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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. i Rssociated Information: Department Head Budget APpro l: zl' q � 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: Page 1 of 4 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. Page 2 of 4 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 Page 3 of 4 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 i My WM,. �Ie b .be �ucdy vw m� as � sre.-ncrnrawoe.aPo Page 4 of 4