HomeMy WebLinkAboutFully Executed - Recorded Document{ AM€A,
e5 'c First American
Title Insurance Company
NATIONAL COM MERCIAL SERVICES
July 15,2026
Kittitas County
Multifamily Housing Unit
205 W 5th Avenue, Suite 108
Ellensburg, WA 98926
Attn: Board of County Commissioners
Delivered via Fedex Tracking No. 874444808132
Re: Teanaway Court
File #: NCS-1196170
To whom it may concern:
Enclosed are the following document(s):
-Origi nal Recorded Afforda ble Housing Covena nt, I nstrument No. 202607 100035
-original Recorded collateral Assignment of Deed of Trust, lnstrument No. 202607130051
lf you have any questions or concerns, please contact the undersigned.
Sincerely,
3twt5"\\,Ul&tIL
Sara Bonnar
Commercial Assistant
206-6L5-3r07
920 Fifth Ave, Suite 1200' Seaftle, WA 98108
TELEPHONE 206.615.3107 , FAX 866-495-0221
RECORDED
D1 r00 *n,r,l4lhl-When Recorded Return to:
Kittitas County
Board of County Commissioners
205 W 5th Ave, Suite 108
Ellensburg, WA 98926
Grantors:
Grantee:
Abbrev. Legal Descr.:
gds:1, I o, Un-b Tt*,-2-:j3144--
simpllfi le,com 800.460.5657
Assessor's Tax Parcel No:
Reference Numbers:
AFFORDABLE HOUSING COVENANT
(TEANAWAY COURT)
TEANAWAY COURT ASSOCIATES LLLP
KITTITAS COUNTY
Ptn Lots 2,3 & 4Blkz,Ptn Lots 1,2,3, 4,8 &9 Blk 3, Lots l, 2,3, 4 & 5
Blk 5 and Lots l, 2,3, 4, 5, 6,7 &8 Blk 4 BALMER'S ADDITION TO THE
CITY OF CLE ELUM,Bk2,Pg44, TOGW ptns of vacated streets and alleys
in City of Cle Elurn Ord. No. 709
Official legal description on Exhibit A attached
1 l 3034
N/A
ofi$sli:,iL O7t1Ot2O26 02:10 PM 202607100035
313.50 Page: 1 ot 11
Covenants
Kittitas County, CountY Auditor
When Recorded Return to:
Kittitas Count5r
Board of CountY Commissioners
205 W 5th Ave, Suite 108
Ellensburg, WA 989?6
Crantors:
Grantee:
Abbrev. Legal Desor':
AFFORDABLE HOUSING COVENANT
(TEANAIVAY COURT)
TEANAWAY COURT ASSOCIATES LLLP
KITTITAS COUNTY
I r3034
N/A
PtnLots2,3&4P,lk2,PtnLots7,2,3,4'8&9Blk3'Lotsl'2'3'4&5
Blk 5 and Lots l, 2,3,4,5' 6-7 & b etk + BALMER'S ADDITION TO THE
criv or cLE ELUM,bUZ,pg44, TOcw ptns of vacated streets and alleys
in City of Cle Elum Ord. No. 709
Official legal desoription on Exhibit A attached
Assessor's Tax Paroel No:
Reference Numbers;
1st AM
1196170
'Fited for Record O7t1Ot2O26 02:10:10 PM - Kittitas County, WA Auditor - 202607100035 Page 2 of 11
AFFORDABLE HOUSING COVENANT
(TEANAWAY COURT)
This Affordable Housing Covenant ("Covenant") is made as of July 10,2A?6, by Teanaway Court
Associates LLLP, a Washington limited liability limited partnership ("Gfantof) and for the benefit of
Kittitas County, a political subdivision of the State of Washington ("equnly"), and is part of the
consideration for the financial assistance provided by County.
WHEREAS the County and Grantor desire that decent, safe and sanitary housing for low'income
households be provided in the multifamily rental complex, consisting of 4l units initially to be known as
Teanaway Court (the "Plejg!") located on the real property legally described on Exhibit A hereto (the
"Properly"). The Grantor holds a fee estate in the hoperty.
WHEREAS, the County has committed, subject to certain terms and conditions, to make a grant
funded pursuant to RCW 36.22.250 to HopeSourcer a Washington nonprofit corporation and general partner
of the drantor ("$IqnSOt), pursuant to that certain Homeless Housing Progratn Grant Agreement, Contract
HH-2021-001-HopeSource-ClP, dated Juty 15, 202l,as amended (the "e,ontr4c!'). Sponsor of even date
hereofhas reloaned the County grant funds to Grantor (the "Le4g"), to finance a portion ofthe costs ofthe
Grantor's devetopment of the Property, and in partial consideration of the Loan the Grantor is willing to
commit to provide low-income housing on the Property as described below.
WHEREAS, the County is willing to permit the Sponsor to loan the proceeds of the Loan to the
Partnership in partial consideration of the recording of this Affordable Housing Covenanl as an
en cumbrance of the Property.
WHEREAS, this Covenant is filed and recorded in the official public land records of Kittitas
County, Washington and shall constitute a restriction upon the use of the Project, subject to and in
u.cordun"r withltre terms of this Covenant until December 3 I of the year in which the fortieth (40th)
anniversary of the date the Grantor first receives a certificate of occupancy for the Project occurs (the
"A ffordabil itv Period").
WHERAS, the covenants contained herein are to be taken and construed €$ covenants running witlt
the land and shall pass to and be binding upon the Grantor, its successors and assigns, heirs, grantees. or
lessees ofthe Prop-erty. begirrning on the date ofinitial residential occupancy after the construction ofthe
Project contemplated by the Contract. Each and every contract. deed, mortgage or other instrument covering
or iolveying the Prcperty, or any portion thereof, shall be conclusivell' held to have been executed,
deliveredand accepted'subject to such covenants, regardless ofwhether such covenants are set forth in such
contract, deed, mortgage or other instruments.
NOW THEREFORE, it is hereby covenanted during the Affordability Period as follows:
l, Grantor will cause this Covenant to be filed and recorded in the official public land records
of Kittitas County, Washington and shall constilute a restriction upon the use of the Property and is
construed ar tunning with the land which shall pass to and be binding upon the Grantor, its successors and
assigns, heirs. graniees, or lessees of the Properly. Each and every contract, deed or otlrer instrument
covJring or conveying the Property, or any portion thereof, shall be conclusively held to have been
executed, delivered atrd accept"d subject 1o this Covenant for the Affordability Period. regardless of
whether the covenants herein are set forth in such contract, deed, or other instruments' This Covenant shall
be senior in prioritl, to all monetary liens on the Properly entered on or after the date hereof.
Affordable ltousing Coveuant -'l-eanaway Court (Kittitas County)Page I
Fited tbr Record OT11012026 02:10:10 PM - Kittitas County, WA Auditor - 202607100035 Page 3 of 11
2. The Grantor shall develop! own, manage, and operate the Property as low-income multi'
family housing in accordance with the terms ofthis Covenant and the Contrast on a continuous basis during
the Affordability Reriod. Except as specifically provided in this Section or the Contract, or otherwise
consented to by ihe County, the Property shall not be devoted to any use other than low-income housing as
described herein, together with commolt areas and supporl facilities for residents, without the express
written consent of the County, in its discretion..
3. Consislent rvjth the requirements of RCW 36,22.250, upon complelion of lhe construction
of the Project (i) five (5) of the residential units at the Project shall be rented to tenants who are "homeless"
at the timi of initiat occupancy as defined by'the Departrnent of Housing and Urban Development ("HUD")
at 24 CFR 578.3; and (ii) one (l) of the five units set aside for tenants who are homeless shall also be
restricted to tenants with gross annual househotd incomes at the time of initial occupancyno higher than
fifty percenf (50%) of area median income for Kittitas County, Washington adjusted for family size
C.aMft as estimated from time to time by HUD. lf HUD ceases to provide suc! estimates of median
incorne,'ttren median income shall mean such comparable figure for Kittitas County, Washington published
or reported by a federal, state, or local agency as the County shall select'
4. The five units set aside for tenants who are homeless at initial occupancy shall be filled
through fhe County-wide Coordinated Entry prograrn managed by HopeSource or its successor program in
accordance with the Contract,
5. Grantor shall use the Project and the Properfy to provide safe and sanitary housing, and
shall cornply with all applicable Federal, State, and local housing codes. licensing requirements. and other
requiremenis of the Contract regarding the condition and the operation of the Project and the Property'
6. Grantor shall keep any records and make any reporls relating to compliance with this
Covenant that the Counfy may reasonably require.
7. 'l'his Covenant has priority over the Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixnre Filings iu favor of the County of even date herewith (the "Deed of Trust"), and shall
,,ri"oiu" any payment, release, satisfaction or cancellation of the Counry Note or the Deed of Trust occuning
prior to the exfiration of the Affordability Period. The covenants herein are independent of and in addition to
ihe covenants in the Deed of Trust between the Grantor and the Counfy, any other covenants rnade for the
benefit of the County. This Section shall not prohibit any morlgages, deeds of trust, regulatory agreements and
covenants for the purposes ofthe future financing! nor prohibit any transfer upon foreclosure ofa deed oftrust
or moftgage appriuea by the County, or in tieu of foreclosure thereof. or any subsequent transfer, but any
hansfer shall be subject to the terms of this Covenant'
8. DEFAUI.,T: If a violation of any of the foregoing covenants occurs' the County may, aft€r
thirty (30) days' notice to Grantor, and if applicable, their successors and assigns, heirs, grantees, or lessees
ofthe P.operiy, institute and prosecute any proceeding at law or in equity to abate. preveut, or enjoin any
such violaiionor to compel specitic performance by the Grantor of its obligations hereunder; provided that
the Grantor shall not be iequired by iny provision herein to evict a residential tenant. No delay in enforcing
the provisions hereof as to any breach or violation, shall impair, damage or waive the right of the County
to enforce the provisions hereofor to obtain reliefagainst or recover for the continuation or repetition of
such breach or violations or any similar breach or violation hereof at any later time.
No waiver of any breach or violation shall be binding ttttless in writing signed by the
Coulty and no waiver or de lay in enforcing the provisions hereof as to any breach or vjolation shall impair.
damage or waive the right of ihe County to obtain relief against or recover for the continuation or repetition
of such breach or violation or any similar breach or violation thereof at any later time or times' The Grantor
Affordable llousing Covenant - 'feanaway Court (Kitlitas CouDty)Pagc 2
Fited for Record O7t1Ot2O26 02.10:10 PM - Kittitas County, WA Auditor - 202607100035 Page 4 of 11
hereby agrees to pay, indemnify and hold the County harmless from any and all cosls, expenses and fees,
inolurling all reasonable attomeys' fees which may be incurred by the County in enforcing this Covenant
following any default on the part of the Crantor whether the same shall be enforced by suit or otherwise,
provided, however that Grantor shall have no obligation to indemnif the County for or hold the County
irarmless from any costs. expenses and fees arising from the County's own negligence, fraud or willful
misconduct.
9, The provisions hereof shall not be amended or revised except by an instrument in writing
duly executed by the County and by the Grantor or its successor in title and duly recorded. This Covenant
shall not be terminated prior to the expiration of the stated term hereof except by instrument executed by
the County and duly recorded.
10. This Covenant shall be governed by the laws of the State of Washington, The Grantor, for
itself and its successors and assigns, consents to the jurisdiction of the courts of the State of Washington
and to venue of any proceedings hereunder in Kittitas County. Washinglon.
I L Time is of the essence of the Grantor's obligations hereunder.
12, The invalidity of any clause, part or provision of this Covenant shall not affect the validity
of the remaining portions thereof.
13. This Covenant may be executed in one or more facsimile counterparts, each of which shall
be deemed the original. but which together shall constitute one and the same instrument'
lSi gn tures on fol I owin g Page')
Affordoble Housing Covenant .. Teanaway Court (Kiltitas County)Page 3
above.
IN WITNESS HEREOF, this Affordable Housing Covenant was executed as of the date set forth
GRANTOR:
TEANAWAY COURT ASSOCIATES LLLP,
a Washington limited liability limited partnership
By:Teanaway Court Associates GP LLC,
a Washington limited liability company
Its: Managing General Partner
By: HopeSource,
a Washington nonprofit corporation
Its: Manager
Susan K. Grindle, Chief Executive Officer
By: BRC Teanaway AGP LLC,
a Washington limited liability company
Its: Administrative General Partner
By: SRl-Blueridge Pacific, LLC,
a Delaware limited liabilitY
Its: Manager
By: Portsmouth I,
a North liability company
Its:
Chris Eisenzimmer, Manager
By:
Affordable Housing Covenant - Teanaway Court Kittitas County)Signature Page
above.
IN WITNESS HEREOF, this Affordable Housing Covenant was executed as of the date set forth
GRANTOR:
TEANAWAY COURT ASSOCIATES LLLP,
a Washington limited liability limited partnership
By: Teanaway Court Associates GP LLC,
a Washington limited liability company
Its: Managing General Partner
By: HopeSource,
a Washington
Its: Manager
Susan K. Grindle, Chief Executive Officer
By: BRC Teanaway AGP LLC,
a Washington limited liability company
Its: Administrative General Partner
By: SRl-Blueridge Pacifi c, LLC,
a Delaware limited liability company
Its: Manager
By:Portsmouth I, LLC,
a North Carolina limited
Its: Manager
company
By:
Affordable Housing Covenant - Teanaway Court (Kittitas County)Signature Page
STATE OF WASHINGTON
COUNTY OF KITTITAS
I certiff that I know or have satisfactory evidence that Susan K. Grindle is the person who appeared before
me and said person acknowledged that she signed this instrument, on oath stated that she was authorized to
execute the instrument and acknowledged it as the Chief Executive Officer of HopeSourceo a Washington
nonprofit corporation, the Manager of Teanaway Court Associates GP LLC, aWashington limited liability
company, the Managing General Partner of Teanaway Court Associates LLLP, a Washington limited
liability limited partnership, to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
)
)
)
ss.
Dated: L5 .\Jn/ ,2026.
Y
My commission expires
for the Washington
(Use this space for notarial stamp/seal)
Affordable Housing Covenant - Teanaway Court (Kittitas County)Notary Pags
STATE OF No*c^
COUNTY OFNeur tkutov.rr
I certiff that I know or have satisfactory evidence that Chris Eisenzimmer is the person who appeared before
me and said person acknowledged that he signed this instrument, on oath stated that he was authorized to
execute the instrument and acknowledged it as the Manager of Portsmouth I, LLC, a North Carolina
limited liability company, the Manager of SRl-Blueridge Pacific, LLC, a Delaware limited liability
company, the Manager of BRC Teanaway AGP LLC, a Washington limited liability company, the
Administrative General Partner of Teanaway Court Associates LLLP, a Washington limited liability
limited partnership.
DATED: ft^al 1-t, 1n7-U
SS.
)
)
)
T l
fu)"-t--
(Print Name)t^YQr
Mv annointment exnires: t ltll-t2-aL1
I ItlI ,,t
Affordable Housing Covenant - Teanaway Court (Kittitas County)Notary Page
IN WITNESS HEREOF, this Affordable Housing Covenant was executed as of the date set forth
above.
COUNTY
STATE OF WASHINGTON
COTJNTY OF KITTITAS
I certify that I know or have satisfactory evidence that person who
appeared befole me and said person acknowledged that said person signed this on
that said person was authorized to execute the instrument and acknowledged it as the
of Kittitas Counfy to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
q
)
)
)
SS.
4 l2l btuDATED:
(Print Name)
My appointrnent expires
rfy\'Lrtlltt'r
N
I llltttll
Affordable Housing Covenant - Teanaway Court (Kittitas Coulrty)Signature and Notary Page
Filed for Record O7t1Ol2O26 02:10:10 PM - Kittitas County, WA Auditor - 202607100035 Page 10 of 11
EXHIBIT A
LEGAL DESCRIPTTON
The Land referred to herein below is situated in the County of Kittitas, State of Washington, and is
described as follows:
PARCEL I:
LOTS 2, 3 AND 4, BLOCK 2, BALMER'S ADDITION TO THE CITY OF CLE ELUM. IN THE
COUNTY OF KITTITAS, STATE OF WASHINGTON, AS PER PLAT THEREOF RECORDED IN
BOOK 2 OF PLATS, PAGE 44, RECORDS OF SAID COUNTY;
EXCEPT THAT PORTION OF LOTS 2 AND 3 WHICH IS DESCRIBED AS FOLLOWS:
A TRACT OF LAND BOI..INDED BY A LINE BEGTNNING AT THE NORTHWEST CORNER OF
SAID LOT 2. AND RUNNING THENCE SOUTH 79O46'EAST, ALONG THE NORTH BOLTNDARY
LINE OF SAID LOT 2, I20 FEET TO THE NORTHEAST CORNER THEREOF;
THENCE SOUTH IOO14' WEST, ALONG THE EAST I]OUNDARY LINE OF SAID LOT 2,47,5 FEET;
THENCE SOUTH 89"56' WEST,I22,O FEET TO A POINT ON THE WEST BOUNDARY LINE OF
SAID LOT3;
THENCE NORTH IO'I4' EAST, ALONC THE WEST BOLTNDARY LINE OF LOT 3 AND OF LOT 2,
69.2 FEET TO THE POINT OF BEGINNING;
TOGETHER WITH THOSE PORTIONS OF VACATED STREETS AND ALLEYS AS VACATED
PURSUANT TO CITY OF CLE ELUM ORDINANCE NO. 709, WHICH WOULD ATTACH BY
OPERATION OF LAW.
PARCEL 2
LOTS I, 2,3,4,8 AND 9. BLOCK 3, ALL IN BALMER'S ADDITION TO THE CITY OF CLE ELUM.
IN THE COUNTY OF KITTITAS, STATE OF WASHINCTON, AS PER PLAT THEREOF RECORDED
IN BOOK 2 OF PLATS, PAGE 44, RECORDS OF SAID COUNTY:
EXCEPT:
I. THAT PORTION OF LOTS I AND 2, BLOCK 3, WHICH IS DESCRIBED AS FOLLOWS:
A TRACT OF LAND BOI.JNDED BY A LINE BEGINNING AT THE NORTHWEST CORNER OF
SAID LOT I. AND RLINNINC THENCE SOUTH 66"44'EAST, ALONG THE NORTH BOLNDARY
LINE OF SAID LOT I, I I I.O FEE"| TO THE NORTHEAST CORNER THEREOF;
THENCE SOUTH OOOO4'EAST, ALONG THE EAST BOUNDARY LINE OF SAID LOT 1,36,7 FEET;
THENCE SOUTH 89O56'WEST, II5.7 FEET TO A POINT ON THE WEST BOUNDARY LINE OF
LOT 2;
THENCE NORTH IO"I4' EAST. ALONG THE WEST BOUNDARY LINE OF LOT 2 AND OF LOT I.
8I.6 FEET TO THE POINT OF BEGINNINC;
2. BEGINNING AT THE NORTHEAST CORNER OF LOT I, BLOCK 3;
THENCE SOUTHERLY ALONG THE EAST BOUNDARY OF SAID LOT I, 36.7 FEET, WHICH IS
THE TRUE POINT OF TRUE BEGINNING;
THENCE IN A GENERALLY SOUTHERLY DIRECTION ALONC THE EAST BOLTNDARY OF SAID
Affordable Housing Covenant - Teanaway Court (Kittitas County)Exhibil A
'Filed for Record OTrrc2O26 02:10:10 PM - Kittitas County, WA Auditor - 2O26Q7100035 Page 11 ol 11
BLOCK 3.I85.0 FEET;
THENCE WESTERL\" 32.0 FEET ON A LINE PARALLEL WITH THE SOLJTH BOLINDARY LINE
OF LOT 5,
SAID BLOCK 3;
THENCE NORTHERLY ON A LINE PARALLEL WITH THE EAST BOLTNDARY LINE OF SAID
BLOCK 3 TO A POINT ON A LINE WHICH BEARS 89O56' WEST FROM THE TRUE POINT OF
BEGINNING;
THENCENORTH 89O56'EAST TO THE TRUE POINT OF BEGINNING:
TOGETHER WITH THOSE PORTIONS OF VACATED STREETS AND ALLEYS AS VACATED
PURSUANT TO CITY OF CLE ELUM ORDINANCE NO. 709, WHICH WOULD ATTACH BY
OPERATION OF LAWI
AND TOGETHER WITH THAT 30 FOOT PORTION OF VACATED ROSE AVENUE LYING
WESTERLY OF LOTS 5. 6 AND 7, BLOCK 3, BALMER'S ADDITION TO THE CITY OF CLE ELUM,
IN THE COLTNTY OF KITTITAS, STATE OF WASHINGTON, AS PER PLAT THEREOF RECORDED
IN BOOK 2 OF PLATS, PACE 44, RECORDS OF SAID COUNTY.
PARCEL 3:
LOTS l,2,3,4,5,6,7AND8,BLOCK4,ANDLOTS I.2.3,4AND5,BLOCK5,ALLINBALMER'S
ADDITION TO THE CITY OF CLE ELUM, IN THE COLNTY OF KITTITAS' STATE OF
WASHINGTON, AS PER PLAT THEREOF RECORDED IN BOOK 2 OF PLATS, PAGE 44, RECORDS
OF SAIDCOUNTY;
TOGETHER WITH THOSE PORTIONS OF VACATED STRET:TS AND ALLEYS AS VACATED
PURSUANT TO CITY OF CLE ELUM ORDINANCE NO. 709, WHICH WOULD ATTACH BY
OPERATION OF LAW.
Affordable Housrng Covenant - Teanaway Court (Kiltitas County)Exhibit A
ORI&IiiAL
0711312026 04:34 PM 202607130051
310,00 Page: 1 of 10
Assignment Of Deed Of Trust
Kittitas County, CountY Auditor
WHEN RECORDED MAiL TO
Kittitas County
Board of Commissioners
205 W 5th Ave. Suite 108
Ellensburg- WA 98926
COLLATERAL ASSIGNMENT OF DEED OF TRUST AND PROMISSORY NOTE
Grantor (Assignor):HoPESouRcE,
a Washinglon nonprofit oorporation
Grantee (Lender):KITTITAS COUNTY'
a political subdivision of Washington State
Grantee (Trustee):
Abbreviated Legal DescriPtion;
Assessorts Tax Parcel
fD Number:
Ret'erence Number:
FIRST AMERICAN TITLE INSURANCE COMPANY
Ptn Lots 2.3 &4 Blk 2, Ptn Lots l' 2,3,4,5 & 9 Blk 3' Lots 1,2,
3. 4 & 5Blk 5 and Lots l, 2, 3, 4, 5,6'7 & 8 Blk 4 BALMER'S
ADDITION TO THE CITY OF CLE ELI'IM' Bk 2, Pg 44' TOGW
ptns of vacated stre€ls and alleys in Ciry of Cle Elum Ord' No 709
I 13034 1 st AM
1196170
2C26071 30023
THIS COLLATERAL ASSIGNMENT OF DEED OF TRUST A]\D PROMISSORY
NOTE (this '-.4,ssignm.ent"), is entered into as of Jr,rly lO, 2026, between HOPESOURCE' a
Washington n;;;;fr*rporatiorr ("Assigqor"), and IflTTITAS COUNTY, a political subdivision
of Wasliilglon Siate, whoie address is 20t W 5th Ave, Suite I 08, Ellensburg, WA 98926 (-'Assignee"
or the.oCoirnty"), in oonnection with an awar<J in the amount of Seven Hundred Fiffy Thousand and
00/l O05;1ffi t$ZSO,OOO) (the "County Funds") made by Assignee to Assignor under that ceftain
Homeless Housing Program Cra.tt eg.""ment, Contract HH-2021-001-HopeSource-CIP' dated
Jr.rly l5, Z0Zl,asamenAiObytl'ratcerlairrArnendmentNo. l datedNoveurbet2l .2023,tlratceltain
Amendment No. 2 clated N;vember 5, 2024. that certain Amendment No. 3 dated June 3,2025'
and tlrat cer-rain Amendment No. 4 dated April Zl ,2026 (as arnended, the "Colrnty Agreeme.nt")'
Assignor lras loaned the proceecls of the County Funds (the "-EpoESAIlLAs!") to-Teanaway Court
Associates LLLp ("Part+ership") for the development of a mixed-use affordable hotrsing
RECORDED ELECTRONICATLY
%o?-to o"7 | 4o 4(P urrttn+
Dob,
-? ltl["o
WHEN RECORDED MAIL TO:
simpllfile.com 800'460,5657
Kittitas County
Board of Commissioners
205 W 5th Ave, Suite 108
Ellensburg, WA 98926
COLLATERAL ASSIGNMENT OF DEED OF TRUST AND PROMISSORY NOTE
Grantor (Assignor):HorrSouncn,
a Washington nonprofit corporation
Grantee (Lender):KrrrtrAs CouNtv,
a political subdivision of Washington State
Grantee (Trustee):
Abbreviated Legal DescriPtion :
Assessor's Tax Parcel
ID Number:
Reference Number:
FIRST AMERICAN TTTLU INSURENCS COUPNNY
Prn Lors 2.3 &.4 Blk 2, Ptn Lots I, 2, 3,4,8 8L 9 Blk 3, Lots l, 2,
3, 4 & SBlk 5 and Lots l, 2,3, 4, 5,6,7 & SBlk 4 BALMER'S
ADDITION TO THE CITY OF CLE ELUM, Bk 2, Pg 44' TOGW
ptns of vacated streets and alleys in City of Cle Elum Ord' No' 709
1st AM
1196170
113034
202607130023
THIS COLLATERAI, ASSIGNMENT OF DEED OF TRUST AND PROMISSORY
NOTE (this "4ss!gruqeng'), is entered into as of July 10, 2026, befween HOPESOURCE, a
washington nonp.rrt
"otporation
("Assignor"), and KITTITAS COUNTY, a political subdivision
of Wasliington Siate, whose address is zo5w sth Ave, Suite 108, Ellensburg, WA 98926.("Assignee"
or the o,egqnr[y,'), in connection with an award in the amount of Seven Hundred Fifty Thousand and
00/100 Dollars ($750,000) (the "C9.unty Funds") made by A,ssignee to Assignor under that certain
Homeless Housing erogram Crant agreernent,-Conttu.i HH-2021-001-HopeSource-ClP, dated
July l5,202l,asamendldbythatcertalnAmendmentNo. I datedNovembet2l,2023'thatcertain
Amendment No. 2 dated November 5, 2024, thatcertain Amendment No' 3 dated June 3,2025,
ancl that cerlain Amendment No, 4 dated April 21,2026 (as amended, the "county Aqfeement")'
nrrigno, has loaned the pro"eeds of the County Funds (the *Sponsgtloan") to Teanaway Court
Associates LLLP r..paltnenlip ) for the development of a mixed-use affordable housing
development in Cle Elum, Washin$on, to be known as Teanaway Court (the "P{ojpct")'
Assignor is collateratty assigning the Note evidencing the Sponsor Loan, and the Deed of
Trust securing payment thereof, reierenced below, to secure Assignor's obligations to Assignee
under the County Agreement, the County Note executed by Assignor and made payable to the
County and the Affoidable Housing Covenant recorded on or about the date hereof in the official
records of Kittitas County (the "egg$I-poauments").
For value received, Assignor hereby collaterally assigns to Assignee all beneficial interest
under that certain Deed of Trust (iponsor Loan - County Funds) dated as of the date hereof, executed
by the Partnership, as Crantor, naming Assignor as Benefrciary, and First American Title Insurance
io*puny as Trustee, recorded under RecorAing No. 20260713002-3- . - - -- ' in the records
of fittitas County, Washington, concerning the feal property described on @A hereto (the
,,Deed of Trust"j, togetheiwith the Loan Agreement (Sponsor Loan - County Funds) ("Loan
4, g....qrr."t') *i proili5ory Note (Sponsor Loan - County Funds) referenced therein (the "Note,"
ililtogrttrri with the Loan Agreement and Deed of Trust, the "$ponsgr Loan Doouments".).
This Assignment shall be governed in all respects by the laws of the state of Washington,
shall inure to th; benefit of the successors and aisigns of Assignor and Assignee, and shall
terminate upon expiration of the term of the County Documents set forth therein.
lsig nature Pages Fo llowl
2
TEANAWAY COLLATERAL ASSICNMENT (COUNTY FUNDS)
By:
IN WITNESS WHEREOF, the undersigned has executed this Collateral Assignment of
Deed of Trust and Promissory Note as of the date first written above.
ASSIGNOR:
HopeSource,
a Washington nonprofit corporation
Susan Grindle, CEO
STATE OF WASHINGTON )
) ss.
COUNTY OF KITTITAS
I certifu that I know or have satisfactory evidence that Susan Grindle is the person who appeared
before me and said person acknowledged that he signed this instrument, on oath stated that she
was authori zed to execute the instrument and acknowledged it as the Chief Executive Officer of
Hopesource, a Washington nonprofit corporation, to be the free and voluntary act of such party
for the uses and purposes mentioned in the instrument.
DATED: 15 JU*T )Dzv.
Print N
Residing
My appointment explres
\\\
PER
TEANAWAY COLLATERAL ASSIGNMENT (Cotxrv Ftxns)SIGNATURE PAGE
The foregoing Collateral Assignment of Deed of Trust and Promissory Note is hereby
accepted by Assignee as of the date first written above.
ASSIGNBE:
KITTITAS COUNTY,
a political su bdivision of Washington State
By:
Name
Title:€.>Az-/il|le-
STATE OF WASHINGTON )
) ss.
COUNTY OF KITTITAS )
I certiff that I know or have satisfactory evidence th
before me and said person acknowledged that said
that he/she was authorized to execute the instrument
who appeared
of the KITTITAS COUNTY, a political subdivision of Washington State, to be the free and
voluntary act of such party for the uses and purposes mentioned in the instrument.
DArED: 04 - 21-21"
Print Name
Residing Lllwsb*wn
Mv annointment exoires: 02' lq -30
person signed this instrument, on oath stated ^
and acknowledged it as the Wff VfCp(luAtf.
I
TEANAWAY Collarenal ASSIGNMENT (CouNTY FL'NDS)SIGNATURE PAGE
Consent to Assignment
The undersigned hereby consents to the foregoing Collateral Assignment of Deed of
Trust and Promissory Note.
TEANAWAY COURT ASSOCIATES LLLP,
a Washington limited liability limited partnership
By:Teanaway Court Associates GP LLC,
a Washington limited liability company
Its: Managing General Partner
By:HopeSource,
a Washington nonprofit corporation
Its:Manager
By:
Susan K. Grindle, Chief Executive Officer
By:BRC Teanaway AGP LLC,
a Washington limited liability company
Its: Administrative General Partner
By: SRl-Blueridge Pacific, LLC,
a Delaware limited liability company
Its:Manager
By:Portsmouth I, LLC,
a North liability company
Its: Manager
Chris Eisen zimmer, Manager
TEANAWAY CoLLATERAL ASSIGNMBNT (Cotnrv FUNDS)
Consent to Assignment
The undersigned hereby consents to the foregoing Collateral Assignment of Deed of
Trust and Promissory Note.
TEANAWAY COURT ASSOCIATES LLLP,
a Washington limited liability limited partnership
By:Teanaway Court Associates GP LLC,
a Washington limited liability company
Its: Managing General Partner
By:HopeSource,
a Washington
Its: Manager
Susan K. Grindle, Chief Executive Officer
By:BRC Teanaway AGP LLC,
a Washington limited liability company
Its: Administrative General Partner
By: SRl-Blueridge Pacific, LLC,
a Delaware limited liability company
Its: Manager
By:Portsmouth I, LLC,
a North Carolina limited liability company
Its: Manager
\
B
By
TEANAwAv CoLLarenel AssIGNMENT (Corntrv Fuxos)
STATE OF WASHINGTON )
) ss.
COUNTY OF KITTITAS )
I certify that I know or have satisfactory evidence that Susan K. Grindle is the person who appeared
before me and said person acknowledged that she signed this instrument, on oath stated that she
was authorizedto execute the instrument and acknowledged it as the Chief Executive Officer of
HopeSource, a Washington nonprofit corporation, the Manager of Teanaway Court Associates GP
LLC, aWashington limited liability company, the Managing General Partner of Teanaway Court
Associates LLLP, a Washington limited liability limited partnership, to be the free and voluntary
act of such party for the uses and purposes mentioned in the instrument.
Dated: lS $n€- ,2026
iwZ '23 isnoa "7 -2
"",rrh*k,,r^iri[sa:t:-5
'?,,,,o, *esSl-oo
ARY for
My commission expires
the
t
Washington
(Use this space for notarial stamp/seal)
TEANAWAY COLLATERAL ASSIGNMENT (CoUNrv FUNDS)
STATE OF Sro*vr (ar,o&,,to")
) ss.
COLINTY OF Npur f{ariroyar )
I certify that I know or have satisfactory evidence that Chris Eisenzimmer is the person who
appeared before me and said person acknowledged that he signed this instrumento on oath stated
that he was authorized to execute the instrument and acknowledged it as the Manager of
Portsmouth I, LLC, a North Carolina limited liability company, the Manager of SRl-Blueridge
Pacific, LLC, aDelaware limited liability company, the Manager of BRC TeanawayAGP LLC, a
Washington limited liability company, the Administrative General Partner of Teanaway Court
Associates LLLP, a Washington limited liability limited partnership, to be the free and voluntary
act of such party for the uses and purposes mentioned in the instrument.
DATED: Marl U ,'?-"*
rJ
-(te- [\t\cU-u*-
(PrintName)Lwro
My appointment expires: nltt-lz-e?-1
..$$*w
: :"'NoTRRY i :(J
"
TEANAWAY CoLLATERAL ASSIGNMENT (CouNrv Fmtns)
EXHIBIT A
LEGAL DESCRIPTION
The Land referred to herein below is situated in the County of Kittitas, State of Washington, and
is described as follows:
PARCEL 1:
LOTS 2, 3 AND 4, BLOCK 2, BALMER'S ADDITION TO THE CITY OF CLE ELUM, IN THE COUNTY OF
KITTITAS, STATE OF WASHINGTON, AS PER PLATTHEREOF RECORDED IN BOOK 2 OF PLATS, PAGE
44, RECORDS OF SAID COUNTY;
EXCEPT THAT PORTION OF LOTS 2 AND 3 WHICH IS DESCRIBED AS FOLLOWS:
A TRACT OF LAND BOUNDED BY A LINE BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 2,
AND RUNNING THENCE SOUTH 79"46'EASI ALONG THE NORTH BOUNDARY LINE OF SAID LOT 2,
120 FEET TO THE NORTHEAST CORNER THEREOF;
THENCE SOUTH 10o14'WEST, ALONG THE EAST BOUNDARY LINE OF SAID LOT 2,47.5 FEET;
THENCE SOUTH 89O56' WEST, 122.0 FEET TO A POINT ON THE WEST BOUNDARY LINE OF SAID
LOT 3; THENCE NORTH 10o14' EAST, ALONG THE WEST BOUNDARY LINE OF LOT 3 AND OF LOT 2,
69,2 FEET TO THE POINT OF BEGINNING;
TOGETHER WITH THOSE PORTIONS OF VACATED STREETS AND ALLEYS AS VACATED PURSUANTTO
CITY OF CLE ELUM ORDINANCE NO. 709, WHICH WOULD ATTACH BY OPERATION OF I-AW.
PARCEL 2:
LOTS 1, 2,3,4, B AND g, BLOCK 3, ALL IN BALMER'S ADDIION TO THE CITY OF CLE ELUM, IN THE
COUNTY OF KITNTAS, STRTE OF WASHINGTON, AS PER PI.AT THEREOF RECORDED IN BOOK 2 OF
PLATS, PAGE 44, RECORDS OF SAID COUNTY;
EXCEPT:
I.THAT PORTION OF LOTS 1 AND 2, BLOCK 3, WHICH IS DESCRIBED AS FOLLOWS:
A TMCT OF I.AND BOUNDED BY A LINE BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 1,
AND RUNNING THENCE SOUTH 66"44',EAST, ALONG THE NORTH BOUNDARY LINE OF SAID LOT 1,
111.0 FEET TO THE NORTHEAST CORNER THEREOF;
THENCE SOUTH OOOO4' EASI ALONG THE EAST BOUNDARY LINE OF SAID LOT 1, 36.7 FEET;
THENCE SOUTH 89"56' WESI 115.7 FEET TO A POINT ON THE WEST BOUNDARY LINE OF LOT
2;
THENCE NORTH 10"14' EAST, ALONG THE WEST BOUNDARY LINE OF LOT 2 AND OF LOT 1, 81,6 FEET
TO THE POINT OF BEGINNING;
2. BEGINNING ATTHE NORTHEAST CORNER OF LOT 1, BLOCK 3;
THENCE SOUTHERLY ALONG THE EAST BOUNDARY OF SAID LOT 1, 36J FEa-T, WHICH IS THE TRUE
POINT OF TRUE BEGINNING;
THENCE IN A GENEMLLY SOUTHERLY DIRECTION ALONG THE EAST BOUNDARY OF SAID BLOCK
3,185.0 FEET;
TEANAWAY COLLATERAL ASSIGNMENT (COUNTY FUNDS)
THENCE WESTERLY, 32.0 FEET ON A LINE PARALLEL WITH THE SOUTH BOUNDARY LINE OF LOT 5,
SAID BLOCK 3;
THENCE NORTHERLY ON A LINE PARALLEL WITH THE EAST BOUNDARY LINE OF SAID BLOCK 3 TO A
POINT ON A LINE WHICH BEARS 89056'WEST FROM THE TRUE POINT OF BEGINNING;
THENCE NORTH 89056' EAST TO THE TRUE POINT OF BEGINNING;
TOGETHER WITH THOSE PORTIONS OF VACATED STREETS AND ALLEYS AS VACATED PURSUANT
TO CITY OF CLE ELUM ORDINANCE NO. 709, WHICH WOULD ATTACH BY OPERATION OF I.AW;
AND TOGETHER WITH THAT 30 FOOT PORTION OF VACATED ROSE AVENUE LYING WESTERLY OF
LOTS 5, 6 AND 7, BLOCK 3, BALMER'S ADDITION TO THE CITY OF CLE ELUM, IN THE COUNTY OF
KITTITAS, STATE OF WASHINGTON, AS PER PLATTHEREOF RECORDED IN BOOK 2 OF PLATS, PAGE44,
RECORDS OF SAID COUNTY.
PARCEL 3:
LOTS 1, 2, 3, 4, 5, 6,7 AND B, BLOCK 4, AND LOTS 1, 2, 3, 4 AND 5, BLOCK 5, ALL IN BALMER'S
ADDITION TO THE CITY OF CLE ELUM, IN THE COUNTY OF KITTITAS, STATE OF WASHINGTON, AS PER
PLAT THEREOF RECORDED IN
BOOK 2 OF PLATS, PAGE 44, RECORDS OF SAID COUNTY;
TOGETHER WITH THOSE PORTIONS OF VACATED STREETS AND ALLEYS AS VACATED PURSUANTTO
CITY OF CLE ELUM ORDINANCE NO. 709, WHICH WOULD ATTACH BY OPERATION OF I-AW.
TEANAWAY COLLRTERAI ASSIGNMENT (COUNTY FUNDS)
KITTITAS COUNTY AMEN DM ENT #4 TO:
Grant Award #HH-2021 -001 -
HopeSource-ClP
(Teanaway Court/Cte Etum Buitd)
This Fourth Amendment to Grant Award #HH-2O21-001-Hopesource-ClP ("Fourth Amendment") is
entered into this 21st day of Aprit 2026 between Kittitas County ("County") and HopeSource, a
Wash ington nonprofit corporation ("HopeSource" or "Contractor").
A. HopeSource and the County are parties to that certain Grant Award #HH-2O21-OO1-
HopeSource-ClP for Capital,lmprovement Project (Cte Etum Buitd)with an effective date of Juty 15,
2021 (known as either the "Professional Services Agreement" or "lnitial Grant Agreement") as
amended by that certain Amendment No. 1 to Contract HH-2O21-001-HopeSource-ClP dated
November 21, 2023 ("First Amendment"), that certain Amendment No. 2 to the Professional
Service Agreement dated November 5,2024 ("Second Amendment") and that certain Amendment
No. 3 to the Professionat Services Agreement dated June 5, 2025 ("Third Amendment"). The lnitiat
Grant Agreement as amended by the First Amendment, Second Amendment and Third Amendment
shal,t be known as the "Amended Grant Agr ," and the Amended Grant Agreement as further
amended by this Fourth Amendment shatt hereafter mean the "Grant Agreement."
B. HopeSource and the County desire to amend the Amended Grant Agreement to
amend the Project Description, ctarify the use restrictions the County witt impose on the Project
and make certain other modifications al[ as more futty set below.
C. Capitatized terms not otherwise def ined herein shatt have the meaning set forth in the
Amended Grant Agreement.
Based on the above facts and in consideration of the mutual promises and covenants set
forth betow, the parties agree to the fotlowing:
1. HopeSource's "Hometess and Affordabte Housing Funds 2021 Notice of Funds Avaitabte
Apptication Form" ("Grant Application") attached as Exhibit A to the lnitiat Grant Agreement
is hereby amended to incorporate the "Updated Project ProposaI Narrative" submitted by
HopeSource to the County on February 18,2026, attached hereto as Exhibit A. To the extent
that the terms of the Updated Project ProposaI Narrative conftict with the terms in the
original, Grant Apptication, the terms of the Updated Project ProposaI Narrative shat[ controt.
2. The Project has been named "Teanaway Court."Any previous references to "Cle Elum Buitd"
shat[ mean "Teanaway Court."
3. As a condition of the County funding, HopeSource has agreed to ptace the fol'towing
restrictions on the Project (cottectivel,y "Use Restriction"):
Kittitas County Amendment to: lLA, AGS, lnterDept. MOU (8128125)
Page 1 of 3
a. No tess than five (5) units shatt be reserved for househotds who are homeless at the
time of occupancy as def ined by the Department of Housing and Urban Development
("HUD") at 24 C.F.R. 578.3 for a period of no less than forty (40)years.
b. One (1) of the five (5) units set aside for househotds who are homeless at the time of
occupancy shatt be restricted to a househotd with an annual household income of no
more than fifty percent (50%) of the Area Median lncome for Kittitas County as
determined by HUD for no less than forty (40) years.
4. HopeSource shatt cause an affordable housing covenant evidencing the Use Restriction to
be recorded against the Property for the benefit of the County and in a form approved by the
County ("Covenant").
5. HopeSource shatt market and rent the five (5) homeless-designated units through
Coordinated Entry referrals, supplemented as needed by direct referrals from locaI agencies
and shetters.
6. The County funding is conditioned on HopeSource complying with the Covenant and this
Grant Agreement. lf HopeSource fails to compty, HopeSource shatt be required to repay the
county the totaI amount of the award pursuant to the terms of a promissory note.
7 . HopeSource shatt reloan the proceeds of the County funds to Teanaway Court Associates
LLLR the tax credit partnership who owns the fee simple interest in the Property and of which
HopeSource is the managing general partner ("HopeSource Loan"). The HopeSource Loan
witt be evidenced by a promissory note and deed of trust, which HopeSource wi[[ assign to
the County as security for the County f unds.
8. Except as specificatty set forth herein, the Amended Grant Agreement is and remains in futt
force and effect and binding on the parties.
9. HopeSource acknowtedges that it has the authority to enter into and perform its obtigations
under this Fourth Amendment.
10. This Fourth Amendment may be executed in one or more facsimile or pdf counterparts, each
of which shatl. be deemed the origina[, but which together shatt constitute one and the same
instrument.
1 1 . Al,t other terms of the lnitiat Grant Agreement remain unchanged and in fu[[ force and effect.
lN WITNESS WHEREOF, the parties have executed this Fourth Amendment as of the latest date
written below.
Kittitas CountyAmendment to: lLA, AGS, lnterDept. MOU (8128/25)
Page 2 of 3
s750.000.00
KITTITAS COUNTYNOTE
Teanaway Court l).2026
FOR VALUE RECEIVED, HOPESOURCE, a Washington nonprofit corporation ("Grantor"),
promises to pay to KITTITAS COUNTY, a political subdivision of Washington State ("Countli") at its
offices at 205 W 5ft Ave,, Ellensburg, Washington or at such other place as County may from time to time
designate in writing, (a) the principal sum of SEVEN HUNDRED FIFTY THOUSAND ANDAtrO/1O0
DOLLARS (S750,000.00) ("County Grant"); and (b) all costs and expenses payable hereunder.
BECIIATS
A. This Promissory Note ("County Note") is made pursuant to that certain unrecorded
Homeless Housing Program Grant Agreement, ContractHH-2021-001-Hopesource-ClP, dated July 15,
202l,between Grantor and County as amended by that certain AmendmentNo. 1 datedNovember 21,
2023, that certain Amendment No. 2 dated November 5,2024, that certain Amendment No. 3 dated June
3,2025, and that certain AmendmentNo.4 dated April 21, 2026 (as amended, the "Contract") and that
certain Affordable Housing Covenant ("Covenant") dated of even date hereof that restricts the use of the
Property for a forty (40) year period for the benefit of the County. The Contract, County Note and
Covenant are referred to herein as the "County Grant Documents".
B. Capitalizedterms used in this County Note shall have the meaning set forth in the Contract
or Covenant, unless expressly otherwise defined herein.
NOW, THEREFORE, for good valuable consideration, receipt of which is hereby
acknowledged, Grantor agrees as follows:
1. Agreement. The principal sums hereunder have been and are being conditionally granted
by County to Grantor in accordance with and pursuant to the Contract. The proceeds of the County Grant
shall be disbursed only to pay for the items and in accordance with the procedures set forth in the
Contract. The terms of the Contract are incorporated herein and made a part hereof to the same extent and
with the same force and effect as if fully set forth herein. In the event of any inconsistencies between the
terms of this County Note and the terms of the Contract or any other document related to the County
Grant, the terms of this County Note shall prevail.
A default by Grantor under any of the provisions of the Conlract, the Covenant, this Note, or any
of the other County Grant Documents shall, after the expiration of any cure period under the respective
agreement, be a default hereunder, and a default hereunder after the expiration of any applicable cure
periods shall be a default under the County Grant Documents.
2. fnterest. Zero percent simple interest (0%) per annum (based on a 360-day year and
charged on the basis of the actual number of days elapsed) shall accrue on the County Note amount and
all other amounts due under this County Note, except as set forth in Section 7 hereof.
3. Payment; Forgiveness. There are no regularly scheduled payments under this County
Note. Payment shall be due as provided in Section 7 hereof only upon a Default. December 31,2068
shall be the "Maturity Date" of this County Note. If, as of the Maturity Date, there are no uncured defaults
under the County Grant documents, including all attachments thereto, and there are no amounts which
have become payable pursuant to Section 7 hereof, all outstanding amounts on this County Note shall be
forgiven.
4. Form of Payments. All amounts due hereunder are payable in immediately available funds
and lawful monies of the United States of America.
5. Application of Payments. All payments shall be applied (i) first, to costs, interest and fees
owing hereunder, (ii) second, to the payment of principal.
6. Security. This County Grant is being reloaned by Grantor to Teanaway Court Associates
LLLP ("Paftnership") the fee simple owner of the Property of which Grantor is the manager of the
managing general partner ("Loan"). The Loan is evidenced by a Promissory Note (Sponsor Loan -
County Funds) payable by the Partnership to Grantor (the "Partnership Note") and secured by a Deed of
Trust (Sponsor Loan - County Funds),executed by the Partnership in favor ofthe Grantor and recorded
against the Property in the Official Records of Kittitas County, which Deed of Trust shall only be
subordinate to (i) a deed oftrust securing the repayment ofa senior loan pursuant to that certain Priority
and Subordination Agreement dated of even date herewith and signed by the Grantor and County
("PftSdq_4gl99rn9!S"), (ii) covenants recorded against the Property as described in the Priority
Agreement and, if applicable (ii) such other encumbrances reasonably approved by the County in writing.
Grantor has assigned its interest in the Loan, the Partnership Note and the Deed of Trust to the County as
security for its obligations hereunder and under the County Covenant and Contract.
7. Acceleration and Other Remedies. If elected by County pursuant to the following
sentence, the entire balance due under this County Note shall be paid to County upon the earlier ofany of
the following (each, a "Default"): (i) the uncured default of Grantor under the this County Note or the
Contract, after the expiration of applicable notice and cure periods (ii) an uncured default under the
Covenant, after the expiration ofapplicable notice and cure periods; or (iii) the sale, lease or other transfer
or conveyance of all or any part of the Project, or any interest therein (individually or collectively a
"Transfer"), without the prior written consent of County. Upon the occurrence and during the continuance
of a Default, County may, at County's option, declare the outstanding principal amount of this County
Note, together with the then accrued and unpaid interest thereon and other charges hereunder, due and
payable immediately. All costs of collection, including, but not limited to, reasonable attorneys' fees and
all expenses incurred in connection with enforcing this County Note, may be added to the principal
hereunder, and shall accrue interest as provided herein. Any delay or omission on the part of County in
exercising any right hereunder, under the Contract or the Covenant shall not operate as a waiver ofsuch
right, or of any other right. The acceptance of payment of any sum payable hereunder, or part thereof,
after the due date of such payment shall not be a waiver of County's right to either require prompt
payment when due of all other sums payable hereunder. In addition, upon any Default, the Counfy Grant
and all outstanding amounts due under this County Note shall accrue interest at the default rate of ten
percent (10%) per annum (based on a 360-day year and charged on the basis ofthe actual number ofdays
elapsed) ("Altemate Rate").
8. Successors and Assigns. Whenever "Count5/" is referred to in this Note, such reference
shall be deemed to include County, and its successors and assigns, including, without limitation, any
subsequent assignee or holder of this County Note. All covenants, provisions and agreements by or on
behalf of Grantor, and on behalf of any makers, endorsers, guarantors and sureties hereof which are
contained herein shall inure to the benefit of County's successors and assigns. County may, at its option,
assign its right to receive payment under this County Note without necessity of obtaining the consent of
Grantor. Whenever "Grantor" is referred to in this County Note, such reference shall be deemed to
include HopeSource, a Washington nonprofit corporation, and its approved successors and assigns,
including, without limitation, any approved subsequent assignee or obligor of this County Note, if such
approval is given by the County in writing. In no event shall Grantor assign or transfer any portion of this
Note without the prior express written consent of County.
g. Costs of Enforcement. Grantor agrees to pay upon demand all reasonable costs and
2
expenses, including attorneys' fees, expert witness fees, and costs of suit (including appeals), incurred by
County to enforce the terms hereof. In addition to the foregoing award of attorneys'fees, County shall be
entitled to its reasonable attorneys' fees incurred in any post-judgment proceedings to enforce any
judgment in connection with this County Note. This provision is separate and several and shall survive
the merger of this provision into any judgment.
10. Miscellaneous. If this County Note is now, or hereafter shall be, signed by more than
one party or person, it shall be the joint and several obligation of such parties or persons (including,
without limitation. all makers, endorsers, guarantors and sureties), and shall be binding upon such parties
and upon their respective successors and assigns. This County Note shall be governed by and construed
under the laws of the State of Washington. Grantor irrevocably and unconditionally submits to the
jurisdiction of the Superior Court of the State of Washington for Kittitas County in connection with any
legal action or proceeding arising out of or relating to this County Note. Grantor also waives any
objection regarding personal or in rem jurisdiction or venue to the extent such action is filed in the above-
referenced court. In the event of a conflict between the provisions of this County Note and the Contract,
this County Note shall control with respect to the subject matter hereof.
11. Non-Recourse Obligation. In the event of any Default under the terms of the Contract,
Covenant or this County Note, the sole recourse of County for any such Default shall be the exercise of its
rights under the Partnership Note and Deed of Trust. The Project and Grantor and its partners and
Affiliates shall not be personally liable for the payment of any obligations; provided, however, that the
foregoing shall not in any way affect any rights County may have hereunder, or any right of County to
recover or collect funds, damages or costs (including without limitation reasonable attorneys' fees and
costs) incurred by County as a result of fraud, intentional misrepresentation or bad faith waste, andlot any
costs and expenses incurred by County in connection therewith (including without limitation reasonable
attorneys' fees and costs).
12. Notice and Cure Periods. Prior to exercising its remedies hereunder or under the Grant,
Contract or Covenant, the County shall first give Grantor, the Partnership and Wincopin Circle LLLP, a
Maryland limited liability limited partnership (together with its successors and assigns, the "Limited
Partner"), notice and opportunity to cure prior to exercising any rights thereunder.
