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HomeMy WebLinkAboutECHDA18-006 6 West Apartments LLC Promissory NotePROMISSORY NOTE Borrower: 6 West Apartments LLC, a Colorado limited liability company Date: February 27, 2018 Property: The 6 West Apartments project (the "Project") that Borrower plans to develop at 32532 Highway 6 in Edwards Colorado, legally described as Lot 1, Final Plat of the 6 West Apartments Subdivision, Eagle County, Colorado, recorded in the records of the Eagle County Clerk and Recorder at Reception Number Zai &9300-7 1. BORROWER'S PROMISE TO PAY As part of the approval of an Amendment to the VIA Planned Unit Development a/k/a 6 West Apartments Planned Unit Development, pursuant to Eagle County Resolution No. 2017-002, Eagle County (the "County") agreed to a dedication of water rights of 12.56024 acre feet from the County's share of the Eagle Park Reservoir stock on behalf of Borrower, valued at $323,879.00, to satisfy all or a portion of the Eagle River Water & Sanitation District's water dedication requirement for the Project (this transaction is referred to herein as the "Loan"). In return for this Loan, Borrower promises to pay U.S. $323,879.00 (this amount is referred to as "Principal"), plus, if the Principal is not paid off in full on or before the fifth anniversary of this Note, the Shared Appreciation, as defined below, to the order of the Lender. The Lender is Eagle County Housing and Development Authority, a body politic within the State of Colorado. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder". (A) Loan Agreement The loan evidenced by this Note is being made pursuant to the ECHDA Subordinate Loan Agreement dated the same date as this Note between Note Holder and Borrower. (B) Purpose of Loan The County's dedication of water rights of 12.56024 acre feet from the County's share of the Eagle Park Reservoir stock on behalf of Borrower shall be used to satisfy all or a portion of the Eagle River Water & Sanitation District's water dedication requirement for the Project. 2. SHARED APPRECIATION This Note does not carry any charge or accumulation of interest. Except for interest at the Default Rate under Section 10 of this Note when an uncured Event of Default exists, no interest will accrue on the Principal or any other amount due under this Note. However, if the Loan is not paid off in full on or before the fifth anniversary of the date of this Note, Lender shall be paid the Shared Appreciation under Section 3(B) below on the "Maturity Date" defined below. 3. PAYMENTS (A) Time and Place of Payments The Principal amount of this Note shall be due and payable in full upon the date (the "Maturity Date") that is the earliest of. (i) Lender's acceleration of this Note under paragraph 20 of the Eagle County Housing and Development Authority Subordinate Deed of Trust dated February 27, 2018 (the "Security Instrument"); (ii) Borrower's refinancing of the first priority construction loan that finances the construction of the Project; (iii) Borrower's sale or transfer of ECH DA18-006 the Property; and (iv) the 15th anniversary of the date of this Note (February 27, 2033). In addition, if the Principal amount of this Note is not paid off in full on or before the fifth anniversary of the date of this Note, Borrower agrees to also pay Lender, on the Maturity Date, the Shared Appreciation under Section 3(B) below. Borrower will not be obligated to make periodic payment of principal or accumulated appreciation under the terms of this Note. In the event the accumulated appreciation calculation produces a negative amount, repayment shall consist of the principal loan balance only. In the event Borrower repays the Principal amount of the Note on or before the fifth anniversary of the date of this Note, Borrower will be obligated to pay the Principal amount plus any applicable fees only, and no pro rata share of Shared Appreciation shall be due or payable. Borrower will make payments in the form of certified check to the Eagle County Housing and Development Authority, 500 Broadway, P.O. Box 850, Eagle, Colorado 81631, or at a different place if required by the Note Holder. (B) Shared Appreciation If Borrower does not pay the Principal amount of the Note off in full on or before the fifth anniversary of the date of this Note, Borrower agrees to pay Lender a pro rata share of the appreciation in the value of the Property on the "Maturity Date" defined above, determined by applying (i) the percentage which represents the ratio of the original Principal amount of the Loan to the original project cost for the purchase of the Property and construction of the Project to (ii) the amount, if any, by which the sales price upon Borrower's sale of the Property, or, in the case of a refinancing, the appraised value used by the lender who refinances the construction loan for the Project, exceeds such original project cost (the "Shared Appreciation"). 4. BORROWER'S RIGHT TO PREPAY Borrower has the right to make payment of all Principal, Shared Appreciation and other applicable fees or charges at any time before they are due without paying any prepayment charge. 5. LOAN CHARGES If any law that sets maximum loan charges provides that the Shared Appreciation or other charges collected or to be collected in connection with this Loan exceed the permitted limits, then: (i) any such Shared Appreciation or loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (ii) any sums already collected from Borrower which exceeded permitted limits will be refunded to Borrower. The Note Holder may choose to make this refund by reducing the Principal Borrower owes under this Note or by making a direct payment to Borrower. If a refund reduces Principal, the reduction will be treated as a reduction of the original Principal due under this Note. 6. GIVING OF NOTICES Unless applicable law requires a different method, any notice that must be given to Borrower under this Note will be given by delivering it or by mailing it by first class mail to Borrower at the Property Address above or at a different address if Borrower gives the Note Holder a notice of Borrower's different address. Any notice that must be given to the Note Holder under this Note will be given by mailing it by first class mail to the Note Holder at the address stated in Section 3(A) above or at a different address if I am given a notice of that different address. 7. OBLIGATIONS OF PERSONS UNDER THIS NOTE If more than one person or entity signs this Note, each person or entity is fully and personally obligated to keep all of the promises made in this Note, including the promise 2 to pay the full amount owed. Any person who is a guarantor, surety or endorser of this Note is also obligated to do these things. Any person or entity who takes over these obligations, including the obligations of a guarantor, surety or endorser of this Note, is also obligated to keep all of the promises made in this Note. The Note Holder may enforce its rights under this Note against each person or entity individually or against all such persons and entities together. This means that any one person or entity may be required to pay all of the amounts owed under this Note. 8. SUBORDINATION Borrower acknowledges that the indebtedness evidenced by this Note, and any other financial obligation which may hereafter be imposed on Borrower by the Lender, is subordinate to the indebtedness evidenced by a note payable to a senior lender, which note is secured by a first mortgage of deed of trust on the Property (the "First Lien Security Instrument"). The holder of such First Lien Security Instrument shall be hereafter referred to as the "Senior Lien Holder". Subsequent obligations that Borrower enters into, which require a lien position that is senior to the Subordinate Security Instrument securing this Note, shall be at the sole discretion of the Note Holder. 9. WAIVERS Borrower and any other person or entity who has obligations under this Note waives the rights of presentment and notice of dishonor. "Presentment" means the right to require the Note Holder to demand payment of amounts due. "Notice of dishonor" means the right to require the Note Holder to give notice to other persons that amounts due have not been paid. The modification or waiver of any of my obligations or Lender's rights under this Note must be contained in a writing signed by Lender. Lender may perform any of my obligations or delay or fail to exercise any of its rights without causing a waiver of those obligations or rights. A waiver on one occasion will not constitute a waiver on any other occasion. Borrower's obligations under this Note shall not be affected if Lender amends, compromises, exchanges, fails to exercise, impairs or releases any of the obligations belonging to any co -borrower or guarantor or any of its rights against any co -borrower, guarantor, the collateral or any other property securing this Note. 10. UNIFORM SECURED NOTE This Note is a uniform instrument with limited variations in some jurisdictions. In addition to the protections given to the Lender under this Note, Borrower grants the Lender a security interest in the Property under a Deed of Trust (the "Subordinate Security Instrument"), dated the same date as this Note, to protect the Lender from possible losses which might result if Borrower does not keep the promises which Borrower makes in this Note. The Subordinate Security Instrument is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the First Lien Security Instrument. The Subordinate Security Instrument describes how and under what conditions Borrower may be required to make immediate payment in full of all amounts Borrower owes under this Note. Some of those conditions are described as follows: (A) "Event of Default" has the meaning the Loan Agreement gives it. (B) "Default Rate": When an Event of Default exists that would entitle Lender to accelerate the Loan under paragraph 20 of the Subordinate Security Instrument, after giving any required notice and after any available cure period expires, the Lender may, in its discretion, impose an annual interest rate on the Principal balance of this Note of twelve percent (12%). 11. APPLICABLE LAW This Note and the Subordinate Security Instrument shall be governed by applicable Federal law and Colorado law. 3 12. COLLECTION COSTS To the extent permitted by law, Borrower agrees to pay Lender's reasonable fees and costs, including, but not limited to, fees and costs of attorneys and other agents which are incurred by Lender in collecting any amount due or enforcing any right or remedy under this Note, whether or not suit is brought, including, but not limited to, all fees and costs incurred on appeal, in bankruptcy, and for post judgment collection actions. Signature Page Follows 4 Signature Page to Promissory Note dated February 27, 2018 given to the Eagle County Housing and Development Authority Borrower: 6 West Apartments LLC, a Colorado limited liability company By: West Edwards Apartments LLC, a Colorado limited liability company, its Managing Member By: -;;;� Stephen S. Spessard, its manager STATE OF COLORADO ) ss. COUNTY OF EAGLE ) Acknowledged, subscribed and sworn to before me on this.? -lay of Alb✓ a.r , 2018, by Stephen S. Spessard, the manager of West Edwards Apartments LLC, a Col ado limited liability company, as the Managing Member of 6 West Apartments LLC, a Colorado limited liability company, on behalf of 6 West Apartments LLC. WITNESS MY HAND AND OFFICIAL SEAL. My commission expires: S z::) 1, d 0 ktvj- I t Notary Public CHRISTINA MOSES NOTARY PUBLIC STATE OF COLORADO NOTARY ID 20044ol7753 MY COMMISSION EXPIRES 05/21/2020