01-29-1992 - Tract 32323, 32324, 42169 - South Hills Homes Partnership Subordination AgreementCity of West Covina
Memorandum
To: City Manager and City Council
AGENDAFrom. Harr W. Thomas Cit En meer
Y � Y g
Subject: _TRACT 32323. 32324,42169 ITEM NO._ .L
SOUTH HILLS HOMES PARTNERSHIP- DATE January 29, 1992
SUBORDINATION AGREEMENTS
Summary:
Due to modification of the loan agreement between South Hills Homes
Partnership and the existing lender, Union Federal Bank, a revised Deed of Trust was
executed. In order to maintain the lender's priority with respect to the City's Second Trust
Deed, a Subordination Agreement between the City and the developer is needed, including a
revised set -aside letter issued by the lender.
Background:
In January of 1987, the City entered into an Agreement with South Hills
Homes Partnership, which recently had .purchased the South Hills Project from Ponderosa
Homes, that allowed substitution of a set -aside letter and Second Trust Deeds as
improvement security for the surety bonds that had been posted by the previous sub -divider.
In addition to this subsittite security the Agreement required South Hills Homes to post
additional improvement security prior to the issuance of building permits for the construction
of each phase of development.
in August of 1990, due to certain changed conditions, this Agreement was
amended to link performance of certain requirements to occupancy rather than building
permit issuance. The subdivider was also permitted to defer construction of public
improvements within 2000 feet of the landfill, pending approval of tentative subdivision maps
that would relocate development within that area to other portions of the project. The
requirements for improvement security in the form of both a set -aside letter and Second Trust
Deeds were unaltered by this amendment.
The developer has entered into a new Loan Agreement with the existing
lender, Union Federal Bank and executed a revised Deed of Trust. By .taking this action, the
City's Second Deeds of Trust are now in the first position. In order to restore the lender's
priority and return the City's Trust Deed to the second position, the subdivider is requesting
approval of a subordination agreement by the City. The subdivider has further advised us
that the lender requires these Agreements to be recorded on or before January 31, 1992, or
the loan will be defaulted.
Analysis:
It is Staff's feeling that the request for a subordination agreement is reasonable as
long as the City's improvement security as earlier provided by the set -aside letter and the
Second 'Trust Deeds is not degraded below the level that existed when the original agreement
with the subdivider was executed in .1987. In order to evaluate this situation, Staff has
reviewed the status of both the set -aside letter.and the. Second Trust Deeds. Following
are the results of that review:
1) There are insufficient funds remaining in the set -aside account to guarantee
construction of the incomplete improvements. These improvements consist of water
reservoirs, water pump stations and appurtenances, miscellaneous street improvements
and open space landscaping and irrigation.
2) The quality of security as represented by the Second Trust Deeds has improved
since 1987 because of the value that has been added to the property by the
construction of approximately 25 million dollars worth of improvements.
Additionally, the amount of the loan on the property is expected to be reduced from
its former level.of 27.1 million dollars to approximately 25 million, further improving
the value of the City's Second Trust Deeds.
-2-
3) Although the quality of security in the form of the Second Trust Deeds has
improved, ease of administration for a call-up of that security in. the event of default
has deteriorated due to the lack of sufficient funds in the set -aside account to assure
completion of improvements. In the event of a default, it is far easier. to draw upon the
set -aside account to complete outstanding items to work than it is to foreclose a Second
Trust Deed in order to perform that same work.
4) An additional element to be considered that was not present in 1987 is the possible
impact of an R.T.C. takeover of the lender on the City's security. Under
such an action, a set -aside letter could well be revoked. Recovery on the 2nd Trust
Deeds through foreclosure proceedings would be limited to the difference, if any,
between the sale price of the property and the amount of the 1st Trust Deed. There is
a very real possibility that these improvement securities would be eliminated by .such
an action.
However,- both under the conditions of approval for the original subdivision and the
terms of the 1987 Subdivision Improvement Agreement, the developer is required to
post bonds or other security acceptable to the City Engineer to secure. improvements
for each phase prior to issuance of building or grading permits for construction of each
phase: Further, occupancy of units is not permitted until all necessary public
improvements have been satisfactorily completed or in the case of open space
landscaping and irrigation, adequately secured.
The R.T.C. has extraordinary power to extinguish obligations of lending institutions
which it takes . over. However, with the agreements presently in place, the City's
ability to ultimately obtain completion of these improvements is adequately assured.
It is Staff's recommendation that a new set -aside be issued by the
lender, slightly raising the set -aside amount to a level sufficient to assure completion of
improvements and requiring as a condition of approval of the requested subordination
agreement that both the South Hills Homes Partnership and the City be cosignatories for any
disbursements from the set -aside fund.. Staff has reviewed with the developer the amount of
work to be done and the estimated cost if it were necessary, for the City to complete such
work. As a result of this review of outstanding work items, it would appear that adequate
security for the landscaping and irrigation can be provided solely in. the form of .the Second
Trust Deeds since this work can not be completed until after home construction and most
likely will occur some. years from now. At a minimum, the set -aside account should be
sufficient to pay for any work necessary to complete water facilities, street, sewer, and storm
drain improvements and any utility work not already installed or funded by the Developer.
