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HomeMy WebLinkAbout2011-8-7854139256 ORDINANCE 2011-8-7854 AN ORDINANCE AUTHORIZING AND DIRECTING THE CITY OF PADUCAH, KENTUCKY, TO ENTER INTO A GAP POOL FUNDING i`- AGREEMENT WITH KENTUCKY HOUSING CORPORATION WHEREBY THE 4 CITY IS ELIGIBLE TO RECEIVE THE AGGREGATE SUM OF $80,000.00 TO BE USED FOR THE CONSTRUCTION OF TWO (2) NEW HOMES FOR LOW TO MODERATE INCOME FAMILIES IN THE FOUNTAIN AVENUE NEIGHBORHOOD THAT: IT IS HEREBY ORDAINED BY THE CITY OF PADUCAH, KENTUCKY SECTION 1. Approval and Authorization. The City of Paducah, Kentucky, is authorized and directed to enter into a GAP Pool Funding Agreement with Kentucky Housing Corporation, in substantially the same form as attached hereto as Exhibit A (the "Funding Agreement"), whereby the City is eligible to receive the aggregate sum of $80,000.00 to be used for the construction of two (2) new homes for low to moderate income families in the Fountain Avenue neighborhood (the "Project"). The Mayor is hereby authorized and directed to execute the Funding Agreement and any and all other documents which may be reasonably necessary for the City to comply with the terms and conditions of the Funding Agreement SECTION 2. Severability. If any section, paragraph or provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 3. Compliance with Open Meetings Laws. The City Commission hereby finds and determines that all formal actions relative to the adoption of this Ordinance were taken in an open meeting of this City Commission, and that all deliberations of this City Commission and of its committees, if any, which resulted in formal action, were in meetings open to the public, in full compliance with applicable legal requirements. SECTION 4. Conflicts. All ordinances, resolutions, orders or parts thereof in conflict with the provisions of this Ordinance are, to the extent of such conflict, hereby repealed and the provisions of this Ordinance shall prevail and be given effect. SECTION 5. Effective Date. This Ordinance shall be read on two separate days and will become effective upon summary publication pursuant to KRS Chapter 424. 1 _. ----- - ----- ATTEST: V�,G�S• ��ZocA.. Tammara S. Brock, City Clerk Introduced by the Board of Commissioners, August 9, 2011 Adopted by the Board of Commissioners, August 23, 2011 Recorded by Tammara S. Brock, City Clerk, August 23, 2011 Published by The Paducah Sun, August 27, 2011 ord\plan\GAP financing pool-KHC See attachment. EXHIBIT A GAP POOL FUNDING AGREEMENT WITH KENTUCKY HOUSING CORPORATION 2 KENTUCKY HOUSING CORPORATION GAP FINANCING POOL Exhibit A 1. REFERENCE INFORMATION Recipient: Cite of Paducah Recipient Address: PO Box 226,7 Paducah, KY 42002-2267 Agreement No: GF12-0198-01 Project :Fame: 2011-2012 GAP Pool Project Total Gap fool Award: Up to $80,000; so long Eligible Activity: Hontebuyer as funds are available. Funds are awarded on a In the event the end recipient violates the terms of the recorded decd -restriction. Recipient's fiscal year begins July I" and ends .lune first conte -first served basis. 30th. DEADLINE DATES AS USED IN THIS AGREEMENT: • Deadline for acceptance of this Agreement is August 31, 2011. • Deadline date for submission into KHC's computer system is June 30, 2012. • Deadline date for Project Completion is June 30, 2012. ■ For Home buyer projects: Project completion is defined as homes built, sold to an income -eligible buyer and all Project Completion Report packets submitted to KHC. ALLOCATION OF FUNDS; TERNIS AND CONDITIONS Y Eligible Budget Items Project Costs include: Development hard costs, soft costs; down payment and closing costs when combined with development costs. and development subsidy. Administrative Funds: Kentucky Housing will provide an additional 5% of Gap Funds for direct administrative costs. Form of Investment to Funds shall be granted to end -recipient. Recipient In the event the end recipient violates the terms of the recorded decd -restriction. the recipient must ensure that the unit is sold to a low income buyer. and the original buyer shall be pennitted to receive a fair return on their original investment at the time of sale. in the event of foreclosure or deed -in -lieu of foreclosure, the affordability may be terminated and the Recipient is required to repay to KHC the amount of fiends available from the net proceeds of the sale of (fie unit. not to exceed the original Gap investment. GAP Recipient Date 9 -Digit Federal "fax Identification Number Page. 1 of 4 3. PROJECT DESCRIPTION Project Description; At such time Recipient elects to disconmvaue operation of the approved project. Repayment by Recipient Recipient will return to KHC any Gap funds on hand and any accounts receivable Units; Location that are attributable to the use of Gap funds. _ Security None between Recipient and KHC. 3. PROJECT DESCRIPTION Project Description; Gap Funds will be used to constriction two (2) new homes for low income families Purpose; Number of in McCracken County. Units; Location "Perm of Affordability Recipient must assure continued affordability of the Gap -assisted housing for a minimum of 10 years. Recipient will be required to have a deed restriction on all Gap -assisted properties. Security Recipient will be required to utilize the KHC approved Deed Restriction which requires that housing remain affordable to loxv income person at or below 80% of AMI for a 10 year period, that the housing be the principal residence of the original buyer. Resale/Recapture • Resale provisions are used to ensure that KHC or the Recipient ensures the PI-ovisions continued affordability of the unit if the housing does not continue to be the principal residence of the family for the duration of the period of affordability. • If the original buyer sells the property during the affordability period, tlae future sales price must be a price as to ensure the subsequent low income buyer can afford the property. From the subsequent sale of the property. the original buyer is permitted to receive a fair return on their investment. Incomes to be Served . 100% of the household(s) served must have income(s) at or below 801,0 of the area median income (AIvII). • Assistance for each household will be adjusted according to family size, as defined by 24 CFR Part 5.609 also known as the federal Section 8 income guidelines. Recipient may be further restrictive if so desired. Program Income . Recipient must remit all program income to KHC. • "Program income" is income that is generated from the disposition by sale of real property acquired or constructed with Gap funds or matching contribution funds. This includes the repayment of Gap fiords from a project that was terminated before completion (either voluntarily or involtnitaril_v) or the recapture of funds invested in housing that failed to comply with the affordability requirements or principal residence requirements as specified in this Funding Agreement. No administrative fees may be retained on program income that is a result of repayment or recapture. GAP Recipient Date 9 -Digit Federal Tax Identification Number Page 21 of 4 Mortgage Lending; In the event Recipient's