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will construct a 75,200 square foot Cub Foods grocery store valued at approximately $4,500,000 on a portion of the site currently occupied by Apache Plaza Mall. Construction is expected to begin in 1996 and be completed in the spring of 1997. The composition of the Issue is as follows: Project Costs $1,417,411 Capitalized Interest 285,100 Issuance Costs 40,939 Allowance for Discount Bidding 26.550 Total Bond Issue $1.770.000 SECURITY AND FINANCING In addition to its general obligation pledge, the City pledges tax increment income received from the City's Tax Increment Financing District No. 3 (Apache Plaza Project) and Chandler Place and Kenzie Terrace Housing and Redevelopment Tax Increment Districts. Annual net tax increment revenues are projected to be $209,010 upon completion of the new Cub grocery store in 1997. The annual debt service payments on the Bonds is estimated to be $206,800. Interest payments due February 1, 1997 through August 1, 1998 will be made from capitalized interest included in the Issue. The February 1, 1999 interest payment will be made from 1998 tax increment revenue collections. Thereafter, tax increment revenues collected each year.are expected to be sufficient to pay 100% of each August 1 interest payment due in the collection year and the subsequent February 1 principal and interest payment. FUTURE FINANCING The City does not anticipate any additional borrowing for at least the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. LEGALITY The Bonds are subject to approval as to certain matters by Dorsey & Whitney LLP of Minneapolis, Minnesota as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement except for guidance conceming the following section, "Taxability of Interest," and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify, any of the financial or statistical statements, or data contained in this Official Statement, and will express no opinion with respect thereto. A legal opinion substantially in the form as set out in Appendix I herein will be delivered at closing. TAXABILITY OF INTEREST The interest to be paid on the Bonds is includable in gross income of the recipient for United States and State of Minnesota income tax purposes, and is subject to Minnesota Corporate and bank excise taxes measured by net income. -4 -