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HomeMy WebLinkAbout2005-010 HUD Section 108- Loan Guarantee, Contract & Note ORDINANCE NO 10 AN ORDINANCE of the City of Yakima, Washington, approving and authorizing a loan guarantee contract and note and related documents under Section 108 of the Housing and Urban Development Act of 1974, as amended. WHEREAS, the City of Yakima, Washington (the "City ") is authorized pursuant to its charter and the laws of the State of Washington to carry out federally - assisted programs and projects, including the use by the City of federal funds and funds made available through the City with federal loan guarantee assistance for loans to private entities in furtherance of a public and federal objective and purpose, and WHEREAS, RCW 35.21 735 authorizes cities to enter into agreements with the United States or any agency or department thereof for any lawful public purpose, and WHEREAS, pursuant to Resolution No R2004 -40, adopted on March 2, 2004, the City Council (the "Council "), approved the execution of an Application for Loan Guarantee from the United States Department of Housing and Urban Development ( "HUD ") for an Economic and Community Development Loan Fund in the amount of $2,945,000, and WHEREAS, HUD executed a Funding Approval on August 24, 2004 authorizing Section 108 loan guarantee assistance in the principal amount of $2,945,000, and WHEREAS, HUD will provide for the funding of a note issued by the City, the proceeds of which will be used to fund the HUD loan to various borrowers, the borrowers will use such money to fund their projects, and HUD will guarantee repayment of the note in the event of a default by the borrowers under the HUD loan, subject to the City's pledge of future block grant funds and security to be provided by the borrowers, and NOW THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as follows Section 1 Approval of Documents The City hereby approves the following agreements, in substantially the form as attached hereto as Exhibits A and B Contract for Loan Guarantee Assistance and Variable /Fixed Rate Note The above - listed agreements shall be amended only with the approval of the City Section 2 Authorization of Documents. The Mayor, Assistant Mayor, or City Manager are hereby authorized to execute the documents listed in Section 1 and such other documents as shall be related to and required by such documents. Such officers and each of the other appropriate officers, agents and representatives of the City are each hereby authorized and directed to take such steps, to do such other acts and things, and to execute such letters, certificates, agreements, papers, financing statements, assignments or instruments as in their judgment may be necessary, appropriate or desirable in order to carry out the terms and provisions of, and complete the transactions contemplated by this ordinance Section 3 City Obligations. Nothing herein or in any document approved hereunder shall in any manner be construed to create a debt of the City payable from public funds within the meaning of any constitutional or statutory limitation on the incurrence of debt, or to obligate the City to pay or expend any funds for the contemplated financial assistance for the Project, except for (1) security specified in the Contract for Loan Guarantee Assistance and (2) money or property derived from the borrower in repayment of the loan. Section 4 Prior Acts. All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified and confirmed. Section 5 Effective Date This ordinance shall be effective 30 days after its passage, approval and publication as provided by law -2- P' \NMN \NMN21W PASSED by the City Council of the City of Yakima, Washington at a regular meeting thereof, held this 15 day of February, 2005 CITY 0 AKIMA, WASHINGTON Paul P George e Mayor ATTEST / (ztA, „ ,O City Clerk APPROVED AS TO FORM City Attorney First Reading N/A Publication Date 2 - 18 - 2005 Effective Date 3 - 20 - 2005 -3- P \NMN \NMN2IW U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 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 Contract This Contract for Loan Guarantee Assistance ( "Contract ") is entered into between the City of Yakima, Washington, 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- 04 -MC -53 -0008, in the Maximum Commitment Amount of $2,945,000, and any amended note or note issued in substitution for such note and having the same note number (the "Note ") This is the first Contract under the Funding Approval ("Commitment") of the same number, which was approved by the Secretary on August 24, 2004 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 2 pursuant to the Fiscal Agency Agreement shall record the date and amount of each payment and Advance under the Note and 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 in b4 e on the Note may /a r t T7 v �. }e after its Conversion Date �.. may �. mau 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 12(f) of this Contract, be signed by an authorized official of the Borrower, and otherwise be in the form prescribed by the Secretary 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 3 Amounts in order of the earliest Principal Due Date(s) C Conversion; Public Offering 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 between 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 c e r t l f i c a t e 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 rt 4 PART II 1 Receipt, Deposit and Use of Guaranteed 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 UCpL L L or accounts are Federally Q11y ill.. Ur eU The Guaranteed GLlltCeU 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 + -, l Y .a ( T fully t ed such t Agreement (A 1Ully executed copy of SuCll Letter AgreellLent l.. 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 1(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 March 31, 2007, 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 Guaranteed Loan Funds in Government Obligations Such Letter 5 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 March 31, 2007 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 : ^:�t� dral'a1s 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; Final Payment and Discharge 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 Upon final payment of all amounts due to Holders under the Note, including any payment made by the Secretary pursuant to the Guarantee, the Fiscal Agent /Trustee is required by the Fiscal Agency /Trust Agreements to return the Note to the Secretary Upon final payment to the Secretary of any amounts due as a result of Guarantee Payments or otherwise due under this Contract, the Secretary will cancel and return the Note to the Borrower in discharge of the Borrower's obligations under the Note 6 3 Selection-of New Fiscal Agent 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 4 Payments Due Fiscal Agent 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 7 required by this Contract (e g , paragraph 5(c), or paragraph 15, et seq ), 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 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 public 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 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 seq 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 seq (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 8 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 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 b l L. .7 1 T fully l t .7 L, Letter T t- established \ CS LU11�/ exel. u l..eU copy of such A'3.L lGllL 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 9 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 (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 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 Right to Restrict Use of CDBG Funds to Repayment 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 10 9 Secretary's Right to Use Pledged Funds for Repayment The Secretary may use funds pledged under paragraph 5(a) of this