HomeMy WebLinkAboutR05-Economic Development Agency
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DEVELOPMEBT DEPAJr.l"l'll51'rJ: OF THE
CITY OF SAW BERRARDIBO
IlEOUEST FOR ClMnSSION/COmrCIL ACTION
From: KENNETH J. HENDERSON
Executive Director
Subject:
SBART AND FIlUL SHOPPIRG
CDrER (NORTHWEST CORBER
OF BASELIlU AND ARROWIIIW)
AVDUE)
Date: JULY 10, 1991
Synopsis of Previous Commission/Council/Committee Action:
6/20/91 The Redevelopment Committee consider the motion and requested staff to
structure the most effective and efficient financing possible for this project.
Recommended Motion:
(CO!RJlf.[TY DEVELOPMEBT COMMISSION)
THAT THE C..........lTY DEVELOPMEBT ClMnSSION IlECEIVE AND FILE THE ATTACHED STAFF
IlEPORT IlEGARDIRG THE SBART AND FIlUL SHOPPIRG CDrER.
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ADMINISTRATOR
Contact Person: Ken Henderson/Ezell James
5065/5081
Phone:
Project Area:
Ward(s) :
Utltown
Supporting Data Attached: Staff Retlort/Memorandum from E.H. Wood & Assoc.
FUNDING REQUIREMENTS:
Amount: $
Source:
Budget Authority:
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Commission/Council Notes:
KJH:EJ:kak:4045H::
COMMISSION MEETIRG
MEETIRG DATE 7/15/91
Agenda Itea No.
F)
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DEVELOPIIKKT DBPAIl'nmn".r
STAFF REPORT
Smart and Final Shopping Center
(Rortheast eorner of Baseline .nd Arrowhead Avenue)
The Galstian Family Trust ("Owner") acquired the old Alpha Beta Shopping Center
which contains approximately 49,000 square feet of retail space on four and
one-half (4 1/2) acres. After acquiring the center, the two (2) major tenants
(Alpha Beta and Thrifty Drugstore) elected not to renew their leases, expressing
concern about the high crime rate in the area and the general deterioration of
this area of Baseline Street. This has left only two (2) tenants (liquor store
and laundry) occupying approximately 4,200 square feet. After several months
the owners were able to lease the old Alpha Beta (25,500 square feet) to Smart
and Final, which is now open and operating. The owners had to give twelve (12)
months free rent to induce Smart and Final to lease the old Alpha Beta site.
Since the main store area had been vacant for more than six (6) months and the
premises contained over fifty percent (50%) of the floor area of the center, the
Smart and Final tenant improvement permit application necessitated compliance
with current landscaping, parking and set-back requirements at a cost of
$140,300. The Department of Planning and Building Services allowed Smart and
Final to occupy the premises under a temporary Certificate of Occupancy, upon
the owners representation that the landscaping work would be completed. This
has been extended to July 22, 1991.
In meetings with the owners, Councilman Reilly and the Police Department, it was
agreed that a COP Center in this location would be desirable. The owners have
agreed to make approximately $30,000 in tenant improvements to 1,250 square feet
and lease the premises to the Police Department for two (2) years at a rent of
$1.00 per year. The lease will be presented to the Mayor and Common Council for
approval on June 19, 1991.
The owner is making an effort to improve the center and plans to spend
approximately $65,000 on exterior rehabilitation.
In summary the owner needs approximately $235,450 as follows:
Concrete/Asphalt work
and irrigation system/
landscaping
$140,300
Exterior Rehabilitation
65,300
Tenant Improvements for COP
29.850
$235,450
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The owner approached four (4) commercial banks in an effort to finance this
amount, but was informed that such loans were not being made in today's market.
Staff has been able to discuss this proposed transaction with two (2) of the
lenders and has confirmed the difficulties encountered.
KJH:EJ:kak:4045H
COMMISSIOR IIDTIRG
Meeting Date: 7/15/91
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. 'DEVELOPMENT DEPARTMENT QAFF REPORT
Smart and Final Shopping Center
(Northeast corner of Baseline and
Arrowhead Avenue)
July 10, 1991
Page -2-
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Because of the difficulties encountered by the Trust, staff assigned the
financing component of this proposal to Mr. Gene Wood, financial consultant to
the Development Department. Mr. Wood has been in contact with several lending
institutions and is very optimistic that a private loan commitment will be
forthcoming in the near future.
Attached to the staff report is a brief memorandum from Mr. Wood to the
Executive Director, outlining the structure of the proposed financing. As soon
as this transaction is finalized, staff will inform the Chairman and members of
the Community Development Commission.
Based upon the foregoing information staff recommends that the Community
Development Commission receive and file the attached staff report.
~~~.~~tbe
Develo~ent Departaent
Director
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KJH:EJ:kak:4045H
ClMIISSIOB MEETIIIG
Meeting Date: 7/15/91
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& ASSOCIATES
Kenneth J. Henderson,Executive Director
Development Department
From: E.H. Wood & Associates
Subject: Smart & Final Shopping Center-Baseline & Arrowhead
Date: July 10, 1991
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On Tuesday, July 9, 1991, I received partial financial statements
from Gagik Galstian, Trustee for the Galstian Family Trust. I met
yesterday with the manager of a major bank to review the financial
statements and outline the loan request. The bank has tentatively
committed a $240,000 UNSECURED LOAN directly to the trust without
RDA guarantee. The bank has requested complete financial
information and I have forwarded that request to the trustee.
The loan will be for two years -INTEREST ONLY-and then
amortized over a five year term. I anticipate the rate at Prime + I
with no points or fees. If the trust will forward the necessary
documents the loan processing will take about a week to process.
If for any reason the financials are not adequate for the bank we
can request RDA participation or offer security. Preliminary
discussions with the bank indicate that securing the loan would be
time consuming, expensive and an inefficient way to package this
loan.
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If I can provide you with additional information, please" .contact
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cc: Ezell James