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HomeMy WebLinkAbout2004-07-12 04-225 ORDERItem No. 04-225 Date: Jidyl2 2004 Item/ Subject; ORDER, Authorizing the City Manager to Execute Various Documents Relating to Financing of the Freese Building Limited Partnership and Freese/Main Street Housing Associates Responsible Department: Community & Economic Development Commentary: Two requests were received hem RealtyResources seeking relief for the Freese Building's two affordable housing projects -- the Freese Building Limited Partnership low-income bousing project on the Pickering Square side of the building and the Freese/Main Strut Housing Associates assisted living project on the top dose floors of the Main Spent side of de building. Cirysmff has had several meetings with representatives of Realty Resources regarding the City's financing oftbe various project compori of the Freese building. Both projects are experiencing higher than expected operating costs and lower revenue restating in negative rash flows. City smffadvised Realty Resources to seek relief from all other parties involved in financing the projects before submitting a request to the City, andtheyhavedoneso. RealtyResourcesismgmsfingchmgestotbetermsofthe City'scurtentfmmcing with the Freese/Main Street Housing Associates ant additional City Community Development financing to pay off 1/3 of the non -City debt on the assisted living project, with the Maine State. Housing Authority and the developer each paying an additional 1/3. They also request amending the tames of the existing note with the From Budding Limited Partnership, reducing the interest rate from 6% to 3%. It is the City's interest to see these projects continue to operate. The Business and Economic Development Committee has reviewed the request on Jane 30, 2004 and recommends Passage. Department Head Manager's Comments: Recommend approval. City Manager Associated Information: hq, Budget Approval: Finance Director Legal Approval: Introduced For _L Passage _ First Reading Page-01— Referral age_ofReferral Aasiupldtocouncilor Palmer T,ly 12, 2006 CITY OF BANGOR (TITLE.) Order, Authorizing the City Manager to Execute Various Documents Relating to Financing of the Freese Building limited Partnership and Freese/Main Street Housing Associates WHEREAS, the General Partner of the Freese Building Limited Partnership and the Freese/Main Street Housing Associates have approached the city and other lenders for assistance In the forth of amending financing temps and providing new financing for the Freese Wilding affordable housing projects; and WHEREAS, examination of operating statements and financial projectors Indicates bath housing pojects In the building are %pedencing significantly higher operating costs and lower revenue than originally anticipated; and WHEREAS, amending the terra of exuding financing and providing additional ban funds will provide financial stability to these tam projects; NOW, THEREFORE, BE IT ORDERED BY THE CRY COUNCIL OF THE CRY OF BANGOR THAT the City Solictor or Assistant Oty Solki is hereby authonzed to prepare and the Ory Manager Is hereby authorized m execute such loan and secudly documee; necessary to accnmpllsh the following: 1. Amend the germs of the Ot^ existing nate with Freese Building Assodams Un ted Partnership evidenced by a Promissory Note and Agreement dated Now:mber 6, 1996 to reduce the current interest ate from 6.00% to 3.00%, with no other change in terms or semrily; 2. Refinance the anent outstanding principal balance of approximately $197,209 of the Cb/s loan to Fmese/Maln Street Horsing Associates, LP evidenced by a Promissory Note and Agreement dated Fabaary 19, 2000, reducing the Interest rate from the arrent interest rate of 8.OD%to 5.50% annually with a new term of 30 years, with no lessening of the OWS security interest. 3. ProAde a new ban to Freese/Main Street Housing Associates, LP from the Citys Community Development Residential Loan Program In an amount not to exceed $150,000 at an interest rate ot 3% and with a term a30 years, to W in a shared mortgage position with the Maine State Housing Authodry, for the purposes of paying off approximately 1/3 of an existing first mortgage ban to Reese/Main Street HOAning Associates, LP by the Maine Community Reinvestnent Corporation, contingent on: a. The Mabe Slate Housing Autnodty providing Freese/Main Street Housing Associates, LP a ban of approximately $150,000 for the 04-225 purposes of paying Off approximately 1/3 of an existing first mortgage ban to Freese/Main Sheet Housing Associates, LP by the Maine Community Reimesbnent Corporation, as a 0% Interest, deferred payment loan, and b. me Freese/Main Street Housing Associates, LP general partner contributing the remaining 1/3 m pay Off the entire outstanding balance of the Maine Community Reinvestment Corporation secured ban to Freese/Main Street Housing Associates, LP. 4. Confinnatlon that the Maine State Housing Autinonty vdll provide at least 20 Section 8 project based rental assistance vouchers ro assist hinants of the Freese/Main Street Housing Associates, LP. IN CITY mmem , July 12, 2004 Notion Made and Seconded a 04-225 for Passage EITLE) Authorizing the city Manager to flouncing of the Freese Building Lfmited P-' `>fh1P e .ewiRonnieg Assoafatee Assigned W Councilor P&W Memorandum TO: Business and Economic Development Committee FROM: Rodney McKay, Community A Economic Development Director SUBJECT: Freese Building Community Development loans DATE: June 23, 2009 The two attached requests were received from Realty Resources seeking relief for the building's two housing projects, the Freese Building Limited Partnership low-income housing project on the Pickering Square side of the building, and the Freese/Main Street Housing Associalms assisted living project on the top three Boors of the Main Street side of the building. City staff has had several meetings with representatives of Realty Resources regarding the City's financing of the various project components of the Freeses building. Both projects are experiencing higher than expected operating costs resulting in negative cash Flows. City staff advised Realty Resources to seek relief from all other parties Involved in financing the projects before submitting a request to the City and they have done so. Realty Resources is requesting changes to the terms of the City's arrant financing and additional City Community Development financing W pay off 1/3 of the non -City debt on the assisted living project with the Maine State Housing Authority and the developer each paying 1/3. It is the City's interest to see these projects continue to operate. Staff recommends the requested amendments to existing financing agreements and new requested financing be approved. A. Freese Building Limited Partnershim The City provided the following financing to the Freese Building Limited Partnership: $280,000 TIF to be repaid from 60% of the new tax revenues generated from the Freese Building Limited Partnership project, with accruing interest. $275,000 Community Development Loan 6%, 30 years, with deferment provisions should gross rental income fall below a certain threshold. 1. Realty Resources is requesting that the City reduce the interest rate on the Community Development Loan from 5% to 3%. 04-225 B. Freese/Main Street Housing Associates fFreese Asslsted Living) The City provided the following financing to the Freese/Maln Street Housing Associates: $212,136 Community Development Loan / TIF, 8%, 20 years, with repayment forgiven if Freese/Main Street Housing Associates makes Its annual property tax payments, with deferent provisions should gross rental Income fall below a certain threshold. Realty Resources is requesting that the City: 1. Reduce the Interest rate on the City's second mortgage from the current 8%. 2. Loan an additional $150,000 in Community Development funds to pay off 1/3 of the MCRC $465,609 first mortgage with the Maine State Housing Authority and developer each Contributing $150,000. Staff has reviewed the operating statements and financial projections for both projects to ensure any relief provided by the City would benefit the low-income tenants and not the owner/developer. We are recommending that he terms of the Community Development financing be amended and the $150,000 additional loan amount be approved to provide financial stability to mese two projects. We are recommending the fallowing: FreeacvMain Street Housing Associates - Assistant Living Loan Interest Term Annual Outstanding Amount Rate Years Payment Balance Exiting Community Develop. I TIF Loan $212,135DD 800% 20 ($21,508.52)$197,203.34 Proposed Refinancing & New Loan Community Devebpment/TIF Loan $197,203.31 5.50% 30 ($1&588.85) New Community Development Loan $151 3.00% 30 1$7.952.891 Total $347,203.34 $21,221.59 Total Financing/Blended Rate $347,203.31 4.45% 30 ($21,221.51) Freese Building Limited Partnership: Reduce annual interest rate from 6% W 3% thereby reducing annual payments due from $20,338 to $14,030, approximately $6,000 / year. These recommended actions would require full Council approval. The Committee's favorable recommendation is requested.