SB-1243, As Passed Senate, May 13, 2008

SUBSTITUTE FOR

SENATE BILL NO. 1243

A bill to amend 1966 PA 346, entitled

"State housing development authority act of 1966,"

by amending the title and sections 2, 11, 22, 58, 58a, 58b, and 58c

(MCL 125.1402, 125.1411, 125.1422, 125.1458, 125.1458a, 125.1458b,

and 125.1458c), the title as amended and sections 58, 58a, 58b, and

58c as added by 2004 PA 480, section 11 as amended by 2004 PA 549,

and section 22 as amended by 2002 PA 385, and by adding sections

58e and 58f; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to create a ~~state~~ community and housing development

authority; to define the powers and duties of the authority; to

establish a housing development revolving fund; to establish a land

acquisition and development fund; to establish a rehabilitation

fund; to establish a conversion condominium fund; to create certain

other funds and provide for the expenditure of certain funds; to

authorize the making and purchase of loans, deferred payment loans,

and grants to qualified developers, sponsors, individuals, mortgage

lenders, and municipalities; to establish and provide acceleration

and foreclosure procedures; to provide tax exemption; to authorize

payments instead of taxes by nonprofit housing corporations,

consumer housing cooperatives, limited dividend housing

corporations, mobile home park corporations, and mobile home park

associations; and to prescribe criminal penalties for violations of

this act.

Sec. 2. This act shall be known and may be cited as the "~~state~~

community and housing development authority act of 1966".

Sec. 11. As used in this act:

(a) "Authority" means the Michigan ~~state~~ community and housing

development authority created in this act.

(b) "Development costs" means the costs that have been

approved by the authority as appropriate expenditures, and

includes:

(i) Payments for options to purchase properties on the proposed

housing project site, deposits on contracts of purchase, or, with

the prior approval of the authority, payments for the purchases of

those properties.

(ii) Legal, organizational, and marketing expenses, including

payment of attorneys' fees, project manager and clerical staff

salaries, office rent, and other incidental expenses.

(iii) Payment of fees for preliminary feasibility studies,

advances for planning, engineering, and architectural work.

(iv) Expenses for surveys as to need, and market analyses.

(v) Necessary application and other fees to federal and other

government agencies.

(vi) Other expenses incurred by the nonprofit housing

corporation, consumer housing cooperative, limited dividend housing

corporation, mobile home park corporation, or mobile home park

association that the authority considers appropriate to effectuate

the purposes of this act.

(i) A below market interest rate mortgage insured, purchased,

or held by the secretary of the department of housing and urban

development.

(ii) A market interest rate mortgage insured by the secretary

of the department of housing and urban development and augmented by

a program of rent supplements.

(iii) A mortgage receiving interest reduction payments provided

by the secretary of the department of housing and urban

development.

(iv) A mortgage on a housing project to which the authority

allocates low income housing tax credits under section 22b.

(v) A mortgage receiving special benefits under other federal

law designated specifically to develop low and moderate income

housing, consistent with this act.

(d) "Fund" means the housing development fund created by this

act.

(e) "Project cost" means the sum total of all reasonable or

necessary costs incurred by the nonprofit housing corporation,

consumer housing cooperative, limited dividend housing corporation,

mobile home park corporation, or mobile home park association for

carrying out all works and undertakings for the completion of a

housing project and approved by the authority. In addition to other

reasonable and necessary costs, "project costs" includes costs for

all of the following: studies and surveys; plans, specifications,

and architectural and engineering services; legal, organization,

marketing, or other special services; financing, acquisition,

demolition, construction, equipment, and site development of new

and rehabilitated buildings; movement of existing buildings to

other sites; rehabilitation, reconstruction, repair, or remodeling

of existing buildings; carrying charges during construction; the

cost of placement of tenants or occupants, and relocation services

in connection with a housing project; and, to the extent not

already included, all development costs.

(f) "Housing project" means any of the following:

(i) Residential real property developed or to be developed or

receiving benefits under this act.

(ii) A specific work or improvement either for rental or for

subsequent sale to an individual purchaser undertaken by a

nonprofit housing corporation, consumer housing cooperative,

limited dividend housing corporation, mobile home park corporation,

or mobile home park association pursuant to or receiving benefits

under this act to provide dwelling accommodations, including the

acquisition, construction, or rehabilitation of lands, buildings,

and improvements.

(iii) Social, recreational, commercial, and communal facilities

that the authority finds necessary to serve and improve a

residential area in which housing described in subparagraph (i) or

(ii) is located or is planned to be located, thereby enhancing the

viability of the housing.

(g) "Low income or moderate income persons" means families and

persons who cannot afford to pay the amounts at which private

enterprise, without federally-aided mortgages or loans from the

authority, is providing a substantial supply of decent, safe, and

sanitary housing and who fall within income limitations set in this

act or by the authority in its rules. Among low income or moderate

income persons, preference shall be given to the elderly and those

displaced by urban renewal, slum clearance, or other governmental

action.

(h) "Municipality" means a city, village, or township in this

state.

(i) "County" means a county within this state.

(j) "Governing body" means in the case of a city, the council

or commission of the city; in the case of a village, the council,

commission, or board of trustees of the village; in the case of a

township, the township board; and in the case of a county, the

county board of commissioners.

(k) "Nonprofit housing corporation" means a nonprofit

corporation incorporated under the corporation laws of this state

and chapter 4.

(l) "Consumer housing cooperative" means a nonprofit

corporation incorporated pursuant to the corporation laws of this

state and chapter 5.

