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.