HomeMy WebLinkAboutResolutions - 1985.05.23 - 11124MISCELLANEOUS RESOLUTION NO. 85159 DATE: May 23, 1985
BY: PUBLIC SERVICES COMMITTEE - JAMES E. LANNI, CHAIRPERSON
IN RE: COMMUNITY DEVELOPMENT DIVISION - AMENDMENTS TO THE REHABILITATION
FUND LEVERAGING AGREEMENT WITH MANUFACTURERS NATIONAL BANK FOR THE
COM=CIAL ASSISTANCE PROGRAM (CAP)
TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Mr. Chairperson, Ladies and Gentlemen:
WHEREAS, Oakland County has been a recipient of Community Development
Block Grant funds from the U.S. Department of Housing and Urban Development
since 1974 and has operated a residential rehabilitation program since 1976;
and
WHEREAS, the U.S. Department of Housing and Urban Development has estab-
lished procedures allowing Community Development Block Grant recipients to
draw (in one lump sum) the funds designated for property rehabilitation in
their approved CDBG application in order to establish a Rehabilitation
Leveraging Fund with a private financial institution; and
YKEREAS, the County of Oakland by Miscellaneous Resolution #82283 of
September 21, 1982 adopted the basic concept of utilizing Community Development
Block Grant funds to leverage private financial resources for the rehabilita-
tion of residential and commercial property; and
WHEREAS, the County of Oakland by Miscellaneous Resolution #83034 of
February 24, 1983 approved the creation of a commercial rehabilitation
financing program with Community Development Block Grant funds and author-
ized the Community Development Division to solicit lenders for a financial
leveraging agreement; and
WHEREAS, the County of Oakland by Miscellaneous Resolution #84239 of
August 30, 1984 approved the Rehabilitation Leveraging Agreement with
Manufacturers National Bank of Detroit for a program of financing commercial
property rehabilitation; and
WHEREAS, the Rehabilitation Fund Leveraging Agreement specifies in
Article III, sections 3.03 and 3.04 that Oakland County, through. the
Commercial Assistance Program, will reduce the cost of financing commercial
property rehabilitation by subsidizing the actual amount of principal borrowed
from Manufacturers National Bank to produce an effective interest rate of 10%
on CAP projects; and
WHEREAS, interest rates have been substantially lowered since the
Commercial Assistance Program and the Rehabilitation Leveraging Fund
Agreement were originally developed such that the prescribed 10% financing
will no longer provide the needed incentive for commercial property rehabili-
tation; and
WHEREAS, the Community Development Division has prepared amendments to
Sections 3.03 and 3.04 of the Rehabilitation Fund Leveraging Agreement to
link CAP interest rates to changes in the prime lending rate.
WHEREAS, the Community Development Citizens Advisory Council has
unanimously approved the attached amendments to the Rehabilitation Fund
Leveraging Agreement.
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commis-
sioners approves the attached amendments to the Rehabilitation Fund Leveraging
Agreement and authorizes the Oakland County Executive to modify the County's
contract with Manufacturers National Bank in accordance with the specified
amendments.
Mr. Chairperson, on behalf of the Public Services Committee, I. move the
adoption of the foregoing resolution.
PUBLIC SERVICES COMMITTEE
Chairperson
May 1, 1985
ATTACHMENT
Amendments to Article III of the Rehabilitation Fund Leveraging
Agreement with Manufacturers National Bank for the Commercial
Assistance Program (CAP) as approved by Miscellaneous Resolution
No. 84239 of August 30, 1984.
Existing Language
Article III
Terms of Program
3.01 The County agrees to cooperate in CAP Loans to qualifying property owners
participating in the program to the extent that sufficient funds are available
and subject to the terms and conditions of this Agreement.
3.02 The Bank will provide commercial rehabilitation financing based on a term of
seven (7) years. Individual requests for shorter repayment periods or for
longer repayment periods of up to ten (10) years where an applicant's cash
flow may not be sufficient to service a shorter term will be considered subject
to the Bank's normal lending standards.
3.03 The Bank's interest rate charged to a CAP Loan shall in no event exceed the
interest rate charged for similar loans by the Bank. The maximum interest
rate charged by the Bank for the duration of this Agreement will be 161/2%
where terms do not exceed seven (7) years and 171/2% for longer terms.
3.04 The County shall reduce the cost of financing for approved CAP Loan recipients
by subsidizing the principal amount borrowed. Using the amount of loan princi-
pal approved by the Bank, a determination of the monthly payment required to
amortize that principal at a rate of 10% will be made. That monthly payment
will be utilized to calculate how large a loan could be supported at the pre-
vailing interest rate charged by the Bank. The difference between the actual
amount of the loan and the amount that could be supported at the prevailing
interest rate becomes the principal loan subsidy to be provided by the County.
3.05 The principal subsidy provided by the County to a loan recipient shall be in
the form of a loan which shall be forgiven over the repayment period of the
Bank's loan, according to the following formula:
1 amount of
loan term x amount of subsidy = subsidy forgiven
(no.years) yearly
In the event the loan recipient sells the property, divests interest in the
property or defaults in the Bank Note or in any security documents offered
to secure either the Bank or County Note, the amount of the subsidy remaining
and not forgiven shall be due and payable.
Proposed, Language (changes noted in italics)
3.03 The Bank o111 proeooro7e -Pc!-L3:7.- rehabs Z -1,• tation fi; • - at on lit rote
of 1 point oner the best interest rote aoailabie on 5 L•es 7-Tz2siness
a000rding to the Bank's rrionth7nd ,n,L,:umer loon index. In no event shall the
Bank's interest rate charged to a CAP loan exceed the interest charged for
similar loans by the Bank. The maximum interest rate charged by the Bank for
the duration, of this Agreement will be 161/2% where terms do not exceed seven
(7) years and l71/2% for longer terms.
3.04 The County shall reduce the cost of financing for approved CAP Loan recipients
by subsidizing the principal amount borrowed. Using the amount of loan princi-
pal approved by the Bank, a determination will he made of the monthly payment
required to amortize that principal at a rote of 64- points be low the interest
rate the Bank charges to a CAP Loan. That monthly payment will be utilized to
calculate how large a loan could be supported at the interest rate charged by
the Bank. The difference between the actual amount of the loan and the amount
that could be supported at the Bank's interest rate becomes the principal loan
subsidy to be provided by the County.
23rd day of Ail' Ma 19 85 Impr
4011 146‘.. 1644.4111%&.
O. ALLEN
Coun y Clerk/Register of Deeds
#85159 May 23, 1985
Moved by Lanni supported by Perinoff the resolution be adopted.
AYES: Lanni, Law, McConnell, McDonald, McPherson, Moffitt, Nelson, Olsen, Page,
Perinoff, Pernick, Rewold, Skarritt, Webb, Wilcox, Aaron, _Caddell, Calandro, Doyon,
Fortino, Gosling, Hassberger, Hobart, R. Kuhn, S. Kuhn. (25)
NAYS: None. Co)
A sufficient majority having voted therefor, the resolution was adopted.
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lynn D. Allen, Clerk of the County of Oakland and having a seal,
do hereby certify that I have compared the annexed copy of
Miscellaneous Resolution adopted by the Oakland County Board of Commissioners at
their meeting held on May 23, 1985
with the orginial record thereof now remaining in my office, and
that it is a true and correct transcript therefrom, and of the
whole thereof.
In Testimony Whereof, I have hereunto set my hand and affixed the
seal of said County at Pontiac, Michigan
this