HomeMy WebLinkAboutJAMBOREE HOUSING CORPORATION (2)A•2018-199
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Ci.rni'iry OF COUNCAL
NOV 2 7 2018
C9AC0 RECORDING REQUESTED BY
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Davis Wright Tremaine LLP
885 S. Figueroa Street
Suite 2400
Los Angeles, CA 90017
Attn: Nancy B. Clapp, Esq.
SUBORDINATION AGREEMENT
(CITY HOME LOAN)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR RIGHTS
UNDER CERTAIN AGREEMENTS RELATING TO CERTAIN REAL PROPERTY
BECOMING SUBJECT TO, AND OF LOWER PRIORITY THAN, THE LIEN OF A
SECURITY INTEREST.
THIS SUBORDINATION AGREEMENT (this "Agreement'), made as of the 71h day of December,
2018, by and among the CITY OF SANTA ANA ("Subordinating Party"), whose address is 20 Civic
Center Plaza, Santa Ana, California 92701, and MUFG UNION BANK, N.A., a national banking
association ("Bank"), whose address is 3151 E. Imperial Highway, 1s' Floor, Brea, California 92821,
Attention: Manager— Loan Administration Department, is made with reference to the following facts:
A. Unless expressly defined herein, all capitalized terms used herein shall have the
meanings ascribed to them in Appendix I or Exhibit "B" attached hereto and made a part hereof.
B. Borrower is the owner (or, concurrently with the recording of this Agreement, will be the
owner) of the Property, which Property is more particularly described in Exhibit "A" attached hereto and
made a part hereof.
C. Borrower and Subordinating Party have heretofore entered into or, concurrently herewith,
are entering into, those certain loan documents more particularly described in Exhibit "B" attached hereto
("Subordinating Party's Loan Documents"), pursuant to the terms of which Subordinating Party shall
make to Borrower a Three Hundred Fifty -Two Thousand Nine Hundred Sixty -Two and 90/100th Dollar
($352,982.90) loan ("Subordinating Party's Loan") which Subordinating Party's Loan is secured by,
among other things, that certain City HOME Deed of Trust and Assignment of Rents dated August 21,
2018 ("Subordinating Party's Deed of Trust"), executed by Borrower for the benefit of Subordinating
Party, and recorded as Instrument No. 2018000341749 in the Official Records of Orange County,
California, and encumbering the Property and all Improvements to be constructed thereon and those
certain Affordability Restrictions on Transfer of Property dated August 21, 2018 ("Subordinating Party's
Restrictions"), and recorded as Instrument No. 2018000341751 in the Official Records of Orange
County, California, pursuant to the terms of which Borrower agreed, among other things, for Itself and its
successors and assigns, to operate the Project as a low income apartment project in accordance with the
terms and conditions set forth therein. Subordinating Party's Deed of Trust and Sections 3.5 and 18 of
Subordinating Party's Restrictions are sometimes collectively referred to as "Subordinating Party's
Security Documents".
D. Concurrently herewith, Borrower and Bank are entering into the Loan Agreement,
pursuant to the terms of which Bank shall make to Borrower the Loan to cover a portion of the cost of
constructing the Improvements and certain other costs related thereto, which Loan is evidenced by the
Note, made by Borrower to the order of Bank, and secured by, among other things, the Deed of Trust,
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executed by Borrower for the benefit of Bank, and encumbering the Property and all Improvements to be
constructed thereon. The Loan Agreement, the Note, the Deed of Trust and all other documents
evidencing, securing or pertaining to the Loan are sometimes hereinafter collectively referred to as the
"Loan Documents".
E. As a condition precedent to Bank's making the Loan, Bank requires that the Deed of
Trust shall unconditionally be and remain at all times a lien or charge upon the Project which is prior and
superior to the liens or charges of Subordinating Party's Security Documents (but not to Subordinating
Party's Restrictions, other than Sections 3.5 and 18 thereof).
NOW, THEREFORE, in consideration of Bank's making the Loan to Borrower, and in
consideration of the mutual promises and agreements hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce Bank
to make the Loan to Borrower, the parties to this Agreement do hereby agree as follows:
1. SUBORDINATION OF SUBORDINATING PARTY'S SECURITY DOCUMENTS. The
Deed of Trust, and any and all renewals or extensions thereof and all amendments and modifications
hereafter made thereto, and any and all disbursements made by Bank to or for the account or benefit of
Borrower the repayment of which is secured thereunder, shall unconditionally be and remain at all times a
lien or charge against the Project that is prior and superior to the liens or charges of Subordinating Party's
Security Documents (but not to Subordinating Party's Restrictions, other than Sections 3.5 and 18
thereof), to the same extent and purpose as though Subordinating Party's Security Documents had been
executed and recorded subsequent to the recording of the Deed of Trust and the making of each
disbursement or advance made by Bank to Borrower the repayment of which is secured by the Deed of
Trust, regardless of whether Borrower, at the time of any such disbursement or advance, may have been
in default under the Loan Agreement, the Deed of Trust, or any of the other the Loan Documents and
regardless of whether Bank was obligated to make any such disbursement or advance. Notwithstanding
the foregoing, Bank shall not amend or modify the terms of the Loan and/or the Loan Documents without
the prior written consent of the Subordinating Party if such amendment or modification has the effect of:
(i) increasing or decreasing the amount of the Loan, except in the case of sums advanced by Bank in
exercising its rights and remedies under the Loan Documents or as otherwise provided in Paragraph 2 of
this Agreement; (ii) increasing the annual interest rate(s), including the default rate, above the rate(s)
described in the Note; (iii) modifying the maturity date to be sooner than the stated maturity date of the
Note; or (iv) having a materially adverse affect on Subordinating Party. For the avoidance of doubt,
Subordinating Party's Restrictions, except Sections 3.5 and 18 contained therein, shall at all times be
prior and superior to the Deed of Trust.
2. ALL DISBURSEMENTS UNDER THE LOAN SECURED BY THE DEED OF TRUST.
Notwithstanding anything to the contrary set forth in the Loan Agreement or any other agreement
between Bank and Borrower with respect to the disbursement of all or any portions of the proceeds of the
Loan, any and all disbursements made by Bank to or for the account or benefit of Borrower or the Project
in connection with the following, whether or not Bank is obligated to make such disbursements pursuant
to the Loan Documents: (a) any costs or expenses incurred in complying with any laws, rules, regulations,
or statutes or any directives of any governmental agencies or authorities having or exercising jurisdiction
over the Project; (b) any sums advanced to pay for the cost of completing the construction of the Project,
Project cost overruns and/or to lease -up and stabilize the Project made by Bank; and (c) any sums
advanced by Bank for the payment of real estate taxes or assessments or insurance premiums, or any
other sums advanced or obligations incurred by Bank in connection with the protection or preservation of
any security given to Bank with respect to the Loan, including, without limitation, interest thereon shall be
deemed to be, and in all events shall be, secured by the Deed of Trust and, as so secured, and
regardless of whether Borrower at the time of any such disbursements may have been in default under
the Loan Documents and regardless of whether Bank was obligated to make any such disbursements,
shall be and remain a lien or charge against the Project that is unconditionally prior and superior to the
lien and effect of Subordinating Party's Security Documents.
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3. APPLICATION OF PAYMENTS UNDER SUBORDINATING PARTY'S LOAN. Until such
time as all amounts outstanding under the Loan have been indefeasibly paid in full, prior to the
occurrence of an Event of Default (as such term is defined in the Loan Documents), Subordinating Party
shall be entitled to receive and retain payments made pursuant to and in accordance with the
Subordinating Party's Loan documents; provided, however, that no such payment is made more than
ninety (90) days in advance of its scheduled due date. Upon the occurrence of an Event of Default under
the Loan Documents, after Subordinating Party receives notice of such Event of Default from Bank with
written instructions directing Subordinating Party not to accept payments from Borrower on account of the
Subordinating Party's Loan (including, but not limited to, principal, interest additional interest, late
payment charges, default interest, attorneys' fees, or any other sums secured by the Subordinating
Party's Deed of Trust), all amounts (including, without limitation, all insurance proceeds and
condemnation awards) received by Subordinating Party from, or for the account of, Borrower under
Subordinating Party's Loan shall be immediately remitted to Bank at the address set forth above to be
applied by Bank in reduction of amounts outstanding under the Loan, in such amounts and in such order
as Bank shall determine. In the event that any payment is made to Subordinating Party which is not
permitted under this Agreement, such payment shall be held by Subordinating Party in trust for the benefit
of Bank and shall be paid immediately to Bank for application to the payment of all of indebtedness and
obligations remaining unpaid under the Loan. If Subordinating Party receives written notice from Bank
that the Event of Default which gave rise to the Subordinating Party's obligation not to accept payments
has been cured, waived, or otherwise suspended by Bank, the restrictions on payment to Subordinating
Party in this Section 3 shall terminate, and Bank shall have no right to any subsequent payments made to
Subordinating Party by Borrower prior to Subordinating Party's receipt of a new notice from Bank of an
Event of Default in accordance with this Section 3. Without limiting the complete subordination of the
Subordinating Party's Loan to the payment in full of the Loan, in any bankruptcy, insolvency, receivership
or similar proceeding, upon any payment or distribution to creditors, the Loan shall be paid in full first in
cash before the Subordinating Party shall be entitled to receive any payment or other distribution on
account of or in respect to the Subordinating Party's Loan and, until the entire Loan is paid in full in cash,
any payment or distribution to which the Subordinating Party will be entitled but for this Agreement
(whether in cash, property or other assets) shall be paid to Bank.
4. SUBORDINATION TO MODIFICATION OF LOAN. If Bank extends or otherwise
modifies the terms of the Loan (including any amendment or modification which requires the
Subordinating Party's prior written consent pursuant to Paragraph 1 and for which Subordinating Party
has granted such consent), Subordinating Party, upon 20 days' prior notice to Subordinating Party, shall
execute a new subordination agreement, in the form of this Agreement, confirming Subordinating Party's
subordination of the effect of Subordinating Party's Security Documents against the Project to the lien or
charge of the Deed of Trust. The execution of such new subordination agreement, however, shall not be
a condition to the effectiveness of the subordination of Subordinating Party's Security Documents against
the Project to the lien or charge of the Deed of Trust, which subordination shall be automatic.
5. SUBORDINATING PARTY'S RIGHT TO CURE DEFAULTS. Upon the occurrence of an
Event of Default, Bank shall: (a) concurrently with notifying Borrower of the occurrence of such event of
default, notify Subordinating Party at its address set forth above of the occurrence of such event of
default; (b) permit Subordinating Party to cure or correct (provided that such event of default is curable)
any such event of default within thirty (30) calendar days after receipt of such notice ("Subordinating
Party Cure Period"); provided, however, that Bank has the continuing right to commence to pursue its
remedies under the Loan Documents on account of such default during the Subordinating Party Cure
Period, including but not limited to the right to accelerate the Loan, record a notice of default and to obtain
a receiver; provided further, that if the cure is completed during the Subordinating Party Cure Period,
Bank will rescind any notice of default after reimbursement of all of its costs incurred in connection with
the default, including, without limitation, attorneys' fees and court costs; and (c) accept all payments and
all acts done by Subordinating Party on behalf of Borrower within the Subordinating Party's Cure Period
as though the same had been timely done and performed by Borrower, so that such acts and payments
shall fully and totally cure and correct all such defaults, breaches, failures or refusals for all purposes.
Subordinating Party shall not be subrogated to the rights of Bank under the Loan Documents by reason of
Subordinating Party having cured any default under the Loan Documents; however, Bank acknowledges
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that, to the extent so provided in the Subordinating Party's Security Documents, amounts advanced or
expended by Subordinating Party to cure an event in default under the Loan Documents may be added to
and become a party of the Subordinating Party's Loan. In the event that an Event of Default occurs and
Bank has recorded a notice of default, then for the period from the date of recordation of the notice of
default, until the date of recordation of a notice of sale, so long as the noticed default continues,
Subordinating Party shall have the right, but not the obligation, in lieu of curing any default under the Loan
Documents, to purchase the Loan. Such purchase will be accomplished by Subordinating Party paying to
Bank the outstanding principal amount of the Loan, plus all accrued and unpaid interest thereon and any
prepayment premium, together with reasonable expenses incurred by Bank in connection therewith
(including reasonable attorneys' fees and costs), in exchange for the assignments of the Loan Documents
without recourse or warranty except that Bank will warrant that it owns and has all requisite authority to
transfer the Loan at the time of the transfer. Borrower acknowledges and agrees, by executing the
joinder attached hereto, that after the Loan has been assigned to Subordinating Party or its nominee,
Bank shall be relieved from all liability to Borrower under or in connection with the Loan Documents.
6. BANK'S RIGHT TO CURE DEFAULT UNDER SUBORDINATING PARTY'S LOAN.
Upon the occurrence of a default under the Subordinating Party's Loan, Subordinating Party shall: (a)
concurrently with notifying Borrower of the occurrence of such event of default, notify Bank at its address
set forth above of the occurrence of such default or event of default; (b) permit Bank to cure or correct
(provided that such event of default is curable) any such event of default within thirty (30) calendar days
after receipt of such notice ("Bank Cure Period"); provided, however, that Subordinating Party has the
continuing right to commence to pursue its remedies under the Subordinating Party's Loan Documents on
account of such default during the Bank Cure Period, including but not limited to the right to accelerate
the Subordinating Party's Loan, record a notice of default and to obtain a receiver; provided further, that if
the cure is completed during the Bank Cure Period, Subordinating Party will rescind any notice of default
after reimbursement of all of its costs incurred in connection with the default, including, without limitation,
attorneys fees and court costs; and (c) accept all payments and all acts done by Bank on behalf of
Borrower within the Bank Cure Period as though the same had been timely done and performed by
Borrower, so that such acts and payments shall fully and totally cure and correct all such defaults,
breaches, failures or refusals for all purposes.
7. SUBORDINATION TO PERMANENT FINANCING, Subordinating Party acknowledges
that it has been advised by Borrower that Borrower intends to repay the amounts outstanding under the
Loan, in whole or in part, by obtaining permanent financing in the future by one or more lenders, which
permanent financing would be secured by, among other things, a deed of trust or deeds of trust
encumbering the Project which would be senior to the effect of Subordinating Party's Security Documents
(but not to Subordinating Party's Restrictions, other than Sections 3.5 and 18 thereof). In order to enable
Borrower (or its successors or assigns, "Borrower's Successor") to obtain permanent financing to repay
the Loan, Subordinating Party hereby agrees that within twenty (20) days after written request by
Borrower or Borrower's Successor, Subordinating Party shall execute a subordination agreement (in form
and substance substantially similar to this Agreement) subordinating the effect of Subordinating Party's
Security Documents to the lien and effect of one (1) or more deeds of trust encumbering the Project in an
amount not to exceed $9,470,000.
8. RECEIPT AND APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION
AWARDS: RECEIPT AND APPLICATION OF PROCEEDS FROM BONDS.
(a) Receipt and Application of Insurance Proceeds and Condemnation Awards.
Notwithstanding anything stated to the contrary in any of Subordinating Party's Security Documents, so
long as the Deed of Trust continues to encumber all or portions of the Project, all insurance proceeds that
may become available from time to time as a result of damage or destruction to all or portions of the
Improvements and all condemnation awards that may become available from time to time as a result of
the condemnation of all or portions of the Project shall be held by Bank, disbursed by Bank and applied
by Bank in accordance with the terms and conditions of the Deed of Trust and the other the Loan
Documents and Subordinating Party shall have no right to hold, disburse or apply any of such proceeds
and/or awards. Without limiting the generality of the foregoing, the Bank shall have all approval, consent
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and oversight rights in connection with any insurance claims or condemnation proceedings related to the
Property and any decision regarding the use of insurance proceeds after a casualty loss or condemnation
awards and Subordinating Party shall have no right to object to any such action or approval taken by
Bank and shall consent thereto and be bound thereby. Subordinating Party shall execute such
documents as Bank may require from time to time in order to assure compliance with the provisions of
this Paragraph 8(a).
(b) Receipt and Application of Proceeds from Bonds. With respect to all labor and
material bonds and/or completion bonds that are issued from time to time to assure payment and
completion of the Improvements and which name Bank and Subordinating Party (or any other party) as
dual obligees, all proceeds that may become available from time to time under such bonds shall be held
by Bank and disbursed by Bank and Subordinating Party shall have no right to hold or disburse any of
such proceeds. Subordinating Party shall execute such documents as Bank may require from time to
time in order to assure compliance with the provisions of this Paragraph 8(b).
9. NOTICES. Any notice, demand or request required or permitted to be delivered
hereunder shall be deemed to have been duly and properly given at the time of such delivery if personally
delivered (which shall include (i) delivery by means of professional overnight courier service which
confirms receipt in writing and (ii) transmission by telecopier or telefacsimile machine capable of
confirming transmission and receipt), or if mailed, forty-eight (48) hours after deposit in United States
registered or certified mail, postage prepaid, return receipt requested, addressed to Subordinating Party
or Bank, as the case may be, at their addresses set forth above.
10. ENTIRE AGREEMENT. This Agreement shall be the whole and only agreement with
respect to the subordination of the effect of Subordinating Party's Security Documents to the lien or
charge of the Deed of Trust and all disbursements and advances made thereunder, and shall supersede
and cancel any prior agreements as to such subordination, including without limitation any provisions
contained in Subordinating Party's Security Documents that provide for the subordination of the effect
thereof to one or more deeds of trust.
11. SUBORDINATING PARTY'S REPRESENTATIONS WARRANTIES COVENANTS
CONSENTS, APPROVALS AND ACKNOWLEDGEMENTS. Subordinating Party hereby warrants,
represents, declares, agrees and acknowledges as follows:
(a) For purposes of this Agreement, Subordinating Party acknowledges that
Subordinating Party has been provided the opportunity to review the Loan Documents before executing
this Agreement;
(b) Bank, in making disbursements pursuant to the Loan Agreement, is under no
obligation or duty to insure, nor has Bank represented that it will insure, the proper application of such
proceeds by the person(s) to whom Bank disburses such proceeds, and any application or use of such
proceeds for purposes other than as provided in any such agreement shall not defeat or render invalid, in
whole or in part, the subordination provided for in this Agreement;
(c) Bank has not made any warranty or representation of any kind or nature
whatsoever to Subordinating Party with respect to (i) the application of the proceeds of the Loan being
made by Bank to Borrower upon the security of the Deed of Trust, (ii) the value of the Property, the
Improvements to be constructed thereon pursuant to the Loan Agreement, or the marketability or value
thereof upon completion of such construction, or (iii) the ability of Borrower to honor its covenants and
agreements with Bank or Subordinating Party;
(d) Bank's release of any security for the Loan, including, without limitation, the
reconveyance of any portion(s) of the Project from the lien of the Deed of Trust shall not constitute a
waiver or relinquishment of Subordinating Party's unconditional subordination of the liens or charges of
Subordinating Party's Security Documents against the Project to the lien or charge of the Deed of Trust;
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(e) Bank would not make the Loan to Borrower absent the execution of this
Agreement by Subordinating Party;
(f) Bank has no duty to disclose to Subordinating Party any facts Bank may now
know or hereafter know about Borrower or the partners or successors of Borrower, regardless of whether
(1) Bank has reason to believe that any such facts may increase materially the risk beyond that which
Subordinating Party intends to assume, (ii) Bank may have reason to believe that such facts are unknown
to Subordinating Party, or (iii) Bank has a reasonable opportunity to communicate such facts to
Subordinating Party, it being understood and agreed that Subordinating Party is fully responsible for
being and keeping informed of the financial condition of Borrower and/or any partners or successors of
Borrower and of all circumstances bearing on the risk of non-payment of any indebtedness of Borrower to
Bank described in this Agreement;
(g) Subordinating Party has made such independent legal and factual inquiries and
examinations as Subordinating Party deems necessary or desirable, and Subordinating Party has relied
solely on said independent inquiries and examinations in entering into this Agreement;
(h) The Subordinating Party's Loan Documents as described in Exhibit "B" attached
