[HISTORY: Adopted by the City Council of the City of Coldwater 5-23-2022 by Ord. No. 851. Amendments noted where applicable.]
This chapter shall be known and cited as the "City of Coldwater
Tax Exemption Ordinance for Old Mill Race Apartments."
(a)
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
persons and families and to encourage the development of such housing
by providing for a service charge in lieu of property taxes in accordance
with the Act. The City of Coldwater is authorized by the Act to establish
or change a 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 low-income persons
and families is a public necessity, and as the City of Coldwater will
be benefited and improved by such housing, the encouragement of the
same by providing real estate tax exemption for such housing is a
valid public purpose. It is further acknowledged that the continuance
of the provisions of this chapter for the tax exemption and the service
charge in lieu of all ad valorem taxes during the period contemplated
in this chapter are essential to the determination of economic feasibility
of the housing development that is to be constructed or rehabilitated
with financing extended in reliance on such tax exemption.
(b)
The
City of Coldwater acknowledges that the sponsor (as defined below)
has offered, subject to receipt of an allocation under the Low-Income
Housing Tax Credit Program administered by the Michigan State Housing
Development Authority, to construct, own and operate a housing development
identified as The Old Mill Race Apartments on certain property located
at 517 West Chicago Street, parcel identification number 304-000-000-020-01,
in the City of Coldwater 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 ad valorem property taxes.
All terms in this chapter shall be defined as set forth in the
Act, except as follows:
The State Housing Development Authority Act, being Public
Act 346 of 1966, as amended.
The total collections during an agreed annual period from
or paid on behalf of all occupants of a housing project representing
rent or occupancy charges, exclusive of charges for gas, electricity,
heat, or other utilities furnished to the occupants by the sponsor.
The Michigan State Housing Development Authority.
The City of Coldwater, a home rule municipality organized
pursuant to Public Act 279 of 1909, as amended, and located in Branch
County, Michigan.
The affordable housing development located in the City known
as "The Old Mill Race Apartments."
A development that 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 has determined improves the quality of the development as
it relates to housing for persons of low income.
The Low-Income Housing Tax Credit program administered by
the Authority under Section 42 of the Internal Revenue Code of 1986,
as amended.
Persons and families eligible to move into a housing development.
A loan that is federally aided (as defined in Section 11
of the Act) or a loan or grant made or to be made by the Authority
to the sponsor for the construction, rehabilitation, acquisition and/or
permanent financing of a housing development, and secured by a mortgage
on the housing development.
CRA Development Limited Dividend Housing Association Limited
Partnership which has or intends to apply to the Authority for an
allocation of low-income housing tax credits to finance a housing
development.
Charges for gas, electric, water, sanitary sewer and other
utilities furnished to the occupants that are paid by the housing
development.
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 developments used exclusively
by low-income persons and families that are financed with a mortgage
loan. It is further determined that the Old Mill Race Apartments is
of this class.
The housing project identified as the Old Mill Race Apartments
and the property on which it will be located shall be exempt from
all ad valorem property taxes. The City of Coldwater acknowledges
that the sponsor and the Authority have established the economic feasibility
of the housing project in reliance upon the enactment and continuing
effect of this chapter, and the qualification of the housing development
for exemption from all ad valorem property taxes and a payment in
lieu of taxes as established in this chapter. Therefore, in consideration
of the sponsor's offer to construct and operate the development, the
City agrees to accept payment of an annual service charge for public
services in lieu of all ad valorem property taxes. Subject to receipt
of a mortgage loan, the annual service charge shall be equal to 9%
of the annual shelter rents actually collected by the development
during each operating year. Nothing in this section shall be construed
to exempt the development and the property on which it is to be constructed
from any special assessments for street or other public improvements
or as a result of its location within a business improvement district
authorized by 1999 Public Act 49, as amended.
(a)
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 chapter.
(b)
The
housing development, and the property on which it is constructed,
shall be exempt from all ad valorem property taxes from and after
the commencement of rehabilitation of the housing development by the
sponsor under the terms of this chapter.
(a)
Notwithstanding § 899.05, the service charge to be paid each year in lieu of taxes for the part of the housing project that is tax exempt but which is occupied by other than low-income persons or families shall be equal to the full amount of the taxes which would be paid on that portion of the housing project if the housing project were not tax exempt.
(b)
The
term "low-income persons or families" as used herein shall be the
same meaning as found in Section 15(a)(7) of the Act.
The annual service charge in lieu of taxes as determined under
this chapter shall be payable in the same manner as general property
taxes are payable to the City and distributed to the several units
levying the general property tax in the same proportion as prevailed
with the general property tax in the previous calendar year. The annual
payment for each operating year shall be paid on or before September
15 of the following year. Collection procedures shall be in accordance
with the provisions of the General Property Tax Act (1893 PA 206,
as amended; MCL 211.1, et seq.). Annual payments in arrears shall
be subject to interest of 1% per month until the 12th month after
their due date, and to interest of 1.5% per month retroactive to the
due date for annual payments in arrears for longer than 12 months.
Subject to any limitations imposed by law, the sponsor shall provide
to the City such accounting records, audits, and financial reports
as the City shall reasonably require to verify the computation of
the annual service charge as provided by this section as of December
31 of each year. The sponsor shall maintain such records of rent or
occupancy charges received and the occupancy of units in the development
as will permit the City to verify which of the units in the development
have been occupied by low-income persons or families. Annual service
charges payable pursuant to this section shall be a lien on the development,
and if delinquent, without prejudice to any remedies for arrears of
payment or preceding breach of covenant, shall at the election of
the City be collected and enforced in the same manner as general property
taxes.
This chapter shall remain in effect and shall not terminate
so long as a mortgage loan remains outstanding and unpaid and the
housing project remains subject to income and rent restrictions under
the LIHTC Program. If the development is no longer subject to income
and rent restrictions under the LIHTC Program, then the exemption
from all ad valorem property taxes established by this chapter shall
terminate upon the payoff of the mortgage loan or upon the sale of
the development to an unrelated third party.
The various sections and provisions of this chapter shall be
deemed to be severable, and should any section or provision of this
chapter be declared by any court of competent jurisdiction to be unconstitutional
or invalid the same shall not affect the validity of this chapter
as a whole or any section or provision of this chapter, other than
the section or provision so declared to be unconstitutional or invalid.
All ordinances or parts of ordinances inconsistent or in conflict
with the provisions of this chapter are repealed to the extent of
such inconsistency or conflict.
This chapter shall become effective on June 17, 2022, as provided
in the City Charter.
