Tax Foreclosure Properties in Minneapolis Metro

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					             Summary of Affordable Housing Legislation (2008)

Omnibus Tax Bill (Chapter 366): Governor signed into law May 29, 2008.
• Sales Tax Exemption – Extends the sales tax exemption for construction materials to
  include limited partnerships in cases when a nonprofit is the sole or managing
  general partner. Assists in the development of approximately 250 units of new
  affordable housing per year. Effective for purchases made after June 30, 2009.
• HRA Levy Authority – Authorizes an increase of over 25% in the maximum general
  HRA levy from 0.0144 to 0.0185 of taxable market value.
• Minnesota Housing Refinancing Authority – Provides the agency with authority to use
  temporary increase in federal mortgage revenue bonds to primarily address
  foreclosed properties.
• Vacant Property Lien – Authorizes municipalities the recovery of delinquent vacant
  property registration fees under an existing program designed to identify and register
  vacant properties and if unpaid, collect the fees through a lien on the property.
• Special Levy for Vacant Properties – Establishes a special levy for abandoned
  residential properties in cities where the foreclosure rate of 1.4% or higher in 2007 or
  50% higher than average metro rate in a zip code. Permits up to $3,000 per unit for
  costs of municipal services related to securing the property.
• Crime Free Multi Housing Pilot – Requires qualifying 4d properties in Brooklyn Center
  to participate in program or lose the 4d classification. Qualifying properties are those
  4d properties that, over two year period, have 25% more police calls compared to
  other 4d properties; compliance required by May 15, 2011.
• Minneapolis Housing Replacement TIF – Expands the City of Minneapolis Housing
  Replacement tax increment financing district to permit addressing the treatment of
  vacant and blighted properties on parcels outside the replacement district.
• Mortgage Registry and Deed Tax – Hennepin and Ramsey counties gain a 5-year
  extension on the Mortgage Registry & Deed Tax to be used for the remediation of
  polluted and contaminated properties.
• Manufactured Housing – Changes the date for determining property taxes from July
  1 to January 2.

 Supplemental Appropriations Bill (Chapter 363): Governor signed into law May 29, 2008.
• Minnesota Housing Budget - Reduces the agency’s FY09 budget by $200,000.
• Minnesota Housing Debt Ceiling: Raises the agency debt ceiling from $3 billion to $5
• Long Term Homelessness – Appropriates $505,000 in the Human Services Budget for
   long-term homeless supportive services. There was an additional reduction of 1.8% to
   general fund grants. This decrease results in a base-level reduction of $90,000 to
   Long-Term Homeless Service Grants starting in FY09.
• Group Residential Housing – Reduces Group Residential Housing grants by $133,000
   in FY09.

                                                                            Updated 6/19/2008
•   Competitive Housing Grant – Establishes a competitive grant process for public and
    private agencies to support and assist individuals eligible for publicly funded home
    and community based services to access housing. Appropriates $250,000 in FY09.

Omnibus Capital Investment Bill (Bonding Chapter 179) – Governor signed into law with
several line item vetoes on April 7, 2008.
• Long –Term Homelessness - Authorizes Minnesota Housing to sell $30,000,000 in non-
   profit appropriations bonds for the purposes of supportive housing as part of the
   state's plan to end long term homelessness
• Publicly Owned Shelter - Includes $1,000,000 in general obligation bonds for
   emergency shelters, temporary transitional housing and for publicly owned
   permanent rental housing.
• Minnesota Housing Non-Profit Bonding Authority – Creates new authorization to the
   agency to issue non-profit appropriations bonds. Initial offering for residential rental
   projects through project based federal bonds.
• Land Trust Taskforce - Establishes a taskforce to consider 1) the use of Minnesota
   Housing non-profit revenue bonds to prevent foreclosure and to address vacant
   properties due to foreclosure, 2) means to make community activity set aside
   (CASA) mortgages more accessible to neighborhood land trusts and 3) alternative
   tax classifications for neighborhood land trusts.

Omnibus Policy Only Tax Bill (Chapter 154): Governor signed into law March 7, 2008.
• Low Income Property Tax Classification (4d) - Modifies the low-income rental
  property classification, 4d, to include properties with at least 20% rent-restricted units.
  Also allows projects with local financing to quality for the lower tax rate. Estimated
  to give property tax relief to approximately 9,700 properties saving a net total of 6.4
  million dollars for affordable housing property owners.
• Manufactured Housing Property Tax Exemption - Exempts buildings or attachments
  to a manufactured home with an estimated market value of $1,000 or less from
  property tax. Instead taxes as personal property. Effective for taxes payable FY09.
• Minneapolis TIF District Expansion - Minneapolis housing replacement tax
  increment finance (TIF) district was increased from 200 to 400 parcels.
                    Summary of Foreclosure Legislation (2008)

In the months leading up to the 2008 legislative session, a bi-partisan and cross-sector
collaborative effort was established to develop a response to the foreclosure crisis. The
effort was undertaken at the behest of a number of Minnesota state legislators,
including the convener, Representative Joe Mullery. Five Working Groups (WG) were
formed and participation included State Representatives and State Senators, the
Minnesota Attorney General’s office, state agency personnel, county and local
government staff, nonprofit sector representatives, members of the financial
community, landlords, members of the academic community, and consumer
advocates. The result was a package of consensus proposals designed to provide
comprehensive relief to the victims of the crisis and to prevent further devastation to
families, further deterioration of neighborhoods, and further erosion of property values
and community and economic stability. Numerous proposals were introduced in
addition to these consensus items. The following list provides an overview of the key
legislation introduced this session.

