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Home My WebLink About03-RDA Item AGENDA ITEM INFORMATION SUMMARY GENERAL INFORMAnON: S~ &C/~~~/ "L4~ ()~-4 Author J..,? i/ /1-'",,;: 6- Ext. Ward Project Area S c- " BudgfllAuthority \'1-<;", /~" I' i .f Ii"~ r -, , , n -) Committee CommissionlCouncil Filing Dates MHtingDates Z-r- 5'( Funding Requirements ~f / ~'/' () L'7 0 , ..L:...~~ Dale CLEARANCES: RDA MANAGEMENT REVIEW: ~ Admlnilhlive Depu1y ~1'Y'9 L 7-/1 , MMegerlSuperyilOr CITY DEPARTMENTAL REVIEW: Date Depl By Oepl By Ve. NlA1 6 O A. C~,(i'. ling Date /;1'// _ C:' I IJr -- ,. ._1 ...:) - 7 (../ / rn o o;l o m ~~/? D./~=7~A~J ..7.-~-90 rn City Administrator RDA Committee recommendation INFORMATIONAL DATA FORWARDED TO CITY DEPARTMENTs/COUNCIL OFFICES: Sent to Mayor's Office Council Ward Council Ward Council Ward Council Ward Department Department By Date COMMENTS/CONCERNS: Include penlnent comments and concerns of offices and persons clearing the summary. such as controversial Issues, time constraints and funding complications. Indicate dates when action must be taken. >>~ RDA -174 REV. 6-29-89 Redevelopment Agency · City of San Bernardino 300 North "D" Street, Fourth Floor. San Bernardino. California 92418 (714) 384-5081 FAX (714) 888-9413 Pride ..f " In Progress ~Jl~ JANUARY 31, 1990 GREENLEAF/NEELEY OPA Synopsis of Previous Commission/Council/Committee Action: 12-06-89 Item continued to Committee meeting of 12/21/89. 12-21-89 Committee recommended that item be forwarded to Commission. 01-22-90 Commission referred item back to Committee. 01-25-90 Committee recommended that item be forward to'Community Development Commission and Mayor and Common Council for approva 1 . Recommended Motion: (MAYOR AND COMMON COUNCIL) A) Move to adopt a RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO CONSENTING TO THE EXECUTION BY THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO WITH GREENLEAF-NEELEY INVESTORS. (COMMUNITY DEVELOPMENT COMMISSION) B) Move to adopt a RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO AUTHORIZING EXECUTION OF AN AGREEMENT WITH GREENLEAF-NEELEY INVESTORS AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH. Respectfully Submitted, R~~~cting Executive Director Supporting data attached: Yes Ward: 5 FUNDING REQUIREMENTS: $100,000 Project: SC Commission Notes: RT:EJ:sm:2656H Agenda of: February 5, 1990 3 Item No. Redevelopment Agency S T A F F R E P 0 R T Greenleaf/Neeley Investors, a California general partnership, has requested assistance from the Agency for a 10 building, 360,000 SF industrial development in the State College Business Park. The proposed agreement would provide $100,000 in assistance for Phase II (4 buildings totalling 133,246 SF). The assistance is needed to induce Greenleaf to go forward with the construction of the second phase which will create additional "spec" industrial space for manufacturing and industrial users looking for relocation faci 1 ities. BACKGROUND In 1988 Greenleaf purchased an 18 acre site in the State College Business Park (see the attached map). In September of 1988 (see the attached Sequence of Events), Grean1eaf requested assistance from the Agency. While Greenleaf's request was prompted by specific difficulties that included resolution of a drainage problem for the City upchanne1 from the development, an analysis by the Agency's consulting economist showed that the project warranted an overall level of assistance ranging between $177,000 and $242,000 (see the attached letter from Keyser Marston Associates, Inc.). Both for policy and for legal reasons it is the staff's recommendation that the assistance be limited to the $100,000 in the proposed agreement. The validity of the need for assistance has been demonstrated by the slow sales, despite agressive marketing, of all three projects in that area (Hat1e, Edwins, and Greenleaf). It has been a long sought goal of the Agency to produce an adequate inventory of existing buildings to be able to compete effectively with surrounding areas in which standing buildings offer users the opportunity to move immediately into a known facility. The difficulty in obtaining "spec" developers has testified to the need for assistance in this type of product. The attached letter from Mr. Dukett describes the nature of the negotiations with Greenleaf and the legal research that went into the development of the proposed agreement. Staff was careful, throughout, to indicate that Commission approval was required for any agreement regardless of the opinions of the Agency's consultants or staff. Nevertheless Greenleaf was aware that their needs did meet our criteria for assistance. The letter from Greenleaf (attached) explains that the reason for the shortfall in funds for the construction of Phase II is specifically due to a loan undertaken in the belief that Agency assistance would be forthcoming. On January 22, 1990, the Commission referred this matter back to the Committee and asked that staff provide a more comprehensive summary of the project. The minutes of the previous Committee action, on December 21, 1989, are attached. RT:EJ:sm:2656H 2 Redevelopment Agency PROPOSED AGREEMENT The attached agreement is an Owner Participation Agreement which provides $100,000 of Agency assistance upon the satisfaction of several "Conditions Precedent" which generally assure the Agency that it is dealing with the legitimate owner of the property who has provided all the necessary documents and has paid all applicable fees. Greenleaf is obligated to commence construction not later than February 1, 1992. Project Location The project is located on parcels I, 2, 3, 4, and 5 of the State College Business Park on the northerly corner of Hallmark Parkway and Saratoga Hay. Greenleaf's Obligations a. record a notice of the agreement which spells out the antidiscrimination requirements and the development obligations of the agreement; b. complete, in the combined phases, construction of ten free-standing buildings of approximately 350,000 SF with an assessed value of not less than $6,300,000; c. complete construction of Phase I not later than February I, 1990, and; d. commence construction of Phase II not later than February I, 1992. Agency Obligations The Agency is obligated to provide $100,000 in assistance after receipt of satisfactory evidence of the payment of applicable fees that total as much as or more than the assistance amount. RT:EJ:sm:2656H 3 Redevelopment Agency ANTICIPATED BENEFITS FOR AGENCY AND CITY In addition to providing a badly needed inventory of spec industrial space in the City, there will be financial and employment benefits from the project. Description Estimate AGENCY: Tax Increment $ 63,000 per year ($23,000 for Phase II) (@ 1%) CITY.: Utility Tax $ 42,000 per year ($15,960 for Phase II) Ci ty fees $252,000 one time ($93,200 for Phase II) Jobs 315 new jobs,(120 for Phase II) RECOMMENDA nON The attached documents have been approved as to form and legal content by Agency Counsel and Special Counsel and the Redevelopment Committee has recommended approval. It is therefore, recommended that the proposed agreement be executed. RT:EJ:sm:2656H 4 ... c CD E Q. 0 - CD :# Q .... CO CD - C CD CD .. " ~ f - CD C C CO .c ~"V o = ~ i & i co c .- co .. l .~ ..:: : "I . . ...... oil.. ! .. ~ . i, , J" . . - . . AWftA!ft' ....~.-'eIi'~fAoL.l; Q.,~,i ..[iJ.-:'''..... ~- -, .Je~ lfil ~: ".J i st. 4 .. -;,. _ ~.l ~ _ _ _ ~~ '1 ~ illl: _ __ _ .".,Lut__....:_:l . __ [[]"',,!- -' l~ .1 It ~ a:: <C 0. ... <C - a:: ~ en ::) Q Z - I I I I I I - -J . ml ~: rF. . w " W ... ... o o w ~ <C ~ en AYM NOJ.DMn'1 s~ '~'kIi ~-- GREENLEAF/NEELEY SEQUENCE OF EVENTS (as of January 10, 1990) March. 1988 Staff met with Greenleaf/Neeley to discuss possible Agency assistance with drainage channel. September, 1988 Greenleaf requested assistance and supplied financial information. October, 1988 Agency requested that Keyser Marston review Greenleaf request for assistance and make recommendation. Keyser Marston stated that $177,000 was warranted. Meetings followed to negotiate business points of an OPA. March, 1989 Matter assigned to Mark Huebsch. April,1989 Additional documents obtained for Huebsch. Ju 1 y, 1989 Received draft OPA from Mark Huebsch for drainage channel improvements. Staff met with Greenleaf to review proposed OPA. During the meeting staff discovered that all improvements had already been built. Counsel informed Greenleaf that the Agency could not recommend assistance because it would constitute a gift of public funds which is a violation of the California Constitution. Staff then asked Greenleaf ;f they had any other projects that the Agency could consider. Greenleaf indicated that Phase II would require some assistance. Staff ;nformed Greenleaf that a draft OPA dealing only with Phase II would be prepared and sent to them for review and approval prior to being submitted to the Commission for consideration. August 1989 Staff received first staff and Greenleaf. draft of current OPA from Mark Huebsch. Sent back to Mark for revisions. Reviewed by October, 1989 Received second draft from Mark. Reviewed and accepted by staff and Greenleaf. Signed by Greenleaf but sent to their attorneys for final rev;ew. November. 1989 Received three signed originals of OPA from Greenleaf. December. 1989 Submitted to Redevelopment Committee. Committee recommended that item be continued to Committee Meeting of December 21, 1989. Redevelopment Committee recommended approval and that the item be forwarded to Commission. JH:EJ:jmh:2604H ~ --- ~ ~ --- ~ ~~- _& ~ ~ - - -- ~ ., . .' KeyserMarstonAssociatesInc. 500 South Grand Avenue. Suite 1480 Los Angeles, California 90071 213/622-8095 Fax 213/622-5204 Richard L. Botti Calvin E. Hollis, II SAN DIEGO 619/942-0380 Heinz A. Schilling SAN FRANCISCO 415/398-3050 Timothy C. Kelly A. Jerry Keyser Kate Earle Funk Robert J. Wetmore Michael Conlon Denise E. Conley GC October 5, 1988 CC 10 Mr. John Hoeger Development Division Manager City of San Bernardino Redevelopment Agency City Hall 300 North "D" Street, 3rd Floor. San Bernardino, California 92401 ~ ~ --=- .:~:-:n+ ~ 1lO!J!:~PY _ - .:;;j-- -- -T Dear Mr. Hoeger: In accordance with your request, Keyser Marston Associates, Inc. reviewed the economics of a proposed industrial development within the existing State College Business Park, located at the northeast corner of Saratoga Way and Hallmark Parkway in the City of San Be~- nardino. BACKGROURD ~ -- --=- The developer entered into escrow for the z18 acre site in Jan~a1& of 1988. Upon conveyance of the property the developer intends to construct 10 industrial structures totaling over 350,000 square feet of building area. The proposed project consists of general purpose industrial space in buildings ranging in size from 16,090 to 64,620 square feet. Comparatively, the existing projects within the State College Business Park consist mainly of owner occupied buildings that were purchased on a build-to-suit basis. Thus, the proposed project represents a pioneering venture in this area. The developer has requested Agency financial assistance to cover additional costs that were imposed by the City after the land pur- chase transaction was in escrow. These costs consist of: 1. The City drainage fee for the development, w~ch is cur- rently estimated at z$35,000. The developer assumed that these fees had already been paid since he bought the land in an improved condition. Additionally, the drainage fees imposed by the City have doubled while this property has been in escrow. Real Estate Predevelomnent & Eva! uation Services -- --- ~ ~ -..;..- ~ --i- - _& ,",- - ~ ~ ~ Mr. John Hoeger October 5, 1988 Page 2 ~ ~ 2. The costs to construct a gunite drainage channel adjacent to the subject property, and are estimated by the developer at z$100,000. This drainage channel does not serve the subject property. However, the channel is cur- rently eroding onto Saratoga Way, which will ultimately impact the proposed development. The channel currently lies on an easement, and is a maintenance liability of the City. At the Agency's request, KMA assessed the financial feasibility-~f the project, as proposed, to determine whether the requesetd $135,000 in Agency assistance is warranted. Additionally, ~ analyzed the broad policy implications associated with provi~A9 this type of assistance. -~ AlIALYSIS ~ KMA performed a cost/income analysis of the proposed project bas!d upon the developer's current pro forma and site plan. The cost es- timates are based on the actual costs incurred to construct similar industrial buildings in the San Bernardino area. The income analysis is based on field surveys and interviews conducted with brokers familiar with the San Bernardino industrial market. The cost and income projections are presented in Tables 1 and ~. These projections were then used to determine the project's val\te upon completion, as shown in Table 3. The basic assumptions u~d in this analysis are as follows: -.;t The developer indicated that the -land cost _wetS $2,027,000, or $2.58 per square foot of land area. 2. Shell costs were estimated at $24 per square foot. This cost level allows for the construction of single user buildings rather than multi-tenant facilities. Addition- ally, these costs include site work and architecture and engineering fees. 1. 3. Indirect costs were based on a percentage of direct costs, with the exception of city permits and fees, which were based on the developer's estimate. 4. Project financing costs consist of loan orig~tion fees, interest during construction and the costs ~n excess of income during the initial lease-up period. Construction and permanent loan fees were estimated at 2.5% of total project costs. Interest during construction was based on Key-serMarstonAssociatesInc. ~ ~ ~ it ~- =- -+- - ,& .~ - ~ -... ~- , , , Mr. John Hoeger October 5, 1988 Page 3 -- ~ ~ a 9 month construction period at an 11.5% interest rate. Costs during lease-up were projected on the basis of an 18 month absorption period. 5. The project consists of 10 industrial structures totaling 352,497 square feet of building area. The achievable rent level was set at $.35 per square foot per month on a triple-net basis. 6. Expenses include a 3% management fee, and an allowa~e for reserves for capital improvements at $.05 per square foot of building area. _~ ~~ Based on the above assumptions, the estimated development costs.tO- tal approximately $13.29 million, and net income before debt serv- ice is estimated at $1,347,000. Utilizing these figures, KMA c~- culated the warranted financial assistance to this project uS~B9 two methodologies. The first method is based on the developer~s return on equity, and the second approach is based on the project's value upon completion. Using the return on equity approach, the determination of warranted assistance is based upon the maximum achievable loan and warranted equity contribution to the project. As presented in Table 3, at a 1.15 coverage ratio and a 10.75% mortgage constant (10.25% interest rate, 30-year amortization), the project can support $10.89 milliQn in debt. If the developer requires an 8% return, at stabilizat~, on any equity investment, the supportable equity contribution ~s $2.2 million. When reduced by the estimated development costsu- cluding the reduced carrying costs required due. to the upfr~ provision of assistance, the net warranted assistance is $177,000. The second method of determining warranted assistance is to es- timate the project value upon completion of construction, based on the capitalization of stabilized income. As shown in Table 3, the net income of $1,347,000 capitalized at a 9% rate yields a value of $14.97 million. After deducting the imputed costs of sale, a reasonable developer's profit and the reduction in carrying costs, the warranted assistance is $242,000. CORCLUSIOR The preceding analysis demonstrates that the economic~aracteris- tics of the proposed project indicate a need for at least the $135,000 in assistance requested by the developer. However, it is necessary to consider whether the assistance is required because the developer overpaid for the property, or if circumstances beyond Key-serMarstonAssociatesInc. Mr. John Hoeger October 5, 1988 Page 4 -~ "!!!: his control intervened after the land had been"--purchased. Moreover, the Agency must also consider the wide reaching policy implications of providing assistance to this project, in terms of the precedents that will be set for future projects. With regard to the issue of waiving drainage fees, KMA recommends that the Agency nQt comply with this request, for the following reasons: 1. ~ --- ~ it -"- - 2. -4iif -+- - ;& 3. The drainage fee is a city-wide assessment, rather tha~a site-specific fee. Thus, this cost is applied to bOlh improved and unimproved parcels. Therefore, the prop~~d project is being burdened with the same costs as will~be assessed to other similar projects. -~ The potential for costs increases is a typical risk~ the development process. Developers should be aware t1r~t the City fee structure is subject to change at any ti~e before building permits have been secured. If the Agency waives the increased drainage fees costs for this parcel, it will represent a precedent-setting action for other developments facing similar fee in- creases. ~ ~ Comparatively, KMA believes that the Agency should reimburse the developer for the gunite drainage channel, due to the follow~g considerations: - ~ ~ ~ . -;;;1 It is the City's legal responsibility - to maintain .-tile channel, and it is currently anticipated that such an im- provement will be necessary during the near-term. 2. The developer is willing to undertake the actual con- struction of the gunite channel at a fixed maximum cost of $100,00. Therefore, effectively the City could trans- fer the risk of cost overruns to the developer. 1. In summary, it is our opinion that the developer's request for a fee waiver should be denied, but that the Agency should accept the re~ponsibility for the costs associated with improving ene drainage channel. However, in the event the Agency proceeds along that course, it will be necessary to retain approval ri~s for the quality level and costs of the proposed channel. - KevserMarstonA<;~ciatf'<; T nr ~ ---- ~ ~ ~- ~ ~- ~ ~ ~ - ~ -=-- ~ ~ Mr. John Hoeger October 5, 1988 Page 5 ~ ~ ~ We appreciate this opportunity to be of assistance, anlTare avail- able to answer any questions you may have. Yours very truly, KEYSER MARSTON ASSOCIATES, INC. ~ If. II~ (!-f.~) Kathleen H. Head Pl~ C p~ Mark E. Pickell ~ '-~~ ~.o;- .~ - KHH : MEP : gbd ~ "? - --= ~ -,;;{ - '- .... 88415.SNB 19020.0054 Key-serMarstonAssociatesInc. TABLE 1 ESTIHATED DEVELOPMENT COSTS SREENLEAF INDUSTRIAL SAN BERNARDINO, CALIFORNIA LAND DIRECT COSTS BUILDING SHELL HULTI-TENANT INDUSTRIAL (I) TOTAL DIRECT COSTS INDIRECT COSTS PERHlTS I FEES ~ INTEREST DURING CONSTRUCTION ~ LAND I SITE WORK ~ BUTLDING PV NEGATIVE CASH fLOWS ~- FINANCING FEES ~ LEGAL/CLOSING ~ - LFASING FEES ~ TAXES/INSURANCE DEVELOPMENT HANAGENENT 'ONTHiGENCY TOTAL INDIRECT COSTS TOTAL DEVELOPMENT COSTS ~ ~ - ~. 1) INCLUDES SITE YORl AND A I E FEES ~ SOURCE: IEYSEF. HARSTON ASSOCI~TfS, IHC. FILE NAn[: IGREEN: OCT08ER, 1983. 352,497 SF ALLOIlANCE 0.75 YEAKS 0.75 YEARS 0.025 PUINTS 1.0DZ DIRECT COSTS 20.00% GEl 1.00% DIRECT COSTS 2.00% DIRECT COSTS 3.00% DIRECT COSTS 124.00 /SF ~ -=- ~ -'-- S2,027,000 SlI,460,000 --------- S8,460,OOO S405,000 175,000 456,000 574,000 315,000 85,000 281,000 85,000 169,000 254,000 --------- S2, 799 ,000 113,286,000 OR SAY S13,290,000 .... ~ -~~ --= ~ ~: - ~ ~ ....o;:c -= --- --.~ - -~ . . . . TABLE 2 ESTIKATED HET INCOHE GREENLEAF INDUSTRIAL SAN 8ERNARDINO. CALIFORNIA - ~ - INCOHE ;e. MULTI-TENANT INDUSTRIAL 352,497 SF 14.20 ISF 11,480,500 ----......--- GROSS INCONE SJ,41:10,500 (LESS) VACANCY ANO COLLECTION 5.00% GROSS INCONE 74,000 -----...--- GROSS EFFECTIVE INCONE IJ,406,500 EXPENSES IIANAGEHENT FEE 3.00% GROSS INCONE 42,200 RESERVES 352,491 SF 10.05 ISF 17,600 ~ --------- ~ TOTAL EXPENSES S59,800 - . --- .=-r- -"4"'Jlf- -"""'::c""7 ~ .--: - HET OPERATING INCONE IJ,3.47,000 ~- -= ~ ~- ,.. ~ ~ ~ ~ --= =-- ~ ~. -... - -~ -- _. SOURCE: (EYSER HARSTON ASSOCIATES, INC. FILE NAHE: IGREEN: OCTOBER, 1988. TABLE 3 WARRANTED PUBLIC ASSISTANCE GREENLEAf INDUSTRIAL SAN BERNARDINO, CALIFORNIA - -~ - --------------------------------------RE!URN TO fOUITY------------------------------------- NET INCOME BEFORE DEBT SERYICE AYAIlA&l[ FOR DEBT SERYICE NET IHCOIIE AFTER DEBT SERYICE MAXI HUH DEBT ~ -- ~ ~ ...... WARRANTED INVESTMENT DEBT EQUITY TorAl WARRANTED INVESIHENT ~- - WARRANTED INVESTMENT (LESS! DEVELOPHENT COSTS ~::o...-_ ~ WARR~~TED ASSISTANCE AND CARRYING COSTS 1ARRANTED ASSISTANCE 1.15 COVERAGE 10.751 CONSTANT 8.00% RETURN -"'-- 11,347,000 1,171 ,000 --------.. S176 , 000 110,893,000 110,893,000 ~ 2,200,000 -------- -~ -~-~ 113,093,000 ~ ::-- ~ - 113,093,000 13,290,000 ~ --------- ~ (1197,000) ~ ($177,278) OR SAY (1177,000) . -- ~ - -------------------------------------VAlUE UP~N COHPLETION--------------------------------- ~ - -"0- ~ -- ~- Nfl INCOIlE mORE DEBT SERVICE CAPITALIZED VALUE (LESS) DEYELOPIlENT ceSTS (LESS) COST OF SALE (lESS) DEVELOPER PR~fJT WARRANTED ASSISTANCE AND CARRYING COSTS WARRANTED ASSISTANCE SOURCE: (EYSER HARSTON ASSOCIATES, INC. FilE HAHE: IGREEH: OCTOSER, 1983. 9.00% 3.00% VlllUE 1O.00! V/ILUE 11,:s.7,OOO 14,967,000 13,290,000 449,000 1,497,000 -.---...- -- ~. OR SAY (1269,000) ($242,070) (1242,000) - , L'ancaster Redevelopment Agency 44933 North Fern Avenue · Lancaster, California 93534 805-723-6128 FAX 805-723-6~41. . '~ " , . '.1 C . ." , \, -.'. J ._ .., .. ...... / -7" .~ '~ r '"-, " ..' ... ' . . ~ . . ~OUTINQ .F ....,-., ..,.:' ':. ~,\ " I .,.:..1 ~ \ a. :;... " ,,,, .(..:..... t.~:! '<.I !,' [". AI JH ME IL GJ GO CC TO JZ..T. ~I " ;,;.. , , ~...... .. ~ K. " i,;.,. \~)> " ,. or,'\' / " 'jr'W'\ \.1 " " ~ ;}. . ~-.-.""'~ lanuary 9, 1990 4'.:2 Mr. lohn Hoeger Redevelopment Manager San Bernardino Redevelopment Agency 300 North "0" Street, Fourth Floor San Bernardino, California 92418 Dear lohn: - - ORIG. EJ- JDU1E COPY_ It was great to hear from you on Monday and especially to hear how well things are going with you and the Agency. It is nice to know that many of the projects I had the privilege to work on with you and other members of staff are continuing forward and soon will become reality. As always, I wish you and the Agency much continued success. Please give my best regards to all the staff and to my friends on the Commission. During our conversation you asked me to confIrm the status of the Agency's staffs negotiations with Greenleaf-Neeley during my tenure as Executive Director. As we discussed, Greenleaf-Neeley requested approximately $100,000 in Agency assistance to offset some of the costs of constructing offsite storm drain improvements required for the fIrst phase of their industrial project in the State College Redevelopment Area. If I am not mistaken, this