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CITY OF SAN BERtAlDINO - REQUEST ~R COUNCIL ACTION
Dept:
Community Development
February 22, 1989
Direct~~'o.-~) OFFCDBG LOAN NUMBER L-649-0194-
Illlltl u.. 49 - ROBERT AND MARGARET
-- ~tD 27 P'~ /2: 3QAVARRO DBA BOB'S MARI<ET
.(ji;
From:
Kenneth J. Henderson,
Date:
Synopsis of Previous Council action:
None.
Recommended motion:
That the request for loan restructuring, conversion of loan to a grant
or discontinuing foreclosure proceedings, as appropriate, be denied and
staff directed to continue implementation of loan collection policy
previously adopted by the Mayor and Common Council (Resolution Number
85-417).
Contact person:
Ken Henderson
Phone:
5065
Supporting data attached:
Staff Report
Ward:
1
FUNDING REQUIREMENTS:
Amount:
N/A
Source: (Acct. No.)
N/A
(Acct. DescriPtion)
N/A
Finance:
Council Notas:
A.........."..... 1+........ I\.I^
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~ITY' OF SAN _RNI:.DINO - REQUEST ,caR COUNCIL ACTION
STAFF REPORT
In September, 1978 and March, 1979, the City made two (2) loans
in the amount of $24,127.32 and $33,664.70, respectively, to
Robert and Margaret Navarro, dba Bob's Market, for physical
rehabilitation of Bob's Market. In March 1982, a third loan
waS made to the Navarros in the amount of $11,676 and consoli- .
dated with the first and second loans fora recorded loan
amount of $72,273.59 (in addition to loan amounts, this amount
includes funds for title and recording fees, taxes and insur-
ance).
The promissory note executed in connection with the last
transaction stated that "...in the event the undersivned fails
to pay the interest on or principal amount of this note when
due...the unpaid princpal amount of the note, together with
accrued interest and late charges, shall become due and pay-
able." From the inception of the first loan, the Navarros were
consistently delinquent and on several occasions, allowed the
fire insurance on the subject property to lapse, which in
itself would enable the City to call the loan. Because of the
seriously delinquent status of the consolidated loan, staff,
once again, commenced negotations with the Navarros with the
purpose of assisting the Navarro.s in bringing and keeping the
loan current.
These negotiations resulted in the development and execution of
a Repayment Agreement which superseded the consolidated loan
promissory note. The Navarros honored the provisions of the
Repayment Agreement for one (1) month and subsequently became
360 days delinquent. Under normal circumstances, the City
would have instituted foreclosure proceedings. Staff learned,
however, that the Navarros had obtained financial assistance
from World Equity, Inc., in the amount of $124,100 (subordinate
to the City's first trust deed) and were seriously delinquent
on this loan. World Equity commenced foreclosure, the Navarros
approached the city regarding a second Repayment Agreement and
the City Attorney responded in writing to the Navarros request
stating that "...since you have already once revised your
. repayment schedule, no further revision is permitted under the
City'S policies without specific direction from the Mayor and.
Common Council. Unless you bring payments current, this matter
will be forwarded for foreclosure action." On February 10,
1988, the Navarros remitted to the City a check in the amount
of $14,206.34 as a result of World Equity, the second trust
deed holder, insisting that the Navarro's account with the city
be brought current.
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2/22/89
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Navarro Staff Report Continued...
Page -2-
In keeping with previous practice, the Navarros almost immed-
iately f&ll behind on the loan. Because staff have rejected
requests for additional financial assistance and instituted
foreclosure proceedings, the Navarros have requested to be
heard by the Mayor and Common Council. The following is a
summary of the status of the loan as of February 22, 1989:
Loan Balance:
Date of Last Payment:
For month of:
$51,507.85
June 22, 1988
March, 1988
Principal and Interest:
(through February, 1989)
$ 6,952.22
Late Charges:
(through February, 1989)
$
544.00
Insurance:
(through February, 1989)
$ 4,173.00
Taxes:
(through February, 1989)
$ 2,475.00
Total Amount Due to Bring
Account Current:
$14.144.22
The recommendation to deny any request for additional financial
assistance or other consideration is submitted for the follow-
ing reasons:
1. The Loan Collection Policy previously adopted by the Mayor
and Common Council states "onlv one reDavment aareement
can be developed during the life of the loan (emphasis
added)." The current Repayment Agreement has been contin-
ually violated by the Navarros.
2. The State Board of Equalization has initiated foreclosure
proceedings against the Navarros for non-payment of sales
taxes. According to the state, the property is scheduled
to be sold on April 13, 1989 to recover the State tax lien
of approximately $60,000.
3. World Equity, the second trust deed holder, has also
initiated foreclosure proceedings to recover its lien of
$32,000 (because the original loan amount was $124,100, we
have requested a title report to determine if the Navarros
have obtained financial assistance from another entity to
pay down this loan).
2/22/89
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Navarro Staff Report Continued...
Page -3-
4. A State Board of Equalization representative has indicated
additional tax liens and court judgments are reflected on
its preliminary title report. Indeed, the City's credit
report on the Navarros reflect numerous court judgments in
favor of the Cities of Riverside and Colton. The report
also shows the use by the Navarros of more than one social
security number.
5. Because of the delinquent status of this loan, the city
has advanced $6,648.00 for impound account shortages for
taxes and insurance. This has been done to protect the
City's interest in the property.
I recommend adoption of the form motion.
Kenneth J. Henderso
Director of Commun' y Development
KJH/lab
2/22/89
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