Loading...
HomeMy WebLinkAboutR-97-0699October 14,1997 97-699 Legis Subordination Agreement - Regis House Pend inglegislation 10:52 AM09/12/2000 CITY OF MIAMI, FLORIDA 0 r INTER -OFFICE MEMORANDUM TO FROM Edward Marquez DATE: City Manager SUBJECT: REFERENCES: Wifredo (Willy) Gort ENCLOSURES: Commissioner September 23, 1997 FILE : Will you please place on the Commission Agenda of October 14, 1997, as a personal appearance, Mr. Xavier Cortada, Vice -Chair of the Board or Directors from the Regis House to discuss the Regis House's Application for a line of credit for $25,000.00. Thank you for your cooperation. WG/kk DATA/REGIS-AI cc: Elvi Gallastegui-Alonso, Agenda Office L 4 . 97- 699 1 • TO : Honorable Mayor and Members of the City Commission r I FROM : Edward z City Manag PERSONAL APPEARANCE CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM DATE : OCT - I FILE SUBJECT : Subordination Agreement, Regis House REFERENCES: City Commission Meeting October 14, 1997 ENCLOSURES: Commissioner Wilfredo (Willy) Gort has requested that Mr. Xavier Cortada, Vice -Chair of the Board of Directors from Regis House, Inc., be placed on the Commission Agenda of October 14,1997, for a personal appearance to discuss his Agency's application for a line of credit in the amount of $25,000 from Republic National Bank. BACKGROUND Representatives from Regis House, Inc. approached the City Commission in reference to a letter sent from Reverend Francisco Perez-Lerena, Chairman of the Board for Regis House, Inc., to the Department of Community Development. In this letter, Regis House requested that the City of Miami further subordinate its existing lien to the Republic National Bank by $25,000 for the purpose of enabling Regis House to establish a line of credit to improve the Agency's cash flow system. The bank has indicated that this action is required for Republic National to approve the $25,000 line of credit. In 1991, the City provided Regis House with a grant of $50,000 for the purchase of property located at 2010 N.W. 7 Street for the purpose of providing outpatient substance abuse treatment and prevention services. Under the terms of the original Agreement between the City and Regis House, which was executed on February 26, 1991, Regis House was required to repay the grant to the City if the mortgage was refinanced. In 1996, the Agency sought to refinance the original mortgage under more favorable conditions and requested that "the City subordinate its lien to the lien of the new mortgage and maintain the same terms as contained in the original Agreement." The City agreed and the existing Subordination Agreement (attached) was executed by the City on April 15, 1996, when the Regis House refinanced its mortgage with Republic National Bank. It should also be noted that the original allocation provided by the City Commission in 1991 was intended to be a grant, not a loan. However, since this allocation provided funds for the acquisition of a facility to provide the aforementioned services, the Subordination Agreement was executed to protect the City's interests in the event that Regis House sold the property for a quick profit or utilized the facility for other unrelated activities. Regis House has operated the facility in accordance with its proposed intentions and it is the Agency's plan to continue these services. 97- 699 3 1 Ms. Carmen Villaronga, the Loan Officer for Republic National Bank handling the Regis House account, indicated to staff that the mortgage has an outstanding balance of approximately $74,500. She further indicated that the Real Estate Appraisal Department of the bank had conducted a Real Estate Collateral Evaluation of the property for internal analysis in March, 1996, and the estimated value of the property in this report is $134,000. It should be understood that this is not a true appraisal of the property's actual value. While this document is intended for internal bank use only and is not available for public distribution, the bank authorized City staff to review the report to confirm its content with the understanding that "neither the bank or the preparer is responsible for unauthorized use of this report." City staff s review of the Real Estate Collateral Evaluation concurs with. the information provided by Ms. Villaronga. In addition to the evaluation, the 1997 assessed value of the property according to the City's ARPS Property System (attached) is $140,740. Based on these figures, with a subordination of $98,000, the City would face a risk of approximately $14,000 based on the evaluation's estimated property value and $7,200 based on the ARPS assessment. RECOMMENDATION: In order assist Regis House in developing a mechanism to provide more adequate cash flow to effectively operate its residential treatment program, it is respectfully recommended that the City Commission authorize the City Manager to enter into a new Subordination Agreement with Regis House, Inc. However, the Administration further recommends that the City increases the existing lien with Republic National Bank by $11,000 (from $73,000 to $84,000) rather than the $25,000 requested by the Agency. This action protects the City's interests in. a worst case scenario if the property was to be sold at the amount of the bank's evaluation. 4 V y J!- 639