00-0836R

RESOLUTION AUTHORIZING SUBORDINATION OF A HOME PROGRAM AGREEMENT MORTGAGE EXECUTED BY LIFE HOUSE, INC.

BY PRESIDENT GILBERT:

        RESOLVED, that the proper city official are hereby authorized to enter into a subordination of mortgage, substantially in the form of that on file in the office of the city clerk as Public Document No. ________________, which subordinates a $175,000 mortgage under a HOME program grant agreement (City Contract No. 18409) executed by Life House, Inc., in favor of the city of Duluth to a $350,000 mortgage of Local Initiatives Support Corporation (LISC) and which further provides that upon the "take out" of the LISC mortgage by Minnesota housing finance agency (MHFA), the MHFA's loan will be deemed as successor to LISC and the HOME mortgage will be a second priority lien behind the $350,000 mortgage of MHFA.


STATEMENT OF PURPOSE:   In 1998, the city awarded $175,000 in HOME program funds to Life House, Inc., for the renovation of the former Ideal Market located at the corner of First Street and First Avenue West.  Named LIFELINE, this is a collaborative project between Lifehouse and Lutheran Social Services, with the Lifehouse Youth Center plan for the first floor and Lutheran Social Services providing supervised, short-term transitional housing on the second floor.  LISC will be providing interim financing in the amount of $350,000.  LISC requires that its mortgage be in first position.  The LISC loan will be "taken out" by MHFA upon completion of the construction.  This resolution authorizes LISC to have first priority ahead of the city's $175,000 mortgage.  It also authorizes, upon "take out" by MHFA of the LISC loan, for MHFA to have first priority ahead of the city's mortgage.