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HomeMy WebLinkAbout03-25-2013 EDA PacketAGENDA ECONOMIC DEVELOPMENT AUTHORITY MEETING MONDAY, MARCH 25, 2013 6:20 P.M. City Council Chambers 1. Call to Order and Roll Call 2. Consideration of Minutes of March 11, 2013 3. Consideration of Resolution No. 13-04 Approving the Second Amendment to the Contract for Private Development and Subordination Agreement, and First Amendment to Declaration of Covenant and Restriction by and between the Lino Lakes Economic Development Authority and Lino Lakes Housing Limited Partnership, Mary Divine 4. Adjourn EDA MINUTES MARCH 11, 2013 APPROVED DATE : March 11, 2013 TIME STARTED : 6:15 p.m. TIME ENDED : 6:20 p.m. MEMBERS PRESENT : Commissioners O'Donnell, Roeser, Reinert, Rafferty, Stoesz MEMBERS ABSENT : None OTHERS PRESENT: : Mary Divine The meeting was called to order at 6:15 p.m. by President Roeser. CONSIDERATION OF THE MINUTES OF JANUARY 14, 2013 EDA Member O'Donnell moved to approve the January 25, 2013 minutes. EDA Member Rafferty seconded the motion. Motion carried on a unanimous voice vote. PUBLIC HEARING TO CONSIDER THE SALE OF PROPERTY TO LINO LAKES ASSISTED LIVING Mary Divine, Economic Development Coordinator, explained the terms of the Purchase and Redevelopment Agreement between the EDA and Lino Lakes Assisted Living, LLC (LLAL). She explained that LLAL would deposit the purchase price of $321,474 and the City would purchase the property from Anoka County. The County will re -convey $290,500 to the City for payment on the special assessments. Also included in the agreement is a subordination agreement subordinating the EDA's interest to the mortgage lender. EDA President Roeser opened the public hearing at 6:18 p.m. Upon hearing no one wishing to speak he closed the public hearing at 6:18 p.m. CONSIDERATION OF RESOLUTION 13-03 APPROVING A PURCHASE AND REDEVELOPMENT AGREEMENT BY AND BETWEEN THE LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY AND LINO LAKES HOUSING LIMITED PARTNERSHIP AND RELATED SUBORDINATION AGREEMENT EDA Member Rafferty moved to approve Resolution No. 13-03 as presented. EDA Member Stoesz seconded the motion. Motion carried on a unanimous voice vote. ADJOURNMENT There being no further business, EDA President Roeser moved to adjourn. EDA Member O'Donnell seconded the motion. Motion carried on a unanimous voice vote. Meeting adjourned at 6:20 p.m. 1 f �F . { �.J ECONOMIC DEVELOPMENT AUTHORITY AGENDA ITEM 3 STAFF MEMBER Mary Alice Divine DATE March 25, 2013 SUBJECT Consideration of Resolution No. 13-04, Approving the Second Amendment to Contract for Private Development and Subordination Agreement and First Amendment to Declaration of Covenant and Restriction VOTE REQUIRED Simple Majority BACKGROUND co In July 2010 the Economic Development Authority approved an amendment to the original Contract for Private Development so that Lino Lakes Housing Limited Partnership (LLHLP) could acquire the senior housing project from the original developer. In connection with that acquisition, LLHLP obtained a HUD loan insured by the Federal Housing Administration. As conditions of the 2010 Amendment, HUD required that the EDA subordinate its rights under the Contract, and the Developer agreed to replace the original City Senior Covenant with a new one that imposes the 55 age restriction through February 1, 2045 (roughly the same term as the HUD Loan). LLHLP wishes to refinance its HUD loan to take advantage of favorable interest rates. Attached are two documents amending the subordination agreement and restrictive covenants to reflect the new mortgage. The new mortgage is identical to the current one, with the same lender and HUD guarantee. The only item changed is the interest rate. RECOMMENDATION: Staff is recommending approval of Resolution 13-04 ATTACHMENTS: 1. Second Amendment to Contract for Private Development and Subordination Agreement 2. First Amendment to Declaration of Covenant and Restriction 3. Resolution No. 13-04 (Above Space Reserved for Recording Data) SECOND AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT AND SUBORDINATION AGREEMENT THIS SECOND AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT AND SUBORDINATION AGREEMENT (this "Agreement") is dated as of , 2013, by and between LINO LAKES HOUSING LIMITED PARTNERSHIP, a Minnesota limited partnership ("Developer"), and LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic of the State of Minnesota (the "Authority"). RECITALS: A. Developer is the fee owner of certain property known as Cottages Homesteads of Willow Pond located at 101 Willow Pond Trail, in the City of Lino Lakes, County of Anoka, State of Minnesota, as legally described on Exhibit A attached hereto and incorporated herein by reference (the "Project"). B. Developer's predecessor -in -interest, Cottage Homesteads of Willow Ponds Limited Partnership, a Minnesota limited liability company (the "Prior Developer"), and the Authority entered into that certain Contract for Private Development dated October 3, 1995, and recorded in the office of the County Recorder, Anoka County, Minnesota, on October 3, 1995, as Document No. 1185222, as assigned to Developer under that certain Assignment of Partnership Interests and Company Interests dated July 1, 2010, and recorded in the office of the County Recorder, Anoka County, Minnesota, on July 21, 2010, as Document No. 2016409.007 and further amended by First Amendment to Contract for Private Development and Subordination Agreement dated July 1, 2010, and recorded in the office of the County Recorder, Anoka County, Minnesota, on July 21, 2010, as Document No. 2016409.008 (together with all subsequent amendments, modifications, renewals and extensions thereof, collectively referred to herein as the "Development Contract"). 438732.2 C. Dougherty Mortgage LLC, a Delaware limited liability company ("Lender"), has agreed to make a refinancing loan to Developer in the original principal amount of Two Million Seven Hundred Ninety -One Thousand One Hundred and 00/100 Dollars ($2,791,100.00) (the "HUD Loan") which loan shall be insured by the Federal Housing Administration (the "FHA") of the United States Department of Housing and Urban Development ("HUD") under Section 207/223(f) pursuant to Section 223(a)(7) of the National Housing Act of 1934, as amended, pursuant to the Commitment for Mortgage Insurance dated January 30, 2013 (FHA Project No. 092-11339) (the "FHA Commitment"). D. The HUD Loan will be evidenced by that certain Amended and Restated Note (the "HUD Note") executed by Developer in favor of Lender in the original principal amount of the HUD Loan and will be secured in part by (i) that certain Amended and Restated Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement and Fixture Filing dated , 2013 (the "HUD Mortgage"), executed by Developer in favor of Lender, and by (ii) the Regulatory Agreement for Multifamily Housing Projects dated , 2013 (the "HUD Regulatory Agreement"), executed by and between the Developer and the Secretary of Housing and Urban Development. The HUD Note, the HUD Mortgage, the HUD Regulatory Agreement and all other loan and security documents executed in connection with the Loan are collectively referred to herein as the "HUD Loan Documents." E. As a condition to the making of the HUD Loan to Developer, Lender and HUD require that the Declaration be amended to include certain HUD provisions and that the Declaration be subordinated to the Loan and the HUD Loan Documents. AGREEMENT: NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual covenants and agreements hereinafter set forth, it is agreed by and between Developer and the Authority as follows: 1. Agreement to Prevail. The terms and conditions of this Agreement supersede the terms of the Declaration, and, should there be any conflict or inconsistency between this Agreement and the Declaration, the terms and conditions of this Agreement shall prevail. 2. Amendment of SECTION 9.1. SECTION 9.1 of the Declaration is hereby deleted and amended in its entirety to state as follows: Section 9.1 438732.2 Notwithstanding anything in this agreement to the contrary, except the requirements in 26 U.S.C. 42(h)(6)(E)(ii), this Agreement is expressly subordinate to (i) the Amended and Restated Note dated as of , 2013 (the "HUD Note"), executed by the Developer in favor of Dougherty Mortgage LLC, a Delaware limited liability company ("Lender"), (ii) the Amended and Restated Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement and Fixture Filing dated , 2013 (the "HUD Mortgage"), executed by the Developer in favor of Lender, (iii) the Regulatory Agreement for 2 Multifamily Projects dated , 2013 (the "HUD Regulatory Agreement"), executed by and between the Developer and the Secretary for Housing and Urban Development ("HUD"), and (iv) all other documents executed by the Developer, Lender and/or HUD in connection with the HUD Note (collectively the "HUD Loan Documents"), and is subordinate to all applicable HUD mortgage insurance (and Section 8 of the U.S. Housing Act of 1937, if applicable) regulations and related administrative requirements. In the event of any conflict between the provisions of this Agreement and the provisions of applicable HUD regulations, related HUD administrative requirements, or HUD Loan Documents, the HUD regulations, related administrative requirements or HUD Loan Documents shall control. 3. Amendment to Add SECTION 9.10. The Declaration is hereby amended to add the following subsection 9.10 to Article 9: Section 9.10 Subject to the HUD Regulatory Agreement, the Authority may require the Developer to indemnify and hold the Authority harmless from all loss, costs, damage and expense arising from any claim or proceeding instituted against the Authority relating to the subordination and covenants set forth in this Agreement, provided, however, that Developer's obligation to indemnify and hold the Authority harmless shall be limited to available surplus cash and/or residual receipts of the Developer. 4. Remaining Effectiveness. Except as herein specifically amended, the Declaration shall remain in full force and effect as written. 5 Successors and Assigns. Each agreement, and each and every covenant, agreement, and other provisions hereof shall be binding upon each of the parties hereto and their successors and assigns. 6. Governing Law. This Agreement is made and executed in the state of Minnesota and shall be governed by the laws of said state. 7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one instrument. 438732.2 [The remainder of this page has been left blank intentionally.] [Signature pages to follow.] 3 SIGNATURE PAGE TO SECOND AMENDMENT TO DECLARATION OF LAND USE RESTRICTIVE COVENANTS FOR LOW-INCOME HOUSING CREDITS AND SUBORDINATION AGREEMENT IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Declaration of Land Use Restrictive Covenants for Low -Income Housing Credits and Subordination Agreement effective as of the day and year first above written. STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) ss. DEVELOPER: LINO LAKES HOUSING LIMITED PARTNERSHIP, a Minnesota limited partnership By: LINO LAKES HOUSING, LLC, a Minnesota limited liability company Its: General Partner By: Charles E. Riesenberg Its: Chief Manager The foregoing was acknowledged before me this day of , 2013, by Charles E. Riesenberg, the Chief Manager of Lino Lakes Housing, LLC, a Minnesota limited liability company, the General Partner of Lino Lakes Housing Limited Partnership, a Minnesota limited partnership, on behalf of the limited partnership. 438732.2 4 Notary Public SIGNATURE PAGE TO SECOND AMENDMENT TO DECLARATION OF LAND USE RESTRICTIVE COVENANTS FOR LOW-INCOME HOUSING CREDITS AND SUBORDINATION AGREEMENT IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Declaration of Land Use Restrictive Covenants for Low -Income Housing Credits and Subordination Agreement effective as of the day and year first above written. THE AUTHORITY: LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic of the State of Minnesota By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) The foregoing was acknowledged before me this day of , 2013, by , the of MINNESOTA HOUSING FINANCE AGENCY, a public body corporate and politic of the State of Minnesota. Notary Public THIS INSTRUMENT WAS DRAFTED BY: FELHABER, LARSON, FENLON & VOGT, P.A. (JPB) 220 South Sixth Street, Suite 2200 Minneapolis, Minnesota 55402 (612) 339-6321 438732.2 5 EXHLBIT A TO SECOND AMENDMENT TO DECLARATION OF LAND USE RESTRICTIVE COVENANTS FOR LOW-INCOME HOUSING CREDITS AND SUBORDINATION AGREEMENT LEGAL DESCRIPTION OF PROJECT 438732.2 (Above Space Reserved for Recording Data) FIRST AMENDMENT TO DECLARATION OF COVENANT AND RESTRICTION THIS FIRST AMENDMENT TO DECLARATION OF COVENANT AND RESTRICTION (this "Amendment") is made by LINO LAKES HOUSING LIMITED PARTNERSHIP, a Minnesota limited partnership ("Declarant"), effective the day of , 2013. RECITALS: A. Declarant owns Lot Eleven (11), Block One (1), Willow Ponds of Lino Lakes, according to the plat and survey thereof on file and of record in the office of the County Recorder in and for Anoka County, Minnesota (the "Subject Property"); B. Declarant made that Declaration of Covenant and Restriction dated July 1, 2010, and filed of record on July 21, 2010, as Document No. 2016409.010 (the "Declaration") which imposed certain covenants and restrictions on the Subject Property. C. Dougherty Mortgage LLC, a Delaware limited liability company ("Lender"), has agreed to make a loan to Declarant in the original principal amount of Two Million Seven Hundred Ninety -One Thousand One Hundred and 00/100 Dollars ($2,791,100.00) (the "HUD Loan") which loan shall be insured by the Federal Housing Administration (the "FHA") of the United States Department of Housing and Urban Development ("HUD") under Section 207/223(f) pursuant to Section 223(a)(7) of the National Housing Act of 1934, as amended, pursuant to