TITLE
Recommendation to adopt resolution approving the decision of the City of Long Beach, as the Successor Agency to the Redevelopment Agency of the City of Long Beach, to approve an agreement exempting the Small Business Administration or its approved lenders from the indemnity obligation contained in the Parking Easement Agreement related to the property at 834 East Fourth Street.
DISCUSSION
Lara Solutions, a woman-owned small business, has purchased and recently renovated Suite 0 at 834 East 4th Street, a development commonly known as the 4th Street Lofts. As an owner in the 4th Street Lofts, Lara Solutions is a party to a Parking Easement Agreement which benefits the Successor Agency. The Parking Easement Agreement requires the property owners within the 4th Street Lofts, including Lara Solutions, to provide parking for the public. The Parking Easement Agreement provides that each of the 4th Street Lofts property owners indemnify the Successor Agency against any liability resulting from the use of the public parking spaces.
Lara Solutions has applied for a 504 Loan from the U.S. Small Business Administration (SBA) for long-term financing, using the property as security. The SBA requires that any open-ended indemnity in the chain of title on a property to be used as collateral for a 504 Loan must be waived with respect to the SBA and its lenders, as it represents an unfunded liability under the Federal Antideficiency Act. As a result, the SBA has required 504 Loan borrowers to obtain waivers of indemnities.
Lara Solutions owns one of the 41 properties at the 4th Street Lofts, and would remain obligated to indemnify the Successor Agency in accordance with the Parking Easement Agreement for so long as Lara Solutions owns its property. In the event that the SBA or its lender becomes owner of the subject property through a foreclosure or loan work-out, then the SBA or its lender would not be required to indemnify the Successor Agency against potential liabi...
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