2004 AGN APR 20 I10 - Laserfiche WebLink

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Item #10 CITY OF COLTON AGENDA REPORT FOR CITY COUNCIL MEETING OF APRIL 20, 2004 TO: Honorable Mayor and Council Members FROM: Al Holliman, Assistant City Manage SUBJECT: Commitment Letter from the Community Reinvestment Fund, Inc. for $3,000,000 Big League Dreams Loan DATE: April 13, 2004 BACKGROUND For several years the City of Colton and its Redevelopment Agency have been working with Big League Dreams (BLD) for the construction and operation of a Community Sports Park. The site for the park has now been acquired and architectural and engineering plans are nearly complete. Construction is expected to commence by September 2004. As part of the development agreement with BLD, the City committed to assist them in procuring a loan for $2.5 million to fund their portion of the acquisition/construction costs. A commitment letter has now been received from the Community Reinvestment Fund, Inc. (CRF) to fund this obligation (see exhibit 1 attached). City Council authorization is requested before the City Manager signs the commitment letter. DISCUSSION/ ANALYSIS Per City Council approved revisions on December 11, 2003 (see exhibit 2 attached) the acquisition and construction budget for the sports park versus funding sources is as follows: Budget: Construction Costs $8,140,743 Land Acquisition $2,465,215 Total $10,605,958 Funding Sources: Bond proceeds construction fund $5,616,321 BLD Loan proceeds $2,500,000 General Fund CIP reserves $2,487,637 Total $10,605,958 Pursuant to the City council approved agreement with BLD, they were to contribute $2.5 million of their own funds or borrow that sum to fund their portion of the acquisition/construction costs. The City also agreed to help BLD in procuring a loan, if necessary. As the transaction progressed BLD stated they would need to obtain a loan. One of the initial options explored involved BLD procuring a loan from their corporate bank or other affiliated sources. While this alternative was possible, staff became increasingly concerned regarding collateral and lien implications. Any lender wants a deed of trust on the property, and without the City being a party to the transaction, it would be very detrimental if BLD ever defaulted to have an outside lender foreclose on our property. For this reason, staff focused on obtaining a loan whereby the proceeds