HomeMy WebLinkAboutR-1996-123 Contingent Loan AGMT / Yakima Housing Authority Housing ProgramRESOLUTION NO. R96- 123
A RESOLUTION authorizing and directing the City Manager of the City of
Yakima to execute a Contingent Loan Agreement with the
Yakima Housing Authority for implementation of the
Yakima Housing Authority Housing Program
WHEREAS, the City of Yakima has a long time commitment to support
and foster affordable housing, and
WHEREAS, SeaFirst National Bank and Yakima Housing Authority will
participate in a housing development program upon execution by the City
in partnership with the Yakima Housing Authority, and;
WHEREAS, City Council deems it to be in the best interests of the City
that a Contingent Loan Agreement be executed by the City, now therefore;
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAIUMA:
The City Manager of the City of Yakima is hereby authorized and
directed to execute a Contingent Loan Agreement in substantially the form
attached hereto, subject to approval of the terms and conditions by the
City Attorney.
ADOPTED BY THE CITY COUNCIL this day o
A'I'I QST:
City Clerk
1996.
Lynn Buchanan, Mayor
Proposed Contingent Loan
Agreement
by Foster,
Pepper, & Shefleman.
FOSTER PEPPER & SHEFELMAN
A LAW PARTNERSHIP INCLUDING
PROFESSIONAL SERVICE CORPORATIONS
DIRECT DIAL 2O$-447.8966
NITER/ST ADDRESS $P1THeFOSTER.COM
September 4, 1996
Forrest W. Walls
Preston Gates & Ellis
5000 Columbia Center
701 Fifth Ave.
Seattle, WA 98104-7078
Re: Nueva Primavera Contingent Loan Agreement
Dear Forrest:
Enclosed is a revised Contingent Loan Agreement for Nueva Primavera, adjusted to take out
the mis-references to "County" and replacing it with "City" in the appropriate places. Both Deborah
Winter and Karen Boyle are out this week, but I will let them know of these adjustments as soon as
they return.
HDS:qan
Enclosure
cc(w/encl): Ned Palmer
Mike Sivia
Tom Parker
0256814 WP
Sincerely,
FOSTE PEPPER & SHEFELMAN
Hu D. Spitzer
1111 THIRD AVENUE, SUITE 3400
SEATTLE, WASHINGTON 98101-3299
TEL. 206-447-4400 FACSIMILE 206-447-9700
ANCHORAGE, ALASKA eELLEVUE, WASHINGTON
PORTLANO, OREGON SEATTLE, WASHINGTON
SEP 0 71996
Draft of 9/4/96
CONTINGENT LOAN AGREEMENT
THIS CONTINGENT LOAN AGREEMENT (this "Agreement") dated as of August 1,
1996, by and between the CITY OF YAKIMA, WASHINGTON (the "City"), and the
HOUSING AUTHORITY OF THE CITY OF YAKIMA, a public body corporate and politic
of the State of Washington (the "Authority");
WITNESSETH:
WHEREAS, Revised Code of Washington ("RCW") Section 35.83.050 provides that a
city may lend or donate money to a housing authority or agree to take such action; and
WHEREAS, the Authority, by its Resolution No. _ , adopted July 24, 1996,
authorized the issuance of the Authority's revenue bonds (the "Bonds") in the aggregate principal
amount of $ for the purpose of providing the funds with which to finance the
construction of a 60 -unit apartment complex to be known as the Nueva Primavera Apartments
(the "Project"); and
WHEREAS, Bank of America NW, N.A., doing business as Seafirst Bank, as
underwriter for the Bonds, has requested additional assurances that the principal of and interest
on the Bonds will be paid when due; and
WHEREAS, the City has declared its intent to enter into a contingent loan agreement
with the Authority to evidence the City's commitment to make loans to the Authority if and to
the extent necessary to replenish the Reserve Account maintained by the trustee for the Bonds
and to make up any deficiencies in the amounts provided by the Authority to make payments of
the principal of and interest on the Bonds when due, and approved the form and execution of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained,
the parties hereto covenant and agree as follows.
ARTICLE I
Incorporation of Documents' Definitions
Section 1.01. Incorporation of Documents. Copies of the Trust Indenture (including any
amendments or supplements thereto, the "Indenture") dated as of August 1, 1996, between the
Authority and _, as Trustee, relating 1:o the Bonds, and the Deed
of Trust (as defined in the Indenture) are attached hereto as Exhibits A and B, respectively. The
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Authority shall not amend the Indenture or the Deed of Trust without the prior written consent
of the City so long as this Agreement is in effect.
Section 1.02. Definitions. Unless the context clearly requires otherwise, the following
terms shall have the respective meanings set forth below for all purposes of this Agreement.
[ Additional Bonds means any bonds issued pursuant to Section 2.7 of the Indenture.]
General Revenues means all revenues (other than Project Revenues) of the Authority
from any source, but only to the extent that those revenues are available to pay debt service on
the Bonds and are not pledged, by law, regulation, contract, covenant, resolution, deed of trust
or otherwise, solely to another particular purpose.
Investment Earnings means all earnings derived from the investment of money held in
any of the Funds held by the Trustee under the Indenture.
Net Revenues means Project Revenues less Operation and Maintenance Costs and Trustee
fees and expenses, if any.
Operation and Maintenance Costs means all necessary costs to the Authority of operating
and maintaining the Project, including but not limited to administrative and general expenses,
costs of insurance (including reasonable contributions for self-insurance reserves, if any),
consulting technical services and repairs and replacements (to the extent not properly classifiable
as capital costs) and reasonable reserves therefor, but excluding depreciation (or reserves
therefor), amortization of intangibles or other bookkeeping entries of a similar nature and debt
service on the Bonds or any other obligations of the Authority relating to the Project.
Project Revenues means all amounts due to or received by the Authority or by the
Trustee for the account of the Authority pursuant or with respect to the Project, including
without limitation all lease payments, Insurance Proceeds, Condemnation Awards, and proceeds
resulting from foreclosure of the Deed of Trust, and all Investment Earnings.
Refunding Bonds means any bonds issued to refund the Bonds, but only if the required
debt service on those bonds does not exceed the Required Debt Service on the Bonds in any year
and if the maturity of those bonds does not extend beyond the maturity of the Bonds.
Required Debt Service means, for any Fiscal Year, with respect to the Bonds, the amount
required to make scheduled payments of principal of (including mandatory redemption payments
with respect to term bonds) and interest on the Bonds in that Fiscal Year.
Reserve Account means the Reserve Account established by the Indenture.
Reserve Requirement means, with respect to the Bonds, $ [, and with
respect to any Additional Bonds, the amount described in Section 2.7 of the Indenture].
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Trustee means , a national banking association
organized and existing under the laws of the United States of America and having its principal
place of business in , or its successor, as trustee under the Indenture.
All other capitalized terms used but not defined in this Agreement shall have the
meanings assigned to thein in the Indenture.
ARTICLE II -
Loans to the Authority;
Repayment Terms: Interest Rate: Limitation of Liability
Section 2.01. Loans to the Authori_yt . The City agrees to lend to the Authority the
principal amount equal to the greater of (1) the amount sufficient, together with Net Revenues
deposited with the Trustee, to replenish the Reserve Account maintained by the Tnistee pursuant
to the Indenture to the Reserve Requirement for the Bonds [and any Additional Bonds], and (2)
the amount sufficient, together with Net :Revenues and other money, including money in the
Reserve Account, on deposit with the Trustee, to pay the principal of and interest on the Bonds
[and any Additional Bonds] when due. The Authority agrees to borrow the amounts described
above from the City pursuant to this Agreement for the purpose of meeting its obligations under
the Bonds[, any Additional Bonds] and the Indenture.
The total amount of funds to be lent by the City pursuant to this Agreement shall not
exceed the principal amount of the Bonds [and any Additional Bonds] plus interest due and
unpaid by the Authority.
Section 2.02. Time of Loan. The loan shall be made at such time or times, if any, as
the Authority is unable, because of lack of Net Revenues, to replenish the Reserve Account to
the Reserve Requirement for the Bonds [and any Additional Bonds] or if the money available
under the Indenture to the Trustee is insufficient to pay the principal of and interest on the Bonds
[and any Additional Bonds] when due. The loan may be made in a series of principal advances.
Section 2.03. Repayment Terms. The loan shall be repaid on reasonable terms
established by the City at such time as funds are advanced. Such terms shall require the
repayment of principal of such advance and interest thereon from the first available Net
Revenues in excess of the amounts neededto pay the interest and principal payments then due
under the Bonds or from the Authority's General Revenues.
Section 2.04. Interest Rate. The rate of interest borne by each advance hereunder shall
be the rate that represents the documented actual cost (including opportunity cost) to the City
of making the loan to the Authority, but in no event shall the rate of interest on any loan
hereunder exceed 12% per annum. The City may in its discretion charge a lower rate of
interest.
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Section 2.05. Procedures. The Authority, or the Trustee on behalf of the Authority,
shall, within two Business Days of any withdrawals from the Reserve Account, give written
notice to the City of such withdrawals, which notice shall state the amount, if any, required to
restore the Reserve Account to the Reserve Requirement for the Bonds [and any Additional
Bonds]. By January 15 of the following year the City shall deliver to the Trustee for deposit
into the Reserve Account the greater of one-half of the amount(s) specified (to the extent not
previously replenished by the Authority from the sources identified in the Indenture) or the
amount, together with other funds held by the Trustee under the Indenture for the purpose,
required to pay debt service on the Bonds [and any Additional Bonds] on the following
February 1, and shall deliver to the Trustee no later than the following July 15 the greater of
the balance of the amount(s) so specified (to the extent not previously replenished by the
Authority from the sources identified in the Indenture) or the amount, together with other funds
held by the Trustee under the Indenture for the purpose, required to pay debt service on the
Bonds [and any Additional Bonds] on the following August 1. The Authority also shall provide,
with or prior to the submission to the City of the certificate requesting funds, an accounting of
its operation of the Project, including cash flow projections and a loan repayment plan. Pursuant
to the Indenture, the Trustee shall notify the City in writing of the amount(s), if any, required
to be delivered to the Trustee by the City on each January 15 and July 15.
Section 2.06. Nature of Authority's Obligation. The obligation of the Authority to make
the loan payments from the sources identified herein and to perform and observe the other
obligations on its part contained herein shall be absolute and unconditional, and shall not be
subject to diminution by setoff, counterclaim, abatement or otherwise. The Authority's
obligations under this Agreement shall continue in effect and shall survive the satisfaction of the
Authority's obligations under the Bonds, the Indenture and the Deed of Trust until such time as
principal and interest due to the City pursuant any loan or loans made hereunder has been
repaid, together with any costs owed to the City pursuant to Sections 2.08 and 4.05.
Section 2.07. Nature of City's Obligation. The obligation of the City to advance funds
to the Trustee on behalf of the Authority in the amounts, at the times and in the manner
described herein shall be absolute and unconditional, and shall not be subject to diminution by
setoff, counterclaim, abatement or otherwise. The full faith, credit and resources of the City
are pledged irrevocably for the payment to the Trustee, on behalf of the Authority, of the
amounts described herein.
The City agrees that it will include in its budget, for each fiscal year following the receipt
by the City of notice under Section 2.05 that a deposit to the Reserve Account is required, an
amount equal to the deficiency in the Reserve Account to be made up by the City pursuant to
this Agreement. -
The obligations of the City hereunder shall terminate upon payment in full of the
principal of and interest on all outstanding Bonds [and Additional Bonds] . The Authority's
obligations under this Agreement shall continue in effect and shall survive the satisfaction of the
Authority's obligations under the Bonds, the Indenture and the Deed of Trust until such time as
principal and interest due to the City pursuant any loan or loans made hereunder has been
repaid, together with any costs owed to the City pursuant to Sections 2.08 and 4.05.
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Section 2.08. Payment of City's Costs. Upon request by the City, the Authority shall
reimburse the City for all out-of-pocket costs incurred by the City in connection with the
negotiation and administration of this Agreement and any loans made lby the City to the
Authority hereunder.
ARTICLE III
Rights of Cit Loans
If the City has made any loans to the Authority under this Agreement and such loans
have not been repaid in full (whether or not the loan is in default), the City may take any one
or more of the following steps:
(a) The City may request that the Trustee call the Bonds for redemption in accordance
with Section 3.2(3) of the Indenture;
(b) The City may have access to and inspect, examine and make copies of the books
and records and any and all accounts and dataof the Authority; and
(c) The City may, but shall not be required to, appoint a manager (which may be the
City) or a receiver for the Project (except that the City may appoint a receiver for the Project
only with the consent of the Trustee for as long as the •nds remain Outstanding).
Any manager or receiver appointed pursuant to paragraph (c) above shall have, in
addition to all the rights and powers customarily given to and exercised by receivers, the right
and authority to enter upon and take and maintain full control of the Project in order to perform
all acts necessary and appropriate for the operation and maintenance thereof in the same manner
and to the same extent that the Authority could do, including without limitation the execution,
enforcement, cancellation and modification of leases, the collection of all rents of the Project,
the removal and eviction of tenants and other occupants, the making of alterations and repairs
to the Project and the execution and termination of contracts providing for management or
maintenance of the Project, all on such terms as are deemed best by the City to protect its
interests under this Agreement. The City or the manager or receiver appointed by the City shall
be entitled to receive a reasonable fee for managing the Project.
ARTICLE IV
Remedies Upon Default
Section 4.01. Remedies of City on Default. Upon the occurrence of a default by the
Authority in its obligations hereunder, the City may take one or more of the following steps:
(a) If, and only if, the Bonds are no longer Outstanding, the City may declare the
entire principal balance of any loans made to the Authority by the City hereunder (if not then
due and payable) to be due and payable immediately, and upon any such declaration the principal
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of the loan shall become and be immediately due and payable, together with all interest accrued
thereon to the date of such acceleration, anything in this Agreement to the contrary
notwithstanding;
(b) The City may proceed to protect and enforce its rights in equity or at law, either
in mandamus or for the specific performance of any covenant or agreement contained herein,
or for the enforcement of any other appropriate legal or equitable remedy, as the City may deem
most effectual to protect and enforce any of its rights or interests hereunder; and
(c) If, and only if, the Bonds are no longer outstanding, the City may exercise any
of its rights under the Deed of Trust.
Section 4.02. Remedies of Authority on Default. Upon the occurrence of a default by
the City in its obligations to make loans to the Authority hereunder, the Authority may proceed
to protect and enforce its rights in equity or at law, either in mandamus or for the specific
performance of any covenant or agreement contained herein, or for the enforcement of any other
appropriate legal or equitable remedy, as the Authority may deem most effectual to protect and
enforce any of its rights or interests hereunder.
Section 4.03. No Remedy Exclusive. No remedy conferred upon or reserved to either
party by this Agreement is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to every other
remedy given under this Agreement or now or hereafter existing at law or in equity or by
statute, and either party hereto shall be free to pursue, at the same time, each and every remedy,
at law or in equity, which it may have under this Agreement, or otherwise.
Section 4.04. No Implied Waiver. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time and as often
as may be deemed expedient. For the exercise of any remedy, it shall not be necessary to give
any notice, other than such notice as may be expressly required herein.
Section 4.05. Agreement to Pay Attorneys' Fees and Expenses. If a default arises under
any of the provisions of this Agreement and either party hereto should employ attorneys or incur
other expenses for the collection of amounts due under this Agreement or the enforcement of
performance or observance of any obligation or agreement on the part of the other party
contained in this Agreement, on demand therefor, the nonprevailing party shall pay or reimburse
the prevailing party for the reasonable fees of such attorneys and such other expenses so
incurred.
ARTICLE V
Indemnification
As between the City and the Authority, the Authority shall assume the risk of, be liable
for, and pay all damage, loss, cost and expense of any party, including its employees, arising
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out of the performance of this Agreement, except that caused by negligence and/or willful
misconduct solely of the City and its employees acting within the scope of their employment.
The Authority shall hold harmless from and indemnify the City and its officers, elected officials,
agents, and employees against, all claims, losses, suits, actions, costs, counsel fees, litigation
costs, expenses, damages, judgments, or decrees by reason of damage to any property or
business and/or any death, injury or disability to or of any person or party, including any
employee, arising out of or suffered, directly, or indirectly by reason of or in connection with
the performance of this Agreement or any act, error or omission of the Authority or the
Authority's employees, agents, or subcontractors, whether by negligence or otherwise.
The Authority's obligation shall include, but not be limited to, investigating, adjusting,
and defending all claims against the City alleging loss from action, error or omission or breach
of any common law, statutory or other delegated duty by the Authority, the Authority's
employees, agents, or subcontractors.
ARTICLE VI
Compliance with Continuing Disclosure Requirements.
To meet the conditions of paragraph (d)(2) of United States Securities and Exchange
Commission Rule 15c2-12 (the "Rule"), as applicable to a participating underwriter for the
Bonds, the City undertakes for the benefit of holders of the Bonds to provide to the Trustee,
with instructions to deliver the same to each NRMSIR and the SID (as those terms are defined
in Section 6.6 of the Indenture), annual financial statements for the City, which statements:
(a) Shall be prepared in accordance with applicable generally accepted accounting
principles promulgated by the Government Accounting Standards Board ("GASB"), as
such principles may be changed from time to time by GASB or its successor;
(b) Shall not be audited, except, however, that if and when audited financial
statements are otherwise prepared and available to the City they will be provided;
(c) Shall be provided to the Trustee, not later than the last day of the ninth month
after the end of each fiscal year o:f the City (currently, a fiscal year ending December
31), as such fiscal year may be changed as required or permitted by State law,
commencing with the City's fiscal year ending December 31, 1996; and
(d) May be provided in a single or multiple documents, and may be
incorporated by reference to other documents that have been filed with each NRMSIR
and the SID, or, if the document incorporated by reference is a "final official statement"
with respect to other obligations o:f the City, that has been filed with the MSRB.
The City's obligations under this undertaking shall terminate upon the legal defeasance
of all of the Bonds. In addition, the City's obligations under this undertaking shall terminate
if those provisions of the Rule which require the City to comply with this undertaking become
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legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of
nationally recognized bond counsel or other counsel familiar with federal securities laws
delivered to the City and the Authority, and the Authority provides timely notice of such
termination to each NRMSIR or the MSRB and the SID.
ARTICLE VII
Miscellaneous
Section 7.01. Governing Law: Venue. This Agreement is governed by and shall be
construed in accordance with the substantive laws of the State of Washington and shall be
liberally construed so as to carry out the purposes hereof. Except as otherwise required by
applicable law, any action under this Agreement shall be brought in the Superior Court of the
State of Washington in and for Yakima County and/or in the United States District Court for the
Western District of Washington.
Section 7.02. Notices. Except as otherwise provided herein, all notices, consents or
other communications required hereunder shall be in writing and shall be sufficiently given if
addressed and mailed by first-class, certified or registered mail, postage prepaid and return
receipt requested, as follows:
To the City:
City of Yakima
129 N. 2nd Street
Yakima, Washington 98901
Attention:
To the Authority:
Housing Authority of the City of Yakima
110 Fair Avenue
Yakima, Washington 98901
Attention: Executive Director
The City or the Authority may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, requests or other communications
shall be sent. Notices shall be deemed served upon deposit of such notices in the United States
mail in the manner provided above.
Section 7.03. Binding Effect. This Agreement shall inure to the benefit of and shall be
binding upon the City and the Authority and their successors. This Agreement may not be
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assigned, except that the Authority shall have the right to assign to the Trustee its right to obtain
funds from the City hereunder for the benefit of the owners of the Bonds.
Section 7.04. Severability. In the event any provision of this Agreement shall be
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
Section 7.05. Amendments(; Additional Bonk. This Agreement may not he effectively
amended, changed, modified or altered, except by an instrument in writing duly executed by the
City and the Authority (or their successors in title). If the Bonds [or Additional Bonds] are rated
by a rating agency, then no such amendment shall be permitted unless the Authority, or the
Trustee on behalf of the Authority, has received written confirmation from the rating agency that
such amendment will not result in a reduction or withdrawal of the rating on the Bonds [or
Additional Bonds]. If the Bonds [and any Additional Bonds] are not rated by a rating agency,
then no such amendment will be permitted unless in the opinion of the Trustee such amendrnent
will not adversely affect the owners of the Bonds [or Additional Bonds]. This Agreement may
not be terminated until the Bonds [and any .Additional Bonds] have been paid in full or defeased,
unless the City has assumed all liability for payment of the principal of and interest on the Bonds
[and any Additional Bonds] when due and shall have pledged its full faith and credit to such
payment.
[The Authority shall not issue any Additional Bonds without the prior written consent of
the City.]
Section 7.06. Waiver of Breach. No waiver of any breach of any covenant or agreement
contained herein shall operate as a waiver of any subsequent breach of the same covenant or
agreement or as a waiver of any breach of any other covenant or agreement, and in case of a
breach by either party of any covenant, agreement or undertaking, the nondefaulting party Jmay
nevertheless accept from the other any payment or payments or performance hereunder without
in any way waiving its right to exercise any of its rights and remedies provided :for herein or
otherwise with respect to any such defaultor defaults that were in existence at the time such
payment or payments or performance were accepted by it.
Section 7.07. No Rights Created in Third Parties. The terms of this Agreement are not
intended to establish nor to create any rights in any persons or entities other than the City, the
Authority and the respective successors and assigns of each.
Section 7.08. Time of Essence. Time and all terms and conditions shall be of the
essence of this Agreement.
Section 7.09. Termination of Agreement. Except as provided in Section 7.10, this
Agreement shall terminate upon payment in full of all principal of and interest on the Bonds [and
any Additional Bonds](or defeasance thereof pursuant to Article IX of the indenture).
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Section 7.10. Refunding Bonds. If the Authority issues Refunding Bonds at any time,
all references in this Agreement to "Bonds" shall be deemed to be references to "Refunding
Bonds" for all purposes.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND
CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the City and the Authority have caused this Agreement to be
executed in their respective names by their duly authorized officers, and have caused this
Agreement to be dated as of the date set forth on the first page hereof.
CITY OF YAKIMA, WASHINGTON
By
ATTEST:
ATTEST:
Executive Director
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HOUSING AUTHORITY OF THE CITY OF
YAKIMA, WASHINGTON
By
Chair, Board of Commissioners
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PRESTON GATES & ELLIS
A T T O R\ E\ 5
September 6, 1996
Mr. John R. Hanson
Director of Finance and Budget
City of Yakima
129 North 2nd
Yakima, WA 98901
Re. Housing Authority of the City of Yakima -- Contingent Loan Agreement
Dear John:
Thank you for your recent call regarding the proposed Contingent Loan Agreement with
reference to the Nueva Primavera project. I understand that concern has been expressed
concerning the presence of the word "county" in this document where "city" should appear.
The draft of the Nueva Primavera documents which I last reviewed was that of August 16,
1996. I understand that this is also the draft which the Council reviewed. I had discussed this
draft with its author, Deborah Winter of Foster Pepper and Sheffelman, following its distribution.
We discussed, among other things, the appearance of the word "county" in the Contingent Loan
Agreement where "city" should appear although we only specifically discussed one instance. As I
recall, she planned to do a global computer search for this change for the next draft thus making
the correction wherever it might be necessary. Another draft has not yet, to my knowledge, been
circulated, but I have received from Hugh Spitzer of that firm and enclose an appropriately
revised draft. Ms Winter is presently out of town.
When discussing with you the over all policy issues regarding the Contingent Loan
Agreement, I did not mention the use of "county" thinking of it as an error which was not in
dispute and which would be corrected. I should have realized that this language would cause
consternation to other readers and apologize for the uncertainty and confusion resulting from not
flagging it for the City.
A PART \ERSHIP 1\CLI_ DI\G A PROFESSIO\AL CORPORATIO\
A\( H K Of • C ,, I t K D At F\ f. • Lo,, \ G E L F s • P O R T L a\ D • S P O k A\ E • TACOMA • \\ A S H I \ G TO \ D C
5000 COLI \1BlA CE\TER 701 FIFTH A\ENI. E SEATTLE W;SH1\GTO\ 98104-7078 PHONE (206) 623-7580 FACSIMILE (206) 623-7022
Mr. John R. Hanson
September 6, 1996
Page 2
Y hope that the foregoing is helpful.
Very tnaly yours,
By
Forrest W. W. Walls
FWW:mlb
cc: Glen Valenzuela
J:1FW W125739.80.001 W3L4KK DOC
Agency Request
YAKIMA HOUSING AUTHORITY
412 South 3rd Street #1 • Yakima, Washington 98901 • Phone: (509) 577-8611
MEMORANDUM
DATE August 27, 1996
TO. The Honorable Lynn Buchanan, Mayor of the City of Yakima
City Council Members
FROM Housing Authority of the City of Yakima (YHA)
SUBJECT- Nueva Pnmavera Townhomes
The purpose of this memorandum is to update the council on the progress of our partnership with the City
of Yakima and to provide a brief outline of this project for our new council members. We will examine
the following information 1) A brief chronology of events with a current update of completed tasks 2)
E\plain wh YHA is requesting a change in the dollar amount of its authorized Continent Loan
Agreement with the City of Yakima. 3) Identify play stations and the proposed facilities
HISTORI
In early 1994 YHA requested, the City staff endorsed, and the City Council agreed to provide a loan
contingency agreement in the amount of $2.5 million dollars to secure the credit enhancement needed to
protect the funding of this project (see Resolution No. R-9468). This action was taken in recognition of
the "partnership" necessary between local housing authorities and the cities in which they exist if we wish
to be a serious contender for consideration of state and federal funds. This partnership was responsible
for the award of one Million dollars from the Washington State Housing Trust Fund the largest single
award made to the Yakima Valley. To date, YHA has used these funds to complete the following pre -
construction tasks l) Contracted for and received a Development and Operation Budgets, 2) Contracted
for and received an M.A.I. Appraisal of land value, 2) Assembled and vacated all necessary parcels of
land. 3) Purchased all necessary parcels of land, 3) Contracted for and received completed site plan and
full construction prints (currently in plan review with the City of Yakima for final approval) 4) Contracted
for and received "As Built Appraisal" required by Seafirst Bank. the underwriter for the bonds The
enhancement received by this contingent loan agreement entitles YHA to inherit the city's bond rating
of "A" This rating is necessary to reduce interest rates on the bonds, allowing YHA to maintain rent levels
affordable to low and moderate income families. Currently YHA has over 800 families on our waiting list
with an anticipated assistance of 24 months from date of application.
EXPLANATION FOR CHANGE IN COMMITMENT FROM S2.5mil. To $3.7miL.:
To best understand the change in the requested amount of the contingent loan amount, one must first
identify the variables used and determine any changes. The construction costs as indicated in the
application were estimates only,. on a concept with no final design or plans at time of discussion.
The project has since been bid and the actual construction costs are known. The original budget had
proposed a million dollar reduction in the bond amount by the use of tax credits which due to the tinning
of this project, are no longer available. Time is the enemy of any development and this project is no
exception From its original application date of early 1994 to present, the variables of this project :have
continued to change. The actual construction bids and the cost of money have both increased. When the
original application was drafted, YHA was considering an unsolicited request from a local developer to
provide a build to suit or a turnkey operation for this project. Under this scenario the developer is in
control of all of the components of the transaction, including land cost, construction cost, and all other
associated soft and hard costs. This method of constructing allows the developer considerably more
latitude in determining what a reasonable profit should be. Due to circumstances beyond YHA's control,
public works law prohibited YHA from using this more cost effective way of constructing. Instead, VI -IA
was forced to use the competitive bid process dealing with dozens of vendors, whose added profit nr ^c
drive up the overall cost of the finished project. Additionally, YHA was required to purchase mo,
for ingress and egress. Finally the opportunity cost for our bonds have risen from 5.35% in early 1994 LSV
5 75% to date. (Reference. Seafirst Bank Northwest Municipal Bond Index)
PROPOSED PLAY AREAS AND THEIR '[NTENDED USE:
This project will provide a total of 14,981 square feet of segregated plays areas . We have designed
three separate play stations by age and activities. Currently under consideration are a regulation size
volley ball court, a multi purpose sport court designed to accommodate basketball ,tennis and
paddleball The third play station will be a" tot lot" designed for children six years of age and under.
The final plans have not yet been final:ized.
Thank you again for your consideration of this project. If you would like additional information, I can
be reached at 110 South Fair Avenue or by phone at 453-3107.
YAKIMA HOUSING AUTHORIPTYe. (509) 577 -sell
412 South 3rd Street 11 • Yakima, Washington 98901
MEMORANDUM
DATE: August 12, 1996
TO. Economic Development Subcommittee
FROM Housing Authority of the City of Yakima (YHA)
SUBJECT Nueva Primavera Townhomes
The purpose of this memorandum is to examine the following information: 1) A brief
chronology of events. 2) Identify the reasons YHA is requesting a change in the dollar
amount of its authorized Continent Loan Agreement with the City of Yakima, 3) Provide
current information and analysts of the project and its ability to service this debt.
HISTORY
In early 1994 YHA requested. the City staff' endorsed, and the City council agreed to provide
a loan contingency agreement in the amount of $2.5 million dollars to secure the credit
enhancement needed to protect the funding of this project, (see Resolution No. R-9468).
This action was taken to recognstion of the "partnership" necessary between local housing
authorities and the cities m which they exist if we wish to be a serious contender for
consideration of state and federal funds This partnership was responsible for the award of
$1 Million dollars from the Washington State Housing Trust Fund the largest single award
made to the Yakima Valley. The credit enhancement received by this contingent loan
agreement entitles YHA to inherit the city's bond rating of "A". This rating is necessary to
reduce interest rates on the bonds allowing YHA to maintain rent levels affordable to low and
moderate income families. Currently YHA has over 1800 families on our waiting list with an
anticipated assistance of 24 months from date of application.
EXPLANATION FOR.CHANGE IN COMMITMENT FROM $2.5miI. To $3.7miI.. :
To best understand the change in the requested amount of the continent loan amount, one
must first identify the variables used and determine any changes. The construction costs
as indicated in the application were only estimates The project has since been bid and the
actual construction costs are known. The original budget had proposed a million dollar
reduction in the bond amount by the use of tax credits which are not available
Paoe'c`2
Time is the enemy of any development and this project is no exception. From its t.
application date of early 1994 to present, the variables of this project have continua.
change. The actual construction bids and the cost of money have both increased. When thu
original application was drafted, YHA was considering an unsolicited request from a local
developer to provide a build to suit or a tumkey operation for this project. Under this scenario
the developer is in control of all of the components of the 'transaction, including; land cost,
construction cost, and all other associated soft and hard costs. This method of constructing
allows the developer considerably more latitude in deterrnining what a reasonable profit
should be. Due to circumstances beyond YHA's control, public works law prohibited YHA
from using this more cost effective way of constructing. Instead YHA was forced to use the
competitive bid process dealing with dozens of vendors, who's added profit margins drive up
the overall cost of the finished project.
Additionally, YHA was required to purchase from
emm535%nearly 1994 to5.75% todFe.ef�r fsand ress. F'lly �
e
opportunity cost for our bonds have rise
(Reference' Seafirst Bank Northwest Municipal Bond Index)
PROJECT'S ABILITY TO SERVICE DEBT:
For your convenience I have attached the following information:
•: As Built -- Appraisal prepared by Palmer Groth & Pietka Inc. Real Estate Analysts
• August 5, 1996 At completion, prior to occupancy •-- --- $49%V,
•:• Development and Operating Budget done by Sivial Levine Associates LLC
❖ Total Development Costs I April 16, 1996 $4,436,559,
❖ YHA'S Public Housing Management Assessment Program (PHMAP)
Annual Report Card from U.S Department of Housing --------HIGH PERFORMER
Additional information available on reauest:,
Thank you again for your consideration of this project. If you would like additional information
I can be reached at 110 South Fair Avenue or by phone at 453-3107.
Page2of 2
Underwriting Agreement
from Seafirst Bank.
pUG—� s+ -4G 1. HU 12 2015 CROF I P.CT COP I TpL MPK.TC P. 02
Cla.aSEAF1R4T
Edward P. Palmer
vlee Prer.lOont
Municipal Flrairms
City Council
City of Yakima
129 North Second Street
Yakima, WA 98901
Honorable Council Members:
August 26, 1996
Tom Parker of the Yakima Housing Authority has asked that I provide you with information about
nur prospective involvement in the financing for the Nueva Primavera Apartments.
Seafirst has underwritten the public sale of revenue bonds for over twenty housing authority
projects in Washington. Based on this experience, our review of the as built appraisal and
preliminary projections fur the project and discussions with the Authority and its financial advisor,
we are quite comfortable in proceeding with this bond offering.
The City's support is very impurwut to the prospective success of the financing. Through the
Contingent Loan Agreement, which will give the bonds an "A" credit rating, the Authority's
borrowing costs will be substantially reduced. This is particularly helpful since this is the
Authority's first non -HUD project and k therefore has no track record in the bond market.
Please do not hesitate to let me know if there is any other information I can provide.
Sincerely yours,
&IAA -4) P . Pak.4.er
Sasflrst Bank MOO
'nA ) 35889954 /t
1206) 9588818 wAsnkvton SO i24
Chronology of
City of Yakima Council
Actions
City of Yakima, Washington
Department of Economic & Community Development
Staff Report
Nueva Primavera
(8/29/96)
The City Council is considering a request from the Yakima Housing Authority to
execute a Contingency Loan Agreement in support of a low-income housing project
at 810 N. 6th Avenue. Several different Council actions were involved in bringing
Nueva Primavera, as it is called by the applicants, to its current status. A summary
of these actions follows:
• June 7,1994: Council approved Resolution No. R-94-68. Resolution provided
for developing a $133,000 draft Contingent Loan Agreement with the Yakima
Housing Authority for implementation of the Yakima Housing Authority
Housing program. Approval moved by Beauchamp, seconded by Sims;
motion carried by 6-1 roll call vote, Brado voting nay. Key issues raised
during the Council review included:
Concern expressed about difficulty of evaluating quality of building
materials with the information provided. (Council Member Beauchamp)
Ordinance language should not state that the City will pay the debt service
on the bonds. (Council Member Barnett)
Emphasis should be given by this project to assist people who are in the
lower 30 percent median income group. (Council Member Barnett)
• May 2, 1995: Public Hearing by the City Council to consider the Hearing
Examiner's recommendation to approve vacation of Garrett Street and
adjacent alley rights-of-way to facilitate proposed Nueva Primavera low-
income housing project. Moved by Brado, seconded by Buchanan "to
disapprove this vacation until an actual project is presented which the
vacation would serve." Motion carried by a unanimous vote; Beauchamp
absent. Key issues raised during the Council review included:
Consideration of proposal should provide Council and neighbors
opportunity to review development plans. (Council Members Brado and
Barnett).
Concern that grant funding could be lost if vacation did not move
forward. (Daniel Tilley, applicant's representative).
• August 22,1995. Continued Public Hearing, requested by Dan Tilley, on
vacation of rights -of -Way. Applicant submitted an up-to-date site plan and
the current status of applicant's loan from HUD, as requested by Council. The
City Council voted to approve the vacation subject to issuance of a building
permit with 18 months and retention of utility easements. Approval moved
by Sims, seconded by Beauchamp and passed by unanimous voice vote.
Approval stipulated using the SEPA review (Mitigated Determination of
Non -Significance). Key issues raised during the Council review included:
Concerns expressed as to whether this project would be for the very low
income or the moderately low income. (general discussion between
several Council Members).
• September 19,1995. City Council adopted Ordinance 95-47, implementing
Council action approving Garrett Street vacation.
• March 5, 1996. Public hearing to reconsider right-of-way vacation petition for
Garrett Street. Dan Tilley, representing the Yakima Housing Authority,
presented revised site plans for the Nueva Primavera project. He requested
the City Council approve a new, revised vacation ordinance that eliminated
certain conditions made unnecessary by the revised plans. It was moved by
Berger, seconded by Sims to approve the vacation petition and prepare a new
ordinance. The motion carried by unanimous voice vote; K1in,gele not
voting; Barnett absent.
• April 2, 1996. City Council adopted Ordinance 96-27, implementing Council
action on March 5, 1966, directing staff to prepare a revised Garrett Street
vacation ordinance.
Summary Analysis
City of Yakima, Washington
Department of Economic & Community Development
Staff Report
Nueva Primavera: Proposal Analysis
Site Plan Analysis
(8/23/96)
The current proposal from the Yakima Housing Authority for the Nueva
Primavera housing project at 810 North 6th Avenue calls for development of 9
multi -family residential structures with a total of 60 dwelling units and an ancillary
office building. The project site is 139,163 square feet in size. Following is a
summary analysis of this development proposal:
I. Residential Development
A. Types of Individual Units.
1. 44 three bedroom units , 1,041 square feet in size.
2. 16 two bedroom units, 800 square feet in size.
B. Residential Density
1. 18.75 dwelling units per net residential acre (60 units i- 2.8 acres = 18.75)
2. The Urban Area Zoning Ordinance allows multi -family development
with 13+ units per net residential acre as a Class (1) use.1 Multi -family
residential dwellings are defined to mean a structure designed for
occupancy by three or more families living independently of each other
and containing three or more attached dwelling units on a lot.2
C. Parking
1. Proposed - 90 parking stalls.
2. Standard Requirement - 90 spaces (1.5 spaces per unit X 60 = 90)3
D. Lot Coverage
1. Proposed landscaping - 25,940 sq. ft. (28.6% of site, thus yielding 71.4% lot
coverage)
2. Development standards allow up to 80% lot coverage.4
1 Table 4-1, Ch. 15.04 of the Yakima Municipal Code
2 Sect. 15.02.020 , p. 13, of the Yakima Municipal Code
3 Table 6-1, Ch. 15.06 of the Yakima Municipal Code
4 Table 5-1, Ch. 15.05 of the Yakima Municipal Code
E. Sitescreening:
1. Proposed - 6 foot high chain link fence with slats.
2. Proposed sitescreening meets standards for sitescreening; adjacent to low
density residential uses.
F. Recreational/play area
1. Proposed -14,491 sq. ft. (1.4% of site)
2. Other Yakima Housing Authority projects:
3. Standard Requirement - The intent of the lot coverage standard is to
provide areas for landscaping and recreation.5 As previously noted this
proposal will have 71.4% lot coverage and up to 80% is allowed.
II. Office Development
A. Size: Single -story 3,450 sq. ft. structure.
B. Proposed Use
1. To serve as Yakima Housing Authority main office.
2. Proposed professional office use will require Class (3) review providing a
public hearing before the :Hearing Examiner.6 No application for Class
(3) review has been submitted.
C. Parking
1. Proposed - 16 parking stalls
2. Standard Requirement - 18 spaces
(1 space per 200 sq. ft. of office space X 3,450 =17.25).
5 Sect. 15.05.020 (C) of the Yakima Municipal Code
6 Table 4-1, Ch. 15.04 of the Yakima Municipal Code
Site Plan
FRI'VFVALE (3013.EVAR0
122 27'
N09'40' 12'E
EXISTING
COMMERCIAL
PROPERTY
TO RE USED
SEPARATELY
Nl z
15'_0'.
50 1 —x_ -49$39441"E —
873 38"E p1 t--- I- h
PROPERTY LINE 120 35' N8939'38 -E
x a1 bi x x- - x x
;1
al
_BUILDING
#4C
0
00)
cew
- mo
I— al -Z.
wo
1z o
1-
z
W
O
LI ,�
BIJILDI4G #3C
4 THREE BEDROOM
T0H'NE OMES
-- -I c7
PLAY AREA
NUEbA PRIMAVERA TOWNHOMES
FOR
YAKIMA HOUSING AUTHORITY
810 NORTH 6th AVENUE YAKIMA. WASHINGTON
ARCHITECTURAL SITE PLAN
SITE _7 DAG , 8/213,'98
GROUP M ARCHITECTURE, INC
TIMOTHY E. MONAHAN. ARCHITECT
203 502714 7015 AVENUE
YAKIMA. WASHINGTON 00900
PHONE (508) 905-2004
SITE = 139,163 S F
HOUSING UNITS TOTAL 60 UNITS
1041 S F EACH 3 BED UNITS - 41 EACH - 45,604 S.F
800 S.F EACH 2 BED UNITS - 16 EACH - 12,800 S F - 4 ACCESSIBLE UNITS
PARKING
90 PARKING STALLS FOR HOUSING a 1 5 PER UNIT
16 PARKING STALLS FOR OFFICES ® 1 PER 200 S.F
ALLEY R O.W 10'
-7t- X 122 32'0
N89" X9'38" 1t x f�
. 11f II
13
JILDING #4
6 TI
REE BEDROOM
TOWNHOMES
I b
GARBAGE-_ �6 PARKS
i
HOUSING Iz4t-00'
ml
TYP OF 4
SEF, DTIS _�--` - 1 _-�-.__
--i
__I I -- -
-0- 24._0•. I 38•_0•
BUILDI
4 THREE
TOWN
1IG #38
BEDROOM
OMES
oI
zi
ET
DI
PLAY AREA
1
i 24 PARKS
I
WIDE SIDEWALK—�
TYPICAL U N 0.
BUILDING p3A
TOWNHOMES
4 THREE BEDROOM
U
-0— x x
72'-0•
c -RR WAY GATEx
Iz8.-0-
LI
4
58,604 S.F TOTAL
PLAY AREAS
14,491 S.F TOTAL
ALL BUILDINGS ARE
TWO STORY EXCEPT
THE ONE STORY OFFICE
\ NORTH %
8' PERIMETER CHAIN LINK
\ FENCE WITH 2" METAL PRIVACY
SLATS. TYPICAL
\
1 I23598'_,38" \ v
ofP�\
-. I 120' -0'
PARK I l 1 U I L I I_I J—(—LJ� g �_.1.
S
4T'-9"
SCALE. 1" = 20'
20.0' S00'19'14"E
122.36' 006'36'38' E
0
w0
cd
0
ot'�
xQ
zw
oa
1-
BUILDING
#4B
x
c0 I_l
1] g C BUILDING
y4A
-8'H CHAT
LINK FEN
W/2' METAL
PRIVACY SLAT
O
oV
0 W
a' 0
110,
O 0
30'-0" 30' .9'
20'-0"
,-- 2' ASPHALT PAVING WIhI
8" BASE COURSE TYPI AL
AT PARKING AREAS
PLAY AREA
x
CIEGINNIN
' FENCE
LOCATE b
DRIVEWAY
PER SP -1
20'-0"
J
GAS\
8' WROUGHT
IRON FENC3
WITH 1'x 1
BRICK COL IT/
CONC. CAP
M.
OFFICE
BUILDING
END OF
8' FENCE
24' BRE. .W Y -4 -ATE
I14 -0'
x t b
36.-0'
20'-8"
OF
W
z
W
0
0
z
Financial Analysis
by Levine Associates
NUEVA PRIMAVERA / ' .AMA, WA
60 UNITS: 16 TWO- AND 44 THREE-BEDROOM APARTMENTS AND OFFICE SPACE
NO SECTION S
PROJECT FINANCING
SOURCES
DEBT FINANCING (SEE DETAIL BELOW)
GRANTS
EQUITY
LOW INCOME HOUSING TAX CREDITS
HISTORIC TAX CREDITS
TOTAL SOURCES OF CAPITAL •
iRNANC1NG GAP /ADDITIONAL EQUITY REQUIRED
4421.559
17.000
0
0
0
4,438,559
9
DEVELOPMENT BUDGET
USES
LAND/BUILDING ACQUISITION
574.000
OTHER ACQUISITION COSTS
4,161
CONSTRUCTION (INCL SITE. OH&P. A&E, PERMITS. FEES)
3.122.668
SF COSTS
50.15
HARD COSTS 242Q443
3942
OH&P. CONTINGENCY + WSST 600224
9.77
A&E PERMITS, FEES, OTHER 102X0
1.66
FINANCING COSTS AND INTERIM COSTS
289.530
OTHER SOFT COSTS. TAX CREDIT EXPENSES
70.000
DEBT SERVICE AND OPERATING RESERVES/LEASE-UP
293.994
DEVELOPER FEE AND PROJECT MANAGEMENT
84•207
TOTAL DEVELOPMENT COSTS •
4,438,559
OPERATING BUDGET
REVENUES (PER UNIT OVERRIDE)
RENTAL INCOME
393.540
LAUNDRY AND VENDING
9,000
OFFICE SPACE (3200 SF @ 512.50/SF)
36.E
LESS HOUSING VACANCY LOSS @ 5.0%
(20.127)
LESS OTHER VACANCY LOSS
TOTAL REVENUES (EFFECTIVE GROSS INCOME)
431,063
AVERAGE/UNIT RENTS
538
EXPENSES
MGM!, LT %L MAINT, TAXES. FEES & RESERVES
138.000
TOTAL EXPENSES
393,106
ANNUAWNJT EXPENSES (BEFORE DEBT)
2,300
NET OPERATING INCOME (NOl)
293,063
FIRST YEARS CASH FLOW BEFORE ADDITIONAL
RESERVES AND PRINCIPAL PAYMENTS
37'957
ADDMONAL DEPOSITS TO RESERVES
9.150
ADDITIONAL PRINCIPAL/INTEREST PAYMENTS
0
CASH FLOW PROFIT (LOSS)
28,807
FIRST MORTGAGE AMOUNT
3,421,559
TAX-EXEMPT FINANCING RATE
TERM
6.25%
360
PAID OFF (YEAR)
2026
DEBT COVER
1.15
(SECOND MORTGAGE AMOUNT
1,000,000
WA KTF LOAN RATE
-- •?rev,A
1.00%
NM
(PAYMEN
PAID OFF (YEAR)
DEBT COVER
30+ YEARS
1.15
CUMULATIVE CASH FLOWS
SS 1997$$
AT YEAR 10
AT YEAR 20
AT YEAR 30
373,078
1,241,149
2,791,862
$MA 1 LEVINE ASSOCIATES LLC - APRIL 16. 1996
• ryrr>oirs may not root CLAP to rov+cat+0
NUEVA PRIMAVERA / YAKIMA, WA
60 UNITS: 16 TWO- AND 44 THREE-BEDROOM APARTMENTS AND OFFICE SPACE
DEVELOPMENT BUDGET
1DC
• •NLbe95 FOR CALCST1Gia�
LAND AND BUILDING ACQUISRION
LAND
OTHER (LAND)
star? r
TITLE AND CLOSING/ESCROW
LEGAL
APPRAISAL
ENVRONMENTAL
SUBTOTAL LAND AND BUILDING ACQUISRION
0
1.761
1.073
7.423
0
574,000
4,161
671,161
HOLLOW IN ACGLTAON PRCE
GLOM FROM Ti7LPCOMPANY
/rC LIVED IN AO:RA ION FRi
SITE WORK
ON-SITE IMPROVEMENTS (NEW CONSTRUCTION)
OFF-SITE IMPROVEMENTS (NEW CONSTRUCTION)
SUBTOTAL SITE WORK
45.000
17.000
62,000
NEW CONSTRUCTION AND REHABILITATION
NEW CONSTRUCTION
16 2 -BED BCC SF $34.08 436.274
44 3 -BED 1.032 SF $34.08 1.547.682
YHA OFFICE SPACE
3.200 g 554.69 175.00
WATER, SEWER 63.000
LIGHTING 11.785
GRADING. SIDEWALKS AND DRIVEWAYS 72.12D
LANDSCAPING 52583
PLAYGROUND EQUIPMENT 0
NEW CONSTRUCTION HARD COSTS SUBTOTAL
DESIGN CONTINGENCY 0 5.0%
GENERAL CONDmONS 0 5.0%
P&P BOND 0 0.0%
50% MST 0 7.90%
CONTRACTOR COSTS SUBTOTAL (NET WSST)
CONTRACTOR COSTS SUBTOTAL
EQUIPMENT AND FURNISHINGS
MAJWTENANCE EGAJF & OFFICE FURNITURE 1a00
SUBTOTAL NEW CONSTRUCTION
61.401 103.CS
2158055 MIA
1.842243 ter
01.110
1G=
261488 YI1A
33t133R CH
2.358.443 Yl
117.922 2343.14 R l
123,818
0
110.154 SFCarr. $JX
2600.184
2.710.338
10.000
ALLOWANCE
2,720.338
CONTRACTOR OVERHEAD AND PROFIT
CONTRACTOR'S OVERHEAD
CONTRACTORS PROFIT 0
SUBTOTAL CONTRACTOR OH&P
1.25%
6.0%
32.502
156.011
18,8,513
CONTINGENCY
NEW CONSTRUCTION
CONTINGENCY 0
SUBTOTAL CONTINGENCY
2.0%
59.817
59,817
/i$ Mt c►+;et
010
ARCHITECTURAL. ENGINEERING, AND OTHER FEES
NEW CONSTRUCTION
A&E
ARCH!TECNRAL DESIGN FEE
SOLIS
PRIN'1NG REIMBURSABLES
PERMITS AND FEES 0
UTIUTY HOOK-UP FEES
SUBTOTAL A&E AND OTHER FEES
85.00
5.730
2730
0.0%
nom
FEE: 3.0%
0 CONSTRUCT ON NET WSST i! INCL W CORET L CT COSTS
0 P LWED NV CONSTRUCTION cors
92,000
INTERIM COSTS
NEW CONSTRUCTION
CONSTRUCTION INSURANCE/BUILDER'S RISK
CONSTRUCTION INTEREST 0 625%
CMOS (C0167R + TOTAL) 8 8
PROPERTY TAXES (BUILDING)
UABILTTY INSURANCE (BUILDING)
SUBTOTAL INTERIM COSTS
0 APPROX r2s.000 COST AWL S OCANSTI11CRON COSTS
83,262 1152127 NET MOW S M$. 0
3.900 ACQUS AON T►COUriN CONs1RUCfl
3,750 ACQUEMONTh OWM.NCCNSTRI.CJOV
90.912
PERMANENT FINANCING FEES AND EXPENSES
BOND ISSUER FEES
LEGAL
UNDERWRITER/PLACEMENT
ORIGINAL ISSUE DISCOUNT 0 207%
NEGATIVE ARBITRAGE
WTEREST EXPENSE
15.000
68,431
45.020
13.686
FOSTEiI PEPPER MAW
E3 AME
CURRENTMARIET =MOON
8 MONTHS 0 6.07% 156.E 1421.559
NET INTEREST INCOME
8 MONTHS 0 5.40% (121176) 1421.559
STATE DCTED LOAN FEE Is 10.000 WM=
OTHER 46.500
APPRAISAL LOCO /4WD ISSLE
LEGAL sox soma/ea soma/coma
TRUSTEE LEGAL 2507
TRUSTEE ACCEPTANCE 2500
TRUSTEE FEE (FIRST YEAR) 2507
RATING AGENCY FEE 6,0x7
FINANCIAL ADVSOR Tarn'
BOND PRINTING. MSCELLANEOS 3,070
TTTLE INSURANCE & ESCROW 1L1017
SUBTOTAL PERMANENT FINANCING FEES AND DCPENSES
198,617
DEBT SERVICE RESERVE
?53,000
OTHER SOFT COSTS
OTHER
RENT -UP- MONTHS 70 LEASE = 4 40.994
OPERATING RSRVS (PER UNIT) 1.Qa? 60,0x]
MARKETING mac
SOFT COSTS CONTINGENCY
SUBTOTAL OTHER SOFT COSTS
110,994
0
110,994
EQUIVALENT MONTES SCONE. 1.7
EOLIVALENT MONTHS OP WPM. &I
DEVELOPER FEE
CONSULTANT FEES
PROJECT MANAGEMENT
PROJECT MANAGEMENT
SUBTOTAL DEVELOPER FEE
2%
3a ox
54.207
84,207
•4,207
YA#L1tMA NCXISNG AUTHORITY
TOTAL DEVELOPMENT COSTS
4,43809
9V1A / LATE ASSOCIA?ES LLC - APRIL 16. 1040
NUEVA PRIMAVEIZA 2;1A.WA
61 UNITS: 16 TWO- AND 44 irtREE-SEDROOM APARTMENTS AND OPF10E SPACE
OPERATING BUDGET (FIRST YEAR) . '' • • •
'Nr..:+.1e.:(1i„, • OA
,•••"' ;^,S :c4r. •
11Alf .."
4.4c -e----!: •
law *4-4'
•
116E0
1D
IDS
393.540
&Al
26400
IMMO
G.127)
ID
=MN
:UM
MOD
SCNEDU123) MSS INCOME
VACANCY LOU -
EFFECTIVE GROSS MOIRE
•
1E000
9.1101
•- 4111,190 • -• -:" • I'•-- *Xl X
4.. we. .. ' ` ".0... ,-...... !.. ...-• .
.. -
.- .." allatiZI
• x
istom . • 1-
SALARIES
MINT FEE • 5.0%
ER SALARY
FREE LINTICS)
AL/PARTNERSHIP
COUNMG/ALM
MEP-IONE COPPING 9PLIES
SITOTAL MijMWDT8 ADMINISTRAINF
ia2.0%
21AS)
=CO
MEI
EDS LOCO
EDS E.Ea)
&MO
&um
ATER AND SENSER
GAREAGE
MANAGER'S Lir
=DOW MERV
ilDS
4.0%
41.0%
.4.0%
123)
moo
12.01)
AO
18.71)
-----
OPENAIWG & MAIDINANCE
3- COL COMIZAC,
-. PCS CONTRACT
•-3-FittEiMAINTENAPCE
PAINTING SUMES/DECORAMG
MtECELLANEOUS
SLIITDTAL °PRATING & MAINTENANCE
2.0%
2.0%
WM
2.0%
21(E)
g1,030
21.Mr)
1.0X)
36.11SC)
TAXES & INSULQICE
•• ESTATE TAXES
MSC TAXES UOENSE AND PEWITS
• . • - - APC UABLITY INSURANCEJOONDING
AYROU. TAXES & WAFTS • 25%
$7.11177A1 TAXES & INSUILANCE
2.0%
2.0%
2.60I
LOX)
7.}
111.1101
RNANCIAL DPINSES
MSC FREA.NCIAL EXPENSES
TIMM FEE
SLITOL411114AMDIAL DOMES
2.SCO
EDS
ISM
EXX
Frs
IcBAREFLACENEM nesszvE
TING RESERVE
SINTOTAI MOW
2.0%
&UZI
12.200
TOTAL EXPENSES NET MORTGAGE INTEREST
ANNUAL PEE UNIT DEPOSES •
110,300 1DIAL CFAC/UALSCVEMEN
WM EY PEP wor CEALOAX1101.,
NE7 OPERATING PEWEE
DDT SERVICE FULLY Amorrrnmc LOANS
200.761
AMMON& PRINCIPAL PAYMENTS APED
AMMON& DEPOSITS 70 ESICRVIS
•
4.11M '
CASH FLOW PROFIT MO=
21.807
NUEVA PRIMAVERA / YAKIMA, WA
SCHEDULED RENT ROLL
*et
fll
a
g 5
16 2-BED/I BATH
20 3-BED/2 BATH
24 3-BED/2 BATH
01 FRU11VALE
NUMBER OF UNITS
MONTHLY GROSS REM
SCHEDULED GROSS RENT
AVERAGE RENT
4 ' 425:.
5575
5 r575
696
6.800
11.5001-
'13.800
695
64
81,6m ':211t-12.42ft
,138.000 7.:(6)5
165.600 '• 0rq
8 940 606
61
32.795
393.540
537.62
AFFORDABILITY TABLE
PERCENTAGE OF INCOME FOR RENT & mums/ MONTHLY INCOME
50% 60%
65%
1.-93%/`21'.300!.,
199%4649#
56% 1.238
127110/i 1;558'
ii940,fr 4.683q,
fe4911 /1.404
25% p 1;692:
46%418 1.521
70%
23% '/11.821:t
!20%1',..,1t447;,.
129%r/1.967
42%
75%
.,22%./ 1.950'
27% / 2.104
40% • 1.764
80%
19%, / 2.20C
24%1 t 2.375
t .•
• 24% / .2.375
36% 1 1.979
SMA 1 lEV1PTE ASSOCIATES 11C — ANNE 16 1096
NUEVA PRIMAVERA / 6(i...4 ® WA
61 UNITS 16 TWO. AND 44 THREE-BEDROOM APARTMENTS AND OOF10ESPAC
IINIFWAC .;1997 1998 1999
<A
393.560 397.475
838 • 843
2.076 0 0
20% 36403- 36.720
429.340 434.7 5
5.0% . (Z1.127) (21132!)
5.0% .;•;'Q 0
0.75 " � :37! 00
50% .(141:7)s)
J
nab , 1265C'
3%.6.50 . 12650
►2,650
9.090'
INCOME
RENTAL AVCOME
RESIDENTIAL W MUM ,sKa2waaawe22.) 1.0%
AVERAGE MONTHLY RENTS
FRUTTVALE HOLD
OFFICE SPACE
SUBTOTAL RENTAL AYGGME
VA CAN=
APARTMENTS 0
FRURVAE HOUSE
OFFICE SPACE
PARKING G
SIJITOTAL VACANC7E3
flhaNCIALREVENUE
INVEST INCOME - DEBT SERVICE RESERVE
DS RESERVE FOR LOAN 01 0 5.00%
SUBTOTAL FINANCE& REVENUE
OTHER REVENTX
LAUNDRY AND VENDING
OTHER REVENUE
SUBTOTAL OTHER REVENUE
SCHEDULED GROSS INCOME
VACANCY LOSS
Tf VE GEMS I NCo E.
1.0%
1.0%
101450
648
0
37454
438.905
C4532)
0
0
0
410.532)
12.650
12.650
12,180
409.479
159
0
38.203
47,683
(20.938)
0
0
0
X0,938)
12.650
12,650
12,650
9.181 9.273
0 0
,.090 1.747 ,1.273
• 451.190'. 455.935 Ma= • -469405
• _ - . X0,12 : C ), • 40432),:;: (20,938)
431,043:.7r4.5%,/e.":`440,234::::'. 448+8.
EXPENSES
TOTAL MGMT, wrung, WATT, TAXES & INSURANCE, ARSQ47ES
IVa MOVE
IVa MOVE
'JCL .DOVE
IVa AJOVE
Wa MOVE
SUBTOTAL U771J7ffS
SUBTOTAL OPERATING 6 MAINTENANCE
SUBTOTAL TAXES & INSURANCE
SUBTOTAA NOAL E PS:MES
SUBTOTAL RESERVES
rffot...lertee%1
144300 MOM
Solirer
s.
TOTAL IDOINSES NET MORTGAGE INTEREST Z.: • «
ANNUAL KR UNfl ESS
,
NET OPERATRNG VN6 ceir '�;� -
TOTAL ACOIASmON PRXE 678,761
CONSTRUCTION q>"ICL SITE. 01410, A&E, PORATTS. PEW
0/AMONG COSTS AND INTERIM COSTS
OTHER SOFT COSTS, TAX CREDIT EXPENSES
DEBT SERVICE AND OPERATING RESERVES/LEASE-IR
DEVELOPER FEE AND PROJECT MANAGEMENT
TOTAL DEVELOPMENT COSTS
PRfC2/34OUSING UNIT (ALL C0S13)
DEBT SERVICE 01 TAX•DIMP7RNANCING
DEBT COVERAGE
DEBT SERVILE: V2 WA HTF LOAN
DEBT COVERAGE (PAYMENTS DEFERRED
3,122,668
289,530
70.000
293,994
84.207
4,438,559
72.763
1 ,300 ‘. '.142,1354!
4200 .'
21A763 ' 293,553
143,829 145,627
- 2001
_
-- 417,659
n •371
0
• ;34968
;1,352)
•
•
2,21
r+
a -��g�
� J iAw
..;,
•1,1'.11.56.5
f 0
NrWar
411,652
*M
452200
7V
143,69 •:,;.145,627
;44,35,1-2287
296.3741"; 303.040
-_I47A43
A 2.417
.i09,852
5 YEARS)
AVAILABLE FOR ADDMONAL RESERVES • LOAN PAYMENTS
ADDITIONAL REPLACE RESERVES (GOAL: 9,150 /YR)
ADDITIONAL OPERATING RESERVES (OR : 0.0% /YIR)
EXPENDITURES
TOTAL RESERVES
ADDMONAL PAYMENT LOAN 01
ADDMONAL PAYMENT LOAN 02
DEBT 01 BALANCE
DEBT 02 BALANCE
CASH FLOW PROFIT (LOSS)
CASH FLOW PROFIT (LOSS) $$1997$S
SMA LEVE 16713 LIC - 16 1006
252.806
1.15
0
1.15
37.957_
9.150
0
0
9,150
0
0
3.381.465
1.000.000
2!.107
21,807
252.806 252.106 252.806 252.806
1.16 1,17 120 . 1.23.
(1 0 0 _ 0
1.16 1,17 1.20 123
434569 80,235 57.047
9,150 9,150 9,150
0 0 ,0
O 0 0
27,450 36,600 45,750
O 0 0
0 0 0
3,193,518
11,000,000
34,419 41.085 47,897
33,741 39,877 46,028
10.748
9,150
0
I)
18.300
0
0
3.338.79;1
1,000,000
31.598
30,383
3.293,375 3,245,036
1,000,000 1,000,000
426.022 434.543 443.233 452.048
542 594 606 615
0 0 0 .0
39,747 40.542 41.353 412.180
46.5,769 475,084 464,586 494.214
(21.774) (22205) (22.644) (Z3.042)
O 0 0 0 -•
a
o o 0 0
o o 0 0 ,,;,;u,;
(21.774) (22.205) (22644) (23.092) 123.549)
12650 12.650 12.650 12.650 "^-12650
12.650 12650 12650 12650 :-72861?
12.650 12.650 12,650 12.650 '22,650
9,459 9.554 9.649 9.746 -::::::50.1113
0 0 0 0..2.L%,-;_::15
9,459 9,554 9,649 2746 A.: ,843
r ':1Cxf _
481.140
•
4^^N�a
y 43,023
:4041.63
•
470.363 479.770 489.365
643 665 669
O 0 0
43.884 44.761 45.657
514.247 524432 535.022
499.153 ,,.509;136
682 s .fd16
46510. • .,''17201 .
545,723
(24.015) (34491) (24975) (2470) ` 5974)
o 0 0 0
0 0 0 0
0 0 0 0
(24.015) (4491) (24975) (25.470)
12,650 12.650 12.650 12,650
12.650 12.650 12.650 12,650
12.650 12650 12.650 12650
9942 10.041 10,141 10,243
0 0 0 O "0;
9,942 10.041 14141 10,243 4t,'1V,3i5
487,878 497,218 506,885 416474'
'(21,774) 0.205) (22644) (23,0401
466,104 475,083 481,241 493.581
.526
"(36.838 647,223 567.814- -555.615✓•' (79,(32 ••
- '(24015) , (24491) (2&975) 70)421.9774)
1• 12.823 522,732_ 132.$381", I4$,1i4r'Nss,8ss
149.291 151.157 153,046 154.959
154458 164843 162.154 164190
w �
149,291 151,157 153,046 154,959 156,896 158358 160,843 _ 162.854 _ 168.890 166,951 ,
2.447 2.478 2,509 - .1.5401 ' 2,572 :; 2204 „ 2637' 2.670L.',"71.003:"" 2,737
=_
316.813 323.926 331,195 .3.18,622 146.211 c 383,,965 361.189 369.954 -1-3711,251;
(6.708
SECOND MORMAfiGE
AMOUNT J, 1,000,000
RATE •L00%
TE914 1 600
Pal _ -. .25,423
PAID OFF 30+ YEARS
TOTAL DEVELOPMENT C0415 4,438259
AMOUNT NNANCED 4421,559
SINKS 17,000
I UI Y 0
UHTC 0
M15TORIC TAX CREWS 0
CAP RATE VALUE • 10.00% 42.91 MILLION
252,806 252,806 252.806 252.806
1.25 1.28 1.31 1.34
27,605 27.605 27,605 27,605
1.13 1.16 1.18 121
36,403 43.516 50,784 58.211
9.150 9,150 . 9,150 9.150
0 0 0 0
0 0 0 0
54,900 64,050 73.200 82.350
0 0 0 0
0 0 0 0
3,138,831 3,080,552 3.018,524 2.952,507
982,314 964,450 946,407 928,143
27.253 34,366 41,634 49,061
25,930 32,374 38,833 45,307
4vu i LEvivE Assoc -Len LLC - * . 16 It%
252.806
..137
27405
.1.23
65.800
9.150
- 0.
•0
91.500
0
0
2882.243
909.775
56450
51.798
252806
1.40
27,605
1.26
252,806 252,406 252.806
143 1.46 1.50
27.605 27.605
1.29 1.32
27.605
125
73,555 81.478 89,574 97,846
9,150 9,150 9,150 9.150
O 0 0
O 0 0
0
0
100.650 109.800 118,950 124100
O 0 0 0
0 0 0• 0
2807,459 2727.466 2643,152 2.552,990
891,183 872,404 853.436 834.278
64,405 72.328 80.424 88.696
51.305 64,829 71,372 77,934
252,806
1.53
27.E
-138
x.
106.297
:9.150
.... ' z0
137.250
'" 0
'2,457,029
814927
97.147
84514
Appraisal Report
by Palmer , Groth, & Pietka, Inc.
1
1
1
1
1
1
1
1
1
t�1tl 8111
:11.1.
Nig
�M
PALMER
GROTH &
PIETKA INC
August 5, 1996
Mr. Torn Parker
Assistant Director
Yakima Housing Authority
110 Fair Avenue
412 South 3rd Street #1 (Mailing)
Yakima. Washington 98901
Re: NUEVA PRIMAVERA APARTMENTS
810 North 6th Avenue
Yakima, Washington
1
Dear Mr. Parker:
1 At your request, via your signed contract that we received May 17, 1996, we have provided
a complete self-contained appraisal report to estimate the market value(s) of the referenced
property using generally accepted appraisal principles and practices. This report has been
prepared in conformance with the requirements of the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute, and the Uniform
Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal Standards
' Board of the Appraisal Foundation, pursuant to the Financial Institutions Reform, Recovery
and Enforcement Act (FIRREA) of 1989, as revised 1990 and 1994. The report is also
intended to comply with the Appraisal Standards for Federally -Related Transactions (FRT's)
i as prescribed by the Federal Reserve System Regulation 12 CFR Parts 208 and 225, and by
the Office of the Comptroller of the Currency (OCC) Regulation 12 CFR 34.41 et. seq. A
copy of the client's signed contract is included in the Addenda.
1 The subject is a proposed apartment complex which will also contain a small office building
on-site. The apartment complex is intended to be operated as a "mixed income" project,
with 60 percent of the units rented to tenants that qualify as low income households. At the
client's request, we have valued the subject project as both a "Market Rate" and "Low
Income" apartment complex.
DC'•ALZ, A
DA'.T: = P-27,-, \L4.
•-f \T \ \ \ _.
.\\D \'\\CL l.:\\\D \l: \vr.
M11.7 L STFiFEN Mw
CLOP.Le 'OPI4 R K. MONGER. MAI
MiOiAEL f GRIF L'. MAI
MARX M LAWWILL MA;
TD.4CTK's E Vs7JCH7 MA:
IR1A.' 1. =LLD
TODD 5 1230'
Mr. Tom Parker, Ass't Director August 5, 1996
Yakima Housing Authority Page 2
Based upon our investigation and analysis of available information, the values of the properc
are:
10 -i ,.Effective .
Value Scenario VAllk-
Dat : '
Amount
"As Is" Market Value 7/10/96 $400,000
Stabilized Value, Market Rate 9/1/97 $2,550,000
At Completion, Prior to Occupancy 5/1/97 S2,510,000
Value Considering Low Income Restriction 9/1/97 S4,950,000
And Favorable Financing Analysis
At Completion, Prior to Occupancy 5/1/97 $4,900,000
This valuation is subject to the conditions and comments presented in this report.
RSA:rsa
S96-186/3
Sincerely,
PALMER, GROTH PIETKA,
R. Scott Adams
WA State Appraiser Certification - General
License No. 270-11 AD-AM-SR-S470Q6
Philip L. Steffen, MAI
WA State Appraiser Certification - General
License No. 270-11 ST-EF-FP-L5O2KE
PALMER, GROTH & PET KA, INC.
Trust Indenture
for the
Yakima Housing Authority
prepared for the City
by Foster, Pepper, & Shefleman.
