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Thus the County was asked to fulfill its legal obligations to loan
the Authority the funds to pay these loans. The County, the
Authority and then banks have been in negotiations for several
months to extend and restructure the debt.
The County will borrow up to $40.5 million over a 4 year term, and
will be required to make interest-only payments during that term.
The interest rate is variable, but the initial rate is under 2.5%.
The $40.5 million will pay off the Harborside debt (totaling $31.09
million) and Poplars (totaling $5.09 million). The final $4.32
million the County will draw as needed, to pay for the carrying
costs associated with the Harborside condominiums with
structuring this debt, and the interest payments needed for the 4
year loan.
Where will the County get the money to pay back this
loan?
The County will assume sole responsibility for the Poplars Debt
and ultimately incorporate the Poplars Property into the Central
Kitsap Community Campus Project, with the potential to convert
its use in a way that will repay the $5.09 million. The remaining
debt will be paid through:
KCCHA/County Loans
Page 2 of 6
No; the County has not made any cuts in expenses or staff
because of this debt. The Board has been negotiating with the
Bank and the Authority to minimize the loan’s impact on the
County’s general operating fund. As noted above, there may be
debt service payments the County will need to make from its
general fund beginning in April 2013; the County will take every
step to plan and save now to avoid making cuts to absorb these
payments.
The County Board and the Authority Board members did seek
federal and state assistance with this debt. In response, the state
legislature did pass an increase in the existing recording
surcharge that could be used to sustain the Authority’s core
programs and in this way ensure the county’s or members
agencies’ own budgets are not tapped to make up any operating
shortfalls of the agency.
The Authority has made deep budget cuts, eliminating staff and
programs that are not fully supported by grants and program
revenues, begun liquidating properties and consolidating office
space. The Authority Board has convened a working finance
group to assist staff in developing a balanced 2009-2010
operating budget and it will develop financial policies to ensure
the Authority will be sustainable going forward.
KCCHA/County Loans
Page 5 of 6
The county will have the right to direct and manage the sale of
specific properties, including the Harborside Condominiums, the
Sinclair Lot and Tree Tops Apartments. Additionally, the county
will take ownership of the Poplars Building. The county intends to
retain a property manager with full authority to act on behalf of
and direction of the Board of County Commissioners and will
benefit from any and all rental agreements. The County will be in
full control over the sale price, timing and marketing of these
properties. Other than Poplars, the properties are vacant or in the
case of Tree Tops, the sale will have no impact to existing tenants.