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HomeMy WebLinkAboutApprove and authorize the City Manager to execute Commercial Dept ID ED 16-05 Page 1 of 3 Meeting Date 3!7/2016 r CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION r MEETING DATE: 3/7/2016 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A Wilson, City Manager PREPARED BY: Ken Domer, Assistant City Manager Kellee Fritzal, Deputy Director, Business Development SUBJECT: Approve and authorize the City Manager to execute Commercial Facade Rehabilitation Program Agreements for FY 2015/2016 to incentivize eligible commercial property owners to revitalize their property Statement of Issue The City Council is requested to authorize the City Manager, or his designee, the authority to enter into Commercial Facade Rehabilitation Grant and Loan Agreements As part of the overall business attraction, retention and expansion program within the Office of Business Development, the Commercial Facade Rehabilitation Program was funded for Fiscal Year 2015/16 to incentivize eligible commercial property owners to revitalize their property Financial Impact This program is funded by utilizing a portion of former redevelopment tax increment funds in the amount of $200,000 These monies are included in the 2015-16 budget (Account Number 10040110). Recommended Action Authorize the City Manager, or his designee, the authority to execute approved Commercial Facade Rehabilitation Grant and Loan Agreements Alternative Action(s) Do not approve and provide direction to Staff Analysis With the elimination of redevelopment agencies in 2012, the ability for the City to effectuate the revitalization of dilapidated and outdated commercial properties was effectively eliminated Numerous studies commissioned by the City over the years have highlighted the need to rehabilitate commercial centers, however, no funding source outside of the former redevelopment agency was ever identified to implement a revitalization program. In recognition of aging commercial strip centers City-wide, a program to provide financial assistance was researched. Many commercial centers throughout the City were built in the 1960's and 70's and, in addition to being dated in look, do not meet current ADA standards, landscaping, and other City/State requirements. Accordingly, with the need to upgrade properties to meet the new building and planning codes, there is minimal incentive for property owners to bring in new tenants and re- position their commercial centers Item 3. - 1 xB -30- Dept ID ED 16-05 Page 2 of 3 Meeting Date 3/7/2016 In response to Strategic Planning Objectives to Increase and enhance fiscal sustainability, the Office of Business Development (OBD) developed the concept of a commercial facade rehabilitation program and obtained an Initial $200,000 to start building an economic development revolving fund in which to fund this program Staff presented this proposal to the Economic Development Committee (EDC) on April 14, 2015, and the concept was found to be within the direction of enhancing economic development activities and included in the 2015-16 Fiscal Year budget The Commercial Facade Rehabilitation Program will operate as a revolving loan fund that will eventually grow with time as projects are completed and loan amounts are repaid Grants will also be issued from this Fund The goals of the program are to incentivize commercial property owners to improve their properties to attract new tenants and customers and to provide an updated and cohesive visual theme to commercial properties throughout the City By incentivizing facade improvements, the City expects to attract property owners to revitalize their locations and feature quality tenants The program contains the following details • Standard loan interest rate of 3% • Maintenance covenants stay with the property regardless of ownership transfer • Borrower/Grantee must maintain property at its own cost and expense • Properties cannot be sold for a minimum of three years following the date of project completion • Grants, depending on the nature of the work, range from under$5,000 to $25,000 • Loans range up to $100,000 • Grant and Loan funds only supplement, not replace,•property improvements Through this item, the City Council is asked to delegate to the City Manager, or his designee, the authority to enter into Commercial Facade Rehabilitation Grant and Loan Agreements Due to the varying nature of applicants and proposed projects, agreement terms and amounts for both the grant and loan program will be dependent upon the scale and scope of each individual project, but will utilize the standard City Attorney approved to form agreements as attached