PLANNING AND ECONOMIC DEVELOPMENT COMMITTEE
RESOLVED, that the proper city officials are authorized to enter into an amendment to URAP program agreement and lien, substantially in the form of that on file in the office of the city clerk as Public Document No. __________, with MPA extending the term of the loan.
FURTHER RESOLVED, that the proper city officials are authorized to enter into a modification agreement to the HOME loan program agreement, substantially in the form of that on file in the office of the city clerk as Public Document No. __________, with MPA extending the term of the loan.
FURTHER RESOLVED, that the proper city officials are authorized to enter into a master subordination agreement and estoppel certificate substantially in the form of that on file in the office of the city clerk as Public Document No. __________, with MHFA, the greater Minnesota housing fund (GMHF), the HRA, LISC and Center City Housing Corporation (Center City) setting forth the priority of the parties’ liens.
FURTHER RESOLVED, that the city’s manager of community development is authorized to give written approval of further subordination of the city’s loans.
STATEMENT OF PURPOSE: This resolution relates to the proposed rehabilitation of Center City Housing Corporation’s (CCHC) Memorial Park Apartments located at 605 North Central Avenue.
In 1991, CCHC became the owner of what was formerly the YMCA in West Duluth. Approximately half the property consisted of 31 units of single-room occupancy units, the other half made up of an unused gymnasium, locker rooms, and pool. In 1996-1997, CCHC converted the unused space into eight (8) family apartments. The city of Duluth provided loans from the HOME program and urban revitalization action program (URAP) for this project.
The expenses to operate Memorial Park Apartments have significantly exceeded revenues for more than a decade. A major contributor to the cash flow problem are high utility costs for a very energy inefficient building. Working with the city of Duluth and Minnesota housing finance agency, CCHC has developed a plan to renovate the property, and to restructure rent subsidies to ensure the future viability of the property.
Part of this plan requires changes and modifications to some of the agreements that were entered into for the 1996-1997 project. The priority order of liens placed on the property to ensure compliance with funding agreements has to be changed to include new funding agreements, to delete those liens that have since expired, and to extend the terms of the city’s URAP and HOME loans that currently end on July 30, 2016.
Approval of this resolution will extend the term of the city loans until July 30, 2038, at which time they will be payable to the city. The HOME loan amount is $108,500, and the remaining URAP loan is $100,000. The resolution also terminates the 1996-1997 projects’ priority and sharing agreement, and authorizes the city to enter into a new master subordination agreement. Additionally, the resolution allows the manager of community development to consent to additional subordination of these loans.