SR-112779-6G~// i _,.
T0: Mayor 6 City Council
FROM: City Staff
SUBJECT: Extension of Ocean Park Redevelopment
Project Promissory Note
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Background
On December 13> 1978, the Redevelopment Agency issued a 74%,interest rate Prom-
issory Note to the City in the amount of $500,000 on behalf of the Ocean Park
Redevelopment Project. This one year note was expected to be repaid with tax
increment bond proceeds. However, prior to the expected issuance, date the bond
rating agencies suspended their ratings of tax increment bonds due to the po-
tential impact of Proposition 4.
This suspension is still in effect and the Agency is unable to issue bonds.
Consequently, unless the Promissory Note is extended by the Council, the
Note will be in technical default. The maximum interest rate payable by the
Agency is eight per cent as established by state law.
Recommendation
It is recommended that the Council accept the payment of interest only
on the outstanding Promissory Note and extend the term of the Note for a
period of one year at the maximum interest rate of 8%.
Prepared by: John Hemer
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