06/07/2010 Council Packet - Laserfiche WebLink

Home Search

• • • WS — Item 1 WORK SESSION STAl+l+ REPORT Work Session Item 1 Date: June 7, 2010 To: City Council From: Mary Alice Divine Re: Cottages of Willow Ponds Senior Housing Background In 1995 the Lino Lakes Economic Development Authority (EDA) entered into a contract with Cottage Homesteads of Willow Ponds to provide an affordable senior housing project on Elm Street. In the contract the EDA agreed to provide available tax increment generated by the project for a period of 15 years, beginning in 1997. The contract, therefore, expires with the final TIF payment in 2012. In Section 8.7 of the contract, entitled "Subordination ", it states: "Upon request by a mortgagee providing financing or refinancing of the minimum improvements, the Authority agrees to subordinate this Agreement to the rights of any such mortgagee." This subordination clause to lenders is typical in TIF contracts. The Contract also contains an Exhibit C, called a Declaration of Covenant and Restriction. This Declaration requires that the project be occupied by one person who is 55 years of age or older. This covenant expires on February 1, 2026, which is 14 years after the TIF contract expires. The covenant states that it shall not be modified or revoked prior to this termination date. Lino Lakes Housing Limited Partnership is proposing to purchase the senior project. The financing will have Housing and Urban Development (HUD) as the underwriter. The property intends to stay an affordable senior project, and HUD will have its own requirements that it remain a senior facility for ages 62 +. However, according to HUD regulations, the Declaration of Covenant and Restriction must also be subordinate. This would allow HUD, in the event of foreclosure on the property, to determine if it was in its best interest to sell the property without the age restriction. 1