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07/12/2010 Council Packet
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07/12/2010 Council Packet
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City Council
Council Document Type
Council Packet
Meeting Date
07/12/2010
Council Meeting Type
Regular
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• <br />• <br />• <br />STAFF ORIGINATOR: <br />MEETING DATE: <br />TOPIC <br />VOTE REQUIRED: <br />BACKGROUND: <br />AGENDA ITEM 1 <br />Mary Alice Divine <br />July 12, 2010 <br />Consider Resolution No. 10 -01, Approving a First <br />Amendment to Contract for Private Development and <br />Subordination Agreement between the Lino Lakes <br />Economic Development Authority and Lino Lakes <br />Housing Limited Partnership <br />Simple Majority (3/5 Vote Required) <br />As you know, the Lino Lakes Economic Development Authority (EDA) entered into a <br />Contract for Private Development with Cottage Homesteads of Willow Ponds Limited <br />Partnership, dated October 3, 1995. Under the Contract, the Authority provided tax <br />increment financing assistance to the developer of a 48 -unit rental affordable housing <br />development known as the Cottage Homestead of Willow Ponds. In addition, the City <br />imposed a separate covenant requiring that 47 of the units be occupied by at least one <br />person who is at least 55 years old, which remains in effect until 2026. <br />Lino Lakes Housing Limited Partnership plans to acquire the project from the original <br />developer, and in connection with that acquisition is obtaining a HUD loan insured by <br />the Federal Housing Administration. <br />As condition of making the HUD Loan, HUD has required that the EDA subordinate its <br />rights under the Contract and the City Senior Covenant. HUD has requested an <br />amendment to the Contract, which inserts nationally standard subordination language <br />that HUD requires in its mortgage transactions. Generally, the HUD language means <br />that the Contract and the City Senior Covenant is subordinate to the HUD Mortgage. <br />This means that if the HUD Mortgage were foreclosed, HUD could eliminate the City <br />Senior Covenant and dispose of the Property without that encumbrance. <br />The EDA has interest in retaining this project as senior housing and staff and attorneys <br />worked with HUD to ensure a measure of security before agreeing to subordinate the <br />covenant. HUD has agreed to include its own senior covenant that requires that 47 units <br />be occupied by at least one person who is at least 62 years of age. The HUD Senior <br />
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