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THE CITY OF ELK RIVER, MINNESOTA
<br />RESOLUTION NO.24-74
<br />RESOLUTION APPROVING A SUBORDINATION OF THE
<br />REGULATORY AGREEMENT RELATED TO CONDUIT BONDS ISSUED FOR
<br />THE DOVE TREE APARTMENTS PROJECT
<br />WHEREAS, the City of Elk River, Minnesota (the "City") issued its Multifamily Housing
<br />Revenue Bonds (Dove Tree Apartments Project), Series 2010 (the "Bonds"), in the original aggregate
<br />principal amount of $3,485,000 and its Subordinate Multifamily Housing Revenue Note (Dove Tree
<br />Apartments Project), Series 2010 in the original aggregate principal amount of $2,856,000 (the "Note"
<br />and together with the Bonds, the "Obligations"), the proceeds of which were loaned to Elk River Leased
<br />Housing Associates III, Limited Partnership, a Minnesota limited partnership (the "Borrower") for the
<br />purposes of financing the acquisition and renovation of a 68-unit multifamily rental housing development
<br />located at 1105 Lions Park Drive in the City (the "Project"); and
<br />WHEREAS, the Bonds were issued by the City pursuant to an Indenture of Trust, dated as of
<br />October 1, 2010 (the "Indenture"), between the Issuer and U.S. Bank National Association, as trustee (the
<br />"Trustee") and the Note was sold to U.S. Bank National Association, a national banking association (the
<br />"Subordinate Lender") and issued pursuant to a Loan Agreement, dated as of October 1, 2010, between
<br />the City and the Borrower. The Obligations were issued in accordance with Minnesota Statutes, Chapter
<br />462C, as amended (the "Act"); and
<br />WHEREAS, the Issuer, the Subordinate Lender, and the Borrower entered into a Regulatory
<br />Agreement (Subordinate Note), dated as of October 28, 2010, and the Issuer, the Trustee, and the
<br />Borrower entered into a Regulatory Agreement (together, the "Regulatory Agreements"), dated as of
<br />October 28, 2010, which set forth the terms of the Borrower's compliance with the Act and Section
<br />142(d) of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable Treasury
<br />Regulations promulgated thereunder; and
<br />WHEREAS, the Obligations have been paid off in full; and
<br />WHEREAS, the Borrower has determined to sell the Project to Elk River Prop I LLC, a
<br />Minnesota limited liability company and has obtained financing (the "Mortgage Loan") from NorthMarq
<br />Capital Finance L.L.0 (the "New Lender"), which will be secured by a Multifamily Mortgage,
<br />Assignment of Lease and Rents, Security Agreement and Fixture Filing (the "Security Instrument") from
<br />the Borrower to the Lender and insured by Fannie Mae ("Fannie Mae"); and
<br />WHEREAS, as a condition to receiving financing from the New Lender, Fannie has required that
<br />the Regulatory Agreements be subordinated to the lien, covenants, and enforcement of the Security
<br />Instrument; and
<br />WHEREAS, there has been presented to the City Council two Subordination Agreements (the
<br />"Subordination Agreements") proposed to be entered into between the City, the New Lender and the
<br />Borrower, pursuant to which the City will agree to subordinate the Regulatory Agreements to the Security
<br />Instrument.
<br />NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, that:
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