TITLE
Consider/Discuss/Act on a Resolution Authorizing the Restructure of Debt for the McKinney Economic Development Corporation's Repayment of a Loan from the Solid Waste Fund
SUMMARY
MEETING DATE: March 5, 2013
DEPARTMENT: Financial Services
CONTACT: Rodney Rhoades, Chief Financial Officer
RECOMMENDED CITY COUNCIL ACTION:
· Approval of the Resolution
ITEM SUMMARY:
· McKinney Economic Development Corp (MEDC) desires to renegotiate the terms of a $4 million loan given by the City.
· The restructuring will offer interest savings to the MEDC of $160,796 and sets the interest rate to be more in line with current market conditions.
· A restructured loan will free up resources to pursue other potential economic development projects.
BACKGROUND INFORMATION:
· A Resolution was passed on January 20, 2009 authorizing the City to enter into a 380 Economic Development agreement with MEDC for a $4 million loan from the General Fund for the redemption of the MEDC 2002 Tax Exempt Revenue Bonds.
· The original loan had a term of eight years at 4% interest.
· A Resolution was passed on July 20, 2010 to transfer the loan from the General Fund to the Solid Waste Fund.
· The first five years of the loan repayment was scheduled as interest only, $160,000 per annum. Years six through eight reflect principal & interest payments ranging from $1.43 to $1.45 million.
· The restructured loan would have annual principal & interest payments of $824,159.
FINANCIAL SUMMARY:
Principal: $4 million |
Current Loan |
Restructured Loan |
Time: |
4 years |
6 years |
Interest Rate: |
4% |
1% |
Total Interest: |
$485,000 |
$160,796 |
· The attached debt schedule reflects the current and restructured annual principal payments.
BOARD OR COMMISSION RECOMMENDATION:
· MEDC Board approved to restructure the debt on February 19, 2013.