05. Reamortization of USDA Loaninc
FOR BUSINESS. FOR LIFE. ON�ANA
City of Kalispell • www.kalispell.com
Office of Community & Economic Development
TO: Mayor Tammi Fisher
And Kalispell City Council
FROM: Jane Howington, City Manager
Wade Elder, Revolving Loan Fund Manager
SUBJECT: Reamortization of USDA loan # 61-02.
MEETING DATE: May 17, 2010
��1 1st Avenue East
Kalispell, M� T 59901
Phone: 495.158. ■ ■ 38
Fax:
405. 58.7758
BACKGROUND: The City of Kalispell's Revolving Loan Fund Program entered into a loan
agreement with the United States Department of Agriculture (USDA) —Rural Development in
the amount of $750,000.00 on November 27, 2006. The loan is structured for a thirty (30) year
term with interest only payments for the first three (3) years and then amortizing for the
remaining twenty-seven (27) years, at a 1%interest rate.
On February 13, 2009 The City requested the USDA to de -obligate the unused portion of the
above mentioned loan. At that time, as is still the case, the principal balance owed on the loan
was $257,500.00.
By reamortizing this loan the loan payments would be reduced from approximately $31,838.00 /
year to $10,945.00. This is a great help to the budget of this fund as the payment schedule in
place now is based on the entire $750,000-00 being lent out and generating income, since we
have only lent out $257,500.00 it puts the budget back in line.
This action is being presented based on the recommendation of the USDA.
RECOMMENDATION: Staff is recommending that the Council find that it is in the best
interest of the City to reamortize this loan, which would reduce its annual debt service. There is
an added benefit of freeing up those funds that would be going to debt repayment could be used
in loans to the public for community and economic development in our city.
FISCAL IMPACTS: The reamortization of the debt and reducing the annual debt service is
anticipated to meet the goals of Revolving Loan Fund program by having more money to lend,
which promotes and/or retains employment within the local economy.
Respectfully submitted,
F\
Wade Elder, RevolvingLoan Fund Managerane Howin ton, City Mana
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