TO:

Real Estate Investment Committee

DATE:

09/06/11

RE:

Madison Street Acquisition Summary Review and Update

Summary Information on 782-786 Madison Street Acquisition:
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From the REIC Meeting of June 10th, 2011o Potential $6MM acquisition of three contiguous buildings to be rehabbed by seller
to LEED standards and to consist of 12 3BR units and 6 2BR units.
o HFH-NYC plans to utilize part of a $5MM revolving line of credit facility from
Enterprise in addition to $3MM in NSP2 funds for this deal.
o Purchase agreement would call for a 60 day non-binding due diligence period
with 5% deposit to go hard after 60 days but not to be released until closing.
o Potential reputational risk to Habitat due to past legal troubles of Isaac Katz
(seller) and the Yeshiva that previously owned the properties.
o Karim moved to enter into a purchase agreement based on the following
conditions:
 Russ will perform research into any potential connections between Isaac
Katz and the Yeshiva.
 REIC will meet prior to the end of the 60 day due diligence period to
review due diligence findings.
 Contract will include an out clause regarding Isaac Katz remaining in
good legal standing with no pending investigations.
 HFH-NYC will engage an owner’s rep to monitor progress and quality of
construction.
 Russ to request title company conduct an exhaustive research of the
property.
o Motion was carried unanimously.
From the REIC Meeting of June 10th, 2011o 782-786 Madison Street- The Committee discussed the attached Katz Yeshiva
Information document. A vote was taken after the discussion to determine if the
Committee wanted to proceed with what was previously approved on June 6th,
2011. The vote passed with Peter Knitzer, Aileen Gribbin, Peter Murray and
Chris McGuinness in favor and Karim Hutson opposed.
o REIC requests staff bring the transaction back for a final vote at the end of the due
diligence period.
Steps taken since meeting of June 10, 2011 –
o Entered into Purchase Agreement August 4th, 2011 with 60 day non-binding due
diligence period.
o Real Estate Committee members Karim Hutson and Timothy Edwards toured the
property on August 19th, 2011 with Bill and Rachel.

 o Due diligence has been completed with the following results:
 Lead based paint, asbestos and above ground storage tanks were
identified. The seller is responsible for mitigating each of these items.
 Our outside counsel has confirmed there is no prior relationship between
the seller and the Yeshiva.
 Contract was reviewed and approved by Christine McGuinness. Contract
includes language seller must remain in good legal standing with no
pending investigations.
 OCV Architects has been retained to perform construction administration
and has been conducting weekly progress inspections of all work with a
Habitat for Humanity – NYC representative.
 Outside counsel has reviewed the title and there are no significant issues.
o Discussion of Enterprise Community Loan Fund, Inc. Line of Credit in the
context of the Madison project: Please note, the Finance Committee is meeting on
Sept. 7th to discuss the Enterprise Line of credit and we will discuss the results of
this meeting with the REIC on Sept. 12th.
REQUEST:

Based on the positive due diligence results, we are requesting
approval from the REIC to conclude the non-binding due
diligence period in order to accelerate the closing on Madison.
We are recommending closing on two of the Madison buildings
in December, 2011 in order to help us meet our 50% test goal
for NSP2 funds. By closing on these two buildings, we will be
able to spend $3.6 million of NSP2 funds. (See attached chart
for the current status of NSP2 spending.)