HomeMy WebLinkAboutR-1994-068 Contingent Loan Agreement•
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RESOLUTION NO. R-94 68
A RESOLUTION authonzmg and directing the City Manager of the City of
Yakima to execute a Contmgent Loan Agreement with the
Yakima Housing Authority for implementation of the
Yakima Housmg Authority Housing Program.
WHEREAS, the City of Yakima currently administers funds for
redevelopment of substandard housing including detrimental land parcels, and
WHEREAS, the lending institution and developer will participate m
that program upon execution by the City m Partnership for housing development
with the Yakima Housmg Authonty and City Council deems it to be in the best
mterests of the City that the agreement be executed by the City, now therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager is hereby authorized and directed to execute a
Contingent Loan Agreement in substantially the form attached hereto, subject to
final approval of the terms and conditions by the City Attorney.
ADOPTED BY THE CITY COUNCIL this 7th day of June
ATTEST
City Clerk
' Mayor
1994.
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Draft of 5/26/94
CONTINGENT LOAN AGREEMENT
4 003; 015 _
THIS CONTINGENT LOAN AGREEMENT (this "Agreement") by and
between the kCITY OF YAKIMA, WASHINGTON (the "City"), and the
HOUSING AUTHORITY OF THE CITY OF YAKIMA, a public body corporate
and politic of the State of Washington (the "Authority");
WITNESSETH:
WHEREAS, Revised Code of Washington ("RCW") Section 35.83.050
provides that a county may lend or donate money to a housing
authority or agree to take such action; and
WHEREAS, the Authority, by its Resolution No. , adopted
, 1994, authorized the issuance of the Auth- ar ty's Low -
Income Housing Assistance Revenue Bonds, 1994 [,Series A and B]
(Nueva Primavera Project) (the "Bonds") in the amount of not to
exceed $2,500,000, for the purpose of providing the funds with
which to finance the acquisition of a 64 -unit apartment complex
known as the Nueva Primavera Apartments (the "Project") to provide
a housing project of the Authority; and
WHEREAS, the City, by [Ordinance/Resolution] No.
(passed/adopted] , 1994, declared its intent to enter
into a contingent loan agreement with the Authority to evidence the
City's commitment to make loans to the Authority if and to the
extent necessary to replenish the Reserve Account maintained by the
trustee for the Bonds and to make up any deficiencies in the
amounts provided by the Authority to make payments of the principal,
of and interest on the Bonds when due, and approved the form and
execution of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter contained, the parties hereto covenant and agree as
follows.
ARTICLE I
Incorporation of Documents; Definitions
Section 1.01. Incorporation of Documents. Copies of the
Trust Indenture (including any amendments or supplements thereto,
the "Indenture") between the Authority and
, as Trustee, relating to the Bonds and
the Deed of Trust (as defined in the Indenture) are attached hereto
as Exhibits A and B, respectively. The Authority shall not amend
the Indenture or the Deed of Trust without the prior written
consent of the City so long as this Agreement is in effect.
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Section 1.02. Definitions. Unless the context clearly
requires otherwise, the following terns shall have the respective
meanings set forth below for ,all purposes of this Agreement.
[ Mdditiona1 Bonds means any bonds issued pursuant to Section
2.7 of the Indenture.]
CaveraaL Ratio means the ratio of Net Operating Income to
Required Net Debt Service.
[ Eligible Maintenance Expenses beans the cost of those
unforeseen repairs and improvements, and other expenses, that are
necessary, in the opinion of the Executive Director of the
Authority, for the viability of the Project.]
[ Excess Revenues means, for each Fiscal Year beginning on or
after , 199_, the excess, if any, of Revenues for that
period over the sum for that period of (1) Operation and
Maintenance Costs, (2) Required Debt Service, (3) Trustee's fees
and Rating Agency fees, if any, (4) the amount, if any, required to
restore the balance in the Reserve Account to the Reserve
Requirement, [(5) the cost of Eligible Maintenance Expenses,] and
[(5)/(5) the Administrative Allowance.]
General Revenues ;means all revenues (other than Revenues) of
the Authority from any source, but only to the extent that those
revenues are available to pay debt service on the Bonds and are not
pledged, by law, regulation, contract, covenant, deed of trust or
otherwise, to another particular purpose.
Investment Earnings means all earnings derived from the
investment of money held in any of the Funds held by the Trustee
under the Indenture.
Net Operating Income means Revenues other than Investment
Earnings, less Operation and Maintenance Costs.
Operation and Maintenance Costs means all necessary costs to
the Authority of operating and maintaining the Project, including
but not limited to administrative and general expenses, costs of
insurance (including reasonable contributions for self-insurance
reserves, if any), consulting technical services and repairs and
replacements (to the extent not properly classifiable as capital
costs) and reasonable reserves therefor, but excluding depreciation
(or reserves therefor), amortization of intangibles or other
bookkeeping entries of a similar nature and debt service on the
Bonds. operation and Maintenance Costs shall not include the
[Administrative Allowance][, Eligible Maintenance Expenses] car
costs paid from reserves or from money disbursed from the Project
Fund.
Reguired Debt Service means the amount required to pay
principal of and interest on the Bonds when due, including amounts
required for the mandatory redemption of Bonds pursuant to the
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Indenture but not including amounts in connection with the optional
redemption [or special redemption of Bonds from Excess Revenues
pursuant to the Indenture].
Required Net Debt Service means, for any period, Required Debt
Service for that period plus the amount of Trustee fees payable
during that period less known investment income on amounts in the
Reserve Account [and the Property Reserve Account] for that period
and amounts in the Principal and Interest Account available during
that period to pay Required Debt Service on the Bonds.
Reserve Account means the account of that name in the Bond
Fund.
Reserve Requirement means, with respect to the Bonds, an
amount equal to the maximum annual debt service on the Bonds,
including amounts required for the mandatory redemption of Bonds
pursuant to the Indenture, initially $ [, and with
respect to any Additional Bonds, the amount described in Section
2.7 of the Indenture).
Revenues means all amounts due to or received by the Authority
or by the Trustee for the account of the Authority pursuant or with
respect to the Project, including without limitation all lease
payments, Insurance Proceeds, Condemnation Awards, and proceeds
resulting from foreclosure of the Deed of Trust, and all Investment
Earnings.
Trustee means
association organized and existing
States of America and having its p
, or its su
Indenture.
All other capitalized
Agreement shall have the
Indenture.
, a national banking
under the laws of the United
incipal place of business in
cessor, as trustee under the
terms sed but not defined in this
meanin•s assigned to them in the
ARTICLE 1 I
Loans to the A thoritv;
L'nita ion of L'abil't
Repayment Terms: Interest 1 2a
Section 2.01. Loans to the A
lend to the Authority the principal
(1) the amount sufficient, together
the Project deposited with the Trus
Account maintained by the Trustee t
thorit . The City agrees to
mount equal to the greater of
ith Net Operating Income from
ee, to replenish the Reserve
the Reserve Requirement for
the Bonds [and any Additional Bonds], and (2) the amount
sufficient, together with Net Operating Income from the Project and
other money, including money in the Reserve Account, on deposit
with the Trustee, to pay the principal of and interest on the Bonds
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[and any Additional Bonds] when due. The Authority agrees to
borrow the amounts described above from the City pursuant to this
Agreement for the purpose of meeting its obligations under. the
Bonds[, any Additional Bonds] and the Indenture.
The total amount of funds to be lent by the City pursuant to
this Agreement shall not exceed the principal amount of the Bonds
[and any Additional Bonds] plus interest due and unpaid by the
Authority.
Section 2.02. Time of L. The loan shall be made at such
time, if any, as the Authority is unable, because of lack of Net
operating Income from the rental of the Project, to replenish the
Reserve Account to the Reserve Requirement for the Bonds [and any
Additional Bonds] or if the money available under the Indenture to
the Trustee is insufficient to pay the principal of and interest on
the Bonds [arid any Additional Bonds) when due. The loan may be
rade in a series of principal advances.
