HF 3982

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/17/2022 05:30pm

A bill for an act
relating to taxation; local government aid; establishing the local affordable housing
aid program; appropriating money; proposing coding for new law in Minnesota
Statutes, chapter 477A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [477A.35] LOCAL AFFORDABLE HOUSING AID.
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new text begin Subdivision 1. new text end

new text begin Purpose. new text end

new text begin The purpose of this section is to help local governments to
develop and preserve affordable housing within their jurisdictions in order to keep families
from losing housing and to help those experiencing homelessness find housing.
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new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the following terms have the
meanings given:
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new text begin (1) "city" means a statutory or home rule charter city with a population of at least 10,000;
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new text begin (2) "city distribution factor" means the number of households in a city that are
cost-burdened divided by the total number of households that are cost-burdened in Minnesota
cities. The number of cost-burdened households shall be determined using the most recent
estimates or experimental estimates provided by the American Community Survey of the
United States Census Bureau;
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new text begin (3) "cost-burdened household" means a household in which gross rent exceeds 30 percent
of household income or in which homeownership costs exceed 30 percent of household
income;
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new text begin (4) "county distribution factor" means the number of households in a county that are
cost-burdened divided by the total number of households in Minnesota that are cost-burdened.
The number of cost-burdened households shall be determined using the most recent estimates
or experimental estimates provided by the American Community Survey of the United
States Census Bureau; and
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new text begin (5) "population" has the meaning given in section 477A.011, subdivision 3.
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new text begin Subd. 3. new text end

new text begin Distribution. new text end

new text begin (a) Each county shall receive the sum of:
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new text begin (1) $15,000; plus
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new text begin (2) the product of:
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new text begin (i) the county distribution factor; multiplied by
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new text begin (ii) the total amount available to counties under this section minus the product of clause
(1) multiplied by the number of Minnesota counties.
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new text begin (b) The commissioner of revenue shall determine the amount of funding available to a
city under this section by multiplying the city's city distribution factor and the amount of
funding available to cities under this section.
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new text begin Subd. 4. new text end

new text begin Qualifying projects. new text end

new text begin (a) Qualifying projects shall include projects designed
for the purpose of construction, acquisition, rehabilitation, demolition or removal of existing
structures, construction financing, permanent financing, interest rate reduction, refinancing,
and gap financing of housing to provide affordable housing to households that have incomes
which do not exceed, for homeownership projects, 115 percent of the greater of state or
area median income as determined by the United States Department of Housing and Urban
Development, and for rental housing projects, 80 percent of the greater of state or area
median income as determined by the United States Department of Housing and Urban
Development, except that the housing developed or rehabilitated with funds under this
section must be affordable to the local work force.
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new text begin (b) Gap financing is either:
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new text begin (1) the difference between the costs of the property, including acquisition, demolition,
rehabilitation, and construction, and the market value of the property upon sale; or
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new text begin (2) the difference between the cost of the property and the amount the targeted household
can afford for housing, based on industry standards and practices.
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new text begin (c) If a grant under this section is used for demolition or removal of existing structures,
the cleared land must be used for the construction of housing to be owned or rented by
persons who meet the income limits of paragraph (a).
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new text begin Subd. 5. new text end

new text begin Use of proceeds. new text end

new text begin (a) Any funds distributed under this section must be spent on
a qualifying project.
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new text begin (b) Any unspent funds must be returned to the commissioner of revenue by December
31 in the third year following the year after the aid was received.
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new text begin Subd. 6. new text end

new text begin Administration. new text end

new text begin (a) The commissioner of revenue must compute the amount
of aid payable to each city and county under this section. By August 1 of each year, the
commissioner must certify the amount to be paid to each county and city in the following
year. The commissioner must pay local affordable housing aid annually at the times provided
in section 477A.015.
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new text begin (b) Beginning in 2024, cities and counties shall submit a report annually, no later than
December 1 of each year, to the Minnesota Housing Finance Agency. The report shall
include documentation of qualifying projects completed or planned with funds under this
section. If a city or county fails to submit a report, or if a city or county uses funds for a
project that does not qualify under this section, the Minnesota Housing Finance Agency
shall notify the Department of Revenue by January 1 of the following year.
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new text begin (c) A city or county must repay to the commissioner of revenue funds it received under
this section if it:
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new text begin (1) fails to spend the funds within the time allowed under subdivision 5, paragraph (b);
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new text begin (2) spends the funds on anything other than a qualifying project; or
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new text begin (3) fails to submit a report documenting use of the funds.
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new text begin (d) The commissioner of revenue may stop distributing funds to any city or county if it
repeatedly fails to use funds, misuses funds, or fails to report on its use of funds.
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new text begin (e) Any funds repaid to the commissioner of revenue by cities under paragraph (c) must
be added to the overall distribution of aids certified under this section for cities in the
following year. Any funds repaid to the commissioner of revenue by counties under paragraph
(c) must be added to the overall distribution of aids certified under this section for counties
in the following year.
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new text begin Subd. 7. new text end

new text begin Appropriations. new text end

new text begin (a) $80,000,000 is annually appropriated from the general
fund to the commissioner of revenue to make payments to counties as required under this
section.
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new text begin (b) $20,000,000 is annually appropriated from the general fund to the commissioner of
revenue to make payments to cities as required under this section.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in calendar
year 2023.
new text end