HF 1964

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; modifying provisions imposing 
  1.3             restrictions, conditions, and limitations on tax 
  1.4             increment financing; amending Minnesota Statutes 1996, 
  1.5             sections 273.1399, by adding a subdivision; 469.176, 
  1.6             subdivisions 1b, 1e, 4j, and 5; 469.1763, subdivision 
  1.7             3; and 469.177, subdivision 1; proposing coding for 
  1.8             new law in Minnesota Statutes, chapter 469. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1996, section 273.1399, is 
  1.11  amended by adding a subdivision to read: 
  1.12     Subd. 9.  [ELECTION TO APPLY LOCAL CONTRIBUTION.] A 
  1.13  district is exempt regardless of the date of its creation if the 
  1.14  municipality files with the county auditor no later than 
  1.15  December 1, 1997, a statement that it elects to make a 
  1.16  qualifying contribution under subdivision 6, paragraph (d), and 
  1.17  annually thereafter makes the required contribution. 
  1.18     Sec. 2.  Minnesota Statutes 1996, section 469.176, 
  1.19  subdivision 1b, is amended to read: 
  1.20     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
  1.21  shall in any event be paid to the authority 
  1.22     (1) after 25 years from date of receipt by the authority of 
  1.23  the first tax increment for a mined underground space 
  1.24  development district, 
  1.25     (2) after 15 years after receipt by the authority of the 
  1.26  first increment for a renewal and renovation district, 
  1.27     (3) after 12 years from approval of the tax increment 
  2.1   financing plan for a soils condition district, 
  2.2      (4) after nine years from the date of the receipt, or 11 
  2.3   years from approval of the tax increment financing plan, 
  2.4   whichever is less, for an economic development district, 
  2.5      (5) for a housing district or a redevelopment district, 
  2.6   after 20 years from the date of receipt by the authority of the 
  2.7   first tax increment by the authority pursuant to section 
  2.8   469.175, subdivision 1, paragraph (b); or, if no provision is 
  2.9   made under section 469.175, subdivision 1, paragraph (b), after 
  2.10  25 years from the date of receipt by the authority of the first 
  2.11  increment. 
  2.12     (b) For purposes of determining a duration limit under this 
  2.13  subdivision or subdivision 1e that is based on the receipt of an 
  2.14  increment, any increments from taxes payable in the year in 
  2.15  which the district terminates shall be paid to the authority.  
  2.16  This paragraph does not affect a duration limit calculated from 
  2.17  the date of approval of the tax increment financing plan or 
  2.18  based on the recovery of costs or to a duration limit under 
  2.19  subdivision 1c.  This paragraph does not supersede the 
  2.20  restrictions on payment of delinquent taxes in subdivision 
  2.21  1f.  For purposes of determining a durational limit under this 
  2.22  subdivision that is based on first receipt of tax increment, any 
  2.23  increment received based on the captured net tax capacity of a 
  2.24  hazardous substance subdistrict shall be disregarded. 
  2.25     Sec. 3.  Minnesota Statutes 1996, section 469.176, 
  2.26  subdivision 1e, is amended to read: 
  2.27     Subd. 1e.  [DURATION LIMITS; HAZARDOUS SUBSTANCE 
  2.28  SUBDISTRICTS.] If a parcel of a district is part of a designated 
  2.29  hazardous substance site or a hazardous substance subdistrict, 
  2.30  tax increment may be paid to the authority from the parcel for 
  2.31  longer than the period otherwise provided by subdivisions 1 to 
  2.32  1f for the overlying district.  The extended period for 
  2.33  collection of tax increment begins on the date of receipt of the 
  2.34  first tax increment from the parcel that is received after the 
  2.35  date of certification to the county auditor described in section 
  2.36  469.174, subdivision 7, paragraph (b), and is either the first 
  3.1   tax increment received from the parcel or more than any tax 
  3.2   increment received from the parcel before the date of the 
  3.3   certification under section 469.174, subdivision 7, paragraph 
  3.4   (b), and received after the date of certification to the county 
  3.5   auditor described in section 469.174, subdivision 7, paragraph 
  3.6   (b).  The extended period for collection of tax increment is the 
  3.7   lesser of:  (1) 25 years from the date of commencement of the 
  3.8   extended period or 20 years if the authority elects under 
  3.9   section 469.175, subdivision 1, paragraph (b), to defer receipt 
  3.10  of the first increment; or (2) the period necessary to recover 
  3.11  the costs of removal actions or remedial actions specified in a 
  3.12  development response action plan. 
  3.13     Sec. 4.  Minnesota Statutes 1996, section 469.176, 
  3.14  subdivision 4j, is amended to read: 
  3.15     Subd. 4j.  [REDEVELOPMENT DISTRICTS.] At least 90 percent 
  3.16  of the revenues derived from tax increments from a redevelopment 
  3.17  district or renewal and renovation district must be used to 
  3.18  finance the cost of correcting conditions that allow designation 
  3.19  of redevelopment and renewal and renovation districts under 
  3.20  section 469.174.  These costs include, but are not limited to, 
  3.21  acquiring properties containing structurally substandard 
  3.22  buildings or improvements, acquiring adjacent parcels necessary 
  3.23  to provide a site of sufficient size to permit development, 
  3.24  demolition and rehabilitation of structures, clearing of the 
  3.25  land, removal of hazardous substances, and installation of 
  3.26  utilities, roads, sidewalks, and parking facilities for the 
  3.27  site.  The allocated administrative expenses of the authority 
  3.28  may be included in the qualifying costs. 
  3.29     Sec. 5.  Minnesota Statutes 1996, section 469.176, 
  3.30  subdivision 5, is amended to read: 
  3.31     Subd. 5.  [REQUIREMENT FOR AGREEMENTS.] No more than 25 
  3.32  percent, by acreage, of the property to be acquired within a 
  3.33  project which contains a redevelopment district, or ten percent, 
  3.34  by acreage, of the property to be acquired within a project 
  3.35  which contains a housing or economic development district, as 
  3.36  set forth in the tax increment financing plan, shall at any time 
  4.1   be owned by an authority as a result of acquisition with the 
  4.2   proceeds of bonds issued pursuant to section 469.178 to which 
  4.3   tax increment from the property acquired is pledged unless prior 
  4.4   to acquisition in excess of the percentages, the authority has 
  4.5   concluded an agreement for the development or redevelopment of 
  4.6   the property acquired and which provides recourse for the 
  4.7   authority should the development or redevelopment not be 
  4.8   completed.  This subdivision does not apply to a parcel of a 
  4.9   district that is a designated hazardous substance site 
  4.10  established under section 469.174, subdivision 16, or part of a 
  4.11  hazardous substance subdistrict established under section 
  4.12  469.175, subdivision 7.  
  4.13     Sec. 6.  Minnesota Statutes 1996, section 469.1763, 
  4.14  subdivision 3, is amended to read: 
  4.15     Subd. 3.  [FIVE-YEAR RULE.] (a) Revenues derived from tax 
  4.16  increments are considered to have been expended on an activity 
  4.17  within the district under subdivision 2 only if one of the 
  4.18  following occurs: 
  4.19     (1) before or within five years after certification of the 
  4.20  district, the revenues are actually paid to a third party with 
  4.21  respect to the activity; 
  4.22     (2) bonds, the proceeds of which must be used to finance 
  4.23  the activity, are issued and sold to a third party before or 
  4.24  within five years after certification, the revenues are spent to 
  4.25  repay the bonds, and the proceeds of the bonds either are, on 
  4.26  the date of issuance, reasonably expected to be spent before the 
  4.27  end of the later of (i) the five-year period, or (ii) a 
  4.28  reasonable temporary period within the meaning of the use of 
  4.29  that term under section 148(c)(1) of the Internal Revenue Code, 
  4.30  or are deposited in a reasonably required reserve or replacement 
  4.31  fund; 
  4.32     (3) binding contracts with a third party are entered into 
  4.33  for performance of the activity before or within five years 
  4.34  after certification of the district and the revenues are spent 
  4.35  under the contractual obligation; or 
  4.36     (4) costs with respect to the activity are paid before or 
  5.1   within five years after certification of the district and the 
  5.2   revenues are spent to reimburse a party for payment of the 
  5.3   costs, including interest on unreimbursed costs. 
  5.4      (b) For purposes of this subdivision, bonds include 
  5.5   subsequent refunding bonds if the original refunded bonds meet 
  5.6   the requirements of paragraph (a), clause (2). 
  5.7      (c) This subdivision does not apply to redevelopment 
  5.8   districts. 
  5.9      Sec. 7.  [469.1764] [EXPENDITURES ON ACTIVITIES WITHIN TAX 
  5.10  INCREMENT DISTRICT.] 
  5.11     For purposes of sections 469.174 to 469.179, with respect 
  5.12  to any project for which certification of a tax increment 
  5.13  district was requested prior to August 1, 1979, any expenditure 
  5.14  made to finance a treatment works facility, watertower, or other 
  5.15  waterworks facility, an electric generation facility, or any 
  5.16  other public utility facility located outside of a tax increment 
  5.17  district and reasonably allocated to users within a tax 
  5.18  increment district or project for which certification was 
  5.19  requested prior to August 1, 1979, shall be deemed to have been 
  5.20  expended on activities in the tax increment district or project 
  5.21  area. 
  5.22     Sec. 8.  Minnesota Statutes 1996, section 469.177, 
  5.23  subdivision 1, is amended to read: 
  5.24     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
  5.25  after adoption of a tax increment financing plan, the auditor of 
  5.26  any county in which the district is situated shall, upon request 
  5.27  of the authority, certify the original net tax capacity of the 
  5.28  tax increment financing district and that portion of the 
  5.29  district overlying any subdistrict as described in the tax 
  5.30  increment financing plan and shall certify in each year 
  5.31  thereafter the amount by which the original net tax capacity has 
  5.32  increased or decreased as a result of a change in tax exempt 
  5.33  status of property within the district and any subdistrict, 
  5.34  reduction or enlargement of the district or changes pursuant to 
  5.35  subdivision 4.  
  5.36     (b) In the case of a mined underground space development 
  6.1   district the county auditor shall certify the original net tax 
  6.2   capacity as zero, plus the net tax capacity, if any, previously 
  6.3   assigned to any subsurface area included in the mined 
  6.4   underground space development district pursuant to section 
  6.5   272.04. 
  6.6      (c) For districts approved under section 469.175, 
  6.7   subdivision 3, or parcels added to existing districts after May 
  6.8   1, 1988, if the classification under section 273.13 of property 
  6.9   located in a district changes to a classification that has a 
  6.10  different assessment ratio, the original net tax capacity of 
  6.11  that property must be redetermined at the time when its use is 
  6.12  changed as if the property had originally been classified in the 
  6.13  same class in which it is classified after its use is changed. 
  6.14     (d) The amount to be added to the original net tax capacity 
  6.15  of the district as a result of previously tax exempt real 
  6.16  property within the district becoming taxable equals the net tax 
  6.17  capacity of the real property as most recently assessed pursuant 
  6.18  to section 273.18 or, if that assessment was made more than one 
  6.19  year prior to the date of title transfer rendering the property 
  6.20  taxable, the net tax capacity assessed by the assessor at the 
  6.21  time of the transfer.  If substantial taxable improvements were 
  6.22  made to a parcel after certification of the district and if the 
  6.23  property later becomes tax exempt, in whole or part, as a result 
  6.24  of the authority acquiring the property through foreclosure or 
  6.25  exercise of remedies under a lease or other revenue agreement or 
  6.26  as a result of tax forfeiture, the amount to be added to the 
  6.27  original net tax capacity of the district as a result of the 
  6.28  property again becoming taxable is the amount of the parcel's 
  6.29  value that was included in original net tax capacity when the 
  6.30  parcel was first certified.  The amount to be added to the 
  6.31  original net tax capacity of the district as a result of 
  6.32  enlargements equals the net tax capacity of the added real 
  6.33  property as most recently certified by the commissioner of 
  6.34  revenue as of the date of modification of the tax increment 
  6.35  financing plan pursuant to section 469.175, subdivision 4. 
  6.36     (e) For districts approved under section 469.175, 
  7.1   subdivision 3, or parcels added to existing districts after May 
  7.2   1, 1988, if the net tax capacity of a property increases because 
  7.3   the property no longer qualifies under the Minnesota 
  7.4   agricultural property tax law, section 273.111; the Minnesota 
  7.5   open space property tax law, section 273.112; or the 
  7.6   metropolitan agricultural preserves act, chapter 473H, or 
  7.7   because platted, unimproved property is improved or three years 
  7.8   pass after approval of the plat under section 273.11, 
  7.9   subdivision 1, the increase in net tax capacity must be added to 
  7.10  the original net tax capacity.  
  7.11     (f) Each year the auditor shall also add to the original 
  7.12  net tax capacity of each economic development district an amount 
  7.13  equal to the original net tax capacity for the preceding year 
  7.14  multiplied by the lesser of (1) .10, or (2) the average 
  7.15  percentage increase in the market value of all property included 
  7.16  in the economic development district during the five years prior 
  7.17  to certification of the district. 
  7.18     (g) The amount to be subtracted from the original net tax 
  7.19  capacity of the district as a result of previously taxable real 
  7.20  property within the district becoming tax exempt, or a reduction 
  7.21  in the geographic area of the district, shall be the amount of 
  7.22  original net tax capacity initially attributed to the property 
  7.23  becoming tax exempt or being removed from the district.  If the 
  7.24  net tax capacity of property located within the tax increment 
  7.25  financing district is reduced by reason of a court-ordered 
  7.26  abatement, stipulation agreement, voluntary abatement made by 
  7.27  the assessor or auditor or by order of the commissioner of 
  7.28  revenue, the reduction shall be applied to the original net tax 
  7.29  capacity of the district when the property upon which the 
  7.30  abatement is made has not been improved since the date of 
  7.31  certification of the district and to the captured net tax 
  7.32  capacity of the district in each year thereafter when the 
  7.33  abatement relates to improvements made after the date of 
  7.34  certification.  The county auditor may specify reasonable form 
  7.35  and content of the request for certification of the authority 
  7.36  and any modification thereof pursuant to section 469.175, 
  8.1   subdivision 4.  
  8.2      (h) If a parcel of property contained a substandard 
  8.3   building that was demolished or removed and if the authority 
  8.4   elects to treat the parcel as occupied by a substandard building 
  8.5   under section 469.174, subdivision 10, paragraph (b), the 
  8.6   auditor shall certify the original net tax capacity of the 
  8.7   parcel using the greater of (1) the current net tax capacity of 
  8.8   the parcel, or (2) the estimated market value of the parcel for 
  8.9   the year in which the building was demolished or removed, but 
  8.10  applying the class rates for the current year. 
  8.11     Sec. 9.  [EFFECTIVE DATE.] 
  8.12     Sections 1 to 8 apply to all tax increment districts, 
  8.13  whenever certified, and any uses of tax increment expended prior 
  8.14  to the effective date of this act which are in compliance with 
  8.15  the provisions of this act are deemed valid.