HF 1684

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to tax increment financing; modifying the 
  1.3             authority to extend districts to offset deficits; 
  1.4             establishing a state grant program to offset deficits 
  1.5             caused by the 2001 property tax reform; appropriating 
  1.6             money; amending Minnesota Statutes 2003 Supplement, 
  1.7             sections 469.1792, subdivision 2; 469.1794, 
  1.8             subdivisions 2, 3, 5, 6, 7, 8; proposing coding for 
  1.9             new law in Minnesota Statutes, chapter 469. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2003 Supplement, section 
  1.12  469.1792, subdivision 2, is amended to read: 
  1.13     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
  1.14  the following terms have the meanings given. 
  1.15     (b) "Preexisting district" means a tax increment financing 
  1.16  district for which the request for certification was made before 
  1.17  August 1, 2001. 
  1.18     (c) "Preexisting obligation" means a bond, interfund loan, 
  1.19  or binding contract that: 
  1.20     (1)(i) was issued or approved before August 1, 2001, or was 
  1.21  issued pursuant to a binding contract entered into before July 
  1.22  1, 2001; or 
  1.23     (ii) was issued to refinance an obligation under item (i), 
  1.24  if the refinancing does not increase the present value of the 
  1.25  debt service; and 
  1.26     (2) is secured by increments from a preexisting district. 
  1.27     [EFFECTIVE DATE.] This section is effective the day 
  2.1   following final enactment and applies to districts for which the 
  2.2   request for certification was made on, before, or after August 
  2.3   1, 1979, and before August 1, 2001.  
  2.4      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  2.5   469.1794, subdivision 2, is amended to read: 
  2.6      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
  2.7   the following terms have the meanings given. 
  2.8      (b) "Extended district" means a tax increment financing 
  2.9   district whose duration limit is extended under this section. 
  2.10     (c) "Preexisting district" has the meaning given in section 
  2.11  469.1792, subdivision 2. 
  2.12     (d) "Preexisting obligation" has the meaning given in 
  2.13  section 469.1792, subdivision 2. 
  2.14     (e) "Qualifying obligation" means: 
  2.15     (1) a preexisting obligation that is: 
  2.16     (i) a general obligation bond of the municipality; 
  2.17     (ii) a general obligation bond of the authority; 
  2.18     (iii) a revenue bond of the authority to which other 
  2.19  revenues or money of the authority in addition to tax increments 
  2.20  are pledged to pay; 
  2.21     (iv) an interfund loan, including an advance or payment 
  2.22  made by the municipality or authority after June 1, 2002, to pay 
  2.23  an obligation listed in items (i) to (iii); 
  2.24     (v) an obligation assumed by a developer before January 1, 
  2.25  2001, to repay a general obligation bond issued by a 
  2.26  municipality to fund cleanup and development activities, if the 
  2.27  developer assumed the obligation more than five years after the 
  2.28  issuance of the bonds; or 
  2.29     (2) a bond issued to refinance a preexisting obligation 
  2.30  under clause (1). 
  2.31     [EFFECTIVE DATE.] This section is effective the day 
  2.32  following final enactment and applies to districts for which the 
  2.33  request for certification was made on, before, or after August 
  2.34  1, 1979, and before August 1, 2001. 
  2.35     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
  2.36  469.1794, subdivision 3, is amended to read: 
  3.1      Subd. 3.  [PRECONDITIONS.] (a) Before an authority may 
  3.2   extend the duration of district under this section, the 
  3.3   following conditions must be met with regard to the district: 
  3.4      (1) the original local tax rate under section 469.177, 
  3.5   subdivision 1a, does not apply under an election made under 
  3.6   section 469.1792, subdivision 3, or under other operation of 
  3.7   law; 
  3.8      (2) for a district in the metropolitan area or taconite tax 
  3.9   relief area, the fiscal disparities contribution is computed 
  3.10  under section 469.177, subdivision 3, paragraph (a); 
  3.11     (3) the municipality has transferred any available 
  3.12  increments in other districts to pay qualified preexisting 
  3.13  obligations of the district or other districts in the 
  3.14  municipality under section 469.1763, subdivision 6; and 
  3.15     (4) the authority finds that, taking into account all of 
  3.16  the increments that are available to pay qualifying preexisting 
  3.17  obligations for the district, the increments from the district 
  3.18  will be insufficient to pay the amount of qualifying preexisting 
  3.19  obligations and that the insufficiency is a result of (i) the 
  3.20  changes in the class rates and (ii) elimination of the 
  3.21  state-determined general education property tax levy under Laws 
  3.22  2001, First Special Session chapter 5. 
