Council briefed on request to subordinate impact fee for Stuart/Stewart Gardens refinancing

Staff presented a refinancing request related to the property identified in the record as Stuart (also referenced as Stewart/Steward) Gardens at 2000 Frost Lane and said the owner is cashing in bonds and refinancing with a bank loan and a Fannie Mae loan.

"This is a project, Stuart Gardens, at 2000 Frost Lane, which has an existing pilot, and the pilot is not being changed," staff said. The presentation said both the city impact fee and the PILOT were approved in 2007 and extend to 2047. Staff described a resolution before the council to approve subordination of the city impact fee as part of the refinancing; the same measure will appear on the Industrial Development Agency agenda on Aug. 25.

City counsel explained what subordination and estoppel mean in this context. "Subordination means that the private loans would come first if they are ever called upon for a default or foreclosure," counsel said, adding that if a foreclosure occurs the PILOT could be extinguished and the property become subject to full real-property taxes while the city would retain its claim for the impact fee. Counsel also said estoppel allows the city to permit the lender to take priority and that the underlying obligations and city protections remain unchanged.

No formal council vote on the subordination resolution was recorded during the Committee of the Whole; staff said the IDA would consider a related measure on Aug. 25 and the matter will return for formal action according to the usual schedule.