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02/01/96 THU 11:07 FAX 16123402644 DORSEY WHITNEY [a 009 7z To meet the three-year deadline, it has been proposed that bond's 136 issued by April 26. The requirement is that the bonds be "issued" by such date; which means that the closing of the bonds has occurred. At our m6L66hg last *eek, it was indicated that the real estate closing for the CUB Foods store site is expected to take place in mid-April. Until the City actually knows SUPERVALU is committed to construct the CUB Foods store it should not sell the bonds because of the significant cost to the City if it issues the bonds and the project does not proceed. Given the history of the Apache Plaza redevelopment proposal, we really will not be certain that the CUB Foods store will be constructed until SUPERVALU has closed on the purchase of the site. Since this closing is expected to be shortly before the April 26 deadline, this will not leave the City with enough time to sell and close a definitive bond issue. At our meeting with representatives of Ste. Marie Company last week we discussed having the City issue a temporary tax increment bond to Ste. Marie Company at the time of the real estate closing in order to satisfy the three-year deadline. This temporary tax increment bond would then be refunded in 45-60 days later with the proceeds of the definitive TIF Bonds. This issuance of the temporary tax increment bond would qualify as the issuance of bonds for the purpose of meeting the three-year deadline. • At the time of issuance of the temporary bond the redevelopment agreement and assessment agreement with SUPERVALU will be entered into. Ste. Marie Company would sell the site to SUPERVALU and would receive a portion of the agreed purchase price from SUPERVALU, with the City issuing the temporary tax increment bonds to Ste_ Marie Company to cover the remainder of the purchase price. Ste. Marie Company would make a contribution to the City from the portion of the purchase price paid by SUPERVALU to cover the estimated present value of the LGA/HACA loss. The temporary bond would not bear interest, would mature in a short period (3-6 months) and be callable-on any date. While I am not aware of SUPERVALU's purchase price for the side, assume for purposes of an example that the purchase price for the site is $2,500;000, that the HRA agrees to a land write down amount of $1,860,000 (this is the amount requested by Ste. Marie Company), and that the estimated present value of the estimated LGA/HACA loss is $250,000. At the real estate closing, the City issues the temporary tax increment bond in the amount of $1,860,000 to Ste. Marie Cbrhpany, and SUPERVALU pays Ste. Marie Company $640;000 (which equals the $2,500,000 purchase price, less the principal amount of the $1,860,000 temporary tax increment bond). From the $640,000 it receives from SUPERVALU, Ste. Marie Company then pays $250,000 to the City to cover the estimated present value of the b7JA/HAC.A. loss. Following the purchase of the site by SUPERVALU, the City would promptly • proceed with the public sale of the definitive tax increment bonds. The definitive DORSEY & WHITNEY P.L.L.P. 2