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HomeMy WebLinkAbout2009 07-27 EDAP EDA MEETING City of Brooklyn Center July 27, 2009 AGENDA 1. Call to Order —The EDA requests that attendees turn off cell phones and pagers during the meeting. A copy of the full City Council packet, including EDA (Economic Development Authority), is available to the public. The packet ring binder is located at the front of the Council Chambers by the Secretary. 2. Roll Call 3. Approval of Agenda and Consent Agenda —The following items are considered to be routine by the Economic Development Authority (EDA) and will be enacted by one motion. There will be no separate discussion of these items unless a Commissioner so requests, in which event the item will be removed from the consent agenda and considered at the end of Commission Consideration Items. a. Approval of Minutes 1. July 13, 2009 Regular Session 4. Commission Consideration Items a. Resolution Authorizing the Stipulation of Settlement in Connection with the Real Property located at 6742 Regent Avenue North, Brooklyn Center, Minnesota Requested Commission Action: Motion to adopt resolution. 5. Adjournment e EDA Agenda Item No. 3a S MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION JULY 13, 2009 CITY HALL COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President Tim Willson at 7:44 p.m. 2. ROLL CALL President Tim Willson and Commissioners Kay Lasman, Tim Roche, Dan Ryan, and Mark Yelich. Also present were Acting Executive Director/Director of Fiscal Support Services Dan Jordet, Community Development Director Gary Eitel, City Attorney Charlie LeFevere, and Carol Hamer, Timesaver Off Site Secretarial, Inc. 3. APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Lasman moved and Commissioner Ryan seconded approval of the Agenda and Consent Agenda, and the following item was approved: 3a. APPROVAL OF MINUTES 1. June 22, 2009 Regular Session Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION NO. 2009 -12 AUTHORIZING THE CITY OF BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY (EDA) TO ENTER INTO AN AMENDED AGREEMENT WITH FLIK INTERNATIONAL CORP FOR FOOD SERVICE MANAGEMENT AT THE EARLE BROWN HERITAGE CENTER Acting Executive Director/Director of Fiscal Support Services Dan Jordet introduced the item, discussed the history, and stated the purpose of the proposed resolution. It was requested that staff discuss the possibility of Flik International Corp serving the microbrew that is located in Brooklyn Center at the Heritage Center. 07/13/09 -1- DRAFT The members of the City Council commended Flik International Corp for the quality product provided at the Heritage Center. It was noted that Flik International Corp has committed in the contract to $100,000 in investments to the premises. Commissioner Lasman moved and Commissioner Ryan seconded adoption of EDA RESOLUTION NO. 2009 -12 Authorizing the City of Brooklyn Center Economic Development Authority (EDA) to Enter Into an Amended Agreement with Flik International Corp for Food Service Management at the Earle Brown Heritage Center. Motion passed unanirously. 5. ADJOURNMENT Commissioner Roche moved and Commissioner Lasman seconded adjournment of the Economic Development Authority meeting at 7:52 p.m. Motion passed unanimously. 07/13/09 -2- DRAFT EDA Agenda Item No. 4a EDA COUNCIL ITEM MEMORANDUM TO: Curt Boganey, City Manager THRU: Gary Eitel, Director of Business and Development FROM: Tom Bublitz, EDA/HRA Specialist DATE: July 22, 2009 SUBJECT: Resolution Authorizing the Stipulation of Settlement in Connection with Certain Real Property Located at 6742 Regent Avenue North in the City of Brooklyn Center, Minnesota Recommendation: Staff recommends approval of the Resolution Authorizing the Stipulation of Settlement in Connection with Certain Real Property Located at 6742 Regent Avenue North in the City of Brooklyn Center, Minnesota. Background: The Economic Development Authority of Brooklyn Center, Minnesota (EDA) was served, through the offices of Kennedy and Graven, with a lawsuit by CitiMortgage, Inc. (CitiMortgage) regarding the filing of a Repayment Agreement for a Community Development Block Grant (CDBG) deferred loan for 6742 Regent Avenue North in Brooklyn Center. The EDA's Repayment Agreement was recorded on January 4, 2006, before the CitiMortgage mortgage on the property. This puts the EDA in a first mortgage position on the property. Information available to staff indicates that the timing of the CitiMortgage filing on August 31, 2007, was probably the result of an error by the title company used by CitiMortgage. CitiMortgage contended that the EDA should have known about the CitiMortgage mortgage and the EDA should not have recorded the EDA Repayment Agreement before theirs. Hennepin County manages the CDBG Deferred Loan program on behalf of the EDA and County staff indicated they had no knowledge of the timing of the CitiMortgage mortgage filing. The property at 6742 Regent Avenue is in foreclosure and the status of the City's Repayment Agreement, in a first position, prevents CitiMortgage from proceeding with the foreclosure on the property. Under usual circumstances the ERA's CDBG Repayment Agreement is recorded in a second position to the first mortgage loan which means that if the property goes into foreclosure, the CDBG deferred loan amount is typically not recovered. A Stipulation of Settlement has been prepared by the City Attorney's office for consideration by the EDA Board. The purpose of the Stipulation of Settlement is to avoid the cost and uncertainty of litigation and trial. The Stipulation of Settlement allows CitiMortgage to proceed with its foreclosure of the property while imposing certain requirements on the final disposition of the property as described in the attached Stipulation of Settlement. CitiMortgage has agreed to the terms of the Stipulation of Settlement. The requirements to be met as per the Stipulation of Settlement Agreement include: The EDA's Mortgage (Repayment Agreement) has priority over the CitiMortgage Mortgage. The EDA would agree to reduce the amount of the CDBG deferred loan to $10,018.08 one half the original deferred loan amount) with simple interest accruing from January 4, 2006 at the simple annual rate of 3%. If the property is sold at Sheriff's Sale, or by CitiMortgage, to an owner occupant, the EDA agrees to forgive the $10,018.08 If the property is purchased by a non -owner occupant at Sheriff's sale or a sale by CitiMortgage, CitiMortgage agrees to pay, to the EDA, the $10,018.08. Since the deferred loan is CDBG money, the $10,018.08, along with accrued interest, would be returned to the City's CDBG Deferred Loan Program. Once executed the Agreement allows CitiMortgage to proceed with foreclosure and sale of the property. Budget Issues: There are no budget issues. i STATE OF MINNESOTA DISTRICT COURT COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT Case Type: 14, Adverse Claims/Declaratory Judgment Court File No:•27 -CV -08 -9149 CitiMortgage, Inc., Plaintiff, VS. STIPULATION OF SETTLEMENT Patrick Williams and Diana L. Leser; Economic Development Authority in and for the City of Brooklyn Center; Ryan Drewniak, P.A.; Discover Bank by its Servicing Agency Discover Financial Services; and Retailers National Bank; Defendants. This Stipulation of Settlement Agreement "Agreement is made and entered into this day of July, 2009 by and between CitiMortgage, Inc. (hereinafter "CitiMortgage and the Economic Development Authority in and for the City of Brooklyn Center (hereinafter, the "EDA"). ARTICLE ONE RECITALS 1. The following Recitals contain capitalized terms which if not defined in such Recital are defined in other portions of this Agreement and are hereby made an integral part of this Agreement. 1.1 Prop erty_. Patrick Williams and Diana L. Leser, n/k. /a Diana L. Williams (hereinafter, "Diana Williams are the owners of real property located at 6742 Regent Avenue North, Brooklyn Center, MN 55429 and legally described as Lot 1, Block 4, Nordstrom's Terrace, Hennepin County, Minnesota (hereinafter, the "Property 1.2 Note. On October 21, 2005, Patrick and Diana Williams executed and delivered to Mortgage Electronic Registration Systems, Inc. a note in the principal amount of $230,000.00 whereby Patrick and Diana Williams promised to pay to the order of Mortgage Electronic Registration Systems, Inc. as nominee for The Lending Group, Inc. the sum, together with interest, all according to the terms of the note (hereinafter, the "Note 1.3 CitiMortgage Mortizaae. To secure payment of the indebtedness evidenced by the Note, Patrick and Diana Williams simultaneously with the delivery of the Note made, executed and delivered to Mortgage Electronic Registration Systems, Inc. as nominee for The Lending Group, Inc. a mortgage dated October 21, 2005. Said mortgage was recorded in the office of the Hennepin County Recorder on November 7, 2005 as Document No. 8690580 (hereinafter, the "CitiMortgage Mortgage The CitiMortgage Mortgage was re- recorded in the office of the Hennepin County Registrar of Titles on August 31, 2007 as Document No. 4415388. 1.4 EDA Mort2aize. On January 4, 2006, Patrick and Diana Williams executed and delivered to the City of Brooklyn Center a mortgage which was recorded on August 17, 2006 in the office of the Hennepin County Registrar of Titles as Document No. 4294931 in the original principal balance of $20,026.16 (hereinafter, the "EDA Mortgage 2 1.5 Assignment of CitiMortgage Mortgage. On September 25, 2007, the CitiMortgage Mortgage was assigned from Mortgage Electronic Registration Systems, Inc. as nominee for The Lending Group, Inc. to CitiMortgage, Inc. Said assignment was recorded in the office of the Hennepin County Registrar of Titles on September 28, 2007 as Document No. 4431008. 1.6 Assip-nment of EDA Mort2aae. On September 4, 2007, the City of Brooklyn Park assigned the EDA Mortgage to the EDA pursuant to an assignment which was recorded in the office of the Hennepin County Registrar of Titles on October 12, 2007 as Document No. 4435672. 1.7 Default. Patrick and Diana Williams defaulted under the terms of the Note in that they have failed to make installment payments of principal and interest as required by the Note and the CitiMortgage Mortgage. 1.8 Judicial Foreclosure. CitiMortgage commenced a judicial foreclosure proceeding represented by Case Number 27 -CV -08 -9149 (hereinafter, the "Action to obtain a determination that the CitiMortgage Mortgage constituted a first mortgage lien on the Property prior, paramount and superior to all other liens or interest on, in or against the Property, that all other liens recorded against the Property were junior liens to that of CitiMortgage's, that Patrick and Diana Williams were indebted to CitiMortgage for a specified sum, that Plaintiff was entitled to the usual decree of foreclosure to satisfy said indebtedness and that the Property be sold to satisfy said indebtedness. III 3 1.9 Answer. The EDA filed an Answer to CitiMortgage's Complaint disputing priority of CitiMortgage's Mortgage and contending that the EDA's Mortgage had priority over the CitiMortgage Mortgage. 1.10 Offer. The EDA has offered to enter into this Agreement in lieu of proceeding to trial to resolve the dispute between the parties. 1.11 Acceptance. CitiMortgage is willing to enter into this Agreement. 1.12 Legal Counsel. CitiMortgage, Inc. is represented by attorney Jonathan R. Cuskey, Peterson, Fram Bergman, P.A., 55 East Fifth Street, Suite 800, St. Paul, MN 55101 and the EDA is represented by attorneys Corrine A. Heine and Peter Mikhail, Kennedy Graven Chartered, 470 U.S. Bank Plaza, 200 South Sixth Street, Minneapolis, MN 55402 regarding the matters described in and the legal consequences of this Agreement. ARTICLE TWO TERMS OF THE AGREEMENT 2. For and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CitiMortgage and the EDA do hereby agree as follows: 2.1 Incorporation. The recitals to this Agreement are fully incorporated herein by this reference thereto with the same force and effect as though restated herein. 2.2 Intent and vurpose. In order to avoid the cost and uncertainty of further litigation and trial, CitiMortgage and the EDA desire to compromise and settle their i 4 dispute, each without admitting liability, and to adjust and settle their rights and obligations in connection with the Action. 2.3 Agreement. a e 2.3.1 CitiMortgage p e sti ulates that the EDA Mortgage, and only the EDA Mortgage, has priority over the CitiMortgage Mortgage. 2.3.2 The EDA agrees to reduce the principal amount of the EDA Mortgage to $10,018.08 with interest accruing from January 4, 2006 at the simple annual rate of 3 2.3.3 The EDA agrees that if the Property is purchased by an owner occupier at the Sheriff's Sale, or is purchased by CitiMortgage at the Sheriff's Sale and later sold by CitiMortgage to an owner occupier, the EDA will forgive the remaining principal balance of $10,018.08 on the EDA Mortgage, together with all interest accrued thereon, and CitiMortgage will not be required to pay any money to the EDA. An affidavit signed by an owner occupier who purchases the Property, setting forth said purchaser's intent to occupy the Property following the purchase of the Property, shall be sufficient proof of ownership status for purposes of satisfying this paragraph. 2.3.4 CitiMortgage agrees that if the Property is purchased by a non- owner- occupant at Sheriff's Sale, or is purchased by CitiMortgage at Sheriff's Sale and later sold to a non owner occupant by CitiMortgage, CitiMortgage will be required to pay the EDA the outstanding principal balance on the EDA Mortgage of $10,018.08, together with interest i 5 accrued thereon to the date of payment, within 45 days of the sale of the Property. 2.3.5 The EDA hereby agrees, that once this Agreement has been executed, and a copy of the Agreement has been provided to the Court, CitiMortgage shall be entitled to an immediate Order from the Court, allowing CitiMortgage to proceed with the sale of the Property, subject to the EDA Mortgage and the terms of this Agreement, but without the need for further litigation concerning, involving or against the EDA. 2.3.6 Each party to this Agreement agrees to be responsible for its own costs and disbursements in this proceeding. SECTION THREE MISCELLANEOUS i 3. The following miscellaneous provisions are hereby made a part of and applicable to this Agreement. 3.1 Avnlicable Law and Bindins Effect. This Agreement and all matters set forth herein shall be subject to and governed by the laws of the State of Minnesota and shall be binding upon the parties hereto, their legal representatives, successors and assigns. 3.2 Headinis. The subject and paragraph headings of this Agreement are included for the purpose of convenience only and shall not affect the construction and interpretation of any of its provisions, and 3.3 Countemarts. This Agreement may be executed simultaneously in two (2) counterparts, both of which shall be an original, but both of which taken together i shall be and constitute one and the same Agreement. 6 ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF BROOKLYN CENTER Dated: By: Print Name: Its: CITIMORTGAGE, INC. Dated: By: Print Name: Its: i 7 Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. RESOLUTION AUTHORIZING THE STIPULATION OF SETTLEMENT IN CONNECTION WITH THE REAL PROPERTY LOCATED AT 6742 REGENT AVENUE NORTH, BROOKLYN CENTER, MINNESOTA WHEREAS, the Brooklyn Center Economic Development Authority "EDA a body corporate and politic organized and existing under the laws of the State of Minnesota, is authorized to engage in development and redevelopment activities pursuant to Minn. Stat. 469.090 to 469.018 and related statutes; and WHEREAS, the EDA holds a mortgage on the property located at 6742 Regent Avenue North, legally described as Lot 1, Block 4, Nordstrom's Terrace, Hennepin County, Minnesota (the "Property and WHEREAS, EDA is a defendant in an action to foreclose a mortgage held by CitiMortgage, Inc. in Court File No: 27 -CV -08 -9149; and WHEREAS, the EDA desires to enter into a Stipulation Agreement in lieu of proceeding to trial to resolve the dispute between the parties. NOW THEREFORE, BE IT RESOLVED, by the Economic Development Authority in and for the City of Brooklyn Center that the Stipulation Agreement between the EDA and CitiMortgage, Inc. in Court File No: 27 -CV -08 -9149 is hereby approved. BE IT it herb authorizes and directs FURTHER RESOLVED that the City Council e FUR Y Y the Mayor and its City Manager to execute an and all documents and instruments necessary to Y Y g Y implement the terms of the Stipulation Agreement. P P Date President The motion for the adoption of the foregoing resolution was duly seconded by member and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted.