HomeMy WebLinkAboutR06-Redevelopment Agency
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D BOB LOP II B . r DB PAR r II;J. r
OF TIll CIrr OF SAIl BBRlIARDIItO
RBOUBSr POR ClMIISSIOR/C01IltCIL ACTIOR
From:
KElIlIBTIf J. REMlERSOR
Executive Director
Subject: AIIROWVIBW PLAZA (lIichael
Jolm BIlterpr1Se8 Loan
Request)
Date:
September 30, 1992
SvnoDsis of Preyioua C~taaionlCouncil/ComBittee ActionCa}:
See the attached staff report.
RecommPn~ed RotionCa}:
CC-ttv DeyelollBlent CMmisaion}
(Staff Rec~Pn~.tion)
IIDTIO. A: That the Community Development Commission receive and file
the attached staff report regardina the proposed Arrowview
Plaza, Ltd., project.
- OR -
(CouncU_ Pope-Luell_'s Rec"'Pn~.tion)
IIDTIO. B
That the COllllll1lIlity Development Commission approve in
concept a loan guarantee for Arrowview Plaza, Ltd:,
subject to the terms and conditions set forth in the
attsched staff report.
-7)
Administrator
Contact Person(s): Kenneth Henderson/John Hoeaer
Phone:
5081
Project Area(s): Northwest
Ward(s):
Sixth
Supportina Dats Attached:
Staff Reoort
Flll'IDIl'IG REQUIREMENTS:
Amount: $ None.
Source:
nla
Budget Authority:
nla
CommissionlConnril Rotes:
KJH:JBH:dle:5932R
COIIUSSIO. IlEErIlIG AGElUll
lIeetiDa Date: 10/5/1992
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DBVBLOPKB.r DBPARrKB.r
01' rBII ern 01' SAIl _.umIIIO
SUI'!' UPOft
AUOWVIBW PLAZA
111..11.",1 Job :Enterorises (IUB) LollD. Reouest
At the request of Councilwoman Pope-Ludlam, the followina status report
relardina a loan request for Arrowview Plaza has been placed on the
alenda. This item was considered by the Redevelopment Committee at its
meetina of September 24, 1992. Based upon the Committee's instructiona,
if the actual loan doclDents turn out to confoJ:III to the essence of the
expected deal points then Agency loan doclDents whiCh parallel the final
bank doclDents will be prepared and this item will be brOught directly to
the Commission for consideration. If the deal points are substantially
different, then the matter will be referred back to the Committee for
reconsideration.
Michael John :Enterprises (MJB) is the developer that has been involved
with Arrowview Plaza Limited and with Grove Investments Who have both
made proposals for the development of the Arrowview Plaza site on the
southwest corner of Massachusetts and Highland Avenues. The
Redevelopment Committee had previously denied on two occasions the
developer's request for financial assistance.
In September of 1988, a request was received from Arrowhead Plaza Limited
to develop a 75,000 square foot shoppina center on 6.35 acres. The
proposal was later revised in February of 1991 to incorporate the
ezistins Stater Bros., store on MassaChusetts Street and vacate
MassaChusetts. In April of 1991, the Redevelopment Committee considered
a proposal for a joint venture to build the center, but took no action.
On October 8, 1991 the developer withdrew the proposal for a shoppina
center and converted it to . proposed office buildina project with the
County Department of Public Social Services (BPSS) as a tenant. The
proposal also included some additional retail development alona Hi&hland
Avenue.
About a week later, (October 16, 1991) the Redevelopment Committee
received a report on the office buildina proposal and a nlDber of
concerns about the project were discussed. On February 12, 1992, the
developer summarized an approaCh in whiCh the Agency would buy the
developer's land and lease it back with deferred lease payments for the
first four years, but with a preferential return of 6% on the land cost.
KJB:JBH:dle:5932R
COIMISSIO. IIIftI': AGIlIDA
KeetiD& Date: 10/5/1992
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DEVELOPIIIlIr DBPARlnAat-J: SDIT IIPORr
0: A.UOWVIBV PL&U (lUchael Job BIlterpd8ea Loan Requeat)
Septeaber 30, 1992
Page lI1aber -2-
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Upon sale of the land, the developer was to reinvest $850,000 in the
project. On March 7, 1992 the CODlD1mity Development COllllllbsion developed
budaet priorities Which did not provide s source of fundina for the
project.
On September I, 1992 a letter was received by Councilwoman Pope-Ludlam
which indicated the developer had a commitment for a $2,200,000
construction loan for an office buildina on a 4.2 acre portion of the
Bite. The letter proposed that the Asency lend an additionsl $915,000 to
complete construction financina for $3,170,830 in office buildina
improvementa. The letter contained a copy of the attached letter of
intereat from Chino Valley Bank. After discussions with the developer, a
modified proposal (see attached letter from Michael Geber to Timothy
Steinhaus) was received on September 15, 1992 Which contemplates a loan
from Chino Valley Bank to the Bconomic Development Aaency as the
odginatina source of the additional financina. The Asency would then
relend the money to the developer usina the bank's construction fund
disbursement control procedures.
The Asency would not provide collateral or compensatina balances nor
would it pledge receipts to the bank -- the bank's loan would be an
unsecured loan to the Asency. The Asency's loan to the deVeloper,
however, would be secured by a second trust deed. The total loan to
value ratio is calculated by the developer as 67X, usina a value of $8.27
per square foot, for the land value (from a January 6, 1992 appraisal).
The term of the loan will be for twelve (12) montha with an option for a
six (6) month extension.
IlIIIIIediately upon commencement of construction, the developer would
diligently pursue a permanent loan for the buildina Which would be used
to payoff the construction 108IUI upon completion. Chino Valley Bank has
given verbal indications of its interest, although the attached letter of
interest indicated a low fundina level based upon its share of the
construction loan.
The developer has been told that the Department of Public Social Services
facility will house 220 employees, includina those Who are relocatina
from downtown. The project will produce tax increment from the new
construction equallina approximately $25,000 per year (after the County
deducts 34X in the Worthwest Project area). This will produce about
$5,000 per year in set aside funds and $20,000 per year in other
redevelopment funds.
KJH:JBH:dle:5932R
COMIISSIOW IIBBTIlIG A_A
MeetiDa Date: 10/5/1992
Asenda Itea lI1aber: 0
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DBVELOPImIr DBPAaumao: SDIT IlBPOJIT
U: AUOWVlBV PLAZA (lUc:bael Jolm Bnterprisea Loan Requeat)
Septe.ber 30, 1992
Paae lImIber -3-
The exact ter1118 for the loan from the bank to the Agency and for the loan
from the Aaency to the developer have not been determined. It is the
expectation of staff that the following targets are realistic:
Bank to AlIencv AlIencv to Develotler
Principal : $915,382 $915,382
Expiration: 12+6 montha 12+6 months
Interest rate: Prime + 2.0 Prime + 4.0
Loan fees: 2.00% 4.00%
Security: Rone Second trust deed
Based upon the developer's assurances that the bank will not require the
Aaency to place aQy aasets at risk or to reduce its borrowing capacity by
this transaction, staff recollllended and the Redevelopment COllllittee
concurred that the staff continue to negotiate this matter with the
developer and the developer'S bank. In view of the fact staff has yet to
receive applicable documents and business ter1118 from Chino Valley Bank,
it is appropriate that the COllllission receive and file the staff report
and authorize staff to proceed subject to the Chino Valley Bank
cOllllitlDent being in substantial conformance with the deal points
described herein.
Staff recollllends adoption of the form motion "A".
~RSO.' lzecuUye Director
Deyelos-ent Departaent
KJH:JBH:dle:5932R
COIMISSIOR IID'lIllG AGBlUlA
Reetina Date: 10/5/1992
Aaenda It. a-ber: ~
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HIGHLAND AVENUE
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Mic:h.I Jahn Erarp.....
. 1950 SewtaIIe B/vd. Suite 2BD . Los Angeles, CA El('llll)Fi
TII:213-4794B33 . FAX:213-312-D830
~. r.s..othy c. ......,..han.,
~ _fftf_tra1:al:,
~C lMIYI:iI<Or...-z ~"lt,
201 Jrozth . Stnet,
_h'll Jr1.oor,
San ~, Ca. '2'01-1507
,
~ 15 19512
Re. Office 8u11d1l1g aD &1g"" Aft" .a.__ at ......_1m&etU
BOO"'-f(' ~t .ag-vy Cou~ Loan
D8u I'uu
.1~ Dtfezuc. to the above llZld oar recent ~, I _
wrl.tiDg to :roa. .lit. order to update JCU .. to ~.
..."'Of!J IMde tJ:r lIB. . .
~y - -- IIGt1flecl by ,.M..... ftlIer BllDk ~'t the
$2.2IIl CQDIItrgctl.o4 10.. recr ..t .. _11 as the '915,392
lqIID z.qlIe.t: by the AgegcJ', 1IOIIl4 be _.t"'oo"..4.. early..
the .'......1. of DeZt ~.
.. fDrtIua: hel~ ~t the .ar~ loG.. to lIB, as
dev8J.open of this pz:o:Ject;, 1IOIIl4 ~ .. an aQeIId&
.i.~ OIl the ~ C---ft:t:ee _t1Ag -1l-','I19d for
~da.r, s.,Q" ...~.~ U 1992.
A : brief mcap of oar loan nc;paeet to the Ar"1'"J' ie ..
fQl'nwst .
1. ~ ~ of th1a pmject, the addJ.t:1oDa1. '915,392
J.JI ~ t:IO aqppJ-.."L tbe '2.2IIl Mil,..... ValleJ'
Ocaat:z'W:t.1oza loaD !Ii o~ t:o COIIp!ete the office
.bnflf1fftg.
A R881"j. 1- Develapmenc ea,x.. ..... · ""'1 Ca..lto _1lar8 Licel1&.. No. 552752
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2~ Da18 ~ 18 JIO'.r for . gran~ DOr . gift. :1:1: is .
fal17 .8CUJ:ed. loan ~ . fiJald ~J.od em t'-- lUId
ccmd1~fOD. eccep1:aJ:lle to IIo't:h t:ha ~ aDd 'the
bo-.__u:. ften 1JI Be ~ ~ IUlJ' _bar of fees OJ:
....-f1:8. hrtJIer, .. 1:Iae __ of fWIda for this l.oeD.
will. be 1''''.... Valler Bu1c J.taelf, 1:.h1. pmjec1; IIbouJ.d DOt
.U-hoh'b .., of 1:lIe fWIda ~.ent:l7 h Ar-r cof~.
3. Be pzoaeed8 oL t;Jle C1tf.... Va1ler l.oeD. to the Aga%Iq'
will. be upo8J.'ted in1:a 1:lIe I:IaDk r. P"-nJ. oollt.1:ol ~
&IllS be cllUur.~ !ly ~, to tile &n.lop8r far lUle lteml1
"WP""'1JIg La the CCllUlt:rllctlGa badga't:. De d8veloper lwI
DO ~ CODt:xal GnIr t:h88. fwId8 wbaU06'.....
t. ft8 A;eDClJ" loan to 't:IIe d8velapllr .hall be for a period
of bMl... IIDIltha 1d.th lID 0Rt10Il to ezt8a4 for lID
.scut-,-1 .is IIDIltba.
5. we !urre eDClotIed . CCtf!r of t:ha IRad;et t.ft v1th 70U
......I..g oar lut: Y1.-'[1: vh1cJl ... 1I1Im1cc.4 to the lwmk.
'l'ha COR of t:ha :pJ:Oject iJI $5,043,480 -. luna '1,872,650
111 die deal oanel.....
,. We IIIriDq ~ att:ent1cm to the faet that 't:heze i.e 110!:8
1:IIuI. suff:Lei8D't: .1lCUI:11:J' to Ow..... IIo't:h 1:Iae l"hf..... Valle7
fJ%8t aut d-.l u4 t.be Ag8Dcy aec0D4 UUt M8d 111 the
....1 f~ eveAt of ....1'_)1:.
We re~"1:fuJ.17 %eCJU88t t:IIa1: t:he ~ pzoaMd 111 tile
....._1f.t:iou ,...........1119 of thiJl1.oua ~.n ill omer fm=
11: to lie eppzo.e4 .fJml~."-wr17 1d.tIl t:ha l"hl..... ValJ.e.y
BeDJr:: ~"L'O.al. of t:ha coJUl't.net.J.oD loIm.
w. lU:8 of _. _"111.1018 to .--r !lIlY qqest1.oaa you
.q Ila.va u4 t-1l."1( JDll1l1 adnDce for all of JOUr .f.Dput,
...18".- aDd _pport.
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ARIlOlIVIEW PLAza
REDEYELDPIIENT AGENCY APPLICATION
CHINO SANK LAIID VALUE AS APPPUSED
187265 SQ.FT OF LAIID
COST OF PROJECT: $5,On.ClO COST OF PROJECT: $4,719,512
LAND VALUE t$10: ($1,872,650) -UNO '$8.27: -$1,548,682
CONSTR. LOAN : $3,170,830 CONSTR.LOAN : $3,170,830
CHINO PORTION : $2,200,000 LOAN TO VALUE : 67.19%
DIFFERENCE : $970,830 EQUITY TO LOAN : 48.84'
LESS .ARKETlNG : ($6,000) EQUITY TO COST : 32.81'
LESS PEIltl!. POINiS ($49,438)
REQUIRED FROM CITY $915,392
NOTES :
l.LAND HAS SEEN APPRAISED' $8.27 PER SQ.FT
2.APPRAISAL IS $4,000,000 FOR PROJECT ON 91930 SQ. FT OF LAIID
3.ACTUAL LAND IS 187215 SO.FT. ADDITIONAL LAND OF 95335 SQ.FT
PROVIDES ADDITIONAL SECURITY
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AUG-'31-92 liON 15:29
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AUgust 31, 1992
Mr. Michael Geber
1950 Sawtelle Blvd. Suite '250
Los Angele., CA 90025
Dear Mr. Geber:
Ba.ed up certain discur" .~ that we have had, which included a
review of .elected fir. 'C ,1 information, Chino Valley Bank is
pleased to i.sus this I ,r: _sian of intere.t to you.
Plea.. understand that ",.z i. a proposal and should not be con-
strued a. a commitment 1n any way. Furthermore, thi. letter is
not a contract nor an offer to enter into a contract.
The proposed financing would inVOlve a pos.ible credit arrange-
ment on the aqqregate principal amount ot $2,200,000 for the con-
struction of Arrowview Plaza. Th. term. of this tacility could
be aa follows.
Borrower: Arrowvi~w Plaza, Ltd., Limited Partnership
Amount: $2,200,000.00
Expiration: One year from loan inception.
Pricing: Prime + 2.0.
Fee: 2.00'
Advance: No more than 60t of the tee simple value ($3,370,000
per appraisal dated 1-6-92) and no more than 25'
on appraised land value.
-Collat.r.l:--Firat-~ruat deed.
The bank i. also willing to conaider a permanent financing
facility in the amount of $2,600,000 one. the county ot San Ber-
nardino occupies the buildinq SUbject to the terms of the exist-
ing leue.
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AUGr31-92 MON 15:30
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Mr. Michael Geller
paqe 2
The aforementioneel crec1it tacUity 18 subject to tuture neqo-
tiations betw.en Borrower anel Bank alonq with comprehensive loan
documents all in form and substance satisraotory to Bank. Addi-
tionally, any tina1 credit facility is subjeot to: 1) Approval by
administrative authorities within Bank, 2) satiSfactory ReView ot
approveel final buildinq and qradinq plan. and 3) Future review of
Company'stinancial statements anel any other ana1YBis Bank deems
appropriate, the results ot which must be satisfaotory to Bank 1n
its Bole elisoretion.
This expre..ion of inter..t 1s personal to the aforementioned
borrower and may not be transterred or assigned to any other in-
elivielual or entity.
Sincerely,
(.. CHINO VALLEY BANK
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Robert L. Brown
Vice President .
Manaqer
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