1.1                          A bill for an act
  1.2             relating to housing; providing assistance to contract 
  1.3             for deed home buyers in targeted neighborhoods; 
  1.4             providing assistance to eligible organizations to 
  1.5             acquire, repair, and sell homes to eligible home 
  1.6             buyers in targeted neighborhoods; requiring a 
  1.7             community impact statement before construction of new 
  1.8             low-income rental housing in targeted neighborhoods; 
  1.9             establishing a mortgage revenue bond guarantee fund 
  1.10            for greater Minnesota; providing incentives for new 
  1.11            affordable housing in greater Minnesota; requiring the 
  1.12            housing finance agency to study the administration of 
  1.13            federal Section 8 housing subsidies in the 
  1.14            metropolitan area; establishing a rental tax equity 
  1.15            pilot project; appropriating money; amending Minnesota 
  1.16            Statutes 1994, sections 462A.05, by adding a 
  1.17            subdivision; and 462A.21, by adding subdivisions; 
  1.18            proposing coding for new law in Minnesota Statutes, 
  1.19            chapter 462A. 
  1.20  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.21                             ARTICLE 1
  1.22                    CONTRACT FOR DEED ASSISTANCE
  1.23     Section 1.  [462A.209] [CONTRACT FOR DEED ACCOUNT.] 
  1.24     Subdivision 1.  [TARGETED NEIGHBORHOOD.] A city may by 
  1.25  resolution designate targeted neighborhoods within its borders 
  1.26  after adopting detailed findings that the neighborhoods meet the 
  1.27  eligibility requirements of this subdivision.  For the purpose 
  1.28  of this section, "targeted neighborhood" means a neighborhood in 
  1.29  a city in the metropolitan area as defined in section 473.121, 
  1.30  subdivision 2, that meets four of the following five criteria: 
  1.31     (a) The area had an unemployment rate that was twice the 
  1.32  unemployment rate for the Minneapolis and Saint Paul 
  2.1   metropolitan statistical area as determined by the 1990 federal 
  2.2   decennial census. 
  2.3      (b) The median household income in the area was no more 
  2.4   than half the median household income for the Minneapolis and 
  2.5   Saint Paul metropolitan statistical area as determined by the 
  2.6   1990 federal decennial census. 
  2.7      (c) The area is characterized by residential dwelling units 
  2.8   in need of substantial rehabilitation.  An area qualifies under 
  2.9   this paragraph if 25 percent or more of the residential dwelling 
  2.10  units are in substandard condition as determined by the city, or 
  2.11  residential property values in the area have declined in the 
  2.12  most recent 12-month period compared to the city as a whole, 
  2.13  based on sales ratio studies conducted by the department of 
  2.14  revenue. 
  2.15     (d) Between 1980 and 1990, the number of owner-occupied 
  2.16  residential properties in the area declined by ten percent or 
  2.17  the number of rental residential properties is 110 percent or 
  2.18  more of the citywide rate. 
  2.19     (e) The area is entirely within a police grid or grids 
  2.20  where the number of police incident reports are at least two 
  2.21  times the annual rate for the city as a whole. 
  2.22     Subd. 2.  [CREATION.] The contract for deed account is 
  2.23  created as a separate account in the housing development fund.  
  2.24  Money in the account is appropriated to the agency for the 
  2.25  purposes of this section.  The account consists of money 
  2.26  appropriated to the account and transferred from other sources 
  2.27  and all earnings from money in the account. 
  2.28     Subd. 3.  [ACCOUNT USES.] (a) Money in the account may be 
  2.29  used to assist owners who occupy existing single-family 
  2.30  structures and duplexes that are being purchased on a contract 
  2.31  for deed in targeted neighborhoods. 
  2.32     (b) Assistance includes financial and technical assistance 
  2.33  to enable eligible contract for deed vendees to pay off a 
  2.34  contract for deed and obtain mortgage loans at market and below 
  2.35  market rates to both buy and repair the property. 
  2.36     (c) Money in the account may be used to create a guarantee 
  3.1   fund for loans made with assistance provided under this section. 
  3.2      (d) To be eligible under this section, a contract for deed 
  3.3   vendee must be current on payments due under the contract and 
  3.4   have at least a one-year record of timely contract payments, the 
  3.5   contract for deed purchase price must be determined by the 
  3.6   agency to be greater than the actual market value, and a 
  3.7   commercial lending institution will not make a loan to buy and 
  3.8   repair the property on normal credit terms due, at least in 
  3.9   part, to the condition of the property. 
  3.10     Subd. 4.  [ADMINISTRATION.] The agency may contract with 
  3.11  organizations or government units experienced in housing 
  3.12  programs to operate programs under this section. 
  3.13     Sec. 2.  Minnesota Statutes 1994, section 462A.21, is 
  3.14  amended by adding a subdivision to read: 
  3.15     Subd. 22.  [CONTRACT FOR DEED PROGRAM.] It may expend money 
  3.16  for the purposes of section 462A.209 and may pay the costs and 
  3.17  expenses necessary and incidental to the development and 
  3.18  operation of the program authorized by section 462A.209. 
  3.19     Sec. 3.  [APPROPRIATION.] 
  3.20     $....... is appropriated from the general fund to the 
  3.21  commissioner of the housing finance agency for transfer to the 
  3.22  contract for deed account in the housing development fund for 
  3.23  the purposes of this article. 
  3.24                             ARTICLE 2
  3.25                METROPOLITAN AREA HOMESTEAD PROGRAM
  3.26     Section 1.  [462A.058] [METROPOLITAN AREA HOMESTEAD 
  3.27  PROGRAM.] 
  3.28     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The agency shall 
  3.29  establish a metropolitan area homestead program for the purpose 
  3.30  of making grants to eligible organizations to acquire, 
  3.31  rehabilitate, and sell eligible residential properties in 
  3.32  targeted neighborhoods to individuals and families committed to 
  3.33  strengthening the neighborhood and following a good neighbor 
  3.34  policy.  
  3.35     Subd. 2.  [DEFINITIONS.] For the purposes of this section, 
  3.36  the terms in subdivisions 3 to 9 have the meanings given them. 
  4.1      Subd. 3.  [CONTRACT FOR DEED.] "Contract for deed" is the 
  4.2   agreement between the home buyer and eligible organization as 
  4.3   established by the agency. 
  4.4      Subd. 4.  [ELIGIBLE ORGANIZATION.] "Eligible organization" 
  4.5   or "organization" means a political subdivision, a nonprofit or 
  4.6   cooperative organization, as defined by the agency, a housing 
  4.7   and redevelopment authority, or other organization designated by 
  4.8   the agency, which demonstrates the capacity to perform the 
  4.9   duties outlined in subdivision 12. 
  4.10     Subd. 5.  [ELIGIBLE PROPERTY.] "Eligible property" or 
  4.11  "property" means a single family residential dwelling or duplex 
  4.12  and surrounding property in a targeted neighborhood that is 
  4.13  vacant, condemned, abandoned, or otherwise defined as eligible 
  4.14  by the agency, which, if rehabilitated, may prevent or arrest 
  4.15  the spread of blight.  It also means a property identified by 
  4.16  the advisory board that is currently occupied and a problem 
  4.17  property. 
  4.18     Subd. 6.  [METROPOLITAN AREA.] "Metropolitan area" means 
  4.19  the area as defined in section 473.121, subdivision 2. 
  4.20     Subd. 7.  [NEIGHBORHOOD VOLUNTEER RESIDENT ADVISORY 
  4.21  BOARD.] "Neighborhood volunteer resident advisory board" or 
  4.22  "advisory board" means the board established by an organization 
  4.23  under subdivision 13. 
  4.24     Subd. 8.  [PROGRAM.] "Program" means the metropolitan area 
  4.25  homestead program established in subdivision 1.  
  4.26     Subd. 9.  [TARGETED NEIGHBORHOOD.] "Targeted neighborhood" 
  4.27  means a neighborhood in the metropolitan area designated by city 
  4.28  council resolution after adoption of detailed findings that the 
  4.29  neighborhood meets four of the following five criteria: 
  4.30     (a) The area had an unemployment rate that was twice the 
  4.31  unemployment rate for the Minneapolis and Saint Paul 
  4.32  metropolitan statistical area as determined by the 1990 federal 
  4.33  decennial census. 
  4.34     (b) The median household income in the area was no more 
  4.35  than half the median household income for the Minneapolis and 
  4.36  Saint Paul metropolitan statistical area as determined by the 
  5.1   1990 federal decennial census. 
  5.2      (c) The area is characterized by residential dwelling units 
  5.3   in need of substantial rehabilitation.  An area qualifies under 
  5.4   this paragraph if 25 percent or more of the residential dwelling 
  5.5   units are in substandard condition as determined by the city, or 
  5.6   residential property values in the area have declined in the 
  5.7   most recent 12-month period compared to the city as a whole, 
  5.8   based on sales ratio studies conducted by the department of 
  5.9   revenue. 
  5.10     (d) Between 1980 and 1990, the number of owner-occupied 
  5.11  residential properties in the area declined by ten percent or 
  5.12  the number of rental residential properties is 110 percent or 
  5.13  more of the citywide rate. 
  5.14     (e) The area is entirely within a police grid or grids 
  5.15  where the number of police incident reports are at least two 
  5.16  times the annual rate for the city as a whole. 
  5.17     Subd. 10.  [GRANTS.] The agency may award grants to 
  5.18  eligible organizations.  The grants must be used by the 
  5.19  organization to buy eligible properties and pay for the costs of 
  5.20  rehabilitating those properties.  A percentage of the grant may 
  5.21  be used for administrative costs which amount shall be stated in 
  5.22  the application and determined by the agency.  
  5.23     Subd. 11.  [AGENCY POWERS; DUTIES.] The agency shall: 
  5.24     (1) establish criteria for awarding grants under this 
  5.25  section; and 
  5.26     (2) establish the terms and provisions of the contract for 
  5.27  deed and other program standards as necessary. 
  5.28     Subd. 12.  [ELIGIBLE ORGANIZATION; CAPACITY.] The eligible 
  5.29  organization must demonstrate to the agency that it has the 
  5.30  capacity to: 
  5.31     (1) organize and continue an ongoing relationship with the 
  5.32  advisory boards required under subdivision 13; 
  5.33     (2) provide the necessary staff to administer the program 
  5.34  on the local level for an extended period; and 
  5.35     (3) select and acquire property that meets the requirements 
  5.36  established for this program and contract with businesses or 
  6.1   organizations for the rehabilitation of the property. 
  6.2      At least one grant recipient in each of Minneapolis and 
  6.3   Saint Paul must provide homeownership counseling and training 
  6.4   paid for with funds other than those provided under this program.
  6.5      Subd. 13.  [NEIGHBORHOOD VOLUNTEER RESIDENT ADVISORY 
  6.6   BOARD.] Each organization must establish a neighborhood 
  6.7   volunteer resident advisory board for each targeted neighborhood 
  6.8   in which the organization plans to acquire and rehabilitate a 
  6.9   property.  The advisory board must consist of residents of the 
  6.10  targeted neighborhood that reflect the racial composition of the 
  6.11  area, but at a minimum at least 20 percent of the advisory board 
  6.12  must be minority residents.  The advisory board must: 
  6.13     (1) recommend to the organization properties that may be 
  6.14  acquired for the program in the designated area; and 
  6.15     (2) recommend to the organization the selection of home 
  6.16  buyers. 
  6.17     Subd. 14.  [PURCHASE AND REHABILITATION.] An eligible 
  6.18  organization may acquire properties in a targeted neighborhood 
  6.19  with the consent of the advisory board for that area.  The 
  6.20  organization must rehabilitate properties to the standards 
  6.21  established by the agency.  The total maximum cost of the 
  6.22  acquisition, rehabilitation, closing costs, and back taxes must 
  6.23  be no greater than $75,000.  The maximum may be exceeded if the 
  6.24  excess costs are attributed to rehabilitation or improvements to 
  6.25  make the property handicapped accessible. 
  6.26     Subd. 15.  [SALE OF PROPERTY TO HOME BUYER.] The eligible 
  6.27  organization may sell rehabilitated property to individuals and 
  6.28  families as provided in paragraph (a) or (b). 
  6.29     (a) The eligible organization may sell rehabilitated 
  6.30  property to individuals and families on a contract for deed, the 
  6.31  terms and other provisions of which must be established by the 
  6.32  agency.  The following requirements must be included in the 
  6.33  contract: 
  6.34     (1) the purchase price paid by the home buyer must be equal 
  6.35  to the total costs of acquiring and rehabilitating the property; 
  6.36     (2) no down payment or interest payment may be required of 
  7.1   the home buyer; and 
  7.2      (3) the monthly payment must be equal to 25 percent of the 
  7.3   home buyer's gross monthly income, except that the monthly 
  7.4   payment may not be reduced if the reduction in monthly income is 
  7.5   due to voluntary unemployment or underemployment.  "Voluntary 
  7.6   unemployment or underemployment" does not include (1) 
  7.7   unemployment or underemployment that is temporary and will 
  7.8   ultimately lead to an increase in income, or (2) a bona fide 
  7.9   career change. 
  7.10     (b) The eligible organization may sell rehabilitated 
  7.11  property to individuals and families and use in part funds other 
  7.12  than those available from a program grant to finance the sale.  
  7.13  The terms and conditions of the financing shall be established 
  7.14  by the eligible organization consistent with this section.  The 
  7.15  eligible organization may use program grant funds to provide 
  7.16  additional financial assistance to the home buyer, including 
  7.17  closing cost assistance, downpayment assistance, or gap 
  7.18  financing, provided that the amount of the grant proceeds used 
  7.19  for each home buyer under this paragraph does not exceed 
  7.20  one-third of the purchase price of the property up to a maximum 
  7.21  of $25,000. 
  7.22     Subd. 16.  [RIGHT TO REPURCHASE.] The eligible organization 
  7.23  may repurchase the property if the home buyer rents, assigns, 
  7.24  vacates, transfers, or offers to sell the property within 20 
  7.25  years of the purchase of the property from the organization.  
  7.26  This option to repurchase does not apply to a transfer of the 
  7.27  property to a surviving joint tenant or heir of the home buyer.  
  7.28  If the organization chooses not to exercise its option to 
  7.29  repurchase the property, the agency may repurchase the property. 
  7.30     The repurchase price paid by the organization or the agency 
  7.31  may not exceed the lesser of the (1) appraised value of the 
  7.32  property at the time of repurchase, or (2) the sum of: 
  7.33     (i) the total amount paid by the homeowner to the 
  7.34  organization for debt payment on the contract for deed; 
  7.35     (ii) the value of any major improvements to the property 
  7.36  that are paid directly by the home buyer and were not part of 
  8.1   the required monthly payment; and 
  8.2      (iii) the product of the sum of (i) and (ii), and the 
  8.3   increase in inflation based on the housing component of the 
  8.4   federal Consumer Price Index. 
  8.5      Subd. 17.  [REPORTS.] Each organization that receives a 
  8.6   grant under this section shall submit an annual report to the 
  8.7   agency by December 1 of each year that describes the use of 
  8.8   grant funds received under this section. 
  8.9      Sec. 2.  Minnesota Statutes 1994, section 462A.21, is 
  8.10  amended by adding a subdivision to read: 
  8.11     Subd. 23.  [METROPOLITAN AREA HOMESTEAD PROGRAM.] It may 
  8.12  expend money for the purposes of section 462A.058 and may pay 
  8.13  the costs and expenses necessary and incidental to the 
  8.14  development and operation of the program authorized by section 
  8.15  462A.058. 
  8.16     Sec. 3.  [APPROPRIATION.] 
  8.17     $....... is appropriated from the general fund to the 
  8.18  commissioner of the housing finance agency for transfer to the 
  8.19  housing development fund for the purposes of this article. 
  8.20                             ARTICLE 3
  8.21                   NEW LOW-INCOME RENTAL HOUSING
  8.22                     COMMUNITY IMPACT STATEMENT
  8.23     Section 1.  [462A.061] [LEGISLATIVE FINDINGS; PURPOSE.] 
  8.24     The legislature finds that concentration of poverty, 
  8.25  including the concentration of low-income rental housing, in a 
  8.26  few neighborhoods in the cities has led to deteriorating 
  8.27  property values and increased crime in those neighborhoods, to 
  8.28  the detriment of their residents.  The legislature also finds 
  8.29  that greater economic and housing diversity in those 
  8.30  neighborhoods would help stabilize and revitalize them.  The 
  8.31  purpose of this article, in conjunction with other provisions of 
  8.32  this act, is to provide resources to increase homeownership 
  8.33  opportunities in targeted neighborhoods for persons who would 
  8.34  not otherwise be able to afford homeownership and to 
  8.35  rehabilitate the housing stock in targeted neighborhoods, is to 
  8.36  require that targeted neighborhoods have input into the siting 
  9.1   of new low-income rental housing in order to assure that the 
  9.2   city consider the effect of concentration of poverty on a 
  9.3   neighborhood and promote greater economic and housing diversity 
  9.4   throughout the city and region. 
  9.5      Sec. 2.  [462A.062] [DEFINITIONS.] 
  9.6      Subdivision 1.  [SCOPE.] For the purposes of sections 1 to 
  9.7   4, the terms defined in this section have the meanings given 
  9.8   them. 
  9.9      Subd. 2.  [CITY.] "City" means Minneapolis or Saint Paul. 
  9.10     Subd. 3.  [LOW-INCOME RENTAL HOUSING.] "Low-income rental 
  9.11  housing" means multifamily rental housing with five or more 
  9.12  units for which a family with a household income of 70 percent 
  9.13  or less of the median household income for the Minneapolis and 
  9.14  Saint Paul metropolitan statistical area as determined and 
  9.15  adjusted from time to time by the United States Department of 
  9.16  Housing and Urban Development spends no more than 30 percent of 
  9.17  its gross monthly household income. 
  9.18     Subd. 4.  [NEW CONSTRUCTION.] "New" means housing that has 
  9.19  never been occupied. 
  9.20     Subd. 5.  [PROJECT.] "Project" means the construction of 
  9.21  new low-income rental housing in a targeted neighborhood. 
  9.22     Subd. 6.  [TARGETED NEIGHBORHOOD.] "Targeted neighborhood" 
  9.23  means a neighborhood in Minneapolis or Saint Paul designated by 
  9.24  city council resolution after adoption of detailed findings that 
  9.25  the neighborhood meets four of the following five criteria: 
  9.26     (a) The area had an unemployment rate that was twice the 
  9.27  unemployment rate for the Minneapolis and Saint Paul 
  9.28  metropolitan statistical area as determined by the 1990 federal 
  9.29  decennial census. 
  9.30     (b) The median household income in the area was no more 
  9.31  than half the median household income for the Minneapolis and 
  9.32  Saint Paul metropolitan statistical area as determined by the 
  9.33  1990 federal decennial census. 
  9.34     (c) The area is characterized by residential dwelling units 
  9.35  in need of substantial rehabilitation.  An area qualifies under 
  9.36  this paragraph if 25 percent or more of the residential dwelling 
 10.1   units are in substandard condition as determined by the city, or 
 10.2   residential property values in the area have declined in the 
 10.3   most recent 12-month period compared to the city as a whole, 
 10.4   based on sales ratio studies conducted by the department of 
 10.5   revenue. 
 10.6      (d) Between 1980 and 1990, the number of owner-occupied 
 10.7   residential properties in the area declined by ten percent or 
 10.8   the number of rental residential properties is 110 percent or 
 10.9   more of the citywide rate. 
 10.10     (e) The area is entirely within a police grid or grids 
 10.11  where the number of police incident reports are at least two 
 10.12  times the annual rate for the city as a whole. 
 10.13     Sec. 3.  [462A.063] [LOW-INCOME RENTAL HOUSING; 
 10.14  RESTRICTIONS.] 
 10.15     Subdivision 1.  [LIMITATION.] A city may approve 
 10.16  construction of new low-income rental housing in a targeted 
 10.17  neighborhood only if the requirements of this section are 
 10.18  satisfied prior to the commencement of construction of the 
 10.19  housing. 
 10.20     Subd. 2.  [COMMUNITY IMPACT STATEMENT.] A project proposer 
 10.21  must file a community impact statement with the city council of 
 10.22  the city where the project is located.  The impact statement 
 10.23  must include details of the proposed low-income rental project, 
 10.24  including the eligibility criteria for tenants, the number of 
 10.25  units, and the sources of financing for the project.  The 
 10.26  statement must be filed before the city may provide notice of 
 10.27  the public hearing required under subdivision 3. 
 10.28     Subd. 3.  [LOCAL HEARINGS; CITY APPROVAL.] A project 
 10.29  requires city council approval.  The city council may approve 
 10.30  the project only after a public hearing.  The public hearing 
 10.31  must be held in the affected neighborhood.  The city shall 
 10.32  provide notice of the hearing in a newspaper of general 
 10.33  circulation in the city and in the most widely circulated 
 10.34  community newspaper in the targeted neighborhood not less than 
 10.35  ten days nor more than 30 days before the date of the hearing.  
 10.36  The notice must identify the community impact statement and 
 11.1   advise where copies of the statement may be obtained.  Copies of 
 11.2   the community impact statement must be available at the public 
 11.3   hearing.  The city council may approve the project only if it 
 11.4   finds that the project will contribute to the stabilization and 
 11.5   revitalization of the targeted neighborhood. 
 11.6      Subd. 4.  [COORDINATION WITH METROPOLITAN COUNCIL.] Before 
 11.7   approving a project, the city shall consult with the 
 11.8   metropolitan council to identify other opportunities and 
 11.9   locations in the metropolitan area for siting low-income rental 
 11.10  housing consistent with the housing policies in the council's 
 11.11  metropolitan development guide, adopted pursuant to section 
 11.12  473.145. 
 11.13                             ARTICLE 4
 11.14                         GREATER MINNESOTA
 11.15     Section 1.  Minnesota Statutes 1994, section 462A.05, is 
 11.16  amended by adding a subdivision to read: 
 11.17     Subd. 41.  [GREATER MINNESOTA MORTGAGE REVENUE BOND 
 11.18  GUARANTEE FUND.] The agency may establish a reserve fund for 
 11.19  credit enhancement of mortgage revenue bonds issued by cities 
 11.20  outside the metropolitan area, as defined in section 473.121, 
 11.21  subdivision 2.  The credit enhancement is to create incentives 
 11.22  for private developers to construct new affordable rental 
 11.23  housing in greater Minnesota, especially in areas where lack of 
 11.24  housing is an impediment to the creation and retention of jobs.  
 11.25  The agency shall establish the terms and conditions for use of 
 11.26  the fund. 
 11.27     Sec. 2.  Minnesota Statutes 1994, section 462A.21, is 
 11.28  amended by adding a subdivision to read: 
 11.29     Subd. 24.  [GREATER MINNESOTA MORTGAGE REVENUE BOND 
 11.30  GUARANTEE FUND.] It may expend money for the purposes of section 
 11.31  462A.05, subdivision 41, and may pay the costs and expenses 
 11.32  necessary and incidental to the development and operation of the 
 11.33  program authorized by section 462A.05, subdivision 41. 
 11.34     Sec. 3.  [APPROPRIATION.] 
 11.35     $7,800,000 is appropriated from the general fund to the 
 11.36  commissioner of the housing finance agency for transfer to the 
 12.1   housing development fund for the purposes of this article. 
 12.2                              ARTICLE 5
 12.3                          SECTION 8 HOUSING
 12.4      Section 1.  [NEIGHBORHOOD STABILITY.] 
 12.5      The housing finance agency must study the administration of 
 12.6   federal Section 8 housing programs in the metropolitan area as 
 12.7   defined in Minnesota Statutes, section 473.121, subdivision 2.  
 12.8   The study must examine whether utilization of Section 8 programs 
 12.9   is concentrated in certain portions of the metropolitan area and 
 12.10  the effect of concentration on neighborhood stability.  The 
 12.11  agency shall make recommendations for changes in the 
 12.12  administration of Section 8 programs to eliminate concentration 
 12.13  to the committees in the house and senate having jurisdiction 
 12.14  over housing issues by January 15, 1996.  The agency may enter 
 12.15  into contracts to perform the study required by this section. 
 12.16     Sec. 2.  [APPROPRIATION.] 
 12.17     $....... is appropriated from the general fund to the 
 12.18  commissioner of the housing finance agency for the purpose of 
 12.19  section 1. 
 12.20                             ARTICLE 6
 12.21                         RENTAL TAX EQUITY
 12.22     Section 1.  [RENTAL TAX EQUITY; PILOT PROJECT.] 
 12.23     Subdivision 1.  [PILOT; TERM.] A pilot project for rental 
 12.24  tax equity in the cities of Duluth, Saint Paul, and Minneapolis 
 12.25  is established.  The program is for property taxes payable in 
 12.26  1996 and 1997.  The program is available to owners of single- 
 12.27  and two-family nonhomestead residential property and apartments. 
 12.28     Subd. 2.  [DEFINITION.] (a) For the purpose of this 
 12.29  section, the term "city" means the city where the property that 
 12.30  may be eligible for the property tax credit provided by this 
 12.31  section is located. 
 12.32     (b) For the purpose of this section, "apartment" means 
 12.33  residential real estate containing four or more units. 
 12.34     Subd. 3.  [PRIMARY OBJECTIVE.] The pilot project's primary 
 12.35  objective is to help stabilize costs for the conscientious, 
 12.36  industrious landlord who is already providing safe, decent, and 
 13.1   affordable housing.  The property tax reduction provided by the 
 13.2   program is intended to give an incentive to other landlords to 
 13.3   improve their tenant-occupied property and still offer 
 13.4   affordable housing. 
 13.5      Subd. 4.  [PROPERTY TAX TREATMENT.] (a) Single- and 
 13.6   two-family nonhomestead residential property and apartments 
 13.7   located in the city of Duluth, Saint Paul, or Minneapolis and 
 13.8   existing on the effective date of this section, that are 
 13.9   classified under Minnesota Statutes, section 273.13, subdivision 
 13.10  25, paragraph (a) or (b), clause (1), and that meet the 
 13.11  requirements of this section, are eligible for the property tax 
 13.12  credit under subdivision 9.  
 13.13     (b) The program is not a housing or building code 
 13.14  enforcement program.  
 13.15     (c) Participation in the program is voluntary. 
 13.16     Subd. 5.  [NOTIFICATION TO OWNERS.] The city shall notify 
 13.17  the owner of each single- and two-family nonhomestead 
 13.18  residential property and apartment located in the city that the 
 13.19  property may be eligible to receive a property tax credit as 
 13.20  provided in this section. 
 13.21     Subd. 6.  [PROGRAM STEPS.] (a) A landlord who owns eligible 
 13.22  property and who wishes to participate must arrange for a 
 13.23  certified evaluator who is licensed by the city to evaluate the 
 13.24  property. 
 13.25     (b) The landlord must notify the tenant of the evaluation 
 13.26  and any reinspection so that the tenant may be present if the 
 13.27  tenant wishes. 
 13.28     (c) The evaluator must evaluate the property using program 
 13.29  guidelines adopted by resolution of the city council prior to 
 13.30  implementation of the program under this section. 
 13.31     (d) If the evaluator determines that repairs are necessary, 
 13.32  the landlord must make the repairs and call for a reinspection 
 13.33  by the evaluator.  If the evaluator identifies life or safety 
 13.34  hazards, the evaluator must notify appropriate city officials, 
 13.35  who shall take immediate action to require and enforce repair of 
 13.36  the life or safety hazard items. 
