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SF 3558

as introduced - 91st Legislature (2019 - 2020) Posted on 02/25/2020 09:21am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; establishing a Minnesota housing tax credit contribution fund;
providing a credit against the individual income tax, corporate franchise tax, and
insurance premiums for certain contributions; requiring a report; appropriating
money; amending Minnesota Statutes 2018, 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" or "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.
The credit equals 90 percent of 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 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 (c).
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. The amount of the unused credit that
may be added under this paragraph may not exceed the taxpayer's liability for tax, less any
credit for the current taxable year.
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. A taxpayer is prohibited from contributing to
certain projects as provided in section 462A.40, subdivision 3.
new text end

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

new text begin (c) Within 30 days after a taxpayer contributes to the fund, the agency must file with
the contributing taxpayer a credit certificate statement or return any amounts to the taxpayer
as provided in this paragraph. 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 not issue a credit certificate for the amount of the contribution for which there
are insufficient credits, and must return that amount to the taxpayer before issuing any credit
certificate.
new text end

new text begin (d) 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 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 document,
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 Subd. 6. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the credit certificate issued by the commissioner
of the Minnesota Housing Finance Agency under subdivision 3, the commissioner of revenue
may use any audit and examination powers under chapter 270C or 289A to the extent
necessary to verify that the taxpayer is eligible for the credit and to assess for the amount
of any improperly claimed credit.
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, 2020.
new text end

Sec. 2.

Minnesota Statutes 2018, 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 A taxpayer 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, 2020.
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 as a revolving fund in the state treasury. The fund is administered by the
commissioner of the Minnesota Housing Finance Agency. 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 as provided
in this section.
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:
new text end

new text begin (1) 35 percent of the financing under this section for housing for persons and families
whose income is 50 percent or less 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; and
new text end

new text begin (2) 15 percent of the financing under this section for housing for persons and families
whose income is 30 percent or less 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.
new text end

new text begin (e) If by June 1 of each year, the commissioner does not receive requests to use all of
the financing set aside under paragraph (d), 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; definitions; restrictions; use of funds. new text end

new text begin (a) The
commissioner may award a loan to any recipient that qualifies under subdivision 2. The
commissioner must not award a grant to a disqualified individual or disqualified business.
new text end

new text begin (b) For the purposes of this subdivision disqualified individual means an individual who:
new text end

new text begin (1) made a contribution to the fund in the current or prior taxable year and received a
credit certificate;
new text end

new text begin (2) owns the housing for which the grant or loan will be used and is using that housing
as their domicile;
new text end

new text begin (3) meets the following criteria:
new text end

new text begin (i) the individual is an officer or principal of a business entity; and
new text end

new text begin (ii) that business entity made a contribution to the fund in the current or previous taxable
year and received a credit certificate; or
new text end

new text begin (4) meets the following criteria:
new text end

new text begin (i) the individual owns, controls, or holds the power to vote 20 percent or more of the
outstanding securities of a business entity; and
new text end

new text begin (ii) that business entity made a contribution to the fund in the current or previous taxable
year and received a credit certificate.
new text end

new text begin (c) For the purposes of this subdivision disqualified business means a business entity
that:
new text end

new text begin (1) made a contribution to the fund in the current or prior taxable year and received a
credit certificate;
new text end

new text begin (2) has an officer or principal who is an individual who made a contribution to the fund
in the current or previous taxable year and received a credit certificate; or
new text end

new text begin (3) meets the following criteria:
new text end

new text begin (i) the business entity is owned, controlled, or is subject to the power to vote 20 percent
or more of the outstanding securities by an individual or business entity; and
new text end

new text begin (ii) that controlling individual or business entity made a contribution to the fund in the
current or previous taxable year and received a credit certificate.
new text end

new text begin (d) The disqualifications in paragraphs (b) and (c) apply if the taxpayer would be
disqualified either individually or in combination with one or more members of the taxpayer's
family, as defined in the Internal Revenue Code, section 267(c)(4). For a married couple
filing a joint return, the limitations in this paragraph apply collectively to the taxpayer and
spouse. For purposes of determining the ownership interest of a taxpayer under paragraph
(a), clause (4), the rules under section 267(c) and 267(e) of the Internal Revenue Code apply.
new text end

new text begin (e) Before applying for a grant or loan, all recipients must sign a disclosure that the
disqualifications under this subdivision do not apply. The commissioner of the Minnesota
Housing Finance Agency must prescribe the form of the disclosure.
new text end

new text begin (f) The commissioner may award grants or loans to a city as defined in section 462A.03,
subdivision 21; 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.
new text end

new text begin (g) Except for the set-aside provided in subdivision 2, paragraph (d), 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 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 rules adopted by the commissioner. Any amount of a loan or grant that
is repaid or recaptured must be redeposited in the fund and is not returned to the taxpayer
who made the contribution.
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, 2020.
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