(m) "Annual shelter rent" means the total collections during

an agreed annual period from all occupants of a housing project

representing rent or occupancy charges, exclusive of charges for

gas, electricity, heat, or other utilities furnished to the

occupants.

(n) "Taxing jurisdiction" means a municipality, county, or

district, including a school district or any special district

having the power to levy or collect taxes upon real property or in

whose behalf taxes may be levied or collected.

(o) "Elderly" means a single person who is 55 years of age or

older or a household in which at least 1 member is 55 years of age

or older and all other members are 50 years of age or older.

(p) "Housing development" means a development that contains a

significant element of housing for persons of low or moderate

income and elements of other housing and commercial, recreational,

industrial, communal, and educational facilities that the authority

determines improve the quality of the development as it relates to

housing for persons of low or moderate income.

(q) "Limited dividend housing corporation" means a corporation

incorporated or qualified pursuant to the corporation laws of this

state and chapter 6 and a limited dividend housing association

organized and qualified pursuant to chapter 7.

(r) "Residential real property" means real property located in

this state, used for residential purposes, and improved or to be

improved by a residential structure. Residential real property

includes a mobile home, a mobile home park, and a mobile home

condominium project. When the terms "rehabilitate" or

"rehabilitation" are used in conjunction with residential real

property, residential real property refers to property improved by

a residential structure.

(s) "Rehabilitation" means all or part of those repairs and

improvements necessary to make residential real property safe,

sanitary, or adequate.

(t) "Deferred payment loan" means a loan that is repayable or

partially repayable upon the occurrence of a specified event as

determined by the authority.

(u) "Eligible distressed area" means any of the following:

(i) An area located in a city with a population of at least

10,000, which area is either designated as a "blighted area" by a

local legislative body pursuant to 1945 PA 344, MCL 125.71 to

125.84, or which area is determined by the authority to be blighted

or largely vacant by reason of clearance of blight, if, with

respect to the area, the authority determines all of the following:

(A) That private enterprise has failed to provide a supply of

adequate, safe, and sanitary dwellings sufficient to meet market

demand.

(B) That approval of elimination of income limits applicable

in connection with authority loans has been received from the city

in the form of either a resolution adopted by the highest

legislative body of the city or, if the city charter provides for

the mayor to be elected at large with that office specifically

designated on the ballot, provides that the office of mayor is a

full-time position, and provides that the mayor has the power to

veto legislative actions of the legislative body of that city, a

written communication from the mayor of that city.

(ii) A municipality that meets all of the following

requirements:

(A) The municipality shows a negative population change from

1970 to the date of the most recent federal decennial census.

(B) The municipality shows an overall increase in the state

equalized value of real and personal property of less than the

statewide average increase since 1972.

most recent federal decennial census, greater than the statewide

average.

(D) The municipality has had an unemployment rate higher than

the statewide average unemployment rate for 3 of the preceding 5

years.

(iii) An area located in a local unit of government certified by

the Michigan enterprise zone authority as meeting the criteria

prescribed in section 2(d) of the neighborhood enterprise zone act,

1992 PA 147, MCL 207.772.

(v) "Mobile home" means a structure, transportable in 1 or

more sections, that is built on a chassis and is designed to be

used as a dwelling with or without permanent foundation, when

connected to the required utilities, and includes the plumbing,

heating, air conditioning, and electrical systems contained in the

structure. Mobile home may, but need not, include the real property

to which the mobile home may be attached. Mobile home does not

include a recreational vehicle.

(w) "Mobile home condominium project" means a condominium

project in which mobile homes are intended to be located upon

separate sites that constitute individual condominium units and

that complies with the condominium act, 1978 PA 59, MCL 559.101 to

559.276.

(x) "Mobile home park" means a parcel or tract of land under

the control of a person or entity upon which 3 or more mobile homes

are located on a continual, nonrecreational, residential basis and

that is offered to the public for general public use for continual,

nonrecreational, residential purposes regardless of whether a

charge is made for that use, together with any social,

recreational, commercial, and communal facilities used or intended

for use incident to the occupancy of a mobile home. Mobile home

park does not include trailer parks and courts for use on a

transient basis.

(y) "Mobile home park association" means a mobile home park

association organized and qualified in accordance with chapter 9.

(z) "Mobile home park corporation" means a corporation

incorporated pursuant to the corporation laws of this state and

qualified in accordance with chapter 8.

(aa) "Housing unit" means living accommodations that are

intended for occupancy by up to 4 families, with a separate

dwelling unit for each family, that may be site constructed or may

be a mobile home or other form of manufactured housing, and with

respect to which either of the following applies:

(i) The owner of the housing occupies at least 1 of the

dwelling units.

(ii) A cooperative shareholder or member has a proprietary

lease of the housing unit.

(bb) "Moderate cost residential rental property" means

dwelling units for which the rental payments are equal to or less

than that established from time to time as the fair market rents

for existing housing in accordance with 1 of the following:

(i) The section 8 leased housing program established under

section 8 of the United States housing act of 1937, 42 USC 1437f,

and the regulations promulgated under that act, or a substantially

equivalent successor federal program.

(ii) A determination made by the authority of the average fair

market rent for existing rental property.

(cc) "Area of chronic economic distress" means an area that

qualifies as a "qualified census tract" or an "area of chronic

economic distress" as defined in former section 103A(k) of the

internal revenue code, or an eligible distressed area.

(dd) "Mortgage lender" means a state or national bank, state

or federal savings and loan association, mortgage company,

insurance company, state pension fund, or any other financial

institution, intermediary, or entity authorized to make mortgage

loans in this state.

