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Resolution Approving Modification of the 2002 HOME Loan to Saint Paul Family Project Limited Partnership, Owner of Jackson Street Village project, Located at 1497 Jackson Street in Saint Paul, and Forgiveness of Accrued Interest, District 6, Ward 5
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WHEREAS, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (the "HRA") is a public body corporate and politic established pursuant to the provisions of Minnesota Statutes, Section 469.001, et seq. (the “Act”); and
WHEREAS, the HRA has the power to engage in development or redevelopment activities under Chapter 469 of the Minnesota Statutes, Housing and Redevelopment Act ("Act") and by authority of said Act engages in activities relating to: a) housing projects and development; b) removal and prevention of the spread of conditions of blight or deteriorations; c) bringing substandard buildings and improvements into compliance with public standards; d) disposition of land for private development; and e) improving the tax base and the financial stability of the community, and to engage in the aforementioned activities when these needs cannot be met through reliance solely upon private initiative and which can also be undertaken in targeted neighborhoods; and
WHEREAS, Jackson Street Village (the “Project”) is comprised of 24 large size, deeply affordable rental units, that serve families, and one additional caretaker unit that is not rent restricted. The project was constructed in 2002 by the Saint Paul Family Project Limited Partnership (an affiliate of the developer RS Eden) (the “Borrower”), which remains as the owner, operator and developer of the Project; and
WHEREAS, the Board of Commissioners of the HRA, through Resolution No. 01-9/12-6 adopted September 12, 2001, approved a $387,500 HOME loan (“2002 HOME Loan”) to the Borrower to acquire and develop the Project, and the Borrower gave a mortgage in that amount to the HRA, as mortgagee, encumbering the Project (the “Mortgage”); and
WHEREAS, the 2002 HOME Loan approved by the HRA allowed for the deferral of principal and interest payments for its approximately 30-year term, and the loan, and all principal and interest payments thereunder, is scheduled to become due on July 25, 2032; and
WHEREAS, the Board of Commissioners of the HRA, through Resolution No. 23-958 adopted on June 28, 2023, approved 2002 HOME Loan modifications that included reduction of the interest rate from 2% to 0%, extension of the term for 30 years to be coterminous with the anticipated MHFA rehabilitation loan, and resubordination to the new MHFA loan; and
WHEREAS, in connection with the Borrower’s application for rehabilitation financing from the Minnesota Housing Finance Agency (“MHFA”), the MHFA has agreed to forgive existing loans that total $2,251,914; and
WHEREAS, the Ramsey County assessed market value for 1497 Jackson Street is $4,104,100. The new MHFA loan of $6,205,000 will have a first position mortgage so there is not sufficient collateral value to secure the HRA HOME loan; and
WHEREAS, there isn’t sufficient cash flow for the project to make debt payments as any cash flow is needed to fund supportive services for the project; and
WHEREAS, the HRA has received a request from Borrower that the HRA forgive the 2002 HOME Loan upon its maturity in 2032, and forgive accrued interest, contingent upon the closing of the new MHFA loan: and
WHEREAS, the Borrower will commit to a 50-year affordability restricted period upon closing as a condition of the MHFA loan that is consistent with the HOME loan requirements; and
WHEREAS, the HRA’s staff has determined the 2002 HOME Loan modification request is reasonable and warranted, and that there is a proper public purpose for forgiveness of the 2002 HOME Loan, including the RS Eden commitment to a 50-year affordability period;
NOW, THEREFORE BE IT RESOLVED, that the HRA Board of Commissioners takes the following action:
1. The HRA Board hereby: (1) approves the forgiveness of all accrued interest on the 2002 HOME Loan on the Project upon closing of the anticipated new MHFA financing; (2) approves the forgiveness of the loan upon its maturity on July 25, 2032; and (3) ratifies the other loan modifications referenced above and approved by the HRA Board under Resolution No. 23-958 adopted on June 28, 2023.
2. The Executive Director of the HRA is hereby authorized and directed to prepare and enter into loan forgiveness and related documents with Borrower consistent with this resolution and the accompanying Board Report, and the HRA’s Executive Director and other appropriate HRA officials are empowered to execute such loan forgiveness and related documents on behalf of the HRA, and are further authorized to execute any other documents and instruments that may be required or necessary in connection the foregoing terms.
3. The HRA Executive Director, staff, and legal counsel for the HRA are further directed and authorized to take all actions necessary to implement this Resolution.
4. This Resolution does not constitute a binding legal agreement; rather, the action taken herein shall not be effective until said document(s) are executed by the appropriate official(s) of the HRA.