Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1994, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 527-H.F.No. 3122
An act relating to public finance; changing procedures
for allocating bonding authority; amending Minnesota
Statutes 1992, sections 474A.02, subdivisions 8a, 13a,
and 23a; 474A.03, subdivision 1; 474A.04, subdivision
1a; 474A.061, subdivision 4; 474A.091, subdivisions 3
and 5; and 474A.131, subdivision 3, and by adding a
subdivision; Minnesota Statutes 1993 Supplement,
sections 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 474A.02,
subdivision 8a, is amended to read:
Subd. 8a. [HOUSING POOL.] "Housing pool" means the amount
of the annual volume cap allocated under section 474A.061 which
is available for mortgage credit certificates or the issuance of
residential rental project bonds or mortgage bonds.
Sec. 2. Minnesota Statutes 1992, section 474A.02,
subdivision 13a, is amended to read:
Subd. 13a. [SMALL ISSUE POOL.] "Small issue pool" means
the amount of the annual volume cap allocated under section
474A.061, that is available for the issuance of enterprise zone
facility bonds authorized under Public Law Number 103-66,
section 13301, small issue bonds to finance manufacturing
projects, and the agricultural development bond beginning farmer
and agricultural business enterprise loan program authorized in
sections 41C.01 to 41C.13.
Sec. 3. Minnesota Statutes 1992, section 474A.02,
subdivision 23a, is amended to read:
Subd. 23a. [QUALIFIED BONDS.] "Qualified bonds" means the
specific type or types of obligations that are subject to the
annual volume cap. Qualified bonds include the following types
of obligations as defined in federal tax law:
(a) "public facility bonds" means "exempt facility bonds"
as defined in federal tax law, except for residential rental
project bonds, which are those obligations issued to finance
airports, docks and wharves, mass commuting facilities,
facilities for the furnishing of water, sewage facilities, solid
waste disposal facilities, facilities for the local furnishing
of electric energy or gas, local district heating or cooling
facilities, and qualified hazardous waste facilities;
(b) "residential rental project bonds" which are those
obligations issued to finance qualified residential rental
projects;
(c) "mortgage bonds";
(d) "small issue bonds" issued to finance manufacturing
projects and the acquisition or improvement of agricultural real
or personal property under sections 41C.01 to 41C.13;
(e) "student loan bonds";
(f) "redevelopment bonds"; and
(g) "governmental bonds" with a nonqualified amount in
excess of $15,000,000 as set forth in section 141(b)5 of federal
tax law; and
(h) "enterprise zone facility bonds" issued to finance
facilities located within empowerment zones or enterprise
communities, as authorized under Public Law Number 103-66,
section 13301.
Sec. 4. Minnesota Statutes 1992, section 474A.03,
subdivision 1, is amended to read:
Subdivision 1. [ANNUAL VOLUME CAP UNDER FEDERAL TAX LAW;
POOL ALLOCATIONS.] At the beginning of each calendar year after
December 31, 1991, 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) $65,000,000 to the small issue pool;
(2) $46,000,000 to the housing pool;
(3) $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) (4), 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.
Sec. 5. Minnesota Statutes 1992, section 474A.04,
subdivision 1a, is amended to read:
Subd. 1a. [ENTITLEMENT RESERVATIONS; CARRYFORWARD;
DEDUCTION.] Except as provided in Laws 1987, chapter 268,
article 16, section 41, subdivision 2, paragraph (a), any amount
returned by an entitlement issuer before the last Monday in July
shall be reallocated through the housing pool. Any amount
returned on or after the last Monday in July shall be
reallocated through the unified pool. An amount returned after
the last Monday in November shall be reallocated to the
Minnesota housing finance agency. Except for the Minnesota
housing finance agency, any amount of bonding authority that an
entitlement issuer carries forward under federal tax law that is
not permanently issued or for which the governing body of the
entitlement issuer has not enacted a resolution electing to use
the authority for mortgage credit certificates by the end of the
succeeding calendar year shall be deducted from the entitlement
allocation for that entitlement issuer for the next succeeding
calendar year. Any amount deducted from an entitlement issuer's
allocation under this subdivision shall be divided equally for
allocation through the manufacturing pool and the housing pool.
Sec. 6. Minnesota Statutes 1993 Supplement, 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 sections 42(e)(2)
and 42(e)(3)(A) of the Internal Revenue Code;
(ii) 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. For purposes of this subdivision, "participation"
means an activity other than the issuance of the bonds; 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 1.5 persons per
bedroom.
Sec. 7. Minnesota Statutes 1993 Supplement, 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, the
first Monday in February, the first Monday in March, 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 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 federal price in the city for which the bonds are to be
sold limits for housing up to a maximum of $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 $95,000.
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 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" means county and 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 or may use bonding authority
for mortgage credit certificates 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 or
mortgage credit certificates 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 or use mortgage credit
certificates from the housing pool.
(g) A city that does not use at least 50 percent of their
allotment by April 15 and at least $200,000 of their allotment
in the calendar year in which the allotment is made available
under paragraph (b), may not apply to the housing pool for a
single-family mortgage bond or mortgage credit certificate
program allocation or receive an allotment under the housing
pool agreement in the succeeding calendar year.
Sec. 8. Minnesota Statutes 1992, 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 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 July, the
amount of allocation is canceled and returned 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 July, the
amount of allocation is canceled and returned 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 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 equal
to:
(1) one-half of the application deposit for the amount of
bonding authority returned within 30 days of receiving
allocation;
(2) one-fourth of the application deposit for the amount of
bonding authority returned between 31 and 60 days of receiving
allocation; and
(3) one-eighth of the application deposit for the amount of
bonding authority returned between 61 and 90 days of receiving
allocation.
(c) No refund shall be available for allocations returned
90 or more days after receiving the allocation. This
subdivision does not apply to the Minnesota housing finance
agency or the Minnesota rural finance authority.
(d) Notwithstanding paragraph (a), the commissioner shall
extend the 90-day allocation period for an additional 30 days if
the issuer applies for an extension and submits an amount equal
to one-quarter of one percent of the allocation with the
application for an allocation, provided that the 30 days does
not extend the allocation period beyond the last Monday in
November.
Sec. 9. Minnesota Statutes 1992, 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 August 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 September 1, allocations shall be awarded
from the unified pool in the following order of priority:
(1) applications for enterprise zone facility bonds;
(2) applications for small issue bonds;
(2) (3) applications for residential rental project bonds;
(3) (4) applications for public facility projects funded by
public facility bonds;
(4) (5) applications for redevelopment bonds;
(5) (6) applications for mortgage bonds; and
(6) (7) applications for governmental bonds.
Allocations for residential rental projects may only be
made during the first allocation in August. 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 474A.045.
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 474A.045 are only eligible to receive a proportionally
reduced share of the proposed authority, based upon the number
of points received. 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 474A.045 with those
projects receiving the greatest number of points receiving
allocation first.
(c)(1) On the first Monday in August, $5,000,000 of bonding
authority is reserved within the unified pool for agricultural
development bond loan projects of the Minnesota rural finance
authority and $20,000,000 of bonding authority or an amount
equal to the total annual amount of bonding authority allocated
to the small issue pool under section 474A.03, subdivision 1,
less the amount allocated to issuers from the small issue pool
for that year, whichever is less, is reserved within the unified
pool for small issue bonds. On the first Monday in September,
$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
manufacturing projects and agricultural development bond loan
projects, the remaining available bonding authority must be
distributed between the two reservations on a pro rata basis,
based upon the amounts each would have received if sufficient
authority was available.
(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.
An allocation for mortgage bonds may be used for mortgage
credit certificates.
After September 1, allocations shall be awarded from the
unified pool only for the following types of qualified bonds:
small issue bonds, public facility bonds to finance publicly
owned facility projects, and residential rental project
enterprise zone facility 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. 10. Minnesota Statutes 1992, 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 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 for reallocation
through the unified pool. If the issuer notifies the department
on or after the last Monday in November, the amount of
allocation is canceled and returned 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 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.
(c) 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, or the Minnesota rural finance authority.
(d) Notwithstanding paragraph (a), the commissioner shall
extend the 90-day allocation period for an additional 30 days if
the issuer applies for an extension and submits an amount equal
to one-quarter of one percent of the allocation with the
application for an allocation, provided that the 30 days does
not extend the allocation period beyond the last Monday in
November.
Sec. 11. Minnesota Statutes 1992, section 474A.131, is
amended by adding a subdivision to read:
Subd. 1a. [CERTIFICATE OF NOTICE.] If an allocation
received under this chapter is used for mortgage credit
certificates, a certificate notice must be submitted to the
department on forms provided by the department stating the date
of the filing of the election not to issue bonds as provided
under section 25, paragraph (c), of the Internal Revenue Code
and the amount of allocation authority to be used under the
program.
A mortgage credit certificate program for which a
certificate notice is not provided to the department within five
days of the date of the filing of the election not to issue
bonds is considered not to have received an allocation under
this law or under federal tax law. Within 30 days after receipt
of a certificate notice the department shall refund a portion of
the application deposit equal to one percent of the amount of
the bonding authority to be used for the mortgage credit
certificate program.
Sec. 12. Minnesota Statutes 1992, section 474A.131,
subdivision 3, is amended to read:
Subd. 3. [IRREVOCABLE ALLOCATION.] The department may not
revoke an allocation received under this chapter after receiving
a notice of issue or certificate notice from the issuer.
Sec. 13. [EFFECTIVE DATE.]
Sections 2, 3, 6, and 9, are effective the day following
final enactment.
Presented to the governor April 26, 1994
Signed by the governor April 28, 1994, 2:25 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes