BY COUNCILOR GILBERT:
RESOLVED, that the proper city officials are hereby authorized to enter into the amendment to sharing and subordination agreement, substantially in the form of that on file in the office of the city clerk as Public Document No. __________, with Housing and Redevelopment Authority of Duluth, Minnesota (HRA), Greater Minnesota Housing Fund (GMHF), Center City Housing Corporation (Center City), Conro Properties, LLC (Conro) and US Bank National Association (US Bank) related to the four-plex adjacent to the Village Place project, pursuant to which all of Center City’s obligation under a 1997 HOME program forgivable loan will be assumed by Conro and the city’s mortgage lien will be subordinated to an additional $38,500 in new debt provided by US Bank.
STATEMENT OF PURPOSE: In October of 1997, the city provided HOME program forgivable loan funds in the amount of $29,000 to Center City for the purpose of rehabilitating a four-plex located at 624 - 626-1/2 East Fifth Street adjacent to the new Village Place project. The HOME program agreement provided for a ten year mortgage lien in favor of the city. The city and HRA hold a shared third priority position behind US Bank and GMHF.
Conro is a Minnesota limited liability company which is owned by the general partner in the Village Place project. The acquisition of the four-plex by Conro has always been a part of the Village Place project plan. However, delays in underwriting the refinancing of the first mortgage kept Conro from closing the transfer at the time the rest of the Village Place transaction closed.
Wells Fargo has completed its underwriting and will provide first mortgage financing to Conro on the four-plex, taking out the current first mortgage held by US Bank. The original principal amount of the US Bank loan was $78,653. The current balance is $61,500. The principal amount of the new Wells Fargo mortgage will be $100,000. Under the terms of the amendment to the sharing and subordination agreement, Conro will assume all the existing obligations of Center City under the HOME program forgivable loan agreement, the city and HRA will be subordinated to an additional $38,500 in new debt provided by US Bank and the priority of the parties will remain the same.