Explanation
BACKGROUND:
This legislation authorizes the assignment, assumption, and modification of a U.S. Department of Housing and Urban Development (“HUD”) HOME Investment Partnerships Program (“HOME”) funded loan package (inclusive of a loan agreement, promissory note, and mortgage, the “HOME Loan”) executed by the Director of the Department of Development, from the City of Columbus (the “City”) to Community Housing Network, Inc., an Ohio nonprofit corporation (“Community Housing Network”), to Jefferson Avenue Apartments, LLC, an Ohio limited liability company (“Jefferson Avenue”) and from Community Housing Network to Jefferson Avenue.
The Jefferson Center for Learning and the Arts, an Ohio nonprofit corporation (“Jefferson Center”), was the original owner of the site that the development was constructed upon. Community Housing Network was the developer and managing member of Jefferson Avenue. It was agreed that upon completion of the 15-year low-income housing tax credit (“LIHTC”) compliance period, Community Housing Network would acquire the interests of the LIHTC investor and convey all of its interest, and cause its wholly owned subsidiary, Jefferson Avenue Apartments, Inc., an Ohio corporation (“JAA Inc.”), to convey all its interest in Jefferson Avenue to Jefferson Center or a related subsidiary. Jefferson Center has created a wholly owned subsidiary, Four Chimneys, LLC, an Ohio limited liability company (“Four Chimneys”), that wishes to acquire a 99.99% interest in Jefferson Avenue, and Sawmill Road Management, LLC, an Ohio limited liability company (“Sawmill”), will acquire a 0.01% interest in Jefferson Avenue as a partner of Jefferson Center. The HOME Loan documents require that the consent of the City be obtained prior to the transfer of any ownership interests of the project.
The HOME Loan to Jefferson Avenue was made on September 8, 2008, to Community Housing Network. Community Housing Network loaned the funds to Jefferson Avenue on the same date and assigned the mortgage to the City. In September 2021, HUD issued a notice stating that local governments may not provide loans to an entity that then lends the funds to the owner of the affordable housing project. Because of this notice, it is necessary to assign and modify the HOME Loan.
Emergency Justification: This legislation is requested to be adopted as emergency legislation to facilitate execution of the necessary documents prior to the end of calendar year 2024 and to achieve compliance with HUD guidance at the earliest possible date.
Fiscal Impact: No funding is required for this legislation.
Title
To authorize the Director of the Department of Development to execute an assignment, assumption, and modification agreement (“Assignment and Assumption Agreement”), and all other necessary agreements or instruments, which assign and modify the HOME Loan documents for the rental development at 50 Jefferson Avenue, Columbus; to authorize the Director of the Department of Development to consent to the transfer of a 99.99% interest in Jefferson Avenue to Four Chimneys, a wholly owned subsidiary of Jefferson Center, and to further authorize the Director of the Department of Development to consent to a transfer of a 0.01% interest in Jefferson Avenue to Sawmill; and to authorize the Director of the Department of Development to execute all other necessary agreements or instruments, in consultation with the City Attorney’s Office, to effect the transfer of interests and obligations from Community Housing Network to Jefferson Avenue as necessary to achieve or maintain compliance with regulations and guidance from HUD; and to declare an emergency. ($0.00)
Body
WHEREAS, on September 8, 2008, the Director of the Department of Development provided a HOME Loan to Community Housing Network for the development of a 39-unit rental housing project in Columbus, Ohio, known as Jefferson Avenue Apartments development owned by Jefferson Avenue;
WHEREAS, the fifteen-year LIHTC compliance period has passed, and Community Housing Network wishes to (i) transfer its 99.99% membership interest in Jefferson Avenue to Four Chimneys, which is wholly owned by Jefferson Center, and cause JAA Inc. to transfer its 0.01% membership interest in Jefferson Avenue to Sawmill;
WHEREAS, in 2021, HUD issued a notice that HOME awards must be made to the entity that owns the affordable housing project, which in this case, is Jefferson Avenue; and
WHEREAS, the terms of the HOME Loan documents require City of Columbus consent to any change of ownership; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Development in that it is necessary to facilitate execution of the necessary documents prior to the end of calendar year 2024 and to achieve compliance with HUD guidance at the earliest possible date all for the immediate preservation of the public health, peace, property, safety, and welfare; and NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That the Director of the Department of Development is authorized to execute an Assignment and Assumption Agreement, and all other necessary agreements or instruments, which assign and modify the HOME Loan documents, promissory note, and mortgage with Community Housing Network to Jefferson Avenue.
Section 2. That the Director of the Department of Development is authorized to consent to the transfer of a 99.99% interest in Jefferson Avenue to Four Chimneys, a wholly owned subsidiary of Jefferson Center, and to consent to the transfer of a 0.01% interest in Jefferson Avenue to Sawmill.
Section 3. That the Director of the Department of Development, with the approval of the City Attorney’s Office, is hereby authorized to enter into all other agreements or instruments not expressly described in this ordinance to effect the transfer of interests and obligations from Community Housing Network to Jefferson Avenue as necessary to achieve or maintain compliance with regulations and guidance from HUD.
Section 4. That for the reasons stated in the preamble hereto, which is hereby made a part hereof, this Ordinance is hereby declared to be an emergency measure and shall take effect and be in force from and after its approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.