Minnesota Legislature
HF 1721
as introduced - 87th Legislature (2011 - 2012) Posted on 05/17/2011 08:44am
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A bill for an act
relating to economic development; authorizing redevelopment demolition loans;
amending Minnesota Statutes 2010, sections 116J.571; 116J.572; 116J.575,
by adding a subdivision; proposing coding for new law in Minnesota Statutes,
chapter 116J.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2010, section 116J.571, is amended to read:
116J.571 CREATION OF ACCOUNTS.
Two redevelopment accounts are created, one in the general fund and one in the
bond proceeds fund. Money deleted text begin in the accountsdeleted text end new text begin for the programnew text end may be used to make grants
as provided in section 116J.575 new text begin and loans as provided in section 116J.5761 new text end and to pay
for the commissioner's costs in reviewing applications and making grantsnew text begin and loans and
is available until spentnew text end .new text begin The repayment of principal and interest on loans and other
income earned on money in the accounts may be used for making grants and loans and for
administrative costs and are appropriated for such purposes.
new text end
Sec. 2.
Minnesota Statutes 2010, section 116J.572, is amended to read:
116J.572 DEFINITIONS.
Subdivision 1.
Scope of application.
For purposes of sections 116J.571 to deleted text begin 116J.575deleted text end new text begin
116J.5765new text end , the terms in this section have the meanings given.
new text begin Subd. 1a. new text end
new text begin Demolition costs. new text end
new text begin
"Demolition costs" means the costs of demolition,
destruction, removal and clearance of all structures and other improvements on the project
site, including interior remedial activities, and proper disposal thereof. As used in this
subdivision, "structure" has the meaning given it in section 116G.03, subdivision 11.
new text end
Subd. 2.
Development authority.
"Development authority" includes a statutory
or home rule charter city, county, housing and redevelopment authority, economic
development authority, or port authority.
Subd. 2a.
Metropolitan area.
"Metropolitan area" means the seven-county
metropolitan area, as defined in section 473.121, subdivision 2.
Subd. 2b.
Municipality.
"Municipality" means the statutory or home rule charter
city, town, or, in the case of unorganized territory,new text begin thenew text end county in which the redevelopment
new text begin or project new text end is located.
Subd. 3.
Redevelopment costs or costs.
"Redevelopment costs" or "costs" means
the costs of land acquisition, stabilizing unstable soils when infill is required, deleted text begin demolition,deleted text end
infrastructure improvements, and ponding or other environmental infrastructurenew text begin ,new text end
new text begin demolition costs new text end and costs necessary for adaptive reuse of buildings, including remedial
activities.
Sec. 3.
Minnesota Statutes 2010, section 116J.575, is amended by adding a subdivision
to read:
new text begin Subd. 4. new text end
new text begin Grant repayment. new text end
new text begin
If a project fails to substantially provide the public
benefits listed in the grant application within five years from the date of the grant award,
the commissioner shall require that 100 percent of the grant amount be repaid by the
development authority over a term not to exceed ten years. The commissioner may
exercise discretion to require repayment of only a portion of the grant amount taking into
account the public benefits generated by the completed development.
new text end
Sec. 4.
new text begin
[116J.5761] LOANS.
new text end
new text begin Subdivision 1. new text end
new text begin Authority. new text end
new text begin
The commissioner may make loans to development
authorities for projects that meet the criteria under sections 116J.5761 to 116J.5764. The
commissioiner may make a loan for up to 100 percent of the estimated land acquisition and
demolition costs of the project. The determination whether to make a loan for a project
is within the discretion of the commissioner, subject to this section, sections 116J.5761
to 116J.5764, and available unencumbered money in the redevelopment accounts. The
commissioner's decisions and application of the priorities under this section are not subject
to judicial review, except for abuse of discretion.
new text end
new text begin Subd. 2. new text end
new text begin Qualifying projects. new text end
new text begin
A project qualifies for a loan under this section,
if the following criteria are met:
new text end
new text begin
(1) the property and structures are owned by the development authority;
new text end
new text begin
(2) the structures on the property have bee vacant for at least one year;
new text end
new text begin
(3) the structures constitute a threat to public safety because of inadequate
maintenance, dilapidation, obsolescence, or abandonment;
new text end
new text begin
(4) the structures are not listed on the National Register of Historic Places; and
new text end
new text begin
(5) upon completion of the demolition, the development authority reasonably
expects that he property will be improved and these improvements will result in economic
development benefits to the municipality.
new text end
Sec. 5.
new text begin
[116J.5762] LOAN APPLICATIONS.
new text end
new text begin Subdivision 1. new text end
new text begin Application required. new text end
new text begin
To obtain a demolition loan, a development
authority shall apply to the commissioner. The governing body of the municipality must
approve the application by resolution.
new text end
new text begin Subd. 2. new text end
new text begin Required content. new text end
new text begin
The commissioner shall prescribe and provide the
application form. The application must include at least the following information:
new text end
new text begin
(1) identification of the property;
new text end
new text begin
(2) proof of ownership by the development authority;
new text end
new text begin
(3) a description of how the structures on the property constitute a threat to public
safety, are functionally obsolete, or are economically unfeasible to repair;
new text end
new text begin
(4) length of vacancy;
new text end
new text begin
(5) a detailed estimate, along with supporting evidence, of the total demolition
costs for the project;
new text end
new text begin
(6) evidence that the structures on the property are not listed on the National Register
of Historic Places;
new text end
new text begin
(7) as assessment of the development potential or likely use of the property after
completion of the demolition plan;
new text end
new text begin
(8) the current appraised or assessed value of the property;
new text end
new text begin
(9) financial documentation necessary for loan underwriting;
new text end
new text begin
(10) other sources of funding if the total estimated demolition costs exceed the
loan amount;
new text end
new text begin
(11) the proposed source of funds to be used for repayment of the loan;
new text end
new text begin
(12) information showing the applicant's financial condition and ability to repay
the loan;
new text end
new text begin
(13) the proposed term and principal repayment schedule for the loan;
new text end
new text begin
(14) the statutory authorization for the applicant to issue bonds, together with a
statement that the statutory provision authorizes the use of proceeds of such bonds to pay
demolition costs and secure the loan; and
new text end
new text begin
(15) any additional information the commissioner prescribes.
new text end
Sec. 6.
new text begin
[116J.5763] PRIORITIES.
new text end
new text begin Subdivision 1. new text end
new text begin Priorities. new text end
new text begin
(a) If applications for loans exceed the available
appropriations, loans shall be made for projects that, in the commissioner's judgment,
provide the highest return in public benefits for the public costs incurred. "Public benefits"
include health, safety and other environmental benefits, blight reduction including
the property's potential for improved economic vitality, functionality and aesthetics,
community stabilization, crime reduction, reduced maintenance costs, and the potential
for future development. In making this judgment, the commissioner shall consider the
following:
new text end
new text begin
(1) the extent to which the existing property conditions threaten public safety;
new text end
new text begin
(2) the length of vacancy of the property;
new text end
new text begin
(3) the development potential of the property;
new text end
new text begin
(4) the proximity of the property to existing sufficient public infrastructure;
new text end
new text begin
(5) the applicant's financial condition and ability to repay the loan.
new text end
new text begin
(b) The factors in paragraph (a) are not listed in a rank order or priority; rather, the
commissioner may weigh each factor, depending upon the facts and circumstances, as
the commissioner considers appropriate. The commissioner may consider other factors
that affect the net return of public benefits.
new text end
new text begin Subd. 2. new text end
new text begin Application cycle. new text end
new text begin
The commissioner shall establish semiannual
application deadlines in which loans will be authorized from available money in the
accounts.
new text end
Sec. 7.
new text begin
[116J.5764] LOAN TERMS AND CONDITIONS.
new text end
new text begin Subdivision 1. new text end
new text begin Terms. new text end
new text begin
Loans to development authorities for demolition costs may
be made by the commissioner subject to the following terms and conditions:
new text end
new text begin
(1) the agreement to repay the loan must be a general obligation of the development
authority, payable primarily from a dedicated source of revenue, and the development
authority must deliver its bond or note to the commissioner to secure the loan;
new text end
new text begin
(2) the term of the loan may not exceed 15 years;
new text end
new text begin
(3) the loan shall bear interest at a rate equal to two percent, but interest will not
accrue during the first two years of the loan term;
new text end
new text begin
(4) the development authority shall make semiannual interest payments and annual
principal payments beginning in the third year of the loan until the end of the term;
new text end
new text begin
(5) the principal amount of a loan may not exceed $1,000,000;
new text end
new text begin
(6) loan proceeds shall be disbursed for eligible demolition costs as incurred or
paid by borrower and upon submission of invoices and other supporting documentation
satisfactory to the commissioner;
new text end
new text begin
(7) an eligible borrower shall establish a dedicated source of revenue for repayment
of the loan.
new text end
new text begin Subd. 2. new text end
new text begin Modification of loan terms. new text end
new text begin
The commissioner has the discretion to
consent to the modification of the rate of interest, time of payment, installment of principal
or interest, or other term of a loan made under sections 116J.5761 to 116J.5764.
new text end
new text begin Subd. 3 new text end
new text begin Forgiveness. new text end
new text begin
The commissioner may forgive principal of the loan and
interest accrued but unpaid thereon, if any, up to 50 percent of the original loan amount,
not to exceed the costs of demolition, upon completion of the redevelopment plan, if the
project would otherwise have received grant funding in the most recent semiannual grant
round, based on the priorities in section 116J.575.
new text end
Sec. 8.
new text begin
[116J.5765] NONLIABILITY.
new text end
new text begin
The state shall have no responsibility or liability relating to or arising out of
activities at the site of a project solely by reason of the making of a grant or loan by the
commissioner under sections 116J.5761 to 116J.5764.
new text end