(a) Preamble.
(1) It is acknowledged that it is a propre public 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 such housing by providing for a service charge in lieu of property taxes in accordance with the State Housing Development Authority Act of 1996 (1996 PA 346, as amended, M.C.L.A. Section 125.1401 et seq., MSA Section 116.114(1) et seq., the "Act"). The City is authorized by this Act to establish or charge the service charge to be paid in lieu of taxes by any or all classes of housing exempt from taxation under this Act at any amount it chooses not to exceed the taxes that would be paid but for the Act. It is further acknowledged that housing for persons of low and moderate income is a public necessity and, as the City will be benefited and improved by such housing, the encouragement of the same by providing certain real estate tax exemption for such housing is a valid public purpose; further, 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 determination of the economic feasibility of housing developments which are constructed and financed in reliance on such tax exemption.
(2) The City acknowledges that Glatonbury Manor Limited Dividend Housing Association Limited Partnership (the "Sponsor") has offered, subject to receipt of a Federally-aided mortgage (as defined below), to acquire, rehabilitate, own, and operate a Housing Development (as defined below) identified as Glatonbury Manor on certain property located on South Main Street (see legal description attached to Ordinance 2004-01) in the City of Davison which will serve persons of low and moderate income (as defined below), 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 shall be defined as set forth in the State Housing Development Authority Act of 1966, being Public Act 346 of 1966, of the State of Michigan, as amended, except as follows:
(1) "Act." The State Development Authority Act, being Public Act 346 of 1966, of the State of Michigan, as amended.
(2) "Annual shelter rent." 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.
(3) "Authority." The Michigan State Housing Development Authority.
(4) "Calendar year." The consecutive 12-month period which ends on December 31 of the year immediately preceding the year in which the service charge was to be paid.
(5) "Person of low or moderate income." Persons whose incomes are at or below 60% of the Genesee County median income, adjusted for family size. Among low income or moderate income persons, preferences shall be given to the elderly and those displaced by urban renewal, slum clearance, or other governmental action.
(6) "Federally-aided mortgage."
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 Housing and Urban Development and augmented by a program of rent subsidies.
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 development 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 the Act.
(7) "Housing development." A development which contains a significant element of housing for persons of low or moderate 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 and moderate income.
(8) "Sponsor." Glastonbury Manor Limited Dividend Housing Association Limited Partnership, 30100 Telegraph Road, Suite #426, Bingham Farms, MI 48025, or its successors in interest, which has applied to the Authority for low income housing tax credits to finance the housing development.
(9) "Utilities." Includes charges for fuel, water, sanitary sewer service, rubbish removal and electrical service which are paid by the housing development, during the calendar year.
(c) Class of Housing Developments. 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 such taxes shall be housing for persons of low to moderate income, which are financed or assisted pursuant to the Act. It is further determined that the proposed Glastonbury Manor project is claimed to be part of this class for each year that a notification of exemption is filed.
(d) Establishment of Annual Service Charge. The housing development identified as Glastonbury Manor and the property on which it is located, shall be exempt from all property taxes pursuant to the terms of this section, immediately upon the commencement of rehabilitation construction and once the notification of the exemption has been filed. The City, acknowledging 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 in consideration of the sponsor’s offer, subject to receipt of a federally-aided mortgage, to acquire, rehabilitate, own and operate the housing development, 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 7.5% of the annual shelter rents actually collected.
(e) Contractual Effect of Ordinance. 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 third party beneficiary under the contract, to provide tax exemption and accept payments in lieu of taxes, as previously described, is effectuated by enactment of this section.
(f) Payment of Service Charge. The service charge in lieu of taxes as determined under this section shall be paid in two equal parts on or before July 31 and December 30 of each year.
(g) Duration. This section shall remain in effect and shall not terminate so long as the federally-aided or authority-aided mortgage, advance, or grant is outstanding or so long as the housing development remains subject to income and rent restriction according to an allocation by the Authority of Low Income Housing Tax Credits, as provided for in M.C.L.A. 125.1415a and125.1422b and so long as the housing development submits the required annual notification of exemption pursuant to M.C.L.A. 125.1415a(1); provided, that the rehabilitation construction of the housing development commences within one year from the effective date of this section. In no instance shall this section remain in effect for more than 40 years.
(Ord. 04-001. Passed 4-12-04.)