RE: Toliver Rd

From: Mac Corthell

Sent: Tue Feb 01 07:42:26 2022

To: 'KIRK SAWYER'

Bcc: Dan Huff; Sam Miller; Sam Miller

Subject: RE: Toliver Rd

Importance: Normal

Hi Kirk,

I’m sorry if you read frustration into my email, that is not the case at all, I am just a very direct communicator. With that said, I do take my role very seriously, especially where it involves being a steward of taxpayer funds. I have responded to your email below in red.

Please bear in mind that this is not personal, but this situation cannot be let to drag out any further. Thank you.

Sincerely,

Macahan “Mac” Corthell, J.D. | Community Development Director

City of Molalla

315 Kennel Ave. | PO Box 248 |Molalla, OR 97038

Phone – 503.759.0243

Email – mcorthell@cityofmolalla.com

Website – http://www.cityofmolalla.com

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From: KIRK SAWYER <1997strinc@gmail.com>

Sent: Monday, January 31, 2022 6:03 PM

To: Mac Corthell <mcorthell@cityofmolalla.com>

Subject: Re: Toliver Rd

HI Mac,

My wife and I plan to come see you tomorrow Feb 1st 2022, to have you go over the documents with us. I reached out to PGE, DEQ, DSL today again to see where they are at on estimates and proper permits and hope to have some further information to share. Today is the last day to close on the loan but you have not made an appointment with me to do so. I have some time after 1pm, please email or call me to arrange a time to meet and we will go through the closing process.

At our last meeting in November, we were directed from the city to take the draft and have our attorney review it and make adjustments. No one ever stated that adjustments by your attorney would be blindly accepted. You’ve had copious time to communicate with the city on a project that is more than 3 years overdue and 100% your responsibility to complete, we are not reviewing a series of complex amendment proposals 2 weeks prior to your deadline and more than 10 weeks after the documents were provided to you for the second time. That is what I sent you on January 17, with a request for the copies of the documents so that our attorney could propose edits for the documents. From your email, I sense that you and/or the city are very frustrated, but the documents still appear to need edits to get into final form. This is the purpose of arranging a time to close, just like pretty much every other loan. I am asking my attorney to make proposed edits to send to you tonight or tomorrow morning. Please feel free to connect with him directly on this (Elliott Dale – edale@elliottdale.com – 503-726-5940). No “edits” other than clerical ones will be accepted by the City, the time for negotiation on this topic has passed (multiple times at this point). As an aside, I will not be contacting your attorney, nor entertaining proposals from him, the city has made you an offer that is extremely gracious and as sweet as it is possibly going to get.

Please do understand we are moving forward with this project and want to do so with the financial help of the City of Molalla. Two of the last three years we have been operating our business and trying to get our arms around this project in some of the most challenging business circumstances in our lifetimes. During that time, since this project began, our main contact with the City has changed 5 times, prior to you (Nicholas, Aldo, Brenda, Alice, Gerald, and then you). Completing a construction project, or even getting one off the ground, has not been easy during this time. We are in the process of lining up private financing and expect to start the project on time. While I’m sympathetic to the business world we’ve all had to live in for the last two years, yours is one of many private developments that was/is required to complete improvements during that timeframe and is the only one that has not been completed here in Molalla… what’s more, it’s the only one being offered $100k, plus a 0% interest 30-year loan (which in essence means the city will only get back about 60% of the value of the money it is not forgiving).

It seems possible to start the project and finish in a year's time, but out of your and my hands is the availability of all the products and supplies needed. Another possible stumbling block is doing the excavation in the Jurisdictional water way where the approved headwall is to be installed. I have been in contact with DSL, and DEQ on the 1200c permit that is designed to use BMP's to prevent sediment into the Cities storm system, which is not a problem for the majority of this project. Except for excavating in the ditch. Given the context here, I find it extremely concerning that you are already attempting to present a series of issues that may (or may not) cause some delay in delivering this project. All I will say is that the city has been more than patient and reasonable throughout this process and will continue to be, so long as you proceed in good faith. Amendments to the agreements that spell out the construction timing can be agreed and executed, but I will warn that these will only be considered if you are assessed to be proceeding in a reasonable, good faith manner.

All in all we do appreciate the flexibility the city has given us on this project. We will be working with the city in good faith in completing this project in a timely manner and according to the deadlines. As written to you in our notes, we would very much appreciate being able to move the property from ownership just in my name to an LLC owned by my wife and I. We believe that this would protect the City’s interests as well, if something were to happen to me. We also wanted to make sure that the deal reflected the City’s earlier conversations to fund 100% of the project, with 50% of that amount forgiven. I recognize that due to the amended development agreement, we are out of time to make these adjustments and we do not want to lose the financing opportunity with the City. So we are going to sign tomorrow. But I am hoping that by working in good faith and in completing this project, we can revisit this issue and the City will consider forgiveness of the loan at 50% of the total project cost once the project is completed, even if that is over the $100,000, and that the City will be receptive and consider it, if we later request to move the property into an LLC after these loan documents are signed.

