But Mayor Steve Tumlin wants to know more before he lends his
Bank of North Georgia has asked Marietta to guarantee $225,000 or 18 months of interest payments.
In 2006, the city gave $2.1 million to the Marietta Redevelopment Corp., a tax-exempt nonprofit formed by the City Council. The MRC used that seed money to secure the bank loan. That money was used to buy blighted duplexes off Power Springs Street across from the Hilton Marietta Conference Center.
About eight acres of vacant lots and properties with aging houses were purchased for $4 million.
Chalfant said the fear is the city is still feeling effects of the Great Recession and faces foreclosure on property if the loan doesn’t remain in good standing.
“There’s a concern right now,” Chalfant said. “If you don’t pay the $220,000, I think the bank will take it back.”
The bank’s request for the city to guarantee some interest payments comes as the city plans to ask residents next week to vote on a $68 million bond that would also be spent on buying and tearing down aging apartments to set the stage for redevelopment.
Chalfant will discuss his idea with his colleagues today during a committee meeting at 5:15 p.m. at City Hall, 205 Lawrence St.
The MRC is current on its payments but still owes nearly $4 million on the loan, plus $12,500 in interest payments each month.
The properties purchased by the MRC are valued at about $883,000, MRC chairman Ron Francis told the MDJ in August. That’s much less than the city’s $2 million investment.
More time would be beneficial, Francis said, because the economy is beginning to turn around.
“I think the more time the MRC gets, the better chance we have of selling that property as the recession comes to a close,” Francis said.
Some of Chalfant’s colleagues fear the city won’t see a return on its $2 million.
Tumlin said he wasn’t familiar with the details of Chalfant’s proposal, but it’s likely the city’s investment has already disappeared.
“I hate to lose the $2 million, but have we already lost it? Probably, yes,” Tumlin said.
Tumlin told the MDJ earlier this month that he questions Chalfant’s proposal because the city did not bail out other developers whose projects failed during the economic downturn.
“We didn’t do it for Winter, we didn’t do it for Myrick, we didn’t do it for Hedgewood. They’re an independent corporation,” Tumlin said earlier this month of the MRC, whose director’s salary is paid by the city. “Personally, I want to keep it at arm’s length.”
He also doesn’t know if Marietta will get that money back.
“It’s the kind of day that we’ve all dreaded,” Tumlin said.
Councilman Philip Goldstein plans to abstain from a vote regarding the loan because he owns stock in Synovis, the parent company of Bank of North Georgia.
Still, if he were to vote, Goldstein said he wouldn’t support Chalfant’s proposal because the city is likely to have lost its investment.
Chalfant is not sure if the bank will negotiate but said spreading payments out over a longer period of time would put the city in a better position to recoup the $2 million it gave to the MRC.
“There’s not a lot of interest in doing anything for 18 months,” Chalfant said. “We’ve got to have more time to make this recovery and try to get back our $2 million.”
Chalfant also isn’t sure of his colleague’s opinions.
“I may just get blown away by people not wanting to put another dime in it,” Chalfant said.
But the city isn’t an official guarantor of the loan and can’t take action on the loan without the MRC.
“We could all agree on something, but it’s all for naught if the bank or the MRC agreed to it,” Tumlin said.