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RESOLUTION AUTHORIZING A FIRST AMENDMENT TO LOAN AGREEMENT WITH DULUTH PLAYHOUSE, INCORPORATED MODIFYING THE LOAN TERM AND PROVIDING FORGIVENESS TERMS
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WHEREAS, the Duluth Economic Development Authority (“DEDA”) and Duluth Playhouse, Incorporated (“Playhouse”) entered into that certain Loan Agreement dated June 15, 2016 (the “Loan Agreement”), as evidenced by that certain note dated June 15, 2016 (the “Playhouse Note”) pertaining to a long-term bridge loan (the “Loan”) to fund the Playhouse’s equity investment in the redevelopment and operation of the historic NorShor Theatre, located at 207-213 East Superior Street, a community theater and performing arts venue in Downtown Duluth.
WHEREAS, Playhouse has requested an extension of the time to repay the Loan and modification of its terms in order to avoid a material increase in debt service costs that would occur if the Loan were refinanced with conventional financing.
NOW, THEREFORE, BE IT RESOLVED, that the proper DEDA officials are hereby authorized to enter into a first amendment to the Loan Agreement, substantially in the form of Attachment 1, with Playhouse amending the Loan Agreement and Playhouse Note, to extend the term of the Three Million Five Hundred Thousand Dollars ($3,500,000) loan, forgive future interest, and providing for conditional loan forgiveness at the end of the term.
Statement of Purpose
STATEMENT OF PURPOSE: The purpose of this resolution is to amend the loan agreement with the Duluth Playhouse, Incorporated for the NorShor Theatre to extend the term of the $3,500,000 loan, forgive future interest, and provide for loan forgiveness at the end of the extended term.
As with many local and community theater, Duluth Playhouse was hard hit by the pandemic and has been struggling to regain their footing ever since. The Duluth Economic Development Authority (“DEDA”) has been working closely with Duluth Playhouse to find a path forward that allows for repayment of the outstanding loan without adversely affecting Duluth Playhouse’s financial future.
As required in the loan agreement (Attachment 2), Duluth Playhouse used its best efforts to refinance the remaining portion of the loan and the outstanding interest. Duluth Playhouse was not able to reasonably proceed with refinancing the loan.
In order for DEDA to provide forgiveness, Duluth Playhouse must make an Economic Development Commitment. To align with the City of Duluth and DEDA’s focus on downtown Duluth, specifically First Street, Duluth Playhouse has committed to investing no less than $1,000,000 in the property located at 201 East First Street (the “Annex Property”) for the purpose of the Playhouse using best efforts to convert the Annex Property into a school for performing arts and/or a second performance space for the Duluth Playhouse and local arts organizations.