HomeMy WebLinkAboutR31-Economic Development Agency
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT:
Subaru of San Bernardino - Termination of
Loan Participation Agreement (Southeast
Industrial Park Project Area)
DATE:
May 6, 2011
SvnoDsis of Previous Commission/Council/Committee Action(s):
On February 19, 1996, the Community Development Commission of the City of San Bernardino ("Commission") approved a
Loan Participation Agreement ("Agreement") with Subaru of San Bernardino (the "Participant"), in the amount of$190,000 to
be used for on-site improvements including the remodeling of sales/display areas, driveway approach and lighting.
On May 5, 2011, the Redevelopment Committee recommended to the Commission approval to terminate the Loan
Participation Agreement by and between the Redevelopment Agency of the City of San Bernardino and Subaru of San
Bernardino (Southeast Industrial Park Redevelopment Project Area).
Recommended Motion(s):
(Community Develooment Commission)
Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing
the Interim Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to
terminate the 1996 Loan Participation Agreement by and between the Agency and Subaru of San Bernardino, a
California corporation ("Participant") (Southeast Industrial Park Redevelopment Project Area)
Contact Person(s):
Colin Strange
Southeast Industrial Park
Redevelopment Project Area
Phone:
(909) 663-1044
Project Area(s):
Supporting Data Attached:
Ward(s):
3
o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s)
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Signature: .
Emil A. M 110" .
Interim Executive Director
Budget Authority:
N/A
N/A
FUNDING REQUIREMENTS:
Amount: $
-0-
Source:
Fiscal Review:
Commission/Council Notes:
P:\AgendasIComm Dev ComrnissionlCDC 2011105-16-11 Subaru _ Termination of Loan Panicipation Agreement SR.docx
COMMISSION MEETING AGENDA
Meeting Date: 05/16/2011
Agenda Item Number: k
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
SUBARU OF SAN BERNARDINO - TERMINATION OF
LOAN PARTICIPATION AGREEMENT
(SOUTHEAST INDUSTRIAL PARK PROJECT AREA)
BACKGROUND:
On February 19, 1996, the Community Development Commission of the City of San Bernardino
("Commission") approved a Loan Participation Agreement ("Agreement") with Subaru of San
Bernardino (the "Participant"), in the amount of $190,000 to be used for on-site improvements
including the remodeling of sales/display areas, driveway approach and lighting. These improvements
became necessary after the construction of public right-of-way improvements to lower "E" Street, just
north of the Santa Ana river which effectively blocked the view of the dealership from the street and
would otherwise have had serious consequences on the sales volume of this business.
The amount outstanding on the loan is $117,958.03. The City of San Bernardino's ("City") portion of
the sales tax generated at this dealership fluctuates between approximately $112,000 and $150,000 per
annum depending upon market conditions. Sales tax numbers generated from all the new sales
automobile dealerships have indicated that the Subaru dealership has been least affected by market
fluctuations and sales have remained relatively steady despite the recent economic downturn. The
Subaru license agreement with the dealership gives the Participant exclusivity in the entire Inland
Empire.
CURRENT ISSUE:
The Participant has received an offer to purchase the business from Imperial Imports, Inc., owned by
Mr. Cliff Cummings. Imperial Imports, Inc., is the owner of Toyota of San Bernardino and Scion of
San Bernardino who seeks to relocate the dealership to premises currently owned by Imperial Imports,
Inc., in the Auto Plaza.
The Redevelopment Agency of the City of San Bernardino ("Agency") has determined that the City
would benefit from the consummation of such a sale by retaining the Subaru dealership, and
consequent sales taxes, within the City and as such is willing to terminate the Participation Agreement
concurrently with the closure of the sale as its contribution to the project.
It makes sound business sense to have as many dealerships located at the Auto Plaza and repopulate
this facility, which was severely affected by the economic downturn of the last two years, as well as
joining and strengthening the Auto Center Property and Business Improvement District ("PBID").
Imperial Imports, Inc. predicts that sales of Subaru vehicles will increase dramatically with the
superior location consequently contributing additional sales taxes for the City, as has been evidenced
by the new Kia Dealership in the Auto Plaza which in the space of six short months has risen to be the
number one dealer in the entire state of California and number 11 in the United States.
P:\Agendas\Comm Dev Commission\CDC 2011\05-]6-11 Sl.lbaru _ Termination of Loan Panicipatioll Agreement SRdocx
COMMISSION MEETING AGENDA
Meeting Date: 05/16/2011
Agenda Item Number: _tz.:31
Economic Development Agency Staff Report
Termination of Loan Agreement - Subaru
Page 2
ENVIRONMENTAL IMP ACT:
A termination of the Loan Participation Agreement of this type does not meet the definition of a
"project" under Section 15378 of the California Environmental Quality Act (CEQA).
FISCAL IMPACT:
Loss of future potential revenue in the amount of$117,958.03, which was disbursed 15 years ago.
RECOMMENDATION:
That the Community Development Commission adopt the attached Resolution.
EmU A. M.$,~..,..." Diuctm
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PlAgendaslComm Dev CommissionlCDC 20] 1\05_16_] 1 Subaru - Termination of Loan Participation Agreement SRdocx
COMMISSION MEETING AGENDA
Meeting Date: 05/16/2011
Agenda Item Nnmber:
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RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT
AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO
TERMINATE THE 1996 LOAN PARTICIPATION AGREEMENT BY AND
BETWEEN THE AGENCY AND SUBARU OF SAN BERNARDINO, A
CALIFORNIA CORPORATION ("PARTICIPANT") (SOUTHEAST
INDUSTRIAL PARK REDEVELOPMENT PROJECT AREA)
WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency"), is a
public body, corporate and politic existing under the laws of the State of California, California
Community Redevelopment Law, Health and Safety Code Section 33000, et seq. (the "CRL"), and
is charged with the mission of redeveloping blighted and underutilized land; and
WHEREAS, the Community Development Commission of the City of San Bernardino (the
"Commission") is the governing body for the Agency; and
WHEREAS, in February of 1996 the Agency and the Participant entered into a certain Loan
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Participation Agreement (the "Participation Agreement") providing for, amongst other things, a loan
from the Agency to the Participant in the original principle amount of $190,000 (the "Agency
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Loan"); and
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WHEREAS, the Participant intends to sell the Participant's Subaru New Motor Vehicle
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dealership business to Imperial Imports, Inc., a California corporation doing business as Toyota of
San Bernardino (the "Buyer"); and
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WHEREAS, the Participant would not be in a position to conclude this sale to the buyer
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unless the Participation Agreement were terminated; and
WHEREAS, the Agency has determined that it would benefit from consummation of the sale
of the Subaru Dealership to the Buyer and as a result the Agency is willing to enter into the
Termination of Loan Participation Agreement ("Termination Agreement") attached hereto as
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Exhibit "A", concurrently with the closing of the sale to the Buyer; and
WHEREAS, a Termination Agreement of this type does not meet the definition of a
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"project" under Section 15378 of the California Environmental Quality Act (CEQA).
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P:\AgendasIResollJtions\Resolulions\201 1\05_\6_1] Subaru - Tennination of Loan Participation Agreement CDC Resodocx
1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
2 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
3 FOLLOWS:
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Section 1.
5 correct.
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Section 2.
The information set forth in the above recitals of this Resolution is true and
The Commission hereby approves and hereby authorizes the Interim
7 Executive Director of the Agency to terminate the Termination Agreement with the Participant, on
8 behalf of the Agency together with such technical and conforming changes as may be recommended
9 by the Interim Executive Director and approved by the Agency Counsel and the City Attorney.
10 Section 3. The Commission hereby approves that a Termination Agreement of this type does
11 not meet the definition of a "project" under Section 15378 of the California Environmental Quality
12 Act (CEQA).
13 Section 4.
14 Commission.
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This Resolution shall take effect from and after its date of adoption by this
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RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT
AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO
TERMINATE THE 1996 LOAN PARTICIPATION AGREEMENT BY AND
BETWEEN THE AGENCY AND SUBARU OF SAN BERNARDINO, A
CALIFORNIA CORPORATION ("PARTICIPANT") (SOUTHEAST
INDUSTRIAL PARK REDEVELOPMENT PROJECT AREA)
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
7 Development Commission of the City of San Bernardino at a
8 meeting thereof, held on the day of
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10 Commission Members: Ayes Nays
11 MARQUEZ
12 VACANT
13 BRINKER
14 SHORETT
15 KELLEY
16 JOHNSON
17 MC CAMMACK
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21 The foregoing Resolution is hereby approved this
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25 Approved as to Form:
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By:
27 Agel1 nsel
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,2011, by the following vote to wit:
Abstain
Absent
Secretary
day of
,2011.
Patrick 1. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
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EXHIBIT "A"
TERMINA nON OF LOAN P ARTICIP A nON AGREEMENT
THIS TERMINATION OF LOAN PARTICIPATION AGREEMENT (the "Termination
Agreement") is entered into as of this 16th day of May, 2011, by and between the Redevelopment
Agency of the City of San Bernardino (the "Agency"), a public body, corporate and politic and
Subaru of San Bernardino, a California corporation (the "Participant"). The Agency and the
Participant hereby agree as follows:
RECITALS
WHEREAS, on or about February 20, 1996, the Agency and the Participant entered into that
certain Loan Participation Agreement (the "Participation Agreement") providing for, among other
things, a loan from the Agency to the Participant in the original principle amount of$190,000 (the
"Agency Loan"); and
WHEREAS, the Participant intends to sell the Participant's Subaru New Motor Vehicle
dealership business to Imperial Imports, Inc, a California corporation doing business as Toyota of
San Bernardino (the "Buyer"); and
WHEREAS, the Participant would not be in a position to conclude this sale to the buyer
unless and until the Participation Agreement were terminated; and
WHEREAS, the Agency has determined that it would benefit from consummation of the sale
of the Subaru Dealership to the Buyer and as a result, the Agency is willing to enter into this
Termination Agreement concurrently with the closing of the sale to the Buyer; and
NOW THEREFORE, in consideration of the mutual covenants, conditions herein set forth
and intending to be legally bound, the parties hereby agree as follows:
1. Definitions. Defined terms used in this Termination Agreement as indicated by
words being capitalized shall have the same meaning as set forth in the Participation Agreement
unless specifically set forth herein.
2. Termination. Effective and conditioned upon the closing of the sale of substantially
all of the assets of the Partieipant's Subaru New Motor Vehicle Dealership to the Buyer, and the
Buyer's taking possession of said Assets and the Dealership premises located at 1790 South "E"
Street, San Bernardino, California 92408 (the "Closing"), the Participation Agreement shall for all
purposes be deemed terminated, and of no further force and effect, and amounts of principal,
interest, or other charges, if any owed under the Agency Loan or otherwise owing under the
Participation Agreement shall be deemed discharged and fully and completely satisfied. Such
termination and discharge of obligations shall be effective as to the Participation Agreement, the
Buyer, and any of their respective shareholders, directors, officers, or agents.
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3. Survivine: Oblie:ation. Notwithstanding the foregoing termination of the
Participation Agreement, the obligations of the Participant to defend and hold harmless, the Agency
and others as set forth in the fITst sentence of Section 4 of the Participation Agreement shall survive
the foregoing termination of the Participation Agreement. However, the obligations imposed by the
second sentence of Section 4 concerning insurance shall terminate concurrently with termination of
the Participation Agreement.
4. Successors. This Termination Agreement shall be binding on and shall inure to the
benefit of the parties hereto and their respective successors, assigns, heirs, and personal
representatives.
5. Amendments. Amendments, supplements, or waivers affecting any of the terms of
this Termination Agreement shall be void and of no effect unless in writing and signed by the party
to be charged.
6. Entire Ae:reement. This Termination Agreement contains the entire agreement and
understanding of the parties respecting its subject matter and supercedes any promises, agreements,
or understandings, written or oral, related thereto.
7. Attornevs' Fees. In any judicial or administrative action to enforce the terms of this
Termination Agreement, or where the terms of this Termination Agreement provide an effective
defense to an action in tort, contract, or otherwise, the prevailing party shall be entitled to recover
costs and reasonable attorneys' fees, paralegal fees, accounting and expert witness fees incurred, it
being stipulated that attorneys' fees for enforcement of judgment shall be allowable as post-
judgment costs.
8. Counterparts. This Termination Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed an original but all of which together shall constitute one
and the same instrument, and shall be binding upon each Party even if both Parties are not
signatories to the same counterpart or counterparts. Signatures on this Termination Agreement
delivered by facsimile or email transmission shall be given the same force and effect as the original
signatures.
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IN WITNESS WHEREOF, the Parties hereto execute this Termination Agreement on the
date set forth opposite their respective signatures.
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Dated:
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By i:,;#
PARTICIPANT
Subara of San Bernardino, a California corporation
Dated:
By:
Geoffrey Harris, President
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