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Key: (1) language to be deleted (2) new language

  
    Laws of Minnesota 1993 

                        CHAPTER 164-H.F.No. 1579 
           An act relating to public finance; changing procedures 
          for allocating bonding authority; amending Minnesota 
          Statutes 1992, sections 462A.221, by adding 
          subdivisions; 462A.222, subdivision 3; 474A.047, 
          subdivision 1; and 474A.061, subdivision 2a. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1992, section 462A.221, is 
amended by adding a subdivision to read: 
    Subd. 4.  [METROPOLITAN AREA.] "Metropolitan area" has the 
meaning given it in section 473.121, subdivision 2. 
    Sec. 2.  Minnesota Statutes 1992, section 462A.221, is 
amended by adding a subdivision to read: 
    Subd. 5.  [SUBSTANTIAL REHABILITATION.] "Substantial 
rehabilitation" means rehabilitation of at least $5,000 per unit.
    Sec. 3.  Minnesota Statutes 1992, section 462A.222, 
subdivision 3, 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) For applications submitted for the first round, an 
allocating agency may allocate tax credits only to the following 
types of projects: 
    (1) in the metropolitan area: 
    (i) new construction or substantial rehabilitation 
single-room occupancy projects which are affordable by 
households whose income does not exceed 30 percent of the median 
income; 
    (2) (ii) new construction or substantial rehabilitation 
family housing projects in which at least 75 percent of the 
units contain two or more bedrooms and at least one-third of the 
75 percent contain three or more bedrooms; or 
    (iii) substantial rehabilitation projects in neighborhoods 
targeted by the city for revitalization; 
    (2) outside the metropolitan area, projects which meet a 
locally identified housing need and which are in short supply in 
the local housing market as evidenced by credible data submitted 
with the application; 
    (3) projects in which a percentage of the units are set 
aside and rented to persons: 
    (i) with a serious and persistent mental illness as defined 
in section 245.462, subdivision 20, paragraph (c); 
    (ii) with a developmental disability as defined in United 
States Code, title 42, section 6001, paragraph (5), as amended 
through December 31, 1990; 
     (iii) who have been assessed as drug dependent persons as 
defined in section 254A.02, subdivision 5, and are receiving or 
will receive care and treatment services provided by an approved 
treatment program as defined in section 254A.02, subdivision 2; 
     (iv) with a brain injury as defined in section 256B.093, 
subdivision 4, paragraph (a); or 
     (v) with physical disabilities if at least 50 percent of 
the units are accessible as provided under Minnesota Rules, 
chapter 1340; 
     (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. 4.  Minnesota Statutes 1992, section 474A.047, 
subdivision 1, is amended to read: 
    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; 
    (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; 
or 
    (c) The proposed project is a multifamily project that 
meets the following requirements: 
    (i) the proposed project is the rehabilitation of an 
existing multifamily building which meets the requirements for 
minimum rehabilitation expenditures in section 42(e)(2) of the 
Internal Revenue Code; 
    (ii) the developer of the proposed project includes a 
managing general partner which is a nonprofit organization under 
chapter 317A and meets the requirements for a qualified 
nonprofit organization in section 42(h)(5) of the Internal 
Revenue Code; and 
    (iii) the proposed project involves participation by the 
Minnesota housing finance agency or a local unit of government 
in the financing of the acquisition or rehabilitation of the 
project.  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:  (1) statewide 
median income or (2) county or metropolitan statistical area 
median income, adjusted for household size as determined by the 
federal Department of Housing and Urban Development; and 
    (iii) the proposed project must be occupied by individuals 
or families whose incomes at the time of their initial residency 
in the project meet the requirements of section 42(g) of the 
Internal Revenue Code. 
    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 at least 75 percent of the units of 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 1.5 
persons per bedroom.  
    Sec. 5.  Minnesota Statutes 1992, section 474A.061, 
subdivision 2a, is amended 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 
474A.047.  After April 1, and through 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: 
    (i) the greater of agency house price limits or 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, 
1990 $95,000; or 
    (ii) for a new construction affordability initiative, the 
greater of 115 percent 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, 1990 $95,000. 
    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 
474A.048; and 
    (5) an application deposit equal to one percent of the 
requested allocation must be submitted with the city's 
application signed allocation agreement.  The agency shall 
submit the city's 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 through 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 the agreement and application deposit 
checks to the commissioner.  The agreement must specify the 
amounts allotted to each applicant.  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 after the first 
Monday in April and through the last Monday in July, but may 
request an allocation no later than the last Monday in July.  
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.  On and after the first Monday in April and 
through the last Monday in July, 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 on the first Tuesday after 
the first Monday in April. 
    (f) No city in an entitlement county may apply for or be 
allocated authority to issue bonds from the housing pool. 
    Sec. 6.  [1993 UNIFIED POOL MORTGAGE BOND ALLOCATIONS.] 
    Subdivision 1.  [APPLICATION.] Notwithstanding Minnesota 
Statutes, section 474A.091, if federal authorization for 
mortgage bonds is not effective on or before the last Monday in 
August 1993, this section applies to mortgage bonds allocated 
from the unified pool or the common pool authorized under 
subdivision 4 after the last Monday in August in calendar year 
1993.  Minnesota Statutes, section 474A.091, applies to mortgage 
bond allocations made under this section, except as otherwise 
provided in this section.  An entitlement issuer may not apply 
for an allocation for mortgage bonds under this section unless 
it has met the permanent issuance requirements specified in 
Minnesota Statutes, section 474A.091, subdivision 2.  The 
definitions in Minnesota Statutes, section 474A.02, apply to 
this section. 
    Subd. 2.  [SEPTEMBER 1993 ALLOCATION.] If federal 
authorization for mortgage bonds is effective after the last 
Monday in August and before the first Monday in October, other 
issuers and entitlement issuers other than the Minnesota housing 
finance agency may apply for an allocation for mortgage bonds 
from the unified pool on the first and second Monday following 
the federal effective date and the Minnesota housing finance 
agency may apply for an allocation from the unified pool on the 
third and fourth Monday following the federal effective date. 
    Subd. 3.  [OCTOBER 1993 ALLOCATION.] If federal 
authorization for mortgage bonds is effective on or after the 
first Monday in October and before the third Monday in October, 
other issuers and entitlement issuers other than the Minnesota 
housing finance agency may apply for an allocation for mortgage 
bonds from the unified pool on the first Monday following the 
federal effective date and the Minnesota housing finance agency 
may apply for an allocation from the unified pool on the second 
Monday following the federal effective date. 
    Subd. 4.  [COMMON POOL.] If federal authorization for 
mortgage bonds is effective on or after the third Monday in 
October and before the first Monday in December, the bonding 
authority in the unified pool is transferred to a common pool 
and is available for allocation for any purpose authorized under 
federal tax law on the first Monday following the federal 
effective date through the last Monday in November.  The maximum 
amount of allocation from the common pool to another issuer is 
$10,000,000.  The maximum amount of allocation from the common 
pool to an entitlement issuer is 20 percent of the entitlement 
issuer's entitlement allocation.  The reserve and priority 
requirements established under Minnesota Statutes, section 
474A.091, do not apply to allocations from the common pool. 
    Subd. 5.  [CARRYFORWARD.] If federal authorization for 
mortgage bonds is not effective before the first Monday in 
December, the commissioner of finance shall allocate bonding 
authority in the unified pool to the Minnesota housing finance 
agency on the first Monday in December.  If the amount of 
allocation is greater than $5,000,000, the difference between 
the amount allocated and $5,000,000 must be deducted from the 
agency's 1994 entitlement allocation and added to the housing 
pool on January 1, 1994. 
    Sec. 7.  [1993 MORTGAGE BOND RESERVATION.] 
    Subdivision 1.  [APPLICATION.] Notwithstanding Minnesota 
Statutes, sections 474A.061, subdivision 2a, and 474A.091, if 
federal authorization for mortgage bonds is not effective before 
the last Monday in July 1993, this section applies to mortgage 
bonds allocated as provided under a mortgage bond agreement 
entered with the Minnesota housing finance agency in 1993 or a 
subsequent agreement entered as provided under subdivision 3.  
Minnesota Statutes, section 474A.061, subdivision 2a, applies to 
mortgage bond allocations made under this section, except as 
otherwise provided in this section.  The definitions in 
Minnesota Statutes, section 474A.02, apply to this section. 
    Subd. 2.  [RESERVATION IN UNIFIED POOL.] If federal 
authorization for mortgage bonds is not effective before the 
last Monday in July, the amount of bonding authority allotted 
under the 1993 mortgage bond agreement is reserved within the 
unified pool for mortgage bonds to be issued as provided in the 
agreement submitted by the Minnesota housing finance agency to 
the commissioner of finance.  A city participating in the 
agreement must submit an application deposit to the Minnesota 
housing finance agency in an amount equal to one percent of the 
amount allotted under the agreement within ten days of the 
federal effective date.  A deposit submitted as provided under 
this subdivision meets the application deposit requirements 
specified in Minnesota Statutes, section 474A.061, subdivision 
2a. 
    Subd. 3.  [CARRYFORWARD OF RESERVATION.] If federal 
authorization for mortgage bonds is not effective before the 
first Monday in November, the amount reserved in the unified 
pool under subdivision 2 is allocated to the Minnesota housing 
finance agency on the first Monday in November.  The agency 
shall carry forward the allocation to issue mortgage bonds on 
behalf of cities who enter a mortgage bond agreement with the 
agency when federal authorization for mortgage bonds is 
effective. 
     Sec. 8.  [EFFECTIVE DATE.] 
    Sections 1 to 3, 5, and 7 are effective the day following 
final enactment.  Section 5 applies to mortgage bonds allocated 
on or after April 1, 1993. 
    Presented to the governor May 11, 1993 
    Signed by the governor May 14, 1993, 9:12 a.m.