Laserfiche WebLink
Eclty1� ,.,�� Request for Action <br /> River <br /> To Item Number <br /> Mayor and City Council 8.1 <br /> Agenda Section Meeting Date Prepared by <br /> General Business Aril 18, 2016 Cal Portner, City Administrator <br /> Item Description Reviewed by <br /> Boys & Girls Club of Elk River Commercial Real <br /> Estate Loan Support Request Reviewed by <br /> Action Requested <br /> Adopt,by motion, a resolution approving a Commercial Real Estate Loan by the Boys & Girls Club of <br /> Elk River. <br /> Background/Discussion <br /> The Boys & Girls Club of Elk River (B&GCER) has requested the City of Elk River provide a resolution <br /> of support for a new$60,000 Commercial Real Estate Loan secured by all business assets of the <br /> B&GCER and a 2nd Real estate mortgage and Assignment of Ground Lease for the property located at <br /> 905 6th Street NW. <br /> The loan requires written consent of the lessor (The City of Elk River) per the terms of the ground lease <br /> agreement dated March 16, 1999. B&GCER President/CEO Ricky Solomon will be in attendance to <br /> answer any questions. <br /> The loan is for working capital with a maturity date of 6/11/2019. Loan terms including interest rate, <br /> maturity and amortization will match the existing loan, currently 5% fixed interest with a maturity date <br /> (balloon date) of 6/11/19 with approximately 13 years left on the amortization. <br /> Under the original loan of$400,000+ in 1999, the city entered into a Mortgagee Agreement that would <br /> require the city to take over the payments of the loan under certain circumstances (the lease would <br /> terminate as part of the agreement). This agreement would apply to the modification of the original 2014 <br /> loan which had a remaining principal amount at the time of approximately$130,000. <br /> The terms do not include a bank request for a similar Mortgagee Agreement for this second <br /> loan. According to the city attorney,if that is the case, the only concern is that the club is financially able <br /> to take on the additional debt and make its payments under the original loan so that the city isn't at risk <br /> under the first Mortgagee Agreement. If the bank is proposing a second Mortgagee Agreement, then the <br /> city is at risk for $60,000 in addition to the amounts under the original loan and will need to consider a <br /> variety of issues that aren't yet identified (e.g. under what terms would the city subject itself to retaking <br /> the property and taking on the additional$60,000 debt). <br /> Financial Impact <br /> No risk to the city, assuming that the BGCER is in a financial position to repay the loans so that the first <br /> loan doesn't go into default. <br /> POWERED 6T <br /> AR <br />