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Office of the Revisor of Statutes

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.