San José Municipal Code § 5.04.010 Subordination of covenants, conditions or restrictions.
5.04.010 - Subordination of covenants, conditions or restrictions.
The director of housing is authorized to subordinate any covenant, condition or restriction regarding affordable housing recorded or to be recorded by the city for itself or on behalf of the redevelopment agency of the City of San José on any housing units or parcels which are financially assisted by the city or the agency to a lien, encumbrance, or regulatory agreement of:
A. A federal or state agency when that federal or state agency provides financial assistance to such housing units or parcels and such federal or state agency refuses to consent to the seniority of the city's or the agency's covenant, condition or restriction, and the director of housing determines, based upon appropriate documentation, that such refusal is due to such federal or state agency's statutory or regulatory requirements or policy or guidelines pertaining to the federal or state agency's financial assistance to such units or parcels; or
B. Any lender or bond issuance if the director of housing makes a written finding that without such subordination an economically feasible alternative method of financing, refinancing, or assisting owner-occupied housing units or parcels on substantially comparable terms and conditions is not reasonably available; or
C. Any lender or bond issuance if the lien, encumbrance or regulatory agreement of the lender or bond issuance is recorded and where the city's and or agency's funds are used for rehabilitation of rental housing units; or
D. Any lender or bond issuance if the director of housing makes a written finding that without such subordination an economically feasible alternative method of financing, refinancing, or assisting rental housing units or parcels on substantially comparable terms and conditions is not reasonably available, and obtains a written commitment from the lender or bond issuer reasonably designed to protect the city's and or agency's investment. Such written commitment may include, but is not limited to, any of the following:
1. A right of the city to cure a loan default.
2. A right of the city to negotiate with the lender after notice of default from the lender.
3. An agreement with the lender that if prior to foreclosure of the loan, the city takes title to the property and cures the loan default, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to the city.
4. A right of the city to purchase property from the owner at any time after a loan default.
(Ord. 23520.)