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HomeMy WebLinkAbout2018-14CITY OF COLUMBIA HEIGHTS, MINNESOTA RESOLUTION NO. 2018-14 RESOLUTION APPROVING SUBORDINATION AGREEMENT RELATED TO LOANS MADE BY THE CITY TO FINANCE COLUMBIA COURT TOWN HOMES WHEREAS, Columbia Heights Transition Block LLC, a Minnesota limited liability company (the "Developer "), the Columbia Heights Economic Development Authority (the "Authority "), and the City of Columbia Heights, Minnesota (the "City ") are parties to a Preliminary Development Agreement, dated October 19, 2000 (the "Original Contract "); and WHEREAS, the Original Contract contemplated that the Developer would transfer fee ownership of a parcel of land in the City (the "Land ") to Columbia Heights Housing Limited Partnership I, a Minnesota limited partnership (the "Borrower "), and that the Borrower would enter into a Definitive Development Agreement (as defined in the Original Contract) for the development and construction of a 22- unit affordable rental complex (the "Project ") on the Land; and WHEREAS, the Developer and the Authority entered into that certain Contract for Private Development, dated March 23, 2001 (the "Contract "), which Contract is the Definitive Development Agreement contemplated by the Original Contract, pursuant to which the Developer agreed to develop and construct the Project on the Land and the Authority agreed to provide public assistance to the Developer in connection with the Project; and WHEREAS, the Developer conveyed the Land to the Borrower, and thereafter the Borrower developed and constructed the Project; and WHEREAS, in accordance with the Contract, the Developer obtained additional financing, including a mortgage and other forms of financing, sufficient to complete the construction of the Project and certain financing documents were delivered to the Developer, including but not limited to the LCA Loan Agreement and the CDBG Loan Agreement (each as hereafter defined); and WHEREAS, pursuant to a grant agreement between the Metropolitan Council and the City, the City received from the Metropolitan Council certain grant funds created under Minnesota Statutes, Section 473.251, as amended (the "Metropolitan Livable Communities Fund "), intended in part to facilitate development of the Project; and WHEREAS, from the grant funds provided by the Metropolitan Council, the City provided a loan of $100,000 (the "LCA Loan") to the Borrower pursuant to a Loan Agreement (Livable Community Act Funds), dated March 23, 2001 (the "LCA Loan Agreement "), between the Borrower and the City, in order to provide additional financing for the Project; and WHEREAS, to evidence the LCA Loan, the Borrower issued its promissory note to the City, dated March 23, 2001 (the "LCA Note "); and WHEREAS, from the grant funds provided by the United States Department of Housing and Urban Development Community Block Grant Program, the City provided a loan of $231,000 (the "CDB Loan ") to the Borrower pursuant to a Loan Agreement (Community Development Block Grant Funds), dated March 23, 2001 (the "CDB Loan Agreement "), between the Borrower and the City, in order to provide additional financing for the Project; and WHEREAS, to evidence the CDB Loan, the Borrower issued its promissory note to the City, dated March 23, 2001 (the "CDB Note "); and WHEREAS, the Borrower is in the process of refinancing the debt incurred to finance the construction of the Project whereby the Federal Home Loan Mortgage Corporation, a shareholder -owned government sponsored enterprise ( "Freddie Mac ") has committed, subject to certain conditions, to facilitate the financing of the Project by purchasing a loan made by NorthMarq Capital, LLC (the "Lender ") to the Borrower in the approximate amount of $1,825,000 to refinance the Project; and WHEREAS, in conjunction with the refinancing of its debt related to the Project, the Borrower has requested that the interests of the City in the LCA Loan Agreement and LCA Note and the CDB Loan Agreement and CDB Note be subordinated to the Lender's interests with respect to the refinancing debt; and WHEREAS, there has been presented before the City Council a form of Subordination Agreement — Governmental Entity (the "Subordination Agreement "), between the Lender and the City; and WHEREAS, the City Council has reviewed the Subordination Agreement and finds that the execution of the same are in the best interest of the City and of its residents. NOW, THEREFORE, be it resolved by the City Council of the City of Columbia Heights as follows: 1. The Subordination Agreement, as presented to the City, is hereby approved in all respects for execution by the City, subject to modifications that do not alter the substance of the transaction and that are approved by the Mayor and City Manager of the City, provided that execution of such documents by such officials shall be conclusive evidence of their approval. 2. The Mayor and City Manager of the City are hereby authorized to execute and deliver any and all documents deemed necessary to carry out the intentions of this resolution. This resolution shall take effect and be in full force from and after its approval. Approved by the City Council of the City of Columbia Heights, Minnesota, this 26th day of March, 2018. Nick No *,Counccil President Attest: X& D Kati Bruno, City Clerk