Office of the Revisor of Statutes
Minnesota Session Laws - 1999, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 189-H.F.No. 1024
An act relating to tax-exempt bond allocations;
providing for certain eligibility, scoring system,
income and purchase price limits, and reservation of
authority; amending Minnesota Statutes 1998, sections
474A.02, subdivision 23a; 474A.045; 474A.061,
subdivisions 2a, 2b, and 4; and 474A.091, subdivision
5.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1998, 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. New bonds
and other obligations are ineligible to receive state
allocations or entitlement authority for public facility
projects under this section if they have been issued:
(1) for the purpose of refinancing, refunding, or otherwise
defeasing existing debt; and
(2) more than one calendar year prior to the date of
application;
(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";
(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. 2. Minnesota Statutes 1998, 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 existing jobs retained in the
state multiplied by .625 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 the average hourly
wage paid to employees by the proposed project, exclusive of
benefits mandated by law, based on the following scale:
Wages paid per hour $8 $10 $12 $15
Non-Metro area points awarded 10 15 20 20
Seven-County Metro Area
points awarded 0 10 15 20
For purposes of this section, the seven-county metropolitan
area includes Anoka, Carver, Dakota, Hennepin, Ramsey, Scott,
and Washington;
(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 most
recent rate for the city or 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, as
provided by the commissioner of economic security.
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. 3. Minnesota Statutes 1998, 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
greater of statewide or area median income as published by the
Department of Housing and Urban Development, adjusted for
household size;
(3) house price limits may not exceed: the federal price
limits established for mortgage revenue bond programs;
(i) the greater of agency house price limits or the federal
price limits for housing up to a maximum of $95,000;
(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 on the home purchase price amount, mortgage amount,
income, household size, and race of the households served in the
previous year's single-family housing program, if any, must be
included in each application; 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
its 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 that exceeds
the amount of its allotment for the preceding year that was used
by the city in the immediately preceding year or receive an
allotment from the housing pool in the succeeding two
calendar years year that exceeds the amount of its allotment for
the preceding year that was used in the preceding year. The
minimum allotment is $100,000, regardless of the amount used in
the preceding calendar year. Each local government unit in a
consortium must meet the requirements of this paragraph.
Sec. 4. Minnesota Statutes 1998, 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
commissioner shall reserve $10,000,000 until the day after the
last Monday in February, $10,000,000 until the day after the
last Monday in April, and $10,000,000 until the day after the
last Monday in June in the small issue pool for manufacturing
projects. 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. 5. Minnesota Statutes 1998, 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 120 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 120-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 120-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. To encourage a competitive
application process, the commissioner shall reserve, for new
applications, the amount of allocation that is canceled and
returned for reallocation under this section for a minimum of
seven calendar days.
(b) An issuer that returns for reallocation all or a
portion of an allocation received under this section within 120
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 120 days of receiving
allocation.
(c) No refund shall be available for allocations returned
120 or more days after receiving the allocation or beyond the
last Monday in November. This subdivision does not apply to the
Minnesota housing finance agency or the Minnesota rural finance
authority.
Sec. 6. Minnesota Statutes 1998, 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 120 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
120-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. To
encourage a competitive application process, the commissioner
shall reserve, for new applications, the amount of allocation
that is canceled and returned for reallocation under this
section for a minimum of seven calendar days.
(b) An issuer that returns for reallocation all or a
portion of an allocation received under this section within 120
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 120 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.
Sec. 7. [WAIVER OF PENALTY PERIOD.]
Notwithstanding Minnesota Statutes, section 474A.061,
subdivision 2a, paragraph (g), a city may apply to the housing
pool for a single-family mortgage bond or mortgage credit
certificate allocation or receive an allotment from the housing
pool in 2000, if the city received an allotment of bonding
authority from the housing pool in 1998 and used 50 percent or
less of its allotment by January 31, 1999. This section applies
to each local government unit in a consortium which received an
allotment from the housing pool in 1998.
Sec. 8. [EFFECTIVE DATE.]
Section 3 is effective the day after final enactment and
applies to loans made after the effective date.
Presented to the governor May 18, 1999
Signed by the governor May 21, 1999, 10:15 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes