(a) Purpose, City Authority and Findings of Fact. In accordance with the authority vested in the City Commission pursuant to Public Act 346 of 1966, as amended, the City is authorized to establish or change the service charged to be paid in lieu of taxes by any or all classes of housing exempt from taxation under the Act in any amount it chooses, not to exceed the taxes that would be paid but for the Act. It is found that such housing for persons of low and moderate incomes is a public necessity, and inasmuch as the City finds that housing for persons of low and moderate income is a public necessity and as the City will benefit and be improved by such housing, the encouragement of same by providing certain real estate tax exemption for such housing is a valid public purpose. It is further found that the continuance of the provisions of this section for tax exemption and the service charge in lieu of taxes during the period contemplated in this section are essential to the development and economic feasibility of the proposed housing development which is to be constructed and financed in reliance on such tax exemption. The City acknowledges that the sponsor, Opportunity Builders, a California nonprofit corporation, has offered, subject to receipt of an allocation under the Low Income Housing Tax Credit Program to purchase, renovate, own and operate a qualifying housing development on certain property located in the City to serve persons of low income and that the sponsor has offered to pay the City on account of this housing development an annual service charge for public services in lieu of all taxes.
(b) Definitions. All terms in this section shall be defined as set forth in the Act, except as follows:
(1) "Act" means the State Housing Development Authority Act, being Public Act 346 of 1966, as amended.
(2) "Annual shelter rent" means the total collections during an agreed annual period from all low income person or family occupants of the development representing rent or occupancy charges, exclusive of the portion of said charges attributable to gas, electricity, heat or other utilities furnished to the occupants by the sponsor.
(3) "Authority" means the Michigan State Housing Development Authority.
(4) "City" means the City of Battle Creek, a home rule municipality organized pursuant to Public Act 279 of 1909, as amended, and located in Calhoun County, Michigan.
(5) "Contract rents" is defined by the United States Department of Housing and Urban Development in regulations promulgated pursuant to the United States Housing Act of 1937, as amended by the Housing and Community Development Act of 1974.
(6) "Development" means the multiple family housing development of up to fifty dwelling units located in the City on certain platted land on Territorial Road near its intersection with Riverside Drive comprised of Lots 31 to 33 and that portion of Lot 37 consisting of the southerly half and westerly 300 feet of the north half of said Lot 37 of S.C. Rand’s Addition and Lots 1 to 19 and any portion of vacated Vine Street lying adjacent to said Lots 1 to 19 of R.J. Miller Subdivision to be known as The Village at Battle Creek.
(7) "Housing development" means a development which contains a significant element of housing for persons of low income and such elements of other housing, commercial, recreational, industrial, communal and educational facilities as the authority has determined improves the quality of the development as it relates to housing for persons of low income.
(8) "Low income person or family," or the plural thereof, means those persons and families whose income is sixty percent or less of the area median income as adjusted for family size and who are determined to be eligible to move into the development under the provisions of Section 42 of the Internal Revenue Code of 1986, as amended, the units of whom shall be rent restricted.
(9) "Sponsor" means Opportunity Builders, a California nonprofit corporation.
(10) "Utilities" means fuel, water, sanitary sewer service and/or electrical service which are paid by the sponsor.
(11) "Section 42" means 26 U.S.C. 42 of the Internal Revenue Code of 1986, as amended.
(c) Applicable Class of Housing Developments. It is hereby determined that the class of housing development to which the tax exemption shall apply and for which a service charge shall be housing projects used exclusively by low and moderate income persons as defined by Public Act 346 as amended. This tax exemption shall apply, notwithstanding any language in Section 882.01 to the contrary, and the language in this section shall govern anything in Section 882.01 in conflict with this section so long as this section is in force. The Village at Battle Creek development is of this class.
(d) Establishment of Annual Service Charge. The Housing Development identified as the development to be known as The Village at Battle Creek, and the property on which it is located, shall be exempt from all property taxes from and after the effective date of this section until the section terminates. The City, acknowledging that the sponsor and the authority have undertaken the economic feasibility of the Housing Development in reliance upon the enactment and continuing effect of this section and the qualification of the Housing Development for exemption from all property taxes and a payment in lieu of taxes as established herein and in consideration of the sponsor’s offer, subject to receipt of an allocation from the Low Income Housing Tax Credit Program, to purchase, rehabilitate, own and operate such Housing Development, hereby agrees to accept payment of an annual service charge for public services in lieu of all property taxes. The annual service charge shall be equal to five percent of Annual Shelter Rents.
(e) Payment of Service Charge. The annual service charge in lieu of taxes as determined under the ordinance shall be payable in the same manner as general property taxes are payable to the City except the annual payment shall be paid on or before February 14 of the year following the year for which payment is due.
(f) Duration. Commencing with the tax year 2007, and ending with the tax year 2021, this section shall remain in effect and shall not terminate from the effective date hereof, provided that the development remains subject to income and rent restrictions pursuant to Section 42, that construction of the development commences on or before June 1, 2006 and it complies with all applicable zoning district requirements or any necessary variances obtained by the sponsor.
(g) Benefits. The benefits of the tax exemption granted pursuant to this section shall be allocated by the sponsor exclusively to the low and moderate income persons or families of the development in the form of reduced rent. Such benefits shall not be allocated to market rate persons or families. The sponsor shall, at the request of the City, submit to the City such evidence and documentation as may be reasonably necessary to verify the sponsor's compliance with this requirement.
(h) Audit and Inspection of Records. Subject to any limitations imposed by law, the sponsor shall provide to the City such accounting records, audits and financial reports as the City shall reasonably require to verify the computation of the annual service charge as provided by this section. The sponsor shall maintain such records of rent or occupancy charges received and the occupancy of units in the development as will permit the City to verify which of the units in the development have been occupied by low-income persons or families. Subject to any limitations imposed by law, the books and records of the sponsor pertaining to the development shall be available for review and audit by the City at all times.
(i) Lien. Annual service charges payable pursuant to this section shall be a lien on the development, and, if delinquent, without prejudice to any remedies for arrears of payment or preceding breach of covenant, shall at the election of the City be collected and enforced in the same manner as general property taxes or the City may take whatever action at law or equity may be necessary to collect any payment then due or which may later become due, or to enforce the performance and observance of any obligation or covenant of the sponsor under this section.
(Ord. 04-05. Passed 3-1-05.)