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02/01/96 THU 11:07 FAX 16123402644 DORSEY WHITNEY IM 002 7/ • MEMORANDUM TO: Michael Mornson FROM: Jerry Gilligan DATE: February 1, 1996 RE: Apache Plaza-TIF Assistance for CUB Foods Store Ste. Marie Company, an affiliate of First Bank, has requested TIF assistance for the new CUB Foods store proposed to be constructed at Apache Plaza. Under Ste. Marie Company's request the City would issue general obligation taxable bonds to provide up front assistance to write down the SUPERVALU's purchase price of the portion of Apache Plaza on which the CUB Foods store will be located. Springsted Incorporated is reviewing the tax increment cash flows for the Apache • Plaza TIF District to determine if the estimated tax increment from the District will be sufficient to pay the proposed bonds. This request is similar in structure to the TIF assistance previously discussed with Dennis Cavanaugh of G. C. Rein with respect to the CUB Foods store. However, the amount of TTF assistance requested is higher than what had previously been discussed. As a condition for issuing the bonds the HRA would enter into a redevelopment agreement with SUPERVALU. Under the redevelopment agreement SUPERVALU agrees to construct the store and guaranty any tax increment shortfalls and the HRA agrees to provide the TIF assistance. The redevelopment agreement will also require SUPERVALU to enter into an assessment agreement which provides for a minimum .market value of the store for real estate tax purposes. In addition, a contribution will be made to the-City from Ste. Marie Company to cover the estimated LGA/HACA loses to thL- City as a tesult of the TIF assistance. As we have discussed, the Minnesota Tax Increment Financing Act requires certain action to be taken within three years after the Apache Placa 'SIF ]district was certified by the County Auditor or the District *ill terminate. Ratrisey County has indicated that the District was certified April 26, 1993, sb s&R action needs to occur by April 26 of this year. The action required by such date is either (i) the City or HRA issues tax increment bonds for a project iii the District; (ii) the HRA acquires property in the District; or (iii) the HRA constructs or causes to be constructed public improvements in the District. DORSF, Y & WHITNEY P.L.L.P.