SF 764

as introduced - 89th Legislature (2015 - 2016) Posted on 02/25/2015 04:37pm

A bill for an act
relating to economic development; creating an Office of Workforce Housing;
creating a workforce housing grant program; creating tax credits for workforce
housing; appropriating money for grants for workforce housing; requiring
reports; amending Minnesota Statutes 2014, sections 290.06, by adding a
subdivision; 297A.71, by adding a subdivision; proposing coding for new law
in Minnesota Statutes, chapter 116J.

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

Section 1.

new text begin [116J.549] OFFICE OF WORKFORCE HOUSING.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given in this subdivision.
new text end

new text begin (b) "City" means any statutory or home rule charter city.
new text end

new text begin (c) "Consolidated population center" means an area with a population density over
200 persons per square mile according to the most recent United States census data
available.
new text end

new text begin (d) "Director" means the director of the Office of Workforce Housing.
new text end

new text begin (e) "Family" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).
new text end

new text begin (f) "Fund" means the workforce housing fund created under subdivision 5.
new text end

new text begin (g) "Greater Minnesota" means the area of Minnesota located outside the
metropolitan area as defined in section 473.121, subdivision 2.
new text end

new text begin (h) "Nonstate funding" means funding that is not part of a state-funded grant
program, including any funds from the workforce housing fund created under this section.
new text end

new text begin (i) "Office" means the Office of Workforce Housing.
new text end

new text begin (j) "Officer" means a person elected or appointed by the board of directors to manage
the daily operations of a business.
new text end

new text begin (k) "Principal" means a person having authority to act on behalf of a business.
new text end

new text begin (l) "Qualified investment" means a cash investment in the workforce housing fund or
the fair market value equivalent for common stock, a partnership or membership interest,
preferred stock, debt with mandatory conversion to equity, or an equivalent ownership
interest as determined by the director that is made in a qualified workforce housing project.
new text end

new text begin (m) "Qualified local investor" means an investor who has been certified by the
director under subdivision 8.
new text end

new text begin (n) "Qualified project investor" means an investor who has been certified by the
director under subdivision 9.
new text end

new text begin (o) "Qualifying workforce housing project" means a project that meets all of the
requirements of subdivision 6, paragraph (b), and has been designated by the director as a
project qualifying for funding through the workforce housing fund.
new text end

new text begin (p) "Residential rental housing" means real property consisting of dwelling units
occupied by one person or a family as a place of residence but does not include the owner
of the real property.
new text end

new text begin Subd. 2. new text end

new text begin Purpose. new text end

new text begin (a) The Office of Workforce Housing is established within the
Department of Employment and Economic Development. The director must be appointed
by the governor and serves in the unclassified service. The director must be qualified by
experience and training in housing development and community development. The office
may employ staff necessary to carry out the office's duties under subdivision 4.
new text end

new text begin (b) The purpose of the office is to encourage, foster, develop, and improve workforce
housing within the state in order to promote job creation and to provide a high quality
workforce for Minnesota businesses by increasing the supply of housing in Greater
Minnesota.
new text end

new text begin Subd. 3. new text end

new text begin Director and staff. new text end

new text begin The office consists of a director of the Office of
Workforce Housing and any other staff necessary to carry out the office's duties under
subdivision 4.
new text end

new text begin Subd. 4. new text end

new text begin Duties. new text end

new text begin The office has the power and duty to:
new text end

new text begin (1) administer the workforce housing fund for the state of Minnesota;
new text end

new text begin (2) coordinate with state, regional, local, and private entities to develop workforce
housing;
new text end

new text begin (3) provide consultation services to local units of government or other project
sponsors in connection with the financing, planning, acquisition, improvement,
construction, or development of any workforce housing project;
new text end

new text begin (4) consult with the Housing Finance Agency and community housing organizations
to organize workforce housing projects and programs;
new text end

new text begin (5) serve as an information clearinghouse for other programs that provide assistance
and funding to developers or others seeking to build workforce housing;
new text end

new text begin (6) provide grants and certify investor tax credits for eligible projects in workforce
housing;
new text end

new text begin (7) provide an annual report as required by subdivision 12;
new text end

new text begin (8) set and collect reasonable application fees for grant programs and tax credit
applications available under this section; and
new text end

new text begin (9) perform any other activities consistent with the office's purpose.
new text end

new text begin Subd. 5. new text end

new text begin Workforce housing fund. new text end

new text begin (a) The workforce housing fund is created to
provide grants for the purpose of construction, acquisition, rehabilitation, demolition,
removal, and development, including the cost of infrastructure and materials necessary for
the creation and production of workforce housing in Greater Minnesota.
new text end

new text begin (b) The fund shall consist of:
new text end

new text begin (1) state appropriations;
new text end

new text begin (2) contributions made by companies, individuals, and others including cities,
nonprofits, and tribes;
new text end

new text begin (3) investment earnings on money in the fund; and
new text end

new text begin (4) application fees paid pursuant to programs in this section.
new text end

new text begin (c) The director of workforce housing may expend the money in the workforce
housing fund to the extent necessary to carry out the objectives of this section.
new text end

new text begin (d) Contributions made to the fund are not refundable.
new text end

new text begin Subd. 6. new text end

new text begin Grants; project eligibility and preferences. new text end

new text begin (a) The Office of Workforce
Housing shall award grants through a competitive grants program for the purposes defined
in this section using the eligibility and preferences provided in this subdivision. If a
project meets the qualifications in paragraph (b), the director may certify the project as
a qualifying workforce housing project based on the eligibility of the program and the
preferences in paragraph (c). The total grant to a qualified workforce housing project must
not exceed $1,000,000.
new text end

new text begin (b) To be eligible for a grant, the project must:
new text end

new text begin (1) be for residential rental housing with a minimum of three dwelling units;
new text end

new text begin (2) cost no more than $....... per unit;
new text end

new text begin (3) be located in a Greater Minnesota city with more than 500 full-time private
sector jobs as measured by the Department of Employment and Economic Development
Quarterly Census of Employment and Wages;
new text end

new text begin (4) be located in a city with a rental vacancy rate lower than three percent for more
than two years based on the most recently available data in a city housing analysis;
new text end

new text begin (5) have more than 50 percent nonstate funding proposed to fund the project;
new text end

new text begin (6) have a jobs-to-population ratio of greater than 50 percent as measured by
the median number of jobs in a city for the last five years compared with the median
population of the city for the last five years; and
new text end

new text begin (7) be located within five miles of a consolidated population center.
new text end

new text begin (c) Preferences for grants from the workforce housing fund must be given to projects:
new text end

new text begin (1) where a qualified local investor has expressed a preference that the investment be
allocated to a specific qualified workforce housing project or a specific community; and
new text end

new text begin (2) that have the largest total private investment in the fund relative to the total
project cost.
new text end

new text begin Subd. 7. new text end

new text begin Sales tax exemptions. new text end

new text begin Projects that are eligible for the grants program
in subdivision 6 may also request a sales tax exemption pursuant to section 297A.71,
subdivision 23a, on construction materials necessary for the completion of the project.
The Office of Workforce Housing may grant the sales tax exemptions based on the
eligibility and preferences in the workforce housing fund.
new text end

new text begin Subd. 8. new text end

new text begin Qualified local investor tax credit. new text end

new text begin (a) A qualified local investor is
allowed a tax credit in an amount equal to 100 percent of the qualified investment in the
fund but no more than $1,000,000 in the taxable year against the taxpayer's income or
corporate franchise tax imposed under chapter 290. The director must not allocate more
than $10,000,000 in credits to qualified local investors for a taxable year, except that
the director may use available tax credit allocations from subdivision 9 for qualified
local investor tax credits under this subdivision when necessary to achieve the goals of
the Office of Workforce Housing. The director must not exceed a total allocation of tax
credits for both programs in an amount greater than $30,000,000 annually.
new text end

new text begin (b) For the purposes of this section, a qualified local investor is an investor that is:
new text end

new text begin (1) an individual or a business with less than 50 full-time equivalent employees;
new text end

new text begin (2) located in Greater Minnesota; and
new text end

new text begin (3) resides or has an office or production facility within 20 miles of a qualified
workforce housing project.
new text end

new text begin (c) The director shall not allocate a credit to a qualified local investor if the investor
is an officer or principal of a business or a family member of an officer or principal of
a business, or sole proprietorship that is competing for a grant through the workforce
housing fund in the year the tax credit would be awarded.
new text end

new text begin (d) Applications for tax credits for a taxable year must be made available by the
office by November 1 of the prior year. The office must make every effort to provide
applications and relevant data to applicants in a simple, concise manner using plain
language. Tax credits must be allocated to qualified local investors in the order that the
tax credit request applications are filed with the office. The director must approve or
reject tax credit request applications within 15 days of receiving the application. The
investment specified in the application must be made within 60 days of the allocation of
the credit. If the investment is not made within 60 days, the credit allocation is canceled.
A qualified local investor that fails to invest as specified in the application must notify
the commissioner immediately and no later than five business days after the expiration
of the 60-day investment period. The director may require an application fee for the
applications submitted under this subdivision.
new text end

new text begin (e) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified local investors
file tax credit request applications on the same day, and the aggregate amount of credit
allocation claims exceeds the aggregate limit of credits under this section or the lesser
amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified local investors who filed on that day on a pro rata basis with respect to
the amounts claimed. The pro rata allocation for any one qualified local investor is the
product obtained by multiplying a fraction, the numerator of which is the amount of the
credit allocation claim filed on behalf of a qualified local investor and the denominator of
which is the total of all credit allocation claims filed on behalf of all applicants on that day,
by the amount of credits that remain unallocated on that day for the taxable year.
new text end

new text begin (f) The director must notify the commissioner of revenue of credit certificates issued
under this subdivision.
new text end

new text begin Subd. 9. new text end

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

new text begin (a) A taxpayer who makes a
qualified investment in a qualified workforce housing project is allowed a tax credit
for 30 percent of the amount of the qualified investment, up to $1,000,000, to reduce
the taxpayer's income or corporate franchise tax under chapter 290 in the year that the
qualified workforce housing project has housing units that are certified for occupancy
by the Department of Labor and Industry. The director must not allocate more than
$20,000,000 in credits to qualified project investors for a taxable year, except that the
director may use available tax credit allocations from subdivision 8 for the qualified
project investor tax credits under this subdivision when necessary to achieve the goals of
the Office of Workforce Housing. The director must not exceed a total allocation of tax
credits for both programs in an amount greater than $30,000,000 annually.
new text end

new text begin (b) The director shall not allocate a credit if the investor is an officer or principal of a
business or sole proprietorship, or a family member of an officer or principal of a business
or sole proprietorship, that is competing for a grant through the workforce housing fund in
the year the tax credit would be awarded.
new text end

new text begin (c) Applications for tax credits for a taxable year must be made available by the
Office of Workforce Housing by November 1 of the prior year. The office must make
every effort to provide applications and relevant data to applicants in a simple, concise
manner using plain language. Tax credits must be allocated to qualified project investors
in the order that the tax credit request applications are filed with the office. The director
must approve or reject tax credit request applications within 15 days of receiving the
application. The investment specified in the application must be made within 60 days
of the allocation of the credit. If the investment is not made within 60 days, the credit
allocation is canceled. A qualified project investor who fails to invest as specified in the
application must notify the commissioner immediately and no later than five business
days after the expiration of the 60-day investment period. The director may require an
application fee for the applications submitted under this subdivision.
new text end

new text begin (d) All tax credit request applications filed with the department on the same day
must be treated as having been filed contemporaneously. If two or more qualified project
investors file tax credit request applications on the same day, and the aggregate amount of
credit allocation claims exceeds the aggregate limit of credits under this section or the lesser
amount of credits that remain unallocated on that day, then the credits must be allocated
among the qualified project investors who filed on that day on a pro rata basis with respect
to the amounts claimed. The pro rata allocation for any one qualified project investor is the
product obtained by multiplying a fraction, the numerator of which is the amount of the
credit allocation claim filed on behalf of a qualified project investor and the denominator
of which is the total of all credit allocation claims filed on behalf of all applicants on that
day, by the amount of credits that remain unallocated on that day for the taxable year.
new text end

new text begin (e) The director must notify the commissioner of revenue of credit certificates issued
under this subdivision.
new text end

new text begin Subd. 10. new text end

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

new text begin (a) A tax credit under this section
is not transferable to any other taxpayer.
new text end

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

new text begin Subd. 11. new text end

new text begin Data privacy. new text end

new text begin Data contained in an application submitted to the Office
of Workforce Housing are nonpublic data, or private data on an individual, as defined in
section 13.02, subdivision 9 or 12, except that the following data items are public:
new text end

new text begin (1) the name, mailing address, telephone number, e-mail address, contact person's
name, and industry type of a qualified local investor upon approval of the application and
certification by the director under subdivision 8, 9, or 10;
new text end

new text begin (2) for credit certificates issued under subdivision 8 or 9, the amount of the credit
certificate issued, the amount of the qualifying investment, the name of the qualifying
investor that received the certificate, and the name of the workforce housing project for
which the qualifying investment was made, if any; and
new text end

new text begin (3) for credits revoked under subdivision 10, the amount revoked and the name
of the qualified investor.
new text end

new text begin Subd. 12. new text end

new text begin Reporting. new text end

new text begin Beginning in 2016, the director must annually report by
March 15 to the chairs and ranking minority members of the legislative committees
with jurisdiction over taxes and economic development in the senate and house of
representatives, in compliance with sections 3.195 and 3.197, on tax credits issued
under this section and the workforce housing projects funded by the workforce housing
development fund. The report must include:
new text end

new text begin (1) information about the availability of workforce housing in Greater Minnesota;
new text end

new text begin (2) information from employers and communities in Greater Minnesota about
whether or not workforce housing needs are being met;
new text end

new text begin (3) which projects have been funded by the workforce housing fund and whether
previously funded projects have created economic growth;
new text end

new text begin (4) a summary of the Office of Workforce Housing activities to coordinate workforce
housing for the state;
new text end

new text begin (5) any suggested legislation to accelerate construction of workforce housing;
new text end

new text begin (6) the number and amount of tax credits issued and the identity of the recipients;
new text end

new text begin (7) the amount of investments made to the fund and whether or not those funds
were for a preferred project;
new text end

new text begin (8) the number and amount of tax credits revoked under subdivision 10; and
new text end

new text begin (9) any other relevant information needed to evaluate the effect of the grants and tax
credits available through the Office of Workforce Housing.
new text end

new text begin Subd. 13. new text end

new text begin Appropriations. new text end

new text begin Amounts in the workforce housing fund are appropriated
to the commissioner of employment and economic development for costs associated with
the administration of applications and for the personnel and administrative expenses related
to administering the workforce housing grant program and investor tax credit programs.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The tax credits in this section are effective for taxable years
beginning after December 31, 2015.
new text end

Sec. 2.

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

new text begin Subd. 37. new text end

new text begin Workforce housing tax credit. new text end

new text begin (a) A taxpayer is allowed a credit against
the tax under subdivision 1 or 2c equal to the amount certified by the director of workforce
housing under section 116J.549, to the taxpayer for the taxable year.
new text end

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

new text begin (c)(1) The credit is limited to the liability for tax. "Liability for tax" for purposes of
this subdivision means the tax imposed under subdivision 1 or 2c, as applicable, for the
taxable year reduced by the sum of the nonrefundable credits allowed under this chapter.
new text end

new text begin (2) For a corporation that is a partner in a partnership, the credit allowed for the
taxable year is limited to the lesser of the amount determined under clause (1) for the
taxable year or an amount, separately computed with respect to the corporation's interest
in the trade, business, or entity, equal to the amount of tax attributable to that portion of
taxable income that is allocable or apportionable to the corporation's interest in the trade,
business, or entity.
new text end

new text begin (3) If the amount of the credit determined under this subdivision for any taxable year
exceeds the limitation under clause (1), the excess is a credit carryover to each of the ten
succeeding taxable years. The entire amount of the excess unused credit for the taxable
year is carried first to the earliest of the taxable years to which the credit may be carried
and then to each successive year to which the credit may be carried. The amount of the
unused credit that may be added under this clause is limited to the taxpayer's liability
for tax, less the credit for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The tax credits in this section are effective for taxable years
beginning after December 31, 2015.
new text end

Sec. 3.

Minnesota Statutes 2014, section 297A.71, is amended by adding a subdivision
to read:

new text begin Subd. 23a. new text end

new text begin Construction materials for qualified workforce housing projects.
new text end

new text begin Purchase of materials and supplies used or consumed in and equipment incorporated into
the construction, improvement, or expansion of qualified workforce housing projects
under section 116J.549 are exempt from the tax imposed under this chapter if the project
has been awarded a grant by the Office of Workforce Housing through the workforce
housing fund and the director of workforce housing has granted the qualified workforce
housing project the sales tax exemption under section 116J.549, subdivision 7. The tax
must be imposed and collected as if the rate under section 297A.62, subdivision 1, applied,
and then refunded in the manner provided in section 297A.75.
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, 2015.
new text end

Sec. 4. new text begin APPROPRIATION; OFFICE OF WORKFORCE HOUSING.
new text end

new text begin $20,000,000 in fiscal year 2016 and $20,000,000 in fiscal year 2017 are appropriated
from the general fund to the commissioner of employment and economic development
for grants under Minnesota Statutes, section 116J.549, subdivision 6. Up to five percent
of the appropriation in each year is available to the commissioner for the administration
of Minnesota Statutes, section 116J.549.
new text end