CITY OF BOYNE CITY ORDINANCE NO. 92
TAX EXEMPTION ORDINANCE
ADOPTED: December 23, 2015
An Ordinance to provide for a service charge in lieu of taxes for a housing project for low income persons and families to be financed with an Authority or Federally-Aided Mortgage Loan or an advance or grant from the Authority pursuant to the provisions of the State Housing Development Authority Act of 1966 (1966 PA 346, as amended; MCL 125.1401, et seq) (the “Act”), and matters related thereto.
THE CITY OF BOYNE CITY ORDAINS:
Section 1. Purpose. This Ordinance authorizes and approves an annual service charge in lieu of taxes for residential housing developments that: (a) 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 Ordinance); (b) are financed or assisted by USDA-RD or the Authority in accordance with Act 346; (c) are located within the City; and (d) comply with this Ordinance.
Section 2. Title. This Ordinance shall be known and cited as the “City of Boyne City Tax Exemption Ordinance-Parkview Apartments.”
Section 3. 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 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 is authorized by this Act to establish or change the annual 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 will be benefitted 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 Ordinance for tax exemption and the service charge in lieu of all ad valorem taxes during the period contemplated in this Ordinance are essential to the determination of economic feasibility of the housing projects that is constructed or rehabilitated with financing extended in reliance on such tax exemption.
The City acknowledges that the Parkview Apartments Limited Dividend Housing Association Limited Partnership (the “Sponsor” as defined in Section 4 of this Ordinance) has committed to rehabilitate, own and operate a housing development identified as Parkview Apartments on certain property located at 326 East Division Street in the City to serve low income persons and families, and that the Sponsor has offered to pay and will pay to the City on account of this housing project an annual service charge for public services in lieu of all ad valorem property taxes.
Section 4. Definitions. The terms used within this Ordinance shall have the following meanings:
A. “Act” means the State Housing Development Authority Act, being Act 346 of the Public Acts of Michigan of 1966, as amended.
B. “Authority” means the Michigan State Housing Development Authority.
C. “Annual Shelter Rents” means the total collections during each calendar year from or paid on behalf of all occupants of a housing project representing rent or occupancy charges, exclusive of Utilities.
D. “Class” means the Housing Development known as Parkview Apartments for Low Income or Moderate Income Persons.
E. “Contract Rents” are as defined by the U.S. Department of Housing and Urban Development in regulations promulgated pursuant to Section 8 of the U.S. Housing Act of 1937, as amended, received in connection with the operation of a housing project representing rent or occupancy charges, exclusive of utilities.
F. “Federally-Aided Mortgage” means any of the following:
(i) A 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 (“USDA-RD”);
(ii) A mortgage receiving interest credit reduction payments provided by the HUD or USDA – RD;
(iii) A Housing Development to which the Authority allocates low income housing tax credits under Section 22b of the Act; or
(iv) A mortgage receiving special benefits under other federal law designated specifically to develop low and moderate-income housing, consistent with the Act.
G. “Housing Development” means 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 Ordinance, “Housing Development” means Parkview Apartments located on the property legally described as:
Part of the Northeast ½ of the Northwest ¼, Section 2, T32N-R6W,City of Boyne City, Charlevoix County, Michigan. Described as beginning at a point on the North Line, of said Section 2 which is S 89°53’40” W, 331.89 feet from the north ¼ Corner of said Section 2; Thence S 00°35’05” E, 1426.53 feet; Thence S 89°09’43” W, 331.14 feet; Thence N 00°36’53”, 1230.77 feet; Thence N 89°53’40” E, 100.00 feet; Thence N 00°36’53” W, 200.00 feet to a point on said North Line; Thence along said North Line 231.89 feet to the Point of beginning. Containing 10.413 acres more or less and subject to East Division Street Road Right of Way, also subject to all Easements and Restrictions of record.
H. “Low Income or Moderate Income Persons and Families” means persons and families eligible to move into the Housing Development and as defined in the Act, as amended.
I. “Mortgage Loan” means a loan or grant made or to be made or approved by the Authority or USDA-RD to the Sponsor for the construction, rehabilitation, acquisition and/or permanent financing of the Housing Development, and secured by a mortgage on the Housing Development.
J. “Rehabilitation” means the definition of rehabilitation as provided in MCL 125.1411(s) which includes improvements identified in the USDA-RD Approved Capital Needs Assessment for Parkview Apartments dated March 26, 2012. Included in this definition is any repair, reconstruction or rehabilitation of infrastructure at Parkview Apartments including roads, utilities, parking areas and facilities.
K. “Sponsor” means Parkview Apartments Limited Dividend Housing Association Limited Partnership and its successors or assigns, so long as such successor or assign is lawfully organized and receives a Mortgage Loan pursuant to this Ordinance.
L. “Tax Credits” means 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 Section 42 of the Internal Revenue Code of 1986, as amended.
M. “USDA-RD” means the United States Department of Agriculture, Rural Development.
N. “Utilities” means charges for gas, electric, water, sanitary sewer and other utilities furnished to the occupants that are paid by the Housing Development.
Section 5. Class of Housing Projects. It is determined that the class of housing projects to which the tax exemption shall apply and for which a service charge shall be paid in lieu of such taxes shall be housing projects for Low Income and Moderate Income Persons and Families that are financed with a Federally-Aided Mortgage Loan. It is further determined that Parkview Apartments is of this class or assisted by USDA-RD or the Authority pursuant to the Act.
Section 6. Establishment of Annual Service Charge. The Housing Development identified as Parkview Apartments and the property on which it is located shall be exempt from and after the commencement of Rehabilitation of the Housing Development, all ad valorem property taxes. The City 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 Ordinance, 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 Ordinance. Therefore, in consideration of the Sponsor’s offer to rehabilitate 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. Subject to receipt or continuance of a Federally-Aided Mortgage Loan, the annual service charge shall be equal to 7% of the Annual Shelter Rents actually collected by the Housing Development during each operating year.
Section 7. Limitation on the Payment of Annual Service Charge. Notwithstanding Section 6, if any portion of the Housing Development is occupied by other than Low Income and Moderate Income Persons, the full amount of the taxes that would be paid on those units of the Housing Development if the Housing Development were not tax exempt shall be added to the service charge in lieu of taxes.
Section 8. Contractual Effect of Ordinance. Notwithstanding the provisions of Section 15(a)(5) of the Act to the contrary, and subject to the terms of this Ordinance including, but not limited to Section 11 herein, this Ordinance constitutes a contract between the City and the Sponsor with the Housing Development to provide an exemption from ad valorem property taxes and to accept the payment of an annual service charge in lieu of such taxes, as previously described in this Ordinance. It is expressly recognized that the Authority and USDA-RD are third party beneficiaries to this Ordinance. Sponsor shall provide to City, at least annually, any audit or annual report information, including a summary of Rehabilitation activities undertaken in the previous year, which Sponsor provides to other public agencies. If no audit or Rehabilitation activity summary is provided to other agencies, Sponsor shall nonetheless annually provide City a summary of Rehabilitation activities with evidence of costs paid to facilitate those Rehabilitation activities.
Section 9. Payment of Service Charge. The annual service charge in lieu of taxes as determined under this Ordinance shall be payable in the same manner as ad valorem 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 April 1st 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).
Section 10. Duration. This Ordinance shall remain in effect and shall not terminate so long as the Housing Development remains subject to a Federally Aided Mortgage Loan and so long as (a) the Housing Development submits the required annual notification of exemption pursuant to M.C.L. 125.1415a(1), as amended; and (b) the Mortgage Loan remains outstanding and unpaid, but in any event not more than fifteen (15) years from the effective date of this Ordinance.
Section 11. Severability. The various sections and provisions of this Ordinance shall be deemed to be severable, and should any section or provision of this Ordinance be declared by any court of competent jurisdiction to be unconstitutional or invalid the same shall not affect the validity of this Ordinance as a whole or any section or provision of this Ordinance, other than the section or provision so declared to be unconstitutional or invalid.
Section 12. Inconsistent Ordinances. All ordinances or parts of ordinances inconsistent or in conflict with the provisions of this Ordinance are repealed to the extent of such inconsistency or conflict.
Section 13. Effective Date. This Ordinance shall become effective on fifteen (15) days after enactment or upon publication, whichever shall later occur as provided in Section 7.14 of the City Charter.
Passed and adopted by the City of Boyne City on December 23, 2015.
STATE OF MICHIGAN )
I, the undersigned, the duly qualified and acting Clerk of the City of Boyne City, Charlevoix County, Michigan, do hereby certify that the foregoing Ordinance was adopted by the City of Boyne City at a regular City Council meeting duly held on the ______ day of _____________, 2015, and that the meeting was held in compliance with notice provisions and all other requirements of Act 267 of the Public Acts of 1976, as amended. I hereby certify that I published the Ordinance in the___________ on the _________day of___________, 2015.