(a) 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 charge 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 is benefitted and improved by such housing, the encouragement of the same by providing a certain real estate tax exemption therefor is a valid public purpose. It is found, further, that the continuance of the provisions of this section for tax exemption and the service charge in lieu of taxes during the periods hereinafter set forth are essential to the continued economic existence of the housing development named in this section for low and moderate income persons.
(b) Definitions. As used in this section:
(1) "Act" means the State Housing Development Authority Act, being Public Act 346 of 1966, as amended.
(2) "Authority" means the Michigan State Housing Development Authority.
(3) "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.
(4) "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 determines improve the quality of the development as it relates to housing for persons of low income.
(5) "Mortgage loan" means a loan to be made by the Authority to the sponsor for the construction and/or permanent financing of the housing development.
(6) "Senior citizen" means a person exempted under Section 46 of the State Housing Authority Act, being M.C.L.A. 125.1446, whose income does not exceed sixty percent of the area median income adjusted for family size.
(7) "Sponsor" means persons or entities which have applied to the Authority for a mortgage loan to finance a housing development.
(8) "Utilities" means fuel, water, sanitary sewer service and/or electrical service which are paid for by the development.
(c) Applicable Class of Housing Developments. It is hereby determined that the class of housing development to which the tax exemption provided for in this section applies and for which a service charge shall be paid in lieu of such taxes shall be housing projects used exclusively by low and moderate income persons as defined by Public Act 346. This tax exemption shall apply, notwithstanding any language in Section 882.01 to the contrary, and anything in Section 882.01 in conflict with this section shall be governed by the language in this section so long as this section is in force.
(Ord. 19-95. Passed 6-20-95; Ord. 17-2010. Passed 12-21-10.)
(d) Establishment of Annual Service Charge. The housing development identified as Riverview Pointe, located on Riverside Drive between Burnham and Goguac Streets, 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 this 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 construct, 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 the following percentages of all gross rental income collected during the following operating years:
Year P.I.L.O.T. Rates
1998 2.50%
1999 4.00%
2000 4.00%
2001 4.00%
2002 4.00%
2003 4.00%
2004 5.00%
2005 5.00%
2006 5.00%
2007 6.00%
2008 6.00%
2009 6.00%
2010 6.00%
2011 and Thereafter NOT EXEMPT
(Ord. 14-98. Passed 8-18-98; Ord. 17-2010. Passed 12-21-10.)
(e) Contractual Effect of Section. Notwithstanding the provisions of Section 15(a)(5) of the Act to the contrary, a contract between the City and the sponsor, with the Authority as a third party beneficiary thereunder, to provide tax exemption and accept payments in lieu thereof as previously described, is effected by enactment of this section.
(f) Payment of Service Charge. The service charge in lieu of taxes as determined under this section shall be payable in the same manner as general property taxes are payable to the City, except that the annual payment shall be paid on or before February 14 of the year following the year for which payment is due. All PILOT payments for years through and including 2010 remain due and owning and payable to the City.
(g) Duration. This section shall remain in effect and shall not terminate so long as the Authority's mortgage remains outstanding and unpaid or the Authority has any interest in the property; or the Housing Development remains subject to income and rent restrictions pursuant to Section 42 of the Internal Revenue Code of 1986, as amended, provided that construction of the housing development commences within one year from the effective date of this section. The PILOT is repealed commencing with the year 2011 for the reason that the owner of the property no longer qualifies for a PILOT under MCL 125.1415a.
(h) Acknowledgment. The City hereby acknowledges receipt of documentation from the Authority indicating that the Authority's participation with the housing development is limited solely to the allocation of tax credits under the Low Income Housing Tax Credit Program.
(Ord. 19-95. Passed 6-20-95; Ord. 17-2010. Passed 12-21-10.)