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.
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Associated Information: Order, Been, Agreement
Finance Director
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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: