ORDINANCE NO. 120690
Acknowledging redemption of
Section 108 loan for the Beacon Hill Development in the amount of $5,656,700.00
and correcting certain accounts.
WHEREAS, on
April 8, 1999, the City Council, through Ordinance No. 990532, authorized
acceptance of financing from the U.S. Department of Housing and Urban
Development (“HUD”) Loan Guarantee Assistance under Section 108 of the Housing
and Community Development Act of 1974 in the amount of $10,000,000.00 for the
purpose of providing financing for the land assemblage and associated costs
necessary for redeveloping the Beacon Hill Development Project; and
WHEREAS, Ordinance
No. 990532 also authorized execution of an agreement with the Housing and
Economic Development Financial Corporation (“HEDFC”) for $10,000,000.00 to
implement redevelopment activities such as property acquisition, relocation
costs, demolition and other eligible costs; and
WHEREAS, the City
entered into a “Contract for Loan Guarantee Assistance Under Section 108 of the
Housing and Community Development Act of 1974, As Amended, 43 U.S.C. Sec.
5308” and “Section 108 Loan Guarantee Program Variable/Fixed Rate Note” with
HUD, both bearing the date August 8, 2002, for the repayment of the
$10,000,000.00 loan amount over the next twenty years; and
WHEREAS, the City, as
required, has made annual debt payments from entitlement Community Development
Block Grant (“CDBG”) funds received from HUD; and
WHEREAS, the U.S.
District Court for the Western District of Missouri, in the case of City of
Kansas City, Missouri v. Housing and Economic Development Financial Corporation,
Case No. 05-00368-CV-W-GAF, pursuant to its “Order and Directions for Termination
of Receivership” entered into on January 6, 2011, directed the Receiver to
separate certain HEDFC funds derived from CDBG funds that HEDFC had received as
a subrecipient of the City and to then later use those funds to pay-off the
remaining balance of the City’s Section 108 debt for the Beacon Hill
Development Project when the opportunity to do so next arose; and
WHEREAS, that next
opportunity to do so arose on August 1, 2012, and the redemption of this Note
using HEDFC funds resulted in saving the City $1,780,700.00 in interest
payments and $5,500,000.00 in principal payments that would have otherwise been
deducted from the City’s annual CDBG awards this grant year and for the next
ten grants years, thereby allowing for $6,468,700.00 in future CDBG funds to be
allocated to other projects and programs; and
WHEREAS, on July 12,
2012, as requested by a motion filed by the City, the U.S. District Court
issued its Order authorizing the Receiver to make payment of $5,656,700.00
directly to the Bank of New York Mellon, the Trustee under the Section 108
Note, on or before July 24, 2012; and
WHEREAS, the Receiver
timely made such payment by wire transfer thereby redeeming the Note in full;
and
WHEREAS, in
accordance with generally accepted accounting procedures applicable to
governmental entities, the City reflects this Section 108 Note as a debt owed
by, and a liability of, the City on its financial and accounting records; and
WHEREAS, the
redemption of this Section 108 Note by the Receiver using the above-described
CDBG-derived funds necessitates the correction of certain City accounts; NOW,
THEREFORE,
BE IT ORDAINED
BY THE COUNCIL OF KANSAS CITY:
Section 1. That the
Mayor and City Council acknowledge the direct payment of $5,656,700.00 by the
Receiver of HEDFC as ordered by the U.S. District Court for the Western
District of Missouri redeeming the City’s “Section 108 Loan Guarantee Program
Variable/Fixed Rate Note” for the Beacon Hill Development Project.
Section 2. That the
revenue in the following account of Fund 2600, the Community Development Block
Grant Fund is reduced in the following amount:
13-2600-550001-477150 HUD CDBG (Entitlement) $5,350,000.00
Section 3. That the
revenue in the following account of Fund 2600, the Community Development Block
Grant Fund is estimated in the following amount:
13-2600-550001-458120 HUD CDBG (Program
Income) $5,656,700.00
Section 4. That the
sum of $306,700.00 is hereby appropriated from the Unappropriated Fund Balance
of Fund No. 2600, the Community Development Block Grant Fund to the following
account:
13-2600-555309-749970 Section
108 Debt $ 306,700.00
_____________________________________________
I hereby certify that
there is a balance, otherwise unencumbered, to the credit of the appropriation
to which the foregoing expenditure is to be charged, and a cash balance,
otherwise unencumbered, in the treasury, to the credit of the fund from which
payment is to be made, each sufficient to meet the obligation hereby incurred.
___________________________________
Randall
J. Landes
Director
of Finance
Approved
as to form and legality:
___________________________________
Nicole
Rowlette
Assistant City Attorney