approved Project involves single-family mortgage loans. Requirements Recipient and all other mortgage brokers or lenders making loans to families to finance all or a part of the Project housing units warrant that all mortgage lending activities will be in compliance with applicable state and federal mortgage lending laws. Other • Recipient is responsible for verifying that the homebuyer maintains homeowner's hazard and liability insurance and that it is in effective and in force throughout the duration of the affordability period. G. -M) Recipient • Recipient is responsible for verification of contractor's qualifications including, but not limited to, adequate liability and workers' compensation coverage. • Recipient is responsible for ensuring that contractors and subcontractors abide by local, state and federal guidelines affecting the project and the HOME Program. • The plans and specifications utilized in the project trust be the original K.1-lC- approved plans. .Any subsequent changes must be approved by KHC. • Recipient agrees that all new construction and rehabilitation activities pertaining to the Project will conform to K.HC's Universal Design (Tier 1) requirements and Minimum Design Standards in effect as of the date of this .Agreement. • For units assisted with Gap funds, the entire unit must meet Kentucky Residential Code (KRC) standards upon completion of rehabilitation. (if applicant is doing acquisition'reliab,'resale) • Recipient will adhere to KHC's inspection policy in effect at the time of this Agreement. n Recipient will adhere to KHC's purchase price limitation of' S 150.000 at the time assistance is offered to each individual unit. • Before investing Gap funds in a single-family dwelling, the Recipient must assess if other assistance has been, or is expected to be, made available to that unit. In performing this evaluation, tite Recipient should consider the aggregate amount of assistance from other sources that is necessary to ensure the feasibility of the assisted project. Recipient cannot provide a standard amount of Gap funds for each assisted unit. • "Fair return on their investment" is defined as any capital improvements. principal reduction and/or the original down payment. • Kentucky- Housing Corporation assigns to Recipient the responsibilities of 24 CFR. Part 35 and Recipient is the designated party for all lead-based paint compliance issues. Date 9 -Digit Federal Tax Identification Number Page 3 of 4 • KHC reserves the right to periodically review the Recipient's progress toward timely commitment and expenditure of the Gap allocation. If at any time KHC determines that the project is not progressing timely so that the imposed deadlines will be met, funds may be recaptured. • The Recipient shall not maintaun more than two (2) open units at any one time. • Ain `open" unit is defined as any unit which has reserved or received funds under this Agreement and has not been designated as "closed." A unit is considered "closed" upon approval by KHC of the Project Completion report ("Report"). • The Project Completion report shall be submitted by the Recipient within fourteen (14) calendar days from the date of the final draw for any given unit. Failure to submit the Report will constitute a breach. In the event of a breach of this subsection, KHC is authorized by recipient to withhold future draxNs under such time that the Report is submitted and approved. • Recipient may not assist more than two (2) households per year through the Pool. For the purposes of this program, a year is July 1 to June 30 of the next year. • Recipient may reserve funds for up to a one hundred and eight (180) day period, after which, the reservation amount will automatically return to the. Gap Financing Pool if not used. Projects not completed within hundred and eight (180) days will count as a unit assisted. • Applicant may not use Gap funds for developer fee. 4. 1.1roleet L' xtenslon Extensions I • Based on Recipient's performance, KHC mn may extend this agreement for a additional 12 months. • KHC may extend this agreement no more than 3 consecutive times before the Recipient must reapply to the Gap Pool. • The number of units to be produced during subsequent periods will be the same as the amount referenced in this agreement in the "Project Description. Number of Units to be Produced". • The amount of funds available in subsequent periods will be the same as the amount references in this agreement in section "Total Gap Pool Award". • If KHC chooses to extend this agreement, notice will be given to Recipient via NNTitten correspondence. GAl' Recipient Date 9 -Digit Federal Tax Identification Number Page 4 of 4 moi' KENTUCKY HOUSING CORPORATION GAP POOL FUNDING AGREENIENI-' 1. Program Description............................................................................................................................... 2 1. ] Futtdiitg Souz-ces........................................................................................................................ 2 1.11 HOME bivestment Partnerships Program................................................................... 2 1.12 Affordable Housing Trust Fund................................................................................... 2 I Amount and Authorized Uses of GAP Funds......................................................................................... 2 2.1 Commitment of GAP Funds......................................................................................................2 2.2 Reliance Upon Information ....................................................................................................... 3 2.3 Authorized Use of Gap Funds; Project Description.................................................................. 3 2.4 Programmatic Changes.............................................................................................................. 3 3.. Release of Funds..................................................................................................................................... 3 4. Disbursement of Gap Funds.................................................................................................................... 4 4.1 Draw Procedure........................................................ ........................................ 4 4.2 Commitment and Disbursement..................................................................... I ......................... . 4 4.3 Administrative Fees . ..................................................................... ........................................... 4 5. Recipient Written Agreements................................................................................................................ 4 5.1 Agreements xvith Subrecipients, Contractors and Subcontractors ............................................. 4 5.2 Agreements with Consultants.................................................................................................... 4 6. Adherence to R.egulations....................................................................................................................... 5 . Property Standards.................................................................................................................................. �. FloodInsurance....................................................................................................................................... 5 9. Recipient Reporting, Audit and Recordkeeping Requirements.............................................................. 5 9.1 Audit Requirements...................................................................................................................5 9.2 Record Keeping, Retention and Access of Records.................................................................. 6 9.3 financial Management System.................................................................................................. 6 10. Representations. \'Warranties and Obligations of Recipient..................................................................... 6 1 I . Lobb 'Ing................................................................................................................................................. 7 12. Recapture; Reduction..............................................................................................................................8 13. 1.)efauits and I nforcement.......................................................................................................................8 14. Grievance Procedures.............................................................................................................................8 15. Conflicts of Interest................................................................................................................................. 9 16. L' -vents of Default.................................................................................................................................... 9 16.1 Cure of Breach or Default-, Penalties........................................................................................ 9 16.2 Misappropriation of Funds...................................................................................................... i 0 16.3 Rights Upon Default................................................................................................................ 10 16.4 Payments Due to Default......................................................................................................... 10 17. Debarment and Suspension................................................................................................................... 1 I I S. Miscellaneous Provisions...................................................................................................................... 11 18.1. Entire Agreement.................................................................................................................... 11 18.2. Waiver.....................................................................................................................................11 18.3. Modification............................................................................................................................11 18.4. Successors and AsslQns........................................................................................................... 11 18.5.Notices..................................................................................................................................... 12 18.6. Counterparts ............................................................................................................................12 18.7. Severability; Survivability....................................................................................................... 12 18.8. Governing Law........................................................................................................................ 12 18.9. Further Actions........................................................................................................................ 12 18.10. Assignment ............................................... 18.11. Termination Date; Rev=ersion of Assets................................................................................... 12 18.12. Fair Housing............................................................................................................................ 12 18.13. Indenuiification........................................................................................... 2 18.14 Promotional Materials and Signs............................................................................................. 13 18.15 Lead Based Paint..................................................................................................................... 13 E\141BIT A ATTACHED GAP FUNDING AGREEMENT 'PHIS GAP FUNDING AGREE;A1ENT ("Agreement") is entered into this day of 2011, by and between KENTUCKY HOUSING CORPORATION. a de jure municipal corporation and political subdivision of the Commonwealth of Kentucky, 1231 Louisville Road. Frankfort, Kentucky 40601 ("KHC") and Recipient (as defined in Exhibit A). WITNESSETH: 1. Program Description. Funds are being made available by KI -IC to Recipient to administer a housing program as outlined in Exhibit A to the Funding Agreement.. 1.1 Funding Sources. KHC administers the Affordable Housing Trust Fund (frust Fund) and the HOME INVESTMENT PARTNERSHIPS PROGRAM ("HOME Program"), collectively called "Gap Funds". 1.11 HOME INVESTMENT PARTNERSHIPS PROGRAM ("HOME Program"). a program created and existing pursuant to Title II of the National Affordable Housing Act of 1990, as amended. the regulations promulgated thereurtdeas established (collectively the "Act") or the Affordable Housing Trust Fund and KHC program guidelines and criteria to expand the supply of decent and affordable housing for low- and very lent --income persons in Kentucky. One of the general purposes of HOME is to extend and strengthen partnerships among all levels of government and the private sector, including for profit and nonprofit organizations. in the production and operation of affordable housing. The Act and HOME regulations governing eligible program areas vary significantly depending upon the activity. Recipient is aware of the level of difficulty in meeting the requirements of the Act and HOME regulations within the various eligible program areas. Recipient will comply with and will ensure that each beneficiary and sub -recipient of its HOME Funds (as defined below) will comply with all applicable KHC, state, local and federal rules, regulations and requirements under the HOME Program. Recipient understands that it bears ultimate responsibility for compliance under the HOME Program regardless of the status of any agreement between Recipient and its beneficiaries, sub -recipients, consultants, contractors and/or subcontractors. 1.12 Affordable Housing Trust Fund. Pursuant to the Kentucky Affordable ]-lousing Act ("Act"); the Affordable Housing Trust Fund ("Trust Fund") was created to assist very low-income persons in meeting their basic housing needs. KHC acts as the administrator of said funds. The Recipient has applied for and has received approval for funds for a specific housing related project described in Exhibit A of this agreement and in order to assist Recipient in the funding of this project. KHC is willing to make funds available to Recipient from the Trust Fund under the terms and conditions of this Agreement. 2. Amount and Authorized Uses of Gap Funds 2.1 Commitment of Gap Funds. Subject to the availability of Gap Funds under the Act and in consideration of the various obligations to be undertaken by Recipient pursuant to this Agreement and as represented by Recipient in its application as defined on Exhibit A to this Agreement, including certifications and exhibits attached ("Application"), KHC agrees to make Gap Funds available to Recipient in an amount not to exceed the aggregate amount appearing on Exhibit A to this Agreement, subject to the terms and conditions set forth in this Agreement, the exhibits to this Agreement, the Application and applicable HOME and AHTF regulations. The terms and conditions set forth in the Application are incorporated herein by reference. KHC's commitment to fund Recipient's Project (as defined below and described on Exhibit A) will expire if this .Agreement is not accepted and returned to KHC by the date indicated on Exhibit A to this Agreement. 2.2 Reliance Upon Information. The commitment of Gap Funds under this Agreement has been made in part on the basis of certain financial and other information furnished to KHC by Recipient. Gap Funds may be withdrawn by KHC at any time if the information furnished by Recipient should prove to be untrue or incorrect in any material respect, or if KHC should determine, in the reasonable exercise of its discretion, that it is inadvisable to fund the Project because of a material and adverse change in the condition of Recipient. 2.3 Authorized Use of Gap Funds; Project Description; Prohibited Use of Gap Funds. 'I'lie sole purpose of the Gap Funds provided to Recipient is and will be to aid Recipient in meeting the eligible program activities for the Project as described in the Application and on Exhibit A attached to this Agreement. The amount of Gap Funds which KHC has committed to provide to Recipient under this Agreement has been determined by KHC in reliance upon the cost estimates and cost sununaries of the Recipient with respect to the eligible program activities set forth in the Application and funds from other sources. A description of the project is included in Exhibit A (the "Project"). Gap Funds may not be used for the acquisition. construction or rehabilitation of structures to the extent that that those structures are used for inherently religious activities. In addition. Gap Funds may only be used for housing that is single family housing, owned by the household or to be sold to a household and to be used a the households principal place of residence. 2.4 Programmatic Changes. Recipient will notify KHC in xvriting in the event of changes in key personnel and obtain the prior written approval of KHC whenever any of the following actions is anticipated: (i) any revision in the scope or objectives of the eligible program activities, including source and use of funds, set forth in the Application; (ii) any revision in the budget for the eligible program activities-. (iii) need to extend the period of availability of Gap Funds: or (iv) obtaining the services of a third party to perform activities which are central to the purposes of this Agreement, which are material to the management or completion of the Project, or which could be construed as an assignment of Recipient's rights and responsibilities under this Agreement. 3. Release of Funds. Gap Funds will be available to draw after this agreement has been executed and a loan closing, if applicable, has been consummated. Compliance with conditions outlined in the Kentucky Clearinghouse approval process is also required. Recipient must cora nit all of its Gap Funds into KHC's computer system by the deadline date indicated on Exhibit A of this Agreement and the Project must be completed by the date indicated as the deadline for Project Completion on Exhibit A of this Agreement. Until all parties execute this agreement, no costs should be incurred or expended with anticipation of reimbursement. In the event that Recipient begins incurring expenses prior to executing this agreement, Recipient acknowledges that responsibility for payment of any expenses is solely that of the Recipient regardless of whether this transaction is actually funded. All costs associated with funding and/or closing this transaction will be those of the Recipient regardless of whether or not the transaction contemplated by this Agreement actually closes. 4. Disbursement of Gap Funds. 4.1 Draw Procedure. Recipient may draw Gap Funds by use of the Universal Draw Request form. The minimum amount Recipient can request at any one time is Five Thousand Dollars (55,000) per project. unless Recipient has less than Five Thousand Dollars (55,000) remaining in its allocation of Gap Funds. A Draw lZequest should be made only in an amount necessary to meet current disbursement needs and in whole dollar 3 amounts only (no cents). Pursuant to federal requirements, current disbursement needs are those funds that will be expended by Recipient within five (5) working days from receipt of funds from KHC. 4.2 Commitment and Disbursement. Any Gap Funds not disbursed or committed by Recipient by the dates indicated on Exhibit A of this Agreement, or which remain available upon completion of all of Recipient's eligible program activities will be subject to recapture by KHC. In the event KHC allows Recipient to retain HOME Program Income, any request for the disbursement of Gap Funds must be reduced or offset in an amount equal to any HOME Program Income currently held by Recipient. HOME C14DO proceeds are not required to be expended prior to requesting a draw of Gap Funds. 4.3 Administrative Fees. Any Gap Funds allocated for administrative fees, as outlined in Exhibit A of this Funding Agreement must be committed into the KHC computer system on a pro rata basis dependent upon the number of proposed housing units. Disbursement of these funds will be in direct proportion to disbursements of project costs on a per housing unit basis. Ten percent (10%) of each housing unit's prorated administrative fees will be withheld until submission of the Project Completion Report package. 5. . Recipient IN'ritten Agreements. 5.1 Agreements -with Sub -recipients, Contractors and Subcontractors. Before disbursing Gap Funds to any entity, the Recipient must enter into a written agreement with the entity ensuring entity's compliance with all KHC, state, local and federal rules, regulations and requirements. At a minimum. the written agreement must include appropriate provisions as described in 24 CFR §92.504 and 24 CFR §84 and 85. If in order to meet the provisions of this part it is necessary for Recipient to enter into more than one written agreement \.N°ith entities receiving fiords, provisions relating to compliance may either appear in a single agreement or combination of agreements between Recipient and entity. Agreements with contractors and subcontractors must also contain provisions relating to compliance with other federal requirements including, but not limited to. the Davis -Bacon Wage Rate Compliance if applicable to the Project. 