Due to a shortage of Private Activity Bond carryover by entitlement issuers (over $800M in past years could potentially be less than $400M this year) and with demand remaining strong, Minnesota Housing Finance Agency Staff proposes the following changes for both the 2017 and 2018 QAPs:

  • Increase the minimum score required to receive an allocation of 4% tax credits to 50 points.
  • Add the requirement that a project must meet at least one Strategic Priority Policy Threshold in the QAP under which the project was selected.
  • Require that owners of projects qualifying for 4% tax credits under the 2017 QAP and the 2018 QAP to maintain the credit units in the projects for at least 30 years and Sections 42(h)(6)(E)(i)(II) and 42(h)(6)(F) of the Internal Revenue Code shall not apply to the projects.

For the 2017 QAP only, MHFA proposes including the requirement that when Minnesota Housing is the issuer of tax-exempt bonds, bonding authority will be allocated for no more than 53% of a project’s eligible cost basis, as defined in the low income housing tax credit rules.

Overall recommended policy changes at MHFA regarding 4% applications also include the following:

  • Minnesota Housing will institute a new pre-application for determination of 4% tax credit eligibility. This process will be available to developers as a means of receiving a tax credit scoring determination prior to submitting an application for Private Activity Bonds to MMB or Minnesota Housing. Developers will be strongly encouraged to submit such a pre-application. Staff will provide details of the pre-application process to the public by November 1, 2016.
  • Minnesota Housing will not consider requests for 4% tax credits or for allocations of Private Activity Bonds made between October 1, 2016 and December 22, 2016.
  • Minnesota Housing will require a waiver from the Board for any project seeking 4% tax credits whose total development costs exceed the predictive model by more than 25%.

Written public comments are due by November 16, 2016 at 12:30pm. Send comments to mn.housing@state.mn.us or by mail to Minnesota Housing, attn: Tamara Wilson, 400 Sibley Street, Suite 300, St. Paul, MN 55101.

A public hearing will also be held:

November 16 from 10:30am – 12:30pm
Minnesota Housing Finance Agency
400 N Sibley St.
St. Paul, MN 55101

The proposed changes will be considered at the Board meeting taking place on December 22, 2016.