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HomeMy WebLinkAbout2022 CON D Avenue Housing Associates - Security Agreement - Kimball HighlandsSECURITY AGREEMENT (Kimball Highlands) THIS SECURITY AGREEMENT ("Agreement") is dated as of the day of Juittg 2022, by and between D Avenue Housing Associates, L.P. ��,�, � California a limited partnership Borrower) and the Community Development Commission -Housing Authority uthorrty of the City of National City ("Lender"). RECITALS A. Lender has agreed to make two loans to lndeinnitor as described in: that certain Promissory Note (Kimball Highlands - CDC -HA Loan) "Commission Loan Note")f even date herewith in the original principal amount of $10,482,000.00 made by lrrde.tnnrtor in favor of the Lender; and (11) that certain Promissory Note(Kirnbali Hi hlands - i("CapitalizedCapitalized Ground Rent � Ground Rent Note")of even date herewith in the original -' . grnal principal amount of $3,000,000.Oo made by fndemnitor* in favor of the Lender. All capitalized terms used but not defined herein have the definitions set forth in that certain Disposition srtron and Development Agreement (Kimball Highlands Master Plan) dated as of October 20, 2020, among the Lender, Centro De Salud De La Comunidad De San Ysidro, Inc., dba San Ysidr•' Health, and Community Housing or .s, a California nonprofit public benefit corporation. Commission The � Loan Note and the Capitalized Ground Rent Note may be referred to collectively herein ei ein asthe "Note." The Note is secured by, among other things, a Deed of Trust executed by Borrower i fa vor favor of Lender. The I, Note, Deed of Trust and this Agreement maybe referred to c ccollectrvely herein as the Loan ocuments.�� B. Borrower and the Lender desire that the Loan and the Note should be ,. . fr2itl�ei secured by certain personal property owned by Borrower and the Property. AGREEMENT agree, NOW, THEREFORE, for valid consideration, Borrower and the Lender a - � � g, pledge and covenant as follows. 1. Grant of Security Interest. Borrower hereby grants to the Lendera security interest, in the following described personal property ("Collateral". SEE EXHIBIT "1" ATTACHED HERETO FOR DESCRIPTION OF COLLATERAL 2. Aitachirint__ofSecurity Interest. The security interest hereby created shall attach immediately upon execution of this Agreement by Borrower and shall secure the payment of the Loan according to the terms of the Promissory Note. 3. Proceeds Included. Borrower also herebygrants to the Lender' a securityinterest in and to any and all additions and modifications to, replacements and substitutions and • a iifor, products, proceeds, and interest from the Collateral on any sale, transfer, exchange or other disposition . thereof, However, • � g c�itiair nothing in this Section 3 shall be deemed to constitute a grant of authorityto 1 Bonower to sell, transfer, exchange or otherwise dispose ofthe Collateral without the prior written consent of the Lender. M Warranties of Borrower. Borrower represents and warrants to Lender that: (a) Borrower is or will be the full legal owner of the Collateral and except for any senior lenders (including, without limitation, Senior* Lender [as defined in the Note]), no other person or entity has or will have any right, title, interest or claim in or to the Collateral or any art thereof, except for the security interest created herein, or created pursuant to those certain deeds of trust and security agreements securing loans to Borrower that are senior to the Loan and that were duly approved by the Lender, andior security interests in the Collateral granted by Borrower with the knowledge e and approval of Lender, in its reasonable discretion. (b) Some or all of the Collateral is or will be located at the Property, and once so located, it will not, during the continuance of this Agreement, be removed from the Property without the prior written consent of end.er, except obsolete items. if the Collateral is moved or upon any default, which continues beyond any applicable notice and cure periods, of this Agreement by Borrower, at enders written request, at its own cost and expense, shall assemble the Collateral wherever in. San Diego County the Lender requests the Collateral to be assembled. .# Dut to Maintain. Borrower shall maintain the Collateral, and each parr or item thereof, in good order and repair, ordinary wear and tear excepted, at Borrower's own cost and expense, and shall not use the Collateral or allow the Collateral to be used in a manner which is likely to result in deteriora.tion ofthe Collateral to a degree beyond that associated with normal usage and ordinary "wear and tear." Insurance. Borrower shall keep the Collateral, and all parts and items thereof, insured, at Borrower's own cost and expense, in an amount equal to the full replacement cost value of the Collateral. Such insurance policy shall cover all insurable risks to which the Collateral might fore eeabl r be exposed, and shall be issued by an insurance carrier acceptable to Lender, and shall provide that the loss payable thereunder shall be paid to Borrower, Lender and to any senior secured party, as their respective interests may appear. Notwithstanding the foregoing, this Section 6 shall not be deemed to require .a separate insurance policy covering the Collateral,if equivalent coverage first satisfactory to Lender is provided as part of the insurance maintained tained by Borrower with respect to Property (as defined in the Deed of Trust), 7. Taxes. Borrower shall be solely liable for any taxes or assessments which are levied or assessed against the Collateral and shall ensure the prompt payment of same. 8. i ositio n of Ccillateral. Except for personal propertyi . the ordinary course of business or as otherwise allowed by the Loan Documents, the Borrower shall not (without the prior written consent of Lender), sell, transfer, 'er•, encumber, hypothecate, exchange or otherwise dispose of the Collateral until the Loan secured hereby is fully and finally paid, except Borrower may replace items of collateral in the ordinary course of business with items of equal or greater value. 4 Right to Ilispeet Lender, through its agents or employees, shall have the right to enter the Property (as defined in the Deed oTrust) at normal business hours upon reasonable advance notice and intervals to inspect and take inventory of the Collateral, provided the sane does not unnecessarily infringe upon the operation of the Property (as defined in. the Deed of Trust), l o, Right to Make .Payments. Lender shall be entitled, but not obligated, to pay, on behalf of Borrower, after giving written noticeto r r ow r and ten (10) days from receipt the notice in which to make payment, any costs or expenses reasonably necessary to keep the Collateral fully insured, properly repaired r maintained, and lien free, which costs or expenses Borrower should have paid pursuant to this Agreement but failed to . The Lender shall have the right to enter; the Property (as defined in the Deed of Trustat normal business hours upon reasonable advance notice and intervals, to perform such acts as it may deem necessary for the maintenance or protection of the Collateral. Any monies expended or expenses incurred under this Section 10 shall be secured by the security interest created by this Agreement, and shall be due and a abie to Lender by 'Borrower, .together with interest thereon at the lesser of ten percent (10%)per annum or the maximum rate permitted by law, on demand. 11. Assignment b Lender. With prior notice to the Borrower, the Lender may assign its rights is hereunder and its security interest created herein. I . the event of such an assignment, Lender's assignee shall be entitled, upon written notice to Bonower of such assignment, to all performance required of Borrower under this Agreement, and to all payments and monies secured by this Agreement, 12Default. If Borrower fails to perform any obligation provided for in this Agreement or to pay any obligation secured by this Agreement as such obligation comes due, after any notice or cure periods provided .herein or in any unexpired Loan Documents, then Borrower shall be in default of this Agreement, and Lender shall be entitled to all of the rights and remedies afforded secured parties under applicable provisions of Division 9 of the California Commercial Code on the date of this Agreement, excluding the right to any deficiency judgment against Borrower. Further, Lender may also: (a).Enter the Property (as defined in the Deed of Trust) to take possession of the Collateral, provided that the Collateral shall not be removed from the Property (as defined in the Deed of Trust unless such removal is .reasonably necessary to protect the Collateral from destruction or unauthorized removal by Borrower or some third party; or (b) Enter the Property (as defined in the Deed of Trust) and dispose of the Collateral, in the manner provided by the California Commercial ercial Code; and (c) Apply the proceeds any such disposition of the Collateral, in addition to the items specified in Division 9 of the California Commercial Code, to the pame .t ofreasonable attorneys' py y fees and legal expenses incurred by Lender as a result of orrower's default. Before exercising any of the foregoing rights, Lender shall first give written notice of such default to Borrower and its limited partner and Borrower shall have thirty days from receipt of the notice to cure any such default before Lender exercises its rights. Notwithstanding anything 3 to the contrary contained herein, the Lender hereby agrees that any cureany default made or tender by the orro er's limited partner shall be deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made or tendered by the Borrower. 13. Finanein Statement. t. Borrower authorizes the Lender to file any `inancin Statement(s) necessary to perfect the security interest created by this Agreement. Such Financing Statement(s) shall be on fore or forms approved by the CaliforniaSecretary of State, and Lender shall pay the fees associated with filing such documents, 14. No Waiyer. Neither the acceptance of any partial or delinquent payment by Lender nor Lender's failure to exercise any of its rights or remedies upon the occurrence default by Borrower shall constitute a waiver of such default, a modification. of this Agreement or of Borrower's obligations under this Agreement, or a waiver of any subsequent default by Borrower. 15. Term. This Agreement shall continue in effect until each and every obligation of Borrower k under the Loan Documents has been satisfied (except any obligations that survive repayment ent of the Loan, 1 pan., foreclosure o the Property or termination of the Loan Documents), or until the Deed of Trust has terminated by virtue of a foreclosure of a senior lienholder. 16 Time ofEssence. Time is hereby expressly declared to be of the essence ofthis Agreement. 17. Notices. Alt notices under this Agreement shall be in writing and sent by certified or registered Q.T.S. mall, return receipt requested, (b) overnight by a nationally recognizedovernight g courier such as UPS Overnight or FedBx, ore by personal delivery. All notices shall be effective upon receipt (or refusal to accept delivery). All notices shall be delivered to the following addresses i(which addresses may be changed by written notice): Lender: Boaower: With a copy to: Community Development Comm1ssion- . ousing Authority of the City ofNational City 1243 National City Blvd. National City, CA 91950 Attn: Executive Director D Avenue Housing Associates, L.P. c/o Community HousingWorks 3111 Camino Del Rio North, Suite 800 San Diego, CA 92108 Attention: Senior Vice President. Downs Phase & Kuei 1,12 235 Montgomery Street, 30th Floor San Francisco., CA 94010 Attention: Irene C. Kuei With a copy to: Bank of America, N.A. MA1-22 - 2- 2 4 With a copy to: With a copy to: 225 Franklin Street Boston, MA 02110 Attention: Asset Management .ent Bane of America CDC Special Holding Company, Inc. MA l -22 5 - O2 02 225 Franklin Street Boston, MA 02110 Attention: Asset Management Buchalter, a Professional Corporation too Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017 Attn: Michael A. Esq. Matter No: B0965-0654 18. Certain Requirements Sun r*ior. All provisions of this Agreement shall be subject and subordinate to: (a) The rights of Senior Lender under the documents evidencing the Construction Loan (as defined in the Note). (b) Any and all federal, state and local statutes and regulations applicable to the Property (as defined in the Deed of Trust), the Collateral or the Loan; and (c) The provisions of the Note secured by this Agreement, to the extent of any inconsis- tency et veen it and this Agreement. 19, Attorneys' Fees, If Borrower or the Lender initiates legal proceedings for the enforcement or interpretation of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs of suit, in addition to any other relief to which the prevailing party may be entitled. 20. Severability. If any {ovision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision shall be severed from the rest of this Agreement and the remaining provisions shall remain in full force and effect. 21. Construction of Agrpement, The provisions contained in this Agreement shall not be construed in favor of or against either Borrower or the Lender, but shall be construed as if both parties prepared this Agreement. This Agreement shall be construed in accordance with the laws of the State of California, 22. Counterparts. This Agreement may be executed in any number of cunter ar't and, as so executed, the counterparts shall constitute one and the same Agreement. Borrower and the Lender agree that each such counterpart is an original and shall be binding upon all of the parties, even though all of the parties are not signatories to the sane counterpart. S 23 . Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are hereby incorporated in this Agreement by this reference, regardless of whether or not the exhibits are actually attached to this Agreement. The Recitals to this Agreement are hereby incorporated in this Agreement by this reference. 24. Si nature uthovt All individuals signing this Agreement for a party which is corporation, limited liability company, partnership or other legal entity, or signing under a power er• of attorney, or as a trustee, guardian, conservator, or in any other legal capacity,covenant to one another that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing. BORROWER: D AVENUE UE HOUSING + ,SS O CIA'TES, L.P., a California limited partnership By: CHW D Avenue, LLC, a California limited liability company Its: Managing General Partner By: Community HousingWorks, a California nonprofit public benefit corporation Its: sole member and mrana #r. l� By: `+ Mary Senior [SIGNATURES CONTINUED ON OLL WIN PAGE] 6 LENDER: COMMUNITY DEVELOPMENT COMMISSION - HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY, a public bodycorporate and politic By: ea Tony es\ n y, Assistant City Manager APPROVED AS TO FORNI: By: Jennifer K. Gilman, Assistant City Attorney APPROVED AS TO FORM: Christensen & Spath LLP Lender Special Counsel By: Waiter rSp th III LENDER: COMMUNITY DEVELOPMENT MMI I - H U I AUTHORITY OF THE `IT ' OF ATI NAL CITY, a public body, corporate and politic y: Tony nney, Assistant City Nlan. er APPROVED AS TO FORM: APPR AS TO F Christensen c c path LLP Lender Special Counsel By: t City Attorney Walter F. Spath 111 EXHIBIT "I" TO SECURITY AGREEMENT BORROWER: D Avenue Housing Associates, L.P. LENDER: Community Development Commission -Housing Attthority of hhe City of Ndo l City The following described property and any and all proceeds thereof, whether Borrower now or hereafter has any right, title or interest in, on, about or concerning the real property (the "Property") described in the Security greement. (a) Iangih1elongitkLProperty. Ali existing and future goods and tangible personal property located on the Property or whenever located and used or useable in connection with the use, operation or occupancy of the Property or in construction of any improvements now or hereafter located on the Property ("Improvements"), including, but not limited to, all appliances, furniture and furnishings, fittings, materials, supplies, equipment and fixtures, and all building material, supplies, and equipment now or hereafter delivered to the Property andinstalled or used or intended to be installed or used therein whether stored on the Properly or elsewhere; and all renewals or replacements thereof ot articles in substitution thereof, but exclutding equipment owner by third parties and located on the property, such as cable television equipment, laundry equipment and solar power equipment. t. (b) General Intangibles. All general intangibles relating to design, development, operation, management and use. of the Property and construction of the improvements, including, but not limited to, i all names under which or by which the Property of the iinprovements may at any time be operated or known, ail rights to carry on business under any soh names or any variant thereof, and all goodwill in any way relating to the .Property,(ID all permits, licenses, authorizations, variances, land use entitlement, approvals and consents issued or obtained in connection .with the construction of the Improvements, iii all permits, licenses, approvals, consents, authorizations, franchises es and agreements issued or obtained. its connection with the .rise, occupancy or operation of the Property, (iv) all rights as a declarant (or its equivalent) under any covenants, conditions and restrictions or other matters now or hereafter of record affecting the Property, (v) all .materials prepared for filing or filed with arty governmental agency, i .all rights under any contract in connection with the development, design, use, operaion, management and constrnctio of the Property, and vil all books and records prepared and kept in connection with the acquisition, construction, operation and occupancy ofthe Propertyand the Improvements. enents. (e) Qontrac Alt construction, service, engineering, consulting, leasing, architectural, design and other similar contracts ofany nature (including, without limitation, those of any general contractors, subcontractors and xaterial.ren, as. such may be modified, amended or supplemented from time to time, concerning the design, construction, management, ent o eration occupancy,use, and orh disposition of any portion of or all of the Property. (d) flans andReports.. All architectural, design and en incel ing drawings, plans, specifications, working drawings, shop drawings, general conditions, addenda, soil tests and reports feasibility studies, appraisals, engineering reports, building rrmit grading rmi and other permits to construct the project on the Property (as defined in the Deed of Trust), as defined in the A, environmental reports and similar materials relating toanyportion ofor all A the Property and all modifications, supplements and amendments thereto. (e) Sureties. All payment and performance bonds or guarantees and any and ll. modifications and extensions thereof relating to the Property, (f) Pawients, Alt reserves., deferredpayments, deposits, refunds, cost savings,letters o.f credit and payments of any kind relating to the construction, design, development, operation, occupancy, use and disposition of all or any portion of the ro erty, including, without limitation, any property tax rebates now owing or hereafter payable to Borrower, or reimbursement r other payments now or hereafter payable to Borrower on account of rc ments or overpayments of fees or payment of costs of infrastructure improvements that benefit real property other than the Property. (g) Financing Commitments. All proceeds of the loan made by the Lender to the Borro ver and any coi mitment by any lender to extend permanent or additional construction financing to the Borrower relating to the Property and all tax credits for the Property (as defined in the Deed of Trust). (h) Claims, All proceeds and claims arising on account of any damage to or taking of the Property or any part thereof, and all causes of action . and recoveries for any loss of diminution in the value of the Property. (i) Jnsuranee, All policies of, and twoceeds resulting romm, insurance relating to the Property { p t or any of the above collateral, and any and all riders, amendments, extensions, renewals, supplements, or extensions thereof, and all proceeds thereof, whether or not the proceeds are from policies of insurance required by the Lender, (j) Deposits. Alt deposits made with or other security iven to utility companies by Borrower with respect to the Property ert and the. improvements, and all advance payments of insurance premiums made by Borrower with respect thereto and claims or demands relating o insurance and all deposit accounts whenever located, (k) Stem.. All shares of stock or other evidence of ownership of any art of the Property that is owned by orr•o v r in common with others, including all water stock relating to the Pr operty, , if any, and all documents or rights of membership in any owners' or members' association or similar group having responsibility for managing or operating any art of the Property, and all the general partnership interests in Borrower. (1) All proceeds, whether cash, promissory notes, contract rights is or otherwise, of the sale or other disposition of all or any part of the estate of Borrower in the Property now or hereafter existing thereon. 9 (m) Sale Contracts. All sales contracts, escrow agreements and broker's reeme t concerning the sale of any or all of the Property, and all amendments thereto and all amounts deposited into escrow for payment to .Borrower. Teases and Rents. All the leases, income, rents, issues, deposits, profits receip t , and proceeds, and accounts receivable generated from the leasing, use and operation, of the Property and the Collateral to which. Borrower may e entitled, whether now du; past due, or to become due. (o) OtiWithout limiting the above items, all Goods, Accounts, Documents, Instruments, Money, Financial Assets, Investment Properties, Chattel Paper and General Intangibles, as those terms are defined in the Uniform Commercial Code from time to time in effect in the State of California. 4 10