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HomeMy WebLinkAbout _ 4.2(a)--Resolution Authorizing the Subordination of a City of Redding Loan � � �' � � � � � � ' � �' � � ' � ` CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: April 15,2025 FROM: Steve Bade, Assistant City ITElVI NO. 4.2(a) Manager ***APPROVED BY*** n � t��� ; s° �r 4.79I�C�?:� �� �p�ir�,C�i �� � ���'9��'2{�?. sbade@cityofredding.org btippin@cityofredding.org SUBJECT: 4.2(a)--Resolution to Authorize the City Manager to Execute a Subordination A reement Recommendation Authorize and approve the following: (1) Approve a Subordination Agreement with The Good News Rescue Missian in the amount of$500,000 thereby authorizing the City of Redding's loan in the amount of$3,000,000 to be in second position for the Good News Rescue Mission's Day Resource Center Proj ect; (2} Adopt Resolution authorizing the City Manager, or designee, to execute the Subordination Agreement; (3) Find that adopting a resolution is not considered a project under the California Environmental Quality Act; and (4} Find that adopting a resolution is exempt under the National Environmental Policy Act under Title 24 CFR 58.34(a)(3). Fiscal Impact In February 2024, the City of Redding (City) awarded the Good News Rescue Mission (GNRM) $3 million of Encampment Resolution Funding (ERF-3-L) as a forgivable loan for the acquisition and rehabilitation of a commercial building located at 3145 Veda Street (Property). The current estimated total project cost is $4.5 million, To date, $1,587,891.54 has been expended toward the Project's cost— the remaining funds will be paid by other funding sources from the GNRM. There is no General Fund fiscal impact related to this report. Alternative Action The City Council (Council) could choose not to adopt the resolution authorizing the City Manager to sign the subordination agreement. Under this alternative, the Good News Rescue Mission (GNRM) would not be able to secure the line of credit and potentially negatively impact the Day Resource Center (DRC) Project (Project). The current estimated Project cost is $4.5 million. To date, $1,58'7,891.54 has been expended toward the Project's cost. Report to Redding City Council Apri19,20Z5 Re: 4.2(a)--Resolution Authorizing the Subora'ination of a City of Redding Loan Page 2 Background/flnalysis The purpose of the project is to provide a location where unsheltered persons can obtain. resources that would assist them in attaining housing and other important resources. The GNRM successfully acquired the property in March 2024. The project's building pennits have been issued by the City's Development Services Department and GNRM staff are presently moving through the procurement process. The City's loan is forgivable in nature; meaning, once the GNRM successfully completes the project and successfully operates the DRC for three years, the loan will be forgiven. F�owever, the GNRM determined there is a need to obtain a $500,000 equity line of credit from Cornerstone Bank (Cornerstone) to provide short-term cash while the project is actively progressing toward completion. The line of credit would be the responsibility of the GNRM to repay and the purpose of the subordination agreement is to a11ow Cornerstone to record their Deed of Trust superior to the City's loan. Providing Cornerstone first position will