HomeMy WebLinkAbout25C - AGMT - INCREASE PERM LOAD DEPOT AT SANTIAGOREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
OCTOBER 2, 2018
TITLE:
APPROVE REQUEST FOR CONSENT
FROM C&C DEVELOPMENT COMPANY,
LLC AND ORANGE HOUSING
DEVELOPMENT CORPORATION TO
INCREASE THE PERMANENT LOAN FOR
THE DEPOT AT SANTIAGO
(STRATEGIC PLAN NO. 4,5)
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
1W11"WO 1
❑ As Recommended
❑ As Amended
❑ Ordinance on 1s' Reading
❑ Ordinance on 2nd Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
1. Authorize the City Manager and Clerk of the Council to approve the request for consent from
C&C Development Company, LLC and Orange Housing Development Corporation to increase
the permanent loan up to $6,420,000 for the Depot at Santiago.
2. Authorize the City Manager and Clerk of the Council to execute the Junior Lienholder's
Consent to a Modification Agreement between Bank of America, N.A, California Community
Reinvestment Corporation, and Depot at Santiago, L.P., and any other documents as may be
required to increase the permanent loan up to $6,420,000 for the Depot at Santiago, subject
to non -substantive changes approved by the City Manager and City Attorney.
On August 21, 2018, the City received a request from C&C Development and Orange Housing
Development Corporation (collectively the "Developer") for consent to increase their permanent
loan at the Depot at Santiago by an amount not to exceed $993,500 (Exhibit 1). The Developer's
permanent loan is from the California Community Reinvestment Corporation (CCRC) and it is
superior (e.g. in a higher position) to the City's subordinate loan. For this request, the CCRC's
permanent loan would increase from $5,426,500 (approved at the project construction closing in
2015) to no more than $6,420,000.
To make this project possible, the City provided $3.0 million in financial assistance consisting of
$2,634,566 in HOME Investment Partnerships Program funds and $365,434 in Community
Development Block Grant Program funds approved by City Council on May 20, 2013. The
Housing Authority also provided eight project -based vouchers. The City's $3.0 million is
subordinate to the larger permanent loan from CCRC and CCRC requires the City's consent to
25C-1
Request for Consent by C&C Development and Orange Housing Development Corporation
October 2, 2018
Page 2
increase the amount of the permanent loan. The Developer is not requesting the City to increase
our financial assistance for the project.
The reason for the requested consent from the Developer is that over the course of the
construction period, the development costs for the project increased by approximately $753,000.
The Developer states that the cost increases are primarily due to the following:
• Increases in construction costs which have affected the construction industry throughout
Southern California;
• Increases in indirect costs such as architecture, engineering, and permits and fees costs;
and
• Increases in financing costs due to extending the construction loan for six additional
months due to extensive rain and flooding in Orange County during the Winter months
between December 2016 and February 2017.
However, the project's current net operating income is able to support a $6.42 million permanent
loan, which is $993,000 higher than previously estimated. This increased permanent loan
amount is due to increases in the Orange County Area Median Income, which allowed for the
2018 affordable rents to be higher than the affordable rents used to estimate the initial permanent
loan amount. The additional permanent loan proceeds would be used to cover the increase in
construction costs and/or pay down the deferred Developer Fee amount.
Therefore, the Developer is requesting that the City approve a permanent loan amount of up to
$6.42 million.
To analyze the impact of this request on the City's subordinate $3.0 million loan, the City
requested an analysis by Keyser Marston Associates (KMA) (Exhibit 2). To evaluate the
Developer's request, KMA analyzed two cash flow scenarios. The first cash flow scenario utilizes
the assumptions from the Developer's 2016 pro forma (2016 Financing Assumptions). The
second cash flow scenario utilizes current assumptions from the Developer's 2018 pro forma
(2018 Financing Assumptions). The following summarizes the pertinent conclusions of the KMA
cash flow analyses:
2016 Financing Assumptions
The cash flow analysis based on the 2016 financing assumptions can be summarized as follows:
• The Deferred Developer Fee is set at $693,000 and is estimated to be repaid by Year 10.
• It is estimated that the City will begin to receive residual receipts payments in Year 13.
• The residual receipts payments to the City over the 55 -year loan term are estimated as
follows:
o $4.26 million in nominal dollars; and
o $164,000 in net present value dollars.
2018 Financing Assumptions
The cash flow analysis based on the 2018 financing assumptions can be summarized as follows:
25C-2
Request for Consent by C&C Development and Orange Housing Development Corporation
October 2, 2018
Page 3
• The Deferred Developer Fee is set at $203,000 and is estimated to be repaid by Year 3.
• It is estimated that the City will begin to receive residual receipts payments in Year 4.
• The residual receipts payments to the City over the 55 -year loan term are estimated as
follows:
o $6.78 million in nominal dollars; and
o $366,000 in net present value dollars.
As such, it is anticipated that the City will receive residual receipts payments sooner with the
Developer's requested higher permanent loan amount. Furthermore, it is estimated that the
residual receipts payments to the City will be higher (in both nominal and net present value terms)
under the requested higher permanent loan amount of $6.42 million rather than the $5.43 million
permanent loan based on the 2016 financing assumptions.
Under certain circumstances, KMA would recommend that the increase in permanent loan
proceeds be utilized to pay down the principal balance of the City's loan rather than to pay
increases in project costs or to pay down the deferred Developer Fee. However, this Project
includes a variety of funding sources which were competitively awarded based on the assumption
that the City would provide $3.0 million in financial assistance (9% Low -Income Housing Tax
Credits, Affordable Housing and Sustainable Communities, and Mental Health Services Act
funds). As such, reducing the City's financial assistance amount could create issues with the
lenders of these other funding sources. Thus, KMA recommends that for this project, the
increase in permanent loan proceeds be utilized to cover additional project costs or pay down the
deferred Developer Fee given that it is estimated to result in higher residual receipts payments to
the City. The Developer has agreed to both recommendations.
If the request for consent is approved, the City Manager and Clerk of the Council will execute the
Junior Lienholder's Consent which is an addendum to the Modification Agreement between Bank
of America, N.A, CCRC, and Depot at Santiago, L.P., that will increase the permanent loan for
the Depot at Santiago (Exhibit 3) and any related documents.
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal # 4 Fiscal Sustainability, Objective #
1 (maintain a stable, efficient and transparent financial environment) and Goal # 5 - Community
Health, Livability, Engagement & Sustainability, Objective # 3 (Facilitate diverse housing
opportunities and support efforts to preserve and improve the livability of Santa Ana
neighborhoods).
FISCAL IMPACT
Approval of the new loan structure is projected to result in the City's ability to begin to receive
residual receipts payments sooner during the repayment period and an overall higher repayment
total (in both nominal and net present value terms). Over the 55 -year repayment period, the
estimated revenue amounts are shown below:
25C-3
Request for Consent by C&C Development and Orange Housing Development Corporation
October 2, 2018
Page 4
Program
Original Loan
New Loan
Revenue Accounts
Re a ment Structure
Repayment Structure
HOME
$3,738,224.34
$5,958,325.68
13018002-56900
13018002-56901
CDBG
$ 518,519.66
$ 826,464.32
13518002-56900
13518002-56901
Residual Receipts Total
$4,256,744.00
$6,784,790.00
Steven A Mendoza
Executive Director
Community Development Agency
APPROVED AS TO FUNDS AND ACCOUNTS:
Sergio Vidal
Acting Executive Director
Finance and Management Services Agency
Exhibits: 1. Request for Consent from C&C Development
2. Financial Analysis by Keyser Marston Associates
3. Modification Agreement
25C-4
oevciavrenNrrorznaxarinw
Impreviuq the Quality of life
August 21, 2018
Mr. Judson Brown
City of Santa Ana
20 Civic Center Plaza, M-26
Santa Ana, CA 92702
EXHIBIT 1
Development
Re: Depot at Santiago- 923 N. Santiago Street- Increase to the Permanent Loan
Hi Judson,
As a follow-up to our recent discussions, we are writing to ask for the City's consent to increase
the permanent loan at Depot at Santiago by an amount not to exceed $993,500. Accordingly, the
California Community Reinvestment Corporation's (CCRC's) permanent loan would increase
from $5,426,500 (approved at the construction closing) to no more than $6,420,000 at
conversion.
As required by both TCAC and CCRC, the project is being re -underwritten prior to conversion to
determine if can still support the loan amount previously approved, or if the loan amount can, or
must, be adjusted to satisfy their respective criteria. In this case, because Orange County's Area
Median Income (AMI) increased since the construction closing in 2015, the project is able to
support a larger loan.
Increasing the permanent loan would help to address the following:
• Cover additional financing costs incurred for extending the construction loan for six
months due to the extensive rain and flooding in Orange County during the winter
months of December 2016, January 2017 and February 2017.
• Absorb the potential reduction of the limited partner's equity contribution ("Downward
Timing Adjuster"), which could be as high as $300,000, due to the construction delay.
• Reduce the deferred developer fee by approximately $240,210, which would permit the
project to begin making residual receipts payments to the City sooner than originally
projected.
This request does not result in additional risk or liability to the City. In fact, it will enable
residual receipt payments to flow to the City earlier in the life of the project. For your reference,
we've attached the most recent conversion pro forma, which reflects the near -final draft cost
certification. We have also included a comparison of the anticipated residual receipt cash flow
schedules based upon the closing and pre -conversion pro formas.
If you have questions, or require additional information, please don't hesitate to contacting us.
25C-5
Sincerely,
7
EXHIBIT 1
Barry Cottle Eunice Bobert
C&C Development Orange Housing Development Corporation
Attachments: Depot at Santiago Pre -Conversion Pro Forma
Residual Receipt Comparison
Page 2 of 2
25C-6
EXHIBIT 2
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, �..
EYSER M ASTON IiSSOCIATES.,
ADVISORS IN PIJ&LIC/PRIVATE REAL ESTATE DEVELOPMENT
MEMORANDUM
ADVISORS IN:
Real Estate
To:
Judson Brown, Housing Division Manager
Affordable Housing
Economic Development
City of Santa Ana
BERKELEY
From:
Kathleen Head
eyser
A. JerryyKeyser
Timothy C. Kelly
Tim Bretz
Debbie M. Kern
David Doezema
Date:
September 7, 2018
LOSANGeLES
Kathleen H. Head
James A. Rabe
Gregory D. Soo -Hoo
Subject:
Depot at Santiago: Permanent Loan Analysis
Kevin E. Engstrom
Julie L. Romey
SAN DIEGO
Paul C. Marra At your request, Keyser Marston Associates, Inc. (KMA) has completed a review of the
submittal from C&C Development Company, LLC and Orange Housing Development
Corporation (collectively "Developer") to increase the permanent loan for the Depot at
Santiago (Project). The following is a summary of our analysis:
BACKGROUND
The Developer has been working with the City of Santa Ana (City) over the past several
years to develop the Project. Prior to the start of construction in 2016, the Developer
submitted a pro forma for the Project, which identified $36.64 million in total
development costs. The Developer estimated that the Project's net operating income
(NO]) could support a $5.43 million permanent loan. In addition to a variety of other
funding sources, the City agreed to provide $3.0 million in financial assistance to the
Project.
Over the course of the construction period, the development costs have increased by
approximately $753,000. The Developer states that the cost increases are primarily due
to the following:
500 SOUTH GRAND AVENUE, SU ITE 1480, LOS ANGELES, CALIFORNIA 90071r PHONE 213.622.8095
W W W.KEYSERMARSTON.COM
25C-7
1809002:SA:TRB
19090.017.006
Judson Brown, City of Santa Ana
EXHIBIT 2
September 7, 2018
Depot at Santiago: Permanent Loan Analysis Page 2
1. Increases in construction costs which have affected the construction industry
throughout Southern California;
Increases in indirect costs such as architecture, engineering, and permits and
fees costs; and
3. Increases in financing costs due to extending the construction loan for six
additional months due to extensive rain and flooding in Orange County during
the Winter months between December 2016 and February 2017.
However, the Project's current net operating income (NO]) is able to support a $6.42
million permanent loan, which is $993,000 higher than previously estimated. This
increased permanent loan amount is due to increases in the Orange County Area
Median Income, which allowed for the 2018 affordable rents to be higher than the
affordable rents used to estimate the initial permanent loan amount. The additional
permanent loan proceeds will be used to cover the increase in construction costs and/or
pay down the deferred Developer Fee amount.
As such, the Developer is requesting that the City approve a permanent loan amount of
up to $6.42 million.
CASH FLOW ANALYSES
To evaluate the Developer's request, KMA analyzed two cash flow scenarios. The first
cash flow scenario utilizes the assumptions from the Developer's 2016 pro forma (2016
Financing Assumptions). The second cash flow scenario utilizes current assumptions
from the Developer's 2018 pro forma (2018 Financing Assumptions). The following
summarizes the pertinent conclusions of the KMA cash flow analyses:
2016 Financing Assumptions
The cash flow analysis based on the 2016 financing assumptions can be summarized as
follows:
1. The Deferred Developer Fee is set at $693,000 and is estimated to be repaid by
Year 10.
1809002:SA:TRB
19090.017.006
25C-8
Judson Brown, City of Santa Ana
EXHIBIT 2
September 7, 2018
Depot at Santiago: Permanent Loan Analysis Page 3
2. It is estimated that the City will begin to receive residual receipts payments in
Year 13.
3. The residual receipts payments to the City over the 55 -year loan term are
estimated as follows:
a. $4.26 million in nominal dollars; and
b. $164,000 in net present value dollars.
2018 Financing Assumptions
The cash flow analysis based on the 2018 financing assumptions can be summarized as
follows:
1. The Deferred Developer Fee is set at $203,000 and is estimated to be repaid by
Year 3.
2. It is estimated that the City will begin to receive residual receipts payments in
Year 4.
3. The residual receipts payments to the City over the 55 -year loan term are
estimated as follows:
a. $6.78 million in nominal dollars; and
b. $366,000 in net present value dollars.
As such, it is anticipated that the City will receive residual receipts payments sooner
than previously estimated using the 2018 financing assumptions. Furthermore, it is
estimated that the residual receipts payments to the City will be higher (in both nominal
and net present value terms) under the requested higher permanent loan amount of
$6.42 million rather than the $5.43 million permanent loan based on the 2016 financing
assumptions.
25C-9
1809002:SA:TRB
19090.017.006
EXHIBIT 2
Judson Brown, City of Santa Ana September 7, 2018
Depot at Santiago: Permanent Loan Analysis Page 4
RECOMMENDATION
It is important to note that under certain circumstances, KMA would recommend that
the increase in permanent loan proceeds be utilized to pay down the principal balance
of the City's loan rather than to pay increases in project costs or to pay down the
deferred Developer Fee. However, this Project includes a variety of funding sources
which were competitively awarded based on the assumption that the City would
provide $3.0 million in financial assistance (9% Tax Credits and Affordable Housing and
Sustainable Communities (AHSC) funds).
As such, reducing the City's financial assistance amount could create issues with the
lenders of these funding sources. Thus, KMA recommends that for this Project, the
increase in permanent loan proceeds be utilized to cover additional Project costs or pay
down the deferred Developer Fee given that it is estimated to result in higher residual
receipts payments to the City.
25C-10
1809002:SA:TRB
19090.017.006
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EXHIBIT 3
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (this "Agreement") is made and entered into as of
October_, 2018, by and among BANK OF AMERICA, N.A., a national banking association ("Bank"),
CALIFORNIA COMMUNITY REINVESTMENT CORPORATION, a California nonprofit public benefit
corporation ("CCRC"), and DEPOT AT SANTIAGO, L.P., a California limited partnership ("Borrower").
RECITALS:
A. Reference is made to that certain Construction and Permanent Loan Agreement
(Affordable Housing — California) executed by Borrower and Bank, dated as of March 1, 2016, as amended
by (i) that certain Loan Modification Agreement dated August 9, 2017 by and among Borrower, Bank and
Guarantor, (ii) that certain Second Loan Modification Agreement dated November 1, 2017 by and among
Borrower, Bank and Guarantor, and (iii) that certain Third Loan Modification Agreement dated March 9,
2018 by and among Borrower, Bank and Guarantor (collectively, the "Loan Agreement"), pursuant to which
Bank agreed to lend to Borrower the total principal amount of $27,295,270.00 (the "Loan"), for the purpose
of financing the construction of certain Improvements on the Land. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Loan Agreement.
B. The obligation of Borrower to repay the Loan is evidenced by that certain Promissory Note
Secured by Deed of Trust (Construction Loan Converting to Term Loan) dated as of March 1, 2016, made
by Borrower to the order of Bank in the original principal amount of $27,295,270, as amended by that certain
First Amendment to Promissory Note dated May 30, 2018 (collectively, with all modifications, extensions,
renewals and replacements thereof, the "Note"). The obligations of Borrower under the Loan Agreement
and the Note are secured by that certain Construction and Permanent Deed of Trust with Assignment of
Leases and Rents, Security Agreement, and Fixture Filing (the "Original Deed of Trust") dated as of March
1, 2016, and recorded March 16, 2016 as Instrument No. 2016000109369 in the Official Records of Orange
County, California (the "Official Records"), executed by Borrower, as trustor, for the benefit of Bank,
encumbering Borrower's fee interest in and to the Land (as more fully described on Exhibit A attached
hereto) and interest in and to the Improvements and other personal property described therein. The Original
Deed of Trust was amended by that certain First Amendment to Deed of Trust and Loan Documents (the
"First Amendment of Deed of Trust") dated as of May 30, 2018, and recorded June 19, 2018 as
Instrument No. 2018000224307 in the Official Records, The Original Deed of Trust and the First
Amendment of Deed of Trust are, collectively, referred to herein as the "Deed of Trust." 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,
together with all of their exhibits, and all other documents which evidence, guaranty, secure, or otherwise
pertain to the Loan are herein collectively referred to as the "Loan Documents."
C. Upon the satisfaction of those certain Conversion Conditions more fully set forth in that
certain Loan Purchase Agreement dated as of March 1, 2016, executed by and among Bank, CCRC and
Borrower, as amended by that certain First Amendment to Loan Purchase Agreement dated as of March 6,
2018, and that certain Second Amendment to Loan Purchase Agreement dated as of May 30, 2018
(collectively, the "Loan Purchase Agreement"), CCRC agreed to purchase the Loan on the Conversion
Date for an amount not to exceed $5,426,500.00 (the "CCRC Purchase Price"), take assignment of the
Loan Documents, and convert the Loan to a term loan.
D. Borrower has requested an increase in the CCRC Purchase Price from CCRC, and CCRC
has agreed to an increase up to $6,420,000.00, subject to modification of the Loan Documents in
accordance with the terms of this Agreement.
E. Bank, CCRC and Borrower wish to enter into this Agreement in order to amend the Loan
Documents in order to increase the CCRC Purchase Price and modify certain of the other terms thereof in
accordance with CCRC's requirements.
25C-25
NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Bank, CCRC and Borrower agree as follows:
1. Incorooration of Recitals. The foregoing Recitals are hereby incorporated into this
Agreement by this reference.
2. Amendment of Loan Purchase Agreement. As among CCRC, Bank and Borrower, the
terms, conditions and covenants of the Loan Purchase Agreement are hereby amended as follows:
(a) Recital F. Recital F of the Loan 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, CCRC
has agreed to purchase the Bank Loan from Bank in the principal amount of $
[not to exceed $6,420,000] or such lesser amount as required by the terms hereof. The
terms and conditions of CCRC's purchase of the Bank Loan are set forth in this Agreement.
Upon such purchase of the Bank Loan by CCRC (subject to the terms herein), the Bank
Loan will, pursuant to its terms, convert into a term loan in an amount not to exceed
and No/100th Dollars ($ ) [not to exceed
$6,420,000]with a term of thirty-five (35) years (the "Permanent Loan"). If CCRC does not
purchase the Bank Loan from Bank for any reason whatsoever, the Bank Loan will become
immediately due and payable on the Construction Loan Maturity Date (as defined in the
Loan Agreement)."
(b) Section 2.1(a). Section 2.1(a) of the Loan Purchase Agreement is hereby deleted
in its entirety and the following is substituted therefor:
"(a) CCRC Purchase Price. Provided that all of the Conversion Conditions set
forth in Article 3 and Exhibit G of this Agreement are satisfied, CCRC shall purchase the
Bank Loan at par, in the maximum principal amount of $ [not to exceed
$6,420,000] (the "CCRC Purchase Price'), on the Conversion Date, subject to adjustment
as provided in Section 2.1(b) below; provided, however, that at Conversion, the Permanent
Loan shall not exceed eighty percent (80%) of CCRC's appraised Project Market Value as
Stabilized Subject to Restricted Rents Including the Project Based Subsidy Rents (Section
8 Value). On or before the Conversion Date, Borrower shall have made all such payments
of principal and interest on the Note, such that the principal amount outstanding together
with any accrued unpaid interest with respect to the Permanent Loan as of the Conversion
Date does not exceed the CCRC Purchase Price."
(c) Section 4.1. Section 4.1 of the Loan Purchase Agreement is hereby deleted in its
entirety and the following is substituted therefor:
"4.1 Time of Conversion. The closing of the sale of the Bank Loan by Bank to
CCRC and the recordation of the Assignment and Assumption (the "Conversion"), shall
occur on or before a date no later than five (5) business days following satisfaction of all of
the conditions set forth in Article 3 of this Agreement (such date, the "Conversion Date").
The precise date and time of the Conversion Date shall be mutually determined by Bank,
CCRC and Borrower; provided, however, the Conversion Date shall not occur later than
December 1, 2018 (the "Termination Date"), unless extended pursuant to the mutual
agreement of Bank and CCRC. In the event the Conversion Date has not occurred by the
Termination Date as a result of the failure of Borrower or Bank to satisfy any condition for
the benefit of CCRC set forth in this Agreement, then Bank and CCRC shall have the right,
each in its sole and absolute discretion, to terminate this Agreement."
25C-26
EXHIBIT 3
3. Amendment of Note. As between Bank and Borrower (and CCRC as successor to Bank),
the terms, conditions and covenants of the Note are hereby amended as follows:
(a) Section 2.1. Section 2.1 of the Note is hereby deleted in its entirety and the
following is substituted therefor:
"Construction Loan Maturity Date. All principal and all accrued and unpaid interest and
other sums due hereunder shall be due and payable on December 1, 2018 (the
"Construction Loan Maturity Date"), subject to extension as provided in Section 2.2. The
period from the date of recordation of the Deed of Trust through the Construction Loan
Maturity Date is herein referred to as the 'Construction Loan Period."'
(b) Section 4.2. Section 4.2(a) of the Note is hereby deleted in its entirety and the
following is substituted therefor:
"(a) The "Term Loan Interest Rate' shall be the applicable interest rate accruing on
this Note during the Term Loan Period determined in accordance with this Section 4.2.
For the period of time commencing with the Conversion Date and thereafter until the date
that is one hundred eighty (180) months from the Conversion Date (the "Term Loan
Interest Rate Reset Date"), the outstanding principal balance of this Note shall bear
interest at a fixed interest rate of percent (_%) per annum (the "Initial
Term Loan Interest Rate")."
(c) Section 6.2(a). Section 6.2(a) of the Note is hereby deleted in its entirety and the
following is substituted therefore:
"(a) No Prepayment Fee Periods. Borrower may prepay all or a part of the Loan
without fee or premium at any time prior to the Conversion Date.
Notwithstanding anything to the contrary set forth above, Borrower may prepay the
principal balance of this Note prior to the Conversion Date, without fee, premium or penalty,
provided that: (a) no prepayment may be made which in Bank's judgment would
contravene or prejudice funding under any applicable permanent loan commitment or tri -
party agreement or the like; (b) Bank shall have actually received from Borrower prior
written notice of (i) Borrower's intent to prepay, (ii) the amount of principal which will be
prepaid (the "Prepaid Principal"), and (iii) no prepayment may be made which would reduce
the principal balance of the Loan to an amount which is less than [$6,420,000] (unless
such prepayment is made in order to satisfy the requirements under Section 2.1(b) of the
Loan Purchase Agreement and Borrower, concurrent with such prepayment to Bank,
delivers to CCRC any "Delivery Assurance Fee" required under the Delivery Assurance
Note or the Loan Purchase Agreement) or such lesser amount of the CCRC Purchase
Price as may be required to satisfy Section 2.1(b) be permitted pursuant to the terms of
the Loan Purchase Agreement. If this Note is prepaid in full, any commitment of Bank for
further advances shall automatically terminate."
4. Amendment of Loan Agreement. As between Bank and Borrower (and CCRC as
successor to Bank), the terms, conditions and covenants of the Loan Agreement are hereby amended as
follows:
(a) Recital D. Recital D of the Loan Agreement is hereby deleted in its entirety and
the following is substituted therefore:
"The Loan is due and payable on December 1, 2018, unless further extended pursuant to
the terms hereof (the "Construction Loan Maturity Date"), However, if prior to the
Construction Loan Maturity Date, Borrower satisfies all "Conversion Conditions" contained
25C-27
EXHIBIT 3
in that certain Loan Purchase Agreement of even date herewith by and among Borrower,
Lender and CCRC, as amended to date, CCRC will purchase the Loan and the Loan will
convert to a term loan not to exceed the principal amount of and
No/100th Dollars ($ ) [not to exceed $6,420,000] (the "Term Loan
Amount") on the Conversion Date, and Borrower shall repay the Loan in monthly amortized
principal and interest payments with a balloon payment due at maturity, on terms and
conditions as more fully set forth in the Note. Once converted, the Loan shall have a term
of approximately eighteen (18) years, and maturing on the Term Loan Maturity Date (as
defined in the Note)."
5. Amendment to Loan Documents. Any reference to the Permanent Loan, the Permanent
Loan Amount, the CCRC Purchase Price, the Term Loan Amount or any other reference generally to the
amount of the Loan on or after the Conversion Date in any of the Loan Documents or other documents
related thereto, is hereby amended, modified and revised to refer to $ [not to exceed
$6,420,000] as the amount thereof.
6. Modification Fee. As consideration for CCRC's agreement to enter into this Agreement
and the modifications to the Loan Documents contemplated herein, Borrower shall pay to CCRC a
modification fee equal to $ .00 on or prior to the date of execution of this Amendment.
7. Further Assurances. Upon CCRC's or Bank's request and at Borrower's sole cost and
expense, Borrower shall execute, acknowledge and deliver any other amendments, modifications or
instruments and perform any other acts necessary, desirable or proper, as reasonably determined by CCRC
or Bank, to carry out the purposes of this Agreement.
8. Attorneys' Fees and Costs. Borrower shall reimburse CCRC and Bank for their reasonable
attorneys' fees and costs actually incurred in connection with the preparation, review, execution and
delivery of this Agreement and of the amendments or modifications of the Loan Agreement, the Note and
the Loan Documents, if any, related hereto, to be payable concurrently with or prior to the execution of this
Agreement.
9. Ratification. Except as expressly modified herein, the Loan Documents remain unmodified
and in full force and effect and the parties ratify and confirm the terms thereof as modified by this
Agreement.
10. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one instrument.
25C-28
EXHIBIT 3
IN WITNESS WHEREOF, this 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 Modification Agreement
S-1
25C-29
"CCRC"
CALIFORNIA COMMUNITY REINVESTMENT CORPORATION,
a California nonprofit public benefit corporation
By:
Mary Kaiser,
President
Signature Page to Modification Agreement
S-2
25C-30
EXHIBIT 3
-sorro"e,
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., LLC,
a California limited liability company,
its sale member
By:
Todd R. Cottle, Trustee of the 2007 Todd R.
Cottle and Jennifer N. Cottle Revocable Trust
By:r
Larry A. Cottle, Trustee of The Cottle Family
Trust Dated 3/811887, Member
Signature Page to Modification Agreement
S-3
EXHIBIT 3
EXHIBIT 3
JUNIOR LIENHOLDER'S CONSENT AND SUBORDINATION AGREEMENT
(City Loan)
NOTICE: THIS JUNIOR LIENHOLDER 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 Lienholder") is the owner and holder of a security interest and other interests
("Junior Security Interest") evidenced by that certain City Deed of Trust and Assignment of Rents (923 N.
Santiago Street, Santa Ana, California) dated July 11, 2013, recorded on August 9, 2013, as Instrument
No. 2013000476764 in the Official Records of Orange County, California (the "Official Records"), 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, other than
the Senior Affordability Restrictions (collectively, the "Junior Loan Documents").
Junior Lienholder hereby (a) acknowledges the receipt of the Modification Agreement, (b) consents to the terms
and provisions of the Modification Agreement and the transactions described therein, and (c) confirms and
acknowledges that the Deed of Trust, as amended by the terms of the Modification Agreement, unconditionally
remains a lien or charge on the Property prior and superior to the lien or charge of each of the Junior Loan
Documents, other than the Senior Affordability Restrictions, respectively. Junior Lienholder reaffirms that the
terms of that certain Subordination Agreement dated March 1, 2016 and recorded March 16, 2016 as
Instrument No. 2016000109374 in the Official Records, executed by and among Junior Lienholder, Bank and
Borrower (the "City Subordination'), as amended by the Modification Agreement, are in full force and effect
with respect to the Loan, Deed of Trust and Loan Documents, as amended to date, which Loan, Deed of Trust
and Loan Documents are being assigned to CCRC concurrently herewith pursuant to the terms of the Loan
Purchase Agreement.
Agreed and Acknowledged:
Dated as of: 2018 "JUNIOR LIENHOLDER"
ATTEST:
Clerk of the Council
APPROVED AS TO FORM:
CITY OF SANTA ANA, a charter city and municipal
corporation
0
Name:
Its:
Consent to Modification Agreement
C-1
25C-32
EXHIBIT 3
JUNIOR LIENHOLDER'S CONSENT AND SUBORDINATION AGREEMENT
(MRSA Loan)
NOTICE: THIS JUNIOR LIENHOLDER 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 Lienholder") is the owner and holder of a security interest and other interests
("Junior Security Interest") evidenced by that certain MHSA Deed of Trust with Assignment of Rents,
Security Agreement and Fixture Filing (Construction/Permanent Financing) CaIHFA Development No. 14-
032-M dated March 1, 2016, recorded on March 16, 2016, as Instrument No. 2016000109372 in the Official
Records of Orange County, California (the "Official Records"), together with the other loan documents
executed in connection with the Junior Security Interest, which isjunior, subordinate and subject to the terms,
covenants, conditions and restrictions of the Deed of Trust (collectively, the "Junior Loan Documents").
Junior Lienholder hereby (a) acknowledges the receipt of the Modification Agreement, (b) consents to the terms
and provisions of the Modification Agreement and the transactions described therein, and (c) confirms and
acknowledges that the Deed of Trust, as amended by the terms of the Modification Agreement, unconditionally
remains a lien or charge on the Property prior and superior to the lien or charge of each of the Junior Loan
Documents, respectively. Junior Lienholder reaffirms that the terms of that certain Subordination Agreement
dated March 1, 2016 and recorded March 16, 2016 as Instrument No. 2016000109376 in the Official Records,
executed by and among Junior Lienholder, Bank and Borrower (the "MHSA Subordination"), as amended by
the Modification Agreement, are in full force and effect with respect to the Loan, Deed of Trust and Loan
Documents, as amended to date, which Loan, Deed of Trust and Loan Documents are being assigned to
CCRC concurrently herewith pursuant to the terms of the Loan Purchase Agreement.
Agreed and Acknowledged:
Dated as of: .2018 "JUNIOR LIENHOLDER"
CALIFORNIA HOUSING FINANCE AGENCY, a public
instrumentality and political subdivision of the State of
California
Name:
Its:
Consent to Modification Agreement
C-2
25C-33
FO:Ta
JUNIOR LIENHOLDER'S CONSENT AND SUBORDINATION AGREEMENT
(IIG Loan)
NOTICE: THIS JUNIOR LIENHOLDER 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 Lienholder") is the owner and holder of a security interest and other interests
("Junior Security Interest") evidenced by that certain Declaration of Restrictive Covenants for the
Development and Operation of Affordable Housing dated March 1, 2016, 2018, recorded on March 16, 2016
as Instrument No. 2016000109373 in the Official Records of Orange County, California (the "Official
Records"), 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 (collectively, the "Junior Loan Documents").
Junior Lienholder hereby (a) acknowledges the receipt of the Modification Agreement, (b) consents to the terms
and provisions of the Modification Agreement and the transactions described therein, and (c) confirms and
acknowledges that the Deed of Trust, as amended by the terms of the Modification Agreement, unconditionally
remains a lien or charge on the Property prior and superior to the lien or charge of each of the Junior Loan
Documents, respectively. Junior Lienholder reaffirms that the terms of that certain Subordination Agreement
dated March 1, 2016 and recorded March 16, 2016 as Instrument No. 2016000109375 in the Official Records,
executed by and among Junior Lienholder, Bank and Borrower (the "IIG Subordination"), as amended by the
Modification Agreement, are in full force and effect with respect to the Loan, Deed of Trust and Loan
Documents, as amended to date, which Loan, Deed of Trust and Loan Documents are being assigned to
CCRC concurrently herewith pursuant to the terms of the Loan Purchase Agreement.
Agreed and Acknowledged:
Dated as of: 2018 "JUNIOR LIENHOLDER"
DEPARTMENT OF HOUSING AND COMMUNITY
DEVELOPMENT, a public agency of the State of
California
By:
Name:
Its:
Consent to Modification Agreement
C-3
25C-34