HomeMy WebLinkAbout1995-09-11 95-401 ORDERCOUNCIL ACTION
item No. 95-401
Item/Subject: Authorizing ExecutimofDvelopmmt Agreement Wit Pmobuot Development Limited
Lialu ity Company -Main Street Municipal Development District
Responsible Department:. Community and Economic Development
Commentary: The Councils of the negotiations with the Foulos
Company for the developmentof anew Shaw's supermarket within the Main
Street Municipal Development District. The proposed Agreement, which will be
reviewed with the Council prior to the Council meeting Monday evening,
ing,
reflects the results of those negotiations. If a m
executed, this Agreement
provide the assurances needed by both parties to go forward with the project.
DDepartment Head
Associated Information:
Finance Director
Legal Approval: v�Yl. ��qqqq
City Solicit
OL
Introduced For:
Passage
_ First Reading
Referral
Pageyof 1
ca -form
95-401
Aeaigned to COuntllar Frankel September 11„1995.
��spp CITY OF BANGOR
Vlf
(TITLE.) rure AUTHORIZINGEXECUTION OF DEVELOPMENT AGRE�T WITH
_.._. _._....
PENOBSCOT DEVELOPMEM LIMITED LIABILITY COMPANY -MAIN
STREET MUNICWAL DEVELOPhIENT DISTRICT
BY tAe Cty Courolt of CW OfRa*uar
ORDERED, -
TBAT the City Manager is hereby audmriaed, on behalf of the City of Bangor, to execute
a Development Agreement, soupy ofwhich is onfile mtbe Office oftbe City Clerk, with Penobacm
Development Limited Liability Company for the redevelopment ofthe f er gasworks property
and other properties located within the Main Street Municipal Development District designated by
passage of City Council Resolve 95-211 on Ione 12, 1995.
IN Din COUNCIL 95-401
September 11, 1995 0 R D E R
C31Y (ERK
Title, Authorizing Execution of
Development AgreemeLimited L with Eenabacot
pan
Development Limited Liability Company
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IN CITY COUNCIL
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Agreements
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for Councilors Baldacci, ••"'• ••
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CITY tPN(
4s- `Intl
AGREEMENT
Draft of September 22, 1995
This Agreement is made and entered into as of , 1995 by am between rbc City
of Bangor (hereinafter "City"), a municipal corporation located in Bangor, County of
Penobscot, Sate of Maine, and Penobscot Development Limited Liability Company
(hereinafter "Developer"), a Maitre Limited Liability Company with a place of business in
Portland, County of Cumberland, Sate of Maine.
WHTIESSETH
WHEREAS, the Developer is desirous of constructing an approximate 56,000 square
foot building to be leased to Shaw's Supermarket (hereinafter "Shaw's") in the Main Street
Municipal Development District (hereinafter "District") designated by the City by passage of
City Council Resolve 95-271 on June 12, 1995, a copy of which is on file in the office of the
City Clerk, City Hall, 73 Harlow Strcet, Bangor, Maine; zM
WHEREAS, the estimated cost of acquisition of property, demolition and clearance of
buildings, environmental remediation of the former Gasworks site, site work, bailding
construction, street improvements, sewer improvements, installation of equipment and
furnishings, design fees, legal fees, insurance and financing costs associated with the
development (hereinafter "Project-) is in excess of Nine Million Dollars ($9,00,000); aad
WHEREAS, Developer will invest approximately Six Million Dollars ($6,000,000) in
privately secured foods in the Project am Shaw's will invest approximately Otte Million
Eight Hundred Thousand Dollars ($1,800,000) in equipment and f rrnisbings associated with
a supe mminet operation in the District; and
WHEREAS, completion of the Project will create a significant public benefit by
providing much needed supermarket services to West Side aM inner-city residents, removal
of blighting conditions in the Main Street area, providing approximately 200 job
opportunities, significantly eMancing the ax base of the City, and improving a major
gateway to the City;,and
WHEREAS, the high cost of property acquisition, building demolition and clearance,
environmental remediation aod site work require fmamial assistance from the City to ensure
the public benefit of location of the Project in the District; and
WHEREAS, the City inmals to use ax increment revenues created by captured
assessed value in the District for the purposes of providing Nine Hundred Sevcuty-five
Thousand Dollars ($975,000) (or such other amount as is determined pursuant to paragraph 6
below) to assist in the financing of acquisition of property, stmt am sewer improvements,
and site development costs; add
WHEREAS, the City shall perform site demolition work a the City owned property
and at other properties purchased by the Developer m correction with the Project at the
City's cost pursum to site demolition specifications approved by the Developer; utilizing
funds under the federal Community Development Block Grant (CDBG) program, it being the
parties' understanding and agreement that the City's use of such funds shall net trigger the
requirement of Davis Baan Act compliance under 40 U.S.C. Section 276a - 276a-5 m under
any other law or regulation by the Developer in correction with the Project.
NOW, THEREFORE, IN CONSIDERATION of the mural promises and covenants
terminal in this Agreement, the City and Developer agree as follows:
1. Subject to the provisions of this Agreement, Developer agrees to acquire
necessary property in the District, to perform all eavhormental site
remediation in the District required by the State of Maine Department of
Environmental Protection to permit development of the Project end as sed foM
in a certain Inter from Nicholas J. Hodgic na to Not Ureneck dated Jure 12,
1995 and attached hereto as Exhibit A, m perform a8 necessary site work and
concoct a masonry building of not less than 50,000 square feet of gross floor
area to accommodate Ne operation of a supermarket, and consumer on site
parking in the District sufficient to comply with City Land Development Code
parking requ rerrsms.
2. Developer agrees to invest not less than $5,900,000 in privately secured fords
m the activities indicated in I above (hereinafter -Developer Investment').
3. Developer agrees to provide evidence, not later than June 30, 1996,
satisfactory to City Solicitor of City, of a binding construction contract, or
contracts, providing for site work and building construction costs in the
District of not less than $3,000,000.
4. Developer agrees to provide evidence, net later Nan June 30, 1996,
satisfactory to City Solicitor of City, of a binding lease or lease commiunent
between Developer and Shaw's for lease of the property in the District to
Shaw's, for a period of nor less than 20 years, and to provide evidence,
satisfactory an City Solicitor of City, of Shaw's commitment to a lease for a
supermarket in the District of not less than 50," square feet of gross floor
area for the same period.
5. Developer agrees to use best efforts to provide evidence, satisfactory to City
Solicitor of City, of Shaw's commirnent to invest not less than $1.8 million
for purchase and installation of furnishings and equipment associated with the
operation of a supermarket in the District.
6. City agrees to reimburse Developer $975,000 through the issuance of City of
Bangor taxable general obligation bonds to assist Developer in the financing
and acquisition of all properties in the District assembled by the Developer to
develop the Project, sheet and ower improvements and site development
costs. Prior to reimbursement of de Developer, the City shall be entided to
reimbursement of the City's net cost of acquiring any properties acquired by
the City and transferred to the Developer pursuant to Paragraphs 13 and 16
below.
The remaining portion of the $975,0110 net required to reimburse the City for
its cost of acquiring property in.the District shall be paid to the Developer to
reimburse the Developer's cost of the land acquisition, environmental
remediation, engineering, legal expenses, permitting costs, site work, street
and sewer improvements, financing and other soft costs exclusive of
Developer's fees and administrative costs, and Project construction as follows:
Pour Hundred Thousand Dollars ($400,000.00) at the lune of bond issuance by
the City in January, 1996; with the remaining balance to be reimbursed to the
Developer on a monthly basis thereafter in an amount equal to eight and one
half perces 18 V2%) of me Developer's Project costs expended during the
month concerned. Notwithstanding the above, the firs[ monthly request will
include all project costs intoned by me Developer up to and including the date
specified in the request. Developer, with each monthly reimbursement
request, shall provide evidence satisfactory in the City of Developer's total
Project casts expended during the period covered by the request. Any
unexpended portion of. the $975,000.00 reimbursement shall be paid to the
Developer upon project completion, provided that the Developer has invested
Privately secured Ponds in me project in the amount specified in paragraph 2
above, and provided that me Developer has otherwise fulfilled its obligations
under this Agreement. It is the parties' intention that the City's total
reimbursement too the Developer under this paragraph, including amounts
used to reimburse the City's cost of acquiring property in the District after
July 1, 1994, shall not exceed $9]5,000.00 or seventeen percent (17%) of the
"Developer's Investment" invested in the Project for land acquisition,
environmental remediation, engineering, legal expenses, pertaining costs, site
work, street and sewer improvements, fmancing and all other soft costs
exclusive of Developer's fees and administrative costs, and Project
construction under paragraph 2 above, whichever amount is less.
9. A. City agrees to perform site demolition work at the City's sole cost and
expense on property owned by City and on other properties purchased
by de Developer in connection with the Project and vacated prior to
March 31, 1996. The site demolition specifications shill be approved
in advance by Developer. It is the patties' understanding and
agreement that such contribution shall not trigger the requirement of
Davis -Bacon Act compliance under 40 U.S.C. Section 276a - 27&-5 or
under any, other law or regulation.
B. City agrees to pay for the design of the environmental site remediation
work and Developer will perform the enviummemal site remediation
work as such work is outlined in a remain letter of the Department of
Environmental Protection to Paul Ursmck dated June 12, 1995 and
attached hereto as Exhibit A.
S. Developer agrees that development of the Project shall be in accordance with
all applicable Federal, State, and City laws, ordinances, and building codes.
9. Developer agrees the scope of ate work shall conform in all material respects
to the site plan prepared by Appledore Engineering, Inc. as will be approved
by the Planning Board of de City of Bangor.
10. Developer agrees to provide evidence, satisfactory to City Solicitor of City, of
legally binding fnancing commivuent of not less than $5 million in private
funds for financing of the Project exclusive of financing to be provided by the
City as provided for m 6 and 7 above.
11. Developer hereby acknowledges tndt the City, in agreeing to provide financial
assistance to Developer for the Project, relied m material part upon the assured
completion of the Project and the Developer agrees to use best efforts to
substantially complete the Project no later than June 30, 1997.
12. Developer agrees to use reasonable efforts to obtain Shaw's commitment to use
its best efforts to create or cause to be created, within duce (3) years after
completion of the Project, 40 full time, or full time equivalent, new permanent
jobs to be filled by persons, who at the time of their employment, will be
persons of low- and moderate -income under criteria established by flea U.S.
Department of Housing and Urban Development.
13. Unless,previously acquired by the Developer, City agrees to acquire, not later
Nan 45 days after the execution of this Agreement, the following properties:
373 Main Street designated as Lot 134A on City Assessoi s Map 35; 361V
Main Street designated as Int 136 on City Assessor's Map 35; 379-383 Main
Strew designated as Lot 165 on City Assessor's Map 25; and 22 Patten Street
designated as Lot 168 on City Assessor's Map 25,
14. City agrees to discontinue Patten Street between Hellier Street and Main Sweet
m the District and m transfer any interest of the City in the Patten Street right-
of-way between Hellier Street and Main Street in the District to Developer not
later than 45 days after the execution of this Agreement.
15. At Developer's election, the Developer may felicitate this Agreement and in
such event Developer shall be released from its obligations under this
Agreement if the City does nor perform all of its obligations in this Agreement
Within the time periods required, if the Developer does not acquire all
properties necessary for its Project, if the Developer does not obtain Planning
Band and/or oder necessary local, Nate, and federal approvals for the
Development, of if the Developer does rot obtain a construction loan financing
commihnent of not less than $5 million in private funds and a noruecourse
permanent take out loan fmancing commitment.
16. City agrees m natter title to property owned or hereafter acquired by City in
District ("the Premises") to Developer for consideration of $I by Municipal
Quitclaim Deed with Covenant.
Notwithstanding anything herein to the contrary, if the City purchases the
properties described in paragraph 13 above, and if the City is not in default of
its obligations under this Agreement, and if the Developer does not then
purchase said properties from the City and reimburse the City for said
properties pursuant to paragraph 6 above, the Developer will be responsible m
NY the City the lesrer of. (a) $82,500; or (b) 50% of the City's cost m
arquve said properties less the residual fain market value of the said
properties. The Developer's obligations shall be secured by a note executed
by the Developer in the amount of $82,500 and personally guaranteed by
Joseph P. Boulos.
17. Developer agrees that it shall kap and maintain books, records and other
documents relating directly in the receipt and disbursement of the City funds
provided hereunder and agrees that any duly authodual 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 written ratite.
Developer shall Brame that similar provisions are included in all contracts or
subcontracts entered into in correction with this Project.
M Developer agrees that any duly authorized representative of the City shall, at
all reasonable times, have access to any portion of the Project until its
completion end a permanent Occupancy, permit for Ne Project has been issued
by Bre City.
19. After reimbursement to Ne City for land acquisition costs and the first
payment of $400," to the Developer, the City agrees to disburse funds
provided for in paragraph 6 above upon receipt of satisfactory evidence that
foods relating to the Project, including without limitation More soft costs
defined in paragraph 6, have been expended by Developer. No funds provided
for in paragraph 6 above will he disbursed by the City prior to February 1,
1996.
20. City agrees m perform the work provided for in paragraph 7 above at the
City's sole coal and expense on the time table mutually agreed upon by
Developer and the City.
21. Any entice which either patty des'nes or is required to give to the other in
convection with this Agreement shall he in writing and shall be sent postage
prepaid, certified mail, return receipt requested, as follows:
If to City:
If to Developer:
Edward A. Baran, City Manager
City Ifall
73 Harlow Street
Bangor, Maine 04401
c/o The Boulos Company
Two City Center
pordand, Maive 04101
Attention: Joseph F. Bmulos
fir to such other person and/or address as may be identified in writing by the
patties.
22. The City agrees to provide and hereby provides the Developer with the
following environmental internally:
In consideration of the Developer undertaking to develop the Project Ne City
shall be responsible for and shall indemnify and hold the Developer and its
members and their successors, assigns, agents or representatives harmless from
and against any and all claims, demands, costs (including court costs, costs of
collection and attorneys' fees) or causes of action at law or in equity by any
and all third parties or persons, including (without liminfion) employees,
agents, servants and representatives of the Developer, lenders of the
Developer, tenants of the Developer, and also including (without limitation)
any private citiuns, persons, organizations, and any department, agency,
branch or representative of Federal, stare or local government on account of
any injury (including death), destruction, governmental claims, loss or damage
of any kind or character to persons, property or natural resources, or losses
incurred by the Developer ("Developer's claims') arising out of or in relation
to any spills, leaks, discharges, or other release of environmental contaminants
or derivatives, regulated hazardous materials, toxic substances or hazardous
wastes, existing in or on the properties which make up the project as of the
dare of this Agreement. The terms of this indemnity provision shall be
specifically unimaginable and assignable to the Developer's tenants,
mortgagees, successors and assigre and shall survive development of the
Project.
The Developer shall provide the City with timely notice of any and all such
potential claims received by the Developer or of which the Developer becomes
aware. Tice City shall have the right in independently investigate, answer,
defend and compromise all such claims, demands and causes of action as long
as there is no economic impact m the Developer by way of such defense
and/or compromise. The Developer shall cooperate with the City's
investigation and defense of such claims as long as there is no cost or expense
to the Developer.
As used in this paragraph 22, the term governmental claims shall include,
without limitation, the claims of any governmental agency, department, or
regulatory body for recovery of response costs, environmental remediation
costs, civil or criminal times or Penalties, or civil damages for the loss,
damage, or destruction of central resources, made or asserted by such agency,
department, or body in a court action or regulatory proceeding authorized by
Common law, stamp or regulation.
NotwiNsranding the foregoing, the indemnity provided to the Developer under
this paragraph shall be limited as follows only with respect in the Developer
Investment: As used in this paragraph 22, Developer Investment shall mem
the right of the Developer to recover from the City the Developer Investment
in dce Project (as defined in paragraph 2 above) in the event a future spill,
leak, discharge, or other release of environmental cmwninants or derivatives,
regulated hazardous materials, toxic substances or hazardous wastes existing
upon the Project site as of the date of this Agreement shall force the Developer
to abandon the Project, or shall make the Project site unfit for continued use as
a supermarket site in the determination of the Developer's recent. In the event
a future release of environmental contaminants, derivatives, regulated
hazardous materials, toxic substances or hazardous wastes now existing upon
the Project site shall make the Project site unfit for continued use as a
supermarket site in the determination of the Developer's tenant and/or such
Variants ceases operation and/or terminates its leases or abates its rent, the City
shall promptly pay the Developer Investment, which Developer Investment
limited to and rat less than the Developer's mortgage balance to its lender nor
greater than $6,000,000 (plus any named interest or charges on Developer's
mortgage balance until said mortgage balance is paid in full).
For purposes of this paragraph 22 and the indemnity set forth herein, the City
expressly waives any immunity from suit or judgment the City may otherwise
enjoy under the Maim Ton Claims Act, 14 M.R.S.A. Sermon gW 1 et sett„ or
other provisions of law.
Notwithstanding the foregoing, the Developer agrees Nat to the extent the
Developer has negotiated or negotiates hold hazMess/itdemnification
provisions with its contractors and/or subcontractors engaged by the Developer
to perform enviromnemal remediation of the Project site and/or project
construction, such indemnifmation provisions indemnifying the Developer
against claims of such contractors' and subcommc[ors' employees raising out
of personal injuries (including death) sustained on the Projem site, and
including for this purpose a limited waiver of such co gractors' and
subcontractors' exemption from liability and judgment otherwise provided
under the Maitre Workers' Compensation Act of 1992, 39-A MRSA § 104, or
other provisions of law, Nen to such extent, the indemnification provided by
the City to the Developer under this paragraph 22 slual not extend to or
include any obligation on the part of the City to answer, investigate, defend,
settle, or satisfy the claims of such contractors' or subcontractors' employees,
or to reimburse the Developer's cost thereof. The Developer will endeavor to
include such hold harmless/indemnifica[ion provisions in me Developer's
contracts for environmental remediation of the Project site and for project
construction.
23. This Agreement represevs the entire agreement of the parties hereto and
supersede all prior negotiations, representations, or agreements, written or
orad, all of which are deemed merged herein. This Agreements may not be
amended except in writing signed by City and Developer.
24. Except as provided in this Agreement, until substantial completion of the
P jegt, Developer shall not assign its rights under this Agreement without the
prior written consent of City, which consent shall not be unreasonably
withheld, delayed or conditioned.
25. Except for the City's indemnity provisions set forth in paragraph 22 above
which are unconditional, the City's obligations hereunder are contingerm upon
the Developer's compliance with the terms and/or conditions set form in Nis
Agreement.
26. A. In the event the Developer does not commence work on the Project within
two (2) years from the date hereof and substantially complete its work
within four (4) years from the date hereof, subject to tome nmieure, the
Developer will be and hereby is contractually obligated to reconvey the
properties conveyed by the City to the Developer in connection with the
Project for $1 unless the delay is caused in whole or in pan by an event
indemnified under pamgmph 22 above. The Developer agrees for itself
and every successor in inm an to the Project to keep the Project subject m
property tees anal assessments imposed by the City for the lesser of 20
years or nmol such time as the General Obligation Bonds described in
paragraph 6 above (Ne Trans') are repaid. The Developer shad have the
right (but not the obligation) to prepay said Boans. The City represents
that the Bonds shall be monetized on a twenty (20) year amortization
schedule.
B. The City intends to fund its reimbursement to the Developer as provided in
paragraph 6 above with a twenty (20) year general obligation bond issue.
The City, in its municipal government capacity, will retain up to Ne full
amount of the tax increment generated by the Project by designating any
"captured assessed value", as defined in 30-A MRSA ¢ 5254, for a period
nut to exceed twenty (20) years, for the repayment of bonds issued of up
to a maximum of Nine I uanred Seventy-five Thoueaan Dollars
($975,000.00), to the extern such revenues are available. The Developer
agrees for itself and for its successors and assigns that, should dee mx
increment generated by Ne Project he insufficient in any year to make arty
scheduled payments for Ne bovds, due to future smte or federal legislative
action that results in reductions in local real esmm or personal property not
revenue, the City of Bangor, in its municipal government capacity, may
impose special assessments pursumat m 30rA MRSA 4 5255 in an amount
necessary m fund the addltiowl amount necessary to make the bond
Payments cotrzmed. The Developer, for itself and its successors, hereby
agrees to execute any necessary written consent to such special
assessments. The Developer shall pay to the City the: amount of any such
special assessments tons (30) days before the bond payment by the City is
due.
C. The Developer, for itself, its successors and assigns, agrees that the City's
approved development program for Ne Main Strout Municipal
Development District referred to herein may be amended to include the
expenditure of up to $ by the City to insure or self -insure all or
a portion of the City's indemnification obligations to the Developer under
paragraph 22 above. In the event the City shall so amend its development
program, the Developer, for itself, its successors and assigns, agrees that
the amount so designated to be expended for inmrance or self-insurance
may be bonded in the same manner as provided in paragraph 6 above.
Such $ amount shall be in addition to the $9'15,000 referred to in
paragraph 6 above and shall be in addition to other development program
expenditures provided for in Ne City's development program. The
Developer, for itself, its successors and assigns, agrees that the City's debt
service for such additional expenditures for insurance or self-inmtmnce
Shall be subject to the provisions of paragraph 26 B above pertaining to
special assesaments in the evem of future state or federal legislative action
that results m reduction of local property her revenue.
27. The Developer agrees for itself and for its successors and assigns that with
respect to Ne so-called "gas works sice" which is to be conveyed to the
Developer by the City and which Bice is a portion of the Project, that a covenant
against discrimination (viz: that the Developer and its successors and assigns
shall not discriminme upon the basis of race, color, erect, national origin, sex
or physical handicap in the sale, lease, or rental or use or occupancy of dw said
gas works site or any Improvements thereon) shall be included in the City's "gas
works site' deed to the Developer. Such covenant shall be binding for the
benefit and in favor of and enforceable by Ne City and the United States of
America.
28. The Developer represents and agrees fiat it purchase of the so-called "gas works
site" will be read for the purpose of development of the Project and not for
speculation in land holdings. This representation shall terminate and Inc of no
frulher force and effect upon substantial completion of the Project by the
Developer.
29. It is intended by the parties that this Agreement shall operate as a contract under
seal, in accordance with 14 MRSA §751.
IN WITNESS WHEREOF this Agreement bas been executed, sealed and
delivered in duplicate counterparts as of the day and year first above written.
PENOBSCOT DEVELOPMENT
LIMITED LIABILITY COMPANY
By
Joseph F. Boulos
Its Member
10
CITY OF BANGOR
LJI
Edward A. Barren
Its City Manager
11