This amount is estimated to be approximately $600,000. The existing set -aside fund has a
remaining balance of approximately $593,000.
In order to meet the. time frame established by the lender for execution
of the subordination agreement, Staff is proposing that the City Council authorize such
execution subject to the provision of improvement, security satisfactory to both the City
Engineer and the City Attorney. In the event that the subdivider fails to provide such
improvement security, Staff would recommend that the subordination agreement not be
executed. It should be noted that in spite of the modified loan agreement between the
subdivider and lender, . there is still a potential risk of default based upon the Special
Counsel's_ review of the loan documents. It is therefore imperative that both an adequate set -
aside letter or some other form of acceptable security and the Second Trust Deeds be
maintained concurrently as the improvement security for this project. If the subdivider were
to replace the improvement security by providing surety bonds or Letter of Credit from- an
acceptable financial institution, Staff could recommend release of the set -aside fund and the
Second Trust Deeds.
0
C10
Alternatives: .
-3-
The City may elect not to execute the subordination agreement. Under
this circumstance, the lender would undoubtedly foreclose on the existing First Trust Deed.
The lender would then have the options of managing the project or selling it to another
developer. As a possible alternative to foreclosure, South Hills Homes Partnership could
post another form of security equivalent in quality to the Second Trust Deeds and request
release of the. deeds and set -aside fund.
If the City's goal is to facilitate orderly and timely development of the
project, foreclosure proceedings would be incompatible with that aim. Staff does not
recommend consideration of that alternative.
The developer does not appear to have the ability to post a letter of
credit, surety bond or other form of security equivalent in quality to the Second Trust Deeds.
Therefore, release of the Second Trust Deeds by the City is not feasible.
Fiscal Impact:
There is no adverse fiscal impact on the City from entering into the
subordination agreement as long as the quality and ease of administration of the improvement
securities are appropriately maintained.
RECOMMENDATION:
It is recommended that the City Council authorize the Mayor and City
Clerk to execute a subordination agreement with South Hills Homes Partnership, and accept
a new set -aside agreement from Union Federal Bank, subject to provision of security for
incomplete improvements satisfactory to the City Engineer and City Attorney.
H Aarry W. Thomas
Public Works Division
Manager/City Engineer
HWT:lw: subordination agreements
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
Gibson, Dunn & Crutcher
800 Newport Center Drive
Suite 500
.-.Newpo•rt Beach, CA 92660
Attn: Eric P. Helm, Esq.
-----------------------------------------------------------
Above Space for Recorder's Use
SUBORDINATION AGREEMENT
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR
SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND
OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER
SECURITY INSTRUMENT.
THIS SUBORDINATION AGREEMENT, dated as of the day
of 1991 (the "Subordination Agreement"),
is made by and between SOUTH HILLS HOMES PARTNERSHIP, a
California limited partnership ("Owner"), owner of the
real property hereinafter described' and the CITY OF WEST
COVINA, a political.subdivision of the State of California
("Beneficiary").
RECITALS
A. Union Federal Bank, a federal savings bank,
formerly known as Union Federal Savings and Loan
Association ("Lender"), is the holder of that certain
Promissory Note Secured By Deed Of Trust, dated.November
17, 1988, executed by Owner to Lender in the face amount
of Twenty Seven Million One Hundred Thousand Dollars
($27,100,000.00), as modified by that certain
Consolidation and.Modification Agreement dated March 29,
1990 by and between Lender and Owner ("Note").
B. Lender is the present holder of, and beneficiary
under, that certain Construction Deed Of Trust, Assignment
Of Rents And Leases And Security Agreement, dated
November 17, 1988, by Owner, as trustor, to Superior Title
EPH:6382V
11/25/91
C93083-00050
•
Service, Inc., as trustee, for the benefit of Lender,'as
beneficiary, recorded on November 28, 1988, as Instrument
No. 88-1891405 in the Official Records of Los Angeles County,
California, as amended by that certain Modification of
Construction Deed of Trust and Assignment of Rents and Leases
and Security Agreement executed by Lender and Borrower dated
February 22, 1990 and recorded on February 26, 1990.as
Instrument No. 90-306234 in the office of the Official Records
of Los Angeles County, California ("Deed of. Trust"). The real
....property encumbered by the Deed of Trust,.as described therein
and as described in Exhibit "A" attached hereto and
incorporated herein by this reference is referred to as the
"Property."
C.'. Beneficiary'is the present holder of, and
beneficiary under, that certain Deed of Trust, dated
January 29, 1987 (the "Subordinate Trust Deed") by Owner, as
trustor, to First American Title Insurance Company, a
California corporation, as trustee, also covering the
Property. The Subordinate Trust Deed was (1) recorded as
Instrument No. 87-150082 on February 2, 1987, in the Official
Records of Los Angeles County, California and (2) subordinated
to the Deed of Trust by an agreement recorded on December 22,
1988 as Instrument No.'88-2043679 in'the Official Records of
Orange'County, California.
