TIRZ #1 board amends the LGC loan: interest stops, $500,000 due by 2036, the rest can be forgiven

On February 9, 2023 staff told the TIRZ #1 board the LGC owed $2,037,092.50 on the $1,687,000 TIRZ #1 had lent for the retail space, because of accumulated interest and no payments, and that TIRZ #1 owed $1,182,244.58 on its loan from the City.^[1][4]

On a motion by Gary Jennings, seconded by Joseph Peterson, the TIRZ #1 board voted unanimously that interest stop accruing; that $500,000 of the $2,037,092.50 balance be due by 2036; that $1,037,092.50 be forgiven on a percentage-of-area basis as retail space is leased, with the already leased unit's share forgiven immediately; and that the remaining $500,000 be forgiven if 100% of the retail space is leased within five years, or else added to the amount due by 2036.^[1]

On February 15, 2023 the LGC board approved 'Amendment #1 to Loan Agreement' with TIRZ #1 by a 6-0 vote; the minutes record that the interest rate in the agreement was 3.74% and that under the amendment interest would stop accruing and amounts would be forgiven if certain criteria are met.^[2]

Assistant City Manager Laura Storrs: Staff's LGC pro forma presented to the TIRZ #1 board showed a needed lease rate of $13 per square foot with TIRZ loan repayment and about $3.55 with full forgiveness, before tenant finish-out; forgiving half the balance was described as bringing rates to about $8.^[1]

February 2023 TIRZ #1 minutes record that the parking garage did not then produce enough revenue to repay both the hotel occupancy tax debt and the City/TIRZ loans, that the LGC's priority had been the hotel occupancy tax debt, and that the City's loan to the LGC for retail finish-out had not been fully spent.^[1]

TIRZ #1 board members Dean Frigo and John Coffee; Andrew Freeman: Board chair Dean Frigo said he had concerns about the collectability of the loan and carrying it as a TIRZ asset; board member John Coffee said he was concerned the loan was made without an expectation of repayment; Assistant City Manager Andrew Freeman said the intention was that it would be repaid but continued lack of repayment pointed toward an inability to repay by 2036.^[1]

The FY2023 annual report states that during 2023 the TIRZ #1 board approved a loan forgiveness plan and that at September 30, 2023 the LGC loan stood at $1,903,296: $1,687,000 advanced plus $425,408 of accrued interest, less $209,112 forgiven. The FY2022 report had listed $350,093 of accrued interest and a $2,037,093 balance.^[3][4][5]

LGC minutes record the sale of the garage's retail space as complete on July 2, 2024. No fetched source states how the sale affected the TIRZ #1 loan balance, the forgiveness conditions, or the City's separate loan to the LGC. In August 2023, before the sale, the deputy city manager told the LGC board the sales price would cover all LGC debt on the property, including the TIRZ #1 note and the City loan; no source reports the actual payoff.^[6][7][8]