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HomeMy WebLinkAboutNORTH HARBOR HOUSING PARTNERS, LP (CO JAMBOREE HOUSING CORPORATION) (2)RECORDING REQUESTED BY: 1'AT WI1101011171711130K110CIS KMO Partners, LLP 3777 Long Beach Blvd. Suite 280 Long Beach, CA 90807 Attention: John Opgenorth THIS SPACE FOR RECORDER'S USE ONLY APR 16 2024 SUBORDINATION AGREEMENT A-2021-054-03 p.coAc) (c.dhnw)^^� NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER INSTRUMENT. THIS SUBORDINATION AGREEMENT ("Agreement') is entered into as of April 1, 2024, by and among NORTH HARBOR HOUSING PARTNERS LP, a California limited partnership ("Borrower"), THE CITY OF SANTA ANA ("Junior Lender % and JPMORGAN CHASE BANK, N.A., a national banking association (`Bank"), in its capacity as agent for the Issuer in connection with the issuance of the Bonds (each as defined below). The parties to this Agreement are referred to as the "Parties." Bank and Junior Lender are referred to as the "Lenders." RECITALS A. Pursuant to the terms of that certain Master Pledge and Assignment by and between California Municipal Finance Authority (the "Issuer") and Bank dated March 1, 2021 ("Master Pledge and Assignment'), Bank agreed to purchase those certain Multifamily Housing Revenue Bonds (North Harbor Village) 2021 Series A in the principal amount of $19,000,000 (the "Tax - Exempt Bonds") and those certain Multifamily Housing Revenue Taxable Bonds (North Harbor Village) 2021 Series A-T in the principal amount of $13,700,000 (the "Taxable Bonds", and together with the Tax -Exempt Bonds, the "Bonds"), the proceeds of which were to be used to fund a loan to Borrower in the original principal amount of up to $32,700,000 for the acquisition, construction, development and operation of a multifamily project located in the City of Santa Ana, County of Orange, California (the `Bank Loan"), as increased pursuant to the Modification Agreement (Supplemental Issuance) defined below. In connection therewith, Borrower executed a Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing recorded in the Official Records of Orange County, California ("Official Records") on April 1, 2021 as Instrument No. 2021000224389, as amended by the Modification Agreement (Supplemental Issuance) defined —1— Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244, v.5 below (as amended, the `Bank Deed of Trust") for the benefit of Bank, to secure that certain Promissory Note (Tax Exempt) dated as of April 1, 2023 in the original principal amount of $19,000,000, as amended by that certain Modification Agreement (Tax -Exempt) dated as of March 15, 2023 and the Modification Agreement (Supplemental Issuance) (as amended, the "Tax -Exempt Note") and that certain Promissory Note (Taxable) dated as of April 1, 2023 in the original principal amount of $13,700,000 as amended by that certain Modification Agreement (Taxable) dated as of March 15, 2023 and the as amended by the Modification Agreement (Supplemental Issuance) (as amended, the "Taxable Note", and together with the Tax -Exempt Note, the "Bank Note"), and a UCC-I Financing Statement in favor of Bank ("Bank UCC") recorded concurrently with the Bank Deed of Trust. The Bank Deed of Trust encumbers, among other things, the real property more particularly described in Exhibit A attached to this Agreement (the "Land"). The Land, together with all improvements now or hereafter located on the Land and all fixtures and personal property located on the Land and encumbered by any of the Recorded Items (as defined below) are referred to, collectively, as the "Pro e ." B. In connection with the issuance of the Bonds, Borrower executed a Regulatory Agreement and Declaration of Restrictive Covenants (the "Bond Regulatory Agreement') recorded in the Official Records on April 1, 2021 as Instrument No. 2021000224388, as amended by that certain First Amendment to Regulatory Agreement and Declaration of Restrictive Covenants recorded in the Official Records on November 13, 2023 as Instrument No. 2023277028 (as amended, the "Bond Regulatory Agreement'). C. Issuer agreed to issue and Bank has agreed to purchase those certain Multifamily Housing Revenue Bonds (North Harbor Village) 2023 Series A in an aggregate principal amount not to exceed $8,037,572 (the "Supplemental Tax -Exempt Bonds") pursuant to that certain First Supplement to Master Pledge and Assignment dated as of November 1, 2023 (the "First Sup lep meet to Master Pledge"), and in connection with the First Supplement to Master Pledge, the Borrower and the Bank entered into that certain Modification Agreement dated as ofNovember 1, 2023, recorded in the Official Records on November 13, 2023 as Instrument No. 2023000277029 (the "Modification Agreement (Supplemental Issuance)"), pursuant to which the Borrower and Bank agreed to increase the maximum principal amount of the Tax -Exempt Note to $27,037,572, to reduce the maximum principal amount of the Taxable Note to $8,913,936, and to increase the maximum principal amount of Bank Loan in the Bank's Loan Documents and secured by the Deed of Trust to $35,951,508. D. Junior Lender made a loan to the Borrower in the original principal amount of $1,687,047 (the "Junior Loan") pursuant to that certain Loan Agreement dated as of April 20, 2021 by and between the Junior Lender and Borrower dated as of April 20, 2021 and recorded in the Official Records as Instrument No. 2021000285576 (the "Junior Loan Agreement"). The Junior Loan is evidenced by that certain City CDBG Loan Note Secured by Deed of Trust to the City of Santa Ana, dated as of April 20, 2021(the "Junior Note") and secured by that certain CDBG Deed of Trust and Assignment of Rents, dated April 20, 2021, and recorded on April 28, 2021 in the Official Records as Instrument No. 2021000285575 (the "Junior Deed of Trust"). Junior Lender and Borrower also executed those certain Affordability Restrictions on Transfer of Property dated April —2— Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244, v. 5 20, 2021, recorded on April 28, 2021 in the Official Records as Instrument No. 2021000285574 ("Affordability Restrictions"). A requirement of the Junior Loan is that the Affordability Restrictions have senior priority among the Recorded Items, as defined below. The Parties hereto desire to enter into this Agreement for the purpose of complying with this requirement of the Junior Loan, and the agreement to comply with this requirement of the Junior Loan constitutes consideration for entering into this Agreement. D. The Bond Regulatory Agreement, the Bank Deed of Trust, the Bank UCC, the Junior Deed of Trust and the Affordability Restrictions are referred to as the "Recorded Items." E. It is the intent of the Parties that the order of priority of the Recorded Items as liens on or charges against the Property be as follows: 1. Affordability Restrictions 2. Bond Regulatory Agreement 3. Bank Deed of Trust 4. Bank UCC 5. Junior Deed of Trust E. It is a condition precedent to the respective obligations of each Party under the Recorded Items to which it is a party that such Recorded Item unconditionally be and remain at all times a lien or charge on the Property, having priority with respect to the other Recorded Items in the order set forth above, and that each Party specifically and unconditionally subordinate the lien or charge of each of the Recorded Items to which it is a party as necessary in order that the Recorded Items have the relative priority set forth above. In consideration of the mutual benefits accruing to the Parties and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: AGREEMENT Priority and Subordination. (a) Each Recorded Item, and any and all amendments, replacements, renewals and extensions thereof, shall unconditionally be and remain at all times a lien or charge on the Property, having the relative priority with respect to the other Recorded Items as set forth above. Each Party intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the Recorded Items, except the Affordability Restrictions, to which it is a party in favor ofthe lien or charge upon the Property of the other Recorded Items to the extent necessary so that the Recorded Items shall have the relative priority set forth above. Notwithstanding anything to the contrary herein, the Affordability Restrictions are not subordinated by this Agreement. —3— Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244, v. 5 (b) Each Party acknowledges that it has been offered a satisfactory opportunity to review each of the Recorded Items and related documents to the extent that it wishes to review them. (c) Each Party acknowledges that its payment interests pursuant to the Recorded Items and any related documents shall have the relative priority with respect to payment interests pursuant to the other Recorded Items as set forth above. In addition, Junior Lender agrees that repayment of the indebtedness secured by the Junior Deed of Trust is and shall be postponed and subordinated to repayment in full of the indebtedness secured by the Bank Deed of Trust; provided, however, that Junior Lender may accept regularly scheduled payments due under its Junior Loan so long as no default has occurred and is continuing under the Bank Loan Documents. Junior Lender agrees that from and after such time as it has received from either Bank or Borrower written notice that a default then exists under the Bank Loan Documents (as defined hereinbelow) (which has not been expressly waived in writing by Bank) or otherwise has actual knowledge of such a default, Junior Lender shall not receive or accept any payments under the Junior Loan. If (i) Junior Lender receives any payment, property, or asset of any kind or in any form on account of the Junior Loan after a default under the Bank Loan Documents of which Junior Lender has actual knowledge or has been given notice of, or (ii) Junior Lender receives, voluntarily or involuntarily, by operation of law or otherwise, any payment, property, or asset in or in connection with any bankruptcy proceeding, such payment, property, or asset will be received and held in trust for Bank. Junior Lender will promptly remit, in kind and properly endorsed as necessary, all such payments, properties, and assets to Bank. Bank shall apply any payment, asset, or property so received from Bank to the outstanding indebtedness under the Bank Loan in such order, amount (with respect to any asset or property other than immediately available funds), and manner as Bank shall determine in its sole and absolute discretion. (d) Junior Lender shall not, without either the prior written consent of Bank (which consent may be granted or withheld in Bank's sole and absolute discretion), pursue any remedy including, without limitation, the acceleration and/or demand of all or any part of the obligations secured by the Junior Deed of Trust, any foreclosure proceeding, exercise of power of sale, exercise of any rights as a secured party under the Uniform Commercial Code, any other public or private sale, acceptance of a tender of title to all or any portion of the Property in full or partial satisfaction of the Junior Deed of Trust, obtaining of a receiver, obtaining of a restraining order, protective order or injunction, seeking of default interest, taking possession or control of all or any portion of the Property, applying any funds pledged to Junior Lender or to any other obligation, exercising of any right of setoff against Borrower, initiating or voluntarily participating in any action or proceeding against Borrower or any of Borrower's assets, to enforce collection or payment of all or any portion of the obligations to Junior Lender or to enforce rights against all or any portion of the Property. Notwithstanding the foregoing, such limitation on the remedies of Junior Lender shall not derogate or otherwise limit Junior Lender's rights, following an event of default under the Junior Loan to (a) compute interest on all amounts due and payable under the Junior Loan at the default rate described in the Junior Note, (b) compute prepayment premiums and late charges, (c) enforce against any person, other than Borrower and any guarantors or indemnitors under the Bank Loan, any guaranty of the obligations of Borrower under the Junior Loan, and (d) seek specific performance or M Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244, v. 5 to enforce covenants and agreements of Borrower relating to income, rent, or affordability restriction contained in the Affordability Restrictions. (e) Junior Lender agrees that Bank shall have all approval, consent and oversight rights in connection with any insurance claims relating to the Property, any decisions regarding the use of insurance proceeds after a casualty loss or condemnation awards, the hiring or firing of property managers, or otherwise related in any way to the Property, and Junior Lender shall have no right to object to any such action or approval taken by Bank and shall consent thereto and be bound thereby. Reserved. 3. Recordin¢. Each Party consents to the recording of each of the Recorded Items, in the lien priority as set forth herein, and the recording of this Agreement. 4. No Obligation. No Lender is under any obligation to any other Lender to, nor has any Lender represented that it will, see to the application of any proceeds of any loan secured by any of the Recorded Items except as may otherwise be set forth in a written agreement (other than this Agreement) executed by the Lender sought to be charged with such an obligation. 5. Notice of Default; Opportunity to Cure. Each Party shall give each of the other Parties notice of default under each Recorded Item in favor of such Party prior to enforcing remedies for such default against Borrower or the Property and each of the other Parties shall have the right to cure such default at any time that Borrower would have a right to cure it. 6. Actions by Bank; Certain Waivers. Bank, without the consent of or notice to any other Lender, may enter into amendments of the Bank Deed of Trust and the documents and obligations secured thereby (collectively, the `Bank Loan Documents") in any manner, may release any or all persons or entities liable for any obligation secured by the Bank Loan Documents, and may release any or all security for the obligations secured by the Bank Loan Documents, all without affecting the subordination under this Agreement. Each Party waives any right to require marshaling of assets or to require Bark to proceed against or exhaust any specific security for the obligations secured by the Bank Loan Documents, and waives any and all defenses arising out of the loss or impairment of any right of subrogation to the lien of the Bank Loan Documents. Any Lender may release any or all persons or entities liable for any obligation secured by the deed of trust in its favor and the documents secured thereby (collectively, with respect to each respective Lender, that Lender's "Loan Documents"), without the consent of or notice to any other Lender, all without affecting the subordination under this Agreement. Each Party waives any right to require marshaling of assets or to require a Lender to proceed against or exhaust any specific security for the obligations secured by any of the Loan Documents, and waives any and all defenses arising out of the loss or impairment of any right of subrogation to the lien of any of the Loan Documents. Miscellaneous. —5— Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244, v. 5 (a) Entire Agreement. This Agreement constitutes the entire agreement among the Parties with respect to the priority of the lien and charge of the Recorded Items against the Property and all prior understandings and agreements on that subject, if any, are superseded and replaced by this Agreement. (b) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the state where the Land is located. (c) Successors: Assignment. This Agreement is for the benefit of the Lenders and their respective successors and assigns, and any provision hereof may be waived or modified by agreement of Lenders without the consent of Borrower, and without affecting the priority of the liens and charges of the Recorded Items as provided in this Agreement. The heirs, administrators, assigns and successors -in -interest of the Parties shall be bound by this Agreement. This Agreement may be assigned by a Party only as a part of an assignment of such Party's interest in the Property. (d) Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when hand -delivered, or two business days after deposit in the U.S. mail, postage prepaid, to the Parties at the addresses set forth below, or to such other place as a Party may from time to time designate for itself by notice to the other Parties. No successor or assign of a Party shall be entitled to notices or opportunity to cure defaults hereunder unless notice of the transfer is given in accordance with this subsection. (e) Amendment. This Agreement may be amended only by a writing signed by the Parties, but this clause shall not impair the validity of any further agreements among fewer than all of the Parties as among themselves. (f) Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and whether or not all Parties execute each counterpart. (g) Completion of Recording Information. If this Agreement is signed without completion of certain recording information called for above, any Party or any escrow agent or title insurance company acting on the instructions of any Party is hereby authorized to insert such information prior to recording this Agreement. (Remainder of page intentionally left blank) M Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244, v. 5 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT. NORTH HARBOR HOUSING PARTNERS LP, a California limited partnership By: JHC-North Harbor LLC, a California limited liability company, Managing General Partner By: Jamboree Housing Corporation, a California nonprofit public benefit corporation, its Manager � I11 / \ I k — Chief Development Officer Address: North Harbor Housing Partners LP c/o Jamboree Housing Corporation 17701 Cowan Ave., Suite 200 Irvine, CA 92614 Attention: Michael Massie With a copy to: Rutan & Tucker, LLP 18575 Jamboree Road, 9th Floor Irvine, CA 92612 Attention: Patrick McCalla (Signature Page to Subordination Agreement) Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT. JUNIOR LENDER: CITY OF S TA AV NA Nufiez { Acting City Manager Dated: Q2Y APPROVED AS TO FORM;. SONIA R. CA;t)(ALMO, Yyfy Attorney Un Best, Best & Krieger Special Counsel for/he City Dated: o� RECOMMENDEDFORAPPROVAL: Michael Garcia Executive Director Community Development Agency Address: City of Santa Ana Executive Director (CDA) 20 Civic Center Plaza (M-26) P.O. Box 1988 Santa Ana, California 92702 With a copy to: City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor (M-29) Santa Ana, California 92702 (Signature Page to Subordination Agreement) Subordination Agreement (City Loan) North Harbor Village 4665-1649-6244 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 April 10, 2024 before me, Claudia M. Fernandez -Shaw, Notary Public (insert name and title of the officer) personally appeared Waldo Barela Jr. who proved to me on the basis of satisfactory evidence to be the person) whose name subscribed to the within instrument and acknowledged to me that,&-%haAhey executed the same in ,tg rN r�P authorized capacity(ies}, and that by er/tMeir signatureo on the instrument the person(4, 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. CLAL'DIAM. FERNANDEZ•SHAW Notary Public - California and official S08I. =' - orange Cocnry Commission 9 2388597 My Comm. Expires Jan 25, 2026 /1 BANK: JPMORGAN CHASE BANK, N.A., a national banking association Justin Chen Authorized Officer with a copy to: JPMorgan Chase Bank, N.A. Community Development Banking 300 South Grand Avenue, Suite 300 Los Angeles, CA 90071 Attention: Rosalind Ross Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244 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 ) ss. COUNTY OF OrOtl ) On Prpn1'Df70Z I before me OrOna C;ofj-0gne2- a notary public in and for said state, personally appeared %tit I Got p el M q SS 1 C, , 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 capacities, 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) CRISTINA COTA-NUNE2 Notary public - California Orange County 9 \\\\ Comm-'onn"'I"'j1 A2379272 my Comm. Expires Oct 20, 2025 ' Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244 Ms t" -qW.1 LEGAL DESCRIPTION Real property in the City of Santa Ana, County of Orange, State of California, described as follows: THE SOUTH 135 FEET OF THE NORTHEAST QUARTER OF THE SOUTHEAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 9, TOWNSHIP 5 SOUTH, RANGE 10 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF. EXCEPT THE WEST 20 FEET THEREOF. APN No. 198-011-05 Subordination Agreement (City Loan) North Harbor Village 4865-1649-6244, v. 5 CALIFORNIA ACKNOWLEDGMENT CIVIL CODE § 1189 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 I County of orange On Wo Igi U14 before me, Mb (Ail I. Rk0u, Nd q V41io Date Here Insert Name and Title of the Officer personally appeared 1\ Ugmo uonit Nome(s) of Signer(s) who proved to me on the basis of satisfactory evidence}A be the person(s) whose name(sUiare subscribed to the within instrument and acknowledged to me that e( e he/they executed the same in Itg/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. BIGAIL O AOrang Count L4 Notary Public • California ¢� Orange County F Commission @ 2474325 My Comm. Expires Dec 26, 2027 Place Notary Seal and/or Stamp Above 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 ancJ.efficial seal. Signature OPTIONAL Public Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: NOffih iittrppf wyslrq PUft\PNS Document Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner— ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer is Representing: of Pages: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner— ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer is Representing: ..:...-.'�,...a..a ,....+S,:e-�:is �e:G.S[�:aS,'a•sm3•:?a:[reSeL >a,.,,.,:. 'c ,s-�s',Y:[.K[n:N 'Yr .:F:T� � - ',...,5,... (02018 National Notary Association