Yorkville delays deal for school payback
By Steve Lord email@example.com October 25, 2013 3:24PM
Updated: November 28, 2013 6:43AM
YORKVILLE — City officials here have delayed consideration of a new deal to finish the financing of Grand Reserve Elementary School.
Aldermen agreed with city staff to table indefinitely an amendment to the annexation agreement that would make it possible to continue collecting money to pay back a $4.7 million loan used to build the school, no matter how long it takes.
The school was built in 2006 in the Grand Reserve subdivision. Developer MPI donated 12 acres on which to build the school, and $4.3 million as its land cash donation.
MPI took a loan from Castle Bank of $4.7 million to get enough to build the $9 million grade school. The idea was that MPI would pay back the loan with the $3,000 transition fee it pays with each building permit taken out.
School officials agreed to the arrangement, as did the city, to get the school built before anyone moved into the subdivision. But MPI ended up building only 419 units in the subdivision that was approved for 2,650 units. Eventually, LaSalle National Bank foreclosed on MPI.
Castle Bank now wants to sell the note it holds as if selling a mortgage. The buyer wants assurances that the city will continue to collect the transition fee, and that the school district is all right with it.
The annexation agreement is due to last 20 years, or through 2024. City officials have said they would be fine with extending that until the loan is paid off. But school officials are not so sure about that.
The delay was necessary, according to City Administrator Bart Olson, because Castle Bank and the prospective note buyer still have “financial and legal hurdles” to work out.