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Agenda Item Review Form
Muskegon City Commission
Commission Meeting Date: May 27, 2025 Title: PILOT Agreement for Village at Park Terrace
Acquisition
Submitted by: Jake Eckholm, Development Department: Economic Development
Services Director
Brief Summary:
The existing ownership of Park Terrace Apartments and Village at Park Terrace Senior Apartments is
seeking to sell the portfolio to new ownership. In order to preserve and lengthen the affordability
period, a new Contract for Housing Exemption is required for both projects.
Detailed Summary & Background:
Staff and the City Attorney's office have been working to finalize the draft agreements before you
related to this project with the new owner. They hope to put significant capital investment into the
facilities in the coming years, and in order to finance the project and make that possible they are
requesting an updated and restated PILOT on both Park Terrace as well as the senior living
component Village at Park Terrace. The agreement reflects a slight reduction in the PILOT rate to 4%
of annual shelter rents but establishes a Municipal Services charge in a separate agreement. This is to
our advantage because the total MSA revenue stays with the City, rather than being split between
the taxing jurisdictions like the PILOT payment. This document is the contract for housing exemption
for up to 25 years, which will require adherence to MSHDA regulated rents per requirements in our
local ordinance.
Goal/Focus Area/Action Item Addressed:
Key Focus Areas:
Diverse housing types
Retain youth within the city
Goal/Action Item:
2027 Goal 2: Economic Development Housing and Business
Amount Requested: Budgeted liem:
NA Yes No
Fund(s) or Accouni(s): Budget Amendment Needed:
NA Yes No N/A Pee
Recommended Motion:
CITY OF MUSKEGON
AMENDED AND RESTATED CONTRACT FOR HOUSING EXEMPTION
This Agreement (the “Agreement”) between Village at Park Terrace Limited Dividend Housing
Association, LLC a Michigan limited liability company whose address is 7451 N 63 St.,
Longmont, Colorado 80503 (the “Owner”) and City of Muskegon, whose address is 933 Terrace
Street, Muskegon, Michigan (the “City”) is made pursuant to the following terms:
RECITALS
A. Owner will acquire property in the City of Muskegon more particularly described on
Exhibit A attached hereto and intends to operate the project thereon (the “Project’”) as a
low-income housing project.
B. As part of the transaction, Hackley Limited Dividend Housing Association II, L.L.C.
(“Hackley”) will assign its rights and obligations under that certain Contract for Housing
Exemption, executed by Hackley and the City as of April 1, 2002 (collectively, the
“Contract for Housing Exemption”) to Owner.
C. The Owner and the City desire to amend and restate the Contract for Housing Exemption
as set forth herein so as to: (i) memorialize the service charge and term of the amended
Contract for Housing Exemption, (ii) memorialize the assignment and assumption of the
Contract for Housing Exemption from Hackley to Owner, and (iii) add a reference to
Owner’s obligations under that certain Municipal Services Agreement (hereinafter
defined) executed approximately as of the date hereof between Owner and the City. Except
as expressly set forth herein, the parties do not intend to make any other substantive
changes to the terms of the existing Contract for Housing Exemption.
D. The City Code of Ordinances shall be referred to herein as the “Ordinance.”
E. 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 persons and families or as
Workforce Housing and to encourage the development of such housing by providing for a
service charge in lieu of property taxes in accordance with the Act. The City is authorized
by this Act to establish or change the service charge to be paid in lieu of taxes by any or
all classes of housing exempt from taxation under this Act at any amount it chooses, not to
exceed the taxes that would be paid but for this Act. It is further acknowledged that such
housing for low income persons and families or Workforce Housing is a public necessity,
and as the City will be benefited and improved by such housing, the encouragement of the
same by providing real estate tax exemption for such housing is a valid public purpose. It
is further acknowledged that the continuance of the provisions of this Ordinance for tax
exemption and the service charge in lieu of all ad valorem taxes during the period
contemplated in this Ordinance are essential to the determination of economic feasibility
of the housing projects that is constructed or rehabilitated with financing extended in
reliance on such tax exemption.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
L Grant of Exemption. As contemplated and pursuant to Act 346 of the Public Acts of 1966,
the State Housing Development Act (the “Act”), the City hereby grants an exemption from all ad
valorem property taxes attributable to any units of the building, provided such building contains
122 rental units offered to “low-income persons and families” or as “Workforce Housing,” each
as defined by MCL 125.141 5a of the Michigan State Housing Development Authority Act of 1966
(the “Authority”). This exemption is contingent upon Owner acquiring the real property described
in Exhibit A by September 1, 2025. If Owner fails to acquire the real property by this date, this
Agreement will become null and void and have no further effect.
2. Term of Exemption. This exemption shall continue until December 31, 2050 (the
“Termination Date”). The City agrees to be contractually bound by this agreement to honor the
exemption status of the Project as provided in this agreement until the Termination Date, subject
to the Ordinance.
3. Responsibilities of the Owner. The Owner agrees to perform the following:
3.1. The Owner shall pay the service charge and payment in lieu of taxes set forth in
Section 82-51 and 82-54 of the Ordinance in a timely manner (on or before July 1 of each
year during the time the exemption is in effect). For said purposes, the Owner recognizes
and will abide by all of the collection provisions of the Ordinance, including without
limitation, the acceptance of the lien provisions status of the payment in lieu of taxes in the
event of default as set forth in 82-53 of the Ordinance. As of the Effective Date, the service
charge shall equal four (4%) percent of all collected rents on the subject Project accounting
for point-in-time vacancies.
3.2 The Owner agrees to comply with its obligations under that certain Municipal
Services Agreement, executed by and between Owner and the City approximately as of the
date hereof (the “Municipal Services Agreement), including payment of the Municipal
Service Fee defined therein (“Municipal Service Fee”).
3.3. The Owner agrees to file all information required by the Ordinance and further to
meet its obligations to the Authority in connection with the Authority's administration of
the low-income housing tax credit program.
4. Term. This agreement shall continue in effect until the Termination Date, not to exceed 25
years. The City considers itself bound by this agreement for the entire term hereof.
5. Interpretation of Financing. The City agrees that the financing of the Project by the use of
tax credits as well as the Project’s mortgage, which satisfies the eligibility requirements of the
Ordinance.
6. Limitation on the Payment of Annual Service Charge. Notwithstanding Section 3, the
service charge to be paid each year in lieu of taxes for the part of the Project that is tax exempt but
which is occupied by other than low income persons or families or as Workforce Housing shall be
equal to the full amount of the taxes which would be paid on that portion of the Project if the
Project were not tax exempt
7. Third Party Beneficiary. This agreement shall benefit the Owner and the Authority, or such
other mortgagee as may have financed the Project which may enforce this agreement, both as its
interest may appear, and on behalf of the Owner and its successors and assigns. No other party is
a beneficiary under this agreement.
8. Counterparts. This Agreement may be executed in several counterparts and an executed
copy hereof may be relied upon as an original.
9. Binding and Benefit. This Agreement shall be binding upon the parties hereto and their
respective heirs, administrators, personal representatives, successors and assigns.
10. Severability. The various sections and provisions of this Agreement shall be deemed to be
severable, and should any section or provision of this Agreement be declared by any court of
competent jurisdiction to be unconstitutional or invalid the same shall not affect the validity of this
Agreement as a whole or any section or provision of this Agreement, other than the section or
provision so declared to be unconstitutional or invalid.
12. Choice of Law; Venue. This Agreement is executed in accordance with, shall be governed
by, and construed and interpreted in accordance with the laws of the State of Michigan. The parties
agree that for purposes of any dispute in connection with this Agreement, the Muskegon County
Circuit Court shall have exclusive personal and subject matter jurisdiction and venue.
13. Payment of Service Charge. The annual service charge in lieu of taxes as established by
this Agreement shall be payable in the same manner as general property taxes are payable to the
City and distributed to the several units levying the general property tax in the same proportion as
prevailed with the general property tax in the previous calendar year. The annual payment for each
operating year shall be paid on or before July 1st of the following year. Collection procedures shall
be in accordance with the provisions of the General Property Tax Act (1893 PA 206, as amended;
MCL 211.1, et seq.).
14. 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 Owner 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 enactment of this Ordinance.
15. Effective Date. This Agreement shall become effective on the last date as of which all
Parties as shown below have signed this Agreement (“Effective Date”).
[Signatures Follow]
IN WITNESS WHEREOF, the parties have signed this Agreement on the following page, on the
dates indicated.
CITY:
CITY OF MUSKEGON
By: Ne Lee-—
Kén Johnson i
Dated S- DP- 909-5
By: Qa tenk
Ann Meisch
Its: City Clerk i
Dated: C. te -LeeS
OWNER:
Village at Park Terrace Limited Dividend
Housing Association, LLC
By: Liam Fund Managez-LLC, its manager
“,
By:
Adam Stein
Its: Manager
Dated: 5/27/2025
EXHIBIT A
LEGAL DESCRIPTION
That part of RUDDIMAN TERRACE, Section 36, Town 10 North, Range 17 West, as recorded
in Liber 12 of Plats on Pages 33 and 34, described as beginning at a point on the North line of
Hackley Avenue which is North 00 degrees 00 minutes 00 seconds East 33.00 feet along the North-
South 1/4 line of said Section 36 and South 89 degrees 58 minutes 00 seconds West 383.75 feet
from the Central 1/4 corner of said Section 36; thence South 89 degrees 58 minutes 00 seconds
West 60.67 feet; thence Southwesterly 506.96 feet along the arc of a 510.50 foot radius curve to
the left said curve having a central angle of 56 degrees 53 minutes 54 seconds, and the chord of
which bears South 61 degrees 31 minutes 01 seconds West 486.38 feet; thence North 56 degrees
20 minutes 00 seconds West 392.08 feet; thence North 33 degrees 40 minutes 00 seconds East
15.07 feet; thence Northeasterly 844.98 feet along the arc of a 890.90 foot radius curve to the right,
said curve having a central angle of 54 degrees 20 minutes 33 seconds, and the chord of which
bears North 60 degrees 50 minutes 17 seconds East 813.66 feet; thence South 09 degrees 34
minutes 32 seconds East 186.05 feet; thence North 90 degrees 00 minutes 00 seconds East 64.57
feet; thence South 00 degrees 00 minutes 00 seconds East 210.93 feet to the Point of Beginning.
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