Purpose of the Bill

The bill proposes an amendment to the Minnesota Constitution to increase the sales and use tax rate by 0.375% for the purpose of funding housing initiatives aimed at improving homeownership opportunities, community stability, and rental assistance.

Main Provisions

1. Sales Tax Increase:

   • The sales and use tax would be increased by three-eighths of one percent starting July 1, 2027, and ending June 30, 2052.
   • The additional revenue is dedicated to specific housing-related funds.

2. Creation of Funds:

   • Homeownership Opportunity Fund: Receives 25% of the tax increase funds. It supports home purchase, rehabilitation, and down payment assistance, focusing on eliminating racial disparities in homeownership.
   • Community and Household Stability Fund: Also receives 25% of the funds to assist households at risk of homelessness through emergency assistance, legal services, and supporting shelters and housing.
   • Rental Opportunity Fund: Receives 50% of the funds to aid in rental assistance, new rental housing development, and improving rental housing conditions.

3. Implementation and Oversight:

   • Establishes councils for each fund to oversee the administration and implementation of their respective funds, ensuring transparency and accountability.
   • The councils must include diverse members representing a range of affected communities and interests.
   • Strategic planning and regular reporting to the legislature are required to guide and document fund usage.

4. Legal and Ethical Compliance:

   • Expenditure of funds is subject to audits to ensure alignment with constitutional mandates.
   • Projects must comply with prevailing wage standards.

Significant Changes to Existing Law

This bill introduces a constitutional amendment to directly fund housing needs via an increased sales tax. It formalizes the creation of three dedicated funds and mandates the establishment of oversight councils to ensure appropriate fund allocation and use, aiming to supplement rather than replace traditional housing funding sources.

Relevant Terms

• Housing initiatives
• Sales tax increase
• Homeownership Opportunity Fund
• Community and Household Stability Fund
• Rental Opportunity Fund
• Homelessness prevention
• Rental assistance
• Constitutional amendment
• Prevailing wages