HomeMy WebLinkAbout1998-09-28 98-397 ORDERCOUNCIL ACTION
Bate:
September 28 1998
Item No. 28-397
Item/Subject: Authorimin, City
D dopmeet"A to Nasky Reaooroes Chadered
Responsible Department: Community
& Economic Development
coazmaatary:
This Order will authorize a loan
of $1,934,300 to Realty ReSOUrCee Chartered to
finance the rehabilitation of floors
1, 2 and 3 of the Hain Street Side of the former I
Preeses Department Store building.
The work financed with this loan is necessary
to enable conversion of the top
three floors into affordable housing.Of the
$1,934,300 loan amount, $1,534,000
will be repaid by Realty Resources and $400,000
will be repaid from new property
tax revenues generated by the Realty Resources
project. Construction will begin
prior to the end of this calendar year and will
be completed in 10 to 12 months. The terms are set forth in the Council Order.
DP artment y6ad
Hanger's Comments:
� f
City Manager
Associated Information
Budget Approval:
Finance Director
Legal Approval:
' wl/WIY
City Solicitor
Introduced For ❑ Passage D First
Reading ❑ Referral
Pageyof I
98-39]
garland to Counimor Farnham September 28, 1998
CITY OF BANGOR
(TITLE) (qrUr,_...AuthmizJmg City Development Loan Chartered _..
Former Frceaes Building
By the City Coburg Of him GYN OfBda .'
ORDEREDr
TUT WHEREAS, Realty Resources Chartered ofRockport, Maine proposes to purchase and
overt Boors 1, 2 and 3 of the Main Street section (the "Main Street Block") of to
former Proves building at 74.96 Main Street mm approximately 45,000 square fat of
retail, professional office, colonel and other related users marrimmingm the City's Lad
Development Code: and
WHERBAS, the project will involve an monument ofapproximamly $1,934,30; and
WHEREAS, rehabilitation of the frmer Freeses building has been a long term
objective ofthe City; ad
WHEREAS, the deteriorated and vacant condition ofthe former Douro building is
detachment to further revitalization of the downtown area; and
WHEREAS, under the terms of me Maine State Housing Authority commitment to
finance the residential development m take place on the top three Boors of the Main
Street Block, the conversion and rehabilitation of the top three Boors will not go
forward without the work on the botmm Wee Bcors financed with the proceeds of this
loan; and
WHEREAS, this loan will sable the complete rehabilitation building
NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CITY
OF BANGOR THAT, Pursuant to the application of Realty Resources ChattetN,
(hereinafter returned to as the "BORROWER") for Bouncing of the acquisition,
improvement and rehabilitation of the lower three Doors of the Main Street side
of former Freeses building, located at 74-96 Main Street, Bangor, Maine
(hereinafter referred to as Ne "PROPERTY") into appmximalely 45,000 square
feet ofcormuercial spare m an estimated cost of $1,934,300 (hereinafter referred
to as the "PROJECT'), the Director of Community and Economic Development is
hereby authorized to provide a loan w Realty Reaournm Chartered a sum not to
exceed One Million Nine Hundred Thirty Four Thousand Three Hundred Dollars
($1,934,300), consisting of two promissory notes secured by a first and second
mortgage on the PROPERTY, subject to the following terms ad conditions and
other such conditions as may be required by the City Solicitor or by the Director
of Community and Economic Development for the administration ofthe loan; and
BE IT FURTHER ORDERED THAT the Community and Economic Development
Committee ofthe City Council is hereby authorized no authorize such ammMmrnts he
the following terms and conditions as it deems appropriate:
FIRST WA
1. BORROWER: Realty Resources Chartered
2. AMOUNT: Not 0 exceed$1,534,100
3. INTEREST RATE: 8.0% fixed rate
4. TERM: 240 months
5. PREPAYMENT PENALTY: None
6. LATECHARIE: 5%ofpaymeatifl5dayslate
7. COMMITMENT FEE: None
8. REPAYMENT: For the first three annual payments due after loan closing,
BORROWER shall Pay annually to the CITY, as debt service, forty-eight
Percent (48%) of BORROWER'S gross rental income Gom termnts in the
of$326ree fiper year, the
to yield
Per
yearin ebtperyear,the48%formulais expected rtyield $156,271.84per
yeaz in debt service Payments. 4 will bedueamid the
the to n nual is
mem zed.
annual payments of $156,271.84 will be due until the loan is fu11Y amortized.
Following BORROWER'S third named debt service payment, and annually
thmeaHer, the CITY shall have the right to take possession of the lower three
floors of the PROPERTY and to receive a release of rate Gum the
BORROWER, ifthe total mom actually paid by the BORROWER as debt
service does at equal or exceed the following percentages of the total
projected debt service:
X= Parent Cumulative Minim mPavments
1-3 60ai, $281234
4 70% $437,475
5 80% $624,964
6 90% $843,701
7 100% $1,093,687
Exercise ofthis canon by the CRY shall discharge BORROWER from ay
fuller obligations under the $1,534,300 rate and the $400,000 second note
described below.
9. PREPAYMENT: BORROWER may May pence all ofthe loan n my note
without penalty.
98-39]
10. COLLATERAL: he loan shall be secured by a first mortgage on the
PROPERTY, which shall also serve the $400,000 second lona described
below.
11. LOAN CLOSING: Loan closing shell take place prior m December 31,1999
unless otherwise agreed to in writing by the CITY.
SECOND LOAN
1. BORROWER: Really Resources Chartered
2. AMOUNT: Not to aeowd $400,000
3. ]MEREST RATE: 8.0%fixed rate
4. TERM: 240 months
5. PREPAYMENT PENALTY: None
6. LATE CHARGE: 5%ofpaymma if 15 days late
T. COMNITTMENTFEE: Now
8. REPAYMENT: Principal and interest shall bepayablemtvenry
instar ofForty Thn sand Seven Hundred Forty UmHara nd Pi hb,
Fycht Cents (W340 88) each, with the fust such installment being dm one
yemfmmlomclosing. h ImtsuchiusWl mtbeingdwmmtyyemsfiom
the dela of lora ctosmg (the"MamntyDate'. If for my reason na paid prior
to the Maturity Daae, the balance of principal than remaining unpaid, together
with accrued unpaid interest shall be paid in full on the Maturity Date.
9. REPAY14ENT CREDIT: BORROWER will receive a credit agvnst the
required repayment in subsection 8 above equal to the amount of rax
increment revenues generated and paid the CITY by the PROJECT, up to
100% of the annual repayment amount due.
IO.PREPAYMENT: BORROWERmayrepaypartmaRofthelomatmytime
without penalty.
11. COLLATERAL: The loan shall be secured by a first mortgage on the
PROPERTY whicb shalt also secure mother lam made by the CITY in an
meant muni exceed $1,534,30D.
In the evmtBORROWER shall prepay the $1,534,300 loan in fall, the CITY
shall subordinate its first mortgage withrespect tothe$400,000Inertia private
refinancing, in a principal amount not to exceed $1,534,300.
12. LOAN CLOSING: Loan clmmg shall take place priorw December 3L 1999
unless otherwise agreed to in writing by the CITY.
CONDITIONS ON FIRST LOAN AND SECOND LOAN
The FIRST LOAN and SECOND LOAN shall be contingent upon compliance
with the following conditions:
1. BORROWER shall provide CITY documentation to verify BORROWER'S
legal capacity and authority to borrow funds applied for and to encumber the
Property as security for repayment ofth s looms.
2. BORROWER shall provide CITY a policy of mortgage title insurance in the
amount of tlm loan, insuring the lien of the mortgage subject only to Wose
exceptions to title as are approved by the CITY.
3. BORROWER shall invest not two then One Million Nine Hundred Thousand
Dollars ($1,900,000) for wets involved in the PROJECT.
4. BORROWER agrees that development of the PROJECT shall be in
accordance with all applicable Fedom, Sam, and City laws, ordinances, and
budding codes.
5. BORROWER agrees the scope of PROJECT work shall conform in all
material respects to the plans approved by the CITY. Building plans and
detailed war estimates shall be submitted by BORROWER to CITY for
approval by CITY priorto FIRST and SECOND LOAN closings.
6. BORROWER hereby acknowledges that CITY, in agreeing to provide
financial assistance to PROJECT, relied m material part upon the assured
completion of the PROJECT and the BORROWER agrees to use its beat
efforts to substantially complete the PROJECT no later than December 31,
1999.
7. BORROWER shall agree that any and all cost overruns; in excess of the
confinger y provided for in the proposal and application will result in a
further cash injection by BORROWER or its principals sufficient to pay the
excess caste necessary or incurred.
8. BORROWER shall request arta receive all necessary approvals and permits
from the City of Bangor and the Maine Historic Preservation Commission
prior to disbursement of fonds.
9. Any prior mortgage or deed of trust to which the CITYS mortgage is to be
subordinate to most be approved by the CITY as m all of its terms and
conditions and as to the principal amount outstanding thereon.
10. BORROWER will maintain hoard and liability insurance with financially
sound end reputable insurers in such amounts and such coverage as shall be
satisfactory to the CITY. The BORROWER shall maintain fire and extended
coverage insurance, and such other insurance as the CITY deems necessary or
appropriate, in an amount sufficient to cover the total of all indebtedness
secured. Such insurance shall name the City of Bangor as a loss payee. Such
hazard, fire and extended coverage insurance shall expressly apply to the
PROPERTY during the construction phase of BORROWER'S renovation
project, and shell cover the full replacement cost of the PROPERTY plus all
renovations and improvements, including the value of renovations and
improvements in progress.
II. The BORROWER shall, prior to low closing, provide the CITY with a copy
of an environmental compliance analysis on the PROPERTY.
12. The BORROWER, Contractor and Subcontractors shall comply with all
building plans cod specifications for improvements to PROPERTY which are
subject to approval by CITY.
13. The BORROWER dull execute and deliver tothe CITY such low documents
as the CITY deems accessary or appropriate to evidence the low hereunder
and to provide adequate security for the same. The tom, and wbsmnce of
such documents shall be satisfactory to CITY'S counsel.
14. Upon coy who or transfer of the mortgaged premises, the LOAN stall become
due and payable, as of the dune of said sale or handler, in fall, together with all
accrued interest thereon.
15. In the event LOAN funds are needed prior to July 1, 1999, receipt by the
BORROWERofabridge loan from another lerm erin an amountnmto exceed
$1,934,300 will be used only for partial financing for improve Tawas to the
PROPERTYardfornootherptupose. Shouldsuchabridgelowbesecmed,
the BORROWER agrees that the LOAN will only be used to pay off the
bridge Ian at time of LOAN closing. The LOAN is contingent on other
lender's agreement not m release bridge loan finds to BORROWER without
written wmeat of CITY, which shall not unreasonably he withheld.
Ib. BORROWER agrees that all equipment and materials are to be wwIhxl in
accordance with monotones res recommendations and in accordance with
nationally recognized, and City of Bangor building codes. The BORROWER
further agrees to famish the CITY with appropriate documentation of all
expenditures far PROJECT improvements. Nothing in the above statement
shall be co armed to suggest that expenditanes by the BORROWER for
PROJECT at a cost in excess of $1,934,300 slash increase the amount of the
CITY low.
