HF3902

Purpose

• This bill changes who can receive Minnesota housing tax credit contributions and removes a sunset on the credit. It also repeals a specific statute related to the credit and updates how eligible recipients and funding use are determined.

Key Provisions

• Eligibility and disqualification rules
  • The Minnesota Housing Finance Agency may award grants or loans to recipients that qualify under the law, but must not award to disqualified individuals or disqualified businesses.
  • Disqualified individuals include:
  • A person whose immediate family member contributed to the credit account in the current or prior tax year and received a credit certificate.
  • A person whose immediate family member owns the housing that will receive the grant or loan.
  • A person who is an officer or principal of a business entity that contributed to the account in the current or previous tax year and received a credit certificate.
  • A person who directly owns 20% or more of the outstanding securities of a business entity that contributed to the account in the current or previous tax year and received a credit certificate.
  • Disqualified businesses include:
  • A business that contributed to the account in the current or prior tax year and received a credit certificate.
  • A business with an officer or principal who contributed to the account and received a certificate.
  • A business that is directly owned or controlled by an individual or other entity that contributed to the account and received a certificate (meeting the 20% ownership or voting threshold).
  • Immediate family definitions (spouse, parents, siblings, spouse of a parent or child, etc.) apply, and for married couples filing jointly, the limits apply to both.
  • Before applying for a grant or loan, all recipients must sign a disclosure stating that the disqualifications do not apply; the agency will prescribe the disclosure form and may rely on it to determine eligibility.
• Eligible recipients and recipients’ categories
  • The agency may award grants or loans to cities, federally recognized American Indian Tribes or Minnesota-based tribal housing corporations, private developers, nonprofit organizations, housing and redevelopment authorities, public housing authorities or agencies with powers under Minnesota law, or the owner of the housing.
  • The provisions about use of funds and eligibility apply to these categories.
• Use of funds and income requirements
  • Except for projects funded under section 462A.39, eligible recipients must use funds to serve households that meet income limits defined in section 462A.33 subdivision 5.
  • The bill preserves a link between funds and household income eligibility, ensuring targeted benefits to qualifying households.
• Other changes and clarifications
  • The bill repeals Minnesota Statutes 2024 section 290.0683 subdivision 7 (repealing the credit sunset).
  • It also amends Minnesota Statutes 2024 section 462A.40 subdivision 3 to reflect the new disqualification framework and eligibility criteria.

Significant Changes to Existing Law

• Introduces broad disqualification rules tied to credit certificate recipients and ownership relationships, including:
  • Direct and indirect connections through immediate family.
  • Officer/principal roles in entities that received credits.
  • 20% ownership or control thresholds over securities of related entities.
• Adds a mandatory disclosure requirement for applicants and formalizes the Minnesota Housing Finance Agency’s ability to rely on disclosures for eligibility decisions.
• Expands the pool of eligible recipients to include a wider range of public and private entities involved in housing.
• Links funding use to income-based eligibility for most projects, reinforcing targeted assistance to low- and moderate-income households.
• Repeals the sunset on the housing credit, potentially extending the duration or availability of the credit.

Relevant notes - The changes affect how credits are allocated and monitored, potentially reducing conflicts of interest by disqualifying certain applicants connected to credit recipients. - The bill continues to require income-based targeting for most funded projects, which focuses benefits on households that meet defined income limits.

Relevant Terms - Minnesota Housing Finance Agency - eligible recipients - disqualified individual - disqualified business - credit certificate - immediate family - officer or principal - ownership 20 percent - grant - loan - city - Tribal housing corporation - federally recognized American Indian Tribe - private developer - nonprofit organization - housing and redevelopment authority - public housing authority - income limits - Minnesota Statutes 462A.40 - Minnesota Statutes 462A.33 - section 462A.39 - disclosure - credit sunset - repeal - housing tax credit contributions