Fiscal Note
The CDA has a current outstanding balance of approximately $1,250,000 on the $4,100,000 Fannie Mae line of credit (LOC), all related to the $2,500,000 financing of the Lake Point condominium project approved in 2004. In July of 2006 an additional $2,100,000 of loans have been approved to assist in the financing of condominium units in the Twin Oaks neighborhood. To date there have been no LOC draws by the CDA or disbursements related to the Twin Oaks project.
Under its present terms the LOC allows the CDA to make additional draw requests until June 15, 2007 but expires on December 15, 2007, with the full balance becoming due and payable at that time. If the term of the present LOC is not extended until at least December of 2008, there will not be sufficient time remaining to effectively finance the approved Twin Oaks project. Extension of this LOC beyond 2008 would facilitate the CDA's ability to finance additional unspecified redevelopment projects in the future, pending Common Council approval.
The proposed LOC extension will cost $18,250 plus legal fees at closing and will continue to bear a variable interest rate, currently estimated to be approximately 6.3%, on the outstanding balance.
The City has guaranteed repayment of any funds drawn on this LOC with its full faith and credit. Thus, if the CDA is unable to fund its obligations under the LOC at any time, the City will be required to assume any repayment due. This guarantee constitutes a general obligation of the City to the extent that the CDA acts to draw funds. If the City's "Aaa" general obligation debt rating falls to the next lower category, the LOC interest rate will increase. If the City's rating would fall further, the full outstanding debt will become due and payable.
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AMENDED - Authorizing the extension of the maturity date by the CDA of a revolving line of credit loan in an amount of Four Million One Hundred Thousand Dollars ($4,100,000) from Fannie Mae, a corporation organized and existing under the laws of the United States of America ("Fannie Mae"), from December 15, 2007, to December 15, 2011, and authorizing the Mayor and City Clerk to execute any and all documents required by Fannie Mae in connection with said revolving line of credit loan.
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WHEREAS, Fannie Mae has a General Obligation Loan Product from its American Communities Fund that is available to cities to expand their community development efforts; and
WHEREAS, the CDA was provided $4,100,000 in funds to undertake these developments in 2004 through the American Communities Fund; and
WHEREAS, the City provided a guarantee for the loan through adoption of Amended Resolution 62022, ID Number 36916 on November 9, 2004; and
WHEREAS, the CDA has reviewed the modifications to Fannie Mae's General Obligation Loan Product and desires to extend the maturity date to December 15, 2011, for potential housing and community development projects; and
WHEREAS, in order to obtain and access the revolving line of credit loan funds from Fannie Mae through the revised maturity date at competitive interest rates, it is necessary for the City to guarantee the loan from Fannie Mae.
NOW, THEREFORE, BE IT RESOLVED, by the Mayor and Common Council that the Common Council of the City of Madison hereby guarantees that $4,100,000 Revolving Line of Credit General Obligation Loan Product from Fannie Mae's American Communities Fund, pursuant to the terms contained in Exhibit A, and acknowledges that the obligation and indebtedness of the CDA and the guarantee by the City of Madison of the loan from Fannie Mae to the CDA constitute an unconditional general obligation of the City, to which its faith and credit and taxing power are pledged through December 15, 2011;
NOW, THEREFORE, BE IT FURTHER RESOLVED, that the Common Council must approve any loans made by the CDA from the Fannie Mae funds for housing projects and community development projects.
NOW, THEREFORE, BE IT FURTHER RESOLVED, when funds are available and an RFP is to be issued, criteria for such an RFP will be approved by the Common Council.
NOW, THEREFORE, BE IT FINALLY RESOLVED, that the Mayor and City Clerk are hereby authorized to execute any and all documents required by Fannie Mae in connection with the said Revolving Line of Credit Loan.