HUD 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

OMB Approval No. 2502-0470
(exp. 08/31/2013)

Federal Housing Commissioner

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. This information is required to obtain benefits and voluntary. 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 projects meet 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").
Whereas, the Owner has made application for a capital advance to assist in financing a rental housing project to house [ ] elderly persons or
[ ] 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 forth and of the valuable considerations, the parties
hereto do covenant and agree as follows:
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 amount not to exceed
Dollars
($
). The amount of the capital advance may not exceed
the total estimated development cost of the project (as determined
by HUD), less the incremental development cost associated with
excess amenities and design features to be paid for by the Owner.
The capital advance shall bear no interest and is not required to
be repaid so long as the housing remains available to eligible very
low income households for a period of
years and in
accordance with Section 202 or Section 81l. The capital advance
shall be secured by a
(hereinafter called
the "Mortgage") on the property described in Exhibit "A." For
Section 202 and Section 811 projects, structures (existing housing
and related facilities) without rehabilitation may be acquired from
other entities. The Owner shall execute or cause to be executed a
Use Agreement restricting use of the PRAC-assisted units in the
project to rental housing for eligible households as approved by
HUD for a
year period.
2. The Owner shall complete on the aforesaid project in
accordance with drawings and specifications filed with and
approved by HUD and designated Project Number
dated
. Such drawings and specifications, which include
"General Conditions of the Contract for Construction" except for
all paragraphs concerning arbitration in AIA Document A201 and
"Supplementary Conditions of the Contract for Construction"
(HUD Form No. 2554) as amended, have been identified by the
Owner, the Design Architect, the Architect administering the
construction Contract (hereinafter called the "Architect”), the
Contractor and the Contractor's Surety.
3. Changes in the Drawings and Specifications, or changes by
altering or adding to the working contemplated, or orders for
extra work, or which change the design concept, may be effected
Previous versions obsolete

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only with the prior written approval of the Architect and HUD
under such conditions as HUD may establish.
4.(a) The Owner shall make monthly applications on Form
Number HUD-92403-CA for portions of the capital advances by
HUD. Such applications for construction items shall be for
amounts equal to (i) the total value of classes of the work
acceptably completed; plus (ii) the value of materials and
equipment not incorporated in the work, but delivered to and
suitably stored at the site; less (iii) 10 percent (holdback) and less
prior disbursements. The "values" of both (i) and (ii) shall be
computed in accordance with the amounts assigned to classes of
the work in the "Contractor's and/or Mortgagor's Cost
Breakdown," attached hereto as Exhibit "B" and made a part
hereof. Each application shall be filed at least
days before
the date desired, and the owner shall be entitled thereon only to
such amount as may be approved by HUD.
(b) Upon completion of the improvements, including all
landscape requirements and off-site utilities and streets, the
Owner shall furnish HUD satisfactory evidence that all work
requiring inspection by municipal and other governmental
authorities having jurisdiction has been duly inspected and
approved by such authorities and by the rating or inspection
organization, bureau, association or office have jurisdiction; and
that all requisite certificates of occupancy and other approvals
have been issued. The balance due the Owner hereunder shall be
payable at such time after completion as HUD releases the
holdback, after the expiration of any period which mechanics and
materialmen may have for filing liens.
(c) The Owner agrees that any funds required for the completion
of the project over and above the amount of the capital advance
shall be deposited in the Construction Account prior to
disbursement of proceeds of the capital advances.
(d) The Owner covenants that it will deposit the proceeds of the
capital advance and the additional funds to be furnished by the
Owner in order to assure the payment of all Project costs into
separate interest bearing account(s) called the "Construction
Account" established by it in depository or depositories which are
members of the Federal Deposit Insurance Corporation, Savings
Association Insurance Fund, or National Credit Union Share
form HUD-90167-CA (7/2009)
ref Handbooks 4571.4 and 4571.5

Insurance Fund. Any portion of the capital advance not insured
by a Federal insurance organization shall be fully (100%) and
continuously collateralized with specific and identifiable U.S.
Government or Agency securities prescribed by HUD 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.
Previous versions obsolete

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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.
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 all 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 attorneyin-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 undisbursed 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
form HUD-90167-CA (7/2009)
ref Handbooks 4571.4 and 4571.5

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 construction payable to the Contractor, as
interest may appear. Certified duplicates of such policies shall be
deposited with HUD.
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, building
components stored offsite 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 a form acceptable to HUD. 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 new construction or substantial
rehabilitation 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
Previous versions obsolete

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 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.
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.

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form HUD-90167-CA (7/2009)
ref Handbooks 4571.4 and 4571.5

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.

Note: If a mixed-finance transaction is structured with a loan of the capital advance from the Sponsor to the Owner then the rights and duties
of the Owner shall also apply to the Sponsor.
By:

(Seal)
Attest

___________________________________________________________
(Name of Owner)

__________________________________________________________
Secretary

___________________________________________________________
(Signature & Date)

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

Date

By:

By:

(Seal)
Attest

___________________________________________________________
(Name of Sponsor if a Mixed-Finance Transaction)

__________________________________________________________
Secretary

___________________________________________________________
(Signature & Date)

__________________________________________________________
By: President

Previous versions obsolete

Page 4 of 4

form HUD-90167-CA (7/2009)
ref Handbooks 4571.4 and 4571.5