HomeMy WebLinkAboutRES NO 095-03RESOLUTION NO.
095-03
A RESOLUTION OF THE COUNCIL OF THE CITY OF
BAKERSFIELD AUTHORIZING THE REQUISITE CITY
PERSONNEL TO EXECUTE ALL DOCUMENTS
REQUIRED TO ACCESS SECTION 108 LOAN
GUARANTEE FUNDS OF $4.'1 MILLION FOR
CONSTRUCTION AND REHABILITATION OF VARIOUS
PUBLIC FACILITIES.
WHEREAS, the City of Bakersfield has determined that a high priority exists for a
series of public facilities improvement projects in various Iow and moderate income
neighborhoods, including the rehabilitation of Martin Luther King (MLK) Jr. and
Jefferson swimming pools, construction of a new aquatic facility and construction of a
Career Counseling/Training Center facility; and
WHEREAS, the City applied to the Secretary of the Department of Housing and
Urban Development ("HUD") under the Section 108 Loan Guarantee program for a loan
to enable such construction and rehabilitation; and
WHEREAS, under the Section 108 Loan Guarantee program, the City can
borrow up to five years' worth of its annual Community Development Block Grant
allocation, and can take up to twenty years to repay the principal and interest; and
WHEREAS, the City requested and has been authorized to receive $4.1 million
dollars to construct and rehabilitate the public facilities enumerated herein; and
WHEREAS, to access the funds, the City must execute several documents with
HUD, including, but not limited to, a loan agreement, a promissory note and a pledge
loan inventory agreement; and
WHEREAS, the loan shall be repaid with future Community Development Block
Grant entitlements; and
WHEREAS, additional security ~s provided by way of a first deed of trust on the
City-owned real property located at 1601 Truxtun Avenue. as well as a portfolio of loans
due to be repaid to the City in the next twenty years.
NOW, THEREFORE, BE IT RESOLVED, incorporating the above recitals herein,
by the Council of the City of Bakersfield as follows:
That the participation of the City of Bakersfield in the Section 108 Loan
Guarantee Program is hereby authorized; and
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That the mayor or designee, the city attorney or designee, the economic
development director or designee and the finance director or designee of
the City of Bakersfield are authorized to execute the documents attached
hereto as Exhibit "A" and any other documents required by HUD to enable
the City to access the Section 108 Loan Guarantee Program funds
mentioned herein.
the
I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by
Council of the City of Bakersfield at a regular meeting thereof held on
JUN 1 ,!. ~03 ., by the following vote:
AYES: COUNCILMEMBER COUCH, CARSON, ~, MACGARD, HANSON, SULLIVAN, SALVAGGIO
NOES: COUNClLMEMBER
ABSTAIN: COUNCILMEMBER /~J Oh..~ ~
ABSENT: COUNCILMEMBER
APPROVED JUN 1 1 ?003
Mayor
CITY CLERK and Ex Officic~lerk of the
Council of the City of Baker~ield
APPROVED AS TO FORM:
BART J. THILTGEN
City Attorney
BY~~
Deputy City Attorney
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Created on 5~30~2003 8:36 AM
ORIGINA~
EXHIBIT NO. ~/~
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
SECTION 108 LOAN GUARANTEE PROGRAM
VARIABLE~IXEDRATE NOTE
NOTE NUMBER: B-02-MC-06-0510
BORROWER: The City of Bakersfield,
California
MAXIMUM COMMITMENT
AMOUNT: $4,100,000
COMMITMENT AMOUNTS: See
Commitment Schedule attached hereto
DATE OF NOTE:
PRINCIPAL DUE DATES AND PRINCIPAL
AMOUNT: Before the Conversion Date, the
aggregate of Advances made for each
applicable Principal Due Date specified in the
Commitment Schedule to this Note; on or after
the Conversion Date, the Principal Amount (if
any) listed for each Principal Due Date in
Schedule P & I hereto.
VARIABLE INTEREST RATE:
REGISTERED HOLDER:
As set forth below.
AFTERWATCH & CO
As Nominee for
Money Market Obligations Trust
on behalf of its Government Obligations Fund
I. Terms Applicable Before the Conversion Date
A. Advances
For value received, the undersigned, the City of Bakersfield (the "Borrower", which term
includes any successors and assigns), a public entity organized and existing under the laws of the
State (or Commonwealth as applicable) of California promises to pay to the Registered Holder
(the "Holder," which term includes any successors or assigns), at the time, in the manner,
rlr-I~!NA~
interest at the rate or rates hereinafter provided, such amounts as may be advanced under this
Note from time to time by the Holder for disbursement to, or on behalf of, the Borrower
(individually, an "Advance", and collectively, "Advances"). The Holder shall make Advances
upon the written request of the Borrower and the approval of the Secretary of Housing and Urban
Development or his designee (the "Secretary"), pursuant to the Contract for Loan Guarantee
Assistance (as further defined in Section IV.A. of this Note, the "Contract"), and the Amended
and Restated Master Fiscal Agency Agreement (the "Fiscal Agency Agreement") dated as of May
17, 2000, between The Chase Manhattan Bank (now known as JPMorgan Chase Bank), as Fiscal
Agent (the "Fiscal Agent"), and the Secretary. The total amount of Advances made for each
Principal Due Date under this Note shall not exceed the applicable Commitment Amount for such
Principal Due Date set forth on the Commitment Schedule attached hereto. The aggregate of all
Advances under this Note for all Principal Due Dates shall not exceed the Maximum Commitment
Amount specified on the attached Commitment Schedule. The Fiscal Agent shall record the date
and amount of all payments and Advances on this Note and maintain the books and records of all
such Advances and Commitment Amounts for each corresponding Principal Due Date, and all
payments. No Advances shall be made on this Note after its Conversion Date.
As used herein, "Conversion Date" means the date (if any) upon which this Note is (i)
delivered by the Holder to the Fiscal Agent against payment therefor by the purchasers selected by
the Secretary to make such payment; and (ii) assigned to JPMorgan Chase Bank (or any
successor thereto) acting in its capacity as Trustee (the "Trustee") pursuant to a Trust Agreement
between the Secretary and the Trustee, dated as of January 1, 1995, as such agreement may be
amended or supplemented (the "Trust Agreement"). Upon the occurrence of both (i) and (ii) in
the previous sentence, Section III of this Note applies, thereby converting this Note to a fixed rate
obligation.
B. Variable Rate of Interest
From and including the date of each Advance to but excluding the earlier of (i) the
Conversion Date, and (ii) the date of redemption or prepayment of such Advance pursuant to
Section I.D. below (each such date of redemption or prepayment, a "Prepayment Date") interest
shall be paid quarterly at a variable interest rate (as set forth below) on the unpaid principal
balance of each Advance on the tn:st day of each February, May, August and November (each, an
"Interim Payment Date"), commencing on the first Interim Payment Date after the initial Advance
is made under this Note. Interest also shall be paid on each applicable Conversion Date,
Prepayment Date or Principal Due Date. The amount of interest payable on each Interim
Payment Date will represent interest accrued during the three-month period ending immediately
prior to such Interim Payment Date, or in the case of the first Interim Payment Date following
each Advance that is not made on an Interim Payment Date, the period from and including the
date of such Advance to but excluding the first Interim Payment Date following such Advance.
The amount of interest payable on this Note's Conversion Date, Prepayment Date, or on any
Principal Due Date that precedes such Conversion Date will represent interest accrued during the
2 OR~INA~
period from the last Interim Payment Date to such Conversion Date, Prepayment Date, or
Principal Due Date, respectively.
The initial variable interest rate for each Advance will be set on the date of such Advance
and will be equal to 20 basis points (0.2%) above the Applicable LIBO Rate (as hereinafter
defined) and thereafter will be adjusted monthly on the tn-st day of each month (each, a "Reset
Date") to a variable interest rate equal to 20 basis points (0.2%) above the Applicable LIBO Rate
(such interest rate, as reset from time to time, the "Standard Note Rate"). If the Conversion Date
for this Note has not occurred by the March 1 following the initial Advance under this Note, then
the terms of Appendix A shall be used to set the variable interest rate. If the Fiscal Agent does
not receive notice of either a Negotiated Special Interest Rate or Holder Determined Special
Interest Rate (as defined in Appendix A attached hereto) from the Secretary or Holder,
respectively, by the times specified in Appendix A to this Note, then the Standard Note Rate shall
apply for the period to which such Negotiated Special Interest Rate or Holder Determined Special
Interest Rate would otherwise apply. The Fiscal Agent may conclusively rely on any such notice
as to the correctness of any matters set forth therein. Appendix A shall be inapplicable to this
Note on or after the Conversion Date.
"LIBO Rate" for any given Business Day means, except in the case of manifest error, the
interest rate per annum published on that day in the Eastern Edition of The Wall Street Journal or
any successor publication ("WSJ"), published by Dow Jones & Company, Inc., in the section
titled "Money Rates" (or any successor section) and opposite the caption "London Interbank
Offered Rates (LIBOR) -- three months" (or any successor caption). If such rate does not appear
in WSJ on a given Business Day, for each interest period, the LIBO Rate shall be the interest rate,
converted to a bond-equivalent yield basis, for deposits in U.S. dollars for three months which
appears on Telerate Page 3750 or such other page as may replace Page 3750 on that service or
such other service or services as may be nominated by the British Bankers' Association for the
purpose of displaying such rate (together, "Telerate Page 3750") as of 11:00 a.m., London time,
on the day (the "Determination Date") that is two London Banking Days preceding the relevant
Reset Date or Advance. If such rate does not appear on Telerate Page 3750 on such
Determination Date, such rate shall be obtained from the Reuters Screen ISDA Page as of 11:00
a.m., London time, on such Determination Date. If, in turn, such rate does not appear on the
Reuters Screen ISDA Page on such Determination Date, the offered quotation from each of four
reference banks (expressed as a percentage per annum) as of approximately 11:00 a.m., London
time, on such Determination Date for deposits in U.S. dollars to prime banks on the London
interbank market for a 3-month period, commencing on the Reset Date or date of such Advance,
shall be obtained. If at least two such quotations are provided, the LIBO Rate for such Reset Date
or date of such Advance will be the arithmetic mean of the quotations, rounded to five decimal
places. If fewer than two such quotations are provided as requested, the LIBO Rate for that
Determination Date shall be the rate for the most recent day preceding such Determination Date
for which the LIBO Rate shall have been displayed on Telerate Page 3750. The LIBO Rate for
any interest period shall be converted to a bond-equivalent yield basis by multiplying such rate by
the actual number of days in such interest period and dividing that number by 180.
3
"Applicable LIBO Rate" means: (1) with respect to the initial interest rate for the first
Advance hereunder, the LIBO Rate two London Banking Days before the date of such first
Advance; (2) with respect to the initial interest rate for any subsequent Advance made before the
first Reset Date, the interest rate borne by the first Advance; (3) with respect to the initial interest
rate for any subsequent Advance made after the first Reset Date, the LIBO Rate two London
Banking Days before the immediately preceding Reset Date; and (4) with respect to the
subsequent interest rate at any Reset Date for any Advance, the LIBO Rate two London Banking
Days before such Reset Date.
"London Banking Day" means any day in which dealings in deposits in United States
dollars are transacted in the London interbank market. Interest payable on or before the
Conversion Date shall be calculated on the basis of a 360-day year and the actual number of days
lapsed.
C. Principal Amount
Prior to the Conversion Date, the aggregate amount of Advances under this Note for each
specified Principal Due Date shall be the Principal Amount paid by the Borrower on such
Principal Due Date (as assigned to such Advances by the Secretary's instructions to the Fiscal
Agent in accordance with the Contract and the Fiscal Agency Agreement), except to the extent
such Principal Amount shall have been reduced by redemption before such Principal Due Date as
provided below.
D. Redemption before Conversion Date
At any time on or before the Conversion Date, the Borrower, with the consent of the
Secretary, may redeem this Note, in whole or in part, upon fourteen calendar days notice to the
Fiscal Agent and the Secretary, at the purchase price of one hundred percent (100%) of the
unpaid Principal Amount to be redeemed, plus accrued interest thereon to the date of redemption.
Partial redemptions shall be credited against the applicable Principal Amount(s). The related
Comm/tment Amounts and the Maximum Commitment Amount shall be adjusted concurrently
with any such redemptions in accordance with the Secretary's instructions to the Fiscal Agent
pursuant to the Contract and the Fiscal Agency Agreement.
II. Conversion
The following events shall occur on the Conversion Date:
4
A. .Schedule P&I
On the Conversion Date all Advances owed by the Borrower under this Note with the
same Principal Due Date shall be aggregated into a single Principal Amount which will accrue
interest at the fixed rate applicable to such Principal Due Date. Such Principal Amount may be
adjusted by the Fiscal Agent in accordance with the following paragraph or paragraph IV.H, as
applicable. Whether or not adjusted, each Principal Amount, the fixed rate applicable to each
Principal Amount, and the applicable Principal Due Date, shall be listed by the Secretary in
Schedule P&I. Schedule P&I will be provided by the Secretary to the Fiscal Agent and attached
to this Note by the Fiscal Agent upon the Fiscal Agent's receipt of this Note on the Conversion
Date.
B. Conversion Date Advances
If, on or prior to the Conversion Date, the Borrower has not utilized the entire
Commitment Amount indicated on the Commitment Schedule attached hereto for a given
Principal Due Date, the Borrower may, in accordance with the Fiscal Agency Agreement and the
Contract, and with the approval of the Secretary, util/ze such Commitment Amount on the
Conversion Date to obtain a Conversion Date Advance. A "Conversion Date Advance" shall
mean any amount by which the Secretary instructs the Fiscal Agent to increase a Principal
Amount on Schedule P&I for a given Principal Due Date, effective as of the Conversion Date of
this Note. Conversion Date Advances shall be funded by the sale of this Note to the purchaser
selected by the Secretary. The proceeds of a Conversion Date Advance (net of any applicable
fees) shall be distributed to or on behalf of the Borrower on the Conversion Date. The total
amount of Conversion Date Advances hereunder shall not exceed the sum of any unused
Commitment Amounts for all Principal Due Dates.
III. Terms Applicable Upon Conversion
The following terms shall apply to this Note from the Conversion Date (if any) until this
Note is canceled, or matured and paid in full:
Commencing on the Conversion Date, the Borrower promises to pay to the Holder on the
applicable Principal Due Date each Principal Amount set forth on the attached Schedule P&I,
together with interest on each such Principal Amount at the rate applicable thereto specified on
the Schedule P&I. Interest shall be calculated and payments shall be made in the manner set forth
below.
Interest on each scheduled Principal Amount of this Note due as of a given date specified
on Schedule P&I hereto shall accrue at the related per annum rate specified on Schedule P&I
from (and including) the Conversion Date to (but excluding) such Principal Due Date or, if
applicable, to the applicable Interest Due Date on which an Optional Redemption (as defined
below) occurs. Each interest amount accrued on each unpaid Principal Amount of this Note shall
be due semiannually as of February 1 and August 1 of each year (each such February 1 an~
August 1, an "Interest Due Date") commencing on the first such date after the Conversion Date,
until each Principal Amount listed on Schedule P&I to this Note is paid in full. Interest shall be
calculated on the basis of a 360-day year consisting of twelve 30~day months.
Certain Principal Amounts that are indicated as being eligible for Optional Redemption on
Schedule P&I may be paid, in whole or in part, at the option of the Borrower as of any Interest
Due Date on or after the date specified in such schedule (an "Optional Redemption"). In order to
elect an Optional Redemption of such a Principal Amount, the Borrower shall give notice of its
intention to prepay a Principal Amount to the Trustee and the Secretary not less than 60 days and
not more than 90 days prior to the Interest Due Date as of which the Borrower intends to prepay
the Principal Amount. The Trustee shall apply any payments received in respect of Optional
Redemptions in accordance with written instructions of the Borrower, as approved by the
Secretary. Principal Amounts that are not indicated as being eligible for Optional Redemption on
Schedule P&I may not be prepaid.
IV. General Terms
A. Additional Definitions
For purposes of this Note, the following terms shall be defined as follows:
"Business Day" shall mean a day on which banking institutions in New York City are not
required or authorized to remain closed and on which the Federal Reser~,e Bank and the New
York Stock Exchange are not closed. If any payment (including a payment by the Secretary) is
required to be made on a day that is not a Business Day, then payment shall be made on the next
Business Day.
"Contract" shall mean the Contract for Loan Guarantee Assistance, and any amendments
thereto, among the Secretary and the Borrower, the designated public entity named therein (if
applicable), and the State named therein (if applicable), that refers to and incorporates this Note
by the number hereof.
"Principal Amount" shall mean: (i) before the Conversion Date for this Note, the
aggregate amount of Advances made for each Principal Due Date specified in the Commitment
Schedule attached to this Note, less the amount of any redemptions pursuant to Section I.D.
hereof, and any principal repayment; and (ii) on or after the Conversion Date, the principal
amount (if any) stated for each Principal Due Date in Schedule P&I attached hereto, less the
amount of any principal repayment and any Optional Redemptions made pursuant to Section III
hereof and the Trust Agreement.
B. Timely Payment to Fiscal Agent or Trustee
Notwithstanding anything contained in Section I, Section II, or Section III, the Borrower,
in accordance with the Contract, shall be required to make all payments of interest and principal,
including any Optional Redemption payment, directly to the Fiscal Agent or the Trustee (as
applicable) on the seventh Business Day prior to the appropriate Interim Payment Date, Interest
Due Date, Principal Due Date, Prepayment Date, or date of Optional Redemption, as applicable.
C. Interest on Late Payments
If a payment of principal or interest herein provided for shall not be made by either (i) 2:30
p.m. on an Interest Due Date or Principal Due Date; or (ii) 2:30 p.m. on the second Business Day
(as herein defined) next succeeding an Interim Payment Date, then interest shall accrue on the
amount of such payment at the then applicable interest rate or rates payable on this Note, from the
relevant due date, as the case may be, until the date such payment is made. Nothing in the
immediately preceding sentence shall be construed as permitting or implying that the Borrower
may, without the written consent of the Holder and the Secretary, modify, extend, alter or affect
in any manner whatsoever the right of the Holder timely to receive any and all payments of
principal and interest specified in this Note.
D. Applicability of Fiscal Agency Agreement or Trust Agreement
Prior to the Conversion Date, this Note and Advances and payments made hereunder shall
be administered pursuant to the terms of the Fiscal Agency Agreement and are subject to such
agreement. On or after the Conversion Date, this Note and Advances and payments made
hereunder shall be administered pursuant to the Trust Agreement and are subject to such
agreement. The terms and provisions of the Fiscal Agency Agreement or the Trust Agreement,
insofar as they affect the rights, duties and obligations of the Holder and/or the Borrower, are
hereby incorporated herein and form a part of this Note. The Borrower hereby agrees to be
bound by all obligations of the Borrower to the Fiscal Agent set forth in the Fiscal Agency
Agreement. Capitalized terms not defined in this Note shall have the meanings ascribed to them
in the Fiscal Agency Agreement or Trust Agreement, as applicable. The Fiscal Agency
Agreement provides for the Fiscal Agent to perform certain duties, including the duties of (i)
paying agent and calculation agent for this Note until its Conversion Date, and (ii) registrar for
this Note until this Note is canceled or a new registrar appointed, each in accordance with the
Fiscal Agency Agreement. The Trust Agreement provides for the Trustee to perform certain
duties, including the duties of collection agent for this Note after its Conversion Date until a new
Trustee is appointed in accordance with the Trust Agreement. This Note may be surrendered to
the Fiscal Agent for registration of transfer or exchange, as provided in the Fiscal Agency
Agreement. The Fiscal Agent and Trustee each shall permit reasonable inspection to be made of a
copy of the Fiscal Agency Agreement or Trust Agreement kept on file at its respective corporate
trust office. Neither the Fiscal Agency Agreement nor the Trust Agreement shall change the
Borrower's payment obligations under this Note.
E. Applicability of Contract and Secretary's Guarantee
This Note evidences indebtedness incurred pursuant to and in accordance with the
Contract and pursuant to Section 108 of Title I of the Housing and Community Development Act
of 1974, as amended (42 U.S.C. § 5308) (the "HCD Act"). This Note is subject to the terms and
provisions of the Contract, to which Contract reference is hereby made for a statement of said
terms and provisions and for a description of the collateral security for this Note. The payment of
principal on the applicable Principal Due Dates and interest on the applicable Interim Payment
Dates or Interest Due Dates under this Note is unconditionally guaranteed by the Secretary to the
Holder through a guarantee (the "Guarantee"). Execution of the Secretary's Guarantee is
required before this Note is effective, and such Guarantee shall be issued pursuant to and in
accordance with the terms of the Contract and Section 108 of the HCD Act.
F. Default
A default under this Note shall occur upon failure by the Borrower to pay principal or
interest on this Note when due hereunder. If a Borrower defaults on the payment of any interest
or Principal Amounts when due, or if the Secretary gives notice of a final decision to declare the
Borrower in default pursuant to the following paragraph of this Section IV.F, the Secretary may,
but is not obligated to, make on any date on or prior to the Conversion Date with fourteen
calendar days prior notice to the Fiscal Agent, or on the seventh Business Day preceding any
Interest Due Date on or after the first permissible Optional Redemption date with seven Business
Days prior notice to the Trustee, an acceleration payment to the Fiscal Agent or the Trustee, as
applicable, equal to the Aggregate Principal Amount of the Note, together with accrued and
unpaid interest thereon to such acceleration payment date or Interest Due Date, as applicable. In
the event that any such acceleration payment is made from sources other than funds pledged by
the Borrower as security under the Contract (or other Borrower funds), the amounts paid on
behalf of the Borrower shall be deemed to be immediately due and payable to the Secretary.
Nothing in this paragraph shall be construed as permitting or implying that the Borrower may,
without the written consent of the Holder and the Secretary, modify, extend, alter or affect in any
manner whatsoever the right of the Holder timely to receive any and all payments of principal and
interest specified in this Note.
In addition, the Secretary may declare the Borrower in default under this Note if the
Secretary makes a final decision in accordance with the provisions of 24 C.F.R. § 570.913 (or any
successor regulation thereof), including requirements for reasonable notice and opportunity for
heating, that the Borrower has failed to comply substantially with Title I of the HCD Act.
Following the giving of such reasonable notice, the Secretary may take the remedial actions
specified as available in the relevant provisions of the Contract pending the Secretary's final
decision.
G. Holder's Reliance on Guarantee
Following a default by the Borrower under the terms of this Note, the Holder agrees to
rely wholly and exclusively for repayment of this Note upon the Guarantee. The enforcement of
any instruments or agreements securing or otherwise related to this Note shall be the sole
responsibility of the Secretary, and the Holder shall not be responsible for the preparation,
contents or administration of such instruments and agreements, or for any actions taken in
connection with such instruments and agreement. The Holder, to the extent it is legally able to do
so, shall bind or cause to be bound its successors and assigns to all limitations imposed upon the
Holder by this Note.
H. Amendment
This Note may only be amended with the prior written consent of the Secretary and the
Borrower. No such amendment shall reduce, without the prior written consent of the Holder of
this Note, in any manner the amount of, or delay the timing of, payments required to be received
on this Note by the Holder, Fiscal Agent or Trustee, including Guarantee Payments; provided that
prior to the Conversion Date, the Commitment Amounts on the Commitment Schedule attached
hereto, and the Principal Amounts due on the corresponding Principal Due Dates may be
rescheduled pursuant to written instructions given to the Fiscal Agent by the Secretary with the
written agreement of the Borrower and the Secretary absent the consent of the Holder.
I. Waivers
The Borrower hereby waives any requirement for presentment, protest or other demand or
notice with respect to this Note. The Borrower hereby waives notice of default and opportunity
for hearing for any failure to make a payment when due.
J. Deliver,/and Effective Date
This Note is deemed issued, executed, and delivered on behalf of the Borrower by its
authorized official as an obligation guaranteed by the Secretary pursuant to Section 108 of the
HCD Act, effective as of the date of the Secretary's Guarantee.
V. Borrower-Specific Provisions
[This space intentionally left blank]
9
IN WITNESS WHEREOF, the undersigned, as an authorized official of the Borrower, has
executed and delivered this Note.
The City of Bakersfield, California
BORROWER
By:
(Signature)
(Name)
ATTEST:
(Signature)
(Name)
(Title)
(Title)
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day
and year first-above written.
"CITY"
CITY OF BAKERSFIELD
By:
HARVEY L. HALL
Mayor
APPROVED AS TO FORM:
BART J. THILTGEN
City Attorney
By:
JANICE SCANLAN
Deputy City Attorney
APPROVED AS TO CONTENT:
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
By:
DONNA L. KUNZ
Economic Development Director
COUNTERSIGNED:
By:
GREGORY J. KLIMKO
Finance Director
11
ASSIGNMENT AND TRANSFER
For value received, the undersigned assigns and transfers this Note to
(Name and Address of Assignee)
(Social Security or Other Identifying Number of Assignee)
and irrevocably appoints
attorney-in-fact to transfer it on the books kept for registration of the Note, with full power of
substitution.
Dated:
Note: The signature to this assignment
must correspond with the name as written on
the face of the Note without alteration or
enlargement or other change.
Signature Guaranteed:
Qualified Financial Institution
By:
Authorized Signature
12
APPENDIX A
(a)
(b)
Special Pre-Conversion Interest Rates.
The Holder and the Secretary contemplate that the majority of the outstanding
Variable/Fixed Rate Notes will be purchased by underwriters selected by the
Secretary for sale in public offerings to occur each year. If a public offering
including this Note has not occurred by each March 1 following the initial Advance
under this Note, the Secretary shall, upon request, advise the Holder as to when a
public offering including this Note is expected to occur, and the Holder and the
Secretary agree to consult with each other as to what the interest rate on this Note
will be after May 1 of that year if a public offering has not occurred by such May
1. The Holder shall notify the Secretary if such consultation has not occurred by
April 1 of that year. If no public offering including this Note has occurred on or
before such May 1, the applicable interest rate on this Note from such May 1 shall
be the rate (if any) negotiated and agreed upon by the Secretary and the Holder.
Such rate may be the Standard Note Rate or some other rate agreed upon by the
Holder and the Secretary at least two Business Days before such May 1 (such
other rate, the "Negotiated Special Interest Rate"). The Secretary shall notify the
Fiscal Agent and the Holder in writing of any Negotiated Special Interest Rate
within two Business Days of the determination thereof.
If the Secretary and the Holder do not, by the April 15th preceding such May 1,
negotiate and agree under Section (a) of this Appendix on an interest rate
applicable to this Note, then tlie Holder may, on or before the April 20th preceding
such May 1, give written notice to the Secretary of its intent to change the interest
rate on this Note and, if such notice was given during such period, the Holder may,
on such May 1, unilaterally determine (subject to the terms of this paragraph) the
interest rate that this Note will bear (such rate, the "Holder Determined Interest
Rate") from and including such May 1 to but excluding the earliest off (i) the
Conversion Date; (ii) the date that this Note is purchased by a new Holder (as
described in Section (c) below) or (iii) a Monthly Special Reset Date (as defined
below). Interest from and including such May 1 to but excluding the Public
Offering Date shall be paid on the unpaid principal balance of all outstanding
Advances under this Note at the rate(s) to be determined by the Holder which,
based upon then prevailing market conditions and taking into account all the
circumstances, will enable the Holder to sell this Note at one hundred percent
(100%) of the aggregate amount of all Advances hereunder prior to the date of
such sale. Such interest rate shall be determined as of such May 1 and shall be
determined again on the foregoing basis on the f'n:st of each month thereafter (the
fzrst of each month after such May 1, a "Monthly Special Reset Date"). The
Holder shall notify the Fiscal Agent and the Secretary in writing within two
Business Days following such dates of the determination of the Holder Determined
(c)
(~)
Interest Rate and each applicable interest rate determined on a Monthly Special
Reset Date.
If the Secretary and the Holder have failed to agree upon an interest rate pursuant
to Section (a) of this Appendix A, the Secretary, upon seven calendar days notice
to the Holder, may arrange for the purchase of this Note in full by another entity
on the following May 1 or any Business Day thereafter. If such a purchase occurs,
the Holder shall sell and assign this Note to the purchaser thereof without recourse
to the Holder and deliver this Note and its Guarantee to the Fiscal Agent for
registration in the name of the pumhaser thereof in accordance with the Secretary's
written instructions. The purchase price for this Note shall be 100% of the
aggregate amount of all Advances owing hereunder plus accrued interest to the
date of purchase. Payment to the Holder of the purchase price for this Note shall
be made by the purchaser thereof in Federal funds at the offices of the Holder, or
at such other place as shall be agreed upon by the Holder and the Secretary, at
10:00 a.m., New York time, on the date of purchase. After such purchase date this
Note shall bear a rate of interest negotiated between the Secretary and the new
interim Holder (the "New Purchaser Special Interest Rate"). The Secretary shall
notify the Fiscal Agent and the new purchaser in writing of any New Purchaser
Special Interest Rate within two Business Days following the date of determination
thereof.
Notwithstanding Sections (a) through (c) (inclusive) of this Appendix, no
Borrower is obligated to pay interest at a variable rate exceeding the maximum
rate permitted by generally applicable law of the Borrower's state (such rate, the
"Maximum Rate"). If the Borrower receives notice of a variable interest payment
that exceeds the Maximum Rate, then the Borrower shall timely pay such amount
as does not exceed the Maximum Rate, and concurrently shall notify the Secretary
and the Fiscal Agent of the reason for any interest non-payment.
COMMITIVIENT SCHEDULE
Note No. B-02-MC-06-0510
Principal Due Date
Commitment Amount
August 1, 2003
August 1, 2004
August 1, 2005
August 1, 2006
August 1, 2007
August 1, 2008
August 1, 2009
August 1, 2010
August 1, 2011
August 1, 2012
August 1, 2013
August 1, 2014
August 1, 2015
August 1, 2016
August 1, 2017
August 1, 2018
August 1, 2019
August 1, 2020
August 1, 2021
August 1, 2022
$0
137,000
143,000
150,000
158,000
164,000
172,000
181,000
189,000
199,000
208,000
218,000
229,000
241,000
252,000
265,000
278,000
291,000
305,000
320,000
Maximum Commitment Amount
$4,100,000
ORIGiNA'
SCHEDULE P&I
Note No.. B-02-MC-06-0510
Principal Amount
Principal Interest Rate
Due Date
Optional Redemption Available
YES NO
August 1, 2003 X
August 1, 2004 X
August 1, 2005 X
August 1, 2006 X
August 1, 2007 X
August 1, 2008 X
August 1, 2009 X
August 1, 2010 X
August 1, 2011 X
August 1, 2012 X
August 1, 2013 X
August 1, 2014 X
August 1, 2015 X
August 1, 2016 X
August 1, 2017 X
August 1, 2018 X
August 1, 2019 X
August 1, 2020 X
August 1, 2021 X
August 1, 2022 X
Principal Amounts for which Optional Redemption is available may be redeemed, subject to the
terms contained herein and in the Trust Agreement, on any Interest Due Date on or after
August 1, 2012.
O~iGiNAi~
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER
SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT
OF 1974, AS AMENDED, 42 U.S.C. §5308
Date of Contract
This Contract for Loan Guarantee Assistance ("Contract") is
entered into between the City of Bakersfield, California, 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-06-0510, in the
Maximum Commitment Amount of $4,100,000, and any amended note or
note issued in substitution for such note and having the same
note number (the "Note"). This is the first Contract under the
Funding Approval ("Commitment") of the same number, which was
approved by the Secretary on September 30, 2002. 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
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.Ao), the
total amount of Advances made by the Holder for each
Principal Due Date under the Note shall not exceed the
applicable Commitment Amount for such Principal Due Date set
forth in the Commitment Schedule of the Note. Prior to
2
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.
Borrower's Requests for Advances. Ail 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 il(c) or 12
hereof, deliver a corresponding Authorization Order or
Advance Order (as applicable) to the Fiscal Agent in
accordance with Section 2.03 or 2.04 of the Fiscal Agency
Agreement for the applicable Funding Date or Conversion Date.
If the Borrower requests an Advance or Conversion Date
Advance of less than the outstanding Maximum Commitment
Amount under the Note, the Borrower may also specify in its
written request the amount of the Advance or Conversion Date
Advance to be allocated to each Commitment Amount or
Principal Amount per Principal Due Date under the Note. If
the Borrower does not specify how the Advance or Conversion
Date Advance should be allocated among Commitment
Amounts/Principal Due Dates, the Borrower hereby authorizes
the Secretary to direct the Fiscal Agent to allocate the
3
Advance to the respective Commitment Amounts or Principal
Amounts in order of the earliest Principal Due Date(s).
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.
Consents. By execution of this Contract, the Borrower
ratifies and consents to the Secretary's selection of the
Underwriters and authorizes the Secretary to negotiate with
the Underwriters the terms of the Underwriting Agreement and
of the public offering of interests in the trust certificates
to investors (including the applicable interest rates). In
addition, by execution hereof the Borrower ratifies and
consents to the Secretary's selection of the Fiscal
Agent/Trustee and agrees to the respective terms of the
Fiscal Agency/Trust Agreements. If Advances have been made
in the Maximum Commitment Amount of the Note not less than
ten Business Days prior to the proposed Conversion Date, or
if the Borrower requests a Conversion Date Advance, the
Borrower authorizes the Secretary to deliver Schedule P&I to
the Note completed in accordance herewith to the Fiscal
Agent/Trustee on the Conversion Date in accordance with the
Fiscal Agency/Trust Agreements, concurrent with delivery of
the Secretary's Guarantee of the trust certificates at the
closing on the Conversion Date, and thereafter the Note shall
be enforceable in accordance with its terms including
Schedule P&I. In addition, the Secretary reserves the right
to notify the Borrower not less than one calendar month in
advance of a specified Conversion Date that the Note will be
sold to the Underwriters on such date, if the Secretary in
his sole discretion determines that market conditions or
program needs require the participation in the proposed
public offering of all or substantially all Borrowers with
outstanding Advances.
4
PART II
Receipt, Deposit and Use of Guaranteed Loan Funds.
(a) Except for funds deducted on the Conversion Date
pursuant to paragraph 4(b) and fees and charges deducted by
the Fiscal Agent/Trustee pursuant to paragraph 4(a), the
Guaranteed Loan Funds shall be electronically transferred in
accordance with the Borrower's instructions for deposit in a
separate, identifiable custodial account (the "Guaranteed
Loan Funds Account") with a financial institution whose
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 Custodial
Account" (Attachment 1) and shall be continuously maintained
for the Guaranteed Loan Funds. Such Letter Agreement must be
executed when the Guaranteed Loan Funds Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution.)
The Borrower shall make withdrawals from said account only
for payment of the costs of approved Section 108 activities,
for transfer to the Loan Repayment Account or for the
temporary investment of funds pursuant to this paragraph
l(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.
Ail 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 January 31, 2005, or have maturities which
exceed one year. All such investments shall be held in trust
for the benefit of the Secretary by the above financial
institution in an account (the "Guaranteed Loan Funds
Investment Account") established and designated as prescribed
in the attached form document entitled "Letter Agreement for
Section 108 Loan Guarantee Program Custodial Investment
Account" (Attachment 2), which account shall be maintained
for all Government Obligations purchased with funds from the
Guaranteed Loan Funds Account. The Guaranteed Loan Funds
Investment Account need only be established if and when the
Borrower is required to invest, or otherwise invests, the
Guaranteed Loan Funds in Government Obligations. Such Lett~e~
ORIGi~A~
5
Agreement must be executed when the Guaranteed Loan Funds
Investment Account is established. (A fully executed copy of
such Letter Agreement shall be submitted to the Secretary
within thirty days of its execution.) All proceeds and
income derived from such investments shall be returned to the
Guaranteed Loan Funds Account.
Ail 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
January 31, 2005. Any funds remaining in either Account
after this date shall be immediately transferred to the Loan
Repayment Account established pursuant to paragraph 6 of this
Contract.
(b) The Borrower shall by the fifteenth day of each month
provide the Secretary with a written statement showing the
balance of funds in the Guaranteed Loan Funds Account and the
withdrawals from such account during the preceding calendar
month, and a statement identifying the obligations and their
assignments in the Guaranteed Loan Funds Investment Account.
(c) Upon the Secretary giving notice that the Borrower is in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Guaranteed Loan
Funds and Guaranteed Loan Funds Investment Accounts shall
immediately vest in the Secretary for use in making payment
on the Note, purchase of Government Obligations in accordance
with paragraph 10, or payment of any other obligations of the
Borrower under this Contract or the Fiscal Agency/Trust
Agreements.
Payments Due on Note; Final Payment and Discharge. The
Borrower shall pay to the Fiscal Agent/Trustee, as collection
agent for the Note, all amounts due pursuant to the terms of
the Note. In accordance with the Note and the Fiscal
Agency/Trust Agreements, payment shall be made by 3:00 P.M.
(New York City time) on the seventh Business Day (the "Note
Payment Date") preceding the relevant Interest Due Date or
Principal Due Date (each as defined in the Note). If any
Note Payment Date falls on a day that is not a Business Day,
then the required payment shall be made on the next Business
Day. Payment may be made by check or wire transfer.
Upon final payment of all amounts due to Holders under the
Note, including any payment made by the Secretary pursuant to
the Guarantee, the Fiscal Agent/Trustee is required by the
Fiscal Agency/Trust Agreements to return the Note to the
Secretary. Upon final payment to the Secretary of any
amounts due as a result of Guarantee Payments or otherwise
due under this Contract, the Secretary will cancel and return
the Note to the Borrower in discharge of the Borrower's
obligations under the Note. ~
6
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.
Payments Due Fiscal Agent or Trustee; Documents to the
Secretary.
(a) The Borrower agrees to pay the fees of the Fiscal Agent
as required by Exhibit G to the Fiscal Agency Agreement, and
any additional amounts that may be due pursuant to Section
6.01 of the Fiscal Agency Agreement. If not paid by the
Borrower by any other means prior thereto, the Borrower
agrees that any such fees or additional amounts that have
been incurred prior to an Advance or a Conversion Date
Advance may be deducted by the Fiscal Agent/Trustee from the
proceeds of the Advance or Conversion Date Advance, as
applicable.
(b) The Borrower agrees to pay the Borrower's share, as
determined by the Secretary, of the customary and usual
issuance, underwriting, and other costs related to the public
offering and future administration of the Note and the trust
certificates, as approved by the Secretary, including the
cost of reimbursement and/or compensation of the Trustee
pursuant to the Trust Agreement, including Sections 3.11 and
7.01 thereof. In connection with the public offering on the
Conversion Date, such payment shall either be made by wire
transfer to the Trustee on the day prior to the Conversion
Date or shall be deducted from the Guaranteed Loan Funds on
the Conversion Date.
(c) The Borrower shall submit to the Secretary not later than
ten Business Days prior to the Funding Date for the initial
Advance hereunder, or if not submitted earlier, prior to any
Conversion Date or Public Offering Date applicable to the
Note, this executed Contract, the executed Note, a request
for an Advance or a Conversion Date Advance (as applicable)
in proper form, and an opinion acceptable to the Secretary
from the Borrower's counsel to the effect that: (i) the
governing body of the Borrower has authorized by resolution
or ordinance, in accordance with applicable State and local
law, the issuance of the Note and the execution of this
Contract; (ii) the Note and this Contract are valid, binding,
and enforceable obligations of the Borrower; (iii) the pledge
of funds pursuant to 24 CFR 570.705(b) (2) and paragraph 5(a)
of this Contract is valid and binding; and (iv) there is no
the
outstanding litigation that will affect the validity of
Note or this Contract. In addition, the Borrower shall
submit any other additional documents or opinions
7
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
Contract.
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) Ail allocations or grants which have been made or for
which the Borrower may become eligible under Section 106 of
the Act, as well as any grants which are or may become
available to the Borrower pursuant to Section 108(q).
(b) Program income, as defined at 24 CFR 570.500(a) (or any
successor regulation), directly generated from the use of the
Guaranteed Loan Funds.
(c) Other security as described in paragraph 15, et seq.
(d) Ail proceeds (including insurance and condemnation
proceeds) from any of the foregoing.
(e) Ail funds or investments in the accounts established
pursuant to paragraphs 1 and 6 of this Contract.
Loan Repayment Account.
(a) Ail amounts pledged pursuant to paragraphs 5(b), 5(c),
and 5(d) of this Contract shall be deposited immediately
8
receipt in a separate identifiable custodial account (the
"Loan Repayment Account") with a financial institution whose
deposits or accounts are Federally insured. The Loan
Repayment Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Custodial
Account" (Attacb-~ent 1) and shall be maintained for such
pledged funds. The Loan Repayment Account need only be
established if and when the Borrower receives amounts pledged
pursuant to paragraph 5(b), 5(c) or 5(d). Such Letter
Agreement must be executed when the Loan Repayment Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution.) Borrower shall make withdrawals from said
account only for the purpose of paying interest and principal
due on the Note (including the purchase of Government
Obligations in accordance with paragraph 10 hereof), for
payment of any other obligation of the Borrower under this
Contract or the Fiscal Agency/Trust Agreements, or for the
temporary investment of funds pursuant to this paragraph,
until final payment and discharge of the indebtedness
evidenced by the Note, unless otherwise expressly authorized
by the Secretary in writing. Such temporary investment of
funds shall be required within three Business Days after the
balance of deposited funds exceeds the amount of the Federal
deposit insurance on the Loan Repayment Account. At that
time, the balance of funds in the Loan Repayment Account
exceeding such insurance coverage shall be fully (100%) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof.
Ail 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 institutiQn
in an account (the "Loan Repayment Investment Account")
established and designated as prescribed in the attached form
document entitled "Letter Agreement for Section 108 Loan
Guarantee Program Custodial Investment Account" (Attach. merit
2), which account shall be maintained for all Government
Obligations purchased with funds from the Loan Repayment
Account. Such Letter Agreement must be executed when the
Loan Repayment Investment Account is established. (A fully
executed copy of such Letter Agreement shall be submitted to
the Secretary within thirty days of its execution.) All
proceeds and income derived from such investments shall be
returned to the Loan Repayment Account.
9
(b) Borrower shall by the fifteenth day of each month,
provide the Secretary with a written 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 a statement identifying the
obligations and their assignments in the Loan Repayment
Investment Account.
(c) Upon the Secretary giving notice that the Borrower is in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Loan Repayment and
Loan Repayment Investment Accounts shall immediately vest in
the Secretary for use in making payment on the Note, purchase
of Government Obligations in accordance with paragraph 10, or
payment of any other obligation of the Borrower under this
Contract or the Fiscal Agency/Trust Agreements.
Use of CDBG or EDI Funds for Repayment. Any funds available to
the Borrower under Section 106 of the Act (including program
income derived therefrom) are authorized to be used by the
Borrower for payments due on the Note, Optional Redemption (as
defined in the Note), payment of any other obligation of the
Borrower under this Contract or the Fiscal Agency/Trust
Agreements, or the purchase of Government Obligations in
accordance with paragraph 10. Any funds specifically available
to the Borrower for such payments or as a debt service reserve
under an EDI Grant Agreement pursuant to Section 108(q) of the
Act which supports the eligible project(s) and activities
financed by the Note may also be used therefor; any other use of
Section 108(q) funds for such purposes shall require the prior
written approval of the Secretary. Unless otherwise
specifically provided herein or unless otherwise expressly
authorized by the Secretary in writing, the Borrower shall
substantially disburse funds available in the Loan Repayment or
the Loan Repayment Investment Accounts before funds from grants
under Section 106 of the Act are withdrawn from the U.S.
Treasury for such purposes.
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
10
disapproving payment requests submitted with respect to such
grants for purposes other than satisfaction of the pledge.
Secretary's Right to Use Pledged Funds for Repayment. The
Secretary may use funds pledged under paragraph 5(a) of this
Contract or funds restricted under grants pursuant to paragraph
8 of this Contract to make any payment required of the Borrower
under paragraph 2 and/or paragraph 4, if such payment has not
been timely made by the Borrower.
10.
Defeasance. For purposes of this Contract, after the Conversion
Date the Note shall be deemed to have been paid (defeased) if
there shall have been deposited with the Trustee either moneys
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
Principal Due Date. In accordance with the Note and the Trust
Agreement, the Borrower shall give timely notice and written
instructions to the Secretary and the Trustee concerning any
principal amounts proposed to be defeased, including any
Optional Redemptions proposed, which instructions shall be
approved by the Secretary. If the unpaid Aggregate Principal
Amount of the Note guaranteed pursuant to this Contract shall be
defeased and deemed to have been paid in full, then the Borrower
shall be released from all agreements, covenants, and further
obligations under the Note.
"Government Obligation" means a direct obligation of, or any
obligation for which the full and timely payment of principal
and interest is guaranteed by, the United States of America,
including but not limited to, United States Treasury
Certificates of Indebtedness, Notes and Bonds State and Local
Government Series or certificates of ownership of the principal
of or interest on direct obligations of, or obligations
unconditionally guaranteed by, the United States of America,
which obligations are held in trust by a commercial bank which
is a member of the Federal Reserve System and has capital and
surplus (exclusive of undivided profits) in excess of
$100,000,000.
11. Default. (a) A Default under the Note and this Contract
shall occur upon failure by the Borrower to:
(i) pay when due an installment of principal or interest
on the Note; or (ii) punctually and properly perform,
observe, and comply with any covenant, agreement, or
condition contained in: (A) this Contract, (B) any
security agreement, deed of trust, mortgage, assignment,
guarantee, or other contract securing payment of
11
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 ll(a).
(c) In addition to Defaults under paragraph ll(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.
(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.
12
(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,
subject to Optional Redemption,
Note.
or with respect to amounts
the Secretary may accelerate the
(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) Ail 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 Housinq and Urban Development
Attention: Paul Webster, Director
Financial Manaqement Division
451 7th Street, SW, Room 7180
Washinqton, DC 20410
Borrower:
The City of Bakersfield
Economic and Community Development Department
ATTN: Ms. Donna Kunz, Economic Development Dir.
1501 Truxtun Avenue
Bakersfield, CA 93301
13
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. Neither
the general credit nor the taxing power of the Borrower, or of
the State in which the Borrower is located, is pledged for any
payment due under the Note, the Contract, or the Fiscal
Agency/Trust Agreements.
14.
Incorporated Grant Agreement. The Contract and the Note are
hereby incorporated in and made a part of the Grant Agreement
authorized by the Secretary on July 24, 2002, under the Funding
Approval for grant number B-02-MC-06-0510 to the Borrower. In
carrying out activities with the Guaranteed Loan Funds
hereunder, the Borrower agrees to comply with the Act and 24 CFR
Part 570, as provided in Subpart M thereof.
15. Special Conditions and Modifications:
(a)
Paragraph 5(c) of the Contract is amended by deleting the
paragraph as written in its entirety and substituting
therefor the following:
"(c)
Other security, consisting of any and all rights,
titles, and interests of the Borrower (but none of
the obligations of the Borrower), in and to a
portfolio of notes (the "Pledged Loan Notes") and
supporting security documents (the "Pledged Loan
Security Documents") which together constitute the
loans (the "Pledged Loans"), further described in
a Pledged Loan Inventory and Agreement (the
"Pledged Loan Inventory and Agreement") in the
form attached as Attachment 3. Other security
shall also include, but not be limited to, a sole
first priority lien in the name of the Secretary
on the real property described in Attachment 4
hereof {1601 Truxtun Avenue) (the "Real Property"),
established through an appropriate and properly
recorded mortgage (the 'Mortgage'). The Mortgage
shall contain such provisions as the Secretary
deems necessary."
(b) Guaranteed Loan Funds shall be used by the Borrower to
carry out the acquisition, construction,
reconstruction, rehabilitation, or installation of a
public facility, pursuant to 24 CFR 570.703(1).
Specific activities to be assisted include the
rehabilitation of the Martin Luther King Jr. Pool, the
rehabilitation of the Jefferson Pool, development of
14
the 14~n Street Aquatic Center, and construction of a
Career Counseling/Training Center facility.
(c) For the Pledged Loans:
(i)
(ii)
(iii)
(iv)
The Borrower shall deliver to the Secretary
contemporaneously with the delivery of this
Contract and the Note the following, in form and
substance satisfactory to the Secretary:
(A)
the Pledged Loan Inventory and Agreement,
including Exhibit 1, the Schedule of Pledged
Loans, and a copy of Exhibit 2, the Pledged Loan
Escrow Agreement (in the forms attached hereto as
Attachment 3), duly executed by an authorized
representative of the Borrower.
(B) an opinion of Borrower's counsel on its
letterhead, addressed to the Secretary, that:
{1) the Pledged Loan Inventory and Agreement,
the Pledged Loan Escrow Agreement, and the
Blanket Endorsement and Assignment referred to
therein, have been duly executed by an
authorized representative of the Borrower and
are valid and binding obligations of the
Borrower, enforceable in accordance with their
terms;
(2) the Pledged Loan Notes and the related
deeds of trust are valid and legally binding
obligations of the respective borrowers,
enforceable in accordance with their
respective terms; and
(3) the Borrower has provided to the Secretary
a perfected security interest in the security
specified in the Pledged Loan Inventory and
Agreement.
As to the preceding subparagraph, such opinion
may be based, in counsel's discretion, on
counsel's review of a sample of Pledged Loan
documents and a certification by a responsible
official of the Borrower that the remainder of
the Pledged Loans were made using materially
similar documents and procedures.
Reserved.
Reserved.
The Borrower covenants that
it shall ensure the
15
(d)
(v)
(vi)
diligent performance of the usual and customary
functions related to the servicing of the Pledged
Loan Notes.
Paragraph 12 is amended by adding at the end
thereof the following language:
"(g) The Secretary may complete the endorsement of
the Pledged Loans (as defined in the Pledged
Loan Inventory and Agreement), and thereby
effectuate the transfer of such documents and
the underlying indebtedness and the
security therefore from the Borrower to the
Secretary or the Secretary's assignee."
Notwithstanding anything else to the contrary in
paragraph 6(a), so long as no Default has occurred,
amounts pledged pursuant to paragraph 5(b), 5(c),
and 5(d) shall not be required to be deposited in
the Loan Repayment Account; provided, however, such
amounts shall be used in accordance with the
regulations governing their use (including, without
limitation, 24 CFR Part 570 and 24 CFR Part 92).
Upon any Default or the issuance by the Secretary
of a Notice of Impaired Security pursuant to
paragraph 15(g), the Borrower shall immediately
deposit all cash derived from such pledged amounts
(then on hand or thereafter received) in the Loan
Repayment Account.
For the lien on real property described in paragraph
15(a) above and Attachment 4 of this Contracts
(i)
The Borrower shall select a financial institution
acceptable to the Secretary (the "Custodian") to
act as custodian for the documents specified in
(d) (ii) below (hereinafter referred to as the
"Security Documents"). The Borrower and the
Custodian shall enter into a written agreement
containing such provisions as the Secretary deems
necessary. A fully executed copy of such
agreement, with original signatures, shall be
forwarded to the Secretary contemporaneously with
the delivery of documents pursuant to 15(d) (ii)
below.
(ii)
Not later than five business days after receipt by
the Borrower of the Guaranteed Loan Funds, the
Borrower shall deliver to the Custodian the
following:
(A) The original recorded Mortgage signed by the
mortgagor securing repayment of the indebtedne~.~
16
evidenced by the Note. Alternatively, Borrower
shall deliver a copy of the Mortgage submitted for
recordation, to be followed by the original
recorded Mortgage as soon as it becomes available.
(B) A mortgagee title policy, issued by a company
and in a form acceptable to the Secretary, naming
the Secretary as the insured party.
(C) A certified survey with a legal description
conforming to the title policy and the Mortgage.
(D) An appraisal of the fee simple ownership
interest in the Real Property specifying a
combined estimate of fair market value of not less
than $3,625,000. The appraisal shall be completed
by an appraiser who is certified by the state and
has a professional designation (such as "SRA" or
"MAI"), and shall conform to the standards of the
Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA").
(E) An opinion of Borrower's counsel on its
letterhead, addressed and satisfactory to the
Secretary, that the Mortgage is a valid and
legally binding obligation, enforceable in
accordance with its terms.
(iii)
Consistent with the use of the Guaranteed Loan
Funds as described in paragraph 15(b) to
rehabilitate the Martin Luther King Jr. Pool and
the Jefferson Pool, the development of the 14th
Street Aquatic Center, and construction of a
Career Counseling/Training Center facility, the
Borrower contemplates requesting release of real
property from the Mortgage, as defined in
paragraph 15(a) above, and substitution of other
real property. The Secretary agrees timely to
consider such request and to execute such release
prepared in proper form by the Borrower for the
signature of the Secretary, provided that the
Borrower certifies that the appraised value of
Property to be substituted equals or exceeds that
amount which is not less than the amount required
by paragraph 15(d) (ii) (D) of this Contract.
(e) Paragraph 12 is amended by adding at the end thereof the
following language:
"(h)
The Secretary may exercise any appropriate remedies
to enforce the lien on the Real Property referred
to in paragraph 15 (a) above, amending paragraph
5(c) ."
17
(f)
(g)
If any one or more of the covenants, agreements,
provisions, or terms of this Contract shall be for any
reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements,
provisions or terms of this Contract and shall in no
way affect the validity or enforceability of the other
provisions of this Contract or of the Note or the
rights of the Holder thereof.
(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, 2003 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 15(g) (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 15(g) (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 15(g)(i) above,
the Secretary may declare the Note in Default and
exercise any and all remedies available under paragraph
12. This paragraph 15(g)(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.
18
(iv) Ail notices and submissions provided for hereunder
shall be submitted as directed in paragraph 12(f)
above.
[Rest of Page Intentionally Left Blank]
19
IN WITNESS WHEREOF, 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 Bakersfield,
BORROWER
ATTEST:
BY=
(Signature) (Signature)
(Name) (Name)
(Title) (Title)
(Date)
CA
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT
BY:
(Signature)
(Name)
(Title)
(Date)
ORK,~iNAi
2O
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed the day and year first-above written.
"CITY"
CITY OF BAKERSFIELD
By:
HARlrEY L. HALL
Mayor
APPROVED AS TO FORM:
BART J. THILTGEN
City Attorney
By:
JANICE SCANLAN
Deputy City Attorney
APPROVED AS TO CONTENT:
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
By:
DONNA L. KUNZ
Economic Development Director
COUNTERSIGNED:
By:
GREGORY J. KLIMKO
Finance Director
ATTACHMENT 3
PLEDGED LOAN INVENTORY AND AGREEMENT
This pledge and security agreement (the "Pledged Loan
Inventory and Agreement") is entered into as of the day
of by and between the City of Bakersfield,
a public entity organized and existing under the laws of the State
of California, as grantor (the "Borrower") and the Secretary of
Housing and Urban Development, as secured party (the "Secretary").
WITNESSETH THAT
~nereas, the Borrower wishes to secure financing to enable the
Borrower to carry out the acquisition, construction,
reconstruction, rehabilitation, or installation of public
facilities; and
Whereas, to facilitate such financing, the Borrower has
requested that the Secretary issue its guarantee under Section 108
of Title I of the Housing and Community Development Act of 1974, as
amended ("Title I); and
Whereas, the Secretary has agreed, pursuant to Section 108 of
Title I, to guarantee the Borrower's loan (the "Loan Guarantee")
upon certain conditions, including the requirement that the
Borrower furnish certain collateral as security for the Loan
Guarantee; and
Whereas, a part of the required collateral is a portfolio of
notes (the "Pledged Loan Notes") and supporting security documents
described below (the "Pledged Loan Security Documents") which
together constitute the loans (the "Pledged Loans") specified on
2
the attached schedule (the "Schedule of Pledged Loans"), attached
hereto as ~Dd~ibit l, which the Borrower has agreed to offer as
collateral for the Loan Guarantee.
Now therefore, in consideration of the premises the Borrower
represents and agrees as follows:
1. That the Borrower is the holder in due course of each of
the Pledged Loan Notes shown on the Schedule of Pledged Loans as
attached hereto as E~/~ibit 1.
2. That there are no known defenses to the payment of any
of the Pledged Loan Notes in accordance with their terms.
3. That no Pledged Loan Note is in default, or is
delinquent for more than thirty days on any payment due thereunder.
4. That, not later than Borrower will
provide a blanket endorsement, without recourse, with a schedule of
the Pledged Loan Notes, and deliver them and the Pledged Loans to a
financial institution approved by the Secretary (the "Custodian")
which Custodian will hold the Pledged Loans pursuant to a written
agreement acceptable to the Secretary, substantially in the form
attached hereto as ~,hibit 2.
5. Upon receipt of notice of a Declaration of Default from
the Secretary or his designee, the Custodian will deliver to the
Secretary as many of the Pledged Loans as may, in the reasonable
determination of the Secretary, be necessary to cure the underlying
Default, up to the limit of the total portfolio of such Pledged
Loans, together with all of the Borrower's right, title and
interest in and to the proceeds of any related insurance policies.
6. The Borrower will, so long as the Note, as defined in
the Contract for Loan Guarantee Assistance under Section 108
between the Borrower and the Secretary of Housing and Urban
Development (the "Contract"), remains unpaid, maintain the Schedule
of Pledged Loans at no less than a decreasing (offsetting)
aggregate value as principal payments are made to the outstanding
Note. The Borrower will have the right, from time to time, to
substitute other loans of equal dignity for any Pledged Loan shown
on the Schedule of Pledged Loans so long as such aggregate value is
maintained.
7. This Pledged Loan Inventory and Agreement constitutes a
legally valid and binding obligation of the Borrower and provides
the Secretary with a perfected security interest in the Pledged
Loan Notes and any revenues accruing to the Borrower from the
Pledged Loans.
[Remainder of page intentionally left blank]
4
IN WITNESS WHEREOF, the undersigned, as authorized officials
of the Borrower and the Secretary, have executed this Pledged Loan
Inventory and Agreement as of the date first appearing above.
The City of Bakersfield, CA
BORROWER
ATTESTs
BY=
(Signature) (Signature)
(Name) (Name)
(Title) (Title)
(Date)
SECRETARY OF HOUSING ANDURBAN
DEVELOPMENT
BY:
(Signature)
(Name)
(Title)
(Date)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed the day and year first-above written.
"CITY"
CITY OF BAKERSFIELD
By:
HARVEY L. HALL
Mayor
APPROVED AS TO FORM:
BART J. THILTGEN
City Attorney
By:
JANICE SCANLAN
Deputy City Attorney
APPROVED AS TO CONTENT:
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
By:
DONNA L. KUNZ
Economic Development Director
COUNTERSIGNED:
By:
GREGORY J. KLIMKO
Finance Director
EXHIBIT i OF ATTACHI~IENT 3
Schedule of Ple~.qed Loans
BORROWER
PRINC I PAL INTEREST
BALANCE RATE
MATURITY
ANNUAL
P&I
EXHIBIT 2 OF ATTACH~NT 3
PLEDGED LOAN ESCROW AGREEMENT
Date:
[Name and Address of Institution]
Dear Sirs:
Re: Section 108 Loan Guarantee Program - Pledged Loan
Escrow Agreement
The undersigned, the City of Bakersfield, California (the
"Borrower"), hereby delivers to you, as Escrow Agent, those notes
(the "Pledged Loan Notes") and supporting security documents (the
"Pledged Loan Security Documents") which together constitute the
loans (the "Pledged Loans") shown on the Schedule of Pledged
Loans attached as Exhibit i to a certain Pledged Loan Inventory
and Agreement entered into by the Borrower and the Secretary,
dated as of the day of ,
For each Pledged Loan you will find a copy of the promissory note
(the "Pledged Loan Note") and the instrument number and date of
the duly recorded deed of trust related to such note. The
Borrower also hereby delivers to you a blanket endorsement of the
Pledged Loan Notes, and a blanket assignment of the related deeds
of trust, without recourse (the "Blanket Endorsement and
Assignment").