Legislation Enacted To Address Foreclosures
• Mortgage Tax Forgiveness - H.F. 3473(Mullery)/S.F. 2916(Moua): forgives taxes for
   certain mortgage debt relief qualified as income. WG
• 5 Week Redemption - H.F. 3474(Hilstrom)/S.F. 2918(Higgins): facilitates use of the 5
   week redemption period when the lender can demonstrate the property is
   abandoned; failure to show up at a hearing is conclusive proof of abandonment.
• Tenant Protections on Foreclosed Properties - H.F. 3476(Kohls)/S.F. 2908(Higgins):
   requires landlords to notify tenants when the property is in foreclosure; requires 2
   month notice before tenants have to leave; requires landlords to tell prospective
   tenants if the property is in foreclosure; provides tenants with right to withhold last
   month’s rent. WG
• Punitive Damages Cap - H.F. 3478(Peterson)/S.F. 2915(Moua): increases cap for
   punitive damages in the case of discrimination from $8,500 to $25,000 and gives
   county attorneys more tools to punish persons guilty of residential mortgage fraud.
   WG ?
• Foreclosure Data - H.F. 3516(Davnie)/S.F. 2914(Rest): sets up foreclosure data
   practices requirements, requires statewide foreclosure data collection and a
   reporting system study. WG
• Expungement - H.F. 3517(Davnie)/S.F. 2910(Higgins): requires mandatory
   expungement of eviction records. WG
• Minnesota Residential Mortgage Originator and Servicer Licensing Act - H.F.
   3774(Dominguez)/S.F. 3214(Higgins): modifies residential mortgage loan and real
   estate property definitions under the act.
• Utilities Shutoff - H.F. 3229(Nelson)/S.F. 2775(Foley): requires disconnection notice to
   cities for customer gas or electric service shutoff.
• Tenant Utilities - H.F. 3428(Gunther)/S.F. 2909(Olseen): gives tenants the right to take
   over utilities payment when a landlord is in default. WG

Updated 5/30/2008                                                  WG = Denotes Working Group Bill
•   Ability to Pay Provision - H.F. 3839(Lillie)/S.F. 3154(Scheid): authorizes a mortgage
    originator to verify the a borrower’s ability to pay when determining the reasonable
    probability of payment on a residential mortgage loan.
•   Land Trust Taskforce (in Chapter 179) – H.F. 380 (bonding bill): establishes a taskforce
    to consider the use of non-profit revenue bonds to address vacant properties due to
•   Contract for Deed - H.F. 3236(Davnie)/S.F. 2881(Scheid): regulates contracts for
    deed and mortgage lending, increases the maximum amount of loan covered from
    $100,000 to $300,000. WG
•   Manufactured Housing - H.F. 3477(Gardner)/S.F. 2917(Marty): regulates
    manufactured home lending practices and amends default regulation provisions.
    Extends time of reinstatement from 30 to 60 days, provides protections against
    egregious lending practices such as negative amortizations, requires verification of
    ability to pay and requires loan refinancing to be signed by loan counselor. WG
•   Foreclosure Process, Remedies & Preforeclosure Counseling - H.F. 3420(Hilstrom)/S.F.
    3239(Moua): amends the former H.F. 3475(Mullery)/S.F. 2912(Scheid) and modifies
    mortgage foreclosure proceedings; provides for early intervention by foreclosure
    counselors; addresses remedies and tenant notice. WG
•   Foreclosure Assistance - H.F. 3346(Davnie)/S.F. 3073(Higgins): increases and indexes
    the cap for the amount of mortgage foreclosure assistance provided to a
    household under the Minnesota Housing Finance Agency’s Foreclosure Prevention
    Assistance Program.
•   Vacant Properties Fees - H.F. 4199(Mahoney)/S.F. 3840(Moua): authorizes delinquent
    vacant building registration fees collection as a special assessment. It has been
    included in the Omnibus Tax Bill, H.F. 3149(Lenczewski).
•   Minnesota Housing Mortgage Revenue Bond Authority - H.F. 4228(Lenczweski)/S.F.
    3864(Pogemiller): gives Minnesota Housing mortgage revenue bonding authority. It
    has been included in the Omnibus Tax Bill, H.F. 3149(Lenczewski).

Vetoed by the Governor
• MN Subprime Borrower Relief Act - H.F. 3612(Davnie)/S.F. 3396(Anderson): defers
   foreclosure for homeowners who were subject to subprime loans and whose lenders
   refuse to negotiate during counseling.

Unsuccessful Proposals
• H.F. 4012(Mullery): extends the foreclosure reinstatement period.
• H.F. 3479(Clark)/S.F. 2911(Higgins): eliminates filing fee requirements for tenants filing
   tenant remedies actions, emergency tenant remedies actions or rent escrow
   actions where property is in foreclosure. WG
• H.F. 3600(Clark)/S.F. 3607(Moua): mortgage foreclosure emergency declared, and
   postponement of foreclosure proceedings authorized.
• H.F. 3931(Kalin)/S.F.3845(Vandeveer): moves mortgage redemption sales to the end
   of the current redemption period; eliminates the redemption rights of the lender.
• H.F. 3932(Atkins)/S.F. 2984(Ortman): modifies the right of reinstatement and other
   provisions relating to mortgage foreclosure.

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