Subject: 18975/CNE/Rental Rehabilitation
Date: Wed, 5 Dec 1990 13:16:00 -0500


                               RESOLUTION NO. 18975
                  
                  
                   A RESOLUTION APPROVING THE SALE BY
                   CHATTANOOGA NEIGHBORHOOD ENTERPRISE, INC. OF
                   VARIOUS RENTAL REHABILITATION LOAN-ASSISTED
                   PROPERTIES TO CNE AFFORDABLE HOUSING LIMITED
                   PARTNERSHIP AND APPROVING SUBORDINATION TO
                   FIRST MORTGAGE OF PRIME LENDER FOR THE
                   PURPOSE OF COMPLETING THE FINANCIAL
                   STRUCTURE OF A LOW-INCOME HOUSING TAX CREDIT
                   SYNDICATION DEMONSTRATION PROJECT INITIATED
                   WITH THE ASSISTANCE OF THE TENNESSEE HOUSING
                   DEVELOPMENT AGENCY AND THE ENTERPRISE SOCIAL
                   INVESTMENT CORPORATION.
                  
                  
                                                    
        
              	   WHEREAS, Chattanooga Neighborhood Enterprise, Inc.
         (hereinafter "CNE") is the owner of certain residential
         properties within the City of Chattanooga which it has improved 

         using a combination of resources, and which it intends to 
manage
         as rental units for persons of limited resources; and
              	   WHEREAS, CNE has received funding from the Tennessee
         Housing Development Agency ("THDA") to be used as a part of a
         demonstration project involving the syndication of certain CNE
         properties as low-income rental properties qualifying for the
         advantages of low-income housing tax credits pursuant to the
         provisions of the Internal Revenue Code; and
              	   WHEREAS, the City of Chattanooga has approved loans to 

         CNE of Rental Rehabilitation Program funds which were used to
         improve certain of the rental properties (the description of
         which and the loan amounts applied are as shown by the Deeds of 

         Trust attached hereto as Exhibit A), which loans are forgivable 

         over their 10-year maturity providing that the conditions of 
the
         loans are met and the properties used for residential purposes; 

         and
              	   WHEREAS, CNE has caused an appropriate syndication
         structure to be formed which established CNE Affordable Housing 

         Limited Partnership as the vehicle to properly utilize the
         advantages of the low-income housing tax credit allocation with 

         Chattanooga Affordable Rental Enterprise, Inc. as its General
         Partner (the shareholders of which are CNE and Inner-City
         Development Corporation, both local housing oriented nonprofit
         Section 501(c)(3) corporations); and
              	   WHEREAS, the tax credit syndication structure should
         allow the leveraging of new sources of funds not otherwise
         available for the development of the project as rental units 
for
         persons of limited resources, and therefore, should result in a 

         lower average monthly rental rates and the recycling of
         resources over a shorter time period allowing expansion of this 

         and similar programs for our citizens of more limited means; 
and
              	   WHEREAS, the syndication structure requires the
         transfer of the properties described in Exhibit A from CNE to
         CNE Affordable Housing Limited Partnership for a minimum of 18
         years to be dedicated for rental by our qualifying citizens of
         limited means; and
              	   WHEREAS, such transfer requires the approval of the
         City of Chattanooga as lender of the Rental Rehabilitation
         Program funds and the same approval to subordinate the security 

         interest of the City of Chattanooga evidenced by the attached
         Deeds of Trust to the security interest of the prime lender for 

         the syndication;
                                 NOW, THEREFORE,
              	   BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
         CHATTANOOGA, TENNESSEE, as follows:
              	   (1)	That the transfer from Chattanooga Neighborhood
         Enterprise, Inc. to CNE Affordable Housing Limited Partnership
         of the properties described in the Deeds of Trust attached to
         this Resolution as Exhibit A be and the same is hereby 
approved;
         and
              	   (2)	That the security interest of the City of
         Chattanooga evidenced by the Deeds of Trust attached to this
         Resolution as Exhibit A may be subordinated for the purposes of 

         this project to the security interest of the prime lender for
         the project, and the subordination thereof for the purposes of
         this project is hereby expressly approved, and by this
         Resolution the City of Chattanooga hereby waives its option to
         declare the amounts owing on the Rental Rehabilitation Program
         promissory notes due and payable because of the transfer and
         actions herein described and expressly approved; and
              	   (3)	That the Mayor of the City of Chattanooga, be and
         hereby is authorized to execute such documents on behalf of the 

         City as are necessary and appropriate to accomplish the 
purposes
         of this Resolution.
        
        
         ADOPTED:  April 2, 1991