Minnesota Legislature
SF 4875
as introduced - 93rd Legislature (2023 - 2024) Posted on 06/26/2024 02:20pm
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A bill for an act
relating to taxation; state aids; imposing a maintenance of effort condition for
receipt of local affordable housing aid; amending Minnesota Statutes 2023
Supplement, section 477A.35, subdivisions 1, 2, 4, 5, 6, by adding a subdivision.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2023 Supplement, section 477A.35, subdivision 1, is
amended to read:
Subdivision 1.
Purpose.
The purpose of this section is to help metropolitan local
governments to develop and preserve affordable housingnew text begin and supportive services for residentsnew text end
within their jurisdictions in order to keep families from losing housing and to help those
experiencing homelessness find housing.
Sec. 2.
Minnesota Statutes 2023 Supplement, section 477A.35, subdivision 2, is amended
to read:
Subd. 2.
Definitions.
new text begin (a) new text end For the purposes of this section, the following terms have the
meanings givendeleted text begin :deleted text end new text begin .
new text end
deleted text begin (1)deleted text end new text begin (b)new text end "City distribution factor" means the number of households in a tier I city that are
cost-burdened divided by the total number of households that are cost-burdened in tier I
cities. The number of cost-burdened households shall be determined using the most recent
estimates or experimental estimates provided by the American Community Survey of the
United States Census Bureau as of May 1 of the aid calculation yeardeleted text begin ;deleted text end new text begin .
new text end
deleted text begin (2)deleted text end new text begin (c)new text end "Cost-burdened household" means a household in which gross rent is 30 percent
or more of household income or in which homeownership costs are 30 percent or more of
household incomedeleted text begin ;deleted text end new text begin .
new text end
deleted text begin (3)deleted text end new text begin (d)new text end "County distribution factor" means the number of households in a county that
are cost-burdened divided by the total number of households in metropolitan counties that
are cost-burdened. The number of cost-burdened households shall be determined using the
most recent estimates or experimental estimates provided by the American Community
Survey of the United States Census Bureau as of May 1 of the aid calculation yeardeleted text begin ;deleted text end new text begin .
new text end
new text begin
(e) "Locally funded housing expenditures" mean expenditures of the aid recipient,
including expenditures by a public corporation or legal entity created by the aid recipient,
which are:
new text end
new text begin
(1) funded from the recipient's general fund, a property tax levy of the recipient or its
housing and redevelopment authority, or unrestricted money available to the recipient, but
not including tax increments; and
new text end
new text begin
(2) expended on one of the following qualifying activities:
new text end
new text begin
(i) financial assistance to residents in arrears on rent, mortgage, utilities, or property tax
payments;
new text end
new text begin
(ii) support services, case management services, and legal services for residents in arrears
on rent, mortgage, utilities, or property tax payments;
new text end
new text begin
(iii) down payment assistance or homeownership education, counseling, and training;
new text end
new text begin
(iv) acquisition, construction, rehabilitation, adaptive reuse, improvement, financing,
and infrastructure of residential dwellings;
new text end
new text begin
(v) costs of operating emergency shelter, transitional housing, supportive housing, or
publicly owned housing, including costs of providing case management services and support
services; and
new text end
new text begin
(vi) rental assistance.
new text end
deleted text begin (4)deleted text end new text begin (f)new text end "Metropolitan area" has the meaning given in section 473.121, subdivision 2;
deleted text begin (5)deleted text end new text begin (g)new text end "Metropolitan county" has the meaning given in section 473.121, subdivision 4;
deleted text begin (6)deleted text end new text begin (h)new text end "Population" has the meaning given in section 477A.011, subdivision 3; and
deleted text begin (7)deleted text end new text begin (i)new text end "Tier I city" means a statutory or home rule charter city that is a city of the first,
second, or third class and is located in a metropolitan county.
Sec. 3.
Minnesota Statutes 2023 Supplement, section 477A.35, subdivision 4, is amended
to read:
Subd. 4.
Qualifying projects.
