First Amendment to Authority Other Funds Note
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FIRST AMENDMENT TO AUTHORITY OTHER FUNDS NOTE
PROMISSORY NOTE SECURED BY DEED OF TRUST
This FIRST AMENDMENT TO AUTHORITY OTHER FUNDS NOTE
PROMISSORY NOTE SECURED BY DEED OF TRUST (“First Amendment to Authority Other Funds Note”) is entered into and executed by MANCHESTER HOUSING PARTNERS LP , a California limited partnership, as borrower (therein and herein, “Maker” or “Developer”) executed and delivered to the ANAHEIM HOUSING AUTHORITY, a public body corporate and politic, as lender and beneficiary (therein and herein, “Beneficiary” or “Authority”)”.
A. Authority and Developer entered into that certain Affordable Housing Agreement (Manchester Orangewood) dated as of March 1, 2020 (“Original Agreement”) that relates to the construction, completion, operation, management and maintenance of a 102- unit affordable housing project now called Finamore Place (“Project”).
B. Pursuant to the Original Agreement, Authority, as Landlord, and Developer, as Tenant, entered into that certain unrecorded Ground Lease (Manchester Orangewood) dated as of March 1, 2020 for which a Memorandum of Ground Lease (Manchester Orangewood) was recorded in the Official Records, County of Orange, State of California (“Official Records”) on March 19, 2020 as Instrument No. 2020-000125688. The parties also entered into that certain Ground Lease Implementation Agreement (Commercial Component) (“Implementation Agreement”) dated as of May 18, 2023 relating to the implementation, terms and conditions of the Sublessees in occupancy of certain commercial space, onsite parking, and the ingress/egress and circulation within the Project.
The Ground Lease (Manchester Orangewood) together with the Implementation Agreement are referred to herein as the “Original Ground Lease”.
C. In implementation of the Original Agreement, Authority and Developer also entered into a series of documents and instruments, also each dated as of March 1, 2020, including without limitation that certain (i) Regulatory Agreement (“Regulatory Agreement”) recorded in the Official Records by Instrument No. 2020-000125690, (ii) Authority Other Funds Note, Promissory Note Secured by Deed of Trust, a promissory note evidencing the Authority Other Funds Loan issued by Authority to Developer in an original principal amount of Three Million Two Hundred One Thousand Three Hundred Eighty Eight and No/100ths Dollars ($3,201,388.00) (“Original Authority Other Funds Note”), (iii) Authority Other Funds Deed of Trust and Assignment of Rents as recorded in the Official Records as Instrument No. 2020-000125695 that secures the Original Authority Other Funds Note (“Original Authority Other Funds Deed of Trust”), and (iv) other instruments related to implementation of the Original Agreement that are referred to therein as part of the “Project Documents”.
D. The Original Authority Other Funds Note was one of three subordinate loans provided by the Authority to Developer pursuant to the Original Agreement The proceeds of the Original Authority Other Funds Note was expended by Developer to fund , in part, certain costs incurred by Developer to construct and complete a 102-unit affordable housing development now called Finamore Place (“Project”).
E. Capitalized terms used in this First Amendment to Authority Other Funds Note are as defined in the Original Agreement and Original Ground Lease unless otherwise defined herein.
First Amendment to Authority Other Funds Note
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F. The lien or charge of the Original Authority Other Funds Deed of Trust was subordinated to the lien or charge of the deed of trust securing the Developer’s construction loan in an original principal amount of $32,312,214.00 by Instrument No. 2020-000125692 recorded on March 19, 2020 in the Official Records.
G. CalOptima Health, a California public agency (“CalOptima”), was founded by the community as a County Organized Health System that offers health insurance programs for low - income children, adults, seniors and people with disabilities. CalOptima has an ongoing commitment to Orange County's vulnerable population of people experiencing homelessness, and operates a grant program to facilitate and accelerate the creation of affordable and permanent supportive housing units, including in Anaheim.
H. In August 2023, the City of Anaheim, a California municipal corporation and charter city, through its Housing and Community Development Department (“City”), prepared and submitted an application to CalOptima seeking an award of capital grant funds for the Project under the Department of Health Care Services’ Housing and Homelessness Incentive Program (“HHIP”).
CalOptima awarded the City One Million Five Hundred Thousand Dollars ($1,500,000) (“CalOptima Funding”) The City authorized transfer to the Authority of the CalOptima Funding pursuant to that certain Cooperation Agreement (CalOptima Funding) as an additional source of funding for the Project. The CalOptima Funding will be loaned by the Authority to Developer and added to the principal due under the Original Authority Other Funds Note, as amended by (i) that certain First Amendment to Affordable Housing Agreement (Manchester Orangewood) (“First Amendment to Agreement”), (ii) as evidenced by this First Amendment to Authority Other Funds Note, and (iii) as secured by that certain First Modification of Deed of Trust and Assignment of Rents (Authority Other Funds Deed of Trust) (“First Modification of Deed of Trust”), the form of which amendments were considered and approved by the Authority at an open public meeting on December 5, 2023.
I. The CalOptima Funding awarded to the City, transferred to the Authority, and then loaned to the Developer shall be expended for the benefit of the residents of the Project and tied to participation in the HHIP, which allows the CalOptima Funding to fund affordable and permanent supportive housing. HHIP aims to prevent and address housing insecurity for Medi -Cal members by ensuring those experiencing homelessness have a clear path into housing and can access the services needed to remain housed; and many residents at the Finamore Place Project will be served with this additional funding.
J. Due to increased costs incurred in the construction, completion, and ongoing operation of the Finamore Place Project, Developer requested additional funding from the Authority, and by the First Amendment to Agreement and this First Amendment to Authority Other Funds Note, the Authority agrees to loan to Developer an additional Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) on the terms and conditions set forth therein and herein, as executed and delivered of even date herewith, which amount is a two-tiered tranche comprised of: (1) One Million Five Hundred Thousand Dollars ($1,500,000.00) sourced from the CalOptima Funding, and (2) One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) sourced from the Authority’s Low to Moderate Income Housing Asset Fund (“ LMIHAF”, and herein the $1.25M is referred to as the “LMIHAF Funding”).
First Amendment to Authority Other Funds Note
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K. The amended, cumulative principal amount of the Authority Other Funds Loan is Five Million Nine Hundred Fifty-One Thousand Three Hundred Eighty -Eight Dollars ($5,951,388) (“Amended Authority Other Funds Note Amount”).
L. In connection with this matter and related matters affecting funding to the Project, Developer has opened escrow and title accounts with First American Title Insurance Company, National Commercial Services (“First American”), at the issuing office located at 18500 Von Karman Ave, Suite 600, Irvine, California 92612, Order No. NCS 810632C-SA1, Reference No.
NWC Manchester and Orangewood in Anaheim, Escrow Officer Ryan Hahn, Title Officer Jeffery Paschal (“First American NCS 810632C-SA1”).
M. By this First Amendment to Authority Other Funds Note, Developer desires to amend the Original Authority Other Funds Note and increase the total principal due hereunder and thereby define the “Amended Authority Other Funds Note Amount” as $5,951,388.
NOW THEREFORE, the Original Authority Other Funds Note is hereby amended by this First Amendment to Authority Other Funds Note as follows:
Section 1. Increased Principal. Developer agrees to borrow from the Authority an additional Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000). In this regard, Developer agrees that the Original Authority Other Funds Note is hereby amended to increase the principal amount from $3,201,388.00 by an additional $2,750,000 for a cumulative Amended Authority Other Funds Note Amount of $5,951,388.
Section 2. Terms and Conditions of Repayment of Authority Other Funds Loan pursuant to the Original Authority Other Funds Note as amended by this First Amendment to Authority Other Funds Note. The terms and conditions of repayment of the Authority Other Funds Loan shall be amended as follows:
2.1 LMIHAF Funding. The repayment of both the original principal amount of $3,201,388 plus the LMIHAF Funding and loan of $1,250,000 (total $4,451,388) added to the Authority Other Funds Loan shall be subject to the same terms and conditions of the Original Authority Other Funds Note, including without limitation interest accrual at the rate of three percent (3%) simple interest per annum and repayment from Residual Receipts as set forth therein and herein; provided, however, that notwithstanding anything to the contrary in the Project Documents, all payments made by Developer pursuant to the Original Authority Other Funds Note, as modified by this First Amendment to Authority Other Funds Note, shall be applied first towards the repayment of interest and principal allocable to portion of the Amended Authority Other Funds Note Amount comprised of the $4,451,388 loan funds addressed in this Section 2.1 until all of such amounts have been fully repaid.
2.2 CalOptima Funding. With one exception as set forth in this Section 2.2., the repayment of the funds allocable to the CalOptima Funding and loan of $1,500,000 added to the Authority Other Funds Loan shall be subject to the same terms and conditions of the Original Authority Other Funds Note including without limitation repayment from Residual Receipts as set forth therein following repayment of all interest and principal allocable to the portion of the Amended Authority Other Funds Note Amount comprised of the $4,451,388 loan funds addressed in Section 2.1 above, excepting that the portion of the Amended Authority Other Funds Note Amount First Amendment to Authority Other Funds Note
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comprised of the $1,500,000 CalOptima Funding shall not accrue interest, i.e., 0% interest rate as to the funds allocable to the CalOptima Funding as a part of the Authority Other Funds Loan, as amended hereby.
Section 3. No Defense or Offset. Developer agrees that it currently has no defenses or offsets to the enforcement of its obligations under the Original Authority Other Funds Note, including as amended by this First Amendment to Authority Other Funds Note.
Section 4. Attorney Fees. In the event of any action between Authority and Developer seeking enforcement of any of the terms and conditions herein, the prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, including without limitation its expert witness fees and reasonable attorney’s fees.
Section 5. Governing Law; Venue . This First Amendment to Authority Other Funds Note shall be governed by the internal laws of the State of California and any question arising hereunder shall be construed or determined according to such law. The Superior Court of the State of California in and for the County of Orange, or such other appropriate court in such county, shall have exclusive jurisdiction of any litigation between the parties concerning this First Amendment to Authority Other Funds Note.
Section 6. No Other Changes . Except as provided herein, in all other respects, the terms and conditions of the Original Authority Other Funds Note shall remain in full force and effect.
IN WITNESS WHEREOF, Developer has duly executed this First Amendment to Authority Other Funds Note Promissory Note Secured by Deed of Trust and is dated for reference purposes as of December [__], 2023.
“DEVELOPER and MAKER”
MANCHESTER HOUSING PARTNERS LP,
a California limited partnership
By: JHC-Manchester LLC
a California limited liability company,
its managing general partner
By: Jamboree Housing Corporation
a California nonprofit public benefit
corporation, its sole member and manager
By:
Michael Massie
Chief Development Officer