HomeMy WebLinkAboutR-2019-003 Section 108 HUD Loan Refinance Participation AuthorizationA RESOLUTION
RESOLUTION NO. R-2019-003
authorizing the City of Yakima to participate in the HUD public offering as
part of two Section 108 Loan Guarantee Assistance Program to refinance
two existing notes or other obligation in the original principal amount of
$2,417,000, for the Morrier Hotel LLC project of the Hilton Gardens Inn
and a second note for $341,000 for the Hilton Gardens Inn
WHEREAS, the City of Yakima, by Resolution R-2004-173, adopted November 16, 2004,
authorized an application seeking loan guarantee assistance under Section 108 of the Housing
and Community Development Act of 1974, as amended, from the United States Department of
Housing and Urban Development ("HUD"), and did authorize City Manager, Richard R. Zais to
execute the documents necessary to accomplish the transaction, and did accept HUD's
guarantee of Section 108 note numbers B-02-MC-53-008 and B-04-MC-53-008 (the "Notes") for
the Hilton Garden Hotel Project under a Section 108 Contract for Loan Guarantee Assistance
dated September 14, 2006 (the "Contract"); and
WHEREAS, the assistance provided by HUD was the guarantee of the Notes in the
original principal amount of $3,560,000, plus interest thereon; and
WHEREAS, HUD has notified the City of Yakima that a public offering will occur in
February, 2019, which will reduce and solidify the interest rate on the Notes, and to participate
the City of Yakima must immediately notify HUD of its intention to refinance all or a portion of its
existing Section 108 commitment through the public offering; and
WHEREAS, HUD may require, as a condition of participation in the public offering, that
City of Yakima_execute documents related to the transaction, and whereas Morrier Hotel, INC has
previously agreed to pay the City of Yakima share, as determined by HUD, of the customary and
usual issuance, underwriting, legal, and other costs related to the public offering and future
administration of the Notes and the trust certificates, in addition to Morrier Hotel, INC's obligation
to pay the principal and interest on the Notes; and
WHEREAS, it is economically sound and in the best interest of the City of Yakima to
accept more favorable fixed rates of interest under the Section 108 Loan Guarantee program
offered by HUD under the public offering; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
1. That the City Manager, Cliff Moore, or his duly authorized agent, shall notify HUD of
the City's and Morrier Hotel, INC's desires to participate in the February, 2019, public
offering by HUD through the loan guarantee assistance program under Section 108
of the Housing and Community Development Act of 1974, as amended, for the
existing obligation of $2,758,000 issued in the original principal amount of $3,560,000,
and to refinance the loan and the related Notes at such rates of interest that will be
determined by HUD at the time of the public offering. Payment of the principal of and
interest on the Notes (including any refinancing obligations) shall be as provided in
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the Contract and related documents. Such Notes (and obligations issued to refinance
such Notes) are not general obligations of the City of Yakima, and shall not be
included in the debt capacity calculations of the City of Yakima for either constitutional
or statutory debt capacity purposes.
2. That the City Manager, Cliff Moore, is authorized to execute the necessary documents
as required by HUD to refinance the existing Notes and to execute such other
documents, contracts, amendments and agreements with HUD, and to authorize
payment of any required fees, as may be necessary to effectuate this refinancing
transaction.
ADOPTED BY THE CITY COUNCIL this 8th day of January, 2019.
ATTEST:
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U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER
SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT
OF 1974, AS AMENDED, 42 U.S.C. §5308
Date of Contract JAN 2 2 2019
This Contract for Loan Guarantee Assistance ("Contract") is
entered into between the City of Yakima, Washington as Borrower
(the "Borrower"), and the Secretary of Housing and Urban
Development ("Secretary"), as guarantor for the Guarantee made
pursuant to section 108 ("Section 108") of title I of the
Housing and Community Development Act of 1974, as amended (the
"Act") and 24 CFR Part 570, Subpart M, of the promissory note
executed contemporaneously herewith and numbered B-04-MC-53-
0008, in the Maximum Commitment Amount of $ 2,417,000, and any
amended note or note issued in substitution for such note and
having the same note number (the "Note"). The funds paid or
credited to the account of the Borrower pursuant to the Note are
referred to herein as the "Guaranteed Loan
(including the Fiscal Agency Agreement and
as defined in Section I.A. of the Note and
is hereby incorporated into the Contract.
Funds." The Note
the Trust Agreement
incorporated therein)
Terms used in the
Contract with initial capital letters and not otherwise defined
in the text hereof shall have the respective meanings given
thereto in the Note. The Fiscal Agency Agreement and the Trust
Agreement are sometimes collectively referred to herein as the
"Fiscal Agency/Trust Agreements," and the Fiscal Agent and the
Trustee respectively are sometimes collectively referred to as
the "Fiscal Agent/Trustee."
PART I
A. The Note: Advances and Records. The Note provides that
Advances and Conversion Date Advances shall be made
thereunder upon the written request of the Borrower and the
approval of the Secretary, pursuant to this Contract and the
Fiscal Agency Agreement. The Commitment Schedule attached
to the Note represents the principal repayment schedule for
the Maximum Commitment Amount of the Note. At all times,
the total amount of all Advances and Conversion Date
Advances under the Note for all Principal Due Dates shall
not exceed the Maximum Commitment Amount of the Note. Prior
to the Conversion Date (as defined in the Note, Section
I.A.), the total amount of Advances made by the Holder for
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each Principal Due Date under the Note shall not exceed the
applicable Commitment Amount for such Principal Due Date set
forth in the Commitment Schedule of the Note. Prior to the
Conversion Date, the Borrower agrees that the Fiscal Agent
pursuant to the Fiscal Agency Agreement shall record the
date and amount of each payment and Advance under the Note
and shall maintain the books and records of all Advances and
Conversion Date Advances for each Principal Due Date,
interest rates on Advances, payments, and Principal Amounts
outstanding for each Principal Due Date. On and after the
Conversion Date, the Borrower agrees that the Trustee
pursuant to the Trust Agreement will maintain the books and
records of all payments on the Note and all Principal
Amounts and interest rates on such Principal Amounts (each
as to be set forth on Schedule P&I to the Note). No
advances of any kind may be made on the Note after its
Conversion Date.
B. Borrower's Requests for Advances. All requests for Advances
or Conversion Date Advances by the Borrower under the Note
shall: be in writing; specify the amount of the Advance
requested; identify the Note by Borrower, number and Maximum
Commitment Amount; be addressed to the Secretary at the
address for notices specified in paragraph 12(f) of this
Contract; be signed by an authorized official of the
Borrower; and otherwise be in the form prescribed by the
Secretary. Advances and Conversion Date Advances shall be
requested and will only be approved and made in increments
of not less than $1,000 for any Principal Due Date. A
request for an initial Advance under a Note, or a request
for a Conversion Date Advance, shall be received by the
Secretary at least ten Business Days prior to the Borrower's
proposed Funding Date or Conversion Date, as applicable.
All other requests for Advances shall be received by the
Secretary not less than five Business Days prior to the
proposed Funding Date. The Borrower may not deliver a Note
or a request for an Advance or Conversion Date Advance to
the Secretary more than two calendar months prior to the
Borrower's proposed Funding Date. At least two Business
Days prior to the proposed Funding Date or Conversion Date
if the Borrower's request was timely received, or the next
available Funding Date for which the request was timely
received, the Secretary shall, except as otherwise provided
in paragraph 11(c) or 12 hereof, deliver a corresponding
Authorization Order or Advance Order (as applicable) to the
Fiscal Agent in accordance with Section 2.03 or 2.04 of the
Fiscal Agency Agreement for the applicable Funding Date or
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Conversion Date. If the Borrower requests an Advance or
Conversion Date Advance of less than the outstanding Maximum
Commitment Amount under the Note, the Borrower may also
specify in its written request the amount of the Advance or
Conversion Date Advance to be allocated to each Commitment
Amount or Principal Amount per Principal Due Date under the
Note. If the Borrower does not specify how the Advance or
Conversion Date Advance should be allocated among Commitment
Amounts/Principal Due Dates, the Borrower hereby authorizes
the Secretary to direct the Fiscal Agent to allocate the
Advance to the respective Commitment Amounts or Principal
Amounts in order of the earliest Principal Due Date(s).
C. Conversion; Public Offering. On the Conversion Date (if
any), trust certificates backed by the Note (and similar
notes issued by other Section 108 borrowers) will be
purchased for a purchase price of the full principal amount
thereof by underwriters selected by the Secretary (the
"Underwriters") pursuant to an Underwriting Agreement
between the Underwriters and the Secretary, at a closing on
such Conversion Date as determined by the Secretary and the
Underwriters. The Borrower agrees that the interest rate at
which the trust certificate of a specified maturity is sold
to the Underwriters shall govern the interest rate inserted
on the Conversion Date in Schedule P&I of the Note for the
Principal Amount of corresponding maturity.
D. Consents. By execution of this Contract, the Borrower
ratifies and consents to the Secretary's selection of the
Underwriters and authorizes the Secretary to negotiate with
the Underwriters the terms of the Underwriting Agreement and
of the public offering of interests in the trust certificates
to investors (including the applicable interest rates). In
addition, by execution hereof the Borrower ratifies and
consents to the Secretary's selection of the Fiscal
Agent/Trustee and agrees to the respective terms of the
Fiscal Agency/Trust Agreements. If Advances have been made
in the Maximum Commitment Amount of the Note not less than
ten Business Days prior to the proposed Conversion Date, or
if the Borrower requests a Conversion Date Advance, the
Borrower authorizes the Secretary to deliver Schedule P&I to
the Note completed in accordance herewith to the Fiscal
Agent/Trustee on the Conversion Date in accordance with the
Fiscal Agency/Trust Agreements, concurrent with delivery of
the Secretary's Guarantee of the trust certificates at the
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closing on the Conversion Date, and thereafter the Note shall
be enforceable in accordance with its terms including
Schedule P&I. In addition, the Secretary reserves the right
to notify the Borrower not less than one calendar month in
advance of a specified Conversion Date that the Note will be
sold to the Underwriters on such date, if the Secretary in
his sole discretion determines that market conditions or
program needs require the participation in the proposed
public offering of all or substantially all Borrowers with
outstanding Advances.
E. Prior Contracts. This Contract governs actions taken
pursuant to this Contract, including actions under paragraph
4 of this Contract that were taken before the date of the
Note. As of the date of the Secretary's Guarantee of the
Note, this Contract supersedes any prior Contract or
Contracts for Loan Guarantee Assistance entered into between
the parties with respect to the Guaranteed Loan Funds, the
terms of the Secretary's Guarantee, and any other matter
covered by this Contract, provided that the prior contract or
prior contracts continue to apply in the following instances:
1. Any prior contract or prior contracts continue to govern
any action taken by the Borrower or the Secretary pursuant
thereto and prior to the Secretary's Guarantee of the Note;
2. This Contract does not supersede any prior contract or
prior contracts with respect to any note having the same
note number other than the promissory note identified in
paragraph 15(a); and
3. The provisions for security or other Borrower -specific
terms for the benefit of the Secretary or to ensure program
compliance contained in any prior contract or prior
contracts continue to remain in force and are not
superseded by this Contract. These additional security
provisions or other Borrower -specific terms of the prior
contract (typically found in paragraphs 5., 12., 13., or
15.) are hereby incorporated in this Contract and shall be
deemed a part hereof. These incorporated provisions apply
as security for repayment of the Note, and such other
charges as may be authorized in this Contract in addition
to the security identified in paragraphs 5(a), 5(b), 5(d),
or 5(e) hereof.
[Rest of Page Intentionally Left Blank]
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PART II
1. Receipt, Deposit and Use of Guaranteed Loan Funds.
(a) Except for funds deducted on the Conversion Date
pursuant to paragraph 4(b) and fees and charges deducted by
the Fiscal Agent/Trustee pursuant to paragraph 4(a), or
funds used to pay off any note refinanced by the Note, the
Guaranteed Loan Funds shall be electronically transferred in
accordance with the Borrower's instructions for deposit in a
separate, identifiable account (the "Guaranteed Loan Funds
Account") with a financial institution whose deposits or
accounts are Federally insured. The Guaranteed Loan Funds
Account shall be established and designated as prescribed in
the attached form document entitled "Letter Agreement for
Section 108 Loan Guarantee Program Deposit Account"
(Attachment 1) and shall be continuously maintained for the
Guaranteed Loan Funds. Such Letter Agreement must be
executed and submitted to the Secretary when the Guaranteed
Loan Funds Account is established.
The Borrower shall make withdrawals from said account only
for payment of the costs of approved Section 108 activities,
for transfer to the Loan Repayment Account or for the
temporary investment of funds pursuant to this paragraph
1(a). Such temporary investment of funds into the
Guaranteed Loan Funds Investment Account shall be required
within three Business Days after the balance of deposited
funds exceeds the amount of the Federal deposit insurance on
the Guaranteed Loan Funds Account. At that time, any
balance of funds in the Guaranteed Loan Funds Account
exceeding such insurance coverage shall be fully (100%) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof, held in the Guaranteed Loan Funds
Investment Account.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with the cash requirements of the
approved activities. In no event shall the investments
mature on or after December 31, 2019, or have maturities
which exceed one year. All such investments shall be held
in trust for the benefit of the Secretary by the above
financial institution in an account (the "Guaranteed Loan
Funds Investment Account") established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Investment
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Account" (Attachment 2), which account shall be maintained
for all Government Obligations purchased with funds from the
Guaranteed Loan Funds Account. The Guaranteed Loan Funds
Investment Account need only be established if and when the
Borrower is required to invest, or otherwise invests, the
Guaranteed Loan Funds in Government Obligations. Such
Letter Agreement must be executed and submitted to the
Secretary when the Guaranteed Loan Funds Investment Account
is established. All proceeds and income derived from such
investments shall be returned to the Guaranteed Loan Funds
Account.
All funds in the Guaranteed Loan Funds Account or the
Guaranteed Loan Funds Investment Account must be withdrawn
and disbursed by the Borrower for approved activities by
December 31, 2019. Any funds remaining in either Account
after this date shall be immediately transferred to the Loan
Repayment Account established pursuant to paragraph 6 of
this Contract.
(b) The Borrower shall by the fifteenth day of each month
provide the Secretary with an electronic copy of a statement
showing the balance of funds in the Guaranteed Loan Funds
Account and the withdrawals from such account during the
preceding calendar month, and an electronic copy of a
statement identifying the obligations and their assignments
in the Guaranteed Loan Funds Investment Account. Borrower
shall email the electronic copies to 108reports@hud.gov.
(c) Upon the Secretary giving notice that the Borrower is
in Default under this Contract or the Note, all right,
title, and interest of the Borrower in and to the Guaranteed
Loan Funds and Guaranteed Loan Funds Investment Accounts
shall immediately vest in the Secretary for use in making
payment on the Note, purchase of Government Obligations in
accordance with paragraph 10, or payment of any other
obligations of the Borrower under this Contract or the
Fiscal Agency/Trust Agreements.
2. Payments Due on Note; Final Payment and Discharge. The
Borrower shall pay to the Fiscal Agent/Trustee, as
collection agent for the Note, all amounts due pursuant to
the terms of the Note. In accordance with the Note and the
Fiscal Agency/Trust Agreements, payment shall be made by
3:00 P.M. (New York City time) on the seventh Business Day
(the "Note Payment Date") preceding the relevant Interest
Due Date or Principal Due Date (each as defined in the
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Note). If any Note Payment Date falls on a day that is not
a Business Day, then the required payment shall be made on
the next Business Day. Payment may be made by check or wire
transfer.
Upon final payment of all amounts due to Holders under the
Note, including any payment made by the Secretary pursuant
to the Guarantee, the Fiscal Agent/Trustee is required by
the Fiscal Agency/Trust Agreements to return the Note to the
Secretary. Upon final payment to the Secretary of any
amounts due as a result of Guarantee Payments or otherwise
due under this Contract, the Secretary will cancel and
return the Note to the Borrower in discharge of the
Borrower's obligations under the Note.
3. Selection of New Fiscal Agent or Trustee. The Secretary
shall select a new Fiscal Agent or Trustee if the Fiscal
Agent or Trustee resigns or is removed by the Secretary.
The Borrower hereby consents in advance to any such
selection and to any changes in the Fiscal Agency/Trust
Agreements agreed to by any Fiscal Agent or Trustee and the
Secretary, subject to paragraph 4(e) of this Contract.
4. Payments Due Fiscal Agent or Trustee; Documents to the
Secretary.
(a) The Borrower agrees to pay the fees of the Fiscal Agent
as required by Exhibit G to the Fiscal Agency Agreement, and
any additional amounts that may be due pursuant to Section
6.01 of the Fiscal Agency Agreement. If not paid by the
Borrower by any other means prior thereto, the Borrower
agrees that any such fees or additional amounts that have
been incurred prior to an Advance or a Conversion Date
Advance may be deducted by the Fiscal Agent/Trustee from the
proceeds of the Advance or Conversion Date Advance, as
applicable.
(b) The Borrower agrees to pay the Borrower's share, as
determined by the Secretary, of the customary and usual
issuance, underwriting, and other costs related to the
public offering and future administration of the Note and
the trust certificates, as approved by the Secretary,
including the cost of reimbursement and/or compensation of
the Trustee pursuant to the Trust Agreement, including
Sections 3.11 and 7.01 thereof. In connection with the
public offering on the Conversion Date, such payment shall
either be made by wire transfer to the Trustee on the day
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prior to the Conversion Date or shall be deducted from the
Guaranteed Loan Funds on the Conversion Date.
(c) The Borrower shall submit to the Secretary not later
than five Business Days prior to the Funding Date for the
initial Advance hereunder, or if not submitted earlier,
prior to any Conversion Date or Public Offering Date
applicable to the Note, this executed Contract, the executed
Note, a request for an Advance or a Conversion Date Advance
(as applicable) in proper form, and an opinion acceptable to
the Secretary from the Borrower's counsel to the effect
that: (i) the governing body of the Borrower has authorized
by resolution or ordinance, in accordance with applicable
State and local law, the issuance of the Note and the
execution of this Contract; (ii) the Note and this Contract
are valid, binding, and enforceable obligations of the
Borrower; (iii) the pledge of funds pursuant to 24 CFR
570.705(b)(2) and paragraph 5(a) of this Contract is valid
and binding; and (iv) there is no outstanding litigation
that will affect the validity of the Note or this Contract.
In addition, the Borrower shall submit any other additional
documents or opinions specifically required by this Contract
(e.g., paragraph 5(c), or paragraph 15, et seq.), at the
time required thereby.
(d) The Borrower agrees to reimburse the Underwriters upon
demand by the Secretary for the Borrower's share, as
determined by the Secretary, of all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of
counsel) incurred in connection with a proposed public
offering, if the Underwriters incur such additional costs for
the public offering because of any refusal, inability, or
failure on the part of the Borrower timely to submit in
acceptable form any document required by this Contract
(including paragraph 4(c)), or because of any withdrawal by
the Borrower from the public offering, after the Borrower has
submitted a request for a Conversion Date Advance hereunder.
By execution and delivery of this Contract to the Secretary,
the Borrower hereby expressly authorizes the Secretary to pay
amounts due under this paragraph from funds pledged under
paragraph 5(a) of this Contract.
(e) The undertakings in paragraphs 3 and 4 of this Contract
are expressly subject to the requirement that the Fiscal
Agency/Trust Agreements shall in no event require payment of
fees or charges, reimbursement of expenses, or any
indemnification by the Borrower from any source other than
funds pledged pursuant to paragraphs 5 or 15 et seq. of this
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Contract.
5. Security. The Borrower hereby pledges as security for
repayment of the Note, and such other charges as may be
authorized in this Contract, the following:
(a) All allocations or grants which have been made or for
which the Borrower may become eligible under Section 106 of
the Act, as well as any grants which are or may become
available to the Borrower pursuant to Section 108(q).
(b) Program income, as defined at 24 CFR 570.500(a)(or any
successor regulation), directly generated from the use of
the Guaranteed Loan Funds.
(c) Other security as described in or incorporated by
paragraphs E and paragraph 15, et seq.
(d) All proceeds (including insurance and condemnation
proceeds) from any of the foregoing.
(e) All funds or investments in the accounts established
pursuant to paragraphs 1 and 6 of this Contract.
6. Loan Repayment Account.
(a) All amounts pledged pursuant to paragraphs 5(b), 5(c),
and 5(d) of this Contract shall be deposited immediately on
receipt in a separate identifiable account (the "Loan
Repayment Account") with a financial institution whose
deposits or accounts are Federally insured. The Loan
Repayment Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Deposit
Account" (Attachment 1) and shall be maintained for such
pledged funds. The Loan Repayment Account need only be
established if and when the Borrower receives amounts
pledged pursuant to paragraph 5(b), 5(c) or 5(d). Such
Letter Agreement must be executed and submitted to the
Secretary when the Loan Repayment Account is established.
Borrower shall make withdrawals from said account only for
the purpose of paying interest and principal due on the Note
(including the purchase of Government Obligations in
accordance with paragraph 10 hereof), for payment of any
other obligation of the Borrower under this Contract or the
Fiscal Agency/Trust Agreements, or for the temporary
investment of funds pursuant to this paragraph, until final
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payment and discharge of the indebtedness evidenced by the
Note, unless otherwise expressly authorized by the Secretary
in writing. Such temporary investment of funds shall be
required within three Business Days after the balance of
deposited funds exceeds the amount of the Federal deposit
insurance on the Loan Repayment Account. At that time, the
balance of funds in the Loan Repayment Account exceeding
such insurance coverage shall be fully (100%) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with cash requirements for payment of
principal and interest as required under the Note. In no
event shall the maturities of such investments exceed one
year. All such investments shall be held in trust for the
benefit of the Secretary by the above financial institution
in an account (the "Loan Repayment Investment Account")
established and designated as prescribed in the attached
form document entitled "Letter Agreement for Section 108
Loan Guarantee Program Investment Account" (Attachment 2),
which account shall be maintained for all Government
Obligations purchased with funds from the Loan Repayment
Account. Such Letter Agreement must be executed and
submitted to the Secretary when the Loan Repayment
Investment Account is established. All proceeds and income
derived from such investments shall be returned to the Loan
Repayment Account.
(b) Borrower shall by the fifteenth day of each month,
provide the Secretary with an electronic copy of a statement
showing the balance of funds in the Loan Repayment Account
and the deposits and withdrawals of all funds in such
account during the preceding calendar month and an
electronic copy of a statement identifying the obligations
and their assignments in the Loan Repayment Investment
Account. Borrower shall email the electronic copies to
108reports@hud.gov.
(c) Upon the Secretary giving notice that the Borrower is
in Default under this Contract or the Note, all right,
title, and interest of the Borrower in and to the Loan
Repayment and Loan Repayment Investment Accounts shall
immediately vest in the Secretary for use in making payment
on the Note, purchase of Government Obligations in
accordance with paragraph 10, or payment of any other
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obligation of the Borrower under this Contract or the Fiscal
Agency/Trust Agreements.
7. Use of CDBG, EDI or BEDI Funds for Repayment. Any funds
available to the Borrower under Section 106 of the Act
(including program income derived therefrom) are authorized to
be used by the Borrower for payments due on the Note, Optional
Redemption (as defined in the Note), payment of any other
obligation of the Borrower under this Contract or the Fiscal
Agency/Trust Agreements, or the purchase of Government
Obligations in accordance with paragraph 10. Any funds
specifically available to the Borrower for such payments or as
a debt service reserve under an EDI or BEDI Grant Agreement
pursuant to Section 108(q) of the Act which supports the
eligible project(s) and activities financed by the Note may
also be used therefor; any other use of Section 108(q) funds
for such purposes shall require the prior written approval of
the Secretary. Unless otherwise specifically provided herein
or unless otherwise expressly authorized by the Secretary in
writing, the Borrower shall substantially disburse funds
available in the Loan Repayment or the Loan Repayment
Investment Accounts before funds from grants under Section 106
of the Act are withdrawn from the U.S. Treasury for such
purposes.
8. Secretary's Right to Restrict Use of CDBG Funds to Repayment.
Upon a determination by the Secretary that payments required by
paragraph 2 and/or paragraph 4 of this Contract are unlikely to
be made as specified, the Secretary may give the Borrower
notice that the availability to the Borrower of funds pledged
under paragraph 5(a) of this Contract for purposes other than
satisfaction of the pledge is being restricted. This
restriction shall be in an amount estimated by the Secretary to
be sufficient to ensure that the payments referred to in
paragraph 2 and/or paragraph 4 hereof are made when due. This
restriction may be given effect by conditioning the restricted
amounts to prohibit disbursement for purposes other than
satisfaction of the pledge at the time such restricted funds
are approved as grants, by limiting the Borrower's ability to
draw down or expend the restricted funds for other purposes,
and by disapproving payment requests submitted with respect to
such grants for purposes other than satisfaction of the pledge.
9. Secretary's Right to Use Pledged Funds for Repayment. The
Secretary may use funds pledged under paragraph 5(a) of this
Contract or funds restricted under grants pursuant to paragraph
8 of this Contract to make any payment required of the Borrower
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under paragraph 2 and/or paragraph 4, if such payment has not
been timely made by the Borrower.
10. Defeasance. For purposes of this Contract, after the
Conversion Date the Note shall be deemed to have been paid
(defeased) if there shall have been deposited with the Trustee
either moneys or Government Obligations (as defined below),
which in the sole determination of the Secretary, mature and
bear interest at times and in amounts sufficient, together with
any other moneys on deposit with the Trustee for such purpose,
to pay when due the principal and interest to become due on the
Note. The Aggregate Principal Amount of the Note or any unpaid
Principal Amount may be so defeased, in whole or in part, as of
any Interest Due Date, or any other Business Day acceptable to
both HUD and the Borrower. In accordance with the Note and the
Trust Agreement, the Borrower shall give timely notice and
written instructions to the Secretary and the Trustee
concerning any principal amounts proposed to be defeased,
including any Optional Redemptions proposed, which instructions
shall be approved by the Secretary. If the unpaid Aggregate
Principal Amount of the Note guaranteed pursuant to this
Contract shall be defeased and deemed to have been paid in
full, then the Borrower shall be released from all agreements,
covenants, and further obligations under the Note.
"Government Obligation" means a direct obligation of, or any
obligation for which the full and timely payment of principal
and interest is guaranteed by, the United States of America,
including but not limited to, United States Treasury
Certificates of Indebtedness, Notes and Bonds - State and Local
Government Series or certificates of ownership of the principal
of or interest on direct obligations of, or obligations
unconditionally guaranteed by, the United States of America,
which obligations are held in trust by a commercial bank which
is a member of the Federal Reserve System and has capital and
surplus (exclusive of undivided profits) in excess of
$100,000,000.
11. Default. (a) A Default under the Note and this Contract
shall occur upon failure by the Borrower to:
(i) pay when due an installment of principal or
interest on the Note; or (ii) punctually and properly
perform, observe, and comply with any covenant,
agreement, or condition contained in: (A) this
Contract, (B) any security agreement, deed of trust,
mortgage, assignment, guarantee, or other contract
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securing payment of indebtedness evidenced by the Note,
or (C) any future amendments, modifications,
restatements, renewals, or extensions of any such
documents.
(b) The Borrower waives notice of Default and opportunity
for hearing with respect to a Default under paragraph 11(a).
(c) In addition to Defaults under paragraph 11(a), the
Secretary may declare the Note in Default if the Secretary
makes a final decision in accordance with the provisions of
section 111 of the Act and 24 CFR 570.913 (or any successor
provisions), including requirements for reasonable notice
and opportunity for hearing, that the Borrower has failed to
comply substantially with title I of the Act.
Notwithstanding any other provision, following the giving of
such reasonable notice, the Secretary may, in the
Secretary's sole discretion pending the Secretary's final
decision, withhold the guarantee of any or all obligations
not yet guaranteed on behalf of the Borrower under
outstanding commitments, suspend approval of any further
Advances or Conversion Date Advances under the Note, and/or
direct the Borrower's financial institution to: refuse to
honor any instruments drawn upon, or withdrawals from, the
Guaranteed Loan Funds Account or the Loan Repayment Account
initiated by the Borrower, and/or refuse to release
obligations and assignments by the Borrower from the
Guaranteed Loan Funds Investment Account or the Loan
Repayment Investment Account.
12. Remedial Actions. Upon a Default or declaration of Default
under this Contract, the Secretary may, in the Secretary's sole
discretion, take any or all of the following remedial actions:
(a) With any funds or security pledged under this Contract,
the Secretary may: (i) continue to make payments due on the
Note, (ii) make a prepayment under Section I.D. of the Note or
make an acceleration payment with respect to the principal
amount of the Note subject to Optional Redemption as provided
in Section III of the Note, (iii) purchase Government
Obligations in accordance with paragraph 10 of this Contract,
(iv) pay any interest due for late payment as provided in the
Note, this Contract, or the Fiscal Agency/Trust Agreements, (v)
pay any other obligation of the Borrower under this Contract or
the Fiscal Agency/Trust Agreements, and/or (vi) pay any
reasonable expenses incurred by the Secretary or the Fiscal
Agent/Trustee as result of the Borrower's Default.
14
(b) The Secretary may withhold the guarantee of any or all
obligations not yet guaranteed or the disbursement of any or
all grants not yet disbursed in full under outstanding
guarantee commitments or grant approvals for the Borrower under
Sections 108 and/or 106 of the Act.
(c) The Secretary may withhold approval of any or all further
Advances or Conversion Date Advances under the Note (if
applicable); direct the Borrower's financial institution to
refuse to: honor any instruments drawn upon, or withdrawals
from, the Guaranteed Loan Funds Account or the Loan Repayment
Account by the Borrower, and/or to release obligations and
assignments by the Borrower from the Guaranteed Loan Funds
Investment Account or the Loan Repayment Investment Account;
and/or direct the Borrower and/or the Borrower's financial
institution to transfer remaining balances from the Guaranteed
Loan Funds Account to the Loan Repayment Account.
(d) Until the Conversion Date, or with respect to amounts
subject to Optional Redemption, the Secretary may accelerate
the Note.
(e) The Secretary may exercise any other appropriate remedies
or sanctions available by law or regulation applicable to the
assistance provided under this Contract, or may institute any
other action available under law to recover Guaranteed Loan
Funds or to reimburse the Secretary for any payment under the
Secretary's Guarantee or any reasonable expenses incurred by
the Secretary as a result of the Default.
(f) All notices and submissions provided for hereunder shall
be in writing (including by telex, telecopier or any other form
of facsimile communication) and mailed or sent or delivered, as
to each party hereto, at its address set forth below or at such
other address as shall be designated by such party in a written
notice to the other party hereto. All such notices and other
communications shall be effective when received as follows:
(i) if sent by hand delivery, upon delivery; (ii) if sent by
mail, upon the earlier of the date of receipt or five Business
Days after deposit in the mail, postage prepaid; (iii) if sent
by telex, upon receipt by the sender of an answer back; and
(iv) if sent by telecopier, upon receipt.
The Secretary:
U.S. Dept. of Housing and Urban Development
15
Attention: Paul Webster, Director
Financial Management Division
451 7th Street SW, Room 7180
Washington, DC 20410
Borrower:
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13. Limited Liability. Notwithstanding any other provision of this
Contract, the Fiscal Agency/Trust Agreements or the Note, any
recovery against the Borrower for any liability for amounts due
pursuant to the Note, the Fiscal Agency/Trust Agreements or
this Contract shall be limited to the sources of security
pledged in paragraph 5 or any Special Conditions of this
Contract.
14. Incorporated Grant Agreement. The Contract and the Note are
hereby incorporated in and made a part of the Grant Agreement
authorized by the Secretary on Ap M as /4 under the
Funding Approval for grant number B-04-MC-53-0008 to the
Borrower. In carrying out activities with the Guaranteed Loan
Funds hereunder, the Borrower agrees to comply with the Act and
24 CFR Part 570, as provided in Subpart M thereof.
15. Special Conditions and Modifications:
(a) The Guaranteed Loan Funds shall be used only to redeem
principal amounts due or payable on or after August 1, 2019,
under that certain promissory note issued by the Borrower and
identified as Note Number B-04-MC-53-0008 Series 2006-A.
(b) Neither the general credit nor the taxing power of the
Borrower, or of the State in which the Borrower is located, is
pledged for any payment due under the Note, the Contract, or the
Fiscal Agency/Trust Agreements, unless the Borrower or the State
in which the Borrower is located agreed in this Contract or a
prior Contract to pledge its full faith and credit, moral
obligation, or similar pledge of its general credit or taxing
power.
(c) Additional Grounds for Default. Notice of Default.
Restriction of Pledged Grants. Availability of Other Remedial
16
Actions.
(i) The Borrower acknowledges and agrees that the
Secretary's guarantee of the Note is made in reliance upon the
availability of grants pledged pursuant to paragraph 5(a)
(individually, a "Pledged Grant" and, collectively, the "Pledged
Grants") in any Federal fiscal year subsequent to the Federal
fiscal year ending September 30, 2018 to: (A) pay when due the
payments to become due on the Note, or (B) defease (or, if
permitted, prepay) the full amount outstanding on the Note. The
Borrower further acknowledges and agrees that if the Secretary
(in the Secretary's sole discretion) determines that Pledged
Grants are unlikely to be available for either of such purposes,
such determination shall be a permissible basis for any of the
actions specified in paragraphs (ii) and (iii) below (without
notice or hearing, which the Borrower expressly waives).
(ii) Upon written notice from the Secretary to the
Borrower at the address specified in paragraph 12(f) above that
the Secretary (in the Secretary's sole discretion) has
determined that Pledged Grants are unlikely to be available for
either of the purposes specified in (A) and (B) of paragraph (i)
above (such notice being hereinafter referred to as the "Notice
of Impaired Security"), the Secretary may limit the availability
of Pledged Grants by withholding amounts at the time a Pledged
Grant is approved or by disapproving payment requests
(drawdowns) submitted with respect to Pledged Grants.
(iii) If after 60 days from the Notice of Impaired
Security the Secretary (in the Secretary's sole discretion)
determines that Pledged Grants are still unlikely to be
available for either of the purposes specified in (A) and (B) of
paragraph (i) above, the Secretary may declare the Note in
Default and exercise any and all remedies available under
paragraph 12. This paragraph (iii) shall not affect the right
of the Secretary to declare the Note and/or this Contract in
Default pursuant to paragraph 11 and to exercise in connection
therewith any and all remedies available under paragraph 12.
(iv) All notices and submissions provided for hereunder
shall be submitted as directed in paragraph 12(f) above.
[Rest of Page Intentionally Left Blank]
17
THE UNDERSIGNED, as authorized officials on behalf of the
Borrower or the Secretary, have executed this Contract for Loan
Guarantee Assistance, which shall be effective as of the date of
execution hereof on behalf of the Secretary.
The City of Yakima, WA
BORROWER
kooiro
(Name)
b4iMAA/W5Cr
(Title)
J6L11 1141
(Date)
CITY CONTRACT NO:
RESOLUTION NO:
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT
Stanley Gimont
(Name)
Deputy Assistant Secretary
for Grant Programs
(Title)
JAN 2 2 2019
(Date)
1
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER
SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT
OF 1974, AS AMENDED, 42 U.S.C. §5308
Date of Contract
JAN 2 2 2019
This Contract for Loan Guarantee Assistance ("Contract") is
entered into between the City of Yakima, Washington as Borrower
(the "Borrower"), and the Secretary of Housing and Urban
Development ("Secretary"), as guarantor for the Guarantee made
pursuant to section 108 ("Section 108") of title I of the
Housing and Community Development Act of 1974, as amended (the
"Act") and 24 CFR Part 570, Subpart M, of the promissory note
executed contemporaneously herewith and numbered B-02-MC-53-
0008, in the Maximum Commitment Amount of $ 341,000, and any
amended note or note issued in substitution for such note and
having the same note number (the "Note"). The funds paid or
credited to the account of the Borrower pursuant to the Note are
referred to herein as the "Guaranteed Loan Funds." The Note
(including the Fiscal Agency Agreement and the Trust Agreement
as defined in Section I.A. of the Note and incorporated therein)
is hereby incorporated into the Contract. Terms used in the
Contract with initial capital letters and not otherwise defined
in the text hereof shall have the respective meanings given
thereto in the Note. The Fiscal Agency Agreement and the Trust
Agreement are sometimes collectively referred to herein as the
"Fiscal Agency/Trust Agreements," and the Fiscal Agent and the
Trustee respectively are sometimes collectively referred to as
the "Fiscal Agent/Trustee."
PART I
A. The Note: Advances and Records. The Note provides that
Advances and Conversion Date Advances shall be made
thereunder upon the written request of the Borrower and the
approval of the Secretary, pursuant to this Contract and the
Fiscal Agency Agreement. The Commitment Schedule attached
to the Note represents the principal repayment schedule for
the Maximum Commitment Amount of the Note. At all times,
the total amount of all Advances and Conversion Date
Advances under the Note for all Principal Due Dates shall
not exceed the Maximum Commitment Amount of the Note. Prior
to the Conversion Date (as defined in the Note, Section
I.A.), the total amount of Advances made by the Holder for
2
each Principal Due Date under the Note shall not exceed the
applicable Commitment Amount for such Principal Due Date set
forth in the Commitment Schedule of the Note. Prior to the
Conversion Date, the Borrower agrees that the Fiscal Agent
pursuant to the Fiscal Agency Agreement shall record the
date and amount of each payment and Advance under the Note
and shall maintain the books and records of all Advances and
Conversion Date Advances for each Principal Due Date,
interest rates on Advances, payments, and Principal Amounts
outstanding for each Principal Due Date. On and after the
Conversion Date, the Borrower agrees that the Trustee
pursuant to the Trust Agreement will maintain the books and
records of all payments on the Note and all Principal
Amounts and interest rates on such Principal Amounts (each
as to be set forth on Schedule P&I to the Note). No
advances of any kind may be made on the Note after its
Conversion Date.
B. Borrower's Requests for Advances. All requests for Advances
or Conversion Date Advances by the Borrower under the Note
shall: be in writing; specify the amount of the Advance
requested; identify the Note by Borrower, number and Maximum
Commitment Amount; be addressed to the Secretary at the
address for notices specified in paragraph 12(f) of this
Contract; be signed by an authorized official of the
Borrower; and otherwise be in the form prescribed by the
Secretary. Advances and Conversion Date Advances shall be
requested and will only be approved and made in increments
of not less than $1,000 for any Principal Due Date. A
request for an initial Advance under a Note, or a request
for a Conversion Date Advance, shall be received by the
Secretary at least ten Business Days prior to the Borrower's
proposed Funding Date or Conversion Date, as applicable.
All other requests for Advances shall be received by the
Secretary not less than five Business Days prior to the
proposed Funding Date. The Borrower may not deliver a Note
or a request for an Advance or Conversion Date Advance to
the Secretary more than two calendar months prior to the
Borrower's proposed Funding Date. At least two Business
Days prior to the proposed Funding Date or Conversion Date
if the Borrower's request was timely received, or the next
available Funding Date for which the request was timely
received, the Secretary shall, except as otherwise provided
in paragraph 11(c) or 12 hereof, deliver a corresponding
Authorization Order or Advance Order (as applicable) to the
Fiscal Agent in accordance with Section 2.03 or 2.04 of the
Fiscal Agency Agreement for the applicable Funding Date or
3
Conversion
Conversion
Commitment
specify in
Date. If the Borrower requests an Advance or
Date Advance of less than the outstanding Maximum
Amount under the Note, the Borrower may also
its written request the amount of the Advance or
Conversion Date Advance to be allocated to each Commitment
Amount or Principal Amount per Principal Due Date under the
Note. If the Borrower does not specify how the Advance or
Conversion Date Advance should be allocated among Commitment
Amounts/Principal Due Dates, the Borrower hereby authorizes
the Secretary to direct the Fiscal Agent to allocate the
Advance to the respective Commitment Amounts or Principal
Amounts in order of the earliest Principal Due Date(s).
C. Conversion; Public Offering. On the Conversion Date (if
any), trust certificates backed by the Note (and similar
notes issued by other Section 108 borrowers) will be
purchased for a purchase price of the full principal amount
thereof by underwriters selected by the Secretary (the
"Underwriters") pursuant to an Underwriting Agreement
between the Underwriters and the Secretary, at a closing on
such Conversion Date as determined by the Secretary and the
Underwriters. The Borrower agrees that the interest rate at
which the trust certificate of a specified maturity is sold
to the Underwriters shall govern the interest rate inserted
on the Conversion Date in Schedule P&I of the Note for the
Principal Amount of corresponding maturity.
D. Consents. By execution of this Contract, the Borrower
ratifies and consents to the Secretary's selection of the
Underwriters and authorizes the Secretary to negotiate with
the Underwriters the terms of the Underwriting Agreement and
of the public offering of interests in the trust certificates
to investors (including the applicable interest rates). In
addition, by execution hereof the Borrower ratifies and
consents to the Secretary's selection of the Fiscal
Agent/Trustee and agrees to the respective terms of the
Fiscal Agency/Trust Agreements. If Advances have been made
in the Maximum Commitment Amount of the Note not less than
ten Business Days prior to the proposed Conversion Date, or
if the Borrower requests a Conversion Date Advance, the
Borrower authorizes the Secretary to deliver Schedule P&I to
the Note completed in accordance herewith to the Fiscal
Agent/Trustee on the Conversion Date in accordance with the
Fiscal Agency/Trust Agreements, concurrent with delivery of
the Secretary's Guarantee of the trust certificates at the
4
closing on the Conversion Date, and thereafter the Note shall
be enforceable in accordance with its terms including
Schedule P&I. In addition, the Secretary reserves the right
to notify the Borrower not less than one calendar month in
advance of a specified Conversion Date that the Note will be
sold to the Underwriters on such date, if the Secretary in
his sole discretion determines that market conditions or
program needs require the participation in the proposed
public offering of all or substantially all Borrowers with
outstanding Advances.
E. Prior Contracts. This Contract governs actions taken
pursuant to this Contract, including actions under paragraph
4 of this Contract that were taken before the date of the
Note. As of the date of the Secretary's Guarantee of the
Note, this Contract supersedes any prior Contract or
Contracts for Loan Guarantee Assistance entered into between
the parties with respect to the Guaranteed Loan Funds, the
terms of the Secretary's Guarantee, and any other matter
covered by this Contract, provided that the prior contract or
prior contracts continue to apply in the following instances:
1. Any prior contract or prior contracts continue to govern
any action taken by the Borrower or the Secretary pursuant
thereto and prior to the Secretary's Guarantee of the Note;
2. This Contract does not supersede any prior contract or
prior contracts with respect to any note having the same
note number other than the promissory note identified in
paragraph 15(a); and
3. The provisions for security or other Borrower -specific
terms for the benefit of the Secretary or to ensure program
compliance contained in any prior contract or prior
contracts continue to remain in force and are not
superseded by this Contract. These additional security
provisions or other Borrower -specific terms of the prior
contract (typically found in
15.) are hereby incorporated
deemed a part hereof. These
as security for repayment of
charges as may be authorized
to the security identified in
or 5(e) hereof.
paragraphs 5., 12., 13., or
in this Contract and shall be
incorporated provisions apply
the Note, and such other
in this Contract in addition
paragraphs 5(a), 5(b), 5(d),
[Rest of Page Intentionally Left Blank]
5
PART II
1. Receipt, Deposit and Use of Guaranteed Loan Funds.
(a) Except for funds deducted on the Conversion Date
pursuant to paragraph 4(b) and fees and charges deducted by
the Fiscal Agent/Trustee pursuant to paragraph 4(a), or
funds used to pay off any note refinanced by the Note, the
Guaranteed Loan Funds shall be electronically transferred in
accordance with the Borrower's instructions for deposit in a
separate, identifiable account (the "Guaranteed Loan Funds
Account") with a financial institution whose deposits or
accounts are Federally insured. The Guaranteed Loan Funds
Account shall be established and designated as prescribed in
the attached form document entitled "Letter Agreement for
Section 108 Loan Guarantee Program Deposit Account"
(Attachment 1) and shall be continuously maintained for the
Guaranteed Loan Funds. Such Letter Agreement must be
executed and submitted to the Secretary when the Guaranteed
Loan Funds Account is established.
The Borrower shall make withdrawals from said account only
for payment of the costs of approved Section 108 activities,
for transfer to the Loan Repayment Account or for the
temporary investment of funds pursuant to this paragraph
1(a). Such temporary investment of funds into the
Guaranteed Loan Funds Investment Account shall be required
within three Business Days after the balance of deposited
funds exceeds the amount of the Federal deposit insurance on
the Guaranteed Loan Funds Account. At that time, any
balance of funds in the Guaranteed Loan Funds Account
exceeding such insurance coverage shall be fully (1000) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof, held in the Guaranteed Loan Funds
Investment Account.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with the cash requirements of the
approved activities. In no event shall the investments
mature on or after December 31, 2019, or have maturities
which exceed one year. All such investments shall be held
in trust for the benefit of the Secretary by the above
financial institution in an account (the "Guaranteed Loan
Funds Investment Account") established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Investment
6
Account" (Attachment 2), which account shall be maintained
for all Government Obligations purchased with funds from the
Guaranteed Loan Funds Account. The Guaranteed Loan Funds
Investment Account need only be established if and when the
Borrower is required to invest, or otherwise invests, the
Guaranteed Loan Funds in Government Obligations. Such
Letter Agreement must be executed and submitted to the
Secretary when the Guaranteed Loan Funds Investment Account
is established. All proceeds and income derived from such
investments shall be returned to the Guaranteed Loan Funds
Account.
All funds in the Guaranteed Loan Funds Account or the
Guaranteed Loan Funds Investment Account must be withdrawn
and disbursed by the Borrower for approved activities by
December 31, 2019. Any funds remaining in either Account
after this date shall be immediately transferred to the Loan
Repayment Account established pursuant to paragraph 6 of
this Contract.
(b) The Borrower shall by the fifteenth day of each month
provide the Secretary with an electronic copy of a statement
showing the balance of funds in the Guaranteed Loan Funds
Account and the withdrawals from such account during the
preceding calendar month, and an electronic copy of a
statement identifying the obligations and their assignments
in the Guaranteed Loan Funds Investment Account. Borrower
shall email the electronic copies to 108reports@hud.gov.
(c) Upon the Secretary giving notice that the Borrower is
in Default under this Contract or the Note, all right,
title, and interest of the Borrower in and to the Guaranteed
Loan Funds and Guaranteed Loan Funds Investment Accounts
shall immediately vest in the Secretary for use in making
payment on the Note, purchase of Government Obligations in
accordance with paragraph 10, or payment of any other
obligations of the Borrower under this Contract or the
Fiscal Agency/Trust Agreements.
2. Payments Due on Note; Final Payment and Discharge. The
Borrower shall pay to the Fiscal Agent/Trustee, as
collection agent for the Note, all amounts due pursuant to
the terms of the Note. In accordance with the Note and the
Fiscal Agency/Trust Agreements, payment shall be made by
3:00 P.M. (New York City time) on the seventh Business Day
(the "Note Payment Date") preceding the relevant Interest
Due Date or Principal Due Date (each as defined in the
7
Note). If any Note Payment Date falls on a day that is not
a Business Day, then the required payment shall be made on
the next Business Day. Payment may be made by check or wire
transfer.
Upon final payment of all amounts due to Holders under the
Note, including any payment made by the Secretary pursuant
to the Guarantee, the Fiscal Agent/Trustee is required by
the Fiscal Agency/Trust Agreements to return the Note to the
Secretary. Upon final payment to the Secretary of any
amounts due as a result of Guarantee Payments or otherwise
due under this Contract, the Secretary will cancel and
return the Note to the Borrower in discharge of the
Borrower's obligations under the Note.
3. Selection of New Fiscal Agent or Trustee. The Secretary
shall select a new Fiscal Agent or Trustee if the Fiscal
Agent or Trustee resigns or is removed by the Secretary.
The Borrower hereby consents in advance to any such
selection and to any changes in the Fiscal Agency/Trust
Agreements agreed to by any Fiscal Agent or Trustee and the
Secretary, subject to paragraph 4(e) of this Contract.
4. Payments Due Fiscal Agent or Trustee; Documents to the
Secretary.
(a) The Borrower agrees to pay the fees of the Fiscal Agent
as required by Exhibit G to the Fiscal Agency Agreement, and
any additional amounts that may be due pursuant to Section
6.01 of the Fiscal Agency Agreement. If not paid by the
Borrower by any other means prior thereto, the Borrower
agrees that any such fees or additional amounts that have
been incurred prior to an Advance or a Conversion Date
Advance may be deducted by the Fiscal Agent/Trustee from the
proceeds of the Advance or Conversion Date Advance, as
applicable.
(b) The Borrower agrees to pay the Borrower's share, as
determined by the Secretary, of the customary and usual
issuance, underwriting, and other costs related to the
public offering and future administration of the Note and
the trust certificates, as approved by the Secretary,
including the cost of reimbursement and/or compensation of
the Trustee pursuant to the Trust Agreement, including
Sections 3.11 and 7.01 thereof. In connection with the
public offering on the Conversion Date, such payment shall
either be made by wire transfer to the Trustee on the day
8
prior to the Conversion Date or shall be deducted from the
Guaranteed Loan Funds on the Conversion Date.
(c) The Borrower shall submit to the Secretary not later
than five Business Days prior to the Funding Date for the
initial Advance hereunder, or if not submitted earlier,
prior to any Conversion Date or Public Offering Date
applicable to the Note, this executed Contract, the executed
Note, a request for an Advance or a Conversion Date Advance
(as applicable) in proper form, and an opinion acceptable to
the Secretary from the Borrower's counsel to the effect
that: (i) the governing body of the Borrower has authorized
by resolution or ordinance, in accordance with applicable
State and local law, the issuance of the Note and the
execution of this Contract; (ii) the Note and this Contract
are valid, binding, and enforceable obligations of the
Borrower; (iii) the pledge of funds pursuant to 24 CFR
570.705(b)(2) and paragraph 5(a) of this Contract is valid
and binding; and (iv) there is no outstanding litigation
that will affect the validity of the Note or this Contract.
In addition, the Borrower shall submit any other additional
documents or opinions specifically required by this Contract
(e.g., paragraph 5(c), or paragraph 15, et seq.), at the
time required thereby.
(d) The Borrower agrees to reimburse the Underwriters upon
demand by the Secretary for the Borrower's share, as
determined by the Secretary, of all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of
counsel) incurred in connection with a proposed public
offering, if the Underwriters incur such additional costs for
the public offering because of any refusal, inability, or
failure on the part of the Borrower timely to submit in
acceptable form any document required by this Contract
(including paragraph 4(c)), or because of any withdrawal by
the Borrower from the public offering, after the Borrower has
submitted a request for a Conversion Date Advance hereunder.
By execution and delivery of this Contract to the Secretary,
the Borrower hereby expressly authorizes the Secretary to pay
amounts due under this paragraph from funds pledged under
paragraph 5(a) of this Contract.
(e) The undertakings in paragraphs 3 and 4 of this Contract
are expressly subject to the requirement that the Fiscal
Agency/Trust Agreements shall in no event require payment of
fees or charges, reimbursement of expenses, or any
indemnification by the Borrower from any source other than
funds pledged pursuant to paragraphs 5 or 15 et seq. of this
9
Contract.
5. Security. The Borrower hereby pledges as security for
repayment of the Note, and such other charges as may be
authorized in this Contract, the following:
(a) All allocations or grants which have been made or for
which the Borrower may become eligible under Section 106 of
the Act, as well as any grants which are or may become
available to the Borrower pursuant to Section 108(q).
(b) Program income, as defined at 24 CFR 570.500(a)(or any
successor regulation), directly generated from the use of
the Guaranteed Loan Funds.
(c) Other security as described in or incorporated by
paragraphs E and paragraph 15, et seq.
(d) All proceeds (including insurance and condemnation
proceeds) from any of the foregoing.
(e) All funds or investments in the accounts established
pursuant to paragraphs 1 and 6 of this Contract.
6. Loan Repayment Account.
(a) All amounts pledged pursuant to paragraphs 5(b), 5(c),
and 5(d) of this Contract shall be deposited immediately on
receipt in a separate identifiable account (the "Loan
Repayment Account") with a financial institution whose
deposits or accounts are Federally insured. The Loan
Repayment Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Deposit
Account" (Attachment 1) and shall be maintained for such
pledged funds. The Loan Repayment Account need only be
established if and when the Borrower receives amounts
pledged pursuant to paragraph 5(b), 5(c) or 5(d). Such
Letter Agreement must be executed and submitted to the
Secretary when the Loan Repayment Account is established.
Borrower shall make withdrawals from said account only for
the purpose of paying interest and principal due on the Note
(including the purchase of Government Obligations in
accordance with paragraph 10 hereof), for payment of any
other obligation of the Borrower under this Contract or the
Fiscal Agency/Trust Agreements, or for the temporary
investment of funds pursuant to this paragraph, until final
10
payment and discharge of the indebtedness evidenced by the
Note, unless otherwise expressly authorized by the Secretary
in writing. Such temporary investment of funds shall be
required within three Business Days after the balance of
deposited funds exceeds the amount of the Federal deposit
insurance on the Loan Repayment Account. At that time, the
balance of funds in the Loan Repayment Account exceeding
such insurance coverage shall be fully (1000) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with cash requirements for payment of
principal and interest as required under the Note. In no
event shall the maturities of such investments exceed one
year. All such investments shall be held in trust for the
benefit of the Secretary by the above financial institution
in an account (the "Loan Repayment Investment Account")
established and designated as prescribed in the attached
form document entitled "Letter Agreement for Section 108
Loan Guarantee Program Investment Account" (Attachment 2),
which account shall be maintained for all Government
Obligations purchased with funds from the Loan Repayment
Account. Such Letter Agreement must be executed and
submitted to the Secretary when the Loan Repayment
Investment Account is established. All proceeds and income
derived from such investments shall be returned to the Loan
Repayment Account.
(b) Borrower shall by the fifteenth day of each month,
provide the Secretary with an electronic copy of a statement
showing the balance of funds in the Loan Repayment Account
and the deposits and withdrawals of all funds in such
account during the preceding calendar month and an
electronic copy of a statement identifying the obligations
and their assignments in the Loan Repayment Investment
Account. Borrower shall email the electronic copies to
108reports@hud.gov.
(c) Upon the Secretary giving notice that the Borrower is
in Default under this Contract or the Note, all right,
title, and interest of the Borrower in and to the Loan
Repayment and Loan Repayment Investment Accounts shall
immediately vest in the Secretary for use in making payment
on the Note, purchase of Government Obligations in
accordance with paragraph 10, or payment of any other
11
obligation of the Borrower under this Contract or the Fiscal
Agency/Trust Agreements.
7. Use of CDBG, EDI or BEDI Funds for Repayment. Any funds
available to the Borrower under Section 106 of the Act
(including program income derived therefrom) are authorized to
be used by the Borrower for payments due on the Note, Optional
Redemption (as defined in the Note), payment of any other
obligation of the Borrower under this Contract or the Fiscal
Agency/Trust Agreements, or the purchase of Government
Obligations in accordance with paragraph 10. Any funds
specifically available to the Borrower for such payments or as
a debt service reserve under an EDI or BEDI Grant Agreement
pursuant to Section 108(q) of the Act which supports the
eligible project(s) and activities financed by the Note may
also be used therefor; any other use of Section 108(q) funds
for such purposes shall require the prior written approval of
the Secretary. Unless otherwise specifically provided herein
or unless otherwise expressly authorized by the Secretary in
writing, the Borrower shall substantially disburse funds
available in the Loan Repayment or the Loan Repayment
Investment Accounts before funds from grants under Section 106
of the Act are withdrawn from the U.S. Treasury for such
purposes.
8. Secretary's Right to Restrict Use of CDBG Funds to Repayment.
Upon a determination by the Secretary that payments required by
paragraph 2 and/or paragraph 4 of this Contract are unlikely to
be made as specified, the Secretary may give the Borrower
notice that the availability to the Borrower of funds pledged
under paragraph 5(a) of this Contract for purposes other than
satisfaction of the pledge is being restricted. This
restriction shall be in an amount estimated by the Secretary to
be sufficient to ensure that the payments referred to in
paragraph 2 and/or paragraph 4 hereof are made when due. This
restriction may be given effect by conditioning the restricted
amounts to prohibit disbursement for purposes other than
satisfaction of the pledge at the time such restricted funds
are approved as grants, by limiting the Borrower's ability to
draw down or expend the restricted funds for other purposes,
and by disapproving payment requests submitted with respect to
such grants for purposes other than satisfaction of the pledge.
9. Secretary's Right to Use Pledged Funds for Repayment. The
Secretary may use funds pledged under paragraph 5(a) of this
Contract or funds restricted under grants pursuant to paragraph
8 of this Contract to make any payment required of the Borrower
12
under paragraph 2 and/or paragraph 4, if such payment has not
been timely made by the Borrower.
10. Defeasance. For purposes of this Contract, after the
Conversion Date the Note shall be deemed to have been paid
(defeased) if there shall have been deposited with the Trustee
either moneys or Government Obligations (as defined below),
which in the sole determination of the Secretary, mature and
bear interest at times and in amounts sufficient, together with
any other moneys on deposit with the Trustee for such purpose,
to pay when due the principal and interest to become due on the
Note. The Aggregate Principal Amount of the Note or any unpaid
Principal Amount may be so defeased, in whole or in part, as of
any Interest Due Date, or any other Business Day acceptable to
both HUD and the Borrower. In accordance with the Note and the
Trust Agreement, the Borrower shall give timely notice and
written instructions to the Secretary and the Trustee
concerning any principal amounts proposed to be defeased,
including any Optional Redemptions proposed, which instructions
shall be approved by the Secretary. If the unpaid Aggregate
Principal Amount of the Note guaranteed pursuant to this
Contract shall be defeased and deemed to have been paid in
full, then the Borrower shall be released from all agreements,
covenants, and further obligations under the Note.
"Government Obligation" means a direct obligation of, or any
obligation for which the full and timely payment of principal
and interest is guaranteed by, the United States of America,
including but not limited to, United States Treasury
Certificates of Indebtedness, Notes and Bonds - State and Local
Government Series or certificates of ownership of the principal
of or interest on direct obligations of, or obligations
unconditionally guaranteed by, the United States of America,
which obligations are held in trust by a commercial bank which
is a member of the Federal Reserve System and has capital and
surplus (exclusive of undivided profits) in excess of
$100,000,000.
11. Default. (a) A Default under the Note and this Contract
shall occur upon failure by the Borrower to:
(i) pay when due an installment of principal or
interest on the Note; or (ii) punctually and properly
perform, observe, and comply with any covenant,
agreement, or condition contained in: (A) this
Contract, (B) any security agreement, deed of trust,
mortgage, assignment, guarantee, or other contract
13
securing payment of indebtedness evidenced by the Note,
or (C) any future amendments, modifications,
restatements, renewals, or extensions of any such
documents.
(b) The Borrower waives notice of Default and opportunity
for hearing with respect to a Default under paragraph 11(a).
(c) In addition to Defaults under paragraph 11(a), the
Secretary may declare the Note in Default if the Secretary
makes a final decision in accordance with the provisions of
section 111 of the Act and 24 CFR 570.913 (or any successor
provisions), including requirements for reasonable notice
and opportunity for hearing, that the Borrower has failed to
comply substantially with title I of the Act.
Notwithstanding any other provision, following the giving of
such reasonable notice, the Secretary may, in the
Secretary's sole discretion pending the Secretary's final
decision, withhold the guarantee of any or all obligations
not yet guaranteed on behalf of the Borrower under
outstanding commitments, suspend approval of any further
Advances or Conversion Date Advances under the Note, and/or
direct the Borrower's financial institution to: refuse to
honor any instruments drawn upon, or withdrawals from, the
Guaranteed Loan Funds Account or the Loan Repayment Account
initiated by the Borrower, and/or refuse to release
obligations and assignments by the Borrower from the
Guaranteed Loan Funds Investment Account or the Loan
Repayment Investment Account.
