CC PACKET 04091996 - Laserfiche WebLink

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MEMORANDUM TO: Mayor and Members of the City Council 'Michael Morrison, City Manager FROM: Jerry Gilligan DATE: April 4, 1996 RE: TIF Assistance for CUB Foods Store At the April 9th meeting the HRA and City Council will be asked to approve the various agreements to be entered into in connection with the proposed TIF assistance for the construction of the CUB Foods store at Apache Plaza. The principal agreements consist of a Redevelopment Agreement with SUPERVALU (the "Redevelopment Agreement"), an Agreement with Ste. Marie Company (the "Assistance Agreement"), and a Shortfall Agreement with First Bank (the "Shortfall Agreement"). The TIF assistance consists of the payment by the City of a portion of SUPERVALU's purchase price of the site for the CUB Foods store from net proceeds of general obligation taxable tax increment bonds to be issued by the City. The net proceeds constitute proceeds received by the City from the sale of the bonds, less amounts to be used to pay costs of issuance and capitalized interest on the bonds. The bond issue is to be structured to be payable over a 15-year term from the expected tax increment generated from the CUB Foods store. Upon the City's payment of the assistance to Ste. Marie Company, Ste. Marie Company will make a contribution to the City in an amount equal to the net present value of the estimated LGA/HACA loss to the City resulting from the TIF assistance. Under the Redevelopment Agreement SUPERVALU agrees to construct the store, execute an assessment agreement which provides that the store will have a minimum market value for real estate tax purposes of $4.5 million and to guaranty any shortfalls during the term of the TIF bonds in the anticipated real estate taxes to be paid with respect to the store. Presently the market value of the shopping center is lower than when the Apache Plaza TIF District was established. So long as the market value of the remaining shopping center is less than the market value at the time of establishment of the TIF District, the tax increment resulting from the CUB Foods store will be reduced. Under the Shortfall Agreement First Bank agrees to make up any reduction in the increment below the amount necessary to pay the TIF Bonds as a result of this decreased market value. DORS EY & WHITNEY L L P