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Home My WebLink About1979-02-26 171 AG ORDER171 AG Introduced by Councilor Soucy, February 26, 1979 CITY OF BANGOR (TITLE:) Authorizing F ling or Application for Urban ➢ lopment faz1T By tiw qty CoanaO of the 04 ofRanyor. ORDERED, TUT,The City Council of the City of cadger, as the local governing body, hereby directs and authorizes the City Manager to submit to and file with the Department of Housing and Urban Development an application for Urban Development Action Grant funds as provided for in Title I of the Housing and Community Development Act of 197, a copy of which application in on file with the City Clerk; to provide such additional information and 'furnish such documents as may, be required by the Department of Housing and Urban Development to andante such contract orcontracts as maybe necessary for the grant applied for; and to execute andfile requisitions for funds. HE IT FURTHER ORDERED, THAT, the City Manager is hereby appointed as the authorized representative of the City of Hanger to act in connection with such application of the City of D rigor fox Federal Curds under Title I of the Rousing and Cau salty Development Act of 1977. IN GIN 0011NCIL FEBUARY 2691979 VOTE TO NOVETIE QUESTION 7 YES 1 NO 1 ASSIST VOTING YES BALOACCIx WULEYASr NCEERNAN� WEYNOTIN� WALLEYE ABSENT VOTING NO GASSY ABSENT SOUCY VOTE FOR Finaot 7 YF 1 NO 1 ASSENT VOTING YES BALDACGIj BROONTAS�NCEE wpuEYNODTNj WIILEYjWOODgZENDZIAN, VOTING NO GASS ABSENT SOUCY 171 AG ORDER Tirie, _ . ADTumurG. FIUN0. PF. AFFLIGASSON. FOR URBAN DEV QMCNT ACTION GRANT FUNDS " Introduced and f -ed 17/.14'e` 421 FEDERAL ASSISTANCE w[B1 "[[" 1. TYPE:p PmY1YGlI:XVIEW MIT r ALL" b ,xi® mil39 Tan eUA&SV NE 19 WiTSM: TPAMOS GAU45 MINIMM p nanrlunxx or lm r urau OF nxx I or &FINY El APPLIGNTI ROCity I. Eo L [ Le.u,o[NanunoN Nu of Bawl IF Us I Casua lty Development Diviaion 114• z 1 W ' Will Streetomm > Mn�[" LINE Bengo Penobscot Cial "i Urbav Develo ACti Nainex DWI 7t A dol OF MCHay WT -947 0341 Cul° GreatFrogran _ r, TRUE AND DOWNIFFOR OF IFFLEMMI Mwil OF INTIRREMPKINT Hmcook-Yozk RDP/The TerPrace - Puvds re4`oeated. u` ..0 G1112.11 io this application are. proposed to be used to rv' te the development of 104 rental wits 44& o Easaassist a site acquired and cleared by the City with ?-„� n...nM. Commmity Development Block GrantIF TYPE OF WREVIANCE oM EauM °0'M� •�� LBBevgorA o. "ao Is TYPT OF APPLICATION . OFINNIE •,•"• SEZoZ„ .Mn oaau.m Penobscot, Maine 0 OWN.Imp'll"i ,•�o..Mm, '! '] ME -2nd BOB Fill I AFRICAN ° [" n., m lr of HAM NMEN��'sill Opp m u Mx ••SRA Im".[oxuL Io[m�nunex NUMBER BYTE TO BEENCY El AL Re ve uou[mMu. [ ..N¢x• De tFIEN.. Houl lgE& UrbanDeveloimentr Manchester HN. 03103 T+/MbTMn�MY "%ul pnPr "u%m�"nP a:.Iv�.w til ie�'aMIN ww au.w p m_ wq vs MY ,Mw,".n, low fti IN di IN i 0 "I rva m.m Me , Maine StateEFlaonSvg Office"re c FI9. Wilm m e,mal FBI FERRY w Nu IN mi.w. MM m Penobscot Valley Regional Flaruldng p ll p Tom FINE n^Sohn MINEY yM. yy F W.vBFl,}wluIN, N Ell e ATIVE emu Maety Matwo. E` 210Nuo"MA Y. ••• u umumwTIex"L UNIT "eMINIB,RR,Iv Ful 4B[Nnr�unoNFIFLN" s g n.00sras, .. ... ... q rM. ..,. ....,. StIll 19 v. "IVORY APPLICANT IT I& oxRA.M�..:°w uM" .M � ,e ..... M, a..0 DATE I� IF BY IS ADDED EBv.NLVMW 4AS�:IUZU 30. Ba W. www .1 WE 4 we W. .....[Maw-.., w":',". 421 WARREN C. SAWYER 49 SAY VIM DRIVE M"PK07, MASSACHUSERS O1907 (617) 59}9249 February 21, 1979 Lloyd E. Willey Chairman, Bangor City Council Bangor City Hall Bangor, Maine 04401 Dear Chairman Willey As you will recall the City Council has designated G & S Associates as developer of parcel H-1 in the Hancock -York Street area. We have now developed preliminary plans and are negotiating with con- tractors for the construction of 104 dwellinngg units. At the same time we are diligently working on the financing of the development. As you know, in our June 29, 1976 letter we proposed three alternative ways to finance the development. 1. Conventional financing through a Maine bank. 2. Conventional financing with an FHA mortgage guarantee 3. Conventional financing plus assistance through an Urban Development Action Grant. With interest rates currently above 10% the project is not feasible with conventional financing alone. Either the second or third alter- native will provide the development with the necessary reduced rate of interest making the construction and operation possible. In the case of #2 we could apply directly to the Department of Housing and Development for a mortgage guarantee and then apply to the U.S. Government's Goverment National Mortgage Association (GNMA) for. a 7 1/27, loan directly to ourselves, the developers making the project viable. In the case of #3 we could apply to the Department of Housing and Development with the City of Banger for an outright grant to the City which in turn would either be given as an outright grant to the develop- ment or could be in the form of a loan to be repaid to the City sometime during the life of the project. Combining this loan with a Savings Bank mortgage would make the total mortgage funds have an approximate interest rate of 7.67.. Omeuve Develepmenf anal Imannoant in Real Ealalo, Ssmilivem Human end Ualmal EmimrvmW Page 2 The advantages of this latter financing package are several: 1. The City can use the funds when repaid for further development as it chooses. 2. It coats. the City nothing to obtain these fonds, not even credit. 3. It is a faster process and is less costly for all concerned creating more assurance for the ultimate success of the development. Therefore, we propose that the City apply for $825,000 in WAC funds to be loaned to the development in the form of a second mortgage for 30 years. We propose that G & S Associates pay a fee to the City of $10,000 annually. We would agree to repay to the City the $825,000 in a combina- tion of the following ways: 1. 50% of net cash flow above a 15% return on our equity. 2. 75% of capital available upon refinancing. 3. 50% of capital available upon sale. 4. At the end of 30 years when the bank mortgage will be repaid. I£ we are granted these funds we agree to go forward with the development and construction of the project as defined in our agreement with the City of Bangor. If I can furnish you with any further information, please Set me know. Yours sincce�rel W� ern G Sawyer !— General Partner G & S Associates WGS/p The Terraces Develo®eat Costs Send $ 52$000 Constmetion 2,6W,o "cls.$ Eng., legal - l.7p" Teres and Insurance MA " Construction Period Interest 168$000 Contingencies, Development fees 297,. $3,234,000 Escrow Operating escrow (rent ap 320 vacant months) $ 30,000 Replacement escrow 10,000 TOTAD DENETUP:®VT CWM $3s2741000 The Terraces Operating Protectives 104 Apartments 63 2 BR's @ $325 - per month 36 2 BR's @ $270 - per month Gross Amus]. Rental Ince $331x840 4% Vacancy Al loxence - 15,273 $366.567 Tj1se. Laundry Income 3,000 Gross operating Incom $3699567 Expenses (Arcual) Real Estate T" $ 36x600 Insurance 7�O0o Water/sewer 6240 Vaintenance/supplies LOs000 _ personna/Maaegemeat 352" Replacement Reserve MIMO �4,840 Net operating Income $264r727 Net return on equity w 431,917 a $327,000 a 9.76% The Terraces Unsubsidized Federal Equity Cash Flow Participation (UDw) $3,274,000 Total Development Cost $3,274,000 299471000 Mortgage (30 years @ 10%) _ 23122,000 327,000 Developer's Equity 327,000 - UDAG 8252OW $ 3$i3840 Groes Rental Income $ 381,840 3.000 Other Income 32000 384,840 Gross Project Income 384.840 15,273 Less 4% Vacancies 15,273 3692567 Net Project Income 369,567 104,840 operating EaDenees 1o4,84o 264,727 Net Operating Income 264,727 309,435 Debt Service - let Mortgage 222 810 ( 44,709) subtotal - 41,917 Debt service Fee - lR1AG 10,000 $( 44,708,) Cash Floe (LOSO)/PrOfit $ 31,917 Net return on equity w 431,917 a $327,000 a 9.76% The Terraces Private Lwestment/WAG Ratio Total Development Costs = $3,274,000 Less Escrow 40 o00 Project Develoyment Costs 3,234,000 O Mortgage - 825.000 Private Investment in Project = $2,409,000 Pavmeat of debt service fee of $10,000 Par year for 30 years at present north of $l. per 30 year period at 11% = $100000 x $8.694 = 86,940 TOTAL PMAn pNVtSTIAgNT = $2,495,940 WIAG investment of $825,000 will generate a total or ,495,940 in private investment fume for a ratio of f1 of U foots to $3.03 of private investment. $825,000 MAG M&N - 1. City will lend $8259000 to DEVE]/JPER interest free durisg construction periods; DEPEI/JFER +ill repay the $825,000 to the City at time oP closing. on permanent financing. 2. City will again lend $8259000 to DLVEIAFER for parmanent fineming as lnw Interest second mortgage loan over 30 years, subject to following teams: a. DE CwebaR will pay City $10,000 per year in interest on outstanding MAG loan balance; and b. hCNCCWPER will be entitlen to 1% return on egaity anwwaU ', provided that any return beyond 1% will be shared equally by the DEVESAPER and the City; the City's share, if any, will be applied to the out- standing WAG loan balance; and C. DEpElgFER will repay the WAG loan balance: (1) is full upon expiration of 30 year pr®issory note, less any amounts already paid on principal; or (2) if the DEVESAPER refinances the project before the loan has been repaid, 75£ of the reflnancing proceeds will be applied to the zMG loan balance; o (3) if indialdual dwelling units are, sold off, the City and the DhvbWpER will share the proceeds equally applying the City's share to the WAG loan balance provided the City's share mast equal at least $7,933 ($825,000/w4) per dwelling unit; or (4) if the entire project is sold, the DE WFER will repay the entire outstanding MAG leen balance.