Eligible recipients for Minnesota housing tax credit contributions modified, and credit sunset repealed.

A bill for an act

relating to taxation; modifying eligible recipients for Minnesota housing tax credit

contributions; repealing credit sunset; amending Minnesota Statutes 2024, sections

290.0683, subdivisions 1, 3; 462A.40, subdivision 3; repealing Minnesota Statutes

2024, section 290.0683, subdivision 7.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 290.0683, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have

the meanings given.

(b) "Agency" means the Minnesota Housing Finance Agency.

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(c) "Greater Minnesota" means the area of Minnesota located outside of the metropolitan

area.

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(d) "Metropolitan area" has the meaning given in section 473.121, subdivision 2.

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(c)
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(e)
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"Minnesota housing tax credit contribution account" or "account" means the

account established in section
462A.40
.

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(f) "Population" has the meaning given in section 477A.011, subdivision 3.

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(d)
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(g)
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"Qualified project" means a project that qualifies for a grant or loan under section

462A.40
.

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(e)
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(h)
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"Taxpayer" means a taxpayer as defined in section
290.01, subdivision 6
, or a

taxpayer as defined in section
297I.01, subdivision 16
.

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EFFECTIVE DATE.

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This section is effective for taxable years beginning after December

31, 2026.

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Sec. 2.

Minnesota Statutes 2024, section 290.0683, subdivision 3, is amended to read:

Subd. 3.

Allocation.

(a) To qualify for the credit, a taxpayer must contribute to the

Minnesota housing tax credit contribution account. A taxpayer may indicate that a

contribution is intended for a specific qualified project
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, subject to the limitations in paragraph

(b)
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. A taxpayer is prohibited from contributing to certain projects as provided in section

462A.40, subdivision 3
.

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(b) For each taxable year, the agency must reserve a percentage of credits for contributions

to qualified projects located in greater Minnesota equal to greater Minnesota's percentage

of the state population. Any portion of a taxable year's credits reserved for contributions to

qualified projects located in greater Minnesota that is not allocated by the agency by

September 30 of each year is available for allocation to credit applications for contributions

to other qualified projects beginning on October 1.

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(b)
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(c)
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The aggregate amount of tax credits allowed to all eligible contributors is limited

to $9,900,000 annually.

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(c)
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(d)
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Within 30 days after a taxpayer contributes to the account, the agency must file

with the contributing taxpayer a credit certificate statement or return any amounts to the

taxpayer as provided in this paragraph. The agency must send a copy of the credit certificate

to the commissioner. If there are insufficient credits to match the contribution, the agency

must not issue a credit certificate for the amount of the contribution for which there are

insufficient credits, and must return that amount to the taxpayer before issuing any credit

certificate.

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(d)
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(e)
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The credit certificate must state the dollar amount of the contribution made by

the taxpayer and the date the payment was received by the account, and indicate if the

contribution was intended for a specific qualified project.

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EFFECTIVE DATE.

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This section is effective for taxable years beginning after December

31, 2026.

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Sec. 3.

Minnesota Statutes 2024, section 462A.40, subdivision 3, is amended to read:

Subd. 3.

Eligible recipients; definitions; restrictions; use of funds.

(a) The agency

may award a grant or a loan to any recipient that qualifies under subdivision 2. The agency

must not award a grant or a loan to a disqualified individual or disqualified business.

(b) For the purposes of this subdivision disqualified individual means:

(1) an individual who or an individual whose immediate family member made a

contribution to the account in the current or prior taxable year and received a credit certificate;

(2) an individual who or an individual whose immediate family member owns the housing

for which the grant or loan will be used;

(3) an individual who meets the following criteria:

(i) the individual is an officer or principal of a business entity; and

(ii) that business entity made a contribution to the account in the current or previous

taxable year and received a credit certificate; or

(4) an individual who meets the following criteria:

(i) the individual directly owns, controls, or holds the power to vote 20 percent or more

of the outstanding securities of a business entity; and

(ii) that business entity made a contribution to the account in the current or previous

taxable year and received a credit certificate.

(c) For the purposes of this subdivision disqualified business means a business entity

that:

(1) made a contribution to the account in the current or prior taxable year and received

a credit certificate;

(2) has an officer or principal who is an individual who made a contribution to the

account in the current or previous taxable year and received a credit certificate; or

(3) meets the following criteria:

(i) the business entity is directly owned, controlled, or is subject to the power to vote 20

percent or more of the outstanding securities by an individual or business entity; and

(ii) that controlling individual or business entity made a contribution to the account in

the current or previous taxable year and received a credit certificate.

(d) For purposes of this subdivision, "immediate family" means the taxpayer's spouse,

parent or parent's spouse, sibling or sibling's spouse, or child or child's spouse. For a married

couple filing a joint return, the limitations in this subdivision apply collectively to the

taxpayer and spouse.

(e) Before applying for a grant or loan, all recipients must sign a disclosure that the

disqualifications under this subdivision do not apply. The Minnesota Housing Finance

Agency must prescribe the form of the disclosure. The Minnesota Housing Finance Agency

may rely on the disclosure to determine the eligibility of recipients under paragraph (a).

(f) The agency may award grants or loans to a city as defined in section
462A.03
,

subdivision 21; a federally recognized American Indian Tribe or subdivision located in

Minnesota; a Tribal housing corporation; a private developer; a nonprofit organization; a

housing and redevelopment authority under sections
469.001
to
469.047
; a public housing

authority or agency authorized by law to exercise any of the powers granted by sections

469.001
to
469.047
; or the owner of the housing. The provisions of subdivision 2, and

paragraphs (a) to (e) and (g) of this subdivision, regarding the use of funds and eligible

recipients apply to grants and loans awarded under this paragraph.

(g)
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Except for projects receiving funding under section 462A.39,
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eligible recipients must

use the funds to serve households that meet the income limits as provided in section
462A.33,

subdivision 5
.

Sec. 4.
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REPEALER.
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Minnesota Statutes 2024, section 290.0683, subdivision 7,

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is repealed.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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APPENDIX

Repealed Minnesota Statutes: H3902-1

290.0683 MINNESOTA HOUSING TAX CREDIT.

Subd. 7.

Sunset.

This section expires after December 31, 2028, except that the agency's authority to issue credit certificates under subdivision 3 based on contributions received before January 1, 2029, and allocation certificates that were issued before February 1, 2029, remains in effect through January 1, 2030. The reporting requirements in section
462A.40
, subdivision 5, remain in effect through the year following the year in which all allocation certificates have either been canceled or resulted in issuance of credit certificates, or January 1, 2031, whichever is earlier. The expiration of this section does not affect the commissioner's authority to audit or power of examination and assessment for credits claimed under this section.