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HomeMy WebLinkAboutR1- Redevelopment Agenda D E Y E L O P M E N T D E P A R T ME NT OF THE CITY OF SAN BERN ARDINO REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: DUKES-DUKES & ASSOCIATES Executive Director REAL PROPERTY PURCHASE AGREEMENT Date: January 25, 1993 ------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On April 20, 1990, the Community Development Commission approved a DDA with Dukes-Dukes and Associates calling for the development of a 114 unit subdivision. In April 1992, the Commission approved a $250,000 business reorganization loan. (Synopsis Continued to Next Page...) ------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) MOTION: That the Community Development Commisison consider purchase of the Dukes-owned thirty-eight (38) lot subdivision located at the northeast corner of 16th and California Streets at a price not to exceed $900,000, and authorize the Chairman and Executive Director to execute all such documents in connection with the implementation of the attached Real Property Purchase Agreement. Administrator KENNETH J. RSON Executive Dire for ------------------------------------------------------------------------------- Contact Person(s): Ken Henderson Phone: 5081 Project Area(s): Northwest (NW) Ward(s): Six (6) Supporting Data Attached: Staff Report FUNDING REQUIREMENTS: Amount: $ 900,000 Source: Bank Loan Budget Authority: Requested ------------------------------------------------------------------------------- Commission/Council Notes: ------------------------------------------------------------------------------- KJH:lag:1108E COMMISSION MEETING AGENDA Meeting Date: 1/25/1993 Agenda Item Number: I REQUEST FOR COMMISSION/COUNCIL ACTION Dukes-Dukes and Associates Real Property Purchase Agreement January 25, 1993 Page Number -2- Synopsis of Previous Commission/Council/Committee Action(s) Continued: The Commission has also approved three (3) amendments to the original DDA. On January 20, 1993, the Commission considered this matter and continued the matter to January 25, 1993 at 10:00 a.m. ------------------------------------------------------------------------------- KJH:lag:1108E COMMISSION MEETING AGENDA Meeting Date: 1/25/1993 Agenda Item Number: t D E V E L O P M E N T D E P A R T M E N T OF THE CITY OF SAN BERNARDINO STAFF REPORT Dukes-Dukes and Associates Real Property Purchase Agreement The Commission on January 20, 1993 considered a loan agreement between the Agency and Dukes-Dukes and Associates in the amount of $900,000. The purpose of the loan was to facilitate the reorganization of the Dukes Corporation and its operating entities to allow Dukes to continue its redevelopment activities within the City of San Bernardino. At the time the matter was considered, the Commission requested that its Housing Committee convene a special meeting during the lunch hour to consider in detail Dukes' loan request and report back to the Commission during the afternoon session. Because of unanswered questions, the Commission adjourned its meeting to January 25, 1993 at 10:00 a.m. Between the meetings of January 20, 1993 and January 25, 1993, staff was directed to attempt to successfully resolve the following issues: - Source of loan repayment - Adequacy of loan security (equity) - Source of funds Agency would utilize to make loan if approved. Subsequent to the January 20, 1993 Commission meeting, staff and Agency Special Counsel met with Dukes and have devised a strategy that can successfully address the major issues noted above. In essence, the proposed financing has evolved from a loan of Agency funds to Dukes to the acquisition by Agency of the Dukes-owned thirty-eight (38) lot parcel (located at the northeast corner of 16th and California Streets) in the amount of $900,000. The proposed deal points are as follows: - Agency agrees to purchase from Dukes and Dukes agrees to sell the thirty-eight (38) lot subdivision, including all soil reports, geological surveys, tentative and final subdivision maps, construction and engineering drawings (plans and specifications ) for the thirty-eight (38) lots and the residential dwelling units, grading and building permits, sewer capacity rights and related instruments, documents and reports for the total consideration of $900,000. ------------------------------------------------------------------------------- KJH:lag:1108E COMMISSION MEETING AGENDA Meeting Date: 1/25/1993 Agenda Item Number: DEVELOPMENT DEPARTMENT STAFF REPORT Dukes-Dukes and Associates Real Property Purchase Agreement January 25, 1993 Page Number -2- - The Agency and Dukes agree to enter into escrow with appropriate instructions provided for the disbursement of funds, transfer of title, recordation of a deed of trust to secure the interim loan as described below, the execution of all other transfer documents required by the Purchase Agreement and the deposit by Dukes into escrow the Related Documents. - Dukes shall be solely responsible for the payment of all costs related to such escrow, all survey and insurance costs, recording and transfer costs, costs associated with the disbursement of funds and all other costs incurred by the title company in connection with this escrow. - After escrow has been established, an amount not to exceed $135,000 shall be disbursed by the Title Company for the satisfaction of federal tax liens (approximately $125,000) and approximately $10,000 to the Bank of San Bernardino as an interest payment on two (2) separate Bank of San Bernardino loans, plus all escrow, title insurance, and recordation and transfer costs. This interim loan will bear no interest until the escrow is terminated. The Interim Loan shall be considered paid in full upon final conveyance of the thirty-eight (38) lots to the Agency. - Upon successful close of escrow and transfer of title from Dukes to the Agency of the thirty-eight (38) lots, the Title Company, upon verification of the recordation of the grant deeds and issuance of the required Title Policy in favor of the Agency, will be authorized to disburse the remaining funds in the approximate amounts for the following purposes: • $200,000 for repayment of Bank of San Bernardino loan secured by thirty-eight (38) lots. • $250,000 for repayment of various unsecured loans with the Bank of San Bernardino. • $200,000 for various accounts payable. • Approximately $20,000 for escrow fees, title policy costs, recordation of documents and transfer of title. • Approximately $100,000 for working capital. ------------------------------------------------------------------------------- KJH:lag:1108E COMMISSION MEETING AGENDA Meeting Date: 1/25/1993 Agenda Item Number: DEVELOPMENT DEPARTMENT STAFF REPORT Dukes-Dukes and Associates Real Property Purchase Agreement January 25, 1993 Page Number -3- Because the Agency has no readily identifiable unencumbered source of funds to finance the proposed acquisition, staff and officials from the Bank of San Bernardino have agreed in principle that the Bank will loan the Agency $900,000 at prime which the Agency will utilize to purchase from Dukes the thirty-eight (38) lot subdivision. The funds will be loaned to the Agency on an unsecured basis, interest only to be paid monthly and a term of twelve (12) months. Based upon the foregoing, staff recommends adoption of the form motion. "�9 KENNETH J. HEND RSON, Executive Director Development Department ------------------------------------------------------------------------------- KJH:lag:1108E COMMISSION MEETING AGENDA Meeting Date: 1/25/1993 Agenda Item Number: I JAN 23 '93 10:21AM P.2 DRAFT REAL PROPERTY PURCHASE AG NT MURES 38 LOT SUBDIVISION) THIS REAL PROPERTY PURCHASE AGREEMENT ("Purchase Agreement")is dated-this day of January, 1993, by and between the Redevelopment Agency of the City of San Bernardino r�referred to as the "Agency" or the "Purchaser") and John Dukes and 'Vivian Nash, as individuals, and Dukes-Dukes and Associates,Inc., a California corporation(hereinafter, collectively referred to as "Dukes" or the "Seller"). &Aqgn 1. The Agency hereby agrees to purchase from the Seller, and the Seller hereby agrees to sell to the Agency, the 38 lot subdivision generally located at the northeast corner of 16th Street and California Street within the City of Sari Bernardino (the "38 Lots"), as more fully described in the Legal Description as attached hereto as Exhibit "A" and the Related Documents as herein defined. The Agency shall pay to the Seller the total consideration of$900,000 for the purchase of both (jL) the 38 Lots and (ii) all soils reports, geological surveys, tentative and final subdivision maps, construction and engineering drawings for the 38 Lots and the residential dwelling units, building and grading permits, s®wer cauacity riEhts and any other document, instrument, report or study relative to the 38 Lots and the construction and sale of residential dwelling units thereon (collectively, the "Related Documents") in accordance with,the terms and conditions as hereinafter set forth. -1- JAN 23 '93 10:21RM P.3 DRAFT Section 2, As soon as practicable after the date of this Purchase Agreement, the parties shall enter into an escrow to be held by First American Title Company, San Bernardino, California (the "Title Company"), for the purpose of disbursing funds and recording documents as required pursuant to this Purchase Agreement, The Agency and the Seller shall execute all additional documents as are reasonably required by the Title Company (i) for the purpose of establishing the escrow, (u) for the disbursement of funds, (iii) for the transfer of title..ky1for the recordation of the Deed of Trust to secure the repayment of the Interim Loan (as hereinafter defined) and Lall other transfer documents as required by this Purchase Agreement, and the Seller shall deposit the Related Documents with the Title Company in escrow upon the establishment of the escrow. The B 'v or of the A enc and counsel to the Agency shall have ten (10) business days after receipt of the Related Documents to approve same as to adequacy and compliance with this Purchase Agreement. Any disapproval by the Executive Director and counsel to the Agency shall be given within said ten-day period and the Seller shall cure any defects in the sufficiency of the Related Documents within the sixty (60) calendar day time period of the escrow without any extension of the time within which the escrow must either close or terminate. The Seller shall be solely responsible for the payment of all costs related to such escrow, all title survey and insurance costs, recording and transfer costs, costs associated with the disbursement of funds from the escrow and all other costs incurred by the Title Company in connection with this escrow. To the extent possible, all such costs shall be disbursed JAN 23 '93 10:22AM P.4 DRAFT from the net available amounts deposited by the Agency with the Title Company and which are credited to the escrow deposit of the Agency. The Agency shall, as a condition precedent to both the execution of the escrow documents and the establishment of an escrow, have reviewed a Preliminary Title Report to be prepared by the title Company demonstrating to the satisfaction of the Executive Director of the Agency and counsel to the Agency that the 38 Lots and the Related Documents can be conveyed to the Agency as required pursuant to this Agreement and that all liens, encumbrances and deeds of trust filed against the 38 Lots can be discharged upon the transfer of title of the 38 Lots and the Related Documents from the Seller to the Agency. Upon the establishment of the escrow as required herein, an amount not to exceed $135,000 shall be disbursed by the Title Company for the following purposes. 1. Approximately $125,000 for the satisfaction of federal tax liens recorded against properties of the Seller located within the County of San Bernardino;and 2. Approximately$10,000 to the Bank of San Bernardino as an interest payment on the two (2) separate Bank of San Bernardino loans as hereinafter specified. Prior to the disbursement of the not to exceed$135,000 amount as required above,_plus all escrow, title insurance and recordation and transfer costs (the 'Interim Loan'), the Agency Executive Director shall deliver payment instructions to the Title -3- JAN 23 '93 10:22AM �' P.5 DRAFT Company describing the payee, account number and the exact dollar amount. The Seller shall execute and the Title Company shall record a Deed of TrusAgainst the 38 Lots, The Deed of Trust shall be in an initial amount not to exceed $135,000 for payments pursuant to items 1. and 2. above, plus all other escrow costs in the event the escrow does not close by the date as herein provided, to guaranty the repayment of the funds as disbursed pursuant to the Interim Loan upon the establishment of the escrow. The Interim Loan shall be in a principal amount not to exceed $135,000, plus all other escrow costs as provided above, and shall be non-interest bearing until the escrow has been terminated by either a final conveyance of the 38 Lots to the Agency or the inability of the Seller to convey the 38 Lots within sixty (60)IWIgaiLdays from the date of establishment of the escrow. Upon final conveyance of the 38 Lots, the Interim Loan shall be deemed to be paid in full and the Deed of Trust shall be reconveyed simultaneously with the transfer of title of the 38 Lots from the Seller to the Agency. In the event the conveyance of the 38 Lots does not occur within sixty (60)SWgWM days from the date of establishment of the escrow,the Interim Loan shall become immediately due and payable by Dukes to the Agency and shall bear interest at a rate equal to twelve percent (12%) per annum from the last date for which the conveyance was to have occurred until the Interim Loan, plus interest, has been paid in full. The Agency shall not require nor shall it have any obligation to advance a principal amount in excess of the $135,000 initial advance plus other escrow related costs. -4- JAN 23 '93 10.23AM P.6 DRAFT Section 3. The escrow shall close and title to the 38 Lots shall transfer from the Seller to the Agency not less than thirty (30) calendar days after the datqWye escrow has been established. Title shall transfer at any time on or after thirty (30),cal�days but not later than sixty (60) days after the date the escrow has been established upon all conditions of the escrow having been satisfied and a notice from Dukes to the Title Company and the Agency has been received by the Title Company indicating that the corporate reorganization of Dukes-Dukes and Associates, Inc., from a Subchapter S corporation to a Subchapter C corporation has either been finally consummated or such condition has been waived by the Seller. In the event the Seller has not delivered such notice on or before sixty (60) calendar days from the date of establishment of the escrow and the escrow has not closed and title transferred to the Agency on or before such sixty (60) calendar day period, the escrow shall be considered terminated by both parties at the conclusion of such sixty (60) calendar day period. All undisbursed Agency deposits and the Related Documents then remaining in the escrow shall be immediately returned to the Agency without any other further restrictions or conditions imposed by either party under the escrow. All costs of the escrow, title reports and other miscellaneous items shall be deducted from the amounts to be reimbursed to the Agency and shall be added to the principal amount of the Interim Loan and secured under the Deed of Trust. -5- • JAN 23 '93 10:23AM P•7 DRAFT Secti Upon a successful close of escrow and transfer of title from the Seller to the Agency of the 38 Lots and the Related Documents within the time period set forth in Section 3 above, the Title Company shall, upon verification of recordation of the Grant Deeds and issuance of the required Title.Policy in favor of the Agency, disburse the remaining $ to, or for the account of, the Seller as follows: 1. $200,000 for the repayment of the loan from the Bank of San Bernardino presently secured by a deed of trust on the 38 Lots; 2. $250,000 for the repayment of various unsecured loans from the Bank of San Bernardino; 3. $200,000 for the payment of various accounts payable subject to the joint approval by written requisition executed by both the Executive Director of the Agency and the Seller instructing the Title Company to pay such amounts; 4. Approximately $ as an estimated amount for escrow fees, title insurance policies in favor of the Agency and other costs associated with the escrow, recordation of documents and the transfer of title as required hereby; and -6- JAN 23 '93 10:24AM ,R P.8 CRAFT 5. Approximately $ as a net amount to be disbursed to the Seller after all amounts required pursuant to items 1 through 4 above have been satisfied. The Seller shall provide at the sole cost of the Seller, which cost may be funded from the sale proceeds to be disbursed to the Seller or added to the principal balance of the Interim Loan, as applicable, a Mortgagee's Title Insurance Policy issued by the Title Company in favor of the Agency in the full principal amount of the Interim Loan as secured by thejgcond Deed of Trust. Such Mortgagee's Title Insurance Policy shall insure that the Interim Loan has been properly recorded as a second lien as to the 38 Lots during the period of time that the escrow is in effect and subsequent thereto if the escrow does not close and the 38 Lots have not been conveyed to the Agency free and clear of any liens or other title exceptions within the sixty (60) day period as required under Section 3 hereof. No proceeds representing the Interim Loan shall be disbursed pursuant hereto until such time as the Title Company is able to record the appropriate Deed of Trust securing the Interim Loan against the 38 Lots and insuring that the recordation of the Deed of Trust is in a second lien position as to the 38 Lots for the benefit of the Agency. The Title Company shall deliver Preliminary Title Reports and Title Insurance Commitments on the 38 Lots to the Executive Director of the Agency for -7- JAN 23 '93 10:24AM �,,� y P.9 DRAFT review and approval by the Executive Director and counsel to the Agency prior to the establishment of the escrow required hereunder. The Executive Director and counsel to the Agency shall have five (S) business days after actual receipt to review such Preliminary Title Reports and Title Insurance Commitments and to approve or disapprove such documents. Any disapproval shall be in writing to the Title Company with a copy to the Seller and shall describe the items or exceptions to title that the Executive Director and counsel to the Agency will not act Establishment of the escrow by the Agency, the deposit of the $900,000 and the execution of all required escrow documents shall be deemed to be approval of the Preliminary Title Reports and Title Insurance Commitments by the Agency. Upon establishment of the escrow Agency shall deposit $900,000 into the escrow which shall be held by the Title Company for the purpose of disbursing the proceeds of the Interim Loan andisubsequently if hP eR *ou ;a able n close within the_ required time period, to apply the remaining balance towards the purchase price of the 38 Lots and the payment of all escrow and title expensgLof the Title Company. ction 4. This Purchase Agreement shall be effective as of the date of approval and execution by the Agency and the Seller. Funds shall not be disbursed pursuant to this Purchase Agreement until all conditions as are set fort in this Purchase Agreement and in the executed escrow instructions with the Title Company have -8- I JAN 23 '93 10:25RM P.10 DRAF-1 been met, including but not limited to, the execution and delivery of all Grant Deeds, the Deed of'Dust and other documents and instruments to be executed by the parties as may be required by the Title Company to allow the recordation of the Deed of Trust to secure the Interim Loan and to allow for the conveyance of the 38 Lots to the Agency free and clear of any title exceptions. Section 5. The Seller shall be responsible for and shall pay any and all costs of collection, attorneys' fees, foreclosure costs and expenses that may be incurred by the Agency t&reserve the security interest of the Agency as granted by the Seller pursuant to this Purchase Agreement and the Deed of Trust. The Seller shall also be responsible to pay any other costs incurred by the Agency to satisfy any prior or -9- JAN 23 193 10:25AM P.11 E DRAFT subsequent lien to that of the Agency under the Deed of'lust so as to protect the security interests granted by the Seller to the Agency. .�SELLEPaL JOHN DUKES AND VIVIAN NASH, as individuals By- Johnres By: Vivian Nash DUDS-DUKES AND ASSOCIATES, INC. a California corporation By: T"itte: ' Py'� By: Title: -10- JAN 23 '93 10:25AM P•12 .7URCHASER` REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: 10D _r!lr 11do: (SEAL) Attest: By: Secetry APPROVMWI FORM: By: slffiow almn� »� k93 1000 JAN 23 '93 10:25AM P.13 EXFIIBIT "A" LEGAL DESCRIP'T'ION OF 38 LOTS