Title
Resolution authorizing the Execution and Delivery by the County of Lake, Illinois of an Assignment and Assumption Agreement and Related Documents relating to a Declaration of Restrictive Covenants and Regulatory Agreement and a Tax Regulatory Agreement entered into by said county at the time of issuance of its Multifamily Housing Revenue Bonds (Brookstone Apartments Project) Series 2007 and Other Provisions in Connection Therewith.
Staff Summary
• In 2007, the County issued Multifamily Housing Revenue Bonds (Brookstone Apartments Project) Series 2007 in the amount of $9,600,000 to finance the costs of the acquisition and construction of a multifamily rental housing facility, located in the City of Waukegan, and loaned the funds to Brookstone Apartments LP (who is responsible for repaying the debt).
• Brookstone Apartments LP has advised the County that it plans to sell the property to a new owner, Waukegan Brookstone Apartments, LLC.
• As part of that sale, Brookstone Apartments LP will deposit sufficient funds in escrow to allow the early payoff of the bonds (sometimes called “defeasance”) on November 1, 2024 (instead of the original deadline in 2040).
• The Bonds required a Declaration of Restrictive Covenants and Regulatory Agreement against the property to assure that it will be maintained as affordable housing under the Internal Revenue Code requirements and a Tax Regulatory Agreement to ensure that excessive interest (arbitrage) is not earned by the borrower during the term of the Bonds.
• Both Agreements require that any purchaser of the property must enter into an agreement to assume those obligations. The owner and the purchaser have agreed on the terms of an agreement for the assignment and assumption of the obligations under both Agreements by the purchaser, and the County’s consent to that assignment and assumption is required.
• The Resolution presented approves and authorizes execution of the Assignment and Assumption Agreement as a consenting party, which will ensure continued compliance of the property with applicable affordable housing standards.
Body
RESOLUTION
RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY BY THE COUNTY OF LAKE, ILLINOIS OF AN ASSIGNMENT AND ASSUMPTION AGREEMENT AND RELATED DOCUMENTS RELATING TO A DECLARATION OF RESTRICTIVE COVENANTS AND REGULATORY AGREEMENT AND A TAX REGULATORY AGREEMENT ENTERED INTO BY SAID COUNTY AT THE TIME OF ISSUANCE OF ITS MULTIFAMILY HOUSING REVENUE BONDS (BROOKSTONE APARTMENTS PROJECT) SERIES 2007; AND OTHER PROVISIONS IN CONNECTION THEREWITH
WHEREAS, The County of Lake, Illinois (the “Issuer”), is a duly organized and existing unit of local government within the meaning of Section 1 of Article VII of the 1970 Constitution of the State of Illinois and is a body politic and corporate operating under the general laws of the State of Illinois and is not a home rule unit of local government; and
WHEREAS, the Issuer is authorized under the Industrial Building Revenue Bond Act, 50 ILCS 445/1 et seq. (the “Bond Act”), to issue its revenue bonds to finance, in whole or in part, the cost of the construction, rebuilding, acquisition, improvement, or extension of an “industrial project,” as defined in Section 2 of the Bond Act; and
WHEREAS, the Issuer previously issued its Multifamily Housing Revenue Bonds (Brookstone Apartments Project) Series 2007, in an aggregate principal amount of $9,600,000 (the “Bonds”) and loaned the proceeds thereof to Brookstone Apartments LP, a limited partnership formed under the laws of the State of Illinois (the “Borrower”), in order to finance the costs of the acquisition and construction of a multifamily rental housing facility, located in the City of Waukegan of The County of Lake, Illinois (the “Project”); and
WHEREAS, in connection with the issuance of the Bonds, the Borrower, the Issuer and Wells Fargo Bank, National Association as predecessor to Computershare Trust Company, National Association, as successor trustee (the “Trustee”) entered into (i) a Declaration of Restrictive Covenants and Regulatory Agreement, dated as of October 1, 2007 (the “Land Use Restriction Agreement” or “LURA”) and (ii) a Tax Regulatory Agreement (the “Tax Regulatory Agreement”), in each case governing the Borrower’s use of the Project;
WHEREAS, pursuant to Section 4(h) of the LURA, and the terms of the Tax Regulatory Agreement, as a condition to the transfer of the Project, the Borrower and any subsequent owner shall require any purchaser to assume in writing the duties and obligations of the Borrower under the LURA and the Tax Regulatory Agreement, respectively, in a form acceptable to the Issuer and the Trustee; and
WHEREAS, the Borrower is the owner of the Project and has entered into an Amended and Restated Purchase and Sale Agreement dated October 5, 2023, as further amended by that certain First Amendment to Amended and Restated Purchase and Sale Agreement dated December 26, 2023, with Srinivasa Nandipati, an individual who has assigned said agreement to Waukegan Brookstone Apartments, LLC, an Illinois limited liability company, (“Purchaser”) pursuant to which the Project will be sold by the Borrower to the Purchaser;
