SF 1968

as introduced - 89th Legislature (2015 - 2016) Posted on 04/10/2015 09:34am

A bill for an act
relating to taxation; income and corporate franchise; establishing a workforce
housing tax credit; requiring reports; appropriating money; amending Minnesota
Statutes 2014, section 290.06, by adding a subdivision; proposing coding for new
law in Minnesota Statutes, chapter 116J.

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

Section 1.

new text begin [116J.549] OFFICE OF WORKFORCE HOUSING.
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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.
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new text begin (b) "City" means a statutory or home rule charter city.
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new text begin (c) "Eligible project area" means a census block with a population density over 200
persons per square mile according to the most recent United States census data available
that is within a greater Minnesota city having a median number of full-time private
sector jobs of at least 500 for the last five years, or an area served by a joint county-city
economic development authority.
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new text begin (d) "Family" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).
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new text begin (e) "Greater Minnesota" means the area of Minnesota located outside the
metropolitan area as defined in section 473.121, subdivision 2.
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new text begin (f) "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.
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new text begin (g) "Market rate residential rental properties" means properties that are rented at
market value and excludes: (1) properties constructed with financial assistance requiring
the property to be occupied by residents that meet income limits under federal or state
law of initial occupancy; and (2) properties constructed with federal, state, or local flood
recovery assistance, regardless of whether that assistance imposed income limits as a
condition of receiving assistance.
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new text begin (h) "Officer" means a person elected or appointed by the board of directors to
manage the daily operations of a business.
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new text begin (i) "Principal" means a person having authority to act on behalf of a business.
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new text begin (j) "Qualified investment" means a cash investment or the fair market value
equivalent for common stock, land, a partnership or membership interest, preferred
stock, debt with mandatory conversion to equity, or an equivalent ownership interest as
determined by the commissioner that is made in a qualified workforce housing project.
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new text begin (k) "Qualified local employer investor" means a corporation, partnership, or a
cooperative organized under chapter 308A, or cooperative association organized under
chapter 308B, that has:
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new text begin (1) more than 50 employees in all locations; and
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new text begin (2) an office or production facility within 30 miles of a qualified workforce housing
project.
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new text begin (l) "Qualified project investor" means an investor who has been certified by the
commissioner under subdivision 2.
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new text begin (m) "Qualifying workforce housing project" means a project:
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new text begin (1) for market rate residential rental properties with a minimum of three dwelling
units;
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new text begin (2) with a cost per unit of no more than $250,000 and no less than $75,000;
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new text begin (3) located in an eligible project area with a rental vacancy rate lower than five
percent for more than the last two years based on the most recently available data in
a city housing analysis;
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new text begin (4) that has more than 50 percent nonstate funding proposed to fund the project;
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new text begin (5) located in a city that has a jobs-to-population ratio of greater than 40 percent
as measured by the median number of jobs in a city for the last five years compared
with the median population of the city for the last five years or an area served by a joint
county-city economic development authority; and
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new text begin (6) that has been designated by the commissioner as a qualifying workforce housing
project.
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new text begin Subd. 2. new text end

new text begin Qualified project investor tax credits. new text end

new text begin (a) A credit up to $1,000,000 is
allowed against the tax imposed under chapter 290 for qualifying investments as follows:
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new text begin (1) for a taxpayer that makes a qualified investment in a qualified workforce housing
project, the credit equals 40 percent of the amount of the qualified investment; and
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new text begin (2) for a qualified local employer investor that makes a qualified investment in a
qualified workforce housing project and enters into an agreement with the commissioner
to employ ten additional employees per year in each of the three years after the year in
which the credit is received, the credit equals 50 percent of the amount of the qualified
investment. The agreement required under this clause must be submitted in a form and
manner prescribed by the commissioner.
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new text begin (b) The credit under this subdivision is allowed in the taxable year that the qualified
workforce housing project has housing units that are certified for occupancy by the
Department of Labor and Industry or a city inspector.
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new text begin (c) The commissioner must not allocate more than $25,000,000 in credits to qualified
project investors for taxable years beginning after December 31, 2014, and before January
1, 2016, and must not allocate more than $50,000,000 in credits to qualified project
investors for taxable years beginning after December 31, 2015, and before January 1,
2017. The commissioner must not allocate more than 40 percent of qualified project
investor tax credits to the same qualified workforce housing project.
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new text begin (d) The commissioner shall not allocate a credit if the investor is an officer or
principal of a business or sole proprietorship, or a family member of an officer or principal
of a business or sole proprietorship, that is competing for a grant through the workforce
housing fund in the year the tax credit would be awarded.
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new text begin (e) Applications for tax credits for a taxable year must be made available by the
Office of Workforce Housing by November 1 of the prior calendar year. The office must
make every effort to provide applications and relevant data to applicants in a simple,
concise manner using plain language. Tax credits must be allocated to qualified project
investors in the order that the tax credit request applications are filed with the office, except
where the commissioner determines the investment is circumventing the spirit of the law
or where little or no local economic growth would occur as a result of the investment. The
commissioner must approve or reject a tax credit request application within 15 days of
receiving the application. The investment specified in the application must be made within
60 days of the allocation of the credit. If the investment is not made within 60 days, the
credit allocation is canceled. A qualified project investor who fails to invest as specified in
the application must notify the commissioner immediately and no later than five business
days after the expiration of the 60-day investment period. The commissioner may require
an application fee for the applications submitted under this subdivision.
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new text begin (f) All tax credit request applications filed with the department on the same day
must be treated as having been filed contemporaneously. If two or more qualified project
investors file tax credit request applications on the same day, and the aggregate amount of
credit allocation claims exceeds the aggregate limit of credits under this section or the lesser
amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified project investors who filed on that day on a pro rata basis with respect
to the amounts claimed. The pro rata allocation for any one qualified project investor is the
product obtained by multiplying a fraction, the numerator of which is the amount of the
credit allocation claim filed on behalf of a qualified project investor and the denominator
of which is the total of all credit allocation claims filed on behalf of all applicants on that
day, by the amount of credits that remain unallocated on that day for the taxable year.
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new text begin (g) The commissioner must notify the commissioner of revenue of credit certificates
issued under this subdivision.
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new text begin Subd. 3. new text end

new text begin Transfer and revocation of credits. new text end

new text begin (a) A tax credit under this section
is not transferable to any other taxpayer.
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new text begin (b) If the commissioner discovers that a qualified project investor or qualified local
employer investor did not meet the eligibility requirements for the tax credits under this
section after the credits have been allocated, the commissioner may determine that credit
allocated is revoked and must be repaid by the investor. The commissioner must notify the
commissioner of revenue of every credit revoked and subject to full or partial repayment
under this section.
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new text begin Subd. 4. new text end

new text begin Reporting. new text end

new text begin Beginning in 2016, the commissioner must annually report
by March 15 to the chairs and ranking minority members of the committees in the senate
and house of representatives with jurisdiction over taxes and economic development,
in compliance with sections 3.195 and 3.197, on tax credits issued under this section
and the workforce housing projects funded by the workforce housing fund. The report
must include:
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new text begin (1) information about the availability of workforce housing in greater Minnesota;
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new text begin (2) information from employers and communities in greater Minnesota about
whether or not workforce housing needs are being met;
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new text begin (3) which projects have been funded by the workforce housing fund and whether
previously funded projects have created economic growth;
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new text begin (4) any suggested legislation to accelerate construction of workforce housing;
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new text begin (5) the number and amount of tax credits issued and the identity of the recipients;
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new text begin (6) the number and amount of tax credits revoked under subdivision 3; and
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new text begin (7) any other relevant information needed to evaluate the effect of the grants and tax
credits available through the Office of Workforce Housing.
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new text begin Subd. 5. new text end

new text begin Appropriations. new text end

new text begin Amounts in the workforce housing fund are appropriated
from the general fund to the commissioner for costs associated with the administration of
applications and for the personnel and administrative expenses related to administering
the workforce housing investor tax credit programs.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 2.

Minnesota Statutes 2014, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Workforce housing tax credit. new text end

new text begin (a) A taxpayer is allowed a credit against
the tax under this chapter equal to the amount certified by the commissioner of employment
and economic development under section 116J.549 to the taxpayer for the taxable year.
new text end

new text begin (b) Credits allowed to a partnership, limited liability company taxed as a partnership,
corporation, or multiple owners of property are passed through to the partners, members,
shareholders, or owners, respectively, pro rata to each partner, member, shareholder, or
owner based on that person's share of the entity's income for the taxable year.
new text end

new text begin (c)(1) The credit is limited to the liability for tax. For purposes of this subdivision,
"liability for tax" means the tax imposed under this chapter for the taxable year reduced by
the sum of the nonrefundable credits allowed under this chapter.
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new text begin (2) For a corporation that is a partner in a partnership, the credit allowed for the
taxable year is limited to the lesser of the amount determined under clause (1) for the
taxable year or an amount, separately computed with respect to the corporation's interest
in the trade, business, or entity, equal to the amount of tax attributable to that portion of
taxable income that is allocable or apportionable to the corporation's interest in the trade,
business, or entity.
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new text begin (3) If the amount of the credit determined under this subdivision for any taxable year
exceeds the limitation under clause (1), the excess is a credit carryover to each of the ten
succeeding taxable years. The entire amount of the excess unused credit for the taxable
year is 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. The amount of the
unused credit that may be added under this clause is limited to the taxpayer's liability
for tax, less the credit for the taxable year.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end