An ordinance to provide for a service charge in lieu of real property taxes for multiple family dwelling projects for the elderly which are financed or assisted pursuant to the provisions of the Michigan State Housing Development Authority Act of 1966, being Public Act 346 of 1966, as amended (MCL 125.1411, et seq.); to authorize the entering into of certain contracts with respect thereto; to establish deadlines for the payment of such service charges; to provide for the duration of such tax exemption benefits; and to repeal all ordinances or parts of ordinances in conflict therewith.

THE TOWNSHIP OF _________, _________ COUNTY, MICHIGAN, ORDAINS:

Section 1: Title
This ordinance shall be known and may be cited as the _________ Township Tax Exemption Ordinance.

Section 2: Findings
The Township Board of ________ Township, ________ County, Michigan, hereby makes the following legislative findings:

A. That it is a proper public purpose of the State of Michigan and its political subdivisions to provide housing for its elderly citizens and to encourage the development of such housing by providing for a service charge in lieu of property taxes in accordance with the provisions of Public Act 346 of 1966, as amended.

B. That such housing for elderly persons is a public necessity, and, as this Township will be benefited and improved by such housing, the encouragement of the same by providing certain real estate tax exemptions therefor is a valid public purpose.

C. That this Township is authorized by said Act to establish or change the service charge to be paid in lieu of taxes by any elderly housing project exempt from taxation under the Act at any amount it chooses not to exceed the taxes that would be paid but for the Act.

D. That the provisions of this ordinance for tax exemption and the service charge in lieu of taxes during the periods hereinafter contemplated are essential to the determination of economic feasibility of housing developments which are constructed and financed in reliance thereto.

Section 3: Definitions
As used in this ordinance, the following terms shall have the following meanings:

A. “Authority” means the Michigan State Housing Development Authority.

B. “Act” means the State Housing Development Authority Act, being PA 346 of 1966, as amended.

C. “Contract/Rents” means that term as defined by the U.S. Department of Housing and Urban Development in regulations promulgated pursuant to the U.S. Housing Act of 1937 (42 U.S.C. 1437, et seq.), as amended by the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5301, et seq.).

D. “Housing Development” means a development which contains a significant element of housing for elderly persons and such elements of other housing, commercial, recreational, industrial, communal and educational facilities as the Authority determines improve the quality of the development as it relates to housing for persons of low income.

E. “Eligibility of Occupants” means such persons as shall be determined pursuant to the Regulations Establishing Admissions and Continued Occupancy Policies, as may have been or will be adopted by the Authority.

F. "Mortgage Loan" means a loan to be made by the Authority to the sponsor for the construction and permanent financing of the housing development.

G. “Utilities” means fuel, water, sanitary sewer service and/or electrical service that are paid by the housing development for and on behalf of its eligible occupants.

H. “Sponsor” means persons or entities that have applied to the Authority for a mortgage loan to finance a housing development.

Section 4: Class of Housing Developments
It is hereby determined that the class of housing developments to and for which the tax exemption shall apply and for which a service charge shall be paid in lieu of such real property taxes shall be elderly units only, which are financed or assisted pursuant to the Act.

Section 5: Establishment of Annual Service Charge
All elderly housing developments and the real property on which the same shall be constructed shall be exempt from all property taxes from and after the commencement of construction.

This Township, acknowledging that the sponsor and the Authority have established or will establish the economic feasibility of any such housing development in reliance upon the enActment and continuing effect of this ordinance and the qualification of the housing development for exemption from all property taxes and a payment in lieu of taxes as established herein, and in consideration of a sponsor's offer, subject to receipt of a mortgage loan from the authority, to construct, own and operate said housing development, hereby agrees to accept payment of an annual service charge for public services in lieu of all property taxes. Said annual service charge shall be equal to four percent (4%) of the difference between contract rents actually collected and utilities.

Section 6: Contractual Effect of Ordinance
Notwithstanding the provisions of Section 15(a)(5) of the Act to the contrary, a contract between the Township and future sponsors, with the Authority as a third-party beneficiary thereunder, to provide tax exemption and accept payments in lieu thereof as previously described is effected by enactment of this ordinance. The Township Supervisor and the Township Clerk shall be and hereby are authorized to execute any and all such contracts which may be required by the Authority for the purpose of effectuating and executing the provisions of this section.

Section 7: Payment of Service Charge
The service charge in lieu of taxes as determined hereunder shall be payable in the same manner as general property taxes are payable to the Township except that the annual payment shall be paid on or before February 14 of each year.

Section 8: Duration
The tax exemption granted by this ordinance shall remain in full force and effect until the happening of one or more of the following:

A. The payment of any mortgage loan in full.

B. The termination of the Authority in any interest in a housing development or the real property associated therewith.

C. The expiration of 50 years from and after the first year that a sponsor avails itself of the tax exemption benefits provided for by this ordinance.

D. The cessation of the housing development for housing for the elderly.

Section 9: Severability
The various sections and provisions of this ordinance shall be deemed to be severable. Should any section or provision of this ordinance be declared by any court of competent jurisdiction to be unconstitutional, invalid or of no force and effect, 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, invalid or of no force and effect.

Section 10: Effective Date
This ordinance shall become effective on the ___ day of __________, 20___. All ordinances or parts of ordinances in conflict herewith are hereby repealed to the extent or such conflict.

The purpose of this sample ordinance is to provide a suggested guideline for the types of items that should be included within an ordinance. Certainly, no sample ordinance should be used unless, after careful review, it is the professional judgment of your legal counsel that using the sample will accomplish the particular objectives and intentions of your Township. Although these sample ordinances are the result of much thought and effort, neither the authors nor the Michigan Townships Association assumes any responsibility for the results of using these samples word-for-word in individual cases.