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Economic Assistance Agreement between the City of La Verne and Chase’s

On October 16, 2017, the City Council voted to approve an economic assistance agreement between the City of La Verne and Chase’s Restaurant in Old Town La Verne.

The owners of Chase’s approached the City about relocating to allow them to expand their business. The new location would have a larger bar area, more indoor and outdoor seating, and better visibility.  The relocation was also prompted by the fact that a lease extension was not renewed at their current location, requiring them to relocate or close.

 

The new lease in a newly renovated building was expected to be significantly more than their current lease payment.

 

The City collects a portion of the sales tax generated at restaurants, and as restaurants sales increase, so does the money that comes to the City’s general fund to pay for City services.

 

Before the State took away the redevelopment agencies in California, cities were able to use redevelopment money to retain, relocate, or attract new businesses as an economic development tool.  La Verne completed over 100 of these types of agreements, including over 30 in Old Town La Verne.  Some examples include Heroes, the University of La Verne Bookstore, and the Church of the Brethren.

 

The agreement between the City and Chase’s is not a grant.  It is a loan, which began to be distributed to Chase’s on a monthly basis, by request, when the restaurant was fully operational in the new location. The maximum amount that could be loaned is $50,400 if requested every month until July 2019.

 

All money loaned will be required to be paid back, plus 2% interest, with the first payment due on March 31, 2029.

 

Prior to receiving their first payment, Chase’s was required to execute a note in favor of the City utilizing all of the business' property as collateral against the loan.

 

The City currently receives approximately $10,000 a year in sales tax revenue from Chase’s. It is projected that with the larger location, Chase’s will be able to increase their business and generate more than $15,000 in sales tax annually to the City. 

 

Per the agreement, once the sales tax revenue exceeds $15,000 per year, Chase’s would then receive credit back on their loan from the City. The credit would be based on the amount above $15,000, ensuring that the City would see an increase in revenue of at least $5,000 annually before any credit is given on their loan payments.

 

The full City Council Agenda Report and the Agreement can be found here:  pdf Reso 17-74 - Assistance Agreement Chase's Restaurant (516 KB)