Agenda packet, special joint meeting — South Gate City Council, August 23, 2022

SPECIAL JOINT CITY COUNCIL/HOUSING AUTHORITY

SPECIAL JOINT MEETING AGENDA
Tuesday, August 23, 2022 at
5:30 p.m.

AMENDED

SOUTH GATE COUNCIL CHAMBERS
8650 CALIFORNIA AVENUE

SOUTH GATE, CA
90280
DIAL-IN-NUMBER: 1 (669) 900-6833
MEETING ID: 830 7359 9269
HTTPS://US02WEB.ZOOM.US/J/83073599269
Call to Order/Roll Call
CALL TO ORDER:

Al Rios, Mayor/Chairperson
ROLL CALL:

Yodit Glaze, City Clerk/Recording Secretary

Council Members/Agency Members

MAYOR/CHAIRPERSON CITY CLERK/RECORDING SECRETARY Al Rios Yodit Glaze

VICE MAYOR/CHAIRPERSON CITY ATTORNEY/AUTHORITY COUNSEL Maria del Pilar Avalos Raul F. Salinas

COUNCIL MEMBERS/AGENCY MEMBERS CITY/MANAGER/EXECUTIVE DIRECTOR Maria Davila Chris Jeffers Denise Diaz
Gil Hurtado

DIRECTOR OF COMMUNITY DEVELOPMENT/

SECRETARY
Meredith Elguira

1 Meeting Schedule
The regular meetings of the Authority Members are held on the second and fourth Tuesday of each month, closed session business will usually commence at 5:30 p.m., when scheduled, and general business session will commence at 6:30 p.m.

Brown Act
Agendas are drafted to accurately state what the legislative body is being asked to consider. The legislative body can take action on "all items" listed on the agenda and be in compliance with the open meeting laws. Under the Brown Act, no action may be taken on a matter unless it is listed on the agenda, or unless certain emergency or special circumstances exist. The governing body may direct staff to investigate and/or schedule certain matters for consideration at a future meeting.

City's Vision Statement
Coming Soon
Public Communications
Public Comments on agenda items are limited to three (3) minutes. All comments are to be addressed directly to the Authority Members not to the members of the public.

Meeting Compensation Disclosure
Pursuant to Government Code Section 54952.3: Disclosure of compensation for meeting attendance by Authority Members is $75.00 per meeting regardless of the amount of meetings.

Closed Session

1. CONFERENCE WITH LEGAL COUNSEL-REAL PROPERTY NEGOTIATIONS Pursuant to Government Code Section 54956.8

Property APN: 6222-014-023
Property Address: 8931 Dudlext Ave., South Gate, CA 90280 City Negotiator: Chris Jeffers, City Manager
Negotiating with: SG Realty
Under Negotiation: Terms of Sale/Subordination Agreement Documents:

JOINT CLOSED SESSION MEETING 08232022.pdf
Open Session Agenda

1. Subordination Agreement with SG Realty Group, Inc.

The City Council will consider: (CD)
a
.

Approving the Subordination Agreement with SG Realty Group, Inc., for the real property located at 8931 Dudlext Avenue, South Gate, and the amended and restated Agreement; and
b
.

Authorizing the Mayor to execute the Subordination Agreement and the Amended and Restated Agreement in a form acceptable to the City Attorney; and 2 c
.

Authorizing the Director of Community Development to act as an agent for the City and execute any additional documents required to implement the Subordination Agreement and the Amended and Restated Agreement.

The Housing Authority will consider: (CD)
a
.

Approving the Subordination Agreement with SG Realty Group, Inc., for the real property located at 8931 Dudlext Avenue, South Gate, and the amended and restated Agreement; and
b
.

Authorizing the Executive Director of the Housing Authority to execute the Subordination Agreement and the Amended and Restated Agreement in a form acceptable to the Legal Counsel; and
c
.

Authorizing the Secretary to the Housing Authority to act as an agent for the Authority and execute any additional documents required to implement the Subordination Agreement and the Amended and Restated Agreement.

Documents:

Item 1 Report 08232022.pdf
Comments From The Audience - Non-Agenda Items
Reports And Comments From City Officials
Adjournment
I, Yodit Glaze, City Clerk, certify that a true and correct copy of the foregoing Meeting Agenda was posted on August 18, 2022, at 4:20 p.m., as required by law.

Yodit Glaze
City Clerk

GENERAL NOTICE TO THE PUBLIC
The City Council adopted new rules relating to the conduct of the public meetings, proceedings, and business in the City of South Gate on July 12, 2022, (Resolution 2022-38-CC) and go into effect on August 1, 2022. Resolution #2022-38-CC is available at the City Clerk’s Office.

MEETING SCHEDULE
Regular meetings of the Housing Authority are held on the second and fourth Tuesday of each month, closed session meetings will commence at 5:30 p.m. unless posted otherwise on its agenda. The regular City Council meetings will commence at 6:30 p.m. Agendas are available at the following locations:

City
Clerk's Office,
Public Notice Boards at City Hall, and on the
City’s web page at
https://www.cityofsouthgate.org
3 The Public can sign up to receive automatic notices of postings of agendas for the City Council or any other Commission or Board of the City of South Gate. Visit the City webpage and click on the Agenda & Minutes icon. That will take you the page where an individual can enter their email in the “Email Updates” box to register.

PUBLIC COMMENT/PARTICIPATION
Any person may request to address a legislative body during a public meeting. The Presiding Officer will call upon those present in the Council Chambers first. After all speakers in the Chambers have spoken, the Presiding Officer will call upon those participating via zoom or teleconference.

Speakers are limited to three (3) minutes on any item listed on the agenda, including public hearings.

Under Comments from the Audience portion, speakers are also limited to a single three (3) minutes time limit. Comments from the Audience is initially limited to 45 minutes at each meeting. Any speaker still wishing to speak, that did not speak, will have an addition Comments from the Audience opportunity after the last business item is finished. The Presiding Officer may extend the time limit as long as there is no objection from the Housing Authority as a body.

To ensure that the public is able to participate, the City provides the opportunity to submit their comments in person, virtually, email, phone call, mail and any other method which may become available. Methods of participation may be subject to change during other such times when a State of Emergency, Health Order or State Executive Order limits in-person participation.

CURFEW
In absence of a motion duly adopted by majority vote of the Housing Authority, the Presiding Officer may adjourn the Housing Authority meetings at 10:30 p.m. The Presiding Officer may ask the Housing Authority if any agenda items listed should be continued or dealt with during the meeting. For those items to be continued, the Housing Authority can direct the item be placed on the next Housing Authority agenda or the current meeting may be adjourned to a time certain at which time the meeting shall be reconvened as an Adjourned Regular Meeting of the Housing Authority and action upon the published agenda continued.

STAFF REPORTS
As a general rule, staff reports. or other written documentation are prepared/organized with respect to each item of business listed on the agenda. Meeting agendas and staff reports are available at least 72- hours prior to the scheduled regular Housing Authority meeting and a minimum of 24-hours prior to a Housing Authority meeting. There are times when the housing Authority receives written material, revised material after the posting of agendas, these materials are become a public record and will be available for public view within 72-hours after the meeting in which they were received. Those materials and any other public document can be inspected in the City Clerk's Office located at 8650 California Avenue, South Gate.

SERVICES TO FACILITATE ACCESS TO PUBLIC MEETINGS
In compliance with the American with Disabilities Act, if you need special assistance to participate in the Housing Authority Meetings, please contact the Office of the City Clerk. Notification 48 hours prior to the Housing Authority Meeting will enable the City to make reasonable arrangements to assure accessibility.

For further information, please contact the Office of the City Clerk at (323) 563-9510 or via email at [email protected]
.
4 MEMORANDUM
TO: Chris Jeffers, City Manager
FROM: Meredith Elguira, Director of Community Development( DATE: August 17, 2022
StJBJECT: CLOSED SESSION ITEM FOR JOINT CITY COUNCIL AND THE SOUTH GATE HOUSING AUTHORITY MEETING OF AUGUST 23, 2022 The following item should be listed on the Closed Session Agenda for joint City Council and the South Gate Housing Authority Meeting of the City of South Gate on August 23, 2022, at 5:30 p.m.:

1. CONFERENCE WITH LEGAL COUNSEL - REAL PROPERTY

NEGOTIATIONS
Pursuant to Governtnent Code Section 54956.8
Property APN:

Property Address:

City Negotiator:

Negotiating with:

Under Negotiation:
6222-014-023
8931 Dudlext Ave, South Gate, CA 90280
Chris Jeffers, City Manager
SG Realty
Terms of Sale/ Subordination Agreement
If you have any questions, please do not hesitate to contact this office immediately. 5 Item No. 1
City of South Gate

JOINT CITY COUNCIL AND HOUSING AUTHORITY
AGENDA IBI[LL
For the Special Meeting of: August 23, 2022
Originating Depaitment: Community Development
SUBJECT: SUBORDINATON AGREEMENT WITH SG REALTY GROUP, INC., ON REAL PROPERTY LOCATED AT 8931 DUDLEXT AVENUE, SOUTH GATE, AND

SUBSTITUTION OF TRUSTEE AND DEED OF FULL RECONVEYANCE PURPOSE: To discuss and consider a request from SG Realty Group, Inc., to approve a Subordination Agreement and Substitution of Trustee and Deed of Full Reconveyance relating to the property located at 8931 Dudlext Avenue, South Gate.

RECOMMENDED ACTION: The City Council will consider:
a. Approving the Subordination Agreement with SG Realty Group, Inc., for the real propeity located at 8931 Dudlext Avenue, South Gate, and the amended and restated Agreement; and b. Authorizing the Mayor to execute the Subordination Agreement and the Amended and Restated Agreement in a form acceptable to the City Attorney; and c. Authorizing the Director of Community Development to act as an agent for the City and execute any additional documents required to implement the Subordination Agreement and the Amended and Restated Agreement.

RECOMMENDED ACTION: The Housing Authority will consider:
a. Approving the Subordination Agreement with SG Realty Group, Inc., for the real property located at 8931 Dudlext Avenue, South Gate, and the amended and restated Agreement; and b. Authorizing the Executive Director of the Housing Authority to execute the Subordination Agreement and the Amended and Restated Agreement in a form acceptable to the Legal Counsel; and
c. Authorizing the Secretary to the Housing Authority to act as an agent for the Authority and execute any additional documents required to implement the Subordination Agreement and the Amended and Restated Agreement.

FISCAL IMPACT: There is no fiscal impact associated with this transaction. However, the approving of the Subordination Agreement means the City's and Housing Authority's security interest in the Dudlext property securing performance of a 30-year affordability covenant will continue in a junior lien position.

ANALYSIS: SG Reality Group, Inc., ("Developer") seeks to encumber real property located at 8931 Dudlext Avenue, South Gate (Dudlext Property) in the amount of $2,100,000 and is requesting the 6 City and Housing Authority subordinate its Deed of Trust securing payment of the Promissory Note to this new loan. The Developer desires to pay off a $1,016,560 loan originating in 2015, with an approximate balance of $974,015. The Developer further desires to take out equity from the Dudlext propeity in the amount of $696,947.

The Developer is also requesting that the Agreement be amended. The Agreement required the Developer to reinvest the expected $500,000 of unencumbered cash proceeds from the new Senior Loan in 2015, to be used to develop, construct, or otherwise increase additional housing units within the City. That task was to be completed no later than June 30, 2017. Failure to accomplish the increases in housing units, would result in the Affordability Covenant to be extended an additional 10- years beyond the pending sunset timeline provided by the original HUD Loan which set the expiration date of those covenants as November 21, 2026. Thus, the new expiration date would become November 21, 2036.

The Developer originally proposed that the Agreement be amended to extend the timeframe of when the additional units would be constructed to June 30, 2026. Once the Affordability Covenant ceases, the existing tenants would be subject to rent increases outside the HUD limitations that currently affect the units. The only limitation would be California law (AB 1482, the California Tenant Protection Act of 2019) which limits aru'iual increases to 5% plus local CPI, or 10% whichever is lower. Even the state limitation could create a significant hardship on the existing tenants. Staff and the Developer are concerned about those potential impacts on the residents.

The Developer is also concemed about the age of the building which will be 30-years old and in need of a substantial amount of rehabilitation. If rents cannot financially allow the Developer to obtain a loan, then the Developer will be challenged to obtain the finances needed and, most importantly, the tenants will have housing units that are in poor conditions and not ideal to the state in which the Developer wants to operate.

In a cooperative effort, the Developer and staff are proposing that instead of the original request to merely extend the Agreement timeframe to June 30, 2026, to build new units, the Agreement be amended to provide "existing" residents living in the complex on a specified date November 1, 2026 to be subject to an affordability restriction as long as they remained tenants at the complex. Any new resident after that date, would not be subject to the restrictions under the amended Agreement. Those "new" residents, again, would be subject to any state law restrictions that might exist now or in the future.

A review of our records for the last four years in auditing affordability covenants shows the rents at this complex have been adjusted 6%; 7%; 5% and 1% over the last four years. Thus, the proposed 5% plus CPI, not to exceed 7.5%, is a fair compromise. This compromise will provide continued rent stabilization to those existing renters of the complex until such time as they move out.

BACKGRO{JND: The former Redevelopment Agency of the City of South Gate (Agency) and Developer initially entered into a Disposition and Development Agreement (DDA) on April 5, 1994, for the construction of the Dudlext Senior Housing Expansion Project for very-low-income senior citizens to rent. The project was for the construction of 20- one-bedroom units. The DDA required the Agency to provide $301,999 and the City to provide $1,234,650 of Hun HOME funds which made up a forgivable Promissory Note of $1,536,649.
2 7
In exchange for the $1,536,649 loan, the Developer agreed to maintain such affordability for a 30-year period. There are no payments due the City/Housing Authority under the Promissory Note as long as tlie affordability covenant is maintained and, in addition, the principal amount of the loan is forgiven by 1/30'h each year. As of June 30, 2022, the remaining balance due the City/Housing Authority is approximately $151,255. Following the dissolution of the Agency, the benefit of this affordability covenant was transferred to the Housing Authority.

The City and Housing Authority previously consented to Subordination to a Senior Lien on July 10, 2007, and again on December 8, 2015. During the Joint City Council/Housing Authority Meeting in 2015, Vice Chair/Vice Mayor De Witt motioned that equity withdrawn from this property (approximately $500,000) be re-invested in the City of South Gate. The motion incorporated that requirement, which was the genesis of the development of the Agreement document.

