1995 JT MIN FEB 21 - Laserfiche WebLink

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that the parcels are being sold for the same price that the Agency incurred when they purchased the land. Mayor/Member Fulp said it was his understanding that sales were based on comparable sales in the area. Mr. Steward stated that in that regard the land directly across the street from this pad is going for $4.50 a square foot and that he was working on a chicken project right next door to Applebee's and that land is being sold for $350,000. Mayor/Member Fulp said the Letter of Intent mentioned earlier is between the developer and Zendejas and there is no Letter of Intent between the developer and the Agency at this point. Mr. Steward said Mayor/Member Fulp's statement was correct. Councilmember/Member Sandoval asked Mr Steward just by comparison what did the Burger King lot across the street katty-cornered from Applebee's retail for? Mr. Steward answered that that sold for about $800,000, three years ago when the market was really good. Councilmember/Member Sandoval asked would it be reasonable to assume that the Agency did a good job of salesmanship? Mr. Steward replied that the Agency got it for what it was worth in this market. Mayor/Member Fulp said on Page 3 of the Disposition and Development Agreement, Section 2.02, Developer Financing, it states that the developer's construction and permanent financing shall be subject to Agency approval and in the next paragraph it states since the Agency approves the developer's lender, the Agency is subject to guarantee the construction loan. Mayor/Member Fulp said that if this project fails, the Agency guarantees to pay the loan. Director Gabriel said the Agency does guarantee the construction loan. Director Gabriel said there are other sections in the agreement that state that should the developer default and fail to make payments, the Agency has the authority to step in and continue the project. In this event the Agency would reimburse the developer for his efforts thus far. Mayor/Member Fulp asked Special Counsel Sabo if he agreed that the Agency is underwriting the financing of this project. Counsel Sabo said that is correct. Mr. Steward said the reason it was structured that way is because this is on a land lease and there is great difficulty in obtaining a loan on a land lease. Mayor/Member Fulp said the reason for pointing this out is to make the Council/Agency aware that the land lease can be leveraged to obtain financing for the construction of the building. Councilmember/Member Hutton asked if it would be possible to obtain a Letter of Intent between Zendejas and the City/Agency, rather than between the developer and Zendejas. Mr. Steward said he did not know, he was the one that put it together and if he is not able to locate the restaurant in Colton, he will locate it elsewhere. General Counsel Biggs asked Special Counsel Sabo to explain the DDA process. Special Counsel Sabo explained the purpose of the DDA is - 4 - FEB 21 1995