  3.23     (b) The provisions of paragraph (a), clause (3), do not 
  3.24  apply to the extension of a district's duration, if the only 
  3.25  preexisting obligation secured by the district's increments is a 
  3.26  binding contract that is not a bond, a contract to issue a bond 
  3.27  or bonds, or an interfund loan. 
  3.28     [EFFECTIVE DATE.] This section is effective the day 
  3.29  following final enactment and applies to districts for which the 
  3.30  request for certification was made on, before, or after August 
  3.31  1, 1979, and before August 1, 2001. 
  3.32     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
  3.33  469.1794, subdivision 5, is amended to read: 
  3.34     Subd. 5.  [MAXIMUM EXTENSION.] (a) The maximum extension 
  3.35  for a district under this subdivision equals the lesser of: 
  3.36     (1) four years; or 
  4.1      (2) the tax reform percentage for the district, determined 
  4.2   under paragraph (b), multiplied by the remaining duration of the 
  4.3   district rounded to the nearest whole number.  Fractions in 
  4.4   excess of one-third are rounded up. 
  4.5      (b) The tax reform percentage for the district, as 
  4.6   estimated by the county auditor, equals: 
  4.7      (1)(i) the total taxes paid by the original tax capacity 
  4.8   for the district for taxes payable in 2001, minus 
  4.9      (ii) the average of the total taxes paid by the original 
  4.10  tax capacity for the district for taxes payable in 2002 and in 
  4.11  2003, divided by 
  4.12     (2) the total taxes paid by the original tax capacity for 
  4.13  the district for taxes payable in 2001. 
  4.14     (c) In the resolution approving the extension, the 
  4.15  municipality may elect to treat all preexisting obligations as 
  4.16  qualified obligations for purposes of this section.  If the 
  4.17  municipality makes an election under this paragraph, the maximum 
  4.18  duration is reduced by one-half of the amount otherwise 
  4.19  permitted under paragraph (a).  
  4.20     (d) The remaining duration of a district is the number of 
  4.21  calendar years, beginning after December 31, 2001, in which the 
  4.22  district may collect increment under its duration limit under 
  4.23  section 469.176, subdivision 1b, 1c, 1e, or 1g, or a special law 
  4.24  approved before January 1, 2002, as applicable. 
  4.25     (e) (d) For purposes of this subdivision, "taxes" exclude 
  4.26  taxes levied against market value, rather than tax capacity, and 
  4.27  the state general tax under section 275.025. 
  4.28     [EFFECTIVE DATE.] This section is effective the day 
  4.29  following final enactment and applies to districts for which the 
  4.30  request for certification was made on, before, or after August 
  4.31  1, 1979, and before August 1, 2001. 
  4.32     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
  4.33  469.1794, subdivision 6, is amended to read: 
  4.34     Subd. 6.  [COMMISSIONER AUTHORITY.] (a) If the municipality 
  4.35  determines that the extension permitted under subdivision 5 will 
  4.36  not provide sufficient revenue to pay in full the amount 
  5.1   of qualifying preexisting obligations, the municipality may 
  5.2   apply to the commissioner of revenue for an additional duration 
  5.3   extension.  The commissioner may authorize an extension of the 
  5.4   duration of the district of up to two years after determining 
  5.5   that: 
  5.6      (1) the insufficiency of revenues to pay the qualifying 
  5.7   preexisting obligations, which will be offset by the additional 
  5.8   extension of the duration limit, result from (i) the changes in 
  5.9   the class rates and (ii) elimination of the state-determined 
  5.10  general education property tax levy under Laws 2001, First 
  5.11  Special Session chapter 5; 
  5.12     (2) the municipality has or is transferring all available 
  5.13  increments from other preexisting districts and after August 1, 
  5.14  2001, has not entered into new obligations or authorized new 
  5.15  spending that reduced the amount of those increments that are 
  5.16  available for transfer to pay qualifying preexisting 
  5.17  obligations; and 
  5.18     (3) increases in increments over the term of the district 
  5.19  are unlikely to eliminate the insufficiency. 
  5.20     (b) The commissioner may: 
  5.21     (1) establish the form of and time for applications under 
  5.22  this subdivision; and 
  5.23     (2) require the municipality to provide the information 
  5.24  that the commissioner determines is necessary or useful in 
  5.25  evaluating the application. 
  5.26     (c) This subdivision does not apply to a district if the 
  5.27  authority has made an election under subdivision 5, paragraph 
  5.28  (c).  
  5.29     [EFFECTIVE DATE.] This section is effective the day 
  5.30  following final enactment and applies to districts for which the 
  5.31  request for certification was made on, before, or after August 
  5.32  1, 1979, and before August 1, 2001. 
  5.33     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
  5.34  469.1794, subdivision 7, is amended to read: 
  5.35     Subd. 7.  [LIMITS ON USE OF INCREMENTS.] (a) Tax increments 
  5.36  of an extended district may only be used to pay preexisting 
  6.1   obligations of the district and administrative expenses, 
  6.2   effective upon the final required approval of the extension 
  6.3   under this section.  All tax increments that are attributable to 
  6.4   an extension of the duration of a district under this section 
  6.5   must be used only to pay qualified obligations of the district.  
  6.6   If increments from a district subject to this subdivision are 
  6.7   pledged to pay preexisting obligations that are not qualified 
  6.8   obligations, increments received under the duration limit, 
  6.9   determined without regard to this section, must be used to pay 
  6.10  qualified obligations and preexisting obligations that are not 
  6.11  qualified obligations in proportion to their relative shares of 
  6.12  all payments due on all preexisting obligations. 
  6.13     (b) If the authority elects to extend the duration of a 
  6.14  district under this section and if increments from one or more 
  6.15  other districts are pledged to pay preexisting obligations of 
  6.16  the extended district, increments from all of the districts may 
  6.17  only be used to pay preexisting obligations and administrative 
  6.18  expenses. 
  6.19     [EFFECTIVE DATE.] This section is effective the day 
  6.20  following final enactment and applies to districts for which the 
  6.21  request for certification was made on, before, or after August 
  6.22  1, 1979, and before August 1, 2001. 
  6.23     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
  6.24  469.1794, subdivision 8, is amended to read: 
  6.25     Subd. 8.  [DECERTIFICATION.] An extended district must be 
  6.26  decertified at the end of the first calendar year when 
  6.27  sufficient increments have been received to pay the qualified 
  6.28  preexisting obligations of the extended district.  Any remaining 
  6.29  unspent increments must be distributed as excess increments 
  6.30  under section 469.176, subdivision 2, clause (4). 
  6.31     [EFFECTIVE DATE.] This section is effective the day 
  6.32  following final enactment and applies to districts for which the 
  6.33  request for certification was made on, before, or after August 
  6.34  1, 1979, and before August 1, 2001. 
  6.35     Sec. 8.  [469.1995] [GRANT PROGRAM.] 
  6.36     Subdivision 1.  [PROGRAM ESTABLISHED.] A state grant 
  7.1   program is established to offset deficits in the ability to pay 
  7.2   preexisting obligations caused by the repeal of the state 
  7.3   determined general education property tax levy and its partial 
  7.4   replacement with the state general tax. 
  7.5      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
  7.6   the following terms have the meanings given. 
  7.7      (b) "Commissioner" means the commissioner of revenue. 
  7.8      (c) "Contract" means a binding contract that is: 
  7.9      (1) a preexisting obligation; 
  7.10     (2) not a bond or interfund loan; and 
  7.11     (3) an agreement between the authority for a preexisting 
  7.12  district and another party under which the party agrees to make 
  7.13  improvements to the district or to provide other goods and 
  7.14  services, which the authority will reimburse, with or without 
  7.15  interest, from available tax increments from the district. 
  7.16     (d) "Contractor" means a person, other than the authority, 
  7.17  who is either (1) a party to or (2) an assignee of rights under 
  7.18  or a successor in interest to a party to a contract. 
  7.19     (e) "Preexisting district" has the meaning given in section 
  7.20  469.1792, subdivision 2. 
  7.21     (f) "Preexisting obligation" has the meaning given in 
  7.22  section 469.1792, subdivision 2. 
  7.23     Subd. 3.  [APPLICATION REQUIREMENT.] A municipality may 
  7.24  apply to the commissioner for a grant under subdivision 4.  A 
  7.25  contractor may apply to the commissioner for a grant under 
  7.26  subdivision 5.  Applications must be made at the times, in a 
  7.27  form, and include the information required by the commissioner.  
  7.28  The commissioner may require the applicant to supply any 
  7.29  information the commissioner determines is necessary to or 
  7.30  useful in administering the grant program under this section, 
  7.31  including certifying information annually to determine the grant 
  7.32  amount. 
  7.33     Subd. 4.  [GRANT PROGRAM; BONDS; INTERFUND LOANS.] (a) An 
  7.34  obligation qualifies for a grant under this subdivision if the 
  7.35  following conditions are met: 
  7.36     (1) the obligation is a preexisting obligation that is a 
  8.1   bond or an interfund loan, secured by a pledge of increment from 
  8.2   a preexisting district; 
  8.3      (2) all of the preconditions under section 469.1794, 
  8.4   subdivision 3, have been met for the district; 
  8.5      (3) the municipality has elected to extend the duration of 
  8.6   the district under section 469.1794, subdivisions 4 and 5; 
  8.7      (4) the available increments, including increments 
  8.8   projected to be received, from the districts are insufficient to 
  8.9   pay the amount due on the preexisting obligations for the 
  8.10  current calendar year or the next calendar year; 
  8.11     (5) the municipality has not denied a request from a 
  8.12  contractor to take actions under section 469.1792, subdivision 
  8.13  3, or 469.1794 to provide additional increment to pay a 
  8.14  contract; and 
  8.15     (6) the municipality has submitted a timely application 
  8.16  meeting the requirements of this section and has supplied all of 
  8.17  the information necessary for the commissioner to determine that 
  8.18  it is eligible for a grant and the amount of the grant. 
  8.19     (b) For an obligation qualifying for a grant under this 
  8.20  subdivision, the commissioner shall pay the municipality a grant 
  8.21  for the calendar year equal to the lesser of: 
  8.22     (1) the amount of the state general tax under section 
  8.23  275.025, paid by the captured tax capacity of the preexisting 
  8.24  district for the taxes payable year; or 
  8.25     (2) the difference between the amount of increment and 
  8.26  other pledged revenues available to the municipality for the 
  8.27  calendar year to pay the preexisting obligations of the district 
  8.28  and the amount due on the preexisting obligations for the 
  8.29  calendar year. 
  8.30     (c) The commissioner shall make payments of grants under 
  8.31  this subdivision by December 26 of the calendar year. 
  8.32     Subd. 5.  [GRANT PROGRAM CONTRACTS.] (a) An obligation 
  8.33  qualifies for a grant under this subdivision if the following 
  8.34  conditions are met: 
  8.35     (1) the obligation is a contract, secured by a pledge of 
  8.36  increment from a preexisting district; 
  9.1      (2) the contractor has requested the authority and 
  9.2   municipality, in writing, to take the actions authorized under 
  9.3   sections 469.l763, subdivision 6, 469.1792, subdivision 3, and 
  9.4   469.1794, to provide additional increment to pay the contract 
  9.5   and the request has been granted or denied by the municipality 
  9.6   or authority, as applicable; a request on which no action has 
  9.7   been taken for over three months after the request is made is 
  9.8   deemed to be denied; 
  9.9      (3) the projected amount of increment to be paid under the 
  9.10  contract over the remaining duration of the district at the time 
  9.11  of application, including any amounts received as a result of 
  9.12  actions taken by the municipality or authority under sections 
  9.13  469.1763, subdivision 6, 469.1792, subdivision 3, and 469.1794, 
  9.14  will be less than the full amount payable to the contractor 
  9.15  under the contract. 
  9.16     (b) For an obligation qualifying for a grant under this 
  9.17  subdivision, the commissioner shall pay the contractor a grant 
  9.18  for the calendar year equal to the lesser of: 
  9.19     (1) the amount of the state general tax under section 
  9.20  275.025, paid by the captured tax capacity of the preexisting 
  9.21  district for the taxes payable year; or 
  9.22     (2) the following amount divided by the number of years of 
  9.23  the remaining duration of the district: 
  9.24     (i) the full amount remaining payable to the contractor 
  9.25  under the contract at the time of the application for the grant, 
  9.26  less 
  9.27     (ii) the sum of the amount of increments received after the 
  9.28  date of application and the projected amount of increment to be 
  9.29  paid under the contract over the remaining duration of the 
  9.30  district, including any amounts received as a result of actions 
  9.31  taken by the municipality or authority under sections 469.1763, 
  9.32  subdivision 6; 469.1792, subdivision 3; and 469.1794. 
  9.33     (c) The remaining duration of the district is the number of 
  9.34  calendar years (expressed in full years) including the current 
  9.35  calendar year, but excluding any calendar years prior to the 
  9.36  current year, in which the district may collect increment under 
 10.1   its duration limit under section 469.176, subdivision 1b, 1c, 
 10.2   1e, or 1g, or a special law, plus any extension granted under 
 10.3   section 469.1794. 
 10.4      (d) The commissioner shall make payments of grants under 
 10.5   this subdivision by December 1 of the calendar year. 
 10.6      Subd. 6.  [AUTHORITY TO DENY OR REDUCE GRANT.] The 
 10.7   commissioner may deny an application for a grant or reduce the 
 10.8   amount of a grant under this section, if the commissioner 
 10.9   determines that the applicant municipality or authority has not 
 10.10  made its best efforts to pay the preexisting obligations with 
 10.11  increments and resources, other than a grant under this section, 
 10.12  such as by: 
 10.13     (1) exercising statutory authority to increase increments 
 10.14  or to transfer increments from districts with surplus 
 10.15  increments; 
 10.16     (2) refinancing debt at lower interest rates; 
 10.17     (3) reducing the interest rates on interfund loans to 
 10.18  current market rates; 
 10.19     (4) reducing the interest rates under a contract to current 
 10.20  market rates; 
 10.21     (5) reducing administrative costs; or 
 10.22     (6) applying the contractor's reduced property taxes to 
 10.23  offset costs payable under the contract or making efforts to 
 10.24  obtain concessions from property owners to reduce costs in light 
 10.25  of the property tax reductions that accrued to property owners 
 10.26  under 2001 property tax changes. 
 10.27     Subd. 7.  [ADMINISTRATIVE RULES.] The commissioner's 
 10.28  establishment of requirements for the form of applications, 
 10.29  times for making application, information to be submitted with 
 10.30  applications, standards for reviewing applications, and annual 
 10.31  submission of amounts to determine the grants are not 
 10.32  administrative rules under chapter 14 and are not subject to 
 10.33  section 14.386. 
 10.34     Subd. 8.  [APPROPRIATION.] An amount sufficient to pay the 
 10.35  grants authorized under this section is appropriated from the 
 10.36  general fund to the commissioner of revenue. 
 11.1      Sec. 9.  [APPROPRIATION; ADMINISTRATIVE COSTS.] 
 11.2      $....... is appropriated from the general fund to the 
 11.3   commissioner of revenue for fiscal year 2005 for the cost of 
 11.4   administering the program under section 8.