C.A.F.R., FY 2010-11 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2011 V. Other Information (Continued) F. Contingent Liabilities, Commitments, and Subsequent Events (Continued) (3) Commercial dairy - Facility is not yet operating but the incentive is to provide reimbursement (beginning in the sixth year of operation) for the difference in a flat water rate and the amount actually charged for five years. This amount is estimated to be $664,300. (4) Soup manufacturer - The incentive is to participate in the cost of a solar storage structure to the extent of $100,000. (5) Bumper manufacturer - Company is to create 20 new jobs providing an incentive amount of $100,000. (6) Retail and office structure - Incentive is to participate in reimbursement of sewer line construction to the extent of $250,000. In connection with a first lien loan by a bank to a commercial operation in the amount of $5,800,000, PEDC has entered into a Guaranty of Collection agreement. The loan payment is guaranteed by an individual (and a related company), and in addition, PEDC has guaranteed the full and prompt collection of the principal and interest due under the note together with limited cost of collection. If the lender makes demand under the Guaranty of Collection agreement, the lender will allow PEDC to satisfy its liability in monthly installments as specified in the original note. The agreement is dated September 23, 2010, and will terminate when the note is paid or the expiration of ten years. In September 2011, the Board of Directors approved a $2,000,000 revolving line of credit with a bank for future economic development projects. The note is dated September 14, 2011, and bears interest at 1.29% which is due monthly. The principal is due in one payment on September 12, 2012, and is secured by sales tax revenues and other income received by PEDC except that portion of income currently obligated or subsequent bond issued as contemplated by the Series 2010 bonds. The interest rate is subject to change based on changes in an independent index and the rate charged is to be 1.96% under the index which at September 12, 2011, was 3.25%. The note documents also provide for right of setoff by the lender in all accounts the lender holds and other restrictions pertaining to issuance of additional debt, maintenance of liquidity, and furnishing of financial information. At September 30, 2011, no funds have been advanced under this line of credit. PEDC has an agreement for office space and other items with the Lamar County Chamber of Commerce which expires September 30, 2013, and which provides for payment of an annual service fee of $60,000. Subsequent to year end, the Board of Directors approved a commitment of $1,500,000 supporting funding of the expansion to four-lane of State Highway 24 in Delta County, Texas, to be paid over an amortized twenty years. 46