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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resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters resolved herein.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 `; ~~# 1~.D4~d14-llQ. . 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 .... _... I I i 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 - , ~. ' 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 -- ~.~~-.LOU 7YCLERISGUADA PE COUNTY o~NTrco~ ^, U-11 /.' TEaESAIUEI. ~g ~a~ gdud~upa County Gatk Yy~da~" Subordination of Lien Page 3 N:1CNeo6~vetNadavalBaaFSSPV Veatwes, IS.(.~Sewvd tTea-20121LOm,77va(Ovala)1Svbv[dlvadvn vEllen.Sc6e~Bi7Cdvca 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). 321f11N3n 1NIOf AVANINHd Z1213H~S VZVId IVNOISS3~021d AVNURNd Z1i13H~S ~ ¢ 4 ~ ~ ~ ~ d - a $ ~ - ~~ ° ~ y ~ ~ ~~ ~ :a 9 ~° ~ ~. ~ 3 ~g1g ~ ~i o €F 'E z~9 G cd a .~ a a U ~-+ ~i N U Q a >W~xNa WF