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

                            CHAPTER 363-H.F.No. 3145 
                  An act relating to bond allocations; providing for 
                  certain applications, housing pool allocations, 
                  scoring systems, deadlines, procedures, the carrying 
                  forward of bond allocations, and the review of 
                  allocations and compliance monitoring; amending 
                  Minnesota Statutes 1996, sections 462A.223, by adding 
                  subdivisions; 474A.045; 474A.061, subdivisions 1, 2a, 
                  and 6; Minnesota Statutes 1997 Supplement, section 
                  474A.091, subdivisions 3 and 6; repealing Minnesota 
                  Statutes 1996, section 474A.061, subdivision 3. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 462A.223, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [SUBMISSION DEADLINES.] In order to assist the 
        Minnesota housing finance agency to comply with the reporting 
        requirements of section 42 of the Internal Revenue Code of 1986, 
        as amended, cities and counties to which low-income housing tax 
        credits are reserved under section 462A.222, subdivision 1, 
        shall submit required documents relating to compliance, 
        allocation or commitment, carryover, issuance, and audit or 
        review and shall return unused tax credits to the Minnesota 
        housing finance agency by the deadlines established in the 
        agency's qualified allocation plan.  Cities and counties to 
        which low-income housing tax credits are reserved under section 
        462A.222 that fail to meet the deadlines established by the 
        agency for the submission of required documents relating to 
        allocation or commitment, carryover, issuance, and allocation 
        reporting shall pay the fees established in the agency's 
        qualified allocation plan.  Pursuant to the qualified allocation 
        plan, the agency may waive fees imposed for failure to meet the 
        deadlines for submission of required documents. 
           Sec. 2.  Minnesota Statutes 1996, section 462A.223, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [REVIEW OF ALLOCATIONS, COMPLIANCE 
        MONITORING.] The agency may review the allocation and compliance 
        monitoring processes established by a city or county to which 
        low-income tax credits are reserved under section 462A.222, 
        subdivision 1, and may review documentation related to the 
        allocations made to and the compliance monitoring of projects 
        allocated credits from a city or county to which low-income tax 
        credits are reserved under section 462A.222, subdivision 1. 
           Sec. 3.  Minnesota Statutes 1996, section 474A.045, is 
        amended to read: 
           474A.045 [SCORING SYSTEM FOR MANUFACTURING PROJECTS.] 
           The following criteria must be used in determining the 
        allocation of small issue bonds for manufacturing projects.  The 
        issuer must prepare and submit to the commissioner a public 
        purpose scoring worksheet that presents the data and methods 
        used in determining the total score under this section.  The 
        total score is the sum of the following: 
           (1) the number of net direct new jobs in the state 
        generated by the proposed project for the next two years per 
        $100,000 of proposed allocation multiplied by 15; 
           (2) the number of direct jobs retained in the state due to 
        the proposed project per $100,000 of proposed allocation 
        multiplied by 15; 
           (3) the quotient of the total increase in net payroll 
        generated in the state by the proposed project divided by the 
        proposed bond allocation, multiplied by 100; 
           (4) the quotient of the estimated total net increase in 
        property taxes generated in the state by the project in the 
        first full year of operation divided by the proposed bond 
        allocation, multiplied by 500; and 
           (5) the seasonally unadjusted unemployment rate in the 
        community where the proposed project is located measured as a 
        percent of the state's unemployment rate, multiplied by ten. 
           The community seasonally unadjusted unemployment rate used 
        in determining the points under clause (5) must be the rate for 
        the county in which the proposed project is located unless an 
        accurate rate may be estimated for a smaller geographic area or 
        census tract.  The commissioner of economic security must 
        approve the rate used when an unemployment rate other than that 
        for a county is used. 
           If the manufacturing project will retain jobs and the total 
        score includes points calculated under clause (2), the issuer 
        must certify to the commissioner that the proceeds of the small 
        issue bonds are required to retain those jobs.  The commissioner 
        shall submit the information relating to the retaining of jobs 
        to the commissioner of trade and economic development.  The 
        commissioner of trade and economic development must verify that 
        the proceeds of the small issue bonds are required to retain the 
        jobs referred to in the certification prior to the awarding of 
        any points under this section. 
           Sec. 4.  Minnesota Statutes 1996, section 474A.061, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] (a) An issuer may apply for 
        an allocation under this section by submitting to the department 
        an application on forms provided by the department, accompanied 
        by (1) a preliminary resolution, (2) a statement of bond counsel 
        that the proposed issue of obligations requires an allocation 
        under this chapter, (3) the type of qualified bonds to be 
        issued, (4) an application deposit in the amount of one percent 
        of the requested allocation before the last Monday in July, or 
        in the amount of two percent of the requested allocation on or 
        after the last Monday in July, and (5) a public purpose scoring 
        worksheet for manufacturing project applications, and (6) a 
        statement from the applicant or bond counsel as to whether the 
        project preserves existing federally subsidized housing for 
        residential rental project applications.  The issuer must pay 
        the application deposit by a check made payable to the 
        department of finance.  The Minnesota housing finance agency, 
        the Minnesota rural finance authority, and the Minnesota higher 
        education services office may apply for and receive an 
        allocation under this section without submitting an application 
        deposit. 
           (b) An entitlement issuer may not apply for an allocation 
        from the housing pool or from the public facilities pool unless 
        it has either permanently issued bonds equal to the amount of 
        its entitlement allocation for the current year plus any amount 
        of bonding authority carried forward from previous years or 
        returned for reallocation all of its unused entitlement 
        allocation.  For purposes of this subdivision, its entitlement 
        allocation includes an amount obtained under section 474A.04, 
        subdivision 6.  This paragraph does not apply to an application 
        from the Minnesota housing finance agency for an allocation 
        under subdivision 2a for cities who choose to have the agency 
        issue bonds on their behalf. 
           (c) If an application is rejected under this section, 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 a certificate of 
        allocation. 
           Sec. 5.  Minnesota Statutes 1996, 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 and the 
        first Monday in February, 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 are not restricted to persons who are 55 
        years of age or older and that meet the eligibility criteria 
        under section 474A.047, except that allocations may be made to 
        projects that are restricted to persons who are 55 years of age 
        or older, if the project preserves existing federally subsidized 
        housing.  Projects that preserve existing federally subsidized 
        housing shall be allocated available bonding authority in the 
        housing pool for residential rental projects prior to the 
        allocation of available bonding authority to other eligible 
        residential rental projects.  If an issuer that receives an 
        allocation under this paragraph does not issue obligations equal 
        to all or a portion of the allocation received within 120 days 
        of the allocation or returns the allocation to the commissioner, 
        the amount of the allocation is canceled and returned for 
        reallocation through the housing pool. 
           (b) After February 1, and through February 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 federal 
        price 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.; 
           (iii) for new construction housing affordability 
        initiatives located in the metropolitan area, as defined by 
        section 473.121, subdivision 2, the lesser of the federal price 
        limits or the amount determined by the metropolitan council as 
        the maximum affordable house price under the Metropolitan 
        Livable Communities Act.  New construction housing affordability 
        initiatives in the metropolitan area must meet one or more of 
        the following criteria:  
           (A) the initiative provides financial resources unrelated 
        to the costs of completion of the mortgage revenue bond sale to 
        reduce the cost of the housing or to improve the terms of the 
        mortgage loans provided through the bond sale.  A financial 
        contribution must be equal to or exceeding ten percent of the 
        purchase price of each newly constructed home to be financed; 
           (B) the initiative provides that the local unit of 
        government in the jurisdiction in which the housing is to be 
        constructed takes affirmative steps to change local regulations 
        in order to improve housing affordability.  The steps must 
        demonstrably reduce the cost of the housing by at least ten 
        percent.  The financial contribution and the affirmative steps 
        to change regulation may be combined to meet the ten percent 
        requirement; or 
           (C) the initiative supports the efforts of housing groups 
        that support self-help or owner-built housing initiatives in 
        which at least 15 percent of the labor or materials or both 
        needed to complete the new housing is acquired or donated 
        through the efforts of such groups; or 
           (iv) for a community revitalization initiative for existing 
        housing in the metropolitan area, as defined by section 473.121, 
        subdivision 2, the federal price limits for existing housing, 
        provided the community revitalization initiative meets the 
        following criteria:  
           (A) the community revitalization initiative is targeted to 
        a specific geographic area within the community which is less 
        than the entire community; 
           (B) the community revitalization initiative is located in a 
        community in which the most recently available data establishes 
        that the median purchase price for an existing home in the 
        community exceeds the agency house price limits; and 
           (C) the community revitalization initiative provides 
        financial resources unrelated to the costs of completion of the 
        mortgage revenue bond sale to reduce the cost of the housing or 
        to improve the terms of the mortgage loans provided through the 
        bond sale.  A financial contribution must be equal to or 
        exceeding ten percent of the purchase price of each existing 
        home to be financed.  
