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HomeMy WebLinkAbout1992-10-26 92-487 ORDERCOUNCIL ACTION Item No. 92-487 Date October 26, 1992 Item/Subject: Authorising City Manager and City Assessor to Exe- cute Agreement with Maine Affordable Housing Trust, INC. Relative to Tax-exempt Status of "Bradford Commwns", so-called Responsible Department: Legal See City Solicitor's Memorandum dated October 2, 1992. 214 V�m j/ Department Head on s, •I 1, : ,� ' I �• �� t�.� h._�� Associated Information: Order, Been, Agreement Finance Director i ol'c'r City Stox Introduced for _ Passage First Reading Referral Page 1 of 7 Auigedto Couodor Saucy October 26, 1992 a v- CITY OF BANGOR Authorising City Manager and City Assessor to (TITLE.) Mrbery........... __ _..... ....... _.. Execute Agreement with Mine Affordable Mousing Trust, Inc. Relative to Tax -Exempt Status of "Bradford Commons", so-called By w City Com ud Ofw 0"N ofB6xyOl: TBAT the City Manager and City Assessor are hereby authorized to execute a certain Agreement with Maine Affordable Housing, Inc. (MART), a copy of which is attached to this Order. Upon execution of the Agreement by all parties, the City Assessor and City Finance Director shall take all necessary sary steps to implement the Agreement's provisions relating to the tax status of the "Bradford Commons" property, so-called, and to establish a billing system for the payments to the City from BAHT specified in the Agreement. 92-48] 0 R 0 E R y&7 Title, IN CITY COUNCIL AutM1oiizln Cit Mang es and CLC Octo 26, 992 �.... Y..... 8.......... Y.... Pa - Assessor to Execute Agreement with Maine Affordable Housing Trust, Inc. Relative to __.............../�/.(............ 6... cx ERx �ne'WI Tax -Exempt $Caeae o L[EdMP�As, so-called. piMcoSar..Ms1 October 2, 1992 TO: Municipal Operations Committee FRORs Erik Stumpfel, City Solicitor RE: Bradford Commons Project Maine Affa dable Housing Trust, Inc As previously reported to the Committee at its meeting on 9-1-92, The National Affordable Housing Trust, Inc. has been working over the past several months to acquire the Bradford Commons apartment complex in Bangor, for the purpose Of converting the complex into a low-income tax-exempt housing project. NAST has organized a Maine corporate subsidiary, Maine Affordable Housing Trust (MAST), to acquire the property for this purpose. MART has been organized as a not -fox -profit corporation under 5 501(c)(3) of the Internal Revenue Code, and is seeking a declaration of the tax exempt status of the proposed project from the City Assessor under 6 MRSA 5 652(1). I have previously given my opinion to the City Assessor that MART's proposed use of the Bradford Commons apartment complex does satisfy the charitable purpose requirement of the Maine statute. Although the City may raise hurdles, it ultimately cannot prevent MART from qualifying for an exemption from real estate taxes on the proposed project. At its September 1st meeting, the Committee was presented with a draft agreement between MART and the City of Bangor which would have confirmed MART's tax exempt status, but under which MART would agree to make an annual payment -in -lieu of taxes to the City in an amount equal to. one-half the regular City tax assessment on MART's property. Pending discussions with Tom Russell, MART's attorney, regarnx�i ng City -proposed changes in the draft agreement, the Co.mtittee cSntinued its consideration of this item. Attorney Russell recently completed his review of the City's proposed changes, and has incorporated those changes into the proposed draft agreement. The revised draft is attached to this Memo for the Committee's review. Salient points of the revised draft agreement are as follows: 1. The City would acknowledge the tax-exempt status of the project once MART acquires title and begins actual use of the property in accordance with MART's charitable purpose. 2. The exemption would apply only if at least 508 of the units in the complex are used to provide housing for people with law income. "Low income' is defined for this purpose as a household income of less than 508 of the median household - income for personslivingin the Bangor Metropolitan Statistical Area. This corresponds with the definition of _p very low income' under Federal Housing and Urban Development regulations and with the requirements imposed n BAHT by the imine State Housing Authority as a condition of project financing through MSHA. 3. BAHT would make an annual voluntary payment in lieu of taxes equal to 50% of the tax that would otherwise be assessed against the Bradford Commons Apartment Complex. Under current Maine law, MART would not be required to make such payments to the City of Bangor so this provision represents a voluntary undertaking by MART. In return for MAIFT's commitment to make this annual payment, the City would forego its right to Impose a municipal service fee on the Bradford Commons complex pursuant to 36 M.H.S.A. S 652(1)(L). Imposition of a service fee is presently an option for the City if MAST qualifies this project as tax exempt, but the amount that would be brought in by a service fee would be substantially less than 50% of the taxes normally assessed. I will be available to answer questions about this project at the Committee's October 6th meeting. If you have any questions in the interim, please feel free to call. G.S. B. S. to Attachment pc: City Manager City Assessor DRAFT AGREEMENT This Agreement is entered into as of this day of 1992, by and between Benjamin F. Birch, Jr. (Assessor), City of Bangor (City), and Maine Affordable Housing Trust, Inc. (MART). RECITALS 1. Benjamin F. Birch, Jr. is the duly appointed and acting Assessor of the City of Bangor, Maine. 2. The City of Bangor is a municipal corporation situated in. Penobscot COL`nty, Maine. 3. Maine Affordable Housing Trust, Inc. is nonprofit, charitable and benevolent corporation duly organised under the _ laws of the State of Maine. 4. Maine Affordable Housing Trust, Inc. is pursuing the acquisition of the so-called Bradford Commons property for the purpose of providing affordable housing to the low income residents of the Bangor area, said property consisting of 19.4± acres of land, 9 buildings housing 194 dwelling units, a common building, and a maintenance building, all on a parcel of land more particularly described in a deed recorded in the Penobscot County Registry of Deeds in Volume 2671,CPage 91. 5. Maine Affordable Housing Trust, Inc. has applied for mortgage bond financing with the Maine State Housing Authority. The Authority's program requires that at least 506 of the dwelling units in a financed project be rented to persons at families with very low income, defined as being 506 of the median income for the area. Said program requires Authority review and approval of budgets, tenant income certifications and affidavits* and the entering into by MAST of a long term Financial Assistance Agreement with the Authority to ensure the provision of affordable housing to those of very low income. 6. Maine Affordable Housing Trust, Inc. has made application for an exemption from property taxation under 35 M.R.S.A. 5652(l)(A). ]. Maine Affordable Housing Trust, Inc. has offered to make an annual payment to Bangor in lieu of property taxes. NOR THEREFORE, inconsideration of the foregoing recitals and in consideration of the rights and obligations set forth herein, the parties hereby agree as follows: 1. Assessor and City agree that MART qualifies a a charitable and benevolent institution for the purpose of 36 M.R.S.A. 5 652, and that the Bradford Commons property shall be deemed exempt from taxation under 35 M.R.S.A. 5 652(1)(A) for so long as the same is owned by MART, or a successor in interest who also qualifies as a nonprofit, charitable and benevolent institution incorporated by the State of Maine, and is used to provide at least So% of the dwelling units therein to persons or families of very low income, as that term is defined by the United States Department of Housing and Urban Development. Said exempt status shall commence for the taxes assessable for the municipal fiscal year commencing on July 1, 1993, provided that MAST, or a duly qualified successor, is the owner of record of the property on April 1, 1993, and shall continue in full force and effect until such time as the property is not owned by a nonprofit, charitable and benevolent institution incorporated by the State of Maine, is not used to provide at least 50% of the dwelling units therein to persons or families of very low income, or s rendered non-exempt by a change in the applicable statutory provisions under 36 M.R.S.A. 5 652. 2. Maine Affordable Housing Trust, Inc. agrees to pay to City an annual payment in lieu of taxes and in lieu of as ervice charge under 36 M.R.S.A. 5 652(1)(L) equal to one-half ofthe real estate taxes which would have been assessed against the property if it was not exempt from taxation. MART agrees to pay said amount in two installments, the first installment for one- half of said amount to be paid on or before September let and the second installment for the remaining amount to be paid on or before March 1st of each City of Bangor fiscal year. 3. At the same time that City sends out its annual tax bills, Assessor and City agree to provide MART with a bill for said annual payment in lieu of taxes, which bill shall contain the itemized amount of the land value and building values, the tax rate for the applicable year, and a calculation of the amount due under the terms of this Agreement. Assessor and City agree that the land and building values shall be determined in accordance with the standard practices utilized to value and assess comparable apartment complexes in the City of Bangor. 4. If MART disagrees with the values utilized by Assessor and City, the parties agree that MART shall have the right to petition the Assessor for a review of those values in accordance with the practices, procedures, and principles applicable to tax abatement requests. If MART and Assessor are unable to agree on the values to be utilized for the payment in lieu of taxes within 60 days from MART -s filing of a petition with the Assessor, the parties agree that the matter may be appealed by MART to the City's Board of Assessment Review for a determination of the appropriate values in the same manner as other valuation appeals made pursuant to 36 M.R.S.A. 5 843(1). if MABT disagrees with the decision of the Board or if the Board fails to make a decision within 60 days from the date of the filing of an appeal 92-48] by MART, the parties agree that EAST may initiate and pursue an action in the Maine courts for a determination of the appropriate values in accordance with the same legal principles utilised by the courts in tax valuation appeals. Said action must be initiated by MART within 30 days from the earliest of: (1) the date of receipt by MAST of the Board's decision or (2) 60 days from the date of filing of an appeal with the Board by MAST, unless the deadline is extended by the mutual consent of City and NAST. Any refund due EAMT because of a reduction in value, plus Interest thereon at the rate established by the City for delinquent taxes for the fiscal year in question, shall be paid by City to MART within 30 days from the date on which the determination of value becomes final. 5. This Agreement is entered into based on Maine law in effect as of the date hereof. In the event that Maine law concerning tax exemption is changed subsequent to the date of execution of this Agreement, Assessor and City reserve the right topursue whatever taxation alternatives may become available. In that event, MAST shall not be obligated to make the payments called for under this Agreement. IN FITNESS FHEREOP, the parties have entered into this Agreement as of the date first above written. Benjamin P. Birch, Jr. Assessor City of Bangor By: Fitness Edward Barrett Its City Manager By: Maine Affordable Housing Trust, Inc. Printed Name: Title: