Fiscal Note
The City made 3 loans of totaling $152,499 in CDBG funds to the Urban League to help purchase three homes that would be used in their rent-to-own program. The initial financing package relied on WHEDA's award of Low Income Housing Tax Credits, to help make the housing affordable to the current tenants after 15 years. For the first time in 13 years, WHEDA turned down the ULGM application, suggesting that they wanted to see more 'volume'. The ULGM has now reconfigured the financing package to use a slightly larger first mortgage, followed by the City's second mortgage, in order to proceed with the program. This resolution would permit the City to take the steps necessary to subordinate its current loans to the new first mortgage loans on these 3 properties.
Title
Authorizing the subordination of previously approved CDBG loans to the Urban League of Greater Madison to a first mortgage holder to reconfigure a financing package that included Low Income Housing Tax Credits and authorizing the Mayor and the City Clerk to sign agreements to effect such a change.
Body
WHEREAS, in the 2007 and 2008 budgets, the Common Council approved $152,500 in CDBG funds for the Urban League of Greater Madison rent-to-own program, wherein the City provides a second mortgage in a financing package that includes a private first mortgage and Low Income Tax Credits,
WHEREAS those efforts have been very successful over a thirteen year period, enabling the organization to provide decent housing to lower income households and increase their opportunities to become homeowners,
WHEREAS WHEDA's rejection of the ULGM application for tax credits required the Urban League to reconfigure its financing package, which will now rely on private first mortgage financing through Forward Community Investments,
WHEREAS the individual financing is detailed on the attached sheet,
WHEREAS the CDBG staff and Commission have reviewed the proposal as presented on the attached sheet, and recommend Council adoption as a way to successfully advance the Rent-To-Own program, even without WHEDA's participation,
NOW THEREFORE BE IT RESOLVED that the Common Council
a) Approve the subordination of the original CDBG loans with the same repayment terms (the greater of the original CDBG loan or the appropriate percentage of value of CBG funds to the value of the home) to the first mortgage holder in the amounts not to exceed the indicated loan levels, and
b) Authorize the Mayor and the City Clerk to enter into any agreement to effect the subordination.