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In addition, the City agrees that absent this sale, the property was "under threat of condemnation" and would consider taking all necessary actions to acquire the site if the acquisition had not been negotiated. Mike Mornson - Northwest Quadrant Redevelopment September 17, 2003 Page 5 c. Commercial Property Acauisition. The Redeveloper has requested assistance in acquiring the three commercial properties that the Phase IA For Sale housing units will be located upon (Apache Squares, Apache Office and JA Cadawallader Office). The Development Team has had discussions with Fannie Mae to assist in providing the "up fronf' money needed to acquire these properties. Fannie Mae is willing to provide this assistance but will require, as collateral, the land, Developer Guarantee and a pledge funds from the City. Itis anticipated that the City will utilize funds from the Water Filtration Fund to utilize as collateral for the loan and will not be required to provide its General Obligation Taxing Authority. The terms of the collateral are still be discussed with Fannie Mae and terms of a revolving fund for future property acquisitions is still being discussed with the Redeveloper. Any fmalloan agreement will be brought before the City Council and HRA for approval. The Redeveloper will be required to have 20% of the units in the first Phase IA building sold prior to the City advancing the loan funds from Fannie Mae. m addition the Redeveloper will need to have obtained the commitment for construction financing for the Phase IA land prior to advancement of the loan. d. Profit Sharing on For Sale Urban Flats. The Developer of the For Sale housing units anticipates a twelve (12) percent profit on the development. Once the Developer obtains this profit margin, they will provide a prorated "pay back" to the City and HRA of 25% of the excess profit. If the project profit exceeds fifteen (15) percent, then the City and HRA's prorated share of the profit will be increased to 50%. It should be noted that the profit calculations exclude any unit "upgrades" requested by homeowners. e. Below Market Profit TIT Assistance mcrease. Provided the For Sale Developer is not in default, in the event the return to the For Sale Developer is less than 12%, the City and HRA shall provide the For Sale Developer a subordinated Pay-As-You-Go (P A YG) Tax Increment Note in the amount needed to attain a 12% return. The Subordinated TIF Note shall be payable solely from the amounts of Available Tax mcrement on the For Sale Element not utilized to pay the Tax Exempt TIF Refmancing or the CitylHRA 5% administration, on the For Sale Element (i.e. coverage, inflation or excess TIT). We are still finalizing negotiations on when the subordinated TIT note would be paid to the Developer and anticipate we will have it finalized by the September 23, 2003 meeting. f. Look Back Provision. As an Exhibit to the Development Agreement, a mutually agreed upon preliminary development proformas for the For Sale Housing and Commercial Development will be attached. This will be the basis for detennination of assistance for the developments. When the developments are completed the actual development proformas will be compared with the preliminary development proformas. If the projects perform better than anticipated and the For Sale Developer receives their required profit amount of 12% and the Commercial Developer meets their construction and lease goals then the excess proceeds will be disbursed to the City and HRA as excess TIF and will be made available for Phase II developments within the TIF District.