HomeMy WebLinkAboutNo. 2439 regarding forgiveness of a promissory note secured by a real estate mortage for the Historic Dunbar Corner projectRESOLUTION NO. ~ j
RESOLUTION OF THE SOUTH BEND REDEVELOPMENT
COMMISSION REGARDING FORGIVENESS OF A
PROMISSORY NOTE SECURED BY A REAL ESTATE MORTGAGE
FOR THE HISTORIC DUNBAR CORNER PROJECT
WHEREAS, the South Bend Redevelopment Commission (the "Commission"),
governing body of the South Bend Department of Redevelopment and the South Bend
Redevelopment District (the "Redevelopment District"), exists and operates under the provisions
of Indiana Code 36-7-14, as amended from time to time (the "Act"); and
WHEREAS, the Commission has adopted various resolutions (i) declaring certain real
estate in the Redevelopment District of the City of South Bend, Indiana (the "City") known as
the South Bend Central Development Area (the "Area"), to be a redevelopment area within the
meaning of the Act, determining that it would be of public utility and benefit to redevelop the
Area pursuant to a development plan, as amended, and (ii) designating the entire Area as an
allocation area ("Allocation Area"); and
WHEREAS, the Historic Dunbar Corner Partnership, LP, ("HDCP") is an Indiana
Limited Partnership which operates low income, affordable housing. HDCP owns property
• containing fifteen (15) residential units located on the near west side of South Bend, Indiana at
the corner of LaPorte and West Colfax Streets in South Bend, Indiana (the "Project"); and
WHEREAS, the Project was financed, in part, through a syndication of low income
housing tax credits available pursuant to Section 42 of the Internal Revenue Code of 1986;
WHEREAS, the sources of financing for the Project included a One Hundred Twenty-
four Thousand Dollars ($124,000) first priority Note and Mortgage to Standard Federal Bank; a
second priority Note and Mortgage in the amount of Two Hundred Seventy Thousand Sixty
Dollars ($270,060) with the Affordable Housing Program; a third priority Note and Mortgage
from the Commission in the principal amount of One Hundred Twelve Thousand Five Hundred
Dollars ($112,500) plus interest at the rate of eight point three five percent (8.35%) per annum;
and Community Development Block Grants from the City of South Bend in the amount of
Ninety Thousand Dollars ($90,000);
WHEREAS, pursuant to a letter directed to South Bend Heritage Foundation of October
2, 1990, Ted Leverman of the Department of Economic Development confirmed the fact the
Commission would forgive its loan to HDCP after fifteen (15) years, so long as the property is
kept free of code violations and is made available to low-moderate income persons; and
WHEREAS, the Project has been kept free of code violation and has been available to
low-moderate income persons for more than the past fifteen (15) years; and
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WHEREAS, HDCP requires a refinancing in order to provide needed capital repairs for
the Project which will continue to provide affordable housing to low-moderate income persons;
and
WHEREAS, in order to make the refinancing successful, it is necessary for the
Commission to forgive the principal balance and all accrued interest of the Promissory Note
secured by Real Estate Mortgage dated May 10, 1991 from HDCP to the Commission; and
WHEREAS, the amount due on the Note is a principal balance of One Hundred Twelve
Thousand Five Hundred Dollars ($112,500) plus interest of One Hundred Forty-nine Thousand
Three Hundred Ninety-four Dollars ($149,394) for a total amount due as of December 31, 2007
of Two Hundred Sixty-one Thousand Eight Hundred Ninety-four Dollars ($261,894). Interest is
accruing at the rate of eight point three five percent (8.35%) from December 31, 2007; and
WHEREAS, the Commission believes it is in the public interest and is consistent with the
obligations of the Commission to provide opportunities for quality low-moderate income
families to forgive this loan; and
WHEREAS, pursuant to I.C. 36-1-4-17(b) a unit of government may compromise the
amount of money owed to the unit, and further in I.C. 36-7-14-12.2(25)(26) the Redevelopment
Commission may provide financial assistance to enable individuals and families to lease
residential units within the district; and based upon the promise of HDCP to make estimated total
improvements of $1,304,550 as specified in its request to the Commission; and
HEREAS the Rental Rehabilitation Program regulations at 24 CFR 570.11(d)(3)
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provide that the written agreement must be recorded against the property, which can be forgiven
at a rate of 10 percent a year for properties of less than 25 units and at the end of ten years for
properties greater than 25 units; and
WHEREAS, Donald E. Inks, Director -Economic Development, (the "Director") is an
appropriate individual to represent the Commission and execute, on behalf of the Commission,
any and all documents necessary to implement the terms and conditions of this Resolution.
NOW THEREFORE, BE IT RESOLVED, by the South Bend Redevelopment
Commission as follows:
Section 1. The Commission hereby forgives the indebtedness of HDCP to the
Commission pursuant to a Promissory Note in the principal amount of One Hundred Twelve
Thousand Five Hundred Dollars ($112,500) dated May 10, 1991 together with interest of One
Hundred Forty-nine Thousand Three Hundred Ninety-four Dollars ($149,394) as of December
31, 2007 and all accruing interest through the date of this Resolution;
Section 2. The Director is hereby authorized to execute such documents as are
necessary to implement the terms and conditions of this Resolution, including but not limited to,
marking paid the Promissory Note dated May 10, 1991 from HDCP to the Commission;
releasing any conditional assignment of contract rights dated May 10, 1991 from HDCP to the
Commission; releasing the Real Estate Mortgage and Security Agreement dated May 10, 1991
and recorded in the Office of the Recorder of St. Joseph County on or about May 31, 1991 as
Instrument Number 9113917; and executing any and all other documents necessary to implement
this Resolution.
Section 3. This Resolution shall be in full force and effect after its adoption by the
Commission.
ADOPTED at a meeting of the South Bend Redevelopment Commission held on
February 15, 2008.
South Bend Redevelopment Commission
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Marcia I. Jones, Presiden~
Attest:
By:
G r .Downes, Secr y
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