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Home My WebLink About2002 04 02 Regular A Credit Enhancement Measures for the Wyman Fields Housing Project 040202 Reg AddOn "A" Wyman Fields COMMISSION AGENDA ADD-ON ITEM A Consent Information Public Hearin2 Re2ular X April 2. 2002 Meeting MGR.(}2N\, /Dept. Authorization REQUEST: City Manager requesting the City Commission to consider credit enhancement measures for the Wyman Fields Housing Project. PURPOSE: This agenda item is needed to determine if the Commission desires to enhance its financial position in the Wyman Fields project in order to minimize any losses that might occur in its second mortgage position in the project. CONSIDERA TIONS: On December 10, 200 II staff provided the Commission with a progress report on the Wyman Fields Housing Project noting that the project was fulfilling its public purpose objectives. 1. Reducing crime. 2. Increasing property values. 3. Improving the aesthetics of the area. Additionally, based upon a worst case scenario of completion of sales occurring in July, it was estimated that the city would receive the entire $918,752 rehab loan back. Today we have the following status: Units closed 28 Units under contract 13 Units not committed 11 Total 52 Closings have continued to be steady but problematic due to the lack of timeliness on the part of the lenders. However, Wyman Fields still believes they can complete closing by July 2002. 1 040202 Reg AddOn "A" Wyman Fields We will provide new scenarios at the meeting indicating extended period of closing beyond July. These scenarios include that losses could occur due to extended interest payments. The city has two alternatives. Enter into a 99.5 participation agreement with the bank in the 15t mortgage. This would result in all but .5% of all principal and all interest being paid to the city. The bank would retain a fractional portion of the first mortgage allowing it to continue to service the loan. The second alternative would be to buyout the banks first mortgage in total. In this case the city would be required to service the loan. The question is obviously how much risk is eliminated by the buyout alternatives. Our analysis is not completed. However, this information will be made available at the meeting. FUNDING: To be presented at Commission meeting. RECOMMENDATION: It is recommended that the Commission determine if its desires to enhance its security in the WYman Fields Housing Project by purchasing a participation in the first mortgage or buying the first mortgage in total. ATTACHMENTS: To be provided at Commission Meeting. COMMISSION ACTION: 2 Date: 4/2/02 The following Document was handed out on 4/2/02. :( City of Winter Springs Memo To: Mayor and Commissioners From: City Manager r-- Date: 04/01/02 Re: Moss Cove Housing Project - Agenda Item Add-On "A" Based upon the three attached scenarios, it appears that the City will receive the following funds: Scenarios Assumption Amount Due Amount Loss Received A 4 Units' Per' '$91'7;899- , . , . , '$917,860 ., $39 ... . ..... Month B 3 Units Per $917,899 $911,794 $6.105 Month C 2 Units Per $917,899 $902,118 $15,781 Month The deficit under the scenarios can be recovered by a pledge against the sale of two units on Lori Anne Lane owned by Wyman Fields and a claim on approximately $30,000 owed to Wyman Fields by the County. This can be accomplished by amending the City's Second Mortgage to include the two units and the funds owed to Wyman Fields by the County. . Page 1 " -, ~' If the City should choose to enter into a 99.5% participation in the First Mortgage, the following gains would be realized under the three scenarios: Scenarios Assumption Amount Due Amount Gain Received A 4 Units Per $917,899 $939,722 $21 ,823 Month B 3 Units Per $917,899 $939,723 $21 ,824 Month C 2 Units Per $917,899 $940,157 $22,258 Month The question is this: Is it worth putting an additional $986,045 at very minimal risk to participate in the First Mortgage in order to prevent a potential loss of less than $16,000 or gaining $22,000 on a project of this size, especially in light of the fqct that the loss can be overcome by extending the Second Mortgage to the other two properties and funds owed to Wyman Fields by the County? Additionally, we need to remember that the loan to the City is comprised of $909,655 in principal and $8,244 in interest. Therefore, a loss of principal is unlikely and minimal at worst. Alternative A Enter into a participation agreement with the Bank by purchasing 99.5% of the note or $986,045. This would assure full payment of the loan from the principal repayments plus 9% interest charged by the Bank and a possible gain of $22,000. Alternative B Do not enter into a participation agreement. We could lose a small amount of funds from repayment of the units due to extended interest payments. However, this loss could be recaptured from proceeds of the sale of the additional properties from Wyman Fields and from capturing funds owed to Wyman Fields by the County if we extend our Second Mortgage over these assets. . Page 2 CITY OF WINTER SPRINGS LOAN ANAL YSIS SCENARIO - KEEP BANK IN PLACE, CLOSE 4 UNITS PER MONTH April 2002 May 2002 June 2002 July 2002 Aug 2002 Sept 2002 Oct 2002 26 -4 22 24 -4 20 $ 299,600 $ 299,600 $ 20,000 $ - $ 204,000 $ 53,004 $ 17 ,668 $ 294,672 $ 4,928 $ 991,000 $(204,000) $ 787,000 $ 635,209 $ (53,004) $ - $ 582,205 $ - $ 17,668 $ (7,432) $ - $ 10,236 A 22 18 14 10 6 2 -4 -4 -4 -4 -4 -2 18 1,4 10 6 2 0 20 1.6 12 8 4 -4 -4 -4 -4 -4 16 12 8 4 0 $ 299,600 $ 299,600 $ 299,600 $ 299,600 $ 299,600 $ 130,000 $ 299,600 $ 299,600 $ 299,600 $ 299,600 $ 299,600 $ 130,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 10,000 $ - $ - $ - $ - $ - $ - $ 204,000 $ 204,000 $ 204,000 $ 175,000 $ - $ - $ 53,004 $ 53,004 $ 70,672 $ 99,672 $ 274,672 $ - $ 17,668 $ 17 ,668 $ - $ - $ - $ - $ 294,672 $ 294,672 $ 294,672 $ 294,672 $ 294,672 $ 10,000 , $ 4,928 $ 4,928 $ 4,928 $ 4,928 $ 4,928 $ 120,000 I $ 787,000 $ 583,00q $ 379,000 $ 175,000 $(204,000) $(204,000) $(204,000) $(175,000) $ 583,000 $ 379,000 $ 175,000 $ - $ 582,205 $ 529,201 $ 476,197 $ 405,525 $ 305,853 $ 39 $ (53,004) $ (53,004) $ (70,672) $ (99,672) $(274,672) $ - $ - $ - $ - $ - $ (31,142) $ - $ 529,201 $476,197 $ 405,525 $ 305,853 $ 39 $ 39 $ 10,236 $ 22,002 $ 35,297 $ 32,455 $ 31,142 $ 17,668 $ 17,668 $ - $ - $ - $ (5,902) $ (4,372) $ (2,842) $ (1,312) $ - $ - $ - $ - $ - $ (31,142) $ 22,002 $ 35,297 $ 32,455 $ 31 ,142 $ - 39 BANK Bank Units Beginning of the Month note Units Closed During Month Bank Remaining Units After Closing CITY City Units Beginning of the Month note Units Closed During Month City Remaining Units After Closing SALES INFLOW Gross Revenues From Sales ($74,900/per unit for Kristi & Rhoden & $65,OOO/per unit for Lori Ann) TOTAL SALES INFLOW SELLERS OUTFLOW Selling Cost @ $5,000/unit Interest Expense being paid by City - see below Principal Reduction - Bank @ $51,000/unit Principal Reduction - City @ $17,668/unit un1il1st mort is gone (1st release is escrowed for int by bank until $34k cushion) Bank escrow Citys Principal Reduction for Wymans Interest TOTAL OUTFLOW NET TO SELLER DEBT BALANCES Beginning Debt Level - Bank less Principal Reduction - Bank Ending Debt Level - Bank Beginning Debt level - City Less Principal Reduction - City less Principal Reduction - City from release of escrow Ending Debt level - City ESCROW Escrow Balance Beginning of the Month Additions - City's Principal Portion on First Sale of Month Reductions - Interest Expense @ 9% Paid to Bank Reductions - Payout to City Escrow Balance End of the Month NOTE: Banks First Mortgage is over 54 units: 32 on Kristi Ann 20 on Rhoden lane 2 on Lori Ann lane $ 149,568 Wyman Profit B $ C existing loan balance have no more claim on units $ (21,862) total Interest City's Second Mortgage is over 52 units: 32 on Kristi Ann 20 on Rhoden Lane ~..., A=Per Bill lloyd's schedule at Peoples Bank less 3/29/2002 proceeds B=$670,545 @ 3/28/2002, 2 to close 3/29/2002 get $35,336 C=Nothing in escrow at 4/1/2002 per BilllIoyd at Peoples Bank 26 Units sold as of 3/28/2002 2 scheduled to close 3/29/2002 CITY OF WINTER SPRINGS LOAN ANAL YSIS SCENARIO - KEEP BANK IN PLACE, CLOSE 3 UNITS PER MONTH April 2002 May' 2002 June 2002 Julv 2002 Aug 2002 Sel2t 2002 Oct 2002 Nov 2002 Dee 2002 26 n -3 23 24 n -3 21 $ 224,700 $ 224,700 $ 15,000 $ - $ 153,000 $ 35,336 $ 17,668 $ 221,004 $ 3,696 $ 991,000 $(153,000) $ 838,000 $ 635,209 $ (35,336) $ - $ 599,873 $ - $ 17,668 $ (7,432) $ - $ 10,236 A 23 20 17 14 11 8 5 2 -3 -3 "3 -3 -3 -3 -3 -2 20 17 14 11 8 5 2 0 21 18 15 12 9 6 3 -3 -3 -3 -3 -3 -3 -3 18 15 12 9 6 3 0 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $130,000 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $ 224,700 $130,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 10,000 $ - $ - $ - $ - $ - $ - $ - $ - $ 153,000 $ 153,000 $ 153,000 $ 153,000 $ 153,000 $ 73,000 $ - $ - $ 35,336 $ 35,336 $ 35,336 $ 53,004 $ 53,004 $ 133,004 $ 206,004 $ - $ 17,668 $ 17,668 $ 17,668 $ - $ - $ - $ - $ - $ 221,004 $ 221,004 $ 221,004 $ 221,004 $ 221,004 $ 221,004 $ 221,004 $ 10,000 $ 3,696 $ 3,696 $ 3,696 $ 3,696 $ 3,696 $ 3,696 $ 3,696 $120,000 $ 838,000 $ 685,000 $ 532,000 $ 379,000 $ 226,000 $ 73,000 $ - $(153,000) $(153,000) $(153,000) $(153,000) $(153,000) $ (73,000) $ - $ 685,000 $ 532,000 $ 379,000 $ 226,000 $ 73,000 $ - $ - $ 599,873 $ 564,537 $ 529,201 $ 