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AUTHORIZE FACADE IMPROVEMENT FORGIVABLE LOAN OF $99,500 TO PINK OCEAN HOSPITALITY, LLC FOR THE PROPERTY LOCATED AT 33 NORTH CENTER STREET
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RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Authorizing a Facade Improvement Forgivable Loan to Pink Ocean Hospitality, LLC, for the commercial property located at 33 North Center Street in the amount of $99,500; and
2. Authorizing the City Manager, or his designee, to take all actions necessary and appropriate to carry out the purpose and intent of the resolution.
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Summary
The owner of the property, Yan Shi, Managing Member of Pink Ocean Hospitality, LLC, has applied for a Facade Improvement Forgivable Loan to make exterior improvements to the commercial property at 33 North Center Street (Attachment A - Vicinity Map; Attachment B - Property Photo; Attachment C - Color Rendering of Proposed Improvements). The total cost of the project is $149,000. The financial assistance requested from the City of Stockton is $99,500, which will be allocated from the federally funded Community Development Block Grant program. The property owner will contribute $49,500 towards the project, which meets the matching funds requirements within the Commercial Facade Loan Program guidelines. The proposed project will enhance the appearance of the building and have a positive impact on surrounding properties.
DISCUSSION
Background
In 1988, City Council adopted the Community Development Block Grant Commercial Loan Program. The program included the Commercial Rehabilitation Program, the Facade Improvement Program and the Emergency Loan Program. The adoption of these programs help provide funds to improve the downtown area. At that time, the Facade Program was limited to the Central Stockton Redevelopment Area and was limited to $10,000 as a one-time loan per commercial property.
In 1999, City Council authorized revisions to the Commercial Loan Program, which included changes to the Facade Improvement Program. These changes allowed larger properties the ability to receive additional financial assistance in improving their facade. For every 50 lineal feet of frontage, a property is eligible for a $10,000 base grant. A property owner is eligible for an additional base grant for every 50 lineal feet of building frontage. However, in order to qualify for additional base grants, the property owner would have to contribute at least $5,000 (a maximum of $10,000) in matching funds for each additional base grant obtained.
The total project cost is $149,000 and, of this amount, $50,000 is in the form of base grants from the City and $49,500 is the City’s matching funds portion of the project. The property owner is responsible for the remaining $49,500, which is their matching funds obligation under the program guidelines. The following table demonstrates the breakdown of funding for this project:
CITY PROPERTY TOTAL
OWNER
Base Grant #1 $10,000 -- $10,000
Matching Funds #1 $10,000 $10,000 $20,000
Base Grant #2 $10,000 -- $10,000
Matching Funds #2 $10,000 $10,000 $20,000
Base Grant #3 $10,000 -- $10,000
Matching Funds #3 $10,000 $10,000 $20,000
Base Grant #4 $10,000 -- $10,000
Matching Funds #4 $10,000 $10,000 $20,000
Base Grant #5 $10,000 -- $10,000
Matching Funds #5 $9,500 $9,500 $19,000
TOTAL $99,500 $49,500 $149,000
On December 16, 2003, City Council approved revisions to the Facade Improvement Forgivable Loan Program authorizing additional areas outside of Downtown Stockton in need of financial assistance. The Commercial Facade Improvement Forgivable Loan Program was further revised by the City Council in July 2007, to expand the program boundary beyond the downtown core and increase funding available to commercial property owners.
Present Situation
Yan Shi, Managing Member of Pink Ocean Hospitality, LLC operates the Howard Johnson Hotel, located at 33 North Center Street, at the corner of Center Street and Weber Avenue. Ms. Shi has requested financial assistance in the amount of $99,500 for facade improvements to the property. The subject property is within the west end waterfront area and is eligible for the Facade Loan Program. As noted above, the Facade Loan Program eligibility is based on location, matching funds and a commitment to maintain the exterior of the building, keeping it free of graffiti and other blighting influences. Beyond these basic eligibility criteria, facade loans are considered at the request and initiative of the applicants and available funding per fiscal year.
This project involves the exterior renovation consistent with the City's Design Review Guidelines. Proposed improvements as part of the facade improvement project include the following:
• Remove all exterior lighting and replace with LED outdoor lighting;
• Demo existing east wall lobby entrance and install new automatic door; and
• Pressure wash all paintable areas, repair stucco cracks, and paint the entire facade with new color scheme.
Under the Facade Improvement Forgivable Loan Program described above, this project is eligible for up to $100,000 in facade loan funds. The total cost for the project is $149,000. The requested assistance will be provided in the form of a forgivable loan in the amount of $99,500 to be financed in accordance with program guidelines over five (5) years at 10% simple interest. The property owner is responsible for the remaining $49,500.
Under this program and per the Facade Improvement Forgivable Loan Program Guidelines, the principal and interest payments are forgiven on an annual basis so long as the property owner maintains the exterior of the building, keeping it free of graffiti and other blighting influences.
The anticipated project will improve the appearance of the building and have a positive impact on surrounding properties. This project encourages and complements the investment of private sector funds.
ENVIRONMENTAL CLEARANCE
City staff determined that the proposed improvements will not have an adverse effect on historic properties. The California State Historic Preservation Office has concurred with this determination pursuant to 36 Code of Federal Regulations, Part 800 (§106).
FINANCIAL SUMMARY
This action will have no impact on the General Fund as the program is supported through federal Housing and Urban Development Department funding. Sufficient funds are available in account number 054-8521-640.20-51, Community Development Block Grant Commercial Rehab Loans, for the $99,500 forgivable loan, which will leave a balance of $50,500 for additional facade loans under this fund for fiscal year 2015-16.
Attachment A - Vicinity Map
Attachment B - Property Photo
Attachment C - Color Rendering of Proposed Improvements