ATT ACHMENTS: A:

Proposed Subordination Agreement
Proposed Amended and Restated Agreement
3 8

ATT ACHMENT C
CC Contract No. 3173
HA Contract No. 2015-02

AMENDED AND REST ATED AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (this "Restated Agreement") is made as of the day of August, 2022, by and among SG REALTY GROUP, INC., a California corporation ("SG AUTHORITY, a public body, corporate and politic, successor-in-interest to the Community Development Commission of the City of South Gate, as successor-in-interest to the Redevelopment Agency of the City of South Gate ("Housing Authority"; City and Housing Authority are sometimes collectively referred to as "Beneficiaries"), with reference to the following recitals:

RECIT ALS:

A. SG Realty is the owner of the real property commonly known as 8931 Dudlext Avenue, South Gate, California 90280 (the "8931 Dudlext roperty"), and being more particularly described as follows:

Lots 739, 740 and 741 of Tract 6666, in the City of SOUTH GATE, County of Los Angeles, State of California, as per map recorded in Book 72, Pages 45 to 47, Inclusive of Maps, in the Office of the County Recorder of said County.

Except the South 10 Feet of Lot 741.

APN: 6222-014-023
B. SG Realty acquired the 8931 Dudlext Prope'ml from the former Redevelopment Agency of the City of South Gate ("RDA") by grant deed dated June 15, 1995, recorded on June 28, 1995, as Instrument No. 95-1030352 in Official Records, County of Los Angeles, State of California (the "Grant Deed"), which Grant Deed expressly provided that the conveyance of the 8931 Dudlext Property from the RDA to SG Realty was made pursuant to a certain Disposition and Development Agreement dated April 5, 1994 (the "DDA"), entered into by and between the RDA and SG Realty.

C. Under the DDA and Grant Deed, SG Realty agreed to construct senior citizen multi-family housing and related on- and off-site improvements on the 8931 Dudlext Property and, among other covenants, further agreed to maintain the affordability of such senior citizen multi-family housing as required under federal law and the rules and regulations promulgated by the U.S. Department of Housing and Urban Development ("HUD") for a period of thirty (30) years from the date of the Certificate of Occupancy for the 8931 Dudlext Property (the "Affordability Covenant"), which Certificate of Occupancy SG Realty and Beneficiaries acknowledge and agree was issued by the City onNovember 21, 1996.

D. SG Realty is the trustor and Beneficiaries are the beneficiaries under that certain subordinate Deed of Trust dated June 25, 1996 (the "City Deed of Trust"), and recorded on December 18, 1996, as Instrument No. 96-2044016 in Official Records, County of Los Angeles, State of California, encumbering the 8931 Dudlext Property to secure payment of that certain Promissory Note dated June 25, 1996, in the original principal sum of $1,536,649, made, executed and delivered by SG Realty (the "Promissory Note"), and performance of SG Realty's obligations under the DDA.

E. In late 2015 SG Reatly requested and obtained the consent of Beneficiaries to a refinancing of the then existing senior indebtedness encumbering the 8931 Dudlext Property (the "2015 Senior Loan"), which consent to the 2015 Senior Loan was granted by Beneficiaries subject to that certain Agreement 5256534 3-L235 37 9
dated December 8, 2015 (the "Original Agreement") entered into by and among SG Realty and Beneficiaries that, among other things, required SG Realty to invest substantially all of the Cash Out Equity (as defined in the Original Agreement) in one or more Qualified Investments (as defined the Original Agreement) not later than the Outside Date (as defined in the Original Agreement).

F, SG Realty now desires to refinance the 2015 Senior Loan encumbering the 8931 Dudlext Property with a proposed new loan in the maximum principal amount of $2,100,000 from First Republic Bank (the "2022 Senior Loan") and, in furtherance of such refinancing, has requested the consent of Beneficiaries to the subordination of the City Deed of Trust to a new deed of trust encumbering the 8931 Dudlext Property to secure payment of the 2022 Senior Loan (the "2022 Senior Deed of Trust").

F. BeneficiariesareagreeabletosubordinatingtheCityDeedofTrusttothe2022SeniorDeed of Trust securing payment of the 2022 Senior Loan, subject to the terms and conditions of this Restated Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants and consideration contained herein, the sufficiency of which the parties hereby acla'iowledge, the parties agree to amend and restate in their entirety the terms, provisions, covenants and conditions of the Original Agreement upon the terms, provisions, covenants and conditions of this Restated Agreement.

AGREEMENT:

1. Consent to Subordination. Subject to the provisions of Section 2 below, City and Housing Authority each hereby agree to subordinate the City Deed of Ttaust to the 2022 Senior Deed of Trust encumbering the 8931 Dudlext Property to secure payment of the 2022 Senior Loan, and further agree to execute, acknowledge and deliver a subordination agreement with First Republic Bank, in form reasonably acceptable to the City Attorney for the City and to the Legal Counsel for the Housing Authority.

2. Reinvestment of Cash Out Proceeds. SG Realty submits to Beneficiaries that, in accordance with the Original Agreement, following the closing and funding of the 2015 Senior Loan SG Realty invested substantially all of the proceeds of the Cash Out Equity by paying off certain indebtedness encumbering SG Realty's real property commonly known as 9700-9714 San Carlos Street, South Gate, California (the "San Carlos Property") in anticipation ofthe development and construction of an affordable senior housing project thereon that, however, was not realized. SG Realty further submits that, upon the closing and funding of the 2022 Senior Loan SG Realty will use substantially all of the approximately $696,947 in unencumbered cash proceeds from the 2022 Senior Loan after the payoff of the 2015 Senior Loan to develop and construct four (4) single family residences on the San Carlos Property on or before the expiration of the Affordability Covenant enumbering the 8931 Dudlext Property.

3. Property.

Limited Affordability Covenant for Existing Qualified Residents of the 8931 Dudlext (a) SG Realty and Beneficiaries acknowledge and hereby agree that the Affordability Covenant enumbering the 8931 Dudlext Property will expire on November 20, 2026 (the "Affordability Covenant Expiration Date") so that the rental rates for the residential units at the 8931 Dudlext Property will no longer be subject to the affordability income and other restrictions and limitations imposed by HUD.
(b) Notwithstanding the expiration of the Affordability Covenant, as a material inducement to Beneficiaries to enter into this Restated Agreement, SG Realty agrees, for the benefit of 2 5256534.3-L235.37 10
each qualified resident then lawfully residing in any residential unit at the 8931 Dudlext Property on the Affordability Covenant Expiration Date (individually a "Qualified Existing Resident" and collectively the "Qualified Existing Residents"), (i) not to terminate the tenancy of any Qualified Existing Resident at the 8931 Dudlext Property for so long as each such Qualified Existing Resident resides at the 8931 Dudlext Property, except as may be petmitted under California law for just-cause termination and (ii) not to increase the annual rental rates being charged to the Qualified Existing Residents at the 8931 Dudlext Property above the annual rental rates then in effect as of the Affordability Covenant Expiration Date by more than five percent (5%) plus any applicable cost-of-living adjustment or seven and one-half percent (7.5%), whichever is lower, for each 12-month period following the expiration of the Affordability Covenant for so long as each such Qualified Existing Resident resides at the 8931 Dudlext Property. For avoidance of doubt, SG Realty may increase such aru'iual rental rates for any Qualified Existing Resident at the 8931 Dudlext Property as provided hereunder effective for the 12-month period commencing on November 21, 2022 and on each November 21 therea:[ter. (c) Not later than ninety (90) days before the Affordability Covenant Expiration Date, SG Realty shall provide Beneficiaries with a true, correct and complete listing of the Qualified Existing Residents at the 8931 Dudlext Property, in form and content reasonably acceptable to Beneficiaries, and shall periodically update and/or confirm such listing of the Qualified Existing Residents from time to time but not less frequently than every three-month period after the expiration of the Affordability Covenant. (d) For further avoidance of doubt, the provisions of this Restated Agreement shall not apply to any new resident at the 8931 Dudlext Property whose tenancy begins after the Affordability Covenant Expiration Date.

