HF 2273

as introduced - 91st Legislature (2019 - 2020) Posted on 03/07/2019 02:50pm

A bill for an act
relating to housing; repealing certain requirements and limitations on the allocation
of housing tax credits; amending Minnesota Statutes 2018, section 462A.222,
subdivision 3.

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

Section 1.

Minnesota Statutes 2018, section 462A.222, subdivision 3, is amended to read:

Subd. 3.

Allocation procedure.

(a) Projects will be awarded tax credits in two
competitive rounds on an annual basis. The date for applications for each round must be
determined by the agency. No allocating agency may award tax credits prior to the application
dates established by the agency.

(b) Each allocating agency must meet the requirements of section 42(m) of the Internal
Revenue Code of 1986, as amended through December 31, 1989, for the allocation of tax
credits and the selection of projects.

(c) For projects that are eligible for an allocation of credits pursuant to section 42(h)(4)
of the Internal Revenue Code of 1986, as amended, tax credits may only be allocated if the
project satisfies the requirements of the allocating agency's qualified allocation plan. For
projects that are eligible for an allocation of credits pursuant to section 42(h)(4) of the
Internal Revenue Code of 1986, as amended, for which the agency is the issuer of the bonds
for the project, or the issuer of the bonds for the project is located outside the jurisdiction
of a city or county that has received reserved tax credits, the applicable allocation plan is
the agency's qualified allocation plan.

(d) deleted text begin (1) deleted text end To maximize the resources available for and increase the supply of affordable
housing in Minnesota by leveraging the benefits to Minnesota from the use of tax-exempt
bonds to finance multifamily housing and to allow local units of government more flexibility
to address specific affordable housing needs in their communities, the agency shall make
residential rental housing projects financed with an allocation of tax-exempt bonds under
chapter 474A the highest strategic priority for tax credits under the agency's qualified
allocation plan under section 42(m)(1)(D) of the Internal Revenue Code of 1986, as amended.

deleted text begin (2) For projects eligible for an allocation of tax credits under section 42(h)(4) of the
Internal Revenue Code of 1986, as amended, the agency's qualified allocation plan and
other related agency guidance and requirements:
deleted text end

deleted text begin (i) shall not include any selection criteria other than (A) the criteria of section 42(m)(1)(C)
of the Internal Revenue Code of 1986, as amended, and (B) whether the project has received
an allocation of tax-exempt bonds under chapter 474A, with subitem (B) as the most
important criteria;
deleted text end

deleted text begin (ii) shall grant projects receiving an allocation of tax-exempt bonds under chapter 474A
the highest possible preference and, to the extent applicable, ahead of any preference
described in section 42(m)(1)(B) of the Internal Revenue Code of 1986, as amended;
deleted text end

deleted text begin (iii) shall exclude any per-unit cost limitations, cost reasonableness, or other similar
restrictions for residential rental housing projects financed with an allocation of tax-exempt
bonds under chapter 474A; and
deleted text end

deleted text begin (iv) shall not adopt or impose any additional rules, requirements, regulations, or
restrictions other than those required by section 42 of the Internal Revenue Code of 1986,
as amended, regarding the allocation of credits.
deleted text end

deleted text begin Each developer of a residential rental housing project that has received an allocation of
tax-exempt bonds under chapter 474A and the proposed issuer of such tax-exempt bonds
shall have standing to challenge the agency's qualified allocation plan for failure to comply
with this clause.
deleted text end

deleted text begin In the event of any conflict or inconsistency between this paragraph and section 462A.04,
the provisions of this paragraph shall govern and control. The provisions of paragraph (d)
shall not apply to any allocating agency other than the agency.
deleted text end

(e) For applications submitted for the first round, an allocating agency may allocate tax
credits only to the following types of projects:

(1) in the metropolitan area:

(i) new construction or substantial rehabilitation of projects in which, for the term of the
extended use period, at least 75 percent of the total tax credit units are single-room
occupancy, efficiency, or one bedroom units and which are affordable by households whose
income does not exceed 30 percent of the median income;

(ii) new construction or substantial rehabilitation family housing projects that are not
restricted to persons who are 55 years of age or older and in which, for the term of the
extended use period, at least 75 percent of the tax credit units contain two or more bedrooms
and at least one-third of the 75 percent contain three or more bedrooms; or

(iii) substantial rehabilitation projects in neighborhoods targeted by the city for
revitalization;

(2) outside the metropolitan area, projects which meet a locally identified housing need
and which are in short supply in the local housing market as evidenced by credible data
submitted with the application;

(3) projects that are not restricted to persons of a particular age group and in which, for
the term of the extended use period, a percentage of the units are set aside and rented to
persons:

(i) with a serious and persistent mental illness as defined in section 245.462, subdivision
20, paragraph (c);

(ii) with a developmental disability as defined in United States Code, title 42, section
6001, paragraph (5), as amended through December 31, 1990;

(iii) who have been assessed as drug dependent persons as defined in section 254A.02,
subdivision 5, and are receiving or will receive care and treatment services provided by an
approved treatment program as defined in section 254A.02, subdivision 2;

(iv) with a brain injury as defined in section 256B.093, subdivision 4, paragraph (a); or

(v) with permanent physical disabilities that substantially limit one or more major life
activities, if at least 50 percent of the units in the project are accessible as provided under
Minnesota Rules, chapter 1340;

(4) projects, whether or not restricted to persons of a particular age group, which preserve
existing subsidized housing, if the use of tax credits is necessary to prevent conversion to
market rate use or to remedy physical deterioration of the project which would result in loss
of existing federal subsidies; or

(5) projects financed by the Farmers Home Administration, or its successor agency,
which meet statewide distribution goals.

(f) Before the date for applications for the final round, the allocating agencies other than
the agency shall return all uncommitted and unallocated tax credits to a unified pool for
allocation by the agency on a statewide basis.

(g) Unused portions of the state ceiling for low-income housing tax credits reserved to
cities and counties for allocation may be returned at any time to the agency for allocation.

(h) If an allocating agency determines, at any time after the initial commitment or
allocation for a specific project, that a project is no longer eligible for all or a portion of the
low-income housing tax credits committed or allocated to the project, the credits must be
transferred to the agency to be reallocated pursuant to the procedures established in
paragraphs (f) to (h); provided that if the tax credits for which the project is no longer eligible
are from the current year's annual ceiling and the allocating agency maintains a waiting list,
the allocating agency may continue to commit or allocate the credits until not later than the
date of applications for the final round, at which time any uncommitted credits must be
transferred to the agency.