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Minnesota Legislature

Office of the Revisor of Statutes

SF 3301

2nd Engrossment - 90th Legislature (2017 - 2018) Posted on 09/05/2018 11:57am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; income; insurance; establishing a Minnesota housing tax credit
contribution fund; providing a tax credit for certain contributions; requiring a
report; appropriating money; amending Minnesota Statutes 2016, section 297I.20,
by adding a subdivision; proposing coding for new law in Minnesota Statutes,
chapters 290; 462A.

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

Section 1.

new text begin [290.0683] MINNESOTA HOUSING TAX 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.
new text end

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

new text begin (c) "Minnesota housing tax credit contribution fund" means the fund established in
section 462A.40.
new text end

new text begin (d) "Qualified project" means a project that qualifies for a grant or loan under section
462A.40.
new text end

new text begin (e) "Taxpayer" means a taxpayer as defined in section 290.01, subdivision 6, or a taxpayer
as defined in section 297I.01, subdivision 16.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A taxpayer is allowed a credit against the tax imposed
under this chapter and the premiums tax under chapter 297I for contributions of no less than
$100 and no more than $5,000,000 to the Minnesota housing tax credit contribution fund
under section 462A.40. The credit equals the amount the taxpayer contributed to the fund
during the taxable year.
new text end

new text begin (b) The credit may be claimed only after certification by the agency as provided in
subdivision 3.
new text end

new text begin (c) To receive the credit, a taxpayer must claim the credit on the taxpayer's state income
tax return in the manner prescribed by the commissioner and file with the return a copy of
the credit certificate issued by the agency under subdivision 3, paragraph (b).
new text end

new text begin (d) The taxpayer must claim the credit for the taxable year in which the contribution is
made.
new text end

new text begin (e) If the amount of the credit under this section exceeds the taxpayer's liability for tax
under this chapter, 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 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 (f) The contribution amount used to calculate the credit under this section may not be
used to calculate any other state income tax deduction or credit allowed by law.
new text end

new text begin (g) For nonresidents and part-year residents, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
new text end

new text begin Subd. 3. new text end

new text begin Allocation. new text end

new text begin (a) To qualify for the credit, a taxpayer must contribute to the
Minnesota housing tax credit contribution fund. A taxpayer may indicate that a contribution
is intended for a specific qualified project. If a taxpayer is also an eligible recipient of a
grant or loan under section 462A.40, the taxpayer may indicate that a contribution is intended
for the taxpayer's project, but may not do so for more than $....... of total contributions each
taxable year.
new text end

new text begin (b) Within 30 days after a taxpayer contributes to the fund, the agency must file with
the contributing taxpayer a credit certificate statement. The agency must send a copy of the
credit certificate to the commissioner of revenue. If there are insufficient credits to match
the contribution, the agency must return contributions to taxpayers within a timely manner.
new text end

new text begin (c) The credit certificate must state the dollar amount of the contribution made by the
taxpayer, the date the payment was received by the fund, and indicate if the contribution
was intended for a specific qualified project.
new text end

new text begin (d) The aggregate amount of tax credits allowed to all eligible contributors is limited to
$25,000,000 annually.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners. new text end

new text begin Credits granted to a partnership, a limited
liability company taxed as a partnership, S 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 their share of the entity's assets or
as specially allocated in their organizational documents or any other executed, as of the last
day of the taxable year.
new text end

new text begin Subd. 5. new text end

new text begin Recapture. new text end

new text begin (a) Credits claimed under this section are not subject to recapture.
new text end

new text begin (b) If a grant or loan made under section 462A.40 is canceled or recaptured, the grant
or loan is returned to the housing tax credit contribution fund. The agency is not required
to return contributions to taxpayers who indicated that a contribution was intended for a
project for which the loan or grant is recaptured or canceled.
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, 2018.
new text end

Sec. 2.

Minnesota Statutes 2016, section 297I.20, is amended by adding a subdivision to
read:


new text begin Subd. 4. new text end

new text begin Minnesota housing tax credit. new text end

new text begin An insurance company may claim a credit
against the premiums tax imposed under this chapter equal to the amount indicated on the
credit certificate statement issued to the company under section 290.0683. If the amount of
the credit exceeds the liability for tax under this chapter, 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 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. This
credit does not affect the calculation of police and fire aid under section 69.021.
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, 2018.
new text end

Sec. 3.

new text begin [462A.40] MINNESOTA HOUSING TAX CREDIT CONTRIBUTION FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Fund created. new text end

new text begin The Minnesota housing tax credit contribution fund is
created to be a revolving fund at the agency and administered by the commissioner. Amounts
contributed to the fund are appropriated to the commissioner. The commissioner may use
the amounts appropriated to direct disbursements from the fund as loans or grants to eligible
recipients.
new text end

new text begin Subd. 2. new text end

new text begin Use of funds; grant and loan program. new text end

new text begin (a) The commissioner may award
grants and loans to be used for multifamily and single family developments for persons and
families of low and moderate income. Allowable use of the funds include: gap financing,
as defined in section 462A.33, subdivision 1, new construction, acquisition, rehabilitation,
demolition or removal of existing structures, construction financing, permanent financing,
interest rate reduction, and refinancing.
new text end

new text begin (b) The commissioner may give preference for grants and loans to comparable proposals
that include regulatory changes or waivers that result in identifiable cost avoidance or cost
reductions, including but not limited to increased density, flexibility in site development
standards, or zoning code requirements.
new text end

new text begin (c) To the extent practicable, grants and loans shall be made so that an approximately
equal number of housing units are financed in the metropolitan area, as defined in section
473.121, subdivision 2, and in greater Minnesota.
new text end

new text begin (d) The commissioner shall set aside 35 percent of the financing under this section for
single-family homes and 20 percent for cities with a population under 10,000. A project
that meets both set asides may count toward both requirements. If by June 1 each year, the
commissioner does not receive requests to use all of the financing set aside under this
paragraph, the commissioner may use any remaining financing for other projects eligible
under this section.
new text end

new text begin Subd. 3. new text end

new text begin Eligible recipients. new text end

new text begin (a) The commissioner may award grants or loans to a city,
a federally recognized American Indian tribe or subdivision located in Minnesota, a tribal
housing corporation, a private developer, a nonprofit organization, a housing and
redevelopment authority under sections 469.001 to 469.047, a public housing authority or
agency authorized by law to exercise any of the powers granted by sections 469.001 to
469.047, or the owner of the housing, excluding individuals who own the housing and are
using it as their domicile.
new text end

new text begin (b) Eligible recipients must use the funds to serve households that meet the income limits
as provided in section 462A.33, subdivision 5.
new text end

new text begin (c) For the purpose of this subdivision, "city" has the meaning given it in section 462A.03,
subdivision 21.
new text end

new text begin Subd. 4. new text end

new text begin Recapture. new text end

new text begin A loan or grant awarded under this section is subject to repayment
or recapture under the guidelines adopted by the commissioner. Any loan or grant that is
repaid or recaptured must be redeposited in the fund.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin $....... each year is appropriated to the commissioner from the
general fund to administer the program in this section.
new text end

new text begin Subd. 6. new text end

new text begin Report. new text end

new text begin The commissioner shall report by January 15 each year to the chairs
and ranking minority members of the legislative policy and finance committees with
jurisdiction over housing on the tax credits and financing provided in the previous fiscal
year. The report shall provide a breakdown of the tax credits, grants, and loans by region
of the state. The report shall also include information on planned financing in the current
fiscal year.
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, 2018.
new text end

Sec. 4. new text beginPURPOSE STATEMENT; TAX EXPENDITURES.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin This section is intended to fulfill the requirement under
Minnesota Statutes, section 3.192, that a bill creating, renewing, or continuing a tax
expenditure must include a statement of intent that clearly provides the purpose for the tax
expenditure and a standard or goal against which its effectiveness may be measured.
new text end

new text begin Subd. 2. new text end

new text begin Minnesota housing tax credit. new text end

new text begin The provisions of sections 1 to 3 allowing a
Minnesota housing tax credit are intended to increase development and availability of
affordable housing to persons and families of low and moderate incomes in Minnesota.
new text end