ORDINANCE NO. 060942
Authorizing the City Attorney to
seek certain relief for the Library Lofts project from the U.S. District Court
in City of Kansas City, Missouri v. HEDFC and to execute a release of
the Receiver from any liability to the City arising from such requested relief
and expressing the Councils intent regarding appropriating funds to pay
creditors of HEDFC if harmed by such requested relief.
WHEREAS, on or about
July 23, 2001, the Housing and Economic Development Corporation (HEDFC),
loaned Library Lofts, L.P., the sum of One Million Five Hundred Thousand
Dollars (HEDFC Loan No. 01-138) to pay a portion of the cost of acquisition of
a multifamily apartment project located at 10th and Baltimore in
Kansas City, Missouri and commonly known as Library Lofts; and
WHERAS, the City
provided HEDFC the funds to make this loan from the Citys Community
Development Block Grant funds to further the elimination of blight in the
Citys Downtown and to provide affordable housing opportunities; and
WHEREAS, in
2005, the City filed a lawsuit against HEDFC in the U.S. District Court for the
Western District of Missouri styled City of Kansas City, Missouri v. HEDFC,
Case No. 4:05-CV-00368-GAF seeking various relief, including the appointment of
a receiver to handle the operations of HEDFC until the Court determined what
assets of HEDFC should be transferred to the City; and
WHEREAS, the
U.S. District Court appointed David Bahner (Receiver) to serve as that
receiver and, among other duties, ordered him to both service the loans in
HEDFCs loan portfolios and collect any amounts due and owing on those loans
and to pay out of HEDFCs income and assets any claims of creditors which the
Court found to be lawfully owed: and
WHEREAS, because
the principal balance of the loan, along with any unpaid accrued interest,
comes due on September 30, 2006, the Receiver intends to demand payment of the
loan on that date unless otherwise ordered by the Court; and
WHEREAS, Library
Lofts, L.P. cannot pay off the principal balance, along with any unpaid accrued
interest, on or before September 30, 2006 and seeks a two (2) year extension of that obligation in exchange for certain enhancements of the extended loan;
and
WHEREAS, the
Library Lofts project was, and still remains, an important and pivotal housing
project for the continued revitalization of the Citys Downtown; NOW,
THEREFORE,
BE IT ORDAINED
BY THE COUNCIL OF KANSAS CITY:
Section 1. That
the City Attorney is hereby authorized to file a joint motion with Library
Lofts, L.P. in the lawsuit pending in U.S. District Court for the Western
District of Missouri styled City of Kansas City, Missouri v. HEDFC, Case
No. 4:05-CV-00368-GAF seeking an order authorizing the Receiver, upon receipt
from Library Lofts, L.P. of any unpaid accrued interest, to enter into a
revision of HEDFC Loan No. 01-138 with Library Lofts, L.P. extending the date
on which the principal balance, along with any accrued interest, is to paid in
full to September 1, 2008, increasing the interest that shall accrue thereafter
on the unpaid principal and interest balance from one percent (1%) to six
percent (6%) percent, continuing monthly installment payments of at least
$4,825.00 and extending its commitment as to the number of affordable housing
units through September 1, 2008.
Section 2. That
the City Attorney is hereby authorized to execute a release of the Receiver of
any and all claims, causes of action or other liabilities of the City that
might arise from the Receivers compliance with any order issued by the Court
in response to the Citys and the Library Loft, L.P.s joint motion.
Section 3. That
the Council hereby expresses its intent, if necessary, to cause the City
Manager to docket for its consideration an ordinance appropriating funds up to
One Million Five Hundred Thousand Dollars for use by the Receiver to pay any
creditors claims found by the Court to be lawfully owed, if the income and
other assets of HEDFC are otherwise insufficient to do so.
_____________________________________________
Approved
as to form and legality:
___________________________________
Galen
Beaufort
City
Attorney