SR-6-S (2)
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JAN2? 1981
Santa Monica, California, January 19, 1981
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Extension of Outstanding Promissory Note
Ocean Park Redevelopment Project
Background
On December 13. 1979, the Redevelopment Agency issued an eight percent (8%)
interest rate Promissory Note to the City in the amount of Five Hundred Thousand
Dollars ($500,000) on behalf of the Ocean Park Redevelopment Project. This One
(1) year Note was expected to be repaid with tax increment bond proceeds; however,
due in large part to the condition of the bond market, bonds have not been Issued
and the Redevelopment Agency does not have sufficient funds to retire the Note at
this time. Consequently, unless the Promissory Note is extended by the City
Council, the Note will be in technical default. The maximum interest rate payable
by the Agency permitted by law has now been increased to ten percent (10%).
Recol11f.lendation
It is recommended CIty Council accept the payment of interest only on the out-
standing Promissory Note, and extend the term of the Note for a period of one (1)
year at the maximum interest rate of ten percent (10%).
Prepared by: John Hemer
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JAN? 7 19qt