PROPOSED

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:

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 which amount is limited by the Act.

The City of Crystal Falls 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.

MSHDA means the Michigan State Housing Development Authority.

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

Annual Shelter Rent means the total collections duringan 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.

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 person s of low income.

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.

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

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

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 not 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.

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 5. 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 6. Duration.

This Ordinance shall remain in effect and shall not terminate as long as the Mortgage Loan remains outstanding and unpaid; but in no event not longer than fifty (50) years, provided that construction of the Housing Development commences within eighteen months from the effective date of this Ordinance.

Section 7.  Severability

The various sections and provisions of this Ordinance shall be deemed to be servable, 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.

This Ordinance shall become effective on 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.

Ordinance Introduced: December 11, 2006

Ordinance to be considered for adoption: January 8, 2007