HomeMy WebLinkAbout2008-12-08 09-021 ORDERCOUNCIL ACTION
Item No: 09,
Date: December 8, 2008
Item/Subject: ORDER, Designating Volunteers of America Bangor Senior Apartments as the Volunteers of
America Affordable Housing Development District
Responsible Department: Community & Economic Development
Commentary: Volunteers of America Northern New England Limited Partnership (hereinafter VOANNE) proposes to construct
55 residential housing units, the Bangor Senior Apartments, in a new 51,096 square foot, two and four-story building on a 2.38
acre site at 315 Harlow Street. This Project would provide additional needed affordable housing for seniors.
The proposed Development District is the former site of Capital Ambulance, a restaurant, and Bangor Photo. This building
is being demolished. The site has frontage on Harlow Street and extends back 1,000 feet with additional frontage on
Curve Street. The Project has received Site Development Plan approval from the Planning Board. Development costs are
being funded through the HUD Section 202 Program and low-income housing tax credits through the Maine State Housing
Authority. Estimated development cost is $11 million. As a condition of financing, rents for the 36 HUD 202 units must
remain affordable for 40 years and rents for the 19 tax credit units for 15 years. In the HUD 202 units, tenants, who must
be at or below 50% of median income, pay 30% of their adjusted income as rent and HUD pays the remainder. The 19
tax credit units do not receive a subsidy and rents are now set at $550 for one and $633 for two bedrooms. Utilities,
excluding electricity, are included, and tenants receive a utility allowance of $49 for one and $63 for two 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.
VOANNE has requested the City adopt a Development District and Development Program where the City would return to
the project all incremental, or new, property taxes for a period of 15 years. The property is currently assessed at
$595,200, providing $11,339 in tax revenue. At completion, the Project has a projected assessed value of $5,043,000
which would produce $96,069 annually at the current tax rate. The City would continue to receive and retain property
taxes on this original assessed value of $595,200. If approved, the tax increment returned would be $84,730 ($96,069
less $11,339) which, over a 15 year period, would approximate $1,363,900 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 VOANNE's request.
Department Head
Manager's Comments: This has been reviewed and is recommended by Business and Economic Development. While
some concerns were expressed regarding return of the full tax increment to the project, the Committee noted the
project's benefits including: providing additional housing for low income seniors, improving a major gateway to downtown,
and setting the stage for additional improvements in the area's commercial and residential develo
tag P A-
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City Manager
Associated Information: Development Program
Budget Approval:
nce Director
Legal Approval:
T
City Solicitor
Introduced for
X Passage
First Reading Page _ of _
Referral
Assigned to Councilor Hawes
CITY OF BANGOR
09 021
December 08, 2008
(TITLE.) ORDER, Designating Volunteers of America Bangor Senior Apartments as the
Volunteers of America 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 Volunteers of America Affordable Housing
Development District (the "District'); and
WHEREAS, in designating the District, the City must also adopt a development prgoram
such as the Volunteers of America 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.
NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR
THAT:
Section 1. The City of Bangor hereby designates the Volunteers of America Affordable
Housing Development District. Such designation is to be pursuant to the following findings,
terms, and provisions.
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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 exsisting 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, 2008.
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 Volunteers of America 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 Volunteers of America Affordable Housing Development Program, attached hereto. The
percentage of increased assessed value to be retained as captured assessed value shall be up
to 100%, as stated in the Program. There shall be established an affordable housing
development program fund as stated in the Program.
Section 4. The 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 City Manager is hereby authorized to execute an agreement between the City
and Volunteers of America Northern New England, in a form approved by the City Solicitor,
setting forth the terms and conditions of the Volunteers of America Affordable Housing
Development Program, as hereby approved.
IN CITY COUNCIL
December 8, 2008
Motion Made and Seconded
for Passage
Ms. Julie Wilcock of the
Volunteer of America gave a
fe comments
Ps ed
-CITY CLERK
(TITLE,) Designating Volunteers of American
Bangor Senior Apartment District
Assigned to Councilor
09 021
VOLUNTEERS OF AMERICA
AFFORDABLE HOUSING DEVELOPMENT PROGRAM
MSRA 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.
