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TIF AMENDMENT Woo Citp of 16alem, Alassarbusetts Citp 3bau f7l COUNCILLORS-AT-LARGE REGINA R. FLYNN WARD COUNCILLORS PRESIDENT 2002 [,1 " ��' 2002 LAURA A DeTOMA DEBORAH E. B1jRKIf4SH;kW,-7 CLAUDIA CHUBER THOMAS H.FUREY CITY CLERK REGINA R. FLYNN KEVIN R. HARVEY JOAN B.LOVELY ARTHUR C. SARGENT III LEONARD F'O'LEARY KIMBERLEY L. DRISCOLL MICHAEL A. BENCAL JOSEPH A. O'KEEFE,SR. December 4, 2002 Mr. Joseph Walsh, Planner Planning Dept. City of Salem Salem, MA 01970 Dear Mr. Walsh: At a regular meeting of the City Council, held in the Council Chamber on Thursday, November 21, 2002, the enclosed was adopted. This action was approved by Mayor Stanley J. Llsovicz, Jr. on December 2, 2002. Very truly yours, CITY CLERK Enclosure cc: Frank Kulik CITY OF SALEM RESOLUTION AUTHORIZING AN AMENDMENT TO A TAX INCREMENT FINANCING AGREEMENT For Pickering WharflCongress and Derby Street Realty Trust, adopted by the Salem City Council, June 11, 1998 Ordere& WHEREAS, Pickering Wharf/Congress and Derby Street Realty Trust(Pickering Wharf Hotel) submitted an application to the City of Salem for designation as a Certified Project under the Massachus�tts Economic Development Incentive Program created by Chapter 23A of the Massachusetts General Laws WHEREAS, the City Council of Salem approved the Certified Project application of Pickering Wharf Hotel through a Resolution adopted by the City Council on June 11, 1998; and WHEREAS, the Resolution was forwarded to the Massachusetts Economic Assistance Coordinating Council and was approved by that body on June 25, 1998; and WHEREAS, the Pickering Wharf Hotel encountered unanticipated delays in moving forward with the project under the timetable originally planned; and WHEREAS, the Mayor of the City of Salem has prepared a Tax Increment Financing Agreement in accordance with Chapter 40 and 751 CMR 11.0; and WHEREAS, there is strong support for economic development and the use of Tax Increment Financing as an economic development tool to encourage business expansion in, and relocation to, the City of Salem-, and WHEREAS, there is strong support for using Tax Increment Financing to encourage the . development of a Hotel at Pickering Wharf on the property owned by Pickering Wharf Realty Trust; and WHEREAS, the subject property is located in the Salem Economic Opportunity Area; NOW THEREFOR BE IT RESOLVED, that the Salem City Council approve an amendment to the TIF agreement between the City of Salem and Pickering Wharf/Congress and Derby Street Realty Trust as is shown attached as Exhibit A, Tax Increment Financing Agreement Amendment of November 21, 2002, and made part of this resolution. In City Council Novmeber 21, 2002 Adopted by roll call vote 10 Yeas, I Nay, 0 Absent Approved by the Mayor on December 2, 2002 ATTEST: '04EBORAH E.�B CITY CLERK CITY OF SALEM, MASSACHUSETTS STANLEY J. USOVICZ, JR. MAYOR AMENDED MEMORANDUM OF UNDERSTANDING between the PICKERING WHARF HOTEL ENTITY and the CITY OF SALEM This document will serve as an Amended Memorandum of Understanding between the City of Salem and the Pickering Wharf Hotel ENTITY. The items included outline the expectations of the two signatory parties. The City of Salem, (CITY) and the Chase House (ENTITY), agree that this Amended Memorandum of Understanding reflects the status of the project as of 11/5/02. Whereas,the ENTITY has an interest in building anew hotel at Pickering Wharf, and Whereas, the CITY agrees that in order to make the project feasible it must provide public development assistance to the developer, Now therefore, the CITY and the ENTITY, agree to the following: If the Hotel Entity does the following: 1. Purchases and demolishes the Eastern Bank building. 2. Relocates Eastern Bank on site- at Pickering Wharf. 3. Develops a hotel according to the plans approved by the Salem Planning Board on 7/29/99 and as revised on I I/15100 (and any subsequent amendments). 4. Provide retail space on the first floor of the Project/Hotel. 5. Improves accessibility to the waterfront by utilizing State grant funding to rebuild the sea-walk around Pickering Wharf(from Congress Street to the Chase House). Then the City agrees to provide the following assistance: 1. TIE Plan In order for the hotel project to be economically viable, the developer requires a multi-year TIF for the hotel portion of the site only. All newly constructed retail space, including the relocated Eastern Bank, will be taxed at full valuation. The new retail located in the development will increase the city's tax base over what is currently received in taxes for the existing retail. TIF AGREEMENT The TIF Agreement is applicable only to the use of the structure as a hotel. Should more than ten(10) percent of the total hotel rooms be changed, altered or reconfigured into non-hotel uses by the developer or subsequent owner after the structure has received an occupancy permit, than the City reserves the right to renegotiate the TIF Agreement individual as it relates to the hotel rooms that are changed to non-hotel uses. However, owner may change, alter or reconfigure more than ten (10) percent for any hotel use, including a restaurant, lounge, gymnasium, pool, lobby, without effecting this agreement. At no time, however, shall there be fewer than 75 hotel rooms. The Developer also agrees that the ownership structure and operation of the hotel is tota I i� separate and distinct from the Pickering Wharf Condominium Association. The TIF schedule: *(see attached TIF expiration schedule) Year %Exempted 1-5 100 6-8 90 9 80 10 60 11 40 12 20 The hotel will also generate room tax calculated at 4%of projected room revenue. The long-term impact of the hotel's presence on the city's economy in terms of property tax, room tax and parking fees will justify the structure of this TIF plan. The location of the hotel will generate more business for local retailers, restaurants and tourist destinations. The Planning Department will begin working with the project proponent to assemble necessary materials for a TIF package. 2) Parking Garage The developer requires the lease of at least one parking space per hotel room on second and third floors of the South Harbor Garage. The lease rate per parking space will be $45.00 per month or a prepaymond rate of $325 Annually and increase at the rate of other City Parking facilities. The lease will be in effect for- the life of the hotel. The -terms of the lease will be determined by the City of Salem and the Pickering Wharf Hotel Entity. No parking spaces shall be reserved. 3) Waterfront Walkway The City pledges to work with the Entity in a public/private partnership to secure other state and federal funds such as CDAG and PWED funds for items such as increasing public access to the waterfront between Congress Street and the Finz Restaurant. This would complete the link from Congress Street to the NPS at Derby Street. In City Council November 21, 2002 Adopted as amended .Approved by the Mayor on December 2, 2002 ATTEST: CITY CLERK Exhibit A TAX INCREMENT FINANCING AGREEMENT AMENDMENT November 21, 2002 by and between City of Salem and Pickering WharVCongress and Derby Street Realty Trust This amendment is made this 21"day of November, 2002, by and between the City of Salem, a municipal corporation duly organized under the laws of the Commonwealth of Massachusetts having a principal place of business at 93 Washington Street, Salem, MA 01970, acting through its Mayor and City Council and Pickering WharFCongress and Derby Street Realty Trust a trust with a principal place of business on 190 Pleasant Street, Marblehead, MA01945. This amendment will take effect immediately upon final approval by the Massachusetts Economic Assistance Coordinating Council. WHEREAS, Pickering Wharf/Congress and Derby Street Realty Trust(Pickering Wharf Hotel) submitted an application to the City of Salem for designation as a Certified Project under the Massachusetts Economic Development Incentive Program created by Chapter 23A of the Massachusetts General Laws WHEREAS, the City Council of Salem approved the Certified Project application of Pickering Wharf Hotel through a Resolution adopted by the City Council on June 11, 1998; and WHEREAS, the Resolution was forwarded to the Massachusetts Economic Assistance Coordinating Council and was approved by that body on June 25, 1998; and WHEREAS, the Pickering Wharf Hotel encountered unanticipated delays in moving forward with the project under the timetable originally planned; and WHEREAS, the Mayor of the City of Salem has prepared a Tax Increment Financing Agreement Amendment in accordance with Chapter 40 and 751 CMR 11.0; and WHEREAS, there is strong support for using Tax Increment Financing to encourage the development of a Hotel at Pickering Wharf on the property owned by Pickering Wharf Realty Trust; and WHEREAS, the subject property is located in the Salem Economic Opportunity Area; BE IT HEREBY OPRDERD THAT: In light of the above, the Tax Increment Financing Agreement and Resolution approved by the Salem City Council on June 11, 1998 and by the Massachusetts Economic Assistance Council on June 25, 1998, shall be amended as follows: Amendment #1. The parcel covered by the TIF shall now be Parcel I A is shown on a plan entitled "PROPOSED PROPERTY SUBDIVISION PLAN OF LAND CREATING PARCELS IA & IB" and dated July 12, 2000, (see attached). Reference to Parcel I A as shown on the attached plan shall supercede the legal description included in the original RESLOLUTION APPROVING CERTIFIED PROJECT APPLICATION OF PICKERING WHARF REALTY TRUST, approved July 11, 1998. Amendment #2 The effective date of increment exemption shall be amended by eliminating, July I", 1999 as the effective date and replacing with: The effective date of increment exemption shall be the date of issuance of a Certificate of Occupancy for the Pickering Wharf Hotel by the Salem Building Inspector. In City Council November 21, 2002 Adopted by roll call vote of 11 Yeas, 0 Nays, 0 Absent Approved by the Mayor on December 2, 2002 ATTEST: ei_zzzel"�) CITY CLERK City of Salem TIF Expiration Schedule (TIF Authorio E4ires in 2015) Date of Issuance of Certificat of Maximum Number of Years Left on TIF Occupancy Post Certificate of Occupancy 1, 2003 12 ju 1, 2004 11 July 1, 2005 10 July 1, 2006 9 July 1, 2007 8 July 1, 2008 7 July 1, 2009 6 July 1, 2010 5 July 1, 2011 4 July 1, 2012 3 July 1, 2013 1 2 July 1, 2014 1 July 1, 2015 0 COMMONWEALTH OF MASSACHUSETTS ECONOMIC ASSISTANCE COORDINATING COUNCIL MASSACHUSETTS OFFICE OF BUSINESS DEVELOPMEN T 100 CAMBRIDGE STREET, SUITE 10 10 BOSTON, MA 02114 TELEPHONE: 617-788-3634 FAX: 617-788-3695 intemet: www.mass.gov/eohed February 10, 2009 BY CERTIFIED MAIL Kim Dunn Pickering Wharf Realty Trust 190 Pleasant Street Marblehead, MA 01945 Re: Notice of Recommended Decertification of Pickering Wharf Realty Trust Dear Kim Dunn: On January 9, 2009, the Massachusetts Economic Assistance Coordinating Council (EACC) notified Pickering Wharf Realty Trust of the recommended decertification due to non-compliance with job creation for FY 2007 Annual Reporting for the Economic Development Incentive Program (EDIP). Through further review and additional information pertaining to your company's job projection and TIF Agreement, the EACC now finds your company's Certified Project to be in good standing for FY 2007 — please see attached documents for your records. With futher review of FY 2007 EDIP Annual Reporting, this notification reverses previous notification of recommended decertification of your project. Please advise if you have any questions or concerns. Regards, Lauren Jones Project Manager Economic Assistance Coordinating Council Copy: Tom Egan, Counselor at Law Tom Daniel, City of Salem THOMAS K. EGAN COUNSELOR AT LAW 190 PLEASANT STREET MARBLEHEAD,MA 01945 781 639-4212 FAX 781 639-2290 01-30-09PO2 : 48 RCVD January 30, 2009 VIA HAND DELIVERY Ms. Lauren Jones MA Office of Business Development and Senior Project Manager Commonwealth of Massachusetts Economic Assistance Coordinating Council 100 Cambridge Street, Suite 1010 Boston, M.A 02114 RE: Appeal—Pickering Wharf Realty Trust RE: January 9, 2009,Notice of Recommended Decertification of Pickerin2 Wharf Realty Trust and Request for a hearing Dear Ms. Jones: Thank you for your input regarding the 2006-2007 fiscal year 2007 EDIP Annual. Form. As per the January 23, 2009, conference call among the Salem Waterfront Hotel & Suites owners (the "Hotel") and you and 1, 1 enclose the new form with the correct numbers regarding jobs and taxes. Your January 9, 2009, letter referenced that if Pickering Wharf Realty Trust(the '7rust") disputed with any decertification recommendation the Trust should submit a request for a hearing by January 30, 2009. Hopefully, now that the EACC has the correct numbers regarding jobs and taxes, a hearing will not be necessary, and the decertification recommendation will be withdrawn. However, please consider this letter to also constitute the written request for a hearing from both the Trust and the Hotel to toll the appeal procedure deadline. We are working with the City of Salem currently regarding this matter and will update you as to our progress. If you request any additional information at this time, please contact me directly, and my clients will respond at once. Very truly your TKE:sloc T tomas. Egan, Esq. Enclosures "Ir PUNN UAL KEMRTING FORM WI;en filling out this reporting form please follow the instructions of the enclosed"Instructional Assistance Sheet". If you need to obtain this sheet please contact Brenda Reynolds at 617 788-3634. L CONTACTINFORMATION. (please print or type) (a) Business Name: Pickering Wharf Realty Trust, a/k/a Derby & Congress Street Realty Trust (b) Address: 190 Pleasant Street (c) City/State/Zip: Marblehead, MA 01945 (d) Contact Person(s): J. Hilary Rockett, Trustee (e) Telephone: 781-631-3070 (f) E-mail address: kdunn�@rockettrealty.com (g) Name of Project Salem Waterfront Hotel & Suites (h) Municipality Project Is Located In: S lem, MA (i) Date Project Was Certified by the EACC: 06/25/1998 .0) NAICS Code of Certified Project(6 digit code): '72110 2. 'NEWEMPLOYEESATPROJECTLOCATION.* (Only Permanent Full-Time Employees) (a) FY2007 Employees(7/l/2006 through 6/30/2007): - 9 (b) Number of FY2007 Employees That Reside in the E�conomicTarget Area: 12 (c) Total Employees(Dateof CertificationbyEACC through 6/30/2,007): 25 (d) Number of Total Employees That.Reside in the Economic Target Am: 17 (e) Average Yearly Wage of Employees Flired since Date of EACC Certification: $43,710.00 rNYESTMENTATPROJECTLOCATION. . 3. TOTALA (a) FY2007 Investment(7/112006 through 6/3012007): $ 74,383-00 (b) Total Investment(From Dateof Certificatioriby EACCthrough 6/30/2007): $ 12,653,493.00 4. STATE BENEFITS. (a) Amount of 5%EOA Tax Credit Claimed for FY2007: S 15,606.00 (b) Total Amount of 5%EOA Tax Credit Claimed Since Date—of Certification: $ 37,113.00 (c) Amount of 101/o Abandoned Building Tax Deduction Claimed in FY2007: $—o 5. LOCAL BENEFITS. (a) Type of Incentive Received(circle one): TTF or STA (b) FY2007 Property Taxes Paid to Municipality: S 8-P183.81 (c) FY2007 Property Taxes Exempted Due to TIF or STA: $ 0 (d) Total Taxes Paid to Municipality since Date of Certification: S (2004-2Oo8) $432026.11 (e) Total Taxes Exempted by Municipality since Date of Certification: $ 6. CERTIFIED PROJECTSTATUS. (Please print or type) What is the status of the expansion project described in your Certified Project Application or Tax Increment Financing Agreement? (Please Attach Separate Description) Z AUTHOWZATION. 1, (print or type name and title) J. Hilary Rvckett; Trustee hereby certify that the information withi-i this Annual Reporting Fo—nu—is—true—an=d�accurate project's job creation and investrnent. A , (-I , and reflects the 2 (Signature) 81. PLEASE RETURN COMPLETED FO 14 1 1 3 �rida Se (Date) —__I� S Y,_ litern ber 28, 2007 TO: Brenda Reynolds,Economic Assistance Coordinating Council I Ashburton Place—Suite 2101 —Boston, MA 02108. Tel: (6117) 788-3634; Fax: (617) 788-3695 COMMONWEALTH OF MASSACHUSETTS ECONOMIC ASSISTANCE COORDINATING COUNCIL V, MASSACHUSETTS OFFICE OF BUSINESS DEVELOPMENT 100 CAMBRIDGE STREET, SUITE 1010 BOSTON, MA 02114 TELEPHONE: 617-788-3670 �FAX: 617-788-3695 www.mass.izov/eOhed DEVAL L.PATRICK GREG BIALECKI GO�RNOR UNDE�ECRETARY OF BUSENESS DEWLOPMENT,CO-CRAM TIMOTHY P.MURRAY L]�NANTGOVERNOR TINA BROOKS UNDERSECRETARY OF HOUSING AND COMMUNMDEWLOPWWCO-CflAM January 9, 2009 BYCERTIFIEDMAIL J. Hilary Rockett,Jr. Pickering Wharf Realty Trust 190 Pleasant Street Marblehead, MA 01945 Notice of Recommended Decertification of Pickering Wharf Realty Trust Dear J. Hilary Rockett, Jr.: In accordance with 402 CMR 2.13(5)you are hereby notified that pursuant to 402 CIVIR 2.13(l), Mass. G.L.23A Section 3F and 760 CMR 22.08(3), the Economic Assistance Coordinatiing Council recommends decertification of Pickering Wharf Realty Trust due to non-compliance of job creation per review and investigation of the Certified Project's Fiscal Year 2007 Annual Reporting Forms. Decertification will result in revoking the EACC's approval of the Certified Project designation and Tax Increment Financing ("TIF") plan and agreement for Pickering Wharf Realty Trust. According to Mass. GL 23A, Section 3F and 760 CMR 22.08(3), if the EACC finds that Pickering Wharf Realty Trust as a party to the TIF plan and agreement in question, has deviated from the requirements outlined in those agreements so substantially as to constitute a material variance (the Certified Project reported less than 50% of permanent, full-time jobs originally projected) to the extent that it frustrates the public purposes and the realization of significant economic benefits which provided part of the basis for the EACC's original approval of the TIF plan and agreement, then the EACC may revoke its approval of the relevant portion(s) of the existing TIF plan and agreement. The effect of such revocation shall be the elimination of all prospective tax incentives your business is receiving from the municipality and the Commonwealth of Massachusetts under the EDIP. Please be advised that you have the right to request a hearing to present all relevant evidence and/or documentation supporting the projects eligibility in order to remain certified. If you wish to be heard on this matter, please submit your request for a hearing on or before the January 30, 2009 deadline to: Lauren Jones, MA Office of Business Development, 100 Cambridge Street, Suite 1010, Boston, MA 02114. If you have any specific questions concerning this decision, please call 617.788.3634. R ards, Lauren Jones Senior Project Manager Economic Development Incentive Program CC: Economic Assistance Coordinating Council Salem THOMAS K. EGAN COUNSELOR AT LAW 190 PLEASANT STREET MARBLEHEAD,MAO]945 FAX 781 639-2290 'D 781 639-4212 'E"VV�EE FEB 0 5 2009 DEPT. 0�FLANNiNG& COW".P�YLHVELG�-�EW February 3, 2009 City of Salem ATTN: Department of Planning and Community Development Tom Daniel, AICP Economic Development Manager 120 Washington Street, P Floor Salem, MA 01970 RE: Appeal—Pickering Wharf Realty Trust RE: January 9, 2009, Notice of Recommended Decertification of Pickering Wharf Realty Trust and Request for a hearing Dear Mr. Daniel: As per our January 30, 2009, meeting regarding the above-referenced matter, please receive the City of Salem's copy of the corrected 2007 EDIP form submitted to the EACC on January 30, 2009. Thank you. Very tru y yours Thomas K. Egan, Esq. TKE:sloc Enclosure _'1117"Z.ilAk" xv�x kjlx 1 LIN ky r kikuyl When filling out this reporting form please follow the instructions of the enclosed"Instructional Assistance Sheet". If you, need to obtain this sheet please contact Brenda Reynolds at 617 788-3634. L CONTACTINFORMATION, (Ple a*yeprint or type) (a) Business Name: Pickering Wha.rf Realty Trust, a/k/a Derby & Congress Street Realty Trust (b) Address: 190 Pleasant Street (C) City/State(Zip: Marblehead, MA 01945 (d) Contact Person(s): J. Hilary Rockett, Trustee (e) Telephone: 781-631-3070 (f) E-mail address: kdunnCarockettrealty.com (g) Name of Project Salem Waterfront Hotel & Suites (h) Municipality Project Is Located In: Salem, MA Ji) Date Project Was Certified by the EACC: . o�-/�25/1998 NAICS Code of Certified Project(6 digit co�de): 7211.0 2, NEWEMPLOYEESATPROZECTLOCATIO*. (Only Permanent Full-Time Employees) (a) FY2.007 Employees(7/l/2006 through 6/30/2007): - 9 (b) Number of FY2007 Employees That Reside in the E��o�nomicTarget Area: 12 (c) Total Employees(Date of Certification by EACC through 6/30/2.007): 25 (d) Number of Total Employees That Reside in the Economic Target Area: 17 (e) Average Yearly Wage of Employees 11ired since Date of EACC Certification: $43,710.00 . 