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DEVELOPMENT DEPARTMENT
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: KENNETH J. HENDERSON SUBJECT: PUBLIC HEARING FOR HUD 108
Executive Director LOAN APPLICATION - WEST
SIDE PLAZA
DATE: November 10, 1993
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Synopsis of Previous Commission/Council/Committee Action(s):
None.
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Recommended Motion(s),:
(Mayor and Common Council)
MOTION: That the Mayor and Common Council establish December 6, 1993 at 11:00 a.m. as the date and
time for a Public Hearing regarding the submission of a U.S. Housing and Urban Development
Department (HUD) Section 108 Loan Application for the West Side Plaza Project.
UYL�t,
Administrator KENN TH J. H NDERSON
Executive Director
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Contact Person(s): Kenneth J. Henderson/Laura J. Muna Landa Phone: 5081
Project Area(s): Northwest Ward(s): Six (6)
Supporting Data Attached: Staff Report
FUNDING REQUIREMENTS: Amount: $ N/A Source: N/A
Budget Authority: N/A
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Commission/Council Notes:
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KJH:LJML:Iag:hudph.cdc COMMISSION MEETING AGENDA
MEETING DATE: 11/15/1993
Agenda Item Number:
DEVELOPMENT DEPARTNTENT
STAFF REPORT
PUBLIC HEARING FOR HUD 108 LOAN APPLICATION -
WEST SIDE PLAZA
Section 108 of the Housing and Community Development Act of 1974, as amended,
authorizes a program of community development loan guarantee assistance (HUD 108 Loan).
Under this program, the Housing and Urban Development (HUD) Department provides cities
that receive entitlement grants with front-end financing for large scale community and
economic development projects that cannot be financed from annual grants. As with all
Community Development Block Grant (CDBG) program activities, the projects financed under
the Section 108 Program must either principally benefit low-and-moderate income persons, aid
in the elimination or prevention of slums and blight, or meet other community development
needs having a particular urgency.
The West Side Plaza Shopping Center principally and directly benefits low-and-moderate
income persons through its provision of goods and services as well as the retention and
creation of jobs and, therefore, is an eligible project for a HUD 108 Loan. Further, its
creation provides a physical stabilizing structure of considerable size that assists in
eliminating, reducing or, certainly, neutralizing slum and blighting conditions within the
surrounding community.
The National Bank of Long Beach (NBLB) has agreed to extend the construction loan on
West Side Plaza which matured on July 1, 1993. The construction loan extension by NBLB
to New Frontier Commercial Properties (developer) is for $5,200,000 at an interest rate of
prime plus 2% with a floor of 8.25% for five (5) years. There is, however, still a financing
gap of $500,000 for the construction loan. Staff is proposing that the $500,000 be funded
through a HUD Section 108 Loan. The HUD Section 108 Loan will enable New Frontier
Commercial Properties to obtain a five (5) year rather than a three (3) year term on its loan
extension with NBLB. This is necessary in order to provide a prudent positive cash flow,
with appropriate reserves. The refinancing plan will also provide the opportunity for the
retention of 152 jobs and the creation of an additional 90 jobs.
From both legal and moral viewpoints the Agency is in partnership with the West Side Plaza.
Successful approval of this funding strategy will assure adequate cash flow to debt service the
center's forecasted obligations and mitigate any downturns throughout the financing term.
HUD approval of the application will "pay down" the construction lender's note and make it
easier to acquire a favorable permanent loan later. It also will provide a prudent reserve over
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KJH:LJML:1ag:hudph.cdc COMMISSION MEETING AGENDA
MEETING DATE: 11/15/1993
Agenda Item Number:
DEVELOPMENT DEPARTMENT STAFF REPORT
RE: PUBLIC HEARING FOR HUD 108 LOAN APPLICATION - WEST SIDE PLAZA
November 10, 1993
Page 2
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a five year period and the opportunity for the Agency to benefit through participation in a
positive cash flow if the center experiences a substantial upturn. The 108 loan to the
developer would be at 7% with a five year term and twenty year amortization period secured
by a second deed of trust subordinate to only the $5,200,000 first deed of trust.
The application for the HUD Section 108 Loan must be considered by the Mayor and
Common Council during a Public Hearing. No action should be taken prior to public
comments and full review of the application by the Mayor and Common Council.
It is appropriate that the Public Hearing for a HUD Section 108 Loan Application be set for
December 6, 1993 at 11:00 a.m. in the City Hall Council Chambers.
Staff recommends adoption of the form motion.
b,4�41P
KENNETH J. HItNDERSON, Executive Director
Development Department
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KJH:LJML:Iag:hudph.cdc COMMISSION MEETING AGENDA
MEETING DATE: 11/15/19�9/3-�
Agenda Item Number: `f