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HomeMy WebLinkAbout2000-02-15; City Council; 15623; PGP Carlsbad Seniors, Ltd.1 . ~ AB# MTG. 2/15/2000 DEPT. H/RED - - CITY OF CARLSBAD - AGENDA BILL TITLE- EXECUTION AND APPROVAL OF THE SUBORDINATION AGREEMENT AND USE OF DOCUMENTS INSTRUCTIONS AND INDEMNIFICATION BETWEEN PGP CARLSBAD SENIORS, LTD. AND THE CITY OF CARLSBAD s DEPT. HD. ($ CITY Al-l-Y. -c CITY MGR> RECOMMENDED ACTION: ADOPT City Council Resolution No.2000- L! / , APPROVING a Subordination Agreement and the Use of Documents Instructions and Indemnification between PGP Carlsbad Seniors, Ltd. and the City of Carisbad ITEM EXPLANATION In December of 1982, the City of Carlsbad approved construction of a 48 unit senior housing project at Jefferson Street and Oak Avenue. Pursuant to the provisions of the Senior Housing Ordinance in affect at that time, the applicant was permitted to increase density for the project to 75 dwelling units/acre, and reduce parking requirements to a ratio of one space per two units. Conditions tied to approval of the density bonus included the applicant’s submittal of (1) a conversion plan for the project in the event the project was converted to a use other than senior housing, and (2) the applicant was required to furnish a second trust deed on the property to the City in the amount of $765,440. The second trust deed becomes due and payable to the City should the property owner fail to maintain the property as required by the terms and conditions of the conditional use permit approved for the project. In 1987, the original property owner, Jefferson House, LP, refinanced the property. As part of the refinance, a subordination agreement was executed between the property owner and the City. The subordination agreement allows for the subordination of the City’s second trust deed to the property lenders first trust deed. In 1990, the property was sold to the current owner, PGP Carlsbad Seniors, LTD. In conjunction with the sale, the Carlsbad City Council approved (Resolution 90-348) the transfer of the Subordination Agreement from the original owner to PGP. PGP is currently seeking to refinance the loan for the property which will again necessitate the execution of a new subordination agreement. EXECUTION OF DOCUMENTS The original and two previously amended agreements have required the review and approval of the City Council, and the signature of the Mayor. This process of review and approval is costly and time consuming for both the property owner and the City. Subordination agreements are typically simple documents that can be processed administratively. Therefore, the attached resolution has been drafted to approve the subject documents and authorizes the City Manager to execute them. Further, approval of the resolution will also allow future subordination agreements or transfers of the subordination agreement to a new property owner to be approved administratively. The attached resolution will allow future subordination agreements to be reviewed by the Housing and Redevelopment Director, and executed by the City Manager, subject to the review and approval of the City Attorney. - Page 2 of Agenda Bill No. 0-443 FISCAL IMPACT Since the City’s second trust deed was recorded in December of 1983, the $765,440 trust deed has compounded at 10% simple interest per annum. The current value of the City’s second trust deed is approximately $3.5 million, while the current total appraised value of the property is $3.1 million. PGP is seeking a new loan for the property in the amount of $2,235,000, or 72% of the value of the property. By granting the subordination, the value of the City’s security will be reduced to the value of the equity in the property ($865,000) rather than the value of the deed ($3.5 million). Should PGP cease to operate the property as senior housing as required by their conditional use permit, the City’s second trust deed becomes due and payable. As permitted by the terms of the conversion plan, the City may, if necessary, use the proceeds of the second trust deed to convert the property back to senior housing. The City’s secured position after the subordination is approximately $865,000. Staff believes that the second trust deed security is adequate to ensure the continued operation of the building as a senior project or to fund any necessary conversion required to bring it into compliance with the conditional use permit. EXHIBITS 1. City Council Resolution No. 2000- L/ 2. Subordination Agreement PGP Carlsbad Seniors, LTD. and the City of Carlsbad 3. Use of Documents Instructions and Indemnification . * 1 z a 4 5 , 6 7 0 9 10 11 12 13 14' 15 16 17 18 19 20 21 22 23 24 25 26 27 20 - RESOLUTION NO. 2000-6 1 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, TO APPROVE A SUBORDINATION AGREEMENT AND THE USE OF DOCUMENTS INSTRUCTIONS AND INDEMNIFICATION BETWEEN PGP CARLSBAD SENIORS, LTD. AND THE CITY OF CARLSBAD APPLICANT PGP CARLSBAD SENIORS, LTD. CASE NO: RP-CUP83-02 WHEREAS, in 1982 a Senior Housing Project commonly referred to as Jefferson House 1 was approved and constructed which allowed for a density bonus and reduced parking requirements; and WHEREAS, the applicant as conditioned, submitted a conversion plan and a subordination agreement naming the City of Carlsbad as the holder of the second trust deed; and WHEREAS, in 1990, Jefferson House, a General Partnership sold the property to PGP Carlsbad Seniors, LTD. WHEREAS, on September 18, 1990, City of Carlsbad City Council approved the transfer of the subordination agreement from Jefferson House, a General Partnership to PGP Carlsbad Seniors, LTD., and WHEREAS, the current property owner is seeking tc refinance the funding for the property and is requesting that a new subordination agreement be executed between PGP Carlsbad Seniors, LTD. and the City of Carlsbad. NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of Carl&ad California, as follows: 1. The above recitations are true and correct. 2. The City Council authorizes the City Manager to execute the Subordination Agreement and the related Use of Documents Instructions and Indemnification between PGP Carlsbad Seniors, LTD. and City of Carlsbad in substantially the form presented to the City Council on February 15, 2000, and subject to review and approval by the City Attorney. 3. The City Council authorizes future subordination agreements and related documents for this subject property or transfers of the subordination agreement to a new property owner to be submitted to the Housing and Redevelopment Director for review, and to be executed by the City Manager, subject to the review and approval of the City Attorney. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the 15th day of February, 2000, by the following vote, to wit: AYES: Council Members Lewis, Hall, Finnila, Nygaard and Kulchin NOES: None ABSENT: None ABSTAIN: None ATTEST: &hOm LORR&NE M. WOOD, CITY CLERK (SEAC) . CC RESO NO. 2000-61 PAGE2 RECORDING REQUESTED BY ) ) 1 ) 1 1 1 1 ]Escrow No: 93048087-N77 ) SPACE ABOVE FOR RECORDER’S USE 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 AGREEMENT, made this 17th day of February , 2000, by PGP Carlsbad Seniors, Ltd., a Cahfomia Limited Partnership owner of the land hereinafter described and hereinafter referred to as “Owner”, and The City of Carlsbad present owner and holder of the deed of trust and note first hereinafter described and hereinafter referred to as “Beneficiary”; WITNESSETH THAT WHEREAS, Jefferson House, a General Partnership did execute a deed of trust dated December 19, 1983, to Ticor Title Insurance Company of California, a California corporation, as trustee, covering that certain real property described as follows: Lots 1 to 8, inclusive in Block 57 of Carlsbad, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 775, filed in the Office of the County Recorder of San Diego County on February 15, 1984. to secure a note in the sum of $765,440.00 dated December 19, 1983, in favor of The City of Carlsbad, which deed of trust was recorded in the office of the County Recorder of San Diego County, California, on February 28, 1984, as File/Page No.84-071757; and WHEREAS, Owner has executed or is about to execute a deed of trust and note in the sum of $2,235,000.00, dated February 16, 2000, in favor of Financial Institutional Partners Mortgage Company, L.P., hereinafter referred to as “Lender”, payable with interest and upon the terms and conditions described therein, which deed of trust is to be recorded concurrently herewith; and - WHEREAS, it is a condition precedent to obtaining said loan that said deed of trust above mentioned shall unconditionally be and remain at all times a lien or charge upon the land heretofore described, prior and superior to the lien or charge of the deed of trust fust above mentioned; and WHEREAS, Lender is willing to make said loan provided the deed of trust securing the same is a lien or charge upon the above described property prior and superior to the lien or charge of the deed of trust first above mentioned and provided that Beneficiary will specifically and unconditionally subordinate the lien or charge of the deed of trust first above mentioned to the lien or charge of the deed of trust in favor of Lender; and WHEREAS, it is to the mutual benefit of the parties hereto that Lender make such loan to Owner; and Beneficiary is willing that the deed of trust securing the same shall, when recorded, constitute a lien or charge upon said loan which is unconditionally prior and superior to the lien or charge of the deed of trust first above mentioned. NOW THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and suffkiency of which consideration is hereby acknowledged, and in order to induce Lender to make the loan above referred to, it is hereby declared, understood and agreed as follows: (1) That said deed of trust securing said note in favor of Lender, and any renewals or extensions thereof, shall unconditionally be and remain at all times a lien or charge on the property therein described, prior and superior to the lien or charge of the deed of trust first above mentioned. (2) That Lender would not make its loan above described without this subordination agreement. (3) That this agreement shall be the whole and only agreement with regard to the subordination of the lien or charge of the deed of trust first above mentioned to the lien or charge of the deed of trust in favor of Lender above referred to and shall supersede and cancel, but only insofar as would affect the priority between the deeds of trust heretofore specifically described, any prior agreements as to such subordination including, but not limited to, those provisions, if any, contained in the deed of trust first above mentioned, which provide for the subordination of the lien or charge thereof to another deed or deeds of trust or to another mortgage or mortgages. Beneficiary declares, agrees and acknowledges that (a> He consents to and approves (i) all provisions of the note and deed of trust in favor of Lender above referred to, and (ii) all agreements, including but not limited to any loan or escrow agreements, between Owner and Lender for the disbursement of the proceeds of Lender’s loan: (b) Lender in making disbursements pursuant to any such agreement is under no obligation or duty to nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom Lender 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; 6) He intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the deed of trust first above mentioned in favor of the lien or charge upon said land of the deed of trust in favor of Lender above referred to and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination specific loans and advances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination; and (4 An endorsement has been placed upon the note secured by the deed of trust first above mentioned that said deed of trust has by this instrument been subordinated to the lien or charge of the deed of trust in favor of Lender above referred to. 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 IMPROVEMENT OF THE LAND. IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS SUBORDINATION AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT THERETO. By: Mayor Its: State of California ) Counp of San Diego ) On kL$4Q.&&u & ,2000, before me, the undersi said State, personAlly appeared CYd%-PG.m\~ &if i? 24 fzktis IA personally known to me or proven to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ANITA J. E. HANSEN Commission # 1157552 Notary Public - Califomia f State of California ) County of San Diego ) on +k8- ,2000, before me, the undersigned, a Notary Public in and for said State, personally appeared C/c~uc& A FLU is - -.- -_-.._ personallyknownto me @F-Q tobethe person@) whose name($) is/ar+subscribed to the within instrument and acknowledged to me that he/sh&bey executed the same in his/her&&r authorized capacity&s& and that by hi&e&h& signature@ on the instrument the person@), or the entity upon behalf of which the person&0 acted, executed the instrument. - Loan No: 4000406 Order No.: 93048087-U 16 EXHIBIT “A” In executing this Subordination Agreement, Subordinating Lienholder acknowledges and agrees that its agreement with borrower and any terms and conditions thereof, whether expressed or implied, are solely between it and borrower and are of no concern to Financial Institutional Partners Mortgage Company, LP (in this Exhibit referred to as “FIPMC”); FIPMC is and will be throughout the term of FIPMC’s loan and any modification, extension or renewal thereof, under no duty or obligation to assure compliance with the terms and conditions of Subordinating Lienholder’s agreement with borrower; nor will FIPMC be under any obligation or duty to take any action or refrain from any action because of any knowledge it has or may have regarding any breach by borrower. Subordinating Lienholder further agrees, notwithstanding anything to the contrary in law, equity or agreement with borrower that this subordination is not subject to compliance, substantial or otherwise, with any provisions of such agreement with borrower, whether expressed or implied. Subordinating Lienholder acknowledges that FIPMC considers the above to be a material condition for making its loan to borrower. ‘I _. ‘.’ Initial \ Real Estate Broker. California Dept. of Real Estate-Lit. No. 01237257 DRE license information telephone no. (916) 227-0931 FEB-23-2000 14:45 .eCW I TAL GROWTH .- 619 454 3257 P .02/03 ! 8 , @ i ‘I I., ,’ ! .1 yUSE OF DOCUME~S+SZ+JC’I’J~~S AND INDE~&“KbN .; .: DATE: : FebnraryI?,2000: . I TO: mw Tifle&p&py~~~‘~~~ ‘, 3703 c& &$f&&&j&&&) [ ! s~pjqp~~~q ggip...:” :‘:i i .Attn: JOyceGray.. i ) j :: : ‘. ‘, RE: Ekirow No; p3948~~7-Njgr6.~ ; ‘. ’ 1. ‘. _‘, , I’ :’ FROMz Th+3*dQrlsbad : ..j :. :., . . .: .: : ,’ I hand you hem+ the fol&i,k~&X&&,L &$mr&lffoilD &g@&mb[d&l2/17/99 ’ a&taj by.me.Cjty of(=b+& ‘,’ ’ i ; :... ‘; ‘j : ‘. : _- ,Such documtit(s> @flkt(sj +rrin&&;$ W. re+prop~ w)lich is coma&$ kn+a “, 3090 Jeffefforr C+n@d& ; ~&&&j$&k+~:aa: ,a .;’ Lots 1 to. 8,: in@siviz; ix$ @lo& 77 of .C@lygd+ in tit? cify of C&is&l/ County of San Diego; State of ,@l$3*& +&ing U, Map th+ofNo: 775, iile# in the Office of the C&m@ R+@@ $$a+ Diego County gn Februuy 15,1?84. The City of Carkbad und&taw$ tkt t&e &ecu&m:of the &b&&ati&n A&m&t u&l result in its securi@ i&r&of in &&p&& I&o&ng $ubject to. &d of l+er priori@ than the lien of the new mty i$&& :‘b&g :‘ob+ined by new lend& he City ,of Q&bad (i) conseqts to and ~I+S 4 pmvisks of the’note &, d&d oft&t i6 f&w of new Lender, (ii) has satisfied: its@ +ga&ig the’ pupose of the fhadt~ b&g obtain&i and the manner in which’ any/all ti@dsniay be &ended, and (iii) ackno&igcq it h#s been advised to se& the &&e cif ‘its owri independent counkl’ &rding +l rardcations regardin its ex&ion of$is.document. :. .: ; The cost of preparation, pmceqing aud;recgrding, as applicible, shall be paid .by PGP Carlsbad~Sariors,. Ltd., a CXifor& L&it@ escrow. In the event of c&kila$on.ot~khis escrow, the doc~ent(s) FEB-23-2880 14 : 45 . f IV I TFlL GROWTH - 619 454 3257 P .63/83 is/are be marked ‘canceled’ and held in *is file. Any other dkposi& of said document(s) requires the &&ual tittep @trwtion of all parties h&to. Tha parties acknowledge @at in preparing this document escrow holder is doing&o only as an accommodation to the parties to complete th~‘escrow referenced above and has not given ynature. BY Mayor , _' Its:: '. i 1 ‘. .‘. : I ‘: ” ,.. 1, ; . .- w _.‘. : * :.;, . . . . .:. : . . ,3s&M: &p~yJ ’ ‘, ; : ‘.., .ii .’ .,, ‘. j ~ I . 3 : = I.!. . . 1, , -rnTa D 1717 \’ WTE IT - DON’T SAY ’ > ! Date March 1. 2000 X?x To FILE - (28 & 43) 0 Reply Wanted From P. Hopkins ONo Reply Necessary The original Subordination Agreement with PGP Carlsbad Seniors, LTD. and the Use of Documents Instructions and Indemnification was picked up by Chicago Title today (3/l/00).