HomeMy WebLinkAboutR-1998-107 Great Western Building ProjectRESOLUTION NO. R-98-10 7
A RESOLUTION authorizing and directing the City Manager and the City Clerk to execute
and submit an application, including all understandings and assurances
contained therein, to the U.S. Department of Housing and Urban
Development (HUD) for an Economic Development Initiative (EDI) grant
of $1,000,000 for the renovation of the Great Western Building and adjacent
plaza area located. in Yakima, Washington.
WHEREAS, economic development is a priority of the City of Yakima, and the City
intends to approach economic development on a comprehensive basis involving public, private
and community-based efforts to achieve new investment and redevelopment in the City; and
WHEREAS, under Section 108 of the Housing and Community Development Act of
1974, federal guarantees are available for loans obtained for the purpose of funding economic
development activities that will create new permanent full-time jobs for low and moderate
income residents; and
WHEREAS, JEM Properties, a local limited liability corporation, desires to renovate the
Great Western Building and develop the adjacent plaza area for retail sales; and
WHEREAS, the renovation of the Great Western Building and the development of the
r adjacent plaza area for retail sales will enhance downtown economic vitality,. create a number
of new permanent full-time jobs for low and moderate income residents, and is in the public
interest; and
WHEREAS, the Office of Neighborhood Development Services (ONDS) of the City of
Yakima recommends that the City apply for a $1,000,000 EDI grant to help fund the renovation
of the Great Western Building and the development of the adjacent plaza area; and
WHEREAS, an EDI grant can only be used in conjunction with a Section 108 loan, and
in applying for the EDI grant the City would have to commit that if the grant is approved, the
City will apply for a Section 108 loan within 60 days of notification of the grant award; and
WHEREAS, as consideration for the City applying for an EDI grant and Section 108
loan, JEM Properties agrees to the following conditions:
• To repay any and all Section 108 loan funds received for said renovation
project, and
(lk)res/edi grant -great „estern buil/pm
• To create one (1) new permanent full-time job for every $35,000 of HUD
funds received for said renovation project, and
• To take all reasonable and necessary steps to ensure that fifty one percent
(51%) of said new jobs will be filled from low and moderate income
residents of the City's Community Empowerment Zone, and
• To comply with all applicable state and federal laws and regulations.
WHEREAS, based on the foregoing, the City Council has determined that it is in the
best interest of the City to authorize said EDI grant application and corresponding Section 108
loan application, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager and the City Clerk are hereby authorized and directed to execute and
submit an application, including all understandings and assurances contained therein, to the
U.S. Department of Housing and Urban Development (HUD) for an Economic Development
Initiative (EDI) grant of $1,000,000 for the renovation of the Great Western Building and
adjacent plaza area located in Yakima, Washington. The City Manager is also hereby
designated as the official City representative to act in connection with the grant and loan
applications, and is authorized to take such additional actions as may be necessary and prudent
to complete the grant and loan application process. 5,
ADOPTED BY THE C1'1 Y COUNCIL this 84 day of uLy , 1998.
ATTEST:
City Clerk
(Ik)resiedi grant -great western buil/pm
Puccinel_i, Mayor
MEMORANDUM
July 9, 1998
To: Honorable Mayor, John Puccinelli
Members of City Council
Economic Development Committee
From: Micheal A. Morales, Grants Writer
Re: Economic Development Initiative Grant/Section 108 Loan Application
As discussed at our previous meeting, a notice was published inviting proposals
from developers for consideration of an application to the U. S. Department of
Housing and Urban Development's Economic Development Initiative (EDI)
competition. This competition provides a window of opportunity to combine grant
dollars with a Section 108 loan project. The grant may only be utilized in
conjunction with a Section 108 Loan. Attached is a brief overview of the Section
108 loan program, as discussed at our previous meeting.
In response to the notice, three inquiries were received. Of the three inquiries, the
proposal from JEM Development (see attached) was the only project that could
possibly meet the July 30 deadline for the City. The proposed project v ould
redevelop the Great Western Building into a hotel and retail center for the
downtown, while preserving the historic integrity of the building.
Based on the financial capacity of the developer, the potential for the proposed
project to impact and benefit the Downtown retail area and surrounding CDBG
target area, and the potential of creating up to 70 new jobs with a majori':
benefiting low and moderate income families, staff recommends City Council
authorize the submission of an application for this project.
If recommended by the committee, the process for the proposed EDI applicu�:�:.
would consist of the following steps:
1. July 21: A resolution by City Council authorizing the submittal of the grant
application and notice of intent to apply for the Section 108 loan upon
successful award.
2. July 30: Application for EDI grant. Application would include a notice of
intent to apply for a Section 108 loan within 60 days of a successful award.
3. October: If application is successful, a full application for a Section 108 loan
for the project would be developed within 60 days of the grant award. If the
grant is not awarded, neither the City nor the developer is obligated to apply for
the Section 108 loan.
