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HomeMy WebLinkAbout1998-03-11 98-142 ORDERCOUNCIL ACTION Date: Me rch 11 leaB Item No. 96-142 Item/Subject: Authorizing Execution of Development Agreement with Hammond Street C artyerd L.P. Responsible Department: Community 6 Economic Development Commentary: This Council Order would authorize a Development Agreement with Hammand Street Courtyard, L.P., proposed developers of the former Bangor Furniture property at 84- 120 Hammond Street. The City has a matured tax lien on the property. The Council has indicated a Development Agreement needs tO be in place, code violations corrected, Bad taxes paid before the City releases its interest in the property. Subject tO the previsions of the Agreement, Hammond Street Courtyard, L.P., with Robert and Suzanne Kelly and Richard Cattelle as General Partnere, agrees to rehabilitate the four buildings at 84-120 Summand Street into amix of retail, office and residential space at an estimated cost of $1.5 million. It provides for a Community Development loan of $150,000 for the residential portion of the project, providing the application meets the City's normal lending and program requirements. Depa5e ant Need Nanagar'a Comments: �mn'ger City Manager Associated Information O:du: Budget Apprevel: Finance Director Legal Approval: `�'7�'�"$q�� 7`(����',�"N City Solicit Introduced For W Passage 0 First leading ❑ Referral Page�ofy Amigoel to Couadm Aube March 11, 1998 CITY OF BANGOR (TIom) Aethoriziog Exenodoo ofDermJopmeot Agreementwdh llammond 9lreet Courtyard L8. By w Otis Correll of the cup ofBwpor: ORDERED, THAT the City manager is hereby enhanced, on behalf of the City of Dangm, w ezecutea Development Agreement with Flemmond Street Courtyard, L.P., for the redevelopment of the fanner Bangor Furnihue Co. property at 84-120 Hammond Street, said Development Ageement to be substantially as mmobed hereto, and in a final form approved by the City Solicitor or Assistant City Solicitor. IN CITY COUNCIL Patch 11, 1999 Councilor Rohman abstained from discussion and vote Motion to Amend by Substitution Passed Passed As Amended by Substitution CfT CLERK \ 98-142 ORDER Title, Autborizing Execution of Develop- ment Agreement aitb Anson ad Street Court- yard L.P. ..................................... ................................. Z^ Lpl1-jr,6 nn Cowcilman 98-142 As Amended • Suba4.la.-ba ('0rcy 0 DEVELOPMENT AGREEMENT This Agreement is made and emend into as of March _,14)98 by and between the City of Bangor (hereinafter "City"), a municipal corporation located in Bangor, County of Penobscot. State of Maine, and Hammond Street Courtyard, L.P. (hereinafter "Developer"), a Maine Limited Partnership, with a place of business in Bangor, County of Penobscot, State of Maine. \"J II21*-iZIN 1:i WHEREAS, the Developer is desirous of renovating 84-120 Hammond Street into amix of retail, office and residential space; and WHEREAS, the estimated cost of acquisition of property, rehabilitation of the buildings, installation of equipment and furnishings, design fres, legal fres, insurance, financing and other costs associated with the development (hereinafter "Project") is estimated to be a least $L5 million; and WHEREAS, Developer will secure not less than $1,250,000 in private financing and equity for the Project; and WHEREAS, completion of the Project will create a significant public benefit by providing affordable housing opportunities, removal of blighting condifions in the downtown Bangor area, and significantly enhancing the tax base of the City; and WHEREAS, the high cost of building rehabilitation requires financial assistance from the City to worse the public benefit of location of the Project in the downtown; end WHEREAS, the City cunently holds legal litre to she 84-120 Hammond Strut property by virtue of mounted tax lien for mass assessed in fiscal yea 1996; NOW THEREFORE, W CONSIDERATION of the mutual promises and coverts contained in this Agreement, the City and Developer agree as follows: 1. Subject to the provisions of this Agreement, the Developer agrees to rehabilitate 84120 Hammond Street into a rnix of retail, office and residential space involving not less that four residential apatrnents affordable to tenants meeting low to moderate income guidelines established by the U. S. Deportment of Housing and Urban Development. 2. Developer agrees to invest not less tlun$1,250,000 in funds secured privately, of which not less than $350,000 shall be equity investment. Page 1 of 4 3. Developer agrees to provide evidence, art later than May 31, 1998 satisfactory to City Solicitor of City, of binding construction contract, or corAmcla, providing for site work and building construction costs for the Project of not less than $1,100,000. 