(A) Purpose. This section authorizes and approves an annual service charge in lieu of taxes for residential housing developments that:
(1) Serve low income or moderate income persons (as defined in the State Housing Development Authority Act, Act 346 of the Public Acts of Michigan of 1966, as amended, and this section);
(2) Are financed or assisted by USDA-RD or the Authority in accordance with Act 346;
(3) Are located within the city; and
(4) Comply with this section.
(B) Title. The ordinance codified herein shall be known and cited as the “Cherry Hill Square Tax Exemption Ordinance.”
(C) Preamble.
(1) It is acknowledged that it is a proper public purpose of the Sate of Michigan and its political subdivisions to provide housing for low income citizens and to encourage the development of such housing by providing for a service charge in lieu of property taxes in accordance with Act 346. The city is authorized by Act 346 and this section to establish or change the annual service charge to be paid in lieu of taxes by any and all classes of housing exempt from taxation under Act 346 at any amount it chooses not to exceed the taxes that would be paid but for Act 346. It is further acknowledged that housing for low income persons and families is a public necessity, and as the city will be benefitted and improved by such housing, the encouragement of the same by providing ceratin real estate tax exemptions for such housing is a valid public purpose; further, that the continuance of the provisions of this section of tax exemption and the service charge in lieu of taxes during the period contemplated in this section is 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 Cherry Hill Square Limited Dividend Housing Associated Limited Partnership, a Michigan limited partnership (the “Sponsor” as defined in division (D) of this section) has committed to own, rehabilitate, and operate a housing development identified as “Cherry Hill Square” on certain property located at 213 Henry Ruff within the City of Inkster, Michigan, which is legally described in division (D)(8) of this section, to serve low income or moderate income persons, and that the Sponsor has offered to pay and will pay to the city, on account of the housing development, an annual service charge for public services in lieu of all taxes.
(D) Definitions. For the purpose of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
(1)
ACT. The State Housing Development Authority Act, being Act 346 of the Public Acts of Michigan of 1966, as amended.
(2) ANNUAL SHELTER RENT. The total actual collections during each calendar year from all occupants of a housing development representing rents or occupancy charges and commercial rents, which rental amounts shall be exclusive of charges for gas, electricity, heat, or other utilities furnished to the occupants.
(3) AUTHORITY. The Michigan State Housing Development Authority.
(4)
CLASS. The housing development known as Cherry Hill Square for low income or moderate income persons.
(5) CONTRACT RENTS. As defined by the U.S. Department of Housing and Urban Development in regulations promulgated pursuant to the U.S. Housing At of 1937, as amended.
(6) FAMILY. A household where a head of the household is a single or married person who is an adult and the family is low or moderate income.
(7) FEDERALLY-AIDED MORTGAGE. 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 (“HUD”) or United States Department of Agriculture-Rural Development (“USA-RD”);
(b) A mortgage receiving interest reduction payments provided by the HUD or USA-RD;
(c) A housing development to which the Authority allocates low income housing tax credits under section 22b of the Act; or
(d) 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. 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 to improve the quality of the development as it relates to housing for persons of low income. For the purposes of this section, HOUSING DEVELOPMENT means Cherry Hill Square located on the property legally described as:
Situated in the City of Inkster, County of Wayne, State of Michigan
A parcel of land in the Northwest one quarter of the Northeast one quarter of Section 23, Town 2 South, Range 9 East, Michigan Meridian, Nankin Township (now City of Inkster), Wayne County, Michigan, described as: Beginning at an iron rod on the North and South one quarter line of said Section 23, distant South 00 degrees 18 minutes 00 seconds West, 687.67 feet from the North one quarter corner of said Section 23; thence South 89 degrees 46 minutes 20 seconds East, 480.00 feet to an iron rod; thence South 00 degrees 18 minutes 00 seconds West, 406.00 feet to an iron rod; thence North 89 degrees 46 minutes 20 seconds West, 480.00 feet to an iron rod on the said North and South one quarter line; thence along said North and South one quarter line, North 00 degrees 18 minutes 00 seconds East, 406.00 feet to the Point of Beginning; reserving the Westerly 33.00 feet for Henry Ruff Road.
Property Address: 213 Henry Ruff Sidwell No.: 44-001-99-0013-000
(9) LOW INCOME OR MODERATE INCOME PERSONS. Shall be as defined in the Act, as
amended.
(10) SPONSOR and OWNER. Person(s) or entities which have applied to the Authority for the tax credits to finance a housing development. For the purposes of this section, the SPONSOR is Cherry Hill Square Limited Dividend Housing Association Limited Partnership.
(11) TAX CREDITS. The low income housing tax credits made available by the Authority to the sponsor for rehabilitation of the housing development by the sponsor in accordance with the low income housing tax credit program administered by the Authority under I.R.C. § 42 of 1986, as amended.
(12) USDA-RD. The United States Department of Agriculture, Rural Services Division.
(13) UTILITIES. Fuel, water, sanitary sewer service and/or electrical service, which are paid by the Housing Development or Tenants.
(E) Class of housing development. This section shall apply only to the housing development to the extent that the housing development provides housing for low income and moderate income persons and is financed or assisted by USDA-RD or the Authority pursuant to the Act.
(F) Declaration of tax exemption; establishment of annual service charge.
(1) The city acknowledges that the sponsor and USDA-RD and/or 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 payment of an annual service charge in lieu of taxes in an amount established in accordance with this section. In consideration of the sponsor’s offer to 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 that would otherwise be assessed to the housing development under Michigan law. Effective upon the adoption of this section and subject to the receipt by the city of the “notification of exemption” (or such other similar notification) by the sponsor and/or the Authority, the annual service charge shall be equal to 10% of the difference between the rental income actually collected and the cost of utilities of the housing development.
(2) The housing development, and the property on which it shall be constructed, shall be exempt from all property taxes from and after the commencement of rehabilitation of the housing development by the sponsor under the terms of this section.
(3) Additionally, sponsor shall cooperate with the city and the State of Michigan, by immediately submitting all necessary documentation and applications to enable the city to receive from the Michigan Department of Treasury payments in lieu of taxes pursuant to MCLA § 2.117d for the housing development. Should sponsor and city receive approval for such payment in lieu of taxes pursuant to MCLA § 2.117d, such payments in lieu of taxes will replace the annual service charge required to be paid by sponsor pursuant to division (F)(1) of this section and sponsor shall have no further obligation to pay to city such annual service charge.
(G) Limitation on the payment of annual service charge. Omitted.
(H) Payment of service charge. The service charge in lieu of taxes shall be payable to the city in the same manner as ad valorem property taxes are payable, except that the annual payment shall be paid on or before April 1 of each year for the previous calendar year.
(I) Duration.
(1) Subject to division (I)(2) below, this section shall remain in effect and shall not terminate for a maximum term of 25 years and so long as the house development remains subject to a federally aided mortgage, and so long as the housing development submits the required annual notification of exemption pursuant to MCL 125.1415a(l), as amended.
(2) Should the city receive approval and receive payment by the Michigan Department of Treasury for any other form of payment in lieu of taxes related to the housing development, this section will be deemed void and unenforceable for the period of time in which the city receives such payments in lieu of taxes for the housing development and during such period Cherry Hill shall have no obligation to pay to city the annual service charge contemplated hereunder.
(J) Filing of annual audit. The sponsor, or its successor, shall file a copy of any and all annual audits required to be provided to the federal government, the State of Michigan, and/or the Authority simultaneously with the city. The audit shall include detail with respect to occupancy of the housing development, annual rents received from the housing development, and the cost for utilities during the audit period.
(Ord. 824, passed 7-10-09)