HomeMy WebLinkAboutR03-Redevelopment Agency
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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REOUEST FOR COMMISSION ACTION
From:
BARBARA J. LINDSETH
Acting Director
Subject:
WELLS FARGO LINE OF
CREDIT EXTENSION
Date:
February 9, 1995
SvnoDsis of Previous Commission/Council/Committee Action(s):
On July 2, 1990, the Community Development Commission authorized the
execution of a Letter of Acceptance for a Line of Credit with Wells
Fargo Bank.
On October 1, 1990, the Community Development Commission authorized the
negotiation of an agreement with Wells Fargo Bank for investment
services.
(SvnoDsis Continued to Next Pa~e...)
Recommended Motion:
(Communitv DeveloDment Commission)
MOTION:
That the Community Development Commission authorize a one year
extension of certain Lines of Credit with Wells Fargo Bank and
authorize the execution of said documents.
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BARBARA J. LINDSETH
Acting Director
Administrator
Contact Person:
Barbara Lindseth
Phone: 5081
Project Area:
All
Ward(s): 1 through 7
Supporting Data Attached:
Staff ReDort
FUNDING REQUIREMENTS:
N/A
Amount:
Source:
N/A
Budget Authority:
N/A
Commission Notes:
BJL:1679A
COMMISSION MEETING AGENDA
Meeting Date: 2/20/1995
Agenda Item Number: R -9
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ECONOMIC DEVELOPMENT AGENCY
REQUEST FOR COMMISSION ACTION
Wells Fargo Line of Credit Extension
Page -2-
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SvnoDsis of Previous Commission/Council/Committee Actiones) Continued
On December 10, 1990, the Community Development Commission authorized
lines of credit with Wells Fargo Bank.
On April 17, 1991, the Community Development Commission authorized the
Executive Director to make certain financial guarantees with regard to the
West Side Plaza Project.
On June 3, 1991, the Community Development Commission authorized the
amendment of certain lines of credit with Wells Fargo Bank and the
execution of certain documents in connection therewith.
On February 17, 1992, the Community Development Commission approved a one
year extension of the Lines of Credit with Wells Fargo Bank.
On March 11, 1993, the Redevelopment Committee recommended to the
Community Development Commission approval of this item.
On March 22, 1993, the Community Development Commission approved a one
year extension of the Lines of Credit with Wells Fargo Bank.
On February 21, 1994, the Community Development Commission directed staff
to determine if better terms for a $10,000,000 line of credit, other than
those terms with Wells Fargo, were available in the open market, and to
obtain a 30-day extension from Wells Fargo Bank for the line of credit.
On April 4, 1994, the Community Development Commission authorized a one
year extension of certain lines of credit with Wells Fargo Bank, and
authorized staff to enter into negotiations with First Interstate Bank of
California to establish a line of credit.
On October 3, 1994, the Community Development Commission approved of a
certain line of credit with First Interstate Bank.
On February 9, 1995, the Redevelopment Committee recommended approval of a
one year extension of certain lines of credit with Wells Fargo Bank.
BJL:1679A
COMMISSION MEETING AGENDA
Meeting Date: 2/20/1995
5
Agenda Item Number:
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II 'I
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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Wells Far20 Line of Credit Extension
In 1990, staff was directed to locate banking institutions willing to
accommodate the Agency with a $10,000,000 line of credit, and to
negotiate an interest rate on said line of credit.
As approved on July 2, 1990 by the Commission, and as amended on June
3, 1991, a line of credit was established with Wells Fargo Bank. The
line of credit was designed to extend credit to the Agency in the
aggregate principal amount of $10,000,000. This was a secured line of
credit payable at prime rate minus .50% to be repaid at the Agency's
terms, and with collateral of secured interest in cash or cash
equivalents of not less than the line commitment. There were no
commitment or loan fees.
As collateral, $10,000,000 was approved by the Commission to be
invested through Wells Fargo Bank Investment Services. These funds are
tax increment funds, not bond proceeds, and the funds are invested in
accordance with the Agency's Investment Policy. Investment of these
funds with Wells Fargo Bank meets the requirement that the Agency
secures any remaining draws on the $10,000,000, and any outstanding
draws on the line of credit.
On February 21, 1994, the Commission directed staff to determine if
better interest terms were available in the open market on a
$10,000,000 line of credit. It was determined that only three (3)
institutions were of sufficient size to accommodate a $10,000,000 line
of credit, besides Wells Fargo Bank. These institutions were: Bank of
America, Union Bank and First Interstate Bank.
Of the inquiries sent by staff, only Bank of America and First
Interstate responded. Bank of America was rejected due to the proposed
interest rate being higher than the current rate which was offered by
Wells Fargo. The proposed interest rate from First Interstate Bank was
accepted, since the rate was .125% lower than the current rate offered
by Wells Fargo Bank. Subsequently, Wells Fargo Bank was contacted and
agreed to lower its rate to match the rate offered by First Interstate
Bank (prime minus .625%).
Currently, the Agency has two (2) lines of credit: one each with Wells
Fargo Bank ($10,000,000) and with First Interstate Bank ($10,000,000),
for a total of $20,000,000. The outstanding payable balance on these
lines of credit is approximately $6,350,000 (leaving an unused balance
of $13,650,000), which provided funds for the Portugal and Neal
Development and for the Wests ide Shopping Plaza.
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BJL:1679A
COMMISSION MEETING AGENDA
Meeting Date: 2/20/l9~
Agenda Item Number:
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II 11-
ECONOMIC DEVELOPMElIT &CY STAFF REPORT
Wells Fargo Bank Line of Credit Extension
February 9, 1995
Page Number -2-
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However, staff does not anticipate drawing on these lines of credit,
which to do so would reguire an additional deposit of Agency funds to
collateralize the line of credit for any additional draws. Since the
balance of the Agency's funds must be kept liquid to pay current
obligations, the Agency is currently unable to transfer and
collateralize additional draws.
The line of credit with Wells Fargo Bank will expire on March I, 1995,
and it is proposed to extend the maturity date of the line of credit
for one year, until March I, 1996, with the same terms and conditions
as stated above.
On February 9, 1995, the Redevelopment Committee recommended approval
of a one year extension of the Wells Fargo line of credit, and the
execution of all necessary documents.
Staff recommends adoption of the form motion.
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BARBARA J. LINDSETH
Acting Director
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BJL:1679A
COMMISSION MEETING AGENDA
Meeting Date: 2/20/1995
3
Agenda Item Number: