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3.2 ff fl Y- WORKFORCE HOUSING RESTRICTIVE COVENANT This Workforce Housing Restrictive Covenant (“Restrictive Covenant’) is made by and between the City of Muskegon, Michigan (“Municipality”) and SDI WFH MUSKEGON, LLC (“Sponsor”) as of April 9, 2024. RECITALS: A. Sponsor is the owner of certain real property in the City of Muskegon, County of Muskegon, Michigan, and more particularly described by Exhibit A (the “Property”), which is attached hereto and incorporated by reference into this Agreement. B. Sponsor has offered to provide thirty-six workforce housing units on the Property (the “Project”) and has applied to Municipality for a workforce housing exemption from ad valorem property taxes under Section 15a of the State Housing Development Authority Act, being Public Act 346 of 1966, as amended (the “Act”). C. In consideration of Sponsor’s offer to undertake the Project, Municipality has agreed to exempt the Project from all ad valorem property taxes imposed by any taxing jurisdiction and to accept in lieu thereof payment of an annual service charge for a period of 15-years as provided by Chapter 82 of the City Code of Ordinances, as amended (“Ordinance”). D. Upon completion of the Project, the annual service charge paid in lieu of all ad valorem property taxes shall be equal to ten percent (10%) of the annual shelter rents collected from the Project and shall be paid as provided in the Ordinance. E. Sponsor and Municipality agree that the economic feasibility of the Project depends upon the continuing effect of the annual service charge in lieu of all ad valorem taxes approved by Municipality for the 15-year exemption period. F, Accordingly, upon recording with the Muskegon County Register of Deeds, this Restrictive Covenant will restrict use of the Project to workforce housing for the 15-year exemption period. NOW, THEREFORE, in consideration of Municipality’s acceptance of payment of the annual service charge in lieu of all ad valorem property taxes and Sponsor’s commitment to construct or rehabilitate the Project, Sponsor and Municipality hereby covenant as follows: 1. Recitals. The above recitals are acknowledged as true and correct, and are incorporated by reference into this paragraph. 2. Definitions. All words and phrases used in this Restrictive Covenant have the same meaning as defined in the Act or the Ordinance. 3. Workforce Housing Covenant. The Project will, upon completion of the proposed construction or rehabilitation, constitute workforce housing for households for persons and families whose household income is not greater than 120% of the area median income, as published by the Michigan State Housing Development Authority (“the Authority) for Muskegon County, adjusted for family size. All of the housing units in the Project will be rented, or available for rental, on a continuous basis to members of the general public throughout the term of this Restrictive Covenant. 4. Term of Exemption. The exemption from ad valorem property taxes approved by Municipality shall remain in effect in accordance with this Restrictive Covenant restricting use of the Project to workforce housing for a period of 15-years, ending on December 31, 2039, or so long as the Project is used as workforce housing, whichever is less. 5. No Violation. Sponsor agrees that it will not knowingly take or permit any action that would result in a violation of the requirements of this Restrictive Covenant or the Ordinance, which is incorporated herein as if a part of this Restrictive Covenant. Further, Sponsor agrees to take any required action, including the amendment of this Restrictive Covenant, as may be necessary, in the determination of the Municipality or of the Michigan State Housing Development Authority (the “Authority”), to comply with the Ordinance. If Municipality determines that the Project is not in compliance with the requirements of this Restrictive Covenant, and Sponsor, after receiving written notice of the non-compliance from Municipality, does not correct such non-compliance within thirty (30) days, Municipality shall be entitled to take such actions as it deems necessary to enforce the provisions of this Restrictive Covenant. 6. Sponsor to Demonstrate Compliance. Sponsor will provide Municipality with such certifications, reports and other information as are required by Municipality to demonstrate compliance with the Ordinance. Sponsor will provide Municipality and Authority with an annual verification of compliance with this Restrictive Covenant, in a form specified by the Authority. 7. Transfer of Ownership. Sponsor will, prior to a sale or other voluntary transfer of ownership of the Project or any part thereof, notify Municipality in writing, and will enter into any agreements with the purchaser or transferee as may be prescribed by Municipality to ensure such purchaser's or transferee's compliance with this Restrictive Covenant and Michigan law. 8. Enforceability. This Restrictive Covenant is enforceable in any court in the State of Michigan having jurisdiction thereof, by Municipality, and to the extent required by the Ordinance, by any individuals who are tenants of the Project. 9. Covenant Running with the Land; Binding Effect. The foregoing covenant shall constitute and be enforced as a covenant running with the land under Michigan law and shall be binding on all successors or assigns of Sponsor or Municipality and any future owner or operator of the Project for the full 15-year exemption period. 10. Miscellaneous. In the event of any conflict between the terms of this Restrictive Covenant and the requirements of the Ordinance the requirements of the Ordinance shall prevail. This Restrictive Covenant may only be amended or terminated by a writing signed by both Sponsor and Municipality. The invalidity of any clause or provision of this Restrictive Covenant shall not affect the validity of the remaining portions thereof. IN WITNESS WHEREOF, is this Covenant is effective as of January 23"4, 2024. 2 [Signature Pages Follow] CITY OF MUSKEGON By: Ye drrern Its: Layo STATE OF MICHIGAN ) ) ss COUNTY OF MUSKEGON _ ) oS Ker 1172024 The foregoing instrument was acknowledged before me this day o Janeary-24", 2024 by Kenneth Johnson, as Mayor of the City of Muskegon, a municipal corporation of the State of Michigan. [poesia ff brenow Notary Public, MU UStO AGM County, MI My Commission Expires: “) pe O3 10U4 Acting inM USXQ Ger \_ County, MI SPONSOR SDI WFH MUSKEGON, LLC ULE Its: Yiee pebcichat STATE OF MICHIGAN _ ) Kent )ss COUNTY OF MUSKEGON +) The foregoing instrument was acknowledged na ae me this aged day of Ma , by Thins Laue He _as the Vice Mesident of ae! on) a ulatehw le ALS Michigan Lig , on behalf of said . any 9 ~ nd TINE LOUISE ANDRES KRIS Notes Publ,aahMichigan : ry Notary cd00 ; Public,» Obl ony Myactingcommone a = r tapes Aig ay2028 My Commission Actingin Vaan just “ ALAS tn the County ot DRAFTED BY: WHEN RECORDED RETURN TO: EXHIBIT A Legal Description of Property MJ_DMS 36842302v2
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