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HomeMy WebLinkAbout1982-1882000-1 4/27/8'2 RESOLUTION NO. 82-188 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AN APPLICATION FOR INDUSTRIAL DEVELOPMENT BOND FINANCING; DIRECTING THE PREPARATION OF CER- TAIN DOCUMENTS; AND MAKING CERTAIN OTHER FINDINGS AND DETERMINATIONS IN CONNECTION THEREWITH (GREGORY) WHEREAS, the City of San Bernardino, California ("City"), is a "home rule city" duly organized and existing under and pursuant to a Charter adopted under the provisions of the Constitution of the State of California; and WHEREAS, pursuant to its home rule powers, the City duly and regularly enacted Ordinance No. 3815 (the "Ordinance') to finance various types of projects, as defined in the Ordinance, and to issue its special revenue bonds for the purpose of paying the cost of financing such projects, and has amended the same from time to time; and WHEREAS, said Ordinance No. 3815, as amended, is intended to finance the development of industry and commerce and to thereby broaden the employment opportunities for residents of the City and its tax and revenue base; and WHEREAS, there has been presented to this Mayor and Common Council an Application, attached hereto as Exhibit "A" and incorporated herein by reference by Arthur Gregory, Jr., an individual (the "Applicant"), requesting the issuance of industrial development bonds in the principal amount of not to exceed $10,000,000 for the purpose of financing, on behalf of the Applicant, a certain Project, to wit: a commercial office and retail building together with a theater complex on a certain site located at 491 West Fifth Street, within the Central City Redevelopment Project Area, in the City of San Bernardino, California, including, without limitation, the acquisition of land and equipment therefor and off-street parking for motor vehicles and all off-site and on-site improvements necessary therefor and appurtenances and appurtenant work (the "Project"). -1- NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: Section 1. That the recitals set forth hereinabove are true and correct in all respects. Section 2. The City of San Bernardino, California, is a municipal corporation duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Constitution and laws of the State of California, and the City Charter of the City, and the powers of the City include the power to issue bonds for any of its corporate purposes. Section 3. Pursuant to the Charter of the City and Ordinance No. 3815, as amended, of the City, the City is legally authorized to issue special revenue bonds for the construction and permanent financing as described in the recitals hereof. Section 4. This body constitutes the governing body of the City and is legally authorized to provide for the issuance of such special revenue bonds by the City. Section 5. The Project referred to in the recitals hereof constitutes a project which may be financed by the issuance of such special revenue bonds by the City and located within the jurisdiction of the City. Section 6. The Application referred to in the recitals hereof complies with the provisions and requirements of said Ordinance No. 3815, as amended, and the Project involved in such Application is hereby approved and the provisions of Subsection (d) of Section 10 and Subsection (a) of Section 11 of said Ordinance No. 3815 shall not apply. Section 7. The City hereby declares its intention to exercise the authority referred to in Section 3 hereof by issuing bonds of the City in such amounts as will be adequate to implement the City financing of the Project. -2- Section 8. The bonds shall be payable from the revenues described in said Ordinance No. 3815, as amended. Section 9. The bonds shall be and are special obligations of the City, and, subject to the right of the City to apply moneys as provided in the applicable laws, are secured by such revenues as are specified in the proceedings for the issuance of such bonds and funds and accounts to be held by the trustee or fiscal agent, and are payable as to principal, redemption price, if any, and interest from the revenues of the City as therein described. The bonds are not a debt of the City, the State of California or any of its political subdivisions, and neither the City, the State, nor any of its political subdivisions is liable thereon, nor in any event shall the bonds be payable out of the funds or properties other than all or any part of the revenues, mortgage loans, and funds and accounts as in this Resolution set forth. The bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the persons serving as the Mayor and Common Council nor any persons executing the bonds shall be liable personally on the bonds or subject to any personal liability or accountability by reason of the issuance thereof. Section 10. The details of such bonds, including the establishing of the aggregate face amount of such obligations, shall be authorized by indenture, resolution or resolutions of the City at a meeting or meetings to be held for such purpose. The City Staff, the Law Offices of Timothy J. Sabo as Bond Counsel to the City, Underwriters, the Applicant and the agents and representatives of same are hereby authorized and directed to prepare or cause to be prepared the necessary legal documents, including the Project Agreement, Resolution of Issuance, and such other documents as may be necessary to effect said Project and the issuance of industrial development revenue bonds therefor and to present same to said Mayor and Common Council. The Mayor of the City is hereby authorized and directed to coordinate the efforts of all concerned relating to the issuance and sale of the bonds, and the City Staff, consultants, legal counsel to the City and Bond Counsel as referenced above are hereby directed to take such steps as shall be appropriate to implement such sale and delivery of the bonds including working with persons who may acquire vested rights as the result of such actions. -3- Section 11. This Resolution constitutes a proper exercise of the powers of this Mayor and Common Council and conforms to State and local legal requirements relating to the issuance of such special revenue bonds and other bonds or debt obligations by a charter city in this State. Section 12. It is intended that this Resolution shall constitute such "official action" toward the issuance of the bonds within the meaning of the United States Treasury Regulations, the United States Tax Laws, and any legislation now or hereafter pending in the Congress of the United States which may require official action in order for the bonds to be exempt from Federal income taxation. Section 13. At the closing of the financing there shall be paid to the City the fee set forth in Resolution No. 81-108 of the Mayor and Common Council, adopted March 13, 1981, as amended by Resolution No. 81-410, of the Mayor and Common Council, adopted September 24, 1981. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a regular meeting thereof, held on the 3rd day of May , 1982, by the following vote, to wit: AYES: Council Members Castaneda, Reilly, Hernandez 4uiel, Hobbs, Strickler NAYS: None ABSENT: Council Member Botts The foregoing resolution is hereby approved this May , 1982. Approved as to form: City Attorney -4- San day of 2,002-1 4/27/82 APPLICATION OF ARTHUR GREGORY, JR., FOR INDUSTRIAL REVENUE BOND FINANCING PART I GENERAL AND BUSINESS INFORMATION 1.1 The legal name of the Applicant is "Arthur Gregory, Jr., an individual." 1.2 The Applicant is engaged in the line of business which is the development, construction and renovation of commercial, retail and office buildings including appurtenant structures and facilities. 1.3 The mailing address and principal place of business of the Applicant are as follows: Mr. Arthur Gregory, Jr. 1520 Crown Street P.O. Box 830 Redlands, California 92373 1.4 Social Security No. 547-22-6944 1.5 Arthur Gregory, Jr., is the principal contact for the Applicant. 1.6 Telephone Number (714) 792-9518 1.7 The Applicant is an individual. 1.8 N/A 1.9 The name of the principal of the Applicant is Arthur Gregory, Jr., located at the address set forth in Section 1.3. 1.10 Other business affiliations of the Applicant are as follows: (a) Redlands Security Company (b) Inland Contractors, Inc. (c) Forsberg & Gregory Contractors, Inc. (d) Falcon West, Inc. 1.11 Employees 1.11.1 The Applicant currently has ten employees in the State of California and will ultimately provide an additional one hundred ninety-five (195) employment opportunities upon Project completion. 1.11.2 The Applicant is presently located in Redlands, California. 1.12 Professional services will be provided by the following: - 1 - 1.12.1 Sauer, Dudley, McKensie and Bovee of San Bernardino shall serve as the accountant for the Applicant and the contact person with said firm is Marvin Dudley at (714) 889-0284. 1.12.2 Charles C. Graeber of Graeber & Broderick of San Bernardino is the attorney for said firm which is the firm of attorneys for the Applicant. 1.12.3 The Law Offices of Timothy J. Sabo of San Bernardino and Los Angeles shall serve as Bond Counsel to the City with regard to the tax-exempt financing of the Project. 1.12.4 Principal Architect - to be determined. 1.12.5 Principal Structural Engineer - Johnson & Nielsen Associates 1.12.6 Principal Contractor - to be determined. 1.13 The principal banking accounts of the Applicant are held by Bank of America, Redlands Branch, Redlands, California, the officer of said bank responsible for such account is Dean Cullep. 1.14 The source of funding for the Project will be from the proceeds of a private placement of a tax-exempt bond or other obligation with a hereafter to be obtained lender. PART II BOND ISSUE 2.1 The estimated total amount of the financing package and the proposed use of bond proceeds is as follows: 2.1.1 Project cost (including land and building acquisition) - $2,250,000 2.1.2 Legal, printing and related fees - $32,000 2.1.3 Financing costs and fees - $40,000 2.1.4 Capitalized interest - $330,000 2.1.5 Other miscellaneous costs - $21,000 2.1.6 Land acquisition - (included in "Project cost" 2.1.1) 2.1.7 City Reserve Fund - $27,000 Total: $29700,000 2.2 The estimated target date for the financing is presently anticipated to be June 1, 1982, with construction and renovation to commence in July, 1982 and to be completed within six (6) months thereafter. 2.3 It is proposed that the financing be in the form of a construction loan during the construction period which would have the traditional construction loan provisions in that drawdowns would be permitted as construction proceeds -2- upon submission of requisition vouchers to the lender. Upon the completion of construction and the certification that all improvements have been completed, the lender will then permit an interest rate adjustment and a principal amount increase, as warranted, and convert the construction loan to a permanent financing. 2.4 The present proposal anticipates that the tax-exempt bonds or other obligations will be sold to a commercial bank or other such lender through a private placement which would not involve any public offering of such securities. PART III FINANCIAL INFORMATION 3.1 The financial statements for the Applicant are included as Exhibit "A" hereto, and shall be reviewed by the firm of accountants set forth in Section 1.12.1 hereof. 3.2 The Applicant is an individual doing business pursuant to the laws of the State of California as such or in conjunction with the entities listed in Section 1.10, and the Applicant would be considered a small business with regard to its relative size as to other such businesses undertaking projects of this type. Although the Applicant is a small business entity, no federal guarantees will be involved in the financing as contemplated by this Application. PART IV PROJECT INFORMATION 4.1 The Project as proposed by the Applicant will serve the purpose of renovating an existing structure within the Central City Redevelopment Project Area by providing a theater, office space and retail commercial space in the Downtown area of the City of San Bernardino, and, in particular, within the Redevelopment Project Area of the Redevelopment Agency of the City of San Bernardino set forth above. The objective of the proposed project is to construct and renovate such theater, office and retail commercial facility upon a parcel known as the "Platt Building" located at 491 West Fifth Street, in the City of San Bernardino, California. Such building will be of approximately 46,019 gross square feet. The Applicant by being able to construct and renovate said Project within the City of San Bernardino will thus be in a position to attract businesses and retail commercial establishments to locate within the Downtown area of the City within said Redevelopment Project Area. There would therefor be an increase in the assessed valuation of underutilized land and buildings which would consequently generate significant employment opportunities within the City. 4.2 The components and the estimated total cost of the functional parts of the Project are as follows: ISIC 4.2.1 Land - $600,000 4.2.2 Buildings - $1,330,939 4.2.3 Other equipment - $ -0- 4.2.4 Architectural and engineering - $50,000 4.2.5 Miscellaneous items (a) Construction loan interest $107,767 (b) Leasing $ 55,000 (c) Permits $ 5,000 (d) Contingency $101,294 Total: $2,250,000 4.3 The estimated construction period for the project is as follows: 4.3.1 Estimated construction date would be within six (6) months after issuance of the tax-exempt obligations, which in all probability would be by December 1, 1982. 4.3.2 The scheduled completion date would be during approximately January, 1983. 4.4 The supervising or consulting engineer responsible for the design of the Project on behalf of the Applicant shall be Lonnie Mount of Johnson and Nielson Associates of Riverside. 4.5 The Project is called the "Platt Building", 491 West Fifth Street, San Bernardino, California 92401, shall be located within the Central City Redevelopment Project Area. 4.6 The Project site is an alteration and renovation of a building previously acquired by the Applicant pursuant to a lease agreement. The acquisition of the building is subject to a purchase contract by and between the owner thereof and the Applicant. 