HF 3042

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/03/2022 03:29pm

A bill for an act
relating to taxation; property; authorizing the creation of tourism improvement
special taxing districts; proposing coding for new law as Minnesota Statutes,
chapter 428B.

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

Section 1.

new text begin [428B.01] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Applicability. new text end

new text begin As used in sections 428B.01 to 428B.09, the terms in this
section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Activity. new text end

new text begin "Activity" means but is not limited to all of the following:
new text end

new text begin (1) promotion of tourism within the district;
new text end

new text begin (2) promotion of business activity, including but not limited to tourism, of businesses
subject to the service charge within the tourism improvement district;
new text end

new text begin (3) marketing, sales, and economic development; and
new text end

new text begin (4) other services provided for the purpose of conferring benefits upon businesses located
in the tourism improvement district that are subject to the tourism improvement district
service charge.
new text end

new text begin Subd. 3. new text end

new text begin Business. new text end

new text begin "Business" means the type or class of lodging business that is
described in the municipality's ordinance, which benefits from district activities, adopted
under section 428B.02.
new text end

new text begin Subd. 4. new text end

new text begin Business owner. new text end

new text begin "Business owner" means a person recognized by a municipality
as the owner of a business.
new text end

new text begin Subd. 5. new text end

new text begin City. new text end

new text begin "City" means a home rule charter or statutory city.
new text end

new text begin Subd. 6. new text end

new text begin Clerk. new text end

new text begin "Clerk" means the chief clerical officer of the municipality.
new text end

new text begin Subd. 7. new text end

new text begin Governing body. new text end

new text begin "Governing body" means, with respect to a city, a city council
or other governing body of a city. With respect to a town, governing body means a town
board or other governing body of a town. With respect to a county, governing body means
a board of commissioners or other governing body of a county.
new text end

new text begin Subd. 8. new text end

new text begin Impacted business owners. new text end

new text begin "Impacted business owners" means a majority of
business owners located within a tourism improvement district.
new text end

new text begin Subd. 9. new text end

new text begin Municipality. new text end

new text begin "Municipality" means a county, city, or town.
new text end

new text begin Subd. 10. new text end

new text begin Tourism improvement association. new text end

new text begin "Tourism improvement association"
means a new or existing and tax-exempt nonprofit corporation, entity, or agency charged
with promoting tourism within the tourism improvement district and that is under contract
with the municipality to administer the tourism improvement district and implement the
activities and improvements listed in the municipality's ordinance.
new text end

new text begin Subd. 11. new text end

new text begin Tourism improvement district. new text end

new text begin "Tourism improvement district" means a
tourism improvement district established under this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [428B.02] ESTABLISHMENT OF TOURISM IMPROVEMENT DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Ordinance. new text end

new text begin (a) Upon a petition by impacted business owners, a governing
body of a municipality may adopt an ordinance establishing a tourism improvement district
after holding a public hearing on the district. The ordinance must include:
new text end

new text begin (1) a map that identifies the tourism improvement district boundaries in sufficient detail
to allow a business owner to determine whether a business is located within the tourism
improvement district boundaries;
new text end

new text begin (2) the name of the tourism improvement association designated to administer the tourism
improvement district and implement the approved activities and improvements;
new text end

new text begin (3) a list of the proposed activities and improvements in the tourism improvement district;
new text end

new text begin (4) the time and manner of collecting the service charge and any interest and penalties
for nonpayment;
new text end

new text begin (5) a definition describing the type or class of businesses to be included in the tourism
improvement district and subject to the service charge;
new text end

new text begin (6) the rate, method, and basis of the service charge with intent, and penalties on
delinquent payments for the district, including the portion dedicated to covering expenses
listed in subdivision 4, paragraph (b); and
new text end

new text begin (7) the number of years the service charge will be in effect.
new text end

new text begin (b) If the boundaries of a proposed tourism improvement district overlap with the
boundaries of an existing special service district, the tourism improvement district ordinance
may list measures to avoid any impediments on the ability of the special service district to
continue to provide its services to benefit its property owners.
new text end

new text begin Subd. 2. new text end

new text begin Notice. new text end

new text begin A municipality must provide notice of the hearing by publication in at
least two issues of the official newspaper of the municipality. The two publications must
be two weeks apart and the municipality must hold the hearing at least three days after the
last publication. Not less than ten days before the hearing, the municipality must mail, or
deliver by electronic means, notice to the business owner of each business subject to the
proposed service charge by the tourism improvement district. The notice must include:
new text end

new text begin (1) a map showing the boundaries of the proposed district;
new text end

new text begin (2) the time and place of the hearing;
new text end

new text begin (3) a statement that all interested persons will be given an opportunity to be heard at the
hearing regarding the proposed service charge; and
new text end

new text begin (4) a brief description of the proposed activities, improvements, and service charge.
new text end

new text begin Subd. 3. new text end

new text begin Business owner determination. new text end

new text begin A business must provide ownership information
to the municipality. A municipality has no obligation to obtain other information regarding
the ownership of businesses, and its determination of ownership shall be final for the purposes
of this chapter. If this chapter requires the signature of a business owner, the signature of
the authorized representative of a business owner is sufficient.
new text end

new text begin Subd. 4. new text end

new text begin Service charges; relationship to services. new text end

new text begin (a) A municipality may impose a
service charge on a business pursuant to this chapter for the purpose of providing activities
and improvements that will provide benefits to a business that is located within the tourism
improvement district and subject to the tourism improvement district service charge. Each
business paying a service charge within a district must benefit directly or indirectly from
improvements provided by a tourism improvement association, provided, however, the
business need not benefit equally. Service charges must be based on a percent of gross
business revenue, a fixed dollar amount per transaction, or any other reasonable method
based upon benefit and approved by the municipality.
new text end

new text begin (b) Service charges may be used to cover the costs of collections, as well as other
administrative costs associated with operating, forming, or maintaining the district.
new text end

new text begin Subd. 5. new text end

new text begin Public hearing. new text end

new text begin At the hearing regarding the adoption of the ordinance
establishing a tourism improvement district, business owners and persons affected by the
proposed district may testify on issues relevant to the proposed district. The hearing may
be adjourned from time to time. The ordinance establishing the district may be adopted at
any time within six months after the date of the conclusion of the hearing by a vote of the
majority of the governing body of the municipality.
new text end

new text begin Subd. 6. new text end

new text begin Appeal to district court. new text end

new text begin Within 45 days after the adoption of the ordinance
establishing a tourism improvement district, a person aggrieved, who is not precluded by
failure to object before or at the hearing, may appeal to the district court by serving a notice
on the clerk of the municipality or governing body. The validity of the tourism improvement
district and the service charge imposed under this chapter shall not be contested in an action
or proceeding unless the action or proceeding is commenced within 45 days after the adoption
of the ordinance establishing a tourism improvement district. The petitioner must file notice
with the court administrator of the district court within ten days after its service. The clerk
of the municipality must provide the petitioner with a certified copy of the findings and
determination of the governing body. The court may affirm the action objected to or, if the
petitioner's objections have merit, modify or cancel it. If the petitioner does not prevail on
the appeal, the costs incurred shall be charged to the petitioner by the court and judgment
entered for them. All objections shall be deemed waived unless presented on appeal.
new text end

new text begin Subd. 7. new text end

new text begin Notice to the commissioner of revenue. new text end

new text begin Within 30 days of adoption of the
ordinance, the governing body must send a copy of the ordinance to the commissioner of
revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

new text begin [428B.03] SERVICE CHARGE AUTHORITY; NOTICE; HEARING
REQUIREMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin A municipality may impose service charges authorized under
section 428B.02, subdivision 4, to finance an activity or improvement in the tourism
improvement district that is provided by the municipality if the activity or improvement is
provided in the tourism improvement district at an increased level of service. The service
charges may be imposed in the amount needed to pay for the increased level of service
provided by the activity or improvement.
new text end

new text begin Subd. 2. new text end

new text begin Annual hearing requirement; notice. new text end

new text begin Beginning one year after the
establishment of the tourism improvement district, the municipality must hold an annual
public hearing regarding continuation of the service charges in the tourism improvement
district. The municipality must provide notice of the hearing by publication in the official
newspaper at least seven days before the hearing. The municipality must mail, or deliver
by electronic means, notice of the hearing to business owners subject to the service charge
at least seven days before the hearing. At the hearing, a person affected by the proposed
district may testify on issues relevant to the proposed district. Within six months of the
hearing, the municipality may adopt a resolution to continue imposing service charges within
the district not exceeding the amount or rate expressed in the notice. For purposes of this
section, the notice must include:
new text end

new text begin (1) a map showing the boundaries of the district;
new text end

new text begin (2) the time and place of the hearing;
new text end

new text begin (3) a statement that all interested persons will be given an opportunity to be heard at the
hearing regarding the proposed service charge;
new text end

new text begin (4) a brief description of the proposed activities and improvements;
new text end

new text begin (5) the estimated annual amount of proposed expenditures for activities and
improvements;
new text end

new text begin (6) the rate of the service charge for the district during the year and the nature and
character of the proposed activities and improvements for the district during the year in
which service charges are collected;
new text end

new text begin (7) the number of years the service charge will be in effect; and
new text end

new text begin (8) a statement that the petition requirement of section 428B.07 has either been met or
does not apply to the proposed service charge.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

new text begin [428B.04] MODIFICATION OF ORDINANCE.
new text end

new text begin Subdivision 1. new text end

new text begin Adoption of ordinance; request for modification. new text end

new text begin Upon written request
of the tourism improvement association, the governing body of a municipality may adopt
an ordinance to modify the district after conducting a public hearing on the proposed
modifications. If the modification includes a change to the rate, method, and basis of
imposing the service charge or the expansion of the tourism improvement district's geographic
boundaries, a petition as described in section 428B.07 must be submitted by impacted
business owners to initiate proceedings for modification.
new text end

new text begin Subd. 2. new text end

new text begin Notice of modification. new text end

new text begin A municipality must provide notice of the hearing by
publication in at least two issues of the municipality's official newspaper. The two
publications must be two weeks apart and the municipality must hold a hearing at least three
days after the last publication. Not less than ten days before the hearing, the municipality
must mail, or deliver by electronic means, notice to the business owner of each business
subject to the service charge by the tourism improvement district. The notice must include:
new text end

new text begin (1) a map showing the boundaries of the district and any proposed changes to the
boundaries of the district;
new text end

new text begin (2) the time and place of the hearing;
new text end

new text begin (3) a statement that all interested persons will be given an opportunity to be heard at the
hearing regarding the proposed service charge; and
new text end

new text begin (4) a brief description of the proposed modification to the ordinance.
new text end

new text begin Subd. 3. new text end

new text begin Hearing on modification. new text end

new text begin At the hearing regarding modification to the
ordinance, business owners and persons affected by the proposed modification may testify
on issues relevant to the proposed modification. Within six months after the conclusion of
the hearing, the municipality may adopt the ordinance modifying the district by a vote of
the majority of the governing body in accordance with the request for modification by the
tourism improvement association and as described in the notice.
new text end

new text begin Subd. 4. new text end

new text begin Objection. new text end

new text begin If the modification of the ordinance includes the expansion of the
tourism improvement district's geographic boundaries, the ordinance modifying the district
may be adopted after following the notice and veto requirements in section 428B.08;
however, a successful objection will be determined based on a majority of business owners
who will pay the service charge in the expanded area of the district. For all other
modifications, the ordinance modifying the district may be adopted following the notice
and veto requirements in section 428B.08.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

new text begin [428B.05] COLLECTION OF SERVICE CHARGES; PENALTIES.
new text end

new text begin The service charges imposed under this chapter may be collected by the municipality,
tourism improvement association, or other designated agency or entity. Collection of the
service charges must be made at the time and in the manner set forth in the ordinance. The
entity collecting the service charges may charge interest and penalties on delinquent payments
for service charges imposed under this chapter as set forth in the municipality's ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

new text begin [428B.06] TOURISM IMPROVEMENT ASSOCIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Composition and duties. new text end

new text begin The tourism improvement association must
be designated in the municipality's ordinance. The tourism improvement association shall
appoint a governing board or committee composed of a majority of business owners who
pay the tourism improvement district service charge, or the representatives of those business
owners. The governing board or committee must manage the funds raised by the tourism
improvement district and fulfill the obligations of the tourism improvement district. A
tourism improvement association has full discretion to select the specific activities and
improvements that are funded with tourism improvement district service charges within the
authorized activities and improvements described in the ordinance.
new text end

new text begin Subd. 2. new text end

new text begin Annual report. new text end

new text begin The tourism improvement association must submit to the
municipality an annual report for each year in which a service charge is imposed. The report
must include a financial statement of revenue raised by the district. The municipality may
also, as part of the enabling ordinance, require the submission of other relevant information
related to the association.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

new text begin [428B.07] PETITION REQUIRED.
new text end

new text begin A municipality may not establish or modify a tourism improvement district under section
428B.02 unless impacted business owners file a petition requesting a public hearing on the
proposed action with the clerk of the municipality.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

new text begin [428B.08] VETO POWER OF OWNERS.
new text end

new text begin Subdivision 1. new text end

new text begin Notice of right to file objections. new text end

new text begin The effective date of an ordinance or
resolution adopted under this chapter must be at least 45 days after it is adopted by the
municipality. Within five days after the municipality adopts the ordinance or resolution,
the municipality must mail a summary of the ordinance or resolution to each business owner
subject to the service charge within the tourism improvement district in the same manner
that notice is mailed, or delivered by electronic means, under section 428B.02. The mailing
must include a notice that business owners subject to the service charge have the right to
veto, by a simple majority, the ordinance or resolution by filing the required number of
objections with the clerk of the municipality before the effective date of the ordinance or
resolution and include notice that a copy of the ordinance or resolution is available for public
inspection with the clerk of the municipality.
new text end

new text begin Subd. 2. new text end

new text begin Requirements for veto. new text end

new text begin If impacted business owners file an objection to the
ordinance or resolution before the effective date of the ordinance or resolution, the ordinance
or resolution does not become effective.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

new text begin [428B.09] DISESTABLISHMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Procedure for disestablishment. new text end

new text begin An ordinance adopted under this chapter
must provide a 30-day period each year in which business owners subject to the service
charge may request disestablishment of the district. Beginning one year after establishment
of the tourism improvement district, an annual 30-day period of disestablishment begins
with the anniversary of the date of establishment. Upon submission of a petition from
impacted business owners, the municipality may disestablish a tourism improvement district
by adopting an ordinance after holding a public hearing on the disestablishment. Prior to
the hearing, the municipality must publish notice of the hearing on disestablishment in at
least two issues of the municipality's official newspaper. The two publications must be two
weeks apart and the municipality must hold the hearing at least three days after the last
publication. Not less than ten days before the hearing, the municipality must mail, or deliver
by electronic means, notice to the business owner of each business subject to the service
charge. The notice must include:
new text end

new text begin (1) the time and place of the hearing;
new text end

new text begin (2) a statement that all interested persons will be given an opportunity to be heard at the
hearing regarding disestablishment;
new text end

new text begin (3) the reason for disestablishment; and
new text end

new text begin (4) a proposal to dispose of any assets acquired with the revenues of the service charge
imposed under the tourism improvement district.
new text end

new text begin Subd. 2. new text end

new text begin Objection. new text end

new text begin An ordinance disestablishing the tourism improvement district
becomes effective following the notice and veto requirements in section 428B.08.
new text end

new text begin Subd. 3. new text end

new text begin Refund to business owners. new text end

new text begin (a) Upon the disestablishment of a tourism
improvement district, any remaining revenues derived from the service charge, or any
revenues derived from the sale of assets acquired with the service charge revenues, shall
be refunded to business owners located and operating within the tourism improvement
district in which service charges were imposed by applying the same method and basis that
was used to calculate the service charges levied in the fiscal year in which the district is
disestablished.
new text end

new text begin (b) If the disestablishment occurs before the service charge is imposed for the fiscal
year, the method and basis that was used to calculate the service charge imposed in the
immediate prior fiscal year shall be used to calculate the amount of a refund, if any.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

new text begin [428B.10] COORDINATION OF DISTRICTS.
new text end

new text begin If a county establishes a tourism improvement district in a city or town under this chapter,
a city or town may not establish a tourism improvement district in the part of the city or
town located in the county-established district. If a city or town establishes a tourism
improvement district under this chapter, a county may not establish a tourism improvement
district in the part of the city or town located in the city- or town-established district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end