Payment in Lieu of Taxes (PILOT) is an investment incentive negotiated between the City of Ferndale and a developer of multi-unit affordable rental housing. The PILOT replaces a traditional property tax assessment with a limited and/or deferred payment, in place, or in “lieu”, of the summer and winter property taxes that most property owners in Michigan pay.

 

The State of Michigan allows the City of Ferndale to accept Payment in Lieu of Taxes (PILOT) for housing under three scenarios:

1. MCL – Act 18 of 1933 (which allows a City to create a housing authority)
2. 2) MCL – Act 346 of 1966 (which created the State’s Housing Development Authority (MSHDA) and outlines PILOTs for certain developments)
3. MCL – Act 303 of 2023 (which allows a City to enter into PILOTs with a developer without state or federal tax credits being leveraged).

Under MCL – Act 18 of 1933

 

By Ordinance No. 548, the City of Ferndale created the Ferndale Housing Commission (FHC).
 

By Ordinance No. 654, the City established FHC paying the City of Ferndale 10% of sheltered rents.

 

The FHC has made payment to the City as outlined below: 

                  

2017	$20,402.00
2018	$19,617.00
2019	$20,415.00
2020	$21,955.44
2021	$20,660.78
2022	$24,820.31
2023	$30,166.64

 

By Ordinance No. 1146, the City updated the Housing Commission’s rules.

 

 

Under MCL - Act 346 of 1966

 

Under MCL – Act 346 of 1966, the Michigan State Housing Development Authority remits payment to the City for MSHDA-financed projects.  By Ordinance No. 1082, the City of Ferndale approved the acceptance of a payment in lieu of taxes for the project known as Devon Square, located at 1255 Orchard Avenue.  Devon Square offers apartment homes for low-income families and seniors with 12 family and 48 senior apartments. All family households are at or below 45% Area Median Income (AMI) and all senior households are at or below 60% AMI.

 

Under MCL – Act 346 of 1966, the City entered into a PILOT agreement with Full Circle Communities for Shepherd House, located at 503 E. Nine Mile Rd. The development is a mix of one- and two-bedroom units with a total of 53 units. 26 of the units receive rent vouchers and the remaining 27 units are rented between 30%-60% Area Median Income. The project received Low-Income Housing Tax Credits (LIHTC).

 

Links:

Planning Commission Agenda Page on January 20, 2021

City Council Agenda Page on January 25, 2021

PILOT Agreement Agenda Page on January 25, 2021, and Amended and Restated on May 8, 2023

 

 

Under MCL – Act 303 of 2023

Under MCL – Act 303 of 2023, the State of Michigan allowed cities to approve PILOTs with developers, without the previous requirement of state or federal tax credits financing a project.  As such, the City of Ferndale approved Ordinance No. 1290 to allow the utilization of PILOTs for Workforce Housing.  After approval of Ordinance No. 1290, the City approved a resolution that entered into an agreement with the Walters Group to provide workforce housing. The development, located at 141 Vester Avenue, is a mix of studio, one- and two-bedroom units with a total of 72 units. 33 of the units are rented between 50% and 80% AMI and the remaining 39 units are rented between 100% and 120% AMI. The developer agreed to community benefits including an annual public safety payment; an interest rate claw-back; monies for a mural; monies for additional alley improvements; and repayment of a water main improvement. 

 

Links:

Planning Commission Agenda Page on January 19, 2022

City Council Agenda Page on February 28, 2022

PILOT Agreement Agenda Page on November 13, 2024