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City attorney outlines attainable and residential housing districts; commission asks staff to analyze tax and compliance impacts
Summary
Traverse City’s city attorney described two state statutes that permit property tax reductions for rental units leased to income‑qualified tenants; commissioners asked staff to study local implementation, tax impacts and administrative costs.
Lauren Tribblelach, city attorney for Traverse City, briefed the joint session on two statutes enacted in 2022 that enable city‑established housing districts for income‑restricted rental units. Tribblelach said the statutes distinguish between attainable housing (up to four rental units) and residential housing districts (more than four rental units); both require income qualification and limit rents to no more than 30% of adjusted household income as defined in the acts. The districts are established by city resolution, require public hearings and notification to county and state officials, and — if approved — can provide a 50% property‑tax reduction for qualifying rental units for up to 12 years, with allowable income limits up to 120% of area median income (AMI).
Tribblelach described the implementation steps: city commission adoption of a resolution establishing district boundaries, county notice and public hearing, local approval, notification to the State Tax Commission and a procedural review by the state. She said the statute contains annual compliance and re‑certification requirements (the statute addresses tenant income changes and program monitoring) and noted the assessor and county need coordination for tax‑billing adjustments. The city attorney and commissioners discussed edge cases — for example, whether a property owner who adds a modest accessory dwelling unit (ADU) or converts a single large home into multiple units could qualify and how the assessor would administer parcel‑level tax adjustments. Tribblelach said she would consult with the assessor and the State Tax Commission on parcel‑level implementation details.
Following the presentation, commissioners asked staff to return with a comparative memo on these districts and other incentive tools, including estimated fiscal impacts on property tax receipts and compliance costs for different scales (single ADU, small multifamily up to four units, larger developments). The commission did not adopt a district or enact any tax changes at the meeting; staff direction was a referral to prepare the analysis and examples for future consideration.