WHEREAS, in connection with the transfer of the Project, the Borrower desires to assign, and the Purchaser desires to assume from and after the date of the transfer, all the duties and obligations of the Borrower which arise on and after such transfer date under the LURA and the Tax Regulatory Agreement; and
WHEREAS, the Borrower and the Purchaser will enter into an Assignment and Assumption of (I) Declaration of Restrictive Covenants and Regulatory Agreement and (II) Tax Regulatory Agreement (the “Assignment”) relating to the Borrower’s transfer, and the Purchaser’s assumption, of the obligations under the LURA and the Tax Regulatory Agreement, which Assignment will be consented to by the Trustee, and it is necessary and desirable that the Issuer execute and deliver the Assignment evidencing its consent; and
WHEREAS, the Bonds will be redeemed in full and the outstanding amounts paid in full as part of the transfer of the Project from Borrower to the Purchaser;
WHEREAS, there has been presented to the County Board at this meeting, the proposed form of the Assignment; and
WHEREAS, the County Board finds the form and substance of the Assignment to be satisfactory and proper and hereby determines to proceed with the execution and delivery of the Assignment and the taking of such other actions as may be necessary and appropriate in connection therewith; and now
THEREFORE, BE IT RESOLVED BY THE COUNTY BOARD OF THE COUNTY OF LAKE, ILLINOIS, THAT:
SECTION 1: The foregoing recitals are hereby incorporated in this Resolution as if fully set forth herein.
SECTION 2: The Assignment is hereby approved in substantially the form and substance presented to the County Board and on file with the County Clerk of the Issuer with such changes or additions thereto as may be required or approved by counsel to the Issuer and approved by the officers of the Issuer executing and attesting the same, as evidenced by their execution and delivery thereof and the Chair or Vice Chair of the County Board is authorized and directed, for and on behalf of the Issuer, to execute the Assignment and the County Clerk of the Issuer is hereby authorized to attest the Assignment on behalf of the Issuer, and such officers are hereby authorized to deliver the Assignment. Upon execution by the parties thereto and delivery thereof, the Assignment shall be binding upon the Issuer in accordance with the terms and provisions thereof.
SECTION 3: No pledge, agreement, covenant, representation, obligation or undertaking by the Issuer contained in this Resolution and no other pledge, agreement, covenant, representation, obligation or undertaking by the Issuer contained in any other document executed by the Issuer in connection with the Project or the Bonds shall give rise to any pecuniary liability of the Issuer or charge against its general credit, or shall obligate the Issuer financially in any way. No failure of the Issuer to comply with any term, condition, covenant, obligation or agreement herein or therein shall subject the Issuer to liability for any claim for damages, costs, or other financial or pecuniary charge except to the extent the same is paid by the Purchaser; and no execution of any claim, demand, cause of action or judgment shall be levied upon or collected from the general credit, general funds or other property of the Issuer.
SECTION 4: The Borrower agrees to pay to the Issuer, immediately upon presentation of a written demand or demands therefor, all legal and other consulting and administrative fees, costs, and expenses incurred or accrued in connection with the negotiation, preparation, consideration, and review of this Resolution and the performance by the Issuer of its obligations under this Resolution, and all fees, costs, and expenses that the Issuer may incur at the request of the Borrower or as a result of or arising out of this Resolution or in connection with the execution and delivery of the Assignment.
SECTION 5: The provisions of this Resolution are hereby declared to be separable and if any section, phrase or provision shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases and provisions; provided, however, that no holding of invalidity shall impose any personal liability on any director, member, elected or appointed officer, official, employee, attorney, or agent of the Issuer.
[Signatures appear on the next page]
Adopted: January __, 2024.
Filed: January __, 2024.
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THE COUNTY OF LAKE, ILLINOIS |
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By: |
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Sandy Hart |
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Chair |
[SEAL]
ATTEST:
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By: |
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Anthony Vega County Clerk and ex officio Clerk of the County Board |