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HF 1431

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:50am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; tax increment financing; transit improvement areas;
amending Minnesota Statutes 2008, sections 469.174, subdivision 12; 469.176,
subdivision 4c; 469.1763, subdivision 2.

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

Section 1.

Minnesota Statutes 2008, section 469.174, subdivision 12, is amended to
read:


Subd. 12.

Economic development district.

"Economic development district"
means a type of tax increment financing district which consists of any project, or portions
of a project, which the authority finds to be in the public interest because:

(1) it will discourage commerce, industry, or manufacturing from moving their
operations to another state or municipality; or

(2) it will result in increased employment in the state; or

(3) it will result in preservation and enhancement of the tax base of the statedeleted text begin .deleted text end new text begin ; or
new text end

new text begin (4) it is located in a transit improvement area as defined in section 469.351,
subdivisions 1 to 3, and it will be used to support activities for which the transit
improvement area was designated.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section applies to all districts, regardless of when the
request for certification was made.
new text end

Sec. 2.

Minnesota Statutes 2008, section 469.176, subdivision 4c, is amended to read:


Subd. 4c.

Economic development districts.

(a) Revenue derived from tax
increment from an economic development district may not be used to provide
improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form
to developments consisting of buildings and ancillary facilities, if more than 15 percent
of the buildings and facilities (determined on the basis of square footage) are used for a
purpose other than:

(1) the manufacturing or production of tangible personal property, including
processing resulting in the change in condition of the property;

(2) warehousing, storage, and distribution of tangible personal property, excluding
retail sales;

(3) research and development related to the activities listed in clause (1) or (2);

(4) telemarketing if that activity is the exclusive use of the property;

(5) tourism facilities;

(6) qualified border retail facilities; deleted text begin or
deleted text end

(7) space necessary for and related to the activities listed in clauses (1) to (6)deleted text begin .deleted text end new text begin ; or
new text end

new text begin (8) activities within a transit improvement area as defined in section 496.351,
subdivisions 1 to 3.
new text end

(b) Notwithstanding the provisions of this subdivision, revenue derived from tax
increment from an economic development district may be used to pay for site preparation
and public improvements, if the following conditions are met:

(1) bedrock soils conditions are present in 80 percent or more of the acreage of
the district;

(2) the estimated cost of physical preparation of the site exceeds the fair market
value of the land before completion of the preparation; and

(3) revenues from tax increments are expended only for the additional costs of
preparing the site because of unstable soils and the bedrock soils condition, the additional
cost of installing public improvements because of unstable soils or the bedrock soils
condition, and reasonable administrative costs.

(c) Notwithstanding the provisions of this subdivision, revenues derived from tax
increment from an economic development district may be used to provide improvements,
loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
square feet of any separately owned commercial facility located within the municipal
jurisdiction of a small city, if the revenues derived from increments are spent only to
assist the facility directly or for administrative expenses, the assistance is necessary to
develop the facility, and all of the increments, except those for administrative expenses,
are spent only for activities within the district.

(d) For purposes of this subdivision, a qualified border retail facility is a development
consisting of a shopping center or one or more retail stores, if the authority finds that all
of the following conditions are satisfied:

(1) the district is in a small city located within one mile or less of the border of
the state;

(2) the development is not located in the seven-county metropolitan area, as defined
in section 473.121, subdivision 2;

(3) the development will contain new buildings or will substantially rehabilitate
existing buildings that together contain at least 25,000 square feet of retail space; and

(4) without the use of tax increment financing for the development, the development
or a similar competing development will instead occur in the bordering state or province.

(e) A city is a small city for purposes of this subdivision if the city was a small city
in the year in which the request for certification was made and applies for the rest of
the duration of the district, regardless of whether the city qualifies or ceases to qualify
as a small city.

new text begin EFFECTIVE DATE. new text end

new text begin This section applies to all districts, regardless of when the
request for certification was made.
new text end

Sec. 3.

Minnesota Statutes 2008, 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;

(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; deleted text begin and
deleted text end

(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 housingdeleted text begin .deleted text end new text begin ; or
new text end

new text begin (4) be used within designated improvement areas as defined in section 469.351,
subdivisions 1 to 3.
new text end

(e) For a district created within a biotechnology and health sciences industry
zone as defined in section 469.330, subdivision 6, new text begin a district created within a transit
improvement area as defined in section 469.351, subdivisions 1 to 3,
new text end or for deleted text begin andeleted text end existing
deleted text begin districtdeleted text end new text begin districtsnew text end located within deleted text begin suchdeleted text end a new text begin biotechnology and health sciences industry new text end zonenew text begin
or a transit improvement area
new text end , tax increment derived from such deleted text begin a districtdeleted text end new text begin districtsnew text end may
be expended outside of the district but within the zonenew text begin , or a transit improvement area,new text end
only for expenditures required for the construction of public infrastructure necessary to
support the activities of the new text begin biotechnology and health sciences industry new text end zone, new text begin or the transit
improvement area, including
new text end 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 EFFECTIVE DATE. new text end

new text begin This section applies to all districts, regardless of when the
request for certification was made.
new text end