SF 4940

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/14/2024 09:56am

A bill for an act
relating to housing; expanding eligible uses of housing infrastructure bonds;
providing for recapitalization; amending a prior appropriation for the housing
infrastructure program; establishing task forces; requiring reports; amending
Minnesota Statutes 2023 Supplement, section 462A.37, subdivisions 1, 2; Laws
2023, chapter 37, article 1, section 2, subdivision 17.

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

Section 1.

Minnesota Statutes 2023 Supplement, section 462A.37, subdivision 1, is
amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Abandoned property" has the meaning given in section 117.025, subdivision 5.

(c) "Community land trust" means an entity that meets the requirements of section
462A.31, subdivisions 1 and 2.

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

(e) "Foreclosed property" means residential property where foreclosure proceedings
have been initiated or have been completed and title transferred or where title is transferred
in lieu of foreclosure.

(f) "Housing infrastructure bonds" means bonds issued by the agency under this chapter
that:

(1) are qualified 501(c)(3) bonds, within the meaning of section 145(a) of the Internal
Revenue Code;

(2) finance qualified residential rental projects within the meaning of section 142(d) of
the Internal Revenue Code; or

(3) are tax-exempt bonds that 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.

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

new text begin (h) "Recapitalization" means financing to address the physical and financial needs of a
distressed building or buildings, including restructuring and forgiveness of amortizing and
deferred debt; principal paydown; interest rate write-down; debt deferral; mortgage payment
forbearance; deferred maintenance; security services; property insurance; renovations;
supportive services reserves; or property reserves to add value, ensure stable property
operations, or extend the life and affordability of a building.
new text end

deleted text begin (h) deleted text end new text begin (i) new text end "Senior" means a person 55 years of age or older.

deleted text begin (i) deleted text end new text begin (j) new text end "Senior household" means a household with one or more senior members and with
an annual combined income not greater than 50 percent of:

(1) the metropolitan area median income for persons in the metropolitan area; or

(2) the statewide median income for persons outside the metropolitan area.

deleted text begin (j) deleted text end new text begin (k) new text end "Senior housing" means housing intended and operated for occupancy by senior
households with at least 80 percent of the units occupied by senior households, and for
which there is publication of, and adherence to, policies and procedures that demonstrate
an intent by the owner or manager to provide housing for seniors. Senior housing may be
developed in conjunction with and as a distinct portion of mixed-income senior housing
developments that use a variety of public or private financing sources.

deleted text begin (k) deleted text end new text begin (l) new text end "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 EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2023 Supplement, section 462A.37, subdivision 2, is amended
to read:

Subd. 2.

Authorization.

(a) The agency may issue up to $30,000,000 in aggregate
principal amount of housing infrastructure bonds in one or more series to which the payment
made under this section may be pledged. The housing infrastructure bonds authorized in
this subdivision may be issued to fund loans, or grants for the purposes of clauses (4) and
(7), on terms and conditions the agency deems appropriate, made for one or more of the
following purposes:

(1) to finance the costs of the construction, acquisition, new text begin recapitalization, funding of
operations and service reserves, new text end and rehabilitation of supportive housing new text begin where at least 50
percent of units are set aside new text end for individuals and families who are without a permanent
residence;

(2) to finance the costs of the acquisition and rehabilitation of foreclosed or abandoned
housing to be used for affordable rental housing and the costs of new construction of rental
housing on abandoned or foreclosed property where the existing structures will be demolished
or removed;

(3) to finance that portion of the costs of acquisition of property that is attributable to
the land to be leased by community land trusts to low- and moderate-income home buyers;

(4) to finance the acquisition, improvement, and infrastructure of manufactured home
parks under section 462A.2035, subdivision 1b;

(5) to finance the costs of acquisition, rehabilitation, adaptive reuse, or new construction
of senior housing;

(6) to finance the costs of acquisition, rehabilitation, new text begin recapitalization, new text end and replacement
of federally assisted rental housing and for the refinancing of costs of the construction,
acquisition, and rehabilitation of federally assisted rental housing, including providing funds
to refund, in whole or in part, outstanding bonds previously issued by the agency or another
government unit to finance or refinance such costs;

(7) to finance the costs of acquisition, rehabilitation, adaptive reuse, or new construction
of single-family housing; and

(8) to finance the costs of construction, acquisition, new text begin recapitalization, new text end and rehabilitation
of permanent housing that is affordable to households with incomes at or below 50 percent
of the area median income for the applicable county or metropolitan area as published by
the Department of Housing and Urban Development, as adjusted for household size.

(b) Among comparable proposals for permanent supportive housing, preference shall
be given to permanent supportive housing for veterans and other individuals or 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.

(c) Among comparable proposals for senior housing, the agency must give priority to
requests for projects that:

(1) demonstrate a commitment to maintaining the housing financed as affordable to
senior households;

(2) leverage other sources of funding to finance the project, including the use of
low-income housing tax credits;

(3) provide access to services to residents and demonstrate the ability to increase physical
supports and support services as residents age and experience increasing levels of disability;
and

(4) include households with incomes that do not exceed 30 percent of the median
household income for the metropolitan area.