4. Public hearings on the Section 108 loan application and the City's 1998
Consolidated Plan (to include the Section 108 loan) would be required as part of
the process.
5. Provided the underwriting criteria established by HUD is agreeable to both the
developer and the City, the loan package must be formally approved by City
Council. Neither the City nor the developer is obligated to accept the loan
package, however, a rejection of the loan package will forfeit the grant award
6. If accepted, the City will reserve a portion of it's future years CDBG allocations
as security for the loan.
This competitive round represents only the second opportunity that HUD has
provided to utilize an economic development grant with a Section 108 loan. While
a Section 108 loan can be applied for at any time, the EDI grant component may
not be available for at least another two years.
Cc: Glenn Rice, Assistant City Manager
William Cook, Manager, Office of Neighborhood Development
SECTION 108 LOAN PROGRAM
The Section 108 Loan Program is a public financing tool for economic development and housing
projects funded by the U.S. Department of Housing and Urban Development (HUD).
The Section 108 Program consists of a 100% federal guarantee against the sale of local notes issued
by a public agency (City of Yakima). The public agency must pledge its future Community
Development Block Grant (CDBG) entitlements to HUD as a contingent funding source if the
assisted project is unable to pay the 108 debt. HUD also requires additional security and a
reasonable project cash flow in addition to CDBG pledge.
SECTION 108 ELIGIBLE ACTIVITIES
Acquisition of Real Property
Rehabilitation of Real Property Publicly Owned
Related Relocation Activities
Related Clearance, Demolition, and Removal
Related Site Preparation
Payment of Financing Costs
Housing Rehabilitation
Economic Development Activities
Construction of New Housing
Debt Service Reserve
Public Facilities
FISCAL CONSIDERATIONS
Terms: Terms can range from three months to 20 years.
Interest Rates: The interest rate to the grantee is based on one of two rates:
1. For interim borrowing, The LIBOR, or London Prime Rate, plus 25 to 50 basis
points.
2. For a permanent note sale, Treasury Notes are used to estimate the cost of
interest., plus 35 to 50 basis points.
Cash Flow: generally, a 15% to 20% buffer or more cash flow in excess of debt service
requirements is favorably reviewed. In financial terms, the net operating income
must generate cash flow 1.15 to 1.2 greater than the debt service requirement.
Security and Collateral:
HUD wants collateral equivalent to approximately 120% of the loan amount.
Security acceptable to HUD include:
Real Property - 80% of appraised market value.
Machinery and Equipment - 80% to 90% of cost/value.
Receivables - 80% of the average in the last 3 years accounts
Inventory - 50% of the last 3 years ending inventory.
Leases - Assignment of leases and rent.
JOB CREATION AND RETENTION
Job creation and retention are two of several public benefits that result from a successful 108
program. To ensure these public benefits, a job creation ration of 1 job to every $35,000 of
Section 108 loan funds is required. Jobs created are also targeted to low and moderate
income residents.
PROCESS AND TIMING
Development of Application by City: 30 to 45 days minimum
Review by HUD Field Office: 15 to 30 days
Review and Approval by HUD Headquarters: 30 to 90 days
Execution of funding approval document: Varies by locality
Contract, agreement and note sent to locality: 30 days after funding approval document
Execution of agreements and note: Varies by locality
Proceeds disbursed by interim lender: 10 days after return of agreements and request,
•h:
6.61
July 7, 1998
Mike Morales
City of Yakima
fAnartment of Community & Economical Development
129 North 2nd Street
Yakima, Washington 98901
Dear Mike,
As you know, I have recently purchased the Great Western Building I am very
much interested in redeveloping this building to enhance the downtown area and at the
same time retain the image and the historical heritage of the Great Western Building
Due to it's close proximity to the Yakima Convention Center I have decided the most
favorable way to benefit the needs of the downtown area would be to redevelop the
building into a hotel The hotel would accommodate approximately 50 to 60 rooms, a
restaurant, retail business on the main floor and meeting rooms on the top floor where
the Masonic Temple is now located.
In researching this project I have spoken to Kathy Coffey, Manager, of the
Yakima Convention Center Bureau and she has strongly supported the need for
additional hotel space in the downtown area due to the increase of conventions in the
Yakima area and the lack of hotel rooms near the Center. She also injected that
women would most likely feel much safer in the mall area environment.
Before making my decision to convert the Great Western into a hotel I traveled
to beth the Seattle area, as well as, Canada and have found the attraction to downtown
area hotels to be greatly beneficial to the cities. Not only do they attract tourist but they
also at the same time encourage and motivate other property owners to improve their
locations.
The hotel, restaurant and retail business' combined would create approximately
70 new jobs in the downtown area. This would include hotel administrative staff, maids,
janitors, waiters/waitresses, cooks, cashiers and clerks. Many of these positions are
entry level positions that would open up new jobs for those just beginning to enter into
the work force in the local area.
I have contacted an architect who is in the process of preparing designs and
determining feasibility for this project. At this time, I have no financing for this
redevelopment plan, therefore, I am requesting a $2,500,000 00 grant/loan from the
City of Yakima.
