City Council Minutes 1991 08 20 - Laserfiche WebLink

Home Browse Search

interest will be at the highest rate, that the City could have earned prior to the reimbursement of that interest. We clarified that no certificate of occupancy would be issued to any future owner 9f the property or any successor until all of the improvements are completed and the City has been reimbursed all of the costs and expenses it has incurred in completing any of the improvements or enforcing the agreement. One of the fundamental protection that,the City has underlying in all of the subdivision agreements is that it will not issue any certificate of occupancy for the buildings until such time as all of the public improvements have been installed to the satisfaction of the City. If for some reason the developer leaves town, any successive owner of the property cannot receive a certificate of occupancy until such time as those improvements are in and completed to the satisfaction of the City. The letter of assurance will be provided by the Valley National Bank of Arizona in the agreed upon form. Through the negotiation process we have completed a letter of assurance that is more protective of the City than the original draft was. Although, the fundamental nature of a letter of assurance is not like a letter of credit, it is better than the original letter of assurance. The Valley National Bank is making a loan to Louisville Plaza, Inc. to construct the improvements and other site facilities. They also provide personal guarantees, guaranteeing the completion of the subdivision improvements and compliance with the subdivision. The Valley National Bank of Arizona would approve a subdivision agreement and would state that the bank's deed of trust is subordinated to the agreement. This portion would eliminate under foreclosure, the City from loosing its rights under the subdivision agreement. The schedule of approvements totals about $350,000, the letter of assurance would be for the $350,000. We would have $15,000 in cash, personal guarantees from the same individuals who are guaranteeing the loan with the bank. This is the best that can be done without a letter of credit. Howard: In the report that was received from Bondi & Co., their only concern seemed to be that there may be other outstanding loans that have priority over the City's. My question is, to your knowledge is that the case and if it is the case I would like to know if there is any way that the City can insure we essentially have first loan rights? Cudlip: I don't quite understand what is being said in the letter. Yes, we are involved in some other projects. Do they have priority over your interest, over their interest? It really matters who requests that cash first. Bondi & Co. took a look at it and there is sufficient cash available in the different parties. The City shouldn't be worried. There are no other loans on Louisville Plaza that are priority to the Valley National Bank and the City. Howard: I think what they are saying is that there may be loans that the principals have that may, in fact, have priority to our interest. Cudlip: The parties do have other loans, but there is nothing pending that would take priority over the City's interest.