Michigan Low-Income Housing Tax Credit Program for developments also using the Direct Lending Program
Program Guidelines as of October 15, 2026
Program Summary
The Michigan Low-Income Housing Tax Credit Program (“MI LIHTC”) is a state tax credit that functions as a companion to the federal 4% Low-Income Housing Tax Credit (LIHTC). As designed, approximately half of the annual MI LIHTC will be used for qualifying projects at the Authority’s discretion. Projects must conform to all regulations outlined in Public Act 23 of 2026. Additionally, all projects seeking direct lending from the Authority that are applying for MI LIHTC will be required to comply with the requirements outlined in this Program Statement as well as all the requirements outlined in any applicable MI LIHTC & Gap Funding Notice of Funding Availability (“NOFA”), the Authority Multifamily Direct Lending Program Parameters, Multifamily Standards of Design, and other applicable requirements of the Authority's Direct Lending Program.
Eligible Projects
Projects applying for MI LIHTC must be located within the state of Michigan, include a qualified low-income building, and be placed in service on or after January 1, 2027. Additionally, projects must be eligible for both of the following:
- Federal 4% LIHTC under Section 42(c) of the Internal Revenue Code, 26 USC 42.; and
- A Tax-Exempt Bond loan financed with bonds issued by the Authority in conjunction with the Direct Lending Program.
More information regarding specific location targeting, project types, selection criteria, and other applicable requirements will be available in the NOFA that is issued prior to each funding round.
Direct Lending Funding Round Timing
The Authority will offer one funding round per year pursuant to a NOFA in which MI LIHTC and other Authority Gap Funding sources will be made available for projects in the Direct Lending Program. The Authority reserves the right to offer additional funding rounds as available resources allow, in the Authority’s discretion. Any additional funding rounds will be subject to this Program Statement and any applicable NOFA.
It is anticipated that the NOFA document will include both Authority Gap Funding sources and MI LIHTC for purposes of addressing financing gaps for eligible projects under the Direct Lending Program. The NOFA will identify the amount of funding being made available, the timeline that NOFA projects will be expected to achieve, any funding categories that the Authority identifies, the selection criteria for determining which developments will receive an award of Authority Gap Funding and/or MI LIHTC, and other applicable project requirements. The application process for MI LIHTC will follow the process outlined in each applicable NOFA. At this time, it is anticipated that Direct Lending projects applying under a NOFA will follow the process of first submitting a Notice of Intent to Apply and then submitting a Full Application, as has been the process in past NOFAs. It is also anticipated that all applications will be due on the same day, to be identified in the NOFA document. The Authority may adjust this process as determined necessary, including requiring Full Applications submitted up front.
If an application is received for MI LIHTC funding, it will be considered withdrawn from all other MSHDA application rounds and programs.
Any projects that do not require Authority Gap Funding or MI LIHTC will continue to be accepted for processing at any time during the year.
How to Apply
All Direct Lending projects, including those that are seeking MI LIHTC, will be submitted through the Authority’s Rental Development online application portal. Information regarding how to set up a project file and submit an application will be available on the Authority’s website and in conjunction with the NOFA document to be released prior to the round. If there are technical issues, MSHDA may determine additional methods to submit applications.
Application Materials
Required application submission materials will be described in the NOFA document. Direct Lending projects applying under a NOFA are expected to follow the multistaged process of first submitting a Notice of Intent to Apply Submission and then submitting a Full Application prior to internal review, as has been the process in past NOFAs. This process is subject to change, at the Authority’s discretion, in future offerings.
Complete Application
In order to be accepted for consideration and to secure its place in line, a fully complete submission must be submitted with all required information at each required stage (Notice of Intent to Apply, Full Application, and all applicable exhibits, addenda, and documentation). Submissions that are incomplete, including those that lack required documentation, will not be accepted for processing.
Project Selection Process
Authority staff will review and rank applications in accordance with the criteria that are established in the NOFA document for the funding round and statutory requirements. Selection criteria may be adjusted from round to round as necessary to ensure the most effective utilization of the resource, but will be set forth in the NOFA(s) preceding such rounds.
Exact Selection Criteria will be identified in each NOFA document. Selection Criteria MAY include but not be limited to the following areas:
Housing Need (as determined by meeting two of the three criteria below):
- Household Growth: Based on projected household growth in a minor civil division into 2035. To qualify, an area's expected increase in households must be in the top third of the distribution of all MCDs (60 households).
- Older Housing Stock: Based on Census data on the number of units in a minor civil division built before 1970. To qualify, an area's count of these types of units must be in the upper third of the distribution (at least 600).
- Cost Overburden: Based on Census data on the number of households spending more than 30% of their incomes on shelter costs. To qualify, the number of cost-burdened households in an area must be in the upper third of the distribution (430 households).
Development Experience
- Development teams that contain an ownership member who has successfully completed a LIHTC project or that are utilizing a development team where all members (consultant, attorney, management agent, architect, general contractor, etc.) have LIHTC experience. All members of the development team must be in good standing at the time of application submission.
Poor Previous Participation
- Applicants who are receiving negative points as part of the federal LIHTC process will be subject to negative points under the applicable NOFA or suspended as part of the MI LIHTC selection process. The Authority reserves the right to deny an application if it is determined that an applicant is suspended in other states or under different programs. Additionally, application scores will be tracked to ensure that projects are achieving their scores. If the Authority determines that final project deviates from the awarded score (in any of the scoring criteria contained in the applicable NOFA), the developer/sponsor (and all related parties) may be subject to negative points for twelve months.
MI LIHTC Efficiency
- Projects that demonstrate efficient use of the resource. The Authority will establish a formula for evaluating this based on equity pricing, LIHTC per unit, and project size.
Rent/Income Targeting
- Projects that maximize long-term affordability and serve lower income households through committing to deeper rent/income targeting
Accessibility
- Projects that thoughtfully incorporate accessibility features into the development
Michigan Manufacturing
- To the extent economically efficient as determined by the Authority, projects must utilize products that are Manufactured in Michigan, as defined below.
The above criteria is a general outline that will be used by MSHDA to select projects for funding. Any of the criteria above can be adjusted, as necessary, with at least 30-days notice by MSHDA prior to the application due date by publishing the adjustments on MSHDA’s website.
MI LIHTC Terms
MI LIHTC is a six-year state housing credit that is designed as a companion credit to the federal 4% LIHTC. Projects that receive MI LIHTC will have regulatory restrictions that mirror the federal 4% LIHTC restrictions. A recapture of federal 4% LIHTC will trigger a recapture of MI LIHTC.
MI LIHTC will not trigger any additional requirements beyond what is included in Authority Direct Lending program guidelines. Applicants should be aware that accepting some alternative gap funding sources for the project may still trigger other federal requirements.
It is not the intent of this Program Statement to conflict with any federal requirements associated with the LIHTC program. Further program clarifications will be addressed through a Frequently Asked Questions document on the MSHDA website or other clarification memorandums, as necessary.
MI LIHTC Documentation
Projects approved for MI LIHTC will initially be issued an Approval Notice from the Authority. The Approval Notice will generally outline the amount of MI LIHTC being reserved for the project, project details, required deadlines, etc. The amount of MI LIHTC the project can utilize will be limited to the amount listed in the Approval Notice.
At or prior to closing, approved projects will execute a Regulatory Agreement that will be recorded against the property at the appropriate office of the Register of Deeds.
At completion of the project (construction or rehab completion), the owner will submit to the Authority a Final Cost Certification and Request for Issuance of Eligibility Statement. “Completion” is deemed by the Authority to be equivalent to “placed in service” as that phrase is used in LIHTC guidance. Upon Authority staff review and approval, the Authority will issue an Eligibility Statement to the project owner. The Eligibility Statement will, at a minimum, state the amount of the MI LIHTC that may be claimed for an applicable tax year of the credit period. NOTE: The Eligibility Statement is intended to be similar in function to the IRS Form 8609 that will be issued for the federal 4% LIHTC.
MI LIHTC Limits
The amount of MI LIHTC that a project is eligible for will be determined based on the following factors:
- The total amount of MI LIHTC awarded to any project may not exceed the adjusted amount of federal 4% LIHTC that the project qualifies for. For example, if a project qualifies for an annual federal 4% LIHTC equal to $1,000,000 ($10,000,000 over 10-years), the amount of MI LIHTC cannot exceed $1,666,666 ($10,000,000 over 6-years)
- The total amount of MI LIHTC a project receives cannot exceed the amount needed for feasibility, as determined by the Authority. Authority staff will perform a Gap Calculation as part of their analysis to ensure that the project is not receiving more MI LIHTC than necessary to be feasible.
Developer/Owner Contribution
Developers/owners will be required to make a required contribution (for example, deferred developer fee or sponsor loan) to the project. The amount of developer/owner contribution will be established in the NOFA document prior to each MI LIHTC round.
Manufactured in Michigan
As a threshold requirement, all projects will be required to certify that to the extent economically efficient to the project they will utilize building components during construction or rehabilitation that are manufactured in Michigan. The Authority reserves the right to penalize owners/sponsors who do not comply with this requirement.
Manufactured in this state is defined as follows:
- For iron or steel products, all manufacturing processes, from the initial melting stage through the application of coatings, occurred in this state.
- For manufactured products, the final point of manufacture for the finished product is a facility physically located within the borders of this state, regardless of the origin of the subcomponents or raw materials used in the assembly or production of said product.
- For construction materials, all manufacturing processes for the construction material occurred in this state.
Application Limits
In an effort to ensure efficient use of MI LIHTC resources, one of the following application limits will be required:
- A development company (or Principal) will be eligible to receive no greater than 12.5% of the total annual MI LIHTC (annual amount includes both Direct Lending and Pass-Through). If a Principal has not exceeded its annual 12.5% limit, and there is enough room under the per Principal award limits to fund 90% of the proposed project, then the Authority, in its discretion, will fully fund that project.
- A development company (or Principal) will be limited to submitting two applications per NOFA if the total amount of MI LIHTC requested by the two applications exceeds the 12.5% limit above.
For this purpose, a Principal is defined as any person or entity receiving a portion of the developer fee.
Parties that have an identity of interest may be treated as a single developer (or Principal) for purposes of the cap if the Authority concludes, based on the relevant facts and circumstances, that the submission of an application by one or more of the applicants is intended, in whole or in part, as a means of circumventing the per-Principal cap.
MI LIHTC in projects with co-developers will count against the per-Principal limit based upon the percentage of interest in the developer fee, including any costs or other fees that would typically be included in and paid from the developer fee such as developer guaranty fees, and consulting fees (excluding fees to a third party, non-related construction manager included and paid from the construction contract). For example, if co-developers retain a fifty percent (50%) interest each in the developer fee, fifty percent (50%) of the MI LIHTC will be counted against each of the developer's per-Principal caps. Parties that have an identity of interest may be treated as a single developer (or Principal) for purposes of the cap if the Authority concludes, based on the relevant facts and circumstances, that the submission of an application by one or more of the applicants is intended, in whole or in part, as a means of circumventing the annual credit ceiling per-Principal cap.
Underwriting Standards
MI LIHTC projects seeking funding in the Direct Lending program will be subject to underwriting standards and procedures as outlined in the Multifamily Direct Lending Parameters.
Approval/Closing Timeline
Upon receipt of Notice of Intent to Apply submissions, Authority staff will review the submissions for completeness and will rank the completed applications for projects in accordance with the Selection Criteria outlined in the published NOFA for the funding round. From there, projects will be required to strictly follow all timeline requirements (for example, Full Application due date, Loan Committee approval dates, Authority Board approval dates, Initial Closing dates, etc.) as listed in the NOFA document in order to maintain their ranking. Projects that do not meet these required timelines will be removed from the process and the MI LIHTC will be either awarded to a different project or carried over to the following calendar year. Applications or projects denied for these reasons may reapply in future rounds. Authority staff maintains the discretion to decline to review projects requesting MILIHTC
after the full, annual, statutory allotment of credits has been achieved. This policy is to focus staff resources on projects moving forward in order to enhance processing speed.
Projects that are approved by Authority staff and that are ranked high enough to be awarded credits will receive a Staff Letter indicating that the review has been completed, required deadlines, and that the full approval is contingent on the Authority Loan Committee approval, Authority Board approval, and other required due diligence approvals.
MI LIHTC Compliance Requirements
MI LIHTC projects will be subject to the same compliance monitoring procedures and requirements as federal 4% LIHTC projects. Please see the Authority's LIHTC Compliance manual for details.
Rural Projects
Statutorily, but only to the extent the Authority receives a sufficient number of completed applications for projects that are located in rural areas, not less than 30% of the annual MI LIHTC will be allocated to projects in rural areas defined as a city, village, or township with a population of 35,000 or less, or an area designated as rural as defined by the United States Department of Agriculture or the United States Census Bureau.
Of the statutorily required amount above (30%), MSHDA will seek to allocate one half (1/2) of that amount to projects meeting eligibility under the USDA RD Multifamily Housing area definition of rural.
Federal 4% LIHTC
Projects receiving MI LIHTC must also meet all threshold requirements for the federal 4% LIHTC (including minimum required score) under the Qualified Allocation Plan in place at the time of application.
Fees
MI LIHTC projects will be subject to all the Fees described in the federal LIHTC Qualified Allocation Plan that is in place at the time of application submission. Additionally, MSHDA will charge the following fees for the MI LIHTC Program:
Reservation Fee:
For any project that receives a MI LIHTC award, the Authority will charge a fee equal to 5% of the annual MI LIHTC dollar amount awarded to the project. 3% will be due at the time of the MI LIHTC Approval Notice and the remaining 2% will be due within 12 months of the date after the MI LIHTC Approval Notice.
The Authority may establish other fees as necessary and post them as part of a Fee Schedule Policy Bulletin.
Compliance Fee:
Prior to the issuance of a MI LIHTC Eligibility Statement, projects must pay a sum of $250 per low-income unit to cover the MI LIHTC compliance period reporting. Thereafter, each year of the MI LIHTC compliance period a fee of $25 per low-income unit compliance fee will be charged.
Modification, Notifications, and Addenda
The Authority may modify the MI LIHTC program, add additional requirements, or waive requirements to address unforeseen, unpredictable, or insurmountable changes to the housing development environment. Additionally, the Authority may adjust the MI LIHTC program to maximize benefit or to resolve any administrative errors made during the processing of applications.
All modifications, notifications, and addenda will be posted in a timely manner to the Authority website.