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HomeMy WebLinkAboutContract 32336 CITY SECRETARY �`�� CONTRACT NO. U.S.DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FIRST AMENDMENT TO 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 Amendment JUL ! 2 2005 BORROWER: City of Fort Worth, Texas COMMITMENT NUMBER: B-99-MC-48-0010 MAXIMUM COMMITMENT AMOUNT: $7,500, 000 This First Amendment is entered into, by and between, the Secretary of Housing and Urban Development ( "Secretary" ) and the City of Fort Worth as Borrower ( "Borrower" ) . RECITALS WHEREAS, the Secretary and Borrower entered into a certain Contract for Loan Guarantee Assistance dated as of May 1, 2001 (the "Contract") , pursuant to a Commitment made on July 21, 2000, for the purpose of financing Business Loans to one or more for profit and/or nonprofit businesses, pursuant to 24 CFR 570 .703 (i) (1) and §570 .203, in connection with the Heritage Center Project, now known as Evans Avenue and Rosedale Street Business and Cultural District Project (the "Project" ) ; and WHEREAS, the Borrower is requesting approval to use $6, 000, 000 of the Guaranteed Loan Funds for development of a branch public library and a public health center, pursuant to §570 .703 (1) ; and WHEREAS, the Secretary and Borrower now desire to amend the Contract to further clarify and facilitate the consummation of the transaction contemplated therein: NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreement set forth herein, the Secretary and Borrower mutually agree that the Contract be and hereby is amended as follows : ParaaraAh 1 of the Contract shall be amended by deleting the date "March 1, 2004" in two places and substituting therefor the date of "September 30, 200511 , and CIS RUHR, I �, � `NO�:7m, A. 2 Paraaravh 15 of the Contract is amended .by deleting the paragraph as written in its entirety and substituting therefor the following: 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, including, but not limited to, all rights of the Borrower (but none of the obligations of the Borrower) in and to the ' Security Documents ' (as defined in paragraph 15 (d) hereof) and to the collateral described therein. If necessary to provide the Secretary with a valid security interest in such other security, the Borrower shall execute a security agreement (the 'Borrower Security Agreement' ) , which Borrower Security Agreement shall be in a form acceptable to the Secretary. " (b) Guaranteed Loan Funds shall be used by the Borrower to carry out the following activities in connection with the Project: (i) finance loans (individually, a "Business Loan" ) to one or more for--profit and/or nonprofit businesses (individually, a "Business Borrower" ) pursuant to 24 CFR 570 .703 (1) and §570 .203 , and (ii) finance construction of a library and public health facility (the "Public Facility" ) , pursuant to 24 CFR 570 .703 (1) . (c) Each Business Loan, shall be evidenced by a promissory note (individually, the "Business Note" and, collectively, the "Business Notes" ) and a loan agreement (the "Business Loan Agreement" ) . The Business Note and Business Loan Agreement shall contain such provisions as the Secretary deems necessary. The amount of principal and/or interest payable under the Business Notes during the twelve month period beginning July 1 of each year and ending on June 30 of the next succeeding year shall be equal to or greater than the amount of principal and/or interest payable under the Notes for the corresponding period. No Business Note shall be subject to redemption or prepayment earlier than the earliest possible redemption date under the terms of the Notes. The Business Loan shall be fully secured by one or more of the following forms of collateral (collectively, the "Collateral" ) . C 11Y SCAM ff Fie =T.UTH, TOL 3 (i) A lien on real property (the "Real Property" ) , established through an appropriate and properly recorded mortgage (the "Business Mortgage" ) . The Business Mortgage shall contain such provisions as the Secretary deems necessary. The Business Mortgage may be subordinated to another lien on the property; provided, however, that the principal amount of the Business Loan secured by the Real Property shall not exceed an amount equal to 80 percent of the "as improved" appraised market value, less the outstanding balance on other indebtedness secured by a mortgage lien of senior or equal priority on the Real Property. (ii) A security interest (collectively referred to as the "Security Interests" ) in machinery and equipment ( "M&E" ) , accounts receivable, inventory, and other items of personal property (collectively, the "Personal Property" ) . The Security Interests may be subordinated to another lien; provided, however, that the principal amount of the Business Loan secured by the Personal Property shall not exceed an amount determined as follows : (A) in the case of used M&E, not more than 90 percent of the appraised net liquidation value, less the outstanding balance of other indebtedness secured by a senior security interest in such M&E; and (B) in the case of new M&E, not more than 80 percent of the cost thereof (including installation) , less the outstanding balance of other indebtedness secured by a senior security interest in such M&E; and (C) in the case of accounts receivable, not more than 80 percent of the average of the ending balances of the last three (3) years of accounts receivable, less the outstanding balance of other indebtedness secured by a senior security interest in said accounts receivable; and (D) in the case of inventory, not more than 50 percent of the average of the ending inventory balances of the last three (3) years, less the outstanding balance of other indebtedness secured by a senior security interest in said inventory. The Security Interests shall be granted pursuant to an appropriate security agreement (the "Security Agreement" ) , which Security Agreement I ' RE V%�1��� 4 also shall be referenced in appropriate Uniform Commercial Code Financing Statements filed in accordance with the Uniform Commercial Code. The Security Agreement and such Uniform Commercial Code Financing Statements shall contain such provisions as the Secretary deems necessary. (iii) Any and all rights, titles, and interests of the Business Borrower to any leases covering the Real Property. Such rights, titles, and interests shall be the subject of an appropriate and properly recorded collateral assignment of leases and rents (the "Collateral Assignment of Leases and Rents" ) . The Collateral Assignment of Leases and Rents shall be in a form acceptable to the Secretary. (iv) Any and all rights, titles, and interests of the Business Borrower in any loan or debt service reserve accounts established for the purpose of securing the Business Loan. Such rights, titles, and interests shall be the subject of a collateral assignment of interest in loan or debt service reserve accounts (the "Collateral Assignment of Interest in Loan or Debt Service Reserve Accounts" ) . The Collateral Assignment of Interest in Loan or Debt Service Reserve Accounts shall be in a form acceptable to the Secretary. (v) Such other alternative collateral or security arrangements as may be requested by the Borrower and approved by the Secretary in writing. (d) The Borrower shall select a financial institution acceptable to the Secretary (the "Custodian" ) to act as custodian for the documents specified in paragraphs 15 (e) and 15 (j ) below (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 paragraph 15 (e) below. (e) Not later than five (5) business days after disbursement by the Borrower of Guaranteed Loan Funds to a Business Borrower, the Borrower shall deliver to the Custodian the following (as applicable to that activity) : (i) The original Business Note endorsed in blank and without recourse. 5 (ii) The original Business Loan Agreement, and an assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary. (iii) The original recorded Business Mortgage signed by the Business Borrower and an assignment thereof to the Secretary, in a recordable form but unrecorded, which assignment shall be in a form acceptable to the Secretary. (iv) The original Collateral Assignment of Leases and Rents and an assignment thereof to the Secretary, in a recordable form but unrecorded, which assignment shall be in a form acceptable to the Secretary. (v) The original Security Agreement and an assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary. (vi) The original Collateral Assignment of Interest in Loan or Debt Service Reserve Accounts. (vii) If Guaranteed Loan Funds are used to acquire real property, an appraisal of the fee simple ownership interest in the Property. 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" ) . (viii) If Guaranteed Loan Funds are used to acquire used M&E, an appraisal of its net liquidation value. (ix) A mortgagee title policy, issued by a company and in a form acceptable to the Secretary, naming the Borrower as the insured party. The policy must either include in the definition of the "insured" each successor in ownership of the indebtedness secured by the Mortgage or be accompanied by an endorsement of the policy to the Secretary. (x) A certified survey with a legal description conforming to the title policy and the Business Mortgage. (xi) An opinion of Borrower' s counsel, addressed to the Secretary and on its letterhead, that : (A) the Business Borrower is duly organized and validly existing as a (corporation, gCO -[jplJIry ow-OEHji Y� r',N�•Y4 o' ■o4 - 6 partnership, etc.] under the laws of the State of and is [existing, qualified to do business, in good standing, as applicable] in and under the laws of the State of Texas; (B) the Business Note has been duly executed and delivered by a party authorized by the Business Borrower to take such action and is a valid and binding obligation of the Business Borrower, enforceable in accordance with its terms, except as limited by bankruptcy and similar laws affecting creditors generally; and (C) the security instruments specified in, (ii) through (vi) above, including any assignments, are valid and legally binding obligations, enforceable in accordance with their respective terms . To the extent that the foregoing opinion deals with matters customarily within the due diligence of counsel to the Business Borrower, Borrower' s counsel may attach and expressly rely on an opinion of Business Borrower' s counsel satisfactory to the Secretary. (xii) Any instruments, documents, agreements, and legal opinions required pursuant to paragraphs 15 (c) (v) . (f) The Borrower covenants that it shall : (i) ensure the diligent performance of the usual and customary functions related to the servicing of the Business Notes; and (ii) promptly perfect the Security Interests by filing a financing statement in accordance with the requirements of the Uniform Commercial Code and shall file such additional statements as are necessary to maintain the perfected Security Interests. (g) The Borrower shall promptly notify the Secretary in writing whenever an event which constitutes a default (an "Event of Default" ) under (and as defined in) any of the Security Documents pertaining to a Business Loan has occurred and has continued unremedied for a period of 90 days after such occurrence. Such Business Loan shall be hereinafter referred to as the "Nonperforming Business Loan. " However, if a Debt Service Reserve Fund has been established by the Borrower in an amount a� k E C 01 Flo =:v1iUw 9 sufficient to satisfy at least one year' s debt service to HUD on the Nonperforming Business Loan(s) at the date that the loan(s) become nonperforming, the Borrower shall have an additional year prior to the required notification to remedy the default. Notification of a Nonperforming Business Loan shall be delivered to the Secretary as directed in paragraph (12) (f) above. The Borrower shall within 60 days of such notification take one of the following actions: (i) The Borrower may replace the Nonperforming Business Loan with another, performing loan (the "Replacement Loan" ) which meets the security requirements specified in paragraph 15 (c) . Such replacement shall be effected by delivery to the Custodian of the Security Documents that would be delivered if the Replacement Loan were made from Guaranteed Loan Funds . If the payments of principal and interest on the Replacement Loan are insufficient to satisfy the payments that are due on the Nonperforming Business Loan, the Borrower shall purchase Government Obligations that mature and bear interest at times and in amounts sufficient, together with payments due on the Replacement Loan, to pay when due the principal and interest to become due on the Nonperforming Business Loan. Such Government Obligations shall be deposited in the Loan Repayment Investment Account. (ii) If the Borrower elects not to replace a Nonperforming Business Loan, the Borrower shall purchase Government Obligations that mature and bear interest at times and in amounts sufficient to pay when due the principal and interest to become due on the Nonperforming Business Loan. (This action shall be required only with respect to Nonperforming Business Loans that have not been replaced as provided under (i) above. ) Such Government Obligations shall be deposited in the Loan Repayment Investment Account. (h) Paragraph 12 is amended by adding at the end thereof the following language: " (g) The Secretary may complete the endorsement of the Business Notes and record the assignments referred to in paragraph 15 (e) , and thereby effectuate the transfer of the documents referenced and underlying indebtedness from the Borrower to the Secretary or the Secretary' s assignee. 8 " (h) The Secretary may exercise or enforce any and all other rights or remedies (including any and all rights and remedies available to a secured party under the Uniform Commercial Code) available by law or agreement (including any of the Security Documents, as defined in paragraph 15 (d) ) against the Borrower, against the Business Borrower, or against any other person or property. " (i) With regard to the Public Facility, the Borrower shall provide a sole first priority lien in the name of the Secretary on the Public Facility real property as described in Attachment 3 hereof (the "Public Facility Property" ) , established through an appropriate and properly recorded mortgage (the "Mortgage" ) . The Mortgage shall contain such provisions as the Secretary deems necessary. (j ) With regard to the Public Facility Property, not later than thirty calendar days after receipt by the Borrower of the Guaranteed Loan Funds for development of the Public Facility, the Borrower shall deliver to the Custodian the following: (i) The original recorded Mortgage signed by the mortgagor securing repayment of the indebtedness evidenced by the Note. (ii) A mortgagee title policy, issued by a company and in a form acceptable to the Secretary, naming the Secretary as the insured party. (iii) A certified survey with a legal description conforming to the title policy and the Mortgage. (iv) An appraisal of the fee simple ownership interest in the Public Facility Property specifying an estimate of fair market value of not less than 80 percent of loan to value. 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" ) . (v) 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 . (k) Notwithstanding any other provision of the Note or this Contract, the following provisions to assure 9 with Texas law shall govern: (i) The Secretary shall not require the Note to be converted to a fixed-rate Note pursuant to Sections II and III thereof at an interest rate on any Principal Amount on Schedule P&I thereof that exceeds the maximum rate payable by the Borrower thereon under generally applicable Texas law, including Chapter 1204 of the Texas Government Code, as amended. This limitation on the interest rate on the principal of the Note also applies if the Note bears interest at a variable rate prior to a conversion to a fixed rate. In addition, the accrual of interest on unpaid interest shall be limited to the extent permissible under Texas law. (ii) Part I , paragraph C, of the Contract is amended to delete the last sentence thereof, and to insert the following two new sentences at the end: "The Borrower agrees that the interest rate at which the trust certificate corresponding to a specified Principal Due Date on Schedule P&I of the Note is sold to the Underwriters shall be the interest rate inserted on the Conversion Date in Schedule P&I for the Principal Amount corresponding to such Principal Due Date. Such interest rate for each trust certificate shall be that rate which the Underwriters determine will enable them to sell under then-prevailing market conditions such certificate, or interests therein, for 100% of the Principal Amount of such certificate. " (iii) Paragraph 4 (e) of the Contract is amended by deleting the paragraph as written in its entirety and substituting therefor the following: " (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 (a) and (b) of this Contract . " (iv) The provisions of the Fiscal Agency/Trust Agreements (including any future amendments thereto or any new fiscal agency or trust agreements in the future) relating to indemnification, standard of care, choice of law and disposition of unclaimed property as they 10 concern the Borrower are subject to the limitations of this Contract and will be enforceable against the Borrower only to the extent permitted by Texas law. The Secretary further agrees that he will require the Fiscal Agent and Trustee to maintain the registration books referred to in section 5 . 