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031097 EDA Official File Copy CITY OF NEW HOPE EDA AGENDA EDA Regular Meeting #3 March 10, 1997 Agenda #3 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Pat La Vine Norby Commissioner Gerald Otten 1. Call to Order 2. Roll Call 3. Approval of Minutes of February 24, 1997 4. Resolution Approving Extension of Repayment Term of Rehab Loans to New Hope Apartments (Improvement Project No. 510) 5. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes February 24, 1997 Meeting #2 CALL TO ORDER President Enck called the meeting of the Economic Development Authority to order at 7:02 p.m. ROLL CALL Present: Enck, Collier, Norby, Otten Absent: Cassen Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald APPROVE MINUTES Motion was made by Commissioner Otten, seconded by Commissioner Collier, to approve the EDA minutes of February 10, 1997. Voting in favor: Enck, Collier, Otten; Abstained: Norby; Absent: Cassen. Motion carried. REDEVELOPMENT President Enck introduced for discussion Item 4, Resolution Approving PLAN AMENDMENT 1997 Amendment to Master Modification to Redevelopment Plans and Item 4 Tax Increment Financing Plans and Requesting the Approval of the City Council. Mr. Dan Donahue, City Manager, illustrated the existing redevelopment plan and explained that the amendment would expand it to include properties located at 7100 and 7112 Bass Lake Road (known as Ponderosa and Taco Bell properties). He stated this action establishes the area which would allow potential future City involvement in the redevelopment of these properties. EDA Commissioner Otten introduced the following resolution and moved its RESOLUTION 97-03 adoption: "RESOLUTION APPROVING 1997 AMENDMENT TO MASTER Item 4 MODIFICATION TO REDEVELOPMENT PLANS AND TAX INCREMENT FINANCING PLANS AND REQUESTING THE APPROVAL OF THE CITY COUNCIL". The motion for adoption of the foregoing resolution was seconded by Commissioner Norby, and upon vote being taken thereon the following voted in favor thereof: Enck, Collier, Norby, Otten; and the following voted against the same: None; Abstained: None; Absent: Cassen; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. ADJOURNMENT Motion was made by Commissioner Otten, seconded by Commissioner Norby, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 7:04 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA February 24, 1997 Page 1 LIJ~ ~ REQUF~T FOR ACTION Originating Depm:i~tent Approved for.a~lenda .~enda Section EDA City Manager I""] 3-10-97 Item No. Kirk McDonald By: Management Assistant By: 4 RESOLUTION APPROVING EXTENSION OF REPAYMENT TERM OF REHAB LOANS TO NEW HOPE APARTMENTS (IMPROVEMENT PROJECT NO. 510) As you are aware, the rehabilitation project for the New Hope Apartments complex on 43rd Avenue North was recently completed and the City Council approved the final pay requestJdisbursement of loan proceeds at the February 10 Council meeting. One final issue that needs to be discussed is the J repayment schedule for the loans. The owners have requested that the EDA allow the repayment to begin as of December 1996 when the project was completed. The EDA loaned the owners $97,350 plus an additional $20,000 (a total of $117,350) to help finance 50% of the rehab project. The loans were approved in 1994, with the actual loan documents signed in June 1994 and May 1995. The terms of the loans called for EDA approval of the rehab project, inspection of the final work, and disbursement of the loan proceeds to cover one-half of the budgeted cost of the work. The owners were required to get at least two bids for each part of the project, arrange for the completion of the work and inspection/approval by the City, and pay for the other half of the rehab work themselves. The loans were to be interest free if, for two years from the outset of the loan, the owners did not raise rents on the existing tenants beyond the rate of the consumer price index. Except for beginning repayment of the loans, the owners have completed all of their requirements under the loan agreements and have established a good working relationship with City staff. The loan documents call for repayment in the form of 100 equal payments of the loan principal beginning the eleventh month after the date of the first loan Promissory Note (dated June 10, 1994). The first payment would have been due May 1, 1995. The language specifying the first payment does contemplate some delay between the signing of the documents and the beginning of repayment, and initial drafts of the document included terms making the first payment due after the completion of the project. MOTION BY SECOND BY / Review: Administration: Finance: RFA-O01 ~ Request for Action Page 2 3-10-97 This project did involve some delays and additional rehab work, evidenced in part by the need for a second loan of $20,000 for fire alarm and security system improvements. As the project progressed, the owners requested and City staff anticipated a delay in the start of the repayment, as it was basically understood that the loan repayment would not begin until the project was completed. And since the funds were used to reimburse the owners for work already completed, the full amount of the loans was not paid out by the EDA until this year. The owners are requesting that the repayment of the loan begin December 1, 1996, and can make the December, January, February and March payments immediately. Due to the fact that this was a cooperative project with the City that involved extensive rehabilitation that simply took longer to complete than expected, staff is recommending that the EDA extend the repayment term of the loans by changing the date of the first payment. The City Attorney has prepared the enclosed resolution which extends the repayment term of the loans by changing the date of the first payment to December 1, 1996. Staff recommends approval of the resolution. ' MRR-04-@7 'rue 14:21 P, 02/07 February 7, 1996 Daniel J. Donahue New Hope EPA 4401Xylon Avenue North New Hope, MN 55428 EPA Rahab Loan New Hope Apartments Zmprovement Project 510 Our File No: 99.11118 Dear Dan: The rehabilitation project for the four building New Hope Apartments complex at 7200-72~0 43tO Avenue Nor[h has been completed, The City approved final disbursement of loan proceeds at its February 10, t997 meeting. The remaining issue involves the repayment schedule for The loans, The owners have requested the EDA allow the repayment to begin as of December 1998. You may recall the EDA loaned the owners the sum of $~7,350 plus an additional $20,000 to help finance the project. The loans were approved ~n 1994, w{th the actual loan documents signed in June 1994 and in May 1995. The terms of the loans called for EPA approval o~ the rahab budget, inspection of the final work, and disbursement of the loan proceeds to cover one half of the budgeted post of the work. The owners were required to get &t least two bids for each part o~ the project, arrange ~or the completion o? the work and inspection by the City, and ~ay for ~he other half of the rahab work themselves. The loans were to be ~nterest ~ree if, for two years from the outset of the loan, the owners did not raise rente on the existing tenants beyond the rate of the consumer pr'i~e index. Except for beginning repayment of the loan~, the owners have oomp]eted al3 of their requirements under the loan agreements. AS for background on the loan repayment, the loan documents themselves call for repayment {n tho form of 100 equal payments of the loan principal beginning the eleventh month after the date of the tirst loan Promissory Note (dated June 10, 1994), So the MAR-04-9? TUE 14:21 P. 03/07 Dan{el J. Donahue March 4, t997 Page 2 first payment would have been due May 1~ 1995. The language specifying the first payment does contemplate some delay between the signing of the documents and the beginning of repayment. note some initial draff~ of the rehabilitation loan policy included terms making the first payment dus two months after ~ompletion of constru~tion~ though that was not ~nc~udea in the poYicy adopted by the EDA in Re~o]ut~on 93-13. Th~s parLicular project ~nvolved some delays and additions] rahab work, evidenced ~n part by the need for a second lo~n of $20,000. A~ the project progressed~ the owners a~so did communicate to the C~ty a request 'rot de]ay ~n the start of repayment, And since this was a reimbursement for work already completed, the full amount of the loans was not pa~d out by the EDA until this yoar. The owners are asking that the repayment of the ~oan begin December 1, 1996, and can make the December, January~ Fsbruary~ and March p~yments r{~ht away. EDA options ~nc]ude extending the repayment term of the l~ans by changing the date of the first payment. If no extension of repayment i~ granted, the apartme~: owners will be i~ default o~ their loan agreements and the EDA could ~oceed to declare the loans ~n default. The owners may have some basis to at least challenge such an EDA act~on~ [hough they may be u~like~y to succeed. Zf the EDA decides to a13o~ the requested ex~snsion of repayment~ the enclosed Resolution can be considered and ~assed at the next meeting. Zf the ~xtension is granted, the December through February payments will be teohnically ~ate~ so the Resolution waives the late Tee for the first four payments. Be sure to contact me ~f you havo any questions o~ comments. Sincerely, Mart~n P. Malecha Asst. New Hope City Attorney m3t Enclosures cc: Valerle Leone, C~ty Clerk (w/eric) Kirk McDonald, Management Assist~r]t Steven A. $ondrall, City Attorney EDA RESOLUTION NO. 97- RESOLUTION APPROVING EXTENSION OF REPAYMENT TERM OF REHAB LOANS TO NEW HOPE APARTMENTS IMPROVEMENT PROJECT 510 WHEREAS, New Hope Apartments, a Minnesota general partnership (the Owner) is the owner of a certain four building apartment complex located at 7200-7260 43rd Avenue North in the City of New Hope (the Apartment Complex), and WHEREAS, the Economic Developme'nt Authority in and for the City of New Hope (the EDA) by Resolution 93-13 adopted a multi- family housing policy on September 13, 1993, said policy calling for rehabilitation loans under certain circumstances to owners of multi-family housing in the City, and WHEREAS, by Resolution 94-02 and in furtherance of its multi- family housing policy, the EDA approved a $97,350 loan (the Loan) to the Owner for basic rehabilitation of the Apartment Complex, known as City Improvement Project 510, which Loan called for the Owner to contribute at least half of the cost of the rehabilitation, and WHEREAS, the Loan would be interest free as tong as the Owners, for two years from the date of the Loan, did not increase the rent for existing tenants in the Apartment Complex by more than the increase in the Consumer Price Index, and WHEREAS, due to unforseen additional rehabilitation costs, the Owners requested and the EDA by Resolution 94-09 approved an additional $20,000 loan (Additional Loan) to the Owners, and WHEREAS, the Owners provided proof to the EDA that any rent increases were within the Loan requirements, and WHEREAS, the construction work on Project 510 was completed by the end of September, 1996, was inspected and approved by City staff, and final disbursement of the Additional Loan proceeds was approved by the EDA on February 10, 1997, and WHEREAS, the Loan and Additional Loan were evidenced by Promissory Notes and secured by Second and Third Mortgages recorded against the Apartment Complex, and WHEREAS, said Promissory Notes called for repayment of the Loan and Additional Loan principal in 100 equal payments commencing June 1, 1995, with a late fee of four percent for payments more than 15 days late, and WHEREAS, because of the delays in completing Project 510, the Owners have not made any payments on the Loan or the Additior~al Loan to the City, and have requested an extension of the time to repay the Promissory Notes by having the 100 payments begin December 1, 1996, as set forth in the Amendment of Second Mortgage Note and Amendment of Third Mortgage Note attached hereto as Exhibits A and B, respectively. NOW, THEREFORE, BE ZT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1. The above recitals are incorporated by reference. 2. Repayment of the Second Mortgage Loan Note and the Third Mortgage Loan Note are extended so that the first payment under both Notes are due December 1, 1996, contingent upon appropriate representatives of New Hope Apartments signing the attached Exhibits A and B, and any other documents requested by the City Attorney. 3. Late fees for payments due December 1, 1996 through March 1, 1997 shall be waived if said payments are made by March 31, 1997. Adopted by the Economic Bevelopment Authority in and for the City of New Hope this lOth day of March, 1997. President Attest: Executive Director AMENDMENT OF SECOND MORTGAGE LOAN NOTE WHEREAS, the undersigned, New Hope Apartments, a Minnesota genera] partnership (hereinafter designated as "Borrower"), executed a SECOND MORTGAGE LOAN NOTE dated June 10, 1994, in the amount of $97,350.00 (hereinafter referred to as "Note") payable to the order of the Economic Development Authority in and for the City of New Hope (hereinafter referred to as "Lender"), and WHEREAS, Borrower has requested, and Lender has agreed to, an amendment of the Note to extend the time for repayment of the Note by changing the date for commencement of the payments under the Note to December 1, 1996. NOW, THEREFORE, by its signature below, the undersigned agrees to modify the Note as follows' 1. The monthly principal payments under paragraph A. of the Note shall commence on the first day of December, 1996, and shall be due and payable on the same day of each month thereafter until the principal balance is paid in full. 2. All other terms and conditions of the Note shall remain unchanged. IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Amendment of Second Mortgage Loan Note on the day of , 1997. NEW HOPE APARTMENTS, a Minnesota general partnership Its General Partner By Its General Partner c:\ wp51\cnh\ nh_apt, pn2 EXHIBIT A AMENDMENT OF THIRD MORTGAGE LOAN NOTE WHEREAS, the undersigned, New Hope Apartments, a Minnesota general partnership (hereinafter designated as "Borrower"), executed a THIRD MORTGAGE LOAN NOTE dated May 8, 1995 in the amount of $20,000.00 (hereinafter referred to as "Note") payable to the order of the Economic Development Authority in and for the City of New Hope (hereinafter referred to as "Le~der"), and WHEREAS, Borrower has requested, and Lender has agreed to, an amendment of the Note to extend the time for repayment of the Note by changing the date for commencement of the payments under the Note to December 1, 1996. NOW, THEREFORE, by its signature below, the undersigned agrees to modify the Note as follows: 1. The monthly principal payments under paragraph A. of the Note shall commence on the first day of December, 1996, and shall be due and paya.ble on the same day of each month thereafter until the principal balance is paid in full. 2. All other terms and conditions of the Note shall remain unchanged. IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Amendment of Third Mortgage Loan Note on the day of , 1997. NEW HOPE APARTMENTS, a Minnesota general partnership By Its General Partner By. Its General Partner c:\ Np51\chh\ nh_ap~:.pn3 EXHIBIT B