[HISTORY: Adopted by the Town of Palmer as indicated in article histories. Amendments noted where applicable.]
[Adopted 4-11-2016 by Ord. No. 2016-04[1]]
[1]
Editor's Note: This ordinance is adopted pursuant to and in accordance with MGL c. 58, § 8C, which was accepted by the Town of Palmer by action of the Town Council.
This affordable housing tax abatement ordinance is enacted to encourage the development of affordable housing as defined in MGL c. 60, § 1, as the same may be amended from time to time.
Qualifying sites which may be the subject of a tax abatement agreement under this article shall:
A. 
Be a site or portion of a site for which the Commissioner of the Department of Revenue has approved in writing a request made by the Town of Palmer to grant an abatement; and
[Amended at time of adoption of Code (see Ch. 1, General Provisions, Art. I)]
B. 
Be owned by a new owner (eligible owner) who is an affordable housing developer who would be acquiring the property as a court-appointed receiver under the Attorney General's Office's Abandoned Housing Initiative and who is not liable for any of the outstanding charges secured by the Town of Palmer's lien and who owes no delinquent taxes to the Town of Palmer; and
C. 
Be available for affordable housing or affordable housing and commercial uses under the Town of Palmer Zoning Ordinances, including any special permits or variances.[1]
[1]
Editor's Note: See Ch. 171, Zoning.
Affordable housing tax agreements must meet the minimum requirements described in this section.
A. 
Property.
(1) 
Current use. The site covered by the agreement may contain one or more taxable parcels. The parcels may be vacant or improved.
(2) 
Developed use. The site must be developed for 1) affordable housing use only or 2) mixed affordable housing and commercial use.
(a) 
Affordable housing.
[1] 
Affordable housing is housing:
[a] 
Owned by or rented to families or individuals with household income at time of initial occupancy that meets certain income standards; and
[b] 
Subject to a recorded affordable housing restriction of at least 45 years, including resale restrictions imposed to maintain its affordability on a long-term basis as defined in MGL c. 60, § 1, as the same may be amended from time to time.
[2] 
Household income cannot exceed 120% of the area-wide median income determined by the United States Department of Housing and Urban Development (HUD) as adjusted for family size. Subsequent owners and renters must also meet that income standard at initial occupancy.
(b) 
Mixed-use.
[1] 
Primary use. Affordable housing must be the primary use of any mixed-use development. The site may include commercial uses, but not market-rate housing. "Primary use" means that more than 50% of the floor space of the improvements on the site must be devoted to affordable housing. This condition and definition of primary use must be included in the agreement, along with plans showing the percentage of floor space devoted to affordable housing use. Common areas, such as floor space used for heating, air conditioning or storage, are to be prorated and allocated to the affordable housing and other uses.
[2] 
Compliance. No agreements covering a mixed-use development may be made unless:
[a] 
The agreement provides that no building permits or certificates of occupancy may be issued unless the Building Inspector determines that the development of the site conforms to the primary use requirement set forth in these guidelines.
[b] 
The agreement provides, at a minimum, that if the development later becomes nonconforming during the period covered by the agreement, or within 20 years of its effective date, whichever period is shorter, the certificates of occupancy for the commercial space shall be revoked unless the amount of real estate taxes abated pursuant to the agreement are repaid.
B. 
Developer.
(1) 
The agreement is with the person or entity planning to develop the site as affordable housing or for affordable housing and commercial purposes, i.e., the developer. The developer may or may not own the site at the time the agreement is made, but cannot be personally liable for any of the outstanding real estate taxes that are the subject matter of the agreement, i.e., cannot be the owner assessed the taxes.
(2) 
The developer must also meet the same standards that apply to purchasers of tax possession property under MGL c. 60, § 77B. This means the developer cannot be delinquent on any property taxes, or have had any arson or insurance fraud convictions, and must submit an affidavit of compliance with these standards at the time the agreement is made.
(3) 
The developer must be an affordable housing developer who would be acquiring the property as a court-appointed receiver under the Attorney General's Office's Abandoned Housing Initiative or through the Massachusetts Housing Court.
C. 
Scope.
(1) 
Outstanding taxes.
(a) 
The agreement may cover the payment and abatement of municipal real estate taxes outstanding at the time the agreement is made or at the time the developer acquires title, whichever occurs first. This means unpaid installment payments of the Town of Palmer's real estate tax assessed for any fiscal year that are overdue, i.e., installments on which interest has accrued by law. It also includes all accrued interest and collection costs (such as demand charges and recording and advertising costs for tax takings) on those taxes as of the agreement or acquisition date, whichever applies.
(b) 
The agreement may not apply to the payment and abatement of unpaid:
[1] 
Municipal real estate tax installment payments that first accrue interest after the agreement or acquisition date, whichever applies, and interest and collection costs that accrue on those taxes.
[a] 
Where the developer has acquired the site before the agreement is made, the developer must have timely paid all post-acquisition installment payments. If not, the developer is considered delinquent on property taxes and, therefore, is not eligible to enter into an agreement. See Subsection B above.
[b] 
Where the developer is acquiring the site after the agreement is made, the developer must pay any post-agreement installment payments, including accrued interest and collection costs, at the time the property is acquired. No abatement may be granted unless and until these post-agreement taxes have been paid. See § 125-4A(2) below.
[2] 
District real estate taxes.
[3] 
Municipal and district charges that are liens on the site, e.g., unpaid water or sewer betterments or user charges.
(2) 
Minimum terms. The agreement must specify at a minimum:
(a) 
The number of affordable housing units to be developed, including the percentage of floor space devoted to affordable housing in any mixed-use development.
(b) 
The amount owed by fiscal year and by taxes, interest and collection costs.
(c) 
The amount to be abated by fiscal year and by taxes, interest and collection costs.
(d) 
The balance to be paid by the developer.
(e) 
The monthly or other schedule for paying the balance.
(f) 
The final payment date.
(g) 
The rate of interest that will accrue, if any, on the unpaid balance.
(h) 
The penalty for late payments, if any.
(3) 
Proposed abatement. The agreement must expressly provide that any abatement is subject to the approval of the Department of Revenue (DOR) in accordance with MGL c. 58, § 8C. If the developer does not own the site at the time the agreement is made, it must also provide that any abatement is subject to the developer's acquisition in compliance with the terms and conditions of the agreement.
D. 
Signature.
(1) 
The agreement must be signed by the Town Manager and the developer and be notarized. The Town Clerk must attest that the official(s) signing on behalf of the municipality is the signatory designated by the bylaw or ordinance.
(2) 
A copy of the signed agreement must be provided to the:
(a) 
Developer;
(b) 
Town Council;
(c) 
Community Development (DHCD); and
(d) 
DOR
A. 
Payments to acquire title. Assessed owners, mortgagees and others with interests in the site subordinate to the municipality's tax lien or tax title may not receive more than the amounts set forth in this section in return for surrendering or conveying their interests in the property to the developer. This is to prevent unjust enrichment to delinquent taxpayers at the expense of other municipal taxpayers and to ensure that the tax revenue foregone by the municipality subsidizes affordable housing and community development. The agreement must include a certification by the developer under the pains and penalties of perjury that the total consideration to be paid the delinquent owner and all others with interests in the property will not exceed the amount authorized by these guidelines.
(1) 
Definitions. The following definitions apply for the purpose of determining the amount the developer may pay to acquire the property:
MUNICIPAL LIENS
Liens for all:
(a) 
Municipal and district real estate taxes;
(b) 
Municipal and district charges for which liens exist; and
(c) 
Accrued interest and collection costs on those taxes and charges outstanding at the time the agreement is made.
PURCHASE PRICE
The total payments made to all parties with subordinate interests. Subordinate interests are all interests other than municipal liens. If a developer acquires property subject to an existing interest, the value of that interest is treated as a payment for purposes of determining the purchase price. For example, if a developer pays the owner of the property $200,000 to convey title, without retiring an existing mortgage that would cost $100,000 to discharge on the date title passes, the purchase price is $300,000.
(2) 
Assessed value substantially more than liens.
(a) 
If the total municipal liens outstanding are less than half the current assessed valuation of the property, the purchase price cannot exceed the fair cash value of the property less the amount of liens before any abatement authorized under the agreement.
(b) 
The fair cash value of the property is presumed to be no more than 10% above its current assessed valuation. A higher amount than this presumptive ceiling on the fair cash value may be used to determine the maximum purchase price only if 1) the higher amount is substantiated by an appraisal from a real estate appraiser licensed by the Board of Registration of Real Estate Appraisers, and 2) the Assessors agree in writing that the higher amount is a reasonable estimate of the current fair cash value of the property.
EXAMPLE:
A parcel with a current assessed valuation of $300,000 has $100,000 in outstanding municipal liens. Without an appraisal, the formula for calculating the maximum purchase price is:
1.
Assessed valuation: $300,000
2.
Presumptive fair cash valuation: ($300,000 x 1.10) = $330,000
3.
Less municipal liens: $100,000
4.
Maximum purchase price = $230,000
(3) 
Assessed value not substantially more than liens. If the total municipal liens outstanding are 1/2 or more of the current assessed valuation of the property, the Assessors must inspect the property and then reapply their valuation schedules or models to determine the valuation of the property in its current condition. The fair cash value of the property is presumed to be no more than 10% above this redetermined value unless a higher amount is established by an appraisal in the manner set forth in Subsection A(2)(b) above.
(a) 
Liens exceed fair cash value. If the total municipal liens exceed the fair cash value, the developer may not pay any party with a subordinate interest more than $1,000 to convey the interest.
(b) 
Fair cash value exceeds liens. If the fair cash value exceeds the total municipal liens, then the maximum amount the developer may pay all parties with subordinate interests in the property is determined according to the formula set out in Subsection A(2)(b) above.
B. 
Approval pending acquisition. The Town may request approval of the proposed abatement before the developer has acquired the property. Assessors may not process any abatement, however, until the municipal signatory certifies to them that the developer has:
(1) 
Acquired all parcels constituting the site;
(2) 
Paid any post-agreement taxes required under § 125-3C(1)(b)[1][b] of this article; and
(3) 
Complied with any other pre-conditions in the agreement.
C. 
Maximum abatement. The proposed abatement cannot exceed 75% of the outstanding real estate taxes and 100% of the outstanding interest and collection costs. If the site consists of more than one parcel, these limits apply to the total amount owed for all parcels.
D. 
Certifications of eligibility. The Town signatory must certify compliance with the following eligibility standards before an abatement can be approved by DOR and granted by the Assessors:
(1) 
Mixed-use developments. If the agreement covers a mixed-use development, 1) the Building Inspector certifies that the plans demonstrate that the primary use of the development will be for housing as defined in these guidelines; and 2) the agreement provides for the compliance sanctions set forth in these guidelines. See § 125-3A(1)(b)[2] above.
(2) 
Eligible developer. The developer submitted an affidavit of compliance with the requirements of MGL c. 60, § 77B regarding property tax delinquency and arson or insurance fraud convictions at the time the agreement was made. See § 125-3B above.
(3) 
Purchase price.
(a) 
The developer paid no more than the purchase price allowed by this article to acquire the site. See Subsection A above.
(b) 
If the site has not been acquired at the time the proposed abatement is submitted for approval, the agreement contains the developer's 1) certification that the purchase price will not exceed the amount allowed by this article; and 2) acknowledgement that no abatement will be granted until the Town signatory certifies to the Assessors that this and all other pre-conditions have been met. See Subsections A and B above.
E. 
Payment of unabated taxes. The developer must pay the amount of unabated outstanding taxes, interest and collection costs in accordance with the repayment terms and conditions contained in the agreement. The obligation and lien for unabated taxes remains subject to those provisions.
In the event that any phrase, clause, sentence, paragraph or section of this article shall be declared unconstitutional or invalid by the judgment or decree of any court of competent jurisdiction, such unconstitutionality or invalidity shall not affect any of the remaining phrases, clauses, sentences, paragraphs and sections of this article.