HomeMy WebLinkAboutRS01-Economic Development Agency
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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM: Gary Van Osdel
Executive Director
SUBJECT:
ORIGINAL
DATE: September 15,2000
Svnonsis of Previous Commission/Council/Committee Action(s):
Recommended Motion(s):
303 WEST THIRD STREET -
MODIFICATIONS TO FORM OF
CONTRACT FOR $1,840,000 LOAN
GUARANTEE ASSISTANCE UNDER
SECTION 108 OF THE HOUSING AND
CO~TYDEVELOPMENTACT
AND THE $344,000 ECONOMIC
DEVELOPMENT INITIATIVE GRANT
AGREEMENT IN SUPPORT OF 303
WEST THIRD STREET PROJECT
(Mavor and Common Council)
MOTION A: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING CERTAIN MODIFICATIONS TO MAYOR AND COMMON
COUNCIL RESOLUTION NO. 2000-249 AND AUTHORIZING THE EXECUTION BY THE
MAYOR OF ECONOMIC DEVELOPMENT GRANT AGREEMENT NO. B-93-ED-06-0539 AND
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING
AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED (303 WEST THIRD STREET
PROJECT)
(Motion(s) Continned to Next Pal!e...)
Contact Person(s): Gary Van Osdel
Project Area(s) Central City East
Phone:
663-1044
One (1)
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Source:
Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter/Memo
Ward(s):
FUNDING REQUIREMENTS Amount: $
Budget Authority:
SIGNATURE:
N/A
N/A
Commlsslon/Councll Notes:
GVO:lag:09-18-00 303 Third St
COMMISSION MEETING AGENDA
Meeting Date: 09/18/2000
Agenda Item Number: f(.5 /
REQUEST FOR COMMlSSION/COUNClL ACTlON
303 West Third Street
September 15,2000
Page Number -2-
Recommended Motion(s) Continued:
(Community Develooment Commission)
MOTION B: RESOLUTlON OF THE COMMUNlTY DEVELOPMENT COMMlSSlON OF THE
CITY OF SAN BERNARDINO APPROVING CERTAIN MODIFICATlONS TO
COMMON COUNCIL RESOLUTlON NO. 2000-27 AND COMMON COUNClL
RESOLUTlON NO. 2000-28 AND AUTHORIZING THE EXECUTlON BY THE
CHAIRPERSON OF THE OWNER PARTlCIPATlON AGREEMENT (303 THlRD
STREET PROJECT) BY AND BETWEEN 303 THIRD STREET, L.L.C., AND THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
GYO:lag:09-18-00 303 Third St
COMMISSION MEETING AGENDA
Meeting Date: 09/1812000
Agenda Item Number:
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
303 West Third Street
BACKGROUND
On Thursday, September 14, 2000, the staff of the Economic Development Agency received the
text of the EDl Grant Agreement and the HUD Section 108 Loan Contract for the 303 Third
Street Project from HUD staff in Washington, D.C. The form of these documents delivered by
HUD contemplate that the City shall be the "lender" in the Section 108 loan transaction with 303
L.L.C., in contrast to the Redevelopment Agency serving as the lender.
In light ofthe fact that the City must actually draw upon the $344,000.00 proceeds of the EDl
Grant by no later than September 29, 2000, time does not permit the Redevelopment Agency
staff to obtain a revised set of HUD Section 108 Loan Contract documents from Washington.
Accordingly, staff recommends that the Mayor and Common Council and the Community
Development Commission each adopt resolutions which authorize conforming changes in the
loan transaction documents with 303 L.L.c. as originally approved by the Mayor and Common
Council and the Commission on August 7, 2000. The resolutions as attached to this
memorandum accommodate the text of the "special condition" terms in the ED! Grant
Agreement and the HUD Section 108 Loan Contract as received by the City on September 14,
2000.
It is also noted that the terms of Paragraph 15(c) of the special conditions of the HUD Section
108 Loan Contract do not expressly authorize the necessary accommodations to the construction
and permanent lenders for the full costs of building rehabilitation work to be undertaken by 303
L.L.C. Accordingly, staff also requests authorization to seek a modification of the HUD special
conditions so as to permit a subordination of the security interest of the City in the 303 Third
Street Project to a construction, and later, a permanent lender in an amount not to exceed $8,
500,000. Agency staff is informed that the modification to Paragraph l5(c) of the HUD Section
108 Loan Contract can be approved after the initial disbursement of the proceeds of the ED!
Grant have been received by the City.
RECOMMENDATION
That the Mayor and Common Council and Community Development Commission adopt the
attached R lutions.
...---------------------------------------------------------------------------------------------------.-------------------------------.---
GYO:lag:09-18-00 303 Third St
COMMISSION MEETING AGENDA
Meeting Date: 09/1812000
Agenda Item Number:
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Item:
MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO
AGENDA
September 18, 2000
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO APPROVING CERTAIN
MODIFICATIONS TO MAYOR AND COMMON COUNCIL
RESOLUTION NO. 2000-249 AND AUTHORIZING THE
EXECUTION BY THE MAYOR OF ECONOMIC DEVELOPMENT
GRANT AGREEMENT NO. B-93-ED-06-0539 AND CONTRACT
FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108
OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF
1974, AS AMENDED (303 WEST THIRD STREET PROJECT)
Authorizing modification of Mayor and Common
Council Resolution No.. 2000-249 and authorizing
execution of a contract for loan guarantee
assistance under Section 108 of the Housing and
Community Development Act of 1974, as amended, 42
U.S.C. Section S308 (CDBG Section 108 Contract
No. B-94-MC-06-0S39-A) and an Economic
Development Grant Agreement No. B-93-ED-06-0539
for the 303 [West] Third Street Project (Central
City Redevelopment Project)
18 Certified copy of Resolution to be returned to Sabo & Green.
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Action to be
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RESOLUTION NO.
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING CERTAIN MODIFICATIONS TO
3 MAYOR AND COMMON COUNCIL RESOLUTION NO. 2000-249 AND
AUTHORIZING THE EXECUTION BY THE MAYOR OF ECONOMIC
4 DEVELOPMENT GRANT AGREEMENT NO. B-93-ED-06-0539 AND
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION
5 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF
1974, AS AMENDED (303 WEST THIRD STREET PROJECT)
6
7 WHEREAS, Mayor and Common Council of the City of San
8 Bernardino (the ~City") and the .Community Development Commission
9 of the City of San Bernardino (the ~Commission") as the governing
10 board of the Redevelopment Agency of the City of San Bernardino
11 (the ~Agency") have previously adopted the following resolutions:
12 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
13
14
SAN BERNARDINO, CALIFORNIA APPROVING THE CONTRACT FOR LOAN
GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND
15 COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C.
16 SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-94-MC-06-0539)
17
FOR THE 303 THIRD STREET PROJECT AND AUTHORIZING THE
18 APPLICATION OF UP TO $344,000 IN ECONOMIC DEVELOPMENT
19 INITIATIVE GRANT PROCEEDS BY THE REDEVELOPMENT AGENCY OF THE
20 CITY OF SAN BERNARDINO FOR THE 303 THIRD STREET PROJECT
22
21 (~City Resolution No. 2000-249");
23 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
24 CITY OF SAN BERNARDINO APPROVING THE TERMS OF AN OWNER
25 PARTICIPATION AGREEMENT (303 THIRD STREET PROJECT) BY AND
26
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BETWEEN 303, L.L.C., AND THE REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO AND APPROVING THE TERMS OF A 2000
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COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
2
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PROJECT DEVELOPMENT LOAN AGREEMENT (303 THIRD STREET
PROJECT) BY AND BETWEEN THE AGENCY AND 303, L.L.C., AND
4 AUTHORIZING CERTAIN OTHER ACTIONS RELATING TO THE
5 DISBURSEMENT OF THE PROCEEDS OF UP TO $344,000.00 IN EDI
6 GRANT/LOAN PROCEEDS AND UP TO $1,840,000.000 IN SECTION 108
7 LOAN PROCEEDS BY THE AGENCY TO 303, L.L.C. (303 THIRD STREET
8 PROJECT) (~Commission Resolution No. 2000-27");
9
10 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
11 CITY OF SAN BERNARDINO APPROVING THE CONTRACT FOR LOAN
12 GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND
13
14
URBAN DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION
5308 (CDBG SECTION 108 CONTRACT NO. B-94-MC-06-0539) FOR THE
15 303 THIRD STREET PROJECT AND AGREEING TO ADMINISTER THE
16 APPLICATION OF UP TO $344,000.00 IN ECONOMIC DEVELOPMENT
17 INITIATIVE GRANT FUNDS TO 303, L.L.C., IN SUPPORT OF THE 303
18 THIRD STREET PROJECT (~Commission Resolution No. 2000-28");
19 and
20 WHEREAS, on September 14, 2000, the Secretary of the United
21 States Department of Housing and Urban Development (~HUD")
22 delivered the following instruments to the City in connection
23 with the 303 Third Street Project as previously approved by City
24 Resolution No. 2000-249 and Commission Resolution No. 2000-27 and
25 Commission Resolution No. 2000-28:
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(i) ~Contract for Loan Guarantee Assistance Under Section
108 of the Housing and Community Development Act of
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1974, As Amended (42 U.S.C. Section 5308) [HUD Grant
2
No. B-94-MC-06-5039-A] (the ~HUD Section 108 Loan
3 Agreement")"; and
4 (ii) ~EDI Grant Agreement [Grant No. B-93-ED-06-0539] (the
5 ~EDI Grant Agreement")"
6 WHEREAS, in order to authorize the Mayor to execute the HUD
7 Section 108 Loan Agreement and the EDI Grant Agreement on behalf
8 of the City in support of the 303 Third Street Project, it is
9 necessary to modify certain provisions of City Resolution No.
10 2000-249 and to acknowledge conforming changes by the Commission
11 to Commission Resolution No. 2000-27 and Commission Resolution
12 No. 2000-28, and to take the following actions as set forth in
13 this Resolution.
14
NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE
15 CITY OF SAN BERNARDINO, CALIFORNIA, DOES HEREBY RESOLVE,
16 DETERMINE AND ORDER AS FOLLOWS:
17
Section 1.
The text of City Resolution No. 2000-
18 249, the text of Commission Resolution No. 2000-27 and the text
19 of Commission Resolution No. 2000-28 are hereby incorporated by
20 this reference into this Resolution of the Mayor and Common
21 Council. Unless the specific context of usage of a particular
22 defined term as used in this Resolution may otherwise require,
23 the meaning of defined terms and phrases as set forth in City
24 Resolution No. 2000-249 shall apply to this Resolution.
25
Section 2.
The Common Council hereby acknowledges
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receipt from HUD as of September 14, 2000, of the HUD Section 108
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Loan Agreement and the EDI Grant Agreement for the 303 Third
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Street Project. The HUD Section 108 Loan Agreement and the EDI
2 Grant Agreement are on file with the City Clerk and the Agency
3 Secretary.
4
Section 3.
The Common Council hereby approves the
5 HUD Section 108 Loan Agreement as received at the meeting at
6 which this Resolution is adopted, and the Mayor and Common
7 Council are hereby authorized and directed to execute the HUD
8 Section 108 Loan Agreement on behalf of the City as the
9
~Borrower" under the HUD Section 108 Loan Agreement.
The
10 provisions of Section 3 and Section 4 of the City Resolution No.
11 2000-249 are hereby modified so as to conform to the approval and
12 authorizations set forth in the first sentence of this Section 3.
13
Accordingly, all other related instruments referenced in Section
14
3 and Section 4 of City Resolution No. 2000-249 and Commission
15 Resolution No. 2000-27 shall be executed by the Mayor on behalf
16 of the City as the Borrower under the HUD Section 108 Loan
l7 Agreement.
18 Section 4. The Common Council hereby approves the
19 EDI Grant Agreement as received at the meeting at which this
20 Resolution is adopted, and the Mayor and City Clerk are hereby
21 authorized and directed to execute the EDI Grant Agreement on
22 behalf of the City. The provisions of Section 3 and Section 4 of
23 City Resolution No. 2000-249 are hereby modified so as to conform
24 to the approval and authorizations set forth in the first
25 sentence of this Section 4.
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Section 5.
Section 5 of City Resolution No. 2000-
27
249 is
hereby modified to conform to the approval of the HUD
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Section 108 Loan Agreement with the City as the Borrower under
2 said transaction as set forth in Section 3 of this Resolution.
3
Section 6.
Section 6 of City Council Resolution No.
4 2000-249 is hereby modified to conform to the approval of the HUD
5 Section 108 Loan Agreement with the City as the Borrower under
6 said transaction.
7
Section 7.
The Common Council hereby authorizes and
8 directs the Mayor and the City Clerk to execute the Agency
9 Section 108 Loan Agreement as the ~lender" in the form as
10 originally approved by Section 2(b) of Commission Resolution No.
11 2000-28 by and between 303 L.L.C., a California limited liability
12
company (the ~Owner") and the Agency.
Accordingly, the
13
provisions of Section 2 (b), and Section 3 through Section 5
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inclusive of Commission Resolution No. 2000-28 are hereby
l5 modified so as to substitute the City in place of the Agency as
16 the lender in the transaction contemplated under the Agency
17 Section 108 Loan Agreement. The Common Council hereby approved
l8 technical and conforming changes to the text of the Agency
19 Section 108 Loan Agreement and related documents so as to conform
20 to the City as the lender under said transaction.
21
Subject to the adoption of an approving
Section 8.
22 resolution of the Commission as relates to the terms and
23 conditions of the Owner Participation and Economic Development
24 Initiative Loan Agreement (the ~OPA") by and between the Owner
25 and the Agency, which shall govern the administration of the
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proceeds of the EDI Grant in support of the 303 Third Street
Project (also referred to as the ~303 West Third Street Project"
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in the EDI Grant Agreement), the Common Council hereby authorizes
2 and directs the Executive Director of the Economic Development
3 Agency to transfer the proceeds of the EDI Grant to First
4 American Title Insurance Company Escrow No. AD-AM 289 with
5 appropriate written instructions to the escrow holder (First
6 American Title Company--Escrow Department) for final disbursement
7 for the account and credit of the Owner under the OPA at such
8 time as all of the related conditions for the close of the
9 pending real estate transfer by and between the State of
10 California and the Owner and the loan disbursement escrow
II established under Section 7.0 of the Section 108 Loan Agreement
12 have been satisfied. Upon maturity of the EDI Loan, the Agency
13
shall promptly remit the proceeds of such loan under the OPA to
14
the City for the credit and account of the City CDBG Program.
15
Section 9.
The Executive Director of the Economic
l6 Development Agency is hereby authorized and directed to request
17 that HUD approve a modification to Paragraph 15(c) of the HUD
18 Section 108 Loan Agreement in order to accommodate the senior
19 security interest of a construction lender and later, a permanent
20 lender in an original principal amount not to exceed $8,500,000,
21 subject to the terms and conditions as set forth in the text of
22 Section 14.0 and Section 15.0 of the Agency [now City] Section
23 108 Loan Agreement.
24
Section 10.
Except to the extent as modified in this
25 Resolution all other provisions of City Resolution No. 2000-249
26
shall remain in full force and effect.
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1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING CERTAIN MODIFICATIONS TO MAYOR AND COMMON
2 COUNCIL RESOLUTION NO. 2000-249 AND AUTHORIZING THE EXECUTION BY
THE MAYOR OF ECONOMIC DEVELOPMENT GRANT AGREEMENT NO. B-93-ED-06-
3 0539 AND CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108
OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED
4 (303 WEST THIRD STREET PROJECT)
5
Section 11.
This Resolution shall take effect upon
6 the date of its adoption.
7 I HEREBY CERTIFY that the foregoing Resolution was duly
8 adopted by the Mayor and Common Council of the City of
9 San Bernardino at a
meeting thereof, held
10 on the
day of
, 2000, by the following vote, to
11 wit:
12
13 Council:
ESTRADA
14 LIEN
MCGINNIS
15 SCHNETZ
SUAREZ
16 ANDERSON
McCAMMACK
~
HAi:S.
ABSTAIN ABSENT
17
18
City Clerk
19
20 day of
21
22
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The foregoing resolution is hereby approved this
, 2000.
Judith Valles, Mayor
City of San Bernardino
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content:
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STATE OF CALIFORNIA
COUNTY OF SAN BERNARDINO
CITY OF SAN BERNARDINO
ss
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I, City Clerk of the City of
4 San Bernardino, DO HEREBY CERTIFY that the foregoing and attached
copy of Mayor and Common Council of the City of San Bernardino
5 Resolution No. is a full, true and correct copy of that
now on file in this office.
6
7
affixed
City of
IN WITNESS WHEREOF, I
the official seal of the
San Bernardino this
have hereunto set my hand
Mayor and Common Council of
day of , 2000.
and
the
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City Clerk
City of San Bernardino
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COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO
AGENDA
September 18, 2000
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING CERTAIN
MODIFICATIONS TO COMMON COUNCIL RESOLUTION NO. 2000-27
AND COMMON COUNCIL RESOLUTION NO. 2000-28 AND
AUTHORIZING THE EXECUTION BY THE CHAIRPERSON OF THE
OWNER PARTICIPATION AGREEMENT (303 THIRD STREET
PROJECT) BY AND BETWEEN 303 THIRD STREET, L.L.C., AND
THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
Authorizing modification of Commission Resolution No.
2000-27 and Commission Resolution No. 2000-28 and
authorize the actions necessary to loan the proceeds
of the $344,000 Economic Development Initiative Grant
to 303, L.L.C., under the Owner Participation
Agreement for the 303 Third Street Project
13 A certified copy of this
returned to Sabo & Green.
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Resolution and executed documents to be
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RESOLUTION NO.
3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF SAN BERNARDINO APPROVING CERTAIN MODIFICATIONS TO
4 COMMON COUNCIL RESOLUTION NO. 2000-27 AND COMMON COUNCIL
RESOLUTION NO. 2000-28 AND AUTHORIZING THE EXECUTION BY THE
5 CHAIRPERSON OF THE OWNER PARTICIPATION AGREEMENT (303 THIRD
STREET PROJECT) BY AND BETWEEN 303 THIRD STREET, L.L.C.,
6 AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
7
8
WHEREAS, Mayor and Common Council of the City of San
9 Bernardino (the ~City") and the Community Development Commission of
10 the City of San Bernardino (the ~Commission") as the governing board
11 of the Redevelopment Agency of the City of San Bernardino (the
12 "Agency") have previously adopted the following resolutions:
13
14
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
15 BERNARDINO, CALIFORNIA APPROVING THE CONTRACT FOR LOAN GUARANTEE
16 ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY
17 DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. SECTION 5308
18 (CDBG SECTION 108 CONTRACT NO. B-94-MC-06-0539) FOR THE 303
19 THIRD STREET PROJECT AND AUTHORIZING THE APPLICATION OF UP TO
20 $344,000 IN ECONOMIC DEVELOPMENT INITIATIVE GRANT PROCEEDS BY
21 THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FOR THE
22 303 THIRD STREET PROJECT (~City Resolution No. 2000-249");
23
24 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY
2S OF SAN BERNARDINO APPROVING THE TERMS OF AN OWNER PARTICIPATION
26 AGREEMENT (303 THIRD STREET PROJECT) BY AND BETWEEN 303, L.L.C.,
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AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND
2 APPROVING THE TERMS OF A 2000 COMMUNITY DEVELOPMENT BLOCK GRANT
3 PROGRAM SECTION 108 PROJECT DEVELOPMENT LOAN AGREEMENT (303
4 THIRD STREET PROJECT) BY AND BETWEEN THE AGENCY AND 303, L.L.C.,
5 AND AUTHORIZING CERTAIN OTHER ACTIONS RELATING TO THE
6 DISBURSEMENT OF THE PROCEEDS OF UP TO $344,000.00 IN EDI
7 GRANT/LOAN PROCEEDS AND UP TO $1,840,000.000 IN SECTION 108 LOAN
8 PROCEEDS BY THE AGENCY TO 303, L.L.C. (303 THIRD STREET PROJECT)
9 (~Commission Resolution No. 2000-27");
10
11 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY
12 OF SAN BERNARDINO APPROVING THE CONTRACT FOR LOAN GUARANTEE
13 ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND URBAN
14
DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION 5308 (CDBG
15 SECTION 108 CONTRACT NO. B-94-MC-06-0539) FOR THE 303 THIRD
16 STREET PROJECT AND AGREEING TO ADMINISTER THE APPLICATION OF UP
17 TO $344,000.00 IN ECONOMIC DEVELOPMENT INITIATIVE GRANT FUNDS TO
18 303, L.L.C., IN SUPPORT OF THE 303 THIRD STREET PROJECT
19 (~Commission Resolution No. 2000-28"); and
20
21 WHEREAS, on September 14, 2000, the Secretary of the United
22 States Department of Housing and Urban Development (~HUD") delivered
23 the following instruments to the City in connection with the 303 Third
24 Street Project as previously approved by City Resolution No. 2000-249
25 and Commission Resolution No. 2000-27 and Commission Resolution No.
26 2000-28:
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(i) ~Contract for Loan Guarantee Assistance Under Section 108
of the Housing and Community Development Act of 1974, As
Amended (42 U.S.C. Section 5308) [HUD Grant No. B-94-MC-06-
5039-A] (the ~HUD Section 108 Loan Agreement")"; and
6 (ii) ~EDI Grant Agreement [Grant No. B-93-ED-06-0539] (the ~EDI
7 Grant Agreement")"
8
9 WHEREAS, in order to authorize the Chairperson of the Commission
10 to execute the Owner Participation and Economic Development Initiative
11 Loan Agreement on behalf of the Commission in support of the 303 Third
12 Street Project, it is necessary to modify certain provisions of
13 Commission Resolution No. 2000-27 and Commission Resolution No. 2000-
C 14 28 and to acknowledge conforming changes by the Mayor and Common
15 Council to City Resolution No. 2000-249, and to take the following
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16 actions as set forth in this Resolution.
