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HomeMy WebLinkAbout2010-06-14 10-225 ORDERCOUNCIL ACTION Item No. 1 �, 9 5 Date: June 14, 2010 Item/Subject: ORDER, Designating Maine Hall as the Maine Hall Affordable Housing Development District Responsible Department: Community & Economic Development Commentary: PUBLIC HEARING: Seminary Housing Partners, L.P. (hereinafter SHPLP) proposes to construct 28 residential housing units, Maine Hall, by rehabilitating and constructing an addition to Maine Hall, which upon completion will be a 28,594 square foot, four-story building on a .79 acre site at 288 Union Street. This Project would provide additional needed affordable housing for seniors. The proposed Development District is a portion of the former Bangor Theological Seminary campus. This building is a contributing building to the existing Bangor Theological Seminary Historic District, which is listed on the National Register of Historic Places. The site has frontage on Union Street and extends back approximately 100 feet. The Project has received Site Development Plan approval from the Planning Board. Development costs are being funded in part by Federal and Maine historic and federal low income housing tax credits, and other financing provided by the Maine State Housing Authority, which the Developer expects to include tax credit exchange funds. Estimated development cost is $5.8 million. As a condition of financing, rents for units must remain affordable for 15 years. The units do not receive a rental subsidy and initial monthly rents are expected to be no greater than $563 for zero -bedroom units and $643 for one -bedroom units. Utilities, excluding electricity, are included, and tenants receive a utility allowance of $39 for zero - bedroom units and $50 for one -bedroom units. Rental income covers project operation and maintenance costs. Since the amount the developer can charge for rents is restricted, rental income is not sufficient to pay the full cost of operating and maintenance, including property taxes. SHPLP has requested the City adopt a Development District and Development Program where the City would return to the project a portion of the incremental, or new, property taxes for a period of 15 years. The property is currently assessed at $385,800, providing $7,349.49 in tax revenue. At completion, the Project has a projected assessed value of $1,602,300, which would produce $31,005 annually at the current tax rate. The City would continue to receive and retain property taxes on the Project of $15,000 annually, which amount exceeds the current tax revenue from the Project. If approved, the tax increment returned would be the extent to which real estate taxes on the Project exceed $15,000 per year. Using current tax rates and the expected valuation upon completion, $16,005 ($31,005 less $15,000) would be returned to the Project which, over a 15 year period, would approximate $274,077 if the property's value and City tax rate remained the same over this time. These funds would be used to assist funding maintenance and operations. This Order will adopt the District and Development Program and approve SHPLP's request. Department Head Manager's Comments: This has been reviewed and is recommended by Business and Economic Development Committee. The Committee noted the projects benefits including: providing additional housing for low income seniors, improving a major gateway to downtown, and setting the stage for additional improve m the a's commercial and residential development. %&O1 City Manager Associated Information: Order, Development Program Budget Approval: Fi nce Director Legal Approval: City Solicitor Introduced for L/ Passage First Reading Referral Page _of_ Assigned toA�buncilor — Bronson June 14, 2010 C1 OF BANGOR f. (TITLE.) ORDER, Designating Maine, Hall as the Maine Hall Affordable Housing Development District WHEREAS, the City of Bangor (the "City' is authorized, pursuant to Chapter 206 of Title 30-A of the Maine Revised Statues, as amended, to designate a specified area within the City as the Maine Hall Affordable Housing Development District (the "District'); and WHEREAS, in designating the District, the City must also adopt a Development Program such as the Maine Hall Affordable Housing Development Program (the "Program'); and WHEREAS, there is a need for affordable senior housing development in the City, in the surrounding region, and in the State of Maine; and WHEREAS, the proposed District will contribute to the expansion of affordable housing opportunities within the municipality or to the betterment of the health, welfare, or safety of the inhabitants of the muncipality; and WHEREAS, having heard and considered any testimony from interested parties at a public hearing, including any claims that the District or Program will result in a substantial detriment to a party's existing property interests in the City if the party has produced substantial evidence to that effect; and WHEREAS, in considering such evidence, having also considered whether any adverse economic effect of the District or Program on the party's interest is outweighed by the benefit to the City in the form of the availability of affordable housing or the betterment of the health, safety, or welfare of the inhabitants of the City; and WHEREAS, the Program meets the applicable requirements under State law, including those relating to the District's financial plan; and WHEREAS, the City desires to designate the District; and WHEREAS, it is expected that the Director of the Maine State Housing Authority will approve the designation of the District. BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR THAT: Section 1. The City of Bangor hereby designates the Maine Hall Affordable Housing Development District. Such designation is to be pursuant to the following findings, terms, and provisions. Section 2. The City Council hereby finds and determines that: a. At least 25%, by area, of the real property within the District is suitable for residential use, is a blighted area or is in need of rehabilitation or redevelopment. b. The total area of the District is less than 2% of the total acreage of the City. The total area of all development districts in the City is less than 5% of the total acreage of the City. c. The original assessed value of the proposed affordable housing development district plus the original assessed value of all existing affordable housing development districts within the municipality did not exceed 5% of the total value of taxable property within the muncipality as of April 1, 2010. d. The aggregate value of municipal general obligation indebtedness financed by the proceeds from affordable housing development districts within Penobscot County does not exceed $50,000,000 adjusted by a factor equal to the percentage change in the United States Bureau of Labor Statistics Consumer Price Index, United States City Average from January 2, 2002 to the date of calculation. e. The Maine Hall Affordable Housing Development Program shows that this development meets an identified community housing need. The Program provides a mechanism to ensure the ongoing affordability for a period of at least 10 years for single-family, owner -occupied units and 30 years for rental units. f. There will be no municipal bond indebtedness associated with the District. g. The District is primarily a residential development on which at least 33% of the dwelling units will be affordable housing. Section 3. Having considered the aforementioned factors, the City Council also hereby adopts the Maine Hall Affordable Housing Development Program, attached hereto. The percentage of increased assessed value to be retained as captured assessed value shall be a portion of the captured assessed value computed as stated in the Affordable Housing Development Program which may be up to 100%. There shall be established an affordable housing development program fund as stated in the Program. Section 4. The Interim City Manager, or his duly appointed representative, is hereby authorized, empowered, and directed to submit the proposed designation of the District to the Director of the Maine State Housing Authority for review and approval pursuant to the requirements of 30-A M.R.S.A. § 5250. Section S. The foregoing designation of the District shall automatically become final and shall take full force and effect upon receipt by the City of approval and designation of the District by the Director of the Maine State Housing Authority, without requirements of further action by the City, the City Council, or any other party. Section 6. The Interim City Manager is hereby authorized to execute an agreement between the City, Seminary Housing Partners, L.P., the Owner, and Community Housing of Maine, Inc., the Developer, and other documentation regarding the Affordable Housing Dveelopment Program and financing for the Project, all in a form approved by the City Solicitor, setting forth or implementing the terms and conditions of the Maine Hall Affordable Housing Development Program, substantially in accordance with the terms hereby approved. IN CITY COUNCIL June 14, 2010 Motion Made and Seconded to Open the Public Hearing Public Hearing Opened Reverend Bob Carlson & Mr. Dennis Marble urged Council Support Erin Cooperrider spoke on behalf of Seminary Housing Partners and Community Housing of Maine Motion Made and Seconded to Close the Public Hearing Public Hearing Closed Motion Made and Seconded for Passage Motion Doubted Vote: 8-1 Councilors Voting Yes: Blanchette, Gratwick, Hawes, Nealley, Palmer, Stone, Weston & Wheeler Councilors Voting No: Bronson Passe ?�, , I - r-])' . . I -- . CITY CLERK - F�41 3 AE (TITLE,)Des] enating Maine Hall as the Mane Hall Affordable Housing Development -District Assigned to Councilor IVISRA Title 30-A Chapter 206 allows a municipal legislative body to designate an affordable housing development district within the boundaries of the municipality. MRSA § 5248 requires the legislative body adopt an affordable housing development program for each affordable housing development district. The legislative body of the City of Bangor is the City Council of the City of Bangor. Seminary Housing Partners, L.P.(hereinafter SHPLP), a Maine Limited Partnership, proposes to construct 28 residential units of affordable housing for seniors, to be known as Maine Hall, in a 28,594 square foot, four-story building at 288 Union Street in Bangor, Maine (hereinafter "Project'. SHPLP has requested the City of Bangor to adopt an affordable housing development district to financially assist in the maintenance and operation of the project: The Maine Hall Affordable Housing Development Program consists of this document and the City of Bangor's Application to Maine Housing (the Director of the Maine State Housing Authority) for approval of a Maine Hall Affordable Housing Development District. A. EINANCING PLA The estimated cost of the acquisition of property, demolition, hazardous materials removal, construction of an addition to and rehabilitation of a building that will contain 28 residential units, installation of equipment and furnishings, design fees, legal fees, insurance, financing and other costs associated with the development project is estimated to be $5,879,430 as follows: Acquisition $260,000 Construction costs $4,261,246 Professional fees and other soft costs $521,237 Financing costs $79,550 Miscellaneous costs $96,267 Fees, reserves and escrows $661,13 Total Financing $5,879,430 The project will be financed as follows: Low income + historic tax credits I equity $4,145,416 Tax Credit Exchange Funds $1,634,014 Developer Fee Loan $100,000 Total Financing $5,879,430 None of the financing sources requires annual debt service. Rental income, operating expenses, and replacement reserves for the start up year- (2011) and the first full year of operation (2012) are as follows: lzwLk Gross Potential Rental Income Other Income - Residential Less:Vacancy Effective Gross Income EXPENSES Management Fee Administrative Expenses Utilities Maintenance Real Estate Taxes Insurance, Payroll Taxes, Benefits Other Total Expenditures DEBT SERVICE NET CASH FLOW 2 Yopr 2di 2012 1. Inflator $ 103% $ 116,387 $189,944 103% $ $ 6% 1�,296J $ 108,240 $176,648 103% $ 6,494 $ 10,599 103% $ 16,477 $ 27,154 103% $ 25,700 $ 42,353 103% $ 16,293 $ 26,850 103% $ 9,656 $ 15,000 103% $ 10,690 $ 17,617 103% $ 4,635 $ 7,638 $ 89,945 $147,212 $ 18,295 $ 29,436 103% $ 5,250 $ 9,800 $ 13,045 $ 19,636 $ 13,045 $ 19,636 SHPLP proposes and requests the City of Bangor assist the maintenance and operation of the Project by returning to SHPLP a portion of any new / incremental real estate property taxes received from the project for the first 15 years of its operation. Specifically, SHPLP requests and proposes that the City of Bangor return to the Project a portion each year of the new / incremental real estate taxes equal to the difference between the total real estate taxes on the Project and $15,000. Adoption of the Maine Hall Affordable Housing Development District and adoption of the Maine Hall Affordable Housing Development Program by the City Council of the City of Bangor will approve the request of SHPLP to return the portion of the incremental taxes received from the Project computed as described over and above the current assessed value thereby capturing such portion of the increased assessed value to finance Project operation and maintenance costs. The percentage of the captured increased assessed value will differ each year based on the computations described and may be up to 100%. The original assessed value of the Project property as of March 31, 2010, the tax year preceding the year in which the Maine Hall Affordable Housing Development District is proposed to be designated, was $385,800, which at the City of Bangor FY 2010 tax rate of $19.05, provided $7,349.49 in property tax revenue. The Project has a projected assessed value of $1,602,300 after completion. This assessment would produce $31,005 annually at the projected tax rate of $19.35 per $1,000 of value. If approved by the City Council, the tax increment amount returned to SHPLP on the $31,005 paid would be $16,005 ($31,005 less $15,000) which over a 15 year period would approximate $274,077 if the City tax rate remained at the projected $19.35. Under no circumstances would the City receive and retain less than the current real estate taxes of $7,349.49. (see following table) 1. The estimated cost of the affordable housing development district is the amount of new incremental taxes paid by SHPLP annually projected to be $23,539 in the first year of the project, which at the Project's projected assessed value after completion of $1,602,300 and projected City tax rate of $19.35 / $1,000 of assessed value would amount to an estimated $274,077 over the 15 year period. (see following table) 2. No public indebtedness by the City of Bangor will be incurred. 3. The source of the anticipated tax increment revenues will be the incremental taxes paid by SHPLP on the Project property. 4. The principal terms and conditions of a credit enhancement agreement between the City and SHPLP will be that SHPLP develop the Project as proposed, provide affordable rents to the Project's tenants during a 30 -year period after completion, and in return, the City will return a portion of the incremental tax revenues received during the period of the Development Program, computed as described above, to be applied by SHPLP to the operation and maintenance of the Project. 5. The increased assessed value of the District is projected to be $1,216,500 which would produce a tax revenue increment of $23,539 in the first year at the projected tax rate. A portion thereof, computed as described above, when paid, would be returned to SHPLP annually for each year of the Development Program. (see following table) 6. Tax shifts — See the City of Bangor's Application to the Director of the Maine State Housing Authority for approval of the Maine Hall Affordable Housing Development District. TABLE MAINE HALL _\LF PROJECTIONS OF CAPTURED ASSESSED VALUE and TAX INCREMENT District tOri final Assessed Value (UAV) $ 355 800 Projected Assessed Value After Com leti m $ 1,602,300 Imroved Land Value $ 51,600 Building Valr3e -. $ 1,550,700 Tonal Cam feted Assessnd Value $ 1,602,300 Assessed Value Increment y .__. $ 1,216,500 Tax Bateerg $1,000 � $ 19 35 Tax Increment Revenue $ 23,539 P!n[ cted Annual Increase In District Value $ 19.35 Annual Increase In Tax Rate $ Onla I3. Tax Increment Financing (TIF) to Support Maine Hall's Costs of Operating and Maintenance Year City Tax Rate New Assessed Value Total Tax Revenue New Assessed Value Increment New Tax Revenue Increment Tax Revenue Retained by City Tax Increment Captured Tax Increment Capture Rate % 1 $ 19.35 $1,602300 $ 31,005 $ 1,216,500 $ 23,539 $ 15,000 $ 16,005 680h 2 $ 19.35 1,618,323 $ 31,315 1,228,665_1 23,775 $ 15,000 $ 16,315 69°/6 3 1 19.35 1,634,506 $ 31,628 1,240,952 $ 24,012 $ 15,000 S 16,628 69% 4 $ 19.35 1.650,851 $ 31,944 1,253,361 $ 24,253 $ 15.000 $ 16,9411 70"/0 5 $ 19,35 1,667,360 $ 32,263 1,265,895 $ 24495 $ 15,000 $ 17,263 70% 6 $7 9 3-5 1,684,033 $ 32,586 1,278,554 $ 24,740$ 15,000 $ 17,586 71/0 7 $ 19.35 1,700,874 $ 32,912 1,291,339 $ 24,987 $ 15,0001 17,912 72% 8 $ 19.35 1,717,882 $ 33,241 1,304,253 _L $ 25,237 $ 15,000 $ 18,241 72% 9 $ 19.35 1,735.061 $ 33,573 1,317,295 $ 25,490 $ 15000$ 18,573 731/o 10 11 $ $ 19.35 19.35 1,752,412 1,765,936 $ $ 33,909 34,248 1,330,468 1,343,773 $ 25,745 $ 26 002 $ $ 15,000 15 000 $ $ 18,909 19,248 73% 74% 12 $ 19.35 1787,635 $ 34,591 1,357,211 $ 26,262 $ 15,000 $ 19,591 75% 13 $ 19.35 1,805,512 $ 34,937 1,370,783 $ 26,525 $ 15,000$ 19,937 75% 1d � 19.38 1,823,567 $ 35,286 1,384,490 $ 26,790 $ 15,000 $ 20,286 76% 15 1 $ 1935 1841,803 1 $ 35,639 _ 1,398,335 $ 27,058 $ 15,000 $ 20639 76ok TOTA,._. L, $ 19,581,873 $ 378,910 $ 225,000 .$274,077 The Project will involve the construction of 28 affordable residential housing units for seniors, in a 28,594 square foot, four-story building at 288 Union Street in Bangor, Maine, designated as let 1G on City Assessor's tax map 33. Acquisition of property, demolition, hazardous materials removal, construction of an addition to and rehabilitation of the existing building, installation of equipment and furnishings, design fees, legal fees, insurance, financing and other costs 0 let 4.'25 associated with the Project are estimated at $5,879,430. The building will contain 16 zero - bedroom units and 12 one -bedroom units; tenants of these units will be not less than 55 years of age and the head of the household; tenants income will not exceed 60 percent of median income for the Bangor area as published by U.S. Department of Housing and Urban Development; with rents remaining affordable as published by the U.S. Department of Housing and Urban Development for a period of 15 years. C. PLAN $ FOR THE REL OCATION -011' PERSQN5 DISPLACED BY THE DEVELOPMENT AUIVIIIES: No persons will be displaced by the development activities, as no persons are or were residing at the location of the Development District. D. ENVI_RONMENTAL CONTROLS TQ BE APPLIED: The City of Bangor has issued permit approval for the development of the Maine Hall site. Every aspect of the proposed development, including but not limited to the General Contractor, the construction schedule, and plans and specifications, are all subject to the approval of Maine State Housing Authority (MSHA), the construction lender (Merrill Bank), and the tax credit investor (Boston Capital). MSHA, the investor and lender will review each monthly construction draw request to insure construction is being done to specifications. E. PROPOSED,OPESMION QF THEA HOUSING DISTRI!CT AUER THE PLANNED IMERQMEMENTS ARE!COMPLETED: The Project will be owned by Seminary Housing Partners, L.P and managed as an affordable housing project by Community Housing of Maine. F. ASSURANCES THAT THE PROGRAM COMPLIES WITH SECTION 4342-A: The Project complies with MRSA 30-A § 4349-A; is located in a locally designated growth area in the City of Bangor Comprehensive Plan; is consistent with the City of Bangor Comprehensive Plan, and on October 20, 2009 a Site Development Plan for the Project was approved by the City of Bangor Planning Board indicating the Project conforms to and in consistent with the City of Bangor Land Development Code, G. DURATIQN IU,EROGRAM: The duration of the Program will be 15 years beginning April 1, 2011, H. ALL DQCUMMON 111MITrED IQ QR PREPARED BY TRE MUNICIPALITY UNDER SECMhl !i24 -xi See the City of Bangor's Application to the Director of the Maine State Housing Authority for approval of the Maine Hall Affordable Housing Development District. !Vel0pmen P�ogrtlmi.'y':.`, -..,t S °?-;' c:;: Notice is hereby given that the,City_Council_oLthe_CittyY, angor" will "Hold a' public hearing at„its,.City .t:oyncil