SF 2552

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/21/2025 09:42 a.m.

A bill for an act
relating to housing; modifying housing provisions; modifying funding provisions
of the rental assistance program; expanding eligibility criteria for certain programs;
removing certain funding restrictions for workforce housing projects; clarifying
eligible uses for housing aid funds; modifying provisions in the high-rise sprinkler
system program; amending Minnesota Statutes 2024, sections 462A.051,
subdivision 2; 462A.2095, subdivision 3; 462A.33, subdivision 9; 462A.40,
subdivision 3; 477A.35, subdivision 5; 477A.36, subdivision 5; Laws 2023, chapter
37, article 1, section 2, subdivision 21; article 2, section 10.

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

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.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. 3.

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. 4.

Minnesota Statutes 2024, section 462A.40, subdivision 3, is amended to read:

Subd. 3.

Eligible recipients; definitions; restrictions; use of funds.

(a) The agency
may award a grant or a loan to any recipient that qualifies under subdivision 2. The agency
must not award a grant or a loan to a disqualified individual or disqualified business.

(b) For the purposes of this subdivision disqualified individual means:

(1) an individual who or an individual whose immediate family member made a
contribution to the account in the current or prior taxable year and received a credit certificate;

(2) an individual who or an individual whose immediate family member owns the housing
for which the grant or loan will be used;

(3) an individual who meets the following criteria:

(i) the individual is an officer or principal of a business entity; and

(ii) that business entity made a contribution to the account in the current or previous
taxable year and received a credit certificate; or

(4) an individual who meets the following criteria:

(i) the individual directly owns, controls, or holds the power to vote 20 percent or more
of the outstanding securities of a business entity; and

(ii) that business entity made a contribution to the account in the current or previous
taxable year and received a credit certificate.

(c) For the purposes of this subdivision disqualified business means a business entity
that:

(1) made a contribution to the account in the current or prior taxable year and received
a credit certificate;

(2) has an officer or principal who is an individual who made a contribution to the
account in the current or previous taxable year and received a credit certificate; or

(3) meets the following criteria:

(i) the business entity is directly owned, controlled, or is subject to the power to vote 20
percent or more of the outstanding securities by an individual or business entity; and

(ii) that controlling individual or business entity made a contribution to the account in
the current or previous taxable year and received a credit certificate.

(d) For purposes of this subdivision, "immediate family" means the taxpayer's spouse,
parent or parent's spouse, sibling or sibling's spouse, or child or child's spouse. For a married
couple filing a joint return, the limitations in this subdivision apply collectively to the
taxpayer and spouse.

new text begin (e) For purposes of this subdivision, "officer or principal" excludes an individual serving
as a volunteer board member of a nonprofit organization governed by chapter 317A.
new text end

deleted text begin (e) deleted text end new text begin (f) new text end Before applying for a grant or loan, all recipients must sign a disclosure that the
disqualifications under this subdivision do not apply. The Minnesota Housing Finance
Agency must prescribe the form of the disclosure. The Minnesota Housing Finance Agency
may rely on the disclosure to determine the eligibility of recipients under paragraph (a).

deleted text begin (f) deleted text end new text begin (g) new text end The agency may award grants or loans to a city as defined in section 462A.03,
subdivision 21; a federally recognized American Indian tribe or subdivision located in
Minnesota; a tribal housing corporation; a private developer; a nonprofit organization; a
housing and redevelopment authority under sections 469.001 to 469.047; a public housing
authority or agency authorized by law to exercise any of the powers granted by sections
469.001 to 469.047; or the owner of the housing. The provisions of subdivision 2, and
paragraphs (a) to deleted text begin (e) deleted text end new text begin (f) new text end and deleted text begin (g) deleted text end new text begin (h) new text end of this subdivision, regarding the use of funds and eligible
recipients apply to grants and loans awarded under this paragraph.

deleted text begin (g) deleted text end new text begin (h) Except for projects receiving funding under section 462A.39, new text end eligible recipients
must use the funds to serve households that meet the income limits as provided in section
462A.33, subdivision 5.

Sec. 5.

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. 6.

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. 7.

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. 8.

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.