5.2 Agreements with Consultants. In the event that Recipient has retained a consultant or consulting firm pertaining to the application for funds and/or administration of the Project and HOME Funds, pursuant to 24 CFR 92.358, Recipient must enter into a written agreement with the consultant or consulting firm which details responsibilities, standards and compensation. Recipient acknowledges that regardless of the content of any agreement between Recipient and its consultant, Recipient bears ultimate responsibility for compliance under this .Agreement and the HOME Program. 6. Adherence to Regulations. In addition to the provisions contained herein, the Recipient agrees to comply with all provisions of applicable KHC, state, local and federal rules, regulations and requirements under this program, as may be amended from time to time and which are incorporated herein by reference. In the event Recipient's Project includes construction activities, Recipient acknowledges compliance with federal and state wage rates, if applicable to the Project. Recipient acknowledges compliance with the HOME Investment Partnerships Program Implementation Manual as amended frorn time to time. Notwithstanding the importance of all regulations governing Recipient's use of HOMIs Funds, Recipient acknowledges familiarity with and agrees to comply with: 24 CFR Part 92 - HOME Regulations (as revised and amended from time to time) Subpart E Program Requirements Subpart F Project Requirements 4 Subpart G Community Housing Development Organizations Subpart H Other Federal Requirements Subpart K Program Administration 24 CFR Part 84 - Grants and Agreements 24 CFR Part 85 - Administrative Requirements Notwithstanding the importance of all regulations governing Recipient's use of AHTF Funds, Recipient acknowledges familiarity with and agrees to comply with KRS 198A.700—Affordable Housing Trust Fund. 7. Property Sumdards. Recipient agrees to comply with the minimum requirements of 2.4 CFR §92.251 of the HOME Regulations and KHC policies which require that all safety hazards. construction and rehabilitation must be addressed, performed and/or corrected in accordance with local, state and federal building codes and standards in effect at the time of this Agreement. Additionally Recipient agrees to comply with Universal Design and Minimum Design requirements imposed by KHC. 8. Flood Insurance. Gap Funds may not be invested in housing located in an area identified by the Federal Emergency Management Agency as having special flood hazards unless flood insurance is obtained and the community in which the housing is located participates in the National Flood Insurance Program or the design of the prQject being funded under this Agreement is designed to mitigate flooding hazards. Recipient is responsible for flood zone determination and maintaining evidence of such determination in its records. 9. Recipient Audit and Record Keeping Requirements. 9.1 Audit Requirements. (a) Each nonprofit and governmental Recipient, that expends 5500,000 or more of federal finds during its fiscal year must procure and have completed annual audits in the form of CPA -prepared financial statements with management letter within two hundred seventy (270) days after the close of Recipients fiscal year as noted on Exhibit A of this Agreement. These financial statements must include a balance sheet, operating statements, source and use of fluids statement, Schedule of Expenditures of Federal Awards and sufficient supporting schedules and notes as may be necessary for KHC to determine the financial status of Recipient's activities. Audits of' Recipient must also be conducted in accordance with the provisions of OMB Circular A-133 and the Single Audit Act of 1996. Recipient is required to submit the above -referenced audit to KHC, including - the detailed financial statements in the event the annual audit reveals any findings or questioned costs or upon written request from KHC. KHC reserves the right to require an audit of any Recipient that expends less than S500.000 in federal funds during its fiscal year. Recipient acknowledges that, in the event KHC requires an audit, I IOME administrative funds may not be used to offset the costs associated with the audit. (b) In the event audit exceptions exist during the effective dates of this Agreement, Recipient shall indemnify KHC against and shall be required to reimburse KHC for all costs incurred by KHC associated with defending against any audit exception, or the performance of any additional or follow-up audits, including, but not limited to: repayment of HOME Funds to HUD, repayment of AHTF Funds to the State Housing Trust Fund. audit fees, reasonable attorneys fees, travel costs, and penalty assessments. Immediately upon notification, Recipient shall reimburse KHC for all costs and fees described herein. 9.2 Record Keeping, Retention and Access of Records. Recipient agrees that KHC, the U.S. Department of Housing and Urban Development, the Comptroller General of the United States or any of their authorized representatives. shall have the right of access to any books, documents, papers or other records of 5 Recipient which are pertinent to this Agreement in order to make audits, examinations, excerpts or transcripts. Recipient will maintain all books and records pertaining to this Agreement in accordance with the provisions of 24 CFR §92.508 for a period of not less than five (5) years after all matters pertaining to this Agreement (i.e. audit, disputes or litigation) are resolved under applicable federal or state laws, regulations or policies, or when a period of affordability or recapture applies to Recipient's activities, for a period of not less than five (5) years after the affordability or recapture period ends. 9.3 Financial Management System. Recipient will establish and maintain a financial management system pursuant to 24 CFR 84 and 85, that will provide for: A. Accurate, current and complete disclosure of the financial results of the functions and services performed under this Agreement. B. Records that identity the source and application of funds for the activities, functions and services performed pursuant to this Agreement. These records will contain information pertaining to federal and state funds received, and assets, liabilities, expenditures, and income. C. Effective control over and accountability for all funds, property, and other assets. Recipient will safeguard all such assets and will assure that they are used solely far authorized purposes as provided in this Agreement. D. Accounting records that are supported by source documentation. 