SB-1123, As Passed House, September 19, 2012

 

 

 

 

 

 

 

 

 

 

 

HOUSE SUBSTITUTE FOR

 

SENATE BILL NO. 1123

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1966 PA 346, entitled

 

"State housing development authority act of 1966,"

 

by amending section 44 (MCL 125.1444), as amended by 2008 PA 58.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 44. (1)(a) The authority may make loans to a nonprofit

 

housing corporation, consumer housing cooperative, limited dividend

 

housing corporation, limited dividend housing association, mobile

 

home park corporation, or mobile home park association or to a

 

public body or agency for the construction or rehabilitation, and

 

for the long-term financing, of the following:

 

     (i) Housing for low income or moderate income persons.

 

     (ii) For the period of time beginning May 1, 1984, and ending

 

November 1, 1987, housing projects in which not less than 20% of

 

the dwelling units are allotted to individuals of low or moderate


 

income within the meaning of former section 103(b)(4)(A) of the

 

internal revenue code of 1954; not less than 60% of the dwelling

 

units are available to persons and families whose gross household

 

income does not exceed 125% of the higher of either the median

 

income for a family in this state or the median income for a family

 

within the nonmetropolitan county or metropolitan statistical area

 

in which the housing project is located, as determined by the

 

authority; and not more than 20% of the dwelling units are

 

available for occupancy without regard to income. The enactment of

 

this subparagraph or the expiration of the authority granted by it

 

does not affect rules in effect before July 10, 1984, or

 

promulgated after July 9, 1984, to define low or moderate income

 

persons.

 

     (iii) For the period of time beginning May 1, 1984, and ending

 

November 1, 1987, housing projects in eligible distressed areas in

 

which housing projects not less than 20% of the dwelling units are

 

allotted to individuals of low or moderate income within the

 

meaning of former section 103(b)(4)(A) of the internal revenue code

 

of 1954, ; not less than 60% of the dwelling units are available to

 

persons and families whose gross household income does not exceed

 

150% of the higher of either the median income for a family in this

 

state or the median income for a family within the nonmetropolitan

 

county or metropolitan statistical area in which the housing

 

project is located, as determined by the authority, and not more

 

than 20% of the dwelling units are available for occupancy without

 

regard to income.

 

     (iv) Beginning November 1, 1987, multifamily housing projects


 

that meet the 20-50 or 40-60 test established in section 142 of the

 

internal revenue code, 26 USC 142, and, in addition, in which the

 

remaining dwelling units are available for occupancy without regard

 

to income.

 

     (v) Social, recreational, commercial, or communal facilities

 

necessary to serve and improve the residential area in which an

 

authority-financed housing project is located or is planned to be

 

located thereby enhancing the viability of the housing.

 

     (b) Notwithstanding the other provisions of this section,

 

subsection, the authority may establish by resolution higher income

 

limits that it considers necessary to achieve sustained occupancy

 

of a housing project financed under subsection (1)(a)(i), (ii), (iii),

 

(iv), or (v) subdivision (a) if the authority determines both of the

 

following:

 

     (i) The owner of the housing project exercised reasonable

 

efforts to rent the dwelling units to persons and families whose

 

incomes did not exceed the income limitations originally

 

applicable.

 

     (ii) For an annual period after the first tenant has occupied

 

the housing project, the owner of the housing project has been

 

unable to attain and sustain at least a 95% occupancy level at the

 

housing project.

 

     (c) A loan under this section may be in an amount not to

 

subsection shall not exceed 90% of the project cost as approved by

 

the authority. For purposes of this section, the term "project

 

cost" includes all items included in the definition of a project

 

cost in section 11 and also includes a builder's fee equal to an


 

amount up to 5% of the amount of the construction contract,

 

developer overhead allowance and fee of 5% of the amount of the

 

project cost, the cost of furnishings, and a sponsor's risk

 

allowance equal to 10% of the project cost. A loan shall not be

 

made under this section unless a market analysis has been conducted

 

that demonstrates a sufficient market exists for the housing

 

project.

 

     (d) After November 1, 1987, the authority may continue to

 

finance multifamily housing projects for families or persons whose

 

incomes do not exceed the limits provided in subsection (1)(a)(ii)

 

or (iii) or (1)(b), until funds derived from the proceeds of bonds or

 

notes issued before November 2, 1987, for that purpose, including

 

the proceeds of prepayments or recovery payments with respect to

 

these multifamily housing projects, have been expended. Multifamily

 

housing projects or single family housing units in an eligible

 

distressed area that are financed by proceeds of notes or bonds

 

issued before June 30, 1984, and that the authority has designated

 

for occupancy by persons and families without regard to income

 

pursuant to this act shall remain eligible for occupancy by

 

families and persons without regard to income until the authority's

 

mortgage loan issued with respect to these multifamily housing

 

projects is fully repaid.

 

     (e) Notwithstanding the expiration of lending authority under

 

subsection (1)(a)(ii), (iii), (iv), or (v), multifamily housing

 

projects financed under those subparagraphs may continue to remain

 

eligible for occupancy by persons and families whose incomes do not

 

exceed the limits provided in those subparagraphs or subsection


 

(1)(b).

 

     (f) For purposes of this subsection:

 

     (i) "Gross household income" means gross income of a household

 

as those terms are defined in rules of the authority.

 

     (ii) "Median income for a family in this state" and "median

 

income for a family within the nonmetropolitan county or

 

metropolitan statistical area" mean those income levels as

 

determined by the authority.

 

     (2)(a) The authority may make loans to a nonprofit housing

 

corporation, limited dividend housing corporation, mobile home park

 

corporation, or mobile home park association for the construction

 

or rehabilitation of housing units, including residential

 

condominium units as condominium unit is defined in section 4 of

 

the condominium act, 1978 PA 59, MCL 559.104, for sale to

 

individual purchasers of low or moderate income or to individual

 

purchasers without regard to income when the housing units are

 

located in an eligible distressed area. A loan under this section

 

may be in an amount not to subsection shall not exceed 100% of the

 

project cost as approved by the authority in the case of a

 

nonprofit housing corporation or individual purchaser, and in an

 

amount not to shall not exceed 90% of the project cost as approved

 

by the authority in the case of a limited dividend housing

 

corporation, mobile home park corporation, or mobile home park

 

association.

 

     (b) While a loan under this subsection is outstanding, a sale

 

by a nonprofit housing corporation or limited dividend housing

 

corporation or a subsequent resale is subject to approval by the


 

authority. The authority may provide in its rules concerning these

 

sales and resales that the price of the housing unit sold, the

 

method of making payments after the sale, the security afforded,

 

and the interest rate, fees, and charges to be paid shall at all

 

times be sufficient to permit the authority to make the payments on

 

its bonds and notes and to meet administrative or other costs of

 

the authority in connection with the transactions. Housing units

 

shall be sold under terms that provide for monthly payments

 

including principal, interest, taxes, and insurance.

 

     (c) While a loan under this subsection is outstanding, the

 

authority, before the approval of sale by a nonprofit housing

 

corporation, limited dividend housing corporation, mobile home park

 

corporation, or mobile home park association, shall satisfy itself

 

determine that the sale is to persons of low or moderate income if

 

the housing unit is not located in an eligible distressed area, or

 

to persons without regard to income if the housing unit is located

 

in an eligible distressed area.

 

     (3) The authority may make, purchase, or participate in loans

 

made to individual purchasers for acquisition and long-term

 

financing or refinancing of newly rehabilitated, newly constructed,

 

or existing 1- to 4-unit housing units, including a residential

 

condominium unit as condominium unit is defined in section 4 of the

 

condominium act, 1978 PA 59, MCL 559.104. To qualify, all All of

 

the following apply to making, purchasing, or participating in a

 

loan under this subsection:

 

     (a) The borrower's family income shall not exceed $108,000.00.

 

The income requirements established in section 143 of the internal


 

revenue code, 26 USC 143. If those income requirements are

 

repealed, the borrower's family income shall not exceed the income

 

requirements that were in effect immediately before the repeal.

 

     (b) The purchase price or, in the case of a refinancing, the

 

appraised value does shall not exceed the following:

 

     (i) With respect to a 1- or 2-family unit, $224,500.00.

 

     (ii) With respect to a 3-family unit, $261,625.00.

 

     (iii) With respect to a 4-family unit, $299,000.00.

 

     (c) For unexpected cost increases during construction or

 

improvements to adapt new or existing property for use by disabled

 

individuals, the authority may increase the purchase price limit by

 

an amount sufficient to cover these cost increases, but not to

 

exceed $3,500.00.

 

     (d) If an income or a purchase price limit prescribed by this

 

subsection exceeds an applicable limit prescribed by the internal

 

revenue code, the internal revenue code limit applies if the loan

 

will be financed with the proceeds of a tax-exempt bond.

 

     (e) Except with respect to newly constructed housing units,

 

the authority may by resolution establish, for a length of time the

 

authority considers appropriate, maximum borrower income or

 

purchase price limits more restrictive than those maximum

 

limitations set forth in this section. subsection. The authority

 

shall advise the appropriate house and senate standing committees 5

 

days prior to adopting a resolution establishing more restrictive

 

maximum borrower income or purchase price limits.

 

     (f) Before making the authority makes a loan under this

 

section, authority staff shall determine that the borrower has the


 

ability to repay the loan.

 

     (g) A loan made or purchased to finance the acquisition of an

 

existing housing unit may include funds for rehabilitation.

 

     (h) If the loan made is a loan for refinancing of a 1- to 4-

 

unit housing unit, including a residential condominium unit as

 

condominium unit is defined in section 4 of the condominium act,

 

1978 PA 59, MCL 559.104, the authority shall determine that 1 of

 

the units is occupied by the borrower.

 

     (4) A loan under this section shall be secured in a manner and

 

be repaid in a period, not exceeding 50 years, as may be determined

 

by the authority. A loan shall bear interest at a rate determined

 

by the authority.

 

     (5) A person who, for purposes of securing a loan under this

 

act, misrepresents his or her income, including taking a leave of

 

absence from his or her employment for purposes of diminishing his

 

or her income, is not to be eligible for a loan under this act.

 

     (6) With regard to refinancing, the authority shall not enter

 

into any new making, purchasing, or participation in make,

 

purchase, or commence participation in loans to individual

 

purchasers pursuant to subsection (3) later than 3 years after the

 

effective date of the amendatory act that added this

 

subsection.after April 3, 2011.

 

     (7)(a) The authority may make, purchase, or participate in a

 

loan for acquisition and long-term financing of newly

 

rehabilitated, newly constructed, or existing 1- to 4-unit housing

 

units, including a residential condominium unit as condominium unit

 

is defined in section 4 of the condominium act, 1978 PA 59, MCL


 

559.104, if all of the following requirements are met:

 

     (i) The loan is made to an individual purchaser or purchasers,

 

whose income does not exceed the income requirements established in

 

section 143 of the internal revenue code, 26 USC 143. If those

 

income requirements are repealed, the borrower's family income

 

shall not exceed the income requirements that were in effect

 

immediately before the repeal.

 

     (ii) The purchase price of the housing unit does not exceed the

 

greatest of purchase price limits established for similar housing

 

units by Fannie Mae, Freddie Mac, and Ginnie Mae.

 

     (iii) At least 1 of the dwelling units is owned and occupied by

 

the individual purchaser or purchasers to whom the loan is made.

 

     (iv) Authority staff determine that the individual purchaser or

 

purchasers receiving the loan have the ability to repay the loan.

 

     (b) If the authority makes, purchases, or participates in a

 

loan under this subsection, the loan may be securitized by the

 

authority and may either be sold to investors or held by the

 

authority.

 

     (c) For purposes of this subsection:

 

     (i) "Fannie Mae" means the federal national mortgage

 

association established under authority of the federal national

 

mortgage association charter act, 12 USC 1716 to 1723i.

 

     (ii) "Freddie Mac" means the federal home loan mortgage

 

corporation established under authority of the federal home loan

 

mortgage corporation act, 12 USC 1451 to 1459.

 

     (iii) "Ginnie Mae" means the government national mortgage

 

association established under authority of the federal national


 

mortgage association charter act, 12 USC 1716 to 1723i.