06/07/2010 Council Packet - Laserfiche WebLink

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• • • Current status Currently we have satisfied all the required forty two commitment conditions in the February 18th COMMITMENT TO INSURE UPON COMPLETION issued by HUD except for condition #36: "The T1F covenants will need to be subordinated to the insured mortgage and amended to conform to MAP requirements. ". As part of closing and to satisfy condition #36 identified above, our lender's attorney presented to the City several standard HUD subordination agreements for execution. Please see attachment D. Two days before closing, the City attorney informed us the City was unwilling to sign the subordination agreement as presented. We checked back with the HUD attorney and he informed us that the subordination agreement is a standard national loan policy and cannot be waived. Unable to gain the City's approval to subordinate its restrictive covenant to the proposed lender we cancelled closing one day before its scheduled date. Furthermore, please be informed that after discussions with the State of Minnesota, MHFA agreed to subordinate its series of restrictive land use covenants establishing affordable rents, tenant incomes and disability requirements to the first mortgage lender as requested and required by HUD. The MHFA LURA is attachment D. And finally, I was informed by the HUD office, they cannot recall any state or municipality not agreeing to subordinate its covenants to the ft mortgage lender in regards to a similar refinancing transaction. In summary, I assumed that after presenting the "commitment to insure" document as part of the background information submitted for City review of the consent to assign project TIF benefits, the requirement to subordinate TIF covenants would be in fact understood and acknowledged. Our lender recently issued a NOTICE AND REQUEST FOR SUBORDINATION to the City of Lino Lakes on May 26th found in attachment C 5