Attachment C
31044858-v3
4913-7571-1396v.2 0061257-000372
WHEN RECORDED MAIL TO:
Citibank, N.A.
Transaction and Asset Management Group/
Post Closing
Citi Community Capital
3800 Citibank Center
Tampa, Florida 33610
Re: The Perlman Deal ID No. ________________
SUBORDINATION AGREEMENT
(City of Santa Maria)
Attachment C
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
SUBORDINATION AGREEMENT
(City of Santa Maria)
THIS SUBORDINATION AGREEMENT (this “Agreement”) is dated and effective as of _______________ 1, 2026, by and among the CITY OF SANTA MARIA, a California municipal corporation (the “City”), CITIBANK, N.A., a national banking association (“Senior Lender”), and SANTA MARIA NORTH BROADWAY LP , a California limited partnership (“Borrower”). The date of this Agreement as set forth above is for reference purposes only, and this Agreement will not be effective and binding until the Closing Date (as defined in the Borrower Loan Agreement).
RECITALS:
A. The Borrower has applied to the California Municipal Finance Authority , a joint exercise of powers agency duly organized and existing under the laws of the State of California (“Governmental Lender ”), for a loan (the “ Senior Loan”) for the acquisition, construction, development, equipping and/or operation of a 150-unit multifamily residential project (the “Project”) located on the land described in Exhibit A hereto in the City of Santa Maria, Santa Barbara County, California, known or to be known as The Perlman (the “Mortgaged Property”).
B. The Senior Loan is evidenced by (i) that certain Multifamily Note (Tax -Exempt), dated as of the Closing Date, in the maximum principal amount of $______________, made by Borrower payable to the order of Governmental Lender (the “Tax-Exempt Note”), (ii) that certain Multifamily Note (Taxable), dat ed as of the Closing Date, in the maximum principal amount of $_______________, made by Borrower payable to the order of Governmental Lender (the “Taxable Note”, and together with the Tax-Exempt Note, the “Senior Note”) and (iii) that certain Borrower Loan Agreement, dated as of the date hereof, by and between Borrower and Governmental Lender (the “Borrower Loan Agreement”)
C. The Senior Loan is secured by, among other things, that certain Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of the date hereof, executed by Borrower for the benefit of Governmental Lender (as the same may from time to time be extended, consolidated, substituted for, modified, increased, amended and supplemented, the “Senior Security Inst rument”) which Senior Security Instrument encumbers the Mortgaged Property.
D. The Borrower has requested that Senior Lender enter into that certain Funding Loan Agreement, dated as of the date hereof , by and among Governmental Lender , __________________________, a ____________________________ , as fiscal agen t (“Fiscal Agent”), and Senior Lender (the “Funding Loan Agreement”), pursuant to which Senior Lender will make a loan to Governmental Lender (the “ Funding Loan”), the proceeds of which will be used to make the Senior Loan pursuant to the Borrower Loan Agreement to Borrower. The Senior Loan will be advanced to Borrower pursuant to that certain Construction Funding Agreement, dated as of the date hereof , by and between Borrower and Senior Lender (the “ Construction Funding Agreement ”; together with the Senior Note, the Senior Security Instrument, the 2 The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City) Borrower Loan Agreement, and all other documents executed in connection with the Senior Loan, including this Agreement, the “Senior Loan Documents”).
E. The Se nior Note and the Senior Security Instrument shall each be assigned by Governmental Lender to ///[Fiscal Agent ]/// to secure the Funding Loan. The interest of the Governmental Lender in the Borrower Loan Agreement shall be assigned to Fiscal Agent and Senior Lender, except for the Unassigned Rights (as defined in the Funding Loan Agreement).
Senior Lender has requested that all remaining Borrower Loan Documents be executed in favor of Senior Lender.
F. The City and Vernon Property Group, LLC, a California limited liability company (“Developer”), entered into that certain Sales and Disposition Agreement dated as of September 17, 2024 (the “ SDA”), a memorandum of which (the “ Memorandum of SDA”) will be recorded in the Recording Office (as hereinafter defined), and pursuant to which the City has agreed to sell to Developer, and Developer has agreed to develop, certain real property located in Santa Barbara County, California and more particularly described therein, which real property includes the Mortgaged Property. The SDA provides for the construction and development of an affordable housing project on the Mortgaged Property, and in furtherance of thereof, Developer, Borrower and the City are entering into that certain Estoppel, Amendment, and Partial Assignment of Sales and Disposition Agreement (the “Assignment and Assumption Agreement”), pursuant to which Developer will assign to Borrower all of its right, title and interest in, to and under the SDA, but only as it relates to the Mortgaged Property, and Borrower will assume all of Developer’s right, title, interest and obligations thereunder but only as it relates to the Mortgaged Property. The Mortgaged Property will be conveyed pursuant to that certain Grant Deed (the “ Grant Deed”) executed by the City in favor of Borrower. In connection with the SDA, Developer and the City are also entering into that certain Memorandum of Option and Sales and Disposition Agreement dated as of ________________, 2026 (the “Memorandum of Option”, and together with Sections
9.3, 9.8 and 9.9 of the SDA, the Memorandum of SDA, and Sections ___ of the Grant Deed , the “City Documents”). [NOTE: THE GRANT INCORPORATES ALL OF THE TERMS OF THE SDA. WE NEED TO BE ABLE TO SUBORDINATE THOSE SAME PROVISIONS (SECTIONS 9.3, 9.8 AND 9.9) HERE, WHICH MAY REQUIRE SOME MODIFICATIONS TO THE GRANT DEED SO THAT WE CAN SUBORDINATE SPECIFIC SECTIONS THEREIN].
G. As a condition to consenting to Borrower entering into the Assignment and Assumption Agreement, Senior Lender requires that the City execute and deliver this Agreement.
H. The Senior Security Instrument , the SDA , the Memorandum of SDA, and the Memorandum of Option are intended to be recorded in the Official Records of Santa Barbara County, California (the “Recording Offices”).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induc e the making of the Senior Loan, the City hereby agrees as follows:
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4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
1. City Documents are Subordinate; Acts by Senior Lender do not Affec t Subordination.
(a) The City hereby covenants and agrees on behalf of itself and its successors and permitted assigns that the City Documents are and shall at all times continue to be, subordinate, subject and inferior (in priority) to the prior payment in fu ll of the Senior Loan, and that the liens, rights, and priority interests granted to the City in connection with the City Documents are, and are hereby expressly acknowledged to be in all respects and at all times, subject, subordinate and inferior in all respects to the liens, rights, payment, priority and security interests granted to Senior Lender under the Senior Loan and the Senior Loan Documents and the terms, covenants, conditions, operations and effects thereof.
(b) The subordination of the City Documents shall continue in the event that any payment under the Senior Loan Documents (whether by or on behalf of Borrower, as proceeds of security or enforcement of any right of set -off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In such event, the Senior Loan or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if such payment on account of the Senior Loan had not been made.
(c) The City hereby acknowledges and agrees that Senior Lender may, subject to the last sentence of this paragraph (c), without the consent or approval of the City, agree with Borrower to extend, consolidate, modify, increase or amend any or all the Senior Loan Documents and otherwise act or fail to act with respect to any matter set forth in any Senior Loan Document (including, without limitation, the exercise of any rights or remedies, waiver, forbearance or delay in enforcing any rights or remedies, the declaration of acceleration, the declaration of defaults or events of default, the release, in whole or in part, of any collateral or other property, and any consent, approval or waiver), and all such extensions, consolidations, modifications, amendments acts and omissions shall not release, impair or otherwise affect the City’s obligations and agreements hereunder. (d) Without limiting any other provision of this Section 1, the City further agrees that, notwithstanding any provision of the City Documents to the contrary, (i) Senior Lender shall have all approval, consent and o versight rights in connection with any insurance claims relating to the Mortgaged Property and any decisions regarding the use of insurance proceeds after a casualty loss or condemnation awards, (ii) any restrictions on transfers of the Mortgaged Property shall not apply to any transfer of title pursuant to foreclosure, or of (or the exercise of a power of sale contained in) the Senior Security Instrument, and (iii) the City shall not exercise any right under the City Documents, in equity or at law, to take possession of the Mortgaged Property or have a receiver appointed with respect to the Mortgaged Property, unless the City shall have provided Senior Lender with at least sixty (60) days’ prior notice of such exercise. 4 The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
2. Enforcement Costs. In the event any legal action is filed to enforce or interpret this Agreement, then the prevailing party in such action shall be entitled to receive from the non - prevailing party the prevailing party’s reasonable attorney’s fees and other legal costs.
3. Notices. Any notice which any party hereto may be required or may desire to give hereunder shall be deemed to have been given and shall be effective only if it is in writing and (i) delivered personally, (ii) mailed, postage prepaid, by United St ate registered or certified mail, return receipts requested, or (iii) delivered by overnight express courier, in each instance addressed as follows:
If to Borrower: Santa Maria North Broadway LP
5251 Ericson Way
Arcata, California 95521
Attention: Christopher Dart
With a copy to: Odu & Associates
31805 Temecula Parkway, Suite 720
Temecula, California 92592
Attention: Nkechi Odu, Esq.
And a copy to: RBC Community Investments, LLC
600 Superior Avenue, Suite 2300
Cleveland, Ohio 44144
Attention: President and General Counsel
And a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, Suite 5880
Los Angeles, California 900071
Attention: Kyle Arndt, Esq.
If to the City: City of Santa Maria
110 E. Cook
Santa Maria, California 93454
Attention: City Manager
With a copy to:
And a copy to:
City of Santa Maria
204 E. Cook
Santa Maria, California 93454
Attention: City Attorney
City of Santa Maria
110 S. Pine Street
Santa Maria, California 93454
Attention: Community Development Director
5 The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City) If to Senior Lender: Citibank, N.A.
388 Greenwich Street, Trading 4th Floor
New York, New York 10013
Attention: Transaction and Asset Management Group
Re: The Perlman Deal ID No. ______________
Facsimile: (212) 723-8209
With a copy to: Citibank, N.A.
Transaction and Asset Management Group/Post Closing
Citi Community Capital
3800 Citibank Center
Tampa, Florida 33610
Re: The Perlman Deal ID No. ______________
Prior to the Conversion Date,
with a copy to:
Citibank, N.A.
388 Greenwich Street, Trading 4th Floor
New York, New York 10013
Attention: Account Specialist
Re: The Perlman Deal ID No. ______________
Facsimile: (212) 723-8209
Following the Conversion
Date, with a copy to:
Citibank, N.A.
c/o Berkadia Commercial Servicing Department
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Client Relations Manager
Re: The Perlman Deal ID No. ______________
Facsimile: (215) 328-0305
And a copy of any notices of
default sent to:
Citibank, N.A.
388 Greenwich Street, 17th Floor
New York, New York 10013
Attention: General Counsel’s Office
Re: The Perlman Deal ID No. ______________
Facsimile: (646) 291-5754
or at such other addresses or to the attention of such other persons as may from time to time be designated by the party to be addressed by written notice to the other in the manner herein provided. Notices, demands and requests given in the manner aforesaid shall be deemed sufficiently served or given for all purposes hereunder when received or when delivery is refused or when the same are returned to sender for failure to be called for.
This Agreement shall constitute notice to City of the notice address of Senior Lender, as holder of a deed of trust secured by the Mortgaged Property, for purposes of Section 8.3 of the SDA. All notices under Section 8.3 of the SDA shall be delivered to Senior Lender at the addresses set forth above in this Section 3.
6 The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
4. WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT PERMITTED
UNDER APPLICABLE LAW, EACH OF THE PARTIES H ERETO (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING
OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES THAT IS
TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH IS SUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
5. Term. The term of this Agreement shall commence on the date first written above and shall continue until the earliest to occur of the following events: (i) the payment of all of the principal of, interest on and other amounts payable under the Senior Loan Documents; or (ii) the acquisition by Senior Lender of Borrower’s interest in the Mortgaged Property pursuant to judicial foreclosure, or of (or the exercise of a power of sale contained in) the Senior Security Instrument.
6. Miscellaneous.
(a) City shall give Senior Lender a concurrent copy of each notice of a violation or other material notice given by City under the IIG Restrictive Covenant. (b) This Agreement shall bind and inure to the benefit of all successors and assigns of City and Senior Lender. Senior Lender may assign its interest in the Senior Loan Documents without notice to or consent of City. City may assign its interest, subject to this Agreement, in the Grant Documents without notice to or consent of Senior Lender. (c) Senior Lender hereby consents to the IIG Restrictive Covenant; provided, however, that this Agreement does not constitute an approval by Senior Lender of the terms of the IIG Restrictive Covenant. City hereby consents to the Senior Loan and the Senior Loan Documents; provided, however, that this Agreement does not constitute an approval by City of the terms of the Senior Loan Documents.
(d) This Agreement may be executed in counterpart originals, each of which shall constitute an original and all of which, when taken together, shall constitute one and the same instrument.
(e) IN ALL RESP ECTS, INCLUDING, WITHOUT LIMITATION,
MATTERS OF CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER, THIS AGREEMENT HAS BEEN
ENTERED INTO AND DELIVERED IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE WHERE
THE MORTGAGED PROPERTY IS LOCATED, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW.
(f) Time is of the essence in the performance of every covenant and agreement contained in this Agreement.
7 The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City) (g) If any provision or remedy set forth in this Agreement for any reason shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or remedy of this Agreement and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or remedy had never been set forth herein, but only to the extent of such invalidity, illegality or unenforceability.
(h) Each party hereto hereby represents and warrants that this Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding agreement enforceable in all material respects in accordance with its terms. (i) Borrower hereby acknowledges and consents to the execution of this Agreement, and agrees to be bo und by the provisions hereof that are applicable to Borrower. Solely as between Senior Lender and City, all of the signatories below hereby agree that to the extent of any conflict between the terms and provisions of this Agreement and the terms and provisions of the Senior Loan Documents respectively, the terms and provisions of this Agreement shall gover n and control. By executing this Agreement in the place provided below, Borrower hereby (i) acknowledges the provisions hereof, (ii) agrees not to take any action inconsistent with Senior Lender’s rights or City’s rights under this Agreement, (iii) waives and relinquishes to the maximum extent permitted by law any and all rights, defenses and claims now existing or hereinafter accruing relating to City’s forbearance from exercising any rights and remedies pursuant to this Agreement, including, without limi tation, any defenses based on the statute of limitations or any equitable defenses, such as laches, and (iv) acknowledges and agrees that (A) this Agreement is entered into for the sole protection and benefit of Senior Lender and City (and their respective successors, assigns and participants), and no other person (including Borrower) shall have any benefits, rights or remedies under or by reason of this Agreement, (B) nothing in this Agreement is intended, or shall be construed to, relieve or discharge the obligations or liabilities of any third party (including Borrower under the Senior Loan Documents), (c) neither of them nor any of their affiliates shall be, or be deemed to be, beneficiaries of any of the provisions hereof or have any rights hereunder whatsoever, and (D) no provision of this Agreement is intended to, or shall be construed to, give any such third party (including Borrower) any right subrogating to the rights of, or action against, Senior Lender or City.
(j) No amendment, supplement, modificati on, waiver or termination of this Agreement shall be effective against any party unless such amendment, supplement, modification, waiver or termination is contained in a writing signed by such party. (k) No party other than Senior Lender and City shall have any rights under, or be deemed a beneficiary of any of the provisions of, this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Attachment C
S-1
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City) IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Subordination Agreement or caused this Subordination Agreement to be duly executed and delivered by their respective authorized representatives as of the date first set forth above.
SENIOR LENDER:
CITIBANK, N.A.
By: ________________________________
________________________________
Authorized Signatory
Deal ID No. ______________________
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On ______________ , 202 6 before me, __________________ _________________________ (here insert name and title of the officer), personally appeared _____________________________ who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
S-2
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City) CITY:
CITY OF SANTA MARIA,
a California Municipal Corporation
By: ________________________________
Name: ________________________________
Title: ________________________________
APPROVED AS TO FORM:
____________________________
City Attorney
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On ______________, 2026 before me, ___________________________________________ (here insert name and title of the officer), personally appeared _____________________________ who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
S-3
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
CONSENT OF DEVELOPER
Developer hereby acknowledges receipt of a copy of this Subordination Agreement by and between Citibank, N.A. and the City of Santa Maria, and consents to the agreement of the parties set forth herein.
DEVELOPER:
VERNON PROPERTY GROUP, LLC,
a California limited liability company
By: ________________________________
Name: ________________________________
Title: ________________________________
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On _____ _________, 2026 before me, ___________________________________________ (here insert name and title of the officer), personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) i s/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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
S-4
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
CONSENT OF BORROWER
Borrower hereby acknowledges receipt of a copy of this Subordination Agreement by and between Citibank, N.A. and the City of Santa Maria, and consents to the agreement of the parties set forth herein.
BORROWER:
SANTA MARIA NORTH BROADWAY LP,
a California limited partnership
By: Santa Maria North Broadway LLC,
a California limited liability company,
its Administrative General Partner
By: Danco Communities,
a California corporation,
its Manager
By: ______________________________
Daniel Johnson
President
By: Community Revitalization and Development
Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By: _________________________________
David Rutledge
President
Attachment C
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On ______________, 2026 before me, ___________________________________________ (here insert name and title of the officer), personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose n ame(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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF
On ______________, 2026 before me, ___________________________________________ (here insert name and title of the officer), personally appeared _____________________________ who proved to me on t he 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________ (Seal)
Attachment C
The Perlman
4913-7571-1396v.2 0061257-000372 Subordination Agreement (City)
EXHIBIT A
LEGAL DESCRIPTION