HomeMy WebLinkAboutBank Of America; 1986-05-12;+ .. *
COMMERCIAL AND RESIDENTIAL PROPERTY REHABILITATION LOAN AG REEMENT
COMPRtHt6IVt FORM -
THIS AGREEMENT is made by the CITY OF CARLSBAD, a municipal
corporation in the State of California (herein called "Authority"), and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association (herein called "Bank").
RECITALS
A. Authority has authorized a Housing Preservation Program as part
of an adopted Community Development Block Grant Program (as may be amended anc
modified from time to time) hereinafter collectively called "Program".
B. As part of Authority's implementation of Program, Authority has
requested Bank to make below-market interest rate property rehabilitation
loans ("Loans" or "Program Loans") to certain owners of residential real
property within Authority and approved by Authority as recipients of Loans
("Applicants").
real property in accordance with Program.
requested a choice of several types of Loans to Applicants.
The purpose of the Loans would be the rehabilitation of said
In addition, Authority has
C. To support these objectives, and based on an initial deposit of
Cmunl'ty Development Block Grant funds, Bank is wflling to provide Authorit
and Applicants with Collateral ired Loans (Part Three), Deferred Payment Loan
(Part Four), and other services at rates and terms not available to the
general public or to Authority independent of this Agreement.
-1 - ..
B 0
D. The terms and conditions of this agreement are subject to the
provisions governing 1 ump-sum drawdowns for property rehavil i tation of the HCD
regulations on Community Development Block Grants contained ;in Title 25,
Administrative Code ;Section 7124, and/or Section 570.513 of the HUD
regulations on Comnunity Development Block Grants, 24 CFR Part 570.
NOW, THEREFORE, for and in consideration of the foregoing and the
mutual agreements made herein, and for other good and valuable consideration,
Authority and Bank agree as follows:
PART ONE
DEPOSIT OF COMMUNITY DEVELOPMENT
BLOCK GRANT FUNDS
1. Authority shall deposit up to $300,000 of Community Development
Block Grant rehabilitation funds available to Authority under the Housing and
Community Development Acts of 1374 and 1977, as amended, as part of this
Agreement.
2. Authority's deposits of Comnunity Development Block Grant funds
may be made in any of the following forms:
(a) A deposit to the Warehouse Account, the funds in which are
unallocated to Loans.
(b) A deposit to Collateralized Loan Account(s) which are
noninterest-bearing savings accounts which subsidize Loans and are pledged as
Loan collateral, with the exception of collateralized account for 12%
commercial loans which accrue at 5.25%.
- 2-
e 0
(c) The purchase from Bank of time certificate(s1 of deposit
from which all proceeds are allocated to future Program Loans.
at Authority's election, the highest interest rate permitted by law on all
accounts described above. If legal interest rate 1 imitations are removed,
Bank will pay its highest rate offered to the public.
Bank will pay,
3. Authority relinquishes the use of and control over accounts
described in paragraph 2(b).
purposes described in this Agreement.
These accounts will be used only for the Loan
4. Authority retains full accessibility to all deposits which are
una1 located to existing Program Loans.
5. Authority agrees all interest earnings will be paid to the
Warehouse Account and will be used in accordance with Community Development
Block Grant regulations contained in 24 CFR 570.513(c).
PART TGIO
APPL I CATION PROCEDURES
6. At the request of Authority, Bank, through its Carlsbad-El Camino
Real Branch, shall consider making loans to qual ified Appl icants directed to
Bank by Authority. Bank shall notify the respective Applicant(s) in writing
of any such request it receives from Authority.
contain the following statement:
Carlsbad-El Camino Real Branch of Bank of America National Trust and Savings
Association, 2550 El Camino Real, Carl sbad, California 92008, to consider
making a specffic extension of credit to you."
The notification shall
"The City of Carlsbad has requested the
A qualified Applicant shall be identified by Authority or its
agents, using Authority's established standards, which must consider, without
1 imitation:
-3-
0 3)
(a) Applicant is "the owner of record" of the property subject
to rehabilitation.
(b) Authority has verifiable income(s) which can be used to
repay the proposed Loan.
(c) Authority has determined that the proposed Loan, given
Program options avail ab1 e, will best serve the rehabil i tati on needs of
Appl icant and the Program objectives.
(d) In addition, each Commercial Improvement Rehabilitation Loan
Applicant, if a lessee, has a lease which, with options, extends at least six
(6) months beyond the maturity of the proposed Loan.
7. Authority shall furnish to Bank, with respect to each loan
application:
(a) an introductory letter stating that Authority desires Bank
to consider making a Loan to Applicant;
(b) a breakdown of the costs involved in the rehabilitation work
to be performed on Applicant's real property;
(c) a description of the work;
(dl an estimate of the value of the real property offered as
security for the Loan;
(e) a copy of any contractor bid accepted by Applicant; and
(f) a statement including the name of the contractor who will
perform the rehabil itatfon work, and a statement that Authority has satisfied
itself with respect to the competence and reliability of the particular
contractor; and
(9) for each Comnercial Improvement Rehabilitation Loan, Bank
shall require from Applicant:
(1) 2-year business income statements supported by IRS
income tax filings; -4- ._
0 e
(2) a copy of the existing lease, if Applicant is a
property tenant;
(3) Appl icant's personal financial statement;
(4) A policy of Creditor Life Insurance, in a form
acceptable to Bank.
equal to the amount outstanding under the Loan to Applicant, with Bank named.
as beneficiary. Upon Authority's request, said insurance shall be prepaid
from Loan proceeds and said amount added to the principal amount of the Loan.
At Bank's request, each Appplicant shall also be required to maintain a
standard policy of hazard insurance covering the real property upon which the
rehabilitation work is to be performed in effect while any part of the Loan
remains outstanding, with Bank named as beneficiary.
Loans, Authority agrees to guarantee unpaid premiums in accordance with the
prsvisi ons of paragraph 15 bel ow.
The policy remains outstanding, in an amount at least
In the case of defaulted
(h) Release of information form.
8. Bank shall perfonn its customary credit evaluation with respect
to the Applicant, render its judgment with respect to the creditworthiness of
the Applicant, and recommend appropriate Loan terms.
9. Upon completion of its credit evaluation, Bank shall furnish to
Authority a recommendation to proceed with the Loan or not, including:
(a) a recommendation as to use of either a Collateralized, or
Deferred Payment Loan, or some combination thereof; and
(b) an indication which of the following Loans (for which Bank
assumes part ot the credit risk, as indicated parenthetically below) Bank is
willing to make to Applicant:
- 5- ._
a 0
(1 ) for residential property improvement Loans:
(i) 3.00% Collateralized Loan (0% credit risk);
(ii) 6.25% Collateralized Loan (30% credit risk);
(iii) 8.50% Collateralized Loan (50% credit risk);
(iiii) 10.75% Collateralized Loan (70% credit risk).
(2) for commercial property improvement Loans;
(i) 6.00% Collateralized Loan (0% credit risk);
(ii) 10.00% Collateralized Loan (60% credit risk).
10. After having determined the exact nature and scope of the
rehabilitation work to be performed on Applicant's real property, Authority
may request Bank to grant Applicant a Loan, which either must be from among
those designated by Bank pursuant to paragraph 9(b) above or must be a Loan
pursuant to paragraph 11 (a) (1 00% coll ateral ized) or paragraph 19 (Deferred
Payment Loan). PART THREE
COL LATRXRETLOANS
11. Each Collateral ized Loan shall be supported by a
noninterest-bearing deposit made. by Authority to a CoJ lateral ized Loan
Account, an account which shall at all times be at least equal to:
(a) 100% of unpaid principal for each 3.00% residential or 6.00%
comnercial Loan for which Bank has not designated the Applicant (pursuant to
paragraph 9(b)) as a party 'to whom Bank is willing to make a (partially)
Coll ateral ized Loan;
(b) 70% of unpaid principal for each residential 6.25% Loan;
(c) 50% of unpaid principal for each residential 8.50% Loan;
(d) 30% of unpaid principal for each residential 10.75% Loan;
(e) 40% of unpaid principal for each commercial 10.00% Loan;
plus, in each case, 100% of accrued unpaid interest.
the Coll ateral ized Loan Account to secure the Collateral ized Loans.
Authority hereby assigr
- 6-
a c
12. (a) Unless Authority requests one note only, each
Collateralized Loan shall be evidenced by two notes, effective in succession,
as provided herein.
(b) The note first effective shall be a short-term commercial
note, the term of which shall coincide approximately with the rehabilitation
period (although all' references herein to the short-term commercial note are
singular, a Loan could include more than one short-term commercial note).
term of any one short-term commercial note may not exceed ninety (90) days,
although the note may be extended, renewed, or refinanced.
thereof shall be disbursed by Bank in a number of draws, each to follow
completion of an applicable state of construction, as certified to Bank by
Authority.
The
The Loan proceeds
Interest shall accrue only on the disbursed portion of the Loan.
