Agenda Item Title:
Ratify Lien & Agreement for Assignment of Proceeds of Real Estate Sales by Red Rock Development Company, LLC to the City of Rapid City
Origination Group:
Legal & Finance Committee
Origination Meeting Date:
05/02/2018
City Council Hearing Date:
05/07/2018
Petitioner:
Pauline Sumption & Wade Nyberg
Agenda Item Summary:
The Council previously approved a similar agreement for lots that were being platted within the IDPF boundaries. This is a similar agreement for an additional 7 lots.
The City and Red Rock Development Company (then known as Buntrock-Graziano-Ward Development Company) entered into an Infrastructure Development Partnership Fund (IDPF) loan agreement in 2000. The agreement provided that the Development Company would borrow $870,773 from the City’s IDPF fund to build water and sewer improvements to serve what would become the red rock development. The agreement also contemplated an additional $528,500 of IDPF funds being utilized for a water main extension in Sheridan Lake Road, which was to be repaid by connection fees (not by the Development Company). The agreement was later amended to add an additional $90,000 to the loan, which brought the total loan to $960,773. The Agreement called for a long-term repayment plan, where the Development Company would pay a portion of the principal and accrued interest for each lot platted. Repayment would be complete upon final platting of the last phase of development, or ten years after substantial completion of the infrastructure to be built, whichever is later. Substantial completion was determined to have taken place in July of 2008, which would make July of 2018 the timeframe for the final amounts to be due. Red Rock is not in default of the Agreement, and Finance records show that approximately $196k is owed for principal on the Agreement, plus an additional amount for accrued interest, which is approximately $43k for a total of approximately $239k. The Assignment Agreement does not change anything other than allowing the Development Company to plat first, and make their payment from the proceeds from the sales of the lots, instead of paying prior to plat approval. The lots have to be platted in order to be sold, so this allowed the Development Company to raise the funds to pay from lot sales. There is a lien given on each lot to guarantee payment upon sale.
Funding Source & Fiscal Impact (if applicable):
| Funding | Cost Center |
|---|---|
Recommendations:
Origination Recommendation Action:
Approve