Monroe bonds will pay off $11 million loan

Published 8:55 pm Monday, September 6, 2010

MONROE — The City Council is scheduled to discuss the North Kelsey property and take final action on financing bonds at tonight’s meeting.

The city has to pay off an $11.27 million loan to Bank of America on Oct. 25. The city has only paid interest — about $2.33 million — on the loan that was used to purchase the North Kelsey property in March 2005, finance manager Dianne Nelson said.

To pay off the loan, Monroe will issue bonds with a value of $11.35 million . The difference will pay the cost of issuing the bonds and to pay interest, Nelson said.

By changing from a bank loan to bonds, the city will have more flexibility and time to find a prospective buyer, Councilman John Stima said.

“Bonds are the best way to go long term because the interest rates are down and will bring stability,” Stima said.

At the meeting, the council is expected to decide the structure of the bonds.

The city will hold an executive session about the pricing of both sides of the North Kelsey property at North Kelsey Street by Galaxy Monroe Theaters.

The bonds will be sold to the financial company D.A. Davidson &Co., which has branches in Everett and Seattle. The company then will sell them to a secondary market, Nelson said.

The 23.33 acre site has no prospective buyer, but the city does have a proposal for it, city Administrator Gene Brazel said.

He did not give any details about the proposal.

There is also the alternative of selling the property on the north side of the street. The 24.37-acre, city-owned property can help cover the costs and currently is being marketed by the Seattle-based commercial real estate firm Grubb &Ellis Co. It has an interested party but no proposal, Brazel said.

“The ultimate goal is to sell the property,” Brazel said.

Stima is confident the Kelsey territory will be sold within the next two years.

The bonds will not affect the city’s budget, which has a projected deficit of $237,000.