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State pauses MIHP reporting, creates housing infrastructure financing and restructures tax‑increment tools
Summary
Legislation freezes MIHP reporting for 2026 (HB436) while the state reorganizes housing programs; lawmakers also created a $100M housing‑infrastructure revolving loan (HB492) and reorganized tax‑increment tools into Regionally Significant Development Zones (HB507), expanding grant and bonding capacity and setting new approval and reporting rules.
State housing policy and financing changes were a major focus of the ULCT webinar: presenters said the session produced a mix of freezes, new financing tools and structural changes intended to accelerate infrastructure‑enabled housing.
MIHP freeze and reporting: Carson explained that House Bill 436 "will freeze MIHP for this year" but cities that remain subject to MIHP must still report the number of certificates of occupancy (COs) issued; administrative rules under the Governor’s Office of Economic Development will clarify reporting mechanics. The League said cities that previously reported and were found eligible will retain eligibility this coming funding cycle.
New financing tools: Carson described House Bill 492 as creating "a $100 million revolving loan fund" — a state housing infrastructure partnership designed to finance system infrastructure (water tanks, sewer treatment, lift stations) that support housing projects. The program requires a local government sponsor and a building partner; applications must identify repayment sources (impact fees, special assessments, general fund, etc.), timelines and affordability commitments. The bill also expands bonding capacity for an existing infrastructure grant program (from $70 million to $150 million) and directs that a state board will monitor project compliance and affordability; rulemaking will determine program details and priorities.
Tax‑increment restructuring: House Bill 507 consolidates and replaces several state tax‑increment housing tools (HTRZ, HOPS, FIZZ) with a new Regionally Significant Development Zone (RSDZ) framework and adds a reporting and approval layer through a state committee. The RSDZs must show regional significance, generally require participation from other taxing entities, and will direct a small portion of increment to a new state fund for major projects. HB507 also allows certain flexibility for transit‑oriented HTRZs (e.g., spanning multiple light-rail connections under size and distance limits) and grandfathered existing zones approved under prior statutes.
Why it matters: presenters said these changes aim to better align state funding with local infrastructure needs and to provide more flexible, competitively awarded financing for projects that unlock housing capacity. Carson emphasized the program's low anticipated interest rate (floored to the federal funds target plus a margin) and that deed restrictions or other affordability mechanisms will strengthen an application’s competitiveness.
Next steps: rulemaking and program design will follow; ULCT and GOED/GOEO are expected to publish application guidance. Cities should be prepared to sponsor infrastructure proposals, identify repayment mechanisms, and monitor reporting requirements should they apply for loans or grants under the new programs.
