08-10-11 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL AUGUST 10, 2011 costs would generate not only construction jobs but also the jobs that the businesses moving into the City would bring. The Administrator reported that the developers have obtained estimates for the work needed and discovered that they are short on the money needed to complete the build outs. They are short approximately $33,000 plus any costs associated with modifying the loan. The Administrator reported that based on the lease figures submitted, the building would have a positive cash flow. The Administrator noted that an ideal loan to value ratio would be 80 %, with the additional funds requested that value would be 112.82% given the County's reduction in estimated market value for this property. The Administrator also indicated that the current loan is for 15 years with a 5 -year balloon, and he would propose that that remain the same with one year having now lapsed. The Administrator reported that the City's loan would be subordinate to the first mortgage and an SBA loan. There are private equity loans from the partners, but the City's loan would be superior to those. The Administrator indicated that a public hearing would be required to modify the loan, and earliest of which given notice requirements would be August 26, 2011. Blesener asked about the risk to the City of the loan amount is increased. The City Administrator replied that the City is secure as long as the tenants are solid. The Administrator pointed out that general City tax dollars are not being loaned, the funds are coming from surplus TIF dollars. Bob Wagner, Graba Properties, indicated that they need $30,000 to $35,000 to complete tenant build -outs for Neato -Scan, the thrift store, and an expansion for the Athlete Lab. Blesener stated that he would support the loan increase if the City's financial advisors say it works. The Administrator indicated that legally and practically the City can do it. He noted that banks are not making these types of loans, and that is why the City has been asked to provide the financing. Keis expressed concern that the City has become Graba Properties personal banker and pointed out that the City has not done this for any other business. Keis noted that Graba Properties has made no loan payments to the City as of yet. Wagner replied that no payments have been made because the loan has not been closed. The City Administrator noted the Interim Loan that is in place with interest accruing. He pointed out that the City is gaining Neato -Scan as well as this project is generating jobs. The Administrator indicated that 11