05/02/2000 RA RPT 03 - Laserfiche WebLink

Home

CITY OF RIVERSIDE REDEVELOPMENT AGENCY MEMORANDUM Honorable Mayor & Agency Members Date: Item No.: May 2, 2000 3 Subject: Request Authorization to Guarantee a Commercial Loan and Provide Commercial Rehabilitation Assistance to Mario's Place Restaurant -- Structure of Merit No. 259' -- Airport IndustriallDowntown 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 revitalization 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 operation 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 $810,000. Current Issue Mario's desires to occupy the entire 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 a proposed tenant, rather than a building owner, Mario's does not have the real estate collateral required to secure a commercial loan needed to complete the vast renovation project. In an effort to obtain resources, staff met with the tenant, building owner, and representatives from Inland Empire National Bank (IENB) and developed an initial financing plan. The essential points of the financing plan were as follows: the building owners (Raincross Enterprises) obtaining a $225,000 building improvement loan from IENB; Mario's obtaining $525,000 in third-party guaranteed loans from IENB; and the Agency providing a forgivable $60,000 facade improvement loan. The total amount of this package is $810,000. As originally envisioned, all but $60,000 of the $525,000 Mario's loan would have been guaranteed by a combination of the Agency ($225,000) and California Southern Small Business Development Corporation ($240,000). Since the time of the original financing concept was put forth, California Southern Small Business Development Corporation has declined to participate. Further, IENB has exhausted all other traditional economic development loan guarantee organizations, leaving only public economic assistance as the possible source. With that requirement, staff and IENB representatives have developed the following revised financing proposal for Agency consideration: 3-1