Consent 1.L.
Regular City Council Meeting
- Meeting Date:
- 06/23/2014
- TITLE
- Amendments to the Loan Agreement for Rose Park Plaza Project
- PRESENTED BY:
- Patrick M. Weber
- Department:
- City Hall Administration
Presentation:
PROBLEM/ISSUE STATEMENT
In 2004, Rose Park Plaza Partners LLP requested issuance of revenue bonds for the acquisition and rehabilitation of Rose Park Plaza Apartments, a 112 unit Section 8 affordable housing complex.
The City is a conduit to the issuance of the industrial revenue bonds for the Rose Park Partners. The bonds issued do not constitute any financial liability of the City. The only requirements for this type of issue is to request the amount needed for City approval and notify the City when the loan is paid off and when any changes are made to the agreement.
The amendment concerns a Residual Receipts account, an account required by HUD to be maintained by the Project Owner to hold the Section 8 Housing Assistance Payment Contract’s funds in excess of those allowed for distribution to the owner. The project is no longer required to make deposits to this account. Recently HUD issued new regulations authorizing HUD to sweep the Residual Receipts Account to subsidize the project’s Section 8 payments. Those sweeps occur monthly until there is only $28,000 on deposit. These regulatory changes by HUD were not anticipated when the Bond documents were done in 2004. A new deposit account will be created to hold a replacement Operating Reserve of $71,211. The Loan Agreement also needs to be modified to create a new Operating Reserve of $71,211.
The City is a conduit to the issuance of the industrial revenue bonds for the Rose Park Partners. The bonds issued do not constitute any financial liability of the City. The only requirements for this type of issue is to request the amount needed for City approval and notify the City when the loan is paid off and when any changes are made to the agreement.
The amendment concerns a Residual Receipts account, an account required by HUD to be maintained by the Project Owner to hold the Section 8 Housing Assistance Payment Contract’s funds in excess of those allowed for distribution to the owner. The project is no longer required to make deposits to this account. Recently HUD issued new regulations authorizing HUD to sweep the Residual Receipts Account to subsidize the project’s Section 8 payments. Those sweeps occur monthly until there is only $28,000 on deposit. These regulatory changes by HUD were not anticipated when the Bond documents were done in 2004. A new deposit account will be created to hold a replacement Operating Reserve of $71,211. The Loan Agreement also needs to be modified to create a new Operating Reserve of $71,211.
ALTERNATIVES ANALYZED
Upon approval of the resolution the lender, US Bank, will proceed with the modifications of the agreement.
FINANCIAL IMPACT
There is no financial impact to the City.
RECOMMENDATION
Staff recommends that Council approve the resolution amending the loan agreement for Rose Park Plaza Project.