HomeMy WebLinkAbout12- Development Department DEVELOPMENT DEPARTMENT
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
From: KENNETH J.HENDERSON Subject: FREEWAY HOME CENTER
Executive Director
Date: April 12, 1994
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Synopsis of Previous CommissiodCouneiECommittee Action(s):
On December 9, 1993,the Redevelopment Committee forwarded the subject proposal to the Community
Development Commission without a recommendation and instructed staff to complete its due diligence so the
matter could be favorably considered by the Community Development Commission on December 20,1993.
(SYNOPSIS CONTINUED TO NEXT PAGE...)
Recommended Motion(s):
(Community Development Commission)
(Redevelopment Committee Recommendation)
MOTION: That the Community Development Commission authorize and direct staff to submit a$2.5 million dollar
loan application to a private lender for the purpose of reloaning the loan proceeds to Allan Steward,Inc.,
for purposes of acquiring and renovating the Freeway Home Center and for working capital,subject to
review of Allan Stewards financial capacity and,further,authorize the Chairman and Executive Director
to execute an Owner Participation Agreement to include a personal guarantee pledge by Allan Steward.
p� KENNETHJ.HENPERSON
Executive Director
Contact Person(s): Kenneth J Henderson/Emily Wong_ Phone: 5081
Project Area(s): Southeast Industrial Park Ward(s): Three(3)
Supporting Data Attached: Staff&Mort,Attachment"A"
FUNDING REQUIREMENTS: Amount: _ Source:
Budget Authority: Requested (Contingent Liability)
Commission/Council Notes:
CKJH:EMW fwyhom.dle COMMISSION MEETING AGENDA
Meeting Date: 04118/1994
Agenda Item Number:
0
DEVELOPMENT DEPARTMENT REQUEST FOR CONWIISSIONICOUNCIL ACTION
�^ SUBJ: FREEWAY HOME CENTER
PREPARED: April 12, 1994
PAGE-2-
Synoosls of Previous Commission/CounciWommittee Action(s)Continued...
On December 20, 1993,the Community Development Commission approved a$2.5 million dollar loan guarantee
to Allan Steward,Inc.,for the purchase and development of the Freeway Home Center project subject to review and
approval of Allan Steward's financial capacity,approval by the Community Development Commission of an Owner
Participation Agreement and close of escrow within ninety(90)days of Commission approval. Further, staff was
authorized to pay to the Resolution Trust Corporation(RTC)a deposit in the amount of$85,000 with only 75%of
such deposit(363,750)tobeiepaiaby Allan Steward,lnc.,to the Agency in the event escrowfadedto close.
On February 7,1994,the Community Development Commission authorized and directed staff to submit a$2.5
million loan application to a private lender for the purpose of reloaning such proceeds to Allan Steward,Inc.,with
the understanding that the loan Wlication submitted by staff would make uo only the difference between the
acquisition price of$2.5 million and the RTC financing,with all the above subject to the review and approval of
Allan Steward's financial cWacity;approval by the Community Development Commission of an Owner
Participation Agreement,execution of a personal guarantee by Allan Steward;and authorized staff to submit
$50,000 to extend escrow and Allan Steward would personally guarantee payment of that money.
On March 21, 1994,the Redevelopment Committee recommended that the Community Development Commission
authorize and direct staff to submit a$2.5 million dollar loan application to a private lender for the purpose of
reloaning the loan proceeds to Allan Steward,Inc.,for purposes of acquiring and renovating the Freeway Home
Center and for working capital,subject to review of Allan Steward's financial capacity and,further,authorize the
Chairman and Executive Director to execute an Owner Participation Agreement to include a personal guarantee
pledge by Allan Steward. Pursuant to a request from Allan Steward,Developer,this agenda item was continued
until April 18, 1994.
On April 4, 1994,the Community Development Commission took action continuing consideration of this matter to
the April 18, 1994 Commission meeting.
QKJH:EMW:fwyhom.dle COMMISSION MEETING AGENDA
Meeting Date: 04/18/1994
Agenda Item Number:
DEVELOPMENT DEPARTMENT
f 1 OF THE CITY OF SAN BERNARDINO
STAFF REPORT
FREEWAY HOME CENTER
PROPERTY DESCRIPTION
The Freeway Home Center,located at 1408-1680 South"E"Street with a current vacancy rate of seventy(70)percent,
is a showroom retail center specializing in home furnishings and accessories. The property consists of seven(7)
concrete tilt up buildingsronstrucled is 1985 with 144,5W wtrentable square feet on 843 acres. Thesitecontaias693
perking spaces and is zoned commercial general. All buildings are currently under the control of the Resolution Trust
Corporation(RTC).
PROJECT BACKGROUND
On February 7, 1994,the Community Development Commission authorized the staff to submit a loan application to a
private leader for the purpose of reloaning the proceeds to Allan Steward,Inc.,with the understanding that the Agency
loan would make up only the difference between the$2.5 million dollars and the financing to be provided by the RTC.
The Commission originally authorized submission of an$85,000 deposit to RTC,$75,000 of such deposit to be repaid
by Allan Steward,hro.,in the event escrow fails to close. The Commission subsequently authorized an additional
submission of$50,000 to extend the escrow,subject to Allan Steward providing a personal guarantee for repayment of
the$50,000. The current escrow is due to close on or before March 29, 1994,the total$135,000 deposit is at risk.
CURRENT PROJECT PROPOSAL
Attachment"A"(letter from Allan Steward)indicates that Allan Steward,Inc.,has not been successful in its efforts to
obtain financing from the RTC. Additionally,previous loan requests(based upon a guarantee by the Agency)were
denied by seven(7)other private lending institutions.
As a result of the above,Allan Steward,Inc.,is requesting that the Agency borrow$2.5 million for the purpose of
reloaning the loan proceeds to Allan Steward,Inc. Funds are to be used to purchase the Freeway Home Center from the
RTC for$1,700,000 with the balance of$800,000 to be used for working capital and improvements.
Based upon the foregoing,the Redevelopment Committee recommends adoption of the form motion.
*
KE TH J.HE ERSON,Executive Director
Development Depa ent
KJH:EMW:fwyhom.dle COMMISSION MEETING AGENDA
Meeting Date: 04/18/1994
Agenda Item Number: Jr
a o
srEw��x®
March 16, 1994 s 4 s s O C/R T E S
:.,OMWPCIAL RE4L Es741E
Tim Steinhaus
Agency Director
Economic Development Dept.
City of San Bernardino
201 N. "E" St., 3rd Floor MAP 16
San Bernardino, CA 92401
RE: Freeway Home Center
South "E" St.
San Bernardino, CA
Dear Tim,
This letter is to inform you that after taking into account all the information that the RTC
requires for their application and the time constraints we are under, there is no possible way
we can complete this application before the closing of escrow deadline. The loan application
processors that have been working on this package are completely and totally flabbergasted
with the amount of detail they require.
Therefore, I request that we use the pass through financing for the $2.5 million from the
City of San Bernardino, with a personal guarantee from myself.
J Tha you in advance, I remain,
EW D & ASSOCIATES
Al . Ste and
President, CEO
ABS/cg
1887 Business Center Drive, Suite 3
San Bernardino, California 92408
ATTACHMENT "A" Tel. (909)381-9922 FAX(909)38 i 2481
J T�:,
January 5, 1993
Commonwealth Land Title Co.
801 N. Brand Blvd. 12th Floor
Glendale, CA 91203
Re: Escrow No. 22079
I have handed you my check in the amount of $85,000.00. You are
instructed to deposit this check in the above numbered escrow for the
benefit of Allan Steward Inc., a party to this escrow. You are
authorized to use said funds in completing the escrow under instructions
given to you by said party. I hereby waive any present or future
interest in said funds. I acknowledge and understand that the escrow
instructions may contain provisions regarding disbursement of funds in
the event this escrow is terminated. Any such payment of these funds in
accordance with the instructions of the parties to this escrow is without
liability or recourse upon Commonwealth Land Title Company for the return
of said money. In the event this escrow is cancelled or your agency is
revoked, any portion of these funds remaining on deposit, NOT subject to
disbursement (payment) instructions of the parties, if any, shall be
refunded solely in accordance with the instructions of the parties to
this escrow.
Redevelopment Agecy of the City of San Bernardino
BYE
BY:
Date:
APPROVED AS�TTOnFORM: U
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s. City of San Bernardino
Timothy
ECONOMIC DEVELOPMENT AGENCY Agency Ad ntst tors
o-
eGADEp IN\
•Development Department
-Redevelopment
-Community Development
Housing
•San Bernardino Downtown
Main Street.Inc.
•Convention and Visitors
Bureau
•otri ofausmess
December 21, 1993 Development
Mr. Allan B. Steward
Steward & Associates
1887 Business Center Drive, Suite 3
San Bernardino, CA 92408
Dear Mr. Steward:
This letter will confirm the action taken by the Community Development Commission of the City
of San Bernardino ("Commission") on December 20, 1993 with regard to the Freeway Home
Improvement Center project acquisition and the proposed arrangement by and between Allan
Steward, Inc., and the Commission.
The Commission, through its consultant E. H. Wood & Associates, will attempt to obtain a
permanent loan in an amount equal to $2,500,000 on behalf of Allan Steward, Inc., for
acquisition of the Freeway Home Improvement Center. Such loan will be guaranteed by the
Commission in a form and substance satisfactory to the Commission in its sole discretion. The
Commission and Allan Steward, Inc., will enter into an Owner Participation Agreement subject
to approval thereof by the Commission together with your personal guarantee to the Commission
in form and substance satisfactory to the Commission.
The Commission has authorized the initial deposit of $85,000 into an escrow with The
Resolution Trust Corporation ('RTC') subject to your reimbursement of 100% of said escrow
deposit,whether or not the subject property is acquired. In the event the escrow should fail to
close for any reason whatsoever and said amount is therefore subject to forfeiture to the RTC,
by your execution of the acceptance as herein after provided, you specifically agree to so
reimburse the Commission immediately upon demand by the Commission together with all cost
of collection including attorney fees, court costs, and interest at the rate often percent (10%) per
annum from and after the date of such demand. Upon a successful acquisition of the subject
property, said $85,000 amount will be returned to the Commission.
rl,*11 1Q
Mr. Allan B. Steward
December 21, 1993
Page -2-
We appreciate the opporianity to work with you to improve as entryway iatfl the City of San
Bernardino through the acquisition and revitalization of the Freeway Home Improvement Center.
Sincerely,
l
Timothy C. Steinhaus
Agency Administrator
t
The above terms and conditions are hereby accepted and agreed to this 1� day of December,
1993.
By: �l I
Allan B. Sfeward
,
February 24, 1994
Mr. Allan B. Steward
Steward & Associates
1887 Business Center Drive, Suite 3
San Bernardino, CA 92408
Dear Mr. Steward:
This letter will confirm the action taken by the Community Development Commission of the City
of San Bernardino ("Commission") on February 7, 1994, which modifies the prior action of
December 20, 1993, with regard to the Freeway Home Improvement Center project acquisition
and the proposed arrangement by and between Allan Steward, Inc., and the Commission.
The Commission, through its consultant E. H. Wood & Associates, will attempt to obtain a
permanent loan on behalf of the Commission in an amount sufficient to cover the shortfall of the
first loan to be obtained by you directly from the Resolution Trust Corporation ("RTC") for
acquisition of the Freeway Home Improvement Center. The loan from the Commission will be
guaranteed by you and your corporation and secured by collateral in a form, substance and
amount satisfactory to the Commission in its sole discretion. By your acceptance of the terms
and conditions of this letter, you specifically acknowledge that the Commission and/or its
consultants and advisors shall in their sole judgment determine your financial capacity to perform
the undertakings as contemplated through the acquisition of the Freeway Home Improvement
Center. The Commission and Allan Steward, Inc., will enter into an Owner Participation
Agreement subject to approval thereof by the Commission together with your personal and
corporate guarantee to the Commission as provided above. Neither the Commission nor the City
nor any official, officer, staff member, advisor or consultant shall be liable to you or your assigns
or successors in interest for any reason whatsoever for any failure of the Commission to proceed
with the intended transaction for any reason or for failure of the Commission in its sole
determination to consummate the intended transaction.
The Commission has previously authorized the initial deposit of $85,000 into an escrow with
the RTC and has more recently authorized an increase in said deposit by an additional $50,000
subject to your reimbursement of 100% of the entire escrow deposit whether or not the subject
property is acquired. In the event the escrow should fail to close for any reason whatsoever and
Allan B. Steward
February 24, 1994
Page Two
said amount is therefore subject to forfeiture to the RTC, by your execution of the acceptance
as hereinafter provided, you specifically agree to so reimburse the Commission for the entire
$135,000 immediately upon demand by the Commission together with all costs of collection,
including attorney fees, court costs, and interest at the rate of ten percent (10%) per annum from
and after the date of such demand. Upon a successful acquisition of the subject property, said
$135,000 amount will be returned to the Commission.
We appreciate the opportunity to work with you to improve an entryway into the City of
San Bernardino through the acquisition and revitalization of the Freeway Home Improvement
Center. Please execute the acceptance as indicated below and deliver a fully signed copy of the
letter prior to our release of the additional $50,000 deposit.
Sincerely,
Timothy C. Steinhaus
Agency Administrator
TCSMS:p:hyW .N
In consideration of the Commission deposits being made as aforesaid, the above terms and
conditions are hereby accepted and agreed to this day of February, 1994.
By:
Allan B. Steward
1A