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HomeMy WebLinkAboutR33-Economic Development Agency CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: Emil A. Marzullo Interim Executive Director SUBJECT: Acceptance of fnnding approval and Grant Agreement for the Neighborhood Stabilization Program 3 (NSP3) DATE: May 2, 2011 ---------------------~------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Svnopsis of Previous Commission/Council/Committee Actiop(s): On April 21, 2011, Redevelopment Committee Members Johnson, Marquez and Brinker unanimously voted to recommend that the Mayor and Common Council consider this action for approval. Recommended Motion(s): (Mavor and Common Council) Resolution of the Mayor and Common Council of the City of San Bernardino, California, approving the funding and Grant Agreement for the Neighborhood Stabilization Program 3 (NSP3) Funds as authorized and appropriated under the Dodd-Frank Act 2010 and approving the execution of a Sub-Recipient Agreement by and between the Redevelopment Agency of the City of San Bernardino and Affordable Housing Solutions of San Bernardino -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Carey Jenkins Phone: (909) 663-1044 Project Area(s): N/A Ward(s): 1,2and6 Supporting Data Attached: o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s) FUNDING REQUIREMENTS: Amount: $ 3,277,401 Source: Federal Neighborhood Stabilization Program 3 Budget Authority: N/A Signature: EmilA. Fiscal Review: arzullo, Interim Executive Director Lori P --------------------------------------------------------- ------------------------------------------------------------------------- ---------------------------------------- ----------------------------------------- Commission/Council Notes: ------------------------------------------------------------------------------------------------------------------------------------------------------------~----------_.---------------------- P:\AgendasIComm Dev Commission\CDC 2011\05-16-11 NSP3 Funding Approval & Grant Agreement SR_doc COMMISSION MEETING AGENDA Meeting Date: 05/16/2011 Agenda Item Number: (2..:~;:/?:::> ECONOMIC DEVELOPMENT AGENCY STAFF REPORT _______________________________________________________________________n ____ ________ ---------------- ------ ------- --------------- ------ -------------- ------- --------------- -- ACCEPTANCE OF FUNDING APPROVAL AND GRANT AGREEMENT FOR THE NEIGHBORHOOD STABILIZATION PROGRAM (NSP3) BACKGROUND: In 2008, Congress appropriated funds for neighborhood stabilization under the Housing and Economic Recovery Act ("NSP"). In 2009, Congress appropriated additional neighborhood stabilization funds under the Recovery Act ("NSP2"). In 2010, Congress appropriated a third round of neighborhood stabilization funding under the Dodd-Frank Act ("NSP3"). In accordance with the notification of an NSP3 award the City of San Bernardino Economic Development Agency's ("Agency") prepared a substantial amendment to the Consolidated Annual Action Plan for Fiscal Year 2010-11 in order to meet the March 1,2011 deadline to apply for funding. The Agency's response to the Dodd-Frank Act consisted ofthe following two programmatic activities: 1. Acquisition, rehabilitation and resale of single-family properties and 2. Rental housing opportunities for households at or below 50% of the Area Median Income It also contained funds for an administrative line item for up to 10% of the NSP3 grant award. In response to the residential foreclosure crisis, the City of San Bernardino ("City") was eligible to receive funding from the United States Department of Housing and Urban Development ("HUD") in the amount of $3,277,401. This amount was based upon pre-determined HUD parameters including the overall number and percentage of homes in foreclosure, and the number and percentage of homes financed by subprime mortgages. CURRENT ISSUE: Under the terms of the NSP3 grant, the City must expend 50% of its award within two years and 100% of its award within three years. If the City does not expend the funds within the allotted time HUD will recapture and reallocate the funds or provide for other sanctions or corrective action. It is the intent of the Agency to have the Mayor, serving as the authorized City official, sign and thus execute the Grant Agreement acknowledging receipt and acceptance of the award and readiness to draw down funds in support of program efforts. Based on the terms and conditions ofthe NSP3, the City has three years to obligate all funds to specific project-related activities. The date that HUD officials signed the Grant Agreement was March 8, 2011. Therefore, it is incumbent upon the City to obligate the funds to its various programmatic activities as soon as possible in order to meet the HUD required expenditure targets. Under this timeline, programmatic activities would be in effect through March 7, 2014 with an assured close-out period that would occur through June 30, 2014. Per HUD requirements, if the funds are not obligated within the three year deadline, the unspent NSP3 allocation could be recaptured. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ P:\Agendas\Comm Dev CommissionlCDC 2011\05-16-11 NSP3 funding Approval & Grant Agreement SR.doc COMMISSION MEETING AGENDA Meeting Date: 05116/2011 Agenda Item Number: ~'? Economic Development Agency Staff Report NSP 3 Funding Approval & Grant Agreement Page 2 The Sub-Recipient Agreement between the City and Affordable Housing Solutions of San Bernardino ("AHS") is attached to this report as Exhibit "B". AHS is the Agency sponsored non-profit organization that has managed all NSPl activities thus far under a similar Sub-Recipient Agreement. It is anticipated AHS will manage the implementation ofNSP3 also. ENVIRONMENTAL IMPACT: No impact under the California Environmental Quality Act ("CEQA"), pursuant to Section 15301. FISCAL IMPACT: There is no impact on the City's General Fund. As a result of receiving the NSP3 grant award, the City would be entitled to $3,277,401 in housing-related funds to combat residential foreclosures RECOMMENDATION: That the Mayor and Common Council adopt the attached Resolution. E . e Director _____________________________________________________________________________________________________________________________________________~PAA.o..P.,lA ~~_' P:\Agendas\Comm Dev Commission\CDC 2011\05-16-11 NSP3 funding Approval & Grant Agreement SRdoc COMMlssfoN....MEETINGAGENDV Meeting Date: 05/16/2011 Agenda Item Number: f2-3 ? 1 2 3 4 5 6 7 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING THE FUNDING AND GRANT AGREEMENT FOR THE NEIGHBORHOOD STABILIZATION PROGRAM 3 (NSP3) FUNDS AS AUTHORIZED AND APPROPRIATED UNDER THE DODD-FRANK ACT 2010 AND APPROVING THE EXECUTION OF A SUB-RECIPIENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND AFFORDABLE HOUSING SOLUTIONS OF SAN BERNARDINO 8 WHEREAS, in Fiscal Year 2010-2011, the City of San Bernardino, California (the "City') is 9 entitled to receive $3,277,401 from the United States Department of Housing and Urban 10 Development ("HUD") under the Neighborhood Stabilization Program 3 ("NSP3") for the purpose 11 of redeveloping abandoned and foreclosed homes and other residential properties as authorized 12 under Section 1497 of the Wall Street Reform and Consumer Protection Act of2010 (Pub. L. 111- 13 203, approved July 21, 2010) ("Dodd-Frank"); and 14 WHEREAS, the NSP3 is subject to certain statutory and regulatory provisions governing the 15 Community Development Block Grant ("CDBG") program as necessitated by Dodd-Frank; and 16 WHEREAS, the City, as a direct recipient of CDBG Funds, has submitted to HUD, and 17 HUD has approved, a Consolidated Plan for Fiscal Years 2011-2015 and a Consolidated Annual 18 Action Plan for Fiscal Year 2010-2011 (the "Action Plan"); and 19 WHEREAS, the City, as required by the NSP3, prepared and submitted a substantial 20 amendment to the Action Plan to HUD in accordance with the consolidated plan procedures for a 21 substantial amendment under the annual CDBG program; and 22 WHEREAS, the City's substantial amendment to the Action Plan calls for the following 23 Program components: (1) rental housing opportunities for households at or below 50% of the Area 24 Median Income; and (2) acquisition, rehabilitation and resale of single-family properties; and 25 WHEREAS, the City shall have a 3 year period from the date of HUD's execution of the 26 funding and Grant Agreement on March 8, 2011 to obligate the NSP3 grant amount pursuant to the 27 requirements of Dodd-Frank; and 28 I P:\AgendasIResolutions\Resolutions\201IIOS_16_1I NSP3 Funding and Granl Agreement Resodoc 1 WHEREAS, the City seeks to redevelop abandoned and foreclosed homes and residential 2 properties to address the significant costs that foreclosure activity imposes on local municipalities 3 and neighborhoods. 4 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY 5 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS 6 FOLLOWS: 7 Section 1. The Mayor and Common Council hereby approve and authorize the Mayor as the 8 authorized official of the City to execute the NSP3 Grant Agreement as provided by HUD for the 9 purpose of the redevelopment of abandoned and foreclosed homes and other residential properties as 10 such Grant Agreement is attached to this Resolution as Exhibit "A". The Mayor and Common 11 Council hereby approve and authorize the City Manager to execute the Neighborhood Stabilization 12 Program 3 Sub-Recipient Agreement by and between the City and Affordable Housing Solutions of 13 San Bernardino ("AHS") attached hereto as Exhibit "BOO. 14 Section 2. This Resolution shall take effect upon its adoption and execution in the manner 15 as required by the City Charter. 16 1/1 17 11/ 18 11/ 19 1/1 20 11/ 21 1/1 22 1/1 23 1/1 24 1/1 25 1/1 26 1/1 27 1/1 28 11/ 2 P:\AgendasIResolutionsIResolutions\201 ]\05-16-11 NSP3 Funding and Grant Agreement Reso.doc 1 2 3 4 5 6 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING THE FUNDING AND GRANT AGREEMENT FOR THE NEIGHBORHOOD STABILIZATION PROGRAM 3 (NSP3) FUNDS AS AUTHORIZED AND APPROPRIATED UNDER THE DODD-FRANK ACT 2010 AND APPROVING THE EXECUTION OF A SUB-RECIPIENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND AFFORDABLE HOUSING SOLUTIONS OF SAN BERNARDINO I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the May~r and 7 Common Council of the City of San Bernardino at a meeting thereof, 8 held on the day of 9 Council Members: Aves 10 MARQUEZ 11 VACANT 12 BRINKER 13 SHORETT 14 KELLEY 15 JOHNSON 16 MC CAMMACK 17 18 ,2011, by the following vote to wit: Abstain Absent Navs Rachel G. Clark, City Clerk 19 20 The foregoing Resolution is hereby approved this ,2011. day of 21 22 Patrick J. Morris, Mayor City of San Bernardino 23 24 Approved as to Form: 25 26 By: 27 28 3 P:\AgendasIResolutionslResolutionsI201 1\05-16-1 I NSP3 Funding and Grant Agreement Resodoc 1 EXHIBIT "A" 2 Grant Agreement 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 PlAgendaslResolutionslResolulions\20J 1\05-16-11 NSP3 Funding and Grant Agreement Resodoc '"i~''' ~ * Ilutll * : ''''"HYl-,r u.s. Deportment of Houolng ond Urbon Dewlopmont Offlco of Community Plonnlng ond Dowlopmonl Loo Ango", FJold OffIce, Roglon IX 811 WHI e'" Slroo~ Sullo 1000 Loo Angol... c.Hfornl. 10017-3101 MAR 82011 Patrick J. Morris, Mayor City of San Bernardino ATTENTION: Carey K. Jenkins 201 North E Street, Suite 301 San Bernardino, CA 92401 '.- ~ 'V .... ;<".:.::::i ..... "':.-< :::! '0 ::s:! _""" ::a ':if, l-" . ".. l-" '% '" ~ ..';, ::3 '% "".. N ';1> o ..:: .,~ cD . 0 ;1> rn 0:.' rn . ;'i.~.) '60 -o"f1'\ . ~':~'. rn f1' %<;> -\--c.P T-"''-; G" rn "". '0 ~ \" Dear Mr. Morris: SUBJECT: Neighborhood Slabllization Program (NSP -3) Executed Grant Agreements Project Number: B-ll-MN-06-o520 Tax Identification Number: 956000n2 DUNS Number: 059452636 Enclosed are three copies of the Grant Agreement for Neighborhood Stabilization Program (NSP 3) grant funds allocated to the City of San Bernardino. The Department has approved your Jurisdiction's substantial action plan amendment for the NSP 3 funds in the amount of $3,2n.401 and looks forward to working with you as your jurisdiction begins to implement Its NSP 3 program. The NSP 3 program is authorized by Section 1497 of the Dodd-Frank Wall Street Reform and Consumer Protectlon Act of 2010 (Dodd-Frank). Please note that under the terms of Dodd- Frank, NSP 3 grantees have the same deadlines for expenditure as NSP 2, defined In the Title XII of American Recovery and Reinvestment Act (ARRA): grantees must expend 50% of their grant amount in two years and 100% of their grant amount In three years. The two-year period was triggered by HUD's execution of the Grant Agreement. Please execute and date the agreements and return them to this HUD office as quickly as possible to ensure that you have the maximum time available to use the NSP funds. Grant Agreements must be signed by an authorized official of the grantee. Upon receipt of the executed Grant Agreement, HUD will immediately forward the fully executed Grant Agreement to the Departmenfs accounting operations center in order to make the funds available on the grantee's line of credit. Please remember that NSP funds win be available through HUD's Disaster Recovery Grant Reporting (DRGR) system, not the Integrated Disbursement and Information System (IDIS). If you have questions regarding DRGR, please contact the DRGR help desk at DRGR HelDOhud,aov. HUD will notify grantees when NSP funds are available for drawdown through DRGA. Grantees are reminded that the October 19, 2010, Federal Register Notice for NSP 3 requires quarterly reports by grantees (see 75 FR 64337, Section 0, Reporting). Such reports are due not later than 30 days following the end of each calendar qlnirter with the first such report due not later than July 31, 2011, for the quarter ending June 30, 2011. Given three-year perlod In which grantees must expend the NSP 3 funds, ills imperative that grantees regularly update DRGR with program performance Information. HUD will closely monitor quarterly report submissions and will aggressively pursue grantees that fall to report in a timely manner. Grantees are also reminded that each quarterly report must be posted on their web sites so that the public may have ready access to the information. In the October 19, 2010 Notice, HUD authorized grantees to use up to 10 percent of their NSP funds for administrative costs incurred in management and Implementation 01 the NSP . program. While HUD is cognizant 01 the fiscal pressures facing many state and local governments, please understand that these funds may only be used lor administration of NSP and may not be used to finance the broader governmental functions 01 the grantee. The Department will be monitoring NSP drawdowns to identify instances where grantees draw administrative funds that are excessive In relation to the level 01 program progress. Grantees are reminded that: . The October 19, 2010, Federal Register Notice requires that NSP grantees maintain on their official webslte a copy 01 the final approved substantial action plan amendment. Grantees are also reminded that they are required to posl'quarterly performance reports to their websites concurrent with their submission to HUD. . NSP-Iunded actMtles are subject to applicable provisions of the HUD Environmental Review Procedures (24 CFR Part 58). In this regard a request lor release of funds must be approved by HUD prior to the obligation or utilization 01 funds for NSP activities. The environmental review process for NSP is the same as for the Community Development Block Grant (CDBG) program. . The Grant Agreement requires grantees to submit inlormatlon on performance measurement as established by the Secretary for activities undertaken with NSP grant lunds. . As a recipient of HUD funds, lederallaw requires that grantees ensure their plan benefits all members of their community, without regard to race, color, national origin, sex, religion, lamlllal status, or disability. Grantees should take afllrmative steps to ensure that no person Is denied the benefit of housing or housing-related services for any of the foregoing reasons. . Providing false, flctitious or misleading Information with respect to the administration of NSP funds may result In criminal, cMI or administrative prosecution under 18 U.S.C. 1001, 18 U.S.C. 1343,31 U.S.C. 3729, 31 U.S.C. 3801, or another applicable statute. We are pleased to have this opportunity to work with your jurisdiction through the Neighborhood Stabilization Program and we are available to assist with your implementation 01 the i program. II you have any questions please contact Jim Yerdon, Neighborhood Stabilization Program Representative, at (213) 534-2615. William G. Vasquez, D ect Office 01 Community an and Development Enclosures FUNDING APPROVAL AND GRANT AGREEMENT FOR NEIGHBORHOOD STABILIZATION PROGRAM 3 (NSP3) FUNDS AS AUTHORIZED AND APPROPRIATED UNDER THE WALL STREET REFORM AND CONSUMER PROTECTION ACT OF 2010, AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 AND THE HOUSING AND ECONOMIC RECOVERY ACT OF 2008 (PUBLIC LAWS 111-203, 111-005 and 110-289) NSP3 GRANTEE: City of San Bernardino NSP3 GRANT NUMBER: B-11-MN-06-0520 NSP3 GRANT AMOUNT: $3.277.401 NSP3 APPROVAL DATE: 03108/2011 NSP3 EXPENDITURE DEADLINE (2 YEAR): 03/08/2013 NSP3 EXPENDITURE DEADLINE (3 YEAR): 03/08/2014 DUNS NUMBER: 059452636 1. This Grant Agreement between the U.S. Department of Housing and Urban Development (HUD) and City of San Bemardino(Grantee) is made pursuant to the authority of section 1497 of the Wall Street Reform and Consumer Protection Act of 2010 (Pub. L. 111-203 (July 21,2010)) (Dodd-Frank Act), title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5 (February 17, 2009)) (Recovery Act) and sections 2301 - 2304 of the Housing and Economic Recovery Act of 2008 (Public Law 110-289 (July 30,2008)) (HERA). The program established pursuant to section 2301- 2304 of HERA is known as the "Neighborhood Stabilization Program" or "NSP." The term "NSP2" refers to the second appropriation of NSP funds provided under the Recovery Act. The additional allocation under the Frank Dodd Act represents the third round of Neighborhood Stabilization Program funding and is referred to as "NSP3." Notice of Formula Allocations and Program Requirements for Neighborhood Stabilization Program Formula Grants (Docket No. FR-5447-N-Ol, October 19, 2010) (NSP3 Notice); the Dodd-Frank Act; the Recovery Act; HERA; the Grantee's application for NSP3; the HUD regulations at 24 CPR Part 570 (as modified by the NSP3 Notice as now in effect and as may be amended from time to time) (Regulations); and this Funding Approval, including any special conditions, constitute part of the Grant Agreement. In the event of a conflict between a provision of the Grantee's Application and any provision of this Grant Agreement, the latter shall control. 2. The Grantee shall comply with reporting requirements established by HUD and OMB 2 3. Subject to the provisions of this Grant Agreement, HUD will make NSP3 Grant Funds in the amount of $3,277,401 available to the Grantee upon execution of this Grant Agreement by the parties. Of that amount, $819,350 must be used to house individuals or families whose incomes do not exceed 50 percent of area median income, pursuant to Dodd-Frank Act. The Grantee shall have 24 months from the date of HUD's execution of this Grant Agreement to expend half of the NSP3 Grant amount pursuant to the requirements of this Agreement, the Dodd-Frank Act, the Recovery Act, HERA and the NSP3 Notice, as amended. The Grantee shall have 36 months from the date of HUD's execution of this Grant Agreement to expend the total NSP3 Grant amount pursuant to the requirements of this Agreement, the Dodd-Frank Act, the Recovery Act, HERA and the NSP3 Notice, as amended. The NSP3 Grant Funds may be used to pay eligible costs arising from eligible uses incurred after the NSP3 Approval Date provided the activities to which such costs are related are carried out in compliance with all applicable requirements. Pre-award planning and general administrative costs may not be paid with funding assistance except as permitted in the NSP3 Notice, as amended. Other pre-award costs may not be paid with funding assistance except as permitted by 24 CPR 570.200(h); for purposes of NSP3, such costs are limited to those incurred on or after the date that the NSP3 Notice was published by HUD. 4. The Grantee agrees to assume all of the responsibilities for environmental review, decision making, and actions, as specified and required in regulations issued by the Secretary pursuant to section 104(g) of Title I of the Housing and Community Development Act, as amended (42 U.S.C. 5304) and published in 24 CFR Part 58. 5. The Grantee agrees that it will demolish or convert units using NSP3 funds only to the extent and scope described in the NSP3 substantial amendment. The Grantee agrees that under no circumstances will NSP3 funds be used to demolish any public housing (as defined in section 3 of the United States Housing Act of 1937 (42 U.S.C. 1437a)). 6. The Grantee agrees to comply with the Recovery Act provisions concerning tenant protections applicable to NSP3 acquisitions of foreclosed property. The Grantee must document its efforts to ensure that the initial successor in interest (ISm in a foreclosed upon dwelling or residential real property (typically, the initial successor in interest in property acquired through foreclosure is the lender or trustee for holders of obligations secured by mortgage liens) has provided bona fide tenants with the notice and other protections outlined in the Recovery Act. The Grantee will not use NSP3 funds to finance the acquisition of property from any initial successor in interest that failed to comply with applicable requirements unless the Grantee assumes the obligations of such initial successor in interest with respect to bona fide tenants. If the Grantee elects to assume such obligations, it may only do so if the tenant is still occupying the property and will provide any tenant displaced as a result of the NSP3 funded acquisition with the assistance outlined in 24 CPR 570.606. If the Grantee knows that the ISn did not comply with the NSP tenant protection requirements and vacated the property contrary to the NSP requirements, NSP3 funds cannot be used to acquire such properties. , 3 7. The Grantee further acknowledges its responsibility for adherence to all applicable terms and conditions of this grant award by sub-recipient entities and contractors, including obtaining a DUNS number (or updating the ellisting DUNS record), and registering with the Central Contractor Registration. 8. This Grant Agreement may be amended only with the prior written approval of HUD. In considering proposed amendments to this Grant Agreement, HUD shall also review, among other things, whether the amendment is otherwise consistent with the Dodd-Frank Act, the Recovery Act, HERA, the NSP3 Notice, as amended, and the Regulations. 9. The Grantee may not amend its Grantee Submission other than as described above; however, such amendments will be subject to the requirements of the NSP3 Notice and any revisions HUD may make to the NSP3 Notice (01' any successor Notice or regulation). 10. The Grantee must respond in writing to any citizen complaint within 15 working days, if feasible, and send a copy of the response to HUD. The Grantee shall at all times maintain an up-to-date copy of its Grantee Application, including all amendments approved by HUD, on its Internet website. Further, the Grantee shall maintain information on all drawdowns, deposits, and ellpenditures of grant funds and program income under this Funding Approval and Grant Agreement and any other records required by 24 CFR 570.506 and the NSP3 Notice, as amended, in its files and shall make such information available for audit or inspection by duly authorized representatives of HUD, HUD's Office of the Inspector General, or the Comptroller General of the United States. 11. The Grantee is advised that providing false, fictitious or misleading information with respect to NSP3 Grant Funds may result in criminal, civil or administrative prosecution under 18 USC ~ 1001, 18 USC ~ 1343, 31 USC ~ 3129, 31 USC ~ 3801 or another applicable statute. 12. Close-out of this grant shall be subject to the provisions of 24 CFR 570.509 or such close-out instructions as may hereafter be issued by HUD specifically for NSP3 grants. 4 This NSP3 Grant Agreement is binding with respect to HUD in accordance with its terms upon the execution by HUD in the space provided below, subject to execution on behalf of the Grantee. The United States Department of Housing and Urban Development William Vasquez Name of Authorized Official Director, Office of Community Planninl! and Develooment Title of Authorized Official The Grantee City of San Bernardino Signature of Authorized Offieal Patrick J. Morris Name of Authorized.Official Mavor Title of Authorized Official Date of Signature 956000772 Grantee Tax Identification Number 1 EXHIBIT "B" 2 Neighborhood Stabilization Program 3 Sub-Recipient Agreement 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 P-\Allendas\Resolutions\Resolutions\201 ]\05. ]6-] I NSP3 Fundin.e; and Grant Agreement Reso_doc NEIGHBORHOOD STABILIZATION PROGRAM 3 SUB-RECIPIENT AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND AFFORDABLE HOUSING SOLUTIONS OF SAN BERNARDINO, A CALIFORNIA NON-PROFIT CORPORATION 4852-7165-4915.1 1 P:\Agendas\Agenda Attachments\Agenda Attachments\AgrmtSoAmend 2011\05-16-11 NSPJ. Sub-Recipient Agreement City & AHS.docx NEIGHBORHOOD STABILIZATION PROGRAM 3 SUB-RECIPIENT AGREEMENT This Agreement is entered into this 16th day of May, 2011. ("Agreement"), by and between the City of San Bernardino, a public body, corporate and politic, hereinafter referred to as the "City" and Affordable Housing Solutions of San Bernardino, a California Non-profit Public Benefit Corporation ("AHS"), hereinafter referred to as the "Sub-recipient" or "AHS." WITNESSETH WHEREAS, the City through its Redevelopment Agency of the City of San Bernardino ("Agency") has entered into a contract with the United States of America through its Department of Housing and Urban Development ("HUD") to execute the City's Community Development Block Grant ("CDBG") Program under the Housing and Community Development Act of 1974, as amended, hereinafter called the "Act"; and WHEREAS, the City and the Sub-recipient have an interest in providing necessary services to and enhancement of the quality of life of its citizens; and WHEREAS, the City and the Sub-recipient recognize that the project herein is eligible under HUD regulations; and WHEREAS, the City and the Sub-recipient desire to cooperate in the implementation of the Program by reason of experience, preparation, organization, staffing, and facilities to provide homes and services for the benefit oflow-, moderate- and middle income persons; and WHEREAS, NSP3 on July 21, 2010 the United States government adopted the Wall Street Reform and Consumer Protection Act of201O (Pub. L. 111-203) ("Dodd-Frank"); and WHEREAS, pursuant to Section 1497 of Dodd-Frank the United States Government created a program known as the Neighborhood Stabilization