Loading...
1992-222-Authorizing The Town Manager To Execute A Loan Agreement With The Chief Of Police, Larry J. Todd, For Housing AssistanceRESOLUTION 1992 -222 RESOLUTION OF THE TOWN OF LOS GATOS AUTHORIZING THE TOWN MANAGER TO EXECUTE A LOAN AGREEMENT WITH THE CHIEF OF POLICE, LARRY J. TODD, FOR HOUSING ASSISTANCE RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa Clara, State of California, that the Town of Los Gatos enter into a loan agreement (attached) with the Chief of Police, Larry J. Todd, for housing assistance, and that the Town Manager is authorized, and is hereby directed, to execute said loan agreement in the name and on behalf of the Town of Los Gatos. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 7th day of December, 1992 by the following vote: COUNCIL MEMBERS: AYES: Randy Attaway, Eric D. Carlson, Brent N. Ventura Mayor Joanne Benjamin NAYES: Steven Blanton ABSENT: None ABSTAIN: None SIGNED: iY ✓t UGC + MA OF THE TOWN LOS GATOS LO GATOS, CALIFORNI ATTEST: 1 J CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA TpryN r, . AGR: `� n HOME LOAN AGREEMENT This agreement is entered into on December 3 1992, between Larry J. Todd (Chief of Police) and Valerie S. Todd, husband and wife, ('Todds "), and the Town of Los Gatos, a Municipal Corporation, ('Town "). RECITALS This agreement is based on the following facts: A. Developing a strong partnership between the police department and the community is one of the primary responsibilities of the Chief of Police. Such a partnership is best achieved by the Police Chief's involvement in a broad spectrum of community activities and by having a personal stake and interest in the quality of life shared by those who live in the community. B. The Police Chief is also the Director of Emergency Services. Since the 1989 Loma Prieta Earthquake, which limited travel between the Town and many outlying areas, the Town has developed a heightened awareness of the critical value of having the Police Chief available during the critical hours immediately following catastrophic events. C. The Town believes, therefore, that it is in the best interest of the community for the Chief of Police to reside within the geographic boundaries of the Town, and recognizing the high cost of housing in the Town of Los Gatos, determines that it is in the Town's best interest to provide assistance in securing such housing. NOW, THEREFORE, the parties agree as follows: 1. Purpose. The purpose of this Agreement is to provide for a loan secured by a second deed of trust for the Todds' purchase of residential real property ( "the Property "). When the purchase of the Property has been finalized, the parties agree to execute an addendum to this Agreement setting forth the address, assessor's parcel number, legal description of the Property. boundaries. 2. Purchase. The Todds shall purchase the Property within the Town 3. Use of the Pro_pertx The Todds shall use the Property as their primary personal residence. 4. Loan Amount. The Town will loan the Todds $325,000.00 secured by a second deed of trust against the Property. 5. Rate of Interest. The loan shall accrue interest at a rate equal to the average rate earned annually by the Town's investment of municipal funds in the Local Page 1 of 7 Agency Investment Foundation ( "LAIF ), or some other mutually agreeable rate. Accrued interest shall be adjusted annually on the anniversary date of this agreement. 6. Balance of Purchase Price The Todds shall pay the balance of the purchase price of the Property. The Town acknowledges and agrees that a portion of the purchase price may be paid by a loan to the Todds from a commercial lender by a first deed of trust on the Property, provided that the Todds pay at least 10% of the total purchase price in a cash down payment. 7. Maintenance and Home Improvements Todds shall maintain the Property in good condition and repair at their sole cost. 8. Taxes. Todds shall pay all taxes, assessments, and utilities. 9. Insurance. (a) Todds duty to keep the Property insured. Throughout the term of this agreement, Todds, at their sole cost and expense, shall (i) keep the Property insured against loss or damage by fire and such other risks as are now included in extended all risk residential insurance, including but not limited to earthquake and flood coverage, in an amount sufficient to replace all structures on the Property; and (ii) shall carry homeowners' liability insurance. (b) Todds duty to maintain life insurance. The Todds shall pay for and maintain a current term life insurance policy on the Chief of Police in an amount equal to the total loan principal and accrued interest. The Town of Los Gatos shall be the beneficiary of the policy. 10. Refinancing. Todds may neither refinance the original purchase money mortgage nor mortgage or encumber the Property further without the prior written consent of the Town. 11. Obligation to Relay Loan (a) Occurrence requiring payment of principal and interest. No payment of principal or accrued interest shall be due until the earliest occurrence of any of the following events: (i) the Police Chief's retirement from the Town; (ii) the Police Chiefs failure to continue to use the Property as his primary residence; (iii) the Police Chiefs voluntary or involuntary termination of employment with the Town except by reason of death. (b) Time for payment of principal and interest. Unless otherwise agreed by the parties, the Todds shall pay all principal and accrued interest within: (i) twenty four (24) months of (a)(i) or (a)(ii) above; and (ii) within six (6) months of (a)(iii) above. Page 2 of 7 12. Sale of the Property (a) Sales Price. In the event that the Todds choose to sell the property in order to repay the principal and interest, the Town and the Todds shall mutually agree to the sales price for the Property. If the parties are unable to agree within forty -five (45) days of the occurrence requiring sale, the sales price shall be the fair market value determined by an independent appraiser. By the fiftieth (50th) day following the occurrence requiring sale, the parties shall agree upon an independent appraiser who shall determine the fair market value of the Property. If the parties cannot mutually agree upon an independent appraiser, then each shall select one independent appraiser. If the appraisers so selected do not agree upon the appraised value, the appraised value of each shall be added and the sum shall be divided by two. Appraisal fees shall be paid equally by the parties. If the Property does not sell at the sales price as determined above, the parties may agree on a reduced price. (b) Terms of sale. The terms of sale shall require payment at the close of escrow of the principal and accrued interest on the Town's loan as set forth in paragraph 13. 13. Satisfaction of the Obligation to Re -ply the Town's Loan The Todds' obligation to repay the Town's loan shall be fully extinguished by payment as follows: (a) Retention of Property. If the Todds retain ownership of the Property, the Todds shall pay the full amount of the Town's loan including principal and all accrued interest. (b) Sale of Property. If the Todds sell the property for a price agreed to by the Town as set forth in paragraph 12 above, the proceeds shall be used as follows: first, to pay sales commission and closing costs; second, to pay the balance due on the loan secured by the first deed of trust to Todds' commercial lender( "the Commercial Loan"); third, to reimburse the Todds for all principal payments made on the Commercial Loan; fourth, to reimburse the Todds for their cash down payment made on the Property; fifth, to repay the principal amount of the Town's loan; sixth, to pay all accrued interest on the Town's loan; Page 3 of 7 all remaining proceeds shall be paid to the Todds. If the sales price is insufficient to pay all accrued interest on the Town's loan, the Todds shall be discharged of any obligation to make any further such payments. In no case shall the Todds obligation to repay the principal amount of the Town's loan be discharged. The following example is illustrative: HOUSE SALE EXAMPLES These examples are based on the following assumptions: Purchase price $590,000 Resale after five years ° $325,000 Town loan at an average interest rate of 8% per annum (5 years interest is $130,000) ° Down payment of $65,000 by Todds Bank loan of $200,000 DISTRIBUTION OF FUNDS FROM FUTURE SALE Reimbursement to Todd of Principal Payments on Bank Loan by Todd 4,600 4,600 4,600 Reimbursement of Todds' Down Payment 65,000 65,000 65,000 Subtotal 409,755 477,180 549,890 Page 4 of 7 Example #1 Example #2 Example #3 Avg. Appreciation of 4% Avg. Appreciation of 6% Avg. Appreciation of 8% Sales Price 717,825 789,553 866,904 Sales Commission/ Closing Costs 43,070 47,373 52,014 Payment of Balance on Commercial Loan 195,400 195,400 195,40 Reimbursement to Todd of Principal Payments on Bank Loan by Todd 4,600 4,600 4,600 Reimbursement of Todds' Down Payment 65,000 65,000 65,000 Subtotal 409,755 477,180 549,890 Page 4 of 7 Payment of Town Loan Principal 325,000 325,000 325,000 Payment of Town Loan Interest 84,755 130,000 130,000 Balance of Proceeds to Todds 0 22,180 94,890 15. Default, (a) Events constituting default. Each of the following events shall be a default and a breach of this Agreement: (i) Todds' default or delinquency in the payment of any loan secured by a mortgage permitted by this agreement