HomeMy WebLinkAbout09/02/2009 AGENDA
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CITY COUNCIL 345 6th Street, Suite 600, Bremerton, WA 983370 Phone (360) 473-5280
***AMENDlED***
SEPTEMBER 2, 2009
CITY COUNCIL MEETING AGENDA
1. BRIEFING: 5:00 - 5:30 P.M. in COUNCIL CONFERENCE ROOM 603
A. General Council Business
2. CALL TO ORDER: 5:30 P.M. in FIRST FLOOR CHAMBERS
A. Pledge of Allegiance
B. Invocation
3. MAYOR'S REPORT
4. ANNOUNCEMENTS & PUBLIC RECOGNITION
5. CONSENT AGENDA
A. Claims & Check Register
B. Minutes of Meeting - August 19, 2009
C. Minutes of Study Session - August 26, 2009
6. GENERAL BUSINESS
A. Lease Agreement between the City of Bremerton and EMERALD BAY YACHTS LLC
B. Acceptance of Brownfields Economic Development Initiative (BEDI) Grant from the U. S.
Department of Housing and Urban Development (HUD) for the Bremerton Boardwalk Project
7. COUNCIL MEMBER REPORTS
8. ADJOURNMENT OF CITY COUNCIL BUSINESS MEETING
rI Americans with Disabilities Act (ADA) accommodations provided upon request. Those requiring special accommodations
should contact the City Clerk's Office at (360) 473-5323 by noon on the Monday preceding the Council meeting.
COUNCIL MEETING SPEAKERS LIST
PLEASE PRINT YOUR NAME BELOW
IF YOU WISH YOUR COMMENTS TO BE
INCLUDED IN THE RECORD
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REQUESTS FOR INFORMATION MUST BE SUBMITTED IN WRITING TO THE CLERK
THANK YOU
DATE SUBMITIED: 9/2/2009
AGENDA BILL
CITY OF BREMERTON
CITY COUNCIL
SA
...........................................................................................1
SUBJECT:
Committee Meeting Date:
COUNCIL MEETING Date: September 2, 2009
Department: Financial Services
Presenter: Catlly Johnson
Phone: 473-5296
Claims & Check Register
SUMMARY:
Consent Agenda item. Approval of checks and electronic fund transfers.
ATTACHMENTS: Check Register.
FISCAL IMPACTS (Include Budgeted Amount):
APPROVALS:
DEP ARTMENT DIRECTOR:
CITY ATTORNEY:
FINANCE DIRECTOR:
MAYOR:
~ '-/CC~ ~
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COMMITTEE CHAIR
COUNCIL PRESIDENT:
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CONSENT AGENDA r2J
GENERAL BUSINESS D
PUBLIC HEARING D
RECOMMENDED MOTION:
1) Check #'s 333393 through 333593 and EFT's 9041 through 9084 in the amount of$I,547,332.84.
2) Regular Payroll for the pay period ending August 31,2009 in the amount of$761,227.29.
3) Retiree Payroll for the pay period ending August 31, 2009 in the amount of $82, 185.19.
COUNCIL ACTION: ~ Approve D Deny D Table
D Continue D No Action
, AGENDA B,ILL
\. ~i " .0> ..' <
CITY OF BREMERTON
CITY COUNCIL
5B
DAn: Sl :BMITTED:
........................................................................................
N/A
S~pfemlne(':l JOD1
City' Council \ (
Cecil McConnell
Council President
Phone: (360) 473-5280
SUMMARY: Attached is a summary of the City Council Meeting held A~l(st / ", J.OO if
SUBJECT: City Council Meeting Minutes
for meeting of A~~st '1~ .).oJ"
Committee Meeting Date:
COUNCIL MEETING Date:
Department:
Presenter:
ATTACHMENTS: Meeting Minutes for fll.<J"1sf ", ~1
FISCAL IMP ACTS (Include Budgeted Amount): N/ A
APlf>>ROV ALS:
DEP ARTMENT DIRECTOR:
CITY ATTORNEY:
FINANCE DIRECTOR:
MAYOR:
Council President
N/A
N/A
N/A
COMMITTEE CHAIR
COUNCIL PRESIDENT:
N/A
b~;r;: Y:~L ,.f i!
CONSENT AGENDA I&J
GENERAL BUSINESS 0
PUBLIC HEARING 0
RECOMMENDED MOTION: Move to appro~e the Consent Agenda as presented.
COUNCIL ACTION: 0 Approve 0 Deny 0 Table
o Continue 0 No Action
DIGITAL RECORDING
CITY COUNCIL MEETING MINUTES
VVednesday, August 19, 2009
The weekly meeting of the City Council of the City of Bremerton was called to order
VVednesday, August 19, 2009, at 5:00 PM in Council Conference Room 603 of the NORM DICKS
GOVERNMENT CENTER, 345 6lhStreet, Bremerton, VVashington, with Council President Cecil
McConnell presiding. Council Members present were Nick VVofford, VVill Maupin, Carol Arends,
Dianne Robinson, Mike Shepherd, Roy Runyon, and Adam Brockus. Council Member Brad
Gehring was absent. Also present were City Attorney Roger Lubovich, City Clerk Carol Etgen,
and Council Assistant Christine Grenier.
A COUNCIL BRIEFING was held to discuss General Council Business; and at 5:30 PM the
meeting moved to the First Floor Meeting Chambers.
The Pledge of Allegiance was led by Council Member Adam Brockus followed by the
invocation provided by Reverend Paul Meeker of Our Saviour's Lutheran Church.
MAYOR'S REPORT - There was no Mayor's Report tonight...
'PUBLIC RECOGNITION & ANNOUNCEMENTS
Roy Runyon announced that there will be a free movie showing of "Evergreen: The
VVashington Clean Tech Story on Monday, August 31 from 6:30 to 8:30 PM in the Meeting
Chambers; and a disaster preparedness workshop on Friday, September 4 from 6:00 to 8:00
PM at the Kitsap Historical Society Museum located at 280 4th Street.
Adam Brockus invited the public to attend Manette Fest on September 12 which will include a
2K race and children's play area.
.Ruth Bond provided an update on the Kitsap Regional Library for the Sylvan VVay Branch; and
announced that there will be a "Strategic Planning" Meeting on September 9 beginning at 6:30
PM at the Sylvan VVay Branch and a "VVest Sound Reads" event which will feature a reading of
"'The Other Boleyn Girl" by Phillipa Gregory on September 26 from 4:00 to 6:00 PM at
Bremerton High School.
~arolyn Neal thanked Public VVorks Staff for helping keep up the downtown library's
appearance; and was pleased that the children's library is now fully developed.
Bill Eley was proud to announce that the City's IT Department received an "Honorable Mention"
Award at the 22nd Annual Governmental Computer News (GCN) Awards for "Outstanding
Information Technology Achievement in Government", and the Department will be formally
recognized at the GCN Awards Gala on October 22,2009 in VVashington, D.C. He expressed
his appreciation for the recognition on behalf of his Department and his staff.
CONSENT AGENDA
A. Check Numbers 333134 through 333392; and EFT-9004 through EFT-9040 in the amount
of $2,297,832.97; and Regular Payroll in the amount of $730,178.92 for the pay period
ending August 15, 2009.
13. Minutes of Meeting - August 5, 2009
C. Minutes of Study Session - August 12, 2009
D. Appointment of Geoft VVentlandt to the Design Review Board
E. Purchase of one Street Sweeper from OWEN EQUIPMENT COMPANY of Portland, Oregon
City Council Reg. Mtg. Minutes
VVednesday, August 19, 2009
Page 2 of 3
F. Purchase of Temporary Construction Easement from Raymond Gardner, Greg Hunt, and
Joan Hunt for Pump Station SB-4 and Sewer Mains as part of the Gorst Sewerage Project
G. Authorize the City Attorney to hire an Assistant City Attorney I at Payband 13, Rate 6; and a
Prosecutor I at Payband 7, Rate 2
Geoff Wentlandt thanked the Council for allowing him the opportunity to serve on the Design
Review Board and for supporting the Design Review Process.
05:42:00 M/S/C/U (Runyon/VVofford) Move to approve the CONSENT AGENDA as presented.
PUBLIC HEARING
7A - ORDINANCE NO. 5088 CREATING BREMERTON HARBORSIDE REVITALIZATION
AREA; AND REPEALING ORDINANCE NO. 5052: Garv Sexton, Redevelopment Projects
Administrator, explained that the creation of a new revitalization area under Substitute Senate
Bill 5045 is needed in order to utilize the Local Revitalization Funds within that Bill to implement
the proposed following projects: parking structure of approximately 175 spaces within a
platform for retail development at Burwell Street and Park Avenue; sidewalk improvements on
Pacific Avenue between Burwell and 5th Streets; street and sidewalk improvements on Pacific
Avenue between 6th and 11th Streets; and added street and sidewalk improvements and other
public open space improvements.
President McConnell opened the public hearing.
There were no comments from the public. . .
President McConnell then closed the public hearing.
05:54:41 Main Motion was made and discussion by Council Members continued...
Rov Runvon asked for clarification on tax increment financing. Andv Parks answered that
redevelopment will ultimately generate more property tax and sales tax revenue from local and
state sources. The amount of revenue returned to the revitalization area would be for the period
of 25 years until the bonds are repaid.
Nick Wofford asked if creating the revitalization area would involve any new taxes. Mr. Parks
responded that there are no tax increases involved and that it would allow a reallocation of
current resources.
Dianne Robinson asked how staff came up with the boundaries for the area. Mr. Sexton
answered that Public VVorks and Parks Departments have specific project and program
interests in downtown and that information was included in the discussion regarding where
projects may be potentially located and what services would be needed. He added that there
were limitations on the type of area that could benefit from grant funding and the downtown
area fell within those guidelines.
06:05:40 M/S/C/U (Arends/Shepherd) Move to approve Ordinance No. 5088 creating the
Bremerton Harborside Revitalization Area; and repealing Ordinance No. 5052 as presented.
!::;OUNCIL MEMBER REPORTS
tllick Wofford expressed his displeasure at the low voter turnout during the current Elections
Primary.
City Council Reg. Mtg. Minutes
VVednesday, August 19, 2009
Page 3 of 3
Dianne Robinson mentioned that she learned.a great deal at the Municipal Budgeting
VVorkshop she attended last week and hoped to provide more information during next week's
Study Session.
Mike Shepherd announced that he had placed 16t11 overall in the National Senior Games in the
San Francisco Bay Area.
Rov Runvon provided a briefing on two recent events: Project Porchlight and the Bremerton
Foodline School Supply & Clothing Drive; and provided a follow-up report regarding several
handicap parking complaints.
Adam Brockus shared information about the decline in the local unemployment rate and
encouraged the unemployed to visit VVork Source located on Sylvan VVay.
Cecil McConnell announced that the Transportation Benefit District Board would be meeting
immediately following the Council Meeting tonight.
VVith no further business, President McConnell adjourned the Council Meeting at 6: 13 PM.
Prepared and Submitted by:
~,~
CHRISTINE GRENIER
Council Assistant
Attest:
CAROL ETGEN, City Clerk
CECIL McCONNELL, City Council President
CM:CE:ls:cg
AGENDA BILL
CITY OF BREMERTON
CITY COUNCIL
5c.
DATE SUBMITTED:
.......................................................................................,
SUBJECT: City Council Meeting Minutes
for meeting of fl~li\sfJ.k, ').61)'{
Committee Meeting Date:
COUNCIL MEETING Date:
Department:
Presenter:
N/A
SeJ>fe~~ Ol J.oo1
City Council I
Cecil McConnell
Council President
(360) 473-5280
Phone:
SUMMARY: Attached is a summary of the City Council Meeting held II ~,^st Jb, ;)..009
ATTACHMENTS: Meeting Minutes for 1J~lAsf ~"" I J..o~ 1/
FISCAL IMPACTS (Include Budgeted Amount): N/ A
APPROVALS:
DEPARTMENT DIRECTOR:
CITY ATTORNEY:
FINANCE DIRECTOR:
MAYOR:
Council President
N/A
N/A
N/A
COMMITTEE CHAIR
COUNCIL PRESIDENT:
N/A
~,;r::;/:'~Hcll
CONSENT AGENDA ~
GENERAL BUSINESS 0
PUBLIC HEARING 0
RECOMMENDED MOTION: Move to approve the Consent Agenda as presented.
COUNCIL ACTION: 0 Approve 0 Deny 0 Table
o Continue 0 No Action
DIGITAL RECORDING
CITY COUNCIL STUDY SESSION MINUTES
VVednesday,August26,2009
The weekly meeting of the City Council of the City of Bremerton was called to order in the City
Council Conference Room 603, of the NORM DICKS GOVERNMENT CENTER, 345 6th Street,
Bremerton, VVashington, VVednesday, August 26,2009, at 5:00 PM, with Council Vice-President
Nick VVofford presiding. Council Members present were VVill Maupin, Carol Arends, Dianne
Robinson, Roy Runyon, and Adam Brockus. Council Members Cecil McConnell, Brad Gehring,
and Mike Shepherd were absent. Council Assistant Christine Grenier was present to provide
staff support.
Vice-President Wofford emphasized that the Study Session was open to the public, however
there would be no opportunities for input or participation; that no action will be taken, and the
content of these items is subject to change.
1. HUD - BEDI Grant Acceptance for Bremerton Boardwalk Project - Tom Knuckey,
Utilities Managing Engineer; and Brad Gehring, Chair of the Public VVorks Committee
General Business
2. Briefing on Regional Fire Authority (RFA) - Fire Chief AI Duke No Action
3. Lease Agreement with Emerald Bay Yachts and City of Bremerton - Gary Sexton,
Redevelopment Projects Administrator; and Nick VVofford, Chair of Finance Committee
Consent Agenda
Dianne Robinson left the meeting at approximately 5:25 PM to attend a CDBG Citizen
Advisory Committee Meeting...
4. Briefing on AVVC Municipal Budgeting VVorkshop - Council Members Nick VVofford and
Dianne Robinson No Action
5. Council Committee Chair Reports:
Carol Arends, Chair of the Audit Committee, announced that the Audit Committee
moved its regularly scheduled meeting to this afternoon and that the remaining
members are still meeting at this time.
Adam Brockus, Vice-Chair of the Finance Committee, stated that one of the topics at
today's Finance Committee meeting was PILOT which could be used to support the
General Fund and that the committee will be discussing the issue again at the next
meeting.
Nick Wofford, Chair of the Finance Committee, mentioned that the proposed parking
garage was also discussed during Finance Committee. He believed that while the
proposed parking garage would be a good source of revenue and would allow for more
available on-street parking spaces, the city should consider focusing efforts on filling
spaces in its garage located at 4th Street and VVashington Avenue.
6. Other General Council Business (as necessary and as time allows...)
Vice-President Wofford adjourned the Study Session at 5:40 PM.
City Council Study Session Minutes
VVednesday, August 26, 2009
Page 2 of 2
Attest:
CAROL ETGEN, City Clerk
CECIL McCONNELL, City Council President
CM:CE:ls:cg
pr~SUbmitted by
.~
CHRISTINE GRENIER
Council Assistant
AGENDA BILL
CITY OF BREMERTON
CITY COUNCIL
'A
DA TE SUBMITTED:
....................................................................'....................
SUBJECT: Lease Agreement between the
City of Bremerton and Emerald Bay Yachts,
LLC
Committee Meeting Date: lJ~ L{ ~+- 2~. ' 200'1
COUNCIL MEETING Date: 5 ". emhf?#"'~,2Qo~
Department: E 011. Development
Presenter: Gary Sexton
Phone: 360-473-5282
SUMMARY: The proposed lease between the City of Bremerton and Emerald Bay Yachts, LLC is a
5-year lease with an option for and additional 5-year term for commercial sales operations at 140
W ashington Avenue.
ATTACHMENTS: Proposed lease.
FISCAL IMPACTS (Include Budgeted Amount): The City will receive $650.00 per month not
including leasehold tax. The lease payment adjustments will be 3% per year.
APlPROV ALS:
DEPARTMENT DIRECTOR:
CITY ATTORNEY:
FINANCE DIRECTOR:
MA YOR:
COMMITTEE CHAIR
COUNCIL PRESIDENT:
eoN3ENT AGeNDA ~-
GENERAL BUSINESS M f\\~ 10
PUBLIC HEARING B G~:
RECOMMENDED MOTION: Move to approve the lease between the City of Bremerton and
Emerald Bay Yachts and authorize the Mayor to finalize and execute the agreement with substantially
the same terms and conditions as presented.
COUNCIL ACTION: 0 Approve 0 Deny 0 Table
o Continue 0 No Action
LEASE
This Lease is entered into this day of ,2009, between the CITY OF
BREMERTON, a municipal corporation, (hereinafter referred to as "Lessor"), and EMERALD
BA Y YACHTS, LLC, a Washington corporation, (hereinafter referred to as "Lessee").
WHEREAS, Lessor owns certain real property and a building situate thereon, and
WHEREAS, Lessee desires to lease a portion of the building for retail space for the purchase,
sale and lease of boats.
NOW, THEREFORE, the Lessor and Lessee agree as follows:
1. PREMISES. Lessor does hereby lease to the Lessee that portion of a building
consisting of approximately 450 square feet located at 140 Washington Avenue, Bremerton,
Washington ("Premises") and situated on real property owned by Lessor. The location of the
Premises is depicted on Exhibit A attached hereto and incorporat~d by reference.
2. TERM. The term of this lease shall be for five years commencing August L
;2009, ("Commencement Date") and ending Julv 31,2014, unless otherwise extended or
terminated. Lessee and Lessor, by and through the Mayor, may extend this Lease for one
additional five year term, subject to mutual agreement of the lease payment and other terms and
conditions. To exercise this option, Lessee shall deliver to Lessor a notice to exercise said option
within 90 days prior to the expiration of the original term of this lease. If Lessee remains in
lPossession of the Premises or any part thereof after the expiration of the term of this Lease,
including any exercised option, without the express written consent of Lessor, such occupancy
shall be a tenancy from month-to-month which may be terminated by either Lessor or Lessee by
delivering written thirty (30) day notice of termination.
3. LEASE PAYMENT.
(a) Monthly Payment. During the term of this Lease, Lessee agrees to pay
Lessor, without notice or demand, the sum of Six Hundred Fifty Dollars and Noll 00 ($650.00)
per month ("Lease Payment") plus the leasehold tax as set forth in Section 3(e) below, in
advance, on or before the first day of the first full calendar month of the term hereof and a like
sum on or before the first day of each and every successive calendar month thereafter during the
term hereof.
(b) Lease Payment Adjustments. The monthly Lease Payment shall be adjusted
every year during the term(s) of this Agreement in the amount of three percent (3%) per year. The
adjustment will occur'on the anniversary date of this Lease each year.
Conference Center Plaza
(c) Overdue Lease Payment. Unpaid installments of the Lease Payment or
other SUll1S due hereunder shall, if not timely paid, be subject to a later charge of Fifty and
Noll 00 Dollars ($50.00) to cover the excess costs of administration and shall bear interest from
the dute due of 12 percent (12%) until all rent and interest has been paid in full. Lessee hereby
further agrees to pay any attorneys' fees and expenses incurred by Lessor by reason of Lessee's
failure to pay Lease Payment or other charges when due hereunder.
(d) Holding Over. If Lessee remains in possession of the Premises or any
part thereof after the expiration of the term of this Lease without the express written consent of
Lessor, such occupancy shall be a tenancy from month-to-month at a Le~se Payment in the
amount of 120% of the last Lease Payment, plus all other charges and additional amounts
payable hereunder, and upon all the terms hereof applicable to a month-to-month tenancy.
(e) Leasehold Excise Tax, Other Taxes and Assessments. In addition to the
Lease Payment, Lessee shall pay a leasehold excise tax, pursuant to RCW 82.29A.030, on all
Lease Payment amounts paid to the City, currently in the amount of 12.84 percent of the base
Lease Payment and as may be adjusted pursuant to Ch. 82.29A RCW. Lessee shall pay the
Leasehold tax with the monthly payment. Lessee shall also pay all taxes assessments, and all
other governmental charges, of any kind whatsoever, applicable or attributable to the Premises,
Lessee's leasehold interest, the improvements, or Lessee's use and enjoyment of the Premises.
Lessee shall pay these taxes and assessments when due or as otherwise requested by the Lessor.
(f) Payment Place. Payment is to be made to the City of Bremerton, Attn:
Director of Financial Services, 345 Sixth Street, Suite 60.0 Bremerton, Washington 98337.
4. USE OF PREMISES. Lessee's use and occupancy of the Premises shall be for
retail space for the purchase, sale and lease of boats.
5. UTILITIES. Lessee agrees to pay all charges for water and sewer service,
power, garbage pickup, janitorial, telephone and for all other utilities which shall be used in the
Premises during the full term of this Lease.
6. IMPROVEMENTS.
(a) Specifically. Lessee accepts the Premises "as is". Lessee may install
signage subject to Lessor's approval.
(b) Generally. Lessee shall not make or allow to be made any alterations,
improvements, or changes to or of the Premises or any party thereof without the prior written
consent of Lessor, and all improvements, alterations, or changes so made shall become a part qf
the lease Premises qnd shall belong to Lessor upon expiration or sooner termination qfthis
Lease. With respect to such alterations, improvements or changes to the Premises requested by
Lessee, Lessor's consent shall not be unreasonably withheld. In the event Lessor consents to the
making of any alterations, aqditions, or improvements to the Premises by Lessee, the same shall
2
Conference Center Plaza
be made by Lessee at Lessee's sole cost andexpense, the Premises and Lessee's leasehold interest
therein shall remain free from any lien of any kind whatsoever, and construction of such
alterations, additions or improvements shall be done in compliance with all laws and
governmental requirements by qualified city staff or licensed and bonded contractors.
(c) Removal. Unless otherwise agreed by the City in writing, Lessee-Owned
Improvements shall not be removed by Lessee during the Lease term or upon expiration or
termination of this Lease and upon expiration or termination of this Lease, shall become the
property of the City without payment by the City.
(d) 'Unauthorized Improvements. Improvements made on the Premises
without the City's prior written consent shall immediately become the property of the City, unless
the City elects otherwise. Regardless of ownership of Unauthorized Improvements, the City
may, at its option, require Lessee to sever, remove, and dispose of them, charge Lessee rent for
the use of them, or both. If Lessee fails to remove an Unauthorized Improvement upon request,
the City may remove it and charge Lessee for the cost of removal and disposal.
(e) Liens. Lessee shall keep the Property and Lessee's leasehold interest free
from any liens arising out of any work performed, materials furnished, or obligations incurred by
Lessee.
7. MAINTENANCE AND REPAIRS.
(a) Lessee's Obligations. By taking possession of the Premises, Lessee shall
be deemed to have accepted the Premises as being clean and in good order, condition, and repair.
Lessee shall, at Lessee's expense, keep the Premises and every part thereof in good condition and
repair (except as hereinafter provided with respect to Lessor's obligations set forth in paragraph
7(b) below). Lessee shall, upon the expiration or sooner termination of this Lease, surrender the
Premises to Lessor in good condition, clean, excepting only ordinary wear and tear and
destruction or damage by such conditions over which Lessee has no control, or such damage as
may be due to the failure of Lessor to comply with any covenant herein contained to be
performed by Lessor. Damage caused by Lessee's use ofth~ Premises shall be repaired at the
sole cost and expense of Lessee.
(b) Lessor's Obligations. Lessor shall, at Lessor's expense, repair and
maintain the structural portions of the Building, including the roof, foundation, bearing and
exterior beams and supports and exterior walls (excluding glass). There shall be no abatement of
Rent and no liability for Lessor by reason of any iI1iury to or interference with Lessee's business
arising from the making of any repairs, alterations, or improvements in or to any portion of the
Building or the Premises or in or to fixtures, appurtenances, and equipment if Lessor shall have
taken every reasonable meas,ure to avoid any such injury and interferenc,e.
3
Conference Center Plaza
I
I
8. LIENS. Lessee shall keep the Premises, Lessee's leasehold interest therein and
I
the Building and L:and on which the Premises are situated free from any liens arising out of any
work performed, niaterials furnished, or obligations incurred by Lessee.
9. INDEMNIFICATION. Lessee shall indemnify, defend and hold Lessor
harmless from all loss damage, liability or expense resulting from any injury to any person or any
loss of or damage to any property caused by or resulting from any act or omission of Lessee or
any officer, agent, 'employee, guest, invitee or visitor of Lessee in or about the Premises or the
Building, but the foregoing provision shall not be construed to make Lessee responsible for
injuries to third parties caused by the negligence of Lessor or any officer, agent, employee, guest,
invitee or visitor of Lessor. Lessor shall not be liable for any loss or damage to person or
property sustained ,by Lessee, or other persons, which may be caused by theft or any act of
neglect of Lessee or occupant of the building, or of any other person, or by any other cause,
unless caused by th.e negligence of Lessor or its officers, licensees, agents, employees, guests,'
invitees or visitors.
10. LIABILITY INSURANCE; HAZARD INSURANCE.
(a) , Liability Insurance. Lessee, at its own expense, shall provide and keep
in force comprehensive general liability insurance in the amount of not less than One Million
Dollars ($1,000,000.00) per occurrence for bodily injury and property damage. Lessee shall
furnish Lessor with a certificate of such policy within thirty (30) days of the Commencement
Date of this Lease ~and whenever required shall satisfy Lessor that such policy is in full force and
effect. Such policy shall name Lessor as an additional insured and shall be primary and
noncontributing with any insurance carried by Lessor. The policy shall further provide that it
shall not be canceled without twenty (20) days prior written notice to Lessor.
(b) I Hazard Insurance. Throughout the term of this Lease, Lessor shall
procure and maintain fire, hazard and extended coverage insurance on the Improvements.
Should the property become uninhabitable due to loss or become uninhabitable for any other
reason the City shall have the option of terminating this lease.
11. PERSONAL PROPERTY. Where furnished by or at the expense of Lessee, all
movable property, :furniture, furnishings and trade fixtures, other than those affixed to the
Premises so that they cannot be removed without material damage, shall remain the property of
and be removable by Lessee, and in case of damage by reason of such removal, Lessee shall
restore the Premises, Building or common areas to good order and condition. Lessee shall payor
cause to be paid before delinquency any and all taxes levied or assessed and which become
payable during the; term hereof upon all Lessee's Improvements, equipment, furniture, fixtures,
and other personal. property located in the Premises. Lessee shall be responsible for all personal
property insurance coverage during the term of this Lease.
12. EN:rRY BY LESSOR. At any and all reasonable times during regular business
hours, upon one (1) day's prior notice to Lessee, Lessor reserves and shall have the right to enter
4
Conference Center Plaza
the Premises to inspect the same a reasonable number of times, to submit the Premises to
prospective purchasers or Lessees, to repair the Premises and any p0l1ion of the Building that
Lessor may deem necessary or desirable, without abatement of Rent, and may for the purpose
erect scaffolding and other necessary structures where reasonably required by the character of the
work to be performed, always providing that the entrance to the Premises shall not be blocked
thereby and further providing that the business of Lessee shall not be interfered with
unreasonably. Lessee hereby waives any claim for damages or for any injury or inconvenience to
or interference with Lessee's business or any loss of occupancy or quiet e~oyment of the
Premises, and any other loss occasioned thereby, if Lessor shall have taken every reasonable
measure to avoid any such injury, inconvenience or interference. Lessor shall have the right to
use any and all means which Lessor may deem proper to open any doors or otherwise obtain
access to the Premises in an emergency, without liability to Lessee except for any failure to
exercise due care for Lessee's property, and any entry to the Premises obtained by Lessor by any
of said means or otherwise shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into or a detainer of the Premises or an eviction of Lessee from the
Premises or any portion thereof.
13. ASSIGNMENT AND SUBLETTING.
(a) City Consent Required. Lessee shall not either voluntarily or by
operation of law assign, transfer, mortgage, pledge hypothecate, or encumber this Lease or any
interest therein and shall not sublet the Premises or any part thereof or any right or privilege
appurtenance thereto or allow any person (the employees, agents, servants, and invitees of Lessee
excepted) to occupy or use the Premises or any portion thereof, without the prior written consent
of Lessor, which consent by Lessor shall not be unreasonably withheld. Any such assignment or
subletting without compliance with the terms of this paragraph shall be void and shall, at the
option of Lessor, constitute a default under the terms of this Lease. Consent to one assignment,
subletting, occupation, or use by any other person shall not be deemed to be consent to any
subsequent assignment, subletting, occupation, or use by another person. Consent to any such
assignment or subletting shall in no way relieve Lessee of any liability under this Lease. Lessor
may assign the Rent herein provided to any person, partnership, corporation, or bank, and Lessee
agrees when notified in writing by the assignee of such assignment to make the Rent paYments to
assignee under the terms of said assignment.
(b) Rent Payments Following Assignment. The acceptance by the City of the
payment of rent following an assignment or other transfer shall not constitute consent to any
assignment or transfer.
14. LESSEE'S DEF AUL T. The occurrence of anyone or more of the following
events shall constitute a default and breach of this Lease by Lessee.
(a) Abandonment. Lessee vacates or abandons the Premises;
(b) Failure to Pay Lease Payment. Lessee fails to make any payment of the
5
Conference Center Plaza
Lease Payment or any other payment required to be made by Lessee hereunder;
(c) Failure to Observe Other Covenants. Lessee fails to observe or perform
any of the covenants, conditions, or provisions of this Lease to be observed or performed by
Lessee where such failure shall continue for a period of thirty (30) days after written notice
thereof by Lessor to Lessee; provided, however, that if the nature of Lessee's default is such that
more than thirty (30) days are reasonably required for such cure, then Lessee shall not be deemed
to be in defalilt if Lessee commences such cure within said thirty (30) days and thereafter,
diligently prosecutes such cure to completion.
15. REMEDIES ON DEFAULT.
(a) Termination. In the event Lessee fails to cure such default, Lessor may,
at any time thereafter, terminate this Lease by written notice to Lessee. Lessor may also seek any
other remedy provided by law.
(b) Removal of Personal Property. In the event of a retaking of possession
of the Premises by Lessor, Lessee shall remove all personal property located thereon and upon
failure to do so upon demand of Lessor, Lessor may remove and store the same in any place
selected by Lessor, including but not limited to a public warehouse, at the expense and risk of
Lessee. If Lessee shall fail to pay the cost of storing any such property after it has been stored for
a period of thirty (30) days or more, Lessor may sell any or all of such property at a public or
private sale and shall apply the proceeds of such sale first to the cost of such sale, secondly to the
payment of the charges for storage, if any, and thirdly to the payment of any other sums of money
which may be due from Le~see to Lessor under the terms of this Lease, and the balance, if any, to
Lessee. Lessee hereby waives all claims for damages that may be caused by Lessor's lawfully
reentering and taking possession of the Premises or lawfully removing and storing the property of
Lessee as herein provided and will save Lessor harmless from loss or damages occasioned by
Lessor thereby, whether such lawful reentry shall be considered or construed to be a forcible
entry.
(c) Remedies Cumulative. The remedies hereinafter described shall be
cumulative and Lessor shall be entitled to pursue any other remedy now or hereafter available to
Lessor under the law or judicial decisions of the State of Washington.
16. LESSOR'S DEFAULT. Lessor is in default if Lessor fails to observe or perform
any of the cov'enants, conditions, or provisions of this Lease to be observed or performed by
Lessor, where such failure shall continue for a period of thirty (30) days after written notice
thereof by Lessee to Lessor; provided, however, that ifthe nature of Lessor's default is such that
rnore than thirty (30) days are reasonably required for such cure, then Lessor shall not be deemed
to be in default if Lessor commences sU,ch cure within said thirty (30) days and therea~er,
diligently prosecutes such cure to completion. In the event Lessor fails to cure such default,
Lessee may, at any time thereafter, terminate this Lease by written notice to Lessor. Lessee may
also seek any other remedy provided by law.
6
Conference Center Plaza
17. EMINENT DOMAIN. If the whole of the Premises (or the whole or part of the
Building or Improvements) shall be acquired or condemned by eminent domain for any public or
quasi -public use, or if a part of the Premises is so taken so that the Premises are rendered
unsuitable for the business of Lessee, then the term of this Lease shall terminate as of the date
title or possession shall be transferred in such proceeding, whichever shall occur first. In the
event of a partial taking or condemnation which is not extensive enough to render the Premises
unsuitable for the business of Lessee, then Lessor shall restore the Premises to a condition
comparable to its condition immediately prior to such taking less the portion lost in the taking,
and this Lease shall continue in full force and efIect provided, however, that the monthly Rent
shall abate in the same ratio that the portion of the Premises so taken bears to the whole of the
Premises.. Lessor shall have the right to receive the compensation of damages awarded upon
either such total or partial taking and Lessee shall have no claim thereto; provided that Lessee
may independently pursue an award or compensation to Lessee for the taking of Lessee's
personal property or fixtures or for the interruption of or damage to Lessee's business and for any
other interest of Lessee.
18. HAZARDOUS SUBSTANCES. Lessee shall not generate, release, spill, store,
deposit, transport, or dispose of (collectively "Release") any hazardous substances, sewage,
petroleum products, hydrocarbons, radioactive substances, medicinal, bacteriological, or disease-
producing substances, hazardous materials, toxic substances or any pollutants or substances
defined as hazardous or toxic in accordance with applicable federal, state, and local laws and
regulations ("Hazardous Substances") in, on or about the Premises. Lessee shall indemnify,
defend and hold Lessor harmless from any and all claims, liabilities, losses, damages, cleanup
costs,response costs, and expenses (including reasonable attorneys' fees) arising out of or in any
way related to the Release by Lessee, or any of its agents, representatives, or employees, or the
presence of such Hazardous Substances in, on or about the Premises occurring at any time after
the Commencement Date and arising out of the activities of Lessee, or any of its agents,
representatives or employees. The provisions of this paragraph shall survive termination or
expiration of this Lease,.
19. GENERAL PROVISIONS. Lessor and Lessee agree to the following general
proVISIOns:
(a) Waiver. No waiver of default by either party of any of the terms,
covenants and conditions hereof to be performed, kept and observed by the other party shall be
construed as, or operate as, a waiver of any subsequent default of any of the terms, covenants and
conditions herein contained, to be performed, kept and observed by the other party. The
subsequent acceptance of Rent hereunder by Lessor shall not be deemed to be a waiver of any
preceding default by Lessee of any term, covenant, or condition of this Lease other than the
failure of Lessee to pay the particular rental so accepted, regardless of Lessor',s knowledge of
such preceding default at the time of the acceptance of such Rent.
(b) Time. Time is of the essence of this Lease and each and all of its
7
Conference Center Plaza
provisions in \vhich performance is a factor.
(c) Paragraph Headings. The paragraph or section headings of this Lease
are not a part of this Lease and shall have no effect upon the construction or interpretation of any
part hereof.
(d) Successors and Assigns. The covenants and conditions herein contained,
subject to the provisions as to assignment, apply to bind the heirs, successors, executors,
administrators, and assigns of the parties hereto.
(e) Recordation. Neither Lessor nor Lessee shall record this Lease, but a
short form memorandum hereof may be recorded at the request of Lessor.
(f) Quiet Possession. Upon Lessee paying the Rent reserved hereunder and
performing all of the covenants, conditions, and provisions on Lessee's part to be observed and
performed hereunder, Lessee shall have quiet possession of the Premises for the entire term
hereof, subject to all the provisions of this Lease. The Premises are leased subject to any and all
existing encumbrances, conditions, rights, covenants, easements, restrictions, rights-of-way, and
any matters of record, applicable zoning and building laws, and such matters as may be disclosed
by inspection or survey.
(g) Prior Agreements. This Lease contains all of the agreements of the
parties hereto with respect to any matter covered or mentioned in this Lease and no prior
agreements or understandings pertaining to any such matters shall be effective for any purpose.
No provision of this Lease may be amended or added to except by agreement in writing signed by
the parties hereto or their respective successors in interest. This Lease shall not be effective or
binding upon any party until fully executed by both parties hereto.
(h) Inability to Perform. The time period within which any party is to fulfill
an obligation of such the party under this Lease shall be extended by such time period that any
party is unable to fulfill any of its obligat~ons hereunder or is delayed in doing so, if such
inability or delay is caused by reason of strike, labor troubles, acts of God, or any other cause
beyond the reasonable control of such party.
(i) Severability. Any provisions of this Lease which shall prove to be
invalid, void, or illegal shall in no way affect, impair, or invalidate any other provision hereof
and such other provision shall remain in full force and effect.
(j) Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall whenever possible be cumulative with all other remedies at law or in equity.
(k) Choice of Law. This Lease shall be constru~d under all of the applicable
laws, statutes, ordinances, rules and regulations of the United States, the State of Washington,
County of Kitsap, and the City of Bremerton. In the case of a dispute between the parties, venue
8
Conference Center Plaza
over such dispute shall be with the Superior Court of Kitsap County, Washington.
(I) Execution. This Lease may be executed in several counterparts, each of
which shall be deemed an original instrument.
(m) Notices. All notices to be given hereunder shall be in writing and shall be
personally delivered and receipt acknowledged, sent by United States certified mail, return
receipt requested, sent by facsimile, with original delivered within three (3) days, or sent by
overnight delivery through public or private service, delivery charge prepaid, and addressed to
the party at the respective mailing address as herein set forth.
To Lessor:
Mayor
City of Bremerton
345 6th Street, Suite 600
Bremerton, W A 98337
To Lessee:
Scott Alprin
Emerald Bay Yachts, LLC
PO Box 2477
Gig Harbor, W A 98335
It is understood that each party may change the address to which notice may be sent by giving a
written notice of such change to the other party hereto in the manner herein provided.
(n) Lessee's Corporate Authority. Lessee is a Washington corporation, and
each individual executing this Lease on behalf of said corporation represents and warrants that he
or she is duly authorized to execute and deliver this Lease on behalf of said corporation, in
accordance with a duly adopted resolution of the board of directors of said corporation or in
accordance with the bylaws of said corporation, and that this Lease is binding upon said
corporation in accordance with its terms. Lessee further represents and warrants that it is fully
registered and qualified to do business in the State of Washington.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year
first above written.
LESSOR
LESSEE
CITY OF BREMERTON
EMERALD BAY YACHTS, LLC
By: Cecil McConnell
Its: Mayor Pro-Tern, City of Bremerton
By: Scott Alprin
Its: Managing Member
9
Conference Center Plaza
V"tV/d .Ii1/lIi1J i1:JlIi1.1iJfiIOJ
01
S'i1;?VJ /Xi1N uo si1!.m/oN
STATE OF WASHINGTON)
) ss.
COUNTY OF KlTSAP )
I certify that I know or have satisfactory evidence that Cecil McConnell the person who appeared
before me, and said person acknowledged that he signed this instrument, on oath stated that he
was authorized to execute the instrument, and acknowledged it as the Mayor of the City of
Bremerton to be the free and voluntary act of such City for the uses and purposes mentioned in
the instrument.
DATED:
NOTARY PUBLIC in and for the State of
Washington, residing at
My commission expires / / .
11
Conference Center Plaza
STArE OF WASHINGTON)
) ss.
C01JNTY OF KITSAP )
I certify that I know or have satisfactory evidence that Scott Alprin is the person who
appeared before me, and said person acknowledged that he signed this instrument, on oath stated
that he was authorized to execute the instrument, and acknowledged it as the
of Emerald Bay Yachts, LLC to be the free and voluntary act of such
Corporation for the uses and purposes mentioned in the instrument.
DA TED:
\
NOTARY PUBLIC in and for the State of
Washington, residing at
My commission expires I I .
12
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EMERALD BA Y YACHTS, LLC
LEASE PREMISES
EXHlBrT A
AGENDA BILL
CITY OF BREMER TON
CITY COUNCIL
68
DA TE SUBMITTED:
...m....................................................................................
SUBJECT: HUD-BEDI Grant Acceptance
Committee Meeting Date: August 26, 2009
COUNCIL MEETING Date: September 2, 2009
Department: PW&U, Engineering
Presenter: Tom Knuckey / Phil
Williams
Phone: 473-2376/473-5315
SUMMARY: The City was verbally notified on August 19th that it will be offered a $1,750,000
Brownfields Economic Development Initiative (BEDI) grant from the Department of Housing and
Urban Development (HUD) to support construction of the Bremerton Boardwalk. A written award
letter is forthcoming. HUD indicated they will require formal acceptance of the grant by September
14, 2009. This grant for the Boardwalk is conditioned upon the City's submittal of a Section 108 loan
application for $2,800,000 within 60 days, and later acceptance of the loan. The requested action
before City Council is acceptance of a BEDI Grant and authorization to apply for a $2,800,000
Section 108 Loan.
ATTACHMENTS: 1. Council Summary.
FISCAL IMPACTS (Include Budgeted Amount): This grant and potential loan will provide partial
funding for construction of the Bremerton Boardwalk.
APPROVALS:. ~ ,
DEPARTMENT DIRECTOR: . .
CITY ATTORNEY:
FINANCE DIRECTOR:
MA YOR: ~.
COMMITTEE C~
COUNCIL PRESIDENT:
~
CONSENT AGENDA D
GENERAL BUSINESS ~
PUBLIC HEARING D
RECOMMENDED MOTION:
Move to accept a $1,750,000 Brownfields Economic Development Initiative Grant conditionally
offered to the City and authorize staff to apply for a $2,800,000 Section 108 Loan.
COUNCIL ACTION: D Approve D Deny D Table
D Continue D No Action
COUNCIL SUMMARY
BEDI GRANT ACCEPTANCE FOR
BREMERTON BOARDWALK CONSTRUCTION
Agenda Bill Summary
The City was verbally notified that we will be offered a $1,750,000 Brownfields
Economic Development Initiative (BED I} grant from the Department of Housing
and Urban Development (HUD,) a formal notification of award is forthcoming.
HUD indicated the formal offer will require the City to accept the grant by
September 14, 2009. The City's acceptance of the grant at this time allows HUD
to reserve the grant funds for the project. The HUD BEDI grant is conditioned on
the City's submittal and HUD's approval of a Section 108 loan guarantee
application for $2,800,000 within 60 days, and the City's acceptance of the loan.
Once the loan has been executed, the City will be able to execute the BEDI
Grant. Both the loan and grant provide construction funding for the Bremerton
Boardwalk.
Fiscal Summary
BEDI Grant Funds = $1,750,000
Section 108 Loan Funds = $2,800,000
Specific Terms for the Section 108 Loan Guarantee will be provided when the
loan offer is available. General Terms are provided below:
Loan Fee: None
Rate: Section 108 is a loan guarantee program; rates can either be variable
or a fixed bond rate. Variable rates are L1BOR plus 0.2% (currently
0.61 %). Bond rates are fixed upon sale to private investors.
Term: Maximum repayment period is 20-years. The city may cancel the
bonds earlier than full maturity by posting an amount equal to what
will be required for all remaining payments.
Security: The City will pledge its current and future CDBG funds to guarantee
the loan.
~\~ENT OJ:>'
~9" ~ "1:
:1'* ~~I~II~I~ *\
t" 1111 i
~6"JjN DE\I'f-\.o~
u.s. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, DC 20410-7000
.
ASSISTANT SECRETARY FOR
COMMUNITY PLANNING AND DEVELOPMENT
AUG 2 4 2009
RECEIVED
Mr. Thomas Knuckey
Managing Engineer
City ofBremerton
100 Oyster Bay Avenue N
Bremerton, W A 98312
AUG 2 6 2Q09
ENGINEERING DIVISION
Dear Mr. Knuckey:
Congratulations! I am pleased to inform you that the City of Bremerton has been awarded a
Brownfields Economic Development Initiative (BED I) grant in the amount of$I,750,000 based on
your application submitted pursuant to the FY 2009 BEDI Notification of Funding Availability
(NOF A).
Today's brownfields were once vital sources of economic growth for communities, and
when cleaned up and redeveloped, can again be thriving centers of economic activity. The U.S.
Department of Housing and Urban Development (HUD) is pleased to assist Bremerton in working
to transform these abandoned sites into new developments that will create jobs, increase tax
revenues and help revitalize communities.
.
This BEDI grant award is conditioned upon the submission and HUD approval of a
complete Section 108 Loan Guarantee application for not less than $2,800,000 followed by the
execution and funding of a Section 108 Note and Contract for Loan Guarantee Assistance for the
same project. The enclosed Instructions and Conditions for Award provide further details on the
Section 108 application as well as about the Section 108 Note and Contract for Loan Guarantee
Assistance.
If you accept the conditions of the BEDI grant award as stated herein, in the enclosed
Instructions and Conditions for Award, and in the 2009 BEDI NOF A, please acknowledge your
acceptance by signing in the space provided below on the page titled "2009 BEDI GRANT
AWARD OBLIGATION". Please return this letter and your original signature of acceptance only
- the other enclosures are for your records--with your signature of acceptance on or before
September 14,2009 to:
Robert Duncan
Associate Deputy Assistant Secretary for Economic Development
Department of Housing and Urban Development
451 7th Street S.W., Room 7136
Washington, DC 20410
.
In order for HUD to obligate funds for the approved BEDI project, this office must receive
.
.
.
your executed acceptance below no later than September 14,2009. IfHUD fails to receive the
properly executed document by September 14,2009, the funds are subject to cancellation.
The executed acceptance, when countersigned on behalf of the Department, shall constitute an
agreement between the City ofBremerton and HOD obligating BEDI funds for the project
described in the approved 2009 BEDI application submitted by Bremerton and assigned Grant
Number B-09-BD-53-8002. A more detailed BEDI Grant Agreement will be sent to you for
execution, along with a Section 108 Note and Contract for Loan Guarantee Assistance, after
:lpproval of the Section 108 Loan Guarantee application. A draft form of that subsequent Grant
Agreement is also enclosed for your information.
If you or members of your staff have any questions concerning this matter, please contact
]\11". Duncan at (202) 708-3773.
I look forward to working with you in the redevelopment of Brown fields and in the return of
1hese sites to productive use for the community.
Sincerely,
~~n
Mercedes Marquez , /
Assistant secret"L'_
'--~
Enclosures
.
.
.
2009 BEDI GRANT AWARD OBLIGATION
B-09-BD-53-8002
Accepted and Agreed by the City of Bremerton:
By:
Signature
Title
Date
Accepted by U.S. Department of Housing and Urban Development:
By:
Signature
Title
Date
.
ENCLOSURE (A)
RECIPIENT: City of Bremerton
laEDI GRANT NUMBER: B-09-BD-53-8002
BEDI GRANT AMOUNT: $1,750,000
INSTRUCTIONS AND CONDITIONS FOR AWARD
Pursuant to the authorizing legislation and the 2009 BEDI Notice of Funding Availability
(NOFA), BEDI grants are made only in support of new, related loans guaranteed under section
108 of the Housing and Community Development Act of 1974. This approved BEDI Grant is
conditioned upon receipt by Bremerton, (the Recipient) of the proceeds of a Section 108 loan
guarantee, or additional guarantee, for the approved BEDI Project in the minimum amount of
$2,800,000 (hereafter referred to as the Related Section 108 Guarantee). (The Recipient may
apply for a loan guarantee in a larger amount than this minimum.)
The terms and conditions of this BEDI grant will be substantially as set forth in the
attached form of grant agreement (the "Agreement"), a completed copy of which will be sent to
the Recipient for execution together with the promissory Note and Contract for Loan Guarantee
Assistance for the Related Section 108 Guarantee after the Related Section 108 Loan Guarantee
application is approved.
. THE PARAGRAPHS CHECKED BY HOO BELOW APPLY TO THIS GRANT AS OF THE
DATE AT THE TOP OF THE ATTACHED LETTER (the Transmittal Date):
.
a. The Recipient's complete application for the Related Section 108 Guarantee has been
approved by HOO (HOO- 7082 commitment executed), effective on the Transmittal Date.
Please execute and return three (3) copies of the enclosed HUD-7082 for the Related
Section 108 Loan Guarantee together with your acceptance of this letter.
b. The Recipient's complete application for the Related Section 108 Guarantee in the above
amount or more has been received by HUD as of April 28, 2009, but has not been
approved as of August 24,2009.
./ c. The Recipient's complete Section 108 guarantee application has not been received by
HUD as of August 24, 2009. If this Paragraph c. applies, HUD's obligations under this
Agreement are conditioned on the Recipient's submitting a complete] 08 application by
October 26, 2009. As of now, approximately $90 million in Section] 08 guarantee
authority remains available to all] 08 applicants on a first-come-first-served basis. The
Section 108 application should be submitted to the HUD Field Office applicable to the
Recipient.
d. The Recipient's BEDI Grant application was not approved in the full amount requested.
For example, all activities submitted may not have been approved, the amount of funds
requested for some or all activities may have been reduced, or there may have been
.
insufficient funds available to approve the entire application amount. Therefore, your
BEDI Grant application must be amended so that it is consistent with the terms of BUD's
approval. Please contact David Kaminsky in the Office of Economic Development at
(202) 708-3484 extension 4612 upon receipt of this letter to determine the required
amendments. If this Paragraph d. applies, HUD's obligations under this Agreement are
conditioned on the Recipient's submitting to HUD the applicable revised pages of your
BED! application containing the required modifications on or before September 14,
2009.
e
If paragraph a. above applies, the Related Section 108 Guarantee amount above is the
amount of the final Section 108 Guarantee approved in relation to the Recipient's BED!
grant. If paragraph d. above is not also checked, your BED! Grant application was
approved as submitted. Since both your Section 108 loan guarantee and BED! grant
applications are approved, no further application submissions are required. You should
contact BUD to request preparation of the Note and Contract for Loan Guarantee
Assistance for the Related Section 108 Guarantee and the completed BEDI Grant
Agreement at least six weeks, if possible, before you will need the funds to be provided
under those documents. You will also be required to submit.additional information to
HUD as needed with respect to compliance with the conditions of the HUD-7082 for the
Related Section 108 Guarantee. Furthermore, as described in the attached form of Grant
Agreement, funds may not actually be withdrawn under this BEDI Grant until after
HUD's execution of the Contract for Loan Guarantee Assistance and Guarantee for the
related Section 108 Guarantee.
If paragraph b. or c. above applies, HUD may request additional information as needed
in connection with its review of the Recipient's Section 108 application and/or may
REDUCE the amount of this BED! Grant, or the amount of the Related Section 108
Guarantee above, or both, if HUD determines in connection with HUD's review of the
Section 108 application or amendatory application under 24 CFR 570, Subpart M, that
all or a portion of the approved BED! Grant or the Related Section 108 Guarantee
amount above is not justified. If this is done, the amount of the finally approved Section
108 guarantee will be the amount of the Section 108 Guarantee referred to in the BEDI
Grant Agreement when received by the Recipient.
All additional submissions required under paragraphs c. and d. above must be
postmarked or hand-delivered to this office within sixty (60) days from the date ofthis letter
unless an extension is requested by you and approved by HUD pursuant to Section
IV.B.l(c)(2) or (3) ofthe NOFA. Pursuant to Section VLB.1(b) of the NOFA, HUD is
authorized to de-obligate this BEDI award to the extent the related Section 108 application, in
whatever form is applicable, is not approved by HUD with ten (10) months of the Transmittal
Date.
You may not make any changes in your BEDI Grant application other than those required
by the terms of this HUD approval letter, because this could affect the competitive basis on
which your grant was awarded. In rating and ranking your BEDI Grant application, HUD has
already assumed that any application revisions required by this letter will be made. Failure to
.
2
e
.
.
submit the required information within 60 days may result in de-obligation of the approved
funds.
SPECIAL NOTE FOR APPLICANTS WHO APPLIED BASED ON SECTION IV.B.1(c)(4) OF
THE NOFA. If you applied for a BEDI grant on the basis of requesting an additional amount
iOf Section 108 guarantee assistance for a proj ect assisted under a previously-approved Section
108 application, you must comply with the requirements for a complete Section 108 application
as described in 24 CFR 570.704 for such additional section 108 funding. To the extent that
parts of the previous application are applicable to the new application, copies thereof can be
resubmitted as part of the new application.
SPECIAL NOTE TO ALL APPLICANTS ON PERFORMANCE REPORTING. Pursuant to
Section VI.C of the NOFA, BEDI grant funds are included within the definition of Community
Development Block Grant (CDBG) funds at 24 CFR 570.3. Accordingly, grantees must report
specifically on the use of BED I grant funds and Section 108 loan guarantee proceeds in the
Consolidated Annual Performance and Evaluation Report (CAPER) required of CDBG grantees
under 24 CFR 570.507 or
24 CFR.570.491. For each reporting period, as part of the required report to HUD, grant
recipients must include a completed Logic Model (form HUD 96010), which identifies output
and outcome achievements.
If you have questions on any aspect of these instructions or conditions, please contact
David Kaminsky in the Office of Economic Development at 202.402.4612, as noted above.
3
.
.
e
ENCLOSURE (B)
Grant No. B- -BD-
BROWNFIELDS ECONOMIC DEVELOPMENT (BEDI) GRANT AGREEMENT
U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
This Agreement is made and entered into by and
SECRETARY OF HOUSING AND URBAN DEVELOPMENT, acting
the Assistant Secretary for Community Planning and
("HUD"), and the [insert City or County of
(the "Recipient").
between THE
by and through
Development,
I State]
1. Background; Purpose. This Agreement is authorized by
section 108(q) of the Housing and Community Development Act of
1974, as amended by section 232(a) of the Multifamily Housing
Property Disposition Reform Act of 1994, codified at 42 U.S.C.
5308 (q) (collectively, "the Act"). Pursuant to the Act, [for
1998 Grants insert lion April 30, 1998, at 63 FR 23889," for 1999
Grants insert: "on February 26, 1999, at 64 FR 9799," for 2000
Grants insert: "on February 24, 2000, at 65 FR 9813," for 2001
Grants insert: "on February 26, 2001, at 66 FR 12033,11 for 2002
Grants insert: "on March 26, 2002, at 67 FR 14135," for 2003
Grants insert: "on April 25, 2003, at 68 FR 21002," for 2004
Grants insert: "on May 14, 2004, at 69 FR 27331/1, for 2005
Grants insert: "on March 21, 2005, at 70 FR 13951, and on July
26, 2005, at 70 FR 43171, for 2006
Grants insert: "on January 20, 2006, at 71 FR 3382 and on March
8, 2006, at 71 FR 11870," and for 2007
Grants insert: "on January 18, 2007 at 72 FR 2396 and on
September 24, 2007 at 72 FR 54324 and on November 2, 2007 at 72
FR 62252, HUD published a Notice of Funding Availability and
Program Guidelines for th~ Brownfields Economic Development
Initiative (the "NOFA"), which set forth the terms and conditions
under which units of general local government could apply for and
receive grants under section 108(q) of the Act ("BEDI Grants")
and related section 108 loan guarantees from HUD for Brownfields
Economic Development Projects ("BEDI Projects"), as defined in
the NOFA. Pursuant to the NOFA, the Recipient has applied for,
and HUD has approved, a BEDI Grant for the Recipient. The
purpose of this Agreement is to set forth the terms and
conditions under which HUD will provide BEDI Grant funds to the
Recipient in connection with the Approved BEDI Projects described
in the Recipient's Approved Application, as further defined
herein. The terms and conditions of the related Section 108
Guarantee (as defined in paragraph 3 hereof) are set forth in the
Recipient's separate Section 108 loan guarantee application,
Funding Approval, and Contract for Loan Guarantee Assistance.
2. Approved Grant Amount, Projects, and Uses of Funds.
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a. By execution of this Agreement on behalf of the Secretary
in the space provided below, HUD agrees, subject to the terms of
this Agreement, to provide BEDI Grant funds in the amount of
[insert dollar amount of BEDI award] (IIBEDI Grant").
b. This grant is approved for the following Approved BEDI
Projects described in the Approved Application: [insert name of
:Project] ("Approved projectll) .
c. The grant funds shall be used in connection with the
.Approved Project for the following specifically Approved Uses
(IIApproved Uses"): [Note: if only one approved activity,
eliminate the (1) and (2); if there are additional approved
activities include additional provisions, (3), (4), etc.]
(1) [insert description of use, including what entity
will use the funds, if other than the Recipient],
pursuant to 24 CFR 57Q.703( ) [insert appropriate
citation]; and
(2) [insert description of use, as above], pursuant to
24 CFR 570.703( ) [insert appropriate citation].
.
3. Relationship to Section 108 Loan Guarantee Application.
This approved BEDI Grant is conditioned upon the Recipient's
receipt of Section 108 guaranteed loan proceeds for the Approved
Project in an amount not less than [insert dollar amount of
Section 108 guaranteed loan required as a condition of the BEDI
award] (the IISection 108 Guaranteell) .
[Include the following Uratio" provision if needed, typically
this would be when BED I funds are being used other than for
interest payments on 108 loan, issuance costs, or debt service
reserve.]
Section 108 Guarantee proceeds shall be advanced and disbursed to
carry out eligible activities under the Section 108 Contract for
Loan Guarantee Assistance executed concurrently herewith in a
ratio not less than [insert dollar amount of 108 funds required
for each dollar of BEDI] of such proceeds for each $1.00 of BEDI
Grant funds disbursed for Approved Uses (the IIRatioll).
.
4. Regulations; Approved Application. This Agreement will
be governed and controlled by the following in effect as of the
date of notification to the Recipient of award of this grant: the
Act, the NOFA, and HUD regulations codified at 24 CFR Part 570 or
incorporated therein (provisions for use of CDBG funds, to the
extent applicable) (hereafter collectively referred to as the
"Regulations II). The Recipient's application submissions,
including the certifications and assurances and any documentation
required to meet any grant award conditions, and including any
amendments made in accordance with this Agreement, are hereby
incorporated in this Agreement as finally approved by HUD (herein
referred to as the IIApproved Applicationll). Unless the context
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.
3
otherwise requires, a reference to "this Agreement" herein shall
be deemed to include the Act, the Regulations, and the Approved
Application.
5. Performance Agreement of Recipient. By execution of
t:his Agreement on its behalf in the space provided below, the
Recipient agrees to carry out the Approved Project on a timely
basis and otherwise in compliance with this Agreement (including
1:he Act, the NOFA, the Regulations, and the Approved Application,
except as otherwise specifically provided in this Agreement) .
The Recipient agrees to assure, and to accept responsibility for,
such compliance by any other entities to which it makes grant
funds available for, or which it otherwise allows to participate
in, the Approved Project covered by this Agreement.
6. Release, Deposit, and Timing of Expenditure of Grant
yunds and Program Income.
a. The Recipient agrees to comply with environmental review
procedures under 24 CFR 570.200(a) (4) and 24 CFR Part 58 in order
.to obtain releases of grant funds under this Agreement. In
particular, the Recipient must not commit local or Federal funds
for the approved activities prior to obtaining HUD approval of
its request for release of funds, except as provided in 24 CFR
58.22(c), 58.34 or 58.35(b).
b. Notwithstanding any other provision of the Regulations or
this Agreement, the Recipient may not withdraw grant funds from
the U.S. Treasury on account of the BEDI Grant under this
.Agreement until after execution on behalf of HUD of the Guarantee
and Contract for Loan Guarantee Assistance for the applicable
Approved Project described in paragraph 2 of this Agreement.
c. This BEDI Grant must be entirely withdrawn and expended
for Approved Uses for the applicable Approved Project on or
before [Insert date appropriate for completion of the approved
activities - usually two years for BEDI, depending on the nature
of the approved activities. For FY 2002 and later BEDI grants, do
not exceed latest date permissible under 31 USC 1552(a)(contact
OGC)l.
d. All program income from this BEDI Grant is deemed to be
program income of the Approved Project, which is jointly financed
by the Section 108 Guarantee. The Recipient agrees that all such
program income constitutes security for the repayment of the
Section 108 Guarantee, shall be initially deposited in, the Loan
Repayment Account established by the Recipient or its designated
public agency under paragraph 6 of the Contract(s) for Loan
Guarantee Assistance for the Section 108 Guarantee, and shall be
disbursed for the purposes and within the time period specified
in said paragraph 6 of such Contract. Upon full ~nd complete
repayment of the Section 108 Guarantee, all such program income
shall be used in accordance with 24 CFR 570.504.
,.
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7. Pre-Award Costs. Notwithstanding any other provision of
this Agreement or the Regulations, "the effective date of the
<3Tant agreement" for this BEDI Grant for purposes of 24 CFR
'570.200(h) is the date of award of this BEDI Grant by HUD, which
was [insert date of BEDI award]. "Pre-award costs" may be
incurred by the Recipient prior to such date and reimbursed with
BEDI Grant funds hereunder, to the extent such costs comply with
:24 CFR 570.200(h) and this Agreement. The BEDI Grant funds
provided hereunder may be used to pay for costs incurred on or
after such date, provided such costs otherwise comply with this
;~greement. However, the timing of use and the availability of
the BEDI Grant funds to actually pay for such costs are subject
to paragraph 6 of this Agreement.
8. Amendment; Record-Keeping.
a. This Agreement or the Approved Application may be amended
only with the prior written approval of HUD. To request approval
of an amendment, the Recipient shall attach the proposed
revisions to the applicable pages of this Agreement or the
.~pproved Application to a cover letter addressed as required
below (see paragraph 11) for notices to HUD and signed by the
Recipient's official representative for this grant. Ih
considering proposed amendments to this Agreement or the Approved
Application,HUD shall review, among other things, whether the
amendment would have affected the ranking of the application in
the year it was approved sufficiently to have resulted in the
application not ranking high enough for funding, and whetoer the
amendment is otherwise consistent with the Act, the Regulations,
and the NOFA. Any increase in the amount of the approved BEDI
Grant represents a new grant obligation by HUD and must be
documented by a formal amendment to this Agreement, or a new BEDI
Grant Agreement, executed on behalf of the parties by officials
with the authority to execute the original Agreement.
b. The Recipient shall at all times maintain an up-to-date
copy of its Approved Application, including all amendments
approved in writing by HUD, and all drawdowns, deposits, and
expenditures of grant funds and program income under this
Agreement and any other records required by 24 CFR 570.506, in
its files and available for audit or inspection by duly
authorized representatives of HUD or the Comptroller General of
the United States.
9. Default; Remedies. A default under this Agreement shall
consist of any use of grant funds other than as authorized by
this Agreement, any other noncompliance with this Agreement
deemed material by HUD, or any misrepresentation or omission in
the application submissions which, if known to HUD, would have
resulted in this grant not being provided. If HUD determines
that the Recipient is in default, HUD will give the Recipient
written notice of this determination and the corrective or
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remedial actions proposed by HUD to cure the default or mitigate
its effects,. to the extent possible, and to prevent a
continuation or recurrence of the default (the "initial notice of
default") ~ Further description of the processes of audit,
performance monitoring, and the corrective and remedial actions
available to HUD which apply to grants under the Act, including
this BEDI Grant, is provided in 24 CFR 570, particularly
SubpartO. No delay or omission by HUD in exercising any right
or remedy under this Agreement shall impair HUD's ability to
exercise such right or remedy or constitute a waiver of, or
acquiescence in, any Recipient default.
10. Close-out. Except as may be otherwise specifically
provided, close-out of this grant shall be subject to 24 CFR
~370.509, or such close-out instructions as may hereafter be
issued by HUD specifically for BEDI Grants.
11. General. HUD notifications to the Recipient under this
j~greement may be addressed to the Recipient's address as stated
in the Approved Application, unless the Recipient otherwise
notifies HUD in writing. Recipient notifications to HUD shall be
to the:
.
u.s. Department of Housing and Urban Development
Attention, Director, Financial Management Division,
451 Seventh Street, SW, Room 7180
Washington, DC 20410,
unless the Recipient is otherwise notified in writing by HUD.
The Recipient's rights under this Agreement may not be
assigned without the prior written approval of HUD. This
.Agreement constitutes the entire Agreement between the Recipient
and HUD, and it may not be amended except in writing and executed
by authorized officials of both HUD and the Recipient, as
provided in paragraph 8.
12. Binding Agreement.
respect to HUD in accordance
in the space provided below,
the Recipient.
This Agreement is binding with
with its terms upon execution by HUD
subject to execution on behalf of
13. Special Condition(s).
There are no special conditions. [or list special
condition(s)j
.
[Rest of Page Intentionally Left Blank)
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THE UNDERSIGNED, as authorized officials on behalf of
the Recipient or the Secretary, have executed this BEDI Grant
Agreement, which shall be effective as of the date of execution
hereof on behalf of the Secretary.
RECIPIENT
BY:
(Signature)
(Name)
(Ti tIe)
(Date)
Employer Identification Number
(EIN) of Recipient
SECRETARY OF HOUSING &~ URB&~
DEVELOPMENT
BY:
(Signature)
(Name)
{Title}
(Date)
Page 1 of3
Lori Smith
roB-
From: Lori Smith on behalf of City Council
Sent: Wednesday, September 02,200912:42 PM
To: City Council
Subject: FW: Questions (Runyon) with Responses (Knuckey) - BEDI Grant & Loan
Attachments: ECONW Final Report 11-14-07.pdf; Section 108 Information.pdf
FYI.. .
The e-mail below along with the attachment titled USection 10Blnformation" has been printed and will
be distributed tonight during the pre-Council Briefing session... Only one copy of the attachment
titled uECONW Final Report" was printed due to its size...
From: Thomas Knuckey
Sent: Wednesday, September 02,200912:09 PM
To: Christine Grenier; Lori Smith; City Council; Andy Parks; Roger Lubovich; 'd4bremerton@yahoo.com'
Cc: Phil Williams; Mike Mecham; Bill Webb; Andrea Spencer; Marie Vila
Subject: FW: BED! grant and loan
Hello Councilman Runyon - thank you for your questions on the HUD BEDI Grant and Section 108 Loan. I've provided
answers in blue text below your questions. Please call me at 473-2376, or on my cell phone at 509-2804 if you have any
follow-up questions on this issue.
From: Roy Runyon [mailto:d4bremerton@yahoo.com]
Sent: Thursday, August 27,2009 11:18 PM
To: City Council
Subject: BED! grant and loan
I have some information requests and questions regarding the BEDI grant and loan the Council will be asked to
approve obligating the City to accept:
1. Was the grant (and loan) application vetted by the City Administrator, Finance Director and DCD Director
before the presentation was made to the Council during the last study session?
Yes. The Agenda Bill was discussed at the weekly Department Head meeting and received all typical approvals prior to
presentation to Council last Wednesday.
2. If not, why not? City council policy requires that proposals for applying for grants be approved by the mayor
BEFORE they corne to the council.
N/A
3. Though the loan interest rate is unbeatable, I'm concerned about committing our CDBG funding as collateral
for the loan. What other forms of collateral have been identified to satisfy HUDs requirement?
Unfortunately, HUD requires the pledge of CDBG funds as security for the Section 108 loan - attached is a fact sheet
which provides additional information on Section 108 financing for your information. Note that the two types of financing
available under Section 108 are "Interim Financing" and long-term bond financing. The Interim financing rate is a variable
rate, set at UBOR + 0.20%; the bond rate is set when the bond is sold. HUD indicated that the bond rate is typically equal
to the Treasury Rate.
At this time, we're only requesting permission to apply for the Section 108 loan, and intend to provide more detailed
information regarding the annual debt service of the loan when we present the loan to Council for approval. That said, if
9/2/2009
Page 2 of3
the City opted to obtain the $2.8M Section 108 loan and the interim financing rate were to remain stable at the current
0.61 %, the typical principal and interest payment amortized over 20-years would be on the order of $150,000 annually.
Finally, note that in communication with HUD (see attached e-mail) they indicated that neither the Grant, nor the Section
108 loan funds can be expended until after we've received "an environmental release from HUD." Since the proposed
funding would be used for construction only, I understand this to mean that these funds would not be available until after
permits are in-hand.
4. Related to number 3, under what circumstances might the City default on the BEDI loan and therefore
jeopordize CDBG funding or other resources?
We'd be in default if we didn't make a payment.
5. To reiterate, please make available to council copies of the Econ Northwest Study on the economic benefits
of the Boardwalk. This might give us some indication of the ability of the City to handle the debt. I'm more
interested in Boardwalk-derived direct financial benefits in the form of prospective propety values, sales tax
revenues and yes, B&O revenues.
Attached is a copy of the ECONorthwest study. Note that the study evaluated two scenarios; a "fair share" scenario
where the boardwalk would cause an initial 10% increase in tourism in Bremerton and then cause annual tourism to be
comparable to the State Average, and an "upper quintile" scenario where the boardwalk would cause an initial 20%
increase in tourism and then cause tourism to be on par with the top counties in the State. Key excerpts from the report
are included in the two tables presented below.
Table 1: Economic Impads{Fair Sbal.e Sce-Ratio} Table 2: Economic ImpACts (Top Quinllle Scenlu1o)
:~':r~:>:..i..t,..,\,";:"::':~::': 't~}:;':"~. ~/ . ,~~~.{..""j ~~"::t'J~L:\:"r.:;~,~:::~:::~:;~":::~~/<:;yJ{{:.:::,:~~>, ;;:::.y~~ii':'.:'::'!~/:l
8remertofl BJelMrtOll
Output $9,734.000 $14,925,000 Output
'Nag!l$ 53,415.000 56,236.000 Wages
Buslnell$ Income $465.000 $112.000 8usine$lncome
Jobs 159 245 Jobs
Re5l Of I<ifSap COLinty Rest of l<itS4lJ) County
Output $5,641,000 $9,365.000 Output
Wages $1,454,000 $2,112.000 Wages
BuSI~l.s Income 5327.000 :)1,699.000 8usine$$lncome
~ 87 174 Jobs
Total Kit~pCount)' TOllll KitwpCounty
OUUlut 515.,375.000 523,515.,000 Output
Wages $4,869.000 $1.4$50.000 WageS
BUSine'3S Income 51,2.91.000 51,980.000 Business Income
JobS 246 J78 Jobs
S20,6t&,OOO
S7.232.700
$984.000
337
$11:947,700
n~79.000
$1.151.000
185
S32,563.700
$10.311.700
$2.735.000
522
State and lo.taJ t;;t< revenues
5939,000
$U89,400
S3Jl44,OOO
$t,440.oo0
Slate and local tax revenues
$4Q,876.oo0
S14.341.000
$1,951.001>
611
$25,641.000
$5.783..000
$4,654.001>
418
$64.566.000
$20,445.000
$50,423.000
1.035
Note that the IMPLAN Economic model that ECONorthwest used in their analysis is a static model, which only accounts
for visitors coming to Bremerton and spending their money at existing businesses - it does not account for additional
property tax resulting from new developments, new businesses, and new households. ECONorthwest has stated that it is
therefore likely that the model results will actually under-estimate the economic benefits of the boardwalk project.
Also note that the "State and Local Tax Revenues" presented in the two tables are a combination of sales tax, property
tax, and other tax revenues collected county-wide. To be able to respond to your question more completely, I asked
ECONorthwest to provide a breakdown of the City's share of the tax revenues - they provided the following information:
Fair Share
Estimated Bremerton
From Table 1 of Reoort Share
Year Annual Cumulative Annual Cumulative
Year 1 $872,000 $872,000 $46,853 $46,853
Year 2 $939,200 $1,811,200 $50,464 $97,318
Year 3 $1,010,700 $2,821,900 $54,306 $151,624
Year 4 $1,086,600 $3,908,500 $58,384 $210,008
Year 5 $1,167,200 $5,075,700 $62,715 $272,723
Year6 $1,252,800 / $6,328,500 $67,314 $340,037
Year 7 $1,343,700 $7,672,200 $72,198 $412,235
9/212009
Page 3 of3
L:8
$1,440,200
$9,112,400
$77,383
$489,619
$489,619
Total
U Q"f1
'Doer um Ie
Estimated Bremerton
Year From Table 2 of Report Share
Annual Cumulative Annual Cumulative
Year 1 $1,744,000 $1,744,000 $93,707 $93,707
Year 2 $1,989,300 $3,733,300 $106,887 $200,594
Year 3 $2,255,000 $5,988,300 $121,163 $321,757
Year 4 $2,542,600 $8,530,900 $136,617 $458,374
Year 5 $2,853,600 $11,384,500 $153,327 $611,701
Year 6 $3,189,700 $14,574,200 $171,386 $783,087
Year 7 $3,552,600 $18,126,800 $190,885 $973,972
Year 8 $3,944,200 $22,071,000 $211,926 $1,185,897
Total $1,185,897
6. Since the Boardwalk is no longer a Wastewater project, would debt service payments be handled via the
General Fund or could we/would we establish a Special Revenue Fund for the purpose?
Debt incurred in construction of the Boardwalk Project would be a General Fund obligation.
Thanks ahead of time for your complete and thoughtful responses to my questions and information requests.
Roy
91212009
\
Page 1 of 1
Thomas Knuckey
From: Kaminsky, David [David.f<aminsky@hud.gov]
Sent: Tuesday, September 01,20097:59 AM
To: Thomas Knuckey
Cc: Phil Williams
Subject: RE: Section 108 Loan Question
Section 108 funds belong to the City. You may borrow them incrementally as needed or ciS a lump surn,
BED! funds are subject to fedHral rules reflarding draws of grants funds. You may draw BEDI funds not sooner
than three days before they are needed to meet an obligation,
You will get a BEDI grant agreement only after you have executed loan documents. You nmy draw BEDI funds
Gniy in t~eratio to 108 funds actually borrowed as per your approved buelg;t
, " ~,,.," 0'", ," ~"
,w~~~
You may not initiate trie project or reimburse with any loan or grant iunds for actiVities that take place before you
have an enviromnental release from HUD That COITles from HUD's fieid office, Check with your CDBG staff for
,~etaiis./_ ~~".
,~....>I-e
Interim facility financing is. as you know, at a variable rate and payments are pepged to a 20 year amortization
From: Thomas Knuckey [mailto:Thomas.Knuckey@ci,bremerton.wa.usl
Sent: f\<londay, August 31, 2009 7:46 PM
To: Kaminsky! David
Cc: Phil Williams
Subject: Section 108 Loan Question
Hi David - a question was raised Hlal I want to conflfm regarditl~l dlstn!)ution of Section iOn funds, Are the loan
proceeds received as reimbursement to costs? Also. can you please explain how the loan and grant proceeds
are distributed - would we receive all of the loan proceeds first onel then receive the grant funding. or would they
be r'eceived at the same time on oj percentage basis? I'm out tomorrow, so eouid you please copy Phil on your
response.
Thanks.
Tom
I) 2'?'o()')
u.s. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
SECTION 108 LOAN GUARANTEES
Section 108 is the loan guarantee provision of the Community Development Block Grant (CDBG)
program. Section 108 provides communities and states with a means of leveraging their CDBG funds to
obtain additional financing resources for economic development, public facilities, large-scale physical
development projects and housing rehabilitation. Regulations governing the Section 108 program may be
found at Title 24 Code of Federal Register Part 570, Subpart M "Loan Guarantees".
ELIGIBLE APPLICANTS AND ACTIVITIES
Eligible Applicants. Eligible applicants include the following public entities:
. CDBG entitlement entities, and
. Nonentitlement communities that are assisted in the submission of applications by States that
administer the CDBG program.
Eligible Activities. Activities eligible for Section 108 financing include:
. Economic development activities eligible under CDBG;
. Acquisition of real property;
. Rehabilitation of publicly-owned real property;
. Related relocation costs;
. Clearance, demolition, and removal on acquired or rehabilitated public property (including
environmental cleanup);
. Site preparation including construction, reconstruction, or installation of public facilities related to
property acquired or rehabilitated using Section 108 funds or for economic development purposes;
. Payment of interest on the guaranteed loan and issuance costs of public offerings;
. Debt service reserves;
. Housing rehabilitation eligible under CDBG; and
. In limited circumstances, housing construction as part of community economic development.
Public entities may directly use the funds or may re..loan funds to businesses, non-profits or other third
parties to undertake eligible activities. All CDBG regulations apply. As with the CDBG program,
projects and activities must either principally benefit low and moderate income persons, aid in the
elimination or prevention of slums and blight, or meet urgent needs of the community. Section 108 loan
guarantee funds are included in the requirement that 70% of all CDBG expenditures must benefit persons
of low and moderate income.
HOW THE PROGRAM OPERATES
Maximum Commitment Amount. Commitments are limited as follows:
· An entitlement entity may apply for up to five times the public entity's latest CDBG entitlement
amount, minus any outstanding Section 108 commitments or principal balances on Section 108 loans.
· A nonentitlement entity may apply for up to five times the latest CDBG amount received by its State,
minus any outstanding Section 108 commitments or principal balances on Section 108 loans for
which the State has pledged its CDBG as security. State programs may apply additional restrictions.
Financing Source. Section 108 obligations are financed annually through underwritten public offerings
in which fixed rate notes are sold to private investors. To ensure the marketability of Section 108 notes,
HUD provides a 100 percent full faith and credit guarantee to investors. Financing between public
offerings is provided through an interim lending facility established by HUD. Although HUD
coordinates the funding process, it does not have a direct role in the flow of funds. The interim lender
and investors provide funds, underwriters and the Fiscal Agent manage the transactions, and the locality
and any third party participants borrow the funds.
Security. Security for the loan guarantee includes a pledge by the public entity or State (in the case of
ncinentit]ement entities) of its current and future CDBG funds. The CDBO funds are not escrowed and
may continue to be used as planned. Additional security is also required, which provides a safeguard to
reduce the risk to CDBO funds. The additional security requirements will be determined on a case-by-
case basis, but could include assets financed by the guaranteed loan.
Loan Repayment. The maximum repayment period for a Section 108 loan is 20 years. Interim loan
interest payments are due quartel']y on the first day of the months of February, May, August, and
November. On permanent loans, principal payments are due once a year on August 1 and interest
payments are due twice a year on August 1 and February 1. Principal payments must be made in
increments of $1 ,000. Interest begins accruing from the date the funds are deposited in the entity's
account. HUD has the ability to structure the principal amortization to match the needs of the project and
borrower.
Prepayment. Investors buying the Section 108 notes are guaranteed the timely payment of principal and
interest for a ten-year period. Technically, the borrowe"r cannot prepay the loan during this period.
However, by guaranteeing the income stream to the investor through a deposit of funds with a Fiscal
Agent, the borrower is defeasing or voiding the Section 108 obligation. Interim loans may be prepaid at
any time without penalty. Jurisdictions do have the options of remaining in the interim financing facility
for the term of the loan.
Interest Rates. Interest rates on interim borrowing are priced at the three-month London Interbank
Offered Rate (LlBOR) plus 20 basis points (0.2%). Interest rates on obligations sold in public offerings
will be determined by market conditions at the time but generally will be slightly lower than yields on
Federal agency securities (e.g. Fannie Mae and Freddie Mac) with comparable terms.
Financing Fees. The only financing fees of the Section 108 program are those related to issuance of the
Section 108 notes, such as fees to the underwriters and the Fiscal Agent and any other expenses related to
the offering. Total financing fees will generally be one-half to one percent (0.5% - 1.0%) of principal.
Other than these up-front fees, no additional maintemince fees are charges for permanent Section 108
notes. Interim loans are charged a $100 quarterly fee.
Regulations. All CDBG program regulations such as citizen participation, Davis-Bacon, and
relocation/displacement compliance must be met. The environmental assessment must be compk~ted prior
to incurring or expending any project costs.
Developing an Application. Applications for Section 108 guarantees are accepted throughout the year.
Public entities wishing to apply for Section 108 loan guarantee assistance are advised to contact HUD in
ad vance for guidance in preparing an application.
For assistance contact: Donna J. Batch, Region X Economic Development Specialist, at
(206) 220~5374 or donfla.batch@hud.gov
2