The City will not extend any additional funding beyond the $200k with $100k forgiveness upon project acceptance.

What time works for you for us to meet and go through the documents with you tomorrow?

After 1pm, before 3pm would be best.

Thank you Mac

On Fri, Jan 28, 2022 at 3:23 PM Mac Corthell <mcorthell@cityofmolalla.com> wrote:

Hi Kirk,

The new agreement was signed on 11/3 and we didn’t hear from you on these proposed changes until 1/17, two weeks before all documents were to be executed and returned (by 2/1/22) and more than two months after they were provided to you.

This issue has been ongoing for more than 3 years and the continuous delays and last minute change requests are not acceptable. The City has been more than fair in offering to finance $200k of the improvements you are required to make, and to forgive $100k of that financing while allowing you to amortize the remaining debt over a 30-year period – interest free.

It is the City’s position that further delays and negotiation of the financing package offered are not acceptable. Any additional project costs are due to self-inflicted delays and the City will not offer any more funding than what has been offered at this point. I would submit that if you wish to have the flexibility you mention in your email that you seek private financing for this project. The risk to the City that flows from the modifications you propose is too great and too complex, especially given that the City is doing you a massive favor by offering the financing terms that it has offered.

Thank you, and we hope to see the executed agreements by 2/1/22 as agreed. The alternative is that this financing agreement will lapse and you will be on your own to complete these improvements with latest start date 180 days after the new agreement was executed on 11/3/21. Please let me know if you intend to execute the agreements on 2/1/22 as agreed and I will have them awaiting your arrival at City Hall.

Sincerely,

Macahan “Mac” Corthell, J.D. | Community Development Director

City of Molalla

315 Kennel Ave. | PO Box 248 |Molalla, OR 97038

Phone – 503.759.0243

Email – mcorthell@cityofmolalla.com

Website – http://www.cityofmolalla.com

From: KIRK SAWYER <1997strinc@gmail.com>

Sent: Monday, January 17, 2022 2:25 PM

To: Mac Corthell <mcorthell@cityofmolalla.com>

Subject: Toliver Rd

Mac,

I appreciate the flexibility the City has given throughout this process. We are committed to moving forward with the Development Agreement and finalizing the MURA loan and breaking ground on this project.

There are a few issues I would like to resolve with you and/or the appropriate parties, hopefully this week.

1. Property into LLC. Currently the property is held in my name, as Kirk Sawyer, individually. For various reasons, we are planning to move the ownership of the property into a limited liability company owned by my wife and I in the next few months. We need to make sure the MURA Loan documents support this transfer. We are willing to sign personal guarantees and remain personally liable for the loan.

2. Trucking Business Separate; Property as Collateral. We need to make sure that our business has access to financing and capital on commercially reasonable terms now and during the time this loan will be outstanding. We understand the City’s need to have security for this loan and are fine with using the property as collateral. We believe the unencumbered value of our property as an asset provides more than enough security for this loan, which will also be backed by our personal guarantee. We request that our truck repair business assets and operations are not included in collateral for the MURA loan.

3. Loan Structure. Based on our past conversations and my understanding of what we’ve agreed to, the MURA loan is for the full costs of the proposed and approved public improvements to Toliver Road, with 50% of the costs to be forgiven at completion, and 50% to be paid back over 30 years at 0% interest. The MURA loan security will be in second position behind our primary mortgage/commercial lending relationship. We also need to be able to refinance our primary mortgage as long as it doesn’t impair the MURA security.

4. Future Use of Property. Currently on the property, we have our truck repair business and a rental house as tenants. At some point in the future, we may want/need to divide the property into two parcels. We do also intend to expand our truck repair business facilities. We need the flexibility to do these reflected in the loan documents.

5. Cost and Timeline of Toliver Rd. Improvements. We are all living in unprecedented times, with so much uncertainty on what it takes to get things done. We are in the process of getting an updated bid on the Toliver Rd. Project, and it looks like the total cost will be approximately $300,000. In addition, though we are confident that it will be possible to complete, and indeed the project WILL be completed 1 year from starting, it is also possible that delays in materials availability or labor shortages could create issues in meeting that timeline. We ask for some flexibility for extending the ultimate completion date if necessary as long as the project is being pursued diligently by us and the contractor.

6. Payback Timeline. We request a payback period of 25 years, with the first payment to occur after 5 years.

7. Timeline for Finalizing MURA Loan. We signed a Development Agreement Amendment in November. It has a deadline of February 1 for signing the MURA Loan documents. We would like to request a limited extension of time on this point in order to finalize the loan documents.

Thank you for your consideration. Please let me know if it would be helpful to talk through any of the above issues, I am available this week to discuss.

In addition, I am working with an attorney, who will have edits to the Loan Document drafts and can propose language for the City to consider on the items above. Can we receive Microsoft Word versions of all of the Loan Documents?

Thank you!

Kirk Sawyer