Staff continues to market the program and is currently working with a property owner interested in the program Staff previously sent flyers on two separate occasions to commercial property owners throughout the community and continues to receive substantial interest Continuous efforts will be made by staff to reach out to potential future applicants, but participation is contingent on the size of the economic development revolving fund To further build this fund, OBD staff has also discussed with the EDC a concept similar to that of the City of Buena Park's utilization of one-time funds from former redevelopment activities and a portion of the ongoing tax sharing of former redevelopment tax increment Such use of a portion of the former redevelopment agency's tax increment can result in an effective economic development program Funded at over $4 million and growing each year by an inclusion of $600,000, the economic development revolving fund in Buena Park can be used for various economic development goals to include business retention, attraction and expansion incentives, as well as job creation programs This revolving fund continues to assist the City of Buena Park make property acquisitions, bolster its business retention and expansion efforts, and to foster small business growth This concept for a similar Huntington Beach revolving fund program will be brought back to the full City Council as part of a larger business retention, expansion and attraction program HB -3 t- Item 3. - 2 Dept ID ED 16-05 Page 3 of 3 Meeting Date 3/7/2016 Environmental Status Not applicable Strategic Plan Goal Strengthen Economic and Financial Sustainability Attachment(s) 1) Commercial Facade Rehabilitation Program Outline and Materials 2) Sample Grant Maintenance Agreement 3) Sample Loan Maintenance Agreement Item 3. - 3 xs -32- ATTAcniviENT # 1 Huntin ton Beach Commercial Rehabilitation Pro ra The Commercial Facade Rehabilitation Program provides funding for ,d commercial property owners and/or tenants to cooperatively update End improve commercial properties. - Eligible Improvements • Paint and color • S ignage • Awnings and shutters • Doors and windows • Siding and plaster application • Landscaping and hardscaping • Safety enhancements{lighting,etc} • ADA public compliance • Other improvements as approved by the City Minimum Qualifications • Buildings are designed for first-floor retail,restaurant,or commer ial purposes • Applicants should be able to demonstrate successful continuous operation for the previous two years. Applicants with fewer than two years of operation will be i teemed eligible at the discretion of the City Manager or designee • Businesses must be in compliance with city code or be using funds in conjunction with upgrades to meet city codes. • Property owner must be the program applicant or must approve an application submitted by a tenant • Applicants must submit bids from at least three licensed contractc rs for project work. • Contractors making improvements must possess a business license through the City and possess workers comp insurance. Program Eligibility • Small business participation is encouraged. • Business must present all relevant documentation in regards to their application. • Tenant applicants cannot be a big-box store or publicly traded company. • City must pre-approve all projects and inspect them upon completion before funds are issued. In certain cases, 25% of grant amount can be provided o a licensed contractor for supplies/materials • Improvements must be utilized for a complete structure. Improvements for individual units in a multi-tenant building will not be considered. • The City reserves the right to deny any applications based on funding availability, improvements requested,etc. HB -33- Item 3. - 4 Revolving Loan Program The Commercial Fagade Rehabilitation Program provides an opportunity to apply for a secured loan of up to $100,000 with 3% simple interest through the City I;a�ade Rehabilitation Loan program Loan repayment will be based on a 3-1 0 year amortization schedule The City will expedite the planning review process for projects participating in the revolving loan program Maintenance of the improvements made through the revolving loan program must meet the standards determined by the City throughout the loan timeframe. properties not adequately maintained will be ineligible for future assistance on commercial fagade improvements and will need to be restored to compliance with the City's maintenance standards at property owner's expense, loan funds may also be subject to immediate repayment. The secured loan can be used separately or in conjunction with the grant program. Grant Program Under this program, the City may provide a grant of up to 50% of the cost of eligible constiuction activities The two tiers of the grant program are as follows a Up to $5,000 o Signage, lighting, hardscaping,and landscaping improvements • Up to$25,000 o Improvements related to code compliance or other projects approved at the discretion of the City Commercial properties are limited to one grant per five yeas period Receipt of the grant is subject to project inspection by City staff and the submission of complete documentation of project costs, invoices, and contracts The City will expedite the planning review process for projects that arc awarded the fagade improvement grant If conditions of the grant agreement are met, the funds dispersed through this grant program are not required to be repaid Awarded funds will automatically be utilized first in the payment of any city fees associated with the project(foi example planning application fees or building permit fees). Program Priority The following items will be considered as a basis of assigning priority: • Property owner investment,higher priority for higher investment • Building facades/signage do not meet City design guidel Ines • Improvements requested are to satisfy City code • Contract locally for increased project preference Item 3. - 5 xB -34- MA K. ) u� The Commercial Facade Rehabilitation Program provides, funding in the form of grants and low interest loans for commercial property owners and/or tenants, to cooperatively update and improve commercial propertiElS. Eligible projects include exterior pai t, stucco repair, doors, windows, signage, and a.+est tic features in addition to safety features and public ADA compliance. Revolving Loan Program ' This program is designed o provide business owners m with an opportunity to ap ly for a secured loan with 3%simple interest. Loan i epayment will be based on a 3-10 year amortization schedule. The City will �- work with the owner to fa ilitate the planning review process for projects. Loans up to $100,000 are available to eligible parti ipants. urant Program Grants of $5,000 and up to $25,000 arn available and can be used alone or in conjuction with the Commercial Fa- cade Loan Program for improvements such as sig age, lighting hardscape, and landscapeimprovements. Awarded funds will be applied first to the payment of any City fees associated with the project. For more information, please visit HBBiz.corn or call (714) 536-5547 Al Office of Business Development 2000 Main Street, Huntington Beach, CA 9 648 N3,i1`IP tm`i$@Pd'� QIlStt1E'SS DQYeIQPRIBtft RB _35_ Item 3. - 6 K) as P quirements rogram "'e Tenant applicants cannot be a big-box store or a publicly traded company. City must pre-ap:)rove all projects and *;'g ?A" inspect them upor completion before funds V, 114" = g are issued. In certain cases, 25% of grant 11"M 1, amount can be provided to a licensed con tractor for su ppties/materials. For a full list of requirements, view the Facade Rehabilitation Program page at at HBBiz.org c Program Priority L Pri oriti will be based on- Applicants with a higher person at funding investment in as the project. T Eft. If fur ds are used to meet City aesthetic design standards. AtLwft Improvements requested are _1'ndwapoh i to melt City code compliance. t N Get started on your re ovations, contact us today Get in touch with us today and we will answer your questions, determine eligibility and help get you started. The Office of Business Development (714)536-5547 Max.DaffrCinrF)virfrity-hb.org Item 3. - 7 HB -36- .� COMMERCIAL FACADE IMPROVEMENT APPLICATION AS Loan El One) Grant • APPLICANT INFORMATION APPLICANT: PROPERTY OWNER: MAILING ADRESS: APPLICANT BUSINESS LICENSE NUMBER: CONTACT INFORMATION: PHONE FAX E-MAIL PROJECT INFORMATION PROJECT ADDRESS: APN: APPROXIMATE TOTAL PROPOSED PROJECT COST: BREIFLY DESCRIBE SCOPE OF PROPOSED IMPROVEMENTS: ESTIMATED TIME FOR COMPLETION: PLEASE ENCLOSE CURRENT PICTURES OF THE PROPERTY TO BE IMPROVED PROPERTY OWNER AUTHORIZATION/CERTIFICATION I have received and completed this application and consent to its filing. The information provided is accurate to the best of my knowledge. I hereby appoint as authorized agent for this Commercial FaVade Improvement Program application. I understand my signature will be required for the processing of the grant/loan'. HB -37- Item 3. - 8 A7TT7ACnLJMENT #2 RECORDING REQUESTED BY: ) WHEN RECORDED MAID TO. ) Space Above this line for Recorder's Use " FACADE REHABILITATION GRANT MAINTENANCE AGREEMENT (ADDRESS) RECITALS This Facade Rehabilitation Grant Maintenance Agreement (`-Agreement") is entered into as of (date) by and between the CITY OF HUNTINGTON BEACH, a municipal corporation ("City"), and A. is the owner of in the City of Huntington Beach, California, ("Property"). The Property is shown and legally described on the attached Exhibit A which exhibit is incorporated herein by reference B ("Grantee") has applied to the City through the Office of Business Development Commercial Facade Rehabilitation Prog7am to obtain funds for implementation of certain facade improvement activities located on the Property NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, agrees as follows: TERMS 1 Grant Terms- . in exchange forreceivirg, { )hereby covenants and agrees to implement only the approved improvements to the property as detailed on the attached approval letter dated and incorporated herein as exhibit 16•50861130760 Item 3. - 9 HB -38- Pursuant to the attached approval letter. the approved improvements funded by the Commercial Facade Rehabilitation program must be maintained for a period of years from the completion date Upon date of completion. Grantee shall physically submit to the City a notice of project completion. accompanied by pictures of the improvements made through the use of granted funds. Should the Grantee desire to update or remodel the improvements previously completed with grant funds within the maintenance period. the City must review and approve the changes. Additionally, projects funded through the Commercial Facade Rehabilitation Progam must not be sold for a minimum of three years from the date of project completion. If sold withm three years of the completion date,Grantee is responsible for full repayment of the grant plus interest before completion of the sale ?. Security Interest As security for the performance of the obligations of stated herein. both parties stipulate that ibis agreement shall constitute a lien against the Property under California Civil Code Section 2881 in the amount of (S } on the Property if conditions of grant approval are not upheld Such lien shall be extinguished upon payment in full of the balance of the grant. This covenant shall run with the land and be binding upon all successors in interest as referenced by Section 12. Upon completion of the maintenance covenant,the lien on the property will be removed 3 Entitlements. Grantee is responsible for all city fees relating to the project including but not limited to. development fees, permits, and entitlements This agreement shall not guarantee or replace any entitlements_ permits, or any other Cit) requirements related to the project. 4 Maintenance Grantee shall. at its own cost and expense_ preserve the facade improvements as described in the Final Letter of Approval, in the same character, quality and condition as that which existed on the effective date of the project completion. 5 Effect of Breach: Failure to maintain facade improvements funded by this grant will constitute a breach in this agreement. Once declared in breach, Grantee will be given 30 days to remedy, at which time, the grant must be repaid in frill if acceptable facade conditions are not met. 4 No Cancellation No breach of any provision of this Agreement shall entitle grantee to cancel, rescind or otherwise terminate this Agreement or the obligations created thereby. Should the Grantee or its successors submit plans to remodel the site within the term of this Maintenance Agreement the City, at its own discretion, may terminate the Maintenance Agreement. 5 Partial Invalidity. Should any provision of this Agreement be held by a court of competent jurisdiction to be either invalid, void, or unenforceable, the remaining provisions of the Agreement shall remain in full force and effect unimpaired by the holding. 10-50861130760 xl3 .39- Item 3. - 10 6 Governing Law- This Agreement shall be construed, interpreted, and enforced under and in accordance with and governed by the laws of the State of California. 7. Amendments- Tlus Agreement may be amended, modified, and/or supplemented only by the written agreement of Grantee and the City. which amendment modification, and/or supplement shall be effective and binding upon Grantee. T S. Riahts and Remedies Are Cuinulazive The rights and remedies of the parties and the City are cumulative. and the exercise by either party or the City. of one or more of such rights or remedies shall not preclude the exercise by it. at the same or different times, of any other rights or remedies for the same default or any other default by any party. R Interpretation of Agreement- This Agreement has been negotiated at arm's length and between persons sophisticated and knowledgeable in the matters addressed in this Agreement In addition, each party has been given the opportunity to consult with experienced and knowledgeable legal counsel. Accordingly, any rule of law (including Civil Code section 1654) or legal decision that would require interpretation of any ambiguities in this Agreement against the party that has drafted it is not applicable and is waived. The provisions of this Agreement shall be interpreted in a reasonable manner to affect the purpose and intent of the parties to this Agreement 10. Time of the Essence: Time is of the essence of this Agreement. ] I. Further Assurances: The parties agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Agreement l?. Binding on Successors This Agreement shall be hindin4 upon and shall inure to the benefit of the City and Borrower and their respective successors and assigns and to the successors and assigns of Borrower or any portion thereof. If Grantee's property is transferred, the Maintenance Covenant will remain in effect for the life of this agreement or until the successor obtains approval from the City for acceptable plans to remodel of the site. 10-50861130760 3 Item 3. - 11 xB -40- 13. Recordation: When this agreement has been approved and executed by all parties, City will cause this Agreement to be recorded in the Office of the Orange County Recorder at its sole cost and expense. IN WITNESS WHEREOF, Borrower has executed this Agreement as of the date first wntten herein above. Owner CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California By pant name Assistant;City Manager APPROVED AS TO RM: By- print name City orney by.a 11z,%-Il1ka Date I6-508611 30760 4 HB -41- Item 3. - 12 ATTACHMENT V loe RECORDING REQUESTED BY- } Pt ) WHEN RECORDED MAIL TO: } } Space Above this line for Recorder's Use FACADE REHABILITATION LOAN MAINTENANCE AGREEMENT (ADDRESS) RECITALS This Facade Rehabilitation Loan Maintenance Agreement ("Agreement") is entered into as of (date) by and between the CITY OF HUXTINGTON BEACH. a municipal corporation ("City"). and A is the owner of _ in the Cit) of Huntington Beach. California. ("Property"), The Property is shown and legally described on the attached Exhibit A which exhibit is incorporated herein by reference B. ("Borrower") has applied to the City through the Office of Business Development Commercial Fagade Rehabilitation Program to obtain funds for implementation of certain fagade improvement activities located on the Property. NOW. THEREFORE,for good and valuable consideration,the receipt and sufficiencv of which are hereby acknowledged. agrees as follows: TERMS 1 Loan Terms: in exchmgeforreceiving$ ( }hereby covenants and agrees to implement only the approved improvements to the property as detailed on the attached approval letter elated and incorporated herein as exhibit_ I5-5086/I30761 1 Item 3. - 13 HB -42- Pursuant to the attached approval letter. the approved improvements funded by the Facade Rehabilitation Program must be maintained for a period of years from the completion date. Upon date of completion, Borrower shall physically submit to the City a Notice of project completion accompanied by pictures of the improvements made through the use of loaned funds Should the Borrower desire to update or remodel the improvements previously completed iA ith loan funds within the maintenance period, the City must review and approve the changes Additionally, projects funded through the Commercial Facade Rehabilitation Program must not be sold for a minimum of three years from the date of project completion. If sold within three years of the completion date. Borrower is responsible for full repayment of the loan plus interest before completion of the sale. 2 Manner of Payment: hereby covenants and agrees to repay the Loan described in Paragraph 1 as follows: Payment over years at 3% interest with the first payment to be made six (6) months following issuance of the final City approvals for unplementation of applicable improvements Each ensuing payment will be made annually, on or before the anniversary date of the first payment. The City will send to the Borrower an invoice for each payment, payable within 30 days of the arniversary date. Borrower is solely responsible for providing current and real time contact and address information to the City. A prepayment of the entire balance in full including interest to date will be permitted without penalty to Borrower 3 Security Interest. As security for the performance of the obligations of stated herein, both parties stipulate that this agreement shall constitute a lien against the Property under California Civil Code Section 2981 in the amount of ( ) on the Property if conditions of loan approval are not upheld. Such lien shall be extinguished upon payment in full the balance of the loan. This covenant shall run with the land and be binding upon all successors in interest as referenced by Section 12. Borrower may request termination of the lien once the balance of the loan has been repaid. 4 Entitlements: Borrower is responsible for all city fees relating to the project including but not limited to, development fees, permits, and entitlements This agreement shall not guarantee or replace any entitlements. permits, of any other City requirements related to the project. 5. Maintenance: Borrower shall, at its own cost and expense, preserve the facade improvements as described in the Final Letter of Approval in the same character, quality and condition as that which existed on the effective date of the project completion. 6. Effect of Default. Failure to pay in a timely manner will result in a default of said loan Borrower will be given notice of default and an invoice to pay within 30 days, at which time. the payment must be brought current. or the entire loan balance including interest to date will be due and payable in full. 16-50861130761 2 HB -43- Item 3. - 14 Failure to maintain facade improvements funded by this lean will constitute a Default Of this agreement Once declared in default, Borrower -will be provided written notice and given 30 days to remedy. at which time, the loan must be repaid in full if acceptable facade conditions are not met. 4 NO Cancellation- NO breach of any provision Of this Agreement shall entitle Borrower to cancel, rescind Or Otherwise terminate this Agreement Or the obligations created thereby Should the Borrower or its successors submit plans to remodel the site within the term of this Maintenance Agreement, the City, at Its own discretion, may terminate the Maintenance requirements of this agreement. Regardless of future site development. Loan balance will be repaid in full by borrower or successor 5 Partial Invaliditv Should any provision of this Agreement be held by a court of competent jurisdiction to be either invalid. void. or unenforceable. the remaining provisions of the Agreement shall remain in full force and effect unimpaired by the holding. 6. Governing Law This Agreement shall be construed, interpreted, and enforced under and in accordance with and governed by the laws of the State of California 7 Amendments. This Agreement ma} be amended, modified, and/or supplemented only by the written agreement of the Borrower and the City, which amendment, modification, and/or supplement shall be effective and binding upon Borrower 8 Rights and Remedies„Are Cumulative The rights and remedies of the parties and the City are cumulative, and the exercise by either party or the City, of one or more Of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by any party. 9. Interpretation of Agreement. This Agreement has been negotiated at arm's length and between+ persons sophisticated and knowledgeable in the matters addressed in this Agreement In addition, each party has been given the opportunity to consult with experienced and knowledgeable legal counsel. Accordingly, any rule of law (including Civil Code section 1654) or legal decision that would require interpretation of any ambiguities in this Agreement against the party that has drafted it is not applicable and is waived. The provisions of this Agreement shall be interpreted in a reasonable manner to erect the purpose and intent of the parties to this Agreement. 10. Time of the Essence. Time is of the essence of this Agreement 16-5086/13 a76 I 3 Item 3. - 15 1413 -44- 11. Further Assurances: The parties agree to execute such other documents and to -take such other action as may be reasonably necessary to further the purposes of this Agreement. ]2 Binding on Successors- This Agreement shall be binding upon and shall inure to the benefit of the City and Borrower and their respective successors and assigns and to the successors and assigns of Borrower or any portion thereof If Borrower's property is transferred; the maintenance covenant and loan repayment schedule will remain in effect for the life of this agreement or until the successor obtains approval from the City for acceptable plans to remodel of the site. 13. Recordation. Virhen this agreement has been approved and executed by all parties, City will cause this Agreement to be recorded in the Office of the Orange County Recorder at its sole cost and expense IN WITNESS WHEREOF. Borrower has executed this Agreement as of the date first written herein above Owner CITY OF HUNTTNCTON BEACH, a municipal corporation of the State of California By: print name City Manager APPROVED AS TO FRM: By' . print name City Attorney *1,0 t t"tr t1 Date 16-5086/130761 4 HB -45- Item 3. - 16