Fiscal Note
There is no impact on the City levy associated with the loss of Federal loan proceeds. Had they been repaid, these loan funds may potentially have been reprogrammed to support other CDBG-related projects in the future, but there is otherwise no significant impact on City funding or programs.
Title
Authorizing the Finance Director to write off uncollectable loans of CDBG funds made for the benefit of Genesis Development Corporation and authorizing the Mayor and City Clerk to execute any documents to effectuate such write off.
Body
PREAMBLE
By Second Substitute Resolution No. RES-05-00912, File No. 02146, adopted November 29, 2005, the Common Council authorized the provision of a loan of CDBG funds in the amount of $1,093,100 to the Dane Fund, Inc., now known as Forward Community Investments (“Forward”), to assist in the creation of a business incubator by Genesis Development Corporation at 313 West Beltline Highway. The City funds were leveraged as a part of a New Market Tax Credits structure, and replaced existing mortgage loans of CDBG funds that had previously been lent by the City to the project. Forward loaned the $1,093,100 of CDBG funds to Genesis Investment Fund, L.L.C., which then loaned those funds to WCDLF Sub CDE IX, LLC (“WCDLF”) which then loaned them to Genesis Development Corporation. The City’s $1,093,100 loan to Forward is evidenced by a promissory note in the amount of the loan. The promissory note is secured solely by an Assignment of Loan as Collateral under which the City’s recourse in case of default is to succeed Forward as the payee of the note and succeed to all of Forward’s rights and obligations under a Third Pledge and Security Agreement from Genesis. The City’s $1,093,100 loan to Forward is not secured by a mortgage and is uncollectable.
In 2009, WCDLF began foreclosure proceedings against Genesis, and in 2011 the Dane County Circuit Court granted a judgment of foreclosure to WCDLF. The property is being managed by a...
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