SB-1133, As Passed Senate, March 6, 2008

SUBSTITUTE FOR

SENATE BILL NO. 1133

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 2004 PA 549.

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 provisions of this section, 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)

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.

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 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 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 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.

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

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 defined in section 4 of the condominium act,

1978 PA 59, MCL 559.104. To qualify, all of the following apply:

(a) The borrower's family income shall not exceed ~~the~~

~~following:~~ $108,000.00.

(i~~) For eligible distressed areas, $69,800.00 until June 1,~~

~~2006, $72,250.00 until November 1, 2007, and $74,750.00 on and~~

~~after November 1, 2007.~~

(ii~~) For any other area, $60,700.00 until June 1, 2006,~~

~~$62,800.00 until November 1, 2007, and $65,000.00 on and after~~

~~November 1, 2007.~~

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

appraised value does not exceed the following:

(i) With respect to a 1- or 2-family unit, ~~3 times the income~~

~~limit, as established pursuant to subdivision (a)~~ $224,500.00.

(ii) With respect to a 3-family unit, ~~3-1/2 times the income~~

~~limit, as established pursuant to subdivision (a)~~ $261,625.00.

(iii) With respect to a 4-family unit, ~~4 times the income limit,~~

~~as established pursuant to subdivision (a)~~ $299,000.00.

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 purchase price limit prescribed by this

subsection exceeds an ~~application~~ 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. 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 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

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 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 loans to

individual purchasers pursuant to subsection (3) later than 3 years

after the effective date of the amendatory act that added this

subsection.

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.