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Pass-Through Bond Program

Pass-Through Bond Program

Act 346 of the Public Acts of 1966 (the “Act”) permits the Michigan State Housing Development Authority (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 participating in this program (the “Pass-Through Bond Program” or the “Program”) may use pass-through bonds as long-term financing (construction and permanent financing) or as short-term financing (construction financing only).  All projects must show evidence of credit enhancement that is acceptable to the Authority. 

The Authority has established a $300 million limit for use of its unified volume cap under the Program (the “Program Limit”).  All proposals are subject to availability of volume cap within the Program Limit.  Applications that are currently in the expiring July 2022 Pass-Through Bond Program pipeline and are continuing to move forward, but have not yet been approved for inducement, will automatically be considered in this July 2023 Pass-Through Bond Program.  The Program Limit may be reduced or increased by the Authority subject to the Authority having sufficient volume cap for its direct lending multifamily program (“Direct Lending” or “Direct Lending Program”) and single-family programs. 

This Program will terminate at the earliest of the following: 1) the Authority’s regularly scheduled July 2024 meeting; 2) the Authority’s regularly scheduled June 2024 meeting if there is no July 2024 meeting; or 3) the Program Limit has been reached.  For a project to be included in the Program Limit, a project must have been approved by the Authority for an inducement resolution at or before the Authority’s July 2024 board meeting.  Upon termination of the Program (as outlined above), volume cap will no longer be available to the Program nor will it be added to any subsequent reinstatement of the Program that may occur, notwithstanding any amount remaining under the Program Limit.  Once the Program has terminated, the Authority will review the Program and determine whether, and under what conditions, to extend the Program.

Applications may be submitted at any time after the Program is authorized.  Authority staff will process applications on a first-come first-served basis in the order they are received in accordance with the date the application is received by MSHDA. The Authority 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.

Applicants will be required to commit to income and rent restrictions to target at least 10% of the total units in the project for households whose income is at or below 40% of AMI (“10% affordable unit restriction”). 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.

Program Statement and Application Requirements


Pass-Through Gap Financing Program for New Construction or Adaptive Reuse Developments

The Pass-Through Gap Financing Program for New Construction or Adaptive Reuse Developments is designed to provide gap funding for New Construction or Adaptive Reuse developments seeking financing under the Pass-Through program.  Projects that apply for gap financing resources will be required to comply with all the requirements of the Pass-Through Bond program above.  An application submitted under the Pass-Through Gap Financing Program for New Construction or Adaptive Reuse Developments will count as the application for Gap Funding purposes as well as the application for Pass-Through Bond purposes.  The Program Guidelines below provide more detail regarding the requirements and the process to apply for these gap resources.  Applicants will be required to upload a complete application and required exhibits (as detailed in the Program Guidelines below) through Sharepoint.  Applicants will set up a Sharepoint folder using the link below titled “How to Create a Sharepoint Folder”.  Once all required documents are uploaded and complete, the Applicant must complete the form below titled, “Gap Funding Application Certification”.  Applicants can contact Carol Thompson in the Low Income Housing Tax Credit program with any questions regarding program requirements and/or application submission. 

Pass Through Gap Financing Applicants - Existing Tax Credit Developments: