1j Gateway Place Loan
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 1~7
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.mn.us
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MEMORANDUM
TO:
Todd Gerhardt, City Manager
FROM:
Justin Miller, Assistant City Manager(S/,^
(!}iC,.{'n-:>
February 15, 2006 ~,,<:;:;(;~
DATE:
RE:
Sand Companies/Gateway Place Loan Documents
BACKGROUND
Last year, the Sand Companies were awarded $300,000 in tax credits by the
Minnesota Housing Finance Agency for their proposed Gateway Place apartment
project. This money is actually granted to the city where the project will occur,
and then the money is passed along to the developer.
Due to their financing requirements, the Sand Companies cannot accept this
money from the City as a grant. Instead, they must enter into a loan agreement
with the City, which states that at the end of 30 years, they must repay the City
the loan amount in full. The Sand Companies have used this arrangement in other
cities where they have completed projects, and are comfortable with the attached
loan language.
Financially, the City has no risk with this loan. We are loaning money that was
given to us by the Metropolitan Council, and can expect that it will be fully repaid
to us at the end of 30 years. The city is under no obligation to repay the money to
the Metropolitan Council at the end of this time, and we could use it for any
purposes we wish. However, many times the developer will ask that the loan be
forgiven for the purposes of capital maintenance on the building, or to allow the
developer to use to money to keep the project qualified as affordable. This
decision does not need to be made at this time, but can be made by future city
councils at the time the loan is due.
While the city is not a signatory to this agreement, the city attorney has reviewed
the documents and is recommending that the City Council approve the attached
promissory note and mortgage.
RECOMMENDA TION
Staff recommends that they City Council approve the attached "Inclusionary
Housing Account Mortgage and Promissory Note" between the City of
Chanhassen and Gateway Place, LLC. Approval of this item requires a majority
vote of the City Council.
The City of Chanhassen · A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
G:\ADMIN\JM\Sand Company\Loan agreement.doc
INCLUSIONARY HOUSING ACCOUNT
PROMISSORY NOTE
Waite Park, Minnesota
, 2006
FOR VALUE RECEIVED, the undersigned (the "Borrower") promises to pay to the order of the
City of Chanhassen, a Minnesota municipal corporation (the "Lender"), or its assigns, the sum of
Three Hundred Thousand and 00/100 Dollars ($300,000.00) (the "iliA Loan"), without interest.
Said sum is made available to Borrower to enable Borrower to develop certain real property
located within the City (the "Project").
The principal of this Note shall be payable in full on the later of (i) December 31, 2036 or (ii) the
maturity date of the Minnesota Housing Finance Agency (MHFA) first mortgage loan with
respect to the Project, except as provided below. The debt evidenced by this Note may be
prepaid in whole or in part at any time prior to the final maturity date of this Note.
The Borrower covenants that (i) it will use the proceeds of this Note solely to finance a portion of
the capital cost of acquiring, constructing and equipping the Project, (ii) the Project shall consist
of a forty-eight (48) unit residential, rental apartment development to be constructed primarily for
the purpose of providing low-to-moderate income housing, and (iii) the Borrower's use of
proceeds of this Note shall comply in all material respects with the requirements set forth in that
certain Metropolitan Livable Communities Act Inc1usionary Housing Account Grant Agreement,
Grant No. SG-005-111, by and between the Metropolitan Council (the "Council") and the City.
This Note is secured by a Mortgage of even date between the Borrower and the Lender (the "iliA
Mortgage"), and reference is made to the iliA Mortgage for the rights of the Lender as to the
acceleration of the indebtedness evidenced by this Note.
Neither the Borrower nor any member, employee or agent of the Borrower shall have any
personal liability for the Borrower's obligations hereunder, it being recognized by the Lender that
the obligations of the Borrower hereunder are nonrecourse obligations and that the remedies of
the Lender are limited to the security provided in connection with this Note and the iliA
Mortgage.
Notwithstanding anything herein to the contrary, Lender agrees that is shall not (a) sell, assign,
conveyor otherwise transfer all or any part of its interest in the Loan to the Federal Home Loan
Mortgage Corporation ("Freddie Mac") or (b) include the Loan, or any interest therein, in any
pool of loans to be sold, assigned, conveyed or otherwise transferred to Freddie Mac.
Demand, protest and notice of demand and protest are hereby waived, and the undersigned
hereby waives, to the extent authorized by law, any and all homestead and other exemption rights
which otherwise would apply to the debt evidenced by this Note.
The Borrower promises to pay all costs of collection, including but not limited to reasonable
attorneys' fees, paid or incurred by the Lender on account of such collection, all costs associated
with recording the IHA Mortgage and any other filing fees paid in connection with the IHA
Mortgage. -
This Note shall be governed and construed in accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, this Note has been duly executed by the undersigned as of the day
and year first above written.
BORROWER:
CHANHASSEN GA TEW A Y PLACE, LLC
By: Augusta Ventures, Inc.
Its: Managing Member
By:
Name: Jamie J. Thelen
Its: Chief Manager
By:
Name: James W. Sand
Its: Vice President
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INCLUSIONARY HOUSING ACCOUNT
MORTGAGE
This Mortgage is made as of this _ day of , 2006, between CHANHASSEN
GATEWAY PLACE, LLC, a Minnesota limited liability company, as Mortgagor, and the CITY
OF CHANHASSEN, a Minnesota municipal corporation, as Mortgagee.
