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REQUEST FOR COUNCIL ACTION Date: March 22, 2021 Item No.: 9. Department Approval City Manager Approval Item Description:Authorize the Mayor and City Manager to execute the Subordination Agreement Governmental Entity for Regulatory Agreement concerning Centennial Gardens 1 B ACKGROUND 2 In 2007, the City of Roseville issued multi-family housing revenue tax exempt bonds to finance a 3 portion of the construction of Centennial Gardens apartmentslocated at 2825 Pascal Street and 1420 4 Centennial Drive. One of the documents executed atclosing was a Regulatory Agreement(see 5 Attachment B), whereby the borrower agreed to operate the project in compliance with federal and 6 state tax exempt bond laws for a period of 15 years after it was first 50% occupied, which included 7 income and rent restrictions to maintain affordability for a certain percentage of the units. This term 8 would expire in 2023. Thesebonds were purchased by Muni Mae and are subject to an Indenture of 9 Trust with Wells Fargo as the bond trustee. 10 The owner, Gardens East Limited Partnership is refinancing thesebonds, resulting in the bonds being 11 retired and the loan being repaid in full, but the requirements of the Regulatory Agreement will stay 12 in place until the original 15 year termexpires. The refinancing will result in a Fannie Mae loan and 13 as a condition of the closing for that loan, Fannie Mae is requiring the City and Wells Fargo to execute 14 a Subordination Agreement whereby the City will consent to the new Fannie Mae mortgage being in 15 first lien position. This action does not cause the Regulatory Agreement to be terminated, meaning 16 the rent and income restrictions will remain as encumbrances on the property. 17 It has been the City’s practice to subordinate under these circumstances. 18 The City Attorney has advised such agreement requires City Council action in order for the Mayor 19 and City Manager to execute the document. The City’s bond attorney, Catherine Courtney, has 20 reviewedthe attached agreement and her revisions have been incorporated. 21 P OLICY O BJECTIVE 22 Not applicable 23 B UDGET I MPLICATIONS 24 Not applicable 25 S TAFF R ECOMMENDATION 26 By motion, authorize the Mayor and City Manager to execute the Subordination Agreement 27 Governmental Entity for Regulatory Agreement, the terms and conditions of which will be 28 substantially similar to the agreement provided as Attachment A. Page 1 of 2