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M E M O R A N D U M TO: MRA Board of Directors FROM: Ellen Buchanan, Director DATE: October 15, 2009 SUBJECT: Brownfields Revolving Loan Fund Amendment The City received an additional $400,000 grant from the EPA to replenish the Brownfields Revolving Loan Fund. The Office of Planning and Grants issued a call for applications for use of the funds and the only application received was for methane abatement on the Old Sawmill District property. As co-borrowers of the RLF funds, MRP and the City are joint applicants for these funds. This impacts and benefits the development of Silver Park since this is where the majority of the deep wood waste is located. The cost of the methane abatement system and wood waste removal associated with the construction of the parking lot are eligible for reimbursement from these loan proceeds. The budget for the use of the funds is as follows: Methane Activities $291,856 Contingency 29,186 Legal Fees 20,000 DEQ Fees 30,000 Wood Waste Abatement 28,958 $400,000 John Adams, the Brownfields Coordinator for OPG, has taken this award through the established process and it has been approved by the Brownfields RLF Committee, the MAEDC Loan Committee and the MAEDC Board. The next step is approval by the MRA Board and referral to City Council for amendment of the RLF Loan Agreement and Note. This will be the fourth amendment to the Agreement and the third to the Note. The original award was for a loan of $1,000,000. This was amended to $1,125,000 and is now proposed to be amended to $1,525,000. The source of repayment is limited to the tax increment currently being generated by the Old Sawmill District property and is interest only until 2023. At that point, payment of ---PAGE BREAK--- principal and interest will be amortized through 2031, the end of URD II. The assumption is that the tax increment generated by the development of the property will be sufficient to debt service any bonds issued for the project and the RLF loan. If there is not sufficient revenue to cover both, the RLF loan is subordinate to the debt on the bonds and may never be repaid in full. The current tax increment revenue being generated by the property is $35,704 and the debt service on the RLF loan is $16,875. With the addition of $400,000 to the loan, the debt service will increase to $22,875. The agreements call for the balance of the current increment to be paid to MAEDC to reduce the principal, which will be done in January. Recommendation: Staff recommends that the MRA Board approve the increase in the Brownfields RLF loan to Millsite Revitalization Project by $400,000 and the associated modifications to the Loan Agreement and Note and refer the recommendation to the City Council for approval.