HomeMy WebLinkAboutRS2-Community Development
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
1m: Kenneth J. Henderson, Director
Subject:
ORABGEWOOD ESTATI!S - PHASE II
Dept: Community Development
Date:
Synopsis of Previous Council action:
On April 9, 1990, the Comm,unity Development Commission approved financial
assistance to Duke-Dukes and Associates for the build-out of the Orangewood
Estates Subdivision. The Agency Counsel was directed to prepare the appro-
priate agreement.
Recommended motion:
(COMMUNITY DEVELOPMENT COMYISSION)
ADOPT RESOLUTION OF THE COMMUNITY DEVELOPMENT CCMMISSION OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE EXECUTION OF A JOINT DEVELOPMENT AGREEMENT
BETWEEN DUKES-DUKES AND ASSOCIATES AND THE COMMUNITY DEVELOPMENT CCMMISSION,
FOR THE CONSTRUCTION OF 114 SINGLE FAMILY HOMES, COMMONLY REFERRED TO AS
ORANGEWOOD ESTATES.
Contact person: KEN HENDERSON/ROBERT TEMPLE
Phone:
5065/5081
Supporting data attached: STAFF REPOR T
Ward:
6
FUNDING REQUIREMENTS:
Amount:
Source: (Acct. No.)
(Acct. Description)
Low to Moderah>: Tnr.:nmp. Hnll~ing 'Fnnn
Finance:
.ncil Notes:
Rs- -~
C I T Y F SAN B ERN A R D ~ A 0
COMMUNITY DEVELOPMENT DEPARTMENT
INTEROFFICE MEMORANDUM
9004-1302
TO: Redevelopment Committee
FROM: Kenneth J. Henderson
Director of Community Development
SUBJECT: Orangewood Estates - Phase II
DATE: April 4, 1990
COPIES: Mayor Holcomb; City Administrator; Director of
Finance; Executive Director, RDA; Community
Development Specialist; city Treasurer
-------------------------------------------------------------
On October 2, 1989, the Mayor and Common Council selected
Dukes - Dukes and Associates to build out the remaining
seventy-six (76) lots of Orangewood Estates. Dukes - Dukes
was to finance the project in its entirety at no further cost
to the City or the Redevelopment Agency.
Because Dukes - Dukes was not able to readily identify
construction financing, the Community Development Commission,
at a subsequent meeting, appropriated $1.6 million to payoff
the assessment district bonds, reimburse the city General
Fund for advances made to keep the bondholders whole and
protect the City's credit rating and to reimburse the Commu-
nity Development Department for its acquisition and weed
abatement costs. The effect of this action was to stop the
interest clock from running on the assesment bonds and limit,
to the extent possible, future costs to the project.
After months of contacts with various lenders, Dukes - Dukes
was able to elicit support from Life Savings and Loan if the
Agency contributed an additional $800,000 of construction
financing. This amount would be added to the $750,000 Life
was prepared to lend to the project. Life would also admi-
nister the combined construction loan for a 1% - 1.5% fee.
After discussions among staff, the Mayor and representatives
from Dukes - Dukes, it was decided to try a better, more
cost-efficient approach.
Staff and Gene Wood from Wood-Husing Associates met to
discuss various alternatives, and at a subsequent meeting
with John Dukes, developed the attached deal points which are
summarized as follows:
1. Agency to sell land to Dukes - Dukes for $1.9 million
($25,000 per lot), with $300,000 profit to be split
between Agency and Community Development Department.
INTEROFFICE MEMORAh~aM: 9004-1302
Orangewood Estates - Phase II
April 4, 1990
Page 2
2. The project is to be constructed in three (3) phases (27,
38, and 49 units) with Phase I to be built in two groups,
thirteen (13) and fourteen (14) units, respectively. The
timing of Phases II and III will be based upon experi-
ences derived from Phase I.
3. Agency to make construction loan of $1,156,115 for first
13 homes at 1.5 points over prime (floating), with Dukes
-Dukes to pay 1.5 points for loan fee and disbursement
administration. The cost of the three models, $275,000,
will be amortized over the entire 114 unit project, or
$2,412 per home.
4. At close of escrow for each home in Phase lA, Dukes _
Dukes will pay $88,112 to Agency.
5. Agency to make second construction loan for the remaining
14 homes in Phase lB. Dukes - Dukes to pay 1.5 points
over prime (floating), with 1.5 points for loan fee and
disbursement administration to be paid up front.
6. At close of escrow, Dukes Dukes will pay to Agency
$86,925, per home or $1,216,950.
7. Phases II and III will be structured similar to Phase I,
taking into account experiences of Phase I.
8.
Under
(10%)
Phases
loan disbursements, there will be a ten percent
retention in lieu of a completion bond throughout
I, II and III.
The deal as described above secures RDA's interest with a
mortagage against each lot, limits the Agency's and Dukes _
Dukes' financial exposure, provides the developer a normal
rate of return and adheres to commercial norms for risk, rate
of return and security.
I recommend the Committee recommend approval to the Community
Development Commission of the deal points as described herein
and in the attached proposal. If approved by the Committee
and Commission, staff recommends Agency Counsel be directed
to prepare the appropriate agreement.
~
KENNETH J.
Director
Development
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