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Home My WebLink About12- Development Department 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 C, REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: JERSEY'S SPORTS BAR — ALL— Executive Director INCLUSIVE TRUST DEED Date: November 10, 1993 ------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On March 8, 1993, the Community Development Commission granted conceptual approval of a $1,188,300 loan guarantee and a ten (10) year extension of a $923,000 tax-exempt Industrial Development Bond. (Synopsis Continued on Next Page) ------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) That the Community Development Commission approve the transfer of and the placement of an all-inclusive trust deed on the property occupied Ar by Jersey's Sports Bar, said all-inclusive trust deed to be in a Naof position junior to the Agency's existing trust deed; also, that the Executive Director be authorized to execute any documents necessary to effectuate said transaction. Administrator KENNETH J. REND RSON c Executive Director Contact Person(s): Ken Henderson/John Wood Phone: 5081 Project Area(s) : Central City North (CCN) Ward(s) : One (1) Supporting Data Attached: Staff Report, Correspondence FUNDING REQUIREMENTS: Amount: $N/A Source: N/A Budget Authority: N/A ------------------------------------------------------------------------------- Commission/Council Notes: -------------------------------------------------------------------------- KJH:JMW:0181g COMMISSION MEETING AGENDA Meeting Date: 11/15/1993 Agenda Item Number: � ' DEVELOPMENT DEPARTMENT Request for Commissio ;ouncil Action `4 November 10, 1993 Page -2- -------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s) Continued: On March 22, 1993, the Community Development Commission authorized initial extensions of the original Industrial Development Bond (IDB), an additional nine (9) year extension of the IDB, the sale of the IDB, the execution of an Owner Participation Agreement and Loan Guarantee in the amount of $1,125,000 and a short-term loan of $25,000 to the proposed borrower. On July 19, 1993, the Community Development Commission approved the form of an Owner Participation Agreement between the Redevelopment Agency, Colorado Consulting Limited Liability Company and Fox Brothers, a general partnership and a $1,125,000 Loan Guarantee with Valley Bank of Moreno Valley, covering costs associated with the Jersey's Sports Bar project; it also authorized the Executive Director to execute all documentation necessary for the implementation of the project. On July 26, 1993, the Community Development Commission approved a request from Jersey's Sports Bar for an Encroachment Permit, to allow the installation of two support poles for a canopy in front of the main facility entrance. I I I I i -------------------------------------------------------------------------- KJH:JMW:0181g COMMISSION MEETING AGENDA Meeting Date: 11/15/1993 Agenda Item Number: I 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 JERSEY'S SPORTS BAR - ALL-INCLUSIVE TRUST DEED Jersey's Sports Bar (Jersey's) opened for business on September 16, 1993, just prior to the annual Route 66 weekend celebration. Since then, its reputation has been spreading throughout the area and the number of patrons has steadily increased. The building owners, who are Jersey's landlords and the borrowers on the $1,125,000 note which the Redevelopment Agency guaranteed, have requested that they be allowed to transfer title to the property and carry back an all -inclusive trust deed which would wrap around the Valley Bank first trust deed and the Agency's second trust deed. This all-inclusive trust deed would be in a junior position to the two prior trust deeds, so the Agency's security would not be impaired. The existing Valley Bank note includes a due-on-sale clause and, for this transaction to proceed, the bank and the Agency must agree to waive said clause. The purpose of the request is to allow the building owners to profit from the transfer of title to the property. If the transaction is approved, however, upon the closing of escrow there would be a one-time principal reduction in the amount of $140,000, which would be beneficial to all of the concerned parties. It would reduce the amount of the building owner's previous obligation and, at the same time, reduce the amount of Valley Bank's and the Agency's risk exposure. An additional benefit would be that, due to a proposed reduction in the monthly debt service on the Valley Bank loan, the debt coverage ratio would increase, thereby making the project more financially sound. It is important to note that the fundamental deal points which govern the original Jersey's transaction will remain in place and unaltered. The Agency continues to hold the personal guarantees of Mr. Russ Hatle, Mr. Ray Fox, Mr. Sam Fox and Mr. Hy Fox as additional security (beyond the second trust deed) for performance of the agreement obligations. Finally, it should be mentioned that the operational management structure which bears the responsibility for the successful, day-to-day functioning of Jersey's will remain unchanged from its original form. --------------------------------------------------------------------------- KJH:JMW:0181g COMMISSION MEETING AGENDA Meeting Date: 11/15/1993 Agenda Item Number: /0- DEVELOPMENT DEPARTMENT STAFF REPORT JERSEY'S SPORTS BAR - ALL-INCLUSIVE TRUST DEED November 10, 1993 Page Number -2- ---------------------------------------------------------------------------- Valley Bank of Moreno Valley has reviewed the proposed transfer of title and has provided its consent to the transaction as proposed. The Agency's special counsel has reviewed the correspondence pertaining to the transaction and has advised that the request is a reasonable one. Special counsel will also review and approve the form of the all-inclusive trust deed, prior to execution. Moreover, Valley Bank and staff will perform due diligence on the background of the buyer, a family trust, to make certain that it is acceptable to both the bank and the Agency. Staff recommends adoption of the form motion. KENNETA J. HE ERSON, Executive Director Development De artment ------------------------------------------------------------------------------- KJH:JMW:018lg COMMISSION MEETING AGENDA Meeting Date: 11/15/11993 Agenda Item Number: 1 11-04-1993 04:25PM FROM Valley Bank MV,(-.n 92556 TO 8889413 P.02 VALLEY BANK �� oJOuY StRLi 4o-�t-sY1�cEc-10 . .yattEr aaxK r-u,i,vi�i JiS,i.,;;:,;J •�'�_E T tg•6 .a Cq MVO November 4, 1993 M Mr. Russ E. Hatle CONMUNITY NATIONAL CORPORATION 1731-A Orange Tree Lane Redlands CA 92374 RE: Loan No. 11215216 (Heritage Building) Fox Bros. and Imprimis L.L.C. Dear Russ: This letter is in response to yours of November 2, 1993 relative to a request for change in terms on subject loan. After visiting with Ken Henderson and JohA Woad ,of the Redevelopment Agency of the City of San Bernardino (RDA}',• 'the following is offered for your consideration. Valley Bank and the RDA would -cons der waiver of the Due On Sale clause contained within the deed of trust contingent upon the following: 1. A principal reduction in the a.mount .of $140, 000 made on the above referenced note by November 30, 1993. 2 . The principal payment on the loan being reduced conl�urrently from $4, 687.50 per month to $4, 070.36 per month. See the accompanying exhibit page for calculation of the new monthly payment amount." 3 . Review and approval of the purchasers of the property. z'h:Ls would necessitate the'"rec.eil;it' and satisfactory review of a current financial statetnetit and 1992 tax return. ) 4 . A review by counsel of the All inclusive Purchase Money Deed of Trust. The inclusion of the subject note within this new deed is understood; howeveri the-.RDA also has a recorded encumbrance and that would also-!need to be included, both of which would be senior , liens. , i j , Very truly yours, d,;V-tJ N. Douglas Mills " President/CEO cc: Ken Henderson John Wood Ray Fox �. ,U JLINJV•lIV6�N1.1 bL i/u., CH 6c�a� - tyJy}2#2-i�� - i-nri ivy n 1� r cv r 1,. 993 04:26PM FRO' Valley Bank MV,CA 92556 TO 8889413 P.03 HERITAGE BUILDING LOAN BALANCE 11-04-93 $1, 054, 006 DP-hW 11-05-93 35,000 PAYMENT DUE 11-30-93 11, 600 SUBTOTAL $1,100, 606 PRINCIPAL REDUCTION 11-30-93 140, 000) i BAL?INCf: cnc I ORIGINAL MONTHS IN AMORTIZATION SCHEDULE - 2410 NUMBER MONTHS EXPENDED THROUGH 11-30-93 4 NUM P-11 OF MONTHS REMAINING IN ORIGINAL SCHEDULE - 236 i LOAN BALANCE AT 11-30-93 OF $96016:06 - 236 MONTHS $4, 070. 36 NEW PRINCIPAL PAYMENT. : A. it TOTAL P.03 iZ jl) NOV - a ic,�y;j November 2, 1993 .1 a t T_ Mr. Doug Mills VALLEY BANK 24010 Sunnymead Boulevard Moreno Valley, CA 92553 Re: Loan #11215216 Fox Bros. and Imprimis, L.L.C. °S Dear Doug, This letter is to request your approval of the following modifications regarding the above referenced loan: 1. A principal reduction in the amount of$140,000 to be made on or before November 30, 1993. 2. The principal payment on the loan to be concurrently reduced from $4,687.50 per month to $3,445.69 per month. 3. The borrowers to be permitted to convey title to the property to a third party in consideration of the principal reduction and the third party's execution of a Note in favor of Fox Bros.-Imprimis secured by an All Inclusive Purchase Money Deed of Trust which will be inclusive of the balance on the Valley Bank Deed of Trust and subordinate thereto. The terms of the new Note and All Inclusive Deed of Trust will be $1,350,000 payable at 9% interest only in 116 payments with the balance all due and payable July 30, 2003. The benefits to the bank of approving this transaction are as follows: A. An immediate reduction of the loan balance to 56% of the $1,700,000 appraised value. B. Debt coverage from the Jersey's lease increases to 1.31 times and over-all debt coverage increases to 1.43 times as follows: Lease Lease Average Lease Pmnt Coverage Period Loan Pmnt Jersey's 13th mo. $9,722.52 $12,750 1.31 24th mo. Shops same :1.212 : Total $9,722.52 $13,962 1.43 Community National Corporation I 1731-A Orange Tree Lane Redlands, California 92374, Phone=/792-7111_ FAX n09-aooa /J s C. The appraised value of$1,700,000 is validated by total consideration in the transaction of$1,700,000. D. You retain as principal borrowers and guarantors all those entities now on the loan in that capacity. In order to facilitate the transaction and make the principal paydown to the bank,we need your prompt approval subject only to approval of the All Inclusive Note and Deed of Trust. The transaction must close by November 30, 1993, if at all For your information I am enclosing a schedule indicating the present loan balance, the Original loan amount and balance at the due date and the Adjusted loan amount and Adjusted balance at the due date. i Please call me to discuss this at your earliest opportunity. Very truly yours, COMMUNITY NATIONAL CORPORATION Russ E. Hatle cc: Eri Hook Ken Henderson, EDA John Wood, EDA ► Mm./HOST/W t HERITAGE OFFICE BUILDING VALLEY BANK 1. LOAN BALANCE 10-28 $ 1,047,285 DRAW 11-5 35,000 INTEREST 11-30 7,215 PRINCIPAL REDUCTION 11-30 (140,000) INTEREST 12-30 6,330 INTEREST 1-30 6,330 --------------- BALANCE 1-30 $ .; 962,160 2 . ORIGINAL LOAN AMOUNT $,. 1, 125,000 PRINCIPAL PAYMENTS (120 @ $4, 687.50) (562,500) BALANCE AT DUE DATE $ 562,500 3 . ADJUSTED LOAN BALANCE $ 962,200 PRINCIPAL PAYMENTS (116 @ $3,445. 69) (399,700) BALANCE AT DUE DATE $ 3 562,500 hob\vllybnk.wkl 11/02/93 j 'Z