01 of the Amended and Restated Master Fiscal Agency Agreement and in section 5 . 03 of the Trust Agreement in a form that can be converted to a writing and a copy of which can be provided to the Borrower in Texas within a reasonable time after request. (v) To the extent that a pledge of ad valorem tax is securing payment of all or a portion of the principal of and interest on the Note, acceleration of the maturity date of that portion of the Note shall not be available as a remedy in the event of a default by the Borrower under the Note or this Contract. (1) Additional Grounds for Default. Notice of Default. Restriction of Pledged Grants. Availability of Other Remedial Actions. (i) The Borrower acknowledges and agrees that the Secretary' s guarantee of the Note is made in reliance upon the availability of grants pledged pursuant to paragraph 5 (a) (individually, a "Pledged Grant" and, collectively, the "Pledged Grants" ) in any Federal fiscal year subsequent to the Federal fiscal year ending September 30, 2005 to: (A) pay when due the payments to become due on the Note, or (B) defease (or, if permitted, prepay) the full amount outstanding on the Note. The Borrower further acknowledges and agrees that if the Secretary (in the Secretary' s sole discretion) determines that Pledged Grants are unlikely to be available for either of such purposes, such determination shall be a permissible basis for any of the actions specified in paragraphs (ii) and (iii) below (without notice or hearing, which the Borrower expressly waives) . (ii) Upon written notice from the Secretary to the Borrower at the address specified in paragraph 12 (f) above that the Secretary (in the Secretary' s sole discretion) has determined that Pledged Grants are unlikely to be available for either of the purposes specified in (A) and (B) of paragraph (i) above (such notice being hereinafter referred to as the "Notice of Impaired Security" ) , the Secretary may limit the availability of Pledged Grants by withholding amounts at the time a Pledged Grant is approved or by 11 disapproving payment requests (drawdowns) submitted with respect to Pledged Grants. (iii) If after 60 days from the Notice of Impaired Security the Secretary (in the Secretary' s sole discretion) determines that Pledged Grants are still unlikely to be available for either of the purposes specified in (A) and (B) of paragraph (i) above, the Secretary may declare the Note in Default and exercise any and all remedies available under paragraph 12 . This paragraph (iii) shall not affect the right of the Secretary to declare the Note and/or this Contract in Default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12 . (iv) All notices and submissions provided for hereunder shall be submitted as directed in paragraph 12 (f) above. (m) The Grant Agreement, dated September 13 , 2001, for grant number B-98-ED-48-0017 to the Borrower for $1, 500, 000 in EDI Grant Funds is hereby incorporated in this Contract and made a part hereof . [Rest of Page Intentionally Left Blank] 12 THE PARTIES HERETO have executed this First Amendment to the Contract, it being understood and agreed that no provisions of the Contract, other than those in paragraph 15 as set forth above, have been changed, and that the Contract as amended continues in full force and effect. CITY OF FORT WO HO WER APPROV D AS TO BY: ITS. ( lg t FORM D ��G Joe Paniagua ASST NT CITY ATTORNEY (Name) Assistant City Manager (Title) Attested By. (Date) Marty Hendrix City Secretary SECRETARY OF HOUSING AND URBAN DEVELOPMENT NO M&C REQUIRED BY. (Signature) Nelson R. Bregon (Name) General Deputy Assistant Secretary (Title) 1 x, 1005 (Date) lQ �: 1 6K e ATTACHMENT 3 Legal Description of Property [to be provided by Borrower] ATTACHMENT 3 Public Library Building Legal Description Lots 5, 6, 7* 8, 9, & 10 of W. J. Boazs Subdivision of Block 3, Evans South Addition to the City of Fort Worth, Tarrant County, Texas according to the plat recorded in Volume 106, Page 28, Plat records, Tarrant County, Texas. *At this time the City of Fort Worth does not own this property. The City is in negotiations with the Owner and anticipate coming to an agreement very soon. If the City is unable to enter into a Purchase Agreement by August 1, 2005, the City will move forward with eminent domain proceedings. Public Health Department Building Lots, 13, 14, 15, North '/z of Lot 26, South % Lot of 26, 27, & 28, of W. J. Boazs Subdivision of Block 3, Evans South Addition to the City of Fort Worth, Tarrant County, Texas according to the plat recorded in Volume 106, Page 28, Plat records, Tarrant County, Texas. Lots 2-15, Block 1 Schlater's Addition, an Addition to the City of Fort Worth, according to the plat recorded in Volume 63, Page 143, Plat records, Tarrant County, Texas.