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Kurt Ulrich COR Apartments - Development Proposal and Terms of Development Agreement and Other Obligations December 14, 2010 Page 3 b. Termination Right if TIF District Not Established. If the Cite doesn't establish the TIF district by February 1, 2011, the Developer may terminate the Development Agreement upon written notice to the City and HRA. If the City creates the TIF district after this date, but before the Developer exercises their termination right, they can no longer terminate the Development Agreement for this reason. c. Minimum Assessment Agreement. The Developer will be required to enter into a Minimum Assessment Agreement with the City and County for a minimum value of $9,710,000 as of January 2, 2012, $19,420,000 as of January 2, 2013 (Note: the minimum assessment amounts are subject to review and approval by the County Assessor). These minimum values were utilized to determine the size of the TIF Note. The County Assessor will determine the actual value, however at no time will Developer be able to contest the assessed valuation of the property below the above referenced amount. If the value is higher than the required minimum assessment amount and the Developer contests the value, they are required to provide 30 day notice to the City. The City will then make TIF payments based solely upon the minimum assessed value until such time the tax petition is resolved. This agreement will remain in place until the TIF Note is paid in full or the district is terminated, whichever is earlier. d. Base Valuation. Since the property is currently exempt from property taxes, the County Assessor will be required to assign a value to the property. The Developer will not have the right to contest this valuation. For purposes of TIF estimates for this project, the base value was set at $1,840,000 per discussions with the County Assessor. If this is the final base valuation set by the County_ Assessor, this will equate to approximately $9,200 in annual taxes to the City's General Fund. e. Amount of Increment: Based upon the assumptions for base value of the existing land and the value of the development stated in the Minimum Assessment Agreement, it is estimated that the development will generate approximately $2 million in present value tax increment at a 6.25% rate. NOTE: THE ACTUAL AMOUNT OF INCREMENT THAT WILL BE GENERATED WILL DEPEND UPON THE BASE VALUE ESTABLISHED BY THE COUNTY ASSESSOR, VALUATION OF THE DEVELOPMENT DETERMINED BY THE COUNTY ASSESSOR AND CURRENT TAX RATES. f. Eligible Reimbursement Costs. The Developer will be reimbursed for the lesser of $2 million or the actual costs associated with the following: General Conditions, removal of top soil, fill, utilities, grading, foundations, fire separation from parking ramp, parking lot and curb, sidewalk, lighting, landscaping, irrigation, pool improvements, permit and plan review fees and contractor fee (full detailed list in Exhibit J). g. Fiscal Disparities. The City Council will need to make a determination if fiscal disparities will be paid inside or outside of the District. The Council is currently reviewing this information and will make that determination at a future date (prior to the public hearing on establishment of the TIF District).