12. Remedial Actions. Upon a Default or declaration of Default
under this Contract, the Secretary may, in the Secretary's sole
discretion, take any or all of the following remedial actions:
(a) With any funds or security pledged under this Contract,
the Secretary may: (i) continue to make payments due on the
Note, (ii) make a prepayment under Section I.D. of the Note or
make an acceleration payment with respect to the principal
amount of the Note subject to Optional Redemption as provided
in Section III of the Note, (iii) purchase Government
Obligations in accordance with paragraph 10 of this Contract,
(iv) pay any interest due for late payment as provided in the
Note, this Contract, or the Fiscal Agency/Trust Agreements, (v)
pay any other obligation of the Borrower under this Contract or
the Fiscal Agency/Trust Agreements, and/or (vi) pay any
reasonable expenses incurred by the Secretary or the Fiscal
Agent/Trustee as result of the Borrower's Default.
14
(b) The Secretary may withhold the guarantee of any or all
obligations not yet guaranteed or the disbursement of any or
all grants not yet disbursed in full under outstanding
guarantee commitments or grant approvals for the Borrower under
Sections 108 and/or 106 of the Act.
(c) The Secretary may withhold approval of any or all further
Advances or Conversion Date Advances under the Note (if
applicable); direct the Borrower's financial institution to
refuse to: honor any instruments drawn upon, or withdrawals
from, the Guaranteed Loan Funds Account or the Loan Repayment
Account by the Borrower, and/or to release obligations and
assignments by the Borrower from the Guaranteed Loan Funds
Investment Account or the Loan Repayment Investment Account;
and/or direct the Borrower and/or the Borrower's financial
institution to transfer remaining balances from the Guaranteed
Loan Funds Account to the Loan Repayment Account.
(d) Until the Conversion Date, or with respect to amounts
subject to Optional Redemption, the Secretary may accelerate
the Note.
(e) The Secretary may exercise any other appropriate remedies
or sanctions available by law or regulation applicable to the
assistance provided under this Contract, or may institute any
other action available under law to recover Guaranteed Loan
Funds or to reimburse the Secretary for any payment under the
Secretary's Guarantee or any reasonable expenses incurred by
the Secretary as a result of the Default.
(f) All notices and submissions provided for hereunder shall
be in writing (including by telex, telecopier or any other form
of facsimile communication) and mailed or sent or delivered, as
to each party hereto, at its address set forth below or at such
other address as shall be designated by such party in a written
notice to the other party hereto. All such notices and other
communications shall be effective when received as follows:
(i) if sent by hand delivery, upon delivery; (ii) if sent by
mail, upon the earlier of the date of receipt or five Business
Days after deposit in the mail, postage prepaid; (iii) if sent
by telex, upon receipt by the sender of an answer back; and
(iv) if sent by telecopier, upon receipt.
The Secretary:
U.S. Dept. of Housing and Urban Development
15
Attention: Paul Webster, Director
Financial Management Division
451 7th Street SW, Room 7180
Washington, DC 20410
Borrower:
c : }AN O f= iG.K; lit o`
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13. Limited Liability. Notwithstanding any other provision of this
Contract, the Fiscal Agency/Trust Agreements or the Note, any
recovery against the Borrower for any liability for amounts due
pursuant to the Note, the Fiscal Agency/Trust Agreements or
this Contract shall be limited to the sources of security
pledged in paragraph 5 or any Special Conditions of this
Contract.
14. Incorporated Grant Agreement. The Contract and the Note are
hereby incorporated in and made a part of the Grant Agreement
authorized by the Secretary on �a6��,,.r k4 .2,under the
Funding Approval for grant number B-02-MC-53-0008 to the
Borrower. In carrying out activities with the Guaranteed Loan
Funds hereunder, the Borrower agrees to comply with the Act and
24 CFR Part 570, as provided in Subpart M thereof.
15. Special Conditions and Modifications:
(a) The Guaranteed Loan Funds shall be used only to redeem
principal amounts due or payable on or after August 1, 2019,
under that certain promissory note issued by the Borrower and
identified as Note Number B-02-MC-53-0008 Series 2006-A.
(b) Neither the general credit nor the taxing power of the
Borrower, or of the State in which the Borrower is located, is
pledged for any payment due under the Note, the Contract, or the
Fiscal Agency/Trust Agreements, unless the Borrower or the State
in which the Borrower is located agreed in this Contract or a
prior Contract to pledge its full faith and credit, moral
obligation, or similar pledge of its general credit or taxing
power.
(c) Additional Grounds for Default. Notice of Default.
Restriction of Pledged Grants. Availability of Other Remedial
16
Actions.
(i) The Borrower acknowledges and agrees that the
Secretary's guarantee of the Note is made in reliance upon the
availability of grants pledged pursuant to paragraph 5(a)
(individually, a "Pledged Grant" and, collectively, the "Pledged
Grants") in any Federal fiscal year subsequent to the Federal
fiscal year ending September 30, 2018 to: (A) pay when due the
payments to become due on the Note, or (B) defease (or, if
permitted, prepay) the full amount outstanding on the Note. The
Borrower further acknowledges and agrees that if the Secretary
(in the Secretary's sole discretion) determines that Pledged
Grants are unlikely to be available for either of such purposes,
such determination shall be a permissible basis for any of the
actions specified in paragraphs (ii) and (iii) below (without
notice or hearing, which the Borrower expressly waives).
(ii) Upon written notice from the Secretary to the
Borrower at the address specified in paragraph 12(f) above that
the Secretary (in the Secretary's sole discretion) has
determined that Pledged Grants are unlikely to be available for
either of the purposes specified in (A) and (B) of paragraph (i)
above (such notice being hereinafter referred to as the "Notice
of Impaired Security"), the Secretary may limit the availability
of Pledged Grants by withholding amounts at the time a Pledged
Grant is approved or by disapproving payment requests
(drawdowns) submitted with respect to Pledged Grants.
(iii) If after 60 days from the Notice of Impaired
Security the Secretary (in the Secretary's sole discretion)
determines that Pledged Grants are still unlikely to be
available for either of the purposes specified in (A) and (B) of
paragraph (i) above, the Secretary may declare the Note in
Default and exercise any and all remedies available under
paragraph 12. This paragraph (iii) shall not affect the right
of the Secretary to declare the Note and/or this Contract in
Default pursuant to paragraph 11 and to exercise in connection
therewith any and all remedies available under paragraph 12.
(iv) All notices and submissions provided for hereunder
shall be submitted as directed in paragraph 12(f) above.
[Rest of Page Intentionally Left Blank]
17
THE UNDERSIGNED, as authorized officials on behalf of the
Borrower or the Secretary, have executed this Contract for Loan
Guarantee Assistance, which shall be effective as of the date of
execution hereof on behalf of the Secretary.
The City of Yakima, WA
BORROWER
c/iIPI rzoaro
(Name)
0)1111% ifYl-AlAkt
(Title)
J-Lfil f 4 lq
1
(Date CITY CONTRACT NO' 2.0IG T • CO
RESOLUTION NO' 24) �j -003
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT
BY:
Stanley Gimont
(Name)
Deputy Assistant Secretary
for Grant Programs
(Title)
JAN 2 2 2019
(Date)
1
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEM ENT
Item No. 8.
For Meeting of: January 8, 2019
ITEM TITLE: Resolution authorizing the City of Yakima to participate in the HUD
public offering as part of the Section 108 Loan Guarantee
Assistance Program to refinance two existing notes
SUBMITTED BY: Joan Davenport, AI CP, Community Development Director
SUMMARY EXPLANATION:
On November 27, 2018, the City of Yakima received a notice from HUD of the opportunity to
participate in a federal refinancing of two Section 108 Loans approved by the City of Yakima in
2004. These loans supported the development of the Hilton Gardens Inn project by Morrier
Hotel, LLC. The original loan from HUD for the project was $3,560,000. In 2004, all loan costs
were paid by Morrier Hotel LLC. The private company (Morrier Hotel LLC) makes monthly
payments on the loan directly to the financial institution. This loan was an economic development
project in 2004 and available within the City of Yakima due to our participation in the Economic
Development Initiative (EDI) Program of HUD.
The opportunity to refinance the loan at a lower interest rate came unsolicited to the City of
Yakima. We shared this information with the loan recipient (Morrier Hotel LLC). They have
indicated a desire to participate in the loan refinance to a lower interest rate and will cover all costs
including those incurred by the city of Yakima and the closing costs. Upon approval by the City of
Yakima, final documents will be prepared and submitted to HUD.
ITEM BUDGETED:
NA
STRATEGIC PRIORITY: Economic Development
APPROVED FOR
SUBMITTAL:
City Manager
STAFF RECOMMENDATION:
Adopt resolution
2
BOARD/COMMITTEE RECOMMENDATION:
ATTACHMENTS:
Description Upload Date Type
D resolution rah 12/26/2019 Greer Memo
Letter in HUD alent In Refluaire, roar' B-02-MC-53-
D 12,'2117e1H Back up Material
0008
Letter in HUD lalrut In Reflualer, I nail B-04-MC-53-
D 12,'2117e1H [3[7.k up Material
nnro
D R-2C04-173 1212712018 Ccuer Memo
0 2004 coudiLiorni apprmal 12/27/2l1a Cover Memo