Section 2.03. Repa mem Cans . The loan shall be repaid on
terms established at such time as funds are advanced. Such terms
shall require the repayment of principal of such. advance and
interest thereon from the General Revenues of the Authority and
from the first available Revenues from the Project after payment: of
Operation and Maintenance Costs, debt service on the Bonds [and any
Additional Bonds)[, Eligible. Maintenance Costs] , credit enhanceine:nt
payments due to the City hereunder and the fees of the Trustee (end
the Rating Agency, if any,) and after replenishing the Reserve
Account.
Section 2.04. Interest pate. The rate of interest borne by
each advance hereunder shall be the rate that represents the
documented actual cost (including opportunity cost) to the City of
making the loan to the Authority, but in no event shall the rate of
interest on any loan hereunder exceed 12% per annum. The City may
i-1 its discretion charge a lower rate of interest.
Section 2.05. Procedure;. The Authority, or the Trustee on
behalf of the Authority, shall, within two Business Days of any
withdrawals from the Reserve Account, give written notice to the
City of such withdrawal, which notice shall state the amount, if
any, required to restore the Reserve Account to the Reserve
Requirement for the Bonds [and any Additional Bonds]. By the
following the City shall deliver to the: Trustee :dor
deposit into the Reserve Account the greater of one-half of the
amount(s) specified or the amount, together with other funds held
by the Trustee under the Indentture for the purpose, required to pay
debt service on the Bonds [and any Additional Bonds] on the
following , and shall deliver to the Trustee no later
than of that year the greater of the balance of the
amount (s) so specified or the amount, together with other funds
held by the Trustee under the Indenture for the purpose, required
to pay debt service on the Bonds [and any Additional Bonds] on the
following The Authority also shall provide, with or
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prior to the submission to the City of the certificate requesting
funds, an accounting of its operation of the Project, including
cash flow projections and a loan repayment plan.
In the event of a deficiency in the mount available to the
Trustee to pay principal of and interest on the Bonds when due as
a result of acceleration of the Bonds or the mandatory redemption
of Bonds on , because of the failure of the
Authority to acquire the Project by , then
immediately upon receipt of notice from the Trustee of such event
(which notice is required by the Indenture to be given by
), the City shall deposit with the Trustee, on behalf
of the`- Authority, the amount required to make up such deficiency.
Section 2.06. Mature of Authority'* Obligation. The
obligation of the Authority to make the loan payments from the
sources identified herein and to perform and observe the other
obligations on its part contained herein shall be absolute and
unconditional, and shall not be subject to diminution by setoff,
counterclaim, abatement or otherwise.
Section 2.07. Nature of City's obligation. The obligation of
the City to advance funds to the Trustee on behalf of the Authority
in the amounts, at the times and in the manner described herein
shall be absolute and unconditional, and shall not be subject to
diminution by, setoff, counterclaim, abatement or otherwise. The
full faith, credit and resources of the City are pledged
irrevocably for the payment to the Trustee, on behalf of the
Authority, of the amounts described herein.
The City agrees that it will include in its budget for each
fiscal year following the receipt_ by the City of notice under
Section 2.05 that a deposit to the Reserve Aocount is required an
amount equal to the deficiency in the Reserve Account to be rade up
by the City pursuant to this Agreement.
The obligations of the City hereunder shall terminate upon
payment in full of the principal of and interest on a:1 Outstanding
Bonds [and Additional Bonds].
ARTICLE III
Authorit Covenants and ..reer.er.tl
Section 3.01. Debt Service Coverage Ratio. The Authority has
covenanted in the Indenture to maintain a Coverage Ratio of at
least to 1, on all Bonds [and Additional Bonds] outstanding.
Section 3.02. Reports and Records. The Authority agrees to
provide to the City upon request, within 30 days of the Authority's
receipt or preparation of such documents, copies of the following:
(1) the Authority's audited and unaudited
financial statements;
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(2) allreports received by the Authority fro the Trustee
under Section 8.10 of the Indenture; and
(3) all certificates required to be given to the Trustee by
the. Authority under Sections 6.2 and 6.3 of the
Indenture.
In addition, the Authority agrees that the City may have
access to and inspect, examine and make copies of the books and
records and any and all accounts and data of the Authc:_ ity relating
to the Project, including reports to the Authority from the manager
of the Project.
Section 3.03. Payments to City. The Authority shall
reimburse the City for all out-of-pocket costs, including
attorneys' fees, incurred by the City in negotiating and entering
into this Agreement.
ARTICLE IV
Remedies Upon Default
Section 4.01. Rights pf Cit ton farina Loans,. If the City
has trade any loans to the Authority hereunder and such loans have
not been repaid in full (whether or not the lcan is in default),
the City may take any one or more of the following steps.:
(a) The City may request that the Trustee accelerate the
maturity of the Bonds (and any Additional Bends] in accordance w..th
Section 7.2 of the Indenture;
(b) If the Authority is in default in its repayment
obligations with respect to any loans made to the Authority by the
City hereunder (an "Authority Default") and if, and only if, the
Bonds (and any Additional Bonds] are no longer outstanding, the
City may declare the entire principal balance of the loan (if not
then due and payable) to be due and payable immediately, and upon
any such declaration the principal cf the loan shall become and be
immediately due and payable, togethe=r with all into; es t accred
thereon to the date of such acceleration, anything in this
Agreement to the contrary notwithstanding. The City may waive srLh
Authority Default and may rescind and annul such declaration and
its consequences; but no such waiver, rescission or annulment shall
extend to or affect any subsequent Aethority Default cr impair any
right incident thereto;
(c) The city may, but shall net be required to, appoint a
manager (which may be the city) for the 'Project; and
(d) The City may proceed to protect and enforce its rights to
equity or at law, either in mandamus or for the specific
performance of any covenant or agreement cc:ntaired hezein, or fez:
the enforcement of any other appropriate legal or eq-uit.3ble remedy,
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as the City may deem most effectual to protect and enforce any of
its rights or interests hereunder.
Section 4.02. Remedies of Authority an Default. Upon the
occurrence of a default by the City in its obligations to make
loans to the Authority hereunder (a "City Default") the Authority
may proceed to protect and enforce its rights in equity or at law,
either in mandamus or for the specificerformance of any covenant
or agreement contained herein, or for the enforcement of any other
appropriate legal or equitable remedy, as the Authority may deem
Most effectual to protect and enforce any of its rights or
interests hereunder.
Section 4.03. No Remedy Exclusive. No remedy conferred upon
or reserved to either party by this Agreement is intended to be
exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute, and either party hereto
shall be free to pursue, at the same time, each and every remedy,
at law or in equity, which it may have under this Agreement, or
otherwise.
section 4.04. No Implied Waiver. No delay or omission to
exercise any right or power accruing upon any default shall impair
any such right or power or shall be construed to be a waiver
thereof, but any such right and power =ay be exercised from time to
time and as often as may be deemed expedient. For the exercise of
any remedy, it shall not be necessary to give any notice, other
than such notice as may be expressly required herein.
Section 4.05. Agreement to Pay Attorneys' Fees and. Expenses.
If a default arises under any of the provisions of this Agreement
and either party hereto should employ attorneys or incur other
expenses for the collection of amounts due under this Agreement or
the enforcement of perfornance or observance of any obligation or
agreement on the part of the other party contained in this
Agreement, on demand therefor, the nonprevailing party shall pay or
reimburse the prevailing party for the reasonable fees of such
attorneys and such other expenses so incurred.
ARTICLE V
Miscellaneous
Section 5.01. Governinc Law; Venue. This Agreement is
governed by and shall be construed in accordance with the
substantive laws of the State of Washington and shall be liberally
construed so as to carry out the purposes hereof. Except as
otherwise required by applicable law, any action under this
Agreement shall be brought in the Superior Court of the State of
Washington in and for Yakima County and/or in the United States
District Court for the western District of Washington.
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Section 5.02. Notices. Except as otherwise provided herein,
all notices, consents or other communications required hereunder
shall be in 'writing and shall be sufficiently given if addressed
and mailed by first --class, certified or registered mail, postage
prepaid and return receipt requested, as follows:
To the City:
City of Yakima
129 N. 2nd Street
Yakima, Washington 98901
Attention:
To the Authority:
Housing Authority of the City of Yakima
110 Fair Avenue
Yakima, Washington 98901
Attention: Executive Director
The City or the Authoriey ray, by notice given hereunder,
designate any further or different addresses to which subsequent
notices, certificates, requests or other communications shall be
sent. Notices shall be deemed served upon deposit of such notices
in the United States mail iri the -manner provided above.
Section 5.03. Binding Ufec,. This Agreement shall inure to
the benefit of and shall be bieeing upon the City and the Authority
and their successors. This Agree...-pnt =ay not be assigned, except
that the Authority shall have the right to assign to the Trustee
its right to obtain funds fror. the City hereunder for the benefit
of the owners of the Bonds.
Section 5.04. Severability. In the event any provision of
this Agreement shall be held invalid or unenforceable by any court
of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.
section 5.05. pnendnents; '_'erninationf . Additional Bondle_j.
This agreement may not be effeeeivs y amended, cha„ ged, modified or
altered, except by an instrument in writing duly executed by the
City and the Authority (or their successors in title) . If the
Bonds [or Additional Bonds] are rated by a rating agency, then no
such amendment shall be permitted unless the Authority, or the
Trustee on behalf of the Authority, has received written
conf ii•Ination from the rating a: ency that such amendment ent will not
result in a reduction or withdrawal of the rating on the Bonds [or
Additional Bonds]. If the Bonds [and anv Additional Bonds] are not
rated by a rating agency, then no such a end.nent will be permitted
unless in the opinion of the. Teustee such amendment will not
adversely affect the owners of the Bonds [or Additional Bonds] .
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This Agreement may not be terminated until the Bonds [and any
Additional Bonds] have been paid in full or defeased, unless the
City has assumed all liability for payment of the principal of and
interest on the Bonds [and any Additional Bonds] when due and shall
have pledged its full faith and credit to such payment.
[ The Authority shall not issue any Additional Bonds without the
prior written consent of the City.)
Section 5.:5. Waiver of Breach. No waiver of any breach of
any covenant or agreement contained herein shall operate as a
waiver of any s:=bsequent breach of the same covenant or agreement
or as a waiver :f any breach of any other covenant or agreement,
and in case of a breach by either party of any covenant, agreement
or undertaking, the nondefaulting party may nevertheless accept
from the other any payment or payments or performance hereunder
without in anyway waiving its right to exercise any of its rights
and remedies pr:sided for herein or otherwise with respect to any
such default or defaults that were in existence at the time such
payment or payments or performance were accepted by it.
Section 5.C7. No Rights Created in Third Parties.
of this Agreeme-•o are not intended to establish nor to
rights in any persons or entities other than the
Authority and the respective successors and assigns of
Section 5.2. Time of Essence. Time and all
conditions shall be of the essence of this Agreement.
The terms
create any
City, the
each.
terms and
Section 5.C. Ter inat ign of Agreement. This Agreement shall
terminate upon payment in full of all principal of and interest on
the Bonds [nd any Additional Bonds](or defeasance thereof pursuant
to Article IX of the Indenture).
ORAL AGREE" NTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND
C',EDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS VHEREOF, the city and the Authority have caused
this Agreement t: be executed in their respective names by their
duly authorized officers, and have caused this Agreement to be
dated as of , 1994.
01550P.M
CITY OF YAKIMA, WASHINGTON
By
HOUSING AUTHORITY OF THE CITY OF
YAKIMA, WASHINGTON
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By
Attest:
Executive Director
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Chair, Board of Commissioners;