City Council

MANISTEE CITY COUNCIL WORK SESSION AGENDA Tuesday, March 14, 2017 - 7:00 p.m. - Council Chambers, City Hall I. Call to Order. II. Work Session Items. a.) PUBLIC COMMENTS ON WORK SESSION RELATED ITEMS. b.) DISCUSSION ON PILOT ORDINANCE AND RELATED MATTERS. – City Manager Thad N. Taylor. c.) DISCUSSION ON THE HOUSING COMMISSION / CENTURY TERRACE / HARBORVIEW. – City Council d.) OTHER. III. Adjourn. TNT:cl  Reformatted 2011 Chapter 1489 Low or Moderate Income Housing 1489.01 Adoption 1489.08 Contractual Effect of Ordinance 1489.02 Purpose 1489.09 Payment of Service Charge 1489.03 Definitions 1489.10 Verification of Rent 1489.04 Ownership Entity 1489.11 Development Agreement 1489.05 Class of Housing Developments or 1489.12 Effective Period of Ordinance Rehabilitations to which exemption(s) shall apply 1489.06 Annual Service Charge in Lieu of 1489.13 Other Ordinances Taxes 1489.07 Limitation of Service Charge 1489.14 Severability 1489.01 ADOPTION Pursuant to MCL 125.1410, et seq. (1966 P.A. 346, as amended), the City of Manistee hereby adopts this Ordinance pursuant to such provisions of the State Housing Development Authority Act of 1966. 1489.02 PURPOSE The purpose of this Ordinance is to describe the terms and manner by which the City of Manistee may approve, from time to time, the development or rehabilitation of certain low or moderate income housing, or senior housing, financed, in whole or in part, pursuant to and under the auspices of the Michigan State Housing Development Authority Act of 1966, including qualified housing tax credit programs and Federal housing assistance programs, and for a payment in lieu of ad valorem real property taxes for such housing or rehabilitation developments. Nothing herein shall obligate the City of Manistee to approve any particular project for development within the City. The desirability and/or suitability of any particular project for development within the City rests in the sole and absolute discretion of the City of Manistee acting through its City Council. 1489.03 DEFINITIONS The following terms shall have the indicated meanings for purposes of this Ordinance: A. “Act” means the State Housing Development Authority Act, being Public Act 346 of 1966 of the State of Michigan, as amended, MCLA 125.1401, et seq., and MSA 116.144(1), et seq., as amended. B. “Annual shelter rent” means the total collections during a calendar year or part thereof from all occupants of a housing development representing rent or occupancy charges, exclusive of charges for gas, electric, or other utilities furnished the occupants. C. “Authority” means the Michigan State Housing Development Authority. City of Manistee Codified Ordinances – Fourteen Building and Housing Code Page 1 Chapter 1489 Low or Moderate Income Housing  Reformatted 2011 D. “Housing Development” means a development which contains a significant element of housing for low or moderate income persons or seniors, 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 low or moderate income persons. E. “LIHTC Program” means Low Income Housing Tax Credit Program(s) administered by the Authority under Section 42 of the Internal Revenue Code of 1986, as amended. F. “Low or moderate income persons” means persons eligible to occupy a housing development as established by the Authority, from time to time. G. “Mortgage loan” means a loan to be made by the Authority to the sponsor for the construction and/or permanent financing of a housing development. H. “Rehabilitation of Housing Development” means the substantial repair, renovation and improvement of an existing Housing Development. I. “Senior” or “Elderly Person(s)” means a family where the head of the household is 62 years of age or older or a single person who is 62 years of age or older. J. “Senior Elderly Licensed” means a Housing Development primarily occupied by Senior or Elderly Persons. K. “Sponsor” means persons or entities who or which have applied to the Authority for a mortgage loan to finance a housing development. 1489.04 OWNERSHIP ENTITY In accordance with the Act, any Sponsor of eligible housing will organize at the time of application to the City for a payment in lieu of taxes as herein provided, a non-profit housing corporation, consumer housing cooperative, limited dividend housing corporation, mobile home park corporation, or mobile home park association that is eligible for financing under the State Housing Development Authority Act of 1966, as the owner of the contemplated Housing development. 1489.05 CLASS OF HOUSING DEVELOPMENTS OR REHABILITATIONS TO WHICH EXEMPTION(S) SHALL APPLY It is hereby determined that the class of Housing Development or Rehabilitation of Housing Development to which the exemption herein provided shall apply, and for which a service charge shall be paid in lieu of ad valorem real property taxes, shall be a Housing Development(s) or Rehabilitation(s) of Housing Developments for low or moderate income persons, or Elderly Persons, which is financed or assisted, in whole or in part, pursuant to the Act, including LITHC Programs. The City Council shall determine, upon application by the Sponsor, whether: City of Manistee Codified Ordinances – Fourteen Building and Housing Code Page 2 Chapter 1489 Low or Moderate Income Housing  Reformatted 2011 A. any proposed Housing development seeking the benefits of this Ordinance qualifies for such treatment; B. the proposed housing development is needed and desired in the City of Manistee; C. the proposed housing development is appropriate and desirable for the specific site proposed for such development; and D. all other matters related to such proposed development not within the jurisdiction of the Authority. Such determinations shall be in the sole discretion of the City Council. 1489.06 ANNUAL SERVICE CHARGE IN LIEU OF TAXES Those Housing Developments or Rehabilitations of Housing Developments approved by the City Council and upon which property such Housing Developments or Rehabilitations of Housing Developments shall be constructed shall be exempt from all property taxes from and after the date when construction of the project is commenced. The City, acknowledging that the Sponsor and the Authority have established the economic feasibility of the Housing Development or Rehabilitation in reliance, in part, upon the enactment and continuing effect of this Ordinance, and the qualification of the Housing Development or Rehabilitation for exemption from all property taxes and a payment in lieu of taxes as established herein and in consideration of the Authority’s offer to the Sponsor to make a mortgage loan to finance the Sponsor’s construction of the Housing development, upon satisfaction of all terms and conditions of its loan commitment to the Sponsor, hereby agrees to accept payment of a service charge for public services in lieu of all property taxes from the Sponsor. Sponsor agrees to pay: A. for new construction projects, in each taxable year, the greater of the tax on the property on which the project is located for the tax year before the date when construction of the project was commenced or an amount equal to ten percent (10%) of annual Shelter Rents per annum. Such annual Payment in Lieu of Taxes shall be paid through a term of the exemption as established by the City, but not more than the term of the original Michigan State Housing Development Mortgage Loan or the thirty-fifth (35th) year of the existence of the Housing Development, whichever is shorter; And after which time the property and all improvements shall be subject to any and all ad valorem taxes; B. for Rehabilitation Projects, the lesser of the tax on the property on which the project is located and the existing project for the tax year before the date when Rehabilitation of Project was commenced, or an amount equal to ten percent (10%) of Annual Shelter Rents. Such annual Payment in Lieu of Taxes shall be paid through the terms established by the City, but not longer than the shorter of the term of the original Michigan State Housing Development Mortgage (Rehabilitation) Loan or term of the LITHCs; And after which time the property and all improvements shall be subject to any and all ad valorem taxes. City of Manistee Codified Ordinances – Fourteen Building and Housing Code Page 3 Chapter 1489 Low or Moderate Income Housing  Reformatted 2011 1489.07 LIMITATION OF SERVICE CHARGE The service charge to be paid each year in lieu of taxes for that part of the Housing development which is tax exempt and which is occupied by other than low or moderate income persons shall be equal to full amount of the taxes which would be paid on that portion of the Housing development if the Housing development were not tax exempt. 1489.08 CONTRACTUAL EFFECT OF ORDINANCE Notwithstanding the provisions of Section 15(a)(5) of the Act to the contrary, a contract between the City and the Michigan State Housing Development Authority with the Sponsor 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 Ordinance. 1489.09 PAYMENT OF SERVICE CHARGE The service charge in lieu of taxes, as determined according to this ordinance, shall be payable in the same manner as general property taxes are payable to the City, except that the annual payment shall be made as follows: A. One-half of the minimum payment due on or before December 31 of each year; and B. One-half of the minimum payment due plus all additional amounts owing from the previous year by July 1 of each year. 1489.10 VERIFICATION OF RENT The Sponsor shall verify Annual Shelter Rent revenues to the City with a Statement of Profit and Loss as reported to the Michigan State Housing Development Authority or other form of financial documentation suitable by the City. 1489.11 DEVELOPMENT AGREEMENT Upon approval of a Housing Development or Rehabilitation of a Housing Development as qualifying for the benefits of this Ordinance by Resolution of the City Council, the City and the Sponsor shall enter into a development agreement, to be approved by the City Council, consisting of the specific construction dates of the Housing development, and other terms that may be appropriate, including but not limited to, the specific amounts of the Payment in Lieu of Taxes (“PILOT”). Such terms may include an option in favor of the City, but not the obligation, to assume for no further cost the ownership of a Housing development upon the full repayment to the Authority of its mortgage loan. 1489.12 EFFECTIVE PERIOD OF ORDINANCE This Ordinance and approving Resolution for any particular Housing Development or Rehabilitation of a Housing Development shall remain in effect for a term which is the shorter of: A. the term approved by the City Council for a particular housing development by Resolution; B. the length of the original mortgage loan from the Authority to the Sponsor; City of Manistee Codified Ordinances – Fourteen Building and Housing Code Page 4 Chapter 1489 Low or Moderate Income Housing  Reformatted 2011 C. in the case of a rehabilitation of a housing development, for a term equal to the length of the LIHTCs; and D. in no event longer than thirty-five (35) years. 1489.13 OTHER ORDINANCES The Housing development shall be subject to all building, zoning, inspection, maintenance codes and other regulatory requirements maintained by the City of Manistee. 1489.14 SEVERABILITY The various sections and provisions of this Ordinance shall be deemed to be declared by any court of competent jurisdiction to be unconstitutional or invalid the same shall not affect the validity of the Ordinance as a whole or any section or provision hereof other than the section or provision so declared to be unconstitutional or invalid. City of Manistee Codified Ordinances – Fourteen Building and Housing Code Page 5 Chapter 1489 Low or Moderate Income Housing