HomeMy WebLinkAboutAgenda - 08-19-2008- 4zORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: August 19, 2008
Action Agertc(~
Item No. !l.,~~
SUBJECT: HOME Program -Loan Subordination Request
DEPARTMENT: Housing/Community Dev. PUBLIC HEARING: (Y/N) No
ATTACHMENT(S):
Subordination Agreements
INFORMATION CONTACT:
Tara L. Fikes, 919-245-2490
PURPOSE: To consider approval of a request from Freedom House Recovery Center, Inc. to
subordinate a County Deed of Trust in the amount of $337,000 to a construction loan and
corporate sewer easement.
BACKGROUND: On February 17, 1998, Orange County entered into an Agreement with
Freedom House, Inc. for $337,000 in HOME dollars to develop 10 transitional housing units for
low income individuals at their facility site on Martin Luther King, Jr. Blvd. in Chapel Hill.
Freedom House executed a Deed of Trust and Promissory Note on the same date to the secure
the HOME investment for a term of 20 years.
Currently, Freedom House has plans to construct two new buildings on its campus in Chapel
Hill. One will replace the. Detox building that has been in operation for over 30 years and will
provide more square footage for staff and client services. Freedom House will also be able to
add seven (7) new bed spaces. The second building will be an outpatient substance abuse
treatment clinic that will provide outpatient services for up to 300 individuals each year.
In order to implement these expansion plans, Freedom House has secured a construction loan
commitment from SunTrust Bank in an amount not to exceed $1,718,000. However, in order to
obtain the construction loan, the current Orange County Deed of Trust must be subordinate to
one securing the SunTrust loan. Additionally, in order to construct the accompanying sewage
system, the Orange Water and Sewer Authority (OWASA) is also requiring that the County
Deed of Trust be subordinate to a Corporate Sewer Easement as well.
Therefore, in order to begin the expansion project, Freedom House is asking the County to
execute Subordination Agreements that will allow the SunTrust Deed of Trust and OWASA
Corporate Easement to be superior to the County lien.
FINANCIAL IMPACT: A secondary lien position increases the financial risk to the County in the
event of a default on the construction loan.
RECOMMENDATION(S): The Manager recommends that the Board approve the
subordination requests and authorize the Chair to sign the Subordination Agreements on behalf
of the Board upon the review and approval of the County Attorney.
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SUBORDINATION AGREEMENT
Prepared by and return to: Stephen B. Miller, Alexander & Miller, L.L.P.
P. O. Bvx 3200, Chapel Hill, NC 45215-3200
PIN: 9880-22-3617 and 9880-22-4757
Tax Map Ref.:
NORTH CAROLINA, ORANGE COUNTY
THIS SUBORDINATION AGREEMENT (this "Agreement"), is made the day of
2008, by and between ORANGE COUNTY ("Orange County") and
GEOFFREY E. GLEDHII,L, Trustee (the "Orange County Trustee"), and SUNTRUST BANK
("SunTrust");
WITNESSETH:
WHEREAS, SunTrust has agreed to make a construction loan to FREEDOM HOUSE
RECOVERY CENTER, INC., formerly known as Freedom House, Inc. ("Bon:ower") in an amount
not to exceed $1,718,000 (the "Construction Loan"); and
WHEREAS, the Construction Loan is secured by a Deed of Trust in favor of Southland
Associates, Inc., as Trustee, for the benefit of SunTrust, recorded at Book ,Page ,
Orange County Registry ("SunTrust Deed of Trust', which evidences a lien upon the property being
described therein (the "Property"};
WHEREAS there is currently a prior Deed of Trust on the Property, dated March 31,1998,
executed by Borrower in favor of the Orange County Trustee, and recorded in Book 1730, Page 490,
Orange County Registry (the "Orange County Deed of Trust"}, which instrument secures an
indebtedness of $337,000.00 therein described, evidenced by a promissory note; and
WHEREAS, Borrower can procure the Construction Loan from SunTrust only upon the
condition that the lien of the Orange County Deed of Trust is subordinated to the lien of the SunTrust
Deed of Trust so that the SunTrust constitutes a superior lien on the Property; and
KCRCM 2A9163.2
*:
(Corporate Sewer Easement Without Mortgage)
NORTH CAROLINA
ORANGE COUNTY DEED OF EASEMENT
THIS DEED, made and entered into this the
day of
2008, .by and between FREEDOM HOUSE RECOVERY CENTER, INC., a North Carolina
Non=Profit Corporation, hereinafter referred to as. GRANTOR, and ORANGE WATER AND
SEWER AUTHORITY, a public body and body politic and corporate created and existing
under Article 1, Chapter 162A of the General Statutes, with its principal office at 400 Jones
Ferry Road in Carrboro, North Carolina hereinafter referred to as GRANTEE;
WITNESSETH:
THAT WHEREAS, the ORANGE WATER AND SEWER AUTHORITY has constructed and
proposes to construct a sewage system for the use of its citizens and .for that purpose has
constructed and proposes to construct line of pipe and mains necessary for the proper
transmission of sewage:
NOW, THEREFORE, in consideration of the sum of One and No/100 ($1,00) Dollar
and other good and valuable considerations paid to the GRANTOR, the receipt of all of which is
hereby fully acknowledged, the said GRANTOit does hereby give, grant, quitclaim, and convey
unto the ORANGE WATER AND SEWER AUTHORITY, its successors and assigns, the right,
:. ;
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privilege, and perpetual easement to go in and upon a strip of land thirty (30} feet in width
described herein and owned by the GRANTOR, lying and being in the Town of Chapel Hill,
Chapel Hill Township, Orange County, North Carolina., the said strip of land thirty {30) feet in
width being more particularly described as follows:
BEING all of that tract or parcel of land being thirty {30) feet in width, running
across the land of the Grantor, said land conveyed to the Grantor by deed of
record in Book 1567, Page 26, Orange County Registry, said easement being
more particularly described as: Beginning at a point on .the western boundary of
the existing 30' OWASA Sanitary Sewer Easement on same parcel as described
in Book 1070, Page 192, Orange County Registry and from said beginning point
nuuiing thence North 47 degrees 12 minutes 54 seconds West 152.43 feet;
running thence North 69 degrees 47 minutes 14 seconds West 99.79 feet; running
thence North 20 degrees 12 minutes 46 seconds East 34.00 feet; running thence
South 69 degrees 47 minutes 14 seconds East 105.77 feet; running thence South
47 degrees 12 minutes S4 seconds East 163.38 feet to a point in the northern Tine
of the existing 30' OWASA Sanitary Sewer Easement as described in Book 1070,
Page 192, Orange County Registry; running thence South 88 degrees 31 minutes
22 seconds West 25.8$ feet; and running thence South OS degrees 53 minutes 02
seconds East 18.08 feet to the point and place of Beginning, and designated as
"Proposed 30' OWASA Sanitary Sewer Easement", as shown on that certain plat
entitled "Easement Plat-Freedom House Recovery Center, Inc.", dated March 3,
2008 and recorded in Plat Book ,Page ,Orange County Registry, which
reference to said plat is hereby made for a more particular description of same.
PIN: 9880-22-3617 TM#: 7.24..21
And, the ORANGE WATER AND SEWER AUTHORITY, GRANTEE, shall have the
right to construct and maintain in, under and/or above, along and through said strip of land thirty
{30) feet in width one or more lines of pipe and manholes for the purpose of transmitting sewage
-t,
as aforesaid, together with the right to construct and maintain in, under, above, and along said
easement such mains and. manholes as shall be necessary in connection with the proper
construction and operation of said sewage line; GRANTEE shall also have the right of ingress
and regress through, over, and across the land of the GRANTOR to and from said strip at such
times as GRANTEE deems it necessary for the purpose of constructing, maintaining, and
inspecting said lines and of making aTI necessary alterations and repairs thereto; the lines of pipe -
shalt be located at such point or points, elevation or elevations below or above the surface of the
earth as shall be necessary, for proper operation of the system, and shall be established at the
proper grade for running said lines and for conveying sewage as aforesaid, and said mains and
manholes, if any, shall be at such point below or above the surface of the earth as may be
necessary for the proper operation of said pipe line or lines; and GRANTEE shall have the right,
privilege and easement to tap the line or lines and construct sewer laterals from the main to the
outside boundary of the right-of--way over which this easement and privilege extends; and,
GRANTEE shall have the privilege, easement, and right to clear and keep cleazed the full width
of the easement of and from brush, plants, trees, and any and all other materials, obstructions, ,,
structures, and encroachments of any kind;
The owner of the fee shall retain the right to cultivate the ground lying within the
boundaries of the easement, provided that such cultivation shall not interfere with the right of the
GRANTEE herein named of ingress and egress to said easement for the purpose of maintenance
and repair of said sewer main or mains or the construction and repair of sewer laterals and
connections, and such cultivation shall not interfere with GRANTEE'S maintenance operation or
installation of the lines; GRANTEE shall also have the right at such times as maybe convenient
to its purposes of ingress and egress to and from the said easement over GRANTOR's land
adjacent to the said easement to any adjoining lands or public rights of way; and provided further
that in all cases where there are roads or streets across the tract of.land sufficient for the purpose
of convenient egress, ingress, and regress, in, to, and from said strip of land, such roads or streets
~,~, '
shall be used by the said ORANGE WATER AND SEWER AUTHORITY when it is necessary
to come in and upon said strip of land for the purposes aforesaid.
No building or structure of any kind, except such as constructed by ORANGE WATER
AND SEWER AUTHORITY, shall be located or erected upon the above described easement.
It is understood and agreed by the parties that the execution and delivery of this deed of
easement by the GRANTOR and its acceptance by the Authority shall not obligate the
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GRANTEE to construct a sewer line or pezmit connections to its sewer system. And, it is further
understood and agreed that failure of the GRANTEE to construct improvements within the said
strip of land and/or to clear or keep cleared said strip of land shall nat impair in any way the
rights, privileges and easements conveyed to the GRANTEE hereunder.
TO HAVE AND TO HOLD all singular the rights, privileges, and easements as
aforesaid, in, along, upon, and through said premises to the said ORANGE WATER AND
SEWER AUTHORITY and its successors and assigns forever.
And the GRANTOR covenants with the GRANTEE that it is seized of the premises in
fee simple, has the right to convey the rights, privileges and easements which are granted herein,
that title is free and clear of all liens and encumbrances which may affect the said rights,
privileges and easements conveyed herein, and the said GRANTOR will warrant and defend the
title fo said easements against the claims of all persons or parties whomsoever.
. IN WITNESS WHEREOF, the GRANTOR, has caused this instrument to be signed in
its corporate name by its duly authorized officers and its seal to be hereunto affixed by authority
of its Board of Directors, all as of the day and year first above written.
FREEDOM HOUSE RECOVERY CENTER, INC.
By:
President
ATTEST:
(Corporate Seal)
Secretary
~- • ' .
s
STATE OF NORTH CAROLINA
COUNTY OF
I, a Notary Public of the County and State
aforesaid, certify that personally appeared before me
this day and acknowledged that _he is the Secretary of FREEDOM HOUSE RECOVERY
CENTER, INC., the corporation named within and which executed this deed of easement and
that by authority duly given and as the act of the corporation, the foregoing instrument was
signed in its-name by' its _ President, sealed with its corporate seal and attested by
as its Secretary. - -
Witness my hand and notorial seal this day of - , 20
Notary Public
My commission expires:
°t.
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SUBORDINATION AGREEN~NT
Prepared by and return to: Stephen B. Miller, Alexander & Miller, L.L.P.,
P. O. Box 3200, Chapel Hill, NC 45215-3200
PIN:
NORTH CAROLINA, ORANGE COUNTY
THIS SUBORDINATION AGREEMENT, made this the day of
2008 by and between ORANGE COUNTX (hereinafter
"Noteholder") and GEOFFREY E. GLEDHILL, Trustee, parties of the first
part, and ORANGE WATER AND SEWER AUTHORITY (OWASA), party of the
second part;
W I T N E S S E T H:
WHEREAS, FREEDOM HOUSE RECOVERY CENTER, INC. (formerly known as
FREEDOM HOUSE, INC.) executed a promissory note to Noteholder in the
amount of three hundred .thirty seven thousand dollars ($337,000),
which promissory note is secured by a deed of trust recorded in Book
1730, Page 490, Orange County Register of Deeds; and
WHEREAS, OWASA has agreed to construct lines of pipe and mains
of a sewage .system upon the property encumbered by said Deed of
Trust; and
WHEREAS, FREEDOM HOUSE RECOVERY CENTER, INC. has agreed to grant
OWASA an easement upon said property to construct the sewage system;
and
WHEREAS, the sewage system will be constructed only upon the
condition that the aforesaid existing Deed of Trust is subordinated
to the lien of OWASA evidenced by the easement; and
WHEREAS, FREEDOM HOUSE RECOVERY CENTER, INC. has requested that
the parties of the first part execute this subordination agreement
and the parties of the first part have agreed to such subordination;
1~
NOW, THEREFORE, in consideration of the aforesaid purpose, and
for other valuable consideration, the sufficiency of which is hereby
acknowledged, the parties of the first part, binding their successors
and assigns, do by the execution of this instrument subordinate the
aforesaid Deed of Trust to GEOFFREY E. GLEDHILL, Trustee for ORANGE
COUNTY, bearing the date of March 31, 1998 and recorded in Book 1730,
Page 490, Orange County Registry, to the lien, operation and effect
of that certain Deed of Easement to OWASA recorded in Book Page
Orange County Register of Deed, and for no other purpose.
Except for the terms of this subordination agreement, the rights
of the parties of the first part in and to the aforesaid Deed of
Trust recorded in Book 1730, Page 490, Orange County Registry, and
the note evidenced thereby are and shall be in full force and effect
and shall continue to constitute a second lien on the property.
IN WITNESS WHEREOF, Trustee and Noteholder have caused this
instrument to be signed by their respective entities, the date first
above written.
ORANGE COUNTY
Noteholder
BY:
Laura E. Blackmon, County
Manager
Attest:
Donna S. Baker, Clerk
Of Board of Commissioners
STATE OF _
COUNTY OF
I, , Notary Public for said County and State, certify that Geoffrey E. Gledhill,
Trustee, personally came before me this day and acknowledged the due execution of the
foregoing instrument. Witness my hand and official seal, this the day of
2008.
Notary Public
My commission expires
STATE OF _
COUNTY OF
I, ,Notary Public for said County and State, certify that
_ Donna S. Baker personally came before me this day and acknowledged that she is Clerk
to the Board of Commissioners for Orange. County, and that by authority duly given and as the
act of said County, the foregoing instrument was signed in its name by Laura E. Blackmon,
the County Manager and attested by her as Clerk of Commissioners.
Witness my hand and official seal, this the day of , 2008.
Notary Public
My commission expires
~~
WHEREAS, Borrower has requested that the Orange County and the Orange County Trustee
execute this Agreement.
NOW, THEREFORE, in consideration of the aforesaid purpose and of making a loan to
Borrower, and for other valuable consideration, the sufficiency of which is hereby acknowledged,
Orange County and the Orange County Trustee hereby agree as follows:
1. Orange County hereby consents to the Construction Loan and the conveyance of a lien
upon the Property to Southland for the benefit of SunTrust as security for the repayment thereof
pursuant to the Orange County Deed of Trust.
2. Orange County and the Orange County Trustee hereby subordinate the lien of the
Orange County Deed of Trust to the lien of the SunTrust Deed of Trust and ali future advances
secured by the SunTrust Deed so that the SunTrust Deed of Trust shall be a lien and charge superior
to the lien and charge of the Orange County Deed.
3. Orange County hereby represents and warrants to SunTrust that (i) the Orange County
Trustee is presently serving as trustee under the terms of the Orange County Deed of Trust; (ii) the
outstanding principal balance of indebtedness secured by the Orange County Deed of Trust is
$ ;and (iii) the indebtedness secured by that certain Deed of Trust dated as of
February 17, 1998, in favor of Orange County Trustee, and recorded at Deed Book 1730, Page 22,
Orange County Registry has been paid in full.
4. This Agreement shall be binding on the successors and assigns of Orange County and
the Orange County Trustee, and shall inure to the benefit of SunTrust and its successors and assigns.
Except for the terms of this subordination agreement, the rights of the parties of Orange
County and the Orange County Trustee in and to the Orange County Deed of Trust and the note
secured thereby are and shall be in full farce and effect.
[Remainder of Page Intentionally Left Blank]
KCIiCM 2491 G3.2 2
1~
IN WITNESS WHEREOF, Orange County and the Orange County Trustee have caused this
instrument to be signed by their respective entities, the date first above written.
ORANGE COUNTY TRUSTEE
Geoffrey E. Gledhill, Trustee
ORANGE COUNTY
By:
Attest:
Laura E. Blackmon, County Manager
Donna S. Baker
Clerk of the Board of Commissioners
STATE OF
COUNTY OF
I, Notary Public for said County and State, certify that Geoffrey
E. Gledhill, Trustee, personally came before me this day and acknowledged the due execution of the
foregoing instrument. Witness my hand and official seal, this the day of , 2008.
My commission expires
STATE OF _
COUNTY OF
Notary Public
I, ,Notary Public for said County and State aforesaid, certify that
Donna S. Baker personally came before me this day and acknowledged that she Clerk to the Board of
Commissioners for Orange County, and, that by authority duly given and as the act of said County,
the foregoing instrument was signed ni its name by Laura E. Blackmon, the County Manager, and
attested by her as Clerk to said Board of Commissioners.
Witness my hand and official seal, this the day of
My commission expires
2008.
Notary Public
KCBCWI 249] 63.2