(A) (1) It is acknowledged that it is a proper purpose of the State of Michigan and its political subdivisions to provide housing for its citizens of low and moderate income and to encourage the development of the housing by providing for a service charge in lieu of property taxes in accordance with the State Housing Development authority Act of 1966 (1966 Public Act 346, as amended, M.C.L.A. §§ 125.1401 et seq.; M.S.A. §§ 116.114(1) et seq.). 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 class of housing exempt from taxation under this Act. It is further acknowledged that such, housing for persons of low and moderate income is a public necessity, and as the city will be benefit and improved by the housing the encouragement of the same by providing certain real estate tax exemption for the housing is a valid public purpose; further, the continuation of the provisions of this ordinance for tax exemption and the service charge in lieu of taxes during the periods contemplated in this ordinance are essential to the determination of economic feasibility of housing developments which are constructed and financed in reliance of the ordinance and service charge.
(2) The city acknowledges that Kings Lane Limited Dividend Housing Association Limited Partnership (“Sponsor”) has been offered, subject to receipt of HUD § 221(d)(4) insurance and tax-exempt bonds being issued by the Michigan Housing Development Authority, to rehabilitate, own, and operate a housing development identified as “Kings Land Apartments” on certain real property located on Hemphill Road and the sponsor has offered to pay the city on account of this development an annual service charge in lieu of taxes.
(3) The property is legally described as: part of the North ½ of the southwest 1/4 of Section 20, Township 7 North, Range 7 East, Michigan Meridian, City of Burton, Genesee County, Michigan, described as: commencing at the Southeast corner of the northwest 1/4 of the southwest 1/4 of Section 30, said point being the southwest corner of the recorded plat of Baker Park; thence South 89 degrees 48 minutes 41 seconds West 558.02 feet along the North line of Outlot A of the recorded plat of Burton Gardens; thence North 00 degrees 02 minutes 09 seconds East 209.58 feet; thence North 89 degrees 57 minutes 53 seconds West 63.22 feet; thence North 00 degrees 01 minutes 47 seconds East 1,119.09 feet to the center line of line of Hemphill Road, so called; thence North 89 degrees 54 minutes 15 seconds East 604.02 feet to the center line of Camden Avenue, so called; thence South 00 degrees 42 minutes 45 seconds East 1321.99 feet along the center line of Camden Avenue, so called, to the point of beginning.
(B) The following definitions shall apply:
ACT. The State Housing Development Authority Act, being Public Act 346 of 1966, of the State of Michigan, as amended.
ANNUAL RENTS. The total collections during a calendar year from all occupants of a housing development representing rent or occupancy charges, exclusive of charges for gas, electricity, heat, or other utilities furnished to the occupants.
AUTHORITY. The Michigan State Housing Development Authority.
CALENDAR YEAR. The consecutive 12-month period which ends on December 31 of the year immediately preceding the year in which the service charge is to be paid.
HOUSING DEVELOPMENT. A development which contains a significant element of housing for persons of low and moderate income and such elements of other housing commercial, recreational, communal and educational facilities as the Authority determines improve the quality of the development as it relates to housing for persons of low and moderate income.
HUD. The Department of Housing and. Urban Development of the United States Government.
MARKET RENTS. Defined by the U.S. Department of Housing and Urban Development in regulations promulgated pursuant to § 221(d)(4) of the U.S. Housing Act of 1937, as amended.
MORTGAGE LOAN. A construction and permanent mortgage loan insured by HUD.
PERSONS OF LOW AND MODERATE INCOME. Persons and families eligible to move into a housing development. A minimum of 40% of each of the Development’s unit types must be occupied or available for occupancy by households who incomes do not exceed 60% of area median income, adjusted for family size. The income of individuals and area median gross income shall be determined by the Secretary of the Treasury in a manner consistent with determinations of lower income families and area median gross income under § 8 of the U.S. Housing Act of 1937, including adjustment for family size.
SPONSOR. Persons or entities which have applied to either the Authority for a mortgage loan to finance housing development or to another governmental entity for a federally-aided loan, as defined by the Act. The sponsor is Kings Lane Limited Dividend Housing Association Limited, Partnership, a Michigan Limited Partnership.
UTILITIES. Fuel, water, sanitary sewer service and/or electrical services which are paid by the Housing Development and not the tenants of the Housing Development.
(C) It is determined that the class of Housing Developments to which the tax exemption shall apply and for which a service charge shall be paid in lieu of the taxes shall be multiple dwellings for persons of low and moderate income, which are financed or assisted by the Authority or which are federally aided, as defined by the Act. It is further determined that “Kings Lane Apartments” is of this class.
(D) The Housing Development identified as “Kings Lane Apartments” and the property on which it shall be rehabilitated shall be exempt from all property taxes commencing on the December 31 after the closing of the project financing and the commencement of construction. The city, acknowledging that the sponsor and HUD and the Authority, in the case of a sponsor receiving a federally-aided mortgage loan from HUD and tax exempt bonds from the Authority, have established that the economic feasibility of the housing development in reliance upon the enhancement and continuing effect of this ordinance and the qualification of the housing development for exemption from all property taxes and a payment in lieu of taxes as established in this ordinance, will accept payment of an annual service charge for public services in lieu of all property taxes. The annual service charge shall be equal to 5% of the difference between annual rents and utilities for federally aided housing developments. The sponsor shall provide the city with a “Verification of Eligibility for Tax Exemption” form from the Authority to commence the annual service charge.
(E) (1) The 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 that the annual payment shall be paid on or before April 1 of each year for the prior year. Sponsor shall provide an audited financial statement and calculation of the service charge along with the annual payment. Sponsor shall also provide on an annual basis a “Verification of Continuing Eligibility of Exemption” form from the Authority.
(2) Notwithstanding the provisions of § 15(a)(5) of the Act, to the contrary, an ordinance adopted by the city with HUD as third party beneficiary under the ordinance to provide tax exemption and accept payments in lieu of taxes as previously described will be effectuated by enactment of the ordinance by the City Council.
(F) This ordinance shall remain in effect and shall not terminate so long as the federally-aided mortgage loan and/or tax-exempt bonds from the Authority for the housing development remains outstanding or unpaid, or for such period as HUD and/or the Authority have any interest in the property through its insurance program and/or tax-exempt bonds issued by the Authority; provided, the construction and/or rehabilitation of the housing development commences within 1 year from the effective date of this ordinance. The sponsor shall cause the Authority to provide an annual certification of same as of December 1 of each year. The lender shall provide the itemized balance of each escrow account.