Modified Pass-Through Program
Section 44c of P.A. 346 of 1966, as amended, (the "Act") (MCL 125.1401 et seq.) allows the Authority to issue bonds to finance multifamily housing under what has been called the "pass through" program. This program, originally authorized in 1984, is self-contained within Section 44c of the Act.
The pass-through program differs from the Authority's historic role of direct lending in that the obligations issued are limited rather than general obligations of the agency, are not secured by the Authority's capital reserve capital account and are not backed by the moral obligation of the state. The bonds instead are secured solely by the assets of the borrower, the properties being financed, and by some form of credit enhancement provided by the borrower. Other than reviewing the proposed credit enhancement and certain threshold tests for participation in the Housing Tax Credit program, Authority staff does not underwrite these loans.
Pass-through tax-exempt bond financing for 501(c)(3) nonprofit-sponsored housing projects remains available under the terms of Section 44c of the Act. These proposals require neither unified volume cap nor Housing Tax Credit.
If you have questions regarding this program, please contact the Director of Legal Affairs at 517-373-8295.