4. City agrees to provide the Developer a loan in the mount ofappmximatety $150,010 for the purpose ofdeveloping the Project Thesourceofstchloansball be the City's Community Development Block Grant Program, or other sources, and the City's coruvdtmeut shall be contingent upon the Developer applying for and conforming an CDBG program requirements and conditions to be contained in the City's loan commitment. 5. City agrees to consider Tax Increment Financing of up to $200,000 for the balance of funds needed to complete the project, after equity and private leader muouras have been identified and deemed reasonable by City. Private lender financing considered reasonable by the City would he 65% to 80"/0 of after Project completion appraised value. Tax Increment Financing muvuras shall in no way substitute for private equity and private leader financing that should reasonably be available for the Project. 6. Developer agrees thin development of the Project shell be in accordance with all applicable Federal, State, and City lames, ordinances and building modes. 7. Developer agrees the scope of the work shall conform in all material respects the plans approved by the City of Bangor. 8. Developer agrees to provide evidence by April 30,1998, satisfactory m City Solicitor of City, of legally binding private leader financing cowniwevts and Nuity investment of not less than $1,250,000 in funds for financing of the Project exclusive of financing to be provided by the City as provided for in 4. and 5. above. 9. Developer agrees to provide evidence by April 30, 1998, satisfactory to City Solicitor of City, of legally binding equity investment of not less than $350,000, which shall include not less than $150,000 equity investment by the recipients of the proceeds from the sale of 84-120 Hammond Street Property to Developer, said investment to support the financing of the Project. 10. Developer agrees that in the event the aluity investment is less than $350,000 on April 30, 1998, the difference between the actual equity investment and $350,000 shall be made up from any proceeds due the General Partners of Hammond Street Courtyard, L.P. for development of the Project, including developer fees and sales Page 2 of 4 commission from the sale of 84120 Hammond Street to Developer, provided that, however, said sum shall not be more then $25,000. 11. Developer hereby acknowledges due the City, in agreeing to provide financial assistance to Developer for the Project, relied in material pare upon the assured completion of the Project and the Developer agrees to use its best efforts to substantially complete the Project no later than March 1, 2000. 12. Developer shall pay, or cause to "d, in full, by April 30,1998, all outstanding mal estate nixes and other charges assessed against the 84120 Hammond Street Property by the City for fiscal years 1996 through 1998. 13. Upon payment of notes and the City's receipt of evidence of construction contracts, financing and equity investment as provided in paragraphs 3., 8. and 9. above, the City shall release its title to the 84-120 Hermann Straa property to the Developer. 14. Developer agrees that it shall keep and maintain books, records and other documents relating directly to the Project and agrees that my duly authorized representative of the City shall, at all reasonable times, have access to and the right to inspect, copy, audit and examine all such books, records and other documents of Developer until completion of the Project upon prior wriven notice. Developer shall aware that similar provisions are included in all contracts or subcontracts entered into in connection with flus Project. I5. Developer agrees that my duly authorized representative of the City shall, at all reasonable firms, have access to any portion of de Project and its completion and a permanent Occupancy Permit for the Project: has been issued by the City. 16. Any notice which either party desires or is required in give to the other in connection with this Agreement shall be in writing and shall be sent postage prepaid, certified mail, return receipt requested, as follows: If to City: Edward A. Barn, City Manager City of Bangor 73 Harlow Street Bangor, Maine 04401 If to Developer: Hammond Street Courtyard, L.P. do K. C. Development, Inc. 73 Pine Street Bangor, Maine 04401 Or such other person and/or address as may be identified in writing by the parties. Page 3 of 4 17. Except as provided in this Agreement, until substantial completion of the Project, Developer shall not assign its rights under this Agreement without the prior written consent of City, which consent shall not be unreasonably w ddald, delayed or conditioned. The City's obligations hereunder are contingent upon the Developer's compliance with the terms and/or conditions set forth in this Agreement. 18. The Developer represents and agrees that its purchase of 84-120 Hammond Street will be used for the purpose of development of the Project and not for specWation in hand holdings. This representation shell [ermiunte and be of no further force and efk t upon substantial completion of the Project by the Developer. 19. It is intended by the patties that this Agreement shall operate as contract under seal, in accardance with 14 MRSA Sec.751. WITNESS WHEREOF this Agreement has been executed, sealed and delivered in duplicate counterparts as of the day and year first above written PDIMMOND STREET COURTYARD, L.P. By K C. DevelopmenS Inc., General Partner By Ruben Reny Its President CITY OF BANGOR By Edward A. Barret[ It City Manager Page 4 of 4 DEVELOPMENT AGREEMENT CITY DRAFT OF March 2,1998 This Agreement is made and ordered into as of ,1998 by and between the City of Bangor (hereinafter "City"), amunicipal corporation located in Bangor, County ofPenobsco; State of Maine, and Hammond Street Courtyard, L.P. Qnsanafter "Developer"), a Maine Limited Partnership, with a place of business in Bangor, County ofPenobsco; State of Maine. WITNESSETH WHEREAS, the Developer is desirous of renovating 84-120 ffammond Strep into a mix of retail, office aM residential space; and WHEREAS, the estimated cog of acquisition of property, rehabilitation of the buildings, insWlaron of equipment and furnishings, design fees, legal fees, meumnce,financing and other costs associated with the development (hereinafter "Project") is estimated to be a least $1.5 million; and WHEREAS, Developer will secure rent less thin $1,250,000 in private financing and equity for the Project; and WHEREAS, completion of the Project will create a significant public benefit by providing affordable housing opportunities, removal of blighting conditions in the downtown Bangor area, and significantly enhancing the tax bele of the City; and WHEREAS, the high cost of building rehabilitation requires financial assistance from the City m ensure the public benefit of location of the Project in the downtown; and WHEREAS, the City commonly holds legal fide to the 84-120 Hammond Street property by virtue of matured tax lien for taxes assessed in fiscal year 1996; NOW THEREFORE, M CONSIDERATION of the mutual promises and covenants contained in this Agreement, the City and Developer agree as follows: 1. Subject to the Provisions of this Agrearni the Developer agrees m rehabilitate 84120 Hammond Street into a mix of mail, office and residential space involving not less than four residential aliments affordable to tmavts meeting low to moderate income guidelines established by the U. S. Department of Housing and Urban Development. 2. Developer agrees to invest not less than $1,250,00K) in funds secured privately, of which not less than $350,000 shall be equity investment. Page 1 of 4 3. Developer agrees m provide evidence, not later then May 31, 1998 satisfactory to City Solicitor of City, of a binding construction contract or contracts, providing for site work and building construction costs for the Project of not less thou $1,100,000. 4. City agrees to provide the Ueveloper a loan is the amount of approximately $150,000 for the propose of developing the Project The sourceofsuch loan shall be the City's Community Development Block Grant Program, or other sources, and the City's commintrent shall be contingent upon the Developer applying for and conforming to CDBG program requirements and conditions to be contained in the City's loan commitment. 5. City agrees to consider Taxlncisment Financing of up m$200,000 for the balance of funds needed to complete the Project, after equity and private leader amounts have been identified and deemed reasonable by City. Private leader farseeing that should reasonably be available for the Project is considered by the City to be approximately 75% W 806/o of after Project completion appraised value. Tax Increvnent Financing nmomus shall in no way substitute for private equity and private leaderfinancing that should reasonably be available for the Project - 6. Developer agrees that developmrn[ of the Project shall be in accordance with all applicable Federal, State, and City laws, ordinances and building codes. 7. Developer agrees the scope of the work "I conform in all materiel respects to the plans approved by the City of Bangor. 8. Developer agrees to provide evidence by March 31, 1998, satisfactory to City Solicitor of City, of legally binding private lender financing commitments and equity investment of not less Wan $1,250,000 in funds for financing of the Project exclusive of financing to be provided by the City as provided for in 4. and 5. above. 9. Developer agrees to provide evidence by March 31, 1998, satisfactory W City Solicitor of City, of legally binding Nutty investment of not less than $350,000, which shall include not less than $150,000 equity investment by the recipients of the proceeds from the sale of 84120 Flammond Street property to Developer, said investmentto support the financing of the Project. 10. Developer agrees that any financing commitment from City will include Provision that any proceeds due the General Pointers ofliaumrond Street Courtyard, L.P. for the development of Project, including developer fees and sales commissions from the sale of 84-120 flammond Street to Developer, will be held Page 2 of 4 98-142 in reserve until project completion and shall be available to cover any Project cost overruns, should they occur. 11. Developer hereby acknowledges that the City, in agreeing to provide financial assistance to Developer for the Project relied in material part upon the assured completion of me Project and the Developer agrees to use its best efforts to substantially complete the Project no Inter Ulan March 1, 2000. 12. Developer shall pay, or cause to be paid, in full, by Match 31, 1998, all outstanding real estate ones and other charges assessed against the 84-120 Hammond Sheet property by the City far fiscal years 1996 through 1998. 13. Upon payment of taxes and the City's receipt of evidence of construction contracts, firuncing and equity investment as provided in paragraphs 3., S. act 9. above, the City shall release its title to the M-120 Hammond Street property to the Developer. 14. Developer agrees that it shall keep and maintain books, records and other documents relating directly to the Project and agrees that any duly authorized representative of the City shall, at all reasonable times, have access to and the right to inspect copy, audit and examine all such books, records and other documents of Developer until completion of me Project upon prior written notice. Developer shall ensure that similar provisions are included in all contracts or subcontracts entered into in connection with this Project. 15. Developer agrees drat any duly authorized representative of the City shall, at all reasonable times, have access to any portion of the Project anal its completion and a permanent Oceupancy Permit for the Project has been issued by the City. 16. Any notice which either party desires or is required to give to the other in cormeeaon with this Agreement shall be in writing and shall be sem postage prepaid, certified mail, woman receipt requested, as follows: IftoCity: Edward A. Barrett Qty Manager City of Bangor 73 Harlow Street Bangor, Maine 04401 If to Developer: Hammond Street Courtyard, L.P. c/o K. C. Development, Inc 73 Pine Street Bangor, Maine 04401 Or such other person and/or address as may be identified in writing by the parties. Page 3 0£ 4 17. Except as provided in Us Agreement, until substantial completion of the Project, Developer shall not assign its rights under this Agreement without the prior written consent of City, which consent shall ant be unreasonably withheld, delayed or conditioned. The City's obligations bereuader are contingent upon the Developer's compliance with the tams and/or conditions set form in anis Agreement. 18. The Developer represents and agrees then us purchase of 84-120 Hammond Street will be used for the purpose of development of the Project and not for speculation in land holdings. This representation shall mundane and be of no father force and effect upon substantial completion of the Project by the Developer. 19. It is intended by the parties that anis Agreement sFWI operate as contract under seal, in accordance with 14 MRSA Sec.751. WITNESS WHEREOF anis Agreement has been executed, sealed and delivered in duplicate counterparts as of die day and year first above written. HAMMOND STREET COURTYARD, L.P. By K C. Development, Inc., General Partner By Robert Kelly Its President CITY OF BANGOR By Edward A. Burrett Its City Manager Page 4 0£ 4