04/18/2000 RA RPT 07 - Laserfiche WebLink

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CITY OF RIVERSIDE REDEVELOPMENT AGENCY MEMORANDUM Honorable Mayor & Agency Members Date: Item No.: April 18, 2000 7 Subject: Request Authorization to Provide Commercial Rehabilitation Assistance to Mario's Place Restaurant -- Structure of Merit No. 259 -- Airport IndustriaUDowntown Merged Project Area -- Additional Appropriation Background On January 18,2000, the Redevelopment Agency Board of Directors approved the Downtown Riverside Retail Entertainment Strategy and Action Plan, which was prepared by Keyser Marston Associates, The Plan formulated a strategy for the continued revitalizarion of Downtown Riverside through the attraction of a variety of upscale restaurants, special retail and entertainment opportunities. A fundamental step has been taken in attracting the first of several upscale restaurants into Downtown Riverside. After nearly twenty years in business, Leone Palagi and his brothers plan to relocate Mario's Place Restaurant from 1725 Spruce Street to 3642 Mission Inn Boulevard in downtown Riverside. A 10-year lease for the property has been executed with the property owner, Raincross Enterprises, LLP; and Mario's will occupy approximately 7,400 square feet. The hours of opera(ion will be increased to better serve the downtown business population, thereby resulting in the creation of 6 new jobs. Unfortunately, the building has experienced extensive deterioration due to its age and extended periods of vacancy and/or underutilization. While both parties propose to participate in the improvement costs, under the terms of the lease, Mario's is responsible for the majority of the tenant improvements. Total facade, tenant and seismic retrofit improvements are estimated at $850,000. Current Issue Mario's desires to occupy the area formerly occupied by Gram's Mission Barbeque Palace as well as the adjacent vacant space on the first floor of the building. Additionally, the rear patio area will be improved to provide for outdoor dining. Ultimately, Mario's wishes to expand into the second story and occupy the entire building in order to provide much needed meeting space. However, that project component will be addressed in the future, as funds become available. As a proposed tenant, rather than a building owner, Mario's does not have the equity to secure a loan in order to complete the vast renovation project. In an effort to maximize resources, staff has met with the tenant, building owner, and representatives from Inland Empire National Bank; and the following financing proposal has been structured: . The building owner, Raincross Enterprises, has obtained a $225,000 loan from Inland Empire National Bank to apply toward building improvements, It is also proposed that the Agency provide a $60,000 forgivable loan to apply toward the facade improvements. However, this matter will be addressed under a separate report, Mario's Place has applied for a $525,000 loan through Inland Empire National Bank with a $240,000 loan guarantee to be provided by California Southern, a private, non-profit lending institution, Additionally, Mario's is seeking economic development assistance from the Redevelopment Agency in the form of a $225,000 loan guarantee. As proposed, the term of the bank loan would be ten years, with the Redevelopment Agency's participation ending in five years and California Southern's participation concluding at the end of the loan term. The bank loan will be amortized over ten years at prime plus 2% (the current rate is 10.75%). The loan is contingent on the Agency's assistance. . . 7-1