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HomeMy WebLinkAbout95- Farmhouse Partners Bozeman Limited Partnership Loan Agreement for $50,000 T E CONFIDENTIAL LOAN AGREEMENT THIS AGREEMENT is made and entered into thisi/�day of Jk 1995, by and between FARMHOUSE PARTNERS-BOZEMAN LIMITED PARTNERSHIP w ose mailing address is 9581 Forest Creek Drive, Bozeman, Montana, hereinafter referred to as "Debtor" and the CITY OF BOZEMAN, a Montana municipal corporation, whose mailing address is P.O. Box 640, Bozeman, Montana, 59771-0640, hereinafter referred to as "Lender" according to the following terms and conditions: 1 . Amount of Loan The Debtor agrees to pay the sum of Fifty-Thousand and no/100 Dollars ($50,000.00) plus simple interest computed at 6% (or 4.18% compounded) according to Schedule A referenced in section 2 below. This loan is evidenced by a Promissory Note, attached as Exhibit A and incorporated herein by reference, and a Fourth Position Montana Trust Indenture, attached as Exhibit B and incorporated herein by reference, executed by the Debtor and originates from funds through the Housing Revolving Loan Committee. The Lender agrees that this security interest in property known as Comstock Apartments, and identified more fully in Exhibit B, is subordinate to a first mortgage loan, a contract land seller's second position trust indenture, and a water main extension third position agreement and trust indenture. Should Debtor default in repayment of the loan, the Lender may resort to the property secured by the agreement and fourth position trust indenture and engage in any remedies provided by the laws of the State of Montana, including foreclosure. 2. Terms for Repayment The Debtor and the Lender agree that the first payment will be a lump sum payment of $21,000.00, constituting interest only on the loan for the first seven years of the loan. This first payment will be made upon completion of the project and after 90% occupancy has been achieved for four months but in no event later than eighteen months from the date of the loan. This interest is prepaid simple interest. Payments of both principal and interest are then deferred for seven years from the date the first interest payment is due. Beginning in that eighth year, the loan will be amortized according to "Schedule A" attached and incorporated herein by reference. Each annual payment is due on or before the anniversary of the first payment. The Debtor will pay a late charge of two percent of the scheduled payment compounded monthly for any payment not made on the date due. In the Fifteenth year, the remainder of the principal (balloon payment), as well as any interest and penalties previously unpaid or accruing, will be due and payable on or before December 31, 2011, and shall be paid in full or new payment terms negotiated prior to the due date. Failure to make the final payment on or before the due date shall result in the accrual of 10% interest per annum upon the remaining balance until paid in full, but in no event to extend more than three years beyond December 31, 2011 . All payments will be applied first to accrued penalties, then accrued interest and thereafter principal, and shall be credited as of the date such payment is received. Payment received on a day which is not a Business Day shall be credited on the next Business Day. Business Day means any day other than those on which commercial banks and/or the City of Bozeman are authorized to be closed. Any Farmhouse/City of Bozeman Loan Agreement P. I portion or all of the unpaid balance may be prepaid without penalty. If the loan is prepaid within the first seven (7) years, the Lender agrees that there will be a credit against the principal balance in the amount of prepaid but unearned interest as shown by the first payment in Schedule A. Such prepayment shall not relieve Debtor from making the next regularly scheduled payment pursuant to the terms of the agreement should a balance be left owing. The Debtor further agrees that a notice shall be given to the Lender upon commencement of construction. A copy of the Certificate of Occupancy, reflecting compliance with all applicable Building Codes, when issued, shall be delivered to the Lender. The Debtor shall deliver these items within five days of the event. 3. Entity By its signature below,the Debtor HEREBY CERTIFIES that FARMHOUSE PARTNERS- BOZEMAN LIMITED PARTNERSHIP is organized and existing as a Limited Partnership under and by virtue of the laws of the State of Montana with its principal office at 9581 Forest Creek Drive, Bozeman, Montana 59715, and is duly authorized to transact business in the State of Montana. 4. Authorizations Debtor certifies and Lender understands that Farmhouse Partners Limited Partnership, general partner of the Debtor, is the authorized agent for Debtor. The Dabney Company, William C,. Dabney, President, is the general partner for Farmhouse Partners Limited Partnership. Farmhouse Partners Limited Partnership is fully empowered to act for and on behalf of Debtor. 5. Conditions of Loan During the term of indebtedness, the Debtor will deliver to the Lender, upon request, annual balance sheets, profit and loss statements, and other financial records pertaining to the project. The Debtor will make all operating statements and other reasonably identified records relating to this agreement available for inspection during normal business hours to the Lender. The parties understand that, during the term of indebtedness, the financial statements are subject to review by a certified public accountant. Full disclosure is required when such review is requested. The Debtor will not be required to pay for a duplication of effort unless some irregularity appears requiring a second opinion. Copies of all summary sheets and written opinions and reports generated by a certified public accountant during an audit must be forwarded to the Lender following an audit. The Debtor will submit status reports on the project on a semi-annual basis unless sooner requested by the Lender. The status report shall included a construction progress report and an occupancy update. Other information pertaining to the project may be requested by the Lender upon reasonable notice prior to submission of the report. 6. Insurance Farmhouse/City of Bozeman Loan Agreement P. 2 Debtor will maintain insurance on the property and the project at all times sufficient to cover loss by fire, theft or other hazard sufficient to protect Lender's interest in said property or project. Insurance proceeds shall be payable to Lender for the monetary amount of Debtor's obligation to Lender. However, the Debtor may, upon written approval of the Lender, in the event of loss by fire, theft or other hazard, apply insurance proceeds received by the Lender towards the payment of the loan or use the proceeds to rebuild the improvements destroyed or damaged. If Debtor chooses this later option, the Lender understands that the first priority lender will hold the insurance proceeds and pay them to materialmen, contractors, and laborers for services rendered and materials furnished and delivered in the rebuilding or the improvements on behalf of the Lender, City of Bozeman. It is understood that it is the Debtors duty to see that no liens are filed upon the premises by reason of any rebuilding. The Debtor will place copies of the insurance policy or policies with the Lender within thirty days of the start of construction. Lender shall have no liability whatsoever for any loss that may occur by reason of the omission or lack of coverage of any such insurance. During the term of this loan agreement, when the Debtor renews the insurance policy by payment of an additional year's premium, the Debtor will provide proof of payment of the premium to the Lender so as to keep the Lender advised at all times that the property is insured. Failure to so notify the Lender is an event of default of this agreement. 7. Non-discrimination The Debtor agrees to abide by the provisions of Title VI of the Civil Rights Act of 1964, section 109 of the Housing and Community Development Act of 1974, the Age Discrimination Act of 1974, and section 504 of the Rehabilitation Act of 1973 regarding discrimination based upon race, color, national origin, sex, age or physical challenge. 8. Additional Assurances The Debtor will remain fully obligated under the provision of this agreement notwithstanding its designation of any third party or parties with written approval of the Lender for the undertaking of all or any part of the program with respect to which assistance is being provided under this agreement. Lender acknowledges that HRDC has a management agreement with the Debtor. The Debtor will comply with all applicable laws, rules and regulations of the Lender, the State of Montana, and the United States Government. 9. Litigation The Debtor states that to the best of its knowledge and belief there are no suits or proceedings pending or threatened against or effecting it which, if adversely determined, would have a material adverse effect on its financial condition. In addition, to the knowledge of the Debtor, there are no proceedings by or before any governmental commission, board, bureau or other administrative agency pending or threatened against the Debtor. 10, Default The parties agree that time is of the essence in this agreement. Debtor shall be in FarmhouselOry of Bozeman Loan Agreement p. 3 default under this agreement upon the happening of any of the following events or conditions: a. Debtor defaults in the payment or performance of any obligation, covenant or liability contained or referred to herein or in any note evidencing the same; b. Any warranty, representation or statement made or furnished to Lender by or on behalf of Debtor proves to have been false in any respect when made or furnished; c. Any event which results in the acceleration of the maturity of the indebtedness of Debtor to others under any indenture, agreement or undertaking; d. Death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against, Debtor or any guarantor or surety for Debtor, or entry of any judgment against them, or failure of any guarantor or surety for Debtor to provide Lender with financial information promptly when requested by Lender. e. Debtor fails to pay any local, real, or personal property taxes, to include special assessments, specific to the property; 11 . Notice of Default Upon the occurrence of any default hereunder and at any time thereafter, the Lender may declare Debtor to be in default and thereafter give Debtor written notice setting forth the action or inaction which constitutes the default and giving Debtor thirty (30) days in which to correct the default. If Debtor fails to correct the default within thirty (30) days of this notice, the Lender may notify Debtor in writing that the full balance due upon the note is then due and payable in full within thirty (30) days. It is agreed by the parties hereto that the provisions of this Agreement provide reasonable and sufficient notice to be given to Debtor in case of Debtor's failure to perform any of its covenants and that this notice is sufficient for Debtor to rectify its actions or inactions of default. 12. Demand Any demand upon or notice to either party shall be addressed and mailed to the address as identified at the top of page one of this agreement or by personal service. Mailing shall be by certified mail, return receipt requested, and shall be effective when served or three days after deposit in the United States Mail, whichever occurs first. 13. Waiver No waiver of any default shall constitute a waiver of any other default, nor shal I such waiver constitute a continuing waiver. No waiver of any term or condition of this agreement shall constitute a waiver of any other term or condition, whether or not similar, nor shall such waiver constitute a continuing waiver. 14. Amendments Farmhouse/City of Bozenwn Loan Agreement F, 4 This agreement may not be altered or amended except by a writing signed by the Debtor, accepted by Lender, and attached hereto. 15. Severability If one or more provisions of this agreement is deemed to be unlawful or unconstitutional or stricken by a court of law, all valid provisions that are severable from the invalid provisions shall remain in effect and be valid and binding on the parties. If any provision is in conflict with any applicable statute, rule of law, court order or judgment, then such provision shall be deemed to be modified to conform with such statute, rule or law, court order or judgment. 16. Construction and Venue This agreement shall be interpreted according to the laws of the State of Montana. Venue in any dispute arising from this agreement shall be in the Eighteenth Judicial District, Gallatin County, Montana. 17. Attorney's Fees In the event that it becomes necessary for any party to this Agreement to retain an attorney to enforce any terms or conditions of this Agreement, then the prevailing party or parties shall be entitled to costs and reasonable attorney's fees, including fees of in-house counsel or City Attorney costs and including fees on appeal. 18. Hold Harmless The Debtor waives any and all claims and recourse against the Lender, including the right of contribution for loss and damage to persons or property arising from, growing out of, or in any way connected with or incident to this agreement. Further, the Debtor will indemnify, hold harmless, and defend the Lender against any and all claims, demands, damages, costs, expenses or liability arising out of the performance of the Debtor. 19 Assignment This agreement is not assignable by Debtor without written consent of the Lender, said consent not to be unreasonably withheld. 20. Titles The titles used in this agreement are for reference purposes only. 21 . Transferability This Agreement shall be binding upon the heirs, personal representatives, successors and assigns of the parties. This Agreement and the contemporaneous Promissory Note are not transferrable without written permission from the Lender, and are subject to the condition that the Debtor, FARMHOUSE PARTNERS - BOZEMAN LIMITED PARTNERSHIP, own the property described as the Comstock Apartments for the term of the loan and that the property remain affordable to persons below 60% of the area median income as defined and updated annually by the Montana Board of Housing or their successors. Should the property be sold or not maintained for the designated income group, the Note shall become due and payable on demand. Farmhouse/City of Bozeman Loan Agreement P. 5 FARMHOUSE PARTNERS - BOZEMAN LIMITED P NERSHIP By: Far r i e Partnership,- its General Partner By: The Dabney Company, its General Partner By: William C. Dabney, III President STATE OF MONTANA ) ss. County of Gallatin ) On this 466 day of November 1995, before me, the undersigned, a Notary Public for the State of Montana, personally appeared William C. Dabney I II, known to me to be the President of the Dabney Company, a General Partner of Farmhouse Partners Limited Partnership, a General Partner of Farmhouse Partners - Bozeman Limited Partnership, and acknowledged to me that he executed the within instrument for an on behalf of such Limited Partnership. IN WITNESS WHEREOF, 1 have hereunto set my hand and affixed my Notarial Sea[ the day and year first above written. (SEAL) Notary Public for the State of Montana, residing at Bozeman My Commission Expires 6115199 CITY OF BOZEMAN By: onald F. Brey Assistant City Manager ATTEST: Robin L. Sullivan Clerk of Commission STATE OF MONTANA } } ss. County of Gallatin } On this day of November 1995, before me, the undersigned, a Notary Public for the State of Montana, personally appeared RONALD 1=. BREY and ROBIN L. SULLIVAN, known to me to be the Assistant City Manager and the Clerk of Commission of the City of Bozeman and the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same for and on behalf of the City of Bozeman. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the day and year first above written. (SEAL) -? otary Public for the State of Montana, residing at Bozeman My Commission Expires 6115/99 SCHEDULE A Initial Annual Ending Loan Loan Principal Loan Balance Payments Interest Reduction Balance YR. 1 50,000. 20,000. 21,000. 0 50,000. YR. 2 50,000. 0 0 0 50,000. YR. 3 50,000. 0 0 0 50,000. YR. 4 50,000. 0 0 0 50,000. YR. 5 50,000. 0 0 0 50,000. YR. 6 50,000. 0 0 0 50,000. YR. 7 50,000. 0 0 0 50,000. YR. 8 50,000. 3,500. 3,000. 500. 49,500. YR. 9 49,500. 4,000. 2,970. 1,030. 48,470. YR.10 48,470. 5,000. 2,908. 2,092. 46,378. YR.1 1 46,378. 5,000. 2,783. 2,217. 44,161 . YR.12 44,161 . 5,000, 2,650. 2,350. 41,811 . YR.13 41,811 . 5,000. 2,509. 2,491 . 39,319. YR.14 39,319. 5,000. 21359. 2,641. 36,678. YR.15 36,678, 5,000. 2,201 . 2,799. 33,879. TOTAL PAYMENTS 58,500. 42,379. 16,121. BALANCE DUE: $33,879.00