HOME Rental Housing Program Manual
Table of Contents
I.
2003 Resources
Page 2
II.
Eligible and Prohibited Activities and Cost
Page 3
III.
Per Unit Cost Limits
Page 8
IV.
Property Requirements
Page 8
V.
Rent and Occupancy Requirements
Page 11
VI.
Owner/Developer Eligibility Requirements
Page 13
VII.
Lobbying Prohibition
Page 14
VIII.
Conflict of Interest
Page 15
IX.
Compliance
Page 15
X.
Labor Standards
Page 16
XI.
Equal Employment Opportunity/Fair Housing
Page 18
XII.
Environmental
Page 21
XIII.
Lead Based Paint
Page 21
XIV. Flood Insurance
Page 23
XV.
Page 24
Tenant Relocation
XVI. Affordability Period
Page 24
XVII. Tenant Participation Protections
Page 25
XVIII. Underwriting Requirement and Feasibility Criteria
Page 26
XIX. Typical Loan Commitment Terms
Page 41
XX.
Page 45
Typical Conversion Conditions
XXI. Typical Construction/Permanent Loan Agreement Terms
Page 51
XXII. Typical Land Use Restrictive Agreement
Page 92
XXIII. Home Loan Terms and Definitions
Page 102
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HOME RENTAL HOUSING PROGRAM
REQUIREMENTS
The HOME Investment Partnership Program (HOME Program), created by the National
Affordable Housing Act of 1990, provides funds to states and local governments to
support affordable housing initiatives. The Georgia Housing and Finance Authority
(GHFA) is the Participating Jurisdiction (PJ) and recipient of the State of Georgia’s
allocation of funds from the federal HOME Investment Partnership (HOME) program.
GHFA contract’s with the Georgia Department of Community Affairs (DCA) to
administer the programs funded by this HOME allocation. The HUD regulations for the
HOME program (24 CFR part 92) set forth the minimum requirements that GHFA and
sub-recipient must meet. These federal regulations governing the HOME program
require DCA to ensure compliance with program requirements and to take appropriate
action when problems arise ( 24 CFR 92.504(e)).
The Georgia Department of Community Affairs HOME Rental Housing Program,
provides funding through the HOME Program to respond to the affordable housing needs
throughout the state of Georgia. These funds are used for eligible HOME activities to
provide decent, safe and affordable housing for Georgia’s low-income families.
Policies governing the administration of the HOME Rental Housing Loan Program
are found throughout the 2003 Qualified Allocation Plan, the 2003 Application
Manual, the 2003 Electronic Application and Application Instructions and other
documents published by HUD, and DCA. Included in this section of the Plan are
policies to which DCA wishes to draw specific attention. In no way, however, should
exclusion of a policy from this section be construed to limit its applicability to funding
resources allocated under the Plan. DCA reserves the right to formulate new policies to
address operational issues that may arise during the course of the funding cycle.
I.
2003 RESOURCES AVALIABLE
HUD annually allocates HOME funds to state and larger local governments. The Federal
Fiscal Year (FFY2003) HOME allocation is expected to be available to the State on July
1, 2003, following approval of the Annual Action Plan for FFY2003 Consolidated Funds
(Annual Action Plan). In the event FFY 2003 HOME funding is not made available to the
State, DCA will not be obligated to provide any HOME Loans to Applicants.
As of the date of publication of the Plan, approximately thirteen million dollars
($13,000,000) is expected to be available for HOME Loans under the Plan. DCA reserves
the right to adjust the amount of HOME funds available for HOME Loans pending final
notification from HUD of its FFY2003 HOME allocation and DCA’s determination of
the funding needs of all of its HOME-funded programs as described in the Annual Action
Plan for FFY 2003 Consolidated Funds.
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CHDO Set-aside. Fifteen percent (15%) of the State’s total FFY 2003 HOME allocation
will be set aside for projects owned by nonprofits that have been pre-qualified by DCA as
CHDOs. All or part of the CHDO set-aside will be met with funding under this Plan.
HOME funds awarded to CHDOs under other DCA programs may also count towards
this set-aside.
CHDOs funded under this Plan must act as sole or joint Owners of newly constructed or
rehabilitated rental housing for occupancy by low and very low-income households as set
forth in the Plan, the Manual, and the HOME regulations. Organizations seeking funds
under the CHDO Set-aside may apply for funding to cover pre-development expenses
through DCA’s CHDO Pre-Development Loan Program. Information on the PreDevelopment Loan Program is available on DCA’s website or by calling DCA at (404)
327-6881.
In the event HOME Loan funds remain unallocated after the Competitive Scoring process
described in the Plan is complete, DCA reserves the right to apply the remaining HOME
Loan funds to other DCA programs at its sole and absolute discretion. Further, DCA
reserves the right to adjust the amount of HOME funds allocated to the HOME Rental
Housing Loan and CHDO Set-Aside in its sole and absolute discretion.
Maximum HOME Loan. The maximum HOME Loan will be $2 million per project,
except that projects located in Rural Counties will be eligible for loans up to $2.8 million
if no other lender is involved or a second lender agrees to a second-lien position.
II. ELIGIBLE AND PROHIBITED ACTIVITIES/COSTS
DCA has established the HOME Rental Housing Loan Program to allow owners and
developers of rental property to apply for funding for the construction and/or
rehabilitation of affordable rental housing for low income persons in the state of Georgia.
HOME funds can be used only for eligible activities and costs for the purpose of
providing affordable rental housing to low and very low-income persons.
A.
Eligible Activities
The following activities are eligible under the HOME Rental Housing and CHDO
Loan Programs:

Reconstruction - Reconstruction means the rebuilding, on the same lot, of
housing standing on a site at the time of project commitment. (Note:
Construction of housing on a vacant lot where a house was demolished or
removed prior to project commitment is considered new construction.)
Rooms may be added outside the foundation or footprint of the housing being
reconstructed, but the reconstructed housing must be substantially similar to
the original housing. In addition, the number of housing units may not be
decreased or increased as part of a reconstruction project.
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If an existing structure is converted to affordable housing, or if a structure is
moved to a new foundation which is constructed with HOME funds, these
projects are considered reconstruction. Reconstruction also includes replacing
an existing substandard unit of manufactured housing with a new or standard
unit of manufactured housing

New Construction - If construction entails adding one or more units beyond
the existing walls, this is also considered to be new construction. The addition
of room(s) beyond the existing walls (but not unit(s)), is not considered new
construction (for example, an additional bedroom to relieve overcrowded
conditions is not new construction).

Moderate and Substantial Rehabilitation - Conversion of an existing
structure from an alternative use to affordable, residential housing is
considered rehabilitation. Moderate rehabilitation includes those projects
which have a total rehabilitation cost of less than or equal to $25,000 per unit.
Substantial rehabilitation includes those properties with a total rehabilitation
cost of greater than $25,000 per unit.

Site Improvements - HOME funds may be used to provide a level of
amenities equal to that of surrounding standard projects. Examples of
acceptable site improvements include: utility hook-ups; off-street parking, if
generally provided in surrounding buildings; appropriate landscaping; fencing;
and ground cover for play grounds.
HOME funds may only be used to provide on-site improvements for a
proposed project. The project site is the property owned by the property
owner and proposed for the project. For instance, streets and sidewalks
related to a HOME assisted project will be considered on-site only if they are
privately owned by owners. HOME funds may be used to make off-site utility
connections from the property line to the adjacent street

Transitional Housing - Section 205 of the Housing and Development Act of
1992 added transitional housing as an eligible HOME activity. Transitional
housing includes housing which is provided for a limited amount of time,
often 12-18 months, for persons in need of appropriate supportive services.
The intent is to treat the housing as transitional until a more independent
living housing arrangement can be identified.
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MIXED-USE PROJECTS
For purposes of the HOME programs, a mixed-use project contains, in addition to at least
one residential unit: a laundry, community or any commercial type facilities (e.g. stores,
delicatessens, restaurants), and/or any other non-residential space (e.g. office space)
which is available to the public. If laundry and/or community facilities are for use
exclusively by the project tenants and their guests, then the project is not considered
mixed-use. Neither a leasing office nor a maintenance area will trigger the mixed-use
requirements.
No HOME funds can be used to fund the commercial or non-residential portion of a
mixed-use project. Therefore, if a HOME-assisted project contains such commercial or
non-residential space, other sources of funding must be used to finance that space.
In order to be eligible for HOME funding, a mixed-use project must meet the following
conditions: residential living space in the project must constitute at least 51 percent of
the total project space; and each building in the project must contain residential living
space (including the building which holds any such laundry and/or community facility).
HOME funds can only be used to fund the residential portion of the mixed-use project
which meets the HOME rent/purchase price limits and income requirements. If the rental
project will contain a model apartment that will be shown to potential renters, the model
apartment will be considered a non-residential area subject to the mixed-use
requirements, unless the model apartment will be rented in the event of high occupancy.
B.
Eligible Costs
DCA HOME Rental Housing Loan funds are used to fund on-site construction
hard costs. DCA defines construction hard cost as the total of the on-site site
improvements, on-site unit/building construction cost,
plus construction
contingency, and contractor services. Exceptions are considered on a case-by-case
basis when requested in writing.
C.
Eligible Development Hard Costs
Eligible development hard costs are those costs required to construct or
rehabilitate properties to meet the applicable area building codes, DCA
rehabilitation standards, and HQS, and to make other essential improvements,
including, but not limited to:






Acquisition of land and existing structures
Site preparation including demolition
Site improvements, including utility connections
Securing of buildings
Construction materials and labor
Improvements to permit use by handicapped persons
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





D.
Model Energy Code improvements (new construction)
Energy-related repairs and improvements
Accessibility improvements for disabled persons
Abatement of lead based paint hazards and other environmental mitigation
Repairs and/or replacement of major housing systems in danger of failure
General property improvements which are non-luxury in nature
Other costs
There are several other miscellaneous costs which are also allowable. These costs
include:



Contractor Services which includes the Builder’s Overhead, Builder Profit,
General Requirements, and the Payment and Performance Bonds or the cost of
the letter of credit or construction loan.
HOME funds can be used for projects previously assisted with HUD funds. If
other HUD requirements still apply to the property, then both the existing
requirements and HOME requirements must be met. Projects receiving
Section 8 Moderate Rehabilitation Program Assistance may not be good
candidates for HOME funds, because HOME maximum rent levels may not be
consistent with Moderate Rehabilitation rents.
Interim construction financing is an eligible HOME cost.
Repayment of HOME funds
If a project that is funded with HOME funds is terminated before
completion, the funds must be repaid to DCA’s HOME Investment Trust
Fund (except for project-specific pre-development assistance to a CHDO
that was terminated for reasons outside the control of the CHDO).
E.
Prohibited Costs
DCA HOME funds cannot be used to fund the following activities:

Soft costs related to the project’s development, such as architectural,
financing, reserves, and insurance;

Providing a project reserve account for replacements, unanticipated
increases in operating costs or operating subsidies;

Providing tenant-based rental assistance for the special purposes of the
Section 8 Existing Housing program or for preventing displacement from
projects assisted with rental rehabilitation grants under 24 CFR §511;

Providing nonfederal matching contributions required under any other
federal program;
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
Carrying out activities authorized under 24 CFR §968 (Public Housing
Modernization);

Providing assistance to eligible low-income housing under 24 CFR §248
(Prepayment of Low Income Housing Mortgages);

Providing assistance to project(s) previously assisted with HOME funds
during the period of affordability established by DCA (exception: tenantbased rental assistance or assistance to a first-time homebuyer to acquire
housing previously assisted with HOME funds). However, additional
HOME funds may be committed to a project up to one year after project
completion, but the amount of HOME funds in the project may not exceed
the maximum per-unit subsidy amount;
Costs of legally required relocation payments and relocation assistance for
temporarily relocated persons are eligible HOME costs.

F.

Using HOME funds to carry out housing remedies or to pay fines,
penalties, or costs associated with an action in which DCA has been found
by a federal, state or local court, to be in violation of Title VI of the Civil
Rights Act of 1964, the Fair Housing Act, or any other federal, state or
local law promoting fair housing or prohibiting discrimination. However,
HOME funds may be used in connection with a settlement that has been
entered into in any case where claims of the above violations have been
asserted against DCA only to carry out housing remedies with eligible
activities; and

Using HOME funds in projects assisted under the pre-1992 Rental
Rehabilitation

Program governed by 24 CFR §511;

Emergency shelters; and

Pay for the acquisition of property from any participating jurisdiction
unless it was acquired with HOME funds or bought in anticipation of
carrying out a HOME project.
Religious Organizations
DCA is prohibited from providing HOME funds to any entity which is a
“primarily religious organization”. DCA may provide HOME funds to a
wholly secular entity if the following 4 four conditions are met:
 The wholly secular entity must own in fee simple the project to be
assisted with HOME funds;
 The HOME project must be used exclusively for secular activities;
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 The wholly secular entity must not seek to further the ideas or
purposes of a primarily religious organizations; and
 There must not be any religious or membership criteria for the tenants
of the HOME-assisted project.
III.
PER UNIT COST LIMITS
All projects built or rehabilitated using HOME dollars must adhere to the
Minimum/Maximum Per Unit Cost requirements. At minimum, DCA must invest an
amount equal to $1,000 times the number of HOME assisted units in each project. The
minimum relates only to HOME funds and not to any other funds that might be used for
project cost. At a maximum, DCA will not fund projects with per-unit costs higher than
those limits given in the State’s Qualified Allocation Plan, which are determined using
the limits set by HUD under Section 221(d)(3) of the National Housing Act. Developers
may apply for a waiver of the per-unit cost limits, as described in the Qualified Allocation
Plan. In projects where all units are not HOME assisted- DCA will verify that HOME
funds went only to HOME units and that the costs were appropriately allocated
( HUD CPD Notice 94-12).
IV.
PROPERTY REQUIREMENTS
All HOME-assisted units- whether in a multifamily building, single room occupancy
(SRO), or single-family or group home, must conform to HUD’s minimum property
standards and any local, state, or federal codes once construction is complete. If the
HOME assisted units have been designated as “floating units”, all units in the project,
whether HOME assisted or not, must meet these requirements at project completion.
If the project is substantially rehabilitated (a total development cost of more than $25,000
per unit) or is newly constructed, the units also must meet specific energy standards.
A.
Site and Neighborhood Standards
If HOME funds are used for new construction purposes, the housing project must
meet HOME site and neighborhood standards. New Construction is defined as
housing which has received an initial certificate of occupancy (CO) or equivalent
document within the one-year period preceding the date DCA commits HOME
funds to a project.
If the proposed project is located in an area of minority concentration, there must
be documentation in the project file which evidences that either “sufficient” and
“comparable” housing opportunities exist for minority families (in the income
range to be served by the proposed project) in the area outside the area of minority
concentration where the proposed project is to be located and that proposed
project is necessary to meet those housing needs.
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If the proposed project is located in a racially mixed area there must be
documentation which evidences that the proposed project will not significantly
increase the proportion of minority to non-minority residents.
In this section, “sufficient” means a reasonable distribution of assisted housing
units each year which over a period of years will approach a balance of housing
choices within and outside the areas on minority concentration. “Comparable”
means:
A.
B.
C.
D.
same household type (elderly, family, disabled, etc.);
same tenure type (owner/renter);
same tenant contribution in rent; or
same income group and same standard housing conditions exist in
the same housing market area.
“Overriding housing needs” means the proposed housing project is intended to
preserve or restore housing located in the area of minority concentration, provided
that discrimination is not the reason that the housing located outside the area of
minority concentration is not available or if the use of this standard in recent years
has had the effect of circumventing the obligation to provide housing choice.
Applicants for HOME funding of new construction projects will be required to
meet DCA’s site selection and approval process requirements before being
approved for HOME funding. Applicants must first determine if the project is
located in an area of minority concentration, a racially mixed area, or a nonminority area. An area of minority concentration is an area that has 50% or more
minorities. A racially mixed area is an area that has 25% or more minorities. A
non-minority area is an area that has less that 25% minorities.
If a project is located in an area of minority concentration, the applicant must
submit the following information to DCA:
1.
2.
3.
4.
5.
6.
2003 HOME Manual
Map of proposed project site
Site map of proposed neighborhood
Census track or enumeration district data of proposed
neighborhood population by:
a.
household type
b.
tenure type
c.
income group and housing conditions
d.
race of residents
Narrative on how the percentage of minority residents is
determined
List of sufficient, comparable sites outside area of minority
concentration or market study evidencing that there is an
overriding housing need in the area of minority concentration.
Expected rents for units on site and comparable rates to other low
income housing near comparable sites outside area of minority
concentration.
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7.
Number of HUD assisted units located outside of the area of
minority concentration.
If the project is located in a racially mixed area, the following must be submitted
to DCA by the applicant for review:
1.
2.
3.
4.
Map of proposed project site
Site map of proposed neighborhood
Census track or enumeration district data of proposed
neighborhood population by:
a.
household type
b.
tenure type
c.
income group and housing conditions
d.
race of residents
Based upon the proposed number of units, show what increase of
minority residents to non-minority residents will occur.
For projects located in non-minority areas and areas that are not racially mixed,
the following must be submitted to DCA by the applicant:
1.
2.
3.
Map of proposed project site
Site map of proposed neighborhood
Census track or enumeration district data of proposed
neighborhood population by:
a.
household type
b.
tenure type
c.
income group and housing conditions
d.
race of residents
The Federal Regulations Compliance Officer is responsible for reviewing the
information submitted by the applicant. The Federal Regulations Compliance
Officer will certify to one of the three statements identified in the Certification of
Compliance, HOME Site and Neighborhood Standards.
B.
Property standards
Housing assisted with HOME funds must meet or exceed the minimum property
standards set forth in Section 24 CFR 200.25, applicable state and local code
requirements, and DCA Rehabilitation Standards (see Design Specification Guide
for new construction or the Rehabilitation Guide in the Rental Housing
Application Manual for rehabilitation). Local rehabilitation standards may be
adopted but they must meet or exceed DCA Rehabilitation Standards.
Throughout the affordability period, the HOME-assisted property must continue
to meet HQS, applicable state and local codes, DCA Rehabilitation Standards, and
local rehabilitation standards (if any).
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DCA is required to inspect the rental project and determine that the property
standards are being met (annually for projects with more than 25 units, every two
years for projects with 25 units or less.)
Applicants are required to submit plans and specifications that conform to the Design
Specifications, located in the Rental housing Application Manual, for new construction
and the Rehabilitation Guide for rehabilitation. These guides reflect Georgia and DCA
construction standards. DCA will review the plans and specifications for conformance
with the appropriate guide. Ongoing construction inspections will also be made to ensure
that the project is constructed in accordance with approved plans and specifications.
Upon project completion, DCA requires a signed certification from the local code
enforcement agency documenting conformance with local codes.
V.
RENT AND OCCUPANCY REQUIREMENTS
The HOME Program establishes rents and occupancy requirements for all units assisted
with HOME funds. The HOME Program requires that each building in a HOME-assisted
project contain housing that meets the applicable HOME rent and occupancy
requirements. HOME-assisted housing must be in compliance with rent and occupancy
requirements throughout the affordability period.
A.
Rent Requirements:
There are two types of rents associated with the HOME Program.

Low HOME Rents - If the project consists of three or more rental units, at
least 20 percent of the HOME assisted units must have rents equal to or less
than the rent affordable to a household at 50 percent of area median income
(AMI) or the area Fair Market Rent (FMR), which ever is less. Additionally,
the Low HOME units must be distributed comparably across unit sizes, e.g.
20% of the one bedrooms, two bedrooms and three bedrooms must be Low
HOME units in each project.

High HOME Rents - DCA requires that the remaining HOME-assisted units
have rents equal to or less than the rent affordable to a household at 60 percent
of AMI or the area FMR. If a project is located in the Atlanta MSA, the rent
limit is reduced to the lesser of 54 percent of AMI or the area FMR.
In determining the maximum rent that can be charged to a tenant for a HOMEassisted unit remember that tenant-paid utility allowances must be subtracted from
both low and high HOME rents.
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While the actual project rents must meet these requirements, they may be less than
the maximum allowable rents under the HOME program requirements. A number
of reasons for this include developers choosing to lower the rents in order to
receive consideration in the competitive selection process, and a market study
indicating that lower rents are necessary for the project to be competitive in that
apartment market area. The actual project rent limits will be written into the Land
Use Restriction Agreement (LURA) which will be recorded at the closing of the
HOME loan.
B.
Occupancy Requirements:
The units renting for the low HOME rent (minimum of 20% of the HOME
assisted units) must be rented to households earning no more than 50 percent
AMI, adjusted for family size. The remaining HOME assisted units must be
rented to households earning no more than 60 percent AMI, adjusted for family
size. AMI charts for the State of Georgia are located in the DCA Application
Manual. Income is calculated using the Section 8 definition of income.
Defining HOME-assisted units
In projects that are not 100% affordable and are mixed-income, it will be necessary to
designate the number of HOME-assisted units in the project. The minimum number of
HOME-assisted units is equal to the following:
Total HOME investment/Total Development Cost x Total # of units = Min. # HOME
assisted units
HOME-assisted units:

are subject to all of the HOME requirements;

must be comparable to the other units in the project (units are considered comparable
if HOME-assisted units have similar amenities and a comparable number of
bedrooms to those units that are not assisted.);

cannot have a cost differential greater than 15% of comparable unassisted units;

when less than 100% of the units in a project are HOME-assisted, the
owner/developer must document prior to HOME funding how many units will be
considered HOME assisted. These units may be identified as “fixed” units within the
development or be designated as “floating” units. “Fixed” units means that the
HOME rent and occupancy requirements apply to certain units for the duration of the
affordability period. “Floating” means that while the number of HOME-assisted units
remains the same throughout the affordability period, the specific units that are
HOME-assisted may change. If the floating designation is chosen, the non-HOME
assisted units must be comparable to the HOME-assisted units. At a minimum each
building must contain one HOME-assisted unit at all times.
Using the Low Income Housing Tax Credit with the HOME Program
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Many DCA projects will combine the Tax Credit program and the HOME Program. As a
result, if the 9% tax credit is proposed, the income targeting requirements are more
stringent. Specifically, at least 40% of the assisted units in each building of the project
must be targeted to families at 50% of AMI, adjusted for family size. All remaining
assisted units must be targeted to families at 60% or less of AMI, adjusted for family size.
If the HOME loan is provided at or above the applicable federal rate, the HOME loan will
not be treated as a federal subsidy. The project would qualify for the 9% credit allocation
for eligible improvement cost and is also eligible for the 130 percent basis adjustment
for projects in “qualified census tracts or difficult development areas” (QCT/DDA).
HOME loans that are provided for a project at an interest rate below the applicable
federal rate may still be counted in the eligible basis and the project may receive a 9%
credit allocation if the project meets these stricter occupancy requirements. However, the
project is not eligible for the 130 percent basis adjustment for projects in “qualified
census tracts or difficult development areas” (QCT/DDA).
Accordingly, the maximum rents charged for the units occupied by tenants at 50% or less
of AMI must be equal to or less than the lesser of the applicable tax credit rent based on
the 50% rents
from the rent chart or the area FMR. The remaining rents for the assisted units must have
rents no greater than the lesser of the tax credit rents based on the 60% rents from the rent
chart or the area FMR. The Tax Credit Section of the Application Manual provides more
details on the Low Income Housing Tax Credit Program.
A project combining HOME and tax credits must meet the HOME rent requirements on
all its units occupied by low-income households. The HOME funding cannot be
designated for only some of the units so as to avoid the high HOME rent requirements.
VI.
OWNER/DEVELOPER ELIGIBILITY REQUIREMENTS
All owners/developers’ financial capacity and experience will be evaluated during the
underwriting process to determine if the owner/developer is able to carry forward the
proposed project. However, there are additional requirements related to owner/developer,
and in some cases contractors and subcontractors, participation in the program. These
requirements are outlined below.
A.
Debarment and Suspension Requirements
HOME funds may not be provided to any individual or entity that is presently
debarred, suspended, proposed for debarment, declared ineligible, subject to
limited denial of participation (LDP) or voluntarily excluded from participation in
the HOME program.
DCA will review all pertinent HUD and DCA debarment/suspension lists for the
presence of any developer, owner, contractor, subcontractor, or other entity
participating in the construction/rehabilitation of the HOME-assisted project.
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The owner must obtain written certification from any contractor, subcontractor, or
other entity participating in the construction/rehabilitation of the HOME assisted
project verifying that the entity or individual is not presently debarred, suspended,
proposed for debarment , declared ineligible, LDP’d or voluntarily excluded from
participation in the HOME program. The owner must submit written certifications
to DCA as new entities become involved with the project.
VII.
LOBBYING PROHIBITIONS
24 CFR 87
The Byrd Amendment prohibits a recipient of federal funds from using said
federal funds to lobby members of Congress; and in the event that a recipient of
federal funds uses other non-federal monies to lobby Congress, requires disclosure
of lobbying activities. The Byrd Amendment requirements apply to Federal
contracts, grants and cooperative agreements exceeding $100,000 and Federal
loans exceeding $150,000.
Execution of the forms described below by the appropriate individual or entity,
evidencing compliance with the Byrd Amendment must occur prior to loan
closing, or for contractor or subcontractors selected after loan closing, before they
are allowed to start work.

Owner - An owner who expects to receive a HOME loan in excess of
$150,000 must certify that the funds will not be used to lobby Congress. If
the owner uses non-federal money to lobby Congress, then the owner must
also submit to DCA a Standard Form Disclosure of Lobbying Activities
(SF-LLL) (Attachment 1-D). The borrower is responsible for ensuring
compliance with the Byrd Amendment by all contractors and
subcontractors.

Contractor - Any developers, contractors, (including architects, engineers
and other consultants which are contractors) (Contractor) who receive
federal funds in excess of $100,000 for any one HOME activity must
complete and submit SF-LLL (Attachment 1-D) to the owner. The owner
will forward the signed SF-LLL to DCA.

Subcontractor - If the Contractor pays anyone (Subcontractor) in
connection with the HOME project in excess of $100,000, the Contractor
must submit SF-LLL (Attachment 1-D). The Contractor will forward the
submitted SF-LLL to DCA.
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VIII. CONFLICT OF INTEREST
No person who is currently an employee, agent, consultant, officer, elected or
appointed official of DCA (hereinafter collectively referred to as Person) may
obtain a financial benefit or interest from any HOME-assisted activity; have an
interest in any contract, subcontract or agreement relating to any HOME-assisted
activity; or obtain any proceeds from a contract, subcontract or agreement relating
to any HOME-assisted activity. The prohibition only applies to a Person who has
HOME-related responsibilities, or is in a position to participate in the decision
making process or has access to inside information. This prohibition remains in
effect for one year after the tenure of said Person has expired. This prohibition
also applies to the Person’s immediate family members and business associates.
If a potential conflict of interest exists involving any of the above-mentioned
parties as described above, the potential conflict of interest must be disclosed to
DCA, which must obtain a waiver from HUD prior to awarding funds to the
project.
DCA’s request to HUD for a waiver includes a description of the nature of the
conflict; an assurance that all the interested parties have publicly disclosed the
conflict; and an opinion from the Georgia Attorney General’s office stating that
any waiver of the conflict would not violate state or local law. DCA may request
a waiver of a conflict of interest from the HUD Regional Office. If a potential
conflict of interest exists between the above-mentioned parties, DCA may require
the applicant to provide information and assist in the preparation of the waiver.
A certification is included in all applications stating that no conflict of interest
exists, and a section of the application allows for the identification of any
potential conflicts of interest.
IX.
COMPLIANCE
DCA will monitor the property for compliance with all applicable HOME
regulations prior to loan closing, during construction/rehabilitation, and
throughout the period of affordability. At the pre-construction conference, the
owner will receive a complete package of HOME compliance materials and
information on training opportunities. Prior to lease up, the owners will be
required to attend a DCA Compliance workshop that will cover lease-up
regulations and compliance requirements throughout the period of affordability.
Any owner, developer, syndicator or management company who has been in
default or has been out of compliance with any DCA-administered program within
the past three calendar years may be ineligible to participate in future funding
rounds. Please refer to the 2003 Compliance Manual for compliance requirements
including the Federal Compliance requirements set forth in Section 12 of the 2003
Compliance Manual.
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X.
LABOR STANDARDS
I.
APPLICABILITY
If HOME funds are provided (whether for construction or non-construction
expenses) to projects involving the construction of affordable housing consisting
of 12 or more units, then the contract relating to the new construction or
rehabilitation must comply with the following labor standards:




Davis-Bacon Act, 40 U.S.C. 276(a)-5
Contract Work Hours and Safety Standards Act, 40 U.S.C. 327-332
Copeland “Anti Kickback” Act, 40 U.S.C. 276(c) 1982.
All applicable regulations and HUD Handbook #1344.1
Each developer/owner is required to attend a pre-construction conference. During
this conference DCA’s Federal Regulations Compliance Officer will distribute
applicable forms and instructions relating to labor standards and answer any
questions you may have. The following summary of general requirements is
intended to be a summary and should not replace direct conversations with DCA
staff.
Records should be maintained to evidence compliance with all
requirements.
Common pitfalls to avoid.





Starting work prior to pre-construction conference and loan closing without written
authorization from DCA
Failure to obtain a wage determination from DCA prior to soliciting construction
bids.
Failure to submit weekly contractor/subcontractor payrolls and Statements of
Compliance to DCA.
Failure to provide documentation that employees are receiving the compensation
reflected on payrolls (i.e. employee interviews).
Failure to pay workers for overtime.
Failure to comply with the items listed above may affect your compliance score and
ability to compete in future funding rounds.
II.
GENERAL REQUIREMENTS
Every construction and/or rehabilitation contract or subcontract must have appended to it
the labor provisions contained in HUD Form 4010, obtained from DCA at preconstruction conference. The property owner is required to ensure that all contractors and
subcontractors comply with this requirement.
The Labor Standards do not apply to individuals who are considered volunteers or to
members of an income eligible family who provide “sweat equity.”
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A.
Davis-Bacon Requirements
DCA will provide the owner/developer with the local prevailing wage rate for the
class of laborer/mechanic involved in the project at the pre-construction
conference. Wage rate decisions are based on determinations made by the U.S.
Dept. of Labor (DOL).
The owner/developer is required to:

Have a written contract with all contractors and subcontractors on the
project;

Submit to DCA a certification from the Bureau of Apprenticeship and
Training for each apprentice employed on the project;

Ensure that the applicable ratio of apprentices to journeymen is not
exceeded;

Ensure that all apprentices are paid the applicable wage rate;

Ensure that the applicable wage rate decision, as changed or modified, is
used in the contract bidding process, if any, and at the time the contract is
awarded;

Ensure that no party who is debarred/suspended or given limited denial of
participation is used as a contractor or employee (see Section 1 of this
Manual);

Ensure that wage decisions and DOL posters are displayed on the project
job site (poster will be distributed at the pre-construction conference);

Attend a pre-construction conference with DCA (mandatory, before you
start construction) which is held after loan underwriting and thirty days
prior to closing; and

Allow DCA to monitor the construction and/or rehabilitation and conduct
on-the-job interviews with workers on the job site.
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B.
Copeland Act Requirements
In general under the Copeland “Anti-Kickback” Act, the owner/developer must:
C.

Ensure that persons working on the construction and/or rehabilitation of
the project are paid weekly and that only those salary deductions which are
permissible are taken;

Submit to DCA, on a weekly basis, payrolls and Statements of
Compliance from contractors and subcontractors (the forms will be
distributed at the pre-construction conference and must be used to
document compliance with this responsibility);

Retain for at least three (3) years (and sometimes longer) the documents
described in the immediately preceding paragraph B;

Check the payrolls of the contractor and subcontractors for accuracy; and

Ensure that contractors and subcontractors retain for at least three (3) years
the basic records supporting the payrolls.
Contract Work Hours and Safety Standards Act
The property owner/developer must ensure that laborers and mechanics that work
in excess of forty (40) hours in any work week receive overtime compensation at a
rate at least equal to one and one-half times the basic rate of pay for overtime
hours.
XI.
EQUAL EMPLOYMENT OPPORTUNITY/ FAIR HOUSING
I.
Summary
No person in the United States may, on the grounds of age, race, color, national origin,
religion, sex, familial status or handicap be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program or activity funded in
whole or part with HOME funds.
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II.
Requirements
HOME fund recipients must comply with any and all federal, state and local laws
relating to fair housing and equal opportunity, including but not limited to those listed
below.
A.
Minority Business Enterprise Executive Orders 11625, 12432, and
12138 relating to use of minority and women-owned business enterprises
which provide that owners must make efforts to encourage the use of
minority and women’s business enterprises in connection with HOME
funds by prescribing procedures acceptable to establish and oversee an
outreach plan.
B.
The Federal Fair Housing Act (42 U.S.C. §3601 et seq. (1968)) and the
Georgia Fair Housing Act (O.C.G.A. §8-3-200 et seq., (1992 Supp.))
requires each owner to affirmatively further fair housing. It is illegal to
discriminate against any person because of race, color, religion, familial
status, sex, handicap, or national origin: in the sale of rental or housing of
residential lots; in advertising the sale or rental of housing or residential
lots; in the financing of housing or residential lots; in the provision of real
estate brokerage services; or in the appraisal of houses or residential lots.
Blockbusting is also illegal. Blockbusting is the use of racial fears and
prejudices to entice one racial group to flee a neighborhood when
members of a disparate racial group move into the area. Normally,
“blockbusting” refers to realtor exploitation of racial tensions. With
respect to the development of rental housing, the rental housing must be
accessible to persons with disabilities in compliance with the American
National Standard (ANSI A117.1), a copy of which can be obtained from
the EEOC at (404) 331-4276.
C.
Age Discrimination Act of 1975 (42 U.S.C. §6101 et seq.) which
prohibits discrimination based on age.
D.
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. §794) which
prohibits discrimination against any otherwise qualified handicapped
individual from participation in any program or activity receiving federal
financial assistance.
E.
Americans With Disabilities Act of 1990 (ADA) (42 U.S.C. §12116 et
seq.) which prohibits discrimination in employment on the basis of
disability (Title I) and prohibits discrimination on the basis of disability in
state and local government services (Title II). Transitional housing must
be in compliance with Title III of the ADA including but not limited to the
Americans with Disabilities Act Accessibility Guidelines (ADAAG).
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F.
Section 3 of the Housing and Urban Development Act of 1968 (12
U.S.C. §171U et seq.) which provides that, to the greatest extent feasible,
opportunities for training and employment arising in connection with
planning and carrying out any project assisted with HOME funds be given
to low-income persons residing within the program service area. In
addition, to the greatest extent feasible, contracts for work (of all types) to
be performed in connection with any project must be awarded to business
concerns, including but not limited to individuals or firms doing business
in the field of planning, consulting, design, maintenance or repair, which
are located in or owned in substantial part by persons residing in the
program service area.
G.
Executive Order 11063 which requires that all action necessary and
appropriate be taken to prevent discrimination based on race, color,
religion (creed), sex, national origin, familial status or disability in the
sale, rental, leasing or other disposition of residential property and related
facilities, or in the use or occupancy thereof, where such property or
facilities are owned or operated by the Federal Government, or provided
with HOME funds and in the lending practices with respect to residential
property and related facilities of lending institutions insofar as such
practices relate to loans insured, guaranteed or purchased by the U.S.
Department of Housing and Urban Development.
H.
Title VI Civil Rights Act - 1964 (42 U.S.C. 2000d) which provides that
no person in the United States may, on the basis of race, color, or national
origin, be excluded from participation in, or be denied the benefit of, or be
otherwise subjected to discrimination under any program or activity
receiving federal financial assistance from the U.S. Department of
Housing and Urban Development.
I.
Affirmative Marketing is required when HOME-assisted housing
contains five or more units. If applicable, owners of HOME-assisted
housing must adopt and conduct affirmative marketing procedures and
requirements which provide information and otherwise attract eligible
persons as described below. DCA will monitor and annually assess the
affirmative marketing efforts conducted by owners in compliance with this
requirement.
Owners must be in compliance with all of the above stated federal and state regulations.
In addition, owners must comply with the DCA MBE/WBE Outreach Plan and submit
their own written MBE/WBE Outreach Plan to DCA for approval. The MBE/WBE
Attachment can be used as a guide-form for the owner’s submission, make appropriate
adjustments as necessary. The owner is bound by all representations and certifications
made in the approved plan.
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The owner must also develop and submit to DCA a written affirmative marketing plan
(Plan). Using the form provided, the applicant is required to document its Plan and
assemble related documentation. Once the Plan has been approved by DCA, the
applicant must keep the plan on the central office premises, along with a copy of the
federal and state Fair Housing Act, both of which must be available for review by the
general public.
XII.
ENVIRONMENTAL REQUIREMENTS
HOME funded projects must adhere to the environmental requirements set forth in the
2003 QAP and the 2003 Environmental Manual. Additionally, in accordance with the
National Environmental Protection Act (NEPA), DCA has provided public notice and
reviewed the environmental effects of proposed housing related activities throughout the
state and concluded that a broad range of activities will not have an adverse effect on the
environment. As a result, the project level advertisements of NEPA are no longer
necessary. However, as each project is identified, DCA will review it for adherence to
DCA’s environmental requirements and for adverse environmental effects.
XIII. LEAD BASED PAINT
The HOME program prohibits the use of and requires the elimination of lead-based paint
hazards in HOME-assisted housing. These lead-based paint requirements apply to all
HOME-assisted properties built before 1978, with the exception of housing intended for
elderly or handicapped persons (except for units in which children under 7 years of age or
pregnant women are residing), and studio or efficiency apartments. These affected units
are referred to as “targeted housing”.
A.
Disclosure requirements for “targeted housing” - To protect families
from exposure to lead in paint and the contaminated dust and the soil it
generates, Congress passed the Residential Lead-Based Paint Reduction
Act of 1992. This law requires the disclosure of known information on
lead-based paint and lead-based paint hazards to the tenants or prospective
tenants of “targeted housing” as described above.
Property
owners/developers must:
2003 HOME Manual

Give tenants the EPA/HUD pamphlet titled “Protect Your Family
From Lead in Your HOME;” and

Incorporate the addendum entitled “Disclosure of Information on
Lead Paint and Lead Paint Hazards” into all lease agreements.
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B.
Lead based paint hazard control standards - The national “Lead-Based
Paint Hazard Reduction and Financing Task Force” recently provided
recommendations related to the control of lead based paint and associated
hazards in their report “Putting the Pieces Together: Controlling Lead
Hazards in the Nation’s Housing.” The DCA requirements outlined below
meet or exceed the recommendations provided by the Task Force. For
further guidance on specific guidelines for controlling lead-based paint
hazards refer to Title X of the Housing and Community Development Act
of 1992 and the final new HUD regulation on lead-based paint hazards in
federally-owned housing and housing receiving federal assistance released
September 1999.

All targeted
requirements:
housing
must
comply
with
the
following
 Completion of Environmental Questionnaire and Phase I
Environmental Assessment
 Consideration of reduction versus abatement - Depending on the
condition of the property, the property owner/developer, in
cooperation with HUD guidelines, referenced above, and DCA
may elect to reduce the lead-based paint and associated hazards.
Alternatively, the property owner/developer may propose
abatement. All interim controls must be included in the property’s
Operation and Maintenance Plan (O&M Plan) and reviewed by
DCA as described in this Manual.
 Engineer approval that all interim control and abatement work is
effective and has been completed according to HUD guidelines,
which approval must be obtained from an engineer who has a good
understanding of lead paint abatement measures and work, based in
training and experience, as confirmed by a Qualifications
Statement or similar document describing education, training, and
work experience, for the engineer(s) providing the approval.

For HOME-assisted housing constructed before 1978 and
occupied by families with children under seven years of age with
Elevated Blood Levels, the following procedures, in addition to those
listed above, must be followed:
 Cooperation with local public health officials investigating the
child’s case by:
 Responding promptly to requests from local officials for
information necessary to complete an environmental
investigation;
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
Providing access to the property; and

Implementing lead hazard control methods as directed by
the agency.
 Obtain a risk assessment unless the local health department has
already conducted an environmental investigation and the
owner/developer has already responded appropriately or the
property is already covered by valid documentation of compliance
by an independent certified individual.
 Control all LBP Hazards identified by the risk assessor within 15
days and conduct post intervention dust tests. Where there is
evidence of chewing, the control action should provide permanent
protection.
 Notify affected tenants of risk assessment results and hazard
control actions taken.
 Do not retaliate against tenant in response to the identification of
an EBL child.
 Relocate tenants if LBP Hazards are not promptly controlled. In
such cases the relocated tenants are eligible for relocation
payments, and the unit may not be re-rented until the LBP Hazards
have been controlled.
XIV. FLOOD INSURANCE
DCA requires flood insurance if a HOME-funded project is located in a community for
which flood insurance has been made available under the provisions of the Flood Disaster
Protection Act of 1973 (42 U.S.C. Section 4001, et seq.); or in a designated special flood
hazard area (SFHA). At the sole discretion of DCA, properties at elevations where
flooding is potentially a risk may also be required to obtain flood insurance.
Such flood insurance must be in a form of the standard National Flood Insurance Program
policy or in the form of a policy which meets the guidelines published by the Federal
Insurance Administration (FIA) in the Federal Register on February 17, 1978, as amended
(43 F.R. 7142). Please refer to the 2003 DCA Environmental Manual for further
guidance regarding flood insurance requirements.
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These guidelines establish the minimum amount of flood insurance required as the lower
of the following:

The full replacement cost value of the improvements secured by the mortgage; or

The maximum amount of flood insurance available on the date the mortgage was
filed.
The owner/developer is required to either provide documentation that the HOME funded
project is located outside of a designated SFHA; or provide documentation before closing
the HOME loan or grant that flood insurance is in place and will be maintained.
Documentation must be satisfactory to DCA and must include:

Consultation with local planning/zoning officials to learn if flood insurance has
been made available in the community through the Flood Disaster Protection Act
of 1973;

A copy of the flood insurance policy that references the property in question and
meets or exceeds the minimum amount required by FIA guidelines (i) or (ii); and

An agreement signed by the borrower that this policy will be maintained for the
life of the HOME loan. This may also be expressed as a clause in or an addendum
to the policy.
XV.
UNIFORM RELOCATION ACT
DCA will not consider applications for financial assistance that propose the
permanent displacement of existing resident tenants. However, there are instances
where temporary relocation may be necessary and allowed by DCA. Temporary
relocation may be allowed if a relocation plan and relocation budget are submitted
and approved by DCA. Please refer to the 2003 DCA Relocation Manual for further
guidance regarding temporary relocation.
XVI. AFFORDABILITY PERIOD
All HOME-assisted rental housing must remain affordable pursuant to certain rent and
occupancy restrictions for a requisite period of time. The affordability period will begin
on the date that the project is marked as "completed” in the HUD reporting system for the
HOME Program. This beginning date will occur after all federal HOME funds for the
activity have been expended. The affordability period will be specified in the recorded
LURA. However, certain protections are afforded existing tenants for a three year period.
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The affordability period may be terminated under certain circumstances related to
foreclosure or a transfer in lieu of foreclosure. However, in certain circumstances this
affordability period may be revived. For example, in a foreclosure situation, where the
owner of record prior to the foreclosure obtains an ownership interest in the project or
property after the foreclosure is complete, the LURA may be revived.
XVII. TENANT AND PARTICIPANT PROTECTIONS
There must be a written lease between a tenant and the owner of a HOME-assisted rental
project for the unit occupied by the tenant. This lease must be for a term of at least one
year, unless a shorter lease is mutually agreed to by the tenant and the owner/developer.
The owner and tenant must also execute DCA’s lease addendum (Attachment 1-E). If
any language in the owner’s lease conflicts with the DCA lease addendum, the DCA lease
addendum will take precedence. The lease must also provide that the owner will give at
least 30 days notice to the tenant before implementing a rent increase.
The owner/developer may terminate a tenant’s lease or refuse to renew a lease only for
serious or repeated violation of the terms and conditions of the lease; violation of
applicable federal, state or local law; or other good cause. The owner/developer must
give the tenant at least 30 days advance written notice of the owner/developer intent to
terminate or refusal to renew the lease and the grounds upon which this action is based.
The owner/developer must adopt written tenant selection policies and criteria that are
consistent with the purpose of providing housing for very low-income and low-income
families; are reasonably related to program eligibility and the tenant’s ability to perform
the obligations of the lease; give reasonable consideration to the housing needs of tenants
that would have a preference under 24 CFR §960.211 (relating to federal selection
preferences for public housing admission), which are families and tenants that are
involuntary displaced, occupying substandard housing, homeless, or paying more than 50
percent of their annual income for rent;
and provide for either the selection of tenants from a written waiting list in the
chronological order of their application, insofar as is practicable, or the prompt written
notice to any rejected applicant of the grounds for any rejection (see Attachment 1-F for a
sample tenant selection policy).
The owner/developer cannot refuse to lease to a holder of a Section 8 rental assistance
certificate or voucher, or a recipient of HOME tenant-based rental assistance, if the
prospective tenant is otherwise eligible under the HOME program.
If the owner/developer is a CHDO, it must develop and follow a fair lease and grievance
procedure, and a tenant participation plan for management decisions in keeping with the
HOME requirements found at 24 CFR Part 92-303.
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XVIII. UNDERWRITING REQUIREMENTS AND FEASIBLITY CRITERIA
Prior to making a firm loan commitment, DCA will carefully underwrite all loans to
assess project feasibility and long term viability.
A. General HOME Loan Requirements

Applicants requesting permanent HOME Loan financing must also use HOME
Loans for construction financing.

HOME loans will be made in an amount sufficient to cover hard construction
costs only, but not to exceed the lesser of 90% of unrestricted appraised market
value or $2 million in non-Rural Counties or $2.8 million in Rural Counties.

The minimum loan amount is $100,000 or $1,000 multiplied by the number of
HOME funded units, whichever is greater.

No interest will be charged during construction loan period.

Construction loan terms will be based upon the projected construction and leaseup schedule, as determined from the Application and DCA’s underwriting.

HOME Construction loans will convert to HOME permanent loans in the exact
amount of HOME construction financing being retired.

The interest rate on the permanent loan will be no less than 1%, but DCA
reserves the right to adjust this rate at its sole and absolute discretion.

Repayment schedules will vary depending upon projected economics of the
development.

In general, permanent HOME Loans will be fully amortizing, with a maturity and
amortization period ranging from 15 to 30 years.

DCA reserves the right, in its sole and absolute discretion, to adjust the term
according to its own underwriting projections and all applicable policies and
procedures.

Non-amortizing Balloon Loans are available for projects in Rural counties and
for all Special Needs Projects throughout the state applying under the Special
Needs Housing Tenancy Characteristics in Section 3B of Appendix II, Scoring
Criteria. In such cases the term will be set by DCA with monthly payment and
interest payments determined by DCA’s underwriting projections and a balloon
payment due at maturity.

Written agreements shall be entered into between GHFA and the borrower
evidencing, securing, and setting forth all of the terms and conditions of the
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HOME Loan. The Project Owner will also be required to execute all other
closing or loan documents DCA deems necessary or desirable to document the
HOME Loan satisfactorily.

HOME Construction Loan proceeds will be disbursed on a draw basis during the
construction period. The HOME loan documents will describe the policies and
procedures for obtaining a draw.

HOME Loans must “convert” to permanent loans within twenty-four months of
HOME loan closing and upon the satisfaction of certain conditions outlined in
the loan documents.
B. Other HOME Loan Policies and Provisions
The following provisions are also applicable to projects applying for HOME Rental
Housing Program Funds.

Annual Operating Expenses. Annual budgeted Operating Cost, excluding
reserve contributions, must be no less than $3,000 per unit for urban projects,
$2,600 for Rural County projects, and $2,000 for Rural County projects that
include USDA loans as a funding source. (The lower amount for an USDA
project is allowable due to USDA's more restrictive underwriting policies.)
However, DCA reserves the right to determine the reasonableness of budgeted
operating expenses for all projects. DCA will consider waivers for projects that
can clearly demonstrate that annual operating costs can be reasonably maintained
at a lesser amount. Approval of such waivers shall be at DCA's sole and absolute
discretion. Requests for waivers and fees shall be forwarded to DCA on or before
March 15 2003, to the attention of the Director of the Office of Affordable
Housing.

Assumptions for Land Purchase. The cost assumed for acquisition of land and
existing buildings will be limited to the lesser of the sales price or the appraised
“as-is” value. For Applications where there is an Identity of Interest between the
buyer and seller an appraisal no more than 6 months old and prepared by a MAI
appraiser must be submitted with the Application as a basis for the determination
of the appropriate sales price. The appraisal must provide separate valuations for
the land and existing buildings.

Builder Cost Limitations. Builder's overhead, general requirements, and builder's
profit are limited to percentages of the total construction contract (net of builder's
overhead, general requirements, and builder's profit) as follows: Builder’s
overhead – two percent (2%); General Requirements – Six Percent (6%); and
Builder’s profit – six percent (6%). For Applications where there is an Identity of
Interest between the owner and contractor or the developer and the contractor, the
cost of obtaining a letter of credit or a construction loan in lieu of the payment and
performance bond must be included in the general requirements.
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
Construction Contingency. The construction contingency amount must be at least
2% but no greater than 5% of the total construction cost for new construction
projects. For rehabilitation projects, the construction contingency amount must be
at least 5%, but no greater than 7% of the total construction hard cost. DCA
reserves the right to adjust development budgets in this regard, for underwriting
purposes, in its sole and absolute discretion.
To the extent feasible, DCA funds should be allocated to cover disbursements
from the construction contingency. Regardless of how the contingency is funded,
DCA must approve all change orders. Any unused balance in the construction
contingency at the time of Conversion must be used to reduce the principal
amount of the HOME Loan or the senior lender loan as appropriate, with the
monthly principal and interest payments adjusted accordingly.

Contract Bidding and Bid Bonds. Owners are not required to solicit bids for
construction contracts to be financed with DCA HOME Loans, and bid bonds are
not required when bids are solicited, unless otherwise required by law. However,
prior to closing a HOME Loan, DCA must approve both the general contractor
and the contract documents; DCA will not close a Home loan unless the
approved contract with the general contractor has been fully executed.

Construction Hard Cost Financing. HOME Loan funds can be used to finance
only construction hard costs which include site development, unit/building
construction, and contractors services which include, general requirements
(inclusive of payment and performance bonds), builders overhead and builder’s
profit. Soft costs, acquisition costs and other project costs must be financed by
other financing sources. (Not applicable to HOME Loan Applications that also
received a CHDO Predevelopment Loan.

Construction Loan Recourse. All construction loans will be full recourse against
the borrower and/or the principals of the Ownership entity until full and final
completion of the project as determined by DCA.

Consultant Portion of the Developer Fee. The Consultant’s Fees will be limited
to no more than 20% of the Developer Fee. The Consultant’s Fee cannot be
claimed if the Consultant has an identity of interest with the Owner or Developer
of the Project.

Conversion. Projects receiving HOME Loans must be scheduled to convert
within twenty four-months of the HOME construction loan closing.

Debt Coverage Ratio. The debt coverage ratio for all tangible debt after funding
expenses and other required reserve funding must be between 1.10 and 1.30 for
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the first full year of operation. For purposes of determining the debt coverage
ratio, the deferred Developer Fee will not be considered tangible debt. The debt
coverage ratio cannot drop below 1.10 during the 15-year Compliance Period,
HOME Loan term, or the Period of Affordability, whichever is longer. The
Credits and/or HOME Loan amount may be reduced if DCA’s underwriting
indicates a debt coverage ratio greater than 1.30 in the first full year of operation.

Developer Fee Limitation. DCA restricts the maximum Developer Fee as
follows:
For New Construction the Developer fee will be limited to 15% of Total
Development Costs less the budgeted Developer Fee and the cost of land. For
acquisition and rehabilitation projects, the Developer Fee on the rehabilitation
portion will be limited to 15% of the Total Development Cost less the budgeted
Developer Fee, the acquisition cost of the buildings, and the cost of land; The
Developer Fee on the Acquisition portion will be limited to 15% of the building
acquisition cost.
When an Identity of Interest exists between the Developer and the general
contractor, the maximum Developer Fee is restricted to 15% of the Total
Development Cost less the cost of the land, the budgeted Developer Fee, and the
builders profit. If the Application budgets a Developer Fee of less than 15%, the
percentage proposed will be substituted for 15% in determining the maximum
Developer Fee.
Consultant’s Fees and any reserves held for less than the term of the loan are
considered part of the Developer Fee.

Developer Overhead and Consultant Fees. The amount of the Developer’s
overhead and Consultant’s Fee (if applicable) that can be drawn during
construction must not exceed the lesser of (1) 20% of the maximum allowable
Developer Fee, or (2) 50% of the total Developer Fee requested. None of the
Developer’s profit will be disbursed until all DCA conversion conditions have
been met and the HOME Loan for construction has been converted to a
permanent loan. These disbursement conditions will be reflected in the HOME
Loan documents and in an agreement with any other funding source(s) that will
be funding these line items.

Distribution Across Unit/Bedroom Sizes
1. Rent. Projects with a multi-tiered rent structure must distribute the rents
equally across unit sizes and buildings. These units need not be fixed but may
float in the same way high HOME rent and low HOME rent units may float
within a project.
2. Accessibility. To the maximum extent feasible, accessible units must be
distributed through the project and site so as not to limit choice.
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


Equity Requirements. Owner will be required to make an investment of its own
funds in the project (the “Equity”). When and in what amounts the Equity will
be invested before GHFA is required to disburse loan proceeds will be subject to
GHFA’s discretion and approval. GHFA’s general policy is to fund the last of
hard costs incurred for the project. It is important that each owner structure their
equity pay in to insure that there is not a funding gap due to the timing of the
equity payments during the construction phase.
Final Draw. The final payment of funds shall be made at the time of substantial
completion of construction, to be evidenced by submission of all items on the
DCA form “Requirements for Final Draw”, including but not limited to: final
payment request in AIA form, copies of all certificates of occupancy for all
buildings, final lien waivers, construction Consultants' final inspection, and
approval for release of funds.
Fixed or Floating Unit Designation. For properties with both HOME assisted
and non- HOME assisted units, the Applicant must select “fixed” or “floating”
units at the time of loan commitment. When HOME assisted units are “fixed”,
the specific units that are HOME assisted (and, therefore, subject to HOME rent
and occupancy requirements) are designated and will never change.
When HOME assisted units are “floating”, the units that are designated as
HOME assisted may change over time as long as the total number of HOME
assisted units in the project remains constant and the HOME assisted units
remain comparable to the non assisted units over the affordability period in
terms of size, features and number of bedrooms. If the Applicant fails to make
such an election at the time of loan commitment, it will be deemed that the
Applicant has elected to treat the HOME- assisted units as “floating”.

Employee Unit Designation. For Applicants electing to house management,
security, or maintenance personnel in a project unit, the employee unit can be
either designated as part of the residential unit count or as part of the common
space. If the employee unit is designated as part of the residential unit count, and
is also designated as a low-income unit, it must be occupied by an income
eligible household that may be the on-site management, security or maintenance
personnel and rent can be charged or collected by the Owner for this unit. If the
employee unit is designated as part of the common space, it need not be occupied
by an income-eligible household, but must be occupied by a full time on-site
manager, security or maintenance personnel. No rent can be charged or collected
by the Owner for a unit designated as common space.

Identity of Interest.
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1. Contractor- If there is an Identity of Interest between the Owner and the
contractor or the Developer and the contractor, a third party front-end analysis of
the construction costs will be commissioned by DCA during the DCA
underwriting period. Additionally, industry standards for such Owner-provided
construction services shall be used to determine reasonableness for the services.
2. Project Participant- Identity of Interest between any Project Participant, other
than the Syndicator, and the construction and/or permanent lenders is prohibited
unless the financing terms and conditions are reasonable, customary, and
consistent with industry standards. The determination of whether or not such
terms and conditions are reasonable and customary are at DCA’s sole and
absolute discretion.
Other Provider - If there is an Identity of Interest between the Owner and any
other provider of service, material, or supplies, three (3) bids must be submitted
to DCA. Such Owner-supplied services, materials, or supplies must not exceed
the amount ordinarily paid for the service, material, or supply.

Intercreditor Agreements. When GHFA is not the only construction lender on a
project, an intercreditor agreement shall be executed with the other lenders to
ensure DCA’s required involvement in all significant aspects of the
administration of the construction loans.
At a minimum, the intercreditor agreement should contain at least the following
essential elements:
1.
2.
3.
4.
5.
6.
A development cost budget approved by all lenders indicating the
source(s) of funding for each line item;
A process and timetable for reviewing and approving change orders to the
construction contract;
A process and timetable for reviewing and approving draw requests,
including site inspection and documentation standards;
A process and timetable for amending the approved development cost
budget;
Limitations on disbursements for Developer Fee (Owner’s profit and risk)
and Consultant fees; and,
Other matters, such as priority of each lender’s interest in the collateral for
the loans.

Land Use Restrictions. When there is more than one financing source imposing
land use restrictions on a project, e.g., a HOME Loan and Credits, there may be
restrictions from one program that are more restrictive than similar restrictions in
the other program(s). In such instances, the most restrictive requirements will
apply to the project.

Market Studies. Applicants seeking 9% Credits and HOME Loans must pay a fee
that includes the cost of a market study to be commissioned by DCA. Applicants
must pay this fee at the time of Application Submission. The resulting market
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study is the sole property of DCA. However, after the Competitive Scoring
process is complete and reservations have been announced, each Applicant will
receive one copy of their respective projects market study.

Non-Amortizing Loans--Excess Cash Flow. For all permanent non-amortizing
HOME Loans, in which the monthly installments of principal and interest are not
sufficient to pay the HOME Loan in full over the loan term (a “non-amortizing
HOME Loan”) the borrower will deposit one-half of the cash flow from the
project (after payment of secured debt service) into an interest bearing reserve
account. The holder of the reserve account and the terms under which it will be
held must be approved by DCA in its sole discretion. Funds held in the reserve
account will be used only for principal reduction of the HOME Loan or Capital
Improvements, but only if such use is approved by GHFA in advance. These
funds in the reserve account (with the exception of those approved by GHFA for
Capital Improvements) must remain in the reserve account until the HOME Loan
is repaid.

Non-Amortizing Loans—Future Market Value. In the case of a non-amortizing
HOME Loan, DCA will require a projection from the appraiser of the future
market value of the property at the maturity of the HOME Loan. This value will
be used by DCA to determine the likelihood of retirement of the outstanding
balance by refinance or resale of the property. The future market value of the
property must be greater than the projected outstanding DCA HOME Loan
balance at maturity in order for the HOME Loan to be considered financially
feasible. In the case of a non-amortizing HOME Loan, the outstanding interest
and a portion of the principal must be paid every year.

Operating Deficit Reserve. All developments financed in whole or in part with
HOME Loans must budget for and fund an operating deficit reserve in an amount
of no less than six times the secured monthly debt service to lenders plus no less
than six months projected operating expenses. The funding of the operating
deficit reserve must be completed prior to the permanent HOME Loan
conversion. If drawn upon, no further distribution to Owners will be authorized
until such time as the operating deficit reserve is restored to full funding.
The operating deficit reserve must be held by DCA or the senior lender and must
remain in place for the term of the HOME Loan or the Period of Affordability,
whichever is longer. With the exception of instances in which Fannie Mae is the
sole senior lender, if DCA is a subordinate lender, but makes a HOME Loan in
an amount greater than the senior lender, DCA must hold the reserves. All
withdrawals from the operating deficit reserve must be requested in writing and
approved in advance by DCA. Interest earned on the operating deficit reserve
account shall be added to the account as an additional contribution and will not
be credited against the required monthly cash contributions.

Over-Income Tenant Restrictions - When DCA HOME Loans are used,
additional over-income restrictions shall apply. Upon re-certification of a
previously eligible tenant, if it is determined that the tenant’s income exceeds
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60% of AMI, the tenant's rent must be increased to the lesser of: 30% of the
tenant's adjusted annual income, HUD's fair market rent limitations, or the
maximum amount allowable by the Code, not to exceed limitations set by state
or local laws (if any). Any exceptions to this requirement must be approved in
writing by DCA. In the event a HOME funded project also has Credits, the Over
Income Tenant Restrictions will defer to the tax credit rules stated above.

Owner-Contractor Agreements. If the Owner is not also the general contractor,
all developments financed in whole or in part with a HOME Loan for
construction must use an AIA Standard Form Agreement between Owner and
contractor, with Standard Form Terms and Conditions. The contract can be
either stipulated sum or cost plus a fee with a maximum.

Partnership Agreements. The partnership agreement and any amendments must
be fully executed prior to the HOME Loan closing. The Partnership Agreement
and any amendments must reflect the terms of the HOME Loan transaction on
all material points.

Payment and Performance Bonds. A 100% payment and performance bond will
be required for all developments funded with HOME Loans. The cost of these
bonds shall be included in the six- percent general requirements limit of the
Builders Cost Limitations. When an Identity of Interest exist and the contractor
cannot obtain a payment and performance bond, a letter of credit or construction
loan can be utilized in lieu of a payment and performance bond. The cost of the
letter of credit or construction loan will be included in general requirements.
A waiver may be granted only when there is an Identity of Interest between the
Owner/Developer and the contractor, regardless of the contract amount, since
such a relationship is usually not bondable. A waiver will not be considered
unless the Owner agrees to provide a construction completion guaranty, secured
by a letter of credit with a value of at least 50% of the total construction cost,
including profit and overhead; or he Owner agrees to secure a construction loan
with private financing. DCA will disburse funds during the construction period,
in an amount not to exceed $2,500 per construction draw.

Public Housing Units. HOME and/or Credits cannot be used for the
construction or rehabilitation of public housing units except in mixed income
projects that include public housing units and a portion of the Total
Development Cost is from another clearly identified funding source.

Relocation and Displacement of Tenants. For all HOME Loan and Credits
projects, tenant household data forms must be submitted with the Application
for every occupied unit in each building to be rehabilitated. The Applicant is
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responsible for the accuracy of the information on the data forms. Applications
for HOME Loans that require relocation of existing tenants due to rehabilitation
work will be accepted only with a relocation plan (including a sufficient budget)
that in the opinion of DCA, meets the requirements of the Uniform Relocation
Act and any other applicable laws.
Funding sources other than the HOME Loan must be used to finance the
relocation costs. If the Applicant anticipates displacing tenants, the Applicant
must include in the Application a detailed displacement plan, which sets forth
the specifics of the displacement, including a projected budget, and an
explanation of efforts planned by the Applicant to mitigate the impact of the
displacement. Any displacement of tenants will be subject to DCA’s prior
written approval.

Rent-Up Reserves. A rent-up reserve is required for projects receiving a DCA
HOME Loan only if a lease-up cash flow analysis results in a cash flow deficit.
For those developments, the required rent-up reserve would equal the amount of
the projected lease-up deficit. A required rent-up reserve will only be used to
cover operating cash flow deficits during the period prior to converting a
construction loan to a permanent loan. Loan documents and intercreditor
agreements must reflect this requirement and DCA’s approval authority.

Replacement Plan. A Replacement Plan and schedule must be submitted to
DCA with the design development documents no later than 90 days from
carryover allocation or HOME Loan award notification. The calculations and
assumptions used in the Replacement Plan should take into account the fact that
over the life of the project, capital items such as building roofs, parking lots,
HVAC systems, major appliances, etc., will need to be replaced. At a
minimum, the Replacement Plan must reflect reserve contributions and,
depending on the projects characteristics, may require contribution amounts
greater than the minimum Replacement Reserves requirements.

Replacement Reserve. A Replacement Reserve, based on a Replacement Plan,
is required for all projects awarded funding under the Plan and must be included
in the operating budget. Contributions must be made to the reserve account,
starting at or before the conversion date of the construction loan to permanent
loan and must be funded for the term of the loan in accordance with the
Replacement Plan. The following minimum contributions must be used:
Rehabilitation
- $25.00 per unit per month ($300 per unit per year)
New Construction - $16.70 per unit per month ($200 per unit per year)
Single Family Units – $33.30 per unit per month ($400 per unit per year)
Replacement Reserve funds may be used only for capital improvements and
system replacements, and must not be used for general maintenance expenses.
Replacement Reserves must escalate at a rate of 3% per year. If the Replacement
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Plan indicates that an amount greater than the minimum reserve outlined above
is necessary, then this greater amount will be required and must be escalated at a
rate of 3% per year. DCA will, at its discretion, adjust the Replacement Reserve
to reflect reasonable and customary capital and replacement expenditures.

Replacement Reserve Withdrawals. All withdrawals from the Replacement
Reserve account must be approved by DCA in advance. The senior lender must
maintain the Replacement Reserve account in a FDIC insured financial
institution. Interest earned on the Replacement Reserve account shall be added
to the account as an additional contribution and will not be credited against the
required monthly cash contributions.

Retainage. The loan agreement between the Project Owner and GHFA will
provide that GHFA may retain 10% of the amounts that it has approved for each
draw request (“the retainage”) until the project reaches 50% completion.
Thereafter GHFA will retain 5% of the amount that it has approved for each
draw request. The construction contract must provide and the contractor must
acknowledge that GHFA has the right to withhold such retainage and that the
retainage will not be disbursed until full and final completion of the
construction.

Revenue, Vacancy, and Expense Trends. Revenue should be trended at 2% per
year, operating expenses at 3% and vacancy and collection loss at 10%, with the
exception of those proposals that include rental assistance. Proposals that
include rental assistance should apply a 7% vacancy factor for the rental
assistance units for the period in which the rental assistance will be committed
to the project.

Rural County Projects. DCA recognizes that Rural County projects may involve
greater financial risk than non-Rural County projects. While a sufficient
economic base to support a proposed Rural County project may exist at the time
of Application, the loss of a predominate industry or employer, or other
extenuating circumstances out of the control of the Applicant could result in a
major economic impact on the project. To mitigate this increased financial risk,
DCA will consider loan modifications during the course of the HOME Loan for
projects which have suffered a demonstrated major economic impact as a result
of the loss of a predominate industry or employer or other extenuating
circumstances. The loan modification may be structured to allow the Owners to
maintain Ownership and control of the property and to continue providing
affordable housing to the extent it is needed in the community.

Section 8 Rental Assistance. No Owner may deny a unit to applicants
possessing a Section 8 Rental Assistance certificate or voucher unless that
applicant fails to meet the minimum requirements for all lease holders. Federal
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statutes prohibit discrimination against Section 8 certificate and voucher
holders. DCA will closely monitor whether the tenant application process is
structured to avoid such discrimination or whether any actions are taken to
discourage Section 8 Rental Assistance certificate or voucher holders from
applying. Likewise, all lease provisions must be compatible and not in conflict
with Section 8 leases.

Stored Materials. DCA will not pay draw requests that include the cost of stored
materials. Stored materials are considered to be materials that will not be
incorporated into the construction within thirty days.

Subordination. The decision whether to subordinate DCA’s regulatory
agreement and/or lien position to a private lender’s security deed will be made
only after DCA considers the individual circumstances of each HOME Loan.
Factors that will be considered include, but are not limited to, the senior loan
amount, DCA’s HOME Loan amount, debt coverage ratio, private lender’s
interest rates, loan maturity, type of loan, etc. In no instance will DCA
subordinate to a public entity’s loan.

Soft Cost Contingency. “Soft cost” or “total project” contingency, over and
above the allowed construction contingency, will not be permitted as a budgeted
line item.

Stabilization. Projects will be considered stabilized when occupancy reaches
90% for three consecutive months, or actual revenue reaches 90% of budgeted
revenues for three consecutive months.

Syndicator Asset Management Fee. Syndicator asset management fees will be
paid from the “after debt service” cash flow less the cash flow payments to DCA
on the HOME permanent loans.

Tri-Party Agreements. A Tri-Party Agreement will be required for all DCA
HOME Loan transactions involving another permanent lender that is not
financing construction costs. The Tri-Party Agreement must clearly state, at a
minimum, that the permanent lender has reviewed and approved the DCA
HOME Loan documents, plans and specifications, development budget, tenant
lease, environmental assessment, construction contract, title exceptions legal
description, management agreement, partnership agreement, borrower's
certificate of limited partnership, survey, appraisal, form of subordination
agreement, and items necessary to satisfy the permanent commitment regarding
completion of construction of the improvements of the collateral property.

Utility Allowance (UA). Applicants should use the UA provided by the agency
administering the Section 8 Rental Assistance Program in the jurisdiction in
which the project is located. For example, if a local housing authority
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administers Section 8 in the area, they would provide those UA, but if DCA
administers Section 8 in the area, the DCA UA would be used. If a building
receives USDA assistance, or any tenant in the building receives USDA
assistance, the low-income units must use the applicable USDA UA. If HUD
reviews rents and UA on a building, the low-income units must use the
applicable HUD UA. In all other cases, the Owner is required to follow the
applicable PHA UA or DCA UA.

C.
Work Scope Owners of projects receiving HOME loan funding in the 2003
round for the rehabilitation of an existing property must perform 100% of the
rehabilitation work scope in accordance with the original physical needs
assessment submitted with the Application. DCA may approve modifications to
the proposed work scope upon written request within its sole and absolute
discretion.
Underwriting Materials
GHFA will require the Borrower to provide the following documents in order to complete
the underwriting of the HOME Loan application. GHFA may request additional
documentation it deems necessary to complete it’s underwriting evaluation:
1.
Proposed management agreement, including the contact person's name, telephone
and facsimile number
2.
Contractor's Qualification Statement on AIA Form A305
3.
Development site Soils Report
4.
Detailed project schedule of values prepared by the general contractor
5.
Project construction schedule prepared by the general contractor
6.
Site Survey signed and stamped by a surveyor licensed in Georgia
7.
Step 2 project plans and specifications conforming to the Architectural Guide
(Application Manual)
8.
Proposed agreement between the project owner and the project architect on AIA
Form B141
9.
Proposed agreement between the project owner and the general contractor on AIA
Form A101
10.
Proposed management plan and lease conforming to the Property Management
Guide (Application Manual)
11.
Minority/Women Business Plan conforming to the Equal Employment
Opportunity/Fair Housing requirements
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12.
Affirmative Fair Housing Marketing Plan conforming to the Equal Employment
Opportunity/Fair Housing requirements
13.
Fair Lease and Grievance Procedure conforming to Section 92.303 of the HOME
Regulations (CHDO only)
14.
Tenant Participation in Management Decisions Plan conforming to Section
92.303 of the HOME Regulations (CHDO only)
15.
Audited financial statements for Borrower, if Borrower is not a single-purpose
entity formed solely for purposes of the Project, or, if Borrower is such an entity,
audited financial statements for the general partner (if Borrower is a partnership),
the principal shareholders or members of Borrower (if Borrower is a corporation
or limited liability company), and the developer. All such financial statements
should include an unqualified auditor's opinion letter and all footnotes to the
financial statement
16.
If Borrower is a partnership, a copy of its executed partnership agreement with all
exhibits and attachments; if Borrower is a corporation, a copy of its articles of
incorporation and bylaws; if Borrower is a limited liability company, a copy of its
articles of organization and operating agreement
17.
Any other and additional information that GHFA may request as part of the
underwriting process. Borrower should be prepared to submit information to
GHFA in a timely manner throughout the underwriting process.
D. Due Diligence Materials
1.
At least 2 copies of a current boundary survey for the Land, prepared by a
registered land surveyor or engineer and meeting the minimum standards for an
ALTA/ACSM Land Title Survey, as adopted in 1999, and including items 1, 2, 3,
4, 6, 8, 9, 10, 11(a) and (b), 13, 14, 15, and 16 of Table A. In addition, GHFA's
name and the title insurer's name need to be included in the title block, and a legal
description of the property should be included on the face of the survey. The
survey must be acceptable to GHFA and include a surveyor’s certificate in the
form or addressing the items contained in the form following this list or the
certificate may be submitted separately.
2.
A lender's title insurance binder for GHFA with the coverage amount being the
maximum amount of the construction loan or permanent loan, whichever is
greater. All real estate taxes due and payable must be paid at or before Closing.
Title to the Land must be in Borrower's name at or before Closing. Only those
exceptions acceptable to GHFA will be permitted and any exception for
mechanic’s and materialmen's liens must be removed at or before Closing.
Legible copies of the documents relating to all easements, rights-of-way, or other
exceptions mentioned in the title binder should be submitted along with the
binder. The binder must include a legal description. GHFA requires the following
endorsements: pending disbursement endorsement; access endorsement; "same as
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survey" endorsement; zoning endorsement (if applicable); and comprehensive
endorsement. After review of the binder, GHFA may require additional
endorsements. GHFA requires that its binder be "marked" at or before Closing
and such "marked" binder must be satisfactory to GHFA in all respects.
3.
If Borrower is a Georgia partnership, a copy of its certificate of partnership and all
amendments, which certificate must be accompanied by the certificate of the
Georgia Secretary of State. If Borrower is a Georgia corporation, a copy of its
articles of incorporation and all amendments and the certificate of incorporation
from the Georgia Secretary of State. If Borrower is a Georgia LLC, a copy of its
articles of organization and all amendments and the certificate of organization
from the Georgia Secretary of State.
4.
If Borrower is an entity created under the laws of a state other than Georgia, the
comparable items set forth in the preceding paragraph with the certificate of the
secretary of state or other state office that is applicable for the type of entity and, if
Borrower is qualified to do business in the State of Georgia, a certificate from the
Georgia Secretary of State evidencing such qualification. If Borrower is not
qualified to do business in the State of Georgia, an explanation as to why such
qualification is not required, which explanation shall be subject to GHFA's review
and approval.
5.
If Borrower is a partnership, a copy of the most recent partnership agreement and
all amendments plus a draft of the most recently proposed amendment or
restatement (if applicable) plus all exhibits and attachments. The final partnership
agreement must contain a provision that clearly and explicitly limits the payment
of the development fee before conversion of the construction loan to 20% of the
total development fee or the amount specified by GHFA in its final conversion
conditions. The final partnership agreement needs to include a provision
authorizing the reserves required under the GHFA Loan Agreement and accurately
reciting the nature of the loan and the loans of all other lenders (if applicable) and
any other sources of funds of the partnership for the Project. The final partnership
agreement and any attachments must be fully executed before or simultaneously
with the Closing.
6.
If Borrower is a corporation, a copy of its bylaws and all amendments.
7.
If Borrower is an LLC, a copy of its operating agreement and all amendments.
8.
If Borrower is a partnership, the names and addresses of all investors and the
name of each investor’s counsel, address, telephone number, and fax number. If
Borrower's investor has issued a commitment letter or a term sheet, a copy of that
letter or sheet. If Borrower is a corporation, the names and addresses of all
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shareholders and the names and positions of all officers. If Borrower is an LLC,
the names and addresses of all managers and members, and, if any member is
separately represented, the name of his counsel and his address, telephone
number, and fax number.
9.
If Borrower is a partnership or an LLC with one or more corporate general
partners or managers, the articles of incorporation and all amendments and the
bylaws and all amendments for each such corporation, and the names and
positions of all officers of each such corporation.
10.
If there is a separate agreement with the developer(s), it needs to contain the
limitation as to the amount of developer fee payable before the conversion of the
GHFA construction loan (see #5 above).
11.
At least one week before Closing, a certificate of existence for Borrower issued by
the Georgia Secretary of State dated no more than 30 days before Closing.
12.
If Borrower is a partnership or LLC with one or more corporate general partners
or managers, at least one week before Closing, a certificate of existence for each
such corporation issued by the Georgia Secretary of State no more than 30 days
before Closing.
13.
A copy of the executed construction contract with Borrower's general contractor
and all amendments. If the construction contract is not in the name of Borrower, it
must be assigned to Borrower in writing or a new construction contract executed.
14.
If applicable, drafts of the payment and performance bonds, including a dual or
multiple obligee rider, naming GHFA, and a Power of Attorney (the original
bonds, rider, and power of attorney must be provided at or before Closing).
15.
A copy of the executed contract between the Borrower and the Project architect
and all amendments. The architect of record must cover design and construction
inspections. If the architect contract is not in the name of Borrower, it must be
assigned to Borrower in writing or a new contract executed.
16.
A copy of the deed to the Borrower for the Land, or, if Borrower does not own the
Land, a copy of the contract for the purchase of the Land by Borrower (plus all
amendments). If the purchase contract does not contain a legal description,
Borrower must submit a copy of the record legal description for the Land along
with the contract.
17.
A list of the names of the persons who will be signing the loan documents on
behalf of Borrower and their titles (GHFA requires a signatory and an attesting
officer for the loan documents if a corporation is signing, either in its own name
or as a general partner or manager).
18.
On what dates and in what amounts the Equity will be contributed.
19.
The name of the bank where the construction account is or will be maintained,
and the wiring instructions for the account.
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20.
Borrower's federal employer identification number.
21.
If there is any other financing or subsidy or grant that will be used in connection
with the Project, a copy of the commitment letter of each such lender and, at least
one week before Closing, a copy of any loan documents prepared by each such
lender and a copy of all documents relating to such subsidy or grant.
22.
A list of the plans and drawings of the Project Architect, showing the latest
revision dates.
23.
Certificates of insurance for property (builder's risk) insurance and for liability
insurance or certified copies of policies of insurance. If certificates are submitted,
they should meet the requirements set forth in Application Manual.
24.
Borrower shall furnish GHFA with such other documentation as GHFA may
require, including (but not limited to) financial statements, leases, estoppel
certificates, licenses and permits, tests and inspection reports, all of which must be
approved by GHFA in its sole discretion as a condition of Closing. At or before
Closing, Borrower shall deliver to GHFA documents, which evidence the
existence, good standing, capacity, and authority for the actions to be taken by
Borrower in connection with the HOME Loan Commitment and the Loan.
25.
Any other and additional information that GHFA may request as part of the due
diligence process.
XIX. TYPICAL LOAN COMMITMENT TERMS
1. General Provisions
The following are the typical loan commitment terms, provisions and conditions.
However, it is important to note that the loan commitment conditions are modified to
reflect the terms and conditions set forth for the particular project and may differ from the
information provided below. All materials provided to GHFA to satisfy a condition or to
substantiate satisfaction of a condition must be satisfactory to GHFA (in its sole
discretion) in form and content:
A. Borrower: GHFA's obligation to make the loan is conditioned upon borrower
finalizing its organizational structure and submitting such structure to GHFA for
approval. Without GHFA's prior consent, Borrower may not make any change in its
organizational structure or the partners, shareholders or owners of Borrower, and any
such change may require Borrower to submit additional information to GHFA for its
review and approval.
B. Principal Amount: The construction loan amount will not exceed an amount
approved by GHFA. GHFA will disburse the loan over time, subject to GHFA's approval
of draw requests submitted by Borrower in accordance with GHFA's procedures. If
certain conversion conditions are met, the construction loan will convert to a permanent
in the amount of the construction loan. Both the amount of the construction loan and the
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permanent loan are subject to the results of GHFA's underwriting of the loan, and GHFA
reserves the right to adjust such amounts based on the underwriting results.
C. The Project: The "Project" will be either a new construction or rehabilitation of a
specified number of housing units in Georgia and such construction or rehabilitation shall
be referred to as the “Work”.
D. The Land: The Project will be located on the "Land" described in the legal
description of the property. If Borrower does not currently own the Land, Borrower's
acquisition of the Land is a condition precedent to GHFA's obligation to make the
construction loan. The Land will be part of GHFA's collateral for the loan.
E. The Closing: The construction loan will close (the "Closing") on a date to be fixed by
GHFA with reasonable advance notice to Borrower. GHFA will set the Closing date and
determine the priority for closing vis-à-vis other loan applicants by reference to the date
on which GHFA receives acceptable underwriting materials as referenced below in
Paragraph L ("first come, first served"). The Closing will be held at GHFA's offices in
Atlanta.
F. Interest: The interest rate for the construction loan will ordinarily be zero. If the
construction loan is converted, the interest rate will ordinarily be 1.0% computed on the
basis of a 360-day year. Both interest rates, however, are subject to the results of GHFA's
underwriting of the loan, and GHFA reserves the right to adjust such rates based on the
underwriting results. If there is a default by Borrower, the default interest rate will be
10.0%.
G. Term: GHFA will determine the maturity date for the construction loan (the "Initial
Maturity Date") based on the approved construction schedule submitted by Borrower plus
some additional time for leasing and stabilizing the Project. If the construction loan is
converted, the permanent loan will mature on a specified date from the first day of the
first month following the conversion date (the "Final Maturity Date"). Unless Borrower
satisfies all conversion conditions, GHFA's obligation to convert the construction loan to
a permanent loan shall terminate at the Initial Maturity Date. Borrower may prepay the
construction loan or permanent loan at any time without penalty, but prepayment will not
terminate the Land Use Restriction Agreement ("LURA") that will be recorded at the time
of Closing.
H. Payments: Unless the construction loan converts, all outstanding principal and any
other amounts owed under the construction loan will be due upon the Initial Maturity
Date. If the construction loan is converted to a permanent loan, both the nature of
Borrower's payments to GHFA (i.e., fully amortizing or partially amortizing with a
balloon payment) and the amount of such payments shall be determined based on the
results of GHFA's underwriting.
I. Guaranties: At Closing, all or some of the principals of borrower, borrower's general
partner, or the developer(s) shall be required to execute and deliver to GHFA a
completion and payment guaranty in form and substance satisfactory to GHFA. By its
terms, the guaranty will terminate upon full and final completion of the Work (as
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determined by GHFA) and payment of amounts owing under the guaranty (if any) that
accrued before completion of the Work.
J. Federal and Other Requirements: GHFA's source of funds for the Project will
include one or more of the following: the HOME program; state funds appropriated for
HOME loans; and HOME program income. Consequently, Borrower will be required to
comply with all requirements imposed by the Cranston-Gonzales National Affordable
Housing Act (the "Act") and the HOME regulations promulgated under that Act (the
"HOME Regulations"). GHFA's obligation to make the construction loan is conditioned
upon Borrower's compliance with all applicable Federal laws and regulations relating to
the loan and the Project, including (but not limited to) the Davis Bacon Act, site and
neighborhood requirements, minority/women business enterprise outreach plan, and
affirmative fair housing marketing plan.
The loan shall be subject to the requirements and provisions of the qualified allocation
plan and the consolidated plan for the year in which the Application was submitted. If
Borrower is anticipating being awarded tax credits in connection with the Project, there
will be additional requirements and conditions that must be met.
K. Equity Required: Borrower will be required to make an investment of its own
funds in the Project (the "Equity"). When and in what amounts the Equity will be invested
before GHFA is required to disburse loan proceeds will be subject to GHFA's discretion
and approval. GHFA’s general policy is to fund the last of the hard costs incurred in the
project. It is important that each Borrower structure their equity pay in to insure that there
is not a funding gap due to the timing of the equity payments during the construction
phase.
L. Underwriting and Due Diligence Information: As soon as possible after acceptance
of the Commitment, but in any event no later than 4 months from the date of this letter,
Borrower shall provide GHFA with the documents, information, and other materials
listed in the underwriting materials list and any other documents or information that
GHFA may request for its underwriting of the loan, all of which shall be subject to
GHFA's review and approval. IF ALL THE MATERIALS SET FORTH IN THE
UNDERWRITING LIST (ALL OF WHICH MUST BE COMPLETE AND CONSISTENT WITH
EACH OTHER AND WITH THE INFORMATION SUBMITTED IN CONNECTION WITH THE
APPLICATION) ARE NOT RECEIVED BY GHFA BY THE ABOVE DATE, GHFA MAY
TERMINATE THE LOAN COMMITMENT. At least 30 days before Closing (unless
otherwise noted in the due diligence materials list), Borrower shall provide GHFA with
all the due diligence documents, materials, and information listed in the due diligence
materials list and any other documents or information that GHFA may request, all of
which shall be in form and content satisfactory to GHFA in its sole discretion.
M. Other Financing: If the Application indicates that, to complete the Project, Borrower
is relying upon sources of funds (whether loans, grants, or subsidies) other than Equity
and the GHFA loan, GHFA's obligation to make and close the construction loan is
conditioned upon: (a) GHFA approving, in its sole discretion, the amount, terms, and
conditions of all documents and agreements relating to all such sources of funds; (b)
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GHFA reaching intercreditor or subordination agreement(s) with other lender(s)
satisfactory to GHFA in its sole discretion; and (c) GHFA's priority with respect to the
collateral for the construction loan being satisfactory to GHFA. If there will be permanent
funding for the Project other than the GHFA loan, GHFA's obligation to make and close
the construction loan is conditioned upon GHFA reaching a satisfactory tri-party
agreement with each other permanent lender.
N. Non-Assignability. Borrower may not assign the HOME Loan Commitment or any
part of the GHFA loan (directly or indirectly) without GHFA's prior written consent,
which consent may be withheld or granted in GHFA's sole discretion, and any attempt to
make such assignment without such consent shall be void and shall be deemed a material
default under the HOME Loan Commitment. For purposes of this provision, an
"assignment" would include a transfer of a controlling interest in Borrower [ or a removal
or replacement of the General Partner].
O. Survival. To the extent that its terms are not incorporated in and not in conflict with
the GHFA loan agreement and other loan documents relating to the GHFA loan
(collectively, the "Loan Documents"), the HOME Loan Commitment and all terms and
provisions in it shall survive the Closing and shall not be merged into any of the Loan
Documents.
P. Conditions for Benefit of GHFA. All conditions in the HOME Loan Commitment
are for the sole benefit of GHFA, and GHFA may insist upon the satisfaction of any or all
of them or waive any of them in its sole discretion.
Q. Changes. If Borrower accepts the HOME Loan Commitment and, before Closing,
desires to make any change in the Project or the parties or persons involved in it (whether
or not Borrower deems the change material), Borrower must notify GHFA in writing
before implementation of any such change and describe in detail the nature of the
proposed change and the reasons for it. Any such change shall be subject to GHFA's prior
approval and any such change may delay the Closing.
R. Acceptance: The HOME Loan Commitment will not become effective unless and
until Borrower returns to GHFA a fully executed copy of the HOME Loan Commitment
on or before a date set forth in the HOME Loan Commitment. IF BORROWER DOES NOT
ACCEPT THE HOME LOAN COMMITMENT, SIGN IT, AND RETURN IT TO GHFA BY
THAT DATE, THE HOME LOAN COMMITMENT SHALL EXPIRE AND HAVE NO
FURTHER FORCE AND EFFECT WITHOUT ANY FURTHER ACTION BY GHFA.
The HOME Loan Commitment is issued in response to the Application and the
supporting information and materials that were contemporaneously or subsequently
submitted in support of it and in reliance on the completeness, truth, and accuracy of the
Application and the supporting information and materials. If Borrower accepts the
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HOME Loan Commitment, Borrower must certifying that all representations and
information submitted in or with its Application are true, correct, and complete as of the
date of acceptance. If it is subsequently determined that there is any material error,
omission, or misrepresentation in the Application, GHFA reserves the right to terminate
the HOME Loan Commitment.
XX. Typical Conversion Conditions
The following are the typical conditions precedent for converting the construction loan to
a permanent loan. However, it is important to note that the conversion conditions are
modified to reflect the terms and conditions set forth for the particular project and may
differ from the information provided below. All materials provided to GHFA to satisfy a
condition or to substantiate satisfaction of a condition must be satisfactory to GHFA (in
its sole discretion) in form and content:
1.
Final completion of all Work in accordance with the approved Plans and
Specifications for the Project and in compliance with the Loan Documents and all
legal requirements, substantiated by the following:
(a) a certificate of occupancy for all buildings;
(b) the Project Architect's "punch list" and completion inspection by the
inspector or consultant being used by GHFA;
(c) the Project Architect's certificate of substantial completion of the
Project;
(d) an "as-built" survey prepared in accordance with ALTA/ACSM
standards, including legal description;
(e) a letter from the Borrower indicating acceptance of the Project;
(f) a letter from the Borrower stating that it has received all manufacturers'
warranties and operating manuals;
(g) letters from the general contractor and the Project Architect stating that
the requirements of current codes and construction documents have
been met;
(h) satisfaction of all requirements in the Loan Documents, including the
final draw requirements
(i) a completed MBE/WBE Data Collection Form;
(j) a satisfactory test for radon;
(k) photographs of exterior, interior, major equipment and systems, and
common areas.
2.
Verification that all Work and all materials supplied in connection with the Work
and all equipment, fixtures, and appliances installed or used in the Project and
other personal property of Borrower have been fully paid and are free and clear of
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all liens and security interests (except those permitted by GHFA) and receipt of
the following:
(a)
(b)
(c)
(d)
3.
final lien waivers from the general contractor;
final lien waivers from all subcontractors;
final lien waivers from all materialmen;
a title examination (including a UCC search) and an updated title
insurance policy for GHFA or an endorsement updating the title
insurance policy issued to GHFA at the Closing, which policy shall
contain no exceptions, except those acceptable to GHFA.
Verification that for four (4) consecutive months after the date of issuance of the
final certificate of occupancy for all improvements, the minimum occupancy of
the Project has been at least 90% and the minimum monthly effective gross
income from the Project meets the required amount as specified by GHFA,
substantiated by GHFA's receipt of the following:
(a)
(b)
profit and loss statement for the Project;
documentation confirming satisfaction of the other requirements of
this condition.
[NOTE: the amount in this condition will be determined by GHFA, based upon
information submitted by Borrower and GHFA's underwriting].
4.
A satisfactory subordination or intercreditor agreement with each permanent
lender other than GHFA (if applicable).
5.
Verification that all insurance policies and coverage required under the Loan
Documents and the DCA 2003 Insurance Manual are in place, and receipt of the
following insurance certificates for the Borrower:
(a)
(b)
6.
an ACORD 25-S;
an ACORD 27-S.
Verification that Borrower has obtained all permits or licenses required for the
operation of the Project for its intended use, including a business license and
apartment, boiler, and elevator licenses (if applicable).
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7.
Proof of qualification of tenants and units placed in service for purposes of the
GHFA HOME Program and, if applicable, low income housing tax credits,
including the following:
(a)
(b)
(c)
certified rent roll, showing tenant names, the beginning and
expiration date of all leases, and any other tenant or lease
information requested by GHFA;
if not on the rent roll, certification of tenants' incomes;
if requested, copies of all leases.
8.
Borrower's payment to GHFA of any unpaid fees and expenses required by the
Loan Documents.
9.
Execution and deliver of a Borrower's Certificate (in the form following this list),
certifying (among other things) that no default currently exists and that no event
has occurred or condition exists that, with the passage of time or giving of notice,
will cause a default to occur under: (1) the LURA; or (2) the other Loan
Documents[; or (3) Borrower 's partnership agreement;][ or (4) any agreements
relating to the tax credits].
10.
Proof that all escrows and reserves required under the Loan Documents have been
established and properly funded in accordance with the Loan Documents,
including:
(a)
(b)
(c)
(d)
11.
Receipt and approval of the following forms and agreements:
(a)
the lease form (which shall include a HOME Addendum to the
lease) to be used for tenants of the Project;
(b)
an executed management agreement for the Project containing
provisions satisfactory to GHFA, including provisions addressing
whether the manager will be located on-site or off-site, whether the
manager will be full-time or part-time, how many staff will be
used, the hours that will be maintained, and such other specific
matters as GHFA may require;
the management plan for the project.
(c)
12.
an escrow account for taxes and insurance;
an operating deficit reserve
a replacement reserve;
if applicable, the cash flow reserve.
If the Project is new construction, receipt of a certificate evidencing treatment for
termites; if the Project is rehabilitation of existing structures, receipt of a termite
report indicating no active infestation of any part of the improvements, dated no
more than 12 months before the conversion date.
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13.
Receipt of a certificate of existence for the Borrower from the Georgia Secretary
of State, dated no sooner than 30 days before the date of conversion.
14.
Proof by execution and delivery of the Borrower's Certificate that Borrower has
not paid a developer's fee (including any amount for consulting fees or developer's
overhead) in excess of the maximum allowed developer’s fee.
[NOTE: amount to be determined by GHFA in accordance with GHFA policy].
15.
Receipt of the information needed to complete the HUD Project Completion
Report (Household Data Forms).
16.
Proof that all construction lenders have been paid in full and their security
documents cancelled of record.
17.
If low income housing tax credits are applicable to the Project, proof in the form
of cancelled checks or other satisfactory evidence that at least the required
amount of Equity from the sale of the tax credits was received by Borrower.
(NOTE: The actual conversion conditions may vary from these conditions, which are
attached to the HOME Loan Commitment solely as examples of the kinds of conditions
that will be contained in the GHFA Loan Agreement.)
C. General Conditions of the Loan Documents
The following are the typical general terms and conditions applicable to the GHFA loan:
1.
Borrower will execute the following "Loan Documents" at Closing, all of which
must be in form and content satisfactory to GHFA:
(a) a Construction/Permanent Loan Agreement;
(b) a promissory note;
(c) a [first][second] priority deed to secure debt for the Land and security
agreement granting GHFA a security interest in all furniture, fixtures, equipment,
building materials, plans, records, reserves, and other tangible or intangible
personal property used in or connected with the Project and financing statements
sufficient to perfect GHFA's interests;
(d) a [first][second] priority assignment of leases, rents, and security deposits;
(e) a Land Use Restriction Agreement ("LURA"), which will contain restrictive
covenants, in form and content satisfactory to GHFA in its sole discretion. The
LURA will be recorded in the real estate records of the County where the Land is
located and will contain use, rent, occupancy, and income restrictions (among
other things) lasting for a period from the completion of construction to a specific
date and satisfaction of the other requirements under the HOME regulations;
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(f) a Borrower's affidavit;
(g) a Borrower's Certificate;
(h) any other agreements, instruments, certificates, or other documents necessary
or desirable to document and evidence the agreement of the parties and close the
loan.
2.
Third parties must execute and GHFA must receive at or before Closing the
following ancillary documents and agreements, all of which must be in form and
content satisfactory to GHFA and properly executed:
(a) an intercreditor agreement or subordination agreement with each other lender
(if applicable);
(b) a tri-party agreement with all permanent lenders other than GHFA (if
applicable);
(c) a consent to assignment from the general contractor;
(d) a consent to assignment from the Project architect;
(e) a HOME addendum to the construction contract;
(f) all guaranties of the loan;
(g) an opinion letter of counsel for borrower;
(h) any other agreements, instruments, certificates, memoranda, or other
documents GHFA deems necessary or desirable to close the loan.
3.
Borrower's acceptance of the Commitment constitutes Borrower's agreement to
pay all fees, expenses, and charges incurred by GHFA in connection with closing
and making the loan.
4.
GHFA's obligation to make the construction loan is conditioned upon approval of
the phase I environmental report on the Land and receipt of any updates or
additional reports relating to the environmental status of the Land as GHFA may
request, all of which are subject to GHFA's review and approval.
The Loan Documents will include provisions relating to the environmental
requirements for the Property, including warranties and representations by
Borrower, Borrower's indemnification of GHFA against any liability resulting
from violations of environmental laws, and GHFA's right to require additional
environmental testing of the Property by an environmental engineer or consultant
satisfactory to GHFA, all of which must be in form and content satisfactory to
GHFA in its sole discretion.
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5.
At the date or dates specified in the Loan Documents, Borrower will be required
to fund and subsequently maintain reserves for taxes and insurance, replacement
of capital improvements, operating deficits[, excess cash flow], and such other
purposes as GHFA may require and subject to such terms and conditions as
GHFA may require in its sole discretion. All reserves will be held by State Home
Mortgage, unless GHFA agrees otherwise.
6.
Without GHFA's prior written consent, Borrower may not transfer the Land or any
interest in it, may not permit any transfer of an interest in Borrower, except
limited partnership interests, may not permit the General Partner to be removed or
replaced], and may not create or permit any liens, other security deeds, or other
encumbrances on the Land, except those approved by GHFA; provided, however,
Borrower may grant easements for utilities serving only the Land and Project
without GHFA's prior consent.
7.
GHFA's obligation to make the construction loan is conditioned upon GHFA's
determination that Borrower[, the General Partner], the developer(s), and the
manager are all in compliance for other projects funded using HOME funds, state
and federal housing tax credits administered by GHFA, or other sources of funds
supplied or administered by GHFA or the Georgia Department of Community
Affairs.
8.
GHFA will be permitted to place a sign on the Land, indicating GHFA's
participation in the financing for the Project. GHFA will also be permitted to
obtain other publicity in connection with the Project through press releases and
participation in events such as ground breaking and opening ceremonies.
Borrower shall give GHFA sufficient advance notice of any such event and give
GHFA as much reasonable assistance as possible in connection with obtaining
such publicity as GHFA desires.
9.
No statements, agreements, or representations by GHFA or any of its employees,
agents, or contractors with respect to the same subject matter as the HOME Loan
Commitment or about the GHFA loan shall have any force or effect, except to the
extent stated and included in the HOME Loan Commitment, and all such prior
statements, agreements, or representations are merged in the HOME Loan
Commitment.
10.
GHFA may terminate the HOME Loan Commitment in its sole and absolute
discretion and without further notice or obligation if any of the following occurs:
(a) Default. Borrower's failure to meet, satisfy, or perform all applicable
covenants and conditions contained in the HOME Loan Commitment on a timely
basis or to GHFA's satisfaction if not cured within 15 days after written notice is
given to Borrower by GHFA; or
(b) Title Problem. Borrower's failure to acquire the Land (if applicable) or any
defect in or objection to Borrower's title to the Property that is non-curable or that
is not cured within a reasonable time; or
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(c) Bankruptcy; Insolvency. With respect to Borrower[, the General Partner,] or
any guarantor, the commission of an act of bankruptcy, the making of a general
assignment for the benefit of creditors, the filing by or against it of a petition in
bankruptcy or for the appointment of a receiver, or the commencement of
proceedings under any bankruptcy or insolvency law for relief or the composition,
extension, arrangement, or adjustment of any of its obligations or the
reorganization of its business, or the issuance of any warrant or attachment against
any of its property or the taking of possession of or assumption of control of all or
any substantial part of the property of it by any governmental agency; or
(d) Violation of Law. GHFA's determination that the Closing and funding of the
construction loan would violate any applicable law, including the Act and the
HOME Regulations; or
(e) Misrepresentation. Any material misrepresentation or omission or inaccuracy
in the application for the GHFA loan and any attachments to it or documents or
information delivered in connection with it, including (but not limited to) the
financial statements and projections that Borrower [or the General Partner or
developer]may have submitted to GHFA; or
(f) Environmental Problem. Any environmental matter relating to the Property
is not satisfactory to GHFA; or
(g) Casualty and Condemnation. The existing improvements (if applicable) are
substantially damaged or destroyed or any part of the Land is taken by
condemnation, eminent domain, or similar proceeding or if any such proceeding is
pending at the time of Closing.
XXI. TYPICAL CONSTRUCTION/PERMANENT HOME LOAN AGREEMENT
The following terms and conditions are provided to give Applicants additional
information regarding the typical of the Construction/Permanent Loan Agreement that
must be executed between the "Borrower” and the Georgia Housing and Finance
Authority, a public corporation and instrumentality of the State of Georgia (the "Lender").
However, it is important to note that the requirements for each construction/permanent
loan agreement and other closing documents are modified to reflect the terms and
conditions set forth for the particular project and may differ from the information
provided below:
1. General Terms
A.
Lender will make a construction loan to Borrower (the "Construction Loan") in
the maximum principal amount approved by GHFA after the underwriting period to
finance the construction of a multifamily rental housing project (the "Project"). The
improvements to be constructed are referred to as the "Improvements". The
Improvements and the real property are collectively referred to as the "Premises".
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B.
In making the Loan, Lender is using all or some of the following: federal funds
made available pursuant to the Act, state appropriations for HOME loans, and HOME
program income. The Loan is being made subject to the requirements of the Act, the
HOME Regulations, and Lender's HOME Rental Housing Loan Program (the "GHFA
Program").
C.
If certain conditions are satisfied, Lender will convert the Construction Loan to a
permanent loan (the "Permanent Loan") (the Construction Loan and the Permanent Loan
are collectively referred to as the "Loan").
D.
The HOME Loan Agreement will set forth the terms and conditions of the Loan.
2. Borrower's Representations and Warranties. To the best of the Borrower's
knowledge after a reasonably thorough and diligent investigation, Borrower represents
and warrants to Lender that each of the statements in this Article is true and does not omit
any material fact:
2.01. Organization, Status, and Authority. (a) Borrower is a duly formed and validly
existing Georgia limited partnership. Borrower has the power, authority, and legal right to
carry on its business and to engage in the transactions contemplated by the Loan
Documents. The execution and delivery of the Loan Documents and the performance and
observance of their provisions have been duly authorized by all necessary actions of its
partners.
(b) The General Partner is a duly formed and validly existing limited liability company in
good standing under Georgia law; the General Partner has the power, authority, and legal
right to carry on its business and to engage in the transactions contemplated by the Loan
Documents; and the execution and delivery of the Loan Documents by the General
Partner on behalf of Borrower (and, where applicable, on its own behalf) and the
performance and observance of their provisions have been duly authorized by all
necessary actions of its managers and members.
2.02. Financing Documents. The Person or Persons executing the Loan Documents on
behalf of Borrower have the authority to do so. To the best of Borrower's knowledge,
after being executed and delivered, the Loan Documents will in all respects be legal,
valid, binding, and enforceable in accordance with their terms. Borrower has provided
Lender with a complete copy of the Tax Credit Documents. None of such documents or
agreements has been changed since the copy was provided to Lender, and, except as
provided in section 3.27(a), Borrower will not make any subsequent amendment or
modification to any such agreement or document without Lender's prior consent, which
consent shall not be unreasonably withheld.
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2.03. Plans and Specifications. Borrower has provided Lender with a complete and
accurate copy of the Plans and Specifications, and they are satisfactory to Borrower. The
construction, finish, and quality of materials required by the Plans and Specifications are
comparable to that of similar projects in the same county in Georgia. To the extent
required, all Public Bodies that exercise jurisdiction over the Work or the Premises have
approved the Plans and Specifications. All Work performed before the Effective Date (if
any) has been performed in accordance with the Plans and Specifications, has been fully
paid for, and contains no defects.
2.04. Construction Documents. Borrower and the General Contractor have executed the
Construction Contract, and there is no default under it. Borrower has not done or omitted
to do any act that might prevent it from exercising any of its rights under the Contract
Documents, all of which are in full force and effect and have not been modified or
amended since copies of them were last submitted to Lender.
2.05. Building Permits. Borrower has obtained all necessary permits and licenses it
needs to begin and continue the Work and has delivered or will deliver to Lender copies
of all permits and licenses.
2.06. Title and Liens. Borrower owns fee simple title to the Premises. No Person other
than Borrower and Lender has or will have any beneficial or legal interest in the
Premises. Borrower has not made and will not make any contract or arrangement, the
performance of which by the other party could give rise to a lien against the Premises,
except the Construction Contract, any contract with a surveyor or engineer, and the
Architect's Agreement. Except for Lender's interest, there are and will be no security
interests in or liens or encumbrances on the Collateral, except only those liens and other
matters (if any) permitted under the Deed (the "Permitted Encumbrances").
2.07. Conflicts. The transactions contemplated by this Agreement and the performance
of Borrower's obligations under the Loan Documents will not constitute a breach of or
default under any mortgage, security deed, lease, loan or credit agreement, partnership
agreement, or other agreement or instrument to which Borrower is a party or by which it
or the Premises are bound or affected.
2.08. Litigation. There are no actions, suits, investigations, or proceedings pending or,
to the best knowledge of Borrower, threatened against or affecting Borrower, the General
Partner, or the Premises or involving the validity, enforceability, or priority of any of the
Loan Documents. Neither Borrower nor the General Partner is in default under any order,
writ, injunction, or judgment of any court or any Public Body and by entering into the
Loan Documents will not be in default under any such document.
2.09. Compliance with Requirements. There is no violation or notice of violation of any
Requirement relating to Borrower or the Premises. The Plans and Specifications, the
Work, and Borrower's contemplated use of the Premises comply and will comply with all
applicable Requirements (including zoning ordinances), restrictive covenants, and
regulations of appropriate supervising boards of fire underwriters and similar agencies.
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2.10. Availability of Utilities. All utilities needed for the Work and to operate the
Improvements as intended are available at the boundaries of the Premises through public
or private easements or rights-of-way. If there is any private easement for those purposes,
it runs with the Premises and the land that it burdens; it is a perpetual easement or its
termination date is not sooner than the "Maturity Date" set forth in the Note; and it is not
subject to sooner termination due to the action or omission of Borrower or any other
event. Borrower has provided Lender with a correct and complete copy of any such
easement.
2.11. Access. All roads needed for performance of the Work and for access to and full
use of the Premises for their intended purpose are either complete or the rights-of-way for
all such roads have been acquired by the appropriate Public Body or have been dedicated
to public use and accepted by such Public Body, and Borrower and such Public Body
have taken all necessary steps to ensure that the roads are completed and installed. All
curb cuts and traffic signals shown on the Plans and Specifications exist or have been
approved by all necessary Public Bodies. If access to the Premises is dependent on an
access easement, the easement area abuts a publicly dedicated road, and such easement is
in effect, has been recorded, is perpetual, and cannot be terminated by the grantor of such
easement for cause or otherwise and the copy of such easement provided to Lender is a
true, correct, and complete copy of such easement.
2.12. Financial Condition. All financial statements of Borrower, any general partner of
Borrower, and any Guarantor given to Lender are true, correct, and complete in all
material respects, were prepared in accordance with generally accepted accounting
principles consistently applied, and fairly present the financial condition or financial
results of Borrower, the general partner, and each Guarantor as of the respective dates of
or for the period covered by the statements. There are no material contingent liabilities
affecting Borrower that are not disclosed in the most recent financial statements
submitted to Lender. No material change has occurred in the financial condition of
Borrower, any general partner of Borrower, or any Guarantor since the last financial
statement submitted by such Person to Lender.
Borrower, each general partner of Borrower, and each Guarantor are solvent and able to
pay their debts as they become due, and no bankruptcy, receivership, or insolvency
proceedings are pending or contemplated by Borrower, any general partner of Borrower,
or any Guarantor or, to Borrower's knowledge, threatened against Borrower, any general
partner of Borrower, or any Guarantor.
2.13. Loan Application. The representations, statements, materials, and other matters
contained in or submitted in connection with the Application were true and complete in
all material respects as of the date of submission to Lender and did not omit any fact or
circumstance necessary to make the statements contained in them not misleading.
Borrower is aware of no event that would require any amendment to the Application
(other than an amendment which has been filed with and approved by Lender) or that
would make such representations, statements, and other matters or materials not true and
complete in all material respects or make them misleading in any material respect.
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2.14. Taxes and Assessments. There are no Taxes that are currently due and unpaid. For
purposes of all Taxes, the Premises are assessed as a separate and distinct parcel from any
other real property.
2.15. Environmental Warranties. Borrower has investigated the current and prior uses of
the Premises, has inspected the Premises, and, to Borrower's best knowledge, except as
disclosed in the environmental phase I report on the Premises submitted to Lender: (a)
Hazardous Substances have not at any time been generated, used, treated or stored on, or
transported to or from the Premises in any quantity or manner which violates any
Environmental Requirement; (b) Hazardous Substances have not at any time been
released or disposed of on the Premises in any quantity or manner which violates any
Environmental Requirement; (c) Borrower is in compliance with all applicable
Environmental Requirements with respect to the Premises and the requirements of any
permits issued under such Environmental Requirements with respect to the Premises; (d)
there are no past, pending or threatened claims or proceedings under any Environmental
Requirement against Borrower or the Premises; (e) there is no condition or occurrence at
the Premises that could reasonably be anticipated to form the basis of any claim or
proceeding under any Environmental Requirement against Borrower or the Premises or to
cause the Premises to be subject to any restrictions on the ownership, occupancy, use, or
transferability under any Environmental Requirement; and (f) there is not now and never
has been any underground storage tank located on the Premises.
2.16. No Condemnation. No condemnation or eminent domain proceeding relating to
the Premises is pending, and Borrower has no information or knowledge that any Public
Body is considering such a proceeding.
2.17. No Default. No default by Borrower exists under the Loan Documents or the Tax
Credit Documents, and no event has occurred and is continuing which, with notice or
passage of time or both, would constitute a default under any such document. To
Borrower's knowledge, there is no default under any Guaranty.
Promptly after learning or being notified of any default or claimed default under any of
the above documents (but, in any event, within 3 business days of such knowledge or
notice), Borrower shall notify Lender in writing of the default or claim and supply Lender
with any other information it requests concerning the matter.
2.18. Commissions. There are no commissions due any Person as a result of the Loan.
Borrower indemnifies Lender from any liability, claim, or expense resulting from any
breach of this warranty, and this indemnification obligation shall survive the repayment
of the Loan and continue in effect so long as the possibility of such liability, claim, or
expense exists.
2.19. Conflicts of Interest. To the best of Borrower's knowledge, no employee, officer,
agent, consultant, official of Lender, or any member of the immediate family of any such
Person has any direct or indirect interest in this Agreement, Borrower, or the Premises or
will receive any benefits arising from this Agreement, Borrower, or the Premises.
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2.20. Debarment and Suspension. Neither Borrower, the General Partner or any other
general partner of Borrower, nor any of their principals or owners are presently debarred,
suspended, proposed for debarment or suspension, declared ineligible, or voluntarily
excluded from participation in this transaction or the GHFA Program by any Public Body
or Lender. Without Lender's prior written consent, Borrower shall not knowingly enter
into any oral or written contract with a Person who is debarred, suspended, proposed for
debarment or suspension, declared ineligible, or voluntarily excluded from participation
in this transaction or the GHFA Program by any Public Body or Lender.
2.21. Lobbying. (a) No federally appropriated funds have been paid or will be paid by or
on behalf of Borrower to any Person for influencing or attempting to influence an officer
or employee of any federal agency, a Member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress in connection with the awarding of
any federal contract, the making of any federal grant, the making of any federal loan, the
entering into of any cooperative agreement, or the extension, continuation, renewal,
amendment, or modification of any federal contract, grant, loan, or cooperative
agreement.
(b)
If any funds other than federally appropriated funds have been paid or will
be paid to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or any employee
of a Member of Congress in connection with this Agreement, Borrower shall complete
and submit HUD Standard Form-LLL, "Disclosure Form to Report Lobbying," in
accordance with its instructions.
(c)
Borrower will require that the substantive language of the certifications in
(a) and (b) above be included in the award documents for all subawards at all tiers
(including subcontracts, subgrants, and contracts under grants, loans, and cooperative
agreements) and that all subrecipients shall certify and disclose accordingly.
2.22. Non-Commencement of Work. No Work or delivery of materials to the Premises
has occurred before the Effective Date that would or might give rise to any statutory or
common law lien against the Premises that might be prior to the Deed.
2.23. Condition of Premises. The Premises are not damaged or injured by any fire,
explosion, accident, flood, or other hazard.
2.24. Architect. The Architect prepared the Plans and Specifications and shall serve as
the architect for the Work. There is no default under the agreement between Borrower
and the Architect. Upon request and at or before Closing, Borrower will provide Lender
with a partial lien waiver by Architect. Upon request, Borrower at its sole cost will
provide or cause the Architect to provide Lender with status reports on the Work and any
other materials or information that Lender may reasonably request.
3. Borrower's Covenants. Borrower hereby further covenants and agrees with Lender as
follows:
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3.01. Use of Loan Proceeds. Borrower shall use the Loan proceeds solely for the
purposes of funding the hard costs of the Work and acknowledges that there are 56
HOME-Assisted Units included in the Work. None of the Loan proceeds shall be used for
personal, family, or household purposes. At Lender's request, Borrower shall erect on the
Premises at a location approved by Lender a sign satisfactory to Lender, indicating that
Lender is providing financing for the Work.
3.02. Commencement and Completion of Construction. Borrower shall begin the Work
as soon as practical after the Closing, but, in any event, within 45 days of the Effective
Date, but Borrower shall not begin any Work until Borrower has received all building
permits or other approvals required by any Public Body. Borrower shall diligently and
continuously perform the Work in accordance with the Completion Schedule, the Plans
and Specifications, the HOME Regulations, the HOME Rules, the Loan Documents, and
all applicable restrictive covenants, standards, and Requirements, including all applicable
building codes. Upon request, Borrower will promptly provide Lender with evidence of
compliance with any or all of the above. Borrower shall complete 100% of the Work
before the Completion Date, and TIME IS OF THE ESSENCE as to this requirement. For
purposes of the HOME Loan Agreement and the other Loan Documents, the Work shall
be deemed completed when Lender, its representative, or construction consultant has
determined the Work is fully completed, and Lender has received a copy of the final
certificate of occupancy for all Improvements.
3.03. Correction of Defects. The Improvements shall not have any structural defects
(whether the Work was or was not in conformity with the Plans and Specifications).
Borrower shall immediately advise Lender if Borrower is aware of any defect in the Work
and shall promptly correct any structural defect found in the Work, any departure from
the Plans and Specifications not previously approved in writing by Lender, or any
departure from the applicable standards in the HOME Regulations or the HOME Rules.
In its discretion (unless the cost of the Work is not being increased), Lender may require
Borrower to deposit with it an amount sufficient to cover the cost to repair the defect or
correct the departure, which amount shall be treated as an Equity Contribution. The
advance of Loan proceeds (before or after Lender knows of such a defect or departure)
shall not constitute a waiver of Lender's right to require compliance with this covenant.
3.04. Change Orders. Without Lender's prior written consent, Borrower shall not make
or permit any change order to be issued, including any change to the Plans and
Specifications. If Borrower wants to make a change, it must first submit a written
proposed change order to Lender along with the following: (a) the Architect's approval;
(b) the approval of Lender's construction consultant (if any) or Lender's inspecting
engineer (if any); (c) the consent of the surety (if applicable); (d) the consent of the
General Contractor and any subcontractor affected by the proposed change order; and (e)
the consent of Borrower and each Guarantor. If the change order increases the amount
due under the Construction Contract, as a condition for its approval, Lender may require
Borrower to deposit with it an amount sufficient to cover the additional cost, which
amount shall be treated as an Equity Contribution.
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Lender will use reasonable efforts to respond to any request for approval of a proposed
change order within 10 Business Days after receipt of the change order, all supporting
information Lender may request for purposes of evaluating it, and the other materials
required above; provided, however, if the Work is stopped as a result of the need for a
change order and if the Work stoppage continues for more than 5 Business Days due to
Lender's failure to approve the pending change order, Lender will not declare a default
under section 5.01(g) for the failure to carry on the Work.
3.05. Construction Contract. Without Lender's prior written consent, Borrower shall
not: (a) permit any material default under the Construction Contract; (b) waive any
material obligations of the General Contractor under the Construction Contract; (c)
except for approved change orders, make any amendment to the Construction Contract or
terminate it; or (d) enter into any agreement other than the Construction Contract relating
to the Work. Borrower shall provide in the Construction Contract that: (w) the General
Contractor shall comply with the insurance requirements of the HOME Loan Agreement;
(x) all subcontractors are subject to the prior approval of Lender; (y) the General
Contractor shall not make or permit any changes in the Plans and Specifications without a
change order submitted and approved as required by the HOME Loan Agreement; and (z)
upon Lender's request, the General Contractor shall provide Lender with a list of all
Persons with whom the General Contractor has contracted or intends to contract for any
part of the Work or furnishing of materials and a copy of the subcontract or material
purchase order with any such Person.
3.06. Borrower Insurance. Before Closing (unless otherwise indicated below), Borrower
shall obtain the following policies of insurance, shall provide Lender with originals or
certified copies and evidence of payment of premiums, and shall maintain them in force
without interruption until the Loan is paid in full:
(a) A commitment for a lender's title insurance policy with coverage of an amount
and in the form and content satisfactory to Lender in its sole discretion with the original
policy being delivered to Lender or its counsel within 20 Business Days after Closing.
Upon Lender's request, Borrower shall promptly obtain at its sole cost and deliver to
Lender any endorsement to Lender's title insurance policy that Lender deems reasonably
necessary or desirable.
(b) If the General Contractor has not obtained or will not obtain builder's risk
insurance or if such insurance is terminated before completion of the Work, extended
coverage (all-risk) builder's risk insurance on a non-reporting, completed value basis,
insuring the Improvements for an amount not less than 100% of the full replacement cost
of the Improvements without deductions for depreciation and providing that all claims for
losses shall be payable to Lender without contribution by Lender, pursuant to a mortgagee
clause satisfactory to Lender;
(c) After completion of the Work, extended coverage (all-risk) hazard insurance,
insuring the Premises and any other improvements on the property in an amount not less
than 100% of the replacement cost of the Improvements (with no reduction for
depreciation) with a betterment and increased cost endorsement and providing that all
claims for losses shall be payable to Lender without contribution by Lender, pursuant to
the New York Standard or other mortgagee clause satisfactory to Lender.
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Unless Borrower is required to deliver such policy to Lender before Closing, Borrower
shall deliver a copy of the policy required under this section to Lender upon completion
of the Work and before any portion of the Premises is occupied by Borrower or any
tenant.
(d) After completion of the Work, rental interruption insurance, insuring Borrower
in an amount not less than 100% of gross rental income from the Improvements for a
period of not less than 12 months.
(e) Commercial general liability insurance in the minimum amount of
$3,000,000.00 per occurrence with a maximum deductible of $5,000.00, including
insurance against liability for personal injury, bodily injury, death, property damage,
medical expenses, and liability assumed by contract, which policy shall be written on an
occurrence basis and for primary coverage, insuring Borrower and naming Lender (and
such other parties as Lender may direct) as an additional insured. In its discretion, Lender
may require the above-stated minimum coverage be increased or that an umbrella policy
be obtained increasing the coverage. A blanket policy may not be used without Lender's
prior written consent.
(f) Workers' Compensation Insurance as required by statute.
(g) Business vehicle liability insurance in the minimum amount of $2,000,000.00.
(h) If any part of the Premises is in an area now or subsequently designated as
having special flood hazards, as defined in the Flood Disaster Protection Act of 1973,
flood insurance in an amount equal to the replacement cost of the Improvements or the
maximum amount of flood insurance available, whichever is less.
(i) Employee fidelity insurance, insuring Borrower against losses, including losses
from the actions of Manager or its employees.
(j) Insurance covering the major components of the central heating, air
conditioning, and ventilating systems, boilers, other pressure vessels, high pressure piping
and machinery, if any, or other similar equipment installed in the Improvements on a
repair and replacement basis, which policies shall also insure against physical damage to
the Improvements arising out of a covered accident.
The form, terms and provisions, amount, types of coverage, and issuer of all
insurance required by the HOME Loan Agreement are subject to Lender's approval. From
time to time, Lender may reasonably require that Borrower increase the limits of coverage
for existing policies required by the HOME Loan Agreement or obtain other insurance
against other insurable hazards, which at the time are commonly insured against in the
case of properties of similar character and location, due regard being given to the type of
Improvements, their construction, location, use and occupancy. Any additional or
different insurance or different or increased limits of coverage required by Lender's then
current insurance manual and guidelines for new loans shall be conclusively deemed
"reasonably required" within the meaning of this subsection if Lender requests such
insurance or increased coverage.
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As further collateral for the payment of the Note and Borrower's obligations under
the other Loan Documents, Borrower hereby assigns to Lender all policies of insurance
that insure against any loss or damage to the Premises or the rents from the Premises and
any proceeds from such insurance. As Lender may require, Lender shall be an additional
insured or loss payee on all such policies pursuant to a mortgagee clause or other clause
satisfactory to Lender, but Lender shall not be subject to contribution. All insurance
required by the HOME Loan Agreement shall contain a provision that provides Lender
with at least 30-days notice of any cancellation of the insurance. Not less than 30 days
before the expiration date of each policy of insurance required under the HOME Loan
Agreement, Borrower shall deliver to Lender a renewal policy or policies marked
"premium paid" or accompanied by other evidence of payment satisfactory to Lender.
At Borrower's cost, Borrower shall cooperate with Lender in obtaining for Lender
the benefits of any insurance or other proceeds payable to Lender under the HOME Loan
Agreement or in connection with the Loan or the Premises and on demand shall promptly
reimburse Lender for any expenses Lender incurs in obtaining those benefits (including
the payment by Borrower of the expense of an independent appraisal on behalf of Lender
in case of a fire or other casualty affecting the Premises), and, if Lender is not so
reimbursed, Lender may first deduct such expenses from the insurance proceeds before
applying such proceeds. If Borrower by reason of such insurance receives any money for
loss or damage, such amount shall be promptly delivered to Lender to be applied in
accordance with the HOME Loan Agreement.
If Lender has permitted the Loan to close without having received certified copies
of all insurance policies required under this section and the next, Borrower shall provide
Lender with certified copies of all such policies within 30 days after Closing. Thereafter,
on an annual basis, Borrower shall provide Lender with proof satisfactory to Lender that
the insurance required by the HOME Loan Agreement is in effect and the premiums paid.
If Lender permits (in its sole discretion) Borrower to submit certificates of insurance as
such proof, any certificate for property insurance must be an ACORD 27 certificate
(ACORD 24 and 25 forms are not acceptable) and any certificate(s) for liability insurance
shall be in a form acceptable to Lender in its sole discretion.
If Borrower fails to obtain any insurance required by this section or fails to
provide Lender with certified copies of insurance policies or certificates of insurance and
evidence of premium payment or if any policy of insurance required under the HOME
Loan Agreement is canceled or terminated by an insurer for any reason and Borrower
does not promptly replace it with insurance acceptable to Lender, such failure shall
constitute a default under the HOME Loan Agreement, and, in addition to whatever other
remedies it may have, Lender shall have the right (but not the obligation) to procure such
insurance with the terms and conditions as Lender, in its sole discretion, may determine.
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If Lender does so, Borrower shall pay on demand the premiums Lender has paid,
or, if Borrower fails to make such payment, Lender may treat the failure to repay as a
default under the HOME Loan Agreement or add the premiums paid for such insurance to
the principal amount of the Loan, to be repaid upon the terms and conditions of the Note,
or both. If Borrower subsequently obtains replacement insurance acceptable to Lender
and if Lender waives or has waived any default resulting from Borrower's failure to
obtain such insurance as required by the HOME Loan Agreement and if Borrower has
reimbursed Lender for premiums Lender paid and if Lender receives a rebate of premium
on the insurance Lender purchased and if Borrower is not in default under any other Loan
Document, Lender will pay the rebate amount to Borrower.
3.07. General Contractor Insurance. The General Contractor shall obtain the policies of
insurance listed below and shall cause its subcontractors to obtain the policies of
insurance in subsections (a) and (b). The policy premiums shall be fully paid, and the
insurers, coverage amounts, expiration dates, and the form and contents of the policies are
subject to Lenders' approval. Each such policy shall be kept in force until completion of
the Work (or, in the case of a subcontractor, until the subcontractor's portion of the Work
is fully completed) and shall provide that the insurer must give Lenders at least 30-days
prior written notice of cancellation or termination and further provide that nothing the
insured does shall invalidate or diminish the Lenders' insurance protection. Before
Closing, Borrower shall provide Lenders with certified copies of the policies or
certificates of insurance for the General Contractor's insurance, which certificates must be
satisfactory to Lender and, in the case of any property insurance, on an ACORD 27 form.
(a)
Commercial general liability insurance in the minimum amount of
$3,000,000.00 per occurrence, which policy shall be written on a per occurrence basis;
(b)
Workers' compensation insurance as required by statute;
(c)
Business vehicle liability insurance in the minimum amount of
$2,000,000.00.
(d)
Unless Borrower is obtaining the fire and hazard insurance required under
section 3.06(c) at or before Closing, extended coverage (all-risk) builder's risk insurance
on a non-reporting, completed value basis, insuring the Improvements against fire and all
hazards ordinarily covered by such a policy in an amount not less than 100% of the full
replacement cost of the Improvements without deductions for depreciation, and
containing a mortgagee loss payable clause satisfactory to Lender.
3.08. Fees and Expenses. Borrower shall pay all costs of closing the Loan and all costs
and fees that Lender incurs in connection with the Loan or the Loan Documents,
including recording fees, fees and expenses of any consultant retained by Lender under
the HOME Loan Agreement, surveys, expenses of Foreclosure, reasonable attorney's fees,
and similar items. All closing papers, loan documents, and other legal matters shall be
subject to the approval of Lender and Lender's attorney. If Lender requires legal services
relating to the Loan after the Effective Date, Borrower shall pay or reimburse Lender for
the reasonable fees for those services upon demand.
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3.09. Inspections. At any time, Lender and its agents and representatives shall have
access to the Premises to inspect the Improvements, the Work, the materials being used in
the Work, and the Plans and Specifications being used at the construction site. Borrower
shall cooperate and cause all of its employees, agents, and contractors to cooperate with
Lender and its representatives during such inspections. This provision shall not, however,
impose upon Lender any obligation to inspect or any liability for the failure to detect or
remedy any defect that was or might have been disclosed by an inspection. If Lender uses
a construction consultant, the construction consultant's approvals shall not constitute
acceptance of the Work or materials by Lender and shall not bind Lender, except to the
extent that the facts actually are as represented at the time of approval.
3.10. Books and Records. Borrower shall keep accurate, complete, and adequate books,
records, and accounts for the operation of the Premises and the Work, which shall be
separate from any general accounting records of Borrower and the records of any other
business venture or real estate venture of Borrower. Upon not less than 24-hours notice
from Lender, Borrower shall make all such books, records, and accounts or excerpts or
information from them as Lender may request available to Lender for inspection or
independent audit at one location within the metro Atlanta area or other location
satisfactory to Lender. Borrower shall also maintain a separate bank account for
construction and, after completion of the Work, for the operation of the Premises. If
Lender or its agents or contractors audit Borrower's books and records, Borrower shall
pay the cost of any such audit.
3.11. Financial Statements and Reports. As soon as available, but no later than 120 days
after the end of each fiscal year of Borrower, beginning with the fiscal year in which the
Work is completed, Borrower will furnish Lender with annual audited financial
statements and operating statement covering the operation of the Premises as at the end of
the fiscal year. All such financial statements shall compare the actual results with
Borrower's operating budget for the year, shall be prepared by a firm of independent
certified public accountants satisfactory to Lender, and shall be certified as correct by
such accountants. Beginning with the first quarter ending after the completion of the
Work, within 45 days after the end of each of the first three quarters in each fiscal year of
Borrower, Borrower shall provide Lender with an unaudited balance sheet and income
statement as at the end of such quarter and for the elapsed portion of the year ended with
the last day of such quarter. Upon request, Borrower shall furnish Lender with copies of
any documents and convenient facilities for the audit and verification of any report or
financial statement Borrower has provided Lender. All financial statements (audited or
unaudited) shall be prepared in accordance with generally accepted accounting principles,
consistently applied, and the General Partner's manager or chief financial officer shall
certify in writing that they are complete and correct in all material respects and present
fairly the financial position and results of Borrower. Borrower's financial statements shall
include a certification by a manager or officer of the General Partner that no default exists
under any of the Loan Documents.
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At Lender's request, Borrower will also furnish Lender the following:
(a)
Within 30 days after the end of each quarter, beginning with the first full
quarter after the date the Work is completed, a rent roll for the Improvements, stating for
each Lease: the apartment number, the tenant's name, the beginning and ending date of
the Lease, the monthly rent, the date through which Borrower has received rent, and the
amount of any security deposit. Lender may request an interim rent roll or copies of
Leases at any time, and Borrower shall produce the requested item or items within 10
days.
(b)
Within 120 days after the end of each fiscal year, a cash flow projection
for the Premises for the remainder of the Loan term, using Lender's then current
underwriting assumptions.
(c)
At least 45 days before the end of each fiscal year, an annual operating
budget for the Premises for the coming year.
(d)
Any other financial or leasing information, reports, or statements, relating
to the business, operations, or condition of Borrower, including a list of any employees of
Borrower or the Manager and any salary information Lender may request.
3.12. Additional Acts. At or before Closing, Borrower shall provide Lender with an
opinion letter of its counsel, opining as to Borrower's formation, organization, and other
legal matters relevant to the Loan and the Collateral, the form and substance of which
letter shall be reasonably satisfactory to Lender. Also, at or before Closing, Borrower
shall provide Lender with an affidavit from a manager or officer of the General Partner in
form and substance satisfactory to Lender along with any other documents or instruments
that Lender deems necessary to close the Loan and create and perfect its interest in any of
the Collateral. Within a reasonable time after requested to do so, Borrower shall: (a)
deliver to Lender copies of any contract, bill of sale, statement, receipt, voucher, or
agreement under which Borrower claims title to any material, fixture, or article
incorporated in the Improvements or located on the Premises and subject to Lender's
security interest or security title; (b) execute and deliver to Lender such documents,
instruments, assignments, and other writings, and do such other acts reasonably necessary
to preserve and protect the Collateral, as Lender may require; (c) do all such other lawful
and reasonable acts and execute all such further conveyances and assurances as may be
reasonably necessary for the more effective carrying out of the intents and purposes of the
HOME Loan Agreement, as Lender shall reasonably require from time to time.
3.13. Easements and Restrictions. Borrower shall not grant any easements burdening
the Premises or subject the Premises to any restrictive covenants without Lender's prior
written consent, which consent will not be unreasonably withheld. If Borrower will
receive any money or other consideration for granting such an easement or restriction,
Lender may condition its consent to the grant upon Borrower using such money or other
consideration to improve the Premises, to reduce the balance of the Loan, or to increase a
reserve required under the HOME Loan Agreement.
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3.14. Compliance With Requirements. Borrower will promptly comply with each and
every Requirement, order, or private covenant applicable to it or the Premises and shall
not do anything that constitutes a public or private nuisance or that makes void, voidable,
cancelable, or increases the premium of any insurance for the Premises. On demand,
Borrower shall furnish Lender with independent evidence of compliance with this
section. So long as Borrower is not in default, Borrower shall have the right to contest the
validity or applicability of any such Requirement if it first notifies Lender of its intention
to do so, then does so diligently, in good faith, without prejudice to Lender, and (if
required by Lender) it provides a bond or other security satisfactory to Lender to protect
Lender's interest.
3.15. Environmental Requirements. Borrower shall comply with all applicable
Environmental Requirements and use its best efforts to cause all tenants and other
persons occupying the Premises to comply with all Environmental Requirements.
Borrower shall not and shall not permit a tenant to generate, use, treat, store, release, or
dispose of any Hazardous Substance on the Premises or transport or permit the
transportation of any Hazardous Substance to or from the Premises in any manner that
violates any Environmental Requirement. Borrower shall keep the Premises free and clear
of any lien imposed pursuant to any Environmental Requirement.
At its sole expense, Borrower will conduct any environmental investigation, study,
sampling, and testing of the Premises and take or cause to be taken such actions as may
be necessary to comply with all Environmental Requirements, including undertaking any
cleanup, removal, or other remedial action necessary to remove and clean up all
Hazardous Substances from the Premises, all of which shall be to the reasonable
satisfaction of a professional environmental consultant selected by Lender and in
accordance with all applicable Environmental Requirements and with all applicable
orders and directives of all Public Bodies. At Borrower's sole expense, Borrower shall
provide Lender with soil tests of the Premises as Lender may request. If there is a material
change in any Requirement governing the assessment, release, or removal of Hazardous
Substances, which change would lead a prudent lender to require additional testing of the
Premises, Borrower shall at its sole expense take all such action (including conducting
engineering tests) as Lender may request to confirm that no Hazardous Substances are or
ever were stored, disposed of, or released on or from the Premises. Borrower shall also
comply with the following requirements:
(a)
Borrower shall notify Lender and provide Lender with any additional
information and documents Lender may request: (1) upon learning of any potential or
known release, or threat of release, of any Hazardous Substance on or from the Premises
or if Borrower has reason to believe that it or the Premises are in violation of any
Environmental Requirement; (2) upon receipt of a notice from any Public Body of any
such potential or known release or threat of release; (3) upon learning that any Public
Body has incurred or intends to incur any expense or loss in connection with the
assessment, containment, or removal of any Hazardous Substances for which expense or
loss Borrower may be liable or for which expense or loss a lien may be imposed on the
Premises; or (4) upon learning of any pending or threatened claim or proceeding against
Borrower or the Premises based on any Environmental Requirement or any condition that
could result in such a claim or proceeding.
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Upon Lender's request, Borrower at its sole expense will provide Lender with an
environmental site assessment report for the Premises, prepared by an environmental
consulting firm approved by Lender, indicating the presence or absence of Hazardous
Substances and the potential cost of any removal or remedial action in connection with
any Hazardous Substances on the Premises.
(b)
Borrower shall indemnify and defend (with attorneys satisfactory to
Lender), and hold harmless Lender and its officers, employees, and agents (collectively,
referred to as "Lender" in this subsection) from and against any loss, damage, liability,
penalty, fine, or expense (including reasonable attorneys' fees and costs and expenses
reasonably incurred in investigating, preparing, or defending against any litigation or
claim, action, suit, proceeding, or demand of any kind or character), arising from the
contamination of the Premises by any Hazardous Substances or any violation or purported
violation of any Environmental Requirement or Requirements relating to the Premises or
Lender's exercise of its rights under this subsection, including any loss, expense, damage,
liability, or charge arising in whole or in part from Lender's negligence or alleged
negligence, but not including: (1) any matters or circumstances resulting from or arising
out of any intentionally wrongful act or omission of Lender or its agents; or,
(2) any matters or circumstances not caused by Borrower or its agents, employees,
tenants, or contractors (but only if such matters or circumstances first occur after
Borrower no longer owns the Premises). If Lender institutes an action or proceeding to
enforce any provision of this section 3.15 (including an action for declaratory relief or for
damages), Lender shall be entitled to recover from Borrower its reasonable attorneys' fees
and disbursements incurred in connection with such action or proceeding if Lender is the
prevailing party. Borrower shall reimburse Lender for any amounts paid or incurred by
Lender that are covered by this indemnification provision within 30 days after Lender's
written demand for reimbursement. Any amount not paid within 30 days shall bear
interest at the Default Rate. The parties intend that this indemnification obligation is
separate and independent from any other obligation in the HOME Loan Agreement or the
other Loan Documents and that this obligation and the warranties and representations in
section 2.15 shall survive the expiration or termination of the HOME Loan Agreement,
the payment of the Loan, the release of the Security Deed, and any Foreclosure and shall
inure to the benefit of Lender and its successors and assigns and to the benefit of any
owner of all or part of the Premises who takes pursuant to any Foreclosure. Lender may
(but is not obligated to) participate in, as a party if it so elects, any action or proceeding
involving an environmental claim. Without Lender's prior written consent, Borrower shall
not enter into any settlement, consent, or compromise with respect to any environmental
claim.
(c)
If Borrower fails to take any action required of it under this section 3.15,
Lender may (but is not obligated to) take the action. If Lender does so, Borrower grants
Lender and its agents, employees, and contractors access to the Premises and shall
reimburse Lender for all amounts paid in connection with any such action, including
reasonable attorneys' fees, fines, or other penalties. Any amount not paid within 30 days
of Lender's demand shall bear interest at the Default Rate.
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(d)
Borrower waives any right or claim of right to cause a marshaling of its
assets or to cause Lender to proceed against any Collateral before proceeding under this
section 3.15. Borrower expressly waives and relinquishes all present or future rights,
remedies, or circumstances that might constitute a legal or equitable discharge of
Borrower or which might otherwise impair the validity or enforceability of this section or
any provision in it.
3.16. Federal Requirements. Borrower will comply with all Requirements relating to
nondiscrimination, including the following: the Civil Rights Act of 1963; Executive
Order 11063; Executive Order 11246; Age Discrimination Act of 1975; Equal Credit
Opportunity Act; Fair Credit Reporting Act; Fair Housing Act; Title VIII of the Civil
Rights Act of 1968; the Americans with Disabilities Act; Section 504 of the
Rehabilitation Act of 1973. Borrower shall also comply with the following federal
Requirements:
(a)
Section 3 of the Housing and Urban Development Act of 1968, which
requires that, to the greatest extent feasible: opportunities for training and employment
arising in connection with the planning and carrying out of the Work will be provided to
individuals residing within the area of the Premises whose households have an anticipated
gross annual income less than or equal to 60% of median income for the area where the
Premises are located, as determined annually by HUD; and contracts for work will be
awarded to business concerns that are located in or owned by persons residing within the
area of the Premises. For purposes of this subsection, gross annual income shall be
determined in accordance with the HOME Regulations and the HOME Rules.
(b)
Executive Orders 11625, 12432, and 12138, which require (among other
things) Borrower to establish a minority outreach program to insure the inclusion to the
maximum extent possible of minorities, women, and entities owned by minorities and
women ("MBE/WBE's") in the carrying out of any activity pursuant to the HOME Loan
Agreement and in the operation and management of the Premises. Borrower agrees to
conduct such outreach activities and shall maintain records, documentation, and data as
required by the HOME Regulations, the HOME Rules, or otherwise by Lender, including
evidence of: (1) the racial, ethnic, or gender character of each business entity providing
services under the GHFA Program; (2) the amount of the contract; and (3) that
MBE/WBE's have equal opportunity to compete for and obtain business under the GHFA
Program. When economically feasible, Borrower shall divide total requirements into
small tasks and quantities to permit the maximum participation by MBE/WBE's and will
require the same of any subrecipients, prime contractors, and owners of housing assisted
with HOME Funds.
(c)
The Copeland "Anti-Kickback" Act (18 U.S.C. 874 et seq.), the DavisBacon Act (40 U.S.C. 276a et seq.), and Sections 103 and 107 of the Contract Work
Hours and Safety Standards Act (40 U.S.C. 327 et seq.).
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(d)
The Uniform Relocation Assistance and Real Property Acquisition
Policies Act, 42 U.S.C. 4601 et seq. (the "U.R.A.") and the Community Development Act
of 1974, which among other things require that the displacement of individuals during the
Work be minimized, that any tenants occupying the Premises be provided an opportunity
to lease and occupy a suitable, decent, safe, sanitary, and affordable HOME-Assisted Unit
upon completion of the Work, and that tenants not be economically displaced.
(e)
The National Environmental Policy Act, 42 U.S.C. 4321 et seq. (1969).
(f)
The Lead-Based Paint Poisoning Prevention Act, 42 U.S.C. 4821 et seq.
(g)
All requirements set forth in the HOME Regulations or the HOME Rules.
3.17. Conveyance of the Premises. Borrower shall not mortgage, assign, convey, sell,
option, refinance, ground lease, or otherwise dispose of, transfer, or encumber all or any
part of the Premises, any interest in the Premises, or the income stream from the Premises
without Lender's prior written consent, which shall not be unreasonably withheld. Any
agreement to do any of the above or a transfer of all or part of the Premises involuntarily
or by operation of law shall constitute a default under the HOME Loan Agreement, unless
Lender waives the default in its sole discretion.
3.18. Leasing. Before executing any Lease starting after the Effective Date, Borrower
shall submit to Lender for Lender's approval a copy of the form lease Borrower
plans to use and the economic terms for Leases. Once Lender approves Borrower's
lease form and economic terms, Borrower shall not change the form and shall not
execute any Lease that materially differs from the form or economic terms without
Lender's prior written consent. No Lease shall have a term in excess of 13 months,
and Borrower shall not enter into a Lease, unless the tenant is going to actually
occupy the leased premises. Borrower shall at all times promptly and faithfully
perform, or cause to be performed, all of the landlord's covenants, conditions, and
agreements contained in all Leases. All HOME-Assisted Units shall be leased
pursuant to a written lease complying with the HOME Regulations and the
HOME Rules and include the Addendum To Lease .
3.19. Insufficiency of Loan Proceeds. (a) If at any time before the Conversion Date the
remaining undisbursed portions of the Loan and equity contributions to Borrower
required pursuant to existing agreement that are to be disbursed for hard costs of
construction at or before completion of the Work ("Construction Equity") are insufficient
in Lender's reasonable judgment to fully complete the Work in accordance with the
Completion Schedule and the Plans and Specifications and to pay all interest accrued or
to accrue before the Conversion Date and to pay all other amounts to be paid under the
Loan Documents on or before the Conversion Date, then Borrower shall, within 15 days
after written notice from Lender, deposit with Lender sufficient cash to remedy such
condition and to pay any and all liens for services and materials alleged to be due and
payable in connection with the Improvements.
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Such Equity Contribution shall be additional security for the Loan and, at Lender's option,
it may be disbursed before any further advances of the Loan proceeds are made. Lender
need not make any further disbursements of the Loan until Borrower has deposited with it
any required Equity Contribution, and Borrower's failure to make an Equity Contribution
as required by this section shall constitute a default.
(b)
In addition, if at any time Lender has advanced the full amount in the DCS
for any item or any category of items or such budgeted amount is insufficient to pay the
full costs of such item or category of items, Borrower will promptly pay out of its own
funds all such excess costs as and when incurred, unless such excess costs are covered by
any contingency funds included in the DCS and Lender approves in advance in writing
the use of the contingency funds for such purpose or unless Lender consents to the
funding of such amounts from any savings realized or projected to be realized with
respect to any other category of items under the DCS, which consent will not be
unreasonably withheld or delayed.
3.20. Notice of Adverse Action. Borrower will promptly advise Lender in writing of the
commencement of any judicial or administrative action against or investigation involving
Borrower or the General Partner or affecting the Premises or involving any of the Loan
Documents and provide Lender with a copy of all documents it has received relating to
any such litigation, action, or investigation, regardless of the amount involved, and will
promptly advise Lender of all complaints, notices of Requirement violations, and charges
from any Public Body relating to the Premises and provide Lender with a copy of any
such complaint, notice, or charge.
3.21. Liens. Without Lender's prior consent, Borrower shall not grant or permit any lien
on or security interest in the Collateral other than: (a) a lien for ad valorem taxes not yet
due and payable on the Premises; (b) inchoate mechanic's and materialmen's lien rights;
and (c) the Permitted Encumbrances. If any other lien or claim of lien is placed or filed
against the Premises, Borrower shall promptly notify Lender and within 15 days of its
receipt of notice of such lien remove it or cause it to be removed or place in escrow with
Lender sufficient funds to pay the claim of lien. Borrower shall, however, have the right
to contest any such claim of lien if it first notifies Lender of its intention to do so and then
does so diligently, in good faith, and without prejudice to Lender, and (if required by
Lender) it provides a bond or other security satisfactory to Lender to protect Lender's
interest. If Borrower intends to contest any such claim of lien, Borrower shall give Lender
advance notice in writing of its intention to do so, which notice shall include the date on
which Borrower intends to start such proceedings, which date shall be no later than 30
days after the date of the notice to Lender, and shall provide Lender with copies of the
documents instituting the proceedings within 10 days of the date the proceedings are
instituted and any other documents relating to the proceedings as Lender may request.
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3.22. Defense of Title. Borrower shall promptly notify Lender of any title problem or
alleged title problem affecting the Premises or other Collateral. Borrower shall reimburse
Lender for any expenses that Lender incurs in defending Lender's title and interest in the
Premises and the other Collateral. Borrower hereby authorizes Lender, at Borrower's
expense, to take all necessary and proper steps for the defense of the title or interest,
including the employment of counsel, the prosecution or defense of litigation, and the
compromise or discharge of claims made against the title or interest, and, at Borrower's
expense, Borrower agrees to cooperate fully with Lender in connection with any such
proceeding. Borrower shall perform and comply with all covenants, conditions,
obligations, and prohibitions required of Borrower in connection with any other
document or instrument affecting title to the Premises.
3.23. Casualties and Condemnation. (a) Borrower shall give Lender prompt written
notice of any material damage to the Premises or the institution of any proceedings for
eminent domain or for the condemnation of all or part of the Premises (along with a deed
in lieu of condemnation, collectively referred to as "condemnation"). As additional
collateral, Borrower hereby assigns to Lender all insurance proceeds on the Premises and
all causes of action, claims, compensation, awards, and recoveries for any damage to all
or any part of the Premises or for any loss or diminution in value of the Premises resulting
from a casualty or condemnation (collectively, the "Proceeds").
Borrower shall execute and deliver such instruments as may be requested by Lender, from
time to time, to confirm the foregoing assignment to Lender of the Proceeds. Borrower
hereby appoints Lender as its attorney-in-fact (which power of attorney is irrevocable,
shall be deemed coupled with an interest, and shall survive the voluntary or involuntary
dissolution of Borrower), with full power of substitution to settle for, collect, and receive
any such Proceeds from the parties paying them. All Proceeds shall be paid to Lender,
and, if Borrower receives any Proceeds, it will promptly remit them to Lender without
demand or request from Lender. Lender may participate in any suits or proceedings
relating to any Proceeds and may join with Borrower in adjusting any loss covered by
insurance relating to the Premises, and Borrower shall from time to time deliver to Lender
any instruments required to permit such participation.
(b)
Lender shall first apply any Proceeds it receives to the payment of all of its
reasonable out-of-pocket costs and expenses (including attorney's fees) incurred in
obtaining those sums (with the remainder referred to as the "Net Proceeds"). Subject to
the conditions set forth below, Lender will then apply the Net Proceeds for rebuilding,
restoration, or repair (collectively in this section 3.23, "repair") of the Premises with any
remainder being applied by Lender for payment of any amount owed under the Loan
Documents in whatever order Lender determines in its absolute discretion.
Notwithstanding the foregoing, however, Lender need not make any Net Proceeds
available to Borrower to repair the Premises if: (1) an Event of Default has occurred and
is continuing; or (2) in the sole and reasonable judgment of Lender, the Net Proceeds are
less than the projected cost of the repair, unless Borrower has deposited with Lender an
amount equal to the difference between the Net Proceeds and the projected cost (the
"Deposit") within 30 days of the time the difference is first determined.
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If either such condition exists, Lender may at its option immediately terminate the
HOME Loan Agreement and declare the entire outstanding principal balance of the Loan
and all accrued and unpaid interest and any other amount owed under the Loan
Documents to be immediately due and payable. In such case, if Borrower fails to pay such
debt in full within 15 days of receipt of such notice from Lender, Lender may apply all or
part of the Net Proceeds to the amounts owed under the Loan Documents in whatever
order Lender determines in its absolute discretion with any remainder being paid to
Borrower and any deficiency being paid by Borrower to Lender. Any reduction in
Borrower's debt resulting from Lender's application of the Net Proceeds shall take effect
only when Lender actually receives and applies the Net Proceeds, and, in any event,
Borrower shall not be excused from paying the unpaid portion of any debt owed under the
Loan Documents.
(c)
If the Premises are partially or totally damaged or destroyed by fire or any
other cause or if a condemnation only relates to part of the Premises and pursuant to
section 3.23(b) the Net Proceeds are to be used for repair, Borrower shall proceed with
the repair of the Premises as soon as is reasonably practical and diligently pursue the
work to completion, at Borrower's cost and expense and regardless of whether the Net
Proceeds are sufficient for the purpose. In the case of a casualty, Borrower shall repair the
Premises as nearly as possible to their value, condition, and character immediately before
such casualty. In the case of a partial condemnation, Borrower shall repair the remaining
part of the Premises to an architectural whole, as best it can under the circumstances.
In either case, all work shall be in accordance with plans and specifications
subject to Lender's prior approval, which approval will not be unreasonably withheld or
delayed. If the Net proceeds are made available to Borrower for repair, Lender will
disburse them to Borrower in accordance with draw procedures similar to those contained
in Article 4. Before the final completion of the repair, Lender will not disburse more than
90% of the cost of the work performed from time to time, and Lender will disburse the
Deposit and funds other than Net Proceeds before disbursement of Net Proceeds. At all
times, the undisbursed balance of Net Proceeds remaining in the hands of Lender,
together with the Deposit, must be sufficient in the reasonable judgment of Lender to pay
for the cost of completion of the repair, free and clear of all liens or claims for lien. Upon
an Event of Default, Lender may cease disbursing Net Proceeds, the Deposit, or any other
amount it is holding for purposes of repair and apply any or all such amounts to
Borrower's obligations under the Loan Documents in whatever order Lender determines
in its absolute discretion with any remainder being paid to Borrower and any deficiency
being paid by Borrower to Lender.
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3.24. Management of Premises. The Premises shall be managed in a professional
manner by a managing agent evaluated and approved by Lender. Borrower has or will
execute a written agreement with the Manager for the operation, management, and
supervision of the Premises. Before Borrower may execute, amend, extend, or terminate
that agreement or any other agreement relating to the management or leasing of the
Premises, Borrower must comply with all requirements set forth in Lender's "Property
Management Guide," as it may be amended or replaced from time to time (the "Guide"),
and shall notify Lender of the proposed action and provide Lender with a copy of the
proposed agreement, amendment, extension, or termination (as the case may be), and
Borrower shall not proceed further without Lender's prior written approval, which
approval will not be unreasonably withheld or delayed. If an agreement relating to the
management of the Premises permits the party contracting with Borrower (the "manager"
in the remainder of this section) to resign, such agreement shall require the manager to
notify Borrower in writing at least 60 days prior to the effective date of the manager's
resignation. Additionally, Borrower shall notify Lender in writing of any such resignation
within 3 Business Days of Borrower's receipt of any notice of resignation (verbal or
written) and, at least 30 days prior to the effective date of any proposed agreement with
any replacement manager, fully comply with all requirements set forth in the Guide and
provide Lender with a copy of the proposed agreement for Lender's approval. If Borrower
violates the requirements of this section or there is a default under any management
contract or leasing agreement by the manager or leasing agent, which default is not cured
within any applicable cure or grace period, Lender may direct Borrower to terminate such
management contract or leasing agreement upon 30-days notice and may direct Borrower
to retain a new manager or leasing agent. Borrower shall maintain the Premises in good
condition and repair and, subject to section 3.23, shall promptly repair, restore, replace, or
rebuild any part of the Premises that is in disrepair. Borrower shall comply with any
maintenance standards imposed by the Act and the HOME Regulations. Borrower shall
not commit or suffer any waste to the Premises. Borrower shall cause the Premises and all
equipment and material stored or located at the Premises to be secured and protected
against vandalism and unauthorized use and possession.
Borrower shall use all gross operating income generated from the Premises to pay for
budgeted operating expenses of the Premises, debt service for debts secured by the
Premises, and any required contribution to reserves and escrows for the Premises and,
without Lender's prior written consent, shall not use any of the income from the Property
for any other purpose unless all expenses, debt service, and reserve contributions have
been fully paid and satisfied.
3.25. Payment of Taxes, Utilities, Etc. Borrower shall pay when due all Taxes. Until the
Loan is paid in full, for purposes of taxation, the Premises must be assessed as a separate
parcel from any other real property, and Borrower shall not cause or permit the Premises
to become subject to the lien of any Tax levied or assessed against any other real
property.
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If Borrower is not in default, Borrower may contest the amount, validity, or applicability
of any Tax if it does so diligently, in good faith, without prejudice to Lender, and (if
required by Lender) it provides security satisfactory to Lender to protect Lender's interest.
If Borrower intends to contest any Tax, Borrower shall give Lender at least 48-hours
advance written notice and at the same time shall provide Lender with copies of the
documents instituting the proceedings and, from time to time, any other documents
relating to the proceedings as Lender may request.
3.26. Zoning. Borrower shall comply with all existing and future zoning Requirements.
Without Lender's prior written consent, Borrower shall not initiate, make, join in, consent
to, or acquiesce in any change in the zoning or conditions of use of the Premises. If the
use of all or any part of the Premises becomes a nonconforming use under the zoning
Requirements, Borrower shall not cause or permit such use to be discontinued or
abandoned without Lender's prior written consent. Borrower shall not file or subject the
Premises to any declaration of condominium or convert the Premises to a condominium,
co-operative, or other form of multiple ownership without Lender's prior written consent.
3.27. Negative Covenants. Without Lender's prior consent, which may be granted or
withheld in Lender's sole and absolute discretion, Borrower shall not take any action that
would change any matters set forth in the Application. Without Lender's prior written
consent, which consent will not be unreasonably withheld, the following actions shall not
be taken:
(a) Borrower shall not modify or amend its partnership agreement or its certificate
of partnership; provided, however, limited partnership interests in Borrower may be
transferred without Lender's prior approval, and, if an amendment of Borrower's
partnership agreement is needed solely for such purpose, such an amendment shall be
permitted, but Borrower will give Lender advance written notice of any such transfer and
the name and address of the new limited partner and a copy of any such amendment to the
partnership agreement.
(b)
The General Partner shall not modify or amend its articles of organization
or operating agreement.
(c)
Borrower shall not encumber, grant a security interest in, transfer, permit
the transfer of, or change or permit a change in the ownership of interests in Borrower
(other than the sale or transfer of limited partnership interests) or sell any substantial
assets used or located at the Premises.
(d)
No General Partner shall encumber, grant a security interest in, transfer,
permit the transfer of, or change or permit a change in the ownership interests of the
General Partner (at one time or over any period of time). No General Partner shall convert
its general partnership interest to a limited partnership interest.
(e)
The Developer shall not transfer, permit the transfer of, or change or
permit a change in the ownership interests of the Developer (at one time or over any
period of time).
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(f)
Borrower shall not cause or permit any merger, consolidation, liquidation,
or dissolution involving Borrower or the sale or transfer of all or substantially all of the
assets of Borrower.
(g)
No general partner of Borrower shall cause or permit any merger,
consolidation, liquidation, or dissolution involving such general partner or the sale or
transfer of all or substantially all of the assets of such general partner.
(h)
Borrower shall not acquire or start any business other than the multifamily rental housing business on the Premises, as contemplated by the HOME Loan
Agreement.
(i)
Borrower shall not make any investment in an Affiliate, unless the
Affiliate is wholly owned by Borrower.
(j)
Borrower shall not acquire or purchase any assets from an Affiliate or
transfer any assets to an Affiliate, unless the Affiliate is wholly owned by Borrower.
(k)
Borrower shall not guaranty any debt of any Person.
(l)
Borrower shall not redeem or purchase in part or in whole the interest of
any partner of Borrower.
(m)
Borrower shall not make any payments in cash or property to any partner
or Affiliate, except payments for services rendered by the partner or Affiliate, the nature
of which services shall be reasonable and customary in the industry and the amount of
which payment shall be reasonable and not more than what would be paid to a nonAffiliate on an arm's length basis and except for distributions to the partners made
pursuant to and in accordance with the Borrower's partnership agreement.
(n)
After completion of the Work, Borrower shall not remove or demolish or
materially alter any of the Improvements or any part of the Premises.
(o)
Borrower shall not change its state of organization.
3.28. Conversion. Borrower shall satisfy all Conversion Conditions before the
Conversion Date and shall submit to Lender any item or document needed to prove
satisfaction of any Conversion Condition by the due date set forth in the Conversion
Conditions or in this section. If Borrower satisfies all Conversion Conditions by the
Conversion Date or Lender in its absolute discretion waives any unsatisfied condition,
Lender shall convert the Construction Loan to the Permanent Loan.
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At or before such conversion, Borrower shall execute any instruments or documents that
Lender deems necessary for purposes of converting the Construction Loan and provide
Lender with any information Lender deems reasonably necessary to determine if the
Conversion Conditions have been satisfied and all other requirements of the Loan
Documents and HOME Regulations have been met. Lender shall not be obligated to
convert the Construction Loan to the Permanent Loan if: (a) an Event of Default exists;
(b) Borrower is not in compliance with any requirement of the GHFA Program, the
HOME Regulations, or the Affordable Housing Application Manual; (c) a default exists
under the Tax Credit Documents; or (d) Borrower has not received a form 8609. If there
is other permanent financing for the Premises, Lender shall not be obligated to convert
the Construction Loan to the Permanent Loan unless the terms, conditions, and amount of
the other permanent financing are satisfactory to Lender and the other permanent
financing has already closed or converted or closes or converts contemporaneously with
the conversion of the Construction Loan to the Permanent Loan. If the other permanent
financing has closed or converted before Lender has converted the Construction Loan,
Borrower shall provide Lender with fully executed copies of all loan documents relating
to the other permanent financing, and Lender's receipt of such copies is a condition to its
obligation to convert the Construction Loan.
3.29. Affirmative Marketing. Borrower shall maintain and abide by an affirmative
marketing plan. The plan shall be subject to the prior approval of Lender and, among
other things, shall be designed to attract tenants and management employees from all
racial, ethnic, and gender groups and, when feasible, shall require all press releases and
written materials advertising or promoting the Premises to include the equal housing
opportunity logo or slogan. Borrower shall maintain records evidencing its compliance
with the plan and the affirmative marketing requirements imposed by the HOME
Regulations and the HOME Rules.
3.30. Assignment of Contract Rights. (a) As additional security for Borrower's
obligations under the Loan Documents, Borrower assigns to Lender all of Borrower's
rights, title, and interest in and to the Contract Documents. The parties intend this
assignment to be an absolute, unconditional, and present assignment. The assigned rights
include all of Borrower's right to: (1) modify any Contract Document; (2) terminate any
Contract Document; and (3) waive or release the observance or performance of any
obligation or condition of any Contract Document. Borrower represents and warrants that
there is no assignment of any rights or interest under the Contract Documents to any other
Person. Borrower shall not assign any rights or interest under the Contract Documents
without Lender's prior consent.
Borrower will: (w) perform and observe every condition and covenant of Borrower under
each Contract Document; (x) give prompt notice and a copy to Lender of any claim of
default under any Contract Document; (y) enforce the performance of each Contract
Document; and (z) appear in and defend any action against it in any way connected with
any Contract Document.
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(b)
If there is an Event of Default, Borrower appoints Lender as its attorneyin-fact to take such actions, execute such documents, and perform such work, with or
without taking possession of the Premises, as Lender deems appropriate in exercising its
rights and remedies. Without limiting the generality of the foregoing, the power shall
include the power to sue on any Contract Document and to seek approvals from any
Public Body required for the completion of the Work, in the name of Borrower or Lender
or both. This power of attorney shall be irrevocable and coupled with an interest and shall
terminate only upon the payment of all sums due Lender by Borrower. Borrower hereby
releases Lender and any Person acting for Lender under this power from all liability
resulting from the exercise of this power or any act or omission under the power.
Borrower indemnifies Lender against all liability, loss, claim, or damage that Lender may
incur under this assignment or any Contract Document or resulting from any act or
omission of Lender under this assignment or any Contract Document, except for a
liability, loss, claim, or damage resulting from Lender's intentional misconduct. This
indemnification obligation shall survive the execution and termination of the HOME
Loan Agreement.
3.31. Georgia Drug-Free Workplace Act. Until the Loan is paid in full, Borrower shall
not engage in the unlawful sale, manufacture, distribution, dispensation, possession, or
use of a controlled substance or marijuana during the performance of any of its
obligations under the HOME Loan Agreement and shall comply with the Georgia DrugFree Workplace Act, O.C.G.A. §50-24-1 et seq., and Borrower shall provide a drug-free
workplace for its employees. Borrower shall secure from the General Contractor and any
other contractor or subcontractor it hires a certification in substantially the following
form, or, if there is a written contract with such contractor or subcontractor, the contract
shall include a provision substantially in the following form:
As part of the agreement with Owner, the contractor or
subcontractor certifies that it will provide a drug-free workplace for
its employees during the performance of that agreement, in
accordance with and pursuant to O.C.G.A. §50-24-3(b)(7).
3.32. Taxes and Insurance Escrow. At or before the Conversion Date, Borrower shall
deposit with the Escrow Agent an amount sufficient to cover the following: (a) the total
Taxes and fire and property insurance premiums that are due on or before the Conversion
Date and have not then been paid; plus (b) the amount of any deductible under Borrower's
liability insurance policy; plus (c) all Taxes and fire and property insurance premiums
coming due within 3 months of the Conversion Date, or, if the due date for Taxes or
insurance premiums or both is more than 3 months after the Conversion Date, an amount
that, when added to the payments due after the Conversion Date, will result in the Escrow
Agent having sufficient funds to pay any such bills by a date that is no later than 2 months
before the due date for the payment. Lender will calculate the amounts to be deposited in
escrow at or before the Conversion Date and thereafter using information provided by
Borrower or the best information that is available to Lender. After the Conversion Date,
on a monthly basis Borrower shall pay the Escrow Agent, 1/12th of the actual or
estimated annual total Taxes and insurance premiums on the same day that regular
payments are due under the Note.
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Upon receipt of any bills for Taxes or property insurance, Borrower shall provide the
original bills or copies to the Escrow Agent. If the Escrow Agent has received such bills
and any other information or documentation needed to pay the bills, on or before the due
date for payments of Taxes and insurance premiums, the Escrow Agent shall pay them;
provided, however, if the funds held in escrow are insufficient to pay the amount in full,
Borrower shall promptly pay the Escrow Agent or the taxing authority or insurer (as the
case may be) any shortage. When all amounts due under the Loan Documents are paid in
full, Lender or the Escrow Agent shall release to Borrower the amount in the reserve
established under this section.
3.33. Operating Deficit Reserve. At or before the Conversion Date, Borrower shall
deposit the required funds with the Escrow Agent, which funds shall be used as an
operating deficit reserve ("ODR"). Borrower may only use the funds in the ODR to pay
budgeted expense items approved by Lender and scheduled Loan payments, but only if
the cash revenues from the Premises are insufficient for those purposes. After the initial
deposit into the ODR, Borrower is not required to further fund the ODR, but all interest
earned on the ODR shall become a part of the ODR. Before Borrower may draw on the
ODR, Borrower must notify Lender in writing, explain the need for the withdrawal, and
receive Lender's approval of the withdrawal. If Borrower at any time draws on the ODR,
Borrower shall first use any "free cash flow" from the Premises (as defined in section
3.35 but without taking into consideration any amounts that would otherwise be included
under subparagraph 3.35(c)) to restore the ODR to the amount it was before the
withdrawal. When all amounts due under the Loan Documents are paid in full, the
Escrow Agent will release to Borrower the amount remaining in the ODR.
3.34. Replacement Reserve. Beginning with the first payment due on the Note after the
Conversion Date and continuing on the same day of each subsequent month until the
Loan is paid in full or the "Affordability Period" under the LURA expires, whichever is
later, Borrower shall deposit the required monthly amount with the Escrow Agent, which
amounts shall be deposited in a replacement reserve; provided, however, each year during
the term of the Loan on the anniversary date of the Conversion Date the monthly amount
due under this section shall increase by 3% over the amount payable for the prior year.
All interest earned on the funds in the reserve shall be part of the reserve. The funds in the
replacement reserve shall only be used to replace or make capital improvements to the
Premises (as defined below). Before Borrower may draw on the replacement reserve,
Borrower must notify Lender in writing, explain the need for the withdrawal, and receive
Lender's approval of the withdrawal., which approval will not be unreasonably withheld.
When all amounts due under the Loan Documents are paid in full or when the
Affordability Period has expired, whichever is later, the Escrow Agent shall release to
Borrower the amount remaining in the replacement reserve.
As used in this section, "capital improvements" means improvements to the Premises, the
cost of which would exceed $10,000.00, such as re-roofing, structural repairs, or major
projects to replace or upgrade existing furnishings, equipment, or fixtures, but not
including replacement of individual appliances or minor repairs.
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3.35. Cash Flow Reserve. On an annual basis, Borrower shall deposit with the Escrow
Agent an amount equal to one-half of the "free cash flow" from the Premises for the
preceding fiscal year, which funds will be used as a cash flow reserve (the "CFR"). The
first payment shall be due within 60 days of the first fiscal year end of Borrower after the
Conversion Date and subsequent payments shall be made within 60 days of each
subsequent fiscal year end until the Loan matures. Each payment shall be accompanied by
Borrower's calculation of the amount being deposited, certified as being accurate by
Borrower’s manager, chief financial officer, or Borrower's outside accountant. Lender
may request any other information it deems necessary or desirable to confirm the
accuracy of the amount deposited by Borrower. If at any time Lender determines that
Borrower has not deposited the required amounts in the CFR, Borrower shall within 15
days of notice of the deficiency from Lender deposit the shortage in the CFR. All interest
earned on the CFR shall become a part of the CFR. Before maturity of the Loan,
Borrower may use the amounts in the CFR to pay for capital improvements to the
Premises (as defined in the preceding section), but only if the replacement reserve has
insufficient funds to pay for the capital improvement. If Borrower wants to draw on the
CFR for such purpose, Borrower must notify Lender in writing, explain the need for the
withdrawal, and receive its approval of the withdrawal. At the maturity of the Loan, all
amounts in the CFR shall be applied to pay or reduce the amounts owed under the Loan
Documents. As used in this paragraph, "free cash flow" means all cash revenues from the
Premises for the fiscal year less the following annual expenditures: (a) all cash operating
and maintenance expenses for the Premises (including a syndicator asset management fee,
but not including depreciation, amortization, any management incentive fee, or similar
fee however denominated); (b) amounts deposited in the replacement reserve; (c)
amounts deposited in the ODR to restore it to its previous balance in accordance with
section 3.33; (d) amounts deposited in any other reserve, but only to the extent approved
by Lender; and (e) principal and interest paid on the Loan.
3.36.
Rent-Up Reserve. On or before substantial completion of the Work, the
Developer shall deposit the required funds into a "rent-up reserve" (the "RUR"). All
interest and other amounts earned on the RUR deposits shall be part of the RUR. During
the period between completion of the Work and conversion of the Construction Loan to
the Permanent Loan ("Conversion"), the amounts in the RUR shall be used solely for
operating capital and debt service purposes for the Premises, but only to the extent that
operating revenues from the Premises are insufficient to pay such expenses, as more fully
set forth in an agreement among Lender, Developer, and Borrower executed
contemporaneously with the HOME Loan Agreement. Borrower may not use funds in the
RUR without Lenders' prior written consent and shall provide Lenders with all
information Lenders request for purposes of evaluating any request to use RUR funds. If
there are amounts left in the RUR at Conversion, those amounts shall be disbursed to the
Developer.
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3.37. Escrow Agent. To the extent that the Escrow Agent receives any funds under the
HOME Loan Agreement or any of the other Loan Documents, it may in its discretion
deposit such funds in a separate account or commingle them with other funds. Funds (if
any) that it is holding in the ODR, replacement reserve, and CFR shall be placed in an
interest-bearing account or accounts. The Escrow Agent shall notify Lender whenever a
deposit to any reserve is not made on a timely basis or when a withdrawal is made. The
Escrow Agent shall have no responsibility for investigating and verifying the legitimacy
of any communication it receives regarding escrowed funds or the amounts billed by any
taxing authority or insurer and shall have no liability to Borrower or any other Person for
distribution, application, or misapplication of any escrowed funds, except for intentional
misconduct involving those funds. Except as otherwise agreed or required by law, neither
the Escrow Agent nor Lender shall have any obligation to pay interest on any sums
Borrower may deposit from time to time with Lender or the Escrow Agent under the
HOME Loan Agreement.
3.38. Photographs. After completion of the Work, on an annual basis at the same time
as financial reports are due to Lender, Borrower shall provide Lender with photographs of
the Premises, which photographs shall fairly reflect the status and condition of the
Premises.
3.39. Required Notices to Lender. Borrower shall promptly (but in any event within 3
Business Days) notify Lender in writing if any of the following occurs and specify in
detail the nature of the event, circumstance, event of default, or default:
(a)
any event or circumstance that immediately or after notice or the passage
of time or both constitutes an Event of Default under the HOME Loan Agreement or an
event of default or default under any of the other Loan Documents; or
(b)
any declaration of default received or made by Borrower under Borrower's
partnership agreement.
4. Disbursement of Loan Proceeds. Borrower must satisfy all conditions and
requirements of any letter of instruction from Lender and satisfy all conditions and
requirements in the HOME Loan Agreement before Lender has any obligation to disburse
any Loan proceeds. The Borrower must contribute its equity ( as determined by GHFA)
towards the hard costs of the Work before Lender is required to disburse any of the Loan
proceeds. Lender must receive a letter of credit (the "LOC") in form, content, and
duration satisfactory to it and for an amount equal to one-half of the amount of the
Construction Contract before Lender is required to disburse any of the Loan proceeds,
which LOC (or a substitute acceptable to Lender in its sole and absolute discretion) must
remain in effect until completion of the Work. If Borrower has started the Work before
the Closing, any pre-Closing draw request submitted by Borrower relating to the Work
must comply with all the requirements of the HOME Loan Agreement before Lender has
any obligation to fund any post-Closing Draw Request. In this section, the term
"subcontractor" includes substantial materialmen or suppliers supplying materials for the
Work and "subcontract" includes the General Contractor's contracts with or purchase
orders to those persons.
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4.01. Method of Disbursement. The following draw procedures shall apply:
(a)
Draw Request. As a condition to any disbursement of Loan proceeds,
Borrower shall fully complete, sign, and deliver to Lender a Draw Request. At a
minimum, the Draw Request shall contain the following: the amount of Loan proceeds
requested; satisfactory substantiation for the amount requested; the percentage completion
of the Work; Borrower's certification that the undisbursed portions of the Loan and
Construction Equity are sufficient to complete the Work in accordance with the Plans and
Specifications and the HOME Loan Agreement. The amount sought for hard costs in the
Draw Request may not exceed the lesser of the actual hard costs incurred by Borrower as
of the date of the Draw Request or an amount equal to all budgeted hard costs for the
Work times the percentage of completion of the Work less amounts previously advanced
for hard costs and retainage. Lender will only advance Loan proceeds for costs contained
in the DCS (not exceeding the amount set forth in the DCS for each item or category of
work), actual, direct costs of the General Contractor for work required by the
Construction Contract and performance of the general conditions under the Construction
Contract. Any Draw Request seeking payment for the General Contractor must include a
requisition for payment, showing all subcontractors by name and trade, the total amount
of each subcontract, and the amount previously paid to each subcontractor as of the date
of the requisition, and shall be accompanied by all invoices relating to the requisition and
the costs in it and partial mechanic's lien releases from the General Contractor and
subcontractors or other satisfactory evidence of payment to subcontractors. The General
Contractor must certify in writing on the requisition the accuracy of all information in and
with it; that there is no person who has or may have any mechanic's or materialmen's liens
against the Premises as a result of performance of part of the Construction Contract; and
the extent of the completion of the Work. Any Draw Request seeking payment for
something other than amounts owed under the Construction Contract must state the
purpose for the advance and must include invoices for the amount requested or other
satisfactory substantiation. In its sole discretion, as a condition of disbursement, Lender
may require that: (1) the Architect or a construction inspector satisfactory to Lender
certify the Draw Request, including the extent of completion of the Work and Borrower's
and the General Contractor's compliance with the Plans and Specifications and the
Construction Contract; (2) it receive an updated survey (provided, however, Lender will
not request an updated survey in connection with an interim Draw Request unless it is
needed to resolve an issue or dispute raised by the Draw Request); (3) it receive an
endorsement to Lender's title insurance policy, increasing the amount of the coverage to
the amount advanced by Lender (unless the policy provides for such an increase
automatically) and indicating that, since the effective date of the policy or the last
endorsement, there has been no change in the status of title to the Premises and no new
title exceptions; and (4) it receive an inspection report from an independent inspector
satisfactory to Lender, in which the inspector has covered those items specified by
Lender. Borrower may not submit the first Draw Request sooner than 20 days after
Closing and subsequent Draw Requests no more frequently than once per month. After
disbursement of Loan proceeds pursuant to a Draw Request, Lender may request canceled
checks and paid invoices, evidencing payment of the hard and soft costs covered by any
such Draw Request.
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Each Draw Request shall constitute Borrower's affirmation that the
representations and warranties in the HOME Loan Agreement remain true and correct as
of the date of the Draw Request and, unless Lender is notified in writing to the contrary
before the disbursement of the requested advance, will be true and correct on the date of
the disbursement.
(b)
Advances. After receipt of a properly completed and substantiated Draw
Request, Lender shall have at least 10 Business Days to examine it before making any
funding decision. If the Draw Request satisfies the requirements of the HOME Loan
Agreement and all other conditions for disbursement have been met, Lender will advance
Loan proceeds. Lender shall mail or wire all advances to Borrower. If wired, proceeds
will be wired to Borrower's construction. Lender is not obligated to advance Loan
proceeds, unless, in Lender's judgment, the undisbursed part of the Loan plus the
undisbursed Construction Equity are adequate to complete the Work in accordance with
the HOME Loan Agreement and pay all interest, costs, and other sums required to be paid
under the Loan Documents before the Conversion Date.
(c)
Retainage. Lender will withhold as retainage an amount equal to 10.0% of
the amount approved under any Draw Request. Lender will disburse the retainage in
accordance with section 4.04.
(d)
Advances to or through Others. At its option, Lender may make any
advance directly to the General Contractor or any subcontractor to pay for its work and
materials; to any other Person to whom Lender in good faith determines payment is due;
or through the company insuring Lender's interest in the Premises, but only if the title
insurer requires that disbursements be made through it and has agreed that it shall be
liable for any negligent, fraudulent, or improper disposition of Loan proceeds. Any such
advance shall be deemed a Loan disbursement to Borrower on the date of the advance and
be secured by the Deed and all other Collateral, regardless of the disposition of the
payment by the contractor, third party, or the title insurer, and shall satisfy pro tanto
Lender's obligations under the HOME Loan Agreement. Borrower's execution of the
HOME Loan Agreement constitutes its irrevocable authorization for Lender to advance
funds in this manner. Lender shall notify Borrower of any such advance.
(e)
Advances for Interest and Past-Due Amounts. If Borrower does not make
any payment or deposit required under the Loan Documents (including interest due under
the Note) and does not cure its failure within any applicable grace or cure period, Lender
may (but is not obligated to) advance Loan proceeds to make any such payment or
deposit. If Lender does so, the payment or deposit shall be deemed a Loan disbursement
to Borrower on the date the payment or deposit is made, notwithstanding that Borrower
did not request such advance or refused to accept such advance. Borrower's execution of
the HOME Loan Agreement constitutes its irrevocable authorization for Lender to
advance Loan proceeds in this manner. Lender shall notify Borrower of any such advance.
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(f)
Limitation on Disbursements. Lender is not obligated to advance Loan
proceeds for any item or category of items in excess of the amount allocated for such item
or category in the DCS, unless, in Lender's judgment, Borrower has sufficient funds
(including undisbursed loan proceeds and Construction Equity) to complete the Work in
accordance with the Loan Documents and pay all interest, costs, and other sums required
to be paid to Lender before or upon completion of the Work. If any item or category in
the DCS is completed at a cost less than the amount allocated for it in the DCS, the
surplus from that item or category may be re-allocated for other items or categories only
with Lender's prior consent, which consent shall not be unreasonably withheld.
(g)
Stored Materials. Lender will not make any advances for the cost of stored
materials not yet physically incorporated into the Improvements.
(h)
First Post-Closing Advance. Lender must receive and approve the items
required for the initial post closing draw before it is obligated to make its first
disbursement under the HOME Loan Agreement. For subsequent Draw Requests, Lender
must receive and approve the fully executed draw request form with all required
supporting documentation, the inspector’s report relating to the draw request and the
Davis-Bacon Act payroll information before it will be obligated to disburse any Loan
proceeds.
(i)
Construction Contingency. Before Borrower permits or authorizes any use
of funds in the construction contingency in the DCS, Borrower must request in writing
and receive Lender's consent for such use.
(j)
Defects. If there are defects in the Work that Lender or the construction
consultant or inspector deems material and irreparable or prohibitively expensive to
repair, Lender shall have no obligation to disburse Loan proceeds.
4.02. Additional Conditions to Disbursement. In addition to the conditions and
requirements in section 4.01, Lender shall not be obligated to disburse Loan proceeds,
unless all of the following conditions are satisfied:
(a)
No Defaults. No Event of Default exists and no event has occurred or
circumstance exists which, with notice and the passage of time (or both), would constitute
an Event of Default or constitute a default under the Tax Credit Documents;
(b)
Improvements Not Damaged. None of the Improvements have been
materially damaged or taken or threatened to be taken by condemnation;
(c)
Payment of Construction Costs. Except for any retainage permitted under
the Construction Contract or any subcontract, Borrower or the General Contractor has
paid all claims for work in progress, labor, materials, and fixtures on the pending Draw
Requests and all previous Draw Requests, and all funds previously disbursed by Lender
have been applied to the costs for which such funds were requested under the applicable
Draw Request;
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(d)
No Liens. There are no liens outstanding against the Premises other than
Lender's and the Permitted Encumbrances (for purposes of this subsection, a lien that has
been bonded off or for which a reserve sufficient to cover the claim of lien has been
established in accordance with section 3.21 shall not be deemed "outstanding");
(e)
Compliance with Requirements. If requested, Borrower has provided
Lender with satisfactory evidence of compliance with all applicable Requirements, the
HOME Regulations, and the HOME Rules;
(f)
Representations Correct. All representations and warranties made in the
HOME Loan Agreement are true and correct on the date of the advance with the same
effect as if made on that date;
(g)
Borrower's Affidavit. If requested, Borrower has provided Lender with an
affidavit that meets the form prescribed by GHFA.
4.03. Final Disbursement. Lender shall make the final disbursement of Loan proceeds
only upon full completion of the Work and Lender's receipt of the following:
(a)
Completion. Evidence of substantial completion of all Work (meaning
completion of all Work except for minor punchlist items, but, in any event, meaning at
least 95% completion of the scope of the work set forth in the Application as modified by
any approved change orders) and a copy of a final certificate of occupancy for all
Improvements from the appropriate Public Body, and copies of any other approvals,
licenses, or permits required by the applicable Public Bodies for the use of the completed
Improvements.
(b)
Certifications. A certificate from the Lender's inspecting engineer
certifying that the Work has been substantially completed (as defined above) in
accordance with the Plans and Specifications and, if Lender requests it, a certificate from
the Architect, certifying the same thing; and approval of the Work by Lender's staff
responsible for reviewing the Work for compliance with all HOME requirements and the
Plans and Specifications.
(c)
Insurance. Policies or satisfactory certificates of insurance for all insurance
required under Article 3 or any of the other Loan Documents, including the rental
interruption insurance required under section 3.06.
(d)
Payment of Costs. Evidence satisfactory to Lender that all sums due in
connection with the Work have been paid in full (or will be paid out of the final
disbursement) and that no person claims or has a right to claim any lien arising out of the
Work or the supplying of labor, material, or services for the Work.
(e)
Lien Waivers. Final lien waivers from the General Contractor and each
subcontractor.
(f)
Survey. A final, as-built survey of the Premises satisfactory to Lender,
which survey shall satisfy the requirements set forth by GHFA.
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(g)
Radon Testing. Verification that the Premises have been tested for radon
in accordance with Lender's requirements and with results satisfactory to Lender.
(h)
MBE/WBE Report. MBE/WBE subcontractor forms, completed in
accordance with the instructions plus proof satisfactory to Lender of the recruitment
activities that were taken (including advertisements or means used).
(i)
Additional Acts. Any other documents, affidavits, reports, or assurances as
Lender or the title insurer insuring Lender's interest in the Premises may require.
4.04. Retainage. Lender shall retain all of the retainage until completion of the punchlist
items for the Work and any other Work that has not been completed as of substantial
completion. Lender shall disburse the withheld amounts upon full and final completion of
the Work as determined by Lender and its representatives.
5. Events of Default.
5.01. Events of Default. Each of the following shall constitute an "Event of Default"
under the HOME Loan Agreement:
(a)
a failure to pay when due any amount owed under any of the Loan
Documents, unless the failure is cured within any applicable cure or grace period; or
(b)
any warranty or representation in any of the Loan Documents, Application,
or any other writing submitted to Lender in connection with the Loan is materially
incorrect or untrue; or
(c)
an assignment for the benefit of creditors by Borrower or any general
partner of Borrower or any Guarantor; the appointment or the filing of a petition for the
appointment of a receiver, liquidator, or trustee for Borrower or any general partner of
Borrower or any Guarantor or for a substantial part of Borrower's properties or a
substantial part of the properties of any general partner of Borrower or any Guarantor,
unless the petition for the receiver, liquidator, or trustee is filed by someone other than
Borrower or the general partner, in which event Borrower or the general partner (as the
case may be) will have 60 days within which to contest such appointment; the filing of a
petition for bankruptcy, reorganization, adjustment of debt, dissolution, liquidation, or
arrangement, pursuant to the Federal Bankruptcy Code or any similar statute by, on behalf
of, or against Borrower or any general partner of Borrower or any Guarantor or an
adjudication or admission that Borrower or any general partner of Borrower or any
Guarantor is bankrupt, insolvent, or unable to pay its debts as they fall due, but, in the
case of an involuntary petition, Borrower or the general partner (as the case may be) shall
have 60 days within which to have the petition dismissed; or
(d)
filing of a notice of intent to dissolve, the dissolution, liquidation,
termination, or partition of Borrower or the General Partner or any Guarantor; or
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(e)
unless approved by Lender in its sole discretion, any sale, option,
refinancing, transfer, leasing (except in the ordinary course of operating the Premises as a
residential rental business in accordance with the HOME Loan Agreement), or
encumbrance of the Premises, the rents, profits, and issues of the Premises, or any other
Collateral; or
(f)
Borrower's execution of any conditional contract of sale, chattel mortgage,
or other security agreement, covering any material, fixture, equipment, appliance, article,
or personal property to be incorporated in or used in connection with the Improvements
(collectively, "construction materials," which term does not include articles that are
owned by other parties and made available to Borrower pursuant to service contracts or
leases), or Borrower's or a third party's filing of a financing statement listing construction
materials as collateral, or Borrower's title to any construction materials upon delivery to
the Premises (except for equipment delivered to the Premises under leases or service
contracts) is not free, clear, and unconditional, unless Borrower cures any such act within
20 days of written notice from Lender or provides Lender within 15 days of demand the
instrument or agreement under which Borrower claims title to any such construction
materials; or
(g)
unsatisfactory progress in the Work in accordance with the Completion
Schedule; abandonment of the Work or the Premises; failure to carry on the Work for 5
consecutive Business Days; Borrower's failure or, in Lender's judgment, inability to
complete the Work by the Completion Date or the failure or inability to satisfy any of the
Conversion Conditions on or before the Conversion Date (unless that date is extended in
Lender's sole discretion); or
(h)
any of the materials, fixtures, equipment, appliances, or articles used in the
Work or to be used in the operation of the Premises depart in any material respect from
the Plans and Specifications or Borrower fails to correct any defect in construction within
a reasonable time after discovery of the defect; or
(i)
Borrower or the Premises or the Work fails to comply with the HOME
Regulations or the HOME Rules; or
(j)
any change in the identity, ownership, management, or control of
Borrower (not including the sale or transfer of limited partnership interests) or the
General Partner, including the termination of the General Partner as general partner of
Borrower or any change in the management of the Premises without Lender's prior
written consent; or
(k)
Borrower or any Guarantor ceases doing business; or
(l)
Lender or any representative of Lender is denied access to the Premises or
is not permitted to inspect the Improvements, the Work, any materials, fixtures, and
articles used or to be used in the Work or is not permitted to examine all plans, shop
drawings, and specifications that relate to the Work, or Borrower fails to furnish to
Lender or its authorized representative within a reasonable time following Lender's
request (but not to exceed 20 days) copies of such plans, drawings, and specifications; or
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(m)
Borrower's use of any Loan proceeds for a purpose other than the purpose
for which the Loan is being made, or Borrower's assignment of any interest in advances to
be made under the HOME Loan Agreement; or
(n)
the filing of any lien or claim of lien against the Premises, unless it is
totally released and removed as a lien against the Premises (by payment, bonding, or
otherwise) within 30 days after Borrower receives actual notice of the lien or claim of
lien, unless Borrower is challenging the amount, validity, or applicability of the lien in
accordance with the requirements of section 3.21; or
(o)
an attachment, execution, levy, or other judicial seizure of or affecting the
properties and assets of Borrower, any general partner of Borrower, or any Guarantor or
affecting the Premises or the filing of a judicial or administrative action or the beginning
of an investigation against Borrower or affecting the Premises that, if adversely
determined, would have a material adverse effect on the financial condition of Borrower
or the operation of the Premises; or
(p)
Borrower's failure to satisfy any condition to the receipt of a Loan
disbursement for a period of 30 days; or
(q)
Borrower's failure to pay any Taxes, if such failure is not cured within 30
days of the due date for any such payment, unless Borrower is challenging the amount,
validity, or applicability of the Taxes in accordance with the requirements of §3.25; or
(r)
any action by a Public Body that materially and adversely affects the use of
the Premises for its intended purposes and affects the security of Lender, except a partial
condemnation of the Premises where the HOME Loan Agreement or Lender permits
Borrower to rebuild or reconfigure the Improvements, but only so long as Borrower
complies with the requirements of section 3.23; or
(s)
Borrower or any Guarantor invalidly contests the validity or enforceability
of any Loan Document, or Borrower or any Guarantor incorrectly denies that it has
further liability under any Loan Document;
(t)
in Lender's reasonable judgment, any material adverse change in the
business or financial condition of Borrower, any general partner of Borrower, any
Guarantor, or the Developer;
(1)
If a material default (existing beyond any applicable cure period)
occurs in any other project funded or being funded by Lender, the Georgia Department of
Community Affairs ("DCA"), or the State Housing Trust Fund for the Homeless
Commission ("SHTF") or for which tax credits have been allocated by Lender or DCA, in
which project the Borrower or an Affiliate of Borrower is the borrower, the Developer or
an Affiliate of the Developer is or was the developer of such project, the General Partner
or an Affiliate of the General Partner, or any Guarantor or an Affiliate of any Guarantor is
or was the managing or sole general partner of the borrower for the other project
(collectively referred to as a "Material Default"), Lender may do one or both of the
following:
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(A) if a Draw Request is pending at the time that Lender learns of the
Material Default, Lender may in its sole discretion extend the time within which it can
consider the pending Draw Request under section 4.01(b) by a period not to exceed 10
Business Days from the date of determining the Material Default; (B) if Lender
determines in its reasonable judgment that the Material Default will materially adversely
affect Borrower's ability to perform the Work and repay the Loan in accordance with the
terms of the HOME Loan Agreement, Lender may deem the Material Default a material
adverse change under this section 5.01(t) and declare a default under the HOME Loan
Agreement.
(2)
Lender's rights under subsection (1) above shall terminate upon
completion of the Work.
(u)
actual or threatened waste of the Premises or, after the Work is completed,
any demolition or material alteration of all or any part of the Premises without the
Lender's prior consent; or
(v)
Borrower's failure to comply with and perform every other provision or
satisfy any other condition of the HOME Loan Agreement (other than ones specifically
addressed above in this section), unless the failure is cured within 20 days after Lender
gives Borrower written notice of the failure or, if the nature of the default is such that, as
a practical matter, it cannot be cured within 20 days, the cure period shall be 90 days, so
long as Borrower begins the cure within the 20-day period following receipt of notice
from Lender and diligently and continuously pursues it to completion within the 90-day
period. The payment of a monetary obligation or the production of financial reports or
other documents or information required or requested by Lender under the HOME Loan
Agreement shall not be subject to the extended 90-day period under any circumstances,
unless Lender in its sole discretion consents to such extended cure period in writing; or
(w)
termination or expiration of the LOC before completion of the Work.
Notwithstanding any contrary provision of the HOME Loan Agreement or any
other Loan Document, if the HOME Loan Agreement or any other Loan Document
(including the Note and Deed) grants Borrower a right to cure a default, if one or more of
Borrower's limited partners cure such a default on a timely basis, such cure shall be
deemed to be a cure by Borrower, and Lender shall accept or reject it on the same basis as
if it had been made by Borrower.
5.02. Cross Defaults. The following shall also constitute an Event of Default under the
HOME Loan Agreement:
(a)
a default or event of default under any of the other Loan Documents,
unless cured within any applicable cure or grace period;
(b)
any default or event of default under any instrument, deed, or agreement of
Borrower to or with any third party, which default would authorize the third party's
immediate acceleration of any debt or foreclosure of Borrower's interest in the Premises;
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(c)
any default or event of default under any other instrument, deed, or
agreement of Borrower to or with Lender, DCA, or SHTF, unless cured within any
applicable cure or grace period;
(d)
a default or event of default under any Guaranty;
(e)
a default under the Tax Credit Documents, unless cured within any
applicable cure period.
6. Remedies Of Lender.
6.01. In General. Upon the occurrence of an Event of Default, Lender shall have the
right to declare all amounts owed under the Loan Documents immediately due and
payable and exercise any other right or remedy available to Lender under law or any of
the Loan Documents, including Foreclosure.
6.01. In General. Upon the occurrence of an Event of Default, Lender shall have the
right to accelerate the maturity of the Note, declare all amounts required to be paid under
the other Loan Documents immediately due and payable, foreclose or exercise the power
of sale under the Deed, and exercise any other right or remedy available to it under law or
any of the Loan Documents.
6.02. Payment of Borrower's Obligations. If Borrower fails to pay any obligation under
the HOME Loan Agreement or the other Loan Documents when due (other than a
payment of interest or principal under the Note), Lender may (but has no obligation to)
pay the amount that is due without thereby waiving the Event of Default or releasing
Borrower from its obligation. If Lender makes any such payment, Borrower shall
promptly on demand reimburse Lender for the amount paid by Lender. If Borrower fails
to reimburse Lender, Lender may add the amount of the payment it made to the
outstanding principal balance of the Note (even if such addition results in the outstanding
principal balance exceeding the face amount of the Note), and, if Lender does so, all such
amounts shall bear interest at the Default Rate from the date of Lender's payment until
reimbursed in full and shall be secured by the Deed and any other Collateral.
Lender's Right to Enter and Complete Work. In addition to any other rights or remedies
available to Lender, upon the happening of an Event of Default, Lender may demand that
Borrower vacate the Premises, and Borrower shall do so promptly upon receipt of such
demand. Upon the happening of an Event of Default, Lender shall also have the right, and
Borrower hereby gives Lender an irrevocable license, to enter the Premises and perform
any and all work and labor necessary to complete the Work substantially in accordance
with the Plans and Specifications or in accordance with reasonable business judgment. In
its discretion, Lender may employ watchmen to protect the Premises. All sums Lender
expends for such purposes shall be deemed both to have been paid to Borrower and to be
secured by the Deed.
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Borrower hereby irrevocably appoints Lender its attorney-in-fact with full power
of substitution to complete the Work in Borrower's name and do any other reasonable act
related to that end, including the following: (1) to use any funds of Borrower, including
any amount held in escrow or reserve, any Equity Contribution, and any unadvanced Loan
proceeds; (2) to make such additions, changes, and corrections in the Plans and
Specifications as Lender deems necessary or desirable; (3) to employ agents, contractors,
subcontractors, architects, and inspectors; (4) to pay, settle, or compromise any existing
or future bills and claims, including ones that are or may become liens against the
Premises or that may facilitate the completion of the Work or the clearance of title to the
Premises; or (5) to execute all applications and certificates in Borrower's name as
required by any construction contract or otherwise and to do any and every act with
respect to the Work that Borrower might do. It is understood and agreed that this power
of attorney shall be deemed a power coupled with an interest that cannot be revoked or
terminated by death or otherwise, except with Lender's prior written consent. As attorneyin-fact, Lender shall also have the power to prosecute and defend all actions or
proceedings arising in connection with the Work and to take such action and require such
performance as it deems necessary or desirable. Borrower hereby assigns and quitclaims
to Lender all sums to be advanced under the HOME Loan Agreement, including any
retainage and all sums in escrow or held in a reserve, conditioned upon the use of those
sums for the completion of the Work and the performance of Borrower's obligations
under the Loan Documents. If the completion of the Work requires a larger sum than the
undisbursed Loan proceeds and Equity Contribution (if any), Lender shall have the right
(but not the obligation) to disburse additional funds as needed to complete the Work. All
funds disbursed by Lender to complete the Work, except any Equity Contribution, shall
be deemed disbursed to Borrower and shall be secured by the Loan Documents and any
Collateral, notwithstanding that the total amount of all disbursements exceeds the
maximum amount of the Loan set forth in the HOME Loan Agreement.
Neither Lender's entering the Premises in order to complete the Work, nor the
exercise of its license or power-of-attorney, will exclude Borrower from possession,
custody, ownership, or control of the Premises or make Lender a mortgagee in
possession.
6.04. Remedies Cumulative. The rights and remedies of Lender granted and arising
under the other Loan Documents shall be separate, distinct, and cumulative of the powers,
remedies, and rights granted in the HOME Loan Agreement and all other rights and
remedies Lender may have in law or equity, and none of them shall be to the exclusion of
the others. All of them are cumulative to the remedies for collection of debt, enforcement
of rights under security deeds, and preservation of security as provided at law. No act of
Lender shall be construed as an election to proceed under any one provision of the Loan
Documents to the exclusion of any other provision or as an election of remedies to the bar
of any other remedy allowed at law or in equity.
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7. Miscellaneous Provisions.
7.01. No Advance Constitutes a Waiver. No advance of Loan proceeds shall constitute
Lender's approval or acceptance of the Work done before the advance or a waiver of any
requirements for or conditions to Lender's obligation to make future advances. If Lender
waives the satisfaction of any requirement for or condition to its obligation to make a
particular disbursement or does not insist upon strict compliance with the provisions of
the HOME Loan Agreement, that shall not preclude Lender from insisting upon strict
compliance in the future, from refusing to make a future advance, or from declaring an
Event of Default. Such a waiver shall not be deemed a waiver of any existing Event of
Default or of the satisfaction of the requirement or condition for any subsequent advance
and shall not obligate Lender to make any other disbursement, unless Borrower satisfies
all requirements for and conditions to the subsequent disbursement.
7.02. Rights of Third Parties. All conditions on Lender's obligations, including the
obligation to make advances, are imposed solely and exclusively for Lender's benefit. No
other Person shall under any circumstances be deemed a beneficiary of any such
condition, any of which Lender may enforce or freely waive in whole or in part at any
time in its sole discretion. In particular, Lender makes no representations and assumes no
obligations to third parties concerning the quality of the Work or the absence of defects in
the Premises. Borrower shall indemnify Lender from any liability, claim, loss, or expense
resulting from disbursement of the proceeds of the Loan or from the condition of the
Premises, whether related to the quality of the Work or otherwise and whether arising
during or after the term of the Loan or from any breach of the HOME Loan Agreement or
any of the other Loan Documents by Borrower. This indemnification provision shall
survive the repayment of the Loan and the termination of the HOME Loan Agreement
and shall continue in full force and effect so long as the possibility of such liability,
claim, loss, or expense exists.
7.03. All Matters Satisfactory to Lender. All actions taken in connection with the Loan
and the transactions contemplated by the HOME Loan Agreement, all surveys and
documents required by the Loan Documents and the persons responsible for the execution
and preparation of them, the contractors and all subcontractors, all sureties, guarantors,
insurers, the form of the construction contracts, and all subcontracts, leases, bonds,
guaranties, and policies of insurance shall be satisfactory to Lender. Borrower shall
provide Lender with copies (or certified copies, if requested) of all documents which
Lender may request.
7.04. Payment of Construction Costs. Lender has no obligation to any contractor,
subcontractor, or materialman used in connection with the Work and has no obligation to
determine whether Borrower has used or will use the proceeds of the Loan for the
payment of the bills incurred by Borrower in connection with the Work. Payment of any
such bills is Borrower's sole responsibility, and, with respect to any money advanced
under the HOME Loan Agreement, Lender's sole obligation is to advance the proceeds of
the Loan subject to and in accordance with the HOME Loan Agreement.
Upon Lender's request, Borrower shall include in the Construction Contract and shall
cause the General Contractor to include in any subcontract or purchase order a waiver of
any right to seek payment or other redress from Lender under any circumstance.
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7.05. No Agency. Lender is not the agent or representative of Borrower, and Borrower
is not the agent or representative of Lender. Nothing in the HOME Loan Agreement or
the acts of the parties is intended to create a partnership or joint venture between
Borrower and Lender, and nothing in the HOME Loan Agreement shall be construed to
create such a relationship between Borrower and Lender. Nothing in the HOME Loan
Agreement shall be construed to make Lender liable to anyone for goods delivered to or
labor or services performed upon the Premises or for debts or claims of Borrower.
Nothing in the HOME Loan Agreement is intended to create, and it shall not be construed
to create, a relationship ex contractu or ex delicto between Lender and anyone supplying
labor or materials or services for or to the Premises or Borrower.
7.06. Assignment. Without Lender's prior written consent, Borrower may not assign the
HOME Loan Agreement or any of its rights or obligations under it. Without consent from
Borrower, Lender may sell participation interests in or transfer the Loan to a subsidiary or
affiliate of Lender or to a Federal Reserve Bank or to another financial institution. Lender
shall provide Borrower and the Investor with notice of any such sale or transfer. If Lender
does so and any Loan participant or transferee shall reasonably require any additional
items from Borrower, Borrower shall use all reasonable efforts to obtain and deliver such
items; provided, however, Borrower shall not be required to incur any additional liability
in connection with such a request. If a Loan participant or transferee requires an estoppel
letter from Borrower, Borrower shall execute an estoppel letter setting forth: (a) the
unpaid principal balance of and accrued but unpaid interest under the Note; (b) any
offsets or defenses that exist or are claimed by Borrower; and (c) any other matters
reasonably requested by Lender or such participant or transferee. If Lender transfers or
assigns all of its interest, Lender shall be released of all liability to Borrower under the
Loan Documents.
7.07. Successors and Assigns. All references to the parties in the HOME Loan
Agreement shall include the party's heirs, executors, administrators, legal representatives,
successors, and permitted assigns of such party, and the HOME Loan Agreement shall be
binding upon and inure to the benefit of the parties and their respective heirs, executors,
administrators, legal representatives, successors, and permitted assigns.
7.08. Section Headings. The section headings in the HOME Loan Agreement are for
convenience only and shall not affect any of the terms of the HOME Loan Agreement.
7.09. Invalid Provisions. If performance of any provision exceeds the limit of validity
prescribed by law at the time of such performance, then ipso facto the obligation to be
performed shall be reduced to the limit of such validity. If any provision of the HOME
Loan Agreement, or the application of it to any Person, shall to any extent be invalid or
unenforceable, then the remainder of the HOME Loan Agreement or the application of
such provision or provisions to Persons other than those as to whom or which the HOME
Loan Agreement is held invalid or enforceable shall not be affected, and every provision
of the HOME Loan Agreement shall be valid and enforceable to the fullest extent
permitted by law.
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7.10. Number and Gender. Whenever the singular or plural number or the masculine,
feminine, or neuter gender is used, it shall include the other, if the context requires.
7.11. Amendments. Neither the HOME Loan Agreement nor any provision may be
changed, waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge, or
termination is sought.
7.12.
Notices. (a) All notices and other communications required or permitted under
the HOME Loan Agreement shall be in writing and addressed to the other party at the
address set forth in this section and, in the case of material notices to Borrower, with a
courtesy copy sent to the Investor. All such notices shall be deemed to have been given
and received as follows: 3 Business Days from the date of deposit in the U.S. mail,
certified mail, return receipt requested, postage-prepaid; or when hand delivered by the
party, an overnight service (such as FedEx), or a courier service. The sending or failure to
send any courtesy copy mentioned under this section shall not affect the validity or
sufficiency of any notice given under this section.
(b) Borrower or Lender may change the address to which notices are to be sent by
giving the other party 10 Business Days written notice of the change.
7.13. Governing Law. The HOME Loan Agreement shall be construed and enforced in
accordance with Georgia law.
7.14. Time is of the Essence. Time is of the essence of the HOME Loan Agreement.
7.15. Notice to Lender of Claim. Borrower shall not start any lawsuit against Lender for
any claim arising from the HOME Loan Agreement unless Borrower first gives Lender
written notice, specifically setting forth the nature and basis of Borrower's claim, within
two years after Borrower first becomes aware of the act or omission that Borrower alleges
gives rise to such claim. Borrower's failure to give such notice as required by this section
shall constitute a waiver of any such claim. To the extent permitted by law, Borrower
hereby irrevocably and unconditionally waives any and all rights to trial by jury in any
action, suit, or counterclaim, arising in connection with or out of the HOME Loan
Agreement or the other Loan Documents.
7.16. Force Majeure. If Borrower is hindered or delayed in, or prevented from,
performing the Work due to any strike, lockout, labor dispute, act of God, inability to
obtain labor or materials on a timely basis, government restriction, civil commotion, fire,
casualty, or other event beyond the direct control of Borrower (but specifically excluding
any financial difficulties of Borrower), then the Completion Schedule shall be revised to
extend the dates applicable to the affected Improvements for a period equal to the period
of delay, if: (a) Borrower has made adequate provision, acceptable to Lender, for the
protection of the Improvements and materials stored on site against deterioration and
against loss or damage and theft during any such period of delay; and (b) Borrower
furnishes to Lender satisfactory evidence that the completion of the Work can be
accomplished on or before the extended Completion Date.
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7.17. Conflict or Inconsistency of Terms. If there is any inconsistency in the terms and
provisions of the HOME Loan Agreement and any of the other Loan Documents or
between or among any two or more Loan Documents, then in such event Lender shall
have the right at its sole option to elect which of such provisions shall govern. If there is a
conflict between the HOME Loan Agreement and Borrower's partnership agreement, the
HOME Loan Agreement shall control.
7.18. Exhibits. All Exhibits attached to the HOME Loan Agreement are a part of the
HOME Loan Agreement.
7.19. Survival of Representations and Warranties. All representations and warranties
made in the HOME Loan Agreement shall be deemed to be made and must be true and
correct as of the Effective Date and shall survive the execution of the HOME Loan
Agreement. With respect to the representations and warranties in sections 2.06 - 2.09,
2.15 - 2.17, and 2.19 - 2.21, if any such representation or warranty becomes inaccurate
due to events subsequent to the Effective Date, Borrower shall notify Lender in writing
and provide Lender with any additional information about the events as Lender may
reasonably request.
7.20. Conditions. If any condition in the HOME Loan Agreement requires Borrower to
submit evidence of the existence or non-existence of a certain fact or facts, Lender is
always free to independently establish the existence or non-existence of the facts in
question before it deems the condition satisfied.
7.21. Terminology. Whenever there is a reference to "reasonable attorney's fees" in the
HOME Loan Agreement, it shall mean reasonable attorney's fees, actually incurred,
without regard to any statutory presumption or definition as to what "reasonable"
attorney's fees means. All provisions referring to "Guarantor" shall apply to each and
every Person that is a Guarantor.
7.22. Compliance in Other Projects. If any other project funded by Lender, DCA, or
SHTF (including the issuance of tax credits), now or in the future, in which Developer,
Borrower, the General Partner, or any Affiliate of Borrower, Developer, or any general
partner of Borrower is involved as developer, borrower, shareholder or owner or partial
owner, or general partner, is not in compliance with the HOME Rules or any other
regulatory Requirement for such project, Lender shall not be obligated to consider,
approve, or reject any request from Borrower made pursuant to the HOME Loan
Agreement or any of the other Loan Documents until the non-compliance in the other
project has been corrected to the satisfaction of Lender or the applicable regulatory
authority.
7.23. General Partner Provisions. In signing the HOME Loan Agreement, the General
Partner is not only signing in the capacity of General Partner and on behalf of the
Partnership, but for sections 2.01(b), 2.20, and 3.20 is signing in its own capacity and is
making the representations that relate to it that are contained in the first two such sections
and agrees to be bound by the provisions contained in the latter section.
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XXII. TYPICAL LAND USE RESTRICTIVE AGREEMENT
The following terms and conditions are provided to give Applicants additional
information regarding the typical of the Land Use Restrictive Agreement that must be
executed between the "Borrower” and the Georgia Housing and Finance Authority, a
public corporation and instrumentality of the State of Georgia (the "Lender") and
recorded against the property. However, it is important to note that the requirements set
forth for each Land Use Restrictive Agreement and other closing documents are modified
to reflect the terms and conditions set forth for the particular project and may differ from
the information provided
A) Use and Occupancy Limitations
1) Use of the Property. During the Affordability Period on a continuous basis, Owner
will: (a) maintain the Property as rental housing and will rent or offer to rent Units only to
Low Income Families or Very Low Income Families , provided, however, at least 80% of
the total Units must be occupied by at least one Person who is an Older Person; and (b)
maintain the site amenities set forth in Owner's loan application or other materials
submitted to Lender in support of the loan application. Any laundry or community
facilities located on the Land shall be for the exclusive use of the tenants and shall not be
available for use by the general public. Any unit that is designated as a manager's unit and
treated as part of the common space shall only be occupied by an on-site manager, and
Owner shall not charge or collect rent for the unit.
2) Supportive Services. Starting no later than the date that 50% of the Units are occupied,
and thereafter on a continuous basis during the Affordability Period, Owner will provide
supportive services to tenants. Initially, the supportive services shall be --, which will be
provided in accordance with agreements submitted to and approved by Lender. On an
annual basis, Owner shall submit to Lender a written report setting forth in detail
satisfactory to Lender the nature of supportive services offered during the preceding year,
the dates during which or on which each of the various services were offered, and the
number or good faith estimate of the number of participants.
The first such report shall be due within 3 months after the first anniversary of the date
the Loan is closed or the date the Work is substantially completed, whichever of those
dates is later (the "Anniversary Date"), and subsequent reports shall be due on or before
the same day of each subsequent year. Also on an annual basis, Owner shall submit to
Lender in writing any changes in the supportive services to be offered during the coming
year. The plan shall be subject to Lender's approval and shall set forth in reasonable detail
satisfactory to Lender the nature of the services to be provided, who will provide them,
when they will be provided, where they will be provided, and will include complete
copies of any new contracts that have been executed or are being considered with the
providers of such services, any such agreement being subject to Lender's prior approval.
The first such plan shall be due one month before the first Anniversary Date after Owner
starts providing supportive services under this section, and subsequent plans shall be due
on or before the same day of each subsequent year.
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If a provider of supportive services terminates or breaches its agreement with Owner and
the tenants are no longer receiving certain services required under this section or the
current plan, Owner shall notify Lender in writing and inform Lender of what steps
Owner intends to take to restore or replace the services.
During the Affordability Period, notwithstanding any other provision of the HOME Loan
Agreement, Owner shall be required to provide significant supportive services and
facilities specifically designed to meet the physical or social needs of Older Persons
(within the meaning of the Georgia Fair Housing Act) to the Older Persons renting the
Units. By agreeing to the supportive services set forth in this section, Lender is not in any
way warranting or agreeing that such services are "significant" within the meaning of the
Georgia Fair Housing Act.
3) Occupancy Requirements. During the Affordability Period, Owner shall make
continuously available for occupancy by Low Income Families not less than the specified
units for Very Low Income Families.
4) Income Determination.
(a)
In accordance with procedures set forth in the HOME Regulations and the
HOME Rules, Owner shall determine and verify whether the Annual Income of a family
seeking to occupy a Unit exceeds the applicable income limit (including asset income) for
Low Income Families or Very Low Income Families (as the case may be) before
permitting the family to rent and occupy the Unit or before designating a rental unit
occupied by such family as a Unit. At the time a family signs a lease for a Unit, it must be
income eligible in accordance with the limitations set forth in the HOME Loan
Agreement. All tenant certifications of income shall be signed by the tenant.
(b)
Owner shall not be in violation of Section 2.03 or 2.04 if, in determining
Annual Income and family composition of tenants or prospective tenants: (1) Owner has
relied in good faith upon information that the tenant or prospective tenant supplied to
Owner; (2) Owner has no reason to believe such information is false; and (3) Owner has
complied with all of Lender's requirements and the requirements in the HOME
Regulations and HOME Rules for verification of household income and family
composition.
5) Recertification and Over-Income Tenants. In accordance with the procedures and
requirements set forth in the HOME Regulations and the HOME Rules, Owner shall
annually re-examine and verify the Annual Income for all tenants occupying Units.
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If it is determined upon re-examination of the Annual Income of a tenant that the family's
Annual Income exceeds the applicable income limit for a Low Income Family (such a
tenant is referred to as an "over-income tenant"), the Unit occupied by such family shall
nonetheless be counted as occupied by a Low Income Family for all other purposes under
the HOME Loan Agreement so long as the tenant pays as rent the lesser of the following
(less the Utility Allowance): (1) 30% of the family’s annual Adjusted Income; (2) if there
is a Declaration of Land Use Restrictive Covenants for Low-Income Housing Tax Credits
("LURC") in effect for the Project, the rent amount specified in the LURC for the Unit; or
(3) the maximum rents payable under state or local law; or (4) if the Units in the Project
are "floating" (as that term is defined in the HOME Regulations), the “fair market rent”
for existing housing for comparable units in the area of the Project (as determined by
HUD).
6) Section 8 Certificate Holders. During the Affordability Period, Owner shall not refuse
to lease to a holder of a voucher or certificate of eligibility under Section 8, unless such
prospective tenant fails to meet the minimum requirements applicable to all prospective
tenants.
7) Mixed Income Restrictions. During the Affordability Period, if Owner markets and
rents rental units in the Project to Persons other than Low Income Families or Very Low
Income Families, each building in the Project that is rented to or offered for rent to such
Persons shall contain at least 40% of each Unit type rented to or offered for rent to Very
Low Income Families; provided, however, each building in the Project must contain at
least one Unit at all times. The Units must be comparable to the units in the Project that
are not HOME-assisted. To be considered "comparable," Units must have similar
amenities and comparable number of bedrooms to units that are not HOME-assisted.
B. Rent Limitations
1) Rent Limitations. The maximum rents that Owner may charge to Low Income Families
and Very Low Income Families during the Affordability Period will be set forth in the
LURA.
2) Rent Increases. Subject to Lender's prior written approval and the provisions of
outstanding leases for Units, the maximum rents may be increased annually as allowed by
HUD. In any event, Owner must provide tenants of Units at least 30 days prior written
notice before implementing any rent increase. Lender shall review the maximum rents
Owner is charging on an annual basis.
C. Administration
1) Reporting. Until the Project has reached 100% occupancy, Owner shall submit
quarterly occupancy reports and copies of tenant income certifications for Units leased
during the quarter to Lender. The reports shall be in the form prescribed by the HOME
Rules. After the Project has reached 100% occupancy and Lender has determined that it is
in compliance with all HOME Regulations and HOME Rules, Owner shall submit annual
occupancy reports to Lender.
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2) Certification by Owner. During the Affordability Period or the Loan term, whichever is
longer, by February 28 of each year, Owner shall certify to Lender Owner's compliance
with the HOME Regulations, the HOME Rules, and the HOME Loan Agreement and
shall submit an annual Owner's report, which certification and report shall be in form and
content satisfactory to Lender.
3) Maintenance of Records and Documents. During the Affordability Period (unless a
longer or shorter period is specified by the HOME Regulations or HOME Rules), Owner
shall keep and maintain in good order sufficient records and documents to enable Lender
to determine if the requirements of the HOME Loan Agreement are being met and any
other document or record required by the HOME Regulations or HOME Rules, including
all tenant lists, applications to rent Units, tenant income certifications and related
documents, leases, waiting lists, and income examinations and re-examinations relating to
the Property, which records shall be kept separately from any other business records of
Owner that are unrelated to the Property. Owner shall maintain all records relating to the
Property in compliance with the HOME Regulations, the HOME Rules, and any Lender
requirements and in a reasonable condition for proper audit.
4) Compliance Reviews. During the Affordability Period or the Loan term, whichever is
longer, Owner is responsible for compliance with all requirements of the HOME
Regulations, the HOME Rules, and the HOME Loan Agreement, and Lender or its agent
or contractor or HUD will monitor the Project's compliance. Such monitoring will include
on-site inspections, and, during business hours, representatives of Lender, HUD, or the
United States Comptroller General or a designated representative or representatives shall
have access to the Property and the right to examine and photocopy any records relating
to tenants or the Property, and Owner shall cooperate with Lender, HUD, or the
Comptroller General (as the case may be) in connection with any such inspection or
examination. If Lender or any other agency or person is denied the access and
examination rights granted under the HOME Loan Agreement, and, notwithstanding
section 6.01(a), if such denial is not cured within 24 hours after Lender has given
Borrower written or verbal notice of the breach, it shall be deemed a material breach of
the HOME Loan Agreement and an "Event of Default" within the meaning of Article 6. If
Lender determines that Owner is not in compliance, Lender shall notify Owner in writing
and will assign a cure period, as determined by Lender in its discretion. If Owner does not
cure the non-compliance within the assigned cure period, unless Lender in its sole
discretion deems an extension of the cure period justified, Owner will be in default under
the HOME Loan Agreement.
D. Owner's Representations and Warranties
1)
Representations and Warranties. Owner represents and warrants to Lender that:
(a)
Units are to be constructed with HOME Funds, and a specified number (if
applicable) of those Units will be used as a manager's unit and treated as part of the
common space of the Property.
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(b)
Owner has validly executed the HOME Loan Agreement, and it is a valid
and binding obligation of Owner. Owner has full power, authority, and capacity to enter
into the HOME Loan Agreement, carry out Owner's obligations in the HOME Loan
Agreement, and assume responsibility for compliance with all applicable rules,
regulations, and requirements governing the HOME Program, including the HOME
Regulations and the HOME Rules.
(c)
To the best of Owner's knowledge, the making of the HOME Loan
Agreement and the fulfillment of Owner's obligations under it: (1) will not violate any
contractual covenants or restrictions between Owner and any third party, including the
Ground Lease; (2) will not violate any contractual covenants or restrictions affecting the
Land or the Property; (3) will not conflict with any applicable public or private
restrictions affecting the Land or the Property; (4) do not require any consent or approval
of any public or private authority that has not already been obtained; and (5) will not
conflict with any of the instruments that create or establish Owner's authority.
(d)
Owner has not and will not execute any other agreement or instrument that
conflicts with any provision of the HOME Loan Agreement. In any event, Owner agrees
that the HOME Loan Agreement is paramount and controlling as to the rights and
obligations contained in it and supersedes any other requirements in conflict with it.
(e)
Owner has freely and without reservation executed the HOME Loan
Agreement. The receipt of financial assistance from the Lender is an essential part of the
consideration for the HOME Loan Agreement.
2)
Indemnification. Owner indemnifies Lender against all liabilities, losses, claims,
and expenses (including reasonable attorneys' fees) incurred by Lender as a result of any
misrepresentation or breach of warranty in the HOME Loan Agreement or any other
breach of the HOME Loan Agreement by Owner.
E. Default, Enforcement, and Remedies
1)
Events of Default. If any of the following events occur, it will constitute an Event
of Default under the HOME Loan Agreement:
(a)
Owner's failure to observe or perform any of its obligations or covenants
under the HOME Loan Agreement, unless the failure is cured within 30 days after
Lender's giving written notice to Owner unless a shorter cure period is specified
elsewhere in the HOME Loan Agreement; or
(b)
Any warranty or representation of Owner contained in the HOME Loan
Agreement is untrue or misleading when made; or
(c)
A default or Event of Default under any other agreement or instrument by
Owner relating to the Loan or the Ground Lease.
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2)
Remedies. If there is an Event of Default, in its sole discretion, Lender may: (1)
apply to any court having jurisdiction of the subject matter for specific performance of the
HOME Loan Agreement, for an injunction against any violation of the HOME Loan
Agreement, or for the appointment of a receiver to take over and operate the Property in
accordance with the terms of the HOME Loan Agreement; or (2) take any and all action
at law, in equity, in restitution, or otherwise which it deems necessary or advisable.
Owner hereby acknowledges that Lender cannot be adequately compensated by monetary
damages for an Event of Default and, consequently, equitable relief for a breach of the
HOME Loan Agreement is appropriate. Lender shall be entitled to its reasonable
attorneys' fees in any such judicial action in which Lender prevails in whole or part.
3) Cumulative Remedies. Lender's rights and remedies under the HOME Loan Agreement
are separate, distinct, and cumulative of other powers and rights that Lender has in law or
equity or under any other agreement or instrument relating to the Loan. No right or
remedy of Lender is exclusive. All of them are cumulative. No act of Lender shall be
construed as an election of an exclusive remedy, unless Lender indicates so in writing.
The fact that Lender exercises or begins to exercise any one or more of its rights, powers,
or remedies shall not preclude Lender from simultaneously or later exercising any other
right, power, or remedy that Lender may have.
4) Enforcement. Any deed, lease, conveyance, contract, or instrument made in violation
of the HOME Loan Agreement by Owner shall be void and may be set aside on Lender's
petition, and all successors, heirs, executors, administrators, or assigns, shall be deemed
parties to the HOME Loan Agreement to the same effect as the original signer. When any
such conveyance or other instrument is set aside by decree of a court of competent
jurisdiction, all costs and all expenses of such proceedings shall be taxed against the
offending party or parties and shall constitute a lien against the real estate so wrongfully
deeded, sold, leased, or conveyed, until paid. Such lien may be enforced in such manner
as the court may order.
E. Revival of Agreement
Subject to the remaining provisions of this section, if a Person forecloses the Owner's
interest in the Property and if such Person's mortgage or security deed was prior to the
Security Deed and the HOME Loan Agreement, the HOME Loan Agreement and the
restrictions and covenants in it shall terminate and no longer affect the Property.
Notwithstanding such a foreclosure, however, the HOME Loan Agreement and the
covenants and restrictions in it shall be revived and shall remain in force for the
remainder of the Affordability Period when and if: (a) the Owner at the time of or
immediately before such foreclosure acquires or obtains any ownership interest in the
Project or the Property at any time during the Affordability Period; or (b) if a New Entity
acquires any ownership interest in the Project or the Property at any time during the
Affordability Period.
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F. Miscellaneous
1) Notices.
a. All notices and other communications required or permitted under the HOME Loan
Agreement shall be in writing and addressed to the other party at the address set forth in
this section. All such notices shall be deemed to have been given and received as follows:
3 business days from the date of deposit in the U.S. mail, certified mail, return receipt
requested, postage-prepaid; or when hand delivered by the party, an overnight service
(such as FedEx), or a courier service.
b. Owner or Lender may change the address to which notices are to be sent by giving the
other party 10 business days written notice of the change.
2) Waiver and Partial Exercise. No failure or delay on the part of Lender to exercise any
right, power, or privilege under the HOME Loan Agreement shall operate as a waiver of
any such right, power, or privilege. Lender's failure to exercise, delay in exercising, or
partial exercise of any such right, power, or privilege shall not preclude any other or
further exercise of any such right, power, or privilege.
3) Governing Law; Waiver of Statutory Rights. The interpretation, construction, validity,
and enforcement of the HOME Loan Agreement shall be governed by Georgia law. If any
part of the HOME Loan Agreement requires judicial interpretation, the court interpreting
or construing it shall not apply a presumption that the terms shall be more strictly
construed against one party by reason of the rule of construction that a document is to be
construed more strictly against the party who prepared it, since it is agreed that the agents
of both parties have participated in the preparation of the HOME Loan Agreement.
The parties agree that the HOME Loan Agreement shall supersede any statutory right to
dissolve any covenant restricting land which may be found in O.C.G.A. §44-5-60, or any
successor provision. Owner hereby knowingly and intelligently waives any rights it may
have under O.C.G.A. §44-5-60. Owner warrants and represents that it has read, is familiar
with, and has received legal counsel concerning O.C.G.A. §50-26-8(a)(30), which permits
Lender to impose restrictive covenants that shall be deemed to run with the Property to
any Person that receives financial assistance from Lender, which form of financial
assistance shall include tax credits, bond financing, grants, guarantees of Lender,
guarantees of the State, insurance of Lender, and all other forms of financial assistance,
regardless of whether the Lender enjoys privity of estate or whether the covenants touch
and concern the property burdened. Owner agrees that the HOME Loan Agreement takes
precedence over any existing or prospective laws or regulations. Except as specifically
provided in section 7.01, the HOME Loan Agreement shall survive any prepayment,
payment, acceleration, foreclosure, sale under power, or deed in lieu of foreclosure.
Owner agrees that the Property shall be subject to the provisions of the HOME Loan
Agreement, including those provisions set forth in Articles 2 and 3, for the entire
Affordability Period, despite any payment or prepayment of any financial assistance
provided by Lender for the Property.
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8.05. Severability. If for any reason any part or portion of this LURA is set aside or
found to be unlawful, those lawful parts or portions remaining shall continue in full force
and effect.
8.06. Binding Effect; Covenants Running with the Land. During the Affordability
Period, this LURA and the covenants, reservations, and restrictions contained in it shall
be deemed covenants running with the land for the benefit of Lender and its successors
and assigns and shall pass to and be binding upon Owner's heirs, assigns, and successors
in title to the Property and shall render Owner, and any heirs, assigns, and successors
liable for any Event of Default. Subject only to section 7.01, only upon expiration of the
Affordability Period will the covenants, reservations, and restrictions in this LURA
expire. This LURA constitutes a charge upon the Property and is not merely a personal
obligation of Owner.
Owner hereby acknowledges that this LURA affects the legal rights that flow from
ownership of the Property and that are connected with the Property. Each and every
contract, deed, or other instrument subsequently executed covering or conveying the
Property or any part of it shall conclusively be held to have been executed, delivered, and
accepted subject to such covenants, reservations, and restrictions, regardless of whether
such covenants, reservations, and restrictions are set forth in such contract, deed, or other
instrument.
This LURA will inure to the benefit of and be binding upon the respective parties
and their successors and assigns; provided, however, no right, benefit, or advantage
inuring to Owner under this LURA and no obligation imposed on Owner may be assigned
without Lender's prior written approval.
8.07. Effective Date. This LURA shall be effective on the date of this LURA.
8.08. Change in Neighborhood. A substantial or radical change in the character of the
neighborhood surrounding the Land will not extinguish the restrictive covenants in this
LURA. The restrictive covenants shall survive any and all changed circumstances,
including the following: housing pattern changes; zoning amendments; the issuance of
variances affecting the immediate or surrounding area; increased traffic or road
conditions; enhancement of the value of the Property; growing industrial activity;
encroachment of business areas; development of natural resources; financial downturn of
Owner; or commercialization of the neighborhood in question.
8.09. Attorney's Fees. Any reference to "reasonable attorney's fees" in this LURA means
reasonable attorney's fees, actually incurred, without regard to any statutory presumption
or definition as to what "reasonable" attorney's fees means.
8.10. HOME Regulations and HOME Rules. If there is a conflict between the HOME
Regulations and HOME Rules, the more restrictive shall control. If there is a conflict
between this LURA and the HOME Regulations or HOME Rules, the HOME
Regulations or HOME Rules (as the case may be) shall control. Subject to the foregoing,
the HOME Regulations and HOME Rules are incorporated into this LURA by reference.
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*8.11. Projects with Tax Credits. Notwithstanding any other provision of this LURA and
in addition to the provisions of sections 2.05, 4.02, and 4.04, if Owner has been allocated
low-income housing tax credits in connection with the Project, the following shall apply:
(a) if the rents required under the LURC are less than the rents specified in section 3.01,
the maximum rents that Owner may charge tenants occupying Units are the rents required
under the LURC; (b) for purposes of examining income, Owner shall use the definition of
"Annual Income" used under Section 8, and the HOME requirements for asset income
shall be used; (c) unless Owner has sought and received a waiver, rent compliance
examinations will be performed annually, and tenants must submit a certification of
income with corroboration by third-party source documents;
(d) the LURC definition of over-income tenant shall be used; (e) if the record-keeping
requirements under the Code, the Treasury Regulations, and LURC are more stringent in
any respect than the record-keeping requirements in the HOME Rules and this LURA,
Owner shall comply with the record-keeping requirements of the Code, Treasury
Regulations, and LURC; and (f) in general, if there are restrictions or requirements in the
Code or LURC that are similar to, but more restrictive than, restrictions or requirements
in this LURA, the restrictions and requirements in the Code and LURC shall control.
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XXIII. HOME LOAN TERMS AND DEFINITIONS
In addition to terms defined elsewhere in the HOME Rental Housing Loan Program
Manual , the following terms shall have the following meanings:
"Act" means the HOME Investment Partnerships Act at Title II of the Cranston-Gonzalez
National Affordable Housing Act, Pub. L. 101-625, as amended, or any corresponding
provision(s) of succeeding law, as amended from time to time.
"Affiliate" means any Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with Borrower, the Developer, or the General Partner
(as the case may be), and, for purposes of this definition, "control" includes (but is not
limited to) the direct or indirect beneficial ownership of more than 50% of the
outstanding voting securities or voting equity of such Person or the power to direct or
cause the direction of the management and policies of such Person, whether by contract
or otherwise, and for purposes of this definition "indirect control" and "indirect
ownership" shall include control exercised by and ownership of a spouse, child, sibling,
parent, or grandparent, but "direct or indirect control" shall not be attributed to Borrower,
the Developer, or the General Partner due to the ownership interest of the Investor (so
long as the Investor is a different Person).
"Application" means the application for the Loan and all attachments and addenda to it.
"Adjusted Income" means "adjusted income" as defined in the HOME Regulations.
"Affordability Period" means the period from the date of this LURA through the date that
is -- years after the "project completion" date, as that term is defined in the HOME
Regulations.
"Annual Income" means "annual income" as defined in the HOME Regulations.
"Area Median Income" or "AMI" means the median income, adjusted for family size, for
the area where the Property is located, as established by HUD at least annually.
"Business Day" means a day on which the Lender is open for the transaction of business
in Atlanta, Georgia. Any other reference to "day" means a calendar day.
"Closing" means the date and act of closing the Construction Loan.
"Code" means the Internal Revenue Code.
"Collateral" means any real property or personal property that secures the payment and
performance of Borrower's obligations under the Loan Documents.
Completion Date" means December 31, 2003.
"Construction Contract" means the contract between Borrower and the General
Contractor for the Work, dated August 1, 2002, as amended, including the HOME
Addendum to Construction Contract.
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"Contract Documents" means the Construction Contract, the Plans and Specifications,
and any other contracts, agreements, and documents together with any changes,
extensions, revisions, modifications, or guaranties of them.
"Conversion Conditions" means those conditions set forth in section 3.28 of the HOME
Loan Agreement.
"Conversion Date" has the same meaning as in the Note.
"Deed" means the Deed to Secure Debt and Security Agreement from Borrower to
Lender, conveying the Premises and granting a security interest in the personal property
described in the Deed.
"Default Rate" has the same meaning as in the Note.
"Developer" means Ironwood Development, LLC or any approved successor to Ironwood
Development, LLC.
"Development Cost Schedule" or "DCS" means the schedule of costs.
"Draw Request" means Borrower's request for a disbursement of Loan proceeds pursuant
to Article 4 and the form that must be used for that purpose.
"Effective Date" means the date the HOME Loan Agreement is effective.
"Elderly Person" means a natural person who is at least 62 years of age.
"Family" (which need not be capitalized) means "family" as defined in the HOME
Regulations and includes a single person and a one-member family.
"
"Equity Contribution" means any amount that Lender may require Borrower to deposit
with Lender pursuant to section 3.19 of the HOME Loan Agreement.
"Escrow Agent" means State Home Mortgage, which is located at 60 Executive Park
South, N.E., Atlanta, Georgia 30329-2229.
"Event of Default" or "default" means an event that is defined as a breach or default under
the HOME Loan Agreement.
"Foreclosure" means Lender's exercise of the power of sale under the Deed, a judicial
foreclosure of Borrower's interest in the Premises, or a deed from Borrower to Lender or
another Person in lieu of foreclosure.
"Guaranty" means the Guaranty of Completion executed by Guarantor, in which
Guarantor guaranties completion of the Work and payment of the Loan, and "Guaranties"
shall mean all of the Guaranties executed in connection with the payment of the Loan or
performance or completion of the Work unless specifically limited.
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"Guarantor" means, individually and collectively, the guarantors for the Guaranty of
Completion, but if and when the Guaranty expires in accordance with its terms or is
terminated by Lender, there shall be no "Guarantor" for purposes of the HOME Loan
Agreement, and thereafter all references to "Guarantor" or "Guaranty" in the HOME Loan
Agreement, including the references in Article 5, shall be ignored.
"Hazardous Substance" means any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976; any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980; any
substance the presence of which on the Premises is prohibited by any environmental law;
contamination resulting from any oil, petroleum products, and their by-products; and
contamination resulting from any materials which, under any Requirement, court or
administrative order or decree, or private agreement require special handling in
collection, storage, treatment, or disposal.
"HOME-Assisted Unit" means
the GHFA Program and, if
Regulations), any other unit
requirements and restrictions,
Regulations.
any unit of housing constructed with HOME funds from
there are "floating" units (as defined in the HOME
that is designated as being subject to the HOME
as set forth in the Loan Documents and the HOME
"HOME Funds" means funds provided under the HOME Program.
"HOME Program" means the HOME Rental Housing Loan Program established pursuant
to the Act and the HOME Regulations.
"HOME Regulations" mean the regulations under the Act governing the HOME Program
by HUD or any successor, as amended from time to time (currently at Title 24 Part 92 of
the Code of Federal Regulations).
"HOME Rules" mean all of Lender's guidelines, rules, and manuals relating to the HOME
Program, including the qualified allocation plan and the application manual, and any
subsequent amendments to such guidelines, rules, and manuals.
"Including" means "including (but not limited to)" unless specifically stated to the
contrary (which term need not be capitalized to have this meaning).
"Investor" means all limited partners of Borrower who have purchased or will purchase
limited partnership interests in Borrower.
"Lease" or "Leases" means any lease, rental agreement, or license for any part of the
Premises.
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"Loan Documents" means the HOME Loan Agreement, the Note, Deed, the Land Use
Restriction Agreement between Borrower and Lender dated as of the Effective Date (the
"LURA"), the Uniform Commercial Code financing statement with Borrower as debtor
and listing Lender as secured party, the Assignment of Leases, Rents, and Security
Deposits from Borrower to Lender, any Guaranty, and any and all other documents and
instruments evidencing, securing, or otherwise relating to the Loan, as amended,
modified, restated, supplemented, or replaced from time to time.
"Low Income Family" means, in the case of a Unit occupied or to be occupied by one
person, an Older Person whose Annual Income does not exceed 60% of the Area Median
Income, and, in the case of a Unit occupied or to be occupied by a family with more than
one person, at least one member of the family occupying or to be occupying the Unit is an
Older Person and the aggregate Annual Income of the family members does not exceed
60% of the Area Median Income.
"Low Income Family" means, in the case of a Unit occupied or to be occupied by one
Person, an Elderly Person whose Annual Income does not exceed 60% of the Area
Median Income, and, in the case of a Unit occupied or to be occupied by more than one
Person (whether or not related), all Persons occupying or to be occupying the Unit are
Elderly Persons whose aggregate Annual Incomes do not exceed 60% of the Area Median
Income.
"New Entity" means (a) if Owner is a natural person, any person who has or had family
ties with Owner; (b) any Person that has or had business ties with Owner, including any
Person in which Owner is or was a principal or in which Owner has or had any ownership
interest or any Person that: (1) directly or indirectly controls or controlled or is or was
controlled by or is or was under common control with Owner; (2) is or was an officer of,
partner in or of, member or manager of, trustee of, or serves in a similar capacity with
Owner or of which Owner is or was an officer, partner, manager, member, or trustee, or
with which Owner serves in a similar capacity; or (3) is or was a principal in Owner or
the beneficial or legal owner, directly or indirectly, of any ownership interest in Owner;
(4) was a developer of the Project.
"Note" means the Promissory Note from Borrower to Lender, evidencing the Loan
"Older Person" means a natural person who is at least 55 years of age.
"Owner" means the current owner of the Project or the Property and any subsequent
owner of any such property during the Affordability Period.
"Person" means a natural person or any business entity, including a corporation,
partnership, limited liability company, trust, joint venture, or any other business
combination.
"Plans and Specifications" means the plans and specifications for the Work, as submitted
to and approved by Lender and any subsequent changes to those plans and specifications
made in accordance with the HOME Loan Agreement.
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"Public Body" and "Public Bodies" mean the United States, the State of Georgia, and any
political or regulatory subdivision, agency, department, commission, board, bureau, or
other instrumentality.
"Requirement" means any federal, state, or local law, ordinance, order, rule, or regulation.
"Environmental Requirement" means any Requirement or private agreement relating to
Hazardous Substances or the environment. All references to any specific Requirement
(such as the Act) or Environmental Requirement shall include any regulations relating to
that Requirement or Environmental Requirement and shall include any amendments to
that Requirement or Environmental Requirement that may be made from time to time.
"Section 8" means section 8 of the United States Housing Act of 1937 or any
corresponding provision(s) of succeeding law, as amended from time to time.
"Security Deed" means the Deed to Secure Debt and Security Agreement from Owner to
Lender transferring the Property as security for payment of the Loan.
"Tax Credit Documents" means Borrower's partnership agreement with all amendments
and restatements, including all attachments, exhibits, and ancillary agreements to the
partnership agreement, and any other agreement or document relating to the Investor's
investment in Borrower.
"Taxes" means any real estate taxes and assessments, any water, sewer, or utility charges
or levies, and any other governmental or private dues, charges, or levies relating to the
Premises (not including any income taxes).
"Tenant" or "tenants" means a tenant, lessee, or licensee under any Lease (which term
need not be capitalized to have this meaning).
"Unit" means a HOME-assisted unit, i.e., an apartment or other residential unit on the
Land that was constructed with HOME Funds and is reserved for rental to Low Income
Families or Very Low Income Families or an apartment or other residential unit that is
not constructed with funds provided under the HOME Program, but which is
subsequently designated as being reserved for rental to Low Income Families or Very
Low Income Families under this LURA.
"Utility Allowance" means a monthly allowance for utilities and services (excluding
telephone) to be paid by the tenant, as initially established or approved by Lender, which
monthly allowance is subject to Lender's modification or approval on an annual basis.
"Very Low Income Family" means a family, in which the aggregate Annual Income of all
members does not exceed 50% of the Area Median Income.
"Very Low Income Family" means, in the case of a Unit occupied or to be occupied by
one person, an Older Person whose Annual Income does not exceed 50% of the Area
Median Income, and, in the case of a Unit occupied or to be occupied by a family with
more than one person (whether or not related), at least one member of the family
occupying or to be occupying the Unit is an Older Person and the aggregate Annual
Income of the family members does not exceed 50% of the Area Median Income.
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"Very Low Income Family" means, in the case of a Unit occupied or to be occupied by
one person, an Elderly Person whose Annual Income does not exceed 50% of the Area
Median Income, and, in the case of a Unit occupied or to be occupied by a family with
more than one person (whether or not related), all Persons occupying the Unit are Elderly
Persons whose aggregate Annual Incomes do not exceed 50% of the Area Median
Income.
"Work" means the construction of the Improvements, as contemplated by the Loan
Documents, the Construction Contract, and the Plans and Specifications.
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