CC PACKET 04142009 - Laserfiche WebLink

Home Browse Search

OTo: Mike Morrison — Executive Director MFrom: Stacie Kvilvang — Ehlers and Associates Wc Date: April 14, 2009 G Subject: Fannie Mae Loan Extension — Assignment of Mortgage EHLERS 4 & ASSOCIATES INC On April 1, 2009, the City and Fannie Mae executed the second amendment and modification to the loan and security agreement for the above referenced loan. Fannie Mae requested additional security on the loan in the form of an assignment of the HRA's mortgage on the property. This request was a new term we were unaware of until review of the closing documents. Myself and the City's attorney expressed the opinion that this security was not needed since Fannie Mae already had the most perfected security, which was the City's pledge of it General Obligation taxing authority. Fannie Mae stated that an assignment of mortgage was needed in order for the extension to be granted. Upon discussion and review with legal counsel, providing the assignment does not increase the City's risk in the deal. The only time Fannie Mae would foreclose on this mortgage is if the City does not repay the loan, which is unlikely. The remaining principle balance on the loan is $2,425,000 (after payment of the $75,000 toward principle at closing on April 1, 2009). The term of the extension is to December 31, 2010 with payments to be made as follows (only principle amounts shown, interest is due quarterly as well): $175,000 on July 1, 2009 $200,000 on October 1, 2009 $200,000 on January 1, 2010 $200,000 on April 1, 2010 $200,000 on July 1, 2010 $1,250,000 by December 31, 2010 The loan will be repaid through land sale proceeds (estimated to be $1.5 million) and tax increment that is generated when the developer capitalizes its PAYG TIF note when it commences with construction. If the closing happens before, after or near a quarterly payment date, the proceeds have to be remitted to Fannie Mae immediately and the remaining quarterly payment schedule stays in place as well (i.e. closing happens November 1, 2009. On January 1, 2010 the City will still be required to make the $200,000 principle payment and the quarterly interest payment that is due). As we finalize the required 7°i amendment to the Development Agreement (anticipated to come before the City and HRA on April 28, 2009), we will need to address future payments to Fannie Mae with the developer. Please contact me at 651-697-8506 with any questions. LEADERS IN PUBLIC FINANCE 306o Centre Pointe Drive Phone:651-697-85o6 Fax: 651-697-8555 Roseville, MN 55113-1105 skvilvang@ehlers-inc.com