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Home My WebLink About2000-06-05 Reading Housing Authority Minutes - Executive SessionREADING HOUSING AUTHORITY MINUTES OF THE EXECUTIVE SESSION MEETING OF JUNE 5, 2000 An Executive Session meeting of the Reading Housing Authority was held on Monday, June 5, 2000 at 7:50 P.M. at the office of the Authority, 22 Frank D. Tanner Drive in the town of Readir Massachusetts. The meeting was called to order at 7:50 P.M. with Mr. Sweet, the Chair, preside Also in attendance were Mr. Allen, Ms. Connors and Ms. Galvin as well as the Executive Direct Ms. Plansky. Mr. Greco, the Authority's attorney also arrived later in the meeting for the discussion relative to Executive Session along with Mr. Favaloro, Mr. Bernardi, Mr. Rucker and Mr. Dolan from Marriott Corporation. Reeular session at close of Executive Session Upon a motion duly made by Mr. Allen and seconded by Ms. Galvin, it was unanimously VOTED: To adjourn to Executive Session at 7:50 P.M. and to return to regular session to resume discussion on the listed agenda items at the end of the session on the following roll call vote: Mr. Allen — aye Ms. Galvin — aye Ms. Connors — aye Mr. Kelley — aye The Chairman then declared said motion carried and said vote in effect. Marriott Corporation The letter to the Reading Housing Authority from Marriott Corp. was reviewed. A lett from our attorney, Mr. Greco was received and reviewed. The Executive Director spol with Mr. Favaloro and he contacted Marriott. The principals reported that what they ha, proposed is the final offer. They do not want to carry the debt on the books or pay for bond. The Board has voted to require the payments to be secured by a mortgage performance bond. The elements of the agreement are: Total of the payments will be $1,100,000.00 paid in eleven equal installments of $100,000.00 each payment per the following schedule: • The first payment will be due within 30 days of the issuance of the Building Permit; • the second payment will be due on issuance of the Certificate of Occupancy, and • the third through eleventh payments will be due annually on the anniversary date of the issuance of the Certificate of Occupancy for the assisted living facility. • Payment in full of all amounts due is required if the facility converts from an assisted living facility to any other use. The Director noted that other towns with inclusionary zoning require that a bonus be give in excess of the required % if the "linkage" units if those units were provided off -site from the proposed development. It was also noted that at the ZBA hearing for the Linden Street Page 2 Minutes -Exec Session 6/5/2000 comprehensive permit, Mr. Cootes of the Reading ZBA felt that the housing authority should require developers to provide the linkage units on site. He felt this would provide for housing in perpetuity and would add to the number of "affordable" units for the town. It was also noted that the ZBA stated that they did not favor taking "market" units off -line only to "count" them as "affordable" housing. It was the ZBA's opinion as expressed at that meeting that the housing authority should be looking to the creation and development of affordable units and not to the conversion of market units to affordable units. The ZBA noted that the easiest way to do that was to require the developer to provide the units on site in perpetuity. Based on this philosophy as expressed by Mr. Cootes of the ZBA, the authority and the town must be aware that • the off -site solution should be a last resort; • consider what "bonus" for off -site units would be considered above the required linkage; • work diligently with the town boards to have a consistent approach to developers for the required linkage units. This will avoid developers setting boards in opposition to one another. This view should be noted at the Tuesday all-Board meeting and find consensus for the town to this approach. At 8:00 P.M. the Authority welcomed the representatives from Marriott, Mr. Favaloro, their attorney, Mr. Bernardi, Mr. Bruskin, in -house counsel, Mr. Marriott presented their situation regarding the requirement of the Authority for securing the payments as per the agreement. Pair. Bruskin noted that current Marriott policy is not to provide performance bonding and they would not record a mortgage, even if it was subrogated to the first mortgage. Marriott presented their arguments as follows: • will not provide performance bond • will not record a mortgage even if subrogated • will have a mortgage held in escrow which could be recorded upon default • Marriott will guarantee the first $200,000 payment and will carry an additional $200,000 in their operational budget which they will guarantee. • Marriott does not intend to pay any more than $400,000 at most and will sell the property to a subsequent owner with the Agreement recorded • The authority will have the right to lien the property if payments are not made in accordance with the schedule. • Marriott is a flagship corporation in the assisted care business. They have never taken a flag down on an assisted care facility. What Marriott does is sells the facility and then Marriott contracts the operations and management for the assisted care facility with the new owners . • Neither Marriott Corporation nor Marriott Senior Living Services will be the owners of record of the property. There will be subsidiary company in charge of the development and operation initially. This will then be sold off (probably in a packaged deal with other properties) and Marriott will provide the operations and management at the facility. page 3 Minutes-Exec 6Se sion t the Agreement: a performance bond The Authority fe or by p Must be secured by either a recorded mortgage • Marriott states that it is a Fortune 40 d the cost for a performance bond ( views +++ ratin in the bond market). company with a B as 0 in escrow holds no security for then much o risk. ther creditors ca • A mortgage held d the Position provided to suggestions by stand before the, Authority an P agree to any of the the Board to sign the agreement as suggested • The level of assuranc enoio convene the to agr Marriott was not suffice maximum of by Marriott. « uaranteed7' payments for a ma et back Discussion about rolling over the g supporting this and g $550,000 ensued. Marriott asked the Board T tconsider egard. to them before they approach Marriott corporate The Board reviewed the proposal of: The Marriott representatives left at P.M. Agreement and have the Authority and Marriott hold a 1 Marriott proposal to sign the provide a "gam antee' to mortgage in escrow for the full amount and have Marr p Marriott Proposal to sign the Agreement provision for an additional 2. P over owner would be responsible for all costs over $400,000 the Authority for the first o� ,000.00 with a roll uld Leave $550,000 not i $150,000. A subsequent This wo guar the first $150,000. with Marriott g of "securing" that the guaranteed by Marriott- of Marriott proposals. To find some way The Authority could pay /2 the costs for bold for a 3. Not accept either tted arr p � he gHAlwould Pay payments w Marriott assuming the other 1/2 of the cost• maximum of $2000 per year for the bond* Allen and seconded by Ms. Galvin, and a Board vote of 0- Upon a motion duly made by W. Al 4 -0, it was Agreement with grantee the first $400,000 in the Chairman and/or Executive Director to sign the � and VOTED: To authorize r,�,ould permit Marriott eement Marriott Corporation which Authority per the payment schedule of the Agr Marrio Housing guaranteed by payments to the�Reading er provision for the next $150,000 asheduled� g that an additional e the paYrn if the subsequent owners failed to make en declared said motion defeated and said vote in effect. usl The Chairman then it was unanimously a motion duly made by Mr. Allen and seconded by Ms• Galvin, Upon a for 1/2 the cost of a bond up to a Chairman to provide to Pay nts er tl�e agreed VOTED: To authorize the to secure the pay p maximum of $2000 per year in order to obtain a bond payment schedule. Page 4 Minutes -Exec Session 6/5/2000 The Chairman then declared said motion carried and said vote in effect. The Chairman will send a letter to their attorney, Mr. Favaloro, stating the Board's position in this regard. Upon a motion duly made by Mr. Allen and seconded by Ms. Galvin, it was unanimously VOTED. To adjourn from Executive Session at 10:25 P.M. and return to regular session to resume discussion on the listed agenda items on the following roll call vote: Mr. Allen — aye Ms. Galvin — aye Ms. Connors — aye Mr. Kelley — aye The Chairman then declared said motion carried and said vote in effect. There being no further business before the Board, it was unanimously voted to return to regular session at 10:25 P.M. Respectfully submitted, Margaret K. Plansky, Secretary and Executive Director