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a <br /> i V <br /> E H L E R <br /> & ASSOCIATES IN ., <br /> 0 To: St.Anthony City Council and Housing and Redevelopment Authority(HRA) <br /> Mike Mornson—City Manager <br /> cW From: Stacie Kvilvang& Sid Inman—Ehlers and Associates <br /> G Date: June 1,2004 <br /> Subject: Fannie Mae Loan—Northwest Quadrant Redevelopment <br /> Overview <br /> On December 19, 2003, the City Council and Housing and Redevelopment Authority (HRA) executed <br /> a Development Agreement with Apache Redevelopment LLC for the redevelopment of the above <br /> referenced area. According to Section 12.11 of the Development Agreement, the City and/or HRA <br /> would be securing an interim loan in the amount of$3,350,000 from Fannie Mae,to assist in acquiring <br /> three (3) commercial properties where the for-sale housing would be developed. The City and HRA <br /> conditioned the commitment to obtain these funds upon the following: <br /> 1. The City had received the Commercial Go Ahead Letter(Received) <br /> 2. The City had received the For Sale Housing Go Ahead Letter <br /> 3. The housing developer had documentation that they had obtained 20 percent of presales of the <br /> units in the first building in Phase 1A(13 units); <br /> 4. The Developer is not in default of the Development Agreement <br /> The loan, as originally discussed with the City Council and HRA, was going to be paid back through <br /> land sale proceeds and a General Obligation TIF bond issued by the City/HRA when the development <br /> was completed (within a three year period). Under this loan structure,Fannie Mae requires the City to <br /> provide a collateral deposit with them consisting of 25 percent of the loan amount ($837,500). The <br /> City was going to utilize its Water Filtration Funds for this deposit requirement (If the City was to <br /> "back".the loan with their General Obligation taxing powers, no collateral would be required). In <br /> addition, the loan was a full recourse debt to the City and they would need to pledge any assets to <br /> repayment of the loan. <br /> After review of the loan documents by the City Attorney, it was determined that State Statutes would <br /> not allow the City to pledge funds to a loan without it being considered,a General Obligation. <br /> Therefore, the loan documents are being redrafted to reflect this. <br /> LEADERS IN PUBLIC FINANCE <br /> A <br /> 3060 Centre Pointe Drive Phone: 651-697-8506 Fax: 651-697-8555 <br /> Roseville, MN 55113-1105 skvilvang @ehlers-inc.com <br />