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Home My WebLink AboutS2- Economic Development ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REQUEST FOR COUNCIL ACTION From: Barbara J. Lindseth Subject: ARROWHEAD HEALTH CARE Acting Director SYSTEM Date: January 13, 1995 ------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On February 22, 1993, the Community Development Commission approved in concept a $8.6 million loan guarantee for Arrowhead Health Care System for the purpose of developing a professional office building. (Synopsis Continued on Page 2) ------------------------------------------------------------------------------- Recommended Motion(s): OPEN PUBLIC HEARING (SCHEDULED AT 11:00 A.M.) CLOSE PUBLIC HEARING (Mayor and Common Council) MOTION: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, MAKING CERTAIN DETERMINATIONS IN ACCORDANCE WITH HEALTH AND SAFETY CODE SECTION 33679. Administrator Barbara J. Lindseth Acting Director ------------------------------------------------------------------------------- Contact Person(s) : Tim Steinhaus/John Wood Phone: 5081 Project Area(s) : Northwest (NW) Ward(s): Sixth Supporting Data Attached: Staff Report; Resolution FUNDING REQUIREMENTS: Amount: $1,250,000 Source: Tax Increment Budget Authority: Agency 1993-94 Budget ------------------------------------------------------------------------------- Council Notes: ------------------------------------------------------------------------------- BJL:2000A COUNCIL MEETING AGENDA Meeting Date: 1/23/1995 Agenda Item Number: �o^ Synopsis of Previous Commission/Council/Committee Action(s) Continued ' On November 15, 1993, the Community Development Commission approved an Agency loan guarantee related to the construction of a professional office building. On December 19, 1994, the Community Development Commission set a public hearing for January 9, 1995 at 11:00 a.m. On January 9, 1995, the Community Development Commission adjourned to January 12, 1995 at 9:30 a.m. On January 12, 1995, the item was continued until January 12, 1995. ------------------------------------------------------------------------------- BJL:2000A COUNCIL MEETING AGENDA Meeting Date: 1/23/1995 Agenda Item Number: ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO STAFF REPORT Arrowhead Health Care System On February 22, 1993, the Community Development Commission approved in concept the guarantee by the Agency of an $8.6 million construction loan from the Whitehall Group to Arrowhead Health Care System (parent company of San Bernardino Community Hospital) for the purpose of developing a 59,000 square foot professional office building with such conceptual approval subject to the drafting and review of all appropriate documents and subsequent approval by the Commission. On November 15, 1993, the Commission approved a loan guarantee related to the construction of the professional medical office building for the San Bernardino Community Hospital and authorized execution of related documents. However, that transaction was not completed. Currently, Arrowhead Health Care System has secured a new lender, North Atlantic Life Insurance Company of America and Northern Life Insurance Company ("the Lenders"), to finance the project and the parties are preparing documents for the transaction. The amount of the loan is estimated at $9.8 million, including certain costs and fees. The Agency guarantee is in the form of a purchase contract/put option, and due to the form of the transaction, the Lender's counsel has requested that the Agency hold a public hearing pursuant to Health and Safety Code Section 33679, which requires a public hearing prior to the use of tax increment revenues to purchase real property. Arrowhead Health Care Systems has requested that the Agency provide the following assistance: (i) a purchase agreement/guarantee of a loan on behalf of Arrowhead for the construction of the office building (the"Project") , and (ii) certain off-site improvements which will benefit the construction of the Project. The Project, as mentioned, is a three-story, 59,000 square foot medical office building which will be located across the street from the San Bernardino Community Hospital. The office building will be connected to the hospital by a pedestrian bridge on the second floor of each building. The pedestrian bridge will also provide for public crossing. In order for Arrowhead Health Care Systems to obtain construction financing of the property, the Agency must guarantee a loan through a purchase agreement/put option in an amount not-to-exceed $9.8 million. The medical office building is projected to attract qualified physicians and support staff from within the City and across the United States in order to increase the quality ------------------------------------------------------------------------------- BJL:2000A COUNCIL MEETING AGENDA Meeting Date: 1/23/1995 Agenda Item Number: Economic Development _ ,,ency Arrowhead Health Care Systems Staff Report Page - 2 - -------------------------------------------------------------------------------- of health care provided to the residents of the City, and will benefit the San Bernardino Community Hospital in order to allow it to maintain its existence within the Northwest Redevelopment Project Area. Whereby, the increase in physicians and support staff from outside of the area will increase the tax base of the Northwest Project Area and the surrounding project areas. The total cost of the Project shall be $11,375,000. The sources of payment of said costs will be as follows: $9,200,000 plus certain costs and fees, which is a loan from Northern Life Insurance company and the North Atlantic Life Insurance Company of America. The loan shall be secured by an Agency Purchase Agreement/Guarantee (the Agency shall guarantee up to an amount not-to-exceed $9.8 million) . $1,250,000 from the Agency for off-site improvements (said improvements include construction of the bridge, traffic lights, utilities, street improvements, water hookup fee, and new code requirements). In February 1992, the Commission prioritized, through the mid-year budget process, the amount of $1,250,000 to be set-aside for the purpose of assisting Arrowhead Health Care Systems with off-site improvements, as outlined in the Owner Participation Agreement, of which, approval is now sought. $925,000 - hospital funds. On December 19, 1994, a public hearing was set for January 9, 1995 at 11:00 a.m. However, notice of the public hearing could not be published on time for the January 9, 1995 meeting and was therefore published for a public hearing on January 12, 1995 at 9:30 a.m. . The January 9, 1995 meeting was adjourned to January 12, 1995 at 9:30 a.m. On January 12, 1995, the item was continued until January 23, 1995 at 11:00 a.m. for the City's public hearing, which hearing may be held at any time thereafter, and January 23, 1995 at 11:00 a.m. for the Commission's public hearing. Based upon the foregoing, staff recommends adoption of the form motion. Barbara J. Lindseth, Acting Director ------------------------------------------------------------------------------- BJL:2000A COUNCIL MEETING AGENDA Meeting Date: 1/23/1995 Agenda Item Number: