CC - Item 5C - Promissory NoteE M F
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ROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: OLIVER CHI, CITY MANAGER l7'~"~"~'
DATE: OCTOBER 28, 2008
SUBJECT: RECOMMENDED TERMS TO BE USED IN A PROMMISSORY NOTE
PAYABLE TO THE CITY FOR AN ADVANCE MADE BY'THE CITY TO
RCDC ON OR ABOUT DECEMBER 5, 2008
SUMMARY
On June 10, 2008 the Rosemead Community Development Commission ("RCDC") held
a regular budget meeting. At that meeting, by a unanimous vote, the RCDC
Commissioners approved the budget totaling $5,544,450. Subsequently the RCDC
needs to borrow $3,055,000 for the purchase of property and secure the loan with a
note payable. This report is to present to .the Council, for review, the terms to be
considered for use in a promissory note to the City from the Rosemead Community
Development Commission.
STAFF RECOMMENDATION
Staff recommends that Council approve the terms listed below to be used in a
Promissory Note (Attachment A) made by the RCDC.
~N~I YSIS
At the regular .Rosemead Community Development Commission budget meeting on
-June 10, 2008, the RCDC Commission approved the FY2008-09 budget. Subsequent
to approving the budget it has become necessary to purchase real property known as
3250 Ivar Avenue, Rosemead, California 91770 (the "Property'). The RCDC does not
have sufficient cash to pay for the Property and desires to borrow the money from the
City. As security for the loan from the City, RCDC will execute a note payable to the
City on or about December 18, 2008. Below, for your review, are the terms
contemplated by staff to be used in the promissory note:
1. Date: On or about December 18, 2008
2. Principal: $3,055,000
3. Rate : 4.00% annually
4. Term: 20 Years
5. Payment: Annually, interest only; principal due December 5, 2028
See attached repayment schedule.
APPROVED FOR CITY COUNCIL AGENDA: O ~
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City Council Meeting
October 28, 2008
Page 2 of 2
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitte
Brian Sa
Assistant City Manager
Attachment A -Promissory Note
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PROMISSORYNOTE
$3,055,000 Date: December _, 2008
For value received, the undersigned Rosemead Community Development Commission (RCDC)
(the "Borrower"), at 8838 East Valley Boulevard, Rosemead, California 91770, promises to pay
to the order of the City of Rosemead, (the "Lender"), at 8838 East Valley Boulevard, Rosemead,
California 91770, (or at such place as the Lender may designate in writing) the sum of $3,055,000
with interest from December _, 2008, on the unpaid principal at the rate of 4.00% per annum.
The accrued interest only shall be payable in annual installments of $122,200 beginning
December_ , 2009, and continuing until December, 2028, (the "Due Date"), at which time the
remaining principal and interest shall be due in full. If the real property known as 3520 Ivar
Avenue, Rosemead, California 91770 (the "Property"), to be purchased with the proceeds of this
note, is sold by RCDC at any time prior to the Due Date the remaining principal and interest shall
be due in full on the close of escrow.
THE BORROWER UNDERSTANDS THAT THE PAYMENT OF THE ABOVE
INSTALLMENT PAYMENTS MAY NOT FULLY AMORTIZE THE PRINCIPAL BALANCE
OF THE NOTE, AND THEREFORE, A BALLOON PAYMENT MAY BE DUE ON THE DUE
DATE OR THE CLOSE OF ESCROW OF THE SALE OF PROPERTY, WHICHERVER
OCCURS FIRST.
. .All Payments on this Note shall be applied first in payment of accrued interest and:any remainder
in payment of principal.
This Note shall be construed in accordance with the laws of the State of California.
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Signed this day of December, 2008, at 8838 East Valley Boulevard, Rosemead,
California 9 ] 770.
Borrower:
Rosemead Community Development Commission ~
By:
John Tran, Chairperson
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CITY OF ROSEMEAD
Loan Repayment Schedule
4.00%
Outstanding Principal Interest Total
Principal Payments Payments Payments
12/5/2008 $ 3,055,000 - .,
2009 3,055,000 - 122,200 122,200
2010 3,055,000 - 122,200 122.,200
2011 3,055,000 - 122,200 122,200
2012- 3,055,000 - 122,200 122,200
2013 3,055,000 - 122,200 122,200
2014 3,055,000 - 122,200 122,200
2015 3,055,000 - 122,200 122,200
2016 3,055,000 - 122,200 122,200
2017 3,055,000 - 122,200 122,200
2018 3,055,000 - 122,200 122,200
2019 3,055,000 - 122,200 122,200
2020 3,055,000 - 122,200 122,200
2021 3,055,000 - 122,200 122,200
2022 3,055,000 - 122,200 122,200
2023 3,055,000 - 122,200 122,200
2024 3,055,000 - 122,200 122,200
2025 3,055,000 - 122,200 122,200
2026 3,055,000 - 122,200 122,200
2027 3,055,000 - 122,200 122,200
2028 3,055,000 3,055,000 122,200 3,177,200
$ 3,055,000 $ 2,444,000 $ 5,499,000