90167-CA Capital Advance Agreement

Capital Advance
Agreement
Under Section 202 of the Housing Act of 1959 or
Section 811 of the National Affordable Housing Act

U.S. Department of Housing
and Urban Development
Office of Housing
Federal Housing Commissioner

OMB Approval No. 2502-0470
(exp. 11/30/2006)

Public reporting burden for this collection of information is estimated to average 2 hours per response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. HUD may not collect this information,
and you are not required to complete this form, unless it displays a currently valid OMB control number.
This information collection is necessary to ensure that viable projects are developed. It is important to obtain information from applicants to assist HUD in
determining if nonprofit organizations initially funded continue to have the financial and administrative capacity needed to develop a project and that the project
design meets the needs of the residents. The Department will use this information to determine if the project meets statutory requirements, ensuring the continued
marketability of the projects. This information is required in order to obtain benefits. This information is considered non-sensitive and no assurance of
confidentiality is provided.

Section 202
Section 811
This Agreement, made the
day of
, by and between the United States of America,
Secretary of Housing and Urban Development (hereinafter called "HUD") and
a nonprofit corporation organized and existing under and by virtue of the laws of the State of
(hereinafter
called the "Owner").
elderly persons or
Whereas, the Owner has made application for a capital advance to assist in financing a rental housing project to house
persons with disabilities (hereinafter called the "Project") in accordance with the provisions of Section 202 of the Housing Act of 1959 (12 U.S.C. 1701q)
(hereinafter called "Section 202") or Section 811 of the National Affordable Housing Act (42 U.S.C. 8013) (hereinafter called "Section 811 "), and the
appropriate regulations.
Whereas, the Project will be located at
Now, Therefore, in consideration of the mutual promises hereinafter set
3. Changes in the Drawings and Specifications, or changes by altering
forth and of the valuable considerations, the parties hereto do covenant
or adding to the working contemplated, or orders for extra work
and agree as follows:
have the prior written approval of the Architect and HUD under
such conditions as HUD may establish.
1. HUD, subject to the terms of this Agreement, will make a capital
advance to the Owner, to be advanced as hereinafter provided, in an
4. (a) The Owner shall make monthly applications on Form Number
amount not to exceed
HUD-92403-CA for portions of the capital advances by HUD. Such
Dollars ($
). The amount of the capital advance may not
applications for construction items shall be for amounts equal to (i)
exceed the total estimated development cost of the project (as
the total value of classes of the work acceptably completed; plus (ii)
determined by HUD), less the incremental development cost
the value of materials and equipment not incorporated in the work,
associated with excess amenities and design features to be paid for
but delivered to and suitably stored at the site; less (iii) 10 percent
by the Sponsor. The capital advance shall bear no interest and is not
(holdback) and less prior disbursements. The "values" of both (i)
required to be repaid so long as the housing remains available to
and (ii) shall be computed in accordance with the amounts assigned
eligible very low income households for a period of 40 years and in
to classes of the work in the "Contractor's and/or Mortgagor's Cost
accordance with Section 202 or Section 81l. The capital advance
Breakdown," attached hereto as Exhibit "B" and made a part hereof.
shall be secured by a
(hereinafter called
Each application shall be filed at least
days before the
the "Mortgage") on the property described in Exhibit "A." For
date desired, and the owner shall be entitled thereon only to such
Section 202 projects, structures (existing housing and related
amount as may be approved by HUD.
facilities) without rehabilitation may only be acquired from the
(b) Upon completion of the improvements, including all landscape
Resolution Trust Corporation under Section 21A(c) of the Federal
requirements and off-site utilities and streets, the Owner shall
Home Loan Bank Act. Section 811 projects may be acquired from
furnish HUD satisfactory evidence that all work requiring inspection
the Resolution Trust Corporation or other sources. The Mortgage
by municipal and other governmental authorities having jurisdiction
shall constitute a valid first lien on said property and the
has been duly inspected and approved by such authorities and by the
improvements to be erected thereon and the only lien thereon except
rating or inspection organization, bureau, association or office have
for liens for taxes and assessments not yet payable and other liens
jurisdiction; and that all requisite certificates of occupancy and other
acceptable to HUD. The Owner shall execute or cause to be
approvals have been issued. The balance due the Owner hereunder
executed a Use Agreement restricting use of the project to rental
shall be payable at such time after completion as HUD releases the
housing for eligible households as approved by HUD for a 40-year
holdback, after the expiration of any period which mechanics and
period.
materialmen may have for filing liens.
(c) The Owner agrees that any funds required for the completion of
2. The Owner shall complete on the aforesaid project in accordance
the project over and above the amount of the capital advance shall
with drawings and specifications filed with and approved by HUD
be deposited in the Construction Account prior to disbursement of
and designated
Project Number
proceeds of the capital advances.
dated
. Such drawings and specifications, which include
(d) The Owner covenants that it will deposit the proceeds of the
"General Conditions of the Contract for Construction" except for all
capital advance and the additional funds to be furnished by the
paragraphs concerning arbitration in AIA Document A201 and "SupOwner in order to assure the payment of all Project costs into
plementary Conditions of the Contract for Construction" (HUD
separate interest bearing account(s) called the "Construction
Form No. 2554) as amended, have been identified by the Owner,
Account" established by it in depository or depositories which are
the Design Architect, the Architect administering the construction
members of the Federal Deposit Insurance Corporation, Savings
Contract (hereinafter called the "Architect”), the Contractor and the
Association Insurance Fund, or National Credit Union Share
Contractor's Surety.
Insurance Fund. Any portion of the capital advance not insured by a
.
Federal insurance organization shall be fully (100%) and
continuously collaterialized with specific and identifiable U.S.
Government or Agency securities prescribed by HUD
Previous versions obsolete

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form HUD-90167-CA (11/22/2006)
ref Handbooks 4571.4 and 4571.5

and as set forth in the General Depository Agreement prescribed by
HUD. Moneys in the Construction Account shall be expended only for
the purposes for which capital advance funds were requested and
approved. The same requirements shall be applicable to any escrow
deposit agreements required by HUD.
(e) The Owner agrees that the capital advance shall at all times remain
in balance. HUD shall, in accordance with the provisions of this
Agreement, continue to provide to the Owner funds from the capital
advance as long as the capital advance remains in balance and the
Owner is not in default hereunder or under the Note or Mortgage. The
capital advance deemed to be in balance only when the undistributed
capital advance (after provision for reserve, fees, expenses and other
deposits required by HUD) equal or exceed the amount necessary
(based on HUD's estimate of the cost of construction (including
rehabilitation)) to pay for all work completed and all materials
delivered, for which payment has not been made, and the cost of
completing construction of the project in accordance with the
Drawings and Specifications.
(f) Owners which incur actual development costs that are less than the
amount of the capital advance may be entitled to retain 50 percent of
the savings in the replacement reserve account. Such percentage shall
be increased to 75 percent for owners which add energy efficiency
features which exceed the energy efficiency standards promulgated by
the Secretary in accordance with section 109 of the National
Affordable Housing Act; substantially reduce the life-cycle cost of the
housing; reduce gross rent requirements and enhance tenant comfort
and convenience. These funds shall be used only for the specified
purposes of the replacement reserve or for such other purposes as
determined by the Secretary. Even though an Owner does not qualify
to share in the savings, funds remaining in the project contingency
after cost certification shall be placed in the replacement reserve
account.
5.

HUD shall provide capital advance fund, to the Owner for the charges
or items enumerated below, but only to the extent that such charges
have accrued and the owner is otherwise entitled to payment on
account of such items:
(a) Real Estate taxes during development
$
(b) Insurance during development
$
(c) Preliminary expense (including ______________) $
(d) Land and rights-of-way
$
(e) Architect/Engineering services
$
(f) Legal expenses including title and
recording expenses
$
(g) Administrative expenses
$
(h)
$
(i)
$

6.

The Owner shall cause either this instrument or the construction
contract under which the improvements are to be erected to be filed in
the public records, if the effect thereof will be to relieve the mortgaged
property from mechanics' and materialmen's liens. Before any
disbursement of capital advance funds hereunder, HUD may require
the Owner to obtain from the contractor and all subcontractors and
materialmen dealing directly with the principal contractor,
acknowledgements of payment on and release of lien down to the date
covered by the last disbursement, and concurrently with the final
payment for the entire project. Such acknowledgements and release
shall be in the form required by local lien laws and shall cover all work
done, labor performed and materials (including equipment and
fixtures) furnished for the project.
7.

The Owner shall, as a condition precedent to the first
disbursement hereunder, furnish HUD with a certified, current
survey of the mortgaged property and a mortgagees title policy
(or other evidence of title) in form, substance and amount
satisfactory to HUD. Said policy shall be extended so as to cover
each and every disbursement of said capital advance at the time
of payment thereof and shall show no mechanics' or
materialmen's liens against the mortgaged property.

Previous versions obsolete

8.

