Laserfiche WebLink
HORSEY <br />the loan through December 31, 2010. Apache has defaulted on its obligations under the loan, <br />so the City has been making the required payments to Fannie Mae. <br />Payments on the Fannie Mae loan are due as follows: <br />Payoff Schedule For Fannie Mae <br />.. <br />Paid to Date By City <br />$ <br />748,381 <br />Remainina Loan Balance <br />$ <br />1,882,090 <br />April 1, 2010 Payment <br />$ <br />210,697 <br />Remaining Loan Balance <br />$ <br />1,671,393 <br />July 1, 2010 Payment <br />$ <br />210,697 <br />Remaining Loan Balance <br />$ <br />1,460,697 <br />October 1, 2010 Payment <br />$ <br />210,697 <br />Remaining Loan Balance <br />$ <br />1,250,000 <br />December 10, 2010 Balloon Payment <br />$ <br />1,250,000 <br />Remaining Loan Balance <br />$ <br />ISSUE <br />If Developer remains in default and payment of amounts due to the City are not paid, <br />what options does the City have to be reimbursed for its investment (approximately $2.6 <br />million)? <br />SHORT ANSWER <br />We have identified four options for your consideration. Regardless of the option the City <br />chooses to pursue, it should immediately serve Developer with notice of default, and plan to pay <br />off the Fannie Mae loan by December 31, 2010. Doing so accomplishes two key tasks <br />necessary to move the project forward: (a) it demonstrates to the Developer that the City is <br />serious about pursuing its remedies; and (b) it starts the lengthy cure period running, thus <br />allowing the HRA to take control of the Property in approximately six months, if necessary. <br />ANALYSIS <br />Option One: Continue with the Current Developer. <br />The first option is to continue with Apache as the Master Redeveloper and Silver Lake <br />Homes as the Phase 1 B developer This would require the City to continue to make the Fannie <br />Mae payments and wait for a proposal by Developer (presumably for either senior co -op <br />housing or rental housing). <br />From a real estate perspective, this option has a few disadvantages. First, the City <br />currently has an interest in ensuring the success of the project, but no longer has the rights of a <br />mortgagee under the mortgage, since those rights have been assigned, so it may not enter the <br />Property to protect the asset. It is relying on Apache, as fee owner, to continue to care for and <br />maintain the value of the Property in a challenging market and under increasingly difficult HUD <br />requirements, where Apache has been in default under several provisions of the <br />Redevelopment Agreement over extended periods of time. <br />2 <br />DORSEY & WHITNEY LLP <br />