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HomeMy WebLinkAbout2004-04-14 Business and Economic Development Committee Minutes � BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE � APRIL 14, 2004 Minutes I Councilors: Palmer, Farrington, D'Errico, Cashwell, Tremble ' Staff: McKay, Bates, Martzial, Bolduc, Weber, Hupp, Heitmann Others: John Karnes, Dave Lawler CONSENT AGENDA t A motion was made and seconded to approve the Consent Agenda. � 1. Authorizina Agreement with the Maine Develooment Foundation: Downtown Businesses have responded positively to technical assistance seminars � that the Community and Economic Development Department and Bangor Center Corporation have produced in the past. The first such event with which we were involved, was held in )une of 1998, when the City hired a consultant specializing � in town planning, landscape architecture, and retail consulting to visit downtown and ultimately deliver a presentation at the end of the visit. Sally Bates has been working with Maine Development Foundation's Maine ' ! Downtown Center Coordinator to develop a program specifically for Bangor, that would bring two people here to visit downtown and meet with various � stakeholders, including retailers, and conclude their two+ day visit with a presentation to Downtown property owners, business owners and employees, city employees, eleded officials and the general public. The agreement will be � with Maine Development Foundation, which will line up the national consultant. The cost to Bangor will be $6,500 funded through the City's Community Development Program. 2. Extension of Lease with NCR Coruoration for O�ce S�ace at 39 Florida , Ave: Approval would extend for one year NCR Corporation's lease of an office at 39 Florida Ave. that it uses for administrative functions and storage of office , machine parts. See attached Memo _ REGULAR AGENDA � 3. Union Place Develo�ment Pr000sals: Palmer indicated that the Committee wouldl hear 15-minute presentations from both parties with a 15 minute question � and answer process following. David Lawler and John Karnes were present. Mr. Karnes, owner of R & K Construction, presented architectural drawings outlining his proposal to construd two 4-unit buildings on the site. As part of his t proposal, he would also completely rehab 251-253 Union Street. The new construction would be three story townhouses, middie income brackets. 251-253 Union Street would be low to moderate income brackets. The remaining 8 would ' be a step up from that bracket housing. Karnes noted one discrepanty in his proposal. When first submitted, he indicated 1 four unit and 2 two-unit. Once it � , � � was submitted to the City, the Community and Economic Development Department indicated there was not sufficient land for the unit numbers. Karnes � then changed the proposal to 2 four-units. The development costs would be slightly reduced. He is also asking for a TIF, which would in turn be slightly reduced. Karnes will relocate the existing tenants at 251-253 Union Street. � Karnes has purchased and rehabed many buildings within the City specializing in bringing rundown, placarded buildings back to life. He has a good working relationship with the Code Enforcement O�ce. He has preliminary financing � place and could move forward on a short notice. Palmer asked about visual, landscape improvements to the properly. Karnes provided a color copy drawing of the proposal, which includes landscaping. ' Cashwell asked how the City acquired the lot. Approximately five years ago, McKay said that RiteAid originally had a proposal to purchase much of this ' neighborhood. RiteAid requested a contract zone change from the City. It was a controversial issue for the neighborhood. The contract zone was granted by the City but RiteAid did not go forward with the project so the zone change expired. , The Council decided that action was needed to clean up the neighborhood. The City used federal community development money to purchase the dilapidated properties to be demolished and tenants were relocated. The one remaining ' building (251-253 Union Street) was left standing and, as part of the RFP issued at the end of 2003, the developer was given the choice to either demolish the building to clear the site for a new building or to rehab the building. McKay said the City adopted the Union Place Redevelopment Plan and is now at the end of � that process where all land has been acquired and made available for redevelopment. Cashwell asked if there are restrictions on the property due to the City's use of federal monies to purchase the parcels. McKay said it is part of ' the City's annual Community Development Block Grant funding. The City provides the federal government with its proposal of intended use. Cashwell asked if low to moderate income is a requirement. Under the current zone, � McKay indicated that medium density residential housing is allowed on the site. To accommodate Mr. Lawler's proposal, which is partially commercial development, the parcel would need to be