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0118
Jan. 1884
REDEVELOPMffiNTAGENCY
OF THE CITY OF SAN BERNARDINO, CALIFORNIA
DATE
APRIL 26, 1985
TO
COMMUNITY DEVELOPMENT COMMISSION
FROM
R.E. GOBLIRSCH
DEPUTY DIRECTOR
SUBJECT
SUPPLEMENTAL REPORT
HERMAN ENGLISH - RAMADA HOTEL
Following the delivery of the Agenda on April 24, Staff met with Herman
English regarding h1s proposal on the Ramada Hotel and spoke to Mr. John
Bromley of First Colonial Trust Company and Mr. Robert L. Chamness of
Rialto.
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Mr. Bromley advised staff that he would supply the financial information
requested in our letter to Mr. English of April 24, if serious
negotiations regarding the transaction proceeded. First Colonial Trust
is a private trust fund that does not disclose financial information
otherwise.
Pursuant to a phone conversation by staff to the Secretary of State in
Texas, we have been advised that First Colonial is a charter corporation
of good standing since 1954and has been certified through April, 1986.
Mr. Robert Chamness has further agreed to provide financial information
and references to the Agency upon serious negotiations. Mr. Chamness
also agreed to outline for the Commission, in written form, the proposal
as it is intended to work. Attached is Mr. Chamness' letter.
The fOllowing is our understanding via conversations with the above
individuals and staff as to the proposal:
1. Mr. Robert Chamness has agreed and has delivered to First
Colonial Trust Company collateral which has been accepted
by First Colonial Trust to enable the trust company to
guarantee the proposed $4,000,000, repayment within three
years.
2. Mr. Chamness has agreed to assign the purchase document
from Colonial Trust Company to Herman English in order that
Mr. Eng11sh can assign said documents to the Agency.
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3. Mr. English proposes that an escrow be entered into wherein
the Agency lends to English $4,000,000 to complete the
Rsmada Hotel. Under the terms of this escrow, if English
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does not repay the loan upon the terms agreed upon,
Colonial Trust w111 guarantee the repayment and assume the
collateral deposited by Robert Chamness.
4. It was discussed that if negot1ations proceeded a aeparate
document needed to be drafted wherein all of the parties
concerned would agree to the method in which these funds
would be released.
5. It was further discussed whether First Colonial and Robert
Chamnesa would increase the guarantee and collateral from
$4,000,000 to $5,000,000; the additional $1,000,000 being
that requested by Mr. English for completion of the
Convention Center.
If the Agency is to consider lending these funds to English, it must also
realize that these funds must be borrowed from a 3rd party in order to
lend them to Eng1iah. As Mr. English does not propose paying interest on
this loan, the cost to the Agency could be substantial.
Assuming the Agency could borrow the entire $5,000,000 at 10% interest
($4,000,000 over three years & $1,000,000 amortized over 5 years) total
outlay by the Agency would be $6,646,666. After Repayment repayment
principal only ($5,000,000) the Agency would realize a net cost of
$1,646,666.
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Projected tax increments over five years is $1,144,888 (sverage of
$229,000 per year).
Net Loss
5 Year Tax Increment Project1on
$1,646,666
[$1,144,888]
[$ 501. 778]
NET
Staff asked if First Colonial would guarantee the loan in the form of a
Letter of Credit. This Letter of Credit could then be used to
collateralize the loan that we need to enter into with the 3rd party and
make borrowing of said funds more feasible. First Colonial's response
was it would require a complete restructuring of the agreement, but they
may consider it.
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R.E. GOBLIRSCH
Deputy Director
REG:SL:jat:1009J
Attachment: (1)
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Phone (714) Il;1 ---
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INVESTMENT ADMINISTRATORS
April 25, 1985
Mr. R.E. Goblirsch
REDEVELOPMENT AGENCY
City of San Bernardino, CA
RE: Ramada Hotel, San Bernardino, CA
Dear Mr. Goblir sch
As per our conversation this date, the following should help you
and your staff to have a better understanding of the guarantee I am
assigning to Mr. English.
1. I have placed sufficient collateral with First
Colonial 'l'rustCo., which they have accepted and in
turn have given me a forward cOmmitment to purchase.
This commitment is for one year and two one year
options to. renew.
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0. First Colonial Trust has given permission, to
assign this commitment, as an outside guarantee of
repayment to-your agency.
3. First Colonial Trust will be the owner of the
collateral and will pay the holder of the commit-
merit $4,000,000.00. In this case, the San Bernar-
dino RedeVelopment Agency, should the loan not be
repaid as agreed.
4. Once your agency has agreed to the loan, I
wi~l place the commitment, my assignment to Mr.
English and the assignment t~om.Mr. English to
your agency in escrow. A copy of this escrow
showing your agency as the holder of the commitment
will be sent by the escrow company to First Colonial
Trust at the time of it's closing. The escrow will
hold all documents until fund s have been received.
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5. First Colonial will receive $250,000.00 from
escrow, out of the proceeds of the loan. One
hundred fifty ($150,000.00) thousand dollars is
for the first year, and one hundred ($100,000.00)
thousand dollars will beheld by First Colonial
Trust, in an interest bearing account, to ex~cise
the two one year options, if needed. Mr. English
is to receive all interest on the $100,000.00.
1420 Cooley Drive . Suite 2OD-M . Colton. California 92324
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I sincerely hope the above detailed explanation has answered
all your questions. As for information on myself, before enter ing
into Investments and Finance, I had extensive experience in Real
Estate, a very beneficial prerequisite for fully understanding
all of the various docwnents and termenologies in Finance. I held
Real Estate licenses in seven states and was the National Marketing
Director for Holly Development Corporation, a subsidiary of McCullough
Industries for five years.
As I am sure you can appreciate and in the interest of brevity,
I will not attempt to list seperately all projects, office or apart-
ment complexes, warehouses or hotels and motels that I have secured
financing for since 1964. The following is a synopsis of my activ-
ities during my career in Finance.
.1 was involved with the setting up and funding of state Bond
issues in New York for Heritage Mountain Resorts of Utah.
I have secured financing for condominium projects in South
Shore, Nevada, Apartment complexes in Tucson, Arizona. A Resort
Development in Elko,Nevada. I arranged and handeled the sale of
the Hacienda Hotel in Las Vegas, Nevada in 1968.
I arranged the financing for the Montreal Sheraton Plaza
Hotel and am currently handling the financing for the Hotel
Luxefords, which are located in Minnesota and Texas. Last year
I spent five months setting up a 'European Trust for one of my
clients in Texas.
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I handle all elf Mr. Keith Rays projects, .who is from Los
Angeles. I have arranged financing for Mr. Ray in .Los Angeles,
Victorville, Orange County and Pollock Pines, Calif~nia. I am
currently arranging the Financing for the purchase of a Holiday
Inn Hotel for. Mr. Ray.
I have recently been asked to secure financing for a Resort
in Tuscaloosa, Alabama as well as a Shopping Center in LoUisville,
Kentucky.
In this area I have arranc;red loans for office complexes,
Shopping Centers and Apartment complexes and of course the San
Bernardino Ramada. Most of these .havebeen for Standrich Develop-
ment Corporation here in San Bernardino.
This of course is not inclusive of all my experience in the
world of Investments and Finance. Suffice it to say that this
is how I have made my entire living for the past twenty-one year s.
Hopefully it has answered any questions you may have about my
understanding and knowledge of the above detailed outside guar-
antee for the proposed loan by the RDA.
Sincerely,
O~~
RC/aic