Item Description:
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Neg Amendment, Assignment and Assumption of Agreements A14354, A18627, and A15921, 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 County Administrator be authorized to negotiate the Amendment, Assignment and Assumption of Agreements A14354, A18627 and A15921, and related documents, transferring ownership of property located at 2753, 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 County Administrator be authorized to sign the Assignment and Assumption Agreements and other related documents on behalf of the County; and
BE IT FURTHER RESOLVED, that the County Administrator be authorized to negotiate Amendment 1 to Agreements A14354, A18627 and A15921with Trellis Co. or an affiliated entity, extending Agreement A14354 to December 31, 2027, and modifying other agreement terms as necessary to facilitate a change in property ownership and to subordinate county mortgages to newly incurred debt with no change in the contract term or the total combined loan principal amount of $710,000; that following review and approval by the County Attorney's Office, the Chair and County Administrator be authorized to sign the amendments and related documents on behalf of the County.
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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. Hennepin County awarded the project three, zero percent interest, deferred loans from the Home Investment Partnerships Program (HOME):
• $275,000 in 1994 to acquire and rehabilitate the 2753 Louisiana Court building, restricting 7 of the 12 units to families at or below 50 percent of the area median income (AMI), from 12/05/1994-12/05/2024 (A14354, Resolution 94-0625).
• $100,000 in 1998 to acquire and rehabilitate the 2760 and 2768 Louisiana Court buildings, restricting 6 of the 24 units to families at or below 50 percent of AMI, from 10/28/1999-10/29/2029 (A18627, Resolution 98-0332).
• $335,000 in 2000 to acquire and rehabilitate the 2759 and 2765 Louisiana Court buildings, restricting 7 of the 20 units to families at or below 60 percent of AMI, and 2 units to families at or below 50 percent of AMI, from 12/27/2001-12/27/2031 (A15921, Resolution 00-0381).
The project also received financing from the county’s Community Development Block Grant (CDBG) program via the cities of St. Louis Park and Edina, and from the Hennepin County Housing and Redevelopment Authority’s Affordable Housing Incentive Fund (AHIF), 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 its 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’ acquisition and the bankruptcy court’s approval of the sale are contingent upon both new financing from Greater Minnesota Housing Fund, and on the assignment and assumption of all secured debt, including the debt secured by Agreements A14354, A18627, and A15921.
To facilitate the transfer of ownership of the properties, Trellis has requested assignment and assumption of the existing HOME loans, and the extension of Agreement A14354 to December 31, 2027. 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 properties 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 HOME agreements, including possible requests 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 negotiate the assignment, assumption, and amendment of Agreements A14354, A18627 and A15921, allowing the transfer of ownership and assumption of debt to Trellis Co, or its 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 Domain:
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