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Minnesota Legislature

Office of the Revisor of Statutes

HF 1216

2nd Division Engrossment - 91st Legislature (2019 - 2020) Posted on 04/02/2019 12:10pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 02/14/2019
1st Engrossment Posted on 03/04/2019
Division Engrossments
1st Division Engrossment Posted on 03/28/2019
2nd Division Engrossment Posted on 04/02/2019

Current Version - 2nd Division Engrossment

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A bill for an act
relating to economic development; authorizing establishment of the Duluth regional
exchange district; authorizing sale and issuance of state appropriation bonds;
providing an exemption from state general sales tax; creating an advisory board;
conferring powers and duties; providing for special tax abatement and tax increment
financing rules; authorizing imposition of an additional local sales and use tax;
appropriating money; amending Minnesota Statutes 2018, sections 297A.71, by
adding a subdivision; 297A.75, subdivisions 1, 2, 3; Laws 1980, chapter 511,
section 1, subdivision 1; proposing coding for new law in Minnesota Statutes,
chapters 16A; 469.

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

Section 1.

new text begin [16A.968] DULUTH REGIONAL EXCHANGE DISTRICT
APPROPRIATION BONDS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision and in section 469.50
apply to this section.
new text end

new text begin (b) "Appropriation bond" or "bond" means a bond, note, or other similar instrument of
the state payable during a biennium from one or more of the following sources:
new text end

new text begin (1) money appropriated by law from the general fund in any biennium for debt service
due with respect to obligations described in subdivision 3;
new text end

new text begin (2) proceeds of the sale of obligations described in subdivision 3;
new text end

new text begin (3) payments received for that purpose under agreements and ancillary arrangements
described in subdivision 2, paragraph (d); and
new text end

new text begin (4) investment earnings on amounts in clauses (1) to (3).
new text end

new text begin (c) "Debt service" means the amount payable in any biennium of principal, premium, if
any, and interest on appropriation bonds and the fees, charges, and expenses related to the
bonds.
new text end

new text begin Subd. 2. new text end

new text begin Authorization to issue appropriation bonds. new text end

new text begin (a) Subject to the limitations of
this subdivision, and upon request by the governing body of the city of Duluth as provided
in section 469.54, subdivision 3, paragraph (f), the commissioner may sell and issue
appropriation bonds of the state under this section for public purposes as provided by law.
new text end

new text begin (b) Proceeds of the appropriation bonds must be credited to a special appropriation
Duluth regional exchange district bond proceeds fund in the state treasury. All income from
investment of the bond proceeds, as estimated by the commissioner, is appropriated to the
commissioner for the payment of principal and interest on the appropriation bonds.
new text end

new text begin (c) Appropriation bonds may be issued in one or more issues or series on the terms and
conditions the commissioner determines to be in the best interests of the state, but the term
on any series of appropriation bonds may not exceed 25 years. The appropriation bonds of
each issue and series thereof shall be dated and bear interest and may be includable in or
excludable from the gross income of the owners for federal income tax purposes.
new text end

new text begin (d) At the time of or in anticipation of issuing the appropriation bonds, and at any time
thereafter, so long as the appropriation bonds are outstanding, the commissioner may enter
into agreements and ancillary arrangements relating to the appropriation bonds, including
but not limited to trust indentures, grant agreements, lease or use agreements, operating
agreements, management agreements, liquidity facilities, remarketing or dealer agreements,
letter of credit agreements, insurance policies, guaranty agreements, reimbursement
agreements, indexing agreements, or interest exchange agreements. Any payments made
or received according to the agreement or ancillary arrangement shall be made from or
deposited as provided in the agreement or ancillary arrangement. The determination of the
commissioner included in an interest exchange agreement that the agreement relates to an
appropriation bond shall be conclusive.
new text end

new text begin (e) The commissioner may enter into written agreements or contracts relating to the
continuing disclosure of information necessary to comply with or facilitate the issuance of
appropriation bonds in accordance with federal securities laws, rules, and regulations,
including Securities and Exchange Commission rules and regulations in Code of Federal
Regulations, title 17, section 240.15c2-12. An agreement may be in the form of covenants
with purchasers and holders of appropriation bonds set forth in the order or resolution
authorizing the issuance of the appropriation bonds or a separate document authorized by
the order or resolution.
new text end

new text begin (f) The appropriation bonds are not subject to chapter 16C.
new text end

new text begin Subd. 3. new text end

new text begin Project authorization. new text end

new text begin (a) Appropriation bonds may be sold and issued in
amounts that, in the opinion of the commissioner, are necessary to provide sufficient funds
to the commissioner of employment and economic development under subdivision 8, not
to exceed $164,000,000 net of costs of issuance, for the purposes as provided under this
subdivision, and pay debt service including capitalized interest, costs of issuance, costs of
credit enhancement, or make payments under other agreements entered into under subdivision
2, paragraph (d).
new text end

new text begin (b) The bonds authorized by this subdivision are for the purposes of financing public
infrastructure projects authorized and approved by the city of Duluth under sections 469.50
to 469.54. No bonds shall be sold under this subdivision until (1) the city has approved an
initial development plan as provided in section 14, and (2) the requirements in section
469.54, subdivisions 2 and 3, paragraph (a), have been met.
new text end

new text begin Subd. 4. new text end

new text begin Form; procedure. new text end

new text begin (a) Appropriation bonds may be issued in the form of bonds,
notes, or other similar instruments and in the manner provided in section 16A.672. In the
event that any provision of section 16A.672 conflicts with this section, this section shall
control.
new text end

new text begin (b) Every appropriation bond shall include a conspicuous statement of the limitation
established in subdivision 7.
new text end

new text begin (c) Appropriation bonds may be sold at either public or private sale upon terms as the
commissioner shall determine are not inconsistent with this section and may be sold at any
price or percentage of par value. Any bid received may be rejected.
new text end

new text begin (d) Appropriation bonds must bear interest at a fixed or variable rate.
new text end

new text begin (e) Notwithstanding any other law, appropriation bonds issued under this section shall
be fully negotiable.
new text end

new text begin Subd. 5. new text end

new text begin Refunding bonds. new text end

new text begin The commissioner may issue appropriation bonds for the
purpose of refunding any appropriation bonds then outstanding, including the payment of
any redemption premiums on the bonds, any interest accrued or to accrue to the redemption
date, and costs related to the issuance and sale of the refunding bonds. The proceeds of any
refunding bonds may, in the discretion of the commissioner, be applied to the purchase or
payment at maturity of the appropriation bonds to be refunded, to the redemption of the
outstanding appropriation bonds on any redemption date, or to pay interest on the refunding
bonds and may, pending application, be placed in escrow to be applied to the purchase,
payment, retirement, or redemption. Any escrowed proceeds pending use may be invested
and reinvested in obligations that are authorized investments under section 11A.24. The
income earned or realized on the investment may also be applied to the payment of the
appropriation bonds to be refunded or interest or premiums on the refunded appropriation
bonds, or to pay interest on the refunding bonds. After the terms of the escrow have been
fully satisfied, any balance of the proceeds and any investment income may be returned to
the general fund or, if applicable, the special appropriation Duluth regional exchange district
bond proceeds fund for use in any lawful manner. All refunding bonds issued under this
subdivision must be prepared, executed, delivered, and secured by appropriations in the
same manner as the appropriation bonds to be refunded.
new text end

new text begin Subd. 6. new text end

new text begin Appropriation bonds as legal investments. new text end

new text begin Any of the following entities may
legally invest any sinking funds, money, or other funds belonging to them or under their
control in any appropriation bonds issued under this section:
new text end

new text begin (1) the state, the investment board, public officers, municipal corporations, political
subdivisions, and public bodies;
new text end

new text begin (2) banks and bankers, savings and loan associations, credit unions, trust companies,
savings banks and institutions, investment companies, insurance companies, insurance
associations, and other persons carrying on a banking or insurance business; and
new text end

new text begin (3) personal representatives, guardians, trustees, and other fiduciaries.
new text end

new text begin Subd. 7. new text end

new text begin No full faith and credit; state not required to make appropriations. new text end

new text begin The
appropriation bonds are not public debt of the state, and the full faith, credit, and taxing
powers of the state are not pledged to the payment of the appropriation bonds or to any
payment that the state agrees to make under this section. Appropriation bonds shall not be
obligations paid directly, in whole or in part, from a tax of statewide application on any
class of property, income, transaction, or privilege. Appropriation bonds shall be payable
in each fiscal year only from amounts that the legislature may appropriate for debt service
for any fiscal year, provided that nothing in this section shall be construed to require the
state to appropriate money sufficient to make debt service payments with respect to the
appropriation bonds in any fiscal year. Appropriation bonds shall be canceled and shall no
longer be outstanding on the earlier of (1) the first day of a fiscal year for which the
legislature shall not have appropriated amounts sufficient for debt service, or (2) the date
of final payment of the principal of and interest on the appropriation bonds.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation of proceeds. new text end

new text begin The proceeds of appropriation bonds issued under
subdivision 3 and interest credited to the special appropriation Duluth regional exchange
district bond proceeds fund are appropriated as follows:
new text end

new text begin (1) to the commissioner of employment and economic development for an agreement
with the city of Duluth that governs the use, disbursement, and audit of funds for public
infrastructure projects as specified in subdivision 3, upon other terms and conditions that
the commissioner of employment and economic development in the commissioner's sole
discretion determines are warranted, with the agreement being exempt from sections 16B.97
to 16B.991; and
new text end

new text begin (2) to the commissioner for accrued and capitalized interest, nonsalary costs of issuance
of the bonds, costs of credit enhancement of the bonds, and payments under any agreements
entered into under subdivision 2, paragraph (d), each as permitted by state and federal law.
new text end

new text begin Subd. 9. new text end

new text begin Appropriation for debt service and other purposes. new text end

new text begin An amount up to
$13,470,000 needed to pay principal and interest on appropriation bonds issued under
subdivision 3 is appropriated each fiscal year from the general fund to the commissioner,
subject to the city of Duluth's entitlement to receive appropriation support payments under
section 469.54, subdivision 3, and further subject to repeal, unallotment under section
16A.152, or cancellation, otherwise as provided in subdivision 7, for deposit into the bond
payments account established for this purpose in the special Duluth regional exchange
district bond proceeds fund. The appropriation is available beginning in fiscal year 2022
and through fiscal year 2055.
new text end

new text begin Subd. 10. new text end

new text begin Waiver of immunity. new text end

new text begin The waiver of immunity by the state provided for by
section 3.751, subdivision 1, shall be applicable to the appropriation bonds and any ancillary
contracts to which the commissioner is a party.
new text end

Sec. 2.

Minnesota Statutes 2018, section 297A.71, is amended by adding a subdivision to
read:


new text begin Subd. 51. new text end

new text begin Construction materials and public infrastructure in regional exchange
district.
new text end

new text begin Materials and supplies used or consumed in and equipment incorporated into, the
construction and improvement of publicly owned infrastructure located within the regional
exchange district established under section 469.51 are exempt.
new text end

new text begin For the purposes of this exemption, the term "infrastructure" means plazas, parking
structures, transit facilities, rights-of-way, sidewalks, pedestrian bridges, bicycle paths,
skyways, tunnels, lighting, landscaping, drainage improvements, utilities, sewer and any
other such facilities and improvements that are located within the regional exchange district
established under section 469.51 on land controlled by the city of Duluth or county of St.
Louis when construction is complete.
new text end

new text begin The tax must be imposed and collected as if the rate under section 297A.62, subdivision
1, applied, and then refunded in the manner provided in section 297A.75.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019, and before July 1, 2026.
new text end

Sec. 3.

Minnesota Statutes 2018, section 297A.75, subdivision 1, is amended to read:


Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14
;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23
;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion
of:

(i) an aerospace defense manufacturing facility exempt under Minnesota Statutes 2014,
section 297A.71, subdivision 42;

(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision
45
;

(iii) a research and development facility exempt under Minnesota Statutes 2014, section
297A.71, subdivision 46; and

(iv) an industrial measurement manufacturing and controls facility exempt under
Minnesota Statutes 2014, section 297A.71, subdivision 47;

(12) enterprise information technology equipment and computer software for use in a
qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c);

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44
;

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivision 49; deleted text beginand
deleted text end

(17) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivision 50, paragraph (b)deleted text begin.deleted text endnew text begin; and
new text end

new text begin (18) building materials, supplies, and equipment for constructing projects exempt under
section 297A.71, subdivision 51.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019, and before July 1, 2026.
new text end

Sec. 4.

Minnesota Statutes 2018, section 297A.75, subdivision 2, is amended to read:


Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items must
be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), and (14), the applicant must be the purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business;

(8) for subdivision 1, clauses (9), (10), and (13), the applicant must be the governmental
entity that owns or contracts for the project or facility;

(9) for subdivision 1, clause (16), the applicant must be the owner or developer of the
building or project; deleted text beginand
deleted text end

(10) for subdivision 1, clause (17), the applicant must be the owner or developer of the
building or projectdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (11) for subdivision 1, clause (18), the applicant must be the governmental entity that
contracts for the project or developer of the project.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019, and before July 1, 2026.
new text end

Sec. 5.

Minnesota Statutes 2018, section 297A.75, subdivision 3, is amended to read:


Subd. 3.

Application.

(a) The application must include sufficient information to permit
the commissioner to verify the tax paid. If the tax was paid by a contractor, subcontractor,
or builder, under subdivision 1, clauses (3) to (13) or (15) to deleted text begin(17)deleted text endnew text begin (18)new text end, the contractor,
subcontractor, or builder must furnish to the refund applicant a statement including the cost
of the exempt items and the taxes paid on the items unless otherwise specifically provided
by this subdivision. The provisions of sections 289A.40 and 289A.50 apply to refunds under
this section.

(b) An applicant may not file more than two applications per calendar year for refunds
for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after June
30, 2019, and before July 1, 2026.
new text end

Sec. 6.

new text begin [469.50] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin For the purposes of section 469.50 to 469.54, and section
14, the terms defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin City. new text end

new text begin "City" means the city of Duluth.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of employment and
economic development.
new text end

new text begin Subd. 4. new text end

new text begin County. new text end

new text begin "County" means St. Louis County.
new text end

new text begin Subd. 5. new text end

new text begin District. new text end

new text begin "District" means the regional exchange district established under
section 469.51.
new text end

new text begin Subd. 6. new text end

new text begin Medical business entity west. new text end

new text begin "Medical business entity west" means a nonprofit
integrated health system with two hospitals located within the district.
new text end

new text begin Subd. 7. new text end

new text begin Medical business entity east. new text end

new text begin "Medical business entity east" means a nonprofit
health system operating one hospital within the district.
new text end

