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