HomeMy WebLinkAboutResolutions - 1987.05.28 - 18008A
MISCELLANEOUS RESOLUTION NO. 87134 DATE May 28, 1987
BY: PUBLIC SERVICES COMMITTEE - RICHARD D. KUHN, JR., CHAIRPERSON
IN RE: COMMUNITY DEVELOPMENT DIVISION - RENEWAL OF THE REHABILITATION FUND
LEVERAGING AGREEMENT WITH MANUFACTURERS NATIONAL BANK FOR THE
COMMERCIAL 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
established 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
WHEREAS, 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
rehabilitation 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 authorized
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 through the Oakland County Commercial Assistance
Program (CAP); and
WHEREAS, the Community Development Division recommends extension of
the Commercial Assistance Program and the attached Rehabilitation Leveraging
Agreement with Manufacturers National Bank of America; and
WHEREAS, the Community Development Citizens Advisory Council has
approved by a roll call vote of 13 to 1 (abstention) the attached
Rehabilitation Leveraging Agreement.
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of
Commissioners approves renewal of the attached Rehabilitation Fund Leveraging
Agreement and authorizes the Oakland County Executive to execute the Agreement
with Manufacturers National Bank.
Mr. Chairperson, on behalf of the Public Services Committee, I move
the adoption of the foregoing resolution.
PUBLIC SERVICES COMMITTEE
Chairperson
OAKLAND COUNTY COMMUNITY DEVELOPMENT
Rehabilitation Fund Agreement
Preamble
WHEREAS, the United States 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 United States 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 tn its Community Development application for the establishment of a
rehabilitatibn 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
, 1987 by and between the County of Oakland, a Michigan
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 two (2) years. 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 cooperate in loans for commercial
property rehabilitation in communities designated for the program by the
Oakland County Board of Commissioners.
1.02 "CAP" Loan - Financing combination of a Bank loan and a County loan
which may be forgiven under terms specified by the County.
1.03 "Commitment Letter" shall mean a letter submitted by the County to the
applicant and the Bank setting forth the terms and conditions of the
County's cooperation in a CAP Loan.
1.04 "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.
1.05 "County Note" shall mean a promissory note payable to the order of the
County evidencing a borrower's obligation to the County on a CAP Loan.
1.06 "Note" shall mean either the "County Note" or "Bank Note" herein
referred to individually, or collectively as "Notes."
1.07 "CDBG Funds" shall mean funds received by the County from the United
States Department of Housing and Urban Development under its Community
Development Block Grant Program.
1.08 "Rehabilitation Fund" shall mean the deposits established from the lump
sum drawdown of CDBG funds budgeted for rehabilitation ,
1.09 "CDBG 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 the
highest interest rate offered by the Bank to any of its customers 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 CDBG 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 United States 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 cooperate in CAP Loans to qualifying property
owners and businesses participating in the program to the extent that
sufficient funds are available and subject to the terms and conditions
of this Agreement.
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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 will provide commercial rehabilitation financing at the
following rates and terms:
a) Seven (7) year loans at a fixed interest
rate of one (1) point over the lowest
interest rate available on five (5) year
business loans according to the Bank's
monthly listing of rates as determined by
the Consumer Loan Department.
Shorter term, five (5) year loans would
receive the lowest fixed rate available for
five (5) year business loans per the Bank's
monthly listing of rates as determined by
the Consumer Loan Department.
Loans disbursed on the five (5) year
maturity with payments calculated on the ten
(10) year basis would carry a fixed interest
rate of two (2) points over the lowest
interest rate available on five (5) year
business loans according to the Bank's
monthly listing of rates as determined by
the Consumer Loan Department.
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 171/4% for longer terms.
b) Floating rate flexible term loans will be
made on a seven (7) year basis at six (6)
points over the Bank's monthly Consumer Loan
Department index (as determined by average
six (6) month Treasury Bill rates for the
previous month as published by the Federal
Reserve Board).
The interest rate charged may change on a
quarterly basis as the index changes.
Payments, however, will remain at a constant
dollar amount and only the allocation of
principal and interest subject to change.
Complete information relative to the
flexible term loan will be made available at
the time of application.
c) If the applicant can provide a first
mortgage on the commercial real estate as
security for the Bank's loan, the Bank will
provide long term commercial mortgage
financing as dictated by Bank policy in
effect at the time of application.
The applicant shall specify their preference for financing in the loan
application. The final determination of the rate and terms shall rest
with the Bank subject to the provisions of this section.
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, the County will calculate
how large a loan could be supported by the annual principal and interest
payment (on the amount of the Bank's approved loan) if the interest rate
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on the Bank loan was 61/2 points less than their CAP approved rate. The
difference between the amount of the Bank's approved loan and what the
loan amount would be at the reduced interest rate becomes the amount of
the principal loan subsidy to be provided by the County. The term of
the County's CAP loan will be the same as the Bank's except that the
County's loan term shall not exceed ten (10) years.
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:
$ Amount of County CAP Loan
# of Months of the County's Loan Term
Amount of Subsidy
Forgiven Monthly
The balance of the County's CAP loan not forgiven shall be due and
payable to the County under the following circumstances:
a) if the borrower or property owner sells,
transfers or divests interest in the
property, or refinances an existing mortgage
or land contract and derives a profit
therefrom; or
b) if the borrower defaults in the Bank Note
and the security agreement given by the
borrower to the Bank involves the real
estate for which the CAP loan was obtained.
3.06 The Bank agrees that when the applicant is an existing Bank customer,
the Bank's CAP loan rate shall in no event exceed the interest rate that
would be charged if the County were not participating in the loan.
3.07 The maximum CAP loan that the County will subsidize is $100,000 per
building. Projects requiring amounts in excess of $100,000 per building
must obtain additional source funds which may include, at the Bank's
discretion, an unsubsidized loan from the Bank.
3.08 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, including
necessary filings and recordings
(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
3.09 The County's security interest in any collateral pledged to secure a CAP
loan shall be subordinate to the Bank's security interest in same.
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 All applications for a CAP Loan shall be initially submitted to the
County by the participating local government. The County shall review
the loan application and any supporting documents to establish initial
eligibility for participation in the program. The County will calculate
the respective amounts of the proposed Bank and County CAP loans.
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 written
notice indicating its decision, with a copy of the notice forwarded to
the County. The Bank shall identify to the County, the conditions under
which the loan could be made.
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4.03 The Bank shall transmit to the County its underwriting decisions for
loan requests, setting forth the terms and conditions of the Bank's
approval in writing. 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 cooperation and the terms
and conditions of same shall be at the sole discretion of the County.
If the County decides not to cooperate in a CAP Loan, it shall send the
loan applicant a written notice indicating its decision.
4.05 When the County decides to cooperate in a CAP Loan, it shall issue a
loan commitment to the Borrower setting forth the terms and conditions
of the County's cooperation in the CAP Loan. A copy of the loan
commitment shall be forwarded to the Bank.
4.06 Upon notification from the County, the loan closing will be scheduled.
The Bank and the County shall each prepare their necessary loan closing
documents.
4.07 At closing, the Bank, the County and the borrower shall execute the
necessary loan closing documents. The Bank shall disburse the funds for
the Bank's loan at loan closing. The County's loan will be disbursed
upon satisfactory completion of the rehabilitation work. The County
will then authorize the Bank to debit the CDBG Account and disburse the
County loan.
4.08 At closing, the borrower shall execute two promissory notes, the "Bank
Note" and a "County Note" and all documents required therewith.
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, except an assignment
arising out of a borrower's default.
Article V
Default
5.01 Default by a borrower as used in this Agreement shall mean:
a) Default by a borrower on a Bank 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 Bank 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 net timely cured, the Bank may take appropriate action,
including the institution of legal proceedings and action to foreclose
under any security instrument, and to effect collection of the Bank Note
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in full. When the Security Agreement given by the Borrower to the Bank
pertains to the real estate for which the Borrower obtained the CAP
Loan, the Bank will also collect the County Note. 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 applied first to the Bank Note and then to
the County Note.
5.04 The County may exercise its option to purchase the reaaining 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 (b) 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 be 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, which consent shall not be unreasonably
withheld:
a) Make or consent to any alteration of the
terms of a Note or the collateral;
b) Make or consent to any release, substitution
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:
a) A monthly bank account statement reflecting
all transactions which occurred during the
month, including the credits, debits and the
account balance.
b) 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.
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Article VII
Duration of Agreement
7.01 This Agreement will apply to new loan activity for a period of two (2)
years 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 thereof.
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 two (2) year Agreement, all unobligated
deposits of CDBG funds in the Rehabilitation Fund will be returned at
the County's responsibility to its 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 CFR, 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 Aichigan's statutory
requirements and Employer's Liability
insurance with minimum limits of $100,000
each accident;
b) Comprehensive general liability insurance
with minimum limits of $1,000,000 combined
single limit, each occurrence, for bodily
injury and property damage.
-7-
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 job 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, conditon or covenant of
this Agreement. Any such change, addition, deletions, extension or
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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 be 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.
13.02 In the' case of a notice, demand or communication to the Bank, such shall
be addressed to it at the following address:
Ronald D. Hooper
Second Vice President
411 W. Lafayette
Detroit, Michigan 48226
In the case of a notice, demand or communication to the County, such
shall be addressed to it at the following address:
Kenneth R. Patterson, Manager
Oakland County Community Development Division
1200 N. Telegraph Road
Pontiac, Michigan 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 party 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.
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Position:
Date:
Attest:
Date:
Position: Oakland County Executive
Date:
Attest:
Date:
Article XVI
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 to operative paragraphs
of this Agreement, and shall be disregarded in construction or
interpretation thereof.
16.05 This Agreement shall bind 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.
IN WITNESS THEREOF the Bank and County have executed this Agreement as of
the date first written above.
MANUFACTURERS NATIONAL BANK OF DETROIT COUNTY OF OAKLAND
By: By:
Daniel T. Murphy
Misc. #87134
May 28, 1987
Moved by Richard Kuhn supported by Law the resolution be adapted.
AYES: Hobart, Jensen, Richard Kuhn, Susan Kuhn, Lanni, Law, McConnell,
Angus McPherson, Rue] McPherson, Moffitt, Nelson, Page, Perinaff, Pernick, Price,
Rewold, Rowland, Skarritt, Wilcox, Aaron, Caddell, Calandra, Crake, Dayon, Gosling.
(25)
NAYS: None. (0)
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 • •
this Miscellaneous Resolution adopted by the Oakland County Board of Commissioners
at their meeting held on May 28,1987
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 28th day of 4111
411111111L
May 19 87
ALLEN LEN
County Clerk/Register of Deeds
Attachment A
;Appendix V
HOD Lump-Sum Deposit Regulations
Fixiarel Regis / Vol.44. No. as
Friday. April I. 1979 / Rules and Regulations
DEPARTMENT OP HOUSING AND
URBAN DEVELOPMENT
Office of the Assistant Secretary for
Community and Planning Development
2.4 CFR Part 570
Community Development Block Grants
(CDBG); Grant Administration
Requirements tor Lump Suns
Dravociown of 0080 Funds for
Property Rehabilitation Financing
AceNoy: Department of Housing and
Urban Development tHUaj,
aCmioft: Final Rulestaking.
summAwr: This Emsl rule establishes the
conditions under which a Community
Development Block Grant recipient may
draw in one sum funds designated in its
Community Deveiopment application for
the establishment in a private financial
institution of a fond for the purpose of
financing the rehabilitation of privately.
owned property.
EFFECTIVE CAT!! May 7, 1979.
FOR FURTHER INFORMATION com-rAoTt.
Leonard f. Csarniecki. Rehabilitation
Policy Division. Office of Urban
Rehabilitation and Conrununity
Reinvestment. Department of Housing
end Liroari Development. Washington,
D.C. Z8410 (202) 755-8300.
SUP-P1_EMENTARY INFORMATION: On
August 3. 1978. (43 L.t R 34424( proposed
rovIsmns to 34 CFR Part 570 were
nnhtished in he Federal Register for
oublic C0.71111E11{. interested parties were
given unlit September 5. 1978, to subralt
,...-rttten ornaments. All oomments
ret:eived with respect to the Drpo.5ed
rules se,,,ernarig the grant udrmnueitrauon
rEqUIren-lernz for the Uinta sum
dig:we oWn Or Community Development
54;ocic Cisut (CDPGt funds for property
ren• tiara non fi...qaocuig were given cue
nonstocreiion.
As a result of the comments received
the following changes were made:
Basic Requirements •
The first sentence of §57151.1 has
been revised as a result of comments
indicating the need to provide that a
block grant recipient may draw hands
from the letter of credit in single lump
aunt to establish a rehabilitation fund in
one or mere-private financial
institutions for the purpose of financing
the rehabilitation of privately owned
properties (inciuding residentlai, mixed
use, and nonresidential oronertiest and
the private acquisition of properties for
rehabilitation as a part of the recipients'
community Ceveioament program.
Section 570.513(a) which contains key
definitions used in the regulation has
been amenaea in response to comments
to include clarifying language for
"private funds" and a definition far
'rehabilitation'. Private funds can
Include funtis heist in must for the
benefit of bondholders or noteholders of
the CDDG recipient or its agency where
such bond or note proceeds are to be
used in connection with the
rehabilitation financing program- The
defiai don of "private Financial
Institution" was amended to make clear
that savings and loan associations.
credit Unions and other financial
institutions. in which deposits are
federally insured, are eligible
.depositories for the rehabilitation fund.
The definition of "rehabilitation"
expands the use of the fund authorized
by r3 570.8131c) to include the financing
of private entities (both those organized
for profit and also those on a not for
profit basisi to acquire private
properties for rehabilitation. and the
rehabilitation of commercial and
industrial buildings and structures
pursuant to § 575003(c)(1). This change
is in accord witn the activities eligible
for financing under Section 15)a l(4 ( of
the Housing and Community
Development Act of 1974 as amended.
at implemented by f 570.2.52IM51; of the regulations.
Section 579.513(14) has been revised to
make clear that the two year limit on the
written agreement only limits the period
during which new loans may be made.
The agreement will necessarily have to
cover a longer period in most cases. For
example. an agreement calling for a
lump sum drawdown of funds to be uied
to guarantee rehabilitation loans made
by the private financial institution(s)
would have to rim as long as the private
rehabilitation loans, i.e., the agreement
must require the block grant recipient to
leave some funds on deposit until the
private rehabilitation loan is fully
repaid. wnicht may take 20 years.
Section 570.513(c5has been amended
Lit response to comments to make clear
Mat the rehabilitation fund can be used
as reserves and to nay issuance or
achniniscrative costs in connection with
the issuance ciboria's or notes by the
block gent recipient or its agency,
where such bond or note proceeds are to
be used to fund rehabilitation teens or
grants.
Several comments were received on
§ 570.513(d]. All comments expressed
concern with the requirement that
"rehabilitation loans made with such
private funds shall be siMject to the
same requirements as are applicable to
direct loan or grant assistance provided
for the rehabilitation of private property
under this Pert" This is not a new
requirement resulting from the
enactment of the drawdown authority,
since authority to use block mtant funds
as subsidies or guarantees in connection
with private loans has always been in
the CDBG regulations.
To the extent that private ioans are
effectively intermingled with CDEG
funds, e.g., through use of CD.BG for
interest subsidies or loan ,iyruiii-Mite en, it
bits always been true that Lie use of the
private funds ties been governed by the
CLMG roles on sac of CDBC, funds, For
eximm ie. such loans could not be made
in a socially discriminatory manner or
avoid labor s tandards requirements of
the Davis,Bicon Act. as amended.
Specific concerns ci the commenters
,centeree on the procurement
42
At tachment A-2
renuirernerits of the Office of
Managenaent and Budget Circular No.
.A-102 dated September 1.2.197, which
superseded Federal Management
Cirmitiar 74-7. However, the Department
has cietertraneci that the procurement
standards fAttachment Cll. of the
foregoing Circular ordinarily applicable
to CDEG assisted construction activities
do not apply to the contracting for
services and materials by private parties
who make use of rehabilitation
assistance offered by the ;rent recipient.
where the contract is not enterect .into by the grant recipient. itself. This means
that the procurement of the necessary
work and materiel is done at the
instance and for the benefit of the
private owner. Although formal
competitive bidding is therefore not
requtred. all procurement transactiens,
regardless of whether negotiated or
advertised.ishould be conducted in a
manner which encourages open and free
competition. It should also be noted that
the requirernente of the Davis-Bacon Act
are appiicable to the rehabilitation of
reeidentlal property pursuant tri Section
110 of the Housing and Community
Development Act of 1974. if such
property is designed for residential use
of eigrit or more
Quite a number of comments were
received on 570.510(e), which
prescribes a 45 day time limit can the
start of use of deposited funds, .
