HomeMy WebLinkAboutResolution SEDA2023-06 06/26/2023 SPRINGFIELD ECONOMIC DEVELOPMENT AGENCY (SEDA)
RESOLUTION NO. SEDA2023-06
A RESOLUTION AUTHORIZING THE CITY MANAGER TO TAKE CERTAIN ACTIONS RELATED
TO THE SEDA ACQUISITION AND PREDEVELOPMENT LOAN CONTRACT #2827
WHEREAS, in April 2021, the Springfield Economic Development Agency (SEDA) entered into a
Memorandum of Understanding with Blue McKenzie Apartments, LLC, regarding construction of a new
eight-story mixed use building with market-rate residential units and ground floor commercial uses in
Downtown Springfield (the"Project");
WHEREAS, the Project's goals are to create a proof of concept to communicate viability and
profitability of a new construction type/height in Springfield; to provide a market rate high-density,
housing project to serve as a comparable to financial institutions approving similar future projects; and
to create a dense development in downtown which spurs subsequent private, taxable, development
and increases market rate housing stock;
WHEREAS, in May 2021, SEDA entered into the Acquisition and Predevelopment Loan Contract #2827
("Loan Contract") with Blue McKenzie Apartments LLC for the purpose of providing up $400,000 for
Blue McKenzie Apartments, LLC to acquire the property east of 7t" Street and north of A Street (Map
Number 17-03-35-42, Tax Lot 2300) (the "Property"), and an additional $1,600,000 to fund
predevelopment costs of the Project;
WHEREAS, the Loan Contract was amended in November 2022 to provide a six-month extension until
May 2023 to allow more time for Blue McKenzie Apartments, LLC to secure construction financing, and
in February 2023 to add $100,000 for building permit submittals to occur while negotiations for
construction financing were underway;
WHEREAS, the market and lending conditions have changed significantly since the Project
predevelopment work began in Spring 2021 due to factors outside the parties'control, and these
conditions have continued to worsen in 2023;
WHEREAS, construction costs have risen more than ten percent since May 2021 and have continued
to increase in 2023, which increases the cost to construct the Project;
WHEREAS, in 2023, the Federal Reserve has raised interest rates an additional 0.75% to a fifteen-
year high of 5.25%, which impacts SEDA's ability to issue indebtedness to provide a construction loan
for the Project and impacts Blue McKenzie Apartment LLC's ability to secure construction financing;
WHEREAS, SEDA remains committed to the goals of the Project but recognizes that recent market
volatility and changed lending conditions may make construction of the Project, as envisioned in the
Loan Contract, to be infeasible,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SEDA, AN URBAN RENEWAL AGENCY OF THE
CITY OF SPRINGFIELD, AS FOLLOWS:
Section 1: The City Manager or a person designated by the City Manager is hereby
authorized to declare the Project as described in the Acquisition and Predevelopment Loan Contract
#2827 to be infeasible, if in the judgment of the City Manager or person designated by the City
Manager, the construction of said Project has become impractical and not in the best interests of the
Springfield Economic Development Agency.
Section 2: The City Manager, City Finance Director, City Attorney, or any person designated
by the City Manager, are authorized to take any actions under the Acquisition and Predevelopment
Loan Contract #2827 or the loan documents as defined therein, which are desirable to enforce SEDA's
rights under the Contract. Such actions may include but are not limited to forgiving the principal of the
loan in exchange for a deed to the Property, or issuing a notice of default and instituting foreclosure of
SEDA's deed of trust.
Section 3: This Resolution will take effect immediately upon adoption.
ADOPTED by the Board of SEDA, an Urban Renewal Agency of the City of Springfield this 26th
day of June , 2023, by a vote of 8 for and 0 against.
ATTEST:
Allie Camp, SEDA Staff Liaison
REVIEWED&APPROVED
AS TCI FORM
Kri4t'a vt m,Kra IM
DATE' 6/2.612.3
SPRINGFIIRD f.ITY ATTORNEYS OFFICE
Resolution No. SEDA2023-06