SF 3896
Introduction - 94th Legislature (2025 - 2026)
Posted on 02/27/2026 10:11 a.m.
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A bill for an act
relating to taxation; income and corporate franchise; establishing credits for
conversion of certain property and energy-efficient design of certain property;
requiring reports; proposing coding for new law in Minnesota Statutes, chapter
290.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
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[290.0696] CREDITS FOR CONVERSION OF UNDERUTILIZED
PROPERTY.
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new text begin Subdivision 1. new text end
new text begin Definitions. new text end
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(a) For purposes of this section, the following terms have
the meanings given.
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(b) "City" means the city of Brooklyn Center.
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(c) "Eligible property" means property located in a qualifying census tract that:
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(1) is exempt from taxation under section 272.02;
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(2) is classified as class 3a under section 273.13 for the most recent assessment year and
is vacant or undeveloped, as determined by the city in a resolution required under subdivision
4; or
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(3) is classified as class 3a under section 273.13 for the most recent assessment year and
contains a building that is at least 15 years old, and:
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(i) the building has maintained not more than 50 percent tenancy during the three
immediately preceding years; or
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(ii) the building qualifies as structurally substandard as defined in section 469.174,
subdivision 10, as determined by the city in a resolution required under subdivision 4.
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(d) "Qualified census tract" means any of the following census tracts, as determined by
the 2020 federal census: 27053020201; 27053020202; 27053020302; 27053020303;
27053020304; or 27053020400.
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(e) "Qualified construction expenditures" means expenses other than qualified sustainable
investment expenditures to convert eligible property to qualified property, including
construction expenses for related facilities located on qualified property.
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(f) "Qualified property" means an eligible property that:
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(1) is reclassified as class 1a, 4a, or 4d (1) under section 273.13 for the most recent
assessment year; or
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(2) retains classification as class 3a under section 273.13 for the most recent assessment
year and is determined by the city to be no longer vacant or undeveloped, or no longer
containing a building that is structurally substandard as defined in section 469.174,
subdivision 10.
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(g) "Qualified sustainable investment expenditures" means expenses other than qualified
construction expenditures for any of the following in converting eligible property to qualified
property, including expenses for related facilities on qualified property:
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(1) LEED certification;
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(2) solar panels;
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(3) geothermal systems;
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(4) energy-efficient HVAC; and
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(5) green retrofits.
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(h) "Related facilities" means access roads, lighting, sidewalks, and utility components
on or adjacent to qualified property that are necessary for safe access to and use of the
qualified property.
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new text begin Subd. 2. new text end
new text begin Credit for qualified construction expenditures allowed; credit certificates. new text end
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(a)
A credit is allowed against the tax imposed under this chapter equal to 20 percent of qualified
construction expenditures.
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(b) To claim a credit under this subdivision, a taxpayer must apply to the commissioner
for a credit certificate. The application for the credit certificate must be in the form and
manner prescribed by the commissioner and include, at minimum:
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(1) the location, property classification, and assessment year of eligible property;
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(2) the amount of qualified construction expenditures, including a description of each
expenditure;
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(3) a copy of the resolution required under subdivision 4; and
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(4) the property classification and assessment year of qualified property.
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(c) If the commissioner determines the criteria in paragraph (b) are satisfied, the
commissioner must issue the credit certificate to the taxpayer within 30 days of receipt of
the application. The credit certificate must state the amount of qualified construction
expenditures made in the taxable year and the amount of the credit. The commissioner must
not issue more than one credit certificate in a taxable year to the same taxpayer.
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(d) A taxpayer may not apply for a credit certificate before eligible property has been
converted to qualified property.
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(e) The credit under this subdivision may not be claimed until two taxable years after
the taxable year in which the credit certificate is issued.
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new text begin Subd. 3. new text end
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Credit for qualified sustainable investment expenditures allowed; credit
certificates.
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(a) A credit is allowed against the tax imposed under this chapter equal to 30
percent of qualified sustainable investment expenditures made during the taxable year.
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(b) To claim the credit under this subdivision, a taxpayer must apply to the commissioner
of commerce for a credit certificate. The application for the credit certificate must be in the
form and manner prescribed by the commissioner of commerce in consultation with the
commissioner and include, at minimum:
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(1) the location, property classification, and assessment year of eligible property;
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(2) the amount of qualified sustainable investment expenditures, including a description
of each expenditure;
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(3) a copy of the resolution required under subdivision 4; and
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(4) the property classification and assessment year of qualified property.
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(c) If the commissioner determines the criteria in paragraph (b) are satisfied, the
commissioner of commerce must issue the credit certificate to the taxpayer within 30 days
of receipt of the application. The credit certificate must state the amount of qualified
sustainable investment expenditures made in the taxable year and the amount of the credit.
The commissioner of commerce must provide a copy of the credit certificate to the
commissioner. The commissioner of commerce must not issue more than one credit certificate
in a taxable year to the same taxpayer.
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(d) A taxpayer may not apply for a credit certificate before eligible property has been
converted to qualified property.
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(e) The credit under this subdivision may not be claimed until two taxable years after
the taxable year in which the credit certificate is issued.
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new text begin Subd. 4. new text end
new text begin Resolution required. new text end
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(a) For a credit claimed under this section to convert
eligible property under subdivision 1, paragraph (c), clause (2) or (3), to qualified property,
the city must adopt a resolution finding that the eligible property qualifies under the
requirements of subdivision 1, paragraph (c), clause (2) or (3), with documentation sufficient
to make the finding.
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(b) The resolution must be adopted at least ....... days before the first qualified construction
expenditure or qualified sustainable investment expenditure is made.
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new text begin Subd. 5. new text end
new text begin Partnerships; multiple owners. new text end
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Credits granted to a partnership, a limited
liability company taxed as a partnership, an S corporation, or multiple owners of property
are passed through to the partners, members, shareholders, or owners, respectively, pro rata
to each partner, member, shareholder, or owner based on their share of the entity's assets
or as specially allocated in their organizational documents or any other executed document,
as of the last day of the taxable year.
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new text begin Subd. 6. new text end
new text begin Allocation for nonresidents and part-year residents. new text end
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For a nonresident or
part-year resident, the credit determined under this section must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
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new text begin Subd. 7. new text end
new text begin Credits refundable. new text end
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If the amount of credit the taxpayer is eligible to receive
under this section exceeds the liability for tax under this chapter, the commissioner must
refund the excess to the taxpayer.
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new text begin Subd. 8. new text end
new text begin Appropriation. new text end
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An amount sufficient to pay the refunds authorized under this
section is appropriated to the commissioner from the general fund.
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new text begin Subd. 9. new text end
new text begin Report to legislature. new text end
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By January 31, 2031, and every two years thereafter,
the commissioner of revenue and the commissioner of commerce must submit a report to
the chairs and ranking minority members of the legislative committees with jurisdiction
over taxes, economic development, and energy. The report must include:
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(1) the amount of qualified construction expenditures for each qualified census tract;
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(2) the amount of qualified sustainable investment expenditures for each qualified census
tract;
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(3) the property classification of each eligible property converted to qualified property
and the property classification of the qualified property;
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(4) the amount of credits awarded for all qualified construction expenditures; and
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(5) the amount of credits awarded for all qualified sustainable investment expenditures.
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new text begin Subd. 10. new text end
new text begin Sunset. new text end
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This section expires January 1, 2036, for taxable years beginning after
December 31, 2035. The reports under subdivision 9 must be submitted through January 1,
2039.
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new text begin EFFECTIVE DATE. new text end
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This section is effective for taxable years beginning after December
31, 2025.
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