HF 3724

as introduced - 86th Legislature (2009 - 2010) Posted on 03/22/2010 09:38am

A bill for an act
relating to housing; providing a Minnesota low-income housing tax credit;
proposing coding for new law in Minnesota Statutes, chapter 290.

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

Section 1.

new text begin [290.0682] LOW-INCOME HOUSING CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Agency" means the Minnesota Housing Finance Agency.
new text end

new text begin (c) "Compliance period" means the period of 15 taxable years beginning with the
first taxable year a credit is claimed under this section.
new text end

new text begin (d) "Eligibility statement" means a statement authorized and issued by the agency
certifying that a project is a qualified Minnesota project. The eligibility statement must
specify the maximum annual amount of the credit authorized for the project.
new text end

new text begin (e) "Federal Low-Income Housing Tax Credit" means the federal tax credit provided
in section 42 of the Internal Revenue Code.
new text end

new text begin (f) "Qualified Minnesota project" means a low-income rental housing project whose
owner is either a taxpayer or a nonprofit that meets the conditions of section 501(c)(3)
of the Internal Revenue Code, and is located in Minnesota and meets the following
requirements:
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new text begin (1)(i) has been allocated federal low-income housing tax credits by the agency
or a suballocator; or
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new text begin (ii) is a housing project that has received a funding commitment from the agency
under the economic development and housing challenge program under section 462A.33;
and
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new text begin (2) whose owner enters into a regulatory agreement with the agency or the
suballocator enforceable by state and local agencies.
new text end

new text begin (g) "Regulatory agreement" means an agreement between the owner of a qualified
Minnesota project and the agency or suballocator and recorded as an affordable housing
restriction on the real property on which the qualified Minnesota project is located, that
requires the project to be operated in accordance with the requirements of this section
from the date the project is placed in service until the date which is not fewer than 15 years
from the expiration date of the compliance period. The agreement may be subordinated
to the lien of a bank or other institutional lender providing financing to the qualified
Minnesota project upon the request of the bank or lender.
new text end

new text begin (h) "Suballocator" means an allocator of low-income federal housing credits and
credits under this section, other than the agency, as provided in section 462A.222.
new text end

new text begin (i) "Taxpayer" means a person, firm, partnership, corporation, limited liability
company, or other entity subject to the individual income tax or corporate franchise tax
under this chapter or to the insurance gross premiums tax under chapter 297I.
new text end

new text begin (j) Terms not otherwise defined in this subdivision have the meanings provided in
section 42 of the Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Minnesota low-income housing tax credit; allocation. new text end

new text begin (a) The agency
and all suballocators may allocate credits annually for a five-year period beginning
January 1, 2011. The total amount of credits that may be allocated each year is the sum of:
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new text begin (1) the federal per capita tax credits awarded to the state under section 42 of the
Internal Revenue Code;
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new text begin (2) unused Minnesota low-income housing tax credits, if any, for the preceding
calendar years; and
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new text begin (3) any Minnesota low-income housing tax credits returned to the agency or a
suballocator by a qualified Minnesota project.
new text end

new text begin (b) Unless otherwise provided in this section, the agency shall authorize, administer,
and determine eligibility for the credit under this section, in accordance with criteria
used in awarding federal low-income housing credits or in making funding commitments
under the economic development and housing challenge program in section 462A.33,
as applicable.
new text end

new text begin (c) The agency must allocate credits under this section to suballocators in the manner
and in the respective amounts provided in section 462A.222. The combined allocated
federal and Minnesota low-income housing tax credit must be the least amount necessary
to ensure financial feasibility of qualified Minnesota projects to which credits are allocated,
based on any income restrictions set forth in the regulatory agreements for the projects.
new text end

new text begin (d) The agency and suballocators must allocate the total available Minnesota
low-income housing tax credit among as many qualified Minnesota projects as fiscally
feasible.
new text end

new text begin (e) The agency may only authorize tax credits to qualified Minnesota projects that
are placed in service on or after January 1, 2011. The agency must issue an eligibility
statement for any suballocator within ten days of a request for a qualified Minnesota
project.
new text end

