The sale of O’Brien Court is a big deal in Tracy, but the biggest benefit the City will get out of it has more to do with paying off debt that putting money in the bank.
The City recently closed on the sale of the EDA-owned property for $1.2 million — $1,195,440 after closing. According to Section 12.02 of the City Charter, the City must use the funds to satisfy the 2016A bonds on the Orchard Lane townhomes — bonds that can’t be retired until Feb. 1, 2025, at the earliest. Because the City refinanced the loan for Orchard Lane a couple of years ago, it is not allowed to pay off the total debt until the 2025 date.
“The charter says that when you are selling a real property, you have to use those proceeds to pay off any debts associated with that property, or a real property with a similar purpose,” said Tracy City Administrator Erik Hansen. “It’s pretty clear that public housing like Orchard Lane is a similar purpose to housing at O’Brien Court.
In light of this, the City must restrict $1,031,400 to ensure there are sufficient monies from the sale to pay off those bonds. That means the City will have just $164,040 at its disposal.
“It’s probably a good thing to pay down debt anyway,” said Hansen. “Given the current circumstances that we’re in, paying down $1 million worth of debt is important.”
Hansen said the leftover monies will be invested and put toward 2023 capital improvements.
Council member Jeri Schons made the motion to restrict the funds for paying off the Orchard Lane debt, with council member Dave Tiegs seconding.
See more on Monday’s council meeting in this weeks’ paper!