04-0739R


RESOLUTION AUTHORIZING AGREEMENT WITH DEDA TO REIMBURSE IT FOR COST OF CONDEMNATION SERVICES RELATED TO THE SAN MARCO PROJECT.

BY COUNCILOR GILBERT:

     RESOLVED, that the proper city officers are hereby authorized to enter into an agreement with the Duluth economic development authority to reimburse DEDA for the costs of acquiring by condemnation the so-called “San Marco” properties for “wethouse” project except for $75,000, being DEDA’s loaned participation in the project pursuant to its Resolution 03D-65, all reimbursement to be payable from Fund 0262, Agency 625, Object 6505 and Fund 0262, Agency 626, Object 6605.


STATEMENT OF PURPOSE:  The purpose of this resolution is to authorize an agreement with DEDA pursuant to which DEDA agrees to acquire the so-called ‘San Marco” property by condemnation if necessary to fulfill the city’s obligations under the city’s agreement with C.C. San Marco L.L.C., and the city agrees to reimburse DEDA for these services.


The city has entered into an agreement with C.C. San Marco L.L.C. for the development of a low income SRO residential project, a portion of which will be a so-called “wethouse” facility, on certain property at 3rd Avenue West and 3rd Street in the city’s Central Hillside neighborhood. This property is presently privately owned and, under the agreement, the city is obligated to acquire it, condemning it if necessary.


Because questions have arisen regarding the city’s ability to use its power of condemnation for this purpose but DEDA’s power to do so is clear, acting as an HRA, the city has requested that DEDA act to acquire the property and proposes to reimburse DEDA’s costs of doing so except for $75,000 of those costs which DEDA had previously budgeted as its participation in the project. DEDA’s participation will be in the form of a forgivable loan, to be repaid if the state participates in the form of a MHFA loan for the project but forgivable if that part of the financing takes the form of federal housing tax credits.


This resolution would authorize the agreement to formalize this arrangement.