2006 Minnesota Statutes

474A.047 RESIDENTIAL RENTAL BONDS; LIMITATIONS.
    Subdivision 1. Eligibility. (a) An issuer may only use the proceeds from residential rental
bonds if the proposed project meets the following requirements:
(1) the proposed residential rental project meets the requirements of section 142(d) of the
Internal Revenue Code regarding the incomes of the occupants of the housing; and
(2) the maximum rent for at least 20 percent of the units in the proposed residential rental
project do not exceed the area fair market rent or exception fair market rents for existing housing,
if applicable, as established by the federal Department of Housing and Urban Development.
(b) 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.
    Subd. 2. 15-year agreement. Prior to the issuance of residential rental bonds, the developer
of the project for which the bond proceeds will be used must enter into a 15-year agreement
with the issuer that specifies the maximum rental rates of the rent-restricted units in the project
and the income levels of the residents of the project occupying income-restricted units. Such
rental rates and income levels must be within the limitations established under subdivision 1.
The developer must annually certify to the issuer over the term of the agreement that the rental
rates for the rent-restricted units are within the limitations under subdivision 1. The issuer may
request individual certification of the income of residents of the income-restricted units. The
commissioner may request from the issuer a copy of the annual certification prepared by the
developer. The commissioner may require the issuer to request individual certification of all
residents of the income-restricted units.
    Subd. 3. Penalty. The issuer shall monitor project compliance with the rental rate and
income level requirements under subdivision 1. The issuer may issue an order of noncompliance
if a project is found by the issuer to be out of compliance with the rental rate or income level
requirements under subdivision 1. The owner or owners of the project shall pay a penalty to the
issuer equal to one-half of one percent of the total amount of bonds issued for the project under
this chapter if the issuer issues an order of noncompliance. For each additional year a project is out
of compliance, the annual penalty must be increased by one-half of one percent of the total amount
of bonds issued under this chapter for the project. The issuer may waive insubstantial violations.
History: 1990 c 552 s 7; 1991 c 346 s 13,14; 1992 c 545 art 1 s 5; 1993 c 164 s 4; 1994 c
527 s 6; 1997 c 169 s 4; 2000 c 493 s 15; 2001 c 214 s 24,25