Michigan Low-Income Housing Tax Credit
Pass-Through

First Amendment to the 2026-2027 Amended and Restated Pass-Through Bond Program

October 15, 2026

The Amended and Restated Pass-Through Bond Program of 2026-2027 (the “Pass-Through Bond Program”), approved June 18, 2026, is amended as follows to reflect amendments to the State Housing Development Authority Act (Public Act 346 of 1966) pursuant to Public Act 23 of 2026 ("Public Act 23") and changes to Internal Revenue Code § 42(h)(4)(B) pursuant to the One Big Beautiful Bill Act, Public Law 119-21, 119 Statute 123 (2025):

1. The Introduction paragraph is modified to add the following:

   Projects seeking to utilize the Michigan Housing Opportunity Tax Credit (the “State Housing Credit”) created by Public Act 23 in conjunction with the Pass-Through Bond Program will be subject to the requirements of the Pass-Through Bond Program and the attached Exhibit C: State Housing Credit Program Statement.

2. The second paragraph of Section III, Minimum Program Income and Rent Restriction Requirements, which is set forth below, is hereby deleted:
   

   In addition to the minimum requirements above, applicants will be required to commit to income and rent restrictions to target at least 10% of the total number of units in the project for households whose income is at or below 40% of AMI (the “10% Affordable Unit Restriction”). The units counted toward the 10% Affordable Unit Restriction may also count toward the 40% Affordable Unit Restriction or the 20% Affordable Unit Restriction, as applicable. In lieu of the 10% Affordable Unit Restriction, the Authority may permit applicants to commit to satisfying other important mission objectives such as developing or rehabilitating projects in rural areas, or projects that meet the definition of Permanent Supportive Housing and have all necessary supportive services available, etc. The 10% Affordable Unit Restriction may not otherwise be waived or reduced unless the Authority determines that the restriction impedes the Authority’s ability to finance the rehabilitation or new production of projects under this Program.

3. The first paragraph of Section IV, Threshold Requirements, is hereby replaced in its entirety with the following:
   

   Authority staff will review each application to ensure that the use of a portion of the State’s unified volume cap for a project will not impair the Authority’s ability to carry out its programs or finance developments or housing units that are targeted to lower income persons. Authority staff will also determine whether the requested use of volume cap is within the Program Limit (as defined in Section V). Pursuant to Internal Revenue Code § 42(h)(4)(B) and to protect volume cap, projects utilizing the Pass-Through Bond Program will be limited to the amount of Tax-Exempt Bonds that the project qualifies for under the Authority's 25% Test Policy as determined and approved by Authority Staff.

4. The fourth paragraph of Section VIII, Application Requirements, is hereby replaced in its entirety with the following:
   

   Applications that are only requesting bonds and LIHTC may be submitted at any time after the Pass-Through Bond Program is authorized. Authority staff will process applications on a first-come first-served basis in the order they are received. Authority staff will advise prospective sponsors/developers of (a) the number of proposals in process, (b) the place “in line” where the application is, based on the submission date/time of the application, and (c) the total volume cap requested by those proposals. Project applications that are submitted but are found to have substantial deficiencies, and cannot progress along a normal approval timeline, may lose their place in line to other projects that are ready to move forward, but were submitted after them. For a project to be included in the Program Limit, a project must have been approved by the Authority for an inducement resolution.

   Applications for projects that are also seeking the State Housing Credit must be submitted in accordance with the Application Windows defined and outlined in the attached Exhibit C. Any such applications submitted outside of a State Housing Credit Application Window will not be considered for the Pass-Through Bond Program and must be resubmitted within a future State Housing Credit Application Window [or the project may reapply at any time without seeking the State Housing Credit].

5. Except as expressly amended herein, the Pass-Through Bond Program remains unchanged and in full force and effect.

Michigan Low-Income Housing Tax Credit Program for developments also using the Pass-Through Bond 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 LIHTCs are to be used in conjunction with the Pass-Through Bond Program. Projects must conform to all regulations outlined in Public Act 23 of 2026. Additionally, projects that are applying for Pass-Though Bond Program funding and MI LIHTC will be required to comply with the requirements outlined in this Addendum and all requirements outlined in the broader Pass-Through Bond Program for which this Addendum is a part of.

Eligible Developments

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:

1. A Federal 4% LIHTC under Section 42(h)(4) of the Internal Revenue Code, 26 USC 42.; and
2. Limited obligation bonds or notes issued under Section 44c of Public Act 346 of 1966, as amended.

Please refer to the broader Pass-Through Bond Program Statement and the 25% Bond Test Policy for further information on these topics. Also, please note that projects not seeking MI LIHTC can apply for Tax-Exempt Bonds and federal 4% LIHTC at any time in accordance with the Pass-Through Bond Program Statement.

Application Windows

Applications for MI LIHTC will be accepted during the application windows listed below:

• January 1st – March 31st
• July 1st – September 30th

At least 30 days before each application window, MSHDA will publish an Application Window Notice on the MSHDA website listing the official date that the application window opens, the amount of MI LIHTC available for both New Construction and Acquisition/Rehab projects, any program adjustments, and other important information. Complete applications received prior to the first business day that the application window opens will be considered received and accepted on the first business day within the application window. After the first Application Window, MSHDA will publish the Application Window Notice at least 45 days prior to the due date.

