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Residential Leases & Program Contracts

The Office of Leases and Contracts, under delegation agreement with Department of Management and Budget, is responsible for the administration of approximately 600 residential leases with over $12 million in annual rents for homes which serve persons in mental health programs across the State. This function includes processing changes in the lessee/lessor relationship, such as documentation of the sale of the properties and the assignment of lease, changes in payee arrangements, processing of renewal leases, rental agreements and termination agreements, and the production of estoppel letters and subordination, non-disturbance, and attornment agreements.

A major function of the office is to process the several varieties of annual adjustments to lease. The FHLBB indexed leases were established during the period of unusually high interest rates, and involve having the home's base rent amount recalculated annually according to a formula using the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders. There are approximately 250 of the existing leases which are financed through the Michigan State Housing Development Authority (MSHDA). MSHDA maintains escrow accounts for each of these properties for the payment of real estate tax and insurance costs. The adequacy of these accounts and their supporting monthly escrow payments is reconciled annually and adjusted as needed. The remainder of leases, which includes the FHLBB indexed leases, have an annual reconciliation done between the amount of tax and insurance escrow payments made as part of the rental payments, and the lessor's actual costs within a calendar year.

The office maintains a process of regular inspection of the leased facilities. The maintenance needs identified in these inspections are directed to the community mental health services programs (CMHSPs)/Providers and Lessors, as appropriate. This helps to ensure quality of housing and to limit state lease close out costs.

The office provides as requested technical assistance to the CMHSPs regarding home development and property management, and consults with MDHHS staff regarding property/building issues affecting permanency planning and waiver programs.


Administers approximately 600 residential leases with over $12.5 million in annual rents.


Distribution of Residential Resources Percent of Homes
Oakland County CMHSP 32%
Detroit-Wayne CMH Agency 15%
Macomb County CMHSP 12%
Genesee County CMHSP 6%
Central Michigan CMHSP 3%
39 other CMHSPs 32%

Services over 200 contracts with local and non-local health agencies including but not limited to the following program areas: WIC, Family Planning, Childhood Lead Poisoning Prevention, and Maternal, Infant and Adolescent Health.

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