HF 2010

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; tax increment financing; 
  1.3             requiring state approval of districts to collect or 
  1.4             spend certain increments; authorizing property tax 
  1.5             abatements; amending Minnesota Statutes 1996, sections 
  1.6             469.174, by adding a subdivision; 469.176, by adding a 
  1.7             subdivision; and 469.177, by adding a subdivision; 
  1.8             proposing coding for new law in Minnesota Statutes, 
  1.9             chapter 469; repealing Minnesota Statutes 1996, 
  1.10            section 469.181. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12                             ARTICLE 1 
  1.13                      TAX INCREMENT FINANCING 
  1.14     Section 1.  Minnesota Statutes 1996, section 469.174, is 
  1.15  amended by adding a subdivision to read: 
  1.16     Subd. 25.  [EDUCATION AID INCREMENT.] (a) "Education aid 
  1.17  increment" for a district means the amount calculated as follows:
  1.18     (1) The captured net tax capacity of the district must be 
  1.19  multiplied by the equalized school levy tax rate for the year in 
  1.20  which property taxes are payable. 
  1.21     (2) The resulting amount must be reduced by the sum of the 
  1.22  excess tax increments under section 469.176, subdivision 2, and 
  1.23  the excess taxes under section 469.177, subdivision 9, that are 
  1.24  deducted from the school district's state aid payments. 
  1.25     (b) For purposes of this calculation, the equalized school 
  1.26  levy tax rate equals equalized school levies as defined in 
  1.27  section 273.1398, subdivision 1, for aids payable in the year 
  1.28  after the property taxes are due and payable, divided by the 
  2.1   total net tax capacity of the school district for the year in 
  2.2   which the taxes are payable. 
  2.3      Sec. 2.  [469.1751] [STATE APPROVAL.] 
  2.4      Subdivision 1.  [SCOPE; EFFECT OF NO APPROVAL.] (a) This 
  2.5   section applies to districts and to amendments adding new area 
  2.6   to existing districts, if the request to certify the original 
  2.7   net tax capacity was made after July 31, 1997. 
  2.8      (b) The development authority may apply to the commissioner 
  2.9   for approval of the district or of an amendment to add new 
  2.10  geographic area to an existing district.  The application must 
  2.11  be made before a request for certification of the original net 
  2.12  tax capacity is made to the county auditor.  If the commissioner 
  2.13  does not approve the application for a district to which this 
  2.14  section applies, the provisions of section 469.177, subdivision 
  2.15  3a, apply and the education aid increment for the district or 
  2.16  the part of the district must be paid to the state. 
  2.17     Subd. 2.  [COMMISSIONER.] The commissioner is: 
  2.18     (1) the commissioner of trade and economic development, if 
  2.19  the application is for an economic development district, a 
  2.20  redevelopment district, a renewal and renovation district, a 
  2.21  soils correction district, a mined underground space district, 
  2.22  or a hazardous substance subdistrict; 
  2.23     (2) the commissioner of the Minnesota housing finance 
  2.24  agency, if the application is for a housing district. 
  2.25     Subd. 3.  [AUTHORITY TO APPROVE.] (a) The commissioner may 
  2.26  approve an application for a district under this section, if 
  2.27  based on the application and supporting documents the 
  2.28  commissioner finds: 
  2.29     (1) the proposed district, the tax increment financing 
  2.30  plan, and proposed development or redevelopment, including any 
  2.31  development agreement, meets the requirements of this chapter 
  2.32  and any other applicable provision of law; 
  2.33     (2) sufficient state budget authority is available to 
  2.34  provide the amount of education aid increment permitted by the 
  2.35  approval; and 
  2.36     (3) the proposed district and the project to be funded by 
  3.1   it meet the requirements of subdivision 5 or 6, as applicable. 
  3.2      (b) The commissioner must specify in approving a district 
  3.3   the amount of education aid increment that may be collected for 
  3.4   the life of the district. 
  3.5      (c) The commissioner's decision and evaluation of the 
  3.6   application under this section are not subject to judicial 
  3.7   review, except for abuse of discretion. 
  3.8      Subd. 4.  [APPLICATION CONTENTS.] (a) The commissioner 
  3.9   shall prescribe and provide the application form.  The 
  3.10  application must include at least the following information: 
  3.11     (1) a copy of the tax increment financing plan for the 
  3.12  district; 
  3.13     (2) if not included in the tax increment financing plan, a 
  3.14  budget of the items on which the authority intends to spend 
  3.15  increment from the district, identifying the estimated dollar 
  3.16  amounts for each, the purpose, and the years in which the 
  3.17  spending is expected to occur; 
  3.18     (3) identification of firm or tentative commitments from 
  3.19  developers to construct improvements in the district or if none 
  3.20  exist, a statement of the prospects for obtaining commitments; 
  3.21     (4) a statement detailing how the proposed district and the 
  3.22  activities to be financed meet the test under section 469.175, 
  3.23  subdivision 3, clause (3), for municipal approval of the 
  3.24  district; 
  3.25     (5) a statement of the manner in which the project's 
  3.26  expenses will be financed, including any plans to use debt 
  3.27  financing and the amount of and source of municipal money other 
  3.28  than increments that will be used; 
  3.29     (6) a statement of the number of years for which the 
  3.30  authority seeks to collect education aid increments; 
  3.31     (7) the maximum amount of education aid increment the 
  3.32  authority seeks authority to collect; 
  3.33     (8) for a housing district, the number of units to be 
  3.34  constructed or rehabilitated, the income limitations that will 
  3.35  apply to the tenants or purchasers of units, the expected rents 
  3.36  or home prices to be charged, and information on the available 
  4.1   supply and demand in the market area for the type of housing to 
  4.2   be provided; 
  4.3      (9) a statement detailing the net benefits in excess of 
  4.4   costs to the state of the proposed financing or other rationales 
  4.5   for state participation in the project; and 
  4.6      (10) any other information the commissioner requires. 
  4.7      (b) The commissioner may establish procedures and time 
  4.8   deadlines for filing applications for approval and cycles for 
  4.9   considering and approving applications so that total approvals 
  4.10  are within the budget limit under subdivision 7. 
  4.11     Subd. 5.  [REVIEW STANDARDS; NONHOUSING DISTRICTS.] (a) 
  4.12  This subdivision applies to applications for approval of all 
  4.13  districts other than housing districts. 
  4.14     (b) The commissioner may not approve an application unless 
  4.15  budget authority is available under subdivision 7 and the 
  4.16  commissioner finds the proposed district and developments to be 
  4.17  financed are in the state's interest. 
  4.18     (c) In determining whether an application for a district is 
  4.19  in the interest of the state, the commissioner of trade and 
  4.20  economic development shall consider: 
  4.21     (1) the cost to the state, including, but not limited to, 
  4.22  the amount of the education aid increment; and 
  4.23     (2) the benefits of the district and the financed 
  4.24  development to the state that would not occur without approving 
  4.25  authority to collect education aid increments such as: 
  4.26     (i) the cleanup of pollution; 
  4.27     (ii) more or better use of existing public and private 
  4.28  infrastructure through redevelopment or more intensive use of 
  4.29  land in developed areas; 
  4.30     (iii) elimination of improvements that are hazardous to the 
  4.31  public health or safety; 
  4.32     (iv) provision of public infrastructure that provides 
  4.33  significant general benefits beyond the jurisdiction of the 
  4.34  municipality; 
  4.35     (v) increased economic activity, whether expanded 
  4.36  employment or increased income, in the state; 
  5.1      (vi) increased fiscal capacity to local governments that 
  5.2   have a significant gap between their fiscal capacities and 
  5.3   needs; 
  5.4      (vii) increased state tax revenue; and 
  5.5      (viii) other benefits the commissioner determines 
  5.6   appropriate. 
  5.7      Subd. 6.  [REVIEW STANDARDS; HOUSING DISTRICTS.] (a) This 
  5.8   subdivision applies to applications for approval of housing 
  5.9   districts. 