Commenters requested Mat the time
limit be extended 10 60 or SO days. The
45 day limit was prescribed by statute in
Section iO4(i)(1i of the Housing and
Community Development Action af 1074,
as amended by the 11177 Act Pub. L 05.-
1781 and cannot be amended by
regulation.'
Several comments on § 570.513(fl ,
related to a lump sum deposit made by
the block gent recipient for the purpose
e sta biishing a fund to guarantee
privately financed renabdita tion loans.
The clarifying language added to
570.513 bi regarding block grant funds
eettri to guarantee rehabilitation loans
made by the private financial
ineututions is responsive to these
concertS.
One commenter on 5 570.5131g)
recommended that. as with any program
income, the interest earned on the
rehabilitation fund be used for any
eligible community development
activity. This change was not made
because this requirements is based on
the statutory provision (Secnon
I04(ilf2I(D) that "interest earned an such
cash deposits shah be used in a manner
which supports the community
rehabilitation program.'
HUD Area Office Approval
Section 570413(Iii received the most
comments. Commenters were very
concerned about the timing requirement
for the submittal of requests for a lump
sum drawdowm in response to these
comments, this section has been
changed to permit HUD Area Off.ces Cci
accept these requests for review and
approval any time during the program
year. Generaily, HUD review will be
carried out as s part of the review and
approval of a block grant application
but requests tar a lump sum deawoown ,
will be accepted throughout the program
year to preclude delay in the
establiaament of local rehabilitation
funds. Acr.crdingly. Paragraph (h; of
§ 570.510 has been modified.
Several comments were received on
§ 170.8131i(. Sortie of the most
cornprehenstve comments on this
section raised questions about
terminology e.g.. "below market rate."
"longer repayment period' and "higher
risk." These am terms which are
contained in the statutory provision
104(i) and serve as the basis for these
rules. The provision contathed in
570.517(i)(1) that private financial
institutions reey satisfy the benefit
miterie by committing private funds for
the rehabilitation financing activities in
amounts which are subatantially in
excess of the deposit of block grant
funds to also based on iarrgusee
contained in Section 104(i). The final
regulations continue to use the language
prescribed in the statute. One change
that has been made in this section in
respoese to a corement is to direct HUD
Area Offices to encourage block grant
recipients to use minority hanks (a bank
whMti is owned at least sd percent by
minoeiry gram members). This is
cons:stem with the national gnat of
expanding the opportunities for minority
business enterprises. A list of minority
owned banks can, be obtained from the
Office of Minority Business Enterprise.
Department of Commerce, Washington.
D.C. 20=0.
• Several commenters were concerned
with the benefit tests prescribed in
Paragraph (I) when market rate interest
is not payable on the rehabilitation fund.
The tests require an estimate of
foregone interest, and a quantified
estimate of the valite or the benefits of
the conermtment under the agreement.
The Department recognizes that these
requirements will require carefully
considered estimates of value by the
block grant recipient and the
participating financial insfitutions, but
the Department considers that such
economic analysis is needed to meet the
requirements when interest is not
earned on deposited funds. Accordingly.
changes in paregrapris (il(ZilAl and
were not mane at this time.
Comments Not Acted Upon.
The description of the changes to
570.513 discussed several comments
which HUD was unable to act upon. 12
many cases. comments procoseu the
inclusion or modification of activities
not authorized by the statute or the •
exclusion of activities which were
specificaily authorized. Other comments
proposed alternative directions on
matters of Departmental pa i icy which
after due consideration were not
accented.
The following are some of the
cartiMentS already discussed which
I-T150 did not agree to act upon for the
reasons set forth above:
1. Eliminate the requirement that
where the rehabilitation fund or other
block grant assistance is used to
subsidize or guarantee the payment of
rehabilitation icons made with private fwecis, or is used to provide a
supotemental loaner grant to the -
borrower of private funds, the
rehabilitation leans made with such
private funds shall be subject to the
same requirements as are applicable to
direct then or grant assistance provided
for the rehabilitation GI pnvat o propert y under this pert.
