Your taxes are financing the mortgage on a golf course and the interest only is now at $500K on this bank loan passed off as part of a bond package at a public hearing on June 20, 2005:
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Art Museum....................................$3,700,000.00
Downtown West Parking Garage...... $2,600,000.00
Financial Application Integration........$2,600,000.00
Countryside Golf Course.............$3,975,000.00
TOTAL...........................................$12,875,000.00
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The Director of Finance recommended that Council adopt a resolution authorizing issuance of $12,875,000.00 in General Obligation Bonds under the Virginia Public Finance Act.
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It was passed as part of the General Obligation Bonds however after pressed Mr. Jesse Hall, Director of Finance for the City of Roanoke, confirmed it was an ordinary bank loan like my mortgage on my house except my interest rate is better then 6.25%. These debt obligation bonds are counted against outstanding debt when weighed by bond rating agencies. Roanoke City has a "AA" rating that allows the City to get a very good rate on debt obligations. The City's debt is reaching a precarious point and in summary it can issue little or no more debt obligations without risking their bond rating. However, that is another topic entirely.
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Why do I bring this up again? The last time I posted this amortization schedule development of the golf course was still on the table with "Foti Fantasy, LLC".
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Today's Roanoke Times Editorial blasts Councilman Wishneff for recommending that the parking garage be funded from the General Fund rather than through an increase in the downtown parking fees. Councilman Wishneff is concerned that the fragile downtown businesses will suffer as people avoid downtown to eat and shop - opting instead to eat and shop where there are no parking fees. He views parking garages as a part of downtown economic development that should come from the General Fund. The Roanoke Times Editor argues that this would take money from neighborhoods (like we see anything here) and economic development initiatives (like granting money to the private developer of the old Grand Piano building being transformed into apartments). BUT THEY CAN BORROW TO BUY A GOLF COURSE that they can't market to any "reputable" developer. So do you hear that "sucking sound" out of the coffers holding your charitable tax contributions?
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Before Roanoke City purchased the golf course they were receiving $54,0000 in real estate and property taxes from Meadowbrook, the former owners and now operators of Countryside Golf Course. Now the City only gets $17,500 a year - you do the math on - Interest Paid To Date - Loss of Real Estate Taxes - Paying Roanoke Regional Airport to Lease their Property and .... Countryside Neighbors being a pain in their arsses PRICELESS!
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How ironic that the Countryside Neighborhood pays real estate taxes so our City can destroy what makes our neighborhood special.
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Sent: Friday, June 23, 2006 2:03 PM
Subject: Countryside Financing
Relative to the Countryside financing, we obtained a loan from a local bank [Carter Bank] for $3,975,000. Although it is a bank loan, it is commonly referred to as a bond. It was set up with a 15 year amortization, but can be paid in part or in whole at any time. We did this to provide flexibility because we are not sure how much of our investment in this property will be recovered from the potential future developer of the property, assuming that the current overall goal of development doesn't change. Thus, the loan might be repaid in part or in whole, depending on the circumstances.
Subject: Countryside Financing
Relative to the Countryside financing, we obtained a loan from a local bank [Carter Bank] for $3,975,000. Although it is a bank loan, it is commonly referred to as a bond. It was set up with a 15 year amortization, but can be paid in part or in whole at any time. We did this to provide flexibility because we are not sure how much of our investment in this property will be recovered from the potential future developer of the property, assuming that the current overall goal of development doesn't change. Thus, the loan might be repaid in part or in whole, depending on the circumstances.
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Ms. Garner, the City will receive $35,000 [$17,500 for 2007 and 2008] for leasing the property back to Meadowbrook for the 2006 "golf season". The City will also pay the Airport $4,731 annually for lease of the Airport owned property. Lastly, the City borrowed $3,975,000 at 6.25% for the purchase of the property. These are basically the facts surrounding the transaction, but I'm sure you know the City's intent for redeveloping the property is to develop additional market rate or higher housing and through perhaps a range of mixed uses arranged in a manner that will add to the tax base while protecting and enhancing the tax base already in place surrounding the site. Please contact me if you have additional questions. Sincerely,Jesse Hall, Director of Finance.
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End of 2008 the amortization schedule shows "interest only" at $704,000.00. The Principle plus Interest will approach $1 million.
Amortization Schedule:
Principal borrowed: $3975000.00 Annual Payments: 12 Total Payments: 180 Annual interest rate: 6.25%
Payment amount: $34296.91 Total Repaid: $6173445.19
Total Interest Paid: $2,173,445.19
Interest as percentage of Principal: 54.336%
TOTAL INTEREST PAID FIRST YEAR is over $240,000
By end of 2007 it will be approaching 1/2 million in Interest Only
1 comment:
Priceless.
That's an appropriate word.
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