SF 1752

as introduced - 93rd Legislature (2023 - 2024) Posted on 06/14/2023 08:29am

A bill for an act
relating to taxation; local government aid; establishing the local affordable housing
aid program; appropriating money; proposing coding for new law in Minnesota
Statutes, chapter 477A.

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

Section 1.

new text begin [477A.35] LOCAL AFFORDABLE HOUSING AID.
new text end

new text begin Subdivision 1. new text end

new text begin Purpose. new text end

new text begin The purpose of this section is to help local governments to
develop and preserve affordable housing within their jurisdictions in order to keep families
from losing housing and to help those experiencing homelessness find housing.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the following terms have the
meanings given:
new text end

new text begin (1) "city" means a statutory or home rule charter city with a population of at least 10,000;
new text end

new text begin (2) "city distribution factor" means the number of households in a city that are
cost-burdened divided by the total number of households that are cost-burdened in Minnesota
cities. The number of cost-burdened households shall be determined using the most recent
estimates or experimental estimates provided by the American Community Survey of the
United States Census Bureau as of May 1 of the aid calculation year;
new text end

new text begin (3) "cost-burdened household" means a household in which gross rent is 30 percent or
more of household income or in which homeownership costs are 30 percent or more of
household income;
new text end

new text begin (4) "county distribution factor" means the number of households in a county that are
cost-burdened divided by the total number of households in Minnesota that are cost-burdened.
The number of cost-burdened households shall be determined using the most recent estimates
or experimental estimates provided by the American Community Survey of the United
States Census Bureau as of May 1 of the aid calculation year; and
new text end

new text begin (5) "population" has the meaning given in section 477A.011, subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Distribution. new text end

new text begin (a) Each county shall receive the sum of:
new text end

new text begin (1) $6,000; plus
new text end

new text begin (2) the product of:
new text end

new text begin (i) the county distribution factor; multiplied by
new text end

new text begin (ii) the total amount available to counties under this section minus the product of clause
(1) multiplied by the number of Minnesota counties.
new text end

new text begin (b) The commissioner of revenue shall determine the amount of funding available to a
city under this section by multiplying the city's city distribution factor and the amount of
funding available to cities under this section.
new text end

new text begin Subd. 4. new text end

new text begin Grants to nonqualifying local governments. new text end

new text begin (a) The commissioner of the
Minnesota Housing Finance Agency shall establish a program to award grants of at least
$25,000 to local governments that do not qualify for a distribution of aid under subdivision
3. The agency shall develop program guidelines and criteria in consultation with the League
of Minnesota Cities.
new text end

new text begin (b) The agency shall attempt to award grants in approximately equal amounts to local
governments outside and within the metropolitan area. Among comparable proposals, the
agency shall prioritize grants to local governments that have a higher proportion of
cost-burdened households.
new text end

new text begin (c) A grantee must use its grant on a qualifying project.
new text end

new text begin (d) In making grants, the agency shall determine the circumstances, terms, and conditions
under which all or any portion thereof will be repaid and shall determine the appropriate
security should repayment be required. Any repaid funds shall be returned to the account
or accounts established pursuant to paragraph (e).
new text end

new text begin (e) The agency shall establish a bookkeeping account or accounts in the housing
development fund for money distributed to the agency for grants under this subdivision. By
May 1 of each year, the Minnesota Housing Finance Agency shall report to the Department
of Revenue on the amount in the account or accounts.
new text end

new text begin Subd. 5. new text end

new text begin Qualifying projects. new text end

new text begin (a) Qualifying projects shall include projects designed
for the purpose of construction, acquisition, rehabilitation, demolition or removal of existing
structures, construction financing, permanent financing, interest rate reduction, refinancing,
and gap financing of housing to provide affordable housing to households that have incomes
which do not exceed, for homeownership projects, 115 percent of the greater of state or
area median income as determined by the United States Department of Housing and Urban
Development, and for rental housing projects, 80 percent of the greater of state or area
median income as determined by the United States Department of Housing and Urban
Development, except that the housing developed or rehabilitated with funds under this
section must be affordable to the local work force.
new text end

new text begin (b) Gap financing is either:
new text end

new text begin (1) the difference between the costs of the property, including acquisition, demolition,
rehabilitation, and construction, and the market value of the property upon sale; or
new text end

new text begin (2) the difference between the cost of the property and the amount the targeted household
can afford for housing, based on industry standards and practices.
new text end

new text begin (c) If a grant under this section is used for demolition or removal of existing structures,
the cleared land must be used for the construction of housing to be owned or rented by
persons who meet the income limits of paragraph (a).
new text end

new text begin Subd. 6. new text end

new text begin Use of proceeds. new text end

new text begin (a) Any funds distributed under this section must be spent on
a qualifying project. If a 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, 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 5, paragraph (a).
new text end

new text begin (b) Any unspent funds must be returned to the commissioner of revenue by December
31 in the third year following the year after the aid was received.
new text end

new text begin Subd. 7. new text end

new text begin Administration. new text end

new text begin (a) The commissioner of revenue must compute the amount
of aid payable to each city and county under this section. Before computing the amount of
aid for counties and after receiving the report required by subdivision 4, paragraph (e), the
commissioner shall transfer from the funds available to counties to the Minnesota Housing
Finance Agency a sum sufficient to increase the amount in the account or accounts established
under that paragraph to $30,000,000. By August 1 of each year, the commissioner must
certify the amount to be paid to each county and city in the following year. The commissioner
must pay local affordable housing aid annually at the times provided in section 477A.015.
new text end

new text begin (b) Beginning in 2025, cities and counties shall submit a report annually, no later than
December 1 of each year, to the Minnesota Housing Finance Agency. The report shall
include documentation of the location of any unspent funds distributed under this section
and of qualifying projects completed or planned with funds under this section. If a city or
county fails to submit a report, if a city or county failed to spend funds within the timeline
imposed under subdivision 6, paragraph (b), or if a city or county uses funds for a project
that does not qualify under this section, the Minnesota Housing Finance Agency shall notify
the Department of Revenue and the cities and counties that must repay funds under paragraph
(c) by February 15 of the following year.
new text end

new text begin (c) By May 15, after receiving notice from the Minnesota Housing Finance Agency, a
city or county must repay to the commissioner of revenue funds the city or county received
under this section if the city or county:
new text end

new text begin (1) fails to spend the funds within the time allowed under subdivision 6, paragraph (b);
new text end

new text begin (2) spends the funds on anything other than a qualifying project; or
new text end

new text begin (3) fails to submit a report documenting use of the funds.
new text end

new text begin (d) The commissioner of revenue must stop distributing funds to a city or county that
the Minnesota Housing Finance Agency reports to have, in three consecutive years, failed
to use funds, misused funds, or failed to report on its use of funds.
new text end

new text begin (e) The commissioner may resume distributing funds to a city or county to which the
commissioner has stopped payments once the Minnesota Housing Finance Agency certifies
that the city or county has submitted documentation of plans for a qualifying project.
new text end

new text begin (f) By May 1, any funds repaid to the commissioner of revenue by cities under paragraph
(c) must be added to the overall distribution of aids certified under this section for cities in
the following year. By May 1, any funds repaid to the commissioner of revenue by counties
under paragraph (c) must be added to the overall distribution of aids certified under this
section for counties in the following year.
new text end

new text begin Subd. 8. new text end

new text begin County consultation with local governments. new text end

new text begin A county that receives funding
under this section shall regularly consult with the local governments in the jurisdictions of
which its qualifying projects are planned or located.
new text end

new text begin Subd. 9. new text end

new text begin Appropriations. new text end

new text begin (a) $210,000,000 is annually appropriated from the general
fund to the commissioner of revenue to make payments to counties as required under this
section.
new text end

new text begin (b) $60,000,000 is annually appropriated from the general fund to the commissioner of
revenue to make payments to cities as required under this section.
new text end

new text begin (c) $....... is annually appropriated from the general fund to the commissioner of revenue
to implement this section.
new text end

new text begin (d) $....... is annually appropriated from the general fund to the commissioner of the
Minnesota Housing Finance Agency to implement this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with aids payable in calendar
year 2024.
new text end