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HomeMy WebLinkAbout01/15/2008 07 Yakima County Coalition for the Homeless Debt Forgiveness and Reconveyance BUSINESS OF THE CITY COUNCIL • YAKIMA, WASHINGTON AGENDA STATEMENT Item No 7 For Meeting Of January 15, 2008 ITEM TITLE Resolution authorizing the forgiveness of debt in the amount of $ 33,750 to the Yakima County Coalition for the Homeless, for property located at 604 and 606 Central Avenue and execution of a full reconveyance deed for the property SUBMITTED BY Bill Cook, CED Director CONTACT PERSON/TELEPHONE Bill Cobabe, ONDS Manager (575 -6101) SUMMARY EXPLANATION As an entitlement community the City of Yakima receives direct Federal funding for the Community Development Block Grant (CDBG) and HOME programs These funds can be invested in a broad range of activities, projects, and programs, and services Approximately 10 years ago the City provided a loan of $33,750 to assist with the renovation of apartments located at 604 -606 Central, owned by the Yakima County Coalition for the Homeless The Coalition has become a victim of difficult economic times, and has gone out of business All of its assets have been sold, except this property A private party has made an offer to purchase the property • The property is not in good condition. The offer to purchase is for Seventy -seven Thousand Dollars ($77,000) Liens against the property far exceed its purchase price Yakima Federal is owed about $35,000, The State of Washington through Community, Trade, and Economic Development (CTED) is owed second and third mortgages totaling about $75,000, and our loan is in 4th position at $33,750 We are being asked to forgive our loan and provide a full reconveyance If we do not do this, the Coalition will be forced to file for bankruptcy protection, and our loan will likely be avoided in that process We have considered other options, and consulted with City and outside legal experts, who agree that it is best to agree to forgive the lien. Resolution X Ordinance Other (Specify) Contract Mail to (name and address) Phone. Funding Source . APPROVED FOR SUBMITTAL. �� City Manager STAFF RECOMMENDATION Approve forgiveness of the loan • BOARD /COMMISSION RECOMMENDATION The Council Neighborhood Development Committee met and disused this request at their meeting on December 12, 2007 COUNCIL ACTION RESOLUTION NO R -2008- 0 A RESOLUTION authorizing the forgiveness of debt in the amount of $33,750 lien to the Yakima County Coalition for the Homeless for property located at 604 and 606 Central Avenue and execution of a full reconveyance deed for the property WHEREAS, the City of Yakima is an annual recipient of CDBG and HOME funds from the Federal government; and WHEREAS, these funds are used for a variety of purposes that benefit low and moderate income persons, and WHEREAS, one of these purposes is to provide housing assistance to these persons, and WHEREAS, the City previously made a loan of $33,750 to the Yakima County Coalition for the Homeless, secured by a 4th lien on property located at 604 and 606 Central Avenue, Yakima , and WHEREAS, The Coalition has gone out of business, has no further revenue sources, and needs to sell all of its assets for the best price it can, and WHEREAS, the Central property has been sold for a price far Tess than the total of the liens against the property; and WHEREAS, there is no opportunity for the City to recover these funds from any other source, now, therefore, • BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA. The City Manager is hereby authorized and directed to execute all necessary documents to accomplish said forgiveness of the lien. ADOPTED BY THE CITY COUNCIL this 15th day of January, 2008 ATTEST David Edler, Mayor City Clerk • Geoff Baker 2007 Lakeview Drive, Yakima, WA 98902 509- 930 -0686 geoffbaker@charter.net Yakima City Hall Attn. Dick Zais, City Manager 129 N. 2nd St. Yakima, WA 98901 Dear Mr Zais I am following up on the Yakima County Coalition for Homeless (YCCH) October request for consideration of relief for the hen on property at 604 and 606 Central Avenue. As explained m our previous correspondence to the City Council, YCCH struggled for over 24 months to repay outstanding debt and turn as much property over to homeless - support agencies /programs as possible. Many of these properties had substantial liens against properties by Yakima Federal Savings and Loan. With the exception of 604 and 606, we fulfilled our commitments repaying debt to local S businesses and taxes owed to the Federal government and the State of Washington. Yakima Federal Savmg and Loan liens against property were in the first position. For the property at 604 and 606 Central Avenue, they are in the first position. CTED is in the next position. With the sale, we would complete obligations to Yakima Federal Savings and Loan (CTED in a secondary position has agreed to accept a partial payment of its significant lien against the property and forgive the rest of the lien) However, the sale of this property is not possible without the permission of Yakima city whose lien is m last place. Because of the significant amount of the CTED obligation, there will be no money left after the sale of the property to provide the City of Yakima. We understand and support efforts to keep property within the mission of supporting city concerns, especially those of the homeless. As stated at the meeting held with the City Council committee, our status remains the same. There is a buyer interested m the property and we have agreed to the sale pending resolution of the City's lien. Per discussions with Bill Cobabe - we also understand there may be interest by another agency in assuming responsibility for the encumbered property Transparency While we want to support any initiative that supports the City's care about the homeless and program initiatives, our situation is critical. We want to be open with the City Council and others interested in this matter When YCCH brought the subject to the city's attention, other agencies had supported rents in the past. These agencies cannot support such payments and cannot assume the roe YCCH is now paying • PP P Ym property rty a P Yakima Federal Savings and Loan payments due on the properties We have exhausted all reserves and operational funds With no income or revenues of any type, YCCH is broke and must dissolve. We have communicated this situation to Yakima Federal Savings and Loan. As of the end of this month, YCCH anticipates that Yakima Federal Savmgs and Loan will start foreclosure process on the property - as YCCH identified there is no money now to accomplish payments In the interest of open communications, we need to inform the Council of this pending action. This also has lent urgency to our request. YCCH remained active for the sole purpose of meeting community obligations - but now we are concerned that property foreclosure will mean that all lose In either case (foreclosure or forgiveness), the City of Yakima will be unable to get funds because its claim rests below CTED who has agreed to accept a partial payment. The long -term agreement with the City of Yakima was accomplished long before any members of the current Board of Directors assumed their positions -and we are trying to resolve the matter m the best interests of all concerned. With no money left after meeting the majority of its obligations, YCCH must dissolve as it cannot initiate further debt obligations without any ability to pay As in the past, we thank you and the council for consideration in this matter hi the interest of open communications, we shall keep you informed. If there are any further questions, I and the President of the Board of Directors, Dixie Kracht, would be happy to meet with you and discuss the matter further Respectfully, 2007 Lakevi - w Drive Yakima, WA 98902 Cc. Yakima Federal Savings and Loan Bill Cobabe, Department of Neighborhood Development Russ Redfield, Prudential Almon Realty Dixie Kracht, President, Board of Directors R C EIVED CITY E OF YAfSIPt4A SEP 2 6 2007 Geoff Baker OFFIrF rir ri■rrn 2007 Lakeview Drive, Yakima, WA 98902 509- 930 -0686 geoffhaker@charter.net Yakima City Mall Attn: Dick This, City Manager 129 N. 2nd St. Yakima, WA 98901 Dear .Mr Zais I am wntmg you regarding the recent request from the Yakima County Coalition for Homeless (YCCH) Board of Directors for assistance regarding our proposed sale of Yakima properties at 604 & 606 Central Avenue. Previously, a letter had been forwarded to you requesting that the City would consider relinquishing its part of YCCH obligations, but, I also thmgbt that I would give this personal appeal as part of further consideration on your part and your assistance, if possible. The YCCH Board of Directors has been working this matter for over 18 months as it berme aware of the indebtedness problems that became insurmountable. We have worked cooperatively with the County, numerous area homeless agencies, CTED, and HUD to arrive at mutually acceptable actions, including the joint establishment of a Homeless Network task force after the November 2005 disclosure that YCCH likely would have to cease operations At that time, the YCCH Board of Directors met and determined that a primary objective would be to transfer properties and programs to the greatest extent possible in order to keep homeless shelters and programs in Yakima - rather than the easier choice to simply exercise bankruptcy or to close the doors with no regard to the needs of the homeless • Our actions were complicated with the resignation of the YCCH Executive Director - the Board of Directors had to assume operational activities of the agency. In January 2007, we worked with local agencies to transfer knowledgeable YCCH staff members to local agencies to ensure expertise remained a Yakima asset. In this and many other matters such as program /asset transfer, the local agencies were extremely helpful and cooperative. Without their assistance, it would not have been possible. Further, all actions were transparent so that everyone was aware of actions being taken.. • As part of the Board's responsibilities, YCCH has now paid off all obligations 411 to the IRS, to the State of Washington's Labor and Indm tnes, to the many vendors who had provided services to YCCH in good faith of payment, and to the Yakima Federal Savings and Loan who held outstanding mortgages agarnst YCCH properties This has been a long and hard task We could not have accomplished it without the understanding and support of community leaders • and local agencies that were empathetic with the Board's dilemma - of having to close operations while still maintaining services to the greatest extent possible through transfer of programs /faciittes We remain a volunteer Board with no pay and no obligations owed to a Board member_ our actions have been without any compensation. • We have now met our debt responsibilities, with the exception of final actions. We have now sold all properties, with the exception of 604 & 606 Central Avenue, wluch I understand outstanding obligations. The Board will now make its final actions for dissolution under State law with legal counsel - as it now has no capacity for operations or revenues. Yakima Federal Savings and Loan, CTED, and Yakima County have given us permission to sell the property CTED has forgiven the hen it has onthe property with the provision that whatever -remains .after the sale will be provided to the State for its use After forging these agreements, the lien by Yakima remains the last action. Given the long struggle by YCCH's Board of Directors and all others involved in the actions, it is my hope that the City of Yakima will forgive the lien against 604 & 606 Central Avenue - and allows this matter to come to close. Quite frankly, there is no further money for the YCCH to provide - an action that CTED is aware and has agreed so that YCCH actions are closed. Without the City of Yakima's assistance, the organization will have no choice but to proceed to other finaiirial actions that will be time-consuming for all parties and end with the same result that there is no financial support to repay the City of Yakima. Thank you in advance for your consideration in this matter It has been a long and hard struggle to date - and we are nearing closure We have worked closely with all concerned to negotiate success and maintain services for those who are disadvantaged. Should there be any further questions, 1 and the President of the Board of Directors, Dixie !Crack, would be happy to meet with you and discuss the matter further Respec , • Ili H. 6 ey 2007 I akeview I "ve Yakima, WA 98902