11-22-2016 Organization of the Board with Oath and Regular School Board Meeting
Agenda Item #38


Title
Subordination Agreement

Discussion

On September 21, 1976, the School Board transferred property in the City of Melbourne, Florida, to Brevard County. The deed contained a reverter clause providing that the property would revert back to the School Board if it is not used for a public purpose or is vacated or abandoned for a period in excess of 12 months. This land was subsequently leased for the construction of Trinity Towers South to provide housing for low-income seniors, constituting a public purpose.

At the October 28, 2014 meeting, the School Board agreed to subordinate its reversionary interest to the current tenant's (Trinity Towers South Preservation Associates, LLLP) leasehold interests to facilitate the refinancing of the property for repairs and maintenance.

The current tenant has negotiated a transfer of  its leasehold interest to a new tenant, New Trinity Towers South Preservation Associates, LLLP. The new tenant intends to secure debt financing and an equity investment in connection with the proposed rehabilitation and operating of the affordable housing project on the leased premises. There will be a total of five (5) loans, each secured by a leasehold mortgage on the new tenant's leasehold estate. A portion of the new financing will pay off the existing PNC loan.

The new tenant is requesting the School Board again subordinate its reversionary interest in the real property to the new leasehold owner's leasehold interest only (not to the fee simple title to the property) to the five (5) leasehold mortgages. The real property will still be required to be used for the operation of an affordable housing project.  

In this regard, the School Board is being requested to execute the attached Estoppel Certificate and Agreement and the attached Subordination Agreement in favor of the new lenders. Both agreements have been reviewed and approved for form by the School Board Attorney.



Recommendation

(1) Approve the Estoppel Certificate and Agreement for the benefit of the tax credit investor attached as Exhibit "A."

(2) Approve the Subordination Agreements attached as Composite Exhibit "B" for the benefit of the new lenders.



Meeting Date(s)
Consent w/o Information - 11/22/2016

Authority for Action
FS 1001.42

Involves Expenditure of Funds Directly in the Classroom
No

Source of Funding
Agenda Item will not Require the Expenditure of Funds

FY
Amount
Budgeted
Fund
Cost Center
Project
Function
Object
Program

Contact

Harold T. Bistline, School Board Attorney (321) 639-0505

Dane Theodore, Assistant Superintendent, Facilities Services ext. 657




Attachment:  Exhibit A Estoppel Certificate.pdf
Attachment:  Exhibit B Subordination Agreements.pdf