Middle-Income Housing Authority (MIHA)
Frequently Asked Questions
Colorado’s Middle Income Housing Authority was created by SB22-232 and amended by SB23-035.
Last Updated: February 2024
Overview
This document includes information about MIHA. For other questions or more information email info@coloradomiha.com.
Table of Contents
General Questions
What is MIHA?
The Middle Income Housing Authority (MIHA) was established by Colorado Senate Bill 22-232 (passed June 3, 2022), and amended by SB23-035, as codified as the Middle-Income Housing Authority Act, being Part 11 of Article 4 of Title 29, Colorado Revised Statutes, as from time to time supplemented and amended (the “Act”). MIHA is a body corporate and a political subdivision of the state, but not an agency of state government. MIHA is a special purpose authority. MIHA’s purpose is to promote affordable rental housing projects for middle-income workforce throughout Colorado.
MIHA is governed by a board of directors (“Board”) composed of appointees by the Governor, the Office of Economic Development and International Trade’s (OEDIT) Executive Director and Department of Local Affairs (DOLA) Division of Housing Director. The Board also has two non voting members, appointed by the Senate Majority Leader and either the House Majority Leader or the House Minority Leader to ensure that both political parties are represented. MIHA will support middle-income workforce housing by issuing bonds to finance affordable rental housing projects and the affordable housing component of public-private partnerships.
The Board makes all decisions for the Authority. MIHA is currently administered by the Colorado Office of Economic Development and International Trade (OEDIT). Sierra Management Group provides financial advisory services.
What is the MIHA definition of middle income housing?
Middle-income individuals and families mean those earning between 80% and 120% area median income (AMI), or 140% AMI for rural resort areas. The AMI limits may be increased at the discretion of the board and lower AMIs may be permitted in certain circumstances. See FAQ #17 below. AMIs are based on the U.S. Department of Housing and Urban Development (HUD) county AMIs, which are reposted by the Colorado Housing and Finance Authority (CHFA) each year.
Does MIHA have funding available?
MIHA does not have funding available for projects. The Authority is authorized to issue tax exempt revenue bonds. The bonds are payable solely from all or a specified portion of the revenues or assets of the Authority or the revenues and assets of the affordable rental housing component of a public-private partnership.
How are the bonds secured?
MIHA bonds may be secured by a mortgage, deed of trust, pledge, other security interest in or encumbrance on any of the revenue, property, or assets of the Authority or the revenue, property, or assets of the affordable housing component of a public-private partnership.
Are MIHA bonds tax exempt and what are the tax requirements?
Depending on the financing structure and an opinion from nationally-recognized bond counsel, the interest on bonds issued by MIHA may be either tax-exempt (i.e., excluded from gross income under federal income taxes pursuant to Section 103 of the Tax Code) or federally taxable. Tax-exempt bonds will be subject to the requirements of the Tax Code for essential purpose bonds.
All bonds issued by the Authority, the interest on and other income from such bonds, and the transfer of such bonds are exempt from income taxation, real and personal property taxation, and all other taxation and assessments in the State.
Are MIHA projects tax exempt?
All property owned by MIHA, as well as the affordable rental housing component of property in a public-private partnership, are exempt from income tax, local property taxes, state and local sales and use taxes, and other assessments in the state. MIHA is authorized to make payments in lieu of taxes to the state and local governments.
During the local government notification period, jurisdictions where the project is located are required to confer with special taxing districts regarding a project and may request payment in lieu of taxes. The Authority may agree to make payments in lieu of property or sales and use taxes.
What is the MIHA Pilot Program?
MIHA was established as a pilot program with the authority to select up to 3,500 middle-income units for bond financing. At that time, the Authority will report to the Legislature with recommendations for the continued operations of the Authority. Eighty percent of MIHA’s portfolio must be new construction. See Question 27 for more information on this definition.
How can I get more information or sign up for updates?
For more information email info@coloradomiha.com. To receive updates please subscribe to our mailing list.
Application Process
How do I apply?
Go to coloradoMIHA.com to download the Initial Application. Instructions to submit the Initial Applications are on the document. If the Initial Application is approved, you will be invited to submit a Final Proposal which will be reviewed by the MIHA Board of Directors.
How will projects be evaluated?
Projects will be evaluated in two stages.
- Initial Application: The project will be evaluated based statutory criteria and priorities of the Board including but not limited to the following;
- A comprehensive plan of finance including amount of bonds and a proforma detailing the capital stack, sources and uses, rental income, development costs, and summary of cash flows,
- Project location,
- Project description, and
- Project sponsor’s experience.
- Final Proposal: Projects selected based on their Initial Application will be invited to submit a Final Proposal. The final selection will be based on statutory criteria and priorities of the Board including but not limited to:
- Financial feasibility and risk evaluation,
- Community need, including a current market study or a housing needs assessment, and
- Local government and stakeholder support.
How do I receive assistance on my Initial Application?
Sierra Management Group is the financial advisor reviewing Initial Applications for MIHA. Please call or email John Stoecker with Sierra Management Group at (760) 889-2121 or jstoecker@smgbonds.com with any specific questions on your Initial Application.
For general questions about MIHA please email info@coloradomiha.com.
How often does MIHA accept applications?
Applications will reopen in March 2024 and MIHA will accept applications on a rolling basis until up to 3,500 units are selected. MIHA reserves the right to close the application window to ensure timely review of applications received. Notice will be posted in advance of any application closing.
Who is eligible to apply?
The following entities are eligible sponsor projects:
- for-profit developers
- nonprofit developers
- housing authorities
- local governments
The Authority is also authorized to enter into public/private partnerships (PPP) between the Authority and one or more public or private entities or persons to work together to acquire, construct, finance, or operate an affordable rental housing project.
What is the Local Government Notification Process?
The Authority will provide written notice of a proposed affordable rental housing project to the county and municipality where the project is proposed within 14 days of the Authority receiving the formal proposal. For purposes of the local government notice, receipt of a project proposal shall occur upon receipt by the Authority of the Final Proposal from a sponsor.
The county or municipality may object to a project in accordance with subsection (4)(b) of the Act at any time within 90 days after receipt of the notice. The Authority shall not select a proposed affordable rental housing project if the county or municipality in which the project is to be located objects to the project in accordance with the Act. The Authority shall use best efforts to work in cooperation with overlapping local government entities for any project during the 90 day objection period. If after negotiations, a county or municipality, or both, provide written notice to the Authority that the proposed project is not feasible along with reasons why, the Authority shall not select that project, or shall request that the proposal be resubmitted for reconsideration by the Authority and applicable county or municipality, or both. If a county or municipality has not approved or objected to the project within 75 days after receiving the notice from the Authority then the Authority must deliver a second notice. Any objections are due within 90 days of the first notice being sent. A county or municipality may approve a proposal at any time, which ends the 90 day objection period.
Are MIHA bonds tax exempt and what are the bond requirements?
Please see the response to FAQ #5, above.
Are MIHA projects tax exempt and what are the requirements?
Please see the response to FAQ #6, above.
MIHA Project Requirements
What are the affordability requirements for units financed and owned by MIHA?
MIHA bonds are allowed to finance units with Area Median Incomes (AMIs) of 80% - 120% (or 140% for projects in areas classified as Rural Resort by the Department of Local Government (DOLA)). An applicant may, at any time, request that the Board grant the proposal an exception to the upper limits of the AMI levels for middle-income individuals and families based upon demonstrated unique economic and housing cost attributes in the local community in which the housing project is proposed to be located. Units below 80% AMI are permitted if required by local rules and regulations. At least 30% of the middle-income units must be offered at 80% AMI or demonstrably target the lowest AMI possible. Units must be rented at a 10% discount to market rents. Market rents may be based on market studies and other available information and need not necessarily be county-wide.
How do I know whether the county where my project is located is Rural, Rural Resort, or Urban?
County classifications can be found in HERE.
Does MIHA have quotas for projects in rural, rural resort, or urban areas?
No, however, MIHA projects must have geographic, income and project size diversity and be built by a variety of developer entities.
Can MIHA projects include commercial space or be mixed-use?
The Act provides that an affordable rental housing project may include commercial space if the Board determines that the commercial space is incidental to the housing component of the project. The Authority may enter into partnerships that could include commercial space.
What is the affordability period for MIHA projects?
Projects financed by MIHA bonds will maintain affordability for the duration of MIHA ownership. MIHA reserves the right to apply additional affordability requirements. Per statute, if MIHA decides to sell the property, all local public governments and housing authorities will be notified. All other affordability requirements from other funding sources must also be met.
Who manages MIHA properties?
The Authority will favor proposals with a property manager identified for a period of at least ten years.
Can other funding sources be used in the capital stack of MIHA projects?
Yes, except that the capital stack may not include federal low-income housing tax credits (LIHTC), state affordable housing tax credits, USDA’s 515 rural rental housing loan program subsidies or private activity bonds (PABs). Other funding sources may be stacked with MIHA if the programs can support MIHA’s AMI requirements.
Can MIHA acquire existing projects?
Yes, the Authority may select projects that propose the acquisition of existing residential or commercial units. MIHA may also enter into an agreement with a private entity to acquire property which will be converted to middle-income units. However, the Authority may not acquire existing properties supported with federal low-income housing tax credits (LIHTC), Colorado state affordable housing tax credits, or USDA’s 515 rural rental housing loan program.
Can workforce housing be restricted to any specific workforce?
The MIHA Act provides that selection criteria for tenants must include priorities for individuals who work, or families where at least one member of the family works, in the area in which the affordable rental housing project is located. Additionally, the Board may establish additional priorities based on the facts and circumstances applicable to the affordable rental housing project which will include local regulations. Examples of potential other priorities include nurses, teachers, firefighters and other local workers.
The tenants selection criteria also must comply with federal and state fair housing laws and, if tax-exempt bonds are used, the rules applicable to tax-exempt governmental purpose bonds.
Can MIHA bonds finance the purchase or preservation of existing buildings?
MIHA is authorized to finance new construction and acquisition of existing commercial or residential projects. The Act requires that 80% of MIHA’s portfolio of affordable rental housing projects be new build construction projects.
How does MIHA define new build construction projects?
New build construction projects include new construction, acquisition of newly constructed multifamily housing projects that are within two years of receiving a certificate of occupancy, and acquisitions and conversions or retrofits of buildings not currently in use as rental housing, such as office buildings. For any acquisition of a multifamily housing project with tenants at the time of acquisition, the project sponsor will have a transition period from the date of acquisition to come into compliance with tenant income requirements.
MIHA Ownership/Partnership Options
What type of ownership structures and partnerships are allowed for MIHA projects?
MIHA may enter into public-private partnerships with public or private entities to acquire, construct, finance or operate affordable rental housing projects and related commercial properties. However, only the middle-income affordable housing component of a public-private partnership qualifies for MIHA’s tax exemptions and may be financed with MIHA bonds. A public-private partnership contract may allocate obligations, interests, rights, and revenues to, in, and from the affordable rental housing project among the parties.
MIHA’s ownership authority permits ground leases. More information in FAQ #30.
Can a developer or local housing authority own the project if it is financed with MIHA bonds?
Unless otherwise specified in a public-private partnership agreement, the project sponsor must transfer all of its interest in the middle-income housing portion of the project to the Authority. MIHA may allow a housing authority to retain a portion of interest in the project. Otherwise, the project sponsor shall not retain or otherwise be entitled to any interest in or any rights to revenue from the project unless allowed in a public-private partnership.
Can MIHA finance and own projects with ground leases?
MIHA may enter public-private partnerships which allow the sponsor, a third party or a partnership between the sponsor, third party and the Authority to have a ground lease leasehold interest or other ownership interest in the affordable rental housing project. The Authority reserves the right to evaluate ownership structures on a project-by-project basis.
What are allowable developer fees?
Developer fees must be less than private sector development fees received for LIHTC deals as of June 3, 2022 (i.e., the effective date of the Act).
What benefits does MIHA provide to developers?
MIHA projects may be financed with low-cost essential purpose bonds. MIHA bonds may be federally tax-exempt, and are also state tax-exempt. The income and revenue of the Authority, all property at any time owned by MIHA, and the affordable rental housing component of property in a public-private partnership, are also exempt from federal and state income tax, local property tax, state and local sales and use tax, and all other taxation and assessments in the State. MIHA properties also benefit from MIHA administrative support and property operational and management services.
MIHA’s public purpose has the potential to attract philanthropic capital, governmental subsidy, and other impact-oriented financing partners. This includes private-public partnership opportunities for nonprofits and governmental employers (hospitals, school districts, artists, municipalities and local housing authorities). MIHA’s public-private partnerships allow partners to receive revenue from the non-MIHA owned portion of the project.
MIHA projects will help ensure affordable housing for Colorado’s middle-income individuals and families, including essential workforce residents.