Title
Dept/ Agency: Economic and Housing Development
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Loan Agreement / Promissory Note Pursuant to Section 108 Loan Guarantee Program
Purpose: A resolution authorizing the execution and delivery of Loan Documents to effectuate a loan awarded under the United States Department of Housing and Urban Development (“HUD”) Section 108 Loan Guarantee Program for a Redevelopment Project to be undertaken by Alpha Alpha Lambda Community Development, Inc.
Entity Name: Alpha Alpha Lambda Community Development, Inc.
Entity Address: 8 Lombardy Street, #206, Newark, New Jersey 07102
Loan Amount: Not to exceed $2,500,000.00
Loan Term: Twenty (20) years
Project Property Information: (Address/Block/Lot/Ward)
13 and 15 16th Avenue/Block 254/Lots33-34/South Ward
292 Hunterdon Street/Block254/Lot 40/Central Ward
294-296 Hunterdon Street/Block 254/Lots 38-39/South Ward
Additional Information:
This loan is funded with proceeds of a loan guaranteed by the United States Department of Housing and Urban Development under Section 108 of the Housing and Community Development Act of 1974. The funds being re-lent pursuant to this Resolution represent a reallocation of previously approved Section 108 funds from a prior project that did not proceed and are subject to all applicable federal requirements.
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WHEREAS, Section 108 of the Housing and Community Development Act of 1974 (42 U.S.C. 5308) (“Section 108”), authorizes the U.S. Department of Housing and Urban Development (“HUD”) to guarantee loans as part of its Community Development Block Grant (“CDBG”) Program; and
WHEREAS, HUD has designated the City of Newark, State of New Jersey (“City”), as an Urban Entitlement Area under the Community Development Block Grant Program; and
WHEREAS, the City has been receiving CDBG Program funds since the program’s inception in 1974; and
WHEREAS, HUD administers the Section 108 Loan Guarantee Program, which provides communities who receive CDBG funds with an additional source of financing for economic development, housing rehabilitation, public facilities, and other physical development projects as outlined by 24 CFR 570.202 and 24 CFR 570.702 (the “Section 108 Regulations”); and
WHEREAS, in order to receive loan guarantees under Section 108, an applicant pledges its current and future CDBG funds as the principal security for the loan guarantee, and may be required to pledge additional security for each loan, as determined by HUD on a case by case basis; and
WHEREAS, on or about July 29, 2013, HUD approved the City’s application for loan guarantee assistance under Section 108 authorizing the City to borrow up to Twelve Million Dollars and Zero Cents ($12,000,000.00) for the purpose of financing eligible economic development and community development activities within the City; and
WHEREAS, in accordance with the Section 108 Regulations, the City may utilize the loan proceeds to fund certain economic development projects, or may lend those loan proceeds to qualified entities to fund economic development projects which meet certain criteria as determined by HUD; and
WHEREAS, by Resolution adopted on February 3, 2021, the Municipal Council of the City of Newark (the “Municipal Council”) authorized the execution of a redevelopment and land sale agreement (the “Redevelopment Agreement”) with Alpha Alpha Lambda Community Development, Inc., (the “Redeveloper”) to provide for the rehabilitation of the Property and development of a community center that will house small business incubator spaces, a meeting hall, and affordable meeting and event rental spaces at 13 and 15 16th Avenue, 292 and 294-296 Hunterdon Street in the South Ward/Central Ward of the City (the “Project”); and
WHEREAS, a portion of the Section 108 Funds, in the amount of Two Million Five Hundred Thousand Dollars and Zero Cents ($2,500,000.00), was originally allocated to a prior project that did not proceed;
WHEREAS, the City now intends to re-lend that portion of the Section 108 Funds to the Redeveloper for the Project, which the City has determined to be an eligible activity under applicable federal requirements, in an amount not to exceed Two Million Five Hundred Thousand and Zero Cents ($2,500,000.00), to subsidize the Project, subject to further approval of the Municipal Council of certain Loan Documents, including a loan agreement, promissory note, and mortgage and security agreement (the “Loan Documents”); and
WHEREAS, the City wishes to authorize and approve the Loan Documents, and the execution of the same by the Mayor and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development in order to effectuate the loan to Master Lease, LLC.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Loan Documents, each in substantially the form as attached hereto as Exhibit A, are hereby approved, and the Mayor and/or his designee, the Director of Economic and Housing Development, are hereby authorized and directed to enter into, execute and deliver, as applicable, the Loan Documents.
2. The Mayor and/or his designee, the Director of the Department of Economic and Housing Development are authorized to request advances from HUD pursuant to the terms and conditions of the Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, as amended (42 U.S.C. §5308)(the “Contract”).
3. Disbursement of the HUD Section 108 Loan Guarantee Program funds to Alpha Alpha Lambda Community Development, Inc., for the Project pursuant to the Obligor Loan Documents, shall be subject to the terms and conditions set forth in the Loan Documents and the Contract, which is attached hereto and a made a part hereof.
4. A copy of each of the fully executed Loan Documents, and any related documents and certifications authorized by this Resolution shall be placed on file with the Office of the City Clerk by the Deputy Mayor/Director of the Department of Economic and Housing Development.
STATEMENT
This resolution authorizes the Mayor and/or his designee, the Deputy Mayor/Director of Economic and Housing Development, to enter into and execute and deliver the Loan Documents, in connection with the HUD Section 108 loan by the City to Alpha Alpha Lambda Community Development, for the benefit of Alpha Alpha Lambda Community Development, in order to finance the proposed Redevelopment Project located at 13 and 15 16th Avenue, 292 and 294-296 Hunterdon Street in the South Ward/Central Ward of the City, shown on the Tax Maps of the City of Newark as Block 254, Lots 33-34 and 38-40 in the South Ward.