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Regular City Council Meeting Monday, September 13, 2010 Page 11 test, and indications of the developer that, without TIF, the project would not pro- ceed due to the economic infeasibility. Councilmember Ihlan questioned how the project could proceed even with full occupancy before July of 2011 if the developer didn't have sufficient financing to proceed; and questioned how the City could determine whether or not the units ~~ould be pledged in their determinations, rather than whether the purpose was to .give the project a push due to the poor economy. Mayor Klausing noted that the number of units sold or committed was not based on TIF financing, and that TIF assistance would not increase the sales of units. Mr. Carey concurred with Mayor Klausing's analysis; and advised that if the de- veloper didn't think there were sufficient buyers, they would not proceed with the project, with or without TIF; however, he noted that without TIF, the project was not economically viable, even though risk is part of the equation. Councilmember Pust questioned if the project was not economically feasible without TIF or if it was so upside down that it couldn't be accomplished at all, or if the discussion was simply a matter of profit margins. Mr. Carey advised that all companies needed to make investment decisions: ~~hether to invest in this site, based on projections for a reasonable return on that investment, or whether to put that investment in another project and/or location. Mayor Klausing questioned if the developer considered a rate of return higher than one percent (1%) to allow an element of flexibility in the risk factor, since the rate of return is an assumption; and whether without TIF assistance it made the project's margin of error too low and not worth doing. Mr. Carey concurred with Mayor Klausing's observations. Councilmember Pust opined that it seemed, from a public point of view, that the City should be able to share in the profit side, as well as the risk side. Mayor Klausing noted that the City was not advancing money to the developer. Councilmember Pust opined that, if the developer didn't get TIF assistance, the monies would go to the City's General Fund. Councilmember Roe reviewed the application for Phase I and the potential that the economic situation could improve, allowing the developer to self-finance Phases II and III without TIF, and allowing the increment to come in faster and pay off what has been set aside, allowing funds to come to the General Fund more quickly.