HomeMy WebLinkAboutAGENDA REPORT 1991 0220 CC REG ITEM 11A M2.100(g)
x - FEB 15 '91 15:008 CHICAGO/EMBASSY P.2/3
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2() 1991 THEpec
February 14, 1991 AC .,.. i •
EMBASSY
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B, �.5omar,"Airy/ INC
Patrick Richards -VIA FACSIMILE-
CITY OF MOORPARK
799 Moorpark Avenue •
Moorpark, CA 93021
Re: Peach Hill Plaza •
Request for Six Month Extension
Dear Pat:
We were finally able to meet with our lender, Citicorp
Real Estate, this week. After going through the status of
the project in detail, Citicorp concluded that it would not
be willing to renew our loan commitment and fund the
construction unless we were willing to commit substantial
additional funds to the project .
After careful discussion within the partnership, we
have decided that we cannot proceed with this project .
While we will sustain a significant loss on this project
( four years and hundreds of thousands of dollars) , there is
greater risk associated with building the project under
these new conditions.
The key problem is the tremendous public improvement
costs that the City is requiring us to bear. The estimated
costs of these improvements is over 10% of our estimated
$8. 8 million project cost . This , coupled with the delays we
faced in getting the project approved, effectively
terminating any possibility of profit .
At the same time, we would like to petition the City
Council for a long term extension of the Development
Agreement. We are looking for a three to four year
extension of the Agreement . While this may seem to be a
contradiction, we believe this action could significantly
benefit both the City and ourselves.
We are discussing a plan for the lender to take back
the property. The lender feels strongly that the heavy
burden of installing public improvements is unreasonable.
Its position will be to allow the entitlements to expire,
hold the property until other developers ( i . e. Carlsberg,
etc. ) build the necessary improvements and then obtain new
entitlements . Since the bank has the resources to sit and
wait , this line of action would take years and the property
would sit vacant until something is done.
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• • FEB 15 '91 15:09 CHICAGO/EMBASSY P.3/3
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If we are granted a long term extension of the
Development Agreement, the City can realize several
benefits . First , the lender may be able to attract another
developer to finish the project under the terms and
conditions of the Agreement since the project is close to
obtaining building permits . Instead of a vacant site, this
site could be developed within the next few years.
Secondly, an extension would lock in the items which
•
have been already agreed to. The time and energy which both
we and the City have spent in creating an acceptable
1 project would not be lost. The public improvements as well
as the design elements (courtyard, waterfall , etc. ) would
be transferred with the property.
The negative side to this discussion is that neither
we nor the lender will be willing to pay any monies towards
public improvements at this time. Of course in the event
the approvals are allowed to expire, not only will no money
be paid, the agreement to install the public improvements
will also be terminated. The extension should be given in
the hope that the project will proceed as approved.
Otherwise, as unentitled land in today' s economy, this site
will sit empty for the foreseeable future.
With an extension, Citicorp may also be willing to
free us from personal guarantees related to the project
which would cause us further financial hardship. We have
given our best effort to try to put this project together
in the face of tremendous adversity and would like to see
that our efforts have not been totally wasted. We believe
that there is nothing to lose by granting this extension
and the City could still reap substantial benefits if the
project is developed.
We will be at the City Council meeting on February
20th and look forward to seeing you there. Please contact
us if you have any questions.
Sincerely,
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Kenneth Shishido