HF 4099

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to tax increment financing; making minor and 
  1.3             technical changes in powers and procedures; changing 
  1.4             the duration limits for and calculation of increment 
  1.5             for economic development districts; repealing mined 
  1.6             underground space authority and districts; changing 
  1.7             dates; amending Minnesota Statutes 1998, sections 
  1.8             469.115; 469.174, subdivisions 9, 11, 12, 14, and 22; 
  1.9             469.175, subdivisions 1a, 2, 2a, and 3; 469.176, 
  1.10            subdivisions 1b and 4d; 469.1761, subdivision 4; 
  1.11            469.1763, subdivision 2; and 469.177, subdivision 1; 
  1.12            Minnesota Statutes 1999 Supplement, section 469.1771, 
  1.13            subdivision 1; repealing Minnesota Statutes 1998, 
  1.14            sections 469.055, subdivision 5; 469.101, subdivision 
  1.15            21; 469.135; 469.136; 469.137; 469.138; 469.139; 
  1.16            469.140; 469.174, subdivision 13; and 469.176, 
  1.17            subdivision 4a. 
  1.18  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.19     Section 1.  Minnesota Statutes 1998, section 469.115, is 
  1.20  amended to read: 
  1.21     469.115 [POWERS OF AGENCIES.] 
  1.22     A local agency shall have all the powers necessary or 
  1.23  convenient to carry out the purposes of sections 469.109 to 
  1.24  469.123; except that the agencies shall not levy and collect 
  1.25  taxes or special assessments, nor exercise the power of eminent 
  1.26  domain unless the governing body of the municipality or 
  1.27  municipalities, in the case of a joint exercise of power, shall 
  1.28  by resolution have expressly conferred that power on the 
  1.29  agency.  A local agency shall also have the following powers in 
  1.30  addition to others granted in sections 469.109 to 469.123: 
  1.31     (1) to sue and be sued, to have a seal, which shall be 
  2.1   judicially noticed, and to alter the same at pleasure; to have 
  2.2   perpetual succession; and to make, amend, and repeal rules and 
  2.3   regulations not inconsistent with these sections; 
  2.4      (2) to employ an executive director, technical experts, and 
  2.5   officers, agents and employees, permanent and temporary, that it 
  2.6   requires, and determine their qualifications, duties, and 
  2.7   compensation; for legal service it may require, to call upon the 
  2.8   chief law officer of the municipality or to employ its own 
  2.9   counsel and legal staff; so far as practical, to use the 
  2.10  services of local public bodies, in its area of operation.  
  2.11  Those local bodies, if requested, shall make the services 
  2.12  available; 
  2.13     (3) to delegate to one or more of its agents or employees 
  2.14  the powers or duties it deems proper; 
  2.15     (4) upon proper application by a public body or private 
  2.16  applicant, and after determining that the purpose of sections 
  2.17  469.109 to 469.123 will be accomplished by the establishment of 
  2.18  the project in the redevelopment area to approve a redevelopment 
  2.19  project; 
  2.20     (5) to sell, transfer, convey, or otherwise dispose of real 
  2.21  or personal property or any interest therein, and to execute 
  2.22  leases, deeds, conveyances, negotiable instruments, purchase 
  2.23  agreements, and other contracts or instruments, and take action 
  2.24  that is necessary or convenient to carry out the purposes of 
  2.25  these sections; 
  2.26     (6) within its area of operation to acquire real or 
  2.27  personal property or any interest therein by gift, grant, 
  2.28  purchase, exchange, lease, transfer, bequest, devise, or 
  2.29  otherwise.  An agency may acquire real property which it deems 
  2.30  necessary for its purposes by exercise of the power of eminent 
  2.31  domain in the manner provided in chapter 117, after adoption of 
  2.32  a resolution declaring that the acquisition of the real property 
  2.33  is necessary to eliminate one or more of the conditions found to 
  2.34  exist in the resolution adopted pursuant to section 469.111, 
  2.35  subdivision 1; 
  2.36     (7) to designate redevelopment areas; 
  3.1      (8) to cooperate with industrial development corporations, 
  3.2   state and federal agencies, and private persons or corporations 
  3.3   in efforts to promote the expansion of recreational, commercial, 
  3.4   industrial, and manufacturing activity in a redevelopment area; 
  3.5      (9) upon proper application by any public body or private 
  3.6   applicant, to determine whether the declared public purpose of 
  3.7   these sections has been accomplished or will be accomplished by 
  3.8   the establishment of a redevelopment project in a redevelopment 
  3.9   area; 
  3.10     (10) to obtain information necessary to the designation of 
  3.11  a redevelopment area and the establishment of a redevelopment 
  3.12  project therein; 
  3.13     (11) to cooperate with or act as agent for the federal 
  3.14  government, the state, or any state public body or any agency or 
  3.15  instrumentality thereof in carrying out the provisions of these 
  3.16  sections or of any other related federal, state, or local 
  3.17  legislation; 
  3.18     (12) to borrow money or other property and accept 
  3.19  contributions, grants, gifts, services, or other assistance from 
  3.20  the federal or state government to accomplish the purposes of 
  3.21  sections 469.109 to 469.123; 
  3.22     (13) to conduct mined underground space development 
  3.23  pursuant to sections 469.135 to 469.141; 
  3.24     (14) to include in any contract for financial assistance 
  3.25  with the federal government any conditions which the federal 
  3.26  government may attach to its financial aid of a redevelopment 
  3.27  project; 
  3.28     (15) (14) to issue bonds, notes, or other evidences of 
  3.29  indebtedness as hereinafter provided, for any of its purposes 
  3.30  and to secure them by mortgages upon property held or to be held 
  3.31  by it, or by pledge of its revenues, including grants or 
  3.32  contributions; and 
  3.33     (16) (15) to invest any funds held in reserve or sinking 
  3.34  funds, or any funds not required for immediate disbursement, in 
  3.35  property or securities in which savings banks may legally invest 
  3.36  funds subject to their control.  
  4.1      EFFECTIVE DATE:  This section is effective the day 
  4.2   following final enactment. 
  4.3      Sec. 2.  Minnesota Statutes 1998, section 469.174, 
  4.4   subdivision 9, is amended to read: 
  4.5      Subd. 9.  [TAX INCREMENT FINANCING DISTRICT.] "Tax 
  4.6   increment financing district" or "district" means a contiguous 
  4.7   or noncontiguous geographic area within a project delineated in 
  4.8   the tax increment financing plan, as provided by section 
  4.9   469.175, subdivision 1, for the purpose of financing 
  4.10  redevelopment, mined underground space development, housing or 
  4.11  economic development in municipalities through the use of tax 
  4.12  increment generated from the captured net tax capacity in the 
  4.13  tax increment financing district.  
  4.14     EFFECTIVE DATE:  This section is effective the day 
  4.15  following final enactment. 
  4.16     Sec. 3.  Minnesota Statutes 1998, section 469.174, 
  4.17  subdivision 11, is amended to read: 
  4.18     Subd. 11.  [HOUSING DISTRICT.] "Housing district" means a 
  4.19  type of tax increment financing district which consists of a 
  4.20  project, or a portion of a project, intended for occupancy, in 
  4.21  part, by persons or families of low and moderate income, as 
  4.22  defined in chapter 462A, Title II of the National Housing Act of 
  4.23  1934, the National Housing Act of 1959, the United States 
  4.24  Housing Act of 1937, as amended, Title V of the Housing Act of 
  4.25  1949, as amended, any other similar present or future federal, 
  4.26  state, or municipal legislation, or the regulations promulgated 
  4.27  under any of those acts.  A project does not qualify under this 
  4.28  subdivision if the fair market value of the improvements which 
  4.29  are constructed for commercial uses or for uses other than low 
  4.30  and moderate income housing consists of more than 20 percent of 
  4.31  the total fair market value of the planned improvements in the 
  4.32  development plan or agreement.  The fair market value of the 
  4.33  improvements may be determined using the cost of construction, 
  4.34  capitalized income, or other appropriate method of estimating 
  4.35  market value. 
  4.36     EFFECTIVE DATE:  This section is effective for districts 
  5.1   for which the request for certification was filed with the 
  5.2   county after May 1, 1988. 
  5.3      Sec. 4.  Minnesota Statutes 1998, section 469.174, 
  5.4   subdivision 12, is amended to read: 
  5.5      Subd. 12.  [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 
  5.6   development district" means a type of tax increment financing 
  5.7   district which consists of any project, or portions of a 
  5.8   project, not meeting the requirements found in the definition of 
  5.9   redevelopment district, renewal and renovation district, soils 
  5.10  condition district, mined underground space development 
  5.11  district, or housing district, but which the authority finds to 
  5.12  be in the public interest because: 
  5.13     (1) it will discourage commerce, industry, or manufacturing 
  5.14  from moving their operations to another state or municipality; 
  5.15  or 
  5.16     (2) it will result in increased employment in the state; or 
  5.17     (3) it will result in preservation and enhancement of the 
  5.18  tax base of the state. 
  5.19     EFFECTIVE DATE:  This section is effective the day 
  5.20  following final enactment. 
  5.21     Sec. 5.  Minnesota Statutes 1998, section 469.174, 
  5.22  subdivision 14, is amended to read: 
  5.23     Subd. 14.  [ADMINISTRATIVE EXPENSES.] "Administrative 
  5.24  expenses" means all expenditures of an authority other than: 
  5.25     (1) amounts paid for the purchase of land or; 
  5.26     (2) amounts paid to contractors or others providing 
  5.27  materials and services, including architectural and engineering 
  5.28  services, directly connected with the physical development of 
  5.29  the real property in the district, project; 
  5.30     (3) relocation benefits paid to or services provided for 
  5.31  persons residing or businesses located in the district, 
  5.32  or project; 
  5.33     (4) amounts used to pay principal or interest on, fund a 
  5.34  reserve for, or sell at a discount bonds issued pursuant to 
  5.35  section 469.178; or 
  5.36     (5) amounts used to pay other financial obligations to the 
  6.1   extent those obligations were used to finance costs described in 
  6.2   clauses (1) to (3). 
  6.3      For districts for which the requests for certifications 
  6.4   were made before August 1, 1979, or after June 30, 1982, 
  6.5   "administrative expenses" includes amounts paid for services 
  6.6   provided by bond counsel, fiscal consultants, and planning or 
  6.7   economic development consultants.  
  6.8      EFFECTIVE DATE:  This section is effective for all tax 
  6.9   increment financing districts, regardless of when the request 
  6.10  for certification was made. 
  6.11     Sec. 6.  Minnesota Statutes 1998, section 469.174, 
  6.12  subdivision 22, is amended to read: 
  6.13     Subd. 22.  [TOURISM FACILITY.] "Tourism facility" means 
  6.14  property that: 
  6.15     (1) is located in a county where the median income is no 
  6.16  more than 85 percent of the state median income; 
  6.17     (2) is located in a county in which, excluding the cities 
  6.18  of the first class in that county, the earnings on 
  6.19  tourism-related activities are 15 percent or more of the total 
  6.20  earnings in the county; 
  6.21     (3) is located outside the metropolitan area defined in 
  6.22  section 473.121, subdivision 2; 
  6.23     (4) is not located in a city with a population in excess of 
  6.24  20,000; and 
  6.25     (5) is acquired, constructed, or rehabilitated for use as a 
  6.26  convention and meeting facility that is privately 
  6.27  owned, amusement park, recreation facility, cultural facility, 
  6.28  marina, park, hotel, motel, lodging facility, or nonhomestead 
  6.29  dwelling unit that in each case is intended to serve primarily 
  6.30  individuals from outside the county. 
  6.31     EFFECTIVE DATE:  This section is effective for all economic 
  6.32  development tax increment financing districts, regardless of 
  6.33  when the request for certification was made, but does not apply 
  6.34  to (1) expenditures made before January 1, 2000; (2) 
  6.35  expenditures made under a binding contract entered before 
  6.36  January 1, 2000; or (3) expenditures made under a binding 
  7.1   contract entered pursuant to a letter of intent with the 
  7.2   developer or contractor if the letter of intent was entered 
  7.3   before January 1, 2000. 
  7.4      Sec. 7.  Minnesota Statutes 1998, section 469.175, 
  7.5   subdivision 1a, is amended to read: 
  7.6      Subd. 1a.  [INCLUSION OF COUNTY ROAD COSTS.] (a) The county 
  7.7   board may require the authority to pay all or a portion of the 
  7.8   cost of county road improvements out of increment revenues, if 
  7.9   the following conditions occur: 
  7.10     (1) the proposed tax increment financing plan or an 
  7.11  amendment to the plan contemplates construction of a development 
  7.12  that will, in the judgment of the county, substantially increase 
  7.13  the use of county roads requiring construction of road 
  7.14  improvements or other road costs; and 
  7.15     (2) the road improvements or other road costs are not 
  7.16  scheduled for construction within five years under the county 
  7.17  capital improvement plan or other formally adopted county plan, 
  7.18  and in the opinion of the county, would not reasonably be 
  7.19  expected to be needed within the reasonably foreseeable future 
  7.20  if the tax increment financing plan were not implemented. 
  7.21     (b) If the county elects to use increments to finance the 
  7.22  road improvements, the county must notify the authority and 
  7.23  municipality within 30 60 days after receipt of the information 
  7.24  on the proposed tax increment district financing plan under 
  7.25  subdivision 2.  The notice must include the estimated cost of 
  7.26  the road improvements and schedule for construction and payment 
  7.27  of the cost.  The authority must include the improvements in the 
  7.28  tax increment financing plan.  The improvements may be financed 
  7.29  with the proceeds of tax increment bonds or the authority and 
  7.30  the county may agree that the county will finance the 
  7.31  improvements with county funds to be repaid in installments, 
  7.32  with or without interest, out of increment revenues.  If the 
  7.33  cost of the road improvements and other project costs exceed the 
  7.34  projected amount of the increment revenues, the county and 
  7.35  authority shall negotiate an agreement, modifying the 
  7.36  development plan or proposed road improvements that will permit 
  8.1   financing of the costs before the tax increment financing plan 
  8.2   may be approved. 
  8.3      EFFECTIVE DATE:  This section is effective for tax 
  8.4   increment financing plans approved after July 1, 2000. 
  8.5      Sec. 8.  Minnesota Statutes 1998, section 469.175, 
  8.6   subdivision 2, is amended to read: 
  8.7      Subd. 2.  [CONSULTATIONS; COMMENT AND FILING.] Before 
  8.8   formation of a tax increment financing district, the authority 
  8.9   shall provide an opportunity to the members of the county boards 
  8.10  of commissioners of any county in which any portion of the 
  8.11  proposed district is located and the members of the school board 
  8.12  of any school district in which any portion of the proposed 
  8.13  district is located to meet with the authority.  The authority 
  8.14  shall present to the members of the county boards of 
  8.15  commissioners and the school boards its the county auditor and 
  8.16  clerk of the school board with the proposed tax increment 
  8.17  financing plan for the district and the authority's estimate of 
  8.18  the fiscal and economic implications of the proposed tax 
  8.19  increment financing district.  The authority must provide the 
  8.20  proposed tax increment financing plan and the information on the 
  8.21  fiscal and economic implications of the plan must be provided to 
  8.22  the county auditor and the clerk of the school district boards 
  8.23  board at least 30 days before the public hearing required by 
  8.24  subdivision 3.  The county auditor and clerk of the school board 
  8.25  shall provide copies to the members of the boards, as directed 
  8.26  by their respective boards.  The 30-day requirement is waived if 
  8.27  the boards of the county and school district submit written 
  8.28  comments on the proposal and any modification of the proposal to 
  8.29  the authority after receipt of the information.  The members of 
  8.30  the county boards of commissioners and the school boards may 
  8.31  present their comments at the public hearing on the tax 
  8.32  increment financing plan required by subdivision 3.  Upon 
  8.33  adoption of the tax increment financing plan, the authority 
  8.34  shall file a copy of the plan with the commissioner of revenue.  
  8.35  The authority must also file with the commissioner a copy of the 
  8.36  development plan for the project area. 
  9.1      EFFECTIVE DATE:  This section is effective for tax 
  9.2   increment financing plans approved after July 1, 2000. 
  9.3      Sec. 9.  Minnesota Statutes 1998, section 469.175, 
  9.4   subdivision 2a, is amended to read: 
  9.5      Subd. 2a.  [HOUSING DISTRICTS; REDEVELOPMENT DISTRICTS.] In 
  9.6   the case of a proposed housing district or redevelopment 
  9.7   district, in addition to the requirements of subdivision 2, at 
  9.8   least 30 days before the publication of the notice for public 
  9.9   hearing under subdivision 3, the authority shall deliver written 
  9.10  notice of the proposed district to each county commissioner who 
  9.11  represents part of the area proposed to be included in the 
  9.12  district.  The notice must contain a general description of the 
  9.13  boundaries of the proposed district and the proposed activities 
  9.14  to be financed by the district, an offer by the authority to 
  9.15  meet and discuss the proposed district with the county 
  9.16  commissioner, and a solicitation of the commissioner's comments 
  9.17  with respect to the district.  The commissioner may waive the 
  9.18  30-day requirement by submitting written comments on the 
  9.19  proposal and any modification of the proposal to the authority 
  9.20  after receipt of the information. 
  9.21     EFFECTIVE DATE:  This section is effective for tax 
  9.22  increment financing plans approved after June 30, 2000. 
  9.23     Sec. 10.  Minnesota Statutes 1998, section 469.175, 
  9.24  subdivision 3, is amended to read: 
  9.25     Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
  9.26  not certify the original net tax capacity of a tax increment 
  9.27  financing district until the tax increment financing plan 
  9.28  proposed for that district has been approved by the municipality 
  9.29  in which the district is located.  If an authority that proposes 
  9.30  to establish a tax increment financing district and the 
  9.31  municipality are not the same, the authority shall apply to the 
  9.32  municipality in which the district is proposed to be located and 
  9.33  shall obtain the approval of its tax increment financing plan by 
  9.34  the municipality before the authority may use tax increment 
  9.35  financing.  The municipality shall approve the tax increment 
  9.36  financing plan only after a public hearing thereon after 
 10.1   published notice in a newspaper of general circulation in the 
 10.2   municipality at least once not less than ten days nor more than 
 10.3   30 days prior to the date of the hearing.  The published notice 
 10.4   must include a map of the area of the district from which 
 10.5   increments may be collected and, if the project area includes 
 10.6   additional area, a map of the project area in which the 
 10.7   increments may be expended.  The hearing may be held before or 
 10.8   after the approval or creation of the project or it may be held 
 10.9   in conjunction with a hearing to approve the project.  Before or 
 10.10  at the time of approval of the tax increment financing plan, the 
 10.11  municipality shall make the following findings, and shall set 
 10.12  forth in writing the reasons and supporting facts for each 
 10.13  determination: 
 10.14     (1) that the proposed tax increment financing district is a 
 10.15  redevelopment district, a renewal or renovation district, a 
 10.16  mined underground space development district, a housing 
 10.17  district, a soils condition district, or an economic development 
 10.18  district; if the proposed district is a redevelopment district 
 10.19  or a renewal or renovation district, the reasons and supporting 
 10.20  facts for the determination that the district meets the criteria 
 10.21  of section 469.174, subdivision 10, paragraph (a), clauses (1) 
 10.22  and (2), or subdivision 10a, must be documented in writing and 
 10.23  retained and made available to the public by the authority until 
 10.24  the district has been terminated. 
 10.25     (2) that the proposed development or redevelopment, in the 
 10.26  opinion of the municipality, would not reasonably be expected to 
 10.27  occur solely through private investment within the reasonably 
 10.28  foreseeable future and that the increased market value of the 
 10.29  site that could reasonably be expected to occur without the use 
 10.30  of tax increment financing would be less than the increase in 
 10.31  the market value estimated to result from the proposed 
 10.32  development after subtracting the present value of the projected 
 10.33  tax increments for the maximum duration of the district 
 10.34  permitted by the plan.  The requirements of this clause do not 
 10.35  apply if the district is a qualified housing district, as 
 10.36  defined in section 273.1399, subdivision 1. 
 11.1      (3) that the tax increment financing plan conforms to the 
 11.2   general plan for the development or redevelopment of the 
 11.3   municipality as a whole. 
 11.4      (4) that the tax increment financing plan will afford 
 11.5   maximum opportunity, consistent with the sound needs of the 
 11.6   municipality as a whole, for the development or redevelopment of 
 11.7   the project by private enterprise. 
 11.8      (5) that the municipality elects the method of tax 
 11.9   increment computation set forth in section 469.177, subdivision 
 11.10  3, clause (b), if applicable. 
 11.11     When the municipality and the authority are not the same, 
 11.12  the municipality shall approve or disapprove the tax increment 
 11.13  financing plan within 60 days of submission by the authority, or 
 11.14  the plan shall be deemed approved.  When the municipality and 
 11.15  the authority are not the same, the municipality may not amend 
 11.16  or modify a tax increment financing plan except as proposed by 
 11.17  the authority pursuant to subdivision 4.  Once approved, the 
 11.18  determination of the authority to undertake the project through 
 11.19  the use of tax increment financing and the resolution of the 
 11.20  governing body shall be conclusive of the findings therein and 
 11.21  of the public need for the financing. 
 11.22     EFFECTIVE DATE:  This section is effective for tax 
 11.23  increment financing plans approved after July 1, 2000. 
 11.24     Sec. 11.  Minnesota Statutes 1998, section 469.176, 
 11.25  subdivision 1b, is amended to read: 
 11.26     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
 11.27  shall in any event be paid to the authority 
 11.28     (1) after 25 years from date of receipt by the authority of 
 11.29  the first tax increment for a mined underground space 
 11.30  development district, 
 11.31     (2) after 15 years after receipt by the authority of the 
 11.32  first increment for a renewal and renovation district, 
 11.33     (3) (2) after 20 years after receipt by the authority of 
 11.34  the first increment for a soils condition district, 
 11.35     (4) (3) after nine eight years from the date of the 
 11.36  receipt, or 11 years from approval of the tax increment 
 12.1   financing plan, whichever is less, for an economic development 
 12.2   district, 
 12.3      (5) (4) for a housing district or a redevelopment district, 
 12.4   after 20 years from the date of receipt by the authority of the 
 12.5   first tax increment by the authority pursuant to section 
 12.6   469.175, subdivision 1, paragraph (b); or, if no provision is 
 12.7   made under section 469.175, subdivision 1, paragraph (b), after 
 12.8   25 years from the date of receipt by the authority of the first 
 12.9   increment. 
 12.10     (b) For purposes of determining a duration limit under this 
 12.11  subdivision or subdivision 1e that is based on the receipt of an 
 12.12  increment, any increments from taxes payable in the year in 
 12.13  which the district terminates shall be paid to the authority.  
 12.14  This paragraph does not affect a duration limit calculated from 
 12.15  the date of approval of the tax increment financing plan or 
 12.16  based on the recovery of costs or to a duration limit under 
 12.17  subdivision 1c.  This paragraph does not supersede the 
 12.18  restrictions on payment of delinquent taxes in subdivision 1f. 
 12.19     (c) Except as authorized by section 469.175, subdivision 1, 
 12.20  paragraph (b), an action by the authority to waive or decline to 
 12.21  accept an increment has no effect for purposes of computing a 
 12.22  duration limit based on the receipt of increment under this 
 12.23  subdivision or any other provision of law.  The authority is 
 12.24  deemed to have received an increment for any year in which it 
 12.25  waived or declined to accept an increment, regardless of whether 
 12.26  the increment was paid to the authority. 
 12.27     EFFECTIVE DATE:  This section is effective for districts 
 12.28  for which the initial request for certification is made after 
 12.29  June 30, 2000. 
 12.30     Sec. 12.  Minnesota Statutes 1998, section 469.176, 
 12.31  subdivision 4d, is amended to read: 
 12.32     Subd. 4d.  [HOUSING DISTRICTS.] (a) Revenue derived from 
 12.33  tax increment from a housing district must be used solely to 
 12.34  finance the cost of: 
 12.35     (1) housing projects as defined in section 469.174, 
 12.36  subdivision 11 intended for occupancy by persons or families of 
 13.1   low and moderate income, as defined in chapter 462A, Title II of 
 13.2   the National Housing Act of 1934, the National Housing Act of 
 13.3   1959, the United States Housing Act of 1937, as amended, Title V 
 13.4   of the Housing Act of 1949, as amended, any other similar 
 13.5   present or future federal, state, or municipal legislation, or 
 13.6   the regulations promulgated under any of those acts; and 
 13.7      (2) commercial uses or other facilities that do not satisfy 
 13.8   the requirements of clause (1), but that meet the applicable 
 13.9   percentage restrictions under paragraph (b) or (c) and that are 
 13.10  part of or related to the housing qualifying under clause (1). 
 13.11     (b) For housing districts with certification request dates 
 13.12  after April 30, 1990, the percentage permitted to be used for 
 13.13  facilities under paragraph (a), clause (2), may not exceed 20 
 13.14  percent of the total fair market value of the planned 
 13.15  improvements in the development plan or agreement. 
 13.16     (c) For housing districts with certification request dates 
 13.17  after May 1, 1988, and before May 1, 1990, the portion permitted 
 13.18  to be used for facilities under paragraph (a), clause (2), may 
 13.19  not exceed one-third of the total fair market value of the 
 13.20  planned improvements in the development plan or agreement. 
 13.21     (d) Under paragraphs (b) and (c), the fair market value of 
 13.22  the improvements may be determined using the cost of 
 13.23  construction, capitalized income, or other appropriate method of 
 13.24  estimating market value.  The cost of planning, site 
 13.25  acquisition, site preparation, public infrastructure, 
 13.26  administration, or other similar undertakings that serve both 
 13.27  housing under paragraph (a), clause (1), and facilities under 
 13.28  paragraph (a), clause (2), must be allocated between clause (1) 
 13.29  housing and clause (2) facilities in proportion to their 
 13.30  respective shares of total fair market value of planned 
 13.31  improvements.  
 13.32     (e) The cost of public improvements directly related to the 
 13.33  housing projects and the allocated administrative expenses of 
 13.34  the authority may be included in the cost of a housing project. 
 13.35     EFFECTIVE DATE:  This section is effective for districts 
 13.36  for which the request for certification was filed with the 
 14.1   county after May 1, 1988. 
 14.2      Sec. 13.  Minnesota Statutes 1998, section 469.1761, 
 14.3   subdivision 4, is amended to read: 
 14.4      Subd. 4.  [NONCOMPLIANCE; ENFORCEMENT.] Failure to comply 
 14.5   with the requirements of this section results in application of 
 14.6   the duration limits for economic development districts to the 
 14.7   district.  If at the time of the noncompliance the district has 
 14.8   exceeded the duration limits for an economic development 
 14.9   district, the district must be decertified effective for taxes 
 14.10  assessed in the next calendar year.  The commissioner of revenue 
 14.11  shall enforce the provisions of this section is subject to 
 14.12  section 469.1771.  The commissioner state auditor may waive 
 14.13  insubstantial violations.  Appeal of the commissioner's orders 
 14.14  of noncompliance must be made to the tax court in the manner 
 14.15  provided in section 271.06. 
 14.16     EFFECTIVE DATE.  This section is effective for violations 
 14.17  occurring after July 1, 2000. 
 14.18     Sec. 14.  Minnesota Statutes 1998, section 469.1763, 
 14.19  subdivision 2, is amended to read: 
 14.20     Subd. 2.  [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 
 14.21  increment financing district, an amount equal to at least 75 
 14.22  percent of the revenue derived from tax increments paid by 
 14.23  properties in the district must be expended on activities in the 
 14.24  district or to pay bonds, to the extent that the proceeds of the 
 14.25  bonds were used to finance activities in the district or to pay, 
 14.26  or secure payment of, debt service on credit enhanced bonds.  
 14.27  For districts, other than redevelopment districts for which the 
 14.28  request for certification was made after June 30, 1995, the 
 14.29  in-district percentage for purposes of the preceding sentence is 
 14.30  80 percent.  Not more than 25 percent of the revenue derived 
 14.31  from tax increments paid by properties in the district may be 
 14.32  expended, through a development fund or otherwise, on activities 
 14.33  outside of the district but within the defined geographic area 
 14.34  of the project except to pay, or secure payment of, debt service 
 14.35  on credit enhanced bonds.  For districts, other than 
 14.36  redevelopment districts for which the request for certification 
 15.1   was made after June 30, 1995, the pooling percentage for 
 15.2   purposes of the preceding sentence is 20 percent.  The revenue 
 15.3   derived from tax increments for the district that are expended 
 15.4   on costs under section 469.176, subdivision 4h, paragraph (b), 
 15.5   may be deducted first before calculating the percentages that 
 15.6   must be expended within and without the district.  
 15.7      (b) In the case of a housing district, a housing project, 
 15.8   as defined in section 469.174, subdivision 11, is expenditures 
 15.9   meeting the requirements of section 469.176, subdivision 4d, are 
 15.10  deemed to be for an activity in the district.  
 15.11     (c) All administrative expenses are for activities outside 
 15.12  of the district. 
 15.13     EFFECTIVE DATE:  This section is effective for districts 
 15.14  for which the request for certification was made after April 30, 
 15.15  1990. 
 15.16     Sec. 15.  Minnesota Statutes 1998, section 469.177, 
 15.17  subdivision 1, is amended to read: 
 15.18     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
 15.19  after adoption of a tax increment financing plan, the auditor of 
 15.20  any county in which the district is situated shall, upon request 
 15.21  of the authority, certify the original net tax capacity of the 
 15.22  tax increment financing district and that portion of the 
 15.23  district overlying any subdistrict as described in the tax 
 15.24  increment financing plan and shall certify in each year 
 15.25  thereafter the amount by which the original net tax capacity has 
 15.26  increased or decreased as a result of a change in tax exempt 
 15.27  status of property within the district and any subdistrict, 
 15.28  reduction or enlargement of the district or changes pursuant to 
 15.29  subdivision 4.  
 15.30     (b) In the case of a mined underground space development 
 15.31  district the county auditor shall certify the original net tax 
 15.32  capacity as zero, plus the net tax capacity, if any, previously 
 15.33  assigned to any subsurface area included in the mined 
 15.34  underground space development district pursuant to section 
 15.35  272.04. 
 15.36     (c) For districts approved under section 469.175, 
 16.1   subdivision 3, or parcels added to existing districts after May 
 16.2   1, 1988, if the classification under section 273.13 of property 
 16.3   located in a district changes to a classification that has a 
 16.4   different assessment ratio, the original net tax capacity of 
 16.5   that property must be redetermined at the time when its use is 
 16.6   changed as if the property had originally been classified in the 
 16.7   same class in which it is classified after its use is changed. 
 16.8      (d) (c) The amount to be added to the original net tax 
 16.9   capacity of the district as a result of previously tax exempt 
 16.10  real property within the district becoming taxable equals the 
 16.11  net tax capacity of the real property as most recently assessed 
 16.12  pursuant to section 273.18 or, if that assessment was made more 
 16.13  than one year prior to the date of title transfer rendering the 
 16.14  property taxable, the net tax capacity assessed by the assessor 
 16.15  at the time of the transfer.  If substantial taxable 
 16.16  improvements were made to a parcel after certification of the 
 16.17  district and if the property later becomes tax exempt, in whole 
 16.18  or part, as a result of the authority acquiring the property 
 16.19  through foreclosure or exercise of remedies under a lease or 
 16.20  other revenue agreement or as a result of tax forfeiture, the 
 16.21  amount to be added to the original net tax capacity of the 
 16.22  district as a result of the property again becoming taxable is 
 16.23  the amount of the parcel's value that was included in original 
 16.24  net tax capacity when the parcel was first certified.  The 
 16.25  amount to be added to the original net tax capacity of the 
 16.26  district as a result of enlargements equals the net tax capacity 
 16.27  of the added real property as most recently certified by the 
 16.28  commissioner of revenue as of the date of modification of the 
 16.29  tax increment financing plan pursuant to section 469.175, 
 16.30  subdivision 4. 
 16.31     (e) (d) For districts approved under section 469.175, 
 16.32  subdivision 3, or parcels added to existing districts after May 
 16.33  1, 1988, if the net tax capacity of a property increases because 
 16.34  the property no longer qualifies under the Minnesota 
 16.35  Agricultural Property Tax Law, section 273.111; the Minnesota 
 16.36  Open Space Property Tax Law, section 273.112; or the 
 17.1   Metropolitan Agricultural Preserves Act, chapter 473H, or 
 17.2   because platted, unimproved property is improved or three years 
 17.3   pass after approval of the plat under section 273.11, 
 17.4   subdivision 1, the increase in net tax capacity must be added to 
 17.5   the original net tax capacity.  
 17.6      (f) Each year the auditor shall also add to the original 
 17.7   net tax capacity of each economic development district an amount 
 17.8   equal to the original net tax capacity for the preceding year 
 17.9   multiplied by the average percentage increase in the market 
 17.10  value of all property included in the economic development 
 17.11  district during the five years prior to certification of the 
 17.12  district.  In computing the average percentage increase in 
 17.13  market value, the auditor shall exclude the market value, as 
 17.14  estimated by the assessor, that is attributable to new 
 17.15  construction; extension of sewer, water, roads, or other public 
 17.16  utilities; or platting of the land. 
 17.17     (g) (e) The amount to be subtracted from the original net 
 17.18  tax capacity of the district as a result of previously taxable 
 17.19  real property within the district becoming tax exempt, or a 
 17.20  reduction in the geographic area of the district, shall be the 
 17.21  amount of original net tax capacity initially attributed to the 
 17.22  property becoming tax exempt or being removed from the 
 17.23  district.  If the net tax capacity of property located within 
 17.24  the tax increment financing district is reduced by reason of a 
 17.25  court-ordered abatement, stipulation agreement, voluntary 
 17.26  abatement made by the assessor or auditor or by order of the 
 17.27  commissioner of revenue, the reduction shall be applied to the 
 17.28  original net tax capacity of the district when the property upon 
 17.29  which the abatement is made has not been improved since the date 
 17.30  of certification of the district and to the captured net tax 
 17.31  capacity of the district in each year thereafter when the 
 17.32  abatement relates to improvements made after the date of 
 17.33  certification.  The county auditor may specify reasonable form 
 17.34  and content of the request for certification of the authority 
 17.35  and any modification thereof pursuant to section 469.175, 
 17.36  subdivision 4.  
 18.1      (h) (f) If a parcel of property contained a substandard 
 18.2   building that was demolished or removed and if the authority 
 18.3   elects to treat the parcel as occupied by a substandard building 
 18.4   under section 469.174, subdivision 10, paragraph (b), the 
 18.5   auditor shall certify the original net tax capacity of the 
 18.6   parcel using the greater of (1) the current net tax capacity of 
 18.7   the parcel, or (2) the estimated market value of the parcel for 
 18.8   the year in which the building was demolished or removed, but 
 18.9   applying the class rates for the current year. 
 18.10     EFFECTIVE DATE:  This section is effective for districts 
 18.11  for which the initial requests for certification are made after 
 18.12  June 30, 2000. 
 18.13     Sec. 16.  Minnesota Statutes 1999 Supplement, section 
 18.14  469.1771, subdivision 1, is amended to read: 
 18.15     Subdivision 1.  [ENFORCEMENT.] (a) The owner of taxable 
 18.16  property located in the city, town, school district, or county 
 18.17  in which the tax increment financing district is located may 
 18.18  bring suit for equitable relief or for damages, as provided in 
 18.19  subdivisions 2, 3, and 4, arising out of a failure of a 
 18.20  municipality or authority to comply with the provisions of 
 18.21  sections 469.174 to 469.179, or related provisions of this 
 18.22  chapter.  The prevailing party in a suit filed under the 
 18.23  preceding sentence is entitled to costs, including reasonable 
 18.24  attorney fees. 
 18.25     (b) The state auditor may examine and audit political 
 18.26  subdivisions' use of tax increment financing.  Without previous 
 18.27  notice, the state auditor may examine or audit accounts and 
 18.28  records on a random basis as the auditor deems to be in the 
 18.29  public interest.  If the state auditor finds evidence that an 
 18.30  authority or municipality has violated a provision of the law 
 18.31  for which a remedy is provided under this section, the state 
 18.32  auditor shall forward the relevant information to the county 
 18.33  attorney.  The county attorney may bring an action to enforce 
 18.34  the provisions of sections 469.174 to 469.179 or related 
 18.35  provisions of this chapter, for matters referred by the state 
 18.36  auditor or on behalf of the county.  If the county attorney 
 19.1   determines not to bring an action or if the county attorney has 
 19.2   not brought an action within 12 months after receipt of the 
 19.3   initial notification by the state auditor of the violation, the 
 19.4   county attorney shall notify the state auditor in writing. 
 19.5      (c) If the state auditor finds an authority is not in 
 19.6   compliance with sections 469.174 to 469.179 or related 
 19.7   provisions of law, the auditor shall notify the governing body 
 19.8   of the municipality that approved the tax increment financing 
 19.9   district of its findings.  The governing body of the 
 19.10  municipality must respond in writing to the state auditor within 
 19.11  60 days after receiving the notification.  Its written response 
 19.12  must state whether the municipality accepts, in whole or part, 
 19.13  the auditor's findings.  If the municipality does not accept the 
 19.14  findings, the statement must indicate the basis for its 
 19.15  disagreement.  The state auditor shall annually summarize the 
 19.16  responses it receives under this section and send the summary 
 19.17  and copies of the responses to the chairs of the committees of 
 19.18  the legislature with jurisdiction over tax increment financing. 
 19.19     (d) The state auditor shall notify the attorney general in 
 19.20  writing and provide supporting materials for a violation found 
 19.21  by the auditor, if the: 
 19.22     (1) auditor receives notification from the county attorney 
 19.23  under paragraph (b) or receives no notification for a 12-month 
 19.24  period after initially notifying the county attorney and the 
 19.25  state auditor confirms with the county attorney or the 
 19.26  municipality that no action has been brought regarding the 
 19.27  matter; and 
 19.28     (2) municipality or development authority have not 
 19.29  eliminated or resolved the violation to the satisfaction of the 
 19.30  state auditor. 
 19.31  The auditor shall provide the municipality and development 
 19.32  authority a copy of the notification sent to the attorney 
 19.33  general. 
 19.34     EFFECTIVE DATE:  This section is effective for violations 
 19.35  occurring after December 31, 1990, but does not apply to pending 
 19.36  litigation. 
 20.1      Sec. 17.  [REPEALER.] 
 20.2      Minnesota Statutes 1998, sections 469.055, subdivision 5; 
 20.3   469.101, subdivision 21; 469.135; 469.136; 469.137; 469.138; 
 20.4   469.139; 469.140; 469.174, subdivision 13; and 469.176, 
 20.5   subdivision 4a, are repealed. 
 20.6      EFFECTIVE DATE:  This section is effective the day 
 20.7   following final enactment.