HomeMy WebLinkAbout2015 CON HA (Subordination Agreement) Summercrest Apartments - 2721 Plaza BlvdNOTE TO FILE
01-16-18
IN THE MATTER OF: Resolution of the CDC -HA of the City of
National City authorizing the Executive Director to execute a
Subordination Agreement with Summercrest Apartments, L.P.,
subordinating the Project Deed of Trust that secures the
Declaration of Covenants, Conditions, and Restrictions (Tenant
Restrictions) on 372 rental units at 2721 Plaza Boulevard. 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
Freddie Mac Loan Number: 708137512
Property Name: Summercrest Apartments
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(Revised 3-1-2014)
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this 30th day of April,
2015, by and between (i) OAK GROVE COMMERCIAL MORTGAGE, LLC, a limited
liability company organized and existing under the laws of the State of Delaware ("Senior
Mortgagee") and (ii) COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF
NATIONAL CITY, acting in its capacity as the Housing Authority of the City of National City
("Subordinate Mortgagee").
RECITALS
A. Summercrest Apartments, LP, a limited partnership organized under the laws of the State
of Delaware ("Borrower") is the owner of certain land located in San Diego County,
California, described in Exhibit A ("Land"). The Land is improved with a multifamily
rental housing project ("Improvements").
B. Senior Mortgagee has made or is making a loan to Borrower in the original principal
amount of $37,685,000 ("Senior Loan") upon the terms and conditions of a Multifamily
Loan and Security Agreement dated as of the date hereof between Senior Mortgagee and
Borrower ("Senior Loan Agreement") in connection with the Mortgaged Property. The
Senior Loan is secured by a Multifamily Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing, dated as of the date hereof ("Senior Mortgage")
encumbering the Land, the Improvements and related personal and other property
described and defined in the Senior Mortgage as the "Mortgaged Property."
C. Subordinate Mortgagee is the holder of a Declaration of Covenants and Restrictions
(Tenant Restrictions)("Regulatory Agreement"), dated December 18, 2001, executed by
Plaza Manor Preservation, L.P. and recorded June 19, 2002 in the office of the County
Recorder of San Diego County, California ("Recording Office") as Document Number
2002-0518422 and assumed by Borrower pursuant to a certain Assignment and
Assumption of Declaration of Covenants and Restrictions and Deed of Trust dated
December 19, 2013 and recorded in the Recorder's Office as Instrument No. 2013-
735297 ("Assumption Agreement") which Regulatory Agreement is secured by that
certain Project Deed of Trust encumbering all or a portion of the Mortgaged Property,
dated December 18, 2001, executed by Plaza Manor Preservation, L.P. and recorded June
19, 2002 in the Recorder's Office as Instrument No.2002-0518423 ("Subordinate
Mortgage") as assumed by the Borrower pursuant to the Assumption Agreement.
Subordination Agreement -- Governmental Entity Page 2
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D. The Senior Mortgage will be recorded in the Recording Office concurrently herewith.
E. The execution and delivery of this Agreement is a condition of Senior Mortgagee's
making of the Senior Loan.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. Definitions. The following terms, when used in this Agreement (including, as
appropriate, when used in the above recitals), will have the following meanings.
(a) The terms "Condemnation," "Imposition Deposits," "Impositions," "Leases,"
"Rents" and "Restoration," as well as any term used in this Agreement and not
otherwise defined in this Agreement, will have the meanings given to those terms
in the Senior Loan Agreement.
(b) "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.
(c)
"Borrower" means all persons or entities identified as `Borrower" n the first
Recital of this Agreement, together with their successors and assigns, and any
other person or entity who acquires title to the Mortgaged Property after the date
of this Agreement; provided that the term "Borrower" will not include Senior
Mortgagee if Senior Mortgagee acquire titles to the Mortgaged Property.
(d) "Casualty" means the occurrence of damage to or loss of all or any portion of the
Mortgaged Property by fire or other casualty.
(e)
"Enforcement Action" means any of the following actions taken by or at the
direction of Subordinate Mortgagee: the acceleration of all or any part of the
Subordinate Indebtedness, the advertising of or commencement of any foreclosure
or trustee's sale proceedings, the exercise of any power of sale, the acceptance of
a deed or assignment in lieu of foreclosure or sale, the collecting of Rents, the
obtaining of or seeking of the appointment of a receiver, the seeking of default
interest, the taking of possession or control of any of the Mortgaged Property, the
commencement of any suit or other legal, administrative, or arbitration
proceeding based upon the Subordinate Note or any other of the Subordinate
Documents, the exercising of any banker's lien or rights of set-off or recoupment,
or the exercise of any other remedial action against Borrower, any other party
liable for any of the Subordinate Indebtedness or obligated under any of the
Subordinate Documents, or the Mortgaged Property.
Subordination Agreement — Governmental Entity Page 3
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(f) "Enforcement Action Notice" means a written notice from Subordinate
Mortgagee to Senior Mortgagee, given following one or more Subordinate
Mortgage Default(s) and the expiration of any notice or cure periods provided for
such Subordinate Mortgage Default(s) in the Subordinate Documents, setting
forth in reasonable detail the Subordinate Mortgage Default(s) and the
Enforcement Actions proposed to be taken by Subordinate Mortgagee.
(g) "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 or any Condemnation or Casualty.
(h) "Notice" is defined in Section 6(d).
(i) "Regulatory Agreement" means the Regulatory Agreement, as defined in the
Recitals.
(j) "Senior Indebtedness" means the "Indebtedness" as defined in the Senior Loan
Agreement.
(k) "Senior Loan Documents" means the "Loan Documents" as defined in the
Senior Loan Agreement.
(1) "Senior Mortgage Default" means any act, failure to act, event, condition, or
occurrence which constitutes, or which with the giving ofNotice or the passage of
time, or both, would constitute, an "Event of Default" as defined in the Senior
Loan Agreement.
(m)
"Senior Mortgagee" means the "Lender" as defined in the Senior Mortgage.
When any other person or entity becomes the legal holder of the Senior Note,
such other person or entity automatically will become Senior Mortgagee.
(n) "Senior Note" means the promissory note or other evidence of the Senior
Indebtedness referred to in the Senior Loan Agreement and any replacement of
the Senior Note.
(o) "Subordinate Indebtedness" means all sums evidenced or secured or guaranteed
by, or otherwise due and payable to Subordinate Mortgagee pursuant to, the
Subordinate Documents.
(p) "Subordinate Documents" means the Subordinate Mortgage, the Regulatory
Agreement and all other documents at any time evidencing, securing,
guaranteeing, or otherwise delivered in connection with the Subordinate
Indebtedness, as the same may be amended from time to time.
Subordination Agreement — Governmental Entity Page 4
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(q)
"Subordinate Mortgage Default" means any act, failure to act, event, condition,
or occurrence which allows (but for any contrary provision of this Agreement), or
which with the giving of Notice or the passage of time, or both, would allow (but
for any contrary provision of this Agreement), Subordinate Mortgagee to take an
Enforcement Action.
(r) "Subordinate Mortgagee" means the person or entity named as such in the first
paragraph of this Agreement and any other person or entity who becomes the
legal holder of the Subordinate Note after the date of this Agreement.
2. Subordination of Subordinate Indebtedness.
(a) The Subordinate Indebtedness is and will at all times continue to be subject and
subordinate in right of payment to the prior payment in full of the Senior
Indebtedness.
(b) The Subordinate Mortgagee acknowledges that a Subordinate Mortgage Default
constitutes a Senior Mortgage Default. Accordingly, upon the occurrence of a
Subordinate Mortgage Default, Subordinate Mortgagee will be deemed to have
actual knowledge of a Senior Mortgage Default.
(c) If (i) Subordinate Mortgagee receives any payment, property, or asset of any kind
or in any form on account of the Subordinate Indebtedness (including any
proceeds from any Enforcement Action) after a Senior Mortgage Default of which
Subordinate Mortgagee has actual knowledge (or is deemed to have actual
knowledge as provided in 2(b) above) or has been given Notice, or (ii)
Subordinate Mortgagee 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 Mortgagee. Subordinate Mortgagee will promptly remit, in
kind and properly endorsed as necessary, all such payments, properties, and assets
to Senior Mortgagee. Senior Mortgagee will apply any payment, asset, or property
so received from Subordinate Mortgagee to the Senior Indebtedness in such order,
amount (with respect to any asset or property other than immediately available
funds), and manner as Senior Mortgagee determines in its sole and absolute
discretion.
(d) Without limiting the complete subordination of the Subordinate 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 will first be paid in full in cash
before Subordinate Mortgagee will be entitled to receive any payment or other
distribution on account of or in respect of the Subordinate Indebtedness, and (ii)
until all of the Senior Indebtedness is paid in full in cash, any payment or
distribution to which Subordinate Mortgagee would be entitled but for this
Subordination Agreement — Governmental Entity
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Agreement (whether in cash, property, or other assets) will be made to Senior
Mortgagee.
(e) The subordination of the Subordinate Indebtedness will continue if 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, any or all
of the Senior Indebtedness originally intended to be satisfied will 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.
3. Subordination of Subordinate Documents.
(a) Each of the Subordinate Documents is, and will at all times remain, subject and
subordinate in all respects to the liens, terms, covenants, conditions, operations,
and effects of each of the Senior Loan Documents.
(b) The subordination of the Subordinate Documents and of the Subordinate
Indebtedness will apply and continue notwithstanding (i) the actual date and time
of execution, delivery, recording, filing or perfection of each of the Senior Loan
Documents and of each of the Subordinate Documents, and (ii) the availability of
any collateral to Senior Mortgagee, including the availability of any collateral
other than the Mortgaged Property.
(c) By reason of, and without in any way limiting, the full subordination of the
Subordinate Indebtedness and the Subordinate Documents provided for in this
Agreement, all rights and claims of Subordinate Mortgagee under the Subordinate
Documents in or to all or any portion of the Mortgaged Property are expressly
subject and subordinate in all respects to the rights and claims of Senior
Mortgagee under the Senior Loan Documents in or to the Mortgaged Property.
(d) If Subordinate Mortgagee, by indemnification, subrogation or otherwise, acquires
any lien, estate, right or other interest in any of the Mortgaged Property, then that
lien, estate, right or other interest will be fully subject and subordinate to the
receipt by Senior Mortgagee of payment in full of the Senior Indebtedness, and to
the Senior Loan Documents, to the same extent as the Subordinate Indebtedness
and the Subordinate Documents are subordinate pursuant to this Agreement.
4. Additional Representations and Covenants.
(a) Subordinate Mortgagee represents and warrants that each of the following is true:
Subordination Agreement — Governmental Entity
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(i) Subordinate Mortgagee is now the owner and holder of the Subordinate
Documents.
(ii) The Subordinate Documents are now in full force and effect.
(iii) The Subordinate Documents have not been modified or amended.
(iv) To the actual knowledge of the Subordinate Mortgagee, as of the date of
this Agreement, no Subordinate Mortgage Default has occurred. •
(v) None of the rights of Subordinate Mortgagee under any of the Subordinate
Documents are subject to the rights of any third parties, by way of
subrogation, indemnification or otherwise.
(b) Without the prior written consent of Senior Mortgagee in each instance,
Subordinate Mortgagee will not do any of the following:
(i) Amend, modify, waive, extend, renew, or replace any provision of any of
the Subordinate Documents.
(ii) Pledge, assign, transfer, convey, or sell any interest in the Subordinate
Indebtedness or any of the Subordinate Documents.
(iii) Take any action which has the effect of increasing the Subordinate
Indebtedness.
(v) Appear in, defend or bring any action to protect Subordinate Mortgagee's
interest in the Mortgaged Property.
(vi) Take any action concerning environmental matters affecting the
Mortgaged Property.
(c) Subordinate Mortgagee will deliver to Senior Mortgagee a copy of each Notice
received or delivered by Subordinate Mortgagee pursuant to the Subordinate
Documents or in connection with the Subordinate Indebtedness, simultaneously
with Subordinate Mortgagee's delivery or receipt of such Notice. Senior
Mortgagee will deliver to Subordinate Mortgagee in the manner required in
Section 5(b) a copy of each Notice of a Senior Mortgage Default delivered to
Borrower by Senior Mortgagee. Neither giving nor failing to give a Notice to
Senior Mortgagee or Subordinate Mortgagee pursuant to this Section 4(c) will
affect the validity of any Notice given by Senior Mortgagee or Subordinate
Mortgagee to Borrower, as between Borrower and such of Senior Mortgagee or
Subordinate Mortgagee as provided the Notice to Borrower.
(d) Without the prior written consent of Senior Mortgagee in each instance,
Subordinate Mortgagee will not commence, or join with any other creditor in
Subordination Agreement — Governmental Entity Page 7
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commencing, any Bankruptcy Proceeding. In the event of a Bankruptcy
Proceeding, Subordinate Mortgagee will not vote affirmatively in favor of any
plan of reorganization or liquidation unless Senior Mortgagee has also voted
affirmatively in favor of such plan. In the event of any Bankruptcy Proceeding,
Subordinate Mortgagee will 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.
(e) [Intentionally Omitted].
(f) All requirements pertaining to insurance under the Subordinate Documents
(including requirements relating to amounts and types of coverages, deductibles
and special endorsements) will be deemed satisfied if Borrowercomplies with the
insurance requirements under the Senior Loan Documents and of Senior
Mortgagee. All original policies of insurance required pursuant to the Senior Loan
Documents will be held by Senior Mortgagee. Nothing in this Section 4(f) will
preclude Subordinate Mortgagee from requiring that it be named as a mortgagee
and loss payee, as its interest may appear, under all policies of property damage
insurance maintained by Borrower with respect to the Mortgaged Property,
provided such action does not affect the priority of payment of Loss Proceeds, or
that Subordinate Mortgagee be named as an additional insured under all policies
of liability insurance maintained by Borrower with respect to the Mortgaged
Property.
(g)
In the event of a Condemnation or a Casualty, all of the following provisions will
apply:
(i)
The rights of Subordinate Mortgagee (under the Subordinate Documents
or otherwise) to participate in any proceeding or action relating to a
Condemnation or a Casualty, or to participate or join in any settlement of,
or to adjust, any claims resulting from a Condemnation or a Casualty, will
be and remain subordinate in all respects to Senior Mortgagee's rights
under the Senior Loan Documents with respect thereto, and Subordinate
Mortgagee will be bound by any settlement or adjustment of a claim
resulting from a Condemnation or a Casualty made by Senior Mortgagee.
(ii) All Loss Proceeds will be applied either to payment of the costs and
expenses of Restoration or to payment on account of the Senior
Indebtedness, as and in the manner determined by Senior Mortgagee in its
sole discretion.
(iii) If Senior Mortgagee applies or releases Loss Proceeds for the purposes of
Restoration of the Mortgaged Property, then Subordinate Mortgagee will
release for such purpose all of its right, title and interest, if any, in and to
such Loss Proceeds. If Senior Mortgagee holds Loss Proceeds, or monitors
Subordination Agreement — Governmental Entity Page 8
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the disbursement thereof, Subordinate Mortgagee will not do so. Nothing
contained in this Agreement will be deemed to require Senior Mortgagee
to act for or on behalf of Subordinate Mortgagee in connection with any
Restoration or to hold or monitor any Loss Proceeds in trust for or
otherwise on behalf of Subordinate Mortgagee, and all or any Loss
Proceeds may be commingled with any funds of Senior Mortgagee.
(iv) If Senior Mortgagee elects to apply Loss Proceeds to payment on account
of the Senior Indebtedness, and if the application of such Loss Proceeds
results in the payment in full of the entire Senior Indebtedness, any
remaining Loss Proceeds held by Senior Mortgagee will be paid to
Subordinate Mortgagee unless another party has asserted a claim to the
remaining Loss Proceeds.
(h) Subordinate Mortgagee will enter into attornment and non -disturbance
agreements with all tenants under commercial or retail Leases, if any, to whom
Senior Mortgagee has granted attomment and non -disturbance, on the same terms
and conditions given by Senior Mortgagee.
(I)
Regardless of any contrary provision in the Subordinate Documents, Subordinate
Mortgagee will not collect payments for the purpose of escrowing for any cost or
expense related to the Mortgaged Property or for any portion of the Subordinate
Indebtedness.
(j) Within 10 days after request by Senior Mortgagee, Subordinate Mortgagee will
furnish Senior Mortgagee with a statement, duly acknowledged and certified
setting forth the then -current amount and terms of the Subordinate Indebtedness,
confirming that there exists no default under the Subordinate Documents (or
describing any default that does exist), and certifying to such other information
with respect to the Subordinate Indebtedness as Senior Mortgagee may request.
(k) Senior Mortgagee may amend, waive, postpone, extend, renew, replace, reduce or
otherwise modify any provisions of the Senior Loan Documents without the
necessity of obtaining the consent of or providing Notice to Subordinate
Mortgagee, and without affecting any of the provisions of this Agreement.
Notwithstanding the foregoing, Senior Mortgagee may not modify any provision
of the Senior Loan Documents that increases the Senior Indebtedness, except for
increases in the Senior Indebtedness that result from advances made by Senior
Mortgagee to protect the security or lien priority of Senior Mortgagee under the
Senior Loan Documents or to cure defaults under the Subordinate Documents.
5. Default Under Loan Documents.
(a) For a period of 90 days following delivery to Senior Mortgagee of an
Enforcement Action Notice, Senior Mortgagee will have the right, but not the
obligation, to cure any Subordinate Mortgage Default, provided that if such
Subordination Agreement — Governmental Entity Page 9
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Subordinate Mortgage Default is a non -monetary default and is not capable of
being cured within such 90-day period and Senior Mortgagee has commenced and
is diligently pursuing such cure to completion, Senior Mortgagee will have such
additional period of time as may be required to cure such Subordinate Mortgage
Default or until such time, if ever, as Senior Mortgagee (i) discontinues its pursuit
of any cure and/or (ii) delivers to Subordinate Mortgagee Senior Mortgagee's
written consent to the Enforcement Action described in the Enforcement Action
Notice. Senior Mortgagee will not be subrogated to the rights of Subordinate
Mortgagee under the Subordinate Documents by reason of Senior Mortgagee
having cured any Subordinate Mortgage Default. However, Subordinate
Mortgagee acknowledges that all amounts advanced or expended by Senior
Mortgagee in accordance with the Senior Loan Documents or to cure a Subordinate
Mortgage Default will be added to and become a part of the Senior Indebtedness
and will be secured by the lien of the Senior Mortgage.
(b) Senior Mortgagee will deliver to Subordinate Mortgagee a copy of any Notice sent
by Senior Mortgagee to Borrower of a Senior Mortgage Default within 5 Business
Days of sending such Notice to Borrower. Failure of Senior Mortgagee to send
Notice to Subordinate Mortgagee will not prevent the exercise of Senior
Mortgagee's rights and remedies under the Senior Loan Documents. Subordinate
Mortgagee will have the right, but not the obligation, to cure any monetary Senior
Mortgage Default within 30 days following the date of such Notice; provided,
however, that Senior Mortgagee will be entitled during such 30-day period to
continue to pursue its remedies under the Senior Loan Documents.
Subordinate Mortgagee may, within 90 after the date of the Notice, cure a non -
monetary Senior Mortgage Default if during such 90-day period, Subordinate
Mortgagee keeps current all payments required by the Senior Loan Documents. If
such a non -monetary Senior Mortgage Default creates an unacceptable level of risk
relative to the Mortgaged Property, or Senior Mortgagee's secured position relative
to the Mortgaged Property, as determined by Senior Mortgagee in its sole discretion,
then during such 90-day period Senior Mortgagee may exercise all available rights
and remedies to protect and preserve the Mortgaged Property and the Rents,
revenues and other proceeds from the Mortgaged Property. Subordinate Mortgagee
will not be subrogated to the rights of Senior Mortgagee under the Senior Loan
Documents by reason of Subordinate Mortgagee having cured any Senior Mortgage
Default. However, Senior Mortgagee acknowledges that all amounts paid by
Subordinate Mortgagee to Senior Mortgagee to cure a Senior Mortgage Default will
be deemed to have been advanced by Subordinate Mortgagee pursuant to, and will
be secured by the lien of, the Subordinate Mortgage. Notwithstanding anything in
this Section 5(b) to the contrary, Subordinate Mortgagee's right to cure any Senior
Mortgage Default will terminate immediately upon the occurrence of any
Bankruptcy Proceeding.
(c) In the event of a Subordinate Mortgage Default, Subordinate Mortgagee will not
commence any Enforcement Action until 90 days after Subordinate Mortgagee
Subordination Agreement — Governmental Entity Page 10
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has delivered to Senior Mortgagee an Enforcement Action Notice with respect to
such Enforcement Action, provided that during such 90-day period or such longer
period as provided in Section 5(a), Subordinate Mortgagee will be entitled to seek
specific performance to enforce covenants and agreements of Borrower relating to
income, rent, or affordability restrictions contained in the Regulatory Agreement,
subject to Senior Mortgagee's right to cure a Subordinate Mortgage Default set
forth in Section 5(a). Subordinate Mortgagee may not commence any other
Enforcement Action, including any foreclosure action under the Subordinate
Documents, until the earlier of (i) the expiration of such 90-day period or such
longer period as provided in Section 5(a), or (ii) the delivery by Senior Mortgagee
to Subordinate Mortgagee of Senior Mortgagee's written consent to such
Enforcement Action by Subordinate Mortgagee. Subordinate Mortgagee
acknowledges that Senior Mortgagee may grant or refuse consent to Subordinate
Mortgagee's Enforcement Action in Senior Mortgagee's sole and absolute
discretion. At the'expiration of such 90-day period or such longer period as
provided in Section 5(a) and, subject to Senior Mortgagee's right to cure set forth
in Section 5(a), Subordinate Mortgagee may commence any Enforcement Action.
Any Enforcement Action on the part of Subordinate Mortgagee will be subject to
the provisions of this Agreement. Subordinate Mortgagee acknowledges that the
provisions of this Section 5(c) are fair and reasonable under the circumstances,
that Subordinate Mortgagee has received a substantial benefit from Senior
Mortgagee having granted its consent to the Subordinate Mortgage, and that
Senior Mortgagee would not have granted such consent without the inclusion of
these provisions in this Agreement.
(d) Senior Mortgagee 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 Subordinate Mortgagee. No action or
failure to act on the part of Senior Mortgagee in the event of a Subordinate
Mortgage Default or commencement of an Enforcement Action will constitute a
waiver on the part of Senior Mortgagee of any provision of the Senior Loan
Documents or this Agreement.
(e) If the Enforcement Action taken by Subordinate Mortgagee is the appointment of
a receiver for any of the Mortgaged Property, all of the Rents, issues, profits and
proceeds collected by the receiver will be paid and applied by the receiver solely
to and for the benefit of Senior Mortgagee until the Senior Indebtedness will have
been paid in full.
(f) Subordinate Mortgagee consents to and authorizes the release by Senior
Mortgagee of all or any portion of the Mortgaged Property from the lien,
operation, and effect of the Senior Loan Documents. Subordinate Mortgagee
waives to the fullest extent permitted by law, all equitable or other rights it may
have (i) in connection with the release of all or any portion of the Mortgaged
Property, (ii) to require the separate sale of any portion of the Mortgaged
Property, (iii) to require Senior Mortgagee to exhaust its remedies against all or
Subordination Agreement — Governmental Entity Page 11
1
1
i
*'EF7+`.'•."Wi':-0[Rail.`S!ID YL'.ntit!^p04,ab? it1040-4,rl :44-,,A,ur*lx.it{li4016,4144414K : i3aiv FA:�i�e�bi�i%l.+f.::U�bw:wirw}1�iiR�.+ei..tslw`.. iadirK�,,,eg'cV.+."i4*f1�:4i:%riT,++.;�F„p�'ik.+x'e�iS.laa.�«.F..ccywK•i••w.sa..-wsr: Yr:.:...,. -.A•l
(g)
any portion of the Mortgaged Property or any combination of portions of the
Mortgaged Property or any other collateral for the Senior Indebtedness, or (iv) to
require Senior Mortgagee to proceed against Borrower, any other party that may
be liable for any of the Senior Indebtedness (including any general partner of
Borrower if Borrower is a partnership), all or any portion of the Mortgaged
Property or combination of portions of the Mortgaged Property or any other
collateral, before proceeding against all or such portions or combination of
portions of the Mortgaged Property as Senior Mortgagee determines. Subordinate
Mortgagee waives to the fullest extent permitted by law any and all benefits under
California Civil Code Sections 2845, 2849 and 2850. Subordinate Mortgagee
consents to and authorizes, at the option of Senior Mortgagee, the sale, either
separately or together, of all or any portion of the Mortgaged Property.
Subordinate Mortgagee acknowledges that without Notice to Subordinate
Mortgagee and without affecting any of the provisions of this Agreement, Senior
Mortgagee may (i) extend the time for or waive any payment or performance
under the Senior Loan Documents; (ii) modify or amend in any respect any
provision of the Senior Loan Documents; and (iii) modify, exchange, surrender,
release, and otherwise deal with any additional collateral for the Senior
Indebtedness.
If any party other than Borrower (including Senior Mortgagee) acquires title to
any of the Mortgaged Property pursuant to a foreclosure of, or trustee's sale or
other exercise of any power of sale under, the Senior Mortgage conducted in
accordance with applicable law, the lien, operation, and effect of the Subordinate
Mortgage and other Subordinate Documents automatically will terminate with
respect to such Mortgaged Property.
6. Miscellaneous Provisions.
(a) If there is any conflict or inconsistency between the terms of the Subordinate
Documents and the terms of this Agreement, then the terms of this Agreement
will control.
(b) This Agreement will be binding upon and will inure to the benefit of the
respective legal successors and permitted assigns of the parties to this Agreement.
No other party will be entitled to any benefits under this Agreement, whether as a
third -party beneficiary or otherwise.
(c) This Agreement does not constitute an approval by Senior Mortgagee of the terms
of the Subordinate Documents.
(d) Each notice, request, demand, consent, approval or other communication
(collectively, "Notices," and singly, a "Notice") which is required or permitted to
be given pursuant to this Agreement will be in writing and will be deemed to have
been duly and sufficiently given if (i) personally delivered with proof of delivery
(any Notice so delivered will be deemed to have been received at the time so
Subordination Agreement — Governmental Entity Page 12
'.::'�i:7r`o:44ICY"yvyp c.�."k"''Yc 4 i4 4`1i++Mr11.:?ys'jyi"f .1: v Of istiaw3_k +tRMSr'Sk.".+yM1: �%'k s 4Y..
delivered), or (ii) sent by a national overnight courier service (such as FedEx)
designating earliest available delivery (any Notice so delivered will be deemed to
have been received on the next Business Day following receipt by the courier), or
(iii) sent by United States registered or certified mail, return receipt requested,
postage prepaid, at a post office regularly maintained by the United States Postal
Service (any Notice so sent will be deemed to have been received on the date of
delivery as confirmed by the return receipt), addressed to the respective parties as
follows:
(i)
Notices intended for Senior Mortgagee will be addressed to:
Oak Grove Commercial Mortgage, LLC
2177 Youngman Avenue, Suite 300
St. Paul, MN 55116
Attention: Loan Servicing
(ii) Notices intended for Subordinate Mortgagee will be addressed to:
Community Development Commission
Housing Authority of the City of National City
140 East 12th Street, Suite B
National City, CA 91950
Attention: Executive Director
Any party, by Notice given pursuant to this Section, may change the person or
persons and/or address or addresses, or designate an additional person or persons
or an additional address or addresses, for its Notices, but Notice of a change of
address will only be effective upon receipt. Neither party will refuse or reject
delivery of any Notice given in accordance with this Section.
(e) Nothing in this Agreement or in any of the Senior Loan Documents or
Subordinate Documents will be deemed to constitute Senior Mortgagee as a joint
venturer or partner of Subordinate Mortgagee.
(f) Upon Notice from Senior Mortgagee, Subordinate Mortgagee will execute and
deliver such additional instruments and documents, and will take such actions, as
are required by Senior Mortgagee in order to further evidence or implement the
provisions and intent of this Agreement.
(g) This Agreement will be governed by the laws of the State in which the Land is
located.
(h) If any one or more of the provisions contained in this Agreement, or any
application of any such provisions, is invalid, illegal, or unenforceable in any
respect, the validity, legality, enforceability, and application of the remaining
Subordination Agreement — Governmental Entity Page 13
�a.+++�tj''.��iGiWaN,�Fr'+Vy`•4M1p;.2.i'•kvi+w:wF��kWy,«f}!}litij.a.v+ftir+:iitinl}V:✓.+RS+Fi.hC4ik4J,44.4,420~objYi`. idi !l0`i ii41i4;,i,s+Aii ,or." .'� ' -'; 1i}F°xhlt�%bl�!d
(i)
provisions contained in this Agreement will not in any way be affected or
impaired.
The term of this Agreement will commence on the date of this Agreement and
will continue until the earliest to occur of the following events: (i) the payment of
all of the Senior Indebtedness; provided that this Agreement will be reinstated in
the event any payment on account of the Senior Indebtedness is avoided, set
aside, rescinded or repaid by Senior Mortgagee as described in Section 2(e) of this
Agreement, (ii) the payment of all of the Subordinate, Indebtedness other than by
reason of payments which Subordinate Mortgagee is obligated to remit to Senior
Mortgagee pursuant to this Agreement, (iii) the acquisition by Senior Mortgagee
or by a third party purchaser of title to the Mortgaged Property pursuant to a
foreclosure of, deed in lieu of foreclosure, or trustee's sale or other exercise of a
power of sale or similar disposition under the Senior Mortgage; or (iv) with the
prior written consent of Senior Mortgagee, without limiting the provisions of
Section 5(d), the acquisition by Subordinate Mortgagee of title to the Mortgaged
Property subject to the Senior Mortgage pursuant to a foreclosure, or a deed in
lieu of foreclosure, of (or the exercise of a power of sale under) the Subordinate
Mortgage.
(j) No failure or delay on the part of any party to this Agreement in exercising any
right, power, or remedy under this Agreement will operate as a waiver of such
right, power, or remedy, nor will any single or partial exercise of any such right,
power or remedy preclude any other or further exercise of such right, power, or
remedy or the exercise of any other right, power or remedy under this Agreement.
(k) Each party to this Agreement acknowledges that if any party fails to comply with
its obligations under this Agreement, the other parties will 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.
(1)
Nothing in this Agreement is intended, nor will it be construed, to in any way
limit the exercise by Subordinate Mortgagee of its governmental powers
(including police, regulatory and taxing powers) with respect to Borrower or the
Mortgaged Property to the same extent as if it were not a party to this Agreement
or the transactions contemplated by this Agreement.
(m) This Agreement may be assigned at any time by Senior Mortgagee to any
subsequent holder of the Senior Note.
(n) This Agreement may be amended, changed, modified, altered or terminated only
by a written instrument or written instruments signed by the parties to this
Agreement.
Subordination Agreement — Governmental Entity Page 14
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(o) This Agreement may be executed in two or more counterparts, each of which will
be deemed an original but all of which together will constitute one and the same
instrument.
[Signature and acknowledgment pages follow]
Subordination Agreement — Governmental Entity Page 15
.:.:.+.yaf:'::ss:.kCQ.*'1 tlGK l+tl�+4i2;,pla n{�..� W �:.�.�.w:.:�.n•uw
+,�:,:.::P::,gat.a4!+rrrM#�i.'yJ:saxaPr+4ilk.�V'/4�k'+a: etilirfr.'�j�iii�iYf�;.�_+i,^�-�.r�.j�.i�?�?*+:Yw4.r;srr6'+iw::c�:•fri*�i4a>+,3=,:.:aa;:x.F.F-fN�.ws�y�,�u:z�(,r?4ki+'f+!�7F:nii?H+wwl':iR'D'�+ff+u++o,+m;,.n..•H:.�;k•.. �.--: ,:. ,�:.f:
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year
first above written.
SENIOR MORTGAGEE:
OAK GROVE COMMERCIAL
MORTGAGE, LLC, a Delaware limited
liability company
By. qlQ, tiles UP. —C./ G
Katherine R. Heding
Assistant Vice President
STATE OF MINNESOTA )
) ss:
COUNTY OF RAMSEY )
On this « day of Ni-t t , 2015 before me, the undersigned officer, personally
appeared Katherine R. Heding, to me known, who being by me duly sworn, did depose and say
that she is the Assistant Vice President of OAK GROVE COMMERCIAL MORTGAGE, LLC,
the company described in and which executed the foregoing instrument; and that by virtue of
authority conferred upon her, she signed and delivered the foregoing instrument as the voluntary
act and deed of said company.
t
TERESA A. GOERISH
Notary Public -Minnesota
My Commission Expires Jan 31.2020
Notary Public
Subordination Agreement — Governmental Entity Page 16
1
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�"'44'Yth?':�ytMl4W1M.44RDK'KN:Nii%1'!'“.`M1N4!44y;•C"w•
µ��i.'Y:r':.ti:x-.i�+i•�!:{:'i.MN^.N•9..11.4�t'....f'Ko.)/w:r�iY`...�a,1i•�+FY���!1h%KJI.••I �iJ.YkRSb:-�.YF..r�tls�U..•n...
SUBORDINATE MORTGAGEE:
COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF NATIONAL CITY, ACTING IN ITS
CAPACITY AS THE HOUSING AUTHORITY OF
THE CITY OF NATIONAL CITY
Leslie Deese, Executive Director
App ved as to. Fo
Y
B • 4't't'}
laudia Gacitua Si va
City Attorney
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certifieiti is
attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss:
COUNTY OF SAN DIEGO )
On this ,Zoe day of Aril , 2015 before me, Pr l-starc-t utf Notary
Public, personally appeared L s (-e. 'b--use , who proven to me on the basis of satisfactory
evidence to be the person whose name is subscribed in the within instrument and acknowledged
to me that /she executed the same in /her capacity, and that by /her signature on the
instrument t e person, or the entity upon b half of which person acted, decuted 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 hind and official seal.
Signa :'"il'Jotary Pu
Subordination Agreement — Governmental Entity
(affix seal here)
ANGELUTA MARCHANTE 1
E .. y COMM. # )046693 0
,^ `� ;^; NOTARY PUBLIC. CALIFORNIA z
SAN DIEGO COUNTY ''
My Comm. Exp. October 25, 20111
Page 17
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CONSENT OF BORROWER
Borrower acknowledges receipt of a copy of this Subordination Agreement, dated
!'+) , 2015, by and between OAK GROVE COMMERCIAL MORTGAGE, LLC,
an COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL
CITY, acting in its capacity as the Housing Authority of the City of National City and consents
to the agreement of the parties set forth in this Agreement.
BORROWER:
SUMMERCREST APARTMENTS, LP
a Delaware limited partnership
By: AOF Summercrest LLC
a Delaware limited liability company
its: Managing General Partner
By: AOF/Pacific Affordable Housing Corp.,
a California nonprofit public benefit corporation
its: Sole ,bet•"
By:
Name: Raman'Na
Title: Preside
By: Summercrest Apartments LLC
a Delaware Iimited liability company
its: Co -General Partner
By: BLF Holdings, LLC
a Washington limited liability company
its: Sole Member
By: The Brian L. Fitterer Revocable Trust
A California Trust
Its: Sole Member
By:
COUNTERPART
Brian L. Fitterer
Trustee
(Subordination Agreement -National City)
Subordination Agreement — Governmental Entity Page 18
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A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss:
COUNTY OF ORANGE )
On this a'ic, day of ?' toiv , 2015 before me, Sharon T. Tran , Notary
Public, personally appeared Raman Nayar , who proven to me on the basis of satisfactory
evidence to be the person whose name is s scribed in the within instrument and acknowledged
to me that he executed the same in er capacity, and that b er signature on the
instrument the person, or the entity upon behalf of which person 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 of Notary Public
(affix seal here)
SHARON T. TRAN
r y, comm. #1961874 m
u) ! ts; 4 Notary Public-Caiitarnia
W / ORANGE COUNTY "
Comm. Exp. NOV 26, 2015
Subordination Agreement — Governmental Entity Page 19
..il•,i�44;7- . .. . •,cc+,. t4p...u}.:i.:-•.,y.1f_..l:a.a•'�F�+,
..r...v.•ti..aC..,y...r,.a:•;.:.+wYf:+'.:Y..v+,+i�r:ia-%.iW.'.ry�iW.ia+.i'r'.i�`m►,r+,a:•u.ir!•�xraid:•1�liY+:.4crf:{...,.n.!w•f.•y�•.a;ty:.�w-..w.v ryr}•fwPiw..-'ru?N,:w ��r!'!w!r:.�s'cifefu�.ir..•,L.•f4•:•e..,...•..•y. :..a. t'... •..y, :N •r.
CONSENT OF BORROWER
B,Qrrower acknowledges receipt of a copy of this Subordination Agreement, dated
t' ` ?i 2015, by and between OAK GROVE COMMERCIAL MORTGAGE, LLC,
and COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL
CITY, acting in its capacity as the Housing Authority of the City of National City and consents
to the agreement of the parties set forth in this Agreement.
BORROWER:
SUMMERCREST APARTMENTS, LP
a Delaware limited partnership
By: AOF Summercrest LLC
a Delaware limited liability company
its: Managing General Partner
By: AOF/Pacific Affordable Housing Corp.,
a California nonprofit public benefit corporation
its: Sole Member
By: COUNTERPART
Name:
Title:
By: Summercrest Apartments LLC
a Delaware limited liability company
its: Co -General Partner
By: BLF Holdings, LLC
a Washington limited liability company
its: Sole Member
By: The Brian L. Fitterer Revocable Trust
A California Trust
Its: /SiI Member
(Subordination Agreement -National City)
Subordination Agreement — Governmental Entity
Page 18
..-:.,.:.:w.::c..t:.:avur>,..r«.;.•••.•,�. n:..:.rybc:avtia::- .:.�,,.•-a....:,.:.+.:i':c�..:....:<�a�s:a.::..Kv:a-;M�+w.r.Y-;<,::.:.:naw.:J::.oYSN:.wU.inarM:mW:Mirka±.N•:F�Mwt-:�i/:urFewwsa+A:�.swrsn..:�.v..i�x...s.v.n... :: ..... :.rt!
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 OFOjVn yP
) ss:
On this 87 day of /r- , 2015 before me, t� �e Gh A l , Notary
Public, personally appeared : RIAN L. FITTERER, who proven to me on the basis of
satisfactory evidence to be the person whose name is subscribed in the within instrument and
acknowledged to me that he/she executed the same in his/her capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of which person 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.
4,,to
nature of Notary Public
Subordination Agreement — Governmental Entity
(affix seal here)
JULIE L. PALO
Commission # 1997238
Notary Public - California a
Orange County
M Comm. Ex . ires Nov 4. 2016
Page 20
.• •• • a,. i-w •A......,...c..._:.,:o:
Freddie Mac Loan Number: 708137512
Property Name: Summercrest Apartments
EXHIBIT A
Legal Description
Real property in the City of National City, County of San Diego, State of
California, described as follows:
PARCEL A:
THAT PORTION OF THE EAST HALF OF THE NORTHWEST QUARTER
OF QUARTER SECTION 106 OF RANCHO DE LA NACION, IN THE CITY
OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 166 ON FILE IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF THE NORTHWEST
QUARTER OF SAID QUARTER SECTION IN THE CENTER LINE OF A
PUBLIC STREET, 80.00 FEET WIDE, RUNNING THENCE SOUTH
71 ° 11'05" WEST (RECORD SOUTH 71° WEST) ALONG THE NORTHERLY
LINE OF SAID QUARTER SECTION A DISTANCE OF 665.03 FEET
(RECORD 660.00 FEET MORE OR LESS) TO THE NORTHEAST CORNER
OF THE LAND DESCRIBED IN DEED TO HERMAN TO CROW
RECORDED IN BOOK 498, PAGE 474 OF DEEDS, SAID POINT BEING
ALSO THE NORTHWEST CORNER OF THE SAID EAST HALF OF THE
NORTHWEST QUARTER OF SECTION 106; THENCE SOUTHERLY
ALONG THE WESTERLY LINE OF SAID EASTERLY HALF OF THE
NORTHWEST QUARTER OF QUARTER SECTION 106, SOUTH 18°36'22"
EAST (RECORD SOUTH 19° EAST), 440.00 FEET TO THE SOUTHERLY
LINE OF THE NORTHERLY 440.00 FEET OF SAID QUARTER SECTION,
BEING ALSO THE TRUE POINT OF BEGINNING; THENCE CONTINUING
ALONG SAID WESTERLY LINE SOUTH 18°36'22" EAST (RECORD
SOUTH 19° EAST), 701.30 FEET TO AND ALONG THE EASTERLY
BOUNDARY OF THE LAND DESCRIBED IN DEED TO O.A. STAUDE,
RECORDED IN BOOK 714, PAGE 411 OF DEEDS TO THE NORTHERLY
LINE OF THE SOUTHERLY 179.00 FEET OF SAID NORTHWEST
QUARTER; THENCE EASTERLY ALONG SAID NORTHERLY LINE
NORTH 71°20'35" EAST, 663.37 FEET TO A POINT ON THE EASTERLY
LINE OF SAID NORTHWEST QUARTER OF QUARTER SECTION 106;
THENCE NORTHERLY ALONG SAID EASTERLY LINE NORTH 18°31'23"
WEST (RECORD NORTH 19° WEST), 208.95 FEET; THENCE LEAVING
SAID LINE SOUTH 71 ° 16'22" WEST, 30.00 FEET; THENCE NORTHERLY
PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWEST
QUARTER OF QUARTER SECTION 106, NORTH 18°31'23" WEST, 302.50
Page 1 of 2
,: L i;wera.zaKe,mrikq•,v.iyAw4f.?. wEN4Y0004wiit0.4?W6i4+I0.I+4¢Ito..16ada!i-a,a+r:;?�x4w4.;t4.. ;•0,04#4404,csfi�xcs�arr.•y1,.:i!•,.4.wew;,r.-,:;Prf;c
FEET; THENCE NORTH 71 ° 16'22" EAST, 30.00 FEET TO A POINT ON THE
EASTERLY LINE OF SAID NORTHWEST QUARTER OF QUARTER
SECTION 106; THENCE NORTHERLY ALONG SAID LINE NORTH
18°31'23" WEST, 191.68 FEET TO THE SOUTHERLY LINE OF THE
NORTHERLY 440.00 FEET OF SAID QUARTER SECTION; THENCE
SOUTH 71°11'05" WEST, 664.39 FEET TO THE TRUE POINT OF
BEGINNING.
PARCEL B:
THAT PORTION OF THE EAST HALF OF THE NORTHWEST QUARTER
OF QUARTER SECTION 106 OF RANCHO DE LA NACION, IN THE CITY
OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF MADE BY MORRILL NO. 166, FILED IN
THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,
MAY 11, 1869, DESCRIBED -AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF LOT 12 OF TRUESDELL
PLACE, ACCORDING TO MAP THEREOF NO. 1735, FILED IN THE
OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,
SEPTEMBER 05, 1922; THENCE SOUTH 18°29'09" EAST ALONG THE
SOUTHWESTERLY LINE OF SAID MAP NO. 1735, TO AND ALONG THE
SOUTHWESTERLY LINE OF ORCHARD MANOR, ACCORDING TO MAP
THEREOF NO. 3627, FILED IN THE OFFICE OF SAID COUNTY
RECORDER, APRIL 22, 1957, A DISTANCE OF 302.50 FEET TO
INTERSECTION WITH THE SOUTHWESTERLY PROLONGATION OF THE
SOUTHEASTERLY LINE OF 11TH STREET AS SHOWN ON SAID MAP
NO. 3627; THENCE SOUTH 71°18'36" WEST ALONG SAID
PROLONGATION 30.00 FEET; THENCE NORTH 18°29'09" WEST
PARALLEL WITH SAID SOUTHWESTERLY LINES OF MAPS NO'S. 3627
AND 1735, RESPECTIVELY, 302.50 FEET TO A POINT OF INTERSECTION
WITH THE SOUTHWESTERLY PROLONGATION OF THE
NORTHWESTERLY LINE OF 10TH STREET AS SHOWN ON SAID MAP
NO. 1735; THENCE NORTH 71°18'36" EAST ALONG SAID
PROLONGATION, 30.00 FEET TO THE POINT OF BEGINNING.
PORTION OF PUBLIC STREET, VACATED, KNOWN AS ARCADIA
PLACE.
Page 2 of 2
f.:e.FK�iVFrw�NMC�t}YN.�`kti5Wfbcweiy:'.iirwfrt� ;,•t'a ;.eft
RESOLUTION NO. 2015 — 30
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING
AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING
THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT
WITH SUMMERCREST APARTMENTS, L.P., SUBORDINATING THE PROJECT DEED
OF TRUST THAT SECURES THE DECLARATION OF COVENANTS, CONDITIONS,
AND RESTRICTIONS (TENANT RESTRICTIONS) ON
372 RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY
WHEREAS, Summercrest Apartments, L.P., a limited partnership organized
under the laws of the State of Delaware ("Borrower") is the owner of a 372 unit multifamily rental
housing project ("Project") known as Summercrest Apartments located at 2721 Plaza Boulevard
in National City; and
WHEREAS, in 2001, the Community Development Commission -Housing
Authority ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships
Program and the Low and Moderate Income Fund to assist in the substantial rehabilitation of
the Project, and the loan was paid in full to the CDC -HA when the property was sold to the
Borrower in 2013; and
WHEREAS, in consideration of receiving financial assistance, the CDC -HA
restricted the affordability of 370 units through April 15, 2032 by recording a Declaration of
Covenants, Conditions and Restrictions ("Declaration"), and securing the Declaration with a
Project Deed of Trust ("Deed of Trust"); and
WHEREAS, the Borrower desires to refinance the Project with a new mortgage
for the original principal amount of $38,000,000 from Oak Grove Commercial Mortgage, LLC
("Lender"); and
WHEREAS, in order to provide the loan, the Lender requires the subordination of
the Project Deed of Trust that secures the Declaration.
NOW, THEREFORE, BE IT RESOLVED that the Community Development
Commission -Housing Authority of the City of National City hereby authorizes the Executive
Director to execute a Subordination Agreement and any other Escrow related documents as
necessary. After being recorded by the County of San Diego, said Subordination Agreement will
be on file in the office of the City Clerk.
PASSED and ADOPTED this 21 St day of April, 20
on Morrison, Chairman
ATTEST: A'' PROVED AS ORM:
Leslie Deese, Secretary
audia Gacitua Silva
CDC Gene? I C• unsel
Passed and adopted by the Community Development Commission — Housing Authority
of the City of National City, California, on April 21, 2015 by the following vote, to -wit:
Ayes: Boardmembers Cano, Mendivil, Morrison, Rios, Sotelo-Solis.
Nays: None.
Absent: None.
Abstain: None.
AUTHENTICATED BY:
RON MORRISON
Chairman, Housing Authority
IZ.-,..l:2c. L�
Secretary, Housing Authority
By:
Deputy
HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of
RESOLUTION NO. 2015-30 of the Community Development Commission — Housing
Authority of the City of National City, California, passed and adopted on April 21, 2015.
Secretary, Housing Authority
By:
Deputy
Ca0k3-5a
CITY OF NATIONAL CITY, CALIFORNIA _
COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY y°y
COUNCIL AGENDA STATEMENT
"EETING DATE: April 21, 2015
AGENDA ITEM NO.17
ITEM TITLE:
Resolution of the Community Development Commission -Housing Authority of the City of National City
authorizing the Executive Director to execute a Subordination Agreement with Summercrest
Apartments, L.P. subordinating the Project Deed of Trust that secures the Declaration of Covenants,
Conditions and Restrictions (Tenant Restrictions) on 372 rental units at 2721 Plaza Boulevard in
National City.
PREPARED BY: Carlos Aguirre, Community Dev. Manager DEPARTMENT: Ho sing, Grants, & Asset
M agment
PHONE: 619 336-4391 APPROVED
EXPLANATION:
Summercrest Apartments, L.P., a limited partnership organized under the laws of the State of Delaware
("Borrower") is the owner of a 372 unit multifamily rental housing project ("Project") known as
Summercrest Apartments located at 2721 Plaza Boulevard in National City. In 2001, the Community
Development Commission ("CDC -HA") made a loan for $500,000 from the HOME Investment
Partnerships Program and the Low and Moderate Income Fund to assist in the substantial rehabilitation
of the Project and the loan was paid in full to the CDC -HA when the property was sold to the Borrower in
2013. In consideration of receiving financial assistance, the CDC -HA restricted the affordability of 370
units through April 15, 2032 by recording a Declaration of Covenants, Conditions, and Restrictions
("Declaration") and securing the Declaration with a Project Deed of Trust ("Deed of Trust"). The Borrower
iesires to refinance the Project with a new mortgage for the original principal amount of $38,000,000 from
)ak Grove Commercial Mortgage, LLC ("Lender"). In order to provide the loan, the Lender requires the
subordination of the Project Deed of Trust that secures the Declaration.
FINANCIAL STATEMENT: APPROVED:
ACCOUNT NO. APPROVED:
There is no fiscal impact to the CDC -HA.
ENVIRONMENTAL REVIEW:
N/A
ORDINANCE: INTRODUCTION:
FINAL ADOPTION:
Finance
MIS
STAFF RECOMMENDATION:
Staff recommends the adoption of a resolution to execute the Subordination Agreement.
BOARD / COMMISSION RECOMMENDATION:
N/IN
ATTACHMENTS:
1. Subordination Agreement
N0. a0- 3 0
Attachment No. 1
RECORDING REQUESTED BY:
OAK GROVE COMMERCIAL MORTGAGE, LLC,
2177 Youngman Avenue, Suite 300,
St. Paul, MN 55116
Attention: Loan Servicing
WHEN RECORDED RETURN TO:
Thomas P. Wild, Esq.
Wild Law Group, LLC
475 Wall Street
Princeton, New Jersey 08540
SPACE ABOVE LINE FOR RECORDER'S USE
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(Revised 3-1-2014)
Subordination Agreement — Governmental Entity Page 1
Attachment No. 1
Freddie Mac Loan Number:
Property Name: Summercrest Apartments
SUBORDINATION AGREEMENT
GOVERNMENTAL ENTITY
(Revised 3-1-2014)
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this day of
, 2015, by and between (i) OAK GROVE COMMERCIAL
MORTGAGE, LLC, a limited liability company organized and existing under the laws of the
State of Delaware ("Senior Mortgagee") and (ii) COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF NATIONAL CITY, acting in its capacity as the Housing
Authority of the City of National City ("Subordinate Mortgagee").
RECITALS
A. Summercrest Apartments, L.P., a limited partnership organized under the laws of the
State of Delaware ("Borrower") is the owner of certain land located in San Diego
County, California, described in Exhibit A ("Land"). The Land is unproved with a
multifamily rental housing project ("Improvements").
B. Senior Mortgagee has made or is making a loan to Borrower in the original principal
amount of $[38,000,000] ("Senior Loan") upon the terms and conditions of a
Multifamily Loan and Security Agreement dated as of the date hereof between Senior
Mortgagee and Borrower ("Senior Loan Agreement") in connection with the Mortgaged
Property. The Senior Loan is secured by a Multifamily Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing, dated as of the date hereof ("Senior
Mortgage") encumbering the Land, the Improvements and related personal and other
property described and defined in the Senior Mortgage as the "Mortgaged Property."
C. Subordinate Mortgagee is the holder of a Declaration of Covenants and Restrictions
(Tenant Restrictions)("Regulatory Agreement"), dated December 18, 2001, executed by
Plaza Manor Preservation, L.P. and recorded June 19, 2002 in the office of the County
Recorder of San Diego County, California ("Recording Office") as Document Number
2002-0518422 and assumed by Borrower pursuant to a certain Assignment and
Assumption of Declaration of Covenants and Restrictions and Deed of Trust dated
December 19, 2013 and recorded in the Recorder's Office as Instrument No.
("Assumption Agreement") which Regulatory Agreement is secured by that certain
Project Deed of Trust encumbering all or a portion of the Mortgaged Property, dated
December 18, 2001, executed by Plaza Manor Preservation, L.P. and recorded June 19,
2002 in the Recorder's Office as Instrument No.2002-0518423 ("Subordinate
Mortgage") as assumed by the Borrower pursuant to the Assumption Agreement.
Subordination Agreement — Governmental Entity Page 2
Attachment No. 1
D. The Senior Mortgage will be recorded in the Recording Office concurrently herewith.
E. The execution and delivery of this Agreement is a condition of Senior Mortgagee's
making of the Senior Loan.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. Definitions. The following terms, when used in this Agreement (including, as
appropriate, when used in the above recitals), will have the following meanings.
(a) The terms "Condemnation," "Imposition Deposits," "Impositions," "Leases,"
"Rents" and "Restoration," as well as any term used in this Agreement and not
otherwise defined in this Agreement, will have the meanings given to those terms
in the Senior Loan Agreement.
(b) "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.
(c) "Borrower" means all persons or entities identified as "Borrower" in the first
Recital of this Agreement, together with their successors and assigns, and any
other person or entity who acquires title to the Mortgaged Property after the date
of this Agreement; provided that the term "Borrower" will not include Senior
Mortgagee if Senior Mortgagee acquire titles to the Mortgaged Property.
(d) "Casualty" means the occurrence of damage to or loss of all or any portion of the
Mortgaged Property by fire or other casualty.
(e) "Enforcement Action" means any of the following actions taken by or at the
direction of Subordinate Mortgagee: the acceleration of all or any part of the
Subordinate Indebtedness, the advertising of or commencement of any foreclosure
or trustee's sale proceedings, the exercise of any power of sale, the acceptance of
a deed or assignment in lieu of foreclosure or sale, the collecting of Rents, the
obtaining of or seeking of the appointment of a receiver, the seeking of default
interest, the taking of possession or control of any of the Mortgaged Property, the
commencement of any suit or other legal, administrative, or arbitration
proceeding based upon the Subordinate Note or any other of the Subordinate
Documents, the exercising of any banker's lien or rights of set-off or recoupment,
or the exercise of any other remedial action against Borrower, any other party
liable for any of the Subordinate Indebtedness or obligated under any of the
Subordinate Documents, or the Mortgaged Property.
Subordination Agreement — Governmental Entity Page 3
Attachment No. 1
(f) "Enforcement Action Notice" means a written notice from Subordinate
Mortgagee to Senior Mortgagee, given following one or more Subordinate
Mortgage Default(s) and the expiration of any notice or cure periods provided for
such Subordinate Mortgage Default(s) in the Subordinate Documents, setting
forth in reasonable detail the Subordinate Mortgage Default(s) and the
Enforcement Actions proposed to be taken by Subordinate Mortgagee.
(g)
"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 or any Condemnation or Casualty.
(h) "Notice" is defined in Section 6(d).
(i)
"Regulatory Agreement" means the Regulatory Agreement, as defined in the
Recitals.
(j) "Senior Indebtedness" means the "Indebtedness" as defined in the Senior Loan
Agreement.
(k) "Senior Loan Documents" means the "Loan Documents" as defined in the
Senior Loan Agreement.
(1) "Senior Mortgage 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
Loan Agreement.
(m)
"Senior Mortgagee" means the "Lender" as defined in the Senior Mortgage.
When any other person or entity becomes the legal holder of the Senior Note,
such other person or entity automatically will become Senior Mortgagee.
(n) "Senior Note" means the promissory note or other evidence of the Senior
Indebtedness referred to in the Senior Loan Agreement and any replacement of
the Senior Note.
(o) "Subordinate Indebtedness" means all sums evidenced or secured or guaranteed
by, or otherwise due and payable to Subordinate Mortgagee pursuant to, the
Subordinate Documents.
(p)
"Subordinate Documents" means the Subordinate Mortgage, the Regulatory
Agreement and all other documents at any time evidencing, securing,
guaranteeing, or otherwise delivered in connection with the Subordinate
Indebtedness, as the same may be amended from time to time.
Subordination Agreement — Governmental Entity Page 4
Attachment No. 1
(q)
"Subordinate Mortgage Default" means any act, failure to act, event, condition,
or occurrence which allows (but for any contrary provision of this Agreement), or
which with the giving of Notice or the passage of time, or both, would allow (but
for any contrary provision of this Agreement), Subordinate Mortgagee to take an
Enforcement Action.
(r) "Subordinate Mortgagee" means the person or entity named as such in the first
paragraph of this Agreement and any other person or entity who becomes the
legal holder of the Subordinate Note after the date of this Agreement.
2. Subordination of Subordinate Indebtedness.
(a) The Subordinate Indebtedness is and will at all times continue to be subject and
subordinate in right of payment to the prior payment in full of the Senior
Indebtedness.
(b) The Subordinate Mortgagee acknowledges that a Subordinate Mortgage Default
constitutes a Senior Mortgage Default. Accordingly, upon the occurrence of a
Subordinate Mortgage Default, Subordinate Mortgagee will be deemed to have
actual knowledge of a Senior Mortgage Default.
(c) If (i) Subordinate Mortgagee receives any payment, property, or asset of any kind
or in any form on account of the Subordinate Indebtedness (including any
proceeds from any Enforcement Action) after a Senior Mortgage Default of which
Subordinate Mortgagee has actual knowledge (or is deemed to have actual
knowledge as provided in 2(b) above) or has been given Notice, or (ii)
Subordinate Mortgagee 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 Mortgagee. Subordinate Mortgagee will promptly remit, in
kind and properly endorsed as necessary, all such payments, properties, and assets
to Senior Mortgagee. Senior Mortgagee will apply any payment, asset, or property
so received from Subordinate Mortgagee to the Senior Indebtedness in such order,
amount (with respect to any asset or property other than immediately available
funds), and manner as Senior Mortgagee determines in its sole and absolute
discretion.
(d) Without limiting the complete subordination of the Subordinate 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 will first be paid in full in cash
before Subordinate Mortgagee will be entitled to receive any payment or other
distribution on account of or in respect of the Subordinate Indebtedness, and (ii)
until all of the Senior Indebtedness is paid in full in cash, any payment or
distribution to which Subordinate Mortgagee would be entitled but for this
Subordination Agreement — Governmental Entity Page 5
Attachment No. 1
Agreement (whether in cash, property, or other assets) will be made to Senior
Mortgagee.
(e) The subordination of the Subordinate Indebtedness will continue if 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, any or all
of the Senior Indebtedness originally intended to be satisfied will 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.
3. Subordination of Subordinate Documents.
(a) Each of the Subordinate Documents is, and will at all times remain, subject and
subordinate in all respects to the liens, terms, covenants, conditions, operations,
and effects of each of the Senior Loan Documents.
(b) The subordination of the Subordinate Documents and of the Subordinate
Indebtedness will apply and continue notwithstanding (i) the actual date and time
of execution, delivery, recording, filing or perfection of each of the Senior Loan
Documents and of each of the Subordinate Documents, and (ii) the availability of
any collateral to Senior Mortgagee, including the availability of any collateral
other than the Mortgaged Property.
(c) By reason of, and without in any way limiting, the full subordination of the
Subordinate Indebtedness and the Subordinate Documents provided for in this
Agreement, all rights and claims of Subordinate Mortgagee under the Subordinate
Documents in or to all or any portion of the Mortgaged Property are expressly
subject and subordinate in all respects to the rights and claims of Senior
Mortgagee under the Senior Loan Documents in or to the Mortgaged Property.
(d) If Subordinate Mortgagee, by indemnification, subrogation or otherwise, acquires
any lien, estate, right or other interest in any of the Mortgaged Property, then that
lien, estate, right or other interest will be fully subject and subordinate to the
receipt by Senior Mortgagee of payment in full of the Senior Indebtedness, and to
the Senior Loan Documents, to the same extent as the Subordinate Indebtedness
and the Subordinate Documents are subordinate pursuant to this Agreement.
4. Additional Representations and Covenants.
(a) Subordinate Mortgagee represents and warrants that each of the following is true:
Subordination Agreement — Governmental Entity Page 6
Attachment No. 1
(i) Subordinate Mortgagee is now the owner and holder of the Subordinate
Documents.
(ii) The Subordinate Documents are now in full force and effect.
(iii) The Subordinate Documents have not been modified or amended.
(iv) To the actual knowledge of the Subordinate Mortgagee, as of the date of
this Agreement, no Subordinate Mortgage Default has occurred.
(v) None of the rights of Subordinate Mortgagee under any of the Subordinate
Documents are subject to the rights of any third parties, by way of
subrogation, indemnification or otherwise.
(b) Without the prior written consent of Senior Mortgagee in each instance,
Subordinate Mortgagee will not do any of the following:
(i) Amend, modify, waive, extend, renew, or replace any provision of any of
the Subordinate Documents.
(ii) Pledge, assign, transfer, convey, or sell any interest in the Subordinate
Indebtedness or any of the Subordinate Documents.
(iii) Take any action which has the effect of increasing the Subordinate
Indebtedness.
(v) Appear in, defend or bring any action to protect Subordinate Mortgagee's
interest in the Mortgaged Property.
(vi) Take any action concerning environmental matters affecting the
Mortgaged Property.
(c) Subordinate Mortgagee will deliver to Senior Mortgagee a copy of each Notice
received or delivered by Subordinate Mortgagee pursuant to the Subordinate
Documents or in connection with the Subordinate Indebtedness, simultaneously
with Subordinate Mortgagee's delivery or receipt of such Notice. Senior
Mortgagee will deliver to Subordinate Mortgagee in the manner required in
Section 5(b) a copy of each Notice of a Senior Mortgage Default delivered to
Borrower by Senior Mortgagee. Neither giving nor failing to give a Notice to
Senior Mortgagee or Subordinate Mortgagee pursuant to this Section 4(c) will
affect the validity of any Notice given by Senior Mortgagee or Subordinate
Mortgagee to Borrower, as between Borrower and such of Senior Mortgagee or
Subordinate Mortgagee as provided the Notice to Borrower.
(d) Without the prior written consent of Senior Mortgagee in each instance,
Subordinate Mortgagee will not commence, or join with any other creditor in
Subordination Agreement — Governmental Entity Page 7
Attachment No. 1
commencing, any Bankruptcy Proceeding. In the event of a Bankruptcy
Proceeding, Subordinate Mortgagee will not vote affirmatively in favor of any
plan of reorganization or liquidation unless Senior Mortgagee has also voted
affirmatively in favor of such plan. In the event of any Bankruptcy Proceeding,
Subordinate Mortgagee will 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.
(e) [Intentionally Omitted.].
(f) All requirements pertaining to insurance under the Subordinate Documents
(including requirements relating to amounts and types of coverages, deductibles
and special endorsements) will be deemed satisfied if Borrower complies with the
insurance requirements under the Senior Loan Documents and of Senior
Mortgagee. All original policies of insurance required pursuant to the Senior Loan
Documents will be held by Senior Mortgagee. Nothing in this Section 4(f) will
preclude Subordinate Mortgagee from requiring that it be named as a mortgagee
and loss payee, as its interest may appear, under all policies of property damage
insurance maintained by Borrower with respect to the Mortgaged Property,
provided such action does not affect the priority of payment of Loss Proceeds, or
that Subordinate Mortgagee be named as an additional insured under all policies
of liability insurance maintained by Borrower with respect to the Mortgaged
Property.
(g)
In the event of a Condemnation or a Casualty, all of the following provisions will
apply:
(i)
The rights of Subordinate Mortgagee (under the Subordinate Documents
or otherwise) to participate in any proceeding or action relating to a
Condemnation or a Casualty, or to participate or join in any settlement of,
or to adjust, any claims resulting from a Condemnation or a Casualty, will
be and remain subordinate in all respects to Senior Mortgagee's rights
under the Senior Loan Documents with respect thereto, and Subordinate
Mortgagee will be bound by any settlement or adjustment of a claim
resulting from a Condemnation or a Casualty made by Senior Mortgagee.
(ii) All Loss Proceeds will be applied either to payment of the costs and
expenses of Restoration or to payment on account of the Senior
Indebtedness, as and in the manner determined by Senior Mortgagee in its
sole discretion.
(iii) If Senior Mortgagee applies or releases Loss Proceeds for the purposes of
Restoration of the Mortgaged Property, then Subordinate Mortgagee will
release for such purpose all of its right, title and interest, if any, in and to
such Loss Proceeds. If Senior Mortgagee holds Loss Proceeds, or monitors
Subordination Agreement — Governmental Entity Page 8
Attachment No. 1
the disbursement thereof, Subordinate Mortgagee will not do so. Nothing
contained in this Agreement will be deemed to require Senior Mortgagee
to act for or on behalf of Subordinate Mortgagee in connection with any
Restoration or to hold or monitor any Loss Proceeds in trust for or
otherwise on behalf of Subordinate Mortgagee, and all or any Loss
Proceeds may be commingled with any funds of Senior Mortgagee.
(iv) If Senior Mortgagee elects to apply Loss Proceeds to payment on account
of the Senior Indebtedness, and if the application of such Loss Proceeds
results in the payment in full of the entire Senior Indebtedness, any
remaining Loss Proceeds held by Senior Mortgagee will be paid to
Subordinate Mortgagee unless another party has asserted a claim to the
remaining Loss Proceeds.
(h) Subordinate Mortgagee will enter into attornment and non -disturbance
agreements with all tenants under commercial or retail Leases, if any, to whom
Senior Mortgagee has granted attornment and non -disturbance, on the same terms
and conditions given by Senior Mortgagee.
(i)
Regardless of any contrary provision in the Subordinate Documents, Subordinate
Mortgagee will not collect payments for the purpose of escrowing for any cost or
expense related to the Mortgaged Property or for any portion of the Subordinate
Indebtedness.
