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<br />foreclosure process by narrowing the timeframes involved. MinnWest Bank has publicly noticed <br />their intent to proceed on the foreclosure process on July 9th. MinnWest Bank can extend that <br />date if they choose, but they do not have the ability to shorten that date. Assuming the property <br />proceeds to sale on July 9th, it will occur as an auction sale held by the Sheriff. Mr. Bray advised <br />the property can be offered for sale as individual parcels or as a block; that is a matter primarily <br />between the debtor and the bank. A presumption in the State Statute is that the goal of the <br />process is to maximize the value realized from the sale. If the owner/debtor can show that the <br />property can bring more money, they can sell it as individual parcels, and it can be sold as an <br />individual unit if that will bring more money. Most often the owner waives those rights and <br />leaves the decisioI}. to the bank as to whether the sale will be as a single unit or multiple parcels. <br />Mr. Bray advised he does not know whether that language has ever been fully tested in <br />Minnesota, but the owner is so far under water that they do not have much interest in the sale. <br />He expects the sale will proceed on whatever basis the bank wants to proceed in terms of <br />multiple parcels or a single unit. Mr. Bray advised Council on the process of the sheriff's sale. <br /> <br />Councilmember Elvig asked if the bank can declare a No Sale if there is a sheriff's sale and they <br />do not realize the values they are hoping for. <br /> <br />Mr. Bray replied no, the property is sold for the high bid. He noted that the bank can be the high <br />bidder. <br /> <br />Councilmember Elvig inquired about the process involved with the junior creditors. <br /> <br />Mr. Bray explained there is a 60 day time period where the junior creditors cannot do anything. <br />At the end of that 60 day period, the creditor who has seniority has seven days to redeem by <br />paying the amount bid at the sheriff's sale. If that creditor does not redeem the next creditor in <br />line could redeem. <br /> <br />Councilmember Olson inquired about the possibility of a federal tax lien on the property which <br />would include a 120 day redemption period. <br /> <br />Mr. Bray indicated it is possible that there is a federal tax lien on the property. <br /> <br />Councilmember Jeffrey requested clarification that the Development Agreement IS III first <br />position and the foreclosure will leave the Development Agreement in place on the property. <br /> <br />Mr. Bray replied it is his understanding that MinnWest Bank contests the priority of the City's <br />Master Development Agreement and is taking the position that upon the foreclosure of the <br />mortgage the property would not be subject to the Master Development Agreement. Council has <br />been provided with a letter he sent to Mr. Russ Bushman of Minn West Bank once that position <br />was made known by MinnWest Bank to the City. Mr. Bray advised it should be kept in mind <br />that in addition to the Master Development Agreement there are four other agreements that the <br />City has recorded against the property: 1) 1 st Amendment to the Master Development <br />Agreement; 2) Parkland and Trail Agreement; 3) Parking Maintenance Agreement; 4) Option <br />Agreement. <br /> <br />City Council Work Session / June 5, 2007 <br />Page 2 of 12 <br />