The Church is meeting this Sunday after worship is an officially called congregational meeting for the purpose of receiving and approving the Resolution that is set forth below at the end of this article.
This meeting is important: The church is giving its final permission for the partnership between Old First (our church), Community Ventures for the construction of Old First House. That new building will be used, in an ongoing partnership between the church, Community Ventures and DePaul USA, to provide residences for 34 formerly chronically homeless people — efficiency apartments with a kitchenette and bathroom — along with offices for adminstrative staff and support services; office and program space for the church; and retail space on the corner of 4th and Race.
The Resolution that the congregation is being asked to approve refers to 6 documents: 2 self-standing documents; 1 document with 1 ancillary document; and 2 documents that work as a pair. Most of this is fairly simple and straight forward.
Our attorney for the project, George A. Nagle, of Nagle Law LLC in Radnor, PA, has reviewed all these documents for the church and written the Resolution. Working with the attorneys from Community Ventures, TD Bank (the prime lender as purchaser of the tax credits) and the Philadelphia Housing Development Corporation, all of these documents have been carefully — meticulously! — drafted to meet each organization’s needs and all legal requirements.
Each of the documents is available in its totality: simply click on the hot-linked TITLE of documents 1-6. We have tried to supply simple summaries in lay folks’ terms so everyone can understand each document:
1) Ground Lease (document not recorded): This is the legal instrument whereby Old First Church leases the land on the 4th Street side of our property to Old First House LP (the limited partnership Community Ventures has created for the building), for 99 years. This reflects our long term commitment to the use of this space for housing those in need.
As holders of the land lease, Old First retains the right to object to any uses of the property. Per the restrictions of the federal tax credit program, the church cannot withdraw from this land lease for the first 15 years. The church retains the ownership of the land under the new building as well as sole control of the remainder of our property.
2) Memorandum of Lease (document that gets recorded) : This is simply the document that is used to record the lease, # 1 above.
3) Church Space Lease : This is the legal instrument whereby Old First House LP will be leasing the church its space in the new building.
Our space will include:
~ the new meeting room,
~ the 1st Floor office space: the 1st floor “front room” of the Fox Building as well as 1st Floor new construction that provides bathrooms, a kitchenette and a pastor’s office;
~ the 2nd and 3rd Floor “front rooms” of the Fox Building will also be church space.
The total church space is approximately 2200 square feet. Our rental price will be $1 per year.
The length of the lease is 29 years, because that is how long a lease can be without being taxed. The length of all the soft loans from “public lenders” for this project is 42 years. At that point, it is presumed, the building would need reinvestment. The financing of that reinvestment and terms of relationship for our continued partnership in providing low cost housing would need to be renegotiated. There is, however, no fear that at 29 years, Old First House LP might refuse to renew the church’s lease; remember, in the Ground Lease, the church has the right to veto any use of the building not already agreed to under the terms of the Ground Lease.
4) and 5) “Leasehold Mortgage” (document that gets recorded) AND “Mortgage” Note (document not recorded): The Leasehold Mortgage and the Mortgage Note go hand in hand.
Our earlier plan was to lease the land to Old First House LP for a nominal fee, like $1 a year. However, that arrangement would not work for financing and tax purposes. In this plan, the church becomes an explicit funder in the project.
Essentially, the church is lending Old First House LP the money to pay for the ground lease. In exchange, Old First House LP gives the church a mortgage on their leasehold interest, due in a balloon payment in 42 years.
This arrangement benefits the church by providing rights as lender in addition to our rights as landowner with regard to how the property is used. Being both landowner and lender assures the church a strong position when refinancing and renegotiation are on the table in 42 years.
6) Philadelphia Housing Development Corporation Declaration: As a condition of Old First House LP receiving funding in the form of long term loans through the City of Philadelphia for the provision of affordable housing, both Old First House LP and the church, as the owner of the property, need to sign the PHDC Declaration that stipulates the income levels and rent rates (items 1., 2. and 3. on the 2nd and 3rd pages of the document) as well as standing housing non-discrimination clauses for the 34 apartments through the 40 year term of these loans.
FULL TEXT OF THE RESOLUTION THE CHURCH IS BEING ASKED TO APPROVE ON SUNDAY, APRIL 30, 2023
RESOLUTIONS OF THE CONGREGATION OF THE MINISTER, TRUSTEES, ELDERS AND DEACONS OF THE GERMAN REFORMED
CONGREGATION IN THE CITY OF PHILADELPHIA IN THE PROVINCE OF PENNSYLVANIA
Dated as of: April ______, 2023
WHEREAS, Minister, Trustees, Elders and Deacons of the German Reformed
Congregation in the City of Philadelphia in the Province of Pennsylvania (the “Church”), is a
congregation of the United Church of Christ; and
WHEREAS, the Church is the fee owner of that certain parcel of land and the
improvements thereon known as 322-340 Race Street, Philadelphia, Pennsylvania (the
“Property”); and
WHEREAS, in furtherance of its exempt purpose, and its continued mission to provide
shelter to homeless and displaced individuals in the City of Philadelphia, the Church approached Community Ventures, which then created Old First House LP, a Pennsylvania limited partnership (the “Tenant”) to act on the plans to develop 34 units of permanent rental housing for low-income households,
retail, office and program space to be called “Old First House” (the “Project”); and
WHEREAS, on November 30, 2022, the Pennsylvania Housing Finance Agency, a public
corporation and government instrumentality (“PHFA”) issued a reservation of 2022 Low-Income
Tax Credits in the amount of One Million Two Hundred Forty-Seven Thousand Five Hundred
Fifty-three Dollars ($1,247,553) per annum for 10 years for the Project; and
WHEREAS, the Tenant desires to lease a portion of the Property (the “Leased Premises”)
for a period of 99 years to erect a mid-rise building (the “Building”) for the primary purpose of
providing rental housing for low-income persons in furtherance of the Project, pursuant to the
terms of that certain Ground Lease by and between the Church and the Tenant (the “Ground
Lease”); and
WHEREAS, pursuant to the terms of the Ground Lease, the Tenant shall make a payment
of deferred rent to the Church reflecting the value of the leasehold interest in the principal
amount of $1,867,809, such payment to be in the form of a Mortgage Note (the “Mortgage
Note”), the principal and interest of which shall generally be due and payable forty-two (42)
years from the effective date of the Mortgage Note, unless such payments become due and
payable earlier pursuant to the terms of the Mortgage Note; and
WHEREAS, the Mortgage Note is secured by that certain Leasehold Mortgage to be
executed by the Tenant for the benefit of the Church (the “Leasehold Mortgage”), and in
connection with the Leasehold Mortgage, the Church will be required to execute certain ancillary
documents including, but not limited to, an Intercreditor Agreement, Agreement to Subordinate
to Rental Assistance Demonstration Use Agreement, certain estoppel certificates and
memorandums of lease and other documents (such ancillary documents, the Mortgage Note and
the Leasehold Mortgage are collectively referred to herein as the “Mortgage Documents”); and
WHEREAS, the Project will contain 2,214 square feet of commercial space to be used for
church office and program space (the “Commercial Space”) which space will be leased by the Tenant to the Church
for a twenty-nine (29) year term for a base rent of $1.00 pursuant to a certain Commercial Lease
to be executed on or about the time of completion of construction of the Project (the
“Commercial Lease”);
WHEREAS, as a condition precedent to participating in the Project, the Church will be
required to execute and deliver various organizational documents, loan documents, guaranties,
leases, indemnifications and other agreements, including, but not limited to all documents
required in connection with the Ground Lease, the Commercial Lease, the Mortgage Note, the
Leasehold Mortgage and the Mortgage Documents (collectively, the “Transaction Documents”);
and
WHEREAS, the Church will directly or indirectly benefit from entering into the
Transaction Documents; and
NOW, THEREFORE, BE IT RESOLVED, that the Church is hereby authorized and
empowered to negotiate, execute, deliver and perform under any documents or instruments
required of the Church, in connection with the foregoing and the Project, consummate all other
transactions described in or contemplated by the Project, and take any and all actions necessary
or appropriate to accomplish the foregoing; and it is
FURTHER RESOLVED, that the Church be and hereby is authorized and empowered to:
(i) enter into the Transaction Documents, (ii) negotiate, execute, deliver and perform the
Church’s obligations under any documents or instruments required in connection with the
Transaction Documents and the Project, (iii) consummate all other transactions described in or
contemplated by the Transaction Documents and (iv) take any and all actions necessary or
appropriate to accomplish the foregoing; and it is
FURTHER RESOLVED, that (i) each of Joanna Robinson and Kathy Sykes, as co-
Moderators, are hereby individually authorized to execute and deliver any and all Transaction
Documents on behalf of the Church and (ii) each of Joanna Robinson and Kathy Sykes, as co-
Moderators, are hereby individually authorized and directed for the Church to take, or cause to
be taken, all such further action and to execute and deliver any Transaction Documents as they
shall in their sole discretion approve, such approval to be conclusively evidenced by their
execution thereof, in order to effectuate the aforesaid resolutions, the Transaction Documents
and any and all transactions contemplated hereby and thereby; and it is
FURTHER RESOLVED, that any and all actions already taken by the Church, any
officers or other authorized signatories thereof on behalf of the Church in connection with or
relating to the subject matter of the foregoing resolutions, are hereby approved and ratified in all
respects; and it is
FURTHER RESOLVED, that these resolutions are to be interpreted in the broadest
possible manner so as to facilitate the consummation of the transactions contemplated hereby.
