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DEPARTMENT OF ENERGY, LABOR AND ECONOMIC GROWTH STATE HOUSING DEVELOPMENT AUTHORITY
GENERAL RULES
Filed with the Secretary of State on April 28, 2009
These rules become effective immediately upon filing with the Secretary of State unless adopted under sections 33, 44, or 45a (6) of 1969 PA 306. Rules adopted under these sections become effective 7 days after filing with the Secretary of State.
(By authority conferred on the state housing development authority by sections 22 and 58b of 1966 PA 346, MCL 125.1422 and MCL 125.1458b of the Michigan Compiled Laws)
R 125.190, R 125.191, R 125.192, R 125.193, R 125.194, R 125.195, R 125.196, and R 125.197 are
amended, and R 125.198 is added to the Michigan Administrative Code as follows:
PART 9 – MICHIGAN HOUSING AND COMMUNITY DEVELOPMENT FUND; MICHIGAN HOUSING AND COMMUNITY DEVELOPMENT PROGRAM
R.125.190 Program purpose and applicability.
Rule 190. The Michigan state housing development authority shall use the housing and community development fund to provide loans, grants, or other comparable forms of assistance to eligible applicants to finance, acquire, rehabilitate, and develop decent, safe, and sanitary housing and projects located in a downtown area or adjacent neighborhood in this state. The use of the fund, created pursuant to MCL 125.1458b, is limited to activities outlined in MCL 125.1458b and 125.1458c as follows:
(a) Developing and coordinating public and private resources to meet the housing needs of low income, very low income, and extremely low income households in this state, particularly innovative strategies leveraging public and private resources to meet these needs.
(b) Developing housing for the homeless, including both transitional housing and permanent housing.
(c) Developing rental housing.
(d) Providing funding to eligible applicants with respect to housing or homeownership for individuals and families of low income, very low income, and extremely low income households and projects located in a downtown area or adjacent neighborhood in this state, including funding for all of the following:
(i) Acquisition of land and buildings.
(ii) Rehabilitation.
(iii) New construction.
(iv) Development costs and predevelopment costs.
(v) Preservation of existing housing.
(vi) Community development projects, including, but not limited to, infrastructure improvements, economic development projects, blight elimination, or community facilities.
(vii) Insurance.
(viii) Operating and replacement reserves.
(ix) Down payment assistance.
(x) Security deposit assistance.
(xi) Foreclosure prevention and assistance.
(xii) Individual development accounts established under the individual or family development account program act, 2006 PA 513, MCL 206.701 to 206.711.
(xiii) Activities related to ending homelessness.
(XIV) Assistance to nonprofit organizations, municipalities, and land bank fast track authorities organized under the land bank fast track act, 2003 PA 258, MCL 124.751 to 124.774.
(XV) Predatory lending prevention or relief.
Rule 125.191 Definitions.
Rule 191. Definitions provided for in part I of the authority’s rules, R 125.101 to R 125.103, shall apply to the provisions of this part, unless superseded in this rule as follows:
(a) “Adjacent neighborhood” means a residential area as determined by the authority immediately adjoining or near a downtown area within the same municipality.
(b) “Allocation plan” means the plan referred to in and required by MCL 125.1458b (3).
(c) “Annual report” means the annual report required under MCL 125.1458b (6).
(d) “Applicant” means a person who has submitted an application, proposal, or other documentation related to a request for an award of housing and community development fund monies meeting the requirements contained in the applicable NOFA or RFP related to the applicable application year.
(e) “Biennial plan” means the allocation plan as defined in subdivision (b) of this subrule.
(f) “Chief Executive Officer” or “CEO” means the senior manager responsible for overseeing the activities of the entire company or organization. The CEO usually holds a position on the board of directors of the company or organization and may also hold the title of president.
(g) “Chief Financial Officer” or “CFO” means the company’s or organization's top managerial and financial accountant and the individual in charge of the company’s or organization's financial matters.
(h) “Community development” means a process involving the conception, planning, and implementation of projects or activities which create improvements in, or reduce the extent of declines in, the living standards of people in a particular community.
(i) “Controlling interest” means the holding by 1 person or group of persons of a majority of the stock or other indicia of ownership of a business entity, giving the holder or holders a means of exercising control over the actions of the entity.
(j) “Development costs” means the sum total of all costs incurred in a housing development or a partnershipproject located in a downtown area or special purpose entity that is approved by the authority and that is organized for the purpose of developing and supporting affordable housing for low income, very low income, or extremely low income households, any of which are determined by the authority to qualify for funding under the program.
(k) “Extremely low income household” means a person, a family, or unrelated persons living together whose adjusted household income is not more than 25% of the median income, as determined by the authority.
(l) “Formula” means the standard procedure for distributing the program funds across the state as specified in MCL 125.1458b (4) (a).
(m) “For-profit corporation” means an entity that exists primarily to generate more income than it spends.
(n) “Housing development costs” means the sum total of all costs incurred in a housing development adjacent neighborhood determined by the authority to be reasonable and necessary, including but not limited to, all of the following:
(i) Cost of land acquisition and any buildings on the land, including payments for options, deposits, or contracts to purchase properties on the proposed housing development site or project located in a downtown area or adjacent neighborhood site or payments for the purchase of properties.
(ii) Cost of site preparation, demolition, and clearing.
(iii) Architectural, engineering, legal, accounting, corporation, and other fees paid or payable in connection with the planning, execution, and financing of the housing development or project located in a downtown area or adjacent neighborhood and the finding of an eligible mortgagee or mortgagees for the housing development or project located in a downtown area or adjacent neighborhood.
(iv) Cost of necessary studies, surveys, plans, and permits.
(v) Insurance, interest, financing, tax and assessment costs, and other operating and carrying costs during construction.
(vi) Cost of construction, rehabilitation, reconstruction, fixtures, furnishings, equipment, machinery, apparatus, and similar facilities related to the real property.
(vii) Cost of land improvements, including landscaping and offsite improvements.
(viii) Necessary expenses in connection with initial occupancy of the housing development or the project located in a downtown area or adjacent neighborhood.
(ix) A reasonable profit and risk fee in addition to job overhead to the general contractor and, if applicable, a limited-dividend housing sponsor.
(x) An allowance established by the authority for working capital and contingency reserves and reserves for any anticipated operating deficits during construction and initial occupancy.
(xi) Cost of other items that are determined to be reasonable and necessary for the housing development or project located in a downtown area or adjacent neighborhood, less any net rents and other net revenue received from the operation of the real and personal property on the development site or project site during the construction.
(k) “Downtown area” means an area where 20 or more contiguous properties have been planned, zoned, or used for commercial purposes for 50 or more years and where a majority of the buildings are built adjacent to each other as determined by the authority and up to the public right-of-way. To be a downtown area, the area shall contain a significant number of multilevel, mixed use buildings and property in the downtown area must be owned by more than 3 private owners.
(l) “Eligible applicant” means a not-for-profit corporation, a for-profit corporation, a municipality, a land bank fast track authority organized under the land bank fast track act, 2003 PA 258, MCL 124.751 to MCL 124.774, or a partnership or special purpose entity that is approved by the authority and that is organized for the purpose of developing and supporting affordable housing for low income, very low income, or extremely low income households, or projects located in a downtown area or adjacent neighborhood, any of which are determined by the authority to qualify for funding under the program.
(m) “Extremely low income household” means a person, a family, or unrelated persons living together whose adjusted household income is not more than 25 30% of the area median income, as determined by the authority.
(n) “Formula” means the standard procedure for distributing the program funds throughout the state based on the number of persons experiencing poverty, economic and housing distress as specified in MCL 125.1458b (3) (A).
(o) “For-profit corporation” means an entity that exists primarily to generate more income than it spends.
(p) “Homelessness” means lacking a fixed, regular, and adequate nighttime residence with priority given to those living in any of the following:
(i) A publicly or privately operated shelter and/or transitional facility designed to provide temporary living accommodations.
(ii) A public or private place not designed for, or ordinarily used as a regular sleeping accommodation for human beings.
(iii) An institution that provides temporary residence for individuals intended to be institutionalized.
(q) “Housing development” means single-family homes, rental developments, elderly developments, affordable assisted living developments, supportive housing developments, and any work or undertaking financed in whole or in part under this part for the primary purpose of acquiring, constructing, or rehabilitating housing for low, very low, or extremely low income households in need of housing. An undertaking may include any buildings, land, equipment, facilities, or other real or personal property that is necessary, convenient, or desirable in connection with a development, including but not limited to streets, sewers, utilities, parks, site preparation, landscaping, and other non-housing facilities determined to be necessary, convenient, or desirable.
(r) “HUD” means the United States department of housing and urban development, the federal department responsible for the major housing programs in the United States.
(s) “Lookback” means the process of reviewing an intended proposed distribution of program funds in a program year to ensure compliance with the earmark requirements provided in the statute and these rules.
(t) “Low income household” means a person, a family, or unrelated persons living together whose adjusted household income is more than 50% but not more than 60% of the median income, as determined by the authority.
(u) “Michigan housing and community development fund” means the fund created in MCL 125.1458a.
(v) “Michigan housing and community development programfund advisory committee” means the programcommittee created inpursuant to MCL 125.1458b.1458e.
(w) “Michigan housing and community development program” means the program created in MCL 125.1458b.
(x) “Mixed use buildings” means buildings that can be used for more than 1 purpose, and in any combination, including, but not limited to, residential housing combined with either commercial or retail space.
(y) “NOFA” means a notice of funding availability issued pursuant to this rule and the applicable statutory law governing the program.
(z) “Not-for-profit corporation” means a public or private corporation that meets all of the following:
(i) Is organized under state or local laws.
(ii) Has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual.
(iii) Has a current tax exemption ruling from the internal revenue service (IRS) under section 501(c)(3), a charitable, nonprofit corporation, or section 501(c)(4), a community or civic organization, of the internal revenue code of 1986, as evidenced by a certificate from the IRS that is dated 1986 or later. The exemption ruling must be effective on the date of the application and must continue to be effective throughout the length of any contract agreements; or classification as a subordinate of a central organization non-profit under the internal revenue code, as evidenced by a current group exemption letter, that is dated 1986 or later, from the IRS that includes the applicant. The group exemption letter must specifically list the applicant.
(iv) A private nonprofit organization's pending application for section 501(c) (3) or (c) (4) status does not comply with the tax status requirement.
(aa) “Persons with disabilities” means a household composed of 1 or more persons, at least 1 of whom is a person who has a disability that is a physical or mental impairment that substantially limits 1 or
more major life activities; has a record of such impairment; or is regarded as having such an impairment as defined in the developmental disabilities assistance and bill of rights act (42 U.S.C. §15002).
(bb) “Persons with special needs” means adult individuals or categories of adult individuals determined by the authority to have unmet housing and supportive service needs and may include any household composed of 1 or more persons with physical, mental, or emotional impairment of long-term duration, including, but not limited to, alcohol and/or drug addictions, persons with disabilities including profound deafness and the legally blind, victims of domestic violence, persons with HIV/AIDS, homeless populations, migrant farm workers, and individuals that are recipients of Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) benefits. In addition to a physical, mental, or emotional impairment, the person must have a substantial and sustained need for supportive services assistance in at least two of the following life-skills areas in order to successfully live independently:
(i) The ability to independently meet personal care needs, economic self sufficiency (capacity for sustained and successful functioning is vocational, learning and employment contexts).
(ii) Use of language (ability to effectively understand, be understood, and handle communication as needed on a daily and ongoing basis).
(iii) Instrumental living skills (managing money, getting around in the community, grocery shopping, complying with prescription requirements, meal planning and preparation, mobility).
(iv) Self direction skills (making decisions/choices about one’s day-to-day activities and regarding one’s future.) “Persons with special needs” shall also include persons legally responsible for caring for persons with special needs.
(cc) “Predevelopment costs” means reimbursable costs, related to a specific eligible housing, downtown, or adjacent neighborhood project, that meet all of the following:
(i) Predevelopment project costs that are determined to be customary and reasonable by the authority, including but not limited to, consulting fees, architectural fees, engineering fees, and costs related to the engagement of a development team, costs related to establishing site control, and costs related to title clearance.
(ii) Pre-construction project costs that are determined to be customary and reasonable by the authority, including but not limited to, the costs of obtaining architectural plans and specifications, zoning approvals, engineering studies, and legal fees.
(iii) Predevelopment costs do not include general operational or administrative costs. (zd) “Project” means those activities defined under MCL 125.1458C.
(ee) “Recipient” means an eligible applicant receiving funds or other assistance under the program. The term recipient shall also include a subrecipient and any requirement applying to a recipient shall likewise apply to a subrecipient.
(ff) “Rental housing project” means a housing development consisting of 1 or more dwelling units that will be rented to individuals or families meeting applicable occupancy and income requirements related to the nature of the housing unit or development.
(gg) “RFP” means “request for proposals.” An RFP is an announcement of a willingness to consider proposals requesting the awarding of program funds for a particular use or uses related to the fund or program.
(hh) “Special purpose entity” means a legal entity created for the primary purpose of sponsoring, originating, creating, sustaining, or assisting the provisioning of housing to low, very low, or extremely low income households the costs of which, if not funded from other sources, are reasonably fully payable out of the persons monthly income, including earned income, grants, or other public or non- public assistance.
