Adopt Resolution #17-09-223 Approving a Grant Agreement Between the City and Metropolitan Council, a Sub-Grant Agreement Between the City and Developer (AEON), and a subordinate Agreement Between the City and Developer (AEON) Regarding the Development Known as Greenway Terrace; Case of AEON; LLC Greenway Terrace Agreements (Project #16-84)

The purpose of this case is to approve three agreements associated with the Greenway Terrace development.  The first is a grant agreement between the City and the Metropolitan Council.  The second is a sub-grant agreement between the City and the Developer (AEON) and the third is a subordinate agreement between the City and the Developer (AEON).  The funds from the grant will be reimbursed to the developer (AEON) after the grant funded activities are complete.

Greenway Terrace is a 54-unit apartment complex being developed by AEON.  The Project was revised by the Planning Commission on July 6, 2017 and approved by the City Council on August 22, 2017.

No notification is required for this action.  

On July 12th the City Council approved the application for a Metropolitan Council Livable Communities TOD Grant. The resolution authorized the City Administrator or his/her designee to submit on behalf of the City an application for Metropolitan Council Livable Communities TOD grant funds for the TOD Project component(s) identified in the grant application, and to execute such agreements as may be necessary to implement the TOD Project on behalf of the City. 

The Applicant on behalf of the City has made applications to and received funds in the amount of $100,000 from the Metropolitan Council under its Local Housing Initiatives Account (LHIA) Program.  The City desires to provide those grant proceeds of the LHIA Grant in the amount of $100,000 to the Applicant to finance costs of acquisition and construction of the 54-unit affordable rental housing project at 7562 146th Avenue NW.

The first of three agreements which are part of this case include a Grant Agreement which is between the City and Metropolitan Council.  

The second agreement is the "Sub-Grant Agreement" which is between the City and Developer (Aeon).  The sub-grant agreement outlines the reimbursement process and indicates that the grant is a pass-through to the Developer (Aeon).  

The third agreement is the "Subordinate Agreement".  The Subordination Agreement is a requirement of the U.S. Department of Housing and Urban Development (HUD) outlining the agreement between the City and the Developer regarding the grant funds in the amount of $100,000.  The mortgage company and HUD have agreed to permit the City to make a subordinate loan and to place a subordinate mortgage lean against the mortgaged property subject to all of the conditions contained in the subordination agreement. This agreement outlines all funding sources on the project, the process in which the City would recoup the grant funds in the event of default.  In essence, the City will only provide the grant dollars provided by the Metropolitan Council to the Developer (Aeon) if the required improvements are completed by the Developer (Aeon).


Alternatives:

Alternative 1
Adopt Resolution #17-09-___ approving the City enter into a Grant Agreement between the City and Metropolitan Council, a Sub-Grant Agreement between the City and Developer (Aeon), and a Subordinate Agreement between the City and Developer (Aeon).  Staff supports this alternative.

Alternative 2
Do not adopt Resolution #17-09-___ approving the City enter into a Grant Agreement between the City and Metropolitan Council, a Sub-Grant Agreement between the City and Developer (Aeon), and a Subordinate Agreement between the City and Developer (Aeon).   This grant is an important step in the financing of the Greenway Terrace development project which was reviewed by the Planning Commission and approved by the City Council.  Staff does not support this alternative.

All costs associated with this Case are the responsibility of the Developer.

Staff recommends adoption of Resolution #17-09-223 approving the City enter into a Grant Agreement between the City and Metropolitan Council, a Sub-Grant Agreement between the City and Developer (Aeon), and a Subordinate Agreement between the City and Developer (Aeon)

Motion to adopt Resolution #17-09-223 approving the City enter into a Grant Agreement between the City and Metropolitan Council, a Sub-Grant Agreement between the City and Developer (Aeon), and a Subordinate Agreement between the City and Developer (Aeon).