12-R-52 Authorizing a subordination of lien agreement with Frost National Bank with existing loan from the Schertz EDC to SPV VenturesRESOLUTION NO. 12-R-52
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF
SCHERTZ, TEXAS AUTHORIZING A SUBORDINATION OF LIEN
AGREEMENT WITH THE FROST NATIONAL BANK IN CONNECTION
WITH AN EXISTING LOAN FROM THE SCHERTZ ECONOMIC
DEVELOPMENT CORPORATION TO SPV VENTURES, LLC IN THE
AMOUNT OF 5150,000, AND OTHER MATTERS IN CONNECTION
THEREWITH
WHEREAS, the City staff of the City of Schertz (the "City") has recommended that the
City authorize the Schertz Economic Development Corporation ("EDC") to enter into a
subordination of lien agreement with The Frost National Bank ("Frost") relating to an existing
loan from the EDC to SPV Ventures, LLC ("SPV") in the amount of $150,000 (the "EDC
Loan"); and
WHEREAS, the EDC previously subordinated the EDC Loan to a $3,800,000 loan from
Frost; and
WHEREAS, SPV has requested that the EDC further subordinate the EDC Loan to a new
$1,176,000 loan fiom Frost to SPV; and
WHEREAS, the EDC board has voted to approve the Subordination of Lien attached
hereto as Exhibit A (the "Agreement"); and
WHEREAS, the City Council has determined that it is in the best interest of the City to
authorize the EDC to execute and deliver the Agreement.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
Section 1. The City Council hereby approves the Agreement and authorizes the
President, or the Vice President in the President's absence, of the EDC to execute and deliver the
Agreement in substantially the form set forth on Exhibit A.
Section 2. The recitals contained in the preamble hereof are hereby found to be hue,
and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a
part of the judgment and findings of the City Council.
Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with
any provision of this Resolution are hereby repealed to the extent of such conflict, and the
provisions of this Resolution shall be and remain controlling as to the matters resolved herein.
Section 4. This Resolution shall be construed and enforced in accordance with the
laws of the State of Texas and the United States of America.
Section 5. If any provision of this Resolution or the application thereof to any person
or circumstance shall be held to be invalid, the remainder of this Resolution and the application
of such provision to other persons and circumstances shall nevertheless be valid, and the City
Council hereby declares that this Resolution would have been enacted without such invalid
provision.
Section 6. It is officially found, determined, and declared that the meeting at which
this Resolution is adopted was open to the public and public notice of the time, place, and subject
matter of the public business to be considered at such meeting, including this Resolution, was
given, all as required by Chapter 551, Texas Government Code, as amended.
Section 7. This Resolution shall be in force and effect from and after its final
passage, and it is so resolved.
PASSED AND ADOPTED, this 12th day of June, 2012.
CITY OF TZ, TEXAS
Mayo em
ATTEST:
ecretary
(CITY SEAL)
sosiswi.z
EXHIBIT A
SUBORDINATION OF LIEN
soasivi.z A-1
3 YOl3 ! 38 Pfi04~75
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Tea:as Recording Services, LLC
When Recorded, Retum To:
THB FROST NATIONAL BAN%
P.O, Box 1600 IZ ~ 011159
San Antonio, Texas 78296
Loan Documentation Departmeht, RB-2
Ref: 4592515-9002
NOTICE OF CONFIDENTIALITY RIGHTS: II' XOU ARE A NATURAL PERSON,
YOII 'MAX REMOVE OR STRIlO; ANY OR ALL OF THE FOLLOWING
INFORMATION TROM ANY INSTRUMENT THAT TRANSFERS AN nvmFUReT IN
REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:
YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.
SIIBORDINATION OFLIEN
Date: Signed on the date of the actmowledgementbeluw,
butto be effective as of 7nne 13, 2012.
Subordinating Party: CITY OF SCHERTZ ECONOMIC DEVELOPMENT
CORPORATION, a Texas non-profit coxpotation
"SiShordinatedT;ienE "-' -
--- _ _- _.
Date: February 3, 2010
Grantor: SPVVEN7.'[IRES,LLC,aTexaslimitedllabilitycompany
Beneficiary: CiTYOFSCHERTZ.ECONOMICDEVELOPMENT
CORPORATION, aTexas uon-profit corporation
Note Secured by Sbhordinated Lien; Note dated February 3, 2A10, in'tha original
principal amount of One Hundred fifty Thousand and No/100 Dollars ($150,000,00),
Recording information: Volame 2837, Page 924, of the Official Public Records of
Guadalupe County, Texas
Subordination of Lien Page 1
V01313 g pg~J 4 7 7
Superior Lien:
Date: June 13, 2012
Borrower: SPV VENTURES, LLC, a Texas limited liability company
Lender: THE11tOSTNATIONALBANI{,anadonalbanldngassociation
Note Secured by Superior Lien: Note dated Tune 13, 2012, in the original principal
amount of ONE bIII,LION ONE HUNDRED SEVENTY~,SI$ THOUSAND AND
NOl100 DOLLARS ($1,176,000.00).
Recording information: Volume~t 3gPag~~of the Official Public Records of
Guadalupe County, Texas ,
Property (including any improvements):
Being all of SCTIERTZPARICwAYPROPPSSTONALPI,A7A OFFICE CONDOMIlVICTM$, a
Condominium Project in the City of Schertz, Guadalupe County, Texas, together with the limited
common elements, and an undivided interest in and to the general common elements, as same aze
defined in'the Condominium Declazadon thereof recorded in Volume 2898, Page 168; as
amended in Volume 2923, Page 468, of the OfFici.aTPublic Records of Guadalupe County, Texas;'
SAVE AND EXCEPI'tJnit No. 1, Suite.100 thereof. Said Project situated on and is out of I.ot 1,
Block 1, 5PV, LL.C. Subdivision, according to the plat thereof recorded in Volume 7, Page 366,
Map and Plat Records of Guadalupe County, Texas.
Subordinating Party is the owner and holder of the Subordina~d Lien, which is a lien
_....... ..... against the Property.. ,
Fot value received, Subordinating Party subordinates the Subordinated Lien against the
Property to the Superior Lien and agrees that Ota Subordinated Lien wffi remain subordinate to the
Superior Lienregardless of the frequency oz manner of renewal, extension, change, oz alteration of
the Superiorlaen or the Nate Secured by Superior Lien,
When the contextrequires, siugulaznouns andpmnouns include the plural,
CITY OF SCHERTZ ECONOMIC
DEVELOPMENT CORPORATION,
a Texas n ~-lprofit core~t/Iton
BY~ a~~`N~ ~+--•
Name: ' f/-tavlA'~f t~ •' GJh ; -~i.~c-
Title: F_ldt', U~ua~-cP PrP
Subordination of Lien page 2
..YOl3~ 13 8 PBO -~ ~ g .... _...
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THE STATB OF §
COTJNTY OF §
This ms ent was aclmowledged before on Ure~ ay of June, 2012, by
as ~ .A)o' _ of the CITI' OF SCHEI2TZ
E ONOMJC BV]~ OPMHNT CORPORATI N, a Texas non-profit corporation, on behalf of
said corporation. /^\
/A1A P p\ Gf i'... n
Notary Public in an~for then State of Texas N
~,e °w'~ BRENDA LOUIE DENNIS
3 _ NDTARY PUBLIO
STATE OFTEXAS
~~oM, ee `~~ My Commlulon Explms 11-03-2014 - ,
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' FII.FD FOR RECORD ~ srarEOFTOCAs
COUNTY OF GUADALUPE
- I ter5y WslnsWment was FILF-D on py
12 JUN 18 AM 9~ 07 dalaa~M at lha 8ms damped thetapn~
was dory IBmfdBd In the Olstlai PUdIO
TERESA KIEi_ R~8 of Gueaatupe ~'nry Texea
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Subordination of Lien Page 3
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Attachment A: Project History
CSvetview
In February 2010, SPV Ventures received a loan from the SEDC for $150,000 with an interest
rate of 0% for a period of 20 years. This loan was made in connection with a Schertz Bank &
Trust loan of $2,493,975. In June of 2011, the Schertz Bank & Trust loan was retired by a new
loan fiom Frost National Bank. At the time of refmancing, additional funding was obtained to
construct two additional buildings. The SEDC loan remained subordinate to the new loan from
Frost National Bank. As of May 31, 2012, $29,920 has been repaid from the SEDC's loan of
$150,000, leaving a loan balance of $120,080 for the SEDC loan.
Currently, SPV Ventures is asking the SEDC to subordinate its existing loan to an additional
construction loan of $1,176,000 from Frost National Bank. This would subordinate SEDC's
position below the existing Frost National Bank loan of $3,800,000 and a new Frost Bank Loan
of $1,176,000. The new loan will be used to construct Building 500 in the Schertz Parkway
Professional Plaza (see Attachment B).
Proiect Backeround
In July of 2009, amedically-themed office condominium project was proposed to be built on
Schertz Parkway just east of IH35. From the beginning, it was envisioned as apublic-private
venture because of the un-tested market and potential risk of such a development. A specific
loan amount was not initially presented; rather an expenditure of up to $250,000 was suggested
for general approval by the SEDC Board. Further details were to be presented when the actual
loan was made. The approved action by the SEDC provided bargaining power for the developer
to then entice the bank to fund the vast majority of phase I of the project.
In January of 2010, an agreement was presented to the SEDC Board to provide SPV Ventures
with a $150,000 loan for 20 years at 0% interest. The loan would be used to provide
infrastructure improvements associated with the new medical-themed complex. The agreement
states that the loan will be repaid 1) as the buildings are sold, 2) within 20 years, or 3) when
refinanced above actual construction costs. The $150,000 loan was to be subordinate to Schertz
Bank & Trust's loan of $2,493,975 for Building 100 and Building 200 (see Attachment B). The
agreement and loan was approved by the SEDC Board. Under Resolution No. 10-R-06 the City
Council gave final approval for this loan which was subsequently executed in February 2010.
In October of 2010, SPV Ventures sold Building 100 (see Attachment B) to Schertz Parkway
Medical Office Group LLC. At the time of sale, SPV repaid $29,920 of the $150,000 loan,
resulting in a current outstanding balance of $120,080. This repayment amount was determined
to be roughly proportionate to the larger development and associated loan.
In June 2011, the Schertz Bank and Trust loan was retired by a loan from Frost National Bank in
the total amount of $3,800,000. The remaining balance on the Schertz Bank & Trust loan
($1,088,000) was repaid and an additional $2,712,000 loan was obtained to construct Building
300 and Building 600 (see Attachment B). The SEDC loan continued to be subordinate to the
construction loan.
In July of 2011, a request was made to provide SPV another loan from the SEDC for additional
infrastructure improvements. The terms of the loan included a principal amount of $200,000, an
Interest rate of 0%, subordinate to the loan to SPV from The Frost National Bank, and a 15%
administration fee to be paid to the SEDC. The loan was payable after 5 years; however, each
time that SPV obtained a certificate of occupancy for one of the five medical office buildings,
1/5 of the principal and administrative fee would be immediately due and payable. This loan has
not yet been acted on by SPV.
At the current time, SPV Ventures is requesting that the SEDC subordinate its original loan of
$150,000 (current balance of $120,080) to a new Frost National Bank loan. This new Frost
National Bank loan will be for $1,176,000 and used to construct Building 500 (see Attachment
B). The SEDC loan will be subordinated through the approval of the attached Subordination of
Lien document (see Exhibit A).
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