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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.

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Revisor of Statutes