RES 2003-0692 - Debt subordination agmt for 1413 Leavenwroth Historic LP re 801 S 15th St •
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., R , , i C L { V C l Planning Department
Omaha/Douglas Civic Center
alikten 1819 Farnam Street,Suite 1100
03 il il Y 16 Pk Li. 52 Omaha,Nebraska 68183-0002
,e ro (402)444-5200
° ,r (402)444-5150
FD FEBRo� CITY CLERK Telefax(402)444-6140
City of Omaha 0 f 4,h.HA, l:E i.R A C K I• Robert C.Peters
Mike Fahey,Mayor June 3, 2003 Director
Honorable President
and Members of the City Council,
Attached is a proposed Resolution authorizing the Mayor to execute a Debt Subordination
Agreement regarding the City's interest in property located at 801 South 15th Street. The terms
of the 1992 Deed of Trust securing this loan provided for the partial financing of the
rehabilitation of this property into 60 rental units, (48 of which would be available to households
with incomes below 80% of the Median Family Income as defined by HUD) by 1413
Leavenworth. Historic Ltd. Partnership under the Multi-family Rehabilitation Program, such
financing consisting of a CDBG funded repayable loan in the original amount of$170,000.00.
The Agreement outlining the terms of this financing was approved on August 6, 1992, by City
Council Resolution No. 2012.
The terms of the Agreement and Repayable Loan Promissory Note require repayment of the loan
principal and accrued interest on January 1, 2013, and also require repayment in full if transfer of
title occurs prior to that date. The Partnership desires to refinance the existing first mortgage in
the original amount of$1,559,000.00 to obtain funds to finance the construction of below ground
tenant parking and improvements to the units. This will update the units and provide safe and
convenient parking to tenants so that the project can remain viable and competitive in the
marketplace. The Partnership has asked the City to subordinate its interest in the subject
property to a new loan, in the amount of $2,100,000.00 from First Westroads Bank, Inc., the
proceeds of which will be used for the aforementioned purposes.
In accordance with the terms of the original Agreement, the project has made 80% of its rental
units affordable and available to low and moderate income households. Continued success of the
project is also important due to its location at the southwestern edge of the Old Market area. The
assessed value of the property is $2,880,000.00 and sufficient to secure both the principal of the
proposed loan and that of the City. The loan to value ratio will be reduced from its original 87%
to 72.9% as a result of the refinancing. Approval of this Resolution will allow the Partnership to
improve the project and make it more competitive without jeopardizing the City's interest.
Your favorable consideration of the attached Resolution is hereby requested
Sincerely, Referred to City Council for Consideration:
714,11 yy
Robert C. Peters 49, Date ayor's ffice Date
Planning Director
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EXHIBIT "A"
DEBT SUBORDINATION AGREEMENT
WHEREAS, 1413 Leavenworth Historic Ltd. Partnership, a Nebraska Limited
Partnership, (hereinafter referred to as "Borrower") is now or hereafter may be indebted to First
Westroads Bank, Inc. (hereinafter referred to as "Bank") on account of a loan in the amount of
One Million Five Hundred Fifty-nine Thousand and 00/100 Dollars ($1,559,000.00), which
indebtedness was incurred for the purpose of rehabilitation of 60 rental units located at 801 South
15 Street, Omaha, Nebraska and legally described as:
Lots 3 and 4, Block 199, in the Original City of Omaha, as surveyed, platted
and recorded in Douglas County, Nebraska;
WHEREAS, the Borrower's above-described indebtedness to the Bank is secured by a
Deed of Trust, which security interest was perfected on July 13, 1992, upon the filing of same
with the Douglas County Register of Deeds, same being recorded on July 14, 1992, in Book 3833
at Page 410; and,
WHEREAS, the Borrower is also indebted to the City of Omaha (hereinafter referred to
as "City") by virtue of a loan made in the sum of One Hundred Seventy Thousand and 00/100
Dollars ($170,000.00), which indebtedness was also incurred for the purposes of partially
financing the rehabilitation of the above-described property; and,
WHEREAS, the Borrower's above-described indebtedness to the City is secured by a
Deed of Trust and Promissory Note, which security interest was perfected on December 15,
1992, upon the filing of same with the Douglas County Register of Deeds, same being recorded
on December 18, 1992, in Book 3948 at Page 257, and Acknowledgement of Sale recorded in
Book 1049 at Page 299; and,
WHEREAS, the Bank is willing to make a loan sufficient to refinance the balance of the
first deed of trust, finance improvements to the property including the construction of tenant
parking, and reasonable related costs, the proceeds of which loan to be used solely for the
aforementioned purposes, in a total amount not to exceed Two Million One Hundred Thousand
and 00/100 Dollars ($2,100,000.00): and,
WHEREAS, the Bank is unwilling to make the above-described loan unless same could
be secured by a"first" mortgage/deed of trust; and,
WHEREAS, it was the intention of the City that its security interests in the above-
described property be subordinate to a"first" mortgage/deed of trust; and,
WHEREAS, the City is willing to subordinate its position as a secured creditor to that of
the Bank.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Bank and the
City do hereby agree that the lien acquired by the Bank by virtue of a mortgage/deed of trust
executed in its favor by the Borrower to secure the above-referenced indebtedness shall be
deemed a first and prior lien upon the above-described property, which lien shall be superior to
the previously acquired lien of the City (as hereinabove described), as if the mortgage/deed of
trust executed in favor of the Bank had been filed with and duly recorded by the Register of
Deeds at some time prior to that of the City, further, that the City's lien shall therefore be deemed
a second lien upon said property, being subject and subordinate to that of the Bank.
IN WITNESS WHEREOF, the parties have executed this Debt Subordination Agreement
as of the date indicated below.
ATTEST: CITY OF OMAHA, A Municipal Corporation
\\4171/44„-aeir---7-
FY CLERK ACTING AYOR OF THE CIT OF OMAHA
STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )
On this 6 l7c- day of , 2003, before me the undersigned, a
Notary Public in and for said County, personally came J,i-- -<<-n- - n ,
who executedhe above document, and acknowledged the execution thereof to be their voluntary
act and deed as such officer and the voluntary act and deed of the City of Omaha, a Municipal
Corporation.
In testimony whereof I have hereunto set my hand and affixed by Notary Seal at Omaha
in Douglas County, on the day and date last above written.
•
GENERAL NOTARY-State of Nebraska
li!d CYNTHIA I.FORD �u�(.t.�- �.
My Comm.Exp.Aup.16,2003 NOTARY PUBLIC
My Commission expires g'/i c/ e 3
FIRST WESTROADS BANK, INC.
By
WITNESS Title
Date
STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )
On this day of , 2003, before me the undersigned, a
Notary Public in and for said County, personally came
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.
In testimony whereof I have hereunto set my hand and affixed by Notary Seal at Omaha
in Douglas County, on the day and date last above written.
NOTARY PUBLIC
My Commission expires
APPROVES AS TO FORM:
ASSISTANT CITY ATTORNEY
C-asa ' CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha,Nebraska
RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
WHEREAS, on August 4, 1992, a Loan Agreement (hereinafter referred to as
"Agreement") between the City of Omaha (hereinafter referred to as "City") and 1413
Leavenworth Historic Limited Partnership, a Nebraska Limited Partnership, 9670 Berry Plaza,
Omaha, Nebraska 68127, (hereinafter referred to as "Borrower") was approved by City Council
Resolution No. 2012; and,
WHEREAS, the terms of that Agreement provided for the partial financing of the
rehabilitation of property located at 801 South 15th Street (hereinafter referred to as "Property")
under the Multi-family Rehabilitation Program, such financing consisting of a repayable loan in
the amount of$170,000.00 the principal of which becomes due upon sale, lease or other transfer
of any kind or nature of the mortgaged property, or any part thereof prior to its maturity date of
January 1, 2013; and,
WHEREAS, on December 15, 1992, the Borrower executed a repayable loan Deed
of Trust and Promissory Note as evidence of the City's secured interest in the above-referenced
Property, such documents being recorded on December 18, 1992, with the Douglas County
Register of Deeds in Book 3948 on Page 257, and an Acknowledgement of Power of Sale, filed
in Book 1049 on Page 299; and,
WHEREAS, the terms of the Deed of Trust and Promissory Note, allow the Deed of
Trust securing such financing be in no less than second lien position; and,
WHEREAS, the Borrower is also indebted to First Westroads Bank, Inc.
(hereinafter referred to as "Bank") by virtue of a loan made in the sum of$1,559,000.00, which
indebtedness was also incurred for the purpose of rehabilitation of the Property; and,
WHEREAS, the Borrower's above-described indebtedness to the Bank is secured
by a Deed of Trust and Promissory Note, which security interest was perfected on July 13, 1992,
upon the filing of same with the Douglas County Register of Deeds, same being recorded on July
14, 1992 in Book 3833 at Page 410; and,
•
By
Councilmember
Adopted
City Clerk
Approved
Mayor
c-25A' CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha,Nebraska
PAGE 2
WHEREAS, the Borrower has been approved for a new loan in an amount
sufficient to refinance the balance of the existing first lien, construct additional secured parking,
update the residential units, pay other related expenses, plus cover reasonable closing costs; and,
WHEREAS, the Bank is willing to make such loan provided it can be secured by a
first mortgage/deed of trust; and,
WHEREAS, it is in the best interests of the citizens of the City.of Omaha that the
Mayor execute a debt subordination agreement, in a form substantially the same as the attached
Exhibit A; and,
WHEREAS, the repayable loan will remain as a lien against the property until
maturity on January 1, 2013, at which time it will be paid in full.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF OMAHA:
THAT, the Mayor is hereby authorized to execute a debt subordination agreement
for 1413 Leavenworth Historic Ltd. Partnership, a Nebraska Limited Partnership, reflecting the
terms and conditions set forth in this resolution regarding property located at 801 South 15th
Street, in substantially the same form as the proposed debt subordination attached hereto.
P:\P1n5\8772pjm.doc APPRO D AS TO FORM:
7/
CITY ATTORNEY DATE
•
By JAM
Council ember
' JUN —3 00^
Adopted 3` s�"D-
- )465:
City Clerk
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ACTIN Mayor
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