Program Three ("NSP3"); and WHEREAS, the purpose of the NSP3 is to make funding available for certain qualified uses in order to assist state and local governments with emergency assistanc~ for the redevelopment of abandoned and foreclosed upon homes and residential properties; and WHEREAS, on October 19, 2010, HUD published its "Notice of allocations, waivers granted, alternative requirements applied, and statutory program requirements" for the NSP3 in the Federal Register, Volume 75, No. 201, Docket No. FR-5447-N-Ol ("Notice"); and WHEREAS, pursuant to the Notice, NSP3 funds are to be considered CDBG funds unless stated otherwise in the Notice; and WHEREAS, in order to qualify for an NSP3 grant, the City has adopted a substantial amendment to its CDBG program setting forth the criteria and guidelines for implementation of the NSP3 within the City ("Substantial Amendment"); and 4852-7165-4915.1 2 P:\Agendas\Agenda Attachments\Agenda Attachmenls\Agrmts-Amend 2011\05-16-11 NSP3 - Sub-Recipient Agreement City & AHS.docx WHEREAS, the Substantial Amendment, and all provisions contained therein, is incorporated by reference into this Agreement as though fully set forth herein; and WHEREAS, HUD has reviewed and approved the Substantial Amendment, and will make NSP3 grant funding available to the City as the administrative agent for the City; and WHEREAS, under the NSP3 regulations, the City's NSP3 funding allocation must be obligated within three (3) years from and after the date ofthe City's grant agreement with HUD; and WHEREAS, AHS as a nonprofit public benefit corporation is authorized to act as a Sub- recipient; and WHEREAS, in addition to other sources of funding and other program opportunities, the Mayor and Common Council of the City of San Bernardino ("Common Council") as the governing body of the City on behalf of the City seeks to establish and engage Sub-recipient as a NSP3 grant sub- recipient to assist the City in utilizing its NSP3 funds for the purchase, rehabilitation and resale or rental of abandoned and foreclosed upon eligible properties ("Eligible Properties") within the NSP3 Target Zone, as defined in Exhibit "C," to households whose annual income does not exceed 120% of the Area Median Income ("AMI") who meet all other tenancy requirements established under NSP3 ("Eligible Homeowners"), all as further set forth in the Substantial Amendment and in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants herein set forth and the mutual benefits to be derived therefrom, the parties agree as follows: OPERATIVE PROVISIONS 1. Incorporation of Recitals The Recitals set forth above are true and correct and are incorporated into this Agreement as though fully set forth herein. 2. Sub-recipient's Name The name of the non-profit Sub-recipient shall be the Affordable Housing Solutions, as adopted in the Sub-recipient's bylaws and stated in the amended Articles of Incorporation. Any substitution of name shall require a majority vote of the Sub-recipient's Board of Directors as approved by the governing body of the City. 3. Supervision of Sub-recipient A. The Staff of the Agency (or its successor, hereafter "Agency") in their designated capacity as staff to the Sub-recipient and designated in Exhibit "B" shall be responsible for the direction of any work to be performed by Sub-recipient and any other consultants or sub-consultants to the City under this Agreement. Sub-recipient shall not undertake any work under the terms of this Agreement, unless instructed to do so by one of the designated staff members. No other staff member is authorized by the City to request services from Sub-recipient. 4852-7165-4915.1 3 P:\Agendas\Agenda Attachments\Agenda Attachments\Ailmts-Amend 2011\05-16-11 NSP3. Sub-Recipient Agreement City & AH5.docx B. Sub-recipient shall obtain approval for its activities affecting the acqulSltlOn, rehabilitation and disposition of real estate and procurement of services by the Board of Directors of Sub-recipient without any further approval by the City. 4. Organization of Sub-recipient A. The Sub-recipient's purpose is to act on behalf of the City to implement the foreclosure acquisition, rehabilitation, and resale components ofNSP3 funding as set forth herein. B. Sub-recipient Administration. 1. The Sub-recipient shall be comprised of a five-member Board of Directors ("Board") consisting of the Interim Executive Director of the Agency, the Housing and Community Development Director of the Agency, the Interim Chief Financial Officer of the Agency, and two additional members appointed by other members of the Board. General legal counsel shall be provided by Lewis, Brisbois, Bisgaard and Smith as special counsel to the Agency and AHS. H. The Board will provide a list of the then-current members of the Board to the City and will notify the City immediately upon the appointment of new Board members. HI. The Interim Executive Director of the Agency shall serve as the Chairman of the Board and the Chief Executive Officer ("CEO") of the Sub-recipient and shall have the authority to convene meetings of the Sub-recipient, as needed. Administrative oversight and daily management of Sub-recipient activities shall be controlled by its Chief Operating Officer ("COO") who also serves as the Director of Housing and Community Development ofthe Agency. 5. Sub-recipient Funding and Support A. The Agency or AHS shall provide all staffing for the Sub-recipient for completion of the services described in the Scope of Services set forth in Exhibit "A". B. The City shall adopt a Resolution concurrent with this agreement that authorizes the following funds as shall be made available to Sub-recipient to fund foreclosure acquisitions, rehabilitations, re-sales, and rentals as more thoroughly discussed in Section 8 below, provided such acquisitions, rehabilitations and re-sales are appropriate pursuant to any and all NSP3 regulations and program guidelines approved by HUD. Initial amounts allocated to Sub-recipient: Source of Funds: Dollar Amount: NSP3 (acquisition, rehabilitation, $3,277,401 resale and rental of foreclosed properties through intermediary agreements) 4852-7165-4915.1 4 P:\AgendaslAgcnda AttachmentslAgcnda Attachments\Agrmts-Amend 201 ]\05-16-11 NSPJ - Sub-Recipient Agreement City & AHS,docx 6. Scope of Sub-recipient Services The Subrecipient shall perform all the services described and set forth in the Scope of Services attached hereto as Exhibit "A" to this Agreement and incorporated herein by this reference. Sub-recipient hereby agrees to perform the work set forth in the Scope of Services, in accordance with the terms of this Agreement. Sub-recipient shall perform the services as set forth on said Scope of Services within the time periods to be identified by the appropriate representative. 7. Time of Performance Said services of the Sub-recipient are to commence upon execution of this agreement, and shall continue until termination by either Party. 8. Initial Capital Allocation A. The Sub-recipient shall be funded through an initial allocation of$3,277,401 million, as indicated by the amount described in Section 5.8. above. Certain of these properties will be rehabilitated and resold to households whose annual income does not exceed 120% of AMI ("Eligible Homebuyers"). Other properties will be acquired rehabilitated and rented to households whose annual income does not exceed 50% of AMI ("Eligible Renters"). This amount shall be determined to be the Initial Capital Allocation ofNSP3 funds. B. Subsequent funding allocations may be authorized based on need and funding availability. Potential funding sources may include, but are not limited to, additional NSP3 funds from both state and federal sources, City Low-to-Moderate Income 20% Housing Set Aside and HOME Program funds. In all cases, future allocations, should they occur, shall be subject to Common Council approval, as applicable, and must be for the promotion of affordable housing and economic development opportunities within the City. 9. Record Retention Records, maps, field notes and supporting documents and all other records pertaining to the use of funds disbursed to the Sub-recipient hereunder shall be retained by the Sub-recipient and available to the City for examination and for purposes of performing an audit for a period of five (5) years from the date of expiration or termination of this Agreement or for a longer period, as required by law. Such records shall be available to the City and to appropriate county, state or federal agencies and officials for inspection during the regular business hours of the Sub-recipient. If the Sub-recipient does not maintain regular business hours, then such records shall be available for inspection between the hours of 9a.m. and 5p.m. Monday through Friday, excluding federal and state govermnent holidays. In the event of litigation or an audit relating to this Agreement or funds paid to the Sub-recipient by the City under this Agreement, such records shall be retained by the Sub-recipient until all such litigation or audit has been resolved. 4852-7165-4915.1 5 P:\Agendas\Agenda AttachmemslAgcnda Attachments\Agnnts-Amtnd 2011\05-16-11 NSPJ . Sub-Recipient Agreement City & AHS,docx 10. Acquisition Procedures Upon the review and analysis of specific properties by AHS staff on behalf of the City the COO, shall make a recommendation for acquisition that shall be presented to the Board of the Sub-recipient. Based upon a majority vote of the Board in support of each such proposed acquisition, the COO and his/her Staff or agents shall negotiate the acquisition of said properties under the terms and conditions approved by the Board and detailed in the "Use of Allocated Funds" section. II. Use of Allocated Funds A. NSP3 Funds shall be used for the acquisition of foreclosed upon and abandoned properties to be rehabilitated and resold to income eligible households and acquired, rehabilitated and rented to eligible tenants. The Sub-recipient shall hold title to the properties acquired until they are resold to Eligible Households, or other qualified nonprofit and/or for-profit organizations to own, maintain and manage based upon covenants and other deed restrictions imposed to promote affordable housing. B. At a time deemed appropriate by the COO, properties shall be forwarded to the Board for consideration to acquire. Upon a majority vote of the Board, the Sub-recipient shall enter into escrow for said properties. Authority to sign the necessary paperwork to enter into escrow shall be given to the COO, or in his/her absence, the CEO. C. Not less than five (5) business days prior to close of escrow, Staff shall request that funds necessary to acquire the properties in escrow be drawn from the appropriate source and deposited into a segregated account deemed appropriate by the Interim Finance Director serving in his/her capacity as Chief Financial Officer ("CFO") of the Sub-Recipient. At the appropriate time identified in the escrow instructions, the CFO shall transfer these funds into escrow in order to close the transaction at which time the Sub-recipient shall hold title to the properties until their final disposition at a later date. D. At the time of Initial Capital Allocation the Sub-recipient shall have the authority to acquire properties deemed appropriate under the Program and/or under the programmatic requirements of the specific funding source. In all instances, property acquisition shall be conducted utilizing sound real estate practices deemed necessary for the specific transaction to include, but not limited to, the review of: (1) the preliminary title report; (2) phase I environmental study, when applicable; (3) property environmental assessment; (4) current appraisal report; (5) property inspection and cost estimate report. 12. Requirements for Transfer of Property A. Sub-recipient shall have the responsibility of: 1. assuring that all transfers of properties to Eligible Homeowners purchasing the acquired foreclosed homes after rehabilitation contain a deed covenant assuring affordability for 45 years or 55 years, whichever is applicable, and running with the land and that separate Affordability Covenant documents will be executed by the Eligible Homeowners and recorded against the applicable properties; 4852-71654915.1 6 P:\Agendas\Agenda AttacbmentslAgenda Attachments\Agrmts-Amend 2011105-1&-1] NSP3 - Sub-Recipient Agreement City & AHS.docx ii. verifying that required notices are recorded against the rehabilitated properties to evidence affordability covenants; 111. providing a homeowner's education program for each homeowner whereby such homeowners are aware of the affordability and resale restrictions; IV. ensuring that sales are not made to investors and that the property shall only be sold to Eligible Homebuyers as a principle place of residence; v. ensuring that all properties rehabilitated pursuant to the Program are sold at a price not greater than the lesser of the total cost of acquisition or the appraisal value of the property. 13. Accounting A. The Sub-recipient shall establish and maintain on a current basis a adequate accrual accounting system in accordance with generally accepted accounting principles, practices, and standards. B. At all times, the CFO shall maintain the financial books and records of the Sub- Recipient separate and apart from other City financial records. C. The Board shall provide an annual audit report and an annual audit of the list of properties acquired and demolished or rehabilitated and resold, as well as an accounting of all NSP3 funds received and expended for each category of expenditures. The CFO shall maintain the books of the Sub-Recipient in order to conduct such annual reports and audits as may be necessary per HUD or other governmental and/or regulatory bodies. D. For expenses incurred by the Sub-Recipient, the CFO shall have the authority to pay for them from funds requested by HUD and/or other sources deemed appropriate by the Board and, if applicable, the Common Council. E. The COO and hislher staff shall maintain accurate lists/records of the following: I. all homeowners by property; II. all contractors by property; iii. the acquisition price of the foreclosed homes; IV. the rehabilitation funds required for each home; v. the resale price of each home; and vi. the amount of any other down payment assistance from the Sub-recipient or the City. 14. Regular Reporting Requirements A. The Sub-recipient shall commit to a City-approved program to provide periodic monitoring of compliance of each homeowner purchasing a NSP3 acquired foreclosed home. 4852-7165-4915.1 7 P:\Agendas\Agenda Anachmellu\Agenda Attachmenls\Agnnts-Amend 2011\05-16-11 NSP3 - Sub--Redpienl Agreement City & AHS,dOClt B. Within thirty (30) calendar days after the end of each calendar quarter, the COO shall provide a status report to the Common Council and the Community Development Commission of the City of San Bernardino ("Commission") regarding the activities of the Sub-Recipient. Such report shall detail, among other things: funds expended to date, progress made on acquisition activities, any relocation that has occurred, properties resold to private owners, demolitions completed and properties rehabilitated. 15. Authority to Enter Into Agreements Recommendations for the Sub-recipient to enter into all third party service agreements shall be made by the COO to the Board who must approve of such recommendations by a majority vote. The third party service agreements and the other obligations incurred pursuant thereto shall be obligations solely ofthe Sub-recipient and not that of the City. 16. Dates and Times of Board Meetings Board meetings shall occur on the second Thursday of each month unless a time earlier is deemed necessary. Any Board member shall have the right to call a special meeting of the Board provided that all Board members have been given at least twenty-four (24) hours prior written notice or otherwise are in attendance at such special meeting regardless of the notice, if any, given to such Board member. 17. Compliance with Laws and Assurances The Sub-recipient hereby assures and certifies that it has complied and will continue to comply with the Act and all applicable federal, state, and local laws, ordinances, regulations, policies, guidelines, and requirements as they relate to acceptance and use of federal funds for this federally-assisted Program. This Agreement is subject to all such laws, ordinances, regulations, policies and guidelines, including, without limitation, the Act; Dodd-Frank; Title 24, Code of Federal Regulations, Part 85; Title 24, Code of Regulations, Part 570; and U.S. Office of Management and Budget Circulars applicable including, without limitation, A-87, A-95, A- 110, A-122 and A-128. 18. Affirmative Action The Sub-recipient shall make every effort to ensure that all proj ects funded wholly or in part by HUD NSP3 funds shall provide equal employment and career advancement opportunities for minorities and women. In addition, the Sub-recipient shall make every effort to employ residents of the area and shall keep a record of the positions that have been created directly or as a result of this Program. 19. Discrimination A. No person shall, on the grounds of race, sex, creed, color, religion or national origin, be excluded from participating in, be refused the benefits of, or otherwise be subjected to discrimination in any activities, programs, or employment supported by this Agreement. 4852-7165-4915.1 8 P:\Agendas\Agenda Attaehments\Agenda Attachments\Agrmts-Amend 2011\05-16-11 NSPJ _ Sub-Recipient Agreemenl City & AHS.docx B. The Sub-recipient shall not discriminate against any person on the basis of race, color, creed, religion, natural origin, ancestry, sex, marital status or physical handicap in the performance of the Scope of Services of this Agreement. Without limitation, the Sub- recipient hereby certifies that it will not discriminate against any employee or applicant for employment because of race, color, religion, sex, marital status or national origin. C. Further, the City, and the Sub-recipient shall promote affirmative action in their hiring practices and employee policies for minorities and other designated classes in accordance with federal, state and local laws. Such action shall include, but not be limited to, the following: recruitment and recruitment advertising, employment, upgrading and promotion. In addition, the City, the City and the Sub-recipient shall not exclude from participation under this Agreement any employee or applicant for employment on the basis of age, handicap or religion in compliance with State and Federal laws. 20. Changes in Grant Allocation The City, through the Common Council, may grant additional funds at its discretion for use by the Sub-recipient to assure the successful completion of the Program. 21. Notices All notices herein required shall be in writing. Notices shall be sent by prepaid First Class Mail to the following Address: If to the City: Redevelopment Agency of the City of San Bernardino Attn.: Emil A. Marzullo, Interim Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 If to the Sub-recipient: Affordable Housing Solutions of San Bernardino, a California non-profit corporation Attn.: Chief Operating Officer 201 North "E" Street, Suite 301 San Bernardino, California 92401 22. Assignment Except for an assignment to a successor of AHS or to the Agency, this Agreement is not assignable by the Sub-recipient without the express prior written consent of the City, which consent shall be given in the City's sole discretion. Any attempt by the Sub-recipient to assign any performance of the terms of this Agreement shall be null and void and shall constitute a material breach of this Agreement upon which the City may, among its other remedies, and without limitation, cancel, terminate or suspend this Agreement. 4852-7165-4915.1 9 P\AgendaslAgenda Attachments\Agenda Attachments\Agrrnts-Amend 2011\05-16_11 NSP3 - Sub-Recipient Agreement City & AHS,docx 23. Termination (a) This Agreement may be terminated at any time by either Party upon giving its thirty (30) day notice in writing to the other Party. The CEO or his/her designee is hereby empowered to give said notice, subject to ratification by the Common Council. Further, the City may immediately terminate this Agreement upon the termination, suspension, discontinuation or substantial reduction in HUD NSP3 funding for the Agreement activity. Further, and not withstanding any other provision of this Agreement, if the Sub-recipient materially fails to comply with any term of this Agreement, the City may take anyone or more of the following actions, as appropriate in the circumstances: (i) temporarily withhold cash payments pending correction of the deficiency by the Sub-recipient or more severe enforcement action by the awarding City; (ii) wholly or partly suspend or terminate the current award for the Program; (iii) withhold further awards for the Program; or (iv) take other remedies that may be legally available. Further, and notwithstanding any other provision of this Agreement, the award may be terminated for convenience in accordance with Title 24, Code of Federal Regulations, Part 85.44. 24. Program Income Any and all Program Income (as defined at Title 24, Code of Federal Regulations, Part 570.500(a)) received by the Sub-recipient during the term of this Agreement shall be used and applied by Sub-recipient and upon any termination of this Agreement shall immediately be returned to the City. Any and all Program Income on hand with the Sub-recipient at the time of the expiration of this Agreement, or received by the Sub-recipient after the expiration of this Agreement, shall be paid to the City pursuant to the provisions of this Agreement as further provided in Section 25 below. 25. Reversion of Assets Upon the expiration or termination of this Agreement, for any reason whatsoever, the Sub- recipient shall forthwith transfer to the City, NSP3 funds on hand at the time of such expiration or termination and any accounts receivable attributable to the use NSP3 funds including, without limitation, Program Income. 26. Fiscal Limitations HUD may in the future place programmatic or fiscal limitations on NSP3 funds not presently anticipated. Accordingly, the City reserves the right to revise this Agreement in order to take account of actions affecting HUD program funding. In the event of funding reduction, the City may reduce the Allocated Funding of this Agreement, and may, at its sole discretion, limit the Sub-recipient's authority to commit and spend funds. Where HUD has directed or requested 4852-7165-4915.1 10 P:\Agendas\Agenda Attachments\Agenda Attachments\Agrmcs-.-Amend 2011\05-16_11 NSPJ. Sub-Recipient Agreement City & AHS.doex the City to implement a reduction in funding, with respect to funding for this Agreement, the Interim Executive Director or hislher Designee may act for the City in implementing and effecting such a reduction and in revising the Agreement for such purpose. The Interim Executive Director or hislher Designee may act for the City in suspending the operation of this Agreement for up to sixty (60) days, upon three (3) days' prior written notice to the Sub- recipient of hislher intention to so act. In no event, however, shall any revision made by the City affect expenditures and legally binding commitments made by the Sub-recipient before it received notice of such revision, provided that such amounts have been committed in good faith and are otherwise allowable and that such commitments are consistent with HUD cash withdrawal guidelines. 27. Use of Funds for Entertainment. Meals or Gifts The Sub-recipient certifies and agrees that it shall not use funds provided through this Agreement to pay for entertainment, meals, or gifts. 28. Release, Indemnification, and Hold Harmless The Sub-recipient shall defend (if requested by the City), release, indemnify and hold the City and the Agency, their officers, officials, attorneys, agents, employees, and authorized volunteers, harmless from and against any loss, liability, claim, or damages that may arise or result from activities of the Sub-recipient, its officers, agents, and employees and, shall, at its own costs, expense and risk, defend any and all legal proceedings that may be brought against the City and the Agency on any claim, demand, or alleged liability, and shall satisfy any settlement or judgment that may be rendered against any of them arising or resulting from activities of the Sub-recipient, and shall assume liability for any and all direct expense incurred in providing services pursuant to this Agreement and shall assume any and all responsibilities for loss or damage resulting from negligence, injury, illness or disease arising out of the provision of services. The Sub-recipient, however, is obligated to promptly notify the City and the Agency in writing of any such loss or damage. 29. Insurance Requirements The Sub-recipient shall secure and maintain throughout the term of the Agreement the following types of insurance with limits as shown: A. Statutory Worker's Compensation Insurance. The Sub-recipient shall require the carriers of this coverage to waive all rights of subrogation against the City and City, their officers, volunteers, employees, contractors and subcontractors. The Sub-recipient shall maintain all California statutory requirements of One Million Dollars ($1,000,000) limit and shall provide a waiver of subrogation in favor of City. B. Comprehensive General and Automobile Liability Insurance. The Sub-recipient shall obtain general liability insurance on a per occurrence basis with a combined single limit of One Million Dollars ($1,000,000); and automobile liability insurance for owned, hired and non-owned vehicles on a per occurrence basis with a combined single limit of One Million Dollars ($1,000,000). Additional insured endorsements are required for general and automobile liability policy coverage. 4852-7165-4915.1 11 P:\AgendaslAgenda Anachments\Agenda Attachments\Agrmts-Amend 201 ]\05-16-11 NSP3 _ Sub-Recipient Agreement City & AHSdocx Additional insured shall be listed as: "The City and the Agency, their officers, officials, attorneys, agents, employees and authorized volunteers" C. Other Requirements and Acceptable Proof of Insurance. I. All insurance coverage must be maintained throughout the duration of this Agreement. 11. Insurance companies must have an A.M. Best Rating ofB+VII or better. 111. Policy deductibles must be stated for each coverage. Deductibles greater than Five Thousand Dollars ($5,000) must include a letter of credit. IV. Acceptable Proof of Insurance: a. ACCORD Certificate of Insurance listing all coverage, limits, deductibles and insurers; and blanket endorsements for all applicable coverage if agent has authority to issue it; or b. Binders of insurance for all coverage. Agents must confirm that policy endorsements have been ordered from the respective insurance companies. Upon issuance, policy endorsements and a corresponding Certificate of Insurance listing all insurers and coverage must be submitted to the City and the Agency. NOTE: Insurance binders are only valid for thirty (30) days and may need to be reissued if the policy endorsements are still pending. Binders may be issued for a maximum of three, thirty (30) day periods. The Sub-recipient shall furnish certified copies of all policies and endorsements to the City and the Agency, evidencing the insurance coverage above required, five business days prior to the commencement of performance of services hereunder, which certificates shall provide that such insurance shall not be terminated or expire without thirty (30) day prior written notice to the City and the Agency, and shall maintain such insurance from the time the Sub-recipient commences performance of services hereunder, until the completion of such services. An inventory of such insurance shall be completed by the Sub-recipient and approved by the City and the Agency prior to the commencement of performance of services hereunder. All policies, with respect to the insurance coverage required above, except for the worker's compensation coverage, shall contain additional insured endorsements naming the City and the Agency, and their officers, agents, employees and volunteers as additional name insured, with respect to liabilities arising out of the performance of services hereunder. 30. Conflict ofInterest The Sub-recipient, its agents and employees shall comply with all applicable federal, state, and city laws and regulations governing conflict of interest. To this end, the Sub-recipient will 4852.7165-4915.1 12 P:\Agcndas\Agenda Attachmems\Agenda Attachmerns\Agrmts-Amend 2011\05-16-11 NSP3. Sub-Recipient Agreement City & AHS_docx make available or shall provide copies of all applicable federal, state, and City laws and regulations governing conflict of interest, to its agents and employees. 31. Program Monitoring The Sub-recipient shall maintain such property, personnel, financial and other records and accounts as are considered necessary by HOD, and the City, to assure proper accounting for all NPS3 funds authorized under this Agreement. The Sub-recipient will permit on-site inspection by the City and HUD representatives, and ensure that its employees and board members furnish such information, as in the judgment of the City and HOD, may be relevant to a question of compliance with contractual conditions and HUD directives, or the effectiveness, legality, and achievements of the Program. All the Sub-recipient records, with the exception of confidential client information, shall be made available to representatives of the City and appropriate federal agencies. The Interim Executive Director or hislher designee will conduct periodic Program progress reviews. These reviews will focus on the extent to which the planned Program has been implemented and measurable goals achieved, the effectiveness of Program management, and the impact of the Program. 32. Religious Proselytizing or Political Activities The Sub-recipient agrees that it will not perform or permit any religious proselytizing or political activities in connection with the performance of this Agreement. Funds under this Agreement will be used exclusively for performance of the services required under this Agreement and no funds shall be used to promote any religious or political activities. 33. Audits The Sub-recipient is required to arrange for an independent financial and compliance audit annually for each fiscal year Federal funds are received under this Agreement. An audit may also be conducted by Federal, State, or local funding source agencies as part of the City's audit responsibilities. The results of the independent audit must be submitted to the City within thirty (30) days of completion. Within thirty (30) days of the submittal of audit report, the Sub- recipient shall provide a written response to all conditions or findings reported in said audit report. The response must examine each condition or finding and explain a proposed resolution, including a schedule for correcting any deficiency, within six (6) months after receipt of the audit report. The City, and its authorized representatives shall, at all times, have access for the purpose of audit or inspection to any and all books, documents, papers, records, property, and premises of the Sub-recipient, whose staff will cooperate fully with authorized auditors when they conduct audits and examinations of the Program. 34. Counterparts This Agreement may be executed in three (3) counterparts. When executed, each counterpart shall be deemed an original, irrespective of date of execution. Said counterparts shall together constitute one and the same Agreement. 4852-7165-4915.1 13 P:\Agendas\Agenda Attachments\Agenda Attachments\Aumts-Amend 201 J\05-16-11 NSPJ - Sub-Recipient Agreement City & ADS,docx 35. Severabilitv Each and every section of this Agreement shall be construed as a separate and independent covenant and agreement. If any term or provision of this Agreement or the application thereof to certain circumstances shall be declared invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to circumstances other than those to which it is declared invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 36. Amendment or Modification This Agreement may only be modified or amended by written instrument duly approved and executed by each of the Parties hereto. Any such modification or amendment shall be valid, binding and legally enforceable only if in written form and executed by each of the Parties hereto, following all necessary approvals and authorizations for such execution. 37. Governing Law This Agreement shall be governed by the laws of the State of California. Any legal action arising from or related to this Agreement shall be brought in the Superior Court of the State of California in and for the County of San Bernardino. 38. Compliance with Law The Sub-recipient shall comply with all local, state and federal laws, including, but not limited to, environmental acts, rules and regulations applicable to the work to be performed by the Sub- recipient under this Agreement. The Sub-recipient shall maintain all necessary licenses and registrations for the lawful performance of the work required of the Sub-recipient under this Agreement. 39. Non-Waiver Failure of either party to enforce any provision of this Agreement shall not constitute a waiver of the right to compel enforcement of the same provision or any remaining provisions of this Agreement. 40. Representations of Persons Executing the Agreement The persons executing this Agreement warrant that they are duly authorized to execute this Agreement on behalf of and bind the respective Party that each purports to represent. 41. Default and Remedies A. Events of Default The occurrence of any of the following shall, after the giving of any notice described therein, constitute a default by Sub-recipient hereunder ("Event of Default"): 4852-7165-4915.1 14 P:\Agendas\Agenda Attachments\Agcnda Attachmenls\Agrmts-Amend 2011\05-16-11 NSP3 . Sub-Recipient Agreement City & AHS_docx 1. The failure of Sub-recipient to payor perform any monetary covenant or obligation hereunder or any of the documents executed in connection herewith, without curing such failure within ten (10) calendar days after receipt of written notice of such default from the City (or from any party authorized by the City to deliver such notice as identified by the City in writing to Sub-recipient); 11. The failure of Sub-recipient to perform any nonmonetary covenant or obligation hereunder or any of the documents executed in connection herewith, without curing such failure within thirty (30) calendar days after receipt of written notice of such default from the City (or from any party authorized by the City to deliver such notice as identified by the City in writing to Sub-recipient) specifying the nature of the event or deficiency giving rise to the default and the action required to cure such deficiency; provided, however, that if any default with respect to a nonmonetary obligation is such that it cannot be cured within a thirty-day period, it shall be deemed cured if Sub-recipient commences the cure within said thirty-day period and diligently prosecutes such cure to completion thereafter. B. Notwithstanding anything herein to the contrary, the herein described notice requirements and cure periods shall not apply to any Event of Default described in Sections (i.) through (iv.) below: 1. The material falsity of any representation or breach of any warranty or covenant made by Sub-recipient under the terms of this Agreement or any documents executed in connection herewith; 11. Sub-recipient shall (a) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or the like of its property, (b) make a general assignment for the benefit of creditors, (c) be adjudicated a bankrupt or insolvent or (d) commence a voluntary case under the Federal bankruptcy laws of the United States of America or file a voluntary petition that is not withdrawn within ten (10) calendar days after the filing thereof or answer seeking an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy or insolvency proceeding; iii. Voluntary cessation of the operation of the Project for a continuous period of more than thirty (30) calendar days or the involuntary cessation of the operation of the Project in accordance with this Agreement for a continuous period of more than sixty (60) calendar days, unless such cessation is approved, in writing, by the City; IV. A mechanic's lien or any other type of encumbrance on any eligible property resulting from the Sub-recipient's failure to fulfill its financial or other contractual obligations with respect to any of its vendors or sub-contractors is not removed within ten (10) calendar days after receipt of written notice of such default from the City (or from any party authorized by the City to deliver such notice as identified by the City in writing to Sub-recipient). 4852-7165-4915.1 15 P:\Agendas\Agenda AttachrnentslAgenda Attachments\Agrmts.Amend 2011\05-16-11 NSPJ - Sub-Recipient Agreement City & AHS,docx C. Any failure or delay by a party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default or of any rights or remedies associated with a default. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties under this Agreement are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. D. The City's Remedies Upon the occurrence of an Event of Default hereunder, the City, or its designated agent(s) , may, in its sole discretion, take anyone or more of the following actions: i. By notice to Sub-recipient declare that the entire unused amount of NSP3 funds must be immediately repaid to the City, and the same shall become due and payable without further demand, protest or further notice of any kind, all of which are expressly waived; 11. Subject to any nonrecourse provIsIOns in this Agreement, take any and all actions and do any and all things which are allowed, permitted or provided by law, in equity or by statute, to enforce performance and observance of any obligation, agreement or covenant of the Sub-recipient under this Agreement or under any other document executed in connection herewith; lll. Cease allowing Sub-recipient access to any NSP3 funds unless and until the Event of Default (if curable) is cured; IV. Demand reimbursement from the Sub-recipient for any payments made to it by the City or the City for which the contracted work product was not satisfactorily delivered by the Sub-recipient; v. Confiscate any material or other work product purchased or produced by the Sub-recipient for the Project; VI. Take any and all actions and do any and all things which are allowed, permitted or provided by law, in equity or by statute, to enforce performance and observance of any obligation, agreement or covenant of the Sub-recipient under this Agreement or under any other document executed in connection herewith. E. City Default and Sub-recipient Remedies Upon fault or failure of the City, to meet any of its obligations under this Agreement without curing such failure within thirty (30) calendar days after receipt of written notice of such failure from Sub-recipient specifying the nature of the event or deficiency giving rise to the default and the action required to cure such deficiency, Sub-recipient may, as its sole and exclusive remedies: I. Bring an action in equitable relief seeking the specific performance by the City or the City of the terms and conditions of this Agreement or seeking to enjoin any act by the City or the City which is prohibited hereunder; and/or 4852-7165-4915.1 16 P:\AgendaslAgenda Attachments\Agenda Attachments\Agrmts-Amend 2011\05-]6-]] NSP3 - Sub-Recipient Agreement City & AHS,docx 11. Bring an action for declaratory relief seeking judicial determination of the meaning of any provision of this Agreement. Without limiting the generality of the foregoing, Sub-recipient shall in no event be entitled to, and hereby waives, any right to seek indirect or consequential damages of any kind or nature from the City arising out of or in connection with this Agreement, and in connection with such waiver Sub-recipient is familiar with and hereby waives the provisions of Section 1542 of the California Civil Code which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." 42. Consequential Damages and Limitation of Liabilitv The City and the Sub-recipient agree that except as otherwise provided in this Section 42, in no event will either be liable to the other under this Agreement for any damages including but not limited to, special damages, loss of revenue, loss of profit, operating costs or business interruption losses, regardless of cause, including breach of contract, negligence, strict liability or otherwise. The limitations and exclusions of liability set forth in this Section 42 shall apply regardless of fault, breach of contract, tort, strict liability or otherwise of the Sub-recipient and the City, their employees or subconsultants. 43. Business Registration Certificate The Sub-recipient warrants that it possesses, or shall obtain immediately after the execution and delivery of this Agreement, and maintain during the period of time that this Agreement is in effect, a business registration certificate pursuant to Title 5 of the City of San Bernardino Municipal Code, together with any and all other licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to be maintained by the Sub-recipient to conduct its business activities within the City. 44. Legal Proceedings Should any legal proceedings be commenced to enforce, enjoin, or collect funds or otherwise affect this agreement between the Parties, it shall be filed in San Bernardino County Superior Court. The prevailing party shall be entitled to recover its reasonable legal fees. The costs, salary and expenses of the City Attorney and members of his office in enforcing this Agreement on behalf of the City shall be considered as "legal fees" for the purposes of this paragraph. 45. Exhibits The Exhibits to this Agreement, A through C are an integral part of this agreement and have each been incorporated herein. The Agreement shall not become effective until such time as the Sub-recipient has properly filled out and fully executed each exhibit to this Agreement, as required, and the Interim Executive Director or his/her designee has reviewed and approved the form and content of each Exhibit. 4852-7165-4915.1 17 P:\Agendas\Agenda Attachmenu\Agenda Attachments\Agrmts-Amend 2011\05-16-11 NSP3. SIIb-Recipient Agreement City & AHS_docx 46. Entire Agreement III III III III III III III III III III III III III III III III III III III III This Agreement constitutes the entire agreement between the Parties. This Agreement supersedes all prior negotiation, discussions and agreements between the Parties concerning the subject matters covered herein. The Parties intend this Agreement to be the final expression of their agreement with respect to the subjects covered herein and a complete and exclusive statement of such terms. 4852-71654915.1 18 P:\Agendas\Agenda Attachments\Agenda Attachment5\Agrmts-Amend 20\1\05.16-11 NSP3. Sub-Recipient Agreement City & AHSdocx IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first written above. CITY By: Charles McNeely, City Manager Approved as to Form: 1-- es F. Penman, City Attorney SUBRECIPIENT Affordable Housing Solutions of San Bernardino, a California non-profit corporation By: Chief Operating Officer ATTEST: By: Secretary 4852-71654915.1 19 P:\Agendas\Agenda AttacbmentslAgenda Allachments\Agrmls-Amend 201 ]\05-16-11 NSPJ - Sub-Recipient Agreement City & AHSdocx EXHIBIT "A" Scope of Services Sub-recipient shall be responsible for carrying out the following two (2) City activities: (I) Acquisition of abandoned and/or foreclosed residential properties that qualifY as Eligible Properties under the NSP3 housing opportunities for households with adjusted gross income at or below 120% of the AMI that qualifY as Eligible Homebuyers; and resale of these properties as further negotiated with the Sub-Recipient; and (2) Acquisition of abandoned and/or foreclosed residential properties that qualifY as Eligible Properties under the NSP3 housing opportunities for households with adjusted gross income at or below 50% of the AMI that qualifY as Eligible Tenants; and the rental of these properties as further negotiated with the Sub-Recipient. The Program shall be carried out in a manner satisfactory to the City and consistent with this Agreement, the Substantial Amendment and any standards required as a condition of providing these funds. 4852-7165-4915.1 20 P:\Agendas\Agenda Attachments\Agenda Attaehments\Agrmts-Amend 2011\05-16-11 NSPJ - Sub-Recipient Agreement City & AHS.docx EXIllBIT "B" Supervisory Staff Personnel Sub-Recipient Staff: Emil A. Marzullo, Chief Executive Officer Carey K. Jenkins, Chief Operating Officer 4852-7165-4915.1 21 P:\Agendas\Agenda Attachments~nda Attachmcnts\Agrmts-Amend 2011\05.16-11 NSPJ - Sub-Recipient Agreement City & AHSdoa; EXHIBIT "e" NSP3 Target Zone 4852-71654915.1 22 P:\Agendas\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2011\05-16-11 NSP3 - Sub-Recipient Agreement City & AHS,docx "'0 Q) Q) z ~ en Q) ~ co Q) .... C) ~ o en CO Q) .... <C ~ o c. CO :E s::: o .- ~ CO o .- - c. c. <C M a.. fJ) z .... o N ID i i :j CD~ ~ J::. - ... ----. . ..-. 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