The move will buy the MRC some time, allowing it to wait for the real estate market to improve to the point where it could sell off its residential properties and recoup some of its losses. The properties are currently not worth the money owed on them, a city official said.
Bank of North Georgia has asked Marietta to guarantee $225,000, or 18 months of interest payments. City Council agreed to back the payments if the term was extended to 42 months.
City Council will officially vote tonight at 5 p.m. to extend the offer to the bank. Though the bank has not officially approved the city’s offer, it has sent a letter of commitment to the MRC.
In 2006, the city gave $2.1 million to the Marietta Redevelopment Corp., a tax-exempt nonprofit formed by the City
The MRC used that seed money to secure the bank loan, then used the proceeds to buy blighted duplexes off Power Springs Street across from the Hilton Marietta Conference Center.
About 8 acres of vacant lots and properties with aging houses were purchased for $4 million.
The MRC is up to date on its payments but still owes nearly $4 million on the loan, plus $12,500 in interest payments each month.
Beth Sessoms, MRC executive director, asked the redevelopment group’s board on Wednesday to delay marketing the
The MRC approved earlier this year hiring Dan Buyers of McWhirter Realty to market the properties pending the loan renewal.
Sessoms, who also serves as the city’s economic development manager, said the values of the properties are still not high enough to be sold without a loss. Prices are at “almost rock bottom,” she said, and will likely begin to climb back up, assuming the economic recovery stays on track.
“I think the point of doing it for 42 months is to allow land values to go up,” Sessoms said.
Ed Bentley, an MRC board member, said he doesn’t see the downside to marketing the properties immediately.
“I don’t understand why you’re hesitant,” Bentley said.
Ultimately, Bentley suggested the board reassess the marketplace in six months and decide if it is ready to accept offers on the properties.
MRC Chairman Ron Francis said he thinks delaying solicitation of offers combined with the city’s extended payment offer leaves more room for the MRC to recoup what appears, at least for now, to be a failed investment.