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3.02. The City has determined that it may pay for administrative costs associated with the establishment of the TIF District and certain other costs incurred in connection with the proposed redevelopment of the TIF District, including but not limited to land acquisition, demolition and site preparation costs (the "Costs Advances') on a temporary basis from the General Fund, or any other fund from which such advances, from time to time, may be legally made (the "Fund") as an interfund loan pursuant to Minnesota Statutes, Section 469.178, Subd. 7. 3.03 The City will, subject to a determination by the City Finance Director, reimburse itself for the Costs Advances (including without limitation (i) out-of-pocket administrative costs incurred prior to the establishment of the TIF District in an amount not to exceed $80,000, subject to the limitations of the TIF Act, and (ii) certain costs incurred in connection with land and building acquisition, demolition and site preparation costs in an amount not to exceed $800,000) in an aggregate amount not to exceed the adopted and, if applicable, amended Tax Increment Financing Plan budget for the TIF District (the "Interfund Loan"), together with interest at the rate prescribed by the statute (Minnesota Statutes, Section 469.178, Subdivision 7), which is the greater of the rates specified under Sections 270C.40 or 549.09 at the time an Interfund Loan, or any part of it, is first made, subject to the right of the City Finance Director to specify a lower rate. 3.04. Principal and interest ("Paytnents'� on the Interfund Loan shall be paid semi- annually on each February 1 and August 1 (each a "Payment Date"), commencing on the first Payment Date on which the City has Available Tax Increment (defined below), or on any other dates determined by the City Finance Director, through the date of last receipt of tax increment from the TIF District. 3.05. Payments on the Interfund Loan will be made solely from the tax increment from the TIF District received by the City from Sherburne County in the 6 -month period before any Payment Date, net of the amount paid under any agreement with a private developer or otherwise pledge to the payment of any obligation (the "Available Tax Increment"). Payments shall be applied first to accrued interest, and then to unpaid principal, unless otherwise specified by the City Finance Director. Interest accruing from the Loan Date will be compounded semiannually on February 1 and August 1 of each year and added to principal, unless otherwise specified by the City Finance Director. Payments on this Interfund Loan may be subordinated to any outstanding or future bonds, notes, or contracts secured in whole or in part with available tax increment, and are on a parity with any other outstanding or future interfund loans secured in whole or in part with available tax increment 3.06. The principal sum and all accrued interest payable under this resolution is pre- payable in whole or in part at any time by the City without premium or penalty. 3.07. This resolution is evidence of an internal borrowing by the City in accordance with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or rarEaEI er NATURE