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Small iilwu.n Wing. Big Uf*. Mayor and Council Request for Action
January 12, 2017
SUBJECT: CONSENT — FINANCE DEPARTMENT — REE COTTAGES REGULATORY
AGREEMENT ASSIGNMENT
RECOMMENDATION: It is respectfully requested that the Mayor and City Council consider
the following motion:
MOTION TO: Approve Resolution 2017-004 Approving Assignment and Assumption of
Amended and Restated Regulatory Agreement, Cottages of Albertville
BACKGROUND: In December, the City was approached by REE Cottages of Albertville LLC
(the "Buyer") with a request to consent to an assignment of the Contract for Private
Development and the TIF Note by the original owner of the facility to the Buyer, and a collateral
assignment of the Contract and TIF Note to the lender providing the financing to the
Buyer. Under the original Contract, the City agreed that it would consent to such assignments if
required by the lender, so City Development Counsel (Kennedy & Graven) recommended
approval of the consent as required under the Contract. The Council approved the assignments
and the consent at its meeting on December 19, 2016.
After the Council had taken its action, but just before closing on the sale of the facility to the
Buyer, the lender's attorney discovered one other document requiring consent. This document is
the Amended and Restated Regulatory Agreement that was originally required in connection
with bonds that were issued to finance the construction of the facility back in 1999. The
Regulatory Agreement contains various occupancy and rental restrictions for the
facility. Primarily, 40% of the units at the facility must be occupied by persons whose income is
60% or less of area median gross income. Since the facility has been sold to the Buyer, the
Buyer is now required to abide by these restrictions. The way to accomplish this legally is
through an assignment of the Regulatory Agreement, which requires the City's consent because
the City was a party to the original Regulatory Agreement.
City Development Counsel recommends approval of the assignment of the Regulatory
Agreement, since this document makes up part of the package of assignments already approved
by the City in December, and the only reason it was not presented with the other documents at
that time is that it was discovered too late for action at the December meeting. Since the City has
already provided its consent to the assignment of the Contract and TIF Note, and since the
Regulatory Agreement is part of the same transaction, consent to the assignment of the
Regulatory Agreement is a formality and may be considered as part of the consent agenda.
KEY ISSUES:
• The Contract for Private Development and the TIF Note were assigned at the December
191 2016 Council meeting and the amended regulatory agreement is a part of that
assignment.
M:1Public Data\City Council\Council Packet Infonnation120171011717\2017-01-17 REE Cottages RCA.docx
Meeting Date: January 17, 2017
ends Page 18
Mayor and Council Request for Action — January 17, 2017
Regulatory Agreement Assignment — REE Cottages Page 2 of 2
There is no basis on Which to deny the assignment.
FINANCIAL CONSIDERATIONS: There are no financial considerations for this item.
Responsible Person/Title: Mike Court, City Attorney & Tina Lannes, Finance Director
Submitted Through: Adam Nafstad, City Administrator-PWD
Attachments: Resolution 2017-004
On file in Clerk's Office: Amended and Restated Regulatory Agmt. Assignment
Original Regulatory Agreement
M:1Public Data\City Council\Council Packet Infonnation120171011717\2017-01-17 REE Cottages RCA.docx
Meeting Date: January 17, 2017
ends Page 19
CITY OF ALBERTVILLE
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO.2017-004
RESOLUTION APPROVING ASSIGNMENT AND ASSUMPTION OF
AMENDED AND RESTATED REGULATORY AGREEMENT,
COTTAGES OF ALBERTVILLE
WHEREAS, the City of Albertville (the "City") executed and entered into that certain
Contract for Private Development dated as of September 22, 1999 (the "Contract") With Cottages
of Albertville, LLC and Group for Affordable Housing — Albertville, LLC (together, the
"Developer") for the construction of a certain senior housing facility Within the City (the
"Facility"); and
WHEREAS, the Developer has conveyed the Facility and assigned its rights and obligations
under the Contract to REE Cottages of Albertville LLC (the "Assignee"), pursuant to that certain
Assignment and Assumption Agreement between the Developer, Group for Affordable Housing —
Albertville, LLC, and the Assignee (the "Assignment"), and the Assignee has collaterally assigned
to Western Bank, National Association (the "Lender") its rights under the Contract, including its
right, title to and interest in the TIF Note, pursuant to the Cottages of Albertville Assignment of Tax
Increment Financing between the Assignee and the Lender (the "Collateral Assignment"), in the
form presented to the City and approved by City Resolution No. on December 19, 201 6; and
WHEREAS, after Council approval of the Assignment and Collateral Assignment by the
Council, it Was determined that additionally an Assignment and Assumption of Amended
Regulatory Agreement between the Developer and the Assignee (the "Assignment and
Assumption") Was required to complete the conveyance, and that the City's consent is required as to
the form of the Assignment and Assumption; and
WHEREAS, the City's Development Counsel has reviewed and approved the language of
the Assignment and Assumption in the form on file With the City Finance Director and attached to
this Resolution as Exhibit A, and has recommended approval of this document.
NOW, THEREFORE, be it resolved by the City Council of the City of Albertville as
follows:
1. The City hereby approves the Assignment and Assumption in the form attached
hereto as Exhibit A.
Page 1
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City of Albertville
Meeting of January 17, 2017
Resolution No. 2016-004
Page 2
Adopted by the City of Albertville this 17th day of January, 2017.
Jiian Hendrickson, Mayor
ATTEST:
Kimberly A. Olson, City Clerk
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EXHIBIT A
ASSIGNMENT AND ASSiMPTION of
AMENDED AND RESTATED REGULATORY AGREEMENT
THIS ASSIGNMENT AND ASSiMPTION of AMENDED AND RESTATED
REGULATORY AGREEMENT (this "Assignment"), made as of this 22na day of December,
20161 by and between Group for Affordable Housing — Albertville, LLC, a Minnesota limited
liability company ("Assignor") and REE Cottages of Albertville LLC, a Minnesota limited
liability company ("Assignee").
wITNESSETH:
A. The City of Albertville (the "City"), U.S. Bank National Association, as trustee, and
Assignor entered into an Amended and Restated Regulatory Agreement dated as of
August 1, 2007 (the "Regulatory Agreement"), pursuant to which the Assignee agreed to
comply with certain restrictions relating to the operation of the its 44-unit residential
rental facility in the City of Albertville on land legally described in Exhibit A attached
hereto.
B. The defined terms in the Regulatory Agreement shall have the same meaning hereunder.
C. Assignor now wishes to assign its rights and obligations under the Regulatory Agreement
to Assignee, and Assignee wishes to assume such rights and obligations under the
Regulatory Agreement.
Now, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Assignor does hereby grant, transfer, and assign to Assignee all of its rights and
interests in, to and under the Regulatory Agreement.
2. Assignee hereby accepts this Assignment and assumes and agrees to faithfully
abide by, perform, and discharge each and every term, covenant, and condition of
the Regulatory Agreement and the exhibits thereto applicable to the "owner" first
arising from and after the date of this Assignment and to be fully bound by all of
the foregoing. Assignee hereby agrees to indemnify and hold Assignor harmless
from and against any and all claims, expenses, costs, obligations, or other
liabilities with respect to the Regulatory Agreement, arising or incurred from and
after the date hereof.
3. Assignor hereby warrants and represents to Assignee as follows:
a. The Regulatory Agreement has not been modified or amended and is full
force and effect as of the date hereof; and
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b. To Assignor's knowledge, there is no Event of Default in existence
under the Regulatory Agreement, nor is there in existence any state of
facts or circumstances which, with the giving of notice or lapse of time
or both, would constitute an Event of Default under the Regulatory
Agreement.
4. Assignor and Assignee agree that this Assignment shall not be amended or
changed in any way without prior written approval of the City.
5. This Assignment and Assumption shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto and shall further be for the
benefit and reliance of the City.
6. This Assignment shall be governed by and construed in accordance with the laws
of the State of Minnesota.
7. This Assignment may be executed in counterparts, which counterparts when
considered together shall constitute a single, binding, valid and enforceable
agreement.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption
Agreement as of the date first indicated above.
ASSIGNOR:
GROUP FOR AFFORDABLE HOUSING
ALBERTVILLE, LLC
By
Its:
ASSIGNEE:
REE COTTAGES OF ALBERTVILLE LLC
By:
Its:
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EXHIBIT A
To ASSIGNMENT AND ASSUMPTION of REGULATORY AGREEMENT
LEGAL DESCRIPTION
Parcel 1:
Lot Thirty-eight (38), Block One (1), Cottages of Albertville, according to the plat and survey
thereof on ale and of record in the office of the County recorder in and for Wright County,
Minnesota.
Abstract Property
Parcel 2 :
Easement for storm sewer purposes over Lot 17, Bock 2, Cottages of Albertville Two, as created
by that certain Declaration of Storm Sewer Easement dated September 23, 1999, filed September
241 1999, as Document No. 690727.
A-1
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