City, Habitat reach agreement over Eco Village loan
In May, the City Council voted to allow the city administrator and city attorney to call St. Croix Valley Habitat for Humanity's loan for the Eco Village project on Apollo Road in the west part of town. Since then, city staff and Habitat board members have been working together to reach an agreement.
On July 11, City Council approved an agreement with SCVHH.
City and Habitat representatives have signed a forbearance agreement. If the terms of that are met, a loan modification and extension agreement will come into effect.
"The City is pleased to have agreed on a resolution with St. Croix Valley Habitat that allows them to continue the great work they do in the region and in River Falls," City Administrator Scot Simpson said. "The City Council is looking forward to St. Croix Habitat fulfilling its commitment to repay the loan in full.
"The Eco Village project is an innovative and important project that provides a model for us all to learn from. Although there were some setbacks and failures associated with the project, the overall project stands as an example of what can be accomplished with vision, determination, and partnerships. The city is proud to have played a role in its successful completion."
Julie Bergstrom, assistant city administrator, said the Habitat Board was "very forthcoming" and easy to work with.
"I think we're in the process of repairing our image with the city, said Randy Boser, Habitat interim executive director. "I think it was an agreement that came with some good discussion between us and the city, and I think they considered our situation, we considered their situation and came through with a nice agreement that I think will work for both parties. We're pleased that we were able to have constructive discussions."
He said the agreement will have no effect on Habitat homeowners in terms of mortgage payments.
Through the forbearance agreement, the city agrees not to take legal action against SCVHH, provided Habitat meets the terms of the agreement.
The original loan was for $400,000 to be paid by May of 2022.
According to the forbearance agreement, SCVHH still owed $262,952 plus interest, attorney's fees, costs and expenses as of July 11, when the agreement was signed.
In the agreement, the forbearance period goes through Jan. 31, 2018. During that time, SCVHH must pay both principal and interest on a monthly basis, and must pay an additional $48,152 before Jan. 31. Bergstrom said that sum makes up for the 13 months of missed payments.
SCVHH also agreed to present an annual update to the city council including financial and tax information. SCVHH also agreed to give the city administrator all Habitat Board meeting agendas, financial statements and non-confidential board meeting packet information.
If the conditions in the agreement are met, the loan modification and extension agreement will take effect.
The loan modification agreement extends the terms of the loan through May 2027. Under the initial terms of the loan, the last payment was to be made in May 2022.
Under the agreement, SCVHH will pay a total of $188,872 remaining principal, and $77,720 interest.
If SCVHH makes timely monthly principal payments, that interest could be waived.