12 - Release of Lien-Waiver Request - 1567 S. Main Street

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Receipt of principle balance is always recommended as this was actual money spent by the City. Typically, my recommendation would be to consider waiving the interest given the principle + interest exceeds the value of the property according to LCAD, however, we also know the asking price exceeds this total value, which is unusual. With the above information, the City Council has at least the following options, if not others: 1. Approve a Resolution for release of the lien against 1567 S Main Street and: a. Receive payment of the $1,469.65 principle while waiving interest applied to the June 20, 2006 Structure Lien. b. Waiver of principle and interest applied to the June 20, 2006 Structure Lien. c. No waiver of principle and/or interest. d. Waiver of a portion (TBD) of the principle and/or interest. 2. Along with option #1, consider waiver of the accrued civil penalties in the amount of $47,000.00, or some sub amount of this. 3. Request additional information. 4. Do not release the lien or waive any portion of the June 20, 2006 Structure Lien. RECOMMENDATION: During my tenure with the City, the City Council has only reviewed a few requests for structure lien waivers, therefore I do not have a lot of history to go off of in regards to council policy. Pursuant to our code, principle and interest are both due in order to release the lien. However, by policy, we have considered waiver of interest from time to time (case by case), particularly when we see that the value of the property is less than the value of principle and interest, which is indeed the case with 1567 S. Main Street, and we deem it in the best interest of the city (i.e. changing hands to someone who may maintain, even develop, the property). What is different though is the selling price of $9,500.00. We have not had a selling price well over the value of the property like this (most have been right around the value of the property), therefore it is reasonable to request a certain amount of interest (if not all) be paid. Precedent could be set in this instance, at the same time, the known alleged facts (very difficult to prove — however I have had no reason to doubt what I have been told by Ms. Stokes) are what can give the council a case-by-case option for considering these in the future. With the above said, I would recommend #2 (waiver of the civil penalties — extremely unlikely to ever be paid the $47k on this property) as well as #ld and for the City Council to require payment of the principle ($1,469.65) as well as some amount of interest (perhaps half = $3,064.67). Another idea could be to split the selling price of $9,500.00, thus $4,750.00 which is greater than the principle plus '/z of interest. I would however be leery of waiving all interest, otherwise it may make it difficult to collect on interest in the future. It would also be well within the council's right, pursuant to code, to require all interest be paid.