HomeMy WebLinkAbout2019-07-22 19-300 Order
07/22/201919-300
07/22/2019
19-300
Community & Economic Development
Order
R41-038
Title, Order
Authorizing Execution of a Property Tax Development Agreement for a Planned Development by Penquis, INC
for Phase II on Grandview Avenue
This Order will authorize the execution of documents including a Tax Revenue Agreement and Payment in
Lieu of Taxes (PILOT) between the City of Bangor and Penquis, C.A.P., INC. for development of a 40-unit
housing project (Phase II) located on Grandview Avenue. In 2017 the City entered into a development
agreement with Penquis for the construction of a 39-unit senior housing development project on Grandview
Ave (Phase I). This development agreement included provisions regarding property taxes, as required by the
City’s disposition policy and requested by Penquis. The agreement was dependent on Penquis’ application to
Maine State Housing Authority (MSHA) for Low-Income Housing Tax Credits (LIHTC), which was successful.
Phase I of the project is broke ground in July of 2019.
Penquis is now moving into planning for Phase II of the development on the same lot, which will be a
40-unit affordable housing project for seniors. As with the last project, Penquis will be applying for LIHTC
through MSHA and has requested a similar credit enhancement agreement with the City. In order to obtain
these low-income tax credits which will make the project financially feasible Penquis will need to transfer the
property to a for-profit, taxable subsidiary, for the term of the tax credit. Once the term of the tax credit
agreement is over, the property will become non-profit and the property becomes tax exempt.
Penquis is requesting a tax revenue agreement to allow them to receive a 70% tax reimbursement for the
first 30 years of operation (during the for-profit ownership) and would commit to paying a 30% payment in
lieu of taxes (PILOT) thereafter (during non-profit ownership) and in perpetuity.
Business & Economic Development Committee
07/16/2019
Recommend for passage
50
New Business
07/22/201919-300
CITY OF BANGOR ORDER
07/22/2019
19-300
Nealley
Authorizing Execution of a Property Tax Development Agreement for a Planned Development by Penquis, INC
for Phase II on Grandview Avenue
WHEREAS, Penquis wishes to construct Phase II of an affordable housing project for seniors on Grandview
Avenue; and
WHEREAS, Penquis will apply to the Maine State Housing Authority for low-income housing tax credits and
other available programs to provide a majority of the funds necessary to address the capital needs of the
project; and
WHEREAS, Penquis is required to and will transfer ownership to for-profit subsidiary in order to receive
low-income tax credits; and
WHEREAS, Penquis or affiliated subsidiary organization is requesting reimbursement by the City of 70% of the
real estate taxes generated by the property for a period of 30 years to assist in supporting annual operating
expenses thereby keeping rents affordable; and
WHEREAS, after the expiration of 30 years of for-profit ownership, ownership may revert to Penquis , a
non-profit entity and they agree to enter into an agreement for payment in lieu of taxes (PILOT); and
WHEREAS, reimbursement of real estate taxes to Penquis shall be done through a Tax Revenue and Credit
Enhancement Agreement.
Be it Ordered by the City Council of the City of Bangor that,
THAT Catherine, M. Conlow, City Manager, is hereby authorized on behalf of the City of Bangor to execute
any documents necessary to meet the terms and conditions of the Development Agreement including a Tax
Revenue and Credit Enhancement Agreement. Said documents shall be in a final form as approved by the
City Solicitor or Assistant City Solicitor.
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