HomeMy WebLinkAbout2004-09-29 Business and Economic Development Committee Minutes ,
BUSINESS & ECONOMIC DEVELOPMENT COMMifTEE �
September 29, 2004 �
Minutes
Councilor Attendance: Palmer, Cashwell, Farrington, D'Errico, Greene, Allen '
Staff Attendance: Rod McKay, Steve Bolduc, Norman Heitmann, Mike Dyer, �
Susan McPike, Edward Barrett
Others: ]oe Cloutier and other representatives from Realty
Resources, Doug Bouchard �
1. Authorizing Ap�lication to the Department of Housing and Urban Development
EDI-Special Projects Program for Waterfront Improvement Grant ,
Rod McKay said they had requested an appropriation from the Federal
Government and received $248,525 which is designated for improvements along with '
the waterfront project. On the next Council agenda will be an Order authorizing the
application for the funds and a Resolve appropriating the funds. Rod asked the �
Committee for its recommendation for passage of these two items. Councilor Palmer
asked if there were any questions, and there were none. Councilor Farrington moved
for staff's recommendation, and his motion was seconded. There was no further ,
discussion.
2. Amendment to Ticketmaster Agreement ,
Norman Heitmann told the Committee the City has had an agreement with
Ticketmaster since 1994. Ticketmaster has requested several amendments to the � '�
agreement, a lot of which are redefining terms to bring us more current, including
internet tickets. The most substantive change to the agreement is that the renewal
would be in three-year increments instead of two-year increments. Mike Dyer said he �
has no objection to any of the amendments, and recommends we do this. Councilor
Farrington asked Susan McPike about the $6,000 in annual telephone charges. Sue �
responded that they provide everything and we are only responsible for providing a
phone line. Ticketmaster provides all the backup service; they program all the shows
when they go on sale; provide ali the support; all the tickets and envelopes. Bass Park '
only pays about $6,600 per year.
Councilor Palmer asked what the City's return was on a ticket. Susan referred to '
a financial printout and responded that there really wasn't a breakdown per ticket but
to print a ticket is 10 cents and then if the credit charge fails there is an approximate 3
cent charge. Palmer then asked about the e-tickets and how those are working. Susan '
said this is getting more and more popular and what Ticketmaster has done is provide
Bass Park with a little machine, like a scanner. They print the ticket off on their
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' computer when it is ordered and when the ticket holder comes to the Auditorium, it is
i ' scanned. It depends on the size of the show, but the last show there were around 200
e-tickets. Norm asked if the scanner can tell if it is a legitimate ticket and Susan
responded yes. If there is a problem with the scanner, Bass Park staff can go into the
� computer and verify it. Palmer noted for the record that Councilor Greene is now in
attendance. A motion was made and seconded to approve staff recommendation and
send it to the full Council for approval. There was no further discussion.
� Susan offered to tell the Committee what was on sale now and Councilor Palmer
read the following to those present: Sesame Street, Lord of the Dance, Lonestar, the
� Moscow Ballet, Godsmack, and the Globetrotters. ,
3. Essex Street Affordable Housing Proposal — Essex Commons — Realry Resources
, Rod McKay said last Spring an RFP was issued for redevelopment of the Naval
Reserve Center on Essex Street. The only proposal received was from Realty Resources
� which is proposing a 32-unit affordable housing project. Tentative developer status
from the Council was granted to give them time to apply to the Maine State Housing
' Authority for low-income housing tax credits and other financing. He added that Realty
Resources has been successful in getting other financing needed for the project,
together with financing from the City in the form of $70,000 from a CD loan and
' $322,000 in the form of a TIF. This proposal was discussed briefly at BED's last
meeting and the Committee requested that any action be postponed until this meeting
so representatives of Realty Resources could be present to answer questions. At the
/ last meeting issues were raised about the density of the proposed housing as well as
the financing of the project. Rod then introduced Joe Cloutier to the Committee, and
Councilor Palmer thanked him for coming.
' Joe Cloutier indicated he had other people coming to the meeting as well, and
they should be along shortly, some technical people and a finance person. He said he
' would be able to address to some of concerns in the meantime. Councilor Palmer
suggested going onto the next item and coming back to him when his other people
1 arrived. This was agreeable to Mr. Cloutier.
4. Shaw House — Waterworks — Project U�date and 6ctension of Dates in
, Develo�ment Agreement
Councilor Palmer indicated that Doug Bouchard from the Shaw House was
� present. Norm Heitmann said there were two matters pending before the Courts: one
being the appeal from the DOT establishing a public crossing. The City was successful
in the first level getting the crossing in Superior Court and the Law Court is hearing
' arguments on the 19�' of October, and hopefully we will get a favorable decision on
that. Mr. Heitmann went on to say that the Railroad has also challenged the City's
taking of the easement for the public crossing, and in essence that is a two-part
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challenge. It is a challenge of the assessment of damages which has nothing to do '
with the taking itself, and they are entitled to a jury trial on that if they wish. The
second part of the challenge is the Rule 80B appeal from the Council's action. The �
Railroad will be filing their briefs on October 10`h and the City has 40 days to respond,
and then the Railroad will have 14 days to respond to the City's response. The court ,
will then set up arguments on that. It's hard to know the schedule, but Norm thought
maybe within 6 months there would be arguments on that. Again, the Railroad has
the right to appeal this as well. �
Councilor Palmer asked Mr. Bouchard if there was anything he wished to add,
like How long the buildings are going to stand before they fall into the Penobscot River. �
Mr. Bouchard said that was a very good question. He said the Shaw House and all of
the other parties involved have two concerns: one is keeping the building in tact, and
second is keeping all of the parties, particularly the financial parties, in place. He said ,
the City is still interested in this project. Shaw House is still interested. The Federal
Home Loan Bank could have withdrawn their money back in May and decided, in order
to make a point to the Railroad, didn't so they also are staying. The biggest �
contributors are still there.
The second issue is the building. He said he had spoken to several people, t
including Dan Wellington, who spoke about the physical plant and how it's doing. He
seemed to think that iYs okay although Doug feels it will depend on what type of '
winter we have this year. He is hoping that some measures can be taken to support
the structure while the legal farce gets played out.
Councilor Farrington said he had three questions regarding this stonewalling by i
the Railroad. He wondered whether this delay will cost the City anything because a
certain amount of money has been committed to this project? And, if the delay entails ,
more cost, how would the costs be apportioned and how much can we get the
Railroad to pay of these costs? Another question is, would the Railroad have fought
this if the development were different from what it is. The Shaw House is a very ,
unique type of development and if we had had a restaurant, for instance, or a
manufacturing outfit, would the grounds of the Railroad have changed? Norm
Heitmann said he could not speculate as to the Railroad's thinking on the last question. ,
However, this is an important public crossing and iYs the first time they have appealed
it so that might give some indication. They never challenged the crossing when the '
hospital had options. He would leave this issue for others to decide. Obviously, the
effect of these challenges has been to delay the project. In terms of whether we're
successful, and continue to be successful in the challenges, and we get anything from �
the Railroad but certainly any claim would be strengthened if the Law Court were to
determine that an appeal was frivolous.
Mr. Bouchard interjected that relating to costs, there is no way Shaw House is �
going to delay this by 6 months or longer and not have an increase in costs. If it
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� ended up being that the project was increased significantly, we would go out and seek
� more funding. However, there is a point of no return should this be delayed long
enough and the price goes up high enough, this project may be out of reach. But it is
conceivable.
' Councilor Palmer indicated that Councilor Allen has joined the meeting.
' ' Councilor Greene asked when the crossing expires. Norm answered that the City
obtained rights from the Railroad to cross. When the DOT established the public
crossing, they set a time limit in which to do the project and that was five years.
� Councilor Greene then said he knew the front building was going to be demolished, the
filter house, and asked if that is anything that can be undertaken at this point? Mr.
Bouchard said there have been a number of considerations about what they refer to as
' bifurcating the deal, which means simply doing it in more than one phase. The
problem is though that even with the demolition of that building, we still need a level
of investments either by the Ciry, the State, the investors, or whomever, and as far as
, the investors are concerned if you're in for a penny you're in for a pound. So all of
their attempts to move in that direction have not been very successful.
� Councilor Cashwell indicated he wanted to make a motion. However, Norm
Heitmann said the primary issue besides the update is to add a year to all the dates.
' Councilor Cashwell made a motion that the dates be modified as recommended by
staff and the motion was seconded. As a final note, Councilor Palmer wished everyone
good luck for historical reasons to see this project happen.
� Noting that Mr. Cloutier's parties were now in attendance, Councilor Palmer
returned to Item Number 3 on the agenda.
' 3. Essex Street Affordable Housing Pro�osal (cont'd�
� Joe Cloutier introduced Suzanne Roy and Tom Williams. Mr. Cloutier said that
this plan is a first attempt to respond to the City's RFP, and from previous discussions,
, there was concern about the density of the project and access. He said that the
project can be done with fewer buildings and more green space, and further it was the
consensus of the construction people that we could end up with 4 or 5 buildings rather
� than the 8 that were originally contemplated. The RFP specifically requested access
on Essex Street, so this is what was done. However, he felt it best to have an
additional access through Pine Street onto Stiliwater. From a legal point of view,
, additional access would be needed over Ciry land to get up to Pine Street other than
whaYs encompassed within the purview of the RFP. Councilor Palmer asked Rod
McKay for assistance.
, Rod McKay said that the site we see this proposal on is the old Naval Reserve
site. Also available is a site which goes up to Milford Street and the Mary Snow School.
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However, the soil conditions in this area are unknown and the ability to support the �
buildings and so forth. So that's why the RFP was drafted for the project to go on the
Naval Reserve site. The City also owns land along Pine Street (he showed on a map) �
and referred to the corner of Stillwater Avenue and Essex Street and said that some of
that land is leased to that commercial development for parking, along with the City's
swimming pool, and another parking lot. All of this area was looked at before and '
whether or not Pine Street extends all along to the naval Reserve Center and what it
would take to extend Pine Street. Norm added that Pine Street does extend to the Ciry ,
parcel. Councilor Palmer thought that if Pine Street were an option it might be a better
package for the Planning Board and the public, but he wanted to hear from others.
Councilor Allen said she was encouraged to see Pine Street being utilized to take �
some of the burden off Essex Street. She asked about a traffic study. Rod McKay said
he didn't believe one had been done relative to this proposed project. This would ,
come if it is required with the site plan improvement process by the Planning Board.
He also was not sure whether there was any traffic information available when the
study was done on Stillwater Avenue. Ed Barrett said he thought we had a lot of ,
traffic information because of the Stillwater Avenue study. As the project goes forward
with the data on hand, it would be relatively easy to determine the impact of additional
tra�c that this development would produce. t
Councilor Allen asked if it was possible to add some type of an access way off ,
Milford Street, and Rod McKay responded that the City does own the land up to Milford
Street but in the RFP we said that we would not allow access to Milford Street because
of the school and additional traffic on Milford Street. �
Ed Barrett said there are two basic concerns for the Committee, the first one
being the density question and the second one the additional traffic. Mr. Cloutier has ,
responded to both questions by indicating that there would be lower densiry and there
would be the use of Pine Street. Ed suggested that the next best step would be for
Mr. Cloutier and his representatives to get together with Kate Weber, Jim Ring and '
Rod McKay to determine what the best density would be for that location. This plan as
proposed would most likely meet the requirements of high density residential
development and the land now is zoned low-density residential so that issue would ,
have to be dealt with as well. There are other considerations that need to be
addressed, and once a better plan can be developed for that area it can come back to '
the Committee for approval before it goes to the Planning Board.
Ed asked Rod to update the Committee on where the financing stands because '
this is a key issue to the project. Rod said the project is a $4.6 million dollar project.
They have $2.5 in low income tax credits, a State Housing Authority loan of $614,000,
a subsidy from Maine State Housing Authority for $600,000. They have proposed two '
financing mechanisms from the City, one being a Community Development loan of
$370,000 at 0% for 30 years, delayed debt service. And the other one was City
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' taxable financing of $322,000 at 7% for 40 years, which in effect would be a loan to
Realty Resources. And the developer has proposed to put in $170,000 also. So the
' total financing from the City is $692,000. One would be a deferred loan for 30 years
and other would be a loan to be repaid over 40 years. Rod added there was also the
' concept to use Community Development Block Grant Funds to finance the purchase of
the property which has been appraised at $263,000 and because the property is
actually part of the Airport assets so the money would go to the Airport. And then we
' could reloan that $263,000 back to the developer with some mechanism where the
Airport would have new money and at 6 '/z% it would be a good investment for them.
Then the Economic Development fund would loan the money to Realty Resources.
' Councilor Farrington indicated that a lot of his financial questions had been
answered. However, because of the uncertainty with the Palesky situation and the
1 impact of the election either way, he still has a concern about the development loan
and the TIF. These stretch out what the City pays with a minimum of return, and he
said he would like to be convinced that this is a prudent thing for the City to do. It is
, a big project. There should be a good return for the developer but there is a limit to
what the City should contribute because it is the City taxpayer that is contributing to
' this.
Rod McKay said Realty Resources proposed the TIF but what they are really
' looking for is a loan for $322,000. In the proposal, they offered more for the property
than the appraisal came back for. But again if we're financing it we need to make sure
that we're not paying more for the property than iYs worth and the Airport is not
� receiving less than iYs worth. Rod said the Assessing Department valued the property
at $8,000 a unit which comes up to $256,000. The appraisal came in at $263,000. So
while Realty Resources did propose tax increment financing for its project, what the
' staff is recommending does not involve any taxable increment or any city funds other
than federal Community Development funds available to the City. What staff is
recommending is we use Federal community development dollars to purchase the land
' for the Airport and that the Airport takes the sale proceeds and loan the money back
to the developer. The Ciry would not receive the money that it loans for the purchase
of the land back until the other obligations to the Maine State Housing Authority are
, taken care of in 30 years. In essence it is what MSHA is doing with their deferred
payment loans in that it's really a grant but it's not being repaid for 30 years so long as
, the property is used for the intended purpose which is to provide affordable housing.
But it gives us a loan and it gives them the obligation to maintain that housing.
� Councilor Cashwell asked if there were any alternatives. Mr. Cloutier responded
that in his view the City needs affordable worker housing in Bangor and this project
will bring in $4 million worth of state and federal resources that are going to be put
, into the project that will benefit Bangor residents. For clarification purposes, Rod also
stated that all of the tax revenue from the project will go to the City based on a value
of $1,540,000 which will result in $34,000 a year going into the General Fund.
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There was further clarification on the technical aspects of how the financing
works. ,
Councilor Farrington asked where the community development loan money come '
from. Is it money that is sitting there provided by various programs and will not cost
the taxpayer any more taxes, or is it something that comes from our General Fund?
We would like to have low and moderate income housing, and we're willing to pay a ,
price for that; but the Council has been criticized for spending more than we should.
Rod responded that it comes out of the federally-funded community development
residential loan program. All federal funds that are earmarked each year for residentiaf '
loans, for property owners to rehabilitate their properties.
Councilor Palmer asked Rod what action he was looking for this Committee to do �
tonight. Rod referred to a Memo that he distributed earlier and explained some of the
contents. Rod said he would like to form a Development Agreement with Realry
Resources so they can proceed on the project. ,
Councilor Cashwell referred to page 4 of the Memo, and especially to the parE '
about 20 years and $1.8 in tax revenues. Councilor Cashwell then moved that we do
this project with the new finances of CDBG loan going to the Airport and paying for the
land, and Councilor Greene seconded the motion. Councilor Greene asked when the '
Committee would see an updated draft, and Mr. Cloutier responded that they would
commission WBRC to start immediately. Councilor Greene then asked Rod, referring to
page 4, how the tax rate is calculated. Rod said it is calculated based on this year's �
tax rate of $22.05 per thousand worth of value. The $1,540,000 is the Assessors'
office projection of the assessed value of the project. That would produce for the first
year $32,970 in tax revenue and Rod said he was projecting an annual increase in ,
value of 1% and an annual increase in tax rate of 1% to be conservative. That goes
out to year 20 and produces almost $50,000 a year in tax revenue to the City.
Rod said he also needed to apply for the zone change from Civic & Institutional ,
to Urban Residence 2, and asked if it was the Committee's intent to have the staff
initiate that zone change. Councilor Palmer asked Councilor Cashwell if that was the ,
intent of his motion and Councilor Cashwell responded yes, if it's required for the
project. Councilor Palmer affirmed that the application for the zone change is part of ,
the motion, and Rod stated that it would go on the Council agenda and be referred to
the Planning Board. In the absence of objection, the motion had passage.
5. F�ctending Tentative Develo�er Status — Sunbury Properties, LLC, Lot 10 ,
Maine Business Enterprise Park
Rod McKay stated that the Council has designated Sunbury Properties as '
tentative developer of Lot 10 in the Maine Business Enterprise Park which ends
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' October 11`h, and staff is requesting an extension of that status for a period of one
month. The developer had been looking at another parcel at one time and
' determined that it would not meet its needs, and are now interested to develop on Lot
10 in the Park and are proposing a 22 to 25,000 square foot building. They have
' made arrangements to meet with staff to present their plans, and after that, staff will
be coming back to the Committee with preliminary plans and proposal for a
development agreement. Councilor Farrington moved for staff recommendation, and
' his motion was seconded. The motion passed.
Councilor Palmer then jumped ahead to Item #11 on the agenda and asked if
, there was anything else that needed to be brought up before going into executive
session and the public portion of the meeting is closed. There was nothing.
, Councilor Palmer asked for a motion to go into executive session for several
items, and indicated this would be the end of the public portion of the meeting.
, 6. F�cecutive Session — Negotiations for Properly Acquisition — Outer
Hammond Street — 1 M.R.S.A. 6 405(6) (C)
, A motion was made and seconded to go into executive session.
' A motion was made and seconded to go out of executive session.
7. Action on above item.
' Councilor Palmer asked what staff was looking for, and Rod said he would like a
recommendation to the City Council approving the $225,000 loan to BanAir Corporation
, for the purchase of 82 acres on Outer Hammond Street owned by the Hirshon Estate.
A council order will be prepared with the terms similar to what was provided to the
Committee this evening. A motion was made and seconded.
, Councilor D'Errico indicated that Councilor Allen has asked for the relationship
between BanAir and the City. Steve Bolduc explained the relationship and the
' membership on the Board.
� Without objection, the motion had passage and will be referred to the City
Council.
' 8. Executive Session — Negotiations for Property Disqosition — Development
Proposal Bangor Waterfront— 1 M.R.S.A. 5 405(6)(C)
� A motion was made and seconded to go into executive session. The motion
passed without objection.
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A motion was made and seconded to go out of executive session. The motion ,
passed without objection. No action was taken by the Committee following the
executive session. '
9.. Executive Session — Negotiations for Properly Disposition — Development �
Pro�osal Maine Avenue/Lot 14 Maine Business Enter�rise Park — 1
M.R.S.A. 6 405(6,(C)
A motion was made and seconded to go into executive session. The '
motion passed without objection.
A motion was made and seconded to go out of executive session. The ,
motion passed without objection. A motion was made, seconded and passed without
objection to recommend to the City Council that Meridian Mobile Health be designated '
tentative developer of Lot 14 in the Maine Business Enterprise Park for a period of 60
days for the potential development of an approximate 11,000 SF building to house its
ambulance service. ,
10. Executive Session — Neaotiations for Property Dis�osition — Development '
Pro�osal Maine Business Enterprise park— 1 M R S A fi 405(6�(C)
A motion was made and seconded to go into executive session. The '
motion passed without objection.
A motion was made and seconded to go out of executive session. The '
motion passed without objection. No action was taken by the Committee following the
executive session.
A motion was made and seconded to end the meeting. The motion passed ,
without objection.
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