1.1Senator Dziedzic moved to amend
H.F. No. 4366, as amended pursuant to Rule 45,
1.2adopted by the Senate April 26, 2022, as follows:
1.3(The text of the amended House File is identical to
S.F. No. 4019.)
1.4Page 72, after line 6, insert:
1.6AFFORDABLE HOMEOWNERSHIP PROTECTIONS
1.7 Section 1.
[500.35] SINGLE FAMILY HOME RENTAL BY CORPORATE ENTITIES
1.8RESTRICTED.
1.9 Subdivision 1. Purpose. The legislature finds that it is in the interests of the state to
1.10encourage and protect home ownership and the single-family home as a basic housing
1.11option, to allow families increased access to housing through homeownership, for families
1.12to build equity and wealth through their housing, and to enhance and promote the stability
1.13and well-being of families and society in Minnesota.
1.14 Subd. 2. Definitions. (a) For purposes of this section, the following terms have the
1.15meanings given.
1.16(b) "Affordable housing" means at least two-thirds of its units are rented to an individual
1.17or family with an annual income of up to 50 percent of the area median income as determined
1.18by the United States Department of Housing and Urban Development, adjusted for family
1.19size, that is paying no more than 30 percent of annual income on rent.
1.20(c) "Corporate entity" means any partnership, corporation, limited liability company,
1.21pension or investment fund, or trust but does not include a nonprofit corporation,
a family
1.22trust, or a family limited liability company.
1.23(d) "Commissioner" means the commissioner of the Minnesota Housing Finance Agency.
1.24(e) "Family limited liability company" means a limited liability company organized
1.25under chapter 322C meeting the following standards:
1.26(1) it has no more than five members;
1.27(2) all its members are natural persons or family trusts;
1.28(3) all of its members who are natural persons or spouses of natural persons are related
1.29to each other within the third degree of kindred according to the rules of civil law;
and
1.30(4) its revenue from rent or any other means is paid directly from one member to another.
2.1(f) "Family trust" means:
2.2(1) a trust in which:
2.3(i) a majority of the current beneficiaries are persons or spouses of persons who
are
2.4related to each other within the third degree of kindred according to the rules of
civil law;
2.5(ii) all of the current beneficiaries are natural persons or nonprofit corporations
or trusts
2.6described in Internal Revenue Code, section 170(c), as amended; and
2.7(iii) one of the current beneficiaries or a person related to a current beneficiary
within
2.8the third degree of kindred according to the rules of civil law is residing at the
property
2.9subject to the trust; or
2.10(2) a charitable remainder trust as defined in Internal Revenue Code, section 664,
as
2.11amended, or a charitable lead trust as set forth in Internal Revenue Code, section
170(f).
2.12(g) "Nonprofit corporation" means a nonprofit corporation organized under state nonprofit
2.13corporation or trust law or qualified for tax-exempt status under federal tax law
that was
2.14incorporated for the purpose of providing affordable housing.
2.15(h) "Pension or investment fund" means a pension or employee welfare benefit fund,
2.16however organized; a mutual fund; a life insurance company separate account; a common
2.17trust of a bank or other trustee established for the investment and reinvestment of
money
2.18contributed to it; a real estate investment trust; or an investment company as defined
in
2.19United States Code, title 15, section 80a-3.
2.20(i) "Real estate developer" means a business that is engaged in real estate development
2.21or construction.
2.22(j) "Residential building contractor" has the meaning given in section 326B.802,
2.23subdivision 11.
2.24 Subd. 3. Single-family home rental restricted; exemptions. (a) No corporate entity,
2.25real estate developer, or residential building contractor shall:
2.26(1) directly or indirectly purchase, own, build, acquire, or otherwise obtain any
interest
2.27in property classified as class 1a under section 273.13, subdivision 22; and
2.28(2) subsequently convert the property into nonhomestead residential real estate containing
2.29one rental unit.
2.30(b) A corporate entity, real estate developer, or residential building contractor
may
2.31petition the commissioner for an exemption from paragraph (a). The commissioner may
2.32issue an exemption if, during the time an employee is employed by the corporation,
an
3.1employee of a corporation rents a unit for a periodic tenancy from that corporation
and pays
3.2rent to the corporation, or the entity meets the following criteria:
3.3(1) the exemption would not contradict the purpose of this section; and
3.4(2) the petitioning entity would not have an impact upon the availability of affordable
3.5housing.
3.6(c) A limited liability company organized under chapter 322C may petition the
3.7commissioner for an exemption from paragraph (a) if the limited liability company:
3.8(1) has an interest in less than 20 properties classified as class 1a under section
273.13,
3.9subdivision 22; and
3.10(2) certifies to the commissioner that the limited liability company is not a subsidiary
3.11or partner or related in any way to a corporate entity that has an interest in 20
or more
3.12properties classified as class 1a under section 273.13, subdivision 22.
3.13 (d) The commissioner shall review annually each entity, developer, or contractor that
3.14is issued an exemption under this section to ensure that the entity continues to meet
the
3.15criteria in paragraph (b) or (c). If an entity, developer, or contractor fails to
meet the criteria,
3.16the commissioner shall withdraw the exemption and the entity is subject to enforcement
3.17proceedings under subdivision 4. The commissioner shall submit a report with a list
of each
3.18entity that is issued an exemption under this paragraph to the chairs and ranking
minority
3.19members of the senate and house of representatives housing policy committees by October
3.201 of each year.
3.21 Subd. 4. Enforcement. If the attorney general has reason to believe that a corporate
3.22entity, real estate developer, or residential building contractor is violating this
section, the
3.23attorney general shall commence an action in the district court in which any real
property
3.24relative to such violation is situated. The attorney general shall file for record
with the county
3.25recorder or the registrar of titles of each county in which any portion of said property
is
3.26located a notice of the pendency of the action as provided in section 557.02. If the
court
3.27finds that the property in question is being held in violation of subdivision 3, it
shall enter
3.28an order so declaring. The attorney general shall file for record any such order with
the
3.29county recorder or the registrar of titles for the county in which the property is
located.
3.30Thereafter, the corporate entity shall have a period of one year from the date of
the order
3.31to divest itself of the property. The aforementioned one-year limitation period shall
be
3.32deemed a covenant running with the title to the property against the entity, developer,
3.33contractor, assignee, or successor. Any property not so divested within the time prescribed
3.34shall be sold at public sale in the manner prescribed by law for the foreclosure of
a mortgage
4.1by action. In addition, any prospective or threatened violation may be enjoined by
an action
4.2brought by the attorney general in the manner provided by law.
4.3EFFECTIVE DATE.This section is effective August 1, 2022, and applies to any interest
4.4acquired in property on or after that date."
4.5Amend the title accordingly
4.6The motion prevailed. #did not prevail. So the amendment was #not adopted.