(c) Promptly after Bank's disbursement of the final draw under
the short-term comnercial note, that note shall be refinanced by an
installment note, as provided for at subparagraph (dl below or, a1 ternatively,
as provided in Part Four (Deferred Payment Loans). At the time the short-tern
commercial note is refinanced by the installment note, Applicant may either
pay Bank the accrued interest on the short-term commercial note or may have it
added to the principal of the installment note.
(d) The term of the installment note shall be determined by Bank
for the Loan in question but:
(i) may not exceed fifteen (15) years for residential;
(ii) may not exceed ten (10) years for commercial
rehabilitation.
The installment note shall be amortized in equal monthly installments over it
term.
installment note.
Interest will be calculated on a simple interest basis for each
- 7-
0 0
13. With respect to Coll ateral ized Loans:
(a) On both the short-term commercial note and the installment
note, interest and other finance charges shall be such as to bear the interest
rates described in paragraph 11, which shall be calculated on a simple
interest basis.
(b) The loan shall be documented using Bank's standard forms.
(c) Both the short-term commercia? note and the installment note
shall, at Bank's or Authority's option, be secured by a deed of trust covering
the real property that is subject of the rehabilitation for which the proceeds
of the Loan are to be used.
74. Authority shall make a relevant deposit to the Collateralized
Loan Account in the percentage of Loan amount provided for at paragraph 11,
when the commercial note and deed of trust are signed by Applicant and when
interest on a short-term commercial note becomes added to the principal of a
subsequent installment note.
days after Authority's first deposit hereunder, Bank shall remit to Authority
the amount by which the Collateral ized Loan Account exceeds the paragraph 11
percentages of the unpaid balances of Collateralized Loans. Funds that Bank
thus remits to Authority shall be deemed funds that Authority deposited at
least 180 days before.
15.
At the end of each calendar month ending 180
If a Collateralized Loan remains in default for a continuous
period of ninety (90) days on account of nonpayment of any sum of money due
pursuant to the terms thereof or of any instrument or document related
thereto, Bank may withdraw from the Collateral ized Loan Account, and pay to
itself, an amount equal to the then outstanding principal balance of the Loa1
multiplied by the same percentage as the percentage of the Loan amount that
was deposited to the Collateral ized Loan Account pursuant to paragraph 11,
plus 100% of accrued unpaid interest on the Loan through the 90th day of - 8-
0 e
default.
Loan Account for any amounts in excess of those permitted under this
paragraph.
customary col 1 ecti on procedures wi th respect to the Loan.
Bank shall have no recourse against Authority or the Collateralized
During any ninety (90) day default period, Bank shall perform its
16. After a withdrawal from the Collateralized Loan Account under
paragraph 15 above, in the case of a Loan for which the deposit to the
Collateralized Loan Account under paragraph 11 was less than 100% of the Loan
amount:
(a) Bank need not assign the deed of trust to Authority upon
completion of the withdrawal but may, for its own account, exercise rights
under the deed of trust to recover the remaining outstanding unpaid principal
of the Loan plus accrued unpaid interest thereon after the 90th day of default
(b) At its election, Bank may assign to Authority such rights as
may be necessary for Authority to attempt to recoup any funds withdrawn from
the Collateralized Loan Account in connection with any Loan default.
Authority agrees to recoup funds, as much as possible, for the benefit of Ban1
as well as itself. Funds recov-ered shall be credited as follows:
(1 ) to wi thdrawal s from the Coll ateral ized Loan Account;
(2) to the costs of recovery;
(3) to Bank's Loan charge-off.
(c) If Bank subsequently recovers funds with respect to a
defaulted Loan (as, for example, but without limitation, if a voluntary sale
of the property takes place), Bank shall, after deducting the previously
unreimbursed percentage of Loan loss to which Bank is entitled, plus Bank's
cost of recovery, return and pay over to Authority all amounts in excess
thereof.
-9-
0 0
17. After a withdrawal from the Collateral ized Loan Account under
paragraph 15 above, in the case of a Loan for which the deposit to the
Collateralized Loan Account under paragraph 11 was 100% of the Loan amount,
Bank shall assign the Loan to Authority, the assignment to be accomplished by:
(a) the due endorsement by Bank to Authority of the promissory
note evidencing the loan, without recourse or warranty; and
(b) the delivery of the promissory note and the assignment and
delivery of the deed of trust.
18. Collateralized Loans, as described in paragraphs 11 through 17,
must have an average original Loan amount of $10,000, which provides Authority
favorable rates and terms, based on this average loan size.
costs associated wi th small er average 1 oan size are si gni fi cantly greater,
Authority's Coll ateral ired Loans will be analyzed every 180 days from contract
approval.
adjustments affecting the pricing of future activity as follows:
Since operating
If average $10,000 Loan amounts are not maintained, Bank may make
(a) increase borrower interest rates for new Loans;
(b) increase collateral requirements for new Loans; or
(c) assess an origination fee for new Loans.
These options are negotiated and mutually accepted by Bank and Authority.
19. The Bank's total commitment for loans to be made under this
program is limited to $526,000.
$2,000,000 in loans to qualified businesses using the various Small Business
Administration programs which relate to, and are supportive of the Authority'
goals and objectives in which the Bank is participating at the time of
appl ication.
by the Local Development Corporation of San Diego County up to any amount
limitattons on each transaction; the regular SBA 7 (a) program up to $550,001
per loan and Bank of America's Preferred Lender's Program (PLP) up to $650,0
In addition, Bank agrees to make up to
These include, primarily, the SBA Section 503 program provided
-1 0-
a 0
per loan or, any combination of these programs which, in the Bank's judgement
are appropriate and best suit the requirements of the applicant, the Authority
and the Bank.
PART FOUR DEFERR- LOANS
20, In the event Authority requests Bank to make a Loan, the terms
of which are other than as provided in Parts Three and Four above, Bank shall
comply with Authority's request.
Applicant's note on terms Authority has requested for the Loan, Bank shall,
promptly after completion of the respective rehabilitation work, assign the
Loan to Authority according to the same procedure, and for the same price, as
would be appl icable under paragraphs 15 through 17 (Part Three) in the case 01
the assignment following default of a Collateral ized Loan for which the
deposit to the Collateralized Loan Account under paragraph 11 was 100%.
Promptly after the assignment Authority shall pay to Bank a fee to cover its
internal administrative and out-of-pocket expenses, as specified by Bank, but
in no event less than THIRTY-SEVEN AND 50/100 DOLLARS ($37.50) nor more than
ONE HUNDRED DOLLARS ($100.00) for each Loan so made. Such fee shall be at
Applicant's sole expense and shall not be recovered from Applicant(s).
In that case, after Bank has obtained
21. Prior to the making of the first Deferred Payment Loan,
Authority shall furnish Bank an opinion of its legal counsel:
(a) stating that Authority has establised rates and terms for
its Deferred Payment Loan Program note;
(b) desf gnating whether any Deferred Payment Loan fee is a
"charge to be financed" or a "prepald finance charge" under Regulation Z; an(
(c) that Authority has delivered this information and note to
Bank's Carl sbad-El Camino Real Branch.
-11-
.a
0 e
PART FIVE
GEN ERA1 PROVISIONS
22. On Authority's request, Bank shall, for its customary fees
therefor, accept for collection purposes, pursuant to Bank's then current
installment collection procedures, a Program Loan that has been transferred to
Authority.
23. On Authority's request, Bank shall, for its customary fee
therefor, provide foreclosure services wi th respect to a defaul ted Program
Loan that has been transferred to Authority, in which case Bank shall be
substituted for Continental Auxiliary Company/Authority as trustee under
applicable deed of trust.
24. (a) The term of this Agreement shall mature on December 15,
1987.
hereto at six (6) month intervals from June 15, 1986, provided written notice
of intent is given to the other party at least fifteen (15) days prior to the
termi nation
date.
This Agreement may be terminated or amended by either of the parties
(b) Any termination of the Agreement shall not affect Program
Loans outstanding at the time of termination.
(c) At termination, Bank shall retain the Collateralized Loan
Account and shall remit monthly to Authority the amount by which the
Collateral ized Loan Account exceeds the paragraph 11 percentages of the unpai
ba'l ances of Col1 ateral ized Loans.
25. Bank covenants and agrees that nothing in this Agreement or an:
agreement made pursuant hereto shall be deemed or construed by Bank to make
Authorfty a surety or guarantor of any Loan, and that Bank's rights with
respect to a Collateral ized Loan shall be 1 imi ted to those set forth at
paragraphs 15 through 37 hereof.
0 e
26. Authority and Bank shall comply with all appl icable statutes and
regulations, including without limitation, where applicable, the Federal Truth
in Lending Act and Regulation Z thereto, the Consumer Credit Reporting Act,
and the Equal Credit Opportunity Act and Regulation B thereto.
27. Except as specifically required by this Agreement, Authority
waives any right it may have to require Bank to:
(a) proceed against any Applicant or other person;
(b) proceed against or exhaust any collateral for the relevant
Loan; or
(c) pursue any other remedy in Bank's power;
and waives any defense arising by reason of any disability or other defense of
Applicant or any other person, or by reason of the cessation from any cause
whatsoever, other than full payment, of the liability of an Applicant or any
other person.
28. Bank and Authority acknowledge the "Special Purpose" nature of
To serve this "Special Purpose", a Loan shall the Program and Program Loans.
be considered in default after ;he date of a transfer of the deed of trust
property which, according to the provisions of the note, make the entire
principal and interest of the note due and payable, regardless of Bank's
ability or inability to enforce those provisions of the note.
29. Any communications between the parties hereto may be given by
mailing the same, postage prepaid, to Bank at its Carlsbad-El Camino Real
Branch, 2550 El Camino Real, Carlsbad, California 92008, and to Authority at
its City Hal 1 , 1200 Elm Avenue, Carlsbad, California 92008, or to such other
addresses as either party may in writing hereafter indicate.
-1 3-
..
0 0
0
30. This Agreement and any agreement, document, or instrument
attached hereto or referred to herein integrate all terms and conditions
mentioned herein or incidental hereto, and supersede all oral negotiations and
prior writings in respect to the subject matter hereof. In the event of any
conflict between the terms, conditions, and provisions of this Agreement and
any such agreement, document, or instrument, the terms, conditions, and
provisions shall prevail.
31. Authority shall indemnify and hold harmless Bank against all
claims and damages, alleged or otherwise, of whatsoever nature arising out of
or in any way connected with the acts or omissions of any contractor
performing rehabilitation work in connection with this Agreement; provided,
however, that Authority's ob1 igations under this paragraph shall not extend to
negligent or willful acts or omissions by Bank. All contractors shall operate
as independent contractors and nothing herein is intended to affect such
independent contractor status.
32, Bank may, at its option, decl ine to make additional Loans from
and after the date when the principal balance of all Loans outstanding has
exceeded SIX HUNDRED THOUSAND AND N0/100 DOLLARS ($600,000.00).
33. This Agreement may be executed in as many counterparts as may bc
deemed convenient, each of which, when executed, shall be deemed an original.
34. The operating aspects of this Agreement, including but not
limited to target area boundaries, my be altered from time to time through a
letter of understanding, accepted mutually by Authority's City Manager and
Bank's City Improvement and Restoration (CIR) Department.
-1 4-
,_
e e
IN WITNESS WHEREOF, this Agreement is executed by Authc
acting by and through its City Council pursuant
Resolution No. 8539 authorizing such execution, and by Bar
Dated this /& ZG day of &&/ , 1986.
/
THE CITY OF CARLSBAD,
A Municipal Corporation
BY LhA/_y k/ @4&/
MARY H. CPLER
Title Mayor Title Assistant Vice Presidenl Community Development Dt
APPROVED AS TO FORM: Attached is a true and correci copy of the original Resolutic
L-l&&lL / RP& - City Clerk
0008
1.
\
'*
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
I.8
19
20
21
22
23
24
25
26
27
28
e e
RESOLUTION NO. 8539
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA APPROVING AN AGREEMENT BETWEEN THE CITY OF CARLSBAD AND THE BANK OF
AMERICA FOR SERVICING THE CITY'S LOAN PROGRAM
WHEREAS, the City Council of the City of Carlsbad,
California does hereby resolve as follows:
(1) That an agreement between the City of Carlsbad and E
of America for servicing the City's Loan Program, a of which is attached hereto as Exhibit A and made a
hereof, is hereby approved.
That the Mayor of the City of Carlsbad is hereby aut
to execute said agreement on behalf of the City of C
PASSED APPROVED AND ADOPTED at a regular meeting of
City Council of the City of Carlsbad, California, held on
day of May, 1986, by the following vote, to wit:
(2)
AYES: Council Members Casler, Lewis, Kulchin, Chick and Pett
NOES: None
ABSENT: None
ABSTAIN : None
I L/L,* Ja4 1 ATTEST:
A4 ALETHA L. RAUTENXRANZ, City C@rk
(SEAL)
////
////
//I/
////
" _. e Q
COMMERCIAL AND RESIDENTIAL
PROPERTY REHABILITATION LOAN AGREEMENT
COMF'REHENSIVE FORM
THIS AGREEMENT is made by the CITY OF CARLSBAD, a municipal
corporation in the State of California (herein called "Authority"), and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association (herein called "Bank1').
RECITALS
A. Authority has authorized a Housing Preservation Program as part
of an adopted Community Development Block Grant Program (as may be amended ani
modified from time to time) hereinafter collectively called "Program".
B. As part of Authority's implementation of Program, Authority has
requested Bank to make below-market interest rate property rehabilitation
loans ("Loans" or "Program Loans") to certain owners of residential real
property within Authority and approved by Authority as recipients of Loans
("Applicants").
real property in accordance with Program. In addition, Authority has
requested a choice of several types of Loans to Applicants.
The purpose of the Loans would be the rehabilitation of said
C. To support these objectives, and based on an initial deposit of
Community Development Block Grant funds, Bank is willing to provide Authority
and Applicants with Collateralized Loans (Part Three), Deferred Payment Loans
(Part Four), and other services at rates and terms not available to the
general public or to Authority independent of this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing and the
mutual agreements made herein, and for other good and valuable consideration,
Authority and Bank agree as follows:
-1- L
e 0
PART ONE
DEPOSIT OF COMMUNITY DEVELOPMENT
BLOCK GRANT FUNDS
1. Authority shall deposit up to $263,000 of Community Development
Block Grant rehabilitation funds available to Authority under the Housing and
Community Development Acts of 1974 and 1977, as amended, as part of this
Agreement.
2. Authority's deposits of Community Development Block Grant funds
may be made in any of the following forms:
(a) A deposit to the Warehouse Account, the funds in which are
unallocated to Loans.
(b) A deposit to Collateralized Loan Account(s) which are
noninterest-bearing savings accounts which subsidize Loans and are pledged as
Loan collateral, with the exception of collateralized account for 12%
commercial loans which accrue at 5.25%.
(c) The purchase from Bank of time certificate(s) of deposit
from which all proceeds are allocated to future Program Loans. Bank will pay
at Authority's election, the highest interest rate permitted by law on all
accounts described above. If legal interest rate limitations are removed,
Bank will pay its highest rate offered to the public.
3. Authority relinquishes the use of and control over accounts
described in paragraph 2(b).
purposes described in this Agreement.
These accounts will be used only for the Loan
4. Authority retains full accessibility to all deposits which are
unallocated to existing Program Loans.
5. Authority agrees all interest earnings will be paid to the
Warehouse Account and will be used in accordance with Community Development
Block Grant regulations contained in 24 CFR 570.513(c).
-2-
0 0
, PART TWO
APPLICATION PROCEDURES
6. At the request of Authority, Bank, through its Carlsbad-El Camir
Real Branch, shall consider making loans to qualified Applicants directed to
Bank by Authority. Bank shall notify the respective Applicant(s) in writing
of any such request it receives from Authority. The notification shall
contain the following statement:
Carlsbad-El Camino Real Branch of Bank of America National Trust and Savings
Association, 2550 El Camino Real, Carlsbad, California 92008, to consider
making a specific extension of credit to you."
"The City of Carlsbad has requested the
A qualified Applicant shall be identified by Authority or its
agents, using Authority's established standards, which must consider, without
1 imitation :
(a) Applicant is "the owner of record" of the property subjec
to rehabilitation.
(b) Authority has verifiable income(s) which can be used to
repay the proposed Loan.
(c) Authority has determined that the proposed Loan, given
Program options available, will best serve the rehabilitation needs of
Applicant and the Program objectives.
(d) In addition, each Commercial Improvement Rehabilitation Lo:
Applicant, if a lessee, has a lease which, with options, extends at least sir
(6) months beyond the maturity of the proposed Loan.
7. Authority shall furnish to Bank, with respect to each loan
application:
(a> an introductory letter stating that Authority desires Bank
to consider making a Loan to Applicant;
(b) a breakdown of the costs involved in the rehabilitation WOI
-3-
0 0
to be performed on Applicant's real property;
(c) a description of the work;
(dl an estimate of the value of the real property offered as
security for the Loan;
(e) a copy of any contractor bid accepted by Applicant; and
(f) a statement including the name of the contractor who will
perform the rehabilitation work, and a statement that Authority has satisfied
itself with respect to the competence and reliability of the particular
contractor; and
(8) for each Commercial Improvement Rehabilitation Loan, Bank
shall require from Applicant:
(1) 2-year business income statements supported by IRS
income tax filings;
(2) a copy of the existing lease, if Applicant is a
property tenant;
(3) Applicant's personal financial statement;
(4) A policy of Creditor Life Insurance, in a form
acceptable to Bank. The policy remains outstanding, in an amount at least
equal to the amount outstanding under the Loan to Applicant, with Bank named
as beneficiary. Upon Authority's request, said insurance shall be prepaid
from Loan proceeds and said amount added to the principal amount of the Loan.
At Bank's request, each Appplicant shall also be required to maintain a
standard policy of hazard insurance covering the real property upon which the
rehabilitation work is to be performed in effect while any part of the Loan
remains outstanding, with Bank named as beneficiary. In the case of defaulted
Loans, Authority agrees to guarantee unpaid premiums in accordance with the
provisions of paragraph 15 below.
-4-
0 0
(h) Release of information form.
8. Bank shall perform its customary credit evaluation with respect
to the Applicant, render its judgment with respect to the creditworthiness o
the Applicant, and recommend appropriate Loan terms.
9. Upon completion of its credit evaluation, Bank shall furnish to
Authority a recommendation to proceed with the Loan or not, including:
(a) a recommendation as to use of either a Collateralized, or
Deferred Payment Loan, or some combination thereof; and
(b) an indication which of the following Loans (for which Bank
assumes part ot the credit risk, as indicated parenthetically below) Bank is
willing to make to Applicant:
(1) for residential property improvement Loans:
(i) 3.00% Collateralized Loan (0% credit risk);
(ii) 6.25% Collateralized Loan (30% credit risk);
(iii) 8.50% Collateralized Loan (50% credit risk);
(iiii) 10.75% Collateralized Loan (70% credit risk).
(2) for commercial property improvement Loans;
(i) 6.00% Collateralized Loan (0% credit risk);
(ii) 10.00% Collateralized Loan (60% credit risk).
10. After having determined the exact nature and scope of the
rehabilitation work to be performed on Applicant's real property, Authority
may request Bank to grant Applicant a Loan, which either must be from among
those designated by Bank pursuant to paragraph 9(b) above or must be a Loan
pursuant to paragraph ll(a> (100% collateralized) or paragraph 19 (Deferred
Payment Loan).
PART THREE
COLLATERALIZED LOANS
11. Each Residential Collateralized Loan shall be supported by a
-5-
e 0
noninterest-bearing deposit made by Authority to a Collateralized Loan
Account, an account which shall at all times be at least equal to:
(a) 100% of unpaid principal for each 3.00% or 6.00% Loan for which
Bank has not designated the Applicant (pursuant to paragraph 9(b)) as a part:
to whom Bank is willing to make a (partially) Collateralized Loan;
(b) 70% of unpaid principal for each 6.25% Loan;
(c> 50% of unpaid principal for each 8.50% Loan;
(d) 30% of unpaid principal for each 10.75% Loan;
(e) 60% of unpaid principal for each 10.00% Loan;
plus, in each case, 100% of accrued unpaid interest. Authority hereby assigi
the Collateralized Loan Account to secure the Collateralized Loans.
12. (a) Unless Authority requests one note only, each
Collateralized Loan shall be evidenced by two notes, effective in succession
as provided herein.
(b) The note first effective shall be a short-term commercial
note, the term of which shall coincide approximately with the rehabilitation
period (although all references herein to the short-term commercial note are
singular, a Loan could include more than one short-term commercial note). TI
term of any one short-term commercial note may not exceed ninety (90) days,
although the note may be extended, renewed, or refinanced. The Loan proceed
thereof shall be disbursed by Bank in a number of draws, each to follow
completion of an applicable state of construction, as certified to Bank by
Authority. Interest shall accrue only on the disbursed portion of the Loan.
(c) Promptly after Bank's disbursement of the final draw under
the short-term commercial note, that note shall be refinanced by an
-6-
0 W
installment note, as provided for at subparagraph (dl below or9 alternatively,
as provided in Part Four (Deferred Payment Loans). At the time the short-terr
commercial note is refinanced by the installment note, Applicant may either
pay Bank the accrued interest on the short-term commercial note or may have it
added to the principal of the installment note.
(dl The term of the installment note shall be determined by Ban1
for the Loan in question but:
(i) may not exceed fifteen (15) years;
(ii) may not exceed ten (10) years for commercial
rehabilitation.
The installment note shall be amortized in equal monthly installments over it:
term. Interest will be calculated on a simple interest basis for each
installment note.
13. With respect to Collateralized Loans:
(a) On both the short-term commercial note and the installment
note, interest and other finance charges shall be such as to bear the interest
rates described in paragraph 11, which shall be calculated on a simple
interest basis.
(b) The loan shall be documented using Bank's standard forms.
(c) Both the short-term commercial note and the installment note
shall, at Bank's or Authority's option, be secured by a deed of trust covering
the real property that is subject of the rehabilitation for which the proceedE
of the Loan are to be used.
14. Authority shall make a relevant deposit to the Collateralized
Loan Account in the percentage of Loan amount provided for at paragraph 11,
when the commercial note and deed of trust are signed by Applicant and when
interest on a short-term commercial note becomes added to the principal of a
-7 -
0 e
subsequent installment note.
days after Authority's first deposit hereunder, Bank shall remit to Authorit)
the amount by which the Collateralized Loan Account exceeds the paragraph 11
percentages of the unpaid balances of Collateralized Loans. Funds that Bank
thus remits to Authority shall be deemed funds that Authority deposited at
least 180 days before.
At the end of each calendar month ending 180
15. If a Collateralized Loan remains in default for a continuous
period of ninety (90) days on account of nonpayment of any sum of money due
pursuant to the terms thereof or of any instrument or document related
thereto, Bank may withdraw from the Collateralized Loan Account, and pay to
itself, an amount equal to the then outstanding principal balance of the Loan
multiplied by the same percentage as the percentage of the Loan amount that
was deposited to the Collateralized Loan Account pursuant to paragraph 11,
plus 100% of accrued unpaid interest on the Loan through the 90th day of
default. Bank shall have no recourse against Authority or the Collateralized
Loan Account for any amounts in excess of those permitted under this
paragraph. During any ninety (90) day default period, Bank shall perform its
customary collection procedures with respect to the Loan.
16. After a withdrawal from the Collateralized Loan Account under
paragraph 15 above, in the case of a Loan for which the deposit to the
Collateralized Loan Account under paragraph 11 was less than 100% of the Loan
amount :
(a) Bank need not assign the deed of trust to Authority upon
completion of the withdrawal but may, for its own account, exercise rights
under the deed of trust to recover the remaining outstanding unpaid principal
of the Loan plus accrued unpaid interest thereon after the 90th day of defaull
(b) At its election, Bank may assign to Authority such rights a:
-8-
e 0
may be necessary for Authority to attempt to recoup any funds withdrawn from
the Collateralized Loan Account in connection with any Loan default.
Authority agrees to recoup funds, as much as possible, for the benefit of Bank
as well as itself. Funds recovered shall be credited as follows:
(1) to withdrawals from the Collateralized Loan Account;
(2) to the costs of recovery;
(3) to Bank's Loan charge-off.
(c) If Bank subsequently recovers funds with respect to a
defaulted Loan (as, for example, but without limitation, if a voluntary sale
of the property takes place), Bank shall, after deducting the previously
unreimbursed percentage of Loan loss to which Bank is entitled, plus Bank's
cost of recovery, return and pay over to Authority all amounts in excess
thereof .
17. After a withdrawal from the Collateralized Loan Account under
paragraph 15 above, in the case of a Loan for which the deposit to the
Collateralized Loan Account under paragraph 11 was 100% of the Loan amount,
Bank shall assign the Loan to Authority, the assignment to be accomplished by:
(a) the due endorsement by Bank to Authority of the promissory
note evidencing the loan, without recourse or warranty; and
(b) the delivery of the promissory note and the assignment and
delivery of the deed of trust.
18. Collateralized Loans, as described in paragraphs 11 through 17,
must have an average original Loan amount of $10,000, which provides Authorit)
favorable rates and terms, based on this average loan size. Since operating
costs associated with smaller average loan size are significantly greater,
Authority's Collateralized Loans will be analyzed every 180 days from contract
approval. If average $10,000 Loan amounts are not maintained, Bank may make
-9 -
e 0
adjustments affecting the pricing of future activity as follows:
(a) increase borrower interest rates for new Loans;
(b) increase collateral requirements for new Loans; or
(c) assess an origination fee for new Loans.
These options are negotiated and mutually accepted by Bank and Authority.
PART FOUR
DEFERRED PAYMENT LOANS
19. In the event Authority requests Bank to make a Loan, the terms
of which are other than as provided in Parts Three and Four above, Bank shall
comply with Authority's request.
Applicant's note on terms Authority has requested for the Loan, Bank shall,
promptly after completion of the respective rehabilitation work, assign the
Loan to Authority according to the same procedure, and for the same price, as
would be applicable under paragraphs 15 through 17 (Part Three) in the case ol
the assignment following default of a Collateralized Loan for which the
deposit to the Collateralized Loan Account under paragraph 11 was 100%.
Promptly after the assignment Authority shall pay to Bank a fee to cover its
internal administrative and out-of-pocket expenses, as specified by Bank, but
in no event less than THIRTY-SEVEN AND 50/100 DOLLARS ($37.50) nor more than
SEVENTY-FIVE DOLLARS ($75.00) for each Loan so made. Such fee shall be at
Applicant's sole expense and shall not be recovered from Applicant(s).
In that case, after Bank has obtained
20. Prior to the making of the first Deferred Payment Loan,
Authority shall furnish Bank an opinion of its legal counsel:
(a) stating that Authority has establised rates and terms for
its Deferred Payment Loan Program note;
(b) designating whether any Deferred Payment Loan fee is a
"charge to be financed" or a "prepaid finance charge" under Regulation Z; and
(c) that Authority has delivered this information and note to
Bank's Carlsbad-El Camino Real Branch. -10-
a 0
PART FIVE
GENERAL PROVISIONS
21. On Authority's request, Bank shall, for its customary fees
therefor, accept for collection purposes, pursuant to Bank's then current
installment collection procedures, a Program Loan that has been transferred tc
Authority.
22. On Authority's request, Bank shall, for its customary fee
therefor, provide foreclosure services with respect to a defaulted Program
Loan that has been transferred to Authority, in which case Bank shall be
substituted for Continental Auxiliary Company/Authority as trustee under
applicable deed of trust.
23. (a) The term of this Agreement shall mature on April 20, 1985.
This Agreement may be terminated or amended by either of the parties hereto at
six (6) month intervals from April 20, 1984, provided written notice of intent
is given to the other party at least fifteen (15) days prior to the terminatic
date.
(b) Any termination of the Agreement shall not affect Program
Loans outstanding at the time of termination.
(c) At termination, Bank shall retain the Collateralized Loan
Account and shall remit monthly to Authority the amount by which the
Collateralized Loan Account exceeds the paragraph 11 percentages of the unpaic
balances of Collateralized Loans.
24. Bank covenants and agrees that nothing in this Agreement or any
agreement made pursuant hereto shall be deemed or construed by Bank to make
Authority a surety or guarantor of any Loan, and that Bank's rights with
respect to a Collateralized Loan shall be limited to those set forth at
paragraphs 15 through 17 hereof.
25. Authority and Bank shall comply with all applicable statutes an(
-11-
0 e
regulations, including without limitation, where applicable, the Federal Trutk
in Lending Act and Regulation Z thereto, the Consumer Credit Reporting Act,
and the Equal Credit Opportunity Act and Regulation B thereto.
26. Except as specifically required by this Agreement, Authority
waives any right it may have to require Bank to:
(a> proceed against any Applicant or other person;
(b) proceed against or exhaust any collateral for the relevant
Loan; or
(c) pursue any other remedy in Bank's power;
and waives any defense arising by reason of any disability or other defense oj
Applicant or any other person, or by reason of the cessation from any cause
whatsoever, other than full payment, of the liability of an Applicant or any
other person.
27. Bank and Authority acknowledge the "Special Purpose" nature of
the Program and Program Loans. To serve this "Special Purpose", a Loan shall
be considered in default after the date of a transfer of the deed of trust
property which, according to the provisions of the note, make the entire
principal and interest of the note due and payable, regardless of Bank's
ability or inability to enforce those provisions of the note.
28. Any communications between the parties hereto may be given by
mailing the same, postage prepaid, to Bank at its Carlsbad-El Camino Real
Branch, 2550 El Camino Real, Carlsbad, California 92008, and to Authority at
its City Hall, 1200 Elm Avenue, Carlsbad, California 92008, or to such other
addresses as either party may in writing hereafter indicate.
29. This Agreement and any agreement, document, or instrument
attached hereto or referred to herein integrate all terms and conditions
mentioned herein or incidental hereto, and supersede all oral negotiations an(
-12-
I, 0
prior writings in respect to the subject matter hereof. In the event of any
conflict between the terms, conditions, and provisions of this Agreement and
any such agreement, document, or instrument, the terms, conditions, and
provisions shall prevail.
30. Authority shall indemnify and hold harmless Bank against all
claims and damages, alleged or otherwise, of whatsoever nature arising out of
or in any way connected with the acts or omissions of any contractor
performing rehabilitation work in connection with this Agreement; provided,
however, that Authority's obligations under this paragraph shall not extend tc
negligent or willful acts or omissions by Bank. All contractors shall operate
as independent contractors and nothing herein is intended to affect such
independent contractor status.
31. Bank may, at its option, decline to make additional Loans from
and after the date when the principal balance of all Loans outstanding has
exceeded FIVE HUNDRED TWENTY SIX THOUSAND AND N0/100 DOLLARS ($526,000.00).
32. This Agreement may be executed in as many counterparts as may be
deemed convenient, each of which, when executed, shall be deemed an original.
33. The operating aspects of this Agreement, including but not
limited to target area boundaries, may be altered from time to time through a
letter of understanding, accepted mutually by Authority's City Manager and
Bank's City Improvement and Restoration (CIR) Department, San Diego,
California.
-13-
* *
IN WITNESS WHEREOF, this Agreement is executed by Authority acting by an
Minute vote
through its City Manager y pursuant to ~#@?fi~~~,Njd.
authorizing such execution, and by Bank.
Dated this A,&&-- adday of y 1984
CITY OF CARLSBAD BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
-* LJL BY
c- *
I
I
BY
Title Title Ass't. Vice President
Community Development Dept
Concurred:
r,
-14-
w w
;e 0 ,,f I
-I----- CERTIFIC&IIgN
STATE OF CALIFORNIA)
COUNTY OF SAN DIEGO) ss. I.
I, ALETHA 1. RAUTENKRANZ, City Clerk of the City of Car7
County of San Diego, State of California, hereby ce-rtify tRa
I have compared the foregoing excerpt of the minutes of the
City Council, dated April 3, 1984 D with the original
Minutes approved by said City Council at a regular meeting he
, at the time and. by the vote therein-stat -
which original Minutes are now on file in my office; that the
same contains a full, true and correct transcript therefrom a
of the whole thereof. ’.
April 17, 1984
\fitness my hand and the seal of said City of Carlsbad,
this 19th day of June, 1984
(SEAL)
i
April 3, 1984 -
Mr. Biondo stated this would be an excellent way to
reduce to writing the verbal promises the County has made about not increasing activities at the airport, and mld be legally enforcible in the future against the County.
Mayor Casler stated the FAA is the ruling force for the airport, and actually the airport is no longer a general aviation facility acmrding to them.
Mayor Casler stated Mr. Severson, the Airport Manager, brought a letter in today, and Air Resort had cancelled
their resuest for the SO-passenger service, but will continue to fly for positioning and darters.
Council adopted the following Resolution:
RESOWTICN No. 7558, requesting Joint Powers Agrement
Casler Lewis X
Kulchin
Prescott regarding Melellan-Palomar Airport. chick
Council Member Lewis stated he would like to represent Carlsbad at these meetings. consensus of the Council to name Mr. Lewis to this
group-
It was the unanimus
Redevelopnen t
(28) 28. AB #7702 - LENDER FOR CONTINUATION OF
(45) REHAPILI?IATION UXN PRCGFUW.
Chris Salmne, Cmnity Redevelopment Manager, gave the staff report on this item as contained in the Auenda
Bill.
Council accepted staff recmnendation regarding the lender for the Rehabilitation Loan Program.
Casler Lewis Kulchin X
Chick Prescot t
City Manager
(81) 29.
PALLNAR AIE7POHT FUY-D.
City Manager Frank Aleshire uave the report on this item as mntained in the Aqenda Bill.
Council authorized the disposition of property by negotiation and directed the City Attorney to prepare the necessary documents to accept T. E. Blonski's offer.
AE 87703 - SALE OF PARCEL - cARLSBAD BOUUWWD AND
Casler Lewis Kulchin
Chick Presmtt X
30. NUMBERNXUSED.
. B 6 I
!
1 i
i
# I
i
I
e 0 Y
<x I
BAN K OF AM E RI CA
REGIONAL ADMINISTRATION
September 2, 1983
Chris Salomone, Director
Department of Housing and Redevelopment
City of Carlsbad
3096 Harding Street
Carlsbad, CA 92008
Dear Chris:
In accordance with current Residential and Commercial property
Rehabilitation Loan Agreement between Bank of America NT & SA and
the City of Carlsbad, a municipal corporation in the State of
California (herein called authority), in that specific provision of
said agreement paragraph number 33:
"The operating aspects of this agreement, including but not
limited to target boundaries, may be altered from time to
time through a letter of understanding, accepted mutually
by Authority's City Manager and Bank's City Improvement and
Restoration Department (cir) Oakland, CA."
We mutually agree to change to the rates and collateralization for
loans as follows:
(1) For residential property improvement loans:
i a 6.25% collateralized loan (30% credit risk);
ii a 8.50% collateralized loan (50% credit risk);
iii a 10.75% collateralized loan (70% credit risk).
(2) For commercial property improvement loans:
10% collateralized loan (60% credit risk).
Each collateralized loan shall be supported by non interest bearing
deposit made by authority to a collateralized loan account, an
account that shall at all times be equal to:
(1) 70% of unpaid principal for each 6.25 residential
(2) 50% of unpaid balance for each 8.50 residential
rehabilitation loan.
rehab il i ta t ion loan ;
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION 450 B ' STREET SUITE 2000 SAN DIEGO CALIFORNIA 92101
0 * t4 *
/e e
(3) 30% of unpaid principal for each 10.75 residential
rehabilitation loan and everything else in the contract
will remain the same until maturity of this contract.
rehabilitation loan.
(4) 40% of unpaid principal for each 10% commercial
Dated this” day of, ’.p( 1983 City Manager, City of Carlsbad
bYJ&dbL-
City Manager
Title
Bank of America Nati a1 Trust and Savings
by ,-/<--&-A 2 6 23 LG----/J
Lois c’. Cyr 3 Assistant Vice President
Community Development Department
San Diego Region #4595
enc 1 o sur e
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
, 0 0
6- *
t
BANKOFAMERICA
REGIONAL ADMINISTRATION
May 27, 1983
Chris Salomone, Director
Department of Housing and Redevelopment
City of Carlsbad
3096 Harding Street
Carlsbad, CA 92008
Dear Chris:
In accordance with current Residential and Commercial property
Rehabilitation Loan Agreement between Bank of America NT & SA and
the City of Carlsbad, a municipal corporation in the State of
California (herein called authority), in that specific provision of
said agreement paragraph number 33:
"The operating aspects of this agreement, including but not
limited to target boundaries, may be altered from time to time
through a letter of understanding, accepted mutually by
Authority's City Manager and Bank's City Improvement and
Restoration Department (cir) Oakland, CA."
We mutually agree to change to the rates and collateralization for
loans as follows:
1. a 6.25 collateralized loan (30% credit risk);
2. a 8.50% collateralized loan (50% credit risk);
3. a 10.75% collateralized loan (70% credit risk).
Each collateralized loan shall be supported by non interest bearing
deposit made by authority to a collateralized loan account, an
account that shall at all times be equal to:
1. 70% of unpaid principal for each 6.25 residential
rehabilitation loan.
2. 50% of unpaid balance for each 8.50 residential
rehabilitation loan;
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION 450 "B" STREET * SUITE 2000 - SAN DIEGO, CALIFORNIA 92101
# w e 0
4 \- c
3, and a 30% of unpaid principal for each 10.75 residential
rehabilitation loan and everything else in the contract will
remain the same until maturity of this contract.
, 1983 City Manager, City of Carlsbad
Bank of America Nat'Qnal ust and Savings
by ,-3qLG - dl <dC
Loisk. Cyr /' Assistant Vice President
Community Development Department
San Diego Region +I4595
enc .
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
I
I 0 0
At-XND?.ENT TO CO>LYERCIXL f3D RES ID'ISTIAL
PROPERTY REItN3ILITb-TION LOA3 AGREDENT
CO?€PREHENSIk% FOXY
THIS MEND?ENT is made by the CITY OF CARLSBAD, a munfci] P 4 i! corporation in the Srate of California (herein called "Authority")
BMK OF AKERICA NATIOSAL TRUST AX9 SAVINGS ASSOCTATION, a national
association (herein called "Bank") .
RECITALS
b A. Authority and Bank, on May 17, 1982, entered into a
Cornmerclal and Residential Proprrty Rehabilitation Loan Agreeaent,
to which Bank is making below-market interest: rate property rehabil
loans (therein and herein called g'Loans''), to certain owners of xes
real pro?erty within Authority and approved by Authority as recipic
LOaRS.
B. Pursuant to paragraph 9(b) subparagraph 2(T) of the
Property Rehabilitation Loan Agreenent, Authority has requested Ran
change its borrower interest rate for commercial property improveme
loans *
C, Pursuant to paragraph I1 of the Property Rehabilitat
Loan Agreemen?, B2s;lc agrees to pay interest on the deposits pledged
collateral for comercia1 improvenent loans.
D, Bank wishes to amend the.loan Agreement to provide t
terms herein agreed to.
NOE, THEREFORE, €or and in constderation of the foregoing
the mutual Agreements made herein, and for other good and valuable
considerations, Authority and Bank agree as follows:
1. Paragraph 9(b) subparagraph 2(i) of the Property
Rehabifitation Loan Agreement is amended to provide in its entirety
1FOllDWS :
0 (2 'For Commercial Property Improvement Loans, a'12%
13
11 1)
CollaEeralized Loan (0% credit risk). .
I 7
E~
,$ fI
2. Paragraph If of the Property Rehabilitation Loan Ag 3 [i
5s mended to provide in its entirety, as folloyvs: 11
"A) Each Collateralized Loan for residential prope
improvement shall be supported by 'a noninterest-bearing deposit ma
Authority to a Collateralized Loan Accoune, an account that shall
times be at least equal to: 0
(a) 100% of iinpaid principal for each 3% Loan
which Bank has not designated the Applicant (pursuant to paragraph
as a party to whoin Bank is willing to make a (partially) Collatera
Loan ;
(b) 70% of unpaid principal for each 7.25% LC
(c) 50% of unpaid principal for each 10.252 I
(d) 30% of rrnpaid principal for each 13.50Z I
pius, in each case, 100% of accrued unpaid interest.?'
"B) Each Collateralized Loan fox co:mercial propel
inprovement shall be supported by an interest-bearing deposit mad(
Authority to a Collateralized Lo2n Account, an account thal: shall
tines be at Peast equal to 100% of unpaid principal €or each 12% 3
Interest will be paid at the passbook rate of 5.25%.'B
"Authority hereby assigns the Collateralized Loan Accoun
secure the Collateralized Loans."
IN WITNESS WHEREOF, this Amendment is executsd by Autho
///
// /
.// /
///
-2-
authorizing such execution, and by Rank,
Dated this /fSit4 day of /lip r/e/.l?dEc
?A
25
26
I
-3-
.I f- --b
I .*
1
I
9 1
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
0
COMMERCIAL AND RESIDENTIAL
PROPERTY REHABILITATION LOAN AGREEMENT
COEREHENSIVE FORM
THIS AGREEMENT is made by the CITY OF CARLSBAD, a municipal c
in the State of California (herein called "Authority"), and BANK OF AME
NATION& TRUST AND SAVINGS ASSOCIATION, a national banking association
called "Bank") .
RE C I TAL S
A. Authority has authorized a Housing Preservation Program
of an adopted Community Development Block Grant Program (as may be amen
modified from time to time) hereinafter collectively called "Program."
B. As part of Authority's implementation of Program, Author
requested Bank to make below-market interest rate property rehabilitati
("Loans" or "Program Loans") to certain owners of residential real prop
in Authority and approved by Authority as recipients of Loans ("Applica
The purpose of the Loans would be the rehabilitation of said real prope
accordance with Program. In addition, Authority has requested a choice
era1 types of Loans to Applicants.
C. To support these objectives, and based on an initial deF
Community Development Block Grant funds, Bank is willing to provide Aut
and Applicants with Collateralized Loans (Part Three), Deferred Payment
(Part Four), and other services at rates and terms not available to the
public or to Authority independent of this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing anc
mutual agreements made herein, and for other good and valuable considel
Authority and Bank agree as follows:
PART ONE
DEPOSIT OF COMMUNITY DEVELOPMENT
BLOCK GRANT FUNDS
1. Authority shall deposit up to $134,189 of Community Dew 1 1
, .,
1
2
3
4
5
6
7
8
9
Block Grant rehabilitation funds available to Authority under the Hous:
Community Development Acts of 1974 and 1977, as amended, as part of th:
ment.
2. Authority's deposits of Community Development Block Grar
may be made in any of the following forms:
(a) A deposit to the Warehouse Account, the funds in wl
unallocated to Loans.
(b) A deposit to Collateralized Loan Account(s) which i
interest-bearing savings accounts which subsidize Loans and are pledgec I 10 collateral.
12
13
from which all proceeds are allocated to future Program Loans.
Bank will pay, at Authority's election, the highest interest rate permi
14
15
16
17
18
19
20
21
22
law and this Agreement on all accounts described above.
limitations are removed, Bank will pay its highest rate offered to the
If legal inter
3. Authority relinquishes the use of an control over accoun
These accounts will be used only for the LC scribed in paragraph 2(b).
poses described in this Agreement.
4. Authority retains full accessibility to all deposits whi
unallocated to existing Program Loans.
5. Authority agrees all interest earnings will be paid to t
house Account and will be used in accordance with Community Development
Grant regulations contained in 24 CFR 570.513(c).
24 23 I PART TWO
25
26
27
28
I
APPLICATION PROCEDURES
6. At the request of Authority, Bank, through its Carlsbad-
Real Branch, shall consider making Loans to qualified Applicants direct
by Authority. Bank shall notify the respective Applicant(s) in writing
1
2 I
3
such request it receives from Authority. The notification shall contair
following statement: "The City of Carlsbad has requested the Carlsbad-E:
Real Branch of Bank of America National Trust and Savings Association, :
4
5
6
Camino Real, Carlsbad, California 92008, to consider making a specific
of credit to you."
A qualified Applicant shall be identified by Authority 0:
(a) Applicant is "the owner of record" of the property
I 11
12
13
14
15
16
17
18
19
20
21
22
23
24
(b) Applicant has verifiable income(s) which can be use
pay the proposed Loan.
(c) Authority has determined that the proposed Loan, gi
Program options available, will best serve the rehabilitation needs of
and the Program objectives.
(d) In addition, each Commercial Improvement Rehabilit:
Applicant, if a lessee, has a lease which, with options, extends at le:
(6) months beyond the maturity of the proposed Loan.
7.
application:
Authority shall furnish to Bank, with respect to each LC
(a) an introductory letter stating that Authority desii
to consider making a Loan to Applicant;
(b) a breakdown of the costs involved in the rehabilit
to be performed on Applicant's real property;
(c) a description of the work;
26 1 27
28
security for the Loan;
(e) a copy of any contractor bid accepted by Applicant
-3-
! 'I .%
1
2
3
4
5
6
7
8
g
lo I
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
0 0
(f) a statement including the name of the contractor wh
perform the rehabilitation work, and that Authority has satisfied itsel
respect to the competence and reliability of the particular contractor;
for each Commercial Improvement Rehabilitation Loan ' (g)
shall 'require from Applicant:
(1) 2-year business income statement supported by
come tax filings;
(2) a copy of the existing lease, if Applicant is
property tenant;
(3) Applicant's personal financial statement;
(4) a policy of Creditor Life Insurance in a form
to Bank. The policy remains outstanding, in an amount at least equal t
amount outstanding under the Loan to Applicant, with Bank named as bene
Upon Authority's request, said insurance shall be prepaid from Loan pro
said amount added to the principal amount of the Loan. At Bank's reque
Applicant shall also be required to maintain a standard policy of hazar
surance covering the real property upon which the rehabilitation work i
performed in effect while any part of the Loan remains outstanding, wit
named as beneficiary. In the case of defaulted Loans, Authority agrees
guarantee unpaid premiums in accordance with the provisions of paragrap
below.
8. Bank shall perform its customary credit evaluation with
to the Applicant, render its judgment with respect to the creditworthin
Applicant, and recommend appropriate Loan terms.
9. Upon completion of its credit evaluation, Bank shall fur
Authority a recommendation whether to proceed with the Loan or not, inc
(a) a recommendation as to use of either a Collateraliz
Deferred Payment Loan, or some combination thereof; and
-4- I!
1I
1
2
3
4
5
6
7
8l
91
(b) an indication of which of the following Loans (for 7
assumes all or part of the credit risk, as indicated parenthetically be
is willing to make to Applicant:
(1)
(i) 7.25% Collateralized Loan (30% credit risk);
(ii) 10.25% Collateralized Loan (50% credit risk);
(iii) 13.50% Collateralized Loan (70% credit risk).
For residential property improvement Loans:
(2)
(i) 6.00% Collateralized Loan (0% credit risk).
For commercial property improvement Loans:
1
11
12
13
14
15
16
17
18
19
20
21
22
23
habilitation work to be performed on Applicant's real property, Authori
request Bank to grant Applicant a Loan, which either must be from among
designated by Bank pursuant to paragraph 9(b) above or must be a Loan p'
to paragraph ll(a) (100% collateralized) or paragraph 19 (Deferred Paym
PART THREE
COLLATERALIZED LOANS
11. Each Collateralized Loan shall be supported by a noninte
bearing deposit made by Authority to a Collateralized Loan Account, an
that shall at all times be at least equal to:
(a) 100% of unpaid principal for each 3.00% or 6.00% Lo
which Bank has not designated the Applicant (pursuant to paragraph 9(b)
party to whom Bank is willing to make a (partially) Collateralized Loan
(b) 70% of unpaid principal for each 7.25% Loan; I
24
25
26
(c) 50% of unpaid principal for each 10.25% Loan; or
(d) 30% of unpaid principal for each 13.50% Loan;
plus, in each case, 100% of accrued unpaid interest. Authority hereby
..I S
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
I
I
!
i
0 e
Loan shall be evidenced by two notes, effective in succession, as provi
in.
(b) The note first effective shall be a short-term corn
note, the tend of which shall coincide approximately with the rehabilit
period' (although all references herein to the short-term commercial not
singular, a Loan could include more than one short-term commercial note
term of any one short-term commercial note may not exceed ninety (90) d
though the note may be extended, renewed, or refinanced. The Loan proc
thereof shall be disbursed by Bank in a number of draws, each to folloh
tion of an applicable state of construction, as certified to Bank by AL
Interest shall accrue only on the disbursed portion of the Loan.
(c) Promptly after Bank's disbursement of the final dr2
the short-term commercial note, that note shall be refinanced by an ins
note, as provided for at subparagraph (d) below or, alternatively, as 1
Part Four (Deferred Payment Loans). At the time the short-term commerc
is refinanced by the installment note, Applicant may either pay Bank tf
interest on the short-term commercial note or may have it added to the
of the installment note.
(d) The term of the installment note shall be determine
for the Loan in question, but:
(i) may not exceed fifteen (15) years:
(ii) may not exceed ten (10) years for commercial rehabi:
The installment note shall be amortized in equal monthly installments (
term. Interest will be calculated on a simple interest basis for each
ment note.
13. With respect to Collateralized Loans:
(a) on both the short-term commercial note and the insi
note, interest and other finance charges shall be such as to bear the :
-6-
I
1
2
3
4
5
6
rates described in paragraph 11, which shall be calculated on a simple
basis.
(b)
(c) Both the short-term commercial note and the install
shal1,'at Bank's or Authority's option, be secured by a deed of trust c
the real property that is the subject of the rehabilitation for which t
proceeds of the Loan are to be used.
The Loan shall be documented using Bank's standard
8 7! 14. Authority shall make a relevant deposit to the Collatera
I
11 1
12
13
l4 15 I
16
17
18
19
20
21
22
23
24
I
terest on a short-term commercial note becomes added to the principal o
sequent installment note. At the end of each calendar month ending 180
after Authority's first deposit hereunder, Bank shall remit to Authorit
amount by which the Collateralized Loan Account exceeds the paragraph 1
Funds that Bc
remits to Authority shall be deemed funds that Authority deposited at 1
days before.
centages of the unpaid balances of Collateralized Loans.
15. If a Collateralized Loan remains in default for a contir
period of ninety (90) days on account of nonpayment of any sum of moneJ
pursuant to the terms thereof or of any instrument or document related
Bank may withdraw from the Collateralized Loan Account, and pay to itsc
amount equal to the the then outstanding principal balance of the Loan
by the same percentage as the percentage of the Loan amount that was de
to the Collateralized Loan Account pursuant to paragraph 11, plus 100%
recourse against Authority or the Collateralized Loan Account for any i
in excess of those permitted under this paragraph. During any ninety (
default period, Bank shall perform its customary collection procedures
-7-
! -1 1
..
1
2
3
4
5
6
7
81 9l
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ll
0 0
respect to the Loan.
16. After a withdrawal from the Collateralized Loan Account
paragraph 15 above, in the case of a Loan for which the deposit to the 1
eralized Loan'Account under paragraph 11 was less than 100% of the Loan
Bank need not assign the deed of trust to Authority
completion of the withdrawal but may, for its own account, exercise rig
the deed of trust to recover the remaining outstanding and unpaid princ
the Loan plus accrued unpaid interest thereon after the 90th day of def
(a)
(b) At its election, Bank may assign to Authority such
may be necessary for Authority to attempt to recoup any funds withdrawn
Collateralized Loan Account in connection with any Loan default. Autho
agrees to recoup funds, as much as possible, for the benefit of Bank as
itself. Funds recovered shall be credited as follows:
(1) to withdrawals from the Collateralized Loan Ac
(2)
(3) to Bank's Loan charge-off.
to the costs of recovery;
(c) If Bank subsequently recovers funds with respect to
faulted Loan (as, for example, but without limitation, if a voluntary s
the property takes place), Bank shall, after deducting the previously u'
percentage of Loan loss to which Bank is entitled, plus Bank's cost of
return and pay over to Authority all amounts in excess thereof.
17. After a withdrawal from the Collateralized Loan Account
paragraph 15 above, in the case of a Loan for which the deposit to the
eralized Loan Account under paragraph 11 was 100% of the Loan amount, B
assign the Loan to Authority, the assignment to be accomplished by:
(a) the due endorsement by Bank to Authority of the pro
note evidencing the Loan, without recourse or warranty; and
(b) the delivery of the promissory note and the assignm
-8-
1
2
3
4
5
6
delivery of the deed of trust.
18. Collateralized Loans, as described in paragraphs 11 throl
are priced on an average loan size of $10,000, which provides Authority
favorable rates and terms, based on this average loan size. Since oper;
costs 'associated with smaller average loan size are significantly great4
Authority's Collateralized Loans will be analyzed every 180 days from c(
8 1
91
10 I
adjustments affecting the pricing of future activity as follows:
(a) increase borrower interest rates for new Loans;
(b) increase collateral requirements for new Loans; or
12
13
14
15
16
17
These options are negotiated and mutually acceptable by Bank and Author:
PART FOUR
DEFERRED PAYMENT LOANS
19. In the event Authority requests Bank to make a Loan, the
which are other than as provided in Parts Three and Four above, Bank shi
with Authority's request. In that case, after Bank has obtained Applici
18
19
20
21
22
23
24
25
26
note on terms Authority has requested for the Loan, Bank shall, promptl:
completion of the respective rehabilitation work, assign the Loan to Aul
according to the same procedure, and €or the same price, as would be ap]
under paragraphs 15 and 17 (Part Three) in the case of the assignment fc
default of a Collateralized Loan for which the deposit to the Collatera:
Loan Account under paragraph 11 was 100%. Promptly after the assignmeni
thority shall pay to Bank a fee to cover its internal administrative an{
pocket expenses, as specified by Bank, but in no event less than THIRTY.
AND 50/100 DOLLARS ($37.50) nor more than SEVENTY-FIVE DOLLARS ($75.00)
27
28
Loan so made.
recovered from Applicant(s).
Such fee shall be at Authority's sole expense and shall 1
-9-
1
2
3
4
20. Prior to the making of the first Deferred Payment Loan,
shall furnish Bank an opinion of its legal counsel:
(a) stating that Authority has established rates and te
its Deferred payment Loan Program note;
(b) designating whether any Deferred Payment Loan fee i
',
6 ,
7
8
9
5~
I
I lo i
11
l2
l3
l4
15
16
l7
l8
l9
20
21
22
23
24
25
e e
"charge to be financed" or a "prepaid finance charge" under Regulation
(c) that Authority has delivered this information and n
Bank's Carlsbad-El Camino Real Branch.
PART FIVE
GENERAL PROVISIONS
21. On Authority's request, Bank shall, for its customary fe
therefor, accept for collection purposes, pursuant to Bank's then curre
stallment collection procedures, a Program Loan that has been transferr
Authority.
22. On Authority's request, Bank shall, for its customary fe
therefor, provide foreclosure services with respect to a defaulted Prog
that has been transferred to Authority, in which case Bank shall be sub
for Continental Auxiliary Company/Authority as trustee under the applic
deed of trust.
23. (a) The tern of this Agreement shall mature on April 20
This Agreement may be terminated or amended by either of the parties he,
six (6) month intervals from April 20, 1982, provided written notice of
is given to the other party at least fifteen (15) days prior to the ter
date.
(b) Any termination of this Agreement shall not affect
26
27
Loans outstanding at the time of termination.
(c) At termination, Bank shall retain the Collateralize
28 Account and shall remit monthly to Authority the amount by which the CO
-10-
.L
1
2
3
4
5
6
7
eralized Loan Account exceeds the paragraph 11 percentages of the unpai
of Collateralized Loans.
24. Bank covenants and agrees that nothing in this Agreement
agreement made pursuant hereto shall be deemed or construed by Bank to
thority a surety or guarantor of any Loan, and that Bank's rights with
to a Collateralized Loan shall be limited to those set forth at paragra
through 17 hereof. 1 8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
25. Authority and Bank shall comply with all applicable stat
regulations, including without limitation, where applicable, the Federa
in Lending Act and Regulation Z thereto, the Consumer Credit Reporting
the Equal Credit Opportunity Act and Regulation B thereto.
26. Except as specifically required by this Agreement, Autho
waives any right it may have to require Bank to:
(a)
(b)
proceed against any Applicant or other person;
proceed against or exhaust any collateral for the r
loan; or
(c) pursue any other remedy in Bank's power;
and waives any defense arising by reason of any disability or other def
Applicant or any other person, or by reason of the cessation from any c
whatsoever, other than full payment, of the liability of an Applicant a
other person.
27. Bank and Authority acknowledge the "Special Purpose" nat
Program and Program Loans. To serve this "Special Purpose," a Loan sha
considered in default after the date of a transfer of the deed of trust
which, according to the provisions of the note, make the entire princir
interest of the note due and payable, regardless of Bank's ability or j
to enforce those provisions of the note.
28. Any communications between the parties hereto may be pi1
-11-
lI 2
3
4
5
6
mailing the same, postage prepaid, to Bank at its Carlsbad-El Camino Re
12550 El Camino Real, Carlsbad, CA 92008, and to Authority at its City H
I Elm Avenue, Carlsbad, CA 92008, or to such other addresses as either pa
!
writing hereafter indicate.
* 29. This Agreement and any agreement, document, or instrumen
hereto or referred to herein integrate all terms and conditions mention
7 i or incidental hereto, and supersede all oral negotiations and prior wrii
8
9
10
11
12
13
'respect to the subject matter hereof. In the event of any conflict beti
terms, conditions, and provisions of this Agreement and any such agreemc
ument, or instrument, the terms, conditions, and provisions of this Agrc
shall prevail.
30. Authority shall indemnify and hold harmless Bank against
claims and damages, alleged or otherwise, of whatsoever nature arising c
I
14
15 1
16
17
18
19
20
21
22
23
I
/in any way connected with the acts or omissions of any contractor perfo:
habilitation work in connection with this Agreement; provided, however,
Authority's obligations under this paragraph shall not extend to neglige
wilful acts or omissions by Bank. All contractors shall operate as inde
contractors and nothing herein is intended to affect such independent cc
status.
31. Bank may, at its option, decline to make additional Loans
and after the date when the principal balance of all Loans outstanding F
exceeded TWO HUNDRED SIXTY EIGHT THOUSAND THREE HUNDRED SEVENTY EIGHT AB
DOLLARS ($268,378.00).
32. This Agreement may be executed in as many counterparts as 24
25
27
28
26
I deemed convenient, each of which, when executed, shall be deemed an orig
33. The operating aspects of this Agreement, including but no
to target area boundaries, may be altered from time to time through a le
nderstanding, accepted mutually by Authority's City Manager and Bank's
-12- 1
I
16
17
18
19
20
21
22
23 I
24
25
26
27
28
V
I
-13-
.* .* 1
h
'2
3
46
5
6
t?
8
9
J-0
. x:l.
22
e '0'
..
I
68iO RESOLUTTON NO.
1
F\U'TIKIRIZT!4G THC DEPOSIT OF FCNDS FROM THE COX liiGENCY ACCOUi..IT IdTTH 'TiiE SELECTEI)
RE HiiO I L I TAT I 0 N I' KO S IiArii DE P 0 S I 'i --- 0 RY _____^__---_I
\Ili(EREAS s the Ci ty Couiici 1 of the City of Carl sbad has authori zed .
of Commgnf ty Dcveioy?ment 51 ock Gra.nZ: funds .?atq the esta.bl .i shent of a lo,
rchablt 1 itation pimogrmli and
MEREAS, the City of Carlsbad and the County of San D-iego have ag
provide local rchabi? itation servjcces tIi~oagh the Coiiimu,!ii-i;y Devefopnlent
Grant progimiE and
WHEREAS, the City of Ca.i:.lshad must se8ec-t a depository to assist
adlni ni strati on ,df ' .:;he rehabi 1 5 tation 1 oan \Ii*ocess 9 and.
3-4.
x5
16
a'?
' ' 13
19
. 20
21
22
23
24.
25
26
1 guirantce rapid iqif ementaati oi: if the local kehabi 1 itatfon program, and
I
W~EKEAS i the ~i-ty of Car'lsbatf desi res to in1rned.i atcfy deposit $134
frcrjj the contingei?cy account wi th the selected depository, this amount 1
re-inibursecl wi*Lh.ln three weeks froni the Bl'ock Grant flii7d;
//I//
1 I///
j //I/
//I/
////
/I//
//I/
//I/
\ .. ///I ,.
. .a
3, j Z!
?5
4
E5
e
..
N01?1, THEREFORE, BE .IT RESOLVED, thzt the Ci %y ' Council ~f the City of C
sltall approve the Rehabi 1 itatioii Rgreemert with the Ihnk of America ai?
deposit $134,189, with thjs dcpoSitc\*j/ iron) the City's contingzncy a~c
PASSED, APPROVED AND ADOPTED at a regular meeting of the City C
of the City of Ca:nlsba.ci oil this 6th day of April iS82, by the folfowfn
1 to hit:
?I
8
9
JO
AY ES : Comcil Pfmbers Pack?-rd, Cas ler p baea-, ImZ s aid I5.iLc
NOES: Nme
UBSTAIIt: kne .
ABsm-r: NCXX
I
/
- aa
1 2
11.3
14
2-5
16
3.7
2.8
19
. 20
21
22
23
24
25
26
2'y
28
'E ,l, LF /"..", (,@ I"/& //< l- i ---_- I_ --__ ._- -. __--- .. . ROGALD C L PACKARD 5 M~J'
.. ,.
'3 i? 1 /? 0 *-eb j LLd, /LA & . .j - .--k.---.- j I-.__. ___l_l_ __-_-__-__ ~~~~,~~~..~~~~.-~~.~~~-,- 2 EtLETI4A L. RA'iiTEiiKIIANZ s City Ci ei-k
(Seal)
.
1
' T..
.. a I 1
'. i