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AFFORDABLE HOUSING AGREEMENT CITY OF MUSKEGON THIS AFFORDABLE HOUSING AGREEMENT ("Agreement”) is entered into as of February 11, 2025 by and between CITY OF MUSKEGON ("City"), a Michigan public body corporate, with an address of 933 Terrace St, Muskegon, MI 49440, the MUSKEGON BROWNFIELD REDEVELOPMENT AUTHORITY (“Authority”), a Michigan public body corporate, with an address of 933 Terrace St, Muskegon, MI 49440, and PARKLAND PROPERTIES OF MICHIGAN — SHAW WALKER, LLC, SHAW WALKER OPPORTUNITY ZONE BUSINESS 1, LLC, SHAW WALKER OPPORTUNITY ZONE BUSINESS 2, LLC, SHAW WALKER OPPORTUNITY ZONE BUSINESS 3, LLC, AND SHAW WALKER OPPORTUNITY ZONE BUSINESS 4, LLC (collectively, the ‘“Developer”), all Michigan limited liability companies, with an address of 75 W Walton Avenue, Suite A, Muskegon, MI 49440. WITNESSETH: WHEREAS, the City has a vested interest to: (1) promote the health, safety and general welfare of the citizens of the City through the implementation of housing goals, objectives, and policies that support economically integrated housing opportunities in the development or rehabilitation of housing, (2) stimulate the production of rental housing available to moderate- income individuals or families, and (3) optimize benefits available to moderate-income residents by incentivizing affordable residential housing projects; and WHEREAS, Developer proposes to develop the Property (defined below) which includes the redevelopment of four (4) parcels located at 965 W. Western Avenue, 920 & 930 Washington Avenue, and 1330 Division Street (collectively, the “Property”), into a mixed-use development with 538 new and 33 renovated residential for-sale and rental housing units, a rooftop pool, jacuzzi and deck; 2-rooftop clubhouses; sport courts; shared work spaces; and 8 large retail units with uses that compliment and provide the best available lifestyle for the community (the “Project”); and WHEREAS, Developer intends to apply to the Michigan Strategic Fund (MSF) for a transformational brownfield plan (the “Plan”) for the Project under the Brownfield Redevelopment Financing Act, Act 381 of 1996, as amended (“Act 381”), which the Plan, if approved by the MSF and the City, would afford Developer the opportunity to obtain reimbursement of certain eligible activities funded by the capture of certain eligible tax revenues generated at the Property and to obtain other tax benefits, as described in Act 381, determined to be necessary for the Project to be economically viable; and WHEREAS, if the MSF, Authority, and the City approve the Plan for the Project, the Project may be eligible to capture up to 100% of state income tax capture revenues generated from the Project, if the Project described within the Plan are subject to a written, binding affordable housing agreement with the City; and WHEREAS, Developer, in order to make the Project eligible to capture up to 100% of state income tax capture revenues, is willing to commit to certain affordable housing requirements subject to the terms and conditions set forth in this Agreement; and WHEREAS, to encourage the successful completion of the Project and promote the development of inclusive mixed-income communities, the City, the Authority, and the Developer are entering into this Agreement to ensure and provide for affordable housing; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the City, the Authority, and Developer agree as follows: 1. Definitions. The following terms used throughout this Agreement shall be defined as follows: a. "Income Limit” means the maximum Household Income that may be earned, determined no less than 30 days nor more than 60 days prior to entering into a lease, by a household leasing an Affordable Unit. For the purposes of this Agreement, the relevant income limits at the time of a Lessee’s initial lease or lease renewal, are those most recently published by the Michigan State Housing Development Authority (MSHDA) for Muskegon County, Michigan, and are 100% of the area median income (AMI) based on household size. After a Lessee’s initial lease, or twelve months, whichever is greater, the Income Limit may be increased by 5% (i.e. 105% AMI) to accommodate reasonable increases in Household Income while avoiding unintended consequences to Lessees and maintaining the spirit of the Agreement. b. “Rent Limit” means the maximum amount that may be charged as monthly rent for an Affordable Unit based on the number of bedrooms in the Affordable Unit. The Rent Limit includes the base rent amount, any charges or required fees imposed by Developer that are paid by Lessees, and tenant-paid utilities, if any. The Rent Limit is published by MSHDA on an annual basis. Developer shall not assess unreasonable fees upon Lessees and shall not assess any fees upon Lessees of Affordable Units that are in addition to any fees assessed upon any other tenant. c. "Affordable Housing Requirement" means that if Developer obtains approval of the Plan for the Project, Developer shall, during the Affordability Period (as defined below), maintain not less than a rolling annualized average of twenty (20) residential rental dwelling units within the Project leased to households whose Household Income does not exceed the applicable Income Limit and for an amount that does not exceed the applicable Rent Limit. To satisfy the Affordable Housing Requirement, the rolling annualized average of twenty (20) residential rental dwelling units must be leased to households whose Household Income is equal to or less than 100% of AMI, and rented for an amount that does not exceed the Rent Limit for the Affordable Unit. Lessees shall be required to meet the applicable Income Limit at all times in order for the leased unit to qualify as an Affordable Unit. d. "Affordability Period" means the specific time periods for which residential rental dwelling units must be maintained as Affordable Units. The Affordability Period for the Project shall begin in 2028 and shall expire twenty (20) years thereafter, in accordance with the Plan. The Developer anticipates that the residential dwelling components of the Project will begin construction in the spring of 2025 and is estimated to be completed within approximately thirty-six (36) months. e. “Grace Period” means the 12-month renewal period available for an eligible Lessee whose Household Income has exceeded the 100% AMI Income Limit for an Affordable Unit. f. "Affordable Units" mean residential rental dwelling units within the Project that satisfy the Affordable Housing Requirement. g. "AMI" means the area median family income for Muskegon County as most recently published by MSHDA. h. “Income Checklist” means a checklist that contains information necessary to determine Household Income, along with supporting documentation, provided by or in a form approved by the City. i. “Tenant Household Self Certification Form” means a form that contains information necessary for tenants to self-certify their Household Income, provided by or in a form approved by the City. j. “Tenant Income and Rent Report” means a report containing information necessary to document tenant income and rental rates charged, provided by or in a form approved by the City. k. “Lessee” means any individual(s) that enters into a lease with the Developer for any Affordable Unit in the Project. 1. “Household Income” means all income received or derived from any source required to be listed on the Income Checklist by (1) every individual named as an authorized leaseholder on the lease regardless of their age, and (2) every household member age 18 and older, including those listed as household members on the lease. Household income does not include income received by individuals under 18 years of age unless a Lessee, nor income of a lease guarantor who does not reside in the unit. 2. Term of Agreement. This Agreement shall be effective only upon (1) the final approval of the Plan for the Project by the City and MSF, and (2) execution of a development and reimbursement agreement for the Project, and shall expire at the end of the final Affordability Period. 3. Obligations of Developer. Developer shall meet the Affordable Housing Requirement, subject to the limitations herein, by constructing or developing, and leasing, Affordable Units subject to the terms and conditions of this Agreement. Affordable Unit Specifications. The Affordable Units shall be comparable in overall quality of construction to the typical and similarly-situated comparable market-rate units contained in the Project. Income Certification. During the Affordability Period, Developer shall conduct annual income certifications as described herein to ensure the Household Income of the Lessee does not exceed the applicable Income Limit. Income shall be determined according to the Part 5 method and shall include income sources as identified in 24 CFR 5.609. Developer shall obtain a completed Income Checklist, including all supporting documentation (a) no less than 30 days nor more than 60 days prior to the date of entering into a lease for an Affordable Unit, and (b) no less than 30 days nor more than 60 days prior to each fifth anniversary of such date. Developer shall, in the intervening years (i.e. years two, three, four, six, etc.) obtain a completed Tenant Household Self-Certification Form for each Lessee no less than 30 days nor more than 60 days prior to lease renewal. Developer shall retain all documentation collected pursuant to this Section 5 for a minimum of five years after receipt. Over Income. An Affordable Unit is “over income” and temporarily out of compliance with the Affordable Housing Requirement when a Lessee experiences an increase in Household Income causing them to surpass the applicable Income Limit. In the event that the Lessee’s Household Income is above 100% AMI, the Lessee’s unit shall qualify as an Affordable Unit only for the duration of the Grace Period. Rent during the Grace Period will correspond with the applicable Rent Limit. As soon as practicable at the beginning of the Grace Period, the Developer shall provide appropriate notice to the Lessee describing the terms of this Agreement. Upon the expiration of the Grace Period, the unit will no longer qualify as an Affordable Unit and Developer shall rent a comparable next available unit as an Affordable Unit to maintain compliance with the Affordable Housing Requirement. Marketing of Affordable Units. Developer will market the Project to both affordable and market rate applicants with the intention of meeting the requirements of this Agreement, Reporting to City. Within ninety (90) days after the end of each calendar year of this Agreement, Developer shall provide the City of Muskegon Development Services Department (“Department”) a report containing the following information: a. The total number of residential rental units for which an unconditional certificate of occupancy has been issued by the City of Muskegon and the total number of Affordable Units in the Project. b. The Tenant Income and Rent Report (TIRR) for the previous calendar year for all Affordable Units subject to this Agreement. c. The number of Affordable Units that are temporarily over income and out of compliance due to a previously qualified Lessee exceeding the applicable Income Limit and the plan to comply with the Affordable Housing Requirement. The Department’s Director may either (a) accept the report, or (b) request documentation from Developer to verify some or all of the information in the report, which documentation may include but shall not be limited to income certification documentation and leases. Developer shall provide the requested documentation within thirty (30) days of receiving such request from the City. If the Department’s Director determines that the Affordable Housing Requirement has not been met, the Department’s Director, on behalf of the City, will provide the Developer with a written determination which shall describe the specific deficiency that resulted in the City’s determination. Developer shall have a thirty (30) day cure period commencing after receipt of notice of failure to satisfy the terms of this Agreement. If Developer fails to cure the deficiency within this thirty (30) day cure period, the City may exercise its remedies with respect to a breach of this Agreement pursuant to Section 13.b. Each successive period of thirty (30) days following the initial breach in which Developer fails to cure the deficiency shall constitute an additional breach under this Section 8, and the City may exercise its remedies for each such breach pursuant to Section 13.b. Developer will provide access to the Project and all records that may pertain to this Agreement within thirty (30) days of request by the City, Department or Authority. Notice and Notification of End of Affordability Period. At least three (3) years prior to the end of the Affordability Period, Developer shall submit notice to the tenants of the Affordable Units, the Department’s Director, and City of Muskegon Economic Development Department indicating the end date of the Affordability Period. At all times during the Affordability Period, every lease between Developer and a Lessee must contain notification to the Lessee of the benefit derived from this Agreement, the Lessee’s obligations, and the terms under which the benefit would no longer be available, including (1) if in the future the Lessee’s Household Income exceeds the applicable Income Limit for the Affordable Unit at the time of expiration or renewal of their lease, or (2) the expiration of the Affordability Period. 10. Obligations of City. The City shall make commercially reasonable efforts to assist Developer through City permitting, site plan approval, financing applications, and other City processes. Notwithstanding the foregoing obligation, the City's efforts do not guarantee final City approvals or City of Muskegon City Commission approval. 11. Review of Rents and Utility Allowances. The Developer will submit to the Department’s Director, upon request but not more than once per year, the annual Rent Limits, inclusive of utility allowances based upon the most recently published Region C Utility Schedule and as published by MSHDA, and the Rent Limits including 100% AMI by household size based on the most recently published data. 12. Casualty Events. If the Affordable Units cease to be available as the result of fire, damage, or other casualty ("Casualty Event"), Developer shall provide prompt written notice of such Casualty Event to the City and the Authority, and Developer may use the insurance proceeds that are actually made available to it to restore the Affordable Units that have been damaged as a result of the Casualty Event. Developer shall not be required to spend any money to restore the damaged Affordable Units in an amount over and above the insurance proceeds that are actually made available to such entity for the restoration of the Affordable Units damaged as a result of a Casualty Event. However, if Developer elects to not fully restore all Affordable Units damaged as a result of a Casualty Event, Developer shall, within a commercially reasonable amount of time, rent a number of next available comparable units as Affordable Units to make up for the number of Affordable Units not fully restored to maintain compliance with the Affordable Housing Requirement. The Affordability Period for the Affordable Units which are the subject of the Casualty Event shall be tolled during the period of time such units do not exist. 13. Default and Remedies. Any failure to satisfy the obligations in this Agreement shall be a breach of this Agreement. The City's remedies under this Agreement are as follows: a. Violation of Agreement With Respect _to Affordable Housing Requirement. If Developer markets or charges rent in a manner that is inconsistent with the Affordable Housing Requirement, the City may declare an event of default by providing notice to the Developer. Upon Developer's receipt of such notice, Developer shall have sixty (60) calendar days to cure the default by: (1) marketing or charging rent in a manner that is consistent with this Agreement; and (2) Developer paying liquidated damages in the following amount: (i) two times the excess of actual rent received by Developer over the Rent Limit that would otherwise apply for each unit not in compliance; plus (ii) the actual enforcement costs of the City with respect to the Affordable Units that are subject to such damages. If the City is entitled to pursue its remedies under this Section 13.a, then Developer shall provide the City an accounting of the actual rent received by Developer as referenced in Section 13.a.i above. If Developer fails to do so within thirty (30) days after Developer's receipt of a request for such information, then, with respect to the units that Developer has failed to provide such information only, (i) the City may calculate the damages under Section 13.a using the applicable market rental rate that would apply to each Affordable Unit absent the affordability restriction that Developer has reported to the City pursuant to Section 8 above (in lieu of the actual rent received). Upon the payment of any such liquidated damages, Developer shall be deemed to be in compliance under this Agreement with respect to each Affordable Unit for the time period to which the liquidated damages that have been paid pertain. If Developer does not pay such liquidated damages within thirty (30) days of being invoiced, the Authority may retain an amount up to and including the amount of liquidated damages invoiced from any and all payments it would otherwise be required to make to Developer pursuant to the Development and Reimbursement Agreement associated with the Plan. b. Failure to Satisfy Reporting Obligations to City: If Developer fails to provide the information to the City required under Section 8 above (after the passage of all applicable notice and cure periods), then the City's sole remedy shall be to extend the Affordability Period for an additional three (3) months for each breach of Section 8. c. Payment into Affordable Housing Fund: Any amounts required to be paid to the City under this Agreement may be utilized by the City for its affordable housing fund, or for any other purpose the City determines, including ensuring that eligible tenants who overpaid the Rent Limit are made whole. Developer is still obligated to pay the City such amounts under this Agreement regardless of whether or not such City fund exists. 14. No Limitation on Remedy. Nothing contained in this Agreement shall limit the exercise of any remedy contained in any other agreement or available in law or equity. 15. Notices. All notices, consents, approvals, requests and other communications, herein collectively called "Notices", required or permitted under this Agreement shall be given in writing, signed by an authorized representative of City, Authority, or Developer, as the case may be, and either mailed by certified or registered mail return receipt requested; or sent by recognized overnight delivery service for next day delivery, and addressed as follows: To the City/Authority: Jake Eckholm Economic Development Director jake.eckholm@shorelinecity.com (231) 724-4141 Muskegon City Hall 933 Terrace St, Muskegon, MI 49440-1397 With Copy to: City Attorney Parmenter Law 601 Terrace St. Muskegon, MI 49440 To Developer: Jonathan Rooks 75 W. Walton Ave, Suite A Muskegon, MI 49440 jon@parklandgr.com With Copy to: Jared T. Belka Warner Norcross + Judd LLP 150 Ottawa Ave NW Grand Rapids, MI 49503 All Notices shall be effective upon receipt. Any party to this Agreement may change its address for the receipt of Notices to an address in the United States or designate additional addresses to whom copies of Notices shall be sent at any time by giving Notice thereof to the others as herein provided. 16. Third Party Management. The Parties acknowledge that Developer may choose to enter into a contract with a third-party property management firm (“Property Manager”) and that the Property Manager may, as part of its contract with Developer, perform certain services described in this Agreement. Developer acknowledges it remains responsible for all obligations, liable for all defaults and subject to all remedies under this Agreement regardless of the performance of any Property Manager. 17. Miscellaneous Provisions. a. This Agreement may be modified or amended in whole or in part only by mutual written agreement. b. A failure by any party to give notice or insist on the immediate performance of any right that it has under this Agreement shall not constitute a waiver of that right or any other right under this Agreement. c. This Agreement shall not be assigned, transferred, or conveyed without the prior written consent of the other parties, which consent will not be unreasonably withheld, conditioned, or delayed. d. The parties agree that all rights and remedies provided in this Agreement shall be deemed cumulative and additional and not in lieu of or exclusive of each other or in any other remedy available at law or in equity. e. Nothing contained in this Agreement, nor any act of Developer, the Authority, or the City shall be deemed or construed by any of the parties hereto or by any third person to create any relationship of third-party beneficiary, principal and agent, limited or general partnership, or joint venture, or of any association or relationship other than that of contracting parties. f. Notwithstanding any other provisions of this Agreement, any required permitting, licensing, or other regulatory approvals by any governmental authority shall be subject to and undertaken in accordance with the established procedures and requirements of such governmental authority, as may be applicable, with respect to similar projects and in no event shall the governmental authority by virtue of any provision of this Agreement be obligated to take any actions concerning regulatory approvals, . If this Agreement contains any unlawful provisions not an essential part of this Agreement and which shall not appear to have a controlling or material inducement to the making thereof, such provisions shall be deemed of no effect and shall be deemed stricken from this Agreement without affecting the binding force of the remainder. In the event any provision of this Agreement is capable of more than one interpretation, one which would render the provision invalid and one which would render the provision valid, the provision shall be interpreted so as to render it valid. . The laws of the State of Michigan shall govern the validity, performance and enforcement of this Agreement. This Agreement, and all the documents and agreements described or referred to herein, including, without limitation, any exhibits hereto, constitute the full and complete agreement between the parties hereto with respect to the subject matter hereof, and supersedes and controls in its entirety over any and all prior agreements, understandings, representations and statements whether written or oral by each of the parties hereto. The headings used in connection with the Sections and paragraphs of this Agreement are for convenience only and shall not be deemed to construe or to limit the meaning of the language of this Agreement. . This Agreement may be executed in counterparts, each of which shall be deemed to be an original document and together shall constitute one instrument. [SIGNATURE PAGE FOLLOWS] The City, the Authority, and the Developer, by and through their duly authorized officers and representatives, have executed this Agreement as follows: CITY OF MUSKEGON Hor one —— ) Ken Johnson, Mayor Qtaueih Ann Meisch, Clerk MUSKEGON BROWNFIELD REDEVELOPMENT AUTHORITY /\ Martha Bottomley, Chapasan DEVELOPER aw = Jonathan L. oer s, on behalfof Developer entities 10
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