06-07-2010 Council Minutes (2) - Laserfiche WebLink

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CITY COUNCIL WORK SESSION June 7, 2010 APPROVED 45 intend to go in that direction, another buyer might. He is anxious to work with the `, 46 council to find a solution. 47 48 Council Members received more information from Mr. Reisenberg on the future capital 49 needs for the project. They also discussed that the agreement in question doesn't seem 50 unusual so it shouldn't have come as such a surprise to Mr. Reisenberg. Also noted was 51 that the biggest question is whether the project remains guaranteed senior housing. The 52 council also questioned, if the agreement were subordinated as is being requested, could 53 he (Mr. Reisenberg)change it from senior housing with or without HUD approval and 54 also who would hold that right if there was a foreclosure? The council asked Mr. 55 Reisenberg for some background information on his other projects and he explained his 56 record. There was some discussion amongst the council about the capital needs and 57 maintenance and some concern that the maintenance is coming due because it hasn't been 58 done appropriately to this point. Mr. Reisenberg pointed out in response that the 59 condition of the property is excellent and the only immediate need is the addition of some 60 smoke detectors and to overlay the parking lot; what he has spoken about are the capital 61 needs of the future and they are generally common things that need to happen in the 62 second 15 year period of a project's existence. He added that HUD requires a capital 63 needs plan as part of the financing package. He characterized this as a nice project the 64 way it is. 65 66 Attorney Bubul added that there is no issue realistically with maintaining the senior 67 requirement unless the project goes into foreclosure. He has to state that there is no "iron 68 clad" guarantee however. 69 70 Ms. Divine explained that this is an Economic Development Authority(EDA)decision 71 but of course the council acts as the economic development authority for the city. If the 72 council concurs, their comments would be forwarded to the EDA who could move to 73 finalize the necessary documents. 74 75 The council confirmed with Mr. Reisenberg that he would be willing to do a senior 76 convenant for a 35 year period (term of the mortgage). Mr. Reisenberg added that there is 77 no doubt that this sale will not happen if the subordination on the covenant does not 78 occur; he doesn't know if there is anyone else out there waiting to purchase. The council 79 confirmed that Mr. Reisenberg's proposed mortgage would be assumable (but only with 80 approval of all attached parties). Mr. Reisenberg also confirmed that he has not had any 81 projects that have failed; generally he is working on 5-6 projects at any given time. He 82 also noted that the failure of senior projects financed by HUD is rare to non-existent. 83 When the council asked if Mr. Reisenberg could request a change through HUD after the 84 deal is cut, Attorney Bubul responded that it would be very rare for that to occur and, in 85 fact, it is difficult to even conceive. 86 87 The council concluded that more discovery and discussion is needed on this matter. They 88 want to ensure that the city's best interest is secure with any change. They will continue 89 discussion at the next regular work session. 2