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What the land contract means for county finances: $3 million sale, interest tied to 5-year Treasury and a 2031 balloon
Summary
County counsel said the sale will be structured as a land contract with a $300,000 down payment, $2.7 million financed, interest indexed to the five-year Treasury (4.33% at the meeting) and a balloon payment due 06/30/2031; supervisors debated the county's exposure if the buyer defaults.
County counsel presented concrete financing terms at the Washington County Board's July 21 special meeting, saying the negotiated sale price is $3,000,000 with $300,000 due at execution and $2,700,000 financed. The contract amortizes payments over 20 years with a balloon payment due no later than June 30, 2031, and annual interest resets tied to the five-year U.S. Treasury.
Brad Stern told the board the five-year Treasury rate "as we sit here tonight" was 4.33%, and he estimated the monthly payment at about $16,500 under that index, with roughly $9,180 in interest and $7,318 in principal. He also described default remedies, including acceleration of the unpaid balance and the option for strict foreclosure; the contract imposes an 8% per annum interest rate on defaults.
Stern also described an early-payoff incentive schedule that reduces the purchase price if the buyer pays before the 2031 maturity date: a $100,000 discount if paid between 06/30/2027 and 06/30/2028, then $75,000, $50,000 and $25,000 in successive years. Supervisor Gallitz argued the board should consider whether the county is accepting extra risk and whether the sale price sufficiently compensates taxpayers for that risk. County counsel responded that the structure preserves county protections while allowing the buyer to occupy the building for the upcoming school year.
