AUBURN – The city’s housing authority should begin paying about $47,000 annually for city services to two of its larger housing developments.

“We recognize that we do create expenses for the city,” said Richard Whiting, executive director of the Auburn Housing Authority. “We bring a lot of benefits for the city, but there are costs associated with what we do and we recognize that. We don’t want to be viewed as impairing the city.”

Whiting said he and interim City Manager Laurie Smith were writing an agreement that would give the city an annual payment in lieu of property taxes. He estimated the housing authority would pay about $47,000 in lieu of taxes on Barker Mill Arms and the Auburn Esplanade.

As state- and federally-funded apartments, both are exempt from having to pay property taxes.

“Most of what we do is nonprofit, and that’s governed by federal regulations,” Whiting said. “Most of it isn’t taxable. But we’ve had agreements with the city going back to the 1960s about the two non-public housing projects.”

The authority paid the city for those properties annually until 2005. But Whiting said he stopped paying the city when federal housing subsidies began to decrease.

“Almost all of our funding comes from Maine State Housing, but it’s federal money,” Whiting said. “There always has been a philosophical question about paying local taxes with federal money. We’ve tried to find a middle way that helps the city without handicapping the housing authority.”

But Whiting said the authority has trimmed it budgets over the past two years.

“We ratcheted back our health insurance and didn’t fill some empty positions,” he said. Those changes have left him room to begin paying the city again. Whiting said he expects to sign the agreement with the city this summer.

“It’s been a real balancing act for Rick and the housing authority for the last couple of years, and we recognize that,” Smith said. “But we’re excited to be able to discuss it again, and I’m looking forward to working out the details.”