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. EHLERS & ASSOCIATES INC o ~ W ~ To: John Herman - Faegre & Benson From: Stacie Kvilvang - Financial Advisor Jim Prosser - Financial Advisor Sid Inman - Senior Vice President Subject: Northwest Quadrant Redevelopment Date: August 4, 2003 On July 30, 2003, you provided the City and EWers with a Term Sheet outlining the proposal for redevelopment of the above referenced project on behalf of the Development Team you represent We have had an opportunity to review the Term Sheet and have the following five (5) comments with regards to the overall redevelopment as proposed: L The purchase price of the various properties needs to reflect the true market value for the property. This is the foundation for the But-For Analysis to be completed by Ehlers and is subject to review by the State Auditor. As stated previously, the City will make its final review ofthe purchase prices based upon an appraisal analysis it will have completed. 2. The scope of the project has been changed from what was originally proposed to the City. The City Council has stated that senior housing is a development component they desire to see in the final development, along with "high-end" town homes. The Redeveloper will need to address senior housing in the development program. 3. The agreement as it stands does not address the complete build out of the entire site. The Redeveloper needs to provide the City and Ehlers will a final listing of all components types of the development, which portions are in future phases and how they will be financed. 4. The City has no additional resources available for this project and it is their position that it will not accept any additional level of risk or debt until all the Redeveloper's resources available to the project are depleted. 5. The level of assistance requested by the Redeveloper has to be commensurate with the overall level of risk and industry standards for similar developments. Understanding these are the overarching issues we have to factor in as we reviewed your information, following is the detailed responses to the various components. It should be noted that we have not reviewed all of the language from a legal standpoint, since this will be addressed when the Development Agreement is drafted. Therefore, if we state there are ''No changes" to a section, it is only in reference to the proposed terms. I. General Project Description A. Proiect Area. No changes. B. Redevelopment Obiectives. No changes.