Report to Successor Agency
Tuesday, May 21, 2019
Consent
SUBJECT:
Title
CONSIDER APPROVAL OF THE SUBORDINATION AGREEMENT BY AND BETWEEN THE CARSON SUCCESSOR AGENCY WIN CHEVROLET PROPERTIES, LLC, AND WIN CHEVROLET, INC. SUBORDINATING THE AGENCY NOTE TO BANK OF AMERICA, N.A. IN CONNECTION WITH THE WIN CHEVROLET DEALERSHIP PROPERTY LOCATED AT 2201 E. 223RD STREET (SUCCESSOR AGENCY)
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I. SUMMARY
WIN Chevrolet, Properties, LLC ("WIN") is preparing to refinance its holdings at 2201 E. 223rd Street ("Property") with Bank of America, N.A. ("Senior Lender"). The Carson Successor Agency ("Agency") currently holds a 20-year note ("Note") in the original amount of $7 million, which was secured by a deed of trust against the Property ("Agency Trust Deed"). The current principal balance of the Agency Note is $4,550,000, having been forgiven over the years in accordance to the Note at the rate of $350,000 per year provided WIN complied with certain obligations, including the continued operation of the existing WIN Chevrolet and Hyundai auto dealerships. The Agency Note was executed in 2011 pursuant to the Disposition and Development Agreement between the Carson Redevelopment Agency ("RDA") and WIN and Win Chevrolet, Inc. ("WIN Inc.") representing a portion of the purchase price for the Property ("DDA"). The RDA received an ALTA loan title policy insuring the Agency Trust Deed in the amount of $7,000,000 ("Agency Loan Policy").
In 2013, the Agency Trust Deed was subordinated to Senior Lender's original construction Deed of Trust ("Senior Trust Deed") securing a loan in the amount of $11,350,000 ("Senior Lender's Loan"). Section 8 of the Agency Trust Deed requires it to be subordinated provided certain requirements are satisfied including (collectively the "Subordination Requirements"):
* The total of both the senior loan and the Agency loan must not exceed 80% of the fair market value of the Property.
* The proceeds of the Senior Loan are to be used for the improvement...
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