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HF 1252

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/18/2021 03:28pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to housing; housing finance agency; adopting housing finance agency
policy provisions; expanding eligibility requirements for certain affordable housing,
workforce housing, and disaster recovery programs; increasing the agency debt
limit; increasing the individual and family household income limits under the
community land trusts program; expanding requirements and uses for the
rehabilitation loan program; making technical and conforming changes; amending
Minnesota Statutes 2020, sections 12A.09, subdivision 3; 273.11, subdivision 12;
462A.05, subdivisions 14, 14a; 462A.07, subdivision 2; 462A.204, subdivision 3;
462A.22, subdivision 1; 462A.30, subdivision 9; 462A.37, subdivisions 1, 2;
462A.38, subdivision 1; 462A.39, subdivisions 2, 5.

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

ARTICLE 1

AFFORDABLE HOUSING ELIGIBILITY

Section 1.

Minnesota Statutes 2020, section 12A.09, subdivision 3, is amended to read:


Subd. 3.

Capacity building grants.

Grants may be made under section 462A.21,
subdivision 3b
deleted text begin,deleted text endnew text begin:
new text end

new text begin (1) new text endto local units of government, including regional consortia, in the disaster area deleted text beginanddeleted text endnew text begin;
new text end

new text begin (2) tonew text end nonprofit organizationsnew text begin; and
new text end

new text begin (3) to federally recognized American Indian tribes or subdivisions located in Minnesota,
and tribal housing corporations
new text end

working in the disaster area to assess housing and related needs, develop and implement
community or regional plans to meet those needs, and provide capacity to implement recovery
plans.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 2.

Minnesota Statutes 2020, section 462A.07, subdivision 2, is amended to read:


Subd. 2.

Technical assistance; residential housing.

It may provide general technical
servicesnew text begin and supportnew text end to assist in the planning, processing, design, construction or
rehabilitation, and inspection of residential housing for occupancy by persons and families
of low and moderate incomenew text begin and to increase the capacity of entities to meet the housing
needs in the state
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 3.

Minnesota Statutes 2020, section 462A.204, subdivision 3, is amended to read:


Subd. 3.

Set aside.

At least one grant must be awarded in an area located outside of the
metropolitan area. A county, a group of contiguous counties jointly acting together, a tribe,
a group of tribes, or a community-based nonprofit organization deleted text beginwith a sponsoring resolution
from each of the county boards of the counties located within its operating jurisdiction
deleted text end may
apply for and receive grants deleted text beginfor areas located outside the metropolitan areadeleted text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 4.

Minnesota Statutes 2020, section 462A.38, subdivision 1, is amended to read:


Subdivision 1.

Establishment.

A workforce and affordable homeownership development
program is established to award homeownership development grants tonew text begin:
new text end

new text begin (1) new text endcitiesdeleted text begin,deleted text endnew text begin;
new text end

new text begin (2) counties;
new text end

new text begin (3) new text endtribal governmentsdeleted text begin,deleted text endnew text begin;
new text end

new text begin (4) new text endnonprofit organizationsdeleted text begin,deleted text endnew text begin;
new text end

new text begin (5) new text endcooperatives created under chapter 308A or 308Bdeleted text begin,deleted text endnew text begin;new text end and

new text begin (6) new text endcommunity land trusts created for the purposes outlined in section 462A.31,
subdivision
1,

for development of workforce and affordable homeownership projects. The purpose of the
program is to increase the supply of workforce and affordable, owner-occupied multifamily
or single-family housing throughout Minnesota.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 5.

Minnesota Statutes 2020, section 462A.39, subdivision 2, is amended to read:


Subd. 2.

Definitions.

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

(b) "Eligible project area" means a home rule charter or statutory city located outside
of the metropolitan area as defined in section 473.121, subdivision 2, with a population
exceeding 500; a community that has a combined population of 1,500 residents located
within 15 miles of a home rule charter or statutory city located outside the metropolitan
area as defined in section 473.121, subdivision 2; new text beginfederally recognized tribal reservations;
new text end or an area served by a joint county-city economic development authority.

(c) "Joint county-city economic development authority" means an economic development
authority formed under Laws 1988, chapter 516, section 1, as a joint partnership between
a city and county and excluding those established by the county only.

(d) "Market rate residential rental properties" means properties that are rented at market
value, including new modular homes, new manufactured homes, and new manufactured
homes on leased land or in a manufactured home park, and may include rental developments
that have a portion of income-restricted units.

(e) "Qualified expenditure" means expenditures for market rate residential rental
properties including acquisition of property; construction of improvements; and provisions
of loans or subsidies, grants, interest rate subsidies, public infrastructure, and related financing
costs.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 6.

Minnesota Statutes 2020, section 462A.39, subdivision 5, is amended to read:


Subd. 5.

Allocation.

The amount of a grant or deferred loans may not exceed 25 percent
of the rental housing development project cost. The commissioner shall not award a grant
or deferred loans to deleted text begina citydeleted text end new text beginan eligible project area new text endwithout certification by the deleted text begincitydeleted text end new text begineligible
project area
new text endthat the amount of the grant or deferred loans shall be matched bynew text begin:
new text end

new text begin (1) new text enda local unit of governmentdeleted text begin,deleted text endnew text begin;
new text end

new text begin (2) a new text endbusinessdeleted text begin, ordeleted text endnew text begin;
new text end

new text begin (3) a new text endnonprofit organizationnew text begin; or
new text end

new text begin (4) a federally recognized tribe
new text end

with $1 for every $2 provided in grant or deferred loans funds.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

ARTICLE 2

GRANT AND LOAN CRITERIA AND USES

Section 1.

Minnesota Statutes 2020, section 462A.05, subdivision 14, is amended to read:


Subd. 14.

Rehabilitation loans.

It may agree to purchase, make, or otherwise participate
in the making, and may enter into commitments for the purchase, making, or participation
in the making, of eligible loans for rehabilitation, with terms and conditions as the agency
deems advisable, to persons and families of low and moderate income, and to owners of
existing residential housing for occupancy by such persons and families, for the rehabilitation
of existing residential housing owned by them. The loans may be insured or uninsured and
may be made with security, or may be unsecured, as the agency deems advisable. The loans
may be in addition to or in combination with long-term eligible mortgage loans under
subdivision 3. They may be made in amounts sufficient to refinance existing indebtedness
secured by the property, if refinancing is determined by the agency to be necessary to permit
the owner to meet the owner's housing cost without expending an unreasonable portion of
the owner's income thereon. No loan for rehabilitation shall be made unless the agency
determines that the loan will be used primarily to make the housing more desirable to live
in, to increase the market value of the housing, for compliance with state, county or municipal
building, housing maintenance, fire, health or similar codes and standards applicable to
housing, or to accomplish energy conservation related improvements. In unincorporated
areas and municipalities not having codes and standards, the agency may, solely for the
purpose of administering the provisions of this chapter, establish codes and standards. deleted text beginExcept
for accessibility improvements under this subdivision and subdivisions 14a and 24, clause
(1), no secured loan for rehabilitation of any owner-occupied property shall be made in an
amount which, with all other existing indebtedness secured by the property, would exceed
110 percent of its market value, as determined by the agency.
deleted text end No loan under this subdivision
for the rehabilitation of owner-occupied housing shall be denied solely because the loan
will not be used for placing the owner-occupied residential housing in full compliance with
all state, county, or municipal building, housing maintenance, fire, health, or similar codes
and standards applicable to housing. Rehabilitation loans shall be made only when the
agency determines that financing is not otherwise available, in whole or in part, from private
lenders upon equivalent terms and conditions. Accessibility rehabilitation loans authorized
under this subdivision may be made to eligible persons and families without limitations
relating to the maximum incomes of the borrowers if:

(1) the borrower or a member of the borrower's family requires a level of care provided
in a hospital, skilled nursing facility, or intermediate care facility for persons with
developmental disabilities;

(2) home care is appropriate; and

(3) the improvement will enable the borrower or a member of the borrower's family to
reside in the housing.

The agency may waive any requirement that the housing units in a residential housing
development be rented to persons of low and moderate income if the development consists
of four or less dwelling units, one of which is occupied by the owner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 2.

Minnesota Statutes 2020, section 462A.05, subdivision 14a, is amended to read:


Subd. 14a.

Rehabilitation loans; existing owner-occupied residential housing.

It may
make loans to persons and families of low and moderate income to rehabilitate or to assist
in rehabilitating existing residential housing owned and occupied by those persons or
families. new text beginRehabilitation may include replacement of manufactured homes. new text endNo loan shall be
made unless the agency determines that the loan will be used primarily for rehabilitation
work necessary for health or safety, essential accessibility improvements, or to improve the
energy efficiency of the dwelling. No loan for rehabilitation of owner-occupied residential
housing shall be denied solely because the loan will not be used for placing the residential
housing in full compliance with all state, county or municipal building, housing maintenance,
fire, health or similar codes and standards applicable to housing. The amount of any loan
shall not exceed the lesser of (a) a maximum loan amount determined under rules adopted
by the agency not to exceed deleted text begin$27,000deleted text endnew text begin $35,000new text end, or (b) the actual cost of the work performed,
or (c) that portion of the cost of rehabilitation which the agency determines cannot otherwise
be paid by the person or family without the expenditure of an unreasonable portion of the
income of the person or family. Loans made in whole or in part with federal funds may
exceed the maximum loan amount to the extent necessary to comply with federal lead
abatement requirements prescribed by the funding source. In making loans, the agency shall
determine the circumstances under which and the terms and conditions under which all or
any portion of the loan will be repaid and shall determine the appropriate security for the
repayment of the loan. Loans pursuant to this subdivision may be made with or without
interest or periodic payments.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 3.

Minnesota Statutes 2020, section 462A.22, subdivision 1, is amended to read:


Subdivision 1.

Debt ceiling.

The aggregate principal amount of new text begingeneral obligation new text endbonds
and notes which are outstanding at any time, excluding the principal amount of any bonds
and notes refunded by the issuance of new bonds or notes, shall not exceed the sum of
$5,000,000,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 4.

Minnesota Statutes 2020, section 462A.37, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

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

(b) "Abandoned property" has the meaning given in section 117.025, subdivision 5.

(c) "Community land trust" means an entity that meets the requirements of section
462A.31, subdivisions 1 and 2.

(d) "Debt service" means the amount payable in any fiscal year of principal, premium,
if any, and interest on housing infrastructure bonds and the fees, charges, and expenses
related to the bonds.

(e) "Foreclosed property" means residential property where foreclosure proceedings
have been initiated or have been completed and title transferred or where title is transferred
in lieu of foreclosure.

(f) "Housing infrastructure bonds" means bonds issued by the agency under this chapter
that:

(1) are qualified 501(c)(3) bonds, within the meaning of section 145(a) of the Internal
Revenue Code;

(2) finance qualified residential rental projects within the meaning of section 142(d) of
the Internal Revenue Code;new text begin or
new text end

deleted text begin (3) finance the construction or rehabilitation of single-family houses that qualify for
mortgage financing within the meaning of section 143 of the Internal Revenue Code; or
deleted text end

deleted text begin (4)deleted text endnew text begin (3)new text end are tax-exempt bonds that are not private activity bonds, within the meaning of
section 141(a) of the Internal Revenue Code, for the purpose of financing or refinancing
affordable housing authorized under this chapter.

(g) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended.

(h) "Senior" means a person 55 years of age or older deleted text beginwith an annual income not greater
than 50 percent of:
deleted text endnew text begin.
new text end

deleted text begin (1) the metropolitan area median income for persons in the metropolitan area; or
deleted text end

deleted text begin (2) the statewide median income for persons outside the metropolitan area.
deleted text end

new text begin (i) "Senior household" means a household with one or more senior members and with
a combined annual income not greater than 50 percent of:
new text end

new text begin (1) the metropolitan area median income for persons in the metropolitan area; or
new text end

new text begin (2) the statewide median income for persons outside the metropolitan area.
new text end

deleted text begin (i)deleted text endnew text begin (j)new text end "Senior housing" means housing intended and operated for occupancy by deleted text beginat least
one senior per unit
deleted text endnew text begin senior householdsnew text end with at least 80 percent of the units occupied by deleted text beginat
least one senior per unit
deleted text endnew text begin senior householdsnew text end, and for which there is publication of, and
adherence to, policies and procedures that demonstrate an intent by the owner or manager
to provide housing for seniors. Senior housing may be developed in conjunction with and
as a distinct portion of mixed-income senior housing developments that use a variety of
public or private financing sources.

deleted text begin (j)deleted text endnew text begin (k)new text end "Supportive housing" means housing that is not time-limited and provides or
coordinates with linkages to services necessary for residents to maintain housing stability
and maximize opportunities for education and employment.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 5.

Minnesota Statutes 2020, 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 clause (4), 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, and rehabilitation of supportive
housing 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 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 and rehabilitation 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; and

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

(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
deleted text begin seniorsdeleted text endnew text begin senior householdsnew text end;

(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;new text begin
and
new text end

deleted text begin (4) provide a service plan containing the elements of clause (3) reviewed by the housing
authority, economic development authority, public housing authority, or community
development agency that has an area of operation for the jurisdiction in which the project
is located; and
deleted text end

deleted text begin (5)deleted text endnew text begin (4)new text end include households with incomes that do not exceed 30 percent of the median
household income for the metropolitan area.

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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

ARTICLE 3

TECHNICAL AND CONFORMING CHANGES

Section 1.

Minnesota Statutes 2020, section 273.11, subdivision 12, is amended to read:


Subd. 12.

Community land trusts.

(a) A community land trust, as defined under chapter
462A, is (i) a community-based nonprofit corporation organized under chapter 317A, which
qualifies for tax exempt status under 501(c)(3), or (ii) a "city" as defined in section 462C.02,
subdivision 6
, which has received funding from the Minnesota housing finance agency for
purposes of the community land trust program. The Minnesota Housing Finance Agency
shall set the criteria for community land trusts.

(b) deleted text beginAll occupants of a community land trust building must have a family income of less
than 80 percent of the greater of (1) the state median income, or (2) the area or county
median income, as most recently determined by the Department of Housing and Urban
Development.
deleted text end Before the community land trust can rent or sell a unit to an applicant, the
community land trust shall verify to the satisfaction of the administering agency or the city
that the family income of each person or family applying for a unit in the community land
trust building is within the income criteria provided in this paragraph. The administering
agency or the city shall verify to the satisfaction of the county assessor that the occupant
meets the income criteria under this paragraph. The property tax benefits under paragraph
(c) shall be granted only to property owned or rented by persons or families within the
qualifying income limits. The family income criteria and verification is only necessary at
the time of initial occupancy in the property.

(c) A unit which is owned by the occupant and used as a homestead by the occupant
qualifies for homestead treatment as class 1a under section 273.13, subdivision 22. A unit
which is rented by the occupant and used as a homestead by the occupant shall be class 4a
or 4b property, under section 273.13, subdivision 25, whichever is applicable. Any remaining
portion of the property not used for residential purposes shall be classified by the assessor
in the appropriate class based upon the use of that portion of the property owned by the
community land trust. The land upon which the building is located shall be assessed at the
same classification rate as the units within the building, provided that if the building contains
some units assessed as class 1a and some units assessed as class 4a or 4b, the market value
of the land will be assessed in the same proportions as the value of the building.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end

Sec. 2.

Minnesota Statutes 2020, section 462A.30, subdivision 9, is amended to read:


Subd. 9.

Persons and families of low and moderate income.

"Persons and families of
low and moderate income" means persons or families whose income does not exceed:

(1) deleted text begin80deleted text endnew text begin 115new text end percent of the greater of state median income, or area or county median
income as determined by the Department of Housing and Urban Development; or

(2) the amount that qualifies the organization for tax exempt status under United States
Code, title 26, section 501(c)(3), whichever is less.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2021.
new text end