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HRA BUSINESS Case #1: Approve Documents to Clear Title to Lands Owned by the Housing and Redevelopment Authority (HRA) in the Plat of COR ONE. HRA Executive Director Nelson reviewed the staff report. Motion by Commissioner Elvig, seconded by Commissioner Ramsey, to approve the Release of Land from Restrictions, Quit Claim Deed and the Declaration of Easement. Motion carried. Voting Yes: Chairperson Jeffrey, Commissioners Elvig, Ramsey, Backous, McGlone, Tossey, and Wise. Voting No: None. Absent: None. Case #2: Consider Flaherty and Collins Financing Options Development Manager Lazan reviewed the staff report. He reviewed the history of this item to help bring the public up to date. Commissioner Wise inquired if the worst-case scenario would be that the HRA would backstop a portion of the lease. Development Manager Lazan responded that was correct. The maximum amount would be roughly $144,000. He added that realistically, if it is empty, the HRA could look at underwriting the next tenant's rent to help insure it is rented. Development Manager Lazan reviewed the financing challenges including the market and comparative values. The rail is still an uncertainty. The demographics are of concern. The largest hurdle is the history of the project. He reviewed the options for funding and how the City could participate in bringing this project to The COR. He explained the repayment and backing of this note would be essentially from the resident project operations through cash proceeds and note extension. The City would have the right to foreclose on the property if they choose. F&C have personal guarantees on the note. There are TIF proceeds from the new district. Stacie Kvilvang of Ehlers & Associates, explained the City's only ability to issue debt is tax increment bonds. It requires 20% of the debt is paid from the TIF district. She said the City can issue a 3 -year temporary bond. There is a 1 -year call date. She explained that states will issue temporary debt when they know that they have income coming in to pay off the debt. This can be repaid anytime after year 1 without penalty. She also noted the City has the ability to issue a second 3 -year temporary bond if more time is needed to obtain repayment. By year 7, a permanent financing plan is necessary. Ms. Kvilvang discussed other avenues to bring the money together for this project. Cash flow from other projects can be used to pay interest. If it performs as anticipated, there is no impact. Development Manager Lazan emphasized these scenarios are the worst case and would only need to be put into motion if there is no payback, and new lending is needed. Commissioner Elvig questioned what is considered full occupancy. Housing and Redevelopment Authority / May 10, 2011 Page 2 of 5