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197 <br /> • The financing plan provides that the City elects to make a"qualifying local contribution" <br /> with respect to the new tax increment financing district. Since the district is a redevelopment district the <br /> qualifying local contribution is 5% of the increment. By making this election the option is preserved that <br /> if such contribution is made to the redevelopment of the shopping center by the City or HRA from other <br /> than tax increment funds,_the City will avoid a reduction in state aid as a result of the district. <br /> In connection with the proposed redevelopment of Apache Plaza Shopping Center by <br /> Hillcrest Development there has been negotiated a Redevelopment Agreement between the HRA and <br /> Hillcrest Development. Approval of the Redevelopment Agreement is to be considered by the HRA <br /> following approval of the financing plan. <br /> The Redevelopment Agreement provides that the HRA will provide tax increment <br /> financing assistance in connection with the redevelopment of Apache Plaza Shopping Center. The <br /> assistance will be provided in the form of a "pay-as-you-go" revenue note to be issued by the HRA to <br /> Hillcrest. This note will be structured to reimburse Hillcrest for up to $4,750,000 of costs, plus interest <br /> at 9.50%. Such assistance would be payable with tax increment received through 2018. If such tax <br /> increment received through 2018 is not sufficient to repay the revenue note neither the City nor the <br /> HRA is obligated to make up any shortfall and the note is cancelled. The Redevelopment Agreement <br /> provides that $4,000,000 of the assistance will be for costs of acquisition, demolition and site <br /> improvements and up to $750,000 of the assistance will be for costs of storm sewer improvements not <br /> paid by the HRA. The HRA will reimburse to Hillcrest $300,000 from HRA funds for costs of storm <br /> • sewer improvements upon completion of the improvements. This $300,000 HRA reimbursement is. <br /> separate from the TIF assistance and will be a "qualifying local contribution" to the new tax increment <br /> financing district. <br /> The Redevelopment Agreement also provides that upon request of Hillcrest the HRA <br /> will commence eminent domain proceedings with respect to the Herberger lease if Hillcrest is <br /> unsuccessful in its negotiations with Herberger's. The Redevelopment Agreement provides that all costs <br /> and expenses of such proceedings will be paid by Hillcrest and requires Hillcrest to post a letter of <br /> credit with the HRA to secure its obligation to pay such costs and expenses prior to the HRA <br /> commencing eminent domain proceedings. <br /> JPG:cmn <br /> -2- <br /> DORSEY & WHITNEY LLP <br />