(a) Purpose; City Authority and Findings of Fact.
(1) It is determined that a proper public purpose of the State of Michigan and its political subdivisions is to assist in the provision of housing for its low income persons and families and to encourage the development of such housing by providing for a service charge in lieu of property taxes in accordance with the Act.
(2) The City is authorized by this Act 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, at any amount it chooses, but not exceeding the taxes that would be paid but for the Act. It is also found that such housing for low income persons and families is a public necessity and that the City will be benefited and improved by such housing, and that the encouragement of the same by providing a 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 all ad valorem taxes during the period contemplated in this section are essential to the determination of economic feasibility of the housing development that is rehabilitated with financing extended in reliance on such tax exemption.
(3) The City acknowledges that the sponsor (as defined below) now has offered, to acquire and rehabilitate, own and operate a housing development identified as Bedford Manor on certain property located at 100 South Bedford Road in the City of Battle Creek to serve low income persons and families, 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 ad valorem property taxes.
(4) On December 15, 1981, the Battle Creek City Commission adopted Ordinance number 27-81, entitled "AN ORDINANCE TO PROVIDE FOR A SERVICE CHARGE IN LIEU OF TAXES FOR A HOUSING DEVELOPMENT IDENTIFIED AS BATTLE CREEK ELDERLY FHA #047-35109-PM FOR ELDERLY PERSONS OF LOW OR MODERATE INCOME FEDERALLY AIDED HOUSING OR FINANCED OR ASSISTED PURSUANT TO THE PROVISIONS OF THE STATE HOUSING DEVELOPMENT AUTHORITY ACT OF 1966 (1966 PA 346, AS AMENDED, MCLA SECTION 125.1401 ET SEQ., MSA SECTION 16.114(1) ET SEQ.,)" pursuant to Resolution 517. This Ordinance providing a service charge in lieu of taxes is for the property located at 100 S Bedford Road, the same Housing Development that is the subject of this Section 19 exemption, with the property owner being Battle Creek Elderly Limited Dividend Housing Association, LP. ("1981 PILOT ORDINANCE") The entity currently owning the Housing Development is transferring ownership to Bedford Manor Limited Divided Housing Association LLC, who will be obtaining a new Fannie Mae mortgage which will allow it to undertake rehabilitative renovations to the Housing Development. The City intends that simultaneous with the adoption and commencement of this Section 19 exemption, the 1981 PILOT ORDINANCE will be repealed.
(b) Definition of Terms. 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 the period January 1 through December 31 of each year paid on behalf of all occupants of the development representing rent or occupancy charges, exclusive of the portion of said charges attributable to utilities.
(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) "Housing development" means the multiple family housing development to be transferred and rehabilitated in the City of Battle Creek at 100 S. Bedford Road, and which rehabilitation is estimated to contain at least 125 units, to be known as Bedford Manor for the housing of elderly low-income persons and families and such elements of other housing, commercial, recreational, industrial, communal and educational facilities as the Authority has determined improves the quality of the housing development as it relates to housing for low income persons and families.
(6) "LIHTC program" means the low income housing tax credit program administered by the Authority under Section 42 of the Internal Revenue Code of 1986, as amended.
(7) "Low income persons and families" means persons and families eligible to move into the housing development under the provisions of Section 42 of the Internal Revenue Code of 1986, as amended, as set in the Act or by the authority in its rules.
(8) "Mortgage loan" means any of the following:
A. A below market interest rate mortgage insured, purchased, or held by the secretary of the Department of Housing and Urban Development;
B. A market interest rate mortgage insured by the secretary of the Department of Housing and Urban Development and augmented by a program of rent supplements;
C. A mortgage receiving interest reduction payments provided by the secretary of the Department of Housing and Urban Development;
D. A mortgage on a housing project to which the Authority allocates low income housing tax credits under section 22b of the Act;
E. A mortgage receiving special benefits under other federal law designated specifically to develop low and moderate income housing, consistent with this act; or a loan or grant made or to be made by the Authority to the sponsor for the construction, rehabilitation, acquisition and/or permanent financing of a housing development, and secured by a mortgage on the housing development.
(9) "Sponsor" means the Limited Dividend Housing Association LLC in which Marven W VanderVeen Enterprises, LLC will continue its role as managing member, and which has or will apply for a mortgage loan to refinance the housing development under this section and any entity that receives or assumes a mortgage loan for the housing development.
(10) "Utilities" means charges for gas, electric, water, sanitary sewer service and other utilities that are paid by the sponsor.
(11) "Section 42" means Title 26 United States Code Section 42 of the Internal Revenue Code of 1986, as amended.
(c) Applicable Class of Housing Developments. It is determined that the class of housing development to which the tax exemption set forth in this section shall apply and for which a service charge shall be paid in lieu of such taxes shall be a housing development for low income persons and families that are financed with a mortgage loan. The tax exemption provided by this section shall apply, notwithstanding any language in Section 882.01 to the contrary, and the language in this section shall govern any conflict between this section and Section 882.01 so long as this section is in effect. Based on representations and warranties of the sponsor, it is determined that the housing development subject to this section is a housing development eligible for tax exemption provided by Section 15a of the Act.
(d) Establishment of Annual Service Charges.
(1) The housing development to be known as Bedford Manor and the property on which it is located and constructed shall be exempt from all ad valorem property taxes as provided in below subsection (2) from and after the date of transfer of ownership from Battle Creek Elderly Limited Dividend Housing Association, LP to Bedford Manor Limited Dividend Housing Association LLC AND the refinance of the mortgage, both of which must occur not later than June 30, 2021, until this section 19 terminates pursuant to its terms. The City acknowledges that the sponsor and the authority have established 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 ad valorem property taxes and a payment in lieu of taxes as established by this section. Therefore, in consideration of the sponsor's offer, subject to the receipt of federally assisted mortgage or a mortgage receiving special benefits under other federal law specifically to develop low and moderate income housing, consistent with this act to assist the sponsor to purchase, rehabilitate, own, and operate the housing development, the City agrees to accept payment of an annual service charge for public services in lieu of all ad valorem property taxes.
(2) Subject to receipt of a mortgage loan, the annual service charge to be paid in lieu of taxes shall be equal to 4.00% of the annual shelter rents actually collected by the housing development during each operating year pursuant to the terms set out in below sub-section (g).
(3) Nothing in this section shall be construed to exempt the housing development and property on which it is constructed from any special assessment for street or other public improvements or as a result of its location within a business improvement district authorized by 1999 Public Act 49, as amended.
(4) The determination of when each housing unit in the housing development is occupied by a tenant qualified under the definition of low-income persons or families shall be made for each year as of December 31 of the immediately preceding year.
(e) Contractual Effect of Ordinance. Notwithstanding the provisions of Section 15a(5) of the Act to the contrary, a contract between the City and sponsor with the authority as third party beneficiary under the contract, to provide tax exemption, accept payment in lieu of taxes, as previously described, is effectuated by the enactment of this section. However, nothing contained in this section shall constitute a waiver of any rights the City of Battle Creek may possess or exercise under the provisions of Section 15(a)(2) of the Act, provided the exercise of such rights does not, in the opinion of the authority, impair the economic feasibility of the housing development or the mortgage loan. Notwithstanding the contractual effect of this section, this section:
(1) Shall be null and void if transfer of ownership and refinance of the mortgage as set out in above subsection (d)(1) of the housing development has not been completed by June 30, 2021;
(2) The service charge to be paid each year in lieu of taxes for the part of the housing development that is tax exempt but which is occupied by other than low income persons or families shall be equal to the full amount of the taxes which would be paid on that portion of the housing development if the housing development were not tax exempt; and
(f) Payment of Service Charge. The annual service charge in lieu of taxes as determined under subsection (d)(2) is payable to the City on or before February 14th of the year following the year for which payment is due. Failure to pay the service charge on or before February 14th of each year shall result in the service charge being subject to 1% interest per month until paid. If any amount of the annual service charge or accrued interest shall remain unpaid as of December 31 of each year, the amount unpaid shall be a lien upon the real property constituting Bedford Manor Housing Development upon the City Treasurer filing a certificate of non-payment of the service charge, together with an affidavit of proof of service of the certificate of non-payment upon the sponsor with the Calhoun County Register of Deeds, and proceedings may then be had to enforce the lien as provided by law for the foreclosure of tax liens upon real property.
(g) Duration and Conditions. Commencing in the tax year in which the transfer of ownership and mortgage refinance of the housing development has been completed as described in above subsection (d)(1), and ending with the tax year 2041 this section shall remain in effect and shall not terminate from the effective date hereof, provided that all of the following requirements are in existence and continue to be met:
(1) The development remains subject to income and rent restrictions pursuant to Section 42, the Act or by the authority in its rules; and
(2) That the transfer of ownership and mortgage refinance of the development as described in above subsection (d)(1) has concluded by June 30, 2021; and
(3) The mortgage loan or grant from the authority is outstanding.
In addition to the foregoing, the sponsor shall make all annual reports supporting its claimed annual shelter rent and reduced rent allocation for the preceding annual period by February 14 of each year, and failure to do so shall result in a late fee of fifty dollars ($50.00) per month, which amount shall accrue one (1 %) percent interest per month until paid.
(h) Benefits. The sponsor shall allocate the benefits of the tax exemption granted pursuant to this section exclusively to the low-income persons and families of the housing development in the form of reduced rent. Such benefits shall not be allocated to market rate persons or families. The sponsor shall submit to the City, in its annual report documentation to verify sponsor's compliance with this requirement.
(i) Audit and Inspection of Records. Subject to any limitations imposed by law, the sponsor shall provide to the City annually, with its payment in lieu of taxes, such accounting records, audits and financial reports as will allow the City 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 housing development as will permit the City to verify which of the units in the housing development have been occupied by low-income persons and families. Subject to any limitations imposed by law, the books and records of the sponsor pertaining to the Housing Development shall be available for review and audit by the City at all times.
(j) Lien. Annual service charges as well as any late fees payable pursuant to this section shall be a lien on the housing development, and, if delinquent, shall be collected and enforced in the same manner as general property taxes.
(k) Description of Development Site. PART OF LOTS 16 & 36, AND PART OF URBANDALE BLVD AS SHOWN IN THE ASSRS PLAT OF CLEAR VIEW, ALSO PART OF LOT 56 OF HENRYS ADD TO URBANDALE: COMM SE COR OF LOT 57 OF HENRYS ADD TO URBANDALE - N 81° 32' 48" W ALG SLY LI OF SD LOT 57 DIST OF 10 FT - S 08° 27' 12" W 38.91 FT TO TRUE POB - CONTN S 08° 27' 12" W ALG WLY LI OF BEDFORD RD (100 FT WIDE) DIST OF 80.59 FT - SLY ALG SD WLY LI OF BEDFORD RD & ARC TO RT DIST OF 469.41 FT (RAD 1856.59 FT; CHORD BRG S 15° 41' 48" W 468.16 FT) - N 62° 48' 38" W 335.87 FT - N 00° 26' 22" E 703.74 FT - S 47° 37' 10" E ALG SLY LI OF URBANDALE BLVD AS RELOCATED (80 FT WIDE) DIST OF 342.26 FT - SELY ALG SD SLY LI & ARC TO LT DIST OF 167.47 FT (RAD 401.01 FT; CHORD S 59° 34' 59" E 166.25 FT) - S 71° 32' 48" E ALG SD SLY LI OF URBANDALE BLVD DIST OF 37.61 FT TO POB, CONT 5.50 AC, SUBJ TO SANITARY SEWER EASEMENT. Commonly known as 100 South Bedford Road.
Subject to easements and restrictions apparent and of record.
(l) Severability. The various subsections and provisions of this section shall be deemed to be severable, and should any subsection or provision of this section be declared by any court of competent jurisdiction to be unconstitutional or invalid the same shall not affect the validity of this section as a whole or any subsection or provision of this section, other than the section or provision so declared to be unconstitutional or invalid.
(m) Inconsistent Ordinances. All ordinances or parts of ordinances inconsistent or in conflict with the provisions of this section are repealed to the extent of such inconsistency or conflict, which shall specifically include the repeal of the 1981 PILOT ORDINANCE described in above (a)(4) upon the commencement of this section as provided in above subsection (g).
(Ord. 11-2020. Passed 1-5-21; Ord. 07-2021. Passed 5-18-21.)