Lookout Mountain, Ga., has been approved for a loan from USDA Rural Development to move forward with building a new city hall and fire station that will be the anchors for what will become the new Town Center. In addition to the municipal buildings, the development will have a commercial component including restaurants and shops.
A letter from the agency spelled out the requirements for getting financing in place and the buildings under construction. In a teleconference meeting Wednesday afternoon, USDA Community Programs Director Jack Stanek highlighted points in the letter that the council had to vote on for approving the loan resolution.
The loan is for $3,490,000 for the buildings that will be constructed on the 1.67-acre tract owned by the town. Any changes in the scope of the work will need USDA approval. The interest rate will be locked in when Mayor David Bennett and Mr. Stanek sign the contract. If the rate decreases between the loan approval and closing the loan, the town will get the lower rate. The current rate is 2.375 percent. The 40-year loan will be paid with an annual installment of $136,145. There is no penalty to pay off the debt sooner. This would not change the payment amount, it would only change the length of the term.
Some conditions included in the letter that the council has agreed to include that the town will have to establish a debt service account that is 10 percent of the annual payment which amounts to $13,614 each year for this loan. Another reserve account must be set up depositing the amount of 25 cents per square foot per year. This account will be for replacing short-lived equipment such as an HVAC system or carpeting.
The loan will be secured by a promissory note for the land the development will sit on, and an appraisal will be needed in the amount of at least $3,460,000. The USDA will also have a lien on furniture and fixtures in the buildings.
After a set number of years, a review will be done to see if the town could refinance the unpaid balance on its own with private financing. During construction, the town must agree to observe civil rights and age laws, disability standards must be met and confirmation to fire protection and safety codes. There must be an effort to meet equal opportunities laws by using small business contractors or a disadvantaged business enterprise. And, there must be adequate insurance to protect both the town and the USDA.
The town will have to obtain end-term financing from a local lender which will be used to pay off the
short-term construction loan. Because of the amount of the loan, in-depth audits will be needed and quarterly reports from the city for a number of years. All the conditions included in the letter must be met within 375 days.
A vote to approve the loan resolution security agreement was unanimous. The mayor and City Clerk Cindy Roberts were authorized to execute that and a number of other documents needed to get the process started.
“This is so great for our community,” said Mayor Bennett. He gave credit to past Mayor Tommy Gifford.
This project has been 13 years in the making and it started with Mayor Gifford’s vision after the fire that destroyed the buildings previously on the site. Mr. Gifford also has taken the reins with financing the project over the last six months.
“Thank you,” said Mayor Bennett, “We would not be here without you.”