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City of Fredericksburg likely to buy riverfront property through transaction with EDA
Date published: 6/30/2011
The city of Fredericksburg will likely purchase a downtown riverfront property using a $200,000 grant and low-interest loan from the city's Economic Development Authority.
Last month the EDA unanimously approved a contract to buy the 0.64-acre property at 609 Sophia St. from the Prince Hall Masonic Lodge 61. The contract price is $925,000, which is $40,000 less than assessed value. The EDA chose the property for its potential to enhance the city's adjoining Riverfront Park and downtown economic development in general.
Not long after signing the contract, EDA members led by Joe Wilson and Michael Colangelo made an offer to the city. The EDA would make a $200,000 grant to the city toward the purchase of the property, and the city would borrow the remaining $725,000 from the EDA.
The EDA would then assign the contract to the city, which would purchase and own the property. The city has already spent $2.7 million buying land for the park, including the purchase and demolition of the Wings on the Water restaurant.
Under the terms of the loan, which still must be approved by the Fredericksburg City Council and EDA, the city would pay the EDA 3 percent annually on the $725,000. It would be a three-year interest-only loan whose annual payments would work out to $21,750. The city would amend the budget to include that.
Over the course of three years, the city would pay the EDA $65,250 in interest.
The city would issue a general obligation promissory note to the EDA, which would likely hold it and collect the semi-annual interest payments. The EDA could also choose to sell the note or borrow against it should an opportunity arise.
At the end of the three years, said City Manager Beverly Cameron, the city could either issue new debt to pay back the $725,000 or take the money from the fund balance, capital project account or some other pot.
A public hearing has been scheduled at 7:30 p.m. July 12 in City Hall on the matter. Cameron said he has discussed the offer with council members, who have indicated they support it.
Cameron said the city doesn't have any definite plans for the 2,000-square-foot, two-story brick building on the property for now. That will be discussed with city departments.