Contract or funds restricted under grants pursuant to paragraph 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 Government Ob l i .a f' ,a below), ti. ' v the or vui.iga�.J.. (as defined wiiiCii ill i..LJ. Soic 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 Intere Due Date, or any other Busine Day acceptable to both HUD and the Borrower 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 Default (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 11 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 11(a) (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 hearilig, that the Borrower has f -' ' 1U11e 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 rpmmi tments 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 Remedial 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 12 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 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 ,-_ t- 1- Optional .a t 1. t the subject LL' Redemption, the Secretary 11LL accelerate Late 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 payment under the for any paYii�cia� uituer Lace 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 Secretary U S Dept of Housing and Urban Development Attention Paul Webster, Director Financial Management Division 451 7th Street SW, Room 7180 Washington, DC 20410 Borrower City of Yakima Attention City Manager 129 North Second Street Yakima, Washington 98901 13 Limited Liability Notwithstanding any other provision of this 13 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 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 Agreement The Contract and the Note are hereby incorporated in and made a part of the Grant Agreement authorized by the Secretary on April 28, 2004 under the Funding Approval for grant number B- 04 -MC -53 -0008 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 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 finance loans (individually, a "Business Loan ") to one or more for - profit businesses (individually, a "Business Borrower ") pursuant to 24 CFR 570 703(1) and 570 203 (c) Each Business Loan shall be evidenced by a promissory note (individually, the "Business Note" and, collectively, the "Business Notes ") and a loan agreement (the "Business Loan Agreement ") The Business Note and Business Loan Agreement shall contain such provisions as the Secretary deems necessary The amount of principal and /or interest payable under the Business Notes 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 14 Note for the corresponding period No Business Note shall be subject to redemption or prepayment earlier than the earliest possible redemption date under the terms of the Note The Business Loan shall be fully secured by one or more of the following forms of collateral (collectively, the "Collateral ") (i) A lien on real property (the "Real Property "), established through an appropriate and properly recorded mortgage (the "Business Mortgage ") The Business Mortgage shall contain such provisions as the Secretary deems necessary The Business Mortgage may be subordinated to another lien on the property, provided, however, that the principal amount of the Business Loan secured by the Real Property shall not exceed an amount equal to 80 percent of the "as improved" appraised market the balance. market vc11UC, less ti1C UTAtStc111Q1i1C�.. i.JdlanC.e. CJ71 other i nrdebteriness CPr•11r•ri by a mortgage o f senior or equal priority on the Real Property (ii) A security interest (collectively referred to as the "Security Interests ") in machinery and equipment ( "M &E "), accounts receivable, inventory, and other items of personal property collectively, the "Personal Property ") The Security Interests may be subordinated to another lien, provided, however, that the principal amount of the Business Loan secured by the Personal Property shall not exceed an amount determined as follows (A) in the case of used M &E, not more than 90 percent of the appraised net liquidation value, less the outstanding balance of other indebtedness secured by a senior security interest in such M &E, and (B) in the case of new M &E, not more than 80 percent of the cost thereof (including installation), less the outstanding balance of other indebtedness secured by a senior security interest in such M &E, and (C) in the case of accounts receivable, not more than 80 percent of the average of the ending balances of the last three (3) years of accounts receivable, less the outstanding balance of other indebtedness secured by a senior security interest in said accounts receivable, and (D) in the case of inventory, not more than 50 percent of the average of the ending inventory balances of the last three (3) years, less the outstanding balance of other indebtedness secured 15 by a senior security interest in said inventory The Security Interests shall be granted pursuant to an appropriate security agreement (the "Security Agreement "), which Security Agreement also shall be referenced in appropriate Uniform Commercial Code Financing Statements filed in accordance with the Uniform Commercial Code The Security Agreement and such Uniform Commercial Code Financing Statements shall contain such provisions as the Secretary deems necessary (iii.) Any and all rights, titles, and interests of the Business Borrower to any leases covering the Real Property Such rights, titles, and interests shall be the subject of an appropriate and properly recorded collateral assignment of leases and rents (the Collateral Assignment of Leases and Rents ) Th C lateral Ass'grm.=.nt of Leases and Rents shall be in a form acceptable to the Secretary (iv) Any and all rights, titles, and interests of the Business Borrower in any loan or debt service reserve accounts established for the purpose of securing the Business Loan Such rights, titles, and interests shall be the subject of a collateral assignment of interest in loan or debt service reserve accounts (the "Collateral Assignment of Interest in Loan or Debt Service Reserve Accounts ") The Collateral Assignment of Interest in Loan or Debt Service Reserve Accounts shall be in a form acceptable to the Secretary (v) Such other alternative collateral or security arrangements as may be requested by the Borrower and approved by the Secretary in writing (d) The Borrower shall select a financial institution acceptable to the Secretary (the "Custodian ") to act as custodian for the documents specified in paragraph 15(e) below (the "Securi'ty 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 15(e) below (e) Not later than five (5) business days after disbursement by the Borrower of Guaranteed Loan Funds to a Business Borrower, the Borrower shall deliver to the Custodian the following (as applicable to that activity) 16 (i) The original Business Note endorsed in blank and without recourse (ii) The original Business Loan Agreement, and an assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary (iii) The original recorded Business Mortgage signed by the Business Borrower and an assignment thereof to �iic .