DRAFT OF JULY 19, 1996
TRUST INDENTURE
BETWEEN
HOUSING AUTHORITY OF THE CITY OF YAKIMA
AND
as Trustee
Dated as of
August 1, 1996
RELATING TO
$[3,700,000] HOUSING AUTHORITY OF THE CITY OF YAKIMA
HOUSING REVENUE BONDS, 1996
(NUEVA PRIMAVERA PROJECT)
This document was prepared by
Foster Pepper & Shefelman
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
1.1 Definitions 3
1.2 Content of Certificates and Opinions 10
1.3 Interpretation 11
ARTICLE II
THE BONDS
2.1 Authorization of Bonds 12
2.2 Transfer of Bonds .. 12
2.3 Form and Execution of Bonds 14
2.4 Mutilated, Lost, Stolen and Destroyed Bonds 14
2.5 Other Secured Obligations .... ,. „ .. 15
2.6 Ownership of Bonds 15
2.7 Nature of Security; Additional Bonds ,. 15
2.8 Redemption of Bonds 16
2.9 Cancellation 16
2.10 Open Market Purchases 16
2.11 Destruction of Bonds 17
ARTICLE III
FORM AND DETAIL OF THE BONDS
3.1 Authorized Amount, Interest Rates and Payment 17
(1) Authorized Amount 17
(2) Payment of Bond Principal and Interest 18
3.2 Redemption of Bonds 19
(1) Optional Redemption 19
(2) Mandatory Redemption 20
(3) Extraordinary Mandatory Redemption 20
(4) Notice and Effect of Call for Redemption 21
ARTICLE TV
APPLICATION OF BOND PROCEEDS;
CREATION OF FUNDS AND ACCOUNTS
4.1 Application of Bond Proceeds 2
U 73445 02
4.2 Creation of Funds and Accounts 23
4.3 Bond Fund 24
(1) Principal and Interest Account 24
25
27
27
27
28
(3) Establishment of Completion 28
(4) Application of Balance in Project Fund 28
(5) Investment of Money in the Project Fund 29
(2) Reserve Account
(3) Investment of Money in Bond Fund
4.4 Project Fund
(1) Maintenance of Project Fund
(2) Payments From Project Fund
ARTICLE V
INVESTMENT OF FUNDS; REBATE FUND
5.1 Investment of Funds 29
5.2 Allocation of Income and Losses 30
5.3 Rebate Fund 31
5.4 Segregation of Money 32
ARTICLE VI
AUTHORITY COVENANTS
6.1 Performance of and Authority for Covenants 32
6.2 Debt Service Coverage Ratio 33
6.3 Condemnation Awards and Insurance Proceeds 34
6.4 Extensions of Payment of Bonds 35
6.5 Tax -Exempt Status of Bonds 35
6.6 Compliance with Continuing Disclosure Requirements 35
6.7 Contingent Loan Agreement 39
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS
7.1 Events of Default 39
7.2 Acceleration of Maturity 40
7.3 Remedies Upon Default 40
7.4 Application of Project Revenues and Other Funds After Default 41
7.5 Trustee to Represent Bondowners 43
7.6 Bondowners' Direction of Proceedings 43
7.7 Limitation on Bondowners' Right to Sue 44
7.8 Absolute Obligation of Authority 44
7.9 Termination of Proceedings 45
07345
7.10 Remedies Not Exclusive
7.11 No Waiver of Default
ARTICLE VIII
CONCERNING THE TRUSTEE
45
45
8.1 Acceptance of Trust and Prudent Performance Thereof 45
8.2 Trustee May Rely Upon Certain Documents and Opinions 47
8.3 Trustee Not Responsible for Indenture Statements,
Validity 48
8.4 Limits on Duties and Liabilities of Trustee • • • • • • • • • • • • • • 48
8.5 Money Held in Trust 49
8.6 Costs for Maintenance of Suit; Indemnification 49
8.7 Intervention in Judicial Proceedings 50
8.8 Trustee to Retain Rebate Records 50
8.9 Reports of Activities 50
8.10 Compensation of Trustee . ,. 50
8.11 Trustee May Hold Bonds 51
8.12 Qualifications of Trustee 51
8.13 Resignation of Trustee 52
8.14 Removal of Trustee 52
8.15 Appointment of Successor Trustee ...... , 52
8.16 Merger of Trustee 53
8.17 Transfer of Rights and Property to Successor Trustee 53
8.18 Survival of Rights 54
[8.19 Appointment of a Co -Trustee 54]
ARTICLE IX
DISCHARGE OF OBLIGATIONS TO BONDOWNERS
9.1 Defeasance of Bonds 55
9.2 Discharge of Indenture 56
9.3 Nonpresentment of Bonds 57
ARTICLE X
AMENDMENT OF INDENTURE
10.1 Amendments to Indenture
10.2 Notice of Amendment
Ot7734A5 02
........................ '.........,57
61
ARTICLE XI
MISCELLANEOUS
11.1 Severability 61
11.2 Payments Due on Saturdays, Sundays and Holidays 61
11.3 Successor Is Deemed Included in All References to 62
Predecessor 62
11.4 Limitation of Rights to Parties and Bondowners 62
11.5 Waiver of Notice 62
11.6 Notices 62
11.7 Waiver of Personal Liability 62
11.8 Applicable Provisions of Law 63
11.9 Execution in Several Counterparts 63
11.10 Notice to Rating Agency
Exhibit A - Bond Form
Exhibit B - Permitted Investments
C137344 G2
-iv-
TRUST INDENTURE
THIS TRUST INDENTURE, made and dated as of August 1, 1996, by and between the
Housing Authority of the City of Yakima (the "Authority"), a public body corporate and politic
organized and existing under the Constitution and laws of the State of Washington (the "State"),
and , a national banking association organized and existing under the laws
of the United States of America and having its principal place of business in _ , _
as Trustee,
WITNESSETH:
WHEREAS, the Authority is authorized and empowered by chapter 35.82 of the 'Revised
Code of Washington (the "Act") to issue bonds for the purposes provided in the Act; and
WHEREAS, the Authority has authorized the issuance of its Housing Revenue Bonds,
1996 (Nueva Primavera Project) (the 'Bonds"), in the aggregate principal amount of
$[3,700,000] to pay all or part of the costs of constructing the Nueva Primavera Apartments
located in the City of Yakima, Washington, to provide a housing project of the Authority (the
"Project"); and
WHEREAS, _ has agreed to accept the duties and responsibilities of thc-
Trustee [and Bond Registrar] hereunder according to the terms hereof; and
WHEREAS, to provide for the authentication, issuance and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued and
secured and to secure the payment of the principal thereof and premium, if any, and interest
thereon, the Authority has authorized the execution and delivery of this Indenture; and
WHEREAS, all acts and proceedings required by law necessary to make the Bonds, when
executed by the Authority, authenticated and delivered by the Bond Registrar, and duly issued,
the valid, binding and legal obligations of the Authority, and to constitute this Indenture: a valid
and binding agreement for the uses and purposes set forth herein in accordance with its terms,
have been done and taken, and the execution and delivery of the Indenture have been in all
respects duly authorized;
NOW, THEREFORE, THIS INDENTURE
WITNESSETH:
GRANTING CLAUSES
The Authority, in consideration of the premises and the acceptance by the Trustee of the
trusts hereby created and of the purchase and acceptance of the l3onds by the Owners thereo
C0730145 02
and for other good and valuable consideration, the receipt of which is hereby acknowledged, to
secure the payment of the principal of and premium, if any, and interest on the Bonds according
to their tenor and effect and to secure the performance and observance by the Authority of all
the covenants expressed or implied herein and in the Bonds, does hereby bargain, sell, convey,
mortgage, assign, pledge and grant, without recourse, all of the Authority's right, title and
interest (whether now or hereafter existing) in and to the Trust Estate and a security interest in
the Trust Estate to the Trustee and its successors in trust and assigns forever, for the securing
of the performance of the obligations of the Authority hereinafter set forth, as follows:
1. All Net Operating Income and, if the Trustee appoints a receiver or exercises its
rights under the Deed of Trust pursuant to Section 7.3, all Project Revenues;
2. All General Revenues of the Authority;
3. The lien on the real property and improvements thereon and personal property
therein conveyed by the Deed of Trust;
4. All funds and accounts established under this Indenture and all Investment
Earnings thereon and money, securities and obligations therein (subject to disbursements from
any such fund or account upon the conditions set forth in this Indenture);
5. All rights of the Authority to obtain advances made by the City to or on behalf
of the Authority under the terms of the Contingent Loan Agreement;
6. All money and securities from time to time held by the Trustee under the terms
of this Indenture and any and all other real or personal property of every name and nature
concurrently herewith or from time to time hereafter by delivery or by writing of any kind
conveyed, mortgaged, pledged, assigned or transferred as and for additional security hereunder
by the Authority or by anyone in its behalf, or with its written consent, to the Trustee, which
is hereby authorized to receive any and all sucb property at any and all times and to hold and
apply the same subject to the terms hereof; and
7. To the extent not covered hereinabove, all proceeds of all of the foregoing;
TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or
hereafter acquired, to the Trustee and its respective successors in trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts set forth herein for the equal
and proportionate benefit, security and protection of the City and all present and future Owners
of the Bonds issued under and secured by this Indenture without privilege, priority or distinction
as to the lien or otherwise of any of the Bonds over any other Bonds except as expressly
provided herein;
PROVIDED, HOWEVER, that if the Authority, its successors or its assigns shall well
and truly pay, or cause to be paid, the principal of and premium, if any, and interest on the
Bonds due or to become due thereon, at the times and in the manner mentioned in the Bonds and
O x3445 CC
-2-
as provided in Article IX according to the true intent and meaning thereof, and shall cause the
payments to be made as required under Article TV, or shall provide, as permitted hereby, for
the payment thereof in accordance with Article IX, and shall well and truly keep, perform and
observe all the covenants and conditions pursuant to the terms of this Indenture to be kept,
performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of
money due or to become due in accordance with the terms and provisions hereof and of the
Deed of Trust and the other Bond Documents (as defined in the Deed of Trust), then upon such
final payments or deposits as provided in Article IX, this Indenture and the rights hereby granted
shall, except as otherwise provided herein, cease, terminate and be void and the Trustee shall
thereupon cancel and discharge this Indenture and execute and deliver to the Authority such
instruments in writing as shall be requisite to evidence the discharge hereof.
THIS INDENTURE FURTHER WITNESSETH, that the Authority covenants to and
agrees with the Trustee, for the benefit of the City and the respective Owners from time to time
of the Bonds, as follows:
ARTICLE I
DEFINITIONS; CONTENT C)F CERTIFICATES AND OPINIONS
1.1 Definitions. Unless the context requires otherwise, the terms defined in this
section shall, for all purposes of this Indenture and of any indenture supplemental hereto and of
any certificate, opinion or other document mentioned herein, have the meanings specified herein,
to be equally applicable to both the singular and plural forms of any of the terms, defined herein.
Accountant means any firm of independent certified public: accountants selected by the
Authority.
Act means chapter 35.82 of the Revised Code of Washington, as amended.
Additional Bonds means any bonds or notes issued pursuant to Section 2.7.
Authoritx means the Housing Authority of the City of Yakima, a public body corporate
and politic of the State of Washington.
Authorized Denomination means $5,000 or any integral multiple thereof within a single
maturity.
Authorized Investments means any investment that is lawful for housing authorities in the
State. A list of investments that are lawful on the Date of Issue is attached hereto as Exhibit B.
Authorized Representative means, with respect to the Trustee, any trust officer thereof;
and with respect to the Authority, the Chair of its Board of Commissioners or its Executive
Director or any other person(s) designated by resolution of the Board of Commissioners as the
authorized representative of the Authority„
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Bond or Bonds means one or more of the $[3,700,000] Housing Authority of the City
of Yakima Housing Revenue Bonds, 1996 (Nueva Primavera Project), or any replacement
thereof authorized by, and at any time outstanding pursuant to, this Indenture.
Bond Counsel means the firm of Foster Pepper & Shefelman, of Seattle, Washington,
or any other firm of nationally recognized bond counsel, designated by the Authority as its bond
counsel for the Bonds.
Bond Fund means the fund of that name established pursuant to Section 4.2.
Bond Register means the books for registration of the Bonds kept for the Authority by
the Bond Registrar as provided in Section 2.2.
Bond Registrar means the paying agent and bond registrar for the Bonds, initially [the
fiscal agencies of the State of Washington in Seattle, Washington, and New York, New York/the
Trustee) .
Bond Year means, as to the first Bond Year, the period from the Date of Issue to July
31, 1997, and, thereafter, the annual period ending on July 31 of each year.
Bondowner means the Owner of any Bond.
Business Dav means any day, other than a Saturday or a Sunday, on which banking
institutions are open in the State of Washington and in the states in which the principal corporate
trust office of the Trustee and any of the offices of the Bond Registrar designated from time to
time by the Bond Registrar for the transfer or exchange of Bonds are located.
City means the City of Yakima, Washington.
Code means the Internal Revenue Code of 1986, as amended, or any successor federal
income tax statute or code. Any reference to a provision of the Code shall include the
applicable regulations of the Department of the Treasury promulgated or proposed with respect
to such provision.
Computation Period means each period for which the Rebate Amount is determined.
Condemnation Award means the total condemnation proceeds actually paid by the
condemnor as a result of the condemnation of all or any pan of the property subject to the Deed
of Trust, less the actual costs and expenses, including attorneys' fees, incurred by the Authority
and/or the Trustee in obtaining such award.
Contingent Loan Agreement means the Contingent Loan Agreement dated as of August 1,
1996, between the Authority and the City.
Costs of Issuance means all expenses of issuing the Bonds or this Indenture, including
but not limited to legal, fiscal and printing expenses, the initial fees of the Trustee (including
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any fees of counsel to the Trustee) under this Indenture, or the initiial fee of any bank or other
agency for collection or administration of the Bonds, advertising expenses, any underwriter's
discount on or placement fee for the Bonds, and any and all other similar out-of-pocket expenses
incurred for the purpose of issuing the Bonds.
Date of Issue means the date the Bonds are issued and delivered to the initial purchaser
thereof.
Declaration of Acceleration means a declaration given in accordance with the provisions
of Section 7.2 that all principal of and interest on the ::.nds are due and payable immediately.
peed of Trust means the Deed of Trust, Assignment of Rents and Leases and Smurity
Agreement under which the Authority is grantor and the Trustee and the City are beneficiaries,
constituting a lien on the real property and improvements constituting the Project.
Determination of Taxability means the receipt by the Trustee of (1) a copy of written
notice from the Commissioner or any District Director of the Internal Revenue Service or a
determination by any court of competent jurisdiction, or (2) an opinion of Bond Counsel, in
either case to the effect that interest on the Bonds is not excludable from gross income for
regular federal income tax purposes under Section 103(a) of the Code from gross income of any
Owners of the Bonds.
Event of Default means any of the events specified in Section 7.1.
Fiscal Year means the fiscal year of the Authority, initially the 12 -month period ending
on March 31 of each year.
Funds means the Funds created and established pursuant to this Indenture, including, but
not limited to, the Bond Fund and the Project Fund, but excluding the Rebate Fund.
General Revenues means all revenues (other than Project Revenues) of the Authority
from any source, but only to the extent that those revenues are available to pay debt service on
the Bonds and are not pledged, by law, regulation, contract, covenant, resolution, deed of trust
or otherwise, solely to another particular purpose.
Government Obligations means (1) direct obligations of the United States of America
(including obligations issued or held in book -entry form on the books of the Department of the
Treasury of the United States of America) or obligations the timely payment of the principal of
and interest on which are fully guaranteed by the United States of America, including
instruments evidencing an ownership interest in securities described in this clause (1); and (2)
obligations, debentures, notes or other evidences of indebtedness issued or guaranteed by any
of the following: Federal Home Loan Bank System, Export -Import Bank of the United States,
Federal Financing Bank, Federal Land Banks, Government National Mortgage Association,
Federal Home Loan Mortgage Corporation, Federal National Mortgage Association or Federal
Housing Administration.
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Hazardous Substances Agreement means the Hazardous Substances Warranty/Indemnity
Agreement between the Authority and the Trustee dated as of August 1, 1996.
Indenture means this Trust Indenture, as originally executed or as it may from time to
time be supplemented, modified or amended by any Supplemental Indenture.
jnsurance Proceeds means the total proceeds of casualty insurance actually paid or
payable in respect of insurance on the Project, less the actual costs and expenses, including
attorneys' fees, incurred by the Authority and/or the Trustee in collecting such proceeds.
Interest Payment Date means the first day of each February and August after the Date
of Issue. In the case of payment of defaulted interest, "Interest Payment Date" also means the
date of such payment established pursuant to Section 3.1(2).
Investment Earnings means all net earnings derived from the investment of money held
in any of the Funds.
Net Operating Income means Project Revenues other than Investment Earnings, less
Operation and Maintenance Costs.
Operation and Maintenance Costs means all necessary costs to the Authority of operating
and maintaining the Project, including but not limited to administrative and general expenses,
costs of insurance (including reasonable contributions for self-insurance reserves, if any),
consulting and technical services and repairs and replacements (to the extent not properly
classifiable as capital costs) and reasonable reserves therefor, but excluding depreciation (or
reserves therefor), amortization of intangibles or other bookkeeping entries of a similar nature
and debt service on the Bonds and any other obligations of the Authority relating to the Project.
Outstanding, when used as of any particular time with reference to Bonds, means all
Bonds theretofore, or thereupon being, authenticated and delivered by the Bond Registrar under
this Indenture except (1) Bonds theretofore cancelled by the Bond Registrar or surrendered to
the Bond Registrar for cancellation; (2) Bonds with respect to which all liability of the Authority
shall have been discharged in accordance with Section 9.1 or as described in Section 9.3, and
(3) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds
shall have been authenticated and delivered by the Bond Registrar pursuant to this Indenture.
Owner, whenever used herein with respect to a Bond, means the Person in whose name
such Bond is registered on the Bond Register.
Person means an individual, corporation, firm, association, partnership, trust, or other
legal entity or group of entities, including a governmental entity or any agency or political
subdivision thereof.
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Principal and Interest Account means the account of that name in the Bond Fund.
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Project means, depending on the context (1) the construction by the Authority ,of the
Nueva Primavera Apartments on real property legally described in Exhibit A to the Deed of
Trust and located in the City of Yakima, Washington, which construction and the rental of at
least 50% of the dwelling units of which to low-income persons was declared by the Resolution
to be a housing project of the Authority, or (2) the Nueva Primavera Apartments.
Project Fund means the fund of that name created pursuant to Section 4.2.
Project Revenues means all amounts due to or received by the Authority or by the
Trustee for the account of the Authority pursuant or with respect to the Project, including
without limitation all lease payments, Insurance Proceeds and Condemnation Awards and
proceeds resulting from foreclosure of the Deed of Trust, and all Investment Earnings.
Rating Agency means the nationally recognized rating agency or agencies, if any, at the
time rating the Bonds at the request of the Authority.
Rebate Amount means an amount equal to the sum of (1) the excess of (a) the aggregate
amount earned from the Date of Issue on all nonpurpose investments in which gross proceeds
of the Bonds are invested (not including income attributable to the excess amount described in
this clause (1)) over (b) the amount that would have been earned if the yield on such nonpurpose
investments (not including income attributable to the excess amount described in this clause (1))
had been equal to the yield on the Bonds, plus (2) all income attributable to the excess amount
described in clause (1) whether or not that income exceeds the yield on the Bonds (i.e., whether
or not that income was earned at a yield higher than the yield on the Bonds), all as determined
in accordance with Section 148 of the Code.
Rebate Fund means the fund of that name, the creation of which is provided for in
Section 5.3.
Record Date means the 15th day of the month preceding each Interest Payment :Date.
Required Debt Service means the amount required to pay principal of and intereston the
Bonds when due, including amounts required for the mandatory redemption of Bonds pursuant
to Section 3.2(2).
Reserve Account means the account of that name in the Bond Fund..
Reserve Requirement means, wiith respect to the Bonds, $L J, and with respect to
any Additional Bonds, the amount described in Section 2.7.
Resolution means Resolution No. _ adopted by the Authority on July 24, 1996,
authorizing the issuance of the Bonds.
Special Record Date means the date established by the Trustee pursuant to Section 3.1(2)
as a record date for the payment of defaulted principal of or interest on the Bonds.
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State means the State of Washington.
Supplemental Indenture means any indenture hereafter duly authorized and entered into
between the Authority and the Trustee, supplementing, modifying or amending this Indenture;
but only if and to the extent that such Supplemental Indenture is specifically authorized
hereunder.
Trust Estate means the trust estate pledged by the Authority and described in the Granting
Clauses of this Indenture.
Trustee means , a national banking association organized and existing under
the laws of the United States of America and having its principal place of business in
, or its successor, as trustee hereunder.
UCC means the Uniform Commercial Code (chapter 62A.9 RCW).
1.2 Content of Certificates and Opinions. Every certificate or opinion provided for
in this Indenture with respect to compliance with any provision hereof made or given by an
officer of the Authority may be based, insofar as it relates to legal or accounting matters, upon
a certificate or opinion or representation given by counsel or an Accountant, unless such officer
knows, or in the exercise of reasonable care should have known, that the certificate, opinion or
representation with respect to the matters upon which such certificate or statement is based is
erroneous. Any such certificate or opinion made or given by counsel or an Accountant may be
based, insofar as it relates to factual matters with respect to which information is in the
possession of the Authority, upon a certificate or opinion of or representation by an officer of
the Authority, unless such counsel or Accountant knows, or in the exercise of reasonable care
should have known, that the certificate or opinion or representation with respect to the maters
upon which such certificate, opinion or representation is based is erroneous. The same officer
of the Authority, or the same counsel or Accountant, as the case may be, need not certify to all
of the matters required to be certified under any provision of this Indenture, but different
officers, counsel or Accountants may certify to different matters.
1.3 Interpretation. Unless otherwise clear from the context of the terms, words or
phrases, the following principles govern the interpretation of terms, words and phrases used in
this Indenture:
(1) Articles, sections, paragraphs and clauses mentioned by number only
without reference to another document are those so numbered which are contained in this
Indenture.
(2) Captions, titles or headings preceding any article, section or subsection
herein, and any table of contents or index attached hereto, are solely for convenience of
reference and are not part of this Indenture and shall not affect its meaning, construction or
effect.
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(3) Terms such as "herein," "hereunder," "hereby," "hereto" and 'hereof"
refer to this Indenture as a whole and not to any particular section hereof unless so indicated;
"heretofore" and 'hereafter" mean before and after the date of adoption of this Indenture.
(4) Words importing any gender include masculine, feminine and neuter
genders, where applicable.
(5) Words importing the :maturity of a Bond do not include or connote the
becoming due of such Bond upon redemption thereof prior to maturity or the payment of the
redemption price thereof.
(6) Words importing the redemption or redeeming or calling for redemption
of a Bond do not include or connote the payment of such Bond at its stated maturity.
(7) Words importing the singular number include the plural ntunber, and vice
versa, where applicable.
(8) If not otherwise specifically provided for herein, and subject to Section
8.1(2), any notice required or permitted to be given shall be deemed given where addressed (if
address is necessary to transmission) as provided in Section 11.6,
(a) on the day on which it is given by messenger or telecopy
or other electronic means capable of producing a written notice (provided,
however, that if notice is given by telecopy or other electronic means the Person
sending the notice shall promptly mail or deliver the original or print of the notice
to the recipient, and if the notice is received (i) on a day other than a Business
Day or (ii) after the close of the recipient's business on a Business Day, such
notice shall be deemed given on the first Business Day following the day on
which it is received),
(b) on the Business Day following the day on which it is given
by telegraphic means; or
(c) on the fifth day following its mauling by certified or
regiistered mail, return receipt requested.
Notwithstanding the foregoing, any notice required or permitted to be given by the Trustee to
any Bondowner shall be deemed effective at the time of its mailing or transmission by
telegraphic or other electronic means.
(9) All references herein to particular sections of the Code include any and all
successor sections to the referenced sections.
(10) Unless the context indicates otherwise, all references to rating categories
shall be deemed to be without regard to any refinement or gradation of such categories b;
numerical modifiers or otherwise.
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(11) If the Trustee is also the Bond Registrar hereunder, all references herein to
transfers of funds from the Trustee to the Bond Registrar shall be of no effect.
(12) All references herein to 'counsel fees,' 'attorney fees' or the like include
fees and disbursements of in-house or outside counsel, whether or not suit is instituted, and
including fees and disbursements preparatory to and during trial and appeal and in any
bankruptcy or arbitration proceeding.
ARTICLE II
THE BONDS
2.1 Authorization of Bonds. The Bonds are authorized to be issued hereunder to
obtain money to carry out the purposes of the Resolution. The Bonds are designated 'Housing
Authority of the City of Yakima Housing Revenue Bonds, 1996 (Nueva Primavera Project).'
The aggregate principal amount of Bonds that may be issued and Outstanding under this
Indenture shall not exceed S[3,700,000]. This Indenture constitutes a continuing agreement with
the Trustee and the Owners from time to time of the Bonds to secure the full payment of the
principal of and premium, if any, and interest on all such Bonds subject to the covenants,
provisions and conditions contained herein.
2.2 Transfer of Bonds.
(1) The Authority shall cause books (the Bond Register) for the registration
and for the transfer of the Bonds as provided in the Bonds, this Indenture and chapter 43.80
RCW to be kept by the Bond Registrar.
(2) Upon surrender for transfer of any Bonds at an office of the Bond
Registrar designated by the Bond Registrar for that purpose, the Bond Registrar shall
authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the
same interest rate and maturity and for the aggregate principal amount the Owner is entitled to
receive. No transfer of any Bond shall be binding upon the Bond Registrar, the Authority or
the Trustee unless made at such office and shown on the Bond Register.
(3) Bonds to be exchanged shall be surrendered at an office of the Bond
Registrar designated by the Bond Registrar for that purpose, and the Bond Registrar shall
authenticate and deliver in exchange therefor the Bond or Bonds that the Bondowner making the
exchange shall be entitled to receive.
(4) Any Bond presented :or transfer or payment (if so required by the Bond
Registrar) shall be accompanied by a written instrument or instruments of transfer or
authorization for payment, in form and with guaranty of signature satisfactory to the Bond
Registrar, duly executed by the Owner thereof or by its attorney duly authorized in writing.
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(5) The costs of printing any new Bonds and any services rendered or expenses
incurred by the Bond Registrar or the Authority in connection with any exchange: or transfer of
Bonds (including the exchange or transfer of a Bond redeemed only in pant) shall be paid by the
Authority, except that as a condition to a transfer of a particular Bond, the Bond Registrar may
require payment by the Bondowner of a sum sufficient to cover any tax„ fee or other
governmental charge that the Bond Registrar is required to pay in relation thereto.
(6) Each Bond delivered upon transfer of or in lieu of any other Bond shall
be a valid obligation of the Authority evidencing the same debt as the Bond surrendered, and
except as otherwise provided herein shall be entitled to all of the security and benefits hereof to
the same extent as the Bond surrendered, shall carry all the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Bond, and shall be so dated that neither gain
nor loss of interest shall result from such transfer or exchange.
(7) The Bond Registrar shall not be required to exchange or transfer any Bond
or portion thereof that has been selected for redemption and also shall not be required to transfer
or exchange any Bond or portion thereof during the period in which the Bond Registrar is
selecting Bonds for redemption or during the 15 days preceding any principal payment or
redemption date.
2.3 Form and Execution of Bonds.
(1) The Bonds shall be in Authorized Denominations and shall be in
substantially the form attached as Exhibit A. The Bonds shall be executed on behalf of the
Authority by the facsimile or manual signatures of the Chair of the Board of Commissioners and
Secretary -Treasurer of the Authority and shall be sealed with an impression or a facsimile of the
seal of the Authority and authenticated as provided in Section 2.3(2) below. The Bonds may be
typed or printed on good bond paper. Neither the death nor infirmity nor the failure of such
officers to hold such office subsequent to the date of this Indenture and prior to the execution
and delivery of the Bonds or any transferred Bond certificates shall affect the validity or
enforceability of such Bonds.
(2) No Bond shall be valid or obligatory for any purpose or entitled to any
security or benefit under this Indenture unless a Certificate of Authentication on such. Bond,
substantially in the form set forth below, shall have been executed by an authorized officer or
signatory of the Bond Registrar, and such executed Certificate of Authentication upon any such
Bond shall be conclusive evidence that such Bond has been duly executed, registered,
authenticated and delivered under this Indenture:
0773445 CC
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Date of Authentication:
CERTIFICATE OF AUTHENTICATION
This bond is one of the fully registered Housing Authority of the City of
Yakima Housing Revenue Bonds, 1996 (Nueva Primavera Project), described in
the Indenture.
[WASHINGTON STATE FISCAL AGENCY]
BOND REGISTRAR
By
Authorized Signer
Certificates of Authentication on different Bonds need not be signed by the same person.
2.4 Mutilated, Lost, Stolen and Destroyed Bonds. In case any Bond issued hereunder
shall become mutilated or be destroyed, stolen or lost, the Authority shall, if not then prohibited
by law, cause to be executed and delivered a new Bond of like amount, interest rate, maturity
date and tenor in exchange and substitution for and upon cancellation of such mutilated Bond,
or in lieu of and in substitution for such destroyed, stolen or lost Bond, upon payment by the
Owner thereof of any applicable tax or governmental charge and the reasonable expenses and
charges of the Authority and the Bond Registrar in connection therewith, and in the case of a
Bond destroyed, stolen or lost, the filing with the Bond Registrar of evidence satisfactory to it
that such Bond was destroyed, stolen or lost, and of the ownership thereof, and furnishing the
Authority and the Bond Registrar with indemnity satisfactory to each of them. If the mutilated,
destroyed, stolen or lost Bond already has matured or been called for redemption in accordance
with its terms it shalt not be necessary to issue a new Bond prior to payment.
2.5 Other Secured Obligations. Nothing contained in this Indenture shall prohibit or
prevent, or be deemed or construed to prohibit or prevent, the Authority from issuing, without
regard to the provisions of this Indenture, bonds, notes, certificates, warrants or other evidences
of indebtedness which are (1) payable as to principal and interest and redemption premium solely
from revenues, proceeds and earnings which are not Project Revenues or Bond proceeds, and
(2) not payable, in whole or in part, from money in any of the Funds or in the Rebate Fund.
2.6 Ownership of Bonds. The Authority, the Bond Registrar and the Trustee may
deem and treat the Person in whose name any Bond is then registered on the Bond Register or
its nominee, whether or not such Bond shall be overdue, as the Owner of such Bond for the
purpose of receiving payment of the principal of and premium, if any, and interest on such Bond
and for all other purposes whatsoever, and the Authority, the Bond Registrar and the Trustee
shall not be affected by any notice to the contrary.
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2.7 Nature of Security; Additional nd . The Bonds are special obligations of the
Authority payable solely from Net Operating Income and Investment Earnings and from the
General Revenues of the Authority, and from the money and investments held in the Funds held
by the Trustee hereunder until disbursed as provided herein. The Bonds also are secured by the
Deed of Trust.
The Bonds are not a debt of the Ciry of Yakima, the State or any political subdivision
thereof. Neither the City of Yakima, the State nor any political subdivision thereof (except the
Authority from the sources described herein) shall be liable for payment of the Bonds nor in any
event shall the principal of, premium, if any, on or interest on the Bonds be payable out of any
funds or assets other than those pledged to that purpose by the Authority herein and in the
Resolution. The Authority does not have taxing power.
The Authority reserves the right and option to issue Additional Bonds [inn an aggregate
principal amount not to exceed $ j on a parity of lien width the Bonds on the Project
and Project Revenues and the Reserve Account for the purpose of financing all or a part of the
costs of constructing additional improvements or further rehabilitating existing improvements on
the property on which the Project is located, but only if the following conditions are met:
(1) if the Contingent Loan Agreement is in effect, the Trustee has
received the prior written consent of the City to the issuance of such Additional
Bonds;
(2) there shall not have occurred and be continuing any Event of
Default;
(3) there shall not have occurred and be continuing an event of default
under the Deed of Trust; and
(4) the amount in the Reserve Account has been increased by an
amount equal to the average annual debt service for the Additional Bonds.
Unless the Trustee has received notice or has knowledge to the contrary„ the Trustee may rely
on a certificate from an Authorized Representative of the Authority in determining whether an
Event of Default or an event of default under the Deed of' Trust has occurred and is continuing.
2.8 Redemption of Bonds. The Bonds shall be redeemable as provided in Section 3.2.
Under certain circumstances, on the conditions, in the manner and with the effect set forth in
this Indennue, the principal of all Bonds issued and then outstanding may become or may be
declared due and payable before the stated maturity thereof, together with :interest accrued
thereon.
2.9 Cancellation. All Bonds that have been redeemed shall be cancelled and destroyed
by the Bond Registrar and shall not bereissued.
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2.10 Open Market Purchases. Notwithstanding anything in this Indenture to the
contrary, the Authority may at any time purchase Bonds in the open market. The Authority
shall notify the Trustee of any such purchase and, if the Bonds are in certificated form, shall
immediately deliver such Bonds to the Bond Registrar for cancellation, together with a certificate
specifying the date(s) of such purchase. If the Bonds are not in certificated form, any such
purchase shall be deemed to be a redemption of such Bonds upon notice to the Trustee of such
purchase, whether or not such Bonds are otherwise subject to redemption at the time of such
purchase. Such Bonds shall not be considered Outstanding for the purposes of Section 10.1 from
and after the date of any such purchase.
2.11 'Destruction of Bonds. Whenever any Bonds shall be delivered to the Bond
Registrar for cancellation pursuant to this Indenture or if received by the Bond Registrar
pursuant to Section 2.4, such Bonds shall be cancelled promptly, held by the Bond Registrar for
its retention period then in effect, and thereafter destroyed by the Bond Registrar in accordance
with its general practices and procedures in effect from time to time after payment, if applicable,
of the principal amount and premium, if any, and interest accrued thereon, in each case after
a reasonable period of time, and counterparts of a certificate of destruction evidencing such
destruction shall be furnished by the Bond Registrar to the Trustee and the Authority.
ARTICLE III
FORM AND DETAIL OF THE BONDS
3.1 Authorized Amount. Interest Rates and Payment.
(1) Authorized Amount. The Bonds shall be dated August 1, 1996, and shall
be subject to redemption as provided in Section 3.2. The Bonds shall be in the aggregate
principal amount of $[3,700,000] and shall be in Authorized Denominations. The Bonds shall
be fully registered as to principal and interest and shall be numbered separately in the manner
and with any additional designation as the Bond Registrar deems necessary for the purpose of
identification.
The Bonds shall mature on August 1 in the years and amounts and shall bear interest at
the rates per annum set forth below:
Maturity
Year Amount Rate
Interest
[INSERT MATURITY SCHEDULE]
(2) payment of Bond Principal and Interest. The principal of and interest on
the Bonds are payable in lawful money of the United States of America. Payments of interest
on each Bond shall be paid by the Bond Registrar on each Interest Payment Date, commencing
0073445 0:
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, 19_, by check mailed by first class mail, postage prepaid, on the Interest Payment
Date to the Owner of such Bond as shown on the Bond Register at the close of business on the
applicable Record Date at the address of the Owner as it appears on the Record Date in the Bond
Register or, at the written request of an Owner( of $1,000,000 or more in aggregate principal
amount of Bonds], by wire transfer of immediately available funds to an account within the
United States designated in writing by the Owner not less than 15 days prior to the Record Date.
Payments of principal of any Bond shall be made upon presentation and surrender of the Bond
to an office of the Bond Registrar designated by the 1: • nd Registrar for that purpose
Interest on the Bonds shall be computed on the basis of a 360 -day year consisting of
twelve 30 -day months. Interest on the Bonds from their date or from the most recent date to
which interest has been paid shall be payable on each Interest Payment Date until the Bonds
mature or are duly called for redemption prior to maturity. Any principal or interrest not
punctually paid or duly provided for hereunder shall forthwith cease to be payable to the Owners
as of the applicable Record Date and shall be paid to the Persons in whose names the Bonds are
registered at the close of business on a Special Record Date for the payment of such defaulted
principal or interest, such Special Record Date and the date of such payment to be fixed by the
Trustee in its sole discretion and notice thereof to be given by or on behalf of the Trustee to the
Owners not less than 10 days prior to such Special Record Date.
