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6.3. HRSR 12-05-2022
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6.3. HRSR 12-05-2022
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12/2/2022 12:32:07 PM
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HRSR
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12/5/2022
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<br /> <br />Request for Action <br /> <br /> <br /> <br />To Item Number <br />Housing and Redevelopment Authority 6.3 <br />Agenda Section Meeting Date Prepared by <br />General Business December 5, 2022 Brent O’Neil, Economic Development Director <br />Item Description Reviewed by <br />HRA Loan at Jackson Place Cal Portner, City Administrator <br />Reviewed by <br /> <br /> <br />Action Requested <br />Approve, by motion, a statement concurring with the Joint Finance Committee (JFC) recommendation on <br />the loan proposal received. <br /> <br />Background/Discussion <br />In an effort to facilitate the development and construction of Jackson Place, the HRA entered into a $400,000, <br />30-year maturity loan agreement with owner-developer Metro Plains in 2006 at 1% annual compound interest <br />deferred until maturity in 2036. The funds were from a federal Community Development Block Grant program <br />which requires the 32 apartment units meet an affordability standard for 30 years. When the grant is satisfied, the <br />funds remain with the city upon repayment. <br /> <br />Metro Plains recently proposed an early loan pay off with a present value discount on the $400,000 principal. The <br />original total principal and interest repayment is $540,000. They proposed an annual discount rate of 9%. <br /> <br />On November 29, 2022, the Joint Finance Committee discussed the proposal and issued a recommendation to <br />the HRA stating that any early pay off agreement be on par with the original principal value and without any <br />present value discounting. <br /> <br />Financial Impact <br />Accepting the JFC recommendation would not have a financial impact. Accepting any repayment of the loan on a <br />discount basis would provide immediate funds to the HRA, but at a reduction of the full principal value. <br /> <br />Mission/Policy/Goal <br />The goal of the HRA is to promote certain housing and redevelopment projects. <br /> <br />Attachments <br /> Proposal (email) <br /> Summary of Present Value Calculation <br /> Loan Documents <br /> Notes from 11/29/2022 JFC Meeting <br /> <br />The Elk River Vision <br />A welcoming community with revolutionary and spirited resourcefulness, exceptional service, <br />and community engagement that encourages and inspires prosperity <br />
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