"We have our reservation and we're breaking ground — when does MSHDA actually check in during construction, does Michigan's revived prevailing wage law reach our contractor, and what does MSHDA need before it will sign off on the 8609?"
MSHDA's construction-period lever is a quarterly report; the real re-tests happen at three fixed checkpoints
Once MSHDA has made an award, Section XI of the QAP ("First Evaluation and Award of Reservations") states the entire construction-period obligation in two sentences: owners "must move forward with closing on financing sources and commencement of construction in a timely manner," and must "submit progress reports to MSHDA quarterly." Failure to file accurate reports on time can cost a project negative points on a future application or the award itself — but the QAP describes no draw-inspection procedure, no requirement that an MSHDA staff member or agent walk the site before a construction draw releases, and no numeric schedule of site visits during construction itself. That is a self-reported paper trail, not a field-verification program.
What the QAP does fix precisely is a three-stage feasibility re-test that runs independently of whatever is happening on the job site. Exhibit IV, Section I ("Project Feasibility") states MSHDA will review a project's feasibility "at three different stages: 1) prior to making an award of credit, 2) at 10% Certification/closing, and 3) at Placed in Service" — and at each of the latter two stages, the review's purpose is stated identically: to confirm "the amount of credit being allocated to the project does not exceed the amount necessary for the project to be financially feasible" for the full 15-year compliance period. MSHDA states explicitly that it will keep monitoring income and expenses during both later stages but "will not hold up" Carryover documentation or 8609 issuance because of that ongoing monitoring — the credit-sizing test is a gate, the income/expense monitoring is not.
| Checkpoint | Requirement | Citation |
|---|---|---|
| 10% test (9% deals only) | CPA-acceptable evidence that the taxpayer has incurred 10% of reasonably anticipated basis within 12 months of the allocation date, plus MSHDA's Exhibit IV financial review; failure to document may rescind the allocation | 2026-2027 QAP §XII |
| 9% deals — required exhibit | 10% Certification Exhibit Checklist | 2026-2027 QAP §XII |
| 4% deals — required exhibit | Commitment Exhibit Checklist, with the Independent Accountant's Report specifically excused | 2026-2027 QAP §XII |
| LIHTC Regulatory Agreement request | No later than November 1 of the year the project is placed in service | 2026-2027 QAP §XIII |
| Placed in Service documentation | Acceptable evidence of the items on the LIHTC Placed in Service Exhibit Checklist, due the year after placed in service | 2026-2027 QAP §XIII |
The QAP references the Placed in Service Exhibit Checklist by name but does not reproduce its contents. This research could not confirm from the QAP text alone what audit level — compilation, review, or full audit — that checklist actually requires for final cost certification; confirm directly against the current checklist rather than assuming a Colorado-style full-audit standard applies in Michigan.
Developer fee and construction-contract caps are hard ceilings, not guidance
Section X sets maximum developer, developer-guaranty, and consulting fees by financing type, and the caps differ enough by deal structure that pricing a fee off the wrong table is an easy mistake. Bond-financed 4% deals get a percentage-of-cost formula with no dollar ceiling in the general fee rule (7.5% of acquisition costs, plus 7.5% of project reserves, plus 20% of other development costs for projects of 49 units or fewer or 15% for 50 units or more) — though a separate note caps the fee actually used for gap-financing sizing purposes at the lesser of that calculation or $2,100,000. Competitive 9% deals without an Emerging Developer partnership are capped at the lesser of $1,800,000 or the same 7.5%/7.5%/15% formula; a 9% deal with an Emerging Developer partnership gets that same calculation plus $300,000, capped at $2,100,000. Up to 50% of the total developer fee can be deferred to close a funding gap, and if the proforma shows insufficient cash flow to repay it within 15 years, the applicant has to explain in narrative how it gets repaid anyway.
Section X.D closes an identity-of-interest loophole directly: where the Applicant and General Contractor are related parties, any incentive fees still count against the caps above, and a general contractor acting as its own subcontractor may only take additional overhead and profit if MSHDA finds the amount within industry standards — the contractor's overhead, profit, and general requirements remain capped at the same percentages regardless. Unlike Colorado's QAP, which explicitly states that its fee caps get re-measured against the audited Development Budget at Final Application, Michigan's QAP does not say in so many words that it re-tests these percentage caps against final, as-built costs at cost certification — the closest textual hook is Exhibit IV's Placed in Service review of "sources and uses of funds and the total financing planned," framed as a credit-sizing test rather than an explicit fee-cap re-test. Treat that as a real difference in how the two states' QAPs are worded, not as evidence Michigan's caps are any less binding at the time fees are actually paid.
Design standards: a real Visitability mandate, and a real gap on Section 504 and the Fair Housing Act
Exhibit I, Section XXIV requires "FHA Type C design features" — the industry's visitability standard, covering a zero-step entrance and an accessible route to at least a powder room and the main living level — in every unit that has first-floor living space or is reachable by elevator. Preservation projects unable to meet that are directed to contact MSHDA's LIHTC department about a waiver rather than being exempted outright. Section XII separately makes the Energy Efficient Buildings Policy a threshold item, not merely a scoring one: every project must incorporate one of MSHDA's approved third-party standards (detailed at Tab M of the Combined Application), and a project creating units under 500 square feet has to submit a marketability narrative under Section XXV.
What the current QAP and its Scoring Criteria do not contain is any explicit treatment of Section 504 of the Rehabilitation Act, the Uniform Federal Accessibility Standards, or the Fair Housing Act's design-and-construction requirements for covered multifamily dwellings — a full-text search of both documents turned up nothing beyond an MSHDA-ADA contact email address for accommodation requests. That does not mean those obligations don't apply: the Fair Housing Act's design-and-construction rule (24 CFR §100.205) reaches covered multifamily buildings under federal law regardless of what any state's QAP says, and Section 504 attaches independently wherever a project carries direct federal financial assistance (for example, project-based vouchers, which this same QAP encourages developments to seek). What a Michigan-specific reader cannot get from the QAP itself is MSHDA's own implementing detail on any of that — MSHDA publishes a separate Standards of Design for Preconstruction manual for architects and contractors, referenced on its developer resources pages, and this research was not able to independently verify that manual's accessibility content against the QAP text reviewed here. Confirm the fuller accessibility scope directly against that manual and the Combined Application's own addenda before treating the QAP's Visitability clause as the whole of Michigan's accessibility requirement.
Prevailing wage: a genuinely reinstated state law, with a narrower reach than "MSHDA is a state authority" might suggest
Michigan's original prevailing-wage statute, 1965 PA 166 (formerly MCL 408.551 et seq.), was repealed by a citizen initiative, 2018 PA 171, effective June 6, 2018. A state prevailing-wage requirement came back five years later: 2023 PA 10, "Prevailing Wages on State Projects," took effect February 13, 2024 and was amended by 2024 PA 110, effective April 2, 2025. Both are current law as of this research. The Act is administered and enforced by the Michigan Department of Labor and Economic Opportunity (LEO), which runs a state-project-registration system — a contractor or subcontractor cannot bid on, list a sub for, or perform work on a covered state project without holding a current registration, and LEO can suspend or revoke one for violations.
The live question for a Michigan LIHTC deal is whether that reinstated law reaches ordinary MSHDA-financed apartment construction, and the Act's own definitions section answers it more narrowly than the phrase "financed by the state" alone would suggest. MCL 408.1101(l) defines a "state project" as new construction, alteration, repair, or similar work on "public buildings, schools, works, bridges, highways, or roads" that is both (A) "authorized by a public contracting agent" and (B) "sponsored or financed in whole or in part by this state" — plus, separately, certain large energy facility projects. A privately-owned LIHTC apartment building, built under a private construction contract between a private Limited Dividend Housing Association and a private general contractor, is not a "public building" in the ordinary sense of that phrase, and the contracting party is not a "public contracting agent" as the Act defines that term (an officer, board, or commission of the state or a political subdivision that itself enters into the construction contract) — even though MSHDA, a state authority, is the source of the tax credit and, on many deals, of gap-financing loans.
Reading the statute's own text, PA 10's prevailing-wage mandate does not appear to reach a standard MSHDA LIHTC construction contract. That is this research's own textual analysis, not a conclusion stated anywhere by MSHDA or LEO — a full-text search of the current 2026-2027 QAP and its Scoring Criteria found no prevailing-wage threshold requirement, no scoring item tied to it, and no cross-reference to PA 10 or its predecessor at all. That silence cuts against at least one secondary source encountered during this research that asserted, without citing specific QAP language, that prevailing wage is now among Michigan's LIHTC threshold requirements; this research could not corroborate that claim anywhere in the primary QAP or Scoring Criteria text and it should be treated as unconfirmed until checked directly with MSHDA. What the QAP does confirm is narrower and different: Exhibit V's basis-boost criteria award additional basis to a project that happens to already be "subject to Davis-Bacon or BABA requirements" (item 10) — federal prevailing-wage and domestic-sourcing rules that attach because of some other funding source layered onto the deal, such as HOME funds — not because LIHTC itself imposes them. Separately, MSHDA's Missing Middle Housing Program (a different, non-LIHTC program) publishes its own Davis-Bacon-referenced prevailing-wage document, which shows MSHDA is not unfamiliar with administering prevailing wage — just not, on this research's reading of the current QAP, for LIHTC construction generally.
Where this goes wrong
- Assuming MSHDA sends an inspector to the job site before each construction draw. The QAP's only stated construction-period obligation is a quarterly self-reported progress report (§XI); its detailed physical-inspection regime (Exhibit VI) targets post-placed-in-service compliance monitoring, and this research found no MSHDA draw-inspection procedure described anywhere in the QAP text.
- Assuming Michigan's reinstated prevailing wage law (2023 PA 10) automatically applies to a standard MSHDA LIHTC construction contract because MSHDA is a state authority. The Act's own definition of a "state project" (MCL 408.1101(l)) is limited to public buildings, schools, works, bridges, highways, or roads authorized by a public contracting agent — a privately-owned LIHTC apartment project under a private construction contract does not fit that definition on its plain text, and this research found no MSHDA or LEO guidance resolving the question either way; confirm current treatment directly before relying on either reading.
- Trusting a secondary-source claim that prevailing wage is now a Michigan LIHTC threshold requirement. This research's direct read of the current 2026-2027 QAP and Scoring Criteria found no such threshold item, no scoring credit tied to it, and no cross-reference to PA 10 anywhere in either document.
- Confusing the QAP's Davis-Bacon/BABA basis-boost criterion (Exhibit V, item 10) with an LIHTC-wide wage mandate. It is a basis-boost bonus for projects already subject to Davis-Bacon or BABA because of a different, separately layered funding source — not a requirement the LIHTC program itself imposes.
- Assuming the same cost-certification audit standard applies in Michigan as in a state like Colorado (which requires a full GAAS audit opinion by name). Michigan's QAP requires CPA evidence for the 10% test and references a Placed in Service Exhibit Checklist for final documentation, but its own text does not state whether a compilation, review, or full audit is required at that final stage — confirm directly against the current checklist.
- Assuming the QAP's silence on Section 504, UFAS, and Fair Housing Act design-and-construction requirements means those rules don't apply in Michigan. They attach as a matter of federal law independent of any state QAP; the QAP's only stated design-accessibility item is the FHA Type C Visitable-unit threshold (Exhibit I §XXIV), and the fuller accessibility picture likely lives in MSHDA's separate Standards of Design for Preconstruction manual, which this research did not independently verify.
- Treating the 4% deal's Commitment Exhibit Checklist carve-out (no Independent Accountant's Report) as meaning 4% deals face no financial review at all. The carve-out removes one specific item; 4% deals still go through MSHDA's Exhibit IV financial review at each of the three feasibility-review stages.
- Treating Section X's developer-fee and construction-contract percentage caps as negotiable guidance. They are stated as hard maximums — with an absolute dollar ceiling layered on for 9% and gap-financing-sized bond deals — and identity-of-interest general contractor arrangements are explicitly held to the same percentage limits, not a higher industry-standard-only test.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies