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EXPLANATION OF <br />AFFORDABLE LIFE -CYCLE HOUSING OPPORTUNITIES <br />FOR THE YEAR 2001 <br />Simply stated, here's how we determined your community's ALHOA for 2000 that is to be <br />expended in 2001. <br />First, we determined the average market value of your city's houses in 1995, doubled it to <br />arrive at a base value. We then found all of the 1995 high priced houses that were above <br />this base amount and subtracted the base value from each of those high priced houses to <br />arrive at an excess value number for each house. Next we added up all of those high priced <br />house's excess values to arrive at the total base year excess number. This 1995 number <br />doesn't change. <br />We did the same for the current year, this time using the current market values for the <br />houses and the current base value using the Consumer Price Index change according to the <br />requirements of the legislation. <br />If the current year's excess is bigger than the 1995 excess, we subtracted the 1995 excess <br />from the current year's total excess to arrive at the Growth in Excess. We multiplied that <br />Growth in Excess times your city's tax rate. This is the Affordable and Life Cycle Housing <br />Opportunities Amount for this year. This means that if there is no growth in the total excess <br />from 1995, then there is no Opportunities amount. <br />Definitions: <br />HOMESTEAD <br />A homestead is defined as property regularly "homesteaded" by its owners. For farm <br />homes, it represents the assessment of the farm house, a garage and one acre of land only. <br />CONSUMER PRICE INDEX (CPI) <br />The Consumer Price Index measures the inflation factor in the U.S. economy. The <br />Department of the Interior publishes this rate monthly along with a yearly average. For this <br />program, the yearly average CPI. is used. <br />To ensure that this base value does not lose its meaning in future years the base value is <br />increased by the CPI each year. This increased value approximately represents the effect of <br />inflation on the market value of houses in your city. By changing the base value every <br />year, the houses that were not included in the first base year calculation should not be <br />included in future years just because the market value has increased due to inflation. <br />Refer to attached sample city printout for assistance <br />Page 7 <br />