SOCIAL CIRCLE - The city of Social Circle entered into an agreement with the Downtown Development Authority to back a $600,000 purchase of property that includes an apartment complex near the town's cemetery.
During the July 21 City Council meeting, the city approved the intergovernmental agreement between Social Circle and the Downtown Development Authority. The Development Authority will purchase about 1.88 acres located at 427 Lakewood Drive from Bruno Properties Management LLC. According to the promissory note, the $605,000 purchase will be subject to a 3.9 percent interest rate payable over 17 years.
The intergovernmental agreement states the reason for the purchase as being for "revitalization and redevelopment of the subject property." The agreement, which goes into effect Aug. 1, stipulates that if the Development Authority defaults on the loan from Pinnacle Bank, the city of Social Circle agrees to back the loan.
"The bank will look at the city's tax base as collateral," Hal Dalley, chairman of the Development Authority, told City Council members last week.
Bruno Properties has managed the 12-unit apartment complex located on the site. Dalley said that the monthly expenses there, including insurance and taxes, are about $4,000.
"We expect to collect 1.3 times that in revenue over expenses," he said.
In other words, rental revenue should be about 30 percent more than the monthly expenditures, he said.
Dalley said 10 of the 12 units are currently rented and the apartments are generally 90 to 100 percent occupied.
City Manager Doug White said this land, which is located near the city's cemetery, is the first piece in an overall redevelopment of the area. He said the city plans to make physical improvements to the area, and eventually will likely demolish the apartments to add on to the cemetery.