  5.10     (b) The commissioner may not approve an application unless 
  5.11  budget authority is available under subdivision 7 and the 
  5.12  commissioner finds that the proposed district and the 
  5.13  developments to be financed are in the interest of the state. 
  5.14     (c) In determining whether an application for a housing 
  5.15  district is in the interest of the state, the commissioner of 
  5.16  the Minnesota housing financing agency shall consider: 
  5.17     (1) the cost to the state, including, but not limited to, 
  5.18  the amount of the education aid increment; and 
  5.19     (2) the benefits of the district and the financed 
  5.20  development to the state that would not occur without approving 
  5.21  authority to collect education aid increments such as: 
  5.22     (i) the extent to which the proposal will help meet a 
  5.23  demand for quality, affordable housing; 
  5.24     (ii) the extent to which the proposal targets the assisted 
  5.25  housing to families and individuals with low incomes; 
  5.26     (iii) the extent to which the proposal prevents undue 
  5.27  concentration of low-income housing in neighborhoods or 
  5.28  communities; and 
  5.29     (iv) other benefits the commissioner determines are 
  5.30  relevant to meeting a need in the state for high quality, 
  5.31  affordable low-income housing that cannot be supplied by the 
  5.32  private market without public assistance. 
  5.33     Subd. 7.  [BUDGET LIMIT ON APPROVALS.] (a) A commissioner 
  5.34  may not approve an application under this section unless budget 
  5.35  authority is available under this subdivision. 
  5.36     (b) The budget limit on education aid increment for 
  6.1   property taxes payable in a year equals: 
  6.2      (1) 3.25 percent of the total statewide net tax capacity, 
  6.3   including captured net tax capacity and the net amount of fiscal 
  6.4   disparities under chapters 276A and 473F; less 
  6.5      (2) the amount of education aid increments that is 
  6.6   estimated to be collected for tax increment financing districts 
  6.7   that were not approved under this section; and less 
  6.8      (3) the amount of the budget limit for the year that has 
  6.9   been approved by the commissioner for districts under this 
  6.10  section; and plus 
  6.11     (4) the amount of the budget limit for the year that has 
  6.12  been approved by the commissioner under this section for 
  6.13  districts which have been decertified early or for which the 
  6.14  authority has voluntarily relinquished the budget limit 
  6.15  entitlement. 
  6.16     (c) In approving applications under this section, a 
  6.17  commissioner shall designate:  
  6.18     (1) a specific dollar amount of education aid increment 
  6.19  that may be collected for the life of a district; 
  6.20     (2) the first year in which the district may collect 
  6.21  education aid increment; and 
  6.22     (3) the maximum duration of the district. 
  6.23     (d) For each application approved, the commissioner shall 
  6.24  deduct from the state budget limit for each year the district is 
  6.25  permitted to collect education aid increment an appropriate 
  6.26  amount of the total permitted education aid increment.  The 
  6.27  commissioner may make this deduction (1) based on information 
  6.28  provided by the authority as to the annual amounts of increment 
  6.29  it projects to collect, (2) in equal annual amounts, or (3) 
  6.30  using any other method the commissioner believes will accurately 
  6.31  reflect the annual amount of education aid increment the 
  6.32  authority is likely to collect.  The resulting amounts must be 
  6.33  charged against the annual budget limit for the affected years.  
  6.34  These amounts may be adjusted periodically as the commissioner 
  6.35  determines appropriate. 
  6.36     (e) The budget limit is apportioned 7.5 percent to housing 
  7.1   districts and 92.5 percent to other districts.  If it appears 
  7.2   that the available budget limit for one of the two types of 
  7.3   districts will exceed the demand for a year, the commissioner of 
  7.4   trade and economic development and the commissioner of the 
  7.5   housing finance agency may agree to reallocate the respective 
  7.6   parts of the limits as they determine appropriate. 
