If you are a developer or investor seeking financing for a multi-family affordable housing project in Michigan, you may need to enter into a regulatory agreement with the Michigan State Housing Development Authority (MSHDA). This is a legal document that outlines certain requirements for the property, such as rent limits and tenant eligibility criteria.

The purpose of the MSHDA regulatory agreement is to ensure that the property remains affordable to low and moderate-income tenants for a designated period of time. This is achieved through a variety of mechanisms, including rent controls, income restrictions, and occupancy limitations.

One important aspect of the regulatory agreement is the rent limits. MSHDA sets maximum allowable rents for each unit size, based on the area median income (AMI) for the surrounding region. These rent limits are typically lower than market rates, making the property more affordable for low and moderate-income tenants.

Another key component of the regulatory agreement is the tenant eligibility criteria. MSHDA requires that a certain percentage of units be set aside for tenants who meet certain income criteria. For example, a property may be required to reserve 20% of its units for households earning less than 50% of the AMI.

In addition to these requirements, MSHDA may also impose restrictions on the use and operation of the property. For example, they may require that the property be maintained in a certain condition, or that certain safety measures be implemented.

It is important to note that the regulatory agreement is a legally binding document, and failure to comply with its terms can result in penalties or legal action. It is therefore essential for developers and investors to carefully review and understand the terms of the agreement before entering into it.

In conclusion, the MSHDA regulatory agreement is an important tool for ensuring the long-term affordability of multi-family affordable housing projects in Michigan. By outlining specific requirements for the property, including rent limits and tenant eligibility criteria, MSHDA helps to ensure that low and moderate-income tenants have access to safe and affordable housing. As a developer or investor, it is important to carefully review and comply with the terms of the regulatory agreement to avoid penalties or legal action.