2007 Incentive Policies for Housing and Economic Development

Transcription

1 2007 Incentive Policies for Housing and Economic Development

2 What Incentives Does MLGW have for Development and Building? At Memphis Light, Gas and Water (MLGW), we have some of the lowest combined utility rates in the United States. In an effort to keep our rates low, MLGW charges Developers and Builders for the installation of utilities to serve their projects. However, MLGW does make a contribution toward the utility cost based on the projected consumption. This brochure is an effort to communicate the policies and contributions that are available from MLGW to help Developers and Builders with their utility cost. Utility cost is the installation cost for the electric, gas, and water facilities to serve a project. In some cases, MLGW even waives the connect fees. In underground electric and gas, the connect fee is defined as the cost MLGW charges for up to 60 feet of service. In water, the connect fee is defined as the cost MLGW charges to set a meter where the future use connection/tap has already been installed. Policies Applicable for the entire MLGW service territory: 1) Affordable Housing - Subdivision Financing/Cash Flow Control Policy - If 50% or more of the houses are going to be classified as affordable housing*, MLGW will finance utility cost (electric, gas, and water) over four years. The Developer pays semi-annual payments based upon the number of lots sold or building permits issued. At the end of four years, any remaining balance is due. 2) Affordable Housing - Subdivision Additional Incentive Policy - If 50% or more of the houses are going to be classified as affordable housing*, MLGW will give an additional 50% revenue allowance over MLGW s standard policy. This policy will not apply to a development that is already receiving an additional 50% revenue allowance from the Downtown Additional Incentive Policy. 3) Affordable Housing - Apartment Additional Incentive Policy - If an apartment development has received recognition by HUD, THDA, or Memphis HCD as low income rental property by receiving financial assistance in the form of a grant or loan, MLGW will give an additional 50% revenue allowance over MLGW s standard policy. This policy will not apply to a development that is already receiving an additional 50% revenue allowance from the Downtown Additional Incentive Policy. 4) Affordable Housing - Individual Homes Waiver of Connect Fees Policy - If the individual single-family house is classified as affordable housing*, the connect fees** are waived or refunded to the Home Builder. 5) Infill - Individual Homes Waiver of Connect Fees Policy - Connect fees** will be waived to an individual single-family residential lot where provisions for such service to that lot have been in place and revenue has not been generated for at least ten (10) years. For electric, it means the primary distribution line and transformer have been installed. For gas, it means the gas main has been installed in the street on which the property fronts. For water, it means the water main and future use connection/tap has been installed. Applicable to projects in the downtown Memphis area: Downtown Additional Incentive Policy - An additional 50% revenue allowance over MLGW s standard policy will be given for residential, commercial, and industrial utility work done in the target area bounded by Chelsea, Danny Thomas, Crump, and the Mississippi River. Downtown Additional Incentive Policy for Electric General Power Customers Above 500 KVA Demand Served by the Network System Until 12/31/2007, an additional 100% revenue allowance (for a total of two times GMA) plus the MLGW estimated cost to install a transformer vault if needed (not to exceed $100,000 per vault) will be given for electric general power customers above 500 KVA demand being served by the network system and located in the target area bounded by Chelsea, Danny Thomas, Crump, and the Mississippi River. For customers meeting the requirements, this policy supercedes the Downtown Additional Incentive Policy.

3 Notes: * - Affordable housing is currently defined as a house that sells for $85,000 or less. ** - Connect fees for underground electric and gas are defined as the cost MLGW charges for 60 feet or less of service which currently equals $373 for the underground electric and $500 for the gas. Connect fees for the water are defined as the cost MLGW charges to set a water meter where the future use connection/tap has already been installed which currently equals $310. Therefore, MLGW s total contribution in the form of connect fees waived per house could total as much as $1,183 where applicable as of 1/1/2007. For additional information about these policies, please call MLGW at (901) and they will direct you to the appropriate department.

4 MLGW s Contribution Subdivisions Electric (Underground Primary and Overhead Primary on the Front Property Line) - $350/lot Gas - $200/lot Apartments Electric (Overhead or Underground Primary) - $175/unit Gas (Applied to the Gas Main Cost only) - $100/unit Utility Extensions required to serve Houses not in a Subdivision Electric - based on projected consumption Gas (Applied to the Gas Main Cost only) - based on projected consumption Commercial and Industrial Services Electric - based on projected consumption Gas (Applied to the Gas Main Cost only) - based on projected consumption Notes: In 2006, MLGW s contribution to Subdivision and Apartment developments totaled over $3,800,000. In 2006, MLGW s contribution to Commercial and Industrial developments totaled over $4,200,000.

5 INCENTIVES FOR AFFORDABLE HOUSING Subdivision Financing/Cash Flow Control Policy DEFINITION: Extended payment plan for utility extension costs to developers of new subdivisions intended for affordable housing. Promote development of lots for affordable housing by alleviating some of the strain on the developer s cash flow. A financing plan that allows payments for utility extensions to be spread over four (4) years. At least 50% of the homes in the development must be intended to meet affordable criteria of a maximum sales price of $85,000. PROCEDURE: 1. The developer must submit a letter of intention to provide lots for affordable housing at the time the subdivision application is submitted. 2. An administrative and financing fee is calculated and pro-rated over the number of lots in the development. 3. Financing agreements are executed. 4. The developer posts a performance bond. 5. The developer makes semi-annual payments on the loan based upon the number of lots sold or building permits issued during that period. 6. At the end of four years, any remaining balance and fees are due. Residential Engineering

6 INCENTIVES FOR AFFORDABLE HOUSING Subdivision Additional Incentive Policy DEFINITION: Additional investment allowance for customers developing new subdivisions intended for affordable housing. Promote development of lots for affordable housing. Additional 50% revenue allowance over MLGW s standard policy. At least 50% of the homes in the development must be intended to meet affordable criteria of a maximum sales price of $85,000. PROCEDURE: 1. The developer must submit a letter of intention to provide lots for affordable housing at the time the subdivision application is submitted. 2. When calculating the allowances per lot for each utility, the amount is increased by 50%. Residential Engineering Note: This policy will not apply to a development that is already receiving an additional 50% revenue allowance from the Downtown Policy.

7 INCENTIVES FOR AFFORDABLE HOUSING Apartment Additional Incentive Policy DEFINITION: Additional investment allowance for customers developing new apartments intended for affordable rental housing. Promote development of apartments for affordable rental housing. Additional 50% revenue allowance over MLGW s standard policy. Recognition by federal, state, or local governmental body as a low income rental property by receiving financial assistance in the form of a grant or loan for the particular development. PROCEDURE: 1. The developer must submit documentation proving that the particular development received financial assistance in the form of a grant or loan for being recognized as a low income rental property from HUD, THDA, or Memphis HCD. 2. When calculating the allowances per unit for each utility, the amount is increased by 50%. Residential Engineering Note: This policy will not apply to a development that is already receiving an additional 50% revenue allowance from the Downtown Policy.

8 INCENTIVES FOR AFFORDABLE HOUSING Individual Homes Waiver of Connect Fees Policy DEFINITION: Refund of connection fees for new affordable homes in subdivisions. Promote individual efforts to produce affordable dwelling units. Refund of utility connection fees. Sales price of the home must not exceed $85,000. Homes must meet energy-efficient construction criteria. Must be an individual single-family house. Some specific costs are not eligible for refund. PROCEDURE: 1. The builder must request that the home participate in the program at the time the service request is made. 2. The home is constructed to all applicable energy-efficient guidelines. 3. The builder submits proof of the home s sale price or certification from a government authority that the home is eligible for affordable incentives. 4. Connection fees are waived or refunded to the builder. Customer Engineering

9 INCENTIVES FOR EFFICIENT INVESTMENT UTILIZATION Individual Homes Infill - Waiver of Connect Fees Policy DEFINITION: Waiver of utility connection fees for single-family residences on lots already having provisions for utilities. Promote building and rehabilitation on lots where MLGW has an existing investment in the infrastructure. Waiver of utility connection fees. Provisions for utility service must have been in place and revenue has not been generated for at least ten (10) years. Provisions for utility service is defined as follows: Electric - The electric primary distribution line and transformer have been installed. Gas - A gas main has been installed in the street on which the property fronts. Water - A water main and future use connection have been installed. New homes must meet energy-efficient construction criteria. PROCEDURE: 1. If it is a newly constructed home, the home is constructed to all applicable energy-efficient guidelines. 2. Connection fees are waived or refunded to the builder. Customer Engineering

10 INCENTIVES FOR EFFICIENT INVESTMENT UTILIZATION Downtown Additional Incentive Policy DEFINITION: Additional investment allowance for customers locating downtown. Promote use of MLGW s installed capacity in the downtown area. Additional 50% revenue allowance over MLGW s standard policy. Any customer is eligible - developers, residential, or commercial. The target area is bounded by Chelsea, Danny Thomas, Crump, and the Mississippi River. These additional incentives are for revenue extensions only and do not include connection fees. PROCEDURE: When calculating the revenue extension allowances for any customer in the area, the amount is increased by 50%. All Engineering Areas

11 INCENTIVES FOR DOWNTOWN DEVELOPMENT Downtown Additional Incentive Policy For Electric General Power Customers Above 500 KVA Demand Served by the Network System DEFINITION: Additional investment allowance over MLGW s standard policy for electric general power customers above 500 KVA demand locating downtown and being served by the Network System in effect until 12/31/2007. Equalize cost per KVA in the downtown area compared to other areas in the service territory. Additional 100% revenue allowance (for a total of two times GMA) plus the MLGW estimated cost to install a transformer vault if needed (not to exceed $100,000 per vault). Electric General Power customers above 500 KVA demand. Downtown is defined as the area bounded by Chelsea, Danny Thomas, Crump, and the Mississippi River. Customer must be served by the Network System. This policy will be in effect until 12/31/2007. These additional incentives are for revenue extensions only and do not include connection fees. PROCEDURE:. When calculating the revenue extension allowances, the customer shall receive two times GMA plus the MLGW estimated cost to install a transformer vault if needed (not to exceed $100,000 per vault). Electric Distribution Engineering Area Note: For customers meeting the above requirements, this policy supercedes the current Downtown Additional Incentive Policy.