HomeMy WebLinkAbout01- Development Department DEVELOPMENT DEPARTMENT
OF THE CITY 17,E SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: KENNETH J.HENDERSON SUBJECT: RUBA ENTERPRISES
Executive Director ARCO AM/PM STATION
DATE: August 17, 1994
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Synopsis of Previous Commission/Council/Committee Action(s):
On June 24, 1994, the Community Development Commission approved, in concept, a loan
guarantee in the amount of 1.3 million dollars to RUBA Enterprises, subject to loan approval by
Valley Bank. Staff was further directed to negotiate a loan guarantee with Valley Bank.
1
On August 15, 1994, the Community Development Commission continued this item to September
6, 1994.
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Recommended Motion(s):
I
(Community Development Commission)
I (Councilwoman Pope-Ludlam's Recommendation)
MOTION: That the Community Development Commission approve, in concept, an increase of
$100,000 in the Agency's loan guarantee to RUBA Enterprises, subject to Valley
Bank's approval of a loan in the amount of$1,400,000, bringing the total Agency
loan guarantee to $1,400,000.
Administrator KENNETH J.BEND P RSON
Executive Director
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Contact Person(s): Kenneth J.Henderson/Emily Wong Phone: 5081
Project Area(s): State College(SC) Ward(s): Six (6)
Supporting Data Attached: Staff Report:Memo from Councilwoman Pope-Ludlam Letter from Atef FakhoM
FUNDING REQUIREMENTS: Amount: 1 AW000 Source: Loan Guarantee
Budget Authority: Requested
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Commission/Council Notes:
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KJH:lag:08-02-05.cdc COMMISSION MEETING AGENDA
MEETING DATE: 08/18/19/94
Agenda Item Number: /
DJh ,( ELOPMENT DEPARTM� .1T
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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RUBA Enterprises ACRO AM/PM Station
RUBA Enterprises, which is owned by Mr. Atef Fakhoury, owns and operates an ARCO AM/PM
Gas Station located at the Intersection of I-21: Freeway and Palm Avenue. The property consists
of a 27,211 s.f. lot and includes a metal framed stucco exterior building. The Mini-Mart building
totals 3,250 s.f and is fully equipped and stocked with inventory. The property also includes four
(4) concrete gasoline service station islands under a lighted 1,920 s.f canopy with four(4) fuel
dispensing pumps with sixteen(16)nozzles. The property is located in close proximity to the 1-
215 Freeway, Blockbuster Pavilion and the Sheriffs Academy and is, therefore, a high-traffic area.
The facility employs 6-12 individuals on an ongoing basis and is open 24 hours daily. In addition
to selling gasoline and related automotive products, the mini-market purveys a large assortment of
I high-profit margin items such as groceries, candy, beer, soft drinks, prepared and frozen foods,
toiletries, magazines and newspapers.
i Mr. Fakhoury has also acquired the adjoining parcel to the ARCO AM/PM location with the
intent of developing a Denny's Restaurant, for which he has received tentative SBA 7A loan
commitment from the Money Store in the amount of$1,025,000.
In December 1990, Mr. Fakhoury obtained a construction loan from Upland Bank in the amount
of$1,264,863 which would convert in nine(9) months to mini-permanent financing based upon a
thirty(30)year amortization, due in seven(7)years. Due to a series of unavoidable delays
obtaining permits and contractor start-ups, the construction of the gas station was not completed
until July of 1992, during which time Upland Bank withdrew its offer for the mini-permanent loan.
According to Mr. Fakhoury, for the past two years, Upland Bank has provided him with a series
of short-term extensions(3-6 months)with associated points and fees totalling $114,000. At this
juncture, Upland Bank has been unwilling to accept interest only payments without full payment
of outstanding fees, and does not appear to be interested in any further extensions. This loan is
currently in default and Upland Bank is in the process of foreclosing on the subject property. As
of June 23, 1994, the total amount necessary to cure this default was approximately$1.4 million.
On June 24, 1994, the Community Development Commission approved, in concept, a loan
guarantee in the amount of$1,300,000, subject to loan approval by Valley Bank. It was Mr.
Fakhoury's intent to personally cover the shortfall of$100,000 necessary to satisfy the
outstanding loan.
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KJH:1ag:08-02-05.cdc COMMISSION MEETING AGENDA
MEETING DATE: 08/18/1994/
Agenda Item Number: r
DEVELOPMENT DEPAK--ENT STAFF REPORT
RUBA Enterprises ARCO AM/PM Station
August 17, 1994
Page Number-2-
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CURRENT STATUS
Mr. Fakhoury's personal financial statement dated January 31, 1994 indicates a sales tax liability
of$110,000, which he is currently paying back at the rate of$2,000 per month. According to
Mr. Fakhoury, the California Franchise Tax Board will not continue to accept monthly payments
and is demanding payment of sales taxes owed in full, upon refinance of the project.
The preliminary title report on the subject property indicates a sales tax lien in the amount of
$132,244. This lien affects all properties, including the subject property, owned by RUBA
Enterprises. Mr. Fakhoury has paid down this amount by $32,000 which leaves the $110,000
amount required by the State Franchise Tax Board to be paid in full.
The preliminary title report also lists additional tax liens totalling $44,828. The liens have been
cleared by Mr. Fakhoury and the support documentation provided to Valley Bank. At the request
of the Commission, staff inquired as to whether Valley Bank would make the $1.3 million loan
without removal of the tax lien or make the $1.4 million loan with a $1.3 million Agency loan
guarantee. The answer to both Agency staff inquiries was no.
With respect to the Upland Bank foreclosure, Valley Bank has sent appropriate correspondence
to Upland and Upland continues to delay its foreclosure. Mr. Fakhoury has also had almost daily
contact with Upland Bank officials in this regard.
Due to these circumstances, Mr. Fakhoury is requesting an increase of$100,000 or a total of
$1,400,000 in the form of a loan from Valley Bank. Correspondingly, he is also requesting an
additional $100,000 or a total of$1,400,000 in the form of a loan guarantee from the Agency.
Councilwoman Pope-Ludlam recommends adoption of the form motion.
/. J
KENNETH J. HENDERSON, Executive Director
Development Department
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KJH:1ag:08-02-05.cdc COMMISSION MEETING AGENDA
MEETING DATE: 08/18/199/4
Agenda Item Number: `
• AUG-09-'94 TUE 16:36 ID:COUNCIL OFFICE TEL NC:909-384-5462 4044 P02
CITY OF SAN BERNARDINO
INTEROFFICE MEMORANDUM
TO: Tim Steinhaus, Administrator, Economic Development Agency
FROM: Council Office
SUBJECT: Arco - AMIPM
DATE: August 9, 1994
COPIES: Susan Morales, Asst: to Agency Administrator,-EDA
Request the Arco - AMIPM at Kendall & Palm be placed on the Commission
Agenda of August 15, 1994, to consider an increase in the loan guarantee amount.
VALERIE POPE-LUDLAM
Councilwoman, Sixth Ward
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