The interest payable on each redemption date or Interest Payment Date shall be that
interest which has accrued through the last day preceding the Interest Payment Date or., in the
case of the maturity or redemption of the Bonds, the last day preceding the date of such maturity
or the date fixed for redemption, as the case may be.
3.2 Redemption of Bonds. The Bonds are subject to redemption prior to maturity as
provided in this section.
In the case of a redemption of fewer than all of the Outstanding Bonds of a particular
maturity pursuant to this Section 3.2, the Trustee shall call or cause to be called Bonds of that
maturity for redemption randomly in the manner determined by the Bond Registrar in its sole
discretion. No Bond shall remain Outstanding having a principal amount that is not an
Authorized Denomination. The Bond Registrar shall notify the Authority and the Trustee
promptly in writing of any Bonds selected for redemption and, in the case of any Bond selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Bonds shall relate, in the case of any Bond redeemed or to be
redeemed only in part, to the portion of the principal of such Bond that has been or is to be
redeemed.
Notice of redemption shall be giiven in accordance with the further provisions of
paragraph (4) of this Section 3.2.
On each redemption date the Trustee shall transfer to the Bond Registrar, but only fror
and to the extent of funds held by the Trustee hereunder available for that purpose, an amoun.
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sufficient to pay the redemption price of' all Bonds or portions thereof to be redeemed on that
date.
(1) Optional Redemption. The Bonds maturing on or before , are
not subject to optional redemption prior to their maturity. Bonds maturing [on or after
/in the years j are subject to redemption on any Interest Payment Date on or after _
, at the option and written direction of the Authority given to the Trustee at least 45 days
prior to the redemption date, in whole or in part with maturities selected by the Authority, at
a price of par plus accrued interest to the date of redemption.
The Authority shall not cause the optional redemption of Bonds under this Section 3.2(1)
if amounts are owed to the City under the terms of the Contingent Loan Agreement.
(2) Mandatory Redemption. The Bonds maturing in the year are subject
to mandatory redemption at par plus accrued interest to the date of redemption on August 1 in
years and amounts as follows:
Year Amount
[INSERT MANDATORY REDEMPTION SCHEDULE]
If Bonds have been redeemed other than as required by the schedules set forth above, the
principal amount of Bonds previously redeemed shall be credited against such scheduled
redemptions in [inverse] chronological order.
(3) Extraordinary Mandatory Redemption. The Bonds are subject to
extraordinary mandatory redemption prior to maturity at a redemption price equal to the
principal amount to be redeemed plus accrued interest thereon to the date of redemption, (a) as
a whole or in part within maturities selected by the Authority, on the first Interest Payment Date
for which timely notice of redemption may be given, with the Insurance Proceeds or a
Condemnation Award (and, if necessary, other money legally available therefor) if so required
by Section 6.3, (b) as a whole or in part within maturities selected by the Authority, on the first
date for which timely notice of redemption can be given upon receipt by the Trustee of an
opinion of Bond Counsel to the effect that such redemption is required to prevent a
Determination of Taxability, [or] (c) as a whole if the City gives written notice to the Trustee
of its election to cause the extraordinary redemption of the Bonds pursuant to the Contingent
Loan Agreement and deposits with the Trustee the amount necessary, together with other money
held by the Trustee hereunder and available to the purpose, to pay the principal of and interest
on the Bonds coming due as a result of such redemption[, or (d) as a whole or in part, on the
first Interest Payment Date for which timely notice can be given in accordance with the
provisions of Section 3.2(4), after completion of the Project, in accordance with the provisions
of Section 4.4(4).] The Trustee shall not be required to obtain any such opinion of Bond
Counsel described in (b) above, and the expense of obtaining any such opinion shall be paid by
the Authority or from the Trust Estate.
0379445.02
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(4) Notice and Effect of Call for Redemption. The Trustee, or the Bond
Registrar on behalf of the Trustee, shall give notice of redemption by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date to each
Owner of Bonds to be redeemed at the address of such Owner appearing in the Bond Register,
and also to the Rating Agency, if any, at its office in New York, New York (or its successor),
to Bank of America NW, N.A., doing business as Seafirst Bank, at its principal office in Seattle,
Washington (or its successor), and to such other Persons as the Authority shall specify to the
Trustee in writing, including all Persons then required by law or regulation to receive notice of
redemption of the Bonds. The failure of the Trustee to mail notice of redemption to Persons
other than the Owners of Bonds to be redeemed shall not affect the sufficiency of the
proceedings for redemption. The Trustee shall be entitled to request, as an expense of the Trust
Estate, receive and rely upon an opinion of counsel (which may be Bond Counsel) in
determining who is required to receive such notice. Notwithstanding the foregoing, notice of
the mandatory redemption of Bonds to prevent a Determination of 'Taxability shall be given by
the Trustee, or by the Bond Registrar on behalf of the Trustee, within five Business Days of
receipt by the Trustee of the opinion of Bond Counsel described in Section 3.2(3) to the effect
that such redemption is required, and the redemption date shall be :not more than 10 days after
the notice of such redemption is mailed by the Trustee or the Bond Registrar.
All notices of redemption shall state:
(a) the redemption date;
(b) the redemption price;
(c) the name of the Bonds to be redeemed, the principal amount
of Bonds to be redeemed, and, if less than all Outstanding Bonds are to be
redeemed, the CUSIP numbers or other identification (and, in the case of partial
redemption, the respective principal amounts) of the Bonds to be redeemed;
(d) that on the redemption date the redemption price of each
such Bond will become due and payable to the extent of funds on deposit: with the
Trustee for that purpose, and that interest on the principal amount of each such
Bond to be redeemed shall cease to accrue on and after such date;
(e) the place or places where such Bonds, must be surrendered
for payment of the redemption price thereof; and
(f) such additional information as the Trustee or the Authority
shall deem appropriate.
Notice of redemption having been given as aforesaid, the principal amount of the Bonds
so to be redeemed shall become due and payable on the redemption date at the redemption price
specified, and on and after such date (unless the Authority shall default in the payment of the
redemption price) such principal amount of the Bonds shall cease to bear interest. Upon
surrender of any such Bond for redemption in accordance with such notice, such Bond shall br
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paid at the redemption price thereof to the extent that money is on deposit with the Bond
Registrar for that purpose. Neither the failure of an Owner to receive such notice nor any defect
in any notice shall affect the sufficiency of the proceedings for such redemption.
If any Bond called for redemption shall not be so paid on the redemption date upon
proper surrender of the Bond for redemption, the redemption price and, to the extent lawful,
interest thereon shall, until paid, bear interest from the redemption date at the rate borne by the
Bond immediately before the redemption date.
Notwithstanding the foregoing, with respect to optional redemptions only, if the Bond
Registrar does not have funds in its possession on the redemption date sufficient to pay the
redemption price (including interest accruing to the redemption date) of all of the Bonds to be
optionally redeemed for any reason (including, but not limited to, failure to issue any refunding
obligations intended for such purpose on or prior to the redemption date), then the purported
optional redemption and such notice of redemption shall be void, and the Bond Registrar shall
so notify the Trustee. Such event shall not constitute an Event of Default hereunder.
If any Bond is to be redeemed only in part, it shall be surrendered to the Bond Registrar
(with, if the Bond Registrar so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Bond Registrar duly executed by, the Owner thereof or its attorney
duly authorized in writing) and the appropriate officers of the Authority shall execute and the
Bond Registrar shall authenticate and deliver to the Owner of such Bond, without service charge,
a new Bond or Bonds of the same maturity and interest rate and of any Authorized
Denomination or Authorized Denominations, as requested by such Owner, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of the Bond
surrendered.
ARTICLE IV
APPLICATION OF BOND PROCEEDS;
CREATION OF FUNDS AND ACCOUNTS
4.1 Application of Bond Proceeds. All of the accrued interest on and proceeds of the
Bonds received by the Authority from the purchaser thereof shall be paid to the Trustee on the
Date of Issue Immediately upon receipt thereof, the Trustee shall deposit $ of Bond
proceeds in the Reserve Account in the Bond Fund, $ , representing accrued interest, in
the Principal and Interest Account in the Bond Fund and the remainder in the Project Fund.
4.2 Creation of Funds and Accounts. The following Funds and accounts shall be
created and established with the Trustee as needed to comply with the provisions of this
Indenture:
(1) the Bond Fund, consisting of the Principal and Interest Account and the
Reserve Account; and
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(2) the Project Fund.
Each Fund and account shall be maintained by the Trustee as a separate and distinct trusty fund
or account to be held, managed, invested, disbursed and administered as provided in this
Indenture. All money deposited in the Funds and accounts created hereunder shall be used
solely for the purposes set forth in this Indenture. The Trustee shall keep and maintain adequate
records pertaining to each Fund and account, and all disbursements therefrom, in accordance
with its general practices and procedures in effect from time to time.
The Trustee shall, at the written direction of an Authorized Representative of the
Authority, and may, in its discretion, establish such additional accounts within any Fund, and
subaccounts within any of the accounts, as the Authority or the Trustee may deem necessary or
useful for the purpose of identifying, more precisely the sources of payments kw and
disbursements from that Fund and its accounts, or for the purpose of complying with the
requirements of the Code relating to arbitrage, but the establishment of any such account or
subaccount chat] not alter or modify any of the requirements of this Indenture with respect to
a deposit or use of money in the Funds or the Rebate Fund, or result in commingling of funds
not permitted hereunder. In establishing such accounts or subaccounts, the Trustee may request,
receive and rely upon an opinion of Bond Counsel, addressed to the Trustee and the Authority,
that the establishment of such accounts or subaccounts will not cause any of the Bonds to
become "arbitrage bonds" within the meaning of the Code.
4.3 Bond Fund.
(1) Principal and Interest Account. The Trustee shall deposit in or transfer
to the Principal and Interest Account, to the extent funds are available for that purpose, and, if
applicable, the Authority shall deliver to the Trustee:
(a) all amounts derived from accrued interest required to be
deposited therein pursuant to Section 4.1;
(b) (i) on or before the 25th day of each month, commencing
25, _, from Net Operating Income of the Project and, if necessary,
other Authority funds available for the purpose, one-sixth of the amount required
to pay interest on the Bonds on the next Interest Payment Date, except that such
deposits for the months of _ through _, ,__, shall equal one-
fifth of the amount required to pay interest on the Bonds on _, _;
and (ii) on or before the 25th day of each month, commencing 25,
from Net Operating Income of the Project and, if necessary, other Authority
funds available for the purpose, one -twelfth of the amount required to pay the
principal of the Bonds maturing or to be redeemed in accordance with Section
3.2(2) on the next _, except that such deposits for the months of _
through _ shall equal one eleventh of the amount
required to pay the principal of the Bonds maturing on __ 1, in each
case taking into account on the 25th day of the month prior to the interest or
principal payment date, as applicable, other amounts on deposit in the Project
0773445 m
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Fund, the Revenue Fund or the Principal and Interest Account in the Bond Fund
available for that purpose;
(c) on or before any Interest Payment Date on or after ,
the principal amount of Bonds, if any, to be redeemed in accordance with
-;n 3.2(1) on that Interest Payment Date;
(d) on or before any extraordinary mandatory redemption date,
.e principal of and interest on the Bonds to be redeemed on that date, taking into
account other amounts on deposit in the Project Fund or the Bond Fund available
for that purpose;
(e) all amounts required by this Indenture to be transferred to
the Principal and Interest Account from the Reserve Account;
(f) the net earnings on investments of money in the Principal
and Interest Account and the Reserve Account (except as otherwise provided in
Section 4.3(3)); and
(g) all other money required to be transferred to or deposited
in the Principal and Interest Account pursuant to any provision of this Indenture.
The money and investments in the Principal and Interest Account are irrevocably pledged
and shall be used by the Trustee, from time to time, to the extent required, in the following
order of priority:
(A) for the payment of the principal of and/or interest on Bonds coming
due on the next Interest Payment Date or mandatory or extraordinary mandatory
redemption date;
(B) for the payment of the redemption price of Bonds called for
optional redemption; and
(C) for transfer to the Rebate Fund, if any, to the extent the Authority
determines pursuant to Section 5.2(1)(b) or Section 5.3 that a Rebate Amount
must be deposited in the Rebate Fund.
The Trustee shall deliver to the Bond Registrar on each redemption date or Interest
Payment Date money from the Principal and Interest Account, to the extent available therein,
in an amount sufficient to pay the principal of and premium, if any, and interest on all Bonds
corning due on that date.
(2) Reserve Account. Promptly upon receipt thereof, the Trustee shall deposit
into the Reserve Account:
W73445 02
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(a) all amounts derived from Bond proceeds required to be deposited
therein pursuant to Section 4.1;
(b) On each February 15 and August 15, commencing
, , from Net Operating Income of the Project and,
if necessary, other Authority funds available for the purpose., the amount, if any,
required to restore the balance in the Reserve Account to the Reserve
Requirement for all Outstanding Bonds and Additional Bonds; and
(c) all other money required to be transferred to or deposited in the
Reserve Account pursuant to any provision of this Indenture or the Contingent
Loan Agreement.
The money and investments in the Reserve Account are irrevocably pledged and shall be
used by the Trustee, from time to time, to the extent required, in the following order of priority:
(A) for transfer to the Principal and Interest Account on each
redemption or Interest Payment Date to the extent that the amount in the Principal
and Interest Account on that date, after all transfers to that Account from the
Project Fund have been made as provided herein, is insufficient to pay the
principal of, premium, if any, on and/or interest on the Bonds coming due on that
date;
(B) for transfer to the Rebate Fund, if any, to the extent the Authority
determines pursuant to Section 5.3 that a Rebate Amount must be deposited in the
Rebate Fund; and
(C) for transfer to the Principal and Interest Account or to the trust
account described in Section 9.1 to pay or defease the last installment(s) of
principal of and/or interest on the Bonds.
The Reserve Account shall be valued pursuant to Section 5.1(5) on each February 28 and
August 31. If on any valuation date the amount in the Reserve Account exceeds the Reserve
Requirement, the Trustee shall transfer any excess to the Rebate Fund, if any, to the extent the
Authority determines pursuant to Section 5.3 that a Rebate Amount must be deposited in the
Rebate Fund, and then to the Principal and Interest Account.
The Trustee shall notify the City within two Business Days of any withdrawals from the
Reserve Account, which notice shall state thBon�dso � � Additional Bonds y, required to store the and shallreserve
equest
Account to the Reserve Requirement for theY
that the Authority provide to the City an accounting of its operation of the Project, as required
by the Contingent Loan Agreement. Pursuant to the Contingent Loan Agreement, by January 15
of the following year the City shall deliver to the Trustee for deposit into the Reserve Account
the greater of one-half of the amount(s) certified or the amount, together with other funds held
by the Trustee under this Indenture for the purpose, required to pay Required. Debt Service on
the Bonds and any Additional Bonds on the following February 1 (to the extent that th
0073445 02
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Authority has not previously replenished the Reserve Account), and shall deliver to the Trustee
no later than the following July 15 the greater of the balance of the amount(s) so specified or
the amount, together with other funds held by the Trustee under this Indenture for the purpose,
required to pay Required Debt Service on the Bonds and any Additional Bonds on the following
August 1 (to the extent that the Authority has not previously replenished the Reserve Account).
(3) Investment of Money in Bond Fund. Pending application of money in the
Bond Fund as set forth in this Section 4.3, such money shall be invested and reinvested by the
Trustee in Authorized Investments pursuant to Section 5.1. All net earnings on money and
investments in the accounts in the Bond Fund shall be deposited in the Principal and Interest
Account, except that net earnings on money and investments in the Reserve Account shall remain
in that account if and to the extent necessary to cause the balance therein to equal the Reserve
Requirement.
4.4 Project Fund.
(1) Maintenance of Project Fund. Promptly upon receipt thereof, the Trustee
shall deposit into the Project Fund all amounts derived from Bond proceeds required to be
deposited therein pursuant to Section 4.1, all net earnings on investments of money in the Project
Fund and all amounts received by the Trustee from the Authority or from any other source for
purposes of paying Costs of Issuance or costs of completing the Project.
The money and investments in the Project Fund shall be held in trust by the Trustee and
applied in accordance with and subject to the provisions of this Section 4.4 and, pending such
application, shall be held for the further security of the Owners of the Bonds until applied as
provided herein.
Immediately upon giving a Declaration of Acceleration pursuant to Section 7.2, the
Trustee shall transfer all funds in the Project Fund to the Principal and Interest Account, until
the amount on deposit in the Principal and Interest Account equals the amount necessary to pay
the principal of and interest on the Bonds coming due by reason of such acceleration.
(2) payments From Project Fund. Costs of Issuance and costs of the Project,
including[ interest on the Bonds and other] expenses of the Authority relating to the Bonds or
the Project, shall be paid by the Trustee from the Project Fund, but only to the extent of the
balance therein, within five Business Days following receipt by the Trustee of a written request
for payment from an Authorized Representative of the Authority, provided, however, that the
Authority may pay such costs directly, in which case the Trustee shall reimburse the Authority
from the Project Fund, but only to the extent of the balance therein, within five Business Days
of the Trustee's receipt of the written request of an Authorized Representative of the Authority.
All payments made from the Project Fund pursuant to a written request for payment from an
Authorized Representative of the Authority shall be presumed to be made properly and the
Trustee shall not be required to see to the application of any payments made from the Project
Fund or to make any investigation or inquiry into the purposes for which withdrawals are being
made from the Project Fund.
0073445 m
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(3) Establishment of Completion. The deemed completion date of the Project
shall be the earliest of (a) the date when the Trustee shall have .received a certificate of an
Authorized Representative of the Authority to the effect that all Costs of Issuance and all costs
of completing the Project have been paid in full, (b) the date on which no money remains in the
Project Fund, (c) the date when the Trustee shall have received a certificate of an Authorized
Representative of the Authority to the effect that all of the Bonds are to be redeemed in
accordance with Section 3.2(3) or (d) _____, 1999.
(4) Application of Balance in Proiect Fund. Within five Business Days of the
deemed completion date of the Project described in Section 4.4(3), the Trustee shall transfer any
money and investments remaining in the Project Fund to the Principal and Interest Account of
the Bond Fund. Such funds shall be used to make the payment of principal of or interest on
Bonds due on the next Interest Payment Date(s).
(5) Investment of Money in the Pro'ect Fund. Pending application of money
in the Project Fund as set forth in this Section 4.4, such money shall be invested and reinvested
by the Trustee in accordance with the requirements of Section 5.1. All investment earnings on
money in the Project Fund shall be deposited in that Fund, subject to the provisions of Section
5.2(1)(b).
ARTICLE V
INVESTMENT OF FUNDS; REBATE FUND
5 1 Investment of Funds.
(1) Except as otherwise provided herein, money on deposit in the Project Fund
or the Bond Fund shall be invested and reinvested by the Trustee in Authorized Investments, as
directed in writing by an Authorized Representative of the Authority at least two Business Days
in advance of the investment, which direction shall certify that such investment is an Authorized
Investment; but in the event of the failure of the Authority to provide timely written directions
as to such investment or reinvestment, the Trustee shall invest or reinvest any or all money held
by it in the Project Fund or the Bond Fund in the sweep invesunent vehicle identified by an
Authorized Representative of the Authority in writing at least one Business Day in advance of
the investment. The Trustee may deem such investments as Authorized Investments without
independent investigation thereof. If no such investment is available or specified by the
Authority, the Trustee shall hold the :money uninvested without liability for interest thereon.
Money in the Principal and Interest Account shall be invested only in Authorized
Investments approved by the Rating Agency, if any, as evidenced by the certificate of the
Authority described in the preceding paragraph, maturing no later than the date money in such
account is needed to make the payments authorized to be made therefrom. [Money in the
Reserve Account shall be invested in the Investment Repurchase Agreement among the
Authority, the Trustee and __ relating to the Bonds.]
0773445 om
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(2) Pending application of the money in the Rebate Fund as required pursuant
to Section 5.3(4), such money shall be invested and reinvested, without regard to yield, in such
Government Obligations maturing on or before the date the money invested therein is required
to be paid to the United States pursuant to Section 5.3(4) as an Authorized Representative of the
Authority shall direct in writing at least two Business Days prior to the date of investment.
However, if no such investment is available or if no such direction is given, the Trustee shall
hold the money uninvested without liability for interest thereon.
(3) The Trustee, in making any investment pursuant to this Section 5.1, may
at any time request, receive and rely upon the opinion of Bond Counsel, addressed to the Trustee
and the Authority, that such investment will not cause the Bonds to become "arbitrage bonds"
under the Code. Any fees and expenses incurred by the Trustee in obtaining such opinion of
Bond Counsel shall be charged to and paid by the Authority.
(4) The Trustee may invest in any Authorized Investment under this Indenture
by or through its own or any affiliate's investment department.
(5) For the purpose of valuing Authorized Investments held in any Fund
hereunder, the Trustee shall value all investments at cost.
5.2 Allocation of Income and Losses.
(1) The interest and income received with respect to the investments in any
Fund or account held by the Trustee hereunder, and any profit or loss resulting from the sale
of any such investments, shall be deposited and credited upon receipt, or charged, as follows:
(a) All interest, income and profit received from the investment
of money in the Rebate Fund shall be deposited and credited, upon receipt, to the
Rebate Fund,
(b) All earnings received from the investment of money in any
Fund or account that has been determined to be a Rebate Amount for any
Computation Period, as determined in accordance with Section 5.3(2), shall be
deposited in and credited to the Rebate Fund (to the extent such money has not
been previously disbursed to any Person pursuant to the terms of this Indenture);
and
(c) All loss resulting from the sale of any investments in any
specified Fund or account shall be charged to such Fund or such account, and all
earnings received from the investment of money in any Fund or account shall be
credited as described in Article IV.
(2) The Trustee may rely on the written instructions of the Authority in
investing money in any Fund or account, and shall not be accountable for any depreciation in
the value of the investments made in accordance with the provisions of this Article V or for any
losses incurred upon any authorized disposition thereof.
0073445 az
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5.3 Rebate Fund.
(1) The Authority hereby authorizes the Trustee to establish a separate special
fund designated as the "Rebate Fund"
if at any time there is determined, pursuant to Section 5.3(2), to be a Rebate Amount, which
fund shall be segregated from all other hinds and accounts held by the Trustee. If such a fund
is established, the Trustee shall maintain the Rebate Fund until the expiration of 60 days after
the retirement of the last outstanding Bond.
(2) Within 30 days after the end of each Computation Period, the Authority
shall determine or cause to be determined, by an Accountant or other qualified Person selected
by the Authority, in accordance with Section 148 of the Code and applicable Treasury
Regulations promulgated under Section 148(f) of the Code and written instructions of Bond
Counsel delivered to the Trustee and the Authority from time to time, the Rebate Amount
attributable to each account and/or fund for each Computation Period (initially, a five-year
period) on such determination date or dates as may be permitted by Section 148 of the Code and
written instructions of Bond Counsel delivered to the Authority and the Trustee, and shall notify
the Trustee in writing of any Rebate Amount so determined. The Trustee and the Authority may
rely upon the opinions, calculations, determinations, directions and advice of such Accountant
or other Person without further investigation or inquiry, copies of all of which opinions,
calculations. determinations, directions and advice shall be given to the Trustee by the Authority.
If a Rebate Amount is determined to exist, the Trustee shall notify the Authority of the amount
in the Rebate Fund available to pay the Rebate Amount, and the Authority shall deliver an
amount equal to any deficiency in the Rebate Fund to the Trustee, with instructions to deposit
that amount in the Rebate Fund. If for any Computation Period the amount of money and
investments held in the Rebate Fund exceeds the Rebate Amount for that Computation Period,
the Trustee shall deposit such excess to the Principal and Interest Account of the Bond Fund.
The Trustee shall not be responsible for calculating Rebate Amounts or for the adequacy or
correctness of any rebate report.
(3) The Trustee shalldeposit in and credit to the Rebate Fund all amounts
described in Sections 5.2(1)(a) and 5.2(1)(b), as determined in accordance with Section 5.3(2),
and all earnings received from the investment of those amounts.
(4) The Trustee shall make the following payments from the money and
investments in the Rebate Fund to the United States Treasury when and as indicated bellow (or
on such other payment date or dates as may be specified in written instructions of Bond Counsel
delivered to the Trustee):
00"3445 02
(a) not later than the 60th day following the end of each fifth
Bond Year, an amount equal to 90% of the Rebate Amountfor the Computation
Period ending immediately prior to the date of payment; and
(b) not earlier than the date of payment of the last outstanding
Bond, nor later than the 60th day thereafter, the amount, if any, which, when
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added to amounts previously paid to the United States as Rebate Amounts, will
equal 100 percent of the Rebate Amount with respect to the Bonds.
(5) The Trustee shall retain all records that have been delivered to it regarding
the source and determination of the Rebate Amounts required to be deposited and credited to the
Rebate Fund, the proceeds of any investments of money in the Rebate Fund, and the amounts
paid to the United States Treasury from the Rebate Fund for six years after the retirement of the
last outstanding Bond, or such shorter period as may be permitted by Section 148 of the Code.
(6) The Trustee may, in its discretion, establish such accounts within the
Rebate Fund established under this Indenture, and subaccounts within any of such accounts, as
the Trustee may deem necessary or useful for the purpose of identifying more precisely the
sources of payments into and disbursements from such accounts or subaccounts, but the
establishment of any such additional account or subaccount shall not alter or modify any of the
requirements of this Indenture with respect to the deposit or use of money in the Rebate Fund
established hereunder or result in commingling of funds not permitted hereunder.
(7) The Trustee shall have no responsibility or liability, independent of the
specific duties set forth in this Article V, resulting from its failure to enforce the Authority's
compliance with any rebate requirements.
5.4 Segregation of Money. All money paid to the Trustee pursuant to this Indenture
for deposit and all investments purchased with money so deposited shall at all times be accounted
for separately and shall not be commingled with any other funds of the Authority and the
Trustee, and shall be held in trust by the Trustee.
ARTICLE VI
AUTHORITY COVENANTS
6.1 Performance of and Authority for Covenants. The Authority covenants and
represents:
(1) that it will faithfully perform at all times any and all covenants,
undertakings, stipulations and provisions contained in this Indenture, the Deed of
Trust and the Hazardous Substances Agreement, in any and every Bond executed,
authenticated and delivered hereunder and in all proceedings of its Board of
Commissioners pertaining thereto;
(2) that it is duly authorized under the Constitution and laws of the State,
including particularly and without limitation the Act, to issue the Bonds and to
pledge, grant and/or assign a security interest in the Project, the Project
Revenues, the General Revenues of the Authority, Bond proceeds and Investment
Earnings in the manner and to the extent set forth herein;
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(3) that all action on its part for the issuance of the Bonds and for the
execution and delivery thereof will be duly and effectively taken; and
(4) that the Bonds in the hands of the Owners thereof will be valid and
enforceable special obligations of the Authority according to the terms thereof.
The Authority acknowledges and agrees that all covenants contained in this Indenture and
the Deed of Trust are with and for the benefit of all Bondowners and can be enforced by the
Trustee, in its discretion or at the direction of the Bondowners as provided herein, or by the
Bondowners, in accordance with the provisions of Article VII.
6.2 [Reserved]
6.3 Condemnation Awards and Insurance Proceeds.
(1) The Authority shall deliver to the Trustee at least annually on or 'before
June 30 of each year a certificate of an Authorized Representative of the Authority providing
evidence of insurance maintained as required under the Deed of Trust and specifically describing
the amounts and types of insurance maintained. If Insurance Proceeds or a Condemnation
Award is paid, the Authority shall forthwith notify the Trustee of such fact and of the amount
of Insurance Proceeds or Condemnation Award received by the Authority. The Trustee shall
not be required to hold or maintain any insurance policies in connection with the Project or be
a named insured on any insurance policy.
(2) Money in the amount of such Condemnation Award or Insurance Proceeds
shall be held by the Authority in trust for a period not exceeding 120 days for the purposes set
forth in Section 6.3(3) or (4). The Trustee shall not be responsible for such Condemnation
Award or Insurance Proceeds during such 120 -day period.
(3) If the Authority determines to restore the Project (such determination to
be made in accordance with the standards set forth in Section 6.3(4) within 120 days after
receipt of such Condemnation Award or Insurance Proceeds), such Condemnation Award or
Insurance Proceeds shall be used exclusively for such purpose, and the Authority shall so certify
to the Trustee in writing and shall cause such Condemnation Award or Insurance Proms to
be transferred to the Trustee for deposit in the Project Fund. The Trustee shall disburse such
funds to pay the costs of the reconstruction of the Project in accordance with the procedures set
forth in Section 4.4(2). In such event, the deemed completion date of the Project set forth in
Section 4.4(3) shall be adjusted to reflect a reasonable date for completion of such restoration,
as determined by the Authority, but in no event later than three years from the date of receipt
by the Authority of the Condemnation Award or Insurance Proceeds.
(4) If the Authority determines not to restore the Project (the Authority shall
make such determination if, in the opinion of the Authority, repair could not be completed
within six months or the restoration and repair of the Project would not be economically
practical or desirable), the Authority shall immediately transfer such Condemnation Award o:
Insurance Proceeds to the Trustee, with instructions to deposit such funds in the Principal and
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Interest Account in the Bond Fund and apply them to the payment or mandatory redemption of
Bonds as follows: If the Project has been condemned or destroyed only in part and the
Authority determines that the Project Revenues will continue to provide funds sufficient to pay
Required Debt Service on the Bonds, the Bonds shall be redeemed in part to the extent of the
Condemnation Award or Insurance Proceeds received by the Trustee. Otherwise, the Bonds
shall be redeemed as a whole.
(5) In the event of a conflict between the provisions of this section and those
of the Deed of Trust, this section shall control.
6.4 Extensions of Payment of Bonds. The Authority shall not directly or indirectly
extend or assent to the extension of the maturity of any of the Bonds or the time of payment of
the interest thereon without the consent of the Owners of all Outstanding Bonds.
6.5 Tax -Exempt Status of Bonds. The Authority covenants and agrees not to use or
permit the use of any of the proceeds of the Bonds in such manner, and not to take or omit to
take any other action in such manner, as will impair the exclusion of interest on the Bonds from
gross income for federal income tax purposes. The Authority further covenants and agrees to
comply with applicable arbitrage rebate requirements under Section 148 of the Code, and to
provide to the Trustee written directions pursuant to Section 5.1 as to the investment of funds
held by the Trustee hereunder.
6.6 Compliance with Continuing Disclosure Requirements.
(1) Undertaking to Provide Annual Financial Information and Notice of Material Events.
To meet the conditions of paragraph (d)(2) of United States Securities and Exchange Commission
("SEC") Rule 15c2-12 (the "Rule") as required to qualify for the limited exemption from
paragraph (b)(5) of the Rule, as applicable to a participating underwriter for the Bonds, the
Authority undertakes (the "Undertaking") for the benefit of holders of the Bonds to provide or
cause to be provided, either directly or through a designated agent:
(a) To any person upon request or annually to a state information depository,
if any, established in the state of Washington and recognized by the SEC (the "SID"),
annual financial information and operating data of the type included in the final official
statement for the Bonds and described in Section 6.6(2) ("annual financial information")
that is customarily prepared by the Authority and is otherwise publicly available; and
(b) To each nationally recognized municipal securities information repository
designated by the SEC in accordance with the Rule ("NRMSIR") or the Municipal
Securities Rulemaking Board ("MSRB"), and to the SID timely notice of the occurrence
of any of the following events with respect to the Bonds, if material: (i) principal and
interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws
on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit
enhancements reflecting financial difficulties; (v) substitution of credit or liquidity
providers, or their failure to perform; (iv) adverse tax opinions or events affecting the
tax-exempt status of the Bonds; (vii) modifications to rights of holders of the Bonds;
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(viii) Bond calls (other than scheduled mandatory redemptions of Term Bonds, if any);
(ix) defeasances; (x) release, substitution, or sale of property securing repayment of the
Bonds; and (xi) rating changes.
(2) lype of Annual Financial Inf rmation Undertaken to be Provided. The annual
financial information that the Authority undertakes to provide
(a) Shall consist of (*revise as appropriate* (i) a statement of operating income
and expenses for the Project for the prior Fiscal Year (the 'Project Operating
Statement"), including (a statement of the coverage ratio of Net Operating Income of the
Project to Required Net Debt Service on the ;: • nds and] a summary of the occupancy
levels of the Project as of the end of the prior Fiscal Year;] and (ii) annual financial
statements for the Authority (the 'Authority Financial Statements"); ,tnd
(b) Shall be available from the Director of Finance of the Authority, 'whose
current address and telephone number shall be identified in the final official statement
for the Bonds.
(3) Amendment of Undertaking. The Undertaking is subject to amendment after the
primary offering of the Bonds without the consent of any holder of any Bond, or of any broker,
dealer, municipal securities dealer, participating underwriter, rating agency, NRMSIR, the SID
or the MSRB, under the circumstances and in the manner permitted by the Rule.
The Authority will give notice to each NRMSIR or the MSRB, and the SID, if any, of
the substance (or provide a copy) of any amendment to the Undertaking and a brief statement
of the reasons for the amendment. I1' the amendment changes the type of annual financial
information to be provided, the notice also will include a narrative explanation of the effect of
that change on the type of information to be provided.
(4) Beneficiaries. The Undertaking evidenced by this Indenture shall inure to the benefit
of the Authority and any holder of Bonds, and shall not inure to the benefit of or create any
rights in any other person.
(5) Termination of Undertakes. The Authority's obligations under this Undertaking
shall terminate upon the legal defeasance of all of the Bonds. In addition, the Authority's
obligations under this Undertaking shall terminate if those provisions of the Rule which require
the Authority to comply with this Undertaking become legally inapplicable in respect of the
Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other
counsel familiar with federal securities laws delivered to the Authority, and the Authority
provides timely notice of such termination to each NRMSIR or the MSRB and. the SID.
(6) Remed for Failure to Conte with Undertaking. As soon as practicable after the
Authority learns of any failure to comply with the Undertaking, the Authority will proceed with
due diligence to cause such noncompliance to be corrected. No failure by the Authority or other
obligated person to comply with the Undertaking shall constitute a default in respect of the
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Bonds. The sole remedy of any holder of a Bond shall be to take such actions as that holder
deems necessary and appropriate, including seeking a writ of mandate or order of specific
performance from an appropriate court, to compel the Authority or other obligated person to
comply with the Undertaking.
(7) Designation of Official Responsible to Administer Undertaking. The [Director of
Finance/Executive Director] of the Authority or his or her designee is authorized and directed
in his or her discretion to take such further actions as may be necessary, appropriate or
convenient to carry out the Undertaking of the Authority in respect of the Bonds set forth herein
and in accordance with the Rule, including, without limitation, the following actions:
(a) Preparing, filing and/or making available upon request the annual
financial information undertaken to be provided;
(b) Determining whether any event specified in paragraph (1)(b) of this
Section 6.6 has occurred, assessing its materiality with respect to the Bonds, and,
if material, preparing and disseminating notice of its occurrence;
(c) Determining whether any person other than the Authority is an
'obligated person" within the meaning of the Rule with respect to the Bonds, and
obtaining from such person an undertaking to provide any annual financial
information and notice of material events for that person in accordance with the
Rule;
(d) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal counsel, to
assist and advise the Authority in carrying out the Undertaking; and
(e) Effecting any necessary amendment of the Undertaking.
