Meeting of the Economic Review Panel Room 126
Regarding Case No. 470-06-57 256 South 700 East, 262-264 South 700 East and 268 South 700 East Applicant Everest Builders, represented by Eric Saxey
Present from the Economic Review Panel were Babs De Lay, Claudia O’Grady and Sarah Sabiston. Present from the City Staff were Cheri Coffey, Deputy Planning Director and Lynn Pace, Deputy City Attorney. George Shaw, Planning Director and Joel Paterson, Planning Programs Supervisor was also present.
An agenda was mailed and posted in accordance with Zoning Ordinance regulations for public hearing noticing and was posted in the appropriate locations in the building, in accordance with the open meeting law. Members of the Public were asked to sign a roll, which is being kept with the minutes of the Economic Review Panel meeting. Electronic recordings of the meeting are made using the FTR Player Plus System. Due to the change of the date of Daylight Savings time to March 12, 2007, both the timer of the FTR Player Plus System and the computer internal clock recorded the time as one hour behind the actual time. The time written into these minutes reflects the actual time. An electronic recording of this proceeding will be retained in the Planning Division office for a period of no less than one year.
Motion
Panelist De Lay made a motion to nominate Claudia O’Grady as Chairperson through the duration of the meeting.
Sarah Sabiston seconded. All voted aye, the motion passed.
In response to a request for clarification posed by Panelist De Lay, the Panel agreed to allow five minutes to each member of the public who wished to make comments.
Luke Garrott, from the audience, stated that as there is not a staff report, more time should be allowed for the public to comment.
Chairperson O’Grady indicated that the Panel has the option to allow the Public additional time if it becomes necessary.
Panelist De Lay requested a second clarification as to the scope of the comments during the meeting. Ms. Coffey confirmed that comments should be limited to the issue of Economic Hardship.
Ms. Coffey gave a brief introduction to the application presented before the Economic Review Panel. The application was submitted in December 2006. Panel members have requested additional information which is included in their packets. Ms. Coffey further stated that although a formal inspection won’t occur until Friday, March 16, 2007, the City requirements for a business license include meeting minimum housing code standards.
A decision must be made by the Panel before the end of the week as there is a forty-five day time period in which the Panel must make that decision and give a recommendation to the Historic Landmark Commission. If the Panel cannot make a decision tonight, another meeting would have to be scheduled prior to Friday.
Chairperson O’Grady invited the applicant to introduce his case to the panel. As Panelist De Lay represented Mr. Saxey during the purchase of the property and was his chosen representative on the Panel, she asked to temporarily recuse herself from the Panel to present the case for economic hardship and to answer questions that the remaining Panelists may have.
Ms. De Lay and Mr. Saxey approached the Panel and introduced themselves for the record. In response to a question posed by Chairperson O’Grady, Ms. De Lay clarified that she represented the applicant at the purchase of the property and has continued to represent him up to this time.
Ms. De Lay stated that the tear down of the structures and building of condos was supported by the Community Council. The Community Council voted for the proposal with the added stipulation that the Community Council and the Historic Landmark Commission approve final design and that economic hardship be proved. The Community Council supports the project as it will be built to American with Disabilities Act (ADA) standards and is considered affordable housing. Currently none of these units meet ADA requirements and would not pass inspection. The plans include an ADA elevator and parking. There are four neighbors on Markea, three of whom support the teardown.
Mr. Saxey purchased the property for less than the appraised value at the time of purchase. As the property owners were absentee landlords who lived in Asia, previous information was not available on the property.
Ms. De Lay informed the Panel that during the due diligence time period, Mr. Saxey determined that the properties were in terrible condition and after consulting the Central City historic district website, that they were not a significant historical site and that the property structures were not unique.
He is not responsible for the zoning and deterioration that has taken place on this block. Big Box stores and McDonalds were approved years ago which affected the integrity of the housing. What is left of this block is Big Lots, a drug store, McDonalds, two tiny vacant lots, and three run down structures. The property is isolated from other residences because of the commercial intrusion on the block and the six lane highway in front.
