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AGENDA ITEM INFORMATION SUMMARY
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GENERAL INFORMATION:
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Committee
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CLEARANCES:
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.B'i City Acmilistralor
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Admililhllv8 Deputy
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CITY DEPARTMENTAL REVIEW:
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RDA COmmlttN ffICOmmendatlon
Dept
By
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INFORMATIONAL DATA FORWARDED TO CITY DEPARTMENTS/COUNCIL OFFICES:
Sent 10
By
Date
Mayor's Office
Council Ward
CouncIl Ward
Council Ward
Council Ward
Departmenl
Departmenl
COMMENTS/CONCERNS: Include pertlnenl comments and concerns of offices and persons clearing the
summary, such IS controversial Issues, time conllrslnts and funding compllcatlons,lndlcate dales when
action mull be taken,
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RDA -174
REV. 6-29-89
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Redevelopment Agency · City of San Bernardino
300 Ncnh "D" SIIeeI, Fcunh F100r . San BemIrdino, Cllifcmia 92418
(714) 384-5081 FAX (714) 888-9413
Pride ./
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Ste_ H. Dukett
EKocutive DiJecror
SEPTEMBER 26, 1989
ARROWHEAD HEALTH CARE SYSTEM - AMENDED DDA
~nopsts of Previous Commission/CounctlLlo~mittee Action:
09-21-89 The Committee reviewed the item and recommended approval.
R~commendeiLlo!oJ LQll:
(COMMUNITY DE\ELOPME~T COMMISSIO~)
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That the Commission approve a Second Amendment to the Disposition and
Development Agreement with Arrowhead Health Care System, Inc.
Contact Person: Steven H. Duke! t
Phone: 38~-508I
Supporting data attached: YES
liard: 6
Fl'!\Dl'iG REQrI REME!\TS:
Project: NIi
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Agenda of:~~tob!"r 2, 1989
I t.em No. _ fR_._______n
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Redevelopment Agency
S T A F F
REPORT
This is to request that the Commission approve a Second Aaendaent to the
Disposition and Developaent AGreeaent (DDA) with Arrowhead Health Care System,
Inc. The itea should be heard provided that Arrowhead Health Care has agreed
to the final fora of the amendment and that it contains the basic deal points
discussed below,
BACKGROUND
On Noveaber 20, 1986, the Redevelopaent Agency entered into a DDA with San
Bernardino Coaaunity Hospital, which was amended on May 2, 1988. It provided
that the Agency would sell a 5,31 acre site to Coamunity Hospital who would
develop an 80-100,000 square foot aedical office building,
In February, 1989, Mr, Ray Barton, President and CEO of Arrowhead Health Care
System, Inc., (the successor to eoamunity Hospital), requested that the
Agreement be again amended to show a new time schedule and to show Arrowhead
Helath Care System as the contracting corporation instead of San Bernardino
Coamunity Hospital,
As escrow did not close by September 1, 1988, the project has been in
technical default, The priaary reason for the default is that Arrowhead
Health Care had considerable difficulty obtaining financing and a developer to
develop the site.
PROPOSED AMENDMENT
Over the past several weeks there has been a series of aeetings between Agency
staff and Arrowhead Health Care representatives, Although a few minor details
need further review, the following issues have been resolved and will be in
the amended agreement:
* The Site will be conveyed immediately even though development is not
ready to proceed because financing and developaent permits are not in
place;
* The Agency will not allow encumbrances of the site until Arrowhead Health
Care has an irrevocable construction loan com.itment;
* If the project does not go forward Arrowhead Health Care has the option
to return the property or purchase at its full market value;
* Land will be paid for by tax increment produced by the project;
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Redevelopment Agency
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Arrowhead Health Care System, Inc" must build a mlnlmum of 50,000 square
feet in two stories with a value of at least $5,000,000;
* Construction is to start no later than twelve (12) months after
conveyance of title and is to be completed no later than eighteen (18)
months after commencement of construciton; and
* Agency will reimburse Arrowhead Health Care System, Inc" their actual
cost of the 1% issuer's fee associated with the refinancing of the
Community Hospital Bonds (fee estimated to be $380,000) after such fee
has actually been paid by Arrowhead, The Agency's payment would be made
at the later to occur of (i) the encumbering of the site with a deed of
trust in favor of a financial institution securing repayment of a loan
providing construction funds, or (ii) the closing of the sale of the
contemplated bonds.
RECOMMENDATION:
On September 13, 1989, Agency staff and Arrowhead Health Care completed
discussions on the basic deal points that are to be reflected in the
amendment, Further amendments were discussed at the Redevelopment Committee
meetings of September 21, 1989 and are reflected above. The final amendment
is being drafted by Agency's Special Counsel and should be ready by September
29, 1989. To avoid delay of this critical project, the Redevelopment
Committee recommended that the amendment be forwarded to the Community
Development Commission for consideration provided, Arrowhead Health Care has
signed the final agreement. In the event that Arrowhead Health Care has not
signed the Agreement by 11:00 a,m, on October 2, 1989, it is recommended that
the matter be continued,