D. Owner and Lender have agreed to modify the terms
of the Note pursuant to the terms of that certain Agreement To
Amend And Restate Promissory Note Secured By Deed Of Trust, of
even date herewith ("Note Amendment"), and to amend the Deed of
Trust to reflect the Note Amendment, as provided in that
certain.Second Modification Of Construction Deed Of Trust,
Assignment of Rents and. Leases and Security Agreement of even
date herewith ("Deed of Trust Amendment").. The Note Amendment.
and Deed of Trust Amendment are hereinafter collectively
referred to as the' "Modification Agreements.".
E. It "is a condition precedent to the effectiveness
of -the Modification Agreements that Beneficiary confirm.and
agree by this Subordination Agreement that the Deed of Trust
shall unconditionally remain a lien'or charge on the Property,
prior and superior -to the lien or charge of the Subordinate.
Trust Deed and that Beneficiary specifically and ,
uncondititonally.subordinates the lien or charge of the
Subordinate Trust Deed to:.the liens or charges of the Deed of
Trust in favor -of Lender as modified .by the Modification .
Agreements,.
6382V
2
v
r-pY nnn 71�ZA9QnacgcnT BY 01;yg.1 a1a R1A anon;- ---
TRANSMITTED FROM 01.15.92 14:10 r.^4
F. =t is-ta the mutual, benefit of the parties hereto
that Lander enter into the modification Agreements with owner;
seneficiary is willing to subordinate to the Deed of Trust as
so modified: and the Deed of Trust shall continue to be dens
or charges upon such property which are., unconditionally pricr
and superior to the lien or charge of. the Subordinate Trust
Deed.
Ar.siw XT
In cansid,erition cf ttie mutual..benefits acc.u_ng tc
the parties hereto and other va_uan a consideration, the
receipt and sufficiency of which are hereby acknowledged, and
in order to. induce Lender to enter into the Modification
Agreements, it is hereby declared and agreed as follownt
1. The Dead of Trust, as,moditied by the Deed of
Truss Amendment and the Note, as modified bir.the tote
Amendment
-theme-, shell unconditionally be and remain at all t-mes a
Henor ah uge on the Property therein deserlb�ed, prior and
superior to the lien or charge of, the Subordinate Trust Deed.
Z, "his Subordination Agreement shall be the only
agreement with regard to the subordination of the lien ar
Charge of the Subordinate Trust Deed to the lien or charge of
Vie Deed of- Trust and shall supersede and cancel, but only
:neotar.aa would affact the priority between the Deed of Trust
and :he Subordinate ~rust Deed, any prior agreements as to such
subordination, including, but not -limited to, those provisions,
if any, Contained in the Subordinate Trust Deed, which provide
for the subordination of the lien oC charge thereof to another
deed or deeds of trust or to another mortgage or mortgages.
3. Beneficiary -hereby declares. agrees and
acknowledges as follows,
(a) Beneficiary ccnsents to and approves all
provision$ of the Note and tie oesd of Trust. as modified by :he
Modification Agreements;
(b) Lender in making disbursements, if any,
pursuant to the -Note, is under no obligation or duty to, and
Lands has not zopresented that it will, see to the applicn:ion
of such proceeds ty the person•.or persons to whom Lender
disburses such proceeds, and any spplieati•en or use of such
proceeds for purposes other than those provided for in such
notes shall not defeat the subordination herein made in whole
or 'in par
except that Lender shall make all disbursements-, if any,
pursuant. to that certain Set Aside Letter .dated as of
January. _, 1992 from Lender addressed to Beneficiary
only to Owner and Beneficiary as co -signatories
638zv
3
(c) Beneficiary intentionally and
unconditionally waives,. reliriquishes and subordinates the lien
o-r .charge of the Suba•rdinate Trust Deed in favor of the liens
.or charges upon the Property of. the Deed.of Trust in favor of
Lender, as modified by the Modification Agreements, and
understands that in reliance upon., and in considera'ti:on of,
•this waiver, relinquishment and.subordination, specific
consideration is being, made and given to Owner and specific
monetary and other. obligations arebeing and will•be entered
into, which would not be made.or entered into but for such
.reliance upon this.waiver, relinquishment and,subordination;.and
(d) An endorsement has been placed upon the
instrument evidencing.the ioan secured.by the Subordinate Trust
Deed that the lien or.charge of the'Subordinate Trust Deed has
.by this Subordination Agreement been subordinated to the lien
or charge,: o.f the Deed :of Trust in favor of Lender,_ .as modified
by the Modification Agreements.
NOTICE.: THIS SUEORDINATION•AGREEMENT CONTAINS -A PROVISION
WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY
SECURITY...TO OBTAIN A LOAN, A'PORTION-OF WHICH MAYBE -EXPENDED
FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND.
IN'WITNESS:WHEREOF, the parties heretohave executed
this Subordination Agreement as=of the date first above written.
OWNER:.
SOUTH HILLS. HOMES"PARTNERSHIP,
a.Calif.ornia li.mit.ed.partnership
By: South.Hills.Homes Corporation, a
California co,rporat.ion '.
By
Zi ad. Alhassen, Its,P:resident
BENEFICIARY:
CITY OF WEST COVINA'
By:
Mayor of the City fo'West Covina
ATTEST:.
City Clerk: of the
City of :West .C-Ovina
6382V
4
STATE OF )
ss.
COUNTY OF - )
On 199_, before me, the
undersigned, a Notary Public in -and for said State,
personally appeared
personally
known to me or proved to me on the basis of satisfactory
.ev.idence to be the person(s) that executed this
instrument on behalf of SOUTH HILLS HOMES PARTNERSHIP,
the partnership, and acknowledged to me that said
partnership executed the same.
WITNESS my hand and official seal.
Notary Public in and for
said State
(Seal]
-----------------------------------------------------------
STATE OF )
COUNTY OF ) ss.
On 199_, before me, the
undersigned, a Notary Public in and -for said State,
personally appeared , personally known.
to me -or proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to
this instrument and acknowledged to me that he executed
the same.
WITNESS my hand and official seal.
Notary Public in and for
said State
[Seal]
6382V
5
SENT BY: Olivetti FX 2000 lei-20_52 4:23PM 7145003:-
1 818 814- 54751;� 3
SE'�,A,S.DE AG,��M�tT
(Bank.Letterhead)
January _, 1992
The City of West Covina'
1444 West Garvey Avenue
West Covina, California. 91793
Attn: Mr. Harry W. Thomas
Res Tract Nos, 32323, 32324 and 42169
Subordination Agreements
Ladies and Gentlemen:
DRAFT
Pursuant to that certain Commitment Letter dated as of
we have agreed to restructure (the "Restructure")
that certain 'loan for the construction of improvements in
connection with the development of the .above Tract Nos.,
which loan is evidenced by that certain. Promissory Note
Secured, By Deed of trust dated November 17, 1988 in the
principal amount of TWENTY-SEVEN MILLION ONE HUNDRED THOUSAND
DOLLARS ($27,100,000.00) (the "Note") executed by South.Hills
Homes Partnership, a California limited partnership ("South
Hills") to Union Federal Bank, a federal savings bank,
formerly known as Union Federal Savings and Loan Association
(the "Lender").
In consideration of, and as a condition precedent to,
your execution of that certain Subordination Agreement dated
as of , 1992 (the "Subordination Agreement") by and
between South Hills and'you, which is. required in connection
with the Restructure, 'we have agreed to issue this letter -
regarding the set -aside of construction loan moneys for the
construction of those off -site improvements set forth on
Exhibit "A" attached hereto (the "Off -Site Improvements")
required in connection with the development of the .above
Tract Nos. We agree to set aside from the construction funds
the total sum of not less. than DOLLARS ($ )
("Budget Allocation") which is to be used in paying for the
Off -Site Improvements.
The. Lender hereby agrees to set aside funds from the
Note ("Set Aside Funds") in an amount up to the Budget
Allocation for the construction of the Off -Site Improvements
by South Hills. ISouth Hills -hereby irrevocably and
unconditionally authorizes the Lender to disburse to South
Hills and the City of 'West Covina (the "City"), as co-
signatories, for the credit and account of South Hills,. any
remaining balance of the Set Aside Funds, upon the demand and
certification of the City and South Hills that such moneys
are required for the construction of any or all of the Off-
40
114b4bI,UJIt-°
The City of West'Covina
January _, 1992
Page 2
1 d'1G vl. 3 4 7 5 ; w 4
Site Improvements. South Fulls acknow�edges and agrees that
any disbursements or payments made by the Lender under this
- letter shall be added to the outstanding principal balance of
the Note, shall bear interest' at the rate of interest
specified in the Note and shall have the security afforded
disbursements under the Note and the other documents
associated with the Note. South Bills hereby indemnifies and
holds the Lender harmless from any claim, demand, cause of
action, dispute, damage, loss or liability, including court
costs and attorneys' fees which the Lender may suffer or
incur as a direct or indirect consequence of the Lender's
issuance of or compliance with this letter and South Hills
shall pay any indebtedness arising underthis indemnity to
the Lender immediately upon demand. South_Hills'.s duty to
indemnify the Lender shall survive the release and
cancellation of the Note and the release and reconveyance or
partial release and reconveyance of the Deed of Trust
associated with the Note. In addition to all other remedies
available to the Lender in the event of South Hills's default
under the Note , the Lender shall have th6 right to disburse
to the City the balance of the Set Aside Funds (regardless of
whether demand for all or any part thereof has or could have
been made by the City) to be held by the City in lieu of.this
letter, as security for South .Hills's construction of the
Off -Site Improvements.
The Set Aside Funds will be disbursed to cover the costs
of the off -Site Improvements and for no other purpose and
only after we have satisfied ourselves that the off -Site
Improvements have, actually been performed. We assume no
obligation with respect to insuring proper completion of. the
Off -Site Improvements including, without limitation,
workmanship and timeliness.
In the event South Hills fails to complete and/or pay
for the Off -Site Improvements, all funds remaining from the
Budget Allocation will be immediately available to the City
to complete and/or pay for the costs of the Off -Site
Improvements. The City shall not in any way be obligated to
repay said funds to be used. Our obligation to disburse the
Budget.Allocation hereunder is subject to any stop notices or
other, legal processes which may have priority over the
interests of the City as to.the Budget Allocation.
SENT BY: Olivetti FX 2000 1'-20-92 4:24PP4 7145469035- 1 513 814 8475;0- 5
The City of West Covina
January _, 1992
Page 3
In any action between any of the parties hereto seeking
enforcementor. interpretation of. any, of the. terms and
_provisions, of this letter, the prevailing party in such
action shall be entitled to have and to recover from the
other., party 'or .other parties in the action its reasonable
attorneys' fees and other reasonable expenses an connection
with such action or proceeding, in addition to its
recoverable court costs.
Subject'- to the recordation of .,the Subordination
Agreement, this, is an irrevocable commitment of funds- which
is not.subject to recall by the Lender. We reserve the tight
.to distribute, the balance of the Budget Allocation in cash to
the City to fulfill our obligations in full.under this letter
at.any time..
Very truly yours,
UNION FEDERAL BANK, a
federal savings bank .
By:
Its:
We. acknowledge, accept 'and agree to comply with the
fotegoing,.conditions.
SOUTH HILLS HOMES PARTNERSHIP,
a.California limited partnership
By:
Its:
By:
Its:
The City of West Covina
January _, 1992
Page 4
r ACKNOWLEDGED'AND ACCEPTED:
TEE CITY OF WEST COVINA, a political
subdivision of the State of
California
By:
Its:
ATTEST:
5/265/014125-0003/01
.-
AMENDMENT.TO TEN (10)
SUBDIVISION IMPROVEMENT AGREEMENTS
RELATING TO TRACTS 32323, 32324,
33656 AND 42169 IN THE CITY OF WEST COVINA
IT IS HEREBY AGREED between THE CITY OF WEST
COVINA, a municipal corporation, herein called "City", and
PONDEROSA HOMES, a California general partnership, herein
called "Existing Subdivider" and SOUTH HILLS HOMES
PARTNERSHIP, a California limited partnership, herein called
"New Subdivider" that the ten (10) Subdivision Agreements
("Agreements") for Tracts 32323, 32324, 33656., and 42169
executed March 18, 1985, November 22, 1986 and June 26,
1986, attached hereto and incorporated herein by this
reference, for work generally described as public
improvements, on site grading and landscaping and irrigation
for public open space areas in said Tracts; and more
particularly described in said Agreements, are hereby
amended by adding to said Agreements the following:
1. New Subdivider shall be substituted for
Existing Subdivider and New, Subdivider: shall assume all
duties and obligations that are set forth in the above -
referenced Subdivision Improvement Agreements. Upon
approval of this amendment by the City the existing
Subdivider shall be released of all obligations under said
Agreements.
0
bEi
-2--: New Subdivider is hereby granted an extension
of time until one year after the date of this Amendment
within which to complete the improvements as required by
said Agreements. Further extensions may be granted as set
forth in the fifth paragraph,of the Agreements.
3. City hereby agrees that upon approval of this
amendment by the council,of the City, that it will exonerate
and return Bonds. For. Faithful Performance Nos. 59SBO18772
BCA, 59SBO19608 BCA, 59SBO19413 BCA; 59SBO19516 BCA,
59SBO19505 BCA, 59SBO19584 BCA, 59SBO19562 BCA, 59S8019573
BCA, 59SBO19595 BCA, 59SB019251 BCA, in the amount of
$8,620,100 posted by the Existing Subdivider as surety for
said Agreements (the "Bonds").. New,subdiv'ider.is not
released from Bond No. 59SB100068684,.-in the amount of
$10,000.
4. New Subdivider shall furnish and deliver to
the City' an approved second .deed of trust encumbering all
said Tracts in the sum of $8,62.0,100.which'deeds of trust
shall be substituted for the Bonds to secure the Subdivision
Agreements referred to in the preamble to this amendment.
5. New Subdivider.agrees that any first Trust
Deed encumbering said Tracts shall not exceed a purchase
money note of no more than $1.,500,0.00..00, plus the amount of
funds necessary to finance the construction of homes and
improvements for one phase of the development (anyone phase
not to exceed forty homes.), unless construction will
commence on two phases within six months, in which case.the
amount of:.the loan may equal. that necessary for construction
of homes and improvements for two phases. Sa•id'.construction
loan shall not encumber any property other than the lots --to
be developed in said phase or phases. No such construction
loan may be secured after December 31,.1981 unless the
purchase money loan of,$1,500,000,00 is paid off in full.
Subdivider agrees to seek approval of the City Engineering
Department prior to the recordation.of any Trust Deed
arising from a construction loan. City agrees that upon
satisfactory completion of construction of a phase, the
Second Trust Deed held by the*City shall be released insofar
as it encumbers property developed in said phase.
6. New'Subdivider agrees that prior to completing
construction of the seventeenth home in the proposed
development, it will complete the water. supply system set,
forth in City Council Resolution No. 5774., dated
September'll, 19.78, Condition of Approval No. 21 for Tract
32323; City Council Resolution No. 6419,.dated August 24,
1981, Condition of Approval No. 20'for Tract 32324; City
Council Resolution No. 6241, dated December 8, 1980,
Condition of Approval No. 20 for -Tract 33656; and City..
Council Resolution 6420, dated August 24, 1981, Condition of
-Approval No. 20 for Tract 42169..
_3_
7. New subdivider is required to post bonds or
other security acceptable to the City Engineer to secure
improvements for each phase prior to the issuance of
building or grading permits for construction for said phase.
IN WITNESS WHEREOF, this Agreements is executed by
THE CITY OF WEST COVINA, pursuant to Resolution
No.' authorizing such execution, and by the
Existing Subdivider and the New Subdivider.
Dated this day of v 19 6"7.
THE CITY OF WEST COVINA, a
municipal orporation
By:
Y
New Subdivider
SOUTH HILLS HOMES PARTNERSHIP,'
a California limited
partnership
By: South Hill Homes
Corporation, its general
partner
By:
Ziad Alhassen, President
Existing Subdivider
PONDEROSA HOMES, a California
general partnership
is 'Daly Aut orized gent
-4-
AGREEMENT
AMENDMENT NO.1 TO AMENDMENT TO TEN (10)
SUBDIVISION IMPROVEMENT AGREEMENTS
DATED 22 JANUARY, 1987
J
This Amendment is to that certain Agreement entitled
"Amendment to Ten (10) Subdivision Improvement Agreements
Relating to Tracts 32323, 32324, 33656- and,42169 in the City of
West Covina", dated 22 January, 1987 ("Agreement") by and
between the City of West Covina ("City"), Ponderosa Homes
("Existing Subdivider") and South Hills Homes Partnership ("New
Subdivider"). This'Amendment to the Agreement is made by and
between "City", "New Subdivider" and Dacin Development, Inc., a
California Corporation, as the successor to a portion of New
Subdivider's interest ("Dacin") as of ,-1990.
R E C I T A L S
T. New.Subdivider_has not -yet completed construction
of improvements and certain other requirements.under the
conditions of approval for Tentative Tracts for 32323, 32324 and
33656, but New Subdivider wishes to sell some of the lots in
Tract 42169, which'is'one of the final tract maps encompassed by
Tentative Tract 32323;
..2.. In.c,ertain cases,- it would be desirable to
restructure the time for execution of certain of. the tentative
tract map requirements and modify portions of certain
requirements as a benefit,to all.parties;
3. In other cases changed conditions since the date
of the original'subdivision requirements prevent complete
compliance -therewith;
NOW, THEREFORE, the parties agree as follows:
Section 1•
The recitals set out above are true and correct.
Section 2•
Section 1 of the Agreement is amended to add the
following:
"Dacin and New Subdivider as a condition of obtaining
building permits for those lots in Tract 42169 to which
they now hold or will hold title in fee simple shall be
jointly and severally responsible for meeting the
duties and obligations set forth in the conditions of
approval for Tentative Tract 32323, the said
Subdivision Improvement Agreements for Tract 42169
dated 26 June, 1985,. said Agreement entitled "Amendment
to Ten (10) Subdivision Improvement Agreements relating
to Tracts 32323, 32324, 33656 and 42169 in the City of
West Covina" and any and all Amendments thereto."
J
Notwithstanding the foregoing, paragraphs 10 and 12 of
the conditions of approval for Tentative Tract 32323 as
contained in City Council Resolution No. 5774 are
amended to read as follows:
"10. Prior to issuance of the first building permit
within any phase of Tract 42169, Tract 32323 or Tract
32324, New Subdivider or Dacin or their successors or
assigns shall submit to the Planning Director for
approval, landscaping and irrigation plans for all
.private manufactured slopes within the phase of Tract
42169, 32323 or 32324 for which building permits are
requested,. in accordance with City requirements and
specifications as adopted by.City.on the -date on which.
such plans are submitted. Jute matting may be required
by the Planning Director on certain 1-1/2 to 1 slopes
.to stabilize the soil during the landscaping
establishment period. All planting for a phase shall
be completed and all irrigation shall be operative
4
1
prior to occupancy of any unit in any phase. As used
herein or in condition 12 'phase' shall be as defined
in Section 4 of Amendment No. 1 to Amendment Ten (10)
Subdivision Improvement Agreements relating to Tracts
32323, 32324, 33656 and 42169 in the City of West
Covina dated 22 January, 1987 New Subdivider, Dacin
and their'successors or assigns shall be responsible
for the maintenance of said private landscaped slopes
until such time as the residential units constructed
upon the lots on to which said slopes are appurtenant
are sold. Said landscaping shall be maintained to the
satisfaction of the Planning Director. If said lots
are sold to another developer prior to completion of
the residential units, new owner shall satisfy said
maintenance requirement for said slopes prior to
occupancy of said residential unit."
5
1112. Prior to issuance of the first building permit
within any phase (as defined herein) of Tract 42169,
Tract 32323 or Tract 32324, New Subdivider or Dacin or
their successor or assigns shall submit to. the
Planning Director for approval landscaping and
irrigation plans for all common area, manufactured
slopes in the phase'for which building permits are
requested. Said.slopes shall be planted and irrigated
" to the satisfaction of the Planning Director prior to
the occupancy of any unit in that phase. Jute matting
may be required by.the Planning Director on certain
1-1/2 to 1 slopes to stabilize the soil -during the
landscaping establishment period. The plant regimen
shall consist of hardy natives and adaptable, exotic
species that are drought -resistant, fire -retardant, and
that require a relatively low level of maintenance in
accordance with City standards and requirements in
place,on the date the plans are submitted. The
applicant/de.veloper.thall assume the responsibility for
the satisfactory maintenance of these common,
landscaped areas for a minimum of 12 consecutive months
after the initial planting has been approved by the
City, before acceptance of the common areas and slopes
by the City. New Subdivider, Dacin and their
successors or assigns shall enter into an agreement and
post improvement security guaranteeing said maintenance
to the satisfaction of`the Planning Director.
Model home complexes within boundaries of Tract 42169
or 32324 not exceeding six (6) units, may be issued
building permits prior to the submittal of landscape
and irrigation plans for any phase of any herein
mentioned tract, assuming all other requirements for
building permits have been met."
7
Section 3:
Section 4 of the Agreement is amended to add':.
"Dacin shall take title to the lots in Tract 42169
subject to the second deed of trust of New Subdivider
or Dacin shall provide additional and/or alternative
improvement security acceptable to the City Engineer
and City Attorney.",
Section.4:
Section 5 of the Agreement is amended to add:
"Dacin agrees to be bound by the requirements of this
section as to lots it purchases in any of the said
phases, tracts or future subdivisions that may be
approved within the current boundaries of said tracts.
8
�As used in this Agreement, or conditions 10 and 12 of
City Council Resolutions No. 5774 and 5775,.'phase'
means no fewer than 18 but no more than 40 homes plus
any and all open space and/or common area lots within
the tract as shown on the respective Tract Map which
are contiguous or adjacent to any lot within that phase
including but not limited to any open space or common
area lot which may be separated from a lot within a
phase by a street or other public right-of-way or
easement."
Section 5:
Section 6 of the Agreement is amended to read as
follows:
"Notwithstanding Section 1 of this Agreement as.
amended, New Subdivider and Dacin agree that .prior to
9 0
occupancy of any dwelling, unit within Tentative Tract
32323; including but not limited to Tract,42169, or
Tentative Tract 32324, they will complete the water
supply system or improvements set forth in the
conditions of approval contained within the following
City Council Resolutions:
Resolution No. 5773, dated September 11, 1978
certifying Environmental Impact Report No.- 1977-1.
Resolution No. 5774, dated September 11, 1978,
approving Tentative Tract 32323 (Condition of
Approval No. 21)
Resolution No. 5775, dated September 11, 1978,
approving Tentative Tract 32324 (Condition of
Approval No. 20)
Except as amended herein all conditions of approval for
Tentative Tracts 32323, including but not limited to
Tract 42169, Tentative Tracts 32324'and 33656, shall'
remain in full force and effect.
10
Notwithstanding the foregoing, NOW Subdivider -or Dacin
shall not be required to construct any portion of a
water supply and distribution system or other public
improvements, including landscaping and irrigation,
within the portion of Tentative Tract 32323, including
but not limited to Tract 42169, located within 2000 ft.
.of the historic Class I/Class II waste disposal area of
the BKK Sanitary Landfill, at this time, pending
approval of revised final maps submitted by New
Subdivider to City on July 12, 1990, except as such
facility may be needed for fire protection purposes
within said 2000 ft. radius area, or provision of
domestic water service and fire protection service to
dwelling units located outside of said 2000 ft. radius
area."
Section 6•
Section-7 of the Agreement is amended to. add as,
follows:
"Dacin and'New Subdivider shall be required.to post
such.security acceptable to the City Engineer and City
Attorney prior to issuance of building permits for any
dwelling units in Tract 42169."'
Section 7:
Sections 8, 9 and 10 are added to the Agreement to read
as follows:
"Section 8: Except -as set out in Section 4 of
Amendment No: 1, City will not require the construction
of certain public improvements otherwise required as
part of Tract 32323 at this time as shown on the map
attached hereto as Exhibit A. Said improvements are
12
located within 2000 ft., measured radially, of the
exterior boundary of the Class I and Class II disposal
area of the BKK Corporation Sanitary Landfill
permitted by the terms and conditions of Unclassified
Use Permit No. 71, Revision 5, Amendment. Relief from
construction of said improvements is subject to the
approval of certain Tentative Maps and Parcel Maps
submitted by New Subdivider to City on July 12, 1990
effecting a partial redesign of Tracts 32323, 32324,
and 42169."
Section 9. Improvement
This Agreement shall inure to the benefit of and be
binding upon the parties, their successors, heirs and
assigns.
1.3
Section 10. Modification/Waiver
This -Agreement shall be modified only in writing signed
bY_all parties. No waiver of any tee or condition of
this agreement shall be considered a coati suing waiver
thereof.',
Section 8. Effective Date
This Agreement shall be effective as of.the date of
approval by the City Council.
14
i
IN WITNESS WHEREOF, this amendment is executed by the
parties as set forth below:
DATE:
DATE: `7 -' /,;) - y0
ATTEST:
City -Clerk
DATE :
SOUTH HILLS HOMES PARTNERSHIP
A CALIFORNIA LIMITED PARTNERSHIP
BY: SOUTH HILLS HOMES CORPORATION
ITS GENERAL PARTNER
BY:
ZIAD ALHASSEN, PRESI T
DACIN DEVELOPMENT, INC.
BY:
APPROVED AS TO FORM:
City' Attorney
Auvust 13, 1990
DATE OF APPROVAL BY CITY COUNCIL:
EXN I BIT ,A
i
fi y
ty i S,o w
lei
' � ".. \� � ,L\ �� - � � to N i •,� ' r � - .
4L ,, N
AV
41
14
'f � �• . r•' ! �.-..�'� fit' : \ .,7� ,
• � •V n
• : .i L� 1700 W .�
GE
d
Ad
t
• q - •� r.. ., t• V p W ,
� f
I)
J .r
J
Z
GE N E RA L N
LOCAT•1 ON OF PUBLIC W A `
IMPROVE MEN7g \NM4 t�
LANDFILL 2000 FT. RADIUS
UNION
a 0 t A A U
Unu•• rR,frry� 4annGs
P C dun 4235
O,ua. CA 92G27
714 '55.8100
November 9,,
1988
�,��•j'
Mr. Harry W. Thomas
Public Works Division Manager
`.
City of West Covina
1444 West Garvey Avenue
West Covina, California 91793
Re: Tract No. 32324 and 42169
Dear Mr. Thomas;
Union Federal Savings and Loan Association ( "Assoc' ati on") , a
financial institution subject to regulation by the federal
gover:.r..ent, has agreed to make a construction loan covering
the move property to South Hills Homes Partnership
Association agrees that upon recordation of the loan,
Association will reserve from the construction loan funds' a
sum In the amount of $6,768,900.00 (the "Set Aside Account")
designated in writing for the benefit of the City of West
Covina ('City,*), to _be used only to pay the cost of of 4 si to
improvements and to.secure Borrower's performance under that
csrta::z Agreement for Construction Improvements between
Borrower and City dated January 22, 1987, a copy of which is
attached (the *Agreement").
As work progresses, the Set Aside Account shall be disbursed
to Scrrcwer or as Borrower may direct in writing, upon its
certification supported by such invoices -or releases as we
may c.1.tain (without any obligation to obtain such invoices or
releases) that such disbursements are to .cover the costs of
the offsite improvements and are for no other purpose, until
such: time as the improvements covered by the Agreement have
been completed, accepted .by the City and paid :or . i—n. f w�+.
Any sum remaining in the Set Aside Account at that time no
longer will be covered by G;3f3 setter.
In the event Borrower fails to complete, or complete .to -City
standards or pay for the improvements and perform his other
obligation as required by the Agreement, -all funds remaining
in the Set Aside Account shall be immediately Available,
subject to the laws of the State of California, to City to
complete and pay for the cost of said improvements, such
funds to be disbursed, upon City's order, to persons
supplying labor or material for such improvements or to
reim :arse Ci ty , f or sums theretofore paid by City for such
Mr. Harry W. Thomas
November 9. 1988
Page Two
purpose. City shall not in any
way be obliged to repay said
funds so used to`t��ssoci�h�oa�ceptanceaofotheoworkes �titsbeing
sume
any responsibil,i ty for must be
understood the installation
fof..the
anlauthorizedsrepresentative
completed to the satisfaction
of the City.
In the event the aforesaid mprov dateeofsthis Agreemeare not ntted
within five t5 i years from
the Borrower agrees to provide City With
lof the improvementsito£be
the cost of the remaining p Engineer and
completed and in a form acceptable supplementthiscommitment as
the City Attorney. The City may
required by its municipal code.
Th
is s is an. irrevocable commitment of funds, sHots ubj ec tect o to the
.laws of the State of California, which
recall by Association.
The Borrower has. approved this agreement below and by such
approval has indicated its willingnn�eeh�heAssociation. honor
orders signed by City for the payme
improvements from the Set Asidmeance
and after, noticeount, . upon hin writing,
conditions
above -stated, at any time fro
from._City that Borrower
ehsubdivisiofailed eimp=ovementa required by
standards or pay for th
- the City.
please indicate your acceptance where indicated below.
UNION FEDERAL SAVINGS
AND LOAN ASSOCIATIQN
EY 1'•
John W. Hil
Itsdent
-WE ACKNOWLEDGE" ACCEPT AND AGREE TO
COMPLY WITH THE FOREGOING CONDITIONS
SOUTH �HILLS HOMES
TNERSHIP
a Ca7ifornalimited
•
y;
ACKNOWLEDGED AND ACCEPTED
CITY OF WEST COVINA
By:
Mayor
By
y Eng neer. and
Public Works Division Manager