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Home My WebLink About2005 Resolution No. 075• RESOLUTION NO . ..:J.S SE RIES OF 2005 A RESOL UT ION AU TMORIZI NG HIE APPLI CA TIO FO R A LOAN FROM CO LONIAL BANK TO THE CITY OF ENG LEWOO D, CO LORADO TO FUND Tl·IE HOUS ING RE HABILIT AT ION ENTERPRI SE FUND . WHEREAS , th e City Co un cil of the Cit y of Englewood, Co lorad1J crea ted th e Englewoo d Hous ing Rehabilitation Loa n Program in 1977 , to pre serve the exi stin g hous ing stock in the City and to address th e problem s oflow-inc omc families with the fin ancing of maj or repairs has approved re so luti ons to appl y for fundin g to support the Housing Rehabilitat ion Pro gram since I 977; and WHEREAS , Englewood Cit y Co uncil approved Ordinance 23 , Series of 1999 , assum ing all of th e assets an d li abi liti es of th e Re habi li ta ti on Progrn m from th e Englewood Hou sing Authority; and WHEREAS , Englewood City Cou ncil appro ved Ordinance 26 , Series of 1999, establishing the He ·15 in g Re ha bilitati on Fund and Ordin ance 31, Series of 2003 , creatin g the City of Eng lewood Hous ing Rehabilitati on Enterprise Fund to operate and suppon the Housin g Rehab Loan Program; a:1d WHEREAS , the Eng lewoo d City Cou ncil ap pro ved Reso lution 33 , of2000 and Reso lution No. 77 of 2003 authorizing agree ment s which establi sr ~d a line of credit with Vectra Bank for the co ntinu ance of the Hou!li 1ig Reh ab ilit ation Fund ; a11 d WH EREAS, th e lc.Cgc number of foreclosed properties has strc s~c d the; P'und and currentl y th e Fu nd does not have th e resou rces to cove r future redemption cos ls and to insure th e so lve ncy of the Progra m until the properties are so ld ; and WH EREAS, th e Englewood Ci ty Counci l appro ve d Re so luti on No. 47 , 2005 , authorizing an ap plicati on r. · a million dollar line of credit with Mile Hi gh Housi ng Fu11d; and WHEREAS, 10 faci li tate a fa ster approval proc ess with Mile High Hou sing Fund it was decided to dec re ase the init ial loan req uest fr om a mi lli on to $500 ,000; and WH EREAS, Mi le High Housi ng Fu nd Loa n Com millec ap pro ved th e loan on July 27, 2005 but with conditi ons that did not entirel y rn cc 1 the Prngra m's ne eds; and WHEREAS , in order to sec ure the fund s neede d by , \u6u,t 18, 2005 the City continued to rc si.:arch oth er loan opti ons with the loc al bankin g co mm,•nity ; and WHE REA S, Colonial Bank f.us offered a loa n pro du ct that wou ld meet th e Program's immediate needs as we ll ns make th e Augu st 18th dead li ne ; an d WHEREAS , the risk s of the lo an wou ld be supponcd solely by the Rehab Program and sec ure d hy its rc.1 1 r.s tate; NO W, TH ERI:.~-'~, BE IT RESO LVE D BY TH E CIT Y COUNC IL OF TH E CITY OF ENG LEWO OD, CO LuRDO , TH AT: Sec ti on I. Th e City Co un cil of th e Cit y of Englew ood hereby authori zes appli ca ti on fo r a loa n fo r th e Engl ewoo d Housin g Reh abilit ati on Enterp ri se Fund for th e sole purpose of fundin g th e redempti on of fo rec lose d Engl ewoo d Housi ng Rehabilitati on Enterpri se FunJ prop cni es and redu ci ng by th at am ount , th e loa ns to be acquired und er th e lin e of credit auth ori zed in Reso luti on No . 4 7, 2005. Sec ti on 2. The Mayo r and City Clerk are hereby auth ori ze d to sign and atte st all nec es sa ry fo nn s, documents , ass urancr s and certifi ca ti ons for th e loan with Colonial Bank of $25 0,000 fo r the En gle woo d Housing Reh abilit ati on Ent erpri se Fund . ADOPTE D AND APPROV ED th is 15•h day of Au gust , 2005 . I, Loucri shi a A. Elli s, Ci ty Clerk for th e Cit y of Englew ood, above is a true co py ofRe so luti on No .~. Se rie s of 2005 . • • COUNCIL COMMUNICATION Date : Agenda Item : Subject: August 15 , 2005 11 C iii Loa n fo r the Housing Rehabilitati on En !c rpr ise Fund Init iated ~y: I Staff Source: Co,nm uni ty Deve lopmen t Depa rtment. Janel Grimmett, Housing Finance Specialist COUNCIL GOAL AND PREVIOU5 (:OUNCIL ACTION City Council approve d Ordinanc e 23, Series 1999 assuming all of the assets and liab ilities of the Rehabi litation Progr am fro m th e Englewood Housing Authority. Also approved was Ordi nance 26, Series of 1999 establishing the Housing Rehabilitation Fund and Ordinance 31, Series of 2003 crea ting the City of Engl ewood Housing Rehabilitation Enterprise Fund . Council aprrove d Resolution 33 , Series of 2000 an d Resolution 77, Series of 2003 authorizing an a~reemen'. establishing a line of credit with Vectra Bank for the continuan ce of th e Housing Rehabiiii•tion Fund . Council approved Resoluti on 47, Series of 2005, authorizing an application for a lin e of credit with Mile Hi gh Housing Fund. RECOMMENDED ACTI ON Recommendation from the Commu nity Development Departm ent to adopt a Reso lu tio n to apply for a new loan wit h Colonial Bank for $250,000 to support the foreclosure ac ti vi ti es of the Housing Rehabili tation Enterprise Fund. BACKGROUND, ANALYSIS, AND ALTERNATIVES IDENTIFIED The City created th e Housing Re habilita tion loan Program in 1977 to preserve th e exis ting housing stock in the City and to address the prob lems of low-income families with th e rinancing of major re pairs. The Program was administ ered throug h the Eng lewood Housing Au th ori ty until early 1999 whe n th e City es tablished the Housing Rehabilitation Fund (the Fund) and assumed all of th e ass ets and liabiliti es of th e Rehabilitation Prag, am . The Fund was established to ope rat e an d support the Housing Rehab loan Program . The Fu nd is man age d as a revo lving fund for housi ng rehabi litation and developm ent with tne goa l of pr eservi ng the principle whil e improvi ng the housing stock. One of the func ti ons of the Fund is to redeem prope rties that have gone through the foreclosure process (i.e . 4231 South Ch•rokee Street, 4180 South Acoma Street and 3596 South Bannock Street redeem ed ea rlier rn 2u05). All foreclosure notices are evaluated by the Rehab Loan Co n 'll ittee (RLC) afte r the pub li c sa le set by the Public Tr us tee. Th e RLC's decision to redeem any prop 'rty is based on th e curren t va lue of the property, the cos t of additional repairs, if an1', and the balan ces of an y se ni or li ens . Strong co nsid eration is gi ve n to th e finan cial feasibi lity of th e redemption and to th e prese rvati on of th e Fund 's p rin c ipal. Foreclos ure pres sur es ha ve ease d sli gh tl y sin ce June . Of th e four forecl osures that were pending, one foreclos ure was w ithdrawn an d two oth ers w ere continu ed t'l fu ture sa le dates into late August. The last property was so ld wi th th e redempti on p eri od ending August 18, 2005 . Th e amoun t needed to redeem th at property is $163 ,000. Thr ee other foreclosures have just sold or are still p ending public sa le. The estimated total to redee m them is $400,000. Funds w ill b e needed in October and N ovember 2005 if th e RLC determin es red emption appropriate. Counci l approved a b o rrowing res olution with Mile High Housing Fund in Jun e. To facilitate a faster approva l process with MHHF, it was decided •~ decrease th e initial loan request from $1 million lo $500,000. The MHHF loan committee rev iewed an d approved the loan on July 27, but with conditions th at did not entirely meet the Program 's needs. Staff has requested th at MHHF Loan Committee re-re view our req uest. The res ult s of th at re view are not known at this time . In the meantime, in order to sec ure fands by August 18, staff has con tinu ed to research other loan opti ons with th e local banking community. A,._ discussin g th e program ne eds with Co lonia l Bank, 3501 South Broadway, they offered a loa n p re, th at would meet th e Program's immediat e n eeds and make the August 18 deadline. The , s of the loan would be supported so lely by the Rehab Program and secured by its real es tate. It is unkn own at this tim e if the loan wi th Mile High Housing Fund w ill be finalized in time to meet th e August 18 deadline. Staff would like to proceed with working wit h Coloni al Bank in order to insure funds are in place pri or to th e A1_:gu:;t 18 redemp ti on de adline. FINANCIAL IMPACT Existing Community Developmen t sta ff administers the Housing Rehabilitation Fund. No additi ona l m oni es w ill be req uired for admi nistratio n of th e lin e of credit. Th e Housing Rehabilitation Fund w ill assume all ris~s ass ociated w ith the line of credit. LIST OF ATTACHMENTS Res olu ti on .. •