Council hears options after repeated loan extensions for 25 East Main property

City staff briefed the Platteville Common Council on April 28 about a request to extend RDA-related loans for 25 East Main Street, a property that has previously been financed with a city RDA loan and a pass-through loan arranged with Fidelity Bank and Trust.

Joe, speaking for staff, outlined the loan history: the original RDA loan was $80,000 and a pass-through loan through Fidelity was originally $172,000; the Fidelity-related balance outstanding was reported at about $96,124.82. Staff presented a proposal to extend the Fidelity loan for two years at 5.95% (down from the current 7.75%) and to extend LMNInvestmentscorresponding loan terms at 6.95% to provide the RDA an administrative spread.

Council members pressed staff on contract language in the proposed promissory note that appeared to include an 18% interest rate after maturity; a council member asked whether a similar clause existed on the current note and whether it would create an unacceptable liability for the city. Joe confirmed staff did not recall an identical clause on prior extensions and said the 18% post-maturity language was in the draft note under review. Councilors also noted the borrower has paid about $76,000 toward the $172,000 loan over its lifetime and observed the borrower remains significantly underwater; members asked whether the borrower had sufficient incentive to refinance or fully repay if the city continued to extend the term.

Joe described constraints: the city is second in mortgage position behind Fidelity, limiting effective foreclosure options; staff said they lacked funds to pay off Fidelity and that the city has extended similar loans previously. "We don't have the funds available to pay off Fidelity. They don't have the funds available to pay off our loan," Joe said, adding that the borrower had discovered building-condition issues during renovation that increased costs and reduced expected value. He said the RDA may consider longer-term restructuring or encourage the borrower to seek private financing.

No formal action was taken at the meeting; staff said they would return with a recommendation and paperwork for council consideration at a later meeting.

What to watch: Council flagged the 18% post-maturity clause and asked staff to clarify the draft note language and to assess alternatives, including a longer amortization schedule or requiring stronger refinancing incentives.