RD 3560-35 Loan Resolution

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Form RD 3560-35
( 02-05)

Position 5

FORM APPROVED
OMB NO. 0575-0189

UNITED STATES DEPARTMENT OF AGRICULTURE
RURAL DEVELOPMENT

LOAN RESOLUTION
RRH Loan to a Broadly Based Nonprofit Corporation
RRH Loan to a Profit Type Corporation
RRH Loan to a Profit Type Limited Liability Corporation on a Limited Profit Basis
RCH Loan to a Nonprofit Cooperative
RCH Loan to a Limited Liability Company

LOAN RESOLUTION OF

, 20

. RESOLUTION OF THE BOARD

OF DIRECTORS OR MEMBERS OF
PROVIDING FOR BORROWING $

TO FINANCE HOUSING AND

, AND
RELATED FACILITIES IN A RURAL AREA FOR
THE COLLECTION, HANDLING, AND DISPOSITION OF INCOME, THE ISSUANCE OF INSTALLMENT PROMISSORY
NOTE AND REAL ESTATE SECURITY INSTRUMENT, AND RELATED MATTERS.
("Entity") is organized

Whereas

and operating under
,
the Board of Directors or members ("Governing Body"') has decided to provide certain housing and related facilities for eligible
occupants in rural areas. The Governing Body has determined that the Entity is unable to provide such housing and facilities with its
own resources or to obtain from other sources for such purpose sufficient credit upon terms and conditions which the Entity could
reasonably be expected to fulfill.
BE IT RESOLVED:
1.
Application for Loan. The Entity shall apply for and obtain a loan (''Loan'') of $
from the United States of America acting through the Rural Housing Service, or a successor agency, United States Department of
Agriculture, (''Government'') pursuant to section 515 of the Housing Act of 1949. The loan may be sold and insured by the
Government. The Loan shall be used solely for the specific purposes for which it is approved by the Government, in order to
provide housing and related facilities for occupants, as defined by the government in rural areas. Such housing, facilities, and
the land constituting the site are called ''Housing''.
2.
Execution of Loan Instruments. To evidence the loan the Entity shall issue a promissory note ("Note''), signed by its
authorized representative, with any requisite seal affixed, for the amount of the Loan, payable in installments over a
years, bearing interest at a
period of
rate, and containing other terms and conditions, prescribed by the Government. To secure the note or any indemnity or other agreement
required by the Government, the authorized representative is hereby authorized to execute a real estate security instrument giving a lien
upon the Housing and upon such other real property of the Entity as the Government shall require, including an assignment of the rents,
subsidies, revenues and profits as collateral security to be enforced in the event of any default by the Entity, and containing other terms
and conditions prescribed by the Government. The authorized representative is further authorized to execute any other security
instruments and other instruments and documents required by the Government in connection with the making or insuring of the loan.
The indebtedness and other obligations of the Entity under the Note, the related security instruments, and any related agreements are
herein called the ''Loan Obligation''.
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control
number. The valid OMB control number for this information collection is 0575-0189. The time required to complete this information collection is estimated to
average 15 minutes 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.

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3.
Equal Opportunity and Nondiscrimination Provisions. The authorized representative is hereby authorized and
directed to execute on behalf of the Entity: (a) any undertakings and agreements required by the Government pursuant to Title VII
of the Civil Rights Act of 1968 as amended by the Fair Housing Amendments Act of 1988 related to Fair Housing regarding
nondiscrimination in the use and occupancy of housing; (b) Form RD 400-1 entitled ''Equal Opportunity Agreement", including
an ''Equal Opportunity Clause'' to be incorporated in or attached as a rider to each construction contract the amount of which
exceeds $10,000 and any part of which is paid for with funds from the loan, and (c) Form RD 400-4, entitled ''Assurance
Agreement (under Title VI, Civil Rights Act of 1964)'', and any other undertakings and agreements required by the Government
pursuant to lawful authority.
4.
Borrower Equity Contribution. The amount of $
to be contributed by the Entity
from its own funds for the land purchase or development will be placed or deposited with the lender and dispersed prior to any
disbursement of interim loan funds or any loan funds of the Government.
5.
Accounts for Housing Operations and Loan Servicing. The Corporation shall establish on its books the following
accounts, which shall be maintained so long as the Loan Obligations remain unsatisfied: a General Operating Account, a Tenant
Security Deposit Account and a Reserve Account.
a. General Operating Account. By the time the Government loan is closed or interim construction funds are obtained,
whichever occurs first, the Entity shall deposit cash from its own funds in an amount totaling
$

, Use of deposited cash will be in accordance with

7 CFR part 3560 or any successor regulation.
b. Reserve Account. Transfers at a rate not less than $

annually shall be made to

the Reserve Account until the amount in the Reserve Account reaches the minimum sum of $
or such higher amount later agreed to by the Government and shall be resumed at any time when necessary, because
of disbursements authorized by the Government from the Reserve Account to restore it to said sum. Withdrawal and
use of funds deposited to this account will be in accordance with 7 CFR part 3560 or any successor regulation. With
prior consent of the Government, funds in the Reserve Account may be used by the Entity:
To pay a return to the Borrower of up to 8 percent per annum of the borrower's initial investment of
: Provided, that after such disbursement (a) the amount in the Reserve Account
$
will be not less than that required by this section 5b to be accumulated by that time (less any disbursements
authorized by the Government), and (b) the amount in the Reserve Account will likely not fall below that required
to be accumulated during the next 12 months.
To pay dividends to the stockholder or for any other purpose desired by the Entity, provided that after such
disbursement (a) the amount in the Reserve Account will not be less than that required by this section 5b to be
accumulated by that time (less any disbursements authorized by the Government), and (b) the amount in the Reserve
Account will likely not fall below that required to be accumulated during the next 12 months.
6.
Regulatory Covenants. So long as the Loan Obligations remain unsatisfied, the Entity shall comply with all
appropriate regulations of the Government and shall:
a. Impose and collect such fees, assessments, rents, occupancy charges, and charges that the income of the
Housing will be sufficient at all times for operation and maintenance of the Housing, payments on the Loan
Obligations, and maintenance of any required accounts.
b. Establish and maintain complete books and records relating to the Housing's financial affairs, cause such books
and records to be audited at the end of each fiscal year, promptly furnish the Government without request a copy of each
audit report, and permit the Government or its representative to inspect such books and records at all reasonable times.
c. If required or permitted by the Government, revise the accounts herein provided for, or establish new
accounts, to cover handling and disposition of income from and payment of expenses attributable to the Housing or
to any other property securing the Loan Obligations and submit regular and special reports concerning the Housing
or financial affairs.

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d. Unless the Government gives prior consent:
(1) Not use the Housing for any purpose other than as rental Housing and related facilities for eligible
occupants.
(2) Not enter into any contract or agreement for improvements or extensions to the Housing or other property
securing the Loan Obligations.
(3) Not cause or permit voluntary dissolution of the Entity nor merge or consolidate with any other
organization, nor cause or permit any transfer or encumbrance of title to the Housing or any part thereof or interest
therein, by sale, mortgage, lease, or otherwise.
(4) Not cause or permit the issue or transfer of an interest in the Entity, borrow any money, nor incur any liability that
would have a detrimental effect on the Housing.
e.

Submit Housing reports as per 7 CFR part 3560 or any successor regulation for prior Government review.

f. Comply with all its agreements and Obligations in or under the Note, security instrument, and any related agreement
executed by the Entity in connection with the Loan.
g. Not alter, amend, or repeal without the Government's consent this agreement or the Entity Agreement, which shall
constitute parts of the total contract between the Entity and the Government relating to the Loan Obligations.
h. Take other action as may be required by the Government in connection with the operation of the Housing, or with
any of the Entity's operations or affairs which may affect the Housing, the Loan Obligations, or the security.
i.

If return on investment for any year exceeds 8 percent per annum of Borrower's initial investment of

$
, the Government may require that the borrower reduce rents the following year,
refund the excess return on the investment to the tenants, or use said excess in a manner that will best benefit the tenants.
7.

General Provisions.

a. It is understood and agreed by the Entity that any Loan made or insured will be administered subject to the limitations
of the acts of Congress and related regulations, and that any rights granted to the Government herein or elsewhere may
be exercised by the Government in its sole discretion.
b. The provisions of this agreement are representations to the Government, to induce the Government, to make or insure a
Loan to the Entity. If the Entity should fail to comply with or perform any provision of this agreement or any requirement made by
the Government pursuant to this agreement, such failure shall constitute default as fully as default in payment of amounts due on
the Loan Obligations. In the event of such failure, the Government at its option may require specific performance, declare the entire
amount of the Loan Obligations immediately due and payable and, if such entire amount is not immediately paid, may take
possession of and operate the Housing and proceed to foreclose its security and enforce all other available remedies, or take such
other action as it may deem reasonable.
c. Any provisions of this agreement may be waived by the Government in its sole discretion to any extent such provisions
could have been foregone to in amended form initially.
d.

Any notice, consent, approval, waiver or agreement must be in writing.

e. This Loan Agreement shall be subject to the present regulations of the Government and to its future regulations and
provisions.
f. The Corporation agrees that no person with a disability will be subjected to discrimination in employment or denied
the benefits of the Housing because of such disability. It will comply with the requirements of the Fair Housing Act, 42
U.S.C. 3601 et seq., the Fair Housing Amendments Act of 1988, the Rehabilitation Act of 1973, 29 U.S.C. 794, the
Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et seq., and the implementing regulations of the Department of
Agriculture, 7 CFR part 15b.

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g.

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This resolution may be cited in the security instrument and any other instruments as the "Loan Resolution

of

, 20

."

CERTIFICATE
The undersigned,
resolution duly adopted by the Governing Body on

, hereby certifies that the foregoing is a true copy of a
, which has not been
, 20

altered, amended, or repealed and that the undersigned is the authorized person to make this representation on behalf of the Entity.

(Date)

(Signature)

(SEAL)

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