Agenda Packets - 1987/12/14 - Laserfiche WebLink

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City of Mounds View, Minnesota Ncernber 10, 1987 The bonds are general obligations of the City pledging its full faith and credit and unlimited taxing powers to the repayment of the bonds. The purpose nf the general obligation pledge is to lend to the bonds the credit rating of the City, which assures the investor that the bonds will be repaid. This results in the lowest available interest rates for the bonds. To protect the City, the redevelopment contract requires specific assurances and guarantees from the developer that the tax increment revenues pledged to the repayment of the bonds will be adequate to cover all debt service. The City has undertaken four separate methods of obtaining security to assure that the bonds will be paid from the project. These include: Assessment agreement. The assessment agreement is between the City of Mounds View, Everest Development, Ltd., and the Ramsey County Assessor. The assessment agreement states that, as of January I in each of the years 1989 through 1991, the developer will construct minimum improvements at a value not less than the amount shown in the development contract. The assessor aarees that upon, substantial completion of the construction, as defined in the redevelopment contract, the assessor will place a minimum market value on the property, which will be maintained as the minimum value of that property until all the bonds are repaid. This assure:: that there will be sufficient value to the property to generate the projected tax increments. It does not guarantee the increment, since there is no certainty as to future mill rates. 2. Release of funds. The City will not release any dollars from the bond issue to the developer until a certificate of completion has been certified for each of the phases. In other words, the developer will "front-end" the w slsiof each phase reimbursetheuntil the work is completed, at which time the Ci'y developer for eligible project costs out of the bond proceeds. This will take place upon completion of each of the phases. This assures the City that the work will be completed and the buildings are on the tax roils before bond proceeds are released. In other words, either the City will have cash to pay the bonds or there will be taxable value sufficient to generate the necessary increments, assuming no dramatic reduction of property tax rates, or major change in property tax administration. 3. Developer guarantee and letter of : • t. The developer guarantees the payment of any shortfall of tax increment which is insufficient to pay the debt service on the bonds. This pledge is uncondit`.onal. To add additional the developer w;ll provide the City a Guaranteed Letter of Credit to assure sufficient tax increment income in the years 4, 5, and 6 in an amount sufficient to guarantee the payment of all debt service. 4. Reserve fund. If excess tax increment is generated because of higher values within the tax increment district or because of higher mill rates than are contemplated, Page 2