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HomeMy WebLinkAbout815 N. HARBOR, L.P. (CORNERSTONE CCRC MORTAGEG FUND I., LLC / HOME INVESTMENT PARTNERSHIP PROGRAM FUNDS) 4-2017INSURANCE NOT REQUIRED C o (s r A%) A-201 5-029-02 WORK MAY PROCEED, CLERK OF COUNCIL �J LI UU CtATp' AUG 2 8 2017 FIRST MODIFICATION AGREEMENT j ,dy W 4N ' THIS FIRST MODIFICATION AGREEMENT (this "Agreement") is made and entered into as of August 22, 2017, by and among BANK OF AMERICA, N.A„ a national banking association ("Bank' or "Bondowner Representative"), CORNERSTONE CCRC MORTGAGE FUND !, LLC, a California limited liability company ("Cornerstone"), and 815 N. HARBOR, L.P., a California limited partnership ("Borrower'). RECITALS A. Reference is made to that certain Bond Issuance and Pledge Agreement executed by the California Municipal Finance Authority, a joint exercise of powers agency, duly organized and existing under the laws of the State of California (together with its successors and assigns, "Issuer'), and Bondowner Representative and dated as of August 1, 2015 (the "Pledge Agreement"), securing up to $15,185,948 California Municipal Finance Authority Multifamily Housing Revenue Bonds (Andalucia Apartments) 2015 Series A-1 and A-2 (the "Bonds"). Pursuant to that certain Loan Agreement executed by Borrower, Issuer and Bondowner Representative, dated as of August 1, 2015 (the "Loan Agreement"), Issuer has agreed to lend to Borrower certain proceeds of the sale of the Bonds (the "Loan") in the principal amount of Fifteen Million One Hundred Eighty -Five Thousand Nine Hundred Forty -Eight and No/100 Dollars ($15,185,948) (the "Construction Loan Amount"). Upon satisfaction of certain conversion conditions set forth in that certain Bond Purchase Agreement, dated as of August 1, 2015 (the "Bond Purchase Agreement") executed by and among Bank, California Community Reinvestment Corporation, a California nonprofit public benefit corporation ("CCRC") and Borrower, will convert to a term loan not to exceed the principal amount of Eleven Million Four Hundred Eighty -Three Thousand Four Hundred and No/100 Dollars ($11,483,400) (the "Cornerstone Purchase Price"). Subsequently CCRC assigned to Cornerstone its interest in the Bond Purchase Agreement by that certain Loan Commitment Assumption Agreement dated as of August 1, 2015, by and between CCRC and Cornerstone. On the Conversion Date (as defined in that certain Supplemental Agreement, dated August 1, 2015 (the "Supplemental Agreement"), by and between Borrower and CCRC), Cornerstone shall purchase the Bonds and Bank shall assign to Cornerstone its interests under certain of the Loan Documents (as defined below). Upon Cornerstone's purchase of the Bonds, Cornerstone shall become the Majority Owner with respect to the Bonds. B, The obligation of Borrower to repay the Loan is evidenced by (i) that certain Promissory Note Secured by Deed of Trust (Construction Loan Converting to Term Loan) (Series A-1) dated as of August 1, 2015, made by Borrower to the order of Issuer in the original principal amount of $14,494,948 (the "Series A-1 Note") and all modifications, extensions, renewals and replacements thereof and (ii) that certain Promissory Note Secured by Deed of Trust (Construction Loan Converting to Term Loan) (Series A-2) dated as of August 1, 2015, made by Borrower to the order of Issuer in the original principal amount of $891,000 (the"Series A-2 Note"; and together with the Series A-1 Note, the "Note") and all modifications, extensions, renewals and replacements thereof. The obligations of Borrower under the Loan Agreement and the Note are secured by a Construction and Permanent Deed of Trust with Assignment of Rents, Security Agreement, and Fixture Filing (Affordable Housing - California) executed by Borrower as trustor in favor of Issuer (the "Deed of Trust") covering certain real and personal property, as therein described (all collectively, the "Property"). Issuer has assigned its rights and interests under the Loan Agreement, Note and Deed of Trust to Bondowner Representative for the benefit of Bank as Majority Owner pursuant to the terms of that certain Assignment of Deed of Trust and Related Documents, dated as of August 1, 2015. The obligations of Borrower under the Loan Agreement and the Note are also secured by other collateral, as more fully explained in the Loan Agreement. This Agreement, the Loan Agreement, the Note and the Deed of Trust and the Supplemental Agreement, together with all of their exhibits, and all other documents which evidence, guaranty, secure, or otherwise pertain to the Loan collectively constitute the "Loan Documents C, Borrower has constructed upon the Land certain improvements (the "Improvements") that qualify as a "qualified low income housing project" under Section 42(g) of the Internal Revenue Code (the "Code") and consists of a multifamily rental housing project and other related appurtenances with 70 units (the "Project"). The Land and the Improvements are hereinafter collectively referred to as the "Property." D. Borrower has requested an increase in the Cornerstone Purchase Price from Cornerstone and Cornerstone has agreed to such increase subject to modification of the Loan Documents in accordance with the terms of this Agreement. E. Bank, Cornerstone and Borrower wish to enter into this Agreement in order to amend the Loan Documents in order to increase the Cornerstone Purchase Price and modify certain of the other terms thereof in accordance with Cornerstone's requirements. NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Bank, Cornerstone and Borrower agree as follows: 1. Incorporation of Recitals. The foregoing Recitals are hereby incorporated into this Agreement by this reference. 2. Amendment of Bond Purchase Agreement. As among Cornerstone, Bank and Borrower, the terms, conditions and covenants of the Bond Purchase Agreement are hereby amended as follows: (a) Recital F. Recital F of the Bond Purchase Agreement is hereby deleted in its entirety and the following is substituted therefor: "F. Pursuant to the terms and conditions of this Agreement, upon satisfaction of the Conversion Conditions set forth in Article 3 and any other conditions herein, Cornerstone has agreed to purchase the Series A-1 Bonds in the principal amount of $11,332,000 or such lesser amount as required by the terms hereof and the Series A-2 Bonds in the principal amount of $659,300 or such lesser amount as required by the terms hereof. The terms and conditions of Cornerstone's purchase of the Bonds are set forth in this Agreement. Upon such purchase of the Bonds by Cornerstone (subject to the terms herein), the Bank Loan will, pursuant to its terms, convert into a term loan in an amount not to exceed Eleven Million Nine Hundred Ninety -One Thousand Three Hundred and No/100 Dollars ($11,991,300) (the "Permanent Loan"), with such Permanent Loan having two tranches (each a "Tranche"), one tranche in the amount of Eleven Million Three Hundred Thirty -Two Thousand and No/1001h Dollars ($11,332,000) (the "Series A-1 Tranche") and one tranche in the amount of Six Hundred Fifty -Nine Thousand Three Hundred and No/100" Dollars ($659,300) (the "Series A-2 Tranche", which Series A-2 Tranche represents the so-called "Section 8 Tranche'), and that certain Supplemental Agreement, dated as of even date herewith, by and between Borrower and CCRC (the "Supplemental Agreement"), shall automatically become effective and shall amend, modify and supplement the terms of the Loan Agreement. If Cornerstone does not purchase the Bonds from Bank for any reason whatsoever, the Bank Loan will become immediately due and payable. (b) Section 2.1(a). Section 2.1(a) of the Bond Purchase Agreement is hereby deleted in its entirety and the following is substituted therefor: "(a) Cornerstone Purchase Price. Provided that all of the Conversion Conditions set forth in Article 3 and Exhibit F of this Agreement are satisfied, Cornerstone shall purchase the Bonds at par, in the maximum principal amount of $11,991,300 (the "Cornerstone Purchase Price'), on the Conversion Date, subject to adjustment as provided in Section 2.1(b) below; provided, however, that at Conversion, the Loan shall not exceed seventy-five percent (75%) of Cornerstone's appraised decontrol value at stabilized occupancy. On or before the Conversion Date, Borrower shall have made all such payments of principal and interest on the Note (and caused the same to be applied to the redemption of the Bonds) such that the principal amount outstanding together with any accrued unpaid interest with respect to the Bonds and the Permanent Loan as of the Conversion Date does not exceed the Cornerstone Purchase Price." 3. Amendment of Series A-1 Note. As between Bank and Borrower (and Cornerstone as successor to Bank), the terms, conditions and covenants of the Series A-1 Note are hereby amended as follows: (a) Section 2.1(b). Section 2.1.(b) of the Series A-1 Note is hereby deleted in its entirety and the following is substituted therefore: "Immediately prior to the Conversion Date, and as a Conversion Condition, Borrower shall pay to Issuer an amount sufficient to reduce the entire outstanding principal balance of the Loan to $11,991,300 or such lesser amount of the Cornerstone Purchase Price (as defined in the Bond Purchase Agreement) as may be permitted pursuant to the terms of the Bond Purchase Agreement., with the Series A-1 Tranche evidenced by this Note not to exceed $11,332,000 or such lesser amount as may be permitted pursuant to the terms of the Bond Purchase Agreement and with the Series A-2 Tranche evidenced by the Series A-2 Note not to exceed $659,300" (b) Section 3.2.2. Section 3.2.2 of the Series A-1 Note is hereby deleted in its entirety and the following is substituted therefor: "Fixed Rate. Subject to Section 6.2 below, at all times from and after the Conversion Date, the unpaid principal balance of this Note from time to time outstanding shall bear interest at the Fixed Rate. The "Fixed Rate" on this Note from the Conversion Date until the Initial Fixed Rate Maturity Date (as defined below) shall be a fixed interest rate equal to Four and Sixty -Nine one hundredths percent (4.69%) per annum, provided that the Conversion Date occurs on or prior to September 20, 2017." 4. Amendment of Series A-2 Note. As between Bank and Borrower (and Cornerstone as successor to Bank), the terms, conditions and covenants of the Series A-2 Note are hereby amended as follows: (a) Section 2.1(b). Section 2.1.(b) of the Series A-2 Note is hereby deleted in its entirety and the following is substituted therefore: "Immediately prior to the Conversion Date, and as a Conversion Condition, Borrower shall pay to Issuer an amount sufficient to reduce the entire outstanding principal balance of the Loan to $11,991,300 or such lesser amount of the Cornerstone Purchase Price (as defined in the Bond Purchase Agreement) as may be permitted pursuant to the terms of the Bond Purchase Agreement., with the Series A-2 Tranche evidenced by this Note not to exceed $659,300 or such lesser amount as may be permitted pursuant to the terms of the Bond Purchase Agreement and with the Series A-1 Tranche evidenced by the Series A-1 Note not to exceed $11,332,000" (b) Section 3.2.2. Section 3.2.2 of the Series A-1 Note is hereby deleted in its entirety and the following is substituted therefor: "Fixed Rate. Subject to Section 6.2 below, at all times from and after the Conversion Date, the unpaid principal balance of this Note from time to time outstanding shall bear interest at the Fixed Rate. The "Fixed Rate' on this Note from the Conversion Date until the Initial Fixed Rate Maturity Date (as defined below) shall be a fixed interest rate equal to Four and Sixty -Nine one hundredths percent (4.69%) per annum, provided that the Conversion Date occurs on or prior to September 20, 2017." 5. Amendment to Deed of Trust. The following sentence is added to the third paragraph of the Deed of Trust: "On the Conversion Date, Cornerstone will purchase $11,991,300.00 of the Bonds as referenced in the Assignment and Assumption of Bonds, Deed of Trust and Loan Documents that is to be recorded at Conversion." 6. Modification Fee. As consideration for Cornerstone's agreement to enter into this Agreement and the modifications to the Loan Documents contemplated herein, Borrower shall pay to Cornerstone a modification fee equal to $5,396.00 on or prior to the date of execution of this Amendment. IN WITNESS WHEREOF, this First Modification Agreement is hereby made as of the date first written above. "Bank" BANK OF AMERICA, N.A., a national banking association By: Name: Title: Signature Page to First Modification Agreement S-1 "Cornerstone" CORNERSTONE CCRC MORTGAGE FUND I, LLC a California limited liability company By: California Community Reinvestment Corporation, a California nonprofit public benefit corporation, it's manager M Mary Kaiser President Signature Page to First Modification Agreement S-2 "Borrower" 815 N HARBOR, LP, a California limited partnership By: OHDC 815 N Harbor, 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 815 N Harbor, LLC, a California limited liability company its Developer General Partner By: By: Barry A. Cottle Trustee of the Cottle Family Trust Dated 3/8/87 its member Todd R. Cottle its member Signature Page to First Modification Agreement S-3 (DOJ Loan) JUNIOR LIENOR'S CONSENT AND SUBORDINATION AGREEMENT NOTICE: THIS JUNIOR LIENOR CONSENT AND SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY REMAINING SUBJECT TO AND OF A LOWER PRIORITY THAN THE LIEN OF THE DEED OF TRUST AS MODIFIED BY THE FOREGOING MODIFICATION AGREEMENT. The undersigned ("Junior Lienor"), as owner and holder of a security interest and other interests ("Junior Security Interest") evidenced by a Deed of Trust, Assignment, Security Agreement and Fixture Filing dated August 1, 2015, recorded on August 14, 2015, as Instrument No. 2015000425634, in the Official Records of the County of Orange, State of California, together with the other loan documents executed in connection with the Junior Security Interest, which is junior, subordinate and subject to the terms, covenants, conditions and restrictions of the Deed of Trust, as modified by the foregoing Modification Agreement, hereby acknowledges its consent to the terms and provisions of the foregoing Modification Agreement and the transactions contemplated thereby. The undersigned further reaffirms and acknowledges that the Junior Security Interest, is junior, subordinate and subject to the Deed of Trust, as modified by the foregoing Modification Agreement. [NOTICE: THE LOAN DOCUMENTS (AS DEFINED IN THE FOREGOING MODIFICATION AGREEMENT) MAY CONTAIN A PROVISION WHICH MAY ALLOW THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO EXPEND A PORTION OF THE LOAN FOR OTHER PURPOSES THAN IMPROVEMENT OF THE PROPERTY.] Agreed and Acknowledged: Dated as of: August 22, 2017 "JUNIOR LIENOR" BANK OF AMERICA, N.A., a national banking association IN Name: Its: Consent to First Modification Agreement C-1 qty HOME Loan and City NSP Loan) JUNIOR LIENOR'S CONSENT AND SUBORDINATION AGREEMENT NOTICE: THIS JUNIOR LIENOR CONSENT AND SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY REMAINING SUBJECT TO AND OF A LOWER PRIORITY THAN THE LIEN OF THE DEED OF TRUST AS MODIFIED BY THE FOREGOING MODIFICATION AGREEMENT, SUBJECT TO THE TERMS OF THE CITY LOAN AGREEMENT. The undersigned ("Junior Lienor"), as owner and holder of a security interest and other interests ("Junior Security Interest") evidenced by a City HOME Deed of Trust and Assignment of Rents dated June 26, 2015, recorded on August 14, 2015, as Instrument No. 2015000425631 ("City HOME Deed of Trust"), and by a City NSP Deed of Trust and Assignment of Rents dated June 26, 2015, recorded on August 14, 2015, as Instrument No. 2015000425629 ("City NSP Deed of Trust") (together with the City HOME Deed of Trust shall collectively be referred to herein as "City Deeds of Trust"), which City Deeds of Trust were recorded in the Official Records of the County of Orange, State of California, together with the other loan documents executed in connection with the Junior Security Interest, which is junior, subordinate and subject to the terms, covenants, conditions and restrictions of the Deed of Trust, as modified by the foregoing Modification Agreement, hereby acknowledges its consent to the terms and provisions of the foregoing Modification Agreement and the transactions contemplated thereby. The undersigned further reaffirms and acknowledges that the Junior Security Interest, is junior, subordinate and subject to the Deed of Trust, as modified by the foregoing Modification Agreement. [Signature Page(s) Follow.] Consent to First Modification Agreement C-2 [NOTICE: THE LOAN DOCUMENTS (AS DEFINED IN THE FOREGOING MODIFICATION AGREEMENT) MAY CONTAIN A PROVISION WHICH MAY ALLOW THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO EXPEND A PORTION OF THE LOAN FOR OTHER PURPOSES THAN IMPROVEMENT OF THE PROPERTY.] Agreed and Acknowledged: Dated as of: August 22, 2017 ATTEST' M RIA E;, «R CLERK OO t ,_ U..,'I.1 CIL "JUNIOR LIENOR" CITY OF SANTA ANA By: Cynthia J. Kurtz Interim City Manager APPROVED AS TO FORM Sonia R. Carvalho 0 RECOMMENDED FOR APPROVAL: By: .. Robert M. ZurSch iede lli Interim Executive\ irector Community Development Agency Consent to First Modification Agreement C-3