HomeMy WebLinkAbout7.1 CommercialFacadeLoan
CITY CLERK
File # D~[2][QJ-l5J[{jJ
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: July 19, 2005
SUBJECT:
Consideration of Commercial Façade Improvement Loan Program
Report Prepared by: Christopher L. Foss
Economic Development Director
ATTACHMENTS:
1.
2.
November 16, 2004 City Council minutes
Loan Application Form
RECOMMENDATION:
/Í A ~Consider the proposed Commercial Facade Improvement Loan
\{/V' program and provide Staff with direction on this matter.
FINANCIAL STATEMENT:
The City Council approved $50,000 in the fiscal year 2005-06
budget to fund the program.
DESCRIPTION: At the November 16, 2004 City Council meeting, the City Council
reviewed a proposed Business Incentive Zone program to assist businesses in the City's Central Busincss
District (CBD). During the revicw process, the City Council directed StafT to develop a Commercial
Facade Improvement Loan program for use by CBD businesses. With this report, Staff would like to
receive City Council input and direction with regards to the proposed program.
BACKGROUND: The City of Dublin has invested a great deal of time and money over
the last several years in the revitalization of the City's Central Business District, or Downtown. During
that timc, projccts ranging from landscaping and street furniture to public art and new bus benches have
been completed. In addition, the City Council has taken scveral pro-active steps through the adoption of 3
separate specific plans (Wcst Dublin BART, Downtown, and Village Parkway) to ensure that the area is
properly zoned for new, more intensive development to meet present and future needs. The City's
Central Business District has also benefited from private investment that has mani fested itself in
completed projects such as Safeway, Target, Expo Design Center, Valley Center and McDonalds, to name
a few. The CBD will also see several new, entitled projects comc to fruition over the next several months
and years, including the Wcst Dublin BART project and related private development, Shamrock Village
Shopping Center, AMB's mixed-use project on St. Patrick's Way, and Enea Properties at Village Parkway
and Amador VaHey Boulevard. Staff is also working with owners of the Dublin Place Shopping Ccnter
for a new retail component.
PROPOSED PROGRAM: The City Council identified the creation of a Business Incentive
Program as a high priority goal for FY 2004-05 and the goalwas carried over for FY 2005-06 (Goal No. II-
E-5). During the City Council's November 2004 deliberations on the Business Incentive Zone proposal,
Staff was dircctcd to look into the possibility of establishing a Commercial Facade Improvement Loan
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COPIES TO:
I f/cc-forms/agdnstmt.doc
[003
ITEM NOo.1.1
4Ýè/
Loan program for the City's Central Business District (see Attachment I - November 5, 2004 City
Council minutes). To that end, Staff researched dozens of California cities and received examples of
viable loans programs from nearly 20 cities, including Morgan Hill, Davis, and Vacaville, to name a few.
The loan amounts generally ranged from $ 5,000 to $ 75,000, with some loans up to nearly $300,000. Of
the loan programs reccived and reviewed by Staff, all but one (City of Bellflower - funded by CDBG
funds) was funded through the respective commulÙty's redevelopment agency.
With the above-mentioned loan programs as a template, Staff is proposing a Commercial Facade
Improvement Loan program that will encompass the following elements:
Purpose/Goals:
The purpose of the program is to leverage public funds and private
investment to encourage substantial rehabilitation to commercial
buildings in the City's Central Business District (CBD). The
program goals include:(I) improving the physical and economic
vitality of the area, (2) encouraging the retention of existing
businesses, (3) promoting the unique nature of the area, and (4)
increasing property values, tenant stability and lease rates in the area.
Staff believes that the primary beneficiaries will be the business and
property owners whose properties will benefit rrom the improved
appearance of the buildings. These improved aesthetics will assist in
attracting shoppers and new businesses to the area and could
increasing shopping options in the area.
Eligible Activities:
Staff would propose that the use of the funds be for the following:
(including but not limited to): architectural/design costs, renovation
of exterior windows and doors, façade improvements, exterior
painting, parking lot improvements, voluntary ADA improvements, -
landscape enhancements, and signage improvements.
Annual Funding:
Staff would propose that the first ycar's funding total $50,000 rrom
the City's General Fund. This amount would allow for the funding
of several small to medium sized loans, or up to two maximum
loans. The City Council would need to determine a method of
prioritization of the limited funding on an annual basis.
Grant/Loan Amount:
Minimum: $5,000 - Maximum: $20,000. Disbursements ofthc loan
proceeds to program participants will be cash reimbursements
following the completion of the work outlined in the loan
application. Staff would also propose that the interest rate on thc
loan would be the City's cost of funds for that current fiscal year.
The City also reserves the right to cancel this program at any time,
prior to loan or grant approval, without notice, if sufficient funds are
determined to be unavailable.
Target Arca( s):
During the first year of the program, Staff would request that the
City Council target the Village Parkway arca from Amador Valley
Boulevard to Dublin Boulevard. In the proposed Village Parkway
program arca, thcrc are over twenty (20) buildings wi!h
owners/tenants that could potentially take advantage of the. program.
~t3>
Securitv:
Staff would request that all loans are secured by a dccd of trust
against the property. Staff would also request that the amount of the
proposed loan be matched a minimum of 100% private funding by
the applicant.
Administration:
During a review of the various loan programs throughout the State, a
few cities worked with a local bank to process and underwrite the
loan program (application, credit checks, ctc.). Due to the lack of
personnel to administer the program, Staff would request City
Council direction to meet with a local bank to determine the level of
interest in becoming the City's partner in the program.
Staff has included, for City Council revicw, a draft loan application form.
In an attempt to determine the level of interest for such a program, Staff sent a letter, dated March 21,
2005, to all of the property owncrs and business owners on Village Parkway notifying them of the
parameters of the program and asking for their input. Of the 169 possible respondents (22 property
owncrs and 147 businesses), Staff received 3 rcsponses in support and 2 responses in opposition - a 3%
response rate. Subsequent to the letter, it was determined that the lack of responses from the businesses
(tenants) was due to the fact that their landlords would not allow individual exterior tenants improvements
to bc completed - the entire building and/or propcrty would need to be upgraded. With that information,
Staff attempted to contact all of the property owners on Village Parkway from Dublin Boulevard to
Amador Valley Boulevard. Staff was successful in contacting 14 of 22 owners in that stretch of Village
Parkway. Of those respondents, 2 of the 22 propcrty owners (9%) were interested in the program, 10 of
the 22 property owners did not respond (45.5%) and 10 of the 22 property owners (45.5%) wcre not
interested. As it relates to leasable square footage in the area, the interestcd parties account for 7.27% of
the Icasable square footage in the area, thc non-respondents account for 19.64% of the leasable square
footage, while the non- interested parties account for 73.09% of the leasable square footage.
Staff also askcd the property owners who were not interested in the program if there would be an amount
at which the loan program would interest them. Only two property owners responded, and the amount for
the loan program ranged from $100,000 to $500,000.
Despite the apparent lack of interest in thc program by the property owners on Village Parkway bctween
Dublin Boulevard and Amador Valley Boulevard, Staffbclieves that the City Council should consider the
proposed Commercial Façade Improvcment Program as a means to revitalize the Central Busincss District
(CBD) - focusing on Village Parkway. If approved in conceptual form this cvening, Staff would prepare
the nccessary documents to market the program and to accept applications from interested parties.
RECOMMENDATION
It is recommended that the City Council consider the proposed Commercial Façade Improvement Program
and provide Staff with dircction on this matter.
G:\Chris\Commçrçial R.ehab l..oaTI Program 2005\FORM-agenda statement July 19 2005.ðoc
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Limitations on Conversions
· Housing Ratios:
· vacancy Rate:
Relocation Assistance Plan
· Moving Expenses:
· Moving Expenses Eligibility:
· Rent Stabilization Period:
· Lease Extension Period:
l3uildin2: Code Reauirements
· Effective Building Code:
Inclusionarv Zonin2: (IZ)
· Application of lZ:
· Percentage of Units:
· Right of First Refusal:
Site Deve10Dment Review CSDR.)
· Deferred Maintenance:
'~<6
30% Rental Units
5%
3 Months Rent
All Current Tenants
Issuance of "Notice. of Intent to Convert?> 6 Months
Following Public Report
1 Year for Seniors/Permanently Disabled/
Inelusionary Tenants &
1 Year for Families with Children in Grades K~12
Time of ConstIuction
Unmapped or Mapped without Public Report from
Department of Real Estate (DRE)
12.5%
Include Inc1usionaryPricing for Existing
Inclusionary Tenants
Site Development Review
..
~
9:11p.m.
Mayor Lockhart called for a bríef break. The meeting reconvened at 9: 16 p.m. with all
members ofthe City Council present.
..
CONSIDERATION OF BUSINESS INÇENTIVE PROGRAM
9:16 p.m. 8.1 (470-50)
Economic Development Director Chris Foss presented the Staff Report and advised. that
the proposed Business Incentive Program could provide, on a case-by-case basis, City
CITY COUNCIL MINUTES
VOLUME 23
REGULAR MEETING
November 16, 2004
PAGE 524
~.¡'Î-I.?:$" "5, I
Attachment 1
2tß
funding to reduce the up~front cost of development (tra.ffic~related fees only) for
businesses looking to create new, beneficial development in downtown Dublin. The
Council should determine: 1) the purpose that the Business Incentive Program should
serve; 2) the area or ~ites that should be considered for a business incentive; 3) the
criteria which should be used to determine whether a business/property should qualify
for a business incentive; and 4) does a Downtown Traffic offset Fee program accomplish
the goal of the City Councilor should Staff investìgate a different type of incentive_
Mayor Lockhart referred to the Downtown Traffic Offset F~ program, which would
involve taking money out of the General Fund for businesses, and asked if it would be
possible to somethi118 similar to wha.t Dublin San Ramon Services District (DSRSD) did
with their connection fee. For certain businesses, DSRSD extends the payment time, as
opposed to giving them the offset.
Mr. Foss deferred to the City Attorney for response.
City Attorney Silver opined that it would be permissible as it would be a variation of the
General Fund making the contribution Currently, fees are payable prior to issuance of a
building permit, so the City has a 100% guarantee that the fees would be paid. If the
payment were deferred to a. time after issuance of the building permit, there is the risk
that the fee would not be paid, in which case the General Fund would have to make the
contribution. As long as the same findings were made to support a reduction in a. fee, if
the fee were deferred tha.n it would be permissible.
The Council and City Attorney discussed the alternatives, including the option of
pursuing: delinquent payments in Court.
Ms. Silver advised that the Council could condition the fee by mandating: security eql,11l1
to the amount of the fee.
Mr. Foss advised that the prcwam had not been defined for either a property owner or a
les:¡ee. A lessee did not have controlling: interest in a piece of property, so it wOl,.Ild be
difficult to encumber a piece of property that they did not own.
The Council discussed the issue and agreed that, although it would be an option for the
property owner only, it was worth exploring.
The Council discussed the fact that there were many projects currently in the works in
previously hard-to-filllocations without the benefit of incentives; however, agreed that it
would be important to have a policy in place in care a really great opportunity that
CITY COUNCIL MINUTES
VOLUME 23
REGULAR MEETING
November 16, 2004
PAGE 525
~voß
needed assistance came along. The potential for even more opportunities could present
themselves with an incentive program. .
The Council a.nd Staff discussed alrernative programs, as well as hidden incentives such
as Dublin having no gross receipts business license or utility users' tax. Business
promotions on the City's website could be considered an incentive, as well. Various loan
and payment plans were also discussed.
Mayor Lockhart stated that the City had already invested substantial money in Village
Parkway for sidewalks, etc., and suggested that a loan program should target that area.
The Council discussed the suggestion and agreed to start with a commercial
t'ehabilitation loan in the Village Parkway area, which would not include a traffic impact
fee payment plan at this time. The Council directed Staff to return to a future Council
meeting: w:ith policy parameters for the loan.
Cm. Sbranti suggested an additional non~cost incentive in the way of moving a business
prop:!sal in the central district to the top of the processing list. Part of the cost for anyone
doing: business is time. If the time could be cut in hatf, it would be a valuable incentive.
The City's website should also be utilized to its fullest to promote the incentives offered to
businesses locating in the central district.
The Council discussed the suggestion and directed Staff to include Cm. Sbranti's
suggestion, outlining its pros, cons and limitations, when the issue returned to the
Council for further discussion and consideration.
.
STAI.tIS....lŒ:PORT ON DOWtfl'OWf'iJ.JVS1~ ASSOClA11QN
9:55 p.m. 8.Z (470·50)
Economic Development Director Chris Foss presented the Staff Report and advised that,
in IT 2002-03, the Council established a High priority goal "to evaluate the need for
specific business as.'Iociations within Dublin." Input was solicited from business and
property owners regarding the possible creation of a downtown business advocacy
group. Due to the apparent lack of interest by the downtown business community in the
establishment of Ii Downtown Business Association, Staff recommended that the City
COuncil find Staff's efforts on Goal II-E-6 complete for IT 2004-05.
CITY COUNCIL MINUTES
VOLUME 23
REGULAR MEETING
November 16. 2004
PAGR 526
~DbZ
COMMERCIAL FAÇADE IMPROVEMENT LOAN PROGRAM
APPLICATION
City of Dublin - Economic Development Department
100 Civic Plaza Dublin, CA 94568 (925) 833-6650
Property Owner
Name:
Date:
Mailing Address:
Phone Number:
E-Mail:
Project Address:
Assessors Parcel Number:
Estimated Total Project Cost:
Description of Work:
I understand all ofthe program guidelines and accept them as requirements to qualify for
a Commercial Façade Improvement Loan. I certifY that I am the legal owner ofrecord of
the abovc-namcd propcrty.
Signature
Date
G:\Chris\Commercial Rehab wan Program 2005\Facade Loan AppJication and Reimbursement 062005.doc
Attachment 2
.
REIMBURSEMENT REQUEST
Lead Contractor:
Address:
Daytime Phone:
Total Project Cost:
Date of Pinal Building Inspection:
Work Items:
Contractor Work Performed Am
.
I Additional Expenses ~ Am
I certify that the information provided is complete and accurate and repre
materials and labor costs associated with the approved façade work. Pho
and original bids, invoices, cancelled checks, etc. are attached.
Signature Date
G:\Chris\CommerdaJ Reh<:1b Loan PI'Ograrn 2005\Facade Loan Application and Reimbursement 06200;5,doc
..-...
5rt~
ount
ount j
sents only those
tocopies of true
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COMMERCIAL FACADE IMPROVEMENT PROGRAM
APPLICATION
CITY OF DUBLIN
Section J
Program Overview
The primary purpose of thc Commercial Facade Improvement Program is to
leverage public funds and private investment to encourage substantial
Improvement of commercial buildings in the City's Central Business District
(CBD). The long-term objective is to upgrade the CBD by improving the
physical and economic vitality of the area. Additional program objectives
include: Encouraging the retention of existing businesses within the CBD, and
increasing property valucs, tcnant stability, and lease rates for property.
The primary beneficiaries wilJ be business and property owners whosc businesses
will benefit rrom the improved appearance of the building. The improved
aesthetics will assist in attracting shoppers and new businesses to the area and
could subsequently increase shopping options in the area.
Section 2
Program Operation
All Improvement projects proposed should be in keeping with the overall design
guidelines adopted by the City of Dublin.
Grant Loan Amount
Disbursement of loan proceeds to program participants will be cash
reimbursements.
The City of Dublin reserves the right to cancel this program at any time, prior to
loan approval, without noticc, if sufficient funds are determined to be unavailable
by the Dublin City Council.
Eligible Activities
I. Architectural/Design costs;
2. New Signage / Lighting;
3. A wuings / New Doors / Windows;
4. Façade improvements such as storerronts, display windows, painting or
stucco, cxtcrior lighting, visible roofrepairs;
5_ Disabled access, including ramps in conjtillction with structural
improvements;
6. Utility Upgrades
'Ob(
Funding Criteria
I. Project Viability and potential;
2. Quality and completeness of Application;
3. Impact ofproject on CBD area;
4. Significant Exterior Improvemcnts;
5. Creation / Retention of .lobs;
6. Sales and Property Tax Generation.
Loan Criteria
1. Personal Guarantecs will be required;
2. Pcrsonal Financial Statements will be provided for review as part of the loan
process;
3. Credit Reports will be reviewed;
4. In some instances, an appraisal may be required to establish sufficient equity
for loan.
Conditions for Loan's Consideration
1. All loans will be secured by a Deed of Trust on the project property;
2. Building must be in the Central Business District of Dublin (see map);
3. Applicant must demonstrate that matching private financing necessary to
complete thc project is secured;
4. Applicant must submit completed application and have application approved
by the City of Dublin prior to commencement of construction;
5. All necessary permits must be obtajned from the City of Dublin's Community
Developmcnt Dcpartmcnt bcforc work can commence. All work is to be
perfonned and inspected to the satisfaction of the Community Development
Department - Building Division.
6. A licensed contractor must perforn1 all work.
Where applicable, all improvements shall be in conformance with City
ordinances, etc. For clarification, please contact the City of Dublin's CommulÙty
Development Department.
The maximum amount ofthc loan shall be 50% of the eligible activities with the
maximum amount of $20,000; with documentation that applicant has matched this
amount on eligible activities.
"'6tf{)ß
Loan Terms
The loan is must be repaid in five equal annual installments beginning in the
earlier of 18 months after the date of the loan agreement or 12 months from
completion of the project evidenccd by a recording of a Notice of Completion.
The loan will carry an interest rate equal to the City of Dublin's cost of funds.
Since the Commercial Facade Improvement loans are fUnded with local dollars,
all contracts and project work will be subject to the Davis-Bacon Act requiring
that the prevailing federal wage rates be paid. The City of Dublin will provide
the most current wage determination to applicant.
In order to process the loan application, cost information on all aspects of the
project will be needed. Plans, if necessary, must be prepared and processed
through normal City review and plan check. When the costs are fully determined,
the loan agreement will be prepared and scheduled for a City Council meeting.
After City Council approval, the agreement must be signed and recorded. Work
on the proj ect cannot begin prior to recordation.
The applicant is responsible for paying all of the bills. Copies of bills, cancelled
checks, and labor and material releases must be submitted to the City for
reimbursement. 10% retention will be held until 30 days after recordation of a
Notice of Completion for the project.
All Commercial Facade Improvement loans will be secured by a mortgage trust
dced in first or second lien position.
If the property is sold, refinanced, or changes ownership within the life of the
loan, the loan will become an interest bearing note at the rate of 5% that must be
paid immediately at the time th.e project property is sold, refinanced or changes
ownership.
Applicable Fees
A Preliminary Titlc Report and Title Insurance Policy are required for all
applicants. The applicant must pay all fees before loan approval is given.
A Reconvcyance Fee will be withheld from the loan proceeds to release the City
of Dublin's claim when the loan is paid in full.
G:\Chri5\Com111~cial Rt:hab Loan Program :2005\C(}mrnerciil] Re:hab w(¡n application 2005.doc