17-APPROVE RES AUTHORIZING EXECUTION OF SUBORDINATION OF LIEN TO LAMAR NATIONAL BANK REGARDING KENNETH WHITE DBA WHITE'S FLOORINGCITY COUNCIL AGENDA ITEM BRIEFING SHEET
Submittal Date:
Originating Department:
Ptesented By:
Agenda Item No.:
1-18-12
Council Date:
City Manager
Gene Anderson
17.
1-23-12
RECOMMENDED MOTION:
Approve a resolution authorizing the execution of a subordination of lien to Lamar National Bank regarding an
additional loan to Kenneth White, d/b/a White's Flooring.
POLICY ISSUE(S):
Fiscal Management
The City of Paris received a Rural Business Enterprise Grant in 2008. Part of this grant was awarded in
the form of a low interest loan to Kenneth White that was executed in conjunction with a loan to Mr.
White made by Lamar National Bank. The loans were for $60,000 each. These loans were for the
purchase of a building and expansion of Mr. White's business. Under this program, the City's loan held
a second lien position to the Lamar Bank loan. Mr. White has been making timely payment on both
loans. The current balances of the two loans are approximately $51,000 and $49,000 respectively.
Having analyzed Mr. White's financial position, Lamar Bank is proposing to loan Mr. White and
additional $30,000 for his business. As the second lien holder, the City must agree to the loan and agree
to accept second lien position to the additional loan amount. Given the purpose of the grant program
was to support small businesses, the staff recommends passage of this resolution. The City will not be
increasing its loan and payments will continue to be made on the City loan on the original payment
schedule. The City loan is a 15 year note with final payment to be made in 2023.
BOARD/COMMISSION RECOMMENDATION:
None
EXHIBITS:
Resolution; Subordination Agreement
ACTION:
BUDGET INFO:
❑ Financial Report ❑ Minute Order
Expense
$NA
❑ Department Report Z Resolution
Budgeted Amt.
$NA
❑ Presentation ❑ Ordinance
y'I'D Actual
$NA
❑ Public Hearing ❑ Other
Acct. Name
NA
Acct. Number
NA
FISCAL NOTES:
None
REVIEWED AND APPROVED BY:
Z Administration Z City Clerk ❑ Community Development ❑ EMS/IT ❑ Finance ❑ Fire
❑ Municipal Court Z Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities
City of Paris 1 4C3 p Revised 2/04/08
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Draft
RESOLUTION N0. _
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS,
TEXAS, ACKNOWLEDGING AND APPROVING A SUBORDINATION
AGREEMENT ATTACHED HERETO AS EXHIBIT "A" AND
SUBORDINATING THE CITY'S 2008 NOTE WITH KENNETH WHITE
D/B/A WHITE'S FLOORING TO THE AMENDED LOAN AGREEMENT
BETWEEN LAMAR NATIONAL BANK AND KENNETH WHITE;
MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE
SUBJECT; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, On April 8, 2008, The City of Paris made a$60,000.00 loan to
Kenneth White d/b/a Whites Flooring, using Rural Business Enterprise Grant Funds,
for White to purchase a building on N. Main Street for his flooring business; and
WHEREAS, in connection with the City's loan, Lamar National Bank also made
a$60,000.00 small business loan to Kenneth White d/b/a/ White's Flooring, and
Lamar National Bank's loan was put in primary position and the City's note was made
secondary; and
WHEREAS, Kenneth White has recently approached Lamar National Bank
about borrowing an additional $30,000.00 for his business and the Bank has agreed to
loan the additional funds to Mr. White in return for the City subordinating its 2008
note to Mr. White's revised loan amount with Lamar National Bank; and
WHEREAS, Lamar National Bank, having analyzed Kenneth White's financial
position, is proposing to loan him an additional Thirty Thousand Dollars ($30,000.00)
for his business. This amount would bring the current Lamar National Bank loan
balance of $51,750.00 to a new balance of $81,750.00; and
WHEREAS, Mr. White's current loan balance with the City of Paris is
$49,000.00 and he is current with his payments; and
WHEREAS, the City Council hereby deems it to be in the best interests of the
citizens of Paris that the City of Paris approve the subordination agreement, attached
hereto as Exhibit "A", with Lamar National Bank and continue its efforts to fund small
and emerging businesses in the city of Paris, Texas; and,
WHEREAS, the City Council hereby authorizes the Mayor of the City of Paris,
Texas to execute the Subordination Agreement attached hereto as Exhibit "A" and any
other documents necessary to this transaction.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PARIS, TEXAS:
143
Section 1. That the findings set out in the preamble of this resolution are
hereby in all things approved.
Section 2. That the City Council of the City of Paris, Texas acknowledges and
approves of the Subordination Agreement attached hereto as Exhibit "A" and
authorizes the Mayor to execute this Subordination Agreement or any other
documents related thereto.
Section 3. That this resolution shall be effective from and after the date of
passage.
PASSED AND APPROVED this 23rd day of January 2012.
A.J. Hashmi, M.D., Mayor
ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
W. Kent McIlyar, City Attorney
150
01/18/12 10:39AM LA24ARNkTLBANK 9037846222
p.02
'I`HE STATE OF TEXAS §
511BORDINATION AGRFEMENT
COUNTY OF LAMAR §
PROPOSED FIRST LIEN:
DESCRIPTION OF F1RST LIEN NOTE AND DEED OF TRUST:
DATE : THE DAY OF , 2012
AMOUNT : $81,750.00
MAKER : KENNETH WHITE
PAYEE : LAMAR NATIONAL BANK
TRUSTEE : DiCK SEVERSON
DEED OF TRUST RECORDING INFORMATiON:
TO BE RECORDED IN THE OFFICIAL PUBLIC RECORDS OF LAMAR COUNTY,
TEXAS.
SECOND LIEN:
DATE : APRIL 4, 2008
AMOUNT : $60,000.00
MAKER : KENNETH WHITE
PAYEE : THE CITY OF PARIS, TEXAS
TRUSTEE : JESSE JAMES FREELEN
DEED OF TRUST RECORDING INFORMATION:
OFFICIAL PUBLIC RECORDS OF LAMAR COUNTY,
NUMBER 058307-2008.
TEXAS, UNDER INSTRUMENT
WHEREAS, Lamar NaTional Bank is the present holder and owner ofa first lien note dated April
4, 2008, in the originai sum of $60,000.00, secured by a vendor's and deed of trust lien fully
described in deed of trust to Michael Rhodes, Trustee, of recard Under Instrument Number 058306-
2008, Official Public Records of I.amar County, "I'exas; and
WHEREAS, The City af Paris, Texas is the holder of the second lien note and deed of trust
above described; and
WHEREAS, Kennetli White, has reguested Lamar National Bank to advance an additional sum
of $30,000.00 upon his loan and Lamar National F3ank is willing ta do so only if The City of Paris,
Texas will subordinate their debt and lien to the entire amount that will be owing to I,amar National
Bank after the additional $30;000.00 advance; and
WHEREAS, the Amount show-n above on the Proposed First Lien is the amount of the new note
to Lamar National Bank, which includes the approximate balance owing upon the original first lien
note and the additionai $30,000.00 advance.
151 ~k ~I
EXHIBIT l~.
01/18/12 10:39AM LAMkRNkTLBk1dK 9037846222 p.03
NOW THERETORF, THE CITY OF PARIS, TEXAS, for a valuable cansideration, the
receipt and sufficiency of which is hereby acknowledged, does hereby agree that note and liens
described herein as SECOND t11EN are hereby subordinated to the Proposed First Lien Note and the
Deed of Trust and other liens securing same_ The City of Paris, Texas herebv recognizes the Note
aild Liens described as PROA05ED FIRST LIEN when madc will be first, prior, and superior ta
those described as SECOND LIEN.
This Subordination Agreement was approved by Resalution of the Cifiy Counsel of the City of
Paris, Texasr on the day of January, 2012.
F.,XFCUTED this day of January, 2012.
`I'HE CITY OP PARIS, TEXAS
BY:
STATE OF TEXAS
CnUNTY OF LAMAR
A. J. Hashmi, Mayor
THIS INSTRUMENT was acknowledged before me on the day of Jaauary, 2012, by
A. J. HASHMI, Mayar of the Cify of Paris, Texas, on behaif uf said city.
Notary Public S#ate of 1"exas
AFTER RECORDING RETURN:
Lamar National Bank
200 South Collegiate
Paris, Texas 75460
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