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Home My WebLink AboutR10- Redevelopment Agency RED,-JELOPMENT AGENCY-RLAEST FOR -.,JMM1SS10N/COUNCIL At.LION From: Glenda Saul, Executive Director Subject: UDAG APPLICATIONS - STATUS REPORTS, THE CLUB AND SUNWEST PROJECTS "pt: Redevelopment Agency Date: January 11, 1988 Synopsis of Previous Commission/Council action: 10-05-87 Council authorized staff to proceed with preparation of UDAG Applications. 11-02-87 First Public Hearing. 11-16-87 Second Public Hearing. Resolutions 87-413 and 87-414 adopted approving applications.. Recommended motion: (MAYOR AND COMMON COUNCIL) Move to receive and file status report on UDAG application for The Club Project and the Sunwest Project. Signature Contact person: Glenda Saul Phone: 383-5081 Supporting data attached: YES Ward: 3rd FUNDING REQUIREMENTS: Amount: $ NSA Project: SV & SEIP No adverse Impact on City: Date: January 19, 1988 r acil Notes: Aaanria I tam l en /[ S T A F F R E P O R T On November 30, 1987 two applications for UDAG funding were submitted to the Department of Housing and Urban Development. A summary of these projects follows: 1. The Club - Portion SV A. Application Development: Three retail Club type facilities. Location: Redlands Boulevard - Waterman Avenue Estimated Value: $27,000,000 - Asking $5,250,000 Grant B. Status On January 7, 1988 Scott Rodde was informed by our Washington, D.C. representative, Dave Kominsky, that he had reviewed The Club Project and would be processing it for rating. Earlier in the week we had been informed by the Los Angeles office that The Club Project application would be held over until the next round due to an omission of two documents in our December 15th submittal. Mr. Kominsky advised us that the Los Angeles letter would be brought into play during the final review process but it was his feeling that it would be overruled. Scott Rodde advised us that the Senate and the House have passed the legislation providing for the "Two Pot System" of allocation for UDAG funds. The President has approved the bill and it is scheduled to be signed on January 20, 1988. The Two Pot System will provide for ranking in the following categories: 1. 65% for Impaction and Distress (First portion of allocation) 2. 35% for Economic Development Merit Mr. Kominsky advised Scott Rodde that several issues needed to be addressed and foreworded to Washington, D.C. as soon as possible. 0954H 1-19-88 AW z A. Commitment Letter from a bank that the project will be funded "but for" the UDAG. B. The amount sought ($5,250,000) should be reduced. This would increase the job ratio and lower the leverage ratio. In summary: We are now in the process of reevaluating the proforma to determine if a lower UDAG would provide an acceptable return on equity. The proposed payback provision provide for the UDAG to be lent to the Developer at 4% for 20 years, with the participant making annual payment to the City from available cost flow. It is also proposed that the City participate in 20% of the next profits upon sale. This percentage participation will be reduced if the UDAG Agreement is reduced. ($5,250,000 is approximately 20% of the total project of $27,000,000). 2. Sunwest Development-SEIP A. Application Development: Three retail Club type facilities. Location: Redlands Boulevard - Waterman Avenue. Estimated Value: $27,000,000 - Asking $5,250,000 Grant B. Status On Friday December 4, 1987, we received a phone call from Mr. Larry Hoak, HUD, Los Angeles. It is Mr. Hoak's job to review all UDAG applications and submit a written report to Washington, DC with his findings. Mr. Hoak conveyed his concern regarding our application for UDAG assistance for the Sunwest Development Project. We discussed with Mr. Hoak the City's desire to amend the application once the height study & appropriate ordinance amendments for the south end of the City were approved. The amendment would increase the building height from 3 to 5 stories. Mr. Hoak indicated that from the review of the application (3 story office buildings) the project would not be feasible even with UDAG assistance. It was confirmed with Mery Simchowitz that he will not be able to obtain a financial commitment for the construction of the project with only a 1% return on equity. Mr. Hoak asked if the Mayor would submit a letter requesting that this application be held over until the next UDAG round. r 0954H 1-19-88 Following this conversation with Larry Hoak discussions were held with Mery Simchowitz and Scott Rodde of National Development Council. It was determined that it will be to our best advantage to request a holdover on this project. The project as submitted would not receive a favorable consideration by UDAG. Staff asked Dennis Barlow, Senior Assistant City Attorney, if under the Mayor's administrative authority the City could send a letter to UDAG requesting that this project be held over. Mr. Barlow concurred that authorization for the hold over did not need Council approval. Attached as Exhibit 1, is a copy of the letter to Stanley Newman requesting the holdover. This means that if the City has approved the increase in heights from three to five stories for Mr. Simchowitz building an amendment may be prepared and submitted to UDAG for its next round (approximately four months from now). 3. Next UDAG Round The next UDAG Round is April 1988. Staff will be preparing amendments where appropriate for the Sunwest Project for your review in March in order that we can meet the April 1, 1988 deadline for the next round. 0954H r 0954H 1-19-88 I � . J_ t e4I R*AI? r _ ..- --- - CITY OF SAN BERNARDINO 300 NORTH"O"STREET,SAN BERNARDINO,CALIFORNIA 92418 Cpl O (714)3843133 i !�l.11 1h { EVLYN WILCOX OFFICE OF THE MAYOR ` M"ow i - j December 9, 1987 r Stanley Newman, Director Office of Urban Development Action Grants D.S. Department of Housing and Urban Development 451 Seventh Street, SW Washington, DC 20410 Re: UDAG Application Sunwest Development Dear Mr. Newman: We respectfully request that our application for an Urban Development Action Grant for the Sunwest Development be held over until the next UDAG round. The application was submitted for the construction of four three story f office buildings and an associated parking structure. The developer y desires to increase the height of his buildings from three to five stories necessitating a larger parking structures (1,400 spaces versus 800 now proposed). You will notice that the proforma submitted for the three story buildings produce a return on equity of only 12. Revised proformas at the increased height, indicate that with UDAG assistance this project could produce an acceptable developer return. The City is currently studying the effects of allowing this increase building height. A decision to provide for this increase in height was anticipated to be reached by early January 1988. It now appears the decision on this issue can not be reached until the end of January or the first part of February. - r 1' Y�PRDDE N PROIRESS EXHIBIT 1 Fo Stanley Newman, Director December 10, 1987 Page 2 F ` It is for this reason that we request that our application for UDAG assistance for the Sunwest Development be held over until the next round. It is our intent that following a favorable determination on the height variance that this application will be amended for your future consideration. i t Should you need further information please do not hesitate to contact i Glenda Saul or Sandy Lowder of the edevelopment Agency at (714) 384-5081. Very Truly Yours, i I yn W cox, Mayor - EW:SL:mv:3318G cc: Larry Hoak U.S. Dept. of Housing & Urban Development 1615 W. Olympic Blvd. Suite 900 Los Angeles, CA 90015-3801 Scott' 8odde National Development Council 1500 3rd Street, Suite D -Napa, CA 94558 i ' Steve Sacks Department of Housing & Urban Development t 450 Golden State Avenue P.O. Box 36003 San Francisco, CA 92102-3448 Mery Simchowitz The Simchowitz Corporation 348 Hospitality Lane, East San Bernardino, CA. 92410 Sandy Lowder Sue Gonzales File Mayor Chron File