Agenda - Council - 08/11/2015 - Laserfiche WebLink

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CC Regular Session Meeting Date: 08/11/2015 By: Tim Gladhill, Community Development 7. 6. Information Title Approve Master Disbursement Agreement and an Amendment to the Development Agreement With CB Ramsey Housing Limited Partnership for the Project Known as Sunwood Village; Case of CommonBond Communities Purpose/Background: The primary purpose of this case is to approve a Master Disbursement Agreement with CB Ramsey Housing Limited Partnership for the project known as Sunwood Village. This is related to the grant awarded by the Metropolitan Council through its Livable Communities Program to the City on behalf of the project. In addition, the primary lender on the project, the Minnesota Housing Finance Agency (MHFA) has requested a revision to the Development Agreement to address the recording sequence of documents related to the project. The requested revision does not materially change the agreement. The purpose of this case is to approve a Master Disbursement Agreement with CB Ramsey Housing Limited Partnership for the project known as Sunwood Village. This is related to the grant awarded by the Metropolitan Council through its Livable Communities Program to the City on behalf of the project. Background In 2014, the City entered into a purchase agreement with CommonBond Communities, who desires to construct a 47 unit workforce apartment building. The project received multiple funding awards, including a Metropolitan Council Livable Communities grant. The project's primary lender, the Minnesota Housing Finance Agency (MHFA), has requested the attached Master Disbursement Agreement to outline the sources and uses of the various funding sources. The purpose of this agreement is to clarify all sources of funding in a single, concise document. This is different than the Sub -Grant Agreement recently approved by the City Council, which was specifically between the City and CB Housing LP. The purpose of this agreement was specific to how the City would disburse the Metropolitan Council funds to CB Ramsey Housing, at the request of CB Ramsey Housing. The Development Agreement has been amended to add paragraph 27 regarding subordination. The City's current policy for recording plats and development agreements is that which the property has `marketable title'. In other words, there are no prior encumbrances, such as easements or mortgages, in position ahead of the development agreement. In the event there are existing encumbrances, these entities are asked to consent to the plat and development agreement. MHFA, the primary lender for the project, has asked for the revision in exchange for allowing the Development Agreement to be recorded ahead of their mortgage. According to MHFA, this additional language is necessary to clarify that, in the event of a default by the Permittee (CB Ramsey Housing Limited Partnership), the City would not have the ability to foreclose on the property in order to enforce the provisions of the Development Agreement. This protects MHFA's loan, as the Development Agreement would be in a position ahead of the mortgage, but retains the City's rights to enforce the Required Improvements and to collect fees due to the City in the event of default of the Permittee. The City would not need to foreclose on the property in order to enforce the provisions of the Development Agreement anyway, and Staff is not aware of the City attempting this process in the past. The City is securing a Letter of Credit as security to ensure the timely installation of public improvements. In this project, the amount of public improvements are relatively small, as Sunwood Drive and Veterans Drive have already been constructed.