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IN THE CITY COUNCIL OF THE CITY OF SAN LEANDRO <br />RESOLUTION NO. 2018-099 <br />RESOLUTION OF THE CITY OF SAN LEANDRO CITY COUNCIL TO <br />SUBSTITUTE COLLATERAL FOR THE SECTION 108 GUARANTEED LOAN FROM <br />THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT <br />(HUD) FOR THE CONSTRUCTION OF THE SAN LEANDRO SENIOR COMMUNITY <br />CENTER BY DESIGNATING AS COLLATERAL $190,635.20 IN THE CITY'S <br />GENERAL FUND RESTRICTED RESERVE <br />WHEREAS, the City previously applied for and received a two million five hundred <br />thousand dollars ($2,500,000) Section 108 guaranteed loan from the United States Department of <br />Housing and Urban Development ("HUD") for the construction of the San Leandro Senior <br />Community Center ("Section 108 Loan"); and <br />WHEREAS, as part of the Section 108 Loan, the City executed a promissory note <br />numbered B -08 -MC -06-0017, whereby the City promised to repay the Section 108 Loan <br />("Section 108 Loan Note"); and <br />WHEREAS, repayment of the Section 108 Loan Note is to come from federal <br />Community Development Block Grant ("CDBG") Funds provided to the City; and <br />WHEREAS, the terms of the original Section 108 Loan required the City to record a <br />deed of trust against the Senior Community Center property as collateral for the Section 108 <br />Loan Note. However California law prohibits the City from recording a lien against publically <br />owned property; and <br />WHEREAS, since the City has never provided the deed of trust on the Senior <br />Community Center property, HUD requests that the City provide alternate collateral in the event <br />that CDBG Funds are not available to the City for loan repayment; and <br />WHEREAS, the City has proposed, and HUD has agreed, that the City can provide <br />restricted General Fund Reserves as collateral; and <br />WHEREAS, in order to provide collateral for the Section 108 Loan, City staff <br />recommends restricting $190,635.20 (the "Restricted Amount"), an amount equal to one annual <br />Section 108 Loan debt service payment, in the General Fund Restricted Reserves as collateral for <br />the Section 108 Loan Note; and <br />WHEREAS, the Restricted Amount must be restricted within the General Fund Reserves <br />until the Section 108 Loan is fully paid in August 2029; and <br />WHEREAS, in the unlikely event that the City is unable to otherwise meet its repayment <br />obligations during the term of the Section 108 Loan's Note, the Restricted Amount would be <br />utilized to cover the deficiency. <br />RESOLUTION NO. 2018-099 <br />