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HomeMy WebLinkAboutCity Council Packet 08-23-1993 SpecialPLYMOUTH CITY COUNCIL SPECIAL COUNCIL MEETING AUGUST 23, 1993 5:00 P.M. Council Chambers I. Proposed Agreement for Harbor Lane Apartments DATE: August 20, 1993 TO: Mayor and City Council Members FROM: Kathy Lueckert, Assistant City Manager SUBJECT: Proposed Agreement for Harbor Lane Apartments Attached is a proposed agreement for the Harbor Lane Apartments rehabilitation project, prepared by Dan Nelson of Best and Flanagan. This agreement will be the focus of discussion at Monday night's study session. I believe that representatives of Interfaith Outreach will be at the study session to discuss the contents of Dan's proposal. Please call with any questions. 08-19-1993 13:47 612 339 5897 BEST'.:FLANAGAN P.02 MEMORANDUM TO: Kathy Leuckert Maria Vasiliou John Edson Pidge Hodowanic Robert Meller M. Mitchell Rotenberg Deb Strehlow Terry McNellis Steve Rindsig FROM: Daniel Nelson DATE: August 19, 1993 RE: Harbor Lane Apartments Project I have enclosed for your review my first draft of the Low Income Housing Agreement between the City of Plymouth and the Owner of the Harbor Lane Apartments Project which will be entered into in addition to the State and Federal requirements applicable to this Bond financed Project. This Agreement focuses on protecting the existing Section 8 tenants of the Project as well as the other lower income tenants by capping rent levels through the completion of the rehabilitation of the Project, and requiring the Owner to make his rehabilitation improvements to units in the Project without regard to the incomes of the tenants. I have also provided for an on-going rent cap for the 15 -year life of this Agreement if the City chooses to assist the low income tenants to keep their rent below the market rate rents for the remaining units in the Project. I will be at the City Council work session at 6:00 p.m. on Monday, August 23rd to discuss this Project with the City Council, City Staff and representatives of Interfaith outreach. I have not requested that the Owner be present at this work session but I have advised him that the City's position should be finalized by that time. Please feel free to call me if you have any questions or comments regarding this Project or the Agreement prior to that time. 7366P 08-19-1993 13:48 612 339 5897 BESTS:FLANAGAN P.03 LOW INCOME HOUSING AGREEMENT THIS LOW INCOME HOUSING AGREEMENT (including Exhibit A attached hereto), dated as of September 1, 1993, by and between OPR LIMITED PARTNERSHIP, a Minnesota limited partnership, and Its successors and assigns (jointly and severally hereinafter called the "Owner"), and the CITY OF PLYMOUTH, MINNESOTA the "Issuer"). WITNESSETH: WHEREAS, the Issuer is authorized by Minnesota Statutes, Chapter 462C, as amended (the "Act"), to carry out the programs and projects described therein and contemplated thereby in the financing of housing within its boundaries, by providing loans with respect to multifamily rental housing developments by issuing revenue bonds to carry out its programs, and by pledging the assets and revenues granted or pledged to secure such financing and by pledging its rights under agreements made in connection therewith for the security for the payment of the principal of and interest on any such revenue bonds; and WHEREAS, OPR Limited Partnership, a Minnesota limited partnership (the Owner") has asked that the Issuer issue its $9,135,000 Multifamily Housing Revenue Bonds (Harbor Lane Apartments Project), Series 1993 (the "Bonds") to provide funds to the Owner for the acquisition, rehabilitation and equipping of a multifamily housing development (the "Project"), and, in connection therewith, the Issuer entered into a Loan Agreement with the Owner dated as of September 1, 1993 (the "Loan Agreement") specifying the terms and conditions of said acquisition, installation and construction and providing for the Issuer to finance the Project by making a loan to the Owner to be funded through the issuance of Bonds; and WHEREAS, the Issuer has provided for the issuance of the Bonds pursuant to an Indenture of Trust dated as of September 1, 1993 (the "Indenture") between the Issuer and the Trustee; and WHEREAS, the Bonds are being issued pursuant to an allocation of Bonding authority received from the State of Minnesota pursuant to the provisions of Minnesota Statutes, Chapter 474A (the "Allocation Act"); and WHEREAS, the Allocation Act requires in Minnesota Statutes, Section 474A.O47, subdivision 2 that, prior to the issuance of the Bonds by the City the Owner must enter into this Agreement with the City to establish the rental rates of the units in the Project and the income levels of the residents in the Project; WHEREAS, compliance by the Project with the Allocation Act is in large part within the control of the Owner; and WHEREAS, the Issuer is unwilling to provide Bond proceeds to finance the Project unless the Owner shall, by entering into this Agreement (this Agreement"), consent to be regulated by the Issuer to assure compliance with the Allocation Act and to comply with certain other requirements of the Issuer; 08-19-1993 13:48 612 339 5897 BEST«FLANAGAN P.04 NOW THEREFORE, in consideration of the mutual premises and covenants hereinafter set forth, and of other valuable consideration, the Owner and the Issuer agree as follows: 1. Subordination of Agreement. This Agreement and the restrictions hereunder are subordinate to the Mortgage Security, Agreement and Fixture Financing Statement, dated as of September i, 1993 (the "Mortgage") executed by the Owner. Terms not defined herein have the meaning given them in the Loan Agreement. In the event of foreclosure, this Agreement and the restrictions hereunder will automatically terminate. 2. Term of Restrictions. This Agreement shall commence upon the date of issuance of the Bonds and shall remain in full force and effect to and including September _ , 2008. 3. Section 8 Tenant Rents. The Issuer and the Owner acknowledge and agree that as of the date of issuance of the Bonds, units in the Project are leased to tenants who currently receive housing assistance from the United States Department of Housing and Urban Development ("HUD") under Section 8 of the National Housing Act of 1937 (the "Section 8 Tenants"). The Owner covenants and agrees that, in order to assure the Issuer that such Section 8 Tenants will be able to continue to occupy their units in the Project after the rehabilitation of the Project from the proceeds of the Bonds, the Owner will not raise the rent on any units leased to such Section 8 Tenants above the HUD fair market rent limits for such units for a period of two years from the date of this Agreement. The Owner further represents that the Owner does not currently expect to increase rents for such Section 8 Tenants above the HUD fair market rent limits after such two year period, and covenants that the Owner will use its best efforts after such two year period and for the term of this Agreement not to change rents for such Section 8 Tenants in excess of the HUD fair market rent limits, as such limits are adjusted from time to time. 4. Lower Income Tenant Rents. The Issuer and the Owner acknowledge and agree that, in addition to the Section 8 Tenants described in Section 3 of this Agreement, as of the date of issuance of the Bonds, additional units in the Project are leased to tenants whose incomes, adjusted for family size, do not exceed fifty percent (50) of the HUD median family income for the Minneapolis - St. Paul area (the "Lower Income Tenants"). Pursuant to the Regulatory Agreement and the Declaration of Restrictive Covenants entered into by the Owner in connection with the Bonds, the Owner is required to have at least twenty percent (20X) of the units in the Project occupied by "Qualifying Tenants (as defined therein). In addition to such occupancy requirements under the Regulatory Agreement and the Declaration of Restrictive Covenants, the Owner further covenants and agrees with the Issuer that the Owner will not increase the rents (excluding concessions or discounts) on any units leased to the Lower Income Tenants from the date of this Agreement until the completion of the "Rehabilitation Work" (as defined in the Indenture) on the Project, as certified by the Owner to the Issuer and the Trustee pursuant to Section _rL—A of the Indenture. The Owner further covenants and agrees that, to the extent the Issuer provides the Owner with financial assistance equal to the difference between 2- 08-19-1993 13:49 612 339 5897 BEST&FLANAGAN P.05 the rents on the Project units leased to the Lower Income Tenants and the average rental rates for the remaining similarly sized units in the Project leased to tenants who are not Lower Income Tenants (the "Market Rate Rents"), then the Owner shall not thereafter increase the rents on the units leased to the Lower Income Tenants, or shall limit such rent increases to the difference between the financial assistance received from the Issuer and the Market Rent Rates. The Owner acknowledges and agrees that the Issuer is not obligated to provide any direct financial assistance to the Project whatsoever and that the Issuer may, in its discretion, determine not to assist the Project or to provide assistance in an amount less than the difference between the rents currently paid by the Lower Income Tenants and the Market Rate Rents for similar units in the Project. If the Issuer determines to provide such financial assistance the Issuer and the Owner will enter into a separate agreement to specify the terms of such assistance, which may include provisions to assist the rents of future tenants who do not now reside in the Project but would qualify as Lower Income Tenants. 5. Rehabilitation Work. The Owner represents and warrants to the Issuer that the Owner has conducted an inspection of the Project to determine the Rehabilitation Work to be completed in the respective units, buildings and common areas of the Project, and that such inspection was made without knowledge of the status of the occupants of any units as Section 8 Tenants or Lower Income Tenants. Based upon such inspection and in accordance with the provisions of Section 5.4 of the Indenture, the Owner will promptly commence the Rehabilitation Work on the Project and expects to complete such Rehabilitation Work by December 31, 1994, but in any event will complete such Rehabilitation Work no later than September 1, 1995. The Owner covenants and agrees with the Issuer that the Rehabilitation Work done on the Project will be determined solely on. the basis of the actual current conditions of the Project Units without regard to the status of the unit tenants as Section 8 Tenants or Lower Income Tenants and that the Owner will not discriminate against Section 8 Tenants or Lower Income Tenants in the determination of the Rehabilitation Work to be undertaken in the respective units in the Project and that upon completion of the Rehabilitation Work, the percentage of the costs of the Rehabilitation Work allocable to the units occupied by Section 8 Tenants and Lower Income Tenants will not be less than % of the total costs of the Rehabilitation Work. After completion of the Rehabilitation Work, at the request of the Issuer, the Owner will give the Issuer the opportunity to inspect the Owner's records regarding the Rehabilitation Work actually done in the respective Project Units. 