HomeMy WebLinkAboutReso 1979-9673J
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RESOLUTION NO. 9673
RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CHULA VISTA APPROVING AGREEMENTS
BETWEEN THE CITY OF CHULA VISTA AND BANK
OF AMERICA FOR SERVICES RELATIVE TO THE
CITY'S COMMUNITY HOUSING IMPROVEMENT
PROGRAM AND AUTHORIZING THE MAYOR TO
EXECUTE SAID AGREEMENTS
The City Council of the City of Chula Vista does
h reby resolve as follows:
NOW, THEREFORE BE IT RESOLVED that those certain
a reements (Property Rehabilitation Loan Agreement - One Note Form
a d Property Rehabilitation Loan Agreement - Interest Subsidy Home
I provement Loan Program) between the City of Chula Vista and Bank
o America, a California Corporation, for services relative to the
C ty's Community Housing Improvement Program dated the 12th day of
July 1979 incorporated herein, the same as though fully set
f rth herein be, and the same is hereby approved.
BE IT FURTHER RESOLVED that the Mayor of the City of
C ula Vista be, and he is hereby authorized and directed to execute
s id agreements for and on behalf of the City of Chula Vista.
esented by_-~__
ul c~. liesrosners~
velopment Director
Approved as to form by
George Lin erg, City Atto ey
ADOPTED AND APPROVED 8Y THE CITY COUNCIL OF THE CITY OF
VISTA, CALIFORNIA, this loth day of__ July
197_, by the following vote, to-wit:
AYES Councilmen -_- E~dahl, Hyde, Gillow, Scott, Cox
A'
Councilmen None
N: Councilmen None
~~ COUnCllmen None
city clerk
STATE F CALIFORNIA
COUNT OF SAN DIEGO ) s s .
CITY 0 CHULA VISTA
Mayor of the City of
I, JENNIE M. FULASZ, CMC, CITY CLERK of the City of Chula Vista, California,
DO HER BY CERTIFY that the above and foregoing is a full, true and correct copy of
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(seal)
,and that the same has not been amended or repealed.
City Clerk
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AMENDMENT TO
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PROPERTY REHABILITATION LOAN AGREEMENT
COMPREHENSIVE FORM ,
THIS AMEb~iMENT is made by the CITY OF CHULA VISTA, a municipal
corporation in the State of California (herein called "Authority") and BANK OF
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'.,AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association
~I(herein called "Bank").
R E C I T A L S
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A. Authority and Bank, on September 15, 1981, entered into a Real
I'~Property Rehabilitation Program, pursuant to which Bank is making below-market
!,interest rate commercial, residential, and personal property (mobile home)
,rehabilitation loans ("Loans" or "Program Loans") to certain owners and/or
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occupants of real and personal property within Authority's target area and
approved by Authority as recipents of Loans ("Applicants").
B. Pursuant to paragraph 9 and paragraph 11 of the Property
(Rehabilitation Loan Agreement, Bank proposes to change borrower interest rates
!ifor commercial and residential property rehabilitation loans.
C. Pursuant to paragraphs 9, 11, and 13(8) of the Property
Rehabilitation Loan Agreement, Bank reserves the right to automatically amend
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the borrower interest rates for commercial and residential property
rehabilitation loans, effective January 1, 1883.
D. Pursuant to Part Four of the Property Rehabilitation Loan
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Agreement, Authority and Bank have agreed to cancel the availability of
Interest Subsidy Loans, contained in paragraphs 19 through 23, inclusive.
E. Pursuant to paragraph 28(a) of the Property Rehabilitation Loan
Agreement, Bank proposes to extend the maturity date of this Agreement.
F. Bank wishes to amend the Loan Agreement to provide the terms
herein agreed to.
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NOW, TIiEREFORE, for and in consideration of the foregoing and the
~mutusl agreements made herein, and for other good and valuable consideration,
.Authority and Bank agree as follows:
1. Paragraph 9 of the Property Rehabilitation Loan Agreement is
amended to provide in its entirety, as follows:
"Upon completion of its credit evaluation, Bank shall furnish
to Authority a recommendation whether to proceed xith the Loan or not,
including:
(a) s recommendation as to use of either a Collateralized or
Deferred Payment Loan, or some combination thereof; and
(b) an indication of which of the following Loans (for which
',Bank assumes all or part of the credit risk, as indicated parenthetically
below) Bank is willing to make to Applicant:
(1) For residential property improvement Loans:
(i) a 5.00% Collateralized Loan (15~ credit risk); or
(ii) a 10.00 Collateralized Loan (50~ credit risk)
(2) For commercial property improvement Loans, a 12.00
Collateralized Loan (60~ credit risk)."
2. Paragraph 11 of the Property Rehabilitation Loan Agreement is
amended to provide in its entirety, as follows:
"Each Collateralized Loan shall be supported by a
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noninterest-bearing deposit made by Authority to a Collateralized Loan
Account, an account that shall at all times be at least equal to:
(a) 100 of unpaid principal for each 3.00 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) Collateralized Loan;
(b) 85~ of unpaid principal for each 5.00 Residential
Rehabilitation Loan;
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1 (c) 50~ of unpaid principal for each 10.00 Residential
2 Rehabilitation Loan;
~ (d) 40~ of unpaid principal for each 12.00 Commercial
,¢ Rehabilitation Loan;
b plus, in each case, 100 of accrued unpaid interest. Authority hereby assigns
s the Collateralized Loan Account to secure the Collateralized Loans." d
7 3. Paragraph 13(a) of the Property Rehabilitation Loan Agreement
g is amended to provide in its entirety:
9 "(a) On both the short-term commercial note and the installment
0 note, interest and other finance charges shall be such as to bear interest at
1 an annual rate of 3.00, or 5.00%, or 10.00%, or 12.00 calculated on a simple
~ interest basis."
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4. Effective January 1, 1983, paragraphs 9, 11, and 13(a) of the ',
Property Rehabilitation Loan Agreement will be automatically amended, to
provide in their entirety:
I'A) "9. Upon completion of its credit evaluation, Bank shall furnish to
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Authority a recommendation whether 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 of which of.the following Loans (for which
Bank assumes all or part of the credit risk, as indicated parenthetically
below) Bank is willing to make to Applicant:
(1) For residential property improvement Loans:
(i) a 5.00 Collateralized Loan (15~ credit risk); or
(ii) a 10.25 Collateralized Loan (50~ credit risk)
(2) For commercial property improvement Loans 11.75
Collateralized Loan (60% credit risk)."
B) "11. Each Collateralized Loan shall. be supported by a
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!noninterest-bearing deposit made by Authority to a Collateralized Loan
(Account, an account that shall at all times be at least equal to:
(e) 100 of unpaid principal for each 3.00% Loan for xhich
'(Bank has not designated the~Applicant (pursuant to paragraph 9(b)) as a party
to whom Bank is willing to make a (partially) Collateralized Loan;
(b) 85~ of unpaid principal for each 5.00 Residential
(!Rehabilitation Loan•
(c) 50~ of unpaid principal for each 10.25 Residential
Rehabilitation Loan;
(d) 40~ of unpaid principal for each 11.75 Commercial
an•
Rehabilitation Lo ,
plus in each case, 100% of accrued unpaid interest. Authority hereby assigns
the Collateralized Loan Account to secure the Collateralized Loans."
C) "13. (a) On both the short-term commercial note and the installment
note, interest and other finance charges shall be such as to bear interest at
,an annual rate of 3.00, or 5.00, or 10.25, or 11.75 calculated on a simple
interest basis."
5. Paragraph 28(a) of the Property Rehabilitation Loan Agreement
is amended to provide in its entirety, as follows:
"(a) The term of this Agreement shall mature on August 1,
1983. This Agreement may be terminated or amended by either of the parties
hereto at six
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1 (6) month intervals from August 1, 19$2, provided written notice of intent is
2 given to the other party at least fifteen (15) days prior to the termination
date." ,
IN WITNESS WHEREOF, this Amendment is executed by Authority acting
by and through its City Council pursuant to Resolution No. 11075
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authorizing such execution, and Bank.
