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Council discusses early payoff of city building mortgage after lender offers $50,000 reduction
Summary
Council members reported negotiations with the building's mortgage holder, who offered a $50,000 principal reduction; council discussed applying available reserve ('splash') funds toward an early payoff and requested written confirmation of the lender—s offer.
Pendergrass City council members discussed a possible early payoff of the mortgage on a city-owned building after the lender, identified in the meeting as "Woody DeLong, UK Partners," offered a $50,000 principal reduction.
Speaker 1 said the mortgage balance was currently at about $414,000 with an interest rate of roughly 3% and that the lender had proposed to "knock $50,000 off" and apply remaining payments to principal. Speaker 1 said the city had approximately $200,000 in splash funds that could be used toward the payoff and that paying the loan sooner could save more than $100,000 in interest over the loan term. Speaker 3 asked what "early payoff" would mean and whether the offer would be documented in writing; Speaker 1 said negotiations and legal review would follow and that any agreement would be formalized.
Why it matters: an early payoff or principal reduction could reduce long-term interest costs and change the city—s debt profile; using reserve funds for early payoff would also affect the city—s available operating reserves.
Next steps: Speaker 1 said negotiations will continue and legal documentation will be obtained; the council did not vote on any payoff at this meeting.
