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HomeMy Public PortalAboutA1985-01-28 CC (2)City of LYNWOOD 11330 BULLIS ROAD LYNWOOD, CALIFORNIA 90262 (213) 603 -0220 A REGULAR ADJOURNED MEETING LYNWOOD CITY COUNCIL WILL BE HELD AT - 5:00 P.M. MONDAY, JANUARY 28, 1985 Councilmen E L MORRIS JAMES E ROWE LOUIS A THOMPSON FOR THE PURPOSE OF CONSIDERING MATTERS AS SET FORTH BELOW A G E N D A 1. CALL TO ORDER 2. ROLL CALL OF COUNCILMEN Robert Henning E. L. Morris James E. Rowe Louis A. Thompson John D. Byork SCHEDULED MATTERS 3. PUBLIC HEARING: Comments: Recommendation: URBAN DEVELOPMENT ACTION GRANT (UDAG) PROJECT HOPKINS DEVELOPMENT Staff has requested City Council to conduct a Public Hearing on the City's application for a UDAG pertaining to the commonly known Hopkins Towne Center Project. Hopkins Development Co. is reaching an agreement with K Mart as the major tenant in this Project. It has been agreed from the onset of this Project that the City would apply for a UDAG. Staff respectfully requests that Council, after re- ceiving public testimony on the application, adopt a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD DIRECTING AND AU- THORIZING THE CITY MANAGER TO FILE AN URBAN DEVELOP- MENT ACTION GRANT APPLICATION IN AN AMOUNT OF $1,085,000 RELATED TO A COMMUNITY SHOPPING CENTER DEVELOPMENT IN THE CITY OF LYNWOOD." 4. DISCUSSION AND FINANCIAL COMMITMENT BY THE CITY, IF NEEDED, TO FUND THE BALANCE THE CITY WILL NEED FOR THE CORPORATE YARD r'nmmontc- Recommendation: Discussion and financial commitment by the City, if needed, to fund the balance the City will need for the Corporate Yard. Staff respectfully requests the City to commit to a financial agreement which outlines the financing of the City Yard. 5. REQUEST FOR THE CITY AND /OR AGENCY TO CARRY A LOAN (CALLED PURCHASE MONEY MORTGAGE) FOR THE TOWNE CENTER PROJECT. THIS REQUEST WILL KEEP THE CITY'S UDAG APPLICATION AS COMPETITIVE AS POSSIBLE. Recommendation: Staff respectfully requests the City Council to commit to approving a loan to the developer (Hopkins) for either a portion of, or the total amount of, the request in the event the Lynwood Redevelopment Agency has not previously agreed to commit to a portion of, or the total amount of, the loan request. 6. ADJOURNMENT TO THE REGULARLY SCHEDULED MEETING TUESDAY, FEBRUARY 5, 1985 - 7:30 p.m., IN THE CITY HALL COUNCIL CHAMBERS. cam AA IIIIIr JOHN D BYORK, Mayor ROBERT HENNING, Mayor Pro -Tem DATE: January 28, 1985 TO: Honorable Mayor and City Council Members FROM: Patrick P. Importuna, Director, Community Development SUBJECT: UDAG PROJECT PUBLIC HEARING/ HOPKINS DEVELOPMENT As part of a series of requirements for the approval of a Urban Development Action Grant (UDAG), the City Council must conduct a public hearing on the application to be submitted to the Federal Government Attached is a copy of a report addressed to the City Manager that was prepared by the City's Consultant Mark Briggs & Associates, Inc.. The letter is an outline of the application addressing the scope of the development, financial commitment of both the City and developer and the projected revenue from the project. RECOMMENDATION Staff respectfully requests that the Council after receiving public testimony on the application, adopt the attached resolution directing and authorizing the City Manager to file an UDAG application with the U.S. Department of Housing and Urban Development on behalf of the City of Lynwood. AGENDA ITEM 3 Amon VAA1 Y j9F-- I. . January 28, 1985 Mr. Charles Gomez City Manager City of Lynwood 11330 Bullis Road Lynwood, California 90262 SUBJECT: UDAG Project Public Hearing Dear Charles, The following provides a summary of the Hopkins Development Project and the major elements of the Urban Development Action Grant: PROJECT The proposed Lynwood Towne Center project is the first phase of final development of the 25 acre Redevelopment Project Area "A" commercial site. The UDAG project consists of the construction of a 129,146 square foot community center including a 84,146 square foot K -Mart Store, 24,000 square foot Thrifty Drug /Trac Auto store, three restaurants (5,000 square feet, 5,000 square feet, and 4,000 square feet respectively), and 7,000 square feet of ancillary side shops. The "project" as referred to in this application includes the acquisition of the remaining parcels of land not currently under Agency /City control in order to assemble the 8.96 acres identified as the project site and sell the land at fair market reuse value to the developer plus the related demolition and relocation costs and the actual construction of the community center. PRIVATE INVESTMENT The private investment, including the $2,392,233 payment for the land, will total $9,779,827 less the UDAG loan for a net private investment of $8,744,827. MARK BRIGGS & ASSOCI INC 2222 Sierra Boulevard 5800 South Eastern Avenue 440 First Street N.W. Suite B -11 Suite 340 Suite 502 Sacramento, California 95825 Los Angeles, CA 90040 Washington, D.C. 20001 (916) 920 -3461 (213) 268 -6325 (202) 223 -0426 Mr. Charles Gomez January 28, 1985 Page 2 UDAG FUNDS USE The $1,035,000 in UDAG funds will be used as a City loan at less than market rate to the developer to finance a portion of his overall project costs. The remaining $50,000 will be used by the City to reimburse application costs and for administration. DEVELOPMENT TEAM The project developer is Hopkins Development Company, Newport Beach, California. Hopkins Development Company has been active in commercial /retail development in Southern California including projects in Orange, San Bernardino, San Diego, Sacra- mento, Riverside, Ventura, and Los Angeles counties for many years. The actual development entity will be Lynwood Associates, a limited partnership including principals in Hopkins Development Company and possibly equity partners. LEVERAGING RATIO The private sector funds of $8,744,827 as compared to the UDAG request of $1,085,000 results in a 8 to 1 leveraging ratio. PERMANENT PRIVATE SECTOR JOBS A total of 274 net new full time equivalent permanent jobs will be created by the project. COST PER JOB The cost in UDAG funds per job created equals $3,960. RECAPTURE The UDAG funds will be used by the City of Lynwood as a below market loan to the developer, fully amortized for 30 years at 6% interest. The developer will repay the loan in annual principal and interest payments beginning in the first year of project operations. In addition, the City will also receive an equity position in the project and receive annually 10% of the net cash flow from the project after payment of normal operating expenses, debt service, and a 15% preferred rate of return on developer equity. The City will also provide the developer with a $500,000 purchase money mortgage for a portion of the land currently owned by the City or Agency. The terms of the purchase money mortgage will be the same as the UDAG loan. The total funds Mr. Charles Gomez January 28, 1985 Page 3 recaptured by the City froin the UDAG; loan and purchase money mortgage, of which both are due and payable in the fifteenth year, is projected at $1,672,755 over the fifteen year period. BENEFIT TO THE CITY In addition to the creation of new permanent jobs and the funds recaptured by the City from the UDAG, the project complements the City's ongoing commercial revitaliza- tion activities and represents the first major commercial center proposed for construction in Lynwood in many years. The purchase price for the land to be paid for by the developer will cover the City's remaining costs to assemble the UDAG site and defray a portion of the costs to relocate the City corporation yard. The corporation yard must be relocated because half of it is on the Phase I site and the remainder of the corporate yard is on the site for the development of the overall 25 acre Redevelopment Project Area commercial site. Additionally, during the first full operating year of the center, the community center will generate approximately $322,110 in taxes directly benefitting the City; $99,310 in property tax increment and $222,800 in sales tax. In addition, of the total UDAG request, $50,000 is requested of HUD on behalf of the City of Lynwood; $30,000 for reimburseable expenses and $20,000 to cover the City's costs to administer the UDAG. The action by the city is to approve the resubmittal of the application through the adoption of the attached resolution. Sincerely, Mark E. Briggs President MEB /jsl �?ESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD DIRECTING AND AUTHORIZING THE CITY MANAGER TO FILE AN URBAN