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CIT ..OF SAN BERNARDI.....O - REQU~....,T FOR COUNCIL AC.. ~ON
From: KENNETH J. HENDERSON 'R!~~!9lbMfN. OFF. Subject:
Dept: COMMUNITY DEVELOPMENTISal JAN 22 PM 4: 06
Date: JANUARY 22, 1987
CDBG REHABILITATION LOAN FOR
HISPANIC CHAMBER OF COMMERCE
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Synopsis of Previous Council action:
November 18, 1985, the Mayor and Common Council considered this item and referred it to
the Ways and Means Committee for review.
December 2, 1985, the Mayor and Common Council adopted Resolution #85-503 authorizing
the execution of a grant deed conveyance and setting a joint public hearing and authorized
the sale of property located at 972 North Mr. Vernone Avenue, to the Hispanic Chamber of
Conunerce.
On January 20, 1986, the Mayor and Common Council considered a rehabilitation loan to the
Chamber and continued the matter to January 19, 1987.
On January 19, 1987, the Mayor and Common Council moved to continue this item to
February 2, 1987.
Recommended motion:
Move to approve CDBG Rehabilitation Loan to Hispanic Chamber of Commerce in
the a~ount of $81;000.
Contact perlon:
Ken Henderson
Phone:
5065
Staff Report
Ward:
1
Supporting data attached:
FUNDING REQUIREMENTS:
Amount: $ 81 ,000. 00
Source: (ACCT. NO.)
(ACCT. DESCRIPTION)
Finance: tj~
G~
Council Note..:
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Ammch, I tArn f\ln
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Cl-r-~ OF SAN BERNARDI"~O - REQUr- ',T FOR COUNCIL AC" ON
STAFF REPORT
On January 5, 1987, the Mayor and Common Council considered a
CDBG rehabilitation loan to the Hispanic Chamber of Commerce
in the amount of $81,000. The City had previously sold the
property located at 972 North Mt. Vernon Avenue to the
Char~er for one dollar ($1.00). Based upon concerns ex-
pressed by members of the Common Council relating to the
amount, type and terms of the loan, the matter was continued
to January 19, 1987 and again on that date to February 2,
1987.
During the January 5, 1987 meeting, certain Council members
indicated they could not remember approving a CDBG rehab-
ilitation loan for the Ghamber. On January 21, 1986, the
Community Development Commission and Mayor and Common Council
conducted a public hearing and adopted resolutions numbered
4844 and 86-15 approving the sale of property located at 972
North Mt. Vernon Avenue for one dollar ($1.00) to the .
Hispanic Chamber of Commerce. The minutes of the Community
Development Commission reflect that at the request of
Councilman Qulel, the resolutions were approved with the
stipulation that a provision be included in the grant deed
indicating the Chamber would be purchasing the property from
the City in "as is" condition.
In view of the staff report which recommended adoption of the
above referenced resolutions "for the express purpose of
enabling the Chamber to secure a rehabilitation loan from the
Agency under the City "Neighborhood Rehabilitation Program
(NRP)", staff proceeded with processing a loan for the
Chamber.
The January 21, 1986 staff report also indicated that a
structural engineering report would be required and because
the Chamber was considered a commercial facility, prevailing
wage rates would be paid for construction labor activity. The
cost estimates for the engineering report, changes required
as a result of the report and prevailing wage rates were not
included in the staff rough estimate of the cost of
rehabilitation. The sum of the completion of these activi-
ties is $81,000.
The $81,000 is ninety percent (90%) of the value of the
property, the maximum allowed by HUD regulations. In order
to remain within this limit, any interest assessed must be
collected in order for the loan not to exceed the loan-to-
value ratio maximum. During the discussion relating to the
annual percentage rate and the term of the loan, staff was
asked to provide information as to the interest rates paid on
1/22/87
75.0".
Hispanic Chamber Staff Report
January 22, 1987
Page -2-
loans taken out by other non-profit agencies. The following
summarizes the information gathered in response to said
request:
Agency
~ of Loan
Interest Rate
SB Historical Society
Amortized
7% for first
five (5) years
9% thereafter
Horne of Neighborly
Services
Amortized
3%
SB Neighborhood Housing
Services
Amortized
7%
SB Neighborhood Housing
Services
Due & Payable in
one (1) year
5%
West Side CDC
Amortized
9%
Another concern expressed by Council was the lack of a minute
action by the Chamber board adopting a resolution authorizing
the Chairman to execute any and all documents relating to the
rehabilitation loan. The Chamber has subsequently submitted
the original resolution adopted, the minute action verifying
same and a financial statement. All documents are in order
and allow for the process to go forward.
The submission of the financial statement was an important
item inasmuch as it allowed staff to analyze the ability of
the of the Chamber to make interest only payments. Based
upon that analysis, staff recommends that a deferred loan in
the amount of $81,000 for the Hispanic Chamber of Commerce be
approved by the Mayor and Common Council. Said loan to be
for a term of twenty (20) years with an annual percentage
rate (interest) of five percent (5%). The loan will be due
and payable upon transfer of title, sale of property, change
in the use of the building or the expiration of the twenty
(~ear term, whichever comes first.
Kennet~~ ~~
Director of Community Development
KJH/lab/0024
1/22/87