HomeMy WebLinkAbout2011-05-10 Board of Selectmen HandoutDRAFT MOTIONS
BOARD OF SELECTMEN MEETING
MAY 10, 2011
Bonazoli, Anthony, Schubert, Goldy, Tafoya . Hechenbleikner
3a)' Move that the Board of Selectmen declare May 15 to May 21, 2011 as
Public Works Week in the Town of Reading.
4a) Move that the Board of Selectmen accept the report of the Volunteer
Appointment Subcommittee and confirm the following appointments to
the following Committee:
• Charles Adams for a position on the Community Planning and
]Development Commission with a term expiring June 30, 2011
• William Keating for an Associate position on the Community
Planning and Development Commission with a term expiring
June 30, 2011
5c) Move that the Board of Selectmen and the Reading Housing Authority
Board, voting as a committee of the whole, pursuant to the enabling
legislation creating the Affordable Housing Trust Fund, vote to approve
funds for the Oaktree Development in Reading as follows:
and the Town Manager and Town Counsel are directed to prepare the
necessary documentation to carry out the purposes of this vote.
5d) Move that the Board of Selectmen close the hearing on setting the water,
sewer and storm water rates for FY2012.
Move that the Board of Selectmen set the FY 2012 Water Rate at $8.27
per 100 cubic feet with a minimum quarterly bill of $ 16.54 effective
with the August 2011 billing.
Move that the Board of Selectmen set the FY 2012 Sewer Rate at $8.57
per 100 cubic feet with a minimum quarterly bill of $17.14 effective with
the August, 2011 billing.
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Move that the Board of Selectmen set the Storm Water Rate at $ 40 per
unit (2,552 square feet) per year to be billed quarterly effective with the
August, 2011 billing.
5e) Move that the Board of Selectmen approve the S voting precincts as
presented on the map entitled "Proposed2010 Voting Precincts" dated
5/4/2011.
Move that the Board of Selectmen adjourn the meeting at p.m.
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TOWN MANAGER'S REPORT
Tuesday, May 10, 2011
Administrative matters
o It is time for the annual Board/Committee/Commission appointment, process.
♦ Town Counsel's tracking for hours/expenditure to date is included in your packet
• I have copied you on an email from Town Meeting member Tom Connery re Killam
School. We will be working this summer with School Department officials on a
strategy to address the HC access issues at the School
o The Boston Region MPO is considering changing their MOU to change the
municipal membership. Currently the MOU requires representatives of 3 cities and
3 towns, and the potential amendment would change that so there would be no
minimum or maximum requirement for how many of the 6 municipal representatives
were from cities or towns.
Finance
e Brian Walsh has resigned from the FINCOM in order to take a position with the
School Department. The position may be filled in the normal annual BCC
appointment process
Community Development
® Calereso's has completed their demo work getting ready for construction of their
new facility on South Main Street.
o The helicopter Bti applications for mosquitoes in the East Middlesex Project
area were completed mid month. With ideal weather conditions, the three
helicopters managed to finish the application by 3 PM.
*An outside section of the House version of the State budget has been filed which
would curtail local Boards of Health ability to regulate smoking. I have asked for
MMA's help in fighting back this provision.
+Town Counsel has sent an email re "Netcafes" which are now illegal per the
Attorney General's emergency regulations. I have advised the Police Chief of that
fact.
Public Safety
*You have in your packet the results of the traffic study on Harrison Street conducted
in December. A second study will be done this spring,
♦The Board has received a letter complimentary to the, Public Safety response to a
MV accident that happened 4-14-11.
♦ Staff has been meeting with Oaktree regarding the logistics of their construction
project. We are working on a construction process that will minimize the amount of
the Brande Court parking lot utilized for construction, minimizes the disruption on
Haven Street, and establishes truck routes. Normally this would all be handled on
9
a staff level. Does the Board of Selectmen want to be involved in the details of
this?
*We are making good progress on the roll out of the mass communications system
and are targeting Friends & Family day in June for the public launch.
Public Works
*DPW Water Division staff has again been recognized by DEP for outstanding
performance in 2010, and will receive an award on May 5.
oA hearing on the Safe Routes to School project took place on 4-14-11. The hearing
went well. There were a couple of specific requests to the Town from property
owners that we are addressing directly - not part of the project - shrub removal in
one instance to improve site distance, and removal of an unsightly Town owned
fence.
*Correspondence from Christine Lusk of Washington Street re: sidewalks and tree
lawn was included in your packet
*The Compost Center is open Friday, Saturday, and Monday for the months of April
and May. Don't forget to have your Community Access Sticker for 2012, available
at the Police Station.
Construction - projects
.Roadway Paving:
*Will start in June and continue August. We were going to start with Pearl, Haven
and the intersection of Forest Glen with Pearl but we will have to re-assess our plan
of attack as the gas company notified us yesterday that they want to replace cast
iron mains on Pearl, Hanscom, Wilson and Track.
Sidewalks:
o Imagination Station area - July construction
Drainage:
o DPW Garage water quality units July
o Howard St improvements - bid May-June, construction this summer
o Memorial Park swale silt removal and bank stabilization - summer work (dry
season)
Water:
o Haverhill St main replacement - anticipated construction start July
Sewer:
+ Lewis Street sewer rehabilitation - late summer\fall. Slip lining of the sewer main,
limited to no excavation
+ Smoke testing remainder of Town, mostly northern half of Town late summer\fall
Dates and Events:
o Paper Shredding - Reading DPW - May 14, 2011
o Rigid Plastics - Reading DPW - May 14, 2011
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♦ Curbside Scrap Metal curbside pickup - May 21, 2011
+ Household Hazardous Waste collection -May 21, 2011 - Reading DPW
o Friends and Family Day - June 18 - time to be announced..
+ Reading Fall Street Faire - September 11, 2011
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Page 1 of 1
Hechenbleikner, Peter
From: Linda Aiello [swedeina@yahoo.com]
Sent: , . Tuesday, May 10, 20115:20 PM
To: Reading - Selectmen
Subject: $400 K grant
Good Evening Selectmen, Re this evening's consideration of granting "Oaktree"
Developers monies in the amt. of 400K to proceed with their project...... NO!,
These funds were not part of the original agreement and if they cannot get this
project underway, so be it. We're sure. there are other possibile developers out
there who are not looking for -a handout from the town's housing fund. The whole
idea does not sit well in our minds and We hope it will not go through.
Sincerely, Robert & Linda Aiello
5/10/2011
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Page 1 of 2
Hechenbleikner, Peter
From: Berman, Barry [barry.berman@bankofamerica.com]
Sent: Tuesday, May 10, 20111:56 PM
To: Hechenbleikner, Peter
Subject: FW: proposal for Oak Tree
Hi Pete
I plan on coming tonight and offering the following recommendation
for a loan to Oak Tree.
I propose two interest free loans of $160,000 to be used once developer
shows he needs for completion of Project>
The first loan has a five year term with annual one year extensions
assuming residential units remain as apartments. The loan will require repayment
as soon as c/o is granted for the apartments and the commercial space.
The developer will pay us $50 per month for the 42 non-subsidized
units and $150 for each commercial unit (assume 4) for a total of $2700 per month.
After 5 years this loan will be re-paid. If the developer or his assigns retain the units as rental
beyond five years, these loan payments can be applied to the second loan, reducing
the balance of that obligation.
The second loan (also interest free) will be paid back when developer converts
the rental to condos, or when he sells the project. To insure the repayment, a lien ($3800 per unit)
will be placed on each non subsidized unit.
Assuming a rate of 5%, the value of the five year loans will be about $80,000 for a total Town
contribution of around $400,000.
I also propose that a portion of the $3000 per unit we receive from the State from
40(R) be placed in the Trust for future use. I assume this will require Town Meeting approval.
Can you forward this to the Board as well, as I don't have all the email addresses
Thanks. By the way I will be speaking'as a private citizen tonight.
Barry
Contact Pte ollnllf}y Nlovi Tools r Re-,; uisus
Barry Berman
Senior Mortgage Loan Offioer
Retail Mortgage Sales
President's Club
View My Website
5/10/2011
Page 1 of 1
Hechenbleikner, Peter
From: Lois Bell [loisbell@verizon.net]
Sent: Monday, May 09, 2011 9:28 PM
To: Reading - Selectmen
Subject: Tomorrow night's meeting
Please no "gift" from the trust fund to the developer. Thanks for listening, Lois Bell
5/10/2011
Page 1 of 4
Hechenbleikner, Peter
From: Paul M Ognibene [paul@UrbanSpacesLLC.corn]
Sent: Tuesday, May 10, 20114:33 PM
To: Delios, Jean
Cc: Hechenbleikner, Peter; 'Chuck Eisenberg'; 'Art Klipfel'; 'Gwen Noyes'; 'Phil Terzis';
jhirsch@urbanspacesllc.com; 'Skip Rose'
Subject: VanMagness Response
Jean:
In response to the VanMagness email, please see my comments below in blue. I'm also putting a short presentation
together which should help provide more information and clarity.
Thanks,
Paul
-----Original Message-----
From: Frederick Van Magness [mailto:vanmagness@verizon.net]
Sent: Thursday, May 05, 2011 5:08 PM
To; Reading - Selectmen
Cc: Hechenbleikner, Peter; Delios, Jean
Subject: Oaktree
Hi all,
I talked with Jean Delios this morning and got some figures for the
Oaktree development, which I have included in a spreadsheet attached to
this email.
I find a number of concerns that should be answered before Tuesdays BOS
meeting:
1. In the pro-forma project income statements in the BOS packet from
50/11, the project still is calculated at 56 units ...not 53.
[5/10/2011 PMO:
The development pro-forma included in my 3/30/2011 memo is the official pro-forma. Any
other financials submissions/documents are out of date. The 3/30/2011 memo references 53
units. There was, however, a typo. at the top of one of the exhibits which erroneously indicates
56 units.]
Also the Market rate housing piece used $18300 per unit but also multiplies the
value by 56 units ...not the real number of market rate units of 42.
5/10/2011
D
Page 2 of 4
[5/10/2011 PMO:
I'm not certain what pro-forma is being referenced. There was an earlier submission to the
Town of a pro-forma dated 10/27/2010 which indicated a sale price of $185,000/unit for two-
bedroom affordable units, but it correctly multiplied that number by five affordable two-bedroom
units. In any event, the current pro-forma is dated 3/30/2010 and the project is now a rental
project and for-sale values aren't being considered.]
In the. affordable income,'they use a value of $2823 times 56 units as well.
Is this correct? I thought the affordable portion was 11 units.
[5/10/2011 PMO:
Based on affordable housing consultant SEB's recent submission to DHCD, we anticipate rent
allowances of $1,165/mo and $1,293/mo for one and two-bedroom affordable units,
respectively. Given that 5 one-bedroom and 6 two-bedroom units are to be designated
affordable, this will yield $13,583/month of affordable rents.
Incidentally, our mortgage on the 11 affordable units costs $13,702/month. After adding
estimated property taxes of $200/unit/month and estimated maintenance costs of
$550/unit/month, our monthly outlay is increased to $21,952, representing an annual operating
loss of about $100,000/year.
Our current estimates of market-rate one-bedroom (18 units) and two-bedroom (24 units) rents
are $1,750/mo and $2,200/mo, respectively, yielding $52,800/mo of market-rate rents.]
Retail income is figured at 20000 sq. ft but the project retail is now 22,882
per Jean.,
[5/10/2011 PMO:
I believe the last submission to the Town was in August 2010, which indicated 26,635 sf of
gross retail space and 19,938 sf of net/rentable retail space. Gross income projections of $23
psf are based on the net.]
2. Based on the overall project sq. ft, estimate, it appears that the
size of the project has been reduced from 123,454 sq.ft. presented to
the CPDC to a new value of 116,071 today.
[5/10/2011 PMO:
I believe the August 2010 submission indicated 66,201 sf of gross residential space, 26,635 sf
of gross retail space, and 30,618 of parking, for a total of 123,454 sf. The building dimensions
will be in flux until the 100% drawings are complete-and even then there will be some
variability in the field. It's important to note that there isn't an exact linear relationship between
square footage and costs.]
5/10/2011
01
Page 3 of 4
You need to get the detailed calculations behind the project hard cost amount of $12,872,417
to see
if the savings in sq. ft has been reflected in the overall project costs. While it is not a direct
correlation, my attached spreadsheet
shows a possible $578,000 reduction in construction costs for smaller sq. ft. as well as now
there is a 3000 sq.ft reduction in parking space.
Somewhere a smaller building project should result in lower costs overall.
[5/10/2011 PMO:
Our current for of hard construction costs is $12.87 million. If the Town were to provide
the anticipated grant of $400,000 and our costs came in lower, we would agree to repay the
grant dollar-for-dollar. We're not looking to profit from the Town's generous grant. In
exchange for the grant, the Town will benefit from:
® $159,000 40R bonus payment from the State
® $2,350,000 cost of constructing 11 affordable units
Affordable units maintained in perpetuity at no expense to the Town ($100,000 / year
value; $2 million present value)
0 $200,000/year increase in property tax revenues ($4 million present value) .
® 53 units added to affordable count / requirement
® Revitalization of downtown district and other intangible benefits
3. The overall modular construction cost is projected at $7.75Million. I
think, since this is one of the largest unsubstantiated numbers in the
overall project, you need to ask for a formal documentation as to how
this number was arrived at...not just a verbal item from Oaktree but a
copy of a preliminary quote from the equity partner.
[5/10/2011 PMO:
Modular construction costs are anticipated to be approximately $3.7 million.]
4. You need to have a written letter from their bank lender stating that
the maximum loan value for the project is $13million and there can be no
more funds available. Seems strange a bank would lend only one
amount-what would happen if the costs exceeded this value and there
were no other funds available. This question should be put to their
lender. As a matter of fact, it would be helpful if their lender was at
the BOS to state that no more funds would be loaned.
[5/10/2011 PMO:
5/10/2011
5
Page 4 of 4
Given that the cost of our construction loan and permanent financing with Enterprise Bank are
5.0% (floor) and 5.75%, respectively and our cost of equity is much more, it was in our
interests to get the maximum amount of bank debt. In this economic climate, banks are very
conservative and achieving $13 million was the result of much negotiation.
Cost overruns are the responsibility of the three partners personally.]
5. Also remember that there were 16 conditions put on Oaktree back on
Sept 13, 2010 that needed to be done before any permits 8 months have
gone by and they have only completed one item.. paid the Site Plan
Review fee.... why all the delays????? Does not seem to represent an
aggressive strategy.
[5/10/2011 PMO:
Financing the project and pulling the deal together in this economic climate has been a
substantial challenge: It took Enterprise Bank several months to find a participant to share in
the risk of their loan, for example. Once Enterprise was ready to move forward, we closed as
soon thereafter as possible, which was March 2011. Since then, our dedicated team has been
working as quickly as possible to design the building and complete the 16 conditions. At this
point, almost all conditions have been met or will be met soon. I believe we share mutual
interests in getting the project launched and completed as quickly as possible.]
Fred
:k**44N:M:s3*:k:M:k:h:k N: N:****X44*N<Ni N:1:*x*** ***4. N: M.
Paul M. Ognibene
Urban Spaces
10 McTeman Street
Cambridge, MA 02139
Phone: 617.868.5558
EFax: 801.991.5002
EMail: pauWUrbanSpacesLLC.com
5/10/2011
Page 1 of 3
Hechenbleikner, Peter
From: Paul M Ognibene [paul@UrbanSpacesLLC.com]
Sent: Tuesday, May 10, 2011 3:07 PM
To: Delios, Jean
Cc: Hechenbleikner, Peter; jhirsch@urbanspacesllc.com; 'Phil Terzis'; 'Skip Rose'
Subject: FW: 30 Haven Street : Reading
Jean:
Please see highlighted correspondence below from/with Bill Reyelt of DHCD.
Please confirm that Bill's email provides the confirmation needed for the Town's CPDC to amend the Site Plan
Review Decision to allow for issuance of the demolition permit and foundation permit (but not the building permit)
prior to satisfying the affordable housing conditions.
Thanks,
Paul
*t.r.~x~ ~x,: ~x~ma~a~a~ a: e***mtxx
Paul M. Ognibene
Phone: 617.868.5558 x111
From: Paul M Ognibene [mailto:paul@UrbanSpacesLLC.com]
Sent: Tuesday, May 10, 20113:05 PM
To: 'Reyelt, William (OCD)'
Cc: 'Geoff Engler'; 'brian_engler@s-e-b.com'; 'Phil Terzis'; 'jhirsch@urbanspacesllc.com'
Subject: RE: 30 Haven Street - Reading
Thanks, .Bill.
. We'll stand by-for your response to the SEB marketing materials submitted (item 1 below) and the Regulatory
Agreement (item 2 below).
. Under separate cover, I just emailed you the affordable unit plans (item 3 below).
. Thank you for clarifying regarding the building permit vs. other permits (demolition permit and foundation
permit). I'll verify-with Jean Dehos to make sure this meets her objectives, but I think this will provide the
confirmation needed for the Town's CPDC to amend. the Site Plan Review Decision to allow for issuance of
the demolition permit and foundation permit (but not the building permit) prior to satisfying the affordable
housing conditions.
Best regards,
Paul
5/10/2011
Page 2 of 3
* 4+k*****4 * *+k 4, * i. *
Paul M. Ognibene
Phone: 617.868.5558 x111
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From: Reyelt, William (OCD) [mailto:william.reyelt@state.ma.us]
Sent: Tuesday, May 10, 201112:59 PM
To: pawl@urbanspacesllc.com
Cc: brian_engler@s-e-b.com; 'Phil Terzis'; jhirsch@urbanspacesllc.com
Subject: RE: 30 Haven Street - Reading
Hi Paul,
My apologies for the delay in getting back to you. I was out of the office yesterday and most of Friday.
I have attempted to respond to each of your questions/concerns below.
From: Paul M Ognibene [mailto:paul@UrbanSpacesLLC.com]
Sent: Friday, May 06, 2011 10:28 AM
To- 'William. Reyelt@state. ma. us'
Cc: 'brian_engler@s-e-b.com'; 'Phil Terzis'; 'jhirsch@UrbanSpacesLLC.com'
Subject: 30 Haven Street - Reading
Bill:
I'm the project manager for our new development at 30 Haven Street in Reading. I believe my colleague, Gwen
Noyes, and our housing consultants, SEB, may have already been in touch with you. Gwen is on vacation for two
weeks, so I'm writing to follow up on a few matters.
1. We've approved SEB's draft Affirmative Fair Housing Marketing Plan and SEB will be submitting it shortly
for your initial review and ultimate approval.
Thanks. Yes, we've received the draft AFHMP from SEB, and are in the process of reviewing. We should have
some initial feedback for SEB later this week..
2. Could you please send a copy of DH®'s Affordable Housing Restriction Form (40R rental project) so we
can have our attorney review?
After my initial request for the form they'd recommend, our legal dept. responded by suggesting we use the one
that was used for Northampton's Village at Hospital Hill 40R. Unfortunately, they are still trying to track down
an editable/word version of the final draft/document, so I will get that to you as soon as possible; hopefully later
today or tomorrow. In the meantime, I've attached the draft version that I have available.
3. Mycolleague, Phil Terzis, will be sending you drawings showing the proposed affordable unit locations.
Based on our unit mix, SEB has indicated that 5 one-bedroom and 6 two-bedroom units must be designated
as affordable units.
Great. 11 units sounds right. We will. take a look at the unit location plan as soon as we receive it.
4. One of the conditions of our Final Site Plan Review Decision (FSPRD) from the Town of Reading is that,
prior to any demolition, foundation, or building permits being issued, the Affirmative Marketing Plan must be
approved by the DH®. Since the DH® approval process is just getting underway and we're ready to start
demolition, The Town of Reading has offered to consider amending the FORD to allow for a demolition
5/10/2011 f
Page 3 of 3
and foundation permit (but not a elennlitiert building permit) prior to DHCD resolution. Based on my read of
the 40R regulation, I believe such an approval would not run afoul to any 40R regulation, which requires the
Affirmative Marketing Plan approved prior to building permit only. Since the 40R regulation is new, the
Town has requested something in writing from DHCD indicating this is correct. Would you be able to
provide something to that effect?
As I have already indicated. to the town (see email below to Jean Delios), as long as the AFHMP is approved
before the Building Permit(s) proper (i.e., construction) are issued, this won't be a problem on our end as the
language in our corresponding requirement refers just to "building permit" (see attached letter). However,
since the town included a more stringent requirement with additional language in their decision tying the
approval to demolition and foundation permits as well, the town / local 40R Plan Approval Authority (PAA) has
the authority to waive the extra language/requirement. While we will certainly do our best on this end to
expedite approval of the AFHMP, and I don't expect this will be a problem in terms of the issuance of the
building permits, it's my understanding that this Plan Approval was issued back in September, so it's unfortunate
that approval of the AFHMP was not initiated earlier.
Again, hope to follow up very soon with the final version of Legal's preferred rental 40R AHR (i.e. Northampton).
Regards,
Bill
From: Reyelt, William (OCD)
Sent: Tuesday, April 26, 2011 12:46 PM
To: 'Delios, Jean'; McCabe, Abigail; Reyelt, William (OCD)
Subject: RE: Reading Downtown 40R District
Hi Jean,
I'm not certain I know exactly what you mean. If the question is whether or not the AFHMP approval
requirement applies to demolition permits as opposed to construction/ building permits proper, I don't
think we've necessarily addressed that to date, but I'm inclined to say that, in terms of DHCD's concerns, I
don't think we would necessarily have an issue w/ the town issuing a demolition permit prior to our
approval of the AFHMP. In other words, I think we're comfortable, in this context, w/ intprpreting building
permits to. ._mean permits.fo t.he,,.constructio.n the bui dingjsi.
Was that your question?
Bill
5/10/2011
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Page 1 of 3
Hechenbleikner, Peter
From: Charlie Adams [charlie.adams99@comcast.net]
Sent: Monday, May 09, 2011 12:33 PM
To: Hechenbleikner, Peter; timothyjkelley@verizon.net
Cc: Charlie Adams
Subject: Thoughts on Trust Funding for 30 Haven
Peter/Tim
I made a couple of calls after Town Meeting last Thursday and took at look at the information provided by the
developer regarding the request for 400K for 30 Haven Street and thought I would just pass along a few thoughts
as well as offer a few comments in the event either or both might be of benefit. My assumption is that much of
this you already know or have heard from others. Below are some quick summary thoughts/comments -
following that is a discussion of alternative sources and some analysis of the numbers.
First, as you both know negotiating with a developer on financial issues is exceedingly difficult because they know
and control the information and you can only react to what they put forward. They also have a bottom line and its
hard to know what that is. Having said that, like Housing Partners Inc. (HPI), I find it difficult to believe that the
400K is "critical to project feasibility" and that they would walk from this deal if the Town does not provide these
funds. This is an $18 million+ project and 400K, which as HPI also states,'represents 2% and "is well within the
range of uncertainty which must be applied to the projections." If I understand correctly, they also have taken
down the land at $2.6 million plus invested additional resources into plans, studies, etc. So walking from the
project means that they believe they can sell the land for a sum that's not less than 400k less of $2.6 million plus
costs incurred to date. Anything less than that would mean their best alternative is to continue with alternative
financing for the 400K. I also recognize that the developer is telling the Town that their only current alternative is
to provide this funding as equity which would come directly out of their pockets or their investor's pockets and
that's not a very palatable alternative to them as what seems like a small amount of money for the deal is a
meaningful amount to them.
Political realities should dictate, and as a resident, I would be personally comfortable with the Town providing
some financial support to the development - should the Selectmen/Housing Authority determine that to be in the
best interests of the Town in promoting and supporting this important project as well as maintaining the goodwill
which it appears we have with the developer. Ideally, however, I would like to see the Town reduce the amount to
perhaps only 100K of the 460K we have in the Trust to this project - this would leave a good percentage of the
funds in the Trust for other future affordable ventures. I also recognize however that splitting the 400K with the
developer is clearly the path of least resistance on a negotiated outcome. Below I have offered a few options on
how the developer can raise these funds without coming out of pocket.
Additionally, I strongly recommend that any funding be structured as a loan. As I mentioned to you Peter after
Town Meeting, structuring the funds as a loan provides the Town with a seat at the table should the project ever
go sideways. If it's a grant, the Town doesn't have a seat at the table (at least from a financing perspective.)
Structuring it as a loan doesn't preclude the Selectman and.the Housing Authority from making it behave as much
like a grant as they wish (of course, they can make the loan behave as much as a hard loan subordinated to the
first as they wish as well with required payments). For example, the loan can be for an extended term, without
interest, without payments, and could include language that says that as long as the project continuously
maintains its minimum affordability requirements, the loan will be forgiven at maturity. This should be acceptable
to.the developer. As I'm sure you know Gwen Noyes sits on the Cambridge Affordability Housing Trust, and my
experience with that entity has been that their funds are provided as loans, so she should be comfortable with it.
Finally, I would recommend that the Board/Authority consider any award of funds to be contingent on the property
being rental housing. It appears that the developer has provided only financial information for the project as a
rental development and so the Selectmen/Housing Authority can only make a decision based on rental housing.
The information provided indicates that they may switch to condominiums during construction. The developer
should be required to show financial information on the need for 400K for a condominium complex should that
occur. It looks like the Town gets credit for 56 units towards its 40B requirement as rental housing and only 11
5/10/2011
6 1)
Page 2 of 3
units if the project is condominiums - this is a big difference-politically and a big difference financially as its $7K
per unit in support for a rental deal versus $36K per unit for a condo deal if contribution per "4013 quantifiable unit"
is measured.
As for alternative sources....... The FHLB bank is a good source of alternative financing as they provide grants of
this size to affordable housing projects. As I suspected however, this property would not be a good fit for their
program based on a conversation I had with a friend of mine at the Bank. FHLB awards are very competitive and
points are awarded in part for affordability: Maximum points in the affordability category are given to projects with
60% or more of the units affordable. With 20% affordable they would fall significantly short in this category and it
would be very difficult for them to make them up in the other categories - given how competitive these funds are.
(I'm assuming than none of the 45 other units have restrictions on them - like say up to 120% of AMI? If they do,
this might change the analysis.) My friend did indicate that there are favorable financing programs for the first
mortgage through FHLB lenders and it looks like the developer may already be taking advantage of these based
on the information I've seen, which is good.
I have a call in to a friend at the state. The state funding round just ended a couple of weeks ago and the next
round won't be until sometime in the Fall. I will follow-up with them but I'm assuming it will be difficult to access
funds from the state likewise based on only 20% affordability.
Finally, I have a call in to a lender I've done business with at Massachusetts Housing Partnership. I will be
speaking with him this afternoon at 3pm. The developer referenced they have something from them and I will
explore their programs to see what I can find out and if this is a good alternative.
On the numbers........ I took a look at the numbers they provided to see if I could suggest alternatives for how to
generate the 400K. The developer indicated they are underwriting a $13 million loan. They indicate the loan is at
the FHLB rate plus 2.75% with a floor of 5.75% based on a 25 year amortization. HPI assumed a 6.75% interest
rate (I think this is a good assumption, based on current rates plus the spread, however it doesn't dovetail with the
cash flow the developer is showing, as this results in just a 1.07 debt service coverage ratio and the best I think
any lender would go is a 1.10 debt service coverage ratio and it wouldn't surprise me to see them require as high
as a 1.25 debt service coverage ratio given the commercial income piece.) Regardless, for simplicity I ran my
numbers using this 6.75% as a base line because I think it's a good rate.
If the developer took on the $400K as additional debt, this would mean debt service of just $33K more per year.
($1,111,000 versus $1,078,000) or $50 per unit per month for all 56 units. The developer says they have a loan
commitment from Enterprise bank using FHLB financing. Reading Cooperation Bank is also a FLHB member and
I wonder if anyone has spoken with them about perhaps providing better financing given this project is in their
back yard. The developer indicates that Enterprise is putting a spread of 2.75% on the loan. For example, if the
spread were reduced by 33 basis points, from 2.75% to 2.42%, the debt service on $13.4 million would be the
same as currently projected at $13 million. FHLB lists Fred Maloof as their contact from the Reading Cooperative
Bank.
There are endless ways to slice and dice this $400k difference. Obviously, another approach as an alternative to
providing the up-front capital is to consider a short term reduction in taxes. The benefit here might be to agree to
reduce taxes by up to 33K per year from the 170K per year currently projected but for say just 5 years. This is
$165K as opposed to $400K - and the logic would be that after 5 years, the property should have positive
trending enabling it to increase cash flow to a level able to incur additional taxes. I understand the developer's
expectation is to sell the property in 5 years which is not inconsistent. with economic investor's real estate time
horizons and also dovetails with this 5 year tax reduction.
I also looked at the rents, and the developer is showing an average rent for the affordable units of $1,200 per
month. I don't know what bedroom size this is based on, but regardless, its below the maximum limits for units at
80% of AMI (I believe this is the restriction for this project). Rent limits for studios, 1 bedrooms and 2 bedrooms,
are $1,286, $1,470, and $1,654 per month respectively not accounting for utilities which would reduce these
figures if residents are paying their own utilities. Regardless there might be some ability to increase rents on the
affordable units to cover some of the $400K through additional debt financing. I don't beleive its possible (or even
palatable) to cover all of the $400K because that would mean $250 per unit per month more in rent for the 11
affordable units, and after deducting for utilties there may not be room in the rents.
5/10/2011
Page 3 of 3
As I said before, there are endless ways to slice and dice this and the analysis changes based on how much the
Town is willing to provide, but this gives you a flavor of some of the options and the impact/changes with respect
to the full 400k.
Feel free to forward this to the Selectmen/other Housing Authority Board members if you think it's helpful. If I
hear anything useful from the State or MHP, I will pass that along.
Charlie Adams
The Richman Group Affordable Housing Corporation
10 St. James Avenue, 11th Floor
Boston, MA 02116
(617) 305-2024 - Direct
(978) 500-8038 - Cell
(617) 523-6850 - Fax.
adamsc@richmancapital.com
www.richmancapital.com
5/10/2011
Hechenbleikner, Peter
From: Frederick Van Magness [vanmagness@verizon.net]
Sent: Friday, May 06, 2011 8:24 AM
To: Reading - Selectmen
Cc: Hechenbleikner, Peter
Subject: Additional Comments Re: Paving for Oaktree
Good Morning,
I found the words below in looking at the September 13, 2010 Site Plan Review Decision of CPDC.
As you can see from item #3 Findings, section b., they granted a waiver in large part because of he
commitment of the applicant to make parking lot improvements. At the time, to the best of my
knowledge, there was no $400,000 project shortfall. It would seem to me that the BOS needs to hold
the applicant to meeting this agreement to make the, improvements which he got for receiving the
density waiver, while not expecting the town to fund the estimated cost of $50,000. Now that the
$400,000 alleged shortfall has surfaced, in essence $50,000 could be assumed to be for the paving
from affordable housing money. The discussion could focus on the town removing $50,000 from the
$400,000 shortfall while requiring the applicant to still perform the agreed to paving improvements to
the Brande Court parking Lot because of the substantial benefit (density waiver) he has previously
received. In my opinion, the town should not agree that by removing the $50,000, the applicant would
be allowed to not perform his previously agreed to obligation.
The following is an excerpt from the CPDC Site Plan Review Decision of September 13, 2010.
Findings
3. CPDC opened the At the June 14th CPDC meeting, the CPDC voted to grant the
density waiver request to exceed the 20 units per acre dimensional limitations of the Downtown
Smart Growth District zoning by-law with the following conditions:
a
b. A major reason for granting the waiver is because of the commitment of the applicant to make
substantial improvements to the public parking (Brande Court Municipal Parking Lot) being made by
the applicant.
In other related data, the conditions imposed by the CPDC before permits can be issued totaled 16
items. I understand that after 8 months, only one condition has been satisfied, which would seem to
puff demolition permitting and other site activities on hold for a period of time. Maybe CPDC should
attend next Tuesday and help clarify any questions concerning item #3 above or other items.
Fred Van Magness Sr.
243 Franklin St.,
Reading, MA 01867
Hechenbleikner, Peter
From: Frederick Van Magness [van magness@verizon ;net]
Sent: Thursday, May 05, 2011 5:08 PM
To: Reading - Selectmen
Cc: Hechenbleikner, Peter; Delios, Jean
Subject: Oaktree
Attachments: Instruction_Motion_FVM_#1.xis; ATT1577695.txt
Instruction_ ATT1577695.
on_FVM #1.x txt (268 B)
Hi all,
I talked with Jean Delios this morning and got some figures for the Oaktree development, which
have included in a spreadsheet attached to this email.
I find a number of concerns that should be answered before Tuesdays BOS meeting:
1 In the pro-forma project income statements in the BOS packet from 50/11, the project still is
calculated at 56 units ...not 53. Also the Market rate housing piece used $18300 per unit but also.
multiplies the value by 56 units ...not the real number of market rate units of 42. In the affordable
income, they use a value of $2823 times 56 units as well. Is this correct? I thought the affordable
portion was 11 units. Retail income is figured at 20000 sq. ft but the project retail is now 22,882 per
Jean.
2. Based on the overall project sq. ft, estimate, it appears that the size of the project has been
reduced from 123,454 sq.ft. presented to the CPDC to a new value of 116,071 today. You need to
get the detailed calculations behind the project hard cost amount of $12,872,417 to see if the savings
in sq. ft has been reflected in the overall project costs. While it is not a direct correlation., my attached
spreadsheet shows a possible $578,000 reduction in construction costs for smaller sq. ft. as well as
now there is a 3000 sq.ft reduction in parking space. Somewhere a smaller building project should
result in lower costs overall.
3. The overall modular construction cost is projected at $7.75Million. I think, since this is one of the
largest unsubstantiated numbers in the overall project, you need to ask for a formal documentation
as to how this number was arrived at...not just a verbal item from Oaktree but a copy of a preliminary
quote from the equity partner.
4. You need to have a written letter from their bank lender stating that the maximum loan value for
the project is $13million and there can be no more funds available. Seems strange a bank would lend
only one amount ...what would happen if the costs exceeded this value and there were no other funds
available. This question should be put to their lender. As a matter of fact, it would be helpful if their
lender was at the BOS to state that no more funds would be loaned.
5. Alsoremember that there were 16 conditions put on Oaktree back on Sept 13, 2010 that needed to
be done before any permits 8 months have gone by and they have only completed one item... paid
the Site Plan Review fee.... why all the delays????? Does not seem to represent an aggressive
strategy.
Fred
l
N
LEGAL NOTICE
TOWN OF READING
To the Inhabitants of the
Town of Reading:
Please take notice that the
Board of Selectmen of the Town
of Reading will hold a public
hearing on Tuesday, May 10,
2011 at 8:30 p.m. In the
Selectmen's Meeting Room, 16
Lowell Street, Reading,
Massachusetts for setting the
FY2012 Water, Sewer and
Storm Water Rates.
A copies of the relevant doc-
uments are available in the
Town Manager's Office, 16
Lowell Street, Reading, MA.
from 7:30 am-5;30 pm, M-W-
Thurs and Tues 7:30 am-7:00
pm and this document is
attached to the hearing notice
on the website at www.reading-
ma.gov.
All interested parties are
invited to attend, or may submit
their comments in writing or by
email prior to 5:00 p.m. on May
10, 2011 to;
townmanager@ci.reading.m
a.us.
By order of
Peter 1. Hechenbleikner
Town Manager
18
Sd
2