(a) Preamble.
(1) It is acknowledged that it is a proper public purpose of the State and its political subdivisions to provide housing for its citizens of low 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 1966 (1966 PA 346, as amended, MCL Section 125.1401 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 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 this Act. It is further acknowledged that such housing for persons of low income is a public necessity, and as the City will be benefitted 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 economic feasibility of housing developments which are constructed and financed in reliance on such tax exemption.
(2) The City acknowledges that Braidwood Manor Christian Ministries, Inc. and American Community Developers, Inc., (collectively the "Sponsor") have offered, subject to receipt of an allocation of low-income housing tax and a Federally aided mortgage, to acquire, renovate, own and operate a housing development identified as Braidwood Manor (the "Project") on certain property in the City described in Exhibit A, attached to Ordinance 2006-08, passed January 8, 2007, and hereby made a part hereof 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 taxes.
(b) Definitions. All terms not herein defined shall have the meanings given them in the State Housing Development Authority Act of 1966, being Public Act 346 of 1966, of the State of Michigan, as amended.
(1) “Act” means the State Housing Development Authority Act, being Public Act 346 of 1966, of the State of Michigan, as amended.
(2) “Annual shelter rent” means the total collections during an agreed annual period from or paid on behalf of 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” means the Michigan State Housing Development Authority.
(4) “Contract rents” are as defined by the U.S. Department of Housing and Urban Development in regulations promulgated pursuant to the U.S. Housing Act of 1937, as amended.
(5) “Elderly” means: so long as the housing development is assisted under a Section 8 contract, an elderly family or a handicapped person as defined in 24 CFR 885.5; or in the event the Section 8 contract is no longer in effect, a single person who is fifty-five years of age or older or a household in which at least one member is fifty-five years of age or older and all other members are fifty years of age or older or a younger handicapped person as defined in 24 CFR 885.5 whose occupancy began during the term of the Section contract.
(6) “Elderly low income persons or families” are those which are both elderly and low income as those terms are defined by this chapter.
(7) “Federally-aided mortgage” 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 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.
E. A mortgage receiving special benefits under other Federal law designated specifically to develop low and moderate-income housing, consistent with the Act.
(8) “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.
(9) “Low income” is as defined in Section 11(g) of the Act.
(10) “Mortgage loan” means a loan to be made by the authority or insured by HUD to the sponsor for the construction and/or permanent financing of the housing development.
(11) “Utilities” mean fuel, water, sanitary sewer service and/or electrical service which are paid by the housing development.
(12) “Sponsor” means person(s) or entities which have applied to the authority for a mortgage loan to finance a housing development.
(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 elderly low income persons or families, which are financed or assisted by the authority, the U.S. Department of Housing and Urban Development or low income housing tax credits. It is further determined that Braidwood Manor 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 Braidwood Manor and the property on which it is constructed shall be exempt from all property taxes upon the commencement of rehabilitation and once the notification of exemption is 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 the qualification of the housing development for exemption from all property taxes and a payment in lieu of taxes as established in this section, and in consideration of the sponsor's offer, subject to receipt of a Federally aided mortgage loan 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 seven and one-half percent of the difference between the contract rents actually collected during the preceding calendar year and utilities. In the event Section 8 payments are no longer available to the project, the annual service charge shall be equal to seven and one-half percent of the annual shelter rents.
(e) Limitation on the Payment of Annual Service Charge. Notwithstanding Section 5 of the Act, the service charge to be paid each year in lieu of taxes for the part of the housing development which is tax exempt and which is occupied by other than low income persons and 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.
(f) 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 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.
(g) 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 in two equal parts on July 15 and December 15 each year.
(h) Duration. This section shall remain in effect and shall not terminate for as long as the Federally-aided mortgage, advance or grant from the authority 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 and 125.1422b, and so long as the housing development submits the required annual notification of exemption pursuant to M.C.L.A. 125.1415a(l); provided, that acquisition and renovation of the housing development commences on or before December 31, 2007. In no instance shall this section remain in effect for more than forty years.
(Ord. 2006-08. Passed 1-8-07.)