  7.7      Sec. 3.  Minnesota Statutes 1996, section 469.176, is 
  7.8   amended by adding a subdivision to read: 
  7.9      Subd. 4k.  [STATE APPROVAL REQUIRED.] (a) This subdivision 
  7.10  applies to tax increment financing districts for which the 
  7.11  request for certification was made before May 1, 1990.  This 
  7.12  includes districts for which the request for certification was 
  7.13  made before August 1, 1979. 
  7.14     (b) For purposes of this subdivision, the commissioner is: 
  7.15     (1) the commissioner of trade and economic development for 
  7.16  an economic development district, a redevelopment district, a 
  7.17  renewal and renovation district, a soils correction district, a 
  7.18  mined underground space district, a hazardous substance 
  7.19  subdistrict, or any district for which the request for 
  7.20  certification was made before August 1, 1979; 
  7.21     (2) the commissioner of the Minnesota housing finance 
  7.22  agency for a housing district. 
  7.23     (c) An authority must obtain approval from the commissioner 
  7.24  to spend revenues derived from tax increment, if the following 
  7.25  conditions apply: 
  7.26     (1) The governing body of the authority or the municipality 
  7.27  authorized the revenues derived from tax increment to be spent 
  7.28  more than five years after the municipality approved the 
  7.29  original tax increment financing plan.  Actions satisfying this 
  7.30  clause include, but are not limited to, amending the tax 
  7.31  increment financing plan, adopting or amending a development 
  7.32  plan, entering into or amending a development agreement, and 
  7.33  adopting a resolution or approving a budget, if these actions 
  7.34  were necessary to permit the increments to be spent. 
  7.35     (2) The authorization would permit the financing of 
  7.36  assistance to a private entity, whether as subsidies, grants, 
  8.1   interest rate reductions, sales of property at less than fair 
  8.2   market value, provision of improvements, or any other form of 
  8.3   assistance, with an estimated present value at the time of 
  8.4   approval of $1,000,000 or more. 
  8.5      (d) In determining whether to approve an application under 
  8.6   this subdivision, the commissioner shall apply the standards 
  8.7   under section 469.1751, subdivisions 5 and 6, to determine 
  8.8   whether the proposed spending of increments is in the interest 
  8.9   of the state. 
  8.10     Sec. 4.  Minnesota Statutes 1996, section 469.177, is 
  8.11  amended by adding a subdivision to read: 
  8.12     Subd. 3a.  [INCREMENT TO STATE.] (a) For each tax increment 
  8.13  financing district, the county auditor shall pay to the 
  8.14  commissioner of revenue a portion of increment for the district 
  8.15  as determined under this subdivision.  The auditor shall pay 
  8.16  this amount no later than January 15 for the taxes collected 
  8.17  during the previous calendar year. 
  8.18     (b) Increments subject to distribution under this section 
  8.19  are: 
  8.20     (1) for a district or for new area added to a preexisting 
  8.21  district: 
  8.22     (i) for which the request for certification of the original 
  8.23  net tax capacity for the district was made after July 31, 1997, 
  8.24  and 
  8.25     (ii) which was not approved under section 469.1751, 
  8.26  the amount of education aid increment for the district; 
  8.27     (2) for a district which was approved under section 
  8.28  469.1751 and which has received education aid increment that 
  8.29  equals its total approved budget amount, the amount of education 
  8.30  aid increment that exceeds the approved amount. 
  8.31     Sec. 5.  [EFFECTIVE DATE.] 
  8.32     Sections 1, 2, and 4 apply to all tax increment financing 
  8.33  districts, regardless of when the request for certification was 
  8.34  made.  Section 3 applies to the spending of increments 
  8.35  authorized after the day following final enactment. 
  8.36                             ARTICLE 2
  9.1                   PROPERTY TAX ABATEMENT AUTHORITY 
  9.2      Section 1.  [469.1812] [DEFINITIONS.] 
  9.3      Subdivision 1.  [SCOPE.] For purposes of sections 1 to 4, 
  9.4   the following terms have the meanings given. 
  9.5      Subd. 2.  [GOVERNING BODY.] "Governing body" means, for a 
  9.6   city, the city council; for a school district, the school board; 
  9.7   for a county, the county board; and for a town, the annual 
  9.8   meeting of the town. 
  9.9      Subd. 3.  [MUNICIPALITY.] "Municipality" means a statutory 
  9.10  or home rule charter city or a town. 
  9.11     Subd. 4.  [POLITICAL SUBDIVISION OR 
  9.12  SUBDIVISION.] "Political subdivision" or "subdivision" means a 
  9.13  statutory or home rule charter city, town, school district, or 
  9.14  county. 
  9.15     Sec. 2.  [469.1813] [ABATEMENT AUTHORITY.] 
  9.16     Subdivision 1.  [AUTHORITY.] The governing body of a 
  9.17  political subdivision may grant an abatement of the taxes 
  9.18  imposed by the political subdivision on a parcel of property, if 
  9.19  it finds that doing so is in the public interest because it will:
  9.20     (1) increase or preserve tax base; 
  9.21     (2) provide employment opportunities in the political 
  9.22  subdivision; 
  9.23     (3) provide or help acquire or construct public facilities; 
  9.24     (4) help redevelop or renew blighted areas; 
  9.25     (5) help provide access to services for residents of the 
  9.26  political subdivision; or 
  9.27     (6) help provide other public benefits that exceed the 
  9.28  public cost of the abatement. 
  9.29     Subd. 2.  [ABATEMENT RESOLUTION.] The governing body of a 
  9.30  political subdivision may grant an abatement only by adopting an 
  9.31  abatement resolution, specifying the terms of the abatement.  
  9.32  The abatement may reduce all or part of the property tax levied 
  9.33  by the political subdivision on the parcel.  The political 
  9.34  subdivision may limit the abatement: 
  9.35     (1) to a specific dollar amount per year or in total; 
  9.36     (2) to the increase in property taxes resulting from 
  9.37  improvement of the property; 
 10.1      (3) to the increases in property taxes resulting from 
 10.2   increases in the market value or tax capacity of the property; 
 10.3   or 
 10.4      (4) in any other manner the governing body of the 
 10.5   subdivision determines is appropriate. 
 10.6   The political subdivision may not abate tax attributable to the 
 10.7   value of the land. 
 10.8      Subd. 3.  [NOTICE AND PUBLIC HEARING.] (a) The governing 
 10.9   body of the political subdivision may approve an abatement under 
 10.10  sections 1 to 4 only after holding a public hearing on the 
 10.11  abatement. 
 10.12     (b) Notice of the hearing must be published in a newspaper 
 10.13  of general circulation in the political subdivision at least 
 10.14  once more than ten days but less than 30 days before the 
 10.15  hearing.  The newspaper must be one of general interest and 
 10.16  readership in the community, and not one of limited subject 
 10.17  matter.  The newspaper must be published at least once per 
 10.18  week.  The notice must indicate that the governing body will 
 10.19  consider granting a property tax abatement and identify the 
 10.20  property or properties for which an abatement is under 
 10.21  consideration. 
 10.22     Subd. 4.  [DURATION LIMIT.] A political subdivision may 
 10.23  grant an abatement for a period no longer than ten years.  The 
 10.24  subdivision may specify in the abatement resolution a shorter 
 10.25  duration.  If the resolution does not specify a period of time, 
 10.26  the abatement is for eight years.  If an abatement has been 
 10.27  granted to a parcel of property and the period of the abatement 
 10.28  has expired, the political subdivision that granted the 
 10.29  abatement may not grant another abatement for eight years after 
 10.30  the expiration of the first abatement.  This prohibition does 
 10.31  not apply to improvements added after and not subject to the 
 10.32  first abatement. 
 10.33     Subd. 5.  [REVIEW AND MODIFICATION OF ABATEMENTS.] The 
 10.34  political subdivision may provide in the abatement resolution 
 10.35  that the abatement may not be modified or changed during its 
 10.36  term.  If the abatement resolution does not provide that the 
 11.1   abatement may not be modified or changed, the governing body of 
 11.2   the political subdivision may review and modify the abatement 
 11.3   every second year after it was approved. 
