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2008-039-RES-Authorizing the city manager to execute an irrevocable standby letter fo credit to the office of rural community affairs (orca)RESOLUTION NO. 2008-039 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE AN IRREVOCABLE STANDBY LETTER OF CREDIT TO THE OFFICE OF RURAL COMMUNITY AFFAIRS (ORCA); MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, on September 10, 1999, the City of Paris was awarded Contract No. 719068 by the Office of Rural Community Affairs (ORCA) granting $399,520 for infrastructure construction to support 38 homes in the Eastgate subdivision; and, WHEREAS, because less than 51% of the 35 homes actually built were sold to low- to-moderate owner-occupants, the City is in non-compliance with this contract requirement; and, WHEREAS, the City has been given until December 31, 2008 to correct this problem and as a condition of this extension the City of Paris is to execute an irrevocable standby letter of credit in the amount of $393,520 payable to ORCA guaranteeing repayment if the non-compliance issue is not settled by the deadline given; and, WHEREAS, if deadline is not met, ORCA will exercise its right under the letter of credit, and Liberty National Bank will pay the $393,520 to ORCA; and, WHEREAS, it is deemed appropriate that the City of Paris execute an irrevocable standby letter of credit to ORCA in order to have time to attempt to correct this problem and the same should be approved. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, THAT: Section 1. The findings set out in the preamble to this resolution are hereby in all things approved. Section 2. The City Council of the City of Paris approves and authorizes the City Manager to execute on behalf of the City of Paris an Irrevocable Standby Letter of Credit payable to the Office of Rural Community Affairs in the amount of $393,520 in substantially the form of Exhibit A attached hereto. Section 3. This resolution shall be effective immediately upon passage. PASSED AND APPROVED this 12th day of May, 2008. ATTESTED: 4ice)Ellis, City Clerk APPROVED AS TO FORM: W. Kent yar, City Attorney Y sse Jame reelen, Mayor F-. y~ ~ t IRREVOCABLE STANDBY LETTER OF CREDIT NO. 175 DATE: Aprii 30, 2008 EXPIRATION DATE: January 30, 2009 BENEFICIARY: . Office of Rural Community Affairs 1700 Rorth Cengress Avenue. Suite 220 Austin, TX 78701 Gentlemen: APPLICANT: City of Paris P. O. Box 9037 Paris, TX 75461-9037 We hereby issue our Irrevocable Standby Letter of Credit No. 175 in your favor up to the aggregate amount of US$393,520.00 (Three Hundred Ninety-Three Thousand Five Hundred Twenty and 001100 U. S. Dollars) availabie by draft(s) drawn on us at sight, marked "Drawn under Irrevocable Standliy Letter of Credit No. 175 of The Liberty National Bank in Paris, Texas. 1. Beneficiary's written statement purportediy signed by its authorized representative reading as follows: "Office of Rural Community Affairs ("Beneficiary") hereby certifies that City of Paris ("City") did not perform as required under its Housing Infrastructure Fund Contract No. 719068." 2. This originai Letter of Credit and all amendments thereto (if any). In the event of a partial drawing the original Letter of Credit will be endorsed and returned to you, unless the Letter of Credit has expired or the amount available is reduced to zero. Special Conditions: Partial drawings permitted. We hereby engaae with you that documents drawn under and in compliance with the terms of this Irrevocable Standby Letter of Credit will be duly honored if presented for payment to The Liberty National Bank In Paris, Texas, 305 Lamar Avenue, Paris, Texas 75460, ATTN: Philip R. Cecil prior to 3:OOPM on January 30, 2009 Central time on or before the expiration date of this Letter of Credit. This Letter of Credit is subject to the International Standby Practices 1998, International Chamber of Commerce Publication No. 590 ("ISP98"), in effect on the date this Letter of Credit is issued, and as to matters not addressed by ISP98 is subject to and governed by Texas State Law and applicable U. S. Federal Law. The Liberty National Bank in Paris, TX Philip R. Cecil, Chairman of the Board EXHlBIT A_ CITY OF PARIS LIBERTY NATIONAL BANK SSk 75 6000635 Pp 60X 9037 305 LAMAR AVE. Loan Number 400010238 PARIS, TX 75461 P.O, BOX 919 Date 04-30 2008 P.A.f3IS, TX 754&0 Maturity Date ON OEMANO Loan Amount 5393,520.00 Renewal Of BORROWER'S NAME AND ADDRESS 'F:ENDil QiEAN1E ANDDRESS CTILOILP PRC:CMR "I" Indudes each borrower ahove, lomtly and severally. mearts t712 len.~ pr, its sucGessors and assigns. For value ieceived, I promise to pay to you, or your order, at your address listed above the PRINC{PAL sum of THREE HUNDRED NINETY THREE THOUSAND FIVE HUNDRED TWENTY AND N01100 Dollars $ 393.520.00 1 Single Advance: I will recerve all otthis principal sum on 0430-2008 . No additional advances are contemplated under this note. ❑ Multiple Advance: The principal sum shown above is the maximum amount of principal I can borrow under this note. On I wiil receive the amount of $ and future principal advances are contemplated. Conditions: The conditions for future advances are ❑ Open End Credit: You and I agree that I may borrow up to the maximum amount of principal more than one time. This teature is subject to ali other conditions and expires on ❑ Closed End Credit: You and I agree that I may borrow up to the maximum only one time (and subject to all other conditions). INTEREST: i agree to pay interest on the outstanding principal balance from 04-30-2008 at the rate of 5.000 % per year until DEMAND IS MAOE ❑ Variable Rate: This rate may then change as stated below. , ❑ Index Rate: The future ratewill be the following index rate: ❑ Ceiiing Rate: The interest rate ceiling for this note is the ceiling rate announced by the Credit Commissioner irom time to time. ❑ Frequency and Timing: The rate on this note may change as often as A change in the interest rate will take effeci ❑ Limitations: During the term of this loan, the applicable annual interest rate will not be more than % or less than The rate may not change more than °k each Effect of Variable Rate: A change in the interest rate will have the following effect on the payments: ❑ The amount of each scheduled payment will change. ❑ The amount of the final payment will change. ❑ ACCRUAL METHOD: Interest will be calculated on a ACTUALI365 basis. POST MATURITY RATE: I agree to pay_interest on the unpaid balance of this note owing after maturity, and until paid in tull, as stated below: _ M on the same fixed or variahle rate basis in eftect 6efore maturity (as indicated above). ❑ at a rate equal to ❑ LATE CHARGE: If a payment is made more than days after it is due, I agree to pay a late charge of ❑ ADDITIOiJAL CHARGES: In addition to interest, I agree to pay the tollowing charges which ❑ are ❑ are not included m the principal amount above:" . PAYMENTS: I agree to pay this note as follows: ON DEMAND WITH SEMIANNUAL INTEREST PAYMENTS BEGINNING 01-30-2009 ADDITIONAL TERMS: THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ❑ SECURITY: This note is separately secured by (describe separate document by type and date): lThis section is for youf internal use. Failure to list a sepa-e security Aocument does noi ean the aflreement will nai secure Ihis note.~ FU^nP05E: The purpose of this loan is FUND LETTER OF CREDIT q175 SIGNATURES: I AGREE TO THE TERMS OF THIS NOTE IINCLUDING THOSE ON PAGE 2). I have received a copy on today's date. CITY OF PARIS Signature for Lender PHILIP CECIL, CHAIRMAN UNIVERSAL NOTE "'1984. 1991 A""keis Systems, Inc., St. Cloud, MN Forni UN-TX 3/712002 tU%l(Je I cl 1)