[HISTORY: Adopted by the City Commission of the City of Kalamazoo as indicated in article and section histories. Amendments noted where applicable.]
CHARTER REFERENCES
Appointment of City Assessor — See § 11.
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 §§ A207.36, 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. 
Definitions. As used in this section, the following terms shall have the meanings indicated:
ACT
The State Housing Development Authority Act, being Public Act 346 of 1966 of the State of Michigan, as amended, MCLA § 125.1401 et seq.
ANNUAL SHELTER RENTS
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.]
AREA MEDIAN INCOME
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.
AUTHORITY
The Michigan State Housing Development Authority.
CONTRACT RENTS
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.)
HOUSING DEVELOPMENT PROJECT
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.
HUD
The Department of Housing and Urban Development of the United States government.
LOW-INCOME INDIVIDUALS AND FAMILIES
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.
MORTGAGE LOAN
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.
SPONSOR
Any persons or entities that receive or assume a mortgage loan.
TAXABLE VALUE
The taxable value as calculated under Section 27a of the General Property Tax Act, 1893 PA 206, MCL § 211.27a.
UTILITIES
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.