Wednesday, November 25, 2009

URA debt refinancing moves forward

Plan calls for consolidating multiple loans into one


By TREVON MILLIARD
Express Staff Writer

Ketchum's Urban Renewal Agency has hired a Los Angeles-based financial services firm to refinance its $5.56 million in debt. The process could be completed by January.

The outstanding debt comes from a $1 million loan from former City Councilman Steve Shafran to help construct the first two phases of the Fourth Street enhancement project, a $2 million loan from the Idaho Housing and Finance Association for the purchase of property at the corner of Second Street and Washington Avenue, and a $2.56 million loan from Mountain West Bank for the purchase of the Sun Valley Road building that now houses the Sun Valley-Ketchum Chamber & Visitors Bureau.

Refinancing consists of swapping an old loan for a more favorable loan. The new loan pays off the old loan and is with a traditional financial institution, such as a bank, instead of with a private party.

Wedbush Mogran Securities Managing Director David Ulbricht told the URA board—which consists of Ketchum City Council members—last week that he's looking to lump the three loans into one loan and expects the interest rate to be 5 percent.

"I was surprised to hear him say that," City Administrator Gary Marks said in an interview. "That was encouraging."

The current loans have interest rates varying from 4 to 6 percent and are with three different groups. Marks said the refinanced loans would be with a bank or with several banks if they can't be lumped into one.

But one loan would be preferable.

"With one lump, we'll be able to leverage a better overall deal because it's a larger amount," Marks said.

But, Marks said, a lot is still up in the air at this point.

"There are so many ins and outs with this thing," he said. "It's hard to pinpoint."

However, Ulbricht gave the URA reassurance that when the refinancing plan is complete, the URA will have enough money coming in annually to cover the loan payments, and then some.

Urban renewal agencies receive funding from tax revenue generated by increased property values in the URA district.

Ulbricht said Ketchum's URA is in the "unique situation" of having increased tax revenue during the current poor economy.

Ketchum's URA went from earning $265,300 in the 2007-08 fiscal year to $460,300 in the 2008-09 fiscal year. The URA estimates $485,000 in tax revenue to be collected this fiscal year, which began Oct. 1 and will end Sept. 30.

Councilman Charles Conn told Ulbricht his plan sounded good. Now, it just needs to happen.

"As they say in 'Star Trek,' make it so," Conn said.

Trevon Milliard: tmilliard@mtexpress.com




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