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Clll OF SAN BERNARD~.~O - REQUL.iT FOR COUNCIL~~
Dept:
COMMUNITY DEVELOPMENT
DIRECTOIiE C'D. ""AiO H Ifr.b~f~
1987 JAN 22 PM 4: 06
RESTRUCTURING OF BELCO DEVELOPMENT
COMPANY LOAN AGREEMENT
From:
KENNETH J. HENDERSON,
Date: JANUARY 22, 1987
Synopsis of Previous Council action:
In September and October of 1983, the Mayor and Common Council approved three (3)
Disposition and Development Agreements (DDA's) for $63,000, $77,000 and $25,000.
respectively.
In October 1985, the Mayor and Common Council approved the restructuring of the
three (3) DDA's into one (1) loan agreement totaling $187,458.34 (principal plus
accrued interest).
In January 1986, a Declaration of Default Status for the Belco loan agreement
was brought before the Mayor and Common Council. The item was tabled inasmuch
as Belco made payment of the total amount in arrears immediately prior to
January 21, 1986 Council meeting.
(SYNOPSIS CONTINUED TO NEXT PAGE...)
Recommended moti.on:
Move to continue consideration of restructuring of Belco Development Company
Community Development Block Grant loan agreement to February 16, 1987.
Contact parlon:
Ken Henderson/Lisa Dickey
Phone:
383-5065
Supporting data attached:
Staff Report
Ward:
1
FUNDING REQUIREMENTS:
Amount:
N/A
Source: (ACCT. NO.)
(ACCT. DESCRIPTION)
Finance:
Council Not&J:
2/SJ87 Mt~.
^...__..I_ ...__ 1.1-
~
4.
SYNOPSIS CONTINUED...
On November 17, 1986, a second Declaration of Default Status
item was brought before the Mayor and Common Council. The
matter was continued to December 8, 1986.
On December 8, 1986, staff informed the Mayor and Common
Council Be1co had brought its account current and had sub-
mitted a request to restructure its loan agreement. The
matter was continued to December 22, 1986 and again to
January 5, 1987.
On January 19, 1987, the Mayor and Common Council continued
to February 2, 1987 Belco's request for loan restructuring,
pending submittal and analysis of support documentation.
file: 0022
1/22/87
CIT~ OF SAN BERNARDI~.O - REQUF~T FOR COUNCIL AC'- ON
STAFF REPORT
Belco Development Company has submitted a pro forma and cash-
flow analysis which substantiates an annual negative cash-
flow of $46,658.28 or $3,888 per month.
After reviewing the materials provided, staff met with Belco
on January 21, 1987 to discuss various methods of loan
restructuring. The following three (3) alternatives were
discussed:
1. Defer loan payments for twelve (12) to twenty-four (24)
months, adding this total amount to the remaining out-
standing principal balance.
2. Defer one-third (1/3) to one half (1/2) of the loan
payment amount for ~welve (12) to twenty-four (24)
months, adding the total amount deferred to the remaining
outstanding principal balance.
3. Reducing the loan interest rate (currently at 7%) fot two
(2) to five (5) years. Principal and interest payments
would then resume at the current seven percent (7%) rate.
Due to the nature of these alternatives, Belco requested time
to analyze the impact of each, using certain data staff had
supplied to assist with this analysis. As was previously
indicated to the Mayor and Common Council, Belco is attempt-
ing to sell the project and each potential alternative must
be viewed in terms of the impact on the possible sale. Belco
requested that, if possible, it would prefer to continue this
matter until February 16, 1987. This would allow time to
pursue the most prudent course of action.
tff concurs and recommends this
F bruary 16, 1987.
t~Q.
Kenneth J. Henderson
Director of Community Development
item be continued to
KJH/LRD/lab/0021
1/22/87
7I.026e