04-27-2010 Council Work Session Packet

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Development Subsidy History April 19,2010 Page 4 Woods Apartments (Including Tax Increment Financing District No. 1-1) Between City of Orono, Orono Housing and Redevelopment Authority and Orono Senior Housing, LLC' (hereinafter the "Development Agreement"). (d) The City has agreed to defer Sewer and Water Connection Fees in the amount of $40,838 and Park Dedication Fees in the amount of $161,200 that would otherwise be due at the time of development of the Senior Housing. Such fees (hereinafter "deferred improvement costs") shall be payable only in the event that the Developer violates the "Senior Housing Restriction" as set forth in the "Development Agreement". In that event such fees shall be immediately due and payable together with interest on the deferred amounts computed at the rate of 7% per annum from the date of said "Development Agreement". If there is no incurred default under section 3.2 of the "Development Agreement" on the date specified in said Agreement,the fees are forgiven and the City shall look solely to tax increment from the TIF District for the reimbursement of such fees. Summary Other than the use of funding from outside sources such as CDBG, MHFA, and Met Council, the only instance in which Orono has provided direct subsidization of residential development is for the Orono Woods Senior Housing Project. Indirect Subsidies Orono has indirectly assisted in the reduction of costs of development or redevelopment that in some cases might be considered as `subsidies' resulting in the ability to make development more affordable. For instance, Orono regularly grants variances for lot standards on existing substandard lots where housing stock improvements would otherwise be impossible without combining two or more small lots. This allows homeowners to make significant improvements to existing homes while maintaining affordability. Another example is Stonebay. Although the resulting dwelling units do not meet Met Council's criteria for affordability, in order to achieve the CMP-guided 6-units-per-acre density the City Council allowed the relaxation of a number of development requirements including acceptance of narrow roadways and relaxation of building setback standards. During 2006-2007 the City approved two RPUD developments - Glendale Cove with lot sizes averaging 14,000 s.f. where the City's minimum lot size had previously been 1/2 acre; and Orono Villas, in which side setback standards were reduced from 10' to 5' and lot sizes reduced to below 14,000 s.f. allow for more efficient use of available land. Neither of these developments resulted in housing that would be considered as meeting affordability criteria.