STAFF MEMORANDUM NORFOLK CITY COUNCIL MEETING October 16, 2006

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Roland Wiggins
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1 STAFF MEMORANDUM NORFOLK CITY COUNCIL MEETING A. CALL TO ORDER 1. Call meeting to order 2. Inform the public about the location of the Open Meetings Act posted in the Council Chambers and accessible to members of the public. 3. Moment of silence/pledge of Allegiance to the flag of the United States of America 4. Roll call B. RECOMMENDED ACTION 1. Approval of consent agenda.* *2. Approval of the minutes of the October 11, 2006, Special City Council meeting. C. SPECIAL PRESENTATIONS 1. Further public discussion will occur of the Initiative Measure No. 423 and its impact on state and local budgets. D. HEARINGS E. ORDINANCES 1. Ordinance No amends Section (a) of City Code related to fifteen minute parking stalls on the east side of North 6 th Street from a point 116 feet north of the north property line of Walnut Avenue to 348 feet north of the north property line of Walnut Avenue. Norfolk Senior High principal Steve Morton requested the addition of ten fifteen minute parking stalls on the Sixth Street side of the school. Currently construction is underway where the original visitor entrance is located. Visitors will no longer have access through the east side of the building. The construction period is estimated to take until sometime in March During this period, the main

2 Staff Memorandum entrance will now be door #16 on the Sixth Street side of the building. The proposed area will provide short-term parking for visitors. Staff believes that this inclusion will be removed from the ordinance when this portion of the construction is completed. See Enclosures E Ordinance No authorizes the sale of abandoned Union Pacific Railroad right-of-way property which lies between Hayes Avenue and Taylor Avenue and between 10 th Street and 11 th Street. The sale is to Jesse M. Lewis and Bernadine R. Lewis for $2, pursuant to the terms of a Lease Agreement dated March 1, 2004, between the City and Jesse and Bernadine Lewis. Approval on three readings is recommended. See Enclosure E-2. F. RESOLUTIONS *1. Resolution No releases the five-foot utility easement on each side of the common lot line less the south ten feet between Lots 8 and 9, Eastwood Subdivision to the City. Johnson Engineering Company, on behalf of the property owner, requests the release of this easement. The utility companies do not object. (Corresponds with item G-12.) See Enclosures F-1 and G-12. G. CURRENT BUSINESS *1. The Public Works Director requests approval of Maintenance Agreement No. 019 with the Nebraska Department of Roads for calendar year 2006 and authorization for the Mayor to execute a Certificate of Compliance at the end of Maintenance Agreement No. 019 authorizes City maintenance of the State highway system within the incorporated limits. The City is responsible for day-to-day maintenance, including snow removal. The State reimburses the City for these services at a standard rate according to the number of lane miles within the City. The agreement has been updated to reflect appropriate State statutes regarding maintenance responsibility per municipal classifications and surface maintenance of parking lanes. The number of lane miles has also been changed from 29.2 to lane miles at $1, per lane mile for a total reimbursement of $41, The Certificate of Compliance will be received at the end of 2006 after the City has provided the required maintenance. See Enclosure G-1.

3 Staff Memorandum *2. Staff request approval of a Grant of Easement to provide access to Lot 5 in Centre Ridge Village across the southerly 12.0 feet of Lot 2, and the northerly 12.0 feet of Lot 3 in said Centre Ridge Village First Addition to the City of Norfolk. Richard Johnson of Johnson Engineering Company, on behalf of the property owners, requests this grant of easement. This easement is being granted over former Union Pacific Railroad right-of-way that the City of Norfolk owns. See Enclosure G-2. *3. Hy-Vee, Inc., 120 East Norfolk Avenue, Norfolk, Nebraska, requests approval of the Corporate Manager Application of Paul Ignowski in connection with its Class C liquor license. See Enclosure G-3. *4. Staff requests approval to advertise for a replacement tanker for use by the Norfolk Fire Division. The tanker replaces a Norfolk Rural Fire District tanker that was taken over by the Norfolk Fire Division under an agreement to maintain the fleet. The funds for this purchase is budgeted in the Fire Division s 84 account and will be paid for by public safety bonds. *5. Staff requests approval of the City of Norfolk Guidelines for the Down Payment Assistance Program for Grant No. 06-TFHP-577. The City must adopt the guidelines required by the grant. The purpose is to provide financial assistance to lowto-moderate income families for the purchase of single-family residential housing units that are safe, decent, sanitary and affordable, using Nebraska Affordable Housing Trust Funds. The project consists of housing units in the Meadow Ridge Subdivision. The Trust Funds grant assistance will provide funds for assisting in the next phase of the Meadow Ridge Subdivision development including infrastructure activities and construction of 35 housing units with at least 16 of the units restricted to buyers whose household income is at or below 100% of the area median income. See Enclosure G-5. *6. Staff requests approval of the Interlocal Agreement For Building Inspection Services (2006) between the City and Village of Winside, Nebraska. This is similar to agreements with the City of Madison and Village of Meadow Grove. See Enclosure G-6. *7. Staff requests approval of award of a bid to FireGuard for a replacement ambulance for $99, The City Council approved advertisement of bids at the October 2, 2006 City Council meeting. Bids were received and opened on October 6. Three vendors submitted five bids. The Fire Chief recommends removing the

