Directive Number: capgrant ------------------------------------------------------------------------ Grant No.______________ CAPITAL GRANT AGREEMENT UNDER LIHPRHA THIS CAPITAL GRANT AGREEMENT between the Secretary of Housing and Urban Development, his successors and assigns ("HUD") and [INSERT*NAME OF PURCHASER] ("Grantee") (Tax Identification Number [INSERT*]) for [INSERT*] ("Project"), Project Number [INSERT*] is made pursuant to the authority of Section 220(d)(3)(B) of the Low Income Housing Preservation and Resident Homeownership Act of 1990, as amended ("LIHPRHA") (12 U.S.C. § 4110). This Grant Agreement will be governed by the applicable statutory provisions at 12 U.S.C. §§ 4101 et seq., and by applicable regulatory provisions at 24 C.F.R. Part 248. The Distribution of Capital Grant Funds Worksheet and all exhibits thereto (Exhibit A), the Grantee's Plan of Action ("POA") dated [INSERT*] (Exhibit B), as approved by HUD, and HUD's Approval Letter dated [INSERT*] (Exhibit C) are hereby incorporated into and made a part of this Grant Agreement. The Grantee agrees to carry out the Grant activities under this Grant Agreement in compliance with LIHPRHA, the regulations at 24 C.F.R. Parts 84 and 248, the Preservation Capital Needs Assessment (Exhibit D), the terms of the POA, the Use Agreement and Amendment of Existing Regulatory Agreement (Exhibit E), and any other applicable laws, regulations, whether Federal State or local, and requirements (including recordkeeping requirements). The Grantee also agrees to accept responsibility for such compliance by any other entities to which it makes grant funds available. In reliance upon and in consideration of the mutual representations and obligations under this Grant Agreement, HUD and the Grantee agree as follows: Subject to the provisions of this Grant Agreement, HUD will make available to the Grantee a grant to complete the transfer of the Project from the Seller to the Grantee in accordance with 12 U.S.C. § 4110(d)(3)(B) and 24 C.F.R. § 248.157(o)). ARTICLE I. PROVISION AND ACCEPTANCE OF GRANT A. HUD hereby agrees to provide the Grantee with funds in the amount of [INSERT*AMOUNT OF GRANT FUNDS] ("Grant Funds"), and the Grantee agrees to accept the Grant Funds, which are to be used solely for those purposes specified in the Distribution of Capital Grant Funds Worksheet, and all exhibits thereto. The Grant Funds include: Deposit to the Reserve for Replacement: $ Repairs or Substantial Rehabilitation Costs: $ Repairs or Substantial Rehab Contingency: $ Repairs or Sub\Rehab Transaction Costs: $ Transfer Preservation Equity: $ Transaction Costs (Other): $ TOTAL GRANT AMOUNT: $ B. The Grant Funds shall not be increased above the amount shown in this Article for any reason. Cost overruns, and other unanticipated increased costs shall be funded by sources other than the Grant Funds. C. The Grantee acknowledges and agrees that the obligations of the parties under this Grant Agreement are contingent upon the occurrence of the following: (1) transfer of the Project title to the Grantee by deed recorded in the appropriate office; (2) availability of Grant Funds; (3) execution of the Use Agreement; and (4) execution of any other document deemed necessary by HUD. No closing will occur if Grant Funds are not available, in which case HUD may rescind this Grant Agreement. D. During the term of this Grant Agreement, the GTR and GTM shall be responsible for monitoring the approved activities of the Grantee under this Agreement. E. Only the Grant Officer, GTR or GTM has the authority to authorize deviations from this Grant Agreement. In the event the Grantee deviates without written approval of the Grant Officer, GTR or GTM, such deviation shall be at the risk of the Grantee. Any costs related thereto shall be borne by the Grantee. ARTICLE II. DEFINITIONS A. The term "Grant" shall mean the funds provided under this Grant Agreement, as authorized under LIHPRHA. B. The term "Grant Officer" as used herein refers to the official authorized by HUD to execute and/or administer this grant. The Grant Officer shall be the [INSERT* CORRECT TITLE] or his or her successor or designee. C. The term "Government Technical Representative (GTR)" shall mean the HUD individual who is responsible for the technical administration of the Grant, the evaluation of performance under the Grant, the acceptance of technical reports or projects, and other such specific responsibilities as may be stipulated in this Grant Agreement. The GTR for this grant is the [INSERT* CORRECT TITLE]. D. The term "Government Technical Monitor (GTM)" shall mean the HUD individual who is responsible for the day to day operation of the Grant. The GTM for this Grant is the [INSERT* CORRECT TITLE]. E. The term "HUD Inspector" shall mean the contractor or HUD employee that HUD assigns to review the Grantee's monthly Draw Requests and to inspect the Repairs or Substantial Rehabilitation that is in progress or that has been completed under such Draw Requests. F. The term "Monthly Draw Request" shall mean the Grantee's request for reimbursement or advanced payment of Total Costs. G. The term "Repairs or Substantial Rehabilitation" shall mean the Repairs or Substantial Rehabilitation approved in the Preservation Capital Needs Assessment and the Plan of Action, the completion of which is funded by this Grant. H. The term "Seller" as used herein refers to [INSERT*NAME OF THE SELLER]. ARTICLE III. ASSIGNMENT AND PLEDGING OF GRANT A. The Grantee acknowledges that the Grant Funds shall not be offered or pledged in any manner as security for any purpose. B. The rights given to the Grantee under this Grant Agreement shall not be assignable to any other entity without HUD's prior written approval. ARTICLE IV. PERIOD OF PERFORMANCE A. For Repair Program. 1. The Grantee shall complete the Repairs required in the Plan of Action and the Preservation Capital Needs Assessment within twelve (12) months after execution of this Grant Agreement. 2. Extensions of the period for Repairs may be granted by the, Grant Officer, GTR or GTM. B. For Substantial Rehabilitation Program. 1. The Grantee shall complete Substantial Rehabilitation required in the Plan of Action and the Preservation Capital Needs Assessment within [INSERT*] months after execution of this Grant Agreement. [Based on the estimated construction time line G52 of Form HUD- 92264.] 2. Extensions of the period for Substantial Rehabilitation may be granted by the Grant Officer, GTR or GTM under the following conditions: a. The delay was beyond the contractor's control (e.g., weather, strikes, differing site conditions, etc.) and is documented, or associated with an approved change order; and b. The written request for an extension is submitted 20 days after the delay. ARTICLE V. SCOPE AND PERFORMANCE OF REPAIRS OR SUBSTANTIAL REHABILITATION A. The Grantee agrees that all Repairs or Substantial Rehabilitation specified in the Plan of Action and the Preservation Capital Needs Assessment, shall be performed and completed in a good and workmanlike manner to ensure that the Project will be brought to and maintained in a decent, safe and sanitary condition in accordance with all applicable laws and governmental requirements, including all applicable codes. B. The Grantee is responsible for the completion of the Repairs or Substantial Rehabilitation, without regard to the sufficiency of the sum of (1) the Grant Funds and (2) other sources of funds to pay for the Repairs or Substantial Rehabilitation. The Grantee shall be responsible for providing the necessary personnel, equipment, materials, services, facilities and other items necessary to complete the Repairs or Substantial Rehabilitation. C. For Substantial Rehabilitation: 1. The grantee shall furnish assurance of completion of the project in the form of a personal indemnity agreement, corporate surety bonds for payment and performance, or a completion assurance agreement secured by a cash deposit in accordance with 24 C.F.R. § 207.19(c)(6). 2. Changes to the plans and specifications will be permitted by Change Orders approved by the Commissioner. As part of the procedure when submitting the Change Order, the Grantee shall detail how it expects to pay for said change and will be required to escrow the funds once a change order is approved. See HUD Handbooks 4435.1 and 4470.1 for guidance. D. The Grantee shall certify to the Grant Officer, GTR or GTM that the Repairs or Substantial Rehabilitation are covered by a guarantee against defects due to faulty materials or workmanship, which runs for 15 months from the date all Repairs or Substantial Rehabilitation is completed. Performance shall be assured by either: 1. obtaining a Surety Bond Against Defects Due to Defective Materials and/or Faulty Workmanship, Form FHA-3259, by a surety on the accredited list of the U.S. Treasury and drawn in an amount not less than ten (10) percent of the cost of repairs as estimated by HUD; or 2. establishing a Cash Escrow equal to two and a half (2 1/2) percent of the total cost of repairs, to be retained for fifteen (15) months from the date all repair work is satisfactorily completed. If Form FHA-2452, Performance Bond-Dual Obligee, or the American Institute of Architect's FormAIA A311, Performance Bond, are used for Substantial Rehabilitation, no action is required from the date of final payment under the construction contract. E. The Grantee shall assure the reasonableness for the cost of Repairs or Substantial Rehabilitation. The Grantee shall also assure that any Repairs or Substantial Rehabilitation performed by an identity-of- interest entity or the Grantee did not spend more than it would have in an arms-length transaction. The Grantee shall notify and get the approval of the Grant Officer, GTR or GTM of any Repairs of Substantial Rehabilitation being conducted by an identity-of- interest entity. F. The Grantee shall be responsible for cost certification to the Grant Officer, GTR or GTM where Substantial Rehabilitation is required by the Plan of Action and the Preservation Capital Needs Assessment. The cost certification will be prepared in accordance with HUD Handbook 4470.2, Cost Certification Guide for Mortgagors and Contractors of HUD-Insured and Section 202/811 Multifamily Projects. HUD will review the said cost certification in accordance with chapter 11 of HUD Handbook 4470.1. G. During the Repair Period, the HUD Inspector will perform inspections, as needed, of the Project Repairs or Substantial Rehabilitation and a review of each Draw Request to confirm that the specified work is completed in a satisfactory manner and that the Draw Request sufficiently documents the Repair or Substantial Rehabilitation expenditures. ARTICLE VI. DISBURSEMENT OF GRANT FUNDS A. The total amount to be wired per this agreement amounts to [INSERT*AMOUNT OF GRANT FUNDS TO BE WIRED]. This amount is broken down as follows: The portion of Grant Funds representing the Transfer Preservation Equity amounts to [INSERT*AMOUNT], Deposit to the Replacement Reserve amounts to [INSERT*AMOUNT], and the Transaction Costs in the amount of [INSERT*AMOUNT], shall be wire transferred after execution of this agreement to the Grantee or the Grantee's designee as approved by HUD, provided the Grantee has supplied the appropriate bank account number, the routing number of the banking institution, and any other necessary information to HUD to enable the transfer to occur. B. The balance of the Capital Grant Funds in the amount of [INSERT*BALANCE OF GRANT FUNDS] shall be drawn down from the Line of Credit Control System - Voice Response System (LOCCS- VRS). This amount is broken down as follows: Repairs/Sub Rehab Costs in the amount of [INSERT*AMOUNT], Repairs/Sub Rehab Contingency in the amount of [INSERT*AMOUNT], and Rep/SR Transaction Costs in the amount of [INSERT*AMOUNT]. A request by the Grantee to draw down Grant Funds under this system constitutes a representation by the Grantee that it and all participating parties are complying with the terms of this Grant Agreement. The procedure for drawing down funds is attached as Exhibit F. C. Upon expenditure of the Grant Funds wire transferred and before the Grantee makes the first draw down from the LOCCS-VRS, the Grantee shall provide a certification to the Grant Officer, GTR or GTM providing that the Grant Funds were expended in accordance with the Sources and Uses Statement. The Grantee agrees that any excess Grant Funds shall be deposited into the Reserve for Replacements Account for the Project. ARTICLE VII. LIMITATIONS ON PAYMENT In the event of any dispute between the parties as to items which are allowable costs covered by the Grant Funds, HUD shall be the sole determiner of allowable costs. ARTICLE VIII. EXCESS GRANT FUNDS In the event the total amount of Grant Funds allocated to the Project under this Grant Agreement is not expended, the Grantee shall deposit any excess amount into the Reserve for Replacements Account established for the Project. The excess Grant Funds deposited into the Reserve for Replacements Account shall be used only for those purposes approved by HUD and the Grantee shall receive the prior approval of HUD to make withdrawals from the account for those purposes. The Grantee may use excess Grant Funds to pay for annual oversight costs in accordance with Paragraph VII-B of Notice 94-42 "Mid-Course Correction II - For Low Income Housing Preservation and Resident Homeownership (LIHPRHA) and Emergency Low Income Housing Preservation Act (ELIHPA) Programs." ARTICLE IX. COMPLETION OF REPAIRS OR SUBSTANTIAL REHABILITATION A. Upon completion of all Repairs or Substantial Rehabilitation specified in the Plan of Action and the