SB 966: 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 - Michigan

As Passed by the Senate → As Passed by the House · 11 edits · Jul 3, 2026

MAJOR

The House substantially restructured Michigan's state housing tax credit program, renaming it from the 'state low-income housing tax credit program' to the 'housing opportunity tax credit program.' The most significant change is a dramatic reduction in the annual credit cap from $250 million (Senate version) to a base of $42 million for the 2027 award cycle. The House version also introduces a more complex application process with set-asides for new construction, preservation, and rural areas, and creates a new category of '4% qualified projects' that did not exist in the Senate bill.

FISCAL

The annual credit cap was reduced from $250 million (starting in 2027, CPI-adjusted) to a base annual amount of $42 million for the 2027 award cycle, with subsequent cycles adjusted by CPI. This is roughly an 83% reduction in available state tax credits.

The per-project credit limit changed. The Senate version capped the annual credit at the lesser of the first-year federal credit (without the IRC 42(f)(2) adjustment) or one-sixth of the reserved amount. The House version caps it at the lesser of the amount necessary for financial feasibility or the 'adjusted annual federal credit amount' (defined as 1/6 of the aggregate federal credit over the full 10-year federal credit period).

SCOPE

New set-aside requirements: up to 50% of the award cycle cap at the authority's discretion, not less than 25% for new construction projects, not less than 25% for preservation projects, and not less than 30% of those amounts designated for rural areas (defined as cities, villages, or townships with population of 35,000 or less, or USDA/Census Bureau-designated rural areas).

DEFINITION

New definition of '4% qualified project' - a qualified project eligible for both a federal LIHTC under IRC section 42(h)(4) and a bond under section 44c where the authority is not the bondholder. These projects get first-come, first-served treatment during application windows.

The program was renamed from 'state low-income housing tax credit program' to 'housing opportunity tax credit program.' Key terminology changes include 'eligibility certificate' becoming 'eligibility statement,' 'project owner' becoming 'owner,' and 'equity owner' becoming 'member' or 'qualified taxpayer.'

New definitions added for 'new construction' (newly constructed housing units, excluding rehabilitation or adaptive reuse), 'preservation' (rehabilitation of existing units or adaptive re-use), 'rural area,' 'award cycle,' 'application window,' 'approval notice,' and 'allocation report.'

REQUIREMENT

New application window system: applications accepted in Q1 (January 1 - March 31) and Q3 (July 1 - September 30) of each award cycle. The authority must approve and allot not less than 45% of the set-aside for 4% projects if sufficient applications are received.

The credit period definition changed from 6 taxable years (with an election to start in the succeeding taxable year) to 6 calendar years beginning with the calendar year the building is placed in service. For multi-building projects, the owner may elect to treat all buildings as one project or each independently.

The House version adds a requirement that the owner and authority use a regulatory agreement that gives preference to maximizing long-term affordability, which was not present in the Senate version.

ENFORCEMENT

The recapture mechanism changed. The Senate version had the authority directly recapture a proportionate state credit and certify it to the state treasurer for assessment. The House version requires the owner to report recapture events to the designated reporter, department of treasury, and authority, mirroring federal LIHTC recapture reporting procedures.

TECHNICAL

The enacting section companion bills changed from Senate Bill No. 967 and Senate Bill No. 968 to House Bill No. 5806 and House Bill No. 5807, reflecting the bill moving through the House.

As Passed by the House → Substitute (H-1) · 2 edits

MINOR

This is a procedural transition from the Senate-passed version of SB 966 to a House Substitute (H-1). The bill amends the State Housing Development Authority Act of 1966, specifically Section 22 (powers of the authority) and adds new Section 22e establishing a housing opportunity tax credit program. Based on the visible portion of the diff, the substantive policy content appears unchanged; the differences are primarily formatting (line breaks, indentation) and cleanup of legislative amendment markup language.

TECHNICAL

The bill header changed from 'Senate Bill No. 966' to 'House Substitute for Senate Bill No. 966,' indicating the House adopted its own version of the Senate bill. This is a procedural step in the legislative process, not a policy change.

Formatting and line-break changes throughout the text of Section 22 and Section 22e. The substantive language of the authority's powers (subsections a through ll) and the housing opportunity tax credit program provisions appear substantively identical between versions.

Senate Concurred Bill → As Passed by the House · 1 edit · Jul 3, 2026

MINOR

The bill text underwent a reformatting adjustment regarding the definition of a 'Flow-through entity.' The content of the definition remains identical, listing the same types of business structures (such as S corporations, partnerships, and trusts) that qualify for the provision. This change appears to be a technical formatting update rather than a substantive policy shift.

Scope change

No change in the scope or applicability of the bill; the definition of eligible entities remains the same.

TECHNICAL

The layout and line breaks within the definition of 'Flow-through entity' were altered, but the legal meaning and list of included entities were not changed.

Substitute (H-1) - 3 → Senate Concurred Bill · 6 edits

MODERATE

The bill was converted from a House substitute to the final Senate concurred version, adding significant new powers for the State Housing Development Authority. These changes expand the authority's ability to manage loans, foreclose on properties, and invest funds, while also establishing a new 'housing opportunity tax credit' program to encourage affordable housing development starting in 2027.

Scope change

The bill's scope expanded significantly by adding new powers for the housing authority, including the ability to foreclose on loans, acquire properties at foreclosure sales, and establish a new tax credit program for affordable housing projects.

FISCAL

Added a new Section 22e establishing a 'housing opportunity tax credit' program for qualified affordable housing projects, with a $42 million cap for the 2027 cycle and subsequent annual adjustments based on inflation.

ENFORCEMENT

Granted the authority new powers to foreclose on mortgages, acquire properties at foreclosure sales, and bid on properties to protect its financial interests.

REQUIREMENT

Added authority to appoint new directors to nonprofit housing corporations under specific circumstances, such as when a loan is in jeopardy or the organization violates rules.

SCOPE

Expanded the authority's powers to include accepting gifts and grants, procuring insurance, investing reserve funds, and participating in federal housing assistance programs.

DEFINITION

Introduced numerous new definitions for the tax credit program, including terms like 'qualified project,' 'award cycle,' 'flow-through entity,' and 'rural area.'

TECHNICAL

Corrected grammatical errors and inconsistent phrasing in the original text, such as fixing 'shall must' to 'shall' and 'shall are' to 'shall not be.'

Substitute (S-1) - 3 → Substitute (H-1) - 2 · 1 edit

MINOR

The bill text was updated to reflect that this is a House substitute version rather than a Senate version, indicating the bill has moved from the Senate to the House for further consideration. The changes are purely administrative and technical, updating the bill version identifier from S-1 to H-1 and replacing placeholder tracking codes.

TECHNICAL

The bill header was changed from 'Substitute for Senate Bill' to 'House Substitute for Senate Bill' to reflect its current stage in the legislative process.

Substitute (H-1) → Substitute (S-1) · 1 edit

MINOR

The bill text was updated from the House version (H-1) to the Senate version (S-1), reflecting the standard legislative process where a bill is amended between chambers. The changes are purely administrative, updating the version identifier and tracking codes without altering any substantive policy, funding, or legal requirements.

TECHNICAL

The bill version label was changed from 'H-1' (House Substitute) to 'S-1' (Senate Substitute), and the associated tracking codes were updated to reflect the Senate's handling of the bill.

As Passed by the Senate → Substitute (H-1) · 4 edits

MODERATE

The bill was converted from a Senate version to a House substitute version, primarily involving formatting adjustments, renumbering of sections, and the insertion of tracking numbers. The substantive policy text regarding the State Housing Development Authority's powers and the new low-income housing tax credit program remains effectively unchanged in meaning.

TECHNICAL

The document header was changed from 'Senate BILL NO. 966' to 'HOUSE SUBSTITUTE FOR SENATE BILL NO. 966' to reflect the legislative chamber that processed the bill.

Section numbers and lettering were reorganized and renumbered to align with House formatting standards, though the content of the powers granted to the authority remains the same.

Tracking numbers (KAS) and page markers were inserted throughout the document, which are administrative artifacts used during the legislative process.

Minor line breaks and spacing were adjusted to fit the House substitute format, but no words were added, removed, or altered to change the legal meaning.

Senate Introduced Bill → As Passed by the Senate · 3 edits · Jun 18, 2026

MINOR

The bill was amended to increase the annual funding cap from $100 million to $250 million starting in 2027, clarify that specific federal tax code exceptions do not apply to state tax credits, and fix formatting inconsistencies in the bill title and section headers.

Scope change

The scope of funding available for qualified projects was significantly expanded by increasing the annual budget cap.

FISCAL

Increased the annual funding cap for qualified projects from $100,000,000 to $250,000,000 effective for the 2027 calendar year.

ELIGIBILITY

Clarified that the state tax credit is contingent on an eligibility certificate and specific filings, explicitly stating that certain Internal Revenue Code exceptions do not apply.

TECHNICAL

Corrected formatting errors in the bill title and section headers, including a typo in 'people' and inconsistent spacing.

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

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