Special Bd. of Aldermen — 12/20/2018 Page 21
Alderman Jette
The loans, but you used the ‘s’ again.
Mr. Cannon There are 2 loans, remember there is a Loan A and a Loan B? Loan B is in the amount, the
reason there is two is because Loan A is the amount of the net bond proceeds and Loan B is the amount of the
Tax Credit Equity and at the end of the 7 years, Loan B is forgiven. You still have to pay down Loan A which is
whatever the balance is on the bond at that time.
Alderman Jette
So Loan B after 7 years gets forgiven but during the 7 years we have to make payments on it?
Mr. Cannon Well the payments, no it is interest only and interest equals 0. For tax purposes and everything
else, it has got to sit there because you have to be obligated to perform before it can be forgiven. So it sits
there for 7 years.
Alderman Jette
Ok but when you say we have to pay interest only but the interest is 0, so we are not paying anything.
Mr. Cannon You are paying, usually there is a servicing fee that is paid on that loan and it represented as a
percentage of that loan. We are going to pay all of that upfront because we don’t want the rent to be different
from the bond payment. So that is all going to be capitalized, it is in the budget.
Alderman Jette
Ok so just for clarification, during the 7 year period?
Mr. Cannon Effectively zero.
Alderman Jette
Ok thank you. Director Cummings, | want to give you a chance to clarify because you said and I’m sure you
didn’t, when you said that originally we were talking about $4 million but you think $2 million would suffice, you
are not talking about the $4 million that is required to be raised prior to the bond being issued, | just want to
give you a chance to clarify that in case anyone listening hears that and thinks that is what you meant.
Mr. Cummings
Thank you, no what | was referencing explicitly was the $4 million dollars for an “endowment fund”. $4 million
dollars of private money needs to be raised period. That is understood, my point is though originally when this
was conceived, and the resolution as originally passed made is explicit that $4 million dollars for operating
costs or an endowment was necessary. At this point in time, a $4 million dollar operating reserve or
endowment would be unnecessary and | think you could have something much lower than that.
Alderman Jette
Ok but again the $4 million that has to be raised has not changed?
