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City of Orono Dunbar Housing Project Outline of Finance Plan January 12, 2001 1. Developer will acquire property. The property will be split into two parcels to allow for the creation of a tax increment financing district for the housing development. a. Need to distinguish the nature of the parties on the development side. Dunbar will build project, but long-term agreement will be with a third party. 2. The Developer will build 62 units of senior housing. The Developer will agree to satisfy the income requirements for qualified residential rental projects under Section 142(d) of the Internal Revenue Code, or 50 percent of the units must be occupied by individuals with income 80 percent or less of the area median income. a. The rental requirements apply for the life of the district. b. Should require annual verification of income compliance as pre-condition to TIF payment. c. If the income requirements are violated, the district duration is reduced to that of an economic development district. Developer will be required to pay any penalty or repayment of tax increment resulting from this action. d. Failure to comply with income requirements terminates tax increment payments. 3. The City will take steps necessary to establish a housing tax increment financing district. a. The current tax increment projections are based on the following assumptions: i. Estimated market value of$93,000 per unit. ii. Tax capacity rate for residential homestead property of 1.00% for the first $76,000 of EMV and 1.50% of EMV above $76,000 iii. Total tax extension rate of 104%. b. It is recognized by all parties that these factors will change over the life of the development agreement and affect the amount of tax increment revenues. 4. The City use tax increment financing to reimburse the Developer for costs of land acquisition and site development in a principal amount of$ 5. The City will retain the first 10% of tax increment revenue collected for administrative expense and for other eligible expenses. 6. The payment will be on a pay-as-you-go basis. The City will pay only as tax increment revenues are collected. The City will make no commitments to cure any shortfall from projected tax increment revenues due to changes in property valuation, tax rate, or any other alteration of the property tax system.