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HomeMy WebLinkAbout09533RESOLUTION NO. 9533 A RESOLUTION APPROVING AN AGREEMENT BETWEEN ENCINO APARTMENTS LLC, AND THE CITY OF PUEBLO, A MUNICIPAL CORPORATION, FOR AFFORDABLE HOUSING DEVELOPMENT AND AUTHORIZING THE PRESIDENT OF THE COUNCIL TO EXECUTE SAME. BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Agreement dated February 25, 2002 between Encino Apartments LLC, and the City of Pueblo, A Municipal Corporation, ( "the Agreement'), for the development of affordable housing, a copy of which is attached and incorporated herein, having been approved as to form and content by the City Attorney, is hereby approved. SECTION 2. The President of the City Council is authorized and directed to execute said Agreement in substantially the same form and with substantially the same content as the copy attached hereto, for and on behalf of the City, but with such minor changes, modifications, additions or deletions therin as the President of the City Council and the City Attorney shall deem necessary, desirable or appropriate in the best interests of the City, and the City Clerk shall attest same. INTRODUCED: Fahruary 29, Pnro BY: Al Gurule C NCIL PERSON APPROVED: Q,6.e-" PR SIDENT OF CITY COUNCIL ATTESTED BY: Y CLERK Background Paper for Proposed RESOLUTION DATE: FEBRUARY 25, 2002 16 ` 00 _ 9 S, 3 3 AGENDA ITEM # Ja DEPARTMENT: HOUSING & CITIZEN SERVICES / TONY BERUMEN TITLE A RESOLUTION APPROVING AN AGREEMENT BETWEEN ENCINO APARTMENTS L.L.C, AND THE CITY OF PUEBLO, A MUNICIPAL CORPORATION, FOR AFFORDABLE HOUSING DEVELOPMENT AND AUTHORIZING THE PRESIDENT OF THE COUNCIL TO EXECUTE SAME issUE A Resolution approving an Affordable Housing Agreement between Encino Apartments L.L.C., and the City of Pueblo, A Municipal Corporation, wherein HOME Federal Funds will be provided to the Project, in the form of a $369,000 loan and a $1,000 grant. To assist in the acquisition of the Encino Apartments in order to preserve existing affordable low- income rental housing. This is an acquisition with rehabilitation project. RECOMMENDATION Approve the Resolution, thus approving a contract with Encino Apartments L.L.C. The proposed project meets the HOME eligibility program requirements in that the funds will be used for the preservation of existing affordable rental housing for low and moderate - income families. BACKGROUND The current owner wishes to sell the property. The Encino Apartments are currently in the Section 8 HAP Program. If the property were sold to a buyer not interested in continuing the HAP, then the City would lose 42 units of affordable housing. Charles Singer representing Encino Apartments L.L.C., applied for HOME funds in response to a request for proposal (RFP) that the City published in October 2001. The developer has applied for $370,000 in HOME funds for acquisition and rehabilitation of the Encino Apartments located in the Eastside of Pueblo. The rehabilitation proposed is for new mechanical systems (HVAC) and interior and exterior rehabilitation for the housing units. This Agreement proposes a $369,000 loan at 1% (P &I repayable) and a $1,000 grant. The new tax credit guidelines require that the local government show support for the project in the form of a grant or fee waiver. The developer has applied to the Colorado Housing Finance Authority (CHFA) for State Preservation Tax Credits and a SMART loan and is providing equity as a loan to the project. There will be no payback of the equity until the developer's fee is paid out. The developer's fee will be paid out over a fifteen -year period. The payback to developer for the equity infusion will be paid from available cash flow. The developer is the current owner of the Mesa Gardens Apartments, formerly known as Red Rocks Apartments (under previous ownership). City Staff toured Mesa Gardens and found the Project to be well maintained. Staff also toured the proposed Project and thinks that rehabilitation is needed to keep the Project from further deterioration. The Housing Authority supports the Project, and expressed concerns to City Staff on the continued certification of the complex under the HUD Housing Quality Standards requirement, unless upgrades are made as proposed by this project CHFA Tax Credit's require that the Project be maintained affordable to low -to- moderate income households for a period of 40 years. The City's requirement is for 20 years. The amount of rent the Project can charge is regulated by CHFA and by the HOME funds. Yearly inspections will be conducted by the City and the Housing Authority as part of the monitoring under HOME and Section 8 HAP regulations. Monitoring activities review tenant income, rents charged, project management, and an inspection of the units. FINANCIAL IMPACT The estimated project costs are $2.7 Million. The sources of funds for the Project are as follows: 1 -CHFA Smart loan at 6.9% $511,000 2 -Tax Credit Investor Equity $1,429,761 3 -City of Pueblo loan at 1 % $369,000 4- Developer Fee loan at 0% $228,819 5 -City of Pueblo grant $1,000 6 -US Bank Equity Investor grant $7,500 7- Developer equity as a loan at 6.9% $122,566 The City loan requires monthly principal and interest payments of $1,187. Total