3. TOTAL IMIESTMENTATPROJECTLOCATION. (a) FY2007 Investment(7/.1/2006 through 6/30/2007): S 74,383.00 (b) Total Investment(From Date of Certification by EACC'through6/30/2007): S 12,653,493.00 4. STATE BENEFITS. (a) Amount of 5%EOA Tax Credit Claimed for FY2007: S' 15,606.00 (b) Total Amourltof 5%EOA Tax Credit Claimed Since Date of Certification. $ 37,1�i3.o o (C) Am Ount Of 100/-Ab,andoned Building Tax Deduction Claimed in FY2007: S 0 5. LOCAL BENEFITS. (a) Type of Incentive Received(circle one):. TIF or STA (b) FY2007 Property Taxes Paid to Municipality: S 8-1183.81 (c) FY2007 Property Taxes Exempted Due to TIF or STA: S o (d) Total Taxes Paid to Municipality since Date of Certification: S. (2004-2008) $432026.11 (c) Total Taxes Exempted by Municipality since Date of Certification: $ 6 CERTIFIED PROJECTSTATUS (Please print or type) What is the status of the expansion project described in your Certified Project Application or Tax Increment Financing Agreement? (Please Attach Separate Description) 7. AUTHORIZATION. 1,(print or type name and title) J. Hilary Rockett; Trustee hereby certify that the information withi project's job creation and investment. a this.Annual Reporting Form is true. 'and accurate, and reflects the k121�113;1� (Signature),�' 8. PLEASE RE TURN COMPLETED I rin e te (Date) mber 28 2007 TO: Brenda Reynolds,Economic Assistance Coordinating Council 1 Ashburton Place—Suite 2101 —Bosto n MA 02108. Tel: (617) 788-3634; Fax: (617) 78W 3695 THOMAS K. EGAN COUNSELOR AT LAW 190 PLEASANT STREET MARBLEHEAD,MA 01946 781 639-4212 JAN 3 0 2009 FAX 781 639-2290 DEPT. Q�TLA*.AG& `B'EL0—fSkJT 00W-,�IUNTYL January 30, 2009 VIA HAND DELIVERY Ms. Lauren Jones MA Office of Business Development and Senior Project Manager Commonwealth of Massachusetts Economic Assistance Coordinating Council 100 Cambridge Street, Suite 10 10 Boston, MA 02114 RE: Appeal—Pickering Wharf Realty Trust RE: January 9, 2009,Notice of Recommended Decertification of Pickerin2 Wharf Realty Trust and Request for a hearing Dear Ms. Jones: As you know, I am counsel for Pickering Wharf Realty Trust(the"Trust") and the Salem Waterfront Hotel & Suites (the"Hotel"). This letter constitutes both my clients' requests for a hearing. The request for a hearing has been timely filed before the expiration of the January 30, 2009, deadline, as verified by Economic Development Incentive Program(the"Program") officer Brenda Reynolds on January 30, 2009. Thank you. Very truly yours, Thomas . Egan, TKE:sloc Enclosures cc: City of Salem ATTN: Department of Planning and Community Development Tom Daniel,AICP Economic Development Manager 120 Washington Street, P Floor Salem, MA 01970 COMMONWEALTH OF MASSACHUSETTS ECONOMIC ASSISTANCE COORDINATING COUNCIL MASSACHUSETTS OFFICE OF BUSINESS DEVELOPMENT 100 CAMBRIDGE STREET, SUITE 10 10 BOSTON, MA 02114 RE -f- VED t C-4;--i ,t �., � TELEPHONE: 617-788-3670 JAN 1 2 2009 FAX: 617-788-3695 www.rnass.aov/eohed OCPT. OF FLAW)IN, 13 & COW.,11,18TV DZE:'WLOr?#r:PlT DEVAL L.PATRICK GREG BIALECKI GOVERNOR UNDERSECRETARY OF BUSINESS DEVELOPMENT,CO-CHAIR TIMOTHY P.MURRAY LIEUTUNANTGOVERNOR TINA BROOKS UNDERSECRETARY OF HOUSING AND COMMUNITY DEVELOPWNT,C�CHAIR January 9, 2009 BY CERTIFIED MAIL J. Hilary Rockeft, Jr. Pickering Wharf Realty Trust 190 Pleasant Street .Marblehead, MA 01945 Notice of Recommended Decertification of Pickering Wharf Realty Trust Dear J. Hilary Rockeft,Jr.: In accordance with 402 CMR 2.13(5)you are hereby notified that pursuant to 402 CIVIR 2.13(l), Mass. G.L.23A Section 3F and 760 CMR 22.08(3), the Economic Assistance Coordinatiing Council recommends decertification of Pickering Wharf Realty Trust due to non-compliance of job creation per review and investigation of the Certified Project's Fiscal Year 2007 Annual Reporting Forms. Decertification will result in revoking the EACC's approval of the Certified Project designation and Tax Increment Financing ("TIF") plan and agreement for Pickering Wharf Realty Trust. According to Mass. GL 23A, Section 3F and 760 CMR 22.08(3), if the EACC finds that Pickering Wharf Realty Trust as a party to the TIF plan and agreement in question, has deviated from the requirements outlined in those agreements so substantially as to constitute a material variance (the Certified Project reported less than 50% of permanent, full-time jobs originally projected) to the extent that it frustrates the public purposes and the realization of significant economic benefits which provided part of the basis for the EACC's original approval of the TIF plan and agreement, then the EACC may revoke its approval of the relevant portion(s) of the existing TIF plan and agreement. The effect of such revocation shall be the elimination of all prospective tax incentives your business is receiving from the municipality and the Commonwealth of Massachusetts under the EDIP. Please be advised that you have the right to request a hearing to present all relevant evidence and/or documentation supporting the project's eligibility in order to remain certified. If you wish to be heard on this matter, please submit your request for a hearing on or before the January 30, 2009 deadline to: Lauren Jones, MA Office of Business Development, 100 Cambridge Street, Suite 1010. Boston, MA 02114. If you have any specific questions concerning this decision, please call 617.788.3634. R ards, Lauren Jones Senior Project Manager Economic Development Incentive Program CC: Economic Assistance Coordinating Council Salem 0 CITY OF SALEM, MASSACHUSE17S NEIL J. HARRINGTON MAYOR PRESS RELEASE FOR MORE INFORMATION CONTACT FOR IMMEDIATE RELEASE MAYOR NEIL J. HARRINGTON OCTOBER 23,1997 (978)745-9595 EXT. 201 MAYOR HARRINGTON ANNOUNCES HOTEL AT PICKERING WHARF Mayor Neil 1 Harrington and the owners of Pickering Wharf, J. Hilary Rockett and J. Hilary Rockett, Jr. today unveiled preliminary plans for a new suite hotel at Pickering Wharf The plans were unveiled today in ajoint press conference with Mayor Harrington, City Planner Craig Wheeler, and the R&kc4is. Mayor Harrington stated, "The construction of a new suite hotel at Pickering Wharf will be a major boost to the South Harbor area. This announcement is further proof that our economic development activities are heading in the right direction and that people are willing to make major investments in the City of Salem." J. Hilary Rockett stated, "The Suite Hotel is the newest concept in the hotel business, wherein each suite has at least two rooms with a living room/dining room area and either one or two bedrooms and it caters to extended stay tourists and business clientele. The services are limited, in that there are no function rooms, but guests will have cooking facilities in their own suite." J. Hilary Rockett Jr., stated, "In May of this year, Mayor Harrington approached us about the possibility of building a hotel at Pickering Wharf, and we initially told the Mayor that we were msure because the construction of a hotel was financially a very risky venture. However, we told him that we might be interested if a hotel study could be provided that would show us that there was (1) a need for another hotel in Salem and (2)that there would be revenues sufficient to support a multi-million dollar hotel, and (3)that the Peabody Essex Museum was staying in Salem." Rockett further stated, "The discussions with the Mayor continued through the fall . During that time, Mayor Harrington instituted a hotel study and the preliminary data support the threshold we believe it was necessary for us to meet in order to make the financial commitment to a new hotel. We commissioned three architects to see if a hotel could properly be situated in Pickering Wharf, and this rendering was the best of three submittals." -MORE- SALEM CITY HALL - 93 WASHINGTON STREET - SALEM, MASSACHUSETTS 01970 - 978/745-9595 FAX 978/744-9327 Rockett further stated, "I want to emphasize that there are many issues that need to be thoroughly discussed and resolved and we look forward to working with the city to make this project a reality." Mayor Harrington stated, "We have come a long way in our discussions over the past 6 months, and we have a distance to go, but a new hotel will be fantastic for Salem and the Peabody Essex Museum. It would allow many more tourists and corporate visitors to stay a few days in Salem and view our many historic attractions. The negotiations with New England Power Company and the Peabody Essex Museum were difficult but we prevailed; now we need the same effort to make sure that this hotel becomes a reality." -30- ROCKETT MANAGETvIENT&REALTY CO.,INC- 190 PLEASANT STREET MARBLEHEAD,MA 01945 TEL. (Mj�)6-31-3070 FAX(617)639-2290 J.IBLARY ROCKETT,JR. Vice President TELECOPIER CONTROL SHEET TO: Mary Cassidy-Salem Planning Department FAX#: 978-740-0404 DATE: 1/28/98 MOM: J- Hilary Rockett,Jr. SUBJECT: -# OF PAGE& 4 (Including cover page) Please contact Nancy Hayes at 617/631-3070 with any trarmnission problems. Notes: MEMORANDUM OF UNDERSTANDING between the PICKERING WHARF ROTEL ENTnT and the CITY OF SALEM This document will serve as a Memorandum of Understanding between the City of Salem and the Pickering Wharf Hotel ENTITY. The items included outline the expectations and cominitments of the two signatory partim The City of Salem,(Cn-Y) and the Picketing Wharf Hotel Entity(ENTITY),Agree that this Memorandum of UnderstAndlug reflects the status of the project as of_and each party agrees to work toward the satisfactory completion of all items included herein. Whereas,the City of Salem has commissioned a Hotel Study to determine the feasibility of adding Hotel rooms in Salem and Whereas,the ENTITY has an interest in undertaking a major redevelopment of Pickering Wharf,and Whereas, the ENTITY believes that the Hotel Study is sufficient evidence that development of a Hotel at Pickering Wharf is feasible,and Whereas, the Hotel Study,the CITY and the ENTITY agree that such feasibility is based upon the ability to provide public development assistance to the developer, Now therefore, the CITY and the ENTITY,based on the findings of the Lan&uer Group Hotel Study,agree to the following: THE HOTEL ENTrrY AGREES TO : 1. Purchase and demolish the Eastern Bank building. 2. Relocate Eastern Bank on-sitc at Pickering Wharf. 3. Develop a hotel of not less than 70 and not more than 140 rooms. 4. Provide a similar amount of retail space to what currently exists at Pickering Wharf. 5. Improve accessibility to the waterftout by utilizing State grant funding to rebuild the sea-walk around Pickering Wharf(from Congress Street to the Chase House). 6. Upgrade lighting and street-scape amenities throughout the interior and exterior of Pickering Wharf. 7. Improve the public open spaces on the interior of Pickering Wharf. 0c:91 THE CM AGREES TO: The CITY Will benefit from the new construction and upgrade of Pickering Whalf,the creation Of construction and Permanent jobs,continuation of the existing tax Payment at Pickering W113174 and the generation of approximately$113,000 In Hotel Tax Revenue. Thus,the net benefit to the CITY in Year one is substantial enough to warrant the TIF outlined below. 1) A Tax Increment finance Plan as follows: Year I - 12 1 000/a exemption of new construction Year 13 80%exemption of new construction Year 14 601/a exemption of new construction Year 15 40%exemption of new construction Year 16 20%exemption of new construction Year 17 10%exemption of new construction Year IS 00/0 exemption of new construction 2) Loan to the ENTITY,the Urban Development Action Grant finds from the Salem Armory UDAG- The terms and conditions of the UDAG funding win be as follows: Principal amount: $994,000. Length of term: 30 years Interest rate: 40/a Repayment Schedule: 30 years of equal monthly payments beginning during the 25th month following the opening of the Hot& Conditions: Subordinate to private financing 1) The CITY and the ENTITY agree to work cooperatively on application for funding under the Community Development Action Grant(CDAG),Public Works Economic Development(PWED)Programs and any other appropriate programs. CITY agrees to works diligently to provide the necessary amount of support for gaining approvaj for such funding requests. 4) In order to provide parking for the proposed Hotel and to raise revenue at the new garage,the CITY agrees to lease the 3rd floor of the new parking garage at South Harbor to the ENTITY for use as valet and other Hotel parking at a rate equal to that being charged for annual passes at the Ent India Parking Garage. In addition, the CITY agrees to incorporate the Pickering Wharf name in the name of the new garage,i-e-, The South Harbor Garage at Pickering Wharf. XWnW XX3M3OM:WO8J tC :St 86-BZ-NVr 5) In connechon with the recently executed Tax Agreement between the CITY and New England Power Company(NEPCO),NEPCO has agreed to transfer its mterest in the parking lot located at 25 Peabody St. to the CITY. When the CITY gets control of this property,it will take all necessary steps to transfer or assign all its rights in this property to the ENTITY. The ENTITY agrees to take ownership of the parcel,and agrees to do so understanding the potential for environmental coutarrunabon at the site.In addition to accepting the site without environmental clearance,the consideraton granted to the CITY and NEPCO in exchange for such parcel will include the creation of 4 tour bus parking spaces at the lot and agreement by the ENTITY to provide a 20 foot strip along the water's edge for use as a sea-walk in accordance with the South Harbor Plan. Additionally,the CITY acknowledges that the ENTITY has preliminary plans to build a parking garage on the site in the future and supports said construction. Dated this day of October, 1997. CITY of Salem by its Mayor,duly authorized Neil 1.HarringtoN Mayor Pickering Wharf Realty Trust J. Hilary Rockett�Trustee S201Y -YbpLF Z'9e --S-2 0' X (25 2 o ' 'x 0-5� 77F Salem Redevelopment Authority Salem Redevelopment Authority.—, 8 Loan4ppik Introduction: The Salem Redevelopment Autl Program in 1985 to encourage economic develc joined the program, allowing the SRA to partici To qualify for a loan, applicants must operate b (downtown Salem), shown on the attached map provide evidence of a satisfactor demonstrate that the borrower is offer appropriate collateral be willina to nrnyide-a-nersonal o � o � o M �1 � N1 N � M o �` �` �� QQ M O IAI Salem Redevelopment Authority Salem-Redevelopment Authority:— S Loan Applic Introduction: The Salem Redevelopment Autt Program in 1985 to encourage economic develc joined the program, allowing the SRA to partici To qualify for a loan, applicants must operate b (downtown Salem), shown on the attached map provide evidence of a satis acto demonstrate that the borrower i offer appropriate collateral be willinE to nrovide-a-nersonall To: Hilary Rocket't,Jr. FAcsiMILE Fax (781) 639-2290 City of Salem Re: Certified Project Application and TIF Plan drafts Planning Date: May 8, 1998 Pages including this cover sheet. Comments: Hilary, Here are preliminary drafts of the certified project application and the TIF plan. I have marked them up in several areas. I need you review the documents and to supply needed information. Talk to you soon, Mary From the desk of... Mary C.Cassidy Economic Development Planner City of Salem Planning Department One Salem Green Salem,MA 01970 978-745-9595 ext.311 Fax:978-740-0404 FAXFROM. CITY OF SALEM, MA PLANNING DEPARTMENT ONE SALEM GREEN SALEM, MA 01970 (978) 745-9595 X 3 11 FAX (978) 740-0404 DATE: Npujq � TIME: TO: Wv--OA FROM: P4/yLi "d,) FAX #: — R � C-1 SUBJECT: PAGES: (Not including cover sheet) COMMENTS: Uj -t-0 4-�� Uf 0\, AA-u--f) CITY OF SALEM RESOLUTION AUTHORIZING A TAX INCREMENT FINANCING AGREEMENT For Pickering Wharf Realty Trust Ordered:WHEREAS, the City of Salem is part of the.area designated the Beverly& Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS,the Mayor of the City of Salem has prepared a Tax Increment Financing Agreement in accordance of Chapter 40 and 751 CMR 11.00; WHEREAS, there is strong support for economic development and the use of Tax Increment Financing as an economic development tool to encourage business expansion in and relocation to the City of Salem; WHEREAS, there is strong support for using Tax Increment Financing to encourage the development of a Hotel at Pickering Wharf, the property owned by Pickering Wharf Realty Trust; WHEREAS.Ithis property is located in the Salem Economic Opportunity Area; NOW THEREFORE BE IT RESOLVED by the Salem City Council that: (1) The Tax Increment Financing Agreement be adopted as it has been substantially submitted to the City Council. A copy of said Tax Increment Financing Agreement is attached as Exhibit A, and made part of this Resolution. (2) The area to be designated as a Tax Increment Financing Zone is: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3), 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as farther amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 3336 (said master deed as so amended is hereinafter referred to as the"Master Deed"): Building Unit Percentake Interest Derby A 10.8775 said unit A, Derby Building being a part of the total Master Deed described above. Together with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3, 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rule-s and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 183A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit, use regulation, special permit, exception or variance. (3) A map of the Tax Increment Financing Zone is hereby attached as Exhibit B and made part of this Resolution. (4) The Tax Increment Financing Agreement shall be binding on all subsequent owners of the property in the Tax Increment Financing Zone. The City of Salem reserves the right to review and renegotiate the Tax Increment Financing Agreement if the business activity ceases to be fully operational during the life of the Tax Increment Financing Agreement, as specified in the Tax Increment Financing Agreement. (5) A copy of the adopted Tax Increment Financing Agreement shall be forwarded to the Massachusetts Economic Assistance Coordinating Council for its approval. (6) The effective date of the Tax Increment Financing Agreement shall be July 1, 1999 (Fiscal Year 2000), whichever is later. (7) The Mayor is hereby authorized to execute and implement the Tax Increment Financing Agreement. Adopted this I Ith day of June, 1998 by the Salem City Council at a regular City Council meeting with a quorum present. mk� Stanley J. Us6'viNJr , iayAo U Date ATTEST: -U—eboriih E. Burkinsha-w, City Clerk SEAL EXHIBIT A: Tax Increment Financing Agreement EXHIBIT B: Map of Tax Increment Financing Zone lll� OF Sl�m Yea and Nay Vote of City.Counco ,Upon the QueWm�pf ZAX ?�z 7'C I z2f Z Date 1"B Yea Nay Pffm Absent MwkKBbdr V7" ReOna IL Tbumms H.Forey ,7 Somb AC Hayes V/ m A.Kelky Joan ILI Lovdy scottimcf.magmin -7 v Peter IL r�i6m Leouwd F.O'lAary,Pm& 21 aff cuum SALEW MASS, U"11 S CITY OF SALEM In City Council, May 14 , 1998 RESOLUTION APPROVING CERTIFIED PROJECT APPLICATION OF PICKERING WHARF REALTY TRUST WHEREAS, Pickering Wharf Realty Trust has applied for designation as a Certified Project under the Massachusetts Economic Development Incentive Program created by Chapter 23A of Massachusetts General laws; WHEREAS, Pickering Wharf Realty Trust meets the minimum standards of the Economic Development incentive Program and the local economic development goals and criteria established as part of the documents creating*the Beverly & Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS, the proposed certified project is located at the comer of Congress and Derby Streets. within the boundaries of the Salem Economic Opportunity Area. The legal description is as follows: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3, 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 336(said master deed as so amended is hereinafter referred to as the "Master Deed"): Building Unit Percentaee In erest - Derby A 10.8775 said unit A, Derby Building being a part of the total Master Deed described above. Together with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3, 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rules and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 183A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit,use regulation, special permit, exception or variance. WHEREAS the City of Salem has agreed to offer Pickering Wharf Realty Trust a Tax Increment Financing Agreement; WHEREAS, Pickering Wharf Realty Trust will invest approximately $3,54 1,100 to develop a hotel at Pickering Wharf, an investment which creates approximately 60, new, permanent jobs for residents of the Beverly & Salem Regional Economic Target Area. WHEREAS, the construction of a hotel at Pickering Wharf will substantially improve the aesthetic appearance of the property and reduce blight on one of Salem's entrance corridors; NOW THEREFORE BE IT RESOLVED that the Salem City Council approves the Certified Project application of Pickering Wharf Realty Trust, designating this project as a certified project for a period of thirteen years, and forwards said application for certification to the Massachusetts Economic Assistance Coordinating Council for its approval and endorsement. Adopted this I Ith day of June, 1998, by the Salem City Council. Stanley J. Usovlc�,'Jr., Mayor Date Alt2q Deborah E. Burkinshaw, City Cl�rk SEAL CrrY OF SALEM Via and Nay Vote of City Coundl Upon the Quesirm of Dote .1998. kYea Nay Pres. Absent , Mark K Blair jobn J.Donalkne Regina R.Flymm Tboomm;EL Furey 'Kevin P—Harvey SarabACElayes , William A.Kelley Joan&LOV* Peter Pasim" Leonard F.OLeary,Pres. TMAL, eA 04 W crrircLum A TRUE COPf ATTEST �7 CITY CLERK SALEM, MASS. .......... 71 1 il -1 . i iL i -Ml The Massachusetts Economic Development Incentive Program Certified Project Application Applicant Information 1. Name and address of business(es) submitting this application: Pickering Wharf Realty Trust J. Hilary Rockett, Trustee 190 Pleasant Street Marblehead, MA 01945 Fiscal year end is: December 31 2. Name and address of project (if different from above): Pickering Wharf Hotel Corner of Congress Street & Derby Street Salem, MA 01970 3. Location of ETA: Beverly & Salem Regional ETA 4. Location of EOA: Salem 5. Authorization: I/We (print), Of the entity applying fd Certified Project des ignation,�hereby certify that the information within this application is true and accurate, and reflects the project's intentions for job creation and investment. I understand that the information provided within t for the duration of the project C Signature (Date) Signature (Date) 6. Nature and purpose of project: INTRODUCTION AND HISTORY OF PROJECT DEVELOPMENT Pickering Wharf Realty Trust seeks Certified Project designation for the Pickering Wharf Hotel to be developed at the corner of Derby and Congress Streets. Salem is a major New England tourist destination that draws over 650,000 visitors annually to its cultural, historic and maritime attractions. Due to a limited supply of overnight accommodations, tourist and business visitor dollars are spent in communities such as Danvers and Peabody which have numerous hotels with easy access to major highways. The trustees of Pickering Wharf Realty Trust recognized the need for additional hotel accommodations in Salem and that the potential space available at Pickering Wharf was an ideal location. The developers conducted an extensive financial analysis of the project and concluded that the development would not be economically feasible without property tax relief through a TIF agreement. Their findings were supported by a Hotel Study conducted by Landauer Group that indicated the Pickering Wharf hotel site was the most Suitable location in Salem for new development and the one most likely to be supported by the market. Their analysis also concluded that the cash flow generated by the project for debt service would not be sufficient to attract private sector developers without economic assistance from the community. Rockett Management & Realty Company was established in 1968. The company develops, manages and owns several commercial and residential properties, including 400 Highland Place, Route 107 in Salem, the Village Plaza in Marblehead and several apartment buildings. The Pickering Wharf Realty Trust was established prior to the purchase of Pickering Wharf on May 2, 1996. Pickering Wharf Realty Trust acquired Pickering Wharf in June 1996 and initiated the successful revitalization of this popular waterfront destination. Pickering Wharf had been for sale since 1991 and had begun to show signs of neglect that have since been reversed under Rockett Management Company's ownership. As a part of the owner's plans for a major redevelopment of Pickering Wharf, a hotel development was proposed to be located at the corner of Derby and Congress Streets. Pickering Wharf Realty Trust plans to construct an eighty +/- room, three story hotel containing standard 14' x 36' rooms featuring kitchen facilities. The ground floor will offer 18,000 square feet of retail space. The development will be a total of four stories. The development cost of the hotel portion of the project is $3,54 1,100. The hotel will be approximately 50,000 square feet. The overall project cost is $4,441,100. The retail portion of the project is estimated to cost $900,000. Please refer to the chart on page 4 for a cost breakdown. The project is projected to employ 60 persons in net, new permanent jobs for the ETA. The existing conditions of the hotel site include retail and office space contained in two buildings and an Eastern Bank. Ninety percent of the retail and office space has been abandoned for over two years. The two buildings housing retail and office will be demolished and the retail uses will be relocated to the ground floor of the hotel. The bank will be demolished and relocated next to the hotel site. The applicant seeks certification for the hotel portion of the project only. All newly constructed retail space, including the relocated Eastern Bank, will be taxed at full valuation. In addition, the City and the developer have entered into a Memorandum of Understanding in which each party has pledged to work in a public/private partnership to secure state and federal funds for items such as increasing public access to the waterfront. There is an unfinished segment of a seawalk from Congress Street to the Chase House restaurant to be addressed with the use of grant funds. 7. Is this business new to Massachusetts? 4- Yes El No If no: Where are the existing Massachusetts facilities? Will this project require/tri.-ger the closing or consolidation of any Massachusetts facilities? If yes, please explain. 8. Is this project an expansion of an existing business? El Yes -1 No If yes, check the appropriate box: El at existing location • at new location in same municipality • at new location in different municipality Budget for Project Soft Costs Budget Architecture Fees 150,000 Structural/Mechanical Engineering 38,000 21 E Site Report 10,000 LegalFees 18,000 General Conditions 85,000 Business Relocation Costs 125,000 Bank Loan Fees 150,000 Permit 15,000 Site Superintendent 75,000 Office Expense 30,000 Hard Costs Demolition 145,000 Site Preparation 45,000 Piles/Caps 160,000 Grade Beams 129,000 Ist Floor Structural Slab 106,000 Structural Plank/Steel Structure 513,000 Concrete Slabs (3) 94,000 Roofing 145,000 Towers/Light Steel Framing 0 Staircases 51,000 Elevator 125,000 Exterior Wall System 397,000 Glass & Glazing 150,000 Misc. Exterior Allowance 50,000 -0,000 Sprinkler System 4 Electrical 197,000 Plumbing 175,000 HVAC 365,000 Interior Dernising Partitions 157,000 Interior Allowance 215,000 Fire Alarm System 56,000 Excavation 86,000 Materials 22,000 Grading/Compaction 26,000 Curbing 22,000 Landscaping 27,000 Sprinkler System 7,100 Paving 61,000 Walkway 49,000 Sidewalk Pavers 25,000 Special Landscaping 15,000 Total 4,441,100 Breakdown of costs Hotel 3,451,100 Retail 900,000 9. Job creation In order to qualify for Certified Project status, the governing statute and regulations require the creation of net, new, permanent full-time employees in Massachusetts. On the chart provided (see next page), please fill in the blanks provided. 5 Work Force Analysis and job Creation Plan Current TOTAL NEW JOBS NEW JOBS NEW JOBS NEW JOBS NEW JOBS NEW JOBS employment projected new Year I Year 2 Year 3 Year 4 Year 5 Years 6-13 permanent jobs Total Employees at Certified Project 0 60 45 8 7 0 0 0 Facility Total Employees at Other Sites in 0 0 0 0 0 0 0 0 Mass. #of Employees at Certified Project 0 35 35 35 35 35 35 35 Location who live in the ETA #of Permanent Full-Time Employees 0 45 35 5 5 0 0 0 #of Permanent Part-Time Employees 0 is 10 3 2 0 0 0 #of Temporary Full-Time Employees 0 70 0 0 0 0 0 0 construciton #of Temporary Part-Time Employees 0 10 0 0 0 0 0 0 construction #of Management Positions 0 4 0 0 0 0 0 0 Average Salary of Management 0 $50,000 Positions #of Professional Positions 0 4 0 0 0 0 0 0 Average Salary of Professional 0 $40,000 Positions #of Technical Positions 0 2 0 0 0 0 0 0 Average Salary of Technical Positions 0 $30,000 #of Skilled Positions 0 8 0 0 0 0 0 0 Average Salary of Skifled Positions $30,000 #of Unskilled Positions 0 10 1 0 1 0 1 0 0 1 0 0 Average Salary of Unskilled Positions $15,000 6 10. Certification for Abandoned Buildings: Does the proposed project involve the renovation and reuse of an abandoned building? 0 Yes I No 11 Unsure If yes or unsure, please answer the following questions: (a) How long has the building been vacant? (If known, state date) (b) During this period of time, what percentage of the building was vacant and unused? If the percentage varied during this time period, provide information for each change in the percent of vacant space and the applicable time period. 11. Local Employment: What actions will you take to recruit employees from among residents of the ETA? The hotel developers believe that the majority of new employees will be ETA residents, as the company will advertise new positions exclusively in the Salem Evening News. Pickering Wharf Realty Trust has the intention and capacity to achieve the anticipated level of new permanent full-time jobs for residents of the municipality and the ETA. The local labor supply is well qualified for the nature of the positions that will be available in the hotel development. The hotel is located within walking distance of several neighborhoods which will assist in reaching the anticipated level of new permanent full-time jobs for residents of the municipality and the ETA. 12. Affirmative Action Statement: It is the policy and practice of Pickering Wharf Realty Trust to hire and promote that person deter-mined to be the best qualified without regard to race, color, religion, sex, age, marital status, or national origin. 13. Agreement between the Business and Area Banks: Describe briefly the business' local banking relationship(s), if any. Does the institution with which the business banks participate in the Massachusetts Capital Access Program, which is designed to commit a portion of the business' deposits to fund loans to local businesses? Pickering Wharf Realty Trust banks with Eastern Bank, who participates in the Massachusetts Capital Access Program. 7 14. Economic benefits of project certification: Provide a description of the economic benefits that are anticipated for the business and the project, if the project is cer-tified. Also, provide any information, documentation or studies demonstrating any additional benefits (i.e. reduction of blight, reuse oil abandoned buildings, clean up of contaminated property, job training, provision of day care, any contributions to the community, etc.) likely to accrue to the area as a result of Certified Project designation. Please describe: Economic benefits to applicant The benefits of project certification are summarized below: Development is economically feasible with the receipt of investment tax credits and property tax benefits The developer will receive approximately $1,369,964 in local property tax benefits over 13 years The construction of a $3,873,400 hotel will entitle the company to $193,670 in state 5% investment tax credits The developer will receive additional state investment tax credits as a result of investment in equipment for the hotel Project provides an anchor for the Pickering Wharf development and orients the visitor to Pickering Wharf and the waterfront a 90 % abandoned building is removed from the site quantity and quality of retail is greatly improved within Pickering Wharf Economic benefits to the City of Salem The City's tax base will be expanded; room taxes in the amount of $968,927 will be received and parking fees in the amount of$451,710 will be generated The reconfigured retail will generate additional tax revenue After all local property tax exemptions expire, this project will generate $185,121 per year in property tax revenues 60 new jobs will be generated through the staffing of the hotel The hotel is to be located in the heart of Salem's waterfront area on one of Salem's main entrance corridors. TheCity has launched several initiatives to improve the appearance of commercial properties on Salem's entrance corridors. This project will be a catalyst for additional development and rehabilitation of the waterfront area The City has historically suffered a loss of tourist revenue due to a limited supply of hotel rooms. The new hotel and retail property taxes, coupled with room tax and parking fees, will have a significant impact on 8 the City's economy. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. Special Requirements for Real Estate Projects I. Will the business own or lease/rent the facility? I Own 13 Lease/Rent If leasing/renting, please identify the developer/landlord, and state who will be the taxpayer of record for the purpose of paying local real estate taxes. If owning, will the business fully occupy the space? I Yes El No If no, does the business intend to lease/rent the remaining space? 2. Describe how the various tax benefits and other economic incentives that will result from Certified Project designation will be allocated among the business(e's) developing the project (i.e. a developer or landlord) and the business(e's) intending to purchase, lease or rent space at the facility (i.e. tenant or tenants). N/A Supplemental Information I Narne(s) of business(e's) intending to take advantage of state tax incentives: Business Name: Pickering Wharf Realty Trust Federal Employer ID:04-6805953 Address: 190 Pleasant Street Marblehead, MA 01945 Phone: (781) 631-3070 Fax: (781) 639-2290 Contact Person: J. Hilary Rockett, Jr., Trustee Type of Organization (check that which applies): 0 Corporation: 0 For profit; 0 S Corp.; 0 Non-Profit -1 Business Trust • Partnership: 11 General Partnership; 1:1 Limited Partnership • Individual Level of interest: (Indicate the benefits the company seeks) 9 15% Investment Tax Credit 11 10% Abandoned Building Tax Deduction (if applicable) I Local Real Estate Tax Incentive Beneficiary 2. Names and Addresses of Organization (please respond according to type) Business Trust Beneficiaries: J. Hilary Rockett and M. Denise Rockett 10 Foster Street Marblehead, MA 01945 J. Hilary Rockett, Jr. 5 Corn Point Road Marblehead, MA 01945 T. Michael Rockett 36 Roosevelt Avenue Marblehead, MA 01945 Richard P. Rockett 7 Dunns Lane Marblehead, MA 01945 Pamela M. Rockett 14 Roosevelt Avenue Marblehead, MA 01945 3. Please provide names, addresses, phone numbers and contact persons for organizations which may own or control or be affiliated with the applicant organization: Not Applicable 4. Certificate of Good Standing: A Certificate of Good Standing is attached with this application. mcc:Vi fforrns\cpap.wpd 10 RESOLUTION APPROVING CERTIFIED PROJECT APPLICATION OF PICKERING WHARF REALTY TRUST WHEREAS, Pickering Wharf Realty Trust has applied for designation as a Certified Project under the Massachusetts Economic Development Incentive Program created by Chapter 2')A of Massachusetts General laws; WHEREAS, Pickering Wharf Realty Trust meets the minimum standards of the Economic Development Incentive Program and the local economic development goals and criteria established as part of the documents creating the Beverly & Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS, the proposed certified project is located at the comer of Congress and Derby Streets, within the boundaries of the Salem Economic Opportunity Area. The legal description is as follows: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3), 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 3)3 6 (said master deed as'so amended is hereinafter referred to as the "Master Deed"): Building Unit Percenta2e Interest Derby A 10.8775 said unit A, Derby Building being a part of the total Master Deed described above. Together with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3), 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rules and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 183A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit, use regulation, special permit, exception or variance. WHEREAS the City of Salem has agreed to offer Pickering Wharf Realty Trust a Tax Increment Financing Agreement; WHEREAS, Pickering Wharf Realty Trust will invest approximately $3,541,100 to develop a hotel at Pickering Wharf, an investment which creates approximately -, new, permanent jobs for residents of the Beverly & Salem Regional Economic Target Area. WHEREAS, the construction of a hotel at Pickering Wharf will substantially improve the aesthetic appearance of the property and reduce blight on one of Salem's entrance corridors; NOW THEREFORE BE IT RESOLVED that the Salem City Council approves the Certified Project application of Pickering Wharf Realty Trust, designating this project as a certified project for a period of thirteen years, and forwards said application for certification to the Massachusetts Economic Assistance Coordinating Council for its approval and endorsement. Adopted this day of 199_, by the Salem City Council. Date Stanley J. Usovicz, Jr., Mayor Attest: Deborah E. Burkinshaw, City Clerk SEAL Massachusetts Economic Development Incentive Program Tax Increment Financing Plan 1. Location A. Economic Opportunity Area (EOA): Salem EOA B. Municipality: City of Salem C. Tax Increment Financing (TIEF) Zone: Attached are: map of the ETA map showing the general location of the proposed private project parcel by parcel map property lines and the outline of each building map indicating infrastructure improvements, all thoroughfare, public rights of way and easements zoning map location of proposed private and public projects Common description of TIF Zone: The proposed TIF Zone is located at the corner of Congress and Derby Streets in the Salem Economic Opportunity Area (EOA). The tax parcel is Map 34, Lot 446. Legal description of TIF Zone: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3), 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 336 (said master deed as so amended is hereinafter referred to as the "Master Deed"): Building Unit Percentage Interest Derby A 10.8775 said unit A, Derby Building being a part of the total Master Deed described above. Together with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed,as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3), 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rules and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 18')A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit, use regulation, special permit, exception or variance. D Narrative Description of TIF Zone: Needs, Problems and Opportunities: Designation of this TIF Zone meets the needs of, solves problems for and creates opportunities for Pickering Wharf Realty Trust and the City of Salem. DESCRIBE BELOW: Solving problems and meeting the needs of Pickering Wharf Really Trust: The trustees of Pickering Wharf Realty Trust made a major investment in Salem upon the purchase of Pickering Wharf. The trustees were seeking an opportunity to enhance this important investment and recognized that one of the problems facing Salem was the need for additional hotel accommodations. The potential space available at Pickering Wharf was considered an ideal location. The developers conducted an extensive financial analysis of the project and concluded that the development would not be economically feasible without property tax relief through a TIF agreement. Their findings were supported by a Hotel Study conducted by Landauer Group that indicated the Pickering Wharf hotel site was the most suitable location in Salem for new development and the one most likely to be supported by the market. Their analysis also concluded that the cash flow generated by the project for debt service would not be sufficient to attract private sector developers without economic assistance from the community. 2 Creating Opportunity for Pickering Wharf Realty Trust: This project provides Pickering Wharf Realty Trust with an ideal opportunity to enhance the value of Pickering Wharf and to establish an anchor in the heart of Salem's busy waterfront district. In addition, the ground floor of the hotel will showcase an improved quality and quantity of retail shops that will further enliven Pickering Wharf. Pickering Wharf Realty Trust plans to construct an eighty +/- room, three story hotel containing standard 14' x 36' rooms featuring kitchen facilities. The ground floor will offer 18,000 square feet of retail space. The cost of the hotel portion of the project is $3,451,100. The construction timeframe is expected to be approximately one year, with construction commencing in August of 1998 and ending in June of 1999. The project is anticipated to employ 60 permanent, net, new jobs in the ETA. Solving problems and meeting the needs of the City of Salem: The hotel is to be located in the heart of Salem's waterfront area on one of Salem's main entrance corridors. The City has launched several initiatives to improve the appearance of commercial properties on Salem's entrance corridors. This project will be a catalyst for additional development and rehabilitation of the waterfront area The City has historically suffered a loss of tourist revenue due to a limited supply of hotel rooms. The new hotel and retail property taxes, coupled with room tax and parking fees, will have a significant impact on the City's economy. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. In addition, the City and the developer have entered into a Memorandum of Understanding in which each party has pledged to work in a public/private partnership to secure state and federal funds for items such as increasing public access to the waterfront. There is an unfinished segment of a seawalk from Congress Street to the Chase House restaurant to be addressed with the use of grant funds. Creating Opportunity for the City of Salem.- Designation of the TIF Zone and approval of this TIF Plan will help Pickering Wharf Realty Trust establish a new hotel in Salem, which will generate jobs, room taxes, parking fees, and property taxes of$185,121 at the expiration of the TIF. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. 3 E. Property owners within the proposed TIF Zone: The property owner within the proposed TIF Zone is the Pickering Wharf Realty Trust. The Trustees are: J. Hilary Rockett M. Denise Rockett J. Hilary Rockett, Jr. T. Michael Rockett Richard P. Rockett Pamela M. Rockett 11. Time The TIF Plan and TIF Zone described here will be in effect for a period of thirteen years. 111. TIF Zone & Economic Development A. Economic Opportunities and Economic Benefits to the Community: Approval of the proposed TIF Zone will create the following economic development opportunities and benefits: Creates jobs: 60 net, new permanent jobs Generates tax revenue: see attached spreadsheet entitled "13 Year Tax Increment Financing Plan" Improves appearance of 90% abandoned property through demolition The City's tax base will be expanded; room taxes and parking fees will be generated, please see attached spreadsheet entitled "13 Year Tax Increment Financing Plan" The reconfigured retail will generate approximately $20,000 in additional tax revenue per year in property tax revenues The hotel is to be located in the heart of Salem's waterfront area on one of Salem's main entrance corridors. The City has launched several initiatives to improve the appearance of commercial properties on Salem's entrance corridors. This project will be a catalyst for additional development and rehabilitation of the waterfront area The City has historically suffered a loss of tourist revenue due to a limited supply of hotel rooms. The new hotel and retail property taxes, coupled with room tax and parking fees, will have a significant impact on the City's economy. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. 4 B. Proposed and Potential Land Uses: (analyze how the land uses are appropriate for anticipated economic development) The developer will construct a hotel and retail development at Pickering Wharf on the waterfront in downtown Salem. There is a demonstrated need for additional hotel accommodations due to Salem's popularity as a tourist destination. C. Zoning in the THT Zone: The TIF Zone is located in district B-5, Central Development District. D. Hazardous Waste: (identify any parcels, public or private, in zone which are confirmed hazardous waste disposal sites, in accordance with chapter ME, MGL. Describe any public or private site remediation activities and any reuse plans) Not Applicable IV. TIF Zone Projects A. Planned Private Project: Pickering Wharf Realty Trust will construct a 50,000 square foot, four story, approximately 80 room hotel,with the ground floor to be occupied by 18,000 square feet of retail uses. Existing retail and office buildings will be razed and a bank will be relocated on site. B. Provide Documentary evidence of the level of the developer's commitment to the proposed and required construction in the TIF project: The developer has retained architects, engineers, surveyors and attorneys for the development of this project. 5 C. Budget for Project: The costs of completing the project are as follows: Soft Costs Budget Architecture Fees 150,000 Structural/Mechanical Engineering 38,000 21 E Site Report 10,000 Legal Fees 18,000 General Conditions 85,000 Business Relocation Costs 125,000 Bank Loan Fees 150,000 Permit 15,000 Site Superintendent 75,000 Office Expense 330,000 Hard Costs Demolition 145,000 Site Preparation 45,000 Piles/Caps 160,000 Grade Beams 129,000 Ist Floor Structural Slab 106,000 Structural Plank/Steel Structure 513,000 Concrete Slabs (3) 94,000 Roofing 145,000 Towers/Light Steel Framing 0 Staircases 51,000 Elevator 125,000 Exterior Wall System 397,000 Glass & Glazing- 150,000 6 Misc. Exterior Allowance 50,000 Sprinkler System 130,000 Electrical 197,000 Plumbing 175,000 HVAC 365,000 Interior Dernising Partitions 157,000 Interior Allowance 215,000 Fire Alarm System 56,000 Excavation 86,000 Materials 22,000 Grading/Compaction 26,000 Curbing 22,000 Landscaping 27,000 Sprinkler System 7,100 Paving 61,000 Walkway 49,000 Sidewalk Pavers 25,000 Special Landscaping 15,000 Total 4,441,100 Breakdown of costs Hotel 3,451,100 Retail 900,000 D. Relevant business plans: Time schedule for development: Scheduled construction commencement: August 1998 7 Scheduled construction completion: June 1999 Expected increases in job creation: 75 temporary construction jobs 60 permanent hotel jobs Estimates of tax revenue based upon increased valuation of parcel: E. Participation in other federal, state and local economic development programs and initiatives: The City intends to pursue grant funding such as CDAG or PWED. F. Planned Public Projects: The City and the developer have entered into a Memorandum of Understanding in which each party has pledged to work in a public/private partnership to secure state and federal funds for items such as increasing public access to the waterfront. There is an unfinished segment of a seawalk from Congress Street to the Chase House restaurant to be addressed with the use of grant funds. The details of this project will be forthcoming. V. Financing for TIF Zone Projects A. Anticipated Financing for Private Projects: Source: Amount: Unknown $4,000,000 B. Anticipated Financing for Public Projects: Source: Amount: PWED TBD CDAG TBD 8 C. Detailed Projection of Costs of Public Construction: TBD D. Will Betterments be used to finance any public-private projects, now or within the proposed life of the TIF Plan? N/A E. If Betterments or Special Assessments are a part of the TIF Plan: N/A Schedule for defrayal of construction costs: Agreement of all participating parties in the betterment: F. Describe how private projects will be financed: Evidence of private financing commitments: Project proponent is investigating financing alternatives with local banks and lending institutions. VI. TAX INCREMENT FINANCING A. Authorization to use TIF: The attached City Council resolution dated March 9, 1995 authorizes the City of Salem to use TIF in the Salem EOA. Also attached is a City Council resolution approving this TIF Plan for Pickering Wharf Realty Trust. B. Amount of proposed tax increment exemptions from property taxes: As the attached spreadsheet shows, the Chairman of Salem's Board of Assessors estimates that property tax benefits will total approximately $1,369,964 over thirteen years. Also, see the description of the proposed TIF Plan in part D of this section. C. Maximum percentage of public project costs that can be recovered through betterments or special assessments: N/A 9 D. TIF exemption from property taxes: As the attached spreadsheet shows, the City estimates the tax benefits to total approximately $1,369,964 over 13 years. The exemption plan works as follows: Year Pickering Wharf Realty Trust Pays 1 - 5 Only the base tax bill 6 -8 10% of the increment, plus the base tax bill 9 20% of the increment, plus the base tax bill 10 40% of the increment, plus the base tax bill 11 60% of the increment, plus the base tax bill 12 80% of the increment, plus the base tax bill 13 100% of the increment, plus the base tax bill The effective date of increment exemption is July 1, 1999 (Fiscal Year 2000). Tenn of the exemption: 13 years V11. Approval of TIF projects TIF projects are approved by the Salem City Council. The Mayor and his staff are responsible for negotiating TIF Plans and, after Council approval, executing those plans. Evidence of local approvals of the proposed TIF Zone and TIF Plan is provided here in the form of a resolution authorizing a TIF agreement passed by the Salem City Council on INSERT DATE. 10 PICKERING WHARF HOTEL 13-YEAR TAX INCREMENT FINANCING PLAN Base Value $332,300 Tax Rate $34.50 Value After Hotel Constructed $3,873,400 Levy Percent Growth 2.5% Increment in Value $3.541,100 Base Year 1998 Year Property Tax Taxes at TIF %* Base Tax Taxes on Taxes Paid Tax BenLfIt Roorn: Parkiftg : TotalTax:. Value Rate 100% Value Bill Increment Each Yea-r* Each Year*"�: Tax Fees: Benefit to City , BASE $332,300 $34.67 $11,521 0% $11,464 $0 $11,464 $0 $0 $27,000 $38,464 1 $3.873,400 $35.54 $137,648 0% $11,809 $0 $11,809 $125,839 $55,188 $27,810 $94,807 2 $3,873,400 $36.43 $141,089 0% $12,104 $0 $12,104 $128,985 $59,686 $28,620 $100,410 3 $3,873,400 $37.34 $144,616 0% $12,407 $0 $12,407 $132,210 $65,324 $29,430 $107,161 4 $3,873,400 $38.27 $148,232 0% $12,717 $0 $12,717 $135,515 $70,181 $30,240 $113,138 5 $3.873,400 $39.23 $151,938 0% $13,035 $0 $13,035 $138,903 $72,112 $31.050 $116,197 6 $3,873,400 $40.21 $155,736 10% $13,361 $14.238 $27,598 $128,138 $74,044 $31,860 $133,502 7 $3,873,400 $41.21 $159,630 10% $13,695 $14,593 $28,288 $131,341 $75,975 $32,670 $136,934 8 $3,873,400 $42.24 $163,620 10% $14,037 $14,958 $28,995 $134,625 $77,907 $33,480 $140,382 9 $3,873,400 $43.30 $167,711 20% $14,388 $30,665 $45,053 $122,658 $79,839 $34,290 $159,181 10 -$3,873,400 $44.38 $171,904 40% $14,748 $62,862 $77,610 $94,294 $81,770 $35,100 $194,480 11 $3,873,400 $45.49 $176,201 60% $15,116 $96,651 $111,767 $64,434 $83,702 $35,910 $231,379 12 $3,873,400 $46.63 $180,606 80% $15,494 $132,090 $147,584 $33,022 $85,633 $36,720 $269,937 13 $3,873,400 $47.79 $185,121 100% $15,882 $169,240 $185,121 $0 $87,565 $37,530 $310,216 TOTALS $2,096,673 $725,652 $1,369,964 $968,927 $451,710 $2,146,189 NOTES *TIF % = Percent of increment that is taxed Room Tax at 4% of Projected Room Revenue(based on 84 rooms) "Taxes Paid Each Year= Base Tax Bill plus Taxes an Increment Parking Fees for 60 spaces @ $450/space increase 3% per year. ***Tax Benefit Each Year= Benefit to Hotel Developers Value of Hotel=cost of construction plus base value Base Value consists of FY98 Assessed values of 5 condos: 221 Derby, 225 Derby(uhb), 225 Derby (uhc), 3 Pickering Way, 7 Pickering Way Does not include enhanced value of ground floor retail which will be fully taxed. RESOLUTION AUTHORIZING THE USE OF TAX INCREMENT FINANCING IN THE SALEM ECONOMIC OPPORTUNITY AREA WHEREAS,-the City of Salem is part of the area designated the Beverly & Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS, there is strong support for economic development and the use of Tax Increment Financing as an economic development tool to create jobs and encourage business expansion and relocation to the City of Salem; NOW THEREFORE BE IT RESOLVED by the City Council of the City of Salem that: (1) Tax Increment Financing may be used as a tool to encourage economic development within the Salem Economic Opportunity Area. (2) The Mayor is hereby authorized to execute and implement Tax Increment Financing agreements. 7-7Z — Adopted this 91 4-1� dayof 19 by the Salem City Council at a regular City Council meeting with a quorum present. Neil J. Harrington, Mayor Date ATTEST: /171 Deborah E. Burkinshaw, City Clerk SEAL RESOLUTION AUTHORIZING A TAX INCREMENT FINANCING AGREEMENT For Pickering Wharf Realty Trust WHEREAS, the City of Salem is part of the area designated the Beverly & Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS, the Mayor of the City of Salem has prepared a Tax Increment Financing Agreement in accordance of Chapter 40 and 751 CMR 11.00; WHEREAS, there is strong support for economic development and the use of Tax Increment Financing as an economic development tool to encourage business expansion in and relocation to the City of Salem; WHEREAS, there is strong support for using Tax Increment Financing to encourage the development of a Hotel at Pickering Wharf, the property owned by Pickering Wharf Realty Trust; WHEREAS, this property is located in the Salem Economic Opportunity Area; NOW THEREFORE BE IT RESOLVED by the Salem City Council that: (1) The Tax Increment Financing Agreement be adopted as it has been substantially submitted to the City Council. A copy of said Tax Increment Financing Agreement is attached as Exhibit A, and made part of this Resolution. (2) The area to be designated as a Tax Increment Financing Zone is: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3), 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 14 1, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 336 (said master deed as so amended is hereinafter referred to as the "Master Deed"): Building Unit Percentage Interest Derby A 10.8775 said unit A, Derby Building being a part of the total Master Deed described above. Together with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3, 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rules and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 18')A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit, use regulation, special permit, exception or variance. (3) A map of the Tax Increment Financing Zone is hereby attached as Exhibit B and made part of this Resolution. (4) The Tax Increment Financing Agreement shall be binding on all subsequent owners of the property in the Tax Increment Financing Zone. The City of Salem reserves the right to review and renegotiate the Tax Increment Financing Agreement if the business activity ceases to be fully operational during the life of the Tax Increment Financing Agreement, as specified in the Tax Increment Financing Agreement. (5) A copy of the adopted Tax Increment Financing Agreement shall be forwarded to the Massachusetts Economic Assistance Coordinating Council for its approval. (6) The effective date of the Tax Increment Financing Agreement shall be July 1, 1999 (Fiscal Year 2000), whichever is later. (7) The Mayor is hereby authorized to execute and implement the Tax Increment Financing Agreement. Ad opted this day of 19_by the Salem City Council at a regular City Council meeting with a quorum present. Stanley J. Usovicz, Jr., Mayor Date ATTEST: Deborah E. Burkinshaw, City Clerk SEAL EXHIBIT A: Tax Increment Financing Agreement EXHIBIT B: Map of Tax Increment Fmancin.-Zone TAX INCREMENT FINANCING AGREEMENT CITY OF SALEM� MASSACHUSETTS and PICKERING WHARF REALTY TRUST This agreement is made this_day of_, 1998, by and between the CITY OF SALEM, a municipal corporation duly organized under the laws of the Commonwealth of Massachusetts, having a principal place of business at City Hall, 93 Washington Street, Salem, Massachusetts, 0 1970, acting through the Mayor, Stanley J. Usovicz, Jr., (hereinafter called "the CITY"), and PICKERING WHARF REALTY TRUST, with a principal place of business at 190 Pleasant Street, Marblehead, Massachusetts, 01945 (hereinafter called "the COMPANY") . This Agreement will take effect as of July 1, 1999 (Fiscal Year 2000). WHEREAS, the COMPANY wishes to construct a hotel at P ickering Wharf in Salem; and WHEREAS, the CITY is willing to grant tax concessions in return for guarantee of the construction of the hotel property and the creation of employment opportunities for local workers; and WHEREAS, the Salem City Council resolved on November 9, 1995 to allow the use of Tax Increment Financing as a tool to encourage economic development within the Salem Economic Opportunity Area; and WHEREAS, the Salem City Council resolved on 1998 to endorse the Tax Increment Financing Plan negotiated by the CITY and the COMPANY. NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties do mutually agree as follows: A. THE COMPANY'S OBLIGATIONS I. The COMPANY shall develop the hotel property at Pickering Wharf in Salem. "The FACILITY" as used herein means a building containing approximately 50,000 square feet plus site improvements and refers to the Hotel portion only of the project. During the life of this agreement, if the COMPANY decides to sell the FACILITY or the business or to otherwise transfer control of the FACILITY or business and/or operations thereof, the COMPANY shall give the CITY at least three months notice of said sale or transfer. Said notice shall be given by certified mail, return receipt requested, to the Mayor, City Hall, 93 Washington Street, Salem, Massachusetts, 0 1970. B. THE CITY'S OBLIGATIONS I The CITY shall grant a tax increment financing exemption to the COMPANY in accordance with Massachusetts General Laws, Chapter A, Section 3E, Chapter 40, Section 59, and Chapter 59, Section 5. Said exemption shall be granted on the improvements to the FACILITY. Said exemption shall be valid for a period of thirteen (13) years, beginning with fiscal year 2000 (July 1, 1999) and ending with fiscal year 2013. During each year of this agreement, the company will pay taxes based on the base value of the FACILITY and on that portion of the value of the FACILITY which is not exempted under the agreement. The base value is established by the Board of Assessors (the Board) and is the current value of the FACILITY unless an abatement is approved by the Board. The exemption schedule on the value of the FACILITY works as follows: For the first five (5) years, the COMPANY will pay only the base tax bill and will be granted an exemption of 100 percent of the full value of improvements to the FACILITY. The full value of improvements to the FACILITY is hereinafter called "the INCREMENT". In years six, seven and eight, the COMPANY will pay taxes on 10% of the full value of the INCREMENT, plus the base tax bill. In year nine, the COMPANY will pay taxes on 20% of the full value of the INCREMENT, plus the base tax bill. In year ten, the COMPANY will pay taxes on 40% of the INCREMENT, plus the base tax bill. In year eleven, the COMPANY will pay taxes on 60% of the INCREMENT, plus the base tax bill. In year twelve, the COMPANY will pay taxes on 80% of the INCREMENT, plus the base tax bill. In year thirteen, the COMPANY will pay taxes on the full value of the FACILITY. C. OTHER CONSIDERATIONS I. This Tax Increment Financing Agreement shall be binding on all subsequent owners of the property. The City of Salem reserves the right to review and renegotiate the Tax Increment Financing Agreement if the business activity ceases to be fully operational during the life of the Tax Increment Financing Agreement. If the COMPANY decides to expand the facility at any time during the life of the Tax Increment Financing Agreement, the CITY and the COMPANY may renegotiate the Tax Increment Financing Agreement to exempt all or part of the value of the expansion from property taxes. The exact amount of that exemption will be determined at the time of expansion. Executed as a sealed instrument on the day and year first above written. CITY OF SALEM PICKERING WHARF REALTY TRUST Stanley J. Usovicz, Jr., Mayor J. Hilary Rockett, Trustee Notary Public My commission expires Vt 11 EM two .................. Mki �Mo Vr imago ZJ Beverly & Salem Regional Economic Target Area E$SEX --CO T r4 Y < Al SA*/ 1:03 vx�� COMMON Al TIF zql-)NE ELA A FTW WILLOWS V/ at PARK tREA AG, AAS� ST.T." 1. lowt. C'. -11 COVE IT C :e, j1AI e GLENDALE 4 COVE CD I I'l -r Olt LlGoiT "GUn 0 General Location Map @@ALE u[m FSEV Pickering Wharf Hotel Tif Zone Indicated 19TS 1981 1989 rN IS% C OF DERBY 2 225 1'223 2 :11\1 0 f' go 34 H 17 E 4 0C :AqT OR 090 S 0*, CIO 1- 1, 10 1 OP ALEM , M A S%. SAC HUS ET TS 1p 71 0 445 182 ,o400 A ASSESSORS MAPS 446 4-68 JNJAGOOV, 0 94017 g.,l 0 kpikr4plo �� E 0 96 0 0 J alp IV47-EER ?0800 z 408 9- 19g48 447 S 4.55 AC 440 15, 5? 12 ,60 ARF ?5,45J LA V1 f1piroo URK 441 Public Project 76 21, 200 K 0 84. 611 86 90 119 0 U Rk A I -v- -A 4,36 0 p 0 4-55 N '?546' 0 ANSpo -A 0 *56 1 S ? 0 to-It -,4 3B 71 3z C C is 45 '384 3264 eeo so —————— 7 35co i67 lo,227 396 397 38 379 �595 2,5�72 3690 VIC/0 �93 394 28400 102 W 8 2288 7 -- A—ZTr;-4 r--- 399 965 Assessors' Map 15 IT-19 23- 30 32-34 39 40-42 44-4P E J54 T 56-66 so 64 TO Public P ,J 0 14 — 54 - ro ect indicated 0 do 47 — 62 5 1 346 A5 357 35 352 49 3 50-T.9 356 9 5 P89S 46 0' L 5 6 4 J 76 3750 3680 369 $7� ro r,Is Attachments Letter from Project Proponent's Accountant Salem Evening News Article Excerpt from Landauer Hotel Study 02-C-03-97 21 : 30 FROM� ID- 15a974OG72e PAGE 2/2 C-_ New store Co. o,Pe BY WMGGRY LIAX S SAIZH—A i�ew this week D Prcmdws�toiv a ha 40 . � 4M for music W* alU tc know mom %eir In Oxti Sar 3&lsjc is the jabeg, vetutme fcr B;v 7 U _" JtjvcLvU_ ')3�add;mricto. r�rvpet%ftr Jliceofhis �$talp�2t='D r*SL,..wjU -We be tbe 3 two, owt�Jri ily 2;�'fo' say3.Sarj.�. LecPC1dlwi ZM.Sara:.d _;mWk7st. zd.C�hm% wi5c�iv�win r=i ft �stcj.6'j'jth U U.;gltlz��blaes�bu 3pt It Yca can raelhom rb I 3dMd-ta Cx)Wormaticu. Sul tionp xre reaII7 dcrze-.—Npeam= nud� Zich Customers stand as a VoLce-over axp the work tbeTvtchc�a= MIrrative higWight the recognized c ics _�Jb mbd works aukt millor imDact an O�Ora rcck.X Cohen U24-1�e� aqp� it urages P00919 to try M� -Uan7 PCOPle lik sfyip or 7 =='ic but tbey-re itlike' -he -m!=With 292 Deft St S27s. Stwimm Pay' -tabligh c=pqct dL� joined t he Cm vrbq Bor- Ch.i.tM as Its nrst ZERM'UPS�7 . ...... ... d' DOM to the lc*� - ' she Pf music aand vidmmer_ Stoxe&,.. ef Ucbmmv --With the W_k%ft Beer =, �W' .'"ft=thc-s�iud Oossimly 2 r,Ut hel the Com- LaCP3id 1100e FAir is ilet to GPM jt�*# says sigm Cf 10&lax ed It 9ee�M� Excerpts from Landauer Hotel Stud Introduction The primary goals of the study were threefold as outlined below: To determine the market and financial feasibility of hotel development at three identified locations within the city: The former site of the Parker Brothers manufacturing plan; A site at Pickering Wharf, at the intersection of Derby and Congress Streets; A site at the current location of the Hawthorne Hotel on its rear parking lot; To assess the economic benefits of the hotel and prospects for public sector financing; and, To develop a report and recruitment package which the city can use in the marketing of the project to both private and public sector entities. Hotel Projects Under-Construction (p. 6) 1. 120- Room Hampton Inn on Rt. 1 2. 85 Room Homewood Suites on Rt. 1 3. 97 Room Mainstay Suites in Centennial Park 4. 66 Room Microtel Hotel on Rt. 1 5. 115 Room Extended Stay America in Danvers Note - 500 Rooms are being built within five (5) miles Prospective Financial Investment Analysis (p. 6) A prospective financial analysis was conducted on each of the facility profiles outlined above (a 120 room full service facility and 66 room limited service facility). The result of this analysis indicated, that cash flow available for debt-service and investor return was not sufficient enough to generate private sector developer interest in either project. However, the cash flow generated by the limited service hotel scenario was closer to supporting the development costs associated with such a project. The gap which existed between the cashflows development supportability against industry supplied development costs was close enough to investigate public sector financing options which could be pledged as low cost of capital mezzanine financing. Site and Facilities Analysis (p. 6 & 7) Our analysis has concluded that the Pickering Wharf location is the most suitable for hotel development utilization at this time. Land availability will be a limiting factor in the potential project's scale and range of facilities. Development Potential Analysis (p. 8) A small 66-room limited service hotel at Pickering Wharf appears market supportable. Significant concessions will be required from the City of Salem and a potential developer in order to render the project financially feasible. Initially, a franchise affiliation would be recommended. Potential affiliations include: Comfort Inn, Days Inn, Hampton Inn or a Holiday Inn Express. Conversely, an independently ran hotel allied with a strong nationally or regionally recognized operator may be an alternative. Economic Benefits and Prospective Financin (p. 8 & 9) Employing discounted cash flow techniques to evaluate the financial viability of a 66-room limited-service hotel built in Salem provides indications of development supportability of approximately $48,500 to $51,500 per room. This level of estimated development supportability indicated that the prospective project is not financially feasible based on an anticipated development cost of$4.3 million to $4.6 million, less approximately $900,000 for retail space development or$51,500 to $56,000 per room, and probably would not attract private sector hotel developers or investors. However, a major stakeholder in Salem may be motivated to develop the project for other purposes such as: An opportunity to enhance the overall value of an existing major real estate investment; and The hotel use will create an anchor and provide additional synergy for a total redevelopment program. In any event, it will be necessary for the City of Salem to offer significant incentives in order to attract additional hotel development in Salem. These incentives might include, but are not limited to, real estate tax abatement or suspension, participation in below market financing such as bond or available government finance programs. Economic benefits may result from the development of a hotel in Salem include: Increased City revenue generated from hotel occupancy taxes and real estate taxes. * Provide a catalyst to attract additional development interest within Salem * Redevelopment catalyst for waterfront * Increased area employment * Enhanced visitation and greater expenditures Proposed Hotel Development (p. 55) The hotels located in Salem will be particularly vulnerable to the hotel expansion currently taking place on the North Shore's highways (including 500 rooms now under construction). In most instances, these locations offer higher visibility, greater accessibility and closer proximity to the major demand generators in the North Shore market. As a result, expansion of the hotel supply in the future will have a greater impact on hotels with secondary locations such as Salem. Market Position (p. 64 & 65) Despite its waterfront location and close proximity to Salem's many attractions including tourist destinations, restaurants and shopping, the prospective hotel will still have a locational disadvantage when compared to the competitive hotels located on the area's highways. The prospective hotel will have a particular advantage in attracting vacationing families visiting the area due to envisioned amenities and waterfront location. The region's seasonal tourism pattern combined with the relatively low level of corporate hotel demand generated within the immediate Salem area will preclude large- scale hotel development in Salem. Financial analysis of a 120 room full-service hotel developed on either the Pickering Wharf or Parker Brothers site was deemed unfinaricable due to relatively low revenue potential and high development costs associated with the meeting and dining facilities required to attract group business in the shoulder and off-season periods. Expansion of the Hawthorne Hotel does not appear financially feasible due to the high cost of replacing the current and expanded parking requirements of the hotel with structured and/or underground parking. Project Financing Analysis (p. 77 & 78) A comparison of what the prospective cashflow analysis would yield on a supportable development basis per room, against the costs provided by Miller Dyer Spears and national chain representative, indicate that the proposed project, as proposed, is not financially feasible under conventional private sector terms. Not only would the prospective cash flow not support the hard development costs associated with the above referenced costing, it would not begin to cover the costs associated with the underlying real estate or other hard and soft cost including, but not limited to planning, design, construction management, construction loan interest, permits, bond and developers fees, and legal services. Further, it would not address the typical private sector return on investment rates which range between 15% and 20%, on a cash basis. This scenario, would make it nearly impossible to entice private sector investment interest in the project, due to the inability to secure conventional mortgage loan financing and the lack of a suitable return. Conventional mortgage loan financing requires, amongst other things, a 50%to 70% loan to value, and a debt coverage ratio of approximately 1.35% to 1.45%. A detailed summary of equity and debt parameters are included in"The Hotel Investment Outlook"publication included as an addendum to this report. Despite the financing hurdles that appear to face the proposed project, and assuming that the City of Salem wants to continue to investigate ways in which to bring a hotel project to fruition, there may be some creative ways of structuring a transaction by bringing public sector financing to the project that may make it more palatable for a private sector developer. However, it is also implied in this scenario, that the private sector developer identified would need to be flexible in their return expectations, and more probably, have other financial incentives for participating in the project. Should private sector developer interest be identified despite these project hurdles, participation and/or contingent participation on the city side could include the pledging of all or part of the following financing vehicles and/or incentives: • Urban Development Action Grant (UDAG) • Tax Increment Financing • Community Development Action Grant • Public Works Economic Development Grants We believe that the proposed hotel development project can meet the general private match requirements for the UDAG and that the project will generate construction jobs, and will create long term employment opportunities for low and moderate income families in the region. Provided that the UDAG is still available to the City we propose that it be made available, along with the City's funds, as a loan to the developer on, terms similar to those in the original UDAG Agreement. This will make available $1,094,180 to the owners or approximately $18,000 per room. The loan would have the meet HUD requirements for job creation and meet the match requirements of the UDAG program. The minimum private match for UDAG was generally 2.5 to I (private dollars to public). This would mean that to retain the UDAG the project would need to see at least $2.4 million in private investment, which the hotel project can meet. CM 1.4 .......... pw 6. The Massachusetts Economic Development Incentive Program Certified Project Application Applicant Information 1. Name and address of business(es) submitting this application: Pickering Wharf Realty Trust J. Hilary Rockett, Trustee 190 Pleasant Street Marblehead, MA 01945 Fiscal year end is: December 31 2. Name and address of project (if different from above): Pickering Wharf Hotel Corner of Congress Street & Derby Street Salem, MA 01970 3. Location of ETA: Beverly & Salem Regional ETA 4. Location of EOA: Salem (k-LA 1). Authorization: I/We (print), of the entity applying foii Certified Project designation,t hereby certify that the information within this application is true and accurate, and reflects the project's intentions for job creation and investment. 1 understand that the information provided within t for the duration of the project C Signatur (Date) Sianature (Date) 6. Nature and purpose of project: INTRODUCTION AND HISTORY OF PROJECT DEVELOPMENT Pickering Wharf Realty Trust seeks Certified Project designation for the Pickering Wharf Hotel to be developed at the corner of Derby and Congress Streets. Salem is a major New England tourist destination that draws over 650,000 visitors annually to its cultural, historic and maritime attractions. Due to a limited supply of overnight accommodations, tourist and business visitor dollars are spent in communities such as Danvers and Peabody which have numerous hotels with easy access to major highways. The trustees of Pickering Wharf Realty Trust recognized the need for additional hotel accommodations in Salem and that the potential space available at Pickering Wharf was an ideal location. The developers conducted an extensive financial analysis of the project and concluded that the development would not be economically feasible without property tax relief through a TIF agreement. Their findings were supported by a Hotel Study conducted by Landauer Group that indicated the Pickering Wharf hotel site was the most suitable location in Salem for new development and the one most likely to be supported by the market. Their analysis also concluded that the cash flow generated by the project for debt service would not be sufficient to attract private sector developers without economic assistance from the community. Rockett Management & Realty Company was established in 1968. The company develops, manages and owns several commercial and residential properties, including 400 Highland Place, Route 107 in Salem, the Village Plaza in Marblehead and several apartment buildings. The Pickering Wharf Realty Trust was established prior to the purchase of Pickering Wharf on May 2, 1996. % V*k Pickering Wharf Realty Trust acquired Pickering Wharf in June 1996 and initiated the successful revitalization of this popular water7ront destination. Pickering Wharf had been for sale since 1991 and had begun to show signs of neglect that have N% since been reversed under Rockett Management Company's ownership. As a part of \? the owner's plans for a major redevelopment of Pickering Wharf, a hotel development io was proposed to be located at the corner of Derby and Congress Streets. Pickering Wharf Realty Trust plans to construct an eighty +/- room, three story hotel containing standard 14' x 36' rooms featuring kitchen facilities. The ground floor will offer 18,000 square feet of retail space. The development will be a total of four stories. The development cost of the hotel portion of the project is $3,541,100. The hotel will be approximately 50,000 square feet. The overall project cost is $4,441,100. The retail portion of the project is estimated to cost $900,000. Please refer to the chart on page 4 for a cost breakdown. 2 The project is projected to employ 60 persons in net, new permanent jobs for the ETA. The existing conditions of the hotel site include retail and office space contained in two buildings and an Eastern Bank. Ninety percent of the retail and office space has been abandoned for over two years. The two buildings housing retail and office will be demolished and the retail uses will be relocated to the ground floor of the hotel. The bank will be demolished and relocated next to the hotel site. The applicant seeks certification for the hotel portion of the project only. All newly constructed retail space, including the relocated Eastern Bank, will be taxed at full valuation. In addition, the City and the developer have entered int o a Memorandum of Understanding in which each party has pledged to work in a public/private partnership to secure state and federal funds for items such as increasing public access to the waterfront. There is an unfinished segment of a seawalk from Congress Street to the Chase House restaurant to be addressed with the use of grant funds. 7. Is this business new to Massachusetts? 'I Yes 1:1 No If no: Where are the existing Massachusetts facilities? Will this project require/trigger the closing or consolidation of any Massachusetts facilities? If yes, please explain. 8. Is this project an expansion of an existing business? 11 Yes V, No If yes, check the appropriate box: 11 at existing location El at new location in same municipality 0 at new location in different municipality Budget for Project Soft Costs Budget Architecture Fees 150,000 Structural/Mechanical Engineering 38,000 21 E Site Report 10,000 Legal Fees 18,000 General Conditions 85,000 Business Relocation Costs 125,000 Bank Loan Fees 150,000 Permit 15,000 Site Superintendent 75,000 Office Expense -)0,000 Hard Costs Demolition 145,000 Site Preparation 45,000 Piles/Caps 160,000 Grade Beams 129,000 Ist Floor Structural Slab 106,000 Structural Plank/Steel Structure 513,000 Concrete Slabs (3)) 94,000 Roofing 145,000 Towers/Light Steel Framing 0 Staircases 51,000 Elevator 125,000 Exterior Wall System 397,000 Glass & Glazing 150,000 Misc. Exterior Allowance 50,000 Sprinkler System I-)0,000 4 Electrical 197,000 Plumbing 175,000 HVAC 365,000 Interior Dernising Partitions 157,000 Interior Allowance 215,000 Fire Alarm System 56,000 Excavation 86,000 Materials 22,000 Grading/Compaction 26,000 Curbing 22,000 Landscaping 27,000 Sprinkler System 7,100 Paving 61,000 Walkway 49,000 Sidewalk Pavers 25,000 Special Landscaping 15,000 Total 4,441,100 Breakdown of costs Hotel 3,451,100 Retail 900,000 9. Job creation In order to qualify for Certified Project status, the governing statute and regulations require the creation of net, new, permanent full-time employees in Massachusetts. On the chart provided (see next page), please fill in the blanks provided. 5 Work Force Analysis and job Creation Plan Current TOTAL NEW JOBS NEW JOBS NEWJOBS NEW JOBS NEWJOBS NEWJOBS employment projected new Year I Year 2 Year 3 Year 4 Year 5 Years 6-13 permanent jobs Total Employees at Certified Project 0 60 45 8 7 0 0 0 Facility Total Employees at Other Sites in 0 0 0 0 0 0 0 0 Mass. #of Employees at Certified Project 0 35 35 35 35 35 35 35 Location who live in the ETA #of Permanent Full-Time Employees 0 45 35 5 5 0 0 0 #of Permanent Part-Time Employees 0 15 10 3 2 0 0 0 #of Temporary Full-Time Employees 0 70 0 0 0 0 0 0 construciton #of Temporary Part-Time Employees 0 10 0 0 0 0 0 0 construction #of Management Positions 0 4 0 0 0 0 0 0 Average Salary of Management 0 $50,000 Positions #of Professional Positions 0 4 0 0 0 0 0 0 Average Sa lary of Professional 0 $40,000 Positions #of Technical Positions 0 2 0 0 0 0 0 0 Average Salary of Technical Positions 0 $30,000 #of Skilled Positions 0 8 0 0 0 0 0 0 Average Salary of Skilled Positions $30,000 #of Unskilled Positions 0 10 0 0 0 0 0 0 Average Salary of Unskilled Positions $15,000 6 10. Certification for Abandoned Buildings: Does the proposed project involve the renovation and reuse of an abandoned building? 11 Yes I No El Unsure If yes or unsure, please answer the following questions: (a) How long has the building been vacant? (If known, state date) (b) During this period of time, what percentage of the building was vacant and unused? If the percentage varied during this time period, provide information for each change in the percent of vacant space and the applicable time period. 11. Local Employment: What actions will you take to recruit employees from among residents of the ETA? The hotel developers believe that the majority of new employees will be ETA residents, as the company will advertise new positions exclusively in the SaLem Evening News. Pickering Wharf Realty Trust has the intention and capacity to achieve the anticipated level of new permanent full-time jobs for residents of the municipality and the ETA. The local labor supply is well qualified for the nature of the positions that will be available in the hotel development. The hotel is located within walking distance of several neighborhoods which will assist in reaching the anticipated level of new permanent full-time jobs for residents of the municipality and the ETA. 12. Affirmative Action Statement: It is the policy and practice of Pickering Wharf Realty Trust to hire and promote that person deter-mined to be the best qualified without regard to race, color, religion, sex, age, marital status, or national origin. 13. Agreement between the Business and Area Banks: Describe briefly the business' local banking relationship(s), if any. Does the institution with which the business banks participate in the Massachusetts Capital Access Program, which is designed to commit a portion of the business' deposits to fund loans to local businesses? Pickering Wharf Realty Trust banks with Eastern Bank, who participates in the Massachusetts Capital Access Program. 7 14. Economic benefits of project certification: Provide a description of the economic benefits that are anticipated for the business and the project, if the project is certified. Also, provide any information, documentation or studies demonstrating any additional benefits (i.e. reduction of blight, reuse of abandoned buildings, clean up of contaminated property, job training, provision of day care, any contributions to the community, etc.) likely to accrue to the area as a result of Certified Project designation. Please describe: Economic benefits to applicant The benefits of project certification are summarized below: Development is economically feasible with the receipt of investment tax credits and property tax benefits The developer will receive approximately $1,369,964 in local property tax benefits over 13 years The construction of a $3,873,400 hotel will entitle the company to $193,670 instate 5% investment tax credits The developer will receive additional state investment tax credits as a result of investment in equipment for the hotel Project provides an anchor for the Pickering Wharf development and orients the visitor to Pickering Wharf and the waterfront a 90 % abandoned building is removed from the site quantity and quality of retail is greatly improved within Pickering Wharf Economic benefits to the City of Salem The City's tax base will be expanded; room taxes in the amount of $968,927 will be received and parking fees in the amount of$451,710 will be generated The reconfigured retail will generate additional tax revenue After all local property tax exemptions expire, this project will generate $185,121 per year in property tax revenues 60 new jobs will be generated through the staffing of the hotel The hotel is to be located in the heart of Salem's waterfront area on one of Salem's main entrance corridors. The City has launched several initiatives to improve the appearance of commercial properties on Salem's entrance corridors. This project will be a catalyst for additional development and rehabilitation of the waterfront area The City has historically suffered a loss of tourist revenue due to a limited supply of hotel rooms. The new hotel and retail property taxes, coupled with room tax and parking fees, will have a significant impact on 8 the City's economy. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. Special Requirements for Real Estate Projects I. Will the business own or lease/rent the facility? I Own 13 Lease/Rent If leasing/renting, please identify the developer/landlord, and state who will be the taxpayer of record for the purpose of paying local real estate taxes. If owning, will the business fully occupy the space? I Yes 0 No If no, does the business intend to lease/rent the remaining space? 2. Describe how the various tax benefits and other economic incentives that will result from Certified Project designation will be allocated among the business(e's) developing the project (i.e. a developer or landlord) and the business(e's) intending to purchase, lease or rent space at the facility (i.e. tenant or tenants). N/A Supplemental Information 1 Narne(s) of business(e's) intending to take advantage of state tax incentives: Business Name: Pickering Wharf Realty Trust Federal Employer ID:04-6805953 Address: 190 Pleasant Street Marblehead, MA 01945 Phone: (781) 631-3070 Fax: (781) 639-2290 Contact Person: J. Hilary Rockett, Jr., Trustee Type of Organization (check that which applies): 0 Corporation: 0 For profit; 0 S Corp.; 0 Non-Profit I Business Trust 0 Partnership: 0 General Partnership; El Limited Partnership 11 Individual Level of interest: (Indicate the benefits the company seeks) 9 -15% Investment Tax Credit El 10% Abandoned Building Tax Deduction (if applicable) I Local Real Estate Tax Incentive Beneficiary 2. Names and Addresses of Organization (please respond according to type) Business Trust Beneficiaries: J. Hilary Rockett and M. Denise Rockett 10 Foster Street Marblehead, MA 01945 J. Hilary Rockett, Jr. 5 Corn Point Road Marblehead, MA 01945 T. Michael Rockett .36 Roosevelt Avenue Marblehead, MA 01945 Richard P. Rockett 7 Dunns Lane Marblehead, MA 01945 Pamela M. Rockett 14 Roosevelt Avenue Marblehead, MA 01945 3. Please provide names, addresses, phone numbers and contact persons for organizations which may own or control or be affiliated with the applicant organization: Not Applicable 4. Certificate of Good Standing: A Certificate of Good Standing is attached with this application. mcc:W fforms\cpap.wpd 10 RESOLUTION APPROVING CERTIFIED PROJECT APPLICATION OF PICKERING WHARF REALTY TRUST WHEREAS, Pickering Wharf Realty Trust has applied for designation as a Certified Project under the Massachusetts Economic Development Incentive Program created by Chapter 2')A of Massachusetts General laws; WHEREAS, Pickering Wharf Realty Trust meets the minimum standards of the Economic Development Incentive Program and the local economic development goals and criteria established as part of the documents creating the Beverly & Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS, the proposed certified project is located at the comer of Congress and Derby Streets, within the boundaries of the Salem Economic Opportunity Area. The legal description is as follows: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3), 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141,,as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 336 (said master deed as so amended is hereinafter referred to as the "Master Deed"): Building Unit Percenta2e Interest Derby A 10.8775 said unit A, Derby Building being a part of the total Master Deed described above. Together with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3, 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rules and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 183A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit, use regulation, special permit, exception or variance. WHEREAS the City of Salem has agreed to offer Pickering Wharf Realty Trust a Tax Increment Financing Agreement; WHEREAS, Pickering Wharf Realty Trust will invest approximately $3,541,100 to tel at Pickering Wharf, an investment which creates approximately new), pennanent jobs for residents of the Beverly & Salem Regional Economir-Target Area. WHEREAS, the construction of a hotel at Pickering Wharf will substantially improve the aesthetic appearance of the property and reduce blight on one of Salem's entrance corridors; NOW THEREFORE BE IT RESOLVED that the Salem City Council approves the Certified Proj.ect application of Pickering Wharf Realty Trust, designating this project as a certified project for a period of thirteen years, and forwards said application for certification to the Massachusetts Economic Assistance Coordinating Council for its approval and endorsement. Adopted this day of 199_, by the Salem City Council. Date Stanley J. Usovicz, Jr., Mayor Attest: Deborah E. Burkinshaw, City Clerk SEAL Massachusetts Economic Development Incentive Program Tax Increment Financing Plan 1. Location A. Economic Opportunity Area (EOA): Salem EOA B. Municipality: City of Salem C. Tax Increment Financing (TIF) Zone: Attached are: map of the ETA map showing the general location of the proposed private project parcel by parcel map property lines and the outline of each building map indicating infrastructure improvements, all thoroughfare, public rights of way and easements zoning map location of proposed private and public projects Common description of TIF Zone: The proposed TIF Zone is located at the corner of Congress and Derby Streets in the Salem Economic Opportunity Area (EOA). The tax parcel is Map 34, Lot 446. Legal description of TIF Zone: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3), 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 665 3, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 3')6 (said master deed as so amended is hereinafter referred to as the "Master Deed"): Buildiniz Unit Percentage Interest Derby A 10.8775 1 said unit A, Derby Building being a part of the total Master Deed described above. Together with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed.as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3, 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rules and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. I Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 18')A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit, use regulation, special permit, exception or variance. D. Narrative Description of TIF Zone: Needs, Problems and Opportunities: Designation of this TIF Zone meets the needs of, solves problems for and creates opportunities for Pickering Wharf Realty Trust and the City of Salem. DESCRIBE BELOW: Solving problems and meeting the needs of Pickering Wharf Realty Trust: The trustees of Pickering Wharf Realty Trust made a major investment in Salem upon the purchase of Pickering Wharf. The trustees were seeking an opportunity to enhance this important investment and recognized that one of the problems facing Salem was the need for additional hotel accommodations. The potential space available at Pickering Wharf was considered an ideal location. The developers conducted an extensive financial analysis of the project and concluded that the development would not be economically feasible without property tax relief through a TIF agreement. Their findings were supported by a Hotel Study conducted by Landauer Group that indicated the Pickering Wharf hotel site was the most suitable location in Salem for new development and the one most likely to be supported by the market. Their analysis also concluded that the cash flow generated by the project for debt service would not be sufficient to attract private sector developers without economic assistance from the community. 2 Creating Opportunity for Pickering Wharf Realty Trust: This project provides Pickering Wharf Realty Trust with an ideal opportunity to enhance the value of Pickering Wharf and to establish an anchor in the heart of Salem's busy waterfront district. In addition, the ground floor of the hotel will showcase an improved quality and quantity of retail shops that will further enliven Pickering Wharf. Pickering Wharf Realty Trust plans to construct an eighty +/- room, three story hotel containing standard 14' x 36' rooms featuring kitchen facilities. The ground floor will offer 18,000 square feet of retail space. The cost of the hotel portion of the project is $3,451,100. The construction timeframe is expected to be approximately one year, with construction commencing in August of 1998 and ending in June of 1999. The project is anticipated to employ 60 permanent, net, new jobs in the ETA. Solving problems and meeting the needs of the City of Salem: The hotel is to be located in the heart of Salem's waterfront area on one of Salem's main entrance corridors. The City has launched several initiatives to improve the appearance of commercial properties on Salem's entrance corridors. This project will be a catalyst for additional development and rehabilitation of the waterfront area The City has historically suffered a loss of tourist revenue due to a limited supply of hotel rooms. The new hotel and retail property taxes, coupled with room tax and parking fees, will have a significant impact on the City's economy. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. In addition, the City and the developer have entered into a Memorandum of Understanding in which each party has pledged to work in a public/private partnership to secure state and federal funds for items such as increasing public access to the waterfront. There is an unfinished segment of a seawalk from Congress Street to the Chase House restaurant to be addressed with the use of grant funds. Creating Opportunity for the City of Salem: Designation of the TIF Zone and approval of this TIF Plan will help Pickering Wharf Realty Trust establish a new hotel in Salem, which will generate jobs, room taxes, parking fees, and property taxes of$185,121 at the expiration of the TIF. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. E. Property owners within the proposed TIF Zone: The property owner within the proposed TIF Zone is the Pickering Wharf Realty Trust. The Trustees are: J. Hilary Rockett M. Denise Rockett J. Hilary Rockett, Jr. T. Michael Rockett Richard P. Rockett Pamela M. Rockett Time The TIF Plan and TIF Zone described here will be in effect for a period of thirteen years. 111. TIF Zone & Economic Development A. Economic Opportunities and Economic Benefits to the Community: Approval of the proposed TIF Zone will create the following economic development opportunities and benefits: Creates jobs: 60 net, new permanent jobs Generates tax revenue: see attached spreadsheet entitled "13 Year Tax Increment Financing Plan" Improves appearance of 90% abandoned property through demolition The City's tax base will be expanded; room taxes and parking fees will be generated, please see attached spreadsheet entitled "13 Year Tax Increment Financing Plan" The reconfigured retail will generate approximately $20,000 in additional tax revenue per year in property tax revenues The hotel is to be located in the heart of Salem's waterfront area on one of Salem's main entrance corridors. The City has launched several initiatives to improve the appearance of commercial properties on Salem's entrance corridors. This project will be a catalyst for additional development and rehabilitation of the waterfront area The City has historically suffered a loss of tourist revenue due to a limited supply of hotel rooms. The new hotel and retail property taxes, coupled with room tax and parking fees, will have a significant impact on the City's economy. The waterfront location of the hotel will generate more business for local retailers, restaurants and tourist destinations. 4 B. Proposed and Potential Land Uses: (analyze how the land uses are appropriate for anticipated economic development) The developer will construct a hotel and retail development at Pickering Wharf on the waterfront in downtown Salem. There is a demonstrated need for additional hotel accommodations due to Salem's popularity as a tourist destination. C. Zoning in the TIF Zone: The TIF Zone is located in district B-5, Central Development District. D. Hazardous Waste: (identify any parcels, public or private, in zone which are confirmed hazardous waste disposal sites, in accordance with chapter 21E, MGL. Describe any public or private site remediation activities and any reuse plans) Not Applicable IV. TIF Zone Projects A. Planned Private Project: Pickering Wharf Realty Trust will construct a 50,000 square foot, four story, approximately 80 room hotel,with the ground floor to be occupied by 18,000 square feet of retail uses. Existing retail and office buildings will be razed and a bank will be relocated on site. B. Provide Documentary evidence of the level of the developer's commitment to the proposed and required construction in the TIF project: The developer has retained architects, engineers, surveyors and attorneys for the development of this project. 