HomeMy WebLinkAboutAgenda Statement 1988/01/26 Item 6COUNCIL AGENDA STATEMENT
• Item ~
Meeting Date 1/26/88
ITEM TITLE: Resolution~~ ~.~ 9 Approving City Guarantee of a maximum
Agency loan of X694,068 from Bank of America to purchase
unsold spaces at Orange Tree Mobilehome Park
SUBMITTED BY: Community Development Director r\'~~
REVIEWED BY: City h1anage~~ (4/5ths Vote: Yes No X )
On January 21, 1988, the Agency voted to approve Agency purchase of unsold
spaces at Orange Tree Mobilehome Park utilizing a fixed-rate loan from Bank of
America for 75% of the cost to purchase. As discussed in the Agency staff
report, the Bank requires that the Agency's loan be secured by the City.
Staff is requesting that the City Council approve the City's guarantee of the
Agency's loan. If the City Council votes to approve the attached resolution,
they would be agreeing to secure the Agency's loan, and would allow the Agency
to proceed with the purchase of unsold spaces at Orange Tree Mobilehome Park.
RECOMMENDATION: That the City Council approve the attached resolution
guaranteeing the Agency loan from Bank of America to purchase unsold spaces at
Orange Tree Mobilehome Park and approving the Continuing Guarantee and the
• Resolution to Sign Guarantee.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
On January 21 the Redevelopment Agency adopted a system for Agency purchase,
management and resale of unsold spaces at Orange Tree Mobilehome Park. A
component of this action was to approve the Agency's borrowing of a maximum of
$694,068 from Bank of America to finance 75% of the cost to purchase these
spaces. The Bank requires that the City guarantee the Agency loan, and thus
staff is recommending that the City Council adopt the attached resolution in
which the City pledges to guarantee the Agency's loan.
The City would be guaranteeing a maximum loan of $694,068. This amount may be
reduced if additional spaces are purchased by existing or incoming residents
prior to agency purchase of remaining spaces. If the City Council approves
the City guarantee of the Agency's loan, and if for some reason the Agency is
unable to pay off the loan, then the City would be responsible for insuring
repayment of the balance of the loan.
It is not anticipated that the Agency would ever default on a loan, and thus
it is highly unlikely that the City would ever be responsible for repayment of
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Page 2, Item 6
• Meeting Date 1/26/88
the Agency's loan. Additionally, the loans are secured by the real property
mobilehome lots, which have no other encumbrances on them. However, the Bank
requires this additional security as part of their loan requirements.
The attached City Council resolution contains a "Continuing Guarantee
Agreement" and a "Resolution To Sign The Guarantee". If the City Council
votes to adopt the City Council resolution, they would be agreeing to secure
the ~-gency loan from Bank of America, and would be authorizing the Mayor, City
Manager, and Community Development Director to sign the documents necessary to
accomplish the guaranteeing of the Agency's loan.
FISCAL IMPACT: No city appropriation is anticipated. However, if the
Agency ever defaulted on this loan, then the City would be responsible for
repayment of the balance of the loan. Any funds required after foreclosure on
the lots would most likely have to come from the General Fund.
WPC 3363H
•
• the City Council of
Ctwla .Vista, California
Dated