6. operation with Issuer. The Issuer and the Owner acknowledge and agree that, in addition to the Section 8 Tenants currently residing in the Project, the Issuer administers the HUD Section 8 Housing Program for other Section 8 certificate holders in the City of Plymouth, and that the Issuer may, during the term of this Agreement, become aware of additional Section 8 certificate holders who desire to rent units in the Project. The Owner agrees to cooperate with the Issuer to provide housing for such Section 8 certificate holders who otherwise meet the Owner's generally applicable tenant qualification standards. In particular, the Owner will: 3- 08-19-1993 13:S0 612 339 5897 BEST«FLANAGAN P.06 i) at the request of the Issuer, advise the Issuer from time to time of the then current status of Section 8 certificate holders as tenants in the Project; ii) on the first day of each January, April, July and October deliver to the Issuer the Owner's Certificate of Continuing Project Compliance in accordance with the requirements of the Regulatory Agreement and the Declaration of Restrictive Covenants, and indicate thereon which units are occupied by Section 8 certificate holders; iii) when given notice by the Issuer of a Section 8 certificate holder who desires to move into the Project. give the Issuer notice of vacancies in the Project as they arise; and iv) use its best efforts to qualify for occupancy 1n the Project and preserve and maintain as occupants of the Project the existing Section 8 Tenants and any future Section 8 certificate holders who otherwise meet the Owner's generally applicable trust qualification standards. 7. Nondiscrimination. The Owner will accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The Owner shall not apply selection criteria to Section 8 certificate holders that are more burdensome than criteria applied to all other prospective tenants. B. Regulatory Agreement and Declaration of Restrictive Covenants. The Owner will comply with and observe all of the tenant income requirements contained in the Regulatory Agreement and the Declaration of Restrictive Covenants, the terms and provisions of which are incorporated herein by reference in their entirety. F?iii• -u- a) The Owner shall permit any duly authorized representative of the Issuer to inspect any books and records of the Owner regarding the Project and with respect to the incomes of tenants which pertain to compliance with the provisions of this Agreement, the Law and Section 142(d) or any successor provision of the Code. b) The Owner shalt submit any information, documents or certificates requested by the Issuer which it deems reasonably necessary to substantiate the Owner's continuing compliance with the provisions of this Agreement. c) The Owner and the Issuer each acknowledges that the primary purpose for requiring compliance by the Owner with the restrictions provided in this Agreement is to comply with the Allocation Act and the requirements of the Issuer, and that the Issuer shall be entitled, for any breach of the provisions hereof. to all remedies both at law and in equity in the event of any default hereunder. 4— 08-19-1993 13:50 612 339 5897 BEST-'FLANAGAN P.07 d) Notwithstanding the foregoing, failure of the Owner to comply with the covenants and restrictions of this Agreement will not constitute an event of default under the Mortgage, nor will enforcement of this Agreement result in any claim under the Mortgage or claim against the Project, the Mortgage proceeds, any reserve or deposit made with another person or entity in connection with the Mortgage transaction, or against the rents or other income from the Project for payment hereunder. 10. Severability. The invalidity of any clause, part or provision of this Agreement shall not affect the validity of the remaining portions thereof. 11. Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when mailed by certified or registered mail, return receipt requested, to the parties hereto at the addresses set forth below, or to such other place as a party may from time to time designate in writing. The Issuer and the Owner may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. The initial addresses for notices and other communications are as follows: To the Issuer: The City of Plymouth, Minnesota 3400 Plymouth Boulevard Plymouth, Minnesota 55447 Attn: City Manager To the Owner: OPR Limited Partnership c/o McNair Realty, Inc. 2512 West Broadway Minneapolis, Minnesota 55411 Attn: Mr. Mitchell Rotenberg 12. Governing Law. This Agreement shall be governed by the laws of the State of Minnesota and, where applicable, the laws of the United States of America. 13. Attorneyg' Fees. In case any action at law or in equity, Including an action for declaratory relief, is brought against the Owner to enforce the provisions of this Agreement, the Owner agrees to pay reasonable attorneys' fees and other reasonable expenses incurred by the Issuer in connection with such action. 14. AgrBement Binding. This Agreement and the covenants contained herein shall bind the Owner, any successors in interest, and assigns, and all subsequent owners of the Project or any interest therein, and the benefits shall inure to the Issuer and its successors and assigns for the term of this Agreement as provided in Section 2. 15. Definitions. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture, the Loan Agreement or the Declaration of Restrictive Covenants, dated as of September 1, 1993 made and 5- 08-19-1993 13:51 612 339 5897 BESTB.FLANAGAN P.08 I entered into by the Owner in connection with the issuance of the Bonds by the Issuer to finance the Project. IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective duly authorized representatives, as of the day and year first written above. 7363P THE CITY OF PLYMOUTH, MINNESOTA By• Its: By: Its: OPR LIMITED PARTNERSHIP, a Minnesota limited partnership By: OPR, LLC, a Minnesota limited liability company Its: General Partner By: Its: 6— 08-19-1993 13:51 612 339 5897 BEST&FLANAGAN P.09 EXHIBIT A THE LAND 7363P