HF 445

as introduced - 87th Legislature (2011 - 2012) Posted on 02/10/2011 10:12am

A bill for an act
relating to taxation; authorizing use of pooled tax increments for development
of market rate housing at certain locations; amending Minnesota Statutes 2010,
section 469.1763, subdivision 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 469.1763, subdivision 2, is amended to
read:

Subd. 2.

Expenditures outside district.

(a) For each tax increment financing
district, an amount equal to at least 75 percent of the total revenue derived from tax
increments paid by properties in the district must be expended on activities in the district
or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification
was made after June 30, 1995, the in-district percentage for purposes of the preceding
sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
increments paid by properties in the district may be expended, through a development fund
or otherwise, on activities outside of the district but within the defined geographic area of
the project except to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification was
made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
20 percent. The revenue derived from tax increments for the district that are expended on
costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before
calculating the percentages that must be expended within and without the district.

(b) In the case of a housing district, a housing project, as defined in section 469.174,
subdivision 11, is an activity in the district.

(c) All administrative expenses are for activities outside of the district, except that
if the only expenses for activities outside of the district under this subdivision are for
the purposes described in paragraph (d), administrative expenses will be considered as
expenditures for activities in the district.

(d) The authority may elect, in the tax increment financing plan for the district,
to increase by up to ten percentage points the permitted amount of expenditures for
activities located outside the geographic area of the district under paragraph (a). As
permitted by section 469.176, subdivision 4k, the expenditures, including the permitted
expenditures under paragraph (a), need not be made within the geographic area of the
project. Expenditures that meet the requirements of this paragraph are legally permitted
expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.
To qualify for the increase under this paragraph, the expenditures must:

(1) be used exclusively to assist housing that meets the requirement for a qualified
low-income building, as that term is used in section 42 of the Internal Revenue Code; new text begin and
new text end

(2) not exceed the qualified basis of the housing, as defined under section 42(c) of
the Internal Revenue Code, less the amount of any credit allowed under section 42 of
the Internal Revenue Code; and

(3) be used to:

(i) acquire and prepare the site of the housing;

(ii) acquire, construct, or rehabilitate the housing; or

(iii) make public improvements directly related to the housing deleted text begin . deleted text end new text begin ; or
new text end

new text begin (4) be used to develop housing the market value of which does not exceed:
new text end

new text begin (i) 150 percent of the average market value of single-family homes in that
municipality; or
new text end

new text begin (ii) $200,000 for municipalities located in the metropolitan area, as defined in
section 473.121, or $125,000 for all other municipalities, whichever is less, and to pay the
cost of site acquisition, relocation, demolition of existing structures, site preparation, and
pollution abatement on one or more parcels, if the parcel:
new text end

new text begin (A) contains a residence containing one to four family dwelling units that has been
vacant for six or more months;
new text end

new text begin (B) contains a residence containing one to four family dwelling units that is
structurally substandard, as defined in section 469.174, subdivision 10;
new text end

new text begin (C) is in foreclosure as defined in section 325N.10, subdivision 7, but without regard
to whether the residence is the owner's principal residence; or
new text end

new text begin (D) is a vacant site, if the authority uses the parcel in connection with the
development or redevelopment of a parcel qualifying under subitems (A) to (C).
new text end

(e) For a district created within a biotechnology and health sciences industry zone
as defined in section 469.330, subdivision 6, or for an existing district located within
such a zone, tax increment derived from such a district may be expended outside of the
district but within the zone only for expenditures required for the construction of public
infrastructure necessary to support the activities of the zone, land acquisition, and other
redevelopment costs as defined in section 469.176, subdivision 4j. These expenditures are
considered as expenditures for activities within the district.

new text begin (f) The authority under paragraph (d), clause (4), expires on December 31, 2016.
Increments may continue to be expended under this authority after that date, if they are
used to pay bonds or binding contracts that would qualify under subdivision 3, paragraph
(a), if December 31, 2016, is considered to be the last date of the five-year period after
certification under that provision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for any district that is subject to the
provisions of section 469.1763, regardless of when the request for certification of the
district was made.
new text end