SF 2078

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 11:34pm

A bill for an act
relating to economic development; amending tax increment financing
requirements; authorizing state investment in a loan guaranty fund; creating a
loan guaranty program; authorizing issuance of bonds for nonprofit housing;
requiring establishment of a second mortgage loan program; authorizing issuance
of bonds for sustainable development projects; limiting environmental review
for certain projects; requiring certain projects to comply with procurement
regulations; providing income tax credits for historic structure rehabilitation
on low-income housing projects; authorizing the use of special assessments
for energy improvements; extending the JOBZ program to the metropolitan
area; appropriating money; amending Minnesota Statutes 2008, sections 11A.24,
by adding a subdivision; 15.99, by adding a subdivision; 16C.16, by adding a
subdivision; 429.011, by adding subdivisions; 429.021, subdivision 1; 429.031,
subdivision 3; 462A.36, subdivisions 1, 2, 4, by adding a subdivision; 469.176,
subdivision 2, by adding a subdivision; proposing coding for new law in
Minnesota Statutes, chapters 116J; 290; 462A; repealing Minnesota Statutes
2008, section 469.312, subdivision 3.

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

Section 1.

Minnesota Statutes 2008, section 11A.24, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Stimulus project loans. new text end

new text begin The State Investment Board may invest funds
with the Minnesota loan guaranty fund or any successor to its functions for the purpose
of allowing the Minnesota loan guaranty fund or its successor to make loan guaranties
through an economic development authority as defined by section 469.090, for planning,
design, development, and construction of a stimulus project as defined by section 469.176,
subdivision 1b. The investment shall be evidenced by a loan agreement that provides the
terms and conditions for repayment of the investment.
new text end

Sec. 2.

Minnesota Statutes 2008, section 15.99, is amended by adding a subdivision to
read:

new text begin Subd. 4. new text end

new text begin Continued review prohibited. new text end

new text begin Notwithstanding any other law to the
contrary, a proposed economic development project or subdivision under this section
or section 462.358 is not subject to continued environmental review or local planning
review if no substantial plan modification is made after the initial review is conducted.
For purposes of this subdivision, a "substantial plan modification" is a modification that
proposes a substantial change to the use, density, or infrastructure needs of an economic
development project or subdivision or poses an adverse environmental effect that is
unmitigated. This subdivision applies to projects commencing on or before December
31, 2010.
new text end

Sec. 3.

Minnesota Statutes 2008, section 16C.16, is amended by adding a subdivision
to read:

new text begin Subd. 13. new text end

new text begin Actions related to stimulus projects. new text end

new text begin To the extent possible, any action
related to the construction of a stimulus project, as defined in section 469.176, subdivision
8, must comply with this section.
new text end

Sec. 4.

new text begin [116J.408] MINNESOTA LOAN GUARANTY FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Loan guarantee. new text end

new text begin Upon determination that a loan will serve a public
purpose, including job creation, expansion of tax base, tourism, or economic development,
the commissioner of employment and economic development must create a program as
provided in this section under which the state guarantees and commits to guarantee against
loss an amount not exceeding 25 percent, exclusive of accrued interest, of a loan for
the cost of an economic development project, including housing, or the refunding or
refinancing of such a loan. The loan must be secured by the best available collateral,
including a mortgage on and security interest in all real and personal property comprising
the project and other collateral as provided in the loan agreement. The guaranty may be on
the final 25 percent of the loan or may be proportionate.
new text end

new text begin Subd. 2. new text end

new text begin Limitation of loan amount. new text end

new text begin The total principal amount of any guaranteed
loan must not exceed 80 percent of the total cost of the related project as determined by
the commissioner at the time the commitment to guarantee is made or, in the case of
a refunding or refinancing loan, 80 percent of the aggregate amount of principal and
interest refunded or refinanced. If the actual cost exceeds the estimate, the commissioner
may, upon request of the borrower and the lender, consent to an increase of the loan by a
principal amount not greater than 25 percent of the excess cost.
new text end

new text begin Subd. 3. new text end

new text begin Required provisions. new text end

new text begin A loan guaranty or loan agreement pertaining to any
loan guaranteed by the state must provide the following terms.
new text end

new text begin (a) Payments of principal and interest made by the borrower under the loan shall
be applied by the lender to reduce the guaranteed and nonguaranteed portion of the loan
on a proportionate basis, and the nonguaranteed portion shall not in any event receive
preferential treatment over the guaranteed portion.
new text end

new text begin (b) A grace period shall be allowed of not less than 60 days from a date a principal
or interest payment is due, prior to the making of demand for payment pursuant to the loan
guaranty, to permit adequate time for a decision on behalf of the state regarding principal
and interest assistance in accordance with subdivision 4. Payment as required by the
loan guaranty shall be made within 60 days after receipt by the commissioner of written
demand complying with the terms and conditions of the guaranty.
new text end

new text begin (c) The lender may not accelerate repayment of the loan or exercise other remedies
available to the lender if the borrower defaults, unless:
new text end

new text begin (1) the borrower fails to pay a required payment of principal or interest;
new text end

new text begin (2) the state consents in writing; or
new text end

new text begin (3) as otherwise permitted in the loan guaranty.
new text end

new text begin In the event of a default, the lender may not make demand for payment pursuant to the
guaranty unless the commissioner agrees in writing that the default has materially affected
the rights or security of the parties, and finds that the lender is entitled to receive payment
pursuant to the loan guaranty.
new text end

new text begin (d) If a payment of principal or interest is made by the state upon default of the
borrower, the state is subrogated to the rights of the lender with respect to the payment.
new text end

new text begin (e) The borrower must promptly prepare and deliver to the commissioner annual
audited or reviewed financial statements of the project prepared by a certified public
accountant according to generally accepted accounting principles.
new text end

new text begin (f) Authorized representatives of the state must have access to the project site at
reasonable times during construction and operation of the project.
new text end

new text begin (g) The borrower shall maintain adequate records and documents concerning the
construction and operation of the project in order that the commissioner may determine its
technical and financial conditions and its compliance with environmental requirements.
The records must include the amounts of all sales and use taxes paid on personal property
and services purchased for the construction and operation of the project, with tax receipts
furnished by the sellers or other supporting documentation determined by the board to be
satisfactory. The amounts of those taxes must be reported to the board in the manner and
at the times required by the board.
new text end

new text begin (h) The borrower shall protect and preserve at all times the project assets and other
collateral securing the loan and shall assist in liquidation of collateral to minimize loss in
the event of default.
new text end

new text begin (i) Orderly liquidation of assets of the project must be provided for in the event of
default, with an option on the part of the state to acquire from the lender the lender's
interest in the assets pursuant to the nonguaranteed portion of the loan.
new text end

new text begin (j) The state must be paid at or prior to the closing of the guaranteed loan a fee or
fees for the loan guaranty or the commitment to guarantee the loan in the amount the state
determines appropriate, provided that all fees may not exceed two percent of the total
principal amount of the guaranteed portion of the loan.
new text end

new text begin (k) The lender shall perfect and maintain the mortgage lien on the real estate and the
security interest in personal property and collateral granted as security for the loan, and
shall cause to be performed all other loan servicing functions that are normally required or
performed by a reasonable and prudent lender with respect to a loan without a guaranty.
new text end

new text begin (l) The state must be notified in writing without delay of:
new text end

new text begin (1) the date and amount and basis for each disbursement of loan proceeds;
new text end

new text begin (2) any nonpayment of principal or interest due;
new text end

new text begin (3) any failure to honor a commitment by any person of an intended source of capital
for the project; and
new text end

new text begin (4) any significant adverse changes from original cash flow projections as evidenced
by reports from the borrower, or any other known evidence that the borrower might be
unable to meet a future scheduled payment of principal or interest.
new text end

new text begin (m) The loan agreement must require the borrower to establish a reserve, from the
proceeds of the loan or otherwise, to be maintained with the lender or with a trustee for
the holders of the borrower's obligations in cash or securities of a specified market value
not less than one-half of the annual amount that would be required to amortize the entire
amount of the loan over the term and at the interest rate, or at the rate of yield resulting
from the interest rates, provided in the loan agreement.
new text end

new text begin (n) The agreement must contain other terms and conditions that the board determines
necessary and appropriate to carry out the purposes of this section.
new text end

new text begin Subd. 4. new text end

new text begin Principal and interest assistance. new text end

new text begin The commissioner may enter into a
written contract with the borrower to pay the lender, on behalf of the borrower, an amount
not greater than the amount of principal and interest to become due on one or more
subsequent dates, without acceleration, if the commissioner determines that:
new text end

new text begin (1) the borrower is not in default in payment of principal or interest due more than
60 days prior to the date of the contract;
new text end

new text begin (2) the borrower is or may become unable to meet in full principal or interest
payments, or both, which are due or to become due within a specified period;
new text end

new text begin (3) it is in the public interest to permit the borrower to continue to pursue the
purposes of the project;
new text end

new text begin (4) the probable net financial loss to the state will be less than that which would
result in the event of a default;
new text end

new text begin (5) the borrower is obligated by the contract to reimburse the state for all principal or
interest advanced, with interest on those amounts, upon terms and conditions satisfactory
to the commissioner; and
new text end

new text begin (6) funds are available for allocation to the account established for the project in
the guaranty fund, and are continuously allocated to the account in accordance with the
provisions of subdivision 7, in an amount equal to the amount of interest on the advances
until actually reimbursed to the state by the borrower.
new text end

new text begin All sums so advanced and interest on those amounts must be secured by the
mortgage lien and security interest granted by the loan agreement, but none of the
advances shall thereafter be repaid to the state until and unless all principal and interest
currently due on the loan has been fully paid. In the event of subsequent default by the
borrower, acceleration by the lender, and payment by the state of the full amount due
under the loan guaranty, the state shall be subrogated to the rights of the lender with
respect to the principal paid by it under the contract. Upon payment of the loan in full,
with accrued interest, the remaining amount of the advances and interest on the advances
may be paid to the state.
new text end

new text begin Subd. 5. new text end

new text begin Limitation on liability. new text end

new text begin The liability of the state for loan guaranties or
bonds authorized under this section is limited to the amount of funds appropriated to the
guaranty fund. The legislature does not intend to appropriate money from the general fund
to the guaranty fund, other than the sales and use taxes from a project as provided for in
subdivision 9 or tax increments from any projects in default as provided in subdivision 10.
The loan guaranties or bonds are not a general obligation or debt of the state.
new text end

new text begin Subd. 6. new text end

new text begin Project taxes and other charges. new text end

new text begin The payments, taxes, and governmental
charges described in this subdivision and subdivisions 7 to 10 that are received
as a consequence of the undertaking, completion, and operation of each economic
development loan guaranty made by the state are appropriated to the loan guaranty fund.
This appropriation shall not lapse at the close of any fiscal year under section 16A.28.
The state is not obligated to continue the appropriation with respect to charges not yet
collected, except to the extent determined to be necessary for compliance with the terms
of the loan guaranty agreement.
new text end

new text begin Subd. 7. new text end

new text begin Allocation to project accounts. new text end

new text begin Receipts of charges related to a particular
project must be deposited and recorded in its project account in the guaranty fund,
provided that the board may reallocate receipts in any project account that cause the
amount held in the account to exceed the minimum balance established initially. The
reallocation may be made to another project account for the purpose of maintaining the
minimum balance in the account.
new text end

new text begin Subd. 8. new text end

new text begin Payments by borrowers. new text end

new text begin Guaranty and commitment fees paid by
borrowers and repayments by borrowers of amounts advanced by the state under contracts
must be deposited in the project account for the borrower's project and must not be
disbursed or transferred for any purpose other than the fulfillment of the state's obligations
under the loan guaranty for that project. Funds may be transferred out of the account if the
minimum required balance in the project account is maintained and exceeds the aggregate
amount of fees and payments previously received from the borrower plus interest received
from investment of those amounts.
new text end

new text begin Subd. 9. new text end

new text begin Sales and use taxes. new text end

new text begin The amount collected from taxes imposed by
chapter 297A, upon retail sales, and upon the privilege of use, storage, or consumption in
Minnesota, of personal property and services purchased for the construction or operation
of any project for which a loan guaranty has been made or conditionally committed, less
any refunds required by law and a proportionate share of the cost of administration and
enforcement of the assessment and collection of the taxes, are appropriated and must be
deposited from the general fund into the project account in the guaranty fund at least once
each year from and after the date of the conditional commitment. The commissioner
of finance shall determine from information provided by each borrower the amount of
taxes so imposed and from the information provided by the commissioner of revenue the
amount of refunds or costs to be deducted from them.
new text end

new text begin Subd. 10. new text end

new text begin Tax increment. new text end

new text begin Notwithstanding any other law to the contrary, upon a
default by any project on debt which has been guaranteed under this section, the following
payments must be made.
new text end

new text begin (a) If the project on which the guaranty is given is not located in a tax increment
district, 40 percent of all tax increment paid on the property on which the project is located
must be paid to the state to reimburse the guaranty fund for any losses, including interest
on that amount at four percent.
new text end

new text begin (b) If the project on which the guaranty is given is located in a tax increment district,
all amounts payable to a local governmental authority for administration, any excess
increment, and 40 percent of all tax increment after expiration of the district for a period
of up to 15 years must be paid to the state to reimburse the guaranty fund for any losses,
including interest on that amount at four percent.
new text end

new text begin Tax increment is determined as provided in section 469.177, provided that, for purposes of
that determination, the election under section 469.177, subdivision 3, paragraph (b), is
deemed to have not been made by the local governing body.
new text end

new text begin Subd. 11. new text end

new text begin Limitation on guaranteed amount. new text end

new text begin The amount of all guaranties under
this section must not exceed $500,000,000. No less than 40 percent of all amounts
guaranteed shall be for projects located outside the seven-county metropolitan area. No
more than $25,000,000 may be guaranteed on any one project.
new text end

new text begin Subd. 12. new text end

new text begin Program timing; rules. new text end

new text begin The commissioner shall establish criteria for
selection of projects and rules for administration of the guaranty program, which are
not subject to chapter 15. Projects with guaranties must be under construction not later
then December 31, 2010.
new text end

Sec. 5.

new text begin [116J.997] BONDS FOR QUALIFIED GREEN BUILDING AND
SUSTAINABLE DESIGN PROJECTS.
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 terms in this
subdivision have the meanings given them.
new text end

new text begin (b) "Commissioner" means the commissioner of employment and economic
development.
new text end

new text begin (c) "Net benefit of revenue bond financing" means the present value of the interest
savings determined by the commissioner that result from the issuance of revenue bonds.
new text end

new text begin (d) "Rural area" means an area of the state that has:
new text end

new text begin (1) a population density of less than 150 people per square mile according to the
2000 census; and
new text end

new text begin (2) increased in population by less than half the rate of the national population
increase between the 1990 and 2000 censuses.
new text end

new text begin Subd. 2. new text end

new text begin Authority. new text end

new text begin A state agency, economic development authority, or port
authority may apply to the commissioner for authorization to issue revenue bonds, either
at one time or in a series from time to time, for a qualified green building and sustainable
design project that meets the criteria in subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Project designations. new text end

new text begin (a) Within 60 days after the end of the nomination
period described in paragraph (c), clause (1), the commissioner shall designate qualified
green building and sustainable design projects for which bonds may be issued under this
section. A project must not include a stadium or arena for professional sports exhibitions
or games.
new text end

new text begin (b) The commissioner shall ensure that each designated project substantially:
new text end

new text begin (1) reduces consumption of electricity as compared to conventional generation;
new text end

new text begin (2) reduces daily sulfur dioxide emissions compared to coal generation power;
new text end

new text begin (3) increases the use of the domestic solar photovoltaic market in the state as
measured against the average use in the state from 2004 to 2008; or
new text end

new text begin (4) increases use of fuel cell energy generation.
new text end

new text begin (c) The commissioner may not designate a project under this subdivision unless:
new text end

new text begin (1) the project is nominated by a state agency, economic development authority, or
port authority within 24 months of enactment of this section; and
new text end

new text begin (2) the state agency, economic development authority, or port authority provides
written verification to the commissioner that the project will satisfy the eligibility criteria
in this section.
new text end

new text begin Subd. 4. new text end

new text begin Applications. new text end

new text begin (a) An application for designation under this section must
include a project proposal that describes the energy-efficiency, renewable energy, and
sustainable design features of the project and demonstrates that the project satisfies the
eligibility criteria in this subdivision.
new text end

new text begin (b) At least 75 percent of the square footage of commercial buildings that are
part of the project must be registered with a recognized green building rating system,
including Minnesota's B3 standards or the United States Green Building Council's LEED
certification, or in the case of residential buildings, Minnesota GreenStar rating, and must
be reasonably expected to receive the certification.
new text end

new text begin (c) The project must have commitments to be granted state or local government
resources worth at least $500,000, including tax increment financing, tax abatement
benefits, revenues derived from lodging, food and beverage taxes, or in-kind contributions.
new text end

new text begin (d) The project must include at least 100,000 square feet of building area, or be
located on a parcel that is at least two acres in size.
new text end

new text begin Subd. 5. new text end

new text begin Use of bond financing. new text end

new text begin The project proposal must include a description of
the net benefit of the revenue bond financing that will be allocated for financing of one
or more of the following:
new text end

new text begin (1) the purchase, construction, integration, or other use of energy-efficiency,
renewable energy, and sustainable design features of the project;
new text end

new text begin (2) compliance with certification standards cited under subdivision 4, paragraph
(b); or
new text end

new text begin (3) the purchase, remediation, and foundation construction and preparation of the
project site.
new text end

new text begin Subd. 6. new text end

new text begin Employment requirements. new text end

new text begin (a) To qualify for designation under this
section, the project must be projected to provide permanent employment of at least 250
full-time equivalents, or 25 full-time equivalents in rural areas when completed, and
construction employment of at least 100 full-time equivalents or ten full-time equivalents
in rural areas.
new text end

new text begin (b) The application must include an independent analysis that describes the project's
economic impact, including the amount of projected employment.
new text end

new text begin Subd. 7. new text end

new text begin Project description. new text end

new text begin Each application must contain for each project a
description of:
new text end

new text begin (1) the amount of electric consumption reduced as compared to conventional
construction;
new text end

new text begin (2) the amount of sulfur dioxide daily emissions reduced compared to coal
generation;
new text end

new text begin (3) the amount of the gross installed capacity of the project's solar photovoltaic
capacity measured in megawatts; and
new text end

new text begin (4) the amount in megawatts of the project's fuel cell energy generation.
new text end

new text begin Subd. 8. new text end

new text begin Certification of use of revenue bond financing. new text end

new text begin No later than 30 days
after the completion of the project, each project must certify to the commissioner that
the net benefit of the revenue bond financing was used for the purposes described in
this section.
new text end

new text begin Subd. 9. new text end

new text begin Accountability. new text end

new text begin Each issuer shall maintain, on behalf of each project, an
interest-bearing reserve account into which one percent of the net proceeds of any bond
issued under this section for the project is deposited. Not later than five years after the
date of issuance, the commissioner shall determine whether the project has substantially
complied with the terms and conditions described in this section. If the commissioner
certifies that the project has substantially complied with the terms and conditions and
meets the commitments in the application for the project described in this section, the
issuer must release the amount in the reserve account, including accrued interest, to the
project. If the commissioner determines that the project has not substantially complied
with the terms and conditions, the issuer must remit the amount in the account, including
accrued interest, to the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for bonds issued after June 30, 2009.
new text end

Sec. 6.

new text begin [290.0681] CREDIT FOR HISTORIC STRUCTURE REHABILITATION.
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 terms in this
subdivision have the meanings given them.
new text end

new text begin (b) "Certified historic structure" means a property located in Minnesota and listed
individually on the National Register of Historic Places or a historic property designated
by either a certified local government or a heritage preservation commission created
under the National Historic Preservation Act of 1966 and whose designation is approved
by the state historic preservation officer.
new text end

new text begin (c) "Eligible property" means a certified historic structure or a structure in a certified
historic district that is offered or used for residential or business purposes.
new text end

new text begin (d) "Structure in a certified historic district" means a structure located in Minnesota
that is certified by the State Historic Preservation Office as contributing to the historic
significance of a certified historic district listed on the National Register of Historic Places
or a local district that has been certified by the United States Department of the Interior.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer who incurs costs for the rehabilitation of
eligible property may take a credit against the tax imposed under this chapter in an amount
equal to 25 percent of the total costs of rehabilitation. Costs of rehabilitation include,
but are not limited to, qualified rehabilitation expenditures as defined under section
47(c)(2)(A) of the Internal Revenue Code, provided that the costs of rehabilitation must
exceed 50 percent of the total basis in the property at the time the rehabilitation activity
begins and the rehabilitation must meet standards consistent with the standards of the
Secretary of the Interior for rehabilitation as determined by the State Historic Preservation
Office of the Minnesota Historical Society.
new text end

new text begin Subd. 3. new text end

new text begin Carryback and carryforward. new text end

new text begin If the amount of the credit under
subdivision 2 exceeds the tax liability under this chapter for the year in which the cost is
incurred, the amount that exceeds the tax liability may be carried back to any of the three
preceding taxable years or carried forward to each of the ten taxable years succeeding the
taxable year in which the expense was incurred. The entire amount of the credit must
be carried to the earliest taxable year to which the amount may be carried. The unused
portion of the credit must be carried to the following taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners; transfers. new text end

new text begin (a) Credits granted to a
partnership, a limited liability company taxed as a partnership, or multiple owners of
property shall be passed through to the partners, members, or owners, respectively, pro
rata or pursuant to an executed agreement among the partners, members, or owners
documenting an alternate distribution method.
new text end

new text begin (b) Taxpayers eligible for credits may transfer, sell, or assign the credits in whole
or part. Any assignee may use acquired credits to offset up to 100 percent of the taxes
otherwise imposed by this chapter. The assignee shall perfect a transfer by notifying the
Department of Revenue in writing within 30 calendar days following the effective date
of the transfer in a form and manner as prescribed by the Department of Revenue. The
proceeds of any sale or assignment of a credit is exempt from taxation under this chapter.
new text end

new text begin Subd. 5. new text end

new text begin Process. new text end

new text begin To claim the credit, the taxpayer must apply to the State Historic
Preservation Office of the Minnesota Historical Society before a historic rehabilitation
project begins. The State Historic Preservation Office shall determine the amount of
eligible rehabilitation costs and whether the rehabilitation meets the standards of the
United States Department of the Interior. The State Historic Preservation Office shall issue
certificates verifying eligibility for and the amount of credit. The taxpayer shall attach
the certificate to any income tax return on which the credit is claimed. The State Historic
Preservation Office of the Minnesota Historical Society may collect fees for applications
for the historic preservation tax credit. Fees shall be set at an amount that does not exceed
the costs of administering the tax credit program.
new text end

new text begin Subd. 6. new text end

new text begin Mortgage certificates; credit for lending institutions. new text end

new text begin (a) The taxpayer
may elect, in lieu of the credit otherwise allowed under this section, to receive a historic
rehabilitation mortgage credit certificate.
new text end

