A regular meeting of the Council for the City of Crystal Falls was held in the Council Chambers of the City Hall on Monday, January 8, 2007, at 4:00 P.M. Central Time.

Roll Call: Mayor Hendrickson, Councilors Heikkinen, Smokevitch, Bicigo, and Valesano.

Absent: None

Also Present: City Manager Nordeman, City Attorney Lawrence, and City Clerk/Treasurer Olson.

In attendance in the audience were: Jeff Sjoquist of Coleman Engineering, Lynn Perry, Julius Simbob, Julie Melchiori, Mark Simeoni, Robert Rafferty, Pete Nocerini, Ken Santi, Jim Ponchaud, Pete Leonard, and Attorney Ron Basso.

Mayor Hendrickson led the reciting of the Pledge of Allegiance.

Councilor Heikkinen seconded by Councilor Smokevitch moved that the items on the Consent Agenda be approved as noted below:

The minutes of the regular meeting of December 11, 2006 and the special meetings of December 19, 2006 and January 4, 2007 as written.

The following reports for the month of December 2006:
A. Police report, as submitted by Police Chief Sherwin, indicating 212 complaints, of which 10 were closed by arrest, and logging of 2,245 miles on patrol duty.
B. Joint Fire Authority report, as submitted by Fire Chief Ahola, indicating answering one (1) fire call; spending approximately 10 man-hours fighting fires; and holding one (1) practice and training session.
C. Electric Dept report, as submitted by Chief Electrician Dave Graff.
D. Public Works Dept report as submitted by Foreman Kelly Stankewicz.
E. Treasurer’s Revenue Report as submitted by Treasurer Dorothea Olson.

Payrolls and Disbursements in the amount of $319,781.36, and instructed the City Clerk/Treasurer to draw checks on the City Treasury in payment of same.

Motion carried.

Visitor, Pete Leonard, asked to purchase the deck at the Crystal Manor building and submitted a verbal bid of $25.00. No action was taken pending further discussion with the prospective developer of the Crystal Manor building.

Regarding the Crystal Manor, Attorney Ron Basso noted that the next step is to firm up and finalize an "Option to Purchase" agreement for the property with Hovey Co.

There was some discussion regarding the $25,000 promised by Iron County.

Mayor Hendrickson gave a report on the DDA meeting held earlier in the day and reported that a public meeting of the DDA will be held on Monday, February 19, 2007 at 5:30 p.m. in the City Council Chambers regarding signage and market strategy for the downtown businesses.

Mayor Hendrickson seconded by Councilor Heikkinen moved to terminate Downtown Development Authority (DDA) members Doug Bates and Ray Bortolini due to lack of attendance at the DDA meetings.

Motion carried.

Councilor Heikkinen seconded by Councilor Smokevitch moved to change the Downtown Development Authority board from a twelve (12) member to an eight (8) member board.

Motion carried.

Jeff Sjoquist updated the Council on matters regarding the water project.

Councilor Bicigo seconded by Councilor Heikkinen moved to retain HBO at the present cost to cable subscribers for 2007.

Motion carried.

Manager Nordeman advised that he would be addressing the overall cost of the cable at the February meeting.

Manager Nordeman advised that he has signed the Fox Sports Net agreement which had added language to allow for an opt out if Fox Sports Net and the NCTC come to an agreement for a lesser rate than that currently being charged by Fox Sports Net.

Clerk/Treasurer reported on the voting machine equipment that had been discussed at the previous meeting. Due to the lack of a market for said equipment it will be kept in storage for now.

Attorney Lawrence advised that Barbara DeSonia has signed an agreement to sell the TV Tower land to the City, however, that document is in transit and he has not seen it as yet.

Mayor Hendrickson seconded by Councilor Heikkinen moved to adopt the following resolution:

AUTHORIZING RESOLUTION

FOR A PROPERTY TAX

ADMINISTRATION FEE

WHEREAS, The Treasurer for the City of Crystal Falls has now assumed the duties of the collection of the Summer Tax billings in the City of Crystal Falls, and

WHEREAS, the Summer Tax billings, although collected by the City Treasurer in the City of Crystal Falls, are taxes collected for entities other than the City of Crystal Falls, and

WHEREAS, the collection of Summer Tax billings in the City Clerk/Treasurer’s office has had a significant impact with the increase in work hours needed to process said collection of taxes,

NOW THEREFORE BE IT RESOLVED that the Council for the City of Crystal Falls hereby authorizes the imposition of a property tax administration fee in the amount of One Percent (1%) against the Summer Tax billings, as permitted by the State of Michigan General Property Tax Act, P.A. 206 of 1893, as amended, with said administration fee to be used by the City of Crystal Falls to offset the cost of the Summer Tax bill collections beginning with the 2007 Summer Tax billing.

Ayes: Mayor Hendrickson, Councilors Heikkinen, Smokevitch, Valesano, and Bicigo. Nays: None

Resolution Adopted.

Councilor Bicigo seconded by Councilor Smokevitch moved to approve a contract with TRICO for Paint River Walkway landscape maintenance in the amount of $1,560 for the 2007 season.

Motion carried.

Councilor Valesano seconded by Councilor Heikkinen moved to accept the 2006 Crystal Falls Contemporary Center Annual Report and further, to release the City’s annual contribution of $1,100 to the center.

Motion carried.

Mayor Hendrickson seconded by Councilor Heikkinen moved to adopt the following resolution:

Correspondences regarding Greyhound Bus service to the City and an Open House at the Contemporary Center on January 12, 2007 from 5:30 – 7:30 were shared with everyone present.

At 4:55 p.m. Mayor Hendrickson recessed the meeting until 5:00 p.m.

Meeting reconvened at 5:00 p.m.

Mayor Hendrickson temporarily closed the regular session of the City Council to conduct a Public Hearing for Proposed Ordinance No. 1.12, The City of Crystal Falls Tax Exemption Ordinance.

PUBLIC HEARING: Mayor Hendrickson explained the Tax Exemption Ordinance and then called for comments from the public. There were no public comments.

Attorney Ron Basso explained that the final draft of the ordinance before the Council reflected revisions to comply with the Michigan State Housing Development Authority (MSHDA) requirements.

Manager Nordeman clarified that the 4% payment in lieu of taxes (PILOT) is 4% of the rent less the utilities and could amount to $5,000 - $6,000 year.

There were no other comments or questions from the City Council.

Mayor Hendrickson adjourned the Public Hearing at 5:05 p.m.

Meeting reconvened at 5:05 p.m.

Councilor Heikkinen seconded by Mayor Hendrickson moved to adopt Ordinance No. 1.12 as follows:

City of Crystal Falls

ORDINANCE NO. 1.12

An Ordinance to provide for a service charge in lieu of taxes for a proposed multiple family dwelling project for persons of low income to be financed or assisted pursuant to the provisions of the State Housing Development Authority Act of 1966, as amended.

The City of Crystal Falls Ordains that:

SECTION 1.

This ordinance shall be known and cited as the City of Crystal Falls Tax Exemption Ordinance.

SECTION 2. Preamble.

It is acknowledged that it is a proper public purpose of the State of Michigan and its political subdivisions to provide housing for its low income citizens and to encourage the development of such housing. Pursuant to the State Housing Development Authority Act (1966 PA 346, as amended, MCL 125.1401, et seq.) (The Act), such housing is exempt from all ad valorem property taxes. The Act provides for an annual service charge for public services in lieu of property taxes. The City is authorized by the Act to establish the service charge to be paid in lieu of ad valorem property taxes which amount is limited by the Act.

The City acknowledges that the Hovey Companies (the Developer) has offered, subject to receipt of a Mortgage Loan from the Michigan State Housing Development Authority, to erect, own and operate a housing development identified as The Crystal Manor, on property located at 400 Superior Avenue in the City of Crystal Falls, to serve persons of low income, and that the Developer has offered to pay the City an annual service charge for public services in lieu of all taxes for tax years beginning after the construction commences. Pursuant to the Act, the Developer shall file, with the assessor of the City, a certified notification of the exemption before November 1 of the year preceding the tax year in which the exemption is to begin.

SECTION 3. Definitions.

A. Authority or MSHDA means the Michigan State Housing Development Authority, a public body, corporate and politic of the State of Michigan.

B. Act means the State Housing Development Authority Act, being Public Act 346 of 1966 of the State of Michigan, as amended.

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

D. Developer means person(s) or entities which have applied to the Authority for a Mortgage Loan to finance a Housing Development.

E. 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 improves the quality of the development as it relates to housing for persons of low income.

F. LIHTC Program means the Low income Housing Tax Credit Program administered by the Authority under Section 42 of the internal Revenue Code of 1986, as amended.

G. Mortgage Loan means a loan to be made by the Authority to the Sponsor for the construction and/or permanent financing of the Housing Development.

H. Utilities mean fuel, water, sanitary sewer service and/or electrical service which are paid by the Housing Development.

SECTION 4. Establishment of Annual Service Charge.

The Housing Development identified as the Crystal Manor and the property on which it shall be constructed shall be exempt from all property taxes, pursuant to the Act, for the tax year after the commencement of construction. The City acknowledges that the Developer has signed a Development Agreement with the City in reliance upon the enactment and continuing effect of this Ordinance. The Developer, subject to approval of its application which will be filed with MSHDA no later than April 1, 2007, and subject to receipt of a Mortgage Loan from the MSHDA, shall construct, own and operate the Housing Development known as Crystal Manor, and the City agrees to accept payment of an annual service charge for public services in lieu of all ad valorem property taxes. The annual service charge shall be equal to 4% of the difference between the Annual Shelter Rents actually collected and Utilities.

SECTION 5. Limitation on the Payment of Annual Service Charge.

Notwithstanding Section 5 of the Act, the service charge to be paid each year in lieu of taxes for the part of the Housing Development which is tax exempt and which is occupied by other than low income persons or families shall be equal to the full amount of ad valorem property taxes which would be paid on that portion of the Housing Development if the Housing Development were not tax exempt. Further, any commercial or retail development located on this property shall pay the full amount of ad valorem property taxes, as determined by the local assessor.

SECTION 6. 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 Developer 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 this Ordinance.

SECTION 7. 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 general property taxes are payable to the City and other taxing authorities except that the annual payment shall be paid on or before September 15 of each year.

SECTION 8. Duration.

This Ordinance shall remain in effect and shall not terminate as long as the Mortgage Loan remains outstanding and unpaid; and as long as the Housing Development remains subject to income and rent restrictions pursuant to Section 42 of the Internal Revenue Code of 1986, as amended, but in no event no longer than fifty (50) years, provided that construction of the Housing Development commences within eighteen months from the effective date of this Ordinance.

SECTION 9. 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 the 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 10. Acknowledgement.

The City hereby acknowledges that it will receive documentation from the Authority indicating that the Authority’s participation with the housing Development is limited solely to the allocation of tax credits under the LIHTC Program.

SECTION 11. Effective Date.

This Ordinance shall become effective thirty (30) days from the date approved by the City Council. All ordinances or parts of ordinances in conflict with this Ordinance are repealed to the extent of such conflict.

Ayes: Janet Hendrickson, Mayor, Councilors Edna A. Heikkinen, Jack Bicigo, Mark Valesano, and Michael Smokevitch

Nays: None

Ordinance Adopted.

(Ordinance Adopted: 01/08/07 and Ordinance Effective: 02/07/07)

Councilor Heikkinen seconded by Mayor Hendrickson moved to adjourn this meeting of the City Council.

Motion carried.

Meeting adjourned at 5:10 p.m.