The Michigan State Housing Development Authority (MSHDA) has proposed changes to its rules to make projects more feasible for LIHTC developers and to encourage new developers to participate in the program.
A major change would eliminate the requirement that investors provide a binding commitment letter to purchase a project’s tax credits. Instead, equity investors would only have to show a serious interest and that due diligence has been conducted.
The Authority is also proposing to lengthen the amount of time after receiving a priority for allocation to closing on the tax credit equity from 120-days to 180-days.
Another change under consideration would eliminate the requirement that sponsors submit a fee with their applications equal to six percent of the annual credit allocation. The new provision would require submission of a three percent fee at the time of reservation, with the remainder being paid at equity closing.
In order to encourage the participation of new developers, the Agency is proposing to reduce total points for experienced developers and management agents from 30 to 20.