HomeMy WebLinkAbout2022-OR-35 Ordinance Approving a Payment in Lieu of Tax ORDINANCE NO..2022-_55
BY THE COMMON COUNCIL FOR THE CITY OF JEFFERSONVILLE
APPROVING A PAYMENT IN LIEU OF TAX
An ORDINANCE approving Payments in Lieu of Tax (the "PILOT") as provided in Ind.
Code § 36-1-8-14.3 (collectively, the "Act") for an affordable housing project being financed in
part with low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code of
1986, as amended (the "Code").
WHEREAS, the Act authorizes the governing body of the City of Jeffersonville (the
"City"), as a political subdivision, to adopt an 'ordinance to require a property owner to pay a
PILOT at times set forth in the ordinance with respect to real property that is subject to an
exemption under Ind. Code § 6-1.1-10-16.7; and
WHEREAS,Ind.Code§6-1.10-10-16.7 provides for a property tax exemption for a project
where (1) the improvements on the real property were constructed, rehabilitated, or acquired for
the purpose of providing housing to income eligible persons under the federal low income housing
tax credit program under Code Section 42; (2) the real property is subject to an extended use
agreement under Code Section 42 as administered by the Indiana Housing and Community
Development Authority; and(3) the owner of the property has entered into an agreement to make
payments in lieu of taxes under Ind. Code § 36-1-8-14.3; and
WHEREAS, Steele Claysburg, LLC, a limited liability limited company (the "Owner"),
' has or will acquire certain real estate in Jeffersonville, Indiana, located at 1306 Wall Street,
Jeffersonville,IN 47130, and identified as Parcel Numbers 10-19-11-103-443.000-010, 10-19-00-
102-467.000-010, 10-19-00-102-647.000-010.,.10-1-9 00-102-648.000-010, 10-19-00-102-
649.000-010, 10-19-00-102-718.000-010, 10-19-00-102-796.000-010, 10-19-00-102-442.000-
010, 10-19-00-102-444.000-010,and 10-19-00-102-445.000-010 (collectively,the"Real Estate"),
and upon which Owner desires to acquire and rehabilitate a 228-unit affordable apartment
community (collectively with the Real Estate, the "Project"), which Owner has represented will
be owned and operated as an affordable housing facility pursuant to the federal low income
housing tax credit program under Section 42 of the Code and the applicable State of Indiana
Qualified Allocation Plan; and
WHEREAS, the Owner will be entering into an extended use agreement with the Indiana
Housing and Community Development Agency; and
WHEREAS, the City and Owner desire to enter into a PILOT agreement to facilitate the
Project and provide affordable housing in the City; and
WHEREAS, the terms and conditions of the. PILOT are contained in Exhibit A (the
"PILOT Agreement"), which is for a thirty (30) year term and includes an annual payment to the
City in the amount equal to $20,000 once the Project has been acquired by the Owner for the term
of the PILOT Agreement(the"PILOT Payment'); and
WHEREAS, the City recognizes and agrees that in accordance with Ind. Code § 36-1-8-
14.3(f)(2),that the percentage generated by dividing the annual PILOT Payment by the amount of
the property taxes that would have been paid to the City if the Project was not subject to an
exemption from property taxation shall be the percentage of the property taxes required to be paid
by the Owner to the City on an annual basis during the term of the PILOT Agreement;
WHEREAS,funds from a PILOT must be deposited in an affordable housing fund pursuant
to Ind. Code § 5-20-5-15.5.
WHEREAS, pursuant to and in accordance with the Act,the City desires to authorize and
enter into the PILOT Agreement; now, therefore:
NOW THEREFORE,BE IT ORDAINED BY THE BY THE COMMON COUNCIL
FOR THE CITY OF JEFFERSONVILLE:
1. It is hereby'found that the acquisition of the Real Estate and acquisition and
rehabilitation of the Project will be of benefit to the health or general welfare of the City and its
citizens and does comply with the purposes and provisions of the Act.
2. The City hereby establishes the City's Affordable Housing Fund (the "Fund"),
pursuant to Ind. Code § 5-20-5-15.5.
3. In accordance with hid. Code § 5-20-5-15.5, the City is authorized and directed to
administer the Fund and shall use the Fund for the following uses:
a. Providing financial assistance to those individuals and families whose
income is at or below eighty percent (80%) of Clark County's (the
"County") median income for individuals and families, respectively, to
enable those individuals and families to purchase or lease residential units
within the County;
b. Paying expenses of administering the Fund;
c. Making grants, loans, and loan guarantees for the development,
rehabilitation, or financing of affordable housing for individuals and
families whose income is at or below eighty percent(80%) of the County's
median income for individuals and families, respectively, including the
elderly, persons with disabilities, and homeless individuals and families;
and
d. Providing technical assistance to nonprofit developers of affordable
housing.
4. The Mayor is directed to notify the Indiana Housing and Community Development
Authority of the creation of the Fund and take all necessary and appropriate action to establish and
administer the Fund.
5. The PILOT Agreement is hereby approved by the City, and the Owner shall make
the annual PILOT Payments in accordance with the terms of the PILOT Agreement, which is
conditioned upon, among other requirements,the Owner receiving property tax exemption for the
Project pursuant to Ind. Code § 6-1.1-10-16.7.
6. In accordance with Ind. Code § 36-1-8-14.3(h), the PILOT Payments shall be
deposited in the Fund.
7. In accordance with Ind. Code § 36-1-8-14.3(e), the Owner has consented to this
Ordinance and the PILOT Payment, which shall be illustrated by the City and Owner executing
the PILOT Agreement.
8. The Mayor is authorized and directed to execute the PILOT Agreement approved
herein. The signature of the Mayor on the PILOT Agreement may be a facsimile signature.
9. By adopting this Ordinance, the'City has authorized and directed the Mayor to
finalize and execute the PILOT Agreement and approve the PILOT Payments,and accordingly the
City has undertaken all required action contained within the Act.
10. If any section, paragraph or provision of this Ordinance shall be held to be invalid
or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or
provision shall not affect any of the remaining provisions of this Ordinance.
11. All ordinances, resolutions and orders or parts thereof, in conflict with the
provisions of this Ordinance are, to the extent of such conflict,hereby repealed.
12. It is hereby determined that all formal actions of the Council relating to the adoption
of this Ordinance were taken in one or more open meetings of the Council, that all deliberations
of the Council and of its committees, if any, which resulted in formal action, were in meetings
open to the public, and that all such meetings were convened, held and conducted in compliance
with applicable legal requirements, including Ind. Code § 5-14-1.5 et seq., as amended.
13. The Mayor and President of the Common Council are authorized to take all such
further actions or to execute,attest and deliver such further instruments and documents in the name
of the City as in the Mayor and President of the Common Council's judgment shall be necessary
or advisable in order fully to consummate the PILOT Agreement and Project and carry out the
purposes of this Ordinance.
14. This Ordinance shall be in full force and effect upon adoption and compliance with
Indiana Code Title 36,Article 5, Chapter 2, Section 10.
2022-OR- JJ
PASSED AND ADOPTS by the Common Council of the City of Jeffersonville, Clark County, Indiana upon this
Ar S day of all-C_ - , 202Z
Matt Owen, President and
Presiding Officer
ATTEST:
Lisa Gill, Ierk
City of Jeffersonville
PRESENTED by me to the Mayor of the City of Jeffersonville, Clark County, Indiana upon this day of
Wt , 20 je;-
Alta
isa Gill,Clerk
City of Jeffersonville
SIGNED and APPROVED by me upon this ale- day of IJ 20`2_:
111.4
Mika• Moore, Mayor
City;,fJeffersonville
Common Council of the City of Jeffersonville, Indiana
VOT D OR: VOTED AGAINST:
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tt wen, resident
ATTEST: 4
Lisa Gift
City Clerk
Prepared by:
Les Merkley
Corporate Counsel
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Exhibit A
PILOT Agreement
1
4871-5653-1229.1
PAYMENT IN LIEU OF TAXES AGREEMENT
THIS PAYMENT IN LIEU OF TAXES AGREEMENT (this "PILOT Agreement") is
entered into as of this day of , 2022 (the "Effective Date"), by and among
the City of Jeffersonville, Indiana, (the "City"), and Steele Claysburg, LLC, and its permitted
successors and assigns ("Owner").
RECITALS
WHEREAS, Owner has or will acquire certain real estate and improvements in
Jeffersonville, Indiana, located at 1306 Wall Street, Jeffersonville, IN-_47130, which the parcel
numbers and legal description of the real estate is described on Exhibit A attached to this PILOT
Agreement (collectively, the "Real Estate"), and upon which Owner desires to acquire and
rehabilitate a 228-unit affordable apartment community (collectively with the Real Estate, the
"Project"), which Owner has represented will be owned and operated as an affordable housing
facility pursuant to the federal low income housing tax credit program under Section 42 of the
Internal Revenue Code of 1986, as amended (the "Code")and the applicable State of Indiana
Qualified Allocation Plan; and
WHEREAS, pursuant to Indiana Code ("IC") 6-1.1-10-16.7, Owner will be exempt from
the requirement to pay property taxes on real property included in the Project if the following
requirements are satisfied: (1) the improvements on the real property were constructed,
rehabilitated, or acquired for the purpose of providing housing to income eligible persons under
the federal low income housing tax credit program under Code Section 42; (2)the real property is
subject to an extended use agreement under Code Section 42 as administered by the Indiana
housing and community development authority; and(3)the owner of the property has entered into
an agreement to make payments in lieu of taxes under IC 36-1-8-14.3;
WHEREAS,the Owner anticipates that the improvements on the property will be acquired
and rehabilitated utilizing the federal low income housing tax,credit program under Code Section
42 and furthermore that the Project will be subject to an extended use agreement under Code
Section 42 as administered by the Indiana Housing and Community Development Authority;
WHEREAS, this Agreement has been drafted to comply with the requirements under IC
IC 36-1-8-14.3 (the "Pilot Statute");
WHEREAS, the City represents that it has or will undertake all necessary and appropriate
actions contained within IC 36-1-8-14.3 to ensure this Pilot Agreement satisfies all necessary
requirements of the Pilot Statute so as to permit the Owner to successfully obtain property tax
exemption under IC 6-1.1-10-16.7;
WHEREAS, Owner represents that it has timely filed or will timely file its application(the
"Project Tax Exemption Application") with the Clark County Assessor requesting an exemption
pursuant to IC 6-1.1-10-16.7, from its obligation to pay real property taxes and that it will timely
file any applications to renew any exemption if required by law to do so; and
WHEREAS, Owner has agreed (i)to make payments in lieu of taxes to the City; and
4870-6517-4817.2
WHEREAS,City and Owner have agreed that,if the real property contained on Real Estate
becomes fully exempt from the payment of property taxes under IC 6-1.1-10-16.7, Owner will
make payments to the City pursuant to the terms of this PILOT Agreement; and
NOW, THEREFORE, in consideration of the foregoing premises, mutual covenants and
the sum of Ten and 00/100 Dollars($10.00)and other good and valuable consideration,the receipt
and sufficiency of which are hereby acknowledged,the parties hereby agree as follows:
AGREEMENT
Section 1. Payments in Lieu of Taxes.
Section 1.1. (a) Owner represents and warrants that it has or will undertake all
appropriate action for the real property of the Project to be exempt under IC 6-1.1-10-16.7, and
during the term of this Pilot Agreement, Owner covenants and agrees it shall at all times comply
with the requirements of IC 6-1.1-10-16.7, as applicable to Owner and the Project.
(b) Owner agrees to maintain the Project as an affordable housing facility consisting of
a 228-unit affordable apartment community.
(c) Owner acknowledges that this PILOT Agreement does not confer any property tax
exemption on the Project and that in order to obtain any such property tax exemption or partial
exemption, Owner must timely file its Property Tax Exemption Application, including renewal
applications,if any are required,with the Clark County Assessor requesting an exemption pursuant
to IC 6-1.1-10-16.7 from Owner's obligation tol pay all or a portion of its property taxes on the
Project. The.City agrees to use best efforts to assist the Owner in ensuring the real property at the
Project is fully exempt from property tax if the Owner has satisfied all requirements to obtain
exemption under IC 6-1.1-10-16.7.
Section 1.2. Owner shall annually pay'to the City upon acquiring the Project an amount
equal to $20,000.
Section 1.3. The payments referenced under Section 1.2 shall each be referred to as a
"PILOT Payment." The PILOT Payment shall be paid in lieu of property taxes for the tax year in
question that would have been payable by Owner if Owner was a non-exempt taxpayer.
If Owner fails to satisfy the requirements'of Section 1.1 or Section 1.4 (a"Noncompliance
Event"), Owner shall pay to the City an additional ten percent(10%)of the PILOT Payment due and
payable for the applicable year (the "Supplemental Payment") no later than December 31' in the
calendar year in which the.Noncompliance Event occurs. Owner shall only be liable for the
Supplemental Payment once per year for all Noncompliance Events.
The Pilot Payment and Supplemental Payment shall only become due if all the real property
at the Project has been exempt from property tax under IC 6-1.1-10-17. To the extent that the real
property at the Project is not fully exempt in any year of the Payment Period,the Owner shall have
no obligation to make the PILOT Payment or Supplemental Payment for such year.
4870-6517-4817.2
I -
•
Section 1.4. The annual Pilot Payment shall be payable in two equal installments due
and payable on or before May 10th and November loth of each successive calendar year,
commencing with the first semi-annual installment due and payable on May 10th in the year
following the acquisition of the Real Estate and Project by the Owner (each an "In Lieu of
Payment") and continuing for thirty (30) years thereafter(the "Payment Period").
Section 1.5. Owner hereby reserves the right to contest and to appeal the amount of any
tax assessment of the Project. Any such challenge will not affect the timely payment of the annual
In Lieu of Amount described in Section 1.2.
Section 2. Security for In Lieu of Payments - Grant of Mortgage Lien.
Section 2.1. This PILOT Agreement may be recorded with the appropriate office in Clark
County,Indiana, as a mortgage to secure the obligation of the Owner to pay In Lieu of Payments
(the "PILOT Mortgage"), which PILOT Mortgage lien shall be in all respects subordinate to any
Mortgage to be held by the bondholders or senior lender in connection with financing procured to
fund development and construction of the Project and any subsequent refinancing thereof.
Section 3. Termination.
Section 3.1. This PILOT Agreement'shall automatically terminate, by no action of the
parties, and shall be of no force or effect between or among the parties upon the expiration of the
Payment Period and the remittance of all In Lieu of Payments due and payable pursuant to Section
1.4 hereof Notwithstanding the foregoing, the City and Owner may mutually agree to extend this
PILOT Agreement prior to the expiration of the Payment Period. Furthermore, the Owner may
terminate this PILOT Agreement to the extent that the real property at the Project is not fully exempt
in any year of the Payment Period.
E
Section 3.2. Upon conveyance of Owner's title to the Project to any party which meets
the requirements of IC 6-1.1-10-16.7, the PILOT Agreement shall remain in full force and effect.
The City acknowledges and agrees the Owner may assign this PILOT Agreement as a part of the
sale of the Project. The Owner's `obligation to pay In Lieu of Payments and Supplemental
Payments shall terminate upon Owner's conveyance of its title to the Project. Upon conveyance of
fee title to the Project to any other entity that does not meet the requirements of IC 6-1.1-10-16.7,
this PILOT Agreement shall become null and void and of no further force or effect; provided,
however, Owner shall remain obligated for payment of the applicable pro rata amount of the In
Lieu of Payments with respect to the Project up;to the date when a purchaser either assumes the
obligations hereunder or the real property is no longer exempt under IC 6-1.1-10-16.7.
Section 3.3. In the event the City determines that Owner has failed to satisfy the
requirements of Section 1.1 or Section 1.4, the City shall notify Owner in writing of such default.
Owner shall have sixty (60) days from the effective date of the notice to cure the reason for default
(the "Cure Period"). The City may in its sole discretion elect to extend the Cure Period. Following
the Cure Period, this PILOT Agreement shall automatically terminate upon written notice from the
City to the Owner that such default has not been lured within the Cure Period.
Section 3.4. The parties hereto may mutually agree to terminate this PILOT Agreement.
Such termination agreement shall be in writing and executed by all parties hereto. Upon mutual
4870-6517-4817.2
termination pursuant to this Section 3.4, this PILOT Agreement shall become null and void, and of
no further force or effect between or among the parties; provided, however, Owner shall pay the
applicable pro rata amount of In Lieu of Payments for the year in which such termination occurs to
the extent that the real property remains fully exempt from property tax under IC 6-1.1-10-16.7.
Section 3.5. Upon termination of this PILOT Agreement,Owner shall pay the applicable
pro rata amount of In Lieu of Payments for the year in which such termination occurs up to the
date of termination to the extent that the real property remains fully exempt from property tax
under IC 6-1.1-10-16.7 for such year, and receive a credit for all In Lieu of Payments already paid
for such year. Upon termination of this PILOT Agreement, the parties hereto agree that that all
other provisions of this PILOT Agreement, except for this Section 3.5,shall become null and void,
and of no further force or effect between the parties.
Section 4. General Provisions.
Section 4.1. Captions; Incorporation and Exhibit. The captions and headings of
various Articles, Sections and Exhibits referenced herein are for convenience only and are not to
be considered as defining or limiting in any way, the scope or intent of the provisions hereof.
Notwithstanding the foregoing, each of the Recitals and the Exhibit referenced herein are
incorporated and expressly made a part hereof.
Section 4.2. Entire PILOT Agreement. This PILOT Agreement constitutes the entire
agreement of the parties, and all prior discussions, negotiations and document drafts are merged
herein.
Section 4.3. Notices. Any notice, demand, request or other communication which any
party hereto may be required or may desire to give hereunder shall be in writing, addressed as
follows and, shall be deemed to have been properly given if hand delivered (effective upon
delivery), if sent by reputable overnight courier, charges prepaid (effective the business day
following delivery to such courier) or if mailed by United States registered or certified mail,
postage prepaid, return receipt requested (effective two business days after mailing):'
If to Owner: Steele Claysburg, LLC
Tc/o [insert contact inforrn'ationj
If to City: City of Jeffersonville
c/o [insert contact information)
or at such other address as the party to be served with notice may have furnished in writing to the
party seeking or desiring to serve notice as a place for the service of notice. Notices given in any
other manner shall be deemed effective only upon receipt.
Section 4.4. Modification, Amendment or Waiver. No modification, waiver,
amendment, discharge or change of this PILOT Agreement shall be valid unless the same is in
writing and signed by all parties to this PILOT Agreement.
Section 4.5. Governing Law. This PILOT Agreement shall be governed by and
construed under the laws of the State of Indiana, without giving effect to any conflict-of-law
4870-6517-4817.2
principle that would result in the laws of any other jurisdiction governing this PILOT Agreement.
Any action or proceeding arising out of this PILOT Agreement will be litigated in the courts
located in Clark County, Indiana. Each party consents and submits to the jurisdiction of any local,
state, or federal court located in Clark County, Indiana.
Section 4.6. Time is of the Essence. Time is hereby declared to be of the essence of this
PILOT Agreement and of every part hereof.
Section 4.7. Counterparts. This PILOT Agreement and any amendments hereof may
be executed in one or more counterparts, each of which when so executed and delivered shall be
deemed to be an original, and all of which taken together shall constitute one and the same
instrument.
Section 4.8. Severability. If any provision of this PILOT Agreement is determined by a
court having jurisdiction to be illegal, invalid or unenforceable under any present or future law,
the remainder of this PILOT Agreement will not be affected thereby. It is the intention of the
parties that if any provision is so held to be illegal, invalid or unenforceable, there will be added
in lieu thereof a provision as similar in terms to such provision as is possible that is legal, valid
and enforceable. Notwithstanding the foregoing, to the extent that the real property is not fully
exempt from property tax, this Section 4.9 is null and void.
Section 4.9. No Joint Venture. Nothing contained in this PILOT Agreement will be
construed to constitute any party as a joint venturer with the City or to constitute a partnership
between any party and the City.
Section 4.10. Construction. The parties acknowledge that each party and each party's
counsel have reviewed and revised this PILOT Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party will not be employed
in the interpretation of this PILOT Agreement or any amendments or exhibits hereto.
Section 4.11. Authorization: The persons executing and delivering this PILOT
Agreement,on behalf of the parties hereto represent and warrant to the other party that such person
is duly authorized to act for and on behalf of said party, and execute and deliver this PILOT
Agreement in such capacity as is indicated below.
Section 4.12. Assignment/Successor. This PILOT Agreement shall be binding upon
City, and Owner, and all successor,'grantees or assignees of Owner with respect to the Project(or
any portion thereof) which would otherwise be entitled to claim an exemption for real property
taxes imposed on the Project.
Section 4.13. Recording. The City will cause, at Owner's expense, this PILOT
Agreement and any other instruments of further assurance to be promptly recorded, filed and
registered, and at all times to be recorded, filed and registered, in such manner and in such places
as may be required by law toipreserve and protect fully the rights of the City hereunder as to all of
the mortgaged property.
[Remainder of this page, intentionally left blank]
4870-6517-4817.2
IN WITNESS WHEREOF, the undersigned parties have caused the execution of this
PILOT Agreement by their duly authorized officers as of the Effective Date.
CITY OF JEFFERSONVILLE, INDIANA
By:
[Insert Name/Title]
STATE OF INDIANA )
) SS:
COUNTY OF CLARK )
Before me, a Notary Public, in and for said County and State, personally appeared [insert
name, title], acting for and behalf of the City of Jeffersonville, Indiana, who acknowledged the
execution of the foregoing instrument as such [insert title] and who, having been duly sworn,
stated that any and all representations and warranties contained therein are true and correct in all
material respects.
Witness my hand and Notarial Seal this day of , 2022.
Notary Public
Printed Signature
My Commission Expires: My County of Residence:
[Executions Continued on Following Page]
4870-6517-4817.2
Steele Claysburg, LLC
By:
[Insert Name/Title]
STATE OF INDIANA )
) SS:
COUNTY OF )
Before me, a Notary Public, in and for said County and State, personally [Insert
Name/Title], who acknowledged the execution of the foregoing instrument as [insert title] and
who, having been duly sworn, stated that any and all representations and warranties contained
therein are true and correct in all material respects.
Witness my hand and Notarial Seal this day of , 2022.
Notary Public'
Printed Signature
My Commission Expires: My County of Residence:
4870-6517-4817.2
Prepared by and return after recording to:
[Insert name/contact information]
I affirm, under penalties for perjury,that I have taken reasonable care to redact each Social
Security Number in this document, unless required by law. [Insert name]
4870-6517-4817.2
EXHIBIT A
Legal Description
Real property in the City of Jeffersonville, the County of Clark, State of Indiana, described as
follows:
[Insert]
Parcel Numbers of Real Estate
10-19-11-103-443.000-010
10-19-00-102-467.000-010
10-19-00-102-647.000-010
10-19-00-102-648.000-010
10-19-00-102-649.000-010
10-19-00-102-718.000-010
10-19-00-102-796.000-010
10-19-00-102-442.000-010
10-19-00-102-444.000-010
10-19-00-102-445.000-010
•
I ,
4870-6517-4817.2