Councilmembers approve subordination agreement with G.V. Burrows Chevron

Hanford attorney, Rick Conway, speaking for G.V. Burrows, Inc. told councilmembers that the subordination would allow the company to obtain a line of credit. “They’re a successful, growing business, and in order to secure a product” and to improve the business, Burrows seeks a line of credit. “With a line of credit it gives us the ability to expand in business and space,” he said.

The property, located in the Lemoore Industrial Park, currently houses the Chevron business. The local company moved to the industrial park when in 2011 the Lemoore Redevelopment Agency Board approved a forgivable loan to Burrows in the amount of $1.2 million to purchase the property vacated by Western RV.

According to a report from Lemoore Project Manager Judy Holwell, the investment by the RDA was and continues to be good for the community because the business has grown substantially, providing additional local jobs and sales tax revenue. Burrows moved their business from the downtown area to the new site.

In return for the city subordinating the original loan, G.V. Burrows promised to forward 90 percent of the sales taxes derived from sales to the city. “It will produce more sales tax revenue to the city,” said Councilmember John Gordon.

The loan was amortized over a 25-year period at an interest rate of 5.85 percent per year during which time Burrows agreed to report 90 percent of his sales tax to Lemoore.

The property was originally assessed at $2.5 million at the time Burrows purchased it. Holwell stated that it’s likely the property continues to hold the same value.

Currently, the city and the RDA has a deed of trust encumbering the property, meaning the city would have been first in line if Burrows defaulted or the business went south. Subordinating it puts the city at the back of the line when it comes to recovering assets.

Because the original loan agreement is with the RDA, which has since been disbanded, the Lemoore Oversight Board will need to approve its subordination, and any action by the Oversight Board cannot be approved until approved by the State of California Department of Finance.