Payment in Lieu of Taxes (PILOT)
The City of Grand Rapids administers a payment in lieu of taxes (PILOT) program that exempts eligible housing units from standard property taxes (i.e. ad valorem taxes) and allows the owner to pay a reduced PILOT fee instead. PILOTs are desirable because they are much lower than ad valorem property taxes. The City of Grand Rapids supports low-income and workforce housing units by authorizing and accepting PILOTs for units occupied by income eligible households.
This is authorized by Chapter 9, Article 5 of Title I of the City Code (i.e. the PILOT Ordinance).
Types of PILOTs
The PILOT program includes two general types:
Low-Income PILOT
The Low-Income PILOT is for rental housing with federal or state (MSHDA) "qualifying financing" that restricts the rental units for affordable housing. Two common forms of "qualifying financing" are: A) Low-Income Housing Tax Credits (LIHTC) along with a mortgage loan, and B) a HOME Investment Partnerships Program (HOME) loan. Eligible units must be rented to low-income tenants, which typically means tenants with household income at or under 60% of area median income (AMI). LIHTC units may be rented to tenants with household incomes up to 80% of AMI as long as all of the LIHTC units have an overall average of 60% of AMI. Low-Income PILOTs are limited to fifty (50) years in length or the term of the “qualifying financing,” whichever is less.
Workforce Housing PILOT
The Workforce Housing PILOT is for qualified rental and owner-occupied units that do not have "qualifying financing." All units must be new construction units or rehabilitation units. Owner-occupied units must also undergo a change in ownership. This means an existing homeowner who decides to rehabilitate their own house is not eligible for a Workforce Housing PILOT. Both tenants and owner-occupants must have household incomes at or below 120% of area median income (AMI) adjusted by household size. Workforce Housing PILOTs are limited to fifteen (15) years in length.
*Please note there is a $270 PILOT application fee