to be placed by Todds against title of the Property; (ii) Breach of any term, condition, or requirement of this agreement. (b) Notice and right to cure. As a precondition to pursuing any remedy for an alleged default by Todds, the Town shall give notice of default to the Todds, specifying in detail the alleged event of default and the intended remedy. (c) Todds' right to cure. If the alleged default is nonpayment of taxes or mortgage payments on the purchase money mortgage or other mortgage permitted by the Town to be secured against the Property, Todds shall have ten (10) days after notice is given to cure the default. For the cure of any other default, Todds shall promptly and diligently after the notice commence curing the default and shall have thirty (30) days after notice is given to complete the cure plus any additional period that is reasonably required for curing the default. (d) Town's remedies. If any default by Todds shall continue uncured, following notice of default and the period allowed for cure, in addition to all other rights and remedies provided by law to which the Town may resort cumulatively or in the alternative, the Town may determine the sales price unilaterally, cause the Property to be sold, and allocate the sales price as follows: first, to pay sales commission and closing costs; second, to pay the balance due on the loan secured by the first deed of trust to Todds' commercial lender ( "the Commercial Loan "); third, to repay the principal amount of the Town's loan; Page 5 of 7 fourth, to pay all accrued interest on the Town's loan; fifth, to reimburse the Todds for all principal payments made on the Commercial Loan; sixth, to reimburse the Todds for their cash down payment made on the Property; all remaining proceeds shall be paid to the Todds. 16. No Assianment. Except as otherwise provided herein, Todds may not assign, rent, or part with the possession of the whole or any part of the Property, nor pledge their interest to secure any indebtedness, without first obtaining the written consent of the Town. 17. Attorneys' Fees. In case legal action is brought by either party under this Agreement for breach or enforcement of its terms, the prevailing party is entitled to reasonable attorneys' fees and costs. 18. Modification of Amendment This Agreement may be modified or amended, or the proportionate equity shares of the parties adjusted, only with the written consent of the parties. 19. Entire Agreement. This Agreement constitutes the entire understanding between the parties on the subject of this Agreement and supersedes all prior verbal and other negotiations. 20. California Law. This Agreement and the rights and obligations of the parties shall be construed, interpreted, and enforced pursuant to the laws of the State of California, except that this Agreement shall be given a fair and reasonable interpretation in accordance with the intention of the parties without regard to, or aid of, Section 1654 of the California Civil Code. Page 6 of 7 The parties have signed this Agreement on December � 1992, at Los Gatos, California. TOWN OF LOS GATOS, A California Municipal Corporation B W David W. Knapp Town Manager ATTEST: MW �� Marian os rove Clerk of t e Town of Los Gatos Los Gatos, California STATE OF CALIFORNIA COUNTYOF�.S.Q ..l.,.� !�CA fff .........as. LINDA v.K. -J QAFRApNNCdNIV � � n 4ry.7W Vo—dd;�� J &dj- Valerie S. Todd APPROVED AS TO FORM: —7`��,, 0c,-�,1-- KAT ERINE ANDERTON TOWN ATTORNEY On this.. gbh........, dayofDeumbe ..,in the year.. ff.!. f ..... , before me, n)C�: n.. D i� S ... , a Notary Public, State of California, dulr c^om assio ed and s orn, Pe sona�ly ppeared ............ . M77.....1ToS.T arT ... VCL�e.a e.5, rsonally known to me or proved to me on the basis of satisfactory evidence) to be the person .... whose name... & ................... ............................... . subscribed to this instrument, and acknowledged that ... 'hey... executed it. IN WITNES WHTEOF I have hereunto set my hand and affixed my official seal in the. ...l. ✓�l . .............................. County of .�. ©.��jj ....1. 6L 1.TJ1.1'Y.1.1. q......... , on the date set forth above in this certificate. l,P n 'r / . . / nls eonomeln is onI, a genstal form wnia may on proper for use In singe n, ,saotons arq In no / v r L4X-(jl. l r � r Vd r vi- war apss. or m lmsnoee to an. ae a spy .. ror mo w on,n.�aney, rno Doman aoo, " ✓ malt Notarx�iib ic, State of California . sny wan•no,' aUer .woss o, iwiied a. b iM legal valgRy d any p.... or oo sysi a these f-. In any then* In..,non. ,�YL, My commission expires (,Li �/ 7 '-'2-1s, 1 Cowdery's Form No. 32 — Acknowledgement to Notary Public — Individuals — (C.C. Sec. 1189) — (Rev. 1/83) Page 7 of 7