[HISTORY: Adopted by the City Council of the City of Coldwater 9-9-2019 by Ord. No. 824. Amendments noted where applicable.]
This chapter shall be known and cited as the "City of Coldwater Tax Exemption Ordinance for Coldwater Senior Villas Limited Dividend Housing Association, LLC."
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.
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 "Coldwater Senior Villas Limited Dividend Housing Association, LLC.," on certain property located at 95 South Fremont Street, Parcel Identification Number 304-000-000-177-00, in the City of Coldwater to serve low-income seniors, 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:
- ANNUAL SHELTER RENT
- 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 senior housing development to be located in the City to be known as "Coldwater Senior Villas Limited Dividend Housing Association, LLC."
- HOUSING DEVELOPMENT
- 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 improve the quality of the development as it relates to housing for persons of low income.
- LIHTC PROGRAM
- The Low-Income Housing Tax Credit Program administered by the Authority under Section 42 of the Internal Revenue Code of 1986, as amended.
- LOW-INCOME PERSONS AND FAMILIES
- Persons and families eligible to move into a housing development.
- MORTGAGE LOAN
- 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.
- Coldwater Senior Villas Limited Dividend Housing Association, LLC., 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 Coldwater Senior Villas Limited Dividend Housing Association, LLC., is of this class.
The housing project identified as the Coldwater Senior Villas apartments and the property on which it will be located shall be exempt from all ad valorem property taxes from and after the issuance of a certificate of occupancy for the development. 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 6% 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.
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.
Notwithstanding § 898-5, 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.
The term "low-income persons or families," as used herein, shall have 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; MCLA § 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 October 3, 2019, as provided in the City Charter.