Counties allowed to spend housing aid payments on expenses of administering qualifying aid expenditures.

A bill for an act

relating to taxation; local government aids; allowing counties to spend housing

aid payments on expenses of administering qualifying aid expenditures; amending

Minnesota Statutes 2024, sections 477A.35, subdivision 4; 477A.36, subdivision

4.

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

Section 1.

Minnesota Statutes 2024, section 477A.35, subdivision 4, is amended to read:

Subd. 4.

Qualifying projects.

(a) Qualifying projects include:

(1) emergency rental assistance for households earning less than 80 percent of area

median income as determined by the United States Department of Housing and Urban

Development;

(2) financial support to nonprofit affordable housing providers in their mission to provide

safe, dignified, affordable and supportive housing;

(3) projects designed for the purpose of construction, acquisition, rehabilitation,

demolition or removal of existing structures, construction financing, permanent financing,

interest rate reduction, refinancing, and gap financing of housing to provide affordable

housing to households that have incomes which do not exceed, for homeownership projects,

115 percent of the greater of state or area median income as determined by the United States

Department of Housing and Urban Development, and for rental housing projects, 80 percent

of the greater of state or area median income as determined by the United States Department

of Housing and Urban Development, except that the housing developed or rehabilitated

with funds under this section must be affordable to the local work force;

(4) financing the operations and management of financially distressed residential

properties;

(5) funding of supportive services or staff of supportive services providers for supportive

housing as defined by section
462A.37, subdivision 1
. Financial support to nonprofit housing

providers to finance supportive housing operations may be awarded as a capitalized reserve

or as an award of ongoing funding;
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and
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(6) costs of operating emergency shelter facilities, including the costs of providing

services
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.
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; and
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(7) costs incurred by counties in administering qualifying projects under this subdivision,

except that administrative costs may not exceed ....... percent of aid received under this

section. Costs incurred in transferring aid payments to a local housing trust fund as provided

in subdivision 5, paragraph (a), are not eligible under this clause, but costs incurred in

expending funds transferred to a local housing trust fund are a qualifying project under this

section, subject to the percentage limit in the preceding sentence.

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(b) Recipients must prioritize projects that provide affordable housing to households

that have incomes which do not exceed, for homeownership projects, 80 percent of the

greater of state or area median income as determined by the United States Department of

Housing and Urban Development, and for rental housing projects, 50 percent of the greater

of state or area median income as determined by the United States Department of Housing

and Urban Development. Priority may be given to projects that: reduce disparities in home

ownership; reduce housing cost burden, housing instability, or homelessness; improve the

habitability of homes; create accessible housing; or create more energy- or water-efficient

homes.

(c) Gap financing is either:

(1) the difference between the costs of the property, including acquisition, demolition,

rehabilitation, and construction, and the market value of the property upon sale; or

(2) the difference between the cost of the property and the amount the targeted household

can afford for housing, based on industry standards and practices.

(d) If aid under this section is used for demolition or removal of existing structures, the

cleared land must be used for the construction of housing to be owned or rented by persons

who meet the income limits of paragraph (a).

(e) If an aid recipient uses the aid on new construction of a building containing more

than four units, the loan recipient must construct, convert, or otherwise adapt the building

to include:

(1) the greater of: (i) at least one unit; or (ii) at least five percent of units that are

accessible units, and each accessible unit includes at least one roll-in shower, water closet,

and kitchen work surface meeting the requirements of section 1002 of the current State

Building Code Accessibility Provisions for Dwelling Units in Minnesota; and

(2) the greater of: (i) at least one unit; or (ii) at least five percent of units that are

sensory-accessible units that include:

(A) soundproofing between shared walls for first and second floor units;

(B) no florescent lighting in units and common areas;

(C) low-fume paint;

(D) low-chemical carpet; and

(E) low-chemical carpet glue in units and common areas.

Nothing in this paragraph relieves a project funded by this section from meeting other

applicable accessibility requirements.

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EFFECTIVE DATE.

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This section is effective for aids payable in 2027 and thereafter.

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Sec. 2.

Minnesota Statutes 2024, section 477A.36, subdivision 4, is amended to read:

Subd. 4.

Qualifying projects.

(a) Qualifying projects shall include:

(1) emergency rental assistance for households earning less than 80 percent of area

median income as determined by the United States Department of Housing and Urban

Development;

(2) financial support to nonprofit affordable housing providers in their mission to provide

safe, dignified, affordable and supportive housing;

(3) outside the metropolitan counties as defined in section
473.121, subdivision 4
,

development of market rate residential rental properties, as defined in section
462A.39,

subdivision 2
, paragraph (d), if the relevant unit of government submits with the report

required under subdivision 6 a resolution and supporting documentation showing that the

area meets the requirements of section
462A.39, subdivision 4
, paragraph (a);

(4) projects designed for the purpose of construction, acquisition, rehabilitation,

demolition or removal of existing structures, construction financing, permanent financing,

interest rate reduction, refinancing, and gap financing of housing to provide affordable

housing to households that have incomes which do not exceed, for homeownership projects,

115 percent of the greater of state or area median income as determined by the United States

Department of Housing and Urban Development and, for rental housing projects, 80 percent

of the greater of state or area median income as determined by the United States Department

of Housing and Urban Development, except that the housing developed or rehabilitated

with funds under this section must be affordable to the local work force;

(5) financing the operations and management of financially distressed residential

properties;

(6) funding of supportive services or staff of supportive services providers for supportive

housing as defined in section
462A.37, subdivision 1
. Financial support to nonprofit housing

providers to finance supportive housing operations may be awarded as a capitalized reserve

or as an award of ongoing funding;
deleted text begin
and
deleted text end

(7) costs of operating emergency shelter facilities, including the costs of providing

services
deleted text begin
.
deleted text end
new text begin
; and
new text end

new text begin

(8) costs incurred by counties in administering qualifying projects under this subdivision,

except that administrative costs may not exceed ....... percent of aid received under this

section. Costs incurred in transferring aid payments to a local housing trust fund as provided

in subdivision 5, paragraph (a), are not eligible under this clause, but costs incurred in

expending funds transferred to a local housing trust fund are a qualifying project under this

section, subject to the percentage limit in the preceding sentence.

new text end

(b) Recipients must prioritize projects that provide affordable housing to households

that have incomes that do not exceed, for homeownership projects, 80 percent of the greater

of state or area median income as determined by the United States Department of Housing

and Urban Development, and for rental housing projects, 50 percent of the greater of state

or area median income as determined by the United States Department of Housing and

Urban Development. Priority may be given to projects that: reduce disparities in home

ownership; reduce housing cost burden, housing instability, or homelessness; improve the

habitability of homes; create accessible housing; or create more energy- or water-efficient

homes.

(c) Gap financing is either:

(1) the difference between the costs of the property, including acquisition, demolition,

rehabilitation, and construction, and the market value of the property upon sale; or

(2) the difference between the cost of the property and the amount the targeted household

can afford for housing, based on industry standards and practices.

(d) If aid under this section is used for demolition or removal of existing structures, the

cleared land must be used for the construction of housing to be owned or rented by persons

who meet the income limits of paragraph (a).

(e) If an aid recipient uses the aid on new construction of a building containing more

than four units, the loan recipient must construct, convert, or otherwise adapt the building

to include:

(1) the greater of: (i) at least one unit; or (ii) at least five percent of units that are

accessible units, and each accessible unit includes at least one roll-in shower, water closet,

and kitchen work surface meeting the requirements of section 1002 of the current State

Building Code Accessibility Provisions for Dwelling Units in Minnesota; and

(2) the greater of: (i) at least one unit; or (ii) at least five percent of units that are

sensory-accessible units that include:

(A) soundproofing between shared walls for first and second floor units;

(B) no florescent lighting in units and common areas;

(C) low-fume paint;

(D) low-chemical carpet; and

(E) low-chemical carpet glue in units and common areas.

Nothing in this paragraph relieves a project funded by this section from meeting other

applicable accessibility requirements.

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EFFECTIVE DATE.

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This section is effective for aids payable in 2027 and thereafter.

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