HF 2309

2nd Engrossment - 94th Legislature (2025 - 2026)

Posted on 04/30/2025 08:06 a.m.

A bill for an act
relating to housing; modifying certain housing policy provisions; modifying
eligibility and funding provisions for certain housing programs; modifying the
high-rise sprinkler system program; authorizing housing and redevelopment
authorities to create public corporations; amending Minnesota Statutes 2024,
sections 15.082; 462A.051, subdivision 2; 462A.07, by adding a subdivision;
462A.202, subdivision 3a; 462A.2095, subdivisions 2, 3; 462A.33, subdivision 9;
462A.37, subdivision 2; 462C.02, subdivision 6; 462C.16, subdivision 1; 469.012,
subdivision 2j; 477A.35, subdivision 5; 477A.36, subdivision 5; Laws 2023, chapter
37, article 1, section 2, subdivision 21; article 2, section 10; proposing coding for
new law in Minnesota Statutes, chapter 469.

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

ARTICLE 1

MINNESOTA HOUSING FINANCE AGENCY

Section 1.

Minnesota Statutes 2024, section 462A.051, subdivision 2, is amended to read:

Subd. 2.

Application.

This section applies to all forms of financial assistance provided
by the Minnesota Housing Finance Agency, as well as the allocation and award of federal
low-income housing credits new text begin by all allocating agencies as defined under section 462A.221 new text end ,
for the development, construction, rehabilitation, renovation, or retrofitting of deleted text begin multiunit
residential deleted text end new text begin multifamily new text end housing, including loans, grants, tax credits, loan guarantees, loan
insurance, and other financial assistance.

Sec. 2.

Minnesota Statutes 2024, section 462A.07, is amended by adding a subdivision to
read:

new text begin Subd. 21. new text end

new text begin Promotion of materials on rights and obligations of landlords and
residential tenants. new text end

new text begin The commissioner shall publish information on the rights and obligations
of landlords and residential tenants, including promotion of the statement required under
section 504B.275. The commissioner must prominently display this information on the
agency website.
new text end

Sec. 3.

Minnesota Statutes 2024, section 462A.2095, subdivision 2, is amended to read:

Subd. 2.

Definitions.

(a) For purposes of this section, the following terms have the
meanings given.

(b) "Eligible household" means a household with an annual income of up to 50 percent
of the area median income as determined by the United States Department of Housing and
Urban Development, adjusted for family size, that is paying more than 30 percent of the
household's annual income on rent. Eligibility is determined at the time a household first
receives rent assistance under this section. deleted text begin Eligibility deleted text end new text begin Income new text end shall be recertified every year
thereafter new text begin for the purposes of determining the amount of rent assistance under subdivision
4 new text end . Eligible household does not include a household receiving federal tenant-based or
project-based assistance under Section 8 of the United States Housing Act of 1937, as
amended.

(c) "Program administrator" means:

(1) a housing and redevelopment authority or other local government agency or authority
that administers federal tenant-based or project-based assistance under Section 8 of the
United States Housing Act of 1937, as amended;

(2) a Tribal government or Tribally designated housing entity; or

(3) if there is no entity under clause (1) or (2) with the capacity to administer the program,
a nongovernmental organization determined by the agency to have the capacity to administer
the program.

Sec. 4.

Minnesota Statutes 2024, section 462A.2095, subdivision 3, is amended to read:

Subd. 3.

Grants to program administrators.

(a) The agency may make grants to
program administrators to provide rental assistance for eligible households. new text begin Notwithstanding
section 16C.06, the commissioner may use a formula to determine award amounts to program
administrators. new text end For both tenant-based and project-based assistance, program administrators
shall pay assistance directly to housing providers. Rental assistance may be provided in the
form of tenant-based assistance or project-based assistance. Notwithstanding the amounts
awarded under subdivision 1, paragraph (b), and to the extent practicable, the agency must
make grants statewide in proportion to the number of households eligible for assistance in
each county according to the most recent American Community Survey of the United States
Census Bureau. new text begin The agency may, at its discretion, redistribute unused or underutilized funds
among eligible program administrators to increase program efficiency and effectiveness.
new text end

(b) The program administrator may use its existing procedures to administer the rent
assistance program or may develop alternative procedures with the goals of reaching
households most in need and incentivizing landlord participation. The agency must approve
a program administrator's alternative procedures. Priority for rental assistance shall be given
to households with children 18 years of age and under, and annual incomes of up to 30
percent of the area median income. Program administrators may establish additional priority
populations based on local need.

Sec. 5.

Minnesota Statutes 2024, section 462A.33, subdivision 9, is amended to read:

Subd. 9.

Grant funding to schools.

A school district; a cooperative unit, as defined in
section 123A.24, subdivision 2; or a charter school may receive funding under this section
in the form of a grant less than $100,000. A school district, intermediate district, or charter
school that uses a grant under this section to construct a home for owner occupancy must
require the future occupant to participate in the homeownership education counseling and
training program under section 462A.209. new text begin A nonprofit organization contracted by a school
district; a cooperative unit, as defined in section 123A.24, subdivision 2; or a charter school
may receive funding under the requirements of this subdivision.
new text end

Sec. 6.

Minnesota Statutes 2024, section 462A.37, subdivision 2, is amended to read:

Subd. 2.

Authorization.

(a) The agency may issue up to $30,000,000 in aggregate
principal amount of housing infrastructure bonds in one or more series to which the payment
made under this section may be pledged. The housing infrastructure bonds authorized in
this subdivision may be issued to fund loans, or grants for the purposes of clauses (4) and
(7), on terms and conditions the agency deems appropriate, made for one or more of the
following purposes:

(1) to finance the costs of the construction, acquisition, new text begin adaptive reuse, new text end and rehabilitation
of supportive housing where at least 50 percent of units are set aside for individuals and
families who are without a permanent residence;

(2) to finance the costs of the acquisition and rehabilitation of foreclosed or abandoned
housing to be used for affordable rental housing or for affordable home ownership and the
costs of new construction of rental housing on abandoned or foreclosed property where the
existing structures will be demolished or removed;

(3) to finance that portion of the costs of acquisition of property that is attributable to
the land to be leased by community land trusts to low- and moderate-income home buyers;

(4) to finance the acquisition, improvement, and infrastructure of manufactured home
parks under section 462A.2035, subdivision 1b;

(5) to finance the costs of acquisition, rehabilitation, adaptive reuse, or new construction
of senior housing;

(6) to finance the costs of acquisition, rehabilitation, and replacement of federally assisted
rental housing and for the refinancing of costs of the construction, acquisition, and
rehabilitation of federally assisted rental housing, including providing funds to refund, in
whole or in part, outstanding bonds previously issued by the agency or another government
unit to finance or refinance such costs;

(7) to finance the costs of acquisition, rehabilitation, adaptive reuse, or new construction
of single-family housing;

(8) to finance the costs of construction, acquisition, new text begin adaptive reuse, new text end and rehabilitation
of permanent housing that is affordable to households with incomes at or below 50 percent
of the area median income for the applicable county or metropolitan area as published by
the Department of Housing and Urban Development, as adjusted for household size; and

(9) to finance the costs of construction, acquisition, rehabilitation, conversion, and
development of cooperatively owned housing created under chapter 308A, 308B, or 308C
that is affordable to low- and moderate-income households.

(b) Among comparable proposals for permanent supportive housing, preference shall
be given to permanent supportive housing for veterans and other individuals or families
who:

(1) either have been without a permanent residence for at least 12 months or at least four
times in the last three years; or

(2) are at significant risk of lacking a permanent residence for 12 months or at least four
times in the last three years.

(c) Among comparable proposals for senior housing, the agency must give priority to
requests for projects that:

(1) demonstrate a commitment to maintaining the housing financed as affordable to
senior households;

(2) leverage other sources of funding to finance the project, including the use of
low-income housing tax credits;

(3) provide access to services to residents and demonstrate the ability to increase physical
supports and support services as residents age and experience increasing levels of disability;
and

(4) include households with incomes that do not exceed 30 percent of the median
household income for the metropolitan area.

(d) To the extent practicable, the agency shall balance the loans made between projects
in the metropolitan area and projects outside the metropolitan area. Of the loans made to
projects outside the metropolitan area, the agency shall, to the extent practicable, balance
the loans made between projects in counties or cities with a population of 20,000 or less,
as established by the most recent decennial census, and projects in counties or cities with
populations in excess of 20,000.

(e) Among comparable proposals for permanent housing, the agency must give preference
to projects that will provide housing that is affordable to households at or below 30 percent
of the area median income.

(f) If a loan recipient uses the loan for new construction as defined by the agency on a
building containing more than four units, the loan recipient must construct, convert, or
otherwise adapt the building to include:

(1) the greater of: (i) at least one unit; or (ii) at least five percent of units that are
accessible units, and each accessible unit includes at least one roll-in shower, water closet,
and kitchen work surface meeting the requirements of section 1002 of the current State
Building Code Accessibility Provisions for Dwelling Units in Minnesota; and

(2) the greater of: (i) at least one unit; or (ii) at least five percent of units that are
sensory-accessible units that include:

(A) soundproofing between shared walls for first and second floor units;

(B) no florescent lighting in units and common areas;

(C) low-fume paint;

(D) low-chemical carpet; and

(E) low-chemical carpet glue in units and common areas.

Nothing in this paragraph relieves a project funded by the agency from meeting other
applicable accessibility requirements.

Sec. 7.

Minnesota Statutes 2024, section 462C.16, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of this section, the following terms have
the meanings given to them.

(b) "Commissioner" means the commissioner of the Minnesota Housing Finance Agency.

(c) "Fund" means a local housing trust fund or a regional housing trust fund.

(d) "Local government" means any statutory or home rule charter city new text begin , a housing and
redevelopment authority, new text end or a county.

(e) "Local housing trust fund" means a fund established by a local government with one
or more dedicated sources of public revenue for housing.

(f) "Regional housing trust fund" means a fund established and administered under a
joint powers agreement entered into by two or more local governments with one or more
dedicated sources of public revenue for housing.

Sec. 8.

Minnesota Statutes 2024, section 477A.35, subdivision 5, is amended to read:

Subd. 5.

Use of proceeds.

(a) Any funds distributed under this section must be spent on
a qualifying project. Funds are considered spent on a qualifying project if:

(1) a tier I city or county demonstrates to the Minnesota Housing Finance Agency that
the city or county cannot expend funds on a qualifying project by the deadline imposed by
paragraph (b) due to factors outside the control of the city or county; and

(2) the funds are transferred to a local housing trust fund.

Funds transferred to a local housing trust fund under this paragraph must be spent on a
project or household that meets the affordability requirements of subdivision 4, paragraph
(a).

(b) Funds must be spent by December 31 in the third year following the year after the
aid was received. The requirements of this paragraph are satisfied if funds are:

(1) committed to a qualifying project by December 31 in the third year following the
year after the aid was received; and

(2) expended by December 31 in the fourth year following the year after the aid was
received.

(c) An aid recipient may not use aid money to reimburse itself for prior expenditures.

new text begin (d) Any program income generated from funds distributed under this section must be
used on a qualifying project.
new text end

Sec. 9.

Minnesota Statutes 2024, section 477A.36, subdivision 5, is amended to read:

Subd. 5.

Use of proceeds.

(a) Any funds distributed under this section must be spent on
a qualifying project. If a tier I city or county demonstrates to the Minnesota Housing Finance
Agency that the tier I city or county cannot expend funds on a qualifying project by the
deadline imposed by paragraph (b) due to factors outside the control of the tier I city or
county, funds shall be considered spent on a qualifying project if the funds are transferred
to a local housing trust fund. Funds transferred to a local housing trust fund must be spent
on a project or household that meets the affordability requirements of subdivision 4,
paragraph (a).

(b) Funds must be spent by December 31 in the third year following the year after the
aid was received. The requirements of this paragraph are satisfied if funds are:

(1) committed to a qualifying project by December 31 in the third year following the
year after the aid was received; and

(2) expended by December 31 in the fourth year following the year after the aid was
received.

(c) An aid recipient may not use aid funds to reimburse itself for prior expenditures.

new text begin (d) Any program income generated from funds distributed under this section must be
used on a qualifying project.
new text end

Sec. 10.

Laws 2023, chapter 37, article 1, section 2, subdivision 21, is amended to read:

Subd. 21. Local Housing Trust Fund Grants

4,800,000

-0-

(a) This appropriation is for deposit in the
housing development fund for grants to local
housing trust funds established under
Minnesota Statutes, section 462C.16, to
incentivize local funding. This is a onetime
appropriation.

(b) A grantee is eligible to receive a grant
amount equal to 100 percent of the public
revenue committed to the local housing trust
fund from any source other than the state or
federal government, up to $150,000, and in
addition, an amount equal to 50 percent of the
public revenue committed to the local housing
trust fund from any source other than the state
or federal government that is more than
$150,000 but not more than $300,000.

(c) A grantee must use grant funds within deleted text begin eight deleted text end new text begin
five new text end years of receipt for purposes (1)
authorized under Minnesota Statutes, section
462C.16, subdivision 3, and (2) benefiting
households with incomes at or below 115
percent of the state median income. A grantee
must return any grant funds not used for these
purposes within eight years of receipt to the
commissioner of the Minnesota Housing
Finance Agency for deposit into the housing
development fund.

Sec. 11.

Laws 2023, chapter 37, article 2, section 10, is amended to read:

Sec. 10. HIGH-RISE SPRINKLER SYSTEM GRANT new text begin AND LOAN new text end PROGRAM.

Subdivision 1.

Definitions.

(a) The definitions in this subdivision apply to this section.

(b) "Eligible building" means an existing residential building in which:

(1) deleted text begin at least one story used for human occupancy is deleted text end new text begin the building is seven stories or more
in height or new text end 75 feet or more above the lowest level of fire department vehicle access; and

(2) at least two-thirds of its units are affordable to households with an annual income at
or below deleted text begin 50 deleted text end new text begin 60 new text end percent of the area median income as determined by the United States
Department of Housing and Urban Development, adjusted for family size deleted text begin , that is paying
no more than 30 percent of annual income on rent deleted text end .

(c) "Sprinkler system" means the same as the term "fire protection system" as defined
in Minnesota Statutes, section 299M.01.

Subd. 2.

deleted text begin Grant program deleted text end new text begin Use of funds new text end .

The commissioner of the Housing Finance
Agency must make grants new text begin or loans new text end to owners of eligible buildings for installation of sprinkler
systems and, if necessary, for relocation of residents during the installation of sprinkler
systems. Priority shall be given to nonprofit applicants. The maximum grant per eligible
building shall be $2,000,000. Each grant to a nonprofit organization shall require a 25
percent match. Each grant to a for-profit organization shall require a 50 percent match.

ARTICLE 2

PUBLIC CORPORATION FOR RENTAL PROPERTY

Section 1.

Minnesota Statutes 2024, section 15.082, is amended to read:

15.082 OBLIGATIONS OF PUBLIC CORPORATIONS.

Notwithstanding any other law, the state is not liable for obligations of a public
corporation created by statute. Upon dissolution of the public corporation, its wholly owned
assets become state property. Partially owned assets become state property to the extent
that state money was used to acquire them.

This section does not apply to a public corporation governed by chapter 119 new text begin or section
469.0121 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 2.

Minnesota Statutes 2024, section 462A.202, subdivision 3a, is amended to read:

Subd. 3a.

Permanent rental housing.

The agency may make loans, with or without
interest, to cities and counties to finance the construction, acquisition, or rehabilitation of
affordable, permanent, new text begin and new text end publicly owned rental housing new text begin , including housing owned by a
public corporation created pursuant to section 469.0121 new text end . Loans made under this subdivision
are subject to the restrictions of subdivision 7. In making loans under this subdivision, the
agency shall give priority to projects that increase the supply of affordable family housing.

Sec. 3.

Minnesota Statutes 2024, section 462C.02, subdivision 6, is amended to read:

Subd. 6.

City.

"City" means any statutory or home rule charter city, a county housing
and redevelopment authority created by special law or authorized by its county to exercise
its powers pursuant to section 469.004, or any public body which (a) is the housing and
redevelopment authority in and for a statutory or home rule charter city, the port authority
of a statutory or home rule charter city, deleted text begin or deleted text end an economic development authority of a city
established under sections 469.090 to 469.108, new text begin or a public corporation created pursuant to
section 469.0121, new text end and (b) is authorized by ordinance to exercise, on behalf of a statutory or
home rule charter city, the powers conferred by sections 462C.01 to 462C.10.

Sec. 4.

Minnesota Statutes 2024, section 469.012, subdivision 2j, is amended to read:

Subd. 2j.

May be in LLP, LLC, or corporation; bound as if HRA.

new text begin (a) new text end An authority
may become a member or shareholder in and enter into or form limited partnerships, limited
liability companies, or corporations for the purpose of developing, constructing, rehabilitating,
managing, supporting, or preserving housing projects and housing development projects,
including low-income housing tax credit projects. These limited partnerships, limited liability
companies, or corporations are subject to all of the provisions of sections 469.001 to 469.047
and other laws that apply to housing and redevelopment authorities, as if the limited
partnership, limited liability company, or corporation were a housing and redevelopment
authority.

new text begin (b) An authority may create a public corporation in accordance with section 469.0121
for the purpose of purchasing, owning, and operating real property converted through the
federal Rental Assistance Demonstration program under Public Law 112-55, as amended.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 5.

new text begin [469.0121] PUBLIC CORPORATION; RENTAL ASSISTANCE
DEMONSTRATION PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Authority" has the meaning given under section 469.002, subdivision 2.
new text end

new text begin (c) "Board" means the board of directors of a corporation created under this section.
new text end

new text begin (d) "Corporation" means a public corporation created under this section.
new text end

new text begin (e) "RAD" means the federal Rental Assistance Demonstration program under Public
Law 112-55, as amended.
new text end

new text begin Subd. 2. new text end

new text begin Public corporation created. new text end

new text begin An authority may create a public corporation to
purchase, own, and operate real property that has been converted through RAD to preserve
and improve public housing properties. A public corporation created under this section is
also a political subdivision of the state and is limited to the powers in this section.
new text end

new text begin Subd. 3. new text end

new text begin Corporation powers. new text end

new text begin (a) The corporation has the following general powers:
new text end

new text begin (1) to have succession until dissolved by law;
new text end

new text begin (2) to sue and be sued in its corporate name;
new text end

new text begin (3) to adopt, alter, and use a corporate seal which shall be judicially noticed;
new text end

new text begin (4) to accept, hold, and administer gifts and bequests of money, securities, or other
personal property of whatsoever character, absolutely or in trust, for the purposes for which
the corporation is created. Unless otherwise restricted by the terms of the gift or bequest,
the corporation is authorized to sell, exchange, or otherwise dispose of and to invest or
reinvest in such investments as the corporation may determine with the money, securities,
or other property given or bequeathed to the corporation. The principal of and income from
the corporate funds and all other revenues received by the corporation from any source
whatsoever shall be placed in such depositories as the board of directors shall determine
and shall be subject to expenditure for corporate purposes;
new text end

new text begin (5) to enter into contracts generally and to execute all instruments necessary or appropriate
to carry out the corporate purposes;
new text end

new text begin (6) to appoint and prescribe the duties of officers, agents, and employees as may be
necessary to carry out the work of the corporation and to compensate officers, agents, and
employees;
new text end

new text begin (7) to purchase all supplies and materials necessary for carrying out the purposes of the
corporation;
new text end

new text begin (8) to accept from the United States, the state of Minnesota, or any of their agencies
money or other assistance whether by gift, loan, or otherwise to carry out the purposes of
the corporation, and enter into contracts with the United States, the state of Minnesota, any
of the agencies of either, or any of the political subdivisions of the state as it may deem
proper and consistent with the purposes of this section;
new text end

new text begin (9) to contract and make cooperative agreements with federal, state, and municipal
departments and agencies and private corporations, associations, and individuals for the use
of the corporation property, including but not limited to rental agreements; and
new text end

new text begin (10) to acquire real or personal property or any interest therein in any manner authorized
under section 469.012, subdivision 1g, including by the exercise of eminent domain.
new text end

new text begin (b) A corporation may acquire properties converted under RAD, subject to restrictions
and conditions compatible with funding acquisitions of and improvements to real property
with state general obligation bond proceeds. The commissioner of management and budget
must determine the necessary restrictions and conditions under this paragraph.
new text end

new text begin Subd. 4. new text end

new text begin Board of directors. new text end

new text begin (a) A corporation is governed by a board of directors, with
each commissioner of the authority that created the corporation serving as a member.
new text end

new text begin (b) The term of a director shall coincide with their term as a commissioner of the authority
that created the corporation, except that a director's term shall continue after their term as
a commissioner is complete until a successor commissioner is duly appointed and qualified.
new text end

new text begin (c) Board members must not be compensated for their service as board members but
may receive reimbursement for reasonable expenses incurred in connection with their duties
as board members. The state auditor must review the reimbursements to board members
each year.
new text end

new text begin (d) The board must annually elect from among its members a chair and other officers
necessary for the performance of its duties.
new text end

new text begin Subd. 5. new text end

new text begin Bylaws. new text end

new text begin The board of directors must adopt bylaws and rules as it deems
necessary for the administration of its functions and the accomplishment of its purpose,
including among other matters the establishment of a business office and the rules, the use
of the project-based rental assistance properties, and the administration of corporation funds.
new text end

new text begin Subd. 6. new text end

new text begin Place of business. new text end

new text begin The board must locate and maintain the corporation's place
of business in the city in which the authority that created the corporation is located.
new text end

new text begin Subd. 7. new text end

new text begin Open meetings; data practices. new text end

new text begin Meetings of the board are subject to chapter
13D and meetings of the board conducted by interactive technology are subject to section
13D.02. The board is subject to chapter 13, the Minnesota Government Data Practices Act,
and shall protect data classified as not public from unlawful disclosure.
new text end

new text begin Subd. 8. new text end

new text begin Compliance. new text end

new text begin The corporation must comply with all federal, state, and local
laws, rules, ordinances, and other regulations required to own and operate properties as
project-based rental assistance properties.
new text end

new text begin Subd. 9. new text end

new text begin Dissolution. new text end

new text begin Upon dissolution of the corporation for any reason, its wholly
owned assets become property of the authority that created the corporation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end