SF 23

Introduction - 94th Legislature (2025 - 2026)

Posted on 08/19/2025 03:36 p.m.

A bill for an act
relating to taxation; property; tax increment financing; clarifying uses of unobligated
increment; amending Minnesota Statutes 2024, section 469.176, subdivision 4n.

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

Section 1.

Minnesota Statutes 2024, section 469.176, subdivision 4n, is amended to read:

Subd. 4n.

Temporary use of increment authorized.

(a) Notwithstanding any other
provision of this section or any other law to the contrary, except the requirements to pay
bonds to which increments are pledged, the authority may elect, by resolution, to transfer
unobligated increment for one or more of the following purposes:

(1) to provide improvements, loans, interest rate subsidies, or assistance in any form to
private development consisting of the construction or substantial rehabilitation of buildings
and ancillary facilities, if doing so will create or retain jobs in the state, including construction
jobs, and the construction commences before December 31, 2025, and would not have
commenced before that date without the assistance; or

(2) to make an equity or similar investment in a corporation, partnership, or limited
liability company that the authority determines is necessary to make construction of a
development that meets the requirement of clause (1) financially feasible.

(b) For each calendar year for which transfers are permitted under this subdivision, the
maximum transfer equals the excess of the district's unobligated increment which includes
any increment not required for payments of obligations due during six months following
the transfer on outstanding bonds, binding contracts, and other outstanding financial
obligations of the district to which the district's increment is pledged.

(c) The authority may transfer increments permitted under this subdivision after creating
a written spending plan that authorizes the authority to take the action described in paragraph
(a) and details the use of transferred increment. Additionally, the municipality must approve
the authority's spending plan after holding a public hearing. The municipality must publish
notice of the hearing in a newspaper of general circulation in the municipality and on the
municipality's public website at least ten days, but not more than 30 days, prior to the date
of the hearing.

(d) Increment that is improperly retained, received, spent, or transferred is not eligible
for transfer under this subdivision.

(e) An authority making a transfer under this subdivision must provide to the Office of
the State Auditor a copy of the spending plan approved and signed by the municipality.

(f) The authority to transfer increments under this subdivision expires on December 31,
2022. All transferred increments must be spent new text begin , loaned, or invested new text end by December 31, 2025.
Increment not spent new text begin , loaned, or invested new text end by December 31, 2025, must be returned to the
district. new text begin The requirement to return increment to the district includes any proceeds, principal,
and interest received on loans of transferred increment; interest or investment earnings on
transferred increment; or other repayments or returns of transferred increment defined as
tax increment under section 469.174, subdivision 25, that remain in the funds or accounts
of the authority or municipality on December 31, 2025, or that are subsequently received
by the authority or municipality. new text end If the district has already been decertified new text begin when increment
is returned under this paragraph new text end , the increment shall be treated as excess increment and
distributed as provided in subdivision 2, paragraph (c), clause (4).

new text begin EFFECTIVE DATE. new text end

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