project's concept predates my arrival in San Bernardino. In addition, if my memory serves me correctly, this level of subsidy was reviewed by Keyser Marston ann found to be reasonable. Staff subsequently ordered the appropriate development agreement to be drafted by Special Counsel and advised the developer of our efforts. Unfortunately, at the time of fInal review of the development documents, staff discovered that the improvements had already been built. To the best of my knowledge, no member of staff advised them that it would be acceptable for them to do this. As a result, per the February 2, 1989 opinion of Stradling, Yocca, Carlson and Rauth (based upon the Attorney General's Opinion No. 85-1104 of lune 24, 1986) which Mark Huebsch, Esq. verbally confIrmed once again as it relates to this case, we recognized that we could not recommend the subsidy requested by the developer because if the Commission approved it, it would constitute a gift of public funds in violation of the California Constitution making each of them personally liable. We advised the developer of this problem. They, of course, exclaimed ignorance relative to this issue. We then asked them if they had any subsequent projects that the Agency could consider. They indicated that the second phase of their project would also require signifIcant public improvements. Johl'! Hoeger lanua.ry 9, 1990 Page 2 We infonned them that subject to drafting of an appropriate agreement. staff would recommend that the Commission consider their request. Further. we cautioned them not to construct any of the improvements they were seeking assistance on prior to the Commission's consideration of the agreement and that only the Commission could legally bind the Agency. As you know, this matter was not resolved prior to my depanure. I understand that the matter was recently forwarded for Commission consideration and that the Chairman has inquired about its background and requested my comments. I trust that you find the above useful. IT J can be of further service or you have any questions, please feel free to call me at (805) 723-6128. :ti~ N H. DUKETI . elopment Director SHD:dm ~OPIER 295: ??-??-??:??:?? ??; IN 18 '90 13:07 GREENI ~CfF DEVELOPMENT 714 966 3265 ~ " 2 P.2 GREENLEAF Development ComPlny January 18, 1990 Ezell James, Sr. Senior Project Manager REDEVELOPMENT AGENCY CITY OF SAN BERNARDINO 300 North "D" Street San Bernardino, California 92418 Reference: State College Business Park San Bernardino, California Dear Ezell: Prior to the Redevelopment Council Meeting on Monday, in which our project is on the Agenda for final approval, I want to give you an update of the project's status. We anticipate completion of the first six buildings of Phase I to be February 1. On. of the buildings has be.n leased to C & M Fine Pack, Inc., who is presently located in State College and we are working with two other prospective companies. It is our desire to commence the final drawings for Phase II (4 buildings). A concern we have regarding the decision to proceed is the possibility of not receiving the financial assistance we have requested from the Redevelopment Agency. As you know, the Agency had advised us we would receive reimbursement for constructing the drainage channel, and thus alleviating the existing drainage problem, which the City was having to maintain. Ba8ed on this, we borrowed money and proceeded with the new channel construction. Without the reimbur.ement there are not sufficient construction funds for the second phase of buildings. Ezell, we are extremely pleased with the project and feel we are building a p~oj.ct that the City of San Bernardino can also be proud of. Should there be any questions regarding the request for assistance or our project, please call. Thank you very much. Sincerely, GREENLEAF ~~COMPANY ~M111' SFM:gd