May 10, 2012, Introduced by Reps. Shaughnessy, Zorn and Wayne Schmidt and referred to the Committee on Commerce.
A bill to amend 1966 PA 346, entitled
"State housing development authority act of 1966,"
by amending section 44c (MCL 125.1444c), as amended by 2004 PA 535.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 44c. (1) If the resolution authorizing the issuance of
notes or bonds provides that the notes or bonds are limited and not
general obligations of the authority, are not secured by the
capital reserve capital account, and are secured solely by revenues
and property derived from or obtained in connection with the
housing project, the authority shall use the proceeds of those
notes or bonds to make loans directly, or indirectly by a loan
through a mortgage lender, to a nonprofit housing corporation,
consumer housing cooperative, limited dividend housing corporation,
limited dividend housing association, mobile home park corporation,
mobile home park association, or public body or agency for the
construction, rehabilitation, long-term financing or any
combination of construction, rehabilitation, or long-term financing
of any of the following:
(a) Multifamily housing projects for students or low income or
moderate income persons.
(b)
Beginning May 1, 1984, multifamily housing projects in
eligible
distressed areas 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 and in which not more than 80% of the
dwelling units are available for occupancy without regard to
income.
(c) Social, recreational, commercial, or communal facilities
to serve and improve the residential area in which an authority-
financed multifamily housing project is located or is planned to be
located, thereby enhancing the viability of such housing.
(2) To qualify as rehabilitation under this section, the
rehabilitation expenditures with respect to the project must equal
or exceed 30% of the portion of the cost of acquiring the building
and equipment financed with the proceeds of the notes or bonds
issued to acquire and rehabilitate the project. For a project
located in an eligible distressed area, the amount of
rehabilitation may be less than the 30% requirement if the
authority
determines and expresses by resolution that the likely
benefit to the community or the proposed residents of the project
merits the use of this financing source. This subsection does not
apply to a project for which the authority has authorized a loan
commitment under this section before December 18, 1985. The
authority shall not provide long-term financing for a project under
this section unless the project is constructed or rehabilitated in
anticipation of authority financing, the construction or
rehabilitation is undertaken with authority financing, long-term
financing is being provided with respect to a housing project for
which regulatory or contractual restrictions assuring occupancy of
some or all of the units by families or persons of low or moderate
income are subject to termination within a 2-year period following
the acquisition of the housing project, or a housing project which
is to be owned and operated by a nonprofit housing corporation
which is qualified under section 501(c)(3) of the internal revenue
code, 26 USC 501(c)(3).
(3) Notwithstanding the provisions of this section, the
authority shall establish by resolution higher income limits for a
housing project financed under either subsection (1)(a) or (b)
equal
to the income limits of subsection (1)(c) if the authority
determines all of the following:
(a) The owner of the housing project exercised reasonable
efforts to rent the dwelling units to persons and families whose
incomes did not exceed the originally applicable income
limitations.
(b) For any 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.
(4) Notwithstanding the expiration of lending authority under
this section, multifamily housing projects financed under this
section may continue to remain eligible for occupancy by persons
and families whose incomes do not exceed the limits provided in
subsection (1) or (3).
(5) A borrower seeking to qualify for a loan under this
section shall file an application with the authority which includes
the following:
(a) A description of the proposed credit enhancement. The
proposed credit enhancement may be in the form of a letter of
credit, bonding, guarantee, mortgage insurance, or other
appropriate security in an amount sufficient to assure the
authority that repayment of notes or bonds issued by the authority
is reasonably secure.
(b) An undertaking to pay all costs of issuing the notes or
bonds and to provide compensation for, as considered appropriate by
the borrower and at no cost to the authority, any underwriters,
trustees, counsel, and other professionals as are necessary to
complete the financing.
(c) An application fee equal to the greater of $4,000.00 or
0.0005 multiplied by the principal amount of notes or bonds for
which issuance is requested. For a project located in an eligible
distressed
area, the fee required by this subdivision shall be is
refundable if the notes or bonds are not delivered or may be waived
by
the authority in the event if
the owner of the housing project
is or will be a nonprofit housing corporation qualified under
section 501(c)(3) of the internal revenue code, 26 USC 501(c)(3),
or a limited dividend housing association wholly owned and
controlled by 1 or more nonprofit corporations qualified under
section 501(c)(3) of the internal revenue code, 26 USC 501(c)(3).
In all other cases, the fee is nonrefundable.