Preservation Capital Needs Assessment, the Grantee shall provide HUD with: 1. Certificates of occupancy and inspection, and all other permits, licenses, and approvals for the occupancy, use and operation of the Project from all applicable governmental authorities; 2. A request for final inspection by HUD; and 3. A final monthly Draw Request. B. The Grantee agrees that upon completion of the Repairs or Substantial Rehabilitation, HUD shall review the requirements under this Grant Agreement to determine compliance by the Grantee. The Grantee agrees to cooperate with any review in any way possible, including making available records requested by HUD and the Project for on-site inspections. C. The HUD Inspector will perform a final inspection within fifteen (15) calendar days after written notification by the Grantee that the Repairs or Substantial Rehabilitation has been completed. Within fifteen (15) calendar days after the final inspection, HUD will provide the Grantee with written notice of approval of repair completion or will provide the Grantee with a statement of deficiencies. D. The Grantee shall take action to cure any stated deficiencies in the time period required by HUD. ARTICLE X. WAGE REQUIREMENTS The Grantee shall comply with the Davis-Bacon Act requirements as provided in Notice 94-42 "Mid-Course Correction II - For Low Income Housing Preservation and Resident Homeownership (LIHPRHA) and Emergency Low Income Housing Preservation Act (ELIHPA) Programs." and Notice 95-14 "Production Branch Instructions to Process Section 241 Loan Applications Pursuant to Title VI of the Low Income Housing Preservation and Resident Homeownership Act of 1990 Plan of Action Stage." ARTICLE XI. RIGHT OF ENTRY TO INSPECT A. HUD shall have from the date of execution of this Grant Agreement until 12 months after completion of Repairs or Substantial Rehabilitation as listed in the Plan of Action and Preservation Capital Needs Assessment or until all latent defects are cured, whichever comes later, the right of entry and free access to the Project and the right to inspect all work done, and materials, equipment and fixtures furnished, installed or stored in and about the Project, and to inspect all books, contracts, subcontracts and records of the Grantee. The Grantee shall furnish such records, papers and documents relating to the Project as HUD may reasonably require from time to time. B. The Grantee shall be subject to inspections as provided under the Mortgage and Regulatory Agreement. ARTICLE XII. EVENTS OF DEFAULT/REMEDIES UPON DEFAULT A default under this Grant Agreement shall consist of any use of Grant Funds for a purpose not authorized by this Agreement, any noncompliance with legislative, regulatory or other requirements applicable to this Agreement, failure to comply with the performance objectives, tasks, time requirements or costs established by this Agreement, any other material breach of this Agreement, or any material misrepresentation during the process of obtaining the Grant Funds under this Agreement which, if known to HUD, would have resulted in the denial of the award of the Grant Funds. If HUD makes an initial determination that the Grantee is in default of this Grant Agreement, HUD will give the Grantee written notice of this determination and the corrective or remedial action proposed by HUD. The Grantee shall have an opportunity to demonstrate within 30 calendar days, and on the basis of facts and data, that it is not in default, that it has taken action(s) necessary to cure the default, or that the proposed corrective or remedial action is inappropriate, before HUD implements the corrective or remedial action. If HUD determines that there is an imminent threat that the Grantee will continue to expend Grant Funds contrary to this Grant Agreement unless HUD takes immediate action, HUD, concurrently with issuing a written notice of default, may implement a remedial action appropriate to prevent such expenditure. Corrective or remedial actions that HUD may take shall include, but shall not be limited to: 1. Canceling or revising the affected activities under this Grant Agreement. 2. Suspending the Grantee's payments pending action to cure the default and prevent further default by the Grantee. 3. Recapturing from the Grantee or others amounts determined by HUD to have been improperly expended. Where HUD determines that remedial actions required by HUD will not be effective in correcting the default, and to prevent further default, HUD may take the following additional corrective and remedial actions under this Grant Agreement: 1. Reduce the Grant Funds by the amount affected by the default. 