hereto are all of the documents evidencing, securing or pertaining to Subordinating Party's Loan, true,
correct and complete copies thereof have been delivered to Bank and the Subordinating Party's Loan
Documents have not been amended or modified except as reflected thereon;
(i) As of the date set forth above, the Subordinating Party has no offset, defense,
deduction or claim against Borrower under any of the Subordinating Party's Loan Documents, Borrower is
not in default under any of the Subordinating Party's Loan Documents and the Subordinating Party knows
of no event that has occurred or is continuing which, with the passage of time or the giving of notice, or
both would constitute a default under any of the Subordinating Party's Loan Documents;
Q) Each and every covenant, condition and obligation contained in the
Subordinating Party's Loan Documents required to be performed or satisfied as of the date hereof, and
each and every matter required to be approved the Subordinating Party as of the date hereof, has been
satisfied and/or approved and/or waived as applicable, including, without limitation, all conditions
precedent to Borrower's right to commence construction of the Improvements, all of which conditions
have been satisfied and/or approved and/or waived, as applicable, as of the date set forth above;
(k) Under Subordinating Party's Loan Documents, Borrower is not obligated to
commence construction of the Improvements until ///[January 1, 2019]///, and construction of the
Improvements need not be completed until ///[November 1, 20201///, subject to extension for force
majeure;
(1) Notwithstanding anything stated to the contrary in the Subordinating Party's Loan
Documents, (i) the limited partner in Borrower shall have the right at any time and from time to time,
without the approval or consent of the Subordinating Party, to assign, sell or otherwise transfer to any
third party its limited partnership interest in Borrower, provided that Borrower provides notice to the
Subordinating Party of such assignment, sale or transfer concurrently with such assignment, sale or
transfer, and (ii) the general partner in Borrower shall have the right, without the approval or consent of
the Subordinating Party, to pledge or otherwise encumber its partnership interest in Borrower to Bank and
the foreclosure of such pledge by Bank shall not cause an event of default under the Subordinating
Party's Loan Documents;
(m) Notwithstanding anything stated to the contrary in the Subordinating Party's Loan
Documents, Subordinating Party's interest in the plans and specifications and all data, drawings,
contracts and agreements relating thereto and all contracts and agreements relating to the construction of
the Improvements shall be subject and subordinate to Bank's interest in the same;
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(n) Notwithstanding anything stated to the contrary in the Subordinating Party's
Loan Documents, Subordinating Party's rights in and to the leases and rents of the Property shall be
subject and subordinate to the rights of Bank to same; and
(o) Notwithstanding anything stated to the contrary in the Subordinating Party's Loan
Documents, the occurrence of an Event of Default under the Loan Documents shall not in and of itself
constitute a default or an event of default under any of the Subordinating Party's Loan Documents unless
the occurrence of such event shall constitute a separate default under the Subordinating Party's Loan
Documents.
(p) The subordination of the Subordinating Party's Loan shall continue in the event
that any payment with respect to any Loan Document (whether by or on behalf of Borrower, as proceeds
of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to
Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, a
receiver or other similar party under any bankruptcy, insolvency or receivership or similar law under any
bankruptcy, insolvency, receivership or similar proceeding. In such event, the Loan or any part thereof
originally intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of any
repayment, return or other action, as if such payment on account of the Loan had not been made.
(q) Subordinating Party shall not commence in or join with any other creditor in
commencing any bankruptcy, insolvency, receivership or similar proceeding involving Borrower and
Subordinating Party shall not initiate any action, motion or request in any such proceeding involving any
other person or entity, which seeks the consolidation of some or all of the assets of Borrower into such
proceeding. In the event of any such proceeding relating to Borrower or the Property or, in the event of
any such proceeding relating to any other person or entity into which (notwithstanding the covenant in the
first sentence of this clause) the assets or interests of Borrower are consolidated, then in either event, the
Loan shall first be paid in full before Subordinating Party shall be entitled to receive or retain any payment
or distribution with respect to the Subordinating Party's Loan. Subordinating Party agrees that (i) the
Bank shall receive all payments and distributions of every kind or character in respect of the
Subordinating Party's Loan to which the Subordinating Party would otherwise be entitled, before the
subordination provisions of this Agreement (including, without limitation, any payments or distributions
during the pendency of any bankruptcy, insolvency, receivership or similar proceeding involving Borrower
or the Property) until the Loan is repaid In full, and (ii) the subordination of the Subordinating Party's Loan
and the Subordinating Party's Security Documents shall not be affected in any way by the Bank electing,
under Section 1111(b) of the Federal Bankruptcy Code, to have its claim treated as being a fully secured
claim. In addition, Subordinating Party hereby covenants and agrees that, in connection with such a
proceeding involving Borrower, neither Subordinating Party nor any of its affiliates shall (i) make or
participate in a loan facility to or for the benefit of Borrower on a basis that is senior to or pari passu with
the liens and interests held by Bank pursuant to the Loan Documents and (ii) not contest the continued
accrual of interest on the Loan, in accordance with and at the rate specified in the Loan Documents, both
for periods before and for periods after commencement of such proceedings.
12. ATTORNEYS' FEES. If either Subordinating Party or Bank shall bring an action against
the other by reason of the breach of any covenant, provision, or condition of this Agreement, or otherwise
arising out of this Agreement, the unsuccessful party shall pay to the prevailing party reasonable
attorneys' fees, which fees shall be payable whether or not any action is prosecuted to judgment. The
term "prevailing party" shall include, without limitation, a party who brings an action against the other by
reason of the other's breach or default and obtains substantially the relief sought, whether by
compromise, settlement, orjudgment.
13. ESTOPPEL CERTIFICATES. Either party shall, within twenty (20) days following the
other party's written request therefor, execute and deliver to such requesting party an estoppel certificate
in form and substance reasonably satisfactory to the requesting party.
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14. GOVERNING JURISDICTION. This Agreement shall be governed by the laws of the
State of California and shall be binding upon, and shall inure to the benefit of, the parties to this
Agreement and their respective successors and assigns.
15. SEVERABILITY. In case one or more of the provisions contained in this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained herein unless the effect thereof
would materially alter the benefits or burdens hereof to the parties hereto.
16. THIRD PARTIES. Subordinating Party recognizes that Bank may show copies of this
Agreement to other institutional lenders who are interested in the matters covered in this Agreement and
Subordinating Party agrees that such other institutional lenders may also materially rely upon the
representations, warranties and agreements made by the Subordinating Party in this Agreement.
17. COUNTERPARTS. This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original but all of which together shall constitute but one and the same
instrument.
[Signature page follows]
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WHEREAS, this Subordination Agreement has been executed by the parties as of the date first
written above.
SUBORDINATING PARTY:
CITY OF SANTA ANA
Raul Godinez II
City Manager
Dated: / 2 - 3. 1 G
ATTEST
Maria D. Huizar
Clerk of the Council, /
Dated: / 2-/ i3/ 2.a /S
APPROVED AS TO FORM:
Dated: 11194tg
RECOMMENDED FOR APPROVAL.:
I„ Ste en A. Mendoza
i Executive Director
Community Development Agency
Dated:
[Signature Page to Subordination Agreement (City HOME Loan)]
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 December 5, 2018 before me, Rosa A. Flores , Notary Public
(insert name and title of the officer)
personally appeared Robert C. Cortez, who proved to me on the basis of satisfactory evidence to
be the person sj whose nameW is fare subscribed to the within instrument and acknowledged to me
that he/s#refthey executed the same in hist tm ttreir authorized capacity(iesj, and that by hisfherftheir
signature(wl on the instrument the person(g), or the entity upon behalf of which the person(ST 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 �&� 0 ,
(Seal)
�.,, ROSA A. FLOgES
- ..�}�` Notary Public - California
`o.��� Orange County
Commission =2228450
` My Comm, Expires Feb 7, 2022 '
BANK:
MUFG UNION BANK, N.A.,
a national banking association
By: tL _,
J ssi a M� nzie
Director
[Signature Page to Subordination Agreement (City HOME Loan)]
JOINDER
Unless expressly defined herein, all capitalized terms used herein shall have the same meanings
ascribed to them in the Subordination Agreement (the "Subordination Agreement") to which this Joinder
is attached.
The undersigned hereby acknowledges receipt of a copy of the Subordination Agreement and, as
fee owner of the Property, hereby consents to, approves and agrees to be bound by all of the terms and
conditions set forth in the Subordination Agreement.
�,_
SANTA ANA VILLAGE LP,
a California limited partnership
By: JHC-Santa Ana Village LLC,
a California limited liability company,
its General Partner
By: Jamboree Housing Corporation
a California nonprof' public be efit corporation,
its sole Memb an Ma ger
By:
[Name]
[Title]
(Joinder to Subordination Agreement (City HOME Loan)]
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
On , before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the persons) whose name(s) Ware
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) 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 (Seal)
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
On before me,
(insert name and title of the officer)
Notary Public, personally appeared
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 that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) 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 (Seal)
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
On before me,
(insert name and title of the officer)
Notary Public, personally appeared
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 that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) 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 (Seal)
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
On before me, ,
(insert name and title of the officer)
Notary Public, personally appeared
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 that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) 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.
(Seal)
EXHIBIT "A"
LEGAL DESCRIPTION
Real property situated in the City of Santa Ana, County of Orange, State of California, described as
follows:
PARCEL "B" AS SHOWN ON LOT LINE OF ADJUSTMENT NO. 91-01, AS EVIDENCED BY
DOCUMENT RECORDED JUNE 17, 1991 AS INSTRUMENT NO. 91-306696 OF OFFICIAL RECORDS,
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING ALL OF PARCEL 1 OF PARCEL MAP FILED IN BOOK 80, PAGES 32 AND 33 OF PARCEL
MAPS, RECORDS OF SAID ORANGE COUNTY, IN THE CITY OF SANTA ANA, COUNTY OF
ORANGE, STATE OF CALIFORNIA, TOGETHER WITH A PORTION OF SAID LOT "I" OF TRACT NO.
13804, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHERLY TERMINUS OF THAT CERTAIN COURSE IN THE WESTERLY
LINE OF SAID LOT "I" SHOWN AS "N 0038'52" W 102.24"' ON SAID MAP; THENCE NORTH 890 21'08"
EAST 8.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 890 21' 08" EAST 6.00
FEET; THENCE SOUTH 00 38' 52" EAST 25.42 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 61.00 FEET; THENCE SOUTHEASTERLY
ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 21° 02'22" AN ARC LENGTH OF 22.40
FEET TO THE BEGINNING OF A REVERSE CURVE CONCAVE SOUTHWESTERLY AND HAVING A
RADIUS OF 59.00 FEET; THENCE SOUTHERLY ALONG SAID CURVE, FROM AN INITIAL RADIAL
LINE WHICH BEARS NORTH 680 18' 46" EAST, THROUGH A CENTRAL ANGLE OF 21° 02' 22" AN
ARC LENGTH OF 21.67 FEET; THENCE SOUTH 0'38'52" EAST 40.58 FEET TO THE BEGINNING OF
A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 110.00 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 19" 14-30" AN
ARC LENGTH OF 36.94 FEET TO THE BEGINNING OF A COMPOUND CURVE CONCAVE
NORTHEASTERLY AND HAVING A RADIUS OF 50.00 FEET; THENCE SOUTHEASTERLY ALONG
SAID CURVE, FROM AN INITIAL RADIAL LINE WHICH BEARS SOUTH 70° 06,38" WEST, THROUGH
A CENTRAL ANGLE OF 240 54' 33" AN ARC LENGTH OF 21.74 FEET TO THE BEGINNING OF A
COMPOUND CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 110.00 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, FROM AN INITIAL RADIAL LINE WHICH BEARS
SOUTH 45" 12'05" WEST, THROUGH A CENTRAL ANGLE OF 22" 02'09" AN ARC LENGTH OF 42.31
FEET TO A POINT IN THAT CERTAIN COURSE IN THE EASTERLY LINE OF SAID LOT "I" SHOWN AS
"NORTH 00 40'113" WEST 132.34"' ON SAID MAP; SAID POINT LYING 7.00 FEET NORTHERLY ALONG
SAID COURSE, FROM ITS SOUTHERLY TERMINUS; THENCE SOUTH 0° 40'13" EAST 7.00 FEET TO
SAID SOUTHERLY TERMINUS, THENCE ALONG THE SOUTHERLY, EASTERLY AND NORTHERLY
LINES OF SAID PARCEL 1 THE FOLLOWING COURSES: NORTH 890 32' 17" EAST 268.75 FEET;
NORTH 00 35'48" WEST 211.42 FEET; SOUTH 89° 33'30" WEST 317.87 FEET; AND WESTERLY AND
SOUTHWESTERLY ALONG A CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF
17.00 FEET, THROUGH A CENTRAL ANGLE OF 90" 12'22" AN ARC LENGTH OF 26.76 FEET TO THE
TRUE POINT OF BEGINNING.
EXCEPT ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS NOW AND HEREAFTER IN,
ON AND UNDER THAT PART OF SAID LAND BUT WITHOUT ANY RIGHT OF ENTRY UPON SAID
LAND OR WITHIN SAID TOP 500 FEET THEREOF FOR ANY PURPOSES WHATSOEVER, AS
RESERVED BY THE ROMAN CATHOLIC ARCHBISHOP OF LOS ANGELES, A CORPORATION SOLE,
IN THE DEED RECORDED MAY 28, 1976 IN BOOK 11753, PAGE 849 OF OFFICIAL RECORDS.
EXCEPTING THEREFROM ALL OIL, GAS AND OTHER HYDROCARBONS AND MINERALS NOW AND
HEREAFTER IN, ON AND UNDER THAT PART OF SAID LAND BUT WITHOUT ANY RIGHT OF ENTRY
UPON SAID LAND OR WITHIN SAID TOP 500 FEET THEREOF FOR ANY PURPOSES WHATSOEVER,
AS RESERVED IN A DEED RECORDED MAY 28, 1975 IN BOOK 11754, PAGE 935 OF OFFICIAL
EXHIBIT "A"
4821-4251-8639v.4 0096250-000012
RECORDS.
ALSO EXCEPTING THEREFROM ALL OIL, MINERAL, GAS AND OTHER HYDROCARBON
SUBSTANCES BELOW A DEPTH OF 500 FEET UNDER SAID LAND, WITHOUT RIGHT OF SURFACE
ENTRY, AS RESERVED BY D&D DEVELOPMENT COMPANY, A CALIFORNIA CORPORATION, IN
DEED RECORDED JULY 10, 1991 AS INSTRUMENT NO. 91-356825 OF OFFICIAL RECORDS.
APN: 144-341-07 and 144-551-51
EXHIBIT "A"
4821-4251-8639v.4 0096250-000012
EXHIBIT "B"
SUBORDINATING PARTY'S LOAN DOCUMENTS
HOME Loan Agreement dated August 21, 2018, by and between Subordinating Party and
Borrower, recorded as Instrument No. 2018000341750 in the Official Records (the
"Subordinating Party's Loan Agreement").
2. City HOME Loan Note Secured by Subordinated Deed of Trust to the City of Santa Ana,
California dated August 21, 2018, executed by Borrower to the order of Subordinating Party.
3. City HOME Deed of Trust and Assignment of Rents dated August 21, 2018, executed by
Borrower for the benefit of Subordinating Party, recorded as Instrument No. 2018000341749 in
the Official Records.
4. Affordability Restrictions on Transfer of Property dated August 21, 2018, by and between
Subordinating Party and Borrower, recorded as Instrument No. 2018000341751 in the Official
Records.
EXHIBIT "B"
4821-4251-8639v.4 0096250-000012
APPENDIX I
(Appendix I - Definitions)
As used in the agreement to which this Appendix I is attached, and as used in this Appendix I, the
following terms shall have the indicated meanings:
"Allocation Committee" shall mean the California Tax Credit Allocation Committee and any
successor governmental agency appointed to carry out the obligations of the Allocation Committee.
"Bank" shall mean MUFG Union Bank, N.A.
"Borrower" shall mean Santa Ana Village LP, a California limited partnership.
"Carryover Allocation" shall mean that certain Carryover Allocation dated
20, executed by the Allocation Committee in favor of Borrower.
"Code(s)" shall mean the Internal Revenue Code of 1986, as amended from time to time, or the
corresponding provisions of any successor Federal Income Tax Law and, if applicable, the California
Revenue and Taxation Code, as amended from time to time, or the corresponding provisions of any
successor State Income Tax Law. Any reference to a particular provision of the Code(s) shall include any
amendment of such provision or the corresponding provision of any successor Federal Income Tax Law
or State Income Tax Law.
"Deed of Trust" shall mean that certain Construction and Permanent Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing of even date of the Note, executed by Borrower for the
benefit of Bank and encumbering the Property.
"Final Reservation" shall mean that certain Final Reservation Letter to be issued by the Allocation
Committee in connection with the Tax Credits.
"General Partner(s)" shall mean JHC-Santa Ana Village LLC, a California limited liability
company.
"Improvements" shall mean a 76 -unit low income apartment complex, together with all related
appurtenances to be constructed on the Property.
"Loan" shall mean the $21,424,775 construction loan to be made by Bank to Borrower.
"Loan Agreement" shall mean the Construction and Permanent Loan Agreement dated December
7, 2018, executed by Borrower and Bank.
"Note" shall mean that certain Promissory Note Secured by Deed of Trust (Construction and
Permanent Loan) in the original principal amount of Twenty -One Million Four Hundred Twenty -Four
Thousand Seven Hundred Seventy -Five and No/100th Dollars ($21,424,775), dated of even date
herewith, executed by Borrower in favor of Bank.
"Partnership Agreement" shall mean Borrower's agreement of limited partnership dated
December 7, 2018, as the same has been or may be amended from time to time.
"Preliminary Reservation" shall mean that certain Preliminary Reservation Letter dated June 13,
2018, issued by the Allocation Committee.
"Project" shall mean the Property and the Improvements.
APPENDIX I
4821-4251-8639v.4 0096250-000012
"Property" shall mean certain real property located in the City of Santa Ana, County of Orange,
State of California, as more particularly described in the Trust Deed.
"Tax Credit Investor" shall mean MUFG Union Bank, N.A., a national banking association.
"Tax Credits" shall mean low income housing tax credits allocated under Section 42 of the
Internal Revenue Code of 1986, as amended, and Sections 17058 and 23610.5 of the California Revenue
& Taxation Code, as amended, pursuant to the terms of the Tax Credit Allocation Documents.
"Tax Credit Allocation Documents" shall mean the Tax Credit Application, the Preliminary
Reservation, the Carryover Allocation and such other documents as have or may be issued by the
Allocation Committee from time to time with respect to the Tax Credits.
"Tax Credit Application" shall mean the 2018 Low -Income Housing Tax Credit Application
submitted to the Allocation Committee to apply for Tax Credits with respect to the Project.
Borrower's address for purposes of notices is as follows
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, California 92614
Attention: Laura Archuleta
Telephone No.: (949) 263-8676
Telecopier No.: (949) 263-0647
Tax Credit Investor's address for purposes of notices is as follows:
MUFG Union Bank, N.A.
200 Pringle Avenue, Suite 355
Walnut Creek, California 94596
Attention: Asset Management, Community Development Finance
Telecopier No.: (925) 947-2455
General Partner(s)' address for purposes of notices is as follows:
c/o Jamboree Housing Corporation
17701 Cowan Avenue, Suite 200
Irvine, California 92614
Attention: Laura Archuleta
Telephone No.: (949) 263-8676
Telecopier No.: (949) 263-0647
APPENDIX I
4821-4251-8639v.4 0096250-000012