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HomeMy WebLinkAboutResolutions - 1984.10.11 - 17511.• I. August 30, 1984 Miscellaneous Resolution #8423 9 RE: COMMUNITY DEVELOPMENT DIVISION - TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Mr. Chairperson, Ladies and Gentlement: WHEREAS the County of Oakland is a recipient of funds under the Community Development Block Grant (CDBG) Program; and WHEREAS the Department of Housing and Urban Development (HUD) has established a procedure whereby a Community Development Block Grant recipient may draw in one sum funds designated in its application for the establishment of a rehabili- tation leveraging fund in a private financial institution; and WHEREAS the Oakland County Board of Commissioners has directed the Community Development Division to develop such a program in Miscellaneous Resolutions #82283 and #83034, with final approval to be made by the Public Services Committee; and WHEREAS in response to the aforementioned Miscellaneous Resolution and to requests made by communities participating in the CDBG program, the Community Development Division has designed a proposed rehabilitation leveraging fund agree- ment for a program of financing the rehabilitation of commercial buildings; and WHEREAS the Community Development Citizens Advisory Council has unanimously recommended the adoption of the attached rehabilitation leveraging fund agreement for this program to be referred to as the Commercial Assistance Program; and WHEREAS the Community Development Division will implement this program on behalf of and assisting the participation of all communities comprising the Oakland Connty CDBG Program; and WHEREAS all funds i!tilized for projects and for program administration shall be allocated from CDBG funds budgeted for this program and from income generated by the rehabilitation leveraging fund agreement, with no funds utilized from the County General Fund; and WHEREAS the Public Services Committee will receive regular quarterly reports on the Commercial Assistance Program's progress. NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners approve the Community Development rehabilitation leveraging fund agreement attached and the Commercial Assistance Program with a level of administrative support not to exceed one staff position to be funded totally from the Community Development Block Grant Program budget and the Oakland County Executive be authorized to sign the agreement. . • adoption of the foregoing resolution. THE FOREGOING RESOLUTION F Airii - norp-4 ", vir.. Exec. ive AVarp Mr. Chairperson, on behalf of the Public Services Committee, I move the OAKLAND COUNTY COMMUNITY DEVELOPMENT Rehabilitation Fund Agreement Preamble WHEREAS, the Department of Housing and Urban Development has enacted rules and regulations regarding the use of funds under a Community Development Block Grant program, and WHEREAS, the County of Oakland is a recipient of funds under such a program, and WHEREAS, the Department of Housing and Urban Development has through its rules and regulations established a procedure whereby a Community Development Block Grant recipient may draw in one sum funds designated in its Community Development application for the establishment of a rehabilitation fund in a private financial institution, and WHEREAS, the County of Oakland is desirous of establishing such a fund, and WHEREAS, the County of Oakland has established a Community Development Commercial Assistance Program (herein referred to as "CAP") to provide rehabilitation financing for commercial structures, and WHEREAS, 24 CFR 570 as amended requires that a written agreement be entered into between the Community Development Block Grant recipient and the financial institution wherein the fund is to be established. NOW THEREFORE, this Agreement is made as of this day of M, 1984 by and between the County of Oakland, a Michigan nnn•n•nn•1= Constitutional Corporation, acting by and through its Community Development Division (herein referred to as the "County"), and Manufacturers National Bank of Detroit, a National Bank Association of Detroit, Michigan (herein referred to as the "Bank") for a period of one (1) year. In consideration of the premises and undertakings herein set forth, the parties do hereby agree as follows: Purpose The purpose of this Agreement between the County and the Bank is to permit the County to draw funds from its Community Development Block Grant Letter of Credit in a single lump sum to establish a Rehabilitation Fund with the Bank for the purpose of financing the rehabilitation of privately owned commercial properties, as a part of the County's Community Development Block Grant (CDBG) Program. The Rehabilitation Fund will also serve as a depository for funds to be transferred as required to any additional rehabilitation programs operated as part of the CDBG Program. Article I Definitions 1.01 "CAP" (Commercial Assistance Program) shall mean the program wherein the County and the Bank have agreed to participate in loans for commercial property rehabilitation. 1.02 "Commitment Letter" shall mean a letter submitted by the County to the Bank setting forth the terms and conditions of the County's participation in a CAP Loan and authorizing the Bank to disburse funds from the Rehabilitation Fund account for said loan. 1.03 "Bank Note" shall mean a promissory note payable to the order of the Bank evidencing a borrower's obligation to the Bank on a CAP Loan. 1.04 "COBG Funds" shall mean funds received by the County from the Department of Housing and Urban Development under its Community Development Block Grant Program. 1.05 "Rehabilitation Fund" shall mean the deposits established from the lump sum drawdown of CDBG funds budgeted for rehabilitation. 1.06 "COBG Account" shall mean the account or accounts established by the County at the Bank for the deposit of funds to be used in the Commercial Assistance Program (CAP) or as designated by the County. Article Ii Establishing the Rehabilitation Fund 2.01 The County agrees to deposit with the Bank from time to time certain CDBG funds and the Bank agrees to accept these funds in an amount to be determined at the sole discretion of the County. 2,02 The funds deposited by the County pursuant to Section 2.01 of this Agreement shall be placed in one or more accounts which shall earn either the maximum allowable interest rate or the market rate of interest, as determined by the size and maturity of such deposits. The principal and interest will be made available for the County's participation with the Bank in the Commercial Assistance Program and for COBG funded rehabilitation programs as designated by the County. 2.03 The parties hereto acknowledge that the deposit of funds by the County pursuant to Section 2.01 of this Agreement is contingent upon the receipt of CDBG funds and the County reserves the right to delay deposit until the receipt of adequate funds from the Department of Housing and Urban Development (HUD). 2.04 The Rehabilitation Fund will be used to finance the County's property rehabilitation programs pursuant to the County's approved Community Development Block Grant Program. Pursuant to 24 CFR 570.313 (c) 2 of the regulations governing lump-sum drawdowns, interest income on the Rehabilitation Fund may be placed into a separate CDBG account. This program income shall be disbursed to CAP Loan activities first. 2.05 Use of the deposited funds for property rehabilitation financing shall commence within forty-five (45) days of deposit. In the event that the use of deposited funds does not start within the forty-five (45) day time limit, the County may be required by HUD to return all or part of the deposited funds not previously pledged or encumbered to the CDBG Letter of Credit. If that should occur, the Bank will no longer be required to continue in participation of this program other than those loans that have been made at the time of withdrawal. Article III Terms of Program 3.01 The County agrees to participate 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 minimum term of seven (7) years. Individual requests for longer repayment periods of up to ten (10) years will be considered where an applicant's cash flow may not be sufficient to service a shorter term. 3.03 The Bank's effective 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 16n96 where terms do not exceed seven (7) years and 17%% 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 principal 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 prevailing 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. The principal subsidy will be paid to the Bank at the loan closing to effectively lower the interest rate paid by the borrower to ten (10%) percent. 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 or divests interest in the property, the amount of the subsidy remaining and not forgiven shall be due and payable. 3.06 The maximum Bank loan that the County will subsidize with a CAP Loan is $100,000. Projects requiring amounts in excess of $100,000 must obtain additional source funds which may include, at the Bank's discretion, an unsubsidized loan from the Bank. 3.07 The Bank agrees that this Agreement shall include providing the following services at no additional cost to the County: (a) Documentation and closing of loans (b) Servicing County accounts (c) Collection of outstanding indebtedness on loans (d) Reporting status of County accounts (e) Foreclosure and liquidation (f) Performance of this Agreement Article IV Eligibility, Application, Approval and Disbursement Process 4.01 The County will designate areas wherein properties may be located and eligible for participation in the program. 4.02 Al! applications for a CAP Loan shall be addressed to both the Bank and the County and initially submitted to the County. The County shall review the loan application and any supporting documents to establish initial eligibility for participation in the program. Eligible applications will then be submitted to the Bank to be approved or denied by the Bank in accordance with its normal lending standards. in cases of denial, the Bank shall send the loan applicant a "Notice of Denial" indicating its decision, with a copy of the notice forwarded to the County. 4.03 The bank shall transmit to the County its underwriting decisions for approved loan requests, setting forth the terms and conditions of the Bank's approval in writing. The Bank shall also transmit to the County a copy of the Bank's credit analysis report on the loan and any rehabilitation plans, specifications, and supporting documents submitted. The County acknowledges that the Bank has made no representation or warranty with respect to the accuracy of any information given by a borrower or as to the credit or ability of a borrower to repay the loan. 4.04 Upon receipt of the information requested in Section 4.03 of this Article, the County shall review the loan application and any supporting documents. The maximum amount of the County's participation and the terms and conditions of same shall be at the sole discretion of the County. If the County decides not to participate in a CAP Loan, it shall send the loan applicant a "Notice of Denial," 4.05 When the County decides to participate in a CAP Loan, it shall submit to the Bank a Commitment Letter similar to the form attached as "Attachment B" setting forth the terms and conditions of the County's participation in the CAP Loan and authorizing the Bank to disburse iunds from the CDBG Account in accordance with the terms and conditions set forth in the Commitment Letter. 