(8) Trustee to Forward Information. The Trustee shall provide notice to the
Authority of any of the events listed in Section 6.6(1)(b) of which the officer of the Trustee
responsible for administering this Indenture has actual notice (including notice from the
Authority) or knowledge and, upon a written determination by the Authority given to the Trustee
that any such event is material, shall provide notice of such event to each NRMSIR or to the
MSRB, and to the SID. In addition, the Trustee shall forward to each NRMSIR, the MSRB and
the SID, as applicable, all information delivered to the Trustee by the Authority with instructions
to forward that information to those entities pursuant to this section, it being understood that the
Trustee has no responsibility for the content, format or timeliness of such information.
Notwithstanding the foregoing, the Trustee shall have no duty or obligation hereunder
to the Authority, any holder of Bonds or any other Person (including without limitation any
underwriter of the Bonds) to monitor the Authority's compliance with the Undertaking.
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6.7 Contingent Loan Agreement. The Authority covenants that it will not terminate
the Contingent Loan Agreement at any time that the Bonds or any Additional Bonds are
Outstanding and that it will amend the Contingent Loan Agreement only in the manner described
therein. The Authority further covenants that it will exercise its rights under the Contingent
Loan Agreement to ensure that all amounts payable by the City thereunder are paid.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BONDOWNERS
7.1 Events of Default° The: following events shall be Events of Default:
(1) default in the due and punctual payment of the principal of, premium, if
any, or interest on any Bond when and as the same shall become due and payable,
whether on any Interest Payment Date, at maturity as expressed therein, by proceedings
for redemption (except as otherwise provided in Section 3.2(4)), iby acceleration, or
otherwise;
(2) default by the Authority in the observance of any of the other covenants,
agreements or conditions on its part contained in this Indenture, the Resolution, the Deed
of Trust, the Hazardous Substances Agreement or the Bonds, if such default shall have
continued beyond any applicable cure period and for a period of 60 days (or such longer
period, if any, as is specified herein for particular defaults) after 'written notice thereof,
specifying such default and requiring the same to be remedied, shall have been given to
the Authority by the Trustee, or to the Authority and the Trustee by the Owners of not
less than 25% in aggregate principal amount of the Bonds at the time Outstanding (or,
if cure cannot be completed within such 60 -day period through the exercise of diligence
and the Authority commences the required cure within such 60 -day period and continues
the cure with diligence and it is reasonably anticipated that the default: could be cured
within 120 days, the Authority shall have 120 days following receipt of such notice to
effect the cure).
7.2 Acceleration of Maturin . If any Event of Default described in paragraph (1) of
Section 7.1 shall occur, then, and in each and every such case during the continuance of such
Event of Default, the Trustee shall be entitled, upon written notice to the Authority or the
Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding shall
be entitled, upon notice in writing to the Authority and the Trustee, to declares the principal of
all of the Bonds then Outstanding and the interest accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be immediately due
and payable, anything contained in this Indenture or in the Bonds to the contrary
notwithstanding.
The Trustee shall give or cause to be given notice of any such declaration of acceleratio
to the respective Owners of the Bonds at their addresses appearing on the Bond Register. Notice
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of such Declaration of Acceleration having been given as aforesaid, anything to the contrary
contained in this Indenture or in the Bonds notwithstanding, interest shall cease to accrue on
such Bonds from and after the date established for payment of the Bonds pursuant to the
Declaration of Acceleration if and to the extent that money��make such Section
is on band
with the Trustee in any of the Funds that
7.3 Remedies Upon Default. Upon the occurrence and during the continuance of an
Event of Default, then and in every such case the Trustee in its discretion may, and upon the
written direction of the Owners of not less than a majority in principal amount of the Bonds then
Outstanding and receipt of indemnity against anticipated expenses, including counsel fees, and
liability satisfactory to the Trustee in its sole discretion (which indemnity is a condition
precedent to its duties hereunder) shall, in its capacity as the Trustee of an express trust, pursue
any one or more of the following remedies to the extent permitted by applicable law:
(1) by mandamus, or other suit, action or proceeding at law or in
equity, enforce all rights of the Owners and require the Authority to cavy out any
agreements, including the Contingent Loan Agreement, with or for the benefit of
the Bondowners and to perform its duties under the Act, the Resolution and this
Indenture, provided that any such remedy may be taken only to the extent
permitted under the applicable provisions of those agreements, the Act, the
Resolution or this Indenture, as the case may be;
(2) bring suit upon the Bonds;
(3) foreclose the Deed of Trust or exercise any remedies thereunder,
but only with the consent of the City so long as the City is not in default in its
obligations under the Contingent Loan Agreement;
(4) by action or suit in equity require the Authority to account as if it
were the trustee of an express trust for the Owners of the Bonds; or
(5) by action or suit in equity enjoin any acts or things which may be
unlawful or in violation of the rights of the Owners of the Bonds.
Upon instituting any such proceeding, the Trustee shall be entitled, as a matter of right, to the
appointment of a receiver of the Project Revenues and other assets pledged under this Indenture
or the Deed of Trust, pending resolution of such proceeding. The Trustee shall have the right
to decline to follow any direction of Bondowners that in the sole discretion of the Trustee would
be unjustly prejudicial to the Trustee or to Bondowners not parties to such direction, that would
expose the Trustee to unreasonable liability or financial exposure or that is not in accordance
with law or the provisions of this Indenture, shall be entitled to rely without further investigation
or inquiry upon any direction given by the Owners of a majority in aggregate principal amount
of the Bonds Outstanding, and shall not be responsible for the propriety of or liable for the
consequences of following any such direction. Notwithstanding anything to the contrary
contained herein, the Trustee shall not be required to foreclose the Deed of Trust or bid on
behalf of Bondowners at any foreclosure sale (a) if, in the Trustee's sole discretion, such action
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would subject the Trustee to personal liability for the cost of investigation, removal and/or other
remedial activity with respect to Hazardous Substances (as defined in the Deed of Trust) or (b)
if the presence of any Hazardous Substance on the property subject to the Deed of Trust results
in such property having no or nominal value. It is acknowledged and agreed that the Trustee
has no authority to manage, own or operate the Project, or any portion thereof, except as
necessary to exercise remedies upon default.
Nothing in this Section 7.3 shall in any manner prevent the City from exercising any of
its rights under the Contingent Loan Agreement so long as the City is not .in default in its
obligations thereunder.
7.4 plication of Proiect Revenues and Other Funds After Default„ If an Event of
Default shall occur and be continuing, all Project Revenues and any other funds then held or
thereafter received by the Trustee under any of the provisions of this Indenture (subject to
Sections 5.3 and 9.2) or the Deed of Trust shall be applied by the Trustee as follows and in the
following order:
(1) To the payment of any expenses necessary in the sole discretion of the
Trustee to protect the interests of the Owners of the Bonds and reimbursement of the Trustee
for any advances made by the Trustee for such purposes, and ;payment of reasonable fees,
charges and expenses of the Trustee (including reasonable fees of its counsel) incurred in and
about the performance of its powers and duties under this Indenture, the Hazardous Substances
Agreement and the Deed of Trust;
(2) If the Trustee appoints a receiver or exercises remedies under the Deed
of Trust, to the payment of Operation and Maintenance Costs;
(3) To the payment of the principal of and interest then due on the Bonds
(upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially
paid, or surrender thereof if fully paid) subject to the provisions of this Indenture, as follows:
(a) Unless the principal of all of the Bonds shall have become or have
been declared due and payable,
First: To the payment to the Persons entitled thereto of all
installments of interest then due in the order of the maturity of such
installments and, if the amount available shall not be sufficient to pay in
full any installment or installments maturing on the same date, then to the
payment thereof ratably, according to the amounts due thereon, to the
Persons entitled thereto, without any discrimination or preference; and
Second: To the payment to the Persons entitled thereto of the
unpaid principal of any Bonds which shall have become due, whether at
maturity or by call for redemption, with interest on the overdue principal
at the rate borne by the respective Bonds, and, if the amount available
shall not be sufficient to pay in full all of the principal due on the Bonds,
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together with such interest, then to the payment thereof ratably, according
to the amounts of principal due on such date to the Persons entitled
thereto, without any discrimination or preference, or
(b) If the principal of all of the Bonds shall have become or have been
declared due and payable, to the payment of the principal and interest then due
and unpaid upon the Bonds, with interest on the overdue principal at the rate
borne by the Bonds, and, if the amount available shall not be sufficient to pay in
full the whole amount so due and unpaid, then to the payment thereof ratably,
without preference or priority of principal over interest, or of interest over
principal, or of any installment of interest over any other installment of interest,
or of any Bond over any other Bond, according to the amounts due respectively
for principal and interest, to the Persons entitled thereto without any
discrimination or preference;
(4) To the City, to the extent that the City certifies to the Trustee that amounts
are owed to the City pursuant to the Contingent Loan Agreement; and
(5) To the Authority.
7.5 Trustee to Represent Bondowners. The Trustee is hereby irrevocably appointed
(and the successive respective Owners of the Bonds, by taking and holding the same, shall be
deemed to have so appointed the Trustee) as trustee for and true and lawful attorney-in-fact of
the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such
rights and remedies as may be available to such Owners under the provisions of the Bonds, this
Indenture, the Deed of Trust and applicable provisions of any law. All rights of action under
this Indenture, the Deed of Trust or the Bonds or otherwise may be prosecuted and enforced by
the Trustee without the possession of any of the Bonds or the production thereof in any
proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee
shall be brought in the name of the Trustee for the benefit and protection of all Owners of
Bonds, subject to the provisions of this Indenture. The foregoing notwithstanding, the Trustee
shall not be entitled to vote in favor of any plan of reorganization or similar restructure plan in
any bankruptcy or other insolvency proceeding, to the extent that such a vote by the Trustee
would alter this Indenture, or the rights of the Owners of any outstanding Bonds, in any manner
not permitted by Article X.
7.6 )3ondowners' Direction of Proceedings. No Owner of any Bond shall have the
right to institute any proceeding, judicial or otherwise, for the enforcement of the covenants
contained herein, without the written concurrence of the Owners of not less than a majority in
aggregate principal amount of the Bonds at the time Outstanding; but the Owners of this
principal amount of Bonds may, subject to the limitations of and upon compliance with Section
7.7, either at law or in equity, by suit, action, mandamus, application for appointment of a
receiver or other proceeding, protect and enforce the rights of all Owners of Bonds, and may
enforce the performance of all covenants and duties of the Authority and its officials as set forth
in this Indenture, including but not limited to foreclosure of the Deed of Trust and the collection
and proper segregation and application of all Project Revenues. Nothing herein shall be
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construed as limiting or otherwise modifying the rights of the Owners and the Trustee under this
Indenture, nor shall anything herein impair the absolute and unconditional right of the Owner
of each Bond to receive payment of the principal thereof and interest thereon at the times
provided in such Bond and in this Indenture, and to institute suit for the enforcement of any such
payment. Before the Owners may take any action hereunder, the Trustee may require that it be
furnished an indemnity bond satisfactory to it in its sole discretion for the reimbursement of all
expenses to which it may be put (including the reasonable expenses and disbursements of its in-
house and outside counsel, independent: appraisers, accountants, consultants, agents and other
experts) and to protect it against all liability by reason of any action so taken by the Owners,
except liability which is adjudicated to have resulted from the negligence or willful default of
the Trustee.
7.7 Limitation on Bondowners' Right to Sue. No Owner of any Bond shall have the
right to institute any suit, action or proceeding at law or in equity, or take any other action
described in Section 7.6, for the protection or enforcement of any right or remedy under this
Indenture, the Deed of Trust or any applicable law with respect to such Bond, unless (1) the
Owner shall have given to the Trustee written notice of the occurrence of an Event of Default;
(2) the Owners of not less than a majority in aggregate principal amount of the Bonds then
Outstandingshall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in their names; (3) such
Owner or Owners shall have tendered to the Trustee indemnity satisfactory to the Trustee in its
sole discretion against the costs, expenses and liabilities to be incurred in compliance with such
request (including the reasonable fees of its counsel, and the reaso . able expenses and
disbursements of independent appraisers, accountants, consultants, agents and other experts); and
(4) the Trustee shall have refused or failed to comply with such request for a period of 60 days
after such written request shall have been nixtived by, and such tender of indemnity shall have
been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or failure are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of I: nds of any remedy
hereunder or under law; it being understood and intended that no one or more Bondowners shall
have any right in any manner whatever by his or their action to affect, disturb or prejudice the
security of this Indenture or the Deed of Trust or the rights of any other Bondowners, or to
enforce any right under this Indenture or applicable law with respect to the Bonds, except in the
manner provided herein, and that all proceedings at law or in equity to enforce any such right
shall be instituted, had and maintained in the manner provided herein, and for the benefit and
protection of all Owners of Outstanding Bonds, subject to the provisions of this Indenture.
7.8 Absolute Obligation of Authority. Nothing in Section 7.7 or in any other
provision of this Indenture, or in the Bonds, shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal of and interest on the Bonds
to the respective Owners of the Bonds at the times stated therein out of the Net Operating
Income, General Revenues and other funds and assets pledged therefor in this Indenture, or
affect or impair the rights of such Owners, which are also absolute and unconditional, to enforce
such payment by virtue of the contract embodied in the Bonds.
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7.9 Termination of Proceedings. In case any proceedings taken by the Trustee or any
one or more Bondowners on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee or the Owners,
then in every such case the Authority, the Trustee and the Owners, subject to any determination
in such proceedings, shall be restored to their former positions and rights hereunder, severally
and respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and
the Owners shall continue as though no such proceedings had been taken. The Trustee shall
restore the balance in each fund or account to clevel m such fund or account as a result of of
Default from and to the extent of money
occurrence of such Event of Default and not disbursed in accordance herewith.
7.10 Remedies Not Exclusive. Except with respect to the limitations on Owners' rights
to sue set forth in Section 7.7, no remedy herein conferred upon or reserved to the Trustee or
the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each
and every such remedy, to the extent permitted by law, shall be cumulative and in addition to
any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
7.11 No Waiver of Default. No delay or omission of the Trustee or of any Owner of
the Bonds to exercise any right or power arising upon the occurrence of any default shall impair
any such right or power or shall be construed to be a waiver of any such default or an
acquiescence therein, and every power and remedy given by this Indenture to the Trustee or to
the Owners may be exercised from time to time and as often as may be deemed expedient.
ARTICLE VIII
CONCERNING THE TRUSTEE
8.1 Acceptance of Trust and Prudent Performance Thereof.
(1) The Trustee, as evidenced by its due execution of this Indenture, hereby
accepts the conveyance set forth in the preamble, in trust, and agrees to keep, perform and
observe faithfully all of the duties, conditions and requirements imposed upon it in this
Indenture. Except during the continuance of an Event of Default, the Trustee undertakes to
perform such functions and duties and only such functions and duties as are specifically set forth
in this Indenture, and no implied duties or obligations shall be read into this Indenture against
the Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs, subject to the limitations on liability
set forth in Sections 7.3, 8.1(3) and 8.2, and subject to the provisions of Section 8.6.
(2) All notices or other instruments required by this Indenture to be delivered
in writing to the Trustee, in order to be effective, must be delivered at the address for notices
to the Trustee set forth in Section 11.6, or at such other location as the Trustee may designate
to the Authority in writing. With respect to an Event of Default pursuant to Section 7.1(2), the
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Trustee shall not be deemed to have notice of any such Event of Default unless and until itshall
have received actual notice thereof, and in the absence of such notice so received, the Trustee
may conclusively assume that there is no such Event of Default. Nonetheless, the Trustee may
in its sole discretion take notice of an Event of Default without specific notification thereof. In
such case, the Trustee shall proceed as if it had received such specific notification.
(3) The Trustee shall not be liable with respect to any action taken or omitted
to be taken hereunder except for its own negligence or willful misconduct; provided that:
(a) The duties and obligations of the Trustee shall be determined solely
by the express provisions of this Indenture; the Trustee shall be obligated to take only such
actions as are specifically set forth herein or as are specifically required to be taken by the
Trustee when requested in writing from time to time in accordance: with this Indenture by the
Authority or by the Owners of not less than the aggregate principal amount of Outstanding
Bonds specified herein with respect to the action in question (subject to the restrictions set forth
in Section 7.3); and
(b) In the absence of bad faith on the part of the Trustee, the Trustee
may rely, without any independent investigation or inquiry, as to the truth of the statements and
to the correcmess of the opinions expressed therein, upon any certificate or opinion furnished
to the Trustee conforming to the procedural requirements of this Indenture; but in the case of
any such certificate or opinion which by any provision is specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or
not it conforms to the procedural requirements of this Indenture; and
(c) The Trustee shall not be liable for any error of judgment made in
good faith by the Trustee unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(d) Notwithstanding the restrictions on the Trustee's duty to act set
forth in Section 7.3, the Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in good faith in accordance with the direction of the Owners of not less than
a majority in aggregate principal amount of the Bonds Outstanding (or such lesser amount as
may be specified herein) or otherwise in accordance with the express provisions of this
Indenture.
8.2 Trustee Mav Rely Upon Certain Documents and Oa)inions.
(1) Subject to Section 8.1(3)(b), the Trustee may rely and shall be protected
in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.
(2) Any request, direction, election, order, certification or. demandof the
Authority shall be sufficiently evidenced by an instrument signed by an Authorized
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Representative of the Authority (unless specifically prescribed otherwise in this Indenture), and
any resolution of the Authority may be evidenced to the Trustee by a certified resolution.
(3) The Trustee may, in its sole discretion and at the expense of the Authority,
consult with its counsel or Bond Counsel, and the legal advice or opinion of such counsel or
Bond Counsel shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by the Trustee hereunder in good faith and in accordance with such
legal advice or opinion of counsel or Bond Counsel.
(4) Whenever, in the administration of the trust created by this Indenture, the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matter (unless other evidence in respect thereof is
specifically prescribed herein) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be proved and established by a certificate of an Authorized Representative
of the Authority; and, in the absence of negligence or willful misconduct on the part of the
Trustee, such certificate shall constitute full authority for any action taken, suffered or omitted
by the Trustee under the provisions of this Indenture in reliance thereon.
(5) The Trustee shall not be concerned with or accountable to anyone for the
subsequent use or application of any money which shall be released or withdrawn in accordance
with the provisions hereof.
(6) The Trustee may execute any of the trusts or powers hereof and perform
the duties required of it hereunder by or through attorneys, accountants, affiliates, agents or
receivers and may, in all cases, pay, and be reimbursed for, the reasonable fees and expenses
thereof.
(7) Any action taken or omitted to be taken by the Trustee in good faith
pursuant to this Indenture upon the request or authority or consent of any Person who at the time
of making such request or giving such authority or consent is the Owner of any Bond, shall be
conclusive and binding upon all future Owners of the same Bond and upon Bonds executed and
delivered in exchange therefor or in place thereof.
8.3 Trustee Not Responsible for Indenture Statements. Validity. The Trustee shall
not be responsible for any recital or statement herein, in the Bonds or the Deed of Trust, or in
any official statement or other disclosure document prepared or distributed in connection with
the Bonds or for the validity of the execution by the Authority of this Indenture or the Bonds,
or for the validity of the execution of any other or supplemental instrument by the Authority,
or for the validity or sufficiency of the security for the Bonds issued hereunder or intended to
be secured hereby, or for the value of or title to the Trust Estate. Except as otherwise expressly
provided herein, the Trustee shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein, or as to the
existence of an Event of Default hereunder, but the Trustee may require of the Authority full
information and advice as to the performance of such covenants, conditions and agreements and
of the condition of the physical property included in the Trust Estate.
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The Trustee makes no representation or warranty, express or implied, as to the tide,
value, design, compliance with speciifications or legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose for the use
contemplated by the Authority of the Project. In no event shall the Tnistee be liable for
incidental, indirect, special or consequential damages in connection with or arising from the
Deed of Trust or this Indenture for the existence„ furnishing or use of the Project.
8.4 Limits on Duties and Liabilities of Trustee.. The permissive right of the Trustee
to do things enumerated in this Indenture shall not be construed as a duty of the Trustee and the
Trustee shall be answerable only for its own negligence or wilful misconduct. The Trustee shall
not be required to give any bond or surety in respect of the execution of its trusts and powers
hereunder or otherwise in respect of the premises.
Nothing contained herein, in the Bonds, the Deed of Trust or the Hazardous Substance
Agreement shall be construed to impose any duties upon the Trustee beyond those expressly
contained in this Indenture. All immunities, indemnities and other provisions of this Indenture
as related to the duties and liabilities of the Trustee shall apply to the Bonds and the Deed of
Trust. The Trustee shall have no liability in respect of any invesunent advice rendered to any
Bondowner, or for the management of the :Project or any portion thereof.
8 5 Money Held in Trust. All money held by the Trustee hereunder is held in oust
for the purposes set forth herein and shall be segregated and kept apart from other funds held
by it in accordance with its general practices and procedures in effect from date to time.
Under no circumstances shall the Trustee be liable in its individual capacity for the
obligations evidenced by the Bonds. In accepting the trust hereby created, the Trustee acts
solely as Trustee for the Owners and not in its individual capacity and, except as otherwise
provided herein, all Persons, including without limitation the Owners and the Authority, having
any claim against the Trustee arising from this Indenture shall look for payment only to the
funds and accounts held by the Trustee hereunder.
8 6 Costs for Maintenance of Suit: Indemnification.
(1) Other than to the extent described herein with respect to making the
payments of principal of and interest on the Bonds when due from money held by the Trustee
hereunder, and with respect to the redemption (other than optional redemption) or acceleration
of payment of the Bonds, the Trustee shall be under no obligationto institute any suit, to take
any proceeding under this Indenture or the Deed off Trust, to enter any appearance in or in any
way defend any suit in which it may be defendant, or to take any steps in the execution of the
trusts hereby created or in the enforcement of any rights and powers hereunder, until it shall be
assured to its satisfaction that repayment of all costs and expenses, including the reasonable fees
of its counsel, will occur in a timely manner, and until adequate indemnity against all risk and
liability is assured to it to its satisfaction. However, the Trustee may begin suit, or appear in
and defend suit, or do anything else in its judgment proper to be done by it as such Trustee,
without assurance of reimbursement or indemnity, and in such case the Trustee shall be
reimbursed or indemnified by the Owners for all counsel fees and other reasonable
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disbursements properly incurred in connection therewith, unless such liability or disbursement
is adjudicated to have resulted from the negligence or willful misconduct of the Trustee. If the
Owners shall fail to make such reimbursement or indemnification, the Trustee may reimburse
itself from any money in its possession under the provisions of this Indenture subject only to the
prior lien of the Bonds for the payment of the principal thereof and interest thereon, except as
otherwise provided in Section 7.4.
(2) The Authority shall indemnify the Trustee for any loss, liability, outlays,
counsel fees, disbursements, expenses or advances reasonably incurred or made, without
negligence or willful misconduct on the part of the Trustee, arising out of or in connection with
its acceptance or administration of the trust or performance of its duties hereunder, and shall
reimburse the Trustee for any amounts paid to the Trustee by the Owners pursuant to Section
8.6(1) which the Trustee has spent for the purposes of that section and which the Trustee has
subsequently been required to return to the Owners.
(3) None of the provisions contained in this Indenture, the Bonds or the Deed
of Trust shall require the Trustee to expend or risk its own funds or otherwise incur individual
financial liability in the performance of any of its duties or in the exercise of any of its rights
or powers hereunder.
(4) All indemnifications and releases from liability granted to the Trustee
hereunder shall extend to its directors, officers, employees, officials, affiliates and agents.
8.7 Intervention in Judicial Proceedings. In any judicial proceeding to which the
Authority is a party and which, in the opinion of the Trustee in its sole discretion, has a
substantial bearing on the interest of the Owners of the Bonds, the Trustee may intervene on
behalf of the Owners, and must do so if requested in writing by the Owners of not less than a
majority in aggregate principal amount of Outstanding Bonds upon written assurance from such
Owners satisfactory to the Trustee of indemnity and reimbursement for costs and expenses,
including reasonable fees of its counsel, incurred in so intervening. The rights and obligations
of the Trustee under this Section 8.7 are subject to the approval of the court having jurisdiction
in the premises.
8.8 Trustee to Retain Rebate Records. The Trustee shall retain all records (solely to
the extent such records are provided to it) relating to the determination and payment of the
Rebate Amount to the United States in connection with any Bonds for six years after the last
Outstanding Bond is retired, or for such shorter period as may be permitted by Section 148 of
the Code.
8.9 Reports of Activities. The Trustee shall keep and maintain accurate and complete
records of fund balances, any investments thereof and all transactions involving any part of the
Trust Estate held by the Trustee pursuant to this Indenture and to furnish monthly reports thereof
to the Authority. The Authority acknowledges that to the extent that regulations of the
Comptroller of the Currency or other applicable regulatory agency grant the Authority the right
to receive brokerage confirmations of security transactions as they occur, the Authority
specifically waives receipt of such confirmations. The Authority and its agents shall have the
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right to inspect all such records at all reasonable times during regullar business hours and upon
reasonable notice and to make such copies and extracts, at their expense, as they may desire.
8.10 Compensation of True. All advances, counsel fees and other expenses
reasonably made or incurred by the Trustee or its agents, directors, officials, officers, affiliates
and employees in and about the execution of the trust hereby created; any and all reasonable
compensation to the Trustee for its services in the premises; any and all claims, damages,
demands, expenses, liabilities and taxes of any character or nature whatsoever (including but not
limited to claims for loss or damage to any property or injury to or death of any person) asserted
by or on behalf of any Person arising out of, resulting from, or in any way connected with the
Project or the real property and improvements thereon conveyed by the Deed of Trust; and any
and all costs and expenses (including reasonable fees of its counsel, agents and other experts)
incurred by or on behalf of the Trustee in defending any such claims, damages, demands,
Iiabilities or claims for taxes of any character whatsoever (unless such claims, damages, demands
or liabilities are adjudicated to have resulted from the negligence or willful misconduct of the
Trustee), shall be paid by the Authority in accordance herewith. The compensation of the
Trustee shall not be limited to or by any provision of law in regard to the compensation of
trustees of an express trust. The Trustee shall have a lien against all money anct other property
or security held pursuant to this Indennure, with right of payment therefrom, subject only to the
prior lien of the Bonds for the payment of the principal thereof and interest thereon when due
(except as provided in Section 7.4(1)), for (1) the Trustee's reasonable compensation, expenses,
advances and counsel fees, incurred on and about the execution of the trusts created hereby and
the exercise and performance of the powers and duties of the Trustee hereunder; and (2) any and
all claims, damages, demands, expenses, liabilities and taxes incurred by the Trustee or its
agents, directors, officials, affiliates, officers and employees, and any and all costs and expenses
incurred by or on behalf of the Trustee in defending against the same, of any character
whatsoever (unless such damage or liability is adjudicated to have resulted from the negligence
or willful misconduct of the Trustee).
8.11 Trustee Mav Hold Bonds, The Trustee and its officers and directors may acquire
and hold or become pledgees of Bonds and other obligations of the Authority and otherwise may
deal with the Authority in the same manner and to the same extent and with like effect as though
it were not Trustee hereunder, and may act as depository for and permit any of its officers and
directors to act as members of, or in any other capacity with respect to, any committee formed
to protect the rights of Bondowners, whether or not such committee represents the Owners of
the majority in aggregate principal amount of the Bonds then Outstanding.
8.12 Qualifications of Trustee_. There shall at all times be a Trustee hereunder which
shall be an association or a corporation organized and doing business under the laws of the
United States or any state thereof, authorized under such laws to exercise corporate mist powers.
Any successor Trustee shall have a combined capital and surplus of at least $50,000,000 (or
shall be a wholly-owned subsidiary of an association or corporation that has such combined
capital and surplus), and be subject to supervision or examination by federal or state authority,
or shall have been appointed by a court of competent jurisdiction pursuant to Section 8.15(2).
If such association or corporation publishes reports of condition at least annually, pursuant tc
law or to the requirements of any supervising or examining authority referred to above, then for
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the purposes of this Section 8.12, the combined capital and surplus of such association or
corporation shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time any successor Trustee shall cease to be eligible
in accordance with the provisions of this Section 8.12 and another association or corporation is
eligible, the Trustee shall resign immediately in the manner and with the effect specified in
Section 8.13.
8.13 Resignation of Trustee. The Trustee may resign and be discharged from the trusts
created by this Indenture by giving to the Authority at least 60 days' advance written notice.
Such resignation shall take effect on the day specified in such notice, but the Trustee shall not
be discharged from the trusts hereby created until a successor Trustee has been approved and
appointed. Subsequent to such date, the Trustee shall have no further duties and obligations
under this Indenture.
8.14 Removal of Trustee.
(1) The Trustee may be removed at any time, either with or without cause,
by the Authority at the written request of the Owners of a majority in aggregate principal amount
of Outstanding Bonds, provided that all fees and expenses of the Trustee that are due and owing
pursuant to Section 8.10 and that are not disputed shall first be paid.
(2) The Trustee may be removed at any time, either with or without cause,
by the Authority so long as there has been no Event of Default which then remains uncured and
provided that all fees and expenses of the Trustee that are due and owing pursuant to Section
8.10 and that are not disputed shall first be paid.
(3) Any removal of the Trustee pursuant to this Section 8.14 shall be effected
by delivery to the Trustee of a written instrument to that effect signed by an Authorized
Representative of the Authority.
(4) Such removal shall take effect on the day specified in such notice, but the
Trustee shall not be discharged from the trusts hereby created until a successor Trustee has been
approved and appointed. Subsequent to such date, the Trustee shall have no further duties and
obligations under this Indenture.
8.15 Appointment of Successor Trustee.
(1) In case at any time the Trustee shall resign, be removed or otherwise
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver of the
Trustee or of its property shall be appointed, or if a public supervisory office shall take charge
or control of the Trustee or of its property or affairs, a vacancy shall forthwith and ipso facto
be created in the office of such Trustee hereunder, and the Authority shall promptly appoint a
successor trustee. Any such appointment shall be made by a written instrument executed by an
Authorized Representative of the Authority. The Authority shall direct the successor Trustee
to mail notice by first class mail, postage prepaid, at least once within 30 days of such
appointment, to the Owners of all Outstanding Bonds at their addresses on the Bond Register.
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(2) If, in a proper case, no appointment of a successor Trustee shall be made
pursuant to Section 8.15(1) within 90 days after the receipt by the Authority of the Trustee's
notice of resignation given pursuant to Section 8.13 or of removal of the Trustee pursuant to
Section 8.14, the retiring Trustee, at the expense of the Authority, or any Owner may apply to
any court of competent jurisdiction to appoint a successor Trustee. The court may thereupon,
after such notice, if any, as such court may deem proper and prescribe, appoint a successor
Trustee.
8.16 Merger of Trustee. Any Person into which the Trustee may be converted or
merged, or with which it may be consolidated, or to which it may sell or transfer its corporate
mist business and assets as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale„ merger, consolidation or transfer to which it is a party,
j facto, shall be and become successor trustee hereunder and shall be vested with all of the
title to the Trust Estate and all the trusts, powers, discretions, immunities, privileges and all
other matters as was its predecessor, without the execution or filing of any instrument or any
further act, deed or conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, but only if such resulting entity is entitled under state or federal law
to exercise corporate trust powers.
8.17 Transfer of Rights and Property to Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the
Authority a written instrument accepting such appointment hereunder, and thereupon such
successor, without any further act, deed or conveyance, shall become fully vested with the Trust
Estate and the rights, powers, trusts, duties and obligations of its predecessor; but such
predecessor shall, nevertheless, on the written request from an Authorized Representative: of the
Authority or from its successor execute and deliver a written instrument transferring to such
successor all the Trust Estate and the rights, powers, trusts, duties and obligations of such
predecessor hereunder, and every predecessor trustee shall deliver all fundis held by it as Trustee
hereunder to its successor. Should any assignment, conveyance or written instrument from the
Authority be required by any successor Trustee for more fully and certainly vesting in such
successor Trustee the Trust Estate and rights, powers, trusts, duties and obligations hereby
vested or intended to be vested in the predecessor Trustee, any and all such assignments,
conveyances and written instruments shall, on request, be executed, acknowledge and delivered
by the Authority. Each successor Trustee shall give, or cause the Bond Registrar to give, notice
of its appointment to all Owners appearing on the Bond Register as of the date of appointment.
The successor Trustee shall reimburse the predecessor Trustee 'for any expenses (including
counsel fees) incurred under this Section 8.17.
8.18 Survival of Rights. The Trustee's rights to immunity and protection from liability
hereunder, its right to receive payment of its fees and expenses and its rights to indemnification
hereunder and under the Deed of Trust and the Hazardous Substances Agreement shall survive
its removal or resignation and the final payment, defeasance or discharge of the Bonds and the
termination of the lien of this Indenture.
[8.19 Appointment of a Co-Trustee. It is the intent of the Authority and the Truste
that there shall be no violation of any law of any jurisdiction (inc:luding particularly the law of
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the State) denying or restricting the right of banking corporations or associations to transact
business as Trustee in such jurisdiction. It is recognized that in case of litigation under this
Indenture and, in particular, in case of the enforcement of any remedies on default, or in case
the Trustee deems that by reason of any present or future law of any jurisdiction it may not
exercise any of the powers, rights or remedies granted herein to the Trustee or holdtitle to the
properties in trust, as granted herein, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint, with the consent
of the Authority, an additional individual or institution as a separate trustee or co-trutee. The
following provisions of this Section 8.19 are adopted to these ends.
[In the event that the Trustee appoints an additional individual or institution as a separate
trustee or co -trustee, in the event of the incapacity or lack of authority of the Trustee, by reason
of any present or future law of any jurisdiction, to exercise any of the rights, powers, trusts and
remedies granted to the Trustee herein or to hold title to the Trust Estate or to take any other
action which may be necessary or desirable in connection therewith, each and every remedy,
power, right, obligation, claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by this Indenture to be imposed upon, exercised by or vested in or
conveyed to the Trustee with respect thereto shall be imposed upon, exercisable by and vest in
such separate trustee or co -trustee, but only to the extent necessary to enable such separate
trustee or co -trustee to exercise such powers, rights, trusts and remedies, and every covenant
and obligation necessary to the exercise thereof by such separate trustee or co -trustee shall run
to and be enforceable by either of them. Such separate trustee or co -trustee shall deliver an
instrument in writing acknowledging and accepting its appointment hereunder to the Authority
and the Trustee.
[Should any instrument in writing from the Authority be required by the separate trustee
or co -trustee so appointed by the Trustee for more fully and certainly vesting in and confirming
to him or it such properties, rights, powers, trusts, duties and obligations, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by the
Authority If the Authority shall fail to deliver the same with 15 days of such request, the
Trustee is hereby appointed attorney-in-fact for the Authority to execute, acknowledge and
deliver such instruments in the Authority's name and stead. In case any separate trustee or co -
trustee, or a successor to either, shall die, become incapable of acting, resign or be removed,
all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee
or co -trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the
appointment of a new trustee or successor to such separate trustee or co -trustee.]
ARTICLE IX
DISCHARGE OF OBLIGATIONS TO BONDOWNERS
9.1 Defeasance of Bonds. In the event that, in accordance with a refunding or
defeasance plan, the Authority shall issue refunding bonds or have money available from any
other lawful source to pay the principal of and interest on the Bonds or such portion thereof
included in the refunding or defeasance plan as the same become due and payable and to refund
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or defease such then Outstanding Bonds and to pay the costs of refunding or defeasance and any
fees and expenses then due to the Trustee, and shall have set aside irrevocably in a special fund
for and pledged to such payment, refunding or defeasance, money and/or Government
Obligations described in paragraph (1) of the derinition of Government Obligations in Section
1.1 that are not subject to redemption prior to maturity sufficient in amount, together with
known earned income from the investments thereof, to make such payments and to accomplish
the refunding or defeasance as scheduled (the °trust account"), and shall make irrevocable
provisions for redemption of such Bonds, if applicable, then in that case all right and interest
of the Owners of the Bonds to be so retired, refunded or defeased (collectively, the "defeased
Bonds") in the covenants of this Indenture, in the Trust Estate, and in the funds and accounts
obligated to the payment of such defeased Bonds, other than the right to receive the funds, so set
aside and pledged, thereupon shall cease and become void, except that such Owners shall have
the right to receive payment of the principal of and premium, if any, and interest on the defeased
Bonds from the trust account and, in the event the funds in the trust account are not available
for such payment, shall have the residual right to receive payment of the principal of and
premium, if any, and interest on the defeased Bonds from the Trust Estate (but only if this
Indenture has not been discharged as described in Section 9.2) without any priority of lien or
charge against the Trust Estate or those covenants with respect thereto except to be paid
therefrom (except that such rights as exist with respect to payment, exchange and transfer of
such Bonds; under the pertinent provisions of this Indenture shall continue in full force and
effect). The Authority shall include in the refunding or defeasance plan such provisions as the
Authority deems necessary for the random selection of any defeased Bonds that constitute less
than all of a particular maturity of the Bonds, for notice of the defeasance to be given to the
Owners of the defeased Bonds and to such other Persons as the Authority shall determine, and
for any required replacement of Bond certificates for defeased Bonds. After the establishing and
full funding of such trust account, the defeased Bonds shall be deemed to be discharged and the
Authority then may apply any money in any other fund or account established for the payment
or redemption of the defeased Bonds to such lawful purposes as it shall determine, subject only
to the rights of the Owners of any other Bonds then Outstanding and the rights of the Trustee
hereunder. Notwithstanding the foregoing, no Bonds shall be defeased unless the Authority has
delivered to the Trustee written confirmation from the Rating Agency, if any, that such
defeasance will not result in a reduction or withdrawal of the rating on the defeased Bonds.
The Authority shall notify the Trustee of the defeasance of any Bonds. The Trustee may
rely on any notice provided to it by the Authority pursuant to this Section 9.1. However, the
Trustee may in its discretion request that the Authority provide to the Trustee (a) an opinion of
Bond Counsel stating that the defeased Bonds are no longer deemed Outstanding under this
Indenture and/or (b) verification by an Accountant acceptable to the Trustee of the conformity
of the trust account with the provisions of this section.
9.2 Discharge of Indenture. The obligations of the Trustee hereunder shall remain
in effect with respect to all Bonds until the principal of and premium, if any, and interest on all
Bonds shall have been paid in full or discharged, notwithstanding that the lien of this Indenture
may have been discharged with respect to some of the Bonds pursuant to Section 9.1. Any
money held by the Trustee after payment or discharge of principal of and interest on all of thr
Bonds and all amounts due to the Trustee hereunder shall be free from the trust hereof and,
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except for any money held in the Rebate Fund, shall promptly thereafter be transferred to the
City to the extent certified to the Trustee by the City as amounts owed to the City under the
Contingent Loan Agreement, and then to the Authority, and the Trustee shall be released and
discharged with respect thereto. Upon payment or discharge of the Bonds in full, the Trustee
shall assign all of its rights and interest in the Deed of Trust to the City if amounts are owed to
the City under the Contingent Loan Agreement.
Neither the Trustee nor the Bond Registrar shall be responsible for accounting for, or
paying to, any Bondowner any return on or benefit from money held for the payment of
unredeemed Bonds or outstanding checks, and no calculation of the same shall affect or result
in any offset against fees and expenses due to the Trustee or the Bond Registrar under this
Indenture.
9.3 Nonpresentment of Bonds. In the event any Bond shall not be presented for
payment when the principal thereof becomes due, either at maturity or at the date fixed for
redemption thereof or otherwise, if funds sufficient to pay the principal and interest accrued
thereon to such date shall have been made available to the Bond Registrar for the benefit of the
Owner thereof, the Bond Registrar shall hold such principal and interest accrued thereon to such
date, without liability to the Owner for further interest thereon, for the benefit of the Owner of
such Bond, for a period of one year from the date such Bond shall have become due, either at
maturity or upon earlier redemption or otherwise, and thereafter the Bond Registrar shall remit
such funds to the Authority unless otherwise required by the Uniform Unclaimed Property Act,
RCW 63.29, as amended, or its successor. In the event the Uniform Unclaimed Property Act,
as amended, or its successor, should require by law other action to be taken by the Bond
Registrar, then the Bond Registrar shall comply with such law and this section shall be deemed
amended After remittance as provided herein, the Bond Registrar's liability for payment to the
Owner of such Bond shall forthwith cease, terminate and be completely discharged and thereafter
the Owner shall be restricted exclusively to his or her rights of recovery provided under the
Uniform Unclaimed Property Act.
ARTICLE X
AMENDMENT OF INDENTURE
10.1 Amendments to Indenture.
(1) This Indenture shall not be supplemented or amended in any respect
subsequent to the initial issuance of the Bonds, except as provided in and in accordance with and
subject to the provisions of this section.
(2) The Authority and the Trustee may from time to time and at any time,
without the consent of or notice to the Owners of the Bonds but with the consent of the City if
so required by the Contingent Loan Agreement, enter into Supplemental Indentures for the
following purposes:
(a) to cure any formal defect, omission, inconsistency or ambiguity in
this Indenture in a manner not adverse to the Owner of any Bond;
(b) to impose upon the Trustee (with its consent) for the benefit of' the
Owners of the Bonds any additional rights, remedies, powers, authority, security, Liabilities or
duties which may lawfully be granted, conferred or imposed and which are not contrary to or
inconsistent with this Indenture or the rights of the Trustee hereunder as theretofore in effect;
(c) to add to the covenants and agreements of, and limitations and
restrictions upon, the Authority in this In ienture other covenants, agreements, limitations and
restrictions to be observed by the Authority which are not contrary to or inconsistent with this
Indenture as theretofore in effect;
(d) to confirm, as further assurance, any pledge under, and the
subjection to any claim, lien or pledge created or to be created by, this Indenture of any other
money, securities or funds;
(e) to comply with any future federal law, regulation or interpretation
to prevent the occurrence of an event that in the opinion of Bond Counsel would lead to a
Determination of Taxability;
(f) to authorize different denominations of the Bonds and to make
correlative amendments and modifications to this Indenture regarding exchangeability of Bonds
of different Authorized Denominations, redemptions of portions of Bonds of particular
Authorized Denominations and similar amendments and modifications of a technical nature;
(g) to make such changes as are required to provide for the conversion
of the Bonds to fully immobilized form;
(h) to make changes required in connection with the issuance of
Additional Bonds;
(i) to make such changes as are required by the Rating Agency to
obtain or maintain a rating for the Bonds;
(j) to make such changes as are elsewhere expressly permitted by this
Indenture, including but not limited to amendments to the continuing disclosure undertaking of
the Authority made in Section 6.6; and
(k) to » odify, alter, amend or supplement this Indenture in any other
respect which is not materially adverse to the Owners of the Bonds and which does not involve
a change described in Section 10.1(3).
Before the Authority and the Trustee shall adopt any such Supplemental Indenture
pursuant to this subsection or simultaneously with such adoption, there shall be or have been
delivered to the Authority and the Trustee an opinion of Bond Counsel, stating that such
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Supplemental Indenture is authorized or permitted by this Indenture and will, upon the execution
and delivery thereof, be valid and binding upon the Authority in accordance with its terms and
will not cause the interest on the Bonds to be included in gross income of the Owners for federal
income tax purposes.
(3) (a) Except for any Supplemental Indenture entered into pursuant to
Section 10.1(2), subject to the terms and provisions contained in this Section 10.1(3) and not
otherwise, the Owners of not less than a majority in aggregate principal amount of Bonds then
Outstanding shall have the right from time to time to consent to and approve the entering into
by the Authority and the Trustee of any Supplemental Indenture deemed necessary or desirable
by the Authority for the purpose of modifying, altering, amending, supplementing or rescinding,
in any particular, any of the terms or provisions contained in this Indenture; except that, unless
approved in writing by the Owners of all Bonds then outstanding, nothing contained in this
section shall permit, or be construed as permitting.
(i) a change in the times, amounts or currency of payment
of the principal of or interest on any outstanding Bond, or a reduction in the
principal amount or redemption price of any outstanding Bond or a change in the
method of redemption or redemption price of any outstanding Bond, or
(ii) a preference or priority of any Bond over any other
Bond, or
(iii) a reduction in the aggregate principal amount of
Bonds, the consent of the Owners of which is required for any such Supplemental
Indenture, or
(iv) the creation of any lien or pledge of Project Revenues
(other than the lien of any Additional Bonds or any bonds issued to defease Bonds
pursuant to Section 9.1) ranking prior to OT on a parity with the lien of the
Bonds, or
(v) the modification of any of the provisions of this
Section 10.1.
(b) If at any time the Authority shall notify the Trustee in writing of
its desire to enter into any Supplemental Indenture for any of the purposes of this Section
10.1(3), the Trustee shall, within 30 days of its receipt of such notice, cause notice of the
proposed Supplemental Indenture to be given by first class mail, postage prepaid, to the City,
if the consent of the City is required by the Contingent Loan Agreement, and to all Owners of
the then outstanding Bonds and to the Rating Agency, if any. Such notice shall briefly set forth
the nature of the proposed Supplemental Indenture, shall request the consent of each Bondowner
and shall state that a copy of the proposed Supplemental Indenture is on file at the office of the
Trustee for inspection by all Owners of outstanding Bonds.
007.445 02
-48-
(c) Within four weeks after the date of the mailing of such notice, the
Authority and the Trustee may enter into such Supplemental Indenture substantially in the form
described in such notice, but only if there shall have first been or is simultaneously delivered
to the Trustee (i) the required consents, in writing, of the Owners of at least a majority of the
aggregate principal amount of the Bonds Outstanding, and (ii) an opinion of Bond Counsel,
stating that such Supplemental Indenture is authorized or permitted by this Indenture and, upon
the execution and delivery thereof, will be valid and binding upon the Authority in accordance
with its terms and will not cause interest on. the Bonds to be includable in gross income of the
Owners for federal income tax purposes.
(d) If the Owners of not less than the percentage of Bonds required by
this Section 10.1(3) shall have consented to and approved the execution and delivery thereof as
provided herein, no Owner of any Bond shall have any right to object to the adoption of such
Supplemental Indenture, or to object to any of the terms and provisions contained therein or the
operation thereof, or in any manner to question the propriety of the executions thereof, or to
enjoin or restrain the Authority or the Trustee from entering into the same or from taking any
action pursuant to the provisions thereof. Any written consent to a permitted amendment may
be embodied in and evidenced by one or any number of concurrent written instruments of
substantially similar tenor signed by Bondowners in person or by an agent duly appointed in
writing, and such consent shall become effective when such insurument or instruments are
delivered to the Authority or the Trustee.
(4) Proof of the execution of any such consent or of a writing appointing any
such agent shall be sufficient for any purpose and shall be conclusive in favor of the Authority
if made in the following manner: the fact and date of the execution by any Person of any such
consent or appointment may be proved by the affidavit of any witness of such execution or by
the certificate of any notary public or other officer authorized by law to take acknowledgements
of deeds, certifying that the Person signing such consent or appointment acknowledged to him
the execution thereof. The fact and date of execution of such consent or appointment may also
be proved in any other manner which the Authority may deem sufficient; but the Authority may
nevertb.'ess, in its discretion, require further proof in cases where it deems further proof
desirab, :. Any consent by the Owner of any Bond shall bind any future Owner of the same
Bond with respect to any Supplemental Indenture executed by the Authority pursuant to such
consent.
(5) Upon the execution and delivery of any Supplemental Indenture pursuant
to the provisions of this Section 10.1, this Indenture shall be, and be deemed to be, modified
and amended in accordance therewith, and the respective rights, duties and obligations under this
Indenture of the Authority, the Trustee and all Owners of Bonds then Outstanding shall
thereafter be determined, exercised and enforced under this Indenture subject in all respects to
such modifications and amendments.
10.2 Notice of Amendment. The Trustee shall notify or cause the Bond Registrar to
notify the Bondowners and the Rating Agency, if any, by mail of all amendments made to this
Indenture whether or not such amendment required the consent of Bondowners,.
007344 5 o:
-49-
ARTICLE XI
MISCELLANEOUS
11.1 Severability. If any provision of this Indenture shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction
or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of
any constitution or statute or rule of public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or provisions contained
herein invalid, inoperative or unenforceable to any extent whatsoever. The invalidity of any one
or more phrases, sentences, clauses or paragraphs contained in the Indenture shall not affect the
remaining portions of the Indenture or any part thereof.
11.2 Payments Due on Saturdays, Sundays and Holidays. In any case where the date
of payment of principal of the Bonds, whether at the stated maturity thereof, on a date fixed for
redemption or otherwise, or payment of interest thereon, is not a Business Day then such
payment need not be made on such date but may be made on the next succeeding Business Day
with the same force and effect as if made on the date of maturity or redemption or the date such
interest was due, as the case may be, and no interest shall accrue for the period from and after
such date.
11.3 Successor Is Deemed Included in All References to Predecessor. Whenever in this
Indenture either the Authority or the Trustee is named or referred to, such reference shall be
deemed to include the successors or assigns thereof, and all the covenants and agreements
contained in this Indenture by or on behalf of the Authority and the Trustee shall bind and inure
to the benefit of the respective successors and assigns thereof whether so expressed or not.
11.4 Limitation of Rights to Parties and Bondowners. Nothing expressed or implied in
this Indenture or in the Bonds is intended or shall be construed to give to any Person other than
the Authority, the Trustee and the Owners of the Bonds any legal or equitable right, remedy or
claim under or in respect of this Indenture or any covenant, condition or provision contained
herein or in the Bonds, and all such covenants, conditions and provisions are and shall be held
to be for the sole and exclusive benefit of the Authority, the Trustee and the Owners of the
Bonds.
11.5 Waiver of Notice. Except as otherwise provided herein, whenever in this Indenture
the giving of notice by mail or otherwise is required, the giving of such notice may be waived
in writing by the Person entitled to receive such notice and in any such case the giving or receipt
of such notice shall not be a condition precedent to the validity of any action taken in reliance
upon such waiver.
11.6 Notices. All notices to Bondowners shall be given by first class mail. Any notice
to or demand upon the following parties shall be given by registered or certified mail, return
receipt requested, or overnight express delivery, as follows, or to such other address as is
specified by the Authority, the City, the Rating Agency or the Trustee to the others in writing:
o 73445 m
-50-
If to the Authority, to:
If to the Trustee, to:
If to the City, to:
If to the Rating Agency, to:
Housing Authority of the City
of Yakima
110 Fair Avenue:
Yakima, Washington 98901
Attn: Executive Director
[ADDRESS OF TRUSTEE]
Atm: ____
City of Yakima
129 N 2nd Street
Yakima, Washington 98901
Atm: Director of Community and
Economic Development
Moody's Investors Service, Inc.
99 Church Street, 10th Floor
New York, New York 10007
Attn: Nicole Johnson
11.7 Waiver of Personal Liabilitx. No commissioner, officer, agent or employee of the
Authority or the Trustee nor any person executing the Bonds shall be individually or personally
liable for the payment of the principal of or premium, if any, or interest on the Bonds or be
subject to any personal liability or accountability by reason of the issuance thereof; but nothing
contained herein shall relieve any such comrnitsioner, officer, agent, employee or other person
from the performance of any official duty provided by law or by this Indenture.
11.8 Applicable Provisions of I. This Indenture shall be governed by and construed
in accordance with the laws of the State of Washington without regard to the conflict or choice
of laws provisions thereof.
11.9 Execution in Several Counter arts. This Indenture may be executed in counterparts
and each such counterpart shall for all purposes be deemed to be an original, and all such
counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed,
shall together constitute but one and the same instrument.
11.10 Notice to Rating Agency. The Trustee shall give written notice to the Rating
Agency, if any, within 10 days after the Trustee receives notice of their occurrence, of the
replacement of the Trustee, (such notice to be given by the successor trustee) and any
redemption or defeasance of all the Bonds, and shall give prior written notice to the Rating
Agency of any change in this Indenture. Unless otherwise directed by the Rating Agency, notice
shall be mailed to the address provided in Section 11.6.
IN WITNESS WHEREOF, the Housing Authority of the City of Yakima has caused thi
Indenture to be signed in its name by the Chair of its Board of Commissioners and attested by
0073445 02
-51-
its Secretary -Treasurer and , as Trustee [and Bond Registrar] hereunder and in
acceptance of the trusts created hereunder, bas caused this Indenture to be signed in its corporate
name and by its officer thereunder duly authorized, all as of the day and year first above written.
HOUSING AUTHORITY OF THE CITY OF YAK]MA
ATTEST:
Secretary -Treasurer
W71445.02
By
Chair, Board of Commissioners
as Trustee [and Bond Registrar]
By
Title:
-52-
EXHIBIT B
PERMITTED INVESTMENTS FQR
HOUSING AUTHORITIES I THE STATE OF WASHINGTOIv
Housing authorities may invest their funds in any investments that are legal for savings banks.
RCW 35.82.070(6). Savings banks may invest in any of the following:
• In bonds or other obligations of or guaranteed by the United States of America
or the Dominion of Canada (if payable in the United States in U.S. funds). RCW
33.24.020;
• Except as limited by regulation, in obligations of the United States either directly
or in the form of securities of, or other interests in, an open-end or closed-end
management -type investment company or investment trust registered under the
Federal Investment Company Act of 1940, if (1) the portfolio of the investment
company or investment trust is limited to obligations of the United States and to
repurchase agreements fully collateralized by such obligations, and (2) the
investment company or investment trust takes delivery of the collateral for any
repurchase agreement either directly or through an authorized custodian. RCW
33.24.025;
• In bonds or other interest-bearing obligations of the State of Washington or any
agency thereof. RCW 33.24.030;
• In bonds or other interest-bearing obligations of any other state of the United
States, upon which there is no existing default and upon which there has been no
default for more than ninety days within ten years immediately preceding the
investment. RCW 33.24.040;
• In valid general obligation warrants or bonds of arty city, town, county, school
district, port district or other municipal corporation in the State of Washington.
RCW 33.24.050;
• In valid general obligation warrants or bonds or any city, county, school district,
port district or other municipal corporation in the United States, having a
population of not less than 50,000, that has not defaulted in the payment of
interest or principal on any general obligation within the last ten years, and which
warrants or bonds are rated not less than BAA by Moody's Investors Service,
Inc. or the equivalent. RCW 33.24.060;
• In obligations issued or guaranteed by any multi -lateral development bank in
which the United States Government formally participates. RCW 33.24.065;
075445 CC
B-1
• In revenue bonds of any city, town, district or political subdivision of the State
of Washington for which the revenues of a utility or revenue-producing facility
are irrevocably pledged. RCW 33.24.070;
• In the light, water or sewer revenue bonds of any city or other municipal
corporation in the United States having a population of at least 50,000, which has
not defaulted in the payment of interest or principal within the last ten years and
for the payment of which the entire revenue of the issuer's light, water or sewer
system, less maintenance and operating costs, is irrevocably pledged. RCW
33.24.070;
• In the bonds of any local improvement district of any city in the State of
Washington (except bonds issued for an improvement consisting of grading only),
the ultimate payment of which is guaranteed by the municipality, but only if
one-half of the lots in the district are improved with revenue-producing houses or
other improvements. RCW 33.24.080;
• In obligations of any federal home loan bank, the Homeowners' Loan
Corporation, any federal Iand bank, the Federal Savings & Loan Insurance
Corporation, the Federal Housing Administration, the Federal National Mortgage
Association, or any other instrumentality of the federal government or any state
or federal agencies organized under the laws of the United States or the State of
Washington authorized to lend to or act as a fiscal agency for or insurer of a
savings and loan association. RCW 33.24.090;
• In loans, mortgages or other obligations secured by real property. RCW
33.24.100,
• In the bonds or other obligations of a metropolitan municipal corporation
("Metro"). RCW 35.58.510;
• In bonds and other obligations issued by a municipality of the State of
Washington which are secured by an agreement between the issuer and the federal
government under which the federal government agrees to lend to the issuer,
prior to the maturity of such obligations, money in an amount sufficient to pay
the principal of and interest on those obligations to maturity. RCW 35.81.110;
• In designated qualified public depositories or in certificates notes or bonds of the
United States or other obligations of the United States or its agencies or of any
corporation wholly owned by the government of the United States. RCW
36.29.020;
• In bankers' acceptances purchased on the secondary market, in Federal Home
Loan Bank notes and bonds, Federal Land Bank bonds, and Federal National
Mortgage Association notes, debentures and guaranteed certificates of
participation, or the obligations of any other government-sponsored corporation
oo 45 02
B-2
whose obligations are or may become eligible as collateral for advances to
member banks as determined by the Board of Governors of the Federal Reserve
System. RCW 36.29.020; and
• In notes or bonds secured by FHA -insured mortgages, in FAA debentures, in the
bonds of the Homeowners Loan Corporation, and in the bonds of any other
corporation which is or may be created by the United States as a governmental
agency or instrumentality. RCW 39.60.010.
arms CZ
B-3
DRAFT OF 7/19/96
HOUSING AUTHORITY OF THE CITY OF YAKIMA
RESOLUTION NO.
(NUEVA PRIMAVERA PROJECT)
A RESOLUTION authorizing the issuance of revenue bonds of the
Authority in the aggregate principal amount of not to exceed [S3,700,000] for the
purpose of providing part of the funds with which to construct an apartment
complex to be used to provide a housing project of the Authority and office space
for the Authority, and to fund a reserve for and pay costs of issuing the bonds;
determining the form, terms and covenants of the bonds; approving the forms of
a trust indenture, deed of trust, hal rdous substances agreement and contingent
loan agreement relating to the bonds; appointing a trustee and bond registrar for
the bonds; authorizing the execution and delivery of the trust indenture, the deed
of trust, the hazardous substances agreement, the contingent loan agreement, the
bonds and other agreements, documents and certificates; and authorizing the
Executive Director of the Authoriry to accept an offer from Bank of America
NW, N.A., doing business as Seafirst Bank, of Seattle, Washington, to purchase
the bonds
This document was prepared by:
FOSTER PEPPER & SHEFELMAN
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
02494'3 01
HOUSING AUTHORITY OF THE CITY OF 'YAKIMA
RESOLUTION NO.
(NUEVA PRIMAVERA PROJECT)
A RESOLUTION authorizing the issuance of revenue bonds of the
Authority in the aggregate principal amount of not to exceed [S3,700,000] for the
purpose of providing part of the funds with which to construct an apartment
complex to be used to provide a housing project of the Authority and office space
for the Authority, and to fund a reserve for and pay costs of issuing the bonds;
determining the form, terms and covenants of the bonds; approving the forms of
a trust indenture, deed of trust„ hazardous substances agreement and contingent
loan agreement relating to the bonds; appointing a trustee and bond registrar for
the bonds; authorizing the execution and delivery of the trust indenture, the deed
of trust, the hazardous substances agreement, the contingent loan agreement, the
bonds and other agreements, documents and certificates; and authorizing the
Executive Director of the Authority to accept an offer from Bank of America
NW, N.A., doing business as Seafirst Bank, of Seattle, Washington, to purchase
the bonds.
WHEREAS, the Housing Authority of the City of Yakima (the "Authority") seeks to •
encourage the provision of long-term housing for low-income persons residing in the City of
Yakima. Washington; and
WHEREAS. RCW 35.82 070(2) provides that a housing authority may acquire and
operate housing projects, and
WHEREAS, RCW 35.82.070(5) provides that a housing authority may pledge any
interest in real property; and -
V4'HEREAS, RCW 35.82.020(11) and 35.82.130 together provide that a housing authority
may issue bonds, notes or other obligations for any of its corporate purposes; and
WHEREAS, the Authority intends to construct a 60 -unit apartment complex, including
office space to be used by the Authority, to be known as the Nueva Primavera Apartments (the
O.a94-3 0:
"Project"), located on certain property owned by the Authority in the City of Yakima,
Washington, which the Authority intends to use to provide a housing project of the Authority;
and
WHEREAS, the Board of Commissioners of the Authority deems it necessary and
advisable and in the best interest of the Authority to issue its revenue bonds (the "Bonds") in the
aggregate principal amount of not to exceed [$3,700,000] to provide all or part of the funds
required to construct the Project and to fund a reserve for and pay costs of issuing the Bonds;
and
WHEREAS, the City of Yakima, Washington, has offered to lend money to the Authority
if and to the extent necessary, together with revenue from the rental of the Project, to make up
any deficiencies in the amount required to pay principal of and interest on the Bonds as the same
shall become due, and will enter into a contingent loan agreement with the Authority for such
purpose at or before the time the Bonds are issued by the Authority; and
WHEREAS, it is anticipated that Bank of America NW, N.A., doing business as Seafirst
Bank. Seattle, Washington, will offer to purchase the Bonds on the terms set forth in this
resolution, NOW, THEREFORE,
BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE HOUSING
AUTHORITY OF THE CITY OF YAKIMA as follows:
Section 1. Definitions. As used in this resolution, the following words have the
following meanings
"Authority" means the Housing Authority of the City of Yakima, a public body
corporate and politic duly organized and existing under and by virtue of the laws of the State
of Washington.
0249 01
-2-
"Bond Registrar" means the entity serving as registrar, authenticating agent and
paying agent under the Indenture, initially [the Trustee].
"Bonds" means the Housing Revenue Bonds, 1996 (Nueva Primavera Project),
of the Authority issued pursuant to, under the authority of and for the purposes provided in this
resolution and the Indenture.
"City" means the City of Yakima, Washington.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contingent Loan Agreement" means the Contingent Loan Agreement between
the City and the Authority relating to the Bonds.
"Deed of Trust" means the :Deed of Trust, Assignment of Rents and Leases and
Security Agreement encumbering the Project securing payment of the Bonds and the Authority's
obligations under the Contingent Loan Agreement.
"Hazardous Substances Agreement" means the Hazardous Substances
Warranty /Indemnity Agreement among the Authority, the City and the Trustee relating to the
Trustee's and the City's service as beneficiary under the Deed of Trust.
"Indenture" means the Trust Indenture between the Authority and the Trustee
relating to the Bonds.
"Project" means the [60 -unit] apartment complex to be known as the Nueva
Primavera Apartments, the construction by the Authority and rental of at least 50% of the
dwelling units of which to low-income persons is declared by this resolution to be a housing
project of the Authority.
"Trustee" means the entity serving as trustee under the Indenture, initially
0:499''3 01
-:3
All capitalized terms used but not defined herein shall have the meanings assigned to
them in the Indenture.
Section 2. Authorization of Bonds and Application of Proceeds. The Authority shall
issue the Bonds for the purpose of providing all or part of the funds with which to construct the
Project, including the Authority office space therein, which construction and the rental of at least
50% of the dwelling units of the Project to low-income persons is declared to be a housing
project and corporate purpose of the Authority. All proceeds of the Bonds shall be used, at the
direction of the appropriate officers of the Authority and in accordance with the Indenture, to
pay al' or a portion of the costs of constructing the Project and funding a reserve for and issuing
the Bonds. The Board finds that it is in the best interest of the Authority to issue the Bonds for
the purposes set forth in this resolution.
Section 3. Description of Bonds. The Bonds shall be called the Housing Revenue
Bonds. 1996 (Nueva Primavera Project), of the Authority; shall be issued in registered form;
and shall be in the aggregate principal amount of not to exceed [$3,700,000]. The Bonds shall
be dated such date, shall be in such denominations, shall bear interest payable on such dates and
at such rates (which shall not exceed a weighted average true interest cost of % per annum),
shall mature at such times and in such amounts, shall have such prepayment or redemption
provisions and shall have such other provisions consistent with the purposes of this resolution
as are set forth in the Indenture, which document is incorporated herein by this reference
Section 4. Security for the Bonds. The Bonds shall be secured by a pledge of the Net
Operating Income from the Project, Investment Earnings and General Revenues of the Authority,
and by other assets, including amounts received from the City pursuant to the Contingent Loan
02499"; 01
-4-
Agreement, all as defined and set forth in the Indenture. Additionally, the Bonds shall be
secured by the Deed of Trust.
The Bonds shall not be a debt of the City of Yakima, the State of Washington or any
political subdivision thereof, and the l3onds shall so state on their face. Neither the City of
Yakima, the State of Washington nor any political subdivision thereof (except the Authority,
from the sources described herein and in the Indenture) shall be liable for payment of the Bonds
nor in any event shall principal of, premium, if any, on and interest on the Bonds be payable
out of any funds or assets other than those pledged to that purpose by the Authority herein and
in the Indenture. The Authority does not have taxing power.
Neither the Authority nor any of the Commissioners, officers or employees of the
Authonty shall be personally liable for the payment of the Bonds.
Section 5. Form and Execution of Bonds. The Bonds shall be in a form consistent with
the provisions of this resolution, the Indenture and state law, shall bear the manual or facsimile
sis?narures of the Chau of the Board and Secretary -Treasurer of the Authority and shall be
impressed with the seal of the Authority or shall bear a facsimile thereof. The Bonds shall be
authenticated by the Bond Registrar as set forth in the Indenture. No Bond shall be valid for
any purpose until so authenticated.
The authorized signing of a Certificate of Authentication shall be conclusive evidence that
the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to
the benefits of this resolution.
Section 6 Preservation of Tax Exem,ation for Interest on Bonds. The Authority
covenants that it will take all actions necessary to prevent interest on the Bonds from being
included in gross income for federal income tax purposes, and it will neither take any action nor
02494.2, 01
-5-
make or permit any use of proceeds of the Bonds or other funds of the Authority treated as
proceeds of the Bonds at any time during the term of the Bonds which would cause interest on
the Bonds to be included in gross income for federal income tax purposes. The Authority also
covenants that, to the extent arbitrage rebate requirements of Section 148 of the Code are
applicable to the Bonds, it will take all actions necessary to comply (or to be treated as having
complied) with those requirements in connection with the Bonds, including the calculation and
payment of any penalties that the Authority has elected to pay as an alternative to calculating
rebatable arbitrage, and the payment of any other penalties if required under Section 148 of the
Code to prevent interest on the Bonds from being included in gross income for federal income
tax purposes.
The Authority certifies that it has not been notified of any listing or proposed listing by
the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications
may not be relied upon
Section 7. Designation of Bonds as "Qualified Tax -Exempt Obligations". The Authority
has determined and certifies that (a) the Bonds are not "private activity bonds" within the
meaning of Section 141 of the Code, (b) the reasonably anticipated amount of tax-exempt
obligations (other than private activity bonds and other obligations not required to be included
in such calculation) which the Authority and all entities subordinate to the Authority (including
any entity which the Authority controls, which derives its authority to issue tax-exempt
obligations from the Authority or which issues tax-exempt obligations on behalf of the Authority)
will issue during the calendar year in which the Bonds are issued will not exceed $10,000,000,
and (c) the amount of tax-exempt obligations, including the Bonds, designated by the Authority
as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code during
02499''3 01
-6-
the calendar year in which the Bonds are issued does not exceed $10,000,000. The Authority
designates the Bonds as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3)
of the Code.
Section 8. Bonds Negotiable. The Bonds shall be negotiable instruments to the extent
provided by RCW 62A.8-102 and 62A.8-105.
Section 9. Authorization of Documents and Execution 'Merle The Board approves the
Indenture, the Deed of Trust, the Hazardous Substances Agreement and the Contingent Loan
Agreement substantially in the forms presented to the Board with this resolution, with such
changes as the Executive Director of the Authority shall deem necessary or appropriate, and
appoints as Trustee [and as Bond Registrar] for the Bonds. The
Authority authorizes and approves the execution and delivery of, and the performance by the
Authority of its obligations contained :in, the Bonds and this resolution and the consummation
by the Authonty of all other transactions contemplated by this resolution in connection with the
issuance of the Bonds. The Executive Director of the Authority is authorized and directed to
do everything necessary for the issuance, execution and delivery of th
nds, the Indenture,
the Deed of Trust, the Hazardous Substances Agreement, the Contingent Loan Agreement and
any other documents reasonably required to be executed in connection with the issuance of the
Bonds, and to ensure the proper use and application of the proceeds of the Bonds. Any action
required by this resolution to be taken by the Chair of the Board or Executive Director or
Secretary -Treasurer of the Authority may in the absence of such person be taken by the duly
authorized acting Chair of the Board or acting Executive Director or Secretary -Treasurer of the
Authority, respectively.
0:499"3 01
Section 10. Approval of Transaction. It is anticipated that Bank of America NW, N.A.,
doing business as Seafirst Bank, of Seattle, Washington, will present a purchase contract to the
Authority offering to purchase the Bonds under the terms and conditions provided herein and
therein. The Board finds that entering into such a purchase contract is in the Authority's best
interest and therefore authorizes the Executive Director of the Authority to accept such offer.
The Bonds will be printed at the Authority's expense and will be delivered to the
purchaser of the Bonds, with the approving legal opinion of Foster Pepper & Shefelman,
municipal bond counsel of Seattle, Washington, regarding those Bonds printed on each definitive
Bond Bond counsel shall not be required to review and shall express no opinion concerning
the completeness or accuracy of any official statement, offering circular or other sales or
disclosure material issued or used in connection with the Bonds, and bond counsel's opinion
shall so state.
The proper Authority officials are authorized and directed to do everything necessary for
the prompt delivery of the Bonds to the purchaser thereof and for the proper application and use
of the proceeds of the sale thereof.
Section 11 Temporary Bond Pending the printing, execution and delivery to the
purchaser thereof of defirutive Bonds, the Authority may cause to be executed and delivered to
such purchaser a single temporary Bond in the total principal amount of the Bonds. The
temporary Bond shall bear the same date of issuance, interest rates, principal payment dates and
terms and covenants as the definitive Bonds, shall be issued as a fully registered Bond in the
name of the Bond purchaser, and otherwise shall be in a form acceptable to such purchaser. The
temporary Bond shall be exchanged for definitive Bonds as soon as they are printed,
authenticated and available for delivery
0249973 of
-8-
Section 12. Ratification and Confirmation. Any actions of the Authority or its officers
prior to the date hereof and consistent with the terms of this resolution are ratified and
confirmed.
Section 13. Effective Date. This resolution shall be in full force and effect from and
after its adoption and approval.
ADOPTED by the Board of Commissioners of the Housing Authority of the City of
Yakima at a [regular] open public meeting thereof this 24th day of July, 1996.
HOUSING AUTHORITY OF THE CITY OF
YAKIMA
By:
ATTEST:
Secretary -Treasurer
02499"3 01
Chair
CERTIFICATE
I, the undersigned, the duly chosen, qualified and acting Executive Director and
Secretary -Treasurer of the Housing Authority of the City of Yakima (the "Authority") and
keeper of the records of the Authority, CERTIFY:
1. That the attached Resolution No. (the "Resolution") is a true and correct
copy of the resolution of the Board of Commissioners of the Authority, as finally passed at a
meeting of the Authority held on the 24th day of July, 1996, and duly recorded in the minute
books of the Authority.
2 That such meeting was duly convened and held in all respects in accordance with
law, and, to the extent required by law, due and proper notice of such meeting was given; that
a legal quorum was present throughout the meeting and a legally sufficient number of members
of the Board of Commissioners of the Authority voted in the proper manner for the adoption of
the Resolution; that all other requirements and proceedings incident to the proper adoption or
passage of the Resolution have been duly fulfilled, carried out and otherwise observed, and that
1 am authorized to execute this Certificate.
IN WITNESS WHEREOF, I have hereunto set my hand this day of July, 1996.
Executive Director and Secretary -Treasurer of the
Authority
O2499"3 0:
DRAFT OF JULY 19, 1996
Requested By and
When Recorded Mail To:
Foster Pepper & Shefelman
1111 Third Avenue, Suite 3400
Seattle, WA 98101
Attention: Deborah S. Winter
DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
(NUEVA PRIMAVERA)
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES AND SECURITY
AGREEMENT (this "Deed of Trust") is made as of August 1, 1996, by Housing Authority of
the City of Yakima, a public body corporate and politic of the State of Washington, as Grantor
("Grantor" or the "Authority"), whose mailing address is 110 Fair Avenue, Yakima, Washington
98901. The Trustee is Valley Title Guarantee, whose mailing address is P. O. Box 1625,
Yakima, Washington 98904. The beneficiaries are , as trustee for the Bonds
referred to below (the "Bond Trustee"), whose mailing address is
, Washington 98, and the City of Yakima, Washington (the "City"),
whose mailing address is 129 N Second Street, Yakima, Washington 98901 (collectively and
individually, "Beneficiary"). For purposes of Article 9 of the Uniform Commercial Code
(RCW 62A.9) (the "UCC"), the Grantor is the Debtor, the Beneficiary is the Secured Party and
this Deed of Trust constitutes a Financing Statement.
Grantor hereby irrevocably GRANTS, TRANSFERS, CONVEYS and ASSIGNS to
Trustee. IN TRUST, WITH POWER OF SALE, all of Grantor's present and future estate,
rights title, claim, interest and demand, either m law or in equity, of, in and to the following
property (the "Property"):
(a) The real property and all rights to the alleys, streets and roads adjoining or
abutting the real property described on Exhibit "A" attached hereto (the "Realty");
(b) All buildings, improvements and tenements now or hereafter located on the
Realty;
(c) All fixtures and articles of property now or hereafter attached to, or used or
adapted for use in the ownership, development, operation or maintenance of the buildings,
improvements, and Realty (whether such items be owned absolutely or subject to any
title -retaining or security instrument, or be otherwise used or possessed, but excluding leased
property located on the Realty), including without limitation all heating, cooling, air
conditioning. ventilating, refrigerating, plumbing, generating, power, lighting, laundry,
maintenance, incinerating, lifting, cleaning, fire prevention and extinguishing, security and
0250019 01
access control, cooking, gas, electric and communication futures, equipment and apparatus, a
engines, motors, conduits, pipes, pumps, tanks, ducts, compressors, boilers, water heaters ano
furnaces, all ranges, stoves, disposers, refrigerators and other appliances, all escalators and
elevators, baths, sinks, all cabinets, partitions, mantels, built-in mirrors, window shades, blinds,
screens, awnings, storm doors, windows and sashes, all carpeting, underpaddirig, floor covering,
paneling and draperies, all furnishings of public spaces, halls and lobbies, and all shrubbery and
plants; all of which items shall be deemed pant of the real property and not severable wholly or
in part without material injury to the freehold;
(d) All assessments, all access, air and development rights, all minerals and oil, gas
and other hydrocarbon substances, all royalties, all water, water rights and water stock, and all
other rights, hereditaments, privileges, permits, licenses, franchises and appurtenances now or
hereafter belonging or in any way appertaining to the Realty;
(e) All of the rents, revenues, issues, profits and income of the Property, and all
rights, title and interests of Grantor in and to all present and future leases and other agreements
for the occupancy or use of all or any part of the Realty, and all right, title and interest of
Grantor thereunder, including without limitation all cash or security deposits, advance rentals
and deposits or payments of similar nature; SUBJECT, HOWEVER, to the assignment of rents
and other property to Beneficiary herein contained;
(f) All of Grantor's rights, title and interests in all intangible personal property used
or useful in connection with the ownership, development, operation or maintenance of tl
buildings, improvements and Realty, including without limitation all permits, licenses an,
franchises with respect to the Property, the exclusive right to use of any trade names, all
contract rights (including, but not limited to, architectural, engineering and management
agreements), all accounts receivable, leases and rental agreements, escrow accounts, insurance
policies, deposits (including but not limited to tenant deposits), instruments, documents of title,
general intangibles and business records pertaining to the buildiings, improvements and Realty
excluding only cash on hand and in bank accounts;
(g) All of Grantor's rights, title and interests in materials, supplies and other goods,
collectively referred to as "materials" now owned or hereafter acquired, wherever located,
whether in the possession of Grantor or any warehouseman or bailee, or any other person,
purchased for use in the construction or furnishing of improvements on the Realty, but excluding
leased property located on the -Realty, together with any documents covering such materials, all
contract rights and general intangibles relating to such materials and proceeds of such materials,
documents, contract rights and general intangibles;
(h) All other rights and privileges of every kind included within the Property, and all
present and future contracts and policies of insurance which insure the Property or any part
thereof, real or personal (whether or not Beneficiary is a loss payee thereof); and
(i) All products and proceeds of the foregoing property.
TO SECURE THE FOLLOWING (collectively the "Secured Obligations"):
0250079 o:L
(1) Payment of the principal of and premium, if any, and interest on the Authority's
$ Housing Revenue Bonds, 1996 (Nueva Primavera Project) (the "Bonds") issued
pursuant to Resolution No. of the Authority adopted on July 24, 1996 (the "Resolution"),
and the Trust Indenture dated as of August 1, 1996, between the Authority and the Bond Trustee
(the "Indenture");
(2) Payment of all amounts due under any loans made pursuant to the Contingent
Loan Agreement (the "Contingent Loan Agreement") dated as of August 1, 1996, between the
Authority and the City;
(3) The performance of the other covenants and agreements of Grantor contained in
the Resolution, the Indenture and the other Bond Documents (as defined below);
(4) Payment of all sums advanced to protect the security of this Deed of Trust,
together with interest thereon as herein provided;
(5) Payment of all other sums which are or which may become owing under the
Indenture and the other Bond Documents; and
(6) Performance of all of Grantor's other obligations under the Indenture and the
Bond Documents.
As used herein, the term "Bond Documents" means this Deed of Trust, the Indenture,
the Resolution, the Contingent Loan Agreement, any UCC Financing Statements executed in
connection herewith, and any other instrument or document (other than the Hazardous
Substances Agreement) securing the Bonds or the Loans made under the Contingent Loan
Agreement or otherwise executed in connection therewith, together with all modifications,
extensions, renewals and replacements thereof.
This Deed of Trust shall be effective, from the date of its recording, as a financing
statement filed as a fixture filing with respect to all items of property described above that are
or are to become fixtures. With respect to such security interest or interests, Beneficiary shall
have all rights and remedies provided for in this Deed of Trust or otherwise available to
Beneficiary and all rights and remedies of a secured party on default of a debtor under the UCC
(whether or not the UCC applies to the affected property). If Beneficiary shall so require,
Grantor in the event of default shall make such collateral available to Beneficiary at a place
designated by Beneficiary that is reasonably convenient to all parties. Grantor shall execute such
instruments and documents as Beneficiary from time to time may require to evidence further or
perfect any rights or security interests.
GRANTOR HEREBY REPRESENTS, WARRANTS, COVENANTS AND AGREES AS
FOLLOWS:
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ARTICLE 1
TITLE AND USE
1.1 Warranty of Title. Grantor covenants that it is lawfully seized of the estate hereby
conveyed and has the right to grant, convey and assign the Property; that no other liens or
encumbrances superior to this Deed of 'Trust will be created or suffered to be created by Grantor
during the life of this Deed of Trust without the prior written consent of Beneficiary; and that
Grantor will forever warrant and defend the Property unto Beneficiary against all claims and
demands of any other person whomsoever. As to any mortgages, deeds of trust, real estate
contracts or other liens presently existing or hereafter permitted by Beneficiary to be recorded
against the Property (the 'Liens"), Grantor expressly covenants and agrees as follows:
(i) Complete and current copies of the agreements relating to the Liens have
been or will be furnished to Beneficiary, and none of them has been or will be modified
in any way without Beneficiary's prior written consent.
(ii) Grantor is not and shall not be in default with respect to the Liens and the
outstanding balance of the Liens, as set forth in agreements relating thereto delivered to
Beneficiary, is and shall be accurate.
(iii) Grantor will fully comply with the terms of all agreemens relating to the
Liens and will deliver a copy of any notice of default or notice of non-performance with
respect to those agreements to Beneficiary.
(iv) Beneficiary has the right to contact the holder of the Liens to confirm the
status of the agreements pertaining to the Liens, and Grantor will., from time to time, at
the request of Beneficiary, request of those lienholders certificates stating that the
agreements pertaining to the Liens are in full force and effect and are unmodified and
that no notice of default thereunder has been served on Grantor, and specifying any
defaults thereunder, if any.
1.2 Non -Agricultural Use Grantor represents and warrants to Beneficiary that the
Property is not used principally for agricultural or farming purposes.
ARTICLE II
GRANTOR'S COVENANTS REPRESENTATIONS AND WARRANTIES
2.1 Payment and Performance of Secured Obligations. Grantor will pay when due
all sums which are now or which may become owing under the Bond Documents, and will pay
and perform all other Secured Obligations, including all covenants contained therein, in
accordance with their terms.
2.2 Transfer of Title. If the Property is sold pursuant to Article VIII or if Beneficiary
otherwise acquires title to the Property, Beneficiary shall have all of the rights, title and interests
of Grantor in and to any insurance policies and unearned premiums thereon and in and to the
proceeds resulting from any damage to the Property prior to such sale or acquisition
025CC'9 01
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2.3 Protection of Beneficiary's Security. Grantor will give notice to Beneficiary of
and will, at its expense, appear in and defend any action or proceeding that might affect the
Property or title thereto or the interests of Beneficiary or Trustee therein or the rights or
remedies of Beneficiary or Trustee hereunder. If any such action or proceeding is commenced
or if Beneficiary or Trustee is made a party to any such action or proceeding by reason of this
Deed of Trust, or if Grantor fails to perform any obligation on its part to be performed
hereunder, then Beneficiary and/or Trustee, each in its own discretion, may make any
appearances, disburse any sums, make any entries upon the Property and take any actions that
may be necessary or desirable to protect or enforce the security of this Deed of Trust, to remedy
Grantor's failure to perform its covenants (without, however, waiving any default by Grantor)
or otherwise to protect Beneficiary's or Trustee's interests. Grantor agrees to pay all loss,
damage, costs and expenses, including reasonable attorneys' fees, of Beneficiary and Trustee
thus incurred. This section shall not be construed to require Beneficiary or Trustee to incur any
expenses, make any appearances or take any actions.
2.4 Reimbursement of Beneficiary's and Trustee's Expenses. All amounts disbursed
by Beneficiary and Trustee pursuant to Section 2.3 or any other provision of the Secured
Obligations or this Deed of Trust to protect the security provided hereby, with interest thereon,
shall be additional indebtedness of Grantor secured by this Deed of Trust. All such amounts
shall be immediately due and payable and shall bear interest from the date of disbursement at
an interest rare of 12 % per annum, or at the maximum rate which may be collected from
Grantor on such amounts by the payee thereof under applicable law if that is less.
2.5 Hazardous Substances. As used herein, the term "Environmental Laws" means all
local, state and federal laws, ordinances, regulations, orders and reported state or federal court
decisions thereunder related to: environmental protection; the use, storage, generation,
production, treatment, emission, discharge, remediation, removal, disposal or transport of any
Ha7ardous Substance; or any other environmental matter, including but not limited to any of the
following statutes:
(i) Federal Resource Conservation and Recovery Act of 1976, as amended,
42 U.S C. Sections 6901-6991k;
(ii) Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. Sections 9601-9675;
(iii) Federal Clean Air Act, 42 U.S.C. Sections 7401-7642;
(iv) Federal Hazardous Material Transportation Control Act of 1970, as amended,
49 U.S.C. Sections 1801-1812;
(v) Federal Clean Water Act of 1977, as amended, 33 U.S.C. Sections 1251-1387;
(vi) Federal Insecticide, Fungicide, and Rodenticide Act, as amended, 7 U.S.C.
Secuons 136-136y;
025 .:0',9 c:
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(vii) Federal Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671;
(viii) Federal Safe Drinking Water Act, 42 U.S.C. Sections 300f -300i-26;
(ix) Washington Water Pollution Control Act, chapter 90.48 RCW;
(x) Washington Clean Air Act, chapter 70.94 RCW;
(xi) Washington Solid Waste Management Act, chapter 70.95 RCW;
(xii) Washington Nuclear Energy and Radiation Act, chapter 70.98 RCW;
(xiii) Washington Radioactive Waste Storage and Transportation Act,
chapter 70.99 RCW;
(xiv) Washington Hazardous Waste Disposal Act, chapter 70.105 RC'W; and
(xv) Washington Model Toxics Control Act, chapter 70.105D RCW.
The term "Hazardous Substance" means any substance or material defined or designated
as hazardous or toxic waste, hazardous or toxic material, a hazardous, toxic or radioactive
substance, or other similar term, by any Environmental Laws, and shall include any such
substance or material as may hereafter become defined or designated as a hazardous or toxic
material by any Environmental Laws.
(a) No Litigation. There is no claim, action, suit, proceeding, arbitration,
investigation or inquiry pending or, to the knowledge of Grantor, threatened against Grantor
before any federal, state. municipal, foreign or other court, or any governmental, administrative
or self-regulatory body or agency, or any private arbitration tribunal, and to the knowledge of
Grantor there neither is nor has been any complaint, order, directive, claim, citation, notice of
hen by or in favor of any governmental authority or private person with respect to (1) air
emissions. (2) spills, releases or discharges of Hazardous Substances on, in or to the Property
or surface water or groundwater affected by the Property or the sewer, septic system or waste
water treatment system servicing the Property; (3) solid or liquid waste disposal; (4) the use,
storage, generation, treatment, transportation or disposal of Hazardous Substances; (5) exposure
to airborne or friable asbestos; (6) violation of any Environmental Law; or (7) arty other
environmental, health or safety matters affecting or pertaining to Grantor or the Property.
(b) No Existin Hazardous Substances. Except as to circumstances, matters or things
that have been disclosed in writing to Beneficiary prior to the date hereof and as to which
Grantor previously has completed, or is proceeding diligently and in the ordinary course of
Grantor's activities to complete, cleanup, removal or other remedial action that has fully
remedied, or will fully remedy, all effects of any Hazardous Substances, (1) Grantor has no
knowledge of any circumstance, matter or thing existing with respect to the Property which
might give rise to any of the claims, actions or proceedings, without limitation, discussed in
paragraph (a) of this section; (2) neither Grantor nor to the knowledge of Grantor a:ny othc
02500'5 O1
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Person has stored, disposed or released in, on or about the Property any Hazardous Substances
the removal or remediation of which is or could be required, or the maintenance of which is
prohibited or penalized, by any applicable Environmental Laws, and the Property is free from
all such Hazardous Substances; (3) Grantor has not at any time disposed or caused to be
disposed at any location any Hazardous Substances generated or existing as a result of Grantor's
operation of the Property in a manner which will or could cause Grantor to be or become liable
for a fine or penalty or a monetary or performance obligation arising from or related to such
disposal; (4) to the knowledge of Grantor, Grantor has no contingent liability in connection with
the release from the Property of any Hazardous Substances into the environment; (5) Grantor
has not given any release or waiver of liability that would waive or impair any claim based on
Hazardous Substances to (A) a prior owner or occupant of the Property, (B) the owner or any
prior owner or occupant of any property leased by Grantor, or (C) any party who may be
potentially responsible for the presence of Hazardous Substances on the Property.
(c) No Future Hazardous Substances. Grantor will not knowingly cause or permit
the Property to be used to generate, manufacture, refine, transport, treat, store, handle, dispose
of, transfer, produce or process any Hazardous Substance, except for Hazardous Substances used
in the ordinary course of business in compliance with all applicable Environmental Laws, nor
shall Grantor cause or permit, as a result of any intentional or unintentional act or omission on
the part of Grantor or any of its agents, employees, contractors, tenants, subtenants, invitees or
other users or occupants of the Property, in the operation of the Property, a release of any
Hazardous Substance onto the Property or onto any other property.
(d) Compliance With Environmental Laws. Grantor will at all times in all respects
comply, and will use its best efforts to cause all tenants, subtenants and other users and
occupants of the Property to comply, with all Environmental Laws including, without limitation,
the dun to undertake the following specific actions: (1) Grantor will, at its own expense,
procure, maintain in effect, and comply with all conditions of any and all permits, licenses and
other governmental and regulatory approvals required by all Environmental Laws, including,
without (imitation, permits required for discharge of (appropriately treated) Hazardous
Substances into the ambient air or any sanitary sewers serving the Property; and (2) except as
discharged into the ambient air or a sanitary sewer in strict compliance with all applicable
Environmental Laws, all Hazardous Substances from or on the Property to be treated and/or
disposed of by Grantor will be removed and transported solely by duly licensed transporters to
a duly licensed treatment and/or disposal facility for final treatment and/or disposal (except when
applicable Environmental Laws permit on-site treatment or disposal in a sanitary landfill).
(e) Cleanup of Property. If the presence, release, threat of release, placement on or
in the Property, or the generation, transportation, storage, treatment or disposal at the Property
of any Hazardous Substance (1) gives rise to liability (including but not limited to a response
action, remedial action or removal action) under any Environmental Law, (2) causes a significant
public health effect, or (3) pollutes or threatens to pollute the environment, Grantor shall, at its
sole expense, promptly take any and all remedial and removal action necessary to clean up the
Property and mitigate exposure to liability arising from the Hazardous Substance, whether or not
required by law.
CLSCC%9
-7-
(f) Notification of Beneficka. Grantor shall promptly give Beneficiary (1) writte-
notice and a copy of any notice or correspondence it receives from any federal, state or otht
government authority regarding Hazardous Substances on the Property or Hazardous Substances
which affect or will affect the Property, (2) written notice of any knowledge or information
Grantor obtains regarding Hazardous Substances on the Property or Hazardous Substances which
will affect the Property or expenses or losses incurred or expected to be incurred by Grantor or
any government agency to study, assess, contain or remove any Hazardous Substances on or
near the Property, and (3) written notice of any knowledge or information Grantor obtains
regarding the release or discovery of Hazardous Substances on the Property.
Grantor acknowledges that, as between itself and Beneficiary, Grantor will be solely
responsible for all costs and expenses relating to the cleanup of Hazardous Substances as a result
of activities on or the contamination of the Property. Grantor's obligations under this
Section 2.5 are unconditional, and the covenants of Grantor in this Section 2.5 shall continue
in effect and shall survive the satisfaction of the obligations of Grantor under this Deed of Trust,
including without limitation the transfer of the Property pursuant to foreclosure proceedings
(whether judicial or nonjudicial), by deed in lieu of foreclosure or otherwise.
Nothing in this Section 2.5 shall prejudice or impair the rights or claims of Grantor
against any Person other than Beneficiary with respect to the presence of Hazardous Substances
as set forth above.
2.6 Maintenance of Property; Insurance. Grantor will maintain the buildings and other
improvements which are part of the Property in such condition as will not impair its operatic
unity or character as a multifamily residential facility, and will neither commit nor suffer any
waste on the Property. Grantor will at all times maintain such insurance on the Property, with
such insurers and in such amounts, as is normally maintained by prudent owners of similar
property in the area in which the Property is located.
ARTICLE III
RESERVES.
3.1 Deposits. If Beneficiary so requires, and subject to Section 3.4, Grantor will
deposit with Beneficiary a monthly sum, as estimated by Beneficiary, equal to (a) the rents under
any ground lease, (b) the taxes and special assessments next due on the Property, and (c) the
premiums that will next become due on insurance policies required hereunder, less all sums
already deposited therefor, divided by the number of months to elapse before two months prior
to the date when such rents, taxes, special assessments and premiums will become delinquent.
Beneficiary may require Grantor to deposit with Beneficiary, in advance„ such other sums for
other taxes, assessments, premiums, charges and impositions in connection with Grantor or the
Property as Beneficiary reasonably deems necessary to protect Beneficiary's interests (herein
"Other Impositions"). Such sums for Other Impositions shall be deposited in a lump surn or
in periodic installments, at Beneficiary's option. If requested by Beneficiary, Grantor will
promptly deliver to Beneficiary all bills and notices with respect to any rents, taxes, assessments,
premiums and Other Impositions. Unless Grantor and Beneficiary otherwise agree in writing
Beneficiary shall not be required to pay Grantor any interest, earnings or profits on any su
0250079 O:
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deposited with Beneficiary. All sums deposited with Beneficiary under this Section 3.1 are
hereby pledged as additional security for the Secured Obligations.
3.2 Application of Deposits. All such deposited sums shall be held by Beneficiary
and applied in such order as Beneficiary elects to pay such rents, taxes, assessments, premiums
and Other Impositions or, in the event of default hereunder, may be applied in whole or in part,
to indebtedness secured hereby. The arrangement provided for in this Article III is solely for
the added protection of Beneficiary and entails no responsibility on Beneficiary's part beyond
the allowing of due credit, without interest, for the sums actually received by it. Upon any
assignment of this Deed of Trust by Beneficiary, any funds on hand shall be turned over to the
assignee and any responsibility of Beneficiary with respect thereto shall terminate. Each transfer
of the Property shall automatically transfer to the grantee all rights of Grantor with respect to
any funds accumulated hereunder. Upon payment in full of the Secured Obligations, Beneficiary
shall promptly refund to Grantor the remaining balance of any deposits then held by Beneficiary.
3.3 Adjustments to Deposits. If the total amount deposited by Grantor under Section
3 1 exceeds the amount deemed necessary by Beneficiary to provide for the payment of such
rents, taxes, assessments, premiums and Other Impositions as the same fall due, then such
excess shall, provided no event of default then exists hereunder, be credited by Beneficiary on
the next due installment or installments of such deposits. If at any time the total amount
deposited with Beneficiary is less than the amount deemed necessary by Beneficiary to provide
for the payment thereof as the same fall due, then Grantor will deposit the deficiency with
Beneficiary within 30 days after written notice to Grantor stating the amount of the deficiency.
3.4 Conditional Waiver. Notwithstanding any other provision of this Deed of Trust,
Beneficiary agrees that it will not require the payment of reserves as provided in this Article III,
so long as there is no delinquency in the payment of any taxes or assessments levied or assessed
against the Property, nor any delinquency in the payment of the premiums for any insurance
required hereunder, and there is no other event of default under this Deed of Trust.
ARTICLE IV
RESTRICTIONS ON TRANSFER OR ENCUMBRANCE
4.1 Restrictions on Transfer or Encumbrance of the Property. Neither the Property
nor any part thereof or interest therein shall be encumbered, sold (by contract or otherwise),
conveyed or otherwise transferred by Grantor without Beneficiary's prior written consent. Any
such action without Beneficiary's prior written consent shall be void and, at the option of
Beneficiary, may constitute an event of default hereunder and shall be deemed to increase the
risk of Beneficiary, and Beneficiary may declare all sums secured hereby immediately due and
payable or may at its sole option consent to such change in title, occupancy or ownership.
C25CC79 C:
ARTICLE V
UNIFORM COMMERCIAL CODE SECURITY AGREEMENT
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5.1 Grant to Beneficiary. This Deed of Trust constitutes a security agreemer
pursuant to the UCC with respect to:
(a) Any of the Property which, under applicable law, is not real property or
effectively made part of the real property by the provisions of this Deed of Trust; and
(b) Any and all other property now or hereafter describ d on any UCC
Financing Statement naming Grantor as Debtor and Beneficiary as Secured Party and affecting
property in any way connected with the use and enjoyment of the Property (any and all such
other property constituting 'Property' for purposes of this Deed of Trust);
and Grantor hereby grants Beneficiary a security interest in all property described in clauses (a)
and (b) above as security for the Secured Obligations. Grantor and Beneficiary agree, however,
that neither the foregoing grant of a security interest nor the filing of any such financing
statement shall ever be construed as in any way derogating from the parties' hereby stated
intention that everything used in connection with the production of income from the Property
or adapted for use therein or which is described or reflected in this Deed of Trust is and at all
times shall be regarded for all purposes as part: of the Realty.
5.2 Beneficiary's Rights and Remedies. With respect to Property subject to the
foregoing security interest, Beneficiary has all of the rights and remedies (i) of a secured party
under the UCC, (ii) provided herein, including without limitation the right to cause such
Property to be sold by Trustee under the power of sale granted by this Deed of Tnist, and
(in) provided in any other Bond Document or by law. In exercising its remedies, Beneftciar,
may proceed against the items of real property and any items of personal property separately or
together and in any order whatsoever, without in any way affecting the availability of
Beneficiary's remedies. Upon demand by Beneficiary following an event of default hereunder,
Grantor will assemble any items of personal property and make them available to Beneficiary
at the Property, a place which is hereby deemed to be reasonably convenient to both parties.
Beneficiary shall give Grantor at least five days' prior written notice of the time and place of
any public sale or other disposition of such Property or of the time of or after which any private
sale or any other intended disposition is to be made. Any person permitted by law to purchase
at any such sale may do so. Such Property may be sold at any one or more public or private
sales as permitted by applicable law. All expenses incurred in realizing on such Property shall
be borne by Grantor.
ARTICLE VI
ASSIGNMENT OF RENTS AND LEASES LEASES OF PROPERTY.
APPOINTMENT OF RECEIVER. BENEFICIARY IN POSSESSION
6 1 Assignment of Rents and Leases. As part of the consideration for the
indebtedness evidenced by the Bonds and the Contingent Loan Agreement, and not as additional
security therefor, Grantor hereby absolutely and unconditionally assigns and transfers to
Beneficiary all right, title and interest of Grantor in and to: (a) any and all present and future
leases and other agreements for the occupancy or use of all or any part of the Property, and any
and all extensions, renewals and replacements thereof (collectively "Leases"); (b) all cash t
0250079 „.
security deposits, advance rentals and deposits of a similar nature under the Leases; (c) any and
all guarantees of tenants' or occupants' performances under any and all Leases, and (d) all rents,
issues, profits and revenues (collectively 'Rents') now due or which may become due or to
which Grantor may now or shall hereafter become entitled or may demand or claim (including
Rents coming due during any redemption period), arising or issuing from or out of any and all
Leases, including without limitation minimum, additional, percentage and deficiency rents and
liquidated damages.
6.2 Collection of Rents. Prior to written notice given by Beneficiary to Grantor of
an event of default hereunder, Grantor shall have a license to, and will, collect and receive all
Rents, if any, as trustee for the benefit of Beneficiary and Grantor, to apply the Rents so
collected first to the payment of taxes, assessments and other charges on the Property prior to
delinquency, second to the cost of insurance, maintenance and repairs required by the terms of
the Bond Documents, third to the costs of discharging any obligation or liability of Grantor
under the Leases, and fourth to the indebtedness secured hereby, with the balance, if any, so
long as no such event of default has occurred, to the account of Grantor. Upon delivery of
written notice by Beneficiary to Grantor of an event of default hereunder and stating that
Beneficiary exercises its rights to the Rents, and without the necessity of Beneficiary entering
upon and taking and maintaining full control of the Property in person, by agent or by a
court-appointed receiver, Beneficiary shall immediately be entitled to possession of all Rents as
the same become due and payable, including without limitation Rents then due and unpaid, and
all such Rents shall immediately upon delivery of such notice be held by Grantor as trustee for
the benefit of Beneficiary only. Upon delivery of such written notice by Beneficiary, Grantor
hereby agrees to direct each tenant or occupant of the Property to pay all Rents to Beneficiary
on Beneficiary's written demand therefor, without any liability on the part of such tenant or
occupant to inquire further as to the existence of a default by Grantor; Grantor hereby authorizes
Beneficiary as Grantor's attorney-in-fact to make such direction to tenants and occupants upon
Grantor's failure to do so as required herein. Payments made to Beneficiary by tenants or
occupants shall. as to such tenants and occupants, be in discharge of the payors' obligations to
Grantor. Beneficiary may exercise, in Beneficiary's or Grantor's name, all rights and remedies
available to Grantor with respect to collection of Rents. Nothing herein contained shall be
construed as obligating Beneficiary to perform any of Grantor's obligations under any of the
Leases.
6.3 Grantor's Representations and Warranties. Grantor hereby represents and
warrants to Beneficiary that Grantor bas not executed and will not execute any other assignment
of the Leases or Rents, if any (except in the Bond Documents), that Grantor has not performed
and will not perform any acts and has not executed and will not execute any instrument which
would prevent Beneficiary from exercising its rights under this Article VI, and that at the time
of execution of this Deed of Trust there has been no anticipation or prepayment of any Rents
for more than two months prior to the due dates thereof. Grantor will execute and deliver to
Beneficiary such further assignments of rents and leases of the Property as Beneficiary may from
time to time request.
6.4 Leases of the Property. Grantor will comply with and observe its obligations as
landlord under all Leases and will do all that is necessary to preserve all Leases in force and free
0250079 01
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from any right of counterclaim, defense or setoff. At Beneficiary's request, Grantor will farms
Beneficiary with executed copies of all Leases now existing or hereafter made. Without.
Beneficiary's written consent, Grantor will not collect or accept payment of any Rents more than
two months prior to the due dates thereof; will not execute, modify, surrender or terminate any
Lease now existing or hereafter made providing for a term (including any renewal term(s)) of
five years or more, will not in any manner waive, discharge, release or modify the obligations
of any tenant or other occupant of the Property under any Lease, or request or consent to the
subordination of any Lease to any lien subordinate to this Deed of Trust.
6..5 Beneficiary in Possessionon: Annointment of Receiver. Upon any event of default
hereunder, Beneficiary may, in person, by agent or by a court-appointed receiver, regardless of
the adequacy of Beneficiary's security, enter upon and take and maintain full control of the
Property in order to perform all acts necessary and appropriate for the operation and
maintenance thereof in the same manner and to the same extent that Grantor could do, including
without limitation the execution, enforcement, cancellation and modification of Leases, the
collection of all Rents, the removal and eviction of tenants and other occupants, the making of
alterations and repairs to the Property and the execution and termination of contracts providing
for management or maintenance of the Property, all on such terms as are deemed best by
Beneficiary to protect the security of this Deed of Trust. From and after the occurrence of any
such event of default, if any owner of the Property shall occupy the Property or part thereof
such owner shall pay to Beneficiary in advance on the first day of each month a reasonable
rental for the space so occupied, and upon failure so to do Beneficiary shall be entitled to
remove such owner from the Property by any appropriate action or proceedings. Following ar
event of default hereunder, Beneficiary shall be entitled (regardless of the adequacy o
Beneficiary's security) to the appointment of a receiver, Grantor hereby consenting; to the
appointment of such receiver, and the receiver shall have, in addition to all the rights and
powers customarily given to and exercised by such receivers, all the rights and powers granted
to Beneficiary in this Article VI. Beneficiary or the receiver shall be entitled to receive a
reasonable fee for so managing the Property.
6.6 Application of Rents All Rents collected subsequent to delivery of written notice
by Beneficiary to Grantor of an event of default hereunder shall be applied first to the costs, if
any, of taking control of and managing the Property and collecting the Rents, including without
limitation attorneys' fees, receiver's fees, premiums on receiver's bonds, costs of maintenance
and repairs to the Property, premiums on insurance policies, taxes, assessments and other
charges on the Property, and the costs of discharging any obligation or liability of Grantor under
the Leases, and then to the indebtedness secured hereby. Beneficiary or the receiver shall be
liable to account only for those Rents actually received. Beneficiary shall not be ;liable to
Grantor, anyone claiming under or through Grantor or anyone having an interest in the ]Property
by reason of anything done or left undone by Beneficiary under this Article VI.
6 7 Deficiencies. To the extent, if any, that the costs of taking controli of and
managing the Property, collecting the Rents, and discharging obligations and liabilities of
Grantor under the Leases exceed the Rents, the excess rims expended for such purposes shall
be indebtedness secured by this Deed of Trust Such excess sums shall be payable upon deman
by Beneficiary and shall bear interest from the date of disbursement at the rate of 12% pt.
0250C/9 c:
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annum, or the maximum rate which may be collected from Grantor therefor under applicable
law if that is less.
6.8 Beneficiary Not Mortgagee in Possession. Nothing herein shall constitute
Beneficiary a "mortgagee in possession" prior to its actual entry upon and taking possession of
the Property, entry upon and taking possession by a receiver not constituting possession by
Beneficiary.
6.9 Enforcement. Beneficiary may enforce this assignment without first resorting to
or exhausting any security or collateral for the indebtedness. This assignment shall terminate
at such time as this Deed of Trust ceases to secure payment of the Secured Obligations.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default. The occurrence of any one or more of the following shall
constitute an event of default hereunder:
(a) Failure by Grantor to make any payment when due under any of the other
Bond Documents, if not cured within any applicable grace period set forth in such documents,
or under this Deed of Trust, if not cured within 10 days after written notice thereof given to
Grantor by Beneficiary.
(b) Failure by Grantor to perform any other covenant, agreement or obligation
under any of the Bond Documents, if not cured within 60 days after written notice thereof given
to Grantor by Beneficiary (or if such cure cannot be completed within such 60 -day period
through the exercise of diligence, the failure by Grantor to commence the required cure within
such 60 -day period and thereafter to continue the cure with diligence and to complete the cure
withtr 120 days following Beneficiary's notice of default).
7 2 Fors of Nonce At Beneficiary's option, any written notice of default required
to be given to Grantor under Section 8.1 may be given in the form of a statutory notice of
default under the Washington Deed of Trust Act or any other form Beneficiary may elect.
ARTICLE VIII
REMEDIES
8.1 Acceleration Upon Default; Additional Remedies. In the event of default
hereunder, Beneficiary may, at its option and without notice to or demand upon Grantor but
subject to the terms of the Indenture and the Contingent Loan Agreement, exercise any one or
more of the following actions:
(a) Declare any or all indebtedness secured by this Deed of Trust to be due
and payable immediately;
0250:'9 0:
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(b) Bring a court action to enforce the provisions of this Deed of Trust or am -
of the indebtedness or obligations securedby this Deed of Trust;
(c) Foreclose this Deed of Trust as a mortgage;
(d) Cause any or allof the Property to be sold under the power of sale granted
by this Deed of Trust in any manner permitted by applicable law;
(e) Elect to exercise its rights with respect to the Leases and the Rents (notice
of exercising this right will be given by Beneficiary to Grantor);
(0 Exercise any or all of the other rights and remedies provided for herein
in the event of default hereunder; or
(S)
Exercise any other right or remedy available undler law or in equity.
8.2 Exercise of Power of Sale. For any sale under the power of sale granted by this
Deed of Trust, Beneficiary or Trustee shall record and give all notices required by law and then,
upon the expiration of such time as is required by law, Trustee may sell the Property upon any
terms and conditions specified by Beneficiary and permitted by applicable law. Trustee may
postpone any sale by public announcement at the time and place noticed for the sale. If the
Property includes several lots or parcels, :Beneficiary in its discretion may designate their order
of sale or may elect to sell all of them as an entirety. The Property, real, personal and mixed
may be sold in one parcel. To the extent any of the Property sold by the Trustee is person
property, then Trustee shall be acting as the agent of Beneficiary in selling such Property. An),
person permitted by law to do so may purchase at any sale. Upon any sale, Trustee will execute
and deliver to the purchaser or purchasers a deed or deeds conveying the Property sold, but
without any covenant or warranty, express or implied, and the recitals in the Trustee's deed
showing that the sale was conducted in compliance with all the: requirements of law shall be
prima facie evidence of such compliance and conclusive evidence thereof in favor of bona fide
purchasers and encumbrancers for value.
8.3 plication of Sale Proceeds. The proceeds of any sale under this Deed of Trust
will be applied in the following manner:
FIRST: Payment of the costs and expenses of the sale, including without
limitation Trustee's fees, legal fees and disbursements, title charges and transfer taxes, and
payment of all expenses, liabilities and advances of Trustee, together with interest on all
advances made by Trustee from the date of disbursement at an interest rate of 12% per annum
or at the maximum rate permitted to be charged by Trustee under applicable law if that is less.
SECOND: Payment of all sums expended by Beneficiary under the terms of this
Deed of Trust and not yet repaid, together with interest on such sums from date of disbursement
at an interest rate of 12% per annum or the maximum rate permitted by applicable law if that
is less.
ozs_c-s c:
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THIRD: Payment of all other indebtedness secured by this Deed of Trust in any
order that Beneficiary chooses.
FOURTH: The remainder, if any, to the person or persons legally entitled to it.
8.4 Waiver of Order of Sale and Marshalling. Beneficiary shall have the right to
determine the order in which any or all portions of the secured indebtedness are satisfied from
the proceeds realized upon the exercise of any remedies provided herein. Grantor, any party
who consents to this Deed of Trust and any party who now or hereafter acquires a security
interest in the Property and who has actual or constructive notice hereof, hereby waives any and
all right to require marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein, or to direct the order in which any of the
Property will be sold in the event of any sale under this Deed of Trust.
8.5 Non -Waiver of Defaults. The entering upon and taking possession of the
Property, the collection of Rents or the proceeds of fire and other insurance policies or
compensation or awards for any taking or damage of the Property, and the application or release
thereof as herein provided, shall not cure or waive any default or notice of default hereunder or
invalidate any act done pursuant to such notice.
8.6 Expenses During Redemption Period. If this Deed of Trust is foreclosed as a
mortgage and the Property sold at a foreclosure sale, the purchaser may during any redemption
period allowed, make such repairs or alterations on the Property as may be reasonably necessary
for the proper operation, care, preservation, protection and insuring thereof. Any sums so paid
together with interest thereon from the time of such expenditure at the rate of 12% per annum
or the highest lawful rate if that is less shall be added to and become a part of the amount
required to be paid for redemption from such sale.
8 7 Foreclosure Subtect to Tenancies Beneficiary's right at its option to foreclose
this Deed of Trust is subject to the rights of any tenant or tenants of the Property.
8.8 Remedies Cumulative. To the extent permitted by law, every right and remedy
provided in this Deed of Trust is distinct and cumulative to all other rights or remedies under
this Deed of Trust or afforded by law or equity or any other agreement between Beneficiary and
Grantor, and may be exercised concurrently, independently or successively, in any order
whatsoever. Beneficiary may -exercise any of its rights and remedies at its option without regard
to the adequacy of its security.
8.9 Beneficiary's and Trustee's Expenses. Grantor will pay all of Beneficiary's and
Trustee's expenses incurred in any efforts to enforce any terms of this Deed of Trust, whether
or not any suit is filed, including without limitation legal fees and disbursements, foreclosure
costs and title charges. All such sums, with interest thereon, shall be additional indebtedness
of Grantor secured by this Deed of Trust. Such sums shall be immediately due and payable and
shall bear interest from the date of disbursement at an interest rate of 12% per annum, or the
maximum rate which may be collected from Grantor under applicable law if that is less.
02E00'9 0:
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8.10 Intercreditor Provisions. The City agrees that, so long as the Bonds [and any
Additional Bonds] are Outstanding, the Bond Trustee shall have the right to exercise all rights
and powers of Beneficiary under this Deed of Trust. If (1) all of the principal of and interest
on the Bonds [and any Additional Bonds] have been defeased or paid in full (whether at maturity
or upon acceleration or otherwise) or (2) the City has assumed all liability for payment: of the
principal of and interest on the Bonds [and any Additional Bonds] when due and shall have
pledged its full faith and credit to such payment, then the Bond Trustee shall assign all of its
rights as beneficiary hereunder to the City if the City certifies to the Bond Trustee that amounts
are owed to the City under the terms of the Contingent Loan Agreement.
Except to the extent set forth in this section, nothing contained berein shall in any way
restrict the rights of either the Bond Truster or the City to exercise any other rights granted to
such party under any of the other Bond Documents.
ARTICLE IX
GENERAL
9.1 Application of Payments. Except as applicable law or this Deed of Trust may
otherwise provide, all payments received by Beneficiary under the Bond .Doc:urnents shall be
applied by Beneficiary pursuant to the Indenture.
9.2 Reconvevance. Upon payment of all sums secured by this Deed of Trust,
Beneficiary shall request Trustee to reconvey the Property and shall surrender this Deed of Trus'
and all notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall
reconvey the Property without warranty to the person or persons :legally entitled thereto. The
grantee in any reconveyance may be described as the "person or persons legally entitled
thereto," and the recitals therein of any matters or facts shall be conclusive proof of the
truthfulness thereof Such person or persons shall pay Trustee's reasonable costs incurred in so
reconveying the Property.
9.3 Successor Trustee In accordance with applicable law, Beneficiary may from time
to time appoint a successor trustee to any Trustee appointed hereunder. 'Without conveyance of
the Property, the successor trustee shall succeed to all the title, power and duties conferred upon
the Trustee herein and by applicable law.
. 9.4 Beneficiary's Powers. Without affecting the liability of any person for payment
or performance of the Secured Obligations, Beneficiary, at its option but only if not prohibited
by the Resolution, the Contingent Loan Agreement or the Indenture, may extend the time for
payment of the indebtedness secured hereby or any part thereof, reduce payment thereon, release
anyone liable on any of such indebtedness, accept a renewal note or notes thereof, modify the
terms and time of payment of the indebtedness, release the lien of this Deed of Trust on any part
of the Property, take or release other or additional security, release or reconvey or cause to be
released or reconveyed all or any part of the Property, or consent and/or cause Trustee to
consent to the making of any map or plat of the Property, consent or cause Trustee to consent
to the granting of any easement or the creating of any restriction on the Property, or join c
cause Trustee to join in any subordination or other agreement affecting this Deed of Trust or th,
025C:"5 C
-16-
lien or charge hereof. Grantor shall pay Beneficiary a reasonable service charge, together with
such title insurance premiums and attorneys' fees as may be incurred at Beneficiary's option,
for any such action if taken at Grantor's request.
9.5 No Violation of Usury Laws. Interest, fees and charges collected or to be
collected in connection with the indebtedness secured hereby shall not exceed the maximum, if
any, permitted by any applicable law. If any such law is interpreted so that such interest, fees
andlor charges would exceed any such maximum and Grantor is entitled to the benefit of such
law, then: (a) such interest, fees and/or charges shall be reduced by the amount necessary to
reduce the same to the permitted maximum; and (b) any sums already paid to Beneficiary which
exceeded the permitted maximum will be refunded. Beneficiary may choose to make the refund
either by treating the payments, to the extent of the excess, as prepayments of principal or by
making a direct payment to the person(s) entitled thereto. No prepayment premium shall be
assessed on prepayments under this section. The provisions of this section shall control over
any inconsistent provision of this Deed of Trust, the Bonds or any other Bond Documents.
9.6 Additional Documents; Power of Attorney. Grantor, from time to time, will
execute, acknowledge and deliver to Beneficiary upon request, and hereby irrevocably appoints
Beneficiary its attorney-in-fact to execute, acknowledge, deliver and if appropriate file and
record, such security agreements, assignments for security purposes, absolute assignments,
financing statements, affidavits, certificates and other documents, in form and substance
satisfactory to Beneficiary, as Beneficiary may request in order to perfect, preserve, continue,
extend or maintain the assignments contained herein, the lien and security interest under this
Deed of Trust and the priority thereof. Grantor will pay to Beneficiary upon request therefor
all costs and expenses incurred in connection with the preparation, execution, recording and
filing of any such document.
9.7 Forbearance by Beneficiary Not a Waiver. Any forbearance by Beneficiary in
exercising any right or remedy hereunder, or otherwise afforced by applicable law, shall not be
a waiver of or preclude the exercise of any right or remedy, and no waiver by Beneficiary of
any particular default by Grantor shall constitute a waiver of any other default or of any similar
default in the future. - Without limiting the generality of the foregoing, the acceptance by
Beneficiary of payment of any sum secured by this Deed of Trust after the due date thereof shall
not be a waiver of Beneficiary's right either to require prompt payment when due of all other
sums so secured or to declare a default for failure to make prompt payment. The procurement
of insurance or the payment of taxes or other liens or charges by Beneficiary shall not be a
waiver of Beneficiary's right to accelerate the maturity of the indebtedness secured by this Deed
of Trust, nor shall Beneficiary's receipt of any condemnation awards or damages or insurance
proceeds operate to cure or waive Grantor's default in payment of sums secured by this Deed
of Trust.
9.8 Indemnitv. Grantor agrees to defend and hold Beneficiary harmless from any claims
made against Beneficiary which arise as a result of actions taken by Grantor. This indemnity
shall survive foreclosure or other acquisition of the Property by Beneficiary.
c25CC"9 c:
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9.9 Modifications and Waiver. This Deed of Trust cannot be waived, changed,
discharged or terminated orally, but only by an instrument in writing signed by the party against
whom enforcement of any waiver, change, discharge or termination is sought.
9.10 Notice. Except as applicable law may otherwise require, all notices and other
communications shall be in writing and shall be deemed given when delivered by personal
service or when mailed, by certified or registered mail, postage prepaid, addressed to the
address set forth at the beginning of this Deed of Trust. Any party may at any time change its
address for such purposes by delivering or mailing to the other parties hereto as aforesaid a
notice of such change.
9.11 Governing Law: Severabiility: CaptjQfl . This Deed of Trust shall be governed by
the laws of the State of Washington without regard to the conflict of laws provisions thereof.
If any provision or clause of this Deed of Trust conflicts with applicable law, such conflicts shall
not affect other provisions or clauses hereof which can be given effect without the conflicting
provision, and to this end the provisions hereof are declared to be severable. The captions and
headings of the sections and articles of this Deed of Trust are for convenience only and are not
to be used to interpret or define the provisions hereof. If any provision herein is inco:asistent
with any provision in the Indenture or the Contingent Loan Agreement and the provisions cannot
be reconciled, then the terms of the Indenture or the Contingent Loan Agreement (in that order
of priority) shall control.
9.12 Definitions. As used herein, the term "Grantor" means Grantor herein named,
together with any subsequent owner of the Property or any part thereof or interest therein, the
term "Trustee" means the Trustee herein named, together with any successor Trustee, and the
terra "Beneficiary" means the Beneficiary herein named, together with any assignee of the
Beneficiary.
9.13 Successors and Assigns Bound: Joint and Several Liability: Agents. This Deed of
Trust shall bind and inure to the benefit of the parties hereto and their respective heirs, devisees,
legatees, administrators, executors, successors and assigns, subject to the provisions of
Article IV. All obligations of Grantor hereunder are joint and several. In exercising any rights
hereunder or taking actions provided for herein, Beneficiary and Trustee may act through their
respective employees, agents or independent contractors as authorized by Beneficiary and
Trustee
9.14 Number: Gender. This Deed of Trust shall be construed so that wherever
applicable the use of the singular number shall include the plural number, and vice versa, and
the use of any gender shall be applicable to all genders.
9.15 Time. Time is of the essence in connection with all obligations of Grantor herein.
9.16 Request for Notice. Grantor hereby requests that a copy of any notice of default
and notice of sale hereunder be mailed to it at its address set forth at the beginning of this Deed
of Trust
02500/5 c:
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IN WITNESS WHEREOF, Grantor has executed this Deed of Trust as of the date first
above written.
HOUSING AUTHORITY OF THE CITY OF
YAKIMA
By:
STATE OF WASHINGTON )
Alice Sells
Executive Director
) ss.
COUNTY OF )
On this day before me personally appeared Alice Sells, known or proved to me to be the
Executive Director of the Housing Authority of the City of Yakima, the entity that executed the
within and foregoing instrument, and acknowledged that instrument to be the free and voluntary
act and deed of that entity, for the uses and purposes mentioned therein, and on oath stated that
she was authorized to execute such instrument.
IN WITNESS WHEREOF I have hereunto set my hand and official seal this day
of , 1996.
o2sc:'e ::
(Stratum of Notary)
(Lgrbly Print or Stamp Name of Notary)
Notary public in and for the state of Washington,
residing at
My appointment expires
-19-
DRAFT OF JULY 19, 1996
HAZARDOUS SUBSTANCES WARRANTY/LNDEMNITY AGREEMENT
(NUEVA PRIMAVERA)
THIS HAZARDOUS SUBSTANCE WARRANTY/INDEMNITY AGREEMENT (the
"Agreement") is executed in order to induce (the "Trustee") to enter into and
act as trustee pursuant to the Trust Indenture dated as of August 1, 1996, between the Trustee
and the HOUSING AUTHORITY OF THE CITY OF YAKIMA (the "Authority") (as amended
from time to time, the "Indenture') and to induce the Trustee and the City of Yakima,
Washington (the 'City"), to act as co -beneficiaries under the Deed of Trust, Assignment of
Rents and Leases and Security Agreement, dated as of August 1, 1996 (as amended from time
to time, the 'Deed of Trust"), among the Authority, as grantor, Valley Title Guarantee, as
trustee, and the Trustee and the City, as co -beneficiaries, covering property described in
Exhibit A attached hereto, and any other properties legally described in any security agreement
executed by the Authority which is granted or assigned to the City or the Trustee, hereinafter
referred to as the "Property". Capitalized terms used herein and not defined shall have the
meanings given those terms in the Deed of Trust.
For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Authority hereby agrees, covenants, and warrants:
1. As used herein, "Environmental Laws" means all local, state and federal laws,
ordinances, regulations, orders and reported state or federal court decisions thereunder related
to. environmental protection; the use, storage, generation, production, treatment, emission,
discharge, remediation, removal, disposal or transport of any Hazardous Substance; or any
other environmental matter, including but not limited to any of the following statutes:
(a) Federal Resource Conservation and Recovery Act of' 1976, as amended,
42 U.S C. Sections 6901-6991k;
(b) Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601-9675;
(c) Federal Clean Air Act, 42 U.S.C. Sections 7401-7642;
(d) Federal Hazardous Material Transportation Control Act of 1970, as
amended, 49 U.S.C. Sections 1801-1812;
(e) Federal Clean Water Act of 1977, as amended, 33 U.S.C. Sections 1251-
1387.
(f) Federal Insecticide, Fungicide, and Rodenticide Act, as amended,
U.S.C. Sections 136-136y;
70.99 RCW;
(g) Federal Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671;
(h) Federal Safe Drinking Water Act, 42 U.S.C. Sections 300f -300i-26;
(i) Washington Water Pollution Control Act, chapter 90.48 RCW;
(j) Washington Clean Air Act, chapter 70.94 RCW;
(k) Washington Solid Waste Management Act, chapter 70.95 RCW;
(1) Washington Nuclear. Energy and Radiation Act, chapter 70.98 RCW;
(m) Washington Radioactive 'Waste Storage and Transportation Act, chapter
(:n) Washington Hazardous Waste Disposal Act, chapter 70.105 RCW; and
(o) Washington Model Toxics Control Act, chapter 70.105D RCW.
2. As used herein, "Hazardous Substance" means any substance or material definer'
or designated as hazardous or toxic waste, hazardous or toxic material, a hazardous, toxic c.
radioactive substance, or other similar term, by any Environmental Laws, and shall include any
such substance or material as may hereafter become defined or designated as a ha7.ardous or
toxic material by any Environmental Laws.
3. There is no claim, action, suit, proceeding, arbitration, iinvesti,gation or inquiry
relating to the Property pending or, to the knowledge of the Authority, threatened against the
Authority before any federal, state, municipal, foreign or other court, or arty governmental,
admi.rustrative or self-regulatory body or agency, or any private arbitration tribunal, and to the
knowledge of the Authority there neither is nor has been any complaint, order, directive, claim,
citation, notice of lien by or in favor of any governmental authority or private person relating
to the Property with respect to (i) air emissions; (ii) spills, releases or discharges of Hazardous
Substances on, in or to the Property or surface water or groundwater affected by the Property
or the sewer, septic system or waste water treatment system servicing the Property; (iii) solid
or liquid waste disposal; (iv) the use, storage, generation, treatment, transportation or disposal
of Hazardous Substances; (v) exposure to airborne or friable asbestos; (vi) violation of any
Environmental Law; or (vii) any other environmental, health or safety matters affecting or
pertaining to the Authority or the Property.
4 Except as to circumstances, matters or things that have been disclosed in writing
to the Trustee and the City prior to the date hereof and as to which the Aut'horry previously has
completed, or is proceeding diligently and in the ordinary course of the Authority's business t
complete, clean up, remove or take other remedial action in accordance with any applicab.
02.50060 01
-2-
Environmental Laws that has fully remedied, or will fully remedy, all effects of any Hazardous
Substances, (i) the Authority has no knowledge of any circumstance, matter or thing existing
which might give rise to any of the claims, actions or proceedings, without limitation, discussed
in Section 3 of this Agreement; (ii) except as maintained in accordance with applicable
Environmental Laws, neither the Authority nor to the knowledge of the Authority any other
Person has stored, disposed of or released in, on or about the Property any Hazardous
Substances the removal or remediation of which is or could be required, or the maintenance of
which is prohibited or penalized, by any applicable Environmental Laws, and the Property is
free from all such Hazardous Substances; (iii) the Authority has not at any time disposed of or
caused to be disposed of at any location any Hazardous Substances generated or existing as a
result of the Authority's operation of the Property in a manner which will or could cause the
Authority to be or become liable for a fine or penalty or a monetary or performance obligation
arising from or related to such disposal; (iv) to the knowledge of the Authority, the Authority
has no contingent liability in connection with the release from the Property of any Hazardous
Substances into the environment; (v) the Authority has not given any release or waiver of
liability that would waive or impair any claim based on Hazardous Substances to (A) a prior
owner or occupant of the Property, (B) the owner or any prior owner or occupant of any
property leased by the Authority or (C) any party who may be potentially responsible for the
presence of Hazardous Substances on the Property.
5. The Authority will not cause or permit the Property to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer, produce or process any
Hazardous Substance, except for Hazardous Substances used in the ordinary course of business
in compliance with all applicable Environmental Laws, nor shall the Authority knowingly cause
or permit, as a result of any intentional or unintentional act or omission on the part of the
Authority or any of its agents, employees, contractors, tenants, subtenants, invitees or other
users or occupants of the Property, a release of any Hazardous Substance onto the Property or
onto any other property.
6 Each of the Trustee and the City is hereby authorized to enter the Property,
including the intenor of any structures, at reasonable times and after reasonable notice, for the
purpose of inspecting the Property to ascertain the accuracy of all representations and warranties
herein relating to Hazardous Substances, and the observance of all covenants herein relating
thereto.
_ 7. The Authority will at all times in all respects comply, and will use its best efforts
to cause all tenants, subtenants and other users or occupants of the Property to comply, with all
Environmental Laws including, without limitation, the duty to undertake the following specific
actions: (i) the Authority will, at its own expense, procure, maintain in effect and comply with
all conditions of any and all permits, licenses and other governmental and regulatory approvals
required by all Environmental Laws, including, without limitation, permits required for
discharge of (appropriately treated) Hazardous Substances into the ambient air or any sanitary
sewers serving the Property; and (ii) except as discharged into the ambient air or a sanitary
sewer in strict compliance with all applicable Environmental Laws, all Hazardous Substances
from or on the Property to be treated and/or disposed of by the Authority will be removed and
transported solely by duly licensed transporters to a duly licensed treatment and/or disposal
or3o060 01
-3-
facility for final treatment and/or disposal (exce:pt when applicable Environmental Laws perm
on-site treatment or disposal in a sanitary landfill).
8. If the presence, release, threat of release, placement on or in the Property, or the
generation, transportation, storage, treatment or disposal at the Property of any Hazardous
Substance (i) gives rise to liability (including but not limited to a response action, remedial
action or removal action) under any Environmental Law, (ii) causes a significant public health
effect, or (iii) pollutes or threatens to pollute the environment, the Authority shall, at its sole
expense, promptly take any and all remedial and removal action necessary to clean up the
Property and mitigate exposure to liability arising from the Hazardous Substance, whether or
not required by law.
9. The Authority shall promptly give the Trustee and the City (i) written notice and
a copy of any notice or correspondence it receives from any federal, state or other government
authority regarding Hazardous Substances on the Property or Hazardous Substances whic:h affect
or will affect the Property, (ii) written notice of any knowledge or information the Authority
obtains regarding Hazardous Substances on the Property or Hazardous Substances which will
affect the Property or expenses or losses incurred or expected to be incurred by the Authority
or any government agency to study, assess, contain or remove any Hazardous Substances on or
near the Property, and (iii) written notice of any knowledge or information the Authority obtains
regarding the release or discovery of Hazardous Substances on the Property.
[*If First Trust Washington is Trustee* 10. The Authority shall proviide the
Trustee and the City, and any Owner of more than 25 % of the aggregate principal amount o
Bonds then Outstanding with copies of any notifications of releases of any Hazardous
Substances or of any environmental hazards or potential hazards which are given by or on
behalf of the Authority to any federal, state, or local agencies or authorities or which are
received by the Authority from any federal, state, or local agencies or authorities with respect
to the Property. Such copies shall be sent concurrently with their being mailed or delivered to
the governmental agencies or authorities or within 10 days after they are received by the
Authority.
The Authority agrees to provide to the Trustee, the City, and any Owner of more than
25 % of the aggregate principal amount of Bonds then Outstanding with copies of all emergency
and hazardous chemical inventory forms (hereinafter "Notices") with respect to the Property
previously given, as of the date hereof, to any federal, state, or local government authority or
agency as required pursuant to the Emergency Planning and Community Right -to -Know Act of
1986, 42 USC § 1101 et seq., and to provide the Trustee, the City, and any Owner of more
than 25 % of the aggregate principal amount of Bonds then Outstanding with copies of all such
Notices subsequently sent to any such governmental authority or agency as required pursuant to
the Emergency Planning and Community Right -to -Know Act of 1986. Such copies of
subsequent Notices shall be sent concurrently with their being mailed to any such governmental
authority or agency.]
11. The Authority agrees to indemnify, hold harmless, and defend the Trustee and the
City, and the officers, directors, employees, and agents of the Tnistee and the City, from an
0250060.01
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against any and all claims, disbursements, demands, damages (including but not limited to
consequential or indirect damages), losses, Liens, liabilities, penalties, fines, lawsuits and other
proceedings and costs and expenses (including experts', consultants' and attorneys' fees and
expenses, and including without limitation remedial, removal, response, abatement, cleanup,
legal, investigative and monitoring costs) imposed against the City or the Trustee, arising
directly or indirectly from or out of, or in any way connected with:
(a) The inaccuracy of the statements contained in Sections 3 and 4 of this
Agreement;
(b) The failure of the Authority to comply with its covenants and agreements
contained in this Agreement;
(c) Any activities on the Property prior to and during the Authority's
ownership, possession or control of the Property which directly or indirectly result in the
Property or any other property becoming contaminated with Hazardous Substances;
(d) The discovery of Hazardous Substances at, on, about, under, within, near
or in connection with the Property;
(e) The clean-up of Hazardous Substances from the Property without regard
to (A) the nature of the activities producing the Hazardous Substances, (B) the identity of the
Person conducting such activities, (C) the time such activities took place (whether prior or
subsequent to the Authority's acquisition of the Property), and (D) whether there has been a
breach of the representations and warranties in Sections 3 and 4 of this Agreement;
(f) Any injury or harm of any type to any person or damage to any property
ansing out of or relating to Hazardous Substances on the Property or from the Property on any
other property: and
(g) Any and all acts now or hereafter taken or not taken by the Trustee or the
City in connection with the Indenture or with bolding, owning, maintaining, operating, realizing
upon or disposing of the Property (except for wilful misconduct of the Trustee or the City,
respectively).
. 12. The Authority acknowledges that, as between itself and the Trustee or the City,
the Authority will be solely responsible for all costs and expenses relating to the cleanup of
Hazardous Substances as a result of activities on, or the contamination of, the Property. The
Authority's obligations under this Agreement are unconditional and are not subject to any
limitation of liability provisions in the Deed of Trust or any other document. The covenants of
the Authority in this Agreement shall continue in effect and shall survive the satisfaction of the
obligations of the Authority under the Deed of Trust, the Contingent Loan Agreement dated as
of August 1, 1996, between the Authority and the City and the Indenture, including without
limitation the transfer of the Property pursuant to foreclosure proceedings (whether judicial or
nonjudicial), by deed in lieu of foreclosure or otherwise.
0250060.01
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13. Those liabilities, losses, claims, damages, and expenses for which the Trustee at
the City are indemnified under this Agreement shall be reimbursable to the Trustee and the Cit,
as and when their obligations to make payments with respect thereto are incurred, without any
requirement of waiting for ultimate outcome of any Iitigation, claim or other proceeding, and
the Authority shall pay such liability, losses, claims, damages, and expenses to the Tnistee and
the City as so incurred within 10 days after notice from the Trustee or the City, as applicable,
itemizing the amounts incurred.
14. The Authority waives any acceptance of this indemnity by the Trustee and the
City. The failure of the Trustee or the City to enforce any right or remedy hereunder, or to
promptly enforce any such right or remedy, shall not constitute a waiver thereof nor give rise
to any estoppel against the Trustee or the City, nor excuse the Authority from its obligations
under this Agreement.
15. Nothing in this Agreement shall prejudice or impair the rights or claims of the
Authority against any Person other than the Trustee and the City with respect to the presence
of Hazardous Substances as set forth above.
16. The Authority agrees that any breach of the terns of this Agreement shall be
considered a Default or Event of Default under the Indenture. The obligations of the Authority
hereunder are not secured by the Deed of Trust.
IN WITNESS WHEREOF, and intending to be Iegally bound hereby, the undlersigne'
have executed this Agreement as of August 1, 1996.
AUTHORITY: HOUSING AUTHORITY OF THE CITY
OF YAKIMA
By
Its Executive Director
TRUSTEE: Approved as i:o form:
o2s0050 01
-6-
By
Its
CITY: Approved as to form:
0250060 01
-7-
CITY OF YAKIMA, WASHINGTON
By
Its 1
State Housing Commission
Contract
ADDENDUM TO
Housing Assistance Program Contract for Yakima Housing Authority -Nueva Primavera
Contract Number 94-491-25b
ADDENDUM. The Housing Assistance Program Contract for Yakima Housing Authority
- Nueva Primavera (the "Contract") to which this Addendum is attached is supplemented and/or
modified as hereinafter provided. To the extent that the printed terms of the Contract are different
than the terms of this Addendum, the terms of the Addendum shall prevail:
PART III: SCOPE OF WORK
3.02 Amount and Terms of Loan
1. Terms:
d. Method of Payment: Payments shall be due and payable beginning
November 30. 2001 and each
ander ber full ono before Novembeer for the next r 0.2050. Each annual
tive 49 years. The
total loan amount shall be payable
payment shall equal S25,423.
-Y-,-A.r .L.t,_ Aa '"
Yakima Housing Authority
dele___ .,..,Zie3.,
Alice Sells - Director
Date: / a —7" f‘..5. --
Ft 5 cEivEo
‘5F{ECEIVED
DEC 1 1 695
HOUSING SERVICES
DepartmCommunity, Trade
and Economic Development
Assistant Director
Date: (2, r ,- ,-/9S---1
w
The State of Washington
The Department of Community, Trade
Housing Assistance Program
Contract Number 94-491-25B
Contact Person and Phone Number:
and Economic Development
Tom Parker
110 Fair Avenue
Yakima, WA 98901
(509) 453.3107
Tax ID Number. 91-1019545
Contract Officer: Lisa Vatske (360) 753-5075
dousing Assistance Program Contract for aldma Houma Authority- Iia ;oa Primavera
PART I: INTRODUCTION
The Department of Community, Trade and Eeonomic Development (Department) has received appropriations
from the Washington State Legislature under the authority of Chapter 43.185 RCW to provide financial
assistance to units of local governments, local housing authorities, and nonprofit orgatinttiOnIt to assist lazy
low-income citizens in meeting their basic housing needs. Aging under the authority of Chapter 43.185 RCW,
the Department has selected the Recipient, Yakima Housing Authority, to receive a Housing Assistance
Program (HAP) loan.
PART II: URP
The Department and Yakima Housing Authority (Recipient), a local bonging authority, have mitered tato this
agreement to undertake a very -low income local housing project which furthers, the goals and objectives of the
Washington State Housing Assistance Program and complies with RCW 43.185 ex. seq.
PART III: SCOPE OF WORK
3.01 Use of Funds and ProoertL I.ocatign
The proceeds of this HAP loan shall be used solely for the acquisition of property and new construction
costs of the Nueva Primavera projexx 1oated at Fruitvak Boulevard and North Sixth Avenue in
Yakima, Washington. This project will provide 61 units of low income housing for families.
3.02 l&rnount and Terms of lem
The Total Loan Amount shall be Oae Million Dollar! (*1,000,000).
1. Terms:
a. Mortgage; Period: 50 Years
b. Interest Rate: One Patent (1%) Annually, Compounded Monthly
c. Loan Fee: One Point ($10,(X0) at execution.
d. Method of Payment: Payments shall be due and payable beginning
November 30, 1998 and each November 30th thereafter alter for the next
1
consecutive 49 years. The total loan amount shall be due and payable in full
on or before November 30, 2047. The first four annual payments shall be
in the amounts specified in the HTF Loan Debt Service Column of
Attachment 11. Thereafter, each annual payment shall equal $25,423.
2. Use of Funds:
Acquisition and new construction
TOTAL $1,000,000
3.. Security
a. Appraisal
b. Fust Deed of Trust and Promissory Note
c. Covenants Running with the Land restricting 603: of the units to households
at 50% of county median income for Fifty (50) yrs.
d. Shared Appreciation (i.e., Contingent Interest. See Section 3.07B).
4. Non -Recourse Loan
The Loan shall be a non-recourse loan to the Recipient, its officers, employees,
agents, and contractors. Nothing, however, shall diminish the Recipient's liability for
damages or deficiencies resulting from negligence, theft, waste, fraud, material
misrepresentation, and misuse of rents.
3.03 Leneth of Commitment and Performance of Activities
A. The length of commitment to serve the target population will be Fahy (50) years, and shall
commence upon project completion as evidenced by a certificate of occupancy for the project.
This contract will remain in effect for Fifty (50) years (or the term of the loan, whichever is
longer). Annual performance reports will be initiated by the Department and.00mpleted by the
Recipient within 30 days of receipt.
B. The activities funded under this contract shall be completed by the Recipient by November 30,
1997 in accordance with the workplan and schedule found in the Recipient's revised HAP
application. Quarterly development reports shall be submitted daring the development phase,
describing the status of the project.
3.04 Covenant Running with the Land
The Recipient shall cause to be recorded a Covenant Running with the Land limiting the toe of 609E of
the Project units to households at or below Fifty Percent (50%) of the Yakima MSA median income
for a continuous period of Fifty (50) years.
3.05 Title Insurance
The Recipient shall purchase title insurance naming the Recipient and the Department as beneficiaries in
an amount not less than $1,000,000.
2
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No., G\
For Meeting Of September 17. 1996
ITEM TITLE: Modification of a Contingency Loan Agreement between the City of Yakima
and the Yakima Housing Authority.
SUBMITTED BY: Glenn J. Valenzuela, Director of Community and Economic Development
CONTACT PERSON/TELEPHONE: Glenn J. Valenzuela, 575-6113
SUMMARY EXPLANATION:
The City Council at its regular scheduled meeting of September 3,1996 considered a
modification request by the Yakima Housing Authority. The request if granted would raise the
amount of guarantee from the original $ 2.5 million to the requested $ 3.7 million. The City
Council questioned a number of apparent errors in the Loan Contingency Agreement as
prepared by Bond Counsel. Those errors have been corrected and a new document is now
before the Council.
This decision is a Council policy issue. As mentioned in previous reports and discussions,
without the City's guarantee this project would not go forward. The Council should consider
the demonstrated need of affordable housing and the public policy issue of the guarantee of
the City's financial standing.
Staff has reorganized the Resolution and documents for Council consideration
Resolution x Ordinance Contract
Other (Specify).
Funding Source
APPROVAL FOR SUBMITTAL:
I't4JcAt
City Manager
STAFF RECOMMENDATION: Council policy issue
BOARD RECOMMENDATION: The Council Committee on Economic Development reviewed
the request on August 16,1996.
COUNCIL ACTION:
SI I L- GROSS SLCTIONAL ELE\LTION
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