Bill Summary – FastDemocracy

Legislative Analysis
MICHIGAN STATE HOUSING DEVELOPMENT AUTHORITY                                 Phone: (517) 373-8080
                                                                             http://www.house.mi.gov/hfa
House Bill 5030 as reported from committee                                   Analysis available at
Sponsor: Rep. Betsy Coffia                                                   http://www.legislature.mi.gov
House Bill 5031 (proposed substitute H-2)
Sponsor: Rep. Ranjeev Puri
House Bill 5032 as reported from committee
Sponsor: Rep. Will Snyder
Committee: Economic Development and Small Business
Complete to 6-11-24
SUMMARY:
       House Bills 5030, 5031, and 5032 would each amend the State Housing Development
       Authority Act to modify provisions related to the Michigan State Housing Development
       Authority (MSHDA), including those related to the maximum cancellation prices of notes or
       bonds purchased by the authority, the scope of participation of the designated resident member
       of the authority, and the sales price limit for certain housing loans.
       House Bill 5030 would amend a provision that currently allows MSHDA to purchase its own
       notes or bonds, which must upon purchase be canceled at a price that does not exceed either of
       the following:
           • If the notes or bonds are then redeemable, the redemption price then applicable plus
                accrued interest to the next interest payment date.
           • If the notes or bonds are not then redeemable, the redemption price applicable on the
                first date after the purchase on which the notes or bonds become subject to redemption,
                plus accrued interest to that date.
       The bill would change this provision to allow MSHDA to cancel the notes or bonds as
       described above, rather than requiring MSHDA to do so immediately.
       MCL 125.1430
       House Bill 5031 would delete a provision that now provides, to the extent required by federal
       law, that the designated resident member of MSHDA can take part in, vote on, and exercise
       the powers of the authority only concerning decisions related to the administration, operation,
       and management of federal public housing programs and tenant-based assistance programs
       established under section 8 of the United States Housing Act of 1937, 42 USC 1437f. 1 The bill
       would retain a provision that prohibits the designated resident member from taking part in,
       voting on, or exercising the powers of the authority in a matter that uniquely applies to them
       and does not generally apply to all residents. (The designated resident member appointed to
1
 https://www.govinfo.gov/content/pkg/USCODE-2011-title42/pdf/USCODE-2011-title42-chap8-subchapI-
sec1437f.pdf.
House Fiscal Agency                                                                           Page 1 of 4
          the authority must be an eligible resident who is directly assisted by a federal housing program
          administered through MSHDA.)
          MCL 125.121
          House Bill 5032 would change the maximum purchase price or appraised value for certain
          loans under the act from a fixed dollar amount to a percentage of the applicable average area
          purchase price.
          The act allows MSHDA to 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 one- to four-family housing units, including a residential condominium
          unit. Among the requirements that apply to such a loan, the purchase price or appraised value
          (for a refinancing) cannot exceed $224,500 for a one- or two-family unit, $261,625 for a three-
          family unit, or $299,000 for a four-family unit.
          The bill would delete the limits described above and would instead provide that the purchase
          price or appraised value, as applicable, cannot exceed 90% of the average area purchase price
          applicable for the housing unit. The average area purchase price would have to be determined
          in accordance with section 143(e) of the federal Internal Revenue Code or any other regulations
          promulgated under that provision.
          In addition, the act allows MSHDA to increase the purchase price limit by an amount that will
          cover unexpected cost increases during construction or improvements to adapt property for use
          by disabled individuals, up to a limit of $3,500. The bill would increase this limit to $10,000.
          MCL 125.1444
BACKGROUND:
          House Bills 5030, 5031, and 5032 are reintroductions of House Bills 4948, 4950, and 4951,
          respectively, of the 2021-22 legislative session. 2 All three of those bills were passed by the
          House and referred to the Senate Finance committee but were not reported.
BRIEF DISCUSSION:
          According to committee testimony, the bills would streamline MSHDA operations, which
          would allow the authority to better use its resources to address Michigan’s accessible housing
          shortage.
          Supporters believe that House Bill 5030 would allow MSHDA to make better use of its
          funding. Since a portion of MSHDA’s debt is variable rate debt, and market disruptions (such
          as the COVID-19 pandemic) can make these rates unreasonably high, allowing MSHDA to
          hold onto its debt until such a disruption passes would allow it to direct more money toward
          housing initiatives. MSHDA estimates that this change could save millions of dollars.
2
    https://www.legislature.mi.gov/documents/2021-2022/billanalysis/House/pdf/2021-HLA-4948-5F9BDE21.pdf
House Fiscal Agency                                               HBs 5030, 5031 (H-2), and 5032 Page 2 of 4
       Supporters of House Bill 5031 suggest that allowing MSHDA’s resident board member to have
       full voting rights would allow that individual to provide their input on all MSHDA programs
       and would reduce marginalization of that member. Further, the bill would reduce legal
       questions about quorums and address other operational challenges.
       According to committee testimony, House Bill 5032 is intended to bring MSHDA’s sales price
       limits, which have not been updated since they were established in 2009, into closer alignment
       with neighboring states. The change could allow MSHDA to provide more services to more
       people, such as financing necessary accommodation improvements for disabled individuals.
       Supporters argue that the bill could help more people attain homeownership by allowing more
       MSHDA program participants to compete with cash buyers.
FISCAL IMPACT:
       The bills would have an indeterminate fiscal impact on the administration and operational costs
       of MSHDA that would depend on actions taken by the authority under their provisions.
       House Bill 5030 would presumably provide additional flexibility that would allow MSHDA
       to better time the cancellation of the notes and bonds purchased to generate a more favorable
       financial outcome when MSHDA elects to purchase its debt. Any fiscal impact would be
       subject to the market conditions at the time of purchase and cancellation.
       House Bill 5031 would have an indeterminate, but likely negligible, fiscal impact on
       MSHDA’s administration costs.
       House Bill 5032 would increase MSHDA’s ability to participate in larger MSHDA
       homeownership loans. According to MSHDA, this would increase the number of persons
       served and increase MSHDA’s revenues. Moreover, this increase would raise the purchase
       price limit to levels provided at surrounding state housing finance agencies. In addition, the
       increase of the purchase price limit from $3,500 to $10,000 for unexpected costs during
       construction for disabled individuals would allow MSHDA to finance more improvements to
       properties for disabled individuals.
POSITIONS:
       Representatives of the following entities testified in support of the bills:
          • Michigan State Housing Development Authority (3-5-24)
          • Michigan Mortgage Lenders Association (10-12-23)
       A representative of the Northern Michigan Chamber Alliance testified in support of House Bill
       5030. (3-5-24)
       A representative of the Home Builders Association of Michigan testified in support of House
       Bill 5032. (10-12-23)
       The following entities indicated support for the bills:
          • Home Builders Association of Michigan (4-23-24)
          • Housing North (3-5-24)
House Fiscal Agency                                            HBs 5030, 5031 (H-2), and 5032 Page 3 of 4
           •   Michigan Realtors (4-23-24)
           •   Northern Michigan Chamber Alliance (10-12-23)
           •   Petoskey Regional Chamber of Commerce (10-12-23)
           •   Traverse Connect (10-12-23)
       The following entities indicated support for House Bill 5030 (3-5-24):
          • Cadillac Chamber of Commerce
          • Petoskey Regional Chamber of Commerce
          • Traverse Connect
       The Michigan Bankers Association indicated support for House Bill 5032. (10-12-23)
       The Rent is Too Damn High indicated a neutral position on the bills. (10-12-23)
                                                          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                                           HBs 5030, 5031 (H-2), and 5032 Page 4 of 4
Statutes affected: 
Substitute (H-2): 125.1421
House Introduced Bill: 125.1421
As Passed by the House: 125.1421