Loading...
HomeMy WebLinkAbout065502-SB1 - Construction-Related - Contract - Maren Grove, LLCD226139686 07/20/2026 07:36 AM Page: 1 of 8 Fee: $48.00 Submitter: Stewart Title Company - Austin Electronically Recorded by Tarrant County Clerk in Official Public Records MARY LOUISE NICHOLSON COUNTY CLERK City Secretary Contract No 65502-SB1 a3/2 9sooa7 --0 4 INTERCREDITOR AND SUBORDINATION AGREEMENT This Intercreditor and Subordination Agreement (this "Agreement"), dated as of July j1, 2026, is made by and among ZIONS BANCORPORATION, N.A., doing business as Amegy Bank ("Senior Lender"), CITY OF FORT WORTH (the "Junior Lender'), and MAREN GROVE, LLC, a Texas limited liability company ("Borrower"). RECITALS: A. Senior Lender has entered into with Borrower a Construction to Permanent Loan Agreement (the "Senior Loan Agreement") and the other "Senior Loan Documents" (as defined below), to provide for a loan to Borrower not to exceed $18,600,000.00 at any one time outstanding (together with any additional sums advanced by Senior Lender to Borrower pursuant to the Senior Loan Documents and consistent with this Agreement, the "Senior Loan") to finance the development of a 90-unit multi -family affordable housing residential rental project located in Tarrant County, Texas at 801 West Shaw, Fort Worth, Texas 76110, known as the Maren Grove (the "Project"), situated on the real property described on Exhibit "A" hereto (the "Land"). Pursuant to the Senior Loan Documents, Borrower has granted to Senior Lender certain rights, liens and security interests (collectively, the "Senior Liens") in the Project and the Land as described in the Senior Loan Documents. B. Pursuant to the Junior Loan Documents (as defined below), Borrower has requested that the Junior Lender make a loan in the amount of $550,000.00 (the "Junior Loan") to Borrower to finance a portion of the costs relating to the Project. C. Junior Lender and the Senior Lender wish to enter into this Agreement to fully set forth their agreement regarding the relationship of the Junior Loan to the Senior Loan. NOW THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Junior Lender and the Senior Lender hereby agree as follows: 1. Definitions. In addition to the terms defined elsewhere herein, the following terms will have the meanings indicated below: "Junior Loan Documents" means all contracts, notes, mortgages, guaranty agreements, agreements, instruments, and documents pertaining to, evidencing, or securing the Junior Loan, which notes, mortgages, guaranty agreements, agreements, instruments, and documents may be amended and/or modified subsequent to the date hereof as permitted by the terms and conditions of the Senior Loan Agreement. "Senior Loan Documents" means the Senior Loan Agreement and all notes, mortgages, agreements, instruments, and documents pertaining to, evidencing, or securing the Senior Loan, which notes, mortgages, agreements, instruments, OFFICIAL RECORD ACTIVE 7249019990 CITY SECRETARY FT. WORTH, TX D226139686 Page 2 of 8 and documents may be amended and/or modified subsequent to the date hereof. 2. Subordination by Junior Lender. (a) Junior Lender agrees that to the extent any voluntary or involuntary liens, claims, and security interests, whether by agreement, at law, or in equity, of Junior Lender (or any other entity claiming by, through, or under Junior Lender) now or hereafter secure the payment and/or performance of the Borrower's obligations under and with respect to the Junior Loan and the Junior Loan Documents or otherwise with respect to the Project (including, without limitation, the liens granted in any deed of trust securing the Junior Loan executed by Borrower to Junior Lender), said liens, claims, and security interests are and shall forever remain junior, subordinate, and inferior, to the liens and security interests of the Senior Lender in and to the Project and otherwise securing payment of the Senior Loan and, by its execution hereof, Junior Lender hereby evidences said subordination. Further, Junior Lender shall not terminate any of the Junior Loan Documents, including without limitation, the Contract, without the prior written consent of the Senior Lender. (b) Payment of any and all amounts now or hereafter owing by Borrower to Junior Lender under or with respect to the Junior Loan, the Junior Loan Documents, or otherwise with respect to the Project, is subordinate and inferior to the Senior Loan. Unless no Event of Default is then continuing, Borrower may make and Junior Lender may accept regularly scheduled payments (but not prepayments, unless such prepayment is expressly permitted by the terms and conditions of the Senior Loan Agreement) on the and with respect to the Junior Loan. After Senior Lender has provided Junior Lender with a written notice from the Senior Lender that an Event of Default has occurred under the Senior Loan Agreement and is continuing, no payment shall be made on the Junior Loan, and Junior Lender shall not accept any payment on the Junior Loan after it has received a written notice from the Senior Lender that an Event of Default has occurred under the Senior Loan Agreement and is continuing. Any payment made to Junior Lender in violation of the foregoing shall be held in trust for the Senior Lender and promptly provided to the Senior Lender. (c) Junior Lender (or its successors in interest) shall not enforce any lien or bring suit for the collection of the Junior Loan unless and until the full and final payment of the Senior Loan and the conclusion of all related funding commitments underthe Senior Loan Agreement. (d) Senior Lender shall provide Junior Lender with copiesof notices of default provided under the Senior Loan Documents, and Junior Lender may (but is not obligated to) cure any right to cure any default or event of default by Borrower under the Senior Loan Documents within any applicable grace or cure period provided for in the Senior Loan Documents. Subordination Agreement ACTIVE 724901 MO Page 2 D226139686 Page 3 of 8 3. Notices. Any notice by one party to the other hereunder shall be in writing and shall be delivered in person or by United States Mail, postage prepaid, certified, return receipt requested. Notice shall be deemed delivered on the date delivered, or if mailed, three days after deposit in the U.S. Mail. Notice shall be delivered to the following addresses: SENIOR LENDER: Zions Bancorporation, N.A. dba Amegy Bank 4576 Research Forest Drive The Woodlands, Texas 77381 Attn: Ray Miller JUNIOR LENDER: The City Attorney's Office The City of Fort Worth 100 Fort Worth Trail Fort Worth, TX 76102 Maren Grove, LLC 5501-A Balcones Drive, #302 Austin, Texas 78731 The parties may change their addresses for purposes of notice by giving the other party ten (10) days' written notice of the address change in the manner hereinabove stated. 4. Miscellaneous. (a) This Agreement constitutes the entire agreement of the three parties hereto with respect to the subject matter hereof, and supersedes all other prior and contemporaneous written or oral agreements. Any amendment hereto must be in writing executed by the Borrower, Junior Lender, and the Senior Lender. (b) Time is of the essence in the performance of the parties' obligations hereunder. (c) This Agreement is governed by the laws of the State of Texas. (d) This Agreement shall be enforceable by and binding upon all successors and assigns of Senior Lender. Subordination Agreement ACTIVE 724901999v1 Page 3 D226139686 Page 4 of 8 (e) This Agreement shall remain in full force and effect until the Senior Loan has been fully and finally paid and Borrower has no further obligations under the Senior Loan Agreement. (f) This Agreement may be executed in two or more counterparts, and it shall not be necessary that any one counterpart be executed by all of the parties hereto. Each fully or partially executed counterpart shall be deemed an original, but all such counterparts taken together shall constitute but one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Subordination Agreement ACTIVE 7249019990 Page 4 D226139686 Page 5 of 8 IN WITNESS WHEREOF, the undersigned have affixed their signatures hereto to be effective as of the date first above written. JUNIOR LENDER: CITY OF FORT WORTH By: 9AU/ Dana Bur4hdot lAssistant City Manager THE STATE OF i § COUNTY OF 'Coat' Mi - § This instrument was acknowledged before me on this 3t . day of 6 , 2026, by Dana Burghdoff, Assistant City Manager of CITY OF FORT WORTH, a Texas municipal corporation, on behalf of said corporation. Victoria Esquivel �cY ry �lJ — f� My Commission Expires 611212029 Nota Public State of Ty, �jQ • y� Notary ID135515177 My Commission Expires: ?A OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX Subordination Agreement Page 5 ACTIVE 7249019990 D226139686 Page 6 of 8 SENIOR LENDER: ZIONS BANCORPORATION, N.A., dba Amegy Bank B ZA4, _... KV Philer, Senior Vice President STATE OF TEXAS § COUNTY OF ,6lop Ian A"Ay § The foregoing instrument was acknowledged before me on the � day of 2026, by Ray Miller, Senior Vice President of Zions Bancorporation, N.A, dba Amegy Bank, a national banking association, on behalf of said association. ; MICHAELINFINGE? T' *.*z: o_ Notary Public, State of TexasNOTARY PUBLIC TH STATE OF TEXAS Comm. Expires 04-23-2027 '�•q;;� odt,��.�' Notary ID 13199459-1 Printed Name of Notary Subordination Agreement ACTIVE 724901999A My commission expires: 1+ - Z3 - z0Z 7 Page 6 D226139686 Page 7 of 8 BORROWER: MAREN GROVE, LLC, a Texas limited liability company By: O-SDA Maren, LLC, a Texas limited liability company, its managing member By: O-SDA Industries, LLC, a Texas limited liability company, its s le member } �,� By: L L_���_ \ Megan sch, Sole Member STATE OF TEXAS § COUNTY OF Tro Vj S § This instrument was acknowledged before me on the !0 day of AAA 2026, by Megan Lasch, Sole Member of 0-SDA Industries, LLC, a Texas limited liability company, on behalf of said limited liability company, as sole member of O-SDA Maren, LLC, managing member of MAREN GROVE, LLC, a Texas lim' liability company. ABIGAIL TATKOW Notary Public, State of Texas Notary Public, state of Texas Comm. Expires 12-13.2026 Notar ID 134102905 Subordination Agreement ACTIVE 7249019990 Page 7 D226139686 Page 8 of 8 EXHIBIT "A" Lot 3, in Block 2, of OUR LADY OF VICTORY HEIGHTS, an addition in Tarrant County, Texas, according to the replat thereof recorded in/under Cabinet A, Slide 7553 of the Map/Plat Records of Tarrant County, Texas. 3 ACTIVE 7249019990 City of Fort Worth, Texas Mayor and Council Communication DATE: 06/09/26 M&C FILE NUMBER: M&C 26-0493 LOG NAME: 19MAREN GROVE UDAG FUNDS SUBJECT (CD 9) Authorize Expenditure in the Amount of $550,000.00 of Urban Development Action Grant Miscellaneous Revenue as a Forgivable Loan to Maren Grove, LLC, or an Affiliate, in Support of Maren Grove Apartments Located at 801 W. Shaw Street; Authorize Execution of Related Contracts; Find that the Loan Serves a Public Purpose and that Adequate Controls are in Place; and Adopt Appropriation Ordinance RECOMMENDATION: It is recommended that the City Council: 1. Authorize expenditure in the amount of $550,000.00 of Urban Development Action Grant Miscellaneous Revenue as a forgivable loan to Maren Grove, LLC, or an Affiliate, in Support of Maren Grove Apartments Located at 801 W. Shaw Street; 2. Authorize the City Manager or his designee to execute a loan agreement and all other related documents necessary for lending activities with terms as specified below; 3. Authorize the City Manager or his designee to extend the contracts if such extensions are necessary for completion of the Project, and to extend all other required documents for lending activities as necessary for the development of the Project; 4. Authorize the City Manager, or his designee, to amend contracts and other related documents if necessary to achieve Project goals, provided that the amendments are within the scope of the Project and in compliance with City policies and applicable laws and regulations; 5. Find that providing the loan serves the public purpose of providing decent, safe, and sanitary housing for low-income residents, while also creating new jobs in the City, and that adequate controls are in place through the various loan documents and agreements to ensure the public purpose is carried out; 6. Accept interest revenue and miscellaneous revenue receipts in the Grants Operating Other Funds account; and 7. Adopt the appropriation ordinance increasing estimated receipts and appropriations in the Grants Operating Other Fund in the amount of $54,248.59 from Urban Development Action Grant Miscellaneous Revenue Program Income for the purpose of funding future projects. DISCUSSION: The purpose of this Mayor and Council Communication (M&C) is to approve financial actions to support Maren Grove (Project). This initiative aligns with the City's Comprehensive Plan and Neighborhood Conservation Plan