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CITY OF RAMSEY Notes to Financial Statements (continued) December 31, 1998 NOTE 14 -TAX INCREMENT FINANCING REVENUE NOTES The City entered into several private development agreements during 1991, 1996, 1997, and 1998. Contemplated in the development agreements were the reimbursements to each of the developers for special trunk assessments. The vehicle used for this reimbursement is called a tax increment revenue note. The original assessments are as follows: Cedar Hills $ 234,042 Energy Park Second Addition #1 455,855 Energy Park Second Addition #2 56,628 Energy Park Third Addition 167,344 O'Brien Properties 4.1,275 $ 955,144 During 1991, the City entered a private development agreement for Cedar Hills. The City agreed to reimburse the developer through future potential tax increments received from this development. This note provides for the payment of principal and interest (8%) up to the lessor of the note or 97% of available tax increment from this development. The note began accruing interest on December 1, 1993, with the first payment due to the developer on February 1, 1995, for tax increments received during 1994. The last payment will be February 1, 1999, based on increments received during 1998. The developer receives only the increments generated by its subdivision. Payments from available increments are applied first to accrued interest and then to principal balances. If increments received through the year 1998 are not sufficient to pay off the developer, the note will be canceled. Excess increments, if any, received after 1998, will be retained by the City. During 1996, the City entered into two private development agreements for the Energy Park Second Addition. The City agreed to reimburse the developers through future potential tax increments received from these developments. Per the agreement document, the City will pay on each scheduled payment date up to the lessor of the net tax increment collected from this development or the scheduled payment due (with interest included in the payment of 8%). The first note began accruing interest on January 1, 1998, with the first payment due to the developers on December 15, 1998 and the second note began accruing interest on January 1, 2003, with the first payment due to the developers on December 15, 2003. For both agreements, the final payments will be December 15, 2005, for tax increments received during 2005. Payments from available increments are applied first to accrued interest and then to principal balances. Any excess increments received after 2005 will be retained by the City. During 1997, the City entered into a private development agreement for the Energy Park Third Addition. The City agreed to reimburse the developer through future potential tax increments received from this development. Interest shall accrue on the principal amount of $167,344 through the period ending December 31, 1999 at the rate of 0% per annum, and from January 1, 2000, and thereafter at the rate of 8% per annum. The scheduled payment due on any scheduled payment date is payable solely from and only to the extent that the City shall have received, as of such scheduled payment date, net tax increments. The first payment due to the developer will be on December 15, 2000. The final payment is scheduled for December 15, 2005. Any excess increments received after 2005-will be retained by the City. -31-