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Page Two <br /> March 18, 1994 <br /> allocable to the expiring requirement is $82, 000. The <br /> balance of the letter of credit satisfies the requirement <br /> under the redevelopment contract for Mounds View Business <br /> Park South. My research indicates the letter of credit <br /> requirement for this portion will expire in September 1995. <br /> The letter of credit is important to the City on a new <br /> project for which bonds have been issued because the City <br /> must meet itsobligationto -meet the debt service <br /> requirements of the underlying tax increment bond issue. As <br /> such, it should have a letter of credit or similar security <br /> as a source of funds in the event the real estate taxes <br /> generated from the project are not paid. Once a project is <br /> mature and tenancy is stabilized, uncertainty over its <br /> success diminishes and the risk to the City is reduced <br /> proportionately. <br /> In contemplating our request, I would ask that you consider <br /> the following factors as evidence that the period of <br /> uncertainty over payment of real estate taxes, for all <br /> practical purposes, has passed. <br /> a) The project is complete and tenants occupy the <br /> space. The project has been successful from the <br /> start and has attracted some key tenants to Mounds <br /> View. The project has remained substantially <br /> leased up from the beginning. <br /> With a high occupancy level, nonpayment of real <br /> estate taxes would be extremely unlikely as <br /> tenants pay for the real estate taxes as part of <br /> the lease. <br /> b) All obligations under the contracts for <br /> redevelopment have been met and in many cases, <br /> exceeded. The minimum improvements were built <br /> ahead of schedule and assessed valuations have <br /> exceeded the minimums required. Excess tax <br /> increment amounting to some millions of dollars <br /> has been and will be generated over the minimums <br /> negotiated with the City prior to the commencement <br /> of the projects. <br /> c) Bank financing has been placed on the project at <br /> favorable terms. As the mortgages are held <br /> subject to the terms of the redevelopment <br /> contracts, it would be the obligation of the <br /> lender to pay real estate taxes if the owner <br /> failed to do so. As the lender has a sizeable <br />