WITNESSETH:
That Mortgagor, in consideration of the sum of One Dollar ($1.00) and other good, valuable, and
sufficient consideration, the receipt of which is hereby acknowledged, does hereby grant, bargain,
sell and convey unto Mortgagee, its successors and assigns, forever, all the tract or parcel of land
lying and being in the County of Carver and State of Minnesota described in the attached
EXHIBIT A (the "Property").
To have and to hold the same, together with the hereditaments and appurtenances thereto
belonging to Mortgagor, its successors and assigns. And Mortgagor, for itself, and its successors
and assigns, does covenant with Mortgagee, its successors and assigns, as follows: That it is
lawfully seized of the Property and has good right to sell and convey the same; that the same are
free from all encumbrances, save and except reservations, restrictions, and easements set forth on
attached EXHIBIT B; that Mortgagee, its successors and assigns, shall quietly enjoy and possess
the same; and that Mortgagor will warrant and defend the title to the same against all lawful
claims not hereinbefore specifically excepted.
Provided, nevertheless, that if Mortgagor, its successors and assigns, shall keep and perform each
and everyone of its obligations under and pursuant to that certain Inclusionary Housing Account
Promissory Note dated the _ day of , 2006 (the "Note") given by Mortgagor to
Mortgagee between Mortgagor and Mortgagee and shall keep and perform all the covenants and
agreemerits herein contained, then this deed will be null and void and will be released at
Mortgagor's expense. This Mortgage secures a principal debt in the amount of Three Hundred
Thousand and No/lOOths Dollars ($300,000.00) payable by Mortgagor to Mortgagee under the
terms of the Note.
Notwithstanding anything to the contrary herein, the Note and this Mortgage shall be
nonrecourse as to Mortgagor and its partners, and Mortgagee's sole recourse with respect to the
Note and the Mortgage shall be as set forth herein. Neither Mortgagor nor any member,
employee or agent of Mortgagor shall have any personal liability for Mortgagor's obligations
under the Note or this Mortgage.
Notwithstanding anything herein to the contrary, Lender agrees that is shall not (a) sell, assign,
conveyor otherwise transfer all or any part of its interest in the Loan to the Federal Home Loan
Mortgage Corporation ("Freddie Mac") or (b) include the Loan, or any interest therein, in any
pool of loans to be sold, assigned, conveyed or otherwise transferred to Freddie Mac.
Mortgagor, for itself, and its successors and assigns, does hereby covenant and agree with
Mortgagee, its successors and assigns, to perform its obligations as above specified, to pay all
taxes and assessments now due or that may hereafter become liens against the Property at least
ten (10) business days before penalty attaches thereto; to pay, when due, both principal and
interest of all prior liens or encumbrances, if any, above mentioned and to keep the Property free
and clear of all other prior liens or encumbrances; to commit or permit no waste on the Property
and to keep them in good repair; to complete forthwith any improvements which may hereafter
be under course of constructions thereon, and to pay any other reasonable expenses and
attorneys' fees incurred by Mortgagee, its successors or assigns, by reason of litigation with any
third party for the protection of the lien of this Mortgage.
Mortgagor does further covenant and agree that if any lien for labor, skill or material shall be
filed for record during the life of this Mortgage, upon or against the Property, Mortgagor, within
ninety (90) days after the date of its filing for record, either will payoff the said lien and secure
its satisfaction of record or will protect Mortgagee against any loss or damage growing out of its
enforcement by furnishing a bond for the same amount in the form and with the sureties to be
approved by Mortgagee.
In case of failure to pay said taxes and assessments, prior liens or encumbrances, expenses and
attorneys' fees as above specified, or to insure said buildings and deliver the policies as
aforesaid, Mortgagee, its successors or assigns, may pay such taxes, assessments, prior liens,
expenses and attorneys' fees and interest thereon, or effect such insurance, and the sums so paid
shall bear interest at the rate then in effect on the Note, shall be impressed as an additional lien
upon the Property, and shall be due and payable from Mortgagor, its successors or assigns, to
Mortgagee, its successors or assigns, within ninety (90) days after Mortgagee, or its successors or
assigns, has demanded payment of such advance, and this Mortgage shall from the date thereof
secure the repayment of such advance with interest.
In case of default in any of the foregoing covenants, Mortgagor confers upon Mortgagee the
option of declaring a default and hereby authorizes and empowers Mortgagee, its successors and
assigns, to foreclose this Mortgage by judicial proceedings or to sell the Property at public
auction and convey the same to the purchaser in fee simple in accordance with the statute, and
out of the money arising from such sale to retain all sums secured hereby and all legal costs and
charges of such foreclosure and attorneys' fees, which costs, charges, and fees Mortgagor herein
agrees to pay.
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In testimony whereof, Mortgagor has signed this Mortgage as of the day and year first above
wri tten.
CHANHASSEN GA TEW A Y PLACE, LLC
By: Augusta Ventures, Inc.
Its: Managing Member
By:
Name: Jamie J. Thelen
Its: Chief Manager
By:
Name: James W. Sand
Its: Vice President
STATE OF MINNESOTA )
) ss.
COUNTY OF STEARNS )
The foregoing instrument was acknowledged before me on this _ day of , 2006 by
Jamie J. Thelen, the Chief Manager and James W. Sand, the Vice President, of Augusta
Ventures, LLC, a Minnesota limited liability company as the Managing Member of Chanhassen
Gateway Place, LLC, a Minnesota limited liability company, on behalf of the company.
Notary Public
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EXHIBIT A
Description of Mortgaged Property
The land described in the attached Mortgage is located in Carver County, Minnesota and
is legally described as follows:
Lot 1, Block 2, Gateway North