1.1                          A bill for an act
  1.2             relating to the housing finance agency; extending the 
  1.3             availability of equity take-out loans; amending 
  1.4             procedures for the allocation of low-income housing 
  1.5             tax credits; permitting allocation of the housing pool 
  1.6             to senior rental housing if it is federally assisted; 
  1.7             requiring an impact statement and a hearing before an 
  1.8             owner terminates participation in a federally assisted 
  1.9             rental housing program; permitting a local government 
  1.10            to require relocation assistance for certain tenants; 
  1.11            appropriating money; amending Minnesota Statutes 1996, 
  1.12            sections 462A.222, subdivision 3; and 474A.061, 
  1.13            subdivision 2a; Minnesota Statutes 1997 Supplement, 
  1.14            section 462A.05, subdivision 39; proposing coding for 
  1.15            new law in Minnesota Statutes, chapter 471. 
  1.16  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.17     Section 1.  Minnesota Statutes 1997 Supplement, section 
  1.18  462A.05, subdivision 39, is amended to read: 
  1.19     Subd. 39.  [EQUITY TAKE-OUT LOANS.] The agency may make 
  1.20  equity take-out loans to owners of ~~section 8 project-based and~~ 
  1.21  ~~section 236~~ federally assisted rental property ~~upon which the~~ 
  1.22  ~~agency holds a first mortgage~~.  The owner of a ~~section 8~~ 
  1.23  ~~project-based~~ federally assisted rental property must agree to 
  1.24  participate in the ~~section 8~~ federal assistance program and 
  1.25  extend the low-income affordability restrictions on the housing 
  1.26  for the maximum term of the ~~section 8~~ federal assistance 
  1.27  contract.  ~~The owner of section 236 rental property must agree~~ 
  1.28  ~~to participate in the section 236 interest reduction payments~~ 
  1.29  ~~program, to extend any existing low-income affordability~~ 
  1.30  ~~restrictions on the housing, and to extend any rental assistance~~ 
  2.1   ~~payments for the maximum term permitted under the agreement for~~ 
  2.2   ~~rental assistance payments.~~  The equity take-out loan must be 
  2.3   secured by a subordinate loan on the property and may include 
  2.4   additional appropriate security determined necessary by the 
  2.5   agency. 
  2.6      Sec. 2.  Minnesota Statutes 1996, section 462A.222, 
  2.7   subdivision 3, is amended to read: 
  2.8      Subd. 3.  [ALLOCATION PROCEDURE.] (a) Projects will be 
  2.9   awarded tax credits in three competitive rounds on an annual 
  2.10  basis.  The date for applications for each round must be 
  2.11  determined by the agency.  No allocating agency may award tax 
  2.12  credits prior to the application dates established by the agency.
  2.13     (b) Each allocating agency must meet the requirements of 
  2.14  section 42(m) of the Internal Revenue Code of 1986, as amended 
  2.15  through December 31, 1989, for the allocation of tax credits and 
  2.16  the selection of projects. 
  2.17     (c) For projects that are eligible for an allocation of 
  2.18  credits pursuant to section 42(h)(4) of the Internal Revenue 
  2.19  Code of 1986, as amended, tax credits may only be allocated if 
  2.20  the project satisfies the requirements of the allocating 
  2.21  agency's qualified allocation plan.  For projects that are 
  2.22  eligible for an allocation of credits pursuant to section 
  2.23  42(h)(4) of the Internal Revenue Code of 1986, as amended, for 
  2.24  which the agency is the issuer of the bonds for the project, or 
  2.25  the issuer of the bonds for the project is located outside the 
  2.26  jurisdiction of a city or county that has received reserved tax 
  2.27  credits, the applicable allocation plan is the agency's 
  2.28  qualified allocation plan. 
  2.29     (d) For applications submitted for the first round, an 
  2.30  allocating agency may allocate tax credits only to the following 
  2.31  types of projects: 
  2.32     (1) in the metropolitan area: 
  2.33     (i) new construction or substantial rehabilitation of 
  2.34  projects in which, for the term of the extended use period, at 
  2.35  least 75 percent of the total tax credit units are single-room 
  2.36  occupancy, efficiency, or one bedroom units and which are 
  3.1   affordable by households whose income does not exceed 30 percent 
  3.2   of the median income; 
  3.3      (ii) new construction or substantial rehabilitation family 
  3.4   housing projects that are not restricted to persons who are 55 
  3.5   years of age or older and in which, for the term of the extended 
  3.6   use period, at least 75 percent of the tax credit units contain 
  3.7   two or more bedrooms and at least one-third of the 75 percent 
  3.8   contain three or more bedrooms; or 
  3.9      (iii) substantial rehabilitation projects in neighborhoods 
  3.10  targeted by the city for revitalization; 
  3.11     (2) outside the metropolitan area, projects which meet a 
  3.12  locally identified housing need and which are in short supply in 
  3.13  the local housing market as evidenced by credible data submitted 
  3.14  with the application; 
  3.15     (3) projects that are not restricted to persons of a 
  3.16  particular age group and in which, for the term of the extended 
  3.17  use period, a percentage of the units are set aside and rented 
  3.18  to persons: 
  3.19     (i) with a serious and persistent mental illness as defined 
  3.20  in section 245.462, subdivision 20, paragraph (c); 
  3.21     (ii) with a developmental disability as defined in United 
  3.22  States Code, title 42, section 6001, paragraph (5), as amended 
  3.23  through December 31, 1990; 
  3.24     (iii) who have been assessed as drug dependent persons as 
  3.25  defined in section 254A.02, subdivision 5, and are receiving or 
  3.26  will receive care and treatment services provided by an approved 
  3.27  treatment program as defined in section 254A.02, subdivision 2; 
  3.28     (iv) with a brain injury as defined in section 256B.093, 
  3.29  subdivision 4, paragraph (a); or 
  3.30     (v) with permanent physical disabilities that substantially 
  3.31  limit one or more major life activities, if at least 50 percent 
  3.32  of the units in the project are accessible as provided under 
  3.33  Minnesota Rules, chapter 1340; 
  3.34     (4) projects, whether or not restricted to persons of a 
  3.35  particular age group, which preserve existing subsidized housing 
  3.36  ~~which is subject to prepayment~~ if the use of tax credits is 
  4.1   necessary to prevent conversion to market rate use; or 
  4.2      (5) projects financed by the Farmers Home Administration, 
  4.3   or its successor agency, which meet statewide distribution goals.
  4.4      (e) Before the date for applications for the second round, 
  4.5   the allocating agencies other than the agency shall return all 
  4.6   uncommitted and unallocated tax credits to the pool from which 
  4.7   they were allocated, along with copies of any allocation or 
  4.8   commitment.  In the second round, the agency shall allocate the 
  4.9   remaining credits from the regional pools to projects from the 
  4.10  respective regions.  
  4.11     (f) In the third round, all unallocated tax credits must be 
  4.12  transferred to a unified pool for allocation by the agency on a 
  4.13  statewide basis. 
  4.14     (g) Unused portions of the state ceiling for low-income 
  4.15  housing tax credits reserved to cities and counties for 
  4.16  allocation may be returned at any time to the agency for 
  4.17  allocation. 
  4.18     (h) If an allocating agency determines, at any time after 
  4.19  the initial commitment or allocation for a specific project, 
  4.20  that a project is no longer eligible for all or a portion of the 
  4.21  low-income housing tax credits committed or allocated to the 
  4.22  project, the credits must be transferred to the agency to be 
  4.23  reallocated pursuant to the procedures established in paragraphs 
  4.24  (e) to (g); provided that if the tax credits for which the 
  4.25  project is no longer eligible are from the current year's annual 
  4.26  ceiling and the allocating agency maintains a waiting list, the 
  4.27  allocating agency may continue to commit or allocate the credits 
  4.28  until not later than October 1, at which time any uncommitted 
  4.29  credits must be transferred to the agency. 
  4.30     Sec. 3.  [471.9997] [FEDERALLY ASSISTED RENTAL HOUSING; 
  4.31  IMPACT STATEMENT; RELOCATION ASSISTANCE.] 
  4.32     Subdivision 1.  [IMPACT STATEMENT.] At least six months 
  4.33  before termination of participation in a federally assisted 
  4.34  rental housing program, including project-based section 8 and 
  4.35  section 236 rental housing, the owner of the federally assisted 
  4.36  rental housing must submit a statement regarding the impact of 
  5.1   termination on the residents of the rental housing to the 
  5.2   governing body of the local government unit in which the housing 
  5.3   is located.  The impact statement must identify the number of 
  5.4   units that will no longer be subject to rent restrictions 
  5.5   imposed by the federal program, the estimated rents that will be 
  5.6   charged as compared to rents charged under the federal program, 
  5.7   and actions the owner will take to assist displaced tenants in 
  5.8   obtaining other housing.  A copy of the impact statement must be 
  5.9   provided to each resident of the affected building. 
  5.10     Subd. 2.  [HEARING; RELOCATION ASSISTANCE.] Within 30 days 
  5.11  of receipt of the impact statement, the governing body shall 
  5.12  hold a public hearing to review the statement.  Not later than 
  5.13  14 days after the conclusion of the hearing, the governing body 
  5.14  shall determine whether the owner must pay reasonable relocation 
  5.15  costs to residents displaced by the termination of participation 
  5.16  in the federally assisted rental housing program and resulting 
  5.17  rent increases.  The governing body may require payment of 
  5.18  relocation costs as a condition for obtaining a rental license 
  5.19  or other similar certification. 
  5.20     Sec. 4.  Minnesota Statutes 1996, section 474A.061, 
  5.21  subdivision 2a, is amended to read: 
  5.22     Subd. 2a.  [HOUSING POOL ALLOCATION.] (a) On the first 
  5.23  business day that falls on a Monday of the calendar year and the 
  5.24  first Monday in February, the commissioner shall allocate 
  5.25  available bonding authority in the housing pool to applications 
  5.26  received by the Monday of the previous week for residential 
  5.27  rental projects that are not restricted to persons who are 55 
  5.28  years of age or older and that meet the eligibility criteria 
  5.29  under section 474A.047, except that allocations may be made to 
  5.30  projects that are restricted to persons who are 55 years of age 
  5.31  or older if the project preserves existing federally assisted 
  5.32  rental housing.  Projects that preserve existing federally 
  5.33  assisted rental housing shall be allocated available bonding 
  5.34  authority in the housing pool prior to the allocation of 
  5.35  available bonding authority to other eligible residential rental 
  5.36  projects.  If an issuer that receives an allocation under this 
  6.1   paragraph does not issue obligations equal to all or a portion 
  6.2   of the allocation received within 120 days of the allocation or 
  6.3   returns the allocation to the commissioner, the amount of the 
  6.4   allocation is canceled and returned for reallocation through the 
  6.5   housing pool. 
  6.6      (b) After February 1, and through February 15, the 
  6.7   Minnesota housing finance agency may accept applications from 
  6.8   cities for single-family housing programs which meet program 
  6.9   requirements as follows:  
  6.10     (1) the housing program must meet a locally identified 
  6.11  housing need and be economically viable; 
  6.12     (2) the adjusted income of home buyers may not exceed the 
  6.13  greater of the agency's income limits or 80 percent of the area 
  6.14  median income as published by the Department of Housing and 
  6.15  Urban Development; 
  6.16     (3) house price limits may not exceed: 
  6.17     (i) the greater of agency house price limits or the federal 
  6.18  price limits for housing up to a maximum of $95,000; or 
  6.19     (ii) for a new construction affordability initiative, the 
  6.20  greater of 115 percent of agency house price limits or 90 
  6.21  percent of the median purchase price in the city for which the 
  6.22  bonds are to be sold up to a maximum of $95,000. 
  6.23     Data establishing the median purchase price in the city 
  6.24  must be included in the application by a city requesting house 
  6.25  price limits higher than the housing finance agency's house 
  6.26  price limits; and 
  6.27     (4) an application deposit equal to one percent of the 
  6.28  requested allocation must be submitted before the agency 
  6.29  forwards the list specifying the amounts allocated to the 
  6.30  commissioner under paragraph (c).  The agency shall submit the 
  6.31  city's application and application deposit to the commissioner 
  6.32  when requesting an allocation from the housing pool. 
  6.33     Applications by a consortium shall include the name of each 
  6.34  member of the consortium and the amount of allocation requested 
  6.35  by each member. 
  6.36     The Minnesota housing finance agency may accept 
  7.1   applications from June 15 through June 30 from cities for 
  7.2   single-family housing programs which meet program requirements 
  7.3   specified under clauses (1) to (4) if bonding authority is 
  7.4   available in the housing pool.  The agency must allot available 
  7.5   bonding authority.  For purposes of paragraphs (a) to (g), 
  7.6   "city" means a county or a consortium of local government units 
  7.7   that agree through a joint powers agreement to apply together 
  7.8   for single-family housing programs, and has the meaning given it 
  7.9   in section 462C.02, subdivision 6.  "Agency" means the Minnesota 
  7.10  housing finance agency.  
  7.11     (c) The total amount of allocation for mortgage bonds for 
  7.12  one city is limited to the lesser of:  (i) the amount requested, 
  7.13  or (ii) the product of the total amount available for mortgage 
  7.14  bonds from the housing pool, multiplied by the ratio of each 
  7.15  applicant's population as determined by the most recent estimate 
  7.16  of the city's population released by the state demographer's 
  7.17  office to the total of all the applicants' population, except 
  7.18  that each applicant shall be allocated a minimum of $100,000 
  7.19  regardless of the amount requested or the amount determined 
  7.20  under the formula in clause (ii).  If a city applying for an 
  7.21  allocation is located within a county that has also applied for 
  7.22  an allocation, the city's population will be deducted from the 
  7.23  county's population in calculating the amount of allocations 
  7.24  under this paragraph. 
  7.25     Upon determining the amount of each applicant's allocation, 
  7.26  the agency shall forward a list specifying the amounts allotted 
  7.27  to each application and application deposit checks to the 
  7.28  commissioner. 
  7.29     (d) The agency may issue bonds on behalf of participating 
  7.30  cities.  The agency shall request an allocation from the 
  7.31  commissioner for all applicants who choose to have the agency 
  7.32  issue bonds on their behalf and the commissioner shall allocate 
  7.33  the requested amount to the agency.  The agency may request an 
  7.34  allocation at any time after the first Monday in February and 
  7.35  through the last Monday in July, but may request an allocation 
  7.36  no later than the last Monday in July.  The commissioner shall 
  8.1   return any application deposit to a city that paid an 
  8.2   application deposit under paragraph (b), clause (4), but was not 
  8.3   part of the list forwarded to the commissioner under paragraph 
  8.4   (c). 
  8.5      (e) A city may choose to issue bonds on its own behalf or 
  8.6   through a joint powers agreement or may use bonding authority 
  8.7   for mortgage credit certificates and may request an allocation 
  8.8   from the commissioner.  If the total amount requested by all 
  8.9   applicants exceeds the amount available in the pool, the city 
  8.10  may not receive a greater allocation than the amount it would 
  8.11  have received under the list forwarded by the Minnesota housing 
  8.12  finance agency to the commissioner.  No city may request or 
  8.13  receive an allocation from the commissioner until the list under 
  8.14  paragraph (c) has been forwarded to the commissioner.  A city 
  8.15  must request an allocation from the commissioner no later than 
  8.16  14 days before the unified pool is created pursuant to section 
  8.17  474A.091, subdivision 1.  On and after the first Monday in 
  8.18  February and through the last Monday in July, no city may 
  8.19  receive an allocation from the housing pool which has not first 
  8.20  applied to the Minnesota housing finance agency.  The 
  8.21  commissioner shall allocate the requested amount to the city or 
  8.22  cities subject to the limitations under this paragraph.  
  8.23     If a city issues mortgage bonds from an allocation received 
  8.24  under this paragraph, the issuer must provide for the recycling 
  8.25  of funds into new loans.  If the issuer is not able to provide 
  8.26  for recycling, the issuer must notify the commissioner in 
  8.27  writing of the reason that recycling was not possible and the 
  8.28  reason the issuer elected not to have the Minnesota housing 
  8.29  finance agency issue the bonds.  "Recycling" means the use of 
  8.30  money generated from the repayment and prepayment of loans for 
  8.31  further eligible loans or for the redemption of bonds and the 
  8.32  issuance of current refunding bonds. 
  8.33     (f) No entitlement city or county or city in an entitlement 
  8.34  county may apply for or be allocated authority to issue bonds or 
  8.35  use mortgage credit certificates from the housing pool. 
  8.36     (g) A city that does not use at least 50 percent of their 
  9.1   allotment by the date applications are due for the first 
  9.2   allocation that is made from the housing pool for single-family 
  9.3   housing programs in the immediately succeeding calendar year may 
  9.4   not apply to the housing pool for a single-family mortgage bond 
  9.5   or mortgage credit certificate program allocation or receive an 
  9.6   allotment from the housing pool in the succeeding two calendar 
  9.7   years.  Each local government unit in a consortium must meet the 
  9.8   requirements of this paragraph. 
  9.9      Sec. 5.  [APPROPRIATION.] 
  9.10     $....... is appropriated from the general fund for transfer 
  9.11  to the housing development fund for the affordable rental 
  9.12  investment fund program under Minnesota Statutes, section 
  9.13  462A.21, subdivision 8b, to finance the acquisition, 
  9.14  rehabilitation, and debt restructuring of federally assisted 
  9.15  rental property and for making equity take-out loans under 
  9.16  Minnesota Statutes, section 462A.05, subdivision 39.  The owner 
  9.17  of the rental property must agree to participate in the 
  9.18  applicable federally assisted housing program and to extend any 
  9.19  existing low-income affordability restrictions on the housing 
  9.20  for the maximum term permitted.  The owner must also agree to 
  9.21  give local units of government, housing and redevelopment 
  9.22  authorities, and nonprofit housing organizations the right of 
  9.23  first refusal if the rental property is offered for sale.  
  9.24  Priority must be given to properties with the longest remaining 
  9.25  term under an agreement for federal rental assistance.  Priority 
  9.26  must also be given to rental housing developments that are or 
  9.27  will be owned by a local government unit, a housing and 
  9.28  redevelopment authority, or a nonprofit housing organization.