RES-ORA-0307 Subordination Agreement Relating to Agency's Multifamily Housing Revenue BondsRESOLUTION NO. ORA-
0307 A RESOLUTION OF THE ORANGE
REDEVELOPMENT AGENCY AUTHORIZING THE EXECUTION OF
A SUBORDINATION AGREEMENT AND
APPROVING OTHER MATTERS RELATING TO THE
DEFEASANCE OF THE BONDS RELATING TO THE AGENCY'
S VARIABLE RATE DEMAND MULTIFAMILY
HOUSING REVENUE BONDS, (MERCURY SAVINGS AND
LOAN ASSOCIATION/PALMYRA SENIOR APARTMENTS)
1987 SERIES
A WHEREAS, the Orange Redevelopment Agency (the "Agencyj
adopted Resolution No. ORA-0074 on June 16, 1987, authorizing the issuance of
its Variable Rate Demand Multifamily Housing Revenue Bonds, (Mercury Savings
and Loan Association/Palmyra Seniors Apartments) 1987 Series A (the "Bonds.) to
finance the acquisition and construction of a certain multifamily residential rental
project (the Prclject") to be constructed by Richard J. Hasbrouck and Carolyn A.
Hasbrouck (the
Developer"); and WHEREAS, in connection with the issuance of the bonds, the
Agency executed a Regulatory Agreement and Declaration of Restrictive Covenants dated
as of June 1, 1987, by and among the Agency, the Developer and
Seattle-First National Bank, as Trustee (the "
Regulatory Agreement); and WHEREAS, in connection with the bonds" the FDIC (the "
Bank") is obligated under that certain letter of credit issued by Mercury Savings and
Loan Association to secure the Developer's obligations under the
Developer Note; and WHEREAS, the Agency entered into a disposition
and Development Agreement with the Developer and Sunwest Bank, a California corporation (the
UDDAj, pursuant to which the Agency secured additional low-income targeting
obligations of the Developer to the Agency with a Deed of Trust dated as of June
1, 1987, recorded on June 30,1987, as document No. 87-372656 among the
official records of the County Recorder of Orange County (the "Agency Deed of
Trusf), which subordinated the lien of the Agency Deed of Trust to the bond financing and the
security interest of the
letter
of (:redit bank; and WHEREAS, the DDA, and particular1y Section
608 thereof, contemplated that the Agency would subordinate the Agency Deed of Trust to a
lien securing financing or refinancing so long as the appraised value of the Project is equal to
or greater than the proposed financing encumbrance and the amount secured by
the Agency
Deed of Trust; and WHEREAS, the appraised value of the Project is
greater than the proposed financing encumbrance and the amount secured by the Agency
WHEREAS, Section 401 of the DDA and Sections 1 and 4 of the grant deed
from the Agency to the Developer (the "Grant Deedj contain provisions requiring the
targeting of twenty percent (20%) of the dwelling units within the Project to "Very-
LowInc:ome Senior Tenants- (as therein defined) at rents limited pursuant to Section 401
of thEI DDA (herein, the "DDA Targeting Provisionsj;
and WHEREAS, the Developer proposed to repay the bonds in full and to
refinance thEI Project with a loan from Home Savings of America ("Homej;
and WHEREAS, Home is requiring as a condition of the new loan that the
Agency Deed of Trust an the DDA Targeting Provisions be subordinated to the lien of
Home and that it receive satisfactory evidence that in the event of default by the
Developer and subsequent foreclosure (or deed in lieu) it may terminate the restrictions of
the Regulatory Agreement, whether through subordination or otherwise;
and WHEREAS, the new loan to be provided by Home is for a principal amount
less thl:ln that as to which the agency subordinated in June 1987;
and WHEREAS, the Agency is prepared to provide such further subordination,
to address Home's concerns regarding the Regulatory Agreement, and to
otherwise fac:i1itate the repayment of the Bonds in full on the terms and conditions set forth
herein;
and WHEREAS, the Agency hereby determines that, prior to delivery Qf
any ins,truments relating to the Bonds or the Regulatory Agreement, there shall have
been delivered to the Agency an approving legal opinion of Stradling, Yocca,
Carlson &Rauth, as Bond Counsel in connection with the issuance of the bonds, to the effect
that thE~ execution of such instruments are permitted by or consistent with the
applicable bond documents as appropriate, and will not adversely affect the exemption of
the interest on the Bonds from federal income
taxation.NOW, THEREFORE, the Board of the Orange Redevelopment Agency
resolves as
follows:Section 1.The above recitals, and each of them are true and
correct.Section 2. The Agency finds and determines that an economically
feasible alternative method of financing, refinancing, or assisting the units or parcels
on substantially comparable terms and conditions, but without subordination of the
DDA Targeting Provisions and the Agency Deed of Trust, is not reasonably available,
and tht~ Agency has obtained written commitments reasonably designed to protect
the Agency's investment in the event of default, such as a right of the Agency to cure
a default on the loan. The Agency hereby authorizes the Executive Director to enter
into such subordination agreement(s) as are consistent with the recitals and findings
Section
3. Subjed to the Agency's and Trustee's receipt of the Bond Cc)
unsel opinion described above, (a) the Agency hereby authorizes the Executive Dilredor,
or his authorized designee, to execute on behalf of the Agency such instruments
relating to the regulatory agreement (including amendment to the regulatory
agreement), as, in his judgment, are reasonably requested by Home or the Developer
to evidence Home's ability to cause the restrictions of the regulatory agreement
to terminate upon foreclosure or other remedial action by Home; and (b) the Agency
hereby authorizes the Executive Diredor, or his authorized designee, to execute
such further agreements relating to the defeasance of the Bonds and the refinancing
of the Projed by the Developer as, in his judgment, may be reasonably requested
by Home or the Developer and consistent with the purposes of this resolution.
Section
4. The Agency Board hereby requests Stradling, Yocca, Carlson &Rauth
to deliver its opinion as described above, subjed only to the due execution of the documents,
certificates and opinion referred to herein and to such other preconditions and
9xce.ptinns as are customary or necessary in connedion with the execution of such opinion.
Section
5. The officers of the Agency are hereby authorized and direded,jointly
and severally, to do any and all things to executive and deliver any and all documents
which they may deem necessary or advisable in order to effeduate the pUlrposes
of this resolution and such actions previously taken by such officers are hej('
ehyratified and confirmed. In addition, at the termination of the Qualified Projed Period,
the Executive Diredor is authorized and direded to execute any and all instruments
respecting such termination.Section
6. The Clerk. of the Agency shall certify to the passage of this res,
olution by the governing board of the Orange Redevelopment Agency, and said resolution
shall thereupon take effed.ADOPTED,
and signed by the Chair and attested by the Agency Secretary this 9th
day of April 1996. //-;? '.f ~j~:
C ~
ir
of the Orange Redevelop~yt Agency
ATTEST:
J~{I~
Clerk, Orang edevelopment Agency
I hElreby certify that the foregoing Resolution was duly and regular1y adopted by the
Orange Redevelopment Agency at a regular meeting thereof held on the 9 t h day
of ...April , 1996, by the following vote:
AYES:
NOES:
DIRECTORS: MURPHY,BARRERA,COONTZ,SPURGEON,SLATER
DIRECTORS: NONE
ABSENT:DIRECTORS NONE
ABSTAIN:DIRECTORS NONE
Resl).No. ORA-0307 HB:
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