Laserfiche WebLink
City of <br />Elk - <br />River <br />To <br />City Council <br />Meeting Date <br />December 16, 2024 <br />Item Description <br />Resolution 24-74 and Agreements 24-32 and 24-33 <br />Subordination of Restrictive Covenants for Dove <br />Tree Apartments <br />Request for Action <br />Item Number <br />4.3 <br />Prepared By <br />Brent O'Neil, Economic Development Director <br />Reviewed by <br />Cal Portner <br />Action Requested <br />Adopt, by motion, Resolution 24-74 authorizing the execution of agreements with Northmarq Capital <br />Finance, LLC, and Elk River Prop I LLC, subordinating existing regulatory agreements for the Dove Tree <br />Apartments. <br />Background/Discussion <br />The Dove Tree Apartments, located at 1 105 Lions Park Drive, were constructed in the mid-1990s and <br />participated in a financing program that required covenants ensuring affordability standards for tenants. In <br />2010, the property participated in a multifamily housing bond program through the city in which the city <br />issued conduit bonds to support the renovation of all units. Utilization of the bond program required that <br />affordability standards be extended 15 years, expiring in late 2025, through two regulatory agreements. The <br />bonds have been repaid; however, the regulatory agreements continue to be in effect until they expire next <br />year. <br />The property is now under a purchase agreement for acquisition by a new owner, Elk River Prop I LLC. The <br />new owner's lender has requested the city subordinate its regulatory agreements as the new debt will be <br />backed by Fannie Mae, and Fannie Mae standards make its participation conditional on this subordination. This <br />subordination request leaves the standards in place but would allow a court more latitude to discharge these <br />requirements in the event of a foreclosure or bankruptcy proceeding. <br />As the affordability standards are set for expiration in 2025, it is highly unlikely this subordination will come <br />into play within the next year. Bond counsel has advised in this process and does not object to this <br />subordination. <br />Financial Impact <br />None. The conduit bonds have been paid off. <br />Mission/Policy/Goal <br />Meet changing needs - agile. <br />The Elk River Vision <br />A avelcoming community with revolutionary and spirited resourcefulness, exceptional service, and community p p W E R E U A Y <br />engagement that encourages and inspires prosperity <br />273 <br />