HomeMy WebLinkAbout2008-06-09 08-219 ORDERCOUNCi1
hero N% 08 219
Jul June 9, 2008
Item/Subject ORDER, Authorizing Execution of Development Agreement with Bangor Steam
laundry, LLC —125 Fern Street
Responsible Department Community& Economic Development
Commentary:
Bangor Steam laundry, LLC proposes to renovate the former New Franbin laundry property at 125 Fern
Street into 15 residential dwelling units with no fewer than 8 units affordable to tenants meeting low and
moderate Income guidelines . The cost of the acquisition of property, rehabilitation of the buildings,
Installation of equipment and furnishings, and other costs associated with the development is estimated!
to be at least $1,850,000. The Deveoper will secure not less than $1,600,000 In private financing and
equity for the Project. Due to the high cost of Wilding rehabilitation, the Developer is requesting
financial assistance from the City in the forth of a Community Development loan in an amount not to
exceetl $250,000 at 3% amortized over 30 years. It Is also proposed that the City agree to apply
annually 50% of new real estate taxes paid by the Project to the Community Development ban payments
due the City for a period of 20 years, but in no year will such reimbursement exceed $13,000.
Completion of the Project will create a significant public benefit by removing a neighborhood blight,
providing affordable rousing opportumbes In the Fem Street neighborhood, and enhancing the tax base
of the City. This Order would authorize the City Manager to enter into a Development Agreement setting
forth the terms and conditions of the City's assistance. The Business and Economic Devdopment
Committee has reviewed this proposal and recommends approval.
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Rssociated Information:
Department Head
Budget APpro l:
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naftejIlrector
City Solklror
X Passage
_ First Reading Page _ of _
Referral
JUN 0 92908.
08 219
Assigned 0 Councilor Paloex
' 9
e„ o sa CITY OF BANGOR
(TITLE) ORDER, Authorizing Execution of Development Agreement with Bangor Steam
Laundry, LLC - 125 Fern Street
WHEREAS, Bangor Steam Laundry, LLC proposes to renovate the former New Franklin
Laundry property at 125 Fern Street into 15 residential dwelling units; and
WHEREAS, the cost of the acquisition of property, rehabilitation of the buildings, Installation
of equipment and furnishings, resign fees, legal fees, insurance, financing and
other costs associated with the development is estimated to be at least
$1,850,000; and
WHEREAS, Developer will secure not less than $1,600,000 in private financing and equity for
the Project, which, In addition to the Clry assistance requested, will enable the
project to go forward;.and
WHEREAS, completion of the Project will create a significant public bereft by removing a
neighborhood blight, providing affordable housing opportunities in the Fern
Street neighborhord, and enhancing the tax base of the City:
NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR
THAT
The City Manager is hereby authorized to execute a Development Agreement with Bangor
Steam Laundry, LLC providing for the rehabilitation of the property at 125 Fern Street into 15
residential units under the terms and conditions as may be required by U. S. Department of
Housing and Urban Development Community Development regulations and substantially as set
forth in the Development Agreement attached hereto and in a final form approved by the City
Solicitor or Assistant City Solicitor.
IP CITY C mem 1
Susie 9. 2000
Motion Nade cud Sccouded p Ilp_>lo
fore a ace j
"XI U"RuL
Au[hnAgreem Mt"I
Development AgreeoeuC ci[h Hevga
Steam turn Y. _ 19s n e.l>e
An1gued b Councilor_
94 w Y
Os 219
DEVELOPMENT AGREEMENT
This Agreement is made and entered into as of June 2008 by and between
the City of Bangor (hereinafter "City'), a municipal corporation located in Bangor,
County of Perwbscot, State of Maine, and Bangor Steam laundry, LLC (hereinafter
"Developer'), a Maine Limited Partnership, with a place of business in Bangor, County
of Penobscot, State of Maine.
WITNESSETH
WHEREAS, the Developer is desirous of renovating the property at 125 Fem
Street (hereinafter "Property's into 15 residential dwelling units; and
WHEREAS, the Property was formerly used as a laundry and dry clearing
establishment, has been vacant and In disuse for several years, and is a slgniRcant
blighting Influence on the Fem Street residential neighborhood; and
WHEREAS, environmental remediation has taken place and has been completed,
and the Property Is ncvv ready for redevelopment; and
WHEREAS, the City wishes to encourage new construction or redevelopment
projects to include sustainable design and building practices; and
WHEREAS, the estimated cost of acquisition of property, rehabilitation of the
buildings, installation of equipment and furnishings, design fees, legal fees, insurance,
fnanang and other costs associated with the development (hereinafter "Project") is
estimated to be at least $1,850,000; and
WHEREAS, Developer will secure not less than $1,600,000 in private financing
and equity for the Project; and
WHEREAS, completion of the Project will create a significant public benefit by
removing a neighborhood blight, providing affordable housing opportunities in the Fem
Street neighborhood, and enhancing the tax base of the City, and
WHEREAS, the high cost of building rehabilitation requires financial assistance
from the City to ensure the public benefit of removing a blighting influence and to
provide affordable housing:
NOW THEREFORE, IN CONSIDERATION of the mutual promises and covenants
contained in this Agreement, the City and Developer agree as follows:
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08 2?9
1. Subject to the provisions of this Agreement, the Developer agrees to
rehabilitate the Property Into 15 residential units Involving not less than 8
residential apartments affordable to tenants meeting low to moderate
income guidelines established by the U. S. Department of Housing and
Urban Development.
