The Downtown Smithfield Development Corporation has been asked to repay the Town of Smithfield for two missed loan payments of $15,125 each.
The missing payments were discovered by Smithfield Finance Director Greg Siler earlier this year.
In 2006, the Town of Smithfield agreed to borrow $250,000 for the Downtown Smithfield Development Corporation (DSDC) for a StreetScape improvement project. The DSDC agreed to repay the money at a 4.25 percent interest rate over the next 30 years, making annual payments of $15,125.
In 2012, the former executive director of the DSDC asked the Town to forgive 3 upcoming payments so they could divert money for renovations and repair at the Hastings House, a town-owned historic property that the DSDC leases from the Town for $1 a year.
Minutes of the 2012 meeting indicate the town council agreed to defer the payment for one year but not three. However, the DSDC director “misunderstood (the) Council’s decision and conveyed to the DSDC Board that their request to forgive the payments for 3 years was approved,” Siler said.
Current DSDC Director Sarah Edwards said the organization had money to make the missing payments but asked the council to consider three options: forgive the missed payments, add the missed payments to the end of the loan and reduce the interest rate, or have the DSDC repay the missed payments but reduce the interest rate so that it would lower the remaining payments.
The Board agreed the final option and unanimously voted to refinance the $221,962 balance on the loan over a 24 year term at an interest rate of 2.75 percent. Siler said that would lower the DSDC payments from $15,125 to $12,752 per year, a savings of nearly $57,000 over the life of the loan.