HomeMy WebLinkAboutSTATE OF CALIFORNIA DEPARTMENT OF HOUSING (2)N
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FREE RECORDING IN ACCORDANCE
WITH CALIFORNIA GOVERNMENT
CODE SECTION 27383 and 27388.1.
5 City of Santa Ana (714) 647-6987
RECORDING REQUESTED BY, AND
WHEN RECORDED, MAIL TO:
State of California Apr
Department of Housing and _G,
Community Development
P. O. Box 952052
Sacramento, CA 94252-2052
Attn: Legal Affairs Division lu'I J� cc d
Affordable Housing and Sustaina
Communities (AHSC) Program www.santa-ana.org
16-AHSC-11199
Return ORIGINAL A-2021-102-01
executed copy toCOTC, SUBORDINATION AGREEMENT
M-30
3;NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
GfINTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.
THIS SUBORDINATION AGREEMENT (the "Agreement') is dated as of August 1, 2021, for
o reference purposes only, and is entered into by and among City of Santa Ana, a charter city
and municipal corporation (the "Junior Lienholder"), Santa Ana Arts Collective, L.P., a California
limited partnership (the 'Borrower"), and the Department of Housing and Community
Development, a public agency of the State of California (the "Senior Lender").
RECITALS
A. Borrower is the owner of the fee simple interest in that real property described in
Exhibit A attached hereto and made a part hereof (the "Property"). The Borrower has developed
a 58-unit multifamily residential rental development on the Property (the "Improvements"). The
Property and the Improvements are sometimes referred to collectively as the "Development."
B. The Junior Lienholder has made a loan to the Borrower in the principal sum of
Four Million Seven Hundred Seventy -Five Thousand and no/100 Dollars ($4,775,000.00) from
Inclusionary funds (the "Junior Lienholder Loan #1 "). The Junior Lienholder Loan is evidenced
by a certain promissory note dated as of July 5, 2017 (the "Junior Lienholder Note #1"), secured
by a certain deed of trust (the "Junior Lienholder Deed of Trust #1 ") recorded on July 26, 2017,
as Instrument No. 2017000308363 in the Official Records of Orange County, California (the
AHSC Subord. Agrmt.
(NOFA- 01 /29/16)
Rev: 11/08/2018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
Page 1 of 9
"Official Records"). The Junior Lienholder has made a loan to the Borrower in the principal sum
of Two Million Two Hundred Nineteen Thousand Seven Hundred Sixty and no/100 Dollars
($2,627,631.00) in HOME funds (the "Junior Lienholder Loan #2"). The Junior Lienholder Loan
is evidenced. by a certain promissory note (the "Junior Lienholder Note #2"), secured by a certain
deed of trust (the "Junior Lienholder Deed of Trust #2") recorded on July 26, 2017, as Instrument
No. 2017000308364 in the Official Records. The Junior Lienholder has made a loan to the
Borrower in the principal sum of Five Hundred Thousand and no/100 Dollars ($500,000.00) in
CDBG funds (the "Junior Lienholder Loan #3"). The Junior Lienholder Loan is evidenced by a
certain promissory note (the "Junior Lienholder Note #3"), secured by a certain deed of trust
(the "Junior Lienholder Deed of Trust #3") recorded on July 26, 2017, as Instrument No.
2017000308365 in the Official Records.
In connection with these loans, the Junior Lienholder and Borrower have entered into the
following documents:
a. Home Loan Agreement by and between the City of Santa Ana and Santa Ana
Arts Collective, L.P., affecting the use of the Development, recorded on July 26,
2017, as Instrument No. 2017000308368 in the Official Records, as amended by
that First Amendment to Home Loan Agreement by and between the City of Santa
Ana and Santa Ana Arts Collective, L.P., recorded on September 10, 2018, as
Instrument No. 2018000331459 in the Official Records (the "Junior Lienholder
HOME Loan Agreement");
b. Affordability Restrictions on Transfer of Property, recorded on July 26, 2017, as
Instrument 2017000308360 in the Official Records (the "Junior Lienholder HOME
Loan Covenant");
c. First Amended and Restated Loan Agreement by and between the City of Santa
Ana and Santa Ana Arts Collective, L.P., affecting the use of the Development,
recorded on July 26, 2017, as Instrument No. 2017000308369 in the Official
Records (the "Junior Lienholder CDBG/Inclusionary Agreement"); and
d. First Amended and Restated Affordability Restrictions on Transfer of Real
Property, affecting the use of the Development, recorded on July 26, 2017, as
Instrument No. 2017000308361 in the Official Records (the "Junior Lienholder
CDBG/Inclusionary Covenant").
The Junior Lienholder Deed of Trust #1, the Junior Lienholder Deed of Trust #2, the Junior
Lienholder Deed of Trust #3, the Junior Lienholder HOME Loan Agreement, the Junior
Lienholder HOME Loan Covenant, the Junior Lienholder CDBG/Inclusionary Agreement, the
Junior Lienholder CDBG/Inclusionary Covenant, and all other documents evidencing or
securing the Junior Lienholder Loan #1, Junior Lienholder Loan #2, and Junior Lienholder Loan
#3 are collectively referred to herein as the "Junior Lienholder Documents.")
C. In order to finance the development of the Improvements, the Senior Lender has
agreed to loan the Borrower a sum not to exceed Four Million Nine Hundred Forty -Four
AHSC Subord. Agrnnt. Page 2 of 9
(NOFA— 01 /29116)
Rev: 11108/2018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
Thousand One Hundred Thirty and no/100 Dollars ($4,944,130.00) (the "AHSC Loan"),
subject to the terms and conditions of: (i) a regulatory agreement restricting the use and
occupancy of the Development and the income derived therefrom which shall be dated as of
even date herewith and recorded concurrently herewith as an encumbrance on the Property in
the Official Records (the "AHSC Regulatory Agreement"), and (ii) other loan documents. The
AHSC Loan will be evidenced by a promissory note (the "AHSC Note"), the repayment of which
will be secured by, among other things, a deed of trust by Borrower as trustor, to Senior Lender
as beneficiary recorded concurrently herewith as an encumbrance on the Property in the Official
Records (the "AHSC Deed of Trust") and by such other security as is identified in other loan
documents. "(The AHSC Regulatory Agreement, the AHSC Deed of Trust, the AHSC Note and
all other documents evidencing or securing the AHSC Loan are collectively referred to herein
as the "Senior Lender Documents.")
D. The Senior Lender is willing to make the AHSC Loan provided the AHSC Deed of
Trust and the AHSC Regulatory Agreement are liens, claims or charges upon the Development
prior and superior to the Junior Lienholder Documents, and provided that the Junior Lienholder
specifically and unconditionally subordinates and subjects the Junior Lienholder Documents to
the liens, claims or charges of the AHSC Deed of Trust and the AHSC Regulatory Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and
other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and
in order to induce the Senior Lender to make its AHSC Loan, it is hereby declared, understood
and agreed as follows:
1. The AHSC Regulatory Agreement and the AHSC Deed of Trust securing the
AHSC Note in favor of the Senior Lender, and any and all renewals, modifications, extensions
or advances thereunder or secured thereby (including interest thereon) shall unconditionally be
and remain at all times liens, claims, or charges on the Development prior and superior to the
Junior Lienholder Documents, and to all rights and privileges of the Junior Lienholder
thereunder; and the -Junior Lienholder Documents, together with all rights and privileges of the
Junior Lienholder thereunder are hereby irrevocably and unconditionally subject and made
subordinate to the liens, claims or charges of the AHSC Deed of Trust and the AHSC Regulatory
Agreement.
2. This Agreement shall be the whole and only agreement with regard to the
subordination of the Junior Lienholder Documents, together with all rights and privileges of the
Junior Lienholder thereunder, to the liens, claims or charges of the AHSC Deed of Trust and
the AHSC Regulatory Agreement, and this Agreement shall supersede and cancel any prior
agreements to subordinate the claims, liens or charges of, but only insofar as would affect the
priority between the claims, liens or charges of the Junior Lienholder Documents to the AHSC
Deed of Trust and the AHSC Regulatory Agreement including, but not limited to, those
AHSC Subord. Agrmt. Page 3 of 9
(NOFA— 01/29116)
Rev: 11/08/2018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dow Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
provisions, if any, contained in the Junior Lienholder Documents, which provide for the
subordination of the lien or charge thereof to another lien or charge on the Property or the
Improvements. This agreement shall not limit, waive, modify or replace the requirement that the
Senior Lienholder comply with IRC Section 42(h)(6)(E)(ii) as stated in the AHSC Regulatory
Agreement.
3. The Junior Lienholder declares, agrees and acknowledges that:
(a) The Junior Lienholder consents and approves (i) all provisions of the AHSC
Note, the AHSC Deed of Trust and the AHSC Regulatory Agreement, and (ii) all
agreements among the Junior Lienholder, Borrower and Senior Lender for the
disbursement of the proceeds of the AHSC Loan, including without limitation any loan
escrow agreements which have been provided to the Junior Lienholder for review;
(b) The Senior Lender, in making disbursements of the AHSC Loan pursuant to
the AHSC Note or any other agreement, is under no obligation or duty to, nor has the.
Senior Lender represented that it will, see to the application of such proceeds by the
person or persons to whom the Senior Lender disburses such proceeds, and any
application or use of such proceeds for purposes other than those provided for in such
agreement or agreements shall not defeat the subordination herein made in whole or in
pad;
(c) That none of the execution, delivery or recordation of any of the AHSC Note,
AHSC Deed of Trust, or AHSC Regulatory Agreement, or the performance of any
provision, condition, covenant or other term thereof, will conflict with or result in a breach
of the Junior Lienholder Documents or the Junior Lienholder Note; and
(d) The Junior Lienholder intentionally and unconditionally waives, relinquishes,
subjects and subordinates the claims, liens or charges upon the Development of the
Junior Lienholder Documents, all present and future indebtedness and obligations
secured thereby, in favor of the claims, liens or charges upon the Development of the
AHSC Deed of Trust and the AHSC Regulatory Agreement, and understands that in
reliance upon, and in consideration of, this waiver, relinquishment, subjection, and
subordination, the AHSC Loan and advances thereof are being and will be made and,
as part and parcel thereof, specific monetary and other obligations are being and will be
entered into which would not be made or entered into but for said reliance upon this
waiver, relinquishment, subjection and subordination.
4. Senior Lender hereby agrees, but only as a separate and independent covenant of
the Senior Lender and not as a condition to the continued effectiveness of the covenants
and agreements of the Borrower and the Junior Lienholder as set forth herein, as follows:
AHSC Subord. Agrnnt
(NOFA— 01 /29/16)
Rev: 11108/2018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
Page 4 of 9
(a)Following a notice from the Senior Lender to the Borrower that a default or breach
exists under the terms of the Senior Lender Documents and each of them, the Senior Lender
shall promptly (but in no event later than the following business day) send a copy of such
notice to the Junior Lienholder and the Junior Lienholder shall have the right, but not the
obligation, to cure the default as follows:
(i) If the default is reasonably capable of being cured within thirty (30)
days, as determined by the Senior Lender in its sole discretion, the
Junior Lienholder shall have such period to effect a cure prior to
exercise of remedies by Senior Lender under the Senior Lender
Documents, or such longer period of time as may be specified in the
Senior Lender Documents.
(ii) If the default is such that it is not reasonably capable of being cured
within thirty (30) days, as determined by the Senior Lender in its sole
discretion, or such longer period if so specified, and if the Junior
Lienholder (a) initiates corrective action within said period, and (b)
diligently, continually, and in good faith works to effect a cure as soon
as possible, then the Junior Lienholder shall have such additional time
as is determined by the Senior Lender, in its sole discretion, to be
reasonably necessary to cure the default prior to exercise of any
remedies by Senior Lender.
In no event shall Senior Lender be precluded from exercising remedies if its security
becomes or is about to become materially jeopardized by any failure to cure a default or the
default is not cured within ninety (90) days after the first notice of default is given, or such
longer period of time as may be specified in the Senior Lender Documents.
Nothing in this subparagraph (a) is intended to modify any covenant, term or condition
contained in the Senior Lender Documents, including, without limitation, the covenant
against creating or recording any liens or encumbrances against the Property without the
prior written approval of the Senior Lender.
(b)The provisions of this paragraph 4 are intended to supplement, and not to limit,
waive, modify or replace, those provisions of law pertaining to notice and cure rights of junior
lenders including, without limitation, those set forth in California Civil Code sections 2924b
and 2924c.
5. The Senior Lender would not make the AHSC Loan without this Agreement.
6. This Agreement shall be binding on and inure to the benefit of the legal
representatives, heirs, successors and assigns of the parties.
AHSC Subord. Agrnnt. Page 5 of 9
(NOFA— 01/29116)
Rev: 11/08/2018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
A-2021-102-01
7. This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
8. In the event that any party to this Agreement brings an action to interpret or enforce
its rights under this Agreement, the prevailing party in such action shall be entitled to recover its
costs and reasonable attorneys' fees as awarded by the court in such action.
9. This Agreement may be signed by different parties hereto in counterparts with the
same effect as if the signatures to each counterpart were upon a single instrument. All
counterparts shall be deemed an original of this Agreement.
NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH
ALLOWS THE PERSON (OR ENTITY) OBLIGATED ON YOUR REAL PROPERTY
SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR OTHER
PURPOSES THAN IMPROVEMENT OF THE LAND.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth
above and agree to be bound hereby:
JUNIOR LIENHOLDER:
City of Santa Ana, a charter city and
municipal corporation
By: ��.6-
Name:
Title:
Title: 8654s7k,...{ 67j k yVteH
[Signatures must be acknowledged.]
[Signatures continue on page 7. Remainder of this page is blank.]
AHsc subord. Agrmt. Page 6 of 9
(NOFA— 01/29/16)
Rev: 11108/2018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
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 August 16, 2021 before me, Claudia M. Fernandez -Shaw, Notary Public
(insert name and title of the officer)
personally appeared Kristine Ridge
who proved to me on the basis of satisfactory evidence to be the person) whose name m
kr�Cj
subscribed to the within instrument and acknowledged t me thatP l executed the same in
>id/t—f60lWirauthorized capacitykW, and that by H signaturesj on the instrument the
persor>W. or the entity upon behalf of which the person X 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.
CLAUDIA M. FERNANDEZ-SHAW
Notary Public — California
_ Orange County
Commiss 42228084 —
My 00M. €xpir&a Jan 25. 2022
I
Santa Ana Arts Collective, L.P.
a California limited partnership
By: Santa Ana Arts Collective, LLC,
a California limited liability company
Its: Administrative General Partner
By: META Housing Corporation
a California Corporation
its sole member and manager
in
George Russo,
Chief Financial Officer
By: WCH Affordable XVIII, LLC,
a California limited liability company
Its: Managing General Partner
By:
Graham Espley-Jones,
President
[Signatures must be acknowledged.]
[Signatures continue on page 8. Remainder of this page is blank.]
SENIOR LENDER:
The Department of Housing and Community
AHSC Subord. Agrmt
(NOFA— 01129116)
Rev: 1110812018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
Page 7 of 9
Development, a public agency of the State of California
0
Eric Dauterive, Closings Manager
[Signatures must be acknowledged.]
AHSC Subord. Agrmt. Page 8 of 9
(NOFA— 01 /29116)
Rev: 1110812018
Prep: 08/0312021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The Land referred to herein below is situated in the City of Santa Ana, County of Orange,
State of California, and is described as follows:
THAT PORTION OF SECTION 12, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE
CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, BEING A
PORTION OF THE LAND ALLOCATED TO JACOB ROSS IN DECREE OF PARTITION
OF THAT RANCHO SANTIAGO DE SANTA ANA, RECORDED IN BOOK "B" OF
JUDGEMENTS OF 17TH JUDICIAL DISTRICT COURT OF CALIFORNIA, DESCRIBED
AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID SECTION 12, BEING ALSO
THE INTERSECTION OF THE CENTER LINES OF SEVENTEENTH STREET AND
MAIN STREET AS SAID INTERSECTION IS SHOWN ON A MAP FILED IN BOOK 11
PAGE 18 OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER
OF SAID ORANGE COUNTY, CALIFORNIA; THENCE ALONG THE NORTHERLY LINE
OF SAID NORTHEAST QUARTER, NORTH 890 56' 40" WEST 289.89 FEET; THENCE
SOUTH 00 16' 25" WEST 230.00 FEET; THENCE PARALLEL WITH THE NORTHERLY
LINE OF SAID NORTHEAST QUARTER, SOUTH 890 56' 40" EAST 289.78 FEET TO
THE EASTERLY LINE OF SAID NORTHEAST QUARTER; THENCE ALONG SAID
EASTERLY LINE NORTH 00 16' 40" EAST 230.00 FEET TO THE POINT OF
BEGINNING.
EXCEPT THE NORTHERLY 40.00 FEET THEREOF.
ALSO EXCEPT THE EASTERLY 35.00 FEET THEREOF.
APN 005-153-19 and 005-153-20
AHSC Subord. Agrmt. Page 9 of 9
(NOFA— 01/29116)
Rev: 11/0812018
Prep: 08/03/2021 (City of Santa Ana Loans)
Dev: Santa Ana Arts Collective
Loan No.: 16-AHSC-11199