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HomeMy WebLinkAbout2015 CON (Subordination Agreement) T & T Community Properties - 138 Norton AveNOTE TO FILE 01-24-18 IN THE MATTER OF: Resolution No. 2015-147 of the City Council of the City of National City authorizing the Mayor to execute a Subordination Agreement with T &T Community Properties, LLC, subordinating the Deed of Trust that secures a Home Investment Partnership Program loan for $717,500 on eight restricted rental units located at 138 Norton Avenue. Please note the following: A FULLY EXECUTED ORIGINAL RECORDED AGREEMENT WAS NEVER FILED WITH THE OFFICE OF THE CITY CLERK. A COPY OF THE FULLY EXECUTED AGREEMENT WAS PROVIDED. ORIGINATING DEPARTMENT: NTF CDC X Housing & Grants City Attorney Human Resources City Manager _ MIS Community Svcs. Planning Engineering Police Finance Public Works Fire Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC via Its proprietary imaging and dell ery system Copyright 2003, All rlgtts reserved. Recording Requested By: FIRST AMERICAN TITLE National Commercial Services AND WHEN RECORDED RETURN TO: CALIFORNIA BANK & TRUST 2399 Gateway Oaks Drive, Suite 110 Sacramento, CA 95833 Attention: Debi Graham //ics — 7Y/ o4‘3—.Lt) SPACE ABOVE LINE FOR RECORDERS USE DOC# 2015-0540392 I IIIIII I III IIIII III IIII IIII I IIIII IIIII IIIII IIIII IIIII IIIII IIII IIII Oct15, 2015 11:39AM OFFICIAL RECORDS Ernest J. Dronenburg, Jr., SAN DIEGO COUNTY RECORDER FEES: $51.00 PAGES: 13 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROJECT BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") is made and entered into as of the 24th day of August, 2015 by T & T COMMUNITY PROPERTIES LLC, a California limited liability company ("Borrower"), and the CITY OF NATIONAL CITY ("City"), and CALIFORNIA BANK & TRUST, a California banking corporation ("Bank"). RECITALS A. Borrower is the fee simple owner of that certain real property comprised of an 8- unit apartment building on 12,197 square feet of land located at 138 Norton Avenue, National City, County of San Diego, State of California, which is more particularly described in Exhibit A attached hereto and incorporated by this reference (the "Land"). B. Pursuant to that certain Business Loan Agreement dated as of ',, 2015 between Borrower and Bank (the "Bank Loan Agreement"), Bank has agreed to make a term loan to Borrower in a principal amount not to exceed $550,000.00 (the "Bank Loan") for the purpose of refinancing the 8-unit apartment building for low-income housing and related amenities (collectively the "Improvements") on the Land. The Land and the Improvements are referred to collectively herein as the "Project." The Bank Loan is evidenced by a Promissory Note made by Borrower to the order of Bank hi the original principal amount of Five Hundred SMRH:442394805.3 -1- SAN DIEGO,CA Document: SA 2015.540392 Page 1 of 13 Printed on 4/6/2017 9:03:45 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va its proprietary imaging and delivery system Copyright 2003. All rights reserved. Fifty Thousand and No/100 Dollars ($550,000.00) dated as of `'- T 2 C , 2015 (the "Bank Note") and secured by that certain Deed of Trust and Fixture Filing executed by Borrower, as trustor, in favor of Bank, as beneficiary, dated as of -, 2. . 2015 and to be recorded in the Official Records of San Diego County substantially concurrently herewith (the "Bank Deed of Trust"). The Bank Loan Agreement, the Bank Note, the Bank Deed of Trust and all other agreements and instruments made or entered into by Bank and/or Borrower in connection with the Bank Loan are hereinafter referred to as the "Bank Encumbrances." C. Pursuant to that certain Acquisition, Rehabilitation and Permanent Financing Loan Agreement dated as of July 28, 2011 between City and Borrower (the "Subordinate Loan Agreement"), City has agreed to make a loan to Borrower in the maximum principal amount of $717,500.00 (the "Subordinate Loan"). The Subordinate Loan is evidenced by that certain Promissory Note dated as of August 15, 2011 and made by Borrower to the order of City (the "Subordinate Note") and secured by (i) that certain Deed of Trust executed by Borrower, as trustor, in favor of City, as beneficiary, dated August 15, 2011 and recorded in the Official Records of San Diego County (the "Official Records") on August 23, 2011 as Instrument No. 2011-0432186 (the "Subordinate Deed of Trust"); (ii) that certain Declaration of Covenants, Conditions and Restrictions (Tenant Restrictions) executed by Borrower and the City, dated as of August 15, 2011 and recorded on August 23, 2011 as Instrument No. 2011-0432185 in the Official Records (the "Subordinate CC&Rs"); and (iii) that certain UCC-1 Financing Statement given by Borrower, as debtor, in favor of City, as secured party and recorded on August 23, 2011 as Instrument No. 2011-9432187 in the Official Records (the "Subordinate UCC-1 Financing Statement"). D. The Subordinate Loan Agreement, the Subordinate Note, the Subordinate Deed of Trust, the Subordinate CC&Rs, the Subordinate UCC-1 Financing Statement and all other agreements entered into by and between City and Borrower in connection with Subordinate Loan are hereinafter referred to as the "City Encumbrances". E. As a condition of Bank's willingness to enter into the Bank Loan Agreement and make the Bank Loan, Bank requires that the Bank Encumbrances be unconditionally (and at all times remain) a lien or charge upon the Project, prior and superior to the City Encumbrances and all indebtedness secured thereby, and that City specifically and unconditionally subordinate the lien and charge of the City Encumbrances and indebtedness secured thereby to the Bank Encumbrances. F. City and Borrower intend that the Bank Encumbrances shall unconditionally be and remain at all times a lien or charge upon the Project prior and superior to the City Encumbrances and all indebtedness secured thereby. City has agreed to specifically and unconditionally subordinate and subject the City Encumbrances and all indebtedness secured thereby, to the lien and charge of the Bank Encumbrances. G. It is to the mutual benefit of the parties hereto that Bank make the Bank Loan; and City is willing that the Bank Encumbrances shall, when recorded, constitute a lien or charge upon the Project which is unconditionally prior and superior to the lien or charge of the City Encumbrances. SMRH:442394805,3 SAN DIEGO,CA Document: SA 2015.540392 -2- Page 2 of 13 Printed on 4/6/2017 9:03:46 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va Its proprietary Imaging and delbery system Copyright 2003, All rights reserved. COVENANTS NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, it is hereby declared, understood and agreed as follows: l , The foregoing Recitals are hereby incorporated into this Agreement as agreements among the parties. 2. The Bank Encumbrances, and (subject to paragraph 3) any modifications, renewals or extensions thereof, and any advances, as permitted in the Bank Note (including interest on such advances), thereunder, or secured thereby, together with Bank's right to repayment of the Bank Loan and Bank's rights under any other of the Bank Encumbrances (including all sums advanced for the purposes of protecting or further securing the lien of the Bank Deed of Trust or curing defaults by Borrower under the Bank Encumbrances), shall unconditionally be and remain at all times liens or charges on the Project, prior and superior to (a) the City Encumbrances and all indebtedness secured thereby, (b) all loans, grants and advances of money made pursuant thereto; and the City Encumbrances and all indebtedness secured thereby, all loans, grants and advances of money made pursuant thereto, are hereby subjected, and made subordinate to the lien of charge of the Bank Encumbrances. 3. This Agreement shall be the whole and only agreement between the parties hereto with regard to the subordination of the City Encumbrances and all indebtedness secured thereby, and all loans, grants and advances of money made pursuant thereto, to the lien or charge of the Bank Encumbrances, and shall supersede and cancel any prior agreements to subordinate the City Encumbrances and all indebtedness secured thereby to the Bank Encumbrances. 4. City declares agrees, and acknowledges that: (a) Subject to the limitations set forth in paragraph 3 above, City acknowledges all provisions of the Bank Encumbrances and all other documents and agreements evidencing, securing or otherwise relating to the Bank Loan. Notwithstanding anything to the contrary in the City Encumbrances, including, specifically Sections 1.1(b)(4) and 1.3 of the Subordinate Loan Agreement, Section 29 of the Subordinate CC&Rs, Section 2(c) of the Subordinate Note, City hereby specifically consents to the making of the Bank Loan to Borrower as an approved refinance loan, and City acknowledges and agrees that the making of the Bank Loan shall not trigger an event of default under the City Encumbrances or acceleration under the City Note; (b) Bank in disbursing the proceeds of the Bank Loan is under no obligation or duty to, nor has Bank represented that it will, see to the application of such proceeds by the person or persons to whom Bank disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in the Bank Loan Agreement or the Bank Deed of Trust shall not defeat the subordination herein made in whole or in part; SMRH:442394805.3 SAN DIEGO,CA Document: SA 2015.540392 -3- Page 3 of 13 Printed on 4/6/2017 9:03:46 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va its proprietary imaging and delivery system Copyright 2003, All rights reserved. (c) City intentionally and unconditionally subordinates the City Encumbrances and all indebtedness secured thereby, and all loans, grants, and advances of money pursuant thereto, in favor of the lien or charge upon the Project of the Bank Encumbrances, the Bank's right to repayment of the Bank Loan and Bank's rights under any other of the Bank Encumbrances (including all sums advanced for the purposes of protecting or further securing the lien of the Bank Deed of Trust or curing defaults by Borrower under the Bank Encumbrances), and understands that in reliance upon, and in consideration of, this subordination, specific loans and advances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this subordination; and (d) Until the City receives a written notice of an event of default from Bank with respect to the Bank Encumbrances pursuant to Section 5 (a) below, the City shall be entitled to retain for its own account all payments made under or pursuant to the City Encumbrances. The Borrower agrees that, after it receives notice (or otherwise acquires knowledge) of an event of default under the Bank Encumbrances, it will not make any payments under or pursuant to the City Encumbrances (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Deed of Trust) without the Bank's prior written consent. The City agrees that, after it receives a notice of an event of default under the Bank Encumbrances from the Bank with written instructions directing the City not to accept payments from the Borrower on account of the City Encumbrances, it will not accept any payments under or pursuant to the City Encumbrances (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Deed of Trust) without the Bank's prior written consent. If the City receives written notice from the Bank that the event of default under the Bank Encumbrances which gave rise to the City's obligation not to accept payments has been cured, waived, or otherwise suspended by the Bank, the restrictions on payment to the City in this Section 4 shall terminate, and the Bank shall have no right to any subsequent payments made to the City by the Borrower prior to the City's receipt of a new notice of event of default under the Bank Encumbrances from the Bank in accordance with the provisions of this Section 4(d). If, after the City receives a notice of an event of default under the Bank Encumbrances from the Bank, the City receives any payments under the City Encumbrances, the City agrees that such payment or other distribution will be received and held in trust for the Bank and unless the Bank otherwise notifies the City in writing, will be promptly remitted, in kind to the Bank, properly endorsed to the Bank, to be applied to the principal of, interest on and other amounts due under the Bank Encumbrances in accordance with the provisions of the Bank Encumbrances. By executing this Agreement, the Borrower specifically authorizes the City to endorse and remit any such payments to the Bank, and specifically waives any and all rights to have such payments returned to the Borrower or credited against the Subordinate Loan. Borrower and Bank acknowledge and agree that payments received by the City, and remitted to the Bank under this Section 4, shall not be applied or otherwise credited against the Subordinate Loan, nor shall the tender of such payment to the Bank waive any event of default under the Subordinate Loan which may arise from the inability of the City to retain such payment or apply such payment to the Subordinate Loan. (e) The City Encumbrances have not been modified, amended or supplemented since the closing of the Subordinate Loan and the City and Borrower SMRH:442394805.3 SAN DIEGO,CA Document: SA 2015.540392 -4- Page 4 of 13 Printed on 4/6/2017 9:03:47 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va its proprietary Imaging and delNery system Copyright 2003, All rights reserved acknowledge, confirm and agree that the payments due under the Subordinate Note are thirty percent (30%) of Residual Receipts (as defined in the Subordinate Note) as set forth in Section 2 of the Subordinate Note. 5. In consideration of City's covenants and agreements contained in this Agreement, Bank hereby agrees for the benefit of City as follows: (a) In the event of any default by Borrower under the Bank Note or the Bank Encumbrances, Bank shall provide the City written notice giving the City an additional sixty (60) days to cure such default after the City's receipt of any such notice, prior to the Bank filing a notice of default with the San Diego County Recorder's Office. (b) "I'he City shall have the same rights as the Borrower's rights to cure the default under the Bank Note or Bank Encumbrances at any time prior to a foreclosure sale under the Bank Deed of Trust. (c) Notwithstanding the foregoing, City hereby agrees that Bank may, at any time and from time to time, supplement, modify, amend, extend, renew, waive, accelerate or otherwise change any of the terms or provisions of the Bank Encumbrances, including increase the principal amount of the Loan, change the rate of interest or the time and manner for principal and interest payments, and release or reconvey any security for the Loan, all without the consent of, and without notice to, City. Any such supplement, modification, amendment, extension, renewal, waiver, acceleration or change to any of the terms or provisions of the Bank Encumbrances shall not affect this Agreement. 6. This Agreement shall be binding upon and inure to the benefit of the legal representatives, heirs, successors and assigns of the parties. 7. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of California, without giving effect to the conflict of laws principles of said state, 8. This Agreement may be signed by different parties hereto in counterparts with the same effect as if the signatures to each counterpart were upon a single instrument. All counterparts shall be deemed an original of this Agreement. 9. City acknowledges that Bank's address for purposes of receiving notice to which it is entitled under this Agreement is as follows: California Bank & Trust 2399 Gateway Oaks Drive, Suite 110 Sacramento, CA 95833 Attention: 10. Bank acknowledges that City's address for purposes of receiving notice to which it is entitled under this Agreement is as follows: SMRH:442394805.3 -5- SAN DIEGO,CA Document: SA 2015.540392 Page 5 of 13 Printed on 4/6/2017 9:03:47 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC vu to proprietary imaging and delivery system Copyright 2003, All rights reserved City of National City 1243 National City Boulevard National City, CA 91950-4397 Attention: 11. Each of the parties hereto will, whenever and as often as they shall be requested to do so by the other, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all such further instruments and documents as may be reasonably necessary to carry out the intent and purpose of this Agreement, and to do any and all further acts reasonably necessary to carry out the intent and purpose of this Agreement. 12. Each person executing this Agreement on behalf of a party hereto represents and warrants that such person is duly and validly authorized to do so on behalf of such party with full right and authority to execute this Agreement and to bind such party with respect to all of its obligations hereunder. SMRH:442394805.3 [END OF PAGE — CONTINUED ON PAGE 7] -6- SAN DIEGO,CA Document: SA 2015.540392 Page 6 of 13 Printed on 4/6/2017 9:03:48 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va It, proprietary imaging and deltvery system Copyright 2003, All rights reserved. NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTERESTS IN THE PROJECT BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. WHEREAS, this Subordination Agreement has been executed as of the date first written above. BANK: CITY: CALIFORNIA BANK & TRUST, a California banking corporation CITY OF NATIONAL CITY, B - Y B Y• 'w Name: eb t G a.44 em, Nam HcrytSoh Its: Vtl . Pres td enf' Title: "Bank" "Subordinating Party" APPROVED AS TO FORM: CHRISTENSEN & SPATH LLP, Special Counsel to the City By: Name: Title: SMRH:442394805.3 -7- SAN DIEGO,CA Page 7 of 13 Printed on 4/6/2017 9:03:48 AM Document: SA 2015.540392 Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va It's proprietary Imaging and delivery system. Copyright 2003, All rights reserved. NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROJECT BECOMING SUBJECT OT AND OF LOWER PRIORITY THAN THE LINE OF SOME OTHER OR LATER SECURITY INSTRUMENT. WHEREAS, this Subordination Agreement has been executed as of the date first written above. BANK: CITY: CALIFORNIA BANK & TRUST, CITY OF NATIONAL CITY, a California banking corporation By: By: Name: Name: Its: Title: SAN DIEGO,CA Document: SA 2015.540392 "Bank" "Subordinating Party" APPROVED AS TO FORM: CHRISTENSEN & SPATH LLP, Special Counsel to the City By: Name: Title: Page 8 of 13 Printed on 4/6/2017 9:03:48 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va ifs proprietary imaging and delivery system Copyright 2003, All rights reserved BORROWER: T & T COMMUNITY PROPERTIES LLC, a California limited liability company By: Mitchell L. Thompsln Managing Member SMRH:442394805.3 -8- SAN DIEGO,CA Document: SA 2015.540392 Page 9 of 13 Printed on 4/6/2017 9:03:49 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC v..a its proprietary imaging and delNery system Copyright 2003, All rights reserved. ACKNOWLEDGMENTS 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 SQ eicasy ' 1/ 0 ) On q .11-16' , before me, Lecr oRi , C30fC11on , a Notary Public, personally appeared i Gf OAl("Y' , 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 SMRFI:442394805.3 SAN DIEGO,CA Document: SA 2015.540392 LEONORA GORDON Commission # 1986761 Notary Public - California Sacramento County My Comm. Expires Jul 30, 2016 -10- Page 10 of 13 Printed on 4/6/2017 9:03:49 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va its proprietary Imaging and delivery system Copyright 2003, All rights reserved 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 San Diego On OvThrr 11 201-5- before me, Angelita Marchante, Notary Public, personally appeared 12-on Morn, scrt- who proved to me on the basis of satisfactory evidence to be the person ) whose name%) is/asubscribed to the within instrument and acknowledged to me that he/sl{h executed the same in his/h&/th9G authorized capacity(iq3, and that by his/hqr/thte. signature on the in trument the person( , or the entity upon behalf of which the person(g7 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 offic' seal. izi Signature SAN DIEGO,CA Document: SA 2015.540392 ANGELITARCHANTE z ► COMMA 2046693 0 co ` NOTARY PUBLIC .CALIFORNIA z SAN DIEGO COUNTY ^•��"� My Comm, Exp. October25, 2017 (Seal) Page 11 of 13 Printed on 4/6/2017 9:03:49 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB Documents provided by DataTree LLC va Its proprietary Imaging and delivery system. Copyright 2003, All rights reserved. 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 San Diego On SLP `1 ,3{�0t2QtS-before me, Angelita Marchante, Notary Public, personally appeared Mi� I,.iktiN ' �v Sur' who proved to me on the basis of satisfactory evidence to be the person(5 whose name is/ari6 subscribed to the within instrument and acknowledged to me that he/sl)/th executed th same lin his/h r/th f r authorized capacity(i0), and that by his/h&/thrir signature on the instrument the person(p, or the entity upon behalf of which the personr) 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 offigial seal. Signature ANGELITA II RCHANTE l a�4�c COMM. A 46693 0 zN i `'�'' ' NOTARY PUELIC.CALIFORNIA z V ! SAN DIEGO COUNTY My Comm, Exp, October 25, 2017 SAN DIEGO,CA Document: SA 2015.540392 (Seal) Page 12 of 13 Printed on 4/6/2017 9:03:50 AM Branch :NCS,User :JGAL Comment: Station Id :YQWB SAN DIEGO,CA Document: SA 2015.540392 Documents provided by DataTree LLC V a Its proprietary imaging and delivery system Copyright 2003, All rigtts reserved. • Exhibit A LEGAL DESCRIPTION Real property in the City of National City, County of San Diego, State of California, described as follows: ALL OF LOT 34 AND THAT PORTION OF LOT 36, BLOCK 3 PARADENA PARK, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 1404, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, FEBRUARY 16, 1912, LYING SOUTHERLY OF A LINE DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EASTERLY LINE OF SAID LOT 36 DISTANT THEREON 50.00 FEET SOUTHERLY FROM THE MOST NORTHERLY CORNER THEREOF; THENCE WESTERLY IN A STRAIGHT LINE TO AN INTERSECTION WITH THE WESTERLY LINE OF SAID LOT 36 AT A POINT WHICH IS DISTANT THEREON 25.00 FEET SOUTHERLY FROM THE NORTHWESTERLY CORNER THEREOF. EXCEPTING FROM SAID LOT 34 THE SOUTHERLY 65.00 FEET MEASURED AT RIGHT ANGLES TO THE SOUTHERLY LINE. APN: 554-013-16-00 Page 13 of 13 Printed on 4/6/2017 9:03:50 AM Esther Clemente From: Carlos Aguirre Sent: Thursday, April 06, 2017 2:58 PM To: Esther Clemente Cc: Angelita Palma Subject: Subordination Agreement Requested Attachments: 038c1701-59e0-4e19-98ea-589f51da26ec.tif.pdf Hello Esther, Attached is the recorded subordination agreement associated with contract file C2011-33 and Resolution No. 2015-17 for 138 Norton Avenue. Please let me know if you prefer a printed copy. Thanks, Carlos 1 RESOLUTION 2015 — 147 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE A SUBORDINATION AGREEMENT WITH T&T COMMUNITY PROPERTIES, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, SUBORDINATING THE DEED OF TRUST THAT SECURES A HOME INVESTMENT PARTNERSHIP PROGRAM LOAN FOR $717,500 ON EIGHT RESTRICTED RENTAL UNITS LOCATED AT 138 NORTON AVENUE IN NATIONAL CITY FOR THE PURPOSE OF REFINANCING EXISTING DEBT WHEREAS, T&T Community Properties, LLC, a California limited liability company, organized under the laws of the State of California ("Borrower"), is the owner of an eight -unit multifamily rental housing project (the "Project") located at 138 Norton Avenue in National City; and WHEREAS, in 2011, the Community Development Commission of the City of National City made a loan for $717,500 from the HOME Investment Partnerships Program to assist in the substantial rehabilitation of the Project; and WHEREAS, the Borrower desires to refinance existing debt of approximately $550,000 on the Project through a new mortgage for the principal amount not -to -exceed $550,000 from California Bank & Trust (the "Lender"); and WHEREAS, In order to provide the loan, the Lender requires the subordination of the Deed of Trust that secures the HOME funds. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of National City hereby authorizes the Mayor to execute a Subordination Agreement and any other Escrow related documents as necessary. After being recorded by the County of San Diego, a copy of the Subordination Agreement will be on file in the office of the City Clerk. PASSED and ADOPTED this 6th day of October, 20 on Morrison, I yor ATTEST: Michael R. Dalla, City Clerk PROVED AS. 0 FO "audia a itu. Silva City Attorne Passed and adopted by the Council of the City of National City, California, on October 6, 2015 by the following vote, to -wit: Ayes: Councilmembers Cano, Mendivil, Morrison, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Mayor of the City of National City, California iifit li City C erk of the City o National City, California By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2015-147 of the City of National City, California, passed and adopted by the Council of said City on October 6, 2015. City Clerk of the City of National City, California By: Deputy CITY OF NATIONAL CITY, CALIFORNIA C raw COUNCIL AGENDA STATEMENT MEETING DATE: October 6, 2015 AGENDA ITEM NO. 11 ITEM TITLE: Resolution of the City Council of the City of National City authorizing the Mayor to execute a Subordination Agreement with T&T Community Properties, LLC, a California limited liability company, subordinating the Deed of Trust that secures a HOME Investment Partnership Program loan for $717,500 on eight restricted rental units located at 138 Norton Avenue in National City for the purpose of refinancina existina debt. PREPARED BY: H►►'sing Grants, & Asset ;Carlos Aguirre, Community Dev. Prog. Mgr.; DEPARTMENT: If t PHONE: 619 336-4391 APPROVE 41111111M, EXPLANATION: T&T Community Properties, LLC, a California limited liability company, organized under the laws of the State of California ("Borrower") is the owner of an 8-unit multifamily rental housing project ("Project") located at 138 Norton Avenue in National City. In 2011, the City of National City made a loan for $717,500 from the HOME Investment Partnerships ("HOME") Program to assist in the substantial rehabilitation of the Project. The Borrower desires to refinance existing debt of approximately $550,000 on the Project through a new mortgage for the principal amount not to exceed $550,000 from California Bank and Trust ("Lender"). In order to provide the loan, the Lender requires the subordination of the Deed of Trust that secures the City's HOME funds. The new loan will effectively lower the interest rate from 6.0% to approximately 4.5% providing additional cash flow to pay off the City's HOME loan sooner. Christensen & Spath, LLP, Special Counsel to the City, has reviewed the Subordination Agreement, need of Trust, and Promissory Note for the new loan from the Lender. FINANCIAL STATEMENT: ACCOUNT NO. IN/A ENVIRONMENTAL REVIEW: N/A ORDINANCE: INTRODUCTION: FINAL ADOPTION: APPROVED: Finance APPROVED: MIS STAFF RECOMMENDATION: Staff recommends the adoption of a resolution to execute the Subordination Agreement. BOARD / COMMISSION RECOMMENDATION: N/A ATTACHMENTS: 1. Subordination Agreement Attacchment No. 1 RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: CALIFORNIA BANK & TRUST 2399 Gateway Oaks Drive, Suite 110 Sacramento, CA 95833 Attention: Debi Graham SPACE ABOVE LINE FOR RECORDER'S USE NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROJECT BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") is made and entered into as of the 24th day of August, 2015 by T & T COMMUNITY PROPERTIES LLC, a California limited liability company ("Borrower"), and the CITY OF NATIONAL CITY ("City"), and CALIFORNIA BANK & TRUST, a California banking corporation ("Bank"). RECITALS A. Borrower is the fee simple owner of that certain real property comprised of an 8- unit apartment building on 12,197 square feet of land located at 138 Norton Avenue, National City, County of San Diego, State of California, which is more particularly described in Exhibit A attached hereto and incorporated by this reference (the "Land"). B. Pursuant to that certain Business Loan Agreement dated as of 2015 between Borrower and Bank (the "Bank Loan Agreement"), Bank has agreed to make a term loan to Borrower in a principal amount not to exceed $550,000.00 (the "Bank Loan") for the purpose of refinancing the 8-unit apartment building for low-income housing and related amenities (collectively the "Improvements") on the Land. The Land and the Improvements are referred to collectively herein as the "Project" The Bank Loan is evidenced by a Promissory Note made by Borrower to the order of Bank in the original principal amount of Five Hundred SMRH:442394805.3 -1- Attacchment No. 1 Fifty Thousand and No/100 Dollars ($550,000.00) dated as of , 2015 (the "Bank Note") and secured by that certain Deed of Trust and Fixture Fil.ijg executed by Borrower, as trustor, in favor of Bank, as beneficiary, dated as of . 2015 and to be recorded in the Official Records of San Diego County substantially concurrently herewith (the "Bank Deed of Trust"). The Bank Loan Agreement, the Bank Note, the Bank Deed of Trust and all other agreements and instruments made or entered into by Bank and/or Borrower in connection with the Bank Loan are hereinafter referred to as the "Bank Encumbrances." C. Pursuant to that certain Acquisition, Rehabilitation and Permanent Financing Loan Agreement dated as of July 28, 2011 between City and Borrower (the "Subordinate Loan Agreement"), City has agreed to make a loan to Borrower in the maximum principal amount of $717,500.00 (the "Subordinate Loan"). The Subordinate Loan is evidenced by that certain Promissory Note dated as of August 15, 2011 and made by Borrower to the order of City (the "Subordinate Note") and secured by (i) that certain Deed of Trust executed by Borrower, as trustor, in favor of City, as beneficiary, dated August 15, 2011 and recorded in the Official Records of San Diego County (the "Official Records") on August 23, 2011 as Instrument No. 2011-0432186 (the "Subordinate Deed of Trust"); (ii) that certain Declaration of Covenants, Conditions and Restrictions (Tenant Restrictions) executed by Borrower and the City, dated as of August 15, 2011 and recorded on August 23, 2011 as Instrument No. 2011-0432185 in the Official Records (the "Subordinate CC&Rs"); and (iii) that certain UCC-1 Financing Statement given by Borrower, as debtor, in favor of City, as secured party and recorded on August 23, 2011 as Instrument No. 2011-9432187 in the Official Records (the "Subordinate UCC-1 Financing Statement"). D. The Subordinate Loan Agreement, the Subordinate Note, the Subordinate Deed of Trust, the Subordinate CC&Rs, the Subordinate UCC-1 Financing Statement and all other agreements entered into by and between City and Borrower in connection with Subordinate Loan are hereinafter referred to as the "City Encumbrances". E. As a condition of Bank's willingness to enter into the Bank Loan Agreement and make the Bank Loan, Bank requires that the Bank Encumbrances be unconditionally (and at all times remain) a lien or charge upon the Project, prior and superior to the City Encumbrances and all indebtedness secured thereby, and that City specifically and unconditionally subordinate the lien and charge of the City Encumbrances and indebtedness secured thereby to the Bank Encumbrances. F. City and Borrower intend that the Bank Encumbrances shall unconditionally be and remain at all times a lien or charge upon the Project prior and superior to the City Encumbrances and all indebtedness secured thereby. City has agreed to specifically and unconditionally subordinate and subject the City Encumbrances and all indebtedness secured thereby, to the lien and charge of the Bank Encumbrances. G. It is to the mutual benefit of the parties hereto that Bank make the Bank Loan; and City is willing that the Bank Encumbrances shall, when recorded, constitute a lien or charge upon the Project which is unconditionally prior and superior to the lien or charge of the City Encumbrances. SMRH:442394805.3 -2- Attacchment No. 1 Fifty Thousand and No/100 Dollars ($550,000.00) dated as of , 2015 (the "Bank Note") and secured by that certain Deed of Trust and Fixture Fil.ijg executed by Borrower, as trustor, in favor of Bank, as beneficiary, dated as of . 2015 and to be recorded in the Official Records of San Diego County substantially concurrently herewith (the "Bank Deed of Trust"). The Bank Loan Agreement, the Bank Note, the Bank Deed of Trust and all other agreements and instruments made or entered into by Bank and/or Borrower in connection with the Bank Loan are hereinafter referred to as the "Bank Encumbrances." C. Pursuant to that certain Acquisition, Rehabilitation and Permanent Financing Loan Agreement dated as of July 28, 2011 between City and Borrower (the "Subordinate Loan Agreement"), City has agreed to make a loan to Borrower in the maximum principal amount of $717,500.00 (the "Subordinate Loan"). The Subordinate Loan is evidenced by that certain Promissory Note dated as of August 15, 2011 and made by Borrower to the order of City (the "Subordinate Note") and secured by (i) that certain Deed of Trust executed by Borrower, as trustor, in favor of City, as beneficiary, dated August 15, 2011 and recorded in the Official Records of San Diego County (the "Official Records") on August 23, 2011 as Instrument No. 2011-0432186 (the "Subordinate Deed of Trust"); (ii) that certain Declaration of Covenants, Conditions and Restrictions (Tenant Restrictions) executed by Borrower and the City, dated as of August 15, 2011 and recorded on August 23, 2011 as Instrument No. 2011-0432185 in the Official Records (the "Subordinate CC&Rs"); and (iii) that certain UCC-1 Financing Statement given by Borrower, as debtor, in favor of City, as secured party and recorded on August 23, 2011 as Instrument No. 2011-9432187 in the Official Records (the "Subordinate UCC-1 Financing Statement"). D. The Subordinate Loan Agreement, the Subordinate Note, the Subordinate Deed of Trust, the Subordinate CC&Rs, the Subordinate UCC-1 Financing Statement and all other agreements entered into by and between City and Borrower in connection with Subordinate Loan are hereinafter referred to as the "City Encumbrances". E. As a condition of Bank's willingness to enter into the Bank Loan Agreement and make the Bank Loan, Bank requires that the Bank Encumbrances be unconditionally (and at all times remain) a lien or charge upon the Project, prior and superior to the City Encumbrances and all indebtedness secured thereby, and that City specifically and unconditionally subordinate the lien and charge of the City Encumbrances and indebtedness secured thereby to the Bank Encumbrances. F. City and Borrower intend that the Bank Encumbrances shall unconditionally be and remain at all times a lien or charge upon the Project prior and superior to the City Encumbrances and all indebtedness secured thereby. City has agreed to specifically and unconditionally subordinate and subject the City Encumbrances and all indebtedness secured thereby, to the lien and charge of the Bank Encumbrances. G. It is to the mutual benefit of the parties hereto that Bank make the Bank Loan; and City is willing that the Bank Encumbrances shall, when recorded, constitute a lien or charge upon the Project which is unconditionally prior and superior to the lien or charge of the City Encumbrances. SMRH:442394805.3 -2- Attacchment No. 1 COVENANTS NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, it is hereby declared, understood and agreed as follows: 1, The foregoing Recitals are hereby incorporated into this Agreement as agreements among the parties. 2. The Bank Encumbrances, and (subject to paragraph 3) any modifications, renewals or extensions thereof, and any advances, as permitted in the Bank Note (including interest on such advances), thereunder, or secured thereby, together with Bank's right to repayment of the Bank Loan and Bank's rights under any other of the Bank Encumbrances (including all sums advanced for the purposes of protecting or further securing the lien of the Bank Deed of Trust or curing defaults by Borrower under the Bank Encumbrances), shall unconditionally be and remain at all times liens or charges on the Project, prior and superior to (a) the City Encumbrances and all indebtedness secured thereby, (b) all loans, grants and advances of money made pursuant thereto; and the City Encumbrances and all indebtedness secured thereby, all loans, grants and advances of money made pursuant thereto, are hereby subjected, and made subordinate to the lien of charge of the Bank Encumbrances. 3. This Agreement shall be the whole and only agreement between the parties hereto with regard to the subordination of the City Encumbrances and all indebtedness secured thereby, and all loans, grants and advances of money made pursuant thereto, to the lien or charge of the Bank Encumbrances, and shall supersede and cancel any prior agreements to subordinate the City Encumbrances and all indebtedness secured thereby to the Bank Encumbrances. 4. City declares agrees, and acknowledges that: (a) Subject to the limitations set forth in paragraph 3 above, City acknowledges all provisions of the Bank Encumbrances and all other documents and agreements evidencing, securing or otherwise relating to the Bank Loan. Notwithstanding anything to the contrary in the City Encumbrances, including, specifically Sections 1,1(b)(4) and 1.3 of the Subordinate Loan Agreement, Section 29 of the Subordinate CC&Rs, Section 2(c) of the Subordinate Note, City hereby specifically consents to the making of the Bank Loan to Borrower as an approved refinance loan, and City acknowledges and agrees that the making of the Bank Loan shall not trigger an event of default under the City Encumbrances or acceleration under the City Note; (b) Bank in disbursing the proceeds of the Bank Loan is under no obligation or duty to, nor has Bank represented that it will, see to the application of such proceeds by the person or persons to whom Bank disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in the Bank Loan Agreement or the Bank Deed of Trust shall not defeat the subordination herein made in whole or in part; SMRH:442394805.3 -3- Attacchment No. 1 (c) City intentionally and unconditionally subordinates the City Encumbrances and all indebtedness secured thereby, and all loans, grants, and advances of money pursuant thereto, in favor of the lien or charge upon the Project of the Bank Encumbrances, the Bank's right to repayment of the Bank Loan and Bank's rights under any other of the Bank Encumbrances (including all sums advanced for the purposes of protecting or further securing the lien of the Bank Deed of Trust or curing defaults by Borrower under the Bank Encumbrances), and understands that in reliance upon, and in consideration of, this subordination, specific loans and advances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this subordination; and (d) Until the City receives a written notice of an event of default from Bank with respect to the Bank Encumbrances pursuant to Section 5 (a) below, the City shall be entitled to retain for its own account all payments made under or pursuant to the City Encumbrances. The Borrower agrees that, after it receives notice (or otherwise acquires knowledge) of an event of default under the Bank Encumbrances, it will not make any payments under or pursuant to the City Encumbrances (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Deed of Trust) without the Bank's prior written consent. The City agrees that, after it receives a notice of an event of default under the Bank Encumbrances from the Bank with written instructions directing the City not to accept payments from the Borrower on account of the City Encumbrances, it will not accept any payments under or pursuant to the City Encumbrances (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Deed of Trust) without the Bank's prior written consent. If the City receives written notice from the Bank that the event of default under the Bank Encumbrances which gave rise to the City's obligation not to accept payments has been cured, waived, or otherwise suspended by the Bank, the restrictions on payment to the City in this Section 4 shall terminate, and the Bank shall have no right to any subsequent payments made to the City by the Borrower prior to the City's receipt of a new notice of event of default under the Bank Encumbrances from the Bank in accordance with the provisions of this Section 4(d). If, after the City receives a notice of an event of default under the Bank Encumbrances from the Bank, the City receives any payments under the City Encumbrances, the City agrees that such payment or other distribution will be received and held in trust for the Bank and unless the Bank otherwise notifies the City in writing, will be promptly remitted, in kind to the Bank, properly endorsed to the Bank, to be applied to the principal of, interest on and other amounts due under the Bank Encumbrances in accordance with the provisions of the Bank Encumbrances. By executing this Agreement, the Borrower specifically authorizes the City to endorse and remit any such payments to the Bank, and specifically waives any and all rights to have such payments returned to the Borrower or credited against the Subordinate Loan. Borrower and Bank acknowledge and agree that payments received by the City, and remitted to the Bank under this Section 4, shall not be applied or otherwise credited against the Subordinate Loan, nor shall the tender of such payment to the Bank waive any event of default under the Subordinate Loan which may arise from the inability of the City to retain such payment or apply such payment to the Subor. irste Loan. (e) The City Encumbrances have not been modified, amended or supplemented since the closing of the Subordinate Loan and the City and Borrower SMRH:442394805.3 -4- Attacchment No. 1 acknowledge, confirm and agree that the payments due under the Subordinate Note are thirty percent (30%) of Residual Receipts (as defined in the Subordinate Note) as set forth in Section 2 of the Subordinate Note. 5. In consideration of City's covenants and agreements contained in this Agreement, Bank hereby agrees for the benefit of City as follows: (a) In the event of any default by Borrower under the Bank Note or the Bank Encumbrances, Bank shall provide the City written notice giving the City an additional sixty (60) days to cure such default after the City's receipt of any such notice, prior to the Bank filing a notice of default with the San Diego County Recorder's Office. (b) The City shall have the same rights as the Borrower's rights to cure the default under the Bank Note or Bank Encumbrances at any time prior to a foreclosure sale under the Bank Deed of Trust. (c) Notwithstanding the foregoing, City hereby agrees that Bank may, at any time and from time to time, supplement, modify, amend, extend, renew, waive, accelerate or otherwise change any of the terms or provisions of the Bank Encumbrances, including increase the principal amount of the Loan, change the rate of interest or the time and manner for principal and interest payments, and release or reconvey any security for the Loan, all without the consent of, and without notice to, City. Any such supplement, modification, amendment, extension, renewal, waiver, acceleration or change to any of the terms or provisions of the Bank Encumbrances shall not affect this Agreement. 6. This Agreement shall be binding upon and inure to the benefit of the legal representatives, heirs, successors and assigns of the parties. 7. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of California, without giving effect to the conflict of laws principles of said state. 8. This Agreement may be signed by different parties hereto in counterparts with the same effect as if the signatures to each counterpart were upon a single instrument. All counterparts shall be deemed an original of this Agreement. 9. City acknowledges that Bank's address for purposes of receiving notice to which it is entitled under this Agreement is as follows: California Bank & Trust 2399 Gateway Oaks Drive, Suite 110 Sacramento, CA 95833 Attention: 10, Bank acknowledges that City's address for purposes of receiving notice to which it is entitled under this Agreement is as follows: sMRH:442394a05.3 -5- Attacchment No. 1 City of National City 1243 National City Boulevard National City, CA 91950-4397 Attention: 11. Each of the parties hereto will, whenever and as often as they shall be requested to do so by the other, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all such further instruments and documents as may be reasonably necessary to carry out the intent and purpose of this Agreement, and to do any and all further acts reasonably necessary to carry out the intent and purpose of this Agreement. 12. Each person executing this Agreement on behalf of a party hereto represents and warrants that such person is duly and validly authorized to do so on behalf of such party with full right and authority to execute this Agreement and to bind such party with respect to all of its obligations hereunder. [END OF PAGE — CONTINUED ON PAGE 71 SMR1-1:442394805 3 -6- Attacchment No. 1 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR. SECURITY INTERESTS IN THE PROJECT BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. WHEREAS, this Subordination Agreement has been executed as of the date first written above. BANK: CITY: CALIFORNIA BANK & TRUST, CITY OF NATIONAL CITY, a California banking corporation By: Name: "Ztb t g e ,r... Its: yrt. Presldci - SMRH:442394805.3 By: Name: Title: "Bank" "Subordinating Party" APPROVED AS TO FORM: CHRISTENSEN & SPATH LLP, Special Counsel to the City By: Name: Title: -7- Attacchment No. 1 BORROWER: T & T COMMUNITY PROPERTIES LLC, a California limited liability company By: Mitchell L. Thompson Managing Member WIRE:442394805.3 -8- Attacchment No. 1 LEGAL DESCRIPTION Real property In the City of National City, County of San Diego, State of California, described as follows: ALL OF LOT 34 AND THAT PORTION OF LOT 36, BLOCK 3 PARADENA PARK, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 1404, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, FEBRUARY 16, 1912, LYING SOUTHERLY OF A LINE DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE EASTERLY LINE OF SAID LOT 36 DISTANT THEREON 50.00 FEET SOUTHERLY FROM THE MOST NORTHERLY CORNER THEREOF; THENCE WESTERLY IN A STRAIGHT LINE TO AN INTERSECTION WITH THE WESTERLY LINE OF SAID LOT 36 AT A POINT WHICH IS DISTANT THEREON 25.00 FEET SOUTHERLY FROM THE NORTHWESTERLY CORNER THEREOF, EXCEPTING FROM SAID LOT 34 THE SOUTHERLY 65.00 FEET MEASURED AT RIGHT ANGLES TO THE SOUTHERLY LINE. APN: 554-013-16-00 Attacchment No. 1 ACKNOWLEDGMENTS I 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 l' County of Barae �r1,P.x1 � { ) On Q . L t »1',� , before me, Liatonctn G GO(Clan , a Notary Public, personally appeared j tli (j{ nbairl , 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. z z Signature SMRH:442394805.3 -10- LEONORA GORDON Commission # 1966761 t, Notary Public - California Sacramento County My Comm. Expires Jul 30, 2016 Attacchment No. 1 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, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature 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, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature SMRH:442394805.3 -11- RESOLUTION 2015 — RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE A SUBORDINATION AGREEMENT WITH T&T COMMUNITY PROPERTIES, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, SUBORDINATING THE DEED OF TRUST THAT SECURES A HOME INVESTMENT PARTNERSHIP PROGRAM LOAN FOR $717,500 ON EIGHT RESTRICTED RENTAL UNITS LOCATED AT 138 NORTON AVENUE IN NATIONAL CITY FOR THE PURPOSE OF REFINANCING EXISTING DEBT WHEREAS, T&T Community Properties, LLC, a California limited liability company, organized under the laws of the State of California ("Borrower"), is the owner of an eight -unit multifamily rental housing project (the "Project") located at 138 Norton Avenue in National City; and WHEREAS, in 2011, the Community Development Commission of the City of National City made a loan for $717,500 from the HOME Investment Partnerships Program to assist in the substantial rehabilitation of the Project; and WHEREAS, the Borrower desires to refinance existing debt of approximately $550,000 on the Project through a new mortgage for the principal amount not -to -exceed $550,000 from California Bank & Trust (the "Lender"); and WHEREAS, In order to provide the loan, the Lender requires the subordination of the Deed of Trust that secures the HOME funds. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of National City hereby authorizes the Mayor to execute a Subordination Agreement and any other Escrow related documents as necessary. After being recorded by the County of San Diego, a copy of the Subordination Agreement will be on file in the office of the City Clerk. PASSED and ADOPTED this 6th day of October, 2015. Ron Morrison, Mayor ATTEST: Michael R. Dalla, City Clerk APPROVED AS TO FORM: Claudia Gacitua Silva City Attorney CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950-4397 619-336-4228 Michael R. Dalla, CMC - City Clerk T & T COMMUNITY PROPERTIES Subordination Agreement Apartment Complex —138 Norton Avenue Carlos Aguirre (Housing & Grants) Forwarded Copy of Agreement to T & T Community Properties.