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Home My WebLink About4. Kari McKiver Subordination Determination for 606 3rd Avenue East CITY OF SHAKOPEE Memorandum TO: Economic Development Authority Mark McNeill, City Administrator FROM: Mark Noble, Planner II SUBJECT: Approval of Request for Subordination Decision under Residential Rehabilitation Loan Program MEETING DATE: September 18, 2012 INTRODUCTION: Kari J. McKiver, recipient of a residential rehabilitation loan for her property at 606 Third Avenue East, has submitted a request for subordination to the Economic Development Authority. DISCUSSION: Ms. McKiver received approval from the City on December 15, 2009, for a $15,000.00 loan under the Small Cities Development Program, for a roof replacement, minor electrical upgrades and energy efficiency. The loan stipulated that she is to pay a sum equal to a percentage of the full amount of the loan, with 10% of the full amount of the loan forgiven each year the borrower remains in the home, for a period of 10 years, should she sell, transfer or convey the property to someone other than herself. The City does have a lien on the real estate to satisfy the repayment obligation and the cost to collect the repayment. At this time, Ms. McKiver is in the process of refinancing her current mortgage with Citimortgage, and is asking that the City of Shakopee agree to take second lien position on the refinance with Citimortgage. She is not intending to sell her home nor transfer ownership; she is attempting to take advantage of a drop in the mortgage interest rates. ALTERNATIVES: 1. Offer and pass a motion approving the request for subordination of a rehabilitation loan for 606 Third Avenue East, and direct staff to work with the Carver CDA to implement the request. 2. Provide staff with any further direction it deems appropriate regarding the request. STAFF RECOMMENDATION: Staff recommends alternative no. 1, offer and pass a motion approving the request for subordination of a rehabilitation loan for 606 Third Avenue East, and direct staff to work with the Carver CDA to implement the request. 1 RELATIONSHIP TO CITY GOALS: By providing for the upgrading of existing housing in the target area, this item relates to City Goal D, vibrant, resilient and stable. ACTION REQUESTED: Offer and pass a motion approving the request for subordination of a rehabilitation loan for 606 Third Avenue East, and direct staff to work with the Carver CDA to implement the request, and move its adoption. — Mark Nob lip Planner II h: \cc\2012 \09 - 18 \CDA rehab loan 606 3rd ave east.doc. 2 AUG 2 8 20 ? R. Michael Leek Community Development Director 129 Holmes Street South Shakopee, MN 55379 August 24, 2012 Greetings Mr. Leek, In December 2009, I borrowed $15,000 from the city of Shakopee for roof repairs to my home with 10% of the full amount of the loan forgiven each year I remain in my home. Lot 10, Block 4, East Shakopee PID #270040330 I am currently in the process of refinancing my current mortgage with Citimortgage to take advantage of the drop in mortgage interest rates. I am not selling my home, nor am I transferring ownership. I am writing to request that the city of Shakopee agree to take second lein position on the refinance with Citimortgage. Thank yo , (2* 2 . Kari McKiver 606 Third Avenue East Shakopee, MN 55379 Enclosed: 2009 Repayment Agreement From:Friendship Church 952 447 8223 07/29/2012 14:38 #034 P.003/006 COMMUNITY DEVELOPMENT PROGRAM REPAYMENT AGREEMENT City of Shakopee THIS AGREEMENT, made and entered into this 16th day of December, 2009, by and between Kari J. McKiver, a single person (hereinafter referred to as "Borrower"), and The City of Shakopee, having its principal office at 129 Holmes Street South; Shakopee, Minnesota (hereinafter referred to as "Lender). WHEREAS, the Borrower has applied for a loan under said program to improve and rehabilitate that certain real estate situated in the City of Shakopee described below and; WHEREAS, Lender has paid Fifteen Thousand Dollars ($15,000.00) on Borrower's behalf as a no- interest loan (hereinafter referred to as "Loan ") for improving the below described real estate under the Small Cities Development Program, the receipt and sufficiency of which is hereby acknowledged by Borrower; and; WHEREAS, Borrower and Lender desire to set forth herein the provision for Borrower's repayment of the Loan, and to provide for securing said repayment with the mortgage on the property described below (herein referred to as the "Mortgage "). NOW, THEREFORE, in consideration of said Loan and in accordance with Minnesota Statutes, the parties hereto do hereby agree as follows: 1. Borrower covenants and agrees with Lender to pay to the order of the