HomeMy WebLinkAboutContract 41391-A1 (2)n
April 18, 2014
Cornerstone Assistance Network Housing Development Corporation
3500 Noble Avenue
Fort Worth, Texas 76111
Attention: Philip Posey, Director
Reference: Cornerstone Polytechnic Single Family Housing Development
Dear Mr. Posey:
We are pleased to present for your review the following amended terms, conditions, and
requirements of the conditional commitment with Cornerstone Assistance Network Housing
Development Corporation, a Community Housing Development Organization, for 2 deferred
payment loans totaling $270,000.00 from the City of Fort Worth for the development of two
single-family infill houses located in the Polytechnic Neighborhood and up to $50,000.00 in
CHDO operating funds.
This amended conditional commitment shall supersede the conditional commitment entered into
by the parties dated January 27, 2011 (City Secretary Contract No, 41391).
SUMMARY OF TERMS
City of Fort Worth ("City") will make two deferred payment loans to Cornerstone Assistance
Network Housing Development Corporation ("CANHDC") totaling $270,000.00 for the
development of 2 single-family infill houses located in the Polytechnic Neighborhood. The
houses will be located at 3220, 3229, or 3233 Fitzhugh ("Sites"). The loan funds will be divided
between 2 of the Sites and CANHDC agrees to execute separate contracts and loan documents
for each Site selected. The terms outlined below apply to the contracts and loan documents for
each Site. The contracts and loan documents must be executed by July 1, 2014 for this
conditional commitment to remain in effect. The completion deadline for construction of
the houses is May 1, 2016 or City will lose HOME funds for this project due to HUD
recapture. City and CANHDC will enter into a separate contract for CHDO operating funds in
an amount up to $50,000.00 upon execution of contracts for the Sites.
BORROWER CANHDC
DEVELOPER CANHDC
CONTRACTOR TBD
GUARANTORS N/A
Housing and Economic Development Department
RECEIVED MAY Q 1 ��ig�City of Fort Worth � 1000 Tlu•ockmorton Street � Fort Worth, Texas 761
817-392-7540 * Fax 817-392-7328
LENDER
City
$270,000.00 of HOME Investment Partnerships Program
LOAN ("HOME") grant funds to be used for eligible construction and other
development costs as defined in 24 CFR 92.206 ("Loans"). The
Loans will be deferred payment loans that will be forgiven if
Borrower fulfills all conditions contained in the contracts between
CANHDC and City setting forth both parties' obligations for the
Project ("Contract").
USE/PROJECT The Project consists of acquisition of lots and new construction of
2 single-family houses. All houses will be at least 1,200 square
feet with 3-bedrooms, 2-baths with attached garage. The houses
must be sold to a HOME -eligible buyer that earns at or below 80%
of Area Median Income ("AMI") as determined by the United States
Department of Housing and Urban Development ("HUD").
INTEREST RATE 0%
DEVELOPER FEE CANHDC will be paid a 10% developer fee based on the cost of
construction of the house at the closing of the sale to a HOME -
eligible buyer. The remaining net sales proceeds will be returned to
the City.
TERM
PAYMENT/
REPAYMENT
i. The term of each Loan is 2 years.
ii. The term of each Contract will be 2 years.
The Contract or the Loan terms may be extended for up to 6
months if Borrower requests an extension and Lender agrees.
Payment will be deferred through the Loan term
forgivable if all conditions in the Contract are
The Loan is
DRAW PERIOD Borrower will be entitled to make requests for draws on a
reimbursable basis during the Contract term. Draws will only be
approved for HOME -eligible costs in accordance with 24 CFR
92.206. Draws will occur as scheduled and defined in the
Contract. City will disburse funds only upon receipt of complete
documentation.
RECORDKEEPING Borrower must maintain records that will provide accurate, current,
separate, and complete disclosure of the status of the HOME
funds and meet all other applicable Federal and/or City standards
for financial management.
The Loan is to be closed at no cost to the City. Borrower shall be
CLOSING COSTS responsible for all costs associated with this transaction, including
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic 2
attorney fees, filing fees, closing costs, etc.
TITLE INSURANCE Borrower will pay the cost of a lender's title policy for the City
insuring the amount of each Loan.
SUMMARY OF CONDITIONS
CONDITIONS TO i. This Conditional Commitment does not constitute a commitment
FUNDING of funds or site approval, and any commitment of funds or
approval may occur only upon satisfactory completion of an
environmental review and receipt by the City of a release of
funds from HUD under 24 CFR Part 58. The parties further
acknowledge that the provision of any funds to the Project is
conditioned on the City's determination to proceed with,
modify or cancel the Project based on the results of a
subsequent environmental review.
ii. PARTIES ARE PROHIBITED FROM UNDERTAKING OR
COMMITTING ANY FUNDS TO PHYSICAL OR CHOICE -
LIMITING ACTIONS, INCLUDING PROPERTY
ACQUISITION, DEMOLITION, MOVEMENT,
REHABILITATION, CONVERSION, REPAIR OR
CONSTRUCTION PRIOR TO THE COMPLETION OF
ENVIRONMENTAL REVIEW AND RECIEPT OF THE
RELEASE OF FUNDS FROM HUD. VIOLATION OF THIS
PROVISION WILL RESULT IN THE DENIAL OF FUNDS
UNDER THIS CONDITIONAL COMMITMENT. A NOTICE
TO PROCEED FROM THE CITY WILL BE ISSUED WHEN
THE ENVIRONMENTAL CLEARANCE HAS BEEN
RECEIVED.
iii. Award of funds is conditioned upon City Council approval of
HOME funds for the Project and receipt of HOME funds from
HUD for the Project.
FULL TIME Borrower will have a minimum of 1 full-time employee who works
STAFF REQUIREMENT solely for Borrower.
ELIGIBLE COSTS Eligible costs to be paid for by Loan funds will be described in the
Contract and are defined in 24 CFR 92.206.
COLLATERAL The Loans will be secured by a first lien Deed of Trust on the Site
filed at closing of Site acquisition prior to commencement of
construction or delivery of materials.
AUDITS Borrower will make available to the City all of its records and will
permit the City to conduct audits of all contracts, invoices, materials,
payrolls, records of personnel, conditions of employment and all
other data relating to the Project.
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic
3
HAP Borrower must require each homebuyer to utilize a minimum of
$1,000.00 from the City's Homebuyer Assistance Program ("HAP")
for down payment/closing cost assistance to ensure that the house
remains affordable for 5 years ("Affordability Period"). Failure to
obtain HAP assistance by a homebuyer will require repayment by
CANHDC of the Loan.
CHDO OPERATING City will provide up to $50,000.00 in CHDO operating funds to
FUNDS CANHDC under a separate contract ("CHDO Operating Funds
Contract") if the following conditions are met:
Borrower will provide its annual operating budget to City
by May 2, 2014.
ii. Amount awarded under the CHDO Operating Funds Contract
shall be necessary and reasonable for Borrower to complete
the performance of its obligations under the Contracts.
iii. City will determine the amount of the CHDO Operating Funds
Contract and the budget line items eligible for reimbursement
in its sole discretion.
iii. The Contracts and Loan documents must be executed prior to
the execution of the CHDO Operating Funds Contract.
iv. Payment to Borrower under the CHDO Operating Funds
Contract will be made upon City's receipt of complete
documentation of expenses on a reimbursement basis only
and.
v. Reimbursement under the CHDO Operating Funds Contract
will be contingent upon Borrower meeting performance and
construction schedule requirements under the Contracts.
OTHER i. If HOME funds are to be used for property acquisition or
REQUIREMENTS demolition, then construction must begin within 12 months of
purchase date or the date on which structures are
demolished.
ii. Construction work on the Project must begin within 3 months
of the date of Contract execution or the Contract will
terminate.
iv
v
The completion deadline for construction of the houses
will be May 1, 2015.
The completed houses must be insured and maintained and
remain vacant while being actively marketed for sale.
Borrower will be liable for and will promptly pay all fees
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic 4
Borrower incurs, including expenses and charges incurred in
connection with the negotiation and preparation of the
documents governing or securing the Loan, and other
expenses incurred in connection with the Project, including
appraisal and Texas Commission on Environmental Quality
(TCEQ) environmental fees, whether or not the Loan closes.
vi. Documentation must be acceptable in all respects to the City
and its counsel.
vii. All permits and approvals must be in place prior to funding of
the Loan.
viii. All construction contracts, plans, surveys, etc. must be
approved by the City and assigned as additional collateral.
Loan approval is subject to a pre -construction review of
plans, specifications and cost estimates.
ix. Borrower must agree to any reasonable terms and conditions
that are necessary to ensure City and Borrower remain in
compliance with all applicable federal, state and City laws,
regulations and ordinances regarding the Project.
x. Borrower shall ensure that the houses and homebuyers meet
the affordability requirements i in 24 CFR 92.254.
xi. Borrower shall furnish City with payment and pertormance
bonds in a form acceptable to City in the amount of the
construction cost for the Project but not less than
$2701000.00.
INSURANCE Borrower must maintain General Liability Insurance in the amount
REQUIREMENTS of $500,000 each occurrence, $1,000,000 aggregate limit.
Borrower must maintain Business Automobile Liability Insurance as
follows:
$1,000,000 each accident on combined single -limit basis, or
$250,000 Property Damage
$500,000 Bodily Injury per person per occurrence
$2,000,000 Aggregate
Borrower and Borrower's general contractor ("Contractor") must
maintain, Workers' Compensation insurance as follows:
Statutory Limits
Employers Liability
$100,000 each accident/occurrence
$100,000 disease/per employee
$500,000 disease policy limit
Contractor must
maintain Builders
Risk insurance in the amount
of
the value of the
construction. The
Builder's Risk insurance must
be
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic 5
acceptable to the City, and must be in force at all times during the
Loan.
Contractor is to maintain property and flood insurance for the
Project if required, in form and amount satisfactory to the City
during the life of the Loan. If applicable, insurance must be
evidenced by a valid binder/policy. Certificates of insurance are not
acceptable. The City will be named as Mortgagee and as
Additional Insured Party.
Certificates of insurance must be provided to City every 6 months.
COMPLIANCE WITH Borrower, as a certified Community Housing Development
FEDERAL, STATE, Organization ("CHDO"), will comply with the CHDO requirements in
AND LOCAL LAWS 24 CFR 92.300 and 92,301, If it is determined that the use of the
funding provided by the City for the Project does not meet HOME
requirements, Borrower will reimburse the City for the Project costs
determined to be ineligible and/or disallowed under the HOME
regulations.
If applicable, Borrower will comply with the Davis Bacon Act,
Copeland Act, Contract Work Hours Safety Standards Act, and the
Fair Labor Standards Act. FAILURE TO COMPLY WITH THE
LABOR STANDARDS REQUIREMENTS CAN RESULT IN THE
ESCROW OF FUNDS AND/OR WITHHOLDING OF
REIMBURSEMENTS.
Borrower agrees that the Project will meet the property standards
requirements in 24 CFR 92.251 and lead -based paint standards in
24 CFR 92.355, as well as City building standards.
Borrower must comply with displacement and relocation
requirements at 24 CFR 92.504 and 92.353.
Borrower certifies that it is not currently listed on the General
Services Administration's List of Parties Excluded from Federal
Procurement or Non -procurement Programs in accordance with
Executive Orders 12549 and 12689 and will not enter into
agreements to expend Federal funds with contractors or
subcontractors that are currently listed.
Borrower must comply with all prescribed procedures regarding
nondiscrimination and equal opportunity, affirmative marketing, and
conflict of interest provisions described in 24 CFR 92 subpart H, 24
CFR 92,504, Chapter 17, Article III, Division 3 - Employment
Practices of the City Code, and Chapter 17, Article lll, Division 4 —
Fair Housing of the City Code.
Borrower must comply with all applicable Federal laws, laws of the
State of Texas and ordinances of the City of Fort Worth.
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic 6
Organizations that are directly funded under the HOME program
may not engage in inherently religious activities as defined under 24
CFIR 92.257
HAP AMOUNT AS City may set -aside and designate HOME funds as CHDO reserve
CHDO RESERVE on behalf of potential HOME -eligible buyers for each of the houses
in the amount of $14,999.00 per house. Actual HAP amount may
be less based on the HOME -eligible buyers' qualification and need
as determined by HAP guidelines.
All funds disbursed under the Contract will be subject to the City's receipt of satisfactory
documentation and any Contract requirements.
In order for this Conditional Commitment to become effective, an original must be executed by
Borrower and any Guarantors and returned to the City on or before April 23, 2014. Any
extension of such time for acceptance must be in writing and signed by a City representative.
To cause this Conditional Commitment to remain in effect, the Contracts between the
City and Borrower must be executed on or before July 1, 2014. Any extension of such date
must be requested in writing and agreed to by the City.
[Signature Pages to Follow]
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic 7
Please indicate your acceptance with your signature and by returning four (4) signed originals
to:
City of Fort Worth
Housing and Economic Development Department
1000 Throckmorton
Fort Worth, TX 76102
Attn: Jesse Madsen, Development Project Coordinator
Sincerely,
Fernando Costa
Assistant City Manager
Approv� as to form and;eg/�lity:
rr
Vicki Ganske
Assistant City Attorney
M&C
C-24710
Date:
01/25/2011
M&C
C-26603
Date:
12/17/2013
[CANHDC SIGNATURE ON NEXT PAGE]
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic
®FPICIAL RECORD
CITY �ECRETARY
�'. WARTW, TX
The undersigned hereby accepts the foregoing amended Conditional Commitment and the
terms and requirements herein set forth and agrees to be bound thereby.
BORROWER
Cornerstone Assistance Network Housing Development Corporation
Signed:
Date:
21
�tfr� Posey
Director
CHDO Amended Conditional Commitment
Cornerstone Assistance Network Housing Development Corporation -Cornerstone Polytechnic 9
• I '
COUNCIL ACTION: Approved on 1/25/2011
DATE: Tuesday, January 25, 2011 REFERENCE NO.: C-24710
LOG NAME: 17CORNERSTONE POLY
SUBJECT:
Authorize a Change in Use and Expenditure of $320,000.00 of HOME Investment Partnership Program Grant
Funds to Cornerstone Assistance Network Housing Development Corporation for the Development of Three
Single Family Houses in the Polytechnic/Wesleyan Neighborhood, Authorize the Execution of Conditional
Commitment and Contract and Authorize a Substantial Amendment to the City's 1996-1997, 2003-2004,
2004-2005, 2005-2006, 2006-20075 2007-2008 and 2009-2010 Action Plans (COUNCIL DISTRICT 5)
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize a substantial amendment to the City's 1996-1997, 2003-2004, 2004-2005, 2005-2006,
2006-20075 2007-2008 and 2009-2010 Action Plans;
2. Authorize the City Manager, or his designee, to substitute funding years in order to meet commitment,
disbursement and expenditure deadlines for grant funds from the United States Department of Housing and
Urban Development;
3. Authorize a change in use and expenditure of $320,000.00 in HOME Investment Partnership Program
Grant funds to Cornerstone Assistance Network Housing Development Corporation, a certified Community
Housing Development Organization, for the development of three single family houses in the Polytechnic
Neighborhood;
4. Authorize the City Manager, or his designee, to execute a conditional commitment with Cornerstone
Assistance Network Housing Development Corporation that conditions funding, among other things, on
satisfactory completion of the HOME requirements;
5. Authorize the City Manager, or his designee, to execute a contract with the Cornerstone Assistance
Network Housing Development Corporation for the project for a three year term beginning on the date of
execution of the contract;
6. Authorize the City Manager, or his designee, to extend or renew the conditional commitment or the
contract if Cornerstone Assistance Network Housing Development Corporation requests a written extension
and such extension is necessary for completion of the project; and
7. Authorize the City Manager, or his designee, to amend the conditional commitment or the contract if
necessary to achieve project goals provided that the amendment is within the scope of the project and in
compliance with City policies and applicable laws and regulations governing the use of federal grant funds.
DISCUSSION:
On October 14, 2010, the City issued a Request for Proposals (RFP) to certified Community Housing
Development Organizations (CHDO) to award and expend up to $1,261,931.00 of HOME Investment
Partnerships Program Grant funds. The HOME funds available under the RFP were originally allocated to
other projects that were not completed either because of lack of private funding, environmental issues or
market condition. On November 18, 2010, the Cornerstone Assistance Network Housing Development
Corporation (CANHDC) submitted a response requesting $540,000.00 of the available HOME funds to
acquire six sites on which it proposed to construct single family houses. The request also included funds for
related CHDO operating expenses.
City staff reviewed all RFP submissions and recommended the award to CANHDC of $320,000.00 in HOME
funds to the Community Development Council (CDC) at its meeting held on December 1, 2010. The CDC
agreed with staffs funding recommendation for the project. Up to $50,000.00 of the awarded funding will be
used for operating expenses and $270,000.00 for construction of three houses and other development
expenses.
CANHDC plans to develop three single family houses to be located in the Polytechnic/Wesleyan
neighborhood. The houses will have three bedrooms, two baths, with an attached garage and range between
1400 and 1475 square feet. The houses will be sold to an individual or family that earns 80 percent or less of
Area Median Income as determined by the United States Department of Housing and Urban Development
(HUD). Buyers must meet all HOME Program requirements including applying for and receiving at least
$1,000.00 in down payment and/or closing cost assistance from the City's Homebuyer Assistance Program
and occupying the house as their primary residence for five years.
;gaff recomtrzends the following contract terms:
i. Construction must begin within six months of contract execution;
ii. Cornerstone's performance under the contract and use of the HOME funds will be secured by a recorded
Deed of Trust;
iii. Houses must be sold to an eligible buyer; and
iv. Proceeds from the sale of houses must be used to construct additional houses for a HOME eligible buyer;
and construction of Proceeds houses must occur with the three year contract term.
The expenditure of HOME,funds is conditioned upon the following:
i. Satisfactory completion of the environmental review per 24 CFR Part 58, and
ii. Authorization to use grant funds from HUD.
City staff recommends the change in use and expenditure of up to $320,000.00 in HOME funds for the
project to benefit low and very low income citizens by providing affordable housing. A public comment
period on the change in use of these HOME funds was held from December 16, 2010 to January 20, 2011.
Any comments are maintained by the Housing and Economic Development Department in accordance with
federal regulations.
This project is located in COUNCIL DISTRICT 5.
FISCAL INFORMATION:
The Financial Management Services Director certifies that funds are available in the current operating
budget, as appropriated, of the Grants fund.
FUND CENTERS:
TO Fund/Account/Centers
GR76 539120 017206351XXX
GR76
539120
005206107XXX
GR76
539120
005206846XXX
3R76
539120
005206930XXX
3R76
539120
005206006XXX
GR76
539120
005206141XXX
3R76
539120
005206181XXX
FROM Fund/Account/Centers
$50.000.00 GR76 539120 017206351030
$47.000.00 GR76 539120 005206107130
3 455.50 GR76 539120 005206846520
763.02 GR76 539120 005206930080
$25.500.00 GR76 539120 005206006220
$184.342.80 GR76 539120 005206141220
CERTIFICATIONS:
Submitted for Cily Manager's Office by:
Originating Department Head:
Additional Information Contact:
ATTACIIlVIENTS
8 938.68 GR76 539120 005206181030
1. Available Funds 17Cornerstone Pol�pdf
Susan Alanis (8180)
Jay Chapa (5804)
Cynthia Garcia (8187)
Ryan Haden (7329)
$501000600
MOM
3 455.50
763.02
$25.500.00
$184.342.80
8 938.68
I►�iF!_�y:Z�+iL�l
Page 1 of 2
CITY COUNCIL AGENDA
DATE: 12/17/2013
CODE: C
COUNCIL ACTION
Approved on 12/17/2013
REFERENCE �*C-26603 LOG
NO.: NAME:
TYPE: CONSENT PUBLIC
HEARING:
Official site of the City of Fort Worth, Texas
Foa_ T��o
17AMENDCANHDCPOLYPROJECT
NO
SUBJECT: Authorize Amendment to Mayor and Council Communication C-24710 for the Conditional
Commitment and Contract for HOME Investment Partnership Program Grant Funds to
Cornerstone Assistance Network Housing Development Corporation for the Development
of Single Family Houses in the Polytechnic Neighborhood to Comply with United States
Department of Housing and Urban Development Requirements, Reduce the Number of
Houses to be Constructed to Two, and Authorize Release of City Liens (COUNCIL
DISTRICT 5)
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize the amendment to Mayor and Council Communication C-24710 that approved a
conditional commitment and contract with Cornerstone Assistance Network Housing Development
Corporation for HOME Investment Partnerships Program grant funds to change certain terms in the
Mayor and Council Communication to comply with United States Department of Housing and Urban
Development requirements, and specifically to remove Community Housing Development
Organization proceeds, include a developer fee, and reduce the number of houses to be constructed
from three to two; and
2. Authorize the release of any City liens on properties located at 3220, 3229, and 3233 Fitzhugh
Avenue to be acquired by Cornerstone Assistance Network Housing Development Corporation, as
sites for the construction of the houses.
DISCUSSION:
On January 25, 2011, (M&C C-24710) the City Council approved the award of $320,000.00 in HOME
Investment Partnerships Program grant funds to Cornerstone Assistance Network Housing
Development Corporation (CANHDC), a certified Community Housing Development Organization
(CHDO), for the development of three single family houses to be located in the Polytechnic
Neighborhood. Up to $50,000.00 of the HOME funds were to be used for CHDO operating expenses
and $270,000.00 of the HOME funds were to be used for eligible development and construction costs
for three single family houses. Due to increases in construction costs, CANHDC can only build two
houses with the HOME funds awarded to it.
In 2011, Staff developed a new policy regarding the use of CHDO proceeds with United States
Department of Housing and Urban Development's (HUD) guidance. HUD approved the policy on
May 3, 2011 and under the new policy, CHDO proceeds were no longer allowed and a 10 percent
developer fee was implemented. Staff recommends the following amendment to contract terms
authorized by M&C C-24710, based upon direction received from HUD:
Remove any reference to CHDO proceeds;
Include a 10 percent developer fee based on the total cost of construction to be paid once the
homes are sold; and
Reduce the number of houses to be constructed in the Polytechnic Neighborhood to two single
family houses due to increase in construction costs since original proposal submission.
http://apps.cfwnet.org/council packet/mc_review.asp?ID=19340&councildate=l2/17/2013 3/17/2014
MBcC Review
Page 2 of 2
To date, neither the conditional commitment nor the contract with CANHDC approved under Mayor
and Council Communication (M&C) C-24710 have been executed. Therefore, upon City Council
approval of this M&C, Staff will move forward with execution of the documents with CANHDC with the
above -referenced terms.
In addition, CANHDC will acquire two lots located at either 3220, 3229, or 3233 Fitzhugh Avenue to
construct the houses. The City's match obligation must be satisfied annually from non-federal
sources used for qualified housing projects, such as donated materials, cash donations, in -kind
contributions, and sweat equity. Staff recommends that the liens be released since this amount can
be counted toward the City's HOME Match obligation.
The project is located in COUNCIL DISTRICT 5, Mapsco 78T.
FISCAL INFORMATION/CERTIFICATION:
The Financial Management Services Director certifies that this action will have no material effect on
City funds.
TO Fund/Account/Centers
Submitted for City Manager's Office bv:
Originating Department Head:
Additional Information Contact:
ATTACHMENTS
CANHDCPoIyHouses.pdf
FROM Fund/Account/Centers
Fernando Costa (6122)
Jay Chapa (5804)
Cynthia Garcia (8187)
Avis F. Chaisson (6342)
http://apps.cfwnet.org/council�acket/mc_review.asp?ID=19340&councildate=l2/17/2013 3/17/2014