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
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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