08-29-11 Council Special Minutes

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MINUTES CITY COUNCIL AUGUST 29, 2011 Metropolitan Council. The City Administrator reported that the estimate is the Building Official's calculation based on additional build out of the building. The City has no choice but to pay this fee which will be charged to Graba Properties as part of their building permit fees when the build out occurs. The Administrator reported that there is over a $700,000 balance in TIF District 3 -2, so the money is available for the additional loan amount. He pointed out that the loan would balloon in five years from the original anticipated date of the loan (4 years remaining). The Administrator indicated that, if approved, the amended loan could close next week. He anticipated minimal legal work would need to occur, however, there may be some title work necessary given the original title work is a year old. The Administrator pointed out that the loan to value ratio is at 112.82% due to a reduction in estimated market value by Ramsey County. The loan will allow the property to generate additional business activity with dollars that are not otherwise available to the property owners. Keis asked about risk to the City. The Administrator reported that there is risk should the property owner not make loan payments as the City's loan would be subordinate to the hank's mortgage on the property as well as an SBA loan on this property. Keis asked if loan repayments would begin upon closing. The Administrator reported that they would and that the City would receive approximately $6,500 in deferred interest at the time of closing. The monthly payment to the City would be $2,229. The Administrator indicated that the risk is as good as the tenants, and stated that the property owners will do their best to not default and lose their building. Wagner noted that the loans from two of the partners have remaining terms of 64 months each rather than the 84 months shown on the information provided. The Administrator indicated that the spreadsheet showed the initial terms of existing loans. Blesener asked if at the end of the balloon period the property owners would have enough equity in the property to take out the City's loan. Wagner replied that they would dependent on the County's property value. He noted the County's recent action lowering the property value by $700,000, which reduced their property taxes by $60,000. That property value reduction was petitioned for by the property owners. Wagner again expressed concern with the SAC charges. Again it was pointed out to Wagner that he will have to address that issue with the Met Council. The City Administrator provided Wagner with the Building Official's calculation estimating these fees. Wagner asked if this was the last SAC charges that he would have to pay. The Administrator noted that the 2