Center for the Arts loans refinanced
JACKSON, Wyo. (KIFI)-The Town of Jackson and Teton County, Wyoming have agreed to refinance and reassign a construction loan for the Center for the Arts from First Interstate Bank to First Republic Bank.
The Town and County own the land upon which the Center for the Arts is located. A 2003 lease agreement prohibited the Center for the Arts from borrowing money against their leasehold interest. However, in 2016, it was discovered the Center had borrowed $7 million as a construction loan and mortgaged their leasehold interest in violation of the 2003 lease agreement. The loan was recognized by the town and county in the 2016 lease, with an understanding that no further encumbrances would be made for the Center for the Arts.
The original loan was $7 million, but has been paid down to a current balance of $600,000. First Republic Bank offered to refinance at a better interest rate.
In 2019, the Center for the Arts lost its 501(c)3 status in 2019, which was also a violation of its lease. At that time, the Center took out an unsecured $300,000 line of credit from First Interstate Bank to help it bridge the cash shortfall, caused by the fact that donors could not donate tax-free to the Center.
According to legal documents, “Unlike an installment loan, this line of credit will renew and be available again each year and not be retired at some set point in the future, though the Center is obligated to pay it down to zero annually. The Center is thus seeking approval to further encumber its leasehold interest with this $300,000.00 line of credit.”
In order to complete the refinance, First Republic Bank would pay off the First Interstate loans, have the existing leasehold mortgage released, and then record a new leasehold mortgage. The leasehold mortgage would cover both the original loan at about $600,000.00 and line of credit at $300,000.00, bringing the total to an amount not to exceed $910,000.
First Republic is not proposing to take any security interest in the building.
Center for the Arts officials say there are currently 20 non-profits based on the Center’s campus. The Center has provided over $200,000 in rent-relief to help those non-profits survive the COVID-19 pandemic.
