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ARDEN HILLS CITY COUNCIL WORK SESSION - MAY 19, 2008 7 Mayor Harpstead agreed stating he would like to see how this additional square footage was captured for the development along with what type of tenants/retail uses would be invited into the neighborhood. Ms. Kvilvang stated the developer was concerned if tax increment financing (TIF) was available for this project and that they would be more comfortable going forward with this assurance. She understood that Ryan Construction would have to prove a need for the TIF before City approval. Councilmember Holden stated this was never a guarantee and that grants should be investigated as well" Ms. Kvilvang stated that they will be seeking grants, but to remember that with grants additional requirements for the development may be added, such as low-income housing, higher density, etc. She explained there is a program through Fannie Mae for local governments and can provide up to $50 million. Ms. Kvilvang indicated Fannie Mae borrows funds to cities for development purposes where 500/0 of the development was for housing purposes. She stated this may assist the City in the economic burden of the development, lowering the debt need. Ms. Kvilvang noted Fannie Mae would have an interest rate today of roughly 5% and requires the City to provide some its General Obligation and TIF. She explained the repayment plan would be part of the master development agreement with the developer being responsible for repayment. Councilmember Holmes questioned who was responsible for the loan payment. Ms. Kvilvang explained that the financing would be passed along to the developer and if they did not make a payment, the City could foreclose on the land. She stated this would all be disclosed and fully explained in the master development agreement. Mayor Harpstead asked if the Fannie Mae dollars had to be borrowed up front or if they could be pursued during the development process. Ms. Kvilvang stated the funds could be borrowed at any time during the process, meaning if the funds were not needed in the beginning, they could be pursued to ease the financial strain at a later date. Mayor Harpstead reiterated that it was the responsibility of the Council to assure this was a financially viable development before going forward with this project. Councilmember McClung stated the original RFP stated the developer would have to be able to do everything from the beginning to the end in terms of the financial viability. Councilmember Grant stated he would support assisting the developer if the development is proven to be financially viable. He indicated the City should not be losing their own "shirt" in the process. Ms. Kvilvang stated that the City and RRLD had a conference call with the GSA on Tuesday where the timeline was discussed with the transfer completed in September 2009. She indicated Bill McDonald was hoping this would be earlier. Ms. K viIvang suggested a letter be drafted to