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• <br />• <br />• <br />WS — Item 1 <br />WORK SESSION STAFF REPORT <br />Work Session Item 1 <br />Date: July 6, 2010 <br />To: City Council <br />From: Mary Alice Divine <br />Re: Cottages of Willow Ponds <br />Background <br />The Cottages of Willow Ponds were built with TIF assistance from the city with the <br />intent that it be an affordable senior housing project. The City's Economic Development <br />Authority entered into a development contract with the original owners in 1995. A <br />separate restrictive covenant required the project remain senior housing through 2026. <br />At the June work session Mr. Chuck Reisenberg, representing Lino Lakes Housing <br />Limited Partnership, addressed the City Council regarding his intent to purchase the <br />Cottages of Willow Ponds using a HUD insured loan. Federal HUD regulations require <br />that the City subordinate its rights under the contract to HUD. HUD was also requiring <br />that the City subordinate the covenant restricting use of the property to senior housing <br />through 2026. This could have had the potential effect, if the property was ever <br />foreclosed, that HUD could eliminate the senior covenant in order to sell the property. <br />A discussion was held whether there were potential solutions to provide the City with <br />reasonable assurance that the project remains affordable senior housing while allowing <br />Mr. Reisenberg to proceed with purchase of the property. A memo from Steve Bubul is <br />included in your packet addressing questions raised by the Council and explaining <br />additional safeguards agreed to by HUD and the buyer. Also enclosed is the proposed <br />amendment to the original contract that the EDA would need to be approved by the EDA. <br />1 <br />