1.1                          A bill for an act 
  1.2             relating to economic development; authorizing the 
  1.3             Brooklyn Park economic development authority to 
  1.4             establish a distressed housing district and providing 
  1.5             the conditions thereof. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [DEFINITIONS.] 
  1.8      Subdivision 1.  [AUTHORITY.] "Authority" means the Brooklyn 
  1.9   Park economic development authority. 
  1.10     Subd. 2.  [DISTRESSED RENTAL PROPERTIES.] (a) "Distressed 
  1.11  rental properties," "distressed rental property," "property," or 
  1.12  "properties" means those multifamily rental projects located 
  1.13  within the city of Brooklyn Park which meet: 
  1.14     (1) both of the following: 
  1.15     (i) are 20 years old or older at the time of the request 
  1.16  for certification; and 
  1.17     (ii) are determined by the authority to be in need of 
  1.18  substantial rehabilitation or demolition; and 
  1.19     (2) one of the following: 
  1.20     (i) have a vacancy rate as established by rental records of 
  1.21  the owner thereof, which has averaged at least 25 percent over 
  1.22  the five-year period preceding the request for certification; 
  1.23     (ii) have an assessor's fair market value which has 
  1.24  decreased by at least 20 percent over the five-year period 
  1.25  preceding the request for certification; or 
  2.1      (iii) were converted from home ownership to rental housing.
  2.2      (b) Buildings located on contiguous properties, commonly 
  2.3   owned and financed, which were constructed at approximately the 
  2.4   same time constitute a single distressed rental property. 
  2.5      Subd. 3.  [CAPTURED NET TAX CAPACITY.] "Captured net tax 
  2.6   capacity" means the amount by which the current net tax capacity 
  2.7   of the distressed housing district exceeds the original net tax 
  2.8   capacity including the value of property normally taxable as 
  2.9   personal property by reason of its location or over property 
  2.10  owned by a tax-exempt entity.  
  2.11     Subd. 4.  [ORIGINAL NET TAX CAPACITY.] With respect to 
  2.12  distressed rental properties which according to the distressed 
  2.13  housing district plan are to be rehabilitated, "original net tax 
  2.14  capacity" means (i) the net tax capacity of said properties as 
  2.15  certified by the commissioner of revenue for the appropriate 
  2.16  assessment year minus (ii) all estimated costs associated with 
  2.17  rehabilitating said properties as set forth in the distressed 
  2.18  housing plan, but (iii) not less than zero.  With respect to 
  2.19  distressed rental properties which according to the distressed 
  2.20  housing district plan are to be demolished, "original net tax 
  2.21  capacity" means the net tax capacity of the land only as 
  2.22  certified by the commissioner of revenue for the appropriate 
  2.23  assessment year.  For purposes of this subdivision, the 
  2.24  appropriate assessment year shall be the previous assessment 
  2.25  year, provided that a request by the authority for certification 
  2.26  has been made to the county auditor by June 30.  If the request 
  2.27  for certification is filed after June 30, the appropriate 
  2.28  assessment year shall be the current assessment year.  
  2.29     Subd. 5.  [SUBSTANTIAL REHABILITATION.] "Substantial 
  2.30  rehabilitation" means rehabilitation, as defined in Minnesota 
  2.31  Statutes, section 462C.02, subdivision 8, in an amount of at 
  2.32  least $7,000 per unit.  
  2.33     Sec. 2.  [ESTABLISHMENT OF A DISTRESSED HOUSING DISTRICT.] 
  2.34     Subdivision 1.  [CREATION.] The authority may establish a 
  2.35  distressed housing district within the city which may contain 
  2.36  not more than five distressed rental properties.  The distressed 
  3.1   rental properties need not be contiguous and may all be included 
  3.2   when establishing the district, or may be added from time to 
  3.3   time as described in subdivision 4, clause (2), provided that no 
  3.4   distressed rental property shall be added to the district after 
  3.5   five years from the date of the initial request for 
  3.6   certification of the district.  
  3.7      Subd. 2.  [TAX INCREMENT.] Minnesota Statutes, section 
  3.8   469.177, subdivisions 1, paragraphs (a), (d), and (g), 1a, and 3 
  3.9   to 10, apply to the computation of tax increment for the 
  3.10  distressed housing district created under sections 1 to 4.  
  3.11     Subd. 3.  [DISTRESSED HOUSING DISTRICT PLAN.] To establish 
  3.12  a distressed housing district to the authority shall adopt a 
  3.13  distressed housing plan that contains: 
  3.14     (1) a description of the distressed rental properties to be 
  3.15  included in the district to the extent known at the time the 
  3.16  plan is prepared, including the current and proposed ownership 
  3.17  entities thereof.  If the maximum allowable number of distressed 
  3.18  rental properties are not included in the district initially, a 
  3.19  description of the criteria that will be used by the authority 
  3.20  to select properties to be included later; 
  3.21     (2) a general description of the types of substantial 
  3.22  rehabilitation or demolition which will be undertaken, and by 
  3.23  whom; and 
  3.24     (3) estimates of the following: 
  3.25     (i) total cost of substantial rehabilitation or demolition 
  3.26  for each distressed rental property included in the district, 
  3.27  including public administrative costs and relocation expenses; 
  3.28     (ii) sources of revenue, public and private, to pay the 
  3.29  estimated costs of substantial rehabilitation or demolition; 
  3.30     (iii) the most recent net tax capacity of each distressed 
  3.31  rental property included in the district; 
  3.32     (iv) the estimated captured net tax capacity of each 
  3.33  distressed rental property included in the district, at 
  3.34  completion; and 
  3.35     (v) statements of the authority's alternate estimates of 
  3.36  the impact of the distressed housing district on the net tax 
  4.1   capacities of all taxing jurisdictions in which the distressed 
  4.2   housing district is located in whole or in part.  For purposes 
  4.3   of one statement, the authority shall assume that the estimated 
  4.4   captured net tax capacity would be available to the taxing 
  4.5   jurisdictions without creation of the distressed housing 
  4.6   district and for purposes of the second statement the authority 
  4.7   shall assume that none of the estimated captured net tax 
  4.8   capacity would be available to the taxing jurisdictions without 
  4.9   creation of the distressed housing district.  
  4.10     Subd. 4.  [PROCEDURE.] Minnesota Statutes, section 469.175, 
  4.11  subdivisions 3 to 6a, apply to the establishment and operation 
  4.12  of the distressed housing district created under sections 1 to 
  4.13  4, except as follows: 
  4.14     (1) the determination required in Minnesota Statutes, 
  4.15  section 469.175, subdivision 3, clauses (1) and (2), is not 
  4.16  required; and 
  4.17     (2) the addition to the district of distressed rental 
  4.18  properties not identified in the original distressed housing 
  4.19  district plan is not a modification of the plan requiring 
  4.20  notice, public hearing, findings, or approval if the addition of 
  4.21  the distressed rental properties is consistent with the criteria 
  4.22  described in subdivision 3, clause (1).  
  4.23     Sec. 3.  [LIMITATIONS.] 
  4.24     Subdivision 1.  [DURATION.] Tax increment generated by each 
  4.25  distressed rental property included in the district shall cease 
  4.26  to be paid to the authority after the expiration of 15 years 
  4.27  from the receipt by the county of the first tax increment from 
  4.28  that property.  
  4.29     Subd. 2.  [USE.] (a) All tax increment received by the 
  4.30  authority from the district shall be used in accordance with the 
  4.31  distressed housing district plan.  
  4.32     (b) Tax increment may be used to pay the costs of: 
  4.33     (1) acquiring title to or an ownership interest in a 
  4.34  distressed rental property; 
  4.35     (2) relocation of tenants residing in a distressed rental 
  4.36  property; 
  5.1      (3) demolition of all or a part of a distressed rental 
  5.2   property; 
  5.3      (4) substantial rehabilitation of a distressed rental 
  5.4   property; 
  5.5      (5) public improvements associated with the substantial 
  5.6   rehabilitation or demolition of distressed housing properties; 
  5.7   and 
  5.8      (6) the costs of the authority in administering the 
  5.9   creation and operation of the district.  
  5.10     (c) The authority may pay the costs of substantial 
  5.11  rehabilitation or demolition of the distressed rental properties 
  5.12  directly, through the issuance and sale of obligations pursuant 
  5.13  to Minnesota Statutes, section 469.178, by means of loans or 
  5.14  grants to the owners of such properties, or through the exercise 
  5.15  of any authority contained in Minnesota Statutes, sections 
  5.16  469.090 to 469.1081. 
  5.17     (d) Tax increment received by the authority in excess of 
  5.18  that needed to pay the costs described in paragraph (b), clause 
  5.19  (2), shall be deposited into the housing account established by 
  5.20  the authority pursuant to Laws 1994, chapter 587, article 9, 
  5.21  section 20. 
  5.22     Sec. 4.  [APPLICABILITY OF OTHER LAWS.] 
  5.23     References in Minnesota Statutes to tax increment financing 
  5.24  districts created and tax increment generated under Minnesota 
  5.25  Statutes, sections 469.174 to 469.179, except for references in 
  5.26  Minnesota Statutes, section 273.1399, include the distressed 
  5.27  housing district and tax increment subject to sections 1 to 4.  
  5.28  Minnesota Statutes, sections 469.174 to 469.179, apply only to 
  5.29  the extent specified in sections 1 to 4.  The distressed housing 
  5.30  district does not have a longer duration than permitted by 
  5.31  general law for purposes of Minnesota Statutes, section 469.1782.
  5.32     Sec. 5.  [EFFECTIVE DATE.] 
  5.33     Sections 1 to 4 are effective the day following final 
  5.34  enactment and upon compliance by the governing body of Brooklyn 
  5.35  Park with Minnesota Statutes, section 645.021, subdivision 3.