Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 169-S.F.No. 1697 
                  An act relating to public finance; updating and 
                  clarifying bond allocation provisions; amending 
                  Minnesota Statutes 1996, sections 474A.03, 
                  subdivisions 1 and 2a; 474A.04, subdivision 1a; 
                  474A.047, subdivision 1; 474A.061, subdivision 2b; 
                  474A.091, subdivisions 3 and 6; and 474A.131, 
                  subdivisions 1 and 1a. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 474A.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [UNDER FEDERAL TAX LAW; ALLOCATIONS.] At 
        the beginning of each calendar year after December 31, 1991 
        1997, 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) $55,000,000 $63,000,000 to the small issue pool; 
           (2) $56,000,000 $59,000,000 to the housing pool, 
        $37,000,000 of which is reserved until the day after the first 
        Monday in February for single-family housing programs; 
           (3) $10,000,000 $10,500,000 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 (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. 2.  Minnesota Statutes 1996, section 474A.03, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [ENTITLEMENT ISSUER ALLOCATION.] (a) The 
        commissioner shall make the following allocation to the 
        Minnesota housing finance agency and the following cities and 
        county:  
           (1) $51,000,000 $53,750,000 per year to the Minnesota 
        housing finance agency, less any amount received in the previous 
        year under section 474A.091, subdivision 6; 
           (2) $20,000,000 $21,000,000 per year to the city of 
        Minneapolis; 
           (3) $15,000,000 $15,750,000 per year to the city of Saint 
        Paul; and 
           (4) $10,000,000 $10,500,000 per year to the Dakota county 
        housing and redevelopment authority for the county of Dakota and 
        all political subdivisions located within the county. 
           (b) Allocations provided under this subdivision must be 
        used for mortgage bonds, mortgage credit certificates, public 
        facility bonds, or residential rental project bonds, except that 
        entitlement cities issuers may also use their allocations for 
        public facility bonds, and may carry forward their allocations 
        for any qualified bond as defined under section 474A.02, 
        subdivision 23a. 
           Sec. 3.  Minnesota Statutes 1996, 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 
        15 shall be reallocated through the housing pool.  Any amount 
        returned on or after the last Monday in July 15 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 July 15 of the 
        end of the succeeding calendar year shall be deducted from the 
        entitlement allocation for that entitlement issuer for the next 
        succeeding current calendar year.  Any amount deducted from an 
        entitlement issuer's allocation under this subdivision shall 
        be divided equally for allocation reallocated through the 
        manufacturing pool and the housing unified pool.  An entitlement 
        issuer must permanently issue all carryforward authority or 
        enact a resolution electing to use all carryforward authority 
        for mortgage credit certificates prior to issuing any current 
        year authority of that entitlement issuer. 
           Sec. 4.  Minnesota Statutes 1996, section 474A.047, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ELIGIBILITY.] (a) An issuer may only use 
        the proceeds from residential rental bonds if the proposed 
        project meets one of the following: 
           (a) (1) 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) (2) 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) (3) 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 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. 
           (b) The maximum rent for a proposed single room occupancy 
        unit under paragraph (a), clause (1), 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) (a), clause (2), 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. 
           (c) The proceeds from residential rental bonds may be used 
        for a project for which project-based federal rental assistance 
        payments are made only if: 
           (1) the owner of the project enters into a binding 
        agreement with the Minnesota housing finance agency under which 
        the owner is obligated to extend any existing low-income 
        affordability restrictions and any contract or agreement for 
        rental assistance payments for the maximum term permitted, 
        including any renewals thereof; and 
           (2) the Minnesota housing finance agency certifies that 
        project reserves will be maintained at closing of the bond issue 
        and budgeted in future years at the lesser of: 
           (i) the level described in Minnesota Rules, part 4900.0010, 
        subpart 7, item A, subitem (2), effective May 1, 1997; or 
           (ii) the level of project reserves available prior to the 
        bond issue, provided that additional money is available to 
        accomplish repairs and replacements needed at the time of bond 
        issue. 
           Sec. 5.  Minnesota Statutes 1996, section 474A.061, 
        subdivision 2b, is amended to read: 
           Subd. 2b.  [SMALL ISSUE POOL ALLOCATION.] On the first 
        Monday in January that is a business day through the last Monday 
        in July, the commissioner shall allocate available bonding 
        authority from the small issue pool on Monday of each week to 
        applications received on or before the Monday of the preceding 
        week.  From the first Monday in January that is a business day 
        through the last Monday in July, the commissioner shall reserve 
        $5,000,000 of the available bonding authority from the small 
        issue pool for applications for agricultural development bond 
        loan projects of the Minnesota rural finance authority.  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 projects that receive 50 points or 
        more are eligible for all of the proposed allocation.  Proposed 
        projects that receive less than 50 points are 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 small issue pool and there is insufficient 
        bonding authority to provide allocations for all projects in any 
        one week, 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.  If two or more applications 
        receive an equal number of points, available bonding authority 
        shall be awarded by lot unless otherwise agreed to by the 
        respective issuers. 
           Sec. 6.  Minnesota Statutes 1996, 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; 
           (3) applications for residential rental project bonds; 
           (4) applications for public facility projects funded by 
        public facility bonds; 
           (5) applications for redevelopment bonds; 
           (6) applications for mortgage bonds; and 
           (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.  If two or more applications receive an equal 
        amount of points, available bonding authority shall be awarded 
        by lot unless otherwise agreed to by the respective issuers. 
           (c)(1) On From 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 through the last Monday in 
        November, $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 to the extent such amounts are available 
        within the unified pool.  On the first Monday in September 
        through the last Monday in November, $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 to the extent such amounts are available within the 
        unified pool.  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. 
           (d) 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, residential rental project bonds, and 
        enterprise zone facility bonds. 
           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. 7.  Minnesota Statutes 1996, section 474A.091, 
        subdivision 6, is amended to read: 
           Subd. 6.  [FINAL ALLOCATION; CARRYFORWARD.] Any bonding 
        authority remaining unissued by the Minnesota housing finance 
        agency after the last Monday in December is allocated to the 
        department of finance for reallocation for qualified bonds 
        eligible to be carried forward under federal tax law shall be 
        carried forward into the next calendar year by the Minnesota 
        housing finance agency. 
           Sec. 8.  Minnesota Statutes 1996, section 474A.131, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTICE OF ISSUE.] Each issuer that issues 
        bonds with an allocation received under this chapter shall 
        provide a notice of issue to the department on forms provided by 
        the department stating: 
           (1) the date of issuance of the bonds; 
           (2) the title of the issue; 
           (3) the principal amount of the bonds; 
           (4) the type of qualified bonds under federal tax law; and 
           (5) the dollar amount of the bonds issued that were subject 
        to the annual volume cap.  
           For obligations that are issued as a part of a series of 
        obligations, a notice must be provided for each series.  A 
        penalty of one-half of the amount of the application deposit not 
        to exceed $5,000 shall apply to any issue of obligations for 
        which a notice of issue is not provided to the department within 
        five business days after issuance or before the last Monday in 
        December, whichever occurs first, is deemed not to have received 
        an allocation under this law or under federal tax law.  Within 
        30 days after receipt of a notice of issue the department shall 
        refund a portion of the application deposit equal to one percent 
        of the amount of the bonding authority actually issued if a one 
        percent application deposit was made, or equal to two percent of 
        the amount of the bonding authority actually issued if a two 
        percent application deposit was made, less any penalty amount. 
           Sec. 9.  Minnesota Statutes 1996, section 474A.131, 
        subdivision 1a, is amended 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 penalty of one-half of the amount of the application 
        deposit not to exceed $5,000 shall apply to any 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 or before the last 
        Monday in December, whichever occurs first, 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, less any 
        penalty amount. 
           Presented to the governor May 16, 1997 
           Signed by the governor May 19, 1997, 1:04 p.m.

Official Publication of the State of Minnesota Revisor of Statutes