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August 18, 2023
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MSHDA Board approves Qualified Allocation Plan for Low-Income Housing Tax Credits, bond transactions and new affordable housing rehabilitation projects
Lansing, Mich. – The Michigan State Housing Development Authority (MSHDA) Board adopted the proposed 2024-25 Qualified Allocation Plan governing its Low-Income Housing Tax Credit program during its meeting on August 17, while also approving bond transactions and funding for two housing rehabilitation projects.
A Qualified Allocation Plan (QAP) is required by federal and state law to guide the allocation of Low-Income Housing Tax Credits (LIHTC) to housing developers whose projects meet specific criteria for preserving and/or creating affordable housing. As part of the 2024-25 QAP, MSHDA intends to hold one competitive funding round for 2024 LIHTC and two competitive funding rounds for 2025 LIHTC. These funding rounds will be publicized on MSHDA’s website at Michigan.gov/MSHDA.
“Our goals, and the direction we took for the 2024-25 plan, focus on key areas our stakeholders have vocalized—including racial equity efforts and policies, differentiation between urban and rural neighborhoods, establishing increased accessibility and more,” said MSHDA Director of Development Chad Benson.
A $17 million loan for the acquisition and rehabilitation of the Traditions of Holland Apartments in Holland was also approved by the MSHDA Board. The development is made up of 120 units reserved for households at or below 60% of area median income (AMI). Twelve units will be reserved for households at or below 40% of AMI. The development’s comprehensive rehabilitation—including improvements to windows, appliances, drywall, sheet metal, carpentry, electrical, HVAC and more—is anticipated to create three permanent jobs and 34 temporary jobs.
Funding was also approved for Lexington Village in Lexington. All 351 residential spaces, including 200 senior living units, 151 family units and 26 accessible units, will be substantially rehabilitated and updated. The Section 8 subsidy for the project is being preserved and extended for 20 years.
In addition, the Board approved 2023 Series B, C and D Single-Family Mortgage Revenue Bonds. The bond proceeds will be used to fund single-family mortgages, down payment assistance loans, service release fees and cost of issuance.
The 2023 B bonds, currently anticipated to be $281.4 million, will be issued as tax-exempt fixed rate bonds. The 2023 C bonds will be issued as taxable fixed rate bonds and are currently anticipated to be $105.8 million. The 2023 D bonds will be issued as taxable variable rate demand obligations, supported by a standby bond purchase agreement with the Federal Home Loan Bank of Indianapolis. The Series D bonds are currently anticipated to be $35.2 million.
The Authority plans to transfer an interest rate swap agreement from a prior bond issue to the 2023 Series D bonds in an effort to reduce its cost of borrowing. The Authority is restricted by the Internal Revenue Service to a fixed spread between the bond cost and its lending rates.
“Any benefit from reducing MSHDA’s cost of debt is passed on to our borrowers,” said Jeffrey Sykes, MSHDA chief financial officer. “The Authority structures its bond deals, balancing risk and debt costs to produce lower rates that can help make homeownership possible for low to moderate income families.”
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