PRESQUE ISLE – City officials are working out a payment schedule with the Presque Isle Housing Authority, which requested a three-year extension on a municipal property payment.

Councilors on Monday night took no formal action on the request to postpone the initial Payment in Lieu of Taxes, or PILOT, on property the housing authority owns at the Bon-Aire Housing facility, but indicated the housing authority director and the city manager should work out a payment schedule agreeable to all parties.

Four years ago, the housing authority acquired 15 duplex structures from the city and negotiated a PILOT payment that would begin in 2005. The city originally had offered the property with a payment beginning in 2002, but extended it to 2005 because of recognized costs to bring the structures “on line.”

Housing Authority Executive Director Jeff Everett told councilors Monday that the authority was requesting the extension until 2008 because of a lack of expected funding.

Because the housing authority did not receive about $200,000 in grant funding it was hoping to secure to renovate the housing units, it had to seek more loan money to finish the project, increasing its debt service payments.

The authority also saw less than expected revenues from the units because of the renovations. It began collecting rent on the first units ready for occupancy about a year ago, according to a letter Everett submitted to the city about the extension request.

Everett said the housing authority hoped to secure the extension in order to build cash reserves and make the project financially stable.

“It’s not our intention to put this off forever,” he said.

The 2005 PILOT for the property was estimated at $22,785, based on an $853,400 property valuation and last year’s tax rate. City Manager Tom Stevens indicated during the meeting that any extension or abatement of the PILOT would cause a loss in income for the city.

Councilor Richard Benjamin said it would not be wise to agree to the extension and then face possible tax rate increases later this year to make up for it. Councilor Don Gardiner said the city lived up to its end of the agreement and that the housing authority needs to live up to its end.

Councilor Ron McPherson said he would have to vote against the measure as presented, but suggested that the city establish an incremental increase for the payment or create a payment schedule.

After discussing the possibility of several scheduled payments throughout the year instead of one lump sum payment, city officials decided the best option is to collect the PILOT while addressing the housing authority’s concerns. Councilors indicated Stevens and Everett should work out the payment schedule.