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Home My WebLink AboutR07-RDA Item c c c r- ~-' Redevelopment Agency · City of San Bernardino 300 NarIh "D" SIIeeI, Fourth Floor . Sill Bernardino, C8lifomia 92418 (714) 384-5081 FAX (714) 888-9413 e. In~; ~ W- JUNE 18, 1990 NEW FRONTIER COMMITMENT LETTER/DRAFT DDA NORTHWEST SHOPPING CENTER SynoPsis of Previous Commission/Council/Committee Action: 06/02/86 Authorized RFQ/RFP for development of Baseline and Medical Center Drive. 07/21/86 Approved Exclusive Right with Alexander Haagen. (Continued on page 2) Recommended Motion: (MAYOR AND COMMON COUNCIL) That the Mayor and Common Council approve the attached deal pOints for a development agreement with New Frontier, Inc. (COMMUNITY DEVELOPMENT COMMISSION) That the Community Development Commission approve the attached deal points for a development agreement with New Frontier, Inc., and direct staff to draft an appropriate Disposition and Development Agreement for . review and approval. Respectfully Submitted, A tlng Executive Director Supporting data attached: YES FUNDING REQUIREMENTS: NONE Ward: 6th Project: NW Commission Notes: RJT:EJ:KK:3004H Agenda of: 6/7/90 ~ Item No. , RJT:EJ:KK:3004H - '- :- ~ ,- '- C Synopsls of Prevlous Commlsslon/Council/Commlttee (Continued from page 1) '-.../ Action: 01/12/87 Commission approved revised terms and conditions of Haagen Shopping Center. 01/22/90 Rescinded the Exclusive Rlght with Alexander Haagen. 01/22/90 Authorized the execution of an Agreement to Negotiate Exclusively with New FrontIer Commerciol Property, Inc. OS/21/90 90 Days to the performance deadlines In the Right to Negotlate Exclusively wlth New Frontier Commercial Property, Inc., 06/07/90 Redevelopment Committee approval in Concept deal points and draft DDA. RJT:EJ:KK:3004H ,...." '- ...., S TAr r R E P 0 R T -- '",- It appears that New Frontier will be successful in completing its obligations to attract a supermarket tenant and to submit the required development concepts within the amended time frames of their ExclusIve Right to Negotiate. The integrity of the UDAG is dependent upon contInued, tImely progress and It Is critIcal that we begin drafting a proposed development agreement. The final numbers will vary somewhat accordIng to the size of the selected supermarket but draftIng can start because the staff has been negotiating a concept with the developer that will serve as a framework for the final numbers when they are established. CHANGES IN PROJECT ECONOMICS There has been a substantial decrease in the anticipated partIcipation of the Agency/City as compared to the project proposed by Alexander Haagen Development. HAAGEN NEW FRONTIER CHANGE Senior Loan 4,500,000 5,700,000 1,200,000 Subordinate Debt 500,000 800,000 300,000 UDAG 1,848,000 1,848,000 0 City SubsIdy 3,827,000 1,225,000 (2,602,000> Land 1.325,000 1,325.000 0 - TOTALS $12,000,000 $10,898,000 $1,102,000 '- Overall the developer has increased its contribution by $1.5 million, the City/Agency's obligations are reduced by $2.6 million, and the center is $1.1 million less expensIve to buIld. DEVELOPMENT PROPOSAL The attached commItment letter from New Frontier sets forth the specIfIc deal poInts for the proposed development agreement. ThIs sectIon of the staff report dIscusses an overvIew of the proposal. The ratIo of publIc to prIvate fundIng Is approxImately 40t calculated as follows: PublIc Fundlnq Land Cost UDAG Funds RDA Loan $1,325,000 1,848,000 1,225,000 PrIvate Fundlnq SenIor Debt $5,700,000 Subordinate Debt 800,000 PUBLIC TOTAL $4,398,000 (40t> PRIVATE TOTAL $6,500,000 (60t> I"'"" '- RJT:EJ:KK:3004H - o -' The private debt will have a priority position but following payment of the private debt, the developer has agreed that cash flow, sale proceeds and ~ refinancing proceeds wIll be splIt 40% to the City and 60% to the developer ~ (with the CIty return capped at $4,500,000). He estImate the annual return to the City will reach $291,000 In year 3. ThIs Is calculated as follows: Project Cash Flow (40%) Tax Increment Revenue Sales Tax Revenue TOTAL $49,000 73,000 169,000 $291,000 - '-' In addItIon, the City has an opportunIty to act as lender for the $800,000 subordInated debt. It wIll receIve an addItional preferred return of 12% on the outstanding balance. This provides the CIty wIth a high return on Its loan and stIll lowers the developer'S costs, helpIng to bring the Center to completion at a lower cost. A central Issue of the agreement Is the nature and extent of the risk of the prIvate developer. The developer's rIsk Includes: · Guarantee of the senIor debt untIl construction Is completed. · Guarantee of subordinated debt until it Is repaid. · Guarantee of the UDAG until construction is completed. · Guarantee to fund any operating loans. The tentative schedule for the implementation of the agreement Is: · June 7, 1990, approval of deal points continued In developer letter to Bob Temple, dated May 30, 1990, by Redevelopment Committee. · June 18, 1990, approval of deal points by Community Development Commission and City Council and direction to prepare Disposition and Development Agreement. · August 15, 1990, Market lease executed. · December 31, 1990, Final plans approved by City. · March 31, 1991, Site work completed by City. · September 30, 1991. Center open for business. - --- 01T.t'1.VV.'J(\"JlU \ - '- .-' "- ,-. "- ,....., \,,4 ~.,~.r RECOMMENDA nON: Staff, including Mr. Scott Rodde of the National Development Council, has been meeting with New Frontier on a bl-weekly basis and we are making substantial progress. To meet the schedule requirements of the UDAG, It is vital that we begin drafting the anticipated agreements. It is therefore recommended that the Commission and Council recommend approval of the attached commitment letter and direct staff to draft a Disposition and Development Agreement. RJT:EJ:KK:3004H