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Item F6LAND AUTHORITY GOVERNING BOARD AGENDA ITEM SUMMARY Meeting Date: May 20, 2009 Division: Land Authority Bulk Item: Yes No X Contact / Phone #: Mark Rosch / 295-5180 Agenda Item Wording: Approval of a resolution authorizing subordination of the mortgage loan encumbering the Roosevelt Sands, Jr. Housing Complex in Key West to a CWHIP mortgage loan. Item Background: The subject property is a 44-unit affordable housing complex located at 105 Truman Avenue in Key West owned by the Key West Housing Authority. To fund KWHA's purchase of the site, the Land Authority issued a $1,500,000 mortgage loan in 2001. KWHA proposes to demolish and rebuild this 70-year-old housing complex using a $3,750,000 institutional mortgage loan and $5,000,000 mortgage loan from the Florida Housing Finance Corporation's Community Workforce Housing Innovative Pilot (CWHIP) program. Land Authority Resolution 01-2008 authorizes the subordination of the Land Authority's mortgage to second position behind the institutional mortgage. Due to the recent decline in the real estate market, KWHA now requests that the Land Authority subordinate its mortgage to third position behind the CWHIP mortgage if necessary to satisfy the CWHIP underwriting requirements. Advisory Committee Action: On April 28, 2009 the Committee voted 4/0 to approve this resolution. Previous Governing Board Action: On March 22, 2001 the Board approved issuing a $1,500,000 mortgage loan to KWHA. On January 16, 2008 the Board approved Resolution 01-2008 to support KWHA's CWHIP application by modifying the property's deed restrictions, subordinating the mortgage loan to second position, and extending the mortgage term from 30 to 50 years. Contract/Agreement Changes: This is not a contract. Staff Recommendation: Approval. Total Cost: $ 500 Indirect Cost: $ Cost to Land Authority: 500 Budgeted: Yes X No Source of Funds: Land Authority (Tourist Impact Tax and State Park Surcharge) Approved By: Attorney X County Land Steward Documentation: Included: X To Follow: Not Required: Disposition: Agenda Item lHousing Authority Flori�,- 1400 Kennedy Drive, Key west, FL 33040 Phone: (305) 296-5621 Fax: (305) 296-0932 Board of Commissioners Frank Toppi.no Bob Dean Juanita Mingo John G_ Parks, Jr. Roosevelt Sands, Jr. April 23, 2009 Mr. Marls J. Rosch Executive Director Monroe County Comprehensive Plan Land Authority 1200 Truman Ave., Suite 207 Key West, FL, 33040 Dear Mr. Kosch: Executive Director J. Manuel Castillo, Sr. The purpose of this letter is to request the Monroe County Comprehensive Plan Land Authority's (Land Authority) approval to subordinate their $1,500,000 mortgage loan to the Housing Authority of the City of Key West, Florida (Housing Authority) placed on the Roosevelt C. Sands, Jr. Housing Complex to both an institutional first mortgage in an amount not to exceed $3,750,000 as previously authorized by Resolution 01-2008 and a CWHIP second mortgage in an ar ount not to exceed $5,000,000. The Land Authority agreed to subordinate its first mortgage position to an institutional loan for approximately $3,750,000 and extended the terms of their mortgage loan from 20 years to 30 years in January, 2008. This was done at the request of the Housing Authority in order to be able to submit a CWHIP application in the amount of $5,000,000 for the demolition and reconstruction of the existing improvements which were built in 1939. The improvements which are 70 years old are functionally obsolete and cannot be rehabilitated without violating the FEMA 5 1 % rule. The housing Authority's CWHIP application was submitted, scored and was the highest ranked rental application received by the Florida Housing Finance Corporation (FHFC). FHFC issued a preliminary commitment and an invitation to underwriting in November 2008. The Housing Authority paid the underwriting fee and shortly thereafter it was notified that the State Legislature in an emergency budget session had requested FHFC to de -obligate $ I90,000,000 of program funds and return it to the State Treasury. We were advised on February 17, 2009 that FHFC intended to de -obligate all CWHIP projects with the exception of 3 of which. the Housing .Authority's application was one. Mr. lurk Rosch Page 2 April. 23, 2009 F FIFC will memorialize this action tomorrow at their board meeting in Tallahassee and the I lousing Authority will have 90 days (FHFC July 24, 2009 Board fleeting) to obtain a positive underwriting recommendation and 60 days to close or loose the funding. The Housing Authority anticipates meeting the FHFC's underwriters' needs timely to obtain a positive underwriting recommendation. As you can see this is an extremely tight timeline leaving very little margin for errors We have reviewed the Rule and determined that in all likelihood we will have difficulty with the Role provision requiring that the appraisal may not have a value equal to the proposed financing of the institutional first mortgage, Land Authority second mortgage and the CHWIP mortgage. In this case, the project would fail to receive the underwriting approval necessary. As you can imagine, the recent decline of values in the real- estate market since the original approval in January of 2008 could adversely affect this project. Thanking you in advance for you and your Board's consideration to our request. Please feel free to contact me should you have any questions. I may be reached at 305-296-5621. Sincerer T 5_Z. %Ianuel. Castillo, Sr. Executive Director JMC:cac PC: File t a _ Row 'elr G Sands, Jr. � �7_ Housing �5 complex µ� ih 4. ft—ftrosam—" RESOLUTION NO. A RESOLUTION OF THE MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY AUTHORIZING SUBORDINATION OF THE MORTGAGE LOAN ENCUMBERING THE ROOSEVELT SANDS, JR. HOUSING COMPLEX IN KEY WEST TO A CWHIP MORTGAGE LOAN. WHEREAS, section 380.0666(3), Florida Statutes and section 9.3-2, Monroe County Code, empower the Monroe County Comprehensive Plan Land Authority (hereinafter "Land Authority") to acquire and dispose of interests in real property for the purpose of providing affordable housing; and WHEREAS, in 2001 the Land Authority issued a 30-year, zero interest mortgage loan in the amount of $1,500,000 to the Key West Housing Authority to fund the purchase of the 44-unit affordable housing site known as the Roosevelt Sands, Jr. Housing Complex (hereinafter "subject property") located at 105 Truman Avenue in Key West; and WHEREAS, the Key West Housing Authority desires to demolish and rebuild the housing on the subject property by obtaining a $5,000,000 mortgage loan from the Florida Housing Finance Corporation's Community Workforce Housing Innovative Pilot (CWHIP) program together with a mortgage loan from an institutional lender of approximately $3,750,000; and WHEREAS, to enhance the project's financial feasibility and make the project's CWHIP application more competitive, the Land Authority adopted Resolution 01-2008, which authorized modifying the subject property's deed restrictions, subordinating the Land Authority's mortgage loan to an institutional first mortgage in an amount not to exceed $3,750,000, and extending the term of the Land Authority's mortgage loan from 30 years to 50 years; and WHEREAS, due to state budget reductions the project's CWHIP application is one of only three selected for funding and is undergoing an accelerated underwriting review; and WHEREAS, due to the recent decline in the real estate market the subject property may appraise at a value below the proposed financing package of the institutional first mortgage, the Land Authority's second mortgage, and the CWHIP mortgage, in which case the project would fail to receive the underwriting approval necessary to proceed; and WHEREAS, the Key West Housing Authority requests that the Land Authority authorize the subordination of the Land Authority mortgage to the CWHIP mortgage if necessary to satisfy the CWHIP underwriting requirements; and WHEREAS, the Land Authority Advisory Committee considered this resolution at a meeting held on April 28, 2009 and voted 4/0 to recommend approval; NOW, THEREFORE, BE IT RESOLVED BY THE MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY: If necessary to satisfy the CWHIP underwriting requirements, the Chairman of the Land Authority Governing Board is hereby authorized to execute the necessary documents to subordinate the Land Authority's $1,500,000 mortgage loan recorded in Official Records Book 1697 at Page 2076 to both an institutional first mortgage in an amount not to exceed $3,750,000 Page 1 of 2 as previously authorized by Resolution 01-2008 and a CWHIP second mortgage in an amount not to exceed $5,000,000. PASSED AND ADOPTED by the Monroe County Comprehensive Plan Land Authority at a regular meeting on this day of 2009. (Seal) ATTEST: Mark J. Rosch Executive Director Approved for Legal Sufficiency Larry R. Erskine MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY Kim Wigington Chairman Page 2 of 2 RESOLUTION NO. 01-2008 A RESOLUTION OF THE MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY AUTHORIZING MODIFICATION OF THE MORTGAGE LOAN AND DEED RESTRICTIONS ENCUMBERING THE ROOSEVELT SANDS HOUSING COMPLEX IN KEY WEST. WHEREAS, section 380.0666(3), Florida Statutes and section 9.3-2, Monroe County Code, empower the Monroe County Comprehensive Plan Land Authority (hereinafter "Land Authority") to acquire and dispose of interests in real property for the purpose of providing affordable housing; and WHEREAS, in 2001 the Land Authority issued a 30-year, zero interest mortgage loan in the amount of $1,500,000 to the Key West Housing Authority to fund the purchase of the 44-unit affordable housing site known as the Roosevelt Sands Housing Complex (hereinafter "subject property") located at 105 Truman Avenue in Key West; and WHEREAS, the Key West Housing Authority desires to demolish and rebuild the housing on the subject property by obtaining a $5,000,000 mortgage loan from the Florida Housing Finance Corporation's Community Workforce Housing Innovative Pilot (CWHIP) program together with a mortgage loan from an institutional lender of approximately $3,750,000; and WHEREAS, to enhance the project's financial feasibility and make the project's CWHIP application more competitive, the Key West Housing Authority has requested the Land Authority's approval to modify the existing mortgage loan and deed restrictions encumbering the subject property's title; and WHEREAS, the CWHIP application deadline is January 28, 2008 and the Land Authority Advisory Committee will consider this resolution on January 24, 2008; NOW, THEREFORE, BE IT RESOLVED BY THE MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY: Section 1. This resolution shall only take effect if approved by the Land Authority Advisory Committee. Section 2. If the Key West Housing Authority's CWHIP application is approved by the Florida Housing Finance Corporation, the Chairman of the Land Authority Governing Board is hereby authorized to execute the necessary documents to: a) modify the restrictions on the warranty deed recorded in Official Records Book 1697 at Page 2074 to implement the revisions shown in Attachment A; and b) subordinate the Land Authority's $1,500,000 mortgage loan recorded in Official Records Book 1697 at Page 2076 to an institutional first mortgage in an amount not to exceed $3,750,000; and c) extend the term of said Land Authority mortgage loan from the existing 30-year term that commenced in 2001 to a term of 50 years commencing from the date of the CWHIP note and mortgage; and Page 1 of 2 d) modify the restrictions on said Land Authority mortgage loan to implement the revisions shown in Attachment B. PASSED AND ADOPTED by the Monroe County Comprehensive Plan Land Authority at a regular meeting on this 16th day of January 2008. t +AT`TT Mark J. Rosch Executive Director Approved for Legal Sufficienc Larry R. Erskine MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY Charles ` on " McCoy Chairman Page 2 of 2 ATTACHMENT A Revisions to Restrictions Attached to the Warranty Deed Recorded in Official Records Book 1697 at Page 2074 Roosevelt Sands Housing Complex THIS DEED IS MADE AND IS TO BE ACCEPTED WITH THE UNDERSTANDING THAT USE OF THE PROPERTY CONVEYED IS RESTRICTED BY THE FOLLOWING: THE PROPERTY SHALL BE DEVELOPED WITH AFFORDABLE HOUSING FOR VERY i )W LOW, OR MODERATE INIGG—ME— PERSONS 48 DEFINED IN SEoT IC)N 4220.^�-IN ACCORDANCE WITH SECTION 380.0666(3), FLORIDA STATUTES, CONSISTENT WITH THE FOLLOWING POLICIES OF THE KEY WEST HOUSING AUTHORITY: 1. Income targeting shall be 80% of median adjusted for family size. Income targeting may increase to 120% to maintain occupancy level and financial feasibility but not to exceed 40% of project units. Income targeting for workforce housing units may increase to 150% of median but may not exceed 20% of the project units. 2. Rental rates shall be calculated using the same methodology as the low income housing tax credit program as adjusted annually. 3. The compliance requirements shall be the same of the Low Income Housing Tax Credit (LIHTC) Program as contained in the Florida Housing Finance Corporation (FHFC) Compliance Manual and shall be the responsibility of the developer to insure compliance annually. 4. The program requirements for the LIHTC, Mortgage Revenue Bond (MRB), State Apartment Incentive Loan (SAIL), and HOME programs when competitively obtained require lower income targeting (rents), which take precedence when utilized. 5. The US Department of Housing and Urban Development occupancy requirements (family composition) shall be adhered to, as they pertain to maximum occupancy only. The above restrictions shall not expire and may only be released by the Monroe County Comprehensive Plan Land Authority. These restrictions are for the benefit of the present owner and its successors and assigns and may be enforced by them in every lawful manner. ATTACHMENT B Revisions to Restrictions Attached to the Mortgage Deed Recorded in Official Records Book 1697 at Page 2076 Roosevelt Sands Housing Complex In reference to the Mortgage Deed dated the 21 st day of May, 2001, between the HOUSING AUTHORITY OF THE CITY OF KEY WEST, FLORIDA, A PUBLIC BODY CORPORATE AND POLITIC, Mortgagor, and MONROE COUNTY COMPREHENSIVE PLAN LAND AUTHORITY, A LAND AUTHORITY UNDER SECTION 380.0663(1), FLORIDA STATUTES AND MONROE COUNTY ORDINANCE NO. 031-1986, the Mortgagee, the parties further covenant and agree as follows: 1. Mortgagor's use of the property shall be limited to the provision of affordable housing in accordance with section 380.0666(3), Florida Statutes. 2. Mortgagor is responsible for developing and managing the property as affordable housing and ensuring compliance with the affordability requirement of 1 above. 3. Mortgagor shall obtain Mortgagee's written consent prior to conveying the real property and said conveyance shall be made subject to this mortgage.