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EXPLANATION OF <br />AFFORDABLE LIFE -CYCLE HOUSING OPPORTUNITIES AMOUNTS <br />FOR THE YEAR 1998 <br />Simply stated, here's how we determined your community' s ALHOA for 1998. <br />Determine the average market value of your city's houses in 1995. Double it to arrive at a <br />base value. Find all of the 1995 high priced homes that are above this base value. <br />Subtract the base value from each of the high priced homes to arrive at an excess value <br />number. Add up all of those excess values. This is the base year excess number. It <br />doesn't change. <br />Do the same for the current year, this time using the current market values for the houses <br />and the current base value supplied by the Met Council. <br />If the current year's excess is bigger than the 1995 excess, subtract the 1995 excess from <br />the current year. Multiply the resultant number times your city's tax rate. This is your <br />Affordable & Life Cycle Housing Opportunities Amount. <br />Definitions: <br />HOMESTEAD <br />A homestead is defined as property regularly "homesteaded" by its owners. For farm <br />homes, it represented the assessment of the farm house, a garage and one acre of land <br />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 <br />this program, the yearly average CPI is used. <br />To ensure that this base value did not lose its meaning in future years the base value is <br />increased by the CPI each year. This increased value represents the effect of inflation on <br />the market value of houses in your city. Changing the base value every year, prevents <br />some houses that did not get included in the base year calculation getting included in <br />future years just because their market value changed. <br />Refer to attached sample city printout for assistance <br />Page 11 <br />