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