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AUTHORIZE A FAÇADE IMPROVEMENT FORGIVABLE LOAN FOR $128,838.76 TO 345 E CHANNEL STREET, LLC, FOR THE PROPERTY LOCATED AT 345 EAST CHANNEL STREET
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Authorizing a Façade Improvement Forgivable Loan to 345 E Channel Street, LLC, for the property located at 345 East Channel Street in the amount of $128,838.76; and
2. Authorizing the City Manager, or 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 345 East Channel Street, 345 E Channel Street, LLC, has applied for a Commercial Façade Improvement Forgivable Loan to make exterior improvements to the property (Attachment A - Vicinity Map, Attachment B - Property Photos, Attachment C - Renderings of Proposed Improvements). The total cost of the project is $197,677.52. The financial assistance requested from the City of Stockton is $128,838.76, allocated from the federally funded Community Development Block Grant (CDBG) program. The property owner will contribute $68,838.76 toward the project, meeting the matching funds requirement within the Commercial Façade Improvement Forgivable Loan Program (Façade Improvement Program) guidelines. The proposed project will enhance the appearance of the building and have a positive impact on the surrounding properties.
DISCUSSION
Background
In 1988, City Council adopted the CDBG Commercial Loan Program. The program included the Façade Improvement Program to improve the downtown area. At that time, the Façade Improvement 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 that allowed larger properties to receive additional financial assistance from the Façade Improvement Program. For every 50 linear feet of street-facing building frontage, a property is eligible for a $10,000 base loan. A property owner may qualify for an additional loan if they contribute at least $5,000 (for a maximum of $10,000) in matching funds for each additional loan obtained, for a total of $20,000 in City funding per 50 feet. Additionally, pursuant to section 5.1 of the program guidelines, “The Economic Development Director, or designees, shall have discretionary authority to reduce or increase funding for a project based upon specific criteria such as remaining funds, impact on surrounding neighborhoods, and financial need.”
Based on the property’s street-facing linear frontage, the building is eligible for five (5) loans, plus matching funds, for a total of $100,000 in City funding with a minimum contribution of $50,000 from the property owner.
The subject property is located within a Low- and Moderate-Income Area and eligible for the Façade Improvement Program. The program eligibility is based on location, matching funds, and a commitment to maintaining the exterior of the building by keeping it free of graffiti and other blighting influences. Beyond these essential eligibility criteria, façade loans are considered at the request and initiative of the applicants and available funding per fiscal year.
Under this program and per the Façade Improvement Program guidelines, the principal and interest payments are forgiven annually if the property owner maintains the exterior of the building, keeping it free of graffiti and other blighting influences.
Present Situation
345 E Channel Street, LLC purchased the commercial property located at 345 East Channel Street in June 2021 after the site had been vacant for 13 years. Since then, the property owner has invested more than $400,000 in interior renovations to utilize the space for a law office. The proposed exterior improvements will include replacing all the windows and painting the entire building for a total project cost of $197,677.52.
After investing a significant amount of private funds in completing the interior renovation of the vacant building, the property owner has requested additional financial assistance to support the completion of the exterior improvements to assist in completing the project to activate the space. Based on the available CDBG funds in the current fiscal year and the proposed projects impact on enhancing the property’s façade, improving the overall appearance of that commercial block in Downtown Stockton, and activating a once vacant building, an additional $28,838.76 has been approved by Economic Development staff to recommend funding for this project.
The property owner will be responsible for the remaining $68,838.76 of the total project cost. Of this amount, $50,000 was their match obligation under the program guidelines, and the additional $18,838.76 is to support the completion of the project. The following table demonstrates the breakdown of funding for this project:
|
|
CITY |
PROPERTY OWNER |
TOTAL |
|
Base Loan #1 |
$10,000 |
-- |
$10,000 |
|
Matching Funds |
$10,000 |
$10,000 |
$20,000 |
|
Base Loan #2 |
$10,000 |
--- |
$10,000 |
|
Matching Funds |
$10,000 |
$10,000 |
$20,000 |
|
Base Loan #3 |
$10,000 |
-- |
$10,000 |
|
Matching Funds |
$10,000 |
$10,000 |
$20,000 |
|
Base Loan #4 |
$10,000 |
-- |
$10,000 |
|
Matching Funds |
$10,000 |
$10,000 |
$20,000 |
|
Base Loan #5 |
$10,000 |
-- |
$10,000 |
|
Matching Funds |
$10,000 |
$10,000 |
$20,000 |
|
Base Loan #6 |
$10,000 |
-- |
$10,000 |
|
Matching Funds |
$10,000 |
$10,000 |
$20,000 |
|
Additional Funds |
$8,838.76 |
$8,838.76 |
$17,677.52 |
|
TOTAL |
$128,838.76 |
$68,838.76 |
$197,677.52 |
City staff will conduct annual inspections to ensure the property is being well maintained and kept free of any graffiti and blight for the duration of the loan. Funds are in the form of a forgivable loan and financed per program guidelines over a six (6) year term at 10% simple interest. As a result of the inspection, the principal and interest payments are forgiven annually and at the end of the term of the loan, the lien will be removed.
ENVIRONMENTAL CLEARANCE
This project is categorically excluded under the National Environmental Policy Act (NEPA) requirements. It has been determined to be categorically excluded under Title 24 of the Code of Federal Regulations - Housing and Urban Development, Section 58.35 (a)(iii). 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 under 36 Code of Federal Regulations, Part 800 (§106).
FINANCIAL SUMMARY
This action will have no impact on the General Fund or to any other unrestricted funds as the program is funded through federal Department of Housing and Urban Development funding. Sufficient funds are available in the Community Development Grant (CDBG) Fund for the $128,838.76 forgivable loan.
Attachment A - Project Vicinity Map
Attachment B - Property Photos
Attachment C - Renderings of Proposed Improvements