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• MEMORANDUM <br /> TO: Mayor and Members of the City Council <br /> Michael Mornson, City Manager <br /> FROM: Jerry Gilligan <br /> DATE: April 18, 1996 <br /> RE: TIF Assistance for CUB Foods Store <br /> At the April 23rd meeting the HRA and City Council will be asked to <br /> approve the various agreements to be entered into in connection with the proposed <br /> TIF assistance for the construction of the CUB Foods store at Apache Plaza. The <br /> principal agreements consist of a Redevelopment Agreement with SUPERVALU <br /> (the "Redevelopment Agreement"), and an Agreement with Ste. Marie Company <br /> (the "Assistance Agreement"). <br /> The TIF assistance consists of the payment by the City of a portion of <br /> • SUPERVALU's purchase price of the site for the CUB Foods store from net proceeds <br /> of general obligation taxable tax increment bonds to be issued by the City and from <br /> other funds to be provided to the City by the HRA. The net proceeds constitute <br /> proceeds received by the City from the sale of the bonds, less amounts to be used to <br /> .pay costs of issuance and capitalized interest on the bonds. The bond issue is to be <br /> structured to be payable over a 15-year term from the expected tax increment <br /> generated from the CUB Foods store. The funds to be provided by the HRA will <br /> consist of excess tax increment revenue which the HRA presently has available. <br /> Upon the City's payment,of the assistance to Ste. Marie Company, Ste. Marie <br /> Company will make a contribution to the City in an amount equal to the net present <br /> value of the estimated LGA/HACA loss to the City resulting from the TIF assistance. <br /> Under the Redevelopment Agreement SUPERVALU agrees to <br /> construct the store, execute an assessment agreement which provides that the store <br /> will have a minimum market value for real estate tax purposes of $4.5 million and <br /> to guaranty any shortfalls during the term of the TIF bonds in the anticipated real <br /> estate taxes to be paid with respect to the store. <br /> Presently the market value of the shopping center is lower than when <br /> the Apache Plaza TIF District was established. So long as the market value of the <br /> remaining shopping center is less than the market value at the time of <br /> establishment of the TIF District, the tax increment resulting from the CUB Foods <br /> • store will be reduced. It is presently estimated that this will result in a $75,000 <br /> reduction in 1998, which is the first year in which tax increment from the CUB <br /> DORSEY & WHITNEY LLP <br />