and Housing Affordability Strategy by delivering quality, affordable housing for low -to moderate -income residents while also fostering economic development and revitalizing the City. The Project is a 90-unit affordable housing multifamily property developed by O-SDA Industries in partnership with Saigebrook Development (Developer) and financed in part with equity from 2024 9% Housing Tax Credits. All of Maren Grove's units will be income -restricted serving families with below -market rents adjusted for the Area Median Income (AMI) with 20 deeply affordable units for reserved households at 30% AMI, 26 units at 50% AMI, 28 units at 60% AMI, and 16 units at 80% AMI. Affordability will be enforced through a state -imposed Land Use Restriction Agreement on the property for a minimum of 40 years. The Project is an adaptive reuse of the historic Victory Arts Center. In addition to rehabilitating the existing structure, it will include an added residential building and an on -site reduced -cost Pre -Kindergarten Program for residents and members of the surrounding community. The Project closed on financing and began construction in June 2025 and is currently about 85% complete. Maren Grove received a $4,000,000.00 award through the Environmental Protection Agency's Greenhouse Gas Reduction Funds (GGRF) to close a financing gap, however, the GGRF program was terminated in Spring 2025 as a result of shifting funding priorities at the federal level. After securing additional construction financing, the Project still faces a financing gap of over $2,000,000.00. The Developer responded to the City's Notice of Funding Availability for Community Development Block Grant -Disaster Recovery (CDBG-DR) funding for multifamily housing development. However, after review, the Project was determined to be ineligible because it did not meet the applicable CDBG-DR regulatory requirements. With these funding sources unavailable, additional gap financing is needed to support Project completion. City staff has identified $550,000.00 in unprogrammed Urban Development Action Grant (UDAG) revenue funds that may be used to support the Project. To address the remainder of the financing gap, the Developer will defer a portion of their fee and implement value -engineering measures. The Project is an eligible UDAG economic development activity consisting of the adaptive reuse and rehabilitation of the historic Victory Arts Center combined with new construction of a 90-unit affordable multifamily development. The Project supports economic recovery through private investment, long-term affordability, and the provision of an on -site reduced -cost Pre -Kindergarten program. UDAG funds may be used because new housing construction and rehabilitation are eligible activities under Title I and UDAG regulations. Funding the Project will also result in the creation of at least three new full-time jobs in the City through property management, maintenance, and staffing of the on -site Pre -Kindergarten Program. Staff recommends execution of a contract with Maren Grove, LLC, or an affiliate, for a forgivable loan in UDAG funds in the amount not to exceed $550,000.00 on the following loan terms and conditions: UDAG Loan Terms: 1. Loan term to commence on the date of execution and terminate 40 years after project stabilization. Final payment of principal and accrued, unpaid interest will be due 40 years after project conversion coterminous with final payment date of permanent loan; 2. Five-year performance period to begin on the date the project reaches stabilization, or 12-months after completion whichever comes first; 3. Interest rate of zero percent so long as borrower complies with all of the terms of the contract and loan documents; 4. UDAG funds will be used for eligible construction costs associated with the new multifamily housing construction; 5. UDAG contract funds shall comply with applicable Urban Development Action Grant (UDAG) requirements under Title I and 24 CFR Part 570, including adherence to eligible UDAG economic development activities and the requirement that the Project contribute to economic recovery; 6. Developer must employ the equivalent of at least three full-time positions during the performance period; 7. UDAG loan shall be forgiven if all terms and conditions are met and Developer has complied with all contract regulations and requirements; and 8. UDAG funds will be provided on a reimbursement basis for eligible construction costs only. Staff recommends approving the expenditure and execution of contracts and related loan documents with Maren Grove, LLC in the amount of $550,000.00 in UDAG funds for construction costs in support of the Project. UDAG Miscellaneous Revenue funds are rental revenues received from the lease of the City -owned parking garage under General Worth Square (City Contract No. 11085, as amended and assigned). UDAG Funds must be used for projects that meet certain CDBG program requirements, including use in a CDBG-eligible area, qualification as a CDBG economic development project and inclusion of private investment or UDAG economic development activities that contribute to economic recovery. Annual revenue from the parking garage is approximately $373,000.00. Currently the City has an appropriate balance of $506,863.69 in UDAG funds. In addition, the City is in receipt of but has not appropriated a total of $ 54,098.59 of UDAG Funds. After funding this loan, and after all funds have been appropriated, the garage rental revenues account will have a remaining balance of approximately $10,962.28. Adoption of the attached appropriation ordinance will appropriate the current balance of program revenue for use on this $550,000.00 loan, with the balance of appropriated funds to support future City projects or programs. Through this M&C, the City Council finds that the Project serves a public purpose by assisting the City in fulfilling its goals under the its Comprehensive Plan and the Neighborhood Conservation Plan and Housing Affordability Strategy, by providing quality, accessible, affordable housing for low- to moderate- income residents and supporting economic development and revitalization, and that the forgivable UDAG loan, are vital to the financial feasibility of the Project. The Council further finds that adequate controls are in place through the various loan documents and agreements to ensure that the public purpose is carried out. This project is located in COUNCIL DISTRICT 9. FISCAL INFORMATION / CERTIFICATION: The Director of Finance certifies that funds are currently available in the Hyatt Regency Parkg Garage Rev project within the Grants Operating Other Fund and upon approval of the above recommendations and adoption of the attached appropriation ordinance, funds will be available as appropriated. The Neighborhood Services Department (and Financial Management Services) will be responsible for the collection and deposit of funds due to the City. Prior to an expenditure being incurred, the Neighborhood Services Department has the responsibility of verifying the availability of funds. This is a reimbursement grant. Submitted for City Manager's Office by. Dana Burghdoff 8018 Originating Business Unit Head: Kacey Thomas 8187 Additional Information Contact: Dyan Anderson 7398 FORT WORTHO City Secretary's Office Contract Routing & Transmittal Slip Contractor's Name: Maren Grove, LLC Subject of the Agreement: UDAG Intercreditor and Subordination Agreement M&C Approved by the Council? * Yes M No ❑ If so, the Mc&C must be attached to the contract. Is this an Amendment to an Existing contract? Yes 8 No ❑ 65502 If so, provide the original contract number and the amendment number. Is the Contract "Permanent"? *Yes B No ❑ If unsure, see back page for permanent contract listing. Is this entire contract Confidential? *Yes ❑ No 8 If only specific information is Confidential, please list what information is Confidential and the page it is located. Effective Date: Date of execution of the contract Expiration Date: If different from the approval date. If applicable. Is a 1295 Form required? * Yes ❑ No 8 *If so, please ensure it is attached to the approving Mc&C or attached to the contract. Project Number: Ifapplicable. *Did you include a Text field on the contract to add the City Secretary Contract (CSC) number? Yes B No ❑ Contracts need to be routed for CSO processing in the following order: 1. Katherine Cenicola (Approver) 2. Jannette S. Goodall (Signer) 3. Allison Tidwell (Form Filler) *Indicates the information is required and if the information is not provided, the contract will be returned to the department.