POMONA — The first step toward financing the proposed Inland Pacific World Trade Center was completed last week, bringing the controversial project closer to reality than some city officials had imagined possible.
In a sudden twist in negotiations, the City Council voted unanimously to issue $100 million in revenue bonds, giving the developer the means to finance construction of the 14-story office tower.
The bonds, which are not obligations of the city, will be repaid by Birtcher/Urban Equities, the Orange County-based developers who hope to break ground on the project in three months, city officials said.
"Pomona is the little town that could," said H. Thomas Felvey, one of the co-developers. "The original concept that we sat and looked at with amazement two years ago will soon be a reality."
Payment for Land
In return for the bonds, the Birtcher group presented the city with a check for $1 million as payment for the 4.5-acre site at the northwest corner of Garey Avenue and Mission Boulevard in downtown Pomona.
The project, which city officials say will create 3,000 jobs and generate more than $1 million a year in general fund revenue, is also expected to house a retail mall, the Los Angeles Toy and Hobby Mart and a 260-room hotel, which the Hilton Hotels Corp. recently announced it would operate.
"I don't think we really thought this would come to be," Mayor G. Stanton Selby said at Wednesday's special council meeting, his last as mayor before municipal elections on Tuesday. "But, believe it or not, it actually has come to be. . . . This day must go down in Pomona's history as a great day."
The financing plan came just two weeks after Selby and other officials expressed dismay that the original financial backer, Mitsubishi Trust and Banking Corp., had shied away from the investment.
The Japanese bankers backed off as a result of mayoral candidate C.L. (Clay) Bryant's unsuccessful attempt last December to have Selby and three other councilmen arrested for holding what Bryant said was a secret meeting with Mitsubishi officials at City Hall, according to Felvey.
Although the council members denied that the Sunday afternoon reception was secret or improper, the incident apparently so embarrassed the bankers that they "got cold feet," city officials said.
With Mitsubishi balking at the $96-million project, Felvey said he was forced to devise an alternate financing package with the city. The bond issue proved to be the most feasible, he said, adding that recent fluctuations in the bond market--not Tuesday's election--prompted the abrupt change in plans.
"We felt if we didn't move quickly, we wouldn't have a bond market in which to sell the bonds," Felvey said of last week's plunge in stock and bond prices.
But Bryant, a vehement critic of the project, accused Felvey of trying to make "a last-ditch effort" to close the deal before Tuesday's election.
"It's a devious thing," said Bryant, who faces a runoff against Councilwoman Donna Smith for the mayor's seat. "The majority of the people of Pomona don't want that thing here."
Felvey, however, said financiers have identified Pomona as a profitable investment target. He predicted that residents would overwhelmingly favor the project if they understood all its benefits.
"It's time for the people of this city to renew faith in themselves," Felvey said. "The rest of the world already has the faith."
He said the bonds already have been purchased by the Solana Beach-based underwriting firm of Miller & Schroeder, which will attempt to sell the taxable notes to investors. The proceeds of that sale will be used to finance construction of the project.
If the Birtcher group is unable to make payments on the bonds, city officials said, the investors could foreclose on the project and seize the building and land. If the project is never completed, the developers will also be required to spend at least $10 million toward another project on the vacant land, officials said.
In addition to the bond revenues, Felvey said he has lined up $20 million from investors which will be used to help cover expenses. The $1-million check presented to the city for the land, for example, came from one of those equity investors, the Santa Ana-based Peacock-Radaker Corp.
"It's a good bet," said James G. Gotses, vice president of asset management for the firm. "I think it's a great opportunity simply to be a part of it."
In return, the city has agreed to pay for construction of a $13-million underground garage with bonds issued by the Pomona Redevelopment Agency and will finance a $1-million promotional campaign to be funded by taxes generated from the proposed hotel.
As part of the deal, the city has also obtained a $5.2-million loan from the federal Department of Housing and Urban Development that will be used to help finance the project.
Magnet for Business
Like a central market or commercial strip, world trade centers operate under the philosophy that concentrating international firms in one building will attract more business activity to the region.
Pomona's proximity to freeways, rail lines and Ontario International Airport make it a natural focal point, Felvey said. As one of the fastest-growing regions in the country, he said, the Inland Empire could become a major center for international trade.
The project, which has already received official designation from the World Trade Center Assn. in New York, would join about 54 such centers around the globe when completed.
Felvey said last fall that ground would be broken in January, 1987. When that failed to occur, the ground breaking was postponed until April 1. Because of the reluctance of the Mitsubishi bankers, Felvey said, the April ceremony also had to be scuttled.