HB-5446, As Passed Senate, March 6, 2008

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5446

A bill to amend 1966 PA 346, entitled

"State housing development authority act of 1966,"

by amending section 32 (MCL 125.1432), as amended by 2004 PA 535.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 32. (1) The authority may create and establish 1 or more

special funds called capital reserve funds to secure notes and

bonds of the authority. The authority shall pay into a capital

reserve fund money appropriated and made available by this state

for the purposes of the fund, the proceeds of the sale of notes or

bonds to the extent provided in the resolution of the authority

authorizing the issuance of the notes or bonds, and other money

that is made available to the authority for the purpose of a fund

from any other source. In addition to, or in lieu of, depositing

money in a capital reserve fund, the authority may obtain and

pledge letters of credit and, effective retroactively as of June 1,

1993, insurance policies, surety bonds, guarantees, or other

security arrangements if those other security arrangements are

approved by the state treasurer, for the purposes of the capital

reserve fund. The amount available under letters of credit,

insurance policies, surety bonds, guarantees, or other security

arrangements pledged to a capital reserve fund shall be credited

toward the satisfaction of a capital reserve fund requirement. All

money and proceeds under letters of credit, insurance policies,

surety bonds, guarantees, or other security arrangements held in a

capital reserve fund, except as specifically provided, shall be

used as required solely for the payment of the principal of notes

or bonds of the authority secured in whole or in part by the

capital reserve fund, for the purchase or redemption of notes or

bonds, for the payment of interest on the notes or bonds, or for

the payment of a redemption premium required to be paid when the

notes or bonds are redeemed prior to maturity. However, the

authority shall not use the capital reserve fund for an optional

purchase or optional redemption of notes or bonds if the use would

reduce the total of the money on deposit in the capital reserve

fund and amounts available under a letter of credit, insurance

policy, surety bond, guarantee, or other security arrangement

pledged to a capital reserve fund to less than the capital reserve

fund requirement established for the fund. Income or interest

earned by, or increment to, a capital reserve fund due to the

investment of the money in the capital reserve fund may be

transferred by the authority to other funds or accounts of the

authority to the extent that the transfer does not reduce the total

of the amount of money in a capital reserve fund and amounts

available under a letter of credit, insurance policy, surety bond,

guarantee, or other security arrangement pledged to the capital

reserve fund below the capital reserve fund requirement for a fund.

(2) The authority shall not at any time issue notes or bonds

secured in whole or in part by a capital reserve fund if, upon the

issuance of the notes or bonds, the amount in the capital reserve

fund, including the amounts available under a letter of credit,

insurance policy, surety bond, guarantee, or other security

arrangement pledged to the capital reserve fund, would be less than

the capital reserve fund requirement for the fund, unless the

authority, at the time of issuance of the notes or bonds, deposits

in the fund from the proceeds of the notes or bonds to be issued,

or from other sources, an amount that, together with the amount

then in the fund, is not less than the capital reserve fund

requirement for the fund, or obtains a letter of credit, insurance

policy, surety bond, guarantee, or other security arrangement in an

amount that, together with the amount then in the fund, is not less

than the capital reserve fund requirement for the fund. For the

purposes of this section, "capital reserve fund requirement" means

the requirement provided in the resolution of the authority

authorizing the notes or bonds with respect to which the fund is

established, which amount shall not exceed the maximum amount of

principal and interest maturing and becoming due in a succeeding

calendar year on the notes or bonds of the authority secured in

whole or part by the fund.

(3) The authority has, before January 9, 1977, in connection

with its housing development bonds issued pursuant to a bond

resolution dated June 10, 1971, established within the capital

reserve fund relating to housing development bonds, a capital

reserve account and a capital reserve capital account. This capital

reserve account constitutes a capital reserve fund under this act.

Money in this capital reserve account shall secure only housing

development bonds issued pursuant to the June 10, 1971 bond

resolution. Unless otherwise provided by the authority, money in

the capital reserve capital account shall secure all bonds and

notes of the authority. In determining whether the capital reserve

fund requirement established for a capital reserve fund has been

met, the authority shall not include or take into account money in

the capital reserve capital account.

(4) The authority has, before January 9, 1977, in connection

with its insured mortgage revenue bonds issued pursuant to a bond

resolution dated May 11, 1976, established a bond reserve fund.

This bond reserve fund constitutes a capital reserve fund under

this act.

(5) The authority may issue notes and bonds subject to the

following limitations:

(a) The authority shall not have outstanding at any time bonds

and notes for any of its corporate purposes in an aggregate

principal amount exceeding $4,200,000,000.00, excluding all of the

following:

(i) The principal amount of bonds and notes issued to refund

outstanding bonds and notes.

(ii) The principal amount of bonds and notes that appreciate in

principal amount, except to the extent of the principal amount of

these bonds and notes payable at such time.

(iii) The principal amount of notes and bonds representing

original issue discount, if any.

(b) After November 1, ~~2007~~ 2011, the limitation on the

aggregate principal amount of notes and bonds provided in

subdivision (a) is $3,000,000,000.00, excluding all of the

following:

(i) The exclusions provided in subparagraphs (i), (ii), and (iii)

of subdivision (a).

(ii) The aggregate principal amount of bonds and notes issued

on or before November 1, ~~2007~~ 2011, that is outstanding on November

1, ~~2007~~ 2011, and that exceeds $3,000,000,000.00.

(6) Subject to the limitation in subsection (5), that portion

of the state ceiling to be used for qualified mortgage bonds,

mortgage credit certificates, or bonds to finance qualified

residential rental projects shall be allocated to the authority

unless the authority elects by resolution to allow another issuer

to issue qualified mortgage bonds, mortgage credit certificates, or

bonds to finance qualified residential rental projects. As used in

this subsection:

(a) "State ceiling" means the aggregate amount of certain

private activity bonds, including qualified mortgage bonds, that

may be issued in any calendar year in this state pursuant to

section 146 of the internal revenue code, 26 USC 146.

(b) "Qualified mortgage bond", "mortgage credit certificate",

and "qualified residential rental project" mean those terms as

defined in section 146 of the internal revenue code, 26 USC 146.

(7) To assure the continued operation and solvency of the

authority for the carrying out of the public purposes of this act,

the authority shall accumulate in each capital reserve fund an

amount equal to the capital reserve fund requirement for that fund.

If at any time the capital reserve fund requirement for a capital

reserve fund exceeds the amount of the capital reserve fund, the

authority shall transfer to this fund from the capital reserve

capital account established by the authority's June 10, 1971 bond

resolution the amount necessary to restore the capital reserve fund

to an amount equal to the capital reserve fund requirement. If a

deficiency exists in more than 1 capital reserve fund and the

amount in the capital reserve capital account is not sufficient to

fully restore the capital reserve funds, the money in the capital

reserve capital account shall be allocated between the deficient

capital reserve funds pro rata according to the amounts of the

deficiencies. If at any time the capital reserve capital account

has been exhausted and the capital reserve fund requirement for a

capital reserve fund exceeds the amount of the capital reserve

fund, the chairperson of the authority on or before September 1

shall certify to the governor and budget director the amount, if

any, necessary to restore a capital reserve fund to an amount equal

to the capital reserve fund requirement. The governor and the

budget director shall include in the annual budget the amount

certified by the chairperson of the authority.

(8) In computing the amount of a capital reserve fund for the

purposes of this section, securities in which all or a portion of

the fund is invested shall be valued at par. If the securities are

purchased at other than par, the securities may be valued at their

cost to the authority, as adjusted by amortization of the discount

or premium paid upon purchase of the securities on a pro rata basis

to the maturity date of the securities.

(9) To the extent possible and consistent with sound fiscal

management and good housing development planning, the authority

shall make full use of available federal housing subsidy programs.

The authority shall recommend programs and legislation to better

maintain and improve existing housing stock.

(10) The authority shall require that not less than 15% of the

multifamily dwelling units financed by mortgage loans from the

authority in a calendar year under federal government subsidy

programs, subject to applicable federal regulations, be offered on

a priority basis to low income families and persons receiving their

primary incomes from social security programs or state and federal

public assistance programs.

(11) The authority shall implement a program of loans for

mobile homes as soon as is reasonably feasible. The authority shall

develop a program for financing the construction or rehabilitation

of mobile home parks and mobile home condominium projects within 24

months after December 31, 1982, subject to a determination of

feasibility by the authority and the authority's ability to sell

bonds.

(12) The authority shall implement a program of loans for

consumer housing cooperatives as soon as is reasonably feasible.

The authority shall develop a program for financing the

construction or rehabilitation of consumer housing cooperative

projects within 12 months after July 10, 1984, subject to a

determination of feasibility by the authority and the authority's

ability to sell bonds.