4.7 Town Square Inc., is the owner of the Project site. 4.8 The Project will provide 17,863 square feet space for a theater and 28,156 square feet of leaseable retail commercial space to be occupied by various retail tenants. 4.8.1 Attached as Exhibit "B" is an 8-1/2 x 11 inch map showing the site location of the proposed Project. 4.8.2 A description of the plant process - not applicable. -4- 4.9 A negative declaration pursuant to the provisions of the California Environ- mental Quality Act of 1970, as amended, would in all probability be satisfactory for the Project as proposed by the Applicant. However, although such is not anticipated, any ultimate user of the Project which would cause any alteration or a significant adverse effect upon the environment will be required to undertake their own environmental con- siderations pursuant to CEQA. 4.10 There are no permits, water quality enforcement orders, air pollution permits or variances or other evidence of actions demonstrating the need for installation of this Project. 4.11 There are no local, state or federal pollution control agencies which would be imposing regulations, standards or requirements with regard to the operations or disposal aspects of the proposed Project to be undertaken by the Applicant. 4.12 The proposed Project shall comply with all applicable City of San Bernardino, County of San Bernardino, and other regional, county or basin plans to which this Project shall conform and the appropriate waste water and air quality requirements which shall be in conformity with all of the above jurisdictions. 4.13 It is presently anticipated that the proposed Project to be undertaken by the Applicant will not produce any by-products or residues which would involve the ultimate disposal or the need for a plan to accomplish same. Recycling or salvage will not be a function of the proposed Project nor will there be any market opportunities generated with regard to same. PART V PUBLIC BENEFITS 5.1 The City of San Bernardino will receive significant benefits by the initiation of this Project as proposed by the Applicant and particularly through the utilization of the financing method as is available under Ordinance No. 3815, as amended, of the City of San Bernardino. Because conventional interest rates for construction and permanent financing for the type of project contemplated by the Applicant is at such an extremely high interest rate on conventionally borrowed funds, if available at all, neither the Applicant nor any others are able to provide the type of renovated theater, office and retail commercial space that is needed within the City of San Bernardino. Additionally, the City of San Bernardino and the Redevelop- ment Agency of the City of San Bernardino will benefit as will the citizens of the City by increasing the assessed valuation of property within the Redevelopment Project Area known as the Central City Redevelopment Project Area which will assure that the Redevelopment Agency of the City of San Bernardino will have a more viable means of undertaking its redevelopment activities within said Project Area. The City likewise would benefit by obtaining a quality theater and office and commercial retail structure which will be newly rehabilitated and will in its ultimate usage provide employment opportunities and encourage other businesses to relo- cate within the City of San Bernardino and thus create a upward spiraling effect on the economy of the City. -5- 5.1.1 The Project will provide long term employment for a section of the locally unemployed. Presently, limited employment opportunities exist with the companies occupying the Project being Crest Theater, Blum Jewelers, Darrahs Pharmacy, Orange Julius and Waycotts Flowers. When fully leased and operational the complex will provide jobs for approximately one hundred and ninety-five (195) persons. The category of jobs to be provided include managerial, skilled, semi -skilled and unskilled. The wages to be paid in the various job categories meet local and regional standards and will sustain a satisfactory level financial stability. The facility will be renovated in accordance with all applicable federal, state and local laws and regulations, hence working conditions are satisfactory. 5.1.2 The City's involvement in the planning and development of the Project will assist the City in attracting the types of businesses most deserved by the City, permit a greater amount of imput for each of the jobs to be created. 5.1.3 Additional benefits anticipated to be realized by the reduction of unemployment and the under -employment attributable to the installation of the Project and the general economic revitalization resulting therefrom include the reduction of public assistance expenditures because the Project will be self supporting at no unreimbursed cost to the City. 5.1.4 Construction of the Project is anticipated to add approximately $1,200,OOOof assessed valuation to the tax rolls of the City. In addition it is anticipated that the Project will generate additional sales tax and business license revenues for the City. 5.1.5 The useful method of financing provided for in Ordinance No. 3815 of the City vis a vis the use of the conventional method will permit the Applicant to complete the financing and construction of the Project within an accelerated time frame. As the City is well aware, conventional interest rates are at historically high levels and many sources of conventional financing do not currently have funds available to loan at any interest rate. The method of financing provided in Ordinance No. 3815 will provide new sources of financing to the Applicant and such financing will be made available at lower tax-exempt interest rates. 5.2 The City will benefit, as can be demonstrated pursuant to Section 1 of Ordinance No. 3815, as amended, of the City of San Bernardino, in that employment opportunities will be generated by the proposed Project both during the construction phase and after said Project is fully leased. The Applicant is not attempting to construct said proposed Project merely for the financial inducement that is offered pursuant to the Ordinance, but rather due to the long-term business reasons that are significant due to the location of the proposed Project and the real economic benefits available to the community. There are no detriments that can be incurred by the City with regard to this type of financing for this Project, and the City of San Bernardino and the Redevelopment Agency of the City of San Bernardino will receive substan- -6- PART VI COMMITMENTS 6.1 The Applicant by the submission of this Application agrees to comply and/or to assist the City in complying with all State and federal laws in the issuance of the bonds or other such tax-exempt obligations to finance the Project, including, without limitation, making of any required application to a governmental department, for authorization, qualification or registration of the offer, issuance or sale of the bonds or other tax-exempt obligations, and any amendments thereto, and any permit or other authorization of such governmental department, prior to the delivery by the City of such bonds or other tax-exempt obligations. 6.2 The Applicant further commits to cause and/or to assist the City in causing to be printed any prospectus or other written or printed communication proposed to be published in connection with the issuance, offer or sale of bonds or other tax-exempt obligations, prior to the delivery by the City of such bonds or other tax-exempt obligations, and, to the extent deemed necessary by the City, following delivery of such bonds or other tax-exempt obligations. 6.3 The Applicant also commits to pay all expenses in connection with the issuance, offer or sale of the bonds or other tax-exempt obligations, whether or not such bonds or other tax-exempt obligations are finally issued, and to hold the City harmless from any and all expenses related thereto, to pay items on an ongoing basis so that neither the City, nor its advisors, attorneys, employees and the like will accumulate any claims against the City. 6.4 The Applicant will supply any additional information, agreements and undertakings as the City may require as a result of conferences and negotiations will be reproduced and supplied to the City and shall be deemed as supplements or amendments to this Application. PART VII SIGNATURE 7.1 The undersigned as an authorized officer of the Applicant as noted below is the officer of the Applicant holding the prime responsibility for the financing to be taken for the proposed project, and certifies that such person has the authority to bind the Applicant to contract terms; that this Application to the best knowledge or belief of the undersigned, contains no false or incorrect information or data, and this Application, including exhibits and attachments hereto, is truly descriptive of the proposed project. The undersigned also represents by signing of this Application familiarity with Ordinance No. 3815, as amended, of the City of San Bernardino. PART VIII FEE SCHEDULE 8.1 The Applicant acknowledges that the City requires a non-refundable appli- cation fee of $50 for each project to be considered for eligibility, to be paid when the basic documents are requested. With the submittal of this Application, $500 is payable to the City. If this Application is accepted, an additional fee of $10,000 is payable for administrative costs. The Applicant acknowledges that the commitments in Part VI above are in addition to -8- tial benefits through increases in assessed valuation of property within a redevelopment project area, plus the increased long-term employment opportunities that will be available to the local residents of the City. 5.2.1 The Project is anticipated to have a beneficial impact on the unemployment problem in the City without imposing a financial burden or adverse effects on areas outside the boundaries of the City or on transient residents of the State. 5.2.2 The Project will not produce detrimental effects on or conflict with or otherwise restrain State efforts to solve problems of legitimate State concern. 5.2.3 The Applicant has legitimate long term business reasons for con- structing the Project including the long term profit potential, labor pool access and other economic factors in comparison to which the financing of the Project is not as important. However, as described in 5.1 the financing of the Project under the method provided by Ordinance No. 3815 will provide additional financing to the Applicant at lower tax-exempt rates and will enable the time schedule for installation of the Project to be accelerated. 5.2.4 The City will only provide a method of financing the Project and will only be paid certain fees to reimburse the City for costs incurred by the City in connection with the financing of the Project. The City will not realize a profit in such a manner as to compete with or rival private firms and the Applicant is not requesting the City take any more action than is necessary to consummate the financing. As described in part 5.1, certain incidental benefits will of course accrue to the City as a result of the installation of the Project. 5.2.5 In part 5.1, the Applicant has outlined the programs by which it is expected that the Applicant's activity in the City will increase long term employment of local residents. 5.2.6 The City will receive a substantial benefit (as described in paragraph 5.1) from installation of the Project that exceeds any detriment incurred by the City. The Project will be self supporting. Ordinance No. 3815 and the documents pursuant to which any bonds issued by the City to finance the Project provide or will provide that such bonds are limited obligations of the City to finance the Project payable only from revenues generated by the Project, and that all fees and expenses incurred by the City in connection with the Project will be required to be paid by the Applicant. Indirect benefits such as the increases in the property tax base and increases in other taxes and user fees are anticipated to exceed other taxes and user fees are anticipated to exceed any indirect detriment to the City such as increases in cost of police and other municipal services. 5.2.7 The Applicant will not take any action that will result in a violation of any applicable State standards relating to sewage disposal. -7- these fixed amounts. Thus, in the event that no closing occurs, the City shall be reimbursed for its processing costs. 8.2 All fees of the City may be capitalized and included in the bond issue as acceptable to the bond purchaser. 8.3 The Applicant acknowledges that the City derives its entire support from the fees for its services. The total function of the City is conducted on a self-supporting basis, and involves no State general revenues or expenditures from taxes from the state or any of its political subdivisions. No indebtedness or taxing power of the City is involved. Project revenues are the sole security for bonds of the City. The federal guarantees, if any, enhance these revenues and income and the security of the bonds. 8.4 Pursuant to Resolution No. 81-108 of the City, as amended by Resolution No. 81-410 of the City, one percent (1%) of the principal amount of the bond issue shall be deposited in the City Treasury in the Industrial Revenue Bond Reserve and Development Fund, which shall be used in such manner as the Mayor and Common Council may direct from time to time. ARTHUR GREGORY, JR., an individual -9- 3 F/FTN .5rREET .VAFVALK C' LARCON DEVELOPMENTiNc. THE PLATT BUILDING PREPARED BY: 5ff6 PLAN AMI, a.'ez Z T N U rA� SM NOT STREET SUITE A LARCON DEVELOPMENTiNc. THE PLATT BUILDING PREPARED BY: 5ff6 PLAN AMI, a.'ez 91.1N 5T FIFTH STREET TERRY LAFONTAINE �EsiC.N caNsuLTANT- N _ '91 $ERNARDINO, CA SM NOT STREET SUITE A SAN BERNARDINO, G 92405 LARCON DEVELOPMENTiNc. i S,%J JRTi` TOWN SQUARE DEVELOPMENT CORPORATION 110`2 �a �.a.i PLATT BUILDING P. O. BOX 030 pH. 714-793-9518 REDLANDS, CALIF. 93373 i 90-3535 1222 AY D PMENTION TOT E `. C RATION OR OF �V OLLARS TOWN SQUARE�DEVELOPMENT CORPORATION Baulkf PLATT BU INO �TCRWIS AVE.. RE 1 2 OLARDS. CALIF. 02313 11'001,10 2,1' ®1: & 2 2 2353551: 010 24387u'O i