HomeMy WebLinkAboutR09-Economic Development Agency
o
o
o
OVBLOPIIB.r DBPARQB.r
OF no: CIn OF SAIl BBIllIAlDIIIO
IIBOUBS'l FOR COIMISSIa/COUlICIL ACTIOR
From:
KENNETH J. HENDERSON
Executive Director
Subject: DOlES-DOlES AlID
ASSOCIATES - AUOW
VISTA JIOIIBS
Date:
March 31, 1992
-------------------------------------------------------------------------------
Svnousis of Previous COBBission/Council/Cn--ittee Action(s):
On October 15, 1990, the Community Development Commission approved a
disposition and development agreement between Dukes-Dukes and
Associates and the Agency. The ColDission subsequently approved a
first amendment to DDA.
(SYROPSIS COM'I1IlIBD to lIBXT PAGE...)
-------------------------------------------------------------------------------
leco"Pnded lIotion(s):
(BousinR C~ittee lecommPndation)
IIOTIOR A
That the disposition and development agreement between
Dukes-Dukes and Associates and the Redevelopment Agency
be amended to reflect the following deal points: (i) That
Dukes be allowed to sell the three Arrow Vista models now
rather than at the end of the project as the DDA
currently requires; (ii) Allow the non-accrual of
interest on Phase II of the project since construction on
this phase began; (iii) Agency to pay loan closing costs
out of $25,000 per lot land cost due to Agency on sale of
homes, and; (iv) rebate to Dukes interest collected on
Phase I of project totalling $106,299.
(MOTIONS COM'I1IlIBD to lIBXT PAGE...)
Administrator
-------------------------------------------------------------------------------
Contact Person(s): Ken Henderson
Phone:
5081
Project Area(s): Northwest (NW)
Ward(s):
Six (6)
Supporting Data Attached:
Staff Renort: Memorandum
FUNDING REQUIREMENTS:
Amount: $ NIA
Source:
NIA
NIA
Budget Authority:
-------------------------------------------------------------------------------
Commission/Council Rotes:
-------------------------------------------------------------------------------
KJH:lag:0654E
COIMISSIO. llEE'rIlIG AGEImA
lIeeting Date: 4/6/1992." ()
Agenda Itea lIIaber: _ _ -':1
REQUEST FOil COIIIISSIOII/COUBCIL ACTIOII Continued...
Dukes-Dukes lIDll As.......ates - Arrow Vista BOlles 0
March 31, 1992 .,....'
Page __ber -2-
-------------------------------------------------------------------------------
<<::; SvnoDsis of Previous CommissioulCouncil/Committee Action(s} Continued:
On March 30, 1992, the Housing Committee considered this matter and
recommended to the Commission approval of four specific deal points.
Recommended Motion(s} Continued:
MOTION B
MOTION C
o
(Staff Recommendation}
That the disposition and development between Dukes-Dukes and
Associates and the Redevelopment Agency be amended to reflect the
following deal points: (i) That Dukes be allowed to sell the
three (3) Arrow Vista models now rather .than at the end of the
project as the DDA currently requires; (ii) allow the non-accrual
of interest on Phase II of the project since construction on this
phase began, and (iii) Agency to pay loan closing costs out of
$25,000 per lot land cost due to Agency on sale of homes.
(Mavor's Rec"-'''''''stion}
That the disposition and development between Dukes-Dukes and
Associates and the Redevelopment Agency be amended to reflect the
following deal points: (i) Agency to make Dukes business
reorganization loan of $250,000. (ii) Loan to accrue interest at
Bank of America prime plus one (I), to be established at loan
closing. (iii) Dukes to pay 1.5% loan origination fee from loan
proeeeds. (iv) Loan to be secured by Dorjil I and Dorjil II
Estates. (v) The term of the loan will be for one year, with the
loan all due and payable at the end of one year or the earlier of
the following events: The Sale of Dorjil I and Dorjil II .Estates
or the sale of Little Zion Manor. (vi) Agency to finance loan
closing costs from $25,000 per lot land cost due to Agency on
sale. (vii) Agency to carry back second trust deed with no equity
participation if interest rate on second trust deed is the same as
that on the take-out financing. (viii) Agency will carry back
second trust deed with equity participation if homeowner requests
and receives interest rate write-down. (ix) The above deal points
are subject to the provision by Dukes of financial statements
demonstrating the creditworthiness of the loan applicant.
o
KJH:lag:0654E
-------------------------------------------------------------------------------
COIIIISSIOII MEETING AGElUlA
Meeting Date: 4/6/1992
Agenda Its llumber: L
o
o
o
o 0
DBVBLOPMB.r DBPARrMB.r
OP rBB CIn OP SAIl BBDARDIIO
STAPP REPORT
Dn1{...-DnIr... .nd Associates - Arrow Vista H.....s
The Community Development Commission on October 15, 1990 approved a
Disposition and Development Agreement (DDA) between the Dukes-Dukes and
Associates (Dukes) and the Agency. The express purpose of the
Agreement was to provide construction financing on favorable terms for
the deVelopment of 114 single-family detached dwelling units.
Since the execution of the DDA, Dukes has encountered significant
difficulties in selling the homes, substantially as a result of the
steep downturn in the economy and other factors. At present
twenty-seven (27) homes in Phase I, including three (3) models have
been constructed, with twenty-four (24) of these homes having been
sold. Twenty-five (25) homes in Phase II have been constructed, none
sold, although six (6) of these homes are reported to be in escrow.
Because of the soft housing market and the standing inventory, Dukes is
experienCing severe cash-flow problems. Indeed, because of slow sales,
Dukes has had, on occasion, to pay money into escrow to close a sale.
In discussions with Dukes, several points have been discussed which, if
approved, could ease Dukes' severe cash-flow crunch. These items are
set forth below:
· Allow Dukes to sell the three (3) models now rather than at the
end of the project as the DDA now requires. Dukes would realize
$400,000+ from the sale of these models.
· Allow the non-accrual of inter~s~ ~~~~<II of the project since
construction on this phase began. " ,~
· Agency would pay for loan closing costs out of $25,000 per lot
land cost due to Agency on sale of homes. This would allow
eligible credit-worthy applicants to close escrow in an
expeditious manner.
It is felt that a positive recommendation by the Housing Committee to
the Community Development Commission would substantially alleviate most
but not all of the cash-flow squeeze Dukes is currently encountering.
-------------------------------------------------------------------------------
KJH:lag:0654E
COIlMISSIO. MEErIlIG AGDDA
Meeting Date: 4/6/1992
Agenda It_ ltumber: -E--
o
o
o
o
DEVBLOPMBIIr DBPAlu..6Iu STAFF UPORT
DUkes-DUkes and As8ociate8 - Arrow Vi8ta Boae8
llarch 31, 1992
Paae lIUIIber -2-
o
At the Housing Committee meeting held on March 30, 1992, discussion
took place regarding the deal point8 recommended by staff, marketing of
the Arrow Vista homes and related issue8. The Committee (Chairman
Maudsley was absent. See attached memorandum) eventually recommended
approval of the deal points referenced above and added the following
deal point:
Rebate to Dukes interest collected on Phase I of project
totalling $106,299.
Subsequent to the Housing Committee meeting, Mr. Dukes, the Mayor and
staff met to further discuss Dukes' proposal. After 80me discussion,
the following deal points were identified and agreement established to
forward same to the Community Development Commission on April 6, 1992:
· Agency to make Dukes business reorganizstion loan of $250,000.
· Loan to accrue interest at Bank of America prime plus one (I), to
be established at loan Closing.
· Dukes to pay 1.5% loan origination fee from loan proceeds.
.
Loan to be 8ecured by Dorjil I and Dorjil II Bstates.
· The term of the loan will be for one year, with the loan all due
and payable at the end of one year or the earlier of the following
events:
The Sale of Dorjil I and Dorjil II Bstates.
The sale of Little Zion Manor
· Agency to finance loan closing costs from $25,000 per lot land
cost due to Agency on sale.
· Agency to carry back second trust deed with no equity
partiCipation if interest rate on second trust deed is the same as
that on the take-out financing.
· Agency will carry back second trust deed with equity partiCipation
if homeowner requests and receives interest rate write-down in
accordance with the following formula:
For every point the interest rate on the second 'trust deed is
reduced, the Agency will acquire a five percent (5%) share of
the equity,
-------------------------------------------------------------------------------
ICJH:1ag:0654B
COIlllISSIoa IIBITIWG AGDDA
MeetiD& Date: 4/6/1992
Ageuda It_ 1IuIlber: L
o
o
o
o
DBVBLOPIIBlIr DBP~ STAFF REPORT
Dultea-Dultes BD4 Associates - Arrow Vista lI_es
llarch 31, 1992
Paae "ber -3-
o
· The above deal points are subject to the provision by Dukes of
financial statements demonstrating the creditworthiness of the
loan applicant.
Because of the variances between the Housing Committee, staff and
Mayoral recommendations, three form motions are offered. Based upon
the foregoing, staff recommends adoption of form motion "B".
~OB' Bz:ecutive Director
Development Departaent
-------------------------------------------------------------------------------
KJH:lag:0654E
COIKlSSIOB MDrIBG AGEImA
Meeting Date: 4/6/1992
q
Agenda Itea Bullber:
o
o
o
o
o
C I T Y
o F
SAN
BERNARDINO
INTEROFFICE MEMORANDUM
TO:
Members of Housing Committee
Council Office
FROM:
SUBJECT :
Dukes-Dukes & Assoc. Request for Financial Assistance
DATE:
March 30, 1992
Tim Steinhaus, Administrator, EDA
Ken Henderson, Executive Director, Develop. Dept.
COPIES:
------------------------------------------------------------------
I am in receipt of the agenda item relating to the above
referenced subject and scheduled to be considered by the Housing
Committee at 1:30 p.m. this afternoon.
At this point, I will be unable to attend this meeting, but
having read the agenda item in its entirety, I must register my
concerns regarding deal points one and two recommended by staff.
In the absence of audited financial statements and related
information, it is difficult to understand, much less support, the
staff recommendation. It is important we have information which
demonstrates the need for financial assistance.
I have numerous questions which time constraints do not allow
me to discuss at any length. I an aware, however, that a develop-
ment in Rialto similar to Arrow Vista (although, in my opinion, the
homes are not as nice) with homes selling $15,000 to $25,000 more
than the Arrow Vista homes have completely sold out, with no
discounting of price by the developer. At the same time, Dukes has
experienced difficulty_in selling nicer, less expensive, homes.
- .
While I recognize the vital importance of this project to our
substantial redevelopment efforts in the Northwest Redevelopment
Project area, I cannot, at this time, support the staff recommenda-
tion without . a . great deal more discussion and comprehensive
financial data from Dukes-Dukes & Associates.
II\IeN.t
COUNCILMAN MICHAEL
Chairman
Housing Committee
MM:sr
q