Minnesota Session Laws - 1990, Regular Session

  

                         Laws of Minnesota 1990 

                        CHAPTER 552-H.F.No. 2457 
           An act relating to public financing; allocating low 
          income housing credits; allocating authority to issue 
          tax exempt revenue bonds; regulating use of bond 
          proceeds; restricting loans from proceeds of mortgage 
          revenue bonds under certain circumstances; amending 
          Minnesota Statutes 1988, sections 462A.222, 
          subdivision 3; 474A.02, subdivisions 6, 8, and by 
          adding a subdivision; 474A.03; 474A.061, subdivision 
          3, and by adding subdivisions; 474A.091, subdivisions 
          1, 4, and 5; 474A.131, subdivision 2; and 474A.14; 
          Minnesota Statutes Second 1989 Supplement, sections 
          474A.061, subdivisions 1 and 4; and 474A.091, 
          subdivisions 2 and 3; proposing coding for new law in 
          Minnesota Statutes, chapter 474A; repealing Minnesota 
          Statutes 1988, sections 474A.081, subdivisions 1, 2, 
          and 4; and 474A.091, subdivision 4a; Minnesota 
          Statutes Second 1989 Supplement, section 474A.061, 
          subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 462A.222, 
subdivision 3, as amended by Laws 1990, chapter 368, section 6, 
is amended to read: 
    Subd. 3.  [ALLOCATION PROCEDURE.] (a) Projects will be 
awarded tax credits in three competitive rounds on an annual 
basis.  The date for applications for each round must be 
determined by the agency.  No allocating agency may award tax 
credits prior to the application dates established by the agency.
    (b) Each allocating agency must meet the requirements of 
section 42(m) of the Internal Revenue Code of 1986, as amended 
through December 31, 1989, for the allocation of tax credits and 
the selection of projects. 
    (c) In For applications submitted for the first round, an 
allocating agency may allocate tax credits only to the following 
types of projects: 
    (1) single-room occupancy projects which are affordable by 
households whose income does not exceed 30 percent of the median 
income; 
    (2) family housing projects in which at least 75 percent of 
the units contain two or more bedrooms and at least 25 one-third 
of the 75 percent contain three or more bedrooms; 
    (3) projects in which at least 50 percent of the units are 
for mentally ill, mentally retarded, drug dependent, 
developmentally disabled, or physically handicapped persons; 
    (4) projects which preserve existing subsidized housing 
which is subject to prepayment if the use of tax credits is 
necessary to prevent conversion to market rate use; or 
    (5) projects financed by the Farmers Home Administration 
which meet statewide distribution goals. 
    (d) Before the date for applications for the second round, 
the allocating agencies other than the agency shall return all 
uncommitted and unallocated tax credits to the pool from which 
they were allocated, along with copies of any allocation or 
commitment.  In the second round, the agency shall allocate the 
remaining credits from the regional pools to projects from the 
respective regions.  
    (e) In the third round, all unallocated tax credits must be 
transferred to a unified pool for allocation by the agency on a 
statewide basis. 
    (f) Unused portions of the state ceiling for low-income 
housing tax credits reserved to cities and counties for 
allocation may be returned at any time to the agency for 
allocation. 
     Sec. 2.  Minnesota Statutes 1988, section 474A.02, 
subdivision 6, is amended to read: 
    Subd. 6.  [DEPARTMENT; DEPARTMENT OF TRADE AND ECONOMIC 
DEVELOPMENT FINANCE.] "Department" means the department of trade 
and economic development finance. 
    Sec. 3.  Minnesota Statutes 1988, section 474A.02, 
subdivision 8, is amended to read: 
    Subd. 8.  [FEDERAL TAX LAW.] "Federal tax law" means those 
provisions of the Internal Revenue Code of 1986, as amended 
through December 31, 1989, that limit the aggregate amount of 
obligations of a specified type or types which may be issued by 
an issuer during a calendar year whose interest is excluded from 
gross income for purposes of federal income taxation. 
    Sec. 4.  Minnesota Statutes 1988, section 474A.02, is 
amended by adding a subdivision to read: 
    Subd. 22b.  [PUBLIC FACILITIES PROJECT.] "Public facilities 
project" means any publicly owned facility that is eligible to 
be financed with the proceeds of public facilities bonds as 
defined under section 474A.02, subdivision 23a. 
    Sec. 5.  Minnesota Statutes 1988, section 474A.03, is 
amended to read: 
    474A.03 [DETERMINATION OF ANNUAL VOLUME CAP.] 
    Subdivision 1.  [ANNUAL VOLUME CAP UNDER FEDERAL TAX LAW; 
POOL ALLOCATIONS.] At the beginning of each calendar year after 
December 31, 1987 1990, the commissioner shall determine the 
aggregate dollar amount of the annual volume cap under federal 
tax law for the calendar year, and of this amount the 
commissioner shall make the following allocation:  
    (1) $74,000,000 $75,000,000 to the manufacturing pool; 
    (2) $30,000,000 $46,000,000 to the multifamily housing 
pool; 
    (3) $21,000,000 $10,000,000 to the public facilities pool; 
and 
    (4) amounts to be allocated as provided in subdivision 2a.  
    If the annual volume cap is greater or less than the amount 
of bonding authority allocated under clauses (1) to (4) and 
subdivision 2a, paragraph (a), clauses (1) to (3), the 
allocation must be adjusted so that each adjusted allocation is 
the same percentage of the annual volume cap as each original 
allocation is of the total bonding authority originally 
allocated. 
    Subd. 2a.  [ENTITLEMENT ISSUER ALLOCATION.] (a) The 
commissioner shall make the following allocation to the 
Minnesota housing finance agency and the following cities:  
    (1) $50,000,000 $51,000,000 per year to the Minnesota 
housing finance agency, less any amount received in the previous 
year under section 474A.091, subdivision 6; 
    (2) $20,000,000 per year to the city of Minneapolis; and 
    (3) $15,000,000 per year to the city of Saint Paul.; and 
    (4) $3,000,000 to each of the cities of the first class 
located outside of the metropolitan area as defined in section 
473.121, subdivision 2, or an amount equal to the amount of 
mortgage bonds or residential rental project bonds that each 
city permanently issued in the previous calendar year, whichever 
amount is less.  If a city is eligible to receive an entitlement 
allocation under this clause, the amount of the allocation is 
deducted from the allocations made under clauses (1), (2), and 
(3) in proportion to the total amount of allocations made in 
clauses (1), (2), and (3).  
    (b) Allocations provided under this subdivision must be 
used for mortgage bonds, mortgage credit certificates, or 
residential rental project bonds, except that entitlement cities 
may also use their allocations for public facility bonds.  
    Sec. 6.  [474A.045] [SCORING SYSTEM FOR MANUFACTURING 
PROJECTS.] 
    The following criteria must be used in determining the 
allocation of small issue bonds for manufacturing projects.  The 
issuer must prepare and submit to the commissioner a public 
purpose scoring worksheet that presents the data and methods 
used in determining the total score under this section.  The 
total score is the sum of the following: 
    (1) the number of net direct new jobs in the state 
generated by the proposed project for the next two years per 
$100,000 of proposed allocation multiplied by 15; 
    (2) the number of direct jobs retained in the state due to 
the proposed project per $100,000 of proposed allocation 
multiplied by 15; 
    (3) the quotient of the total increase in net payroll 
generated in the state by the proposed project divided by the 
proposed bond allocation, multiplied by 100; 
    (4) the quotient of the estimated total net increase in 
property taxes generated in the state by the project in the 
first full year of operation divided by the proposed bond 
allocation, multiplied by 500; and 
    (5) the unemployment rate in the community where the 
proposed project is located measured as a percent of the state's 
unemployment rate, multiplied by ten. 
    The community unemployment rate used in determining the 
points under clause (5) must be the rate for the county in which 
the proposed project is located unless an accurate rate may be 
estimated for a smaller geographic area or census tract.  The 
commissioner of jobs and training must approve the rate used 
when an unemployment rate other than that for a county is used. 
     If the manufacturing project will retain jobs and the total 
score includes points calculated under clause (2), the issuer 
must certify to the commissioner that the proceeds of the small 
issue bonds are required to retain those jobs.  The commissioner 
shall submit the information relating to the retaining of jobs 
to the commissioner of trade and economic development.  The 
commissioner of trade and economic development must verify that 
the proceeds of the small issue bonds are required to retain the 
jobs referred to in the certification prior to the awarding of 
any points under this section. 
    Sec. 7.  [474A.047] [RESIDENTIAL RENTAL BONDS; 
LIMITATIONS.] 
    Subdivision 1.  [ELIGIBILITY.] An issuer may only use the 
proceeds from residential rental bonds if the proposed project 
meets one of the following: 
    (a) The proposed project is a single room occupancy project 
and all the units of the project will be occupied by individuals 
whose incomes at the time of their initial residency in the 
project are 50 percent or less of the greater of the statewide 
or county median income adjusted for household size as 
determined by the federal Department of Housing and Urban 
Development; or 
    (b) The proposed project is a multifamily project where at 
least 75 percent of the units have two or more bedrooms and at 
least one-third of the 75 percent have three or more bedrooms.  
At least 75 percent of the units of the multifamily project must 
be occupied by individuals or families whose incomes at the time 
of their initial residency in the project are 60 percent or less 
of the greater of the statewide or county median income adjusted 
for household size as determined by the federal Department of 
Housing and Urban Development. 
    The maximum rent for a proposed single room occupancy unit 
under paragraph (a) is 30 percent of the amount equal to 30 
percent of the greater of the statewide or county median income 
for a one-member household as determined by the federal 
Department of Housing and Urban Development.  The maximum rent 
for a multifamily project under paragraph (b) is 30 percent of 
the amount equal to 50 percent of the greater of the statewide 
or county median income as determined by the federal Department 
of Housing and Urban Development based on a household size with 
one person per bedroom.  
    Subd. 2.  [15-YEAR AGREEMENT.] Prior to the issuance of 
residential rental bonds, the developer of the project for which 
the bond proceeds will be used must enter into a 15-year 
agreement with the issuer that specifies the maximum rental 
rates of the units in the project and the income levels of the 
residents of the project.  The rental rates and income levels 
must be within the limitations established under subdivision 1.  
The developer must annually certify to the issuer over the term 
of the agreement that the rental rates are within the 
limitations under subdivision 1.  The issuer may request 
individual certification of the income of all residents of the 
project.  The commissioner may request from the issuer a copy of 
the annual certification prepared by the developer.  The 
commissioner may require the issuer to request individual 
certification of all residents of the project. 
     Subd. 3.  [PENALTY.] If a project is found out of 
compliance with the rental rate or income level requirements 
under subdivision 1, the owner or owners of the project shall 
pay a penalty to the commissioner equal to one-half of one 
percent of the total amount of bonds issued for the project 
under this chapter.  For each additional year a project is out 
of compliance, the annual penalty must be increased by one-half 
of one percent of the total amount of bonds issued under this 
chapter for the project.  The commissioner shall deposit any 
penalties collected under this subdivision in the housing trust 
fund account established under section 462A.201. 
     Sec. 8.  [474A.048] [SINGLE FAMILY MORTGAGE BONDS; 
LIMITATIONS.] 
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section the following terms have the meaning given them. 
    (b) "City" means a city as defined in section 462C.02, 
subdivision 6. 
    (c) "Existing housing" means single family housing that (i) 
has been previously occupied prior to the first day of the 
origination period; or (ii) has been available for occupancy for 
at least 12 months but has not been previously occupied.  
    (d) "Metropolitan area" means the Minneapolis-St. Paul 
metropolitan statistical area as defined by the United States 
Department of Commerce's Bureau of the Census. 
    (e) "New housing" means single family housing that has not 
been previously occupied.  
    (f) "Origination period" means the period that loans 
financed with the proceeds of qualified mortgage revenue bonds 
are available for the purchase of single family housing.  The 
origination period begins when financing actually becomes 
available to the borrowers for loans. 
    (g) "Redevelopment area" means a compact and contiguous 
area within which the city finds by resolution that 70 percent 
of the parcels in the area are occupied by buildings, streets, 
utilities, or other improvements and more than 25 percent of the 
buildings, not including outbuildings, are structurally 
substandard to a degree requiring substantial renovation or 
clearance. 
    (h) "Single family housing" means dwelling units eligible 
to be financed from the proceeds of qualified mortgage revenue 
bonds under federal law. 
    (i) "Structurally substandard" means containing defects in 
structural elements or a combination of deficiencies in 
essential utilities and facilities, light, ventilation, fire 
protection including adequate egress, layout and condition of 
interior partitions, or similar factors, which defects or 
deficiencies are of sufficient total significance to justify 
substantial renovation or clearance. 
    Subd. 2.  [LIMITATION; ORIGINATION PERIOD.] During the 
first ten months of an origination period, the Minnesota housing 
finance agency or a city may make loans financed with proceeds 
of mortgage bonds for the purchase of existing housing.  Loans 
financed with the proceeds of mortgage bonds for new housing in 
the metropolitan area may be made during the first ten months of 
an origination period only if at least one of the following 
conditions is met: 
    (1) the new housing is located in a redevelopment area and 
is replacing a structurally substandard structure or structures; 
    (2) the new housing is located on a parcel purchased by the 
city or conveyed to the city under section 282.01, subdivision 
1; or 
    (3) the new housing is part of a housing affordability 
initiative, other than those financed with the proceeds from the 
sale of bonds, in which federal, state, or local assistance is 
used to substantially improve the terms of the financing or to 
substantially write down the purchase price of the new housing.  
    Upon expiration of the first ten-month period, the agency 
or a city may make loans financed with the proceeds of mortgage 
bonds for the purchase of new and existing housing.  
    Subd. 3.  [NONMETROPOLITAN AREA.] The Minnesota housing 
finance agency and cities shall initiate steps in the 
nonmetropolitan areas of the state similar to those required for 
the metropolitan area under subdivision 2 to encourage loans for 
existing housing or for new housing under the conditions 
specified in subdivision 2. 
    Subd. 4.  [REDEVELOPMENT AREA.] A city must submit to the 
Minnesota housing finance agency the resolution adopted by the 
governing body of the city finding an area to be a redevelopment 
area and a map of the redevelopment area.  
    Subd. 5.  [LIMITATION; COMMITMENTS AND LOANS TO BUILDERS 
AND DEVELOPERS.] The Minnesota housing finance agency or a city 
may not make available, provide set asides, or commit to make 
available proceeds of mortgage bonds for the exclusive use of 
builders or developers for loans to eligible purchasers for new 
housing except for new housing described in subdivision 2, 
clauses (1) to (3).  This prohibition is in effect for the total 
origination period. 
    Subd. 6.  [REPORTING REQUIREMENT.] The Minnesota housing 
finance agency and any city that provides loans for new housing 
financed with the proceeds of mortgage bonds shall report to the 
chairs of the appropriate housing related standing committees or 
divisions of the state senate and house of representatives by 
January 1 of each year detailing new housing activity financed 
with the proceeds of mortgage bonds, including a description of 
affordable housing initiatives, the number of loans, the average 
purchase price, average borrower income, and steps taken to 
encourage loan activity as required in subdivision 3. 
    Sec. 9.  Minnesota Statutes Second 1989 Supplement, section 
474A.061, subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICATION.] (a) An issuer may apply for 
an allocation under this section by submitting to the department 
an application on forms provided by the department, accompanied 
by (1) a preliminary resolution, (2) a statement of bond counsel 
that the proposed issue of obligations requires an allocation 
under this chapter, (3) the type of qualified bonds to be 
issued, and (4) an application deposit in the amount of one 
percent of the requested allocation before the last Monday in 
August, or in the amount of two percent of the requested 
allocation on or after the last Monday in August, and (5) a 
public purpose scoring worksheet for small issue 
applications.  An issuer applying for an allocation from the 
multifamily housing pool who does not sign an agreement 
requiring that the project comply with the gross rent 
restrictions of the low-income housing credit program under 
section 42 of the Internal Revenue Code of 1986, as amended 
through December 31, 1988, must submit an additional application 
deposit in the amount of two percent of the requested allocation 
before the last Monday in August, or in the amount of one 
percent of the requested allocation on or after the last Monday 
in August.  The issuer must pay the application deposit by 
check.  The Minnesota housing finance agency may apply for and 
receive an allocation under this section without submitting an 
application deposit. 
     (b) An entitlement issuer may not apply for an allocation 
from the multifamily housing pool or from the public facilities 
pool unless it has either permanently issued bonds equal to the 
amount of its entitlement allocation for the current year plus 
any amount of bonding authority carried forward from previous 
years or returned for reallocation all of its unused entitlement 
allocation.  For purposes of this subdivision, its entitlement 
allocation includes an amount obtained under section 474A.04, 
subdivision 6. 
    (c) If an application is rejected under this section, the 
commissioner must notify the applicant and return the 
application deposit to the applicant within 30 days unless the 
applicant requests in writing that the application be 
resubmitted.  The granting of an allocation of bonding authority 
under this section must be evidenced by a certificate of 
allocation. 
     Sec. 10.  Minnesota Statutes 1988, section 474A.061, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [HOUSING POOL ALLOCATION.] (a) On the first 
business day that falls on a Monday of the calendar year and on 
the first Monday in April, the commissioner shall allocate 
available bonding authority in the housing pool to applications 
received by the Monday of the previous week for residential 
rental projects that meet the eligibility criteria under section 
7.  After April 1, and until April 15, the Minnesota housing 
finance agency may accept applications from cities for 
single-family housing programs which meet program requirements 
as follows:  
    (1) the housing program must meet a locally identified 
housing need and be economically viable; 
    (2) the adjusted income of home buyers cannot exceed the 
agency's income limits, except in the Minneapolis-St. Paul 
metropolitan statistical area as determined by the United States 
Department of Commerce where the adjusted income limits of home 
buyers may not exceed the greater of the agency's income limits 
or 80 percent of the area median income as published by the 
Department of Housing and Urban Development; 
    (3) house price limits may not exceed the greater of agency 
house price limits or 90 percent of the median purchase price in 
the city for which the bonds are to be sold up to a maximum of 
80 percent of the safe harbor limitations for existing housing 
provided under section 143(e) of the Internal Revenue Code of 
1986, as amended through December 31, 1989, except that house 
price limits may be 80 percent of the safe harbor limitation for 
existing housing if subsidy is used to reduce the effective 
purchase price of the property to the above levels.  Data 
establishing the median purchase price in the city must be 
included in the application by a city requesting house price 
limits higher than the housing finance agency's house price 
limits; 
    (4) the housing program meets the requirements of section 
8; and 
    (5) an application deposit equal to one percent of the 
requested allocation must be submitted with the city's 
application.  The agency shall submit the application and 
application deposit to the commissioner when requesting an 
allocation from the housing pool. 
    The Minnesota housing finance agency may accept 
applications from July 1 to July 15 from cities for 
single-family housing programs which meet program requirements 
specified under clauses (1) to (5) if bonding authority is 
available in the housing pool.  The agency and a representative 
for each applicant shall negotiate the terms of an agreement 
regarding the allocation of available authority among the 
applicants.  The agreement must allot available bonding 
authority among the applicants.  For purposes of paragraphs (a) 
to (d), "city" has the meaning given it in section 462C.02, 
subdivision 6, and "agency" means the Minnesota housing finance 
agency.  
    (b) Upon reaching agreement with participating cities, the 
agency shall forward to the commissioner the amounts allotted to 
each applicant pursuant to the agreement.  The agency may issue 
bonds on behalf of participating cities.  The agency shall 
request an allocation from the commissioner for all applicants 
who choose to have the agency issue bonds on their behalf and 
the commissioner shall allocate the requested amount to the 
agency.  The agency may request an allocation at any time 
between the first Tuesday after the first Monday in April and 
the last Monday in August, but may request an allocation no 
later than the last Monday in August.  The commissioner shall 
return any application deposit to a city that paid an 
application deposit under paragraph (a), clause (5), but was not 
part of the agreement forwarded to the commissioner under this 
paragraph. 
    (c) A city may choose to issue bonds on its own behalf or 
through a joint powers agreement and may request an allocation 
from the commissioner.  If the total amount requested by all 
applicants exceeds the amount available in the pool, the city 
may not receive a greater allocation than the amount it would 
have received under the agreement forwarded by the Minnesota 
housing finance agency to the commissioner.  No city may request 
or receive an allocation from the commissioner until the 
agreement under paragraph (b) has been forwarded to the 
commissioner.  Between the first Monday in April and the last 
Monday in August, no city may receive an allocation from the 
housing pool which has not first applied to the Minnesota 
housing finance agency.  The commissioner shall allocate the 
requested amount to the city or cities subject to the 
limitations under this paragraph.  
    (d) If a city issues mortgage bonds from an allocation 
received under paragraph (c), the issuer must provide for the 
recycling of funds into new loans.  If the issuer is not able to 
provide for recycling, the issuer must notify the commissioner 
in writing of the reason that recycling was not possible and the 
reason the issuer elected not to have the Minnesota housing 
finance agency issue the bonds.  "Recycling" means the use of 
money generated from the repayment and prepayment of loans for 
further eligible loans or for the redemption of bonds and the 
issuance of current refunding bonds. 
    (e) The total amount of allocation for mortgage bonds for 
one city is limited to the lesser of (i) $4,000,000 or (ii) 20 
percent of the total amount available for allocation for 
mortgage bonds from the housing pool after the first Monday in 
April. 
    Sec. 11.  Minnesota Statutes 1988, section 474A.061, is 
amended by adding a subdivision to read: 
     Subd. 2b.  [MANUFACTURING POOL ALLOCATION.] From the 
beginning of the calendar year until the last Monday in August, 
the commissioner shall allocate available bonding authority from 
the manufacturing pool on Monday of each week to applications 
received on or before the Monday of the preceding week.  The 
amount of allocation provided to an issuer for a specific 
manufacturing project will be based on the number of points 
received for the proposed project under the scoring system under 
section 6.  Proposed projects that receive 50 points or more are 
eligible for all of the proposed allocation.  Proposed projects 
that receive less than 50 points are eligible to receive a 
proportionally reduced share of the proposed authority. 
    If there are two or more applications for manufacturing 
projects from the manufacturing pool and there is insufficient 
bonding authority to provide allocations for all projects in any 
one week after all eligible bonding authority has been 
transferred as provided in section 474A.081, the available 
bonding authority shall be awarded by lot unless otherwise 
agreed to by the respective issuers. 
    Sec. 12.  Minnesota Statutes 1988, section 474A.061, is 
amended by adding a subdivision to read: 
     Subd. 2c.  [PUBLIC FACILITIES POOL ALLOCATION.] From the 
beginning of the calendar year until the last Monday in August, 
the commissioner shall allocate available bonding authority from 
the public facilities pool on Monday of each week to 
applications for eligible public facilities projects received on 
or before the Monday of the preceding week.  If there are two or 
more applications for public facilities projects from the pool 
and there is insufficient bonding authority to provide 
allocations for all projects in any one week after all eligible 
bonding authority has been transferred as provided in section 
474A.081, the available bonding authority shall be awarded by 
lot unless otherwise agreed to by the respective issuers. 
    Sec. 13.  Minnesota Statutes 1988, section 474A.061, 
subdivision 3, is amended to read: 
    Subd. 3.  [ADDITIONAL DEPOSIT.] An issuer which has 
received an allocation under this section may retain any unused 
portion of the allocation after the first Monday Tuesday in 
September only if the issuer has submitted to the department 
before the first Monday Tuesday in September a letter stating 
its intent to issue obligations pursuant to the allocation 
before the end of the calendar year or within the time period 
permitted by federal tax law and a deposit in addition to that 
provided under subdivision 1, equal to one percent of the amount 
of allocation to be retained.  The Minnesota housing finance 
agency may retain an unused portion of an allocation after the 
first Tuesday in September without submitting an additional 
deposit. 
    Sec. 14.  Minnesota Statutes Second 1989 Supplement, 
section 474A.061, subdivision 4, is amended to read: 
    Subd. 4.  [RETURN OF ALLOCATION; DEPOSIT REFUND.] (a) If an 
issuer that receives an allocation under this section determines 
that it will not issue obligations equal to all or a portion of 
the allocation received under this section by the end of the 
current year within 90 days of allocation or within the time 
period permitted by federal tax law, whichever is less, the 
issuer must notify the department.  If the issuer notifies the 
department or the 90-day period since allocation has expired 
prior to the last Monday in August, the amount of allocation is 
canceled and returned must be reallocated for reallocation 
through the pool from which it was originally allocated.  If the 
issuer notifies the department or the 90-day period since 
allocation has expired on or after the last Monday in August, 
the amount of allocation is canceled and returned must be 
reallocated for reallocation through the unified pool.  If the 
issuer notifies the department after the last Monday in 
November, the amount of allocation is canceled and returned must 
be reallocated for reallocation to the Minnesota housing finance 
agency. 
    (b) An issuer that returns for reallocation all or a 
portion of an allocation received under this section within 90 
days of allocation shall receive within 30 days a refund of all 
of its application deposits equal to:  
    (1) one-half of the amount on application deposit for the 
amount of bonding authority returned before the first Monday in 
November within 30 days of receiving allocation; 
    (2) one-fourth of the amount on application deposit for the 
amount of bonding authority returned on or after the first 
Monday in November and before the third Monday in 
November between 31 and 60 days of receiving allocation; and 
    (3) one-eighth of the amount on application deposit for the 
amount of bonding authority returned on or after the third 
Monday in November and before the last Monday in 
November between 61 and 90 days of receiving allocation. 
    No refund shall be available for allocations returned on or 
after the last Monday in November 90 or more days after 
receiving the allocation.  This subdivision does not apply to 
the Minnesota housing finance agency. 
    Sec. 15.  Minnesota Statutes 1988, section 474A.091, 
subdivision 1, is amended to read: 
    Subdivision 1.  [UNIFIED POOL AMOUNT.] On the day after the 
last Monday in August any bonding authority remaining 
unallocated from the manufacturing pool, the multifamily housing 
pool, and the public facilities pool is transferred to the 
unified pool and must be reallocated as provided in this section.
    Sec. 16.  Minnesota Statutes Second 1989 Supplement, 
section 474A.091, subdivision 2, is amended to read: 
    Subd. 2.  [APPLICATION.] An issuer may apply for an 
allocation under this section by submitting to the department an 
application on forms provided by the department accompanied by 
(1) a preliminary resolution, (2) a statement of bond counsel 
that the proposed issue of obligations requires an allocation 
under this chapter, (3) the type of qualified bonds to be 
issued, and (4) an application deposit in the amount of two 
percent of the requested allocation, and (5) a public purpose 
scoring worksheet for small issue applications.  An issuer 
applying for an allocation for residential rental project bonds 
who does not sign an agreement requiring that the project comply 
with the gross rent restrictions of the low-income housing 
credit program under section 42 of the Internal Revenue Code of 
1986, as amended through December 31, 1988, must submit an 
additional application deposit in the amount of one percent of 
the requested allocation.  The issuer must pay the application 
deposit by check.  An entitlement issuer may not apply for an 
allocation for public facility bonds, residential rental project 
bonds, or mortgage bonds under this section unless it has either 
permanently issued bonds equal to the amount of its entitlement 
allocation for the current year plus any amount carried forward 
from previous years or returned for reallocation all of its 
unused entitlement allocation.  For purposes of this 
subdivision, its entitlement allocation includes an amount 
obtained under section 474A.04, subdivision 6. 
    The Minnesota housing finance agency may not apply for an 
allocation for mortgage bonds under this section until after the 
last Monday in September.  Notwithstanding the restrictions 
imposed on unified pool allocations after October 1 under 
subdivision 3, paragraph (c)(2), the Minnesota housing finance 
agency may be awarded allocations for mortgage bonds from the 
unified pool after October 1.  The Minnesota housing finance 
agency may apply for and receive an allocation under this 
section without submitting an application deposit. 
    Sec. 17.  Minnesota Statutes Second 1989 Supplement, 
section 474A.091, subdivision 3, is amended to read: 
    Subd. 3.  [ALLOCATION PROCEDURE.] (a) The commissioner 
shall allocate available bonding authority under this section on 
the Monday of every other week beginning with the first Monday 
in September through and on the last Monday in November.  
Applications for allocations must be received by the department 
by the Monday preceding the Monday on which allocations are to 
be made.  If a Monday falls on a holiday, the allocation will be 
made or the applications must be received by the next business 
day after the holiday.  
    (b) On or before October 1, allocations shall be awarded 
from the unified pool in the following order of priority: 
    (1) applications for small issue bonds, with preference 
given to projects to be located in distressed counties 
designated under section 297A.257; 
    (2) applications for residential rental project bonds, with 
preference given to issuers agreeing to require that the project 
comply with the gross rent restrictions of the low-income 
housing credit program under section 42 of the Internal Revenue 
Code of 1986, as amended through December 31, 1988; 
    (3) applications for public facility projects funded by 
public facility bonds; 
    (4) applications for redevelopment bonds; 
    (5) applications for mortgage bonds; and 
    (6) applications for governmental bonds. 
    Allocations for residential rental projects may only be 
made during the first allocation in September.  The amount of 
allocation provided to an issuer for a specific manufacturing 
project will be based on the number of points received for the 
proposed project under the scoring system under section 6.  
Proposed manufacturing projects that receive 50 points or more 
are eligible for all of the proposed allocation.  Proposed 
manufacturing projects that receive less than 50 points under 
section 6 are only eligible to receive a proportionally reduced 
share of the proposed authority.  If there are two or more 
applications for manufacturing projects from the unified pool 
and there is insufficient bonding authority to provide 
allocations for all manufacturing projects in any one allocation 
period, the available bonding authority shall be awarded based 
on the number of points awarded a project under section 6 with 
those projects receiving the greatest number of points receiving 
allocation first. 
    (c)(1) On the first Monday in October, $20,000,000 of 
bonding authority or an amount equal to the total annual amount 
of bonding authority allocated to the manufacturing pool under 
section 474A.03, subdivision 1, less the amount allocated to 
issuers from the manufacturing pool for that year, whichever is 
less, is reserved within the unified pool for small issue 
bonds.  On the first Monday in October, $5,000,000 $2,500,000 of 
bonding authority or an amount equal to the total annual amount 
of bonding authority allocated to the public facilities pool 
under section 474A.03, subdivision 1, less the amount allocated 
to issuers from the public facilities pool for that year, 
whichever is less, is reserved within the unified pool for 
public facility bonds.  If sufficient bonding authority is not 
available to reserve the required amounts for both small issue 
bonds and public facility bonds, three-fourths seven-eighths of 
the remaining available bonding authority is reserved for small 
issue bonds and one-fourth one-eighth of the remaining available 
bonding authority is reserved for public facility bonds. 
    (2) The total amount of allocations for mortgage bonds from 
the housing pool and the unified pool may not exceed: 
    (i) $10,000,000 for any one city; or 
    (ii) $20,000,000 for any number of cities in any one 
county; or 
    (iii) 60 percent of the amount initially allocated to the 
unified pool. 
    An allocation for mortgage bonds may be used for mortgage 
credit certificates. 
    After October 1, allocations shall be awarded from the 
unified pool only for the following types of qualified bonds:  
small issue bonds, with preference given to manufacturing 
projects to be located in distressed counties designated under 
section 297A.257, public facility bonds, and residential rental 
project bonds. 
    (d) If there is insufficient bonding authority to fund all 
projects within any qualified bond category, allocations shall 
be awarded by lot unless otherwise agreed to by the respective 
issuers.  If an application is rejected, the commissioner must 
notify the applicant and return the application deposit to the 
applicant within 30 days unless the applicant requests in 
writing that the application be resubmitted.  The granting of an 
allocation of bonding authority under this section must be 
evidenced by issuance of a certificate of allocation. 
    Sec. 18.  Minnesota Statutes 1988, section 474A.091, 
subdivision 4, is amended to read: 
    Subd. 4.  [MORTGAGE BOND SUNSET BONDS.] If federal tax law 
is not amended to permit the issuance of tax-exempt mortgage 
bonds after December 31, 1988, All remaining bonding authority 
available for allocation under this section on December 1, 1988, 
is allocated to the Minnesota housing finance agency.  For 
purposes of this subdivision, "city" has the meaning given it in 
section 462C.02, subdivision 6.  The Minnesota housing finance 
agency shall reallocate at least 50 percent of the remaining 
bonding authority available for allocation to cities requesting 
an allocation on or before November 1, 1988, for the issuance of 
mortgage bonds.  A city may apply for an allocation under this 
subdivision by submitting to the Minnesota housing finance 
agency an application on or before November 1, 1988, on forms 
provided by the agency.  After December 1, 1988, any unallocated 
bonding authority remaining after all city requests are filled 
is reallocated to the Minnesota housing finance agency for 
issuance by the agency or for reallocation to a city requesting 
an allocation on or before November 1, 1988.  
    Sec. 19.  Minnesota Statutes 1988, section 474A.091, 
subdivision 5, is amended to read: 
    Subd. 5.  [RETURN OF ALLOCATION; DEPOSIT REFUND.] (a) If an 
issuer that receives an allocation under this section determines 
that it will not issue obligations equal to all or a portion of 
the allocation received under this section by the end of the 
current year within 90 days of the allocation or within the time 
period permitted by federal tax law, whichever is less, the 
issuer must notify the department.  If the issuer notifies the 
department or the 90-day period since allocation has expired 
prior to the last Monday in November, the amount of 
allocation is canceled and returned must be reallocated for 
reallocation through the unified pool. 
    (b) An issuer that returns for reallocation all or a 
portion of an allocation received under this section within 90 
days of the allocation shall receive within 30 days a refund of 
its application deposit equal to:  
    (1) one-half of the amount on application deposit for the 
amount of bonding authority returned before the first Monday in 
November within 30 days of receiving the allocation; 
    (2) one-fourth of the amount on application deposit for the 
amount of bonding authority returned on or after the first 
Monday in November and before the third Monday in 
November between 31 and 60 days of receiving the allocation; and 
    (3) one-eighth of the amount on application deposit for the 
amount of bonding authority returned on or after the third 
Monday in November and before the last Monday in 
November between 61 and 90 days of receiving the allocation. 
    No refund of the application deposit shall be available for 
allocations returned on or after the last Monday in 
November.  This subdivision does not apply to the Minnesota 
housing finance agency. 
    Sec. 20.  Minnesota Statutes 1988, section 474A.131, 
subdivision 2, is amended to read: 
    Subd. 2.  [CARRYFORWARD NOTICE.] If an issuer intends to 
carry forward an allocation received under this chapter, it must 
notify the department in writing before the last Monday of 
December.  If the written notice of carryforward is not provided 
within the time required, one-quarter of the amount of 
the application deposit eligible for refund upon filing of the 
notice of issue under this section is forfeited.  
    Sec. 21.  Minnesota Statutes 1988, section 474A.14, is 
amended to read: 
    474A.14 [NOTICE OF AVAILABLE AUTHORITY.] 
    The department shall publish in the State Register at least 
twice monthly, a notice of the amount of bonding authority, if 
any, available for allocation pursuant to sections 474A.061 and 
474A.091 in the housing, manufacturing, and public facilities 
pools as soon after January 1 as possible.  The department shall 
publish in the State Register a notice of the amount of bonding 
authority available for allocation in the unified pool as soon 
after september 1 as possible. 
    Sec. 22.  [SUNSET OF QUALIFIED BONDS.] 
    Subdivision 1.  [TRANSFER.] If federal tax law is not 
amended by May 31, 1990, to permit the issuance of tax exempt 
mortgage bonds or small issue bonds past September 30, 1990, all 
remaining bonding authority available for allocation in the 
multifamily housing, manufacturing, and public facilities pools 
is transferred to the unified pool on the first business day in 
June and must be reallocated as provided in this section. 
    Subd. 2.  [APPLICATION.] An issuer may apply for an 
allocation under this section by submitting to the department an 
application on forms provided by the department accompanied by 
(1) a preliminary resolution, (2) a statement of bond counsel 
that the proposed issue of obligations requires an allocation 
under this chapter, (3) the type of qualified bonds to be 
issued, and (4) an application deposit in the amount of two 
percent of the requested allocation.  The issuer must pay the 
application deposit by check.  An entitlement issuer may not 
apply for an allocation for public facility bonds, residential 
rental project bonds, or mortgage bonds under this section 
unless it has either permanently issued bonds equal to the 
amount of its entitlement allocation for the current year plus 
any amount carried forward from previous years or returned for 
reallocation all of its unused entitlement allocation.  For 
purposes of this subdivision, its entitlement allocation 
includes an amount obtained under Minnesota Statutes, section 
474A.04, subdivision 6. 
     The Minnesota housing finance agency may not apply for an 
allocation for mortgage bonds under this section until after the 
last Monday in June.  Notwithstanding the restrictions imposed 
on the unified pool allocations after July 1 under subdivision 
3, paragraph (c), clause (2), the agency may be awarded 
allocations for mortgage bonds from the unified pool after July 
1.  The agency may apply for and receive an allocation under 
this section without submitting an application deposit. 
    Subd. 3.  [ALLOCATION PROCEDURE.] (a) The commissioner 
shall allocate available bonding authority under this section on 
the Monday of every other week beginning with the first Monday 
in June through and on the last Monday in August.  Applications 
for allocations must be received by the department by the Monday 
preceding the Monday on which allocations are to be made.  If a 
Monday falls on a holiday, the allocation will be made or the 
applications must be received by the next business day. 
    (b) On or before July 1, allocations shall be awarded from 
the unified pool in the following order of priority: 
    (1) applications for small issue bonds; 
    (2) applications for residential rental project bonds; 
    (3) applications for public facilities projects financed 
with public facility bonds; 
    (4) applications for redevelopment bonds; 
    (5) applications for mortgage bonds; and 
    (6) applications for governmental bonds. 
    Allocations for residential rental projects may only be 
made during the first allocation in June and must meet the 
eligibility requirements of section 7.  If an application is 
rejected, the commissioner must notify the applicant and return 
the application deposit to the applicant within 30 days unless 
the applicant requests in writing that the application be 
resubmitted.  The granting of an allocation of bonding authority 
under this section must be evidenced by issuance of a 
certificate of allocation. 
    (c)(1) On the first Monday in July, $20,000,000 of bonding 
authority or an amount equal to the total annual amount of 
bonding authority allocated to the manufacturing pool under 
Minnesota Statutes, section 474A.03, subdivision 1, less the 
amount allocated to issuers from the manufacturing pool for that 
year, whichever is less, is reserved within the unified pool for 
small issue bonds.  On the first Monday in July, $2,500,000 of 
bonding authority or an amount equal to the total annual amount 
of bonding authority allocated to the public facilities pool 
under Minnesota Statutes, section 474A.03, subdivision 1, less 
the amount allocated to issuers from the public facilities pool 
for that year, whichever is less, is reserved within the unified 
pool for public facility bonds.  If sufficient bonding authority 
is not available to reserve the required amounts for both small 
issue bonds and public facility bonds, seven-eighths of the 
remaining available bonding authority is reserved for small 
issue bonds and one-eighth of the remaining available bonding 
authority is reserved for public facility bonds.  
     (2) Allocations for mortgage bonds from the unified pool 
may not exceed: 
     (i) $10,000,000 for any one city; 
     (ii) $20,000,000 for any number of cities in any one 
county; or 
     (iii) 60 percent of the amount initially allocated to the 
unified pool. 
     An allocation for mortgage bonds may be used for mortgage 
credit certificates. 
     After July 1, allocations shall be awarded from the unified 
pool only for the following types of qualified bonds:  small 
issue bonds, public facility bonds, and residential rental 
project bonds. 
     (d) If there is insufficient bonding authority to fund all 
projects within any qualified bond category, allocations shall 
be awarded by lot unless otherwise agreed to by the respective 
issuers.  If an application is rejected, the commissioner must 
notify the applicant and return the application deposit to the 
applicant within 30 days unless the applicant requests in 
writing that the application be resubmitted.  The granting of an 
allocation of bonding authority under this section must be 
evidenced by issuance of a certificate of allocation. 
     Subd. 4.  [REMAINING ALLOCATION.] Any remaining bonding 
authority that has not been allocated by September 1 in the 
unified pool shall be allocated to the Minnesota housing finance 
agency.  
    Subd. 5.  [RETURN OF ALLOCATION; DEPOSIT REFUND.] (a) If an 
issuer that receives an allocation under this section determines 
that it will not issue obligations equal to all or a portion of 
the allocation received under this section within 90 days of the 
allocation or within the time period permitted by federal tax 
law, whichever is less, the issuer must notify the department.  
If the issuer notifies the department or the 90-day period since 
allocation has expired prior to the last Monday in August, the 
amount of allocation is canceled and returned for reallocation 
through the unified pool. 
    (b) An issuer that returns for reallocation all or a 
portion of an allocation received under this section within 90 
days of the allocation shall receive within 30 days a refund 
equal to:  
    (1) one-half of the application deposit for the amount of 
bonding authority returned within 30 days of receiving the 
allocation; 
    (2) one-fourth of the application deposit for the amount of 
bonding authority returned between 31 and 60 days of receiving 
the allocation; and 
    (3) one-eighth of the application deposit for the amount of 
bonding authority returned between 61 and 90 days of receiving 
the allocation. 
    No refund of the application deposit shall be available for 
allocations returned on or after the last Monday in August. 
    Sec. 23.  [TAX CREDIT PROJECTS RECEIVING ALLOCATION PRIOR 
TO MARCH 31, 1990.] 
    Projects eligible for federal low-income tax credits that 
received bonding allocation under Minnesota Statutes, chapter 
474A, prior to the effective date of Laws 1990, chapter 368, are 
subject to the following conditions: 
    (a) The requirements of Laws 1990, chapter 368, section 6, 
paragraph (c), do not apply. 
    (b) The requirements of the applicable qualified allocation 
plan for the second and third rounds for federal low-income tax 
credits must apply. 
    Sec. 24.  [REPEALER.] 
    Minnesota Statutes 1988, sections 474.081, subdivisions 1, 
2 and 4, and 474A.091, subdivision 4a; and Minnesota Statutes 
Second 1989 Supplement, section 474A.061, subdivision 2, are 
repealed.  Section 22 is repealed January 1, 1991. 
    Sec. 25.  [EFFECTIVE DATE.] 
    Sections 2 to 6, 8 to 21, and 24 are effective January 1, 
1991.  Section 7 applies to projects that receive an allocation 
of bonding authority after the day of final enactment.  Sections 
1, 7, 22, and 23 are effective the day following final enactment.
    Presented to the governor April 26, 1990 
    Signed by the governor May 4, 1990, 11:29 p.m.