not compromise the City's ERF-3-L loan as the City's loan is short-term and forgivable in nature. Environmental Review Adopting a resolution is not considered a project under the California Environmental Quality Act (CEQA). The actual construction of the project was previously reviewed for CEQA compliance. Under the National Environmental Policy Act (NEPA), administrative and management activities such as adopting a resolution are considered exempt activities and no further action is required. The actual construction project was reviewed far NEPA requirements before the project started. Council P�^io�ity/City Manager Goals • Government of the 21st Century — `Be relevant and proactive to the opportunities and challenges of today's residents and workforce. Anticipate the future to make better decisions today." • Public Safety — "Work to improve a11 aspects of public safety to help people feel secure and safe where they 1ive, work, and play in the City of Redding." Attachments ^GNRM Subordination Resolution ^Goods News Rescue Mission Subordination RESOLUTION NO. 2025— A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING AUTHORIZING THE CITY TO SUBORDINATE ITS ENCAMPMENT RESOLUTION GRANT LOAN TO A PRIVATE LINE OF CREDIT FOR THE GOOD NEWS RESCUE MISSION'S DAY RESOURCE CENTER WHEREAS,The Department of Housing and Community Development("Department")awarded the City of Redding ("City") $8,354,955 of Encampment Resolution Funding Program (`BRF-3- L") funds and entered into a Standard Agreement with an effective date of 10/12/2023; and WHEREAS,The Good News Rescue Mission("Developer")is a nonprofit corporation organized under the laws of the State of California and qualifying for Federal Tax-Exempt Status under Section 501 (c) (3) of the Internal Revenue Code; and WHEREAS, the City has awarded the Developer $3,000,000 of ERF-3-L funds for the purchase and rehabilitation of their Day Resource Center located at 3150 Veda Street identified as Assessor's Parcel Number 104-620-059-000, (the "Project Site" or"Site"); and WHEREAS, the Developer wishes to apply for and secure a $500,000 line of credit from Cornerstone Bank for additional construction costs associated with the Project; and WT-IEREAS, the Developer is requesting that the City Subordinate its ERF-3-L loan to the $500,000 line of credit; NOW THEREFORE BE IT RESOLVED THAT: 1. The City is hereby authorized and directed to subordinate its loan to the line of credit. 2. The City Manager, or his designee, is authorized to execute the Subordination Agreement and any other documents to facilitate the transaction. I HEREBY CERTTFY that the foregoing resolution was introduced at a regular meeting of the City Council of the City of Redding on the 15th day of April, 2025, and was duly adopted at said meeting by the following vote: AYES: COUNCIL MEMBER: NOES: COUNCIL MEMBER: ABSENT: COUNCIL MEMBER: ABSTAIN: COUNCIL MEMBER: JACK MUNNS, Mayor ATTEST: APPROVED AS TO FORM: SHARLENE TIPTON, City Clerk CHRISTIAN M. CURTIS, City Attorney CERTIFICATE OF THE ATTESTING OFFICER The undersigned,Sha�^lene Tipton, City Clerk, does hereby attest and certify that this Resolution is a true, full and correct copy of a resolution duly adopted at a meeting of the City of Redding which was duly convened and held on the date stated thereon, and that said document has not been. amended, modified, repealed or rescinded since its date of adoption and is in fu11 force and effect as of the date hereof. ATTEST: Signature of Attesting Officer Sharlene Tipton, City Cle�k R�CORDING R�QUEST�U BY: First Arr�erican Title�ompany A111D WHEN RECCIRD�D MAIL L�10CUMENT T`t3. CITY QF REt3DTNG Pa Bc�x 496D71 Redding, �A 96049-6C}781 Space Above This 4ine for Recorder's Use OnFy A,P.N.; �.04-620-�52-��0 and 104-620-059 �ile iVo.: �5U5-718051p (bf} SUBC)RDZNATIt3N ACREEMENT (EXISTINC Tt} NEW} IYCI7ICE: THIS SUBt7�R�?INATItfN ACREEMENT RESULTS IN YI�UR SECURITY ZNTEREST IN TH� PRQPERTY BECQMING SUB��CT TC3 AND U�' L�JW�R PR�CIR�TY THAN THE �IEN {)F SC�M�OTHER OR LATEFt SECURITY INSTRUMENT. TMIS AGREEM�NT, made this Eic�hteenth day of March, 2025, by THE Gt]CfD 1ti1�WS RESCtIE MISSI+DN,A CA�IFC)RN2A NCINI�RCl��T Ct'�RM�t�RATI�DN dwner af the land hereinafter describ�d and hereinafker referred to as "dwner", and C�TY t�F REDDING,A MUNICIPA�.Ct)RPt��tATION AND GENERAL LAW CITY present C7wner and Nolder of the beed of Trust and Nate first hereinaft�r descri�+eci and hereinafter referre�!tc� as „Beneficiary"; 1NITNESS�TH THAT WH�REAS, C�wner h�s�x�cuted a [�eed of Trust dated March fl7, 2�}24 to F�RST AMERICAN TtTI.� COMPANY, as Trustee, covering: TNAT R�A�PRC}�EFtTY IN S�CT7C}P1� 1�AN� 15 {�F THE P. 8. Ft�At7ING �RA�1T, IN THE C1TY �F (�EC}DING, SHASTA C�UNTY, CALIFpRN�A, fl�SCRI�3ED AS FtJ��{J1NS: �a�c��. �.: {A�r�: �o�-szo-o�2-0�0} CC)MMEi�CIN�AT TH� �IORTHIJitEST C{7R1�E�t t�� I�ARC��C A�SHCIWN C7i�A SlJRVEY�I��D MA�tCH �7, 1�8�I�1 BQOK 46 OF LANC} StJRV�YS AT PAGE 103, SHA51�A CC3tJNTY RE�QRDS; THENCE ALt�NG THE NtJRTH LIN��F Pag� 1 af 6 A.P,N.. 104-620•052-000 Subardination Agreement-contir�ued �ile No.: 4505-?18051t1 (bf) Da�e; March 18, 2025 PARCELS C AND D C}F SAID SURVEY, SC}UTH 88° 24'00" EAST,A DISTAN�E OF 153.0? FEEI'; TH�NGE �,EAVI�JG SAI� NC}RT�i LINE, SQC�Tl� 2° 55' 34" EAST, A C�ISTANCE C}�7C1,60 ��EC'TtJ T�iE Pt�It�T C}F B�GINNTNG; THENCE Cdf�TINiJING SC}UTH 2° 55' 3�4" EAST, A DI5TAt�CE OF?9.�8 FEETr MQRE OR LESS TC}A POIIVT ON THE NORTH LINE 4F PARCEL B C}F SATD SURVEI'REC�RC?�D IN �QOf�45 OF I_ANI� SIJRVEYS AT PAGE �.{l3; THENCE AL�NG SAIb �iC7RTH L�NE, SQUTH 88° 24`00" EAST, A DISTA�SC�4F 2.42 FLET TtJ TNE fVaRTHWEST CORNER C7F THAT C�RTAII� PARCEI, pESIGNATED "'PARCEt�4'" IN DEER R�Ct�R�3Ed 4N i�C7VEME3ER 5, 199£}IN BflQK 2659 Q�OFFICIAL R�C(�FtDS AT PAGE 303, SFIASTA C4t�NTY REC�JRDS THENCE A�.C1NG THE 1N�5f I.INE 0�SAID "PARCEI�4", SQl1TH 2° 38' 00" �AST, A DTSTANCE t�F 9659 FEET T{J A Pt�INT THAT BEARS N�RT� 87° 22' 00" �AST, A DISTA�lCE OF 14,00 FEET' FRC3M TH� S(�UTHEAST Cf�RNER C}F PARCE�A UF SAID SURVEY RECaRRED IN BQ�K 46 aF IAfUC� SIJf2VEYS AT PAGE 1Q3; THENC�SQUTH 87° 22' 00" WEST, A DISTANCE Ct� I4,Qf} FEET TQ THE�0lJTHEAST CQRNER{]F SAIC} PARCEL A;THENCE ALC}�1G TH� SOtJTH LINE �F SAID PARCEL A, St�UTN 87° 14' S4"WEST, A �iiSTANCE OF �.30.21 �EET(S�UTI� 87° 22' 00"WEST, 130.21 �EET'PER 46-L.S.-103)r M4RE ClR LESSr TtJ TM� EAST L.��1�t�F VEDA STREET'� TI-1�iVCE ALC3NG SAID �AST LIIUE� 111C)RTH 6° �i`O(3" �11EST, A DISTANCE QF i88.00} FEET; THENC� LEAVING SAID EA5T LIN�, SOtJTH $8° 2�' {?0" EAST, A DISTANCE C}F 153.45 FEEf, MOR�OR LESS, TC}THE P4IiVT C}� BEGINNING AIUD AS DESCRTBECt AS RESl1LTANT PARCEL A OF PRt�PEFtTY �.IIV�ADJUSTMENT PI_A-6-06. PARC�L 2: (APN: 104-621�-059-000 PORTIC}N} B�GINNING A`T`THE SC1lJTH�AST COt�NER C3F PAR�EL A,AS SHt�WN �JN A Sl1RVEY FILEC} MARCH 27, 19841�1 B�t�l�46 �F LAi�D SU�ZVEY� AT PAG� 103; THENCE, SQl1TH 64 1�.` EASI", AI�CING THE WESTERI.Y l.INE QF L.(�T 29 {JF BLC}CK 2 t)F THE ALTA SU�DIVISI(7N, (BOQK 5 OF MAPS, PAGE 53) A DiSTANC� Q� �fi4.40 F�ET T4 THE a�UTHWEST C�RNER OF SAI1� Lt3T 29; TH�NCE, NC}RTH 87° 22' W�ST A��NG THE St�UTM LINE QF SAID L.QT 29, 50.00 FEET',TO TNE SC?tJTHEAST CQRN�R TF�EREt�F; T�iE�iC� Nt�RTH 6°11'WEST AL.Q�IG THE LINE CUMMC7N TQ L,QTS 29 AND 30 C}F SAID ALTA SIJBDIVISI{�N 67.38 FE�T T�THE NC}FtTHWEST�C}RNER(�F SAID LOT 30; THENC� NdE?TH 87° 22' EAST AI.QNG THE NORTH �INE OF SAIa LOT 3t}, A I�iSTANCE flF 30.23 FEET; T�ENCE Nt3RTH 2° 38' W�ST' 187.#JO FEET TC� A PCYINT ON THE IUC}I�TH LINE t}� PARCE�.B, AS SHOINN U�J 46 I.AND SURVEYS AT PAGE 103; T�iENC�, (V�RTH 88° 24'W�ST 72.fl0 ��ET MC}R� O�t L�SS, TC} A PCIINT WHICH B�AI�S 1VURTIi 87° Z�' EASTr 14.UC} FEEI"f T�-IENCE� IVC}RT}-I 2° 38' INESTj $fi.C#C} FE�T FRQM TF1E P(,�INT fl� B�GII�NING; THE�]CE, 5C1l�TN 2° 3$' �AST 86.fl0 FEEI';THENC�, SOUTH 87° 22`, UVEST 14.00 ��EI"TO TFiE PQIIVT OF BEGINNING, , �a�c���; (APN: 104-620-059-0#�0 �t'�I�`I`I01�} BEGINN�NG AT A POIiVT C}N T�E NC7RTH L.INE t�F LC}T 3t7 C}� BLC}CK 2 flF THE A�TA St1B�IVISIfliV {Bt7C7K 5 t�F MAP5, PA�E 53) bISTANT THERE(7N I�C}F�TH 87° 22' EAST 30.23 FEEf FR�M TME�lC1RTNWEST CC}RNER THEREQF; T1�ENCE, 1VORT}� 87° 22' EAST, 64.00 FEET TO THE S{�UTHEAST CC}RNER(7F PAR�EL B AS SHdtNN ON A SURV�Y FII.ED MARCH 27, 1984 IN BOOK 46 C}F LANC} SIJRV�YS AT PAG� 103; TN�NC�, fUORTH �° 38" VIl�ST AI.dNG THE �AST LIt�E 0� SAID PARC��.t3, 183.42 FEET'T�T�fE N�RTHWEST CC7RNER OF SAID PARC�I� B; THENCE NQRTH 88° �4', WEST ALt�PJG TI�E NORTH �IIVE {}�SAID PARCE� B, 64.00 FEET; TNENC�SOUTH 2° 38` EAST, 187.00 F�E t'TQ THE PC?I�lT�}� BEGI�INI�VG. EXCEPTING YHEREFRt�M THAT PC7RTI(7N t�F t..ANi3 CC3NVEY�C}TC?THE STATE C}�CALIF{�RNIA� DEPARTMENT OF TRANSPt7RTATIQN, IN GRANT DEED RECORDED JUNE 3fl, 202t1 AS IN5TRUMENT NO, �f}2t3-0�#�0302 C]F fJFFICIAI.R�CC}RDS. Page 2 oP 6 A.P.N.: 104-620-052-t}00 Subardination Agreement-cantinued File No.. 450�-?18051t1 (bt) (�ate: March �,8, �0�5 to SeCt�re� Note itl the 5ut11 of $3�t100rtI00.0(�, dated March 07, 2024r in favar of CI�'Y 4F FtEI�[7ING, A Ml1NI�IPAI.COR�ORATIflN AND GENE�tAL IAW CI1Y,which Deed of Trust was recorder� Marc� 19, 2�24 in Boolc n/a, Page nJa, ar Instrument �lat 202�-00(}5630, of said Count}r; and WHEREAS, Owner�as executed, or is about to execute, a Deed of Trust and Nate in fi�e�urn af$St}O,a00.00, dated , tn favor of Ccrrnerstone Communi�jr Bank, hereinafter referred ta as"Lender"', payabEe w�th in�erest and upon the terms and c�nditions described therein, which Deed of Trust is to be recordecl cancurrently h�rewith; an� WHER�AS, �t is a condition precedent to obtaining said Ic�an that said �7eeci o�Trust last above mentionec!shall unconditianally be and remain at al!times a lien or charge upon t�►e land i�ereinbefore described, prior ancl s�periar to the lien or eharge of the Deed of Trust first above mentioned; and WHEREAS, �enc�er is willing �o ma�Ce saic� lr�an provided the Deed of Trust securing the same is a liet�or ci�arge upon the above described property prior ar�d superior to the lien or charge of the Deed o�Tr�ast f�rst above mentioned anci provided that Seneficiary will specifically and uncanditionally su6ordir�ate the lien or cl�arge of the Deed of Trust first above mentioned to fihe lien or charge o�th�C�eed af Trust in favor af Lender; and WM�REAS, it is to th� rrr�tual ber�efit of fhe part�es hereto that L�nder mak�such Ioan to Ctwner; and �eneFiciary is wiliing that the [�eed of Trust securing the same shall, when recorded, consti�ute a lien or charge upon said lar�d which is unconditionally prior and superiar t�the lier► or charge of�h� De�d of Trust first above mentioned, NOW,THER�FaR�, in cor�sider�tion of the mutual beneFi�s accruing to the parties hereta and other vai�able consideration, the receipt and sufficiency af which eonsideration is hereby acknowledged, and in c�rder to induce Lender to �ake the foan above ref�rred to, it is �ereby declared, undersfiood and agreed as�o�laws: (1) That said Deed of Trust securing said �lote in favor gf l.ender, and any renewals or extensians thereof, shal! unconditianally be and remain at all times a lier� or charge on the property ther�in described, priar ar�d su�eriar to the lien or c�arge of the Deed of Trt�st first above mentioned. (2) Tl�at �.ender would not rnake its �oan above described withaut th�s subordination agreement. {3) That this agreement shall be fihe whole and on�y agreernent with rcgard ta th� subordinatic�n r�f the lien or charge of the Deed of Trust first abave mentioned to the lien ar charge af the [�eed of Trusfi in favor of t�ender above referred ta and shall supersede and cancel, but only insofar as would afFecfi the pr3ority between the[�eeds of Trust hereinbePore specifieally described, any prior agreement as to such subordinatian including, but not limited to, thase�rovisions, if any, contained in fi�e Deed of Trust first above mer�tioned, which pravide far the subordinatian oF the lien nr eharge thereof to anather t�eed or Deeds of Trust or ta anather Mortgage or Mortgages. �ene�ciary declares, agrees and acknowledges that (a) He eonsents to and appraves(i) all provisions of the Note and De�d of Trust in favor of Lender a�rave ref�rr�c#to, and {ii}all agreernents, andudir�g but not Ilmit�d to any laan ar escrow agreements, between �wner and �ender for the disburs�r�ent af the proceec�s of t�ender's (aar�; {b) Lender in ma�cing disbursements pursuant tg any such ac�reement is under no abligatic�n or-duty to, n�,r has Lender represented that it will see to the application of such proceeds by the person ar persons to whom Lender disburses such proceeds and any application or use of such proceeds for purposes other than those provided for in such agreeme�t or agreements shall nc�t defeat the subordina�ion herein made in wl�ole or in P��i Page3ofs A.P.N.: 104-620-052-t�Otf Subordir�ation Agreement- continued File No.: 4505-7�.8�510(E�f) Date: March 18, 2025 �c} He intentionaily and uncanditionally waives, relinquis�es and subardinates the lien or charge af the Deed af Trust flrst above m�ntioned ir� favor of the li�n or charge upon said land af the Deed of Trust in favor of �ender above referred to and understands that in reliance upan, and in consideratio�t�f� tFtIS Wr31Vt.,'1'r relinquishrr�ent and subardination specific loans and advances are beinc� and will be made and, as part and parcel thereof, speciffc manetary and other obligations are being and will be entered into which would not be �ade ar entered intc� but for said reliance upan tF�is waiver, relinquishment a€�d subordination; and {d} An e�dorsement has been placed upc�r� fihe t�ote secured by Deed of Trust first above mentioned tha�said Deed af Trust has by this instrument been subordinated ta the Ilen or charge of the Deed of Trust in favor of l.ender above referred to. NOTIC�: THIS SUBClRDINAT�CIN AGR��MENT Ct3NTAINS A PROVI5ICIN WHTCFI AI�L,C}WS TNE PERSC►N ta►Bt�IGATED ON YOUR REAL PROPERTY SECURI"i'Y TO t7tBTA�N A LQAN A PGIRIIC}N C1�WHICH MAY BE EXPENDED FOR tJTHER PURPQSES THAN THE TMPRCIV�MENT{)�THE LANU. (ALI.S�GN�TUR�S MUST B�ACKNOWt�EOGED� I7`�S RECUMMENC1Ef� THAT, Pf2ICJR TO TNE EXECU77G�111 t�F TNIS`SUBt?RL71J11ATIt�N AGREEMEN7, THE PARTIES C�NSU�.T V1/ITh`TNE.�R AT1"+QRNEYS WITN RESPEt�T T'NERET�. (GLTA Sl1BQRC?INATIC}N FQRM „A"} O�NNER: THE Gt�OD NEVttS RESCl1E MISSIt�t�, A CA�IF RNiA NQNFRC7FIT C�RPORATIQN y; cl 1V me: � na han Andersan- .�. T' le. E ec ��ive Direckor BENEFICIARY: CITY C7�R�C7DIIVG, A MUNI��PA�.Ct�RP�RATIC7�!ANC}��N�F:A�.�AIIV�ITY By: Autl�c�rized Signor Page � of 6 A.P.N.: 104-62t#-05�-000 Subordination Agreernent -continued File No.: 45t15•7180510 (b� Date: March 18, 2025 A notary public or other officer completing this certificate verifies only th� identity r�f the individual wha signed t1�e document to which this certificafie is attached, and not the truthfulness,accuracy,ar validity of that document. STATE 4F ��,,���c�,��� � }SS �1.✓��f � �� ��F�".. ey��"� • C7n �� �j befsare rrte, � ���:>��"��a���,�� , Notary Publlc, personaiEy appeared �<' �P.�, � C" "� wha proved ta me an the basis of satisfaetary evidence to be the person(s} whose name(s) is/are subseribed to the within 'tnstrutTtent and acknowledged to me that he/she/they executed fihe sarr�e in hisJherJtheir authorized capaeity(ies), and that by his/herftheir signature(s} on the instrument the persc�n{s}, ar the entity upc�n beha3f of which the person(s) ac�ed, executed the €nstrument. I certify under PENALTY t7F PER�URY under th�laws of ti�e State of California that the fcsregoing paragraph is true and corree,t WITNES�my hand and official seal. 7'hi�area fvr o�clal notariai seal, ���""� � r "d,�• AARO#�J GU�MA�� ' t� , ,� . .. , corv��.�2��sa�� NotarY ` �� �--�, {� �. �� �o���v Pu���c-c�,���a�r�ia� � �' SHASTA Ct�UN7Y � a' G0�1#�1,EXPIRES APR.2d,2�28'' Pag� S of 6 A.P.N.: 104-620-05�-OOt� Subordination Agreemer�t- cantinued �ile Na,: 45Q5-��18a510 [bf) Date: M2�1"Ch �.$�. 2025 A natary public ar ather officer completing this certi�cate �eri�es only the ident�ty of the individual who sigr�ed the document t�which this cer�ificate is attacl�ed,and not the truthfu[ness,accuraey,ar validity of that dacument, STATE�� )SS CC7EINTY C7F } C3� before me, , �Votary Public, personally appeared uvho praved to r�e on the basis af satisfactary evidenee to be tf�e person(s} whos� nam�{s) isJare subscrbed to the within instrument and acknowledged to me that heJsheJthey executed the sarn� in his/her/their authorized capacity(ies}, and that by hisJher/their signature{s} orr the instrur�nent the person(s), or �he entity upon behaEf af which the person(s} acted, executed the instrument, I certify under P��VAL`IY OF PER:IURY under the laws of the Sfia�e of CalJfornia that the forego�ng paragraph i5 true and correct. WITN�SS my hand and officfal seal, Thisarea foro�cia/notarialseat. (�otary S�gnature Page 6 of 6