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17. Approval of MOU and Program Income Plan/Glacier Affordable Housing FoundationMEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF KALISPELL AND GLACIER AFFORDABLE HOUSING FOUNDATION WHEREAS, the City of Kalispell entered into a $400,000 Home Investments Partnerships Program (H.O.M.E.) Grant contract on June 2, 1995, and a $400,000 Community Development Block Grant (CDBG) contract on April 18, 1995 with the Montana Department of Commerce to provide for the construction of forty-four homes for low and very low income residents; and WHEREAS, the City of Kalispell was awarded $198,000 Affordable Housing Program (AHP) grant funds by the Glacier Affordable Housing Foundation for down payment and closing cost assistance in the amount of $4,500 per home; and WHEREAS, the HOME and AHP grants require either the newly constructed homes remain affordable or the program income they generate remain available to future low and very low income residents for home ownership opportunities for a period of thirty (30) years; and WHEREAS, the City of Kalispell adopted a Management Plan in October 1995 which allows Glacier Affordable Housing Foundation (GAHF), on the City's behalf, to track and recycle these program income funds to assure that future low and very low income residents are assisted in purchasing homes as follows: THEREFORE, the City of Kalispell and the Glacier Affordable Housing Foundation (GAHF) do herein agree: 1. THAT, GAHF commits to provide down payment and closing cost assistance in the amount of $4,500 to forty-four (44) low and very low income families in the subdivisions known as South Woodland Court and Teton Terrace; and, 2. THAT, the City of Kalispell will market the program to assure recipients of such funds will be within 60% to 800 of median income; and 1 3. THAT, the City of Kalispell will do all required marketing and advertising as per CDBG and HOME requirements, and will pre - qualify all applicants prior to referring those individuals to the participating lending institutions; and, 4. THAT, upon closing, the closing agent will furnish to the Planning, Economic and Community Development Department (PECDD) staff and to GAHF a copy of the final closing statement with the distribution of funds, the Trust Indenture which secures the loan and the Promissory Note and any other documents which provide for equity sharing and repayment of the second mortgage; and, 5. That GAHF shall administer and account for Program Income in accordance with the Program Income Plan, attached hereto as Exhibit "A" and thereby made a part hereof. 6. THAT, in the event GAHF is unable to provide continued assistance of CDBG, HOME and AHP funds to future low and very low income home buyers within the city limits, all future CDBG and HOME Program Income will revert to the City of Kalispell to be used exclusively in providing affordable housing. It is understood and agreed to between GAHF and the City of Kalispell that CDBG and HOME Program Income will only be utilized to provide affordable housing subsidy dollars in the future and not to cover administrative costs on the part of either entity. 7. In the event any provision of this Agreement is declared void invalid or contrary to law, the parties agree that the remaining provisions shall continue and remain in full force and effect. 8. This agreement shall be binding upon and inure to the benefit of the parties' respective successors and assigns. Douglas D. Rauthe, Mayor City of Kalispell Attest: c:\homeownr\council\memounst Steve Van Helden Chairman Glacier Affordable Housing Foundation Attest: 2 Program Income Plan Between The City of Kalispell, Montana and Glacier Affordable Housing Foundation This Program Income Plan specifically addresses program income generated from first time home buyer opportunities created in South Woodland Court and Teton Terrace, Kalispell, Montana, by the City of Kalispell with funding provided by the Community Development Block Grant (CDBG), Home Investments Partnerships Program (HOME) through the Montana Department of Commerce and the Affordable Housing Program (AHP) provided through the Federal Home Loan Bank of Seattle. Glacier Affordable Housing Foundation (GAHF), a 501 © (3) corporation has been registered with the State of Montana as a corporation whose sole purpose is providing affordable housing to low and very low income individuals on an ongoing basis. GAHF was founded with a $610,000 "Affordable Housing Program" grant from the Federal Home Loan Bank of Seattle to be utilized in a five -county area. Thus, GAHF is in a position to assume on behalf of the City of Kalispell the responsibility for tracking, administering, and recycling the Program Income generated by the targeted units to be assisted. Program Income will be generated upon subsequent sale or refinancing by the original owner. All CDBG, HOME and AHP funds used as subsidy to assist targeted low income families to become first time home buyers within the city limits will be considered as Program Income and must remain available to subsequent low and very low income home buyers for future purchases within the city. Thus it will become the responsibility of Glacier Affordable Housing Foundation (GAHF), on behalf of the City of Kalispell, to account for and administer the original subsidy, plus a prorated percentage of the appreciation of the home and lot. CDBG, HOME and AHP Program Income funds created from the direct subsidy of the cost of the home and/or mortgage buy down will be protected through a promissory note made payable to GAHF and a second mortgage wherein GAHF is named the beneficiary. The zero interest, deferred second mortgage loan amount, together with a proportionate share of the appreciated equity, will be due and payable at the time of resale or refinance. Debts or liens against the property which occur after the CDBG, HOME and AHP grant subsidies were provided will be subordinate to the CDBG, HOME and AHP assistance, and the net proceeds from the sale of the property will be used to repay the grant assistance first. If the net proceeds from the resale or refinance of a unit assisted with CDBG, HOME and AHP subsidies are not sufficient to recapture the full CDBG, HOME and AHP investment plus enable the homeowner to recover the down payment, principal payments, and any capital improvement investments the owner may have made, the federal grant criteria could allow the subsidy repayment to be reduced. The City of Kalispell and GAHF will review every request on a case by case basis. GAHF will notify the City of Kalispell of the amount of Program Income recaptured when a unit located within the two subdivisions is resold or refinanced. This amount will be held by GAHF to be recycled to another low income buyer within the city limits when that low income buyer has been qualified for bank financing. In the event GAHF is unable to provide continued assistance of CDBG and/or HOME Program Income funds to future low and very low income home buyers in the respective counties, all future CDBG and HOME Program Income, and all compliance requirements, will revert to the City of Kalispell to be used exclusively in providing affordable housing stock. It is understood and agreed between GAHF and the City of Kalispell that CDBG and HOME Program Income will only be utilized to provide affordable housing subsidy dollars in the future and not to cover administrative costs on the part of either entity. Douglas D. Rauthe, Mayor Steve Van Helden, Chairman City of Kalispell Glacier Affordable Housing Foundation Attest: Attest: c:\homeownr\council\progincm