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Home My WebLink AboutRS03-Economic Development Agency 1-_- o o . DEVELOPMENT DEPARTMENT OF TIlE CITY OF SAN BERNARDINO REOUEST FOR COMMISSION/COUNCIL ACTION From: KENNETII J. HENDERSON Executive Director Subject: PROPERTY IMPROVEMENT LOAN PROGRAM Date: September 22, 1994 Svnoosis ofPrevlous Commlssloo/CouocillCommittoo Aetloo(s): The Communi1y Development Conunission reviewed the Owner Participation Agreement (OP A) proposal between Mr. William H Cooper and the Redevelopment Agen<:j to effectuate a moderate rehabilitation loan in the amolmt of $650,000 on September 15, 1994, and denied approval for said transaction. Reeommeoded Motlon(s): (Communltv Develooment Commission) That the Communi1y Development Commission approve as to form an Owner Participation Agreement between Mr. William H. Cooper and the Redevelopment Agen<:j and authorize the Chairman and EDA Agen<:j Administrator to execute any document necessary to effectuate said transaction. TIMOTHY C. TEINHAUS Agency Administrator 13... ttAA"- J! ~ J,. rt J.,- KENNETIlJ.HENDERSON /" Executive Director Contact Person(s): Barbara LindsethlEdward Flores Phone: 5081 Project Area(s): _ Ward(s): T"" (2) Supporting Data Attached: StaffReporl' Owner Particioation Al!feement (OPA) FUNDING REQUIREMENTS: AmOlmt: $450.000rNot to exceed) Source: LowlMod Budget Authori1y: N/ A Commission/Council Notes: cooperopa COMMISSION MEETING AGENDA Mootlog Date: 10/03/1994 Agenda Item Number: .L;> - 3 o o DEVELOPMENT DEPARTMENT OF THE CITY OF SAN BERNARDINO STAFF REPORT ------------------------------------------------------------------------------------------------------------ PROPERTY IMPROVEMENT PROGRAM Housing Division staffrecently mailed correspondence directly to multi-family property owners located within one of the two (2) "focus" neighborhoods regarding property improvement assistance program availability. Included in financial assistance requests received by the Development Department was the following multi-family property: Property Name: Property Owner: Property Address: Norman Manor William H. Cooper 488 West 17th Street 1749 North "E" Street Forty-Two (42) 1935 1972 Wood Frame with plaster f"mish 28 Studio Units - $385 Month 14 One Bedroom Units - $430 Month Owner pays utilities (Water, Gas, & Electric) Numher of Units: Year Constructed: Date Purchased: Construction: Rent Schedules: At a special meeting held on September 15, 1994, the Commission was presented with a proposed Owner Participation Agreement/Loan Agreement with Mr. William H. Cooper for the properties located at 1749 North "E" Street and 488 West 17th Street consisting of a 42 unit apartment project. The original loan request was in the amount of$650,OOO comprised of two separate notes each at 3% interest and each in a dollar amount of$325,OOO. One loan was to amortize fully over 20 years and the additional loan was non-interest bearing until after the first $325,000 loan had been paid in full. The second loan was scheduled to amortize during years 21 through 35. The Agency voted 7-0 to deny the loan request as proposed on September IS, 1994. Since that date, Agency Staff has had continuing conversations with Mr. Cooper and his attorney regarding a less extensive renovation project at a substantially reduced cost Rather than relying upon prior contractor prepared proposals, Mr. Cooper has prepared a precise work description on a unit- by-unit basis and has obtained preliminary cost estimates from several contractors. Mr. Cooper will be conducting a more thorough bidding process during the next week to determine the exact cost for each line item comprising the renovation work. As of this date, Mr. Cooper estimates that the total work including the value of the demolition previously undertaken will not exceed $450,000 and in all probability would be $350,000 to $380,000. cooperopa COMMISSION MEETING AGENDA Meeting Date: 10/03/1994 Agenda Item Number:_ o o The repayment tenns of the loan would be as follows: 1. S225,OOO@3%amortizedfor20yearsfromMarch 1,1995 through February I, 2015; monthly payment oUI,247.85. 2. (a) $225,000@3%interestonlyfromMarch 1,1995 through February 1,2005; monthly payment of $562.50. (b) $225,000 @ 3% amortized for 20 years from March I, 2005 through February 1,2025; monthly payment of $1,247.85. Summary Years I - 10 $1,247.85 +562.50 $1,810.35 permonth Item 1. Item2.(a) Yearsll-20 $1,247.85 +1.247.85 $2,495.70 per month Item I Item 2.(b) Years 21 - 30 $1,247.85 permonth ltem2.(b) Any reduction in the cost of the project would be used to reduce the second $225,000 portion of the estimated $450,000 loan. Such second portion of the loan would be interest only for a 10 year period and would then amortize dwingthenext 20 years of the term of the loan Ifforexample, the total cost of the project were $350,000, the loan payment amounts would be calculated as follows: 1. $225,000 @ 3% amortized for 20 years from March I, 1995 through February I, 2015; monthly payment of$I,247.85. 2. (a) $125,000@3%interestonIyfromMarch 1,1995 through February 1,2005; monthly payment of$312.50. (b) $125,000@3%amortizedfor20yearsfromMarch I, 2005 through February 1,2025; monthly payment oU693.25. Summary Years 1 - 10 $1,247.85 Item 1. +312.50 Item2.(a) $1,550.35 per month $1,247.85 Item I +693.25 Item 2.(b) $1,941.10 per month $693.25 per month Item 2.(b) Years II - 20 Years21-30 --------------------------------------------------------------------------------- coopecopa COMMISSION MEETING AGENDA Meeting Date: 10/03/1994 Agenda Item Number: _ o o Staffreconunends that (i) the Owner Participation Agreement/Loan Agreement be approved as to form and (ii) the Chairman and Agency Administrator be directed to negotiate the final terms and conditions and to execute the final form of said Agreement after Mr. Cooper has completed the necessary bidding process. The Agency will have the added assurance that all rehabilitation loan funds are used solely for the verifiable labor and material amoWlts. Staff will strictly monitor all draw requests, and payments for labor and materials will be made only upon receipt of customary invoices and payment requests, as is typically obtained from other Agency monitored construction projects. cooperopa COMMISSION MEETING AGENDA Meeting Date: 10/03/1994 Agenda Item Number: _ . 1"\ f"\ DEVELOPMENT DEPJmTMENT CITY OF SAN BERNARDINO HOUSING DIVISION REHABILITATION SECTION INCOME & EXPENSE STATEMENT OWNERS NAME(S): William Cooper PROPERTY ADDRESS: 488 W 17th. Street & 1749 N "E" Street, San Bernardino, CA INCOME UNIT # OF CURRENT CURRENT AFTER REHAB AFTER REHAB SIZE UNITS RENT ANNUAL RENT ANNUAL Studios - 28-- -- 385 - 129,360 -- -- ---One Bedroom 14 430 72,240 - ,,,r::"'I\L LU~ OTHER INCOME ~ RENTAL OPERATIONS REVENUE VACANCY ALLOWANCE CURRENT 15.00% (30~ 15.00% ANNUAL EFFECTIVE GROSS REVENUE 171, ~ ANNUAL FIXED CHARGES REAL ESTATE TAXES 5,440 PERSONAL PROPERTY TAXES INSURANCES 8,650 OPERATING EXPENSES ELECTRIC WATER FUEUGAS RUBBISH HAULING ADVERTISING 1,600 SEWER/SEPTIC OTHER _ TOTAL UTILITIES 49,697 r----... -- MAINTENANCE EXPENSES BUILDING IMPROVEMENTSIREPAIRS 15,050 ------- . .--- PERSONAL PROPERTY . YARD & GROUND CARE ----.-...-......--, SWIMMING POOL SERVICE -- OTHER RESERVE FOR REPLACEMENTS BUILDING COMPONENTS PERSONAL PROPERTY LEGAL 2,100 OTHER PAYROLL OR FEES RESIDENT MANAGER MANAGEMENT FEES 12.00% . 12.00% TOTAL ANNUAL EXPENSES ANNUAL NET OPERATING INCOME (N.OJ,) 6ll,:llSU DEBT SERVICE EXISTING DEBTS PROPOSED FIRST MORTGAGE P 691877.45 56,446 SECOND MORTGAGE OTHER ~;ffi- TOTAL EXISTING DEBT SERVICE ANNUAL CASH FLOW 11, . o o DEVELOPMENT DEPARTMENT OF THE CITY OF SAN BERNARDINO REOUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Executive Director Subject: PROPERTY IMPROVEMENT LOAN PROGRAM Date: September 22, 1994 -------------------------------------------------------------------------------------------------------------- Svnoosis of Previous Commiosion/CouneWCommittee Action(s): The Community Development Commission reviewed the Owner Participation Agreement (OP A) proposal between Mr. William H Cooper and the Redevelopment A&eru::Y to effectuate a moderate rehabilitation loan in the amount of $650,000 on September IS, 1994, and denied approval for said transaction. ---------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Communitv Develooment Commission) That the Community Development Commission approve as to form an Owner Participation Agreement between Mr. William H. Cooper and the Redevelopment Agency and authorize the Chairman and EDA Agency Administrator to execute any document necessary to effectuate said transaction. ;j....~<MO" =Jf,,) 30. ~ J.~ KENNElRJ.HENDERSON /" Executive Director TIMOTIlYC. TEINHAUS Agency Administrator -------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Barbara LindsethlEdward Flores Phone: 5081 Project Area(s): _ Ward(s): Two (2) Supporting Data Attached: Staff Reoort: Owner Particioation Al!reement COP A) FUNDING REQUIREMENTS: Amount: $450 OOOCNot to exceed) Source: LowlMod Bodget Authority: N/ A ----_.~--------------------------------------------._-._-~----------------.__._--------------------------------.._------ Commission/Council Not..: --------------------------------------------------------------------------------- cooperopa COMMISSION MEETING AGENDA Meeting Date: 10/03/1994 Agenda Item Number:~S --3 o o DEVELOPMENT DEPARTMENT OF TIlE CITY OF SAN BERNARDINO STAFF REPORT ------------------------------------------------------------------------------------------------------------ PROPERTY IMPROVEMENT PROGRAM Housing Division staff recently mailed correspondence directly to multi-family property owners located within one of the two (2) "focus" neighborhoods regarding property improvement assistance program availability. Included in financial assistance requests received by the Development Department was the following multi-family property: Property Name: Property Owner: Property Address: Norman Manor William H. Cooper 488 West 17th Street 1749 North "E" Street Forty-Two (42) 1935 1972 Wood Frame with plaster f"mlsh 28 Studio UnIts - $385 Month 14 One Bedroom Units - $430 Month Owner pays utilities (Water, Gas, & Electric) Number of Units: Year Constructed: Date Purchased: Construction: Rent Schedules: At a special meeting held on September 15, 1994, the Commission was presented with a proposed Owner Participation Agreement/Loan Agreement with Mr. William H. Cooper for the properties located at 1749 North "E" Street and 488 West 17th Street consisting of a 42 unit apartment project. The original loan request was in the amount of $650,000 comprised of two separate notes each at 3% interest and each in a dollar amount of $325,000. One loan was to amortize fully over 20 years and the additional loan was non-interest bearing until after the frrst $325,000 loan had been paid in full. The second loan was scheduled to amortize during years 21 through 35. The Agency voted 7-0 to deny the loan request as proposed on September 15, 1994. Since that date, Agency Staffhas had continuing conversations with Mr. Cooper and his attorney regarding a less extensive renovation project at a substantially reduced cost. Rather than relying upon prior contractor prepared proposals, Mr. Cooper has prepared a precise work description on a unit- by-unit basis and has obtained preliminary cost estimates from several contractors. Mr. Cooper will be conducting a more thorough bidding process during the next week to determine the exact cost for each line item comprising the renovation work. As of this date, Mr. Cooper estimates that the total work including the value of the demolition previously undertaken will not exceed $450,000 and in all probability would be $350,000 to $380,000. --------------------------------------------------------------------------------- cooperopa COMMiSSION MEETING AGENDA Meeting Date: 10/03/1994 Agenda Item Number:_ . o o The repayment terms of the loan would be as follows: I. $225,000@3%amortizedfor20yearsfromMarch 1,1995 throughFebruaty 1,2015; monthly payment of$I,247.85. 2. (a) $225,000 @ 3% interest ouly from March I, 1995 through February I, 2005; monthly payment of $562.50. (b) $225,000 @3% amortized for 20 years from March I, 2005 through February I, 2025; monthly payment of $1,247.85. Summarv Years I - 10 $1,247.85 Item I. +562.50 Item 2.(a) $1,810.35 per month $1,247.85 Item I +1.247.85 Item 2.(b) $2,495.70 per month $1,247.85 per month Item 2.(b) Years 11 - 20 Years 21 - 30 Any reduction in the cost of the project would be used to reduce the second $225,000 portion of the estimated $450,000 loan. Such second portion of the loan would be interest ouly for a 10 year period and would then amortize during the next 20 years of the term of the loan. !ffor example, the total cost of the project were $350,000, the loan payment amounts would be calculated as follows: I. $225,000 @ 3% amortized for 20 years from March I, 1995 through February I, 2015; monthly payment ofSl,247.85. 2. (a) $125,000@3%interestonlyfromMarch I, 1995 through February 1,2005; monthly payment of$312.50. (b) $125,000@3%amortizedfor20yearsfromMarch 1,2005 through February I, 2025; monthly payment of $693.25. Summarv Years I - 10 $1,247.85 Item I. +312.50 Item 2.(a) $1,550.35 per month $1,247.85 Item I +693.25 Item2.(b) $1,941.10 per month $693.25 per month Item 2.(b) Years 11 - 20 Years 21 - 30 --------------------------------------------------------------------------------- cooperopa COMMISSION MEETING AGENDA Meeting Date: 10/03/1994 Agenda Item Number:_ . o o Staff recommends that (i) the Owner Participation AgreementlLoan Agreement be approved as to form and (ii) the Chairman and Agency Administrator be directed to negotiate the final tenns and conditions and to execute the final form of said Agreement after Mr. Cooper has completed the necessaty bidding process. The Agency will have the added assurance that all rehabilitation loan fimds are used solely for the verifiable labor and material amounts. Staff will strictly monitor all draw requests, and payments for labor and materials will be made only upon receipt of customary invoices and payment requests, as is typically obtained from other Agency monitored construction projects. --------------------------------------------------------------------------------- cooperopa COMMISSION MEETING AGENDA Meeting Date: 10/03/1994 Agenda Item Number:_ . . n ("\ DEVELOPMENT DE~TMENT CITY OF SAN BERNARDINO HOUSING DIVISION REHABILITATION SECTION INCOME & EXPENSE STATEMENT OWNERS NAME(S): William Cooper PROPERTY ADDRESS: 488W17th. Street & 1749 N "E" Street, San Bernardino, CA INCOME UNIT # OF CURRENT CURRENT AFTER REHAB AFTER REHAB SIZE UNITS RENT ANNUAL RENT ANNUAL Studios - 28- 1-- 385 129,360 - One Bedroom 14 430 72,240 IAL ;lUl. OTHER INCOME ~ RENTAL OPERATIONS REVENUE VACANCY ALLOWANCE CURRENT 15.00% (30,240) 15.00% ANNUAL EFFECTIVE GROSS REVENUE 171,;SliU ~ ANNUAL FIXED CHARGES REAL ESTATE TAXES 5,440 PERSONAL PROPERTY TAXES INSURANCES 8,650 OPERATING EXPENSES ELECTRIC WATER FUEUGAS RUBBISH HAULING ADVERTISING 1,600 SEWER/SEPTIC OTHER TOTAL UTILITIES 49,697 MAINTENANCE EXPENSES ..- --- BU!LDING IMPROVEMENTSIREPAIRS 15,050 ---.----.. .----.- PERSONAL PROPERTY . YARD & GROUND CARE -------------, SWIMMING POOL SERVICE OTHER RESERVE FOR REPLACEMENTS BUILDING COMPONENTS PERSONAL PROPERTY LEGAL 2,100 OTHER PAYROLL OR FEES RESIDENT MANAGER MANAGEMENT FEES 12.00% 20,563 12.00% TOTAL ANNUAL EXPENSES lU;S,lUU ANNUAL NET OPERATING INCOME (N.O.!.) 1llI."ClU DEBT SERVICE EXISTING DEBTS PROPOSED FIRST MORTGAGE p 691877.45 56,446 SECOND MORTGAGE OTHER ~ TOTAL EXISTING DEBT SERVICE ANNUAL CASH FLOW 11,014 ,.... "'''''