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financing. Staff is asking the City Council to consider starting the City process to obtain the HRA funds and to <br />start the creation of the Redevelopment Plan. ARAA has committed to deposit 10K in escrow to start this process. <br />Once they receive formal bank approval, the City will also utilize HRA funds to fund the balance of legal work by <br />TAFT. Staff is working with Taft Law on the boundaries of the Redevelopment Plan Area and hopes to include <br />areas, in addition to the ARAA project area, such as the 167th Commercial and residential node. The reason to <br />expand the project area is so that in the future, the payments received from ARAA can be reallocated to additional <br />HRA eligible project expenses. A map of the area is attached. <br />Notification: <br />N/A at this time. However, the Redevelopment Plan/business subsidy process will require public hearings. <br />Time Frame/Observations/Alternatives: <br />Staff is looking for council consensus on whether or not to proceed with the proposed financing structure, adding <br />the requirement of Assumption of Mortgage. All terms and conditions of the loan will ultimately need to be <br />formally approved by City Council action at a later date. If consensus is reached on approval of the financing, <br />staff is asking for direction to begin working with the bank to draft the Mortgage Assumption Agreement and City <br />Loan documents for the City HRA Loan to be formally approved by the Council. Key Terms of the City HRA <br />Loan and Mortgage Assumption are below: <br />City EDA HRA Loan <br />• Amount — Up to 2M, Current 1.88M proposed <br />• Collateral — 100,000 SF Building and Real Estate <br />• Term — 5 year <br />• Amortization — 25 year <br />• Interest Rate — indexed to 10 year Treasury Note (currently 4.53%) <br />• Payments for loan (deferred one year) <br />• Paid in full, or refinanced when Balloon Payment is due for COR Trust Loan. <br />ARAA / COR Trust Assumption of CORTrust Mortgage <br />• ARAA, CORTrust and City of Ramsey/EDA to execute Assumption of Mortgage Agreement to City of <br />Ramsey/EDA <br />Terms <br />• City of Ramsey/EDA to assume ARAA loan with CORTrust if ARAA Defaults on Loan and is unable to <br />cure Default with CORTrust. (required NOT Optional) <br />• City of Ramsey/EDA has the ability to refinance any time after the assumption of a mortgage without <br />penalty. <br />• In the event that ARAA defaults within the last 6 months of the Mortgage with CORTrust, Cor Trust will <br />extend the mortgage for up to 6 months for the City to obtain permanent takeout financing for the balloon <br />payment. <br />• ARAA/CORTrust to execute the transfer of real estate (including 100,000 SF Building) to City of <br />Ramsey / EDA. <br />• City of Ramsey/EDA will obtain financing to refinance the balance of CORTrust Loan. <br />• No Obligation by City of Ramsey/EDA to lease back to ARAA. <br />• ARAA waives the right to transfer/sell to another entity other than the City of Ramsey/EDA while the <br />Assumption Agreement is in place. <br />Funding Source: <br />10K Escrow Account by ARAA to start TAFT Law Redevelopment Area process. (received) <br />Balance of Legal work by City of Ramsey (HRA/EDA). <br />Staff has reviewed City financing options and has recommended an HRA Loan (up to 2M) from Ramsey HRA <br />funds held by Anoka County. <br />