3. Memorandum of Agreement. Beneficiaries may record a memorandum of this Restated Agreement giving notice of the Limited Affordability Covenant, in the form attached hereto as Exhibit "A" and incorporated herein. For the purposes of carrying out and fully exercising its sole and only remedy under this Restated Agreement, SG Realty hereby appoints the City as its lawful irrevocable attorney-in- fact, with full power of delegation and substitution, to act for such purposes in SG Realty's name, to the same extent that SG Realty could act in its own behalf, to execute and deliver such memorandum, it being specifically agreed that this power of attorney is a power coupled with an interest which cannot be revoked.

4. Miscellaneous.
(a) This Restated Agreement shall be governed by the laws of the State of California.

All judicial proceedings brought against any party hereto arising out of or relating to this Restated Agreement shall be brought in any state or federal court of competent jurisdiction in the County of Los Angeles, State of California.
(b) All notices required to be given pursuant to the terms hereof shall be in writing and shall be either (i) deposited in the United States express mail or first class mail, registered or certified, return receipt requested, postage prepaid, or (ii) delivered by FedEx or a similar regional or national overnight courier service for next-day delivery that requires written acknowledgment of receipt by the addressee. All such notices shall be deemed delivered upon actual receipt (or upon the first attempt at delivery pursuant if the intended recipient refuses to accept delivery). All such notices shall be delivered to the following addresses, or to such other address as the receiving party may from time to time specify by written notice to the other party:
3 5256534.3-L235.37 11
To the Beneficiaries: City of South Gate
Housing Authority of the City of South Gate
Attn: City Manager
8650 California Avenue
South Gate, Califomia 90280
To SG Realty: SG Realty Group, Inc.

Attn: Silvestre Gonzales
p.o. Box 1894
South Gate, California 90280
(c) This Restated Agreement shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns, in addition to the Qualified Existing Residents at the 8931 Dudlext Property as third party beneficiaries hereunder. (d) Time is of the essence of every provision contained in this Restated Agreement. If the date (each a "Performance Date") on which any action is to be taken, any obligation is to be performed, or any notice is to be given under this Restated Agreement falls on a Friday when South Gate City Hall is closed for business, or on a Saturday, Sunday or holiday, such Performance Date shall be automatically extended to the next business day. Except as otherwise expressly provided herein, all references to periods of days shall refer to consecutive calendar days. (e) If any paity brings suit against the other with respect to this Restated Agreement, then all costs and expenses, including without limitation actual professional fees and costs such as appraisers' accountants' experts, and attorneys' fees and costs, incurred by the prevailing party (whether that party prevails by final judgment or out-of-court settlement) shall be paid by the losing party. (f) This Restated Agreement contains the entire understanding of the Parties and supersedes any and all other written or oral understanding. This Restated Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
[signatures of the parties on the following page]
4 5256534 3-L235.37 12
IN WITNESS WHEREOF, the parties have executed this Restated Agreement as of the date first above written.

BENEFICIARIES:

CITY OF SOUTH GATE, a municipal corporation
ATTEST: By:

AI Rios, Mayor
By:

Yodit Glaze, City Clerk
(SEAL)
APPROVED AS TO FORM:

By:

Raril F. Salinas, City Attoriiey
ATTEST:

By:

Yodit Glaze, City Clerk
(SEAL)
APPROVEDAS W!RM:

By 9
Raril F. Salinas, Legal Counsel

Chris Jeffers, Executive Director
SG REALTY:

SG REALTY GROUP, INC.,
a Califomia corporation
BY:

Name:

Title:
5 5256534.3-L235.37 13
Exhibit "A"
Memorandum of Amended and Restated Agreement

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of South Gate
South Gate Housing Authority
Attn: City Manager
8650 California Avenue
South Gate, California 90280
(Space above line for Recorder's use)
This document is recorded for the benefit of the
City of South Gate and is therefore exempt from
payment of recording fees pursriant to
Government Code Sections 6103 and 27383.

APN 6222-014-023

MEMORANDUM OF AMENDED AND REST ATED AGREEMENT
THIS MEMORANDUM OF AMENDED AND RESTATED AGREEMENT (the "Memorandum") is made as of the day of August, 2022, by SG REALTY GROUP, INC., a California corporation ("Trustor"), in favor of CITY OF SOUTH GATE, a municipal corporation (""), and SOUTH GATE HOUSING AUTHORITY, a public body, corporate and politic, successor-in-interest to the Community Development Commission of the City of South Gate, as successor-in-interest to the Redevelopment Agency of the City of South Gate ("Housing Authority"; City and Housing Authority are sometimes collectively referred to as "Beneficiaries"), who reference to the following recitals:

A. . Trustor is the owner of the real property commonly known as 8931 Dudlext Avenue, South Gate, California 90280 (the "8931 Dudlext Propeity"i, and being more particularly described as follows:

Except the South 10 Feet of Lot 741.

B. Limited Affordability Covenant. Pursuant to that ceitain Amended and Restated Agreement dated as of August , 2022 by and among Trustor, the City and the Housing Authority (the "Restated Agreement"), SG Realty agreed, for the benefit of Beneficiares and each qualified resident then law'fully residing in any residential unit at the 8931 Dudlext Property on the Affordability Covenant Expiration Date (as defined in the Restated Agreement) (i) not to terminate the tenancy of any such qualifiedresident at the 8931 Dudlext Property and (ii) not to increase the annual rental rates being charged to any such qualified resident at the 8931 Dudlext Property, except in each case as otherwise provided in 5258431 . I-L235.37 14
the Restated Agreement. Tthe provisions of the Restated Agreement shall not apply to any new resident at the 8931 Dudlext Property whose tenancy begins after the Affordability Covenant Expiration Date.

C. Purpose of Memorandum. This Memorandum is being executed and delivered for the purposes of recording only, and it in no way modifies the Restated Agreement. In the event of a conflict between this Memorandum and the provisions of the Restated Agreement, the provisions of the Restated Agreement shall control.

D. Counterparts. This Memorandum may be executed in one or more counterparts, each of which when executed and delivered shall be deemed to be an original and such counterparts together shall constitute one and the same instniment.
[Signatures of the parties on following page.]
525843I I-L235.37 15
IN WITNESS WHEREOF, the parties have executed this Memorandum below as of the date first set forth above written.

