Coatesville council and the city Redevelopment Authority will meet tonight to decide whether to tap into the Trust Fund to pay off a $7 million note used to purchase properties the Janssen Administration believed were needed for the city's revitalization

Coatesville City Manager Harry Walker said the $7 million was spent in two years. The idea at the time the RDA obtained the loan was the money would be paid back quickly. Basically, the RDA would purchase the property, provide clean up with federal and state funds, and then sell it to the developer. However, that didn't occur and the RDA has been paying interest on the property since.

"Every time the RDA sold a property, it went to pay the interest; so, nothing was going to the principal," said Walker. "Frankly we don't have a way out."

Although the RDA took out the loan, ultimately, said Walker, the city is responsible.

In June 2004, the RDA secured the a $7 million line of credit from First National Bank and immediately began buying up properties. Its largest purchase was the 27-acre Flats for $1.6 million, the former site of G.O. Carlson Inc. The RDA spent another $193,349 from a smaller tract from the International Steel Group, now Mittal Steel.

According to Walker, the city will be required to pay a minimum $420,000 in annual interest, if it doesn't retire the loan. Also, he said, there is at least a 2-percent differential between what the city makes and what it pays for interest, about $140,000.