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HomeMy WebLinkAbout2017-05-08 17-170 ORDERCOUNCIL ACTION Item No. 17-170 Date: May 8, 2017 Item/Subject: ORDER, Authorizing Execution of a Property Tax Development Agreement for a Planned Development by Penquis - Map -Lot (R41-038) Responsible Department: Community and Economic Development Commentary: This Order will authorize the City Manager to execute a Tax Revenue and PILOT Agreement with Penquis for the development of housing on a parcel of land located off of Grandview Avenue. Council Order 17-120, adopted on March 27, 2017, authorized an Option and Development Agreement between the City of Bangor and Penquis for a portion property located near the corner of Grandview Avenue, Map -Lot (R41-038). Penquis needed this parcel to move forward on a 37 unit affordable housing development on an adjacent parcel. Penquis intends to use low-income tax credits to make the project financially feasible. This will require Penquis to transfer the property to a for-profit, taxable subsidiary, for the term of the tax credit. Once the term of the tax credits is over, the property will be conveyed to a non-profit and the property becomes tax exempt. Penquis is requesting a tax revenue agreement to allow them to receive a credit of 70% of the taxes for the period of the low-income tax credits followed by a 30% PILOT once the property become tax exempt. This is similar to an arrangement the City has with Penquis on Ernst Manor. If approved, it allows the project to move forward on constructing low income housing using tax credits and guarantees that the City will receive payments in lieu of taxes in perpetuity. This was item was reviewed and approved by the Business and Economic Development Committee on May 2, 2017. Tanya L. Emery Department Head Manager's Comments: Associated Information: Budget Approval: Legal Approval: Introduced for X Passage First Reading Referral Finance Director City licitor Page 1 of _1_ Assigned to Councilor Perry CITY OF BANGOR 17-170 MAY 8, 2017 (TITLE.) ORDER, Authorizing Execution of a Property Tax Development Agreement for a Planned Development by Penquis - Map -Lot (1141-038) WHEREAS, the City of Bangor, Maine is the owner of land located at the corner of Grandview Ave and Hillside Ave in Bangor, County of Penobscot, State of Maine; and WHEREAS, the City and Penquis have negotiated terms under which a portion of that lot can be sold to Penquis; and WHEREAS, Penquis wishes to acquire the land to incorporate into a housing development project in the immediate area; 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 15 years to assist in supporting annual operating expenses thereby keeping rents affordable; and WHEREAS, after the expiration of 15 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. NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR, 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. IN CITY COUNCIL MAY 8, 2017 CO 17-170 COUNCILOR TREMBLE LEFT THE MEETING AS IT WAS DETERMINED -AT COMMITTEE THAT HE HAD A CONFLICT OF INTEREST WITH THIS ITEM MOTION MADE AND SECONDED FOR PASSAGE PASSED CITY CLERK