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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