8M Consent 2008 0902 - Laserfiche WebLink

Home

As part of the purchase agreement for 1717 Doolittle Drive, Comcore Development (an affiliation of McGrath Properties which Terrance McGrath is the managing member) secured an option to purchase 1720 Doolittle Drive, which consists of a 3.5 acre parking lot shown in Exhibit A. This property was environmentally contaminated by the Nestle Plume, and is currently being remediated by Arcadis. Comcore Development maintains an option to purchase this property when the contamination is reduced to an acceptable level. In June 2006, in order to enhance the future development of 1720 Doolittle Drive and at the urging of the Agency, McGrath Properties (through a separate entity, 1750 Doolittle, LLC) purchased. the adjacent property at 1750 Doolittle Drive, which consists of the .44 acres at the corner of Williams Street and Doolittle Drive. Combination of these two adjacent parcels will allow for a larger and more cohesive development at this critical intersection. Since purchasing 1750 Doolittle Drive, McGrath Properties has learned that the environmental remediation at 1720 Doolittle Drive will take longer than originally anticipated. This, along with concerns regarding the slowing economy, has created a situation in which it is economically impractical to exercise the purchase option and develop these sites. In addition, current market conditions have made it difficult to secure conventional financing to pay off the seller-financed purchase of 1750 Doolittle Drive. The term of this seller-financed loan expires on June 30, 2008. In order to allow McGrath Properties to continue their efforts to develop the primarily undeveloped 1720 and 1750 Doolittle Drive sites into a viable industrial building site, the Agency recommends extending 1750 Doolittle, LLC an interest only loan for $559,200. This loan will provide $536,000 to pay-off the existing seller-financed loan for the purchase of 1750 Doolittle Drive and $23,200 to demolish the small building located on the property. The loan will be in the form of a five (5) year, six percent (6%) interest only loan. 1750 Doolittle, LLC will make interest only payments to the Agency through July 30, 2013 with a balloon payment on August 1, 2013. If Comcore Development is unable to secure an extension of their option to purchase the adjacent 1720 Doolittle Drive, the loan will mature with the expiration of the option on November 30, 2010. The loan will be secured against the real property located at 1750 Doolittle Drive with a Deed of Trust and Promissory Note to be recorded with Alameda County. The Loan Agreement includes a provision granting the Agency first right of refusal to purchase the property for the loan amount of $559,200. Current City Council Policy - N/A Previous City Council Action(s) - N/A City Council Committee Review and Action At the meeting of July 10, 2008 the Business and Housing Development Committee reviewed the business terms for the loan agreement with 1750 Doolittle LLC. It was the