California Code of Regulations › Title 25 - Housing and Community Development › Division 1 - Housing and Community Development › Chapter 7 - Department of Housing and Community Development Programs › Subchapter 18 - Child Care Facilities Financing Program › Article 4 - Direct Loan Program › Section 8271 - Legal Documents

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) As a condition of receiving a direct
					 loan, a successful applicant shall be required to enter into a loan agreement
					 with the department or its contractor. The loan agreement shall require the
					 applicant to execute a promissory note in favor of the department or its
					 contractor in the principal amount of the direct loan, and to provide the loan
					 security documents specified in the loan agreement for the benefit of the
					 department or its contractor. The promissory note shall provide that a default
					 under the loan agreement shall be a default under the promissory
					 note.
(b) The loan agreement shall
					 contain the following terms and conditions:
(1) Interest rate of the loan;
(2) Term of the loan;
(3) Amortization schedule;
(4) Description of the project and a time
					 frame for completion, and a provision that if the work is not completed by the
					 completion date set forth in the construction contract, the loan will be in
					 default unless an extension of time is given in writing by the department or
					 its contractor;
(5) Description of
					 security for the loan;
(6)
					 Description of the documents to be provided by the applicant to secure
					 repayment of the loan (e.g., promissory note, deed of trust, security
					 agreement, fixture filing, UCC-1);
(7) A borrower covenant to require the
					 borrower to maintain a current, valid child care license for the facility
					 during the term of the direct loan;
(8) A borrower covenant that the borrower
					 shall provide child care and development services of the priority type
					 identified in the borrower's application at the facility for which the loan was
					 made, unless the department has approved, in writing, provision of child care
					 and development services of a different type, for the lesser of twenty (20)
					 years or the term of the direct loan, unless the borrower is a family child
					 care provider temporarily ceasing providing child are and development services
					 and complying with section 8271(b)(10);
(9) A borrower covenant that the borrower
					 shall notify the department or its contractor within fourteen (14) calendar
					 days of the cessation of child care and development services in the facility
					 for which the direct loan was made ("cessation notice");
(10) A borrower covenant for family child
					 care provider borrowers only, that in the event the borrower:
(i) ceases to provide services;
(ii) retains its license; and
(iii) intends to resume child care and
					 development services, the cessation notice shall include:
(i) the reasons for the interruption in
					 services; and
(ii) a date for
					 resuming services. The borrower may amend the resumption of services date
					 declared in the cessation notice by submitting an amended cessation notice to
					 the lender and the department or its contractor. The covenant shall also
					 include that any cessation of services exceeding three years from the date of
					 the initial cessation notice shall constitute a default of the
					 loan;
(11) A
					 requirement that the borrower maintain appropriate insurance on the facility
					 during the term of the direct loan naming the department or its contractor as
					 an additional loss payee and in an amount sufficient to repay the direct
					 loan;
(12) A list of the acts and
					 omissions that shall constitute a default or breach under the loan agreement,
					 and the department's or contractor's remedies in the event of default or
					 breach. The submittal of information in support of an application for a direct
					 loan which was or has become untrue, shall constitute a default or breach under
					 the loan agreement and promissory note;
(13) A borrower covenant providing that, with
					 the exception of a family child care provider temporarily ceasing to provide
					 services in compliance with section 8271(b)(10), failure by the borrower to
					 continue operation of the licensed facility assisted with the direct loan for
					 child care and development shall constitute a default or breach under the loan
					 agreement; and
(14) Any other terms
					 or conditions required by the department or its contractor which are reasonably
					 necessary to insure compliance of the particular facility and applicant with
					 the requirements of this subchapter and to protect the interests of the
					 State.