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