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