Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                        CHAPTER 287-S.F.No. 652 
           An act relating to housing; providing for the payment 
          of fees for certain publicly owned facilities; 
          providing for use of neighborhood land trusts; 
          amending Minnesota Statutes 1990, sections 327.23, 
          subdivision 3; and 462A.02, by adding a subdivision; 
          proposing coding for new law in Minnesota Statutes, 
          chapter 462A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 327.23, 
subdivision 3, is amended to read: 
    Subd. 3.  [MUNICIPAL PARKS.] Any manufactured home park or 
recreational camping area owned or operated by any municipality 
or political subdivision of this state shall meet all sanitary 
and safety provisions of sections 327.10, 327.11, 327.14 to 
327.28, shall be inspected as herein provided, pay all fees, and 
make all reports, as herein required of a licensee.  
     Sec. 2.  [462A.30] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to sections 2 to 4. 
    Subd. 2.  [AGENCY.] "Agency" means the Minnesota housing 
finance agency.  
    Subd. 3.  [FIRST OPTION TO PURCHASE.] "First option to 
purchase" means a right of a neighborhood land trust or the 
agency to purchase all or any portion of the improvements and 
leasehold interest of a lessee, sublessee, or other resident of 
property subject to a ground lease, prior to the rights of any 
other party and at a limited equity price. 
    Subd. 4.  [GROUND LEASE.] "Ground lease" means a lease of 
real property in which the lease does not include buildings or 
other improvements. 
    Subd. 5.  [LEASEHOLD INTEREST.] "Leasehold interest" means 
the real property interest of a lessee in a ground lease in 
which the neighborhood land trust is the lessor. 
    Subd. 6.  [LIMITED EQUITY FORMULA.] "Limited equity formula"
means a method, to be determined by rule adopted by the agency, 
for calculation of the limited equity price, designed to 
maintain the affordability of the housing and the public subsidy.
    Subd. 7.  [LIMITED EQUITY PRICE.] "Limited equity price" 
means a price for the sale of any building or other improvement 
located on land owned by a neighborhood land trust determined by 
means of the limited equity formula. 
    Subd. 8.  [NEIGHBORHOOD LAND TRUST.] "Neighborhood land 
trust" means a nonprofit corporation organized under chapter 
317A that complies with section 3 and that qualifies for tax 
exempt status under United States Code, title 26, section 
501(c)(3), and meets all other criteria for neighborhood land 
trust set by the agency. 
    Subd. 9.  [PERSONS AND FAMILIES OF LOW AND MODERATE 
INCOME.] "Persons and families of low and moderate income" has 
the meaning specified in section 462A.03, subdivision 10. 
    Sec. 3.  [462A.31] [NEIGHBORHOOD LAND TRUSTS.] 
    Subdivision 1.  [PURPOSES.] A neighborhood land trust must 
have as one of its purposes the holding of land and the leasing 
of land for the purpose of preserving the affordability of 
housing on that land for persons and families of low and 
moderate income. 
    Subd. 2.  [POWERS.] A neighborhood land trust may have any 
or all of the powers permitted to a nonprofit corporation under 
chapter 317A, except that a neighborhood land trust must have 
the power to buy and sell land, to mortgage and otherwise 
encumber land, and to negotiate and enter into ground leases 
with an initial term of up to 99 years. 
    Subd. 3.  [RESTRICTIONS.] A ground lease in which a 
neighborhood land trust is the lessor must contain provisions 
designed to preserve the affordability of housing on the land.  
Each ground lease must reserve to the neighborhood land trust 
the first option to purchase any building or improvement on the 
land, or any condominium or cooperative unit located in a 
building on the land, at a limited equity price specified in the 
ground lease.  Each ground lease must grant to the Minnesota 
housing finance agency the right to exercise that first option 
to purchase if the neighborhood land trust does not, for any 
reason, exercise the first option.  Each ground lease must 
exempt sales to persons and families of low and moderate income 
from the provisions granting the first option to purchase to the 
neighborhood land trust and to the Minnesota housing finance 
agency.  Sales to persons and families of low and moderate 
income are not exempt from the limited equity price.  A ground 
lease may also contain appropriate restrictions on: 
    (1) subletting or assigning the ground lease; 
    (2) construction and renovation of buildings and other 
improvements; and 
    (3) sale of buildings and improvements. 
    Subd. 4.  [MORTGAGES.] (a) A ground lease with a 
neighborhood land trust must prohibit the lessee from mortgaging 
the lessee's interest in the lease or in buildings or other 
improvements without the consent of the neighborhood land 
trust.  A ground lease may obligate a neighborhood land trust as 
lessor and fee title holder to consent to, join in, or 
subordinate its interest to, a mortgage entered into by a lessee 
as mortgagor for the purpose of obtaining financing for 
construction or renovation of housing on the land.  A lease 
provision so obligating a neighborhood land trust must specify 
that the mortgage must provide to the neighborhood land trust 
the right to receive from the mortgagee prompt notice of default 
in the mortgage and the right to cure the default or to purchase 
the mortgagee's interest in the mortgage.  The limited equity 
price and provisions in subdivision 3 do not apply if the lessee 
or the neighborhood land trust fails to cure the default or 
purchase the mortgagee's interest in the mortgage. 
    (b) A ground lease with a neighborhood land trust must 
provide that the neighborhood land trust will not, during the 
term of the lease, mortgage or otherwise encumber its interest 
in the property or permit any liens on its interest in the 
property to exist.  This prohibition does not apply to mortgages 
that require the mortgagee to subordinate the lien of its 
mortgage to a mortgage entered into by a lessee as mortgagor for 
the purpose of obtaining financing for construction or 
renovation of housing on the land. 
    Subd. 5.  [RIGHTS OF HEIRS.] A ground lease with a 
neighborhood land trust must provide that the heirs of the 
lessee may assume the lease, if the heirs agree to occupy the 
lease property as their homestead.  For purposes of this 
subdivision, "the heirs" means the heirs at law of a lessee who 
dies intestate or the devises of a lessee who dies testate. 
    Sec. 4.  Minnesota Statutes 1990, section 462A.02, is 
amended by adding a subdivision to read: 
    Subd. 11.  It is further declared that it is in the best 
interests of the citizens of the state of Minnesota that public 
money used for the purposes of this chapter be used in a manner 
that best assures the long-term affordability of housing to low- 
and moderate-income citizens.  To achieve that public purpose, 
the agency shall consider, in the making of grants and loans and 
other uses of agency resources, the degree to which such grants, 
loans, and other uses will assure the long-term affordability of 
the housing, by use of the neighborhood land trust model or 
other techniques. 
    Sec. 5.  [EFFECTIVE DATE.] 
    Section 1 applies to fees payable in 1992, and thereafter. 
    Presented to the governor May 29, 1991 
    Signed by the governor June 1, 1991, 4:02 p.m.