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HB 5805

Housing: housing development authority; housing opportunity tax credit program; establish and administer. Amends sec. 22 of 1966 PA 346 (MCL 125.1422) & adds sec. 22e. TIE BAR WITH: HB 5806'26, HB 5807'26

2025-2026 Regular Session Introduced by Joe Aragona and 2 co-sponsors

Establishes the Housing Opportunity Tax Credit program (HOTC) tied to 4% LIHTC projects to spur qualified housing in Michigan, with annual caps and defined allocation rules.

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Bill Summary · HB 5805

Summary of HB 5805 (Michigan, 2025-2026)

Purpose and intent

  • HB 5805 amends the Michigan State Housing Development Authority Act of 1966 to expand the authority’s powers and, notably, to establish the Housing Opportunity Tax Credit (HOTC) program. The HOTC is designed to encourage the development of qualified housing projects within Michigan, in coordination with the Department of Treasury.
  • The bill ties into HB 5806 and HB 5807 as conditions for enactment (tie-bar), meaning the changes take effect only if those companion bills are enacted.

Key provisions and changes

  • General authority enhancements (Sec. 22 and related provisions):
    The act already grants broad powers to the Michigan State Housing Development Authority (MSHDA). HB 5805 reinforces this framework by detailing numerous permissive powers, including contracting, research, financing, property acquisition, loan activities, regulatory agreements, and covenant enforcement to satisfy federal and state housing requirements.

  • Housing Opportunity Tax Credit Program (Sec. 22e):

    • Establishes, implements, and administers the HOTC program to stimulate qualified housing projects in Michigan.
    • The authority, with the Department of Treasury, will develop application forms, procedures, and evaluation criteria for HOTCs.
    • The HOTC is structured to complement the federal Low-Income Housing Tax Credit (LIHTC) framework, with credits aligned to project feasibility and federal credit benchmarks.

  • Award cycles and caps (Sec. 22e):

    • For cycles beginning January 1, 2027, HOTC applications will be accepted in conjunction with 4% LIHTC-qualified projects and allocated per the authority’s qualified allocation plan or an alternative competitive process.
    • The annual cap starts at $42,000,000 for 2027 and will be adjusted annually by the U.S. CPI increase from the prior year.
    • A minimum 45% of any award cycle cap must be allocated to qualified projects if applications are sufficient.
    • Unallocated credits may be reapportioned to other qualified projects under the qualified allocation plan or alternative processes.

  • Allocation and timing (Sec. 22e):

    • Owners must submit applications; 4% qualified projects are reviewed on a first-come, first-served basis with a simultaneous treatment of same-day submissions.
    • An award (reservation letter) is contingent on final cost certification and issuance of an allocation statement, which specifies annual credit amounts over the credit period.

  • Credit transferability (Sec. 22e):

    • Flow-through entities may allocate HOTCs among members, including nonprofit members, regardless of LIHTC allocations, subject to internal tax rules and agreements.

  • Recapture and reporting (Sec. 22e):

    • Recapture events must be reported to the Department of Treasury and the Authority, with allocations flowing through to members appropriately.

  • Definitions (Sec. 22e):

    • Provides detailed definitions for terms used in the HOTC program (qualified project, eligible costs, credit period, rural area, new construction, preservation, etc.).

Who is affected

  • Projects and developers: Entities pursuing affordable housing developments that qualify for LIHTC and HOTC will access credits through MSHDA.
  • Owners and investors: Flow-through entities and their members may receive and allocate HOTCs; detailed reporting and compliance obligations will apply.
  • Localities and rural areas: The program contains set-asides and geographic considerations (e.g., rural set-asides) to promote varying project types and locations.
  • State agencies: MSHDA and the Department of Treasury will coordinate administration, application processing, and monitoring.

Procedural and timeline notes

  • The HOTC program and many of its provisions become effective only if HB 5806 and HB 5807 are enacted.
  • Initial HOTC award cycle cap starts at $42 million (2027) and will adjust with CPI each year thereafter.
  • Application windows and evaluation criteria emphasize maximizing unit production, preservation, and rural deployment.

If you’d like, I can provide a side-by-side comparison with current law or a plain-language FAQ for developers and applicants.

Compiled from official sources — confirm details with the bill’s official record.

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