HOUSE BILL No. 4492 April 15, 1999, Introduced by Reps. DeWeese, Birkholz, LaSata, Lockwood, Kukuk, Byl and Jansen and referred to the Committee on Local Government and Urban Policy. A bill to create an urban homestead program; to permit cer- tain local governmental units, nonprofit community organizations, and state entities to create and administer urban homestead pro- grams; to prescribe the powers and duties of certain state enti- tles and local governmental units; and to provide for the dispo- sition of personal and real property. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. This act shall be known and may be cited as the 2 "urban homestead act". 3 Sec. 2. As used in this act: 4 (a) "Administrator" means a local governmental unit, or a 5 nonprofit community organization or the Michigan state housing 6 development authority under contract with a local governmental 7 unit. 00180'99 * JLB 2 1 (b) "Local governmental unit" means a city, village, 2 township, or county. 3 (c) "Michigan state housing development authority" means the 4 Michigan state housing development authority created under sec- 5 tion 21 of the state housing development authority act of 1966, 6 1966 PA 346, MCL 125.1421. 7 (d) "Nonprofit community organization" means an organization 8 exempt from taxation under section 501(c)(3) of the internal rev- 9 enue code of 1986 with experience in housing issues and that con- 10 tracts with a local governmental unit to administer an urban 11 homestead program under this act. 12 (e) "Qualified buyer" means a person who meets the criteria 13 in section 4. 14 (f) "Qualified loan rate" means an interest rate not to 15 exceed the adjusted prime rate determined in section 23 of 1941 16 PA 122, MCL 205.23, minus 1 percentage point as determined by the 17 department of treasury. 18 Sec. 3. By resolution, a local governmental unit may oper- 19 ate, or may contract with a nonprofit community organization or 20 the Michigan state housing development authority to operate and 21 administer, an urban homestead program that makes property avail- 22 able to qualified buyers to rent and purchase under this act. 23 Sec. 4. An applicant that meets all the following criteria 24 is eligible to rent and purchase property as a qualified buyer 25 under this act: 26 (a) The applicant or his or her spouse is employed and has 27 been employed for the immediately preceding 12 months. 00180'99 * 3 1 (b) The applicant or his or her spouse has not been 2 convicted of a felony within the immediately preceding 3-year 3 period as determined by the administrator. 4 (c) All school age children of the applicant or his or her 5 spouse who will reside in the property attend school regularly as 6 determined by the administrator. 7 (d) The applicant and his or her spouse have income below 8 the median for the state of Michigan, as determined by the United 9 States department of housing and urban development for families 10 with the same number of family members of the applicant and his 11 or her spouse. 12 (e) The applicant and his or her spouse are drug free as 13 determined by the administrator. 14 Sec. 5. (1) A qualified buyer may apply to the administra- 15 tor to rent certain property in that local governmental unit. 16 The application shall be in a form and in a manner provided by 17 the administrator. If the application is approved, the qualified 18 buyer and administrator shall enter into a lease agreement for 19 the premises. The administrator may determine the terms and con- 20 ditions of the lease agreement. 21 (2) The administrator shall charge the fair market rental 22 value for the premises, as determined by an independent 23 appraiser. The independent appraiser shall be paid by the 24 administrator. 25 (3) The qualified buyer who is renting the property is 26 responsible for all utilities and costs of improvements to the 27 premises. 00180'99 * 4 1 (4) If the qualified buyer is in substantial compliance with 2 the terms of the lease for not less than 5 years and continues to 3 meet the criteria in section 4, and the premises substantially 4 comply with all building and housing codes, the administrator 5 shall deed or cause to be deeded that property to the qualified 6 buyer for $1.00. 7 Sec. 6. (1) If the local governmental unit acts as the 8 administrator under this act, the rental receipts shall be depos- 9 ited in a separate fund within the general fund of the local gov- 10 ernmental unit. If the local governmental unit contracts with a 11 nonprofit community organization to act as the administrator 12 under this act, the rental receipts shall be deposited in a seg- 13 regated escrow account in a financial institution located in this 14 state. If the local governmental unit contracts with the 15 Michigan state housing development authority to act as adminis- 16 trator under this act, the rental receipts shall be deposited in 17 a restricted account in the state general fund. 18 (2) Rental receipts deposited under subsection (1) shall be 19 used to make loans to qualified buyers in that local governmental 20 unit for the improvement, repair, or rehabilitation of property 21 in the urban homestead program. Loans shall be made for a term 22 not to exceed 10 years and at a rate of interest not to exceed 23 the qualified loan rate. The administrator may determine the 24 terms and conditions of the loan agreement. 25 (3) The administrator may solicit funds from any and all 26 sources, both public and private, for deposit into the accounts 27 and funds described in subsection (1). 00180'99 * 5 1 Sec. 7. Every 2 years, the administrator shall hire an 2 independent auditor to audit the books and accounts of the urban 3 homestead program operated by the administrator. Upon comple- 4 tion, the audit report shall be made available to the public. 00180'99 * Final page. JLB