           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; and 
           (4) an application deposit equal to one percent of the 
        requested allocation must be submitted before the agency 
        forwards the list specifying the amounts allocated to the 
        commissioner under paragraph (c).  The agency shall submit the 
        city's application and application deposit to the commissioner 
        when requesting an allocation from the housing pool. 
           Applications by a consortium shall include the name of each 
        member of the consortium and the amount of allocation requested 
        by each member. 
           The Minnesota housing finance agency may accept 
        applications from June 15 through June 30 from cities for 
        single-family housing programs which meet program requirements 
        specified under clauses (1) to (4) if bonding authority is 
        available in the housing pool.  Applications will be accepted 
        from June 15 to June 30 only from cities that received an 
        allotment in the same calendar year and used at least 75 percent 
        of their allotment by June 1.  Allocations will be made loan by 
        loan, on a first come, first served basis among applicant 
        cities.  The agency must allot available bonding authority.  For 
        purposes of paragraphs (a) to (g), "city" means a county or a 
        consortium of local government units that agree through a joint 
        powers agreement to apply together for single-family housing 
        programs, and has the meaning given it in section 462C.02, 
        subdivision 6.  "Agency" means the Minnesota housing finance 
        agency.  
           (c) The total amount of allocation for mortgage bonds for 
        one city is limited to the lesser of:  (i) the amount requested, 
        or (ii) the product of the total amount available for mortgage 
        bonds from the housing pool, multiplied by the ratio of each 
        applicant's population as determined by the most recent estimate 
        of the city's population released by the state demographer's 
        office to the total of all the applicants' population, except 
        that each applicant shall be allocated a minimum of $100,000 
        regardless of the amount requested or the amount determined 
        under the formula in clause (ii).  If a city applying for an 
        allocation is located within a county that has also applied for 
        an allocation, the city's population will be deducted from the 
        county's population in calculating the amount of allocations 
        under this paragraph. 
           Upon determining the amount of each applicant's allocation, 
        the agency shall forward a list specifying the amounts allotted 
        to each application and application deposit checks to the 
        commissioner. 
           (d) 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 February 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 (b), clause (4), but was not 
        part of the list forwarded to the commissioner under paragraph 
        (c). 
           (e) 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 list forwarded by the Minnesota housing 
        finance agency to the commissioner.  No city may request or 
        receive an allocation from the commissioner until the list under 
        paragraph (c) has been forwarded to the commissioner.  A city 
        must request an allocation from the commissioner no later than 
        14 days before the unified pool is created pursuant to section 
        474A.091, subdivision 1.  On and after the first Monday in 
        February 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.  
           If a city issues mortgage bonds from an allocation received 
        under this paragraph, 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. 
           (f) No entitlement city or county or 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 the date applications are due for the first 
        allocation that is made from the housing pool for single-family 
        housing programs in the immediately succeeding calendar year may 
        not apply to the housing pool for a single-family mortgage bond 
        or mortgage credit certificate program allocation or receive an 
        allotment from the housing pool in the succeeding two calendar 
        years.  Each local government unit in a consortium must meet the 
        requirements of this paragraph. 
           Sec. 6.  Minnesota Statutes 1996, section 474A.061, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DEADLINE FOR ISSUANCE OF SMALL ISSUE QUALIFIED 
        BONDS.] If an issuer fails to notify the department before the 
        last Monday in December of issuance of obligations pursuant to 
        an allocation received for a small issue any qualified bond 
        project, the allocation is canceled and the bonding authority is 
        allocated to the department of finance for reallocation under 
        section 474A.091, subdivision 6. 
           Sec. 7.  Minnesota Statutes 1997 Supplement, 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 for manufacturing 
        projects; 
           (3) applications for small issue bonds for agricultural 
        development bond loan projects; 
           (4) applications for residential rental project bonds; 
           (4) (5) applications for public facility projects funded by 
        public facility bonds; 
           (5) (6) applications for redevelopment bonds; 
           (6) (7) applications for mortgage bonds; and 
           (7) (8) 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) From the first Monday in August 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.  
           (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. 8.  Minnesota Statutes 1997 Supplement, 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 shall be carried 
        forward into the next calendar year by the Minnesota housing 
        finance agency in accordance with section 474A.131, subdivision 
        2. 
           Sec. 9.  [REPEALER.] 
           Minnesota Statutes 1996, section 474A.061, subdivision 3, 
        is repealed. 
           Presented to the governor April 3, 1998 
           Signed by the governor April 6, 1998, 3:05 p.m.

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Revisor of Statutes