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. REb.VELOPMENT AGENCY .~ST FOR c<tMMISSION/COUNCIL AcrloN
From: GLENDA SAUL
Subject:
WEST SIDE COMMUNITY DEVELOPMENT
CORPORATION CDBG LOAN OF $112.000
(OFFICE BUILDING)
.. .,pt: Redevelopment Agency
Date: February 10. 1986
Synopsis of Previous Commission/Council action:
-On April 12. 1984. the Community Development Commission adopted resolution #4603
authorizing the development of an Owner Participation and Loan Agreement with
West Side CDC for the construction of an office building complex.
-On November 26. 1985. the Mayor and Common Council considered financial assistance
to West Side CDC and approved the staff recommendation to deny such financial
assistance. Staff was directed to meet again with West Side CDC to resolve the
problem.
-On January 15. 1986. the Mayor and Common Council considered this item and
continued same to February 17. 1986.
Recommended motion:
(MAYOR AND COMMON COUNCIL)
That West Side Community Development Corporation be declared in default of their
Community Development Block Grant loan of $112.000.
OR
Approve revised repayment structure for Owner Participation and Loan Agreement with
West Side CDC in accord with the scenario described in staff report.
~/:t~tl
Signature
Contact person: GLENDA SAUL/KEN HENDERSON
FUNDING REQUIREMENTS:
Amount: $
N/A
Phone: 383-5081
Ward: 6
Project: NW
Date: Fphrll1lry 17. IQRfi
Supporting data attached:
YES/STAFF REPORT
No adverse Impact on City:
, 'neil Notes:
Agenda Item No.
/I/k,
- Wes t Slde CDC t
'''.,,,.,, ,~.,:,. :::::::d:;:"'-";~: "~'. "', "'.._,
- "''''.'" -~ '" '''''l2.". ""'''..
"'OUld not accrue.
- OutStandlng bBlance
fOllo,..lng scenarlo:
Wes t Slde CDC ...
PrOflt on the OUld be allo"'ed to I1lake s
P..E" .....d"'~Po:::'~ 'E 'h. 'E,,~ ";;;;;,,, Po...., <20%) '"
'0% '. ... ......y "d ,';;;"'Y Po...., <20%) " . .""'... ...,. ~
to West Slde CDc. Bure "'Ould be sPIlt
$ 50,000
$1l2,000
1'hlrty (30)
Due and PSYabl:e~r fSllJort12atlon
Years. n lfteen (IS)
Rate:
Se"en Percent (7%)
'" ".. 'E 'h. ., Po. .~..,
MaYor and COlllnJon C o"e and thelr SOllJe"'hat
:.;;z-., c_.:::,,,,;. ':.r;:;:: '''''E " ::::-::::: .~~":'..,., """'" '"
'. · .'''d be ...'...'....d .. U ... ....""'.. "', .., "d. ........"
d '''ih',,, .~.....,,~. ;, As <' '''''' '" 'h,. ...., h, '.... .. ""."bed
'" 'Pod E~ .....,"'...;~ ,:.. 'i'- .......'...........d ......, "la,...
- · ........_, C_"'" 'Po_, "... '"
Appralsed "Blue of bUlldl ~ .
ng d,04S,000.
- Antlclpated tag J.n
crellJent Per Year $10 450 (~
- ""'" , · ".04'.000 , m,
($ ag lncrellJent reCel
la.." "'d ""'.. 20%'''' 'Y ..d....._, Po.
dlStrlCts. set-aslde and S~
... for
You "'111 recall the t
...d .~'ld'''d ... ...;:: N.._., lOBs, 'be "'Yo.
"00.000, '~.,,, ,'~.Y '.... ..,...., by. "'d C-. "-"
.'" ,.., . '" ... Yo. ...: .. ...." 'Iu, 'E,.. "':" . ld. Cl>c '" ,,,; ..:::;;-::
""''''d. Du.... ..~.""~ "-." ..... '-1-, ~? ....,., ........ .. 'be
'" ..,.... .E '" CO"" ...".... 'h... ... .....ld dbeny the loan request
'E,,~ '''''' ...,...... 'be ... '" ,. ......" ..
''''.,..... .;:;:, .~"'" ...... '- ..;0.' Iud >r""'d.. .. ..,;;;, ...."...
"'....,.... 'Iu, ,,!:' ....,,,'~ "d "oVt d.-....,,~ ""''''d ," 'be,.
E.".... · ...... '" ... CO"" ... ....._,)" . ''''''
aSS1Stance to It\ "'as agaln
es t Slde CDC "'as a;
OF SAfl8eJifl.411\.,fIo
- IfeQlIeS]- "OIf COuNcIL AC1"1OfI
STAFF REPORT
----~- -
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.,
.
Grant:
Loan:
1'el1D:
Year $7,837.50
Other tag1ng
Of i72,812'S0
"'ould be retlred Under the
~
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It should be noted that the difference between the interest rate of seven (7)
percent over a fifteen (15) year period and market interest rates (13%)
constitutes an additional subsidy on this project. The actual difference
equates to $95,823.00, or the equivalent of twenty-five (25) years of tax
increment.
After discussion by Committee members, staff was directed to place this item
on the Commission agenda along with the committee recommendation that West
Side CDC be declared in default and Agency Counsel directed to take all
appropriate legal actions to secure repaYlllent and to protect the City's
interest.
At the January 15, 1986 meeting of the Mayor and Common Council, this item was
continued to February 17, 1986.
544L
1/86
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, RE~VELOPMENT AGENCY-R..4uEST FOR ~MMISSlON/COUNCIL ACrltoN
,"",~"t: Redevelopment Agency
Subject: WEST SIDE COMMUNITY DEVELOPMENT
CORPORATION CDBG LOAN OF $112,000
(OFFICE BUILDING)
. From: GLENDA SAUL
Date: February 10, 1986
Synopsis of Previous Commission/Council action:
-On April 12, 1984, the Community Development Commission adopted resolution #4603
authorizing the development of an Owner Participation and Loan Agreement with
West Side CDC for the construction of an office building complex.
-On November 26, 1985, the Mayor and Common Council considered financial
assistance to West Side CDC and approved the staff recommendation to deny such
financial assistance. Staff was directed to meet again with West Side CDC to
resolve the problem.
-On January 15, 1986, the Mayor and Common Council considered this item and
continued same to February 17, 1986.
Recommended motion:
(MAYOR AND COMMON COUNCIL)
That West Side Community Development Corporation be declared in default of their
Community Development Block Grant loan of $112,000.
~~
r Signature
Contaet person:
GLENDA SAUL/KEN HENDERSON
YES/STAFF REPORT
Phone: 383-5081
Ward: 6
Project: NW
Supporting data attaehed:
FUNDING REQUIREMENTS:
Amount: $ N/A
No adverse Impact on City:
Date:
Februar 17 1986
oneil Notes:
"CIT(., OF SAN BERNARDIU - REQUECi' FOR COUNCIL ACl~N
STAFF REPORT
You will recall that in November, 1985, the Mayor and Common Council reviewed
and considered an emergency loan request by West Side CDC in the amount of
$100,000. You will also recall that after two (2) special meetings on the
subject, the Mayor and Common Council voted 5-1-1 to deny the loan request as
submitted. During those meetings, there was considerable discussion regarding
the nature of the CDBG assistance the Agency had provided to WSCDC on their
office building complex. Based upon the documentation submitted by staff
(including minutes, resolution and OPA/Loan Agreement) it was again,
determined that the nature of the CDBG assistance to West Side CDC was as
follows:
Grant:
Loan:
Term:
$ 50,000
5112,000
Thirty (30) year amortization
Due and Payable in fifteen (15)
years.
Seven percent (7%) per annum.
Rate:
In view of the above and their somewhat precsrious financial position, the
Mayor and Common Council directed staff to meet again with West Side Community
Development Commission to determine if the repayment of the loan as described
above could be restructured. As a result of this meeting and several related
telephone conversations, the following restructured repayment plan was
developed for consideration by the Redevelopment Committee:
- Appraised value of building $1,045,000.
- Anticipated tax increment per year 510,450 ($1,045,000 x 1%).
- Actual tax increment
($10,450 and minus
districts.
received by Redevelopment per year $7,837.50
20% set-aside and 5% for other taxing
- West Side CDC to receive five (5) years tax increment totaling
$39,187.50 leaving outstanding balance of $72,812.50.
- Interest would not accrue.
- Outstanding balance of $72,812.50 would be retired under the
following scenario:
West Side CDC would be allowed to make a twenty percent (20%) net
profit on the operation of the office building complex. Any net
profit exceeding the twenty percent (20%) figure would be split
60% to the Agency and 40% to West Side CDC.
71.0264
'I ,.
-
'--'./'
After diecueeion by Committee .embers, staff was directed to place thiB
item on the Commission agenda along with the committee recommendation
that West Side COC be declared in default and Agency Counsel directed to
take all appropriate legal actions to secure repayment and to protect the
City's interest.
544L
1/86