(13) In addition to the powers granted the authority in this

act to promulgate rules in accordance with the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, the

authority shall furnish to each member of the legislature a copy of

notice of a public hearing or proposed rule change at least 10 days

before the public hearing and at least 20 days before the adoption

of the rule.

(14) Before October 1 of each year, the authority shall

identify housing production goals for housing projects financed

with bonds and notes issued under the limitations provided in

section 32a. The authority shall identify a goal for the authority

as a whole and a specific goal for each program. The authority

shall submit those goals in an annual report to the governor and to

the house committee on urban affairs and the senate committee on

finance, or their successor committees.

(15) Within 6 months after the legislature enacts or the

authority adopts a new program, the authority shall submit an

interim report to the same persons to whom an annual report is

submitted. If both the legislature and the authority establish a

program, the authority shall submit the interim report within 6

months after the effective date of the act establishing the

program. The authority shall include in an interim report all of

the information required in an annual report that is specific to

that program.

(16) After the initial or an interim report, the authority

shall include in an annual report all of the following for each

program:

(a) Whether the production goals for the previous 12-month

period have been met. If those production goals have not been met,

the authority shall explain in the report the reasons why those

production goals have not been met.

(b) Any significant obstacles to the development of housing

for low and moderate income persons that have been encountered by

the authority.

housing projects to the immediate neighborhoods in which the

housing projects have been constructed.

(d) The estimated economic and social benefits of these

housing projects to the municipalities in which the housing

projects have been constructed.

(e) The extent of displacement, direct and indirect, of lower

income persons caused by these housing projects, and steps taken by

the authority and other governmental and private parties to

ameliorate the displacement, and the results of those efforts.

(f) The estimated extent of additional reinvestment activities

by private lenders attributable to the authority's financing of

these housing projects.

(g) The age, race, family size, median income, and average

income of the tenants of these housing projects.

(h) 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.

(i) The progress in developing mobile home parks and mobile

home condominium projects, in financing the construction or

rehabilitation of consumer housing cooperative projects, and in

financing the construction or rehabilitation of nonprofit housing

corporation projects.

(j) A report on the neighborhood preservation program under

section 44f shall include information about the progress in

developing the program, the neighborhoods identified as being

eligible for the program, the neighborhoods or municipalities that

have applied for the program, the neighborhoods that have received

funds from the program, and the reasons that neighborhoods or

municipalities have been denied funds from the program.

(k) A report on the status of federal programs that provide

assistance to low income tenants displaced as the result of

prepayments of federally and authority assisted loans. If the

authority determines that federal programs are inadequate for

tenants of authority-financed housing projects, the authority will

provide recommendations to the legislature as to how to address

this problem on or before May 1, 1989.

(l) A report on the low income housing tax credit program under

section 22b, that shall include information regarding the amount of

tax credits allocated to the state under each of the subdivisions

of section 22b(2); the projects that have received tax credits; and

the reasons why projects have been denied tax credits under the

program; a geographical description of the distribution of those

tax credits; and a description of amendments to the allocation plan

made during that year.

(m) A report on education and training opportunities provided

by the authority under section 17 that will indicate the types of

education and training opportunities made available and the amount

of funding committed to these activities.

(n) For any programs or projects involving refinancings, the

number of refinancings undertaken by the authority and the total

dollar amount of all refinancings undertaken by the authority.

(17) The authority shall conduct an annual review of all

loans, financial instruments that require repayment, or lines of

credit with the Michigan broadband development authority. The

review shall contain an analysis of the Michigan broadband

development authority's ability to repay all loans, financial

instruments that require repayment, and lines of credit with the

authority and the amount and payment schedule of all current loans,

financial instruments that require payment, and lines of credit

with the authority. The review shall also contain an analysis of

the number of authority-assisted or -financed developments and

homes purchasing high-speed internet connections at substantially

reduced rates as a direct result of loans from the Michigan

broadband development authority, as specified in the memorandum of

understanding between the authority and the Michigan broadband

development authority.

(18) The authority shall insure that the income

characteristics of individuals served by an authority program are

provided in a manner that insures each individual's

House Bill No. 5446 as amended March 5, 2008

confidentiality. The authority shall also insure that proprietary

information in its reports under this section concerning an

individual, corporation, cooperative, or association is not

released without the permission of that individual, corporation,

cooperative, or association.

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 94th Legislature are

enacted into law:

(a) Senate Bill No. 948.

(b) Senate Bill No. 950.

<<(d) Senate Bill No. 1133.

(e)>> House Bill No. 5443.