Volunteers of America Northern New England, L.P.(hereinafter VOANNE), a Maine Limited
Partnership, proposes to construct 55 residential units of affordable housing for seniors, to be
known as Bangor Senior Apartments, in a 51,096 square foot, two-story and four-story building
at 315 Harlow Street in Bangor, Maine (hereinafter "*Project's. VOANNE 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 Volunteers of America 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 Volunteers of America Affordable Housing Development District.
A. FINANCING PLAN:
The estimated cost of the acquisition of property, demolition and clearance of existing buildings,
construction of a building containing 55 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 $10,985,845 as follows:
Acquisition and demolition costs $963,477
Construction costs $7,384,995
Professional fees and other soft costs $1,897,085
Financing costs $233,406
Tax credit and syndication costs $141,620
Start-up costs, reserves and escrows $365,262
Total Financing $10,985,845
The project will be financed as follows:
Low income tax credits / equity $5,901,000
HUD Section 202 Capital Grant $5,138,300
VOANNE AHP Loan $400,000
Total Financing $11,439,300
Of the financing sources, only the HUD 202 Capital Grant Loan involves annual debt service.
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Rental income, operating expenses, replacement reserves and debt service for the start up year
(2010) and the first full year of operation (2011) are as follows:
RENTAL INCOME
Gross Potential Rental Income
Other Income - Residential
Less: Vacancy
Effective Gross Income
EXPENSES
Professional Fees
Administrative Expenses
Total Utilities
Total Repairs & Maintenance
Total Real Estate Taxes*
Total Other Taxes & Insurance
Total Property Management Fee
Other Miscellaneous Expenses
Total Expenditures
NET OPERATING INCOME (NOI)
REPLACEMENT RESERVES
NOI Adjusted for Reserves
DEBT SERVICE
202 Capital Grant Loan
NET CASH FLOW
riix
:.. .
" y
Inflator
102.6% $ 124,442 $365,560
102.6% $ 1,788 $ 3,366
6% $ (7,258) $ (21,213)
$ 118,972 $347,713
103%
$
3,792
$
7,210
103%
$
17,588
$
33,444
103%
$
53,083
$100,940
103%
$
39,542
$
75,190
103%
$
6,142
$
11,679
103%
$
16,250
$
30,900
103%
$
16,445
$
31,271
103%
$
5,617
$
10,681
$ 158,459 $301,315
$ (39,487) $ 46,398
103% $ (1,375) $ (16,995)
$ (40,862) $ 29,403
$ - $ (11,381)
$ (40,862) $ 18,022
VOANNE proposes and requests the City of Bangor assist the maintenance and operation of the
Project by returning to VOANNE the new / incremental real estate property taxes received from
the project for the first 15 years of its operation. Adoption of the Volunteers of America
Affordable Housing Development District and adoption of the Volunteers of America Affordable
Housing Development Program by the City Council of the City of Bangor will approve the
request of VOANNE to return 100% of the incremental taxes received from the Project over and
above the current assessed value thereby capturing 100% of the increased assessed value to
finance Project operation and maintenance costs. The original assessed value of the Project
property as of March 31, 2008, the tax year preceding the year in which the Volunteers of
America Affordable Housing Development District is proposed to be designated, was $595,200,
which at the City of Bangor FY 2009 tax rate of $19.05, provided $11,339 in property tax
revenue. The Project has a projected assessed value of $5,043,000 after completion. This
assessment would produce $96,069 annually at the current tax rate of $19.05 per $1,000 of
value. The City would continue to receive and retain property taxes on this original assessed
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value of $595,200 which at the current tax rate of $19.05/$1,000 of assessed value would be
$11,339. If approved by the City Council, the tax increment amount returned to VOANNE on the
$96,069 paid would be $84,730 ($96,069 less $11,339) which over a 15 year period would
approximate $1,363,900 if the property's value and City tax rate remained at $19.05.
1. The estimated cost of the affordable housing development district is the amount
of new incremental taxes paid by VOANNE annually projected to be $84,730 per
annum, for the first 15 years of the project, which at the Project's projected
assessed value after completion of $5,043,000 and current City tax rate of
$19.05 / $1,000 of assessed value would amount to an estimated $1,363,900
over the 15 year period.
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 VOANNE on the Project property.
4. The principle terms and conditions of a credit enhancement agreement between
the City and VOANNE will be that VOANNE develop the Project as proposed,
provide affordable rents to the Project's tenants during the period of the
Development Program, and in return, the City will return the incremental tax
revenues received during the period of the Development Program to be applied
by VOANNE to the operation and maintenance of the Project.
5. The increased assessed value of the District is projected to be $4,743,300 which
would produce a tax revenue increment of $84,731 annually, an amount equal to
100% of the tax revenue increment, when paid, would be returned to VOANNE
annually for each year of the Development Program.
6. Tax shifts — See the City of Bangor's Application to the Director of the Maine
State Housing Authority for approval of the Volunteers of America Affordable
Housing Development District.
B. DESCRIPTION OF FACILITIES IMPROVEMENTS OR PROGRAMS TO BE
FINANCED IN WHOLE OR IN PART BY THE AFFORDABLE HOUSING
DEVELOPMENT PROGRAM:
The Project will involve the construction of 55 affordable residential housing units for seniors, to
be known as Bangor Senior Apartments, in a 51,096 square foot, two-story and four-story
building on a 2.38 acre site at 315 Harlow Street in Bangor, Maine, designated as lots 12 and 19
on City Assessor's tax map 40. The Project involves the acquisition of property, demolition and
clearance of existing buildings, construction of a building containing 55 residential units,
installation of equipment and furnishings, design fees, legal fees, insurance, financing and other
costs associated with the Project at an estimated cost of $10,985,845. The Project will involve
36 units of congregate style; affordable, elderly housing complex funded through the U.S.
Department of Housing and Urban Development (HUD) 202 Program, 35 of these residential
units will be one -bedroom apartments with a fully equipped kitchen, separate living room and
bath, and one unit will be a two-bedroom unit for Project staff. Tenants of 35 of these units will
be at least 62 years of age and the head of household; will have incomes that do not exceed
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50% of the median income for the Bangor area as published by the U. S. Department of
Housing and Urban Development. For a period of not less than 40 years the tenants of not less
than 35 of these units will be charged rent not exceeding 30% of the tenant's adjusted income.
The Project will also include 19 additional residential units funded with federal low-income tax
credits; 17 of these units will be one -bedroom units and 2 will be two-bedroom units; residents
of these units will be not less than 62 years of age and the head of the household; tenants
income will not exceed 57% 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. PLANS FOR THE RELOCATION OF PERSONS DISPLACED BY THE
DEVELOPMENT ACTIVITIES:
No persons will be displaced by the development activities, as no persons are or were residing
at the location of the Development District.
D. ENVIRONMENTAL CONTROLS TO BE APPLIED:
The City of Bangor has issued permit approval for the development of the Bangor Senior 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), Manchester HUD, the construction lender (Bangor Savings
Bank), and the tax credit investor (National Affordable Housing Trust). HUD, the investor and
lender will review each monthly construction draw request to insure construction is being done
to specifications.
E. PROPOSED OPERATION OF THE AFFORDABLE HOUSING DISTRICT
AFTER THE PLANNED IMPROVEMENTS ARE COMPLETED:
The Project will be owned by Volunteers of America Northern New England, L.P and managed
as an affordable housing project by Volunteers of America Northern New England.
F. ASSURANCES THAT THE PROGRAM COMPLIES WITH SECTION 4349-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 23, 2007 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. DURATION OF THE PROGRAM:
The duration of the Program will be 15 years beginning April 1, 2009.
H. ALL DOCUMATION SUBMITTED TO OR PREPARED BY THE MUNICIPALITY
UNDER SECTION 5247:
See the City of Bangor's Application to the Director of the Maine State Housing Authority for
approval of the Volunteers of America Affordable Housing Development District.
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