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TICC Bridge
Financing Financial Institutions contacted: •Sterling Bank •US Bank •Washington Federal Savings •Kitsap Bank •Thurston First Bank •Heritage Bank •Bank of America •Comm. Assoc. Bank/Mutual of Omaha Bank •US Department of Agriculture (USDA) Borrower •Treasure Island Country Club is the borrower •The individual lot owners are not the direct borrower, but they provide the “income and cash flow” to repay the loan •In order to close the loan, the lot owners must approve a Special Assessment to pay the loan balance and related expenses. This Special Assessment is pledged to repay the loan. Construction & Long Term Loan •Mutual of Omaha Bank Alternate Long term Loan discussion: •USDA •Heritage Bank with USDA Guarantee Mutual of Omaha Commitment Letter: • Up to $5 million for construction and long term( no prepayment fee) • Submit $3,500 for M of O legal fees • Return by February 28, 2011 • Attorneys proceed with loan documents and complete by April 15, 2011 • Non-revolving credit line converting to term loan • Term of Construction loan = 21 months Mutual of Omaha Commitment Letter (Cont.): • Within 22 months, principal balance will start amortization with 180 monthly payments • Rate during construction: Wall Street Prime Rate with a floor of 6% • Rate on term loan: Fixed for 60 months with rate on US Treasury 5 year constant maturity rate plus 4.58%. Floor of 6% Mutual of Omaha Commitment Letter (Cont.): • Collateral: First position of TICC future income including assessments • Rate subject to minimum deposit of $50,000 • Loan fee: .25% ($12,500) or additional $100,000 in deposits for term of loan • Term loan will annually re-amortize, but same maturity Mutual of Omaha Commitment Letter (Cont.): • May refund related costs of bridge to Asset Replacement (not interest) • Delinquencies of > 60 days shall not be more than 10% of lots • Attorney certifications of conditions (i.e. authorized to borrow, lien rights, etc.) • Provide evidence of insurance • Copy of bids for construction Mutual of Omaha Commitment Letter (Cont.): • Submit inspection reports with advancement of “draws” on loan • Standard conditions as in most Letters • Letter does not fully define Loan Agreement but more of “deal points” and a written understanding and loan documents will be the ultimate binding Agreement Special Assessment Payment: • Option #1 • Pay off, up front, the Special Assessment approved by the homeowners. • The Special Assessment will be at least the total amount of the Loan amount and will be developed once the final construction bid is determined. It is anticipated the Special Assessment will include the interest for the Construction loan and other potential expense if it exceeds the loan amount of $5 million. Special Assessment Payment (Cont.): • Option #2 • Special Assessment will be the same amount as Option #1 • Those lot owners that do not want to pay off the Special Assessment up front, may elect to pay in quarterly payments, PLUS, that rate of interest and expense the lender charges TICC. Cost estimates • $5 million ( unknown until bid awarded) • Interest on Construction loan: $237,500 • TICC monthly payment will be determined by remaining balance of loan after Special Assessment payments are made on the principal balance of the loan • Annually the 15 year loan will re-amortize based upon Special Assessment pay offs. Long Term Loan (consideration): • Each lot assessment can be paid off annually • Re-amortization of Principal annually • Payment for each lot owner remains the same except for interest expense which changes every 5 years. • Reserve account needs to be included for delinquent payments Time Line Estimate • February 5, 2011-Special Membership Meeting • February 17, 2011- Construction Bid opening • March 5, 2011- Board Selects Contractor • March 12, 2011- Membership Information Meeting • April 2, 2011- Special Membership meeting to approve Special Assessment • April 15, 2011- Complete Loan Documents to close loan. Home | Bridge | Board Minutes |