ATTEST:

BY:

Yodit Glaze, City Clerk
(SEAL)
CITY OF SOUTH GATE, a municipal corporation
By: jNOT FOR EXECUTIONI
Al Rios, Mayor
APPROVED AS TO FORM:

By:

Raril F. Salinas, City Attorney
ATTEST:

B)7:

Yodit Glaze, City Clerk
(SEAL)

SOUTH GATE HOUSING AUTHORITY,
a public body, corporate and politic, successor-in-interest to the Community Development Commission of the City of South Gate, successor-in-interest to the Redevelopment Agency of the City of South Gate
By: JNOT FOR EXECUTIO§]
Chris Jeffers, Executive Director
APPROVED AS r\l:
y ; o%>
Raul!Salinas, Legal Counsel
SG REALTY:

SG REALTY GROUP, INC.,
a California corporation
BY: jNOT FOR EXECUTION'j
Name:

Title:
5258431.1-L235.37 16
A notary public or other officer completing this ceitificate verifies only the identity of tlie individual who signed the document to which tliis ceitificate is attached, and not the tiuthfulness, accuracy, or validi of that document.

ST ATE OF CALIFORNIA

COUNTY OF LOS ANGELES
On , 2022, before me, , Notary
Public, 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 {JNDER 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)
A notary public or other officer completing this certificate verifies only the identity of tlie individual who signed the document to wliich this certificate is attached, and not the tnithfulness, accuracy, or vali a of that document.

ST ATE OF CAI,IFORNIA

I certify UNDER PENALTY OF PERJLTRY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (seal)
5256534.3-L235.37 17
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 ttauthfulness, accuracy, or vali a of that document.

ST ATE OF CALIFORNIA

COUNTY OF LOS ANGELES
On , 2022, before me, , Notary
Public, 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 acla"iowledged 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)
10 5256534.3-L235.37 18

ATT ACHMENT B

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

First Republic Bank
111 Pine Street
San Francisco, CA 94111
ATTN: Loan Review Department
RE: Loan #655093-3

SUBORDINATION AGREEMENT
(Secondary Financing)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST

IN THE PROPERTY BECOMING, OR CONFIRMS THAT YOUR SECURITY INTEREST IN THE

PROPERTY NOW IS AND SHALL AT ALL TIMES REMAIN, SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN EVIDENCED BY THE "SENIOR SECURITY INSTRUMENT." AS DEFINED BELOW, OF FIRST REPUBLIC BANK, AS SUCH LIEN MAY BE PARTICIPATED.

SOLD. EXTENDED, RENEWED, OR OTHERWISE MODIFIED FROM TIME TO TIME.

This Subordination Agreement (Secondary Financing) (the "Agreement"), dated August 2022 for reference purposes only, is entered into by and among SG Realty Group, Inc., a California corporation (the "Borrower"), First Republic Bank (the "Lender"), and City of South Gate, a municipal corporation, and the South Gate Housing Authority, a public body, corporate and politic, as successor-in-interest to the Community Development Commission of the City of South Gate, as successor-in-interest to the Redevelopment Agency of the City of South Gate (collectively, the "Junior Lien Holder"), with reference to the following facts:

A. The Lender has made or is about to make a loan in the original principal amount of Two Million Dollars One Hundred Thousand and 00/100'h ($2,100,000.00) (the "Senior Loan") to Borrower. The Senior Loan is or will be evidenced by Borrower's Promissory Note dated August 2022 (the "Senior Note"). The Senior Loan is secured or will be secured by a deed of trust or mortgage dated August 2022 (the "Senior Security Instrument") executed by Borrower, as trustee, in favor of the Lender, as beneficiary, which is to be recorded in the Official Records of Los Angeles County, State of California (the "Official Records"), concurrent herewith the recordation of this Agreement.

B. The Senior Security Instrument encumbers or will encumber Borrower's estate in the real property described In Exhibit "A" attached hereto, including all improvements now or hereaffer located thereon (the "Improvements") (such real property and Improvements are referred to collectively as the "Real Property"). In connection with the Senior Loan, Borrower has I
14 19
also executed or is about to execute, among other documents, (1) an Assignment of Leases (the "Assignment of Leases") with respect to the Real Property in favor of the Lender, as assignee; and (2) an Environmental Indemnity Agreement (the "Indemnity Agreement") in favor of the Lender, as indemnitee. The Lender also has filed or intends lo file a UCC-1 Financing Statement (the "Financing Statement") In favor of the Lender, as secured party, naming the Borrower, as debtor. The Financing Statement covers certain equipment and other personal property relating to the Real Property, which personal property is referred to collectively as the "Personal Property." The Real Property and Personal Property are referred to collectively as the "Property." The Senior Note; Senior Security Instrument; Assignment of Leases; Financing Statement; Indemnity Agreement; and all other documents executed by Borrower and delivered to the Lender at the Lender's request in connection with the Senior Loan, including all existing and future amendments, modifications, renewals, supplements, replacements, and extensions of any or all of such documents (referred to collectively as "Loan Modifications") (none of which Loan Modifications shall require the approval of Junior Lien Holder, except as provided in Section 1.2(b) below); and all rights and privileges of the Lender thereunder, are referred to collectively as the "Senior Loan Documents."
C. Junior Lien Holder has made a loan or loans or other extensions of credit in the aggregate original principal amount of One Million Five Hundred Thirty Six Thousand Six Hundred Forty Nine Dollars and 00/100'h ($1,536,649.00) (referred to collectively as the "Subordinate Indebtedness") to Borrower. The Subordinate Indebtedness is secured by a deed of trust encumbering the Real Property (the "Subordinate Securitylnstrument") dated June 25, 1996 and recorded on December 18, 1996 as Instrument No. 96-2044016 in the Official Records. The documents evidencing the Subordinate Indebtedness, the Subordinate Security Instrument, all other documents executed by Borrower and delivered to Junior Lien Holder at Junior Lien Holder's request in connection with the Subordinate Indebtedness, and all existing and future amendments, modifications, renewals, supplements, replacements, and extensions of any or all of such documents, and all rights and privileges of Junior Lien Holder under any or all of such documents, are referred to collectively as the "Subordinate Loan Documents." D. It is a condition precedent to the Lender's closing and initial funding of the Senior Loan that the Subordinate Loan Documents shall be and remain at all times unconditionally subject and subordinate to the Senior Loan Documents. It is to the mutual benefit of Junior Lien Holder and Borrower that the Lender make the Senior Loan to Borrower, and Junior Lien Holder is willing to agree that the Senior Security Instrument, when recorded, and other Senior Loan Documents shall constitute a lien or charge on the Property which is unconditionally prior and superior to the lien or charge of the Subordinate Security Instrument and other Subordinate Loan Documents.

THEREFORE, in consideration of the mutual benefits accruing to the parties and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lender to make the Senior Loan to Borrower, Borrower, Junior lien Holder, and the Lender agree as follows:
2 20

1. Subordination:

1.1 Subordination of Subordinate Loan Documents. The Senior Loan Documents, including the Senior Security Instrument, shall unconditionally be and remain at all times a lien or charge on the Property prior and superior to the lien or charge of the Subordinate Loan Documents, including the Subordinate Security Instrument. THIS AGREEMENT SHALL

NOT BE DEEMED TO AFFECT THE PRIORITY OF THE SUBORDINATE LOAN DOCUMENTS

WITH RESPECT TO ANY OTHER LIEN OR SECURITYINTEREST AFFECTING THE

PROPERTY, EXCEPT ONLY FOR THE SUBORDINATION OF THE SUBORDINATE LOAN DOCUMENTS TO THE SENIOR LOAN DOCUMENTS ON THE TERMS OF THIS AGREEMENT.

1.2 Application of Subordination Agreement. Notwithstanding anything to the contrary contained in this Agreement or the Senior Loan Documents:
(a) The subordination contained in this Agreement shall apply only, with respect to (i) all indebtedness evidenced by the Senior Note, Including all principal, interest, default interest, late charges, and prepayment fees; (ii) all Loan Modifications (except as otherwise expressly provided in Section 1.2(b) below): and (iii) all future amounts hereafter advanced by the Lender under and pursuant to the Senior Loan Documents in connection with or relating to the preservation or protection of all or part of the Property or the Lender's interests in connection with the Property or the Senior Loan (including advances for the payment of real estate taxes and assessments and insurance premiums relating to the Property), and all costs, fees, expenses (including attorneys' fees and costs), and amounts hereafter incurred by the Lender or owing to the Lender under or pursuant to the Senior Loan Documents (all such amounts, costs, fees and expenses advanced or incurred by the Lender or owing to the Lender are referred to collectively as the "Senior Loan Protective Advances"); (b) The Lender agrees that the subordination contained in this Agreement shall not apply with respect to (i) any future loan or loans (excluding the Senior Loan and all Senior Loan Protective Advances), which future loan or loans (excluding the Senior Loan and all Senior Loan Protective Advances) represent new loans of principal to Borrower evidenced by a separate note or other Instrument of any kind (excluding the Senior Note and other Senior Loan Documents) which state that they are secured by the Senior Security Instrument; and (ii) future modifications to the Senior Note or other Senior Loan Documents which increase the original principal face amount of the Senior Note, provided that no Senior Loan Protective Advances shall be deemed to constitute such a modification but in no event shall the total aggregate amount of indebtedness (including the Senior Loan Protective Advances) subject to this subordination exceed Two Million One Hundred Thousand and 00/100 Dollars ($2,100,000.00); and
(c) The Senior Security Instrument shall be prior and superior to the Subordinate Loan Documents insofar as the Senior Security Instrument secures all existing and future disbursements of the proceeds of the Senior Loan and all Senior Loan Protective Advances that may hereaffer be made by the Lender, regardless of whether such disbursements of the proceeds of the Senior Loan or Senior Loan Protective Advances may constitute optional or obligatory disbursements by the Lender.
3 16 21

1.3 Further Assurances. Within thirty (30) business days after the Lender's written request to the Junior Lien Holder, Junior Lien Holder shall execute, acknowledge (if required for recording purposes), and deliver to the Lender such further documents and Instruments as may be reasonably required by the Lender to effectuate the terms of this Agreement, including any documents reasonably required by the Lender to effectuate Junior Lien Holder's subordination of the Subordinate Loan Documents to any Loan Modifications (except as otherwise provided in Section 1.2(b) above) and lo the lien of the Senior Security Instrument insofar as such Senior Security Instrument secures any and all Loan Modifications (except as otherwise provided in Section 1.2(b) above). Notwithstanding anything to the contrary contained in this Agreement, nothing in this Agreement constitutes or shall be construed to obligate the Lender to enter into any Loan Modifications.

2. UCC Subordination. Junior Lien Holder authorizes the Lender to take all actions that are necessary or appropriate to file a UCC Financing Statement Amendment (Form UCC3) subordinating Junior Lien Holder's security interest, if any, in the Personal Property under the Subordinate Loan Documents to the Lender's security interest in the Personal Property under the Senior Loan Documents.

3. Rents and Other Proceeds. Without limiting the generality of Sections 1 and 2 above, Junior Lien Holder agrees that (a) all advances of the principal amount of the Senior Loan and all Senior Loan Protective Advances made by the Lender under or pursuant to the Senior Loan Documents, regardless of the optional or obligatory character of any or all of such advances, shall be secured by the first-priority lien of the Senior Security Instrument, which lien shall be prior and superior to the lien of the Subordinate Security Instrument; and (b) all of Junior Lien Holder's rights under the Subordinate Loan Documents in and to each and all of the following shall be unconditionally subject and subordinate to the rights of the Lender, Including the Lender's right to cause any or all of the following to be applied first to the payment of principal, interest and all other amounts owing by Borrower to the Lender under the Senior Loan Documents:

3.1 Rents and Profits; Sales Proceeds. AU existing and future rents, royalties, issues, profits, proceeds, revenues, Income and other benefits of the Property and all leases affecting the Property, including all security deposits and prepaid rent, and all proceeds of the sale of all or part of the Property;

3.2 Insurance Proceeds. All proceeds of all claims, actions, causes of action, demands, liens, rights, judgments, settlements, awards, compensation, and damages of every kind and nature which Borrower now has or which may hereafter accrue against any person, whether arising in tort, by contract or statute, or in any other manner, which in any way directly or indirectly relate to or arise under any policy of insurance which Borrower maintains with respect to the Property; and

3.3 Condemnation Proceeds. All proceeds of all claims, actions, causes of action, demands, liens, rights, judgments, settlements, awards, compensation, and damages of every kind and nature which Borrower now has or which may hereafter accrue against any person, whether arising in tort, by contract or statute, or in any other manner, which in any way directly or indirectly relate to or arise out of any condemnation of the Property or other taking of the Property for public or quasi- public use by eminent domain or to the transfer of the Property in lieu of 4 22
condemnation or any such taking. In the event Lender elects to disburse or otherwise release all or any portion of any condemnation award, payment or proceeds to Borrower for the purpose of reconstruction or replacement of the Property (including any improvements now or hereafter located on the Property), Junior Lien Holder shall in no event declare a default under the Subordinate Loan Documents by reason of the condemnation of or damage to or destruction of the Property or by reason of such application by Borrower of such award, payment or proceeds to the costs of reconstruction or replacement of the Property.

4. Repair of Improvements. If the Lender, in its sole but good faith business judgment, elects to release, for the purposes of restoration of the Improvements, all or part of the proceeds of any policies of casualty insurance relating to the Property or all or part of any award or other compensation made for any damages or losses by reason of a taking of the Property by eminent domain, Junior Lien Holder shall consent to the application of such insurance proceeds, awards or compensation for such restoration purposes, subject to reasonable controls over the disbursement of such proceeds for such restoration purposes, as established by the Lender, and no such application shall constitute a default or breach by Borrower under the Subordinate Loan Documents. Nothing contained in this Section shall be deemed to obligate the Lender to release any such proceeds for restoration of the Improvements.

5. Leasing. To the extent, if at all, that Junior Lien Holder consent is required with respect to any future lease of all or part of the Property ("Lease"), (a) Junior Lien Holder waives such consent requirement with respect to any Lease which has been approved by the Lender; and (b) with respect to any Lease which has been approved by the Lender, Junior Lien Holder shall not unreasonably withhold or delay the granting of any non-disturbance agreement by Junior Lien Holder to the tenant under such an approved Lease, provided such non-disturbance agreement is in a form reasonably acceptable to Junior Lien Holder. Notwithstanding anything to the contrary contained in this Agreement, the Lender's approval of any Lease shall be for the Lender's sole benefit and not for the benefit of Junior Lien Holder or any other person, and the Lender shall have no liability or responsibility of any kind under any circumstances to Junior Lien Holder with respect to the Lender's approval of any Lease affecting the Property.

6. Impounds. Junior Lien Holder shall not collect impound payments for the purpose of escrowing taxes, assessments or other charges imposed on the Property or insurance premiums due on the insurance policies required under the Senior Security Instrument or the Subordinate Security Instrument without the Lender's prior written consent, which consent may be withheld by the Lender in its sole but good faith business judgment.

7. Junior Lien Holder's Statements. Affer receipt of written request by Junior Lien Holder from the Lender, Junior Lien Holder shall within thirty (30) business days furnish to the Lender a statement setting forth the unpaid principal balance of the Subordinate Indebtedness, all accrued but unpaid interest and any other sums due and owing thereunder, the current rate of Interest, the monlhly payment amount, and that to Junior Lien Holder's actual present knowledge, no default by Borrower exists under the Subordinate Loan Documents (or If such default is actually known to Junior Lien Holder, stating the nature of the default).

8. Consent by Lender to Subordinate Indebtedness; Permitted Payments to Junior Lien Holder. Lender consents to the Subordinate Indebtedness, the Subordinate Security 5 23
Instrument and the other Subordinate Loan Documents, as disclosed in writing by Borrower and Junior Lien Holder to the Lender prior to the date of Lender's execution of this Agreement, and Lender agrees that no "Event of Default" (as such term Is defined in the Senior Loan Documents) by Borrower under the Senior Loan Documents. shall be deemed to exist under the Senior Loan Documents based solely on the existence of the Subordinate Loan Documents, as disclosed in writing by Borrower and Junior Lien Holder to the Lender prior to the date of Lender's execution of this Agreement. In the event of any distribution, division, or application, whether partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of Borrower's assets, or the proceeds of Borrower's assets, in whatever form, to creditors of Borrower or upon any indebtedness of Borrower, whether by reason of the liquidation, dissolution or other winding- up of Borrower, or by reason of any execution sale, receivership, insolvency, or bankruptcy proceeding, assignment for the benefit of creditors, proceedings for reorganization, or readjustment of Borrower or Borrower's properties, then and in such event, (a) the indebtedness evidenced by the Senior Loan Documents (the "Superior Indebtedness") shall be paid in full before any payment is made upon the indebtedness evidenced by the Subordinate Loan Documents (the "Subordinated Indebtedness"), and (b) all payments and distributions, of any kind or character and whether in cash, property, or securities, which shall be payable or deliverable upon or in respect of the Subordinated Indebtedness shall be paid or delivered directly to Lender for application in payment of the amounts then due on the Superior Indebtedness until the Superior Indebtedness shall have been paid in full; provided, however, that so long as there is no default by Borrower under the terms of the Superior Indebtedness, Borrower may continue to make and Junior Lien Holder may continue to receive the scheduled interestinstallment payments as they mature on the Subordinated Indebtedness. In the event of any bankruptcy proceeding concerning Borrower, as debtor, Junior Lien Holder agrees that post- petition interest on the Superior Indebtedness to the extent approved by the Court shall be paid prior to payment of any amount of principal or interest on the Subordinated Indebtedness.

9. Certain Payments. If and to the extent that any payment under the Senior Loan Documents (whether by or on behalf of the Borrower, as proceeds of collateral for the Senior Loan, or enforcement of any right of setoff or otherwise) is declared by any court of competent jurisdiction to be a fraudulent conveyance or a preference, set aside, or required to be paid to a trustee, receiver or other similar person under any bankruptcy, insolvency, receivership or similar law, then if such payment is recovered by, or paid over to, such trustee, receiver or other similar person, the Senior Loan, or part thereof originally intended to be satisfied, shall be deemed to be reinstated and outstanding as if such payment had not occurred.

10. Senior Loan Documents. Junior
consent to or approval of the existing Senior Loan Lien Holder acknowledges and agrees that its
Documents shall not be required.

11. Junior Lien Holder's Statement of Outstanding Indebtedness. Junior Lien 1-lolder certifies to the Lender that the total outstanding principal amount of all indebtedness secured by the Subordinate Security Instrument is $ as of the date of this Agreement.

Initial Here:
6 24

12. Borrower's Representations and Warranties. Borrower represents and warrants to the Lender and agrees that (a) as of the date of this Agreement and as of the date of recordation of this Agreement in the Official Records, neither Borrower nor Junior Lien Holder is in default under the Subordinate Loan Documents; (b) Borrower shall al all times comply with all of its obligations under the Subordinate Loan Documents and shall not modify or supplement any or all of the Subordinate Loan Documents without the Lender's prior written consent; and (c) the Subordinate Loan Documents which Borrower has furnished or caused to be furnished to the Lender represent the entire agreement between Borrower and Junior Lien Holder regarding the Property and the Subordinate Indebtedness, and there are no other agreements, whether written or oral, between Borrower and Junior Lien Holder with respect to the Property or the Subordinate Indebtedness, except for (i) this Agreement; and (ii) such other documents as Borrower has specifically disclosed in writing to the Lender prior to the Lender's execution of this Agreement; and (d) Borrower's breach of any warranty or obligation of Borrower under this Agreement shall constitute an "Event of Default" (as such term is defined in the Senior Loan Documents) by Borrower under the Senior Loan Documents.
'13. Junior Lien Holder's Representations and Warranties. Junior Lien Holder represents and warrants to the Lender that (a) as of the date of this Agreement to the best of Junior Lien Holder's present knowledge, Borrower is not in default under the Subordinate Loan Documents, nor has any event occurred which, with the giving of notice of the passage of time, or both, would constitute a default by Borrower under the Subordinate Loan Documents; (b) no representations or agreements of any kind have been made to Junior Lien Holder by the Lender, Borrower or any other person that would limit or qualify in any way the terms of this Agreement; (c) the Lender has made no representation to Junior Lien Holder as to the creditworthiness of Borrower, any guarantor of the Senior Loan, or any other person; (d) the principal amount of the Subordinate Indebtedness shall not exceed the amount set forth in Section 11 above, other than with respect to sums advanced or paid by Junior Lien Holder for the purpose of protecting or preserving the collateral securing the Subordinate Indebtedness or to otherwise protect its interests in connection with the Subordinate Indebtedness (including advances for the payment of real estate taxes and assessments and insurance premiums relating to the Property or to pay any indebtedness secured by the Senior Security Instrument); and (e) Junior Lien Holder has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower's financial condition. Junior Lien Holder further agrees that Lender shall have no obligation to disclose to Junior Lien Holder Information or material acquired by Lender in the course of Its relationship With Borrower, other than such notices as are expressly required by this Agreement, if any.

14. Entire Agreement. This Agreement shall be the whole and only agreement with regard to the subordination of the Subordinate Loan Documents to the Senior Loan Documents and shall supersede and cancel, but only insofar as would affect the priority between the Subordinate Loan Documents and the Senior Loan Documents, any prior agreements as to such subordination, including those provisions, if any, contained in the Subordinate Loan Documents which provide for the subordination of any or all of such documents to the rights of another lender.

15. Headings; Interpretation. The headings to sections of this Agreement are for convenient reference only and shall not be used in interpreting this Agreement. For purposes of 7 20 25
this Agreement, (a) the term "including" shall be deemed to mean "including without limitation"; (b) the term "person" shall Include any natural person and any entity, including any corporation, partnership, joint venture, trust, unincorporated organization, trustee, or governmental authority; and (c) the term "Property" shall be deemed to mean all or any part of the Property, unless otherwise expressly provided in this Agreement.

16. Successors. This Agreement shall Inure to the benefit of and be binding on the parties and their respective permitted successors and assigns.

17. Amendments. This Agreement may be modified or supplemented only by a written agreement signed by Borrower, Junior Lien Holder, and the Lender.

18. Senior Loan Disbursements. Junior Lien Holder agrees that the Lender, in making disbursements pursuant to any of the Senior Loan Documents, is under no obligation or duty to nor has the Lender represented that it will, see to the application of such proceeds by the person or persons to whom the Lender disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in the Senior Loan Documents shall not defeat this Agreement, in whole or in part.

19. Reliance by the Lender. Junior Lien Holder intentionally and unconditionally subordinates the lien or charge of the Subordinate Loan Documents in favor of the lien or charge on the Property of the Senior Loan Documents. Notwithstanding anything to the contrary contained in this Agreement, (a] none of the terms, covenants, or provisions of this Agreement shall constitute or be construed as conditions precedent or conditions subsequent to the unconditional subordination of the Subordinate Loan Documents to the Senior Loan Documents; and (b] no breach of any term, covenant, or provision of this Agreement shall in any way impair or otherwise affect the unconditional subordination of the Subordinate Loan Documents to the Senior Loan Documents on the terms of this Agreement.

20. Notices. All notices, communications, and demands by any of the parties under this Agreement shall be in writing and shall be effective on the earliest of (a) personal delivery to the recipient; (bl three (3) days after deposit in registered or certified United States mail, postage prepaid, return receipt requested, addressed to the recipient al the notice address set forth in this Agreement; (c) one (1) business day after depositwith a reputable nationally recognized overnight delivery service, delivery charges prepaid, for next business day delivery addressed to the recipient the notice address set forth in this Agreement; and (d) if notice is sent by facsimile transmission to the recipient's facsimile number as shown in the notice address set forth in this Agreement, on the first (1") business day after the date on which sending party's facsimile transmitting equipment issues a confirmation record of receipt of such notice by the recipient's facsimile equipment. Any party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate up to one additional person or up to one additional address for notices to such party, but notice of a change of address shall only be effective upon receipt by the other parties. Each of the parties agrees that it will not refuse or- reject delivery of any notice given hereunder, that it will acknowledge, In writing, receipt of the same upon request by any other party (provided that such notice has in fact been received), and that any notice rejected by it shall be deemed for all purposes of this Agreement to have been received by the rejecting party on the date so refused or rejected, as conclusively established by 8 26
the records of the u.s. Postal Service or a reputable nationally recognized overnight delivery service.-
All notices to the Lender shall be sent to:

First Republic Bank
11l Pine Street
San Francisco, Ca 94111
Attn: Loan Servicing
All notices to Junior Lien Holder shall be sent to:

City of South Gate and
The South Gate Housing Authority
8650 California Avenue
South Gate, California 90280
All notices to Borrower shall be sent to:

SG Realty Group, Inc.

P.0. Box 1894
South Gate, California 90280

23. Independent Counsel. Borrower, Junior Lien Holder, and the Lender each acknowledges that it has been represented by independent counsel or has had an opportunity to consult with independent counsel in connection with this Agreement.

24. Miscellaneous. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same agreement. Signature and acknowledgement pages to counterparts of this Agreement may be detached from the counterparts and attached to a single original of this Agreement to form physically one document which may be recorded in the Official Records. If Borrower, Junior Lien Holder, or the Lender institutes an action to enforce its rights under this Agreement or because of a breach of this Agreement, the prevailing party in such action shall be entitled to recover from the other party or parties all reasonable costs and expenses, including reasonable attorneys' fees and costs, in addition to any other relief awarded by the court. This Agreement shall be governed by and interpreted in accordance with the laws of the state in which the Property is located. The parties to this Agreement consent to the jurisdiction of any federal or state court within the state in which the Property is located and to service of process by any means authorized by the laws of such state. Each of the individuals executing this Agreement on behalf of Borrower, Lender and Junior Lien Holder, respectively, represents to the other parties that such person has the authority to bind Borrower, Lender and Junior Lien Holder, respectively, to the terms of this Agreement, and each of the other parties may rely on such representation. 9 22 27
NOTICE: THIS SUBORDINATION AGREEMENT CONT AINS A PROVISION WHICH ALLOWS

THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A

PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES OTHER THAN IMPROVEMENT OF THE LAND.

Dated: August, 2022

JUNIOR LIEN HOLDER
City of South Gate, a municipal corproration
By:

Name:

Title:

ATTEST:

BY:

Name:

Title:

APPROVED AS TO FORM
BY:

Name:

Title:

SOUTH GATE HOUSING ALITHORITY, a public body, corporate and politic, as successor-in-interest to the Community Development Commission of the City of South Gate, as successor-in-interest to the Redevelopment Agency of the City of South Gate
BY:

Name:

Title:
10 23 28
ATTEST
By:

Name:

Title:

APPROVED AS TO FORM
By:

Name:

Title:

BORROWER
SG Realty Group Inc., a California
Corporation
By:

Name:

Title:

LENDER

FIRST REPUBLIC BANK
By:

Name:

Title:
11 24 29
"EXH BIT A

LEGAL DESCRIPTION OF REAL PROPERTY
12 25 30

ACKNOWLEDGMENT
Ath.lnsocteary,Ifplcuabteliclsoarffoathcehreodfflacnedr cno0mttphleettinrugihthfuislnceesrts:fiaccacteurvaecryifieOsrVoanlYdtlthyeOifdtehnattitdyOocfutmheeinntdividual who signed the document, to which

STATE OF
) SS.

COUNTY OF
On before me,
Notary Public, 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.

Notary Public
My Commission expires:
13 26 31

ACKNOWLEDGMENT
Aih.lnsoctaery,lfplcuabteliclsoarffoathcehreodffiacnedr cno0mttphleettinrugththfuislnceesrts:fiaccacteurvaecryifie0sr voanllyldtlthye0ifdtehnattitdyOocfutmheeinntdividual who signed the document, to which

STATE OF
) SS.

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.

Notary Public
My Commission expires:
14 27 32

ACKNOWLEDGMENT
Ath.lnsocteary,Ifplcuabteliclsoarffoathcehreodffiacnedr cno0mftphleettinrugththfuislnceesrts:fiaccacteurvaecryifie0srvoanllyldtlthye0ifdtehnattitdyOoCfutmheenintdividual who signed the document, to which

STATEOF
) SS.

COUNTY OF
On before me
Notary Public, 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.

Notary Public
My Commission expires:
15 28 33

ACKNOWLEDGMENT
Ath.lnsoctaeryn,plcuabteliclsoarffoathcehreodffiacnedr cno0mttphleettinrugththfuislnceesrtsi.fiaccacteurvaecryifie0sr VoanllyldtlthyeOifdtehnattitdyOoCfutmheenintdividual who signed the document. to which

STATEOF
) SS.

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.

Notary Public
My Commission expires:
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South Gate City CouncilAugust 23, 2022

South Gate City Council
August 23, 2022