This letter agreement will be designated as Exhibit 2 to
2
said Pledged Loan Inventory and Agreement.
You are to hold the Pledged Loans until the Note guaranteed
by the Secretary is paid in full, or until you are authorized by
the Secretary, in writing, to redeliver all or a part of such
Pledged Loans to the Borrower.
Notwithstanding the foregoing, you are authorized and
directed to deliver up to the Borrower from time to time and upon
its request, certain Pledged Loans specified by the Borrower in
exchange for other Pledged Loans of equal value and dignity. In
effectuating such exchanges you may rely on representations made
by the Borrower as to the value of the Pledged Loans tendered in
exchange for the Pledged Loans which you are asked to deliver to
Borrower.
In the event you receive a Declaration of Default from the
Secretary, or his designee, pertaining to the Note guaranteed by
the Secretary, and you receive a request to do so from the
Secretary, you shall, as to as many Pledged Loans as may be
needed to cure the default in the reasonable determination of the
Secretary, deliver such Pledged Loans and the Blanket Endorsement
and Assignment to the Secretary or his designee.
Upon being notified by the Secretary that the Note
guaranteed by the Secretary has been paid, you may return to
Borrower as many of the Pledged Loans as may be specified by the
Secretary. If you are notified by the Secretary that the Note
has been paid in full, you shall deliver all of such Pledged
Loans to the Borrower and terminate this escrow agreement.
3
The undersigned will indemnify and hold you, your directors,
officers, employees and agents harmless from and against any and
all liability, demands, claims, actions, losses, interest, costs
of defense, and expenses (including reasonable attorney's fees)
which arise out of your acts or omissions in connection with this
agreement, except for your own gross negligence or willful
misconduct. These indemnification and hold harmless provisions
set forth herein shall continue after termination of this
agreement.
In the event of any disagreement between the undersigned
and/or any other person, resulting in adverse claim or demand
being made in connection with this escrow, you shall not become
liable to the parties for damages or interest for your failure or
refusal to comply with such conflicting or adverse demands, and
you shall be entitled to continue to refuse to act until the
disagreement is resolved in accordance with this paragraph.
Disagreements may be resolved by:
a. Ail adverse parties providing you with consistent
written instructions; or
b. You initiate an interpleader in a court of proper
jurisdiction; provided, however, that any other controversy
or claim arising out of or relating to your acts or
omissions in connection with this agreement, or any related
agreement or instrument, including any claim based on or
arising from an alleged tort or any counterclaim related to
an interpleader action, shall be determined by arbitration
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Judgment upon an award
rendered by an arbitrator(s) may be entered in any court
having jurisdiction.
Should you at any time and for any reason desire to be
relieved of your obligations as escrow holder hereunder, you
shall give written notice to the Borrower and the Secretary. The
Borrower shall within days of the receipt of such notice,
appoint a successor escrow holder and instruct you to deliver the
subject matter hereunder to said successor. If you are not
notified of the successor escrow holder within __ days, you may
return the subject matter hereunder to the Borrower and upon
doing so you may be absolved from all further obligations in
connection with this escrow.
Except as provided as above, this agreement shall be
governed by the laws of the State of California, except to the
extent the federal laws of the United States of America are
applicable.
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
sent by telecopier, upon receipt.
The Secretary:
U.S. Dept.
Attention: Paul Webster, Director
Financial Manaqement Division
an answer back; and (iv) if
of Housinq and Urban Development
451 7th Street, SW, Room 7180
Washington, DC 20410
Borrower:
This agreement may not be amended except in writing executed
by all parties hereto. Such amendment shall not be effective
without the prior written consent of the Secretary. This
agreement may be executed in counterparts, each of which so
executed shall be deemed an original, irrespective of the date of
execution and delivery, and said counterparts shall constitute
one and the same document.
[Rest of page intentionally left blank]
This letter is submitted to you in duplicate. Please
execute the duplicate copy of the certificate below,
acknowledging your willingness to act as Escrow Agent in this
matter, so that we may present a signed copy of this letter to
the Secretary of HUD.
City of Bakersfield, CA
By:
Name:
Title:
Date:
(Signature)
The undersigned institution certifies, for the benefit of
the Secretary of Housing and Urban Development, that it is
willing to act as Escrow Agent for the purposes and under the
terms set forth above.
[Name of Institution]
By:
Signature)
Name:
Title:
Date:
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed the day and year first-above written.
"CITY"
CITY OF BAKERSFIELD
By:
HARVEY L. HALL
Mayor
APPROVED AS TO FORM:
BART J. THILTGEN
City Attorney
By:
JANICE SCANLAN
Deputy City Attorney
APPROVED AS TO CONTENT:
ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT
By:
DONNA L. KUNZ
Economic Development Director
COUNTERSIGNED:
By:
GREGORY J. KLIMKO
Finance Director
ATTACHMENT 4
Legal Description of Real Property
[1601 Truxtun Avenue, Bakersfield, CA]
Parcel 1:
Lots 1, 2, 3 and 4 in Block 315 in the City of Bakersfield, County of Kern, State of California, as
per map recorded in Book 1, Page 13 of Maps, in the office of the County Recorder of said
county.
Together with that portion of the alley, being 33 feet in width, lying between Lots 1 and 2 and
Lots 7 and 8 of said Block 315 as vacated by Resolution No. 59-74, by the Council of the City of
Bakersfield, dated June 24, 1974 and recorded July 25, 1974 in Book 4852, Page 726 of Official
Records.
Also that portion of the alley being 33 feet in width lying between Lots 3 and 4 and Lots 5 and 6
of said Block 315, as vacated by Resolution No. 33-75 by the Council of the City of Bakersfield,
dated April 21, 1975 and recorded May 20, 1975 in Book 4896, Page 907 of Official Records.
Parcel 2:
All of Lots 5, 6, 7 and 8 in Block 315, in the City of Bakersfield, County of Kern, State of
California, as per map recorded in Book 1, Page 13 of Maps, in the office of the County
Recorder of said county.
Together with that portion of the northerly 16.5 feet of 16th Street being 82.5 feet wide, that is
adjacent to and bounded on the north by the south line of said Block 315 as vacated by
Resolution No. 59-74, by the Council of the City of Bakersfield, dated June 24, 1974 and
recorded July 25, 1974 in Book 4852, Page 726 of Official Records.
Also that portion of the northerly ½ of said 16th Street, being 82.5 feet wide, lying adjacent to
said Block 315 and bounded on the west by the easterly line of H Street and on the east by and
westerly tine of Eye Street as vacated by Resolution No. 119-83 by the Council of the City of
Bakersfield, dated August 3, 1983 and recorded September 30, 1983 in Book 5593, Page 1909
of Official Records.
Excepting therefrom the northerly 16.5 feet of said 16th Street as previously vacated.
Excepting therefrom that portion of the northerly ½ of 16th Street as vacated by the Council of
the City of Bakersfield in Resolution No. 50-74, recorded July 25, 1974 in Book 4852, Page 726,
of Official Records, and in Resolution No. 119-82, recorded September 30, 1983 in Book 5593,
Page 1909 of Official Records, lying within the following described parcel of land:
Beginning at the northwest corner of Lot 4, Block 324, as per Map recorded November 26,
1898, in Book 1, Pages 13 and 14, of Maps in the office of the County Recorder of said county;
Thence (1) north 90°00'00" east 31.47 feet along the north line of said Lot 4, which is also the
south line of a portion of 16~h Street vacated per Resolution 119-83 on September 30, 1983,
said portion of vacated 16th Street being 82.5 feet in width lying adjacent to Blocks 315 and 324
as said Blocks are shown on said map of the City of Bakersfield, bounded on the west by the
east line of "H" Street and on the east by the west line of Eye Street (formerly 'T' Street);
Thence (2) north 20052'46" west 88.30 feet to the southwest corner of Lot 5 of said Block 315,
said corner also being the intersection of the north line of said vacated 16th Street with the east
line of "H" Street;
Thence (3) south 0~00'00'' west along the east line of "H" Street, 82.50 feet to the point of
beginning.
Parcel 3:
Lots 1, 2, 3 and 4 in Block 324, in the City of Bakersfield, County of Kern, State of California, as
per map recorded November 25, 1898 in Book 1, Pages 13 and 14 in the office of the County
Recorder of said county.
Excepting therefrom the southerly 25 feet of Lot 1 and the southerly 25 feet of the easterly 26
feet of Lot 2.
Together with the southerly ½ of 16th Street, lying adjacent to said Block 324, and bounded on
the west by the easterly line of H Street and on the east by the westerly line of Eye Street as
vacated by Resolution No 119-83 by the City Council of the City of Bakersfield, dated August 3,
1983 and recorded September 30, 1983 in Book 5593, Page 1909 of Official Records.
Together with that portion of the 33 foot wide alley in said Block 324, vacated by Resolution No.
215-91 of the City Council of the City of Bakersfield, dated November 6, 1991, recorded
November 20, 1991 in Book 6596, Page 1723, of Official Records, more particularly described
as follows:
Beginning at a point on the north line of said alley also being the southeast corner of Lot 3 of
said Block 24;
Thence south 00°00'00'' west, 33.00 feet to a point on the south line of said alley also being the
northeast corner of Lot 6 of said block;
Thence south 90°00'00'' west, along said south line, 76.94 feet;
Thence north 09°01'33" west, 33.41 feet to a point on the north line of said alley;
Thence north 90°00'00'' east, along said north line, 82.18 feet to the point of beginning.
Excepting therefrom that portion of the southerly ½ of 16~h Street as vacated by the Council of
the City of Bakersfield in Resolution No. 119-82, recorded September 30, 1983 in Book 5593,
Page 1909 of Official Records, lying within the following described parcel of land:
Beginning at the northwest corner of Lot 4, Block 324, as per Map recorded November 25,
1898, in Book 1, Pages 1 3 and 14, of Maps in the office of the County Recorder of said county;
Thence (1) north 90'00'00" east 31.47 feet along the north line of said Lot 4, which is also the
south line of a portion of 16~h Street vacated per Resolution 119-83 on September 30, 1983,
said portion of vacated 16th Street being 82.5 feet in width lying adjacent to Blocks 315 and 324
as said Blocks are shown on said map of the City of Bakersfield, bounded on the west by the
east line of "H" Street and on the east by the west line of Eye Street (formerly "1" Street);
Thence (2) north 20°52'46'' west 88.30 feet to the southwest corner of Lot 5 of said Block 315,
said corner also being the intersection of the north line of said vacated 16th Street with the east
line of "H" Street;
Thence (3) south 0000'00'' west along the east line of "H" Street, 82.50 feet to the point of
beginning.
Also excepting therefrom that portion of Lot 4 lying within the following described parcel of land:
Beginning at the southwesterly corner of Lot 4, Block 324, in that portion of the City of
Bakersfield, in the County of Kern, State of California, as per map recorded November 25, 1898,
in Book 1, Pages 13 and 14, of Maps in the office of the County Recorder of said county;
Thence running easterly along the southerly line of said Lot 4, which is also the northerly line of
the alley, north 90°00'00'' east, a distance of 49.82 feet;
Thence running northwesterly along a line through said Lot 4, north 9~01'33" west, a distance of
116.95 feet;
Thence running westerly along the northerly line of said Lot 4, which is also the southerly line of
16~h Street, north 90°00'00'' west, a distance of 31.47 feet;
Thence running southerly along the westerly line of said Lot 4, which is also the easterly line of
"H" Street, south 0°00'00'' east, a distance of 115.50 feet to the point of beginning.
Parcel 4:
Lots 5 and 6 in Block 324, in the City of Bakersfield, County of Kern, State of California, as per
map recorded November 25, 1898, in Book 1, Pages 13 and 14 of Maps, in the Office of the
County Recorder of said County.
Excepting therefrom that portion of said land lying within the following described parcel of land:
Beginning at the southwesterly corner of Lot 5, Block 324, in that portion of the City of
Bakersfield, in the County of Kern, State of California, as per map recorded November 25, 1898,
in Book 1, Pages 13 and 14, of Maps in the office of the County Recorder of said county;
Thence running easterly along the southerly line of Lots 5 and 6 of said Block, which is also the
northerly line of AT&SF RY, north 90'00'00" east, a distance of 132.00 feet;
Thence running northerly along a line separating Lots 6 and 7 of said Block, north 0'00'00"
west, a distance of 36.70 feet;
Thence running westerly along a line through Lots 6 and 5 of said Block, north 90~00'00'' west, a
distance of 64.43 feet;
Thence running northwesterly along a line through Lot 5 of said Block, north 9°01'33" west, a
distance of 79.79 feet;
Thence running westerly along the northerly line of Lot 5, which is also the southerly line of the
alley, north 90°00'00'' east a distance of 55.06 feet;
Thence running southerly along the westerly line of said Lot 5, which is also the easterly line of
"H" Street, south 0°00'00'' east, a distance of 115.50 feet, to the point of beginning.
Parcel 5:
Lots 7 and 8 in Block 324, in the City of Bakersfield, County of Kern, State of California, as per
map recorded November 25, 1898, in Book 1, Page 13, of Maps in the office of the County
Recorder of said county.
Excepting therefrom that portion described as follows:
Beginning at the southwesterly corner of Lot 7;
Thence running easterly along the southerly line of said Lots '7 and 8 in said Block, which is also
the nodherly line of AT&SF Railway, north 90°00'00'' east, a distance of 132 feet;
Thence running northerly along the easterly of Lot 8 in said Block, which is also the westerly line
of Eye Street, north 0'00'00" east, a distance of 47.45 feet;
Thence running southwesterly along a line through Lot 8 of said Block, south 45°00'00'' west, a
distance of 15.20 feet;
Thence running westerly along a line through said Lots 8 and 7, south 90~00'00'' west, a
distance of 121.25 feet;
Thence running southerly along the lot line separating Lots 7 and 6 of said Block, south 0°00'00''
east, a distance of 36.70 feet to the point of beginning,
Assessor's Parcel No: 006~300-01,006-311-01,006-311-10 and 006-311-05
ATTAC}~/~ENT 1
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
LETTER AGREEMENT FOR
SECTION 108 LOAN GUARANTEE PROGRAM
CUSTODIAL ACCOUNT
Name of Institution (and Branch)
Street
City, State, Zip Code
Date:
[ ] This account is established for funds received by the Borrower under Note(s)
guaranteed by the United States Department of Housing and Urban Development (HUD)
under the Section 108 Loan Guarantee Program. (Guaranteed Loan Funds Account)
[ ] This account is established for repayment of the Note guaranteed by HUD under the
Section 108 Loan Guarantee Program. (Loan Repayment Account)
[ ] This account is established as a debt service reserve under the Section 108 Loan
Guarantee Program. (Debt Service Reserve Account)
You are hereby authorized and requested to establish a custodial account to be
specifically designated:
Trustee of United States Department of Housing and Urban Development." All deposits
made in such account shall be subject to withdrawal therefrom by the Borrower named
below and shall also be subject to withdrawal therefrom by HUD. No agent of the
Borrower shall be authorized to withdraw funds from the account. You are also
authorized to pay HLrD at any time, upon its written demand, which need not name a
specific amount, the entire amount in such account subject only to notice requirements
contained in applicable regulations governing this institution, but in no event to exceed
seven business days.
You are further authorized, upon the request of HUD, to refuse to honor any
instrument drawn upon or withdrawals from such account by parties other than HUD and
to change the name of the aforesaid account to the "United States Department of Housing
and Urban Development." In no instance shall the funds in the custodial account be used
to offset funds which may have been advanced to, or on behalf of, the Borrower by the
custodian institution.
This letter is submitted to you in duplicate. Please execute the duplicate copy of
the certification below, acknowledging the existence of such account, so that we may
present the copy signed by you to HI_rD.
Name of Borrower
By: [Signature]
Title
The undersigned institution certifies to the United States Department of Housing and
Urban Development (HUD) that the account identified is in existence in this institution
under Account Number: , and agrees with the Borrower
named above and HUD to honor demands on such account in the manner provided in the
above letter, subject only to notice requirements contained in applicable regulations
governing this institution, but in no event to exceed seven business days. The
undersigned institution further agrees, upon the written request of HUD, to refuse to
honor any instruments drawn upon or withdrawals from such account by parties other
than HUD and to change the name of the aforesaid account to "United States Department
of Housing and Urban Development." In no instance shall the funds in the custodial
account be used to offset funds which may have been advanced to, or on behalf of, the
Borrower by the custodian institution. Deposits in this institution are insured by the
Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation, or the National Credit Union Administration.
Name of Institution
By (Signature and Title)
Date:
ATTACI{MENT 2
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
LETTER AGREEMENT FOR
SECTION 108 LOAN GUARANTEE PROGRAM
CUSTODIAL INVESTMENT ACCOUNT
Name of Institution (and Branch)
Street
City, State, Zip Code
Date:
[ ] This account is established to hold obligations and their assignments, such obligations
having been purchased with funds from the Guaranteed Loan Funds Account.
(Guaranteed Loan Funds Investment Account)
[ ] This account is established to hold obligations and their assignments, such obligations
having been purchased with funds from the Loan Repayment Account. (Loan
Repayment Investment Account)
[ ] This account is established to hold obligations and their assignments, such obligations
having been purchased with funds from the Debt Service Reserve Account. (Debt
Service Reserve Investment Account)
You are hereby authorized and requested to hold obligations and assignments of
those obligations in trust for the United States Department of Housing and Urban
Development (HUD) in an account specifically designated:
Trustee of United States Department of Housing and Urban Development." All
obligations and assignments shall be subject to release to the Borrower named below and
shall also be subject to release to HUD. No agent of the Borrower shall be authorized to
release the obligations or assignments. You are also authorized to release the obligations
and assignments to HUD at any time, upon its written demand, which need not name
specific obligations and assignments, all obligations and assignments being held in such
account subject only to notice requirements contained in applicable regulations governing
this institution, but in no event to exceed seven business days.
You are further authorized, upon the request of HUD, to refuse to honor any
request for release of the obligations and assignments from such account by parties other
than HUD and to change the name of the aforesaid account to the "United States
Department of Housing and Urban Development." In no instance shall the obligations in
this- account be used to offset funds which may have been advanced to, or on behalf of,
the Borrower by the custodian institution.
This letter is submitted to you in duplicate. Please execute the duplicate copy of
the certification below, acknowledging the existence of such account, so that we may
present the copy signed by you to HUD.
Name of Borrower
By: [Signature]
Title
The undersigned institution certifies to the United States Department of Housing and
Urban Development (HUD) that the account identified is in existence in this institution
under Account Number: , and agrees with the Borrower
named above and HUD to honor requests for release on such account in the manner
provided in the above letter, subject only to notice requirements contained in applicable
regulations governing this institution, but in no event to exceed seven business days. The
undersigned institution further agrees, upon the written request of HUD, to refuse to
honor any request for release of the obligations and assignments from such account by
parties other than HUD and to change the name of the aforesaid account to "United States
Department of Housing and Urban Development." In no instance shall the obligations in
the account be used to offset funds which may have been advanced to, or on behalf of,
the Borrower by the custodian institution. Deposits in this institution are insured by the
Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation, or the National Credit Union Administration.
Name of Institution
By (Signature and Title)
Date: