Lorain/Elyria, OH
Lorain Council debates buying mortgages
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LORAIN - City Council again revisited whether to purchase loans on two downtown buildings owned by Lorain County Community Action Agency during a first reading at Monday night`s meeting.
In December, Council narrowly defeated a proposal to buy the mortgages on 502 and 506 Broadway for $450,000. Had it passed, the city would have purchased the mortgages from FH Partners, the Texas lender currently holding the mortgages. The city would have then leased the buildings to LCCAA for $3,500 a month for 15 years.
A new proposal would have the city buy the mortgages for $325,000. The loans are currently for $825,000 - a bargain purchase price, Mayor Tony Krasienko said.
“It`s a good deal,” Krasienko said after the meeting. “It helps our community action agency, it helps us expand our loan portfolio, and it lowers community action`s loan payment, so it`s a win-win situation.”
Structural and environmental inspections of the buildings at the end of last year revealed potential problems, including the presence of sealed asbestos and mold. Several council members didn`t want to spend city money to bring the buildings up to code.
Krasienko said the money to buy the loans would come from the community development revolving loan fund and not the city`s general fund.
“The city`s in a good position,” the mayor said. “We`d be in a positive cash flow situation with debt-to-equity ratio, and we`d also hold first mortgage. If they sell (the buildings), we`d get paid off automatically.”
The measure also failed in October. Krasienko said helping the agency is important enough to merit a third try.
“They need to refinance, and we`re in a position to be able to finance that,” Krasienko said. “The federal government has money available to the city for just these situations.”
The lower purchase price means the city would collect $2,500 a month for 15 years. Council has scheduled the legislation for a second reading at its next regular meeting.
Contact Alicia Castelli at 329-7144 or acastelli@chroniclet.com.
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This deal is still confusing. How can there be a mortgage on the property if the deal is a LOAN/ SALE with the city taking possession?
How would the city have a positive debt to equity ratio if the city is flat out buying the property for consideration of the loan?
If I was to lend you a hundred dollars and you gave me a bicycle for giving you the loan, who owns the bike?
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If the bike in the above agreement is a piece of crap, who is going to pay to fix it?
If the terms are $2,500 a month for 15 years, where is the lease to show council and how could Head Start sell the building if the city already owned it?
Something sure is fishy…
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Why doesn’t Alicia Castelli, the reporter who wrote this story ask some of these questions? Isn’t that what reporters do?
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How is the City going to pay for this? They don’t have the money to pay for safety services!
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The money is coming from Community Development funds and not general funds that pay for safety services.
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Brian, you are correct there is something really fishy going on. Oh well, liars & thieves running the city, and another just got voted in.
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