The URL can be used to link to this page

Home My WebLink About2010-04-21 Business and Economic Development Committee Minutes BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE Wednesday,April 21,2010 5:00 pm City Council Chambers MINUTES Councilors: Chair Weston, Bronson,Gratwick, Nealley and Wheeler Staff: McKay, Harrington,Wallace Others: Brian Ames of Ames A/E; Richard Hanson, Mike Henry and Iry Marsters (partners in Penobscot Plaza Associates Corporation) CONSENT AGENDA 1. REFERRAL—ORDINANCE 10-138, Amending Schedule X of Chapter 291, Article III, Sec. 42 of the Code of the City of Bangor—Off-Street Parking—Court Street 2. Community Development Residential Rehabilitation Loan—22 South Park Street 3. Community Development Residential Rehabilitation Loan—282 Pearl Street A motion was made by Councilor Gratwick and seconded by Councilor Bronson. No discussion. Consent agenda was unanimously passed. REGULAR AGENDA 4. Penobscot Plaza Reconstruction Penobscot Plaza Associates Corporation—partners include Iry Marsters, Richard Hanson and Mike Henry—came before the Committee to present their proposed reconstruction plan for Penobscot Plaza. They are represented by Brian Ames of Ames A/E who reviewed in detail the proposed reconstruction project of the Penobscot Plaza and its associated costs. The architectural rendition for the Penobscot Plaza reflects the style of the former historical railroad station that was once on the Bangor waterfront. It is proposed to have retail on the first floor with mixed-use residential on the second floor accessible through a stair tower. There will be 3 phases to the entire reconstruction project. Phase one will have a build out cost of around $3.8 million with 12-15 condominium units; Phase two will have a build out cost of around $3.7 million with 8-10 condominium units; Phase three will have a build out cost of around $3 million for retail portion. The total investment in this project will be around$10 million. Brian added that with this type of investment on the private side, it is hoped that the City can provide aid as well in assisting with leveraging up the accumulation of private funding and investment, and the usage of available TIF monies to do public street areas and public improvements around the facility. He further asked that the City consider stream front improvements of the waterfront bulkhead area along with improving the park land between the stream and the railroad to make that more attractive and available for pedestrian usage; and asked if the City would assist with railroad accessibility. In closing, Brian stated that they would be open to suggestions and opportunities that might come forward over the next 2-3 years in Economic Development assistance, recognizing that this project will probably take at least 3 years to move through the various stages. Councilor Gratwick inquired as to what the next steps the involved parties foresee. Brian replied that a project of this size will need some additional investors which they would invite to join them. Also, the major piece of improvements on how they go forward and invest$10 million is going to be the waterfront. This could take 2-3 years before they could move forward with the project itself. Chair Weston stated that the attention to historical detail is commendable, and he's more than willing to hear more about the project as it moves forward and see how the City can help. 5. ORDINANCE 10-112, Amending Chapter 23, § 23-13—Add Associate Membership to the Cultural Commission The City established a Cultural Commission with six members and no associate members. This Ordinance change will add two associate members to the Cultural Commission. A motion was made by Councilor Gratwick and seconded by Councilor Nealley to approve this Ordinance Amendment as presented. So voted. 6. Discussion of Use of FY 2010 CDBG Funds Rod reviewed a list of proposed Community Development activities for funding from July 1, 2010 through June 30, 2011. The total estimated amount for these activities ($1,632,613) exceeds the amount expected to be available ($1,365,432) by$267,181. Rod suggested Committee members may also have additional projects they would like considered for funding. The proposed use of CDBG funds has to be submitted to HUD by May 15, 2010. Rod further reviewed annual budget comparisons showing how the City has historically used its annual allocation of Community Development funds. At this time, Staff is asking for guidance from the Committee about what adjustments in the proposed project funding amounts they would like and/or what projects should no longer be considered. Any changes would have to be known and made prior to the May 15 submission date. At the next BED Committee meeting, staff will be asking for the Committee's recommendation to the City Council on project funding ($267,000 of adjustments to be made to the proposed project list). Staff suggests rather to consider the issue of making the upper levels of the Parks& Rec building handicapped accessible rather than putting funding of$250,000 for an elevator into this year's program to be carried out from July 1, 2010—June 30, 2011. Councilor Gratwick inquired as to monies possibly being available to assist with sprinkler systems in the downtown. Rod replied that in privately owned property you'd need the participation of the owners. The City does currently does not require sprinklers and there isn't a dedicated program to assist owners with sprinkler improvements. If a building's tenants qualify as low-to-moderate income, the owners probably would not, perhaps that would be sufficient to assist the owners through the Community Development Business Loan Program. We could also pursue government grants. Councilor Gratwick replied that he brings this subject up to get it on everyone's radar and see what's available in state and federal grants, as it seems that this is going in the direction of eventually being a requirement. Councilor Bronson added that there has been discussion happening in various places with some City staff and Committees regarding such an ordinance on a local level. It has been asked at some of these meetings whether or not Community Development, or Economic Development, could assist in finding programs whereby the City puts such an ordinance in place and if there will be some means of helping owners either through low-interest, no interest or grants. Councilor Wheeler expressed concern with facades and unattractive signage on several buildings on Main Street and suggested that there be a pro-active effort on the City's part to approach the owners of these buildings regarding these issues. He further inquired if CDBG funding could be used for having one or two motorized replica trolleys which could not only serve as shuttles between the waterfront and the core downtown area but possibly be used by the Historical Society for tours of the historic areas of Bangor during the summer and fall months. Rod replied that the planning aspect could be eligible for Community Development assistance but do not think we could finance the buses or the operational expenses. Those would have to come through the DOT, BACTS and Comprehensive Planning Committee. I would suggest speaking with the City's BAT staff about the possibility of that. Councilor Palmer suggested furthering discussions on the funding of broadband installation in the downtown and what funding resources there may be available to assist with the cost. Councilor Weston reiterated Councilor Palmer's comment and added that there is a workshop being planned in the coming weeks to continue this discussion. Councilor Gratwick inquired regarding the possibility of more bulkheads at the waterfront. Rod replied that the bulkheads that the City of Bangor has done (as well as the ones Brewer has done) have been largely funded through state and federal programs to stabilize the shores. We would look primarily to those programs for the funding to do that. The problem behind Penobscot Plaza is that the City does not own any land along the riverbank there; it may belong to the railroad, so the City would need permission from the railroad to make improvements. 7. Neighborhood Stabilization Program (NSP) Kaleena Harrington, Asst. C.D. Director, updated the Committee on the progress of the City's federally funded Neighborhood Stabilization Program (NSP). The City of Bangor has received $1,084,873 to rehabilitate foreclosed and vacant properties. The intended use of the funds is to mitigate the adverse impacts on neighborhoods of foreclosures. Kaleena handed out to the Committee a spreadsheet listing the properties that have been acquired under the NSP in Bangor and reviewed the properties that have been acquired to date: 111 Parker Street, 27 Cumberland Street,41-43 Second Street. The property at 41-43 Second Street will be sold to Penquis CAP under Maine State Housing Authority's 'NSP'. Their program is different from ours in that non-profits and community action programs can apply under the MSHA program to do multi-unit properties. That program allows for whatever local Community Action Program (CAP) applies for that funding can have housing vouchers attached to it which makes the property management for that building much easier for that non-profit. Properties at 34 Holland Street and 24 Fruit Street have not yet been acquired but are in the process of being acquired. The NSP regulations stipulate that once a property is acquired, rehabilitated and sold, the City cannot make a profit on it. Chair Weston at this time had to leave the meeting; in his absence Councilor Gratwick Chaired the remainder of the meeting,with Councilor Bronson as an alternate. III♦ 8. Discussion: Community Development Residential Rehabilitation Loan Program—Investor Owner Property— Eligibility Policy The Business and Economic Development Committee has previously discussed possible policy changes for Community Development Residential Property Rehabilitation Loans for investor owned multifamily properties. Rod reviewed the City's current Community Development multifamily lending policy along with recommended policy changes. In previous years, Staff has made loans to investor owners who agreed to rent at least 51%of their units to low and moderate income people provided that they did not have a rent increase for a period of 4 years after the loan was made,and those loans were made at a fixed interest rate for a period of up to 20 years. The Committee has suggested that we should be adjusting the interest rate periodically; the banks typically do that every 5 years. Staff is in agreement with adopting a policy that would adjust the interest rate periodically and they have suggested every 5 years. Councilor Stone has suggested that it be done more often than every 5 years. Also, Committee members have suggested that we should only make loans available to applicants once so that applicants can't get multiple loans. Rod stated that the objective of this program is to rehabilitate properties to bring them up to meet City code requirements and make them safe to live in. In the past,the program has encouraged as many interested applicants to come in and partake of the program to improve their property and make them available to tenants who meet the low and moderate income standards. The objective has been to improve properties and stabilize property values. Councilor Nealley stated that by requiring that the investor owners of these multi-family units rent only to low and moderate income persons that it's highly possible that the owners are not getting a net operating income from the building to be able to put aside funds for potential improvements. It is highly likely,therefore, that some of these owners will be returning for assistance with repairs. May be we should review that aspect and continue to allow people to use it that have used it before. Councilor Nealley then inquired if there are any of the recommended policies by Committee that Rod would like to see adjusted or delete completely. Rod replied that the interest rate recommendation that the rate be fixed for the first 5 years then be adjusted every 5 years at 300 basis points,that is 3%above the Federal Home Loan Bank Boston rate which is pretty close to what the banks are doing. However,we shouldn't make the program identical to the banks program because then we don't have anything that makes us different. He also goes along with Councilor Nealley's concern that we shouldn't control the rents for too long a period of time but we do want to have some protection for the tenants at the time the loan is made, so I recommended that this requirement stays the same as it is now. Loan payments amortized over 20 years, unless otherwise approved by the Committee—there are situations where Staff would recommend less than 20 years, but generally as a lot of property improvements are being made for larger amounts I think 20 years is a reasonable repayment period - 80% loan to value ratio is pretty standard - staff recommends that. Private lenders like to see the owners put in at least 20%cash into a project. We have not required that as long as the equity is in the property; if the property is worth $100,000 with no existing mortgage and they need $50,000 to fix it up, we have not asked the owners to put up$15,000 in cash. We've accepted the equity as their investment. The debt cover ratio of 1.2,that means you need 120% revenue over your expenses, we would recommend that as a criteria. Councilor Stone had suggested that the Staff have approval authority over the loans—no other Committee members have suggested this so I haven't recommended it. Councilor Nealley made a motion to move Staff recommendations to full City Council. Seconded by Councilor Bronson. 2 in favor with Councilor Gratwick opposing as he feels it is complicated and needs more discussion at Committee level before going to the full City Council. Meeting adjourned.