(a) Qualifying projects deleted text begin shalldeleted text end include: (1) emergency rental
assistance for households earning less than 80 percent of area median income as determined
by the United States Department of Housing and Urban Development; (2) financial support
to nonprofit affordable housing providers in their mission to provide safe, dignified,
affordable and supportive housing; deleted text begin anddeleted text end (3) projects designed for the purpose of construction,
acquisition, rehabilitation, demolition or removal of existing structures, construction
financing, permanent financing, interest rate reduction, refinancing, and gap financing of
housing to provide affordable housing to households that have incomes which do not exceed,
for homeownership projects, 115 percent of the greater of state or area median income as
determined by the United States Department of Housing and Urban Development, and for
rental housing projects, 80 percent of the greater of state or area median income as determined
by the United States Department of Housing and Urban Development, except that the housing
developed or rehabilitated with funds under this section must be affordable to the local work
forcenew text begin ; (4) financing the operations and management of financially distressed residential
properties; and (5) funding of supportive services or staff of supportive services providers
for supportive housing as defined by section 462A.37, subdivision 1. Financial support to
nonprofit housing providers to finance supportive housing operations may be awarded as
a capitalized reserve or as an award of ongoing fundingnew text end .
deleted text begin Projects shall be prioritizeddeleted text end new text begin (b) Recipients must prioritize projectsnew text end that provide affordable
housing to households that have incomes which do not exceed, for homeownership projects,
80 percent of the greater of state or area median income as determined by the United States
Department of Housing and Urban Development, and for rental housing projects, 50 percent
of the greater of state or area median income as determined by the United States Department
of Housing and Urban Development. Priority may be given to projects that: reduce disparities
in home ownership; reduce housing cost burden, housing instability, or homelessness;
improve the habitability of homes; create accessible housing; or create more energy- or
water-efficient homes.
deleted text begin (b)deleted text end new text begin (c)new text end Gap financing is either:
(1) the difference between the costs of the property, including acquisition, demolition,
rehabilitation, and construction, and the market value of the property upon sale; or
(2) the difference between the cost of the property and the amount the targeted household
can afford for housing, based on industry standards and practices.
deleted text begin (c)deleted text end new text begin (d)new text end If aid under this section is used for demolition or removal of existing structures,
the cleared land must be used for the construction of housing to be owned or rented by
persons who meet the income limits of paragraph (a).
deleted text begin (d)deleted text end new text begin (e)new text end If an aid recipient uses the aid on new construction or substantial rehabilitation
of a building containing more than four units, the loan recipient must construct, convert, or
otherwise adapt the building to include:
(1) the greater of: (i) at least one unit; or (ii) at least five percent of units that are
accessible units, as defined by section 1002 of the current State Building Code Accessibility
Provisions for Dwelling Units in Minnesota, and include at least one roll-in shower; and
(2) the greater of: (i) at least one unit; or (ii) at least five percent of units that are
sensory-accessible units that include:
(A) soundproofing between shared walls for first and second floor units;
(B) no florescent lighting in units and common areas;
(C) low-fume paint;
(D) low-chemical carpet; and
(E) low-chemical carpet glue in units and common areas.
Nothing in this paragraph relieves a project funded by this section from meeting other
applicable accessibility requirements.
Sec. 4.
Minnesota Statutes 2023 Supplement, section 477A.35, subdivision 5, is amended
to read:
Subd. 5.
Use of proceeds.
(a) Any funds distributed under this section must be spent on
a qualifying project. Funds are considered spent on a qualifying project if:
(1) a tier I city or county demonstrates to the Minnesota Housing Finance Agency that
the city or county cannot expend funds on a qualifying project by the deadline imposed by
paragraph (b) due to factors outside the control of the city or county; and
(2) the funds are transferred to a local housing trust fund.
Funds transferred to a local housing trust fund under this paragraph must be spent on a
project or household that meets the affordability requirements of subdivision 4, paragraph
(a).
(b) Funds must be spent by December 31 in the third year following the year after the
aid was received.new text begin The requirements of this paragraph are satisfied if funds are:
new text end
new text begin
(1) committed to a qualifying project by December 31 in the third year following the
year after the aid was received; and
new text end
new text begin
(2) expended by December 31 in the fourth year following the year after the aid was
received.
new text end
new text begin
(c) An aid recipient may not use aid monies to reimburse itself for prior expenditures.
new text end
Sec. 5.
Minnesota Statutes 2023 Supplement, section 477A.35, is amended by adding a
subdivision to read:
new text begin Subd. 5a. new text end
new text begin Maintenance of effort. new text end
new text begin
As a condition of receiving aid under this section, a
recipient must commit to maintaining its locally funded housing expenditures at a level that
is not less than the average level of such expenditures maintained by the recipient for the
three preceding fiscal years.
new text end
Sec. 6.
Minnesota Statutes 2023 Supplement, section 477A.35, subdivision 6, is amended
to read:
Subd. 6.
Administration.
(a) The commissioner of revenue must compute the amount
of aid payable to each tier I city and county under this section. By August 1 of each year,
the commissioner must certify the distribution factors of each tier I city and county to be
used in the following year. The commissioner must pay local affordable housing aid annually
at the times provided in section 477A.015, distributing the amounts available on the
immediately preceding June 1 under the accounts established in section 477A.37, subdivisions
2 and 3.
(b) Beginning in 2025, tier I cities and counties shall submit a report annually, no later
than December 1 of each year, to the Minnesota Housing Finance Agency. The report must
include documentation of the location of any unspent funds distributed under this section
and of qualifying projects completed or planned with funds under this section. new text begin The report
must also include an accounting of locally funded housing expenditures in the three prior
fiscal years. new text end If a tier I city or county fails to submit a report, if a tier I city or county fails
to spend funds within the timeline imposed under subdivision 5, paragraph (b), deleted text begin ordeleted text end if a tier
I city or county uses funds for a project that does not qualify under this section, new text begin or if a tier
I city or county fails to meet its maintenance of effort requirement, new text end the Minnesota Housing
Finance Agency shall notify the Department of Revenue and the cities and counties that
must repay funds under paragraph (c) by February 15 of the following year.
(c) By May 15, after receiving notice from the Minnesota Housing Finance Agency, a
tier I city or county must pay to the Minnesota Housing Finance Agency funds the city or
county received under this section if the city or county:
(1) fails to spend the funds within the time allowed under subdivision 5, paragraph (b);
(2) spends the funds on anything other than a qualifying project; deleted text begin or
deleted text end
(3) fails to submit a report documenting use of the fundsdeleted text begin .deleted text end new text begin ; or
new text end
new text begin
(4) fails to meet the maintenance of effort requirement under subdivision 5a.
new text end
(d) The commissioner of revenue must stop distributing funds to a tier I city or county
thatnew text begin requests in writing that the commissioner stop payment or thatnew text end , in three consecutive
years, the Minnesota Housing Finance Agency has reported, pursuant to paragraph (b), to
have failed to use funds, misused funds, or failed to report on its use of funds.
(e) The commissioner may resume distributing funds to a tier I city or county to which
the commissioner has stopped payments in the year following the August 1 after the
Minnesota Housing Finance Agency certifies that the city or county has submitted
documentation of plans for a qualifying project.new text begin The commissioner may resume distributing
funds to a tier I city or county to which the commissioner has stopped payments at the
request of the city or county in the year following the August 1 after the Minnesota Housing
Finance Agency certifies that the city or county has submitted documentation of plans for
a qualifying project.
new text end
(f) By June 1, any funds paid to the Minnesota Housing Finance Agency under paragraph
(c) must be deposited in the housing development fund. Funds deposited under this paragraph
are appropriated to the commissioner of the Minnesota Housing Finance Agency for use
on the family homeless prevention and assistance program under section 462A.204, the
economic development and housing challenge program under section 462A.33, and the
workforce and affordable homeownership development program under section 462A.38.