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Home My WebLink About10- Development Department I VELOPMENT DEPARTME T OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: FREEWAY HOME CENTER Executive Director Date: March 16, 1994 --------------------------------------------------------------------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s�: On December 9, 1993, the Redevelopment Committee forwarded the subject proposal to the Community Development Commission without a recommendation and instructed staff to complete its due diligence so the matter could be favorably considered by the Community Development Commission on December 20, 1993. (SYNOPSIS CONTINUED TO NEXT PAGE...) --------------------------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) (Redevelopment Committee Recommendatlon) MOTION: That the Community Development Commission authorize and direct staff to submit a $2.5 million dollar loan application to a private lender for the purpose of reloaning the loan proceeds to Allan Steward, Inc., for purposes of acquiring and renovating the Freeway Home Center and for working capital, subject to review of Allan Steward's financial capacity and, further, authorize the Chairman and Executive Director to execute an Owner Participation Agreement to include a personal guarantee pledge by Allan Steward. L/7 Administrat6r KENNETH J. ENDERSON Executive Director -------------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Kenneth J. Henderson/Emily Wong Phone: 5081 Project Area(s): Southeast Industrial Park Ward(s): Three (3) Supporting Data Attached: Staff Report: Attachment "A" FUNDING REQUIREMENTS: Amount: $2.500.000 Source: Tax Increment Budget Authority: Requested --------------------------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: ---------------------------------------------------------------------------------------------------------------------------------------------- KJH:EMW:frwyhome.dle COMMISSION MEETING AGENDA Meeting Date: 03/2111994 Agenda Item Number: 10 DEVELOPMENT DEPARTMENT OF THE CITY OF SAN BERNARDINO STAFF REPORT ------------------------------------------------------------------------------------------------------------------------------- FREEWAY HOME CENTER PROPERTY DESCRIPTION The Freeway Home Center, located at 1408-1680 South "E" Street with a current vacancy rate of seventy (70) percent, is a showroom retail center specializing in home furnishings and accessories. The property consists of seven (7) concrete tilt up buildings constructed in 1985 with 144,503 net rentable square feet on 8.43 acres. The site contains 693 parking spaces and is zoned commercial general. All buildings are currently under the control of the Resolution Trust Corporation (RTC). PROJECT BACKGROUND On February 7, 1994, the Community Development Commission authorized the staff to submit a loan application to a private lender for the purpose of reloaning the proceeds to Allan Steward, Inc., with the understanding that the Agency loan would make up only the difference between the $2.5 million dollars and the financing to be provided by the RTC. The Commission originally authorized submission of an $85,000 deposit to RTC, $75,000 of such deposit to be repaid by Allan Steward, Inc., in the event escrow fails to close. The Commission subsequently authorized an additional submission of $50,000 to extend the escrow, subject to Allan Steward providing a personal guarantee for repayment of the $50,000. The current escrow is due to close on or before March 29, 1994, the total $135,000 deposit is at risk. CURRENT PROJECT PROPOSAL Attachment "A" (letter from Allan Steward) indicates that Allan Steward, Inc., has not been successful in its efforts to obtain financing from the RTC. Additionally, previous loan requests (based upon a guarantee by the Agency) were denied by seven (7) other private lending institutions. As a result of the above, Allan Steward, Inc., is requesting that the Agency borrow $2.5 million for the purpose of reloaning the loan proceeds to Allan Stewart, Inc. Funds are to be used to purchase the Freeway Home Center from the RTC for $1,700,000 with the balance of $800,000 to be used for working capital and improvements. Based upon the foregoing, the Redevelopment Committee recommends adoption of the form motion. �6" KEN14ETH J. H NDERSON, Executive Director Development Department ---------------------------------------------------------------------------------------------------------------------------------------------- KJH:EMW:frwyhome.dle COMMISSION MEETING AGENDA Meeting Date: 03/21/1994 Agenda Item Number: 1 DEVELOPMENT DEPARTMENT REQUEST FOR COMMISSION/COUNCIL ACTION SUBJ: FREEWAY HOME CENTER PREPARED: MARCH 16,1994 PAGE -2- ----------------------------------------------------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Actions) Continued... On December 20, 1993, the Community Development Commission approved a $2.5 million dollar loan guarantee to Allan Steward, Inc., for the purchase and development of the Freeway Home Center project subject to review and approval of Allan Steward's financial capacity, approval by the Community Development Commission of an Owner Participation Agreement and close of escrow within ninety (90) days of Commission approval. Further, staff was authorized to pay to the Resolution Trust Corporation (RTC) a deposit in the amount of $85,000 with only 75% of such deposit ($63,750) to be repaid by Allan Steward, Inc., to the Agency in the event escrow failed to close. On February 7, 1994, the Community Development Commission authorized and directed staff to submit a $2.5 million loan application to a private lender for the purpose of reloaning such proceeds to Allan Steward, Inc., with the understanding that the loan application submitted by staff would make up only the difference between the acquisition price of$2.5 million and the RTC financing, with all the above subject to the review and approval of Allan Steward's financial capacity; approval by the Community Development Commission of an Owner Participation Agreement, execution of a personal guarantee by Allan Steward; and authorized staff to submit $50,000 to extend escrow and Allan Steward would personally guarantee payment of that money. ---------------------------------------------------------------------------------------------------------------------------------------------- KJH:EMW:frwyhome.dle COMMISSION MEETING AGENDA Meeting Date: 03/21/1994 Agenda Item Number: i 1 1111F STEW,AMAU March 16, 1994 ASS O C/A T E s ,MIVERC14L REAL EST4Tc Tim Steinhaus Agency Director Economic Development Dept. City of San Bernardino 201 N. "E" St., 3rd Floor MAP, 1 6 San Bernardino, CA 92401 RE: Freeway Home Center South "E" St. San Bernardino, CA Dear Tim, This letter is to inform you that after taking into account all the information that the RTC requires for their application and the time constraints we are under, there is no possible way we can complete this application before the closing of escrow deadline. The loan application processors that have been working on this package are completely and totally flabbergasted with the amount of detail they require. Therefore, I request that we use the pass through financing for the $2.5 million from the City of San Bernardino, with a personal guarantee from myself. Tha you in advance, I remain, EW D & ASSOCIATES Al . Ste and President, CEO ABS/cg 1887 Business Center Drive, Suite 3 San Bernardino, California 92408 ATTACHMENT "A" Tel. (909)381-9922 FAX(909)38i-2481