Fiscal Note
This resolution authorizes a loan from the City of Madison to the Community Development Authority of the City of Madison. Funds will be used to pay off existing bank loans for Revival Ridge and Monona Shores properties and fund major capital improvements at Revival Ridge. This loan will be executed via a promissory note issued by the CDA, purchased by the City, and held in the City's investment portfolio. The City’s investment policy allows for investment grade obligations of state and local governments and public authorities. The promissory note will include security features, such as assignment of mortgage. The loan will be in the amount of $5,691,636.97 with a term of seven years and interest rate of 4.1% resulting in semi-annual principal and interest payments of $471,821.28. The interest rate is based on the City's current portfolio yield plus 0.50%. This rate is approximately 2% less than current bank loan rates. This loan is similar to an approach used several years ago to advance surplus funds from Tax Increment District (TID 25) to Madison Metropolitan School District prior to the closure of that TID.
Title
SUBSTITUTE: Authorizing the City to issue loans not to exceed $5,691,636.97 to the Community Development Authority related to the Monona Shores Apartments and Revival Ridge Apartments.
Body
Editor's Note: The file was introduced By Title Only. The substitute modifies the title as follows:
Title: Authorizing the City to purchase a Taxable General Obligation Promissory note issued by issue loans not to exceed $5,691,636.97 to the Community Development Authority of the City of Madison related to the Monona Shores Apartments and Revival Ridge Apartments.
WHEREAS, the Community Development Authority of the City of Madison (“CDA”) owns and manages the property located generally at 2 Waunona Woods Court, Madison, Wisconsin, operated as affordable residential housing, and commonly referred to as the “Monona Shores Apartments.”
WHEREAS, the Madison Revitalization and Community Development Corporation (“MRCDC”) is the sole member of Allied Drive Redevelopment, LLC, which owns the affordable residential housing project generally located at 2313 Allied Drive, Madison, Wisconsin, and commonly referred to as “Revival Ridge Apartments.”
WHEREAS, there are existing banks loans for both the Monona Shores Apartments and Revival Ridge Apartments that the respective ownership entities wish to refinance, and the Revival Ridge Apartments currently requires major capital repairs.
NOW THEREFORE, be it resolved that the Common Council of the City of Madison authorizes the City of Madison (the “City”) to issue loans to be funded by and held in its investment portfolio, totaling an aggregate of no more than $5,691,636.97 to the CDA for the purposes of paying off existing bank loans for Revival Ridge Apartments and Monona Shores Apartments, and to fund major capital improvements at Revival Ridge Apartments.
BE IT FURTHER RESOVED, that the loan terms shall provide that the CDA may loan or otherwise assign loan proceeds to the owner of the Revival Ridge Apartments, provided that the CDA executes a promissory note with the City and the City receives an assignment of mortgage, or other form of security approved in the discretion of the City.
BE IT FURTHER RESOLVED, that the City anticipates the loans will have a seven-year term, consistent with the City’s Investment Policy contained in APM 1-7, with an interest rate of 4.1%, however, the final loan terms, loan documents, and form of security shall be in a form approved by the City Attorney.
BE IT FINALLY RESOLVED, that the Mayor and City Clerk are authorized to execute and record the various documents required for the loans in a form approved by the City Attorney.