MT. PLEASANT, MI - The Michigan State Housing Development Authority (MSHDA), the United States Department of Agriculture Rural Development (USDA-RD) and the United States Department of Housing and Urban Development (HUD) today announced the nation's first launch of a pilot program that will reduce regulatory burdens on affordable housing developers and owners, as well as help state and federal agencies' staff to better serve low-income families who rent their homes.
Officials with MSHDA, USDA-RD and HUD approved the first Memorandum of Understanding (MOU) nationwide to align Subsidy Layering Review requirements between the three agencies during a press conference this morning in Mt. Pleasant at the Annual Council for Affordable and Rural Housing (CARH) meeting.
"The goal of this agreement is to create seamless coordination between the agencies providing housing assistance," said U.S. Dept. of Agriculture Rural Development State Director for Michigan James J. Turner. "It only makes sense for all levels of government to work together, to better coordinate services and remove duplication. This effort is part of an ongoing Obama Administration effort to streamline services and better coordinate between federal and state agencies to make sure our taxpayers are not overburdened."
In response to the White House's Domestic Policy Council request for better coordinated federal rental policy, MSHDA has worked with USDA-RD and HUD since April to align the often burdensome program requirements of different affordable rental housing government programs. Almost all federal housing programs have statutory requirements requiring the administering agencies to confirm that, at the time of making a grant or subsidized loan, the total amount of subsidy being provided by public sources does not exceed eligible costs. When developers of affordable housing are awarded multiple sources of public funding, they consequently become subject to multiple Subsidy Layering Reviews (SLRs), which cause delays and add costs to projects that are preparing to start construction.
The new initiative will increase communication between agencies, provide a "one-stop-shop" for development applicants, implement timelines to ensure expediency of reviews and simplify the application process, which will benefit owners, developers, tenants and local communities working to create and preserve affordable housing.
"This initiative is an excellent example of HUD partnering with federal and state agencies to eliminate burdensome requirements for our customers," said Louis M. Berra, Director of HUD's Grand Rapids office. "The subsidy layering review process has been streamlined to create a more timely and effective process for those who pursue financing options with the federal government."
Historically, the issue of subsidy layering has been addressed differently by the United States Department of Treasury (Treasury), HUD, and USDA-RD. Subsidy layering is a HUD statutory requirement to assure that federal resources are neither duplicative nor wasteful when applied to affordable rental housing. These differences are reflected in the extent of subsidy layering analysis that the agencies require; ranging from USDA that relies on the Low Income Housing Tax Credit (LIHTC) review and does not require a formal subsidy layering analysis to HUD's multifamily HOME program, which has detailed guidance on how the analysis must be completed.
The MOU approved by MSHDA, HUD and USDA-RD is an administrative solution that better aligns and utilizes state and federal affordable rental housing program policies.
"Today's initiative is an important step forward in MSHDA's effort to continue affordable rental housing's success in serving our most rent-challenged and at-risk families," said MSHDA Executive Director Gary Heidel. "Through the launch of MSHDA's pilot program, our partners and customers can begin to realize cost- and time-savings that will help enable low-income families to have access to affordable housing where it is needed most."
The Michigan State Housing Development Authority (MSHDA) provides financial and technical assistance through public and private partnerships to create and preserve decent, affordable housing for low- and moderate-income residents and to engage in community economic development activities to revitalize urban and rural communities.*
*MSHDA's loans and operating expenses are financed through the sale of tax-exempt and taxable bonds as well as notes to private investors, not from state tax revenues. Proceeds are loaned at below-market interest rates to developers of rental housing, and help fund mortgages and home improvement loans. MSHDA also administers several federal housing programs.