Kathleen S. Margoles, Community and Economic Development Director

Andrew Thompson, Finance Director

Issue Statement: The City of Oakland Park's first and second Redevelopment Capital Program Loan payments are due on March 31, 2017 and September 30, 2017 respectively.

Recommended Action: Execute First Amendments to both Loan Agreements to provide for interest only payments for two years.

Broward County and the City of Oakland Park Community Redevelopment Agency (CRA) have been partners in the downtown redevelopment since 2007 through the Redevelopment Capital Program (RCP) and the Broward Redevelopment Program (BRP).   The Oakland Park CRA is a non-TIF CRA, meaning that it does not receive tax increment financing as a revenue source and instead relies City funding and County programs to provide the financial resources to promote redevelopment. 

The Redevelopment Capital Program functioned as a loan-to-grant program in which loans were offered to qualifying, non-TIF cities to provide funding for projects that would help promote redevelopment.  These loans can be converted to grants based on the amount of increase in the County's tax base that is generated by redevelopment within the CRA area.  No payments of principal or interest are due in the first five years of the loan.

The original interlocal agreement (ILA) on the Redevelopment Capital Program with the County was executed in June 2007. The City/CRA originally applied and was approved for $13 million in projects.  Four amendments to the ILA were subsequently executed that reduced the maximum amount of the loans to $4.9 million for 11 projects.  A listing of these projects is attached to this item as Exhibit A. 

As shown in Exhibit A, Loans I and II are due this fiscal year.  Loan I is in the amount of $1,390,050 and was executed on March 8, 2011 for the acquisition of property located at 3770-3776 NE 12 Ave.  Loan II is in the amount of $695,393 and was executed on September 7, 2011 for the acquisition of property located at 3148 NE 12 Ave.  The total value of the remaining loans is approximately $2.8 million. 

Earlier this month the City received two letters from the County, see attached as Exhibit D, providing an overview of the City's obligations relating to Loans I and II and their debt service schedules.  As shown in these documents, the first principal and interest payments on Loan I are due on March 31, 2017.  The first principal payment is $92,670 and the first interest payment is $42,422.  The next principal and interest payments are for Loan II and are due on September 30, 2017.  The first principal payment is $46,360 and the first interest payment is $19,177.39.

The City has requested a deferral on the payment of principal payments for another two years for Loans I and II.  This request was sent to the County and a copy of the request is attached as Exhibit E.  As discussed in the request, City staff has been assembling the documentation necessary for the loan to grant conversion for loans due this fiscal year, but many of the major investments are currently in progress or have yet to be recognized on the tax rolls. The deferral will provide the City with the opportunity to include these developments in the loan to grant conversion.  A similar request was made by Lauderhill and approved by the County. County staff advised that once the Amendments to the Loans are executed by the City/CRA Boards, the County intends to submit to the County Commission for approval on their meeting of March 28, 2017. 

Should the two amendments to the two loans be accepted, the principal for both loans will be paid over a thirteen year period commencing on March 31, 2019 for Loan I and September 30, 2019 for Loan II.  Interest payments for both loans will begin in accordance with the existing schedule, with initial interest payments beginning March 31, 2017 for Loan 1 ($42,422) and on September 30, 2017 for Loan 2 ($19,177.39).  Sufficient funding exists in the debt service fund this fiscal year to make these payments.

As discussed above, staff will continue to prepare materials needed to convert these loans to grants.