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S.F. No. 1789 - Housing Project Bonding Allocation
 
Author: Senator David H. Senjem
 
Prepared By: Greg Knopff, Senate Analyst (651/296-9399)
 
Date: March 13, 2017



 

Section 1 [Aggregate bond limitation] defines “aggregate bond limitation” as 55 percent of the reasonably expected project.

Section 2 [AMI] defines “AMI” as the area median income.

Section 3 [Workforce housing] defines “workforce housing” as multifamily housing that for a period of at least 15 years are occupied by at least 80 percent of families at an income of 60 percent or less AMI and 80 percent of the rents are restricted to 30 percent of 60 percent AMI.

Section 4 [Federal tax-exempt bond allocation] eliminates the existing 31 percent reserve for single-family housing allocation that exists until the last Monday in July for housing tax-exempt bond allocation.

Section 5 [Bond allocation application; housing pool] adds additional information required for residential rental project bond allocation applications to the housing pool on whether the project will be using federal tax credits, is workforce housing, and whether the bond application and previous bonds for the project will exceed the aggregate bond limitation.

Sections 6 [Housing pool allocation] creates a new priority for the housing pool, as described below:

  1. Priority 1, projects that preserve existing federally subsidized housing and the issuer/borrower agrees to issue an amount of bonds at or below 55 percent of the reasonable expected eligible basis, as determined by the issuer;
  2. Priority 2, projects where the applicant will be using low-income housing tax credits and the bonds, plus previous allocations will not exceed 55 percent of the project;
  3. Priority 3, all other eligible multifamily applicants using low-income housing tax credits;
  4. Priority 4, single-family housing programs; and
  5. Priority 5, all other eligible multifamily applicants not using low-income housing tax credits.

This section also provides for residential rental projects being fully funded from the housing pool.  If they are not fully funded in a given year, the project will be fully funded in the next year before any new project that has an equal priority is funded.

Section 7 [Bond allocation application; unified pool] adds additional information required for residential rental project bond allocation applications to the unified pool on whether the project will be using federal tax credits, is workforce housing, and whether the bond application and previous bonds for the project will exceed the aggregate bond limitation.

Section 8 [Unified pool allocation; housing] creates a new priority for housing allocations from the unified pool, as described below:

  1. Priority 1, projects that preserve existing federally subsidized housing and the issuer/borrower agrees to issue an amount of bonds at or below 55 percent of the reasonable expected eligible basis, as determined by the issuer;
  2. Priority 2, projects where the applicant will be using low-income housing tax credits and the bonds plus previous allocations will not exceed 55 percent of the project;
  3. Priority 3, all other eligible multifamily applicants using low-income housing tax credits; and
  4. Priority 4, all other eligible multifamily applicants not using low-income housing tax credits.

This section also provides for residential rental projects being fully funded from the unified pool.  If they are not fully funded in a given year, the project will be fully funded in the next year before any new project that has an equal priority is funded.

Section 9 [Unifies pool allocation on October 1] provides that money in the unified pool on October 1 each year, is only available for single-family housing for cities that applied in January.

Section 10 [Allocation plan] directs the Commissioner of MHFA to prepare a tax-exempt bond allocation plan by January 15, each year. The plan must be posted on the MHFA Web site until February 1, and invite public comment.  After February 1, the commissioner may file the IRS form for allocations, unless otherwise required by the IRS.

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