Bank to Marietta: Take responsibility for ’06 loan
by Rachel Gray
October 05, 2013 01:03 AM | 2218 views | 3 3 comments | 7 7 recommendations | email to a friend | print
MARIETTA — Bank of North Georgia has asked the city to guarantee 18 months worth of interest payments, totaling $225,000, on a loan that was given to the Marietta Redevelopment Corp. in 2006.

Mayor Steve Tumlin, who is reluctant to take such a step, said the City Council will discuss options at its Monday meeting.

“We have to address how we are going to handle what the MRC has asked us to do,” Tumlin said.

The MRC is a tax-exempt organization formed by the City Council. The city gave the MRC $2.1 million in 2006, which it used to secure a $4.2 million loan from Bank of North Georgia to buy property along Powder Springs Street, off West Dixie Avenue and Hedges St. across from the Hilton Marietta Conference Center.

The group spent $4 million to purchase about 8 acres of vacant lots and properties with aging homes.

Tumlin said if the council agrees to support the MRC once again, the $225,000 would be structured as a mortgage loan that the city would hold.

The bank’s request comes just as the city is gearing up to ask residents to vote on a new $68 million bond, the proceeds of which would also be spent on buying up aging apartment complexes to help spur redevelopment.

“Well, if you got the cards I guess you play them,” Councilman Grif Chalfant, who serves on the MRC board, said of the bank. “He’s playing the cards. He’s playing hardball, there’s no doubt about that,” Chalfant said, referring to Bank of North Georgia President and former Cobb Chamber of Commerce Chairman Rob Garcia.

Lending in the past

Tumlin said the MRC loan was up for renewal later this month by the bank and the group is current on its payments.

The MRC still owes the bank nearly $4 million and interest payments on the loan are $12,500 a month, according MRC Chairman Ron Francis.

In April, the MRC renegotiated the interest rate loan from 5 percent to 3.75 percent.

The city-backed real estate investment southeast of the Loop has been stalled for five years.

Tumlin said he does not want to see something drastic such as foreclosure happen to “this piece of property that is important to the city.”

But if the bank ultimately takes the property, the value of the land is less than the original loan, so the city’s money would be gone.

The MRC is governed by a 14-member board appointed by the City Council for two-year terms.

Tumlin said even though the city supports the MRC it is an independent development group that should not receive favoritism.

Comments
(3)
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anonymous
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October 05, 2013
Dissolve the MRC. It does nothing.
old Doc
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October 05, 2013
Dissolve the City of Marietta if we can't do better than this!
anonymous
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October 05, 2013
Marietta and Smyrna needs to quit buying real estate. Especially when the properties end up being worth a loss in 7 years. The citizens don't deserve these mistakes, they didn't choose, but will be left to bail out!
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