However, the foundation will also have to pay to the trust $188,500 in unpaid interest on the loan as part of the deal.
Three years ago, in the beginning stages of the Myriad Botanical Gardens renovation planning, it became apparent that a new facility would be needed for office spaces and for maintenance equipment said Jim Tolbert (pictured), Myriad Gardens Foundation chair emeritus.
The foundation identified the Vitagraph building as a possible solution to this dilemma, and about that time the foundation was approached by the building’s owner Rick Dunning, Tolbert told the trust at the Aug. 9 meeting.
Tolbert said Dunning, the CEO and president of Indian Exploration Company, University of Oklahoma Board of Regents member and a former member of the Oklahoma Judicial Nominating Commission, told him he wanted the building to be used for civic development in the area, rather than be sold and re-sold to a speculator.
However, Dunning believed, and had an appraisal in line with that belief, that the property was worth more than the $4.2 million the foundation was willing to pay for it, Tolbert said, and asked that the difference — about $2.7 million — be considered a donation to the foundation.
The foundation agreed and finalized the property transaction, paying $4.2 million, but around the time the deal was complete, the city began looking at the idea of having the foundation take over operation and management control of the gardens, Tolbert said.
We are here today to deed the building to the trust and enter into a promissory note to repay the existing balance of the interest.
As part of the management agreement between the city and foundation approved by the City Council in May, the city would forgive the loan in exchange for the property.
However, at the time the management deal was proposed, there were concerns about accrued interest on the loan because the foundation’s ability to pay on the loan was tied to the actual cash flow from the property, which was insufficient, Tolbert said.
Tolbert said, in his opinion, the obligation was based on the property (pictured right) and if it was deeded to the city, there should not be any future obligations on behalf of the foundation.
“Nonetheless, we agreed that this needed to be dealt with,” Tolbert said. “So we are here today to deed the building to the trust and enter into a promissory note to repay the existing balance of the interest, which is about $180,000, out of the future cash flow of the property.”
payment of $188,500 in unpaid interest was not in the original
management agreement, but all other aspects remain the same, Tolbert
According to city documents, the total amount forgiven on the principal of the loan is $4.19 million.
Catherine O’Connor, surrogate general manager of the trust, said the foundation, which was required to pay on its loan every quarter from revenue generated by the property, had made payments on the loan prior to it being deeded to the trust.
An informal appraisal presented at the meeting stated that the property is still worth at least the $4.2 million paid for it and probably more now that the city has chosen to locate the MAPS 3 convention center across the street, O’Connor said.
Tolbert said if there are future improvements or potential developments of the property, it would be the city that reaps the benefits, rather than the foundation.
Trust board member and City Councilor Larry McAtee said the deal is a good one.
“From a business standpoint, this looks like a very good business deal,” McAtee said.
Photos by Mark Hancock