06/05/2001 RA RPTS 07 - Laserfiche WebLink

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CITY OF RIVERSIDE REDEVELOPMENT AGENCY MEMORANDUM Honorable Mayor & Agency Members Date: June 5,200I Item No.: 7 Subject: Approve Amendment to the Owner Participation Agreement and Amendment to the $50,000 Promissory Note Due to the Redevelopment Agency from United Loan & Jewelry Company, Inc. Background On January 11, 1994, the Agency authorized the allocation of $100,000 to the owners of United Loan & Jewelry for seismic retrofit assistance and historic commercial rehabilitation loan assistance for the facade of the property located at 3557 University Avenue. The Owner Participation Agreement, with a Promissory Note and Deed of Trust, was signed on September 30, 1994 to allow for the disbursement of the approved funding. The Owner Participation Agreement provided a grant of $50,000 on a 2:1 ratio (2 private dollars for 1 agency dollar) for the seismic retrofit and a loan in the amount of $50,000 on a 2:1 ratio for the historic facade rehabilitation of the property. The loan terms are: interest at 5%, with interest only payments, and the principal due in 5 years. Current Issue United Loan and Jewelry Company celebrated its 48m year in downtown Riverside last year. Unfortunately, in 1998 and 1999 the store suffered a break in family ties. In addition, both owners, Mr. & Mrs. Steingone, began requiring extensive medical care. In early 1999, Mr. & Mrs. Steingone's daughter, Janet Le Coz was appointed as Chief Financial Officer, and her husband Phillipe Le Coz, as General Manager. They have been diligently rebuilding the store. The store supports six full-time employees and one part-time employee. In early June 2000, Mr. & Mrs. Le Coz began working with Inland Empire Bank to refinance the store property to pay off the balance of the Agency loan. In October 2000, Mrs. Le Coz was finally notified by the bank concerning her loan request and was told that the bank required the Agency to provide a" $50,000 loan guarantee" as a condition for approval of the new loan. Mrs. Le Coz was completely surprised by the bank's requirement, especially as this requirement was never previously discussed. What was especially dismaying to Mrs. Le Coz, was the extended time that had passed from her initial application, putting her under serious time pressure to meet the upcoming balloon payment due to the Agency. Mrs. Le Coz immediately contacted Agency staff to discuss the bank requirements and inquired about a possible extension of time with the Agency to seek an alternative lender. Mrs. Le Coz also indicated to staff that the family owned additional real estate that possibly could be offered up to a bank as additional collateral for a loan. After meeting with Mrs. Le Coz, and reviewing the financing proposal, staff agreed it would be in the best interest of the Agency to allow Mrs. Le Coz to continue to try to obtain financing that does not require a public guarantee for a limited time period. She assured staff that she would work diligently with Inland Empire Bank to resolve the issues and would contact other banks over the next three months to obtain a new loan if she was unsuccessful with Inland Empire Bank. A report was presented to the Finance Cormmttee on November 13, 2000 and Mr. and Mrs. Le Coz were granted a 90-day extension of the loan, continuing the interest only payments at the same 5% through February 1, 2001. The Finance Committee instructed staff to return to the Comrrfittee upon resolution of this matter. Subsequent to the staff report in November 2000, the health of the owners of United Loan & Jewelry Company further deteriorated and Mrs. Steingone recently died. Their health problems were complicated by the tragic death