 11.4      Sec. 3.  [469.1814] [BONDING AUTHORITY.] 
 11.5      Subdivision 1.  [AUTHORITY.] A political subdivision may 
 11.6   issue bonds or other obligations to provide an amount equal to 
 11.7   the sum of the abatements granted for a property under section 
 11.8   2.  The maximum principal amount of these bonds may not exceed 
 11.9   the estimated sum of the abatements for the property for the 
 11.10  years authorized.  The bonds may be general obligations of the 
 11.11  political subdivision if the governing body of the political 
 11.12  subdivision elects to pledge the full faith and credit of the 
 11.13  subdivision in the resolution issuing the bonds. 
 11.14     Subd. 2.  [BOND CODE APPLIES.] Chapter 475 applies to the 
 11.15  obligations authorized by this section, except bonds are 
 11.16  excluded from the calculation of the net debt limit. 
 11.17     Subd. 3.  [MUNICIPAL ISSUE FOR COMBINED ABATEMENTS.] If two 
 11.18  or more political subdivisions decide to grant abatements for 
 11.19  the same property, the municipality in which the property is 
 11.20  located may issue bonds to provide an amount equal to the sum of 
 11.21  the abatements for each of the jurisdictions that agrees.  The 
 11.22  governing body of each of the other jurisdictions must guarantee 
 11.23  and pledge to pay annually to the municipality the amount of the 
 11.24  abatement.  This pledge and guarantee is a binding obligation of 
 11.25  the political subdivision and must be included in the abatement 
 11.26  resolution. 
 11.27     Subd. 4.  [BONDED ABATEMENTS NOT SUBJECT TO REVIEW.] If 
 11.28  bonds are issued to provide advance payment of abatements under 
 11.29  this section, the amount of abatement is not subject to periodic 
 11.30  review by the political subdivision under section 2, subdivision 
 11.31  5. 
 11.32     Subd. 5.  [USE OF PROCEEDS.] The proceeds of bonds issued 
 11.33  under this section may be used to (1) pay for public 
 11.34  improvements that benefit the property, (2) to acquire and 
 11.35  convey land or other property, as provided under section 
 11.36  469.185, (3) to reimburse the property owner for the cost of 
 12.1   improvements made to the property, or (4) to pay the costs of 
 12.2   issuance of the bonds. 
 12.3      Sec. 4.  [469.1815] [ADMINISTRATIVE.] 
 12.4      Subdivision 1.  [INCLUSION IN LEVY.] The political 
 12.5   subdivision must add the estimated amount of each abatement 
 12.6   granted to its levy amount for the year under sections 275.065 
 12.7   and 275.07. 
 12.8      Subd. 2.  [PAYMENT.] The political subdivision must provide 
 12.9   in the abatement resolution the method under which the abatement 
 12.10  will be paid.  The subdivision may elect either of the following 
 12.11  methods: 
 12.12     (1) the abatement will appear in the property tax statement 
 12.13  issued for the parcel as a local property tax abatement and will 
 12.14  be deducted from the total amount payable; or 
 12.15     (2) the full property tax will be collected and the 
 12.16  political subdivision will pay the abatement to the property 
 12.17  owner, lessee, or a representative of the bondholders, as 
 12.18  provided by the abatement resolution. 
 12.19     If the abatement is pledged to the payment of bonds, the 
 12.20  political subdivision must elect the option in clause (2). 
 12.21     Sec. 5.  [REPEALER.] 
 12.22     Minnesota Statutes 1996, section 469.181, is repealed. 
 12.23     Sec. 6.  [EFFECTIVE DATE.] 
 12.24     Sections 1 to 4 are effective beginning for taxes payable 
 12.25  in 1998.  Section 5 is effective for property tax deferrals 
 12.26  granted after June 30, 1997.