Title
Resolution to Approve the Sale of Avalon Housing, Inc.’s Property at 1675 &1677 Broadway to Dawn Farm for Continued Use as Affordable Housing (8 Votes Required)
Memorandum
In 2007 the City of Ann Arbor awarded Avalon Second Nonprofit Housing Corporation (“Avalon”) $355,000.00 in HOME funds to acquire and rehabilitate four units of affordable housing at 1675-1677 Broadway Street, Ann Arbor (the “Project”) (R-07-480). The City awarded the Project an additional $20,000.00 in HOME funds in 2009, and the City and Avalon entered into a Housing Affordability Agreement to ensure Avalon’s use of the funds to set aside the affordable units for individuals at or below 50% of the Area Median Income for a 99-year affordability period. (R-09-249). Additionally the City placed mortgages on the property to secure the HOME funds as 0% interest, 99-year deferred payment loans.
Avalon completed the acquisition and rehabilitation on or around 2009 and has owned and operated the Project as affordable housing since that time. However, Avalon has determined that the Project and location is no longer a good fit for their clients and they wish to sell to Dawn Farm, a local nonprofit, for continued use as affordable housing. Dawn Farm intends to use the Project within their transitional sober living program, and will continue to ensure that units are rented to individuals at or below 50% of the Area Median Income.
Attached for Council approval is a resolution that would transfer the existing loans to Dawn Farm and release Avalon from the loan obligations, and approve the execution of a new affordability agreement with Dawn Farm to ensure the continued use of the Project for affordable housing for the remainder of the 99-year affordability period.
Washtenaw County is also working with Avalon and Dawn Farm to release Avalon of the affordability agreement and obligations related to the County’s previous award of $70,000 in CDBG funds. Dawn Farm has agreed to assume responsibilities for those CDBG funds and enter into an affordability agreement with the County for the remainder of the 10-year term.
The Washtenaw County Office of Community and Economic Development supports this transaction to preserve long-term affordability of the Project through the 99-year affordability period.
Staff
Prepared by: Tara Cohen, Washtenaw County Office of Community and Economic Development
Reviewed by: Derek Delacourt, Community Services Area Administrator
Nicole Vargas, Assistant City Attorney
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, The City of Ann Arbor previously awarded a total of $375,000.00 in HOME program funds through the Housing and Urban Development HOME Investment Partnerships Program to Avalon Second Nonprofit Corporation (“Avalon”) for acquisition and rehabilitation of four units of housing affordable to individuals at or below 50% of the Area Median Income (the “Project”) at 1675-1677 Broadway Street, Ann Arbor, MI 48105 (the “Property”);
Whereas, To ensure the long-term affordability of the Project and compliance with applicable Housing and Urban Development (HUD) requirements, a Housing Affordability Agreement and mortgage were recorded at the Property with a 99-year term;
Whereas, Avalon completed the acquisition and rehabilitation of the Project and has maintained the Project as affordable housing pursuant to the terms and conditions set forth in the Housing Affordability Agreement;
Whereas, The HUD minimum affordability period for the Project has ended;
Whereas, Avalon wishes to sell the Project to Dawn Farm, and Dawn Farm wishes to purchase the Project for use as affordable housing, undertake Avalon’s responsibilities under the existing loan documents, and execute a new affordability agreement with the City to set forth the affordable housing requirements;
Whereas, The current Housing Affordability Agreement requires that the City consent to the sale of the property after a City-initiated process including advertisement to other nonprofit agencies, and provides for the City to share in any profits; and
Whereas, Avalon and the Washtenaw County Office of Community and Economic Development have determined that Dawn Farm is an appropriate nonprofit entity to purchase the Project and undertake the affordable housing obligations, and Avalon is not anticipated to make any profit off of the sale of the Project to Dawn Farm;
RESOLVED, That City Council approves the sale of 1675 &1677 Broadway Street, Ann Arbor Michigan 48105 from Avalon to Dawn Farm, and waives the requirement set forth in the Housing Affordability Agreement regarding advertising to other nonprofit agencies and profit-sharing;
RESOLVED, That City Council approves releasing Avalon from all terms of the Affordable Housing Agreement and loan documents related to the $375,000.00 in HOME Program funds upon sale of the Property to Dawn Farm;
RESOLVED, That as a condition to the approvals above, Dawn Farm will assume the $375,000.00 mortgage loans and enter into a new affordability agreement with the City, consistent with this resolution, subject to approval by the City Administrator and City Attorney;
RESOLVED, That the Mayor and City Clerk are authorized and directed to sign documents to effect the assumption of loan documents by Dawn Farm and release of Avalon, a housing affordability agreement with Dawn Farm consistent with the resolution, and a termination of the affordability agreement with Avalon, after approval by the City Administrator and City Attorney; and
RESOLVED, That the City Administrator and City Attorney are authorized to take all appropriate actions and to execute all incidental documents necessary to complete the transaction and to implement this resolution.