DEVELOP- MENT ACTION GRANT APPLICATION IN AN AMOUNT OF $1,085,000 RELATED TO A COMMUNITY SHOPPING CENTER DEVELOPMENT IN THE CITY OF LYNWOOD WHEREAS, the City Council authorized the preparation of an Urban Development Action Grant (UDAG) Application to finan- cially assist in the development of a community shopping center in the City. NOW, THEREFORE, the City Council of the City of Lynwood does hereby find, determine, order and resolve as follows: Section 1. The City Manager is hereby directed and authorized to file an Urban Development Action Grant (UDAG) Appli- cation, a copy of which is on file in the office of the City Clerk, with the United States Department of Housing and Urban Development (HUD) under Section 119, of Title I of the Housing and Community Act of 1974, as amended, in an amount of $1,085,000, for the pur- pose of obtaining an Urban Development Action Grant related to the development of a community shopping center at the intersection of Imperial Highway and Long Beach Boulevard. Se ction 2. The City Manager is hereby authorized and directed to take such actions as are reasonably necessary in con- nection with meeting the terms and conditions contained in such application, and to provide such additional information as may be required. PASSED, APPROVED and ADOPTED this day of "--- , 1985. JOHN D. BYORK, MAYOR CITY OF LYNWOOD ATTEST: APPROVED AS TO CONTENT: ANDREA L. HOOPER, CITY CLERK CITY OF LYNWOOD APPROVED AS TO FORM: PATRICK P. IMPORTUNA, DIRECTOR COMMUNITY DEVELOPMENT %00 CITY ATTORNEY BARBARA FIKEL, ACCOUNTING DIRECTOR DATE: January 28, 1985 TO: Honorable Mayor and City Council Members FROM: Patrick P. Importuna, Director, Community Developmen� SUBJECT: DISCUSSION AND FINANCIAL COMMITMENT BY THE CITY, IF NEEDED, TO FUND THE BALANCE THE CITY WILL NEED FOR THE CORPORATE YARD As stated in the Mark Briggs and Associates, Inc. letter of January 18, 1985, there is a need for the City and or Agency to make a commitment to fund the cost of a new corporate yard. The corporate yard is still one of the major acquisition and relocation expenses that the Agency will be required to make for the Towne Center. The attached report is an analysis of the projected cost estimates for the relocation of the yard. Relative to funds the developer will pay for the purchase of the land and the cost of the yard relocation, there will be a difference that either the Agency or City will have to fund. Mark Briggs will be explaining the financial detials for this arrangement at the City Council and Agency meeting. RECOMMENDATION Staff respectfully requests for the City Council to commit to a financial agreement to fund the cost of the City Yard. AGENDA ITEM I i January 24, 1985 Mr. Charles Gomez City Manager City of Lynwood 11330 Buliis Road Lynwood, California 90262 Dear Charles: We have recently been heavily involved in Center with a K -Mart store and Thrifty /Trac the development costs, income projections, His overall costs will be $7,241,347. He can, loan of $4,451,406. With an equity position would be $1.5 million. working out the details of the Hopkins Auto configuration. We have completed and financing details for the developer. based on the income stream, generate a of about $1.25 million, the financing gap In order to keep the UDAG request as competitive as possible, I recommend the UDAG request be $1,085,000 ($1,035,000 loaned to the developer and $50,000 to reimburse City application and administrative costs). To accomplish that, the City would need to allow the developer to buy $500,000 of the property as a loan (called purchase money mortgage). That means, of the $2,392,233 purchase price, the City would receive cash totalling $1,892,233 and take back paper on the balance of $500,000. The UDAG staff will want the City to use the purchase money mortgage approach both to reduce the need to reduce the UDAG request and to ensure the City "participants" the land it already owns to the greatest extent possible. A major issue which needs immediate attention is the relocation of the City Corporation Yard. If the City is successful in ac uiring the 5 acre site, which is surplus to Caltrans' needs, and the purchase is at 4.00 per square foot, the costs which would be involved are as follows. The cost on the left are those provided by Joe Wang to Jack Segal on June 21, 1984, on the right, revisions based on slightly lower costs. Land (5 acres /217,800 s.f. @ $6.00 p.s.f.) Architectural and Engineering Water Division Office Building (7,000 s.f.) with Water Well Telemetric System Street Maintenance Offices and Covered Parking (12,250 s.f.) and Trash Transfer $1,306,800 @ $4.00 p.s.f. $871,200 70,000 $ 70,000 187,000 187,000 MARK BRIGGS & ASSOCIATES, INC 2222 Sierra Boulevard 5800 South Eastern Avenue 440 First Street N.W. Suite B -I l Suite 340 Suite 502 Sacramento, California 95825 Los Angeles, CA 90040 Washington, D.C. 20001 (916) 920 -3461 (213) 268 -6325 (202) 223 -0426 Mr. Charles Gomez January 24, 1985 Page 2 Station 275,000 275,000 Garage Structure (7,000 s.f.) with built -in equipment and fuel island Contingency (15 %) TOTAL: 412,000 412,000 131,100 (10 %) 87,400 $2,381,900 $1,902,600 There will be a limited amount of funds surplus to the City's needs when the developer purchases the site for use for the Corporation Yard. The estimates of costs are as follows related to the land acquisition Land acquisition 390,250 s.f. @ $6.13 $ 2,392,233 Less purchase money mortgage 500,000 $ 1,892,233 City's remaining costs: Acquisition $ 829,380 Relocation 82,500 Demolition 50,000 Off -sites 300,000 $ 1,261,880 Amount available for corporate yard: $ 630,353 With the corporation year costs estimates at $1,902,600 and the $630,353 available, the balance the City will need for the corporation yard is $1,272,247. That amount would change if the off -site costs, which is now only a fill in number, are lower based on engineering work now being done by the developer. The UDAG application needs to have a commitment of funds by the City or Agency to cover the costs for the corporation yard. Sincerely, Mark E. Briggs President MEB /jsl DATE: January 28, 1985 TO: Honorable Mayor and City Council Members FROM: Patrick P. Importuna, Director, Community Development SUBJECT: REQUEST FOR THE CITY AND OR AGENCY TO CARRY A NOTE IN THE AMOUNT OF $500,000 FOR THE TOWNE CENTER PROJECT Attached is a letter received from the City's Consultant, Mark Briggs and Associates, Inc. in regards to the need for either the City and or the Agency to agree for the developer (Hopkins) to buy $500,000 of the Towne Center Property as a loan (called purchase money mortgage). The purpose of this request is to keep the City's UDAG request as competitive as possible by reducing the need to request for an excessive grant of funds. Mark Briggs will be explaining the transaction in greater detail at the scheduled meeting of both the Agency and City Council. RECOMMENDATION Staff respectfully requests the City Council to commit to approving a loan to the developer (Hopkins) for either a portion of or the total amount of the proposed $500,000 request, in the event the Lynwood Redevelopment Agency has not previously agreed to commit to a portion of or total amount of the loan request. - 1' January 24, 1985 Mr. Charles Gomez City Manager City of Lynwood 11330 Bullis Road Lynwood, California 90262 Dear Charles: We have recently been heavily involved in working out the details of the Hopkins Center with a K -Mart store and Thrifty /Trac Auto configuration. We have completed the development costs, income projections, and financing details for the developer. His overall costs will be $7,241,347. He can, based on the income stream, generate a loan of $4,451,406. With an equity position of about $1.25 million, the financing gap would be $1.5 million. In order to keep the UDAG request as competitive as possible, I recommend the UDAG request be $1,085,000 ($1,035,000 loaned to the developer and $50,000 to reimburse City application and administrative costs). To accomplish that, the City would need to allow the developer to buy $500,000 of the property as a loan (called purchase money mortgage). That means, of the $2,392,233 purchase price, the City would receive cash totalling $1,892,233 and take back paper on the balance of $500,000. The UDAG staff will want the City to use the purchase money mortgage approach both to reduce the need to reduce the UDAG request and to ensure the City "participants" the land it already owns to the greatest extent possible. A major issue which needs immediate attention is the relocation of the City Corporation Yard. If the City is successful in acquiring the 5 acre site, which is surplus to Caltrans' needs, and the purchase is at $4.00 per square foot, the costs which would be involved are as follows. The cost on the left are those provided by Joe Wang to Jack Segal on June 21, 1984, on the right, revisions based on slightly lower costs. Land (5 acres /217,800 s.f. @ $6.00 p.s.f.) Architectural and Engineering Water Division Office Building (7,000 s.f.) with Water Well Telemetric System Street Maintenance Offices and Covered Parking (12,250 s.f.) and Trash Transfer $1,306,800 @ $4.00 p.s.f. $871,200 70,000 $ 70,000 187,000 187,000 MARK BRIGGS & ASSOCIATES, INC 2222 Sierra Boulevard Suite B -I1 Sacramento, California 95825 (916) 920 -3461 5800 South Eastern Avenue Suite 340 Los Angeles, CA 90040 (213) 268 -6325 440 First Street N.W. Suite 502 Washington, D.C. 20001 (202) 223 -0426 D 0 January 24, 1985 Mr. Charles Gomez City Manager City of Lynwood 11330 Bullis Road Lynwood, California 90262 Dear Charles: We have recently been heavily involved in working out the details of the Hopkins Center with a K -Mart store and Thrifty /Trac Auto configuration. We have completed the development costs, income projections, and financing details for the developer. His overall costs will be $7,241,347. He can, based on the income stream, generate a loan of $4,451,406. With an equity position of about $1.25 million, the financing gap would be $1.5 million. In order to keep the UDAG request as competitive as possible, I recommend the UDAG request be $1,085,000 ($1,035,000 loaned to the developer and $50,000 to reimburse City application and administrative costs). To accomplish that, the City would need to allow the developer to buy $500,000 of the property as a loan (called purchase money mortgage). That means, of the $2,392,233 purchase price, the City would receive cash totalling $1,892,233 and take back paper on the balance of $500,000. The UDAG staff will want the City to use the purchase money mortgage approach both to reduce the need to reduce the UDAG request and to ensure the City "participants" the land it already owns to the greatest extent possible. A major issue which needs immediate attention is the relocation of the City Corporation Yard. If the City is successful in acquiring the 5 acre site, which is surplus to Caltrans' needs, and the purchase is at $4.00 per square foot, the costs which would be involved are as follows. The cost on the left are those provided by Joe Wang to Jack Segal on June 21, 1984, on the right, revisions based on slightly lower costs. Land (5 acres /217,800 s.f. @ $6.00 p.s.f.) Architectural and Engineering Water Division Office Building (7,000 s.f.) with Water Well Telemetric System Street Maintenance Offices and Covered Parking (12,250 s.f.) and Trash Transfer $1,306,800 @ $4.00 p.s.f. $871,200 70,000 $ 70,000 187,000 187,000 MARK BRIGGS & ASSOCIATES, INC 2222 Sierra Boulevard Suite B -I1 Sacramento, California 95825 (916) 920 -3461 5800 South Eastern Avenue Suite 340 Los Angeles, CA 90040 (213) 268 -6325 440 First Street N.W. Suite 502 Washington, D.C. 20001 (202) 223 -0426 Mr. Charles Gomez January 24, 1985 Page 2 Station Garage Structure (7,000 s.f.) with built -in equipment and fuel island Contingency (15 %) TOTAL: 275,000 275,000 412,000 412,000 131,100 (10%) 87,400 $2,381,900 $1,902,600 There will be a limited amount of funds surplus to the City's needs when the developer purchases the site for use for the Corporation Yard. The estimates of costs are as follows related to the land acquisition Land acquisition 390,250 s.f. @ $6.13 Less purchase money mortgage City's remaining costs: Acquisition $ 829,380 Relocation 82,500 Demolition 50,000 Off -sites 300,000 Amount available for corporate yard: $ 2,392,233 500,000 $ 1,892,233 $ 1,261,880 $ 630,353 With the corporation year costs estimates at $1,902,600 and the $630,353 available, the balance the City will need for the corporation yard is $1,272,247. That amount would change if the off -site costs, which is now only a fill in number, are lower based on engineering work now being done by the developer. The UDAG application needs to have a commitment of funds by the City or Agency to cover the costs for the corporation yard. Sincerely, Mark E. Briggs President MEB/ jsl