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