HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/05/2016 - FIRST READING OF ORDINANCE NO. 008, 2016, AUTHORIZAgenda 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.
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