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Home My WebLink AboutRS5- 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 REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: HERITAGE BUILDING - Executive Director JERSEY SPORTS BAR BUSINESS ATTRACTION Date: March 4, 1993 ------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): None ------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) MOTION: That the Community Development Commission approve in concept a loan guarantee of $1,188,300 for Heritage Investors in connection with the establishment of the Jersey Sports Club within the Heritage Building and that an existing tax-exempt Industrial Development Bond on the Heritage Building, in the original amount of $923,000, be extended for an additional ten (10) years. Administrator KENNETH J. HEND RSON 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 FUNDING REQUIREMENTS: Amount: $1,188,300 Source: Loan Guarantee (Cont. Liab.) Budget Authority: Requested ------------------------------------------------------------------------------- Commission/Council Rotes: ------------------------------------------------------------------------------- KJH:JMW:lag:01198 COMMISSION MEETING AGENDA Meeting Date: 03/08/1993 Agenda Item Number: 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 Heritage Building - Jersey Sports Bar Business Attraction Heritage Investors ("Heritage"), owners of the Heritage Building, located at 440 West Court Street in the Central City Redevelopment Project Area, has, with the assistance of the Downtown Main Street Program, procured a tenant which will occupy the entire 15,093 square feet of the subject building. The tenant is Jersey's Sports Grill and Billiard Parlor ("Jersey's"), an upscale entertainment facility which projects annual sales of $5 million and the employment of eighty (80) persons. The facility will feature a full-service restaurant and will be open between the hours of 6:00 a.m. and 2:00 a.m. Heritage recently lost a major tenant, New York Life Insurance Company, to the Tri-City Corporate Center. Agency staff is currently working to relocate the remaining tenant, The San Bernardino Convention and Visitors Bureau, to the EDA building at 201 North "E" Street. Jersey's represents the type of downtown dining and entertainment facility that Main Street has been working for years to attract and is interested in signing a ten (10) year lease with two (2) five (5) year options to extend. The City of San Bernardino General Plan also calls for this type of use in the subject location. Finally, Jersey's will help fill the void which was created when Court Street West was closed to make way for The Sun Company's parking expansion project. In order to finance this important business attraction, Heritage has requested an Agency loan guarantee of $1,188,300. The Agency's financial consultant, Mr. Gene Wood of E.H. Wood & Associates, has advised that he can probably arrange a loan in this amount for Heritage but, based on the loan amount and strength of the borrower, an Agency guarantee would be required. It should be noted that, in addition to the investment by Heritage, Jersey's will contribute $1 million toward the upscale tenant improvements which will include, among other things, a glass elevator on the exterior of the building. Construction could begin as early as April 1, 1993, with a completion date of August 1, 1993. At the time Heritage became involved with the subject building, they acquired tax-exempt Industrial Development Bond (IDB) financing in the amount of $923,000. The interest rate on the bond was sixty percent (60%) of the prime rate plus two (2) points, floating, and the term ran until December of 1992. Because the economic feasibility of this project would be significantly enhanced by it, Heritage has also asked ------------------------------------------------------------------------------- KJH:JMW:lag:0119g COMMISSION MEETING AGENDA Meeting Date: 03/08/1pp993 Agenda Item Number: f� -,5 DEVELOPMENT DEPARTMENT STAFF REPORT JERSEY SPORTS BAR BUSINESS ATTRACTION March 8, 1993 Page Number -2- for a ten (10) year extension of the IDB, in the amount of $923,000, at the same interest rate and with the same tax-exempt status. The balance of the $1,188,300 loan would be provided at prevailing market rates. Not incidentally, the Agency will receive a two (2) point loan origination fee from this transaction, which amounts to $23,300. In conclusion, staff feels that Jersey's would be an excellent attribute to the existing downtown business mix. As an upscale restaurant, it helps to satisfy the continuing need for additional eating establishments in the City's heart, while adding significantly to the City's sales tax revenues and employment base. Moreover, the proposed assistance will prevent yet another downtown office building from becoming vacant and unused. Staff requests conceptual approval of the subject assistance package, as additional time will be required for E.H. Wood & Associates to secure and finalize a loan and for Sabo & Green, special counsel, to prepare required documentation and verify that the IDB can be extended. At such time, this item will be brought back to the Commission to seek authorization to execute the implementing documentation. Staff recommends adoption of the form motion. �(44, i KENNETH J. NDERSON, Executive Director Development epartment ------------------------------------------------------------------------------- KJH:J',1*:"r7:lag:0119g COMMISSION MEETING AGENDA Meeting Date: 03/08/1993 Agenda Item Number: �-;