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Home My WebLink About01- Redevelopment Agency D ; EL0PMENT DEPARTZT - NT OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: SAN BERNARDINO Executive Director COMM[TNITY HOSPITAL - PROFESSIONAL OFFICE BUILDING Date: February 19, 1993 ------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): None. ------------------------------------------------------------------------------- R_ecommended Motion(s): (Community Development Commission) MOTION A: That the Community Development Commission determine that the need to take action on the San Bernardino Community Hospital Professional Office Building arose after the posting of the agenda. MOTION B: That the Community Development Commission approve in concept the guarantee by the Redevelopment Agency of an $8.6 million construction loan from the WHITEHALL Group to Arrowhead Health Care System for the purpose of developing a 33,000 square foot professional office building with such conceptual approval subject to the drafting and review of all appropriate documents and approval of same by the Community Development Commission l t Administrator KENNETH J. HE RSON Executive Director ------------------------------------------------------------------------------ Contact Person(s): Kenneth J. Henderson Phone: 5081 Project Area(s): Northwest Ward(s): six (6) Supporting Data Attached: _ Staff Report; Preliminary Commitment FUNDING REQUIREMENTS: Amount: $8.6 million (Contina Source: Loan Grnte Liability) Budget Authority: Requested ---------------------------------------------------------------------------- Commission/Council Notes: ----------------------------------------------------------------------------- KJH:lmp:1mp:2504B COMMISSION MEETING AGENDA Meeting Date: 02/22/1992 Agenda Item Number: __ L- DE E L 0 P M E N T DEPARTIl " NT OF THE CITY OF SAN BERNARDINO STAFF REPORT SAN BERNARDINO COMMUNITY HOSPITAL PROFESSIONAL OFFICE BUILDING Arrowhead Health Care System, the present company of San Bernardino Community Hospital, has, through services provided by E. H. Wood and Associates, obtained a preliminary construction loan commitment (see attached) from the WHITEHALL Group in the amount of $8.6 million. The construction loan proceeds would be utilized to finance the development of a 33,000 square foot professional office building which will, it is anticipated, provide offices for 25-30 doctors and support personnel, a pharmacy and a laboratory. The WHITEHALL Group commitment is contingent upon the Agency guaranteeing the full amount of the construction loan for a term of twenty-five (25) years. Because Arrowhead's bond rating was recently downgraded one level below investment grade, the Commission should appreciate the fact the Hospital will be unable to obtain financing for its proposed office building without the Agency's guarantee or until its bond rating has been upgraded. It is staff's understanding that the long-term economic stability of the Hospital cannot be assured, if _ at all, until it has more physicians on campus, and it is not probable that the Hospital's bond rating can be upgraded without the additional capital that would be generated as a result of having more on-campus physicians. At present, hospital administration has letters of intent or firm leases covering seventy-five percent (75%) of the net leasable space. Hospital administration believes there will be executed leases covering one-hundred percent (100%) of the net leasable space well in advance of the completion of construction. At the time the preliminary commitment was provided by WHITEHALL, it was envisioned the Commission would meet on March 2, 1993 to consider conceptual approval. Since that meeting was rescheduled to March 8, 1993 and the preliminary commitment expires on March 4, 1993, it is important the Commission consider granting conceptual approval so the negotiation of specific deal points and the drafting and review of all related documents, which is anticipated to take at least thirty (30) days, can commence forthwith. Staff recommends adoption of the form motion. V� I KENNETH J. HE RSON, Executive Director Development Department ------------------------------------------------------------------------------- KJH:lmp:lmp:2504B COMMISSION MEETING AGENDA Meeting Date: 02/22/1992 Agenda Item Number: ) LOAN AGREEMEN" Prepared for City of San Bernardino Economic Development Agency 2/8%93 Per Mr. Dale Stogner The Whitehall Group("Whitehall')a private investment banking firm located at 980 N.Michigan Ave.,14th Floor, Chicago IL 60611 hereby agrees, subject to the terms and conditions hereinafter stated, ge funding for Arrowhead Health Care System("Borrower"), i theparaent ��fthe dino Community Hospital,to construct an addition to the rrow ead ealth Lessee )based on a lease purchase agreement guaranteed by the City of San Bernardino Economic Developoment Agency ("EDA"). 1. AMOUNT OF LOAN-Approximately$8,600,000.00 2. TERM OF LOAN-300 months 3. INTEREST RATE -lot4l cttic0�21t82t�pataalckptes�expc�ta�cfXR lc�p1 �•/ �� not to exceed 7.5% annual interest. v 4. PAYMENT SCHEDULE -Self amortizing during the term. 5. COLLATERAL-The collateral for the loan shall be(i)The obligation ofthe Borrower. Said obligation subject to the receipt and approval of Borrower's audited financial statements by Whitehall/Chicago Corp. at their sole discretion. (ii)The 25 year term lease. Said lease will have no provisions allowing the abatement or o'fset oflease payments for any reason whatsoever. Said lease must be approved by Whitehall and Chicago Corp.at their sole discretion. (iii) A guarantee by the EDA(EDA must have an investment grade debt rating by Moody's,Standard&Poor or Duff&Phelps)that in the event of default by Borrower and/or Lessee for any reason whatsoever the EDA will pay all debt service when due. - 6. FEE TO WHITEHALL/CHICAGO CORP.-Whitehall/Chicago Corp shall be entitled to receive at Closing a fee equal to three percent(3%)of the gross amount of the funding. In addition all loan processing and closing cost including but not limited to legal,accounting, and appraisal costs shall be paid by Lessee at loan closing. 7. PREPAYMENT-No PREPAYMENT is allowed. 8. All signatures are "Subject to the review of documents" The undertaking by Whitehall set forth in this agreement shall be null and void and have no legal effect if not accepted and performed by Lessee on or before 3/4/93 It is understood this will be privately placed structured financing. Further we require a 90 day exclusive starting the date Lessee signs this agreement(Lessee cannot pursue funding from any other source during this 90 day exclusive period)subject to a report of estimated closing no more than 30 days from the date Lessee signs this agreement. Lessee: The WHITEHALL Group gggq�� /Y Arrowhead Health Car System y: J. H.Ta�m, r esident g Date.-� - - V3 Y•Date z Guarantor: Borrower: San Bernardino Economic Development Agency Arrowhead Health Care S stem .D Date: Date: 2 2 1