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CC – Item 4B – Staff Report- Approval of Economic Development Loan for Garvey Wholesale Beverage �x• stafop tort TO: HONORABLE MAYOR AND MEMBERS ,� ROSEMEAD CITY COUNCIL FROM: FRANK G. TRIPEPI, CITY MANAGER DATE: Y OCTOBER 9, 1997 RE: APPROVAL OF ECONOMIC DEVELOPMENT LOAN FOR GARVEY WHOLESALE BEVERAGE In January 1997, Garvey Wholesale Beverage applied for an economic development loan under the City's Commercial Loan program. Staff has worked with Garvey Wholesale to define the project, and complete the environmental process. Under the Commercial Program approved by the City Council, the City may do general economic development which is not related to rehabilitation for properties located in its designated Improvement area. In May, 1996,the property located at 2542 N. San Gabriel Boulevard was purchased by Garvey Wholesale Beverage for expansion of its thirty(30)year-old Rosemead-based business. At the time,the property was dilapidated and in need of repair. Garvey Wholesale Beverage worked with Planning,Building and Public Works to determine the improvements to be made. To date, Garvey Wholesale Beverage has undertaken all renovations of the property without City assistance. The business has completed the following improvements, at a cost of$175,000: ▪ Paved the parking lot, sidewalks, and repaired sewer drainage • installed a new roof • installed new fencing and block wall • installed lighting and landscaping in the parking lot • constructed tenant improvements in the form of in-house offices • completed exterior paint and stucco COUNCIL AGENDA NOV 251997 ITEM No. tr• te:A K J In July, 1996, Garvey Wholesale Beverage Company applied for a rebate under the City's Commercial Rehabilitation Program. Unfortunately, the City was unable to grant a rebate at that time because the property was undergoing environmental closure by the bank for clean up of the property. This environmental clean up was the bank's responsibility under the terms of the purchase. That issue has since been resolved and the business was able to obtain a closure letter from the County of Los Angeles in December 1996. However, because improvements needed to be made to the property as soon as possible after Garvey Wholesale obtained the property,they decided to invest their own capital in financing those improvements and to ask the City for an economic development loan to improve cash flow to the business once improvements had been completed. The original amount of rebate for which Garvey Wholesale Beverage would have been eligible was $50,000. Under the City's Commercial Loan Program, a business may receive a loan for up to $50,000. Garvey Wholesale Beverage is requesting a loan for$50,000 to purchase inventory and advertising for the holiday season. This loan is anticipated to yield greater business goodwill and create ongoing increased demand for service. In addition to increased revenue,the increase in business will allow Garvey Wholesale Beverage to add two full-time positions to the business. These positions are: (1) Warehouse at$6.00 per hour, and(2) Salesperson at$8.00 per hour. Under the terms of the note, Garvey Wholesale Beverage would receive a loan for$50,000 for ten years at six percent(6%)interest. This loan would be deferred for the ten year period if the company remains in business and continues to own the site. At the end of the ten year period, after successful completion of the terms and conditions of the Owner Participation Agreement, Garvey Wholesale Beverage could request that the City forgive the original loan amount. RECOMMENDATION Staff recommends that the City Council approve an economic development loan to Garvey Wholesale Beverage in the amount of$50,000, and that the City Manager be authorized to execute appropriate agreements. • CITY OF ROSEMEAD COMMERCIAL REHABILITATION PROGRAM OWNER PARTICIPATION AGREEMENT THIS AGREEMENT made and entered into this_DAY OF , 19, by and between Garvey Wholesale Beverage, (hereinafter "OWNER")and the City of Rosemead, a municipal corporation(hereinafter "CITY"). WITNESSETLI WHEREAS, OWNER is owner of a commercial property commonly known as Rosemead, CA (the "PROPERTY"), which is legally described in Exhibit "A," attached hereto. WHEREAS, OWNER is in need of working capital in order to expand operations of the business which is located in the City designated improvement district. WHEREAS, CITY is the administrator of federal funds which may be used to provide incentives for economic development of a privately owned for-profit business,where economic development will result in job creation and retention and in improvement of the neighborhood. WHEREAS, OWNER desires to create jobs and expand its business