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_ Tuna a Muady • Despite its limitations, pay -as- you -go TIF effectively avoids the complex guarantees and assessment agreements of bond based transaction, and eliminates all of the costs of issuing bonds. The role of a financial advisor is to become involved in the structuring of the reimbursement agreement to assure it is workable from the City's perspective as well as the developer and banker's. Case Study: City of Shoreview Pay-as-you-go Tax Increment Deluxe Check, Inc., Shoreview's major employer, was proposing to build a major corporate headquarters and R&D complex. The three -phase project was to be constructed over a 10 -year period at a total cost in excess of $35,000,000. Deluxe was seeking a complex incentive package including over $6,000,000 in tax increment assistance. It was critical for Shoreview to take the steps necessary to retain Deluxe Check's development. Yet $500,000 in roadway improvements and a $6,000,000 City recreational facility also demanded tax increment help. Coupled with a real concern that additional bonded debt would damage the City's credit rating, the City was faced with a complex problem. As Shoreview's financial advisor, Juran & Moody set out to help find a solution acceptable to both Deluxe Check and the City. The process involved many weeks of negotiation and alternative analysis, requiring 105 separate customized computer runs before reaching a successful solution. Deluxe Check was ultimately willing to accept "pay -as- you -go" assistance over a 20 -year period through the vehicle of a taxable revenue note from the City. This avoided over $7,000,000 in City general obligation bonding, and considerably reduced the City's risk in the transaction. Remaining tax increments were sufficient to cover the needed street improvements and fund one -half of the City recreational facility, thus avoiding the requirement of a referendum vote. Tax Increment Revenue Bonds To our knowledge, only a very few tax increment bonds have been structured as pure revenue bonds. Working with the City of Owatonna and SPX Corporation, Juran & Moody recently completed a $1,100,000 pure revenue tax increment bond and has been invited to participate in a second similar issue. Unlike a general obligation tax increment bond, where the full faith, credit and unlimited taxing power of the city is pledged to the payment of the bonds, a revenue tax increment bond pledges only tax increments. The buyer of the revenue bond must bear the risk that if something goes wrong f. i City of Centerville, Minnesota - 16 - Fi ri 1