5 C. Budget for Project: The costs of completing the project are as follows: Soft Costs Budget Architecture Fees 150,000 Structural/Mechanical Engineering 38,000 21 E Site Report 10,000 LegalFees 18,000 General Conditions 85,000 Business Relocation Costs 125,000 Bank Loan Fees 150,000 Permit 15,000 Site Superintendent 75,000 Office Expense )0,000 Hard Costs Demolition 145,000 Site Preparation 45,000 Piles/Caps 160,000 Grade Beams 129,000 1 st Floor Structural Slab 106,000 Structural Plank/Steel Structure 513,000 Concrete Slabs (3) 94,000 Roofing 145,000 Towers/Light Steel Framing 0 Staircases 51,000 Elevator 125,000 Exterior Wall System 397,000 Glass & Glazing 150,000 6 Misc. Exterior Allowance 50,000 Sprinkler System 130,000 Electrical 197,000 Plumbing 175,000 HVAC 365,000 Interior Dernising Partitions 157,000 Interior Allowance 215,000 Fire Alarm System 56,000 Excavation 86,000 Materials 22,000 Grading/Compaction 26,000 Curbing 22,000 Landscaping 27,000 Sprinkler System 7,100 Paving 61,000 WalLway 49,000 Sidewalk Pavers 25,000 Special Landscaping 15,000 Total 4,441,100 Breakdown of costs Hotel 3,451,100 Retail 900,000 D, Relevant business plans: Time schedule for development: Scheduled construction commencement: August 1998 7 Scheduled construction completion: June 1999 Expected increases in job creation: 75 temporary construction jobs 60 permanent hotel jobs Estimates of tax revenue based upon increased valuation of parcel: E. Participation in other federal, state and local economic development programs and initiatives: The City intends to pursue grant funding such as CDAG or PWED. F. Planned Public Projects: The City and the developer have entered into a Memorandum of Understanding in which each party has pledged to work in a public/private partnership to secure state and federal funds for items such as increasing public access to the waterfront. There is an unfinished segment of a seawalk from Congress Street to the Chase House restaurant to be addressed with the use of grant funds. The details of this project will be forthcoming. V. Financing for TIF Zone Projects A Anticipated Financing for Private Projects: Source: Amount: Unknown $4,000,000 B. Anticipated Financing for Public Projects: Source: Amount: PWED TBD CDAG TBD 8 C. Detailed Projection of Costs of Public Construction: TBD D. Will Betterments be used to finance any public-private projects, now or within the proposed life of the TIF Plan? N/A E. If Betterments or Special Assessments are a part of the TIF Plan: N/A Schedule for defrayal of construction costs: Agreement of all participating parties in the betterment: F. Describe how private projects will be financed: Evidence of private financing commitments: Project proponent is investigating financing alternatives with local banks and lending institutions. VI. TAX INCREMENT FINANCING A. Authorization to use TIF: The attached City Council resolution dated March 9, 1995 authorizes the City of Salem to use TIF in the Salem EOA. Also attached is a City Council resolution approving this TIF Plan for Pickering Wharf Realty Trust. B. Amount of proposed tax increment exemptions from property taxes: As the attached spreadsheet shows, the Chairman of Salem's Board of Assessors estimates that property tax benefits will total approximately $1,369,964 over thirteen years. Also, see the description of the proposed TIF Plan in part D of this section. C. Maximum percentage of public project costs that can be recovered through betterments or special assessments: N/A 9 A TIF exemption from property taxes: As the attached spreadsheet shows, the City estimates the tax benefits to total approximately $1,369,964 over 13 years. The exemption plan works as follows: Year Pickerinz Wharf Realty Trust Pays 1 - 5 Only the base tax bill 6 -8 10% of the increment, plus the base tax bill 9 20% of the increment, plus the base tax bill 10 40% of the increment, plus the base tax bill 11 60% of the increment, plus the base tax bill 12 80% of the increment, plus the base tax bill 13 100% of the increment, plus the base tax bill The effective date of increment exemption is July 1, 1999 (Fiscal Year 2000). Term of the exemption: 13 years V11. Approval of TIF projects TIE projects are approved by the Salem City Council. The Mayor and his staff are responsible for negotiating TIF Plans and, after Council approval, executing those plans. Evidence of local approvals of the proposed TIF Zone and TIF Plan is provided here in the form of a resolution authorizing a TIE agreement passed by the Salem City Council on INSERT DATE. I w Vinn,,u,sWfp1an 10� PICKERING WHARF HOTEL 13-YEAR TAX INCREMENT FINANCING PLAN Base Value $332,300 Tax Rate $34.50 Value After Hotel Constructed $3,873,400 Levy Percent Growth 2.5% Increment in Value $3,541,100 Base Year 1998 �::Ye.ar :..:... :..%,P rt( Tax Taxes at TIFIGY,*, BaseT T on: I TaxLs.Pald' : rope .) ax:, axes. 77gMnefit I ::::ROOM P k ing'.. Total Ta Eac�Year`*Ikl :,T F ::Benefit o City. ax ees:::. ..Value Rate 1 00%.Value.. .:13'111: Incrernent Each:! ear.. BASE $332,300 $34.67 $11,521 0% $11,464 $0 $11,464 $0 $0 $27,000 $38,464 1 $3,873,400 $35.54 $137,648 0% $11,809 $0 $11,809 $125,839 $55,188 $27,810 $94,807 2 $3,873,400 $36.43 $141.089 0% $12,104 $0 $12,104 $128,985 $59,686 $28,620 $100,410 3 $3,873,400 $37.34 $144,616 0% $12,407 $0 $12,407 $132,210 $65,324 $29,430 $107,161 4 $3,873,400 $38.27 $148,232 0% $12,717 $0 $12,717 $135,615 $70,181 $30,240 $113.138 5 $3,873,400 $39.23 1$151,938 0% $13,035 $0 $13,035 $138,903 $72,112 $31,050 $116,197 6 $3,873,400 $40.21 $155,736 10% $13,361 $14,238 $27,598 $128,138 $74,044 $31,860 $133,502 7 $3,873,400 $41.21 $159,630 10% $13,695 $14,593 $28,288 $131,341 $75,975 $32,670 $136,934 8 $3,873,400 $42.24 $163,620 10% $14,037 $14,958 $28,995 $134,625 $77,907 $33,480 $140,382 9 $3,873,400 $43.30 $167,711 20% $14,388 $30,665 $45,053 $122,658 $79,839 $34,290 $159,181 10 $3,873,400 $44.38 $171,904 40% $14,748 $62,862 $77,610 $94,294 $81,770 $35,100 $194,480 11 $3,873.400 $45.49 $176,201 60% $15,116 $96,651 $111,767 $64,434 $83,702 $35,910 $231,379 12 $3,873,400 $46.63 $180,606 80% $15,494 $132,090 $147,584 $33,022 $85,633 $36,720 $269,937 13 $3,873,400 $47.79 $185,121 100% $15,882 $169,240 $185,121 $0 $87,565 $37,530 $310,216 TOTALS $2,095,573 $725,552 $1,369,964 $968,927 $451,710 $2,146,189 NOTES *TIF % = Percent of increment that is taxed Room Tax at 4% of Projected Room Revenue(based on 84 rooms) "Taxes Paid Each Year = Base Tax Bill plus Taxes on Increment ParkingFeesfor 0 paces@ $450/space increase 3% per year. ***Tax Benefit Each Year= Benefit to Hotel Developers Value of Hotel=cost of construction plus base value Base Value consists of FY98 Assessed values of 5 condos: 221 Derby, 225 Derby(uhb), 225 Derby (uhc), 3 Pickering Way, 7 Pickering Way Does not include enhanced value of ground floor retail which will be fully taxed. RESOLUTION AUTHORIZING THE USE OF TAX INCREMENT FINANCING IN THE SALEM ECONOMIC OPPORTUNITY AREA WHEREAS, the City of Salem is part of the area designated the Beverly & Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS, there is strong support for economic development and the use of Tax Increment Financing as an economic development tool to create jobs and encourage business expansion and relocation to the City of Salem; NOW THEREFORE BE IT RESOLVED by the City Council of the City of Salem that: (1) Tax Increment Financing may be used as a tool to encourage economic development within the Salem Economic Opportunity Area. (2) The Mayor is hereby authorized to execute and implement Tax Increment Financing agreements. Adopted this day of 19 by the Salem City Council at a regular City Council meeting with a quorum present. Neil J. Harrington, Mayor Date ATTEST: Deborah E. Burkinshaw, City Clerk SEAL RESOLUTION AUTHORIZING A TAX INCREMENT FINANCING AGREEMENT For Pickering Wharf Realty Trust WHEREAS, the City of Salem is part of the area designated the Beverly & Salem Regional Economic Target Area and the Salem Economic Opportunity Area; WHEREAS, the Mayor of the City of Salem has prepared a Tax Increment Financing Agreement in accordance of Chapter 40 and 751 CMR 11.00; WHEREAS, there is strong support for economic development and the use of Tax Increment Financing as an economic development tool to encourage business expansion in and relocation to the City of Salem; WHEREAS, there is strong,support for using Tax Increment Financing to encourage the development of a Hotel at Pickering Wharf, the property owned by Pickering Wharf Realty Trust; WHEREAS, this property is located in the Salem Economic Opportunity Area; NOW THEREFORE BE IT RESOLVED by the Salem City Council that: (1) The Tax Increment Financing Agreement be adopted as it has been substantially Submitted to the City Council. A copy of said Tax Increment Financing Agreement is attached as Exhibit A, and made part of this Resolution. (2) The area to be designated as a Tax Increment Financing Zone is: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3), 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated,November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 3')6 (said master deed as so amended is hereinafter referred to as the "Master Deed"): Buildinp Unit Percentage Interest Derby A 10.8775 said unit A, Derby Building being a part of the total Master Deed described above. T -ether with the undivided percentage interests in the common areas and facilities of the Condominium described in the Master Deed as set forth for the unit above. Subject to and with the benefit of all easements, rights, reservations, restrictions, agreements and provisions contained in the Master Deed, in the Agreement and Declaration of Trust of the Pickering Wharf Condominium Trust dated August 3, 1979, recorded with Essex South Registry of Deeds in Book 6624, Page 168, in the By-Laws of Pickering Wharf Condominium recorded with Essex South Registry of Deeds in Book 6624, Page 179, and in any rules and regulations promulgated pursuant thereto, as any of the foregoing may be amended from time to time. Subject to and with the benefit of the provisions of Massachusetts General Laws Chapter 18')A as now in force and as amended from time to time. The foregoing unit is intended to be used for any purpose allowed by applicable law, zoning law, license, permit, use regulation, special permit, exception or variance. A map of the Tax Increment Financing Zone is hereby attached as Exhibit B and made part of this Resolution. (4) The Tax Increment Financing Agreement shall be binding on all subsequent owners of the property in the Tax Increment Financing Zone. The City of Salem reserves the right to review and renegotiate the Tax Increment Financing Agreement if the business activity ceases to be fully operational during the life of the Tax Increment Financing Agreement, as specified in the Tax Increment Financing Agreement. (5) A copy of the adopted Tax Increment Financing Agreement shall be forwarded to the Massachusetts Economic Assistance Coordinating Council for its approval. (6) The effective date of the Tax Increment Financing Agreement shall be July 1,1999 (Fiscal Year 2000), whichever is later. (7) The Mayor is hereby authorized to execute and implement the Tax Increment Financing Agreement. Adopted this day of 19_by the Salem City Council at a regular City Council meeting with a quorum present. Stanley J. Usovicz, Jr., Mayor Date ATTEST: Deborah E. Burkinshaw, City Clerk SEAL EXHIBIT A: Tax Increment Financing Agreement z��cim,Zone EXHIBIT B: Map of Trut Increment Fin TAX INCREMENT FINANCING AGREEMENT CITY OF SALEM, MASSACHUSETTS and PICKERING WHARF REALTY TRUST This agreement is made this—day of_, 1998, by and between the CITY OF SALEM, a municipal corporation duly organized under the laws of the Commonwealth of Massachusetts, having a principal place of business at City Hall, 93 Washington Street, Salem, Massachusetts, 0 1970, acting through the Mayor, Stanley J. Usovicz, Jr., (hereinafter called "the CITY"), and PICKERING WHARF REALTY TRUST, with a principal place of business at 190 Pleasant Street, Marblehead, Massachusetts, 01945 (hereinafter called "the COMPANY") . This Agreement will take effect as of July 1, 1999 (Fiscal Year 2000). WHEREAS, the COMPANY wishes to construct a hotel at Pickering Wharf in Salem; and WHEREAS, the CITY is willing to grant tax concessions in return for guarantee of the construction of the hotel property and the creation of employment opportunities for local workers; and WHEREAS, the Salem City Council resolved on November 9, 1995 to allow the use of Tax Increment Financing as a tool to encourage economic development within the Salem Economic Opportunity Area; and WHEREAS, the Salem City Council resolved on 1998 to endorse the Tax Increment Financing Plan negotiated by the CITY and the COMPANY. NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties do mutually agree as follows: A. THE COMPANY'S OBLIGATIONS I. The COMPANY shall develop the hotel property at Pickering Wharf in Salem. "The FACILITY" as used herein means a building containing approximately 50,000 square feet plus site improvements and refers to the Hotel portion only of the project. During the life of this agreement, if the COMPANY decides to sell the FACILITY or the business or to otherwise transfer control of the FACILITY or business and/or operations thereof, the COMPANY shall give the CITY at least three months notice of said sale or transfer. Said notice shall be given by certified mail, return receipt requested, to the Mayor, City Hall, 93 Washington Street, Salem, Massachusetts, 0 1970. B. THE CITY'S OBLIGATIONS I The CITY shall grant a tax increment financing exemption to the COMPANY in accordance with Massachusetts General Laws, Chapter A, Section 3E, Chapter 40, Section 59, and Chapter 59, Section 5. Said exemption shall be granted on the improvements to the FACILITY. Said exemption shall be valid for a period of thirteen (13) years, beginning with fiscal year 2000 (July 1, 1999) and ending with fiscal year 2013. During each year of this agreement, the company will pay taxes based on the base value of the FACILITY and on that portion of the value of the FACILITY which is not exempted under the agreement. The base value is established by the Board of Assessors (the Board) and is the current value of the FACILITY unless an abatement is approved by the Board. The exemption schedule on the value of the FACILITY works as follows: For the first Five (5) years, the COMPANY will pay only the base tax bill and will be granted an exemption of 100 percent of the full value of improvements to the FACILITY. The full value of improvements to the FACILITY is hereinafter called "the INCREMENT". In years six, seven and eight, the COMPANY will pay taxes on 10% of the full value of the INCREMENT, plus the base tax bill. In year nine, the COMPANY will pay taxes on 20% of the full value of the INCREMENT, plus the base tax bill. In year ten, the COMPANY will pay taxes on 40% of the INCREMENT, plus the base tax bill. In year eleven, the COMPANY will pay taxes on 60% of the INCREMENT, plus the base tax bill. In year twelve, the COMPANY will pay taxes on 80% of the INCREMENT, plus the base tax bill. In year thirteen, the COMPANY will pay taxes on the full value of the FACILITY. C. OTHER CONSIDERATIONS I. This Tax Increment Financing Agreement shall be binding on all subsequent owners of the property. The City of Salem reserves the right to review and renegotiate the Tax Increment Financing Agreement if the business activity ceases to be fully operational during the life of the Tax Increment Financing Agreement. If the COMPANY decides to expand the facility at any time during the life of the Tax Increment Financing Agreement, the CITY and the COMPANY may renegotiate the Tax Increment Financing Agreement to exempt all or part of the value of the expansion from property taxes. The exact amount of that exemption will be determined at the time of expansion. Executed as a sealed instrument on the day and year first above written. CITY OF SALEM PICKERING WHARF REALTY TRUST Stanley J. Usovicz, Jr., Mayor J. Hilary Rockett, Trustee Notary Public My commission expires 1 71 mms -------------- ........ ca,few MA_ Mm� 70 E 17 I J: I �w t aW a. M Beverly & Salem Regional Economic Target Area ESSEX'-' -CO N TY Y 13pk < B SA .RAO Th I, 40 CIO's BERTRAM FIELD 10 C�t ext ' r 4r -4c I L� 11 —MI NGTO. SALEM —1 3F 0 s CAR TIWF ZONE L N 71A7 A 404r, C,R < IBM, PARK 4,*rRA,, ENT LAM, '..".3TATION Co. 1� 0 V � I e. �11 COVE V 010-ft, ,Z11t Polle 3r *r P-441f N/Ve R V LICIT ...n LSo General Location MaP pickering Wharf Hotel Tif Zone Indicated 19TO 1981 1989 1993 CIA Ci 0 F DERBY 225 1'223 21 1� 59 go 34 17 0C IWNTH RNE 4 60 .4090 0 1p, 0 CHUSETTS 5.. 0 - ALEM9 MASSA 0 44b 0 �2400 ASSESSORS MAPS A46 _5 G -3 416 6 4,0 1wr001t`i1v 60, 7 0 0401 0 of-fka,( E 0, 0 \VAG J SIR \87 0 cyEfk p IV47-EER �0800 z 5 408 49 �k to 248 C) 19 A A 67 AA7 5 4.55 AC \\O 440 12#6 0 ARF 2�5,4453 Ln OR4110 rea URK 441 U1 Public Project 76 QtAlroo ?/, 200 go 84 L 116 86 go 49 Is- 7 S 0 U RA,I Ln v 436 4-55 0 p C IV 4�S4C ;a ANSFOO 61516 Alert -A 0 -&85 34 39 la S g 0 Y go-tt t4 38 71 OR IS 4,/ ig 45 384 3264 00 36-01-38 T so 7 Poo i67 10,227 a 138 5 96 397 q 872 3690 39 0 .9 A 102 610 AI 114 Z-4 4 1399 ?288 1-63 965 Assessors' Map 7-19 Ig - f I E E T $$-as so 64 TO Public Project Indicated t 14 30 32-34 311 40-4 11 4P 46 54 52 04 -1 47 50 42 53 '9 40 45 Jt� 2813 35 351 62 `J4 34 joi -357 353 35 149 �-35 356 3488 9 -56 0 460 4000 L4 L435 6 :d2 3750 3680 3476 369 71 ",11N kY Attachments Letter from Project Proponent's Accountant Salem Evening News Article Excerpt from Landauer Hotel Study CEC-03-97 21z30 FROM, ID- ISOG74OS729 PACE 2Z2 �aen�Ws,,,Morjday.t4CVaTg�17,1997 C3 -ale, S . ew. "sic store M'mg-lo D By 9MWZY LAX S News starr A 3iew D opeftirm irbi Street to�be a for mom vets-who maw 3mow=or-. the Inbmt m S 'W Vaeture for L-U7 0'y er3 IrpertAre �hice cfbis at 292 have. W dmdcnl.: sical.: tID the jxm -7 S2�3- Lacpcjd.� ..a-pu cohm's wffi--wb�Will r= - ' ' - store with Wt j2=. blocs.but You cm,also Wt tbe ' hfbs:-i . to theni�c(:� -to CD or=ticm 3tati are really vo, x=d as a Lce-over =p the wqrk tbey�vt Ph— a,ad PlaLt'in � hilto,7- , 72w narr2tive -zed c ics. the reOmEMi artilb�md works hM IUkd- Imikior 1=2zt an 0 r2. hard rucIL zad oth*r re gearcz. coherihopes it cottrages PeoqlQtDtry�c-W Aan7 DeoDle likli a style�f nobeci IW P'fepaft: -'14-7�7 y ==Wbuithmrmr=r 1hein r Z w 'Wip peove Atong eft U� ...... III he - f PaATactabliet Compact dL=as D=omc t"VOr MIC5 divisions b, the -1119 Bar- ch�in fam mftinc Over to axi. d as'Its ne3t 15M ad the me,,-dft P091- umm to the she M'dvidmmer- Store&,,_ cr IAC I b=elv Btcr -zaylr--�W g.Ux hel is 2 m Vat k!'W ..?mum tht'. the com- Leopid says*P=ffm simsof aA loa.�L- to opm'ne*2t h6tel, it Atpichci= Excerpts from Landauer Hotel Study Introduction The primary goals of the study were threefold as outlined below: To determine the market and financial feasibility of hotel development at three identified locations within the city: • The former site of the Parker Brothers manufacturing plan; • A site at Pickering Wharf, at the intersection of Derby and Congress Streets; • A site at the current location of the Hawthorne Hotel on its rear parking lot; To assess the economic benefits of the hotel and prospects for public sector financing; and, To develop a report and recruitment package which the city can use in the marketing of the project to both private and public sector entities. Hotel Projects Under-Construction (p. 6) 1. 120- Room Hampton Inn on Rt. 1 2. 85 Room Homewood Suites on Rt. 1 3. 97 Room Mainstay Suites in Centennial Park 4. 66 Room Microtel Hotel on Rt. I 5. 115 Room Extended Stay America in Danvers Note - 500 Rooms are being built within five (5) miles Prospective Financial Investment Analysis (p. 6) A prospective financial analysis was conducted on each of the facility profiles outlined above (a 120 room full service facility and 66 room limited service facility). The result of this analysis indicated, that cash flow available for debt-service and investor return was not sufficient enough to generate private sector developer interest in either project. However, the cash flow generated by the limited service hotel scenario was closer to supporting the development costs associated with such a project. The gap which existed between the cashfows development supportability against industry supplied development costs was close enough to investigate public sector Financing options which could be pledged as low cost of capital mezzanine financing. Site and Facilities Analysis (p. 6 & 7) Our analysis has concluded that the Pickering Wharf location is the most suitable for hotel development utilization at this time. Land availability will be a limiting factor in the potential project's scale and range of facilities. Development Potential Analysis (p. 8) A small 66-room limited service hotel at Pickering Wharf appears market supportable. Significant concessions will be required from the City of Salem and a potential developer in order to render the project financially feasible. Initially, a franchise affiliation would be recommended. Potential affiliations include: Comfort Inn, Days Inn, Hampton Inn or a Holiday Inn Express. Conversely, an independently run hotel allied with a strong nationally or regionally recognized operator may be an alternative. Economic Benefits and Prospective Financin (p. 8 & 9) Employing discounted cash flow techniques to evaluate the financial viability of a 66-room limited-service hotel built in Salem provides indications of development supportability of approximately $48,500 to $51,500 per room. This level of estimated development supportability indicated that the prospective project is not financially feasible based on an anticipated development cost of$4.3 million to $4.6 million, less approximately $900,000 for retail space development or$51,500 to $56,000 per room, and probably would not attract private sector hotel developers or investors. However, a major stakeholder in Salem may be motivated to develop the project for other purposes such as: An opportunity to enhance the overall value of an existing major real estate investment; and The hotel use will create an anchor and provide additional synergy for a total redevelopment program. In any event, it will be necessary for the City of Salem to offer significant incentives in order to attract additional hotel development in Salem. These incentives might include, but are not limited to, real estate tax abatement or suspension, participation in below market financing such as bond or available government finance programs. Economic benefits may result from the development of a hotel in Salem include: Increased City revenue generated from hotel occupancy taxes and real estate taxes. Provide a catalyst to attract additional development interest within Salem Redevelopment catalyst for waterfront Increased area employment Enhanced visitation and greater expenditures Proposed Hotel Development(p. 55) The hotels located in Salem will be particularly vulnerable to the hotel expansion currently taking place on the North Shore's highways (including 500 rooms now under construction). In most instances, these locations offer higher visibility, greater accessibility and closer proximity to the major demand generators in the North Shore market. As a result, expansion of the hotel supply in the future will have a greater impact on hotels with secondary locations such as Salem. Market Position (p. 64 & 65) Despite its waterfront location and close proximity to Salem's many attractions including tourist destinations, restaurants and shopping, the prospective hotel will still have a locational disadvantage when compared to the competitive hotels located on the area's highways. The prospective hotel will have a particular advantage in attracting vacationing families visiting the area due to envisioned amenities and waterfront location. The region's seasonal tourism pattern combined with the relatively low level of corporate hotel demand generated within the immediate Salem area will preclude large- scale hotel development in Salem. Financial analysis of a 120 room full-service hotel developed on either the Pickering Wharf or Parker Brothers site was deemed unfinancable due to relatively low revenue potential and high development costs associated with the meeting and dining facilities required to attract group business in the shoulder and off-season periods. Expansion of the Hawthorne Hotel does not appear financially feasible due to the high cost of replacing the current and expanded parking requirements of the hotel with structured and/or underground parking. Project Financing Analysis (p. 77 & 78) A comparison of what the prospective cashflow analysis would yield on a supportable development basis per room, against the costs provided by Miller Dyer Spears and national chain representative, indicate that the proposed project, as proposed, is not financially feasible under conventional private sector terms. Not only would the prospective cash flow not support the hard development costs associated with the above referenced costing, it would not begin to cover the costs associated with the underlying real estate or other hard and soft cost including, but not limited to planning, design, construction management, construction loan interest,permits, bond and developers fees, and legal services. Further, it would not address the typical private sector return on investment rates which range between 15% and 20%, on a cash basis. This scenario, would make it nearly impossible to entice private sector investment interest in the project, due to the inability to secure conventional mortgage loan financing and the lack of a suitable return. Conventional mortgage loan financing requires, amongst other things, a 50% to 70% loan to value, and a debt coverage ratio of approximately 1.35%to 1.45%. A detailed summary of equity and debt parameters are included in"The Hotel Investment Outlook"publication included as an addendum to this report. Despite the financing hurdles that appear to face the proposed project, and assuming that the City of Salem wants to continue to investigate ways in which to bring a hotel project to fruition, there may be some creative ways of structuring a transaction by bringing public sector financing to the project that may make it more palatable for a private sector developer. However, it is also implied in this scenario, that the private sector developer identified would need to be flexible in their return expectations, and more probably, have other financial incentives for participating in the project. Should private sector developer interest be identified despite these project hurdles, participation and/or contingent participation on the city side could include the pledging of all or part of the following financing vehicles and/or incentives: * Urban Development Action Grant (UDAG) * Tax Increment Financing * Community Development Action Grant * Public Works Economic Development Grants We believe that the proposed hotel development project can meet the general private match requirements for the UDAG and that the project will generate construction jobs, and will create long term employment opportunities for low and moderate income families in the region. Provided that the UDAG is still available to the City we propose that it be made available, along with the City's funds, as a loan to the developer on, terms similar to those in the original UDAG Agreement. This will make available $1,094,180 to the owners or approximately $18,000 per room. The loan would have the meet HUD requirements forjob creation and meet the match requirements of the UDAG program. The minimum private match for UDAG was generally 2.5 to I (private dollars to public). This would mean that to retain the UDAG the project would need to see at least $2.4 million in private investment, which the hotel project can meet. The Massachusetts Economic Development Incentive Program Certified Project Application Applicant Information 1. Name and address of business(es) submitting this application: Pickering Wharf Realty Trust J. Hilary Rockett, Trustee 190 Pleasant Street Marblehead, MA 01945 Fiscal year end is: December 31 2. Name and address of project (if different from above): Pickering Wharf Hotel Corner of Congress Street & Derby Street Salem, MA 01970 3. Location of ETA: Beverly & Salem Regional ETA 4. Location of EOA: Salem 5. Authorization: I/We (print). of TkLA the entity apFlyi7n--g�focertified Project designation,t hereby certify that the information within this application is true and accurate, and reflects the project's intentions for job creation and investment. I understand that the information provided within for the duration of the project cip Signaturi (Date) Signature (Date) The Massachusetts Economic Development Incentive Program Certified Project Application Applicant Information 1. Name and address of business(es) submitting this application: Pickering Wharf Realty Trust J. Hilary Rockett, Trustee 190 Pleasant Street Marblehead, MA 01945 Fiscal year end is: December 31 2. Name and address of project (if different from above): Pickering Wharf Hotel Corner of Congress Street & Derby Street Salem, MA 01970 3. Location of ETA: Beverly & Salem Regional ETA 4. Location of EOA: Salem 5. Authorization: I/We (print) of the entity applying foii Certified Project designation, he—reby certify that the information within this application is true and accurate, and reflects the project's intentions for job creation and investment. I understand that the information provided within shall be bindindfor the duration of the project Signaturi (Date) Signature (Date) The Massachusetts Economic Development Incentive Program Certified Project Application Applicant Information 1. Name and address of business(es) submitting this application: Pickering Wharf Realty Trust J. Hilary Rockett, Trustee 190 Pleasant Street Marblehead, MA 01945 Fiscal year end is: December 31 2. Name and address of project (if different from above): Pickering Wharf Hotel Corner of Congress Street & Derby Street Salem, MA 01970 3. Location of ETA: Beverly & Salem Regional ETA 4. Location of EOA: Salem 5. Authorization: I/We (print), of the entity applying fo Certified Project designation,'hereby certify that the information within this application is true and accurate, and reflects the project's intentions for job creation and investment. I understand that the information provided within th(S9,Wlication,shall be bindirN for the duration of the project ne ific 'on �5—// -qP Signatur9 �'A (Date) Signature (Date) i --��U � f �--, f �.,,�. .�.� L. ',��, �� , up 1 .� ( b/'•� 3 n � fl IHHH � ��r r � � � � 1. .. � �, ,� w t , 'f� �'� ,1 R :� f � � H s ,�—_ r�_ t _ �. Massachusetts Economic Development Incentive Program Tax Increment Financing Plan 1. Location A. Economic Opportunity Area (EOA): Salem EOA B. Municipality: City of Salem C. Tax Increment Financing (TIF) Zone: Attached are: map of the ETA map showing the general location of the proposed private project parcel by parcel map property lines and the outline of each building map indicating infrastructure improvements, all thoroughfare, public rights of way and easements zoning map location of proposed private and public projects Common description of TIF Zone: The proposed TIF Zone is located at the corner of Congress and Derby Streets in the Salem Economic Opportunity Area (EOA). The tax parcel is Map 34, Lot 446. Legal description of TIF Zone: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3, 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 336 (said master deed as so amended is hereinafter referred to as the"Master Deed"): Building Unit Percentage Interest Derby A 10.8775 Massachusetts Economic Development Incentive Program Tax Increment Financing Plan I. Location A. Economic Opportunity Area (EOA): Salem EOA B. Municipality: City of Salem C. Tax Increment Financing (TIF) Zone: Attached are: map of the ETA map showing the general location of the proposed private project parcel by parcel map property lines and the outline of each building map indicating infrastructure improvements, all thoroughfare, public rights of way and easements zoning map location of proposed private and public projects Common description of TIF Zone: The proposed TIF Zone is located at the corner of Congress and Derby Streets in the Salem Economic Opportunity Area (EOA). The tax parcel is Map 34, Lot 446. Legal description of TIF Zone: The following condominium unit in the Pickering Wharf Condominium (the "Condominium") in Salem in the County of Essex and Commonwealth of Massachusetts, created by and described in the Master Deed of Pickering Wharf Condominium dated August 3, 1979 recorded with Essex South Registry of Deeds in Book 6624, Page 141, as amended by a First Amendment to Master Deed dated November 9, 1979, recorded with Essex South Registry of Deeds in Book 6653, Page 99, by a Second Amendment to Master Deed dated December 28, 1979, recorded with Essex South Registry of Deeds in Book 6667, Page 39, and as further amended by a Third Amendment to Master Deed dated April 4, 1980, recorded with Essex South Registry of Deeds in Book 6692, Page 336 (said master deed as so amended is hereinafter referred to as the "Master Deed"): Building Unit Percenta2e Interest Derby A 10.8775 CITY OF SALEM, MASSACHUSETTS STANLEY J. USOVICZ, JR. MAYOR June 15, 1998 Economic Assistance Coordinating Council Sean Calnan, Director Massachusetts Office of Business Development One Ashburton Place, Room 2101 Boston, MA 02108 To the Members of the Economic Assistance Coordinating Council: In June 1996, the Trustees of Pickering Wharf Realty Trust acquired two thirds ownership of the well known Pickering Wharf in Salem. Members of the Trust own Rockett Management and Realty, a successful realty management firm. Approximately two years ago, representatives of Pickering Wharf Realty Trust expressed an interest in developing a hotel at Pickering Wharf. The proposed location for the hotel is at the corner of Congress and Derby Streets. At this site there are two office/retail buildings that are 90 percent vacant and a bank. The buildings will be demolished, with the bank being relocated on site. One of the first actions I undertook as the newly elected Mayor was to enter into negotiations with the Trust representatives to offer an economic incentive package that was mutually beneficial. I welcomed the interest of Pickering Wharf Realty Trust and sought to provide development assistance to encourage the construction of a hotel on Salem's waterfront. My administration has closely followed the economic impact that has occurred due to a lack of hotel accommodations. Extensive studies support the need for additional hotel rooms in the City. The hotel project at Pickering Wharf is an appropriate candidate for the Economic Development Incentive Program. The company proposes to create 60 new jobs and replace a i h a productive attractive property that will serve as an anchor to Salem's vacant property wit I waterfront. The Trust plans to make a significant, highly visible investment, complementing the City's own plans for the area, which include extensive harbor planning and the construction of an attractive garage with retail space. SALEM CITY HALL-93 WASHINGTON STREET-SALEM.MASSACHUSETTS 01970-3592-978/745-9595-FAX 978/744-9327 EACC Page 2 June 15, 1998 The timing of the hotel project is ideal for the City of Salem. The City is experiencing an exciting time of growth as important projects are completed and planning for new opportunities is ongoing. There is a demonstrated need for a hotel and we believe that this endeavor will be successful in Salem and that its success would help to improve the stability and image of the area and attract the interest of investors. On June 11, 1998, the Salem City Council voted to designate the hotel a certified project and endorsed a thirteen-year tax increment financing (TIF) plan. The enclosed TIF plan and application for certified project status describe the City's reasons for offering incentives and the many benefits which the Pickering Wharf hotel project will bring to the waterfront area. The City of Salem has used the Economic Development Incentive Program to assist five growing Salem companies. .1 appreciate your support of our economic development efforts and hope that, once again, you will vote to certify a Salem project. Sincerely, 7tanle Mayor mc:\tif\picke ring\eaccsju CITY OF SALEM, MASSACHUSETTS ST ANLEY J. USOVICZ, JR. MAYOR June 15, 1998 Economic Assistance Coordinating Council Sean Calnan, Director Massachusetts Office of Business Development One Ashburton Place, Room 2101 Boston, MA 02108 To the Members of the Economic Assistance Coordinating Council: In June 1996, the Trustees of Pickering Wharf Realty Trust acquired two thirds ownership of the well known Pickering Wharf in Salem. Members of the Trust own Rockett Management and Realty, a successful realty management firm. Approximately two years ago, representatives of Pickering Wharf Realty Trust expressed an interest in developing a hotel at Pickering Wharf. The proposed location for the hotel is at the corner of Congress and Derby Streets. At this site there are two office/retail buildings that are 90 percent vacant and a bank. The buildings will be demolished, with the bank being relocated on site. One of the first actions I under-took as the newly elected Mayor was to enter into negotiations with the Trust representatives to offer an economic incentive package that was mutually beneficial. I welcomed the interest of Pickering Wharf Realty Trust and sought to provide development assistance to encourage the construction of a hotel on Salem's waterfront. My administration has closely followed the economic impact that has occurred due to a lack of hotel accommodations. Extensive studies support the need for additional hotel rooms in the City. The hotel project at Pickering Wharf is an appropriate candidate for the Economic Development Incentive Program. The company proposes to create 60 new jobs and replace a vacant property with a productive, attractive property that will serve as an anchor to Salem's waterfront. The Trust plans to make a significant, highly visible investment, complementing the City's own plans for the area, which include extensive harbor planning and the construction of an attractive garage with retail space. SALEM CITY HALL- 93 WASHINGTON STREET-SALEM.MASSACHUSETTS 01970-3592-978/745-9595-FAX 9781744-9327 EACC Page 2 June 15, 1998 The timing of the hotel project is ideal for the City of Salem. The City is experiencing an exciting time of growth as important projects are completed and planning for new opportunities is ongoing. There is a demonstrated need for a hotel and we believe that this endeavor will be successful in Salem and that its success would help to improve the stability and image of the area and attract the interest of investors. On June 11, 1998, the Salem City Council voted to designate the hotel a certified project and endorsed a thirteen-year tax increment financing (TIF) plan. The enclosed TIF plan and application for certified project status describe the City's reasons for offering incentives and the many benefits which the Pickering Wharf hotel project will bring to the waterfront area. The City of Salem has used the Economic Development Incentive Program to assist five growing Salem companies. I appreciate your support of our economic development efforts and hope that, once again, you will vote to certify a Salem project. Sincerely, Stanley J. Usovicz,Jr. Mayor mc:\tif\pickering\eacaju