493,865 $ 440,861 $ 387,857 $ 254,853 $ (35,336) $ (35,336) $ (35,336) $ (53,004) $ (53,004) $(133,004) $(206,004) $ - $ - $ - $ - $ - $ - $ (42,744) $ 564,537 $ 529,201 $ 493,865 $ 440,861 $ 387,857 $ 254,853 $ 6,105 $ 6,105 $ 10,236 $ 21,619 $ 34,150 $ 47,828 $ 44,986 $ 43,291 $ 42,744 $ 17,668 $ 17,668 $ 17,668 $ - $ - $ - $ - $ (6,285) $ (5,137) $ (3,990) $ (2,842) $ (1,695) $ (547) $ - $ (27,929) $ - $ - $ - $ - $ - $ - $ (42,744 $ 21,619 $ 34,150 $ 47,828 $ 44,986 $ 43,291 $ 42,744 $ - BANK Bank Units Beginning of the Month ote Units Closed During Month Bank Remaining Units After Closing CITY City Units Beginning of the Month ote Units Closed During Month City Remaining Units After Closing SALES INFLOW Gross Revenues From Sales ($74.900/per unit for Kristi & Rhoden & $65,000/per unit for Lori Ann) TOTAL SALES INFLOW SELLERS OUTFLOW Selling Cost @ $5,000/unit Interest Expense being paid by City - see below Principal Reduction - Bank @ $51 ,OOO/unit Principal Reduction - City @ $17,668/unit until 1st mort is gone (1st release is escrowed for int by bank until $34k cushion) Bank escrow Citys Principal Reduction for Wymans Interest TOTAL OUTFLOW NET TO SELLER DEBT BALANCES Beginning Debt Leyel - Bank Less Principal Reduction - Bank Ending Debt Level - Bank Beginning Debt Level - City Less Principal Reduction - City Less Principal Reduction - City from release of escrow Ending Debt Level - City ESCROW Escrow Balance Beginning of the Month Additions - City's Principal Portion on First Sale of Month Reductions - Interest Expense @ 9% Paid to Bank Reductions - Payout to City Escrow Balance End of the Month NOTE: Banks First Mortgage is over 54 units: 32 on Kristi Ann 20 on Rhoden Lane 2 on Lori Ann Lane $ 149,568 Wyman Profit B existing loan balance have no more claim on units C total interest City's Second Mortgage is over 52 units: 32 on Kristi Ann 20 on Rhoden Lane A=Per Bill lloyd's schedule at Peoples Bank less 3/29/2002 proceeds B=$670,545 @ 3/28/2002, 2 to close 3/29/2002 get $35,336 t., C=Nothing in escrow at 4/1/2002 per BilllIoyd at Peoples Bank 26 Units sold as of 3/28/2002 2 scheduled to close 3/29/2002 CITY OF WINTER SPRINGS LOAN ANAL YSIS SCENARIO - KEEP BANK IN PLACE, CLOSE 2 UNITS PER MONTH BANK Bank Units Beginning of the Month Units Closed During Month Bank Remaining Units After Closing CITY City Units Beginning of the Month Units Closed During Month City Remaining Units After Closing SALES INFLOW Gross Revenues From Sales ($74,900/per unit for Kristi & Rhoden & $65,OOO/per unit for Lori Ann) TOTAL SALES INFLOW SELLERS OUTFLOW Selling Cost @ $5,OOO/unit Interest Expense being paid by City - see below Principal Reduction - Bank @ $51.000/unit Principal Reduction - City@ $17,666/unit until 1st mort is gone (1st release is escrowed for int by bank until $34k cushion) Bank escrow Citys Principal Reduction for Wymans Interest TOTAL OUTFLOW NET TO SELLER DEBT BALANCES Beginning Debt Level, Bank Less Principal Reduction - Bank Ending Debt Level, Bank Beginning Debt Level - City Less Principal Reduction, City Less Principal Reduction, City from release of escrow Ending Debt Level - City ESCROW Escrow Balance Beginning of the Month Additions, City's Principal Portion on First Sale of Month Reductions. Interest Expense @ 9% Paid to Bank Reductions, Payout to City Escrow Balance End of the Month NOTE: Banks First Mortgage is over 54 units: 32 on Kristi Ann 20 on Rhoden Lane 2 on Lori Ann Lane A=Per 6i11l1oyd's schedule at Peoples 6ank less 3/29/2002 proceeds 6=$670,545 @ 3128/2002, 2 to close 3/29/2002 get $35,336 C=Nothing in escrow at 4/1/2002 per BilllIoyd at Peoples Bank ,. &ui1.2f)!ll 26 n ,2 24 24 n -2 22 $ 149.600 $ 149,600 $ 10.000 $ . $ 102,000 $ 17,666 $ 17,668 $ 147,336 $ 2.464 $ 991.000 $ (102.000) $ 889.000 $ 635,209 $ (17,668) $ $ 617,541 $ $ 17 ,668 $ (7,432) $ $ 10,236 Max.2QQ2~.IJJ&.2QQ2Au!z..2QQ2SML2QQ2~~~J.an..2QQJEM.2QQJ.MaL2QQ1&uiL2QQJ A Z4 22 20 18 16 14 12 10 8 6 4 2 -2 -2 -2 .2 -2 -2 -2 -2 .2 -2 -2 -2 22 20 18 16 14 12 10 8 .6 4 2 0 22 20 16 16 14 12 10 6 6 4 2 -2 -2 -2 ,2 ,2 :2 -2 -2 -2 -2 -2 20 18 16 14 12 10 8 6 4 2 0 $ 149.800 $ 149,800 $ 149.600 $ 149,800 $ 149.800 $ 149,600 $ 149.600 $ 149,600 $ 149,800 $ 149,800 $ 149,800 $ 130,000 $ 149.800 $ 149,800 $ 149.800 $ 149,600 $ 149.800 $ 149,800 $ 149,600 $ 149,800 $ 149,800 $ 149,800 $ 149,800 $ 130.000 $ 10.000 $ 10.000 $ 10,000 $ 10,000 $ 10,000. $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10.000 $ - $ - $ . $ - $ - $ . $ . $ . $ - $ - $ - $ - $ 102,000 $ 102.000 $ 102,000 $ 102,000 $ 102,000 $ 102,000 $ 102,000 $ 102,000 $ 73,000 $ - $ $ - $ 17 ,666 $ 17.668 $ 17 ,668 $ 35,336 $ 35.336 $ 35,336 $ 35,336 $ 17 ,668 $ 64,336 $ 137,336 $ 137.336 $ - $ 17 ,668 $ 17 ,668 $ 17.668 $ $ - $ - $ $ 17 ,668 $ - $ $ $ $ 147,336 $ 147,336 $ 147.336 $ 147,336 $ 147.336 $ 147,336 $ 147,336 $ 147,336 $ 147,336 $ 147,336 $ 147.336 $ 10,000 $ 2,464 $ 2,464 $ 2.464 $ 2,464 $ 2,464 $ 2,464 $ 2,464 $ 2,464 $ 2,464 $ 2,464 $ 2,464 $ 120.000 $ 689,000 $ 787.000 $ 665,000 $ 583.000 $ 481.000 $ 379,000 $ 277.000 $ 175,000 $ 73.000 $ (102,000) $ (102.000) $ (102,000) $ (102.000) $ (102.000) $ (102,000) $ (102,000) $ (102.000) $ (73,000) $ 767,000 $ 665.000 $ 583,000 $ 481.000 $ 379.000 $ 277 ,000 $ 175.000 $ 73,000 $ - $ 617.541 $ 599.873 $ 562.205 $ 564,537 $ 529.201 $ 493,865 $ 456,529 $ 423.193 $ 405.525 $ 341.189 $ 153.117 $ (17.668) $ (17,668) $ (17.666) $ (35.336) $ (35.336) $ (35.336) $ (35,336) $ (17.666) $ (64,336) $(137,336) $(137,336) $ $ $ $ $ $ - $ - $ $ $ (50,736) $ - $ 599,873 $ 582,205 $ 564,537 $ 529,201 $ 493,665 $ 458,529 $ 423,193 $ 405,525 $ 341.189 $ 153,117 $ 15,781 $ 15,761 $ 10,236 $ 21,237 $ 33,002 $ 47.828 $ 43,456 $ 39.848 $ 37,006 $ 34,928 $ 51,284 $ 50,736 $ 0 $ 17 .666 $ 17,668 $ 17.668 $ $ $ - $ $ 17,668 $ . $ - $ $ (6,667) $ (5,902) $ (5,137) $ (4,37Z) $ (3,607) $ (2,842) $ (2,077) $ (1,312) $ (547) $ - $ - $ (36,039) $ $ - $ - $ $ $ $ - $ $ - $ (50.736) $ - $ 21,Z37 $ 33,002 $ 45,533 $ 43,456 $ 39,848 $ 37.006 $ 34,928 $ 51.284 $ 50.736 $ 0 $ 0 " " ote ote $ 149,568 Wyman pro1t 6 C ex/sting loan balance have no more claim on units total Interest City's Second Mortgage is over 52 units: 32 on Kristi Ann 20 on Rhoden Lane 26 Units sold as of 3/28/2002 2 scheduled to close 3/29/2002