4.06 Upon receipt of a Commitment Letter from the County approving the County's participation in a CAP Loan, the Bank shall prepare the necessary loan closing documents. 4.07 At closing, the Bank and the borrower shall execute the necessary loan closing documents. The Bank shall disburse the funds for both the Bank's loan and the principal loan subsidy provided by the County loan. The County's loan will be disbursed by a debit to the CDBG Account. The County shall participate at the loan closing or shall have in writing approved of the loan closing documents which will be used to protect its interest, 4.08 At closing, the Bank and the borrower shall execute two promissory notes, the "Bank Note" evidencing the borrowers obligation to the Bank and a "County Note" evidencing the County's participation in the CAP Loan and the borrowers obligation to the County. 4.09 The Bank shall have no liability, obligation or responsibility to the County for a borrower's obligations under the Notes and/or security therefor or for the validity, enforceability, collectibility, genuineness or sufficiency or of any document executed in connection therewith or for title to any collateral. 4.10 The Bank and the County agree that neither party shall sell, assign or transfer, or suffer any sale, assignment or transfer in whole or in part of its interest in a Note or a portion of the security therefor without the prior written consent of the other party. Article V Default 5.01 Default by a borrower as used in this Agreement shall mean: (a) Default by a borrower on a note or a security instrument (b) Default by a borrower in compliance with federal regulations prohibiting or restricting certain uses of the loan and/or default by a borrower in compliance with the Commercial Assistance Program 5.02 Upon the occurrence of any default under any note or security agreement given by a borrower in conjunction therewith, the Bank shall within forty-five (45) days of the date on which the Bank becomes aware of the default, notify the County in writing of the default, specifying the nature thereof. By appropriate notice the bank shall promptly demand that the default be cured by the borrower. In the event such default is not timely cured, the Bank may take appropriate action, including the institution of legal proceedings and action to foreclose under any security instrument, to effect collection of the Bank Note in full and County Note in full. Collection of the County Note will be waived upon written authorization from the County and received by the Bank, 5.03 If the Bank initiates legal action to collect an outstanding indebtedness after the occurrence of a default as described in Section 5.01 (a) of this Agreement, all costs and expenses of collection, including attorney's fees, shall be paid by the Bank. All proceeds received by the Bank resulting from legal action and/or foreclosure of its security interest in the Collateral shall be first applied to the payment of reasonable expenses incurred by the Bank in the collection of said proceeds. Any proceeds received by the Bank in excess of such costs and expenses shall be deemed received by the Bank for the pro rata benefit of the Bank and the County in accordance with the amount of the outstanding principal and interest due to the Bank and the County. 5.04 The County may exercise its option to purchase the remaining portion of the Bank Note and move independently against the borrower, if the Bank decides not to take any action on a default under Section 5.01 of this Agreement. For this purpose, the Bank shall negotiate to the County, the Bank Note and assign all collateral associated with the Note and any security instruments in connection therewith. 5.05 The County shall be responsible for monitoring a borrower's compliance with applicable federal regulations and compliance with CAP guidelines. Upon the occurrence of a default as defined in Section 5.01 (5) of this Article, the County shall notify the Bank in writing of the default within forty-five (45) days. By appropriate notice, the County shall promptly demand that the default he cured by the borrower. In the event such a default is not timely cured, the County may exercise its option to purchase the remaining portion of the Bank Note and move independently against the borrower. For this purpose, the Bank shall negotiate to the County, the Bank Note and assign all collateral associated with the Note and any security instruments in connection therewith. 5.06 Prior to default by a borrower, the Bank shall not without the prior written consent of the County: (a) Make or consent to any alteration of the terms of a note or the collateral; (b) Make or consent to any release, substitution or exchange of any collateral; or (c) Waive any claim against a borrower in connection with a note. Article VI Reporting 6.01 The Bank shall furnish and deliver to the County the following reports: -4- (a) A monthly statement indicating the number of applications for CAP Loans received by the Bank during the month. (b) A monthly bank account statement reflecting all transactions which occurred during the month, including the credits, debits and the account balance. (c) A monthly loan activity reporting new loans and reflecting the status of outstanding CAP Loans. 6.02 The County shall have the right at any reasonable time during the Bank's business hours, to examine all of the Bank's books or accounts and other records pertaining to the CAP Loans, Notes and security instruments. Article VII Duration of Agreement 7.01 This Agreement will apply to new loan activity for a period of one (1) year from the date of this Agreement. The responsibilities of the Bank and County with respect to loans made under this Agreement shall remain in effect until those loans have matured or until such time as the County's investment has been returned, whichever shall occur sooner. 7.02 If for any cause the parties hereto shall violate any covenant, agreement, term or condition in this contract, the other parties shall thereupon have the right to terminate this Agreement by giving written notice of such termination, specifying the effective date thereof, at least thirty (30) days before the effective date of such termination and this Agreement shall terminate in all respects as if such were the date originally given for the expiration hereof. 7.03 In the event the County is required to terminate this Agreement pursuant to a directive from the federal government or pursuant to federal rules and regulations, the County shall be permitted to so terminate by giving notice in accordance with the terms of Section 8.01 of this Agreement. 7.04 At the termination of the one (1) year Agreement, all unobligated deposits of CDBG funds in the Rehabilitation Fund will be returned to the County's Community Development Block Grant Letter of Credit unless the County is authorized by the Department of Housing and Urban Development to extend the Agreement for an additional period. Article VIII Compliance With Laws 8.01 The parties hereto agree to comply with all applicable laws, ordinances, and codes of the federal, state and local governments. It is understood that all loans will be made pursuant to good and sound banking practices but under no circumstances shall an applicant be discriminated against because of race, color, creed, handicap, sex or national origin. 8.02 It is hereby understood and agreed that the terms and conditions of this Agreement are subject to the provisions governing lump-sum drawdowns for property rehabilitation pursuant to 570.513 of the Department of Housing and Urban Development regulations on Community Development Block Grants, being 24 CF', Part 570, attached as "Attachment A." Article IX Insurance 9.01 The parties hereto shall maintain at their expense during the term of this Agreement on behalf of all of their employees performing any of the activities hereunder the following insurance where applicable: (a) Worker's Compensation insurance for Employees which meets Michigan's statutory requirements and Employer's Liability insurance with minimum limits of $100,000 each accident; (s) Comprehensive general liability insurance with minimum limits of $1,000,000 combined single limit, each occurrence, for bodily injury and property damage. -5- Article X Indemnification 10.01 The Bank agrees to save harmless the County against and from any and all liabilities, obligations, damages, penalties, claims, costs, charges and expenses which may be imposed upon, incurred by or asserted against the County by reason of any of the following occurring during the terms of this Agreement: (a) Any negligent or tortious acts of the Bank or any of its personnel, employees, consultants or subcontractors; or (b) Any failure of the Bank or any of its personnel, employees, consultants or subcontractors to perform its obligations either implied or expressed under this Agreement. Article XI Fair Employment Practices 11.01 In accordance with the United States Constitution and all Federal legislation and regulations governing fair employment practices and equal employment opportunity, and including but not limited to the Civil Rights Act of 1964 (P. L. 88-352, 78 Stat. 252) and in accordance with the Michigan Constitution and all State laws and regulations governing fair employment practices and equal employment opportunity, including but not limited to the Michigan Civil Rights Act (P. A. 1976, No. 453) and the Michigan Handicappers' Civil Rights Act (P. A. 1976, No. 220) the Bank agrees that it will not discriminate against any person, employee, consultant or applicant for employment with respect to his or her hire, tenure, terms, conditions or privileges of employment because of his or her religion, race, color, national origin, age, sex, height, weight, marital status, handicap, sex or sexual orientation that is unrelated to the individual's ability to perform the duties of a particular iob or position. 11.02 The Bank further agrees to take affirmative action to achieve reasonable representation of minority groups and women on their work force. Such affirmative action shall include, but not be limited to, the following areas: employment, promotion, demotion or transfer, recruiting or recruitment, advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training or education, including apprenticeships. 11.03 Breach of the terms of this Article may be regarded as a material breach of the Agreement. The Bank hereby recognizes the right of the United States, the State of Michigan and the County to seek judicial enforcement of the foregoing covenants against discrimination against themselves or their subcontractors connected directly or indirectly with the performance of this Contract. Notwithstanding anything herein to the contrary, the provisions of this Article shall not be waived without the express consent of the appropriate enforcement agency. Article XII Amendment 12.01 The parties hereto may from time to time consider it in their best interest to change, modify or extend a term, condition or covenant of this Agreement. Any such change, addition, deletions, extension or modification shall be incorporated in written amendments to this Agreement. Such amendments shall not invalidate this contract unless expressly stated therein. 12.02 No amendment to this contract shall he effective and binding upon the parties, unless it expressly makes reference to this contract, is in writing and is signed and acknowledged by duly authorized representatives of all parties hereto. Article XIII Notice 13.01 A notice, demand or other communication under this Agreement by a party to the other party hereto shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, except that the reports required by Article VI hereof may be by regular mail or may be hand delivered at the discretion of the Bank. -6- 13.02 In the case of a notice, demand of communication to the Bank, such shall be addressed to it at the following address: Ronald T)• Hooper Second Vice President 411 W. Lafayette Detroit, MI 48226 In the case of a notice, demand or communication to the County, such shall be addressed to it at the following address: Marcia E. Berkley, Manager Oakland County Community Development 1200 N. Telegraph Road Pontiac, MI 48053 All notices shall be deemed effective on the date of mailing. The addresses to which notice is to be made may be changed at any time by any party by informing the other parties of such change in writing. Article XIV Assignment 14.01 No party hereto shall assign or encumber directly or indirectly any interest whatsoever in this Agreement, and shall not transfer any interest in the same without prior written approval of the other party. Article XV Remedies 15.01 Each party to this agreement shall have the right to protect and enforce all rights available to it by suit in equity, action at law or by any other appropriate proceedings, whether for specific performance of any covenant contained in this Agreement, or damages, or other relief, or proceed to take any action authorized or permitted under applicable law or regulation. 15.02 Except as otherwise specifically set forth in this Agreement, all rights and remedies of the parties under this Agreement shall be cumulative. 15.03 The parties hereto agree to submit to the personal jurisdiction of any competent court In Oakland County, Michigan for any action brought against it arising out of this Agreement. Article XW Miscellaneous 16.01 This Agreement constitutes the entire agreement between the parties and supersedes any prior or contemporaneous oral or written agreements, understandings or representatives. 16.02 This Agreement and all rights and obligations imposed hereunder shall be interpreted and construed in accordance with the laws of the State of Michigan. 16.03 If any provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such provision to a person or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 16.04 The captions and headings of this Agreement are inserted for convenience only, and shall not modify or affect the intent or operative paragraphs of this Agreement, and shall be disregarded in construction or interpretation thereof. 16.05 This Agreement shall hind and shall inure to the benefit of the parties hereto, their successors and assigns. 16.06 Each party to this Agreement hereby represents and warrants to the other party that it has full right, power and authority to enter into and perform this Agreement; that its execution and delivery of this Agreement have been duly authorized by all necessary action; and that this Agreement is valid, binding and enforceable upon approval by the County and the Bank. Attest: Attest: IN WITNESS THEREOF the Bank and County have executed this Agreement as of the date first written above. MANUFACTURERS NATIONAL BANK OF DETROIT COUNTY 9F OAKLAN By: By: Position: Position: Date: Date: Date: Date; -9- CD2 Commercial Assistance Program (CAP) Doan Example: Assumptions: $100,000 Rehabilitation Project 7 Year Amortization 16.5% Interest Charged by Bank 10.07 Effective Rate of Loan Monthly Payment By Borrower; CAP Loan: Bank Loan: $ 1,660.12 17,604.00 82,396.00 Leveraging Ratio: 4.68 : 1 Private (Bank) Public Funds (CDBG) Funds Amortizing Factor of CAP Loan: (.14285714) Amount of CAP Loan forgiven Yearly ($2,514.86) # 84239 October II, 1984 11th day of I 93_4_ ALLEN Moved by McDonald supported by Moore the report be accepted. A sufficient majority having voted therefor, the report was accepted. Moved by McDonald supported by Nelson the resolution be adopted. Moved by Hobart supported by Moore the resolution be amended in the NOW THEREFORE BE IT RESOLVED paragraph by adding "These positions are totally funded by this grant and the future existence of these positions is contingent upon the continuation of Federal Funding at the same level". A sufficient majority having voted therefor, the amendment carried. Vote on resolution as amended: AYES: S. Kuhn, Lanni, Law, McConnell, McDonald, McPherson, Moore, Nelson, Olsen, Perinoff, Pernick, Rewold, Wilcox, Aaron, Caddell, Calandro, Doyon, Fortino, Gosling, Hobart, Jackson, R. Kuhn. (22) NAYS: None. (0) A sufficient majority having voted therefor, the resolution as amended was adopted. STATE OF MICHIGAN) COUNTY AOC,LAND) I, Lynn D. Alien, Clerk of the County of Oakland and having a seal, do hereby certify that I have compared the annexed copy of Miscellaneous Resolution #84239 adopted by the Oakland County Board of Commissioners at their meeting held on October 11 184 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 County Clerk/Register of Deeds