Dated this 16th day of November , 1982,
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CITY OF C ULA VISTA
gy ;
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
B3' • ~ch,/ ~~~ n
Don Walsh`--
Title:MdyOr Of the City Of Chula Vistd Title: Vice President-Statewide Head
City Improvement and
Restoration
APPROVED AS TO FORM: Attached is a true and correct
copy of the original Resolution:
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ity At ney Q ty Clerk
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PROPERTY REHABILITATION LOAN AGREEMENT
ONE-NOTE FORM
This AGREEMENT is made by the CITY OF CHULA VISTA, a municipal
corporation/political subdivision of the State of California, herein
called "Authority", and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association, herein called "Bank".
R E C I T A L S
A. Authority has authorized a Housing Rehabilitation/Code
Enforcement Program (as amended and modified from time to time, herein
called "Program").
B. As part of Authority's implementation of Program, Authority
has requested Bank to make below market interest rate property rehabili-
tation loans ('°Loans") to certain owners of residential real property
within Authority and approved by Authority as recipients of Loans
("Applicants"). The purpose of the Loans would be the rehabilitation
of said real property in accordance with Program.
C. Bank is willing to make Loans to Applicants on the terms
and conditions set forth in 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:
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1. At the request of Authority, Bank, through its Chula Vista '•
Main Branch, shall consider making loans to Applicants directed to Bank
by Authority. Authority shall notify the respective Applicant in writing
of any request it makes to Bank. The notification shall contain the follow-
ing statement: "Authority has requested the Chula Vista Main Branch of
Bank of America National Trust and Savings Association, 295 E. Street, Chula
Vista, California 92010, to consider making a specific extension of credit
to you."
2. 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 rehabili-
tation work to be performed on Applicant's real property;
(c) a description of the work;
(d) an estimate of the value of the real property offered
as security for the Loan;
(e) a copy of the notice provided to Applicant pursuant to
paragraph 1 above;
(f) a copy of the proposed contract between a licensed con-
tractor and the Applicant for the work;
(g) Authority will inform Bank of the Loan interest rate
to be received by each Applicant (to be 3% or 7%).
3. Bank shall perform its customary credit evaluation with
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respect to each Applicant, make its judgment with respect to the cre~i.it-
worthiness of each Applicant, and inform a designated representative of
Authority of such judgement, and if Authority makes a written request to
Bank that the Loan should be made, Bank shall make Loan to Applicant.
If Bank does not approve Loan, Loan application may be re-submitted by
Authority with the written direction of the Authority to make the Loan
requested 3% or 7%, 100% collateralized.
4. (a) Each Loan shall be evidenced by one note, as provided
herein.
(b) The Loan proceeds thereof shall be disbursed by Bank
as requested by Authority.
(c) As part of its normal credit accomodations Bank will
make creditor life and disability insurance available to each Applicant.
Insurance will be at Applicant's option subject to standard qualifi-
cations and premiums. Qualifications and premiums are subject to
change without prior notice. In the case of defaulted loans,
Authority agrees to guarantee unpaid premiums in accordance with
the provisions of paragraph 8(a) below.
(d) The term of the instalment note shall be determined by
Applicant for the Loan in question, but may not exceed 15 years, and the
instalment note shall be amortized in equal monthly instalments over
its term. Interest will be calculated on a simple interest basis for
each instalment note.
5. With respect to each Loan:
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(a) The Loan shall be documented using Bank's standard
forms.
(b) Interest and other finance charges, as defined in the
Federal Truth in Lending Act and Regulation Z thereto, shall be such
as to result in an Annual Percentage Rate, as defined in that Act and
Regulation Z, of 3% for all 100% matching deposits, and 7% for all 70%
matching deposits.
(c) The note evidencing the Loan shall be secured by a
deed of trust covering the real property that is the subject of the re-
habilitation of which the proceeds of the Loan are to be used.
6. (a) The Loans shall be supported by a non-interest bearing
deposit (public agency savings account) made by Authority in an amount
equal to the following percentages of the unpaid principal amount of all
Loans plus accrued interest thereon.
(i) 100% thereof, for 3% Loans;
(ii) 70% thereof, for 7% Loans.
A relevant deposit to such account shall be made when Loan funds are
initially advanced by Bank.
(b) At the end of each calendar month during the term of
this Agreement, Bank shall remit to Authority the amount, if any, by which
Authority's deposit exceeds an amount equal to 100% or 70% of the unapid
principal, plus accrued unpaid interest and insurance premiums on all out-
standing Loans including 3% Loans and 7% Loans, respectively.
(c) Authority hereby assigns said deposit to Bank for the
purpose set forth in paragraph 8 below. Funds that Bank thus remits to
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Authority shall be deemed to be funds that Authority deposited at least
180 days before.
(d) Except as specifically required by this Agreement,
Authority waives any right it may have to require Bank to: (i) proceed
against any Applicant or other person; (ii) proceed against or exhaust
any collateral for the relevant Loan; or (iii) 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.
7. In the event Authority requests Bank to make a Loan the
terms of which are other than as provided in paragraphs 4 and 5 above,
Bank shall comply with Authority's request. In that case, after Bank
has obtained Applicant's note on terms Authority has requested for the
Loan, Bank shall, promptly after completion of the respective rehabili-
tation work, sell the Loan to Authority for the price and according
to the procedure specified in paragraph 8. Promptly after the assign-
ment, Authority shall pay to Bank a documentation fee of THIRTY SEVEN
DOLLARS AND 50/100 ($37.50) to cover its internal administrative and
out-of-pocket expenses, as specified by Bank, for each Loan so made.
Such fee shall be recovered from Applicants.
8. (a) Any 3% Loan supported by a pledged deposit equal to
100% of the outstanding principal of the Loan pursuant to paragraph 6(a)
made by Bank which remains in default for a continuous period of
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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 shall be purchased by Authority for an amount equal to the
then outstanding principal balance of the Loan plus accrued unpaid
interest thereon, together with insurance premiums, if any, accrued
through the 90th day of default. Said purchase shall be accomplished
by:
(i) the due endorsement by Bank to Authority of the
promissory note evidencing such Loan, with recourse or warranty;
(ii) the withdrawal by Bank from the deposit account
supporting the Loan an amount equal to the purchase price therefor;
and
(iii) the delivery of the promissory note and the
assignment and delivery of the deed of trust.
(b) Any 7% Loans (supported by pledged deposits equal to
70% of the outstanding principal of the Loans pursuant to paragraph 6(a)
made by Bank which 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
shall be processed as follows:
(i) Bank may withdraw from the deposit accounts
supporting the Loans an amount equal to 70% of the outstanding
and unpaid principal of the Loan plus accrued unpaid interest
thereon together with insurance premiums, if any, accrued
through the 90th day of default. Bank shall have no recourse
against Authority or deposited funds for any amounts in excess
of those permitted under this subparagraph.
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(ii) The Bank will not assign the deed of trust.to
the Authority upon completion of the actions of paragraph (b)(i)
but, may for its own account, exercise rights under the deed of
trust to the extent it desires to recover for itself the remain-
ing 30% of the outstanding and unpaid principal of the Loans
plus accrued unpaid interest thereon together with insurance
premiums, if any, accrued after the 90th day of default.
(iii) If Authority desires, Bank shall assign to
Authority such rights as may be necessary to recoup or attempt
to recoup any funds withdrawn from the deposit account in
connection with any loan default. In any event where withdrawals
have been made from the deposit account in association with a
defaulted loan and Bank subsequently recovers funds with respect
to such defaulted loan (as, for example, but without limitation,
if a voluntary sale of the property takes place) Bank shall, after
deducting all amounts to which Bank is entitled, return and pay
over to Authority all amounts in excess thereto.
(c) During any ninety (90) day default period, for a 3%
or 7% loan, Bank shall perform its customary collection procedures with
respect to each Loan. After the sale of a 3% Loan to Authority, Bank
shall have no responsibility for collection or otherwise with respect
thereto, except as provided herein. Bank shall, for its customary fees
therefor, accept such 3% Loans from Authority for collection purposes
only, pursuant to Bank's then current installment collection procedures.
(d) On Authority's request, Bank shall, for its customary
fees therefor, provide foreclosure services with respect to any Loan in
default, and may substitute Bank for BA Premises Corporation as trustee
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under the•applicable deed of trust prior to performing such services.
(e) For purposes of this paragraph 8, 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.
9. The term of this Agreement shall be two (2) years from the
date of execution by Authority, renewable by mutual consent of the parties
hereto with such amendments and modifications as then may be agreed to.
This Agreement may be terminated by either of the parties hereto at six
(6) month intervals from the date hereof, provided written notice of
intent to terminate is given to the other party at least sixty (60) days
prior to the termination date. Any termination of this Agreement shall
not affect the operation hereof as it relates to Loans outstanding at the
time of said termination.
10. Prior to the making of the first Loan as contemplated by
this Agreement, Authority shall furnish or cause to be furnished to Bank
an opinion of its legal counsel to the effect:
(a) that Authority has all requisite power and authority
to enter into this Agreement;
(b) that Authority has taken all such actions as may be
required for the execution, delivery and performance hereof; and
(c) that this Agreement (and any instrument or document
to which Authority is a party pursuant to this Agreement) is, or
will become upon execution by Authority, valid, binding and
enforceable in accordance with its terms.
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11. 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 Authority's
liability to Bank with respect to the purchase of any Loan shall be
limited to the deposit supporting the Loans, plus any amount necessary for
payment of earned interest and insurance premiums, as set forth in para-
graph 8 above.
12. 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
to negligent or wilful acts or omissions by Bank. All contractors shall
operate as independent contractors and nothing herein is intended to
affect such independent contractor status.
13. Authority and Bank shall comply with all applicable statutes
and regulations, including without limitation, where applicable, the
Federal Truth in Lending Act and Regulation Z thereto, the Consumer Credit
teporting Act, and the Equal Credit Opportunity Act and Regulation B
=hereto.
14. Any communications between the parties hereto may be given
~y mailing the same, postage prepaid, to Bank at its Chula Vista Main
4ranch, 295 E. Street, Chula Vista, California 92010, and to Authority
it Office of the City Manager, 276 Fourth St., Chula Vista, California
X2010, or to such other addresses as either party may in writing here-
fter indicate.
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.15. 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 of this Agreement shall prevail.
16. Bank may, at its option, decline to make additional Loans
from and after the date when the principal balance of all Loans out-
standing has exceeded one-million two-hundred thousand DOLLARS
~$ 1,200,000 ).
17. This Agreement may be executed in as many counterparts
as may be deemed convenient, each of which, when executed, shall be
deemed an original.
IN WITNESS WHEREOF,this Agreement is executed by Authority
acting by and through its City Manager, pursuant to Resolution No. 9673
authorizing such execution, ands by Bank.
Dated this 12th day of July ,19 79 ,
CITY OF CHULA VISTA
By~
Title Mav~r of ('hula Vista
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By ~'
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Title (~"
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PROPERTY REHABILITATION LOAN AGREEMENT
INTEREST SUBSIDIZED HOME IMPROVEMENT LOAN PROGRAM
This AGREEMENT is made by Chula Vista, a municipal corporation/
political subdivision of the State of California, herein called "Author-
ity," and BANK OF Ar1ERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association, herein called "Bank."
R E C I T A L S
A. Authority has authorized a Housing Conservation Program
(as amended and modified from time to time, herein called "Program").
B. As part of Authority's implementation of Program, Author-
ity has requested Bank to make 3% APR or 7% APR property rehabilitation
loans ("Program Loans") to certain owners of residential real property
within Authority and approved by Authority as recipients of Loans. Pur-
suant to this proposal, Authority would, in consideration for Bank's mak-
ing the Program Loans,.subsidize Bank, through certain deposits and debits
thereto, for the reduced amount of interest received by Bank from the
Program Loans.
C. Bank is willing to make Program Loans on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing and
the mutual agreements made herein, and for other good and valuable con-
sideration, Authority and Bank agree as follows:
1. At the request of Authority, Bank, through its Chula Vista
Main Branch shall consider making individual Program Loans, at Interest
Rate as requested by Authority, to applicants directed to Bank by Authority.
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Authority shall notify the respective applicant in writing of any such
request if makes to Bank. The notification shall contain the following
statement: "Authority has requested the Chula Vista Main Branch of Bank
of America National Trust and Savings Association, 295 E. Street, Chula
Vista, California 92010, to consider making a specific extension of
credit to you."
2. Authority shall furnish to Bank, with respect to each ap-
plication for a Program Loan:
(a) an introductory letter stating that Authority desires
Bank to consider making a Program Loan to applicant;
(b) the requested Program Loan interest rate to the
borrower of 3% APR or 7% APR.
(c) a breakdown of the costs involved in the rehabili-
tation work to be performed on the applicant's real property;
(d) a description of the work;
(e) a copy of the notice provided to applicant pur-
suant to paragraph l;
(f) a copy of any contractor bid accepted by applicant;
(g) a statement including the name of the contractor
who will perform the rehabilitation work.
3. Bank shall perform its customary credit evaluation with
respect to the creditworthiness of each applicant, and inform a desig-
nated representative of Authority of such judgment. Bank shall make the
Loan to the applicant if Bank deems the applicant creditworthy. Bank's
credit judgment shall be final on this program. If Authority makes a
written request to override Bank's decision, Loan application may be re-
submitted by Authority-with the written direction of the Authority to make
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the Loan under Property Rehabilitation Loan Agreement. The term of '
the Program Loan and the loan terms other than interest shall be the
same as those applicable to Bank's conventional home improvement loans,
however, the Bank will waive all standard fees. Program Loans shall be
documented using Bank's standard forms. All Program Loans shall be
assets of Bank.
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4. Authority's deposits of Community Development Block Grant
funds may be made in any of the following forms:
(a) A deposit to the Loan Subsidy Account. This is
a savings account, the minimum balance of which must at all times
at least equal the total, for all Program Loans, of the differ-
ence between (i) the total interest due at the Bank's target
yield rate, currently ll% for the term of the loan, and (ii) total
interest for the term of each Program Loan.
(b) A deposit to the Warehouse Account. This is an
interest-bearing savings account, the funds in which are unal-
located to Program Loans.
(c) The purchase from Bank of time certificate(s) of
deposit.
5. (a) The minimum required balance of funds in the Loan
Subsidy Account are hereby irrevocably committed to payment of in-
terest subsidies to Bank with respect to the Program Loans. Bank
will debit the account, pay itself monthly, for the aggregate of
the difference between the Bank's target yield and the 3% or 7%
interest rate(s) at which Program Loans are actually made.
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• (b) Authority may transfer funds among the various ac-
counts referred to at paragraph 4 above, except that it may not
effect withdrawals from the Loan Subsidy Account. If Authority
requests a 3% or 7% Program Loan and the balance of the applicable
Loan Subsidy Account is insufficient, to subsidize the loan, Bank
may transfer to the Loan Subsidy Account any funds that may exist
in the Warehouse Account.
6. (a) The interest subsidy that Aurhority is required to
make hereunder and the minimum required balances for the Loan Sub-
sidy Account shall be adjusted for prepayments. If a Program Loan
is prepaid, Authority shall not be chargeable for any interest
subsidy for the resulting unused term of the loan. The minimum
required balance of the Loan Subsidy Account shall be ratably de-
decreased to take account of the prepayment.
(b) Authority shall subsidize, on the same ratable basis
as for Program Loan regular payments, additional interest, up to
a maximum of 90 days' interest for each Program Loan, that accrues
as a result of the borrowers delinquency in making payment. Bank
may use its standard operating procedures with respect to such
delinquent payments; a common practice is for the borrower to pay
no additional, delinquent interest at the time the delinquent in-
stallment payment itself is made, and for Bank to collect the total
of all delinquent interest payments concurrently with the final
loan payment. Authority shall provide an interest subsidy, at the
applicable rate differential, as delinquent interest for each in-
stallment accrued (rather than as it may later be paid), and the
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minimum required balance of the applicable Loan Subsidy Account
shall be increased to take account of the accrued delinquent in-
terest.
(c) Periodically, and at least annually at the close of
the calendar year, Bank shall adjust the required minimum balances
of the Loan Subsidy Accounts for prepayments and delinquent in-
terest.
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(d) The 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."
7. The term of this Agreement -shall be one (1) year from the
date of execution by Authority, renewable by mutual consent of the par-
ties hereto with such amendments and modifications as then may be agreed
to. This Agreement may be terminated or amended by either of the par-
ties hereto at six (6) month intervals from the date hereof, provided
written notice of intent to terminate is given to the other party at
least fifteen (15) days prior to the termination date. Any termination
of this Agreement shall not affect Loans outstanding at the time of said
termination. At termination, the minimum required balance of the Loan
Subsidy Account shall be paid to Bank. Concurrently, Bank and Authority
shall negotiate to determine what adjustment, if any, to the minimum re-
quired balance is appropriate to take account of anticipated delinquent
payments and prepayments for outstanding Program Loans over their re-
maining unexpired terms.
3
5
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8. In the event Authority requests Bank to make a Deferred
Payment Loan on terms that, aside from the 3% APR and 7% APR interest
rate(s) for Program Loans, are other than Bank's ordinary terms for home
improvement loans, Bank shall comply with Authority's request. After
Bank has made the Loan on terms Authority has requested, Bank shall promp-
tly sell the Loan to Authority for the price and according to the pro-
cedure specified below:
(a) the due endorsement by Bank to Authority of the
promissory note evidencing the Loan, without recourse or war-
ranty;
(b) the debt by Bank to the Warehouse Account in an
amount equal to the purchase price therefor; and
(c) the delivery of the promissory note and the as-
signment and delivery of the deed of trust.
Promptly after the assignment, Authority shall pay Bank a fee to cover
its internal administrative and out-of-pocket expenses, as specified
by Bank, but in no event be more than THIRTY SEVEN and 50/100 DOLLARS
($37.50) for each Loan so made. Such fee shall be Authority's sole
expense and shall not be recovered from Applicants.
9. Prior to the making of the first loan as contemplated by
this Agreement, Authority shall furnish or cause to be furnished to Bank
an opinion of its legal counsel to the effect:
(a) that Authority has all requisite power and
authority to enter into this Agreement;
(b) that Authority has taken all such actions as
may be required for the execution, delivery and performance
hereof;
463 6
,. ~ °r.
• (c) that this Agreement (and any instrument or docu-.
ment to which Authority is a party pursuant to this Agreement)
is, or will become upon execution by Authority, valid, binding,
and enforceable, in accordance with its terms; and
(d) that Authority has reviewed the rates, terms and
structure of any proposed deferred payment note and considers
it legal, binding, and enforceable.
10. 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 to negligent or wilful acts or omissions by
Bank. All contractors shall operate as independent contractors and
nothing herein is intended to affect such independent contractor status.
11. Authority and Bank shall comply with all applicable
statutes and regulations, including without limitation, where applic-
able, 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.
12. Any communications between the parties hereto may be
given by mailing the same, postage prepaid, to Bank at its Chula Vista
Branch, 295 E Street, Chula Vista, California 92010, and to Authority
at 276 Fourth Street, Chula Vista, California 92010, or to such other
addresses as either party may in writing hereafter indicate.
g~?3
13. 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 negotia-
tions and prior writing 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 of this Agreement shall prevail.
14. Bank may, at its option, decline to make additional Loans
from and after the date when the principal balance of all Loans outstand-
ing has exceeded $1,200,000
15. This Agreement may be executed in as many counterparts
as may be deemed convenient, each of which, when executed, shall be
deemed an original.
IN WITNESS WHEREOF, this Agreement is executed by Authority
acting by and through its City Council pursuant
to Resolution No. 9673
authorizing such execution, and by
Bank.
Dated this 12th day of
CITY OF Chula Vista
July 1979
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
1
By ~ BY
~ •
Title Mayor of the City of Chula Vista Title
96 ~3 e