HomeMy WebLinkAbout05- Development Department D ., VELOPMENT DEPARTMB -. T
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: KENNETH J. HENDERSON SUBJECT: STANDARD MORTGAGE
Executive Director COMPANY, INC. LOAN
GUARANTEE
DATE: March 16, 1994
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Synopsis of Previous Commission/Council/Committee Action(s):
On March 10, 1994, the Redevelopment Committee recommended that the Community Development
Commission approve a $1.7 million loan guarantee for Standard Mortgage Company, Inc., for purposes of
acquiring a working capital loan; said loan guarantee to be adequately collateralized with real estate.
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Recommended MotIon(s):
(Community Development Commission)
MOTION: That the Community Development Commission approve a $1.7 million loan guarantee for
Standard Mortgage Co., Inc., for the purposes of obtaining a working capital loan, conditioned
upon the provision of adequate real estate collateral.
Administrator KENNETH J. HE DERSON
Executive Director
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Contact Person(s): Kenneth J. Henderson/ Phone: 5081
Project Area(s): All Ward(s): Seven (7)
Supporting Data Attached: Staff Report
Loan Guarantee
FUNDING REQUIREMENTS: Amount: $1.700.000 Source: Riverside National Bank Loan
Budget Authority: Requested
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Commission/Council Notes.
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KJH:1mp:03-02-04 COMMISSION MEETING AGENDA
MEETING DATE: 03/21/1994
Agenda Item Number: J-
DE ? LOPMENT DEPARTr TNT
STAFF REPORT
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Standard MortaaEe Company, Inc., Loan Guarantee
Standard Mortgage Company, Inc., has submitted to Agency staff a request to have the
Agency guarantee a proposed $1.7 million working capital loan to be provided by Riverside
National Bank.
Standard has been hit hard by the deep and lingering recession and has taken significant steps
to shore up its financial position by closing approximately six (6) offices and disposing of
certain troublesome properties at less than fair market value. Standard has been a fixture in
the residential real estate market for more than thirty years. It is a San Bernardino-based
company that, until recently, had offices throughout the two-county Inland Empire region.
Because of the significant holdings and cash-flows of the Company, Riverside National Bank
seriously entertained the notion of loaning the requested amount to Standard without any
Agency assistance. In the final analysis, however, because federal bank examiners look
askance at real estate loans in today's market, Riverside indicated to Standard that some form
of credit enhancement would be necessary in order to make the loan. Hence, the loan
guarantee request submitted to Agency staff.
Staff and E.H. Wood and Associates have reviewed the following documentation submitted by
Standard to assist in the evaluation of its request:
• Company-prepared Balance Sheets for October 31, 1993 and November 30,
1993.
• Company-prepared Income Statements for October 31, 1993 and November 30,
1993.
• Owner-prepared personal financial statement for years ending December 31,
1991 and December 31, 1992.
• Audited (Fleming, Reis and Company) financial statements for years ending
February 28, 1990, February 28, 1991, February 29, 1992, and February 28,
1993.
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KJH:1mp:03-02-04 COMMISSION MEETING AGENDA
MEETING DATE: 03/21/1994
Agenda Item Number:
Standard Mortgage Comp. j, Inc.
March 9, 1994
Page Number -2-
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• Corporate tax returns prepared by Fleming, Reis and Company for the years
1989, 1990, 1991, and 1992.
• Individual (owner) tax returns prepared by Fleming, Reis and Company for 1991
and 1992.
• A listing (see attached background information) of company-owned and Steiler-
owned property to be pledged as collateral for the Agency's guarantee and
located in the City of San Bernardino.
The above documentation, including the property listing, has also been received and reviewed
by Riverside National Bank. Riverside proposes an unsecured loan based upon the cash-flows
generated by Standard. Such a scenario affords the Agency the opportunity to secure its
guarantee not only with the personal guarantee of the company owner but also with a blanket
trust deed on affected properties.
With reference to the attached property listing, staff analyzed the values encumbrances and
equities of the various holdings, concluding that Standard Mortgage should provide an
additional $700,000 of equity in order to properly collateralize the Agency's loan guarantee.
Standard Mortgage has agreed to comply with this condition.
The proposed deal points for the Agency only are set forth below:
Type of Assistance: Loan Guarantee
Amount: $1.7 Million
Term of Guarantee: 3 Years
Fees: 1.5% payable to Agency upon
Commission approval.
Collateral: Personal Guarantee; blanket deed
of trust in favor of Agency.
On March 10, 1994, the Redevelopment Committee considered this request and recommended
that the Community Development Commission approve the subject $1.7 million loan guarantee.
The only condition was that Standard Mortgage provide sufficient real estate collateral to safely
and adequately secure said guarantee.
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KJH:1mp:03-02-04 COMMISSION MEETING AGENDA
MEETING DATE: 03/21/1994
Agenda Item Number:
DEVELOPMENT DEPA: RENT STAFF REPORT
Standard Mortgage Company, Inc.
March 9, 1994
Page Number -3-
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Based upon the foregoing, staff recommends adoption of the form motion.
0414A
KENNETH J. IIENDERSON, Executive Director
Development Department
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KJH:1mp:03-02-04 COMMISSION MEETING AGENDA
MEETING DATE: 03/21/19`94
Agenda Item Number: J
375 WEST SEVENTH STREET-P.O.BOX 107
SAN BERNARDINO,CALIFORNIA 92401
PHONE:(909)884-6001
FAX#:(909)889-4832
February 28, 1994
Mr. Ken Henderson Qc��< it
CITY OF SAN BERNARDINO \ .
Redevelopment Agency
201 North "E" Street
San Bernardino, CA 92401 `}
Re: Possible Loan Guarantee
Dear Mr. Henderson:
Pursuant to our earlier conversation with Dick Steiler, attached is a listing of properties owned by
Standard Mortgage Company and Dick Steiler.
If you have any questions, please give me a call.
Sincerely,
Standard Mortgage y, Inc.
Craig Dyberg
Real Property Division
kag
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