Update: New Loan Agreement Templates

This update will cover process and document template changes, their reasons, unchanged aspects, and a contract template review. Your continued involvement is invaluable.

New Loan Agreement Templates

These are for reference only; the final form of any loan agreement will vary based on the details of a project and its underwriting.

• 1 HDG Loan Agreement
• 2 HDG Loan Exhibit B Statement of Work
• 3 HDG Loan Exhibit D Rent and Income Limits
• 4 HDG Loan Exhibit F Use Covenant and Regulatory Agreement
• 5 Exhibit G Promissory Note
• 6 Exhibit H Deed of Trust
• 7 Exhibit I Subordinate Agreement

Please note that the Office of the State Controller must approve, review, and periodically update these and all other State Contracting templates. The most up-to-date version of the State Grant Agreement template is on the Office of the State Controller Contract and Grant Templates website.

Loan Agreement Updates: Process, Template Changes, and Unchanged Elements Review

Process and Template Revisions: What's New

• The standard Loan Agreement and Statement of Work Templates have been updated to include clarifications and exceptions to insurance provisions to better align with the single-asset entity nature of many borrowers, less restrictive bid bond requirements, and additional notice opportunities for tax credit investors.
• The transfer sections in the Use Covenant and Deed of Trust documents have been updated to establish exceptions to transfer consent requirements more clearly and broadly. This will reduce administrative timelines during the life of the loans and allow for a wider variety of transfers pursuant to security interests.
• Notice and cure provisions throughout the documents have been updated and added, which will help borrowers and third-party stakeholders to remain apprised of the status of projects supported by the State and increase opportunities to solve possible future issues.
• The Subordination Agreement template has been updated to include provisions frequently requested by senior lenders, such as updated definitions and bankruptcy, notice and condemnation, and casualty provisions, which will increase confidence for senior lenders in the security of their loans.
• Drafter’s Notes have been added throughout the template documents to clarify language that cannot be modified, including explanations regarding where to find alternative language that meets the need or State law or policy that prohibits modifications.

Unchanged Elements: What Remains Consistent

• Requests to accommodate particular lender-level or grantee-level revisions that more than one lender or borrower does not generally request were not included in the interest of maintaining more widely applicable templates.
• Requests that are prohibited under State law or policy, such as adding more affirmative third-party beneficiary rights, were not included.
• Requests oriented toward overall process or application improvement, such as providing more information during the application phase, more consistently reserving inapplicable provisions, or providing template documents as a resource, will be considered and implemented as part of separate process improvement initiatives.

Moving Forward

Our priorities going forward include continuing to implement loan agreement template updates, starting to execute OIT solutions, and performing information collecting and developing responses to the executive order.