HomeMy WebLinkAbout2006-05-22 06-187 ORDER[tem No. 7
Date: May 22. 2006 --
Item/Subject ORDER, Authorization to Enter into a Development Agreement with HAT
Properties, LLC for the Rehabilitation and Reuse of 32-38 Main Street
Responsible Department: Community & Economic Development
Commentary: HAT Properties, LLC, win Michael Delargy and Stephen Smith as principals, has purchased and
proposes to develop B pool units in the upper floors of std -38 Main Steel and has applied for a Community
Cameraman an Res onattd Rehabilitation Icon to provide partial financing. The Coal Residential Rehabilitation Loan
Program relulres that a minimum of 51%, or 5, of the new housing units beaffordable and occupied by pwsom who
meet HUD guidelines as -low -moderate income" with rents controlled at the HUD approved Fair Market Rent for a
period of fear years. Total acguisiton, renowitkrn, and related costs are estimated to be $58,292. Proposed fimndrg
includes a minimum of $180,880 in equity investment from Ne developers and private lender financing of $122,300.
The fallowing Ory assistance to the project is proposed: a Community Dev6'opment loan of $219,992 at 3%
interest for 30 years, and a secant loan of $80,000 with payment deferred for 5 years at which time the loan would
be amortized at 3% interest over 30 years. The terms of me City's mans are structured ro moot lender debt
coverage pairs. The City 6 projected to receive in mattes M $7,000 in new property tax revenues from the
moreased value of the improved property. The amount of City assistance proposed does not exceed the amount of
City assistance needed to make the pmje¢ financially vase.
The Community Development Residential Reca photon Loan Program, in collaboration with developers and private
finaWl has a successful track record in supporting the cementation of seveml vacant downNvm properties
inducing the Hammond Street Courtyard, the Cyrus Clark House, Me Thomas Hatch Blccy the Paramount, the
Freese Building, the One Hundred Associates building, and the former Standard Shoe building. Renomination of
this property will provide an additional 8 residential Who, 5 of which will be affordable to tea and moderate intone
persons. The project: will represent another significant and positive step toward a revitalized downtown. This
Order would autlrorize the City Manager to enter into a Development Agreement with the owners setting forth the
termsaMmnditionsofne Otysassistance. The BusinessaMEmm is Developmem Commit Msreviewed
the application favorably and recommends appmel.
Department Head
Manager's Comments: The Business and Economic Development Committee has reviewed the application
favorably and recommenes approval.
l/.
Cry Manager
Associated Information:
Budget Approval:
Finance Director
Legal Approval:
Cry litter
Introduced for
x Passage
First Reatling
Page _ M_
_ Referral
Of; .187
$ seiner ]rss 22. E006
F CITY OF BANGOR
(TITLE.) Order, Authorizing a Development Agreement with HAT Properties, LLC for the
Rehabilitation and Reuse of 3438 Main Street
WHEREAS, it Is Me policy of Me City Coundl to encourage the redevelopmeet of the upper
floors of dovmtown buntings through Ole Community Development Residential
Rehabilitation lean Program, Mus contributing M Me economic viability of the
downtown; and
WHEREAS, HAT Properties, LLC, with Michael J. Dearly and Stephen C. Smith as principals,
has purchased and proposes M develop 8 residential units in Me upper floors of
3438 Main Street.; and
WHEREAS, there Is a need for additional affordable housing; and
WHEREAS, HAT Propertles, LLC has secured Me necessary private financing and has provided
Nulty, which, in addition to the City assistance requested, will enable the project
M go Forward; and
WHEREAS, it is projected the project will provide new real estate tax revenue to the City in
excess of $7,000 annually;
NOW, THEREFORE. BE IT ORDERED BY THE CRY COUNCIL OF THE CITY OF BAMGOR
THAT
the City Manager is hereby auModzed to enter into a Development Agreement with HAT
Properties, LLC with tens requiring Me development of not less Man 8 new dwelling units at
3438 Main Street, with no fewer than 5 units with rents affgrdable M low and moderate
income persons under U.S. Department of Horning and Urban Development (HUD) guidelines,
M a project related cost of not less Man $572,000; the City M provide a Community
Development Residential Rehabilitation Loan in an amount not exceeding $219,997 at 3%
Interest amortized over 30 years and secured by not less than a 2nd mortgage subordinate to
a Ist mortgage searing a loan of not more Man $172,300 from a private lender acceptable M
the City and under terns acceptable M the City; the City to provide a second Community
Development Residential Rehabilitation Loan in Me amount of $BD,OOD wRh payments deferred
5 years at which time Me loan will nd amortized a[ 3% interest over 30 years, secured by not
lea than a V mortgage subondrwle only M the aforementioned V and 2nd mortgages; and
contingent on HAT Properties, LLC securing financing from a private lender of not less than
$172,300, and providing equity investment of not lea Man $100,ODO M provide Me needed
financing for the project; and other such additional terms and conditions as may be required by
HUD regulations, the City Solidwr or Assistant City Solidtar, or the Director of Community and
Economic Development The final form of Me agreement shall be approved by the City Solicitor
or Assistant City Solicitor.
IN CITY COMCIL
May 22, 2006
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