SB0293: SUMMARY OF INTRODUCED BILL IN COMMITTEE (Date Completed: 6-7-23)

INTRODUCTION

The Michigan State Housing Development Authority administers the Michigan Housing and Community Development Program for the purpose of making financing available to meet the housing needs of low-income, very-low-income, and extremely-low-income households and to finance projects in a downtown area or adjacent neighborhood in the State. The bill would expand the Program's scope by making its financing available to middle-income households and deleting the requirement that financed projects be in a downtown area or adjacent neighborhood. In addition, the bill would delete earmarks that require certain percentages of the Michigan Housing and Community Development Fund to be spent on projects that target groups based on income threshold and housing type.

FISCAL IMPACT

The bill would expand the Program to include middle-income housing projects and remove the spending requirements that target low-income housing, extremely low-income housing, housing for the homeless, and transitional housing. While these changes would not create or spend State revenue directly, there could be indirect benefits to the State and local units of government because of increased middle-income housing volume, such as increased property and income tax revenue. Any indirect benefits would likely take years to become apparent or measurable.

MCL 125.1458 et al. Legislative Analyst: Abby Schneider

Fiscal Analyst: Michael Siracuse

CONTENT

The bill would amend the State Housing Development Authority Act to do the following:

-- Expand the scope of the Program to make its financing available to middle-income households and delete a requirement that projects financed by the Program be in a downtown area or adjacent neighborhood.

-- Delete the requirement that percentages of the Fund be earmarked for projects that target specific groups based on income threshold and housing type.

-- Allow, instead of requiring, the Authority to spend a portion of the Fund for housing for persons with physical or mental handicaps and persons living in eligible distressed areas.

Program Purpose

Among other things, the Act establishes the Program for the purpose of developing and coordinating public and private resources to meet the housing needs of low-income, very-low-income, and extremely-low-income households and to finance projects in a downtown area or adjacent neighborhood in the State. The bill would modify the Program’s purpose to include the development and coordination of public and private resources to also meet the housing needs of middle-income households and remove the requirement that the Program only develop and coordinate projects located in a downtown area or adjacent neighborhood.

Under the bill, "middle-income household" would mean an individual, family, or unrelated individuals living together whose adjusted household income is not more than 120% of the area median income, as determined by the Authority.

The Act requires the Authority to make financing available to eligible applicants from money in the Fund or from money secured by the Fund for housing for low-income, very-low-income, and extremely-low-income households and for projects located in a downtown area or adjacent neighborhood. The bill would require the Authority to make financing available for housing for middle-income households and remove the requirement that the Authority make funding available for projects located in a downtown area or adjacent neighborhood.

The Act defines "eligible applicant" as a not-for-profit corporation, a for-profit corporation, a municipality, a land bank fast track authority, or a partnership that is approved by the Authority and that is organized for the purpose of developing and supporting affordable housing for low-income, very-low-income, or extremely-low-income households or projects located in a downtown area or adjacent neighborhood. The bill would modify the definition to include those organizations described above organized for the purpose of developing and supporting affordable housing for middle-income households. The bill would remove from the definition the requirement that the housing be in a downtown area or adjacent neighborhood.

Program Plan

The Act requires the Authority to develop a plan for distribution of money from the Fund. It specifies that the plan must abide by the following:

-- The allocation plan must contain a formula for distributing money throughout the State based on the number of persons experiencing poverty, economic, and housing distress in various regions of the State.

-- The allocation plan must include a preference for certain special population groups.

-- At least 25% of the Fund must be earmarked for rental housing projects that do not qualify under preferences for special population groups or other preferences contained in the allocation plan.

-- At least 30% of the Fund must be earmarked for projects that target extremely low-income households and include at a minimum developing housing for the homeless, supportive housing, transitional housing, and permanent housing.

-- A rental housing project or home ownership project assisted by the Fund must set aside at least 20% of the rental units included in the project for households earning no more than 60% of the area median income.

-- Money that has not been committed at the end of a fiscal year must not be carried over in the category to which the money had been allocated during that fiscal year but must be reallocated for the next fiscal year according to the next fiscal year's allocation plan.

Instead, under the bill, the plan would have to abide by the following:

Fund Allocation

The Act requires the Authority to spend money in the Fund to make grants, mortgage loans, or other loans to eligible applicants to enable them to finance specified projects with respect to housing for low-income, very-low-income, and extremely-low-income households, including the acquisition of land and buildings, rehabilitation, new construction, community development projects, and insurance, among other things. The bill also would apply this requirement to middle-income households and remove the requirement that these projects be located in a downtown area or adjacent neighborhood.

Various Provisions

The Act requires the Authority to spend a portion of the Fund for housing for persons with physical or mental handicaps and persons living in eligible distressed areas. The bill would make this provision permissive instead of mandatory.

The Act also allows the Authority to aid eligible applicants for housing units within multifamily housing that is occupied partly by low-income, very-low-income, and extremely-low-income households. Under the bill, this provision would apply to middle-income households, as well.

Annual Report

The Act requires the Authority to issue an annual report to the Governor and the Legislature summarizing the expenditures of the Fund for the prior fiscal year including a description of the eligible applicants that received funding, the number of housing units that were produced, the income levels of the households that were served, the number of homeless persons served, and the number of downtown areas and adjacent neighborhoods that receive financing. The bill would delete the requirement that the annual report summarize expenditures of the Fund related to the number of downtown areas and adjacent neighborhoods that receive financing.

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.