The Owner agrees that said project shall be constructed strictly in
accordance with all applicable ordinances and statutes, and in
accordance with the requirements of A regulatory authorities, and any
rating or inspection organization, bureau, association or office having
jurisdiction. The Owner further agrees that said project shall be
constructed entirely on the aforesaid property and will not encroach
upon any easement or right-of-way, or the land of others; and that the
buildings when erected shall be wholly within the building restriction
lines, however established and will not violate applicable use or other
restrictions contained in prior conveyances, zoning ordinances or
regulations. The Owner shall furnish from time to time such evidence
with respect thereto as may be required by HUD, and, upon completion
of construction, shall furnish a survey, certified by a registered
surveyor, which shows the project to be entirely on said property and
to be free from any such violations.

9.

If the Owner at any time prior to the completion of the project
abandons the same or ceases work thereon for a period of more than 20
days or fails to complete the erection of the project strictly in
accordance with the Drawings and Specifications, or makes changes in
the Drawings and Specifications without first securing the written
approval required by paragraph 3 hereof, or otherwise fails to comply
with the terms hereof, any such failures shall be a default hereunder,
and HUD, at its option, may terminate this Agreement. If HUD so
elects to terminate this Agreement, it may use and apply any funds
deposited within by the Owner, regardless of the purpose for which
such funds were deposited, in such manner and for such purposes as it
may prescribe. If HUD elects not to terminate this Agreement, it may
enter into possession of the premises and perform any and all work and
labor necessary to complete the improvements substantially according
to the Drawings and Specifications, and employ watchmen to protect
the premises from injury. All sums so expended by HUD shall be
deemed to have been paid to the Owner and secured by the Mortgage.
For this purpose, the Owner hereby constitutes and appoints HUD its
true and lawful attorney-in-fact, with full power of substitution on the
premises, to complete the project in the name of the Owner. The
Owner hereby empowers said attorney as follows: (a) To use any funds
of the Owner, including any balance which may be held in escrow and
any funds which may remain disbursed hereunder for the purpose of
completing the project in the manner called for in the Drawings and
Specifications; (b) to make such additions, changes and corrections in
the Drawings and Specifications as shall be necessary or desirable to
complete the project in substantially the manner contemplated by the
Drawings and Specifications; (c) to employ such contractors,
subcontractors, agents, architects and inspectors as shall be required
for said purposes; (d) to pay, settle or compromise all existing bills and
claims which may be liens against the mortgaged property, or as may
be necessary or desirable for the completion of the project, or for
clearance of title; (e) to execute all applications and certificates in the
name of the Owner which may be required by any of the contract
documents; (f) to prosecute and defend all actions or proceedings in
connection with the mortgaged premises or the construction of the
project and to take such action and required such performance as he
deems necessary under the accepted guaranty of completion; (g) to do
any and every act which the Owner might do in its own behalf. It is
further understood and agreed that this power of attorney, which shall
be deemed to be a power coupled with an interest, cannot be revoked..
The Owner hereby assigns and quit claims to HUD all sums
undisbursed under the Mortgage and all sums in escrow conditioned
upon the use of said sums for the completion of the project, such
assignment to become effective only in case of the Owners default.

10. The Owner shall provide or cause to be provided workmen's compensation insurance and public liability and other insurance required by
applicable law or by the general conditions included in the
Specifications. The Owner further agrees to purchase and maintain fire
insurance and extended coverage on the mortgaged property. All such
policies shall be issued by companies approved by HUD and shall be
in form and amounts satisfactory to HUD. Such policies shall be
endorsed with standard mortgagee clauses making loss payable to
HUD or its assigns; and may be endorsed to make loss during

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form HUD-90167-CA (11/22/2006)

construction payable to the Contractor, as interest may appear.
Certified duplicates of such policies shall be deposited with HUD.

payable to the Owner hereunder until the Owner establishes to the
satisfaction of HUD that all laborers and mechanics or other persons
employed in the construction of the project have been paid the
applicable wages rates and that such violation of the said Labor
Standards provisions no longer exists. The written statement by HUD
declining to make available any portion of the capital advance
hereunder by reason of such nonpayment or violation shall be deemed
conclusive proof that such amounts are ineligible for disbursement.
(d) The Owner shall insert the labor standards provisions of the
aforesaid Supplementary Conditions of the Contract for Construction
in any contract, if applicable (see paragraph 14(a) above) made by him
for the construction of the project, or any part thereof, and shall require
the Contractor to insert similar provisions in each subcontract relating
to the construction of the project.

11. HUD and its agents shall, at all times during construction, have the
right of entry and free access to the project and the right to inspect all
work done, all materials, equipment and fixtures furnished, installed or
stored in and about the project, and to inspect all books, subcontracts
and records of the Owner.
12. The Owner shall execute and deliver to HUD, prior to final closing, a
security agreement and financing statement, or other similar
instrument, covering all property of any kind whatsoever purchased
with the capital advance and concerning which there may be any doubt
as to such property's being subject to the lien of the Mortgage under
the laws of the State in which the project is situated.
13. The Owner shall furnish to HUD assurance of completion of the
project in the form specified in the applicable Regulations in effect on
the date of this Agreement. Such assurance of completion shall run to
HUD as obligee.
14. (a) The Owner understands that the wages to be paid laborers and
mechanics employed in the construction of housing assisted under
Section 202 and consisting of 12 or more units or housing assisted
under Section 811 and designated for dwelling use by 12 or more
persons with disabilities required by the provisions of Section 2020)(5)
of the Housing Act of 1959, as amended and Section 811 0)(6) of the
National Affordable Housing Act to be not less than the prevailing
wage rates for corresponding classes of laborers and mechanics
employed on a construction of a similar character in the locality in
which the work is to be performed, as determined by the Secretary of
Labor with respect to this project. The Owner hereby states that it has
read the aforesaid determination by the Secretary of Labor and is fully
familiar with the same.
(b) The Owner shall, as a condition precedent to any advance
hereunder, submit to HUD (i) with each application for advance prior
to the final application, certifications, in form approved by HUD, that
all laborers and mechanics employed in the construction of the project
whose work is covered by that or any previous application and who
have been paid in whole or in part of account of said employment,
have been paid at rates not less than the said prevailing wage rate, if
applicable, and (ii) with the final application for advance, certifications, in form satisfactory to HUD, that the project has been fully
constructed in accordance with the provisions of this agreement and
that all laborers and mechanics employed in the construction of the
completed project have been paid not less than the said prevailing
wage rates, if applicable. The Secretary's prevailing wage
determination shall be construed to include every amendment to or
modification of the determination which may be made prior to the
beginning of construction.
(c) The Owner agrees that should any portion of the capital advance
hereunder be ineligible for disbursement by reason of (i) the
nonpayment of the prevailing wage rates, or (ii) violation of any of the
applicable labor standards provisions of the Regulations of the
Secretary of Labor, HUD may withhold from the Owner such amounts

15. The Owner shall furnish such records, papers and documents relating
to the project as HUD may reasonably require from time to time.
16. The Owner shall not transfer, assign or pledge any right or interest in,
or title to, any capital advance funds deposited in the Construction
Account without the approval of HUD.
17. Prior to the disbursement of any portion of the capital advance, the
Owner shall present evidence satisfactory to HUD that it is able to
finance from other than capital advance funds or Project revenues the
applicable minimum capital investment required under the
Regulations.
18. The Owner covenants and agrees that it will attempt to obtain and
maintain in effect exemption of the Project from State and local real
and personal property taxes.
19. The Owner shall, on or before substantial completion of the Project,
provide from sources other than the capital advance hereunder, if
necessary, and from sources and in a manner which will not jeopardize
the security for the capital advance, the furnishings and movable
equipment necessary to the full enjoyment of the use and occupancy of
the Project.
20. Prior to the disbursement of any portion of the capital advance the
Owner shall obtain from the Internal Revenue Service a tax exemption
ruling under Section 501(c)(3) or 501(c)(4) of the Internal Revenue
Code if it is a nonprofit organization or is organized in the Commonwealth of Puerto Rico and exempt from income taxation under Puerto
Rico law, or a consumer cooperative that is tax exempt under State
law, has never been liable for payment of Federal income taxes, and
does not pay patronage dividends, may be exempt from the
requirement set out in the previous sentence if they are not eligible for
tax exemption.
21. No member of or delegate to the Congress of the United States shall be
admitted to any share or part of this Agreement or to any benefit
arising therefrom.
22. By execution of this Agreement the Owner represents that it has not
paid, and, also, agrees not to pay, any bonus, commission, or fee for
the purpose of obtaining an approval of its application for the capital
advance hereunder.

By:

(Seal)
Attest

(Name of Owner)

Secretary

(Signature & Date)

By: President
UNITED STATES OF AMERICA
Secretary of Housing and Urban Development

Date

By:
Previous versions obsolete

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form HUD-90167-CA (11/22/2006)