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01/30/96 TUE 16:25 FAX 16123402644 DORSEY WHITNEY X003 <br /> �j O <br /> 4. Mr. Guertin is correct that the 1985 bonds could be refinanced on a • <br /> taxable basis without City participation using FHA insurance and Chandler Place is <br /> eligible to obtain the lower tax classification. However, this loan will carry a higfiei <br /> interest rate and is clearly not as attractive to the owner of Chandler Place. <br /> 5. With respect to the tax increment loan, I think the payback of the loan <br /> at this time on a discounted basis has merit and should be reviewed closely. For any <br /> discount the City will need to be supplied with information as to what eligible TIF <br /> expenditures the discounted amount is to be applied to. Presently, the loan is in <br /> excess of $800,000, so the $450,000 repayment proposed by Mr. Guertin represents a <br /> significant discount. However, the loan bears interest at a below market rate (3%) <br /> and is not payable for 10 years so a discount makes economic sense at some amount. <br /> In addition, the loan is a nonrecourse loan, secured by a second mortgage on <br /> Chandler Place. Consequently, the HRA's security may be difficult to realize on <br /> should the owner of Chandler Place fail to pay the loan when due. <br /> JPG:jkt <br /> • <br /> DORSEY & WHITNEY P.L.L.P. 2 <br />