interest to be received over the life of the loan is $58,440. Principal and interest payments resulting from the loan are recorded as program income under 24 CFR Part 92, and are reprogrammed for other HOME eligible projects. The funds are available for the Project from 2001 and 2002 HOME Federal funds. Ven. 2/15/02 CITY OF PUEBLO AFFORDABLE RENTAL HOUSING REHABILITATION LOAN AGREEMENT This Agreement is made and entered into this < ) b day of , 2002, by and between the City of Pueblo, a Municipal Corporation (hereinafter referred to "City ") and ENCINO APARTMENTS, LLC, a Colorado limited liability company whose address is 5045 Manor Ridge Lane, San Diego, California, 92130 (hereinafter collectively referred to as "Developer "). WITNESSETH, that: WHEREAS, the City has, under date of March 12, 2001, entered into an agreement with the U.S. Department of Housing and Urban Development ( "HUD "), whereby federal financial assistance may be made available to City on behalf of the Pueblo Consortium ( "Consortium "), established under Agreements dated September 14, 1998 and August 10, 2000 between City and Pueblo County, Colorado, as a participating jurisdiction for the purpose of expanding the availability of affordable housing pursuant to the Home Investment Partnerships Act ( "the Act ") (42 U.S.C. 12701 et. sec,.), the Cranston - Gonzales National Affordable Housing Act and implementing regulations, including but not limited to those at 24 CFR Part 92; and WHEREAS, in accordance with the provisions of the Act and 24 CFR Sections 92.200 and 92.205, a portion of such financial assistance, subject to deobligation (and subject to Vera. 2/15/02 $511,000.00, which loan will be secured by a first lien put on the Developer's housing rehabilitation project; and WHEREAS, as a condition to funding this loan to the Developer, the Colorado Housing and Finance Authority will require that the City subordinate its security interest in the affordable Housing rehabilitation project to the Colorado Housing and Finance Authority first deed of trust lien; and WHEREAS, the City is duly authorized to enter into this Agreement and to undertake all actions required by this instrument; NOW, THEREFORE, in consideration of the foregoing recitals and the covenants, terms and conditions set forth herein, the parties agree as follows: 1. DEVELOPER SERVICES (a) Developer shall undertake, or cause to be undertaken by or through a limited partnership or limited liability partnership affiliated with Developer (the "Investment LP "), subject to approval by City, in accordance with all applicable federal, state and local laws and regulations, acquisition, control, and rehabilitation of a forty-two (42) unit affordable housing project, known as the Encino Apartments Project, in furtherance of the City's housing strategy and as approved by the City and satisfactorily perform and complete all services and items of work, and furnish all labor and materials encompassed within or reasonably necessary to construct and rehabilitate the project and accomplish th tasks and functions described in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by reference (hereinafter referred to as the "Project "), in full compliance with all provisions of this Agreement. Before proceeding with the Project, Developer shall famish City with all reasonable information which City may request concerning the Project and its Developer, demonstrate eligibility of the Project for assistance under this Agreement, and obtain the written approval of City's authorized representative as to such Project. In the event Developer performs any activities or obligations under this Agreement through the Investment LP, it shall contractually bind the Investment LP to the terms, conditions and requirements of this Agreement. (b) Developer warrants and represents that (i) it has the requisite authority and capacity to perform all terms and conditions on Developer's part to be perfonned hereunder; (ii) that Developer is a limited liability company duly organized under state law in good standing with the Secretary of State of Colorado; (iii) that it is aware of and understands its duty to perform all functions and services in accordance with the regulatory requirements of 24 CFR Part 92 and those identified in Exhibit "C" hereto; and (iv) that it is accepting federal financial assistance hereunder subject to certain mandatory repayment provisions. (c) Time is of the essence hereof. Developer agrees that it shall meet the following deadlines with respect to the Project: (i) Developer or its Investment LP shall secure loan commitments for a construction and permanent loan financing for the Project, and furnish evidence thereof to City, on or before March 15, 2002; (ii) Developer shall cause construction of the Project to commence not later than May 15, 2002; and (iii) Developer shall cause construction of the Project to attain substantial completion not later than May 15, 2003. (d) Developer acknowledges that because the Project contemplated by this Agreement concerns the construction of affordable housing consisting of more than 12 units Developer shall require in all contracts for the construction of the Project that (i) prevailing wages be paid to all laborers and mechanics performing work on the Project pursuant to 24 CFR §92.354 and the Davis -Bacon Act [40 U.S.C. 276a -5] and (ii) the contract is subject to applicable requirements of the Contract Work Hours and Safety Standards Act [40 U.S.C. 327- 332]. 2. ROLE AND RESPONSIBILITIES OF THE CITY Under this Agreement, the City is acting on behalf of both itself and the Consortium. Notwithstanding the foregoing, all obligations of Developer under this Agreement shall run directly to City and be fully enforceable by City and in the name of the City. The City shall designate a representative of the City who will be authorized to make all necessary decisions required of the City on behalf of the City in connection with the performance of this Agreement, approval of the Project to be undertaken by Developer hereunder and the disbursement of funds in connection with the program. In the absence of such a designation, the City Manager shall be deemed as City's authorized representative. 3. FINANCIAL ASSISTANCE AND METHOD OF PAYMENT (a) Upon execution by Developer or Developer's Investment LP of all loan and other documents required by City, the City will make a grant to Developer of One Thousand Dollars ($1,000.00) and a loan to Developer, or Developer's Investment LP, in a principal amount not to exceed Three Hundred Sixty -Nine Thousand and No /100 Dollars ($369,000.00) as the public investment for acquisition of the apartment project by Developer under this Agreement, subject to all terms and conditions of this Agreement and said loan documents (collectively the "Loan"). Provided that neither Developer nor Developer's Investment LP is in default under any provision of this Agreement or the Loan documents, the Loan shall bear interest at the rate of One Percent 1% per annum until paid in full. Disbursement of the grant and Loan funds to Developer shall be in the form of a single disbursement at the time of apartment project acquisition, and is subject to all of the following requirements, which shall be conditions precedent to disbursement: (i) that Developer has expended funds after February 15, 2002 for eligible approved expenditures with respect to the Project and the disbursement will be for such eligible approved expenditures, (ii) that Developer is not in default of any material provision of this -3- Agreement nor applicable law or regulation, (iii) that Developer has timely submitted the request for Loan disbursement detailing the eligible loan drawdown items in a format approved by City, including therewith appropriate documentation and lien waivers from all contractors, suppliers and workmen covering all labor and materials furnished through the date of the request, (iv) that Developer has certified with each payment or Loan drawdown request compliance with the requirements identified in Exhibit "C" and that all expenditures for which drawdown is sought were made for and in furtherance of the Project and are an eligible use of federal assistance under the Act, and (v) that City has timely received from HUD sufficient federal assistance under the Act to pay the disbursement hereunder. (b) Disbursement of Loan funds is also subject to, and such funds may only be disbursed in accordance with, HUD regulations including but not limited to those at 24 CFR Part 92, as presently promulgated and as same may be revised from time to time in the future. All loan proceeds received by Developer hereunder are subject to repayment by Developer as provided in 24 CFR Part 92. Loan funds provided hereunder for Project may only be used for development hard costs and acquisition costs, as provided in 24 CFR § §92.205(d) and 92.206(a) and (c). (c) City may, in its sole discretion, refuse to make the grant and/or to close the Loan to Developer or Developer's Investment LP, or thereafter may suspend or terminate fiuther disbursements of Loan proceeds, if it has cause to believe any of the following circumstances has occurred or is found to exist: (i) There has been any adverse material change in Developer's or the Investment LP's credit worthiness, the Project or the value of the real property described in paragraph 4(b) of this Agreement; (ii) Developer or Investment LP have allowed or suffered liens (other than the Deed of Trust given to secure the construction and permanent loan financing) to be filed against the Project or the real property described in paragraph 4(b) of this Agreement; (iii) Developer or Investment LP have misapplied Grant or Loan proceeds for other than the purposes stated in this Agreement; (iv) Developer or Investment LP have defaulted in the performance of any term, condition or covenants set forth in this Agreement or any of the Loan Documents; (d) Upon expiration of the term of this Agreement or upon any prior termination, Developer and Investment LP shall transfer to City any Grant and Loan funds provided hereunder which are on hand at the time of expiration or termination together with any accounts receivable attributable to the use of funds provided hereunder. -4- 4. TERM OF AGREEMENT; PERIOD OF AFFORDABILITY; INDEBTEDNESS CREATED (a) Unless sooner terminated, the term of this Agreement, for purposes of undertaking acquisition, construction, rehabilitation and completion of the Project, shall be from the date of execution hereof until May 15, 2003; provided however, that with the respect to the Project for which Developer has received financial assistance under and during the term of this Agreement, Developer shall have continuing responsibility to comply with the performance, certifications, repayment, affirmative marketing, housing affordability compliance and recordkeeping requirements of this Agreement, and 24 CFR Part 92 (including, without limitation 24 CFR Sections 92.252, 92.254, 92.301, 92.351 and 92.508) which shall survive expiration or termination and remain in effect throughout the required full period of affordability, notwithstanding termination or expiration of this Agreement. As used herein, "period of affordability" shall mean 20 years from the completion of the Project except that if the assistance provided hereunder is used in connection with a project financed by a mortgage insured by HUD under Chapter II of Title 24, Code of Federal Regulations, the period of affordability shall be the full original term of said mortgage or 20 years, whichever is longer. (b) The full amount of loan assistance provided to Developer or Investment LP pursuant to this Agreement shall constitute an indebtedness of Developer or Investment LP to the City (or subsequent holder of the Note) which shall be evidenced by a promissory note (hereinafter referred to as the "Promissory Note" or "Note ") which shall be due and payable with interest as provided therein and which shall be secured by the following real property located in Pueblo County, Colorado (the "Property"): Parcel 1: LOTS 21 TO 40, INCLUSIVE, BLOCK 147, EAST PUEBLO HEIGHTS SUBDIVISION SECOND FILING, COUNTY OF PUEBLO, STATE OF COLORADO Parcel 2: LOTS 13 TO 20, INCLUSIVE, BLOCK 167, ARLINGTON HEIGHTS SUBDIVISION, COUNTY OF PUEBLO, STATE OF COLORADO as evidenced by a Deed of Trust to be executed contemporaneously with said Promissory Note. Developer and the Investment LP promise to pay to City or holder the indebtedness as and to the extent same becomes due under the provisions of the Promissory Note and tlus Agreement. The amount of the assistance shall continue as an indebtedness until paid in full and thereafter for the full period of affordability. (c) During the full Term of this Agreement and for the period of affordability, (i) any failure by Developer or Investment LP to perform any obligation, covenant or provision of the -5- Note or this Agreement required to be performed by Developer or Investment LP, or (ii) any breach of any warranty made by Developer in this Agreement, or (iii) any other violation of any material term of this Agreement or the Deed of Trust given to secure the Note, shall constitute an event of default under this Agreement and the Note. With respect to Developer's failure to observe or perform any non - monetary covenant or condition contained in this Agreement or any other Loan Document, such failure shall not become an event of default until thirty (30) days after Lender's written notice to Developer of the non - monetary covenant default: provided, however, that if any such Developer failure concerning a non - monetary covenant or condition is susceptible to cure and cannot reasonably be cured within said thirty (30) days, then no Developer event of default shall be deemed to exist hereunder so long as Developer commences such cure within the initial thirty (30) day period and diligently and in good faith pursues such cure to completion within the following sixty (60) day period from the date of Lender's notice. Upon any event of default by Developer or Investment LP, the entire indebtedness, together with accrued interest, and the entire amount of the grant, shall at the election of the holder, at once become immediately due and payable. Failure of the holder to exercise this election shall not constitute a waiver of the right to exercise the same in the event of any subsequent failure to make any payment or other default. If the entire indebtedness is declared immediately due and payable by the holder pursuant to the provisions of the above paragraphs, from and after the date of such declaration or acceleration the indebtedness shall accrue interest at the rate of twelve percent (12 %) per annum until the date when the entire indebtedness and such accrued interest is paid in full. Developer further agrees that no release of any security for the indebtedness or extension of time for payment of same, or any installment thereof, and no alteration, amendment or waiver of any provision of the Note or the Deed of Trust securing same shall in any manner, release, discharge, modify or affect the obligations of Developer and Investment LP under this Agreement, the Note and said Deed of Trust. (d) The City agrees to subordinate the lien of its deed of trust on the Property to the lien of the Colorado Housing and Finance Authority first lien deed of trust, and to execute and deliver to the Colorado Housing and Finance Authority a Subordination Agreement evidencing the City's agreement to subordinate its security interest and repayment right to the security interest and repayment right of the Colorado Housing and Finance Authority. 5. TERMINATION OF AGREEMENT PRIOR TO PROJECT ACQUISITION (a) For Cause This Agreement may be terminated by City for cause, including any nonperformance by Developer, following ten (10) days written notice to Developer containing a statement of the reasons therefore and the failure of Developer to cure as provided herein, and after an opportunity for a hearing has been afforded. If a hearing is requested, it shall be held before the City's Director of Housing and Community Development whose decision as to both the grounds for termination and the appropriateness thereof shall be final and binding upon both City and Developer. In accordance with 24 CFR 85.43, cause for termination shall include any 0 material failure by Developer to comply with any term of this Agreement. (b) For Convenience This Agreement may be terminated by the City for convenience in accordance with the provisions of 24 CFR 85.44. This Agreement shall terminate immediately upon any non - appropriation of FY 2001 funds, or upon any suspension or non - receipt of federal assistance provided to City under the Act, regardless of cause. (c) Post Termination Procedures In the event of termination, Developer shall continue to be responsible for those matters which survive termination identified in paragraph 4 above, unless City takes over the project and, in connection therewith, prospectively releases Developer from one or more specific responsibilities in writing. Additionally, at City's sole option, all property acquired by Developer with grant funds, all grant funds, program income, and mortgage loans originated with grant funds or by payments therefrom and payments received under such mortgage loans, held, owned or retained by Developer shall immediately become the sole and separate property of the City and Developer shall perform all acts and execute all instruments necessary to transfer and assign such property, funds, income, and mortgage loans to City. All finished or unfinished documents, data, studies reports and work product prepared by Developer under this Agreement or with grant funds shall, at the option of the City, become its property. 6. ASSIGNABILITY This Agreement shall not be assigned or transferred by Developer, except to an affiliate of Developer designated as its Investment LP and approved by City prior to disbursement of loan funds hereunder, without the prior written consent of the City, which may be withheld in City's absolute discretion. Any assignment or attempted assignment made in violation of this provision shall, at City's election, be deemed void and of no effect whatsoever. 7. CONFLICT OF INTEREST HOME Regulation 24 CFR, Part 92.356 is incorporated herein by reference, and sets forth applicable laws and regulations that apply to Conflict of Interest. Developer shall avoid all conflicts prohibited by applicable regulations, including but not limited to those set forth in 24 CFR Part 92 as presently promulgated and as same may be revised from time to time in the future. 8. DEVELOPER RECORDKEEPING Developer shall maintain records as to all project work and activities undertaken with grant and loan assistance hereunder, services provided, reimbursable expenses incurred in performing the Scope of Services and complete accounting records. Accounting records shall be kept on a generally recognized accounting basis and as requested by the City's auditor. -7- Developer agrees to comply with all applicable uniform administrative requirements described or referenced in 24 CFR Part 92. The compliance provisions attached as Exhibit "B" hereto are made a part of this Agreement, and Developer agrees to perform and comply with same. The City, HUD, the Comptroller General of the United States, the Inspector General of HUD, and any of their authorized representatives, shall have the right to inspect and copy, during reasonable business hours, all books, documents, papers and records of Developer which relate to this Agreement for the purpose of making an audit or examination. Upon completion of the work and end of the term of this Agreement, the City may, at any time during the period of affordability or within 5 years thereafter, require all of Developer financial records relating to this Agreement to be turned over to the City. 9. MONITORING AND EVALUATION The City shall have the right to monitor and evaluate the progress and performance of Developer to assure that the terms of this Agreement are being satisfactorily fulfilled in accordance with HUD's, City's and other applicable monitoring and evaluation criteria and standards. The City shall at least quarterly review Developer's performance using on -site visits, progress reports required to be submitted by Developer, audit findings, disbursement transactions and contact with Developer as necessary. Developer shall furnish to the City monthly or quarterly program and financial reports of its activities in such form and manner as may be requested by the City. 10. DEVELOPER FILES AND INFORMATION REPORTS Developer shall maintain files containing information which shall clearly document all activities performed in conjunction with this Agreement, including, but not limited to, financial transactions, conformance with assurances, activity reports, and program income. These records shall be retained by Developer for a period of five years, except that with respect to the project undertaken with assistance provided hereunder, such records shall be maintained for the full required period of affordability. Activity reports shall be submitted monthly or quarterly no later than the ninth day of the month following the end of month or quarter for which the report is submitted. 11. INDEPENDENCE OF DEVELOPER Nothing herein contained nor the relationship of Developer to the City, which relationship is expressly declared to be that of an independent contractor, shall make or be construed to make Developer or any of Developer's agents or employees the agents or employees of the City. Developer shall be solely and entirely responsible for its acts and the acts of its agents, employees and subcontractors. I:3 12. LIABILITY & INSURANCE (a) As to the City, Developer agrees to assume the risk of all personal injury, including death and bodily injury, and damage to and destruction of property, including loss of use therefrom, caused by or sustained, in whole or in part, in conjunction with or arising out of the performance or nonperformance of this Agreement by Developer, construction and rehabilitation of the Project, or by the conditions created thereby or resulting therefrom. Developer fiu ther agrees to indemnify and save harmless the City, its officers, agents, attorneys and employees, from and against any and all claims, liabilities, costs, expenses, penalties and attorney fees arising from such injuries to persons or damages to property or based upon or arising out of the performance or nonperformance of this Agreement by Developer, construction of the Project or out of any violation by Developer of any statute, ordinance, rule or regulation. (b) Developer agrees that it shall procure and will maintain during the term of this Agreement, such insurance as will protect it from claims under workers' compensation acts, claims for damages because of personal injury including bodily injury, sickness or disease or death of any of its employees or of any person other than its employees, and from claims or damages because of injury to or destruction of property including loss of use resulting therefrom; and such insurance will provide for coverage in such amounts as set forth in subparagraph (c). (c) The minimum insurance coverage which Developer shall obtain and keep in force is as follows: (i) Workers' Compensation Insurance complying with statutory requirements in Colorado. (ii) Comprehensive General Liability ( "CGL ") Insurance written on ISO Form CG 00 01 0196, or a substitute form providing equivalent coverage, with a limit not less than One Million Dollars ($1,000,000.00) per occurrence, covering liability arising from premises, operations, independent contractors, personal injury, products completed operations, and liability assumed under an insured contract, on an occurrence basis. The policy shall identify the City as an additional insured. (d) Developer further agrees to procure and maintain, at its own expense, hazard and fire insurance upon the property described in the Deed of Trust on an "all risk" form in such amounts as City's Department of Housing and Community Development may require, but in any event, for not less than the amount of all liens against the property and the amount of funds loaned to Developer by City pursuant to this Agreement. Developer shall furnish a certificate of insurance certifying such coverage to City's Director of Finance prior to disbursement of any funds to Developer. Both said certificate of insurance and the policy procured by Developer shall name the City as a loss payee. 6!13 13. CERTIFICATIONS Developer agrees to execute and abide by the certifications contained in Exhibit "C" hereto, which are hereby expressly made a part of this Agreement. 14. PROGRAM INCOME, REVERSION OF ASSETS (a) Unless otherwise authorized by City in writing in a separate instrument executed after date of this Agreement, interest income earned by Developer on funds provided by City hereunder during the period between receipt of such funds by Developer and the expenditure thereof for a purpose authorized by this Agreement shall be deemed program income within the meaning of 24 CFR §92.2 and shall be promptly repaid by Developer to City. Additionally, in the event HUD or the Inspector General of HUD, should determine that any other income received by Developer constitutes program income within the meaning of 24 CFR §92.2 which HUD or the Inspector General of HUD requires be returned to City's HOME Investment Trust Fund Treasury Account, HOME Investment Trust Fund local account or to HUD, then in that event Developer shall repay the amount so determined to City. (b) Upon expiration of the term of this Agreement, or upon any prior termination, Developer and its Investment LP shall transfer to City any funds provided hereunder which have not been expended for the authorized purposes of this Agreement as of the time of expiration or termination, together with any accounts receivable attributable to the use of funds provided hereunder. (c) The Project, the Property, and any other real property acquired, constructed or improved in whole or in part with funds provided pursuant to this Agreement shall be used as affordable rental housing within the meaning of 24 CFR § 92.252 for the full period of affordability as defined in paragraph 4 hereof. In the event the Project, the Property or such other property ceases to be so used, Developer shall immediately pay to City the full amount of the grant, plus the greater of (i) an amount equal to the current market value of the Project and property less any portion of the value attributable to expenditures of funds not provided under this Agreement for the construction of the Project or acquisition of, or improvements to, the Property or, (ii) the remaining principal balance and accrued interest owing under the Note. The use restriction and repayment obligation set forth in this subparagraph shall survive termination or expiration of this Agreement and shall be fully enforceable and subject to collection by City or HUD in accordance with applicable laws. Developer shall execute a Deed of Trust which shall be and constitute a lien upon the Property and all other real property acquired or improved with funds provided hereunder, and which shall secure all obligations of Developer hereunder. (d) In the event City incurs any cost or expense in enforcing the requirements of this -10- Agreement, including but not limited to the requirements of this paragraph 14, or in bringing any action to recover the Project or Property or amount of any repayment obligation, or to foreclose or obtain sale under the Deed of Trust or other mortgage or security instrument, City shall be entitled to recover its costs and expenses, including reasonable attorneys fees. (e) To further ensure that the funds provided hereunder to Developer do not constitute an investment of more HOME funds than are necessary to provide affordable housing (as required by 24 CFR §92.250(b)), Developer commits to either retain ownership of the project or have its Investment LP retain ownership for a period of not less than 20 years from and after the completion of the project. Consequently, in the event Developer or the Investment LP should sell or transfer title to the Project, the Property or other real property or improvements constructed or improved with funds provided pursuant to this Agreement, within 20 years after substantial completion of the Project or said improvements, the entire indebtedness shall immediately become due and payable and shall be repaid to City, together with interest thereon at the rate of 12% per annum from the time of substantial completion until said repayment is made; the aforestated deed of trust or mortgage instrument shall also secure this repayment obligation. (f) It is the intent of the parties that §38 -30 -165, C.R.S. and any similar statute hereafter enacted, be preempted under federal law and regulations in order to maintain affordability of the rental units within the Property. Consequently, this Agreement shall not be assumable, and the indebtedness shall be due and payable upon sale, transfer or assignment, or any attempted sale or transfer of the Property by Developer or the Investment LP, unless all of the following circumstances are demonstrated to exist: (i) more than 20 years have elapsed since the substantial completion of the project, or the City approves transfer of the Project, which transfer may be approved or disapproved in the sole discretion of the City, (ii) the Primary Lender also consents to assumption of the mortgage or obligation to which the Deed of Trust securing this Agreement is subordinate, (iii) the sale of the Property is to a subsequent purchaser who agrees in writing to comply with the affordability requirements of this Agreement and applicable requirements, including those set forth at 24 CFR, §92.252, (iv) the sale price and payment of principal, interest, property taxes and insurance by the subsequent purchaser must permit the rental units to remain affordable for the remaining period of affordability specified in this Agreement, with affordability determined by applicable regulations and requirements, and (v) the City or holder of the Note expressly consents to assumption of Developer's obligations under this Agreement and the Note by the subsequent purchaser prior to sale or transfer, which consent shall be granted only upon Developer's showing circumstances (i) through (iv) have or will be satisfied. 15. SPECIAL REQUIREMENTS APPLICABLE TO IMPROVEMENTS TO PROPERTY -11- (a) In addition to all procurement requirements otherwise applicable to Developer pursuant to any other provision of this Agreement or pursuant to any requirement of law or regulation incorporated in this Agreement by reference, Developer and its Investment LP shall comply with all requirements of this Paragraph 15. (b) No improvements shall be undertaken to the Property or other real property with funds (or reimbursement) provided hereunder unless and until: (i) plans and specifications therefor have been prepared by either a registered Professional Engineer in good standing and duly licensed to practice in the State of Colorado or an Architect duly licensed and authorized to conduct a practice of architecture in the state of Colorado; (ii) such plans and specifications have been filed with the City and approved by both the City's designated representative and the City's Director of Public Works; and (iii) all construction contracts for improvements for which payment is sought from City shall have been awarded only after an open, competitive bidding process which has been approved by City's Director of Purchasing and which allows qualified contractors to reasonably participate in the competitive bidding procedures. (c) No disbursement of Loan funds to Developer or the Investment LP shall be made by City hereunder unless and until all conditions precedent to payment specified elsewhere in this Agreement have been satisfied and Developer files with City's Director of Housing and Community Development a written request for payment signed by an officer of Developer that certifies (i) that the amounts included in the request for payment have not been included in any prior request for payment, (ii) that the improvements listed therein for which payment is sought have been completed in accordance with the approved plans and specifications therefor, and (iii) that the improvements for which payment is sought have been constructed so as to comply with City of Pueblo building codes and Section 8 Housing Quality Standards. (d) In every contract for construction of improvements which are part of the Project, Developer or its Investment LP shall include a contract clause or clauses, approved by City's Director of Purchasing, requiring the contractor, and all of the contractor's subcontractors of all tiers, to comply with the requirements of the Davis -Bacon Act and implementing regulations, and to pay all laborers and mechanics engaged in work upon the improvements at the prevailing wage rates for such work as determined by the U.S. Department of Labor. (e) Every contract for construction of Project improvements, and all lower tier covered transactions, shall include a requirement that the contractor, subcontractor or vendor certify that neither it nor its principal is debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from participation in any federally funded project. (f) Developer shall, at Developer's sole expense, provide for relocation assistance to any persons displaced as a result of the Project in accordance with the Unifonn Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, and applicable -12- implementing regulations. 16. RECOGNITION OF HUD, CITY In all printed materials, project descriptions and other activities undertaken with funds provided under this Agreement, Developer shall provide recognition that funds have been provided by the U.S. Department of Housing and Urban Development and the City of Pueblo. Recognition shall be accomplished by prominent disclosure of the role of HUD and the City in all such printed materials and project signage, if any. 17. ENTIRE AGREEMENT: AMENDMENTS The provisions set forth in this Agreement, and all exhibits and attachments to this Agreement, constitute the entire and complete agreement of the parties hereto with respect to the Project and supersede all prior written and oral agreements, understandings or representations related thereto. No amendment or modification of this Agreement, and no waiver of any provision of this Agreement, shall be binding unless made in writing and executed by the duly authorized officers of both the Developer and City. 18. SIGNATURES The persons signing this Agreement on behalf of Developer represent and warrant that such persons and Developer have the requisite power and authority to enter into, execute and deliver this Agreement and that this Agreement is a valid and legally binding obligation of Developer enforceable against Developer in accordance with its terms. When the Developer consists of more than one person or entity, all such persons or entities shall be jointly and severally liable for performance of the Developer's obligations and responsibilities wider this Agreement. IN WITNESS WHEREOF, Developer and the City have executed this Agreement as of the date first above written and under the laws of the State of Colorado. CITY OF PUEBLO, ATTEST: a Mun' � al Corporation B -— --e- -e City C k President of the City Council [SEAL] -13- F ATTEST: DEVELOPER: C ENCINO APARTMENTS, LLC, a Colorado limited liability company Name: I/�` Title: . ♦ By: Name Charles Singer Title•Manager LOAN AGREEMENT R -14- EXHIBIT A SCOPE OF SERVICES 1. The City's loan and grant in the amount of $370,000, will be combined with other funds and will go towards the purchase of the Encino Apartments. This is a forty-two unit complex. The developer will secure additional funding from the Colorado Housing Financing Authority in the form of a SMART loan for $511,000, and will receive Low Income Housing Tax Credits (LIHTC) for approximately $1,429,761. Additional funding for the Project will be provided through developer fees, developer equity and a grant from the tax credit investor, US Bank. 2. This is an acquisition rehabilitation project and rehabilitation work will commence as soon as the construction contract has been awarded.