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HomeMy WebLinkAbout1992-04-13 92-210 ORDERCOUNCIL ACTION Item No. 99-210 Date April 13, 1992- Item/Subject: First Amendment to Option Agreement for Purchase of Bangor waterworks Facilities Responsible Department: Community & Economic Development This item was discussed at length by the Municipal Operations Committee on March 17, 1992. As the Council is aware, the City executed an Option Agreement with Bangor waterworks Associates in Merch 1991, for redevelopment of the Bangor waterworks facility into a 37 -unit vacation timeshare project. The original Option Agreement obligated the City to petition mBOT to establish a public crossing of the Maine Central Railroad line adjacent to the project site, and further provided that the option period and construction schedule proposed by the developer would be reasonably extended if construction or marketing of the project was held up as a result of delays in the City o State permittingprocess. The Agreement also tied the City's obligation to convey the property, and to take other steps, to the developer's pre -sale of aertain number of timeshare units, in lieu of regular financings (continued on next page) Manager's Comments: Department Bead - City Manager Associated Information: Order, First Amendment Budget Approval: Finance Director Legal Approval: Councilor Baldacci should abstain on this item due to his family relationship with one of the developer's principals. ALA City Solicitor Introduced For Passage First Reading Referral Page 1 of 8 92-210 A%*M to CaweJoe Soucy April 13, 1992 CITY OF BANGOR (D First Amendment to the Option 11 Agreement for Purchase of Bangor Waterworks Facilities ....... ...._..._._ ............... .......... ......... -_.__. BYW CUY CmW of CftofDemise. OHDBBSD, THAT the City Manager is hereby authorised to execute a FirstAmendment to the Option Agreement for Purchase of Bangor Waterworks Facilities by and between the City of Bangor and .Bangor Waterworks Associates dated March 6, 1991, a copy of which First Amendment is on file in the Office of the City Clerk. 92-210 In City Connell aptil 13,1992 1 P O R D E R Passed Title, J ,FY? Firs[ Amendment to the Option Agreement try Clar i�....................................... for purchase of Bangor Waterworks Facilities gU. R Awigned to C 6 •��Cvwncilman 92-210 FIRST AMENDMENT TO THE OPTION AGREEMENT FOR PURCHASE OF BANGOR WATERWORKS FACILITIES Thin Amendment to the Option Agreement of March 6, 1991 is made this day of 1992, by and between the CITY OF BANGOR, a municipal corporation located in the County of Penobscot, State of Maine (hereinafter "CITY"), and Bangor Waterworks Associates, a Maine Corporation having a place of business in Bangor, County of Penobscot, State of Maine (hereinafter "DEVELOPER"). WITNESSETH: WHEREAS, the CITY and the DEVELOPER have executed an Option Agreement for the Purchase of. the Premises for development In accordance with. the "Bangor Waterworks Proposal" submitted to the CITY by Bangor Waterworks Associates dated September 21, 1990 and the terms and conditions of the Option Agreement dated March 6, 1991; and WHEREAS, delays in obtaining necessary approvals from the State of Maine for establishment of a public railroad crossing and for redevelopment of the facility have made it necessary to revise the DEVELOPER'S project schedule and financing arrangements as contemplated by the parties' original Option Agreement; NOW, THEREFORE, the CITY and the DEVELOPER, hereby mutually agree that the parties' said Option Agreement dated September 21, 1990 is hereby amended as follows: Section A. (GRANT OF OPTION), Subsection 9., Paragraph 1 of the Option Agreement provides that the Option Agreement shall remain in effect until June 30, 1992. This date shall be amended to June 30, 1993. Section B. (CONDITIONS PRECEDENT TO THE CITY'S CONVEYANCE OF THE PREMISES TO THE DEVELOPER), Subsection 2.c., Paragraph.3 of the Option Agreement provides that no later than May 15, 1992, the DEVELOPER shall meet with the City CouncilCommunityand Economic Development Committee and submit for its approval final plans and related drawings, specifications, and documents in the form specified in Section B.2. above. If the City Council Community and Economic Development Committee deems revisions to the final plans to be necessary or appropriate, the plans must be so revised and submitted to the City Council Community and Economic Development Committee for its approval no later than June 15, 1992. These dates shall be amended to May 15. 1993 for the submittal of final plans and June 15. 1993 for any revisions required for these plana. 