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Section 2. Regiment of Interfund Loan. 2.01. The City will reimburse itself or the HRA for the Costs Advances including without limitation (i) administrative costs incurred prior to the establishment of the TIF District, subject to the limitations of the TIF Act, and (ii) certain costs incurred in connection with a study of blighting conditions, engineering, land and building acquisition, demolition and site preparation costs in an aggregate amount not to exceed the greater of $1,100,000 or 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 a Interfund Loan, or any part of it, is first made; provided, however, the City Finance Director is authorized to specify a lower rate. 2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid annually on February 1 (the "Payment Date"), commencing on the first Payment Date on which the City or the HRA has received 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 (the "Maturity Date"). 2.03. Payments on the Intetfund Loan will be made solely from the tax increment from the TIF District received by the City or the HRA 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 pledged 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. 2.04. 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 or the HRA without premium or penalty. 2.05. This resolution is evidence of an internal borrowing by the City or the HRA 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 or the HRA. Neither the State of Minnesota, not any political subdivision thereof shall be obligated to pay the principal of or interest on the Interfund Loan or other costs incident hereto except out of Available Tax Increment. Neither the City nor the HRA shall have any obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the termination or expiration of the TIF District. rerEAE' it �rIATURE