(j) Within 10 days after request by Senior Mortgagee, Subordinate Mortgagee will
furnish Senior Mortgagee with a statement, duly acknowledged and certified
setting forth the then -current amount and terms of the Subordinate Indebtedness,
confirming that there exists no default under the Subordinate Documents (or
describing any default that does exist), and certifying to such other information
with respect to the Subordinate Indebtedness as Senior Mortgagee may request.
(k) Senior Mortgagee may amend, waive, postpone, extend, renew, replace, reduce or
otherwise modify any provisions of the Senior Loan Documents without the
necessity of obtaining the consent of or providing Notice to Subordinate
Mortgagee, and without affecting any of the provisions of this Agreement.
Notwithstanding the foregoing, Senior Mortgagee may not modify any provision
of the Senior Loan Documents that increases the Senior Indebtedness, except for
increases in the Senior Indebtedness that result from advances made by Senior
Mortgagee to protect the security or lien priority of Senior Mortgagee under the
Senior Loan Documents or to cure defaults under the Subordinate Documents.
5. Default Under Loan Documents.
(a) For a period of 90 days following delivery to Senior Mortgagee of an
Enforcement Action Notice, Senior Mortgagee will have the right, but not the
obligation, to cure any Subordinate Mortgage Default, provided that if such
Subordination Agreement — Governmental Entity Page 9
Attachment No. 1
Subordinate Mortgage Default is a non -monetary default and is not capable of
being cured within such 90-day period and Senior Mortgagee has commenced and
is diligently pursuing such cure to completion, Senior Mortgagee will have such
additional period of time as may be required to cure such Subordinate Mortgage
Default or until such time, if ever, as Senior Mortgagee (i) discontinues its pursuit
of any cure and/or (ii) delivers to Subordinate Mortgagee Senior Mortgagee's
written consent to the Enforcement Action described in the Enforcement Action
Notice. Senior Mortgagee will not be subrogated to the rights of Subordinate
Mortgagee under the Subordinate Documents by reason of Senior Mortgagee
having cured any Subordinate Mortgage Default. However, Subordinate
Mortgagee acknowledges that all amounts advanced or expended by Senior
Mortgagee in accordance with the Senior Loan Documents or to cure a Subordinate
Mortgage Default will be added to and become a part of the Senior Indebtedness
and will be secured by the lien of the Senior Mortgage.
(b) Senior Mortgagee will deliver to Subordinate Mortgagee a copy of any Notice sent
by Senior Mortgagee to Borrower of a Senior Mortgage Default within 5 Business
Days of sending such Notice to Borrower. Failure of Senior Mortgagee to send
Notice to Subordinate Mortgagee will not prevent the exercise of Senior
Mortgagee's rights and remedies under the Senior Loan Documents. Subordinate
Mortgagee will have the right, but not the obligation, to cure any monetary Senior
Mortgage Default within 30 days following the date of such Notice; provided,
however, that Senior Mortgagee will be entitled during such 30-day period to
continue to pursue its remedies under the Senior Loan Documents.
Subordinate Mortgagee may, within 90 after the date of the Notice, cure a non -
monetary Senior Mortgage Default if during such 90-day period, Subordinate
Mortgagee keeps current all payments required by the Senior Loan Documents. If
such a non -monetary Senior Mortgage Default creates an unacceptable level of risk
relative to the Mortgaged Property, or Senior Mortgagee's secured position relative
to the Mortgaged Property, as determined by Senior Mortgagee in its sole discretion,
then during such 90-day period Senior Mortgagee may exercise all available rights
and remedies to protect and preserve the Mortgaged Property and the Rents,
revenues and other proceeds from the Mortgaged Property. Subordinate Mortgagee
will not be subrogated to the rights of Senior Mortgagee under the Senior Loan
Documents by reason of Subordinate Mortgagee having cured any Senior Mortgage
Default. However, Senior Mortgagee acknowledges that all amounts paid by
Subordinate Mortgagee to Senior Mortgagee to cure a Senior Mortgage Default will
be deemed to have been advanced by Subordinate Mortgagee pursuant to, and will
be secured by the lien of, the Subordinate Mortgage. Notwithstanding anything in
this Section 5(b) to the contrary, Subordinate Mortgagee's right to cure any Senior
Mortgage Default will terminate immediately upon the occurrence of any
Bankruptcy Proceeding.
Subordination Agreement — Governmental Entity Page 10
Attachment No. 1
(c) In the event of a Subordinate Mortgage Default, Subordinate Mortgagee will not
commence any Enforcement Action until 90 days after Subordinate Mortgagee
has delivered to Senior Mortgagee an Enforcement Action Notice with respect to
such Enforcement Action, provided that during such 90-day period or such longer
period as provided in Section 5(a), Subordinate Mortgagee will be entitled to seek
specific performance to enforce covenants and agreements of Borrower relating to
income, rent, or affordability restrictions contained in the Regulatory Agreement,
subject to Senior Mortgagee's right to cure a Subordinate Mortgage Default set
forth in Section 5(a). Subordinate Mortgagee may not commence any other
Enforcement Action, including any foreclosure action under the Subordinate
Documents, until the earlier of (i) the expiration of such 90-day period or such
longer period as provided in Section 5(a), or (ii) the delivery by Senior Mortgagee
to Subordinate Mortgagee of Senior Mortgagee's written consent to such
Enforcement Action by Subordinate Mortgagee. Subordinate Mortgagee
acknowledges that Senior Mortgagee may grant or refuse consent to Subordinate
Mortgagee's Enforcement Action in Senior Mortgagee's sole and absolute
discretion. At the expiration of such 90-day period or such longer period as
provided in Section 5(a) and, subject to Senior Mortgagee's right to cure set forth
in Section 5(a), Subordinate Mortgagee may commence any Enforcement Action.
Any Enforcement Action on the part of Subordinate Mortgagee will be subject to
the provisions of this Agreement. Subordinate Mortgagee acknowledges that the
provisions of this Section 5(c) are fair and reasonable under the circumstances,
that Subordinate Mortgagee has received a substantial benefit from Senior
Mortgagee having granted its consent to the Subordinate Mortgage, and that
Senior Mortgagee would not have granted such consent without the inclusion of
these provisions in this Agreement.
(d) Senior Mortgagee 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 Subordinate Mortgagee. No action or
failure to act on the part of Senior Mortgagee in the event of a Subordinate
Mortgage Default or commencement of an Enforcement Action will constitute a
waiver on the part of Senior Mortgagee of any provision of the Senior Loan
Documents or this Agreement.
(e) If the Enforcement Action taken by Subordinate Mortgagee is the appointment of
a receiver for any of the Mortgaged Property, all of the Rents, issues, profits and
proceeds collected by the receiver will be paid and applied by the receiver solely
to and for the benefit of Senior Mortgagee until the Senior Indebtedness will have
been paid in full.
(0 Subordinate Mortgagee consents to and authorizes the release by Senior
Mortgagee of all or any portion of the Mortgaged Property from the lien,
operation, and effect of the Senior Loan Documents. Subordinate Mortgagee
waives to the fullest extent permitted by law, all equitable or other rights it may
have (i) in connection with the release of all or any portion of the Mortgaged
Subordination Agreement — Governmental Entity Page 11
Attachment No. 1
(g)
Property, (ii) to require the separate sale of any portion of the Mortgaged
Property, (iii) to require Senior Mortgagee to exhaust its remedies against all or
any portion of the Mortgaged Property or any combination of portions of the
Mortgaged Property or any other collateral for the Senior Indebtedness, or (iv) to
require Senior Mortgagee to proceed against Borrower, any other party that may
be liable for any of the Senior Indebtedness (including any general partner of
Borrower if Borrower is a partnership), all or any portion of the Mortgaged
Property or combination of portions of the Mortgaged Property or any other
collateral, before proceeding against all or such portions or combination of
portions of the Mortgaged Property as Senior Mortgagee determines. Subordinate
Mortgagee waives to the fullest extent permitted by law any and all benefits under
California Civil Code Sections 2845, 2849 and 2850. Subordinate Mortgagee
consents to and authorizes, at the option of Senior Mortgagee, the sale, either
separately or together, of all or any portion of the Mortgaged Property.
Subordinate Mortgagee acknowledges that without Notice to Subordinate
Mortgagee and without affecting any of the provisions of this Agreement, Senior
Mortgagee may (i) extend the time for or waive any payment or performance
under the Senior Loan Documents; (ii) modify or amend in any respect any
provision of the Senior Loan Documents; and (iii) modify, exchange, surrender,
release, and otherwise deal with any additional collateral for the Senior
Indebtedness.
If any party other than Borrower (including Senior Mortgagee) acquires title to
any of the Mortgaged Property pursuant to a foreclosure of, or trustee's sale or
other exercise of any power of sale under, the Senior Mortgage conducted in
accordance with applicable law, the lien, operation, and effect of the Subordinate
Mortgage and other Subordinate Documents automatically will terminate with
respect to such Mortgaged Property.
6. Miscellaneous Provisions.
(a) If there is any conflict or inconsistency between the terms of the Subordinate
Documents and the terms of this Agreement, then the terms of this Agreement
will control.
(b) This Agreement will be binding upon and will inure to the benefit of the
respective legal successors and permitted assigns of the parties to this Agreement.
No other party will be entitled to any benefits under this Agreement, whether as a
third -party beneficiary or otherwise.
(c) This Agreement does not constitute an approval by Senior Mortgagee of the terms
of the Subordinate Documents.
(d) Each notice, request, demand, consent, approval or other communication
(collectively, "Notices," and singly, a "Notice") which is required or permitted to
be given pursuant to this Agreement will be in writing and will be deemed to have
Subordination Agreement — Governmental Entity Page 12
Attachment No. 1
(g)
Property, (ii) to require the separate sale of any portion of the Mortgaged
Property, (iii) to require Senior Mortgagee to exhaust its remedies against all or
any portion of the Mortgaged Property or any combination of portions of the
Mortgaged Property or any other collateral for the Senior Indebtedness, or (iv) to
require Senior Mortgagee to proceed against Borrower, any other party that may
be liable for any of the Senior Indebtedness (including any general partner of
Borrower if Borrower is a partnership), all or any portion of the Mortgaged
Property or combination of portions of the Mortgaged Property or any other
collateral, before proceeding against all or such portions or combination of
portions of the Mortgaged Property as Senior Mortgagee determines. Subordinate
Mortgagee waives to the fullest extent permitted by law any and all benefits under
California Civil Code Sections 2845, 2849 and 2850. Subordinate Mortgagee
consents to and authorizes, at the option of Senior Mortgagee, the sale, either
separately or together, of all or any portion of the Mortgaged Property.
Subordinate Mortgagee acknowledges that without Notice to Subordinate
Mortgagee and without affecting any of the provisions of this Agreement, Senior
Mortgagee may (i) extend the time for or waive any payment or performance
under the Senior Loan Documents; (ii) modify or amend in any respect any
provision of the Senior Loan Documents; and (iii) modify, exchange, surrender,
release, and otherwise deal with any additional collateral for the Senior
Indebtedness.
If any party other than Borrower (including Senior Mortgagee) acquires title to
any of the Mortgaged Property pursuant to a foreclosure of, or trustee's sale or
other exercise of any power of sale under, the Senior Mortgage conducted in
accordance with applicable law, the lien, operation, and effect of the Subordinate
Mortgage and other Subordinate Documents automatically will terminate with
respect to such Mortgaged Property.
6. Miscellaneous Provisions.
(a) If there is any conflict or inconsistency between the terms of the Subordinate
Documents and the terms of this Agreement, then the terms of this Agreement
will control.
(b) This Agreement will be binding upon and will inure to the benefit of the
respective legal successors and permitted assigns of the parties to this Agreement.
No other party will be entitled to any benefits under this Agreement, whether as a
third -party beneficiary or otherwise.
(c) This Agreement does not constitute an approval by Senior Mortgagee of the terms
of the Subordinate Documents.
(d) Each notice, request, demand, consent, approval or other communication
(collectively, "Notices," and singly, a "Notice") which is required or permitted to
be given pursuant to this Agreement will be in writing and will be deemed to have
Subordination Agreement — Governmental Entity Page 12
Attachment No. 1
been duly and sufficiently given if (i) personally delivered with proof of delivery
(any Notice so delivered will be deemed to have been received at the time so
delivered), or (ii) sent by a national overnight courier service (such as FedEx)
designating earliest available delivery (any Notice so delivered will be deemed to
have been received on the next Business Day following receipt by the courier), or
(iii) sent by United States registered or certified mail, return receipt requested,
postage prepaid, at a post office regularly maintained by the United States Postal
Service (any Notice so sent will be deemed to have been received on the date of
delivery as confirmed by the return receipt), addressed to the respective parties as
follows:
(i) Notices intended for Senior Mortgagee will be addressed to:
Oak Grove Commercial Mortgage, LLC
2177 Youngman Avenue, Suite 300
St. Paul, MN 55116
Attention: Loan Servicing
(ii) Notices intended for Subordinate Mortgagee will be addressed to:
Community Development Commission
Housing Authority of the City of National City
140 East 12th Street, Suite B
National City, CA 91950
Attention: Executive Director
Any party, by Notice given pursuant to this Section, may change the person or
persons and/or address or addresses, or designate an additional person or persons
or an additional address or addresses, for its Notices, but Notice of a change of
address will only be effective upon receipt. Neither party will refuse or reject
delivery of any Notice given in accordance with this Section.
(e) Nothing in this Agreement or in any of the Senior Loan Documents or
Subordinate Documents will be deemed to constitute Senior Mortgagee as a joint
venturer or partner of Subordinate Mortgagee.
(0
(g)
Upon Notice from Senior Mortgagee, Subordinate Mortgagee will execute and
deliver such additional instruments and documents, and will take such actions, as
are required by Senior Mortgagee in order to further evidence or implement the
provisions and intent of this Agreement.
This Agreement will be governed by the laws of the State in which the Land is
located.
(h) If any one or more of the provisions contained in this Agreement, or any
application of any such provisions, is invalid, illegal, or unenforceable in any
Subordination Agreement — Governmental Entity Page 13
Attachment No. 1
(i)
respect, the validity, legality, enforceability, and application of the remaining
provisions contained in this Agreement will not in any way be affected or
impaired.
The term of this Agreement will commence on the date of this Agreement and
will continue until the earliest to occur of the following events: (i) the payment of
all of the Senior Indebtedness; provided that this Agreement will be reinstated in
the event any payment on account of the Senior Indebtedness is avoided, set
aside, rescinded or repaid by Senior Mortgagee as described in Section 2(e) of this
Agreement, (ii) the payment of all of the Subordinate Indebtedness other than by
reason of payments which Subordinate Mortgagee is obligated to remit to Senior
Mortgagee pursuant to this Agreement, (iii) the acquisition by Senior Mortgagee
or by a third party purchaser of title to the Mortgaged Property pursuant to a
foreclosure of, deed in lieu of foreclosure, or trustee's sale or other exercise of a
power of sale or similar disposition under the Senior Mortgage; or (iv) with the
prior written consent of Senior Mortgagee, without limiting the provisions of
Section 5(d), the acquisition by Subordinate Mortgagee of title to the Mortgaged
Property subject to the Senior Mortgage pursuant to a foreclosure, or a deed in
lieu of foreclosure, of (or the exercise of a power of sale under) the Subordinate
Mortgage.
(j) No failure or delay on the part of any party to this Agreement in exercising any
right, power, or remedy under this Agreement will operate as a waiver of such
right, power, or remedy, nor will any single or partial exercise of any such right,
power or remedy preclude any other or further exercise of such right, power, or
remedy or the exercise of any other right, power or remedy under this Agreement.
(k) Each party to this Agreement acknowledges that if any party fails to comply with
its obligations under this Agreement, the other parties will 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.
(1) Nothing in this Agreement is intended, nor will it be construed, to in any way
limit the exercise by Subordinate Mortgagee of its governmental powers
(including police, regulatory and taxing powers) with respect to Borrower or the
Mortgaged Property to the same extent as if it were not a party to this Agreement
or the transactions contemplated by this Agreement.
(m) This Agreement may be assigned at any time by Senior Mortgagee to any
subsequent holder of the Senior Note.
(n) This Agreement may be amended, changed, modified, altered or terminated only
by a written instrument or written instruments signed by the parties to this
Agreement.
Subordination Agreement — Governmental Entity Page 14
Attachment No. 1
(o) This Agreement may be executed in two or more counterparts, each of which will
be deemed an original but all of which together will constitute one and the same
instrument.
[Signature and acknowledgment pages follow]
Subordination Agreement — Governmental Entity Page 15
Attachment No. 1
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year
first above written.
SENIOR MORTGAGEE:
OAK GROVE COMMERCIAL
MORTGAGE, LLC, a Delaware limited
liability company
By:
Debra Jones Thomson
Assistant Vice President
STATE OF MINNESOTA )
) ss:
COUNTY OF RAMSEY )
On this day of , 2015 before me, the undersigned officer, personally
appeared , to me known, who being by me duly sworn, did depose and say
that she is the Assistant Vice President of OAK GROVE COMMERCIAL MORTGAGE, LLC,
the company described in and which executed the foregoing instrument; and that by virtue of
authority conferred upon her, she signed and delivered the foregoing instrument as the voluntary
act and deed of said company.
Notary Public
Subordination Agreement — Governmental Entity Page 16
Attachment No. 1
SUBORDINATE MORTGAGEE:
COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF NATIONAL CITY, ACTING IN ITS
CAPACITY AS THE HOUSING AUTHORITY OF
THE CITY OF NATIONAL CITY
By:
Leslie Deese, Executive Director
Approved as to Form:
By:
Claudia Gacitua Silva
City Attorney
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 )
ss:
On this day of , 2015 before me, , Notary Public,
personally appeared , who proven to me on the basis of satisfactory evidence
to be the person whose name is subscribed in the within instrument and acknowledged to me that
he/she executed the same in his/her capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which person 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 of Notary Public
(affix seal here)
Subordination Agreement — Governmental Entity Page 17
Attachment No. 1
CONSENT OF BORROWER
Borrower acknowledges receipt of a copy of this Subordination Agreement, dated
, 2015, by and between OAK GROVE COMMERCIAL MORTGAGE, LLC,
and COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL
CITY, acting in its capacity as the Housing Authority of the City of National City and consents
to the agreement of the parties set forth in this Agreement.
BORROWER:
SUMERCREST APARTMENTS, L.P.
a Delaware limited partnership
By: AOF Summercrest LLC
a Delaware limited liability company
its: Managing General Partner
By: AOF/Pacific Affordable Housing Corp.,
a California nonprofit public benefit corporation
its: Sole Member
By:
Name:
Title:
By: Summercrest Apartments LLC
a Delaware limited liability company
its: Co -General Partner
By: BLF Holdings, LLC
a Washington limited liability company
its: Sole Member
By: The Brian L. Fetterer Revocable Trust
A California Trust
Its: Sole Member
By:
Brian L. Fetterer
Trustee
Subordination Agreement — Governmental Entity Page 18
Attachment 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 )
) ss:
)
COUNTY OF
On this day of , 2015 before me, , Notary Public,
personally appeared , who proven to me on the basis of satisfactory evidence
to be the person whose name is subscribed in the within instrument and acknowledged to me that
he/she executed the same in his/her capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which person 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 of Notary Public
(affix seal here)
Subordination Agreement — Governmental Entity Page 19
Attachment No. 1
COUNTY OF
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss:
)
On this day of , 2015 before me, , Notary
Public, personally appeared BRIAN L. FETTERER, who proven to me on the basis of satisfactory
evidence to be the person whose name is subscribed in the within instrument and acknowledged
to me that he/she executed the same in his/her capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which person 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 of Notary Public
(affix seal here)
Subordination Agreement — Governmental Entity Page 20
Attachment No. 1
EXHIBIT A
LEGAL DESCRIPTION
Subordination Agreement — Governmental Entity Page 21
RESOLUTION NO. 2015 —
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING
AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING
THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT
WITH SUMMERCREST APARTMENTS, L.P., SUBORDINATING THE PROJECT DEED
OF TRUST THAT SECURES THE DECLARATION OF COVENANTS, CONDITIONS,
AND RESTRICTIONS (TENANT RESTRICTIONS) ON
372 RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY
WHEREAS, Summercrest Apartments, L.P., a limited partnership organized
under the laws of the State of Delaware ("Borrower") is the owner of a 372 unit multifamily rental
housing project ("Project") known as Summercrest Apartments located at 2721 Plaza Boulevard
in National City; and
WHEREAS, in 2001, the Community Development Commission -Housing
Authority ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships
Program and the Low and Moderate Income Fund to assist in the substantial rehabilitation of
the Project, and the loan was paid in full to the CDC -HA when the property was sold to the
Borrower in 2013; and
WHEREAS, in consideration of receiving financial assistance, the CDC -HA
restricted the affordability of 370 units through April 15, 2032 by recording a Declaration of
Covenants, Conditions and Restrictions ("Declaration"), and securing the Declaration with a
Project Deed of Trust ("Deed of Trust"); and
WHEREAS, the Borrower desires to refinance the Project with a new mortgage
for the original principal amount of $38,000,000 from Oak Grove Commercial Mortgage, LLC
("Lender"); and
WHEREAS, in order to provide the loan, the Lender requires the subordination of
the Project Deed of Trust that secures the Declaration.
NOW, THEREFORE, BE IT RESOLVED that the Community Development
Commission -Housing Authority of the City of National City hereby authorizes the Executive
Director to execute a Subordination Agreement and any other Escrow related documents as
necessary. After being recorded by the County of San Diego, said Subordination Agreement will
be on file in the office of the City Clerk.
PASSED and ADOPTED this 21st day of April, 2015.
Ron Morrison, Chairman
ATTEST: APPROVED AS TO FORM:
Leslie Deese, Secretary Claudia Gacitua Silva
CDC General Counsel
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
SUMMERCREST APARTMENTS
Subordination Agreement
2721 Plaza Blvd.
Carlos Aguirre (Housing & Grants) Forwarded
Copy of Agreement to Summercrest Apartments.