new text begin Subd. 8. new text end

new text begin Public infrastructure project. new text end

new text begin (a) "Public infrastructure project" means a
project financed in part or in whole with public money in order to support development in
the district. A public infrastructure project may:
new text end

new text begin (1) acquire real property and other assets associated with the real property;
new text end

new text begin (2) demolish, repair, or rehabilitate buildings;
new text end

new text begin (3) remediate land and buildings as required to prepare the property for acquisition or
development;
new text end

new text begin (4) install, construct, or reconstruct elements of public infrastructure required to support
the overall development of the district, including but not limited to: streets, roadways,
highways, and utilities systems and related facilities, including relocations and realignments;
structural caps or streetscape improvements; bridges or other buildable pads above streets,
roadways, highways, and other rights-of-way; network and communication systems; drainage
systems; sewer and water systems; district energy systems; subgrade structures and associated
improvements; landscaping; facade construction and restoration; wayfinding and signage;
and other components of community infrastructure;
new text end

new text begin (5) acquire, construct or reconstruct, and equip parking facilities, transit stations, and
other facilities to encourage intermodal transportation and transit;
new text end

new text begin (6) install, construct or reconstruct, furnish, and equip parks and trails; cultural,
community, educational, and recreational facilities; facilities to promote tourism and
hospitality, conferencing, and conventions; and broadcast and related multimedia
infrastructure;
new text end

new text begin (7) make related site improvements, including, without limitation, excavation, earth
retention, soil stabilization and correction, foundation and substructure, vertical circulation
systems, and other site improvements to support a district; and
new text end

new text begin (8) demolition of vacated medical facilities and other related buildings and structures
and preparation of the facilities, buildings, and structures for development.
new text end

new text begin (b) No portion of any structure financed by the state as a public infrastructure project
may be an inpatient or outpatient hospital facility.
new text end

new text begin (c) Ten percent of the amount financed by the state for public infrastructure projects
must be spent on public infrastructure to support the construction of new affordable housing.
Amounts spent on affordable housing-related public infrastructure projects under this
paragraph must be matched by an equal nonstate contribution.
new text end

new text begin (d) A public infrastructure project is not a business subsidy under section 116J.993.
new text end

new text begin Subd. 9. new text end

new text begin Regional Exchange District Advisory Board; advisory board;
REDAB.
new text end

new text begin "Regional Exchange District Advisory Board," "advisory board," or "REDAB"
means the advisory board established under section 469.515.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 7.

new text begin [469.51] REGIONAL EXCHANGE DISTRICT.
new text end

new text begin Subdivision 1. new text end

new text begin Creation; boundaries. new text end

new text begin There is established in the city a regional exchange
district. The regional exchange district is bounded by: East 6th Street from North 3rd Avenue
East to North 7th Avenue East; North 7th Avenue East from East 6th Street to East 3rd
Street; East 3rd Street from North 7th Avenue East to North 12th Avenue East; North 12th
Avenue East from East 3rd Street straight through the Duluth Rose Garden to the Lake
Superior waterfront; the Lake Superior waterfront from the Duluth Rose Garden at North
12th Avenue East to Lake Place Park at North 3rd Avenue East; North 3rd Avenue East
from Lake Place Park at the Lake Superior waterfront to East 6th Street, excluding any
property operated as a hotel on the corner of Superior Street and North 3rd Avenue East.
new text end

new text begin Subd. 2. new text end

new text begin Purpose; findings. new text end

new text begin The public purposes of the district are to facilitate:
new text end

new text begin (1) repurposing vacant or underutilized public land, or unutilized property interests such
as air rights, for development or redevelopment and to incent significant private investment;
new text end

new text begin (2) redeveloping vacant or underutilized private land to increase its tax-generating and
job-creating potential or to provide housing or meet other community needs; and
new text end

new text begin (3) development by the anchoring institutions in the community, such as health care
organizations and institutions of higher education, to create opportunities to improve the
economy of the city and greater Minnesota regions and attract and retain a workforce.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 8.

new text begin [469.515] REGIONAL EXCHANGE DISTRICT ADVISORY BOARD.
new text end

new text begin Subdivision 1. new text end

new text begin Advisory board membership. new text end

new text begin The Regional Exchange District Advisory
Board consists of nine members appointed as follows:
new text end

new text begin (1) the mayor of the city or the mayor's designee;
new text end

new text begin (2) a city council member, appointed by the council;
new text end

new text begin (3) two representatives of the medical business entity west, appointed by and serving at
the pleasure of the medical business entity west;
new text end

new text begin (4) one representative of the medical business entity east, appointed by and serving at
the pleasure of the medical business entity east;
new text end

new text begin (5) one member appointed by the Duluth Greater Downtown Council;
new text end

new text begin (6) one representative of the local building and trades council appointed by the Duluth
building and construction trades council; and
new text end

new text begin (7) two representatives appointed by the governor, one of whom has expertise in housing
policy and finance.
new text end

new text begin Subd. 2. new text end

new text begin Conflict of interest. new text end

new text begin A person appointed as provided in subdivision 1, clause
(1), (2), (5), (6), or (7), must not be employed by or affiliated with either medical business
entity.
new text end

new text begin Subd. 3. new text end

new text begin Terms; vacancies. new text end

new text begin The appointing authorities must make their respective
appointments by June 30, 2019. Members shall serve for four-year terms, except that a
member appointed under subdivision 1, clauses (1) and (2), serves for a term coterminous
with the term of the elected office, but may be reappointed. Of the members appointed in
subdivision 1, clauses (3) and (7), one member serves from the date of appointment until
the first Tuesday after the first Monday in January 2022, and the other member serves from
the date of appointment until the first Tuesday after the first Monday in January 2024. A
vacancy occurs as provided in section 15.059.
new text end

new text begin Subd. 4. new text end

new text begin Duties. new text end

new text begin The duties of the advisory board are to provide the city with advice and
guidance in developing an overall development plan for the regional exchange district; to
prepare a proposed development plan for the district for approval by the city council; propose
modifications to the development plan for city council approval; and recommend to the city
council proposed public infrastructure projects not specifically listed in the plan that the
board designates as consistent with the development plan adopted by the city. The advisory
board is also responsible for the following activities related to the district:
new text end

new text begin (1) on behalf of a medical entity, certify to the city that all incurred expenses related to
the private investment are accurate;
new text end

new text begin (2) review all proposed uses of state financial instruments to ensure they are consistent
with Minnesota law;
new text end

new text begin (3) work with a medical entity and the city to acquire or dispose of real estate and
facilitate all transactions associated with development in the district;
new text end

new text begin (4) develop patient, visitor, and community outreach programs for the district;
new text end

new text begin (5) develop and implement a plan for economic development outcomes related to the
district; and
new text end

new text begin (6) by January 31 of each year, submit a report to the commissioner and the chairs and
ranking minority members of the legislative committees with jurisdiction over economic
development. The report must include a copy of the development plan and list of any changes
to the plan, the progress of projects identified in the development plan, and actual costs and
financing sources.
new text end

new text begin Subd. 5. new text end

new text begin Open meetings; data practices. new text end

new text begin The advisory board and committee or
subcommittee of the advisory board is subject to the Open Meeting Law in chapter 13D
and is a government entity for purposes of chapter 13.
new text end

new text begin Subd. 6. new text end

new text begin Chair. new text end

new text begin Every two years the board must elect a chair from among the governor's
appointees.
new text end

new text begin Subd. 7. new text end

new text begin Compensation; expense reimbursement. new text end

new text begin The city may compensate members
and reimburse members for expenses as provided in section 15.0575, subdivision 3. For
purposes of this subdivision, the member representing the medical business entity shall be
treated as an employee of a political subdivision.
new text end

new text begin Subd. 8. new text end

new text begin Removal. new text end

new text begin A member may be removed as provided in section 15.0575.
new text end

new text begin Subd. 9. new text end

new text begin Staff. new text end

new text begin The board may hire an executive director and other staff as the board
requires. The city shall pay all staff salaries and benefits.
new text end

new text begin Subd. 10. new text end

new text begin Contract for services. new text end

new text begin The advisory board, through the staff assigned to the
district, may contract for the services of financial advisors, other consultants, agents, public
accountants, legal counsel, and other persons needed to perform its duties and exercise its
powers.
new text end

new text begin Subd. 11. new text end

new text begin Costs. new text end

new text begin All costs incurred by the advisory board and staff assigned to the district
shall be paid by the city.
new text end

new text begin Subd. 12. new text end

new text begin Expiration. new text end

new text begin The advisory board terminates when funds from all appropriation
support payments made to the city under section 469.54 are committed to approved public
infrastructure projects.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 9.

new text begin [469.517] COMPREHENSIVE DEVELOPMENT PLAN FOR THE
REGIONAL EXCHANGE DISTRICT.
new text end

new text begin (a) REDAB must prepare a comprehensive development plan by March 31, 2021. The
comprehensive plan must, to the extent practicable, provide the following:
new text end

new text begin (1) an outline for the development of the district to meet the purpose and findings in
section 469.51, subdivision 2;
new text end

new text begin (2) the extension of 6th Avenue East, primary street improvements, and related structural
and safety improvements;
new text end

new text begin (3) construction of parking structures for the medical business west and for the medical
business east, with the parking structures also supporting the public needs of surrounding
neighborhoods and district. The comprehensive development plan must require that public
financing for the construction of parking structures is not available until the commissioner
determines that ....... has been committed to the project from private sources;
new text end

new text begin (4) extensions or connections of district energy utility infrastructure to existing and new
buildings and facilities within the district to meet the medical facilities' thermal energy
needs;
new text end

new text begin (5) subgrade structures and design and completion of the structural frame cap over
marked Interstate Highway 35;
new text end

new text begin (6) demolition of vacated medical facilities and other related buildings and structures
and preparation of the site for redevelopment;
new text end

new text begin (7) discussion of how the development plans will increase economic activity and housing
availability, including affordable housing, in the city and fit into the city's long-term
comprehensive development plans;
new text end

new text begin (8) a specific list of public infrastructure projects that meet the purposes and findings
listed in section 469.51, subdivision 2; and
new text end

new text begin (9) the criteria that will be used by the advisory board in evaluating whether a public
infrastructure project not specifically listed in the plan under clause (3) is consistent with
the proposed development plan.
new text end

new text begin (b) Any development plan must be approved by six members of the advisory board prior
to submitting the plan to the city council for consideration. The development plan for the
district is not adopted until approved by the city council. If the city council rejects the initial
development plan proposed by the advisory board, the board may revise the development
plan and resubmit the plan. Section 15.99 does not apply to review and approval of the
development plan. The city must not spend any appropriation support payments from the
state until it has approved a development plan, or an initial development plan under section
14, proposed by the advisory board.
new text end

new text begin (c) REDAB may propose modifications to the development plan at anytime, however
all changes are subject to approval by the city council.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 10.

new text begin [469.52] CITY POWERS; DUTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Port authority powers. new text end

new text begin The city may exercise the powers of a port
authority under sections 469.048 to 469.068 for purposes of implementing sections 469.50
to 469.54.
new text end

new text begin Subd. 2. new text end

new text begin Steel products. new text end

new text begin The city must require that a public infrastructure project use
steel products made from iron ore mined from the taconite assistance area as defined in
section 273.1341 to the extent practicable. In determining whether it is practicable, the city
may consider the exceptions to the requirement by Public Law 111-5, section 1605.
new text end

new text begin Subd. 3. new text end

new text begin City contracts; construction requirements. new text end

new text begin For all public infrastructure
projects, the city must make reasonable efforts to hire and cause the construction manager
and any subcontractors to employ women and members of minority communities. Goals
for construction contracts must be established in the manner required under the city's
disadvantaged business enterprises plan.
new text end

new text begin Subd. 4. new text end

new text begin Public bidding exemption. new text end

new text begin Notwithstanding section 469.068 or any other law
to the contrary, the city need not require competitive bidding with respect to a parking
facility or other public improvements constructed in conjunction with, and directly above
or below, or adjacent and integrally related to, a private development within a district.
new text end

new text begin Subd. 5. new text end

new text begin Parking structure revenue. new text end

new text begin Parking facilities or structures constructed pursuant
to the development plan must charge market rate parking fees, except for use separately
negotiated between the city and a church whose parking facility is removed to accommodate
construction of a parking ramp.
new text end

new text begin Subd. 6. new text end

new text begin City utility fund contribution. new text end

new text begin The city must use the city utility fund to finance
improvements made within the district for sanitary sewer, storm sewer, and water systems
and other related utility improvements. The improvements must be included in the
development plan approved by the board. The total expenditures required under this
subdivision and under Laws 1980, chapter 511, section 1, subdivision 1, paragraph (d),
must equal at least $20,000,000.
new text end

new text begin Subd. 7. new text end

new text begin City general contribution; debt service. new text end

new text begin (a) Following the sale and issuance
of state appropriation bonds under section 16A.968, subdivision 2a, the city must contribute,
from sources other than the sales tax established under section 13, subdivision 1, paragraph
(d), $250,000 annually for a period of 25 years, for the purposes of paragraph (b).
new text end

new text begin (b) Money contributed under paragraph (a) must be paid by the city to the commissioner
for deposit into the general fund and is intended to offset amounts required for debt service
payments under section 16A.968, subdivision 9.
new text end

new text begin Subd. 8. new text end

new text begin Project approval; notice; hearing. new text end

new text begin Public infrastructure projects may be
undertaken within the district by the city if the project is listed in the development plan or
is recommended to the city by REDAB and is approved by the city. The city must hold a
public hearing before approving a public infrastructure project for local or state funding
provided pursuant to section 469.53 or 469.54. At least ten days before the hearing, the city
must publish notice of the hearing in the official newspaper of the city.
new text end

new text begin Subd. 9. new text end

new text begin City support. new text end

new text begin The city must provide financial and administrative support, and
office and other space, to the advisory board.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 11.

new text begin [469.53] LOCAL VALUE CAPTURE AUTHORITY.
new text end

new text begin Subdivision 1. new text end

new text begin Special abatement rules. new text end

new text begin (a) If the city or county elects to use tax
abatement under sections 469.1812 to 469.1815 to finance costs of public infrastructure
projects, or to finance the costs of a joint project between the city and county, including all
financing costs, the special rules under this subdivision apply.
new text end

new text begin (b) The limitations under section 469.1813, subdivision 6, do not apply.
new text end

new text begin (c) The limitations under section 469.1813, subdivision 8, do not apply, and property
taxes abated by the city or county to finance costs of public infrastructure projects are not
included for purposes of applying section 469.1813, subdivision 8, to the use of tax abatement
for other purposes.
new text end

new text begin Subd. 2. new text end

new text begin Special tax increment financing rules. new text end

new text begin If the city elects to establish one or
more redevelopment tax increment financing districts within a regional exchange district
to fund public infrastructure projects, the requirements, definitions, limitations, or restrictions
in the following statutes do not apply: sections 469.174, subdivisions 10 and 25, clause (2);
469.176, subdivisions 4j, 4l, and 5; and 469.1763, subdivisions 2, 3, and 4. The provisions
of this subdivision expire effective for tax increments expended after December 31, 2055.
After that date, the provisions of section 469.1763, subdivision 4, apply to any remaining
unspent or unobligated increments.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 12.

new text begin [469.54] STATE VALUE CAPTURE.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Appropriation support payments" means payment from the state to the city pursuant
to subdivision 3.
new text end

new text begin (c) "Construction projects" means expenditures for the constructing, furnishing,
commissioning, and equipping of buildings, ancillary facilities, utilities, parking, and other
improvements, whether private or public, that are located within the district.
new text end

new text begin (d) "Expenditures" means expenditures made by a private entity on construction projects,
including but not limited to:
new text end

new text begin (1) planning, predesign, and design, including architectural, engineering, project
management, and similar services;
new text end

new text begin (2) legal, regulatory, and other compliance costs of the project;
new text end

new text begin (3) land acquisition, demolition of existing improvements, and other site preparation
costs;
new text end

new text begin (4) construction costs, including all materials and supplies of the project; and
new text end

new text begin (5) equipment, furnishings, and fixtures.
new text end

new text begin Expenditures excludes supplies and other items with a useful life of less than a year that
are not used or consumed in constructing improvements to real property or are otherwise
chargeable to capital costs.
new text end

new text begin (e) "Qualified expenditures" means the total expenditures under paragraph (e) since
January 1, 2019, and certified under subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin Certification of expenditures. new text end

new text begin By March 1 of each year, the city must certify
to the commissioner the amount of qualified expenditures made through the end of the
preceding year. The certification must be made in the form that the commissioner prescribes
and include any documentation of and supporting information regarding the qualified
expenditures that the commissioner requires. By July 1 of each year, the commissioner must
confirm or revise the amount of the qualified expenditures.
new text end

new text begin Subd. 3. new text end

new text begin Appropriation support payments. new text end

new text begin (a) No appropriation support payments
from the state to the city may be made under this section until total qualified expenditures
equal at least $75,000,000.
new text end

new text begin (b) The amount of the appropriation support payments for a year equals:
new text end

new text begin (1) $75,000,000 multiplied by 0.0267; plus
new text end

new text begin (2) for amounts greater than $75,000,000 and up to $1,000,000,000, the amount of
qualified expenditures above $75,000,000 multiplied by 0.0124.
new text end

new text begin (c) No appropriation support payments shall be paid before September 1, 2021. The
maximum appropriation support payment paid in fiscal year 2022 is $2,000,000, and the
maximum appropriation support payment in any subsequent fiscal year is limited to no more
than $13,470,000, each subject to paragraph (f). The total amount of appropriation support
payments made under this subdivision is limited to an amount sufficient to finance
$164,000,000 of public infrastructure projects.
new text end

new text begin (d) The city must use the appropriation support payments it receives under this subdivision
for public infrastructure projects, including the cost to finance such projects. The city must
maintain appropriate records to document the use of the funds under this requirement.
new text end

new text begin (e) The commissioner must pay to the city the amount of appropriation support payments
determined under this section for the year by September 1.
new text end

new text begin (f) In lieu of directly receiving the appropriation support payments, the city may elect
to have the state issue appropriation bonds as provided in section 16A.968 to finance up to
$164,000,000 of public infrastructure projects. In the event the state issues appropriation
bonds for these purposes, the amount of appropriation support payments in any year is
reduced by an amount equal to the amount needed from the general fund under section
16A.968, subdivision 8.
new text end

new text begin Subd. 4. new text end

new text begin Credit for parking revenue. new text end

new text begin (a) By March 1 of the year following the year in
which the parking facilities or structures are placed into operation within the district pursuant
to the development plan, the city must certify to the commissioner:
new text end

new text begin (1) the total amount of revenue generated by the parking facilities and structures in the
preceding year; and
new text end

new text begin (2) the total amount necessary for operational and maintenance expenses of the facilities
or structures in the current year.
new text end

new text begin (b) By July 1 of each year thereafter, for a period of 25 years, the commissioner must
confirm or revise the amounts as reported. An amount equal to 50 percent of the amount of
revenue received by the city by the parking structures and facilities in the previous year that
is greater than the amount necessary for operational and maintenance expenses of the
facilities or structures in the current year must be paid by the city to the commissioner of
employment and economic development by September 1 for deposit into the general fund.
new text end

new text begin Subd. 5. new text end

new text begin Prevailing wage requirement. new text end

new text begin During the construction, installation, remodeling,
and repairs of any public infrastructure project funded by appropriation support payments,
laborers and mechanics at the site must be paid the prevailing wage rate as defined in section
177.42, subdivision 6, and the public infrastructure project is subject to the requirements
of sections 177.30 and 177.41 to 177.44.
new text end

new text begin Subd. 6. new text end

new text begin Termination. new text end

new text begin No aid may be paid under this section after fiscal year 2055.
new text end

new text begin Subd. 7. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the appropriation support payments
authorized under this section to the city is appropriated to the commissioner from the general
fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 13.

Laws 1980, chapter 511, section 1, subdivision 1, is amended to read:


Subdivision 1.

new text begin(a) new text endMinnesota Statutes, section deleted text begin477A.01, Subdivision 18deleted text endnew text begin 477A.016new text end, shall
not be deemed to prohibit the city of Duluth from amending its sales and use tax ordinances
so as to impose a sales deleted text beginordeleted text endnew text begin andnew text end use tax at the rate of one percent upon any or all sales or uses
which are taxed by the state of Minnesota pursuant to Minnesota Statutes, chapter 297A deleted text beginor
297B
deleted text end.

new text begin (b) Notwithstanding Minnesota Statutes, section 477A.016, or any ordinance, city charter,
or other provision of law, pursuant to the approval of the voters at the election on November
7, 2017, the city of Duluth may impose by ordinance an additional sales and use tax of
one-half of one percent for the purposes specified in paragraphs (c) and (d). The provisions
of Minnesota Statutes, section 297A.99, govern the imposition, administration, collection,
and enforcement of the taxes authorized under this paragraph.
new text end

new text begin (c) Revenues received from the tax authorized by paragraph (b) must be used to pay all
or part of the capital and administrative costs of street, curb, gutter, sidewalk, and bridge
improvements including related lighting and signals in the city of Duluth as outlined in the
Duluth Street Improvement Program 2017 as designated August 8, 2017, including any
subsequent amendments approved by the city.
new text end

new text begin (d) Revenues from the tax authorized by paragraph (b) must be used to pay all or part
of the improvements listed in paragraph (c) that are located within the district established
under Minnesota Statutes, section 469.51. The total expenditures required under this
paragraph and under Minnesota Statutes, section 469.52, subdivision 6, must equal at least
$20,000,000. The allocation required under this paragraph expires ten years after the date
of initial imposition of the tax. Projects authorized under this paragraph must be included
in the development plan approved by the Regional Exchange District Advisory Board in
consultation with the medical business entity east and medical business entity west.
new text end

new text begin (e) The city of Duluth, pursuant to the approval of the voters at the November 7, 2017,
referendum authorizing the imposition of the taxes in this section, may issue bonds under
Minnesota Statutes, chapter 475, to pay capital and administrative expenses for the projects
described in paragraphs (c) and (d), until the tax terminates as provided in paragraph (f). A
separate election to approve the bonds under Minnesota Statutes, section 475.58, is not
required.
new text end

new text begin (f) The tax authorized under paragraph (b) terminates at the earlier of: (1) 25 years after
the date of initial imposition of the tax; or (2) when the city council determines that sufficient
funds have been raised from the tax to finance the capital and administrative costs of the
improvements described in paragraphs (c) and (d), plus the additional amount needed to
pay the costs related to issuance of bonds under paragraph (e), including interest bonds.
Any funds remaining after completion of the projects specified in paragraphs (c) and (d)
and retirement or redemption of bonds in paragraph (e) shall be placed in the general fund
of the city. The tax imposed under paragraph (b) may expire at an earlier time if the city so
determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 14. new text beginINITIAL DEVELOPMENT PLAN FOR THE REGIONAL EXCHANGE
DISTRICT.
new text end

new text begin (a) REDAB must prepare a proposed initial development plan for the district and submit
the plan to the city by March 31, 2020. The initial plan must provide the following:
new text end

new text begin (1) an outline for the development of the district to meet the purpose and findings in
Minnesota Statutes, section 469.51, subdivision 2;
new text end

new text begin (2) the extension of 6th Avenue East, primary street improvements, and related structural
and safety improvements;
new text end

new text begin (3) construction of parking structures for the medical business west and for the medical
business east, with the parking structures also supporting the public needs of surrounding
neighborhoods and district. The initial development plan must require that public financing
for the construction of parking structures is not available until the commissioner of
employment and economic development determines that ........ has been committed to the
project from private sources; and
new text end

new text begin (4) extensions or connections of district energy utility infrastructure to existing and new
buildings and facilities within the district to meet the medical facilities' thermal energy
needs.
new text end

new text begin (b) The initial development plan must be approved by six members of the advisory board
prior to submitting the plan to the city council for consideration. The initial development
plan for the district is not adopted until approved by the city council. If the city council
rejects the initial development plan proposed by the advisory board, the board may revise
the initial development plan and resubmit the plan. Section 15.99 does not apply to review
and approval of the development plan. The city must not spend any appropriation support
payments from the state until it has approved an initial development plan proposed by the
advisory board.
new text end

new text begin (c) REDAB may propose modifications to the initial development plan at anytime,
however all changes are subject to approval by the city council.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Duluth and its chief clerical officer timely comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end