HomeMy WebLinkAboutCALIFORNIA, STATE OF DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENTI N S U AT& 11 Jr � P 019t, I R ' 0
WOW MAY PRXEEI)
9CLERK OFCOUNCIL
FR'�9RECORDING IN ACCORDANCE
WITH CALIFORNIA GOVERNMENT
VOIAPCODE SECTION 27383 and 27388.1.
RECORDING REQUESTED BY, AND
WHEN RECORDED, MAIL TO:
State of California
Department of Housing and
Community Development
P. O. Box 952052
Sacramento, CA 94252-2052
Attn: Legal Affairs Division
Affordable Housing and Sustainable
Communities (AHSC) Program
14-ASHC-10478
W
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.
THIS SUBORDINATION AGREEMENT (the "Agreement") is dated as of February 15, 2019,
for reference purposes only, and is entered into by and among 'The City of Santa Ana, a
Charter City and Municipal Corporation, (the "Junior Lienholder") and Depot at Santiago,
L.P., a California limited partnership (the "Borrower"), and the Department of Housing and
Community Development, a public agency of the State of California (the "Senior Lender").
[a*0311111"
A. Borrower is the owner of the fee simple interest in that real property described in
Exhibit A attached hereto and made a part hereof (the "Property"). The Borrower is
constructing a 70-unit multifamily residential rental development on the Property (the
"Improvements"). The Property and the Improvements are sometimes referred to collectively
as the "Development."
B. The Junior Lienholder has made a loan to the Borrower in the principal sum of
Three Million and no/100 Dollar-, ($3,000,000.00) (the "Junior Lienholder Loan"). The Junior
Lienholder Loan is evidenced by a certain promissory note (the "Junior Lienholder Note"),
secured by a certain deed of trust (the "Junior Lienholder Deed of Trust") recorded on August
9, 2013, as Instrument No. 2013000476764 in the Official Records of Orange County,
California (the "Official Records"), The Junior Lienholder and Borrower modified the Junior
Lienholder Deed of Trust and entered into the City Loan Modification Agreement (the "Junior
AHSC Subord. Agrrnt.
(NOFA— 01/30/15)
Now 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loin No.: 14-AHSC-10478
Page 1 of 10
Lienholder Modified Deed of Trust') recorded on March 16, 2016, as Instrument No.
2016000109370 in the Official Records. The Junior Lienholder and Borrower subsequently
entered into that certain Substitution of Trustee and Deed of Partial Reconveyance (the
"Junior Lienholder Deed of Reconveyance") recorded on October 30, 2018, as Instrument
No. 2018000393452 in the Official Records.
The Junior Lienholder and Borrower have also entered in that certain Loan Agreement
Home Program/CDBG Funds (the "Junior Lienholder Loan Agreement') recorded on August
9, 2013, as Instrument No. 2013000476765 in the Official Records, as amended by that
certain Amendment to Loan Agreement (the "Junior Lienholder Amended Loan Agreement")
recorded on June 27, 2014, as Instrument No. 2014000255562 in the Official Records, and
as further amended by that certain City Loan Agreement Modification (the "Junior Lienholder
Modified Loan Agreement") recorded on March 16, 2016, as Instrument No. 2016000109370
in the Official Records. The Junior Lienholder and Borrower have also entered into that
certain Partial Release and Termination of City of Santa Ana Loan Agreement and
Affordability Restrictions (the "Junior Lienholder Partial Release and Termination") recorded
on October 30, 2018, as Instrument No. 2018000393451 in the Official Records.
The Junior Lienholder and Borrower have also entered into that certain Affordability
Restrictions of Transfer of Property (the "Junior Lienholder Affordability Restrictions")
recorded on August 9, 2013, as Instrument No. 2013000476766 in the Official Records, as
amended by that certain Amendment to Affordability Restrictions of Transfer of Property (the
"Junior Lienholder Amended Affordability Restrictions") recorded on June 27, 2014, as
Instrument No. 2014000255563 in the Official Records, and as further amended by the
Junior Lienholder Modified Loan Agreement.
The Junior Lienholder Deed of Trust, the Junior Lienholder Modified Deed of Trust,
the Junior Lienholder Deed of Reconveyance, the Junior Lienholder Loan Agreement, the
Junior Lienholder Amended Loan Agreement, the Junior Lienholder Modified Loan
Agreement, the Junior Lienholder Partial Release and Termination, the Junior Lienholder
Affordability Restrictions, the Junior Lienholder Amended Affordability Restrictions and all
other documents evidencing or securing the Junior Lienholder Liens are collectively referred
to herein as the "Junior Lienholder Documents."
C. In order to finance the development of the Improvements, the Senior Lender
has agreed to loan the Borrower a sum not to exceed Four Hundred Twenty Five Thousand
and no/100 Dollars ($425,000.00) (the "AHSC Loan"), subject to the terms and conditions
of: (i) a regulatory agreement restricting the use and occupancy of the Development and the
income derived therefrom which shall be dated as of even date herewith and recorded
concurrently herewith as an encumbrance on the Property in the Official Records (the "AHSC
Regulatory Agreement'), and (ii) other loan documents. The AHSC Loan will be evidenced
by a promissory note (the "AHSC Note"), the repayment of which will be secured by, among
other things, a deed of trust by Borrower as trustor, to Senior Lender as beneficiary recorded
concurrently herewith as an encumbrance on the Property in the Official Records (the
"AHSC Deed of Trust") and by such other security as is identified in other loan documents.
AHSC Subord. Agrmt.
(NOFA-01/30/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 2 of 10
D. The Senior Lender is willing to make the AHSC Loan provided the AHSC Deed
of Trust and the AHSC Regulatory Agreement are liens, claims or charges upon the
Development prior and superior to the Junior Lienholder Documents, and provided that the
Junior Lienholder specifically and unconditionally subordinates and subjects the Junior
Lienholder Documents to the liens, claims or charges of the AHSC Deed of Trust and the
AHSC Regulatory Agreement.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto
and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and in order to induce the Senior Lender to make its Al-ISC Loan, it is hereby
declared, understood and agreed as follows:
1. The AFISC Regulatory Agreement and the AHSC Deed of Trust securing the
AHSC Note in favor of the Senior Lender, and any and all renewals, modifications,
extensions or advances the rounder or secured thereby (including interest thereon) shall
unconditionally be and remain at all times liens, claims, or charges on the Development prior
and superior to the Junior Lienholder Documents, and to all rights and privileges of the Junior
Lienholder thereunder; and the Junior Lienholder Documents, together with all rights and
privileges of the Junior Lienholder thereunder are hereby irrevocably and unconditionally
subject and made subordinate to the liens, claims or charges of the AHSC Deed of Trust and
the AHSC Regulatory Agreement.
2. This Agreement shall be the whole and only agreement with regard to the
subordination of the Junior Lienholder Documents, together with all rights and privileges of
the Junior Lienholder thereunder, to the liens, claims or charges of the AHSC Deed of Trust
and the AHSC Regulatory Agreement, and this Agreement shall supersede and cancel any
prior agreements to subordinate the claims, liens or charges of, but only insofar as would
affect the priority between the claims, liens or charges of the Junior Lienholder Documents to
the AHSC Deed of Trust and the AHSC Regulatory Agreement including, but not limited to,
those provisions, if any, contained in the Junior Lienholder Documents, which provide for the
subordination of the lien or charge thereof to another lien or charge on the Property or the
Improvements. This agreement shall not limit, waive, modify or replace the requirement that
the Senior Lienholder comply with IRC Section 412(h)(6)(E)(ii) as stated in the AHSC
Regulatory Agreement.
3. The Junior Lienholder declares, agrees and acknowledges that:
(a) The Junior Lienholder consents and approves (i) all provisions of the AHSC
Note, the AHSC Deed of Trust and the AHSC Regulatory Agreement, and (ii) all
agreements among the Junior Lienholder, Borrower and Senior Lender for the
disbursement of the proceeds of the AHSC Loan, including without limitation any loan
escrow agreements which have been provided to the Junior Lienholder for review;
AHSC Subord. Agrmt.
(NOFA— 01130/16)
Rev: 11/08/2018
Prep. 08/0312019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No,: 14-AHSC-10478
Page 3 of 10
(b) The Senior Lender, in making disbursements of the AHSC Loan pursuant to
the AHSC Note or any other agreement, is under no obligation or duty to, nor has the
Senior Lender represented that it will, see to the application of such proceeds by the
person or persons to whom the Senior Lender disburses such proceeds, and any
application or use of such proceeds for purposes other than those provided for in such
agreement or agreements shall not defeat the subordination herein made in whole or
in pail;
(c) That none of the execution, delivery or recordation of any of the AHSC
Note, AHSC Deed of Trust, or AHSC Regulatory Agreement, or the performance of
any provision, condition, covenant or other term thereof, will conflict with or result in a
breach of the Junior Lienholder Documents or the Junior Lienholder Note; and
(d) The Junior Lienholder intentionally and unconditionally waives, relinquishes,
subjects and subordinates the claims, liens or charges upon the Development of the
Junior Lienholder Documents, all present and future indebtedness and obligations
secured thereby, in favor of the claims, liens or charges upon the Development of the
AHSC Deed of Trust and the AHSC Regulatory Agreement, and understands that in
reliance upon, and in consideration of, this waiver, relinquishment, subjection, and
subordination, the AHSC Loan and advances thereof are being and will be made and,
as part and parcel thereof, specific monetary and other obligations are being and will
be entered into which would not be made or entered into but for said reliance upon
this waiver, relinquishment, subjection and subordination.
4. Senior Lender hereby agrees, but only as a separate and independent covenant
of the Senior Lender and riot as a condition to the continued effectiveness of the covenants
and agreements of the Borrower and the Junior Lienholder as set forth herein, as follows:
(a) Following a notice from the Senior Lender to the Borrower that a default or
breach exists under the terms of the Senior Lender Documents and each of them, the
Senior Lender shall promptly (but in no event later than the following business day) send
a copy of such notice to the Junior Lienholder and the Junior Lienholder shall have the
right, but not the obligation, to cure the default as follows:
(i) If the default is reasonably capable of being cured within thirty (30)
days, as determined by the Senior Lender in its sole discretion, the
Junior Lienholder shall have such period to effect a cure prior to
exercise of remedies by Senior Lender under the Senior Lender
Documents, or such longer period of time as may be specified in the
Senior Lender Documents.
(ii) If the default is such that it is not reasonably capable of being cured
within thirty (30) days, as determined by the Senior Lender in its sole
discretion, or such longer period if so specified, and if the Junior
Lienholder (a) initiates corrective action within said period, and (b)
AHSC Subord. Agrmt.
(NOFA— 01/30/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 4 of 10
diligently, continually, and in good faith works to effect a cure as
soon as possible, then the Junior Lienholder shall have such
additional time as is determined by the Senior Lender, in its sole
discretion, to be reasonably necessary to cure the default prior to
exercise of any remedies by Senior Lender.
In no event shall Senior Lender be precluded from exercising remedies if its security
becomes or is about to become materially jeopardized by any failure to cure a default or
the default is not cured within ninety (90) days after the first notice of default is given, or
such longer period of time as may be specified in the Senior Lender Documents.
Nothing in this subparagraph (a) is intended to modify any covenant, term or condition
contained in the Senior Lender Documents, including, without limitation, the covenant
against creating or recording any liens or encumbrances against the Property without the
prior written approval of the Senior Lender.
(b) The provisions of this paragraph 4 are intended to supplement, and not to
limit, waive, modify or replace, those provisions of law pertaining to notice and cure rights
of junior lenders including, without limitation, those set forth in California Civil Code
sections 2924b and 2924c.
5. The Senior Lender would not make the AHSC Loan without this Agreement.
6. This Agreement shall be binding on and inure to the benefit of the legal
representatives, heirs, successors and assigns of the parties.
7. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
8. In the event that any party to this Agreement brings an action to interpret or
enforce its rights under this Agreement, the prevailing party in such action shall be entitled to
recover its costs and reasonable attorneys' fees as awarded by the court in such action.
9. This Agreement may be signed by different parties hereto in counterparts with
the same effect as if the signatures to each counterpart were upon a single instrument. All
counterparts shall be deemed an original of this Agreement.
[Signatures follow on page 6 of this Subordination Agreement.
The remainder of this page is intentionally left blank.]
AHSC Subord. Agrmt.
(NOFA— 01/30/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 5 of 10
NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH
ALLOWS THE PERSON (OR ENTITY) OBLIGATED ON YOUR REAL PROPERTY
SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR
OTHER PURPOSES THAN IMPROVEMENT OF THE LAND.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set
forth above and agree to be bound hereby:
r- r
Norma Mitre
Acting Clerk of the Council
APPROVED AS TO FORM
Sonia R. Carvalho
RECOMMENDED FOR APPROVAL
Steven A. Mendoza
Executive Director
Community Development Agency
ATTEST: CITY OF SANTA ANA
Stine Ridge
City Manager
[Signatures must be acknowledged.]
[Signatures follow on page 7 of this Subordination Agreement.
The remainder of this page is intentionally left blank.]
AHSC Subord. Agrmt.
(NOFA— 01130/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 6 of 10
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document, to which this certificate
is attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of Orange )
On Julie 13 2019 _ before me, Rosa A. FI ores Notaly Public
(insert name and title of the officer)
personally appeared Kristine a who proved to me on the basis of satisfactory evidence to be
the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me
that49e/she/4hey executed the same in his/her/their authorized capacity(ies-), and that by 446/her/their
signatureW on the instrument the person(A), or the entity upon behalf of which the persons) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature s ot - l v t`
(Seal)
ROSA A. FLORES
Notary Public -California
Orange County:
Commission S 2228450
My Comm. Expires Feb 7, 2022
Depot at Santiago, L.P., a
California limited partnership
By: OHDC Depot, LLC, a
California limited liability company
Its: Managing General Partner
By: Orange Housing Development Corporation, a
California nonprofit public benefit corporation
Its: Sole Member
By:
Eunice Bobert
Chief Executive Officer
By: C&C Depot, LLC, a
California limited liability company
Its: Administrative General Partner
By: C&C Development Co., LL.C, a
California limited liability company
Its: Sole Member
By:
By:
Todd R. Cottle, Trustee of the 2007 Todd R.
Cottle and Jennifer N. Cottle Revocable Trust,
Member
and
Barry A. Cottle, Trustee of
The Cottle Family Trust Dated 3/8/1987,
Member
[Signatures must be acknowledged.]
[Signatures follow on page 8 of this Subordination Agreement.
The remainder of this page is intentionally left blank.]
AHSC Subord. Agrnnt.
(NOFA— 01130/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 7 of 10
SENIOR LENDER:
The Department of Housing and
Community Development, a public
agency of the State of California
By:
John Lemert, Closings Manager
[Signatures must be acknowledged.]
[The remainder of this page is intentionally left blank.]
AHSC Subord. Agrnnt.
(NOFA— 01/30/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 8 of 10
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF
ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
PARCEL 1 OF PARCEL MAP NO. 2013-170, IN THE CITY OF SANTA ANA, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILE IN BOOK 390, PAGES
1 THROUGH 6 INCLUSIVE, OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPTING AND RESERVING FROM BLOCK 52 UNTO SOUTHERN PACIFIC
RAILROAD COMPANY, A CORPORATION, THEIR SUCCESSORS AND ASSIGNS, ALL
PETROLEUM, OIL, NATURAL GAS AND PRODUCTS DERIVED THEREFROM WITHIN
OR UNDERLYING SAID LAND, OR THAT MAY BE PRODUCED THEREFROM AND ALL
RIGHTS THERETO; PROVIDED, HOWEVER, THAT SAID SOUTHERN PACIFIC
RAILROAD COMPANY, A CORPORATION, THEIR SUCCESSORS AND ASSIGNS,
SHALL NOT USE THE SURFACE OF SAID LAND IN THE EXERCISE OF ANY OF SAID
RIGHTS, BUT SHALL HAVE THE. RIGHT TO ENTER INTO AND USE THE SUB-
SURFACE OF SAID LAND BY LATERAL OR SLANT DRILLING AND BORING FOR
SUCH PURPOSES; PROVIDED, FURTHER, THAT IN SO DOING SAID SOUTHERN
PACIFIC RAILROAD COMPANY, A CORPORATION, THEIR SUCCESSORS OR
ASSIGNS, SHALL NOT DISTURB THE SURFACE OF SAID LAND, OR ANY
IMPROVEMENTS THEREON, OR REMOVE OR IMPAIR THE LATERAL OR SUBJECT
SUPPORT OF SAID LAND, OR ANY IMPROVEMENT THEREON, BY DEED RECORDED
JULY 14., 1945 IN BOOK 1326 PAGE 24 OF OFFICIAL RECORDS OF ORANGE
COUNTY, CALIFORNIA.
AND FURTHER EXCEPTING THEREFROM THOSE CERTAIN EASEMENTS
BURDENING THE ABOVE REFERENCED REAL PROPERTY THAT WERE GRANTED
PURSUANT TO THAT CERTAIN DECLARATION OF COVENANTS, CONDITIONS AND
RESTRICTIONS PROVIDING FOR RECIPROCAL EASEMENTS, JOINT USE AND
MAINTENANCE DATED AS OF NOVEMBER 1, 2016, AND RECORDED ON FEBRUARY
28, 2017, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA AS
INSTRUMENT NO. 2017000082831.
PARCEL B:
THOSE CERTAIN EASEMENTS BENEFITTING THE ABOVE REFERENCED REAL
PROPERTY THAT WERE GRANTED PURSUANT TO THAT CERTAIN DECLARATION
OF COVENANTS, CONDITIONS AND RESTRICTIONS PROVIDING FOR RECIPROCAL
AHSC Subord. Agrmt.
(NOFA— 01/30/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 9 oP 10
EASEMENTS, JOINT USE AND MAINTENANCE DATED AS OF NOVEMBER 1, 2016,
AND RECORDED ON FEBRUARY 28, 2017, IN THE OFFICIAL RECORDS OF ORANGE
COUNTY, CALIFORNIA AS INSTRUMENT NO. 2017000082.831,
APN: 398-202-12
AHSC Subord. Agrmt.
(NOFA— 01/30/15)
Rev: 11/08/2018
Prep: 08/03/2019 (City of Santa Ana Liens)
Dev: Depot at Santiago
Loan No.: 14-AHSC-10478
Page 10 of 10