(ee) "Authority-aided mortgage" means a mortgage made, held,

purchased, or assisted by the authority.

(ff) "Subsidiary nonprofit housing corporation" means an

entity created under section 22c.

(gg) "Family income" means all income that is included in a

determination of family income under section 143(f) of the internal

revenue code, 26 USC 143(f), together with the income of all adults

who will reside in the residence, which income might otherwise be

excluded from consideration because the individual was not expected

to both live in the residence and be primarily or secondarily

liable on the mortgage note.

(hh) "Statewide median gross income" means the statewide

median gross income as determined under section 143(f) of the

internal revenue code, 26 USC 143(f).

(ii) "Mutual housing association" means a corporation

organized in accordance with chapter 10.

(jj) "Internal revenue code" means the United States internal

revenue code of 1986.

(kk) "Internal revenue code of 1954" means the United States

internal revenue code of 1954 as in effect on the day immediately

before the effective date of the internal revenue code of 1986.

Sec. 22. The authority shall possess all powers necessary or

convenient to carry out this act, including the following powers in

addition to other powers granted by other provisions of this act:

(a) To sue and to be sued; to have a seal and to alter the

seal at pleasure; to have perpetual succession; to make and execute

contracts and other instruments necessary or convenient to the

exercise of the powers of the authority; and to make, amend, and

repeal bylaws and rules.

(b) To undertake and carry out studies and analyses of housing

needs within this state and ways of meeting those needs, including

data with respect to population and family groups, the distribution

of population and family groups according to income, and the amount

and quality of available housing and its distribution according to

rentals and sales prices, employment, wages, and other factors

affecting housing needs and the meeting of housing needs; to make

the results of those studies and analyses available to the public

and the housing and supply industries; and to engage in research

and disseminate information on housing.

financial assistance.

(d) To survey and investigate housing conditions and needs,

both urban and rural, throughout this state and make

recommendations to the governor and the legislature regarding

legislation and other measures necessary or advisable to alleviate

any existing housing shortage in this state.

(e) To establish and collect fees and charges in connection

with the sale of the authority's publications and the authority's

loans, commitments, and servicing, including but not limited to,

the reimbursement of costs of financing by the authority, service

charges, and insurance premiums as the authority determines to be

reasonable and as approved by the authority. Fees and charges shall

be determined by the authority and shall not be considered to be

interest. The authority may use any accumulated fees and charges

and interest income for achieving any of the corporate purposes of

the authority, to the extent that the fees, charges, and interest

income are not pledged to the repayment of bonds and notes of the

authority or the interest on those bonds and notes.

(f) To encourage community organizations to assist in

initiating housing projects as provided in this act.

(g) To encourage the salvage of all possible usable housing

scheduled for demolition because of highway, school, urban renewal,

or other programs by seeking authority for the sponsors of the

programs to use funds provided for the demolition of the buildings,

to be allocated to those sponsors approved by the authority to

defray moving and rehabilitation costs of the buildings.

(h) To engage and encourage research in, and to formulate

demonstration projects to develop, new and better techniques and

methods for increasing the supply of housing for persons eligible

for assistance as provided in this act; and to provide technical

assistance in the development of housing projects and in the

development of programs to improve the quality of life for all the

people of this state.

(i) To make or purchase loans, including loans for condominium

units as defined in section 4 of the condominium act, 1978 PA 59,

MCL 559.104, and including loans to mortgage lenders, which are

unsecured or the repayments of which are secured by mortgages,

security interests, or other forms of security; to purchase and

enter into commitments for the purchase of securities, certificates

of deposits, time deposits, or mortgage loans from mortgage

lenders; to participate in the making or purchasing of unsecured or

secured loans and undertake commitments to make or purchase

unsecured or secured loans; to sell mortgages, security interests,

notes, and other instruments or obligations evidencing or securing

loans, including certificates evidencing interests in 1 or more

loans, at public or private sale; in connection with the sale of an

instrument or obligation evidencing or securing 1 or more loans, to

service, guarantee payment on, or repurchase the instrument or

obligation, whether or not it is in default; to modify or alter

mortgages and security interests; to foreclose on any mortgage,

security interest, or other form of security; to finance housing

units; to commence an action to protect or enforce a right

conferred upon the authority by law, mortgage, security agreement,

contract, or other agreement; to bid for and purchase property that

was the subject of the mortgage, security interest, or other form

of security, at a foreclosure or at any other sale, and to acquire

or take possession of the property. Upon acquiring or taking

possession of the property, the authority may complete, administer,

and pay the principal and interest of obligations incurred in

connection with the property, and may dispose of and otherwise deal

with the property in any manner necessary or desirable to protect

the interests of the authority in the property. If the authority or

an entity that provides mortgage insurance to the authority

acquires property upon the default of a borrower, the authority may

make a mortgage loan to a subsequent purchaser of that property

even if the purchaser does not meet otherwise applicable income

limitations and purchase price limits.

(j) To set standards for housing projects that receive loans

under this act and to provide for inspections to determine

compliance with those standards. The standards for construction and

rehabilitation of mobile homes, mobile home parks, and mobile home

condominium projects shall be established jointly by the authority

and the mobile home commission, created in the mobile home

commission act, 1987 PA 96, MCL 125.2301 to 125.2349. However,

financing standards shall be established solely by the authority.

(k) To accept gifts, grants, loans, appropriations, or other

aid from the federal, state, or local government, from a

subdivision, agency, or instrumentality of a federal, state, or

local government, or from a person, corporation, firm, or other

organization.

