Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 167-S.F.No. 1543
An act relating to public finance; changing procedures
for allocating bonding authority; changing provisions
relating to housing programs and plans; amending
Minnesota Statutes 1994, sections 462C.01; 462C.02,
subdivision 3; 462C.04, subdivisions 2 and 3;
462C.071, subdivision 2; 474A.03, subdivisions 1 and
4; 474A.061, subdivisions 2a, 2c, 4, and 6; 474A.091,
subdivisions 3 and 5; and 474A.131, subdivision 2;
repealing Minnesota Statutes 1994, sections 462C.02,
subdivision 2; 462C.03, subdivisions 1 and 5; and
462C.04, subdivision 1.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1994, section 462C.01, is
amended to read:
462C.01 [AUTHORIZATION.]
A city may develop and administer programs of (1) making or
purchasing mortgage or rehabilitation loans pursuant to section
462C.03 to finance the acquisition or rehabilitation of single
family housing by low and moderate income persons and families
anywhere within its boundaries, or (2) making or purchasing
loans pursuant to section 462C.05 to finance multifamily housing
developments or the rehabilitation of multifamily housing
developments upon the following conditions:
(a) The city develops a housing plan as required by section
462C.03;
(b) A public hearing is held thereon after one publication
of notice in a newspaper circulating generally in the city, at
least 30 days before the hearing, after which the plan may be
adopted by resolution of the governing body with or without
amendment;
(c) The plan is submitted for review pursuant to section
462C.04, subdivision 1; and
(d) Each if the program provided for in the plan is
submitted for review pursuant to section 462C.04, subdivision 2.
Sec. 2. Minnesota Statutes 1994, section 462C.02,
subdivision 3, is amended to read:
Subd. 3. "Program" means an individual component of the a
city's overall program for housing plan for which one or more
issues of revenue bonds or obligations is proposed.
Sec. 3. Minnesota Statutes 1994, section 462C.04,
subdivision 2, is amended to read:
Subd. 2. [PROGRAM REVIEW.] A public hearing shall be held
on each program after one publication of notice in a newspaper
circulating generally in the city, at least 15 days before the
hearing. On or before the day on which notice of the public
hearing is published, the city shall submit the program to the
metropolitan council, if the city is located in the metropolitan
area as defined in section 473.121, subdivision 2, or to the
regional development commission for the area in which the city
is located, if any, for review and comment. The appropriate
reviewing agency shall comment on:
(a) whether the program is consistent with the housing plan
of the city; and
(b) whether the program furthers local and regional housing
policies and is consistent with the metropolitan development
guide, if the city is located in the metropolitan area, or
adopted policies of the regional development commission; and
(b) the compatability of the program with the housing
portion of the comprehensive plan of the city, if any.
Review of the program may be conducted either by the board
of the reviewing agency or by the staff of the agency. Any
comment submitted by the reviewing agency to the city must be
presented to the body considering the proposed program at the
public hearing held on the program.
A member or employee of the reviewing agency shall be
permitted to present the comments of the reviewing agency at the
public hearing. After conducting the public hearing, the
program may be adopted with or without amendment, provided that
any amendments must not be inconsistent with the comments, if
any, of the reviewing agency and must not contain any material
changes from the program submitted to the reviewing agency other
than changes in the financial aspects of any proposed issue of
bonds or obligations. If any material change other than a
change in the financial aspects of a proposed issue of bonds or
obligations, or any change which is inconsistent with the
comments of the reviewing agency is adopted, the amended program
shall be resubmitted to the appropriate reviewing agency for
review and comment, and a public hearing shall be held on the
amended program after one publication of notice in a newspaper
circulating generally in the city at least 15 days before the
hearing. The amended program shall be considered after the
public hearing in the same manner as consideration of the
initial program.
Sec. 4. Minnesota Statutes 1994, section 462C.04,
subdivision 3, is amended to read:
Subd. 3. [CITY REPORT.] Within 30 days after the bonds are
issued for a housing program, the city shall submit a report to
the Minnesota housing finance agency, the metropolitan council
if the city is located within the metropolitan area as defined
in section 473.121, subdivision 2, or the appropriate regional
development commission. The report must include a program
description, the amount of bonds issued, the income limits, and
the rent levels.
Sec. 5. Minnesota Statutes 1994, section 462C.071,
subdivision 2, is amended to read:
Subd. 2. [LIMITATION; ORIGINATION PERIOD.] During the
first ten months of an origination period, a city may make loans
financed with proceeds of mortgage bonds for the purchase of
existing housing. Loans financed with the proceeds of mortgage
bonds for new housing in the metropolitan area may be made
during the first ten months of an origination period only if at
least one of the following conditions is met:
(1) the new housing is located in a redevelopment area;
(2) the new housing is replacing a structurally substandard
structure or structures;
(3) the new housing is located on a parcel purchased by the
city or conveyed to the city under section 282.01, subdivision
1; or
(4) the new housing is part of a housing affordability
initiative, other than those financed with the proceeds from the
sale of bonds, in which federal, state, or local assistance is
used to substantially improve the terms of the financing or to
substantially write down the purchase price of the new housing;
or
(5) the new housing is located in a city that has entered
into a housing affordability agreement with the metropolitan
council.
Upon expiration of the first ten-month period, a city may
make loans financed with the proceeds of mortgage bonds for the
purchase of new and existing housing.
Sec. 6. Minnesota Statutes 1994, section 474A.03,
subdivision 1, is amended to read:
Subdivision 1. [ANNUAL VOLUME CAP UNDER FEDERAL TAX LAW;
POOL ALLOCATIONS.] At the beginning of each calendar year after
December 31, 1991, 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) $65,000,000 $55,000,000 to the small issue pool;
(2) $46,000,000 $56,000,000 to the housing pool,
$37,000,000 of which is reserved until the day after the first
Monday in February for single-family housing program;
(3) $10,000,000 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. 7. Minnesota Statutes 1994, section 474A.03,
subdivision 4, is amended to read:
Subd. 4. [APPLICATION FEE.] Every entitlement issuer and
other issuer shall pay to the commissioner a nonrefundable
application fee to offset the state cost of program
administration. The application fee is $20 for each $100,000 of
entitlement or allocation requested, with the request rounded to
the nearest $100,000. The minimum fee is $20. Fees received by
the commissioner must be credited to the general
fund. Application fees for projects of entitlement issuers must
be submitted to the commissioner with the notice of issuance of
bonds, notice of use of mortgage credit certificates, and notice
of carry forward.
Sec. 8. Minnesota Statutes 1994, 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 first Monday in March, and the
first Monday in April, 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. 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 April February 1, and through April 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.
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;
(4) the housing program meets the requirements of section
474A.048; and
(5) an application deposit equal to one percent of the
requested allocation must be submitted with the city's signed
allocation agreement. 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 July 1 June 15 through July 15 June 30 from
cities for single-family housing programs which meet program
requirements specified under clauses (1) to (5) if bonding
authority is available in the housing pool. The agency and a
representative for each applicant shall negotiate the terms of
an agreement regarding the allocation of available authority
among the applicants. The agreement agency must allot available
bonding authority among the applicants. For purposes of
paragraphs (a) to (d), "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,
and. "Agency" means the Minnesota housing finance agency.
(b) Upon reaching agreement with participating cities, the
agency shall forward the agreement and application deposit
checks to the commissioner. The agreement must specify the
amounts allotted to each applicant.
(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 April 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 (a), clause (5), but
was not part of the agreement forwarded to the commissioner
under this 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 agreement forwarded by the Minnesota
housing finance agency to the commissioner. No city may request
or receive an allocation from the commissioner until the
agreement list under paragraph (b) (c) has been forwarded to the
commissioner. On and after the first Monday in April 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.
(d) If a city issues mortgage bonds from an allocation
received under paragraph (c) (d), 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.
(e) The total amount of allocation for mortgage bonds or
mortgage credit certificates for one city is limited to the
lesser of (i) $4,000,000 or (ii) 20 percent of the total amount
available for allocation for mortgage bonds from the housing
pool on the first Tuesday after the first Monday in April.
(f) No 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 April 15 and at least $200,000 of their allotment
in the calendar year in which the allotment is made available
under paragraph (b), 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 under from the housing pool agreement in the
succeeding two calendar year years. Each local government unit
in a consortium must meet the requirements of this paragraph.
Sec. 9. Minnesota Statutes 1994, section 474A.061,
subdivision 2c, is amended to read:
Subd. 2c. [PUBLIC FACILITIES POOL ALLOCATION.] From the
beginning of the calendar year and continuing for a period of
120 days, the commissioner shall reserve $5,000,000 of the
available bonding authority from the public facilities pool for
applications for public facilities projects to be financed by
the Western Lake Superior Sanitary District. From the beginning
of the calendar year through the last Monday in July, the
commissioner shall allocate available bonding authority from the
public facilities pool on Monday of each week to applications
for eligible public facilities projects received on or before
the Monday of the preceding week. If there are two or more
applications for public facilities projects from the pool and
there is insufficient available bonding authority to provide
allocations for all projects in any one week, the available
bonding authority shall be awarded by lot unless otherwise
agreed to by the respective issuers.
Sec. 10. Minnesota Statutes 1994, 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 90 120 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 90-day 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 90-day
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.
(b) An issuer that returns for reallocation all or a
portion of an allocation received under this section within 90
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 90 120 days of
receiving allocation.
(c) No refund shall be available for allocations returned
90 120 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.
(d) Notwithstanding paragraph (a), the commissioner shall
extend the 90-day allocation period for an additional 30 days if
the issuer applies for an extension and submits an amount equal
to one-quarter of one percent of the allocation with the
application for an allocation, provided that the 30 days does
not extend the allocation period beyond the last Monday in
November.
Sec. 11. Minnesota Statutes 1994, section 474A.061,
subdivision 6, is amended to read:
Subd. 6. [DEADLINE FOR ISSUANCE OF SMALL ISSUE 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 manufacturing small issue 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. 12. Minnesota Statutes 1994, 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
mortgage bonds;
(4) applications for public facility projects funded by
public facility bonds;
(5) applications for redevelopment bonds;
(6) applications for mortgage bonds residential rental
project 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.
(c)(1) On 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 $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. On the first Monday in September,
$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. 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.
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, and enterprise zone facility bonds.
(d) 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. 13. Minnesota Statutes 1994, 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 90 120 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 90-day
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.
(b) An issuer that returns for reallocation all or a
portion of an allocation received under this section within 90
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 90 120 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.
(d) Notwithstanding paragraph (a), the commissioner shall
extend the 90-day allocation period for an additional 30 days if
the issuer applies for an extension and submits an amount equal
to one-quarter of one percent of the allocation with the
application for an allocation, provided that the 30 days does
not extend the allocation period beyond the last Monday in
November.
Sec. 14. Minnesota Statutes 1994, section 474A.131,
subdivision 2, is amended to read:
Subd. 2. [CARRYFORWARD NOTICE.] If an issuer intends to
carry forward an allocation received under this chapter, it must
notify the department in writing before the last Monday of
December. If the written notice of carryforward is not provided
within the time required, one-quarter of the amount of the
application deposit eligible for refund upon filing of the
notice of issue under this section is forfeited.
Sec. 15. [TRANSFER.]
Any remaining balance of bonding authority in the small
issue pool on the effective date of this section, up to and
including $20,000,000 of bonding authority, is transferred from
the small issue pool to the housing pool for use pursuant to
Minnesota Statutes, section 474A.061, subdivision 2a, except
that the Minnesota housing finance agency may accept
applications between June 1, 1995, and June 7, 1995.
Sec. 16. [REPEALER.]
Minnesota Statutes 1994, sections 462C.02, subdivision 2;
462C.03, subdivisions 1 and 5; and 462C.04, subdivision 1, are
repealed.
Sec. 17. [EFFECTIVE DATE.]
Sections 8 and 15 are effective the day following final
enactment, provided that section 8, paragraph (g), applies to
allocations made on or after the day following final enactment.
Section 12 is effective January 1, 1996.
Presented to the governor May 12, 1995
Signed by the governor May 15, 1995, 10:04 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes