DISCLAIMER

 

06-0830R


RESOLUTION AUTHORIZING THE CITY TO ENTER INTO A SECOND AMENDED AND RESTATED MASTER SUBORDINATION AGREEMENT REGARDING THE WASHINGTON SCHOOL PROJECT.

BY COUNCILOR GILBERT:

     RESOLVED, that the proper city officials are hereby authorized to enter into a second amended and restated master subordination agreement, substantially in the form of that on file in the office of the city clerk as Public Document No. ____________, with Washington Studios Limited Partnership (Washington Partnership), Artspace Projects, Inc., TCF National Bank (TCF), Duluth economic development authority (DEDA) and Housing and Redevelopment Authority of Duluth, Minnesota (HRA), regarding the Washington school project.


STATEMENT OF PURPOSE:  The purpose of this resolution is to authorize execution of a second amended and restated master subordination agreement setting forth the priority of liens with respect to the Washington school project loans as follows:


     TCF Loan                  $ 460,000

     DEDA Loan               4l9,324

     DEDA II Loan                419,324

     City Abatement Loan         312,636

     City Loan                   100,000

     HRA Loan                    285,000

     City HOME Loan              100,000

     Deferred Fees Loan           38,220

     DEDA Assigned Loan           80,000


The Washington Partnership has been working with its first mortgage lender to refinance the Washington school project. The TCF loan amount will be increased from $339,200 to $460,000 in order to accomplish the following: take advantage of interest rate savings, allow Washington Partnership to substantially increase funded replacement reserves, fund needed capital improvements to the site and satisfy certain accrued and deferred liabilities of the partnership critical for tax credit compliance. The order of priority of all liens subordinate to TCF including those of the city remains unchanged.