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HomeMy WebLinkAbout05/11/83 MINUTES RA H I N U T E S BAKERSFIELD REDEVELOP~ENT AGENCY Regular .... · ~ ~,~eeulng---~ay 11, 1983 The Regular Meeting of the Bakersfield Redevelopment Agency was called to order by Chairman Barton on May 11, 1983 at 5:35 p.m. in the City Council Chanbers. The Secretary called the roll as follows: mEL~iBERS PR~_,S~JNT. James J. Barton Chris Christensen John Heans Thomas Payne Art Rockoff Vernon Strong MEMBERS ABSENT: Donald )Ratty R~inutes of the regular e ~' ~ ~ m.e-uzng of April 13 and Hay ~.:, 1983, were approved as presented. SCHEDULED PUBLIC STATEMENTS hr. lielmar stated that the contract with Blyth Eastman Paine ~ebber Incorporated relates to a lease revenue bond issue. However~ the hond~issue is n~w~ a tax allocation i~ond issue. This is the san. e basic agreement with the sarae amount that was apilorved previously~ but the wording has been changed to allow them to be paid for their services from the hax allocation bond proceeds. Mr. C. hristensen made a motion to approve the agreement with Plyt[n R]astl~an Paine Webber Incorporated, which was carried by t]Re following roll call vote: AY~S: qockoff, Strong, Barton, Cl%ristensen, Means, Payne 170~S: None ~ ;%STAih 3: None ~PJi~S7{I IT: Ratty [-ir. Thomas R[cBride of Hedrick/McBride Development Company ga~e an oral report on the downtown hotel project. Mr. McBride re- viewed his comments made during the last Redevelopnent Agency meeting regarding the financing entities of the hotel project~ an~'7 provided an update on the status of the financing. He stated that the Coalition of Trade Union Pension Funds only grants a one. year co;a~itN~ent~ foz a pe_r~anent lo~.n~ h~_ with satisfactory evidence that a working agreeRent with the City can assure timely acquisition of the land, they will extend that one year on a quarter- l~y-quarter basis for one half percent fee which would cost the hotel investors $200~000. Mr. Colberg of Union ~ank was present to explain a financing method that would help alleviate some of the problems in financing this project. He stated that it should be structured as an industrial revenue tax exempt bond issue. He further stated -that they can work with Bank of America~ or any other institution that has financing available to support the bond issue; the bond issue has to be supported by a letter of credit which is put up by the lending institution to insure 'the bond holders if there is a default. Mr. Strong questioned 'the time it would take for this effort. Mr. Colberg stated that once the letter of credit is received, it would take approximately 90 days to have an issue in the market. He stated that this process involves preparing a term sheet out- lining the issue which should be approved by the Redevelopment Agency and the ]principal parties involved. He further stated that there is a demand in the narket place because the interest rates are approximately $% percent, and the bonds can be rated with Bank of America in which there are ways to secure a triple A rating. ~r. Barton questioned if the 90 days commences from ~ay 15. Mr. Colberg stated that t~e 90 days begins from the time they have secured a letter of credit backing the bond zssue. He stated that if there is any default on the bonds by the obligor, and any redemption period that may be set forth in the mssue, the trustees would call on that letter of credit and pay off the bond holders i~mediately. [.ir. Colberg further explained that it would be necessary to structure the issue no allow two individuals to act as general partners and the lender partnership znteresn that would be sold would be sold to separate individuals or they can be combined. Mr. Rockoff ~sked ~ow ~o ge~ out of the "catch 22" situation. Mr. McBride stated that it would be solved by showing the California Corporation Co)[missioner that we have adequate time acquire the site and build the hotel~ thus protecting the funds of the limited partner lnvestors. This would permit the use of the equity investment. With 17 shares at $135,000 per share, it would be approximately s2.4 million, and they can declare the partnership open according 'ao the offering and can s~art releasing the money to drill the test holes and start the working plans. Once the equity ~aoney has broken the chain, ~he Bank of America can release the construction funds to start construction. ~:r. Rockoff questioned if 90 days would be sufficient acco~plish ~verythlng to start ~ne project. 'ir. l.cDride stated t~at th~ 2rojec'c would be started; however this would not necessarily mean groundbreaking. 14r. Payne asked if the ~0 days would commence fros~ the time the developer or somebody gets s letter of credit. ~dr. Colberg stated t~'~at the whole structure zs based on credit worthiness of the general partner and the partnershi]? itself. The credit position will be the obligation of the Bank of America. Once the letter of credit or com~itmen5 letter ms granted, the bond issue can be taken to market. ~[e further stated that with a letter of credit in hand assuring the sale of the bonds, the City can proceed with the Qrocess of acquirzng and clearing the land~ it can be done simultaneously. Mr. Payne questioned who nhe general partner is. L~r. McBride stmted that i% is [dr. Cassidy~ ?~r. Robert Corsaro ana hi~self. %~he li~ited partnershi~ is 34 ~akersfield families anm the San Joaquin Capital Corporation which is owned by 67 individuals. ~lr. ~icEride stated that he has received- letters of insent ~o cover the $4.7 million equity require~!~ent, but they cannot be picked up until the California Corporation Commissioner provides his stamp of approval on the offering. z~r. Corsaro stated that Bank of America can review the part- nership and issue a letter of credit within 30 days. Mr. Rockoff stated that there is a $100,000 letter of credit that is a deposit on the project which, a'c this point in rime, is refundable. He insisted that, in his opinion should the Agency grant the extension, that deposit should become nonrefundable or would be refundable only in the mnstance that the City did not deliver the land. He commented 'ahat he feels tl~e reason for the length of the requested e×tenslon ls to provide more favorable financing terms to the developer and the partners, and that there should be some partici2ation by the 2edevelop~ent Agency in the benefits because the original agreement was predicated on certain costs in the financing package. Mr. Christensen ~sde a motion to table the issue until the Agency members could read the committee report or better understand the subject matter. The motion was defeated. AYES: Christensen NOES: Rockoff, Strong, Barton~ ~eans, Payne ABSTAINS: None ABSENT: Ratty Mr. Strong explained to [ir. Christensen that the committee meeting was held in order to iron out some of the questions that were expected to be asked at this meeting in which several things were evident. He stated that the committee was disappointed by developers before who have promised to deliver, and the problem of permanent financing, in which they have more than one possibility. Mr. Strong stated that the disappointment is not the same in this project as far as not delivering because there are local investors. He stated that there is more than profit making involved, and that · there should be an extension of time; approximately 120 days with the understanding that the $100~000 be refundable only if something happens beyond their control. Mr. Strong made a motion to recess the meeting till Thursaay~ Liay 12, 1983 at 12:00 p.m~ ,~A~ ' J. ,~RT~N ~ , ,hairman ~kersfic~Id Redeve..,~pment Agency