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Home My WebLink AboutR07-RDA Item ,.. - -~- AGE~A ITEM INFORMATION SUM~RY GENERAL INFORMATION: Subject ~,,{- (J JiM J. 0 P A AuIttor...5)o It ~ Woo ,.p. Ward S PrajeclAr.. s()vf/... Budg..AuthorllY. ~1(f1/rlf'~ ,'1\.. ~.'~ '- RDA MANAGEMENT REVIEW: ~~r~ I ., ~'*Deputy ~ ~~ r '- ~~ Dept. By Ex!. rlf37 VAAl e.- 0. 5-7-CfO s(s Dale 5-= 7- ?n CommillH CommlulllnlCouncl Flingo.tea ;;"- ~- ~O 5- (G -"0 MeelIngo.tea 5- 10- '0 5- ~(- "'0 FundlngRequnm.... ~ 3.... tf-OO, 000 f)~ rfe~ CLEARANCES: Dale Y.. N1A JgJ 0 ~H.J{17A,j/.J S-?,9tJ o ~ lEI ; ~~Q.,..- . u-.7.f7J ~u/~ :r~2_1lJ . o Cltr Admlnil_ ... RDA Commm.. recommendstlon INFORMATIONAL DATA FORWARDED TO CITY DEPARTMENTS/COUNCIL OFFICES: Mayor's Office Council Ward . Council Ward Council Ward CouncIl Ward Department Department Bent to By DatlI COMMENTS/CONCERNS: Include pertinent comments end concerns of offices end persons clelrlnll the summery, such IS controverslellssues, time constraInts end funding complications. Indlclte dstes when actIon must be liken. --- '- 7 RDA .174 REV. 6-29-89 I r ~ -- ./ -- I '- Redevelopment Agency · City of San Bernardino 300 Norlh "D" Street, Fourth Floor . Sill BanardiDo, California 92418 (714) 384-5081 FAX (714) 888-9413 e. ID~ ./ ; MAY 17, 1990 DHIGHT PORTUGAL AND RICH NEAL OHNER PARTICIPATION AGREEMENT (OPA) SvnoPsls of Previous Commission/Council/Committee Action: NONE Recommended Motion: (COMMUNITY DEVELOPMENT COMMISSION) - Move to authorize execution of the attached Owner's Participation Agreement with Portugal & Neal, together with all documents necessary to Implement the agreement, to authorize a $3,400,000 Increase In the Agency's budget to provlde the funding for the agreement, and to authorize the borrowing of $3,400,000 from a commercial bank. Respectfully Submitted, '- .'\ T mp1e, Act ng Executive Director Supporting data attached: YES FUNDING REQUIREMENTS: $3,400,000 Hard: 3rd Project: sv Commission Notes: RJT:JH:mv:200SR Agenda of: Item No. c c .....,/ S T A F F REPORT .....- '- This Item proposes an Owner's Participation Agreement (OPA) with Dwight Portugal and Rich Neal (PN). PN proposes to demolish old buildings on a five acre site on Redlands Boulevard, west of Waterman Avenue, and construct 51,372 SF of new retail buildings. The existing buildings are mostly metal and contribute heavily to blight in the area. The Agency proposes to borrow $3,400,000 and loan $3,250,000 of these funds to PN, plus make a grant for offsites of up to $120,000. The additional $30,000 will cover costs for escrow, title, possible construction supervision, etc. This will require that the Commission grant budget authority for $3,400,000 in project costs. AGREEMENT Aqency Obliqations The Agency plans to borrow $3,400,000 from a commercial bank at a floating interest rate (currently 10.51). It will then loan $3,250,000 to PN, at a slightly higher interest rate to start and a substantially higher rate starting in year five. In addition, the Agency will make a grant of up to $120,000 for offsites. The following is a detailed description of the deal points: Loan Portion (loan to PN) · Principal amount - $3,250,000 '- · Interest rate: Fixed at 111 for first four years. Prime plus three points for years five through seven. Prime plus six points for years eight through twenty. Floating interest rate to be adjusted once per year, on the anniversary date of the agreement. Prime means the prime interest rate of the commercial bank from which the RDA obtains its loan. . Payback terms: Interest-only monthly payments from funding to 120 days. Original loan amount to include funds for the first 120 days interest. Then, monthly payments to fully amortize the loan amount over 20 years. -- RJT:JW:mv:2005R 2 c ~ ,.) STA~~ R ~ P 0 R T ,- "- Amortization to be recalculated upon each change In the Interest rate. Due-on-sale clause required. 401-251-251 draw-down schedule with a 101 retention payable upon evidence of satisfaction of all indebtedness relating to the project. Except for the amount (approximately $620,000) needed to payoff the existing encumbrance, building permits must be obtained before any loan proceeds will be released. · Securi ty: First trust deed on property. Loan personally guaranteed, jointly and severally, by Portugal and Neal. Fire, earthquake, liability and ALTA title Insurance.. · Other: r '- Development fees are Included In loan amount. Inclusion In loan amount of any street and offslte costs above the $120,000 grant. Grant Portion · RDA to assist Portugal and Neal with their half of new street costs, plus the costs of any off-site Improvements, up to but not exceeding $120,000. The following Is a breakdown of the $3,250,000 loan amount: Construction cost of project Existing Loan Payoff Approximate Fees and Permits New Street (Portion of Cost) $2.152,043.00 $ 620,000.00 $ 150,000.00 $ 100,000.00 Retro fit existing structure with fire sprinklers, paint, and remodel canopy to match new project Sub Tota 1 Loan $ 40,000.00 $3,062,043.00 ,- "- RJT:JH:mv:2005R 3 c , " STAFF R E P 0 R T ,-- --. Interest Pro Rated on 120 days 40t for 120 days 25t for 60 days 25t for 30 days lOt for 10 days Approximate Total Construction Contingency Total for Project Developer Obllqatlons PN agrees to demolish old structures and construct 51,372 SF (and possibly more) of new buildings, with a value of $2,152,043, starting on or before 7 months after agreement execution and finishing on or before 19 months after agreement execution (a new street and traffic signal may take longer to complete). The overall value of the new development (land and bUildings) should be approximately $4,330,000. $ 65,368.00 $ 122.589.00 $3,250,000.00 '- New annual tax increment - Benefits to the Cltv $ 16,900 $ 50,000 (estimated) $ 1,000 (estimated) $ 80,702 /_. New annual sales tax - New annual utility tax - New one-time City fees - New jobs - Removal of blighted buildings 50 (estimated) OTHER ITEMS Note that the Interest rate rises In step-wise fashion over time. This is Intended to encourage PN to refinance. They will most probably refinance by the eighth year, so the $3,250,000 loan portion should be fully repaid by that time. The loan Is to be drawn down as construction progresses. Staff may need to hire a consultant to verify the completion of various construction stages before draws are released. An escrow will be set up to make sure that an existing encumbrance Is paid off ~ concurrent with the creation of the Agency's new first trust deed. "-" RJT:JH:mv:2005R 4 c STAFF REPORT ~- --- The Agency will order an ALTA lender's title Insurance policy, as additional security for Its loan. It looks as though PN W1ll be assessed for half the cost of a new street connecting Redlands Boulevard with Caroline Street. In addition, they will be assessed for sidewalks, street lights and other public Improvements. Depending on what these costs are, the Agency will commit to a grant of up to, but not. exceeding $120,000. Another offslte requirement associated with the new street Is a new traffIc signal at the Intersection of the South Waterman Avenue offramp from 1-10 and Redlands Boulevard. The City Engineering Department Is confident, however, that federal funding may be available for this traffic signal, and Is currently In the process of applying for this funding. Finally, If this project Is successful, PN hopes to continue redevelopment efforts on land they own easterly, all the way to Waterman Avenue. This would be a future project, but Is Important because that site Is more badly blighted than the subject. A lease commitment makes It difficult to redevelop at this time. - '- CONCERNS FROM RDA COMMITTEE MEETING OF MAY 10. 1990 Agency Counsel has added language to the OPA requiring that fire and earthquake Insurance be maintained, In the approximate amount of the new construction value ($2,155,000>. Attached 1s a table (prepared by PN> descr1blng PN's preleaslng act1vlty and at what occupancy point the project breaks even. Including the existing building, and not counting possible additional mezzanine square footage that may be built, 22t of the project has been preleased. The development will break even when 65t of the space Is occupIed. This Is very good, conslder1ng that the norm In Income-producing properties Is closer to 75t - BOt. SUMMARY In summary, staff recommends that the Commission approve this OPA between the Agency and PN. In return for a loan of $3,250,000 and a grant of up to $120.000, PN will remove existing blight and replace It with at least 51,372 SF of attractive, modern construction. The loan Is essentially a pass-through and will probably cost the Agency close to nothing, while resulting In new revenues for the City and Agency and new jobs for citizens. PN has reviewed and approved the attached OPA and copies of 1t are presently out for signatures. .- --- RJT:JW:mv:2005R 5 -- / r / I '--'- i '1; 5 , '1; J I ~ ~ - I I .. --.... -..;;,- c <( 1LI a:: <( ~ 0 1LI -:I 0 a:: a.. ~ z 1LI . :E a.. 9 1LI > !, 1LI 0 ; !Ih 1LI I a:: -. .~ 1LI ~ 1&11 I ::J II'. ~ C :I: ~ =>> 0 (f)