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Special Housing Tax Breaks Rapped

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A two-year-old Michigan law that provides property tax exemptions to housing operated by nonprofit corporations receiving federal aid will not automatically remain in effect in Ann Arbor if the City Council follows advice offered last night by the city's Housing Commission. A 1968 amendment to the 1966 law gives cities a choice whether to continue or withdraw the tax exemption. The Housing Commission held a special meeting last night to discuss the subject, at City Council' s request. Commissioners pointed out that the exemption does not apply to public housing - which receives a similar exemption under a different state law- but does apply to housing built with low-interest mortgages insured b y' the FederalHousing Administration under Section 221(d) (3) of federal housing law. Last year, the exemption which is now a local option applied in Ann Arbor only to Colonial Square Cooperative housing units on the city's far southeast side. The cooperative, built under Section 221(d) (3), made payments in lieu of taxes equal to 10 per cent of shelter rents, as provided in the law granting tax exemption. Unless city council acts by Dec. 31 to end the exemption for 221(d) (3) housing, Colonial Square could continue receiving it by reincorporating. Commissioners took the pösition that 221(d) (3) housing generally does not benefit lowincome families and therefore should not receive the same tax exemptions state law grants to public housing for low-income families. Commissioner Mrs. Norma F. Kraker said "a big part of Colonial Square's pitch when it was being planned was that this would be on the tax rolls, just as any apartment." She added that when present plans of existing nonprofit housing corporations in Ann Arbor are carried out, there will be at least 1,388 units of 221(d) (3) housing in the city. Mrs. Kraker, who is director of the University's off-campus housing office, also commented that many Colonial Square residents are U-M students who are not required to fill a local risidence requirement before moving into 221 (d) (3) housing, as is required of public housing tenants. She said tenants of 221(d) (3) housing "shouldn't have the same tax exemptions as the Housing Commission. I would like them to show their rents, and let the people in Ann Arbor compare their rents to those of people eligible for this exemption." Commissioner Louis C. Andrews Jr., a lawyer, said: "Traditionally, exemptions are given on a uniform basis. The present law exempts all 221(d) (3) housing unless some cities exelude it. This isn't my idea of good legislation. An exemption shouldn't be granted unless there's a very clear need. We've got too many tax exemptions now-." A statement drafted by Commission Chairman Lyndon Welch, and endorsed by commissioners without a formal vote, stítes: "1) We question the appropriateness of providing to 221 (d) (3) residents a tax tion as great as that provided under statute and cooperative agreement to low-income families in public housing; "2) We understand that overincome families in 221(d) (3) housing are subject to normal taxation. However, the administrative procedures of enforcement of this provisión are not clear to us. "3) Regardless of the action taken by the City Council on the ordinance designated as Chapter 18 (a proposed city ordinance that would end tax exemptions given in the 1966 law), we consider that council will have to make a valué decisión in the case of each 221(d) (3) project as to the merit, amount and administration of a tax exemption. The burden of justifying a tax exemption in each case should be the responsibility of those seeking it."