Leader Blues

Friday, July 11, 2008

TOP STORY > >Golf course funds uncertain

Leader staff writer

A $6.1 million interim loan that Sherwood’s Public Facilities Board approved last Monday is still not a sure thing.

The five-member board approved a proposal from Twin City Bank to loan the city the funds to purchase the 106-acre condemned North Hills Country Club provided the bank agreed to three changes.

The bank has amended and resubmitted its proposal.

The facilities board will meet again at noon this Monday in the Sherwood council chambers to reconsider the loan with the bank’s changes.

The bank, which was the only lending facility to submit a bid, offered the city what it called an interim loan of up to $6.1 million. The exact amount the city will need will be determined in court the end of July when a jury decides what the city should have to pay for the golf course it took under its eminent domain procedures.

Once an exact amount is deter mined and used, the facilities board could then get a bond issue to cover the loan or continue with the loan.

The bank said the loan money would be used to cover 100 percent of the cost of buying the North Hills property, plus pay off any legal fees related to the purchase.

The board would have a choice of interest rates, either 6.5 percent fixed or a variable rate at 1 percent above the prime rate, which currently would work out to 6 percent.

However, board members had three concerns with the bank’s proposal: The prepayment penalty, the length of the loan and the bank’s request that the city move some of its deposits to the bank.

The bank’s proposal called for a 24-month loan and required the board to pay a 2 percent penalty if the loan was paid off in less than 24 months.

The proposal also called for both the board and the city to move deposits to Twin City Bank.

The facilities board agreed that it could move its funds to the bank, but had no power to influence the city to do the same.

“We can ask them and they can say no,” chairman Linda Napper said.

Board member Jack Wilson made a motion to accept the financing provided that the bank would eliminate the prepay penalty, stretch the length of the loan from 24 to 36 months and not require the city to move its deposits to the bank.

LeeAnn Jennings and Annette Van Pelt, vice presidents with Twin City Bank who represented the bank at Monday’s bid opening, said they would take the board’s recommendation back to the bank.

Whether or not the bank agreed to the terms won’t become public until Monday’s meeting.

Tim Grooms, an attorney working with the city to acquire the defunct golf course property, has said the appraisals on the property run from just under $3 million to more than $5 million.