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Committee recommends refinancing HUD loan to cut annual servicing costs for 12 childcare centers
Summary
The committee advanced a resolution authorizing negotiations to refinance a HUD loan through the Low Income Investment Fund up to $1.925 million; HSA said refinancing would reduce annual servicing costs by about $370,000 but extend payments and increase total cost over five years.
The Budget & Finance Committee voted to move forward a resolution that would authorize the Human Services Agency to negotiate refinancing of a Department of Housing and Urban Development loan through the Low Income Investment Fund.
Phil Arnold, Deputy Director for Finance and Administration at HSA, told the committee the existing HUD loan has about two years left and carries an interest rate around 8.5 percent, producing roughly $850,000 in annual servicing costs. The refinancing proposal would stretch payments to five years at roughly 6.5 percent interest and cut annual servicing by about $370,000. "Reducing our annual cost by $370,000 will cost us about $150,000 more over the 5-year lifespan, but it does cut our annual costs about in half," Arnold said, and noted the loan supports 12 childcare centers whose annual costs would be similarly reduced.
The committee voted to move the item to the full board with a recommendation in favor of proceeding with negotiations and with maximum parameters set (6.5% over 5 years). Committee members thanked staff and closed public comment; no dissenting votes were recorded at committee recommendation stage.
Next steps: HSA was authorized to proceed with negotiations under the stated parameters and to return with final agreements for board approval.
