AN ORDINANCE relating to community and economic development; authorizing modification of security for a Section 108 loan and Urban Development Action Grant loan in order to facilitate refinancing of the Promenade 23 Shopping Center; accepting a deed for street purposes, and authorizing related agreements, amendments, and actions.

WHEREAS, the Central Area Action Plan, adopted by the Seattle City Council through Resolution No. 28815 on January 3, 1994, recognized the Promenade 23 Shopping Center ("Center") as a critical neighborhood revitalization project; and

WHEREAS, Ordinance 117877 authorized The City of Seattle to issue $2.4 million in non-recourse notes guaranteed by the Secretary of the Department of Housing and Urban Development ("HUD") under the Section 108 program to finance a loan ("Section 108 Loan") for expansion of the Center on the north side of Jackson St. in order to assist community and economic development in the Central Area;

WHEREAS, the Section 108 Loan is secured by a first lien deed of trust on the property developed with that loan ("North Tract 1"), as specified by Section 4 of Ordinance 117877;

WHEREAS, the City also holds a loan made from federal Urban Development Action Grant ("UDAG") funds for the development of the Center on the south side of Jackson St. (the "UDAG Loan");

WHEREAS, under the terms of the UDAG loan as modified pursuant to Ordinance 115904, the City receives payments based on the net cash flow from the south portion of the Center after payment of debt service on a first mortgage from a private lender;

WHEREAS, the owner of the Center ("Developer") has successfully completed the development financed by the Section 108 Loan;

WHEREAS, the Developer has proposed a plan to refinance the private debt on the Center in order to reduce total debt service, improve cash flow and obtain a long-term fixed rate;

WHEREAS, the Developer also intends to develop the remaining portion of the Center on the north side of Jackson St. ("North Tract 2") with private financing;

WHEREAS, the UDAG loan modification agreement approved by Ordinance 115904 provided that the deed of trust to the City as beneficiary on the property north of Jackson Street would be released when the Developer proceeded with development of the entire north side property, and Developer has now agreed that such deed of trust shall not now be released;

WHEREAS, the Director of the Office of Economic Development ("OED Director") has determined that refinancing as contemplated by the Developer's proposal will be in the best interests of the City, subject to certain conditions imposed by the Director, to negotiation of final terms, to review of appraisals and to necessary HUD approvals; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. The Mayor or OED Director, or his or her designee, is authorized, for and on behalf of The City of Seattle, to negotiate and implement a plan to refinance the Promenade 23 Shopping Center ("Plan"). The Plan may include the subordination of the deed of trust and assignment of leases securing the Section 108 Loan to a new first deed of trust securing a loan from a private lender, provided that the City shall obtain a second lien deed of trust on the portion of the Center south of Jackson Street (the "South Tract") as additional security for the Section 108 Loan. The Plan may also include subordination of the UDAG deeds of trust on the North Tract 1, and the South Tract to a third lien position and of the UDAG deed of trust on the North Tract 2 to a second lien position, provided that the City's security for the UDAG Loan on North Tract 1 and North Tract 2 shall not be released until such time as a sale or refinancing of North Tract 2 occurs on terms that will satisfy all obligations to the City or that are otherwise acceptable to the OED Director.

Section 2. The authority to implement the Plan authorized in Section 1 is subject to the OED Director's satisfaction with new appraisals on the security property and the terms of final documents, and to the receipt of any necessary approvals from HUD.

Section 3. In connection with the Plan the Mayor or OED Director, or his or her designee, is authorized, for and on behalf of the City, to negotiate, execute and implement one or more amendments to the terms of the UDAG Loan and related documents as she shall deem to be in the best interests of the City. In connection with any future sale or refinancing of any of the property held as security for the UDAG Loan and the Section 108 Loan, the Mayor or OED Director is authorized, for and on behalf of the City, and subject to receipt of any necessary HUD approvals, to release security in return for such payments and/or substitute security as he or she shall deem to be in the best interests of the City.

Section 4. The Mayor, OED Director and Director of Housing and Human Services are authorized, for and on behalf of the City, to make such submissions to HUD and to execute, deliver, record, modify and administer such additional documents as may be necessary or appropriate to implement the authority granted by this Ordinance.

Section 5. The Council authorizes the acceptance of a deed to be executed by Promenade 23 Associates, L.P., in the form attached to this Ordinance as Exhibit A, conveying to the City of Seattle for street purposes the following described property in Seattle, King County, Washington:

That portion of Block 6, Jackson Street Addition to the City of Seattle, per plat recorded in Volume 2 of Plats, page 24, records of King County, Washington, being more particularly described as follows:

Beginning at the northwest corner of Lot 14, said Block 6, thence along the north line thereof south 89 59'18" east 10.33 feet, thence along a line parallel with the west line of said block (east margin of 23rd Avenue South), south 00 11'50" west 300.73 feet, thence south 44 55'26"east 21.66 feet to a point on the south line of said Block 6 (north margin of South Jackson Street); thence along said south line south 89 49'19" west 25.68 feet to the southwest corner of said block; thence along said west line of Block 6 (east margin of 23rd Avenue South), north 00 11'50" east 316.15 feet to the point of beginning, containing 3,384 square feet more or less;

and the real property conveyed by such deed shall be placed under the jurisdiction of the Director of Seattle Transportation. The Director of Seattle Transportation is authorized to execute and deliver any documents, and to take any actions, necessary for execution of the deed or to effectuate the conveyance to the City authorized by this section.

Section 6. The Mayor or OED Director is authorized, for and on behalf of the City, to grant a partial release of the Section 108 and UDAG deed of trust on North Tract 1 and North Tract 2 to conform the descriptions in those deeds of trust to Lot Boundary Adjustment no. 99702259 that has transferred a small strip from North Tract 1 to North Tract 2, and the transfer to the City for street purposes authorized in Section 5 of this Ordinance.

Section 7. The authority granted herein is in addition to, and not in substitution for, authority previously granted in Ordinance 117887 and other ordinances.

Section 8. Any actions authorized by this Ordinance and carried out before its passage or effective date, including without limitation submitting information or requests for approval to HUD, are hereby ratified and confirmed.

Section 9. This ordinance shall take effect and be in force thirty (30) days from and after its approval by the Mayor; but if not approved and returned by the Mayor within ten (10) days after presentation, it shall take effect as provided by Municipal Code Section 1.04.020.

Passed by the City Council the _____ day of ____________, 1998, and signed by me in open session in authentication of its passage this _____ day of _________________, 1998.

___________________________________

President__________ of the City Council

Approved by me this _____ day of _________________, 1998.

___________________________________

Paul Schell

Mayor

Filed by me this _____ day of ____________________, 1998.

___________________________________

(Seal City Clerk

Exhibit A: Deed

EXHIBIT A