(l) To acquire or contract to acquire from a person, firm,

corporation, municipality, or federal or state agency, by grant,

purchase, or otherwise, leaseholds or real or personal property, or

any interest in a leasehold or real or personal property; to own,

hold, clear, improve, and rehabilitate and to sell, assign,

exchange, transfer, convey, lease, mortgage, or otherwise dispose

of or encumber any interest in a leasehold or real or personal

property. This act shall not impede the operation and effect of

local zoning, building, and housing ordinances, ordinances relating

to subdivision control, land development, or fire prevention, or

other ordinances having to do with housing or the development of

housing.

(m) To procure insurance against any loss in connection with

the property and other assets of the authority.

(n) To invest, at the discretion of the authority, funds held

in reserve or sinking funds, or money not required for immediate

use or disbursement, in obligations of this state or of the United

States, in obligations the principal and interest of which are

guaranteed by this state or the United States, or in other

obligations as may be approved by the state treasurer.

(o) To promulgate rules necessary to carry out the purposes of

this act and to exercise the powers expressly granted in this act

in accordance with the administrative procedures act of 1969, 1969

PA 306, MCL 24.201 to 24.328.

(p) To enter into agreements with nonprofit housing

corporations, consumer housing cooperatives, limited dividend

housing corporations, mobile home park corporations, and mobile

home park associations that provide for regulation by the authority

of the planning, development, and management of any housing project

undertaken by nonprofit housing corporations, consumer housing

cooperatives, limited dividend housing corporations, mobile home

park corporations, and mobile home park associations and that

provide for the disposition of the property and franchises of those

corporations, cooperatives, and associations.

(q) To appoint to the board of directors of a nonprofit

housing corporation, consumer housing cooperative, limited dividend

housing corporation, mobile home park corporation, or mobile home

park association, a number of new directors sufficient to

constitute a majority of the board notwithstanding other provisions

of the articles of incorporation or other provisions of law.

Directors appointed under this subsection need not be stockholders

or members or meet other qualifications that may be described by

the certificate of incorporation or bylaws. In the absence of fraud

or bad faith, directors appointed under this subsection shall not

be personally liable for debts, obligations, or liabilities of the

corporation or association. The authority may appoint directors

under this subsection only if 1 or more of the following occur:

(i) The nonprofit housing corporation, consumer housing

cooperative, limited dividend housing corporation, mobile home park

corporation, or mobile home park association has received a loan or

advance, as provided for in this act, and the authority determines

that the loan or advance is in jeopardy of not being repaid.

(ii) The nonprofit housing corporation, consumer housing

cooperative, limited dividend housing corporation, mobile home park

corporation, or mobile home park association received a loan or

advance as provided for in this act and the authority determines

that the proposed housing project for which the loan or advance was

made is in jeopardy of not being constructed.

(iii) The authority determines that some part of the net income

or net earnings of the nonprofit housing corporation is inuring to

the benefit of a private individual, firm, corporation,

partnership, or association; the authority determines that an

unreasonable part of the net income or net earnings of the consumer

housing cooperative is inuring to the benefit of a private

individual, firm, corporation, partnership, or association; or the

authority determines that some part of the net income or net

earnings of the limited dividend housing corporation, in excess of

that permitted by other provisions of this act, is inuring to the

benefit of a private individual, firm, corporation, partnership, or

association.

(iv) The authority determines that the nonprofit corporation or

consumer housing cooperative is in some manner controlled by, under

the direction of, or acting in the substantial interest of a

private individual, firm, corporation, partnership, or association

seeking to derive benefit or gain from, or seeking to eliminate or

minimize losses in any dealings or transactions with, the nonprofit

corporation or consumer housing cooperative. However, this

subparagraph shall apply to individual cooperators in consumer

housing cooperatives only in circumstances defined by the authority

in its rules.

(v) The authority determines that the nonprofit housing

corporation, consumer housing cooperative, limited dividend housing

corporation, mobile home park corporation, or mobile home park

association is in violation of the rules promulgated under this

section.

(vi) The authority determines that the nonprofit housing

corporation, consumer housing cooperative, limited dividend housing

corporation, mobile home park corporation, or mobile home park

association is in violation of 1 or more agreements entered into

with the authority that provide for regulation by the authority of

the planning, development, and management of a housing project

undertaken by the nonprofit housing corporation, consumer housing

cooperative, limited dividend housing corporation, mobile home park

corporation, or mobile home park association or that provide for

the disposition of the property and franchises of the corporation,

or cooperative, or association.

(r) To give approval or consent to the articles of

incorporation submitted to the authority by a corporation seeking

approval as a nonprofit housing corporation, consumer housing

cooperative, limited dividend housing corporation, or mobile home

park corporation under chapter 4, 5, 6, or 8; to give approval or

consent to the partnership agreement, joint venture agreement,

trust agreement, or other document of basic organization of a

limited dividend housing association under chapter 7 or mobile home

park association under chapter 9.

(s) To engage the services of private consultants on a

contract basis for rendering professional and technical assistance

and advice.

(t) To lease real or personal property and to accept federal

funds for, and participate in, federal programs of housing

assistance.

(u) To review and approve rental charges for authority-

financed housing projects and require whatever changes the

authority determines to be necessary. The changes shall become

effective after not less than 30 days' written notice is given to

the residents of the affected authority-financed housing projects.

(v) To set forth in the various loan documents of the

authority those restrictions on the sale, conveyance by land

contract, or transfer of residential real property, housing

projects, or housing units for which a note is held by the

authority and restrictions on the assumption by subsequent

purchasers of loans originated by and held by, or originated for

purchase by and held by, the authority as the authority determines

to be necessary in order to comply with requirements of federal

statutes, federal rules or regulations promulgated under sections

551 to 559 of title 5 of the United States Code, 5 ~~U.S.C.~~ USC 551

to 559, state statutes, or state rules promulgated under the

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

24.328, or to obtain and maintain the tax exempt status of

authority bonds and notes. However, the authority shall not use a

due on sale or acceleration clause solely for the purpose of

renegotiating the interest rate on a loan made with respect to an

owner-occupied single-family housing unit. Without limiting the

authority's power to establish other restrictions, as provided in

this section, on the sale, conveyance by land contract, or transfer

of residential real property, housing projects, or housing units

for which a note is held by the authority and the assumption by

subsequent purchasers of loans made or purchased by the authority,

the authority shall provide in its loan documents relating to a

single family loan that the single family loan may be assumed by a

new purchaser only when the new purchaser qualifies under the

authority income limitations rules except where such a restriction

diminishes or precludes the insurance or a guarantee by an agency

of the federal government with respect to the single family loan. A

loan made for a mobile home that the borrower does not intend to

permanently affix to real property shall become immediately due and

payable in the event the mobile home is moved out of the state. Any

restrictions on conveyance by sale, conveyance by land contract, or

transfer that are authorized in this section shall apply only to

loans originated by and held by, or originated for purchase by and

held by, the authority and may, at the option of the authority, be

enforced by accelerating and declaring immediately due and payable

all sums evidenced by the note held by the authority. An

acceleration and declaration of all sums to be due and payable on

conveyance by sale, land contract, or transfer is not an

unreasonable restraint on alienation. An acceleration and

declaration, unless otherwise prohibited in this subdivision, of

all sums to be due and payable under this subdivision is

enforceable in any court of competent jurisdiction. This

subdivision is applicable to secured and unsecured loans. This

subdivision is also applicable to loan documents utilized in

conjunction with an authority-operated program of residential

rehabilitation by an entity cooperating or participating with the

authority under section 22a(4), which loans are originated with the

intent to sell those loans to the authority.

(w) To set forth in the various loan documents of the

authority those remedies for the making of a false statement,

representation, or pretense or a material misstatement by a

borrower during the loan application process. Without limiting the

authority's power to pursue other remedies, the authority shall

provide in its loan documents that, if a borrower makes a false

statement, representation, or pretense or a material misstatement

during the loan application process, the authority, at its option,

may accelerate and declare immediately due and payable all sums

evidenced by the note held by the authority. An acceleration and

declaration of all sums to be due as authorized under this

subdivision and payable as provided in this subdivision is

enforceable in any court of competent jurisdiction. This

subdivision is applicable to secured and unsecured loans.

(x) To collect interest on a real estate loan, the primary

security for which is not a first lien on real estate, at the rate

of 15% or less per annum on the unpaid balance. This subdivision

does not impair the validity of a transaction or rate of interest

that is lawful without regard to this subdivision.

(y) To encourage and engage or participate in programs to

accomplish the preservation of housing in this state available for

occupancy by persons and families of low or moderate income.

(z) To verify for the state treasurer statements submitted by

a city, village, township, or county as to exempt properties under

section 7d of the general property tax act, 1893 PA 206, MCL

211.7d.

(aa) For the purpose of more effectively managing its debt

service, to enter into an interest rate exchange or swap, hedge, or

similar agreement with respect to its bonds or notes on the terms

and payable from the sources and with the security, if any, as

determined by a resolution of the authority.

(bb) To make working capital loans to contractors or

subcontractors on housing projects financed by the authority. The

authority shall submit an annual report to the legislature

containing the amount, recipient, duration, circumstance, and other

related statistics for each capital loan made to a contractor or

subcontractor under this subdivision. The authority shall include

in the report statistics related to the cost of improvements made

to adapt property for use by disabled individuals as provided in

section 32b(5) or (6) or section 44(2)(a).

(cc) Subject to rules of the civil service commission, to

adopt a code of ethics with respect to its employees that requires

disclosure of financial interests, defines and precludes conflicts

of interest, and establishes reasonable post-employment

restrictions for a period of up to 1 year after an employee

terminates employment with the authority.

(dd) To impose covenants running with the land in order to

satisfy requirements of applicable federal law with respect to

housing assisted or to be assisted through federal programs such as

the low income housing tax credit program or the home investment

partnerships program by executing and recording regulatory

agreements between the authority or such municipality or other

entity as may be designated by the authority and the person or

entity to be bound. These covenants shall run with the land and be

effective with respect to the parties making the covenants and

other intended beneficiaries of the covenants, even though there is

no privity of estate or privity of contract between the authority

and the persons or entities to be bound.

(ee) To impose covenants running with the land in order to

satisfy requirements of applicable state or federal law with

respect to housing financed by the authority by executing and

recording regulatory agreements between the authority and the

person or entity to be bound. These covenants shall run with the

land and be effective with respect to the parties making the

covenants and other intended beneficiaries of the covenants, even

though there is no privity of estate or privity of contract between

the authority and the persons or entities to be bound. With respect

to the application of any applicable environmental laws, this

subdivision shall not be construed to grant to the authority any

additional rights, privileges, or immunities not otherwise afforded

to a private lender that is not in the chain of title for the land.

(ff) To participate in programs designed to assist persons and

families whose incomes do not exceed 115% of the greater of

statewide median gross income or the area median gross income

become homeowners where loans are made by private lenders for

purchase by the government national mortgage association, federal

national mortgage association, federal home loan mortgage

corporation, or other federally chartered organizations.

