2025. The time is 5:02 p.m. Uh Christine, do we have a quorum and proper notice been given? Yes, Chairman Hawkins. Okay. Thank you. Uh before we have the approval of minutes for our meeting July 17th, 2025.
Approval. Thank you. Second. Roll call, please. Mr. Holland, I. Miss Lee, I. Mr. Obott, I. Chairman Hawkins. I Okay. Next up, we have the uh board
discussion and the direction for the refi of the the uh CRA loan. Yes. Uh so as the commission knows the uh CRA financed the uh former Waterman site and uh that loan is coming due and
uh Lori will be presenting some options for refinance of the property. Hello. Oh Lori. And as always I'm sure I'm left-handed. Let me just qualify that. Nobody knows that. That's why I do things backwards.
Okay. So, as you know, um I think it's September 24th, September 4th. Um in September, the five-year um balloon note is due on the CRA. So, um my understanding is that we secured that
with cash when we financed it. Um and so it's been the money has been in the bank making money and we're paying interest and it has been earning interest um in excess of what we are paying out in interest because it's a 2.875% 875% loan
and interest rates are better today. Of course, we know that we will not get that rate if we were to refinance with the bank going forward. Uh so basically we have two very broad options that we can do. One of them would be I can go out and look for
traditional bank financing or uh because we do have reserves that we're able to do it with in the general fund, we can do an internal loan to the general fund. And I have uh run the option of right now the bank's uh rates are between 3.7
and 3.9. Um I'm sorry Lori, could you explain to me how that internal works? I I will. Okay, thanks. Um I'm just going over the first option first, but then then feel free to ask any questions. Uh so the current rate um that I got quotes is 3.7
to 3.9. The one bank that responded did have a prepayment penalty. Um and the interest rate was 2.875 years ago and it had the balloon which is what's due now in the tune of 2.411 million.
So the second option is internal financing and it allows for several things. What would happen is that instead of us going out and securing a loan with the bank, the general fund will loan the CRA the money. We have it um it would be a bonafide
loan. I have spoken with our esteemed attorney legal counsel and we are able to do this and it's not uncommon practice at all where the general fund we would draw up a loan document for whatever the terms are and then the CRA would make monthly, quarterly,
semiannual, annual payments however we wanted to do it. So it gives us flexibility on the terms. It gives us um we can choose the rate that we would want to use. We can choose the terms. We can include not having um
prepayment penalties. There would be no closing costs. Unlike going out to the market, there's a lot of other there's a lot more work and a lot more fees associated with it. Not significant because it's just a bank load, but there are more fees. It's not say going out to
bond. It would not be that expensive. So if we were to take that option, uh the general fund, we would pay off the balloon payment prior to or on September 4th. We would then receive the cash. It's being held as collateral at US
Bank, USB, and then we would come up with an agreement that first the CRA board and then the general uh city commission would vote on of those terms of that agreement. And that would also give us time. we
don't have to rush this within the next month when we're also going through budget at the same time. So, here are some of the options. Um, and I've done the same term that we have now. Uh, actually I did not. Um, we can do a
s 10-year simple interest, which is just a straight 10-year loan. We could do a 15-year loan, uh, 20-year loan, or we could do a um a balloon loan, five years. um but based on a 25-year
amortization schedule or we could do 10-year balloon based on a 25-y year amortization schedule. And so for those that don't know what the balloon is, it's amvertised over the length of the term, 25 years, but then what's left in
five years is paid in full. So it's amvertised at a at a lower rate of interest, but you don't pay nearly as much in interest doing it that way. So, uh, staff is really recommending, first of all, we're recommending the internal financing
and our first choice would be, um, 15-year simple interest. That's very close to the payments that we have now. And the CRA loan goes until 20 32, Tom. Oh, no. 2047.
20. I'm getting CRA and sales tax mixed up. Uh so it goes till 2047. So we would have it paid off in 2040 barring any unforeseen circumstances with what the legislaturator is going to do to us. And again internal financing
would help protect us from anything that may happen at that level. Okay. All right. Okay. And all interests and all that would go back to general fund. It would go back to the general fund. Okay. Uh our recommendation is to extend the same terms at 2.875. 875
and do it on a 15-year note. So, it would be steady payments, which are very close to what we're paying now. The CRA can afford it. There's there's no trying to stretch it there. It would bring no problems. Um,
and I just lost my So, uh, we would recommend that that's what we do. we would draw up the documents and go forward and have the commission and the CRA board vote on what what it is that we want to do. And so um our first recommendation was
which is a 15-year it would mature in 2040 2.875 9875 interest. The 20-year would recommend uh maturing 2045 and you can see the current monthly payment is 165 um that should say 15year I'm sorry
about that would be uh 17,000 a month and the 20-year would be 18,000 a month. So there's really not a whole lot of difference between them. And just to give you food for thought, we would the CRA would be paying 2.875%
875% interest to the general fund. Current uh current 12 month CD is 3.63. So we'd also be making money in what we have invested. We would be making money over what we're charging them.
Okay. Okay. And that was it. So what we are looking for is direction. If you want to do bank financing um or internal and whichever direction you want to go, then we would
need to fine-tune the mechanism that we're going to do it with and have it done before next month. Okay. All right. We don't necessar if we're doing internal, we the first step we would have to do is make sure we do pay it off by September 4th, but then we can work
on a loan document. All right. Okay. Input. I'm good with following staff recommendation with option number two at 15 years. Okay. What I'm sorry, what are we getting on that money now? It's in the reserve,
right? So, what are we earning on that? What are we giving up to? It's not in reserve. It's actually in the C it's being held in the CRA and oh gosh, um I want to say it's about 3.6. six and
change right now. It's definitely more than the 2.875. So, we're getting more money for it in there, but we're paying ourselves this money. It's really paying ourselves. Sure. So, what we're really doing is taking
out of uh and there's no prepayment on it on the note you'll probably make to ourselves, right? So, there's no So, we are going backwards in the interest, but we're paying it to ourselves. Um, yeah. Yeah. I think you got to do it
internally. The money's just sitting there. So, if you don't let if we don't if we borrow it on the outside for 3.6 something and that's the minimum. The other bank that we're currently with, they did respond back and it was in the fours. Okay. Certainly gives you flexibility and no
repayment and and and releases the property from being encumbered by any Yes. Uh anything. And I think that was the original intent why it was had cashes come out and we could basically renegotiate the note with ourselves if we wanted to anyway. So yeah, it's really not a big
decision. It's just a parallel. Yeah, I agree with uh with with Holland. I do too. Okay. And I truthfully believe when we took this loan out, this was what we were thinking to begin with. This is what we were wanting to do. Okay. So
All right. Okay. Uh, do we need to vote on this? Um, mayor, I you I don't think you explicitly said you're in favor. Are are you? Yes. Then I think we have consensus and so we will move forward and we do have to
bring something back to you uh for consideration, but I think we have consensus. Okay. All right. Great job. So, I'll work with Sasha to have some loan documents drawn up and in the meantime, we'll make sure that the existing loan is paid off timely. Okay. Thanks, Lori. You're welcome.
Tom, is there anything else? Uh, that's it. Okay. All right. We are adjourned until 5:30 p.m.