in a qualified area with the assistance of the financial incentives offered by CITY. NOW, THEREFORE, for and in consideration of their mutual promises,the OWNER and the CITY hereby agree as follows: 1. LOAN AMOUNT: CITY shall lend OWNER an amount not to exceed FIFTY THOUSAND DOLLARS ($50,000) for advertising and to finance the purchase of inventory in accordance with the Pro Forma attached hereto as Exhibit "B,' and submission of acceptable evidence to show purchase of same. Loan shall be made via a note and deed of trust for the property. Said loan shall be for a term of ten (10) years at six percent(6%)interest. Principal and interest shall be deferred on an annual basis for the ten year period,provided that OWNER remains in business and in occupancy of the commercial property listed hereinabove. Should owner sell the property or the business within that time period,the loan shall become due and payable, including any interest which may have accrued. 2. FINANCING: OWNER agrees to fmance the cost and expenses of such purchase with the loan and to finance any costs and expenses incidental to same using private funds. 3. TIME OF PERFORMANCE: OWNER agrees to cause such purchase to be prosecuted with due diligence and good faith without delay, so that the same will be fully completed not later than sixty(60)days from execution of this AGREEMENT. 4. CHANGES IN WORK: OWNER shall not permit any amendments of modifications of the performance of any work without prior written consent of the CITY first being obtained with respect thereto. 5. JOB CREATION: OWNER shall cause the two positions to be created within sixty(60) days of execution of this AGREEMENT. OWNER shall allow the CITY to track such job creation on at least an annual basis and shall provide evidence that of the job title,the number of hours per week that the job entails, the name of the person holding the created job. Those jobs are: (1) Warehouse at$6.00, and(1) Salesperson at$8.00. Both jobs, as agreed to here by CITY and OWNER to be full time positions (FTE). 6. INDEMNIFICATION: OWNER shall indemnify, defend and hold harmless, the CITY its officers, agents, or employees from and against any loss, liability, or expense from defense costs, legal fees, and claims for damages that may arise or result from the wrongful acts or omissions or the allegedly wrongful or negligent acts or omissions of the OWNER, its officers, agents or employees. 7. EMPLOYMENT DISCRIMINATION: OWNER shall not discriminate against any employee or application for employment because of race, color, religion, sex, national origin, age, familial status or handicap. OWNER shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color religion, sex, national origin, age, familial status or handicap. Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination, rate of pay or other forms of compensation and selection for training including apprenticeship. OWNER agrees to post in conspicuous place available to employees and applicants for employment, notices setting forth the provisions of this non- discrimination clause. OWNER shall, in all solicitations or advertisements for employees placed by or on behalf of OWNER, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, age, familial status or handicap. 8. INSPECTION OF RECORDS: CITY and the United States Government and/or their representatives shall have access for purpose of monitoring, auditing, and examining OWNER'S activities and performance, to books, documents and papers, and the right to examine records of OWNER'S sub-contractors, bookkeepers and accountants, employees in regard to said loan. CITY and the United States Government and/or their representative shall also schedule on-site monitoring at their discretion. Monitoring activities may also include, but are not limited to, questioning employees and entering any premises or any site in which any activity funded hereunder are conducted or in which any of the records of OWNER are kept. Nothing herein shall be construed to require access to any privileged or confidential information as set forth in Federal or State law. In the event OWNER does not make the above-referenced documents available to the City of Rosemead, California, OWNER agrees to pay all necessary and reasonable expenses incurred by CITY in conducting any audit at the location where said records and books of account are maintained. 9. ASSIGNABILITY. OWNER shall not assign or transfer any interest in this AGREEMENT, whether by assignment, delegation or novation, without the prior written consent of CITY. IN WITNESS WHEREOF,the parties hereto have executed this agreement as of the day and year first set forth hereinabove. BY: CITY OF ROSEMEAD PROPERTY OWNER APPROVED BY CITY ATTORNEY: