Item Description:
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Neg Assignment, Assumption and Amendment of Agreements A15931 and A081848, approving the transfer of ownership of property to Trellis Co., no change to NTE
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Resolution:
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BE IT RESOLVED, that the Executive Director be authorized to negotiate the Assignment and Assumption of Agreements A15931 and A081848, and related documents, transferring ownership of property located at 2760, 2759, 2765 and 2768 Louisiana Court in St. Louis Park, from Perspectives, Inc., to Trellis Co. or an affiliated entity; that following review and approval by the County Attorney's Office, the Chair and Executive Director be authorized to sign the Assignment and Assumption Agreements and other related documents on behalf of the Authority; and
BE IT FURTHER RESOLVED, that the Executive Director be authorized to negotiate Amendment 1 to Agreements A15931 and A081848 with Trellis Co. or an affiliated entity, modifying agreement terms as necessary to facilitate a change in property ownership and to subordinate Hennepin County Housing and Redevelopment Authority mortgages to newly incurred debt with no change in the contract term or total combined loan principal amount of $710,000; that following review and approval by the County Attorney's Office, the Chair and Executive Director be authorized to sign the amendments and related documents on behalf of the Authority.
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Background:
Perspectives is a 56-unit affordable housing development located in five adjacent buildings with addresses of 2753, 2760, 2759, 2765 and 2768 Louisiana Court in St. Louis Park. The Hennepin County Housing and Redevelopment Authority (HCHRA) awarded the project one loan and one grant from the Affordable Housing Incentive Fund (AHIF) program:
• $450,000 deferred loan in 2001 to acquire and rehabilitate the 2759 and 2765 Louisiana Court buildings, requiring all 18 units to be affordable to low-income persons, from 12/27/2001 to 12/27/2031 (A15931, Resolution 12-HCHRA-00R1).
• $260,000 grant in 2007 to rehabilitate the 2760 and 2768 Louisiana Court buildings, requiring 22 of the 24 units at to be affordable to households at or below 30pecent of the area median income, from 02/27/2009 to 02/27/2039 (A081848, Resolution 07-HCHRA-13).
The project has also received financing from Hennepin County’s HOME Investment Partnerships (HOME) and Community Development Block Grant (CDBG) programs, in addition to other funders. Moreover, the St. Louis Park Housing Authority has provided project-based Section 8 rental assistance for 22 units at these properties, further enhancing affordability for 22 tenant households.
The current owner, Perspectives, Inc., has filed for Chapter 11 bankruptcy and is required to sell the properties as part of the bankruptcy proceedings. Perspectives has accepted a suitable offer from Trellis Co. to purchase the five buildings, maintain all affordability restrictions, assume the Section 8 rental assistance contract, and assume and continue all tenant leases. Trellis’s acquisition and the bankruptcy court’s approval of the sale are contingent upon both new financing from Greater Minnesota Housing Fund, and on assignment and assumption of all secured debt, including the debt secured by Agreements A15931 and A081848.
To facilitate the transfer of ownership of the properties, Trellis has requested assignment and assumption of the existing AHIF loan and grant. Subordination to new debt and amendment of certain terms unrelated to the primary contract terms and principal loan amounts may be necessary to effectuate the transfer assignment and assumption of debt contemplated by this action. Contingent on required approvals from the bankruptcy court and other funders, Trellis anticipates closing on the sale of the property in August 2024.
Trellis anticipates a renovation and recapitalization of the Perspectives properties in the coming years, which may prompt future requests to further modify these AHIF agreements, including possible request for forgiveness, and/or requests for additional funding from a future RFP. Any future request related to the property will be brought forward for separate consideration.
Current Request:
This request is for authorization to negotiation of the assignment, assumption, and amendment of Agreements A15931 and A081848, allowing the transfer of ownership and assumption of debt to Trellis Co, or an affiliated entity.
Impact/Outcomes:
Approval of this request will preserve affordability for 56 housing units, 22 of which are further supported by project-based Section 8 rental assistance and prevent displacement of current tenants during the Chapter 11 bankruptcy process.
Housing Disparity Outcomes:
This board action request aligns with Hennepin County disparity reduction efforts by creating affordable housing opportunities for households with lower incomes.
recommendation
Recommendation from County Administrator: Recommend Approval