Payments in Lieu of Taxes (PILOTs)

To be considered for a PILOT, the development must have demonstrated financial support from the Michigan State Housing Development Authority (MSHDA). The City Commission will also consider the impact the proposal will have on the city, and the benefits it provides to residents. Additionally, PILOT applicants must be designated as one of the following:

• Nonprofit housing corporation
• Consumer housing cooperative
• Limited dividend housing association limited partnership
• Limited dividend housing association limited liability company
• Limited dividend housing corporation 

PILOT proposals must be received at least six weeks before the City Commission meeting where the PILOT resolution will be considered. If the property requires a rezoning or a zoning variance, plan for additional time (approximately four weeks for a variance and ten weeks for a rezoning request). Both types of approvals will require neighborhood outreach and public hearings. For questions about zoning approval email planning@kalamazoocity.org. 

PILOT requests are commonly submitted for projects that are also seeking Low Income Housing Tax Credits (LIHTC) from MSHDA. To accommodate all information requested for LIHTC applications, PILOT proposals are reviewed according to the following schedule:

• Weeks 1-4: The project undergoes site plan review. Review cannot happen until all required zoning approvals are obtained
• Week 2-3: City staff reviews project and issues a zoning compliance letter and letter stating the project is aligned with the master plan and our community priorities 
• Weeks 3-4: City staff reviews project for PILOT, seeks comment from the City Assessor, prepares the report for City Commission, and submits the report to the City Clerk for an upcoming meeting agenda
• Weeks 5-6: City Commission agenda items are reviewed by City staff.

The City Commission may deem a proposed project as eligible for a PILOT, but the State of Michigan actually issues the PILOT. To make sure the PILOT proposal is complete, please make sure you include the following:

• A brief overview of the applicant organization, including the type of legal entity that will own the project;
• The project scope, including rehabilitations to be made for existing projects and rental units broken out by bedrooms, targeted incomes, and estimated rents; the project budget, including sources and uses; and a timeline with projected milestones;
• A description of how the project benefits low-to-moderate income households;
• Evidence of potential financial support from MSHDA
• An estimate of annual shelter rents projected for the requested length of the PILOT; and
• A brief narrative describing how the project is consistent with the City of Kalamazoo Master Plan, the current Consolidated Plan, and other applicable planning documents.

The developer of the proposed project must send a written proposal to be considered for a PILOT. The proposal should be sent to planning@kalamazoocity.org. Use “PILOT Proposal” and the project address in the subject line.

Submit a PILOT Proposal

• The proposal will be reviewed by City staff for completeness, feasibility, verification of resources, and for consistency with community plans and priorities.
• The percentage of shelter rents allowed under the proposed PILOT will be determined by staff following a fiscal impact analysis of the project.
• City staff will prepare an agenda report and resolution and forward the request to other City staff for review, according to the timeline provided above.
• If accepted, the PILOT request and resolution will be considered during a regularly scheduled City Commission meeting. Applicants may attend the meeting but are not required unless specifically requested. 
• If approved by the City Commission, the City will send a copy of the official approved PILOT Resolution to the developer.
• Using the City Commission Resolution as the basis for the request, the developer must seek approval from MSHDA for the PILOT.  
• Once approved, the developer is responsible for ensuring that MSHDA notifies the City Assessor's Office through a Notification to Local Assessor of Exemption.
• Notification must be filed by November 1 of the year before the PILOT is to take effect. The PILOT cannot take effect mid year.
• The City Clerk's Office will notify all taxing authorities that the PILOT has been granted by the State of Michigan.
• Based on the approved percentage of shelter rents permitted under the PILOT, the owner must submit annual payments to the City Treasurer.
• The City Treasurer's Office will verify the accuracy of payments and distribute them accordingly among taxing jurisdictions.