Ms. De Lay stated that Mr. Saxey cannot reasonably rehabilitate this property and return a profit as a result of vacancy rates and poor rents. The regulations in place deprive him of a reasonable economic return. There are ten total units, two are not rentable and can be considered unofficially condemned.
The options are:
1. To gut the structures and turn them into single family homes. The market will not justify high end homes next to McDonalds.
2. To rehabilitate the structures and keep them as rentals. He would not be able to rehab them and have a return that would result in a positive cash flow.
Ms. De Lay consulted Kim McClelland, realtor, who sells more income properties than any other member of the Board of Realtors. Using her assessment, the six-plex comes in at half the value with an income approach value of $276,000 and one duplex comes in at $93,000. The property owner is losing approximately $5,000 a month on mortgage payments alone.
Ms. De Lay then referred to a letter submitted by Cindy Cromer. She stated that Mr. Saxey has had two separate conversations with Ms. Cromer one at a Community Council Meeting and one on the phone within the last two weeks. During both of these meetings, Ms. Cromer implied to Mr. Saxey, that if his petition didn’t work out, she would be interested in purchasing the six-plex, but not the duplexes from Mr. Saxey.
Based on that, she stated that Ms. Cromer’s testimony should not be allowed to be heard today; because she is a property owner in the immediate neighborhood and her testimony would be tainted. Ms. De Lay went on to say that the applicant would respond to Ms. Cromer’s letter.
Ms. De Lay said that the heating and wiring in these buildings is so poor that Mr. Saxey was required to approach five insurance companies before he could get hazard insurance. The company which finally issued the policy is located out of state and did not do an onsite inspection.
She said that Mr. Saxey can get a 20% tax credit if he shows income on the profit of his rentals within the next five years. He cannot show profits on his rentals now, whereas after rehab is done, the rental market would have to increase 200% to show a profit and thus qualify him for the tax credit.
She said that Mr. Saxey could build townhomes on the lots, but they are too small to allow a garage structure or off street parking. Therefore, the town homes will only sell for approximately $175,000.
Mr. Saxey intends to keep as much of the historical elements of the structure for reuse as he can.
Panelist De Lay rejoined the Panel. Aaron Sadler, partner to Eric Saxey, approached the panel to answer questions.
Panelist Sabiston asked Mr. Saxey what type of density could be achieved if only the vacant land was developed and specifically, was a Planned Development considered with the possible tax credit outcome.
Mr. Saxey replied that the maximum density he could build on the vacant portion of the property was two town homes using the RMF-45 constraints. He was not considering a potential of the Planned Development which would not change the density ratio.
In response to a question posed by Chairperson O’Grady regarding affordable housing, Mr. Saxey clarified that the expected price range of homes in the proposed development would range from $200,000-400,000. He further clarified that the project does not qualify as true affordable housing, but would be priced significantly less than the average market.
Mr. Sadler explained that to make a profit on the homes, they would need to be priced in the $300,000 range.
In response to a question posed by Chairperson O’Grady regarding whether Mr. Saxey knew the properties were in a local historic district, Mr. Saxey replied that, he did know of the designation and bought the properties with the intent to demolish the structures. He stated that economic hardship for the property owner exists, regardless as to who owns the property. The value is in the land and the zoning, not in the structures and the property owner should be allowed to capitalize on that. A denial of hardship denies him of an asset, which he believes qualifies as an economic hardship.
Ms. Coffey clarified that the scope of the meeting is to determine whether the applicant can demonstrate that the denial of the demolition of structures results in an economic hardship for the property owner, not to determine if the properties have historical significance.
Mr. Sadler explained that when the property owners took possession of the property, only three of the ten units were occupied. By investing “out of pocket” funds in an effort to rehabilitate the units, the owners were able to bring four additional units into a rentable condition.
Panelist De Lay reiterated that the previous property owner was not forthcoming regarding the financial income from the property.
Arla Funk, a member of the Public requested a Point of Order and stated that it was inappropriate for the panelist to serve dual roles one as panelist and one as representative of the property owner.
Lynn Pace, City Attorney, spoke to the issue raised. He stated that, in the ordinance there is an assumption that one panelist will support the applicant’s position. The issue with this case has been that the applicant selected a member of the panel to speak for him directly. The ordinance does not address this situation specifically. It is the City Attorney’s position that in the issue before the Economic Review Panel that it does not matter if Ms. De Lay speaks into the applicant’s ear or speaks for him directly. However, it would be appropriate for Ms. De Lay to take a seat across the table when she is speaking for the applicant. It is important to focus on the purpose of this meeting: determining whether the structures on the property represent an economic hardship to the property owners.
Panelist De Lay explained her understanding that as the appointed representative of the applicant, she would represent the applicant in this case and explain his position.
Mr. Pace clarified the roles of a Panelist appointed by the applicant to weigh the evidence rather than a representative of the applicant who would present the evidence. Given the unusual situation, it would still serve the purpose of the meeting that all pertinent evidence whether from Ms. De Lay or Mr. Saxey, is presented so that it can be considered and fulfill the purpose of the meeting. If Panelist De Lay were to speak on the applicant’s behalf, it would be appropriate to sit at the table opposite from the Panel.
Panelist De Lay agreed to change seats when speaking on behalf of the applicant. She retained her seat as a Panel member and the meeting moved forward.
Panelist Sabiston clarified with Mr. Saxey that the property was purchased on March 15, 2006 and that the appraisal was done on March 9, 2006. She asked if he was aware of the recommendation in the appraisal that stated the maximum profitability would be the continued use of the three existing buildings as rental properties with the development of an additional multi-family unit on the vacant parcel to the highest density allowed.
Mr. Saxey refuted the appraiser’s claim that the property’s value of $870,000 and stated that the appraiser would need to justify his claim with numbers. Mr. Saxey stated he did not remember that specific comment in the appraisal.
In response to Panelist O’Grady’s question about whether he had obtained more than one bid from contractors relating to the rehabilitation costs, Mr. Saxey said that he had not.
Chairperson O’Grady read into the record that the cost estimate from Building Craft Construction for immediate improvement of the duplex at 262-264 was as follows:
Estimate for immediate improvements to duplex at 262-264 South 700 East:
Exterior 6500.00
Unit 262 9500.00
Unit 264 17,500.00 - 33,500.00
Estimate for immediate improvements to at duplex 256 South 700 East:
Exterior 13,900.00
Unit 256 1800.00
Rear unit 16,200.00 - 31,900.00
Total for both duplexes:
65,400.00
Total for immediate improvement for 6-plex:
6-plex 250,000.00
Total for 6-plex 250,000.00
Total immediate structure improvements:
315,400.00
Chairperson O’Grady agreed that these costs would be a figure that is difficult to recapture.
Panelist Sabiston asked Mr. Saxey to explain what appears to be a discrepancy between the appraised value of the property as of last March when it was appraised at $795,000 and the sale price based on the rental prices without remodel and vacant land being appraised at $870,000.
Mr. Saxey stated that the original figure of $49,970 was calculated using an income approach: an estimate he calculated using the yearly rents and multiplying it by ten. The estimate was derived before he consulted an independent realtor to provide numbers more in line with the market. He consulted a realtor and derived numbers which are in conflict with those in the appraisal because he believed they better reflected the value of the property.
Chairperson O’Grady stated that the appraisal was compiled by a certified appraiser and the Cook group, who conducted the appraisal, is a reputable group. The analysis findings are supported in the report. Therefore, the Panel will use the values stated in the appraisal as evidence in this case. Kim McClelland, a Realtor, from whom the applicant submitted a letter, stated in her letter that numbers derived using the income method are not an accurate method to determine the value of the duplexes.
Panelist Sabiston requested clarification regarding the debt service on the property.
Mr. Saxey clarified that the debt service is based on both the Holladay Bank & Trust and National City Mortgage Company. The Holladay holds the primary mortgage and the National City Mortgage Company is the secondary mortgage. Ms. Sabiston asked if the loan on the purchase contract was $613,000. Ms. O’Grady clarified that the applicant had indicated that he had put $200,000 in cash down on the purchase of the property. Mr. Saxey stated that that understanding was incorrect.
Ms. Sabiston stated that according to the submitted information, in the real estate purchase contract the number is $277,000.
Mr. Saxey clarified that when he purchased the property he was still constructing the townhouses (on 200 South). He was required to put $73,000 in cash down on the property. The bank put a lien on the townhouses. The $200,000 is the National City Bank loan plus the $73,000 they required him to put down as cash to cover the real estate purchase contract number.
4:53 P.M. Having no additional questions for the applicant, Chairperson O’Grady opened the meeting to comments from the public.
Kirk Huffaker, Assistant Director, Utah Heritage Foundation gave an overview of the tax credits and low interest loan programs which were available to the property owner through the agency.
Mr. Huffaker gave the following example as to how tax credits can assist owners of properties with historic value: If a $300,000 project were using a 20% Federal Tax Credit and a 20% State tax credit, both of which would be available on residential rental properties, the cost of the rehab would be brought down to $180,000. These numbers do not have to be applied to this property alone. They could be applied on the same owner’s claimed profit on all properties. The income would be considered under the same ownership title.
The Federal tax credit can be carried forward up to twenty years. Additionally, the tax credits can also be sold. Banks or investors can buy those credits, giving the owner cash and allowing him the option to reinvest those funds back into the rehabilitation of the properties.
The Utah Heritage Foundation has low interest loans available for rehabilitation projects at one half a percentage below prime.
Panelist De Lay questioned Mr. Huffaker regarding the appropriateness of the tax credits for Mr. Saxey, when it is not possible for him to achieve a positive cash flow. Mr. Huffaker stated the increase in rents to get a cash flow is based on the quality of the units. Ms. De Lay wondered whether rents could be raised on a 300 or 400 square foot unit high enough to a price to take advantage of the tax credits.
Cindy Cromer, resident and historic multi-family dwelling property owner, stated that she has never been treated this badly. She stated that she did not make an offer on Mr. Saxey’s property, is not interested in purchasing any properties at this time, and has not been in the market for property since the spring of 2005. She is in opposition to the finding of Economic Hardship for Mr. Saxey, stating she believed the application fails to meet standard
21A.34.020.K. Definition and Determination of Economic Hardship: The determination of economic hardship shall require the applicant to provide evidence sufficient to demonstrate that the application of the standards and regulations of this section deprives the applicant of all reasonable economic use or return on the subject property.
Ms. Cromer further stated that, at first glance, she believed that the property owner paid too much for the property, but after analysis and when considering the tax and loan opportunities available to him, she has come to the opinion that the property purchase was advantageous to Mr. Saxey.
Normally the hardship has to be established for each structure. In this case the six-plex at 268 and the duplex at 262-264 are linked together by a Board of Adjustment case 1799-B regarding the parking. As the units were tied together by the legalization process, they need to be analyzed as eight units.
The Ordinance anticipates expenses will include interest; it is unreasonable however, to finance the entire purchase price with short term loans with variable interest rates. Typically, with an investment property the investor will put 20% down and that is not what happened here. She questioned the reasonableness of using the type of financing that Mr. Saxey used to purchase the property.
She further stated that the units have not yet been inspected which is required for a business license. The determination of what repairs need to be done on the property, the remodeling costs, should be the result of the City’s inspection for licensing. The inspection is scheduled for Friday, so those requirements are not available. She also stated that rents on the block are between $325 and $575.
Ms. Cromer referred to the supplemental Financial Information submitted by the applicant, Example A referring to the reuse of vacant land. Mr. Saxey has taken the County Assessor’s value of the land $134,800 and subtracted it from the purchase price of $830,900. It would be more applicable to subtract like values from like values. In other words, subtract the County Assessor’s value for the land from the County Assessor’s value of the entire property, for all of the parcels. She did not believe it was an accurate analysis since the purchase price is lower than the Assessor’s value to subtract the Assessor’s value from the purchase price. This method causes almost $100,000 difference between the Assessor’s value for the entire property and the purchase price. Ms. Cromer also noted that other alternatives should be looked at, including the Planned Development approach and RB Zoning.
Panelist De Lay asked Ms. Cromer if she voted for approval of this project in the Central City Neighborhood Council Meeting.
Ms. Cromer replied that she did, subject to it meeting the standards for Economic Hardship, which she believes it does not.
Panelist De Lay questioned the documentation provided by Ms. Cromer for Panel consideration. She stated that the comparables must be properties sold within 90 days (up to a 6 month maximum) and that properties under contract cannot be used for comparables.
Arla Funk, landlord opposes a finding of economic hardship for Mr. Saxey. She stated that the properties have been neglected over a period of years, lending to an increased expense for rehabilitation. She stated four points which should be considered while considering Mr. Saxey’s request for economic hardship determination:
1) Had the properties been maintained, the repair expense would be significantly lessened.
2) The property was purchased for too high of a value. Mr. Saxey did not conduct a proper investigation during the due diligence period, so he overpaid for what he now believes he is able to do with the property.
3) The rental amount is abnormally low for a one bedroom apartment in the area.
4) A Planned Development might allow him more density.
5) The City has not completed its inspection.
Ms. Coffey clarified that a Planned Development does not increase the density. If Mr. Saxey assembled all of his property together, he may get a maximum of 26 units. Through the Planned Development process, he may be allowed to get a larger building on the vacant portion of the property if the Planning Commission allows him an exception the setbacks required. However, the off-street parking requirement and how it is configured will be a large factor in the number of units that can be realized.
Terrance Beaver, resident on Markea, stated that he is in support of an economic hardship determination for Mr. Saxey, stating that the existing structures are in deteriorated condition and decrease the property values in the neighborhood, thus it impacts him economically.
The chair invited Mr. Saxey and Mr. Sadler to respond to comments made by the public.
In general Mr. Saxey stated that he had adequately documented his argument for economic hardship and that the comments presented by the public had not been substantiated by supporting documentation (identifying sources) and should not be considered. He further stated that without the requested demolition, the land with the existing setbacks, provides a small buildable area. The assessor’s value was used to provide a documented number without getting a second appraisal for the vacant land alone. He also stated that his properties were not similar to others in the neighborhood.
Mr. Saxey stated that he did look into using tax credits. After evaluating this option, he came to the conclusion that the property could not be rehabilitated and allow a profit. At this time he is able to make interest only payments to the first mortgage through Holladay Bank & Trust and a small principle payment to National City Mortgage Company.
In response to a question posed by Chairperson O’Grady, Mr. Saxey stated that he would need to borrow $300,000 to complete the acquisition and rehab if using a tax credit for all three structures.
Mr. Sadler stated in order to make payments on their current loan they would have to raise each of the rents $500 just to break even.
Mr. Saxey clarified the amount of interest paid to date on his loans.
5:33 P.M. Chairperson O’Grady closed the Public Comment portion of the meeting and opened the meeting for Panel Discussion.
Chairperson O’Grady stated that she believes the appraisal is credible and the rents are reasonable after she inspected them, noting their condition and location. She noted that the applicant purchased the property for less than the appraised value. The deteriorated condition of the buildings does accelerate the case for economic hardship, but it does not change the case for economic hardship. She stated that the Panel would discuss each standard and make findings. She asked staff if the applicant had to meet each standard.
Ms. Coffey stated that historically, the applicant did not have to prove that they met every standard in the Standards for Determination of Economic Hardship to qualify for economic hardship.
Mr. Pace explained that each standard for determination does not have to be equally weighed. The intention of the Ordinance is to allow the Panel the flexibility to decide if there is a reasonable economic use of the property with the buildings left intact. If not, then the determination of this board must be to allow the property owner to demolish the buildings. A decision by this board will result in a recommendation to the Historic Landmark Commission who will make a decision. If any party is aggrieved by that decision, they can appeal the decision to the Land Use Appeals Board. Anyone aggrieved by the Land Use Appeals Board decision may appeal that decision to the District Court. The decision before this body falls under the jurisdiction of the Historic Landmark Commission, and as the case involves a large quantity of number crunching and analysis, the Commission has delegated that function to a panel with expertise who can take more time on it. They expect this panel to give them a recommendation based upon more analysis than the Historic Landmark Commission has time to give.
The Panel agreed that allowing an applicant to qualify for consideration for economic hardship without requiring that each standard be met and the unequal weight of those standards was a weakness in the Ordinance.
The Panel considered each standard to arrive at a decision regarding Mr. Saxey’s application. Chairperson O’Grady led the discussion:
21A.34.020.K. Definition and Determination of Economic Hardship
2. Standards for Determination of Economic Hardship: The historic landmark commission shall apply the following standards and make findings concerning economic hardship:
a. The applicant's knowledge of the landmark designation at the time of acquisition, or whether the property was designated subsequent to acquisition;
The property was designated prior to acquisition and the property owner knew the challenges and that he might not be able to complete his development because of the Historic Landmark designation. He interpreted the website to state that they were not significant structures. However, they were contributing structures and they are still within the Historic District.
b. The current level of economic return on the property as considered in relation to the following:
i. The amount paid for the property, the date of purchase, and party from whom purchased, including a description of the relationship, if any, between the owner of record or applicant, and the person from whom the property was purchased,
ii. The annual gross and net income, if any, from the property for the previous three (3) years; itemized operating and maintenance expenses for the previous three (3) years; and depreciation deduction and annual cash flow before and after debt service, if any, for the previous three (3) years,
iii. Remaining balance on any mortgage or other financing secured by the property and annual debt service, if any, during the previous three (3) years,
iv. Real estate taxes for the previous four (4) years and assessed value of the property according to the two (2) most recent assessed valuations by the Salt Lake County assessor,
v. All appraisals obtained within the previous two (2) years by the owner or applicant in connection with the purchase, financing or ownership of the property,
vi. The fair market value of the property immediately prior to its designation as a landmark site and the fair market value of the property as a landmark site at the time the application is filed,
vii. Form of ownership or operation of the property, i.e., sole proprietorship, for profit corporation or not for profit corporation, limited partnership, joint venture, etc., and
viii. Any state or federal income tax returns on or relating to the property for the previous two (2) years;
The panel determined that the appraisal was for more than the purchase price and that even with improvements; the rent will not be enough to substantiate the debt due to the size of the units and their location on this section of 700 East.
The Panel agreed that the mortgage was burdensome and there was an extremely high balance, but that it was initiated by the property owner and not a cause of the deteriorated condition of the property. The panel did not believe they could factor his bad lending decisions into the case.
The Panel stated that the taxes are what they are and they are fair.
The existing appraisal of the property was accepted as credible by the Panel.
The Panel did not believe that the fair market value prior o the property’s designation was relevant.
c. The marketability of the property for sale or lease, considered in relation to any listing of the property for sale or lease, and price asked and offers received, if any, within the previous two (2) years. This determination can include testimony and relevant documents regarding:
i. Any real estate broker or firm engaged to sell or lease the property,
ii. Reasonableness of the price or rent sought by the applicant, and.
iii. Any advertisements placed for the sale or rent of the property;
The Panel discussed whether the applicant would be able to recoup the money invested, if he sold the properties. They determined that he cannot recoup his investment through rents and the rental rates he is receiving are reasonable based on the size and location of the units. They discussed the condition of the structures. They noted that there is a high debt service on the property. The applicant made a bad financial decision by purchasing the property not knowing what he could do with the property and financing most of the purchase price. Even if tax credits or low interest loans were used to bring down the cost of rehabilitation, recapturing the debt over time would be very difficult because of the high debt service obligation on the property. Therefore, the property could not be rehabilitated for sale because the applicant would not be able to recoup the purchase price and the property could not be rehabilitated for rent to recoup the purchase price because of the location and size of the units.
d. The infeasibility of alternative uses that can earn a reasonable economic return for the property as considered in relation to the following:
i. A report from a licensed engineer or architect with experience in rehabilitation as to the structural soundness of any structures on the property and their suitability for rehabilitation,
ii. Estimate of the cost of the proposed construction, alteration, demolition or removal, and an estimate of any additional cost that would be incurred to comply with the decision of the historic landmark commission concerning the appropriateness of proposed alterations,
iii. Estimated market value of the property in the current condition after completion of the demolition and proposed new construction; and after renovation of the existing property for continued use, and
iv. The testimony of an architect, developer, real estate consultant, appraiser, or other professional experienced in rehabilitation as to the economic feasibility of rehabilitation or reuse of the existing structure on the property;
Panelist Sabiston stated that the rehab costs are reasonable, and should have been expected with the purchase of the property. It is unfortunate that the owner finds himself in a difficult financial situation because he neglected to investigate the property thoroughly and consider the ramifications of cost of rehabilitating and the difficulties of developing the property before purchase.
Panelist O’Grady expressed the opinion that the applicant did not provide enough documentation to prove that he explored all alternatives that would allow him to rehabilitate the property and create an alternative use for the structures.
At the request of the Panel, Ms. Coffey explained that if the property owner consolidated all of the lots into one parcel, it would be a Planned Development because there would be more than one principle structure on that site and then there may be flexibility as to how the other portion of the property can be developed. She noted that through the Planned Development Process the Planning Commission can modify site regulations in order to provide a better development and preservation of historic properties and is one of the stated intents in the ordinance for using a Planned Development. Standard off-street parking requirements for new residential units is one stall per one bedroom unit and two stalls for two bedrooms or greater. She noted that the parking regulations could be a limiting factor to development on the site.
Panelist De Lay insisted that there is not parking available.
Panelist Sabiston stated that there was an option of underground parking and flexibility of bringing in a commercial development which would result in higher rents.
Ms. Coffey cautioned the panel to not assume that there is a commercial potential because the Master Plan calls for the parcel to be a moderate/medium density residential and the zoning meets the Master Plan.
Ms. O’Grady noted that even if they ask the applicant to submit a scenario for a Planned Development to develop more units on the site, the cost of rehabilitating the existing units still has to be factored in and that rehabilitating the existing units does not make economic sense. Ms. O’Grady wondered if one of the structures was preserved, the duplex at 256 South, would the new development and existing commercial development to the north impact it.
Ms. Sabiston stated that poor economic decisions were made by the applicant and therefore, the result is economic hardship which allows for demolition.
Ms. De Lay clarified that the decision had to be made by Friday.
Mr. Pace stated that was correct. They could delay their decision but must make it by the end of the week or they could make the decision at the meeting tonight.
Ms. De Lay stated that whether to delay the decision was up to the other panel members because she has reviewed the numbers many times and knows that they do not work. She believes there is an economic hardship and therefore, will vote that way.
Ms. O’Grady asked Ms. Sabiston if there was any compelling case to prove that there was a way not to find an economic hardship. She stated that even with the problems with the ordinance set aside, the numbers just do not work.
Mr. Pace stated that the ordinance gives the panel the flexibility to determine whether they believe there is any reasonable economic use of the properties. If they believe there is an economic use, they should say so. They need to state what that reasonable economic use of the property is and that the applicant cannot tear down the buildings. If they do not believe there is any reasonable economic use of the properties with the structures preserved, they must say that.
Ms. Sabiston stated that given the structures that are there, as rentals the numbers will not work. She noted that if the Planned Development scenario is looked at, the six-plex structure at 268 South and the duplex at 262-264 South would have to be demolished while preserving the duplex at 256 South 700 East. However, she did not know that this was a reasonable approach.
Ms. O’Grady stated that she did not believe the purple duplex would be viable and have a positive cash flow.
e. Economic incentives and/or funding available to the applicant through federal, state, city, or private programs.
The Panel expressed frustration that there was not enough time remaining in the forty-five day time limit to allow noticing and holding another public meeting so that they could deliberate further and also look at alternatives and incentives.
Panelist De Lay stated her belief that the applicant should be granted permission to demolish. Panelist O’Grady again stated her frustration with the Ordinance as written. The Panelists agreed.
Motion
Panelist De Lay moved that based on the testimony and findings presented today the panel finds that an economic hardship exists on all three properties: 256 South 700 East, 262-264 South 700 East, 268 South 700 East. Seconded by Panelist Sabiston. All voted Aye. The motion passed.
As a result of Panelist comments, Ms. Coffey stated that the Historic Landmark Commission was in the process of hiring a consultant to help create a preservation plan and part of that plan will be to look at the Ordinance and offer possible suggestions for change.
Meeting adjourned at 6:11 P.M.