March 24, 2017

Washington, D.C. Trip - April 25-27, 2017

Register Today for this Great Opportunity!

Join the MBA for the 2017 MBA Washington Visit. Head to Washington for another great opportunity to get involved in the political process and network with fellow bankers. While in Washington, you will receive informational briefings from the FDIC, CFPB, Treasury Department and the ABA.

You will have the opportunity to meet with and discuss important banking issues and other hot topics with Minnesota's Congressional Delegation and U.S. Senators.

Attendees must make their own hotel reservations soon! The Mayflower Hotel in Washington, D.C., (202-347-3000 or 800-468-3571) is holding a block of rooms for the "Minnesota Bankers" until April 10, 2017. Click here to make your room reservations online. Click here for a printable registration form.

Now, is the time to head to Washington, D.C., and make sure your voice is heard! After eight years, there is a new Administration and we have the opportunity to make some changes. There has never been a time when your involvement has been needed more!

Please contact Therese Kuvaas if you have any questions.

Minnesota Legislature – Weekly Recap

Committees in the state legislature began their work this week on Omnibus Bills as they move toward next Friday’s Third Committee Deadline. Some committees have already finished up their work, while others are only finally unveiling their bills today and early next week.

House Tax Bill Unveiled

On Thursday, the House Tax Committee unveiled their 2017 Tax Omnibus Bill. As you know, there has not been a tax bill signed into law for the past two years, so the legislature has made this a top priority. The overall House bill comes in at $4.76 billion over the 2018-19 biennium. This figure includes tax reductions, shifts in sales tax collections and proposed aids and credits.

According to Session Daily, “sponsored byRep. Greg Davids(R-Preston), the committee chair, the bill holds many of the provisions contained in the2016 tax billthat was vetoed because of a drafting error. However, this bill has several notable differences. For instance, any hope for a transportation funding package this session is directly linked to passage of the tax bill, which would shift $450 million of various vehicle-related fees and taxes from General Fund use to fund road and bridge projects.”

The MBA-supported provision to address the Department of Revenue's Residency Factors was included once again in this year’s Omnibus bill.  These factors currently include the location of a person's bank accounts and also where their financial advisor, attorney and others are located. The language that is included in the bill would remove these factors from the list and not allow the Department to consider them at any time. The MBA has been actively involved in the drafting of language and lobbying for this measure the past three years.

The bill would target several groups with either credits or tax deductions, including:

  • $125 million toward credits or subtractions for contribution to college 529 savings plans and, what tax leaders billed as a “first in the nation” tax credit for student loan payments;
  • $35 million toward modifying the child and depend care credit;
  • exempting the first $200,000 of commercial-industrial property from the state general tax and freeze the tax at the 2017 level; and
  • providing property tax relief to renters and homeowners in the form of a refund payment.

The bill also increases the exclusion under the estate tax to the federal exclusion amount; repeals the subtractions for qualified farm and small business property, beginning for decedents dying in 2016; and provides that recapture tax is not triggered by transfers of qualified property to governmental units with eminent domain powers.

A provision the MBA is supporting to help first-time homebuyers is included in the Omnibus Bill. It would allow for a deduction of up to $15,000 for married joint filers who save for their down payment in a special account. Under this program, individuals could establish dedicated savings accounts to help buy a home for themselves or another qualified beneficiary; contributions to and interest earning on the accounts would be exempt from Minnesota income tax, if they were used for a down payment or closing costs on a home for the beneficiary. A first-time home buyer is someone who does not own or has not owned a residence in the last three years. The program would become effective the day following enactment and, for income tax purposes, would apply beginning for tax year 2017.

Minnesota Department of Revenue Commissioner Cynthia Bauerly expressed Governor Mark Dayton’s concerns with the proposed Omnibus Tax Bill, specifically with the lack of a working family tax credit, reductions to the renters’ property tax credit, no funding to help farmers complying with the new buffer law and no increase to local government aid.

This morning, the Tax Committee met to amend and finalize the bill. It is scheduled to be heard in Ways and Means on Monday before heading to the Floor. The Senate version may be unveiled next week.

Click here for a summary of the bill.

Click here for a Pioneer Press article.

MBA-Sponsored Residential PACE Legislation Included in House and Senate Omnibus Bills

The House Jobs Growth and Energy Affordability Omnibus Bill and the Senate Energy Omnibus Bill both include the MBA-Supported Residential PACE language. The legislation would create a stakeholder group, which would be convened by the Department of Commerce, to develop recommendations and draft legislation regarding consumer protections for energy efficiency financing programs for residential homes. The bill would also suspend the statutory authorization for Residential PACE loans until these consumer protections are implemented. The MBA is a sponsor of the legislation and is listed as one of the members of the stakeholder group.

Background: Property Assessed Clean Energy (PACE) legislation began passing in states in 2009 and 2010 to offer additional options for energy financing. Minnesota passed legislation enabling PACE for both commercial and residential projects. Since the legislation passed in Minnesota, only commercial PACE projects have moved forward as the market was still recovering and no one seemed interested in Residential PACE, until now. The MBA was alerted about nine months ago that an energy financing company out of California was looking to move into the Minnesota market, which prompted our research into how residential PACE has worked in other states.

Issue: Residential PACE loans present several challenges for homeowners:

  • They can negatively impact future financial transactions and can subject the PACE-encumbered home to foreclosure. 
  • A residential PACE loan is not subject to the regulatory framework or consumer protections that have been built into traditional loans to ensure borrowers understand the terms of the loan. 
  • Traditional and responsible underwriting to ensure the borrower has the ability to repay the loan is not conducted. 
  • Disclosure of all terms, conditions, fees and other costs is not uniformly required.

This method of energy improvement financing has received negative attention from the Federal Housing Finance Authority (FHFA), the regulator for the government-sponsored entities (GSEs) known as Fannie Mae and Freddie Mac. The FHFA’s concerns are rooted in longstanding lending and underwriting principles.

For the banking industry, an assessment would change the lien priority causing the mortgage to move into second position. FHFA has prohibited Fannie Mae and Freddie Mac from purchasing loans with PACE liens citing concerns about taxpayer risk.

The Senate Energy Omnibus Bill is completed and has been sent to the Senate Finance Committee, which will hear the bill on Monday evening. The House Job Growth and Energy Affordability Omnibus bill will be accepting testimony on Monday and marking up the bill on Tuesday.

Omnibus House Jobs Growth and Energy Affordability Bill

In addition to the Residential PACE language, the Department of Commerce budget is also included in the Omnibus House Jobs Growth and Energy Affordability Bill that was unveiled on Thursday evening.  Items of interest included in the bill:

  • $125,000 increase in the financial institutions base in 2019 and in each year of the 2020-2021 fiscal years
  • $400,000 each year for grants to Prepare and Prosper for purposes of developing, marketing, evaluating and distributing a financial services inclusion program that will assist low-income and financially underserved populations build savings, strengthen credit and provide services to assist them in being more financially stable and secure. The MBA has been a part of this project for the past three years.
  • $200,000 is appropriated to create and execute a statewide education and outreach campaign to protect seniors, meaning those aged 60 or more years, vulnerable adults and their caregivers from financial fraud and exploitation.
  • A decrease in the number of Deputy Commissioners at the Department of Commerce from four to one.

Click here for a Session Daily article on the bill.

The Job Growth and Energy Affordability Committee will hear testimony on Monday and mark up the bill on Tuesday.

Tidbits:

  • Legislation (H.F. 347) that would make changes to the process by which a manufactured home is determined to be an improvement to real property, because it is affixed to the real estate, or a motor vehicle, and is not affixed to real estate was included in Senate Transportation Finance Omnibus Bill. This language also creates a system for resolving situations where the ownership of a manufactured home is at issue. The MBA was approached a year ago regarding this topic and has been involved in the discussions throughout the process. Here is a summary of the bill.
  • Language (H.F. 817) that would expand the crime of unauthorized computer access by criminalizing interference with point-of-sale terminals to collect information from credit, debit, or similar cards was included in the House Public Safety Omnibus Bill. The language creates a felony offense for accessing, or attempting to access, an ATM, gas pump, or similar device without authorization by opening a panel or access door and attaching, or attempting to attach, a device to collect information from credit, debit, and similar cards.

Mark Your Calendar
Here are some key dates for the 2017 legislative session: 

  • March 31 -  3rd Committee Deadline – bills must be out of all committees except Finance/Taxes
  • April 9-17 – Easter/Passover Break
  • May 22 – Session ends – Constitutionally required adjournment date 

Please contact Tess Rice or Therese Kuvaas for any additional information.

For more legislative updates, follow Therese Kuvaas, Government Relations Manager, on Twitter @thkuvaas

Next Week:

Monday:     House Jobs Growth and Energy Affordability Committee will hear testimony of their Omnibus Bill

                  House Ways and Means will hear the House Tax Omnibus Bill

Tuesday:     House Jobs Growth and Energy Affordability Committee will mark up their Omnibus Bill

Lots of committee activity will occur throughout the week as committees continue to complete their Omnibus Bills.

Bill Introductions

***As the Legislative Session passes deadlines, significantly fewer bills are introduced***