(ii) “State” means the state of Michigan and any state level component units thereof.
(jj) “Statute” means the state housing development authority act of 1966, 1966 PA 346, MCL 125.1401 et seq.
(kkgg) “Supportive housing” means a rental housing project in which some or all of the units are targeted to persons with household incomes at or below 30% of area median income and that provide services, either directly or contracted for, to those persons with special needs that include, but are not limited to, mental health services, substance abuse services, counseling services, and daily living services.
(ll) “Very low income household” means a person, a family, or unrelated persons living together whose adjusted household income is not more than 50% of the median income, as determined by the authority.
Rule 125.192 Basic eligible activities; ineligible activities.
Rule 192. (1) Housing and community development program funds may be used for the following activities:
(a) Acquisition activities. Acquisition in whole or in part by the recipient, by purchase, long-term lease, donation, or otherwise, of real property (including air rights, water rights, rights-of-way, easements, and other interests therein) for any purpose authorized by the program.
(b) Rehabilitation, clearance, and remediation activities. Rehabilitation activities include clearance, demolition, and removal of buildings and improvements, movement of structures to other sites, and remediation of known or suspected environmental contamination for a current or proposed housing development or project located in a downtown area or adjacent neighborhood. Demolition of HUD- assisted or HUD-owned housing units may be undertaken only with the prior approval of HUD.
(c) New construction of housing activities or projects located in a downtown area or adjacent neighborhood. Construction of a housing development or projects located in a downtown area or adjacent neighborhood, including housing assisted under federal or state law, through the incurrence of development costs and predevelopment costs.
(d) Activities incurring development costs and predevelopment costs.
(e) Preservation of existing housing or activities related to the preservation of existing housing.
(f) Activities related to community development projects, infrastructure improvements, economic development projects, blight elimination, and community facilities. Activities under this category shall include acquisition, construction, reconstruction, rehabilitation or installation of community facilities and infrastructure improvements or other incurrence of development costs or predevelopment costs carried out by the recipient. In undertaking such activities, design features and improvements which promote energy efficiency may be included. Such activities may also include the execution of architectural design features and similar treatments intended to enhance the aesthetic quality of facilities and improvements receiving assistance. Such community facilities include, but are not limited to, shelters for the homeless; battered spouse shelters; halfway houses for run-away children, drug offenders or parolees; group homes for mentally retarded persons and temporary housing for disaster victims.
(g) Activities incurring insurance costs related to any purpose authorized by the program.
(h) Activities involving operating, replacement and other reserves related to any purpose authorized by the program.
(i) Activities providing down payment and other direct homeownership assistance to low, very low, or extremely low income households.
(j) Activities providing security deposit assistance to low, very low, or extremely low income households.
(k) Supportive services activities (including labor, supplies, and materials) for Activities providing foreclosure prevention or foreclosure assistance to low, very low, or extremely low income households, INCLUDING BUT NOT LIMITED TO THOSE CONCERNED WITH EMPLOYMENT, CRIME
PREVENTION, CHILD CARE, HEALTH, DRUG ABUSE, EDUCATION, FAIR HOUSING COUNSELING, ENERGY CONSERVATION, WELFARE, HOMEBUYER DOWNPAYMENT ASSISTANCE, OR RECREATIONAL NEEDS TO A PERSON, PERSON WITH DISABILITIES OR PERSON WITH SPECIAL NEEDS. TO BE ELIGIBLE FOR ASSISTANCE, A SUPPORTIVE SERVICE MUST BE EITHER A NEW SERVICE OR A QUANTIFIABLE INCREASE IN THE LEVEL OF AN EXISTING SERVICE ABOVE THAT WHICH HAS BEEN PROVIDED IN THE 12 CALENDAR MONTHS BEFORE THE SUBMISSION OF THE FUNDING APPLICATION. .
(l) Activities related to individual development accounts established under the individual or family development account program act, 2006 PA 513, MCL 206.701 to 206.711.
(m) Activities related to ending homelessness.
(n) The provision of assistance either through the recipient directly or through public and private organizations, agencies, and other subrecipients (including nonprofit and for-profit subrecipients) to facilitate economic development projects or activities that support housing development that does the following:
(i) Provides financial support for the establishment, stabilization, and expansion of business enterprises.
(ii) Provides technical assistance, advice, and business support services to owners of business enterprises and persons developing business enterprises.
(iii) Provides general support, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services, to owners of business enterprises and persons developing business enterprises.
(iv) Assistance under this subdivision may also include training, technical assistance, or other support services to increase the capacity of the recipient or subrecipient to carry out the activities under this subdivision.
(o) Assistance activities provided to public or nonprofit entities, including municipalities and land bank fast track authorities organized under the land bank fast track act, 2003 PA 258, MCL 124.751 to 124.774, to increase the capacity of such entities to carry out program eligible housing development, neighborhood revitalization or economic development activities.
(p) Predatory lending prevention or relief.
(q) Any other housing and community development fund or program activities authorized under the authority’s act.
(2) Ineligible applicants include the following:
(a) An applicant, recipient, or an entity in which the applicant or recipient has or had a controlling interest, either failed to submit or is now delinquent in providing an explanation, evidence of corrective action or a payment of disallowed costs or fees as a result of a program funding monitoring review.
(b) An applicant, recipient, or an entity in which the applicant or recipient has or had a controlling interest, is currently delinquent on any loan payments or any fees due and payable to the authority.
(c) An applicant, recipient, or an entity in which the applicant or recipient has or had a controlling interest, has been or is barred, suspended, or terminated from procurement in a state or federal program or listed in the list of parties excluded from federal procurement or non-procurement programs or has otherwise been debarred by HUD or the authority.
(d) Any individual acting as an owner, member, principal, officer, manager or key employee of the applicant, recipient, or an entity in which the applicant or recipient has or had a controlling interest, has been convicted of a state or federal felony crime involving fraud, bribery, theft, misrepresentation of material fact, misappropriation of funds, or other similar criminal offenses within fifteen years preceding the application deadline.
(e) An applicant, recipient, or an entity in which the applicant or recipient has or had a controlling interest, at the time of application submission is subject to any of the following:
(i) Enforcement or disciplinary action under state or federal securities law or by the NASD.
(ii) A federal tax lien.
(iii) An enforcement proceeding with any governmental entity.
(f) An applicant, recipient, or an entity in which the applicant or recipient has or had a controlling interest has open and/or unresolved audit issues with HUD or the authority related to this program or other programs administered by HUD or the authority.
(g) A submitted application is incomplete; lacks required supporting documentation; or is so unclear or disjointed that, in the discretion of the authority, it cannot reasonably be reviewed to determine whether it meets program criteria. If an application is determined to be ineligible pursuant to this rule, the application will be terminated. To the extent that the authority staff was able to complete a limited application review, specific reasons for the authority's determination of ineligibility shall be included in the termination letter to the applicant.
(h) An applicant or recipient or a person who has or had a controlling interest in the applicant or recipient has an ownership interest or exercises control of 1 or more rental housing properties in the state of Michigan subject to a regulatory agreement or tax credit regulatory agreement with the authority and is in material noncompliance with such regulatory agreement or tax credit regulatory agreement.
(i) Any application that includes financial participation by a person who, during the 5-year period preceding the date of the bid or award, has been convicted of violating a federal law in connection with a contract awarded by the federal government for relief, recovery, or reconstruction efforts as a result of any disaster occurring after January 1, 2000, or was assessed a federal civil or administrative penalty in relation to such a contract.
(j) Applications for proposals which cause or result in the permanent displacement of low, very low, or extremely low income households. Low, very low, or extremely low income households who may be temporarily displaced by the rehabilitation of affordable housing may be eligible for compensation of moving and relocation expenses. If a recipient violates the dislocation provisions of this subsection, that recipient shall repay program monies and the landlord/developer must pay the affected parties’ costs and all moving expenses.
PART 9A. APPLICATION, EVALUATION, AND PROGRAM REQUIREMENTS
R 125.193 Application procedures and requirements.
Rule 193. (1) Applications received by the authority in response to a NOFA or RFP shall be handled in the following manner:
(a) The authority will accept applications on an ongoing basis during the application acceptance period as specified in the NOFA or RFP.
(b) Applications submitted and accepted by the authority shall be reviewed in the following manner:
(i) Authority staff shall review all applications for eligibility, threshold, and selection criteria and ensure that all application requirements have been met.
(ii) Authority staff shall review applications to ensure that they are in accordance with the NOFA or RFP and applicable law.
(iii) Authority staff may issue a notice of any administrative deficiencies related to applications reviewed.
(iv) Authority staff shall conduct a comprehensive review of financial feasibility for development activities proposed in any application deemed acceptable under subdivision (b)(i) to (b)(v) of this subrule.
(v) Authority staff shall create a report setting forth the recommended terms, amount, and any conditions related to the proposed loan, grant, or project.
(2) Upon completion of staff review and any associated resolution of any applicable administrative deficiencies, applications which the review committee reviews, scores, and selects for award will be recommended to the authority for approval.
(3) If an application contains deficiencies which, in the determination of the authority staff, require clarification or correction, the authority staff may request clarification or correction of the administrative deficiencies, including threshold and/or selection criteria documentation and/or financial feasibility analysis.
(a) Requests for clarification or correction may be sent to the applicant in the form of a facsimile, e- mail, and/or be relayed to the applicant via a telephone call and documented in the application file.
(b) An applicant may not change or supplement any part of an application in any manner after submission to the authority, increase the award amount, or revise the unit mix (both income levels and bedroom mixes), except to remedy an administrative deficiency.
(4) The authority may decline to fund any application if the proposed activities do not, in the authority's sole determination, represent a prudent use of the housing and community development fund funds.
(5) The authority is not obligated to proceed with any action pertaining to any applications which are received, and may decide it is in the authority's best interest to refrain from pursuing any selection process.
(6) The authority may negotiate individual elements of any application.
(7) The authority may conduct a site review. Applicants must receive recommendation for approval from the authority staff and the review committee to be considered for funding by the authority.
Rule 125.194 Evaluation criteria for funding; other program requirements.
Rule 194. (1) Requests for funding scoring the highest on the criteria explained in subrule (2) of this rule are most likely to be awarded funds.
(2) The following criteria will be used in evaluating the responses to any NOFA or RFP:
(a) To be eligible for funding, an applicant must first demonstrate that it meets each of the following threshold criteria:
(i) The application is consistent with the requirements established in the statute, this rule, the NOFA, or the RFP.
(ii) If the application involves either a rental housing project or a home ownership project, the application requests funding for a project which sets aside at least 20% of the rental units or housing units in the project for households earning not more than 60% of the median income.
(iii) The application includes a letter of support from the highest ranking elected official for each of the jurisdictions served by the proposed project.
(iv) The application meets the readiness to proceed requirements established in the NOFA or the RFP.
(v) Any outstanding housing and community development fund predevelopment loans for the same proposed development site must be paid in full at the time of loan closing for the current requested funds.
(b) Evaluation factors used to evaluate and score applications, as more fully described in a NOFA or RFP, will include at a minimum the following factors:
(i) The extent to which the proposal or project represents the leveraging of program funds.
(ii) The ability of the applicant, recipient, or both to administer the funding award effectively and deliver results within program timelines.
(iii) The extent to which the proposal or project helps meet the 25% earmark provided in the statute for rental housing projects that do not qualify under preferences for special population groups, or other preferences contained in the allocation plan.
(iv) The extent to which the proposal or project helps meet the 30% earmark provided in the statute for projects that target extremely low income households, including developing housing for the homeless, supportive housing, transitional housing, and permanent housing.
(v) The extent to which the proposal helps meet the statutory requirement that a portion of the fund be expended for persons with physical or mental handicaps and persons living in eligible distressed areas.
(3) Other program requirements include the following:
(a) All uses of program funds shall comply with the applicable income limitations contained in the act, these rules, the annual plan, the applicable NOFA or RFP, and any statements or representations made in any application or other documentation submitted as a part of any application, reporting or other monitoring related to any award of program funds.
(b) A rental housing project assisted by the fund must set aside at least 20% of the housing units in the project for households earning not more than 60% of the area median income.
(c) A home ownership project assisted by the fund must set aside at least 20% of the housing units in the project for households earning not more than 60% of the area median income.
(d) If the housing funded by the program is rental housing, the owner or manager of the housing must agree in writing not to evict a tenant without just cause, as defined in section 44a of 1933 (Ex Sess) PA 18, MCL 125.694a.
(e) All assistance for housing and real property acquired or supported by program funds shall include an agreement, restriction, or real covenant related to the recapture of program funds upon sale, conversion, or disposition of the property if the recapture provisions of these rules are triggered.
R 125.195 Biennial plan; allocations; earmarks; carryover.
Rule 195. Pursuant to the statute, the authority shall biennially develop, propose, and establish a biennial plan related to the program. The biennial plan shall be issued pursuant to the requirements of the statute and all of the following:
(a) The authority shall, as a part of the biennial plan, issue an allocation plan related to the disbursement of program funds.
(b) The authority’s biennial plan and allocation plan shall contain an allocation formula related to the disbursement of program funds.
(c) The following statutory earmark and lookback procedures shall apply to any biennial plan, allocation plan, and allocation formula:
(i) The following statutory earmarks shall be included in the biennial plan, allocation plan, and allocation formula:
(A) Not less than 25% of the dollars used for loans or grants made in any program year shall be earmarked for rental housing projects that do not qualify under preferences for special population groups, or other preferences contained in the allocation plan.
(B) Not less than 30% of the dollars used for loans or grants made in any program year shall be earmarked for projects that target extremely low income households and include housing for the homeless, supportive housing, transitional housing, or permanent housing.
(C) A portion of the fund shall be expended for housing for persons with physical or mental handicaps and persons living in eligible distressed areas.
(ii) After the completion of any application receipt, review, selection, and approval process related to any biennial plan, allocation plan or allocation formula in any program year, the authority shall look back and review the intended distribution of the program funds for that year and determine whether the earmark requirements in this rule and in statute will be met under the proposed distribution. If the earmark requirements are not met, and eligible applications meeting the earmark requirements have been received, accepted, and have not otherwise been approved for funding, the authority shall revise
the proposed distribution to comply with the applicable earmark requirements. The revised plan shall be presented to and approved by the authority.
(iii) Uncommitted funds at the end of any program year shall be carried over and used under the applicable biennial plan, allocation plan, and allocation formula related to any subsequent program year.
R 125.196 Reporting requirements; program periods; compliance monitoring; review; recapture. Rule 196. (1) The following provisions regarding reporting apply:
(a) All recipients of program funds shall report back to the authority on a semiannual basis about their use of program funds. The authority shall collect information from recipients to establish that the funds are being spent correctly and to measure the results or performance of its spending against the objectives of the program.
(b) The authority will establish as a part of each biennial plan reporting forms that shall be submitted by the recipients on a semiannual basis. These reports shall include both a performance monitoring form and a financial monitoring form.
(c) The performance monitoring form shall be signed by the chief executive officer of the recipient and shall analyze the management performance of the recipient, specifically including a description of the following items:
(i) What was done with the program funds and whether what was done was consistent with the goals and strategies outlined in the application.
(ii) How well it was done, including a discussion of how success or failure will be measured.
(iii) Who has benefited from the distribution of program funds, including details on results.
(d) The financial monitoring form shall be signed by the chief financial officer of the recipient and shall analyze the financial performance of the recipient. Program funds shall be used in an efficient, effective, and appropriate manner, consistent with program objectives and priorities, including community needs. Program funds shall also be appropriately and properly accounted for with documentation that adequate safeguards have been instituted by the recipient to ensure that there is not misuse of program funds.
(2) The following provisions apply to program periods and extensions:
(a) The initial program period for any loan or grant awarded under the program 2 years from date of the award of program funds. All activities related to the use of program funds shall be completed within this 2-year time frame. Any program monies outstanding on the date which is 2 years from the date of the award are subject to the recapture provisions of this rule and shall be immediately repaid to the authority.
(b) Recipients must maintain compliance with each of its contracts with the authority.
(c) Recipients must comply with any restrictions that are stated and enforced through a regulatory agreement or any other legal document associated with any award of program funds. These restrictions may include, but are not limited to, the following:
(i) Rent restrictions.
(ii) Record keeping and reporting.
(iii) Income targeting of tenants.
(d) The authority monitors compliance with project restrictions and any other covenants by recipient in any housing and community development fund agreement. An annual compliance fee of up to $75.00 per unit may be charged for this review.
(3) The authority executive director shall name a review committee who shall meet to consider, review, score, and recommend for approval program funding awards and award amounts based on applications received in any program funding round. The review committee shall meet to formally review the applications and shall make recommendation to the authority regarding the total awards to be made in
any application year and the amount and recipient of the proposed awards. Each member of the committee shall complete a scoring sheet detailing the member’s evaluation and score of the application on the various evaluation factors or criteria. The committee shall make any funding award recommendation decisions based on the scoring of these factors or criteria, subject to revision under the applicable earmark requirements. All decisions of the committee shall be made based on the scoring outcomes and/or by majority vote as applicable. The authority shall have final authority to approve or disapprove of any funding award recommendation made by the review committee.
(4) Recapture of program funds shall be accomplished as follows:
(a) The authority shall have the power to recapture or de-obligate program funds and program awards in certain circumstances. The power to recapture or deobligate funds can apply to entire awards or portions of awards. Recaptured or deobligated funds shall be re-deposited in the fund and shall be used to make future awards in the current and next applicable program year or program funding round.
(b) The following reasons shall justify the deobligation or recapture of program funds:
(i) Inability of applicant or recipient to execute the program activity and obligate the program funds within the initial program period 2-year timeline.
(ii) Inability of the applicant or recipient to make draw downs of program funds on a regular and timely basis, such that the authority has grounds to question the overall viability of the project.
(iii) Substantial, significant, and lengthy noncompliance with the statute, rules, NOFA, RFP, application, biennial plan, allocation plan, allocation formula, program funding agreement or any other documentation or requirement related to any award. In making the decision on deobligation or recapture in this instance, the authority shall consider whether or not the non-compliance is due to factors beyond the applicant’s and/or recipient’s control.
(iv) If the total cost of the anticipated program activity is less than the total costs anticipated in the application or other documentation provided by the applicant and/or recipient, the authority can deobligate the portion of the award exceeding the actual costs of the program activity.
(v) At the end of the initial program period and any approved extension of that period, the unspent funds remaining in the program account, project account, or any other account related to the program activity shall be recaptured and returned to the fund.
(vi) If the applicant and/or recipient voluntarily returns the funds to the authority/fund and ceases all program activity and reporting upon the return of program funds.
(vii) Any other reason justifying recapture or deobligation approved by the authority, upon notice to the applicant and/or recipient of both the authority’s consideration of a recapture or obligation decision and notice that the authority has approved a resolution or motion evidencing its decision to recapture or deobligate the funds.
R 125.197 Hearings procedures.
Rule 197. Hearing procedures shall include citizen participation as follows:
(a) The authority shall hold at least 3 public hearings in separate locations throughout the state biennially on the program priorities for the upcoming 2-year. period. At the hearings, the authority shall solicit comments from the public, eligible applicants, and administrators and development owners on the housing and community development fund and program rules, guidelines, and procedures related to the housing and community development fund and program.
(b) The authority shall consider the comments received at public hearings. Biennially, the authority shall review the performance, administration, and implementation of the housing and community development fund in light of public comment it receives. The authority shall also review the biennial plan, allocation plan and allocation formula, funding goals, and earmarks relating to allocation and award of housing and community development fund monies.
(c) The authority shall submit an annual report to the governor and the legislature under MCL 125.1458b (6). The authority shall include the statutorily required information in the annual report, as well as any other information that the authority staff, review committee or authority board believe would enhance the understanding that the elected officials and citizens of the state have regarding the operation of the program.
(d) After the applicable application deadline related to the NOFA or RFP, applications for housing and community development funds are public information subject to release under the freedom of information act (FOIA) MCL 15.231 to 15.246, and the authority shall afford the public an opportunity to comment on proposed housing applications prior to the making of awards.
(e) Prior to any proposed change to these rules, the authority shall conduct a public hearing in accordance with the provisions of the administrative procedures act, MCL 24.201 to 24.328.
R 125.198 Michigan housing and community development fund advisory committee
Rule 199. Records maintenance requirements for applicants and recipients include the following:198. Pursuant to MCL 125.1458e, the authority shall seek the advice of the Michigan housing and community development fund advisory committee on all of the following:
(a) In addition to any regular reporting obligations provided under R 125.193, applicants, recipients, or both are required to maintain records on each of the following issues and shall, upon the written request of authority, submit information to the authority on any program activity or administration issues, which may include, but are not limited to the following:
(i) Such information as may be necessary to determine whether a project is benefiting low, very low, and extremely low-income households.
(ii) The monthly rent or mortgage payment for each dwelling unit in each structure assisted.
(iii) Such information as may be necessary to determine whether the applicant and/or recipient has carried out their housing or community development activities in accordance with the requirements and primary objectives of the housing and community development fund and implementing regulations.
(iv) The size and income of the household for each unit occupied by a low, very low, and extremely low-income households.
(v) Data on the extent to which any racial and ethnic group and households have applied for and benefited from any project or activity funded in whole or in part with funds made available under this program. This data shall be updated annually.
(vi) A final statement of accounting upon completion of the project.
(vii) Any other information reasonably within the applicant’s or recipient’s ability to determine and to report to the authority related to the award.
(b) Applicants or recipients, or both, shall maintain records pertinent to the tenant's files for at least 3 years.
(c) Applicants or recipients, or both, shall maintain records pertinent to funding awards including, but not limited to, project costs and certification work papers for at least 5 years.
(d) Applicants or recipients, or both, shall maintain records in an accessible location. (a) Recommendations for the biennial allocation plan required under MCL 125.1458b.
(b) Fund expenditure review, including whether the expenditures are distributed fairly and equitably, whether the expenditures satisfy the housing needs and priorities in this state, and whether the expenditures satisfy the economic needs and priorities in this state.