Participation may include providing or funding homeownership

counseling and providing some or all of a reserve fund to be used

to pay for losses in excess of insurance coverage.

(gg) To invest up to 20% of funds held by or for the authority

in escrow accounts for the benefit of the authority or mortgagors

of authority-financed housing in loans originated or purchased by

the authority, under the conditions prescribed in this subdivision

and without the consent of the escrow depositors. In connection

with loans described in this subdivision, the authority may charge

and retain fees in amounts similar to those charged with respect to

similar loans for which the source of funding does not come from

escrow funds. The investment authorized by this subdivision shall

not be made unless both of the following requirements are met:

(i) The return on the loan is approximately equivalent to that

which could be obtained from investments of substantially similar

credit quality and maturity, as determined by the authority.

(ii) The authority agrees to repurchase from its own funds and

at the same prices at which the loans were sold to the escrow

funds, as adjusted for the accretion of discount or amortization of

premium, plus accrued interest, any loans that become delinquent in

excess of 30 days. This subdivision does not obligate the authority

to purchase a delinquent loan so long as with respect to that loan

the authority advances money from its own funds in the amount of

the delinquent payments. The authority's election to advance

payments does not in any manner abate or cure the delinquency of

the loan and the authority may resort to any remedies that would

exist in the absence of that payment.

(hh) To acquire, develop, rehabilitate, own, operate, and

enter into contracts with respect to the management and operation

of real and personal property to use as office facilities by the

authority and to enter into leases with respect to facilities not

immediately necessary for the activities of the authority.

(ii) To make loans to certain qualified buyers and resident

organizations and to make grants to resident organizations as

provided in the following:

(i) The urban homestead act, 1999 PA 127, MCL 125.2701 to

125.2709.

(ii) The urban homesteading on vacant land act, 1999 PA 129,

MCL 125.2741 to 125.2748.

(iii) The urban homesteading in single-family public housing

act, 1999 PA 128, MCL 125.2761 to 125.2770.

(iv) The urban homesteading in multifamily public housing act,

1999 PA 84, MCL 125.2721 to 125.2734.

(jj) To implement and administer a housing and community

development program as described in this act.

Sec. 58. (1) The definitions in section 11 apply to this

chapter unless otherwise provided in this chapter.

(2) As used in this chapter:

(a) "Adjacent neighborhood" means a residential area as

determined by the authority immediately adjoining or near a

downtown area within the same municipality.

(b) ~~(a)~~ "Adjusted household income" means that term as defined

in rules of the authority.

~~(b) "Affordable housing" means residential housing that is~~

~~occupied by low income, very low income, or extremely low income~~

~~households, and results in monthly housing costs equal to no more~~

~~than approximately 1/3 of the adjusted household income of the~~

~~occupying household.~~

properties have been planned, zoned, or used for commercial

purposes for 50 or more years and where a majority of the buildings

are built adjacent to each other as determined by the authority and

up to the public right-of-way. In order to be a downtown area, the

area shall contain a significant number of multilevel, mixed use

buildings and property in the downtown area must be owned by more

than 3 private owners.

(d) ~~(c)~~ "Eligible applicant" means a not-for-profit

corporation, a for-profit corporation, a municipality, a land bank

fast track authority organized under the land bank fast track act,

2003 PA 258, MCL 124.751 to 124.774, 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.

(e) ~~(d)~~ "Extremely low income household" means a person, a

family, or unrelated persons living together whose adjusted

household income is not more than ~~25%~~ 30% of the area median

income, as determined by the authority.

(f) ~~(e)~~ "Fund" means the Michigan housing and community

development fund created in section 58a.

(g) ~~(f)~~ "Low income household" means a person, a family, or

unrelated persons living together whose adjusted household income

is more than 50% but not more than 60% of the area median income,

as determined by the authority.

(h) "Mixed use buildings" means buildings that can be used for

more than 1 purpose, and in any combination, including, but not

limited to, residential housing combined with either commercial or

retail space.

(i) ~~(g)~~ "Multifamily housing" means a building or buildings

providing housing to 2 or more households, none of which is owner

occupied.

(j) "Project" means those activities defined under section

58c.

(k) "Supportive housing" means a rental housing project in

which some or all of the units are targeted to people with

household incomes at or below 30% of area median income and that

provide services, either directly or contracted for, to those

people that include, but are not limited to, mental health,

substance abuse, counseling, and assistance with daily living.

(l) ~~(h)~~ "Very low income household" means a person, a family,

or unrelated persons living together whose adjusted household

income is not more than ~~25% but not more than~~ 50% of the area

median income, as determined by the authority.

Sec. 58a. ~~(1) The Michigan housing and community development~~

~~fund is created in the department of treasury. The fund shall be~~

~~administered by the authority and shall be expended only as~~

~~provided in this chapter.~~

~~(2) The state treasurer shall credit to the fund all of the~~

~~following:~~

~~(a) All receipts, including, but not limited to, dividends and~~

~~interest on the investment of money in the fund and principal and~~

~~interest payments from loans or agreements made from the fund.~~

~~(b) All proceeds of assets received by the authority as a~~

~~result of the default of loans or agreements made under this~~

~~chapter.~~

~~(c) All appropriations, grants, or gifts of money or property~~

~~made to the fund.~~

~~(d) All fees or charges collected by the authority pursuant to~~

~~activities authorized under this chapter.~~

~~(e) Other revenue as provided by law.~~

~~(3) All balances in the fund at the end of a fiscal year shall~~

~~be carried over as a part of the fund and shall not revert to the~~

~~general fund of the state.~~

(1) The Michigan housing and community development fund is

created as a separate fund in the authority.

(2) The fund shall be administered by the authority, and money

in the fund shall be expended only as provided in this act.

(3) The authority shall credit to the fund all amounts

appropriated to the fund or to the authority for the fund and any

other money made available to the authority for the fund from any

other source for the purposes under this act. The authority, on

behalf of the fund, may solicit and accept gifts, grants, labor,

loans, and other aid from any person, government, or entity. The

authority may receive money or other assets from any source for

deposit into the fund, including, but not limited to, federal

funds, gifts, bequests, and donations.

(4) The authority shall invest the money and credit the

earnings from the investments to the fund in accordance with

section 22.

(5) Money appropriated to the fund or to the authority for the

fund shall be available for disbursement by the authority upon

appropriation.

(6) Money in the fund at the close of a fiscal year shall

remain in the fund and shall not lapse to the general fund.

Sec. 58b. (1) The authority shall create and implement the

Michigan housing and community development program for the purpose

of developing and coordinating public and private resources to meet

the ~~affordable~~ housing needs of low income, very low income, and

extremely low income households and to finance projects located in

a downtown area or adjacent neighborhood in this state.

(2) The authority shall identify, select, and make financing

available to eligible applicants from money in the fund or from

money secured by the fund for ~~affordable~~ housing for low income,

very low income, and extremely low income households and for

projects located in a downtown area or adjacent neighborhood. This

subsection does not preclude the authority from using other

resources in conjunction with the fund for a purpose authorized

under this chapter.

~~(3) The authority shall promulgate rules according to the~~

~~administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to~~

~~24.328, providing for the terms and conditions under which~~

~~assistance made under this chapter shall be recaptured.~~

(3) ~~(4)~~ The authority shall develop ~~an annual~~ a biennial

allocation plan providing for the allocation of money from the

fund, according to all of the following:

(a) The allocation plan shall 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.

(b) The allocation plan shall ~~identify eligible applicants,~~

include a preference for special population groups described in

section 58c(2). ~~, and preference for geographic targeting in~~

~~designated revitalization areas including, but not limited to,~~

~~neighborhood preservation areas, state renaissance zones, core~~

~~communities, and federally-designated enterprise community or~~

~~homeownership zones.~~

rental housing projects that do not qualify under preferences for

special population groups ~~, geographic preferences,~~ or other

preferences contained in the allocation plan.

(d) Not less than 30% of the fund shall be earmarked for

projects that target extremely low income households and include at

a minimum ~~both of the following activities:~~

(i~~) Developing~~ developing housing for the homeless, supportive

housing, transitional housing, and permanent housing.

(ii~~) Providing security deposits, supportive services, and~~

~~technical assistance to eligible applicants.~~

(e) A rental housing project assisted by the fund must ~~provide~~

~~affordable housing for households earning no more than 60% of the~~

~~median income~~ 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.

(f) A home ownership project assisted by the fund must ~~provide~~

~~affordable housing for households earning no more than 60% of the~~

~~median income~~ set aside at least 20% of the housing units in the

project for households earning no more than 60% of the area median

income.

(g) Money that has not been committed at the end of a fiscal

year shall not be carried over in the category to which the money

had been allocated during that fiscal year, but shall be

reallocated for the next fiscal year according to the next fiscal

year's allocation plan.

(5) ~~Each year, the authority shall hold public hearings in at~~

~~least 3 separate locations throughout this state on the priorities~~

~~and draft allocation plan for the upcoming year. After the public~~

~~hearings, the authority may make minor modifications to the~~

~~allocation plan necessary to facilitate the administration of the~~

~~Michigan housing and community development program or to address~~

~~unforeseen circumstances.~~ Prior to developing the biennial

allocation plan, the authority shall hold public hearings in at

least 3 separate locations in this state regarding the content of

the biennial allocation plan. The authority may make modifications

to the allocation plan necessary to facilitate the administration

of the Michigan housing and community development program or to

address unforeseen circumstances.

(6) The authority shall issue an annual report to the governor

and the legislature summarizing the expenditures of the fund for

the prior fiscal year including at a minimum a description of the

eligible applicants that received funding, the number of housing

units that were produced, ~~and~~ 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.

(7) ~~In addition to the rules promulgated under subsection (3),~~

~~the authority shall promulgate rules according to~~ The authority may

promulgate rules under the administrative procedures act of 1969,

1969 PA 306, MCL 24.201 to 24.328, to implement this chapter.

Sec. 58c. (1) The authority shall expend money in the fund to

make grants, mortgage loans, or other loans to eligible applicants

as provided in this section to enable eligible applicants to

finance any of the following with respect to housing or home

ownership for low income, very low income, and extremely low income

households and with respect to projects located in a downtown area

or adjacent neighborhood:

(a) Acquisition of land and buildings.

(b) Rehabilitation.

(d) Development and predevelopment costs.

(e) Preservation of existing housing.

(f) ~~Infrastructure~~ Community development projects, including,

but not limited to, infrastructure improvements, economic

development projects, blight elimination, or community facilities.

~~that support housing development.~~

(g) Insurance.

(h) Operating and replacement reserves.

(i) Down payment assistance.

(j) Security deposit assistance.

(k) ~~Supportive services~~ Foreclosure prevention and assistance.

(l) Individual development accounts established under the

individual or family development account program act, 2006 PA 513,

MCL 206.701 to 206.711.

(m) Activities related to ending homelessness.

(n) Assistance to nonprofit organizations, municipalities, and

land bank fast track authorities organized under the land bank fast

track act, 2003 PA 258, MCL 124.751 to 124.774.

(o) Predatory lending prevention or relief.

(2) The authority shall expend a portion of the fund for

housing for ~~special needs populations including, but not limited~~

~~to, the homeless,~~ persons with physical or mental handicaps , and

persons living in ~~rural or~~ eligible distressed areas.

(3) The authority may make a loan to an eligible applicant

from the fund at no interest or at below market interest rates,

with or without security, and may make a loan for predevelopment

financing.

(4) The authority may provide assistance to eligible

applicants for housing units for very low income or extremely low

income households within multifamily housing that is occupied

partly by very low income or extremely low income households and

partly by households that do not qualify as very low income or

extremely low income households, subject to the rules promulgated

by the authority.

(5) The authority may ~~provide funding for projects with 50~~

~~units or less and provide incentives to encourage project~~

~~feasibility and mixed income housing projects that respond to~~

~~community priorities~~ expend money in the fund for all other things

necessary to achieve the objectives and purposes of the fund or

this chapter.

(6) When performing functions under this chapter, the

authority shall consider advice provided by the committee created

under section 58e.

Sec. 58e. (1) The Michigan housing and community development

fund advisory committee is created in the authority. The committee

shall have 10 members. Members of the committee shall include the

executive director of the authority, who shall serve as a nonvoting

ex officio member, and the following 9 members appointed by the

governor with the advice and consent of the senate:

(a) An individual representing housing lenders, developers, or

builders appointed by the governor from a list of 3 or more

individuals nominated by the speaker of the house of

representatives.

(b) An individual representing housing lenders, developers, or

builders appointed by the governor from a list of 3 or more

individuals nominated by the majority leader of the senate.

(d) An individual representing local housing organizations.

(e) An individual representing nonprofit organizations.

(f) An individual representing a local economic development

corporation, a downtown development authority, a corridor

improvement authority, a business improvement district, or a

principal shopping district.

(g) An individual representing a local neighborhood

association or neighborhood improvement authority.

(h) Two other residents of this state.

(2) Except as provided in subsection (3), the term of a member

of the committee appointed by the governor under subsection (1)

shall be 4 years.

(3) Of the members initially appointed by the governor under

subsection (1), 2 members shall be appointed for a term expiring on

November 30, 2008, 2 members shall be appointed for a term expiring

on November 30, 2009, 3 members shall be appointed for a term

expiring on November 30, 2010, and 2 members shall be appointed for

a term expiring on November 30, 2011.

(4) A vacancy on the committee arising for a reason other than

the expiration of a term shall be filled in the same manner as the

original appointment for the remainder of the unexpired term.

(5) Members of the committee shall serve without compensation

but, subject to available funding, may receive reimbursement for

their actual and necessary expenses while attending meetings or

performing other authorized official business of the committee.

(6) The governor shall designate 1 member of the committee to

serve as chairperson of the committee at the pleasure of the

governor. The members of the committee may elect a member of the

committee to serve as vice-chairperson of the committee and may

elect other members of the committee as officers of the committee

as the committee considers appropriate.

(7) The committee may advise the authority on all of the

following:

(a) Recommendations for the biennial allocation plan required

under section 58b.

(b) Expenditures from the fund under this chapter, including

all of the following:

(i) Whether expenditures are distributed fairly and equitably.

(ii) Whether expenditures satisfy housing needs and priorities

in this state.

(iii) Whether expenditures satisfy the economic needs and

priorities of communities benefiting from the expenditures.

(8) The committee may meet with representatives of the

authority, including authority employees and members of the board

of directors of the authority, to discuss and provide advice on

matters relating to the fund.

(9) The authority may provide the committee with meeting

space, supplies, and staff to support the functions of the

committee under this section.

(10) A meeting of the committee shall be conducted as a public

meeting held in compliance with the open meetings act, 1976 PA 267,

MCL 15.261 to 15.275. Notice of the date, time, and place of a

public meeting of the committee shall be given as prescribed in the

open meetings act, 1976 PA 267, MCL 15.261 to 15.275. A majority of

the members of the committee serving constitute a quorum for the

transaction of the committee’s business. The committee shall act by

a majority vote of its serving members.

(11) A member of the committee shall not use for personal gain

information obtained by the member while performing business of the

committee, nor shall a member of the committee disclose

confidential information obtained by the member while conducting

committee business, except as necessary to perform committee

business. The committee shall adopt a code of ethics for its

members and establish policies and procedures requiring the

disclosure of relationships that may give rise to a conflict of

interest. The committee shall require that any member of the

committee with a direct or indirect interest in any matter before

the committee disclose the member’s interest to the committee

before the committee takes any action on the matter.

Sec. 58f. (1) When performing duties under this chapter, the

authority and the committee created under section 58e shall remain

cognizant of the rights of the holders of authority bonds or notes

and the extent to which certain authority bond and note contracts

may require the authority to either maintain sufficient personnel

or contract for services to plan authority programs and to

supervise enforcement and, where necessary, foreclosure of

authority mortgage agreements.

(2) Nothing in this chapter shall be construed to affect the

status of money of the authority controlled by the authority as

state funds appropriated to the authority lose their identity as

state funds upon payment to the authority and become public funds

of the authority solely under the control of the authority and

funds established by or within the authority and are public trust

funds administered by the authority. Nothing in this chapter shall

be construed to impair the obligation of any bond or note issued by

the authority. Bonds and notes issued by the authority are

obligations of the authority and not obligations of this state.

Enacting section 1. The Michigan housing and community

development fund act, 2004 PA 479, MCL 125.2821 to 125.2829, is

repealed.