HomeMy WebLinkAbout2003-10-27 03-339 ORDERItem No. 03-339
Date: October 27, 2003
Item/Subject: Authorization to enter into a Development Agreement with Penquis
Family Housing Associates L.P.
Responsible Department: Community and Economic Development
Commentary:
Penquis Family Housing Associates L.P. (PFHLA is a for -pmt entity created by Penquis C.A.P. Inc. to
secure financing from the Low Income Housing Tax Credit Program through MSHA) is proposing to
develop 16 units of affordable housing near the comer of Griffin Read and Mitchell Street, These will be
8 tyro -bedroom units and 8 three-bedroom units, including a community center. The units will be
targeted to families eaming up to W% of the area median income ($29,500 for a family of 4). Rents will
range From $455 m $638 Including heat and but water. The HUD published Fair Market Rents for Mese
units are $541 and $711. Actual rents in the hot Bangor rental market night now are significantly higher
For apartment of this quality. Penquis has an excellent track record of developing new affordable
housing in Veazie, Belfast, Corinna, and Searsport PFHLA is requesting up to $130,000 from the CDBG
Program for acquisition of the land and some program eligible handicapped accessibility or public
infrastructure site improvements which would fill a Ponding gap for the total development costs, and up to
$10,00 Per year in taxes retuned to the property to patally amortize their mortgage with Merrill
Merchants Bank. R is expected the project will still generate approximately $6,000 in additional taxes
after the requested return. The Development Agreement points outlined in the Council Order will ensure
the potential for amor mafon of the CDBG loan after 15 years, and will memorialize the requirements for
the return of a portion of Me real estate taxes.
Department Head
Manager's Comments:
Recommend approval, as does the Business and Economic Development Committee.
City Mawger
Associated Information:
401
City Solicitor
X Passage
_ First Heading Page _ of
Referral
03-339
AnignWwCwrcilor Paler October 27, 2003
CITY OF BANGOR
(TITLE.) Order, Authorization to enter Into a Development Agreement with penqugt
Family !busing Associates L.P.
WHEREAS, Peiquis Family Housing Associates LP, has proposed to develop 16 units of
affordable housing on the GTYfin Road; and
WHEREAS, the City Council of the City of Bangor acknowledges that the need for
Affordable family housing units In Bangor is Oudal; and
WHEREAS, Perquis Family Housing Associates LP, has secured $2.356 million in debt
and equity Funding for the proposed development but S challenged by funding gap of $130,000
and an annual operating deficit of $10,000; and
WHEREAS, acquisition of land For the development for affordable housing is an eligible
activity under the qty's Community Development Block Grant Program; and
WHEREAS, the Incremental change in real estate taxes that will result from the propose
development is significant, and a portion of that could be retrained to to project to amortize
debt service;
NOW, THEREFORE, BE IT ORDERED BY THE CRY COUNCIL OF THE CRY OF BANGOR
THAT, to City Manager is hereby autnodzed to enter into a Development Agreement with
Penquis Family Housing Assodates L.P. in a farm Mat is acceptable to the Director of
Community and Economic Development and to City Solidtar, containing, but not limited to the
following elements: CDBG Funds will be used to Pay for the lesser of $125,000 or Me appraised
value of the property; CDBG funds All be used For spedfic eligible Improvements M to she;
total CDBG Funds committed shall not exceed $130,080; CDBG Funds will be loaned At 0%
Interest for 15 years wit to option M refinance to loan after 15 years At terms that will not
jeopardize to mndnuirg affordability Of Me project For persons of low ant moderate income;
to gross family Income of to residers shall not exceed 80%of to area median income; the
project most remain fully taxable; 60% of the taxes assessed, not M exceed $10,000 per year,
will be returned on to owner for amortizing of debt service tat will be at least $15,639 per
year; Penquis Family Hang Associates LP. will provide evidence to the City of other debt and
equity financing necessary to complete the proposed development, and an operating proforma
indical ng adequate income and financing to operate and maintain to proje t
IR CITY COMCIL
October 27, 2003
Paes<=\eAo� Y„
CR
# 03-339
O RD DR
(TITLE) Authorisation to Rater into a
U eloPm n
RouefaR Associates L.P.
Aesl9netl to Cowrolo� YnYattl/I
' r3.
DEVELOPMENT AGREEMENT
03-339
This Agreeawnt is made and noticed fano as of January 5, 2004 by and between the CITY of
Bangor (hereinafter "QTY"), a municipal corporation located in BMM County OfPmolawse, Snare
of Maine, and Penquis Faauly Housing Associates, Limited Parlawsbip. having a place of business in
Bangor, County of Penobscot State of Maine (hercwefter "DEVELOPER").
C:/YYJd.XYa�Y:
WHEREAS, me DEVELOPER is desirous ofdevelopmg at amel of land in Bangor
designated as City Assessor's Map R23 Lot 2A fund 16 units of affordable housing for low ftwme
persons; and
WHEREAS, the espoused cost of acquisition of the land, mastruction of the buildiags,
bo sllstion of equipment, design fess, legal fees, insurance, financing and other costs associated with
the developmeal(herewefta "Project") is estimated to be $2,486.000; and
WE&,REAS, the DEVELOPER will secure not less than $2,356,000 in 6nmcing and equity,
for me Project from sources other than the CrTY, and
WHEREAS, corvpleHm ofihe Pmjea will create a significant public benefit by providing
affordable housing Opportunities, and enhance the tae base of the=;. and -
WHEREAS, the lush cost of the development reganes financial assistance from the CITY a
ensure the affomaMGry, and the public benefit of completing the Project; and _
WHEREAS, the low rental revenues would not be sufficient to fully service the proposed debt
on the project, and additional financial assistance m the warm of tax increment financing of a portion
of the debt service is also necessary to ensure the affordability end the public benefit of considering
the Project
NOW MlI EEORE, in consideration of the readied promises and covenants contained in this
Agreement the CITY and the DEVELOPMagree as follows:
1. Subjectto the provisions of this Agreement, the DEVELOPER agrees m develop on
the property designated as City Assessor's Map R23 Lot 2A, 16 units ofaffordeble
housing for low income families meeting low income guidelines established by the U.
S. Depamnmt of Housing and Urban Development Parody gross Incomes shall not
exceed 80% of the area median income for the Bangor mehopoli au statistical area as
established annually by the U. S. Department of Housing and Urban Development
2. DEVELOPER agrees to invest not less than $2,356,000 in fuels sesmed from sources
Other then the Dry of Buffer,
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03-339
3. DEVEWA agreestopmAdeevidence,notlate &m Mav1 2004 saesfacbryto
the City Sobcdor, of a binding consnucbon contract, or connects, providing for site
work and building construction costs ad contingency for the Project of not less thin
$1,654,000.
4. Subject to the provisions otitis Agreement, the CfrY agrees to provide the
DEVELOPER a loan for acquisition of 60 property, in an combat which is the lease
of We appraised value accepted by the Director of faraway and Econonic
Development. or $125,000. the source of such loan shall be the City's Commwity
Development Block Grana (CDB(ii Progcmu. Itis loan shall be a 0%interest,
deferred payment lona wi@ a and of 15 years. More specific terms of this loan Shull
be containM in the City's final loan covmiMrnt subsequent w the satisfaction of the
tame of this Agreemrnt On flee maturity date of Itis loaa, We CffY shall reserve the
Option w propose refinancing that will Martin We original prindpC mvomt The
refinmcing terms shall not j eopadiae Out continued affordability of the prof act or
affect compliaoce with o@er covenants and restrictions required of the project by
Odgers.
5. CffY agrees is, provide additional f rcing w the project for specific site or
infia¢nvcnre improvemeats rest we eligible under nbe CDBG Program under the
same corms described in pvagraph 4. The total rurmviwen[ of CDBG finds£or the
Project shall not exaW$ 130,000.
6. C= agrees to rerun real table Was to We DEVELOPER for the purpose of
amortizing a portion of the weal debt service on to development This amomt shall
be $10,000 or 0% of the real estate saxes paid per your, beginning with taxes Paid on
real wrote due Me C= w the CITY'S assessment as of April 1, 2005, and ending on
April I, 2020, whichever is Its. Warn 30 days of closing, the DEVEIAPER shall
provide evidence in a bar nacceptable to the City Soficitor, of normal debt service that
wilt not be less flan $15,639 per year.
]. DEVELOPER will provide a final opcanng proforma to the C1717 a later aban 30
days prim to aproposed loan closing, on aforso acceptable to the Director of
Community and Economic Development ndicaWg adequate income and fatting to
operate end Winners the project
S. DEVELOPER agrees that developman of the Project shall be in accordance with Al
applicable Pedaal, Stare, and City laws, costumes; ad building codes.
9. DEVELOPER agrees the scope of the work shall conform in all material reasons to
%a plms approved by One City of Bangor,
10. DEVELOPER agrees to provide evidence byAnrll 12004. satisfactoryto the Ciry
Solicitor, oflegavy binding private lends financing commitmems and equity
mvesmrera of not less then $2,356,000 in funds for firmcing of the Project exclueive
ofInencing to be provided by the CI1Y as provided for in 4 above.
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03-339 1
11. DEV PERhmeby acknowledges diatribe CITY, is agreeing to provide financial
assistance to DEVELOPER for the Project, relies in material part upon the assured
completion of the Project and the DEVELOPER agrees ro use its beat efforts m
srbstsdtialty complete the Project no later then March L 2005.
12. DEVELOPER agrees that h shall kap and maintain books, records and other
documents relating directly to the Project and agrees that any duly authorized
representative of the CDY shad, at all reasonable times, have access to and the right
to mspeck copy, audit and examine all each books, records and other documents of
DEVELOPER until completion of the Project upon prior written notice.
DEVELOPER shall ensure that similar provisions are included or all contracts or
subcouaecrs arRaed into in connection with this Project.
13. DEVELOPER agrees used my duly authorized representative of the CITY sbal, a all
reasonable times, Lave access m any Widen of the Project card its completion end a
permenrnt Certificate of Occupancy for the Project has been issued by the CITY.
14. -'Tne DEVELOPER agrees that Property' rues on the proPerrY improved with loan
proceeds shall always be Paid for the life of the loan regardless of the tax a+ehu of the
DEVELOPER Payment of such taxes may be accomplished as a one-hmdred percent
(Iiso%) payrom as Has of taxes. As pw of the loan agreement, the DEVELOPER
agrees for itself, said every successor in interest to the property, or UY pmt thereof
that the property shall be subject to all taxes and assessinonts as nay be imposed by
any govemmevml authority upon the aforedescnbed premises and any buildings,
structures, or irnprovemats which may be or may become located thereon. Bis the
intent of the CITY and DEVELOPER, and DEVEIOPER will agee as waive, for
itself and any successors in imerec, Al right or privilege of exemption Gam mwicipal
taxation of the property improved with the loan proceeds a lNut the City of Bangor,
to its capacity as a Paving sutbmity, may assess all taxes and assessments as would
otherwise be appiiable ro the property including buildings, structures or I .
immovements which are or may became located thereon, as if such exemption did not
exist. DLNELAPER further agrees, for itself add any successors in interest, ro pay
said assessments on or before the date upon which the sane become due and payable.
Provided, however, that C=agnea that DEVELOPER, Or its sucassom in interest,
shall have the right to correct the amcrrt of such taxes or assessments in the marcor
Prescriber law
15. Any notice which either party desires or is rwluhed to give ro me other in correction
with this Agreement shall be in writing and shall be sent pos ap prepaid, certified
mai, ream receipt raluested, as follows:
Ulu C1TI: Edward A. Barrett, City Manager
City of Bangor
73 Halow Street
Bangor, Moire 04401
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03-339
IfW DEVELOPER:
PSkWn H. Mooers
BoFamily Housing Associates, Limiter Pazmaship
P.O. .O. 1162
Bangor, Maine 04402-1162
Or such other person and/or address as may be identified in writing by the parties.
16. Except as provided in this Agreesnen; until substantial Completion of the Project
DEVELOPER shall not assign its vghu untler this Agreevwnt without the ptior
written consent of CITY, wb th consent sball not be unreasonably withheld, delayed
or oouditionest. The CITY'S obligations hereunder arc conmgent upon the
DEVELOPERS compliance with the terms andbr conditions set forth w this
Agreanent.
17. The DEVELOPER represents and agaes that the acquisition off the property
deslgnmed as City assessor's Map R23 Lat 2A will be used for the purpose of
developmentofthe picjoO and not for speculation in landholdings. This
tepresenthtion shall teammate and be of no further force and effect upon substantial
completion of the Project by the DEV EIAPER-
IS. It is intended by the parties that this Agreement shall operate as contact under seal, th
accordance with 14 MRSA Sen751.
RTPNESSW EOF this Agreement has beenex=nsd, sealed and delivered in duplicate
conotapons as of the day and year first above written.
Penquis Family Housing Associates, Limited ParNership
BT 'tS rnB. Moo
Its Dvecto� of Housing Development
CffY OF BANGOR
Ey
on FAwatd A. Barrett
Its City Manager
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