HomeMy WebLinkAbout1997-03-12 97-147 ORDERCOUNCIL ACTION
Date: Mach 12 1997
Item No. 41_}47
Item/Subjects Authorizing Loan to Bangor Housing Development Corportaion
Responsible Department: Community and Economic
Development
Commentary:
See attached Memo.
D ar t`J3 ad
Manager's Comments: Cfe 5��d..,�d��7�y
W and Mara
�4d. A- 7AemeNu em
m 4s ,kt�
G(/
City Manager
Associated InformaCion:aAiA WC&w
Budget Approval:
Finance Director
Legal Approval:
� i city olicitar
Introduced For $Passage 0 First Reading 0
Referral
Page 1 ofd_
c,f,=
91-147
Midped to.Camcdar Tyler March 12, 1997
CITY OF BANGOR
(TITLE.) WX11CXr-.-quthorizingLoun-t4-BangorlfousingDevelapmerrtEncpomtion- ----
By the aty Covuil of to ON ofBaayar:
ORDERED,
THAT
the Director of Community and Economic Development is hereby authorized, on
behalf of the City of Bangor, to provide not more Nan $366,500 in City of Bangor
Community Development Residential Rehabilitation Loan Program funds to Ne Bangor
Housing Development Corporation for Ne rehabilim6on of 100 vents of housing located on
Moosehead Boulevard, Kennebec Place and Dirigo Drive in accordance wiN Ne Policies
and Procedures adopted by Ne City Council for said Program, and under the terms and
coMitions established by Ne Community and Economic Development Committee of use
City Council.
IN CITY COUNCIL
March LZ, 1997 -
Motion to Amend by Substitution
(Includingthe title of the order)
Mo Hon Paeeed / Passed as Amended -
by Substitution
CLERI
97-147
ORDER
Title, Authorizing Loan to Bangor Housing
}Development Corporation
' .............:........................
WA
....../.)............... . ..... ... ..
A Q"to
..... V 'y^..�.
Councilmanan
97-147
Aarigned W"A..nmflat INSTITUTE COPY
CITY OF BANGOR
�p Authorizing Acceptance of Maine Slate I lousing Authority Funds soft Loan
(TITLE.) _..__ ........ _...1 -
to Baoanr Ido ming Ihvelnpnrenl Corporation
By else City Co at of My ofBanyor.
ORDERED,
THAT the CooIn unity and Baonomio l hoelopnenl Can ntit iltce a the Dangor City Contact
is hereby aulharimd, on behalf ol'the City orllangor, m accept foods train the Maine State
Housing Authority and n, loan said hands to the hangar Ihaving Development Corpturalion
for The rehabilitation of I W unit of burning located an Mansell" Boulevard, Kennebec
Place and Didgo Drive in accordance with such demo and conditions as funds are provided
to the City of Bangor by the Maine Slam Housing Authority miler the Municipal
Inf tnicture and Land Acquisition Program. and under any other terms and conditions as
may be esmLlished by Ibc Community and Economic Development Comonipee.
97-147
MEMORANDUM
To: Honorable Council Chair and Members of the City Council
From: Rodney McKay la\
Subject: Disposal of University of Maine Housing
Request for Community Development Loan
Date: Februtry3,1997
The University of Maine currently owns 107 units of housing near the Downcast Elementary
School (see attached map). The University is proposing on sell the housing to the Bangor
Housing Development Corporation (for background, see Ken Gibb's April 28,1995 Memo, copy
attached). The Maine State Housing Authority (MSHA) has issued a commimrent letter on
Banns the purchase of the housing by the Bangor Housing Development Corporation, subject to
the City of Bangor committing not less than $250,000 as a subordinate mortgage to finance
correction of code violations and other improvements MSHA feels necessary. I was not aware of
the proposed City involvement in the project until last December 18 when furnished a copy of
the MSHA commitment. A copy of my response to the MSHA commitment requirement is
attached Before proceeding farther, it would be helpful to understand the degree of Council
support for this project.
The amount MSHA would like from the City has now grown to $366,500. As now proposed by
MSHA, to beprovided as follows:
$100,000
before Jane 30, 1997
$1001000
July 1997
$100,000
July 1998
$66,500
July 1999
The 32 University owned buildings consist o725 four-plexes, and 7 single-family units on 19.58
acres. Content rents range door about $425 to $462 per month. The property has been managed
by the Bangor Housing Authority (BHA) since the University acquired it as surplus federal
Property at the time of closure of Dow Air Force Base. Originally the University planned on
Providing affordable housing for students and faculty, but most of the units have been rented on
the open market many to BHA residents who transition out of Public Housing due to increased
income. The University pays full property fixes on a current valuation of$3.56 million
In April of 1995, the University decided to dispose of the property, and undertook a public bid
process. After a review of the bids, the University selected the Bangor Housing Development
Corporation (BHDC) as the westing bid for $2 million. BHDC is a separate, non-profit
corporation associated with the Bangor Housing Authority, and the current Board of Directors
are former BHA commissioners Bob Toole, Bob Quinn, Jane Johnson, Bob England, and Clads
Hutchins and chairperson John (Bud) McDonough. BHDC currently owns 50 units of elderly
97-147
Honorable Council Chair and Members of the City Council `
Page 2
February3,1997
housing at Ammon Park West, and 24 units of mostly elderly housing at Crestwood Place. Both
of those projects were threatened with expiration of project based Section 8 subsidies in 1994
and 1995 when BHDC purchased them, and successfully re -negotiated the Section 8 contracts
with HUD for five more yews. The funding for the purchase of these properties came from
MSHA. Autumn Park Wert and Crestwood Place continue to be managed by the BHA.
BHDC now proposes to purchase and rehabilitate 100 ofthe multi -family units, and sell the
remaining 7 single-family units. The property would continue to be managed by BHA-
Project
HAProject costs for the 100 multifamily units to be retained are:
Acquisition.....................................................$1,580,000
Improvements.................................................... 366,500
Financing& soft costs ............................................... 24,000
Reserves......................................................... 13?50
Total....................................................$2,103,000
Sources of Foods (prop ssed) was:
MSHA 30 year, def dpayment,deferred interest loan ......._........ $1,022,0]5
MSHA 30Yeaz, ]°u interest loam .... ..................
714,425
City of Bangor Community Development loan, 30 year, 3% interest .......... 366.500
Tom' ....................................................$2,103,000
A bridge loan of S263,500 would be made by Bangor Savings Bank, which would be paid back
through the sale of the 7 single-family wits. The pro -forma awlvsis we have examined includes
full Payment of property taxes.
As a requirement for receiving the MSHA money, the rents will be structured similar to the
Freese's Building project also funded by MSHA. All 100 wits are 3 -bedroom, family units.
The occupancy and rent structure would be as follows:
Occupants Income as
No. of Units A%of Area Rent
Medianincome
10 30% $209
30 40% $385
60 60% $511
For comparison, to be eligible for Public Housing family income cancer exceed 50% of area
medico income. Currently, there are no restrictions on income eligibility at this property,
although most current occupants probably would qualify to remain as most of the tenants are
97-147
Honorable Council Chair and Members of the City Council
Page 3
February 3, 1997
either students, or forma Public Housing residents whose income has risen above the 50% of
median level.
If Us project goes forward, the result will be a net increase in low-income family residents in
this neighborhood. The University owned housing is contiguous to 432 units of Public Housing
.(seeanwhedmap). This area (Part of U.S. Census Tract 9) is home to the largest concentration
of public housing in northern New England with 517 public housing dwelling units. These517
Public housing units represent 23% of the total housing units in the Census Tract. With the
addition of the Park Woods homeless projen to this neighborhood, the 567 units of publicly -
Owned and assisted low-inwme housing represent 26%ofthe total available housing in this area
ofthe City.
A positive effect would be that the project would create an additional 100 units of safe, sanitary,
and well managed apartments for low-income Bangor families, and solidify the future revenue
stream from management and maintenance fres to support BHA operations at a time of
threatened HUD budget ants in public housing subsidies.
The $366,500 being applied for is for rehabilitation which includes installation of new electrical
services, all new doors and windows, smoke detectors, and other minor electrical repairs. Over
50%ofthe loan amount requested is for the replacement of doors and windows for energy
efficiency.
The project is eligible for Community Development assistance. The $366,5W being requested is
the single largest amount of Community Development funds requested for any project in Bangor,
and would consume from 114 to 113 of the average $384,000 Community Development funds
normally allocated by the Council annually for Residential Rehabilitation Loan Program loans.
Normally the commitment of large amounts of Community Development funds to any single
Project takes place in a designated redevelopmeat area, such as the "Cres Works" area or
dmvutown.
Since this request is fornva $100,000, approval will need action by the full Council. We will be
discussing the project at a future meeting of the Community and Economic Development
Committee. The MSHA would like the City's commitment by the and of this month.
C: Edward A. Barrett, City Manager
T.J. Martaal, Housing Resources Coordinator
Stan Moses, Asst Community Development Director