§ 2-227. Payment of service charges in lieu of taxes for certain housing developments for elderly persons.

(a)

Purpose. The State Housing Development Authority Act of 1966 (MCL 125.1401 et seq.), as amended, provides for tax exemptions for certain housing developments which are federally aided or state authority aided, and certain powers are allowed by such Act to the local municipal governing bodies as to whether exemptions should be allowed or whether service charges in lieu of taxes should be charged, and the amount of such charges. It is determined that it is a proper public purpose of the state and its political subdivisions to provide housing for elderly citizens of low and moderate income and to encourage the development of such housing developments which are federally aided or state authority aided in accordance with the State Housing Development Authority Act of 1966.

(b)

Definitions. The following terms, when used in this section, shall have the meaning set forth in this subsection:

Act means the State Housing Development Authority Act, being Act No. 346 of the Public Acts of Michigan of 1966 (MCL 125.1401 et seq.), as amended.

Annual shelter rent means the total collections during an agreed annual period from all occupants of a housing development representing rents or occupancy charges, exclusive of any charges for gas, electricity, heat or other utilities furnished to the occupant.

Authority means the Michigan State Housing Development Authority.

Elderly means a single person who is 55 years of age or older, or a household in which at least one member is 55 years of age or older, and all other members are 50 years of age or older.

Federally aided mortgage means any of the following:

(1)

A below market interest rate mortgage insured, purchased or held by the Secretary of the Department of Housing and Urban Development;

(2)

A market interest rate mortgage insured by the Secretary of the Department of Housing and Urban Development and augmented by a program of rent supplements;

(3)

A mortgage receiving interest reduction payments provided by the Secretary of Housing and Urban Development; or

(4)

A mortgage receiving special benefits under other federal law designated specifically to develop low and moderate income housing, consistent with the Act.

(5)

A mortgage on a housing project to which the authority allocates low income housing tax credits under section 22b of the Act.

Housing development means a development which contains a significant element of housing for persons of low or moderate income and such elements of other housing, commercial, recreational, industrial, communal and educational facilities which the authority determines improve the quality of the development as it relates to housing for persons of low or moderate income.

Housing for the elderly means housing occupied by a single person who is 55 years of age or older, or housing occupied by a family and/or household in which at least one member is 55 years of age or older and all other members are 50 years of age or older.

Low income or moderate income persons and families means persons and families who cannot afford to pay the amounts at which private enterprise, without federally aided mortgages or loans from the authority, is providing a substantial supply of decent, safe and sanitary housing and who fall within income limitations set in the Act or by the authority in its rules.

Mortgage loan means a loan to be made by the authority to the sponsor for the construction and permanent financing of the housing development.

Sponsor means persons or entities which have applied to the authority for a mortgage loan to finance a housing development.

Utilities means fuel, water, sanitary sewer service and/or electrical services which are paid by the housing development.

(c)

Eligible housing developments. 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 taxes, shall be housing developments for elderly persons of low and moderate income which are financed or assisted pursuant to the Act.

(d)

Collection of service charges; due date. The service charge in lieu of taxes as determined under this section shall be payable and collected in the same manner as general property taxes are payable to and collected by the city, except that the annual payment shall be paid on or before August 14 of each year.

(e)

Contractual effect. Notwithstanding the provisions of section 15a(5) of the Act to the contrary, a contract between the city and the sponsor with the authority as third party beneficiary thereunder to provide tax exemption and accept payments in lieu thereof as previously described is effected by enactment of this section.

(f)

Meadows of Auburn Hills.

(1)

Acknowledgement of development. The city acknowledges that the Auburn Hills Limited Dividend Housing Association Limited Partnership has offered, subject to receipt of a mortgage loan from the authority and/or other financing permitted by the Act, to erect, own and operate a housing development identified as the Meadows of Auburn Hills on certain property located at 3131 North Squirrel Road, City of Auburn Hills, Michigan, to serve and house elderly persons of low and moderate income, and the Auburn Hills Limited Dividend Housing Association Limited Partnership has offered to pay the city, on account of such development, an annual service charge for public services in lieu of all taxes. It is further determined that the Meadows of Auburn Hills development is within a class of development to which the Act would apply.

(2)

Annual service charge. The housing development known as Meadows of Auburn Hills and the property upon which it shall be constructed and maintained shall be exempt from all property taxes from and after the commencement of construction on the property, subject further to the provisions of this section. The city acknowledges that the sponsor and the authority have established the economic feasibility of the housing development in reliance upon the enactment and continuing effect of this chapter, and the qualification of the housing development for exemption from all property taxes and a payment in lieu of taxes is established herein, and in consideration of the sponsor's offer, subject to receipt of a mortgage loan from the authority and/or other financing permitted by the Act, to construct, own and operate such housing development hereby agrees to accept payment of an annual service charge for public services in lieu of all property taxes.

(3)

Amount of service charge. The annual service charge for Meadows of Auburn Hills shall be equal to the following percentage of all rental income, less tenant paid utilities, during the following operating years:

Year	Annual Service Charge Rate
1	3.50%
2	4.00%
3	4.50%
4	5.00%
5	5.50%
6 and thereafter	6.00%

 

This provision shall remain in effect and shall not terminate so long as the mortgage loan with the authority and/or the other financing permitted by the Act and obtained by the sponsor remains outstanding and unpaid or the authority has an interest in the property. This provision shall terminate and the tax exempt status of the property shall be rescinded, and the property shall be returned to the tax rolls when the authority no longer has an interest in the property. If the construction of the housing development does not commence within two years from February 20, 1995, this subsection shall automatically expire and be of no effect.

(4)

Provisions contingent on rezoning and site plan approval. The terms, provisions and conditions of this subsection (f) are conditioned and contingent upon the sponsor obtaining the rezoning of the property on which the Meadows of Auburn Hills development is proposed to be located to a zoning classification as contained in the city zoning ordinance which would permit the use of the property for the housing development proposed for the Meadows of Auburn Hills, and is also conditioned and contingent upon the Meadows of Auburn Hills housing development obtaining the required site plan approval from the city. In the event that the sponsor for the Meadows of Auburn Hills is unable to obtain both the rezoning of the subject property and site plan approval, then the provisions of this subsection (f) shall be of no force and effect and not binding on the city, the sponsor and/or any other party.

(Ord. No. 518, §§ 1—5, 4-6-92; Ord. No. 567, §§ 1—4, 2-20-95)