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HomeMy WebLinkAbout2006-04-19 Business and Economic Development Committee Minutes � � BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE April 19, 2006 Minutes � Councilor Attendance: Greene, Pa{mer, D'Errico, Hawes, Farrington, Gratwick Staff Attendance: Barrett, McKay, Comeau � 1. Preliminary Review of Projects and Activities Proposed to be Funded Next Year with Community Development Block Grant Funds. � The City annually receives CDBG funds from the US Department of Housing and Urban Development. The program has been in effect since 1974.The funds can be used for a , variety of activities that benefit low and moderate income individuals or aid in the elimination of slums and blight. McKay said the City has used funds in the past for both categories. Traditionally the City has received $1.3M annually. The amount has been � reduced over the past two years, and this year it is approximately$1,060,750. In addition to this amount, McKay is projecting program income of$600,000, making a total of$1,660,750 available. McKay reviewed a proposed use of funds including � $100,000 for business development loans, $76,734 for Park Woods social services, $703,857 for property rehabilitation, $7,000 for property disposition costs, $i00,000 for the waterfront area infrastructure improvement to include local matching funds for the � federal grant of$547,000 received for the floating heavy vessel dock, $40,000 for downtown revitalization to include design and engineering for West Market Square improvements, $50,000 for the Enterprise Park infrastructure improvements, $202,412 � for street and sidewalk improvements in eligible neighborhoods, $285,747 administrative costs, and $15,000 for reimbursement to the City Planning Office for services provided to Community Development An application needs to be submitted to HUD by May 15, and it requires a public hearing that will be scheduled at the May 3ro BED meeting. � Council needs to approve the application at its first meeting in May. Council has the ability to make changes throughout the year to the program. McKay reviewed � neighborhoods eligible for CDBG funds. Barrett mentioned that $80,000 for improvements to Williams Park is also included.The playground equipment is close to 20 years old. Farrington asked if stafF had any idea when federal funds would be � completely not available and are there other projects that can be added to the list without much difficulty. McKay indicated that as long as an activity was included in the annual submission to HUD, the Council could move funds between activities, but if a � new activity were proposed, the City would need to submit a revision to HUD to include the new activity. Barrett said he would look for continuing reductions in the level of funding. Responding to Farrington, McKay reviewed several past projects for which � CDBG funds were used and the spin-off effect from the federal dollars. Responding to D'Errico, Barrett said that streets in the tree street neighborhood ofF State Street that have been tom up for sewer work will be repaved as part of the sewer project this � summer. The streets need to settle over the winter months. Palmer said that Birch Street from State to Mt. Hope/State to Garland needs attention. He spoke about his concern of vandalism at Williams Park. Responding to Greene, Comeau said the parks utilized the most include Fairmount, Stillwater, Hayford and Broadway. The others tend �., to be neighborhood parks. Palmer said that Bangor has the best parks of any Maine � � � community. McKay said that if Councilors have suggestions for the proposed project list � they should contact McKay or Barrett. 2. Request for Extension of Deadlines in Agreement with Penview Associates. ' McKay provided background information regarding this project. The city has a development agreement with Penview Associates for the development of a 28-unit � residential condo project on the waterfront. Penview is required to start construction by the end of June 2006. There are certain deadlines within the agreement which have thus far been met. Penview has requested an extension primarily because they need to � have evidence of all permits, licenses and govemmental approvals by May 3 including a building permit. The buiiding permit fee is based on the development proposed. Typically the contractor would pay that fee as part of the construction contract. Ames � and Russell have asked for a 7-week extension based on the delay on the transfer of land between Chris Hutchins and the City which took place some months ago. That exchange of property was needed by Ames in order to proceed with the site pian � application approval, which was completed within the designated timeframe. In the option agreement, by)une 1�Penview is required to provide evidence of financing, evidence of a construction contract, close on the property by June 2"d and commence � construction by June 30 with construction completed by September 30, 2007. Russell, attorney for Penview, addressed the Committee. � Farrington asked if the deadline for the evidence of financing is still in place. Russell said it is currently June 2"d and the requested seven-week extension would move it to July 15. Farrington asked what steps were slowed down due to the delay in the � property transfer which resulted in the extension request. Russell said it is a fair question but the agreement doesn't say it will extend the deadlines if it impacts the approval process of the plan. Responding to Farrington, Russell said the extension is � not automatic. Responding to Farrington, Heitmann provided background. Hutchins on behalf of � Summer Street Capital executed an agreement for the land swap of November 1, 2005. The Council then approved the agreement. Language as approved in the agreement anticipated the need for an e�ension to prepare plans for state approval; it did not � provide for a 7 week extension. Once the Council gave their approval, it was discovered that Hutchins did not have clear title due to a properly mortgage. Given the delay, Heitmann said there was a provision that an extension can be negotiated in good faith. � There was no language requiring a specified timeframe. Timing is now the challenge. The request was presented last week. Heitmann suggested that Council action would be needed at their April 24"'agenda. Waiting until the May 8�' meeting would go � beyond two of the deadlines contained in the agreement. If this Committee has concems with the requested extension, Heitmann suggested an executive session whereby Council would provide direction to staff. Russell responded to Gratwick's � questions regarding meeting evidence of financing deadlines. Ames talked about dealing with a financing institution and reviewed some of the steps Penview has taken in order to satisfy any conditions of private financing. They now have financing proposals from investors other than banks, that are offering Penview 100% financing and they are � now in the process of evaluating these proposals. Ames said there has been a steady � � i � stream of requests for information since the commencement of dealing the new financing entities. He said that at some point the financing entities will commission an appraisai,which takes several weeks. Ames cannot guarantee a deadline for the � appraisal. From a business point of view, Ames asked if Penview would be smarter to extend the full seven weeks and hope that it can be accomplished more quickly or would the City want Penview to come back each step of the way. Penview has acted � expeditiously, Ames has provided all that the financial institution has requested, has done a new market study. The more information requested by the potential financers, the more it slows the process down. Ames said it is not unreasonabie to ask for the � seven week extension. Palmer applauded Ames for his vision and said he senses Ames'frustration at this point. � He said it would be appropriate for the Council to meet in executive session to discuss _ its options. Palmer made a motion to go into executive session. Heitmann cited the MRSA title. The motion was seconded. � Prior to executive session, Farrington said the committee's responsibility is to assure the best use of City property. He indicated the developer's patience throughout the process. � He is concerned that the City not inappropriately lose its control of this property. He wants to be certain there are adequate safeguards in place so that the City does not loose control of the taxpayer's land. Farrington questioned the financial proposal in � place, which Ames had previously discussed. He said that 100% can be risky and more difficult in terms of ineeting qualifications from the lending institution. Ames said it was not the only proposal but appears to be the best. If the project fails, Gratwick asked � which entity has right to the land. Heitmann said the land would be owned by the developer; the bank would have a mortgage. There are provisions in all city development agreements that contemplate mortgages. The bank would have the right � to complete or find someone to complete the project. Ames talked about the 100% contractor bonding required by the lending institution. He said the contractor has an insurance policy that guarantees-he will perform the project. The lending institution will put all of the money that the contractor needs into an account for the developer to pay � the contractor. Once that happens, the project is on a course of its own. Heitmann said that Ames made a very good point. The City also requires performance and payment � bonds. D'Errico confirmed that Ames was asking for an additional 49 days beyond the June 2"a � date. Greene stated that the Committee is in executive session. �. A motion was made and seconded to go out of executive session. Greene stated that the committee had deliberated this item considerably and the recommendation is to � have Penview representatives meet with City stafF. StafF has been given direction from the Committee. The item will be placed on the April 24�' Council agenda. Ames asked to speak about windows. He said the plans are to order the model unit � next week. Inherent to that unit is the design of the end unit itself. (he stepped away from the mic to describe plans— could not hear well). He talked about adding bay � � . � windows in the living room, dining room area, and the second bedroom. It would ' provide two bay windows on each end, would add several thousand dollars to the project, but Ames feels it is well worth it. The Committee had no questions. � A motion was then made and seconded to go into executive session for the remaining , items. � 3. Executive Session - Economic Development- Negotiations for Property Disposition - 107 Maine Avenue— 1 M.R.S.A. § 405(6)(C) _ � A motion was made and the Committee voted to go mto execut�ve session to discuss negotiations involving the proposals received for the disposition of 107 Maine Avenue. � 4. Committee Action on Above Item � Followi�g the executive session,the Committee determined to not further consider the proposals received from the Warren Center, and Liz and Paul Leonard. � 5. Executive Session -Economic Development- Maine Business Enterprise Park - Negotiations for Property Disposition - 1 M.R.S.A. § 405(6)(C) � A motaon was made and the Committee voted to go into executive session to discuss negotiations for the possible sale of property in the � Maine Business Enterprise Park for developmen� . 6. Committee Action on Above Item. The Committee took no action on the above � item following the executive session. 7. Executive Session -Economic Development-Lease of City Properly at 110 � Hildreth Street to Hallowel) International - 1 M.R.S.A. § 405(6)(C). A motion was made and the Committee voted to go into executive � session to discuss negotiations involving the lease of properly at 110 Hildreth Street to Hallowell International. 8. Committee Action on Above Item � Following the executive session, a motion was made and seconded to � recommend to the full City Council that the City Manager be authorized to enter a lease with Hallowell Intemational as recommended by staff and substantially under the terms set forth in Council Order 05-273 passed August 8, 2005. � 9. Executive Session -Request for Economic Development Assistance - Hallowell Intemational - 1 M.R.S.A. § 405(6)(C) (Confidential Memorandum provided � separately) �. �