HomeMy WebLinkAbout4743_CCv0001.pdf RESOLUTION NO. 4743
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF REDLANDS ESTABLISHING POLICY ON
SUBORDINATION AGREEMENTS
WHEREAS, the City of Redlands regularly enters into lien
agreements with property owners to allow them to defer construction
of public improvements associated with the development of their
property; and
WHEREAS, these improvement lien agreements are
subsequently recorded against the owner's property pursuant to the
California Subdivision Map Act; and
WHEREAS, from time to time the City receives requests
from property owners that it execute agreements that would
subordinate existing City improvement liens to trust deeds which
those property owners would give to lenders to secure new
financing; and
WHEREAS, the City Council of the City of Redlands
recognizes that the effects of executing a subordination agreement
are to give a lesser priority to the City's lien agreement than the
trust deed securing the new loan and to create a risk that the
improvements secured by the City's lien might never be constructed;
and
WHEREAS, this City Council further recognizes that
instances may arise where a property owner will suffer significant
hardship if he or she is unable to subordinate a City lien
agreement and that, because of special circumstances, there is
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little to no risk that the City's lien will be jeopardized by the
execution of the subordination agreement; and
WHEREAS, it is the desire of this City Council to
establish a policy for determining whether it is in the best
interests of the City to comply with a request that the City
subordinate its lien agreement;
NOW, THEREFORE, be it resolved by the City Council of the
City of Redlands as follows:
SECTION 1. The following process is hereby established
for the consideration of requests to subordinate City lien
agreements:
A. All requests for subordination of a City lien agreement
shall be made by application to the City' s Public Works Director.
The application shall be in the form approved by the City's Public
Works Director, and shall include, but not be limited to, the
following:
1. The name and address of the owner of the property
requesting subordination;
2 . A brief statement of the need for subordination and
written documentation from a lending institution that it
will not provide the requested financing unless such
subordination agreement is entered into;
3 . The amount of the debt secured by the trust deed which
will have priority over the lien agreement;
4 . Copies of all trust deed evidencing the total amount of
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debt secured against the property;
5. A copy of the City' s lien agreement which is proposed to
be subordinated; and
6. Payment of any applicable City fee established for review
of subordination agreement requests.
B. Upon receipt of a complete application, the Public Works
Director, or his designee, shall review the application and, based
upon the scope and cost of improvements to be constructed under the
lien agreement, the estimated value of the remaining security, and
the approximate time when the improvements will be required to be
constructed, make a recommendation to the City Council on the
request.
C. The City Council shall review all requests for
subordination agreements and may approve a request if it determines
that, based upon the information provided to it, the property Owner
will suffer significant hardship if the City' s improvement lien is
not subordinated and that there is little to no risk that the
improvements secured by the City's lien will not be constructed.
Notice shall be mailed to the applicant at least five days prior to
the time and date of the City Council ' s consideration of the
request.
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ADOPTED, SIGNED AND APPROVED this 19th day of February ,
1991.
Mayor of the City lof l�edlands
ATTEST:
City C .erk
I, Lorrie Poyzer, City Clerk of the City of Redlands,
hereby certify that the foregoing resolution was duly adopted by
the City Council as a regular meeting thereof held on the 19th day
of _ February , 1991, by the following vote:
AYES: Councilmembers Beswick, Cunningham, Larson, Milson;
Mayor DeMirjyn
NOES: None
ABSENT: None
ABSTAINED: None
City- Clerk ( {
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LAW OFFICES OF
BEST, BEST & KRIEGER
February 14 , 1991
MEMORANDUM
TO: MAYOR, CITY COUNCIL, AND CITY MANAGER
FROM: CITY ATTORNEY
RE: SUBORDINATION AGREEMENT POLICY
We recently informed you that a practice had evolved
within the City of approving requests for subordination agreements
on an ad hoc basis without consistent review and approval by the
City Engineer or the City Council. Because of the potential risk
that City required improvements might not be constructed as a
result of the execution of a subordination agreement, you asked
that we prepare a resolution to establish a policy of bringing
requests for subordination agreements to the City Council for
consideration on a case by case basis.
The attached resolution establishes a process whereby
applications for the execution of subordination agreements will
first be submitted to the City' s Public Works Director for his
recommendation, and then forwarded to the City Council for review
and approval. So that the Council can make an informed decision on
whether to approve the request, the resolution requires that
certain detailed information relating to the scope and value of
improvements subject to the lien, and the amount of secured debt
for the property, be provided with the application. If the Council
then determines that significant hardship will occur to the
property owner should the subordination agreement not be executed,
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and that there is little to no risk that the improvements secured
by the lien agreement will not be constructed, the Council may
consider approval of the request.
DANIEL J. McHUGH
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