On October 25, 2013, the City of Orlando entered into a HOME loan Agreement with Timber Sound, II Ltd. for the rehabilitation of 75 units in the Timber Sound Apartment Complex located at 4897 Raleigh Street, Orlando, Florida. The principal amount for this loan was $681,000. Subsequently, the owner of the Timber Sound Apartments requested additional funds for a second Phase renovation on an additional 80 units and on September 10, 2014 the City entered into another HOME loan agreement to fund the second phase for $710,900. These loans are referenced in the HOME Program Agreement between the City of Orlando and Timber Sound II, Ltd., as amended by the First Amendment to the HOME Program Agreement between the City of Orlando and Timber Sound II, Ltd. The HOME loans and Restrictive Covenant stipulated a five-year affordability period, which will expire on November 30, 2020.
Timber Sound Preservation L.P. has recently entered into a contract to purchase the Timber Sound Apartment Complex from Timber Sound Ltd. and Timber Sound II, Ltd. As part of the purchase of this property, Timber Sound Preservation L.P. has requested the outstanding HOME loans and HOME Agreement obligations between the City and the current owner be assigned to them. Rents will remain affordable.
Timber Sound Preservation L.P. is financing the acquisition of Timber Sound Apartments with a HUDinsured 223(f) mortgage (permanent loan of approximately $19,452,900 with a term of 35 years). HUD, as the insurer requires the City of Orlando to subordinate its loan position. Timber Sound Preservation L.P. is requesting a subordination of the HOME loan per HUD requirements. The Property is currently 98% leased and maintains a waiting list. The property's appraised value as of February 21, 2017 is $30,500,000. As the second mortgage holder, it is possible the City would not be repaid if the property were to go into foreclosure between now and November 30, 2020.
Approve and authorize the Mayor and City Clerk to execute a Subordination Agreement of the HOME Loan between the City of Orlando, Timber Sound Preservation, L.P. and SunTrust; the assignment and assumption agreement between the City of Orlando, Timber Sound II, Ltd., and Timber Sound Preservation, L.P.; and the Amendment to Restrictive Covenant.