Lender a sum equal to a percentage of the full amount of the Loan with 10% of the full amount of the Loan forgiven each year the borrower remains in the home, without interest, at such place Lender may designate in writing to Borrower, upon the occurrence of any of the following events within the period of ten (10) years after the date of the Loan as set forth above: From:Friendship Church 952 447 8223 07/29/2012 14:39 #034 P.004/006 a. The sale, transfer, or conveyance (whether by deed, contract for deed, or otherwise); and whether voluntary or involuntary; either while the Borrower is living or by reason of the death of the Borrower; or b. The below- described real estate ceases for any reason to be the principal place of residence of the Borrower; Repayment of the Loan as required under the terms of this paragraph 1 shall be made to Lender not later than the 30th day following the sale, transfer, or other conveyance referred to in paragraph 1 (a) above. For the purposes of this Agreement this will be Maturity Date. 2. As security for Borrower's obligation of repayment, and subject to the terms and conditions of this agreement, Borrower hereby grants, and Lender shall and hereby does have, a lien on the real estate hereinafter described in the full amount necessary to satisfy said repayment obligation and the cost, including reasonable Attorney fees, or collecting the same. The real estate subject to_said lien is situated in Shakopee, Minnesota, in the County of Scott and is legally described as: Lot 10, Block 4, East Shakopee P I D # 270040330 3. Promptly after the date if any sale, transfer or other conveyance of the above described real estate (or, in the event of a sale by contract or deed at least ten (10) days prior to such date of sale), Owner or his /her heirs, executors, or Representatives, shall give the City notice thereof. 4. In the event Owner or his /her heirs, executors or representatives shall fail or refuse to make a required repayment within said limited period, the City may, with or without notice of Owner, foreclose said lien in the same manner as an action for the foreclosure of mortgages upon said real Estate, as by statute provided. 5. Said lien shall terminate and shall be of no further force or effort in the event the City has not, on or before December 16 2019 commenced an action in the aforesaid manner to foreclose the same. From:Friendship Church 952 447 8223 07/29/2012 14:39 #034 P.005/006 6. This agreement shall run with the aforesaid real estate and shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, representatives, successors, and assigns. T - 7. If this Agreement" is executed by the contract for deed vendor or a mortgage of the property, as 5ne -of the Owners, such execution shall be deemed for the purpose of establishing and continuing the existence of the indebtedness described herein and the lien granted herein. However, in the event of default of the terms hereof, neither the City of Shakopee nor its assigns shall take any action against such contract for deed vendor except such as may be necessary in order to subject to the satisfaction of said indebtedness the property described herein. IN TESTIMONY WHEREOF, the parties have executed this Agreement as of the day and year first ritten above. Borrower: ari J. McKiver Borrower: Borrower Borrower Contract Vendor (if applicable) Contract Vendor (if applicable) Contract Vendor (if applicable) Contract Vendor (if applicable) The Carver County CDA for the / City of Shakopee Grant Administrator By: rg its nit Development Specialist From:Friendship Church 952 447 8223 07/29/2012 14:40 #034 P.006/006 State of Minnesota ) it ,, DARIN JON BERGER 4'!. Notary Public County of Carver ) "� Minnesota _ __• My Comm. Expires Jan 31, 2013 On the 16th day of December, 2009, before me, a Notary Public with and for the said County, personally appeared Kari J. McKiver, a single person to me known to be the person(s) described in and who executed the foregoing instrument and acknowledging that she executed the same as her free act and deed. Notary Pu c -----e State of Minnesota ) ) County of Carver ) On the 16 day of December, 2009, before me, a Notary Public with and for the said County, personally appeared Darin J. Berger, Community Development Specialist to me known to be the person(s) described in and who executed the foregoing instrument and acknowledging the he executed the same as his free act and deed. i�4 - _ .4 f.. 1 Public 7 s- -- .1.7.7„. JUDITH ANN This document was prepared by: Notary Public ► Carver County CDA V.'.1 i Minnesota o 705 North Walnut Street My Comm, Expires Jan 31, 2010 Chaska, MN 55318 This instrument is exempt from registration tax under Section 287.06 of Minnesota Statutes.