HomeMy WebLinkAboutR31 EDAECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
FROM: Gary Van Osdel SUBJECT: PURCHASE PROPERTY - 571
Executive Director MAGNOLIA STREET (KMH
ORIGINAL ASSOCIATES, INC. - ARR PROGRAM)
DATE: December 2, 1998
Synopsis of Previous Commission /Council /Committee Action(s):
In June 1997, staff conducted a Request for Qualifications (RFQ) process in an effort to recruit qualified contractors to
participate in the City's Acquision, Rehabilitation and Resale (ARR) Program.
On September 15, 1997, the Community Development Commission approved five (5) contractors /development
companies, one of which is KMH Associates, Inc. (Participant), and authorized staff to execute an Owner Participation
Agreement (Agreement) between the Agency and Participant.
Recommended Motion(s):
(Community Development Commission)
MOTION: That the Community Development Commission authorize the Economic Development Agency to
negotiate the purchase of the Property located at 571 Magnolia Street, in connection with the Agency
guarantee under the Mortgage Lenders Acceptance Corporation and KMH Associates, Inc., Housing
Participation Agreement (Acquisition, Rehabilitation and Resale Program).
Contact Person(s): Gary Van Osdel/ Maggie Pacheco
Project Area(s)
Supporting Data Attached:
FUNDING REQUIREMENT
N/A
Phone: 5081
Ward(s): Two (2)
El Staff Report ❑ Resolution(s) ❑ Agreement(s) /Contract(s) ❑ Map(s) ❑ Letter /Memo
Approx
S Amount: $ 45,000 Source: Federal HOME Funds
/ r/a Budget Authority:
l
SIGNATURE:
e,'Cjary'Van,jXsdel, Executive Direc or
Economfc Development Agency
Commission /Council Notes:
Maggie P 'c o, Director
Housing Community Development
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REW:lag:12- 07- 02.cdc COMMISSION MEETING AGENDA
Meeting Date: 12/07/1998
Agenda Item Number:
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
Property Purchase - 571 Magnolia Street
Under the Agreement, the Participant purchased four (4) homes from the U.S. Department of
Housing and Urban Development (HUD) in order to rehabilitate and resell the properties to first
time homebuyers participation in the ARR Program. As part of this Agreement, the Participant
was also required to demolish and develop the vacant property located at 571 Magnolia Street
(Property) with a single family residential unit.
The Participant is having financial difficulties and has evidently made numerous attempts to sell
these properties and has been unsuccessful. Consequently, Alvarez & Associates has agreed to
take responsibility for disposition of the four (4) homes in order to avoid foreclosure. However,
with respect to the vacant Property, the Participant is unable to continue with their development
plans of the property, the loan is also due and the lender is proceeding with foreclosure
proceedings.
Pursuant to the Agreement, the lender must exhaust all legal remedies available to it under
foreclosure proceeding, including but not limited to sale of the Property, prior to requesting the
Agency's guarantee. The Agency's guarantee on the subject Property is $76,300. To date, the
outstanding debt on the Property is approximately $40,000. However, interest costs and legal
costs are accruing daily.
Since the Participant is unable to fulfill its obligations under terms of the Agreement, staff
recommends that the Community Development Commission 1) authorize staff to negotiate the
purchase of the Property with the lender and Participant in lieu of the foreclosure in an effort to
preserve the integrity of the Agency's guarantee and the ARR Program and 2) terminate the
Agreement between the Agency and the Participant. Federal HOME funds will be used to
purchase the Property. In the meantime, if successful with the acquisition, staff will explore
completely the development of the Property, which could include establishing a partnership with
either Habitat for Humanity or Frazee Community Center. Upon concluding these plans, staff
will return to the Community Development Commission with a status report and any required
development approvals.
VawOsdel, Executive Director
RE W:lag:12- 07 -02. cdc
Economic Development Agency
COMMISSION MEETING AGENDA
Meeting Date: 12/07//j19998
Agenda Item Number: