Senate Bill 432 Implementation (PILOT Legislation)

February 13, 2023

House Bill 432 to Allow for Participation in PILOT Programs
Implementation Polices in Development with the State of Michigan
and Local Units of Government

The State of Michigan recently passed legislation that would allow local governments the ability to develop payment in lieu of taxes (PILOT) policies and enter into PILOT agreements with developers who are building or rehabbing workforce housing units without the previous requirement of state or federal tax credits.

Currently, local units of government may participate in PILOTs for developments as part of the developer’s application process for low-income housing tax credits through MSHDA. However, local governments don’t have discretion to award a PILOT unless the developer is awarded the MSHDA tax credits, a competitive program. 

Senate Bill 432, approved December 13, 2022, allows local governments the discretion to enter into PILOT agreements for developments that are not applicants for state or federal tax credits. The legislation does require MSHDA to be involved in the process, and that process is still in development. In addition, local units of government will be required to develop an ordinance to allow for and approve PILOT agreements.

“This new legislation allows for a needed tool that the City can use to partner on local workforce and affordable housing opportunities. Senate Bill 432 removes a barrier that many developers have been unsuccessful at acquiring MSHDA funding due to its competitive nature. We look forward to the development of an easier path toward supporting and growing affordable housing opportunities,” stated Mayor Richard Lewis.

City Attorney, Lauren Trible-Laucht, and President of the Michigan Association of Municipal Attorneys, is working closely with MSHDA and the State of Michigan to develop the necessary policies and a model ordinance that municipalities across the state can use for implementation.

“We are excited about the change in legislation to allow for PILOT agreements to be approved more easily and support the City Commission’s goals related to addressing affordable housing. We are actively working on the required policies within MSHDA and a local ordinance to allow for implementation of the program,” stated Lauren Trible-Laucht, City Attorney.

Implementation is expected in 2023 and will require the City Commission adopt a local ordinance. Application materials will then be available to launch the program locally.