City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: DECEMBER 20, 2022 FROM: COMMUNITY & ECONOMIC DEVELOPMENT WARDS: ALL
DEPARTMENT
SUBJECT: CONSENT TO ENCUMBRANCE AND ESTOPPEL CERTIFICATE WITH JVE HOLDING, LLC AND COMMONWEALTH BUSINESS BANK – 1408-1520 SOUTH E STREET, SAN BERNARDINO, CALIFORNIA ISSUE:
Approve the Consent to Encumbrance and Estoppel Certificate with JVE Holding, LLC and Commonwealth Business Bank - 1408-1520 South E Street in San Bernardino, California.
RECOMMENDATIONS:
That the City Council:
Approve the Consent to Encumbrance and Estoppel Certificate (Certificate) with JVE Holding, LLC and Commonwealth Business Bank; and Authorize the City Manager, or his designee, to execute the Consent to Encumbrance and Estoppel Certificate, including making minor non-substantive changes, and to sign all documents necessary to complete the transaction.
BOARD RECOMMENDATION:
On November 28, 2022, the Board of Public Utilities unanimously recommended that the City Council approve the Consent to Encumbrance and Estoppel Certificate with JVE Holding, LLC.
BACKGROUND:
The City, through Riverside Public Utilities (RPU), owns the 5.13-acre parcel of land located at 1408-1520 South E Street in San Bernardino County, CA (Property). The Property was first developed in 1985 by the previous tenant and has several commercial buildings which are subleased to small businesses.
On December 18, 2012, City Council approved a 55-year ground lease (Lease) with CRE Retail, LLC for commercial, office, and retail use of the Property.
On October 16, 2014, CRE Retail assigned its rights and obligations under the Lease to JVE Holding, LLC (JVE).
On October 16, 2015, the Board of Public Utilities recommended approval of a Certificate between JVE and Commonwealth Business Bank (Lender) allowing JVE to refinance their loan in the amount of one million three hundred thousand dollars ($1,300,000.00). City Council approved the item on November 10, 2015.
On July 24, 2017, the Board of Public Utilities recommended approval of a second Certificate between JVE and Commonwealth Business Bank, allowing the Tenant to refinance their loan in the amount of two million dollars ($2,000,000.00). City Council approved this item on August 8, 2017.
DISCUSSION:
JVE is requesting approval of a third Consent to Encumbrance and Estoppel Certificate to increase the amount financed to two million eight hundred thousand dollars ($2,800,000.00). To obtain the financing, the Lender is requiring JVE to provide, as security, a leasehold interest in the Lease.
The City is also required to consent to the leasehold interest. By executing the Certificate, the City will be required to provide the Lender with duplicate copies of any default notices sent to JVE so that the Lender can cure any defaults and assume the Lease. The City must also attest that JVE is not currently in default under the lease.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 6 – Infrastructure, Mobility & Connectivity and Goal 6.2: Maintain, protect, and improve assets and infrastructure within the City’s built environment to ensure and enhance reliability, resiliency, sustainability, and facilitate connectivity.
The item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – By approving the Consent to Encumbrance and Estoppel Certificate, the City demonstrates that Riverside is committed to serve the public interest, benefitting the City’s diverse populations that results in the greater public good.
Equity – Approving the Consent to Encumbrance and Estoppel Certificate ensures every member of the community has equal access to share the benefits of community progress.
Fiscal Responsibility – Approving the Consent to Encumbrance and Estoppel Certificate ensures responsible management of the City’s financial resources while providing quality public services to all.
Innovation – By approving the Consent to Encumbrance and Estoppel Certificate, the City demonstrates how it prepares for the future through collaborative partnerships and adaptive processes outside the City boundaries.
Sustainability & Resiliency – Approving the Consent to Encumbrance and Estoppel Certificate ensures the City’s capacity to persevere, adapt and grow during good and difficult times alike.
FISCAL IMPACT:
There is no fiscal impact associated with this report.
Prepared by: Jennifer Lilley, Community & Economic Development Director Approved by: Rafael Guzman, Assistant City Manager
Certifies availability
of funds: Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/City Treasurer Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Consent to Encumbrance and Estoppel Certificate
Presentation
Consent to Encumbrance and Estoppel Certificate ● Page 2