rezoned. It would require Planning � Board and then City Council approval. Weber said the Union Place Neighborhood Conservation area originally had two zones: Urban Residence II and Multi-Family and Service District. Last year, the property that was Multi-Family and Service � District was rezoned to Urban Residence II. In response to D'Errico, McKay said the City's intent indicated to the federal � government was that the funds would be used to acquire the property, to clear I and make it available for redevelopment, with the intended use as housing in conformance with zoning. As long as it fits within the City's plan, the federal � government should not have a problem with the property being made a combination of housing and commercial use. ' Farrington asked for clarification of the map outlining the proposed units. In response to Paimer, Karnes addressed fire issues indicating there has been a fire at one of his building at 342 Union Street and a second fire took place which was � , � ruled accidental. He is moving forward and will again fix the building. Palmer , asked if there were any charges pending against him. Karnes said it was possibly pending but there have been no charges as of yet. Palmer asked when there � would be resolution and Karnes indicated he thought three weeks or so. Karnes owns 14 buildings in the Bangor with approximately 35 units. Karnes described landscaping for the project. Tremble asked about the financial aspects of the , project. McKay said the proposed project, due to the costs involved in construction and rehabilitation of the existing building, would not support a payment for the land. Karnes also proposed TIF financing with 65°/a of the new � tax revenue generated by the project to be returned to Karnes. The owner would provide $100,000 of cash equity and would borrow $140,000 of Community Development funds for the rehabilitation of the eacisting building. , Karnes indicated earlier that he had changed his unit plans due to the City's indication that there was not enough space. McKay said that staff would work with him on financing to adjust the numbers appropriately, should the Council , approve Karnes as the developer. Karnes said the 65%TIF is based on the value of existing Union Place and currently the City is not collecting taxes on the building so the numbers were not accurate when he first put them together. ' Therefore, the TIF percentage would drop significantly. Karnes would use a portion of the new tax revenue generated by the project to make debt service on the community development loan. Farrington asked what the property tax was , on the property prior to the City's purchasing it. McKay indicated approximately $7,000 for all properties in Union Place. Martrial pointed out that the relocation costs involved previously were approximately $15,000 per relocation and that Mr. ' Karnes has proposed to pay the relocation costs. Mr. Lawler addressed the Committee. Palmer asked Lawler to explain his history , with the location. Lawler has been at the intersection for over 25 years. After the RiteAid project didn't go forward, Lawler purchased and rehabed the properties next door to his current video business. He is looking to build two � story town houses with brick fronts with a one-car garage for each unit. In the Newman building, he is suggesting commercial space on the first floor and two apartments on the second floor. He talked about moving his current store closer to the front, eliminating parking in the front and provide parking on the side and � the back. He has suggested a masonry building with a porch with white columns. Lawler further discussed his proposal for landscaping and green space. Palmer asked Lawler if he had considered residential units above his current video store. , Lawler had not. Lawler indicated he did not submit all that had been required in the proposal because it would have cost a substantial amount of money, $6,000- 10,000. A zone change will be required to include the commercial/residential , mix. The financing would be taken care of by Mr. Lawler and his project would generate a substantial amount of taxes for the City. He had planned to offer $5,000 for the land but had not included it in his proposal. Farrington confirmed � that Lawler's original plans are now obsolete due to changes. Lawler didn't have current plans as his architect is on jury duty. All proposed buildings have a brick fasade to match other buildings in the area. Tremble commended both Karnes , and Lawler for their efforts in the City to restore buildings. Lawler's current store is 3,000 sq feet but not all on one floor. Palmer asked if there would be distinct � � , ' i demarcation separating the family from the adult side of the building. Lawler indicated yes and there currently is a barrier. With additional space, it could be ' even better for the separation. Palmer asked if Lawler needed 6,000 sq. ft. for the commercial end of the project. Lawler said he is not locked into it but he does need additional space. � Cashwell said Lawler is an unsung developer but the City has issued an RFP which requires several different submissions to go with the proposal. There � were deadlines associated with the RFP. Cashwell assumed the only submission was the 2-page document from Lawler and further said that if the requirements for an RFP are irrelevant, how is the City to act regarding equity between the � two proposals and people who offer the proposals. Cashwell asked Lawler• how he would want to be treated in that regard. Lawler indicated Cashwell is right but said it is very entailed and felt he submitted a plan and a letter and, if there � was some interest, he would then come up with a better proposal. He didn't want to spend the amount of time and money and then have his proposal rejected. Cashwell said if Lawler had submitted a complete proposal and another ' proposer offered a 2-page plan would Lawier feel that he had been treated equitably in the proposal process. Lawler said yes. Palmer asked Lawler if he had had any conversations with Karnes regarding moving the video business to ' another location and using the space entirely for residential space. Lawler said he had been at that location for 25 years and it has been a struggle for him and sometimes with the City. His goal is to stay at that location. He would have to , close the business down for a short period of time, in his proposal, in order to tear the current building down and rebuild. Farrington asked about the zone change and the relocation of current tenants in that area. Lawler said he would have no obligation to the current tenants. He suggested JGQ Properties, who ' previously have helped him with relocations. Because the properry was acquired by CDBG Funds, Martrial said that existing tenants would have to be temporarily or permanently relocated in compliance with the Uniform Relocation Ad. It is � just a matter of who pays for the relocation. The cost depends upon the income of the tenant; i.e. the lower the income of the tenant the more relocation benefits they are eligible for. Mar�ial explained that it becomes expensive when � there is a very low income tenant. You have to move them into an equai apartment and pay the difference between their existing rent now and the new rent for five years plus moving expenses. Regarding the zoning change that , would be required with Lawler's proposal, Weber said that to accommodate any � commercial use on the City owned property would require at least partial rezoning back to a commercial zone. The City's Comprehensive Plan for the area � calls for it to be residential from the corner of the intersection along Union Street. A zone change to Urban Service District would not be consistent with the Comprehensive Plan. In response to Palmer, Weber said the proposal could be � smaller commercial and fewer residential units. Weber said she would be willing to work with Lawler to scale down the project. The current video business is a grandfathered, nonconforming commerciai use of the lot. A 6,000 sq. ft. building � at this location would take up all of the City property to meet the development standards, according to Weber. Tremble asked why it isn't appropriate to change the zone to Downtown Development District. Lawler said his proposal is � � � similar to the RiteAid proposal except on a smaller scale. Weber said that the , Karnes' proposal of 12 units maximizes what would be allowed. In response to Palmer, Weber said if it were to be the desire of the City to have mixed , residential, then a contract zone that would limit the density might be appropriate. Palmer asked about upper floor residential units, and Weber said it is an option. Tremble favored creating residential but to improve the commercial aspect. � McKay said that at some point the Committee needs to provide staff with ' guidance on dealing with the two proposals. The item will be referred to the next Business and Economic Development Committee on April Z8`h for � consideration. Karnes indicated he was overwhelmed by the RFP and the � associated requirements. He checked with the Community and Economic Development Department and was told that his proposal would most likely be rejected if he didn't comply with the requirements. Karnes said he did go to the � expense of complying ($3,500 plus his time of over one hundred hours). Palmer asked staff to come up with something a bit more refined in two weeks so that the Committee could take action based on facts, not on speculation. ' 4. Penobscot Theater Communiri Development Loan and Develoument Agreement: Staff reviewed the proposed terms of a Development Agreement , with the Penobscot Theater that will provide a $155,190 Community Development loan for the installation and activation of a fire suppression sprinkler system needed to comply with City Codes. At a previous Committee ' meeting, the Committee wanted to assist in the financing and didn't want to see the building closed because of code violations. If approved by the Committee and the City Council, the loan would be made at a normal interest rate for 20 years. For each year the Theater remains open to the public with performances, , the City will forgive the payments in that year as long as the Theater maintains its employment level of five. The City would have a first mortgage on the property. If the Theater decided to sell the property, the City would have the � right of first refusal. There is currently no mortgage on the property. Tremble asked if the Theater has current loans with the City as well as Ciry financial support. McKay said the City has provided financing for the Theater's , Shakespeare Festival at $10,000. Tremble asked about the additional $50,000 the City provided the Theater last year. McKay said there is additional work needed on the facility but the current request is for essential work necessary to � remain open. Palmer supported the requested fire suppression efforts but agreed with Tremble to look at the longterm overall plan for the Theater. D'Errico talked about the sale of the Theater's second properry and thought the , proceeds were to be used for the Opera House improvements. McKay said one consideration by the Theater is whether to continue upgrading the current facility or to build a new facility. At its last meeting, the Committee felt that funding the ' fire suppression system would place higher value on the building no matter its use. McKay said there is substantial interest for a movie theater in the downtown, if the Penobscot Theater were to move. D'Errico asked about the � benefit of the current building being shared with the Theater and the movie business. In considering this request, Farrington said it is very important that r � ! ` the Council prioritize its budget process. He requested staff provide a list of what the City has already put into the Theater. He indicated there is a limit for ' the non-profit requests at which point they have to start to assume more of their own support. Farrington did make a motion to approve the request. The motion was seconded. Cashwell agreed with Farrington and, separate from the motion, � felt it should be clear what the City has done, what it can do, and it is time for the Theater to present a business plan. Tremble stressed the importance of a financial business plan. The City isn't helping them by piecemealing financial ' support. He suggested the City's Finance Diredor be placed on the Theater's Board of Directors. Palmer agreed. Cashwell asked if there is a clear definition of default in the agreement. McKay said if the Theater remains open and continues ' their performance schedule the City would forgive the repayments so there wouldn't be a default. If the Theater closed the building, had no public performances, then they would be responsible for the repayment to the City. If ' repayment did not occur, the City could institute a foreclosure process. Cashwell suggested an addendum to the agreement specifically outlining the default so that all involved are clear. McKay said the City is currently assisting the Theater � in obtaining cost proposals for the fire suppression system. Palmer suggested delaying the item to the ne� regularly scheduled BED meeting. Farrington asked the reason for the delay. McKay said that staff will work on the amended language regarding default, City representation on the Theater's Board, and a ' business plan for the City's review in the agreement. McKay said the language will be incorporated, staff will review it with the Theater, and will attempt to put it in place for the April 12"' agenda. Palmer also asked for a five-year financial � history of the City's support for the Theater. Tremble suggested a 15-minute pre-Council meeting session to review the amended agreement. Palmer asked for a roll call vote on the motion to move the item ahead with the caveats as , outlined by the Committee. The roll call vote was 4-1 in favor of the motion. A motion was made and seconded to go into Executive Session for the following 1 items taking Item #7 first: 5. Executive Session — Pro�ertv Disoosition—Griffin Road � 6. Executive Session — Front Street Development Prouosal 7. Executive Session — Communitv Develoument Loan — 25 Randoloh Drive � ' � � � � COUNCIL ACTION � Item No. 04-120 Date: A�ril 26, 2004 , Item/Subject: ORDER, Authorizing Execution of Municipal Quitclaim Deed - Real Estate at 87 Pushaw Road (Mobile Home) , Responsible Department: Legal Commentary: � Payment has been received for real estate taxes and sewer bills on a mobile home located at 87 Pushaw Road. Because the liens have matured, Council approval is necessary to release the City's interest in the , property back to the property owners. There are no code issues with the property. The Finance Committee recommended approval at its April 21, 2004 meeting. , r Department Head ' Manager's Comments: , ��,"�" __ � ._-`-�-.'"� �d:Ll1tC.�G�-U,r5'(.l.c�t� _ , City Manager Associated Information: i Budget Approval: � c � , Finance Director � Legal Approval: ' City Solicitor , I Introduced for Consent Agenda X Passage _ First Reading Page 1 of 2 � _ Referral i /