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HomeMy WebLinkAboutResolution - 2008-R0220 - Contract Amendment - HUD Funds - 06_26_2008Resolution No. 2008-RO220 June 26, 2008 item No. 5.6 RESOLUTION IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and .ed to execute for and on behalf of the City of Lubbock an Amendment to a Contract ing the City to change the use of Section 108 Loan funds from housing Bitation to park improvements, by and between the City of Lubbock and United Department of Housing and Urban Development (HUD), and all related nents. Said Amendment is attached hereto and incorporated in this resolution as if set forth herein and shall be included in the minutes of the City Council. by the City Council this 26th .TTEST: zd, City Secrcthry { AS TO CONTENT: ill Howerton, Jr. ommunity Development Director AS TO FORM: day of .Tune , 2008. �. —11 /01:;r- TOM MARTIN, MAYOR W, ccdocs/Amend-Contract HUD Section 108 Loan funds.res 11 /08 Resolution No. 2008-RO220 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT SECOND AMENDMENT TO CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. §5308 Date of Amendment AUG 15 BORROWER: CITY OF LUBBOCK, TEXAS COMMITMENT NUMBER: B-01-MC-48-0022 MAXIMUM COMMITMENT AMOUNT: $1,000,000 CONTRACT EFFECTIVE DATE: June 30, 2004 [2004 Public Offering] PROJECT: Housing Rehabilitation and Reconstruction Program This Second Amendment is entered into, by the Secretary of Housing and Urban Development ("Secretary") and the CITY OF LUBBOCK, TEXAS ("Borrower"). RECITALS WHEREAS, the Secretary and Borrower entered into a certain Contract for Loan Guarantee Assistance effective on June 30, 2004 (the "Contract"), pursuant to a Commitment made on July 2, 2002; and WHEREAS, the Contract was subsequently amended by a First Amendment dated June 10, 2005 (the "First Amendment"); and WHEREAS, Borrower used Guaranteed Loan Funds to finance loans under its Housing Rehabilitation Program (the "Project"); and WHEREAS, Borrower desires to use remaining Guaranteed Loan Funds to finance improvements to three City parks within the City's CDBG-eligible areas; and WHEREAS, the Secretary and Borrower now desire to amend the Contract to further clarify and facilitate the consummation of the transaction contemplated therein: NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreement set forth herein, the Secretary and Borrower mutually agree that the Contract be and hereby is amended as follows: Paragraph 15 of the Contract is amended by deleting the paragraph as written in its entirety and substituting therefor the following: 2 15. Special Conditions and Modifications: (a) Paragraph 5(c) of the Contract is amended by deleting the paragraph as written in its entirety and substituting therefor 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 carry out the following activities: (i) making loans to assist in financing the rehabilitation of privately owned multi -family and single-family dwelling structures pursuant to 24 CFR 570.703(h); and (ii) payment of relocation expenses, pursuant to 24 CFR 570.703 (d) . (iii) public facility improvements, pursuant to 24 CFR 570.703(1) (c) For Housing Rehabilitation Loans: Each housing rehabilitation loan described in paragraph 15(b)(i)(individually, the "Housing Loan") made to a private owner of a multi -family or single-family structure (the "Housing Borrower") shall be evidenced by a promissory note (individually, the "Housing Note" and, collectively, the "Housing Notes") and a loan agreement (the "Housing Loan Agreement"), which Housing Note and Housing Loan Agreement shall contain such provisions as the Secretary deems necessary. The amount of principal and/or interest payable under each Housing 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 for the corresponding period on that portion of the Note used to fund the Housing Loan. The Housing Note shall not be subject to redemption or prepayment earlier than the earliest possible redemption date under the terms of 3 the Note. As security for each Housing Loan the Borrower shall promptly establish, or cause to be established, a lien on the real property (the "Housing Property") owned by a Housing Borrower. Such lien shall be established through an appropriate and properly recorded mortgage (the "Housing Mortgage"). The Housing Mortgage shall contain such provisions as the Secretary deems necessary, and may be subordinated to another lien on the property, provided, however, that such subordination is not lower than the second lien position. Further Additional Security for Hous on Loans and Public Facilities Improvements Borrower shall maintain a deposit of $125,000 in a separate identifiable account (the "Debt Service Reserve Account"), which account shall be established and designated as prescribed in one or both of the attached form documents identified as Letter Agreement for Section 108 Loan Guarantee Program Deposit Account ("Attachment 111) and Letter Agreement for Section 108 Loan Guarantee Program Investment Account ("Attachment 211). Furthermore, the provisions of the First Amendment to the Contract, as related to the Guaranteed Loan Funds and Loan Repayment Accounts, shall be applicable to the Debt Service Reserve Account(s). (d) The Borrower shall select a financial institution acceptable to the Secretary (the "Custodian") to act as custodian for the documents specified in 15(e) below (hereinafter referred to as 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 initial delivery of Security Documents to the Custodian. (e) Not later than five business days after disbursement of the Guaranteed Loan Funds for a Housing Loan described in paragraph 15(b)(iii), the Borrower shall deliver to the Custodian the following documents: (i) The original Housing Note endorsed in blank and without recourse. (ii) The original Housing Loan Agreement and an assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary. ►al (iii) The original recorded Housing Mortgage signed by the Housing Borrower 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) An attorney title opinion addressed to the Borrower and the Secretary, to include a legal description of the Housing Property conforming to the Housing Mortgage, evidence that a title search was performed and identifying Housing Borrower's fee simple ownership interest in the Housing Property; (v) Evidence of the most current tax assessed value of the Housing Property; (vi) [Reserved] (vii) An opinion of Borrower's counsel on its letterhead, addressed and satisfactory to the Secretary that the documents specified in (i) through (iii) above are valid and legally binding obligations, enforceable in accordance with their respective terms. (f) The Borrower covenants that it shall ensure the diligent performance of the usual and customary functions related to the servicing of the Housing Notes. (g) Paragraph 12 is amended by adding at the end thereof the following language: "(g) The Secretary may complete the endorsement of the Housing 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 Housing Borrower, or against any other person or property." (h) Additional Grounds for Default. Notice of Default. Restriction of Pledged Grants. Availability of other Remedial Actions. 5 (i) The Borrower acknowledges and agrees that the Secretary's guarantee of the Note is made in reliance upon the availability of grants pledged pursuant to paragraph 5(a) (individually, a "Pledged Grant" and, collectively, the "Pledged Grants") in any Federal fiscal year subsequent to the Federal fiscal year ending September 30, 2004 to: (A) pay when due the payments to become due on the Note, or (B) defease (or, if permitted, prepay) the full amount outstanding on the Note. The Borrower further acknowledges and agrees that if the Secretary (in the Secretary's sole discretion) determines that Pledged Grants are unlikely to be available for either of such purposes, such determination shall be a permissible basis for any of the actions specified in paragraphs (ii) and (iii) below (without notice or hearing, which the Borrower expressly waives). (ii) Upon written notice from the Secretary to the Borrower at the address specified in paragraph 12(f) above that the Secretary (in the Secretary's sole discretion) has determined that Pledged Grants are unlikely to be available for either of the purposes specified in (A) and (B) of paragraph (i) above (such notice being hereinafter referred to as the "Notice of Impaired Security"), the Secretary may limit the availability of Pledged Grants by withholding amounts at the time a Pledged Grant is approved or by disapproving payment requests (drawdowns) submitted with respect to Pledged Grants. (iii) If after 60 days from the Notice of Impaired Security the Secretary (in the Secretary's sole discretion) determines that Pledged Grants are still unlikely to be available for either of the purposes specified in (A) and (B) of paragraph (i) above, the Secretary may declare the Note in Default and exercise any and all remedies available under paragraph 12. This paragraph (iii) shall not affect the right of the Secretary to declare the Note and/or this Contract in Default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12. (iv) All notices and submissions provided for hereunder shall be submitted as directed in paragraph 12(f) above. 0 (i) If any one or more of the covenants, agreements, provisions, or terms of this Contract shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Contract and shall in no way affect the validity or enforceability of the other provisions of this Contract or of the Note. (j) Notwithstanding any other provision of the Note or this Contract, the following provisions to assure compliance with Texas law shall govern: (i) The Secretary shall not require the Note to be converted to a fixed-rate Note pursuant to Sections II and III thereof at an interest rate on any Principal Amount on Schedule P&I thereof that exceeds the maximum rate payable by the Borrower thereon under generally applicable Texas law, including Chapter 1204 of the Texas Government Code, as amended. This limitation on the interest rate on the principal of the Note also applies if the Note bears interest at a variable rate prior to a conversion to a fixed rate. In addition, the accrual of interest on unpaid interest shall be limited to the extent permissible under Texas law. (ii) Part I, paragraph C, of the Contract is amended to delete the last sentence thereof, and to insert the following two new sentences at the end: "The Borrower agrees that the interest rate at which the trust certificate corresponding to a specified Principal Due Date on Schedule P&I of the Note is sold to the Underwriters shall be the interest rate inserted on the Conversion Date in Schedule P&I for the Principal Amount corresponding to such Principal Due Date. Such interest rate for each trust certificate shall be that rate which the Underwriters determine will enable them to sell under then -prevailing market conditions such certificate, or interests therein, for 100% of the Principal Amount of such certificate." (iii) Paragraph 4(e) of the Contract is amended by deleting the paragraph as written in its entirety and substituting therefor the following: "(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 (a) and (b) of this Contract." (iv) The provisions of the Fiscal Agency/Trust Agreements (including any future amendments thereto or any new fiscal agency or trust agreements in the future) relating to indemnification, standard of care, choice of law and disposition of unclaimed property as they concern the Borrower are subject to the limitations of this Contract and will be enforceable against the Borrower only to the extent permitted by Texas law. The Secretary further agrees that he will require the Fiscal Agent and Trustee to maintain the registration books referred to in section 5.01 of the Amended and Restated Master Fiscal Agency Agreement and in section 5.03 of the Trust Agreement in a form that can be converted to a writing and a copy of which can be provided to the Borrower in Texas within a reasonable time after request. (v) To the extent that a pledge of ad valorem tax is securing payment of all or a portion of the principal of and interest on the Note, acceleration of the maturity date of that portion of the Note shall not be available as a remedy in the event of a default by the Borrower under the Note or this Contract. (k) Contemporaneously with delivery to the Secretary of this executed Second Amendment to the Contract, Borrower shall deliver to the Secretary an executed copy of Attachment 1 and/or Attachment 2 showing that the Debt Service Reserve Account has been established in accordance with the provisions described in paragraph 15(c) above and in the First Amendment. [Rest of Page Intentionally Left Blank] .11 THE UNDERSIGNED, as authorized officials on behalf of the Borrower or the Secretary, have executed this Second Amendment to the Contract, it being understood and agreed that no provisions of the Contract, other than those in paragraph 15 of the Contract, as set forth above, have been changed, and that the Contract, as amended, continues in full force and effect. ATTEST: CITY OF LUBBOCK, TEXAS BORROWER (Si atu e) BY: (Signature) Rebecca Garza (Name) City Secretary (Title) Tom Martin (Name) Mayor (Title) June 26, 2008 (Date) SECRETARY OF HOUSING AND URBAN DEVELOPMENT BY: 5�.•. �' " O�. (Signature) Nelson R. Bretton Name General Deputy Assistant Secretary for Community Planning and Development (Title) 15 20M_ (Date)