HomeMy WebLinkAboutR34-Economic Development Agency
,
ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM: Ann B. Harris, Director SUBJECT:
Business Recruitment, Retention & Revitalization
440 WEST COURT STREET - LOAN
GUARANTEE
DATE:
May 10, 1999
ORIGINAL
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Svnopsis ofPrevions Commission/Council/Committee Action(s):
On November II, 1994, the Community Development Commission approved a short term loan in the amount of $45,000
rolled into $104,000 - 1995.
On March 22, 1993, the Community Development Commission approved an Owner Participation Agreement between
the Agency and HatIelFox and a $1,125,000 loan guarantee with Valley Bank.
Recommended Motion(s):
(Community Development Commission)
MOTION: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVING AN ESCROW
LETTER IN CONJUNCTION WITH THE RECONVEYANCE OF GUARANTEES, REPAYMENT
OF LOAN AND TRANSFER OF FURNITURE, FIXTURES AND EQUIPMENT (440 WEST COURT
STREET)
Contact Person(s):
Gary Van Osdel/ Ann B. Harris
Central City North (CCN)
Phone:
Project Area( s)
Ward(s):
5081
One (I)
Supporting Data Attached: liiI Staff Report IllI Resolution(s) IX! Agreement(s)/Contract(s) 0 Map(s) 0 LetterlMemo
FUNDING REQUIREMENTS Amount: $
Source:
SIGNATURE:
Budget Authority:
~
nn .' ams, rrector
Bus. Recruitment, Retention & Revital
Commission/Council Notes:
ABH:lag:99-05-17 440 Court
COMMISSION MEETING AGENDA
Meeting Date: 05/17/1999
Agenda Item Number: 26.y
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
440 West Court Street Loan Guarantee(HatIe&Fox)
On March 22,1993, the Community Development Commission approved an OPA between the
Agency and Hatle/Fox and a $1,125,000.00 Loan Guarantee with Valley Bank of Moreno Valley.
The balance of that loan has been reduced, with a current balance of$780,000.00.
After years of being vacant, the building at 440 West Court Street went through major
renovations converting the property from an office use to a restaurant and night club use. This
required major expenses to add a kitchen, walk in refrigerators, three bars and to bring the
building into code compliance.
There have been three businesses in the building since the conversion of the property. The
failure of these three businesses was caused by a variety of reasons, but poor management has
been the overwhelming factor. Business failure of the tenants has caused this property to be at
risk. On November 11, 1994 the Community Development Commission approved a short-term
loan in the amount of$45,000.00 and in 1995 the agency made payments to the bank as per the
loan guarantee. The $45,000.00 loan was rewritten into a $104,000.00 loan. At this time the
balance of this loan is $97,000.00.
Carlos 0 Brien opened for business the first of May 1999. The owner and management of this
business has a proven track record and has the experience to be successful at this location. Carlos
o Brien has a very successful operation in Riverside and Fontana and will be cross promoting the
San Bernardino location along with these other establishments. Carlos 0 Brien will employ
approximately 30 employees, generate tax revenues and create additional activity downtown.
Agency staff has worked out an agreement with BatIelFox and Valley Bank to release the
Agency from the loan guarantee, with a current balance of 5780,000.00.
A. The fixture, furniture and equipment located on the property at 440 West Court Street
will be assigned to the Agency in exchange for the personal loan of$97,000.00.
B. The Agency will assign the FF&E to Valley Bank, the Bank will release the Agency
from the loan guarantee, current balance of$780,000.00, on property located at 440 West Court
Street. (Heritage Building).
C. Hatle/Fox will pay cash to the Agency to close on the property at 5414 N Hallmark
Parkway, $473,500.00 as defined in the DDA
The Agency is the winner in several ways with this transaction:
ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
440 WEST COURT STREET LOAN GUARANTEE
May 17,1999
Page-2-
1. Carlos 0 Briens opens for business, bank agreed to attorn the lease. Carlos 0
Brien will have on hands management, owner/manager, with a proven track record.
Business will create 30 new jobs, generating tax revenues and creating activity downtown.
2. Agency is released from the loan guarantee of 5780,000.00 on 440 West Court
Street Property.
3. The Agency receives 5473,500.00 cash for sale of property at 5414 N Hallmark
Parkway, property goes back on tax roDs, Agency will receive in cash, upon completion of
project, the savings from the flood control adjustment,(S333,500.00). Saving will be
accomplished by a new site plan, building smaUer buildings rather than one large building
on this site.
4. City gets new industrial development, property goes back on tax roDs, generating
additional tax revenues and creating jobs.
To accomplish all that has been laid out in this transaction very specific and detailed escrow
instructions will be required. Attached is the Escrow Instructions and Disbursement Instruction
for EDA, HatleIFox, Valley Bank for the Property located at 440 West Court Street; and as
between the EDA and Hatle, the property located at 5414 N Hallmark Parkway: (See
Attachment)
Based on the foregoing, staff recommends the adoption of the Resolution.
~~
HARRIS, Director Business
Recuritment, Retention, Revitalization
ABH: 5/17/1999
COMMISSION MEETING AGENDA
MEETING DATE: 5/17/99
Agenda Item Number: 2~1
CITY OF SAN BERNARDINO
INTEROFFICE MEMORANDUM
CITY CLERK'S OFFICE
RECORDS & INFORMATION MANAGEMENT (RIM) PROGRAM
Date:
May 21,1999
To:
Gary Van Osdel, Executive Director, Economic Development Agency
From:
Melanie Miller, Senior Secretary
Re:
Transmittal for signature - Resolutions from 05/17/199 meeting
Attached are the following:
Original documents:
Resolution CDC 1999-16
Resolution 1999-93 attachments only
Please obtain signatures where indicated on all copies.
Please return the executed original to the City Clerk's Office as soon as possible, to my attention.
If you have any questions, please do not hesitate to contact me at ext. 3212. Thank you.
Rachel Clark
City Clerk
By: Melanie Miller
I hereby acknowledge receipt of the above mentioned documents.
Signed: ~~vJ" I J~{
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RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT
COMMISSION OF THE REDEVELOPMENT AGENCY OF THE
CITY OF SAN BERNARDINO APPROVING AN ESCROW
LETTER IN CONJUNCTION WITH THE RECONVEYANCE OF
GUARANTEES, REPAYMENT OF LOAN AND TRANSFER OF
FURNITURE, FIXTURES AND EQUIPMENT (440 WEST
COURT STREET)
WHEREAS, the Redevelopment Agency of the City of
8 San Bernardino (the "Agency") is a public body, corporate and
9 politic organized under the laws of the State of California; and
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WHEREAS, the Agency and Fox Brothers, a General
12 Partnership (" Fox Brothers") and Colorado Consulting Limited
13 Liability Company, a Wyoming limited liability company, dba
C 14 Imprimis (" Colorado Consulting") entered into an Ownership
15 Participation Agreement (Heritage Office Building) dated July 28,
16 1993 ("OPA") providing for the development of that certain real
17 property located at 440 West Court Street in San Bernardino,
18 California (" Property" ); and
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WHEREAS, pursuant to the OPA the Agency assisted Fox
21 Brothers and Colorado Consulting in the refinancing of an
22 obligation incurred by Fox Brothers and Colorado Consulting in
..23 connection with a certain tax-exempt financing issued by the Agency
24 on behalf of Fox Brothers and Colorado Consulting; and
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WHEREAS, the aforementioned refinancing consisted of a
C 27 loan ("Loan") from Valley Bank ("Lender") in the amount of One
28 Million One Hundred Twenty Five Thousand Dollars ($1,125,000.00)
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1 evidenced by a loan agreement by and between Valley Bank, Fox
2 Brothers and Colorado Consulting dated July 28, 1993 (~Loan
3 Agreement"); and
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5 WHEREAS, Community National Corporation, a California
6 corporation (~CNC") subsequently succeeded to the rights and
7 obligations of Colorado Consulting under the OPA and the Loan
8 Agreement (Fox Brothers and CNC being hereinafter collectively
9 referred to as ~ Participant"); and
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11 WHEREAS, in connection with the Loan Agreement the Agency
12 executed an Agency Guarantee Agreement dated July 26, 1993 pursuant
13 to which the Agency guaranteed to Lender the repayment of the Loan
14 (~Agency Guarantee"); and
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16 WHEREAS, on November 30, 1994 the Agency and the
17 Participant entered into a loan agreement (~Agency Loan Agreement")
18 pursuant to which the Agency agreed to make a loan to Participant
19 in an amount not to exceed Forty Five Thousand Dollars ($45,000.00)
20 (~Agency Loan") to enable Participant to bring the Loan current and
21 make payments on the Loan until the Property was occupied by new
22 tenants; and
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24 WHEREAS, in connection with the Agency Loan, Russell E.
25 Hatle and Raymond Fox executed and delivered to the Agency a
26 personal guarantee (~Hatle/Fox Guarantee"); and
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C 1 WHEREAS, subsequently the Agency Loan was increased to
2 One Hundred Four Thousand Dollars ($104,000.00) ; and
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4 WHEREAS, the Loan has a current balance of Seven Hundred
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5 Eighty Thousand Dollars ($780,000.00); and
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7 WHEREAS, the Agency Loan has a current ,balance of Ninety
8 Seven Thousand Dollars ($97,000.00); and
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10 WHEREAS, Participant desires to repay the Agency Loan and
11 to extinguish the Hatle/Fox Guarantee by assigning to Agency all
12 Participant's right, title and interest to the furniture, fixtures
13 and equipment ("FF&E") located on the Property; and
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15 WHEREAS, the Agency is willing to accept an assignment of
16 the FF&E is payment of the Agency Loan and to extinguish the
17 Hatle/Fox Guarantee in connection therewith; and
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19 WHEREAS, the Agency desires to assign the FF&E to the
20 Lender for an extinguishment of the Agency Guarantee; and
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22 WHEREAS, the Lender desires to accept the FF&E from the
23 Agency and to extinguish the Agency Guarantee in connection
24 therewith; and
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26 WHEREAS, there is a need for timely coordination of all
27 of the above transactions; and
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1 WHEREAS, there has been filed with the Secretary of the
2 Community Development Commission proposed escrow letter
3 instructions to be delivered to an escrow holder selected by the
4 Agency and the Participant in connection with the above
5 transactions.
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NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION,
ACTING ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF
SAN BERNARDINO, DOES HEREBY RESOLVE, DETERMINE AND ORDER AS
FOLLOWS:
Section 1. A09rova1 of Escrow Letter Instructions.
The Agency hereby approves the escrow letter instructions in
substantially the form presently on file with the Secretary
together with any changes therein or additions thereto as may be
approved by the Executive Director. The Executive Director of the
Agency is hereby authorized and directed to execute and deliver,
and.the .Secretary or Assistant Secretary is hereby authorized and
directed to attest to, the final form of escrow letter instructions
when the same have been prepared.
Section 2. Official Action. The Executive Director
and Secretary and any and all other officers of the Agency are
hereby authorized and directed, for and in the name and on behalf
of the Authority, to enter into an escrow arrangement with an
escrow company with respect to the transactions contemplated herein
and to deliver the escrow letter instructions to such escrow
company and to do any and all things and take any and all actions
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C 1 which they, or any of them, may deem necessary or advisable in
2 order to consummate the transactions contemplated herein.
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1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVING AN
2 ESCROW LETTER IN CONJUNCTION WITH THE RECONVEYANCE OF GUARANTEES,
REPAYMENT OF LOAN AND TRANSFER OF FURNITURE, FIXTURES AND EQUIPMENT
3 (440 WEST COURT STREET)
4
Section 3.
This Resolution shall take effect upon the
5 date of its adoption.
6 I HEREBY CERTIFY that the foregoing Resolution was duly
7 adopted by the Community Development Commission of the City of
8 San Bernardino at a
meeting
9 thereof, held on the
day of
, 1999,
10 by the following vote, to wit:
I1 Commission Members: AYES NAYS ABSTAIN ABSENT
12 ESTRADA
LIEN
13 McGINNIS
SCHNETZ
C 14 DEVLIN
ANDERSON
15 MILLER
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day of
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Secretary
The foregoing resolution is hereby approved this
, 1999.
Judith Valles, Chairperson
Community Development Commission
of the City of San Bernardino
24 By: I
Agency Counsel
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1 STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO )ss
2 CITY OF SAN BERNARDINO )
3 I, Secretary of the Community
Development Commission of the City of San Bernardino, DO HEREBY
4 CERTIFY that the foregoing and attached copy of Community
Development Commission of the City of San Bernardino Resolution
5 No. is a full, true and correct copy of that now on file
in this office.
6
IN WITNESS WHEREOF, I have hereunto set my hand and
7 affixed the official seal of the Community Development Commission
of the City of San Bernardino this day of
8 1999.
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Secretary of the
Community Development Commission
of the City of San Bernardino
Out1ine of Escrow Xnstructions and disbursement instructions for
EOA, FoxfBat1e and Va11ey Bank for the property 10cated at 440 West
Court Street; and as between the BOA and Bat1e, the property
10cated at 5414 North Ba11mark Parkway:
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The "Initial Closing Date" shall occur on or about May 19, 1999,
and the "Hallmark Closing Date" shall occur on or about May 30,
1999.
I. Documents, checks and instruments to be provided by following
parties to the Escrow Holder on or before May 18, 1999:
A. EDA
1. Release of Personal Guaranties of Ray Fox and Russ
Hatle;
2. Certificate of Satisfaction of remaining $97,000
loan balance and accrued and unpaid interest on EDA
loan to Fox/Hatle;
3. Reconveyance of Deed of Trust on 440 West Court
Street securing Personal Guaranties of Ray Fox and
Russ Hatle;
Acceptance of FF&E from Fox/Hatle for 440 West
Court Street;
Conveyance of FF&E from EDA to Valley Bank;
Executed copy of Amendment No. 2 to DDA for
Hallmark Parkway property;
executed _Grant Deed for transfer of Hallmark
Parkway property from EDA to Hatle;
Preliminary Title Report for Hallmark Parkway
property;
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B. Fox/Ha tIe
1. Conveyance of FF&E to EDA for subsequent transfer
to Valley Bank;
2. Executed copy of Amendment No. 2 to DDA for
Hallmark Parkway property;
3. deposit of cashier's check for $473,500 plus
$ for allocable share of closing costs on
Hallmark Parkway property purchase from EDA;
C. Valley Bank
2.
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SBEO/0001/DOC/3493
1.
Check for $
440 West Court
Completion of
Street;
for
Street;
trustee's
payment of back taxes on
sale on 440 West Court
Page 1 of 2
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3.
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5.
Release of EDA Guaranty;
Release of Fox/Hatle Guaranty;
Certificate of Satisfaction of all remaining
principal and interest, late charges and penalties
due and owning on the loan to Fox/Hatle for the 440
West Court Street property;
II Upon satisfaction of all conditions contained in Section I.
above, the Escrow Holder shall be authorized to close the
escrow, disburse funds, record documents and take the other
actions as set forth below:
A. As of the Initial Closing Date and upon satisfaction of
all conditions of the escrow and upon receipt of all
funds and documents required by the terms of the Escrow,
the Escrow Holder shall undertake the following:
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record trustee's deed to 440 West Court Street;
record the Reconveyance of Deed of Trust from the
EDA to Fox/Hatle;
Disburse $ for payment of back property taxes
on 440 West Court Street;
simultaneously deliver the (i) Conveyance of FF&E
from Fox/Hatle to EDA and (ii) Conveyance of FF&E
from EDA to Valley Bank;
Transmit to the EDA the Release of EDA Guaranty as
executed by Valley Bank;
Transmit to Fox/Hatle the Release of EDA Guaranty
as executed by the EDA;
Transmit to Fox/Hatle the Release of Bank Guaranty
as executed by Valley Bank;
Transmit to Fox/Hatle the Certificate of
Satisfaction of the EDA loan;
Transmit to Fox/Hatle the Certificate of
Satisfaction of the Valley Bank and all principal,
interest, penalties and late charges;
B. As of the Hallmark Closing Date and upon satisfaction of
all additional conditions required by the terms of the
Escrow, the Escrow Holder shall undertake the following:
1. record the Grant Deed for the transfer of title to
the Hallmark Property from the EDA to Hatle;
2. deliver the CLTA Title Policy to Hatle;
3. disburse to the EDA an amount equal to $473,500
representing the cash purchase price for the
Hallmark Property;
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SBEO/0001/OOC/3493
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