�cCrc�ary, iii a rcCoruauie ivriii uu�. unrecorded, which assignment shall be in a form acceptable to the Secretary (iv) The original 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 Security Agreement and an assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary (vi) The original Collateral Assignment of Interest in Loan or Debt Service Reserve Accounts (vii) If Guaranteed Loan Funds are used to acquire real property, an appraisal of the fee simple ownership interest in the Property 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 ") (viii) If Guaranteed Loan Funds are used to acquire used M &E, an appraisal of its net liquidation value (ix) A mortgagee 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 Mortgage or be accompanied by an endorsement of the policy to the Secretary (x) A certified survey with a legal description conforming to the title policy and the Business Mortgage (xi) An opinion of Borrower's counsel on its letterhead, addressed and satisfactory to the 17 Secretary, that (A) the Business Borrower is duly organized and validly existing as a [corporation, partnership, etc.] under the laws of the State of and is [existing, qualified to do business, in good standing, as applicable] in and under the laws of the State of Washington, (B) the Business Note has been duly executed and delivered by an authorized party and is a valid and binding obligation of the Business Borrower, enforceable in accordance with its terms, except as limited by bankruptcy and similar laws affecting creditors generally, and (C) the instruments specified in (ii) through (vi) above are valid and legally binding obligations, enforceable in accordance with their respective terms To the extent that the foregoing opinion deals with matters customarily within the due diligence of counsel to the Business Borrower, Borrower's counsel may attach and expressly rely on an opinion of Business Borrower's counsel satisfactory to the Secretary (xii) Any instruments, documents, agreements, and legal opinions required pursuant to paragraph 15(c)(v) (f) The Borrower covenants that it shall (1) ensure the diligent performance of the usual and customary functions related to the servicing of the Business Notes, and (11) promptly perfect the Security Interests by filing a financing statement in accordance with the requirements of the Uniform Commercial Code and shall file such additional statements as are necessary to maintain the perfected Security Interests (g) The Borrower shall promptly notify the Secretary in writing whenever an event which constitutes a default (an "Event of Default ") under (and as defined in) any of the Security Documents pertaining to a Business Loan has occurred and has continued unremedied for a period of 90 days after such occurrence Such Business Loan shall be hereinafter referred to as the "Nonperforming 18 Business Loan " However, if a Debt Service Reserve Fund has been established by the Borrower in an amount sufficient to satisfy at least one year's debt service to HUD on the Nonperforming Business Loan(s) at the date that the loan(s) become nonperforming, the Borrower shall have an additional year prior to the required notification to remedy the default Notification of a Nonperforming Business Loan shall be delivered to the Secretary as directed in paragraph 12(f) above The Borrower shall within VV days of such notification take one of the following actions (1) The Borrower may replace the Nonperforming Business Loan with another, performing loan (the "Replacement Loan ") which meets the security requirements specified in paragraph 15(c) Such replacement shall be effected by delivery to the Custodian of the Security Documents that would be delivered if the Replacement Loan were made from Guaranteed Loan Funds If the payments of principal and interest on the Replacement Loan are insufficient to satisfy the payments that are due on the Nonperforming Business Loan, the Borrower shall purchase Government Obligations that mature and bear interest at times and in amounts sufficient, together with payments due on the Replacement Loan, to pay when due the principal and interest to become due on the Nonperforming Business Loan Such Government Obligations shall be deposited in the Loan Repayment Investment Account (11) If the Borrower elects not to replace a Nonperforming Business Loan, the Borrower shall purchase Government Obligations that mature and bear interest at times and in amounts sufficient to pay when due the principal and interest to become due on the Nonperforming Business Loan (This action shall be required only with respect to Nonperforming Business Loans that have not been replaced as provided under (1) above ) Such Government Obligations shall be deposited in the Loan Repayment Investment Account (h) 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 19 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 Business Borrower, or against any other person or property " (1) Additional Grounds for Default Notice of Default Restriction of Pledged Grants Availability of Other Remedial Actions (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 p 5(a) (individua11y, a "Pledged Grant" and, collectively, the "Pledged Grants ") in any Federal fiscal year subsequent to the Federal fiscal year ending September 30, 2005 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 (1) 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 20 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 [Rest of Page Intentionally Left Blank] 21 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 City of Yakima, Washington BORROWER BY: (Signature) (Name) (Title) (Date) SECRETARY OF HOUSING AND URBAN DEVELOPMENT BY: (Signature) (Name) (Title) (Date) 03 25 2003 23 43 5,5h634 Pi-4,t 1 ATTACHMENT 1 L S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT LETTER AGREEMENT FOR SECTION 108 LOAN GUARANTEE PROGRAM CUSTODIAL ■CCOUNT JPMorgan Chase Bank - \Tame of Ynctinution (an, Brnch) C/o 600 Travis St , Suite 1150 Street Houston. TX 77002 _ City State Zip Code Date March 7, 2003 [X This account is established for funds received by the Borrower under Notc(s) guaranteed by thc United States Department of Housing and Urban Development (HUD) under thc Scrtion 108 Loan Guarantee Program (Guaranteed Loan Fund Account) „,�. [X This account is established for repayment of the Note guaranteed by HUD under the " Section 108 Loan Guarantee Program (Loan Repayment account) [ This account is established as a debt service reserve under the Section 108 Loan Guarantee Proorarn (Debt Service Reserve - account) ''ou arc hcrcb }- authorized and requested to establish a custodial account to be specifiicailt designated " City of Yakima, Washington (Pool Loans) Trustee of Lnited States Department of Housing and Urban Deiclopmcnt " A11 deposits made in such account shall be subject to withdrawal therefrom by the Borrower named below and shall also be sublect to withdrawal therefrom by HUD No agent of the Borrower shall be authorized to withdra"✓ funds from the account. Y ou are also authorized to pay HUD at any time upon its written demand which need not name a specific amount the entire amount in such account subject onk to notice requirements' contained in applicable regulations eoi,erning this institution but in no event to exceed seven business days `1 ou are further authorized upon the request of HUD to refuse to honor any instrument drawn upon or wvithdrawals from such account by parties other than HUD and to change the name of the aforesaid account to the "United States Depaitnient ofHousina III and 1 rrban Development " In no instance shall the funds in the custodial account be used ,3; J 24)3 23 43 576,h634 P-= to offset funds which may have been advanced to or on behalf of, the Borrower by the custodian institution. This letter is submitted to you in duplicate Please execute the duplicate copy of he certification below acknowledging the existence of such account so that we may present the copy signed by you to HUD City of Yakima, WA \air_eofBo. if / J A /1 i c ,t Bt Signature] Title • t , , , The undersigned institution certifies to the United States Department of Housing and Urban Development (HUD) that the account identified is in existence in this institution under Account Number 10204445 and agrees with the Borrower named abo %e and HUD to honor demands on such account in the manner provided in the above letter subject only to notice requirements contained in applicable regulations goveming this institution but in no event to exceed seven business days The undersigned tnstitution further agrees, upon the written request of HUD, to refuse to honor any instruments drawn upon or withdrawals from such account by parties other than HUD and to change the name of the aforesaid account to "L rated States Department o F Housing and Urban Development " In no instance shall the funds in the custodial account be used to offset funds which mati have been advanced to or on behalf of, the Bor by the custodian institution Deposits in this institution arc insured by the Federal Deposit Insurance Corporation. the Federal Savings and Loan Insurance Corporation_ or the \attonal Credit Union Administration JPMorgan Chase Bank \Tame of Institution Bti (Sian- lire and Title) Authorized Signatory Date March 7, 2003 ji U7 -Fj_J ,.J 4. 7 /bbbJq n-AL:t _)4 ATTACHMENT 2 U S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT LETTER 1.GREEMENT FOR SECTION 108 LOAN GUARANTEE PROGRAM CUSTODIAL TNVFSTMENT ACCOUNT JPMorgan Chase Bank Name of Institution (and Branch) C/o 600 Travis St , Suite 1150 Street Houston, TX 77002 Cit`r State Zip Code Date March 7, 2003 fXi This account is established to hold obligations and their assignments such obligations haling been purchased with funds fTom the Guaranteed Loan Funds Account (Guaranteed Loan Funds Investment Account) g am`: [X] Tris account is established to hold obligations and their assignments such obligations having been purchased with funds from the Loan Repayment Account (Loan Repayment Investment Account) [9 This account is established to hold obligations and their assignments such obligations having been purchased with funds From the Debt Service Reserve Account. (Debt Service Reserve Investment Account) You are hereby authorized and requested to hold obligations and assignments of those obligations in trust for the United States Department of Housintr and Urban Development (HUD) in an account specifically designated City of Yakima, Washington (Pool Loans) Trustee of States Department of Housing and Urban Development " All obligations and assignments shall be subject to release to the Borrower named beloNA, and shall also he subject to release to HUD No agent of the Borrower shall he authorized to release the obligations or assignments You are also authonzed to release the obligations and assignments to HUD at any time upon its ~written demand ti�hich need not name specific obligations and assignments all obligations and assignments being held in such account ,ubject only to notice requirements contained in applicable regulations governing this institution, hut in no ctient'o e \geed seven business days • en, 05, - '003 23 43 575h534 p�uE r35 You are further authorized upon the request of HUD to refuse to honor any request for release of the obligations and assignments from such account by parties other than HUD and to change the name of the aforesaid account to the "United States D of Hnuucing and L rrban Development " in no instance shall the obligations in this account be used to offset funds which may have been advanced to or on behalf of, he Borrower bti the custodian institution. This letter is submitted to you in duplicate Please execute the duplicate copy of the certification belt acknowledging the existence of such account so that we may 4- t s 0r },r vnrn to i -TT ID com City of Yakima, WA Name of Ben ower if Aef B , Signature Title :, ,. .ft �::t- F-:v s,xyy• <:k* *mow * * * * -!. �:i *+. ** M ***** ** k=i'ri t a.rt;.* *+ *F*** — ** ** ** *** The undersigned institution certifies to the United States Department of Housing and Lrban Development (HUD) that the account identified is in existence in this institution ender Account Number 10204445 , and agrees with the Borrower named above and HUD to honor requests for release on such account in the manner pro ided in the abo\,e letter, subject only to notice requirements contained in applicable regulations governing this institution, but in no event to exceed seven business days The undersigned institution further agrees upon the wntten request of HUD to refuse to honor any request for release of the obligations and assignments From such account by parties other than HUD and to change the name of the aforesaid account to "United States Department of Housing and Urban Development ' In no instance shall the obligations in the account be used to offset 'funds which may have been advanced to or on behalf of the Borrower by the custodian institution Deposits in this institution are insured by the Federal Dt posit Insurance Corporation the Federal Savings and Loan Insurance Corporation or the National Credit Union Administration JPMorgan Chase Bank Name of Insnitution KATHLEEN L GRAVES Authorized Signatory n . ■ Signal re and T itlel Datr March 7, 2003 • ATTACHMENT 3 Legal Description of Real Property [Borrower shall insert legal description] ATTACHMENT 4 Description of Personal Property [Borrower shall insert description] U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT SECTION 108 LOAN GUARANTEE PROGRAM VARIABLE/FIXED RATE NOTE NOTE NUMBER .rr�r. n n � � ,ri. ter nnnn DATE NOTE B- 04 -MC -53 -0008 DATE OF1VO1E BORROWER- City of Yakima, Washington PRINCIPAL DUE DATES AND PRINCIPAL AMOUNT Before the Conversion Date, the aggregate of Advances made for each applicable Pnncipal Due Date specified in the Commitment Schedule to this Note, on or after the Conversion Date, the Pnncipal Amount (if any) listed for each Pnncipal Due Date in Schedule P & I hereto MAXIMUM COMMITMENT AMOUNT $2,945,000 COMMITMENT AMOUNTS See Commitment Schedule attached hereto VARIABLE INTEREST RATE As set forth below REGISTERED HOLDER AFTERWATCH & CO As Nominee for Money Market Obligations Trust on behalf of its Government Obligations Fund I. Terms Applicable Before the Conversion Date A. Advances For value received, the undersigned, the City of Yakima (the "Borrower ", which term includes any successors and assigns), a public entity organized and existing under the laws of the State of Washington promises to pay to the Registered Holder (the "Holder," which term includes any successors or assigns), at the time, in the manner, and with interest at the rate or rates hereinafter provided, such amounts as may be advanced under this Note from time to time by the Holder for disbursement to, or on behalf of, the Borrower (individually, an "Advance ", and collectively, "Advances ") The Holder shall make Advances upon the wntten request of the Borrower and the approval of the Secretary of Housing and Urban Development or his designee (the "Secretary "), pursuant to the Contract for Loan Guarantee Assistance (as further defined in Section IV A of this Note, the "Contract "), and the Amended and Restated Master Fiscal Agency Agreement (the "Fiscal Agency Agreement ") dated as of May 17, 2000, between The Chase Manhattan Bank (now known as JPMorgan Chase Bank), as Fiscal Agent (the "Fiscal Agent "), and the Secretary The total amount of Advances made for each Pnncipal Due Date under this Note shall not exceed the applicable Commitment Amount for such Pnncipal Due Date set forth on the Commitment Schedule attached hereto The aggregate of all Advances under this Note for all Pnncipal Due Dates shall not exceed the Maximum Commitment Amount specified on the attached Commitment Schedule The Fiscal Agent shall record the date and amount of all payments and Advances on this Note and maintain the books and records of all such Advances and Commitment Amounts for each corresponding Pnncipal Due Date, and all payments No Advances shall be made on this Note after its Conversion Date As used herein, "Conversion Date" means the date (if any) upon which this Note is (i) delivered by the Holder to the Fiscal Agent against payment therefor by the purchasers selected by the Secretary to make such payment, and (n) assigned to JPMorgan Chase Bank (or any successor thereto) acting in its capacity as Trustee (the "Trustee ") pursuant to a Trust Agreement between the Secretary and the Trustee, dated as of January 1, 1995, as such agreement may be amended or supplemented (the "Trust Agreement ") Upon the occurrence of both (i) and (ii) in the previous sentence, Section III of this Note applies, thereby converting this Note to a fixed rate obligation B Vanable Rate of Interest From and including the date of each Advance to but excluding the earlier of (i) the Conversion Date, and (ii) the date of redemption or prepayment of such Advance pursuant to Section I.D below (each such date of redemption or prepayment, a "Prepayment Date ") interest shall be paid quarterly at a vanable interest rate (as set forth below) on the unpaid principal balance of each Advance on the first day of each February, May, August and November (each, an "Intenm Payment Date "), commencing on the first Interim Payment Date after the initial Advance is made under this Note Interest also shall be paid on each applicable Conversion Date, Prepayment Date or Pnncipal Due Date The amount of interest payable on each Intenm Payment Date will represent interest accrued dunng the three -month penod ending immediately pnor to such Intenm Payment Date, or in the case of the first Intenm Payment Date following each Advance that is not made on an Intenm Payment Date, the penod from and including the date of such Advance to but excluding the first Intenm Payment Date following such Advance The amount of interest payable on this Note's Conversion Date, Prepayment Date, or on any Principal Due Date that precedes such Conversion Date will represent interest accrued dunng the 2 period from the last Interim Payment Date to such Conversion Date, Prepayment Date, or Principal Due Date, respectively The initial vanable interest rate for each Advance will be set on the date of such Advance and will be equal to 20 basis points (0 2 %) above the Applicable LIBO Rate (as hereinafter defined) and thereafter will be adjusted monthly on the first day of each month (each, a "Reset Date ") to a variable interest rate equal to 20 basis points (0.2 %) above the Applicable LIBO Rate (such interest rate, as reset from time to time, the Standard Note Rate ) If the Conversion Date for this Note has not occurred by the March 1 following the initial Advance under this Note, then the terms of Appendix A shall be used to set the variable interest rate If the Fiscal Agent does not receive notice of either a Negotiated Special Interest Rate or Holder Determined Special Interest Rate (as defined in Appendix A attached hereto) from the Secretary or Holder, respectively, by the times specified in Appendix A to this Note, then the Standard Note Rate shall apply for the penod to which such Negotiated Special interest Rate or Holder Determined Special Interest Rate would otherwise apply The Fiscal Agent may conclusively rely on any such notice as to the correctness of any matters set forth therein Appendix A shall be inapplicable to this Note on or after the Conversion Date "LIBO Rate" for any given Business Day means, except in the case of manifest error, the interest rate per annum published on that day in the Eastern Edition of The Wall Street Journal or any successor publication ( "WSJ "), published by Dow Jones & Company, Inc , in the section titled "Money Rates" (or any successor section) and opposite the caption "London Interbank Offered Rates (LIBOR) -- three months" (or any successor caption) If such rate does not appear in WSJ on a given Business Day, for each interest penod, the LIBO Rate shall be the interest rate, converted to a bond - equivalent yield basis, for deposits in U S dollars for three months which appears on Telerate Page 3750 or such other page as may replace Page 3750 on that service or such other service or services as may be nominated by the Bntish Bankers' Association for the purpose of displaying such rate (together, "Telerate Page 3750 ") as of 11 00 a.m , London time, on the day (the "Determination Date ") that is two London Banking Days preceding the relevant Reset Date or Advance If such rate does not appear on Telerate Page 3750 on such Determination Date, such rate shall be obtained from the Reuters Screen ISDA Page as of 11 a.m , London time, on such Determination Date If, in turn, such rate does not appear on the Reuters Screen ISDA Page on such Determination Date, the offered quotation from each of four reference banks (expressed as a percentage per annum) as of approximately 11 00 a.m., London time, on such Determination Date for deposits in U S dollars to pnme banks on the London interbank market for a 3 -month period, commencing on the Reset Date or date of such Advance, shall be obtained. If at least two such quotations are provided, the LIBO Rate for such Reset Date or date of such Advance will be the anthmetic mean of the quotations, rounded to five decimal places If fewer than two such quotations are provided as requested, the LIBO Rate for that Determination Date shall be the rate for the most recent day preceding such Determination Date for which the LIBO Rate shall have been displayed on Telerate Page 3750 The LIBO Rate for any interest period shall be converted to a bond - equivalent yield basis by multiplying such rate by the actual number of days in such interest period and dividing that number by 180 3 "Applicable LIBO Rate" means (1) with respect to the initial interest rate for the first Advance hereunder, the LIBO Rate two London Banking Days before the date of such first Advance, (2) with respect to the initial interest rate for any subsequent Advance made before the first Reset Date, the interest rate borne by the first Advance, (3) with respect to the initial interest rate for any subsequent Advance made after the first Reset Date, the LIBO Rate two London Banking Days before the immediately preceding Reset Date, and (4) with respect to the subsequent interest rate at any Reset Date for any Advance, the LIBO Rate two London Banking Days before such Reset Date "London Banking Day" means any day in which dealings in deposits in United States dollars are transacted in the London interbank market. Interest payable on or before the Conversion Date shall be calculated on the basis of a 360 -day year and the actual number of days lapsed. C Pnncipal Amount Prior to the Conversion Date, the aggregate amount of Advances under this Note for each specified Principal Due Date shall be the Principal Amount paid by the Borrower on such Principal Due Date (as assigned to such Advances by the Secretary's instructions to the Fiscal Agent in accordance with the Contract and the Fiscal Agency Agreement), except to the extent such Pnncipal Amount shall have been reduced by redemption before such Pnncipal Due Date as provided below D Redemption before Conversion Date At any time on or before the Conversion Date, the Borrower, with the consent of the Secretary, may redeem this Note, in whole or in part, upon fourteen calendar days notice to the Fiscal Agent and the Secretary, at the purchase price of one hundred percent (100 %) of the unpaid Pnncipal Amount to be redeemed, plus accrued interest thereon to the date of redemption Partial redemptions shall be credited against the applicable Principal Amount(s) The related Commitment Amounts and the Maximum Commitment Amount shall be adjusted concurrently with any such redemptions in accordance with the Secretary's instructions to the Fiscal Agent pursuant to the Contract and the Fiscal Agency Agreement. II. Conversion The following events shall occur on the Conversion Date 4 A Schedule P &I On the Conversion Date all Advances owed by the Borrower under this Note with the same Pnncipal Due Date shall be aggregated into a single Pnncipal Amount which will accrue interest at the fixed rate applicable to such Principal Due Date Such Pnncipal Amount may be adjusted by the Fiscal Agent in accordance with the following paragraph or paragraph IV.H, as applicable Whether or not adjusted, each Pnncipal Amount, the fixed rate applicable to each Pnncipai Amount, and the applicable Pnncipai Due Date, shall be listed by the Secretary in Schedule P &I. Schedule P &I will be provided by the Secretary to the Fiscal Agent and attached to this Note by the Fiscal Agent upon the Fiscal Agent's receipt of this Note on the Conversion Date B Conversion Date Advances V V11VG1 J1 Vll 1JQLl.. AUVQ1lGG.