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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 01/19/2016 - SECOND READING OF ORDINANCE NO. 008, 2016, AUTHORIAgenda Item 6 Item # 6 Page 1 AGENDA ITEM SUMMARY January 19, 2016 City Council STAFF Heidi Phelps, CDBG/HOME Program Administrator SUBJECT Second Reading of Ordinance No. 008, 2016, Authorizing the Release of a Covenant on the Murphy Center Property. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on January 5, 2016, releases a covenant that is no longer needed following the loan payoff and Release of Deed of Trust for the Community Development Block Grant (CDBG) Public Facility project regarding the Sister Mary Alice Murphy Center for Hope. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, January 5, 2016 (PDF) 2. Ordinance No. 008, 2016 (PDF) Agenda Item 11 Item # 11 Page 1 AGENDA ITEM SUMMARY January 5, 2016 City Council STAFF Heidi Phelps, CDBG/HOME Program Administrator SUBJECT First Reading of Ordinance No. 008, 2016, Authorizing the Release of a Covenant on the Murphy Center Property. EXECUTIVE SUMMARY The purpose of this item is to release a covenant that is no longer needed following the loan payoff and Release of Deed of Trust for the Community Development Block Grant (CDBG) Public Facility project regarding the Sister Mary Alice Murphy Center for Hope. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION In 2004, United Way of Larimer County, representing a group of larger community interests, was awarded a $70,500 Community Development Block Grant (CDBG) loan towards the purchase of land, which would eventually support the Sister Mary Alice Murphy Center for Hope. The loan was granted subject to a Recipient Contract for Community Development Block Grant Funding and was secured by a promissory note and deed of trust. The terms of the deed of trust required the loan to be repaid if the property was ever sold. Although United Way acted as the fiduciary agent and interim property owner, it contracted out daily operations of the facility to another agency, SummitStone (formerly TouchStone) Health Partners. Touchstone was responsible for oversight until June 2013, when United Way transferred the property to Serve 6.8, a local faith-based organization, which also assumed responsibility for daily operations. When United Way conveyed the Murphy Center property to Serve 6.8, the City allowed Serve 6.8 to assume the loan on the property rather than require it to be repaid. As a condition of permitting Serve 6.8 to assume the loan, the City required Serve 6.8 to sign a Memorandum of Understanding and Covenant that required Serve 6.8 to use the property only for serving those experiencing homelessness or at risk for becoming homeless, and providing only services meeting CDBG requirements. The covenant also required the consent of the City and United Way for any future transfers of the property. Serve 6.8 transferred the property to Murphy Center LLC, an entity formed by Bohemian Foundation, on December 6, 2015, with the City's consent, after Serve 6.8 redirected its mission towards serving under- resourced community members through a more preventive framework at another facility. At present, Bohemian Foundation is leasing the facility to Homeless Gear, the agency overseeing daily operations. Community partners such as Catholic Charities, Neighbor to Neighbor, and others, continue to provide direct service to clients at the Murphy Center facility. As part of this transfer, the City's loan was paid off and the City now wishes to release the property from the covenant. Because a covenant is an interest in real property, City Council's authorization is required to release the covenant. ATTACHMENT 1 Agenda Item 11 Item # 11 Page 2 CITY FINANCIAL IMPACTS A loan payoff and subsequent release of Deed of Trust occurred. The loan payoff returns $74,025 to the City in CDBG Program Income. Those funds will be primarily available for allocation to a successful affordable housing proposal through the 2016 Spring Competitive Process. The release of the Memorandum of Understanding and Covenant will also relieve the City of staffing costs associated with the long-term monitoring and compliance requirements attached to oversight of the federal loan for this project. BOARD / COMMISSION RECOMMENDATION This action is a housekeeping item and does not require board or commission recommendation. ORDINANCE NO. 008, 2016 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE RELEASE OF A COVENANT ON THE MURPHY CENTER PROPERTY WHEREAS, in 2004 the City of Fort Collins and United Way of Larimer County (“United Way”) entered into a Recipient Contract for Community Development Block Grant (“CDBG”) Funding (the “Contract”) for the acquisition of land described as Lot 2, A Minor Sub of Conifer Industrial Park (the “Conifer Property”), as the future site of a facility now known as the Sister Mary Alice Murphy Center for Hope (“the Murphy Center”); and WHEREAS, the Contract provided for a distribution by the City to United Way of a due on sale loan in the amount $70,500, plus 5% simple interest on the principal (the “Loan”), made available to the City from the United States Government under Title I of the Housing and Community Development Act of 1974, and secured by a Promissory Note and Deed of Trust in favor of the City on the Conifer Property dated January 21, 2005; and WHEREAS, in 2007 the Conifer Property was replatted, and the City agreed to release the 2005 Promissory Note and Deed of Trust in exchange for a new Promissory Note and Deed of Trust dated August 21, 2008, encumbering a portion of the former Conifer Property described as Lot 2, United Way Housing Services Day Center (the “Murphy Center Property”); and WHEREAS, in 2013, with the City’s consent and cooperation, United Way transferred the Murphy Center Property to Serve 6.8, a Colorado nonprofit corporation (“Serve 6.8”); and WHEREAS, as part of this transfer the City permitted Serve 6.8 to assume the Loan and the Contract from United Way, on condition that Serve 6.8 execute a Memorandum of Understanding and Covenant, a copy of which is attached hereto as Exhibit “A” and incorporated herein by reference (the “Covenant”); and WHEREAS, the purpose of the Covenant was to help the City ensure that Serve 6.8 complied with the federal requirements associated with the Contract and Loan by requiring Serve 6.8 to use the Murphy Center Property solely for the purpose of case management and a range of related services for community members who are experiencing homelessness, or who are at risk of becoming homeless, with a majority (51%) of clients being provided direct services falling below 80% of local Area Median Income, and 100% of the services provided being CDBG- eligible, public service activities as described in 24 CFR 570.201(e); and WHEREAS, the Covenant also says that SERVE 6.8 may not allocate office or administrative space at the Murphy Center to any entity other than the entity responsible for daily operations of the Murphy Center, or agencies providing on-site, direct services to clients, nor permit the use of such space for any purpose other than the daily operation of the Center or the provision of allowable, on-site direct services, and it requires the consent of the City and United Way to any future transfers of the Murphy Center Property; and WHEREAS, on December 6, 2015, Serve 6.8, with the City’s consent, transferred the Murphy Center Property to Murphy Center LLC, a new, single-member LLC formed by the Bohemian Foundation (the “LLC”); and WHEREAS, as part of the conveyance by Serve 6.8 the Loan was paid off, the 2008 Deed of Trust on the Murphy Center Property was released, and the Contract terminated; and WHEREAS, because the requirements of the Loan and the Contract no longer apply to the Murphy Center Property, the LLC would like the City to release the Covenant, as it is an interest in real property that encumbers the LLC’s title to the Murphy Center Property; and WHEREAS, City staff has no objection to releasing the Covenant as its purpose has been served, and removing the Covenant will relieve City staff from the time and cost associated with monitoring the LLC for compliance with the requirements of the Covenant; and WHEREAS, Section 23-111(a) of the City Code authorizes the City Council to sell, convey or otherwise dispose of any interest in real property owned by the City, provided that the City Council first finds, by ordinance, that such sale or other disposition is in the best interests of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby finds that the City’s release of the Covenant on the Murphy Center Property as described herein is in the best interests of the City. Section 3. That the City Manager is hereby authorized to execute a release of the Covenant in a form that the City Manager, in consultation with the City Attorney, determines is necessary or appropriate to protect the interests of the City and effectuate the purposes of this Ordinance. Introduced, considered favorably on first reading, and ordered published this 5th day of January, A.D. 2016, and to be presented for final passage on the 19th day of January, A.D. 2016. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 19th day of January, A.D. 2016. __________________________________ Mayor ATTEST: _______________________________ City Clerk EXHIBIT A