(d) To the extent practicable, the agency shall balance the loans made between projects
in the metropolitan area and projects outside the metropolitan area. Of the loans made to
projects outside the metropolitan area, the agency shall, to the extent practicable, balance
the loans made between projects in counties or cities with a population of 20,000 or less,
as established by the most recent decennial census, and projects in counties or cities with
populations in excess of 20,000.

(e) Among comparable proposals for permanent housing, the agency must give preference
to projects that will provide housing that is affordable to households at or below 30 percent
of the area median income.

(f) If a loan recipient uses the loan for new construction or substantial rehabilitation as
defined by the agency on 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 the agency from meeting other
applicable accessibility requirements.

new text begin (g) Among comparable proposals requesting funding for recapitalization, the agency
must prioritize projects in properties that are:
new text end

new text begin (1) at risk of foreclosure;
new text end

new text begin (2) under workout agreements with lenders; or
new text end

new text begin (3) providing affordable homeownership opportunities.
new text end

new text begin (h) Supportive housing providers may use a portion of funding awarded pursuant to this
section to support oversight and operations of supportive housing facilities.
new text end

new text begin (i) The agency must engage with community stakeholders, advocates, and developers
annually when considering project priorities.
new text end

new text begin (j) From July 1, 2024, through June 30, 2033, whenever the agency awards more than
$20,000,000 under this section, 50 percent of the amount must be awarded for
recapitalization.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Laws 2023, chapter 37, article 1, section 2, subdivision 17, is amended to read:

Subd. 17. Housing Infrastructure

100,000,000

100,000,000

This appropriation is for the housing
infrastructure program for the eligible
purposes under Minnesota Statutes, section
462A.37, subdivision 2. This is a onetime
appropriation. new text begin Of this amount, at least
$50,000,000 must be used for recapitalization,
as defined by Minnesota Statutes, section
462A.37, subdivision 1.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4. new text begin AFFORDABLE HOUSING INSURANCE COSTS TASK FORCE.
new text end

new text begin Subdivision 1. new text end

new text begin Creation; duties. new text end

new text begin A legislative task force is created to:
new text end

new text begin (1) evaluate increased insurance rates in the affordable housing market, including rates
and availability of insurance in lower-income and higher racial minority percentage
communities; and
new text end

new text begin (2) develop legislative proposals to stabilize or lower insurance rates of affordable
housing providers.
new text end

new text begin Subd. 2. new text end

new text begin Membership. new text end

new text begin The task force must consist of ten members selected by the
governor for their expertise in insurance law or the insurance market. The task force must
include an additional member designated by the commissioner of commerce for expertise
in insurance regulation. The task force must include an additional member designated by
the Minnesota attorney general as an expert in insurance law. Appointments to the task
force must be made by August 18, 2024.
new text end

new text begin Subd. 3. new text end

new text begin Compensation. new text end

new text begin Public members of the task force may be compensated as
provided by Minnesota Statutes, section 15.059, subdivision 3.
new text end

new text begin Subd. 4. new text end

new text begin Officers; meetings. new text end

new text begin (a) The Department of Commerce shall convene the first
meeting of the task force no later than August 31, 2024, and shall provide accessible physical
or virtual meeting space as necessary for the task force to conduct its work.
new text end

new text begin (b) At its first meeting, the task force shall elect a chair and vice-chair from among the
task force members and may elect other officers as necessary.
new text end

new text begin (c) The task force shall meet according to a schedule determined by the members or
upon the call of its chair. The task force shall meet as often as necessary to accomplish the
duties under subdivision 5.
new text end

new text begin (d) Meetings of the task force are subject to Minnesota Statutes, chapter 13D.
new text end

new text begin Subd. 5. new text end

new text begin Final report; expiration. new text end

new text begin The task force shall prepare a report making
recommendations for administrative and legislative action to stabilize or lower insurance
rates in this sector by December 31, 2024, and shall expire upon completion and adoption
of the final report.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5. new text begin TASK FORCE ON LONG-TERM SUSTAINABILITY OF AFFORDABLE
HOUSING.
new text end

new text begin (a) A task force is established to:
new text end

new text begin (1) evaluate the process of awarding and closing awards of low-income housing tax
credits and housing infrastructure bonds; and
new text end

new text begin (2) recommend to the commissioner of the Minnesota Housing Finance Agency process
improvements to promote long-term sustainability of affordable housing projects.
new text end

new text begin (b) The Legislative Coordinating Commission shall convene the first meeting of the task
force no later than August 31, 2024, and shall provide accessible physical or virtual meeting
space as necessary for the task force to conduct its work. The task force must create final
recommendations for the commissioner of the Minnesota Housing Finance Agency no later
than April 30, 2025.
new text end

new text begin (c) The task force shall consist of 11 members representing a cross section of the
affordable housing industry and relevant agency staff. The chair of the house of
representatives committee with jurisdiction over housing finance shall appoint four members.
The chair of the senate committee with jurisdiction over housing finance shall appoint four
members. The commissioner of the Minnesota Housing Finance Agency shall appoint three
members. Members must be appointed no later than July 1, 2024.
new text end

new text begin (d) The task force expires upon submission of the final recommendations required under
paragraph (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end