The URL can be used to link to this page

Home My WebLink About1992-08-24 92-398 RESOLVEIntirr duced For IXI Peswge L First Reading Page—of — ❑Referral Cate August 29, 1992 Item No. 92-398 Item/Subject: Approving Community Development Residential Rehabilitation Loan, 9 and 16 Center Street Avenue Responsible Department: Community 6 Rconomic Development Commentary: See attached nemoxandsmt.. `f pepn�enxem Manager's Comments: chremanvper AsurriatM Information: Secret Approval: Finance Dirctto, lamil Approval: C saennr Intirr duced For IXI Peswge L First Reading Page—of — ❑Referral 92-398 Assigned to Councilor Bragg, August 26, 1992 CITY OF BANGOR (TITLEJ F¢¢IIjUE;. AppYO.. ng Community Development Residential ....._... ........__. _..._.................. _ Rehab litatigq_Loan, 9 and 16 Center,$treet...,gYenH9,,,...., By Ns City Council of AAs My of Bangor: RESOLVED, WHEREAS, the City Council of the City of Bangor has rviessed the application of FRIENDS OF TOGETHER PLACE, INC. for a Community Development Residential Rehabilitation Loan in the amount of $27,9]] for the rehabilitation of the properties owned by the applicant located at 9 and 16 Center Street Avenue, Bangor, Heine; and WHEREAS, it has been determined that the applicant sets all of the eligibility criteria of the Residential Rehabili- tation Loan Program; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BANGOR. THAT the application by FRIENDS OF TOGETHER PLACE, INC. for a Community Development Residential Rehabilitation Loan in the amount of $27,977 at an interest rate of 38 for a, term of 20 years and secured by a third mortgage on the land and buildings located at 9 and 16 Center Street Avenue, subordinate only to a first mortgage .held by as Federal Home Loan Bandc of Boston in an amount not to exceed $30,950 and a second mortgage held by Bangor Savings Baidc in an amount not to exceed $13,500, is hereby approved. IN CITY COUNCIL " August 24, 1992 Passed CITY CLERK 92-398 EES0LVE Approving Community Development Residential Rehabilitation Loan. 9 and 16 Center Street Avenue I�^I{,�oVV�rMIV . U Qy CITY OF BANGOR v f (TITLE.) Q$pljipv._ApPreving Couvnun ty Oavelopment Reeitlentia1 ..._............. ._ Rahabilitatio,R._Laan� 9 and., 16 $eater_$tzeet AYeRLLa....... BY Bw City Causal ofaw Cite o7Bansw: RESOLVED. WHEREAS, the City Council of the Cit reviewed the application of FRIENDS OF TOGETHER PLACE, INOf �gfor or hax COwnunity Development Residential Rehabilitation Loan in the amount of $27,977 for the rehabilitation Of the properties owned by the applicant located at 9 and 16 Center Street Avenue, Bangor., Heine; and WHEREAS, it has been determined that the applicant meets all of the eligibility criteria of the Residential Rehabili- tation Loan Program; HOW, THEREFORE, BE IT RESOLVED BY THE CITY COBHCIL OF THE CITY OF BANGOR THAT the application by FRIENBS OF TOGETHER PLACE, INC. for a Community Development Residential Rehebilitation Loan in the amount of $270977 at an interest rate of 3% fox a term of 20 years and Secured by a third mortgage on the land and buildings located at 9 and 16 Center Street Avenue, subordinate only to a first mortgage held by the Federal Home Loan EmB& of Soston in an amount not to exceed $30,950 and a second mortgage held by Bangor Savings Bank in an amount not to exceed $13,500, is hereby approved. Od �/JJ/Ax .* 31 y,2, 35� IulAj(m'L\�:11L TO: City Council �p FROM: Rodney McKay, Community Development Director d * DATE: August 17, 1992 ((GG.�/��"��' Re: Community Development Residential Rehabilitation Loan Application Friends of Together Place, Inc. 9 s 16 Center St. a . Friends of Together Place, Inc., the owner of two properties located at 9 and 16 Center Street Avenue (between Center Street and French Street), has applied for a Community Development Residential Rehabilitation Loan in the amount of $27,977 for the rehabilitation of the two properties. The loan application was considered by the Community and Economic Development Committee at its meeting on August 5, 1992 and the Committee voted to refer the loan application to the full City Council. Concerns the Committee felt the full Council should consider included the effect of the project on the neighbor- hood, that she area a was too confined and overcrowded for the project contemplated, the size of the lots involveddeRare too small, parking s limited, the City's third mortgage loan position would not provide adequate security for the loan, and a concern about the continued availability of rent subsidies from the Bureau of Mental Health needed to make theprojectsuccessful. The Together Place formed the loan applicant, "Friends Of Together Place, Inc.," as an "asset management" corporation. The Together Place is a licensed mental health facility offering social, recreational, and vocational services in Bangor. The Together Place s proposing a cooperative housing project through Friends Of Together Place, Inc. which will be the first of it's kind in the State of False, and a model for The Bureau of Mental Health's future housing concerns. It involves a public and private partnership for affordable housing. Roger Griffith, Director of The Together Place, stated in a letter supplied with application materials "With the downsizing of Maine's two state-run mental institutions and the proposed shifting of resources to the community, the urgent need for a wide range of community housing for the long term mentally ill is readily apparent". Friends of Together Place, Inc. purchased the properties involved at a foreclosure auction for $40,000. Friends of Together Place, Inc. has applied for and received $30,950 in financing from the Federal Home Loan Bank of Boston (FHLB) for partial financing of the project. This financing will be released after rehabilitation of the two properties is completed. it will be at 0% interest and will require. no repayment as long as the properties remain affordable housing and used ascurrently proposed. This loan has a term of 40 years, 1/40 of it will be forgiven each year. This financing will be administered by the Bangor Savings Bank. Friends of Together Place, Inc. has also received a commitment from Bangor Savings Bank for a $13,500 loan to cover soft costs incurred, and some of the rehabilitation already completed at the properties. This loan will be amortized over 10 years at approximately Ut interest with payments of $163.69 a month amounting to $1,965 annually. A requirement for receiving these two loans is that the $30,950 FHLB mortgage be in first mortgage position and the $13,500 Bangor Savings Bank mortgage be in second mortgage position. The $27,977 City Community Development loan applied for, if approved, would then be subordinate to a total of $44,450 and the properties involved would be securing a total debt of $72,427. The current assessed value of the two properties is $132,000. Projected monthly rent for each of the 5 single bedroom apart- ments involved is $439 par month including all utilities. The $439 per month is the prevailing fair market rent established by the U.S. Department of Housing and Urban Development for a one bedroom apartment including all utilities in the Bangor a The Friends of Together Place, Inc. has received a commitment from The Bureau of Mental Health to subsidize the rents of the tenants, similar to BUD's Section S program. The tenant would pay 30% of his/her income (from SSI and any other sources) towards rent and the Bureau of Mental Health would pay the remaining difference up to a maximum of $439 per month or $20,000 per year for the project. Friends of Together Place, Inc. (the owner -applicant) will farm a limited equity cooperative with the tenants called Together Place Housing. After the properties involved are rehabilitated, Friends of Together Place, Inc. would than sell the buildings to Together Place Housing, but would retain ownership of the land. This relationship between the two entities will be governed by a Ground Lease. The Ground Lease defines the responsibilities of the two entities and also provides several "safety net^ provisions that will allow Friends of Together Place to directly monitor the finances of Together Place Housing, and to intervene in the operation and ownership if necessary. Friends of Together Place would subordinate its continued Interest in the land to the City's mortgage allowing the City, in the event foreclosure was ever necessary, to receive both land and buildings. The limited equity cooperative model, whereby each resident owns a share in a corporation made up of it's residents, provides long term affordability and consumer control and empowerment. This appears to be the direction in which Federal and State housing policy is currently headed. The initial equity needed for tenant participation in the limited equity cooperative (Together Place Housing) will be provided by an $5,000 unsecured grant from the mine State Realtors Association. The attached pro forma was developed to indicate projected eexpenses and cash flow of the project o monthly basis (Column A); annually without repayment of the $30,950 FHLB financing (Column B); and annually indicating repayment of the $30,950 FHLB financing as if it were conventionally financed at 108 interest over a 20 year term (Column C). even if conventional financing of the $30,950 provided by FBLB were involved, the projections indicate the project would still be financially feasible. There would be adequate projected revenue to c expenses and mortgage Payments with a debt coverage ratio of 2.45 (1.27 if the FBLB financing were a conventional loan). Private lenders typically require net operating income of 1.25 to 1.50 times debt service (mortgage principal and interest payments). Debt secured by the property if the loan is made would represent approximately half (558) of its assessed value providing adequate equity and security for the Community Development loan applied for. Private lenders typically require a minimum 208 to 258 owner equity, and will lend a maximum of 758 to 808 of a properties value. This standard would be met even if the value of the two properties were as low as $89,000 (@758) to $95,000 (@808) which would be a 288 to 328 reduction from the current assessed value of $132,000. The application meets the objectives of the Community Development Program and the eligibility criteria of the Residential Rehabili- tation Loan Program. Approval is recommended. f �D PFO FORMA ANALYSIS A e C 9& 16 Conter St. Ave. MONTHLY ANNUALLY Wro PHLB ANNUALLY Wth FHLB > 1.20-1.50 Projected Revenue Year 1 Mod. Pe aok Mort. Pa back 9C rter Moret Avenue >20%-25% Apadmed#1 $439 $5,08 5,266 Aparenent#2 0.99 5,288 5,268 16Center Street Avenue Apartrnent#1 $439 $5126B $6,268 Apadment#2 439 5,268 5,268 Apadmerd#3 439 526 5288 Gross Soheduled Rents $2,195 $28,340 $26,340 Lsss: Vacancy@ 5.0% (110) (1,317',(1,31 Plus: Miss. Income 0 0 0 Effective Gross Income U.051 $25023 25,023 Lose Emenses FIXED Real WTaxes $234 $2,812 2,812 Insurxice eB gm 986 ahar 0 0 0 VARIABLE Management@ 6.0% 1a 1,501 1,501 Heat 210 2,520 2,620 Electric 290 2,780 2,]80 Gas 26 300 BW Water 38 450 450 Sewer 75 1,050 1,050 Repar&Maintenance@ 5.0% 104 1,251 1,251 Trash 0 0 0 Supplies 21280 250 Snow Plovring 21 250 250 Lawn Mowing 0 0 0 Outside SeMi 0 0 0 Miscellaneous 100 1,mo 1,200 AEvedising 0 0 0 Legal & Accounting Fees 26 300 300 Other Tota EMenses $1291 1 $15640 $15640 NET OPERATING INCOME NOI $794 WM3 9383 Less: Debt San Mat Ayt 1.FMLSdBoston $i0,95o 298.6] 0 3,584 2.Bangw Savings Bank $13,500 183]9 1,968 Ism 3.0ty CD Rehab Loan $27 155.18 1,862 1,862 Tota ModawGAmount $7%427 CASH FLOW $176.78 $5555 1,9]1 ASSESSEDVALUE $132,0 DEBT COVERAGE RATIO (NO1/Debt Service) LOAN TO VALUE RATIO (total Modgages/Vaue) EQU" RATIO (Value/Tota Modgagea) RLE:TOGETHER 18—Aug-92 Lending - Criterion 2.45 1.27 > 1.20-1.50 55% 55% <75%-80% 45% 0.5% >20%-25% RLE:TOGETHER 18—Aug-92 RECEIVED JUL 2 1 m82 Together Place Limited Equity Rehab Project Tegmher place Wore Crew 9 Center enter Aventine 0227 16 Center SYram Averme 19555 TwIm%Iro1M1 buSdiriese MR SYbeoMraMwc Carpeting 935 Plumbing 395 Healing 1070 Electrical 19" Tocol SuhcorMxlMs 03W Total Together Place Proposal: 27162 Estimate: 9 Center Street Avenue a 5 lowest door to ad'o, with lorkeet labor Materials Examor 85 30 repointing 46 25 Fironry- e escape -etlerW to aside wBM1 pt lumber 137 115 Re-tont patch as speoilled - 250 150 Ginter - right side of porch 25 45 Fascia - replace on from power 37 25 Storm windows - repair throughout 175 150 one, -recall praising metal from door as speotlled 45 175 Siding-repair lbergas shingles with fiberglass 55 So Replace missing balusters in front porch 100 125 Paint house- scrape, prime 8 oil palm - tem 8 siding 1200 950 2069 1010 Imenar -Aiu n 1 Laminate walls andceiling who 3/8- steelwork, as needed 350 ISO Palm all walls, tem 8 ceiling, as spmiried 475 250 Replace missing or damaged ceiling Was 1s 'So Install self close hinges 8 SIB" shemnck basement dam 23 28 Install handrail In Wsemem B 2 Insulate Ram least in basement 35 75 Install pre-hung door in bedroom 45 175 Replace broken tousling, top 8 05 959 a15 Interior- Apartment 2 Laminate walls and delete with 3111^ sheebudk, as needed 400 200 Palms all walls, him 6 coifing, as specifiM 375 200 Belong door In living roam 0 15 Blow in msulali nt to sme well wads 65 25 Insall undedaymem 8 vinyl in Modern 150 250 Install new door to Mthmme i 955 1013 725 Interior - Add: Replace damaged tread " a 5 lowest door to ad'o, with lorkeet 35 35 Mise cmpemg, at rear a sairwell opening 85 30 Insulate alfc emmncewsy wl attraction 5_ 8 133 70 Interior - ddougho s window appear - assists, adjust windows to wo Iso 175 Sawmill: 4624 3603 Total: 9 Center Street Avenue 8227 mMW a)5 60 aea ummney. line, naFealb 25 dYmim, ubmh poWhom int! ecY4e las 95 MISS nephue mt' 35 Onreps amp 11 re9eee mn, repay rmen ewms as zpxmea 1400 1"D M 9e 90 175 prep 6 peFn n N enenm Wm SMgz % 1912 Eariah Censamot sh ipxXlee 66 Amdo ns,II,as Rene pamM1 aM Pwitluuppal 135 F.yhse 36 mori FtyagL,cmsam, BnwYrol 66 I'Mgutter ISO MMIS Imwl amulmuumeeanavem: b fA Insist . Insist 6 Maven 6 6 20 hM, 12.; m,,pVnon9muna 100 Inn" pVIVIVO~19 mvmM e pmNm 1_5 65 225 Wmwe nWw. was "Man".mus ane. stall 75 y 692 ISO Remnant tlow F, bsuhM anal Mill 116 25 laminate wIS Shniemch Plan III Mass, mm 6neang. a,. pawed M li ands I mi mlinwv 0 b0 stall"M,gpM daotb wt 66 Wall0 MM ymxq, in 0eerwm 26 45 Fryhw missing 6 aam.ged 11fig Xk, n 45 631 Instant Wou mmmexry a I6 Blwlnn nM1lbnwsaime6xNs' 46 75 Wff bMOnm 6 11 I.n4nw Moisten. as byuine zoo Pans IS n.vx, tem 6cenng as sp.um.e was Inmll new Gu hlpMnudnm. 35 In Inmll z Mng09daFns an naman-n, 30 111 Sand. ads,, and vanish h6eM1en now - 150 60 InaW 13p s1xl eamdawnnsin Mry a5 225 lam isle En, arywal.I I M am smiting $ 66 14ep4cem¢,ingaaamageeeex nam 90 an mmnbe.unumm.a.apa,sedns bmll maetwomal 6 Valli, as apaeX1e0 M Wh ]ill M 1163 nre. IUNat. eu,nmeml 5 - Feppna hMhen awnmmit 135 alb "Mall mb¢yymem 6 Vm2l 411p,wad h Isamn 300 no Inns Y thy. MXossom - 0 000 Lawn Wi2ama m%arequbtl... _. SOn 100. 11X11 asspwi,So II 166 350 10 W mi man, hwn XnganWh aMsitle sI '150 Sanai Inm.xmew Wrylua.ImpanxOyF Xmn nnelf ow 1M na z1n .- Xaaemem TaaNmpmd.mmbkx lmd.vm6g wao 116 62 muMle Xm pin. ..9emFea 35 in instant 59' Nennc4 an hatemeaa dicta, a a InA"a"tlaellg Mngeewpasamem deM g g9 _ 2M 169 WFtivw mpar- mote, atlpM"Mons lX MaM1 als 2" Sunni 1 Teta1:113CMUSitreel Avenue 14555 110.6 I nlviN M