(6) So long as there is uncommitted bonding capability under
the limitations of section 32, the authority shall issue a 6-month
commitment to loan funds, subject to sale by the authority of its
notes and bonds in compliance with applicable law and pursuant to
terms and conditions which permit the funding of such loan, either
directly or indirectly by a loan through a mortgage lender, to the
borrower in the amount of the total development cost of the
proposed multifamily housing project or $25,000,000.00, whichever
is less, or if the proposed multifamily housing project is located
in an eligible distressed area, in the amount of the total
development cost of the proposed project or $50,000,000.00,
whichever is less, upon the determination by the authority of all
of the following:
(a) The housing project is eligible for financing under this
section.
(b) The borrower is an eligible borrower under this act.
(c) The requirements of subsection (5) have been met.
(d) The borrower has provided evidence of a commitment to
issue a credit enhancement in the form of a letter of credit,
bonding, guarantee, mortgage insurance, or other appropriate
security in a form and amount sufficient to assure the authority
that the repayment of notes or bonds issued by the authority for
purposes of making a loan to the borrower is reasonably secure. If
the authority determines that repayment of the notes or bonds will
be reasonably secure, the authority's review of the credit
enhancement shall take the place of the authority's normal
underwriting and feasibility review.
(e) If the loan is made indirectly by a loan through a
mortgage lender, the requirements of section 44b have been met.
(7) Unless a borrower is either a nonprofit housing
corporation qualified under section 501(c)(3) of the internal
revenue code, 26 USC 501(c)(3), or a limited dividend housing
association that is wholly owned and controlled by 1 or more
nonprofit corporations qualified under section 501(c)(3) of the
internal revenue code, 26 USC 501(c)(3), and may borrow money from
the authority without an allocation of the state volume limitation,
a borrower and any person who is a related person to the borrower
as defined in section 144(a)(3) of the internal revenue code, 26
USC 144(a)(3), shall not have outstanding loan commitments under
this section which total more than the greater of $25,000,000.00 or
the amount of financing approved for a single project under
subsection (6). Once a loan has been made under this section, the
commitment made with respect to the loan shall no longer be
considered to be outstanding.
(8) Simultaneously with the issuance of the loan commitment by
the authority, the borrower shall pay a commitment fee established
by the authority in the amount of not more than 0.1% of the
principal amount of notes or bonds to be issued. The authority
shall credit the amount paid by the borrower as an application fee
under subsection (5) against this commitment fee. The authority
shall extend a 6-month loan commitment issued under subsection (6)
for an additional 6 months upon payment by the borrower of a
nonrefundable extension fee of $5,000.00, which fee shall not be
credited against any other fee or payment to the authority.
(9) Within the period during which the commitment is
effective, the authority, upon a determination that the terms and
conditions of the commitment have been satisfied, shall make its
loan directly, or indirectly through a loan to a mortgage lender,
to the borrower.
(10) Except as otherwise provided in this subsection, upon
issuance of any notes or bonds to finance a housing project under
this
section, the borrower shall pay at the time when the
notes or
bonds are issued, in addition to any commitment or extension fee
paid under subsection (8), a fee established by the authority of
either not more than 0.9% of the principal amount of the notes or
bonds for a loan made for a project located in an eligible
distressed area or not more than 1.9% of the principal amount of
the notes or bonds for a loan made for a project located in other
than an eligible distressed area. If notes or bonds have been
issued under this section for a project owned by the borrower
located in an eligible distressed area within 180 days before the
issuance of notes or bonds for the next project financed by that
borrower, which next project is located in other than an eligible
distressed area, the fee under this subsection shall be not more
than 0.9% of the principal amount of the notes or bonds. If notes
or bonds have been issued under this section for a project located
in other than an eligible distressed area and the borrower has paid
the 1.9% fee, the authority shall not charge a fee under this
subsection for the next project financed by that borrower if that
next project is located in an eligible distressed area and if the
notes or bonds are issued within 180 days after the notes or bonds
were issued for the project located in other than an eligible
distressed area. In addition to the fee to be paid to the authority
at
the time when notes or bonds are issued under this section, the
authority may, at its sole discretion, establish an annual fee, or
other administrative fees, to be paid by the borrower during the
term of the loan. All or any portion of the fees due to the
authority under this subsection shall be paid by the borrower to
the authority in annual or semiannual installments, as the
authority shall determine, after the date on which notes or bonds
are issued to finance the related housing project.
(11) Subject to any rights of the holders of any notes or
bonds issued to finance a multifamily housing project under this
section, if the owner of a multifamily housing project financed
under this section provides evidence satisfactory to the authority
that
the a prospective new owner of the multifamily housing project
is an eligible borrower under this act and the exemption from
federal income taxation of interest on the notes or bonds issued to
finance the multifamily housing project will not be impaired as a
result of a sale, refinancing, or resyndication, the borrower may
sell, refinance from a source other than the authority, or
resyndicate
that housing project at any time. There shall not be a
A prepayment penalty or fee shall not be required for the sale,
refinancing,
or resyndication in addition to other
than any
prepayment penalty or fee owing to the holders of notes or bonds
issued to finance a housing project under this section, except that
the owner shall pay all fees of the authority described in
subsection (10) before or concurrent with the sale, refinancing, or
resyndication. For student housing, a transfer of ownership shall
be approved by a resolution of the college or university board of
trustees for the college or university that approved the initial
financing under this section.
(12) A borrower is allowed distributions equal to a 12% return
on the borrower's investment in a multifamily housing project
financed under this section for the first 12 months of operation of
the housing project following substantial completion. The allowable
return shall be increased by 1% for each 12-month period after the
first 12 months. The maximum allowable return for a housing project
located in other than an eligible distressed area is 25%. Any
return less than the allowable rate in any preceding period may be
received in any subsequent period on a cumulative basis.
(13)
Before September 1 of each year, after 1984, the owner of
a housing project financed under this section shall report to the
authority all of the following, which the authority shall include
in the report required by section 32(14):
(a) The incomes of the tenants residing in that housing
project in a manner that preserves the anonymity of those tenants.
(b) The estimated economic and social benefits of that housing
project to the immediate neighborhoods in which it has been
constructed.
(c) The estimated economic and social benefits of that housing
project to the city in which it has been constructed.
(d) Information requested by the authority about that housing
project that is needed so that the authority can report the extent
of displacement, direct and indirect, of lower income persons
caused by housing projects financed under this section, the steps
taken by governmental and private parties to ameliorate the
displacement, and the results of those efforts.
(e) Information requested by the authority about that housing
project that is needed so that the authority can report the
estimated extent of additional reinvestment activities by private
lenders attributable to the authority's financing of housing
projects financed under this section.
(f) Except for housing for students, the age, race, family
size, and average income of the tenants of these housing projects.
(g) The estimated economic impact of these housing projects,
including the number of construction jobs created, wages paid, and
taxes and payments in lieu of taxes paid.
(14) Mortgages securing loans made under this section are
authority-aided mortgages.
(15) The authority may inspect and audit projects and records
of projects financed under this section in order to monitor
compliance with the requirements of this section. If there is
noncompliance, the authority, pursuant to the provisions of the
financing and organizational documents applicable to the
transaction, may pursue the remedies that the authority considers
appropriate.
Except as is required to assure ensure
compliance with
this section or section 46 or otherwise required by purchasers of,
or a third party credit enhancement provider with respect to, notes
or bonds issued to finance a multifamily housing project under this
section, the authority shall not regulate, in any manner, a
multifamily housing project financed under this section. This
section does not preclude the authority from regulating a
multifamily housing project in consideration for other types of
program benefits, incentives, or concessions provided by the
authority
over and above in addition
to the financing made
available under this section.
(16) Notwithstanding any other provision of this section,
there shall not be any liability on the part of the authority or
its members, officers, employees, or agents, and the assets of the
authority shall not be subject to any liability, as a result of any
act or failure to act under this section on the part of the
authority or its members, officers, employees, or agents.
(17) If notes or bonds have been issued under this section for
a project located in an eligible distressed area within 180 days
before the submission, by the same borrower or a borrower having
the same general partners, of a commitment for credit enhancement,
that borrower's application shall be given priority over the other
applications submitted under this section to finance projects
located in other than eligible distressed areas, except for
projects for which the authority has authorized loan commitments.
The principal amount of notes or bonds issued to finance a project
given priority under this subsection shall not exceed 10 times the
principal amount of the notes or bonds issued to finance the
distressed area project that qualifies the borrower for priority
consideration.
(18) Except for housing projects for which the authority has
adopted an inducement resolution on or before April 1, 1991, loans
shall not be made under this section unless the authority
determines that use of the state's unified volume cap for a project
will not impair the ability of the authority to carry out programs
or finance housing developments or housing units which are targeted
to lower income persons.
(19)
Beginning on the effective date of the amendatory act
that
added this subsection January
3, 2005, a person or entity who
proposes a student housing project shall cooperate with the college
or university from which the majority of tenants are proposed to be
drawn by using its best efforts to communicate with the college or
university regarding the location of and the need for the project.
If, in the judgment of the authority, the person or entity
proposing the project does not communicate with the college or
university and the unit of local government where the project is
located regarding the location of and need for the project, the
authority may deny financing for the project. The authority shall
not make a financing commitment for a housing project unless the
board of trustees of the college or university from which a
majority of students are anticipated to be residents of the housing
project adopts a resolution in support of the proposed development.