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City now eyes bank loan for Keeler land
Karen Goschen, the city administrative services director, told the council at its Nov. 24 meeting that a direct placement bond through a bank has more competitive interest rates and more flexible payment terms than the state program presented at the Nov. 10 meeting.
The city also could pay off a direct placement bond early, which it couldn't do with the state's bond, she said.
"We can finance the improvements, too," Goschen said.
On April 14, the city council agreed to buy 35 acres on U.S. Highway 101 just east of Simdars Road that are adjacent to 10 acres of land donated by the Keeler family.
The council agreed to pay $806,610 over five years with a 5-percent interest rate and $200,000 annual payments through March 31, 2012.
But according to a memo from Goschen to the council, the Keeler family would prefer the city pay off the $631,610 owed to them and obtain other financing.
Extending the payment schedule from five years to 10 years would reduce the city's annual payment from $200,000 to $81,000 or less, although the total interest paid would increase from $90,000 to $180,000, the memo stated.
The property also could require as much as $1.2 million in improvements to make it available for use as a park, including a road extension, utility extension and restrooms, parking lot and storm water control, signs and a trail system.
Goschen said those improvements also could be financed through this direct placement bond option.
Goschen said the parks board should be consulted regarding which of the potential improvements to the property should be included in the financing.
The annual payments also could be structured differently, such as interest only with a balloon payment, since they would be more than $100,000 less the current payments, she said.