Fund Term Sheet

This Draft Term Sheet is not an offer to sell or the solicitation of an offer to buy any of the securities described herein.

For Discussion Only (March 8, 2000)

Up to $10,000,000
Minneapolis Community Development Agency
Midtown Urban Village Project
Subordinated Mortgage Revenue Notes (Series 2000
)

PURPOSE: To provide the City of Minneapolis ("CITY") and the Minneapolis Community Development Agency ("MCDA") with interim funding to undertake the site acquisition, demolition, relocation, and site improvements for the Midtown Urban Village Project prior to the commencement of tax increment flows.

BASIC STRUCTURE: The proceeds of each Series of Notes will be collected at its respective closing from the investors, simultaneous with executing transaction documents. The proceeds will be invested in a guaranteed investment contract with a financial institution rated investment grade that will pay interest to the investors until the proceeds are drawn on by the MCDA to effect the redevelopment activities. After completion of the redevelopment, and when sufficient assessed value has been put into place to assure payment, the City or MCDA will issue bonds that will provide the long term financing for the site activities financed by the Notes, and the proceeds of the Bonds will retire the Notes. The Midtown Community Works Partnership, the City Finance Officer and the MCDA will oversee use of the money.

NOTES DATED: Date of the Issue, presumed to be May 1, 2000 for Series A and December 1, 2000 for Series B.  

FORM OF BONDS: For Series A: 
*$4,000,000 Tax-Exempt Adjustable Rate Notes ­ Rate adjustment quarterly
*$1,000,000 Taxable Adjustable Rate Notes ­ Rate adjustment quarterly


For Series B: 
*4,000,000 Tax-Exempt Adjustable Rate Notes ­ Rate Adjustment quarterly
*1,000,000 Taxable Adjustable Rate Notes ­ Rate adjustment quarterly

FINAL MATURITY: 30 years from date of issue

OPTIONAL REDEMPTION: In whole or in part at par on any Interest Payment Date after three years from the dated date, and upon issuance of the City of Minneapolis Tax Increment bonds. 

INTEREST: Paid quarterly at a rate equal to the weekly J.J. Kenny 7 day Variable Rate plus 15 basis points or 3.45% if tax-exempt and the GE 90-day commercial paper (bond equivalent yield) plus 20 basis points or 5.04% if taxable. 

PRINCIPAL REPAYMENT: If not redeemed after four years, principal will be paid on a schedule that amortizes the debt over the rest of its term based on an interest rate of 6% if tax-exempt and 8% if taxable.

SECURITY: Any rights that the City or MCDA may possess and assign, including a mortgage on all property acquired until such time as the land is conveyed by the MCDA to a developer. Other security would consist of tax increment produced by the new development, proceeds from the sale of land, grant proceeds, and the like.

METHOD OF SALE: A Private Placement to major area business corporations, foundations, governmental units, and non-profit organizations. Each subscribing entity would execute a letter stating that it had received sufficient information to make a determination to invest in the notes, and that it understands the risks of the investment. Each entity would have the choice of owning the Notes directly or investing in a Certificate of Deposit for the term of its choice and pledged to a rated Bank as collateral for a Letter of Credit issued by the Bank to make those bonds rated and marketable to the general public. Both the Letter of Credit and the Certificate of Deposit would be reduced pro rata by a principal repayment on the Notes.