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.. CI'f~ OF SAN BERNARD~""O - REQlI~ST FOR COUNCIL A~ION
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From: Kenneth J. Henderson, Director
Subject: Status of Agreements Assumed by City
from San Bernardino Economic Develop-
ment Council
Dept: Community Development
Date:
May 21,1987
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Synopsis of Previous Council ection:
On November 3,1986, the Mayor and Common Council approved in concept the transfer to
City of the San Bernardino Economic Development Council small business loan program.
On December 8,1986, the Mayor and Common Council adopted Resolution #86-487
approving the transfer of the San Bernardino Economic Development Council small business
loan program to City. The City Attorney was directed to prepare a contract between the
San Bernardino Economic Development Council and City.
On May 18, 1987, the Mayor and Common Council adopted a resolution approving a contract
between City and San Bernardino Economic Development Council. Staff was directed to
prepare a summary of the status of the agreements transferred to City from San Bernardino
Economic Development Council.
Recommended motion:
That the Mayor and Common Council receive and file staff report on status of agreements
assumed by City from San Bernardino Economic Development Council under its
Revolving Loan Program and direct staff to take appropriate action.
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-1L& V.~
Contact person:
Ken Henderson/Nestor Nazario
Phone:
5065
Supporting data atteched:
Staff Report
Ward:
1-7
FUNDING REQUIREMENTS:
Amount:
N/A
Sou rce:
Finance:
Council Notes:
7s.o262
Agenda Item No
S-I
· CI"C~f' OF SAN BERNARD~ - REQV-:ST FOR COUNCIL A~TION
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STAFF REPORT
On May 18, 1987, the Mayor and Common Council adopted a resolution
authorizing the assumption by City of certain agreements, excluding the
La Esperanza loan, entered into by San Bernardino Economic Development
Council (SBEDC) under its Revolving Loan Fund program. This program
had provided financial assistance to small businesses, particularly
those owned by minorities and females. Subsequent to the above action,
the Mayor and Common Council directed staff to provide a summary of the
agreements City has assumed and report back to Council at its June 1,
1987 meeting. The following is the information requested:
Monthly
Business Amount/Interest pavment Term
Buttercup Bakery $ 70,000/10.5% $., 920.83 7 years
Option House $246,000/incl. $ 684.00 30 years
in lease
Don's Drug Store $180,000/incl. $1,500.00 10 years
in lease
Cajun's Seafood $ 20,000/8% $ 191.13 15 years
(5 yr. CD)
Foothill/Meridian Pl. $ 60,000/7% $ 465.18 20 years
<15 yr. CD)
Heritage House $ 75,000/10% $1,875.00 Due 5/17/87
Parking Lot
Julia's Enterprises $ 30,000/8% $ 363.98 10 years
(5 yr. CD)
Community Financial $ 60,000/10% $1,274.82 5 years
Services
Progressive Mortgage $ 27,314/7% $ 245.51 15 years
Ht. Vernon Hardware $ 35,000/7% $ 314.00 15 years
The agreements with Buttercup Bakery, Don's Drug Store, Meridian Plaza,
Julia's Enterprises, Community Financial Services and Ht. Vernon
Hardware are current (Mt. Vernon Hardware has paid through August,
1987). Option House, which entered into a thirty (30) year lease
purchase agreement with the City, is seven (7) months delinquent
($4,788.00) and is currently reorganizing itself in order to continue
operations; John Haywood, doing business as Cajun's Seafood, is four
(4) months delinquent ($764.52) and is apparently not in operation; the
Progressive Mortgage loan agreement specifies that monthly loan
payments are deferred for a period of two (2) years; and the quarter:y
5/26/87
75.0264
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SBEDC Staff Report
May 26, 1987
Page -2-
payment (due May 1, 1987) on the Heritage House Parking lot of
$1,875.00 has been deferred by SBEDC for ninety (90) days. Loans made
to the Renaissance Bakery, Vent-Cair and Operation Second Chance are in
bankruptcy and are being handled by other agencies or the City's
bankruptcy counsel.
Prior to the Mayor and Common Council approving the assumption of the
agreements noted above, staff had developed guidelines and loan under-
writing criteria for the Community Development Department Economic
Development Program (small business loans). The guidelines, under-
writing criteria, loan requirements and standardized loan agreement
were approved by the Mayor and Common Council on December 8, 1986.
While it must be recognized that there will be some risk in any loan
agreement the City enters into, the benefit accruing to the City as a
result of the effective and efficient implementation and adherence to
the recently adopted guidelines and procedures cannot be overstated.
Staff recommends that the Mayor and Common Council adopt the form
motion and authorize staff to take appropriate actions, if any, relat-
ing to the agreements described above.
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Kenneth J. Henderson
Director of Community Development
KJH/lab/0300
5/26/87