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Home My WebLink AboutVIII-06 Resolution - Met Council Liveable Communities Loan Assignment City Council Memorandum To: Mayor Fasbender & City Councilmembers From: John Hinzman, Community Development Director and Melanie Lammers, Finance Manager Date: April 1st, 2019 Item: Loan consenting and forgiveness Council Action Requested: Approve the attached resolution consenting to an assignment and assumption of a loan agreement, note, and mortgage; and authorizing the forgiveness of the loan, termination of the loan agreement and note, and release of the mortgage. Background Information: The original development agreement was executed in 2000 for the redevelopment of the former Guardian Angels Church and School located at 208 East 4th street by Sherman Associates. The project included the establishment of a TIF district and the issuance of a loan by the former Hastings Housing and Redevelopment Authority (HRA). Met Council also gave several grants to the project through Livable communities, one which was structured as a loan. The Met Council loan was for $328,500 to enable Sherman Associates to acquire and rehabilitate an existing building. It was interest free and repayment was due at the end of 30 years or in 2031. The grant was structured in this manner for tax reasons that benefitted the developer. The City had to authorize the loan but was not entitled to any repayment, as Met Council would receive any funds repaid. Common Bond is now purchasing the property from Sherman Associates. They plan to add three units to the area once designated as a daycare, and rehabilitate the property. Common Bond has requested the $328,500 Metropolitan Council loan be forgiven. Met Council has reviewed the request and related documents and does not see a conflict in the City forgiving the Met Council loan. Met Council is granting additional monies to Common Bond for the remodel and renovation costs. Financial Impact: The attached resolution reassigns the loan to Common Bond. It then terminates the Loan agreement and note, and authorizes the release of the mortgage. There is no financial impact to the City as we were a pass through for the loan from Met Council. VIII-06 Advisory Commission Discussion: HEDRA took action on March 14th to reassign the HRA loan and Tax Increment from the TIF district. Council Committee Discussion: None. Attachments: Resolution Guardian Angels Construction Narrative VIII-06 11608245v1 EXTRACT OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF HASTINGS, MINNESOTA HELD: April 1, 2019 Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Hastings, Minnesota, was duly held at the City Hall in said City on April 1, 2019, at 7:00 P.M. The following members were present: and the following were absent: Member ___________________ introduced the following resolution and moved its adoption: RESOLUTION CONSENTING TO AN ASSIGNMENT AND ASSUMPTION OF LOAN AGREEMENT, NOTE, AND MORTGAGE; AND AUTHORIZING THE FORGIVENESS OF THE LOAN, TERMINATION OF THE LOAN AGREEMENT AND NOTE, AND RELEASE OF THE MORTGAGE WHEREAS, the Metropolitan Council awarded the City on December 20, 2000 funds from the Metropolitan Livable Communities Act, Livable Communities Demonstration Account (the “Met Council Funds”) to help fund the Guardian Angels Redevelopment project, pursuant to Minnesota Statutes, Sections 473.25 through 473.255 (the “Act”); WHEREAS, Guardian Angels of Hastings Limited Partnership, a Minnesota limited partnership (“Guardian Angels”) and the City entered into that certain Loan Agreement, dated as of December 14, 2001 (the “Loan Agreement”), to loan $328,500.00 of the Met Council Funds (the “Met Council Loan”) to enable Guardian Angels to pay for the acquisition and rehabilitation of an existing building, located at 208 Fourth Street East within the City (the “Property”), into twenty units of rental housing and the construction of an additional ten units of rental housing for occupancy by Very-Low Income Families, as defined in the Loan Agreement; WHEREAS, the Met Council Loan was evidenced by that certain Met Council Promissory Note, dated December 14, 2001, executed and delivered by the Assignor to the City (the “Note”), and secured by that certain Combination Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement, dated December 14, 2001, and recorded in the Office of the County Recorder, Dakota County, Minnesota as Document No. 1853846, (the “Mortgage”); WHEREAS, Guardian Angels is selling the Property to CB Guardian Angels Holding LLC, a Minnesota limited liability company (“CBGA”), and in connection with said sale, is VIII-06 11608245v1 entering into a certain Assignment and Assumption of Loan Agreement, Note, and Mortgage (the “Assignment”), with CBGA, and both Guardian Angels and CBGA have requested that the City consent to the Assignment; WHEREAS, CBGA intends to rehabilitate the Property, including the replacement of numerous building systems, the conversion of an existing vacant commercial space into three additional affordable apartments, and the construction of other various improvements (the “Project”); WHEREAS, CBGA has further requested, after entering into the Assignment, that the City forgive the Met Council Loan, terminate the Loan Agreement and Note, and release the Mortgage; WHEREAS, the Metropolitan Council has reviewed the request and related documents, and does not see a conflict in the City forgiving the Met Council Loan. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hastings, as follows: 1. The City Council hereby consents to the Assignment, and authorizes the Interim City Administrator, or her designee, to execute the same. 2. Because of the new Project and approval from the Metropolitan Council, the City Council hereby determines that it is in the best interests of the City to forgive the Met Council Loan, terminate the Loan Agreement and Note, and release the Mortgage. 3. The City Council hereby forgives the Met Council Loan, terminates the Loan Agreement and Note, and releases the Mortgage, and authorizes and directs the officers of the City, and Briggs and Morgan, Professional Association, as counsel to the city, to prepare, furnish, and execute all documents necessary to effectuate the same. The following motion was seconded by member ___________________ and the following voted in favor thereof: and the following against the same: VIII-06 11608245v1 ADOPTED BY THE CITY COUNCIL OF THE CITY OF HASTINGS, THIS 1 st DAY OF APRIL, 2019. ______________________________ Mary Fasbender, Mayor ATTEST: _____________________________________ Julie Flaten, City Clerk VIII-06 11608245v1 STATE OF MINNESOTA COUNTIES OF DAKOTA AND WASHINGTON CITY OF HASTINGS I, the undersigned, being the duly qualified and acting City Clerk of the City of Hastings, Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes with the original minutes of a meeting of the City Council duly called and held on the date therein indicated, which are on file and of record in my office, and the same is a full, true and correct transcript therefrom insofar as the same relate to a resolution of the City Council consenting to an assignment of a loan, and the forgiveness and termination of the same. WITNESS my hand as such Clerk this ___ day of ______________, 2019. ________________________________ City Clerk VIII-06 February 4, 2019 RE: Guardian Angels Apartments and Townhomes Construction Narrative Guardian Angels Apartments and Townhomes is an existing housing tax credit property that was initially developed in 2001. The property is a critical affordable housing resource for the City of Hastings and the larger community, with highly affordable rents serving a resident base whose average income is 31% of the area median income. The property is, however, in need of a comprehensive recapitalization in order to address physical needs and restructure the existing financing. The rehab scope of work will include the replacement of numerous building systems and the conversion of an existing vacant commercial space into three additional affordable apartments. The addition of these revenue producing units is expected to substantively improve the financial performance of the property. The construction scope of work for the converted school building (current apartments), includes:  Adding 3 new units at currently vacant commercial space  Replacing sidewalks  Patching/repairing parking lot  Tuck pointing exterior façade  Replacing the flat roof  Refurbishing existing windows  Modernizing the elevator  Upgrading kitchen cabinets/counters/faucets  Replacing bath vanities/faucets/toilets  Replacing unit flooring  Painting units  Replacing boilers  Adding cameras and replacing light fixtures The scope of work for the existing two townhomes buildings, includes:  Replacing sidewalks  Replacing siding  Replacing roofing VIII-06  Replacing windows  Replacing entry doors  Upgrading kitchen cabinets/tops/faucets  Replacing bath vanities/tops/faucets/toilet  Replacing bath fans  Painting entire unit/living space  Adding cameras and replacing light fixtures VIII-06