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HomeMy WebLinkAboutH-2g - Refinance of the Terrace Apartments Portion of the Balboa Bay ClubCITY OF NEWPORT BEACH. Office of CITY ATTORNEY July 28, 1980 To: The Honorable Mayor and Members of City Council Item No. H -2(g) From: City Attorney Subject: Refinance.of the Terrace Apartments Portion of the Balboa. Bay Club International Bay Clubs, Inc., the lessee of the Balboa Bay Club property, desires to refinance an existing loan against the Terrace Apartments portion of the Balboa Bay Club prop- erty. Presently, there is a primary loan against the Terrace Apart- ments in favor of Union Bank.. In 1971 the City Council autho- rized a loan against the Terrace Apartments portion of the Balboa Bay Club property not to-exceed $13,200,000. In fact, said loan was funded in the amount of $6,650,000, the lendor being U. S, F. Investors in the form of a wraparound encum- brance. The wraparound encumbrance was used to permit the Balboa Bay Club to maintain the original first deed of trust in favor of Union Bank which was at a favorable interest rate. Since the 1971 transaction with U. S. F. Investors, there have been several name changes and minor funding changes in regards to this original authorization. Presently, the lendors on said loan would be City Bank of Beverly Hills and First National Bank of Chicago. The loan is now due and First National Bank of Chicago and International Bay Clubs, Inc., have agreed to refinance the loan in the amount of $2,804,332.64, if the loan closes on or before August 1, 1980. It appears now that the loan will close sometime after August 1, 1980. The new loan will be in the form of a second:.deed of trust, second to the . Union Bank loan, and prior to a third loan on the Terrace Apartments in favor of Oppenheimer Industries. The transaction July 28, 1980 Page Two Refinance of the Terrace Apartments Portion of the Balboa Bay Club to Oppenheimer Industries was approved by the City Council on October 26, 1976. It appears that the requested transaction is no more than a refinancing of an existing obligation and creates no addi- tional financial risk in regard to the Balboa Bay Club Terrace Apartments. It is recommended that the City Council authorize the transaction and the amount authorized in the resolution is approximately $46,000 in excess of the actual request to permit adjustments in the amount of principal and interest due based upon uncertain closing dates. This slight altera- tion should not.make any overall effect in.the transaction and the amount actually funded-will not exceed the principal, interest and other costs involved with closing this trans- action. I am attaching to this memorandum a copy of the letter from Thomas J. O'Keefe, attorney for International Bay Clubs, Inc., in regard to this transaction. Attachment 3 w w R • LAW OFFICES OF THOMAS J. O'KEEFE, INCORPORATED July 7, 1980 Hugh R. Coffin, Esq. City of Newport Beach City Hall 3300 Newport Boulevard Newport Beach, California 92663 Re: International Bay Clubs, Inc. Balboa Bay Club Terrace Apartments and Boat Slips Newport Beach, California Dear. Hugh: • SUITE 400 2323 NORTH BROADWAY POST OFFICE BOX 6099 BANTA ANA, CALIFORNIA 92706 TELEPHONE (7141 636 -1100 I have enclosed the proposed draft of an estoppel letter which is being requested by The First National Bank of Chicago in connection with their rewrite of the existing loan on the Terrace Apartments portion of the Bay Club property. This loan was originally written in the amount. of $6,650,000 as a wrap- around encumbrance in favor of USF Investors, whose name was later changed to Independent Mortgage Trust. City Bank of Beverly Hills was a 50% participant in the loan, and the old USFI interest was assumed by The First National Bank of Chicago in connection with their reorganization. Now that the loan is due, First National has agreed to rewrite it and extend it in its now reduced principal amount of $2,804,332.64. The loan is scheduled to be closed no later than August 1. If any council consent is required, please have it placed on the agenda. It is, however, really a rewrite of an earlier approved loan transaction. If you have any questions, please let me know. Very truly your §, J. . Thomas J O'Keef TOK /lf Enclosure. cc: Mr. W. D. Ray xl a) 0 0 RESOLUTION NO. W4, 4, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH APPROVING A REFINANCING OF THE REDUCED PRINCIPAL OF THE DEED OF TRUST IN FAVOR OF THE FIRST NATIONAL BANK OF CHICAGO ON THE.TERRACE APARTMENTS AT THE BALBOA BAY CLUB WHEREAS, the City of Newport Beach has entered into lease dated March 24, 1948, with the Balboa Bay Club, Inc., a California corporation, which lease has since been amended by instruments dated April 10, 1950, September 29, 1952, and March 28, 1960, covering the premises in the City of Newport Beach; and WHEREAS, on December 13, 1971, the City Council adopted Resolution No. 7586 authorizing.the conveyance of the Balboa Bay 'Club's leasehold estate to U. S. Financial Corporation in an amount not to exceed Thirteen Million Two Hundred Thousand Dollars ($13,200,000.00) for the pur- pose,of refinancing the Balboa Bay Club; and WHEREAS, pursuant to said approval, the Balboa Bay Club assigned a certain portion of the leasehold estate, known as the Terrace Apartments, to U. S. Financial Corpora- tion to secure a loan in the amount of Six Million Six Hundred Fifty Thousand Dollars ($6,650,000.00); and WHEREAS, said.loan in favor of U. S. Financial Corporation was in the form of a wraparound financing on the Terrace Apartments portion of the Balboa Bay Club, the pri- mary loan on the Terrace Apartments being in favor of Union Bank; and WHEREAS, said loan in favor of U. S. Financial Corporation was funded 508 by City Bank of Beverly Hills and 508 by U. S. Financial Corporation.; and WHEREAS, U. S. Financial Corporation has changed its name to Independent Mortgage Trust; and WHEREAS, the portion of said loan in favor of Independent Mortgage Trust has been assumed by First National Bank of Chicago; and WHEREAS, the City Council adopted Resolution No. 8915 on October 26, 1976, on the proposed sale of the Terrace Apartments to Oppenheimer Industries; and and WHEREAS, said proposed sale has been consummated; WHEREAS, the present financing on the Terrace Apartments portion of the Balboa Bay Club is such that Union Bank is the primary lendor with a wraparound financing orig- inally in favor of U. S. Financial Corporation, with the loan in favor of Oppenheimer Industries as a loan junior to said prior loans; and WHEREAS, the First National Bank of Chicago desires to refinance said loan originally in favor of.U. S. Financial Corporation in the amount not to exceed Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000.00 ), which amount is the reduced.principal on said loan; and WHEREAS, said loan will be in the form of a second deed of trust and City Bank of Beverly Hills will no longer be a lendor on said loan; and -2- ! 0 0 WHEREAS, it appears to be in the best interest of the City of Newport Beach to approve said transaction, NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Newport Beach hereby approves a refinancing of an existing loan in favor of the First National Bank of Chicago in an amount not to exceed Two Million Eight Hundred Fifty Thousand Dollars ($20850,000.00). BE IT FURTHER RESOLVED that this approval is'sub- ject to the same terms and conditions as contained in Resolution No. 7586.and Consent to Assignment dated December 15, 1971. BE IT FURTHER RESOLVED that the City Attorney is authorized to execute any consent required by said trans- action, provided that said transaction is consistent with this resolution. ADOPTED this 28th day of July , 1980. ATTEST: City Clerk Mayor -3- HRC /kv 7/24/80