RES 2014-0717 - Amend Milton Apts Limited Partnership C
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�� ,� Planning Department
., o ' Omaha/
Douglas�,,,., Civic Center
&.1 n 1819 Farnam Street,Suite 1100
�lro Omaha,Nebraska 68183
(402)444-5150
D FEaR`A4 Telefax(402)444-6140
City of Omaha James R.Thele
Director
Jean Stothert,Mayor
June 10, 2014
Honorable President
and Members of the City Council,
On August 1, 1995, the City Council approved, by Resolution No. 1883, a Community
Development Block Grant (CDBG) Agreement between the City of Omaha and Milton
Apartments Limited Partnership (LP), a Nebraska Limited Partnership, THI, Inc. General
Partner, 514 Walker Street, Woodbine, IA 51579, which provided for partial funding in the
amount of $160,000.00 for the rehabilitation of a fifteen (15) unit rental housing structure
(Project) located at 1954 Jones Street. The CDBG funding is secured by a Deed of Trust and
Promissory Note recorded on August 30, 1995, with the Douglas County Register of Deeds, in
Book 4578 at Page 596. This Resolution modifies the repayment terms related to the loan.
These CDBG funds leveraged a $765,100.00 in private investment for a total Project cost of
$925,100.00. For 19 years, the owner has maintained these units as affordable units and leased
them to low and moderate income tenant households having incomes at or below 80% of the
Median Family Income as defined by HUD.
The terms of the Agreement state interest will accrue at the annual rate of 1% but be deferred for
15 years after which time it will be added to the principal. Beginning January 1, 2011, a thirty-
year amortization of the accrued interest plus principal is scheduled to begin with the 1% interest
rate applying throughout the thirty (30) year amortization period. The LP intends to sell the
property in the near future and has made written request to the City asking it to reduce the
amount owed to the City due to the Project value being insufficient to satisfy all obligations. The
property has not generated a sufficient income stream to service the private lender first mortgage
debt and other project costs. The Project has experienced a net loss during the last three years in
the amount of$27,509.00 prior to depreciation and $114,610.00 when depreciation is taken into
consideration. Consequently, the partners have had to loan the Project additional funds to
maintain the properties and pay expenses as needed. The market value ($220,000.00 using the
income approach) of the property, as well as the tax assessed value ($257,200.00), are
insufficient to generate enough sale proceeds to satisfy the balance of the first mortgage loan
($116,744.00), the City's lien interest ($160,000.00 plus interest), and the amount owed to the
General Partner ($220,061.00). The LP has requested that the City accept the present value of its
interest as satisfaction of the debt rather than required full payment in the amount of
$185,755.03. The accepted present value of the debt is $53,908.68 as calculated by the City
Finance Department.
The Project has provided affordable rental housing for low and moderate income households for
19 years exceeding the requirements of CDBG funding regulations. This repayment
modification is consistent with action taken on other projects under similar circumstances.
The attached Resolution would allow for the modification of the repayment terms of the City's
loan interest in the property located at 1954 Jones Street by authorizing the Mayor to accept the
present value of the combined loan principal and accrued interest as payment in full of the debt
owed to the City and to execute a deed of reconveyance upon receipt of that payment. If the sale
or transfer does not occur prior to July 1, 2014, the original terms of the loan will remain in
effect until such time as the property is transferred.
Your favorable consideration of this Resolution is requested.
Sincerely, Referred to City Council for Consideration:
c.,;;) - 11-a-tt- .572-0 q
mes R. Thele Date Mayor's Office I /Datb
Planning Director
2022 dlh
SCHEDULE "A"
"AMENDMENT"
TO DEFERRED PAYMENT LOAN PROMISSORY NOTE
This amendment is to the Deferred Loan Promissory Note, dated June 20, 1995, and filed
as an Attachment to the Deed of Trust, Construction Security Agreement and Assignment
of Rents recorded with the Douglas County Register of Deeds on August 30. 1995, in Book
4578 Page 596, to modify the repayment terms of the Loan effective January 1, 2011.
Except for this amendment,the original Promissory Note remains the same.
THIS DEFERRED LOAN PROMISSORY NOTE (HEREINAFTER MAY BE REFERRED TO
AS "NOTE") SECURES AN OBLIGATION, WHICH THE DEBTOR INCURRED FOR THE
PURPOSES OF MAKING IMPROVEMENTS ON THE REAL PROPERTY LOCATED AT
1954 Jones Street, OMAHA, NEBRASKA.
THI AMENDED DEFERRED LOAN PROMISSORY NOTE is made this th day of
n L— 2014, between Milton Apartments Limited Partnership (LP), THI, Inc.
neral Partner, 514 Walker Street, Woodbine, Iowa (hereinafter referred to as "Trustor"), and
the City of Omaha, a Municipal Corporation, 1819 Farnam Street, Omaha, Nebraska 68183
(hereinafter referred to as "Beneficiary"):
LEGAL DESCRIPTION of PROPERTY: Lot 1, Milton Rogers Place Replat 1, being a replat of
Lots 4 and 5, and the West 13.3. feet of Lot 6, Milton Rogers Place, an Addition to the City of
Omaha, as surveyed, platted and recorded in Douglas County, Nebraska, together with all
improvements thereon (commonly known as 1954 Jones Street)
WITNESSETH:
That the Beneficiary and the Trustor agree as follows:
1. The first paragraph of the Note shall be deleted in its entirety and the following inserted
in its place.
"FOR VALUE RECEIVED, the undersigned jointly and severally promise(s) to pay
to the order of the CITY OF OMAHA (herein called "CITY"), acting by and through the
Director of the Planning Department or his successors, the sum of Fifty-three Thousand,
Nine Hundred Eight and 68/100 ($53,908.68) representing the present value of the
$185,755.03 Deferred Payment Loan, in a lump sum payment due and payable no later
than January 1, 2015. The interest accrued at the rate of 1% on $160,000.00 for 15 years
prior to January 1, 2011. All interest will be forgiven and the payment of $53,908.68
considered payment in full for the debt owed.
2. With the exception of this amendment, the original Note remains the same.
IN WITNESS WHEREOF,this Note has been duly executed by the Undersigned, as of
the day and year set forth below.
Milton Apartments Limited Partnership, a Nebraska
Limited partnership:
MI, Inc., a Nebraska, General Partner
Todd Heistand,Vice-President, TM, Inc.
TOwe^
STATE OF )
11
) §
COUNTY OF 41 CAX MOY1)
On this irls day of dint , 2014, before me, the undersigned, a Notary Public
duly commissioned and qualified in and for said county, personally came Todd Heistand, Vice-
resident, TM, Inc. to me known to be the person named in and who executed the foregoing
instrument, and acknowledged that he/she executed the same as his/her voluntary act and deed.
Witness my hand and notarial seal the day and year last above written.
wit CYONEY JO MEEKER
//) A11/11/1/
aAt Commission Numbs)735151
MY ommission Expirss
'0N'� 3"Z°l, Not Public
APPROVED AS TO FORM:
ITY ATTORNEY Date
c zsA CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha, Nebraska
RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
WHEREAS, on August 1, 1995, a Community Development Block Grant
(CDBG) Loan Agreement (hereinafter referred to as "Agreement") between the City of Omaha
(hereinafter referred to as "City") and Milton Apartments Limited Partnership (LP), a Nebraska
Limited Partnership, THI, Inc. General Partner, 514 Walker Street, Woodbine, IA 51579
(hereinafter referred to as "Owner") was approved by City Council Resolution No. 1883; and,
WHEREAS, the terms of that Agreement provided for the partial financing of the
rehabilitation of a fifteen (15) unit rental housing structure located at 1954 Jones Street, legally
described as Lot 1, Milton Rogers Place Replat 1, being a replat of Lots 4 and 5, and the West
13.3 feet of Lot 6, Milton Rogers Place, an Addition to the City of Omaha, as surveyed, platted
and recorded in Douglas County, Nebraska together with all improvements thereon (hereinafter
referred to as "Property") under the Multi-family Rehabilitation Program, such financing
consisting of a repayable loan in the amount of $160,000.00 at 1% interest, with the principal
plus accrued interest becoming due and payable on January 1, 2011 with a thirty (30) year
amortization of the accrued interest plus principal; and,
WHEREAS, the CDBG funding is secured by a Deed of Trust and Promissory
Note in the amount of $160,000.00 recorded on August 30, 1995 with the Douglas County
Register of Deeds, in Book 4578 at Page 596; and,
WHEREAS, the Owner has maintained the Property as affordable rental housing
for 19 years, exceeding the CDBG requirements, renting the units to households with incomes at
or below 80% of the Median Family Income as defined by the U.S. Department of Housing and
Urban Development; and,
WHEREAS, the LP intends to sell the property in the near future and has made
written request to the City asking it to reduce the amount owed to the City due to the Project
value being insufficient to satisfy all obligations; and,
By
Councilmember
Adopted
City Clerk
Approved
Mayor
NO.
Resolution by
Presented to City Council
eu3fer grown,
City Clerk
C-25A
CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha,Nebraska
WHEREAS, the Project has experienced a net loss during the last hree years and
the partners have had to loan the Project additional funds to maintain the prerties and pay
expenses as needed; and, •
WHEREAS, the Project will be sold to a non-profit that will serve families at risk;
and,
WHEREAS, the LP has requested that the City accept the present value of its
interest as satisfaction of the debt rather than required full payment in the amount of
$185,755.03. The accepted calculated present value of the debt is $53,908.68; and,
WHEREAS, it is the best interests of the citizens of the City of Omaha that the
City approve this Resolution allowing for modification of the loan terms as stated in the attached
Amendment to the Deferred Payment Loan Promissory Note.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF OMAHA:
THAT, as recommended by the Mayor, the terms of the Deed of Trust,
Construction Security Agreement and Assignment of Rents and Promissory Note, executed by
Milton Apartments Limited Partnership on August 29, 1995, and recorded on August 30, 1995,
with the Douglas County Register of Deeds, in Book 4578 at Page 596, securing the partial
financing of the rehabilitation of the Property located at 1954 Jones Street be amended.
APPROVED AS TO FORM:
.V•r,lG
CITY ATTORNEY DATE
2022 dlh
By
Councilmember
Adopted JUN 1 a 2014 2-�
it lerk (l/ // '7
Approved
Mayor
"//e4-1/
NO. '7/7
Resolution by
Res. that, as recommended by the Mayor,
the terms of the Deed of Trust, Construction
Security Agreement and Assignment of
Rents and Promissory Note, executed by
Milton Apartments Limited Partnership on
August 29, 1995, and recorded on August
30, 1995, with the Douglas County Register
of Deeds, in Book 4578 at Page 596,
securing the partial financing of the
rehabilitation of the Property located at 1954
Jones Street be amended.
2022 dlh
Presented to City Council
JUN 1 0 2014
Adopted `
eu3ter grown
City Clerk