Item Description:
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Neg Assignment, Assumption and Amd 1 to Agmt PR00004845, approving the transfer of ownership of property to NorthView LLC, extend term to 12/31/78, increase the NTE; terminate and forgive Agmts A021091, A080507, and A120639 with Beacon Interfaith Housing Collaborative
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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 Agreement PR00004845 (Resolution 22-HCHRA-0048), and related documents, allowing transfer of ownership of 2216 and 2220 Clinton Avenue South in Minneapolis, from North Haven LLC to NorthView LLC; that following review and approval by the County Attorney's Office, the Chair be authorized to sign the Assignment and Assumption Agreement 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 Agreement PR00004845 with NorthView LLC, or an affiliated entity, modifying agreement terms as necessary to recognize a change in property ownership as described herein, adding properties at 3146 Cedar Avenue South and 3806-3816 Third Avenue South in Minneapolis, extending the contract period end date from December 31, 2053 to December 31, 2078, and capitalizing the accrued interest for a new not to exceed amount of approximately $309,000; that following review and approval by the County Attorney's Office, the Chair be authorized to sign the amendment and related documents on behalf of the Authority; and
BE IT FURTHER RESOLVED, that the Executive Director be authorized to terminate Agreement A021091 with FMF 38th Street Development LLLP, for 3806-3816 Third Avenue South in Minneapolis, and to forgive the principal loan amount of $118,500 and accrued interest for a combined total of approximately $146,397; that the Chair be authorized to negotiate and sign any related documents to effectuate loan termination and release of the declaration on behalf of the Authority; and
BE IT FURTHER RESOLVED, that the Executive Director be authorized to terminate Agreement A080507 with North Haven LLC, for 2216 Clinton Avenue South in Minneapolis, and to forgive the agreement amount of $125,000; that the Chair be authorized to negotiate and sign any related documents to effectuate grant termination and release of the declaration on behalf of the Authority; and
BE IT FURTHER RESOLVED, that the Executive Director be authorized to terminate Agreement A120639 with North Haven LLC, for 2200 Clinton Avenue South in Minneapolis, and to forgive the principal loan amount of $100,000; that the Chair be authorized to negotiate and sign any related documents to effectuate loan termination and release of the declaration on behalf of the Authority.
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Background:
The Hennepin County Housing and Redevelopment Authority (HCHRA) awarded four Affordable Housing Incentive Fund (AHIF) program agreements from 2001-2022 for various properties within Beacon Interfaith Housing Collaborative’s Northview portfolio in Minneapolis: Agreement A021091 (NTE $118,500) for a 12-unit townhome development at 3806-3816 Third Avenue South: Agreement A080507 (NTE $125,000) for a fourplex apartment building at 2216 Clinton Avenue South; Agreement A120639 (NTE $100,000) for a fourplex apartment building at 2220 Clinton Avenue South; and Agreement PR00004845 (NTE $300,000) providing additional funding for 2216 Clinton Avenue South and 2220 Clinton Avenue South. The AHIF agreements required compliance with affordability requirements to end dates ranging from 2032 to 2053. Provided that requirements were met, no repayment of funds would be due at the end of the term for Agreements A080507 and A120639. Mortgages and declarations were recorded against each property to secure affordability across the Northview portfolio.
Since initial acquisition in the early 2000s, the three AHIF-supported projects and a fourth project (3146 Cedar Avenue South) within the Northview portfolio have developed significant capital improvement needs that must be addressed for the properties to remain viable, long-term affordable housing. Beacon has obtained new funding commitments and associated long-term affordability restrictions from city, state and local funders, including a 2024 Supportive Housing Strategy award for $1,000,000 that secures deeper affordability than is required by the existing AHIF agreements. Beacon plans to close on the new financing and begin property renovation in 2026. Affordability will be extended for 50 years, through 2078.
With the newly committed capital funding for the full Northview portfolio, the cumulative debt on the properties (after the 2026 closing) would far exceed the properties’ appraised value, making the oldest debt prohibitive to closing on new funding. Beacon has requested consolidation of all properties (3806-3816 Third Avenue South, 2216 Clinton Avenue South, 2200 Clinton Avenue South, and 3146 Cedar Avenue South) under Agreement PR00004845 with a new not to exceed amount of approximately $309,000 (including accrued interest); termination and forgiveness of Agreements A021091, A080507, and A120639, including release of the related declarations, and satisfaction of the related mortgages; assignment of Agreement PR00004845 to the new ownership entity, NorthView LLC; and extension of the contract term to 2078 to match that of the term of the new financing.
Staff have reviewed Beacon’s request and, consistent with county priorities, recommend approval as the best means to allow the properties to remain stable, affordable housing for 22 extremely low-income households and 9 low-income households until 2078.
Current Request: This request is for authorization to terminate and forgive three existing AHIF contracts (Agreements A021091, A080507, and A120639) and to release the related notes, mortgages and declarations therewith; and to negotiate the Assignment, Assumption, and Amendment 1 to Agreement PR00004845, allowing the transfer of ownership and assumption of debt to NorthView LLC.
Impact/Outcomes: Approval of this request will allow for the renovation and preservation of four existing affordable housing properties that comprise the Northview portfolio. This action will help to ensure that the Northview portfolio properties remain as stable, high-quality affordable housing for decades, providing quality housing to 22 extremely low-income households and 9 low-income households.
Housing Disparity Domain: This board action request aligns with Hennepin County disparity reduction efforts by creating affordable housing opportunities for households with lower incomes.
This request funds services that are: core services
recommendation
Recommendation from County Administrator: Recommend Approval