HF 1143

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to tax increment financing; modifying the 
  1.3             local contribution to avoid the state aid offset; 
  1.4             amending Minnesota Statutes 2000, section 273.1399, 
  1.5             subdivision 6, and by adding a subdivision. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2000, section 273.1399, 
  1.8   subdivision 6, is amended to read: 
  1.9      Subd. 6.  [EXEMPT DISTRICTS.] (a) The provisions of this 
  1.10  section do not apply to exempt tax increment financing districts 
  1.11  as specified by this subdivision. 
  1.12     (b) A tax increment financing district for an ethanol 
  1.13  production facility that satisfies all of the following 
  1.14  requirements is exempt: 
  1.15     (1) The district is an economic development district, that 
  1.16  qualifies under section 469.176, subdivision 4c, paragraph (a), 
  1.17  clause (1). 
  1.18     (2) The facility is certified by the commissioner of 
  1.19  agriculture to qualify for state payments for ethanol 
  1.20  development under section 41A.09 to the extent funds are 
  1.21  available. 
  1.22     (3) Increments from the district are used only to finance 
  1.23  the qualifying ethanol development project located in the 
  1.24  district or to pay for administrative costs of the district. 
  1.25     (4) The district is located outside of the seven-county 
  2.1   metropolitan area, as defined in section 473.121. 
  2.2      (5) The tax increment financing plan was approved by a 
  2.3   resolution of the county board. 
  2.4      (6) The exemption provided by this paragraph applies until 
  2.5   the first year after the total amount of increment for the 
  2.6   district exceeds $1,500,000.  The county auditor shall notify 
  2.7   the commissioner of revenue of the expiration of the exemption 
  2.8   by June 1 of the year in which the auditor projects the revenues 
  2.9   from increments will exceed $1,500,000.  On or before the 
  2.10  expiration of the exemption, the municipality may elect to make 
  2.11  a qualifying local contribution under paragraph (d) in lieu of 
  2.12  the state aid reduction. 
  2.13     (c) A qualified housing district is exempt. 
  2.14     (d)(1) A district is exempt if the municipality elects at 
  2.15  the time of approving the tax increment financing plan for the 
  2.16  district to make a qualifying local contribution.  To qualify 
  2.17  for the exemption in each year, the authority or the 
  2.18  municipality must make a qualifying local contribution equal to 
  2.19  the listed percentages of increment from the district or 
  2.20  subdistrict: 
  2.21     (A) for an economic development district or a renewal and 
  2.22  renovation district, ten percent; 
  2.23     (B) for a redevelopment district, a housing district, a 
  2.24  mined underground space district, a hazardous substance 
  2.25  subdistrict, or a soils condition district, five percent. 
  2.26     (2) If the municipality elects to make a qualifying 
  2.27  contribution and fails to make the required contribution for a 
  2.28  year, the state aid reduction applies for the year.  The state 
  2.29  aid reduction equals the greater of (A) the required local 
  2.30  contribution or (B) the amount of the aid reduction that applies 
  2.31  under subdivision 3.  For a district exempt under paragraph (b), 
  2.32  no qualifying local contribution is required for years in which 
  2.33  the district is exempt. 
  2.34     (3)(A) If the sum of required local contributions for all 
  2.35  districts in the municipality exceeds two percent of city net 
  2.36  tax capacity as defined in section 477A.011, subdivision 20, for 
  3.1   a year, the municipality's total required local contribution for 
  3.2   that year is limited to two percent of net tax capacity to 
  3.3   qualify for the exemption under this subdivision.  The 
  3.4   municipality may allocate the contribution among the districts 
  3.5   on which it has made elections as it determines appropriate. 
  3.6      (B) If a municipality makes an election under this 
  3.7   subdivision for a district in a year in which item (A) applies, 
  3.8   a minimum annual qualifying contribution must be made for the 
  3.9   district equal to the lesser of 0.25 percent of city net tax 
  3.10  capacity or three percent of increment revenues.  This minimum 
  3.11  contribution applies for the life of the district for each year 
  3.12  that the restriction in item (A) applies and is in addition to 
  3.13  the contribution required by item (A). 
  3.14     (4) The amount of the local contribution must be made out 
  3.15  of unrestricted money of the authority or municipality, such as 
  3.16  the general fund, a property tax levy, or a federal or a state 
  3.17  grant-in-aid which may be spent for general government 
  3.18  purposes.  The local contribution may not be made, directly or 
  3.19  indirectly, with tax increments or developer payments as defined 
  3.20  under section 469.1766.  The local contribution must be used to 
  3.21  pay project costs and cannot be used for general government 
  3.22  purposes or for improvements or costs that the authority or 
  3.23  municipality planned to incur absent the project.  The authority 
  3.24  or municipality may request contributions from other local 
  3.25  government entities that will benefit from the district's 
  3.26  activities.  These contributions reduce the local contribution 
  3.27  required of the municipality or authority by this paragraph.  
  3.28  Cities, counties, towns, and schools may contribute to paying 
  3.29  these costs, notwithstanding any other law to the contrary. 
  3.30     (5) The municipality may make a local contribution in 
  3.31  excess of the required contribution for a year.  If it does so, 
  3.32  the municipality may credit the excess to a local contribution 
  3.33  account for the district.  The balance in the account may be 
  3.34  used to meet the requirements for qualifying local contributions 
  3.35  for later years.  No interest or investment earnings may be 
  3.36  credited or imputed to the account, except those (A) actually 
  4.1   paid by the municipality out of its unrestricted funds or by 
  4.2   another person or entity, other than a developer as used in 
  4.3   section 469.1766, and (B) used as required for a qualifying 
  4.4   local contribution. 
  4.5      (6) If the state contributes to the project costs through a 
  4.6   direct grant or similar incentive, the required local 
  4.7   contribution is reduced by one-half of the dollar amount of the 
  4.8   state grant or other similar incentive. 
  4.9      [EFFECTIVE DATE.] This section is effective for tax 
  4.10  increment financing districts for which the request for 
  4.11  certification is made after June 30, 2001. 
  4.12     Sec. 2.  Minnesota Statutes 2000, section 273.1399, is 
  4.13  amended by adding a subdivision to read: 
  4.14     Subd. 9.  [WAIVER BY DEPARTMENT OF TRADE AND ECONOMIC 
  4.15  DEVELOPMENT.] (a) The provisions of this section do not apply to 
  4.16  a tax increment financing district if the commissioner waives 
  4.17  the requirements of this section or the requirements are 
  4.18  otherwise waived as provided in this subdivision. 
  4.19     (b) For purposes of this subdivision, the following terms 
  4.20  have the meanings given: 
  4.21     (1) "Commissioner" means the commissioner of trade and 
  4.22  economic development. 
  4.23     (2) "City" means a home rule charter or statutory city that 
  4.24  is the municipality, as defined in section 469.174, for the tax 
  4.25  increment financing district. 
  4.26     (c) Upon application by the city, the commissioner shall 
  4.27  exempt a tax increment financing district from the requirements 
  4.28  of this section if the commissioner determines that any one of 
  4.29  the following conditions is met: 
  4.30     (1) the private investment to be assisted with the tax 
  4.31  increment would not have occurred in the state without the 
  4.32  assistance provided by the district; 
  4.33     (2) the state, through a direct grant or similar incentive, 
  4.34  has contributed to the project costs of the tax increment 
  4.35  financing district; 
  4.36     (3) the commissioner estimates that the projected increase 
  5.1   in state revenues from sales and income taxes that will be 
  5.2   generated as a result of the project will exceed the amount of 
  5.3   the state aid reduction; or 
  5.4      (4) the city has established and makes a contribution to an 
  5.5   affordable housing fund, as provided in paragraph (h), for the 
  5.6   district. 
  5.7   The exemption applies for the duration of the tax increment 
  5.8   financing district. 
  5.9      (d) A city may apply to the commissioner for waiver of the 
  5.10  provisions of this section for a tax increment financing 
  5.11  district.  The city must apply on a form prescribed by the 
  5.12  commissioner and must provide the information required by the 
  5.13  commissioner.  These requirements are not an administrative rule 
  5.14  under the Administrative Procedure Act, chapter 14.  In addition 
  5.15  to information required by the commissioner, the city may 
  5.16  provide any evidence it considers relevant to the commissioner's 
  5.17  determination.  Upon the request of the city, the commissioner 
  5.18  shall allow the city to present evidence supporting its 
  5.19  application at a hearing on the matter. 
  5.20     (e) The commissioner shall grant or deny an application for 
  5.21  waiver within 30 days of receipt of the application.  If the 
  5.22  commissioner does not deny the application for waiver within 30 
  5.23  days, the waiver is granted. 
  5.24     (f) If the commissioner denies the request for a waiver, 
  5.25  the city may appeal the denial as a contested case proceeding 
  5.26  under the Administrative Procedure Act, chapter 14. 
  5.27     (g) The commissioner shall notify the commissioner of 
  5.28  revenue, in writing, of each exemption granted under this 
  5.29  subdivision. 
  5.30     (h) In lieu of the state aid offset or local contribution 
  5.31  under this section, a city may elect, in the tax increment 
  5.32  financing plan, to make a contribution to an affordable housing 
  5.33  fund.  To qualify under this paragraph, the city must: 
  5.34     (1) make a contribution to the affordable housing fund at 
  5.35  the times and in the amounts required for a local contribution 
  5.36  under the provisions of subdivision 6 for the district; 
  6.1      (2) make the contribution out of funds that would qualify 
  6.2   as a local contribution under subdivision 6; and 
  6.3      (3) spend the funds in the affordable housing account 
  6.4   within five years after the amounts are contributed on a project 
  6.5   that meets the requirements of a qualified housing district. 
  6.6   Failure to make a contribution to an affordable housing fund as 
  6.7   required by this paragraph has the same effect as the city 
  6.8   failing to make an elected local contribution under subdivision 
  6.9   6. 
  6.10     [EFFECTIVE DATE.] This section is effective for tax 
  6.11  increment financing districts (1) for which the request for 
  6.12  certification is made after June 30, 2001, and (2) for which the 
  6.13  request for certification was made after June 30, 1994, if the 
  6.14  municipality elected to make a local contribution under 
  6.15  Minnesota Statutes, section 273.1399, subdivision 6.