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CITY .,F SAN BERNARDI Nt' - REQUEST FOR COUNCIL AC:nt'M-
From: KENNETH J. HENDERSON, DIRECTOR
RESlej8(.UI"Jf~'ltyI'~EPORT -- BELCO DEVELOPMENT
COMPANY LOAN AGREEMENT
1986 NOV 2ll P~,l 3: 22
Dept: COMMUNITY DEVELOPMENT
Date:
November 24, 1986.
. .,,,...
Synopsis of Previous Council action:
In September and October of 1983, the Mayor and Common Council approved three (3) separate
Disposition and Development Agreements (DDA's) for $63,000; $77,000; and $25,000; respectively,
for the acquisition and development of Mt. Vernon and Spruce and Mt. Vernon and Vine (total
$165,000).
In October, 1985, the Mayor and Common Council approved the restructuring of the three (3)
Disposition and Development Agreements into one (1) loan agreement totaling $187,458.34
(principal plus accrued interest).
In January of 1986, a Declaration of Default Status for Belco Development Company CDBG loan
($187,458,34) was brought before the Mayor and Common Council. This item was tabled at that
time as Belco had made payment of the full amount in arrears just prior to the meeting of the
Mayor and Common Council on January 21, 1986.
(SYNOPSIS CONTINUED TO NEXT PAGE)
Recommended motion:
Receive and file status report and authorize staff to pursue second
restructuring of Belco Development Company loan agreement.
Signature'
Contact person:
KENNETH J. HENDERSON
Phone:
5065
Supporting data attached:
YES
Ward:
1
FUNDING REQUIREMENTS:
Amount:
N/A
Sou rce:
Finance:
Council Notes:
Agenda I tern No. ~ .
7'5.0262
.
SNYOPSIS CONTINUED...
On November 17, 1986, the Mayor and
the declaration of default status
Development Company and continued
1986.
11/24/86
Common Council considered
for loan agreement Be1co
the matter to December 8,
CIT~- OF SAN BERNARDI"''' - REQUE~"" FOR COUNCIL ACT'''N
STAFF REPORT
On November 17, 1986, a Declaration of Default Status for P,elco
Development CDBG loan totaling $187,458.34 was brought before the
Bayor and Common Council for action. At that time, the Hayor and
ConmlOn Council moved to continue this n,atter to the December 8,
1986 Council meeting.
On November 20, 1986, payment was received from Delco in the amount
of $8,755.14, the amount in arrears for the months May, 1986
through November, 1986. Said payment has cured the default and
brings Belco's account current.
Belco has formally requested a restructuring of its loan agreement
with the City. The Mayor and Common Council previously approvecl,
at Belco's request, a loan restructuring in October, 1985. Al-
though it is unclear at present whether a second loan restructuring
would have the effect of facilitating Belco's compliance with the
loan repayment provisions of a proposed agreement, staff will
pursue this matter if Council so desires.
At a minimum, staff would require the submission of documentation
substantiating the need for loan restructuring including, but not
limited to, the following:
1. Pro forma showing current revenues and operating costs, includ-
ing maintenance.
2. Current and projected cash-flow analyses.
3. Difference between market rents and Belco's current lease
agreements.
4. Current maintenance costs versus the "market norm".
Based upon the foregoing, staff recommends that the Mayor and
Common Council receive and file the Belco status report and
authorize staff to pursue the possibility of restructuring the
Belco loan agreement and bring back same to Council for considera-
tion.
u~~~ G.
Kenneth J. llenderson,
Comraun i ty Development
irector
epartment
KJH/ lb
file: Delcosr12-8-86
November 24, 1986
75-0264
.....
COUNCIL ACTION CORRESPONDENCE
To Kenneth J. Henderson, Director Subject Declaration of Default Stat',lS
Community Development for Belco Development
Date November 17, 1986
Meeling Dale November 17, 1986 Agenda Item No. 6
Action
The matter relative to the declaration of default status for Belco Development
Company CDBG loan in the amount of $187,458.34, was continued to December 8, 1986.
~-,_.- _.>.~~,...^..._.... ~... . ,..-... .~
SC:dc
cc: Mayor Wilcox ./~/
Councilwoman Estrada -5'HAUNA CLARK
City Attorney City Clerk
City Administrator
""
, /
CIT"-oF SAN BERNARDIk.., - REQUEl.
FOR COUNClltl~flir>N ~ '
From: Kenneth J. Henderson, Director
Subject: DECLARATION OF DEFAULT STATUS FOR
BELCO DEVELOPMENT COMPANY CDBG LOAN
($187,458.34)
Dept: Community Development
Date: November 17, 1986
Synopsis of Previous Council action:
In September and October of 1983, the Mayor and Common Council approved three (3) separate
Disposition and Development Agreement (DDA's) for $63,000; $77,000; and $25,000, respectively,
for the acquisition and development of Mt. Vernon and Spruce and Mt. Vernon and Vine (total
$165,000).
In October, 1985, the Mayor and Common Council approved the restructuring of the three (3)
Disposition and Development Agreements into one (1) loan agreement totaling $187,458.34
(principal plus accrued interest).
In January of 1986, a Declaration of Default status for Belco Development Company CDBG loan
($187,458.34) was brought before the Mayor and Common Council. This item was tabled at that
time as Belco Development had made payment of the full amount in arrears just prior to the
meeting of the Mavor and Common Council on Januarv 21. 1986.
Recommended moti,on:
FORM MOTION:
MOVE TO DECLARE BELCO DEVELOPMENT COMPANY IN DEFAULT OF ITS COMMUNITY DEVELOPMENT BLOCK
GRANT LOAN AGREEMENT OF $187,458.34.
Contact person:
~pnnp~h T HpnrlPTRon
Phone:
383-5065
Supporting data attached:
YES
Ward:
1
FUNDING REQUIREMENTS:
Amount:
N/A
Sou rce:
Finance:
Council Notes:
75-0262
Agenda Item No._
~ITY ,)F SAN BERNARDIN'" - REQUES" FOR COUNCIL ACTI"N
STAFF REPORT
In September and October of 1983, the Mayor and Common Council
approved three (3) separate Disposition and Development Agree-
ments (DDA's) with Belco Development Company for $63,000;
$77,000; and $25,000 for the acquisition and development of
properties located at Mt. Vernon Avenue and Spruce and and Mt.
Vernon and Vine. Terms of the DDA's required Belco to make an
annual payment of $13,000(+) on or before August thirty-first of
any given year until the total of the three (3) DDA's ($165,000)
was repaid. Belco missed the first annual payment and when the
second annual payment was due, they approached Agency staff
regarding the restructuring of their agreements.
In October, 1985, the Mayor and Common Council considered and
approved the consolidation of the three (3) DDA's into one (1)
loan agreement, bearing interest at seven percent (7%) per annum,
added the accrued interest to the principal and amortized the
loan over thirty (30) years with the total loan due and payable
in fifteen (15) years. The payments for the first year were
$1,247.17 per month, with payments to begin November 1, 1985.
Belco had failed to make the monthly payments for the months of
November, December and January which totaled $3,741.51.
In December, 1985, staff brought this matter to the attention of
the Redevelopment Committee. Staff was instructed to send a
payment demand letter to Belco and if payment was not forthcoming
to bring the matter before the Mayor and Common Council. Payment
was not received and this matter was brought before the Mayor and
Common Council. However, just prior to the meeting of the Mayor
and Common Council, Belco paid the full amount in arrears. The
matter was tabled in view of this action.
Belco continued to make monthly payments for the next three (3)
months until May of 1986. At present, loan payments for the
months of May, 1986 through November 1986 remain unpaid. With
loan payments of $1,247.17 per month, the total amount in arrears
to date is $8,730.19 plus accrued interest.
Staff again received a request for loan restructuring from Belco.
Staff responded to Belco's five (5) part request and indicated
insufficient information was provided by Belco to make a detailed
analysis and to assure the Mayor and Common Council that the
City's interest would be adequately protected. Belco was also
advised to bring their loan payments current. No response was
forthcoming from Belco. Staff contacted Belco directly on
November 3, 1986 to advise the of the pending Declaration of
Default status. Belco advised staff that they were attempting to
secure refinancing of their loan and could possibly make payment
of the full amount in arrears within a week.
As a result of the foregoing, staff recommends that the loan be
declared in default and that the City Attorney's office be
75-0264
//-/7- t"
,
instructed to take any and all appropriate legal action to secure
repayment and to protect the City's interest.
~Li4 G. ~~~
Kenneth J. Henderson, Director
Community Develoment Department
KJH:LRD:lb
attachment
file: belcostaffrept
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