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DeForest CDA clears loan-purchase resolution tied to $3.5M village loan for Jefferson Square project
Summary
The CDA approved a resolution authorizing the chair and executive director to execute a loan-purchase agreement under which the Village would loan $3.5 million to the CDA to support a new development; if Jefferson Square sells with adequate proceeds, the CDA will buy out the Villageloan so the Village is made whole and an LLC developer bears tax consequences.
The Village of DeForest Community Development Authority voted to authorize execution of a loan-purchase agreement with the Village under which the Village would loan the CDA $3,500,000 to support construction of a new development. Staff described the agreement as the Village making a loan that the CDA would purchase (buy out) from the Village using proceeds from a sale of Jefferson Square when and if those proceeds are sufficient.
"This agreement basically says that if the CDA... the village is loaning the CDA $3,500,000 to construct the new, development," the staff member said, describing the proposed arrangement and its mechanics. Staff added that structuring the transaction as a loan and assigning repayment to the project LLC avoids creating taxable income for the Village from CDA contributions.
A motion (resolution 2026-503) to authorize the chairperson and executive director to execute the loan purchase agreement was made, seconded and then voted on; the Chair announced the motion carries. Staff said the village had authorized signatures at its prior meeting and that the CDA's execution is the counterpart action required to implement the agreement.
