6. EDSR 08-13-2012 - Laserfiche WebLink

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EDIT Finance Committee Minutes Page 2 November,4,2010 Page 2 of 3 The Committee discussed the challenges of obtaining a valid security interest when the Borrower is technically not in title to the property(cannot grant a mortgage). EDA staff has Legal reviewing the title work and the proper method getting a security interest in the property. Committee's position was that the Fee Title Owner should pledge a mortgage against the property since the improvements to be made are to the Fee Title Owner's benefit in the event Ms. Sitts defaults under the terms of her contract for deed arrangement. While the committee does not expect a first position mortgage, they would like a valid security interest in the property that would allow the building owner to step in upon an event of a default by Ms. Sitts. Ms. Sitts commented that she is currently working on getting an inspection done on 251 8th St NW. She has also had several inquiries by potential renters of the future office space,but would like to wait to market the space until the build out is complete. She has not explored the option of a traditional mortgage due to a lack of money to use as a down payment. She had not considered installing motion sensors for lighting. The committee recommended that she consider installing motion sensors. Ms. Sitts was excused from the meeting. The committee discussed the terms of the loan and determined that it should be a clean security position that transcends to the current owner in the event of a default. The owner shouldn't be able to raise the contract price and charge Ms. Sitts a higher interest rate. The EDA's position would be the most secure by the loan with the debt obligation on Ms. Sitts and a third-party pledge provided by the owner of the building. Tom Sagstetter mentioned that he has had numerous conversations with Ms. Sitts and they have discussed the energy efficiency of the lighting and HVAC. Mt Sagstetter stated that he is uncertain of the overall efficiency improvements because he has not received detailed plans of the improvements. Mr. Sagstetter noted that the contingency for the improvements should be raised to account for the additional cost of the improvements to the heating system. Mr. Sagstetter recommended raising the contingency to $3,000. The committee members agreed. Ms. Deckert indicated there was already a $1,500 contingency built in,therefore the loan amount could be raised to $30,000 to include the increase which would include an additional$500 for motion sensors. The Committee discussed the structure of payments for the loan and determined that it will be structured such that Ms. Sitts will submit invoices for the improvement to the city and;city staff will review the invoices and disburse the loan dollars for qualifying costs. Mr. Sagstetter explained that the improvements will be reviewed,and energy efficiency of the improvements will be measured and documented both before and after construction to determine what rebates apply for the improvements. Any rebates received will be directly applied to the principal balance of the loan. MOVED BY TVIETE AND SECONDED BY LUNDBERG,THE FINANCE COMMITTEE RECOMMENDS THAT THE EDA CONSIDER APPROVING THE ENERGY EFFICIENCY MICRO LOAN REQUEST FOR P.S. DANCE STUDIO WITH THE FOLLOWING TERMS AND CONDITIONS: • UP TO $30,000 N:\Departments\Community Development\Economic Development\Micro Loan Fund\Finance Committee\2012\8.1.2012.doc