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Paris Economic Development Corp. FY 2010-11 (2)
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Paris Economic Development Corp. FY 2010-11 (2)
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1/18/2013 3:01:12 PM
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Paris Economic Development Corporation r9? ° i ( s ; f <br />(A Component Unit of the City of Paris, Texas) - <br />Notes to Financial Statements (Continued) , <br />September 30, 2010 r - " N" <br />Note 7: Commitments (Continued) <br />In connection with a first lien loan by a bank to a commercial operation in the amount of $5,800,000, <br />PEDC has entered into a Guaranty of Collection agreement. The loan payment is guaranteed by an <br />individual (and a related company), and in addition, PEDC has guaranteed the full and prompt <br />collection of the principal and interest due under the note together with limited cost of collection. If <br />the lender makes demand under the Guaranty of Collection agreement, the lender will allow PEDC to <br />satisfy its liability in monthly installments as specified in the original note. The agreement is dated <br />September 23, 2010, and will terminate when the note is paid or the expiration of ten years. <br />In September 2011, the Board of Directors approved a $2,000,000 revolving line of credit with a <br />bank for future economic development projects. The note is dated September 14, 2011, and bears <br />interest at 1.29% which is due monthly. The principal is due in one payment on September 12, 2012, <br />and is secured by sales tax revenues and other income received by PEDC except that portion of <br />income currently obligated or subsequent bond issued as contemplated by the Series 2010 bonds. <br />The interest rate is subject to change based on changes in an independent index and the rate charged <br />is to be 1.96% under the index which at September 12, 2011, was 3.25%. The note documents also <br />provide for right of setoff by the lender in all accounts the lender holds and other restrictions <br />pertaining to issuance of additional debt, maintenance of liquidity, and furnishing of financial <br />information. At September 30, 2011, no funds have been advanced under this line of credit. <br />PEDC rents office space and other items from the Lamar County Chamber of Commerce under an <br />agreement which expires September 30, 2013, and which provides for payment of an annual service <br />fee of $60,000. <br />Subsequent to year end, the Board of Directors approved a commitment of $1,500,000 supporting <br />funding of the expansion to 4-lane of State Highway 24 in Delta County, Texas, to be paid over an <br />amortized twenty years. <br />Note 8: Risk Management and Subsequent Events <br />PEDC is exposed to various risks of loss and has obtained insurance related to general liability, loan <br />enforcement liability, errors and omissions liability, and automobile liability. <br />Management has evaluated subsequent events through the date on which the financial statements <br />were available to be issued. <br />
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