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Home My WebLink About07-Economic Development DEVELOPMENT DEPARTMENT OF THE CITY OF SAN BERNARDINO ECONONUCDEVELOPMENTAGENCY REOUEST FOR COMNUSSION/COUNCIL ACTION FROM: KENNETII J. HENDERSON Executive Director SUBJECT: PRIME LINE PRODUCTS COMPANY EXPANSION - PUBLIC HEARING DATE: July27,I994 -~-~------------------------------------------------------------------------------------.-------------------------------------------------. SvnoDsis of Previous Commisslon/CounclVCommlttee Actlon(s): On July 8, 1994, the Redevelopment Committee considered this matter and recommended to the Community Development Commission approval of this matter subject to the receipt offair market value information. On July 18, 1994, the Community Development Commission authorized staff to accept a deed in lieu of foreclosure from HAB., Land Development Company and established a date and time certain for the conducting of a public hearing related to the proposed sale of Agency property. ----------------------------.-------------------------------------------------------------------------------------------------------------- Recommended Motion(s): OPEN PUBLIC HEARING CLOSE PUBLIC HEARING (Communitv DeveloDment Commission) MOTION: That the Community Development Commission approve conceptually the sale of 7.1 acres of Agency- owned property to University Service Center, Ltd., to facilitate the construction of a building to accommodate the proposed Prime Line Products expansion, direct staff to develop an Owner Participation Agreement between the Agency and University and authorize the Chairman and Executive Director to execute said agreement when completed. _10 Administrator (LA Uu), KENNETHJ. HEND RSON Executive Director Contact Person(s): Kenneth J. Henderson Project Area(s): Northwest: State College Supporting Data Attached: StaffR~ort. FUNDING REQUIREMENTS: Amount: $ NlA Budget Authority: Phone: 5081 \\Tard(s): 6.3.5 Source: N/A N/A Commission/Council Notes: KJH:lag:08-0 1-0 1.cdc COMMISSION MEETING AGENDA MEETING DATE: 08/01/1994 Agenda Item Number: 7 DEVELOPMENT DEPARTMENT ECONONUCDEVELOPMENTAGENCY STAFF REPORT ------------------------------------------------------------------------------------------------------------------ Prime Line Products Comnanv Expansion - Public Hearinl! BACKGROUND In August of 1990, the Community Development Conunission approved an Owner Participation Agreement (OP A) with H.A.B. Land Development Company which provided $2,130,000.00 for roadway and bridge construction in the Northwest and State College redevelopment project areas. The specific improvements to be installed were the construction of two bridges connecting Industrial and Hallmark Parkways, including curbs, gutters, landscaping and underground utilities to be built to City specification and on alignment approved by the Director of Public Works. In August of 1992, the Community Development Conunission approved an additional $300,000.00 in order for the project to be completed as proposed. Subsequently, in December of 1992, H.A.B. Land Development Company filed a Notice of Completion with the County of San Bernardino, and in March of 1993, the Director of Public Works certified that all work in connection with the bridges over the Devil's Canyon and Cable Creek Channels, including approach roadways, had been satisfactorily completed. Under the terms of the Deed of Trust and Promissory Notes, H.A.B. was to make quarterly interest only payments, with all principal, interest and late charges due and payable seven (7) years after completion of the project. The property securing the H.A.B. promissory notes consists of forty (40) acres owned by H.A.B. H.A.B. is currently in default on its interest payments (3 quarters) for a total past due amount of$185,950.65. The principals ofH.A.B. have indicated to staff that they are no longer in a position to continue interest payments and desire to dispose of the land securing the promissory notes. After further discussion with staff, it was mutually agreed that H.A.B. Land Development Company would execute a Deed in lieu offoreclosure in favor of the Agency. The estimated fair market value of land in question is $2.6 million ($1.50/s.f.). On July 18, 1994, the Conunission authorized staff to accept a deed in lieu offoreclosure and set a public hearing to discuss and take possible action relating to the proposed sale of7.1 acres. ------------------------------------------------------------------------------------------------------------------ KJH:lag:OS-O 1-0 l.cdc COMMISSION MEETING AGENDA MEETING DATE: 08/0111994 Agenda Item Number: l DEVELOPMENT DEPARTMENT STAFF REPORT Prime Line Products Company July 27, 1994 Page Number -2- -------------------------------------------------------------------------------------------------------------.---- Prime Line Products Company 4985 and 4185 Hallmark Parkway Agency staff has been approached by Prime Line Products and University Service Center, Ltd., regarding the acquisition ofland in sufficient amount to allow for a proposed Prime Line expansion. In particular, University and Prime Line are interested in 7.1 acres of the forty (40) acres that H.A.B., has deeded to the Agency. Community National Corporation (Russ Hatle) is the general partner of University Service Center, Ltd. Prime Line Products must consolidate its present two (2) facilities into a single, larger facility. However, no buildings of sufficient size exist in the City of San Bernardino. Therefore, a new building of 100,000 s.f, expandable to 125,000 s.f., needs to be built to meet Prime Line's requirements and retain 115 jobs within the City of San Bernardino. Prime Line Product's alternative is to relocate to an already existing building outside the City of San Bernardino. According to Community National Corporation, the project will only be economically feasible if the Agency writes down the acquisition cost of the land from $1.40/s.f, to $1.00/s.f, resulting in an Agency contribution of$123,710. Community National Corporation has also requested the Agency write down the cost of anticipated fees by $48,000 from $123,000 to $75,000. If approved, the total Agency contribution would be $171,710. The anticipated benefits to the Agency are as follows: o Retain 115 Prime Line jobs within the City. o Provide for future growth of 40 new Prime Line jobs. o Add tax increment to the State College Redevelopment area tax base. o Reduce existing Note receivable to Redevelopment Agency secured by subject land. o Improve Redevelopment Agency cash flow. . Create opportunity to expand and add additional jobs for Cumberland-Swan. If a new facility is constructed for Prime Line Products, Cumberland-Swan, Inc., another significant industrial user located at 5015 Hallmark Parkway, will lease one of the structures at 4985 Hallmark Parkway currently leased by Prime Line Products. This will provide Cumberland- Swan with additional facilities for future expansion in San Bernardino. KJH:lag:08-01-0I.cdc COMMISSION MEETING AGENDA MEETING DATE: 08/0111994 Agenda Item Number: l DEVELOPMENT DEPARTMENT STAFF REPORT Prime Line Products Company July 27, 1994 Page Number -3- Other than specific deal points, if the Commission approves the form motion, staff will negotiate a schedule of performance which will contain specific timeframes for performance, prohibit the actual sale of the property until University has provided evidence (to be detailed in the agreement) it is ready to pull building permits and to record a construction loan and the payment of in-lieu taxes in the event construction cannot be commenced or completed through no fault of the developer. RECOMMENDATION Based upon the foregoing, staff recommends adoption of the form motion. ------------------------------------------------------------------------------------------------------------------ KJH:lag:08-01-0 I.cdc COMMISSION MEETING AGENDA MEETING DATE: 08/01/1994 Agenda Item Number: 'J