the Commitment to Insure dated January 30, 2013 (FHA Project No. 092- 11339), as amended (the "FHA Commitment"). D. The HUD Loan will be evidenced by that certain Amended and Restated Note (the "HUD Note") executed by Declarant in favor of Lender in the original principal amount of the HUD Loan and will be secured in part by (i) that certain Amended and Restated Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement and Fixture Filing dated , 2013 (the "HUD Mortgage"), executed by Declarant in favor of Lender, and by (ii) the Regulatory Agreement for Multifamily Housing Projects dated , 2013 (the 439179.1 "HUD Regulatory Agreement"), executed by and between the Declarant and the Secretary of Housing and Urban Development. The HUD Note, the HUD Mortgage, the HUD Regulatory Agreement and all other loan and security documents executed in connection with the Loan are collectively referred to herein as the "HUD Loan Documents." E. As a condition to the making of the HUD Loan to Declarant, Lender and HUD require that the Declaration be amended to include certain HUD provisions and that the Declaration be subordinated to the Loan and the HUD Loan Documents. AMENDMENT: NOW, THEREFORE, Declarant declares that the Declaration is hereby amended as follows: 1. Amendment to Prevail. The terms and conditions of this Amendment supersede the terms of the Declaration, and, should there be any conflict or inconsistency between this Amendment and the Declaration, the terms and conditions of this Amendment shall prevail. 2. Amendment of SECTION 4. SECTION 4 of the Declaration is hereby deleted and amended in its entirety to state as follows: 4. Notwithstanding anything in this agreement to the contrary, except the requirements in 26 U.S.C. 42(h)(6)(E)(ii), this Agreement is expressly subordinate to (i) the Amended and Restated Note dated as of , 2013 (the "HUD Note"), executed by the Declarant in favor of Dougherty Mortgage LLC, a Delaware limited liability company ("Lender"), (ii) the Amended and Restated Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement and Fixture Filing dated 2013 (the "HUD Mortgage"), executed by the Declarant in favor of Lender, (iii) the Regulatory Agreement for Multifamily Projects dated , 2013 (the "HUD Regulatory Agreement"), executed by and between the Declarant and the Secretary for Housing and Urban Development ("HUD"), and (iv) all other documents executed by the Declarant, Lender and/or HUD in connection with the HUD Note (collectively the "HUD Loan Documents"), and is subordinate to all applicable HUD mortgage insurance (and Section 8 of the U.S. Housing Act of 1937, if applicable) regulations and related administrative requirements. In the event of any conflict between the provisions of this Agreement and the provisions of applicable HUD regulations, related HUD administrative requirements, or HUD Loan Documents, the HUD regulations, related administrative requirements or HUD Loan Documents shall control. 439179.1 2 3. Amendment to Add SECTION 13. The Declaration is hereby amended to add the following SECTION 13: 13. Subject to the HUD Regulatory Agreement, the MHFA may require the Declarant to indemnify and hold the MHFA harmless from all loss, costs, damage and expense arising from any claim or proceeding instituted against the MHFA relating to the subordination and covenants set forth in this Agreement, provided, however, that Declarant's obligation to indemnify and hold the MHFA harmless shall be limited to available surplus cash and/or residual receipts of the Declarant. 4. Remaining Effectiveness. Except as herein specifically amended, the Declaration shall remain in full force and effect as written. 5 Successors and Assigns. Each agreement, and each and every covenant, agreement, and other provisions hereof shall be binding upon each of the parties hereto and their successors and assigns. 6. Governing Law. This Amendment is made and executed in the state of Minnesota and shall be governed by the laws of said state. 7. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one instrument. [The remainder of this page has been left blank intentionally.] [Signature pages to follow.] 439179.1 3 SIGNATURE PAGE TO FIRST AMENDMENT TO DECLARATION OF COVENANT AND RESTRICTION IN WITNESS WHEREOF, the Declarant has executed this First Amendment to Declaration of Covenant and Restriction effective as of the day and year first above written. DECLARANT: LINO LAKES HOUSING LIMITED PARTNERSHIP, a Minnesota limited partnership By: LINO LAKES HOUSING, LLC, a Minnesota limited liability company Its: General Partner By: Charles E. Riesenberg Its: Chief Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing was acknowledged before me this day of , 2013, by Charles E. Riesenberg, the Chief Manager of Lino Lakes Housing, LLC, a Minnesota limited liability company, the General Partner of Lino Lakes Housing Limited Partnership, a Minnesota limited partnership, on behalf of the limited partnership. 439179.1 4 Notary Public CONSENT OF LINO LAKES ECONOMIC DEVELMENT AUTHORITY The Lino Lakes Economic Development Authority (the "Authority") which required the imposition and recording of Declaration of Covenant and Restriction upon the Subject Property does hereby consent to and approve the attached First Amendment to Declaration of Covenant and Restriction and does hereby consent to and approve the fling of the First Amendment to Declaration of Covenant and Restriction against the Subject Property. Dated: , 2013 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic of the State of Minnesota By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing was acknowledged before me this day of , 2013, by , the of LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic of the State of Minnesota. Notary Public THIS INSTRUMENT WAS DRAFTED BY: FELHABER, LARSON, FENLON & VOGT, P.A. (JPB) 220 South Sixth Street, Suite 2200 Minneapolis, Minnesota 55402 (612) 339-6321 439179.1 LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 13-04 RESOLUTION APPROVING A SECOND AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT AND SUBORDINATION AGREEMENT BETWEEN THE LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY AND LINO LAKES HOUSING LIMITED PARTNERSHIP AND A FIRST AMENDMENT TO DECLARATION OF COVENANT AND RESTRICTION RELATED THERETO BE IT RESOLVED By the Board of Commissioners ("Board") of the Lino Lakes Economic Development Authority ("Authority") as follows: Section 1. Recitals. 1.01. The Authority administers Development District No. 1 (the "Project)" and Tax Increment Financing District No. 1-5 (the "M District") pursuant to Minnesota Statutes, Sections 469.124 to 469.134 ("Development District Act") and Sections 469.174 to 469.179 (the "11F Act"). 1.02. The Authority and Cottage Homesteads of Willow Ponds (the "Original Developer") entered into a into a Contract for Private Development dated October 3, 1995 (the "Contract"), under which the Authority provided certain tax increment assistance to help develop a 48-unit housing facility known as the Cottage Homestead of Willow Ponds (the "Project"). 1.03. Lino Lakes Housing Limited Partnership (the "Developer") acquired the Project from the Original Developer, and in connection with that acquisition obtained a loan (the "HUD Loan") insured by the Federal Housing Administration, a division of the United Stated Department of Housing and Urban Development ("HUD"). 1.04. HUD required that the Authority subordinate its rights under the Contract and related agreements, and to that end the Authority entered into a First Amendment to Contract for Private Development and Subordination Agreement between the Authority and Developer dated July 1, 2010 (the "First Amendment"). 105. Pursuant to the First Amendment, the Developer also executed a Declaration of Covenant and Restriction dated July 1, 2010 (the "Declaration") which imposed certain restrictions on the Project. 1.06. Developer has proposed to refinance the original HUD Loan with a new HUD loan in the same principal amount, and to that end has requested that the Authority enter into a Second Amendment to Contract for Private Development and Subordination Agreement (the "Contract Amendment"), and has requested that the Authority consent to a First Amendment to Declaration of Covenant and Restriction (the "Declaration Amendment"), which documents simply reflect the new HUD loan. 1.07. The Board has reviewed the Contract Amendment and Declaration Amendment and 420638v1 SJB LN140-25 determined that it is in the best interests of the Authority to approve the same. Section 2. Authority Approval; Further Proceedings. 2.01. The Contract Amendment and Declaration Amendment as presented to the Board are hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the President and Executive Director, provided that execution of the documents by such officials shall be conclusive evidence of approval. 2.02. The President and Executive Director are hereby authorized to execute on behalf of the Authority the Contract Amendment and the consent to the Declaration Amendment, and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority its obligations thereunder. Approved by the Board of Directors of the Lino Lakes Economic Development Authority, this day of , 2013. A 1-FEST: Secretary 420638v1 SIB LN140-25 2 President