SENATE BILL NO. 1326 September 23, 1998, Introduced by Senators SCHUETTE, BULLARD, SHUGARS and SCHWARZ and referred to the Committee on Economic Development, International Trade and Regulatory Affairs. A bill to create an urban homestead program for multifamily public housing; to provide that certain local governmental units, public housing entities, and certain state entities create and administer urban homestead programs for multifamily public hous- ing; to prescribe the powers and duties of certain state and local governmental units, public housing entities, and nonprofit community organizations; and to provide for the disposition of personal and real property. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. This act shall be known and may be cited as the 2 "urban homesteading in multifamily public housing act". 3 Sec. 2. As used in this act: 4 (a) "Homestead agreement" means a written contract between a 5 resident organization or successor entity and a qualified buyer 06492'98 JLB 2 1 that contains the terms under which the qualified buyer may 2 acquire the public housing property. 3 (b) "Housing commission" means a housing commission or hous- 4 ing authority as defined under section 3 of 1937 PA 293, MCL 5 125.603. 6 (c) "Housing project" means that term as defined under 7 section 3 of 1937 PA 293, MCL 125.603, that is not specifically 8 designed for the elderly or handicapped or more than 50% occupied 9 by the elderly or handicapped. 10 (d) "Michigan state housing development authority" means the 11 Michigan state housing development authority created under sec- 12 tion 21 of the state housing development authority act of 1966, 13 1966 PA 346, MCL 125.1421. 14 (e) "Nonprofit community organization" means an organization 15 exempt from taxation under section 501(c)(3) of the internal rev- 16 enue code of 1986. 17 (f) "Qualified buyer" means a person who meets the criteria 18 in section 6. 19 (g) "Qualified loan rate" means an interest rate not to 20 exceed the interest rate charged for home improvement loans by 21 the federal housing administration under title I of the national 22 housing act, chapter 847, 48 Stat. 1246, 12 U.S.C. 1702, 1703, 23 1705, and 1706b to 1706d. 24 (h) "Resident organization" means a group of residents of a 25 specific housing project who contract with a housing commission 26 to manage that housing project for not less than 5 years with the 06492'98 3 1 intent to acquire legal ownership of the housing project under 2 this act. 3 Sec. 3. By resolution, and subject to federal and state 4 law, a housing commission may operate an urban homestead program 5 for multifamily public housing to administer a homesteading pro- 6 gram that makes multifamily public housing properties available 7 to resident organizations and eligible buyers to purchase under 8 this act. 9 Sec. 4. (1) A resident organization in a housing project 10 that contracts with a housing commission to manage the housing 11 project is eligible to acquire the housing project after not less 12 than 5 years if the resident organization can demonstrate to the 13 housing commission a successful record of management of the hous- 14 ing project as determined by the housing commission. 15 (2) If a resident organization contracts with a housing com- 16 mission under subsection (1), the housing commission shall pay 17 all management fees that the housing commission receives for the 18 housing project to the resident organization to manage the 19 property. 20 (3) A resident organization that manages a housing project 21 under contract with a housing commission may apply to the 22 Michigan state housing development authority for grant funds up 23 to $250,000.00 for management training and counseling. Nonprofit 24 community organizations and similar organizations are eligible to 25 provide the management training and counseling. 26 Sec. 5. (1) If the housing commission determines that the 27 resident organization has successfully managed the housing 06492'98 4 1 project under this act, upon payment of fair market value, the 2 housing commission shall transfer legal ownership to the resident 3 organization. The resident organization shall hold legal owner- 4 ship of the housing project in the form of a cooperative housing 5 corporation or a condominium association. 6 (2) In consideration of the transfer of legal ownership, the 7 resident organization shall pay the fair market value of the 8 housing project to the housing commission. 9 (3) The Michigan state housing development authority shall 10 make mortgage loans to resident organizations that qualify under 11 this act to acquire multifamily public housing of up to 95% of 12 the fair market value of the housing project. The remaining por- 13 tion of the transfer price shall be provided by the resident 14 organization from any legal source. 15 Sec. 6. An applicant who meets all the following criteria 16 is eligible to enter into a homestead agreement to acquire public 17 housing property as a qualified buyer under this act: 18 (a) The applicant or his or her spouse is employed and has 19 been employed for the immediately preceding 12 months. 20 (b) The applicant or his or her spouse has not been con- 21 victed of a drug related felony with the immediately preceding 22 3-year period. 23 (c) All school age children of the applicant or his or her 24 spouse who will reside in the multifamily public housing property 25 attend school regularly. 26 (d) The applicant and his or her spouse have income below 27 the median for the state of Michigan as determined by the United 06492'98 5 1 States department of housing and urban development, for families 2 with the same number of family members of the applicant and his 3 or her spouse. 4 Sec. 7. (1) A qualified buyer may apply to the resident 5 organization or successor entity to acquire the public housing 6 property. The application shall be in a form and in a manner 7 provided by the resident organization or successor entity. If 8 the application is approved, the qualified buyer and the resident 9 organization or successor entity shall enter into a homestead 10 agreement for the public housing property. The resident organi- 11 zation or successor entity may add additional terms and condi- 12 tions to the homestead agreement. 13 (2) If the qualified buyer is in compliance with the terms 14 of the homestead agreement and has lived in the property for not 15 less than 5 years, or if the qualified buyer has resided in the 16 multifamily public housing property before the resident organiza- 17 tion or successor entity takes ownership under this act, resides 18 in that property for not less than 5 years, meets the criteria in 19 the homestead agreement, and has otherwise promptly met its 20 financial obligations with the resident organization or successor 21 entity, the resident organization or successor entity shall deed 22 or cause to be deeded that public housing property occupied by 23 the qualified buyer to the qualified buyer for fair market con- 24 sideration as determined by the resident organization or succes- 25 sor entity. 26 Sec. 8. The Michigan state housing development authority 27 shall provide mortgage loans to qualified buyers who purchase 06492'98 6 1 their unit in the multifamily public housing. Loans provided 2 under this section shall be made at a rate of interest not to 3 exceed the qualified rate. The loan agreement may contain addi- 4 tional terms and conditions as determined by the Michigan state 5 housing development authority. 6 Sec. 9. For 5 years after a qualified buyer takes ownership 7 of a unit under this act, the resident organization or successor 8 entity has a right of first refusal if the qualified buyer 9 desires to sell his or her property acquired under this act. 10 During the 5 year period, the resident organization or successor 11 entity may repurchase the property at the same price for which 12 the qualified buyer purchased the property if the qualified buyer 13 sells the property. 14 Sec. 10. (1) Residents of the housing project who resided 15 in the housing project before the resident organization or suc- 16 cessor entity took legal ownership may continue to reside in the 17 premises under the same terms and conditions as when the property 18 was owned by the housing commission. 19 (2) The Michigan state housing development authority shall 20 request the federal government to provide housing vouchers for 21 residents who do not become owners. 06492'98 Final page. JLB