HomeMy WebLinkAboutFCS-14-209 - Mortgage Renewal - 102 - 104 King Street WestStaff Report
rTC.�r R finance and Corporate Services Department www.kitchener.ca
REPORT TO: Committee of the Whole
DATE OF MEETING: December 15, 2014
SUBMITTED BY: Lesley MacDonald, Director of Legal Services & City Solicitor,
519- 741 -2200 ext. 7267
PREPARED BY: Lesley MacDonald, Director of Legal Services & City Solicitor,
519- 741 -2200 ext. 7267
WARD(S) INVOLVED: Ward 10
DATE OF REPORT: December 10, 2014
REPORT NO.: FCS- 14 -209
SUBJECT: Mortgage Renewal - 102 -104 King Street West
Kitchener - Waterloo Multicultural Centre Inc.
RECOMMENDATION:
That the City renew the mortgage it holds for the property at 102 -104 King Street
West owned by the Kitchener - Waterloo Multicultural Centre Inc., in an amount not
to exceed $120,000, on the terms and conditions set out in FSC Report 14 -209;
and further
That the Mayor and Clerk be directed to execute the necessary documentation
pertaining to the City's renewal of the mortgage it holds for the property at 102-
104 King Street West; said documentation to be to the satisfaction of the City
Solicitor.
BACKGROUND:
The City sold 102 -104 King Street West to the Kitchener - Waterloo Multicultural Centre
Inc. on December 17, 2004 for the appraised fair market value of $267,000. The City
took a mortgage back to facilitate Kitchener - Waterloo Multicultural Centre Inc. acquiring
the property.
The City provided a variable rate 10 year mortgage in the amount of $152,000 at City's
current financing rates, amortized over 25 years. (Originally Council authorized a
mortgage of $137,000 and subsequently increased the mortgage to $152,000 on Nov
29, 2004 per council resolution). The mortgage is now up for renewal and Kitchener -
Waterloo Multicultural Centre Inc. has asked that it be renewed.
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REPORT:
The City does not normally act as a mortgagee but over the years the City has from
time to time (but under very limited circumstances on a site specific basis) taken back a
mortgage with respect to a site it has sold in order to facilitate the sale transaction. This
was one of the limited situations where Council extended a mortgage. The mortgage
was at fair value. Currently the rate would be approximately 5 %. The City has received
regular payments on this mortgage during the term.
Staff support the renewal of this mortgage on the same terms and conditions as the
original (or expiring) mortgage in an amount not to exceed $120,000. The terms and
conditions are as follows:
• Mortgage 10 years amortized over 25 years (15 years remaining)
• Interest equivalent to City's financial institutions prime rate plus 2 %.
• Interest and penalty to be adjusted every 6 months.
• Fully open and repayable at any time without penalty etc
• Payment to be made 1St of every month.
• Standard Charge Terms of Mortgage 200033 apply
In addition to the mortgage, staff suggests that the City registered revised restrictive
covenants on title requiring such things as the City's permission in the event the
property is to be sold, leased, or further mortgaged. The City currently has a Right of
First Refusal Agreement which remains in effect.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
This recommendation supports the Diversity priority of the Strategic Plan which says
"the city has an opportunity to step up and lead the way through coordinating
partnerships where resources will be shared and new and exciting integration
opportunities explored."
FINANCIAL IMPLICATIONS:
City collecting interest equivalent to City's financial institutions prime rate plus 2 %,
which currently is approximately 5 %.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in
advance of the council / committee meeting.
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CONCLUSION:
The City took back a mortgage when it sold the property to Kitchener - Waterloo
Multicultural Centre Inc. The City has received all monthly payments in a timely manner.
It is appropriate to continue to hold the mortgage in keeping with the City's original
intent that it wanted to facilitate Kitchener - Waterloo Multicultural the transaction.
ACKNOWLEDGED BY: Dan Chapman, Deputy Chief Administrative Officer, Finance
and Corporate Services
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