HomeMy WebLinkAbout087 - 07/18/2017 - AUTHORIZING THE RELEASE OF A COLLATERAL ASSIGNMENT OF NOTE AND DEED OF TRUST WHICH SECURES PERFORMAN (2)ORDINANCE NO. 087, 2017
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE RELEASE OF A COLLATERAL ASSIGNMENT OF NOTE AND
DEED OF TRUST WHICH SECURES PERFORMANCE OF CERTAIN OBLIGATIONS
RELATED TO THE 1999 RESTORATION OF THE NORTHERN HOTEL
WHEREAS, in the 1970s, a fire left most of the Northern-Hotel (the "Hotel") in a
condition of vacancy and disrepair, and portions of it were left in a condemned state; and
WHEREAS, in the late 1990s, Funding Partners for Housing Solutions and the National
Development Council created a development partnership (the "Developer") to restore the Hotel
as a cornerstone of the downtown area while also adding affordable housing for the community
the "Project"); and
WHEREAS, to support the Project, the City contributed $1,001,000 toward the total
Project costs of approximately $9.7 million; and
WHEREAS, the City's support of the Project was memorialized in a November 1999
Northern Hotel Restoration Agreement between the City and the Developer that was (the
Agreement"); and
WHEREAS, the Agreement required the Developer to satisfying several obligations
related to the Project and future use of the Hotel, including the development of forty-seven
affordable residential units in the Hotel to remain affordable for a twenty-year period, historic
character facade improvements and the development of 13,800 square feet of commercial space
in the Hotel ("Project Obligations"); and
WHEREAS, to secure its performance of the Project Obligations, the Developer assigned
to the City a $1,001,000 promissory note and deed of trust encumbering the Hotel and did so
under that Collateral Assignment of Note and Deed of Trust recorded with the Agreement on
November 18, 1999, at Reception #0099098903 in the Larimer County, Colorado records (the
Collateral Assignment"); and
WHEREAS, the Collateral Assignment was subsequently amended and restated by the
City and the Developer by that certain Amended and Restated Collateral Assignment of Note and
Deed of Trust" dated May 10, 2000, recorded on May 22, 2000, at Reception #2000033228 in
the Larimer County, Colorado records (the "Amended Collateral Assignment"); and
WHEREAS; the City has recently received a request from the Developer for the release
of the Collateral Assignment and the Amended Collateral Assignment to facilitate the sale of the
Hotel to an affiliate of Hendricks Communities, a preferred affordable housing partner with a
positive track record with the City; and
WHEREAS, Hendricks Communities plans to acquire the Hotel with a new allocation of
low-income housing tax credits in order to fund a substantial rehabilitation of the Hotel to
improve the livability of its affordable housing units, which will require Hendricks to commit to
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an additional twenty years of affordability for those units ("Tax Credit Affordability
Obligation."); and
WHEREAS, all of the Project Obligations have been satisfied except for the requirement
that forty-seven residential units in the Hotel remain affordable for twenty years from the date of
the issuance of the final certificate of occupancy for the Project, which twenty-year period will
end on November 15, 2021 ("City Affordability Obligation"); and
WHEREAS, in addition to the City Affordability Obligation, the affordability of the
forty-seven units is currently required through a separate Low-Income Housing Tax Credit Land
Use Restriction Agreement (the "LURA") executed with the Colorado Housing and Finance
Authority as a condition of receiving Low Income Housing Tax Credit Financing for the Project
and the LURA requires affordability of the forty-seven units through the year 2041 (the "LURA
Affordability Obligation"); and
WHEREAS, Hendricks Communities has also recently been approved for an award of
675,000 in City Affordable Housing Fund dollars to be used for the proposed Hotel renovation
awarded in the City's 2016 and 2017 competitive process, and to receive these funds Hendricks
Communities will be required to execute a promissory note, deed of trust, and a restrictive
covenants agreement requiring an additional twenty years of affordability for the forty-seven
affordable units (the "Affordable Housing Fund Obligation"); and
WHEREAS, while the release of the Collateral Assignment and the Amended Collateral
Assignment will eliminate security helping to insure compliance with the City Affordability
Obligation, the remaining LURA Affordability Obligation and the new Tax Credit Affordability
Obligation and the Affordable Housing Fund Obligation will continue to provide security
helping insure that the forty-seven affordable units in the Hotel will remain affordable for many
years to come; and
WHEREAS, given the positive benefits of the sale of the Hotel to Hendricks
Communities, a community partner in affordable housing, who 'will be making substantial
improvements to the Hotel and considering that all but one of the Project Obligations have been
satisfied, City staff recommends the Collateral Assignment and Amended Collateral Assignment
be released and discharged; and
WHEREAS, since the Collateral Assignment and Amended Collateral Assignment
constitute a lien against the Hotel, they are considered under Code Sections 23-110 and 23-111
to be an interest in real property that can only be disposed of by City Council by ordinance if
Council first finds such disposition to be in the best interests of the City; and
WHEREAS, the City Council hereby finds that the release and discharge of the Collateral
Assignment and the Amended Collateral Assignment is in the best interests of the City.
NOW THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
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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 Manager is hereby authorized to execute such documents
and to take such other actions as necessary to fully release and discharge any and all interests the
City has in the Collateral Assignment and in the Amended Collateral Assignment, consistent
with the terms and purposes of this Ordinance.
Introduced, considered favorably on first reading, and ordered published this 5th day of
July, A.D. 2017, and to be presented for final passage on the 18th day of July, A.D. 2017.
OF FORT Co
N ayor
ATTEST: SEAL E
COLORS
vv
City Clerk
Passed and adopted on final reading on the 18th day of July, A.D. 2017.
pORT CO
Mayo
ATTEST:
COLORP
O
v V
City Clerk
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