HF 112

as introduced - 94th Legislature (2025 - 2026) Posted on 02/10/2025 03:08pm

A bill for an act
relating to economic development; modifying the definition of financial assistance
to include certain tax increment financing or allocations of low-income housing
credits; expanding the definition of project; amending Minnesota Statutes 2024,
sections 116J.871, subdivision 1; 177.42, subdivision 2.

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

Section 1.

Minnesota Statutes 2024, section 116J.871, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of this section, the following terms have
the meanings given them.

(b) "Economic development" means financial assistance provided to a person directly
or to a local unit of government or nonprofit organization on behalf of a person who is
engaged in the manufacture or sale of goods and services. Economic development does not
include (1) financial assistance for rehabilitation of existing housing; (2) financial assistance
for new housing construction in which total financial assistance at a single project site is
less than $100,000; or (3) financial assistance for the new construction of fully detached
single-family affordable homeownership units for which the financial assistance covers no
more than ten fully detached single-family affordable homeownership units. For purposes
of this paragraph, "affordable homeownership" means housing targeted at households with
incomes, at initial occupancy, at or below 115 percent of the state or area median income,
whichever is greater, as determined by the United States Department of Housing and Urban
Development.

(c) "Financial assistance" means (1) a grant awarded by a state agency or allocating
agency for economic development related purposes if a single business receives $200,000
or more of the grant proceeds; (2) a loan or the guaranty or purchase of a loan made by a
state agency or allocating agency for economic development related purposes if a single
business receives $500,000 or more of the loan proceeds; deleted text begin or deleted text end (3) a reduction, credit, or
abatement of a tax assessed under chapter 297A where the tax reduction, credit, or abatement
applies to a geographic area smaller than the entire state and was granted for economic
development related purposes; new text begin (4) tax increment financing pursuant to chapter 469 or special
law, provided that such tax increment financing (i) provides financial assistance to a
development that consists, in part or in whole, of 25 units or more of multifamily housing,
or (ii) provides $100,000 or more of financial assistance to a development; new text end or deleted text begin (4) deleted text end new text begin (5) new text end
allocations or awards of low-income housing credits by all allocating agencies as provided
in section 462A.222, for which tax credits are used for multifamily housing projects
consisting of more than ten units. Financial assistance does not include payments by the
state of aids and credits under chapter 273 or 477A to a political subdivision.

(d) "Project site" means the location where improvements are made that are financed in
whole or in part by the financial assistance; or the location of employees that receive financial
assistance in the form of employment and training services as defined in section 116L.19,
subdivision 4, or customized training from a technical college.

(e) "State agency" means any agency defined under section 16B.01, subdivision 2,
Enterprise Minnesota, Inc., and the Department of Iron Range Resources and Rehabilitation.

(f) "Allocating agency" has the meaning given in section 462A.221, subdivision 1a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for financial assistance provided after
August 1, 2025.
new text end

Sec. 2.

Minnesota Statutes 2024, section 177.42, subdivision 2, is amended to read:

Subd. 2.

Project.

"Project" means demolition, erection, construction, alteration,
improvement, restoration, remodeling, or repairing of a public building, structure, facility,
land, or other public work, which includes any work suitable for and intended for use by
the public, or for the public benefit, financed in whole or part by state funds. Project also
includes demolition, erection, construction, alteration, improvement, restoration, remodeling,
or repairing of a building, structure, facility, land, or public work when new text begin :
new text end

new text begin (1) new text end the acquisition of property, predesign, design, or demolition is financed in whole or
part by state funds deleted text begin . deleted text end new text begin ; or
new text end

new text begin (2) the project is owned by a city, county, or school district and the materials and supplies
used or consumed in and equipment incorporated into the construction, reconstruction,
upgrade, expansion, renovation, or remodeling of the project qualify for an exemption from
sales and use tax under chapter 297A or special law.
new text end