92-210 Section B. (CONDITIONS PRECEDENT TO TBE CITY'S CONVEYANCE OF THE PREMISES TO TBE DEVELOPER), Subsection 4., Paragraph 1 of the Option Agreement provides that the progress Schedule shall provide for the commencement of construction of the DEVELOPER'S project as described in the DEVELOPER'S Proposal dated September 21, 1990 (Exhibit "B"), within three (3) months after closing but in no event later than June 30, 1992. This date shall be amended to July 30. 1993 . Section B. (CONDITIONS PRECEDENT TO THE CITY'S CONVEYANCE OF THE PREMISES TO THE DEVELOPER), Subsection 6. SM11 be deleted in its entirety and replaced with the following Subsection 6. 6. Prosect Financing. It is contemplated by the DEVELOPER End understood by the CITY that construction of the DEV@LOPER's project will requireconstruction financing by a commercial lender or private investors. in order to assure the availability of funds necessary to complete construction of those aspects of the project of special interest to the CITY, and to assure the availability of tax increment revenue necessary to retire any obligation incurred by the CITY in accordance with "Attachment C" paragraph 4, the CITY and the DEVELOPER expressly agree to the following additional terms and conditions: a. It the DEVELOPER shall not have obtained necessary construction financing or commitments in a minimum amount of $200,000.00 by June 30, 1993, the DEVELOPER may, at its option, elect to cancel this Option Agreement. In such event, the CITY shall release to the DEVELOPER any letter of credit Or Other security for construction of on-site improvements furnished in accordance with Section B.]. below, but shall have no liability to refund to the DEVELOPER the cost of any improvements actually constructed, which shall become the property of the CITY. The CITY shall also retain the DEVELOPER'S option fee paid in accordance with Section A.4. above. b. Upon exercise of its option in accordance with Section A.]. of this Agreement, DEVELOPER shall provide satisfactory evidence of project financing sufficient to assure construction ofallimprovements required to be made under Section S,O. below, and shall provide a performance bond or other financial guarantee, in a form acceptable to the CITY'S City Solicitor, as provided in Sections B.]. and B.B. below. C. If the DEVELOPER engages in pre -marketing activities, all such activities shall fully comply with all applicable disclosure and other requirements under the Maine Condominium Act, 33 MRSA 51601-101 at seg_, 92-210 including purchase -money escrow requirements under 33 MRSA 51604-109, and with Title 33 MRSA 5591 at seq. , relating to time-shares. DEVELOPER Shall provide the CITY with evidence of its compliance with disclosure and other requirements under the cited statutes. d. No unit or interest in a unit shall be finally conveyed to any individual for consideration prior to the date on which the CITY .conveys title to the Premises to the DEVELOPER, or prior to the date on which the DEVELOPER received CITY subdivision approval under Section 5.5. of this Option Agreement. Execution of a purchase and sale or similar agreement with an individual timeshare purchaser shall not be deemed a final conveyance under this subparagraph. WHEREAS, in accordance with 'Attachment C" dated March 6, 1991, additional terms were negotiated between the parties, Section 4 of id "Attachment C shall be deleted in its entirety d with the following Section 4. 4. CITY to Create Develooment District and Construct Public Improvements The CITY agrees that upon DEVELOPER'S compliance with the requirements of Section S. of this Agreement, the CITY shall designate the Premises as part of a municipal development district to be created in accordance with 30-A MRSA g§ 5251-5260, and shall designate any "captured assessed value", as defined in 30-A MRSA §5254, for a period not toexceed ten (10) Years, up to a maximum of Three Hundred Fifty Thousand Dollars ($350,000.00), as retained for the purpose of financing proposed public improvements as set forth in DEVELOPER'S proposal dated September 21, 1990. Said $350,000.00 shall be in addition to the $100,000.00 purchase proceeds to be applied to structural repairs as designed in Paragraph 1. of this Attachment. The public improvements to be financed In this manner shall include the following, a. Construction of a public crossing to provide access to the site, the amount retained for this Purpose not to exceed One Hundred Fifty Thousand Dollars ($150,000.00) (portion of "Phase I" Public Improvements). b. Construction of any turning lanes on State Street determined by the CITY to be necessary as a result of DEVELOPER'S project, the amount retained for this Purpose not to exceed Twenty Five Thousand Dollars ($25,000.00) (portion of "Phase I" Public Improve- ments). C. Cost of removing Power line, as provided in Paragraph 2. of this Attachment (portion of "Phase I- Public Improvements). 92-210 d. Improvements to the public areas of the Premises to be retained by the CITY, in an amount not to exceed One Hundred Seventy -Five Thousand Dollars ($175,000.00), ("Phase II" Public Improvements). Said improvements to include renovation or repair of the upper gatehouse, construction of two bridges in the forebay area, construction of an island connection between the two bridges, and completion of a pedestrian walkway in the retained area, all a shown on plans submitted with the DEVELOPER'SBangor Waterworks Proposal dated September 21, 1990 ("Exhibit B" attached to this Agreement). The CITY'S obligation to construct the above -listed public Improvements and to create a tax increment financing district under this Paragraph shall be void and of no force until such time as the DEVELOPER has provided satisfactory evidence of construction financing and posted a performance bond or other security as provided in Sections B.6., B.7. and B.B. above. Concurrently with DEVELOPER'S actual construction of the improvements required under Section B.6. above, the CITY shall construct or cause to be constructed the public improvements listed in subparagraphs a. - c. above ("Phase I" Public Improvements). Concurrently with the DEVELOPER'S interior renovations and actual construction of no fewer than 12 individual units of the planned 37 nit project, and the pre -sale of no less than 550 individual ownership units (timeshare "weeks') by the DEVELOPER, the CITY shall construct or cause to be constructed the public improvements listed in subparagraph d. above ("Phase II" Public Improvements). The CITY may, in its sole discretion, require the DEVELOPER to complete construction of all or part of the above listed public improvements, including public improvements to areas to be retained by the CITY. In that event, all direct costs of such public =Provements constructed by the DEVELOPER shall be refunded by the CITY to the DEVELOPER within ninety (90) days following completion of the public Improvements. From such sums, the CITY may withhold a total of not more than ten percent (108) for a period of not more than one (1) year, as surety for satisfactory completion of the improvements and correction of any defects therein. IN WITNESS WHEREOF, the parties hereto have set their bonds and seals this _ day of , 1992. CITY OF BANGOR BY Edward A. Barrett City Manager 92-210 BANGOR WATERWORKS ASSOCIATES BY Witness Robert E. Baldacci, Jr. STATE OF MAINE Penobscot, as. 1992 Then personally appeared the above-named Edward A. Barrett, in his capacity as the City Manager of the City of Bangor, and acknowledged the foregoing instrument to be his free act and deed in such capacity and the free act and deed of the City of Bangor. Penobscot, as. Before me, Printed Name: Erik M. Stumpfel Attorney at Law STATE OF MAINE 1992 Then personally appeared the above-named Robert E. Baldacci Jr., in his capacity as President of Bangor Waterworks Associates and acknowledged the foregoing instrument to be his free act and deed in such capacity and the free act and dead of the Partnership . Before me, Printed Name: Erik M. Stumpfel Attorney at Law 92-210 Since March 1991, several things have happened to affect the Agreement. First, the City petitioned MOOT and was successful in obtaining a public crossing of the Maine Central line at the waterworks site. However, due to the vigorous opposition of Maine Central and delays at the State level, we did not get a final decree until February 19, 1992. Second, the project developer has had more success recently in obtaining regular construction financing, and now feels that it will net need to rely on pre -sale of timeshare weeks as a financing mechanism. The attached Council Order and "First Amendment- to the Option Agreement responds to these delays and recent developments. The Order and Amendment would extend the original option period for one year, with the option now to expire on June 30, 1993. Option fees of $500/month would be paid for the extension period. The developer's construction schedule dates would be extended for a one Fear period, and would also be adjusted slightly. Finally, Section B.6 of the original Agreement would be amended to require proof of --- -construction financing, in lieu of pre -sale of timeshare units, to trigger the City's obligations to convey the property and to establish a development district to fund project -related public improvements required under the original Agreement. The City's Community and Economic Development staff and the Municipal Operations Committee have both recommended approval of the proposed amendments.