Hesperia Partnering Agreement Approved

Hesperia Partnering Agreement Approved subject to more financial details to come from Hesperia Directors re cash flow and business plan.

The Council by a 6-0 vote agreed to enter into the Partnering agreement with Hesperia so that Corporation could start paying invoices for services already entered into and provide necessary seed money to start hiring staff etc. Their were indications that the financial details re cash flow and business plan that were drawn up for the Commercial Bankers who were the original source of loans would be given to the Council to allay any concerns that they might have. (Public disclosure should follow shortly thereafter.) Council was reassured by the CAO that the City of Vernon was the only shareholder and that the structure was necessary to protect the taxpayers through limited liabilty but that as the only shareholder the Corporation could be wound up or business plan could be changed by the Council of the day.

The full details of the risk reward and the ultimate subsidy that the City's taxpayers are projected to put up to achieve this model of attainable housing will come out when these documents are produced.

The original $5,000,000 loan seems to have evolved into a line of credit that will see the Hesperia Corporation draw down $12,993,300 and repay $13,720,120 with initial draw down occurring in July of 2008 and final payment occurring in June of 2012. (see image on left. Click to enlarge). The first draw is for $700,500 and the other draws are of such odd amounts that they seem to have been taken from some already perused business plan?

When the full business plan is revealed and accepted by Council and vetted by the public we will know that this is a wise use of taxpayers money. As this should occur in the first 3 months we will have only our initial bet of $700,500 on the table but the land ($1,000,000 original cost of the 69 acres, sale price of $3,000,000 to Hesperia but worth much more than that $48,478 per acre) will still be under City Control.

This agreement may prove beneficial but I'm from Missouri the show-me state. I have no hesitation in subsidizing worthwhile projects with the use of taxpayer's land assets but I want to know how much I am paying or foregoing if land was sold for open market development!