HomeMy WebLinkAbout2013-05-29 13-190 ORDERCOUNCIL ACTION
Item No. 113-190 ,
Date: May 29, 2013
Item/Subject: Authorization to Execute a Development Agreement and Tax Revenue and
Credit Enhancement Agreement and Payment in Lieu of Taxes Agreement with
Edward G. Ernst Manor Housing Associates Limited Partnership and Broadway
Housing, Inc.
Responsible Department: Legal
Commentary:
This Order will authorize the execution of a Development Agreement, Tax Credit
Enhancement Agreement and Agreement for a Payment in Lieu of Taxes with Broadway
Housing, Inc., a non-profit organization that owns a senior housing projected located at 686
Broadway in Bangor, known as Ernst Manor. The property is in need of repairs and
upgrades estimated to cost more than $800,000 with construction expected to begin by May
1, 2014 and be completed by December 31, 2014. The projected operating costs of the
proposed project, which include property taxes, exceed the amount projected to be available.
from affordable rents.
To help finance the improvements, the owners will apply to the Maine State Housing
Authority for low income tax credits. In order to do so, the owners will form the Edward G.
Ernst Manor Housing Associates Limited Partnership in August 2013, which by statute is not
tax exempt. For that reason, they are requesting reimbursement by the City of 70% of the
real estate taxes generated by the property for a period of 15 years beginning with the April
1, 2014 assessment. The reason is that the tenants are largely senior citizens on a fixed
income. The cost of the improvements combined with operating costs will exceed the
available rents for the individuals that they serve. After the expiration of 15 years the
ownership of 686 Broadway will revert to a non-profit, tax exempt entity and the tax exempt
entity will enter into an agreement for a payment in lieu of taxes (PILOT) of 30% of the
property taxes.
Department Head
Manager's Comments: '�Ae" -,,� 1,\
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3 City Manager
Associated Information:
Budget Approval:
Legal Approval:
Finance Director
City Solicitor
13-190
MAY 299 2013
Assigned to Councilor Baldacci
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CITY OF BANGOR
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(TITLE.) ORDER, Authorization to Execute a Development Agreement and Tax Revenue
and Credit Enhancement Agreement and Payment in Lieu of Taxes
Agreement with Edward G. Ernst Manor Housing Limited Partnership and
Broadway Housing, Inc.
WHEREAS, Broadway Housing, Inc., a non-profit, tax exempt corporation, is the owner of
property located at 686 Broadway, Bangor, Maine, providing affordable housing for senior
citizens; and
WHEREAS, the property at 686 Broadway is in need of repairs and upgrades; and
WHEREAS, the projected costs of the repairs and upgrades to 686 Broadway is in excess of
$800,000; and
WHEREAS, the construction for the repairs and upgrades will begin by May 1, 2014 and be
completed by December 31, 2014; and
WHEREAS, the projected operating costs of the proposed project, which include property taxes,
exceed the amount projected to be available from affordable rents; and
WHEREAS, Edward G. Ernst Manor Housing Associates Limited Partnership will be formed in
August 2013, will have title to 686 Broadway conveyed to it and in September 2013 will apply
to the Maine State Housing Authority for low-income housing tax credits and other available
programs to provide the majority of the funds necessary to address the capital needs of the
property; and
WHEREAS, in order to qualify for low-income housing tax credits, Edward G. Ernst Manor
Housing Associates Limited Partnership is required to be a taxable entity and Broadway
Housing, Inc. is, therefore, requesting reimbursement by the City of 70% of the real estate
taxes generated by the property located at 686 Broadway for a period of 15 years beginning
with the April 1, 2014 assessment to assist in supporting annual operating expenses thereby
keeping rents affordable; and
WHEREAS, after the expiration of 15 years the ownership of 686 Broadway will revert to
Broadway Housing, Inc. a non-profit, tax exempt entity and Broadway Housing, Inc. agrees to
enter into an agreement for a payment in lieu of taxes (PILOT); and
WHEREAS, reimbursement of real estate taxes to Ernest G. Manor Housing Associates Limited
Partnership shall be done through a Tax Revenue and Credit Enhancement Agreement.
IN CITY COUNCIL
May 29, 2013
Motion made and seconded for Passage
Pase
CITY CLE
13-190
MAY 291, 2013
By the City Coundl of the aty of Bangor.
ORDERED,
THAT Catherine, M. Conlow, City Manager, is hereby authorized on behalf of the City of Bangor
to enter into a Development Agreement, an Agreement for a payment in lieu of taxes (PILOT)
and a Tax Revenue and Credit Enhancement Agreement with Ernest G. Ernst Manor Housing
Associates Limited Partnership and / or Broadway Housing, Inc. Said documents shall provide
for repairs and upgrades to the property located at 686 Broadway, construction to commence
no later than May 1, 2014 and completion of construction no later than December 31, 2014; the
use of property to continue in its current use as low income housing for seniors; reimbursement
of 70% of the property taxes paid by Ernest G. Ernst Manor Housing Associates Limited
Partnership assessed after April 1, 2014; a payment of 30% of property taxes by Broadway
Housing, Inc. upon conveyance of 686 Broadway from to Ernest G. Ernst Manor Housing
Associates Limited Partnership Broadway Housing, Inc., and other terms and conditions as
approved by the City Solicitor or Assistant CitySolicitor. Said document shall be in a final form
as approved by the City Solicitor or Assistant City Solicitor.