HomeMy WebLinkAbout16-72 CC Resolution RESOLUTION NO. 16-72
' A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TEMECULA MAKING FINDINGS AND APPROVING
SUBORDINATION AGREEMENTS WITH CITIBANK, N.A.
AND THE COUNTY OF RIVERSIDE TO FACILITATE
CITIBANK, N.A. AND COUNTY CONSTRUCTION LOANS
FOR THE MADERA VISTA APARTMENTS
DEVELOPMENT
WHEREAS, the former Temecula Redevelopment Agency ("RDA") entered into
an Owner Participation and Loan Agreement with Summerhouse Housing Associates,
L.P. dated September 22, 2009, which was amended eight times (the "OPA"), and the
City has succeeded to the rights and obligations of the RDA under the OPA as the
successor to the housing assets of the RDA.
WHEREAS, Section 9.10 of the OPA authorizes the Executive Director of the
RDA (now, the City Manager of the City as successor to RDA housing assets) to
execute reasonable subordination agreements subordinating the existing deed of trust
and regulatory agreement in favor of the RDA (now the City) to liens securing
construction and permanent financing for the development of property that is subject to
the OPA (the "Property").
' WHEREAS, City staff and the City Attorney's office have negotiated both a
subordination agreement with Citibank, N.A. (and have reviewed the Citibank loan
documents referred to therein) and a subordination agreement with the County of
Riverside (and have reviewed the County loan documents referred to therein), and have
determined that: (i) loan documents for the Citibank and County loans constitute
construction and permanent financing necessary to develop the Property in accordance
with and as required by the OPA; (ii) both subordination agreements are reasonable; (iii)
neither Citibank nor the County would make their loans without the Subordination
Agreements being executed by the City in order to subordinate the City's deed of trust
and regulatory agreement and related documents to the Citibank and County loan
documents (including deeds of trust in favor of Citibank and the County securing such
loans); and (iv) substantial comparable financing is not reasonably available without
such subordination.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TEMECULA
DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The City Council finds, determines and declares that an economically
feasible alternative method of financing the development on terms and conditions
substantially comparable to the terms and conditions of the proposed Citibank and
County loans, but without subordination of the City's deed of trust, regulatory
t agreement, OPA and related documents is not reasonably available, and each of the
subordination agreements contains a written commitment reasonably designed to
protect the City's investment in the event of default (specifically a right of the City to
Resos 16-72 1
cure a default on Citibank loan or the County loan). The foregoing findings are made
' under California Health and Safety Code Section 33334.14(a)(4) and 33334.14(a)(4)(A).
Section 2. The City Council of the City of Temecula hereby approves that certain
"Subordination and Intercreditor Agreement" with Citibank, N.A. and that certain
[Subordination and Intercreditor Agreement] with the County (collectively, the
"Subordination Agreements") in the forms attached hereto as Exhibit "A", but with such
changes as may be approved by the City Manager as being necessary or convenient to
effectuate the purposes of the Agreement. The City Manager is hereby authorized to
execute the Subordination Agreements on behalf of the City. A copy of the final
Subordination Agreement when executed by the Mayor and the other parties thereto,
shall be placed on file in the Office of the City Clerk.
Section 3. The City Manager (or his designee), is hereby authorized, on behalf of the
City, to take all actions necessary and appropriate to carry out and implement the
Agreements and to administer the City's obligations, responsibilities and duties to be
performed under the Subordination Agreements and any related documents, including,
but not limited to, the approval and execution on behalf of the City of escrow instructions
and other implementing agreements and documents.
Section 4. The City Clerk shall certify to the adoption of this Resolution.
' PASSED, APPROVED, AND ADOPTED by the City Council of the City of
Temecula this 13th day of December, 2016.
Michael S. Naggar, Mayor
ATTES
Randi Clerk
[SEAL]
Resos 16-72 2
STATE OF CALIFORNIA )
' COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, do hereby certify that the
foregoing Resolution No. 16-72 was duly and regularly adopted by the City Council of the
City of Temecula at a meeting thereof held on the 13th day of December, 2016, by the
following vote:
AYES: 5 COUNCIL MEMBERS: Comerchero, Edwards, McCracken,
Rahn, Naggar
NOES: 0 COUNCIL MEMBERS: None
ABSTAIN: 0 COUNCIL MEMBERS: None
ABSENT: 0 COUNCIL MEMBERS: None
' Randi Johl, City Clerk
1
Resos 16-72 3
EXHIBIT "A"
' FORMS OF SUBORDINATION AGREEMENTS
(Attached)
1
' WHEN RECORDED MAIL TO:
Citibank, N.A.
Transaction Management Group/Post Closing
390 Greenwich Street,2nd Floor
New York, New York 10013
Attention: Tanya Jimenez
Re: Madera Vista- Deal ID No. 23692
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this
"Agreement") dated as of December I, 2016, is made by and between the CITY OF
TEMECULA, a municipal corporation, as successor to the housing assets of the Redevelopment
Agency of the City of Temecula ("Junior Lender'), and CITIBANK, N.A., a national banking
association ("Senior Lender') and acknowledged by SUMMERHOUSE HOUSING 3, L.P., a
California limited partnership (`Borrower"). The date of this Agreement as set forth above is
for reference purposes only, and this Agreement will not be effective and binding until the
Closing Date (as defined in the Loan Agreement).
' RECITALS:
A. Borrower has applied to the California Municipal Finance Authority, a joint
exercise of powers authority duly organized and existing under the laws of the State of California
("Governmental Lender'), for a loan (the "Senior Loan") for the acquisition, construction,
development, equipping and/or operation of the Property(as hereinafter defined).
B. The Senior Loan is evidenced by that certain Multifamily Note, dated as of the
Closing Date, in the maximum principal amount of$5,865,050 made by Borrower payable to the
order of Governmental Lender (the "Note") and that certain Borrower Loan Agreement, dated as
of the date hereof, by and between Borrower and Governmental Lender (the `Borrower Loan
Agreement').
C. The Senior Loan is secured by, among other things, that certain Multifamily Deed
of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of the date
hereof, executed by Borrower for the benefit of Governmental Lender (as the same may from
time to time be extended, consolidated, substituted for, modified, increased, amended and
supplemented, "Senior Security Instrument'), which Senior Security Instrument shall be
recorded concurrently herewith in Riverside County, California ("Official Records") and
encumbers the Property.
D. Borrower requested that Senior Lender enter into that certain Funding Loan
Agreement dated as of the date hereof, between Governmental Lender and Senior Lender,
pursuant to which Senior Lender will make a loan to Governmental Lender (the "Funding
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' Loan"), the proceeds of which will be used to make the Senior Loan pursuant to the Borrower
Loan Agreement to Borrower.
E. The Senior Note, the Senior Security Instrument and the Borrower Loan
Agreement have each been assigned by Governmental Lender to Senior Lender to secure the
Funding Loan. The Borrower and Senior Lender have entered into that certain Construction
Funding Agreement dated as of the date hereof (the "Construction Funding Agreement")
regarding the manner in which the improvements at the Property will be completed and paid for.
F. Junior Lender has made a subordinate loan (the "Junior Load') to Borrower in
the original principal amount of $721,345, which Junior Loan is evidenced by that certain
Promissory Note Secured by Deed of Trust dated as of April 1, 2013 made by Borrower to Junior
Lender (the "Junior Note") and secured by, the Junior Security Instrument (as hereinafter
defined) encumbering the Property. The Junior Loan has been advanced to Borrower pursuant to
that certain Owner Participation and Loan Agreement dated as of September 22, 2009 by and
between Summerhouse Housing Associates, L.P., a California limited partnership, and the
Redevelopment Agency of the City of Temecula, as amended by that certain First Amendment to
Owner Participation and Loan Agreement dated July 22, 2010, as amended by that certain
Second Amendment to Owner Participation and Loan Agreement dated October 12, 2010, as
amended by that certain Third Amendment to Owner Participation and Loan Agreement dated
March 12, 2011, as amended by that certain Fourth Amendment to Owner Participation and Loan
Agreement dated March 22, 2011, as amended by that certain Fifth Amendment to Owner
' Participation and Loan Agreement dated June 23, 2011, as amended by that certain Sixth
Amendment to and Partial Assignment of Owner Participation and Loan Agreement dated April
1, 2013, as amended by that certain Seventh Amendment to Owner Participation and Loan
Agreement dated March 10, 2015, and that certain Eighth Amendment to Owner Participation
and Loan Agreement dated May 16, 2016 by and between Borrower and Junior Lender (as
amended and assigned, the "Junior Loan Agreement').
G. As a condition to the making of the Senior Loan, Senior Lender requires that
Junior Lender execute and deliver this Agreement.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the
making of the Senior Loan and to induce Senior Lender to consent to the Junior Loan and the
Junior Security Instrument, Junior Lender hereby agrees as follows:
I. Definitions. Capitalized terms used but not defined in this Agreement shall have
the meanings ascribed thereto in the Senior Security Instrument. As used in this Agreement, the
terms set forth below shall have the respective meanings indicated:
"Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency,
composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of
creditors, or custodianship action or proceeding under any federal or state law with respect to
Borrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, or
any of their respective partners, members, officers, directors, or shareholders.
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' "Casualty" means the occurrence of damage to or loss of any of the Property by fire or
other casualty.
"Condemnation means any proposed or actual condemnation or other taking, or
conveyance in lieu thereof, of all or any part of the Property, whether direct or indirect.
"Enforcement Action" means any exercise of any of Junior Lender's remedies under the
Junior Security Instrument or any of the other Junior Loan Documents, including, without
limitation, any of the following: (i) the acceleration of all or any part of the Junior Indebtedness,
(ii) the commencement of any judicial or non judicial action of proceeding to enforce any
obligation of Borrower under any of the Junior Loan Documents, collect any monies payable to
Borrower or have a receiver appointed to collect any monies payable to Borrower, or foreclose
the lien(s) created by the Junior Security Instrument, (iii) the filing or joining in the filing of any
involuntary Bankruptcy Proceeding against Borrower or any person or entity which owns a
direct or indirect interest in Borrower, (iv) the advertising of or commencement of any
foreclosure or trustee's sale proceedings, (v) the exercise of any power of sale, (vi) the
acceptance of a deed or assignment in lieu of foreclosure or sale, (vii) the collecting of Rents,
(viii) the obtaining of or seeking of the appointment of a receiver, (ix) the seeking of default
interest, (x) the taking of possession or control of any of the Property, (xi) the commencement of
any suit or other legal, administrative, or arbitration proceeding based upon the Junior Note or
any other of the Junior Loan Documents, (xii) the exercising of any banker's lien or rights of set-
off or recoupment, or (xiii) the taking of any other enforcement action against Borrower, any
other party liable for any of the Junior Indebtedness or obligated under any of the Junior Loan
Documents, or the Property.
"Enforcement Action Notice" means a written notice from Junior Lender to Senior
Lender, given following a Junior Loan Default and the expiration of any notice or cure periods
provided for such Junior Loan Default in the Junior Loan Documents, setting forth in reasonable
detail the Enforcement Action proposed to be taken by Junior Lender.
"Junior Indebtedness" means all indebtedness of any kind at any time evidenced or
secured by, or arising under, the Junior Loan Documents, whether incurred, arising or accruing
before or after the filing of any Bankruptcy Proceeding.
"Junior Loan Default" means any act, failure to act, event, condition, or occurrence
which constitutes, or which with the giving of notice or the passage of time, or both, would
constitute, an "Event of Default" as defined in the Junior Security Instrument.
"Junior Loan Documents" means, collectively, the Junior Note, the Junior Security
Instrument, the Junior Loan Agreement, the Junior Regulatory Agreement and all other
documents evidencing, securing or delivered in connection with the Junior Loan, all of which are
listed on Exhibit B attached hereto, together with such modifications, amendments and
supplements thereto as are approved in writing by Senior Lender prior to their execution.
"Junior Regulatory Agreement" means that certain Amended and Restated Regulatory
Agreement, Right of First Offer, and Purchase Option dated as of May 16, 2016, by Borrower
and Junior Lender, recorded in the Official Records on June 7, 2016 as Instrument No. 2016-
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' 0231653, as the same may from time to time be extended, consolidated, substituted for,
modified, amended or supplemented upon receipt of the consent of Senior Lender.
"Junior Security Instrument' means that certain Deed of Trust With Assignment of
Rents, Security Agreement, and Fixture Filing dated as of April I, 2013, made by Borrower for
the benefit of Junior Lender to secure the Junior Loan, recorded in the Official Records on April
5, 2013 as Instrument No. 2013-20130163320, as the same may from time to time be extended,
consolidated, substituted for, modified, amended or supplemented upon receipt of the consent of
Senior Lender.
"Loan Agreement" means that certain Construction Funding Agreement, dated as of the
date hereof, by and between Borrower and Senior Lender relating to the Senior Loan.
"Loss Proceeds" means all monies received or to be received under any insurance policy,
from any condemning authority, or from any other source, as a result of any Condemnation or
Casualty.
"Property" means (i) the land and improvements known or to be known as Madera Vista
Phase 3 Apartments, located in the City of Temecula, Riverside County, California, which
Property is more particularly described on Exhibit A attached hereto, and (ii) all furniture,
fixtures and equipment located at such apartments and other property, accounts, deposits and
rights and interests of Borrower encumbered by the Senior Security Instrument and/or the other
Senior Loan Documents.
"Senior Indebtedness" means all indebtedness of any kind at any time evidenced or
secured by, or arising under, the Senior Loan Documents, whether incurred, arising or accruing
before or after the filing of any Bankruptcy Proceeding.
"Senior Loan Documents" means, collectively, the Senior Security Instrument, the Senior
Note, the Loan Agreement and all of the other documents, instruments and agreements now or
hereafter evidencing, securing or otherwise executed in connection with the Senior Loan, as the
same may from time to time be extended, consolidated, substituted for, modified, increased,
amended and supplemented in accordance with the provisions of this Agreement (excluding any
amendments which require Junior Lender consent pursuant to Section 2(h) below to which
Junior Lender has not consented).
"Senior Loan Default" means any act, failure to act, event, condition, or occurrence
which constitutes, or which with the giving of notice or the passage of time, or both, would
constitute, an "Event of Default' as defined in the Senior Security Instrument.
"Senior Note" means the Note, as defined by the Senior Security Instrument, as the same
may from time to time be extended, consolidated, substituted for, modified, increased, amended
and supplemented.
"Senior Security Instrument" has the meaning set forth in the Recitals to this Agreement.
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2. Junior Loan and Junior Loan Documents are Subordinate; Acts by Senior
Lender do not Affect Subordination.
(a) Junior Lender hereby covenants and agrees on behalf of itself and its
successors and permitted assigns that the Junior Indebtedness is and shall at all times
continue to be, subordinate, subject and inferior (in payment and priority) to the prior
payment in full of the Senior Indebtedness, and that the liens, rights, payment interests,
priority interests and security interests granted to Junior Lender in connection with the
Junior Loan and under the Junior Loan Documents are, and are hereby expressly
acknowledged to be in all respects and at all times, subject, subordinate and inferior in all
respects to the liens, rights, payment, priority and security interests granted to Senior
Lender under the Senior Loan and the Senior Loan Documents and the terms, covenants,
conditions, operations and effects thereof.
(b) Except as expressly set forth herein, repayment of the Junior Indebtedness,
is and shall be postponed and subordinated to repayment in full of the Senior Loan. Prior
to a Senior Loan Default (regardless of whether such Senior Loan Default occurs prior to
or during the pendency of a Bankruptcy Proceeding), Junior Lender shall be entitled to
receive and retain payments made pursuant to and in accordance with the terms of the
Junior Loan Documents; provided, however, that no such payment is made more than ten
(10) days in advance of the due date thereof. Junior Lender agrees that from and after
such time as it has received from either Senior Lender or Borrower written notice that a
' Senior Loan Default then exists (which has not been expressly waived in writing by
Senior Lender) or otherwise has actual knowledge of such a Senior Loan 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 Indebtedness (including, without limitation, any proceeds from any
Enforcement Action) after a Senior Loan Default 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 Senior Lender. Junior Lender will promptly remit, in kind
and properly endorsed as necessary, all such payments, properties, and assets to Senior
Lender. Senior Lender shall apply any payment, asset, or property so received from
Junior Lender to the Senior Indebtedness in such order, amount(with respect to any asset
or property other than immediately available funds), and manner as Senior Lender shall
determine in its sole and absolute discretion.
(c) Without limiting the complete subordination of the Junior Indebtedness to
the payment in full of the Senior Indebtedness, in any Bankruptcy Proceeding, upon any
payment or distribution (whether in cash, property, securities, or otherwise) to creditors
(i) the Senior Indebtedness shall first be paid in full in cash before Junior Lender shall be
entitled to receive any payment or other distribution on account of or in respect of the
Junior Indebtedness, and (ii) until all of the Senior Indebtedness is paid in full in cash,
any payment or distribution to which Junior Lender would be entitled but for this
' Agreement (whether in cash, property, or other assets) shall be made to Senior Lender.
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' (d) The subordination of the Junior Indebtedness shall continue in the event
that any payment under the Senior Loan Documents (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, receiver or other similar party under any
bankruptcy, insolvency, receivership or similar law. In such event, the Senior
Indebtedness or 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 Senior Indebtedness had not been made.
(e) The subordination of the Junior Loan Documents and of the Junior
Indebtedness shall apply and continue notwithstanding (i) the actual date and time of
execution, delivery, recording, filing or perfection of the Senior Security Instrument and
other Senior Loan Documents and of the Junior Security Instrument and other Junior
Loan Documents, and (ii) the availability of any collateral to Senior Lender, including the
availability of any collateral other than the Property.
(f) By reason of, and without in any way limiting, the full subordination of
the Junior Indebtedness and the Junior Loan Documents provided for in this Agreement,
all rights and claims of Junior Lender under the Junior Security Instrument or under the
Junior Loan Documents in or to the Property or any portion thereof, the proceeds thereof,
the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable
' with respect thereto, are expressly subject and subordinate in all respects to the rights and
claims of Senior Lender under the Senior Loan Documents in and to the Property or any
portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits
therefrom, and the Loss Proceeds payable with respect thereto.
(g) If Junior Lender, by indemnification, subrogation or otherwise, shall
acquire any lien, estate, right or other interest in any of the Property, that lien, estate,
right or other interest shall be fully subject and subordinate to the receipt by Senior
Lender of payment in full of the Senior Indebtedness, and to the Senior Loan Documents,
to the same extent as the Junior Indebtedness and the Junior Loan Documents are
subordinate pursuant to this Agreement.
(h) Junior Lender hereby acknowledges and agrees that Senior Lender may,
without the consent or approval of Junior Lender, agree with Borrower to extend,
consolidate, modify, increase or amend any or all the Senior Loan Documents and
otherwise act or fail to act with respect to any matter set forth in any Senior Loan
Document (including, without limitation, the exercise of any rights or remedies, waiver,
forbearance or delay in enforcing any rights or remedies, the declaration of acceleration,
the declaration of defaults or events of default, the release, in whole or in part, of any
collateral or other property, and any consent, approval or waiver), and all such
extensions, consolidations, modifications, amendments acts and omissions shall not
release, impair or otherwise affect Junior Lender's obligations and agreements hereunder.
Notwithstanding the foregoing, Senior Lender shall not, without the prior written consent
of Junior Lender, amend the Senior Loan Documents to (i) increase the amount of the
Senior Loan (other than in connection with protective advance), (ii) increase the interest
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rate under the Senior Note, (iii) accelerate, other than upon a Senior Loan Default, the
term of the Senior Loan, or (iv) materially increases the obligations of the Borrower
under the Senior Loan Documents.
3. Junior Lender Agreements.
(a) Without the prior written consent of Senior Lender in each instance, Junior
Lender shall not (i) amend, modify, waive, extend, renew or replace any provision of any
of the Junior Loan Documents, or (ii) pledge, assign, transfer, convey, or sell any interest
in the Junior Indebtedness or any of the Junior Loan Documents: or (iii) accept any
payment on account of the Junior Indebtedness other than a regularly scheduled payment
of interest or principal and interest made not earlier than ten (10) days prior to the due
date thereof; or (iv) take any action which has the effect of increasing the Junior
Indebtedness; or (v) appear in, defend or bring any action in connection with the
Property: or(vi) take any action concerning environmental matters affecting the Property.
Regardless of any contrary provision in the Junior Loan Documents, Junior Lender shall
not collect payments for the purpose of escrowing for any cost or expense related to the
Property or for any portion of the Junior Indebtedness.
(b) Junior Lender hereby agrees that Senior Lender may, at its option (but
without any obligation to do so), at any time (including during the pendency of a
Bankruptcy Proceeding), purchase the Junior Loan at par (and without liability for any
' prepayment premiums or liquidated damages set forth in the Junior Loan Documents).
Such transfer and assignment of the Junior Loan shall be without representation or
recourse, except that Junior Lender shall represent that it is the sole holder of the Junior
Loan, that it has authority to assign and convey the Junior Loan Documents, that, to the
best of its knowledge, there are no defaults or breaches under the Junior Loan
Documents, and as to the total amount then outstanding under the Junior Loan. . Junior
Lender shall give Senior Lender a concurrent copy of each notice of a Junior Loan
Default, Enforcement Action Notice or other material notice given by Junior Lender
under the Junior Loan Documents. Notwithstanding any contrary provision in the Junior
Loan Documents, Senior Lender shall have the right, but shall not have any obligation, to
cure any Junior Loan Default until ninety (90) days following Senior Lender's receipt of
an Enforcement Action Notice given by Junior Lender as a consequence of the Junior
Loan Default. Senior Lender shall not be subrogated to the rights of Junior Lender under
the Junior Loan Documents by reason of Senior Lender having cured any Junior Loan
Default. However, Junior Lender acknowledges that all amounts advanced or expended
by Senior Lender to cure a Junior Loan Default shall be added to and become a part of
the Senior Indebtedness pursuant to the terms of the Senior Security Instrument.
(c) In the event and to the extent that each of Senior Lender and Junior Lender
have under their respective loan documents certain approval or consent rights over the
same subject matters (regardless of whether the obligations or rights are identical or
substantially identical), Junior Lender agrees that Senior Lender shall exercise such
approval rights on behalf of both Senior Lender and Junior Lender, and Junior Lender
' shall have no right to object to any such action or approval taken by Senior Lender and
shall consent thereto and be bound thereby. Without limiting the generality of the
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' foregoing, Senior Lender 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 Senior
Lender and shall consent thereto and be bound thereby.
(d) Junior Lender agrees that in any action commenced to enforce the
obligation of Borrower to pay any portion of the Junior Indebtedness, the judgment shall
not be enforceable personally against Borrower or Borrower's assets, and the recourse of
Junior Lender for the collection of the Junior Indebtedness shall be limited to actions
against the Property and the rents, profits, issues, products, and income from the
Property.
(e) Junior Lender shall not commence or join with any other creditor in
commencing any Bankruptcy Proceeding involving Borrower, and Junior Lender shall
not initiate and shall not be a party to any action, motion or request, in a Bankruptcy
Proceeding involving any other person or entity, which seeks the consolidation of some
or all of the assets of Borrower into such Bankruptcy Proceeding. In the event of any
Bankruptcy Proceeding relating to Borrower or the Property or, in the event of any
Bankruptcy 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 Senior Loan shall first be paid in full before Junior
Lender shall be entitled to receive and retain any payment or distribution in respect to the
Junior Loan. Junior Lender agrees that (i) Senior Lender shall receive all payments and
distributions of every kind or character in respect of the Junior Loan to which Junior
Lender would otherwise be entitled, but for the subordination provisions of this
Agreement (including without limitation, any payments or distributions during the
pendency of a Bankruptcy Proceeding involving Borrower or the Property), and (ii) the
subordination of the Junior Loan and the Junior Loan Documents shall not be affected in
any way by Senior Lender electing, under Section IIII(b) of the federal bankruptcy
code, to have its claim treated as being a fully secured claim. In addition, Junior Lender
hereby covenants and agrees that, in connection with a Bankruptcy Proceeding involving
Borrower, neither Junior Lender 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 Senior Lender pursuant to the Senior Loan Documents, (ii)
not vote affirmatively in favor of any plan of reorganization or liquidation unless Senior
Lender has also voted affirmatively in favor of such plan, and (iii) not contest the
continued accrual of interest on the Senior Indebtedness, in accordance with and at the
rates specified in the Senior Loan Documents, both for periods before and for periods
after the commencement of such Bankruptcy Proceedings. Junior Lender shall execute
and deliver to Senior Lender powers of attorney, assignments or other instruments as may
be requested by Senior Lender in order to enable it to exercise the above-described
authority or powers with respect to any or all of the Junior Loan Documents, and to
collect and receive any and all payments or distributions which may be payable or
deliverable at any time upon or with respect to any of the Junior Loan Documents to
Junior Lender.
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(f) Junior Lender covenants and agrees that the effectiveness of this
Agreement and the rights of Senior Lender hereunder shall be in no way impaired,
affected, diminished or released by any renewal or extension of the time of payment of
the Senior Loan, by any delay, forbearance, failure, neglect or refusal of Senior Lender in
enforcing payment thereof or in enforcing the lien of or attempting to realize upon the
Senior Loan Documents or any other security which may have been given or may
hereafter be given for the Senior Loan, by any waiver or failure to exercise any right or
remedy under the Senior Loan Documents, or by any other act or failure to act by Senior
Lender. Junior Lender acknowledges that Senior Lender, at its sole option, may release
all or any portion of the Property from the lien of the Senior Security Instrument, and
may release or waive any guaranty, surety or indemnity providing additional collateral to
Senior Lender, and Junior Lender hereby waives any legal or equitable right in respect of
marshaling it might have, in connection with any release of all or any portion of the
Property by Senior Lender, to require the separate sales of any portion of the Property or
to require Senior Lender to exhaust its remedies against any portion of the Property or
any other collateral before proceeding against any other portion of the Property or other
collateral (including guarantees) for the Senior Loan. Senior Lender may pursue all
rights and remedies available to it under the Senior Loan Documents, at law, or in equity,
regardless of any Enforcement Action Notice or Enforcement Action by Junior Lender.
At any time or from time to time and any number of times, without notice to Junior
Lender and without affecting the liability of Junior Lender, (a) the time for payment of
the Senior Indebtedness may be extended or the Senior Indebtedness may be renewed in
' whole or in part; (b) the time for Borrower's performance of or compliance with any
covenant or agreement contained in the Senior Loan Documents, whether presently
existing or hereinafter entered into, may be extended or such performance or compliance
may be waived; (c) the maturity of the Senior Indebtedness may be accelerated as
provided in the Senior Loan Documents; (d) any Senior Loan Document may be
extended, consolidated, modified or amended by Senior Lender and Borrower in any
respect, including, but not limited to, an increase in the principal amount; and (e) any
security for the Senior Indebtedness may be modified, exchanged, surrendered or
otherwise dealt with or additional security may be pledged or mortgaged for the Senior
Indebtedness. If, after the occurrence of a Senior Loan Default, Senior Lender acquires
title to any of the Property pursuant to a mortgage foreclosure conducted in accordance
with applicable law, the lien, operation, and effect of the Junior Security Instrument and
other Junior Loan Documents automatically shall terminate with respect to such Property
upon Senior Lender's acquisition of title.
(g) Junior Lender acknowledges that it entered into the transactions
contemplated by the Junior Loan Documents and made the Junior Loan to Borrower
without reliance upon any information or advice from Senior Lender. Junior Lender
made its own underwriting analysis in connection with the Junior Loan, its own credit
review of Borrower, and investigated all matters pertinent, in Junior Lender's judgment,
to its determination to make the Junior Loan to Borrower. Junior Lender acknowledges
that it is a sophisticated, experienced commercial lender, and was represented by
competent counsel in connection with this Agreement.
LEGAL US W#87553320 6
' (h) Junior Lender hereby represents and warrants that, as of the date hereof,
the entire proceeds of the Junior Loan have been disbursed to Borrower. Junior Lender
hereby further represents and warrants that: (i) Junior Lender is now the owner and
holder of the Junior Loan Documents; (ii) the Junior Loan Documents are now in full
force and effect; (iii) the Junior Loan Documents have not been modified or amended;
(iv) no default or event which, with the passing of time or giving of notice would
constitute a default, under the Junior Loan Documents has occurred; (v) the current
outstanding principal balance of the Junior Indebtedness is $721,345; (vi) no scheduled
monthly payments under the Junior Loan Documents have been or will be prepaid except
with the prior written consent of Senior Lender; (vii) none of the rights of Junior Lender
under any of the Junior Loan Documents are subject to the rights of any third parties, by
way of subrogation, indemnification or otherwise; and (viii) there are no other Junior
Loan Documents other than those listed on Exhibit B hereto. Borrower further represents
and warrants that it has provided to Senior Lender a true, complete, and correct copy of
all the Junior Loan Documents.
4. Standstill Agreement; Right to Cure Senior Loan Default.
(a) Until such time as any of the Senior Indebtedness has been repaid in full
and the Senior Security Instrument has been released and discharged, Junior Lender shall
not without either the prior written consent of Senior Lender, which may be withheld in
Senior Lender's sole and absolute discretion, or giving at least sixty (60) days' prior
' written notice of a default under the Junior Loan and Junior Lender's intent to exercise its
remedies, take any Enforcement Action, including, without limitation, (i) accelerate the
Junior Loan, (ii) exercise any of Junior Lender's remedies under the Junior Security
Instrument or any of the other Junior Loan Documents (including, without limitation, the
commencement of any judicial or non judicial action of proceeding (a) to enforce any
obligation of Borrower under any of the Junior Loan Documents, (b) to collect any
monies payable to Borrower, (c) to have a receiver appointed to collect any monies
payable to Borrower; or (d) to foreclose the lien(s) created by the Junior Security
Instrument) or (iii) file or join in the filing of any involuntary Bankruptcy Proceeding
against Borrower or any person or entity which owns a direct or indirect interest in
Borrower; provided, however, that 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 Documents to (a) compute interest on all amounts due and payable
under the Junior Loan at the default rate described in the Junior Loan Documents (b)
compute prepayment premiums and late charges. and (c) enforce against any person.
other than Borrower and any guarantors or indemnitors under the Senior Loan
Documents, any guaranty of the obligations of Borrower under the Junior Loan, and (d)
seek specific performance to enforce covenants and agreements of Borrower relating to
income, rent, or affordability restrictions contained in the Junior Regulatory Agreement.
(b) Senior Lender shall, simultaneously with the sending of any notice of a
Senior Loan Default to Borrower, send to Junior Lender a copy of said notice under the
Senior Loan Documents; provided, however, failure to do so shall not affect the validity
of such notice or any obligation of Borrower to Senior Lender and shall not affect the
relative priorities between the Senior Loan and the Junior Loan as set forth herein.
LEGAI. US W#875533 20.6
' Borrower covenants and agrees to forward to Junior Lender, within three (3) business
days of Borrower's receipt thereof, a copy of any notice of a Senior Loan Default
Borrower receives from Senior Lender.
(c) Junior Lender shall have the right, but shall have no obligation, to cure
any Senior Loan Default; provided, if Junior Lender shall elect to cure any such Default,
it shall so notify Senior Lender and shall commence and complete such curing within any
applicable notice or grace period, if any, as Borrower is permitted by the terms of the
Senior Loan Documents to cure such Senior Loan Default. Junior Lender shall not be
subrogated to the rights of Senior Lender under the Senior Loan Documents by reason of
Junior Lender having cured any Senior Loan Default. However, Senior Lender
acknowledges that, to the extent so provided in the Junior Loan Documents, amounts
advanced or expended by Junior Lender to cure a Senior Loan Default may be added to
and become a part of the Junior Indebtedness.
(d) Junior Lender agrees that, notwithstanding any contrary provision
contained in the Junior Loan Documents, a Senior Loan Default shall not constitute a
default under the Junior Loan Documents if no other default occurred under the Junior
Loan Documents.
(e) Junior Lender acknowledges that any conveyance or other transfer of title
to the Property pursuant to a foreclosure of the Junior Security Instrument (including a
' conveyance or other transfer of title pursuant to the exercise of a power of sale contained
in the Junior Security Instrument), or any deed or assignment in lieu of foreclosure or
similar arrangement, shall be subject to the transfer provisions of the Senior Loan
Documents; and the person (including Junior Lender) who acquires title to the Property
pursuant to the foreclosure proceeding (or pursuant to the exercise of a power of sale
contained in the Junior Security Instrument) shall not be deemed to be automatically
approved by Senior Lender.
5. Insurance. Junior Lender agrees that all original policies of insurance required
pursuant to the Senior Security Instrument shall be held by Senior Lender. The preceding
sentence shall not preclude Junior Lender from requiring that it be named as a loss payee, as its
interest may appear, under all policies of property damage insurance maintained by Borrower
with respect to the Property, provided such action does not affect the priority of payment of the
proceeds of property damage insurance under the Senior Security Instrument, or that it be named
as an additional insured under all policies of liability insurance maintained by Borrower with
respect to the Property.
6. Default. Junior Lender and Borrower acknowledge and agree that a default by
either such party under this Agreement shall, at the sole option of Senior Lender, constitute a
default under the Senior Loan Documents. Each party hereto acknowledges that in the event any
party fails to comply with its obligations hereunder, the other parties shall have all rights
available at law and in equity, including the right to obtain specific performance of the
obligations of such defaulting party and injunctive relief. No failure or delay on the part of any
' party hereto in exercising any right, power or remedy hereunder shall operate as a waiver
LEGAL US W N 87553330.6
' thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or remedy hereunder.
7. Enforcement Costs. Borrower and Junior Lender agree to reimburse Senior
Lender for any and all costs and expenses (including reasonable attorneys' fees) incurred by
Senior Lender in connection with enforcing its rights against Junior Lender under this
Agreement.
8. Notices. Any notice which any party hereto may be required or may desire to
give hereunder shall be deemed to have been given and shall be effective only if it is in writing
and (i) delivered personally, (ii) mailed, postage prepaid, by United State registered or certified
mail, return receipts requested, (iii) delivered by overnight express courier or (iv) sent by
telecopier, in each instance addressed as follows:
To Junior Lender: City of Temecula
41000 Main St
Temecula, CA 92590
Attention: City Manager
If to Senior Lender: Citibank, N.A.
390 Greenwich Street, 2nd Floor
' New York, New York 10013
Attention: Transaction Management Group
Re: Madera Vista- Deal ID No. 23692
Facsimile: (212) 723-8209
With a copy to: Citibank, N.A.
325 East Hillcrest Drive, Suite 160
Thousand Oaks, California 91360
Attention: Operations Manager/Asset Manager
Re: Madera Vista - Deal ID No. 23692
Facsimile: (805) 557-0924
Prior to the Conversion Citibank, N.A.
Date, with a copy to: 390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention: Account Specialist
Re: Madera Vista - Deal ID No. 23692
Facsimile: (212) 723-8209
Following the Conversion Citibank N.A.
Date, with a copy to: c/o Berkadia Commercial Servicing Department
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Client Relations Manager
Re: Madera Vista - Deal ID No. 23692
LEGAL Us W#87553320 6
Facsimile: (215) 328-0305
And a copy of any notices Citibank, N.A.
of default sent to: 388 Greenwich Street
New York, New York 10013
Attention: General Counsel's Office
Re: Madera Vista - Deal ID No. 23692
Facsimile: (646) 291-5754
or at such other addresses or to the attention of such other persons as may from time to time be
designated by the party to be addressed by written notice to the other in the manner herein
provided. Notices, demands and requests given in the manner aforesaid shall be deemed
sufficiently served or given for all purposes hereunder when received or when delivery is refused
or when the same are returned to sender for failure to be called for.
9. WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT
PERMITTED UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN
THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY
SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL
' BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. IF FOR ANY
REASON THIS WAIVER IS DEEMED TO BE UNENFORCEABLE, ALL SUCH DISPUTES
SHALL BE RESOLVED BY JUDICIAL REFERENCE PURSUANT TO THE PROVISIONS
OF SECTION 43(J) OF THE SENIOR SECURITY INSTRUMENT.
10. Term. The term of this Agreement shall commence on the date hereof and shall
continue until the earliest to occur of the following events: (i) the payment of all of the principal
of, interest on and other amounts payable under the Senior Loan Documents; (ii) the payment of
all of the principal of, interest on and other amounts payable under the Junior Loan Documents,
other than by reason of payments which Junior Lender is obligated to remit to Senior Lender
pursuant to the terms hereof, (iii) the acquisition by Senior Lender of title to the Property
pursuant to a foreclosure, or a deed in lieu of foreclosure, of(or the exercise of a power of sale
contained in) the Senior Security Instrument; or (iv) the acquisition by Junior Lender of title to
the Property pursuant to a foreclosure, or a deed in lieu of foreclosure, of(or the exercise of a
power of sale contained in) the Junior Security Instrument, but only if such acquisition of title
does not violate any of the terms of this Agreement.
LEGAL US W W 87553320.6
' IL Miscellaneous.
(a) Junior Lender shall, within ten (10) business days following a request
from Senior Lender, provide Senior Lender with a written statement setting forth the then
current outstanding principal balance of the Junior Loan, the aggregate accrued and
unpaid interest under the Junior Loan, and stating whether, to the knowledge of Junior
Lender, any default or event of default exists under the Junior Loan, and containing such
other information with respect to the Junior Indebtedness as Senior Lender may require.
Upon notice from Senior Lender from time to time, Junior Lender shall execute and
deliver such additional instruments and documents, and shall take such actions, as are
required by Senior Lender in order to further evidence or effectuate the provisions and
intent of this Agreement.
(b) This Agreement shall bind and inure to the benefit of all successors and
assigns of Junior Lender and Senior Lender. Senior Lender may assign its interest in the
Senior Loan Documents without notice to or consent of Junior Lender. Junior Lender
may only assign its rights and interests hereunder following the prior written consent of
Senior Lender, which consent may be withheld or conditioned in its sole and absolute
discretion.
(c) Senior Lender hereby consents to the Junior Loan and the Junior Loan
Documents; provided, however, that this Agreement does not constitute an approval by
' Senior Lender of the terms of the Junior Loan Documents. Junior Lender hereby
consents to the Senior Loan and the Senior Loan Documents; provided, however, that this
Agreement does not constitute an approval by Junior Lender of the terms of the Senior
Loan Documents.
(d) This Agreement may be executed in multiple counterparts, each of which
shall constitute an original document and all of which together shall constitute one
agreement.
(e) IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION,
MATTERS OF CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER, THIS AGREEMENT HAS
BEEN ENTERED INTO AND DELIVERED IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE WHERE
THE PROPERTY IS LOCATED, WITHOUT GIVING EFFECT TO ANY
PRINCIPLES OF CONFLICTS OF LAW.
(t) Time is of the essence in the performance of every covenant and
agreement contained in this Agreement.
(g) If any provision or remedy set forth in this Agreement for any reason shall
be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or remedy of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable provision or
LEGAL US W#87553320.6
' remedy had never been set forth herein, but only to the extent of such invalidity, illegality
or unenforceability.
(h) Each party hereto hereby represents and warrants that this Agreement has
been duly authorized, executed and delivered by it and constitutes a legal, valid and
binding agreement enforceable in all material respects in accordance with its terms.
(i) Borrower hereby acknowledges and consents to the execution of this
Agreement, and agrees to be bound by the provisions hereof that are applicable to
Borrower. Solely as between Senior Lender and Junior Lender, all of the signatories
below hereby agree that to the extent of any conflict between the terms and provisions of
this Agreement and the terms and provisions of the Senior Loan Documents and/or the
Junior Loan Documents respectively, the terms and provisions of this Agreement shall
govern and control. By executing this Agreement in the place provided below, Borrower
hereby (i) acknowledges the provisions hereof, (ii) agrees not to take any action
inconsistent with Senior Lender's rights or Junior Lender's rights under this Agreement,
(iii) waives and relinquishes to the maximum extent permitted by law any and all rights,
defenses and claims now existing or hereinafter accruing relating to Junior Lender's
forbearance from exercising any rights and remedies pursuant to Section 4 of this
Agreement, including, without limitation, any defenses based on the statute of limitations
or any equitable defenses, such as ]aches, and (iv) acknowledges and agrees that (A) this
Agreement is entered into for the sole protection and benefit of Senior Lender and Junior
' Lender (and their respective successors, assigns and participants), and no other person
(including Borrower) shall have any benefits, rights or remedies under or by reason of
this Agreement, (B) nothing in this Agreement is intended, or shall be construed to,
relieve or discharge the obligations or liabilities of any third party (including Borrower
under the Senior Loan Documents and the Junior Loan Documents), (c) neither of them
nor any of their affiliates shall be, or be deemed to be, beneficiaries of any of the
provisions hereof or have any rights hereunder whatsoever, and (D) no provision of this
Agreement is intended to, or shall be construed to, give any such third party (including
Borrower) any right subrogating to the rights of, or action against, Senior Lender or
Junior Lender.
Q) No amendment, supplement, modification, waiver or termination of this
Agreement shall be effective against any party unless such amendment, supplement,
modification, waiver or termination is contained in a writing signed by such party.
(k) No party other than Senior Lender and Junior Lender shall have any rights
under, or be deemed a beneficiary of any of the provisions of, this Agreement.
(1) Nothing herein or in any of the Senior Loan Documents or Junior Loan
Documents shall be deemed to constitute Senior Lender as a joint venturer or partner of
Junior Lender.
12. Attached Exhibits.
LFGAI. US W N 87553320.6
' The following Exhibits are attached to this Agreement and are incorporated by reference
herein as if more fully set forth in the text hereof:
Exhibit A— Legal Description
Exhibit B—Junior Loan Documents
Exhibit C—Modifications to Subordination and Intercreditor Agreement
The terms of this Agreement are modified and supplemented as set forth in said Exhibits.
To the extent of any conflict or inconsistency between the terms of said Exhibits and the text of
this Agreement, the terms of said Exhibits shall be controlling in all respects.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
1
1
LEGAL US W#875533 20.6
' IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Subordination and Intercreditor Agreement or caused this Subordination and Intercreditor
Agreement to be duly executed and delivered by their respective authorized representatives as of
the date first set forth above.
JUNIOR LENDER:
CITY OF TEMECULA,
a municipal corporation
By:
Aaron Adams, City Manager
ATTEST:
Ranch Job] MMC, City Clerk
APPROVED AS TO FORM:
' RICHARDS, WATSON & GERSHON
Bruce Galloway
City Attorney
1
S-1
LEGAL US W#87553320
' SENIOR LENDER:
CITIBANK, N.A.
By:
Name:
Title:
S-2
LEGALUS W#87553320
' ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE:
BORROWER:
SUMMERHOUSE HOUSING 3, L.P.,
a California limited partnership
By: BRIDGE SC. LLC,
a California limited liability company,
its managing general partner
By: BRIDGE Housing Corporation—Southern California,
a California nonprofit public benefit corporation,
its sole member/manager
By:
Kimberly McKay, Vice President
S-3
LLGAL US W N 87553320
CALIFORNIA ALL-PURPOSE 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
On before me, (here insert name and title of the
officer), 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)
LEGA US W W 87553320.6
' EXHIBIT A
LEGAL DESCRIPTION
Real property located in the County of Riverside, State of California, more particularly described
as follows:
PARCEL ONE:
That certain parcel of land situated in the City of Temecula, County of Riverside, State of
California, being that portion of Lot 'B" of No. Tract 33891 as shown on the map recorded in
Book 424, Pages 82 through 84, inclusive, of Maps in the Office of the County Recorder of said
Riverside County, together with that portion of Parcel I of Parcel Map No. 36219 as shown on
the map filed in Book 231, Page 58 through 60, inclusive of Parcel Maps in the Office of said
Riverside County Recorder, described as follows:
Commencing at the northeasterly corner of said Lot "B**;
Thence along the easterly line of said Lot "B" South 16° 56' 06" East 91.99 feet to the easterly
prolongation of the northerly line of Parcel 2 of said Parcel Map No. 36219;
Thence along the easterly prolongation, said northerly line of Parcel 2 and the westerly
' prolongation of said northerly line South 73° 04' 07" West 562.85 feet to the westerly line of
said Parcel I:
Thence along said westerly line North 09° 21' 50" West 92.83 feet to the the northwesterly
corner of said Parcel 1;
Thence along the northerly line of said Parcel I and the northerly line of sid Lot "B" North 73°
04' 17" East 550.62 to the Point of Beginning.
Being Parcel B as shown on the Lot Line Adjustment No. PA 13-0056, recorded April 1. 2013.
Instrument No. 2013-0154092, in the Official Records of Riverside County.
PARCEL TWO:
Rights and Easements granted in that certain Reciprocal Easement, Joint Use and Maintenance
Agreement dated April 2, 2013, and recorded April 4, 2013 as instrument No. 2013-161381, in
the Official Records of Riverside County.
APN: 959-080-033 (formerly portion of 959-080-023 & 959-080-024)
1
LEGAL US W#87553320.6
EXHIBIT B
JUNIOR LOAN DOCUMENTS
I. Owner Participation and Loan Agreement dated as of September 22, 2009 by and
between Summerhouse Housing Associates, L.P., a California limited partnership, and
the Redevelopment Agency of the City of Temecula, as amended by that certain First
Amendment to Owner Participation and Loan Agreement dated July 22, 2010, as
amended by that certain Second Amendment to Owner Participation and Loan
Agreement dated October 12, 2010, as amended by that certain Third Amendment to
Owner Participation and Loan Agreement dated March 12, 2011, as amended by that
certain Fourth Amendment to Owner Participation and Loan Agreement dated March 22,
2011, as amended by that certain Fifth Amendment to Owner Participation and Loan
Agreement dated June 23, 2011, as amended by that certain Sixth Amendment to and
Partial Assignment of Owner Participation and Loan Agreement dated April I, 2013, as
amended by that certain Seventh Amendment to Owner Participation and Loan
Agreement dated March 10, 2015, and that certain Eighth Amendment to Owner
Participation and Loan Agreement dated May 16, 2016 by and between Borrower and
Junior Lender
2. Promissory Note Secured by Deed of Trust dated as of April I, 2013 made by Borrower
' to Junior Lender in the amount of$721,345
3. Amended and Restated Regulatory Agreement, Right of First Offer, and Purchase Option
dated as of May 16, 2016, by Borrower and Junior Lender, recorded in the Official
Records on June 7, 2016 as Instrument No. 2016-0231653
4. Deed of Trust With Assignment of Rents, Security Agreement, and Fixture Filing dated
as of April I, 2013, made by Borrower for the benefit of Junior Lender, recorded in the
Official Records on April 5, 2013 as Instrument No. 2013-0163320
5. Notice of Affordability Restrictions on Transfer of Property by and between Borrower
and Junior Lender, recorded in the Official Records on April 5, 2013 as Instrument No.
2013-0163321
LEGAL US W#87553320,6
' EXHIBIT C
MODIFICATIONS TO
SUBORDINATION AND INTERCREDITOR AGREEMENT
The following modifications are made to the test of the Agreement that precedes this
Exhibit
None.
Capitalized terms used and not defined herein shall have the respective meanings ascribed to
them in the Agreement.
1
LEGAL US W#87553320.6
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Temecula
41000 Main St.
Temecula, CA 92590
Attention: City Manager
No fee for recording pursuant to
Government Code Section 27383
(SPACE ABOVE rins LINE FOR RECORDER'S USE)
SUBORDINATION AGREEMENT
(Madera Vista Apartments Phase 3)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTEREST IN AND RESTRICTIVE COVENANTS AFFECTING THE
PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY
INSTRUMENT AND RESTRICTIVE COVENANTS.
' THIS SUBORDINATION AGREEMENT (the "Agreement') is made as of December_,
2016 by and among the County of Riverside, a political subdivision of the State of California (the
"County"), the City of Temecula,a municipal corporation,as successor to the housing assets of the
Redevelopment Agency of the City of Temecula(the "City"), and Summerhouse Housing 3. L.P.,
a California limited partnership ("Borrower").
RECITALS
A. Borrower owns that certain real property more particularly described Exhibit A,
attached hereto and incorporated herein by this reference (the "Property"), together with the
improvements to be constructed thereon which shall consist of multifamily housing development
composed of thirty (30) units of affordable housing to be known as Madera Vista Apartments
Phase 3 (the "Development').
B. Borrower's predecessor in interest entered into that that certain Owner Participation
and Loan Agreement dated as of September 22, 2009, by and between Summerhouse Housing
Associates, L.P.. a California limited partnership, and the Redevelopment Agency of the City of
Temecula, as amended by that certain First Amendment to Owner Participation and Loan
Agreement dated July 22, 2010, as amended by that certain Second Amendment to Owner
Participation and Loan Agreement dated October 12, 2010, as amended by that certain Third
Amendment to Owner Participation and Loan Agreement dated March 12, 2011. as amended by
that certain Fourth Amendment to Owner Participation and Loan Agreement dated March 22,
201 I, as amended by that certain Fifth Amendment to Owner Participation and Loan Agreement
dated June 23, 2011, as amended by that certain Sixth Amendment to and Partial Assignment of
I
Subordination Agreement
144\225V1992535 6
' Owner Participation and Loan Agreement dated April 1, 2013, as amended by that certain Seventh
Amendment to Owner Participation and Loan Agreement dated March 10, 2015, and that certain
Eighth Amendment to Owner Participation and Loan Agreement dated May 16, 2016, by and
between Borrower and City(as amended and assigned,the "City Loan Agreement"), in connection
with the loan to Borrower in the principal amount of Seven Hundred Twenty One Thousand Three
Hundred Forty-Five Dollars ($721.345) (the "City Loan").
C. The City Loan is evidenced by that certain Promissory Note Secured by Deed of
Trust dated as of April 1, 2013 (the "City Note"), and secured by that certain Deed of Trust With
Assignment of Rents, Security Agreement, and Fixture Filing dated as of April 1, 2013, and
recorded in the Official Records of Riverside County (the "Official Records") on April 5, 2013 as
Instrument No. 2013-0163320 (the "City Deed of Trust"). In connection with the City Loan,
Borrower also entered into a Notice of Affordability Restrictions on Transfer of Property, dated as
of April I, 2013, and recorded in the Official Records on April 5, 2013 as Instrument No.
2013-0163321 (the "City Notice") and an Amended and Restated Regulatory Agreement, Right of
First Offer,and Purchase Option dated as of May 16, 2016,and recorded in the Official Records on
June 7,2016 as Instrument No. 2016-0231653 (the "City Regulatory Agreement"). The City Note,
the City Deed of Trust,the City Notice,City Loan Agreement, and the City Regulatory Agreement
are hereinafter collectively referred to as the "City Loan Documents".
D. The County has agreed to make a loan of Neighborhood Stabilization Program
("NSP") funds to Borrower in the original principal amount of One Million Six Hundred Fifty
Thousand Dollars ($1.650,000) (the "County Loan") in connection with the financing of the
development and construction of the Development.
E. In connection with the County Loan, concurrently herewith, Borrower has
executed: (i) a Promissory Note(NSP Loan) in the amount of the County Loan in favor of County
dated on or about the date hereof(the "County Note"); (ii) a Deed of Trust and Assignment of
Rents, as trustor, naming the County as beneficiary and Old Republic Title Company, as trustee,
dated on or about the date hereof and recorded concurrently herewith in the Official Records (the
"County Deed of Trust"); and (iii) a Covenant Agreement (Madera Vista Apartments Phase 3) in
favor of the County dated on or about the date hereof and recorded concurrently herewith in the
Official Records (the "County Regulatory Agreement"). The County Loan Agreement, County
Deed of Trust, County Note, and County Regulatory Agreement are hereinafter collectively
referred to as the "County Loan Documents." The County Deed of Trust and the County
Regulatory Agreement will be recorded against the Borrower's fee interest in the Property in the
Official Records concurrently herewith.
F. As a condition to funding the County Loan, the County requires, (i)that the County
Loan and County Loan Documents are a lien or charge upon the Property prior and superior to the
lien or charge of the City Loan and City Loan Documents, (ii)the City specifically subordinate the
liens and charges of the City Loan and City Loan Documents to the lien and charges of the County
Loan and County Loan Documents, and (iii) City and Borrower execute and deliver this
Agreement.
2
Subordination Agreement
144\225\1992535.6
' G. City is willing to specifically and unconditionally subordinate the City Loan and
City Loan Documents such that the County Loan and County Loan Documents shall constitute a
lien or charge upon the Property which is prior and superior to the liens or charges of the City Loan
and City Loan Documents.
NOW THEREFORE, for and in consideration of the foregoing recitals, which are
incorporated into this Agreement by this reference, the mutual covenants and benefits contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
I. The County Loan and County Loan Documents shall at all times be prior and
superior to the liens or charges of the City Loan and the City Loan Documents. The City Loan and
City Loan Documents shall at all times be junior and are hereby subordinated to the County Loan
and County Loan Documents. The County would not have made the County Loan without this
Agreement. City intentionally and unconditionally waives, relinquishes and subordinates the lien,
charge and encumbrance of the City Loan Documents in favor of the prior lien, charge and
encumbrance of the County Loan Documents as set forth in this Paragraph 1, in favor of the
Countv, and understands that in reliance upon, and in consideration of, the waiver, relinquishment
and subordination set forth herein, specific loans and advances are being and will be made, and
specific monetary and other obligations are being and will be entered into which would not be
made or entered into but for the County's reliance upon this waiver, relinquishment and
subordination. Borrower and the City each acknowledge and agree for the benefit of the County
' that the County Loan and County Loan Documents and any modifications thereof, but excluding
any increase in the amount of the County Loan, an increase in the interest rate under the County
Note, any renewals or extensions thereof, and any material increase in the obligations of the
Borrower under the County Loan Documents, except for such modifications (i) that relate to
protective advances, or (ii) have been approved in writing by the City which approval shall not be
unreasonably conditioned, delayed or withheld, shall unconditionally be and at all times remain a
lien or charge on the Property prior and superior to the rights of the City under the City Loan
Documents. The City intentionally and unconditionally subordinates all of the City's right, title
and interest in and to the City Loan and City Loan Documents to the lien or charge of the County
Loan and County Loan Documents.
2. The County agrees that, upon the occurrence of a default under the County Loan
Documents, the County shall:
(a) concurrently with notifying Borrower of the occurrence of a default, notify
the City of the occurrence of such default-by delivering a notice to the City, at its address set forth
on the first page of this Agreement;
(b) permit the City to cure or correct any such default within ninety(90)
calendar days after delivery of such notice to City;
(c) accept all payments and all acts done by the City on behalf of Borrower
within the cure period specified in Paragraph 2(b) above as though the same had been timely done
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' and performed by Borrower, so that such acts and payments, provided they effect a cure,shall fully
and totally cure and correct all such defaults, breaches, failures or refusals for all purposes; and
(d) retain any rights it otherwise may have to record a notice of default, obtain a
court appointed receiver and otherwise exercise the County's rights and remedies under the County
Loan Documents during the above-mentioned cure period.
3. The parties hereto agree to cooperate with each other and perform any acts and
execute, acknowledge and deliver any additional reasonable agreements, documents, or
instruments that may be reasonably necessary or desirable to carry out the provisions or to
effectuate the purpose of this Agreement.
4. Until such time as any of the County Loan has been repaid in full and the County
Loan Documents have been released and discharged, the City shall not without the prior written
consent of the County, which may be withheld in County's sole and absolute discretion, or giving
at least sixty(60)days' prior written notice of default under the City Loan and the City's intent to
exercise its remedies, take any action to enforce its remedies under the City Loan Documents,
including,without limitation (i)accelerate the City Loan, (ii)exercise any of City's remedies under
the City Loan Documents (including, without limitation, the commencement of any judicial or
non judicial action of proceeding (a) to enforce any obligation of Borrower under any of the City
Loan Documents, (b) to collect any monies payable to Borrower, (c) to have a receiver appointed
to collect any monies payable to Borrower; or(d) to foreclose the lien(s) created by the City Loan
Documents, including, but not limited to the City Deed of Trust), or(iii) file orjoin in the filing of
any involuntary bankruptcy proceeding against Borrower or any person or entity which owns a
direct or indirect interest in Borrower; provided, however, that such limitation on the remedies of
the City shall not derogate or otherwise limit the City's rights, following an event of default under
the City Loan Documents to (a) compute interest on all amounts due and payable under the City
Loan at the default rate described in the City Loan Documents, (b)compute prepayment premiums
and late charges, (c) enforce against any person, other than Borrower and any guarantors or
indemnitors under the County Loan Documents, any guaranty of the obligations of Borrower
under the City Loan, and (d) seek specific performance to enforce covenants and agreements of
Borrower relating to income, rent, or affordability restrictions contained in the City Regulatory
Agreement.
5. If,subject to the terms of Sections I and 4 above, prior to any foreclosure sale of the
Property under the County Deed of Trust, the City takes title to or possession of the Property and
cures the outstanding curable defaults under the County Loan, if any, the County hereby agrees not
to exercise any rights it may have to accelerate the County Loan by reason of the transfer of title or
possession to the City, or if acceleration has already occurred, the County hereby agrees that it will
reinstate the County Loan, as applicable, at that time, and agrees that it will recognize the City as
borrower under the County Loan under the same terms and conditions of said County Loan,
provided that: (i) the City expressly assumes all of Borrower's obligations under the County Loan
Documents-that can be performed by the City; provided, however, the City shall not be obligated
to assume any liability in connection with any fraudulent misrepresentation of Borrower, and (ii)
the City provides the County with evidence reasonably satisfactory to the County that the City has
authority to assume all of Borrower's obligations under County Loan Documents.
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6. If, subject to the terms of Sections I and 4 above. the City takes title to the Property
and cures the outstanding defaults under the County Loan Documents, if any, subject to the prior
written approval of the County in its reasonable discretion, the City shall have the right to transfer
the Property to another nonprofit housing developer, and the County agrees that such transfer shall
not constitute a default under the County Loan Documents, and the County shall not exercise any
rights it may have to accelerate the County Loan as a result of such transfer.
7. The City agrees that, upon the occurrence of a default under the City Loan
Documents, the City shall:
(a) concurrently with notifying Borrower of the occurrence of a default, notify
the County of the occurrence of such default, as applicable, by delivering a notice to the County,at
its address set forth on the first page of this Agreement;
(b) permit the County to cure or correct any such default within ninety(90)
calendar days after delivery of such notice to County; and
(c) accept all payments and all acts done by the County on behalf of Borrower
within the cure period specified in this Paragraph 7(b) above as though the same had been timely
done and performed by Borrower, so that such acts and payments, provided they effect a cure, shall
fully and totally cure and correct all such defaults, breaches, failures or refusals for all purposes.
' 8. This Agreement shall be the whole and only agreement with regard to the priority
and subordination of the County Loan, the County Loan Documents and the City Loan and the
City Loan Documents,and shall supersede and cancel, but only insofar as would affect the priority
among the loans and documents referred to hereinabove, any prior agreements as to such
subordination including, but not limited to, those provisions, if any,contained in any of such loans
and documents which provide for the subordination of the lien or charge thereof to another loan or
loans, document or documents, deed or deeds of trust or to a mortgage or mortgages. This
Agreement represents the entire agreement among the Parties on the subject matter hereof, and
except as expressly provided herein, shall not be affected by reference to any other documents.
Neither this Agreement nor any provision hereof may be changed, waived, discharged, or
terminated orally, but such may be accomplished only by an instrument in writing signed by the
party against whom enforcement of the change. waiver, discharge, or termination is sought.
9. All Notices provided for in this Agreement shall be deemed received when
personally delivered, or two (2) days following mailing by certified mail, return receipt requested.
All mailing shall be addressed to the respective parties at their addresses set forth below,or at such
other address as each party may designate in writing:
County: County of Riverside
c/o Housing Authority of the County of Riverside County
5555 Arlington Avenue, Riverside, CA 92504
Attention: John Aguilar
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City: City of Temecula
41000 Main St.
Temecula, CA 92590
Attention: City Manager
Borrower: Summerhouse Housing 3. L.P.
600 California St., Suite 900
San Francisco, CA 94108
Attention: President/CEO
10. This Agreement shall be governed by and construed in accordance with the laws of
the State of California. Any legal action related to the performance or interpretation of this
Agreement shall be filed only in the Superior Court of the State of California located in Riverside,
California, and the parties waive any provision of law providing for a change of venue to another
location. If any of the provisions or terms of this Agreement shall for any reason be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other of the terms hereof,
and this Agreement shall be construed as if such unenforceable term had never been contained
herein.
11. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original and all of which together shall constitute and be construed as one and the
' same instrument.
12. This Agreement shall be binding on and inure to the benefit of the legal
representatives, heirs, successors and assigns of the parties.
/REMAINDER OF PAGE INTENTIONALL Y BLANK/
(SIGNATURES ON FOLLOWING PAGE/
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144\225V1992535.6
IN WITNESS WHEREOF, the City, Borrower, and County have executed this Agreement as of
the dates set forth below.
BORROWER:
SUMMERHOUSE HOUSING 3, L.P.,
a California limited partnership
By: BRIDGE SC, LLC,
a California limited liability company,
its administrative general partner
By: BRIDGE Housing Corporation—Southern
California, its sole member/manager
By:
Kimberly McKay, Vice President
CITY:
CITY OF TEMECULA,
a municipal corporation
By:
Aaron Adams, City Manager
ATTEST:
Randi Johl MMC, City Clerk
City Attorney
APPROVED AS TO FORM:
RICHARDS, WATSON& GERSHON
Bruce Galloway
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144\225V1992535.6
1
COUNTY:
COUNTY OF RIVERSIDE,
a political subdivision of the State of
California
By:
Heidi Marshall,
Assistant Director
Date:
APPROVED AS TO FORM
Gregory P. Priamos
County Counsel
By:
Jhaila R. Brown
Deputy County Counsel
1
]SIGNATURES MUST BE NOTARIZED]
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1411225\1992535 6
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, 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.
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.
Name:
' Notary Public
1
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144\225\1992535,6
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, 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.
Name:
' Notary Public
1
S-4
I4\225V1992535 6
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, 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.
Name:
Notary Public
1
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144\225V1992535.6
' EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The land referred to in this Report is situated in the County of Riverside,City of Temecula, State of
California, and is described as follows:
PARCEL ONE:
That certain parcel of land situated in the City of Temecula. County of Riverside, State of
California, being that portion of Lot "B" of No. Tract 33891 as shown on the map recorded in
Book 424, Pages 82 through 84, inclusive, of Maps in the Office of the County Recorder of said
Riverside County, together with that portion of Parcel I of Parcel Map No. 36219 as shown on the
map filed in Book 231, Page 58 through 60, inclusive of Parcel Maps in the Office of said
Riverside County Recorder, described as follows:
Commencing at the northeasterly corner of said Lot"B";
Thence along the easterly line of said Lot "B" South 16° 56' 06" East 91.99 feet to the easterly
prolongation of the northerly line of Parcel 2 of said Parcel Map No. 36219;
' Thence along the easterly prolongation, said northerly line of Parcel 2 and the westerly
prolongation of said northerly line South 730 04' 07" West 562.85 feet to the westerly line of said
Parcel l:
Thence along said westerly line North 09° 21' 50" West 92.83 feet to the northwesterly corner of
said
Parcel 1;
Thence along the northerly line of said Parcel I and the northerly line of said Lot "B" North 73°
04' 17" East 550.62 to the Point of Beginning.
Being Parcel B as shown on the Lot Line Adjustment No. PA 13-0056, recorded April 1, 2013,
Instrument No. 2013-0154092, in the Official Records of Riverside County.
PARCEL TWO:
Rights and Easements granted in that certain Reciprocal Easement, Joint Use and Maintenance
Agreement dated April 2, 2013, and recorded April 4, 2013 as instrument No. 2013-161381, in the
Official Records of Riverside County.
APN: 959-080-033 (formerly portion of 959-080-023 & 959-080-024)
A-1
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