2. Terminate the grant as to all further activities. 3. Take action against the grantee under 24 C.F.R. Part 24 and Executive Order 12549 with respect to future HUD or Federal grant awards. 4. Demand repayment of all grant amounts disbursed; 5. Initiate litigation or other legal proceedings designed to require compliance with the statute, regulations, the Use Agreement, this Grant Agreement or other pertinent authorities; and 6. Take any other available legal or equitable remedial action. No delay or omission by HUD in exercising any right or remedy under this Grant Agreement shall impair HUD's ability to exercise such right or remedy, or shall constitute a waiver of, or acquiescence in, any default by the Grantee. ARTICLE XIII. PERMITS, FEES AND NOTICES The Grantee represents and warrants that it has obtained (or will obtain) all necessary permits and approvals from such agencies and authorities necessary for the commencement and completion of the Repairs or Substantial Rehabilitation. ARTICLE XIV. INSURANCE The Grantee shall provide or cause to be provided workmen's compensation insurance and public liability insurance and any and all other insurance required by applicable law in connection with the Repairs or Substantial Rehabilitation performed hereunder. ARTICLE XV. CERTIFICATIONS The Grantee certifies that it shall comply with the provisions of the Fair Housing Act (42 U.S.C. 3601-3619); Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); Executive Order 11063 as amended by Executive Order 12259 (3 C.F.R. 1958-1963 Comp., p. 652 and 3 C.F.R. 1980 Comp., p.307; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794); the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107); Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), executive Order 11246 (3 C.F.R. 1964-1965 Comp., p.339), Executive Orders 11625, 12432, and 12138 and all implementing regulations issued pursuant to these statutes and authorities. ARTICLE XVI. AMENDMENTS This Grant Agreement may be modified at any time by a written amendment. Amendments which reflect the rights and obligations of either party shall be executed by HUD (the Grant Officer) and the Grantee. Amendments to this Grant Agreement involving corrections or inconsistencies regarding the Plan of Action, Use Agreement, statute or regulations may be made unilaterally by the Grant Officer. ARTICLE VII. REPAYMENT OF GRANT FUNDS If the Grantee within ten (10) years from the date of this Grant Agreement becomes affiliated with or transfers the project to any non-priority purchaser, the Grantee shall reimburse HUD for the difference between the total amount of the Grant Funds listed in Article I. of this Agreement and the assistance HUD would have provided to a non-priority purchaser, in accordance with 24 C.F.R. § 248.157(p). ARTICLE XVIII. SPECIAL CONDITIONS A. The Grantee, in performing the terms, provisions and requirements of this Grant Agreement, shall also adhere to the provisions and terms of The 241(f) Loan Capital Grant Worksheet, Distribution of Capital Grant Funds Worksheet, the POA, HUD's Approval Letter and that Use Agreement and Amendment of Regulatory Agreement which are attached hereto and incorporated herein. Should there be any conflict between this Grant Agreement and the POA, or between this Grant Agreement and the HUD Approval Letter, or between this Grant Agreement and the Use Agreement, such discrepancy or conflict shall be resolved by the Grant Officer. B. HUD funds may only be used for the purpose stated in this Grant Agreement. This Grant Agreement is hereby executed on behalf of the parties as follows: UNITED STATES OF AMERICA Secretary of Housing and Urban Development BY:________________________________________ Signature of Authorized Official ___________________________________________ Title ___________________________________________ Date GRANTEE ___________________________________________ Name of Organization ___________________________________________ Signature of Authorized Official ___________________________________________ Title ___________________________________________ Date EXHIBITS Exhibit A - Distribution of Capital Grant Funds Worksheet Exhibit B - HUD Approved Plan of Action Exhibit C - HUD Approval Letter Exhibit D - Preservation Capital Needs Assessment Exhibit E - Use Agreement and Amendment of Existing Regulatory Agreement Exhibit F - Procedure for drawing down from the Line of Credit Control System - Voice Response System (LOCCS-VRS)