BY COUNCILOR GILBERT:
RESOLVED, that the proper city officials are hereby authorized to enter into the second amendment to the agreement for forgivable loan of MIF substantially in the form of that on file in the office of the city clerk as Public Document No. __________ with United HealthCare Services, Inc., (United) terminating all security interests required under the agreement, terminating the agreement and note, and changing the interest rate and prorating the amount of the business subsidy to be repaid by United, said repayment in the amount of $155,390 to be paid into Fund _____.
FURTHER RESOLVED, that the proper city officials are authorized to execute any and all documents necessary to effectuate the termination of the agreement, note and security interests set forth above.
FURTHER RESOLVED, that the proper city officials are hereby authorized to execute any and all documents necessary to terminate its grant agreement with the DEED, repayment in the amount of $155,390 to be paid from Fund ____.
STATEMENT OF PURPOSE: This resolution amends the Minnesota investment fund (MIF) loan agreement between United and the city. The $500,000 forgivable MIF loan to United is in default due to a shortage in the actual net jobs created (268) versus the job creation goal of 370.
Under the current terms of the loan agreement, the remedy for default is repayment of the full amount of principal ($500,000) at 12% interest, accruing as of the initial disbursement date (February 15, 2002). Under default, all proceeds from repayment of principal and interest will be forwarded to DEED.
This amendment recognizes the net 268 jobs created by United in this community by requiring only a prorata repayment of $137,838, as calculated:
Shortage of 102 jobs ÷ 370 job goal = 27.5676%;
27.5676% of $500,000 = $137,838 = loan amount outstanding
This amendment further adjusts the interest rate from 12% to the implicit price deflator which is 1.1273%.
Thus, the repayment amount is calculated as: Loan Amount Outstanding x Implicit Price Deflator = $137,838 x 1.1273 = $155,390.
Upon both the approval of this amendment to the loan agreement and the receipt of United’s repayment, the loan agreement and all security interests required under the agreement will be terminated. Parallel to this action, the city’s MIF grant agreement with DEED will also be terminated.
It should be noted that administrative staff of DEED recommend the terms of the amendment, as proposed above.