Committee approves revised repayment terms, authorizes draw on letter of credit for Every Child Is Special loan

The Rapid City Legal & Finance Committee on Oct. 15 approved revised loan terms for Every Child Is Special, a childcare facility that received a city life-safety loan in 2021. The committee authorized the finance officer to draw on the facility’s existing letter of credit if a replacement is not secured before the current letter expires.

Why it matters: The loan originally reimbursed the facility for fire-suppression improvements. Staff and the city attorney said a letter of credit currently secures repayment and must be extended or replaced to avoid leaving the loan unsecured.

What the committee approved: Finance staff said the original loan was for $75,500. The revised schedule approved by the committee calls for an $8,000 payment by the end of the month and $1,200 each month thereafter until repaid. The owner said a replacement letter of credit would be available from Black Hills Federal Credit Union by Friday.

City Attorney Joel Landeen urged caution. “If that expires, you have an unsecured loan with somebody who has a history of not making their payments,” he said, adding that drawing on the letter of credit should be authorized if a replacement is not obtained.

Owner representation: An owner of the facility told the committee they had spoken to a bank contact at Black Hills Federal Credit Union and expected a new letter of credit to be ready by Friday. Finance staff said a new loan agreement would be prepared with the attorney’s office to memorialize the revised terms.

Next steps: The attorney’s office and finance staff will prepare a revised loan agreement reflecting the new schedule and the committee’s authorization to draw on the letter of credit if it expires without replacement.