Workforce Housing PILOT for Owner-Occupied Units
The Workforce Housing PILOT for owner-occupied units applies to houses that are being developed or rehabilitated for owner-occupancy when the new construction or rehabilitation is also associated with a change in ownership. Developers can build or rehabilitate a single-family house, condominium, or zero-lot line house, and the new homeowner can apply for a 15-year Workforce Housing PILOT if their total household income does not exceed 120% of area median income (AMI). The homeowner may apply for the PILOT as soon as they have a signed Purchase Agreement for the property or as late as six (6) months after they have obtained legal title to the property. If approved for a PILOT, the homeowner will sign a Restrictive Covenant that details PILOT requirements including annual compliance reporting. See below for key information.
Click here(PDF, 237KB) for a sample Restrictive Covenant
Click here(PDF, 126KB) for a diagram of the customer journey
Not for Homes Developed with Tax Increment Financing (TIF)
The Workforce Housing PILOT for Owner-Occupied Units is not designed for homes that were developed with the assistance of Tax Increment Financing (TIF) or other programs that use future property taxes to finance construction costs.
Rehabilitation Defined
"Rehabilitation" in the context of Workforce Housing means any work that requires at least one of the following three building permit types: Remodel or Repair, New or Addition, or Re-roof or Re-side. After the rehabilitation work has been completed, it must receive a final, approved inspection by a City Building Inspector. If not inspected, approved, and finaled, the rehabilitation work will not constitute eligible rehabilitation.
Click here for information about Building Permits
PILOT Application Timing
The homebuyer/homeowner may apply as soon as they have a signed Purchase Agreement for the house or as late as six (6) months after they have obtained legal title to the property.
PILOT Charge
During the 15-year PILOT term, the homeowner will be charged 10% of ad valorem taxes annually instead of the amount of ad valorem taxes they would otherwise pay. The percent will not change and will remain 10% throughout the PILOT term. However, taxable value of the property will change over time as it does for all properties. This means when the taxable value of the property increases, the amount paid under PILOT will also increase.
County Opt Out
Per the state enabling legislation, Kent County is allowed to opt out of any Workforce Housing PILOT. If the County chooses to opt out, the City Assessor’s Office will charge the homeowner whatever additional amount is needed, in addition to the applicable PILOT charge, to make the County whole. Opting out means the County will receive the same amount of property taxes that it would receive if there were no PILOT.
Income Limit
The homeowner’s total household income must not exceed 120% of area median income (AMI) for their household size in order for the house to remain PILOT eligible. ALL income sources from ALL adults residing in the home must be reported. The City reserves the right to inspect income source documents such as tax returns, pay stubs, and benefits statements to verify eligibility. If the homeowner’s household income increases beyond 120% of AMI, as reported in annual compliance reports, the property will be out of compliance and the homeowner will be charged ad valorem taxes that year and for all future years.
Click here(PDF, 20KB) for income limits
Principal Residence
The homeowner must reside at the house, and the house must be their principal residence. The homeowner shall not rent out the property or live elsewhere during the PILOT term.
PILOT Term
The property tax exemption and PILOT shall begin on December 31 of the year in which all of the following has occurred:
- New construction has been completed as documented by the City’s issuance of a Certificate of Use and Occupancy OR Eligible rehabilitation has been completed as documented by a final, approved inspection by a City Building Inspector, and
- Homeowner has obtained title to the Property in the form of a Deed recorded with the Kent County Register of Deeds, and
- The Restrictive Covenant has been signed and recorded with the Kent County Register of Deeds, and
- Homeowner has submitted all required documents to the Michigan State Housing Development Authority (MSHDA) and the homeowner or MSHDA has provided the certified notification of exemption to the City Assessor before November 1 of the same calendar year.
The property tax exemption and PILOT shall end after the conclusion of the 15-year term, when the homeowner's household income exceeds 120% of AMI as reported in an annual compliance report, or when the house is sold to a new owner, whichever occurs first. Once it has ended, the PILOT cannot be restarted nor will the homeowner be eligible for a new PILOT for the same house even if their total household income drops below 120% of AMI or new rehabilitation were to take place.
Annual Compliance Report
The homeowner will provide the City with an annual compliance report by May 30 of every year to report on their prior calendar year household income. The report will be completed through the City's web-based Accela system and will include ALL income sources from ALL household members age 18 and older. The City reserves the right to inspect income source documents such as tax returns, pay stubs, and benefits statements at any time to substantiate the income figures reported in any annual compliance report.