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Resolution of the City of San Leandro City Council to Substitute Collateral for the Section 108 Guaranteed Loan from the United States Department of Housing and Urban Development (HUD) for the Construction of the San Leandro Senior Community Center by Designating as Collateral $190,635.20 in the City's General Fund Restricted Reserve
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WHEREAS, the City previously applied for and received a two million five hundred thousand dollars ($2,500,000) Section 108 guaranteed loan from the United States Department of Housing and Urban Development ("HUD") for the construction of the San Leandro Senior Community Center ("Section 108 Loan"); and
WHEREAS, as part of the Section 108 Loan, the City executed a promissory note numbered B-08-MC-06-0017, whereby the City promised to repay the Section 108 Loan ("Section 108 Loan Note"); and
WHEREAS, repayment of the Section 108 Loan Note is to come from federal Community Development Block Grant ("CDBG") Funds provided to the City; and
WHEREAS, the terms of the original Section 108 Loan required the City to record a deed of trust against the Senior Community Center property as collateral for the Section 108 Loan Note. However California law prohibits the City from recording a lien against publically owned property; and
WHEREAS, since the City has never provided the deed of trust on the Senior Community Center property, HUD requests that the City provide alternate collateral in the event that CDBG Funds are not available to the City for loan repayment; and
WHEREAS, the City has proposed, and HUD has agreed, that the City can provide restricted General Fund Reserves as collateral; and
WHEREAS, in order to provide collateral for the Section 108 Loan, City staff recommends restricting $190,635.20 (the "Restricted Amount"), an amount equal to one annual Section 108 Loan debt service payment, in the General Fund Restricted Reserves as collat...
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