Michigan State Housing Development Authority
The Authority’s Act permits the Authority to participate in "conduit” or "pass-through" financings in which the bonds issued to finance a development are a limited obligation of the Authority; the bonds are not secured by the Authority's capital reserve capital account; and the bonds are not backed by the moral obligation of the State of Michigan. Instead, the bonds are secured by the revenues of the borrower, the real and personal property being financed, and a form of credit enhancement acceptable to the Authority.
Projects initiated under the Pass-Through Short-Term Bond program have historically been credit enhanced with a Credit Enhancement and Investment Agreement and are refinanced within 36 months following the issuance of the bonds through the use of a Federal Housing Administration (FHA) insured Ginnie Mae (GNMA) mortgage or other similar financing source. The refinancing occurs after construction or substantial rehabilitation of the development has been completed – at which time the program bonds are redeemed in whole.
Although the bonds issued under the Pass-Through Short-Term Bond program are only outstanding for a short period of time, all of the statutory and other requirements of the pass through program would apply. Those requirements are summarized in the program statement below.
All proposals are subject to available volume cap, as made available by the Michigan Department of Treasury and as determined appropriate by the Authority. Volume cap may be allocated to qualified projects under this program provided that said projects may not have a combined bond amount greater than $30 million. This program will terminate at the earliest of: 1) the Authority’s regularly scheduled July 2019 meeting; or 2) the Authority’s regularly scheduled June 2019 meeting if there is no July 2019 meeting; or 3) the $30 million volume cap is fully subscribed. For a project to be included in the $30 million ceiling, a project must have been approved by the Authority for an inducement resolution at or before the Authority’s July 2019 board meeting. Any volume cap remaining upon termination of the program (as outlined above) will no longer be available to the program nor will it be added to any subsequent reinstatement of the program that may occur. Once the program has terminated, the Authority will review the program and determine whether, and under what conditions, to extend the program.