2. ilctenct the 45 da7., time limit on Me elan of use of deposited hinds to C.i.D or
50 days,
43
At tachment A-3
3. Use the interest earned an the
rehabilitation fund for any eligible
community development activity.
4. Eliminate use df.certain terms, e.g.,
"below market rate." One commenter
recammended that the Department
support a proposal to amend the
Housing and Community Development
Act to authorize State Housing Finance
agencies to be an eligible financial
under 570.513.
Several comments were received on
the needs of small rehabilitation
contractors who require prompt
payment for work completed because of
cash flow problems. These included recommendations to establish a
rehabilitation fund under § 570.513 for
this purpose. Although the timely
payment of small contractors is a very
important element of a local
rehabilitation financing activity, the
primary purpose of establishing a
rehabilitation fund in private financial
institutions is generally designed to
assure the leverage of communitY
development block grantlunds so that
participating financial institutions
commit private funds for loans in the
local rehabilitation program in amounts
in excess of deposit of community
development funds.
OTHER INFORMATION: A Finding of
Inapplicability with regard to
Environmental Impact has been
prepared in accordance with HUD
Handbook 1303.1. Copies of the
statement and findings are available for
inspection and copying during business
hours in the ()Moe of the Rules Docket
Clerk. Room 5210. Department of
Housing and Urban Development, 451
Seventn Street. S.W., Washington, D.C.
20410.
Accordingly 31 CFR 570 is amended
as follows:
1. Section 570.503 is revised to read as
follows:
570.03 Cash weltrtdrswais.
at Except as provided in § 570.513.
which covers lump sum drawnowns for
financing the rehabtlitazIon of pnvately
owned properties. the ttrnmg and
,m-munt of c ash withdrawais from the
U.S. Treasury by the recipient for
activities which are free from all
conditions specified pursuant to
I§ 570.311 ar 570.433(1)1121 shall be in
accordance with U.S. Department of the
Treasury regulations an withdrawal of
cash from the Treasury for advances
under Federal programs 131 CFR part
2051, as incorporated in handbook
1400.22 Rev.. Letter of Credit Procedures—Treasury Regional
Disbursing Office System.
(b) To the maximum extant
practicable, program income shall be
disbursed prior to making additional
draws from the letter of credit to finance
approved community development
activities (including local option
activities) as follows:
(1) Program income in the form of
repayments to a revolving fund, other
than a nand to finance the rehabilitation of pnvately owned properties as
provided for in 571.511 estabiislied to
carry out an approved activity, snail he
substantially disbursed from such: fund
before additional draws are made from
the letter of credit for the same activity.
!2) All other program income shall be
substantially disbursed for any
approved activity hefore additional
are retort,. ,rArn the letter of credit.
2. § 570.513 is added to read as
follows:
520.513 Lurrto aufn drisvirdowri for
nrouqtrty radmiPilitastiOts itnaneing.
Subject to the conditions prescribed in
this section recipients of grants under
this Part may draw funds from ti)c letter
of credit in a single lump sum to
establish a rehabilitation fund in one or
more private financial institutions for
the purpose of financing the
rehabilitation of privately owned
properties as a part of the recipient's
community development program,
(a )0e/in/bons. (1) "Rehabilitation
fund- means a fund established with
block grants drawn down in a lump sum
from the recipient's letter of credit for
use in a rehabilitation financing program
under the terms ot an agreement
between t.he block grant recipient and
the depositoEy pnvate financial
institution ounuant 0 the requirements.
of this section. 12) -Private financial
institution- means a depository
(including banks, sayings and can
associations, credit unions and other
financial institutional, in which deposits
are federally insured, and which is a
parry to such an agreement.131 -Pinvate
bands" means the funds of the private
financial institution. Private funds
include funds held in trust for the
benefit of bondholders or notehoiders of
the CDBC recipient or its agency where
such bond or note proceeds are to be
used in connection with the
rehabilitation program. (41
"Rehabilitation" means the activities
eligible for rehabilitation or properties -
pursuant to 570.202(c), including the
acquisition of properties for
rehabilitation by private entities
organized for profit or on a not-for-profit
basis, and the rehabilitation of
commercial and industrial buildings and
structures pursuant to 570.233(c;f1).
fhl Requirement for agreement. A
written agreement for time deposit of
block grant funds to estabblea a
rehabilitation fund shall be executed by
the block grant recipient and
perticioanng pnvate financial
instnutiontsl. The agreement shall
specificaily describe the obligations and
responsibilities of the parties and tire
tern,is and conditions on which such
funds are to be deposited and used
consistent with the requirements of this
secnon. Except as mav otherwise Ito
authorized by the :in Area Office in
connection with approvals ion uses of
the rehabilitation fund pursuant to
paragraph (c)(5) or (71,.the agreement
shall authorize the use of the
rehabilitation rand only in connection
with grants and loans made within a
period of two years from the date of the
agreement. The description of the
proposed use of decanted binds in tile
agreement shall include a statement on
the intended use of loan repayments and
interest earned. The agreement shall
expressly provide that its terms and
conditions are subiect to the provisions
governing lump sum cfrawdowris for
property rehabilitation § 570.513 of the HUD regulations on communi ty
deveiopment block grants. 24 CFR Part
570.
44
Attachment A-4
(c) Uses of rehabilitation ,fund, The
rehabilitation fund may be used for the
following purposes:
ll)TP make direct rehabilitation loans
or grants to property owners:. .
(2) To pay interest subsidies, or
establlish a fund for payment of
subsidies, on rehabilitation loans made
by private financial institutions with
private funds;
(3) To guarantee the repayment of
rehabilitation loans made to property
owners by private financial institutions
with private funds: or
(4)7a serve as collateral for financing
actually extended to the applicant (or
applicant's agency) where such
financing is used to make rehabilitation
loans or grants.
351 To fund reserves and/or pay
issuance or adreinisetiative costs to
connection with the issuance of boncis
or times by the recipient or its agency,
where such bond or note proceeds arc to
he used to Lint rehabilitation loans or
grants.
(8) For the payment of reasonable
administrative fees and charges of the
private financial institution related to
the provision of financing for the
rehabilitation of private property; or for
(7) Other uses as may be approved by
1-it'D consistent with the objectives of
this section.
(d) Rehabilitation loans made with
private funds. Where the rehabilitation
fund or other block grant assistance is
used to subsidize or guarantee the
payment of rehabilitation loans made
wort private funds, or is used to provide
a supplemental loan or grant to the
borrower of the private funds, the
rehabilitation loans made with such
privaiii feeds shall be subject to the
same requirements 'excluding the
teeerre tier of loan repayments as
preveam incernet as are applicable to
direct loan or grant assistance provided
for the rehabilitation of private property
under this Part.
(e) Time limit on start of use of
deposited funds. Use of the deposited
funds for rehabilitation financing
assistance (eige first loan is made,
subsidized or guaranteed) must start
Within 45 days of the deposit. Should
use of deposited funds not start within
45 days, the recipient may be required
by HUD to return all or part of the
deposited funds to the letter of credit,
(fl Return of unused deposits. At the
termination of the period of the
agreement all uncioligaieti funds (funds
of the rehabilitation fund that have not
been encumbered or disbursed) then on
deposit shall be returned to the
recipient's letter of credit uniess the
block grant recipient nes been or is
being authorized by HUD to extend the
agreement for an additional period. lin
addition., the block grant recipient shall
reserve the right to withdrew from the
rehabilitation Emit/ any et:obligated
amounts required by HUD in the
exercise of coneeteve or remedial
actions authorized under § 377.610(b) of
the regulations.
(g) Interest earned on the
rehabilitation land. Interest earned on
the rehabilitation fund shall be used
pursuant to the terms and conditions of
the agreement consistent with the 7.19s
authorized under paragraph (c) of this
section.
(h) Request „far HOD review and
approval of lL'177,7 sum aakwdaivn. HUD
area office review and approval-of a
request for a lump sum drawdown is
required enter to drawdown. HUD
review can be canned out anytime
during the prograiri year but generally
HUD will review these requests as a part of the review and approval of a
block grant application except those
requests submitted in conjunction with
grants made under the Secretary's fund
for new communities. A request
suiamMed Ea connection with the new
commumnes fund is subiect to the
renuirernents of this section...however it
sha.J be reviewed dna approved by the
New COM.T111.1r11:
Corporation. welch apprevee and
administers granis under the new
communitien lainei. All requests for
drewdown snail include:
(11 A copy of the written agreement
described in paragrape
(2) The reasons for the locality's belief
that the agreement meets the HUD
approval standards set forth in
paragraph (1); and
(3) Certification, described in
paragraph f i j(2 ) i): where the request
proposes that the benefit to be derived
from lump sum drawdown qualifies
under paragraph (fi(2)(i).
(i) HUD review criteria for approval
of lump sum arawdown request. The
HUD area office shall approve a request for :Limo sum drawdown if it determines
that the funds will be deposited to one
or more private financial institutions
under an agreement which includes, one
or more of the commitments described
in paragraph (1)(1) of this section: meets
the benefit tests described in paragraph
(i)(2.) of this section: meets the testy
concerning the amount of drawdown
described in paragrapo igt) of this
section: and otherwise meets the
• requirements of pa:agree:1 (bj of this
section. Consistent with the zarional
goal of expanding the opportunitiee for
minority business enterprises. the 1-11I0
area office shall encourage 'block gran:
recipients to use minority 'OE:71(.3 (a bank
which: is owneo at least .N) percent by minority group members).
(1) Commitments al, private financ:cl
iriVitudcins, 01 Commitment of private
funds for the rehabilitation financing
ac.,jvities in amounte which are
substantially in excess of the deposit of block grant funds:
Cdramitment of private funds for
rehabilitation financing activities ai
below-market interest rates, or with longer repayment periods. or at higher
risk than would mormaily be taken;
(iii) Provision of administrative
servicue by the financial institutions in
suppert of the rehabilitation iirtancing activities at no cost oral reduced Cost,
enelit loots. (i) When rnar.ket rate
interest is payable an the reticoitiLitlori
friinci--ivVhen interest at the market rate
for deposits of similar maturity and size
it payable on the rehabilitation fund, the
apoileaet must certify that the
cot:lei:intent ender the agreement ptitriipiarii to parai.3raph provides
4_5
Attachment A-5
or Or
significant benefit meeting the needs of ' its rehabilitation obiecoves consistent
with its block grant application. Such
certification shall be accepted by the
Area Office for the purpose of meeting
the requirements of the benefits test of
this paragraph in the absence of
substantial evidence to the contrary.
Eli) When market role rnterest is not
payable on the rehabilitation fund—
When less than the market rate interest
is Payable an the rehabilitation fund, the
value of the benefits of the commitment
under the agreement must be at least
equal to the interest foregone. The
comparison of the benefit and interest
foregone snail be based on the
following:
(A) Estimate of foregone interest—An estimate of the difference between the
interest payable under the agreement
and the amount of interest that would be
earned on the estimated average
monthly balance of the rehabilitation
fund at the market rate for deposits of
similar maturity and size.
(13# Estimote of value of benefits—A
quantified esumate of the value of the
benefits of the commitment under the
agreement. For example. if as a result of
the deposit the private financial
institution provides free loan origination
services, the benefit would be quantified
as the amount of the direct fee that •
would otherwise have to be paid for
such services.
(3) Basis for amount of drawdoverr.
The amount of funds that a block grant
recipient proposes to draw for deposit
for a rehabilitation fund shall not
exceed the amount of funds that the
applicant reasonably expects will be
required under the terms or the
agreement during the period of the agreement and based on either
(i) Prior Level of rehabilitation activity:
(11) Rehabilitation staffing and
management plans of the locality for the
period of the agreement.
0 •
(Tine I. Housing and Carriaturtir.,
Develacrn ant Act at 174 142 U.S.C_ Z311 et seq.); Title I. Hausa-1g arid Comma:117
Da,eiopcient AC: Of 1977 {Pnisi,L 03-1281: and
secten ridI, .Dapartrneni of Housing aria -
Urban Devalapmenc Act 02 .1535Id).)
Issued at Waii.turigtnct• D.C.. Marct 22, 1071.
anti orr C., 04850. It,
Assasa, Snrcrreary ler Canurfundry Piemonn; cncl O'-lg.
Rttkret No. R-74-teat
FR Co. taloa= Filed .1-5-aNG 04 smi
lin-LA.3 CODE 611071--tA
4.6
pRI:7,155 119c-,,-7.7,1--7.!9/1,:,