new text begin Subd. 3. new text end

new text begin Credit allowed; limitations; transfer. new text end

new text begin (a) A taxpayer who is allocated
a credit under subdivision 2 may claim the Minnesota low-income housing tax credit
against the taxes imposed under this chapter and chapter 297I. The taxpayer may claim
the amount allocated in the year in which the credit is allocated and in each of the four
following taxable years.
new text end

new text begin (b) A credit allowed under this section may not exceed liability for tax under this
chapter and under chapter 297I.
new text end

new text begin (c) If the amount of the credit under this section exceeds the limitation under
paragraph (b), the excess shall be a Minnesota low-income housing credit carryover to
each of the five succeeding taxable years. The entire amount of the excess unused credit
for the taxable year must be carried first to the earliest of the taxable years to which the
credit may be carried and then to each successive year to which the credit may be carried.
new text end

new text begin (d) All or any portion of tax credits issued under this section may be transferred,
sold, or assigned to one or more taxpayers without regard to ownership in the qualified
Minnesota project or the taxpayer that owns the project and without regard to any other
allocation of credits, depreciation, profits, or losses under the entities' organizational
documents. All or any portions of the tax credits issued under this section may be
subsequently further transferred, sold, or assigned to a taxpayer without transferring
any ownership interest in the qualified Minnesota project or any interest in the entity
owning the project. The transfer must include all credits attributable to periods after
the transfer date, but may not include carryforward of prior year credits. A partial year
shall be allocated on a daily basis.
new text end

new text begin (e) An owner of a qualified Minnesota project must certify to the commissioner the
amount of credit allocated to each taxpayer and provide the commissioner with other
information required by the commissioner to determine the allocation of the credit. The
owner of a qualified Minnesota project eligible for the credit shall submit, together
with the project owner's tax return under this chapter, a copy of the eligibility statement
issued by the agency with respect to the qualified Minnesota project. If the owner fails
to attach the eligibility statement, a credit is not allowed for that project for that taxable
year until the copy is provided to the commissioner. An owner or transferee who makes
a transfer, sale, or assignment of a credit as provided in paragraph (d) must submit to
the commissioner a statement that shows the amount of the credit that was transferred,
sold, or assigned. The owner must provide necessary information in a form and manner
requested by the commissioner so that the low-income housing tax credit can be properly
allocated and claimed.
new text end

new text begin (f) The proceeds of any sale or assignment of low-income housing credit under this
section is exempt from taxation under this chapter.
new text end

new text begin Subd. 4. new text end

new text begin Credit duration. new text end

new text begin Except for unused credits carried forward under this
section, a taxpayer is eligible for the Minnesota low-income housing tax credit for a
project for no more than five taxable years.
new text end

new text begin Subd. 5. new text end

new text begin Education, promotion, enhancement. new text end

new text begin (a) The agency, in cooperation
with the suballocators, shall conduct periodic educational seminars and promotional
events to inform potentially interested purchasers of the state credit and shall facilitate
and encourage creation of state credit buyer pools to acquire federal and state credits
in Minnesota.
new text end

new text begin (b) The agency, in collaboration with the suballocators, may pursue methods of
enhancing the efficiency of the Minnesota low-income housing tax credit program,
including pursuing opinions from the Internal Revenue Service in the form of general
counsel memoranda, private letter rulings and other notices, rulings, or guidelines, to
enhance the value of the credits; by reviewing other state low-income housing tax
programs that utilize an option for taxpayers to receive the tax credits in the form of a loan
generated by transferring the credit to a designated state entity; and any other methods.
new text end

new text begin (c) Not later than January 15, 2015, the agency shall submit a written report to the
committees of the legislature with jurisdiction over taxes, in compliance with Minnesota
Statutes, sections 3.195 and 3.197, on the success and efficiency of the Minnesota
low-income housing tax credit program. The report must include recommendations for
enhancement or modifications of the program.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
with credit authorizations allowed for taxable years beginning after December 31, 2010.
new text end