HomeMy WebLinkAboutR04-Redevelopment Agency
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DEVELOPflEIIT DEPARTflEIIT
OF THE CIn OF SAIl BERl'IARDIIIO
REOUEST FOR COIMISSIOII/COUl'lCIL ACTIOII
From:
KENNETH J. HENDERSON
Executive Director
Subject: WEST SIDE PLAZA
Date:
February 26, 1992
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SvnoDsis of Previous Commission/Council/Committee Action(s}:
None
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Recomm~ded tIotionls}:
(flavor and r....-... Council)
flOTIOII
That the Mayor and Common Council authorize staff to open
a new bank account with the National Bank of Long Beach
with withdrawals to be executed by the Executive Director
of the Development Department or designee to facilitate
the securing and payment of Urban Development Action
Grant Funds from the federal government.
J<.&UUiUI J. 011
Executive Direc or
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Contact Person(s): Ken Henderson/Art Hassel
Phone:
5081
Project Area(s): North West (NW)
Ward(s):
Six (6)
Supporting Data Attached:
Staff ReDort
FUNDING REQUIREMENTS:
Amount: $ N/A
Source:
N/A
Budget Authority:
N/A
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Commission/Council lIotes:
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KJH:AJH:lag:0552E
COIMISSIOII tlEETIl'IG AGENDA
fleeting Date: 3/2/1992 ~
Agenda Item l'IuIIIber:
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DBVBLOPMBWT DBPARTMBWT
OF THE CITY OF SAB BBDARDIBO
STAFF REPORT
West Side Plaza
A construction loan for the West Side Plaza Project has been approved
and the project is under construction. The funding mix for the
Agency's maximum obligation of $4.5 million included a $1,848,000 Urban
Development Action Grant (UDAG). The Department of Housing and Urban
Development (HUD) will provide $1.00 in UDAG funds for every $2.98
spent on the project in private funds. Because of this mandatory
federal reimbursement ratio and a resulting delay in timely
reimbursement, sufficient monies must be made available to guarantee no
slowdown or stoppage of construction activities. The traditional gap
between the final UDAG application and HUD's first reimbursement is a
four (4) month delay.
The Development and Disposition Agreement (DDA) with the construction
lender (National Bank of Long Beach) and the developer (New Frontier
Commercial Properties, Inc.) anticipated and resolves this problem. In
response to the bank's loan conditions and need to maintain continuity
of construction cash flow, the Agency agreed to advance the developer
sufficient funds ($700,000) to maintain continued work. It was
indicated this advance would subsequently be paid out of the National
Bank of Long Beach construction loan.
The Development Department staff has been requested by the Bank of Long
Beach to open an account to assure that ample UDAG matching funds (to
satisfy the $1 to $2.98 ratio) will be available when the bank releases
its private matching funds. The account will be an interest bearing
one in the name of the Agency. As a condition of the approved
$5,700,00 private loan to New Frontier, the Agency agreed to and
executed a "Letter of Reliance", approved as to adequacy by Special
Counsel, that commits the Agency to the placement of matching UDAG
funds in an account with the bank.
Work has already been completed in the project that is eligible for
UDAG reimbursement upon HUD approval. The bank has released and the
Agency has received seventy-two percent (72% - $505,279) of the
original $700,000. A cash flow analysis indicates the $505,279 is
sufficient to cover the UDAG matching funds for a period of four (4)
months. The analysis also calculated the cumulative and periodic
deposits of UDAG reimbursements. At the conclusion of the project, the
Agency will have $505,279 plus interest on deposit in the new account
with the bank.
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KJH:AJH:lag:0552E
CO...xSSIOW MEBTIBG AGBNDA
Meeting Date: 3/2/1992
Agenda Item Number: ~
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DEVELOPMDT DBPAR:rPmlr.r STAFF RBPORT
West Side Plaza
February 26, 1992
Page Number -2-
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The California Fund Control (CFC) is contractually responsible for the
disbursement of UDAG and private funds for the project. Upon
notification from CFC, and staff verification, that certain work has
been completed, the CFC withdrawal request will be submitted to the
Bank of Long Beach. The "Reimbursement Form" that authorizes a
withdrawal from the new account will be executed by the Executive
Director or designee before it is forwarded to the bank. Upon
presentation to the bank, it will withdraw sufficient funds from the
Agency's account to match the requested amount on a ratio of $1.0 from
the Agency's account to $2.98 from the banks private funds. The CFC
payment request form and sufficient funds to pay the requested amount
will be forwarded to CFC which will, in turn, release the combined
funds to the developer.
Staff has carefully analyzed the above referenced process and finds it
is in compliance with the Development and Disposition Agreement and the
Letter of Reliance between the bank and Development Department. No
additional funding allocation is required for this action.
Staff recommends adoption of the form motion.
~~~~., Executive
Development Department
Director
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KJH:AJH:1ag:0552E
COMMISSION MEBTIIIG AGEIIDA
Meeting Date: 3/2/1992
Agenda Its llumber: L