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City of San Leandro Notes to Basic Financial Statements For the year ended June 30, 2012 73 NOTE 7 - LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Bay Fair Mall Debt with Agency Commitment On June 15, 1998, the City committed $4,000,000 to renovate the Bayfair Mall. This debt with City commitment is at 0% interest and has installments ranging between $200,000 and $400,000 per year over a 15 year per iod beginning in July 1998. The debt is secured and payable from Community Redevelopment Agency revenues. An adjustment was made in prior years for an accelerated payment of $50,000 which is reflected in the table, leaving a debt service balance of $450,000. Prior to February 1, 2012, tax increment revenues were used to fund debt service on the Bonds. As a result of the dissolution of the Redevelopment Agency pursuant to state law (See note 16), a Successor Agency assumed the debt and receives tax revenues used to pay debt service and fund other activities of the former Redevelopment Agency. Future debt service repayments on these bonds will be made by the Successor Agency from the Redevelopment Property Tax Trust Fund allocation (see Note 18). Owner Participation Agreements with Agency Commitment The Agency entered into the following agreements which represent contingency liabilities for the Agency: Ford Motor Company 2,008,746$ Batarse Family Trust Disposition and Development 332,615 2,341,361$ 1. Ford Motor Company Owner Participation Agreement - The agreement required the Agency to make annual payment equivalent to 50% of the sales tax generated above a base of $277,000 by the sale of vehicles as part of the Ford Store San Leandro development. The amount due is $2,008,746 to be paid over several years depending on the volume of auto sales at no interest. 2. Batarse Family Trust Disposition and Development Agreement – The agreement required the Agency to make annual payments equivalent to 50% of the sales tax generated by the sale of vehicles as part of the development of a proposed Saturn dealership. The amount due is $332,615 to be paid over several years depending on the volume of auto sales at no interest. Prior to February 1, 2012, tax increment revenues were used to fund debt service on the Bonds. As a result of the dissolution of the Redevelopment Agency pursuant to state law (See note 18), a Successor Agency assumed the debt and receives tax revenues used to pay debt service and fund other activities of the former Redevelopment Agency. Future debt service repayments on these bonds will be made by the Successor Agency from the Redevelopment Property Tax Trust Fund allocation (see Note 18).