MARIETTA — Marietta Redevelopment Corporation member Floyd Northcutt this week balked at the terms of the MRC’s line of credit with Bank of North Georgia, going so far as to consider defaulting on the loan.
The MRC has a $4.3 million line with the bank, of which it has spent $4.1 million on property near the Marietta Conference Center.
To date, the MRC has paid the bank about $500,000 in interest payments, MRC Chairman Ron Francis said.
Francis told the MRC board on Wednesday that the bank had agreed to continue the line of credit for another year at a rate of prime plus one with a floor of 6¼, raising the monthly payment to about $22,500 from the current $20,000. The floor is currently five, he said.
The bank also wanted a $20,000 fee for the renewal.
Northcutt asked how much interest the MRC paid the bank last year, to which Francis said $200,000.
“So they got $200,000 and now they want to charge us a fee to loan us some money again?” Northcutt said, asking why the MRC couldn’t negotiate a better deal.
“We probably don’t have a whole lot of negotiating power right now,” Francis said.
Northcutt suggested shopping the loan elsewhere, but Francis said an appraisal of the MRC’s property would likely show that it’s valued less than what the MRC owes the bank.
“What if we told the bank we want to quit? I wonder what they would do then,” Northcutt said.
Francis said the MRC has two choices.
“Either we renew the thing or we say, ‘No, we’re not going to do it,’ and they come back to you and say, ‘OK, we have to foreclose on the property,’” said Francis, whose contacts at Bank of North Georgia are Kelly Maxwell and Mary Karras.
A condition of renewing the line of credit is for the property to be appraised, something MRC member Ray Buday said “probably won’t be pretty.”
“I guess the question is do we want to say we give up,” Northcutt said. “Nobody wants to say that, but is it a smart thing to do?”
Councilman Grif Chalfant, who serves as the City Council liaison to the MRC, is opposed to admitting defeat.
“We’ve got several years worth of cash, and we’ve got property to sell. I don’t understand that attitude at all,” Chalfant said.
Francis said the MRC has $552,228 left in cash, which gives it two more years of interest payments to the bank.
Better to spend that money on interest payments than lose the property altogether, Chalfant said.
“You fight until you can’t fight anymore,” Chalfant said. “Then you throw in the towel. But to me, at this stage, it doesn’t make sense to give up.”
The MRC board ultimately decided to renew the loan in a unanimous vote.
The MRC is a tax-exempt organization formed by the Council in 2003. In 2006, it received $2.1 million from the city to be used as a land-buying fund. It used that money to secure a loan from the bank and began buying up property across from conference center on Powder Springs Street, where it has spent more than $4 million. The plan was to turn over the 11-acre tract to a developer, something it has been unable to do due to the economy.
Francis also brought up Mayor Steve Tumlin’s latest idea about expanding the City Cemetery over one street from Cemetery Street to Hedges Street, which might entail the city purchasing some of the MRC-owned lots. Francis suggested that the MRC wait to hear what City Manager Bill Bruton’s feasibility study of the idea reveals. After the meeting, Tumlin smiled as he looked at Northcutt, joking that Northcutt would be the first of the MRC members to make a “stop” at the cemetery.