HomeMy WebLinkAbout2006-07-24 06-279 ORDERCOUNCILAMON
Item No. 06 279
Date: 2uly 24, 2006
Item/Subject ORDER, Approval of Community Development Residential Rehabilitation Loans for
Jahn T. canes, UI for the Redevelopment of Union Place
Responsible Department Community & Economic Development
Commentary:
On Juiy 19, 2006 the Business & Economic Development Committee reviewed the application from John
T. Kamer, III for two Community Development Residential Rehabilitation Loans to provide financing to
rehabilitate the 4 unit vacant property owned by the City at 251-253 Union Street The Committee looked
favorably on the application and refereed the application to the full Council for approval, (all Residential
Rehabilitation loans over $100,000 require full Ccur cil approval. Under the CDBG Residentlal
Rehabilitation Loan Program a minimum of 51%, or 3 of those units are required to be occupied by
persons who meet HUD guidelines as "low -moderate income', and the lets will be controlled M the Fair
Market Rent for a period of 20 years, (the standard term is 4 years). In addition m the rehabilitation, Mr.
Kames will constmR 8 new additional on the property. Rehabilitadon costs are $211,011, with a total
development cast of $822,251. Proposed financing Includes $200,000 cash equity from the developer,
and $411,240 in private financing from BankNorth. The City's loans would be $126,011 at 3% Interest
for 30 years, a Deferred Payment Loan of $85,000 at 0% interest with payment deferred for 20 years Or
until the property is sold or the title otherwise transferred, whichever occurs first, 1/20 of this loan
amount will he forgiven for each year that 3 units at 251-253 Union Street are occupied by low -moderate
income families and the rents are controlled m not exceed HUD's Fair Market Rents, and a tax Increment
credit enhancement that will realm $6,325.20 of the new taxes generated by the project to cover the
debt service on the City loan. The $,325 represents approximately 39% of the projected $16,320 in
annual near properly taxes. The Otys financing Is necessary because the rental Income projected far the
project will not support market rate loans. This Order, if approved, will approve the Residential
Rehabilitation loans Under the terms contained In the Order.
DeparBnent Head
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AssociageO Information: rv-
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finance Director
Legal Approval:
Solicitor
Introduced for
Passage
_ First Reading Page _ of _
Referral
06 279
Assigned to Councilor Paiver July 26. 2006
CITY OF BANGOR
(TREE.) Order, Approval of Community Development Residential Rehabilitation Loan for
Jahn T. Kames, DJ for the Redevelopment of Union Place
Sy the ary, cousury a me pity aSarga:
ORDERED, THAT
WHEREAS, as authorized by City Coundl Order 06-233 the City has entered into an Option
Agreement for Purchasee and Development aF Union Place with John T. Kamer, HI; and
WHEREAS, the proposed development will include the rehabilitation of four apartments
Imbed 251-253 Union Street; and
WHEREAS, there is a read far additional affordable housing, and the cost of the rehabilitation
of 251-253 Union Street is an eligible expense under the Dry§ Community Development
Residential Rehabilitation Loan Program; and
WHEREAS, John T. Mmes, III has secured the necessary Private financing and has provided
equity, which, in addition to the Cry assistance requested, will enable the project to go
forward;
NOW, THEREFORE, BE rr ORDERED BY THE CITY COUNCIL OF THE CRY OF BANGOR
THAT, that two Residential Rehabilitation Loans for John T. Karnes, M be approved as follows:
First Loan: $126,011 at 3% interest for 30 years seared by a mortgage In second position
subordinate to a Jet mortgage searing a loan of not more than $411,790 from a private lender
acceptable to Rte City and under terms acceptable to the City; Second Loan: $85,000 at 0%
Interest with all payments deferred for 20 years from the data of the loan or until the the of
the property is transferred from John T. Kanes, UI, whichever occurs first, at which time all
outstanding pdndpal and interest would be due, and, 1/30 of the amount of this loan will be
torgwen each year for as long as 3 units at 251-253 Union Street are occupied by lm moderate
income families and the rents are controlled by the standard Residential Rehabilitation Loan
Program Rent Agreement. This second loan shall be seared by a mortgage in not less than
third position subordinate only to the CKs first loan and a 1st mortgage securing a loan of not
more than $411,740 from a Private lender acceptable to the City and under terms acceptable to
the City. In addition, the Cry shall apply annually $6,375.20 of real estate taxes received from
the Property to the Community Development loan payments for a Period of 20 years. John T.
Kames, M shall Inject a minimum of $200,000 ash equity into the project, and comply with all
of the terms and conditions of the Option Agreement for Purchase and Development of Union
Place; and other such additional terms and conditions as may be required by HUD regulations,
the City Solicitor or Assistant City Solicitor, or the Director of Community and Economic
Development, in a form approved by the City Solicitor or Assistant City SolRItor.
IH CI'Sy COMCIL
JUY 26: 2006
notlony79aae avn seeooded
for P (:asge
CLE6H
`�TITLE5)dcnroeal of Co®�fty Deva Iro of
ofaea . .tacwa
'John I. Eernea. III for the Eedevelol nt
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Acroo Sned to Councilor