(20 ILCS 3805/8.1)
(from Ch. 67 1/2, par. 308.1)
With respect to mortgage loans for developments financed by
the issuance of the Authority's bonds and notes and not covered under the
Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12
U.S.C. 4101 et seq.) created by Title VI of the Cranston-Gonzalez National
Affordable Housing Act, the owner may not make, and the Authority may not
accept, a prepayment of the mortgage loan except in accordance with the
provisions of this Section.
(a) For those developments covered under this Section, the owner may
make, and the Authority may accept, a prepayment of the mortgage loan if
the owner enters into an agreement with the Authority to extend to the full
term of the mortgage loan the affordability restrictions on those units
affordable to low income persons and families or create a comparable number
of new units of housing affordable for low income persons and families. As
used in this Section, "affordability restrictions" means limits imposed by
a federal or Authority regulation, regulatory agreement or rent subsidy
contract on tenant rents, rent contributions, or income eligibility for the
development so as to require that the units be affordable to low income
persons and families.
(b) If the owner does not enter into the agreement described in
subsection (a), prior to the owner making and the Authority accepting
prepayment of the mortgage loan on those developments covered by this
Section the owner shall provide notice to the tenants of the development of
the owner's intent to prepay the mortgage loan and the tenants' rights
under this Section. The notice shall be in a form approved by the
Authority and shall be delivered at least 9 months prior to the date the
owner intends to prepay the mortgage loan.
(c) If the owner does not enter into the agreement described in
subsection (a) and intends to cause the prepayment of the mortgage loan,
the tenants shall have the first right to purchase the development as follows:
(1) The tenants shall, within 60 days after the date
of the owner's notice under subsection (b), notify the owner in writing that the tenants have formed a tenant association and shall designate the name of its representative. As used in this Section, "tenant association" means an association, corporation or other organization that represents at least a majority of the tenants in the development.
(2) After receiving notice from the tenants under
paragraph (1) of this subsection (c), the owners shall provide a bona fide offer for sale of the development to the tenant association which contains the essential terms of the sale, including, at a minimum, the following: the sale price; the terms of seller financing, if any, including the amount, the interest rate, and amortization rate; the terms of assumable financing, if any, including the amount, the interest rate, and the amortization rate; and the proposed improvements, if any, to the property to be made by the owner in connection with the sale. The bona fide offer for sale shall also state that within 30 days after its receipt, the tenant association shall notify the owner, in writing, of its intent to purchase the development, which notice shall not create any legal obligation other than under this Section. By this notice the tenant association may designate a not-for-profit corporation to act on its behalf to purchase the development.
(3) The tenant association or its designee shall,
within 90 days after delivery of the notice of intent to purchase under paragraph (2) of this subsection (c), deliver to the owner and the owner shall execute a purchase contract reflecting a sale price and terms agreed to by the parties or the sale price and terms determined as follows: If the owner and the tenant association or its designee are unable to agree to a sale price within the first 60 days of the 90 day period specified above, the sale price of the development shall be based upon its fair market value at its highest and best use minus any rehabilitation costs or other costs required to convert the development to that use, as determined by 2 independent appraisers qualified to perform multi-family housing appraisals. One appraiser shall be selected and paid by the owner and the other shall be selected and paid by the tenant association or its designee. If the appraisers fail to agree upon a fair market value, the owner and the tenant association or its designee shall either jointly select and pay a third appraiser whose appraisal shall be binding, or agree to take an average of the 2 appraisals. All appraisers shall be MAI certified. The determination of the sale price shall be completed within the 90 day period specified above.
(4) The tenant association or its designee shall
close on the sale of the development within 90 days after the date the parties sign the contract to purchase.
(d) The provisions of this Section shall not apply to any of the
following: a government taking by eminent domain or negotiated purchase; a
forced sale pursuant to a foreclosure; or a transfer by gift, devise or
operation of law.
(e) If the Authority determines, in its sole discretion, that the
tenants of the development failed to form a tenant association as defined
in this Section, or that the tenant association or its designee failed to
provide notice to the owner of the formation of a tenant association under
paragraph (1) of subsection (c), failed to provide notice to the owner of
its intent to purchase under paragraph (2) of subsection
(c), failed to provide a bona fide offer to purchase under paragraph (3) of
subsection (c), or failed to close on the development under paragraph (4) of
subsection (c), the owner may prepay the mortgage loan and the Authority
may accept the prepayment of the mortgage loan.
(f) The owner and the tenant association or its designee shall timely
forward a copy of all notices required under this Section to the Authority.
(Source: P.A. 87-578.)