09-20 and 09-21-10 Special Called Regular Meeting of Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS Agreed Upon Procedures - Five Points Town Center Project (Continued) September 21, 2010 With respect to the payment for purchase of the Triangle property, $153,424.56 was transferred to a Stewart Title Company Escrow account (Exhibit 39). The amount matches the HUD-l closing document found in Exhibit 34. The amount can be broken down as follows: . $150,000.00 - Purchase price of the property . $3,479.00 - Closing costs associated with purchase . $324.44 - Delinquent taxes credited to purchase price of the property ill exchange for the amounts above, the EDC took ownership of the property as evidenced by the completed contract (Exhibit 40). The loan to East A, also in the amount of $150,000, is covered above in the section "Review Loan Documents to Determine Compliance with the Agreement and Applicable Laws and Regulations. " Review of Exhibit C for proper execution ill the documents provided to us, there were two items denoted with Exhibit C. Both were HUD-1 closing documents; one for the loan to East A (Exhibit 30) and one for the purchase of the Triangle property from East A (Exhibit 37). Both documents appear to be properly executed. Amounts total and match other documentation. Review title history along with lien documents on property, if available, and timing of transactions The purchases of two properties by the EDC for the Proj ect (Parks and Wildlife Building and Triangle property) appear to be straight sales. We were provided no documents to the contrary. Most of the concerns revolve around the much more complicated array of liens involving the property purchased by East A using the proceeds of the $150,000 loan provided by the EDC. The liens and title history of this property can be summarized as follows: On July 30,2007, the Triangle property and the property at 109 and 111 San Jacinto was purchased by East A from Wade Cooper for $59,999 as can be seen on Exhibit 41, page 1. Rather than a straight purchase, the property was deeded to East A using a Special Warranty Deed with Vendor's Lien (Exhibit 41, page 4) backed by a note. On October 17, 2008, East A obtained a mortgage on the two properties in the amount of $110,000 through Gagle illvestments. This is evidenced by the Deed of Trust and Security agreement which can be found as Exhibit 41, page 22. On October 29, 2008, the 100' right of way along San Jacinto belonging to East A was deeded to the EDC. This was the portion of San Jacinto Street which was closed to traffic and incorporated as part of the Plaza. Also on October 29,2008, a Warranty Deed with Vendor's Lien was issued in the amount of $150,000. The original Warranty deed apparently had a mistake and was corrected with the deed attached in Exhibit 41, page 11. This is in reference to the $150,000 loan provided to East A by the EDC as discussed above. 22