17
18
NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
19 CITY OF SAN BERNARDINO, CALIFORNIA, DOES HEREBY RESOLVE, DETERMINE AND
20 ORDER AS FOLLOWS:
21
22
Section 1.
The text of City Resolution No. 2000-249, the
23 text of Commission Resolution No. 2000-27 and the text of Commission
24 Resolution No. 2000-28 are hereby incorporated by this reference into
25 this Resolution of the Commission. Unless the specific context of
26 usage of a particular defined term as used in this Resolution may
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c:; 1 otherwise require, the meaning of defined terms and phrases as set
2 forth in City Resolution No. 2000-249 shall apply to this Resolution.
3
4
Section 2.
The Commission hereby acknowledges receipt
5 from HUD as of September 14, 2000, of the HUD Section 108 Loan
6 Agreement and the EDI Grant Agreement for the 303 Third Street
7 proj ect.
The HUD Section 108 Loan Agreement and the EDI Grant
8 Agreement are on file with the City Clerk and the Agency Secretary.
9
10
Section 3.
The Commission hereby acknowledges receipt
11 from the Common Council of its Resolution dated September 18, 2000,
12 entitled:
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~RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
15 BERNARDINO APPROVING CERTAIN MODIFICATIONS TO MAYOR AND COMMON
16 COUNCIL RESOLUTION NO. 2000-249 AND AUTHORIZING THE EXECUTION BY
17 THE MAYOR OF ECONOMIC DEVELOPMENT GRANT AGREEMENT NO. B-93-ED-
18 06-0539 AND CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION
19 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS
20 AMENDED (303 WEST THIRD STREET PROJECT)".
21
22 The Commission hereby concurs and accepts the modifications to
23 Commission Resolution No. 2000-27 and Commission Resolution No. 2000-
24 28 as set forth in the September 18, 2000, Resolution of the Common
25 Council, as referenced above.
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Section 4.
The Commission hereby approves the OPA in the
2 form as submitted to the Commission at the meeting at which this
3 Resolution is adopted.
The Chairperson of the Commission and the
4 Agency Secretary are hereby authorized and directed, to execute the
5 OPA on behalf of the Agency, together with technical and conforming
6 changes to the text of the OPA and each of the attachments and
7 exhibits thereto as may be recommended by the Executive Director and
8 Agency Special Counsel in order to conform the provisions of the OPA
9 to the special conditions of the HUD Section 108 Loan Agreement and
10 the EDI Grant, as applicable, as delivered to the City as of September
11 14, 2000. The Executive Director is hereby authorized and directed
12 to transfer the sum of $344,000.00, as drawn by the City under the EDI
13 Grant Agreement to the property transfer escrow account established
C 14 by the State of California and 303 L. L. C., identified as First
15 American Title Escrow No. AD AM 289, at the earliest feasible time.
c
16 The escrow by and between the State of California and 303 L.L.C. shall
17 close upon satisfaction of each of the conditions described in Section
18 7.0 of the Section 108 Loan Agreement as approved by the Resolution
20 of the Commission.
19 of the Common Council as referenced in Section 3 of this Resolution
21
22
Section 5.
Except to the extent as modified in this
23 Resolution all other provisions of Commission Resolution No. 2000-27
24 and Commission Resolution No. 2000-28 shall remain in full force and
25 effect.
26
27
28
SBEO/0001/DOC/4175
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5
c
1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN
BERNARDINO APPROVING CERTAIN MODIFICATIONS TO COMMON COUNCIL
2 RESOLUTION NO. 2000-27 AND COMMON COUNCIL RESOLUTION NO. 2000-28 AND
AUTHORIZING THE EXECUTION BY THE CHAIRPERSON OF THE OWNER
3 PARTICIPATION AGREEMENT (303 THIRD STREET PROJECT) BY AND BETWEEN 303
THIRD STREET, L.L.C., AND THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
4 BERNARDINO
5
Section 6.
This Resolution shall take effect upon the
6 date of its adoption.
7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted
8 by the Community Development Commission of the City of San Bernardino
9 at a
meeting thereof, held on the
, 2000, by the following vote, to wit:
day
10 of
11 Commission
ESTRADA
12 LIEN
MCGINNIS
13 SCHNETZ
C SUAREZ
14 ANDERSON
McCAMMACK
15
16
~
NA:iS.
ABSTAIN ABSENT
17
Secretary
The foregoing Resolution is hereby approved this
, 2000.
day
18 of
19
20
21
Judith Valles, Chairperson
Community Development Commission
of the City of San Bernardino
22 Approved as to form
and legal content:
23 By: ~. ~~ ~V"~.QG.I\JI..- U..f
24 Agency Special Counsel \
25
26
C 27
28
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6
1 STATE OF CALIFORNIA
COUNTY OF SAN BERNARDINO ss
2 CITY OF SAN BERNARDINO
3 I, Secretary of the Community
Development Commission of the City of San Bernardino, DO HEREBY
4 CERTIFY that the foregoing and attached copy of Community Development
Commission of the City of San Bernardino Resolution No. is
5 a full, true and correct copy of that now on file in this office.
6 IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official seal of the Community Development Commission of the City
7 of San Bernardino this day of , 2000.
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Secretary of the
Community Development Commission
of the City of San Bernardino
SBEO/0001/DOC/4175
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7
..,oatiNr~
./'11....
. .
~ * * GO
. .
\ $
c.........OE>lt..F
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, C.C. 20410-7000
OFFICE OF THE ASSISTANT SECRETARY FOR
~Pl..ANNI<<i AND DEVElOPMENT
S ;:_. ?, "non
_ J ',;, I.'
Honorable Judith Valles
Mayor of San Bernardino
300 North "D" Street, 6th Floor
San Bernardino, CA 90a02
Dear Mayor Valles:
On May S, 1995, the Department of Housing and Urban
Development (HUD) approved for the City of San Bernardino a
Section loa loan guarantee commitment in the amount of
$2,29S,000 (B-94-MC-06-0S39-A) to assist with the 40th
Street Shopping Center Project. The City also received an
Economic Development Initiative (EDI) grant for $344,000.
The project was to include a 41,000 square foot supermarket,
an adjoining drug store and ancillary retail space to create
jobs for low- and moderate-income individuals.
The City has requested an amendment to its application
by reducing the commitment to $1,840,000 and using the EDI
grant of $344,000 for the 303 West Third Street Office
Building project. The project will involve the acquisition,
remediation, rehabilitation and improvements of the building
and parking area.
The Department has determined that such activities are
eligible under 24 CFR !lS70. 703 (i) (1), "Activities eligible
under Section S70.203." The activity will meet the national
objective of benefiting low and moderate persons through the
creation or retention of jobs as defined under 24 CFR
!l570.208(a) (4). As such, HUD hereby approves the City's
amendment to the Section 108 commitment B-94-MC-06-0539-A
and the EDI grant B-93-ED-06-0539.
The original loan guarantee Funding Approval (form HUD-
70a2) was subject to four special conditions (a. (a) - (d)).
Except as specified in the following sentence, the use of
guaranteed loan funds for the activity approved pursuant to
2
this amendment is still subject to special conditions 8. (a)
- (d). Special condition 8. (a) is modified by the new
deadline of submission of notes or other obligations for
HUD's guarantee to September 30, 2001. The amendment to the
City's application and other supporting material identified
the additional security for this Commitment is: an "A"
rated irrevocable letter of credit for $SOO,OOO; first
trust deeds on the building and parking lot properties
estimated at $1,67S,000; and personal guarantees of the
principals of 303 LLC. A copy of the special conditions is
enclosed.
Please be advised that the City must comply with all of
the requirements of the HUD Environmental Review Procedures
(24 CFR Part 58) for the project to be carried out with the
guaranteed loan funds. In this regard, a request for
release of funds must be approved by HUD prior to the
obligation or utilization of funds for the project.
If you have any questions regarding this letter, please
contact with Nelson R. Breg6n, Director, Office of Economic
Development and Empowerment Service, at (202) 708-1686.
Very sincerely yours,
Y)Jh" ~. t::s..cj~
}"Jeff Ruster
Deputy Assistant Secretary
for Economic Development
Enclosure
~"'II.'"'"''''
. .
. .
:l. * "
. .
. .
0(;.'9 it'"
05''''' OE~E"O
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON. D.C. 20410-7000
OFFICE OF THE ASSISTANT SECRETARY FOR
COMMUNITY PLANNING AND DEVELOPMENT
SEP 1 3 2000
Mr. John Heoger
Project Manager
Economic Development Agency
City of San Bernardino
201 North E Street
San Bernardino, CA 92401
Dear Mr. Hoeger:
Enclosed are documents to be executed by the City of San
Bernardino, pursuant to a loan guarantee by HUD under Section 108
of the Housing and Community Development Act of 1974, as amended,
for the 303 West Third Street project. These documents are: (1)
a Variable/Fixed Rate Note (~Note"); and (2) two copies of the
Contract for Loan Guarantee Assistance under Section 108
(~Contractn); and (3) four copies of the related Economic
Development Initiative (EDI) Grant Agreement. Also enclosed for
your reference are the Amended and Restated Master Fiscal Agency
Agreement (~Fiscal Agency Agreement"), Trust Agreement and form
of Trust Supplement.
Your staff and counsel will note that the forms of Note,
Contract, and Fiscal Agency Agreement are new. In brief, the
changes in these documents are designed to replace the former
series of up to twenty separate notes used for Section 108
interim financing with one multiple maturity Note, which converts
to a fixed rate note on its ~Conversion Date" at a Section 108
public offering. The ~Commitment Schedule" to the Note
represents the agreed-upon repayment schedule referred to in the
Section 108 commitment (HUD-7082 and attached Special
Conditions), against which the City of San Bernardino requests
Advances when funds are needed to carry out the approved project.
Schedule P&I to the Note is intentionally not completed now; it
is filled out as of the Conversion Date based on the cumulative
amount of Advances per Principal Due Date that the Borrower has
received on or before such date. The method of calculating the
standard variable rate for interim financing, however, has not
changed.
In addition, there are many other changes in the documents
designed to make them clearer and easier to work with. If you,
your staff, or your counsel have any questions about these new
documents, please call the number listed at the end of this
letter, or your counsel may call one of the HUD attorneys listed
at the end of the instructions to the model legal opinion package
also enclosed.
2
The Note and Contracts should be signed, as appropriate, by
the City of San Bernardino. However, all dates (other than the
date under the signature line of the Contract) will be inserted
after the documents are returned to HUD. While the Fiscal Agency
Agreement Trust documents are enclosed for your reference, they
are not required to be returned to HUD.
Please return the executed Note and Contracts to:
U.S. Department of Housing and Urban Development
Attention: Paul D. Webster, Director
Financial Management Division
451 Seventh Street, SW - Room 7180
Washington, DC 20410
The City of San Bernardino's counsel should provide an
opinion (on letterhead stationery) as described in the model
opinion package, which includes instructions for preparation of
the opinion. Please note that the opinions should be addressed
to the Secretary of Housing and Urban Development. A separate
opinion to The Chase Manhattan Bank as Fiscal Agent is no longer
required.
