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06-07-2010 Council Minutes (2)
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06-07-2010 Council Minutes (2)
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City Council
Council Document Type
Council Minutes
Meeting Date
06/10/2010
Council Meeting Type
Work Session Regular
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CITY COUNCIL WORK SESSION June 7, 2010 <br /> APPROVED <br /> 45 intend to go in that direction, another buyer might. He is anxious to work with the <br /> `, 46 council to find a solution. <br /> 47 <br /> 48 Council Members received more information from Mr. Reisenberg on the future capital <br /> 49 needs for the project. They also discussed that the agreement in question doesn't seem <br /> 50 unusual so it shouldn't have come as such a surprise to Mr. Reisenberg. Also noted was <br /> 51 that the biggest question is whether the project remains guaranteed senior housing. The <br /> 52 council also questioned, if the agreement were subordinated as is being requested, could <br /> 53 he (Mr. Reisenberg)change it from senior housing with or without HUD approval and <br /> 54 also who would hold that right if there was a foreclosure? The council asked Mr. <br /> 55 Reisenberg for some background information on his other projects and he explained his <br /> 56 record. There was some discussion amongst the council about the capital needs and <br /> 57 maintenance and some concern that the maintenance is coming due because it hasn't been <br /> 58 done appropriately to this point. Mr. Reisenberg pointed out in response that the <br /> 59 condition of the property is excellent and the only immediate need is the addition of some <br /> 60 smoke detectors and to overlay the parking lot; what he has spoken about are the capital <br /> 61 needs of the future and they are generally common things that need to happen in the <br /> 62 second 15 year period of a project's existence. He added that HUD requires a capital <br /> 63 needs plan as part of the financing package. He characterized this as a nice project the <br /> 64 way it is. <br /> 65 <br /> 66 Attorney Bubul added that there is no issue realistically with maintaining the senior <br /> 67 requirement unless the project goes into foreclosure. He has to state that there is no "iron <br /> 68 clad" guarantee however. <br /> 69 <br /> 70 Ms. Divine explained that this is an Economic Development Authority(EDA)decision <br /> 71 but of course the council acts as the economic development authority for the city. If the <br /> 72 council concurs, their comments would be forwarded to the EDA who could move to <br /> 73 finalize the necessary documents. <br /> 74 <br /> 75 The council confirmed with Mr. Reisenberg that he would be willing to do a senior <br /> 76 convenant for a 35 year period (term of the mortgage). Mr. Reisenberg added that there is <br /> 77 no doubt that this sale will not happen if the subordination on the covenant does not <br /> 78 occur; he doesn't know if there is anyone else out there waiting to purchase. The council <br /> 79 confirmed that Mr. Reisenberg's proposed mortgage would be assumable (but only with <br /> 80 approval of all attached parties). Mr. Reisenberg also confirmed that he has not had any <br /> 81 projects that have failed; generally he is working on 5-6 projects at any given time. He <br /> 82 also noted that the failure of senior projects financed by HUD is rare to non-existent. <br /> 83 When the council asked if Mr. Reisenberg could request a change through HUD after the <br /> 84 deal is cut, Attorney Bubul responded that it would be very rare for that to occur and, in <br /> 85 fact, it is difficult to even conceive. <br /> 86 <br /> 87 The council concluded that more discovery and discussion is needed on this matter. They <br /> 88 want to ensure that the city's best interest is secure with any change. They will continue <br /> 89 discussion at the next regular work session. <br /> 2 <br />
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