In the event of a monetary default, Grantor shall have a period of ten (10) days after such notice is
given within which to cure the default prior to exercise of remedies by the County.
In the event of a non-monetary default, the County shall give Grantor written notice of such
default. If the default is reasonably capable of being cured within thirty (30) days, or such longer period
of time as may be specified by the County at its sole discretion, then Grantor shall cure such default
within thirty (30) days or such longer period of time specified by the County. If the default is such that it
is not reasonably capable of being cured within thirty (30) days or such longer period if so specified, and
if Grantor (a) initiates corrective action within said period, and (b) diligently, continually, and in good
faith works to effect a cure as soon as possible, then Grantor shall have such additional time as is
reasonably necessary to cure the default prior to the exercise of any remedies by the County.
All notices to Grantor shall be sent to:
HopeSource
606 West 3rd Avenue
Ellensburg, WA 98926
Attention: Chief Executive Officer
3
All notices to the Partnership shall be sent to:
Teanaway Court Associates LLLP
c/o HopeSource
606 West 3rd Avenue
Ellensburg, WA 98926
Attention: Chief Executive Officer
and
c/o SRI-Blueridge Pacific, LLC
2223 I l2th Avenue NE, Suite 102
Bellevue, Washington 98004
Attention: Chris Eisenzimmer
All notices to Limited Partner shall be sent to
Wincopin Circle LLLP
c/o Enterprise Community Asset Management, Inc.
11000 Broken Land Parkway, Suite 700
Columbia, Maryland 21044
Telephone: (410) 964-0552
Attention: Asset Management
With a copy to:
Email : legal@enterprisecommunity.org
Attn: Chief Legal Officer
With a copy to:
Jessica Weston, Esq.
Gallagher LLP
218 North Charles Street, Suite 400
Baltimore, MarYland 21201
Telephone: (410) 7 27 -7 7 02
13. Permitted Transfers. The withdrawal, removal, and/or replacement of the General
Partner of the Partnership pursuant to the terms of the Partnership's First Amended and Restated
Agreement of Limited Partnership dated as of the date hereof (the "Partnership Agreement") shall not
constitute a default under this County Note, the Contract, Grant or Covenant, nor shall it require the
consent of the County, and any such actions shall not accelerate the maturity of this County Note. The
transfer or assignment of a limited partner interest in the Partnership, or interests in the Limited Partner,
shall not constitute a default under this County Note, the Contract, Grant or Covenant, nor require the
consent ofthe County.
14. Casualty, Condemnation, Etc. In the event of any fire or other casualty to the project or
eminent domain proceedings resulting in condemnation of the project or any part thereof, Grantor shall have
the right to rebuild the Project, and to use all available inswance or condemnation proceeds therefor, provided
that (a) such proceeds me sufficient to keep this Counfy Note in balance and rebuild the project in a manner
that provides adequate security to the County for repayment of this County Note or if such proceeds are
insufficient, then Grantor shall have funded any deficiency; (b) Counf shall have the right to approve plans
and specifications for any major rebuilding and the right to approve disbursements of insurance or
4
condemnation proceeds for rebuilding under a construction escrow or similar arrangement; and (c) no
material default then exists under this County Note. If the casualty or condemnation affects only part of the
Project and total rebuilding is infeasible, then proceeds may be used for partial rebuilding and partial
repayment of this County Note in a mariner that provides adequate security to the County for repayment of
the remaining balance of this County Note.
15. Subordination. The indebtedness evidenced by this Note is and shall be subordinate in
right of payment to the prior payment in full of all amounts then due and payable (including, but not
timited tt, all amounts due and payable by virtue of any default or acceleration or upon maturity) with
respect to the indebtedness evidenced by the Note (as defined by that certain Multifamily Deed of Trust,
Asiignment of Rents, Security Agreement and Fixture Filing by the Borrower in favor of Citibank,
N.A), in the original maximum principal amount not to exceed $9,000,000 executed by Borrower and
payable to Citibank, N.A. ("Senior Lender"), to the extent and in the manner provided in that certain
Friority and Subordination Agreement, dated as of | , 20261(the "subordination Agreement")' The
rights and remedies of the payee and each subsequent holder of this Note shall be deemed, by virtue of
such holder's acquisition of this Note, to have agreed to perform and observe all of the terms, covenants
and conditions to be performed or observed by the "Junior Lender" under the Subordination
Agreement."
lSignature P age Follow sl
5
NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, Grantor has caused this County Note to be executed as of the date
first set forth above.
GRANTOR:
HOPESOURCE,
a Washington nonprofit corporation
By:
Name: Susan K. Grindle
Title: Chief Executive Officer
Signature Page - County Note (HopeSource - Teanaway Court)
CONTRACTOR
HOPESOURCE
,l- 27 'LaDate
re
Susan Grindte
Printed Name
Ch ief Executive Officer
Titte
BOARD OF COUNTY COMMISSIONERS
KITTITAS COUNTY
Vice-Chair
issioner
Attest:
La
!
Date , )Ll - 2 l' 2L2
rdCterk of the
ABSENT
CoryWright, Chai
,.{lutie Kjorsvik
! Mandy Buchholz
StAL
ry
7
t7
Kittitas CountyAmendment to: lLA, AGS, lnterDept. MOU (8128125)
Page 3 of 3
PRIORITY AND SUBORDINATION AGREEMENT
(Teanaway Court)
This PRIORITY AND SUBORDINATION AGREEMENT (this "Agreement") is
datedasof-,2026byandamongthefollowingparties(collectively,the..Parties''):
TEANAWAY COURT ASSOCIATES LLLP, a Washington limited liability limited
partnership (the "Partnership");
CITIBANK, N.A., a national banking association ("Citibank");
HOPESOURCE, a Washington nonprofit corporation (the "Sponsor");
WASHINGTON STATE DEPARTMENT OF COMMERCE, a state agency
('oCommerce");
WASHINGTON STATE HOUSING FINANCE COMMISSION, a public body
corporate and politic and an instrumentality of the State of Washington (the "Commission");
KITTITAS COUNTY, a political subdivision of Washington State (the "County");
BRC TEANAWAY AGP LLC, a Washington limited liability company (the
"Administrative General Partner"); and
TEANAWAY COURT ASSOCIATES GP LLC, a Washington limited liability
company (the "Managing General Partner").
The parties to this Agreement are referred to as the "Parties." Each of the Commission,
Commerce, County, Citibank and Sponsor is referred to as a "Lender." Commerceo County
and Sponsor are referred to collectively and individually as a "Subordinate Lender.oo
Various parties providing loans, grants or other advances or contributions to assist in
the financing of the Project (as hereinafter defined) have required that the Partnership execute
and record against the Property certain instruments in the nature of covenants and agreements
restricting the leasing, operation and/or management of the Project (as hereinafter defined),
and/or deeds of trust and other financing instruments securing the performance of certain
monetary and other obligations.
RECITALS
A. Partnership's Interest as Fee Owner. The Partnership is the owner of certain real
property located in the City of Cle Elum, Kittitas County, Washington, legally described on
Exhibit A hereto (together with all improvements now or hereafter thereon and all
appurtenances, the "Property"), which real property is to be developed using a combination of
public and private funds from various sources. Depending upon the context, the term "Project"
shall herein refer to (i) the construction on the Property of a 4l-unit mixed-use multifamily
Priority and Subordination Agreement Teanaway Court
project including an early leaming facility, or (ii) the buildings and all related improvements so
constructed.
B. Commission's Interest. The Partnership has obtained financing for the Project
through the use of Low Income Housing Tax Credits ("LIHTC"). In connection with the
LIHTC, the Partnership has executed a Regulatory Agreement (Extended Use Agreement) with
the Commission (the 'oCommission Extended Use Agreement"), to be recorded in Kittitas
County, Washington. In addition, as described in Paragraph C below, the Partnership has
obtained financing for the Project through the Borrower Loan (as defined herein). In connection
with the Borrower Loan, the Partnership has executed a Regulatory Agreement with the
Commission (the "Commission Bond Regulatory Agreement"), to be recorded in Kittitas
County, Washington.
C. Commission's and Citibank's Interest as a Tax Exempt [.oan Lender. The
Partnership has applied to the Commission to issue its revenue note designated as Multifamily
Revenue Note (Teanaway Court Apartments Project), Series 2026 and to use the proceeds
thereof to acquire a loan made to the Partnership by Citibank in a maximum principal amount
not to exceed $9,000,000 (the "Borrower Loan"). The Borrower Loan is evidenced by, among
other things, that certain Multifamily Note (Tax-Exempt), made by the Partnership payable to
the order of Citibank, as endorsed and assigned to the Commission, and secured by that certain
Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the
"Tax Exempt Bond Deed of Trust") executed by the Partnership for the benefit of Citibank,
to be recorded in Kittitas County, Washington, and assigned to the Commission, and that certain
Borrower Loan Agreement by and among the Partnership, Commission, U.S. Bank Trust
Company, National Association, a national banking association, as fiscal agent (in such
capacity, the'oFiscal Agent"), and Citibank (the'oBorrower Loan Agreement"). Each of the
foregoing documents shall be assigned by Commission to Citibank in its capacity as funding
lender (in such capacity, "Funding Lender") to secure the Funding Loan (defined below). The
Partnership has further requested that Citibank enter into that certain Funding Loan Agreement
by and among Commission, Fiscal Agent, and Funding Lender, pursuant to which Citibank will
make a loan to Commission (the "Funding Loan"), the proceeds of which will be used to
acquire the Borrower Loan made to the Partnership pursuant to the Borrower Loan Agreement.
The Commission shall assign its interest in each of the documents evidencing the Borrower
Loan, other than certain reserved rights, to Funding Lender to secure the Funding Loan. The
Borrower Loan will be advanced to the Partnership pursuant to that certain Construction
Funding Agreement by and between the Partnership and Funding Lender. The Borrower Loan
and the Funding Loan shall be referred to herein collectively as the "Bond Loan." All
documents identified in this paragraph, and any documents executed by the Partnership in
connection therewith, are collectively referred to as the "Bond Documents."
D. Citibank's Interest as Taxable Loan Lender. Citibank and the Partnership have
entered into a Construction Loan Agreement which sets forth the terms and conditions under which
Citibank has agreed make a loan to the Partnership in the amount of up to $14,450,000 (the
o'Taxable Loan"). The Taxable Loan is evidenced by, among other things, that certain
Multifamily Construction Note (Taxable) made by the Partnership payable to the order of
2Priority and Subordination Agreement Teanaway Court
Citibank, and secured by that certain Subordinate Multifamily Deed ofTrust, Assignment ofRents,
Security Agreement and Fixture Filing (the "Taxable Deed of Trust") recorded in Kittitas County,
Washington. All documents identified in this paragraph, and any documents executed by the
Partnership in connection therewith, are collectively referred to as the "Taxable Loan
Documents".
E. Commerce's Interests.Sponsor and Commerce have entered into a Capital
Funding Agreement (the "Commerce Contract") which sets forth the terms and conditions
under which Commerce has agreed to lend Sponsor up to $12,630,020.00 (the "Commerce
Loan"). The Commerce Loan is evidenced by a Promissory Note (the ooCommerce Note"),
made by Sponsor to the order of Commerce. The Commerce Contract and the Commerce Note
were assigned to the Partnership under an Assignment, Assumption and Consent Agreement
recorded concurrently herewith in Kittitas County, Washington (the "Commerce
Assignment"). The Commerce Contract is secured by a Deed of Trust for the benefit of
Commerce, to be recorded in Kittitas County, Washington (the "Commerce Deed of Trust").
Commerce has entered into that certain Low Income Housing Covenant Agreement granted by the
Partnership for the benefit of Commerce to be recorded in Kittitas County, Washington (the
"Commerce Regulatory Agreement"). All documents identified in this paragraph, and any
documents executed by the Partnership in connection therewith, as the same may be amended
from time to time, subject to the restrictions set forth in Section 5(b) below, are collectively
referred to as the "Commerce Loan Documents", provided, however, for the avoidance of
doubt, as it pertains to statements of priority or subordination in this Agreement, the Commerce
Regulatory Agreement shall not be considered part of the "Commerce Loan Documents", the
intent being that the Commerce Regulatory Agreement shall have third (3'd) priority as provided
below.
F. Sponsor's and General Partners' Interest.
a. Soonsor's Interest as C Snonsor Loan Lender. The Sponsor has made a loan
to the Partnership in the amount of $2,030,000 (the "CPF Sponsor Loan").
The CPF Sponsor Loan is evidenced by a Promissory Note (Sponsor Loan -
CPF) (the "CPF Sponsor Note"), made by the Partnership to the order of the
Sponsor. The Partnership's obligation to repay the CPF Sponsor Note is
secured by a Deed ofTrust (Sponsor Loan - CPF) for the benefit of Sponsor,
to be recorded in Kittitas County, Washington (the "CPF Sponsor Deed of
Trust"). All documents identified in this subparagraph, and any documents
executed by the Partnership in connection therewith, as the same may be
amended from time to time, subject to the restrictions set forth in Section 5(b)
below, are collectively referred to as the "CPF Sponsor Loan Documents".
b. Sponsor's Interest as Countv Funds Loan Lender. The S ponsor has
made a loan to the Partnership in the amount of $750,000 (the'oCounty F'unds
Sponsor Loan"). The County Funds Sponsor Loan is evidenced by a
Promissory Note (Sponsor Loan - County Funds) (the "County Funds
Sponsor Note"), made by the Partnership to the order of the Sponsor. The
JPriority and Subordination Agreement Teanaway Court
Partnership's obligation to repay the County Funds Sponsor Note is secured by
a Deed of Trust (Sponsor Loan - County Funds) for the benefit of Sponsor, to
be recorded in Kittitas County, Washington (the 'oCounty Funds Sponsor
Deed of Trust"). All documents identified in this subparagraph, and any
documents executed by the Partnership in connection therewith, as the same
may be amended from time to time, subject to the restrictions set forth in
Section 5(b) below, are collectively referred to as the "Count5r Funds
Sponsor Loan Documents".
c. Spensor's and General Partners' lnterest as Optionee. Pursuant to the
Partnership's First Amended and Restated Agreement of Limited Liability
Limited Partnership (the "Partnership Agreement"), the Sponsor has an
unrecorded right of first refusal and the Managing General Partner and the
Administrative General Partner have an unrecorded option with respect to the
Project (together with any other rights of Sponsor andlor the General Partners
to acquire the limited partner's interest, under the Partnership Agreement or
otherwise, the "Option"). The Option is not recorded.
G. Countv's Interest. In connection with the Project, the County provided an award
to the Sponsor in the amount of $750,000 (the o'@!y Award") pursuant to that certain
Homeless Housing Program Grant Agreement, Contract HH-2021-001-HopeSource-ClP, dated
July 15, 2021, as amended by that certain Amendment No. I dated November 21, 2023, that
certain Amendment No. 2 dated November 5, 2024,thatcertain Amendment No. 3 dated June
3, 2025, and that certain Amendment No. 4 dated April 21, 2026 (as amended, assigned,
restated, supplemented or otherwise modified from time to time, the "@-4gI@").
The County Award is evidenced by that certain Kittitas County Note made by the Sponsor in
favor ofthe County (the "County Note"). In connection with the County Award, the Partnership
also executed that certain Affordable Housing Covenant in favor of the County dated on or
about the date hereof to be recorded in Kittitas County, Washington (as amended, assigned,
restated, supplemented or otherwise modified from time to time, the "County Covenant"). As
security for the Sponsor's obligations under the County Note, the County, Partnership, and
Sponsor have entered into that certain Collateral Assignment of Deed of Trust and Promissory
Note, dated on or about the date hereof to be recorded in Kittitas County, Washington (as
amended, assigned, restated, supplemented or otherwise modified from time to time, the
"Cguty Agqignmen!"), whereby Sponsor has collaterally assigned the Sponsor's interest in the
County Funds Sponsor Loan Documents to the County. All documents identified in this
paragraph, and any documents executed by the Partnership or Sponsor in connection therewith,
as the same may be amended from time to time, subject to the restrictions set forth in Section
5(b)below,arecollectivelyreferredtoasthe..@,,provided,however,
for the avoidance of doubt, as it pertains to statements of priority or subordination in this
Agreement, the County Covenant shall not be considered part of the "County Loan
Documents", the intent being that the County Covenant shall have fourth (4th) priority as
provided below.
The Parties desire to provide herein for the relative priority of the various covenants,
4Priority and Subordination Agreement Teanaway Court
deeds of trust, and other instruments to be recorded in connection with the Project, and to
undertake certain covenants with respect to the subordination of the priority of their interests
under recorded instruments in their favor to certain other instruments which may be put of
record hereafter, as more particularly provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and undertakings
herein contained, the Parties agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement (including, as
appropriate, when used in the above recitals), shall have the following meanings:
"Bankruptcy Proceeding" means any bankruptcy, reotganization, insolvency,
composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of
creditors, or custodianship action or proceeding under any federal or state law with respect to
the Partnership, any guarantor of any of the Senior Indebtedness, any of their respective
properties, or any of their respective partners, members, officers, directors, or shareholders.
"Casualt5r" means the occurrence of damage to or loss of any of the Property by fire
or other casualty.
"Condemnation" means any action or proceeding or notice relating to any proposed or
actual condemnation or other taking, or conveyance in lieu thereof, of all or any patt of the
Property, whether direct or indirect.
"Deeds of Trust" means, collectively, the Tax Exempt Bond Deed of Trust, the Taxable
Deed of Trust, the Commerce Deed of Trust, the County Funds Sponsor Deed of Trust and the
CPF Sponsor Deed of Trust.
"Enforcement Action" means any of the following actions taken by or at the direction
ofa Subordinate Lender: the acceleration ofall or any part ofthe Subordinate Indebtedness, the
advertising of or commencement of any foreclosure or trustee's sale proceedings with respect
to all or a portion of the Property, the exercise of any power of sale, the acceptance of a deed
or assignment in lieu of foreclosure or sale with respect to all or a portion of the Property, the
collecting of Rents, the obtaining of or seeking of the appointment of a receiver for all or a
portion of the Property, the seeking of default interest on the Subordinate Indebtedness, the
taking of possession or control of any of all or a portion of the Property, the commencement of
any suit or other legal, administrative, or arbitration proceeding based upon a Subordinate Note
or any other of the Subordinate Loan Documents, the exercising of any banker's lien or rights
of set-off or recoupment with respect to the Subordinate Indebtedness, or the exercise of any
other remedy under the Subordinate Loan Documents against the Partnership, any other party
liable for any of the Subordinate Indebtedness or obligated under any of the Subordinate Loan
Documents, or all or a portion of the Property, but does not include any actions against Sponsor
with respect to any real property owned by Sponsor other than the Property, nor does it include
5Priority and Subordination Agreement Teanaway Court
any administrative action by the Subordinate Lender with respect to the eligibility or status of
Partnership, Sponsor or any affiliate with regard to any applications for any further contracts,
funding or assistance.
ooEnforcement Action Notice" means a written notice from a Subordinate Lender to
the Senior Lender, given following a Subordinate Loan Default, setting forth in reasonable
detail the Subordinate Loan Default and the Enforcement Action proposed to be taken by such
Subordinate Lender.
"Impositions" means the obligations of Partnership to pay premiums required in
respect of coverage against loss by fire and allied perils, general boiler and machinery coverage,
rent loss and extra expense insurance or other insurance as shall be required by a Lendero taxes,
assessments, vault rentals and other charges, if any, whether general, special or otherwise,
including all assessments for schools, public betterments and general or local improvements,
which are levied, assessed or imposed by any public authority or quasi-public authority, and
which, if not paid, will become a lien on the Property, water and sewer charges (that could
become a lien on the Property), ground rents, if any, assessments or other charges (that could
become a lien on the Property).
"Leases" means all present and future leases, subleases, licenses, concessions or grants
or other possessory interests now or hereafter in force, whether oral or written, covering or
affecting the Property, or any portion ofthe Property (including proprietary leases or occupancy
agreements if Partnership is a cooperative housing corporation), and all modifications,
extensions or renewals.
oo|,oan" means each of the Bond Loan, the Taxable Loano the Commerce Loan, the
County Loan, the County Funds Sponsor Loan and the CPF Sponsor Loan.
ool,oan Documents" shall mean each of the Bond Documents, the Taxable Loan
Documents, the Commerce Loan Documents, the County Loan Documents, the CPF Sponsor
Loan Documents and the County Funds Sponsor Loan Documents.
"Loss Proceeds" means all monies received or to be received under any insurance
policy, from any condemning authority, or from any other source, as a result of any
Condemnation or Casualty.
'oPartnership" means all persons or entities identified as "Partnership" in the first
paragraph of this Agreement, together with their successors and assigns, and any other person
or entity who acquires title to the Property after the date of this Agreement.
"Rents" means all rents (whether from residential or non-residential space), revenues
and other income of the Property, parking fees, laundry and vending machine income and fees
and charges for food, health care and other services provided at the Property, whether now due,
past due, or to become due, and deposits forfeited by tenants.
6Priority and Subordination Agreement Teanaway Court
"Restoration" means the restoration and repair of the Property following a Casualty or
Condemnation as nearly as practicable to the equivalent of its condition immediately prior to
the Casualty or Condemnation event or, with the consent of all Lenders and grantees of
Restrictive Covenants, to a different use.
"Restrictive Covenants" means the Commission Bond Regulatory Agreement, the
Commission Extended Use Agreement, County Covenant and the Commerce Regulatory
Agreement.
"senior Deed of Trust" means the Tax Exempt Bond Deed of Trust and the Taxable
Deed of Trust.
"senior Indebtedness" means the principal of, interest on, all other amounts due under,
and any reimbursement obligations owing at any time under or in respect of any Senior Loan
Document, including prepayment/substitution premiums, late charges, default interest, and
advances to protect the security of Senior Loan Documents.
"senior Lender" means the beneficiary ofthe Senior Deed of Trust as ofthe date hereof
and any other person or entity who subsequently becomes the beneficiary of such Senior Deed
of Trust, in each case in its capacity as such beneficiary.
"senior Loan Documents" means the promissory note, reimbursement agreement or
other evidence of the Senior Indebtedness referred to in the Senior Deed of Trust and any
replacement thereof and all other documents at any time evidencing, securing, guaranteeing, or
otherwise delivered in connection with any Senior Indebtedness, as the same may be amended
from time to time.
o'senior Loan Default" means any act, failure to act, event, condition, or occuffence
that constitutes, or that with the giving of notice or the passage of time, or both, would
constitute, an "Event of Default" as defined in the Senior Loan Documents.
"subordinate Deed of Trust" means the Commerce Deed of Trust, the CPF Sponsor
Deed of Trust and the County Funds Sponsor Deed of Trust.
"subordinate Indebtedness" means all sums evidenced or secured or guaranteed by,
or otherwise due and payable to a Subordinate Lender pursuant to, the Subordinate Loan
Documents.
"subordinate Lender" means the beneficiary of a Subordinate Deed of Trust as of the
date hereof and any other person or entity who subsequently becomes the beneficiary of such
Subordinate Deed of Trust, in each case in its capacity as such beneficiary.
"subordinate Loan Default" means any act, failure to act, event, condition, or
occurrence that allows, or would allow (but for any contrary provision of this Agreement), a
Subordinate Lender to take an Enforcement Action.
7Priority and Subordination Agreement Teanaway Court
"subordinate Loan Documents" means the promissory note, loan agreement,
reimbursement agreement or other evidence of the Subordinate Indebtedness referred to in a
Subordinate Deed of Trust and any replacement thereof and all other documents at any time
evidencing, securing, guaranteeing, or otherwise delivered in connection with any Subordinate
Indebtedness, as the same may be amended from time to time, but not including the Restrictive
Covenants.
"subordinate Note" means each promissory note or other evidence of the Subordinate
Indebtedness referred to in any Subordinate Deed of Trust and any replacement thereof.
"surplus Cash" means, with respect to any period, any revenues of Partnership
remaining "o":0""*;; ;:::::: T:":;'ff:::::ff ffi:,he S eni.r L.an
Documents, including any imposition or reserve deposits required
thereunder.
All deposits to any replacement reserve, completionlrepair reserve or
other reserve or escrow required by the Senior Loan Documents that are
due or currently payable.
All reasonable operating expenses of the Property, including real estate
taxes, insurance premiums, utilities, building maintenance, painting and
repairs, management fees, payroll, administrative expenses, legal
expenses and audit expenses (excluding any developer fees payable with
respect to the Property).
2. PRIORITIES. Regardless of the time each Party's interest in or lien on the Property
was or shall be created or recorded, such interests and liens have and shall have the following
priorities:
(a) Prioritv of Restrictive Covenants.
(i) The Restrictive Covenants shall each take priority over all, and
shall not be subject or subordinate to any, of the Deeds of Trust. As among each
other, the Restrictive Covenants shall have the following priority:
(l) Commission Extended Use Agreement;
(2) Commission Bond Regulatory Agreement;
(3) Commerce Regulatory Agreement; and
(4) County Covenant.
(ii) Survival. It is acknowledged and agreed by the Parties that
each of the Restrictive Covenants, subject to their respective provisions and
Section 6(h) hereof, shall survive foreclosure of any of the Deeds of Trust.
8Priority and Subordination Agreement Teanaway Court
Subject to their respective provisions and Section 6(h) hereof, the Restrictive
Covenants shall be binding upon any person acquiring the Property by means of
foreclosure or deed in lieu thereof, or who shall succeed to an interest in the
Property so acquired, in each case for so long as such person shall retain an
interest in the Property. Notwithstanding anything to the contrary in the
foregoing, the Commission Extended Use Agreement shall terminate upon
foreclosure in accordance with Section 10.3.1 of the Commission Extended Use
Agreement.
(iii) Amendment. Without the prior written consent of the Senior
Lender (in each case, so long as such Senior Deed of Trust encumbers the
Property), the Commission, the County and Commerce shall not amend, modify,
extend, renew or replace any provision of any of the Restrictive Covenants,
except for releases made pursuant to Section 6 below.
(iv) Restrictive Covenants Apply Simultaneously. The Parties
acknowledge that, notwithstanding the priority of the Restrictive Covenants
established in Section 2(a)(i) above, the Restrictive Covenants apply
simultaneously and that the grantors thereunder are obligated to comply with
each of them regardless of their relative priority or order of recording.
(b) Priority of Mortease Liens. The Deeds of Trust, in each case for so
long as such instrument remains a lien of record on the Property, or any part thereof shall rank
in the following lien priority (with "1't" being the most senior):
(l) Tax Exempt Bond Deed of Trust;
(2) Taxable Deed of Trust;
(3) Commerce Deed of Trust and Commerce Assignment;
(4) County Funds Sponsor Loan Deed of Trust and County
Assignment; and
(5) CPF Sponsor Deed of Trust.
(c) Prioritv of Option. The Option shall at all times be subject and
subordinate and shall rank below the Restrictive Covenants and Deeds of Trust.
For purposes of this Section, the lien or interest with "lesser priority" is the one with the
higher numerical designation, so that, for example, "fourth priority" is a "lesser priority" than
"third priority."
Any Uniform Commercial Code financing statement or fixture filing recorded or filed
in connection with any deed of trust or any loan referenced in this Agreement shall have the
same relative priority or subordination as the deed of trust and loan to which such financing
statement or fixture filing relates.
9Priority and Subordination Agreement Teanaway Court
The Parties agree that the Lenders do not have any obligation to each other to advance
funds or to see to the application of their respective loan proceeds and that any application of
such proceeds contrary to the terms of any loan documents shall not defeat the subordinations
granted herein in whole or in part.
The Parties agree that except for such obligations as the Partnership may have to other
Parties hereto pursuant to agreements with such Parties (i) the Parties do not have any
obligations to each other to advance funds or to see to the application of their respective loan
proceeds, (ii) any application of such proceeds contrary to the terms of any loan documents
shall not defeat the subordinations granted herein in whole or in part, and (iii) nothing contained
in this Agreement shall impair the right of any Party to pursue any right or remedy available to
it in any of the agreements, covenants, regulatory agreements, deeds of trust or options
referenced herein.
Notwithstanding any other provisions of this Agreement, the priorities established
hereunder shall not apply to nor affect the security position of any security agreement or pledge
of cash accounts or other property to which only one Party hereto has been granted a security
interest.
3. SUBORDINATIONOFSUBORDINATEINDEBTEDNESS.
a. The Subordinate Indebtedness is and shall at all times continue to be subject and
subordinate in right of payment to the prior payment in full of the Senior Indebtedness.
b. Until receipt of notice of a Senior Loan Default, the Subordinate Lender shall be
entitled to collect and retain for its own account all payments made on account of the principal
of and interest on its Subordinate Indebtedness in accordance with the requirements of its
Subordinate Loan Documents; provided no such payment is made more than ten (10) days in
advance of the due date thereof and provided further that the aggregate amount of such
payments does not exceed 75Yo of then available Surplus Cash. However, immediately upon
Subordinate Lender's receipt of notice of a Senior Loan Default, Subordinate Lender will not
accept any payments on account of its Subordinate Indebtedness without the consent of the
Senior Lender unless and until the Subordinate Lender receives notice from the Senior Lender
that the Senior Loan Default has been cured or waived, and the provisions of Section 3(c) of
this Agreement shall apply; provided that if and when the Subordinate Lender has the right to
pursue an Enforcement Action under Section 6 below, the Subordinate Lender may receive and
retain any proceeds from a foreclosure sale or trustee's sale pursuant to the Subordinate Deed
of Trust, and upon any foreclosure sale or trustee's sale pursuant to the Senior Deed of Trust,
the Subordinate Lender shall have such right to make a claim for excess proceeds, if any, as
provided by applicable law and consistent with Section 2hereof, and to receive and retain any
such proceeds as may be allowed by a court of competent jurisdiction. In addition, if the Senior
Lender has given notice of a Senior Loan Default and one year thereafter the Senior Lender has
not accelerated the Senior Indebtedness owing and has not commenced legal action based on
the Senior Loan Default, then so long as the Subordinate Lender has not received notice that
Priority and Subordination Agreement 10 Teanaway Court
amounts secured by the Senior Deed of Trust are past due, the Subordinate Lender may receive
and retain regularly scheduled payments on the Subordinate Indebtedness to the same extent as
ifthere had been no notice of Senior Loan Default. The Subordinate Lender acknowledges that
a Subordinate Loan Default may constitute a Senior Loan Default.
c. If (i) the Subordinate Lender receives any payment, property, or asset of any
kind or in any form on account of its Subordinate Indebtedness (including, without limitation,
any proceeds from any Enforcement Action) contrary to the terms of subsection (b) of this
Section 3, or (ii) the Subordinate Lender receives, voluntarily or involuntarily, by operation of
law or otherwise, any payment, property, or asset in or in connection with any Bankruptcy
Proceeding contrary to subsection (b) of this Section 3, such payment, property, or asset will be
received and held in trust for the Senior Lender to the extent permitted by applicable law. The
Subordinate Lender will promptly remit in kind, and properly endorse as necessary, all such
payments, properties, and assets to the Senior Lender. The Senior Lender receiving the
payments, assets or property shall apply any paymento asset, or property so received from the
Subordinate Lender to its Senior Indebtedness in such order, amount (with respect to any asset
or property other than immediately available funds), and manner as the Senior Lender shall
determine in its sole and absolute discretion. Any other provision herein notwithstanding, the
obligation of the Subordinate Lender to make any payment pursuant to this Section shall be
limited to the amounts available for such payment under appropriations then in effect, if
applicable, and the obligation to deliver and convey any other assets or property shall be subject
to any restrictions under then applicable law. In case of any dispute or uncertainty as to the
identity of the Senior Lender or the holder of the rights thereof hereunder, the Subordinate
Lender may implead any such payment or delivery to the registry of a court of competent
jurisdiction in accordance with applicable law, and shall then be fully absolved of any further
responsibility therefor.
d. Without limiting the complete subordination ofthe Subordinate Indebtedness to
the payment in full of the Senior Indebtedness, in any Bankruptcy Proceeding, upon any
payment or distribution (whether in cash, property, securities, or otherwise) to creditors (i) the
Senior Indebtedness shall first be paid in full in cash (in the order and priority set forth in
Section 2(b)) before the Subordinate Lender shall be entitled to receive any payment or other
distribution on account of or in respect of the Subordinate Indebtedness, and (ii) until all of the
Senior Indebtedness is paid in full in cash, any payment or distribution to which the Subordinate
Lender would be entitled but for this Agreement (whether in cash, property, or other assets)
shall be made to the Senior Lender.
e. The subordination of the Subordinate Indebtedness shall continue in the event
that any payment under the Senior Loan Documents (whether by or on behalf of the Partnership,
as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason
repaid or returned to the Partnership or its insolvent estate, or avoided, set aside or required to
be paid to the Partnership, a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law. In such event, the Senior Indebtedness or part thereof
originally intended to be satisfied shall be deemed to be reinstated and outstanding to the extent
of any repayment, return, or other action, as if such payment on account of the Senior
llPriority and Subordination Agreement Teanaway Court
Indebtedness had not been made, but ifall ofthe Property shall have been reconveyed ofrecord
from the lien ofthe Senior Deed of Trust, such reinstatement shall not impose liability for action
taken or omitted by any person without notice thereof.
f. In addition to the limitations set forth above, Subordinate Lender agrees that, in
the aggregate, the Subordinate Indebtedness will be payable solely from not more than 75Yo of
Surplus Cash while the Senior Indebtedness remains outstanding.
4. SUBORDINATIONOF'SUBORDINATELOANDOCUMENTS.
a. The Subordinate Deed of Trust and each of the other Subordinate Loan
Documents, as they affect the Property and the Partnership's interest therein,
are, and shall at all times remain, subject and subordinate in all respects to the
Senior Deed of Trust and the other Senior Loan Documents, provided, that so
long as the Subordinate Deed of Trust encumbers the Property, the Subordinate
Lender shall retain the right to enforce its Subordinate Loan Documents except
as restricted by the terms of this Agreement.
b. The subordination of the Subordinate Loan Documents shall apply and continue
notwithstanding (i) the actual date and time of execution, delivery, recording,
filing or perfection of the Senior Deed of Trust and other Senior Loan
Documents and of any Subordinate Deed of Trust and other Subordinate Loan
Documents, (ii) the availability of any collateral to the Senior Lender, including
the availability of any collateral other than the Property.
c. All rights and claims of the Subordinate Lender under its Subordinate Loan
Documents in or to the Property or any portion thereof the proceeds thereof, the
Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds
payable with respect thereto, are expressly subject and subordinate in all respects
to the rights and claims of the Senior Lender under the Senior Loan Documents
in and to the Property or any portion thereof, the proceeds thereof, the Leases
thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable
with respect thereto.
d. If the Subordinate Lender, by indemnification, subrogation or otherwise, shall
acquire any lien, estate, right or other interest in any of the Property, that lien,
estate, right or other interest shall be fully subject and subordinate to the receipt
by the Senior Lender of payment in full of the Senior Indebtedness, and to the
Senior Loan Documents, to the same extent as the Subordinate Indebtedness and
the Subordinate Loan Documents are subordinate pursuant to this Agreement.
5. ADDITIONAL REPRESENTATIONS AND COVENANTS
a. The Subordinate Lender represents and warrants, as to itself only and for the
benefit of Senior Lender, that, as of the date of this Agreement, (i) it is now the
Priority and Subordination Agreement t2 Teanaway Court
owner and holder of its Subordinate Loan Documents; (ii) its Subordinate Loan
Documents have not been modified or amended; (iii) the Subordinate Lender
has no actual knowledge of any material Subordinate Loan Default, and has not
given notice of, any Subordinate Loan Default, that has occurred under its
Subordinate Loan Documents; (iv) no scheduled monthly payments under its
Subordinate Note, if applicable, have been prepaid more than ten (10) days in
advance oftheir respective due dates; and (v) to the Subordinate Lender's actual
knowledge, none of the rights of such Subordinate Lender under any of its
Subordinate Loan Documents are subject to the rights of any third parties, by
way of subrogation, indemnification or otherwise, except for matters of record
in the official public land records of Kittitas County, Washington, maintained
by the Kittitas County Auditor or in filings made under the Uniform Commercial
Code.
b. Without the prior written consent of the Senior Lender, the Subordinate Lender
shall not (i) amend, modiff, renew or replace any provision of any of its
Subordinate Loan Documents in a manner that results in or requires any earlier
or greater payments thereunder or materially increases the obligations of
Partnership thereunder or creates any additional defaults under such Subordinate
Loan Documents; (ii) terminate any of its Subordinate Loan Documents, or (iii)
pledge, assign, transfer, convey, or sell any interest in its Subordinate
Indebtedness to any party that is not a governmental or quasi-governmental
authority; (iv) accept any payment on account of its Subordinate Indebtedness
other than a regularly scheduled payment of interest or principal and interest
made not earlier than ten (10) days prior to the due date thereof (and the
aggregate of which is not in excess of 75Yo of then available Surplus Cash) or as
expressly authorized in Sections 3 and 5(h); or (iv) take any action concerning
environmental matters affecting the Property.
c. The Subordinate Lender will deliver to Senior Lender a copy of each
Enforcement Action Notice delivered by that Subordinate Lender pursuant to
the Subordinate Loan Documents or in connection with the Subordinate
Indebtedness, simultaneously with Subordinate Lender's delivery of such
Enforcement Action Notice. The Subordinate Lender shall not take action to
enforce its Subordinate Loan Documents against the Partnership or the Property
until it has delivered to the Senior Lender a copy of a notice declaring a
Subordinate Loan Default and stating its intent to take Enforcement Action, or
until the expiration, without cure of the applicable Subordinate Loan Default, of
the applicable cure period in Section 6 below. The Senior Lender shall deliver
to the Subordinate Lender in the manner required in Section 8(e) a copy of each
notice of a Senior Loan Default delivered by the Senior Lender. Neither giving
nor failing to give a notice to the Senior Lender or the Subordinate Lender
pursuant to this Section 5(c) shall affect the validity of any notice given by the
Priority and Subordination Agreement t3 Teanaway Court
Senior Lender or the Subordinate Lender to the Partnership, as between the
Partnership and such Senior Lender or Subordinate Lender.
d. Without the prior written consent of the Senior Lender in each instance, the
Subordinate Lender will not commence, or join with any other creditor in
commencin1, any Bankruptcy Proceeding. In the event of a Bankruptcy
Proceeding, the Subordinate Lender shall not vote affirmatively in favor of any
plan of reorganization or liquidation unless the Senior Lender has also voted
affirmatively in favor of such plan. In the event of any Bankruptcy Proceeding,
the Subordinate Lender shall not contest the continued accrual of interest on any
Senior Indebtedness, in accordance with and at the rates specified in the
respective Senior Loan Documents, both for periods before and for periods after
the commencement of such Bankruptcy Proceedings.
e. All requirements pertaining to insurance under the Subordinate Loan Documents
(including requirements relating to amounts and types of coverages, deductibles
and special endorsements) shall be deemed satisfied if the Partnership complies
with the insurance requirements of the Senior Lender under its Senior Loan
Documents, so long as those requirements result in the provision of at least the
extent of coverage and ratings of insurers with respect to periods as are set forth
in Senior Lender's insurance requirements, each as provided to the Subordinate
Lender prior to the date hereof. All original policies of insurance required
pursuant to the Senior Loan Documents shall be held by the Senior Lender.
Nothing in this Section 5(e) shall preclude the Subordinate Lender from
requiring that it be named as a Lender and loss payee, as its interest may appear,
under all policies of property damage insurance maintained with respect to the
Property, provided such action does not affect the priority of payment of Loss
Proceeds, or that the Subordinate Lender be named as an additional insured
under all policies of liability insurance maintained with respect to the Property,
or that the Subordinate Lender be provided with such endorsements establishing
such Lender, loss payee and additional insured status and such rights to notices
and proof of coverage consistent with this subsection as it may require.
f. In the event of a Condemnation or a Casualty, the following provisions shall
apply:
i. subject to the proviso set forth in this subsection (f) below, the rights of
the Subordinate Lender (under its Subordinate Loan Documents or
otherwise in respect of its Subordinate Deed of Trust) to participate in
any proceeding or action relating to a Condemnation or a Casualty, or to
participate or join in any settlement of, or to adjust, any claims resulting
from a Condemnation or a Casualty, shall be and remain subordinate in
all respects to rights of the Senior Lender, under the Senior Loan
Documents with respect thereto, and the Subordinate Lender shall be
bound by any settlement or adjustment of a claim resulting from a
Priority and Subordination Agreement t4 Teanaway Court
Condemnation or a Casualty made by the Senior Lender, following the
consultation by the Senior Lender with the Subordinate Lender in
adjusting or settling any claim for which Loss Proceeds may reasonably
be expected to exceed $25,000;
ii. subject to the proviso set forth in this subsection (f) below, all Loss
Proceeds shall be applied either to payment of the costs and expenses of
Restoration or to payment on account of the Indebtedness secured by the
Deeds of Trust, as and in the manner determined by the Senior Lender,
in its sole discretion;
iii. subject to the proviso set forth in this subsection (f) below, in the event
the Senior Lender applies or releases Loss Proceeds for the purposes of
Restoration ofthe Property, the Subordinate Lender shall release for such
purpose all of its right, title and interest, if any, in and to such Loss
Proceeds; and
iv. subject to the proviso set forth in this subsection (f) below, if the Senior
Lender elects to apply Loss Proceeds to payment on account of its Senior
Indebtedness, and if the application of such Loss Proceeds results in the
payment in full of its entire Senior Indebtedness, any remaining Loss
Proceeds held by the Senior Lender shall be paid to the Subordinate
Lender (in the order of priority as set forth in Section 2(b)) unless another
party has asserted a claim to the remaining Loss Proceeds;
provided, however, that notwithstanding the foregoing, so long as any Subordinate
Deed of Trust, excluding the CPF Sponsor Deed of Trust and the County Funds
Sponsor Deed of Trust, remains in effect on any part of the Property, in the event
of a Condemnation or a Casualty, any Loss Proceeds shall be applied first to
Restoration, and any amounts secured by any Deed of Trust shall not be accelerated
as a result of such Condemnation or Casualty, unless:
at the time of the Condemnation or Casualty, there is an uncured or
uncurable Event of Default under a Senior Loan Document, and such
Event of Default is not waived by the Senior Lender;
after consultation among the Lenders, the Senior Lender determines, in
its sole commercially reasonable discretion, that Restoration is not
feasible or that adequate funds are not available therefor, which
determination shall occur no later than fourteen (14) days after
consultation among the Lenders, provided that for purposes of satisfuing
any condition regarding the sufficiency of funds for Restoration, a
commitment of additional loan funds from the Subordinate Lender on
terms reasonably acceptable to the Senior Lender, shall be deemed
equivalent to the deposit of such funds by Partnership;
ll
Priority and Subordination Agreement 15 Teanaway Court
iii. after consultation among the Lenders, the Senior Lender determines, in
its sole commercially reasonable discretion, that the conditions for
permitting release of Loss Proceeds for Restoration set forth in its Senior
Loan Documents have not been met; or
lv as ofthe date of Condemnation or Casualty less than one (l) year remains
before the maturity of the Senior Indebtedness;
provided that Restoration proceeds with reasonable dispatch once Loss Proceeds
are available.
Nothing contained in this Agreement shall be deemed to require the
Senior Lender to act for or on behalf of the Subordinate Lender in connection
with any Restoration or to hold or monitor any Loss Proceeds in trust for or
otherwise on behalf of the Subordinate Lender.
g. Subordinate Lender shall not cause the termination, through foreclosure or
otherwise, of any commercial Leases for laundry facilities, telephone or internet
access services and cable television services for tenants at the Property without
the express written consent of the Senior Lender.
h. Except as provided in this Section 5(h), and regardless of any contrary provision
in the Subordinate Loan Documents, Subordinate Lender shall not collect
payments for the purpose of escrowing for any cost or expense related to the
Property or for any portion of its Subordinate Indebtedness. However, if no
Lender holding a Deed of Trust with higher priority is collecting escrow
payments for one or more Impositions, the Subordinate Lender may collect
escrow payments for such Impositions; provided that all payments so collected
by the Subordinate Lender shall be held in trust by such Subordinate Lender to
be applied only to the payment of such Impositions.
i. Within ten (10) days after request by any Lender, the Subordinate Lender shall
furnish the Senior Lender, as applicable, with a statement seffing forth the then-
current amount of its Subordinate Indebtedness, confirming that it has not given
notice of any existing default under its Subordinate Loan Documents (or
describing any existing default of which it has given such notice).
j. The Senior Lender may amend, waive, postpone, extend, renew, replace, reduce
or otherwise modifu any provisions of its Senior Loan Documents without the
necessity of obtaining the consent of or providing notice to the Subordinate
Lender, and without affecting any of the provisions of this Agreement.
Notwithstanding the foregoing, the Senior Lender may not modify any provision
of any Senior Loan Document in a manner (i) that increases its Senior
Indebtedness, except for increases in the Senior Indebtedness that result from
advances made by the Senior Lender to protect the security or lien priority of
Priority and Subordination Agreement t6 Teanaway Court
the Senior Lender under its Senior Loan Documents or to cure defaults under
the Subordinate Loan Documents, or (ii) that impacts or conflicts with the
affordable housing requirements of another Lender's Loan Documents.
6. DEFAULT UNDERLOAN DOCUMENTS.
a. For a period of ninety (90) days following delivery to the Senior Lender of an
Enforcement Action Notice, the Senior Lender shall have the right to cure any
Subordinate Loan Default, provided if such Subordinate Loan Default is a non-
monetary default that is capable of cure by the Senior Lender but is not capable
of being cured within such ninety (90) day period and the Senior Lender has
commenced and is diligently pursuing such cure to completion, the period for
cure shall be extended for such additional period of time, not to exceed one year,
as may be required to cure such Subordinate Loan Default or until such earlier
time, if any, as (i) the Senior Lender discontinues its pursuit of any cure and/or
(ii) the Senior Lender delivers to the Subordinate Lender the Senior Lender's
written consent to an Enforcement Action. No Senior Lender shall have any
obligation whatsoever to cure any Subordinate Loan Default. No Senior Lender
shall be subrogated to the rights ofthe Subordinate Lender under the Subordinate
Loan Documents by reason of the Senior Lender having cured any Subordinate
Loan Default. However, the Subordinate Lender acknowledges that all amounts
advanced or expended by the Senior Lender in accordance with its Senior Loan
Documents to cure a Subordinate Loan Default shall be added to and become a
part ofthe Senior Indebtedness and shall be secured by the lien ofthe SeniorDeed
of Trust.
b. The Senior Lender shall deliver to the Subordinate Lender a copy of any notice
sent by such Senior Lender to the Partnership of a Senior Loan Default within
five (5) business days of sending such notice to the Partnership. Failure of the
Senior Lender to send notice to the Subordinate Lender shall not prevent the
exercise of the Senior Lender's rights and remedies under the Senior Loan
Documents. The Subordinate Lender shall have the right, but not the obligation,
to cure any monetary Senior Loan Default within thirty (30) days following the
date of such notice; provided, however, that the Senior Lender shall be entitled
during such 30-day period to continue to pursue its remedies under the Senior
Loan Documents. The Subordinate Lender may have up to ninety (90) days
from the date of the notice to cure a non-monetary Senior Loan Default if during
such 90-day period the Subordinate Lender keeps current all payments required
by the Senior Loan Documents. In the event that such a non-monetary Senior
Loan Default creates an unacceptable level of risk relative to the Property, or the
Senior Lender's secured position relative to the Property, as determined by the
Senior Lender in its sole discretion, then the Senior Lender may exercise during
such 90-day period all available rights and remedies to protect and preserve the
Property and the Rents, revenues and other proceeds from the Property. Neither
Subordinate Lender, nor the Sponsor shall be subrogated to the rights of the
Priority and Subordination Agreement 17 Teanawav Court
Senior Lender under the Senior Loan Documents by reason of the Subordinate
Lender having cured any Senior Loan Default. However, the Senior Lender
acknowledges and the Partnership agrees that all amounts paid by the
Subordinate Lender to the Senior Lender to cure a Senior Loan Default shall be
deemed to have been advanced by such Subordinate Lender pursuant to, and
shall be secured by the lien ol such Subordinate Lender's Subordinate Deed of
Trust.
c. In the event of a Subordinate Loan Default, no Subordinate Lender will
commence any Enforcement Action until the delivery by the Senior Lender, to
such Subordinate Lender of Senior Lender's written consent to such
Enforcement Action by the Subordinate Lender, provided that (i) the
Subordinate Lender shall be entitled to seek injunctive relief, including specific
performance, to enforce covenants and agreements contained in any Restrictive
Covenanto subject to the Senior Lender's right to cure a Subordinate Loan
Default set forth in Section 6(a); and (ii) if ninety (90) days after notice from the
Subordinate Lender to the Senior Lender of a default on the Subordinate Loan
Documents and of the Subordinate Lender's desire to pursue an Enforcement
Action, the Senior Lender shall not have commenced proceedings to foreclose
on the Senior Deed of Trust, or if one year after such notice there has not been
a sale pursuant to the Senior Deed of Trust or a Bankruptcy Proceeding, then,
subject to the cure rights herein, the Subordinate Lender may commence and
pursue remedies against the Property, including without limitation foreclosure
judicially or nonjudicially and/or seeking appointment of a receiver if the Senior
Lender shall not already have caused a receiver to be appointed. Any sale or
other action under a Subordinate Deed of Trust shall be subject to the lien of the
Senior Deed of Trust, and Subordinate Lender shall not cause any lease to be
terminated by such foreclosure without the express written consent ofthe Senior
Lender. The Subordinate Lender acknowledges that the Senior Lender may grant
or refuse consent to the Subordinate Lender's Enforcement Action in the Senior
Lender's sole and absolute discretion. Any Enforcement Action on the part of
such Subordinate Lender shall be subject to the provisions of this Agreement.
The Subordinate Lender acknowledges that the provisions of this Section 6(c)
are fair and reasonable under the circumstances, that Subordinate Lender expects
to receive a substantial benefit from the Senior Lender having provided
financing for the Property, and that the Senior Lender would not have entered
into the transactions described herein without the inclusion of these provisions
in this Agreement.
d. The Senior Lender may pursue all rights and remedies available to it under its
Senior Loan Documents, at law, or in equity, regardless of any Enforcement
Action Notice or Enforcement Action by the Subordinate Lender. No action or
failure to act on the part of the Senior Lender in the event of a Subordinate Loan
Default or commencement of an Enforcement Action shall constitute a waiver
Priority and Subordination Agreement 18 Teanaway Court
on the part of the Senior Lender of any provision of its Senior Loan Documents
or this Agreement.
e. In the event that an Enforcement Action taken by the Subordinate Lender is the
appointment of a receiver for any of the Property, all of the Rents, issues, profits
and proceeds collected by the receiver, net ofcosts and fees that the receiver is
authorized to pay or receive as allowed by the court, shall be paid and applied
by the receiver solely to and for the benefit of the Senior Lender in the order and
priority set forth in Section 2(b) until the Senior Indebtedness shall have been
paid in full.
f. The Subordinate Lender hereby expressly consents to and authorizes the release
by the Senior Lender of all or any portion of the Property from the lien,
operation, and effect of their respective Senior Loan Documents. The
Subordinate Lender hereby waives to the fullest extent permitted by law, all
equitable or other rights it may have (i) in connection with any release of all or
any portion of the Property, (ii) to require the separate sale of any portion of the
Property, (iii) to require the Senior Lender to exhaust its remedies against any
portion of the Property of any combination of portions of the Property or any
other collateral for its Senior Indebtedness, or (iv) to require the Senior Lender
to proceed against the Partnership, any other party that may be liable for any of
the Senior Indebtedness (including any partner of the Partnership), any portion
of the Property or combination of portions of the Property, or any other
collateral, before proceeding against all or such portions or combination of
portions of the Property as the Senior Lender determines. The Subordinate
Lender hereby expressly consents to and authorizes, in the event of a Senior
Loan Default and a judicial or nonjudicial foreclosure, or disposition of personal
property collateral, in each case under applicable law, at the option ofthe Senior
Lender, the sale, either separately or together, of all or any portion of the
Property. The Subordinate Lender acknowledges that without notice to
Subordinate Lender and without affecting any of the provisions of this
Agreement, the Senior Lender may (i) extend the time for or waive any payment
or performance under the Senior Loan Documents; (ii) modiff or amend in any
respect any provision of the Senior Loan Documents (except as provided in
Section 5O of this Agreement); and (iii) modifr, exchange, surrender, release
and otherwise deal with any additional collateral for the Senior Indebtedness.
The foregoing provisions of this subsection notwithstanding, the Senior Lender
agrees, for the benefit of Subordinate Lender, that ie at the time of
commencement of any foreclosure proceedings by the Senior Lender, whether
judicial or nonjudicial, the Senior Lender holds any cash, cash equivalents, or
deposit accounts, including without limitation any proceeds of its Senior Loan,
as security for the obligations secured by the Senior Deed of Trust or held by the
Senior Lender, for the benefit of the Senior Lender (collectively, "Cash
Collateral"), then unless otherwise required by order of any court or by its
Priority and Subordination Agreement t9 Teanaway Court
Senior Loan Documents, the Senior Lender shall apply the Cash Collateral to
the outstanding balance of its Senior Indebtedness in connection with any
foreclosure sale of the Property; provided, however, that the obligation to so
apply Cash Collateral shall be limited to Cash Collateral (A) in which the Senior
Lender has a perfected security interest that is not subject to avoidance or being
set aside under bankruptcy or similar laws and (B) that the Senior Lender is
entitled to apply to its Senior Indebtedness and that is not subject to revocation
or return.
g. If any party other than the Partnership (including any Senior Lender) acquires
title to any ofthe Property pursuant to a foreclosure of or trustee's sale or other
exercise of any power of sale undero the Senior Deed of Trust conducted in
accordance with applicable law and with notice to the Subordinate Lender in
accordance with applicable law, the lien, operation, and effect ofthe Subordinate
Deed of Trusts and other Subordinate Loan Documents automatically shall
terminate with respect to such Property.
h. Senior Lender and Subordinate Lender hereby agree that, notwithstanding
anything to the contrary set forth elsewhere herein, following a foreclosure sale
under the Senior Deed of Trust, or the acceptance by Senior Lender of a deed to
the Property in lieu of such a foreclosure (each, a "Foreclosure Action"), the
Restrictive Covenants shall survive and the successor owner of the Property
shall acquire the Property subject to all of the terms and conditions of the
Restrictive Covenants, except as otherwise expressly provided below:
O No successor owner after a Foreclosure Action shall be obligated by the
Restrictive Covenants to make any payment under the Subordinate Note, or to otherwise
comply with, any of the Subordinate Loan Documents, but this paragraph shall not
affect the enforceability of the Subordinate Loan Documents against Partnership or
affect obligations contained in the Restrictive Covenants merely because the same or
similar obligations are contained in a Subordinate Loan Document;
(iD The Foreclosure Action and the transfer of the Property pursuant to the
Foreclosure Action will not violate the limitations on transfers in the Restrictive
Covenants or require the approval of the Subordinate Lender;
(iii) Neither Senior Lender (or its nominee), nor any immediate successor in
interest of such party, shall be obligated to pay, or otherwise have any liability for or in
connection with, any claim by Subordinate Lender for liquidated damages, for
indemnification or for damages in connection with any breach of any term or provision
of the Restrictive Covenants occurring prior to the date upon which such successor
owner acquired title to the Property; and
(iv) Neither Senior Lender (or its nominee), nor any immediate successor in
interest of such party, shall be required to cure any default under the Restrictive
Priority and Subordination Agreement 20 Teanaway Court
Covenants occurring prior to the date upon which such party acquired title to the
Property, except that said party shall be required to cure continuing defaults under the
Restrictive Covenants related to the Property reasonably promptly and in any event
within 120 days after the date upon which it acquires title to the Property, or, if any such
continuing default is not reasonably susceptible to a cure by such owner within such
period, shall commence curing such default as soon as reasonably practicable (and
thereafter continuously and diligently pursue the cure of such default to completion),
provided that nothing herein shall be construed to excuse any failure to comply in a
timely manner with any applicable laws, ordinances, regulations or permits, nor to
obligate the Subordinate Lender to forbear from the enforcement thereof.
i. Senior Lender agrees that if Senior Lender shall commence judicial or
nonjudicial foreclosure proceedings against the Property arising out of a Senior
Loan Default not caused by Commerce, then Commerce in its individual
capacity as holder of the Commerce Deed of Trust shall have the right, to be
exercised at any time prior to the date of any foreclosure sale, to purchase all of
the Senior Lender's right, title and interest in the Senior Deed of Trust that then
encumbers the Property and all obligations secured thereby from the Senior
Lender for an amount (the "Purchase Price") equal to the total ofall outstanding
principal, interest (including default interest), costs, fees (including late fees),
prepayment premium (if any), legal fees of Senior Lender, and any other
amounts then secured by such Senior Deed of Trust. The Senior Lender shall
provide to Commerce, within ten (10) business days of a request by Commerce,
an itemized statement of all such amounts. Closing of such sale shall occur on
such date as the parties shall mutually agree but in any event not more than thirty
(30) calendar days after notice from Commerce of its exercise of such option.
At the closing of such sale, the Senior Lender shall deliver recordable
assignments of the applicable Senior Loan Documents, properly endorsed for
absolute transfer by the Senior Lender, and any other necessary assignments of
any other collateral for the Senior Loan Documents, with proper endorsements
where applicable, title insurance policies (including title guarantees) and copies
of all other documents related to the obligations secured by the Senior Deed of
Trust. At the option of Commerce, closing shall be subject to receipt by
Commerce of title insurance acceptable to Commerce at Commerce's expense.
Such sale shall be without recourse to the Senior Lender and without warranties
except that (i) the Senior Lender will wanant that it has title to the loan
documents sold, and (ii) the Purchase Price accurately reflects the amount of the
loan balance then accrued and unpaid and all other amounts due under the terms
of the Senior Loan Documents (but without any warranty as to the existence or
validity of any offsets, defenses or counterclaims that may be asserted by the
Partnership or any other person or entity). Commerce shall pay all costs, fees
and expenses in connection with such sale.
Priority and Subordination Agreement 2t Teanaway Court
7. REFINANCE
a. Each Subordinate Lender agrees that it consents to a refinancing of the Bond
Loan and Taxable Loan and that upon such refinancing its liens, rights and
interests pursuant to their respective loan documents, shall retain its relative
priority and be subject to the same limitations set forth in this Agreement in the
event of any refinancing upon maturity of the Bond Loan or Taxable Loan
(without regard to the source/lender of any such refinancing) provided that the
principal amount of any obligation incurred in connection with such refinancing
does not exceed one hundred percent (100%) of the then outstanding principal
loan amount under the Bond Loan or Taxable Loan, as applicable, plus ordinary
and customary refinancing fees and costs, or such higher amount to the extent
necessary to refinance the Bond Loan or Taxable Loan, as applicable, to enable
the Project to achieve a 1.15 debt coverage ratio, which may include a
restructuring of repayment terms. It is the intention of the Parties that no further
priority agreements or subordination agreements shall be required to establish
such lien priority; however, the Parties acknowledge and agree that to the extent
such subordination or priority agreements are required by such refinance lender
in order to provide the refinance lender with the same lien position as identified
herein, the Parties shall execute a subordination agreement substantially in the
form of this Agreement or such other reasonable subordination agreement
provided that such agreement contains reasonable rights to notice and
opportunity to cure defaults of such loan to the County and Commerce.
8. MISCELLANEOUS PRO\ISIONS
a. In the event of any conflict or inconsistency between the terms of the
Subordinate Loan Documents and the terms of this Agreement, the terms ofthis
Agreement shall control: (i) the relative priority of the security interests of the
Lenders in the Property, (ii) the timing of the exercise of remedies by the
Lenders under their respective loan documents, and (iii) all other rights and
obligations that the Lenders have agreed to pursuant to this Agreement.
b. Except as otherwise provided in Section 8(r) below: (i) this Agreement
comprises the entire agreement among the Parties with respect to the priority of
each Party's liens upon and other rights and interests in the Property, and (ii) all
prior understandings or agreements on that subject are superseded hereby.
c. This Agreement shall be binding upon the Parties hereto and their respective
successors in interest and assigns. This Agreement shall inure to the benefit of
the Lenders and their respective successors in interest and assigns. No person
other than the Parties and their respective successors in interest and assigns will
be entitled to any benefits under this Agreement, whether as a third-party
beneficiary or otherwise. No covenant of any Party herein is for the benefit of
Sponsor, a General Partner or the Partnership.
Priority and Subordination Agreement 22 Teanaway Court
d. By executing this Agreement, each Party hereby acknowledges and consents to
the execution of, and where appropriate, the recording of the Loan Documents
and the Restrictive Covenants by Partnership and the other Parties thereto.
Notwithstanding such consent, the terms hereof, the terms of the Loan
Documents, the terms of the Restrictive Covenants, and the acceptance by
Lenders of their respective liens and other rights and interests under these
documents, a Lender shall not, prior to any acquisition of title to the Properfy by
such Lender, be liable or responsible for any obligation of Partnership under any
such documents or of any "Owner" or "Borrower" as defined in any of the Loan
Documents or the Restrictive Covenants.
e. Each notice, request, demand, consent, approval or other communication
(collectivelyo 'onotices", and singly, aoonotice") that is required or permitted to
be given pursuant to this Agreement shall be in writing and shall be deemed to
have been duly and sufficiently given if (i) personally delivered during normal
business hours with proof of delivery thereof (any notice so delivered shall be
deemed to have been received at the time so delivered), or (ii) sent by a national
overnight courier service (such as FedEx) designating next business day delivery
(any notice so delivered shall be deemed to have been received on the next
business day following receipt by the courier), or (c) sent by United States
registered or certified mail, return receipt requested, postage prepaid, at a post
office regularly maintained by the United States Postal Service (any notice so
sent shall be deemed to have been received on the date of delivery as confirmed
by the return receipt), addressed to the respective Parties as set forth on Schedule
A hereto or such other notice as a Party may provide by notice given pursuant
to this Section. No Party shall refuse or reject delivery of any notice given in
accordance with this Section. Any notice to Partnership shall also be effective
if made in accordance with any Loan Document signed by such Party, in
accordance with the terms of that Loan Document.
f. Nothing herein or in any of the Senior Loan Documents or Subordinate Loan
Documents shall be deemed to constitute any Lender as a joint venturer or
partner of any other Party.
g. This Agreement shall be governed by the laws of the State of Washington.
Venue for any action brought in respect of this Agreement shall be in the
Superior Court for Kittitas County, Washington.
h. If any one or more of the provisions contained in this Agreement, or any
application thereof, shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein, and any other application thereof, shall not in any way be affected or
impaired thereby.
Priority and Subordination Agreement 23 Teanaway Court
The term of this Agreement shall commence on the date hereof and shall
continue so long as any two or more of the Loan Documents remains a lien or
encumbrance of record on the Property, or any part thereof, but the rights and
obligations of the Senior Lender hereunder shall terminate upon the full
reconveyance of the Property from the Senior Deed of Trust; provided that this
Agreement shall be reinstated, or the rights of the Senior Lender hereunder
reinstated, as applicable, in the event any payment on account of the Senior
Indebtedness is avoided, set aside, rescinded or repaid by the Senior Lender as
described in Section 3(e) hereof; but such reinstatement shall not impose liability
for action taken or omitted by any person without notice thereof.
j. No failure or delay on the part of any Party hereto in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
k. Each Party hereto acknowledges that in the event any Party fails to comply with
its obligations hereunder, the other Parties shall have all rights available at law
and in equity, including the right to obtain specific performance of the
obligations of such defaulting party and injunctive relief. No rights or remedies
are hereby granted to Partnership except as may be expressly set forth above.
l. Nothing in this Agreement is intended, nor shall it be construed, to in any way
limit the exercise by the Subordinate Lender of its governmental powers
(including but not limited to police, regulatory and taxing powers), or its powers
as a public utility, with respect to the Partnership, any Lender, any other person,
or the Property, nor to affect any liens, rights or interests in the Property arising
pursuant to those powers or the exercise thereof.
m. No amendment, supplement, modification, waiver or termination of this
Agreement shall be effective against any Party unless such amendment,
supplement, modification, waiver or termination is contained in a writing signed
by such Party.
n. Each Party acknowledges for the benefit of each other Party that it is entering
into this Agreement and the transactions described herein based on its
independent investigations and without reliance upon representations or
information from any other Party or its officers, employees or counsel. Based
on such documents and information as deemed appropriate by each Party, that
Party has made its own independent investigation of all matters relating to its
restrictive covenants, loan or credit enhancement and its documents, including,
without limitation, the value of the collateral given as security and the
creditworthiness ofthe Partnership and any guarantor. Each Party acknowledges
that any statements, representations, warranties, covenants or undertakings by
Partnership, Sponsor and any guarantor are not made on behalf of any other
Priority and Subordination Agreement 24 Teanaway Court
Party, and that no other Party nor its officers, employees, or counsel are
responsible for the validity, accuracy, completeness, or performance of any
statements, representations, warranties, covenants or undertakings of
Partnership, Sponsor or any guarantor, whether or not such Party or its officers,
employees, and counsel have knowledge of the terms or content thereof or any
other information relating thereto.
o. This Agreement may be executed in counterparts, each of which shall be deemed
an original but all ofwhich together shall constitute one and the same instrument.
If this Agreement is executed with blanks for dates or recording numbers of any
documents referred to herein, any Lender, or any escrow agent or title insurance
Partnership acting on the instructions of any Lender, is authorized to insert the
dates and/or recording numbers, as applicable.
p. Notwithstanding any provision of the Subordinate Loan Documents or of the
Restrictive Covenants to the contrary, any right of the Subordinate Lender under
the Subordinate Loan Documents or under the Restrictive Covenants to remove,
or cause to be removed, the Partnership's managing agent in respect of the
Property or to require changes to any management plan or management
agreement in respect of the Property previously approved by the Subordinate
Lender in each instance, shall be subject to the prior written consent of the Senior
Lender.
q. Reserved.
r. Police Powers. Nothing in this Agreement is intended, nor shall it be construed,
to in any way to limit the exercise by the state of washington of its
governmental powers (including but not limited to police, regulatory and taxing
powers), or its powers as a public utility, with respect to the Partnership,
Sponsor, Citibank, any other person, or the Property, nor to affect any liens,
rights or interests in the Property arising pursuant to those powers or the exercise
thereof.
Statutory Notice. ORAL AGREEMENTS OR ORAL COMMITMENTS TO
LEND MONEY, EXTEND CREDIT OR FOREBEAR FROM ENFORCING
REPAYMENT OF A DEBT ARE NOT ENFORCEABLE LTNDER
WASHINGTON LAW.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
S
Priority and Subordination Agreement 25 Teanaway Court
WHEN RECORDED MAIL TO
Kittitas County
Board of Commissioners
205 w 5th Ave, Suite 108
Ellensburg, WA98926
COLLATERAL ASSIGNMENT OF DEED OF'TRUST AND PROMISSORY NOTE
Grantor (Assignor):HornSouncno
a Washington nonprofit corporation
Grantee (Lender):Krrrrrls CouxrY,
a political subdivision of Washington State
Grantee (Trustee):
Abbreviated Legal Description:
FrRsr AvrnnrclN TIrln Ixsunaxcn Coupl,xv
Ptn Lots 2,3 & 4 Blk 2, Ptn Lots l, 2,3,4,8 & 9 Blk 3,Lots 7,2,
3,4 &.5 Blk 5 and Lots l, 2,3,4,5,6,7 & 8 Blk 4 BALMER'S
ADDITION TO THE CITY OF CLE ELUM, Bk2,Pg44, TOGW
ptns of vacated streets and alleys in City of Cle Elum Ord. No. 709
Assessor's Tax Parcel
ID Number:
Reference Number:
THIS COLLATERAL ASSIGI\MENT OF DEED OF TRUST AI\D PROMISSORY
NOTE (this 'o4S!.S!q.s$"), is entered into as of 2026, between
HOPESOURCE, a Washington nonprofit corporation ("Assignor"), and KITTITAS COUNTY' a
political subdivision of Washington State, whose address is 205 W 5th Ave, Suite 108, Ellensburg,
WA 98926 ("Assiggg" or the "eoudy"), in connection with an award in the amount of Seven
Hundred Fifty Thousand and 00/100 Dollars ($750,000) (the "County Funds") made by Assignee
to Assignor under that certain Homeless Housing Program Grant Agreement, Contract HH-2021-
001-Hopesource-ClP, dated July 15, 2021, as amended by that certain Amendment No. I dated
November 21, 2023, that certain Amendment No. 2 dated November 5, 2024, that certain
Amendment No. 3 dated June 3,2025, and that certain Amendment No. 4 dated April 21,2026 (as
amended, the "County Agreement"). Assignor has loaned the proceeds of the County Funds (the
"Spe4sor LoAE') to Teanaway Court Associates LLLP ( PAfqgIship") for the development of a
mixed-use affordable housing development in Cle Elum, Washington, to be known as Teanaway
Court (the "Projs{").
Assignor is collaterally assigning the Note evidencing the Sponsor Loan, and the Deed of
Trust securing payment thereof, referenced below, to secure Assignor's obligations to Assignee
under the County Agreement, the County Note executed by Assignor and made payable to the
County and the Affordable Housing Covenant recorded on or about the date hereof in the official
records of Kittitas County (the "Countv Documents").
For value received, Assignor hereby collaterally assigns to Assignee all beneficial interest
under that certain Deed of Trust (Sponsor Loan - County Funds) dated as ofthe date hereof, executed
by the Partnership, as Grantor, naming Assignor as Beneficiary, and First American Title Insurance
Company as Trustee, recorded under Recording No.-, in the records
of Kittitas County, Washington, concerning the real property described on s!!@! hereto (the
"Deed of_Tnl5!"), together with the Loan Agreement (Sponsor Loan - County Funds) ("Loan
Agreement") and Promissory Note (Sponsor Loan - County Funds) referenced therein (the "M,,"
and, together with the Loan Agreement and Deed of Trust, the "sponsor Loan Docum .
This Assignment shall be governed in all respects by the laws of the state of Washington,
shall inure to the benefit of the successors and assigns of Assignor and Assignee, and shall
terminate upon expiration of the term of the County Documents set forth therein.
fSignature Pages Followf
2TEANAWAY CoLLATERAL AsslcNMENr (Cotntrv FUNDS)
By
IN WITNESS WHEREOF, the undersigned has executed this Collateral Assignment of
Deed of Trust and Promissory Note as of the date first written above.
ASSIGNOR:
HopeSource,
a Washington nonprofit corporation
Susan Grindle, CEO
srATE OF WASHINGTON )
) ss.
COTINTY OF KITTITAS
I certiff that I know or have satisfactory evidence that Susan Grindle is the person who appeared
before me and said person acknowledged that he signed this instrument, on oath stated that she
was authorized to execute the instrument and acknowledged it as the Chief Executive Officer of
Hopesource, a Washington nonprofit corporationo to be the free and voluntary act of such party
for the uses and purposes mentioned in the instrument.
DATED:
Print Name
Residing
My appointment expires
)
TEANAWAY COLLATERAL ASSIGNMENT (Colll.trv FUNDS)SIGNATURE PAGE
The foregoing Collateral Assignment of Deed of Trust and Promissory Note is hereby
accepted by Assignee as of the date first written above.
ASSIGNEE:
KITTITAS COUNTY,
a political subdivision of Washington State
By:
Name:
Title:
STATE OF WASHINGTON )
) ss.
COUNTY OF KITTITAS )
I certify that I know or have satisfactory evidence that
-
is the person who appeared
before me and said person acknowledged that said person signed this instrumento on oath stated
that he/she was authorizedto execute the instrument and acknowledged it as the
of the KITTITAS COUNTY, a political subdivision of Washington State, to be the free and
voluntary act of such party for the uses and purposes mentioned in the instrument.
DATED:
Print Name
Residing ati
My appointment
TEANAWAY Cor-lnrs,nal ASSIGNMENT (CouNrv FUNDS)SIGNATURE PAGE
Consent to Assignment
The undersigned hereby consents to the foregoing Collateral Assignment of Deed of
Trust and Promissory Note.
TEANAWAY COURT ASSOCIATES LLLP,
a Washington limited liability limited partnership
By:Teanaway Court Associates GP LLC,
a Washington limited liability company
Its: Managing General Partner
By:HopeSource,
a Washington nonprofit corporation
Its: Manager
By
Susan K. Grindle, Chief Executive Officer
By:BRC Teanaway AGP LLC,
a Washington limited liability company
Its : Administrative General Partner
By: SRl-Blueridge Pacific, LLC,
a Delaware limited liability company
Its: Manager
By:Portsmouth I, LLC,
a North Carolina limited liability company
Its: Manager
By
Chris Eisenzimmer, Manager
TEANAWAY Cor.lere,nal ASSIGNMENT (Cotntrv FUNDS)
STATE OF WASHINGTON )
)ss
cor.INTY OF KITTITAS )
I certify that I know or have satisfactory evidence that Susan K. Grindle is the person who appeared
before me and said person acknowledged that she signed this instrument, on oath stated that she
was authorized to execute the instrument and acknowledged it as the Chief Executive Officer of
Hopesource, a Washington nonprofit corporation, the Manager of Teanaway Court Associates GP
LLC, a Washington limited liability company, the Managing General Partner of Teanaway Court
Associates LLLP, a Washington limited liability limited partnership, to be the free and voluntary
act of such party for the uses and purposes mentioned in the instrument.
Dated:2026.
NOTARY PUBLIC for the State of Washington
My commission expires
(Use this space for notarial stamp/seal)
TEANAWAY Cou-arsnel ASSIGNMENT (Corxrv Futtos)
STATE OF
COI.INTY OF
I certify that I know or have satisfactory evidence that Chris Eisenzimmer is the person who
appeared before me and said person acknowledged that he signed this instrument, on oath stated
that he was authorized to execute the instrument and acknowledged it as the Manager of
Portsmouth I, LLC, a North Carolina limited liability company, the Manager of SRl-Blueridge
Pacific, LLC, a Delaware limited liability company, the Manager of BRC Teanaway AGP LLC, a
Washington limited liability company, the Administrative General Partner of Teanaway Court
Associates LLLP, a Washington limited liability limited partnership, to be the free and voluntary
act of such party for the uses and purposes mentioned in the instrument.
DATED:
(Print Name)
My appointment expires:
)
)ss.
TEANAWAY COLLATERAL ASSIGNMENT (COUNTY FUNDS)
EXHIBIT A
LEGAL DESCRIPTION
TEANAWAY cOllersRe,r- ASSIGNMENT (COUNTY FUNDS)
RECORDED AT THE REQUEST OF
AND AFTER RECORDING RETURN TO
Teanaway Court Associates LLLP
c/o HopeSource
606 West 3'd Avenue
Ellensburg, WA 98926
Attention: Chief Executive Officer
DEED OF TRUST
(Sponsor Loan - County Funds)
Grantor @orrower):
Grantee (Lender):
Grantee (Trustee):
Abbreviated Legal
Description:
DBno or Tnusr
SpoNson LoaN (Cour.rrv)
Assessor's Tax Parcel
ID Number:
THISDEEDoFTRUST(,,DeedofTrasf,),ismadeasof-,2026,by
TEANAWAY COURT ASSOCIATES LLLP, a Washington limited liability limited
partnership, the mailing address of which is c/o HopeSource, 606 West 3'd Avenue, Ellensburg,
WA 98926 ("Grantor"), in favor of FIRST AMERICAN TITLE INSURANCE COMPANY,
TEANAWAY COURT ASSOCIATES LLLP,
a Washington limited liability limited partnership
HOPESOURCE,
a Washinglon nonprofit corporation
F'IRST AMERICAN TITLE INSURANCE COMPANY
Ftn Lots 2,3 & 4Blk2, Ptn Lots 1,2,3,4,8 & 9 Blk 3,
Lots 1,2,3,4 & 5 Blk5 andLots 1,2,3,4,5,6,7 &8
BIK 4 BALMER'S ADDITION TO THE CITY OF CLE
ELUM, Bk2,Pg44, TOGW ptns of vacated streets and
alleys in City of Cle Elum Ord. No. 709
(Full Legal Description on Exhibit A)
Pe,cn I
the address of which is 920 Fifth Avenue, Suite 1200, Seattle, Washington, 98104, and its
successors in trust and assigns ("Trustee"), and HOPESOURCE, a Washington nonprofit
corporation, the mailing address of which is 606 West 3'd Avenue, Ellensburg, WA 98926
("Beneficiary").
l. Grant. Grantor hereby bargains, sells and conveys to Trustee in trust for the benefit
of Beneficiary, with power of sale, the real property located in Kittitas County, Washington
described on Exhibit A attached hereto and incorporated herein by reference (the "Ptopefi"),
together with all tenements, privileges, reversions, remainders, irrigation and water rights and stock,
oil and gas rights, royalties, minerals and mineral rights, hereditaments and appurtenances belonging,
or in any way pertaining to, the Property, and the rents issues and profits thereof. Said Property is
not used principally, or at all, for agricultural or farming purposes.
2. Obligations Secured. This deed is given for the purpose of securing payment in the
amount of Seven Hundred Fifty Thousand and No/l00 Dollars ($750,000.00) according to the terms
of a Promissory Note (Sponsor Loan - County Funds) (the "Note") and the Loan Agreement
(Sponsor Loan - County Funds) ("Loan Agreemenf') each of even date herewith, payable by
Grantor to the Beneficiary including all renewals, modifications and extensions thereof.
3. Lien Prioritv. This Deed of Trust shall be in a subordinate lien priority position
against the Property. Beneficiary consents to the refinancing of any loan with a higher lien priority
than this Deed of Trust, and Beneficiary agrees to subordinate this Deed of Trust to any such
refinanced loan.
4. Protection of Securitv. To protect the security of this Deed of Trust, Grantor
covenants and agrees:
4.1. To keep the Property in good condition and repair; to permit no waste thereof;
to complete any building, structure or improvement thereon which may be damaged or destroyed;
and to comply with all laws, ordinances, conditions and restrictions affecting the Property.
4.2. To pay before delinquent all lawful taxes and assessments upon the
Property; and to keep the Property free and clear of all other charges, liens or encumbrances
impairing the security of this Deed of Trust.
4.3. To keep all buildings now or hereafter on the Property continuously insured
against loss by fire or other hazards in an amount not less than the replacement cost of the Property.
4.4. To defend any action or proceeding purporting to affect the security hereof
or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including
reasonable costs of title search and attorneys' fees in a reasonable amount, in any such proceeding
and in any suit brought by Beneficiary to foreclose this Deed of Trust.
Dren on Tnusr
SPoNSoR LoAN (CouNrv)
Pncr 2
4.5. To pay all costs, fees and expenses in connection with this Deed of Trust,
including the expenses of the Trustee incurred in enforcing the obligation secured hereby and
Trustee's and afforneys' fees actually incurred, as provided by statute.
4.6. Should Grantor fail to pay when due any taxes, assessments, insurance
premiums, liens, encumbrances or other charges against the Property, Beneficiary may pay the same,
and the amount so paid shall be added to and become a part ofthe debt secured by this Deed of Trust.
5. General Conditions. The parties hereto agree that
5.1. In the event any portion of the Property is taken or damaged in an eminent
domain proceeding, subject to the rights of senior lien holders, Grantor shall have the right to apply
the entire amount of the award to restore and rebuild the Property, provided that (a) such proceeds
are sufficient to keep the Note in balance and rebuild the project in a manner that provides adequate
security to Beneficiary for repayment of the Note or if such proceeds are insufficient, then Grantor
shall have funded any deficiency; (b) Beneficiary shall have the right to approve plans and
specifications for any major rebuilding and the right to approve disbursements of insurance or
condemnation proceeds for rebuilding under a construction escrow or similar arrangement; and (c)
no material default then exists under the Note or this Deed of Trust. If the casualty or condemnation
affects only part ofthe project and total rebuilding is infeasible, then proceeds may be used for partial
rebuilding and partial repayment of the Note in a manner that provides adequate security to
Beneficiary for repayment of the remaining balance of the Note. If Grantor elects not to rebuild, the
entire amount ofthe award or such portion as may be necessary to fully satisfy this obligation secured
hereby, shall be paid to Beneficiary to be applied to said obligation.
5.2. By accepting payment of any sum secured hereby after its due date,
Beneficiary does not waive its right to require prompt payment when due of all other sums so secured
or to declare default for failure to so pay.
5.3. The Trustee shall reconvey all or any part of the Property covered by this
Deed of Trust to the person entitled thereto on written request of the Grantor and the Beneficiary,
or upon satisfaction of the obligations secured hereby and written request for reconveyance made
by the Beneficiary or the person entitled thereto substantially in the form of Exhibit B attached
hereto.
5.4. Power of Sale. Pursuant to Chapter 61.24 of the Revised Code of
Washington, upon default by Grantor under the Note without timely cure, and after wriffen notice
of thirty (30) days, in the payment of any indebtedness secured hereby or in the performance of
any agreement contained herein, all sums secured hereby shall immediately become due and
payable. In such event and upon written notice of Beneficiary, the property shall be sold, in
accordance with the Deed of Trust Act of the State of Washington, by public auction to the highest
bidder. Any person may bid at the Trustee's sale. Subject to the rights of the beneficiary or
beneficiaries of any senior deed of trust, the proceeds ofthe sale shall be applied as follows: (1) to
Dseo or Tnusr
SPoNsoR Loeu (Couvrv)
Pe.ce 3
the expense ofthe sale, including a reasonable Trustee's fee and attorney's fee; (2) to the obligation
secured by this Deed of Trust; (3) the surplus, if any, shall be distributed to the person or persons
entitled thereto. However, notwithstanding the foregoing, prior to taking any actions under this
Section 5.4 or Section 5.6 hereunder, Beneficiary shall give notice to the following parfy:
Wincopin Circle LLLP
c/o Enterprise Community Asset Management, Inc.
11000 Broken Land Parkway, Suite 700
Columbia, Maryland 21044
Telephone: (410) 964-0552
Attention: Asset Management
With a copy to:
Emai I : le gal@enterprisec om munity. org
Attn: Chief Legal Officer
With a copy to:
Jessica Weston, Esq.
Gallagher LLP
218 North Charles Street, Suite 400
Baltimore, Maryland 21201
Telephone: (410) 727 -77 02
Beneficiary shall additionally provide such pafi an opportunity to cure pursuant to Section 7 of
the Note.
5.5. A Trustee shall deliver to the purchaser at the sale its deed, without warranty,
which shall convey to the purchaser the interest in the Property, which Grantor had or had the
power to convey at the time of the execution of this Deed of Trust, and such as Grantor may have
acquired thereafter. Trustee's deed shall recite the facts showing that the sale was conducted in
compliance with all the requirements of law and of this Deed of Trust, which recital shall be prima
facie evidence of such compliance and conclusive evidence thereof in favor of a bona fide
purchaser for value.
5.6. The power of sale conferred by this Deed of Trust and by the Deed of Trust
Act ofthe State of Washington is not an exclusive remedy; Beneficiary may cause this Deed ofTrust
to be foreclosed as a mortgage.
5.7. Beneficiary may at any time appoint or discharge the Trustee.
5.8. This Deed of Trust applies to, inures to the benefit of, and binds all parties
hereto and their successors and assigns. The terms ooGrantor," "Trustee," and'oBeneficiary" include
their respective successors and assigns.
Dero on Tnusr
SPoNSoR LoAN (CouNrv)
Prce4
5.9 The withdrawal, removal, and/or replacement of a general partner of
Grantor, pursuant to the terms of the First Amended and Restated Agreement of Limited
Partnership of Grantor (the "Partnership Agreement") shall not constitute a default under this
Deed of Trust or the Note, nor require the consent of Beneficiary. In addition, any transfer or
assignment of any of the limited partner interest in Grantor, or any transfer or assignment of
interests in the Limited Partner (as defined in the Note), shall not constitute a default under this
Deed of Trust or the Note, nor require the consent of Beneficiary.
6. Standstill. Beneficiary will not commence (A) until the earlier of (i) the
expiration of the Compliance Period (as such term is defined in the Partnership Agreement), or (ii)
the date the Limited Partner is no longer a partner in the Grantor, or (B) while the Tax-Exempt Loan
is outstanding (as such term is defined in the Partnership Agreement): (i) foreclosure proceedings
with respect to the Property hereunder or under the Note, or exercise any other rights or remedies it
may have hereunder or under the Note, including, but not limited to, accelerating the Note, collecting
rents, appointing (or seeking the appointment of) a receiver or exercising any other rights or remedies
thereunder; or (ii) join with any other creditor in commencing any bankruptcy reorganization,
arrangement, insolvency or liquidation proceedings with respect to the Grantor.
7. Subordination. Beneficiary acknowledges and agrees that the repayment of
the Indebtedness is subordinate to payment in full of the "Deferred Development Fee" as such term
is defined in the Partnership Agreement of Borrower and to the payment in full of the Tax-Exempt
Loan.
8. Non-Recourse Oblieation. Payment and performance of the obligations set
forth herein and under the Note shall be non-recourse to the Grantor and the Grantor's partners, and
the Beneficiary's sole recourse with respect to the Note shall be the right to foreclose underthis Deed
of Trust.
9. Loan Sale or Assignment. Beneficiary agrees that it shall not assign or
transfer the Note (or any interest therein) to any third party without the prior written consent of the
Grantor.
10. Terms used herein and not otherwise defined shall have the meanings given
in the Loan Agreement.
OF'A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
[Signature s on follow ing page s]
Dpno or Tnusr
Spolson LoeN (CouNrv)
Pece 5
IN WITNESS HEREOF, the undersigned have executed this Deed of Trust as ofthe day and
year first written above.
Grantor:
TEANAWAY COURT ASSOCIATES LLLP,
a Washington limited liability limited partnership
By: Teanaway Court Associates GP LLC,
a Washington limited liability company
Its: Managing General Partner
By: HopeSource,
a Washington nonprofit corporation
Its: Manager
By:
Susan K. Grindle, Chief Executive Officer
By: BRC Teanaway AGP LLC,
a Washington limited liability company
Its: AdministrativeGeneralPartner
By: SRl-Blueridge Pacific, LLC,
a Delaware limited liability company
Its: Manager
By: Portsmouth I,LLC,
a North Carolina limited liability company
Its: Manager
By:
Chris Eisen zimmeg Manager
DBeo or Tnusr
SpoNson LoaN (Coumv)
SrcNeruns Pnce
STATE OF WASHINGTON )
) ss.
COUNTY OF KITTITAS )
I certiff that I know or have satisfactory evidence that Susan K. Grindle is the person who appeared
before me and said person acknowledged that she signed this instrument, on oath stated that she
was authorized to execute the instrument and acknowledged it as the Chief Executive Officer of
HopeSource, a Washington nonprofit corporation, the Manager of Teanaway Court Associates GP
LLC, a Washington limited liability company, the Managing General Partner of Teanaway Court
Associates LLLP, a Washington limited liability limited partnership, to be the free and voluntary
act of such party for the uses and purposes mentioned in the instrument.
DATED: 2026.
(Print Name)
My appointment expires:
DeBo or Tnusr
Spouson LoaN (Couvrv)
Srcnaruns Pece