Housing group repays loan
After delaying repayment of a $250,000 loan from City Hall, Mountainlands Community Housing Trust recently paid back the money, saying that it needed the additional time to raise the funds.
The $250,000 was one of two loans City Hall gave to the nonprofit for work on the Line Condominiums on Deer Valley Drive. Mountainlands was also unable to pay back the other loan, which was for $100,000, on time and the Park City Council has extended that deadline until 2011.
Scott Loomis, the executive director of Mountainlands, says the organization needed revenue from unit sales at the Line before it was able to pay back the $250,000, plus interest.
"I never had a doubt we’d be able to," Loomis says about the repayment.
The $250,000, Loomis says, financed finishing work at the condominiums.
Mountainlands, which provides housing options for people otherwise priced out of Park City’s resort-driven real estate market, encountered delays and budget increases during construction of the 22-unit complex, on the 500 block of Deer Valley Drive.
As the delays mounted, Mountainlands approached City Hall for the loan.
According to Loomis, the construction cost about $3.1 million, up from the $2.3 million forecast. Key loans came from City Hall and Zions Bank, the chief financer of the project. Loomis reports that the bank loaned Mountainlands a little more than $2.1 million and was repaid before City Hall.
Mountainlands financed the rest of the cost, Loomis says. He says that Mountainlands will not break even on the project. He says the organization is in the red about $50,000, that it put in another $170,000 and spent several hundred thousand dollars in staff time and expenses.
The City Council agreed to the $250,000 loan in April. Terms at the time required that the money be repaid within 120 days of the organization’s first draw on the money. The loan was later revised to allow Mountainlands to repay the money after it sold the last unit.
Loomis says Mountainlands approached City Hall with the loan request to avoid asking a bank for the money. That, he says, would have taken longer as appraisals were conducted and a bank assigned a committee to consider a request.
"It was quick and easy. They wanted it done as much as we did," Loomis says about the local government, adding, "It was much easier."
He also says City Hall charged a lower interest rate. He estimates that Mountainlands saved between $8,000 and $10,000 in interest and appraisal fees by receiving a loan from the city instead of the private sector.
Mayor Dana Williams, who was at one time frustrated with the progress on the project, says he expected that Mountainlands would quickly repay the money once sales started. Williams says the $250,000 was critical for Mountainlands.
"The only way this project would have been completed is for City Hall to step up. Mountainlands had exhausted its source of funds," the mayor says. "We were, basically, the only entity able to step up and do a short-term loan."
Without the loan, Williams says, work would likely have halted.
"It could have stopped, dead in the water," Williams says.
The Line is one of the most ambitious affordable-housing projects in the city but the construction delays strained relations between Mountainlands and City Hall. The sides say that they are on better terms now, though.
City Hall normally supports the organization’s work and officials with the government see themselves as being among the chief supporters of affordable housing. They say that offering housing priced well below the market rate is important to ensure that everyday workers can afford to live in the city.
"Paying off the loan was never a concern, particularly," Loomis says. "Finishing the project was the concern."
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