new text begin (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a
certificate that is issued to the taxpayer according to procedures prescribed by the State
Historic Preservation Office with respect to the certified rehabilitation and meets the
requirements of this paragraph. The face amount of the certificate must be equal to
the credit that would be allowable under subdivision 2 to the taxpayer with respect to
the rehabilitation. The certificate may only be transferred by the taxpayer to a lending
institution, including a nondepository home mortgage lending institution, in connection
with a loan:
new text end

new text begin (1) that is secured by the building with respect to which the credit is issued; and
new text end

new text begin (2) the proceeds of which may not be used for any purpose other than the acquisition
or rehabilitation of the building.
new text end

new text begin (c) In exchange for the certificate, the lending institution must provide to the
taxpayer an amount equal to the face amount of the certificate discounted by the amount
by which the federal income tax liability of the lending institution is increased due to its
use of the certificate in the manner provided in this section. That amount must be applied,
as directed by the taxpayer, in whole or in part, to reduce:
new text end

new text begin (1) the principal amount of the loan;
new text end

new text begin (2) the rate of interest on the loan; or
new text end

new text begin (3) the taxpayer's cost of purchasing the building, but only in the case of a qualified
historic home that is located in a poverty-impacted area as designated by the State Historic
Preservation Office.
new text end

new text begin (d) The lending institution may take as a credit against the tax due under this chapter
an amount equal to the amount specified in the certificate. If the amount of the discount
retained by the lender exceeds the amount by which the lending institution's federal
income tax liability is increased due to the use of a mortgage credit certificate, the excess
shall be refunded to the borrower with interest at the rate prescribed by the State Historic
Preservation Office. The lending institution may carry forward all unused credits under
this subdivision until exhausted. Nothing in this subdivision requires a lending institution
to accept a historic rehabilitation certificate from any person.
new text end

new text begin Subd. 7. new text end

new text begin National landmarks. new text end

new text begin Notwithstanding subdivision 2, the rehabilitation
of a property designated as a National Historic Landmark on the National Register of
Historic Places shall be eligible for the credit under this section provided that:
new text end

new text begin (1) renovation of the specific property, designated as a National Historic Landmark,
without regard to its being part of a larger project, is consistent with the standards set forth
in section 47(c) of the Internal Revenue Code;
new text end

new text begin (2) any project of which the National Historic Landmark is a part that has received
the approval of any local heritage preservation commission under section 471.193, with
review jurisdiction, or, if there is no applicable local heritage preservation commission,
the Minnesota State Historic Preservation Officer; and
new text end

new text begin (3) all other requirements of this section are met.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 7.

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

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

new text begin (b) "Applicable percentage" means the appropriate percentage prescribed by the
secretary of the treasury for the type of building for purposes of section 42 of the Internal
Revenue Code for the month that is the earlier of:
new text end

new text begin (1) the month in which the eligible low-income project is placed in service; or
new text end

new text begin (2) at the election of the taxpayer, the month in which the taxpayer and the agency or
suballocator enter into an agreement with respect to the building, which is binding on the
agency or suballocator, the taxpayer, and all successors in interest, as to the housing credit
dollar amount to be allocated to the project.
new text end

new text begin A month may be elected under clause (2) only if the election is made not later than
the fifth day after the close of the month. The election, once made, is irrevocable.
new text end

new text begin If, as of the close of a taxable year in the credit period, the qualified basis of an
eligible low-income building exceeds the basis as of the close of the first year of the credit
period, the applicable percentage that applies to the excess is two-thirds of the applicable
percentage originally ascribed to the building.
new text end

new text begin (c) "Compliance period" means the period of 15 taxable years beginning with the
first taxable year of the credit period with respect to a building.
new text end

new text begin (d) "Credit period" means, with respect to any eligible low-income project, the
period of ten taxable years beginning with:
new text end

new text begin (1) the taxable year in which the project is placed in service; or
new text end

new text begin (2) at the election of the taxpayer, the succeeding taxable year, but only if the
project is an eligible low-income project as of the close of the first year of the period.
The election, once made, is irrevocable.
new text end

new text begin (e) "Eligibility statement" means a statement issued by the agency or the suballocator
certifying that a project is an eligible low-income housing project. The statement must
set forth the taxable year in which the project is placed in service, the dollar amount
of low-income housing credit allocated to the project as provided in subdivision 5, the
applicable percentage and maximum qualified basis with respect to the project taken
into account in determining the dollar amount, sufficient information to identify each
project and the taxpayer or taxpayers who may claim a credit for each project, and other
information as the agency, in consultation with the commissioners of revenue and finance,
prescribe. The statement must be first issued following the close of the first taxable year in
the credit period, and thereafter, to the extent required by the commissioners of revenue
and finance, following the close of each taxable year of the compliance period.
new text end

new text begin (f) "Eligible low-income housing project" or "project" means a housing project
located in this state that is a qualified low-income project as defined in section 42(c) of
the Internal Revenue Code and that has been allocated federal low-income housing tax
credits from the agency or a suballocator.
new text end

new text begin (g) "Low-income project" means a project that has received an allocation of federal
nine percent low-income housing credits for the applicable year.
new text end

new text begin (h) "Qualified basis" of an eligible low-income housing project means the qualified
basis of the building determined under section 42(c) of the Internal Revenue Code.
new text end

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

new text begin A taxpayer that owns an interest in one or more eligible
low-income housing projects shall be allowed a credit against the tax imposed under
this chapter for the amount of low-income housing credit allocated by the agency or a
suballocator to the project. The credit amount allocated shall be allowed as a credit against
the tax for the ten taxable years in the credit period, provided the credit allowable for the
first taxable year of the credit period for any project shall be adjusted as provided in section
42(f)(2) of the Internal Revenue Code and any reduction in first-year credit by reason of
the adjustment shall be allowable for the first taxable year following the credit period.
new text end

new text begin Subd. 3. new text end

new text begin Amount of credit. new text end

new text begin Except as provided in subdivisions 4 and 5, the amount
of low-income housing credit shall be the applicable percentage multiplied by the qualified
basis of each eligible low-income project.
new text end

new text begin Subd. 4. new text end

new text begin Statewide limitation. new text end

new text begin The aggregate dollar amount of credit available for
eligible low-income housing projects under this section is $5,000,000 per year. The annual
amount of low-income credit shall be allocated between the agency and suballocators
in the same proportion as provided for federal credits and the allocation process shall
be as provided in section 462A.222. The state credit need not be allocated in the same
proportion among eligible low-income projects as the federal credit. The limitation
provided by this subdivision applies only to allocation of the annual aggregate dollar
amount of credit to be allocated by the agency and the suballocators, and does not apply
to allowance to a taxpayer of the credit with respect to an eligible low-income building
for each year of the credit period.
new text end

new text begin Subd. 5. new text end

new text begin Project allocation limitation. new text end

new text begin The dollar amount of credit allocated to
any project must not exceed the amount the agency and the suballocators determine is
necessary for the financial feasibility of the project as an eligible low-income project
throughout the credit period. In allocating a dollar amount of credit to any eligible
low-income project, the agency and suballocators must specify the applicable percentage
and the maximum qualified basis that may be taken into account under this section with
respect to the project. The applicable percentage and the maximum qualified basis for a
project must not exceed the amounts determined under this subdivision.
new text end

new text begin Subd. 6. new text end

new text begin Long-term commitment to low-income housing required. new text end

new text begin No credit
shall be allowed under this section with respect to a project or the taxable year, unless an
extended low-income housing commitment is in effect as of the end of the taxable year.
In this subdivision, the term "extended low-income housing commitment" means an
agreement between the taxpayer and the agency or suballocator, substantially similar to
the agreement specified in section 42(h)(6)(B) of the Internal Revenue Code.
new text end

new text begin Subd. 7. new text end

new text begin Credit to successor owner. new text end

new text begin If a credit is allowed under this section to an
eligible low-income housing project and the project or an interest in it is sold during the
credit period, the credit for the period after the sale that would have been allowable to the
prior owner had the project not been sold shall be allowable to the new owner. Credit for
the year of sale shall be allocated between the parties on the basis of the number of days
during the year that the project interest was held by each.
new text end

new text begin Subd. 8. new text end

new text begin Project monitoring. new text end

new text begin The agency shall establish procedures it deems
necessary for monitoring compliance of all eligible low-income projects with the
provisions of this section and section 42 of the Internal Revenue Code and for notifying
the commissioners of revenue and finance of any known noncompliance. The procedure
shall utilize existing procedures for monitoring the federal low-income housing tax credit
compliance with section 42 of the Internal Revenue Code.
new text end

new text begin Subd. 9. new text end

new text begin Credit recapture. new text end

new text begin If, as of the close of any taxable year in the compliance
period, the amount of the qualified basis of any low-income housing project for the
taxpayer is less than the amount of the basis as of the close of the preceding taxable
year, the credit under this section may be recaptured under a procedure to be established
by the commissioner of revenue.
new text end

new text begin Subd. 10. new text end

new text begin Education and promotion. new text end

new text begin The agency, in cooperation with the
suballocators, shall conduct a series of educational seminars and promotional events
targeted to corporations with major operations in Minnesota to inform potentially
interested purchasers of the state credit regarding the program 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 EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
provided that the tax credits are effective for taxable year beginning after December
31, 2009.
new text end

Sec. 8.

Minnesota Statutes 2008, section 429.011, is amended by adding a subdivision
to read:

new text begin Subd. 2c. new text end

new text begin Municipality, energy conservation improvements. new text end

new text begin For purposes
of construction, improvement, alteration, and reconstruction of an on-site energy
conservation system, a municipality may provide the improvements through and impose
special assessments upon the request of a port authority, economic development authority,
industrial development authority, or housing and redevelopment authority.
new text end

Sec. 9.

Minnesota Statutes 2008, section 429.011, is amended by adding a subdivision
to read:

new text begin Subd. 17. new text end

new text begin On-site energy conservation improvements. new text end

new text begin "On-site energy
conservation improvement" means any type of active or passive improvement, including
insulation; windows or doors; heating, cooling, or other building systems; lighting
systems; energy-related process or manufacturing changes; energy demand monitoring
and regulation equipment; and any other type of device, improvement, or equipment
installed in a building for the primary purpose of reduction in the use of energy in the
building, whether the devices, equipment, or improvements so installed are publicly
or privately owned.
new text end

Sec. 10.

Minnesota Statutes 2008, section 429.021, subdivision 1, is amended to read:

Subdivision 1.

Improvements authorized.

The council of a municipality shall have
power to make the following improvements:

(1) To acquire, open, and widen any street, and to improve the same by constructing,
reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle parking
strips of any material, or by grading, graveling, oiling, or otherwise improving the same,
including the beautification thereof and including storm sewers or other street drainage
and connections from sewer, water, or similar mains to curb lines.

(2) To acquire, develop, construct, reconstruct, extend, and maintain storm and
sanitary sewers and systems, including outlets, holding areas and ponds, treatment plants,
pumps, lift stations, service connections, and other appurtenances of a sewer system,
within and without the corporate limits.

(3) To construct, reconstruct, extend, and maintain steam heating mains.

(4) To install, replace, extend, and maintain street lights and street lighting systems
and special lighting systems.

(5) To acquire, improve, construct, reconstruct, extend, and maintain water works
systems, including mains, valves, hydrants, service connections, wells, pumps, reservoirs,
tanks, treatment plants, and other appurtenances of a water works system, within and
without the corporate limits.

(6) To acquire, improve and equip parks, open space areas, playgrounds, and
recreational facilities within or without the corporate limits.

(7) To plant trees on streets and provide for their trimming, care, and removal.

(8) To abate nuisances and to drain swamps, marshes, and ponds on public or private
property and to fill the same.

(9) To construct, reconstruct, extend, and maintain dikes and other flood control
works.

(10) To construct, reconstruct, extend, and maintain retaining walls and area walls.

(11) To acquire, construct, reconstruct, improve, alter, extend, operate, maintain, and
promote a pedestrian skyway system. Such improvement may be made upon a petition
pursuant to section 429.031, subdivision 3.

(12) To acquire, construct, reconstruct, extend, operate, maintain, and promote
underground pedestrian concourses.

(13) To acquire, construct, improve, alter, extend, operate, maintain, and promote
public malls, plazas or courtyards.

(14) To construct, reconstruct, extend, and maintain district heating systems.

(15) To construct, reconstruct, alter, extend, operate, maintain, and promote fire
protection systems in existing buildings, but only upon a petition pursuant to section
429.031, subdivision 3.

(16) To acquire, construct, reconstruct, improve, alter, extend, and maintain highway
sound barriers.

(17) To improve, construct, reconstruct, extend, and maintain gas and electric
distribution facilities owned by a municipal gas or electric utility.

(18) To purchase, install, and maintain signs, posts, and other markers for addressing
related to the operation of enhanced 911 telephone service.

(19) To improve, construct, extend, and maintain facilities for Internet access and
other communications purposes, if the council finds that:

(i) the facilities are necessary to make available Internet access or other
communications services that are not and will not be available through other providers or
the private market in the reasonably foreseeable future; and

(ii) the service to be provided by the facilities will not compete with service provided
by private entities.

(20) To assess affected property owners for all or a portion of the costs agreed to
with an electric utility, telecommunications carrier, or cable system operator to bury or
alter a new or existing distribution system within the public right-of-way that exceeds the
utility's design and construction standards, or those set by law, tariff, or franchise, but only
upon petition under section 429.031, subdivision 3.

new text begin (21) To construct, reconstruct, improve, alter, and maintain on-site energy
conservation improvements in existing buildings, but only upon a petition under section
429.031, subdivision 3. The activities under this clause may also be undertaken by a port
authority, economic development authority, industrial development authority, or housing
and redevelopment authority, and the municipality may act on the request of those entities
in imposing special assessments.
new text end

Sec. 11.

Minnesota Statutes 2008, section 429.031, subdivision 3, is amended to read:

Subd. 3.

Petition by all owners.

Whenever all owners of real property abutting
upon any street named as the location of any improvement shall petition the council
to construct the improvement and to assess the entire cost against their property, the
council may, without a public hearing, adopt a resolution determining such fact and
ordering the improvement. The validity of the resolution shall not be questioned by
any taxpayer or property owner or the municipality unless an action for that purpose
is commenced within 30 days after adoption of the resolution as provided in section
429.036. Nothing herein prevents any property owner from questioning the amount
or validity of the special assessment against the owner's property pursuant to section
429.081. In the case of a petition for the municipality to own and install a fire protection
system, a pedestrian skyway system, new text begin on-site energy conservation improvements, new text end or
on-site water contaminant improvements, the petition must contain or be accompanied
by an undertaking satisfactory to the city by the petitioner that the petitioner will grant
the municipality the necessary property interest in the building to permit the city to enter
upon the property and the building to construct, maintain, and operate the fire protection
system, pedestrian skyway system, new text begin on-site energy conservation improvements, new text end or on-site
water contaminant improvements. In the case of a petition for the installation of a
privately owned fire protection system, a privately owned pedestrian skyway system,
new text begin privately owned on-site energy conservation improvements, new text end or privately owned on-site
water contaminant improvements, the petition shall contain the plans and specifications
for the improvement, the estimated cost of the improvement and a statement indicating
whether the city or the owner will contract for the construction of the improvement. If the
owner is contracting for the construction of the improvement, the city shall not approve
the petition until it has reviewed and approved the plans, specifications, and cost estimates
contained in the petition. The construction cost financed under section 429.091 shall not
exceed the amount of the cost estimate contained in the petition. In the case of a petition
for the installation of a fire protection system, a pedestrian skyway system, new text begin on-site energy
conservation improvements, new text end or on-site water contaminant improvements, the petitioner
may request abandonment of the improvement at any time after it has been ordered
pursuant to subdivision 1 and before contracts have been awarded for the construction of
the improvement under section 429.041, subdivision 2. If such a request is received, the
city council shall abandon the proceedings but in such case the petitioner shall reimburse
the city for any and all expenses incurred by the city in connection with the improvement.

Sec. 12.

new text begin [462A.2094] TAX CREDIT ADVANCE LOAN PROGRAM.
new text end

new text begin The agency must develop the tax credit advance loan program. The loan program
provides second mortgages for first-time home buyers to finance loans for up to $8,000 of
the home purchase price. Tax credit advance loans must be used in conjunction with a
conventional loan at a 30-year fixed rate mortgage and require that the home buyer file
for a federal tax credit for first-time home buyers and use the credit refund to repay the
loan. If the tax credit advance loan is repaid when due, the homeowner will be required to
pay no interest, although reasonable servicing fees may be required to be paid. If the tax
credit advance loan is not paid when due, principal and interest payments to repay the loan
over ten years begins. The agency must issue tax-exempt bonds to fund the program. The
program shall remain in effect during the time when the federal tax credit is in effect.
new text end

Sec. 13.

Minnesota Statutes 2008, section 462A.36, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section the following terms have
the meanings given them in this subdivision.

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

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

(d) "Nonprofit housing bonds" means bonds issued by the agency under chapter
462A that are "qualified 501(c)(3) bonds" (within the meaning of Section 145(a) of
the Internal Revenue Code) or 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.

(e) "Permanent 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 (f) "Qualified nonprofit housing" means housing constructed by a 501(c)(3)
organization and serving, in part, a low- or moderate-income group of tenants.
new text end

Sec. 14.

Minnesota Statutes 2008, section 462A.36, subdivision 2, is amended to read:

Subd. 2.

Authorization.

(a) The agency may issue up to deleted text begin $30,000,000 deleted text end new text begin $180,000,000 new text end
of nonprofit housing bonds in one or more series to which the payments made under this
section may be pledged.

new text begin (b) new text end The nonprofit housing bonds new text begin up to an amount of $30,000,000 new text end authorized in this
subdivision may be issued for the purpose of making loans, on terms and conditions
the agency deems appropriate, to finance the costs of the construction, acquisition,
preservation, and rehabilitation of permanent supportive housing for individuals and
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.

deleted text begin (b) deleted text end new text begin (c) new text end An insubstantial portion of the bond proceeds may be used for permanent
supportive housing for individuals and families experiencing homelessness who do not
meet the criteria of paragraph deleted text begin (a) deleted text end new text begin (b) new text end .

new text begin (d) The nonprofit housing bonds up to an amount of $150,000,000 authorized in this
subdivision may be issued for the purpose of making loans, on terms and conditions
the agency deems appropriate, to finance the costs of the construction, acquisition,
preservation, and rehabilitation for other types of qualified nonprofit housing provided
that the housing has a material low-income component according to standards established
by the agency.
new text end

Sec. 15.

Minnesota Statutes 2008, section 462A.36, is amended by adding a
subdivision to read:

new text begin Subd. 3a. new text end

new text begin State fee for issuance. new text end

new text begin The state may charge a fee for its issuance of the
bonds under this section equivalent to actual costs, plus an additional amount, not to
exceed 0.5 percent, as determined by the agency. Amounts received in excess of costs
shall be held in the nonprofit bond account as provided in subdivision 4, paragraph (b),
and may be used to pay the nonprofit housing bonds.
new text end

Sec. 16.

Minnesota Statutes 2008, section 462A.36, subdivision 4, is amended to read:

Subd. 4.

Appropriation; payment to the agency or trustee.

(a) The agency must
certify annually to the commissioner of finance the actual amount of annual debt service
on each series of bonds issued under subdivision 2 new text begin , paragraph (a) new text end .

(b) Each July 15, beginning in 2009 and through 2031, if any nonprofit housing
bonds issued under subdivision 2 remain outstanding, the commissioner of finance must
transfer to the nonprofit housing bond account established under section 462A.21,
subdivision 32, the amount certified under paragraph (a), not to exceed $2,400,000
annually. The amounts necessary to make the transfers are appropriated from the general
fund to the commissioner of finance.

(c) The agency may pledge to the payment of the nonprofit housing bonds the
payments to be made by the state under this section.

Sec. 17.

Minnesota Statutes 2008, section 469.176, subdivision 2, is amended to read:

Subd. 2.

Excess increments.

(a) The authority shall annually determine the amount
of excess increments for a district, if any. This determination must be based on the tax
increment financing plan in effect on December 31 of the year and the increments and
other revenues received as of December 31 of the year. The authority must spend or return
the excess increments under paragraph (c) within nine months after the end of the year.

(b) For purposes of this subdivision, "excess increments" equals the excess of:

(1) total increments collected from the district since its certification, reduced by any
excess increments paid under paragraph (c), clause (4), for a prior year, over

(2) the total costs authorized by the tax increment financing plan to be paid with
increments from the district, reduced, but not below zero, by the sum of:

(i) the amounts of those authorized costs that have been paid from sources other than
tax increments from the district;

(ii) revenues, other than tax increments from the district, that are dedicated for or
otherwise required to be used to pay those authorized costs and that the authority has
received and that are not included in item (i);

(iii) the amount of principal and interest obligations due on outstanding bonds after
December 31 of the year and not prepaid under paragraph (c) in a prior year; and

(iv) increased by the sum of the transfers of increments made under section 469.1763,
subdivision 6, to reduce deficits in other districts made by December 31 of the year.

(c) The authority shall use excess increment only to do one or more of the following:

(1) prepay any outstanding bonds;

(2) discharge the pledge of tax increment for any outstanding bonds;

(3) pay into an escrow account dedicated to the payment of any outstanding bonds; deleted text begin or
deleted text end

(4) new text begin pay or reimburse eligible project costs for a stimulus project certified by the
authority as defined in section 469.176, subdivision 8, paragraph (b); or
new text end

new text begin (5) new text end return the excess amount to the county auditor who shall distribute the excess
amount to the city or town, county, and school district in which the tax increment financing
district is located in direct proportion to their respective local tax rates.

(d) For purposes of a district for which the request for certification was made prior to
August 1, 1979, excess increments equal the amount of increments on hand on December
31, less the principal and interest obligations due on outstanding bonds or advances,
qualifying under subdivision 1c, clauses (1), (2), (4), and (5), after December 31 of the
year and not prepaid under paragraph (c).

(e) The county auditor must report to the commissioner of education the amount of
any excess tax increment distributed to a school district within 30 days of the distribution.

(f) For purposes of this subdivision, "outstanding bonds" means bonds which are
secured by increments from the district.

(g) The state auditor may exempt an authority from reporting the amounts calculated
under this subdivision for a calendar year, if the authority certifies to the auditor in
its report that the total amount authorized by the tax increment plan to be paid with
increments from the district exceeds the sum of the total increments collected for the
district for all years by 20 percent.

Sec. 18.

Minnesota Statutes 2008, section 469.176, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Economic stimulus projects. new text end

new text begin (a) In connection with a stimulus project,
the authority may extend by ten years the duration limits in subdivision 1b, paragraph (a),
for any district for which the request for certification was made after July 31, 1979, and
before January 1, 2013, to pay expenditures relating to a stimulus project.
new text end

new text begin (b) A "stimulus project" means any capital project, the construction of which
commences not later than December 31, 2012, determined to create or retain jobs in the
state, including construction jobs, by the governing body of the municipality in which the
project is located.
new text end

Sec. 19. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, section 469.312, subdivision 3, new text end new text begin is repealed.
new text end