Complete applications that are received before midnight eastern time on the same day will be considered received at the same time for first-come, first-served ranking purposes. MSHDA will not consider an application “complete” until all required application exhibits are received in accordance with the time-stamp information in the SharePoint system. Applications that are received at the same time will be ranked and prioritized according to the criteria listed below under Project Selection Process. MI LIHTC requests may not be allowed to be increased above the amount requested in the initial application. If an application is received for MI LIHTC funding, it will be considered withdrawn from all other MSHDA application rounds and programs.

How to Apply

Pass-Through projects seeking MI LIHTC must be submitted through MSHDA’s Pass-Through/MI LIHTC SharePoint portal. To electronically submit an application package for MI LIHTC, first complete the form on the website. Upon selecting "Submit," a folder will be created, then an email will be sent to identified members with instructions for submitting the application package electronically through SharePoint. If there are technical issues, MSHDA may determine additional methods to submit applications.

Application Materials

Applicants under this program will submit the following:

1. Pass-Through/MI LIHTC Program Application
2. All required exhibits listed in the Pass-Through Program Exhibit Checklist

MSHDA will adjust this list as necessary, with notice, to effectively administer the program.

Complete Application

To be accepted for consideration and secure a place in line, a complete application must be submitted. Applications that are incomplete, including those that lack required documentation and/or a complete plan of financing, will not be accepted for processing and are not considered received until they are complete.

Project Selection Process

Complete applications will be reviewed and awarded on a first-come, first-served basis following the opening of each application window until the cumulative total amount of MI LIHTC requested by eligible applications received on a particular day exceeds the amount of MI LIHTC remaining available for the application window. During this period, projects will not be scored, and eligible projects will be awarded up to their MI LIHTC Limit described below. If multiple applications are received on the same day prior to midnight eastern time, they will be considered received at the same time for the purpose of priority. Applications submitted prior to the opening day of an application window will be considered received on the opening day of the application window. If an application is determined to be incomplete by MSHDA staff, the application will be rejected, the project will be removed from the rankings, and a complete application must be submitted to be considered for MI LIHTC funding, if not yet exhausted. If the cumulative amount of MI LIHTC requested by eligible applications received on a particular day exceeds the amount of MI LIHTC remaining available for the application window, only the applications received on that day projects will be scored and ranked according to the following criteria:

Manufactured in Michigan:

Applications will be ranked and scored based on the following post-submission formula:

• Applicants will be required to certify to the percentage of Michigan-Manufactured Building Components (as determined by the percentage of the total cost of Michigan-manufactured products divided by the total cost of all building components) that will be incorporated into the development.
• Applications will be grouped by construction type (new construction/adaptive reuse will be placed into one group and preservation/existing developments will be placed in another group).
• MSHDA will determine the mean value percentage (“Mean”) of Michigan-Manufactured Building Components for all new construction/adaptive reuse projects and the Mean of Michigan-Manufactured Building Components for all preservation/existing development projects.
• All projects whose percentage of Michigan-Manufactured Building Components equals or exceeds the Mean in their respective grouping (new construction/adaptive reuse or preservation/existing development) will receive 10 points. Projects whose percentage of Michigan- Manufactured Building Components is below the Mean in their respective grouping will receive 5 points.

The lowest amount of MI LIHTC (6-year total) requested per unit:

The estimated development period of the proposed qualified project from the initial Approval Notice to placing the proposed qualified project in service:

MI LIHTC Investor Equity Pricing:

Applications will be ranked and scored based on the following post-submission formula:

• MSHDA will determine the mean value of the MI LIHTC equity prices for all applications received on the same day.
• MSHDA will determine the 2nd standard deviation below the mean MI LIHTC equity price (“Lower Limit”). For all projects with a MI LIHTC equity price that is greater than or equal to the Lower Limit, MSHDA will award fifteen (15) points. Any projects with MI LIHTC pricing below the Lower Limit will receive zero (0) points.

Additionally, the Lower Limit MI LIHTC equity pricing will be the minimum amount determined for underwriting purposes. This will require the project to either defer additional developer fee to maintain feasibility or secure higher MI LIHTC equity pricing.

Poor Previous Participation/Negative Points:

• Applicants receive negative points as part of the federal LIHTC process will be subject to twenty (20) negative points as part of the MI LIHTC selection process. Additionally, application scores will be tracked and to ensure that projects are actually achieving their scores. If MSHDA determines that the final project deviates by more than 15% from the awarded score (in any of the criteria above), the developer/sponsor (and all related parties) will be subject to up to fifteen (15) negative points for twelve months.

Tiebreakers:

In the event of a scoring tie the following criteria will be used as tiebreakers:

1. The project that is creating or preserving the most total units will be given priority.
2. The project that is utilizing the greatest percentage of Michigan- Manufactured Building Components (as determined by the percentage of the total cost of Michigan-manufactured products divided by the total cost of all building products) will be given priority.

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, by MSHDA by publishing the adjustments on MSHDA’s website with at least 30-day notice prior to the application due date.

On a weekly basis, MSHDA will post the applications received, the rankings based on developer-submitted data, and the projects that have been approved for MI LIHTC awards. This weekly posting will occur until enough applications have been received to fully exhaust the MI LIHTC for the application window.

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. Additionally, applicants who are awarded MI LIHTC are subject to the Designated Reporter requirements under Public Act 23 of 2026.

A recapture of federal 4% LIHTC will trigger a recapture of MI LIHTC.

MI LIHTC will not trigger any additional federal cross-cutting requirements beyond what is included in these program guidelines. Applicants should be aware that other sources in 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 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 MSHDA. The 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 use will be limited to the amount listed in the notice.

Approved projects will execute a MI LIHTC 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 MSHDA a Final Cost Certification and Request for Issuance of Eligibility Statement. “Completion” is deemed by MSHDA to be equivalent to “placed in service” as that phrase is used in LIHTC guidance. Upon MSHDA review and approval, MSHDA 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:

1. 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)
2. The total amount of MI LIHTC a project receives cannot exceed the amount needed for feasibility. MSHDA 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

Projects that receive MI LIHTC will be required to defer at least 25% of the total Developer Fee. If an owner chooses to contribute a portion of the paid Developer Fee back to the project, it will be counted towards the 25% requirement in the same manner as Deferred Developer Fee.

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. MSHDA reserves the right to penalize owners/sponsors who do not comply with this requirement.

Manufactured in Michigan is defined as follows:

1. For iron or steel products, all manufacturing processes, from the initial melting stage through the application of coatings, occurred in this state.
2. 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.
3. 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:

1. A development company (or Principal) will be eligible to receive no greater than 12.5% of the total annual amount of MI LIHTC (total annual amount means the cumulative MI LIHTC award provided under both the Direct Lending Program and the Pass-Through Program). If a Principal has not exceeded its annual 12.5% limit, and there is enough remaining MI LIHTC award room under the per Principal award limits to fund 90% of the proposed project, then MSHDA, in its discretion, will fully fund that project.
2. A development company (or Principal) will be limited to submitting two applications per Application Window if the total amount of MI LIHTC requested by the two applications reaches or 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 MSHDA 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 LIHTCs 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 MSHDA 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 in the Pass-Through program will be subject to the Underwriting Standards identified in Tab O of MSHDA’s Combined Application.

Approval/Closing Timeline

Upon receipt of a complete application, MSHDA staff will review the application for completeness, for application threshold requirements, and will rank the project in accordance with the Selection Criteria (if necessary). All components of this initial review (including marketing and environmental review) are expected to be completed within 60 days. MSHDA staff maintains the discretion to only review those projects necessary to allocate all the MI LIHTC being made available. This policy is to focus staff resources on projects moving forward to enhance processing speed.

Projects that are approved at staff-level and that are ranked high enough to be awarded will receive a staff letter indicating review has been completed, required deadlines, and full approval is contingent on MSHDA Board approval of the Pass- Through Bond or Note.

Projects will then be prepped for inducement and commitment approvals by MSHDA Board in accordance with the process and the timeline listed in the Pass-Through Program statement for which this Addendum is a part. After commitment approval by the MSHDA Board, an official approval notice for the MILIHTC will be issued to the project. The Approval Notice is a binding reservation letter issued by MSHDA for an award of MI LIHTC during a specific award cycle. The notice will set forth the amount of the MI LIHTC to be claimed in each year of the credit period, project-specific details for which the award is based, and other timeline/deadline information.

Projects will be required to achieve inducement resolution and commitment resolution within nine (9) months of the Approval Notice letter, or the MI LIHTC will be revoked. If the deadline falls in December, that month will not be counted as part of the 9 months. This nine (9) month deadline may be waived for extraordinary circumstances. Waiver requests incur a $5,000 fee due with the request. Requests made without the fee being paid will be denied.

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 MSHDA’s LIHTC Compliance manual for details.

Statutory Categories

1. NEW CONSTRUCTION:
   Per statute, not less than 50% of the available Pass-Through MI LIHTC will be allocated to new construction projects (as defined in Public Act 23 of 2026).
2. PRESERVATION:
   Per statute, not less than 50% of the available Pass-Through MI LIHTC will be allocated to preservation projects (as defined in Public Act 23 of 2026).
3. RURAL PROJECTS
   Statutorily (to the extent MSHDA 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.

Reallocation: At the end of the final application window of each award cycle, if the Authority has not received a sufficient number of completed applications to allot the amount set aside under subdivision (1) or (2) above, the Authority may reapportion the unallotted credit amounts to other qualified projects in accordance with the LIHTC Qualified Allocation Plan or other alternative competitive processes.

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.

MI LIHTC 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 and the MSHDA Pass-Through Bond fees. Additionally, MSHDA will charge the following fees for the MI LIHTC Program:

Reservation Fee:

For any project that receives a MI LIHTC award, MSHDA 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 after the date of the MI LIHTC Approval Notice.

MSHDA 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

MSHDA 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, MSHDA 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 MSHDA website.