Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1994, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 586-H.F.No. 2064
An act relating to housing; modifying programs of the
housing finance agency for low-income and tribal
housing and for accessibility loans; amending
Minnesota Statutes 1992, sections 462A.05, subdivision
14d, and by adding subdivisions; 462A.10, by adding a
subdivision; 462A.201, by adding a subdivision;
462A.21, by adding a subdivision; 462A.30, subdivision
9; and 462A.31, subdivision 4; Minnesota Statutes 1993
Supplement, sections 462A.07, subdivision 14;
462A.202, subdivision 7; and 462A.222, subdivision 3.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1992, section 462A.05,
subdivision 14d, is amended to read:
Subd. 14d. [ACCESSIBILITY LOAN PROGRAM.] Rehabilitation
loans authorized under subdivision 14 may be made to eligible
persons and families whose income does not exceed the maximum
income limits allowable under section 143(f) of the Internal
Revenue Code of 1986, as amended through June 30, 1991 without
limitations relating to the maximum incomes of the borrowers.
A person or family is eligible to receive an accessibility
loan under the following conditions:
(1) the borrower or a member of the borrower's family
requires a level of care provided in a hospital, skilled nursing
facility, or intermediate care facility for persons with mental
retardation or related conditions;
(2) home care is appropriate; and
(3) the improvement will enable the borrower or a member of
the borrower's family to reside in the housing.
Sec. 2. Minnesota Statutes 1992, section 462A.05, is
amended by adding a subdivision to read:
Subd. 14e. [PURCHASE-REHABILITATION LOANS.] The agency may
agree and enter into commitments to purchase, make, or otherwise
participate in making loans to persons or families, without
limitations relating to the maximum incomes of the borrowers,
for the purchase and rehabilitation of existing owner-occupied
residential housing, as provided under subdivision 14.
Sec. 3. Minnesota Statutes 1992, section 462A.05, is
amended by adding a subdivision to read:
Subd. 39. [EQUITY TAKE-OUT LOANS.] The agency may make
equity take-out loans to owners of section 8 project-based
rental property upon which the agency holds a first mortgage.
The owner must agree to participate in the section 8 program and
extend the low-income affordability restrictions on the housing
for the maximum term of the section 8 contract. The equity
take-out loan must be secured by a subordinate loan on the
property and may include additional appropriate security
determined necessary by the agency.
Sec. 4. Minnesota Statutes 1993 Supplement, section
462A.07, subdivision 14, is amended to read:
Subd. 14. [AMERICAN INDIANS.] (a) It may engage in housing
programs for low- and moderate-income American Indians developed
and administered separately or in combination by the Minnesota
Chippewa tribe, the Red Lake band of Chippewa Indians, and the
Sioux communities as determined by such tribe, band, or
communities. In furtherance of the policy of economic
integration stated in section 462A.02, subdivision 6, it may
engage in housing programs for American Indians who intend to
reside on reservations and who are not persons of low and
moderate income, provided that the aggregate dollar amount of
the loans for each lender's fiscal year shall not exceed an
amount equal to 25 percent of the total dollar amount of all
loans made by that lender during the lender's fiscal year at the
time of loan application. In developing such housing programs,
the tribe, band, or communities shall take into account the
housing needs of all American Indians residing both on and off
reservations within the state. A plan for each such program,
which specifically describes the program content, utilization of
funds, administration, operation, implementation and other
matter, as determined by the agency, must be submitted to the
agency for its review and approval prior to the making of
eligible loans pursuant to section 462A.21. All such programs
must conform to rules promulgated by the agency concerning
program administration, including but not limited to rules
concerning costs of administration; the quality of housing;
interest rates, fees, and charges in connection with making
eligible loans; and other matters determined by the agency to be
necessary in order to effectuate the purposes of this
subdivision and section 462A.21, subdivisions 4b and 4c. All
such programs must provide for a reasonable balance in the
distribution of funds appropriated for the purpose of this
section between American Indians residing on and off
reservations within the state. Nothing in this section shall
preclude such tribe, band, or communities from requesting and
receiving cooperation, advice, and assistance from the agency as
regards program development, operation, delivery, financing, or
administration. As a condition to the making of such eligible
loans, the Minnesota Chippewa tribe, the Red Lake band of
Chippewa Indians, and the Sioux communities shall:
(1) enter into a loan agreement and other contractual
arrangements with the agency for the purpose of transferring the
allocated portion of loan funds as set forth in section 462A.26
and to insure compliance with the provisions of this section and
this chapter; and
(2) agree that all of their official books and records
related to such housing programs shall be subjected to audit by
the legislative auditor in the manner prescribed for agencies of
state government.
The agency shall submit a biennial report concerning the
various housing programs for American Indians, and related
receipts and expenditures as provided in section 462A.22,
subdivision 9, and such tribe, band, or communities to the
extent that they administer such programs, shall be responsible
for any costs and expenses related to such administration
provided, however, they shall be eligible for payment for costs,
expenses, and services pursuant to subdivision 12 and section
462A.21. The agency may provide or cause to be provided
essential general technical services as set forth in subdivision
2, and general consultative project assistance services,
including, but not limited to, management training, and home
ownership counseling as set forth in subdivision 3. Members of
boards, committees, or other governing bodies of the tribe,
band, and communities administering the programs authorized by
this subdivision must be compensated for those services as
provided in section 15.0575. Rules promulgated under this
subdivision may be promulgated as emergency rules under chapter
14.
(b) The agency may engage in demonstration projects to
encourage the participation of financial institutions or other
leveraging sources in providing housing opportunities for
American Indians. The agency shall consult with the Minnesota
Chippewa tribe, the Red Lake band of Chippewa Indians, and the
Sioux communities in developing the demonstration projects. The
income limits specified in paragraph (a) do not apply to the
demonstration projects.
(c) The agency may make home improvement loans under this
subdivision without regard to household income.
Sec. 5. Minnesota Statutes 1992, section 462A.10, is
amended by adding a subdivision to read:
Subd. 10. [DEFERRAL OF ISSUANCE AND DELIVERY.] It may
provide that the agency may defer the issuance and delivery of
the bonds to the underwriters to a designated future date when
the proceeds of the bonds are required for one or more of the
purposes specified in section 462A.08.
Sec. 6. Minnesota Statutes 1992, section 462A.201, is
amended by adding a subdivision to read:
Subd. 7. [CAPACITY BUILDING GRANT SET-ASIDE.] Five percent
of the money credited to the housing trust fund account under
section 82.24, subdivision 8, may be used to make capacity
building grants as provided under section 462A.21, subdivision
3b.
Sec. 7. Minnesota Statutes 1993 Supplement, section
462A.202, subdivision 7, is amended to read:
Subd. 7. [RESTRICTIONS.] (a) Except as provided in
paragraphs (b), (c), (d), and (e), and (f), the city must own
the property financed with a loan under this section and use the
property for the purposes specified in this section:
(1) the city may sell the property at its fair market value
provided it repays the lesser of the net proceeds of the sale or
the amount of the loan balance to the agency for deposit in the
local government unit housing account; or
(2) the city may use the property for a different purpose
provided that the city repays the amount of the original loan.
If the city owns and uses the property for the purposes
specified in this section for a 20-year period, the agency shall
forgive the loan.
(b) In cases where the property consists of land only,
including land on which buildings acquired with a loan under
this section are demolished by the city, the city may lease the
property for a term not to exceed 99 years to a nonprofit
corporation organization to use for the purposes specified in
this section.
(c) In cases where the property consists of land and
buildings, the city may do the following:
(1) demolish the buildings in whole or in part and use or
lease the property under paragraph (b);
(2) sell the buildings to a nonprofit corporation
organization to use for the purposes specified in this section.
If sold, the city must sell the buildings for fair market value
and repay the proceeds of the sale to the agency for deposit in
the local government unit housing account;
(3) lease the buildings to a nonprofit corporation
organization to use for the purposes specified in this section.
If leased, except as provided in paragraph (d), the annual
rental must equal the amount of the loan attributable to the
cost of the buildings, divided by the number of years of useful
life of the buildings as determined in accordance with generally
accepted accounting principles. For purposes of determining the
required rental, the purchase price of land and buildings must
be allocated between them based on standard valuation
procedures; or
(4) contract with a nonprofit organization to manage the
property.
(d) A city may lease a building to a nonprofit organization
for a nominal amount under the following conditions:
(1) the lease does not exceed ten years;
(2) the city must have the option to cancel the lease with
or without cause at the end of any three-year period; and
(3) the city must determine annually that the property is
being used for the purposes specified in this section and that
the terms of the lease, including any income limits for
residents, are being met.
(e) A city may sell single-family residential housing
directly to persons and families of low and moderate income.
(f) A city may lease the buildings to a partnership
consisting of a nonprofit organization and a limited partner if
the nonprofit organization is the general partner and the
financing for the land trust project includes low-income housing
tax credits. All conditions for leasing buildings to a
nonprofit organization as provided under this subdivision apply
to the lease authorized under this paragraph.
Sec. 8. Minnesota Statutes 1992, section 462A.21, is
amended by adding a subdivision to read:
Subd. 21. [COMMUNITY REHABILITATION PROGRAM.] The agency
may spend money for the purposes of the community rehabilitation
program authorized under section 462A.206 and may pay the costs
and expenses necessary and incidental to the development and
operation of the program.
Sec. 9. Minnesota Statutes 1993 Supplement, 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 of
projects in which at least 75 percent of the total units are
single-room occupancy projects, efficiency, or one bedroom units
and which are affordable by households whose income does not
exceed 30 percent of the median income;
(ii) new construction or substantial rehabilitation family
housing projects that are not restricted to persons who are 55
years of age or older and 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. 10. Minnesota Statutes 1992, section 462A.30,
subdivision 9, is amended to read:
Subd. 9. [PERSONS AND FAMILIES OF LOW AND MODERATE
INCOME.] "Persons and families of low and moderate income" means
persons or families whose income does not exceed; (1) 80 percent
of the greater of (1) state median income, or (2) area or county
median income as determined by the department of housing and
urban development, or (2) the amount that qualifies the
organization for tax exempt status under United States Code,
title 26, section 501(c)(3), whichever is less.
Sec. 11. Minnesota Statutes 1992, section 462A.31,
subdivision 4, is amended to read:
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
acquisition, 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 acquisition, construction
, or renovation of housing on the land.
Sec. 12. [EFFECTIVE DATE.]
Sections 1 to 11 are effective the day following final
enactment.
Presented to the governor May 4, 1994
Signed by the governor May 6, 1994, 11:37 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes