AN ORDINANCE relating to the Community Development Block Grant Float Loan Program; authorizing renewed advances on existing loans after early repayments are required to support other Block Grant activities pending availability to the City of annual entitlement funds; authorizing the Director of Economic Development to enter into related modification agreements, including an agreement with Rose & Associates, L.L.C. for the Promenade Red Apple Market; appropriating Community Development Block Grant funds for such advances; and ratifying and confirming prior acts.

WHEREAS, the City Council, by Ordinance 116402, adopted policies for short-term loans, known as "CD Float Loans," of Community Development Block Grant ("CDBG") funds not yet needed for the activities to which they are allocated; and

WHEREAS, the City has several CD Float Loans outstanding; and

WHEREAS, the City Council, by Ordinance 119225, approved the City's Director of the Office of Economic Development ("OED") providing a CD Float Loan (the "Loan") to Rose & Associates, L.L.C. ("Borrower") for an economic development project (the "Project") involving the refinancing of debt incurred to acquire inventory, fixtures, equipment, and the leasehold interest in the Promenade 23 Red Apple Market (the "Market") and to finance new leasehold improvements to the Market, with a loan term extending to June 23, 2001; and

WHEREAS, CD Float Loan terms permit the City to require early repayment of all or part of the principal in order to fund CDBG activities; and

WHEREAS, the City from time to time has a temporary need to reduce balances outstanding on CD Float Loans during the period prior to availability of the City's annual CDBG entitlement grant; and

WHEREAS, in February 2000 the OED Director requested that Borrower make a partial principal payment on its Loan in the amount of $1,700,000 to enable the City to fund CDBG activities in a timely manner, which amount was paid; and

WHEREAS, the City's year 2000 CDBG entitlement grant is now available, in an amount exceeding the City's immediate cash requirements for CDBG activities; and

WHEREAS, the OED Director has requested authority to advance funds to the Borrower, and authority to make similar advances of funds under existing CD Float Loan Agreements if partial payments are made in the future in similar circumstances; and

WHEREAS, such advances require additional expenditure authority, although no net additional funds are required; and

WHEREAS, the making of the proposed advance and any future advances in similar circumstances will not impair the implementation of other projects or programs of the City using CDBG funds; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Whenever the City shall require funds in order to meet temporary cash requirements for CDBG activities pending the City's receipt of its annual Block Grant entitlement as approved by the United States Congress, the OED Director may request and receive payments on one or more outstanding CD Float Loans, in advance of the payment schedule for such loan(s). The OED Director may accept payment from a CD Float Loan borrower, from the bank that has issued a letter of credit securing the loan, or from another party making payment on behalf of the borrower, all in accordance with loan documents or as otherwise agreed between the OED Director and the borrower. After any such payment is received, and when the Director of the Human Services Department informs the OED Director that the current year's CDBG entitlement grant is available and that there are sufficient CDBG funds on the City's federal line of credit, the OED Director may make one or more new advances on any CD Float Loan(s) on which such repayments have been made. Any such new advance may not exceed the amount that was repaid on the CD Float Loan in response to a request under this Section plus an amount determined by the OED Director based on the estimated interest costs to the borrower of temporary substitute financing, and in any event may not cause the outstanding balance on any CD Float Loan to exceed the maximum principal amount of such loan authorized by ordinance. The authority granted in this Section is subject to the existence of sufficient expenditure authority for the Office of Economic Development in the Housing and Community Development Revenue Sharing Fund.

Section 2. Any CD Float Loan on which an advance is made under this ordinance shall continue to be secured by one or more irrevocable letters of credit that shall have a total amount available for drawing, at all times, at least equal to the outstanding principal amount and accrued interest, plus all additional interest that will accrue for the next 30 days. Each letter of credit shall be issued or confirmed by a commercial bank satisfactory to the OED Director and shall be in form and content satisfactory to the OED Director.

Section 3. Any advances authorized by this ordinance shall be conditioned upon satisfaction of applicable CDBG requirements, and upon other conditions required by law or deemed appropriate by the OED Director.

Section 4. For any new advance authorized under this ordinance, the OED Director is authorized to execute, deliver, accept, administer, modify and enforce, as appropriate, for and on behalf of the City, a loan modification agreement and such related documents as may be appropriate, consistent with the intent of this ordinance. The intent of this ordinance is to authorize modifications that do not materially exceed what is required to restore a CD Float Loan to the status that would have existed had no early repayment been required. Without limiting the foregoing general authority, the OED Director is authorized to execute, deliver, accept, administer, modify and enforce, as appropriate, for and on behalf of the City, a Loan Modification Agreement with the Borrower evidencing the modified terms of the Loan for the Market, based upon the form attached hereto as Exhibit A, and with such insertions, additions and revisions as she shall deem appropriate to implement the intent of this ordinance.

Section 5. The OED Director is authorized, for and on behalf of The City of Seattle, to advance an amount up to ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000) from year 2000 CDBG funds (which may include available CDBG program income), subject to availability of sufficient CDBG funds, to Rose & Associates, L.L.C. under the CD Float Loan agreement for the Market, subject to the terms and conditions stated in this ordinance. An amount up to ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000) is hereby appropriated from the Housing and Community Development Revenue Sharing Fund for such purpose.

Section 6. The OED Director is authorized to take such other actions and execute and deliver such other documents as shall be reasonably necessary or appropriate to carry out the intent of this ordinance. The authority granted in this ordinance is supplemental to, and not in limitation of, other authority of the OED Director.

Section 7. Payments of interest on and principal of any CD Float Loan on which funds are advanced under this ordinance shall continue to be deposited in the Housing and Community Development Revenue Sharing Fund, and may be expended pursuant to any past or future appropriations of CDBG funds, whether in the annual budget or otherwise, unless such other appropriations are limited by their express terms to CDBG program income from other programs.

Section 8. The Director of the Human Services Department is authorized to amend the City of Seattle's Consolidated Plan and to take such other actions as are appropriate to implement the intent of this ordinance under applicable laws and regulations.

Section 9. Any act pursuant to the authority and prior to the effective date of this ordinance is hereby ratified and confirmed.

Section 10. This ordinance shall take effect and be in force thirty (30) days from and after its approval by the Mayor; but if not approved and returned by the Mayor within ten (10) days after presentation, it shall take effect as provided by Municipal Code Section 1.04.020.

Passed by the City Council the _____ day of ____________, 2000, and signed by me in open session in authentication of its passage this _____ day of ______, 2000. ___________________________________ President of the City Council

Approved by me this _____ day of _________________, 2000. ___________________________________ Paul Schell, Mayor

Filed by me this _____ day of ____________________, 2000. ___________________________________ City Clerk

Exhibits: A. Promenade Red Apple Loan Modification Agreement Promenade Red Apple Loan Modification Agreement Prom23 Amend Ord2.doc (Version 2)

LOAN MODIFICATION AGREEMENT (CD Float Loan Secured by Letter of Credit

THIS LOAN MODIFICATION AGREEMENT (this "Agreement") is made as of the ____ day of May, 2000, by and between The City of Seattle, a Washington municipal corporation ("Lender"), acting through its Office of Economic Development ("OED") and Rose & Associates, L.L.C., a Washington limited liability company ("Borrower").

RECITALS

This Agreement is entered into upon the basis of the following facts and circumstances:

A. Lender and Borrower entered into a loan of federal Community Development Block Grant ("CDBG") funds (the "Loan") under the terms and conditions set forth in a Promissory Note in the principal amount of $2,075,000 (the "Note"), and a Community Development Block Grant Float Loan Agreement ("Loan Agreement"), each dated as of December 23, 1998. In addition, Borrower has executed other documents in favor of Lender in connection with the Loan, all of which, together with the Note and Loan Agreement, are referred to in this Agreement as the "Loan Documents." Capitalized terms not defined herein have the meanings set forth in the Loan Agreement unless the context otherwise clearly requires.

B. In order to fund Lender's community development activities, in February 2000 OED requested that Borrower make a partial principal payment on its Loan in the amount of $1,700,000 (the "Principal Payment") in lieu of OED exercising its right, granted in the Note, to demand payment and draw on the letter of credit ("Letter of Credit') securing the Loan.

C. Associated Grocers, Incorporated ("AG"), made the Principal Payment to Lender on Borrower's behalf on February 18, 2000 as interim refinancing of a portion of the costs originally funded by the Loan.

D. The City now has year 2000 CDBG funds available. Borrower has requested, and subject to the terms of this Agreement the City is willing to provide, a new advance of Loan funds in the amount of the Principal Payment. Such advance from year 2000 CDBG funds will refinance the same costs of the original Loan on substantially the same terms as contemplated by the Loan Agreement and Promissory Note, such that this advance does not constitute a new loan or new activity under CDBG regulations.

E. Lender's City Council has approved the re-advance of funds by Ordinance _________.

NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

Section 1. Modification of Terms. The terms of the Loan are modified as follows:

1.1 New Advance. Subject to the conditions herein and in the Loan Agreement, the Lender shall make a single further advance on the Loan, solely from available CDBG funds, in the amount of up to One Million Seven Hundred Thousand Dollars ($1,700,000). Such new advance shall be used by Borrower solely to refinance indebtedness incurred by Borrower in order to make the Principal Payment. Borrower hereby requests that the full amount of the new advance be disbursed by check jointly payable to it and Associated Grocers, Incorporated.

1.2 Monthly Principal and Interest Payments. Lender agrees that in recognition of Borrower's Principal Payment of $1,700,000, Borrower shall not be required to make the monthly installment payments of principal and interest for the months of April and May, 2000 that would have been otherwise due. Thereafter, the monthly principal and payments shall continue as established pursuant to the Note, subject to the right of the Lender to require earlier repayment as provided therein.

1.3 Letter of Credit. The new advance and interest thereon, together with all other amounts owing on the Loan, shall be secured by the Letter of Credit.

1.4 Fair Contracting Practices. Borrower shall comply with the Fair Contracting Practices Ordinance of the City of Seattle (Ordinance 119601), as amended. Conduct made unlawful by that ordinance constitutes a breach of contract. Engaging in an unfair contracting practice may also result in the imposition of a civil fine or forfeiture under the Seattle Criminal Code as well as various civil remedies.

Section 2. Conditions to New Advance. All conditions to Loan disbursement set forth in the Loan Agreement shall apply to the new advance. In addition, as a condition to the new advance, Borrower shall (a) be in full compliance with the Loan Documents (b) execute and deliver to Lender an Amendment to Promissory Note in form required by Lender.

If Borrower does not satisfy all conditions to receipt of the new advance on or before May 26, 2000, any obligation of Lender to make the new advance shall terminate.

Section 3. Representations, Warranties, Waivers and Releases by Borrower. Borrower hereby represents and warrants that this Agreement has been duly authorized, executed and delivered and that the Loan Documents, as modified hereby, are legally valid and binding obligations of Borrower, enforceable in accordance with their terms. Borrower represents and warrants that it is in full compliance with the Loan Documents and that, except as Borrower may have expressly stated to OED in writing, all representations and warranties of Borrower in the Loan Documents are true and complete as of the date hereof. As additional consideration and inducement for Lender's agreement to this Agreement, Borrower acknowledges that it has no defenses, setoffs or counterclaims to payment of the Note or any amounts owing thereunder, and if any such defenses, setoffs or counterclaims exist, whether known or unknown, Borrower hereby irrevocably waives and releases them. Without limiting the foregoing waiver and release, as of the date of this Agreement, Borrower expressly waives and releases any disputes with, and any claims or defenses against, Lender or any of its officers, employees or agents, in connection with the Loan Documents or the activities being financed thereunder, including without limitation any claims or defenses arising out of any statement, act or omission of any department or office of The City of Seattle, whether in its capacity as Lender or in a regulatory, utility or other capacity.

Section 4. Consents. Borrower represents and warrants that it has obtained consents from all parties whose consent may be required for this Agreement, and that this Agreement will not result in a default under any other agreements.

Section 5. Not a Novation. This Agreement and the Amendment to Promissory Note constitute a modification and not a novation. The Loan Documents, as modified by this Agreement and the Amendment to Promissory Note, shall remain in full force and effect.

Section 6. No Implied Waiver. Borrower acknowledges that any delay by Lender in enforcing its rights under the Loan Documents does not constitute waiver of any such rights.

Section 7. No Implied Modification. Except as specifically provided in this Agreement, the terms of the Loan Documents shall not be considered as modified, released, altered or affected.

Section 8. Oral Modifications. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

LENDER: THE CITY OF SEATTLE By: ______________________________ Mary Jean Ryan Director, Office of Economic Development

BORROWER: ROSE & ASSOCIATES, L.L.C. By: ______________________________ Leonard Rose Managing Member By: ______________________________ Laurie Ann Rose Member