 14.1      (e) The evaluator must reinspect the property to see if the 
 14.2   program guidelines have been followed. 
 14.3      (f) The evaluator must submit a report on the property's 
 14.4   evaluation to the appropriate city officials, the landlord, and 
 14.5   the tenant.  A filing fee must be paid at the time the report is 
 14.6   submitted to the city. 
 14.7      (g) Appropriate city officials must review the report and 
 14.8   approve it or issue orders for further repair.  In so doing, 
 14.9   city staff members may make an on-site review.  The landlord may 
 14.10  withdraw from the program at any time without making required 
 14.11  repairs except those for life or safety hazards, which may be 
 14.12  otherwise required.  Property for which the evaluator's report 
 14.13  is approved must be certified by the appropriate city officials 
 14.14  to the county assessor.  When the city certifies the property, 
 14.15  it must provide the landlord with a certificate specifying that 
 14.16  the property will receive the credit provided by this section.  
 14.17  The certificate must be in a form so that it may be used by a 
 14.18  landlord to demonstrate to a lender the improved cash flow of 
 14.19  the property due to the credit.  A city must limit the number of 
 14.20  qualifying properties so that the credit payable under 
 14.21  subdivision 9 will not for property in that city, in the city's 
 14.22  estimate, exceed $1,500,000 for 1996 and $1,500,000 for 1997 for 
 14.23  Minneapolis or Saint Paul, and $500,000 for 1996 and $500,000 
 14.24  for 1997 for the city of Duluth.  In any year, no more than 
 14.25  $500,000 of the credit may be applied to apartment property in 
 14.26  Minneapolis or Saint Paul, and no more than $200,000 of the 
 14.27  credit may be applied to apartment property in the city of 
 14.28  Duluth. 
 14.29     (h) An owner who chooses to participate must complete an 
 14.30  application for certification by November 1, preceding the year 
 14.31  in which taxes are payable.  
 14.32     (i) An owner may apply this program to no more than two 
 14.33  nonhomestead, single- or two-family, tenant-occupied properties 
 14.34  or one apartment property. 
 14.35     (j) An owner is not eligible for the credit under this 
 14.36  section if the owner owns property in the state with a tax 
 15.1   delinquency owing. 
 15.2      Subd. 7.  [APPEALS.] (a) The board of equalization must 
 15.3   serve as a board of review to hear appeals relating to the value 
 15.4   of improvements and properties.  Procedures for board actions 
 15.5   and for appeals from board decisions are as provided for other 
 15.6   matters decided by the board of equalization.  
 15.7      (b) The city may appoint a board of appeals to hear 
 15.8   disputes regarding qualification.  The board shall meet to hear 
 15.9   appeals under this program between November 1 and December 1, 
 15.10  preceding the year in which taxes are payable. 
 15.11     Subd. 8.  [CITY FEES.] The owner must pay the housing 
 15.12  evaluator a fee, as determined by the city, for the initial 
 15.13  inspection and necessary reinspections.  The evaluator must pay 
 15.14  a filing fee, as determined by the city, to file the evaluator's 
 15.15  report.  The evaluator may be reimbursed by the owner for this 
 15.16  fee.  The owner must pay the city a fee, as determined by the 
 15.17  city, to apply for recertification.  If additional inspections 
 15.18  are required, a reinspection fee, as determined by the city, 
 15.19  must be paid by the landlord. 
 15.20     Subd. 9.  [CREDIT AND REIMBURSEMENT.] (a) [CREDIT 
 15.21  PROVIDED.] Property that meets the requirements under this 
 15.22  section is eligible for a property tax credit equal to the 
 15.23  difference between (1) the tax on the property, and (2) the tax 
 15.24  that would be payable if the property were classified under 
 15.25  Minnesota Statutes, section 273.13, subdivision 22, paragraph 
 15.26  (a). 
 15.27     (b) [PROPERTY TAX STATEMENTS.] The property tax statement 
 15.28  provided under Minnesota Statutes, section 276.04, to an owner 
 15.29  of property that receives the credit under this subdivision 
 15.30  shall include information on the amount of the credit given to 
 15.31  the property.  The county treasurer shall notify the 
 15.32  commissioner of revenue on how the county plans to modify the 
 15.33  property tax statements to include the necessary information. 
 15.34     (c) [GENERAL FUND; REPLACEMENT OF REVENUE.] Payment from 
 15.35  the general fund shall be made as provided in this subdivision 
 15.36  for the purpose of replacing revenue lost as a result of the 
 16.1   reduction of property taxes provided in this subdivision. 
 16.2      The county auditor shall certify to the commissioner of 
 16.3   revenue the amount of reduction resulting from this 
 16.4   subdivision.  This certification shall be submitted to the 
 16.5   commissioner of revenue as part of the abstracts of tax lists 
 16.6   required to be filed with the commissioner under the provisions 
 16.7   of Minnesota Statutes, section 275.29.  The commissioner of 
 16.8   revenue shall review the certification to determine its accuracy 
 16.9   and make changes in the certification as necessary or return the 
 16.10  certification to the county auditor for corrections. 
 16.11     Based on current year tax data reported in the abstracts of 
 16.12  tax lists, the commissioner of revenue shall determine the 
 16.13  taxing district distribution of the amounts certified.  The 
 16.14  commissioner of revenue shall pay to each taxing district, other 
 16.15  than school districts, its total payment for the year at the 
 16.16  times provided in Minnesota Statutes, section 473H.10.  The 
 16.17  credit reimbursement to school districts must be certified to 
 16.18  the commissioner of education and paid as provided under 
 16.19  Minnesota Statutes, section 273.1392. 
 16.20     The reimbursement paid under this subdivision shall be made 
 16.21  only in 1996 and 1997, and is limited to $3,500,000 in 1996 and 
 16.22  $3,500,000 in 1997.  No more than $1,500,000 in these 
 16.23  reimbursements may be made in any year for property located in 
 16.24  Minneapolis or Saint Paul nor more than $500,000 in any year for 
 16.25  property located in Duluth.  To the extent the amount of credit 
 16.26  originally certified in a city exceeds this amount, 
 16.27  reimbursements to the taxing districts in that city shall be 
 16.28  prorated according to the proportions of their levies so as not 
 16.29  to exceed the maximum reimbursement allowed in a year. 
 16.30     Subd. 10.  [REPORT TO THE LEGISLATURE.] By January 15, 
 16.31  1997, a city council shall provide a report to the committee on 
 16.32  housing and the committee on taxes and tax laws of the senate 
 16.33  and the housing committee and the tax committee of the house of 
 16.34  representatives on the program.  The report must include the 
 16.35  program guidelines, housing costs, rents, and the extent of 
 16.36  participation in the program. 
 17.1      Sec. 2.  [USE OF UNEXPENDED FUNDS.] 
 17.2      Any unexpended reimbursement amount authorized in Laws 
 17.3   1994, chapter 587, article 5, section 27, subdivision 8, 
 17.4   paragraph (c), is reappropriated to the commissioner of revenue 
 17.5   for immediate transfer to the city of Saint Paul.  The city must 
 17.6   place the transferred appropriation in a revolving fund to make 
 17.7   loans to owners of property eligible for a tax credit under 
 17.8   section 1.  The loans must be used to make repairs on the 
 17.9   eligible property to qualify for the credit. 
 17.10     Sec. 3.  [PROPERTY TAX REFUNDS.] 
 17.11     Notwithstanding Minnesota Statutes, section 290A.03, 
 17.12  subdivision 11, for purposes of calculating a claimant's 
 17.13  property tax refund, in the case of a claimant who resides in a 
 17.14  unit certified for participation in the rental equity project 
 17.15  under section 1, the claimant's "rent constituting property 
 17.16  taxes paid" for property taxes payable in 1996 or 1997 shall be 
 17.17  the rent constituting property tax as defined in Minnesota 
 17.18  Statutes, section 290A.03, subdivision 11, for the unit in the 
 17.19  year preceding the year in which the unit was certified for the 
 17.20  rental equity project. 
 17.21     An owner or managing agent of a unit certified for 
 17.22  participation in the rental equity project shall indicate that 
 17.23  the unit was certified for participation on the rent certificate 
 17.24  prescribed in Minnesota Statutes, section 290A.19, paragraph 
 17.25  (a).  In the event that the owner or managing agent fails to 
 17.26  provide a rent certificate and the renter obtains a statement 
 17.27  from the county treasurer, as prescribed in Minnesota Statutes, 
 17.28  section 290A.19, paragraph (c), the county treasurer shall also 
 17.29  indicate on the statement if the building was certified for 
 17.30  participation in the rental equity project.  If the building was 
 17.31  certified for participation, the county treasurer shall include 
 17.32  on the statement the amount of property tax on the parcel in the 
 17.33  year preceding certification for the rental equity project. 
 17.34     Sec. 4.  [APPROPRIATION.] 
 17.35     $7,000,000 is appropriated from the general fund to the 
 17.36  commissioner of revenue for the biennium ending June 30, 1997, 
 18.1   for the purposes of section 1. 
 18.2      Sec. 5.  [EFFECTIVE DATE.] 
 18.3      Section 1 is effective for the city of Duluth, Saint Paul, 
 18.4   or Minneapolis the day following final enactment, upon 
 18.5   compliance with Minnesota Statutes, section 645.021, subdivision 
 18.6   3, by the city.