HomeMy WebLinkAbout2005 Resolution No. 047•
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RESOLUT ION NO . .i!l
SE RI ES OF 2005
A RESOLUTION AU TH ORIZIN G THE AP PLI CAT IO FOR A LINE OF CREDIT FOR THE
HOUSING REHABILITATIO ENTERPRISE FUN D FOR FUNDING OF $1 ,000,000 FOR
THE ENG LEWOOD HOUSING REHAB ILIT AT ION ENTERPRISE FUND BETWEEN THE
MILE HI GH HOUSfNG FUN D (M HHF ) AN D THE CIT Y OF ENGLEWOOD , COLORADO .
WHEREAS , th e City Cou ncil of the Ci ty of Englewoo d, Co lora do created the Englewood
I-l ousing Rehabilitation Loa n Program in 1977 , to pre serve the cx i 1 ing housing stock in the City
and to add ress the problems of low -in come families with th e fin anc in g of major repa irs has
approved reso lu tio ns to app ly fo r fu ndin g to support the Hous in g Re hab ilit at ion Program sin ce
1977 ; and
WHEREAS, Englewood Ci ty Co uncil approve d Ordinance 23, Series of 1999, ass uming all of
the asset s and li abilitie s of the Rehabilitati on Program from th e Englewood Housi ng Authority;
and
WHEREAS , Englewood City Counci l appro ve d Ordinance 26 , Seri es of 1999, estab lis hing the
Housing Rehab ilit atio n Fund and Ordin ance 31, Series of 2003 , cre aung the City of Englewood
Hous in g Rehabilitati on Ent erprise Fund to operate and support th e Ho using Rehab Loan
Program ; and
WHEREAS, the large numb er of foreclosed propertie s has stressed th e Fund and curren tl y the
Fund docs not have the re source to cover future re demptio n costs and to in sure the so lvency of
the Progra m until the propertie s are so ld ; and
WHEREAS , Mile High Housing Fund (MHHF) has a loa n product that wo uld support th e
Progmm ''i !o re clos ure crisis as a sho n tcnn loan to cover the costs of redee min g tt,e ex isting
foreclosure s as we ll as any future forec losures ; and
WHEREAS , Cit y Co u11 cil desi res staff to appl y fo r $1 ,000 ,000 fo r the Hou sing Rehabilitation
Project from the Mi le High Hou sing Fund ;
NOW , TliEREFORE , BE IT RESOLVED BY THE CITY COUNC IL OF HI E CITY OF
ENG LEWOOD , CO LORDO , THAT :
Section I. The City Counc il of th e Cit y of Englewood hereby authorizes r :•~li ca ti on fo r a lin e
of credit for t!1c Eng lewood Mous in g Rehabilitation Enterpri se Fund for th e so le "Urposc of
funding th e rede mpti on of fo reclose d Eng lewoo d Hou sin g Re hab ilit ati on Ent erp.dc Fund
prop..:nics .
Section 2. The Mayor and Ci1y Clerk nre hereby au thori ze d 10 sign and a11e s1 all necessary
forms , documents , ass urance s and ccnifications for the funding of SI ,000 ,000 for th e
Englewood Housing Rchnbi li1a1ion Enterprise Fund .
ADOPTED AND APPROVED 1his 201h day of June , 2005 .
'L1.,
l loucrish1 a A. Ellis , Cily Clerk
I, Loucrishia A. Ellis, City Cle rJ<l9r ~~e City of Engle oo , C lorad o, hereby cenify 1he
above is a true copy uf Re so lution No . '!:L_, Series of 2005. 1
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• COUNCIL COMMUNICATION
Date : Agenda Item: Subject:
l un e 20, 2005 9 C i Lin e of Credit w ith Mile High H ou sin g
Fund for Rehabilitation Ent erpri se Fund
Initiat ed By: I Staff Source:
Community D evelopm ent D epartm ent Jan et Grimmell, H o using Fin ance Sp ecia li st
COUNCIL GOAL AN D PREVIOUS COUNCIL ACTION
City Cou nc il ap p roved Ordinan ce 23, Se rie s 1999 ass uming all of the assets and liab iliti es of th e
Rehab ilitation Pr og ram fro m th e Engl ewood H o usin g Auth ority . Als o approve d was Ordinance 26,
Ser ies of 1999 es ta blishing th e H ousing Rehabi li tation Fund and Ordinance 3 1, Seri es of 2003
c rea ting th e City of En glewood H ousin g Rehabi li tati on Ent erprise Fund .
Counci l als o approve d Res olutio n 33 , Se ri es of 2000 and Resolution 77, Series of 2003 authori zing
an agree m ent establishing a line of credit w ith Vectra Bank for th e continuance o f th e H o using
Rehabilitati on Fund .
• RECOMMENDED ACTION
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Recomm endati on fro m th e Community D evel opment lo ad opt a reso lution auth o ri zing app li ca ti on
for ne w li ne of credit w ith Mile High H o usin g Fu n d for $1 ,000,000 l o support the ac ti vities o f the
H ousin g Rehabilit ati on Enterprise Fun d.
BACKGROUND , ANALYSIS, AND ALTERNATIVES IDENTIFIED
Th e City c rea ted th e H ousin g Rehab ili ta ti on Loa n Program in 1977 to prese rv e th e exi sting housing
st ock in the City and to address th e p ro bl ems of low-in co m e famili es w ith th e fin ancin g of m aj or
repairs . Th e Pr ogram was adm i ni stered thro ugh th e Engl ewood H o using Auth ority un til ea rl y 1999
w hen th e Ci ty es tablished th e H o using Rehabilitati on Fund and ass um ed all of the ass ets and
liabilit ie s o f th e Rehabilit ati on Pr ogram.
Th e H ousing Reha bilitati on Fund (th e Fund ) wa s es tabli shed l o op erate and support th e Housing
Rehab Loa n Prog ram . Th e Fund is man age d as a revolvin g fund for h ousing rehabilita tion and
deve lopment w ith th e goa l of preseivin g th e principle w hil e improvin g th e hou si ng stock . A
m inimum $600,000 is required to man age th e Rehab Loa n Program in a prudent manner. Funds
above that level support th e ACTS Stud ent Build pa rtn ership w ith Arapahoe Community Coll ege.
One of the fun cti ons of th e Fu n d is to redee m pro p erties th at ha ve gone through the fo reclosure
process (i.e., 423 1 South Ch ero kee Str eet and 41 80 So uth Aco ma Str ee t redee m ed ea rli er in 2005) .
All fo recl osure noti ces are eva luated by th e Re hab Loa n Commillee (RL C) aft er th e public sa le se t
by th e Pu b lic Tr us tee. Th e RLC's decision to reJee m any prop erty is ba sed on th e c urrent va lu e of
th e p rop erty, the cos t o f addi ti ona l repairs, if any, and th e ba lances ol any senior l iens. St ro ng
con siderat ion is give n to th e finan cial feasibili ty nf th e red emption and to the pres erva ti on of th e •
Fund's prin cipa l. If ih e rede mption makes fiscal sense, and fund s are ava ila b le l o red ee m, th en a
recommenda ti on to red eem is genera ll y approve d. If th e re demptio n does n ot make fisca l se ns e,
then th e RLC w ill recommend to write-o ff the rehab loan rath er th an redee m th e fo rec los ure. If
funds are not available, th en the RLC is limited to writing-off th e rehab note ev en if th e red emption
makes fis ca l sense .
Th e large number of foreclos ed p roperti es has stress ed th e Fund thi s yea r. Four foreclos ures hav .s
b ee n rede em ed totaling $5 70,355 usin g cas h ava il abl e in th e Fund . One of th ose foreclos ures w.1s
subse qu ently redeem ed by a junio r li en returning $138,000 to th e Fund, but th e balance of
$432,355 is st ill ti ed up in rea l est ate. The m oni es will only be returned to th e Fund when th e
indivi du al p roperties are so ld to new owners.
Four m ore foreclos ures are pe ndin g publi c sa le to taling an es tim ated $518,000. Fu nds w ill be
nee ded in August and Sep tember 2005 to red ee m th ose properties if th e RLC determi nes
redempti on appropriate . Th e Fund c u rre ntly does not ha ve th e resou rces available to redeem any
one of th em . It is also anticipated th at th e number of foreclos ures w ill not decrea se in the near
future . Fund s would also be need ed l o cove r fu ture redemption costs and to insure th e so lve ncy of
th e Program until th e properti es are so ld .
Council has approved borrowin g reso luti ons in th e past au th oriz in g agreemen ts w ith Vectra Ba nk
fo r lin es of c red it to support th e H ousing Rehabil itati on Program. That agreement is limited to th e
approva l of new reha b loa ns . Th e Pr ogram has also rec eive d ot her loa ns an d grants fr om va ri ous
age nc ies, but none of them cover the cos ts of redeeming foreclosu res as an eligible ex pense.
Anoth er so urce of fund s is needed to cove r foreclosu re expenses until the properti es are so ld and •
the proceeds are retu rned to th e Fund .
After resea rchin g possib le opti ons , it w as det ermined th at Mile High H o usin g Fun d (MHH F) has a
loa n product tha t wou ld b es t support th e Pr ogram 's fo reclosu re crisis. MHHF can provide a loa n
th at would be used to red eem the cu rrent and future foreclosures as nee ded. MHH F is a non-profit
financial insti tu tion crea ted in May 2000 to provid e ea rl y stage bridge loa ns fo r housing
deve lopments tha t serve low-in com e fa mili es. Th e City of Englewood was o ne of th e origi nal
investors in M HHF wi th a $50,000 loa n .. 1AHH~ ca n provide up to $1 ,000,000 as a sho rt term loan
l o cove r th e c osts of redeeming the existi ng foreclosures as we ll as any future foreclos ures. TI1 e
rate would be 5.0% interes t w ith prin ci pJI and interes t due in 24 m onths. Th e loan w ill be secured
by th e redeemed rea l est ate and will b e repa id to MHHF upon sa le of th e property to a qu alified
buyer. Any risks of loa n would be supported sol ely by th e Rehab Program and th e secured rea l
es tat e.
FINANCIAL IMPACT
Ex istin g Commu nity Development staff adm ini sters the H using Reh abi litatio n Fund . N o addi tional
monies will be required for ad mini stration oi tlce lin e of c redit. The Housin g Re habilitati on Fu nd w ill
ass um e all ri sks assoc iated with the lin e of credit.
UST OF ATTACHMENTS
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