View the PDF version Google Docs PDF Viewer
City of Muskegon
Muskegon County, Michigan
Ordinance Amendment No. 2564
THE CITY OF MUSKEGON HEREBY ORDAINS:
Chapter 82, Article II, Division 2 of the Code of Ordinances of the City of Muskegon, Michigan,
concerning Ad Valorem Property Taxation is amended, including a reorganization and revision of
the chapter in its entirety, to read as follows:
Sec. 82-46. Definitions.
Terms not defined herein shall have those definitions contained in Chapter 1 of the State
Housing Development Authority Act, Public Act 346 of 1966, as amended (Public Act 346).
“Additional amount” means the amount equal to the difference between the following:
(1) The millage rate levied for operating purposes by the county multiplied by the current
taxable value of that housing project.
(2) The amount of the annual service charge paid by the housing project under Section 82-
51 that is distributed to the county.
“Annual shelter rent” means the total collections during an agreed annual period paid by or on
behalf of all occupants of a housing project representing rent or occupancy charges, less charges
for utilities furnished to the occupants and paid by the housing project owner. Annual shelter rent
includes the rental amounts to be currently charged for units in the housing project, whether a unit
is vacant or not, and whether or not the rent is actually paid. Annual shelter rent also include the
rentals to be paid for additional facilities by tenants, such as carports or garages, and further include
miscellaneous income, such as income from vending machines or laundry equipment. The portion
of additional facility rents and miscellaneous income to be attributed to Annual shelter rent shall
be determined by reference to the floor plan of the facility which includes and clearly exhibits the
housing project (therefore the exempt portion of the facility), and the portion of Annual shelter
rent shall be determined by the ratio of the housing project square footage to the entire square
footage of the facility.
“Authority” means the Michigan State Housing Development Authority.
“Elderly persons” means persons determined by authority guidelines, rules, and practices to have
attained the age and have the status to constitute them as elderly persons.
“Homebuyer” means the household that will permanently own and occupy the owner-occupied
workforce housing project.
“Household” means an individual or family and all occupants residing in the unit.
1
“Housing Project” means a residential facility consisting of rental units offered to the following
persons; it does not mean the portion of any facility which is not so occupied by:
(1) Low-Income Households as defined in this Section.
(2) Workforce Housing as defined in this Section.
“Low-income household” means a household with:
(1) Income not greater than 60% of the Area Median Income (AMI) published by the
Authority based on United States Department of Housing and Urban Development
(HUD) data; or
(2) Income at or below 80% of AMI when residing in Low Income Housing Tax Credit
(LIHTC) Program units rent restricted at various levels up to 80% of AMI where the
average rent restriction of all units is 60% AMI or less.
“Mortgage Loan” means a loan that is Federally-aided (as defined in Section 11 of Public Act 346)
or a loan or grant made or to be made by the Authority, for the construction or rehabilitation and/or
permanent financing of a housing project, and then secured by a mortgage on the housing project.
“Rehabilitation” means all or part of those repairs and improvements necessary to make residential
real property safe, sanitary, or adequate.
“Restrictive Covenant” means an agreement between the owner of the housing project and the City
recorded with the Muskegon County Register of Deeds and running with the land that restricts the
use of the housing project to workforce housing as defined in the Ordinance, for a period not to
exceed 15 years.
“Service charge” means the same as payment in lieu of taxes.
“Workforce housing” means rental or owner-occupied units that are reasonably affordable to, and
occupied by, a household whose total household income is not greater than 120% of the Area
Median Income (AMI) published by the United States Department of Housing and Urban
Development (HUD).
“Utilities” means gas, electric, public water and public sanitary sewer services provided to a
housing unit. Utilities do not include cable, broadband, telephone or similar communications
services, or solid waste services.
Sec. 82-47. General denial of exemption.
The exemption from ad valorem property taxes provided by Section 15a of Public Act No. 346 of
1966 (MCL 125.1415a) shall not apply to all or any class of housing projects within the city
boundaries except as provided in this division.
Sec. 82-48. Limited Exemption Stated.
2
A limited exemption, only if authorized by Public Act No. 346 of 1966 (MCL 125.1401 et seq.),
is hereby granted, limited however to the projects described and authorized by this division and
further having a signed contract with the city pursuant to this division entered into by the city in
its sole discretion. No other residential project, even if authorized by Public Act No. 346 of 1966
(MCL 125.1401 et seq.), shall be entitled to an exemption. The exemption shall not be available
to mobile home park corporations or mobile home park associations.
Sec. 82-49. Eligible Housing Projects.
The tax exemption established in subsection (1) of Section 15a of Public Act 346 (MCL
125.1415a) shall apply to housing projects within the boundaries of the City of Muskegon that
meet either of the following criteria:
A. Low-income housing projects.
(1) Projects that are financed with a Federally-aided or State Housing Development
Authority-aided mortgage or with an advance or grant from such Authority, and
(2) Projects that serve low-income households, elderly and/or handicapped, and
(3) Projects that are owned by a "consumer housing cooperative," "qualified nonprofit
housing corporation," or a "limited dividend housing association" as defined in
Public Act 346, as amended.
B. Workforce housing projects. To qualify as a workforce housing project, a housing project
must be either:
(1) Rental project:
a. Projects that are being developed or rehabilitated for workforce housing.
Rehabilitation work may not occur prior to applying to the City for tax
exemption. All projects other than new construction development are to be
considered rehabilitation projects, and
b. The rent and utilities paid by or on behalf of the occupants do not exceed
the applicable Area Median Income (AMI) rent limit, adjusted by number
of bedrooms in the unit, published annually by the Authority based on
United States Department of Housing and Urban Development (HUD) data,
and
(2) A housing unit that is being developed or rehabilitated for owner-occupied
workforce housing.
Sec. 82-50. Authorization and Establishment of Property Tax Exemption.
3
A. Owners of eligible housing projects described that qualify under Section 82-49(A) and 82-
49(B)(1) may apply to the designated City department, and upon satisfaction of all other
requirements in this ordinance, shall be approved.
B. Owner-occupants of eligible housing projects that qualify under Section 82-49(B)(2). may
apply to the designated City department, and upon satisfaction of all other requirements in
this ordinance, shall be approved. Homebuyers with an executed purchase agreement to
purchase a newly developed or rehabilitated workforce housing project are eligible to
apply.
C. The owner of a workforce housing project that qualifies under Section 82-49(B) shall enter
into a Restrictive Covenant with the City of Muskegon, subject to approval by the City
Attorney, that is recorded in Muskegon County and specifies the terms and conditions of
the tax exemption as follows:
(1) The Restrictive Covenant shall provide (a) that the Restrictive Covenant may be
enforced by the City of Muskegon, (b) for the reporting and monitoring of the
housing project owner’s compliance with the Restrictive Covenant and this
Ordinance, (c) remedies available to the City of Muskegon for non-compliance,
including termination of the exemption, (d) that ad valorem taxes will be assessed
for units with households that have income above 120% of AMI, as reported on
annual compliance reports, and that such units will not revert to being tax exempt
until a future annual compliance report evidences household income that does not
exceed 120% of AMI, and (e) that the Restrictive Covenant cannot be modified
except in a written instrument executed by the housing project owner and the City
of Muskegon and recorded with the Register of Deeds.
(2) The Restrictive Covenant for a rental workforce housing project under Section 82-
49(B)(1) shall stipulate the number of units to be rented to households within the
various income brackets. For all units in the rental workforce housing project, rent
and utilities shall not exceed the applicable Area Median Income (AMI) rent limit,
adjusted by number of bedrooms in the unit, published annually by the Authority,
based on United States Department of Housing and Urban Development (HUD)
data and household income shall not exceed 120% of Area Median Income.
D. The owner of the housing project shall submit an affidavit to the Authority in the form
required by the Authority for certification by the Authority that the project is eligible for
the property tax exemption. The owner or Authority must then file the certified notification
of exemption with the City of Muskegon Assessor before November 1 of the year
preceding the tax year in which the exemption is to be effective.
E. Workforce housing projects under Section 82-49(B)(1), subject to the recording of the
Restrictive Covenant, shall be exempt from all ad valorem property taxes as of December
31 of the year in which development or rehabilitation commences. Work must start within
4
one (1) year of the Authority’s certification of exemption or such longer period as specified
in the Restrictive Covenant.
F. Workforce housing projects under Section 82-49(B)(2), subject to the recording of the
Restrictive Covenant, shall be exempt from all ad valorem property taxes as of December
31 of the year in which work is complete and the homebuyer obtained title to the housing
project.
G. Not later than 5 business days after receipt of the certified notification of exemption for a
workforce housing project, the City Assessor shall provide a copy of the certified
notification of exemption to the County Treasurer.
H. Notwithstanding the provisions of MCL 125.1415a(3)(b) and 125.1415a(7) to the contrary,
upon City approval of the tax exemption and receipt of a certified notification of exemption
from the Authority, a contract shall be deemed effective between the City of Muskegon
and the owner of the housing project to provide tax exemption and accept service charge
payments in lieu of taxes as described in this ordinance.
I. During the exemption period, units in housing projects that qualify under Section 82-49
shall be in compliance with the City’s Property Maintenance Code (Chapter 10), including
requirements for Registration of Dwellings and Certificates of Compliance.
J. Housing projects that qualify under Section 82-49(A) above shall have the tax exemption
provided in subsection (1) of Section 15a of Public Act 346, provided the owner of the
housing project has complied with Public Act 346, is current with all taxes and assessments
on the subject property, and has annually filed before August 1 an audited financial
statement for the previous calendar year, as requested, with the City Assessor.
K. Housing projects that qualify under Section 82-49(B)(1) above shall have the tax
exemption provided in subsection (1) of Section 15(a) of Public Act 346, provided the
owner of the housing project has complied with Public Act 346, is current with all taxes
and assessments on the subject property, and has annually filed before August 1 a financial
statement for the previous calendar year, as requested, with the City Assessor and has
annually submitted by May 30 an annual compliance report for the previous calendar year,
as requested.
(1) An annual audited financial statement shall be required for all housing projects with
twenty (20) or more units.
(2) Housing projects with less than 20 units may submit an audited financial statement,
or either a third-party prepared or internally-prepared financial statement, certified
by the owner, showing the actual annual shelter rent collected for the preceding
calendar year.
(3) For housing projects that have units occupied by households at various income
brackets, or that have units that are both eligible and not eligible for tax exemption
5
under this Ordinance, the owner must report the amount of rent collected for the
preceding year by unit.
L. Housing projects that qualify under Section 82-49(B)(2) above shall have the tax
exemption provided in subsection (1) of Section 15a of Public Act 346, provided the owner
of the housing project has complied with Public Act 346, is current with all taxes and
assessments on the subject property, and has annually affirmed to the City continued
eligibility for the tax exemption.”
Sec. 82-51. Payment in Lieu of Taxes; amount; standards for determination.
The payments in lieu of taxes to be made by housing projects exempt from ad valorem taxes under
this division are hereby established by the city pursuant to section 15a of Public Act No. 346 of
1966 (MCL 125.1415a), without regard to the amounts otherwise set forth in such section of this
act. The service charge to be paid in lieu of taxes by any housing project exempt under this division
shall be determined as follows:
A. The owner of the housing project exempt from taxation under this Ordinance and Public
Act 346 shall pay to the City of Muskegon an annual service charge for public services in
lieu of all taxes. All of the following apply to the amount that an owner must pay as a
service charge. In no case shall the service charge exceed the amount in taxes that an owner
would have otherwise paid if the housing project were not tax exempt.
B. Low-income housing projects approved for tax exemption under Section 82-49(A) or
Workforce housing projects approved for tax exemption under Section 82-49(B) of this
Ordinance shall pay a service charge in an amount no less than one percent nor more than
20 percent of the annual shelter rent charged for the total of all units in the exempt housing
project, whether the units are occupied or not and whether or not the rents are paid. In no
event shall the service charge exceed the ad valorem real property taxes which would be
paid for the housing project if it were not exempt.
C. Standards for determining the amount of the payment in lieu of taxes. The city's Payment
In Lieu of Taxes (PILOT) policy shall guide the city in determining the amount of service
charge (not less than the minimum) which will be paid to the city for a housing project
exempt under this division.
D. Property or unit becoming ineligible. In the event any residential unit is found to be
occupied by persons who are not eligible to occupy exempt units under this division, the
service charge for that unit, prorated, shall equal the general property taxes which would
be payable (prorate) for that unit. In the event the city determines that more than 50 percent
of the units in the housing project are occupied by such ineligible persons, than the entire
housing project shall be immediately liable for a service charge in an amount equal to the
ad valorem property taxes which would otherwise be charged by tax bills normally issuing
in the year of the city's determination.
Sec. 82-52. Term of Exemption.
6
A. The exemptions and service charges authorized under this Ordinance for low-income
housing projects that qualify under Section 82-49(A) above shall be in effect so long as the
housing project remains subject to a Mortgage Loan, not to exceed twenty-five (25) years.
B. The exemptions and service charges authorized under this ordinance for workforce housing
projects that qualify under Section 82-49(B) above shall be in effect for a term not to exceed
fifteen (15) years.
C. The exemption term shall begin on the tax day of the year in which a final certificate of
compliance or occupancy is issued by the city, therefore affecting the taxes due in the
following year, and shall terminate on the happening of any of the following:
(1) Refinancing of the Mortgage Loan, except to convert from a construction to an end
loan, for exemptions and service charges authorized under this Ordinance for low-
income housing projects that qualify under Section 82-49(A).
(2) The day falling 25 years after the effective date of the contract for the exemption
required by this division, or the period determined by the contract, whichever is
shorter.
(3) Any violation or default under section 82-55.
Sec. 82-53. Duration of Exemptions.
The service charge shall constitute a lien on the housing project property and improvements,
effective at the same times and enforceable in the same manner as general property taxes.
Sec. 82-54. Collection of a Service Charge.
The service charge as determined by this division shall be payable in the same manner as general
property taxes, except that the annual payment shall be paid on or before July 1 of each year during
which the exemption is in effect. The entire tax collection procedure provided by the general
property tax act (MCL 211.1 et seq.) shall be effective and utilized with respect to such payment,
including, but not limited to, the provisions providing for interest and penalties on late payments,
return of delinquent taxes, tax liens, and the sale of lands for delinquent taxes. In the event of a
delinquency in the payment in lieu of taxes, the city shall issue a tax bill for the premises and
include the required payment as a delinquent tax.
Sec. 82-55. Requirement to file information; default in payment; violations; loss of
exemption.
The sponsor or owner shall file annually with the city treasurer a statement of contract rents to be
charged and/or received, the statement to be filed within 30 days after December 31 of each year.
Failure to timely file such statement, the filing of an inaccurate statement, any misrepresentation
in the amount of rents, or the failure to timely pay any service charge shall be considered violations
of this division and the commission of any one violation shall result in the permanent, immediate
7
loss of the exemption for the current year and thereafter. The city may require that information
presented in the statement be certified by an independent auditor.
Sec. 82-56. Service fees and special assessments.
Except as otherwise provided by law, a housing project otherwise exempt under this section shall
not be exempt from special assessments or service fees or charges levied or charged by the city.
Sec. 82-57. Contract requirement.
Except for housing projects previously determined to be exempt prior to the enactment of this
division, each housing project which is exempt under this division must sign an agreement with
the city by which the exemption set forth in this division is granted, and further providing for the
payment in lieu of taxes, consenting to the provisions of this division and recognizing the
conditions whereby exemption may be lost. The city may require any reasonable conditions in
such contract, including, but not limited to, such matters as limitations on the years for which the
exemption may be continued, requirements for completing the project within a time certain,
requirements for completing nonexempt units or facilities and time limits for completion, as well
as the number of such units. Each contract shall have a complete and final floor plan attached
(subject only to insubstantial amendment by asbuilt drawings), which shall govern the
determination of the payment in lieu of taxes as appropriate under this division. No exemption
may be granted unless and until the contract is completed, approved by the city commission and
signed.
Sec. 82-58. Denial of application.
The city is not required by this section to grant an application which may otherwise qualify under
this division. The city may deny an application in its sole discretion. In determining whether to
deny a project, the city may use, but is not limited to, the following standards. The city would deny
a project for exemption if the project applied for:
A. Constitutes a development which diverts, subverts, alters or is contrary to the master plan
of the city;
B. Fails to contribute to the improvement of neighborhoods in the city;
C. Concentrates exempt housing in one or more areas of the city;
D. Adversely affects the property tax base of the city;
E. Creates significant public burdens, such as traffic, public works or infrastructure, health,
safety, school population or service capabilities;
F. Results in the concentration of low income or elderly housing in a neighborhood or is
contrary to the encouragement of economically diverse housing development;
8
G. Is sponsored by a developer who fails to demonstrate acceptable financial, managerial or
construction capabilities; or
H. Results in a project or development which is harmful to the health, safety and welfare of
the city
Sec. 82-59. Effect on existing projects.
Housing projects which have been previously determined and treated as exempt pursuant to Public
Act No. 346 of 1966 (MCL 125.1401 et seq.) under previous ordinances of the city shall continue
their exempt status, and further shall continue the present payments to the city as presently
determined. To the extent their present contracts do not conflict with this division, this division
shall control their exemptions.
Sec. 82-60. Severability and Inconsistent Ordinances.
A. The various sections and provisions of this Ordinance shall be deemed to be severable and
should any section or provision of this Ordinance be declared unconstitutional or invalid
by any court of competent jurisdiction, the same shall not affect the validity of this
Ordinance as a whole or any section or provision of this Ordinance, other than the section
or provision declared unconstitutional or invalid.
B. All ordinances or parts of ordinances inconsistent or in conflict with the provisions of this
Ordinance are repealed to the extent of such inconsistency or conflict.
Secs. 82-61—82-80. Reserved
This Ordinance Adopted:
Ayes: German, Jackson, Kochin St.Clair, Johnson, Kilgo, and Keener
Nays: None
Adoption Date: May 26, 2026
Effective Date: June 12, 2026
First Reading: May 26, 2026
Second Reading: N/A
CITY OF MUSKEGON
By: ______________________________
Ann Marie Meisch, MMC
Clerk, City of Muskegon
9
CERTIFICATE
The undersigned, being the duly qualified clerk of the City of Muskegon, Muskegon County,
Michigan, does hereby certify that the foregoing is a true and complete copy of an ordinance
adopted by the City Commission of the City of Muskegon, at a regular meeting of the City
Commission on the 26th day of May, 2026, at which meeting a quorum was present and remained
throughout, and that the original of said ordinance is on file in the records of the City of Muskegon.
I further certify that the meeting was conducted, and public notice was given, pursuant to, and in
full compliance with Act No. 267, Public Acts of Michigan of 1976, as amended, and that minutes
were kept and will be, or have been made available as required thereby.
CITY OF MUSKEGON
Published: June 2, 2026 By:
Ann Marie Meisch, MCC
Clerk, City of Muskegon
Publish: Notice of Adoption to be published once within ten (10) days of final adoption.
10
CITY OF MUSKEGON
NOTICE OF ADOPTION
TO: ALL PERSONS INTERESTED
Please take notice that on May 26, 2026 the City Commission of the City of Muskegon
adopted an amendment, including a reorganization and revision of the chapter in its entirety, to
Chapter 82, Article II, Division 2 summarized as follows:
Sec. 82-46. Definitions.
Sec. 82-47. General denial of exemption.
Sec. 82-48. Limited Exemption Stated.
Sec. 82-49. Eligible Housing Projects.
Sec. 82-50. Authorization and Establishment of Property Tax Exemption.
Sec. 82-51. Payment in Lieu of Taxes; amount; standards for determination.
Sec. 82-52. Term of Exemption.
Sec. 82-53. Duration of Exemptions.
Sec. 82-54. Collection of a Service Charge.
Sec. 82-55. Requirement to file information; default in payment; violations; loss of
exemption.
Sec. 82-56. Service fees and special assessments.
Sec. 82-57. Contract requirement.
Sec. 82-58. Denial of application.
Sec. 82-59. Effect on existing projects.
Sec. 82-60. Severability and Inconsistent Ordinances.
Secs. 82-61—82-80. Reserved
11
Copies of the ordinance may be viewed and purchased at reasonable cost at the Office of the City
Clerk in the City Hall, 933 Terrace Street, Muskegon, Michigan, 49440 during regular business
hours.
This ordinance amendment is effective ten (10) days from the date of this publication.
CITY OF MUSKEGON
Published: June 2, 2026 By:
Ann Marie Meisch, MCC
Clerk, City of Muskegon
------------------------------------------------------------------------------------------------------------
PUBLISH ONCE WITHIN TEN (10) DAYS OF FINAL PASSAGE
12
Sign up for City of Muskegon Emails