Brea : City Aids Company With Letter of Credit

The City Council has come to the rescue of a local investment company that was in danger of losing its property to bank foreclosure.

By a 4-1 vote this week, the council, acting as the Redevelopment Agency, provided a $500,000 letter of credit to Brea Boulevard Investment Group. The move enabled the company to get a two-year extension on its $2.12-million loan from Pioneer Bank in Fullerton.

The letter of credit will serve as additional collateral for the loan, said Redevelopment Services Director Susan M. Georgino. In a report to the council, Georgino said that no agency money was spent in the transaction. Brea Boulevard Investment Group will pay for the costs of obtaining the letter of credit.

Georgino said Michael D. Cohen, managing partner of Brea Boulevard Investment Group, signed a document that allows the agency to claim part of the property equal to $500,000 if Pioneer Bank forecloses on the property.

Councilwoman Kathryn E. Wiser, who voted against the proposal, said that it was unwise for the city to rescue a private business.

“What will we say to the next businessman who asks the city for money to save his business?” she said.

Cohen said Pioneer Bank asked for an additional $600,000 in equity because the value of the 22,600-square-foot office complex that his firm owns at 203 N. Brea Blvd. has gone down in the last two years.

The bank appraised the property last year at $2.1 million, down from $3 million when the office complex was completed in 1991, Cohen said. “Part of it was the economy, part of it the still unfinished downtown project,” he said.

“I’m very grateful for what the city did,” Cohen said.