2. Developer agrees that all renovations of the Property will meet LEEDS
standards or, at a minimum, the Maine State Housing Authority Green
Building Standards, as approved by the City of Bangor Code Enforcement
Office.
3. Developer agrees to invest not less than $1,600,000 in funds secured
privately, of which not less than $300,000 shall be equity investment.
4. Developer agrees to provide evidence, not later than July 31, 2008
satisfactory to City Solicitor of City, of a binding construction contract, or
contracts, providing for site work and building construction casts for
rehabilitation of the Property of not less than $1,850,000.
5. City agrees to provide the Developer a loan In an amount not to exceed
$250,000 at 30/a amortized over 30 years for the purpose of developing
the Project. The source of such can shall be the City's Community
Development Block Grant Program, or other sources, and the City's
commitment shall be contingent upon the Developer conforming to CDBG
program requirements and conditions to be contained in the City's loan
commitment. City loan secured by mortgage on Property subordinate only
to private lender financing not to exceed $1.4 million.
6. Subject to the Developer meeting the conditions of this Agreement, City
agrees to reimburse Developer up to 50% of real estate taxes paid on
Property for a perlod of 20 years beginning with real estate taxes paid
after April 1, 2009, and ending April 1, 2029, but In no year will such
reimbursement exceed $13,000, mid reimbursement to be applied to the
debt service payment required on the City of Bangor Community
Development Program loan referred to in the above paragraph.
7. In the event any of the 15 individual residential units are sold as
residential condominium units, a pro rata portion of the loan amount owed
the City shall be paid from sale proceeds as a condition of City releasing
the unit from its security Interest.
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08 219
B. Developer agrees that development of the Project shall be in accordance
with all applicable Federal, State, and City laws, ordinances and building
codes.
9. Developer agrees the scope of the work shall conform in all material
respects to the plans approved by the Business and Economic
Development Committee of the City Council of the City of Bangor.
10. Developer agrees to provide evidence by July 31, 2008, satisfactory to
City Solicitor of City, of legally binding private lender financing
commitments and equity investment of not less than $1,600,000 in funds
for financing of the Project exclusive of financing to be provided by the
City as provided for in 5. and 6. above.
11. Developer hereby acknowledges that the City, In agreeing to provide
financial assistance to Developer for the Project, relied in material part
upon the assured completion of the Project and the Developer agrees to
use its best efforts to substantially complete the Project no later than
March 1, 2010.
12. Developer agrees that it shall keep and maintain books, records arid other
documerrcs relating directly to the Project and agrees that any duly
authorized representative of the City shall, at all reasonable times, have
access to and the right to Inspect, copy, audit and examine all such books,
records and other documents of Developer until completion of the Project
upon prior written notice. Developer shall ensure that similar provisions
areIncluded in all contracts or subcontracts entered into in connection
with this Project.
13. Developer agrees that any duly authorized representative of the City shall,
at all reasonable times, have access to any portion of the Project until its
completion and a permanent Occupancy Permit for the Project has been
Issued try the City.
14. Any notice which either party desires or is required to give to the other in
connection with this Agreement shall be in writing and shall be sent
postage prepaid, certified mail, return receipt requested, as follows:
If to City: Edward A. Barrett, City Manager
City of Bangor
73 Harlow Street
Bangor, Maine 04401
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08 ?'.Iq
If to Developer: Bangor Steam Laundry, LLC
73 Pare Street
Bangor, Maine 04401
Or such other person and/or address as may be Identified In writing by the
parties.
15. Except as provided In this Agmemem, until substantial completion of the
Project, Deyeloper shall not assign its rights under this Agreement without
the prior written consent of City, which consent shall not be unreasonably
withheld, delayed or condi toned. The City's obligations hereunder are
contingent upon the Developer's compliance with the terms and/or
conditions set forth in this Agreemem.
16. The Developer represents and agrees that its purchase of 125 Fern Street
will be used for the purpose of development of the Project and not for
speculation in land holdings. This representation shall terminate and be of
no further force and effect upon substantial completion of the Project by
the Developer.
17. It is intended by the parties that this Agreement shall operate as contract
under seal, in accordance with 14 MRSA Sec.751.
WRNESS WHEREOF this Agreement has been executed, sealed and delivered In
duplicate counterparts as of the day and year first above written.
BANGOR STEAM LAUNDRY, LLC
BY
Its
CRY OF BANGOR
By
Edward A. Barrett
Its City Manager
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