10. Representations, Warranties and Obligations of Recipient. Recipient. by its execution of this Agreement. represents and warrants to KHC that: A. Recipient is duly organized and validly existing under the laws of (lie Commonwealth of Kentucky and has all the requisite power and authority to enter into this Agreement and to assume the responsibilities for compliance with all federal and state laws and regulations and KHC program guidelines and criteria. A resolution, motion, order or ordinance has been duly adopted, passed or enacted as an official act of Recipient, authorizing the execution and delivery of this Agreement by Recipient and authorizing and directing the person executing this Agreement to do so for and on behalf of Recipient; said acts being done in such a manner and form as to comply with all applicable laws to make this Agreement the valid, enforceable and legally binding act and agreement of Recipient. Recipient has been organized for the primary purpose of providing housing to families and persons of low- to moderate -income B. There is no action, proceeding or investigation now pending, nor any basis known or believed by Recipient to exist, which (i) questions the validity of this Agreement, or any action taken or to be taken under it; or (ii) is likely to result in any material adverse change in the authorities, properties, assets, liabilities or conditions (financial or otherwise) of Recipient which would materially and substantially impair- Recipient's ability to perform any of the obligations imposed upon Recipient by this Agreement. C'. The representations, statements and other matters contained in the Application were true and complete in all material respects as of the date of filing. Recipient is aware of no event that would require any amendment to the Application (other than an amendment which has been filed with and approved by KHC) which would make such representations, statements and other matters true and complete in all material respects and not misleading in any material respect. Recipient is aware of no event or other fact that should have been and has not been reported in the Application as material information. D. Recipient has obtained or has reasonable assurances that it will obtain all federal, state and local government approvals and reviews required by law to be obtained by Recipient for Recipient's eligible program activities; and all beneficiaries of Recipient's Gap Funds have obtained, or the Recipient has reasonable assurances that such beneficiaries will obtain, all such approvals and reviews required by law to be obtained by such beneficiaries for Recipient's eligible program activities. E. Insofar as the capacity of Recipient to carry out any obligation under this Agreement is concerned (i) Recipient is not in material violation of its corporate, partnership or other organizing instrument, whichever may be applicable, any mortgage, indenture, agreement, instrument, judgment, decree, order, statute, rule or regulation; or (ii) the execution and performance of this Agreement will not result in any such violation. F. Recipient will comply with and will use its best efforts to cause each beneficiary of its GAP Funds to comply with the minimum Gap requirements for Recipient's eligible program activities as more fully set forth on Exhibit A attached hereto. G. If Community Development Block Grant ("CDBG") or other public funds are used by Recipient to also support its eligible Gap Program activities, Recipient will comply with, and will use its best efforts to cause each beneficiary of such funds to comply with, the applicable rules, regulations or requirements for the use of said funds. In the event of any inconsistency between applicable HOME requirements, AHTF requirements and CDBG or other governmental requirements, the more stringent of the programs will control. IT If funds from any other sources are used by recipient to also support its eligible Gap Program activities. Recipient will comply with the applicable terms of the contract with the source for use of said funds. In the event of any inconsistency between applicable Gap requirements and the contract with the source of other funds, the Gap requirements will. prevail. 11. Lobbying. Recipient certifies, by submission of its Application and execution of this Agreement, A. No federal appropriated funds have been paid or will be paid, by or on behalf of Recipient, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any federal contract; the making of any federal grant; the making of any federal loan; the entering into of any cooperative agreement; and the extension, continuation, renewal, amendment or modification of federal contract, grant, loan or cooperative agreement. B. If any fiords other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or any employee of a Member of Congress in connection with this federal contract, grant, loan, or cooperative agreement, Recipient shall complete and submit Standard Form -LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions. C. Recipient will require that the language of this certification be included in the award documents for all sub -awards at all tiers (including subcontracts, sub -grants and contracts under grants, loans and cooperative agreements) and that all sub -recipients shall certify and disclose accordingly. 12. Recapture; Reduction. KHC reserves the right to reduce and recapture the amount of Gap Funds provided under this Agreement (i) to conform to any revision in the Application or this Agreement; (ii) if the actual cost for the eligible program activities are lower than estimated; (iii) if HOME Funds are subsequently reduced by the federal government; (iv) if AHTF funds are subsequently reduced by the Kentucky General Assembly. (v) upon occurrence of any default as described in Section 16 of this Agreement; (vi) if the property does not remain affordable as required by this Agreement and federal regulation governing the use of HOME Funds and the eligible activity; or (vii) if the amount of any funds from other sources changes. 13. Defaults and Enforcement. An event of default will exist upon the occurrence of any of: (i) the use of Gap Funds for any purpose other than as authorized in this Agreement and the Application, or (ii) breach of any covenant, agreement, provision or warranty in this Agreement or the Application. In accordance with federal regulation, upon occurrence of any event of default as described above, KHC may suspend the Recipient's authority to draw Gap Funds at any time by notice to the Recipient. If default is not cured within thirty (30) days from notice of such default by KHC to the Recipient, KHC may continue such suspension or by delivery of notice terminate this Agreement. In the event of a termination, the Recipient's authority to draw Gap Funds will terminate at the date of the notice of termination and Recipient shall have no right, title or interest in or to any remaining Gap Funds. KHC also has the right to require Recipient to repay to KHC a portion of or all Gap Funds drawn by Recipient in cases of default. The rights and remedies of KHC shall be deemed to be cumulative and shall be in addition to the rights afforded KHC in law or equity. Any election of any right or remedy will not be deemed to be an election of that right or remedy to the exclusion of any other right or remedy. The rights and remedies available to KHC in the event of a suspension or termination of Agreement will survive such suspension or termination. This Agreement may be terminated for convenience by either party in accordance with the provisions of federal regulation. 14. Grievance Procedures. Recipient will establish and maintain procedures to assure that persons aggrieved by actions arising from programs or services under this Agreement will have the right to a hearing. Such procedures must include an opportunity for an aggrieved person to request a hearing and to be heard by Recipient. 15. Conflicts of Interest. No person. employee, agent, consultant, officer or elected official or appointed official of Recipient who exercises or has exercised any function or responsibilities with respect to activities assisted with Gap Funds or who is in a position to participate in a decision making process or gain inside information with regard to these activities, may obtain a financial interest or benefit from a Gap -assisted activity. or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder. either for themselves or those with whom they have family or business ties, during their tenure or for one year thereafter. Upon written request. KHC and/or HUD may, pursuant to 24 CFR § 92.356, grant an exception to the provisions of this section on a case-by-case basis when they determine that the exception will serve to further the purposes of HOME and the effective and efficient administration of the Recipient's eligible program activities. 16. Events of Default. Occurrence of one or more of the following events will, in the sole discretion of K.HC. constitute un event of default: (i) Any representation or warranty made herein, or in any certificate, report or statement furnished to KHC in connection the AHTF Funds or the Promissory Dote shall prove to have been untrue or misleading in any material respect ,vhen made; or (ii) Default shall be made in the performance of any of the provisions of this Agreement or any other document executed in connection with this Agreement; or (iii) The violation of the affordability requirements whether evidenced by recorded Deed Restriction or owner certification; or 8 (iv) The entry of any lien or encumbrance against the Project site(s), except for ad valorem taxes -which are not yet due and payable and liens incurred in the ordinary course of business with respect to amounts -which are not yet due and payable -without penalty or interest; (v) Recipient fails to prosecute Project site development work with diligence so that construction thereof will be completed in a timely manner; or (vi) Any party obtains or seeks an order or decree in any court of competent jurisdiction seeking to enjoin the construction of the improvements or to delay construction of the same or to enjoin or prohibit Recipient or KHC from carrying out the terns and conditions hereof, and such proceedings are not discontinued or such decree is not vacated within thirty (30) days after KHC has given Recipient notice under i the provisions hereof: or (vii) Recipient discontinues the corlstructlorl!rehabilitation -work and abandonment continues for a period of ten (10) days; or (viii) Recipient permits cancellation or termination of any insurance policy required under this Agreement or fails, if required, to obtain any renewal or replacement thereof satisfactory to KHC; or (ix) The Recipient shall (A) become bankrupt, or cease; be unable, or admit in -writing inability to pay its debts as they mature, or make a general assignment for the benefit of, or enter into any composition or arrangement with, creditors; (B) apply for, or consent (by admission of material allegations of a petition or otherwise), to the appointment of a trustee, receiver or liquidator of the Recipient or of a substantial portion of its assets, or authorize such application or consent, or proceedings seeking such appointment shall be commenced without such authorization, consent or application against it and continue un -dismissed and unstaved for a period of fifteen (15) days; (C) authorize or file a voluntary petition in bankruptcy. reorganization. readjustment of debt, insolvency, dissolution, liquidation or other similar law of any jurisdiction, or authorized such application or consent, or proceedings to such end shall be instituted against the Recipient -without such authorization, application or consent and be approved as properly instituted, remain undismissed for fifteen ( 15) days, or result in adjudication of bankruptcy or insolvency; or (x) 'The Recipient shall be found to have violated any law or regulation, -whether federal or state. 16.1 Cure of Bi -each or Default; Penalties. If any breach or default is not cured within ten (10) days from the date KHC notifies Recipient of the breach or default, KHC may continue suspension of disbursements. KHC may terminate this Agreement by giving written notice to Recipient. In the event of a termination, Recipient's authority to draw AHTF Funds will terminate as of the date of the notice of termination and Recipient will have no right, title or interest in or to any remaining .AHTF Funds. 16.2 Misappropriation of Funds. Recipient will be liable for any and all misappropriation of funds, audit exceptions by state or federal agencies, and violations of the terms of this Agreement. KHC also has the right to require Recipient to repay to KHC a portion of or all AI-ITF Funds drawn by Recipient in cases of breach involving misappropriation of finds or fraudulent uses of funds. 16.3 Rights Upon Default. If' one or more of the events of default described above occur, KHC may declare Recipient to be in default under this Agreement by giving not less than (i 0) days prior 9 written notice (or other notice required by applicable default provisions in other KHC loan documents) to Recipient as required for the applicable default, except for a default in payment, in which case no notice is required, and thereafter, KHC may exercise any one or more of the following remedies: (i) Terminate the credit hereby extended, Provided, however, KHC may make advances under the occurrence of an event of default without waiving any of its rights hereunder; (ii) Exercise its rights under the this Agreement - (111) Enter upon the Project site(s), expel and eject Recipient and all persons claiming through 01- under runder Recipient and collect the rents and profits therefrom; (iv) Complete the Project site development work at the cost and expense of Recipient and add Such cost to the debt evidenced by this Agreement; (v) Have discharged of record any mechanic's and materialmen's lien or other lien against the. Project site(s),. (vi) Institute such legal proceedings or other proceedings in the name of Recipient or KHC as KHC may deem appropriate for the purpose of protecting the Project site(s) and KHC's interests therein: or (vii) Do and perform all acts and deeds in the name of Recipient or KHC as KiIC deems necessary or desirable to protect the Project site(s) and KHC's interests therein. (viii) All of the rights and remedies of KHC under this Agreement shall be cumulative and to the fullest extent permitted by law and shall be in addition to all those rights and remedies afforded KIIC at lacy or in equity or in bankruptcy. 16.4 Payments Due to Default. Recipient hereby agrees to reimburse and fully compensate KHC upon demand for all loss, damage and expense, including without limitation reasonable attorneys fees, together with interest on the amount thereof from the date the same accrues at the rate of twelve percent (12%) per annum, incurred by KHC (i) by reason of any default or defaults under this Agreement, (ii) by reason of the neglect of the Recipient of any duty or undertaking under this Agreement or any other loan document, and (iii) in the exercise of any right or remedy under this Agreement or any other loan document. 17. Debarment and Suspension. Recipient certifies by submission of its Application and execution of this Agreement and to the best of its knowledge and belief, that it and/or its principals: A. Are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from participation in this transaction by any federal department or agency: H. Have not within a three-year period preceding this certification been convicted of or had a civil .judgment rendered for commission of fraud or a criminal offense in connection Nvith obtaining, attempting to obtain or performing a public (federal, state or local) transaction or contract under a public transaction; violation of federal or state antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, snaking false statements or receiving stolen property; 10 C. Are not presently indicted for or otherwise critninally or civilly charged by a governmental entity (federal, state or local) with commission of any of the offenses enumerated in paragraph (b) of this certification; and D. Have not within a three-year period preceding this certification had one or more public transactions (federal, state or local) terminated for cause or default. 18. miscellaneous Provisions. 18.1. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior agreements or understandings of any kind. 18.2. Waiver. The waiver of any particular provision of this Agreement does not constitute a waiver of the entire Agreement, nor does the waiver of any particular provision in a specific instance guarantee future waivers of the same or similar provision. 18.3. modification. No change or modification of this Agreement will be valid unless it is in writing and signed by both parties. 18.4. Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the respective parties and their successors and assigns. 18.5. Notices. All notices which will or may be given under this Agreement will be in writing and will be deemed given when personally delivered or when mailed by certified, overnight or registered mail, return receipt requested and properly addressed to the party at the address listed on Exhibit A of this Agreement. 18.6. Counterparts, This Agreement may be executed in any number of counterparts. each of which will be deemed an original and all of which together will constitute one and the same instrument. 18.7. Severability; Survivability. Should any provision of this Agreement be deemed invalid or unenforceable, it shall not affect the validity or enforceability of any other provision of this Agreement. The terms of this Agreement shall survive the closing of any loan or grant contemplated by this Agreement. 18.8. Governing Law. Except to the extent superseded by federal law, this Agreement will be construed in accordance with the laws of the Conunonwealth of Kentucky. 18.9. Further Actions. Each party agrees to perform any and all further acts and to execute and deliver any and all additional documents that may be reasonably necessary to carry out the terms of this Agreement. 18.10. Assignment. This Agreement, nor any right, benefit or advantage inuring to Recipient under this Agreement and no obligation imposed on the Recipient hereunder may be assigned without the prior written approval of K11C. 18.11. Termination Date; Reversion of Assets. Except as otherwise provided in this Agreement, this Agreement will remain in effect until the affordability or recapture period, as set forth in this Agreement and its Exhibits, has expired for the last residence assisted with Gap Funds. Upon expiration or sooner termination of this Agreement, Recipient will transfer to KHC any Gap Funds on hand at the time of expiration or termination and any accounts receivable attributable to the use of Gap Funds. 18.12. Fair- Housing. Recipient sliall not discriminate in the sale, rental or deny assistance to any person because of race, color, religion, sex, familial status, age, disability or national origin. Recipient hereby Nvan-ants that it does not have any Fair Housing Discrimination complaints pending against it. Recipient also agrees that should any Fair Housing Discrimination complaint be lodged against it during the term of this Agreement, it will immediately notify KHC in wvriting of the occurrence. 8.13 Indemnification. Recipient agrees to defend, indemnify and hold MIC harmless against any and all claims, including attorney's fees and other costs of litigation, which may result from damages caused by the Recipient's employees or the negligent acts or omissions of the Recipient's agents, employees or subcontractors. 18.14. Promotional Materials and Signs. Recipient agrees that all promotional materials. publications and conirrrunications to media related to the Project shall contain an appropriate acknowledgment of KHC's participation. When applicable, a construction sign in compliance with KHC's published guidelines will be displayed prominently at the site acknowledging KHC's financial assistance to the Project. To indicate their understanding of and agreement to the terms of this Agreement, the parties have executed this instrument as of the day and year first herein above written. 18.15. Lead Based Paint. The Recipient recognizes that common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which cast be harmful to adults and children. To protect against this risk, on April 22, 2008, the Environmental Protection Agency ("EPA"), issued a rule requiring the use of lead -safe practices and other actions aimed at preventing lead poisoning. This rule is known as the Renovation, Repair and Painting Rule ("the RRP Rule"). The Recipient recognizes that the RRP Rule takes effect on April 22, 2010, and applies to renovation or rehabilitation on any housing constructed before 1978. The RRP Rule requires that renovations upon such housing must be performed only by renovators who have been properly trained and certified in accordance with EPA requirements. The Recipient acknowledges that the requirements of the RRP are frilly contained at 40 CFR Part 745, and the Grantec'I3orrower has reviewed and understands those requirements. The Recipient is responsible for all renovation performed on this project, and shall ensure that any renovation performed on this project after April 22, 2010, shall be conducted only by entities which are in compliance with the requirements of'40 CFR Part 745. 12_ KL-'N'I'UCKYJ-IOUSf"NlG CORPORATION CITY OF PADUCAH Gap Funding Agreement No.:G-F 12-0198-01 BY TITLE: (K -HC) TITLE: 13 ("Recipient")