YAKIMA MALL SHOPPING CENTER CORPORATION
402 E. Yakima Ave., Suite 1400, Yakima, Washington 98901
Phone (509) 248-4040 • FAX (509) 457-8361
PAGE TWO
Mike Morales
July 7 ono
In addition, to the aforementioned project, we are also considering an additional
$2,500,000 project which would coincide with the hotel. This project is for a plaza next
to the Great Western Building which would add an additional 30,000 square feet.
There is no doubt that the City of Yakima would greatly benefit from the
redevelopment of the Great Western building into a hotel, as well as, beautify and
enhance our downtown area.
Thank you for your consideration of this project and please feel free to call if you
are in need of any additional information.
Sincere
o v e io l /�
Joseph R. Morrier
President/CEO
JRM/pjn
Current Zoning
and Utilities
CURRENT ZONING
SR Suburban Residential
R-1 Single -Family Residential
■ R-2 Two -Family Residential
. R-3 Multi -Family Residential
B-1 Professional Business
■ B-2 Local Business
■ HB Historical Business
■ SCC Small Convenience Center
■ LCC Large Convenience Center
■ CBD Central Business District
CBDS CBD Support
M-1 Light Industrial
■ M-2 Heavy Industrial
N Water Line
N Sewer Lines
Future
Land Use
FUTURE LAND USE
Future
Zoning
FUTURE ZONING
SR Suburban Residential
R-1 Single -Family Residential
II R-2 Two -Family Residential
. R-3 Multi -Family Residential
B-1 Professional Business
■ B-2 Local Business
■ HB Historical Business
▪ SCC Small Convenience Center
▪ LCC Large Convenience Center
▪ CBD Central Business District
CBDS CBD Support
M-1 Light Industrial
. M-2 Heavy Industrial
Digital
Orthophoto
Mosaic of Digital
Orthophotography
flown 03/12/94
Low Density Residential
Medium Density Residential
High Density Residential
Professional Office
Neighborhood Commercial
Large Convenience Center
Arterial Commercial
CBD Core Commercial
Industrial
Urban Reserve
CITY OF YAKIMA
DEPARTMENT OF COMMUNITY AND
ECONOMIC DO/ELOPEMENT
129 North Second Street
Yakima, Washington 98901
Phone:(509)675-6113
Fax 15091575-6105
All maps shown at 1' = 100ft
One page Atlas: greatwest
Created: July 16,1998
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting Of: July 21, 1998
ITEM TITLE: Approve Application for a $1 Million Dollar Economic Development Initiative Grant
for the Great Western Building Project.
SUBMITTED BY: William Cook, Neighborhood Development Services Manager
CONTACT PERSON/PHONE: William Cook, Neighborhood Development Services Manager
(575-6101)
SUMMARY EXPLANATION: The Office of Neighborhood Development Services is requesting the
approval to submit an application to the U. S. Department of Housing and Urban Development
(HUD) for a $1 million dollar Economic Development Initiative (EDI) Grant for the Great Western
Building project. This grant may only be used in conjunction with a U. S. Department of Housing and
Urban Development (HUD) Section 108 Loan. In applying for this Grant, the City agrees that if
successful, the City will apply for a Section 108 Loan within 60 days of notice of grant approval.
Future Council action will be required to approve the terms and conditions of any Section 108 Loan
received for the project. Section 108 Loans provide communities with a source of financing for
economic development projects involving job creation. The $1 million dollar Economic Development
Initiative Grant will be used in conjunction with a $1.5 million Section 108 loan to leverage $2.5 million
in private investment for the project development. (Continued on next page)
Resolution X Ordinance_ Contract _ Other (Specify)
Funding Source
,'
APPROVAL FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: Approve Application
BOARD RECOMMENDATION: The Council Economic Development Committee at their meeting of
July 10, 1998 recommended approval of the submittal of the Economic Development Initiative Grant
application and Notice of Intent to apply for Section 108 Loan funds for this project.
COUNCIL ACTION:
The project will fund the renovation of the Great Western Building and adjacent mall plaza area into a
hotel and retail center. The project will be developed by JEM Properties, a local limited liability
corporation with private financing provided by Key Bank. The historic hotel will occupy the second
through seventh floors, while retail activities will be present on the ground level. Additional retail
space will be provided by enclosing the plaza area adjacent to the Great Western Building. Nearly
20,000 square feet of new retail space will result from this project. The hotel will add approximately
41 new guest rooms to the benefit of the Downtown Business Core area and the community's tourism
economy. Surrounding Community Development Block Grant (CDBG) Target Area residents of low
and moderate income will also benefit from the creation of new permanent jobs. The Section 108 Loan
and Economic Development Initiative (EDI) Grant programs require creation of one new permanent job
for each $35,000 of federal financing provided.
Application for this competitive grant process must be received by the U. S. Department of Housing
and Urban Development in Washington, D. C. by July 30, 1998.