SF4400

Purpose

This bill changes how Minnesota calculates the limit on private activity bonds used to finance qualifying residential rental projects. It updates the definition of “Aggregate bond limitation” in the state tax/finance statute to use a specific formula based on the project’s value and land, with a built‑in cap on debt.

Main Provisions

• The bill amends Minnesota Statutes 2024 section 474A.02 subdivision 1a to redefine “Aggregate bond limitation.”
• New definition uses a formula that considers:
  • the reasonably expected aggregate basis of a residential rental project, and
  • the land on which the project is or will be located.
• The limit is tied to the greater of two options:
  • a percentage-based amount related to 30 percent of the project’s basis and the land, and
  • the maximum supportable permanent amortizing debt.
• There is an overarching cap stating the debt (the maximum supportable permanent amortizing debt) cannot exceed 40 percent of the reasonably expected aggregate basis of the project and land.
• The change affects how much private activity bond authority can be allocated to qualifying residential rental projects.

Significant Changes to Existing Law

• Replaces the previous wording with a new, explicit formula for the aggregate bond limitation.
• Explicitly includes the land portion as part of the aggregate basis in calculating the limit.
• Establishes a 40 percent cap on the maximum supportable permanent amortizing debt portion of the aggregate basis.

Implications and Who Is Affected

• Financing for qualifying residential rental projects may be reshaped because the amount of private activity bonds available under this limit will follow the new formula.
• developers, lenders, and public financing agencies involved in housing projects will use the revised calculation to determine how much bond financing is allowed.

Relevant terms - Aggregate bond limitation - private activity bonds - qualifying residential rental projects - aggregate basis - land - reasonably expected aggregate basis - maximum supportable permanent amortizing debt - permanent amortizing debt - Minnesota Statutes 2024 section 474A.02 subdivision 1a

Relevant Terms aggregate bond limitation private activity bonds qualifying residential rental projects aggregate basis land reasonably expected aggregate basis maximum supportable permanent amortizing debt permanent amortizing debt Minnesota Statutes 2024 section 474A.02 subdivision 1a