� If, on or pnor to the Conversion Date, the Borrower has not utilized the entire Commitment Amount indicated on the Commitment Schedule attached hereto for a given Pnncipal Due Date, the Borrower may, in accordance with the Fiscal Agency Agreement and the Contract, and with the approval of the Secretary, utilize such Commitment Amount on the Conversion Date to obtain a Conversion Date Advance. A "Conversion Date Advance" shall mean any amount by which the Secretary instructs the Fiscal Agent to increase a Pnncipal Amount on Schedule P &I for a given Principal Due Date, effective as of the Conversion Date of this Note Conversion Date Advances shall be funded by the sale of this Note to the purchaser selected by the Secretary The proceeds of a Conversion Date Advance (net of any applicable fees) shall be distnbuted to or on behalf of the Borrower on the Conversion Date The total amount of Conversion Date Advances hereunder shall not exceed the sum of any unused Commitment Amounts for all Principal Due Dates. III. Terms Applicable Upon Conversion The following terms shall apply to this Note from the Conversion Date (if any) until this Note is canceled, or matured and paid in full Commencing on the Conversion Date, the Borrower promises to pay to the Holder on the applicable Pnncipal Due Date each Pnncipal Amount set forth on the attached Schedule P &I, together with interest on each such Pnncipal Amount at the rate applicable thereto specified on the Schedule P &I. Interest shall be calculated and payments shall be made in the manner set forth below Interest on each scheduled Pnncipal Amount of this Note due as of a given date specified on Schedule P &I hereto shall accrue at the related per annum rate specified on Schedule P &I from (and including) the Conversion Date to (but excluding) such Pnncipal Due Date or, if applicable, to the applicable Interest Due Date on which an Optional Redemption (as defined below) occurs Each interest amount accrued on each unpaid Pnncipal Amount of this Note shall be due semiannually as of February 1 and August 1 of each year (each such February 1 and 5 August 1, an "Interest Due Date ") commencing on the first such date after the Conversion Date, until each Principal Amount listed on Schedule P &I to this Note is paid in full Interest shall be calculated on the basis of a 360 -day year consisting of twelve 30 -day months Certain Pnncipal Amounts that are indicated as being eligible for Optional Redemption on Schedule P &I may be paid, in whole or in part, at the option of the Borrower as of any Interest Due Date on or after the date specified in such schedule (an "Optional Redemption ") In order to elect an Optional Redemption of such a Pnncipal Amount, the Borrower shall give notice of its intention to prepay a Pnncipal Amount to the Trustee and the Secretary not less than 60 days and not more than 90 days prior to the Interest Due Date as of which the Borrower intends to prepay the Principal Amount. The Trustee shall apply any payments received in respect of Optional Redemptions in accordance with written instructions of the Borrower, as approved by the Secretary Principal Amounts that are not indicated as being eligible for Optional Redemption on Schedule P &I may not be prepaid. IV. General Terms A Additional Definitions For purposes of this Note, the following terms shall be defined as follows "Business Day" shall mean a day on which banking institutions in New York City are not required or authorized to remain closed and on which the Federal Reserve Bank and the New York Stock Exchange are not closed. If any payment (including a payment by the Secretary) is required to be made on a day that is not a Business Day, then payment shall be made on the next Business Day "Contract" shall mean the Contract for Loan Guarantee Assistance, and any amendments thereto, among the Secretary and the Borrower, the designated public entity named therein (if applicable), and the State named therein (if applicable), that refers to and incorporates this Note by the number hereof "Pnncipal Amount" shall mean (i) before the Conversion Date for this Note, the aggregate amount of Advances made for each Pnncipal Due Date specified in the Commitment Schedule attached to this Note, less the amount of any redemptions pursuant to Section I.D hereof, and any principal repayment, and (ii) on or after the Conversion Date, the pnncipal amount (if any) stated for each Pnncipal Due Date in Schedule P &I attached hereto, less the amount of any pnncipal repayment and any Optional Redemptions made pursuant to Section III hereof and the Trust Agreement. 6 B Timely Payment to Fiscal Agent or Trustee Notwithstanding anything contained in Section I, Section II, or Section III, the Borrower, in accordance with the Contract, shall be required to make all payments of interest and principal, including any Optional Redemption payment, directly to the Fiscal Agent or the Trustee (as applicable) on the seventh Business Day pnor to the appropnate Intenm Payment Date, Interest Due Date, Principal Due Date, Prepayment Date, or date of Optional Redemption, as applicable C Interest on Late Payments If a payment of principal or interest herein provided for shall not be made by either (i) 2 30 p.m on an Interest Due Date or Pnncipal Due Date, or (n) 2 30 p.m. on the second Business may (as herein defined) next succeeding an Interim Payment Date, their interest shall accrue on th amoun of such p aymen t a t th then applicable interest rate or rates payable on this Note, from the relevant due date, as the case may be, until the date such payment is made Nothing in the immediately preceding sentence shall be construed as permitting or implying that the Borrower may, without the written consent of the Holder and the Secretary, modify, extend, alter or affect in any manner whatsoever the nght of the Holder timely to receive any and all payments of principal and interest specified in this Note D Applicability of Fiscal Agency Agreement or Trust Agreement Prior to the Conversion Date, this Note and Advances and payments made hereunder shall be administered pursuant to the terms of the Fiscal Agency Agreement and are subject to such agreement. On or after the Conversion Date, this Note and Advances and payments made hereunder shall be administered pursuant to the Trust Agreement and are subject to such agreement. The terms and provisions of the Fiscal Agency Agreement or the Trust Agreement, insofar as they affect the nghts, duties and obligations of the Holder and/or the Borrower, are hereby incorporated herein and form a part of this Note The Borrower hereby agrees to be bound by all obligations of the Borrower to the Fiscal Agent set forth in the Fiscal Agency Agreement. Capitalized terms not defined in this Note shall have the meanings ascribed to them in the Fiscal Agency Agreement or Trust Agreement, as applicable The Fiscal Agency Agreement provides for the Fiscal Agent to perform certain duties, including the duties of (i) paying agent and calculation agent for this Note until its Conversion Date, and (ii) registrar for this Note until this Note is canceled or a new registrar appointed, each in accordance with the Fiscal Agency Agreement. The Trust Agreement provides for the Trustee to perform certain duties, including the duties of collection agent for this Note after its Conversion Date until a new Trustee is appointed in accordance with the Trust Agreement. This Note may be surrendered to the Fiscal Agent for registration of transfer or exchange, as provided in the Fiscal Agency Agreement. The Fiscal Agent and Trustee each shall permit reasonable inspection to be made of a copy of the Fiscal Agency Agreement or Trust Agreement kept on file at its respective corporate trust office Neither the Fiscal Agency Agreement nor the Trust Agreement shall change the Borrower's payment obligations under this Note 7 E. Applicability of Contract and Secretary's Guarantee This Note evidences indebtedness incurred pursuant to and in accordance with the Contract and pursuant to Section 108 of Title I of the Housing and Community Development Act of 1974, as amended (42 U S C § 5308) (the "HCD Act ") This Note is subject to the terms and provisions of the Contract, to which Contract reference is hereby made for a statement of said terms and provisions and for a description of the collateral secunty for this Note The payment of pnncipai on the applicable Pnncipai Due Dates and interest on the applicable Interim Payment Dates or Interest Due Dates under this Note is unconditionally guaranteed by the Secretary to the Holder through a guarantee (the "Guarantee ") Execution of the Secretary's Guarantee is required before this Note is effective, and such Guarantee shall be issued pursuant to and in accordance with the terms of the Contract and Section 108 of the HCD Act. F Default A default under this Note shall occur upon failure by the Borrower to pay principal or interest on this Note when due hereunder If a Borrower defaults on the payment of any interest or Principal Amounts when due, or if the Secretary gives notice of a final decision to declare the Borrower in default pursuant to the following paragraph of this Section IV.F, the Secretary may, but is not obligated to, make on any date on or prior to the Conversion Date with fourteen calendar days pnor notice to the Fiscal Agent, or on the seventh Business Day preceding any Interest Due Date on or after the first permissible Optional Redemption date with seven Business Days pnor notice to the Trustee, an acceleration payment to the Fiscal Agent or the Trustee, as applicable, equal to the Aggregate Principal Amount of the Note, together with accrued and unpaid interest thereon to such acceleration payment date or Interest Due Date, as applicable In the event that any such acceleration payment is made from sources other than funds pledged by the Borrower as secunty under the Contract (or other Borrower funds), the amounts paid on behalf of the Borrower shall be deemed to be immediately due and payable to the Secretary Nothing in this paragraph shall be construed as permitting or implying that the Borrower may, without the wntten consent of the Holder and the Secretary, modify, extend, alter or affect in any manner whatsoever the right of the Holder timely to receive any and all payments of principal and interest specified in this Note In addition, the Secretary may declare. the Borrower in default under this Note if the Secretary makes a final decision in accordance with the provisions of 24 C.F.R § 570 913 (or any successor regulation thereof), including requirements for reasonable notice and opportunity for heanng, that the Borrower has failed to comply substantially with Title I of the HCD Act. Following the giving of such reasonable notice, the Secretary may take the remedial actions specified as available in the relevant provisions of the Contract pending the Secretary's final decision 8 G Holder's Reliance on Guarantee Following a default by the Borrower under the terms of this Note, the Holder agrees to rely wholly and exclusively for repayment of this Note upon the Guarantee The enforcement of any instruments or agreements securing or otherwise related to this Note shall be the sole responsibility of the Secretary, and the Holder shall not be responsible for the preparation, contents or administration of such instruments and agreements, or for any actions taken in connection with such instruments and agreement. The Holder, to the extent it is legally able to do so, shall bind or cause to be bound its successors and assigns to all limitations imposed upon the Holder by this Note H. Amendment This Note may only be amended with the prior written consent of the Secretary and the Borrower No such amendment shall reduce, without the pnor written consent of the Holder of this Note, in any manner the amount of, or delay the timing of, payments required to be received on this Note by the Holder, Fiscal Agent or Trustee, including Guarantee Payments, provided that pnor to the Conversion Date, the Commitment Amounts on the Commitment Schedule attached hereto, and the Pnncipal Amounts due on the corresponding Pnncipal Due Dates may be rescheduled pursuant to written instructions given to the Fiscal Agent by the Secretary with the written agreement of the Borrower and the Secretary absent the consent of the Holder I. Waivers The Borrower hereby waives any requirement for presentment, protest or other demand or notice with respect to this Note The Borrower hereby waives notice of default and opportunity for hearing for any failure to make a payment when due J Delivery and Effective Date This Note is deemed issued, executed, and delivered on behalf of the Borrower by its authonzed official as an obligation guaranteed by the Secretary pursuant to Section 108 of the HCD Act, effective as of the date of the Secretary's Guarantee V. Borrower - Specific Provisions [This space intentionally left blank] 9 THE UNDERSIGNED, as an authonzed official of the Borrower, has executed and delivered this Note City of Yakima, Washington BORROWER By (Signature) (Name) (Title) 10 ASSIGNMENT AND TRANSFER For value received, the undersigned assigns and transfers this Note to (Name and Address of Assignee) (Social Security or Other Identifying Number of Assignee) and irrevocably appoints attorney -in -fact to transfer it on the books kept for registration of the Note, with full power of substitution Dated. Note The signature to this assignment must correspond with the name as wntten on the face of the Note without alteration or enlargement or other change Signature Guaranteed. Qualified Financial Institution By Authonzed Signature [This page to be completed by the Fiscal Agent for transfer of the Note by the Holder as of the Conversion Date pursuant to the last paragraph of Section I.A of this Note.] 11 APPENDIX A Special Pre - Conversion Interest Rates (a) The Holder and the Secretary contemplate that the majonty of the outstanding Vanable/Fixed Rate Notes will be purchased by underwriters selected by the Secretary for sale in public offerings to occur each year If a public offenng including this Note has not occurred by each March 1 following the initial Advance under this Note, the Secretary shall, upon request, advise the Holder as to when a public offenng including this Note is expected to occur, and the Holder and the Secretary agree to consult with each other as to what the interest rate on this Note will be after May 1 of that year if a public offenng has not occurred by such May 1 The Holder shall notify the Secretary if such consultation has not occurred by Apnl 1 of that year If no public offenng including this Note has occurred on or before such May 1, the applicable interest rate on this Note from such May 1 shall be the rate (if any) negotiated and agreed upon by the Secretary and the Holder Such rate may be the Standard Note Rate or some other rate agreed upon by the Holder and the Secretary at least two Business Days before such May 1 (such other rate, the "Negotiated Special Interest Rate ") The Secretary shall notify the Fiscal Agent and the Holder in wnting of any Negotiated Special Interest Rate within two Business Days of the determination thereof (b) If the Secretary and the Holder do not, by the April 15th preceding such May 1, negotiate and agree under Section (a) of this Appendix on an interest rate applicable to this Note, then the Holder may, on or before the Apnl 20th preceding such May 1, give wntten notice to the Secretary of its intent to change the interest rate on this Note and, if such notice was given dunng such period, the Holder may, on such May 1, unilaterally determine (subject to the terms of this paragraph) the interest rate that this Note will bear (such rate, the "Holder Determined Interest Rate ") from and including such May 1 to but excluding the earliest of (i) the Conversion Date, (u) the date that this Note is purchased by a new Holder (as described in Section (c) below) or (iii) a Monthly Special Reset Date (as defined below) Interest from and including such May 1 to but excluding the Public Offenng Date shall be paid on the unpaid pnncipal balance of all outstanding Advances under this Note at the rate(s) to be determined by the Holder which, based upon then prevailing market conditions and taking into account all the circumstances, will enable the Holder to sell this Note at one hundred percent (100 %) of the aggregate amount of all Advances hereunder prior to the date of such sale Such interest rate shall be determined as of such May 1 and shall be determined again on the foregoing basis on the first of each month thereafter (the first of each month after such May 1, a "Monthly Special Reset Date ") The Holder shall notify the Fiscal Agent and the Secretary in wnting within two Business Days following such dates of the determination of the Holder Determined Interest Rate and each applicable interest rate determined on a Monthly Special Reset Date (c) If the Secretary and the Holder have failed to agree upon an interest rate pursuant to Section (a) of this Appendix A, the Secretary, upon seven calendar days notice to the Holder, may arrange for the purchase of this Note in full by another entity on the following May 1 or any Business Day thereafter If such a purchase occurs, the Holder shall sell and assign this Note to the purchaser thereof without recourse to the Holder and deliver this Note and its Guarantee to the Fiscal Agent for registration in the name of the purchaser thereof in accordance with the Secretary's written instructions The purchase pnce for this Note shall be 100% of the aggregate amount of all Advances owing hereunder plus accrued interest to the date of purchase Payment to the Holder of the purchase pnce for this Note shall be made by the purchaser thereof in Federal funds at the offices of the Holder, or at such other place as shall be agreed upon by the Holder and the Secretary, at 10 00 a.m., New York time, on the date of purchase After such purchase date this Note shall bear a rate of interest negotiated between the Secretary and the new intenm Holder (the "New Purchaser Special Interest Rate ") The Secretary shall notify the Fiscal Agent and the new purchaser in writing of any New Purchaser Special Interest Rate within two Business Days following the date of determination thereof (d) Notwithstanding Sections (a) through (c) (inclusive) of this Appendix, no Borrower is obligated to pay interest at a variable rate exceeding the maximum rate permitted by generally applicable law of the Borrower's state (such rate, the "Maximum Rate ") If the Borrower receives notice of a vanable interest payment that exceeds the Maximum Rate, then the Borrower shall timely pay such amount as does not exceed the Maximum Rate, and concurrently shall notify the Secretary and the Fiscal Agent of the reason for any interest non - payment. 2 COMMITMENT SCHEDULE Note No B- 04 -MC -53 -0008 Pnncipal Due Date Commitment Amount August 1, 2012 $165,000 August 1, 2013 174,000 August 1, 2014 183,000 August 1, 2015 193,000 August 1, 2016 203,000 August 1, 2017 213,000 August 1, 2018 224,000 August 1, 2019 235,000 August 1, 2020 246,000 August 1, 2021 258,000 August 1, 2022 270,000 August 1, 2023 284,000 August 1, 2024 297,000 Maximum Commitment Amount = $2,945,000 SCHEDULE P &I* Note No B- 04 -MC -53 -0008 Principal Amount Pnncipal Interest Rate Optional Redemption Available Due Date YES NO $ August 1, 2005 X August 1 2 006 X August 1, 2007 X August 1, 2008 X August 1, 2009 X August 1, 2010 X August 1 2011 August 1, 2012 X August 1, 2013 X August 1, 2014 X August 1, 2015 X August 1, 2016 X August 1, 2017 X August 1, 2018 X August 1, 2019 X August 1, 2020 X August 1, 2021 X August 1, 2022 X August 1, 2023 X August 1, 2024 X $ = Aggregate Pnncipal Amount Principal Amounts due on or after August 1, 2016, may be redeemed, subject to the terms contained herein and in the Trust Agreement, on any Interest Due Date on or after August 1, 2015 *This schedule will not be completed when initially executed and delivered by the Borrower for Guarantee for intenm, vanable -rate financing. It will be completed when assigned by the Holder at the request of the Borrower for conversion to Fixed Rates on the Conversion Date The first date shown above on which Optional Redemption is available is expected to be the same when this schedule is completed, if the Borrower participates in the initial Section 108 public offenng after receiving an intenm financing Advance hereunder If the Borrower participates in a later public offenng, the first date on which Optional Redemption is available is expected to be correspondingly later BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT l� Item No For Meeting Of 2 -15 -2005 ITEM TITLE An Ordinance approving and authorizing a loan guarantee contract and note and related documents under section 108 of the HUD Act of 1974 SUBMITTED BY Bill Cook, Community and Economic Development Director Tim Jensen, Treasury Services Officer CONTACT PERSON/TELEPHONE Tim Jensen, 576 -6070 SUMMARY EXPLANATION On March 2 2004 the Council adopted Resolution # 2004 -40, authorizing the application to HUD for an additional $2,945,000 in HUD Section 108 loan funds for the purpose of loaning those dollars out to qualifying projects within the community HUD approved this application Passage of the attached legislation and execution of the accompanying loan and contract documents, prepared by HUD, are legally required to complete this transaction However, passage of this Ordinance does not bind the City to consummate the loan if the Corporate Borrower has not satisfied all conditions precedent for his loan from the City, nor does it commit the City to that one Corporate Borrower This procedural step is identical to the first Section 108 loan taken out by the City The documents have been reviewed by City Staff and the City's Bond Counsel, Preston, Gates and Ellis, and are substantially identical to the documents executed in 2003 The loan pledges future Block Grant revenues for payment in case of a Corporate Borrower's default. Also pledged is a second position lien on the real and personal property purchased or constructed with the loan proceeds by the Corporate Borrower No Pledge Continued Resolution _ Ordinance X Other (Specify) Variable /Fixed Rate Note and Contract Contract Mail to (name and address) Phone Funding Source APPROVED FOR SUBMITTAL. City Manager STAFF RECOMMENDATION Pass Ordinance BOARD /COMMISSION RECOMMENDATION COUNCIL ACTION Ordinance passed. ORDINANCE NO. 2005-10 Legal /BD rev effective 7/21/92 of City tax dollars is made on this transaction The loan and its repayments will be processed between HUD, their custodian, the City's custodian and the Corporate Borrower The City only acts as administrator for these transactions, therefore no appropriation will be required to make any loan Two other documents that are necessary for completion of this Transaction are, (1) the Master Fiscal Agency Agreement between JP Chase (custodian) and HUD and the Indenture of Trust and Custodial Agreement between the City and JP Chase (our custodian) These documents are not included because they are still in effect from the first 108 financing The interest rate on this note is currently a variable rate until the loan pool goes to public offering, possibly later this year The variable rate is tied to three -month LIBOR plus twenty basis points (currently about 2 97 %) The interest cost and principal is to be paid by the Corporate Borrower The loan has final maturity in 2024, and a draft commitment schedule is attached to the note The documents attached for your review are • Ordinance authorizing the loan transaction • HUD Contract for Loan Guaranty Assistance • HUD Variable /Fixed Rate Note The City's execution of these documents is required to begin the process of obtaining the loan funds for the Corporate Borrower HUD will execute and date the documents at the time of the first draw of loan funds Passage of this Ordinance does not bind the City to accept the loan The documents will only be executed, and the money borrowed if the Corporate Borrower has satisfied all conditions of their loan agreement. Legal /BD rev effective 7/21/92