4 Staff Memorandum lowest bidder because of various exceptions in the low bid ambulance. The Fire Chief recommends approval of the second low bidder that is FireGuard. The funds for this purchase are budgeted in the Fire Division s 84 account and will be paid for by public safety bonds. See Enclosure G This request by Phil Perry for a loan modification agreement and related allonge with Meadow Ridge Partners, LLC, will forgive accrued interest on the $935,000 HOME loan to Meadow Ridge Partners, LLC, and reducing the interest rate from 7.88% to 0%. In 1995, City loaned $935,000 to Meadow Ridge Partners, LLC, from proceeds of a HOME grant to be used for construction of the original three apartment buildings in Meadow Ridge Housing Development. The interest rate on this loan is 7.88%. This is a residual receipts loan and project cash flow has not been sufficient to provide for any loan payments to the City. Unpaid interest is simply added to the loan. As of December 31, 2005, $818,068 of accrued interest has been added to the loan balance. This modification agreement would forgive this accrued interest and reduce the interest rate to 0%. This agenda item also approves the related allonge which is simply an amendment to the existing note incorporating Section 2 of the modification agreement. Meadow Ridge Partners, LLC, is making this request because interest on the City s loan is causing negative capital accounts for the tax credit partners which will result in a taxable event at the end of the 15-year recapture period if the general partners exercise their option and take out the tax credit partners. The operating agreement requires Meadow Ridge Partners to pay any tax consequences that result to the tax credit investors when they exit the project. The Nebraska Department of Economic Development reviewed this request and believes it should be granted to avoid cash flow problems at the end of the 15-year recapture period. JP Morgan also requires this modification agreement prior to refinancing the existing first mortgage. Included in the agenda packets is a Fact Sheet from Phil Perry, Managing Member of Meadow Ridge Partners, LLC, discussing issues related to this modification agreement as well as the other agenda items. Also enclosed is a letter dated September 27, 2006 from Lara Huskey, DED Housing Manager, supporting the changes requested by Meadow Ridge Partners, LLC. (Corresponds with items G-9, G-10 and G-11.)

5 Staff Memorandum Phil Perry requests approval of a subordination agreement subordinating the City s $935,000 HOME loan to Meadow Ridge Partners, LLC, to a loan from JP Morgan Chase Bank. Meadow Ridge Partners, LLC, requested this subordination agreement to allow refinancing their existing loan from First National Mortgage Association with a new loan from JP Morgan Chase Bank at a reduced interest rate. The balance of the current first mortgage is about $1,980,000 with an interest rate of 7.2%. Monthly loan payments are $14, The refinancing loan will be $2,100,000 with a 30-year amortization and 10-year balloon reducing monthly loan payments by $2,072, substantially improving project cash flow. The project has never had sufficient cash flow to make any payments on the City s residual receipts loan. However, with these reduced senior loan payments it is possible the City may begin receiving payments. JP Morgan is acting as the loan originator. However, this is a conduit loan and will be packaged with other similar loans to be resold to a group of investors. Because this is a conduit loan, there are certain standard terms required in the loan documents including the subordination agreement. The subordination agreement is more than a simple subordination agreement, but actually a standstill agreement, which does not allow the City to take any enforcement action under its loan or regulatory agreement as long as the first mortgage remains outstanding. The Nebraska Department of Economic Development is aware of this and recommends the City proceed with this refinancing so the project can generate more cash flow to come into compliance with HOME program requirements. (Corresponds with items G-8, G-10 and G-11.) 10. Staff request authorization for the Mayor to sign a letter to the Nebraska Department of Economic Development requesting an amendment to Grant Contract M94-SG to reduce the number of HOME assisted units from 42 to 19. Meadow Ridge Partners, LLC, owns the original three apartment buildings constructed in the Meadow Ridge Housing Development. The City loaned Meadow Ridge Partners $935,000 of HOME funds received through a grant from the Nebraska Department of Economic Development for a portion of the construction cost of these apartment buildings. Meadow Ridge Partners, LLC, is currently out of compliance with HOME rules regarding rent and income limits. The Nebraska Department of Economic Development negotiated with Meadow Ridge Partners, LLC, to bring the project into compliance. As a result of these negotiations, the Nebraska Department of Economic Development proposed a reduction in HOME assisted units from 42 to 19. This enables the project to gener-

6 Staff Memorandum ate the necessary income to meet obligations and at the same time allows compliance with HOME program requirements. (Corresponds with items G-8, G-9 and G-11.) 11. Consideration of approval of a Memorandum of Understanding (MOU) with Meadow Ridge Partners, LLC, requiring Meadow Ridge Partners to comply with HOME Program requirements and limiting distributions to the Managing Members to $30,000 annually. This MOU requires Meadow Ridge Partners, LLC, to fully comply with HOME regulations for the Meadow Ridge Housing Project. As more fully explained in the Fact Sheet included in the agenda packages for Item G-1, there are two agreements controlling compliance issues related to the HOME loan the City made to Meadow Ridge Partners. The agreements could be read to indicate that the project is in compliance with the agreement between Meadow Ridge Partners and the City, but not compliant with the requirements of the agreement between the Nebraska Department of Economic Development (DED) and the City. This MOU clarifies that Meadow Ridge Partners must abide by the same rent restrictions as contained in the City s agreement with DED. The MOU also provides that if Meadow Ridge Partners does not comply with HOME rules as determined by DED resulting in the City owing monetary compensation to DED, Meadow Ridge Partners shall indemnify the City. The Managing Members have only taken $30,000 annually out of the project as payment for deferred development fees. This is substantially less than allowed by the provisions of the HOME loan. The MOU limits these distributions to $30,000 annually and correspondingly limits preferential cash flow to $30,000 annually for the residual receipts computation. The HOME loan from the City to Meadow Ridge Partners is a residual receipts loan with payments required only to the extent there are residual receipts. Without this modification, there will probably never be any residual receipts to be paid the City. With these modifications, it is anticipated that the City may begin receiving some principal payments on its HOME loan going forward. (Corresponds with items G-8, G-9 and G-10.) *12. Staff request approval of a Grant of Easement for construction and maintenance of utilities along the replatted lot line between Lots 8 and 9, Eastwood Subdivision in the City. Johnson Engineering Company, on behalf of the property owner, requests this grant of easement. (Corresponds with item F-1.) See Enclosures G-12 and F-1.

7 Staff Memorandum *13. Staff recommend approval of authorization for the Mayor to execute a Storm Water Management Plan Program Grant Application, the Cooperative Agreement and all other related documents. The grant program will provide funding to the City to implement a local Storm Water Management Plan. The annual allocation less administrative expenses will be distributed to applicants according to population size. The City of Norfolk is entitled to at least $51,373 depending on the number of eligible applicants. See Enclosure G-13. *14. Staff request approval of all bills on file. The staff submitted the list of all current bills payable to the Mayor and City Council for review. Gary Miller is responsible to field questions concerning any bill. His phone number is H. ADMINISTRATIVE REPORTS 1. Included in the agenda package is the Transfer Station Annual Report for See Enclosure H Included in the agenda package is the monthly commercial and industrial building permit report for September See Enclosure H Included in the agenda package is the Works-In-Progress report for the period September 27 through October 10, See Enclosure H-3.

Contents TABLE OF CONTENTS

Contents TABLE OF CONTENTS Contents CHAPTER 1 Low-Income Housing Tax Credits and Year 15 17 1.01 Introduction 17 1.02 Overview of the LIHTC Program 18 [1] Land Use Restriction Agreement (LURA) 20 [2] Extended-Use Period 21 1.03