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HomeMy WebLinkAbout7/23/2003 - STAFF REPORTS DATE: July 23, 2003 MEMO TO: Palm Springs Community Redevelopment Agency/Housing Authority FROM: Director of Finance & Treasurer Director of Community & Economic Development RE: Subordination of Bonds —Tahquitz Court Apartment (2890 E. Tahquitz Canyon Way) RECOMMENDATION: It is recommended that the Agency and the Authority approve resolutions authorizing the City Treasurer to approve the Subordination Agreement for the Tahquitz Court Apartments Bond Issue with the Corporate Fund for Housing, owners of the property. BACKGROUND The Housing Authority provided conduit financing for the rehab of the Tahquitz Court Apartments in 1993. One of the conditions of the issue was that the bank that issued the underlying Letter of Credit had a first right to payments. At that time, the Agency and Authority agreed to subordinate any claims relating to the property. The owner unwittingly missed the deadline to refinance the protect by the September 1, 2002 mandatory redemption date, and technically defaulted on the bonds. The Letter of Credit was invoked, and the bondholders were paid, in full. The owner is now requesting that its unpaid obligations to the bank be recast as an installment loan, in effect, a mortgage. The Agency, Authority, nor City has anything at risk. The subordination agreement is required to allow the financial transaction to proceed. The owner has agreed to reimburse the Agency for all out-of-pocket legal expenses. The various financing documents were reviewed by the City Attorney's office, and the resolutions prepared by them. Submitted by: _ �f Thomas M. Kanarr Jkhn R, aymond� Director of Finance & Treasurer Director of Community & Economic Development Approved: David H. Ready City Manager Attachments: Resolution (CRA) ,^ Resolution (Housing Authority) !!! RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: CITIBANK(WEST), FSB 201 W. Lexington Dr.,2n' Floor Glendale, CA 91203 Attn: Cristina Ochoa Legal Dept. No. 15714 (SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY) SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN CERTAIN RESTRICTIONS ON THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT("AGREEMENT"), is dated as of this_day of June,2003, by CORPORATE FUND FOR HOUSING,a California non-profit public benefit corporation,owner of the real property("Owner")described on the attached Exhibit A("Property"),and by this reference made a part hereof, and the HOUSING AUTHORITY OF THE CITY OF PALM SPRINGS, a housing authority of the State of California duly organized and existing under the laws thereof("Authority"). RECITALS: A. The Authority has issued and sold its $3,380,000 Housing Authority of the City of Palm Springs Multifamily Housing Mortgage Revenue Bonds(Tahquitz Court Apartments)(the"Bonds")pursuantto a trust indenture(the"Indenture")dated as of September 1, 1993 between the Authority and U.S.Bank,N.A., a national banking association (formerly known as Seattle-First National Bank) as trustee (the "Bond Trustee")for the holders of the Bonds, and proceeds of the Bonds have been loaned by the Authority to the Owner(the"Bond Loan")upon the terms and conditions of a Loan Agreement dated as of September 1,1993 by and among the Authority,the Bond Trustee and the Ownerforthe sole and exclusive purpose of financing a multifamily residential facility located on the Property. B. In addition,Owner,the Authority and the Bond Trustee entered into a Regulatory Agreement and Declaration of Restrictive Covenants dated as of September 1, 1993 ("Regulatory Agreement"), recorded September 30, 1993, as Instrument No. 382200 in the Official Records("Official Records")of the County of Riverside, State of California. The Regulatory Agreement provides for certain terms, conditions, covenants and restrictions to be imposed upon Owner and the Property. C. With respect to the Bonds, Citibank (West), FSB, a federal savings bank, successor by merger to California Federal Bank, a federal savings bank, successor by merger to Glendale Federal Bank, Federal Savings Bank (formerly known as Glendale Federal Savings and Loan Association), successor by merger to Redlands Federal Bank, a federal savings bank ("Senior Lienholder") has issued a certain Irrevocable Direct Draw Letter of Credit dated as of September 1, 1993 forthe benefit of the Bond Trustee(the "Letter of Credit")pursuant to which Senior Lienholder has made certain advances to the Bond Trustee(a) with respectto amounts due under the Bond Loan and(b)to provide funds to purchase Bonds tendered under certain circumstances in accordance with the Indenture, and in consideration therefore, Owner and Senior Lienholder have entered into a Reimbursement Agreement dated as of September 1, 1993 (the 0 c\Dommenls and Smgngmm0ad-naMy DocamemMCcgom1MSUGDm2 aoe(Form 122200) 1 Loan No.,02-8101198„ "Reimbursement Agreement") to evidence Owner's obligation to reimburse Senior Lienholder for such advances. D. The obligations of the Owner underthe Reimbursement Agreement are secured by the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing Financing Statement dated as of September 1, 1993 and recorded September 30, 1993 as Instrument No. 382202 in the Official Records encumbering the Property ("Senior Deed of Trust"). E. Owner has executed, or is about to execute and deliver to Senior Lienholder a Modification and Extension Agreement ("Modification Agreement") of even date herewith with respect to the Reimbursement Agreement and Senior Deed of Trust. In addition, Owner has executed, or is about to execute, in favor of Senior Lienholder, a Promissory Note in the original principal amount of$3,200,000.00 evidencing Owner's obligation to reimburse Senior Lienholder for Letter of Credit draws and all interest accrued thereon("Senior Note"). The Modification Agreement modified the Senior Deed of Trust to provide that it secures the repayment in full of the Senior Note,together with interest thereon as provided therein,and all modifications,extensions, renewals,and/or replacements thereof. The Modification Agreement,together with the Reimbursement Agreement,Senior Deed of Trust,Senior Note,and all other documents executed or delivered in connection therewith, are hereinafter referred to collectively as the "Senior Lienholder Documents". F. It is a condition precedent to modifying the Senior Lienholder loan,that the Senior Lienholder Documents and Senior Lienholder's right to payments under the Senior Lienholder Documents shall unconditionally be and remain at all times a lien or charge upon the Property, prior and superior to the Regulatory Agreement and any and all covenants, conditions, restrictions and agreements in favor of the Authority. G. Senior Lienholder is willing to modify the Senior Lienholder loan, provided the condition precedent described above is satisfied and that the Authority will specifically and unconditionally subordinate the Regulatory Agreement and any and all other covenants,conditions,restrictions and agreements in favor of the Authority to the liens and charges of the Senior Lienholder Documents and Senior Lienholder's right to payments under the Senior Lienholder Documents. H. It is to the mutual benefit of the parties hereto that Senior Lienholder modify the Senior Lienholder loan,and the Authority and Owner are willing to provide the subordination required bythe condition precedent described above. NOW, THEREFORE, in consideration of mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, and in orderto induce Senior Lienholder to modify the Senior Lienholder loan,it is hereby declared,understood and agreed as follows: (a) The Senior Lienholder Documents and any modification,extension or renewal thereof together with Senior Lienholder's right to payments under the Senior Lienholder Documents shall unconditionally be and remain at all times a lien or charge on the Property, prior and superior to the Regulatory Agreement and any and all other covenants, conditions, restrictions and agreements in favor of the Authority. All advances made by Senior Lienholder and any modification, extension or renewal agreed to by Senior Lienholder with respect to the Senior Lienholder loan, the Senior Lienholder Documents or any other documents and instruments governing,evidencing orsecuring the Senior Lienholder loan shall be secured by the lien or charge of the Senior Lienholder Documents, which lien shall at all times be prior and superior to the Regulatory Agreement and any and all other covenants, conditions, restrictions and agreements in favor of the Authority; (b) The Senior Lienholder would not modify the Senior Lienholder loan pursuant to the Modification Agreement without this Agreement; and cdDoama"m and sew"dmamad—WyD"cumentMCa,"o,alo4Subo,d2dac(Fmm 122 zoom 2 Loan No. 02-81 01 1 98 (c) This Agreement shall be the whole and only agreement with regard to the subordination of the Regulatory Agreement and any and all other covenants,conditions,restrictions and agreements in favor of the Authority to the liens or charges of the Senior Lienholder Documents and the Senior Lienholder's right to payments under the Senior Lienholder Documents and shall supersede and cancel,but only insofar as would affect such priority,any prior agreements as to such subordination, including, but not limited to, those provisions, if any, contained in the Regulatory Agreement in favor of the Authority, which provide for the subordination of the rights, restrictions or agreements thereof to another deed or deeds of trust or to another mortgage or mortgages. The Authority declares, agrees and acknowledges that: (d) [Intentionally deleted]; (a) Senior Lienholder in making disbursements pursuant to any such agreement is under no obligation or duty to, nor has Senior Lienholder represented that it will see to the application of such proceeds by the person or persons to whom Senior Lienholder disburses such proceeds and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat the subordination herein made in whole or in part; (f) The Authority intentionally and unconditionally subordinates the Regulatory Agreement and intentionally and unconditionally subordinates any and all other rights,restrictions or agreements in favor of the Authority in favor of the lien or charge upon the Property of the Senior Lienholder Documents. The Authority understands that in reliance upon,and in consideration of,this Agreement, specific concessions are being and will be made by Senior Lienholder, and as part and parcel thereof,specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this Agreement; (g) The Authority acknowledges that no violation, default or event of default(or events which would become such with the giving of notice or passage of time or both)currently exist under the Regulatory Agreement; (h) The Authority agrees to notify Senior Lienholder within 30 days after the Authority has knowledge of a breach, default or event of default under the Regulatory Agreement, The Authority shall not, under any circumstances, incur any liability for any failure to provide any notice, provided, however, the Authority shall correct any such failure to provide such notice required by this Section (h). It shall be the obligation of Senior Lienholder to provide and update its address for notice purposes hereunder and the Authority shall have no duty to verify the accuracy or completeness of such information.Unless the Authority is otherwise notified,notices to Senior Lienholder shall be sent to Citibank(West), FSB,201 W.Lexington Dr., Glendale,CA 91203,Attn: Commercial Real Estate, Re: Corporate Fund for Housing, Loan No. 02-81 01 1 98; (i) If an event of default occurs under the terms of any of the Senior Lienholder Documents, prior to exercising any remedies thereunder, Senior Lienholder shall give Subordinate Lienholder the same written notice given to Owner as required by Section 4.01 of the Senior Deed of Trust. Subordinate Lienholder shall have the right to cure defaults within the time periods provided for Owner in Section 4.01 of the Senior Deed of Trust. With respect to any right of cure provided herein, performance of a cure by Subordinate Lienholder shall have the same effect as would like performance by Owner. Senior Lienholder shall not, under any circumstances, incur any liability for any failure to provide any notice,provided,however, Senior Lienholder shall correct any such failure to provide such notice required by said Section 4.01 and to permit the cure of such default within the time periods set forth in Section 4.01 of the Senior Deed of Trust, commencing from the date of mailing or delivering of such corrected notice. It shall be the obligation of Subordinate Lienholder to provide and update its address for notice purposes hereunder and Senior Lienholder shall have no duty to verify the accuracy or completeness of such information. Unless Senior Lienholder is otherwise notified,notices to Subordinate Lienholdershall be sentto the Housing Authority of the City of Palm Springs, 3200 East Tahquitz Canyon Way, Palm Springs, CA 92262,Attn: City Manager; oQoaamema and SONngAc[liadmImMy DommentAComomlm5aborJ2 doa(Form 122 zo12) 3 Loan No. 02-8101198 (j) The undersigned hereby acknowledges and agrees that its agreement with Owner, and any terms and conditions thereof,whether express or implied,are solely between it and Owner and are of no concern to Senior Lienholder, Senior Lienholder is and will be,throughout the terms of its loan and modification, extension or renewal thereof, under no duty or obligation to assure compliance with the terms and conditions of any agreement between Owner and undersigned;nor will Senior Lienholder be under any obligation or duty to take any action because of any knowledge it has or may have regarding any breach by Owner. The undersigned further agrees, notwithstanding anything to the contrary in the law, equity or its agreement with Owner, that the subordination of its interest is not subject to compliance,substantial or otherwise,with any provision of such agreement with Owner, whether express or implied. The undersigned acknowledges that Senior Lienholder considers this acknowledgment and agreement to be a material condition for modifying its loan with Owner; and (k) This Agreement may be executed simultaneously in counterparts,each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [Remainder of this page left intentionally blank] c M000moms xod somnyslamaeminWy QocrmmIslCo,pom[oI5uborJ2 eoo(Form 122 2003) 4 Loan No. 02-8101198 NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION, WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN,A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENTS OF THE LAND, IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS SUBORDINATION AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT THERETO. AUTHORITY: ATTEST: HOUSING AUTHORITY OF THE CITY OF PALM SPRINGS Secretary of the Authority By: By: Name: Title: OWNER: CORPORATE FUND FOR HOUSING, a California non-profit public benefit corporation By: Name: Its: AGREEMENT IS NOT BE EXECUTED UNDER A POWER OF ATTORNEY ALL SIGNATURES MUST BE ACKNOWLEDGED c maaomooia and Sa1[1ngaldpatlm1nlMy oommonis6orpoalasuGooR aoa(Foam 122 taw) 5 Loan No. 02-8101198 ACKNOWLEDGMENTS STATE OF CALIFORNIA ) )ss COUNTY OF ) On this_day of 2003 before me, a Notary Public in and for said State,personally appeared personally known to me (or proved to me on the basis of satisfactory evidence)to be the person(s)whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that by his/her/their signature(s)on the instrument the person(s),or the entity upon behalf of which the person(s)acted, executed the instrument. WITNESS my hand and official seal. Notary Public My Commission expires: STATE OF CALIFORNIA ) )ss COUNTY OF ) On this_day of 2003 before me, a Notary Public in and for said State,personally appeared personally known to me (or proved to me on the basis of satisfactory evidence)to be the person(s)whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that by his/her/their signature(s)on the instrument the person(s),orthe entity upon behalf of which the person(s)acted, executed the instrument. WITNESS my hand and official seal. Notary Public My Commission expires: c.M000mems 2na soibooa�rn,aeminWy oocumanls\CorpaptulSuborddoc)Form 1222003) 6 Loan No. 02-8101198 EXHIBIT"A" LEGAL DESCRIPTION The Property is located in the City of Palm Springs, County of Riverside,State of California and is described as follows: LOT 15 IN SECTION 13,TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO MERIDIAN, IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA,AS PER MAP OF PALM VALLEY COLONY LANDS, RECORDED IN BOOK 14 PAGE 652 OF MAPS, SAN DIEGO COUNTY RECORDS; EXCEPT THAT PORTION LYING NORTH OF THE SOUTH LINE OF ENCHANTED HOMES UNIT NO. 1, RECORDED IN BOOK 34 PAGE 17 OF MAPS, RIVERSIDE COUNTY RECORDS. SAID PROPERTY IS SHOWN ON RECORD OF SURVEY ENTITLED 'RECORD OF SURVEY OF A PORTION OF LOT 15 OF SECTION 13, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO MERIDIAN,AS SHOWN BY MAP OF PALM VALLEY COLONY LANDS AS RECORDED IN BOOK 14 PAGE 652 OF MAPS, SAN DIEGO COUNTY RECORDS' ON FILE IN BOOK 33 PAGE 77 OF RECORDS OF SURVEY, RIVERSIDE COUNTY RECORDS. CMoo„a,oma a„dSa,lm9s\QladminlMp 000umema\ComDmddsobord2 dad(Form 122200]) 7 Loan No. 02-8101198 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: CITIBANK(WEST),FSB 201 W. Lexington Dr.,2nd Floor Glendale, CA 91203 Attn: Cristina Ochoa Legal Dept. No. 15714 (SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY) SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT("AGREEMENT"),is dated as of this _day of June,2003, by CORPORATE FUND FOR HOUSING,a California non-profit public benefit corporation,owner of the real property("Owner")described on the attached Exhibit A("Property"),and by this reference made a part --------.hereof, and THE COMMUNITY RED EVELOPM ENT,AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA,a public body corpse andnd palttic�"Subordinate Lienholder")present owner and holder of the promissory- otr�e and deed of trust first hereinafter described. RECITALS: A. With respect to the Property,Owner did execute a Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing dated September 28,1993("Subordinate Deed of Trust"),in favor of Subordinate Lienholder, which Subordinate Deed of Trust was recorded on September 30, 1993, as Instrument No. 382205 in the Official Records ("Official Records") of the County of Riverside, State of California, to secure performance under a Promissory Note referred to therein ("Subordinate Note") evidencing a loan made by Subordinate Lienholder in the amount of$590,000.00. B. In addition, Owner and Subordinate Lienholder entered into a Regulatory Agreement and Declaration of Covenants and Restrictions dated September 28,1993("Regulatory Agreement"),recorded September 30,1993,as Instrument No.382201 in the Official Records. The Regulatory Agreement provides for certain terms, conditions, covenants and restrictions to be imposed upon Owner and the Property. The Regulatory Agreement, the Subordinate Note, the Subordinate Deed of Trust and all agreements and obligations secured thereby are collectively referred to herein as the"Subordinate Lienholder Documents". C. The Housing Authority of the City of Palm Springs, California(the"Issuer")has issued and sold its $3,380,000 Housing Authority of the City of Palm Springs Multifamily Housing Mortgage Revenue Bonds(Tahquitz Court Apartments)(the"Bonds")pursuant to a trust indenture(the"Indenture")dated as of September 1, 1993 between the Issuer and U.S. Bank, N.A.(formerly known as Seattle-First National Bank) as trustee(the"Bond Trustee")for the holders of the Bonds,and proceeds of the Bonds have been loaned by the Issuer to the Owner(the"Bond Loan")upon the terms and conditions of a Loan Agreement dated as of September 1, 1993 by and among the Issuer, the Bond Trustee and the Owner for the sole and exclusive purpose of financing a multifamily residential facility located on the Property. c"ommeni:Ana sumo"momoammmy"oo,mamsco,�aio�s"aom aoclFom tzz zoom 1 Loan No. 02-8101198� i D. With respect to the Bonds, Citibank (West), FSB, a federal savings bank, successor by merger to California Federal Bank,a federal savings bank,successor by merger to Glendale Federal Bank, Federal Savings Bank(formerly known as Glendale Federal Savings and Loan Association), successor by merger to Redlands Federal Bank, a federal savings bank ("Senior Lienholder") has issued a certain Irrevocable Direct Draw Letter of Credit dated as of September 1,1993 forthe benefit of the Bond Trustee(the "Letter of Credit")pursuant to which Senior Lienholder has made certain advances to the Bond Trustee(a) with respect to amounts due under the Bond Loan and(b)to provide funds to purchase Bonds tendered under certain circumstances in accordance with the Indenture, and in consideration therefore, Owner and Senior Lienholder have entered into a Reimbursement Agreement dated as of September 1, 1993 (the "Reimbursement Agreement") to evidence Owner's obligation to reimburse Senior Lienholder for such advances. E. The obligations of the Owner under the Reimbursement Agreement are secured by the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing Financing Statement dated as of September 1, 1993 and recorded September 30, 1993 as Instrument No. 382202 in the Official Records encumbering the Property("Senior Deed of Trust"). F. Owner has executed,or is about to execute and deliver to Senior Lienholder a Modification and Extension Agreement ("Modification Agreement") of even date herewith with respect to the Reimbursement Agreement and Senior Deed of Trust. In addition, Owner has executed, or is about to execute, in favor of Senior Lienholder, a Promissory Note in the original principal amount of$3,200,000.00 evidencing Owner's obligation to reimburse Senior Lienholder for Letter of Credit draws and all interest accrued thereon("Senior Note"). The Modification Agreement modified the Senior Deed of Trust to provide that it secures the repayment in full of the Senior Note,togetherwith interest thereon as provided therein,and all modifications,extensions,renewals,and/or replacements thereof. The Modification Agreement,together with the Reimbursement Agreement,Senior Deed of Trust,Senior Note,and all other documents executed or delivered in connection therewith, are hereinafter referred to collectively as the "Senior Lienholder Documents". G. It is a condition precedent to modifying the Senior Lienholder loan,that the Senior Lienholder Documents and Senior Lienholder's right to payments under the Senior Lienholder Documents shall unconditionally be and remain at all times a lien or charge upon the Property, prior and superior to the Subordinate Lienholder Documents and any and all rights,restrictions,agreements,liens and charges in favor of Subordinate Lienholder and the Subordinate Lienholder's right to payments under the Subordinate Lienholder Documents. H. Senior Lienholder is willing to modify the Senior Lienholder loan, provided the condition precedent described above is satisfied and that Subordinate Lienholder will specifically and unconditionally subordinate the Subordinate Lienholder Documents and the Subordinate Lienholder's right to payments under the Subordinate Lienholder Documents and any and all other rights, restrictions, agreements, liens and charges in favor of Subordinate Lienholder to the liens and charges of the Senior Lienholder Documents and Senior Lienholder's right to payments under the Senior Lienholder Documents. I. It is to the mutual benefit of the parties hereto that Senior Lienholder modify the Senior Lienholder loan, and Subordinate Lienholder and Owner are willing to provide the subordination required by the condition precedent described above. NOW, THEREFORE, in consideration of mutual benefits accruing to the patties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, and in order to induce Senior Lienholder to modify the Senior Lienholder loan,it is hereby declared,understood and agreed as follows: (a) The Senior Lienholder Documents and any modification,extension or renewal thereof together with Senior Lienholder's right to payments under the Senior Lienholder Documents shall unconditionally be and remain at all times a lien or charge on the Property, prior and superior to the cvo"-m:a"a aoc(F"-122 zoos) 2 Loan No. 02-8101198 Subordinate Lienholder Documents and the Subordinate Lienholder's right to payments under the Subordinate Lienholder Documents and any and all other rights,restrictions,agreements, liens and charges in favor of the Subordinate Lienholder. All advances made by Senior Lienholder and any modification, extension or renewal agreed to by Senior Lienholder with respect to the Senior Lienholder loan, the Senior Lienholder Documents or any other documents and instruments governing,evidencing or securing the Senior Lienholder loan shall be secured by the lien or charge of the Senior Lienholder Documents,which lien shall at all times be prior and superior to the Subordinate Lienholder Documents and the Subordinate Lienholder's right to payments under the Subordinate Liehholder Documents and any and all other rights,restrictions,agreements,liens or charges in favor of the Subordinate Lienholder; (b) The Senior Lienholder would not modify the Senior Lienholder loan pursuant to the Modification Agreement without this Agreement; and (c) This Agreement shall be the whole and only agreement with regard to the subordination of the Subordinate Lienholder Documents and the Subordinate Lienholder's right to payments under the Subordinate Lienholder Documents and any and all other rights, restrictions, agreements, liens or charges in favor of the Subordinate Lienholder to the liens or charges of the Senior Lienholder Documents and the Senior Lienholders right to payments under the Senior Lienholder Documents and shall supersede and cancel,but only insofar as would affect such priority, any prior agreements as to such subordination, including,but not limited to,those provisions,if any, contained in the Subordinate Lienholder Documents in favor of the Subordinate Lienholder, which provide for the subordination of the rights,restrictions,agreements,lien or charge thereof to another deed or deeds of trust or to another mortgage or mortgages. Subordinate Lienholder declares, agrees and acknowledges that: (d) [Intentionally deleted]; (e) Senior Lienholderin making disbursements pursuantto anysuch agreement is under no obligation or duty to, nor has Senior Lienholder represented that it will see to the application of such proceeds by the person or persons to whom Senior Lienholder disburses such proceeds and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat the subordination herein made in whole or in part; (f) Subordinate Lienholder intentionally and unconditionally- subordinates the Subordinate Lienholder Documents and the Subordinate Lienholder's right to payments under the Subordinate Liehholder Documents and intentionally and unconditionally subordinates any and all other rights, restrictions,agreements, liens or charges in favor of Subordinate Lienholder in favor of the lien or charge upon the Property of the Senior Lienholder Documents. Subordinate Lienholder understands that in reliance upon,and in consideration of,this Agreement,specific concessions are being and will be made by Senior Lienholder,and as part and parcel thereof,specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this Agreement; (g) Subordinate Lienholder acknowledges that no violation,default or event of default(or events which would become such with the giving of notice or passage of time or both)currently exist under the Subordinate Lienholder Documents; (h) Subordinate Lienholder agrees to notify Senior Lienholder within 30 days after Subordinate Lienholder has knowledge of a breach,default or event of default under the Subordinate Lienholder Documents. Subordinate Lienholder shall not,under any circumstances,incur any liability for any failure to provide any notice,provided,however,Subordinate Lienholder shall correct any such failure to provide such notice required by this Section (h). It shall be the obligation of Senior Lienholder to provide and update its address for notice purposes hereunder and Subordinate Lienholder shall have no duty to verify the accuracy or completeness of such information. Unless c goo .Wm xna mc(F.-tzz 2003) 3 Loan No. 02-81 01 1 98 Subordinate Lienholder is otherwise notified, notices to Senior Lienholder shall be sent to Citibank (West), FSB, 201 W. Lexington Dr., Glendale, CA 91203, Attn: Commercial Real Estate, Re: Corporate Fund for Housing, Loan No. 02-8101198; (i) If an event of default occurs under the terms of any of the Senior Lienholder Documents, prior to exercising any remedies thereunder, Senior Lienholder shall give Subordinate Lienholder the same written notice given to Owner as required by Section 4.01 of the Senior Deed of Trust. Subordinate Lienholder shall have the right to cure defaults within the time periods provided for Owner in Section 4.01 of the Senior Deed of Trust. With respect to any right of cure provided herein, performance of a cure by Subordinate Lienholder shall have the same effect as would like performance by Owner. Senior Lienholder shall not, under any circumstances,incur any liability for any failure to provide any notice,provided,however,Senior Lienholder shall correct any such failure to provide such notice required by said Section 4.01 and to permit the cure of such default within the time periods set forth in Section 4.01 of the Senior Deed of Trust, commencing from the date of mailing or delivering of such corrected notice. It shall be the obligation of Subordinate Lienholder to provide and update its address for notice purposes hereunder and Senior Lienholder shall have no duty to verify the accuracy or completeness of such information. Unless Senior Lienholder is otherwise notified,notices to Subordinate Lienholder shall be sent to The Community Redevelopment Agency of the City of Palm Springs,3200 East Tahquitz Canyon Way,Palm Springs,CA 92262,Attn: Executive Director; Q) The undersigned hereby acknowledges and agrees that its agreement with Owner, and any terms and conditions thereof,whether express or implied,are solely between it and Owner and are of no concern to Senior Lienholder. Senior Lienholder is and will be,throughout the terms of its loan and modification, extension or renewal thereof, under no duty or obligation to assure compliance with the terms and conditions of any agreement between Owner and undersigned;norwill Senior Lienholder be under any obligation or duty to take any action because of any knowledge it has or may have regarding any breach by Owner. The undersigned further agrees, notwithstanding anything to the contrary in the law,equity or its agreement with Owner, that the subordination of its interest is not subject to compliance,substantial or otherwise,with any provision of such agreement with Owner, whether express or implied. The undersigned acknowledges that Senior Lienholder considers this acknowledgment and agreement to be a material condition for modifying its loan with Owner; and (k) As required pursuant to Section 33334.14(a)(4)of the California,Health and Safety Code, Subordinate Lienholder has determined that an economically feasible alternative method of financing, refinancing or assisting the project situated or to be situated on the Property, on substantially comparable terms and conditions to the Senior Lienholder Documents, without subordination, is not reasonably available. [Remainder of this page left intentionally blank] c.00�m.m+nd sanmy:mmaammvny oowm.mmcopwatlsvMN.eoc tFe�1 Ma ) 4 Loan No. 02-8101198 NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION, WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN,A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENTS OF THE LAND. IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS SUBORDINATION AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT THERETO. SUBORDINATE LIENHOLDER: ATTEST: THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS,CALIFORNIA, a public body, corporate and politic By: By: Secretary Name: Title: APPROVED AS TO FORM: By: Name: Title: OWNER: CORPORATE FUND FOR HOUSING,a California non-profit public benefit corporation By: Name: Its: AGREEMENT IS NOT BE EXECUTED UNDER A POWER OF ATTORNEY ALL SIGNATURES MUST BE ACKNOWLEDGED coo�menis-d Sm'Op m.dm.nWy do.(Fm.1.222003) 5 Lean No. 02-8101198 ACKNOWLEDGMENTS STATE OF CALIFORNIA ) )ss COUNTY OF ) On this_day of 2003 before me, a Notary Public in and for said State,personally appeared personally known to me (or proved to me on the basis of satisfactory evidence)to be the person(s)whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that by his/her/their signature(s)on the instrument the person(s),or the entity upon behalf of which the person(s)acted,executed the instrument. WITNESS my hand and official seal. Notary Public My Commission expires: STATE OF CALIFORNIA ) )ss COUNTY OF ) On this_ day of 2003 before me, a Notary Public in and for said State,personally appeared personally known to me (or proved to me on the basis of satisfactory evidence)to be the person(s)whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),and that by his/her/theirsignature(s)on the instrument the person(s),or the entity upon behalf of which the person(s)acted, executed the instrument. WITNESS my hand and official seal. Notary Public My Commission expires: cnooam.m:..a samag:mm.amm�myoowmem.�coRonies.eab d.c(F.m 122 zonal 6 Loan No. 02-81 01 1 98 EXHIBIT"A" LEGAL DESCRIPTION The Property is located in the City of Palm Springs,County of Riverside,State of California and is described as follows: LOT 15 IN SECTION 13,TOWNSHIP 4 SOUTH, RANGE 4 EAST,SAN BERNARDINO MERIDIAN,IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA,AS PER MAP OF PALM VALLEY COLONY LANDS, RECORDED IN BOOK 14 PAGE 652 OF MAPS, SAN DIEGO COUNTY RECORDS; EXCEPT THAT PORTION LYING NORTH OF THE SOUTH LINE OF ENCHANTED HOMES UNIT NO. 1, RECORDED IN BOOK 34 PAGE 17 OF MAPS, RIVERSIDE COUNTY RECORDS. SAID PROPERTY IS SHOWN ON RECORD OF SURVEY ENTITLED 'RECORD OF SURVEY OF A PORTION OF LOT 15 OF SECTION 13, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN BERNARDINO MERIDIAN,AS SHOWN BY MAP OF PALM VALLEY COLONY LANDS AS RECORDED IN BOOK 14 PAGE 652 OF MAPS, SAN DIEGO COUNTY RECORDS" ON FILE IN BOOK 33 PAGE 77 OF RECORDS OF SURVEY, RIVERSIDE COUNTY RECORDS. nd semnyskh.d,.mmr d-(Forth I no) 7 Loan No. 02-8101198 RESOLUTION NO, A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING THE SUBORDINATION OF BONDS RELATING TO THE TAHQUITZ COURT APARTMENTS WHEREAS, pursuant to a trust indenture dated September 1, 1993 between the Housing Authority of the City of Palm Springs ("Authority") and the U.S. Bank, N.A., ("Bond Trustee") the Authority issued and sold $3,380,000 Housing Authority of the City of Palm Springs Multifamily Housing Mortgage Revenue Bonds (Tahquitz Court Apartments) ("Bonds") and the proceeds of the Bonds have been loaned by the Authority to the Corporate Fund for Housing ("Owner") for the construction of housing units ("Bond Loan") on certain real property ("Property); and WHEREAS, with respect to the Bonds, Citibank (West), FSB, ("Senior Lienholder") has issued a certain Irrevocable Direct Draw Letter of Credit dated as of September 1, 1993 for the benefit of Bond Trustee pursuant to which the Senior Lienholder has made certain advances to the Bond Trustee; and WHEREAS, Owner and Senior Lienholder have entered into a Reimbursement Agreement to evidence Owner's obligation to reimburse Senior Lienholder for such advances ("Senior Lienholder Loan"); and WHEREAS, the obligations of Owner under the Reimbursement Agreement are secured by the Deed of Trust recorded on September 30, 1993, as Instrument No. 382202 in the Official Records ("Senior Deed of Trust"); and WHEREAS, Owner has executed and delivered to Senior Lienholder a Modification and Extension Agreement relating to the Reimbursement Agreement and the Senior Deed of Trust; and WHEREAS, it is a condition precedent to modifying the Senior Lienholder Loan, that the Senior Lienholder's right to payments shall unconditionally be and remain a lien superior to all other agreements relating to the Property in favor of the Authority; and WHEREAS, the Senior Lienholder Loan is being modified and requires the Authority to execute a Subordination Agreement which is attached hereto as Exhibit "A" and incorporated herein by this reference; and WHEREAS, Owner has defaulted on the Senior Lienholder Loan such that it is now it is to the benefit of all of the parties that the Senior Lienholder modify the Senior Lienholder Loan to allow Owner's unpaid obligations to be recast as an installment loan. NOW, THEREFORE, BE IT RESOLVED, by the Housing Authority of the City of Palm Springs as follows: Res Page 2 Section 1. All of the facts set forth in the above recitals are true and correct and are incorporated herein by this reference. Section 2. The Subordination Agreement is hereby approved and the Treasurer is hereby authorized and instructed to execute same on behalf of the Authority. Section 3. The Treasurer is authorized to execute any and all additional documents necessary and to grant any and all other approvals necessary to the subordination. ADOPTED this day of , 2003. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By: By: City Clerk Chairman APPROVED AS TO FORM: RESOLUTION NO. A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING THE SUBORDINATION OF BONDS RELATING TO THE TAHQUITZ COURT APARTMENTS WHEREAS, the Corporate Fund for Housing ("Owner") executed a Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing dated September 28, 1993 ("Subordinate Deed of Trust") in favor of the Community Redevelopment Agency of the City of Palm Springs ("Subordinate Lienholder") relating to the Tahquitz Court Apartments ("Property') to secure performance under a promissory note ("Subordinate Note") evidencing a loan made by Subordinate Lienholder in the amount of $590,000; and WHEREAS, pursuant to a trust indenture ("Indenture") dated September 1, 1993 between the Housing Authority of the City of Palm Springs ("Issuer") and the U.S. Bank, N.A., ("Bond Trustee") the Issuer issued and sold $3,380,000 Housing Authority of the City of Palm Springs Multifamily Housing Mortgage Revenue Bonds (Tahquitz Creek Apartments) ("Bonds") for the holders of the Bonds and the proceeds of the Bonds have been loaned by Issuer to the Owner ("Bond Loan") to finance a multifamily residential facility located on the Property; and WHEREAS, with respect to the Bonds, Citibank (West), FSB, ("Senior Lienholder") has issued a certain Irrevocable Direct Draw Letter of Credit dated as of September 1, 1993 for the benefit of Bond Trustee pursuant to which the Senior Lienholder has made certain advances to the Bond Trustee; and WHEREAS, Owner and Senior Lienholder have entered into a Reimbursement Agreement to evidence Owner's obligation to reimburse Senior Lienholder for such advances ("Senior Lienholder Loan"); and WHEREAS, the obligations of Owner under the Reimbursement Agreement are secured by the Deed of Trust recorded on September 30, 1993, as Instrument No. 382202 in the Official Records ("Senior Deed of Trust"); and WHEREAS, Owner has executed and delivered to Senior Lienholder a Modification and Extension Agreement relating to the Reimbursement Agreement and the Senior Deed of Trust; and WHEREAS, it is a condition precedent to modifying the Senior Lienholder Loan, that the Senior Lienholder's right to payments shall unconditionally be and remain a lien superior to all other agreements relating to the Property in favor of the Authority; and WHEREAS, the Senior Lienholder Loan is being modified and requires the Authority to execute a Subordination Agreement which is attached hereto as Exhibit "A" and incorporated herein by this reference; and ., hr WHEREAS, Owner has defaulted on the Senior Lienholder Loan such that it is now it is to the benefit of all of the parties that the Senior Lienholder modify the Senior Lienholder Loan to allow Owner's unpaid obligations to be recast as an installment loan. NOW, THEREFORE, BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs as follows: Section 1. All of the facts set forth in the above recitals are true and correct and are incorporated herein by this reference. Section 2. The Subordination Agreement is hereby approved and the Treasurer is hereby authorized and instructed to execute same on behalf of the Community Redevelopment Agency of the City of Palm Springs. Section 3. The Treasurer is authorized to execute any and all additional documents necessary and to grant any and all other approvals necessary to the subordination. ADOPTED this day of , 2003. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY of the City of Palm Springs By: Assistant Secretary Chairman APPROVED & REVIEWED: