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Home My WebLink AboutR-2003-007 Pat’s College Loan Request ( Horizon, Inc. )RESOLUTION NO. R-2003- 07 A RESOLUTION authorizing a $15,000 loan request from 2002 CDBG Economic Development funds by Horizon, Inc./Pat's College to assist in the payment of operating costs until they receive funding from the U.S. Department of Housing & Urban Development (HUD), and authorizing and directing the City Manager and the City Clerk to execute all necessary loan documents, including a loan agreement, between the City of Yakima and Horizon, Inc./Pat's College. WHEREAS, the City of Yakima is a recipient of 2002 federal CDBG funds; and WHEREAS, Horizon, Inc./Pat's College provides essential educational like skills training to develop to developmentally disabled adults living with the City of Yakima; and WHEREAS, Horizon, Inc./Pat's College expects to receive a 3 -year operating grant from the federal government; and WHEREAS, the U.S. Congress has not yet approved the 2003 Budget with will fund this grant; and WHEREAS, Horizon/Pat's College's understands it is their responsibility to secure alternative funding for future operating expenses beyond the City's $15,000 gap funding should the anticipated federal grant not be approved by Congress or delays create additional operating budget shortfalls; and WHEREAS, at January 14, 2003 City Council Neighborhood Development Subcommittee meeting, the Subcommittee recommended that the loan request from Horizon Inc./Pat's College for up to $15,000 to assist in operating costs until they receive funding from the U.S. Department of HUD, be forwarded to full Council; and WHEREAS, it is in the best interest of the City of Yakima to help keep Horizon, Inc./ Pat's College operating so they can continue to provide important life skills and services to developmentally disabled persons and preserve the jobs of their staff; and WHEREAS, the City Council has determined that it is in the best interest of the City to approve the $15,000 loan request from Horizon, Inc./Pat's College to assist in continuing to provide a viable service to the local community, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: 1. A 2002 CDBG Community Service Project loan of $15,000 to Horizon Inc./Pat's College for assisting with operating costs is hereby approved with the following conditions: • Execution of a formal loan agreement between the City of Yakima and Horizon, Inc./Pat's College. 2. The City Manager is hereby authorized and directed to execute all necessary loan documents, including a loan agreement, between the City of Yakima and Horizon, Inc./Pat's College. ADOPTED BY THE CITY COUNCIL this 21st day of January, 2003. ATTEST: #1<cvt....-e—v-- A City Clerk C/ ary Place, Mayor LOAN AGREEMENT DATE: February C , 2003. PARTIES: HORIZON OF SUNNYSIDE, a Washington non-profit Public Benefit corporation, hereinafter referred to as "Borrower." THE CITY OF YAKIMA, a Washington municipal corporation, hereinafter referred to as "Lender." BACKGROUND: Borrower is in the business of providing educational services to disabled adults. In conjunction with providing these educational services Borrower has been advised that it is entitled to receive funding for its operational expenses for the school year 2002-2003 from certain programs of the United States government under the fiscal year 2003 budget. As of the date hereof, the United States fiscal year 2003 budget has not been approved by the Congress and the President of the United States. As a result, Borrower is in danger of not meeting its ongoing operational expenses and being required to terminate its services to its clients. Lender is willing to advance the sums described below on a short-term basis to Borrower on the terms and conditions set forth herein. THEREFORE, IT IS AGREED AS FOLLOWS: 1. Amount of Advances. Lender shall advance to Borrower $15,000.00. 2. Credit Terms: All proceeds from programs of the United States of America, or any of its agencies received by Borrower shall first be paid to Lender in payment of debt under this Agreement, and Borrower shall retain no cash payment from such sources until the amounts owed under such Agreements are paid in full. 2.1 Master Note. The Borrower shall execute a master promissory note in favor of the Lender to cover advances made hereunder, Page 1 in the form attached hereto as Exhibit "A" and incorporated fully herein by this reference. No interest shall be charged. 3. Borrower's Obligations. Borrower is obligated as follows: 3.1 Delivery of Corporate Authorization. Borrower shall deliver to Lender a certified copy of its corporate Minutes evidencing its authority to borrow funds from Lender pursuant to this Loan Agreement and indicating those corporate officers authorized to execute such documents on behalf of Borrower as are required by Lender. 3.2 Certificate of Good Standing. Borrower shall deliver to Lender evidence from the Washington Secretary of State evidencing that Borrower is a corporation validly organized and existing and in good standing under the laws of the State of Washington. 3.3 Notification of Receipt of Federal Funds. Borrower shall immediately notify Lender when the proceeds from any federal governmental program are payable to Borrower, and further notify Lender when any such funds are received by Borrower. In the event proceeds from any governmental program to which Borrower has applied are not allocated by such governmental agency, then Borrower shall immediately notify Lender of such event and make arrangements to discuss with Lender alternative repayment options. 4. Condition for Advances. Lender shall have no obligation to advance funds until it has received the documents described in paragraphs 3.1 and 3.2, above, and the Master Note and Security Agreement provided for herein have been fully executed and delivered to Lender. 5. Waiver of Default. Lender's acceptance of partial or delinquent payment or failure of Lender to exercise any right or remedy shall not be a waiver of any of the Borrower's obligations, or Lender's rights or constitute a waiver of any other similar default occurring at a later date. Page 2 6. Receipt of Copy by Borrower. Borrower acknowledges receipt of a copy of this Agreement and all Exhibits incorporated herein. 7. Construction of Agreement. The captions used in this Agreement are for convenience only and shall not be construed in interpreting this Agreement. 8. Integration. This Agreement comprises the entire agreement between the parties and may be modified only in writing. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, the remainder shall not be affected. 9. Additional Documents. Borrower shall sign all documents required by Lender to fully implement the terms of this Agreement. 10. Venue. This Agreement shall be governed by the laws of the State of Washington. Venue for any suit or action brought to enforce this Agreement shall lie in Yakima County, Washington. 11. Costs and Attorney's Fees. Borrower shall pay Lender's reasonable attorney's fees, costs and expenses in the event of Borrower's default in any of its obligations hereunder, or any of Borrower's obligations in any other agreement between Borrower and Lender, including but not limited to such amounts incurred in any collection activity or legal action in state or any federal court. NOTICE TO BORROWER: Do not sign this Agreement before you read it. You are entitled to and shall receive a copy of the Agreement you signed. You have the right to pay in advance the unpaid balance of this Agreement. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. BORROWER: Horizon of Sunnyside LENDER: The City of Yakima R. A. Zais, Jr., City Manager City of Yakima 129 North Second Street Yakima, WA 98901 ,,, t\K I /144 cATTEST: ,, ,"-"=,,,, -k,6„ ( sf,f.,c,--F`q Y ' - - - aren Roberts, City Clerk \ f:\ clients \dab \yakima \housing \horizon \master loan agreement- revised clean.doc 2/5/2003 11:27 amdab Page 4 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No.: 4 % For Meeting of: January 21, 2003 ITEM TITLE: Horizon, Inc. on behalf of Pat's College has requested a $15,000 loan from the 2002 CDBG Economic Development Budget. This loan would help keep Pat's College operating and providing important life skills to developmentally disabled persons, while they wait to receive funding from the Department of Housing and Urban Development. SUBMITTED BY: William Cook, Director of Community and Economic Development CONTACT PERSON/TELEPHONE: William Cobabe, Neighborhood Development Services, Manager (575-6101) SUMMARY EXPLANATION: Pat's College has been providing life skills training to developmentally disabled person living in Yakima for 25 years. Senator Murray has sponsored a request for a Federal grant that will provide operating funds for Horizon for the next 2 - 3 years. While the request is expected to be funded, Congress has not yet enacted the budget for 2003. This inaction has resulted in an operating budget shortfall for Pat's College. They have asked for a loan of CDBG funds to cover the shortfall (not more than $15,000 at $1,500 per month or until HUD funds are received, whichever is less. These funds can be made available from the approved 2002 CDBG Budget as an economic development activity. It is understood by all parties that it is Horizon/Pat's College's responsibility to secure alternative funding for future operating expenses beyond the City's $15,000 gap funding should the anticipated federal grant not be approved by congress or that additional delays create additional operating budget shortfalls. This loan would keep Pat's college from closing, enabling them to continue providing important life skills to developmentally disabled persons and it also preserves the jobs of three staff persons. By unanimous vote at the January 14, 2003 Council Neighborhood Development Subcommittee meeting, the Pat's College request was recommended to be forwarded to full Council for approval. Resolution Ordinance Contract Other Specify Funding Source: 2002 CDBG Economic Dev y •ment B • get APPROVAL FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Approve Loan Request. BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2003-07