Bill Summary – FastDemocracy

Legislative Analysis
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EXPAND HOUSING AND COMMUNITY DEVELOPMENT
                                                                              http://www.house.mi.gov/hfa
PROGRAM TO MIDDLE-INCOME HOUSEHOLDS
                                                                              Analysis available at
Senate Bill 293 (S-1) as reported from House committee                        http://www.legislature.mi.gov
Sponsor: Sen. Kristen McDonald Rivet
House Committee: Economic Development and Small Business
Senate Committee: Economic and Community Development
Complete to 10-18-23
SUMMARY:
        Senate Bill 293 would amend Chapter 3A of the State Housing Development Authority Act to
        expand the Housing and Community Development Program to include housing projects for
        middle-income households and no longer require the program be restricted to downtown areas.
        Currently, the Michigan Housing and Community Development program finances projects and
        coordinates resources to meet the needs of low-income, very low-income, and extremely low-
        income households located in a downtown area or adjacent neighborhood. The program is
        administered by the Michigan State Housing Development Authority (MSHDA), which
        allocates money for the projects from the Michigan Housing and Community Development
        Fund (HCDF). 1
                Low-income household means an individual, family, or unrelated individuals living
                together whose adjusted household income is more than 50% but less than 60% of the
                area median income (AMI), as determined by MSHDA.
                Very low-income household means an individual, family, or unrelated individuals
                living together whose adjusted household income is not more than 50% of the AMI, as
                determined by MSHDA.
                Extremely low-income household means an individual, family, or unrelated
                individuals living together whose adjusted household income is not more than 30% of
                the AMI, as determined by MSHDA.
                Downtown area means an area where at least 20 contiguous properties have been
                planned, zoned, or used for commercial purposes for at least 50 years and where most
                of the buildings are adjacent to each other and up to the public right-of-way. Downtown
                areas must contain a significant number of multi-level mixed-use buildings with
                property owned by at least four private owners.
                Adjacent neighborhood means a residential area that immediately adjoins or is near a
                downtown area within the same municipality. 2
1
  For more information on the Michigan Housing and Community Development Fund, see:
https://www.michigan.gov/mshda/-/media/Project/Websites/mshda/developers/lihtc/Folder2/HCDF-Overview.pdf
2
  Senate Bill 293 would remove this definition.
House Fiscal Agency                                                                             Page 1 of 4
           Under Senate Bill 293, the program could also serve middle income households and would no
           longer be restricted to downtowns and adjacent neighborhoods.
                    Middle income household would mean an individual, family, or unrelated individuals
                    living together whose adjusted household income is not more than 120% of the AMI,
                    as determined by MSHDA.
           Eligible funding uses
           Chapter 3A authorizes MSHDA to spend money in the Housing and Community Development
           Fund to enable eligible applicants to finance certain activities with respect to housing projects,
           including assistance to nonprofit organizations, municipalities, and land bank authorities.
           Under Senate Bill 293, this assistance would specifically include support of capacity building,
           local and regional planning, and housing studies. The bill would also allow community
           development financial institutions to receive the funding.
                    Eligible applicant means a nonprofit corporation, a for-profit corporation, a
                    municipality, a land bank organized under the Land Bank Fast Track Act, or a
                    MSHDA-approved partnership organized to develop and support affordable housing. 3
           Additionally, eligible applicants for housing units for middle-income households living in a
           multifamily housing structure that is also occupied by noneligible households would be able to
           receive MSHDA assistance. (This provision currently applies to eligible applicants for very
           low-income and extremely low-income households.)
           Allocation plans
           MSHDA is required to develop a biennial allocation plan for the Housing and Community
           Development Fund that contains a formula for distributing money throughout the state based
           on the number of people experiencing poverty, economic distress, and housing distress in
           various regions of the state. Before developing the plan, MSHDA must hold public hearings in
           at least three separate locations regarding its contents.
           Senate Bill 293 would require MSHDA to provide an option for virtual participation in all
           public hearings prior to the development of the plan, and MSHDA would have to utilize
           additional methods to gather public comment on an allocation plan that target engagement with
           people with disabilities; people with limited English proficiency; and people from low-income,
           very low-income, and extremely low-income households.
           The HCDF would no longer be required to allocate at least 30% of its funding for projects that
           target extremely low-income households; housing for the homeless; and supportive,
           transitional, and permanent housing. It also would no longer be required to allocate 25% of its
           funding for rental housing projects that do not qualify under preferences for special population
           groups or other preferences contained in the allocation plan. Additionally, a rental or home
           ownership project assisted by the fund would no longer have to designate at least 20% of the
           units in the project for households that earn up to 60% of the area median income.
3
    The definition of “eligible applicant” would be amended to reflect changes made by SB 293.
House Fiscal Agency                                                       SB 293 (S-1) as reported   Page 2 of 4
        MSHDA would no longer be specifically required to expend a portion of the fund for housing
        for people with disabilities and people living in eligible distressed areas, 4 but the allocation
        plan would have to consider the number of people with disabilities and the number of
        accessible housing units in various regions of the state. The plan would also have to consider
        the availability and adequacy of alternative funding to address the housing needs of people
        with disabilities, low-income households, very low-income households, and extremely low-
        income households.
        Additional provisions
        The annual report that MSHDA is required to submit to the governor and the legislature that
        summarizes the expenditures of the Michigan Housing and Community Development Fund for
        the prior fiscal year would have to be made available to the public on MSHDA’s website. 5
        Additionally, the bill would require MSHDA to consider the advice provided by the Statewide
        Housing Partnership, rather than the HCDF Advisory Committee, when performing functions
        under Chapter 3A. 6 (If the partnership is dissolved, MSHDA would have to create an advisory
        council with members assigned by the MSHDA director that represent the same interests as
        the Statewide Housing Partnership.)
        MCL 125.1458 et seq.
BRIEF DISCUSSION:
        According to committee testimony, removing some of the restrictions on the Housing and
        Community Development program would grant MSHDA greater flexibility in funding the
        state’s regional housing plans and would allow MSHDA to better address the various housing
        challenges that the state currently faces, particularly the lack of middle-income housing.
FISCAL IMPACT:
        The bill would expand the Michigan Housing and Community Development Program to also
        include services to middle-income households. The bill would also delete the requirement that
        projects receiving funding must be in a downtown area or in an area adjacent to a downtown
        and would remove the current requirements that specific percentages of the fund be allocated
        for certain low-income households and housing types. These changes would have minimal
        direct fiscal impact on the Department of Labor and Economic Opportunity (LEO) and on local
        units of government. Any additional costs to LEO would be related to increased administrative
        expenses to the authority from the bill's requirements that virtual participation must be provided
        for all public meetings held while developing the biannual allocation plan and that the authority
        must employ alternative methods to engage with people with disabilities, people with limited
        English proficiency, and low-income households.
4
  For more information on and a list of eligible distressed areas, see: https://www.michigan.gov/mshda/-
/media/Project/Websites/mshda/about/reports/MSHDA-EDA-List.pdf
5
  The report would no longer have to include the number of downtown areas and adjacent neighborhoods that received
financing.
6
  Executive Order 2022-10 created the Statewide Housing Partnership Council:
https://www.michigan.gov/whitmer/-/media/Project/Websites/Whitmer/Documents/Exec-Orders/EO-202210--
Statewide-Housing-Partnership-220907-final-signed.pdf. The Council is set to dissolve on September 6, 2024.
House Fiscal Agency                                                     SB 293 (S-1) as reported      Page 3 of 4
POSITIONS:
       A representative of the Michigan State Housing Development Authority testified in support of
       the bill. (9-12-23)
       The following entities indicated support for the bill:
          • Community Economic Development Association of Michigan (9-12-23)
          • Home Builders Association of Michigan (10-3-23)
          • Michigan Coalition to End Domestic and Sexual Violence (9-12-23)
          • Michigan Housing Council (9-12-23)
          • Michigan Realtors (10-3-23)
          • Michigan Townships Association (9-12-23)
                                                          Legislative Analyst: Holly Kuhn
                                                               Fiscal Analyst: Viola Bay Wild
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency                                              SB 293 (S-1) as reported    Page 4 of 4
Statutes affected: 
Substitute (S-1): 125.1458
Senate Introduced Bill: 125.1458
As Passed by the Senate: 125.1458