Apparently the Lampasas Economic Dunces Club has agreed to borrow yet ANOTHER huge pile of money ($1,500,000.00) from BancorpSouth for their failed ‘business’ park. One of the conditions of the NEW loan [see pages 9 and 10] is that the LEDC agreed to EXTEND the terms of the OLD loan (made in 2015 for $1,345,000) for another TEN YEARS!
Seems ridiculous to me, but what do I know? I’m just an idiot taxpaying, non-banker Lampasshole chump.
Let’s break all this profligate spending down and start at the beginning:
Loan #93300010855800 was originated back in 2015. It was for $1.345 MILLION and the proceeds were mostly wasted spent to put pipes in the ground at the corpse repository ‘business’ park.
[That would be the same ‘business’ park that still sits empty today and which former councilman Mike White called a “goat pasture” last May.]
The terms of the loan were 3.35% for 15 years – with a maturity date of March 5th, 2030.
That “finance charge” means “total interest payments” – the total COST of the loan. Yes, you read that right – the LEDC will squander $377,116 over 15 years to borrow that money. So when they borrowed $1.345 million to put pipes in the ground in a business park that sits completely empty 6 years later, they ACTUALLY are wasting $1,722,116.00 – NOT just the $1.345 million in principal.
The fun fact about all these interest payments is that they are mostly front-loaded. In other words, the interest payments are HUGE up front and dwindle over time as the loan balance shrinks. The very FIRST interest payment was $43,295 (in 2015) and the very LAST interest payment will be $945 in 2030.
Since this loan has been running now for 6 years, they have forked over $244,000 in interest payments already – or about 65% of the total interest they will owe over the course of the loan (244/377 = 64.7%).
So the TERM of the loan is only 40% complete but the INTEREST PAYMENTS are 65% complete. The bank only has another $133,000 in juice to squeeze from the LEDC nutsack over the next 9 years.
[Reminder – the NEW loan will generate roughly $561,000 for BancorpSouth: $1.5 million at 3.20% for 21 years]
Oh, and BancorpSouth ALSO wants a 1% “loan origination fee” [page 9]- that’s a measly $15,000 for those of you who suck at math.
What’s a banker to do? Hmmm. Well, MAYBE they could tack ANOTHER 10 years on to that first loan as a condition of the LEDC getting this NEW loan! Naturally, the interest rate will be kept the same as the FIRST loan (3.35%) and NOT adjusted downward to that of the second loan (3.2%).