2022/08/24 Council Agenda Packet

This Subordination Agreement ("Agreement") is dated for reference purposes July 21, 2022, by and among HOUSING HOPE, a Washington non-profit corporation ("Owner'); the CITY OF EVERETT, a Washington municipal corporation (the "City); and BENEFICIAL STATE BANK, a California Corporation ("Bank'). The City and Bank are referred to collectively as "Lenders." This Agreement is made with reference to the following facts: RECITALS A. Owner's Interest. Owner is the owner of the real property described on Exhibit 1 attached to this Agreement (together with all improvements now or hereafter thereon, the "Property"). B. City's Interest. The City has made a loan to the Owner, in the amount of five hundred seventy-three thousand two hundred ninety-eight dollars ($573,298.00) (the "City Loan"), which is secured by a deed of trust on the Property executed by the Owner and recorded under Snohomish County recording number 201701260344, as amended by the Omnibus Amendment executed and recorded contemporaneously herewith (as so amended, the "City Deed of Trust'). In connection with the City Loan, the Owner executed a Use Restriction Covenant Agreement encumbering the Property recorded under Snohomish County recording number 201701260345, , as amended by the Omnibus Amendment executed and recorded contemporaneously herewith (as so amended, the "City Covenant'). C. Bank's Interest. The Bank is making a loan to the Owner in the amount of six hundred thousand dollars ($600,000) (the "Bank Loan"), which is secured by a deed of trust on the Property executed by the Owner and is being recorded concurrently with this Agreement (the "Bank Deed of Trust"). D. Purpose. As a condition of making the Bank Loan, the Bank has required the City to subordinate the lien of the City Deed of Trust to the lien of the Bank Deed of Trust. The City has agreed to this request, subject to the terms, conditions, and limitations set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the mutual agreements and undertakings herein contained, the parties agree as follows: 1. Subordination. Subject to the limitations set forth in this Agreement, the City hereby subordinates the lien of the City Deed of Trust to the lien of the Bank Deed of Trust. (a) City Covenant. The rights and interests of the City under the City Covenant are not subordinated to the lien of the Bank Deed of Trust. The City Covenant shall survive foreclosure of the Bank Deed of Trust and shall be binding upon any person who shall acquire the Property by means of such foreclosure or deed in lieu thereof, or who shall succeed to an interest in the Property so acquired, in each case for so long as such person shall retain an interest in the Property. Subordination Agreement Page 1 of 8