Agenda

Return

C. 27

To:	Board of Supervisors
From:	Brian M. Balbas, Public Works Director/Chief Engineer
Date:	November 2, 2021

Contra

Costa

County

Subject:

Approve the Subordination, Non-Disturbance and Attornment Agreement with First Republic Bank related to the lease at 309 Diablo Road, Danville.

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 11/02/2021

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Diane Burgis, District III Supervisor
Karen Mitchoff, District IV Supervisor

ABSENT:

Federal D. Glover, District V Supervisor

Contact:	Julin Perez, 925. 957-2460
cc:	Auditor Controller

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: November 2, 2021
Monica Nino, County Administrator

BY:	, Deputy

RECOMMENDATION(S):

APPROVE the Subordination, Non-Disturbance And Attornment Agreement (SNDA) with First Republic Bank (Lender) that will subordinate the County’s lease of office space at 309 Diablo Road, Danville, to the deed of trust that secures a first priority lien by the Lender.

AUTHORIZE the Public Works Director, or designee, to execute on behalf of the County, the SNDA with First Republic Bank.

FISCAL IMPACT:

No fiscal impact.

BACKGROUND:

The County has leased a portion of the building located at 309 Diablo Road, Danville, since 1997 for use as the office for the Board of Supervisor in District II. The current lease term ends February 28, 2025. The lessor is in the process of refinancing the property. The new senior lender, First Republic Bank, requires that all the tenants in the building execute a subordination, non-disturbance and attornment agreement (SNDA). The SNDA between the lender, the borrower (the lessor), and the County (lessee), details the rights of the parties in the event the borrower defaults on the loan and the lender forecloses and becomes the property owner/landlord. The SNDA protects the lessee from being evicted if the lender forecloses on the mortgage loan and assures the lender that the County will treat the lender as the lessor if the lender forecloses.

California law follows a “first in time” rule in establishing lien priorities. The County’s lease is in effect and, in the absence of an SNDA that subordinates the lease to the mortgage loan, would be senior to the proposed new first mortgage loan. The terms of the proposed new loan are predicated on the lender being in a first priority lien position. The lessor will not be able to refinance if the County does not agree to subordinate. The SNDA does not harm the County as it ensures that the County cannot be evicted if the lender forecloses and the County is in compliance with its lease.

CONSEQUENCE OF NEGATIVE ACTION:

If the SNDA is not approved, the owner of the building will not be able to refinance the building.