HomeMy WebLinkAboutContract 41396 FORTWORTH CITY co SECRETARY, , , 3�(�CONTRACT Na. � �,
January 26, 2011
Neighborhood Land Corporation
3345 South Jones Street
Fort Worth, Texas 76110 -4312
Attention: Gage Yager, President
Reference: Neighborhood Land Corporation — Single Family Housing Development
Dear Mr. Yager:
We are pleased to present for your review the following terms, conditions, and requirements based on
the application of Neighborhood Land Corporation, a Community Housing Development Organization
("CHDO"), for a deferred payment loan of up to $420,000.00 from the City of Fort Worth for the
development of up to seven (7) single-family houses located within Council Districts 5 and 7, along
with two (2) houses from CHDO proceeds, subject to the following terms and conditions:
BORROWER Neighborhood Land Corporation ("NLC")
DEVELOPER Neighborhood Land Corporation
CONTRACTOR TBD
GUARANTORS N/A
LENDER City of Fort Worth ("City")
AMOUNT $420,000 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 NLC fulfills all conditions set forth in the contract with the
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.
USE/PROJECT Construction of up to seven (7) single-family houses ("Project'). All
houses will be, at a minimum, 3-bedroom, 2-baths with a one car
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").
Housing and Economic Development Department OFFICIAL RECORD
The City of Fort Worth * 1000 Throckmorton Street* Fort Worth, Texas 76 OCITY SECRETARY
817-392-7520* Fax 817-392-2013 FT. WORTH, TX
The Affordability Period is five (5) years from the date units have been
AFFORDABILITY/ entered into HUD IDIS reporting system.
AFFORDABILITY The HOME Program requires:
PERIOD . Each home will be sold to a HOME-eligible buyer earning equal
to or less than 80% of the Area Median Income (AMI).
• NLC agrees to ensure that all HOME-assisted housing to meet
all affordability requirements identified in 24 CFR 92.254.
FULL TIME STAFF NLC will have a minimum of one (1) full-time employee who works
REQUIREMENT solely for NLC.
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 seven (7)
houses will be used to build up to two (2) additional houses 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 NLC to use in accordance with the contract.
INTEREST RATE 0%
TERM 1. The term of the contract is three (3) years 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 five (5) years.
3. The contract or the Loan terms may be extended for up to six
(6) months if NLC requests an extension and such extension is
necessary to complete the Project.
PAYMENT/ Payments will be deferred throughout 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 as his or her primary
residence and (2) CHDO Proceeds from the houses are used to
construct additional house(s) to be sold to a HOME-eligible buyer. If
the CHDO Proceeds are not sufficient to construct an additional
house(s), the Proceeds will be held in a restricted account for NLC until
such time as additional proceeds are generated. Upon completion and
sale of the additional house(s), the CHDO Proceeds will be retained by
NLC with no further obligation to the City.
DRAW PERIOD Borrower will only be entitled to make requests for draws, on a
reimbursable basis only, 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 as 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 92.206.
COLLATERAL Upon execution of contract, the City will place a valid first lien Deed of
Trust on each of the lots and all improvements will be recorded by the
City to secure performance. This lien will be released when the houses
are purchased from NLC 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 a HOME eligible
buyer during the Affordability Period, the HOME funds will become
subject to recapture in accordance with 24 CFR 92.254(a)(5)(ii).
i. This Conditional Commitment does not constitute a commitment
CONDITIONS TO LOAN of funds or site approval, and any commitment or approval may
FUNDING 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.
iii. 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 receipt 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.
V. Neighborhood Land Corporation (NLC) 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
REQUIREMENTS i. If HOME funds are to be used for property acquisition or
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.
iii. 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.
iii. 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.
vi. 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 NLC 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, NLC will
reimburse the City for the Use/Project costs determined to be
ineligible and/or disallowed under the HOME regulations.
NLC agrees that all housing projects assisted under this agreement will
meet the property standards requirements in 24 CFR 92.251
which includes compliance with the current edition of the Model
Energy Code (MEC), International Energy Conservation Code
IECC), lead-based paint standards in 24 CFR 92.355, as well as
City building standards.
NLC must comply with Section 504 of Rehabilitation Act of 1973.
Section 504 requires 5% of the dwelling units, or at least one
unit, whichever is greater, to be accessible for person with
mobility disabilities. An additional 2% of the dwelling units must
be accessible for person with hearing or visual disabilities.
NLC must comply with displacement and relocation requirements at 24
CFR 92.353.
NLC 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.
NLC 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 92.504.
Organizations that are directly funded under the HOME program may
not engage in inherently religious activities as defined under 24
CFR 92.257.
NLC 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 NLC must maintain and present to the City on a semi-annual basis, a
REQUIREMENTS General Liability Insurance in the amount of $500,000 each
occurrence, $1,000,000 aggregate limit.
NLC is to maintain and present to the City on a semi-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
NLC and Builder to maintain, and present to the City on a semi-annual
basis, Workers' Compensation insurance as follows:
Statutory Limits
Employers Liability
$100,000 each accident/occurrence
$100,000 disease/per employee
$500,000 disease policy limit
NLC and Contractor 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 NLC must maintain records that will provide accurate, current,
separate, 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, NLC 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.
NLC 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
format/template and /or instructions to be provided by the City.
NLC 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 NLC and the City must be executed on or before
January 31, 2012. Any extension of such date must be in
writing and signed by the City of Fort Worth.
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 the Neighborhood Land Corporation (NLC). 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 written
agreement. In the event of a conflict between any of the terms or conditions presented in this
commitment and the subsequent contract, the terms and conditions presented in the contract would
supersede those presented in this commitment.
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We hope the foregoing is responsive to your needs and that you will accept this offer., in 1 o0cvc
your acceptance with your signature below and by returning a signed copy to: pro 0,
City of Fort Worth
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Atte o
Housing and Economic Development Department �a* 0 00
1000 Throckmorton A0OOXA�aO�
Fort Worth, TX 76102
Attn: Fabiola Suarez, Economic Development Specialist #1ar(y Hendrix, City Se r tart'
Sincere) , 0&"' Date: ���"-7
SusO Ala is
Assist ity Manager
Iroved asito form and legality:
10 ztb 1� Date:
eann Guzman
Assistant City Attorney II
The undersigned hereby accepts the foregoing Commitment and the terms and requirements herein set for
and agrees to be bound thereby.
BORROWER
Neighborhood Land Corporation
Signed:
Date: 7i 1
Ga a Yager
President, N ghbor4od Land Corporation
C-a4-� ( ,DL,
Contract Authorization
OFFICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 1/25/2011
DATE: Tuesday,January 25,2011 REFERENCE NO.: C-24712
LOG NAME: 17NLCCHDO7
SUBJECT:
Authorize a Change in Use and Expenditure of Up to$470,000.00 of HOME Investment Partnerships
Program Grant Funds to the Neighborhood Land Corporation for the Development of Up to Seven Single
Family Houses,Authorize the Execution of a Conditional Commitment and Contract and Authorize a
Substantial Amendment to the City's 2007-2008, 2008-2009,2009-2010 and 2010-2011 Action Plans
(COUNCIL DISTRICTS 5 &7)
RECOMMENDATION:
It is recommended that the City Council:
1.Authorize a Substantial Amendment to the City's 2007-2008,2008-2009, 2009-2010 and 2010-2011
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 up to$470,000.00 in prior year's HOME Investment
Partnerships Program Grant funds to the Neighborhood Land Corporation,a certified Community Housing
Development Organization,for the development of up to seven single family houses located at scattered sites
throughout the City of Fort Worth;
4.Authorize the City Manager,or his designee,to execute a conditional commitment with the Neighborhood
Land Corporation that conditions funding,among other things,on satisfactory completion of HOME
requirements;
5.Authorize the City Manager,or his designee, to execute a Contract with the Neighborhood Land
Corporation for the project for a two 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 the Neighborhood Land 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) for 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
i
other projects that were not completed either because of lack of private funding,environmental issues or
market condition. On November 18,2010,the Neighborhood Land Corporation(NLC)submitted responses
requesting$470,000.00 of the available HOME funds for the development of up to seven single family
houses on scattered sites throughout the City of Fort Worth. The request also included funds for related
CHDO operating expenses.
City staff reviewed all RFP submissions and recommended the award to NLC of$470,000.00 in HOME
funds to the Community Development Council(CDC)at its meeting held on December 1, 2010.The CDC
agreed with staff s funding recommendation for the project. Up to$50,000.00 of the awarded funds will be
used for operating expenses and$420,000.00 for construction and other development expenses.NLC, an
affiliate of Trinity Habitat for Humanity,has secured corporate and individual donations to cover the
remainder of the project costs.
NLC plans to develop seven single family houses to be located at scattered sites throughout the City that will
be,at a minimum, 1,153 square feet with three bedrooms,two baths and a one car garage.The houses will be
sold to an individual or a family that earns at or below 80 percent of the 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$1,000.00 in down payment and/or
closing cost assistance from the City's Homebuyer Assistance Program and occupying the house as their
primary residence for five years.
,$fit ff recommends the following Contract terms:
i.Construction must begin within six months of date of contract execution;
ii.NLC's performance under the Contract and use of the HOME funds will be secured by a recorded
Deed of Trust;
iii.House must be sold to a HOME eligible buyer; and
iv.Proceeds from the sale of the house to be used to construct additional houses for a HOME
eligible buyer and construction of Proceed houses must occur within the two year contract term.
The Menditure of HOME funds is conditioned rfpon the olio w ing:
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$470,000.00 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 DISTRICTS 5 &7.
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 FROM Fund/Account/Centers
GR76 539120 017206351 XXX $50.000.00 GR76 539120 00 206181030 $131.112.32
GR76 539120 005206181 XXX $131.112.32 GR76 539120 017206351M $50,000.00
GR76 539120 005206271 XXX $124.360.00 GR76 539120 005206271030 S124,360.00
GR76 539120 017206461 XXX S164,527.68 GR76 539120 01720646 I Q4Q $164.527.68
CERTIFICATION
Submitted for QtX Manager's Office by; Susan Alanis (8180)
Originating Department Head: Jay Chapa (5804)
Additional Information Contact Cynthia Garcia (8187)
Fabiola Suarez (6811)
ATTACHMENTS
1.Available Funds 17N HD07 pdf