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Council ratifies emergency tax payment to protect city's security interest in North Point/Eagle Theater loan
Summary
Council ratified a previously made emergency payment (approximately $96,000 outstanding on the city loan) to protect the city's security interest in the North Point/Eagle Theater redevelopment loan while the property remains in bankruptcy; staff said the payment prevented a tax sale that would have vacated the city's lien.
City staff asked the council to ratify an emergency payment of real estate taxes to preserve the city's security interest in property tied to redevelopment of the North Point/Eagle Theater. According to staff, the city had previously provided subsidies and a revolving loan to support redevelopment; approximately $96,000 remained owed under that loan and the bank did not make the tax payment on schedule.
Staff said the payment was made to prevent a tax sale that could have extinguished the city's lien. The property owner/entity (Pupil City LLC or Beautiful City LLC referenced in the discussion) is in bankruptcy, and staff said foreclosure proceedings may be stayed until the federal bankruptcy matter resolves. The presenter told council the payment followed attorney recommendation to protect the city's financial interest.
Council ratified the payment on a roll-call vote. Staff said the city, being in first lien position, expects to be repaid or could end up with the building and pursue reopening or finding a new operator.
Eric Gugelman was mentioned as the primary beneficiary of the LLC associated with the project; staff noted a court hearing had been postponed until February.