The Note issued initially to the interim lender will
ultimately be sold on its Conversion Date in a public offering of
guaranteed obligations. At that time, the Borrower will be
required to pay a share of the costs of the public offering,
including the underwriters' discount, the Trustee's fee, and the
other costs of issuance.
Please include with the other documents a Request for an
Advance under the Note and the signature card (SF-1194). The
Request for an Advance should be a separate document, should
request increments of not less than $1000 per Principal Due Date,
and should be countersigned by two officials whose signatures
appear on the SF-1194. We are enclosing two copies of the SF-
1194 and a sample Request for an Advance for your use.
Please note that a $70.00 fee will be deducted from the
total amount of each Advance by the Fiscal Agent. In addition,
if the City of San Bernardino remains in the interim financing
facility after a public offering, it will be required to pay an
Administration Fee of $100 per quarter to the Fiscal Agent, which
will be billed together with the quarterly interest payments.
3
If you have any questions about this transaction, please
contact Paul Webster at (202) 708-1871 or Kathleen Weddle at
(202) 708-0614 extension 3817.
Very sincerely yours,
r-)js~~. 'c:S~,~
Nelson R. Breg6n
Director
Office of Economic Development
and Empowerment Service
Enclosures
8. Special Conditions.
(a) In the event the Borrower fails to submit notes
or other obligations for inspection and guarantee by
the Secretary of the Department of Housing and Urban
Development (the Secretary) before October 1, 2001,
the offer will expire as of such date.
(b) The repayment schedule for the guaranteed loan
must be acceptable to the Secretary.
(c) The Borrower shall provide additional security
for the guaranteed loan and such additional security
must be acceptable to the Secretary. The additional
security shall be identified in the Contract for Loan
Guarantee Assistance specified by 24 CFR
~S70.705(b) (1) which will be executed at the time the
guaranteed obligations are issued.
(d) Prior to submitting notes or other obligations
for inspection and guarantee by the Secretary, the
Borrower shall submit information required under
Section 102(b) of the Department of Housing and Urban
Development Reform Act of 1989 (42 U.S.C. 3S31).
Such information shall be submitted to the HUD Los
Angeles Area Office.
Grant No. B-93-ED-06-0S39
EDI GRANT AGREEMENT
U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
This Agreement is made and entered into by and between THE
SECRETARY OF HOUSING AND URBAN DEVELOPMENT, acting by and through
the Assistant Secretary for Community Planning and Development,
("HUO"), and THE CITY OF SAN BERNARDINO. CALIFORNIA (the
"Recipient") .
1. Backaround: Purpose. This Agreement is authorized by
section 108(q) of the Housing and Community Development Act of
1974, as amended by section 232(a) of the Multifamily Housing
Property Disposition Reform Act of 1994, codified at 42 U.S.C.
S308(q) (collectively, "the Act"). Pursuant to the Act, on
August 16, 1994, at S9 FR 42066, HUD published a Notice of
Funding Availability and Program Guidelines for the Economic
Development Initiative (the "NOFA"), which set forth the terms
and conditions under which units of general local government
could apply for and receive grants under section 108(q) of the
Act ("EDI Grants") and related section 108 loan guarantees from
HUD for Economic Development Projects ("EDI Projects"), as
defined in the NOFA. Pursuant to the NOFA, the Recipient has
applied for, and HUD has approved, an EDI Grant for the
Recipient. The purpose of this Agreement is to set forth the
terms and conditions under which HUD will provide EDI Grant funds
to the Recipient in connection with the Approved EDI Projects
described in the Recipient's Approved Application, as further
defined herein. The terms and conditions of the related Section
108 Guarantee (as defined in par. 3 hereof) are, or will be, set
forth in the Recipient's separate section 108 loan guarantee
application, Funding Approval, and Contract for Loan Guarantee
Assistance.
2. Aooroved Grant Amount. Proiects. and Uses of Funds.
a. By execution of this Agreement on behalf of the Secretary
in the space provided below, HUD agrees, subject to the terms of
this Agreement, to provide EDI Grant funds in the amount of
$344.000.00 ("EDI Grant").
b. This grant is approved for the following Approved EDI
proj ects described in the Approved Application ("Approved
Project"): 303 West Third Proiect.
2
c. The grant funds shall be used in connection with the
Approved Project for the following specifically Approved Uses
("Approved Uses") :
1. acquisition expenses pursuant to 24 CFR Section
S70. 703 (a) ;
2. clearance and related expenses pursuant to 24 CFR
Section 570.703(e).
3. Relationship to Section 108 Loan Guarantee Application.
This approved EDI Grant is based upon section 108 loan
guarantees, or additional guarantees, for the Approved Projects
in an amount not less than $1. 840.000.00 (the "Section 108
Guarantee") .
The full application(s), or full amendatory application(s), for
the Section 108 Guarantee in the above amount, have been approved
by HUD (HUD-7082 commitment(s) executed) on or after August 16,
1994, or are being approved concurrently with execution on behalf
of HUD of this Grant Agreement.
EDI Grant funds may be disbursed by the Recipient for Approved
Uses in a ratio not to exceed $1.00 or EDI Grant funds to $S.3S
of Section 108 loan proceeds disbursed for approved activities.
4. Reaulations: Approved Application. This Agreement will
be governed and controlled by the following in effect as of the
date of notification to the Recipient of award of this grant: the
Act, the NOFA, and HUD regulations codified at 24 CFR Part 570 or
incorporated therein (provisions for use of CDBG funds, to the
extent applicable) (hereafter collectively referred to as the
"Regulations"). The Recipient's application submissions,
including the certifications and assurances and any documentation
required to meet any grant award conditions, and including any
amendments made in accordance with this Agreement, are hereby
incorporated in this Agreement as finally approved by HUD (herein
referred to as the "Approved Application"). Unless the context
otherwise requires, a reference to "this Agreement" herein shall
be deemed to include the Act, the Regulations, and the Approved
Application.
S. Performance Aareement of Recipient. By execution of
this Agreement on its behalf in the space provided below, the
Recipient agrees to carry out the Approved Project(s) on a timely
basis and otherwise in compliance with this Agreement (including
the Act, the NOFA, the Regulations, and the Approved Application,
except as otherwise specifically provided in this Agreement) .
The Recipient agrees to assure, and to accept responsibility for,
such compliance by any other entities to which it makes grant
funds available for, or which it otherwise allows to participate
in, the Approved Project(s) covered by this Agreement.
3
6. Release. Deposit. and Timina of Expenditure of Grant
Funds and Proaram Income.
a. The Recipient agrees to comply with environmental review
procedures under 24 CFR ~ S70.200(a) (4) and 24 CFR Part 58 in
order to obtain releases of grant funds under this Agreement.
b. Notwithstanding any other provision of the Regulations or
this Agreement, the Recipient may not withdraw grant funds from
the u.s. Treasury on account of the EDI Grant under this
Agreement until after execution on behalf of HUD of the Guarantee
and Contract for Loan Guarantee Assistance for the applicable
Approved Project described in paragraph 2 of this Agreement.
c. This EDI Grant must be entirely withdrawn and expended
for Approved Uses for the applicable Approved Project(s) on or
before September 30. 2000.
d. All program income from this EDI Grant is deemed to be
program income of the Approved Project(s), which are jointly
financed by the Section 108 Guarantee. The Recipient agrees that
all such program income constitutes security for the repayment of
the Section 108 Guarantee, and shall be initially deposited in,
the Loan Repayment Account established by the Recipient, or its
designated public agency, under paragraph 6 of the Contract(s)
for Loan Guarantee Assistance for the Section 108 Guarantee, and
shall be disbursed for the purposes and within the time period
specified in said paragraph 6 of such Contract. Upon full and
complete repayment of the Section 108 Guarantee, all such program
income shall be used in accordance with 24 CFR S70.504.
7. Pre-Aareement Costs. Notwithstanding any other
provision of the Regulations, the EDI Grant funds provided
hereunder may be used to pay for costs incurred on or after the
date of HUD execution of the Funding Approval committing funds
for the applicable Approved Project under the Section 108
Guarantee, provided such costs otherwise comply with this
Agreement. However, use of the EDI Grant funds to actually pay
for such costs is subject to paragraph 6 of this Agreement.
8. Amendment: Record-Keepina.
a. This Agreement or the Approved Application may be amended
only with the prior written approval of HUD. To request approval
of an amendment, the Recipient shall attach the proposed
revisions to the applicable pages of this Agreement or the
Approved Application to a cover letter addressed as required
below (see par. 11) for notices to HUD and signed by the
Recipient's official representative for this grant. For any
amendment other than an increase in the amount of the approved
EDI Grant (par. 2.a.), HUD may approve or disapprove the proposed
amendment by letter from the Director of the CPD Division (or
higher level official) in the applicable HUD office. In
considering proposed amendments to this Agreement or the Approved
Application, HUD shall review, among other things, whether the
amendment would have affected the ranking of the application in
4
the year it was approved sufficiently to have resulted in the
application not ranking high enough for funding, and whether the
amendment is otherwise consistent with the.Act, the Regulations,
and the NOFA. Any increase in the amount of the approved EDI
Grant represents a new grant obligation by HUD and must be
documented by a formal amendment to this Agreement, or a new EDI
Grant Agreement, executed on behalf of the parties by officials
with the authority to execute the original Agreement.
b. The Recipient shall at all times maintain an up-to-date
copy of its Approved Application, including all amendments
approved in writing by HUD, and all drawdowns, deposits, and
expenditures of grant funds and program income under this
Agreement, in its files and available for audit or inspection by
duly authorized representatives of HUD or the Comptroller General
of the United States.
9. Default; Remedies. A default under this Agreement shall
consist of any use of grant funds other than as authorized by
this Agreement, any other noncompliance with this Agreement
deemed material by HUD, or any misrepresentation or omission in
the application submissions which, if known to HUD, would have
resulted in this grant not being provided. If HUD determines
that the Recipient is in default, HUD will give the Recipient
written notice of this determination and the corrective or
remedial actions proposed by HUD to cure the default or mitigate
its effects, to the extent possible, and to prevent a
continuation or recurrence of the default (the "initial notice of
default"). Further description of the processes of audit,
performance monitoring, and the corrective and remedial actions
available to HUD which apply to grants under the Act, including
this EDI Grant, is provided in 24 CFR 570, particularly
Subpart O. No delay or omission by HUD in exercising any right
or remedy under this Agreement shall impair HUD's ability to
exercise such right or remedy or constitute a waiver of, or
acquiescence in, any Recipient default.
10. Close-out. Except as may be otherwise specifically
provided, closeout of this grant shall be subject to 24 CFR
570.509, or such close-out instructions as may hereafter be
issued by HUD specifically for EDI Grants.
11. Notices. HUD notifications to the Recipient under this
Agreement may be addressed to the Recipient's address as stated
in the Approved Application, unless the Recipient otherwise
notifies HUD in writing. Recipient notifications to HUD shall be
to the Director of Community Planning and Development in the HUD
Office having responsibility for CDBG programs of the Recipient,
unless the Recipient is otherwise notified in writing by HUD.
The Recipient's rights under this Agreement may not be assigned
without the prior written approval of HUD. This Agreement
constitutes the entire Agreement between the Recipient and HUD,
and it may not be amended except in writing and executed by
authorized officials of both HUD and the Recipient, as provided
in paragraph 8.
5
12. Bindina Aareement.
respect to HOD in accordance
in the space provided below,
the Recipient.
This Agreement is binding with
with its terms upon execution by HOD
subject to execution on behalf of
13. Special Condition{s).
a. In the event that all of the Section 108 funds are not
drawn down in connection with the Approved Project by September
30, 2001, the full amount of the EDI Grant ($344,000) shall
become immediately due and payable by Recipient to HOD.
[The remainder of this page intentionally left blankl
6
This Agreement is hereby executed on behalf of the parties
as follows:
SECRETARY OP HOUSING AND URBAN DEVELOPMENT,
BY:
(Signature of Authorized Official) ,
Jeff Ruster
Deputy Assistant Secretary
for Economic Development
(Date)
RECIPIENT,
THE CITY OF SAN BERNARDINO. CALIFORNIA
(Legal Name of Recipient)
BY:
(Signature of Authorized Official)
(Title)
(Date)
[Employer Identification Number (EIN)
of Recipient]
;
U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER
SECTI:ON 108 OF THE HOUSING AND COMNCNI:TY DEVELOPMENT ACT
OF 1974, AS AMENDED, 42 U.S.C. S5308
Date of Contract
This Contract for Loan Guarantee Assistance ("Contract") is
entered into between the City of San Bernardino, California, as
Borrower (the "Borrower"), and the Secretary of Housing and Urban
Development ("Secretary"), as guarantor for the Guarantee made
pursuant to section 108 ("Section 108") of title I of the Housing
and Community Development Act of 1974, as amended (the "Act") and
24 CFR Part 570, Subpart M, of the promissory note executed
contemporaneously herewith and numbered B-94-MC-06-0539-A, in
the Maximum Commitment Amount of $1,840,000, and any amended note
or note issued in substitution for such note and having the same
note number (the "Note;'). The funds paid or credited to the
account of the Borrower pursuant to the Note are referred to
herein as the "Guaranteed Loan Funds." The Note (including the
Fiscal Agency Agreement and the Trust Agreement as defined in
Section I.A. of the Note and incorporated therein) is hereby
incorporated into the Contract. Terms used in the Contract with
initial capital letters and not otherwise defined in the text
hereof shall have the respective meanings given thereto in the
Note. The Fiscal Agency Agreement and the Trust Agreement are
sometimes collectively referred to herein as the "Fiscal
Agency/Trust Agreements," and the Fiscal Agent and the Trustee
respectively are sometimes collectively referred to as the
~Fiscal Agent/Trustee."
PART I
A. The Note: Advances and Records. The Note provides that
Advances and Conversion Date Advances shall be made
thereunder upon the written request of the Borrower and the
approval of the Secretary, pursuant to this Contract and the
Fiscal Agency Agreement. The Commitment Schedule attached to
the Note represents the principal repayment schedule for the
Maximum Commitment Amount of the Note. At all times, the
total amount of all Advances and Conversion Date Advances
under the Note for all Principal Due Dates shall not exceed
the Maximum Commitment Amount of the Note. Prior to the
Conversion Date (as defined in the Note, Section I.A.), the
total amount of Advances made by the Holder for each
Principal Due Date under the Note shall not exceed the
applicable Commitment Amount for such Principal Due Date set
forth in the Commitment Schedule of the Note. Prior to the
Conversion Date, the Borrower agrees that the Fiscal Agent
pursuant to the Fiscal Agency Agreement shall record the date
and amount of each payment and Advance under the Note and
2
shall maintain the books and records of all Advances and
Conversion Date Advances for each Principal Due Date,
interest rates on Advances, payments, and Principal Amounts
outstanding for each Principal Due Date. On and after the
Conversion Date, the Borrower agrees that the Trustee
pursuant to the Trust Agreement will maintain the books and
records of all payments on the Note and all Principal Amounts
and interest rates on such Principal Amounts (each as to be
set forth on Schedule P&I to the Note). No advances of any
kind may be made on the Note after its Conversion Date.
B. Borrower's Requests for Advances. All requests for Advances
or Conversion Date Advances by the Borrower under the Note
shall: be in writing; specify the amount of the Advance
requested; identify the Note by Borrower, number and Maximum
Commitment Amount; be addressed to the Secretary at the
address for notices specified in paragraph l2(f) of this
Contract; be signed by an authorized official of the
Borrower; and otherwise be in the form prescribed by HUD.
Advances and Conversion Date Advances shall be requested and
will only be approved and made in increments of not less than
$1,000 for any Principal Due Date. A request for an initial
Advance under a Note, or a request for a Conversion Date
Advance, shall be received by the Secretary at least ten
Business Days prior to the Borrower's proposed Funding Date
or Conversion Date, as applicable. All other requests for
Advances shall be received by the Secretary not less than
five Business Days prior to the proposed Funding Date. The
Borrower may not deliver a Note or a request for an Advance
or Conversion Date Advance to the Secretary more than two
calendar months prior to the Borrower's proposed Funding
Date. At least two Business Days prior to the proposed
Funding Date or Conversion Date if the Borrower's request was
timely received, or the next available Funding Date for which
the request was timely received, the Secretary shall, except
as otherwise provided in paragraph 11(c) or 12 hereof,
deliver a corresponding Authorization Order or Advance Order
(as applicable) to the Fiscal Agent in accordance with
Section 2.03 or 2.04 of the Fiscal Agency Agreement for the
applicable Funding Date or Conversion Date. If the Borrower
requests an Advance or Conversion Date Advance of less than
the outstanding Maximum Commitment Amount under the Note, the
Borrower may also specify in its written request the amount
of the Advance or Conversion Date Advance to be allocated to
each Commitment Amount or Principal Amount per Principal Due
Date under the Note. If the Borrower does not specify how
the Advance or Conversion Date Advance should be allocated
among Commitment Amounts/Principal Due Dates, the Borrower
hereby authorizes the Secretary to direct the Fiscal Agent to
allocate the Advance to the respective Commitment Amounts or
Principal Amounts in order of the earliest Principal Due
Date(s) .
3
C. Conversion; Pub1ic Offerinq. On the Conversion Date (if
any), trust certificates backed by the Note (and similar
notes issued by other Section 108 borrowers) will be
purchased for a purchase price of the full principal amount
thereof by underwriters selected by the Secretary (the
"Underwriters") pursuant to an Underwriting Agreement be.tween
the Underwriters and the Secretary, at a closing on such
Conversion Date as determined by the Secretary and the
Underwriters. The Borrower agrees that the interest rate at
which the trust certificate of a specified maturity is sold
to the Underwriters shall govern the interest rate inserted
on the Conversion Date in Schedule P&I of the Note for the
Principal Amount of corresponding maturity.
D. Consents. By execution of this Contract, the Borrower
ratifies and consents to the Secretary's selection of the
Underwriters and authorizes the Secretary to negotiate with
the Underwriters the terms of the Underwriting Agreement and
of the public offering of interests in the trust certificates
to investors (including the applicable interest rates). In
addition, by execution hereof the Borrower ratifies and
consents to the Secretary's selection of the Fiscal
Agent/Trustee and agrees to the respective terms of the
Fiscal Agency/Trust Agreements. If Advances have been made
in the Maximum Commitment Amount of the Note not less than
ten Business Days prior to the proposed Conversion Date, or
if the Borrower requests a Conversion Date Advance, the
Borrower authorizes the Secretary to deliver Schedule P&I to
the Note completed in accordance herewith to the Fiscal
Agent/Trustee on the Conversion Date in accordance with the
Fiscal Agency/Trust Agreements, concurrent with delivery of
the Secretary's Guarantee of the trust certificates at the
closing on the Conversion Date, and thereafter the Note shall
be enforceable in accordance with its terms including
Schedule P&I. In addition, the Secretary reserves the right
to notify the Borrower not less than one calendar month in
advance of a specified Conversion Date that the Note will be
sold to the Underwriters on such date, if the Secretary in
his sole discretion determines that market conditions or
program needs require the participation in the proposed
public offering of all or substantially all Borrowers with
outstanding Advances.
4
PART II
1. lleceipt, Deposit and Use of GUlI:ranteed Loan Funds.
(a) Except for funds deducted on the Conversion Date
pursuant to paragraph 4(b) and fees and charges deducted by
the Fiscal Agent/Trustee pursuant to paragraph 4(a), the
Guaranteed Loan Funds shall be electronically transferred in
accordance with the Borrower's instructions for deposit in a
separate, identifiable custodial account (the "Guaranteed
Loan Funds Account") with a financial institution whose
deposits or accounts are Federally insured. The Guaranteed
Loan Funds Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Custodial
Account" (Attachment 1) and shall be continuously maintained
for the Guaranteed Loan Funds. Such Letter Agreement must be
executed when the Guaranteed Loan Funds Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution. )
The Borrower shall make withdrawals from said account only
for payment of the costs of approved Section 108 activities,
for transfer to the Loan Repayment Account or for the
temporary investment of funds pursuant to this paragraph
l(a). Such temporary investment of funds into the Guaranteed
Loan Funds Investment Account shall be required within three
Business Days after the balance of deposited funds exceeds
the amount of the Federal deposit insurance on the Guaranteed
Loan Funds Account. At that time, any balance of funds in
the Guaranteed Loan Funds Account exceeding such insurance
coverage shall be fully (100%) and continuously invested in
Government Obligations, as defined in paragraph 10 hereof,
held in the Guaranteed Loan Funds Investment Account.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with the cash requirements of the
approved activities. In no event shall the investments
mature on or after October 1, 2001, or have maturities which
exceed one year. All such investments shall be held in trust
for the benefit of the Secretary by the above financial
institution in an account (the "Guaranteed Loan Funds
Investment Account") established and designated as prescribed
in the attached form document entitled "Letter Agreement for
Section 108 Loan Guarantee Program Custodial Investment
Account" (Attachment 2), which account shall be maintained
for all Government Obligations purchased with funds from the
Guaranteed Loan Funds Account. The Guaranteed Loan Funds
Investment Account need only be established if and when the
Borrower is required to invest, or otherwise invests, the
,
5
Guaranteed Loan Funds in Government Obligations. Such Letter
Agreement must be executed when the Guaranteed Loan Funds
Investment Account is established. (A fully executed copy of
such Letter Agreement shall be submitted to the Secretary
within thirty days of its execution.) All proceeds and
income derived from such investments shall be returned to the
Guaranteed Loan Funds Account.
All funds in the Guaranteed Loan Funds Account or the
Guaranteed Loan Funds Investment Account must be withdrawn
and disbursed by the Borrower for approved activities by
October 1, 2001. Any funds remaining in either Account after
this date shall be immediately transferred to the Loan
Repayment Account established pursuant to paragraph 6 of this
Contract.
(b) The Borrower shall by the fifteenth day of each month
provide the Secretary with a written statement showing the
balance of funds in the Guaranteed Loan Funds Account and the
withdrawals from such account during the preceding calendar
month, and a statement identifying the obligations and their
assignments in the Guaranteed Loan Funds Investment Account.
(c) Upon the Secretary giving notice that the Borrower is in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Guaranteed Loan
Funds and Guaranteed Loan Funds Investment Accounts shall
immediately vest in the Secretary for use in making payment
on the Note, purchase of Government Obligations in accordance
with paragraph 10, or payment of any other obligations of the
Borrower under this Contract or the Fiscal Agency/Trust
Agreements.
2. Payments Due on Note. The Borrower shall pay to the Fiscal
Agent/Trustee, as collection agent for the Note, all amounts
due pursuant to the terms of the Note. In accordance with the
Note and the Fiscal Agency/Trust Agreements, payment shall be
made by 3:00 P.M. (New York City time) on the seventh
Business Day (the "Note Payment Date") preceding the relevant
Interest Due Date or Principal Due Date (each as defined in
the Note). If any Note Payment Date falls on a day that is
not a Business Day, then the required payment shall be made
on the next Business Day. Payment may be made by check or
wire transfer.
3. Se1ection of New Fisca1 Aqent or Trustee. The Secretary
shall select a new Fiscal Agent or Trustee if the Fiscal
Agent or Trustee resigns or is removed by the Secretary. The
Borrower hereby consents in advance to any such selection and
to any changes in the Fiscal Agency/Trust Agreements agreed
to by any Fiscal Agent or Trustee and the Secretary, subject
to paragraph 4(e) of this Contract.
6
4. Payments Due Fisca1 Aqent or Trustee; Documents to the
Secretary.
(a) The Borrower agrees to pay the fees of the Fiscal Agent
as required by Exhibit G to the Fiscal Agency Agreement, and
any additional amounts that may be due pursuant to Section
6.01 of the Fiscal Agency Agreement. If not paid by the
Borrower by any other means prior thereto, the Borrower
agrees that any such fees or additional amounts that have
been incurred prior to an Advance or a Conversion Date
Advance may be deducted by the Fiscal Agent/Trustee from the
proceeds of the Advance or Conversion Date Advance, as
applicable.
(b) The Borrower agrees to pay the Borrower's share, as
determined by the Secretary, of the customary and usual
issuance, underwriting, and other costs related to the public
offering and future administration of the Note and the trust
certificates, as approved by the Secretary, including the
cost of reimbursement and/or compensation of the Trustee
pursuant to the Trust Agreement, including Sections 3.11 and
7.01 thereof. In connection with the public offering on the
Conversion Date, such payment shall either be made by wire
transfer to the Trustee on the day prior to the Conversion
Date or shall be deducted from the Guaranteed Loan Funds on
the Conversion Date.
(c) The Borrower shall submit to the Secretary not later than
ten Business Days prior to the Funding Date for the initial
Advance hereunder, or if not submitted earlier, prior to any
Conversion Date or Public Offering Date applicable to the
Note, this executed Contract, the executed Note, a request
for an Advance or a Conversion Date Advance (as applicable)
in proper form, and an opinion acceptable to the Secretary
from the Borrower's counsel to the effect that: (i) the
governing body of the Borrower has authorized by resolution
or ordinance, in accordance with applicable State and local
law, the issuance of the Note and the execution of this
Contract; (ii) the Note and this Contract are valid, binding,
and enforceable obligations of the Borrower; (iii) the pledge
of funds pursuant to 24 CFR 570.705(b) (2) and paragraph 5(a)
of this Contract is valid and binding; and (iv) there is no
outstanding litigation that will affect the validity of the
Note or this Contract. In addition, the Borrower shall
submit any other additional documents or opinions
specifically required by this Contract (e.g., paragraph 5(c),
or paragraph 15, et ~.), at the time required thereby.
(d) The Borrower agrees to reimburse the Underwriters upon
demand by the Secretary for the Borrower's share, as
determined by the Secretary, of all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of
7
counsel) incurred in connection with a proposed public
offering, if the Underwriters incur such additional costs for
the public offering because of any refusal, inability, or
failure on the part of the Borrower timely to submit in
acceptable form any document required by this Contract
(including paragraph 4(c)), or because of any withdrawal by
the Borrower from the pu~lic offering, after the Borrower has
submitted a request for a Conversion Date Advance hereunder.
By execution and delivery of this Contract to the Secretary,
the Borrower hereby expressly authorizes the Secretary to pay
amounts due under this paragraph from funds pledged under
paragraph 5(a) of this Contract.
(e) The undertakings in paragraphs 3 and 4 of this Contract
are expressly subject to the requirement that the Fiscal
Agency/Trust Agreements shall in no event require payment of
fees or charges, reimbursement of expenses, or any
indemnification by the Borrower from any source other than
funds pledged pursuant to paragraphs 5 or 15 et ~ of this
Contract.
5. Security. The Borrower hereby pledges as security for
repayment of the Note, and such other charges as may be
authorized in this Contract, the following:
(a) All allocations or grants which have been made or for
which the Borrower may become eligible under Section 106 of
the Act, as well as any grants which are or may become
available to the Borrower pursuant to Section 108(q).
(b) Program income, as defined at 24 CFR 570.500(a) (or any
successor regulation), directly generated from the use of the
Guaranteed Loan Funds.
(c) Other security as described in paragraph 15, et ~
(d) All proceeds (including insurance and condemnation
proceeds) from any of the foregoing.
(e) All funds or investments in the accounts established
pursuant to paragraphs 1 and 6 of this Contract.
6. Loan Repayment Account.
(a) All amounts pledged pursuant to paragraphs 5(b), 5(c),
and 5(d) of this Contract shall be deposited immediately on
receipt in a separate identifiable custodial account (the
"Loan Repayment Account") with a financial institution whose
deposits or accounts are Federally insured. The Loan
Repayment Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Custodial
Account" (Attachment 1) and shall be maintained for such
8
pledged funds. The Loan Repayment Account need only be
established if and when the Borrower receives amounts pledged
pursuant to paragraph 5(b), 5(c) or 5(d). Such Letter
Agreement must be executed when the Loan Repayment Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution.) Borrower shall make withdrawals from said
account only for the purpose of paying interest and principal
due on the Note (including the purchase of Government
Obligations in accordance with paragraph 10 hereof), for
payment of any other obligation of the Borrower under this
Contract or the Fiscal Agency/Trust Agreements, or for the
temporary investment of funds pursuant to this paragraph,
until final payment and discharge of the indebtedness
evidenced by the Note, unless otherwise expressly authorized
by the Secretary in writing. Such temporary investment of
funds shall be required within three Business Days after the
balance of deposited funds exceeds the amount of the Federal
deposit insurance on the Loan Repayment Account. At that
time, the balance of funds in the Loan Repayment Account
exceeding such insurance coverage shall be fully (100%) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with cash requirements for payment of
principal and interest as required under the Note. In no
event shall the maturities of such investments exceed one
year. All such investments shall be held in trust for the
benefit of the Secretary by the above financial institution
in an account (the "Loan Repayment Investment Account")
established and designated as prescribed in the attached form
document entitled "Letter Agreement for Section 108 Loan
Guarantee Program Custodial Investment Account" (Attachment
2), which account shall be maintained for all Government
Obligations purchased with funds from the Loan Repayment
Account. Such Letter Agreement must be executed when the
Loan Repayment Investment Account is established. (A fully
executed copy of such Letter Agreement shall be submitted to
the Secretary within thirty days of its execution.) All
proceeds and income derived from such investments shall be
returned to the Loan Repayment Account.
(b) Borrower shall by the fifteenth day of each month,
provide the Secretary with a written statement showing the
balance of funds in the Loan Repayment Account and the
deposits and withdrawals of all funds in such account during
the preceding calendar month and a statement identifying the
obligations and their assignments in the Loan Repayment
Investment Account.
9
(c) Upon the Secretary g~v~ng notice that the Borrower is in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Loan Repayment and
Loan Repayment Investment Accounts shall immediately vest in
the Secretary for use in making payment on the Note, purchase
of Government Obligations in accordance with paragraph 10, or
payment of any other obligation of the Borrower under this
Contract or the Fiscal Agency/Trust Agreements.
7. Use of CDBG or EDI Funds for Repayment. Any funds available to
the Borrower under Section 106 of the Act (including program
income derived therefrom) are authorized to be used by the
Borrower for payments due on the Note, Optional Redemption (as
defined in the Note), payment of any other obligation of the
Borrower under this Contract or the Fiscal Agency/Trust
Agreements, or the purchase of Government Obligations in
accordance with paragraph 10. Any funds specifically available
to the Borrower for such payments or as a debt service reserve
under an EDI Grant Agreement pursuant to Section 108(q) of the
Act which supports the eligible project(s) and activities
financed by the Note may also be used therefor; any other use of
Section 108(q) funds for such purposes shall require the prior
written approval of the Secretary. Unless otherwise
specifically provided herein or unless otherwise expressly
authorized by the Secretary in writing, the Borrower shall
substantially disburse funds available in the Loan Repayment or
the Loan Repayment Investment Accounts before funds from grants
under Section 106 of the Act are withdrawn from the U.S.
Treasury for such purposes.
8. Secretary's Riqht to Restrict Use of CDBG Funds to llepayment.
Upon a determination by the Secretary that payments required by
paragraph 2 and/or paragraph 4 of this Contract are unlikely to
be made as specified, the Secretary may give the Borrower notice
that the availability to the Borrower of funds pledged under
paragraph 5(a) of this Contract for purposes other than
satisfaction of the pledge is being restricted. This
restriction shall be in an amount estimated by the Secretary to
be sufficient to ensure that the payments referred to in
paragraph 2 and/or paragraph 4 hereof are made when due. This
restriction may be given effect by conditioning the restricted
amounts to prohibit disbursement for purposes other than
satisfaction of the pledge at the time such restricted funds are
approved as grants, by limiting the Borrower's ability to draw
down or expend the restricted funds for other purposes, and by
disapproving payment requests submitted with respect to such
grants for purposes other than satisfaction of the pledge.
9. Secretary's Riqht to Use P1edqed Funds for Repayment. The
Secretary may use funds pledged under paragraph 5(a) of this
Contract or funds restricted under grants pursuant to paragraph
10
8 of this Contract to make any payment required of the Borrower
under paragraph 2 and/or paragraph 4, if such payment has not
been timely made by the Borrower.
10. Defeasance. For purposes of this Contract, after the Conversion
Date the Note shall be deemed to have been paid (defeased) if
there shall have been deposited with the Trustee either moneys
or Government Obligations (as defined below), which in the sole
determination of the Secretary, mature and bear interest at
times and in amounts sufficient, together with any other moneys
on deposit with the Trustee for such purpose, to pay when due
the principal and interest to become due on the Note. The
Aggregate Principal Amount of the Note or any unpaid Principal
Amount may be so defeased, in whole or in part, as of any
Principal Due Date. In accordance with the Note and the Trust
Agreement, the Borrower shall give timely notice and written
instructions to the Secretary and the Trustee concerning any
principal amounts proposed to be defeased, including any
Optional Redemptions proposed, which instructions shall be
approved by the Secretary. If the unpaid Aggregate Principal
Amount of the Note guaranteed pursuant to this Contract shall be
defeased and deemed to have been paid in full, then the Borrower
shall be released from all agreements, covenants, and further
obligations under the Note.
"Government Obligation" means a direct obligation of, or any
obligation for which the full and timely payment of principal
and interest is guaranteed by, the United States of America,
including but not limited to, United States Treasury
Certificates of Indebtedness, Notes and Bonds - State and Local
Government Series or certificates of ownership of the principal
of or interest on direct obligations of, or obligations
unconditionally guaranteed by, the United States of America,
which obligations are held in trust by a commercial bank which
is a member of the Federal Reserve System and has capital and
surplus (exclusive of undivided profits) in excess of
$100,000,000.
11. Defau1t. (a) A Default under the Note and this Contract
shall occur upon failure by the Borrower to:
(i) pay when due an installment of principal or interest
on the Note; or (ii) punctually and properly perform,
observe, and comply with any covenant, agreement, or
condition contained in: (A) this Contract, (B) any
security agreement, deed of trust, mortgage, assignment,
guarantee, or other contract securing payment of
indebtedness evidenced by the Note, or (C) any future
amendments, modifications, restatements, renewals, or
extensions of any such documents.
(b) The Borrower waives notice of Default and opportunity
for hearing with respect to a Default under paragraph II(a).
.
11
(c) In addition to Defaults under paragraph 11(a), the
Secretary may declare the Note in Default if the Secretary
makes a final decision in accordance with the provisions of
section 111 of the Act and 24 CFR 570.913 (or any successor
provisions), including requirements for reasonable notice and
opportunity for hearing, that the Borrower has failed to
comply substantially with title I of the Act.
Notwithstanding any other provision, following the giving of
such reasonable notice, the Secretary may, in the Secretary's
sole discretion pending the Secretary's final decision,
withhold the guarantee of any or all obligations not yet
guaranteed on behalf of the Borrower under outstanding
commitments, suspend approval of any further Advances or
Conversion Date Advances under the Note, and/or direct the
Borrower's financial institution to: refuse to honor any
instruments drawn upon, or withdrawals from, the Guaranteed
Loan Funds Account or the Loan Repayment Account initiated by
the Borrower, and/or refuse to release obligations and
assignments by the Borrower from the Guaranteed Loan Funds
Investment Account or the Loan Repayment Investment Account.
12. Remedia1 Actions. Upon a Default or declaration of Default
under this Contract, the Secretary may, in the Secretary's sole
discretion, take any or all of the following remedial actions:
(a) With any funds or security pledged under this Contract, the
Secretary may (i) continue to make payments due on the Note,
(ii) make a prepayment under Section I.D. of the Note or make an
acceleration payment with respect to the principal amount of the
Note subject to Optional Redemption as provided in Section III
of the Note, (iii) purchase Government Obligations in accordance
with paragraph 10 of this Contract, (iv) pay any interest due
for late payment as provided in the Note, this Contract, or the
Fiscal Agency/Trust Agreements, (v) pay any other obligation of
the Borrower under this Contract or the Fiscal Agency/Trust
Agreements, and/or (vi) pay any reasonable expenses incurred by
the Secretary or the Fiscal Agent/Trustee as result of the
Borrower's Default.
(b) The Secretary may withhold the guarantee of any or all
obligations not yet guaranteed or the disbursement of any or all
grants not yet disbursed in full under outstanding guarantee
commitments or grant approvals for the Borrower under Sections
108 and/or 106 of the Act.
(c) The Secretary may withhold approval of any or all further
Advances or Conversion Date Advances under the Note (if
applicable); direct the Borrower's financial institution to
refuse to: honor any instruments drawn upon, or withdrawals
from, the Guaranteed Loan Funds Account or the Loan Repayment
Account by the Borrower, and/or to release obligations and
assignments by the Borrower from the Guaranteed Loan Funds
.
12
Investment Account or the Loan Repayment Investment Account;
and/or direct the Borrower and/or the Borrower's financial
institution to transfer remaining balances from the Guaranteed
Loan Funds Account to the Loan Repayment Account.
(d) Until the Conversion Date, or with respect to amounts
subject to Optional Redemption, the Secretary may accelerate the
Note.
(e) The Secretary may exercise any other appropriate remedies
or sanctions available by law or regulation applicable to the
assistance provided under this Contract, or may institute any
other action available under law to recover Guaranteed Loan
Funds or to reimburse the Secretary for any payment under the
Secretary's Guarantee or any reasonable expenses incurred by the
Secretary as a result of the Default.
(f) All notices and submissions provided for hereunder shall be
in writing (including by telex, telecopier or any other form of
facsimile communication) and mailed or sent or delivered, as to
each party hereto, at its address set forth below or at such
other address as shall be designated by such party in a written
notice to the other party hereto. All such notices and other
communications shall be effective when received as follows: (i)
if sent by hand delivery, upon delivery; (ii) if sent by mail,
upon the earlier of the date of receipt or five Business Days
after deposit in the mail, postage prepaid; (iii) if sent by
telex, upon receipt by the sender of an answer back; and (iv) if
sent by telecopier, upon receipt.
The Secretarv:
U.S. Dept. of Housina and Urban Development
Attention: Paul Webster. Director
Financial Manaaement Division
4S1 7th Street. SW. Room 7180
Washinaton. DC 20410
Borrower:
13. Limited Liabi1ity. Notwithstanding any other provision of this
Contract, the Fiscal Agency/Trust Agreements or the Note, any
recovery against the Borrower for any liability for amounts due
pursuant to the Note, the Fiscal Agency/Trust Agreements or this
Contract shall be limited to the sources of security pledged in
paragraph 5 or any Special Conditions of this Contract. Neither
the general credit nor the taxing power of the Borrower, or of
13
the State in which the Borrower is located, is pledged for any
payment due under the Note, the Contract, or the Fiscal
Agency/Trust Agreements.
14. Incorporated Grant Aqreement. The Contract and the Note are
hereby incorporated in and made a part of the Grant Agreement
authorized by the Secretary on June 22, 1994 under the Funding
Approval for grant number B-94-MC-06-0539 to the Borrower. In
carrying out activities with the Guaranteed Loan Funds
hereunder, the Borrower agrees to comply with the Act and 24 CFR
Part 570, as provided in Subpart M thereof.
15. Specia1 Conditions and Modifications:
(a) Paragraph 5(c) of the Contract is amended by deleting the
paragraph as written in its entirety and substituting
therefore the following:
~(c) Other security, including, but not limited to, all rights
of the Borrower (but none of the obligations of the
Borrower) in and to the 'Security Documents' (as defined
in paragraph 15(d) hereof) and to the collateral
described therein. If necessary to provide the Secretary
with a valid security interest in such other security,
the Borrower shall execute a security agreement
(the 'Borrower Security Agreement'), which Borrower
Security Agreement shall be in a form acceptable to the
Secretary."
(b) Guaranteed Loan Funds shall be used by the Borrower to
make a loan to 303 LLC , (the ~Obligor"), for
acquisition of the property pursuant to 24 CFR
570.703 (i) (1).
(c) The loan to the Obligor shall be evidenced by a
promissory note (the ~Obligor Note") and a loan
agreement (the ~Obligor Loan Agreement"), which
Obligor Note and Obligor Loan Agreement shall be in a
form acceptable to the Secretary. The amount of
principal and/or interest payable under the Obligor Note
during the twelve month period beginning July 1 of each
year and ending on June 30 of the next succeeding year
shall be equal to or greater than the amount of principal
and/or interest payable under the Note for the
corresponding period. The Obligor Note shall not be
subject to redemption or repayment earlier than the
earliest possible redemption date under the terms of the
Note. As security for the Obligor Note, the Borrower
shall obtain the following collateral (collectively, the
~Collateral") :
(i) A first priority lien on the real property
described in Attachment 3 hereof (the ~Property"),
14
established through an appropriate and properly
recorded deed of trust (the ~Deed of Trust"). The
Deed of Trust shall contain such provisions as the
Secretary deems necessary.
(ii) Any and all rights, titles, and interests of the
Obligor in and to any leases covering the Property.
Such rights, titles, and interests of the Obligor
shall be the subject of a collateral assignment of
leases and rents (the ~Collateral Assignment of
Leases and Rents"). The Collateral Assignment of
Leases and Rents shall be in a form acceptable to
the Secretary.
(iii)Any and all rights, titles, and interests of the
Obligor in and to any licenses, permits, and other
agreements covering the Property. Such rights,
titles, and interests shall be the subject of a
collateral assignment of interest in licenses,
permits, and other agreements (the ~Collateral
Assignments of Interest in Licenses, Permits, and
Agreements"). The Collateral Assignment of
Interest in Licenses, Permits, and Agreements
shall be in a form acceptable to the Secretary.
(iv)Personal guaranties (collectively, the
"Personal Guaranty") of Mr. Kevin Brunk.
Mr. Wilfred C. Lemann and Mr. Martin A.
Matich (the "Personal Guarantors"). The
Personal Guaranty shall be in a form
acceptable to the Secretary.
(v)An unconditional and irrevocable letter of credit
(the "Letter of Credit") from the Obligor in favor of
the Borrower. The Letter of Credit shall be at all
times in an amount of $500,000. The Letter of Credit
shall be in a form acceptable to the Secretary and
shall be issued by a financial institution ("Issuer")
acceptable to the Secretary. The Issuer shall be a
member of the Federal Reserve System, have a rating
of at least "A2", as determined by Moody's Bank
Credit Report Service ("Moody's"), for its long term
bank deposits, and must reflect an outstanding standby
Letter of Credit balance of $50 million or more on its
most recent Call Report to its supervisory agency.
The rating must be in effect as of the date of receipt
of the Letter of Credit by the Custodian (as defined
in paragraph 15(d) below). The Letter of Credit shall
bear an expiration date (the "Expiration Date") one
year from the first day of the month following the
date of execution of the Obligor Agreement and shall
provide for automatic renewal for successive periods
of one year each as of the Expiration Date until such
1S
time as the Obligor demonstrates to the satisfaction
of the Borrower that at least 90 per cent of the net
leasable area of the Property is leased and occupied.
At such time, the Obligor may be permitted to withdraw
the Letter of Credit. Any change with respect to the
Letter of Credit subsequent to its deposit with the
Custodian must be approved by both the Borrower and
the Secretary. The Borrower will be responsible for
demanding payment under the Letter of Credit if
necessary.
(d) The Borrower shall select a financial institution
acceptable to the Secretary (the ~Custodian") to act
as custodian for the documents specified in
paragraphs l5(e) below (the ~Security Documents").
The Borrower and the Custodian shall enter into a
written agreement containing such provisions as the
Secretary deems necessary. A fully executed copy of
such agreement, with original signatures, shall be
forwarded to the Secretary contemporaneously with the
delivery of documents pursuant to paragraph l5(e)
below.
(e) Not later than five business days after the initial
disbursement of the Guaranteed Loan Funds to the
Obligor, the Borrower shall deliver to the Custodian
the following:
(i) The original Obligor Note, endorsed in blank and
without recourse.
(ii) The original Obligor Loan Agreement and an
assignment thereof to the Secretary, which
assignment shall be in a form acceptable to
the Secretary.
(iii) The original recorded Deed of Trust signed by the
Obligor and an assignment thereof to the
Secretary, in a recordable form but unrecorded,
which assignment shall be in a form acceptable to
the Secretary.
(iv) The original recorded Collateral Assignment of
Leases and Rents and an assignment thereof
to the Secretary, in a recordable form but
unrecorded, which assignment shall be in a form
acceptable to the Secretary.
(v) The original Collateral Assignment of Interest in
Licenses, Permits, and Agreements and an
assignment thereof to the Secretary, which
assignment shall be in a form acceptable to the
Secretary.
.
16
(vi) The original Personal Guaranty and an assignment
thereof, which assignment shall be in a form
acceptable to the Secretary.
(vii)The original Letter of Credit and an
assignment thereof, which assignment shall in
a form acceptable to the Secretary.
(viii)An opinion of the Borrower's counsel, addressed
to the Secretary and on its letterhead, that:
(1) the Obligor is a limited liability company, duly
organized, validly existing, and in good standing
under the laws of the State of California;
(2)the Obligor Note has been duly executed and
delivered by a party authorized by the
Obligor to take such action and is a valid
and binding obligation of the Obligor,
enforceable in accordance with its terms,
except as limited by bankruptcy and similar
laws affecting creditors generally; and
(3)the security instruments specified in (ii)
through (vii) above are valid and legally
binding obligations, enforceable in
accordance with their respective terms.
(ix) A mortgage title policy, issued by a company
and in a form acceptable to the Secretary,
naming the Borrower as the insured party. The
policy must either include in the definition of
the ~insured" each successor in ownership of the
indebtedness secured by the Deed of Trust or be
accompanied by an endorsement of the policy of
the Secretary.
(x) A certified survey with a legal description
conforming to the title policy and the Mortgage.
(xi) An appraisal of the fee simple ownership
interest in the Property specifying an estimate
of fair market value of not less than
$1,675,000. The appraisal shall be completed
by an appraiser who is certified by the state and
has a professional designation (such as ~SRA" or
~MAI"), and shall conform to the standards of the
Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (~FIRREA").
.
17
(f) Paragraph 12 is amended by adding at the end thereof
the following language:
~(g) The Secretary may complete the endorsement of
the Business Notes and record the assignments
referred to in paragraph 15(e), and thereby
effectuate the transfer of the documents
referenced and underlying indebtedness from the
Borrower to the Secretary or the Secretary's
assignee."
~(h) The Secretary may exercise or enforce any and
all other rights or remedies (including any and
all rights and remedies available to a secured
party under the Uniform Commercial Code)
available by law or agreement (including any of
the Security Documents, as defined in paragraph
15(d)) against the Borrower, against the
Obligor, or against any other person or property."
(g) The Borrower covenants and agrees that it shall
establish and maintain a reserve (the "Debt Service
Reserve") in the Loan Repayment Account for payment of
principal and/or interest on the Notes upon notice from
the Secretary to the Borrower at the address specified
in paragraph 12(f) above that the Secretary in his sole
discretion has determined that grants pledged pursuant
to paragraph Sea) are unlikely to be sufficient to pay
when due the amounts to become due on the Notes. Such
notice shall be hereinafter referred to as the "Notice
of Inadequate Security." The Debt Service Reserve
shall be established in an amount determined by an
independent financial advisor acceptable to the
Secretary (the "Financial Advisor") in accordance with
a methodology acceptable to the Secretary. The Debt
Service Reserve shall be fully (100%) and continuously
invested in Government Obligations, as defined in
paragraph 10 hereof, which investments shall be held in
trust for the benefit of the Secretary in the
Guaranteed Loan Funds Investment Account as provided in
paragraph 6(a) hereof. Grants pledged pursuant to
paragraph S(a) may be used to fund the Debt Service
Reserve in whole or in part. The Borrower shall engage
the Financial Advisor and shall instruct it to submit
to the Secretary for his review and approval the
methodology it proposes to use in determining the
amount of the Debt Service Reserve, which submission
shall include any comments and/or recommendations of
the Borrower regarding the acceptability of the
methodology. Such submission shall not be required if
the selection of the Financial Advisor and the
appli~ation of the methodology comply with guidelines
promulgated by the Secretary subsequent to the date of
.
18
this Contract. Within 60 days of the Notice of
Inadequate Security, the Borrower shall furnish to the
Secretary at the address specified in paragraph (12)
above acceptable evidence that the Debt Service Reserve
has been established in the manner prescribed above
(including such certifications and/or opinions by the
Financial Advisor as the Secretary deems necessary) .
The Debt Service Reserve shall be maintained in an
amount consistent with an amortization schedule
developed by the Financial Advisor and approved by the
Secretary.
(h) The Grant Agreement, dated for
the grant made to the Borrower pursuant to Section
108 (q), under grant number B-93-ED-06-0S39, is hereby
incorporated in this Contract and made a part hereof.
[Rest of paqe Intentiona11y Left B1ankl
,
19
IN WZTNESS WHEREOF, the undersigned, as authorized officials on
behalf of the Borrower or the Secretary, have executed this Contract
for Loan Guarantee Assistance, which shall be effective as of the
date of execution hereof on behalf of the Secretary.
BORROWER
ATTEST:
BY:
(Name)
(Name)
(Ti Ue)
(TiUe)
(Siqnature)
(Siqnature)
(Date)
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT
BY:
(Name)
(Ti Ue)
(Siqnature)
(Date)
,
A'l"l'ACBMENT 3
Description of Real Property
[Borrower shall insert descriptionl
20
~
I). .' '--.r
c:l(nj-I'~.- '3
Clf' . ccn-_' '3
ECONOMIC DEVELOPMENT AGENCY
TO:
RACHEL G. CLARK, CITY CLERK
~
PROM: JOHN HOEGER, PROJECT MANAGER
SUBJECT: 303 THIRD STREET - HUD CONTRACf DOCUMENTS
DA11&: 10/11/00
CC: WITII AITACHMENTS: KEVIN BRUNK, 303UC: BARBARA UNDSE"IH; DAVID GONDEK,
SABa & GREEN; FilE. WITIlOUT AITACHMENTS: GARY VAN OSDEL.
Rachel-enclosed are the fully executed original documents received from Washington,
D.C. this morning. These documents are for the 303 West Third Project (the fonner State
Office Building on the southwest comer of Third Street and Arrowhead Avenue). There are
two agreements:
. ED! Grant Agreement B-93-ED-06-0539 in the amount of $344,000.
· Contract for Loan Guarantee Assistance, dated September 26, 2000, in the
amount of $1,840,000.
Funds have been drawn under each of these agreements and placed in escrow at First
American Title CompanY'~Q}'ect ~~.!'W be further Con:unission/Cowtcil action in this
t,natter and that these documents will be amended or revised sbol;tl.y.,Please call (909 663-
1:274) or send email <jhoeger@sbrda.org> if there are any questions.
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** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): q -I ~ "00
Vote: Ayes ! - 3 !5 -f) Nays
I
Change to motion to amend original documents:
Item # e.S,/A
-f)- Abstain
Resolution # 'lCJ::D - 2 q3
L/ Absent -e-
::::'n=: ~ (Dc!ZaXr 33
I
Reso. # On Attachments:
Contract term:
NullNoid After:
Date Sent to Mayor: q - Ig--c:o Date Returned from Mayor:
Date of Clerk's Signature: q -\ q --<X:) Reso. Log Updated:
<1-lq-oo
./
Date of Mayor's Signature: q-\ q -0()
Seal Impressed: ,/
Date Memo Sent to Department for Signature:
See Attached: _ -flate Returned:
-
Date Letter Sent to Outside Party for Signature:
60 Day Reminder Letter Sent on 30th day:
90 Day Reminder Letter Sent on 45th day:
See Attached: ~ Date Returned:
See Attached:
See Attached:
Note on Resolution of Attachment stored separately: -=
Direct City Clerk (circle I): PUBLISH, POST, RECORD W/COUNTY Date:
See Attached:
YesL No By
Yes No-.L By
Yes No---L By
Yes No~ By
Yes No / By_
Request for Council Action & Staff Report Attached:
Updated Prior Resolutions (Other Than Below):
Updated CITY Personnel Folders (6413, 6429, 6433,10584,10585,12634):
Updated CDC Personnel Folders (5557):
Updated Traffic Folders (3985, 8234, 655, 92-389):
Copies Distributed to:
City Attorney ,/
Parks & Rec.
Code Compliance Dev. Services
Police Public Services Water
EDA
v
Finance
MIS
Others:
Notes:
BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term. etc.)
Ready to File: ~
Date: q - D-co
~
."
-
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): q -\ '6-00 Item # Qs. IB
Vote: Ayes I-~ 5-'1 Nays -f:r Abstain
,
4-
SFF
Resolution # CI}::j 7tlrY3::S
Absent .fT
l2b..~). 2CCD -~q ~
Change to motion to amend original documents:
Reso. # On Attachments; ....:::::::...-
Contract term;
NullNoid After:
-
Date Sent to Mayor:
Date ofperl('s Signature:
ef)(:\-
q~lq-cxJ Date Returned from Mayor:
C{-lq-OO Reso. Log Updated:
q>-\q-oo
V
Date of Mayor's Signature:
Seal Impressed: v r.J I A
,
Chi-oC!
Date Memo Sent to Department for Signature:
See Attached: .:=:- Date Returned:
Date Letter Sent to Outside Party for Signature:
60 Day Reminder Letter Sent on 30th day:
90 Day Reminder Letter Sent on 45th day:
See Attached:
See Attached:
See Attached:
Date Returned;
Note on Resolution of Attachment stored separately: -=
Direct City Clerk (circle I): PUBLISH, POST, RECORD W/COUNTY Date;
See Attached;-
Yes ./ No By
Yes No ~ By
Yes No ,/ By
Yes No v By
Yes No ,/ By
-
Request for Council Action & Staff Report Attached:
Updated Prior Resolutions (Other Than Below);
Updated CITY Personnel Folders (6413, 6429, 6433, 10584, 10585, 12634);
Updated CDC Personnel Folders (5557);
Updated Traffic Folders (3985, 8234, 655, 92-389);
Copies Distributed to:
City Attorney
Parks & Rec.
Code Compliance
Dev. Services
EDA
,/
Finance
MIS
Police
Public Services
Water
Others;
Notes:
BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term, etc,l
Ready to File: IY"I
Date;....3- <.2.-c()