17. The BORROWER agrees that property taxes on the Property improved with
LOAN proceeds shall always be paid for the life of the low regardless of the
tax Maps of the BORROWER. Payment of such taxes may be accomplished
as a M19 payment in lieu of taxes. As pan of the LOAN agreement, the
BORROWER agrees for itself, and every successor in interest to the
98-39]
PROPERTY, or any part thereof, that the PROPERTY shall he subject to all
traces and assessments as may be imposed by any governmental authority upon
the afore described premise and any buildings, structures, or improvements
which may be or may become located thereon. It is the intent of the CITY and
BORROWER, and BORROWER will agree to waive, for itself and any
successors in interest, all right or privilege of exemption from municipal
taxation ofNe PROPERTY improved with the loan proceeds and fiat the City
of Bangor, in its capacity as a mang authority, may assess all taxes mul
assessments as would otherwise be applicable to the PROPERTY including
buildings, structures or improvements which are or may become located
thereon, as if such exemption did not oast. BORROWER further agrees, nor
itself and any successors in interest, to pay said assessments on or before the
date upon which the same become due and payable. Provided, however, that
CITY agrees thm BORROWER, or its successors in interest, shall have the
right to comest the amount of such raves or assessments in the manner
prescribed by law.
18. Transfer of lb: Prnnerty. BORROWER shall not sell, Issue (m the case where
the BORROWER is also a lessee), or transfer the PROPERTY without
repaying the entire LOAN, unles Prior written consent of the CITY is sought
and received. For the purpose of Ws subsection, the word "transfer" shall
include, but not be limited to, acquisition of title by inheritance and the word
"sell" shall include, bat not be limited a, the execution of land sales contract
or similar document.
19. The
CITY in its sole discretion may choose to subordinate the LOAN to a
mortgage entered into atter the date of the LOAN, upon request of the
mortgagor. No such subordination shall be agreed to unim the LOAN
remains in or lamas high priorityas when the LOAN was made. Fluther,my
new mortgage to which the LOAN is subordinated must be used only for
mprovemems to the PROPERTY. Fuller, the applicant requesting the
subordination shall pay all costs incurred by the CITY in arranging the
subordination, including the value of the time spent by CITY staff.
20. Points of f A roament: The BORROWER shell also agree to abide by the
following monaural conditions:
a. Use of Pmceeds; Use the LOAN proceeds only to pay for costs of
services and materials nttessnry to carry out the PROJECT.
b. Completion of Works Aware that the PROJECT shall be carried out
promptly and efficiently through written contract(s) approved by CITY
and let with the prior ooncumence of the CITY.
c. InapW!on Permit inspection by the CITY, or its designee, of the
PROPERTY, the cehabititatiov work, and all contracts, materials,
equipment, payrolls, and conditions of employment perteiniug a the work.
d. Records Rcepmdmainainbooke,re rasa othedmc ntsmlathrg
dic UyathereceiptanddisbursemartofCI Yfunds Mro dedbereunder
and agrees that any duly authorized representative of CITY shall, at all
98-39]
reasonable times, have access to amal the right to inspect, copy, audit and
examine all such books, records and other documents of the
BORROWER, call completion of PROJECT, upon prior wrimn notice.
BORROWER shall ensure that siailar provisions are included in all
contracts and subcontracts entered into in connection with PROJECT.
Pmaervadonofehes.scrim- Maintain the PROPERTY in confonmance
with the minimum standards of the BOCA Property Maintenance Code
and permit the CITY or its designee to inspect the PROPERTY during the
tan of the LOAN.
j'soutes Intheevwtadisputeexistsbetweenthe BORROWERand the
Contractor with respect to the rehabilitation work, CITY will take
appropriate action in accordance with the provisions of the construction
contract to assure that all parties are satisfied before payment to the
contractor.
IN CITY COUNCIL
September 28, 1998
Motion for Passage Made and Seconded
Passed
LERK
98-39]
O ROER
Title, Authorizing City Development Loan
t0 Realty Resources Chartered - Former
Freemen Building
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