[HISTORY: Adopted by the City Commission
of the City of Kalamazoo as indicated in article and section histories.
Amendments noted where applicable.]
CHARTER REFERENCES
City Assessor generally — See
§ 51.
Taxation generally — See § 77
et seq.
Board of Review — See § 81
et seq.
GENERAL REFERENCES
Special assessments for public improvements — See Ch. 32.
STATUTORY REFERENCES
General Property Tax Act — See
MCLA § 211.1 et seq.
Assessment role — See MSA § 7.24;
MCLA § 211.24.
Completion of review of assessments — See
MSA § 7.30(1); MCLA § 211.30a.
Tax exemption for housing project — See
MSA § 16.114(15a); MCLA § 125.1415a(5).
[Adm. Code § A207.34]
The "tax day," for the purpose of assessing
the value and determining the taxable situs of persons and property,
both real and personal, in the City shall be the same as the "tax
day" for such purposes as set forth in the General Property Tax Act
of the State of Michigan (MSA § 7.1 et seq.; MCLA § 211.1
et seq.).
[Adm. Code § A207.35]
Each year, unless in conflict with law, the
City Assessor shall, on or before the first Monday in March, make
and complete the assessment roll.
[Adm. Code §§ A207.36, A207.38]
A.
Each year the Board of Review shall meet, for the
purpose of reviewing and correcting the assessment roll, at the office
of the City Assessor, on the first Tuesday following the first Monday
in March, between the hours of 9:00 a.m. and 5:00 p.m., and shall
continue in session until the assessment roll shall have been revised,
corrected and approved. The review of assessments shall be completed
on or before the first Monday in April.
B.
All notices required to be given to the public of
the time and place of meeting of the Board of Review shall reflect
the dates provided for in this section.
[Adm. Code §§ A502.1A, A502.1B;
amended 2-24-1975 by Ord. No. 1045; 12-22-1980 by Ord. No. 1215; 6-3-1985 by Ord. No.
1352; 7-6-1987 by Ord. No. 1418; 2-8-1988 by Ord. No. 1431; 5-31-1988 by Ord. No. 1442; 11-6-1989 by Ord. No. 1477; 10-4-1993 by Ord. No.
1559; 11-6-2001 by Ord. No. 1726; 6-20-2008 by Ord. No. 1842; 7-20-2009 by Ord. No. 1857; 7-21-2014 by Ord. No. 1923; 9-21-2015 by Ord. No. 1935; 9-17-2018 by Ord. No. 1972; 6-20-2023 by Ord. No. 2067]
A.
Preamble. It is acknowledged that it is a proper public purpose of
the State of Michigan and its political subdivisions to provide housing
for low-income individuals and families and to encourage the development
of such housing by providing for a service charge payment in lieu
of property taxes in accordance with the State Housing Development
Authority Act. The City is authorized by Public Act 346 of 1966, as
amended, 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 not to exceed the ad valorem taxes that would be paid but
for the application of the Act. It is further acknowledged that housing
for low-income individuals and families is a public necessity, and
as the City is benefited and improved by such housing, and the encouragement
of the same by providing a real estate tax exemption for such housing
is a valid public purpose. It is further acknowledged that the continuance
of the provisions of this section for tax exemption and the service
charge payment in lieu of ad valorem property taxes during the periods
contemplated by this section are essential to the determination of
economic feasibility of housing developments that are constructed
or rehabilitated with financing extended in reliance on such tax exemption.
B.
ACT
ANNUAL SHELTER RENTS
AREA MEDIAN INCOME
AUTHORITY
CONTRACT RENTS
HOUSING DEVELOPMENT PROJECT
HUD
LOW-INCOME INDIVIDUALS AND FAMILIES
MORTGAGE LOAN
SPONSOR
TAXABLE VALUE
UTILITIES
Definitions. As used in this section, the following terms shall have
the meanings indicated:
The State Housing Development Authority Act, being Public
Act 346 of 1966 of the State of Michigan, as amended, MCLA § 125.1401
et seq.
The total collections during a calendar year or other agreed-upon
annual period from or paid on behalf of all occupants of the housing
development representing rent or occupancy charges, exclusive of charges
for utilities furnished to the occupants. [This definition is not
applicable to a housing development project which receives project-based
Section 8 of the United States Housing Act of 1937 (42 U.S.C. § 1437f)
rental subsidy.]
The median income for the Kalamazoo area as determined under
Section 8 of the United States Housing Act of 1937, 42 U.S.C. § 1437f,
adjusted for family size.
The Michigan State Housing Development Authority.
The total contract rents (as defined by HUD in regulations
promulgated pursuant to Section 8 of the United States Housing Act
of 1937, as amended) received in connection with the operation of
a housing development during a calendar year or other agreed-upon
annual period, exclusive of utilities. (This definition is not applicable
to a housing development project that does not receive project-based
Section 8 rental subsidy.)
A development or project which meets the qualifications of
and is eligible for a service charge payment in lieu of taxes under
the Act and this section.
The Department of Housing and Urban Development of the United
States government.
Individuals and families whose household income is does not
exceed 120% of the area median income. This definition is based on
the condition in the City of Kalamazoo that nearly 61% of all households
and almost 71% of renters in the City have household income of less
than 80% of the HUD area median family income.
A loan that is federally aided as defined in Section 11(c)
of the Act, or a loan or grant made or to be made by the Authority,
for the construction, rehabilitation, acquisition and/or permanent
financing of a housing development project, that qualifies for a payment
in lieu of taxes pursuant to the Act and this section and is secured
by a mortgage on the housing project.
Any persons or entities that receive or assume a mortgage
loan.
The taxable value as calculated under Section 27a of the
General Property Tax Act, 1893 PA 206, MCL § 211.27a.
Charges for gas, electric, water, sanitary sewer and other
utilities furnished to the occupants of a housing development governed
by this section, and which are paid by a housing development project
sponsor.
C.
Class of eligible housing development projects.
(1)
It is determined that the class of housing development projects to
which the tax exemption shall apply and for which a service charge
shall be paid in lieu of such taxes shall be those housing development
projects that are for individuals and families of low income which
are financed with a mortgage loan.
(2)
Prior to being eligible for tax exemption under this section, each
housing development project shall be presented to the City Commission,
which shall make a determination by resolution as to whether the proposed
project qualifies for exemption and, if so, shall set forth the service
charge payment in lieu of taxes to be made for that project. The service
charge payment in lieu of taxes for the project set by the City Commission
shall be reflective of the mix of dwelling units intended to be occupied
by low-income individuals and families and dwelling units intended
to be occupied by other than low-income individuals and families.
(3)
The owner of a housing project eligible for an exemption under this
section must file with the City Assessor notification of the exemption.
The notification must be in an affidavit form as provided by the Authority.
The owner must first submit the completed affidavit form to the Authority
for certification by the Authority that the project is eligible for
the exemption. The owner must then file the certified notification
of the exemption with the City Assessor before November 1 of the year
preceding the tax year in which the exemption is to begin.
(4)
A housing development project in which at least 80% of the dwelling
units are reserved for individuals and families of low income whose
income is 60% or less of the area median income are eligible for a
tax exemption and the payment of a service charge in lieu of ad valorem
taxes on those dwelling units occupied by low-income individuals and
families as set forth by City Commission resolution; for the remaining
units, the developer shall pay a service charge equivalent to the
ad valorem taxes on those noneligible units or create a condominium
to separate the noneligible units from the eligible income-restricted
tax-exempt units.
(5)
A housing development project in which less than 80% but at least
41% of the dwelling units are reserved for individuals and families
of low income whose income is 60% or less of the area median income
are eligible for a tax exemption and the payment of a service charge
in lieu of ad valorem taxes, as set forth by City Commission resolution,
on those dwelling units reserved for low-income individuals and families;
for the remaining units, the developer shall pay a service charge
equivalent to the ad valorem taxes on those noneligible units or create
a condominium to separate the noneligible units from the eligible
income-restricted tax-exempt units.
(6)
A housing development project in which less 41% of the dwelling units
are reserved for individuals and families of low income whose income
is 60% or less of the area median income is not eligible for a tax
exemption and the payment of a service charge in lieu of ad valorem
taxes on those dwelling units.
(7)
Documentary evidence must be presented to the City Commission to
establish that the project so qualifies for exemption, whether by
making available to tenants a program of rent supplements or housing
assistance payments, as established and allocated under the rules
and regulations of either HUD or the Authority, or both, or the project
is being operated in accordance with the requirements of the Housing
Development Grant Program, or otherwise qualifies by law.
D.
Establishment of annual service charges.
(1)
The portion of a housing development project and the property on
which it is or will be located that is within the class of housing
development projects eligible for tax exemption pursuant to this section
is exempt from all ad valorem property taxes. The City acknowledges
that the sponsor, and the Authority, in the case of a sponsor receiving
an Authority-financed mortgage loan, or the sponsor and the mortgage
lender, in the case of a sponsor receiving a federally aided mortgage
loan, have conditioned the economic feasibility of the housing development
project in reliance upon the enactment and continuing effect of this
section, as from time to time amended, and the qualification of the
housing development project for exemption from all ad valorem property
taxes and a service charge payment in lieu of taxes as established
in this section. Therefore, the City, in consideration of the sponsor's
offer, subject to receipt of a mortgage loan to construct or rehabilitate,
own and operate said housing development project, agrees to accept
payment of an annual service charge for public services in lieu of
all ad valorem property taxes. The annual service charge payment shall
be in an amount equal to a City Commission determined percentage of
the annual shelter rents and contract rents collected by the housing
development project sponsor during each calendar year or other agreed-upon
annual period as determined by the City Commission in a resolution
to be adopted pursuant to this section for each eligible project.
(2)
The owner of a housing project exempt from taxation under this section
shall pay an annual service charge for public services in lieu of
all taxes. All of the following apply to the amount that an owner
must pay as an annual service charge under this subsection:
(a)
The owner must pay an annual service charge in accordance with
the following:
[1]
Subject to Subsection D(2)(b) and D(2)(c), for a new construction project, an amount that is the greater of the tax on the property on which the project is located for the tax year preceding the date on which construction is commenced or as determined by City Commission resolution up to 10% of the annual shelter rents obtained from the project.
[2]
Subject to Subsection D(2)(b) and D(2)(c), for a rehabilitation project, an amount that is the lesser of the tax on the property on which the project is located for the tax year preceding the date on which rehabilitation is commenced or as determined by City Commission resolution up to 10% of the annual shelter rents obtained from the project.
(b)
Subject to Subsection D(2)(c), the City Commission, by ordinance, may establish or change, by any amount it chooses, the service charge paid under Subsection D(2)(a) in lieu of taxes by all or any class of housing projects exempt from taxation under this section. However, the service charge cannot exceed the amount in taxes that an owner would have otherwise paid if the housing project were not tax-exempt.
(c)
Notwithstanding Subsection D(2)(a), a service charge paid each year in lieu of taxes for that part of a housing project that is tax-exempt, but it is occupied by individuals or families other than low-income individuals or families must be equal to the full amount of the taxes that would be paid on that portion of the housing project if the housing project were not tax-exempt. The owner of the housing project must allocate the benefits of any tax exemption granted under this section exclusively to low-income individuals or families or to the maintenance and preservation of the housing project as a safe, decent, and sanitary affordable housing.
E.
Limitation on the payment of annual service charge. Except as otherwise
provided in this section, the service charge to be paid each year
in lieu of taxes for the part of an otherwise tax-exempt housing development
which is occupied as commercial (nonresidential) space or by other
than low-income individuals or families shall not exceed the full
amount of the taxes which would be paid on that portion of the housing
development if the project were not tax-exempt.
F.
Manner of payment in lieu of taxes. Except as otherwise provided
in this section, the annual service charge payment in lieu of taxes
shall be based on the annual shelter rents or contract rents for the
preceding calendar year or other agreed-upon annual period based on
the audited financial report for that year as provided by the sponsor
to the City. The annual service charge payment in lieu of taxes shall
be paid to the City on or before March 31 of each year. Any annual
service charge payment in lieu of taxes or any portion of the annual
service charge payment remaining unpaid after 120 days after the close
of the owner's fiscal year shall have interest of 1% per month,
together with a penalty fee of 4%, added to it, provided that the
total penalty fee shall not exceed 4% of the total service charge
payment in lieu of taxes due and payable. The annual service charge
payment in lieu of taxes shall be accompanied by an estimate of the
shelter rents or contract rents for the current calendar year and
a certified annual audit of the gross rentals and utility costs of
the project for the preceding calendar year along with documentation
regarding how the sponsor has calculated the amount of the annual
service charge payment it is submitting to the City. The sponsor shall
also provide the City with any other audited financial statements
or other documentation as may be necessary to establish compliance
with this section.
G.
Contractual effect of section. Notwithstanding the provisions of
Section 15(a)(7) of the Act to the contrary, a contract shall be deemed
effected between the City of Kalamazoo and the sponsor, with the Authority
as third-party beneficiary, to provide a tax exemption and accept
service charge payments in lieu of taxes as previously described by
this section upon the adoption of a project-specific resolution as
provided by this section.
H.
Duration. Unless indicated otherwise in the resolution adopted by
the City Commission, the property tax exemption provided under this
section shall commence at the beginning of the tax year immediately
after the property has satisfied all the requirements under the Act.
If, at the inception of the exemption provided by this section, the
property does not generate any annual shelter rents during one or
more calendar years or other agreed-upon annual period, the service
charge payment shall equal the amount of regular ad valorem taxes
that would have been paid for the property until the property begins
to generate annual shelter rents or contract rents. Unless indicated
otherwise in the resolution adopted by the City Commission, the duration
of the property tax exemption provided under this section shall continue
so long as the Authority-aided or federally aided mortgage loan remains
outstanding and unpaid, provided that construction or rehabilitation
of the housing development commences within one year from the effective
date of the resolution. In the event that the housing development
project sponsor fails to timely pay the annual service charge in lieu
of taxes, the City Commission, by resolution, may, in addition to
any other means available under law, elect to: 1) employ collection
procedures that are in accordance with the provisions of the General
Property Tax Act, 1893 Public Act 206, as amended, MCLA § 211.1
et seq.); or 2) direct the City Attorney to commence an action in
a Kalamazoo County court of competent jurisdiction to collect any
outstanding past-due service charge payments and/or seek an order
terminating the contract and revoking the tax-exempt status of the
project due to the breach of the acknowledged contract between the
City and sponsor created pursuant to the provisions of this section.
If the tax-exempt status of the housing project is revoked, the housing
development project shall then be placed on the tax rolls on the next
December 31 following the revocation of the tax-exempt status of the
project. If a housing development project is added to the tax rolls
and any service charge payment remains unpaid at the time the housing
development project is added to the tax rolls, the City officials
in charge of the collection thereof shall certify to the tax assessing
officer of the City the fact of such delinquency, whereupon such charge,
together with any accumulated interest and penalty fees, shall be
entered upon the tax rolls as a charge against such premises and shall
be collected and the lien thereof enforced in the same manner as general
City taxes against such premises.
I.
Severability. Should any section, clause or provision of this section
be declared by any court to be invalid, the same shall not affect
the validity of this section as a whole or any part thereof other
than the part so declared to be invalid.
J.
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.
K.
Savings clause. The adoption of amendments to this section shall
not repeal or revoke the tax-exempt status and payment in lieu of
taxes previously established for any other housing development by
the City Commission.
[Added 12-26-1979 by Ord. No. 1182;
amended 4-7-1980 by Ord. No. 1194]
Pursuant to § 87 of the City Charter,
all taxes due and remaining unpaid after the last of the month in
which such installment shall be payable shall have a penalty of 1%
per month, together with a collection fee of 4% added to them; provided
that the total collection fee shall not exceed 4% of the total tax
due and payable on the first day of July next preceding.[1]
[1]
Editor's Note: Former Art. II, Kalamazoo Downtown Development
Authority Tax Increment Financing Plan and Development Plan, adopted
12-5-1988 by Ord. No. 1450, as amended, which immediately followed,
was repealed 5-20-2019 by Ord. No. 1987. Ordinance No. 1987 also stated
that Ord. No. 1679, which amended Ord. No. 1450, was repealed except
to the extent that the legal description and boundaries of the Downtown
Development Area (identified as Exhibits 1 and 2, respectively, in
the Restated Plan that was attached as Exhibit A to Ord. No. 1679)
remain full force and effect.
