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HomeMy WebLinkAboutContract 41391WISR119N January 14, 2011 Cornerstone Assistance Network Housing Development Corporation 3500 Noble Avenue Fort Worth, Texas 76111 Attention: Philip Posey - Director Reference: Cornerstone Assistance Network Housing Development Corporation Cornerstone Poly Single Family Housing Development Dear Mr. Posey: We are pleased to present for your review the following terms, conditions, and requirements based on the application of Cornerstone Assistance Network Housing Development Corporation, a Community Housing Development Organization ("CHDO"), for a deferred payment loan of up to $270,000,000 from the City of Fort Worth for the development of up to three (3) single-family infill houses located within the Polytechnic Neighborhood, along with to one (1) house from CHDO Proceeds, subject to the following terms and conditions: BORROWER Cornerstone Assistance Network Housing Development Corporation ("CANH DC") DEVELOPER Cornerstone Assistance Network Housing Development Corporation CONTRACTOR TBD GUARANTORS N/A LENDER City of Fort Worth ("City") AMOUNT $270,000 in HOME Investment Partnerships Program Grant funds for eligible construction and other development costs as defined in 24 CFR 92.206 ("Loan"). The Loan will be a deferred payment loan that will be forgivable if CANHDC fulfills all conditions set forth in the contract with City. The parties agree that if additional HOME funds are needed to complete the project as determined by both parties, city staff will ask the City Council for additional funds. The City of Fort Worth * 1000 Throckmorton Street *Fort Worth, 817-392-7520 *Fax 817-392-2013 ,76102 CITY SECRETARY I ¢,� USE/PROJECT Construction of up to three (3) single-family houses. All houses will be, at a minimum, 1,200 square feet with 3-bedrooms, 2-baths with attached garage. The houses must be sold to HOME -eligible homebuyers that earn at or below eighty percent (80%) of the Area Median Income ("AMI") as determined by the United States Department of Housing and Urban Development ("HUD IT AFFORDABILITY / The Affordability Period is five (5) years from the date units have been AFFORDABILITY entered into HUD IDIS reporting system. PERIOD The HOME Program requires: • Each home will be sold to a HOME -eligible buyer earning equal to or less than 80% of the Area Median Income (AMI). • CANHDC agrees to ensure that all HOME -assisted housing or housing identified as match for the HOME program meet all affordability requirements identified in 24 CFR 92.254. FULL TIME CANHDC will have a minimum of one (1) full-time employee who works STAFF REQUIREMENT solely for CANHDC. CHDO PROCEEDS CHDO Proceeds are defined as total HOME investment in the unit, minus funds allocated as development subsidies, buyer subsidies, developer's fee and any repayments from sales proceeds. It is expected that the CHDO Proceeds from the sale of the three (3) houses will be used to build up to one (1) additional house but the number of houses will be determined by the amount of CHDO Proceeds generated. CHDO Proceeds will be retained in a restricted account for CANHDC to use in accordance with the contract. INTEREST RATE 0% TERM 1. The term of the contract is one (1) year beginning on the date of contract execution. The term of the contract requires completion of construction but does not require completion of the sale of the house to a HOME -eligible buyer. The completed houses must be insured and maintained and remain vacant while being actively marketed for sale. 2. The term of the Loan is one (5) years. 3. The contract or the Loan terms may be extended for up to six (6) months if CANHDC requests an extension and such extension is necessary to complete the Project. PAYMENT/ Payment will be deferred through the Loan term. The Loan is REPAYMENT forgivable if the following conditions are met: (1) houses are sold to a HOME -eligible buyer who will occupy the house his or her primary residence and (2) CHDO Proceeds from the three (3) houses are used to construct an additional house to be sold to a HOME -eligible buyer. If the CHDO Proceeds are not sufficient to construct an additional house, the CHDO Proceeds will be held in a restricted account for CANHDC until such time as additional proceeds are generated. Upon completion and sale of the additional house, the CHDO Proceeds will be retained by CANHDC with no further obligation to the City. 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 upon receipt of satisfactory documentation and due diligence satisfaction. ELIGIBLE COSTS Eligible costs to be paid for by these funds will be stipulated in the contract and are defined under 24 CFR 9202066 COLLATERAL Upon execution of contract, the City will place a valid first lien Deed of Trust on each of the lots. This lien will be released when the houses are purchased from CANHDC by a HOME eligible homebuyer for use as his or her primary residence. AUDITS City will conduct annual audits to ensure Affordability requirements. Borrower will maintain records according to the recordkeeping requirements outlined below. RECAPTURE If the units built with Loan funds are not occupied by aHOME-eligible buyer during the Affordability Period, the HOME funds will become subject to recapture in accordance with 24 CFR 92.254 (a) (5) (ii). CONDITIONS TO LOAN 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 conditional on the City's determination to proceed with, modify or cancel the Project based on the results of a subsequent environmental review. ii. City Council approval of award of HOME funds for the Project and receipt of HOME funds from HUD for the Project. 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 iv. Documentation must be acceptable in all respects to the City and its counsel. Cornerstone Assistance Network Development Corporation (CANHDC) must require each homebuyer to utilize a minimum of $1,000.00 from the City's Homebuyer Assistance Program for down payment assistance to ensure that the house remains affordable for five (5) years. Failure to require down -payment assistance will result in repayment of the total of HOME funds awarded. OTHER i. If HOME funds are to be used for property acquisition or REQUIREMENTS demolition, then construction must begin within twelve (12) months of purchase date or the date on which structures are demolished. ii. Construction work on the Project must begin within 6 months of the date of contract execution or the contract will terminate. Borrower will be liable for and will promptly pay all fees 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 constructed with the Loan, including appraisal and Texas Commission on Environmental Quality (TCEQ) environmental fees, whether or not the Loan closes. Documentation must be acceptable in all respects to the City and its counsel. iv. All permits and approvals must be in place prior to funding of the Loan. v. All construction contracts, plans, surveys, etc. must be acceptable to the City and assigned as additional collateral. Approval is subject to a pre -construction review of plans, specifications and cost estimates. vie 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. COMPLIANCE WITH CANHDC agrees that as a certified Community Housing Development FEDERAL, STATE, Organization, they will comply with 24 CFR 92.300 and 92.301. AND LOCAL LAWS If it is determined that the use of the funding provided by the City for the stated Use/Project does not meet HOME requirements, CANHDC will reimburse the City for the Use/Project costs determined to be ineligible and/or disallowed under the HOME regulations. CANHDC agrees that all housing projects assisted under this agreement will meet the property standards requirements in 24 CFR 92.251 and lead -based paint standards in 24 CFR 92.3551 as well as City building standards. CANHDC must comply with displacement and relocation requirements at 24 CFR 92.504 and 92.353. CANHDC 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 that are currently listed. CANHDC must comply with all prescribed procedures regarding nondiscrimination and equal opportunity, affirmative marketing, displacement and relocation, labor relations, lead -based paint and conflict of interest provisions described in 24 CFR 92 subpart H and 24 CFR 92.5040 CANHDC must comply with all applicable Federal laws, laws of the State of Texas and ordinances of the City of Fort Worth. Organizations that are directly funded under the HOME program may not engage in inherently religious activities as defined under 24 CFR 92.257 Borrower must agree to any reasonable terms and conditions as necessary in order to ensure City and Borrower remain in compliance with all federal regulations, state laws, and local ordinances regarding the Project. INSURANCE CANHDC must maintain and present to the City on a semi-annual REQUIREMENTS basis, a General Liability Insurance in the amount of $500,000 each occurrence, $1,000,000 aggregate limit. CANHDC is to maintain and present to the City on asemi-annual basis, a 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 CANHDC and Contractor to maintain, semi-annual basis, Workers' follows: Statutory Limits Employers Liability $100,000 each accident/occurrence $100,000 disease/per employee $500,000 disease policy limit and present to the City on a Compensation insurance as Contractor is to maintain and present to the City, Builders Risk insurance. The Builder's Risk insurance must be acceptable to the City, and must be a valid policy at all times during the Loan. Contractor to maintain property and flood insurance (if required), in form and amount satisfactory to the City for the Project 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. The policy will also provide for 30- day prior notification to the City of cancellation. RECORDKEEPING CANHDC must maintain records that will provide accurate, current, separateI and complete disclosure of the status of the funds received pursuant to this Agreement and pursuant to any other applicable Federal and/or State regulations establishing standards for financial management. Upon receipt of reasonable written notice by the City and as often as City may deem necessary, CANHDC will make available to the City all of its records and will permit City to conduct audits of all contracts, invoices, materials, payrolls, records of personnel, conditions or employment and all other data relating to the stated Use/Project. CANHDC will provide quarterly financial and beneficiary reports that will contain such records, data and information as City may request pertinent to matters covered by this Agreement. Reports will be due to the Housing and Economic Development department within 45 days of the end of the quarter. Required report formautemplate and /or instructions to be provided by the City. CANHDC will provide any additional information as requested by the City within 10 days of date of receipt of written request. CLOSING COSTS The Loan is to be closed at no cost to the City. Borrower shall be responsible for all costs associated with this transaction, including title insurance, attorney fees, filing fees, closing costs, etc. TITLE INSURANCE Borrower will pay the cost of a mortgagee's title insurance policy insuring the amount of the Loan. EXPIRATION To cause this Conditional Commitment to remain in effect, the contract between the City and CANHDC must be executed on or before January 31, 2012. Any extension of such date must be in writing and signed by the City. Any funds disbursed against this Conditional Commitment will be subject to the City's receipt of satisfactory documentation of the Loan and due diligence satisfaction. This Conditional Commitment is confidential and is intended solely for the use of Cornerstone Assistance Network Development Corporation. No other person or parties has any rights whatsoever with respect to the above terms and conditions. These terms can be modified or other terms negotiated between the parties upon mutual agreement. We hope the foregoing is responsive to your needs and that you will accept this46 Please indicate your acceptance with your signature below and by returning a cOpV to: City of Fort Worth Housing and Economic Development Department 1000 Throckmorton Attes vyo Fort Worth, TX 76102 Attn: Ryan Haden, Development Project Coordinator Sincerely, Slasari City Manager Appr ved as form and legality: Liu& Ann Guzman Assistant City Attorney Date: I : L ! I 1 Date: The undersigned hereby accepts the foregoing Conditional Commitment and the terms and requirements herein set for and agrees to be bound thereby. BORROWER Cornerstone Assistance Nefixork Housing Development Corporation Signed: Philip Posey Director Date: G / �z Movel 9 V N