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.
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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.
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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;
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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
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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:
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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.
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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
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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.
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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:
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EXHIBIT A
THE LAND
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