HF 2070

1st Committee Engrossment - 86th Legislature (2009 - 2010) Posted on 03/19/2013 07:29pm

1.1A bill for an act

1.2relating to economic development and housing; modifying the targeted
1.3neighborhood revitalization program; creating a revolving fund; regulating tax
1.4increment financing expenditures; appropriating money; amending Minnesota
1.5Statutes 2008, sections 469.201, subdivisions 2, 4, 6, 7, 10, 11, 12; 469.202;
1.6469.203, subdivisions 1, 2, 4; 469.204, subdivision 1, by adding a subdivision;
1.7469.205; 469.207, subdivision 2; Laws 2008, chapter 366, article 5, section 37;
1.8repealing Minnesota Statutes 2008, sections 469.203, subdivision 3; 469.204,
1.9subdivisions 2, 3.
1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11    Section 1. Minnesota Statutes 2008, section 469.201, subdivision 2, is amended to read:
1.12    Subd. 2. City. "City" means a city of the first class as defined in section 410.01 and
1.13a city of the second class that is designated as an economically depressed area by the
1.14United States Department of Commerce any statutory or home rule charter city, town, or
1.15township. For each city, a port authority, housing and redevelopment authority, or other
1.16agency or instrumentality, the jurisdiction of which is the territory of the city, is included
1.17within the meaning of city.

1.18    Sec. 2. Minnesota Statutes 2008, section 469.201, subdivision 4, is amended to read:
1.19    Subd. 4. City matching money. (a) "City matching money" means the money of a
1.20city specified in a targeted revitalization program. The sources of city matching money
1.21may include:
1.22(1) money from the general fund or a special fund of a city used to implement a
1.23targeted revitalization program;
2.1(2) money paid or repaid to a city from the proceeds of a grant that a city has
2.2received from the federal government, a profit or nonprofit corporation, or another entity
2.3or individual, that is to be used to implement a targeted revitalization program;
2.4(3) tax increments received by a city under sections 469.174 to 469.179 or other law,
2.5if eligible, to be spent in the targeted neighborhood community;
2.6(4) the greater of the fair market value or the cost to the city of acquiring land,
2.7buildings, equipment, or other real or personal property that a city contributes, grants,
2.8leases, or loans to a profit or nonprofit corporation or other entity or individual, in
2.9connection with the implementation of a targeted revitalization program;
2.10(5) city money to be used to acquire, install, reinstall, repair, or improve the
2.11infrastructure facilities of a targeted neighborhood community;
2.12(6) money contributed by a city to pay issuance costs, fund bond reserves, or to
2.13otherwise provide financial support for revenue bonds or obligations issued by a city for a
2.14project or program related to the implementation of a targeted revitalization program;
2.15(7) money derived from fees received by a city in connection with its community
2.16development activities that are to be used in implementing a targeted revitalization
2.17program;
2.18(8) money derived from the apportionment to the city under section 162.14 or by
2.19special law, and expended in a targeted neighborhood community for an activity related to
2.20the targeted revitalization program;
2.21(9) administrative expenses of the city that are incurred in connection with the
2.22planning, implementation, or reporting requirements of sections 469.201 to 469.207.
2.23(b) City matching money does not include:
2.24(1) city money used to provide a service or to exercise a function that is ordinarily
2.25provided throughout the city, unless an increased level of the service or function is
2.26to be provided in a targeted neighborhood community in accordance with a targeted
2.27revitalization program;
2.28(2) the proceeds of bonds issued by the city under chapter 462C or 469 and payable
2.29solely from repayments made by one or more nongovernmental persons in consideration
2.30for the financing provided by the bonds; or
2.31(3) money given by the state to fund any part of the targeted revitalization program.

2.32    Sec. 3. Minnesota Statutes 2008, section 469.201, subdivision 6, is amended to read:
2.33    Subd. 6. Housing activities. "Housing activities" include any work or undertaking
2.34to provide housing and related services and amenities primarily for persons and families of
2.35low or moderate income. This work or undertaking may include, the planning of buildings
3.1and improvements; the acquisition of real property, which may be needed immediately
3.2to address vacancies, foreclosures, and preservation of housing now or in the future for
3.3housing purposes and the; demolition of any existing improvements; activities to address
3.4lead abatement, energy efficiencies, or other activities related to the health of a building;
3.5and the construction, reconstruction, alteration, and repair of new and existing buildings.
3.6Housing activities also include the provision of a housing rehabilitation and energy
3.7improvement loan and grant program with respect to any residential property located
3.8within the targeted neighborhood community, the cost of relocation relating to acquiring
3.9property for housing activities, and programs authorized by chapter 462C.

3.10    Sec. 4. Minnesota Statutes 2008, section 469.201, subdivision 7, is amended to read:
3.11    Subd. 7. Lost unit. "Lost unit" means a rental housing unit that has been vacant
3.12for more than six months or has been condemned for code violations, that is lost as a
3.13result of revitalization activities because it is demolished, converted to an owner-occupied
3.14unit that is not a cooperative, or converted to a nonresidential use, or because the gross
3.15rent to be charged exceeds 125 percent of the gross rent charged for the unit six months
3.16before the start of rehabilitation.

3.17    Sec. 5. Minnesota Statutes 2008, section 469.201, subdivision 10, is amended to read:
3.18    Subd. 10. Targeted neighborhood community. "Targeted neighborhood
3.19community" means an area including one or more census tracts, as determined and
3.20measured by the Bureau of Census of the United States Department of Commerce, that
3.21a city council determines in a resolution adopted under section 469.202, subdivision 1,
3.22meets the criteria of section 469.202, subdivision 2, and any additional area designated
3.23under section 469.202, subdivision 3.

3.24    Sec. 6. Minnesota Statutes 2008, section 469.201, subdivision 11, is amended to read:
3.25    Subd. 11. Targeted neighborhood community money. "Targeted neighborhood
3.26community money" means the money designated in the targeted revitalization program to
3.27be used to implement the targeted revitalization program.

3.28    Sec. 7. Minnesota Statutes 2008, section 469.201, subdivision 12, is amended to read:
3.29    Subd. 12. Targeted neighborhood community revitalization and financing
3.30program. "Targeted neighborhood community revitalization and financing program,"
3.31"revitalization program," or "program" means the targeted neighborhood community
3.32revitalization and financing program adopted in accordance with section 469.203.

4.1    Sec. 8. Minnesota Statutes 2008, section 469.202, is amended to read:
4.2469.202 DESIGNATION OF TARGETED NEIGHBORHOODS
4.3COMMUNITIES.
4.4    Subdivision 1. City authority. A city may by resolution designate a targeted
4.5neighborhoods community within its borders after adopting detailed findings that the
4.6designated neighborhoods communities meet the eligibility requirements in subdivision 2
4.7or 3.
4.8    Subd. 2. Eligibility requirements for targeted neighborhoods communities. An
4.9area within a city is eligible for designation as a targeted neighborhood community if the
4.10area meets two three of the following three four criteria:
4.11(a) The area had an unemployment rate that was twice the unemployment rate for
4.12the Minneapolis and Saint Paul standard metropolitan statistical area as determined by
4.13the most recent federal decennial census.
4.14(b) The median household income in the area was no more than half 80 percent of
4.15 the median household income for the Minneapolis and Saint Paul standard metropolitan
4.16statistical area as determined by the most recent federal decennial census.
4.17(c) The area is characterized by residential dwelling units in need of substantial
4.18rehabilitation. An area qualifies under this paragraph if 25 percent or more of the
4.19residential dwelling units are in substandard condition as determined by the city, or if 70
4.20percent or more of the residential dwelling units in the area were built before 1940 1960 as
4.21determined by the most recent federal decennial census.
4.22(d) The area is characterized by having a disproportionate number of vacant
4.23residential buildings and mortgage foreclosures. An area qualifies under this paragraph
4.24if it has either:
4.25(1) a foreclosure rate of at least 1.5 percent in 2008; or
4.26(2) a foreclosure rate in 2008 in the city or in a zip code area of the city that is at
4.27least 50 percent higher than the average foreclosure rate in the metropolitan area, as
4.28defined in section 473.121, subdivision 2. For purposes of this paragraph, "foreclosure
4.29rate" means the number of foreclosures, as indicated by sheriff sales records, divided by
4.30the number of households in the city in 2007.
4.31    Subd. 3. Additional area eligible for inclusion in targeted neighborhood
4.32community. (a) A city may add to the area designated as a targeted neighborhood
4.33community under subdivision 2 additional area extending up to four contiguous city
4.34blocks in all directions from the designated targeted neighborhood community. For the
4.35purpose of this subdivision, "city block" has the meaning determined by the city; or
5.1(b) The city may enlarge the targeted neighborhood community to include portions
5.2of a census tract that is contiguous to a targeted neighborhood community, provided that
5.3the city council first determines the additional area satisfies two three of the three four
5.4criteria in subdivision 2.

5.5    Sec. 9. Minnesota Statutes 2008, section 469.203, subdivision 1, is amended to read:
5.6    Subdivision 1. Requirements. For each targeted neighborhood community for
5.7which a city requests state financial assistance under section 469.204, the city must
5.8prepare a comprehensive revitalization and financing program that includes the following:
5.9(1) the revitalization objectives of the city for the targeted neighborhood community;
5.10(2) the specific activities or means by which the city intends to pursue and implement
5.11the revitalization objectives;
5.12(3) the extent to which the activities identified in clause (2) will benefit low-
5.13and moderate-income families, will alleviate the blighted condition of the targeted
5.14neighborhood community, or will otherwise assist in the revitalization of the targeted
5.15neighborhood community;
5.16(4) a statement of the intended outcomes to be achieved by implementation of the
5.17targeted revitalization program, how the outcomes will be measured both qualitatively and
5.18quantitatively, and the estimated time over which they will occur; and
5.19(5) a financing program and budget that identifies the financial resources necessary
5.20to implement the targeted revitalization program, including:
5.21(i) the estimated total cost to implement the targeted revitalization program;
5.22(ii) the estimated cost to implement each activity in the revitalization program
5.23identified in clause (2);
5.24(iii) the estimated amount of financial resources that will be available from all
5.25sources other than from the appropriation available under section 469.204 to implement
5.26the revitalization program, including the amount of private investment expected to result
5.27from the use of public money in the targeted neighborhood community;
5.28(iv) the estimated amount of the appropriation available under section 469.204 that
5.29will be necessary to implement the targeted revitalization program;
5.30(v) a description of the activities identified in the targeted revitalization program for
5.31which the state appropriation will be committed or spent; and
5.32(vi) a statement of how the city intends to meet the requirement for a financial
5.33contribution from city matching money in accordance with section 469.204, subdivision 3.

5.34    Sec. 10. Minnesota Statutes 2008, section 469.203, subdivision 2, is amended to read:
6.1    Subd. 2. Targeted neighborhood community participation in preparing
6.2revitalization program. A city requesting state financial assistance under section
6.3469.204 shall adopt follow a process to involve the residents of targeted neighborhoods
6.4communities in the development, drafting, and implementation of the targeted
6.5revitalization program. The process shall include the use of a citizen participation
6.6process established by the city. A description of the process must be included in the
6.7program. The process to involve residents of the targeted neighborhood community
6.8must include at least one public hearing. The city of Minneapolis shall establish the
6.9community-based process as outlined in subdivision 3. The city of St. Paul shall use
6.10the same community-based process the city used in planning, developing, drafting, and
6.11implementing the revitalization program required under Laws 1987, chapter 386, article 6,
6.12section 6. The city of Duluth shall use the same citizen participation process the city used
6.13in planning, developing, and implementing the federal funded community development
6.14program meeting in the targeted community.

6.15    Sec. 11. Minnesota Statutes 2008, section 469.203, subdivision 4, is amended to read:
6.16    Subd. 4. City approval of program. (a) Before or after adoption of a revitalization
6.17program under paragraph (b), the city must submit a preliminary program to the
6.18commissioner and the Minnesota Housing Finance Agency for their comments. The city
6.19may not adopt the revitalization program until comments have been received from the
6.20state agencies or 30 days have elapsed without response after the program was sent to
6.21them. Comments received by the city from the state agencies within the 30-day period 30
6.22days after submission of the preliminary program must be responded to in writing by the
6.23city before adoption of the program by the city.
6.24(b) The city may adopt a targeted revitalization program only after holding a public
6.25hearing after the program has been prepared. Notice of the hearing must be provided in a
6.26newspaper of general circulation in the city and in the most widely circulated community
6.27newspaper in the targeted neighborhoods not less than ten days nor more than 30 days
6.28before the date of the hearing subject to any local public notification requirements
6.29and consistent with citizen participation process established for identifying targeted
6.30communities.
6.31(c) A certification by the city that a targeted revitalization program has been
6.32approved by the city council for the targeted neighborhood community must be provided
6.33to the commissioner together with a copy of the program. A copy of the program must
6.34also be provided to the Minnesota Housing Finance Agency and the commissioner of
6.35employment and economic development.
7.1(d) A targeted revitalization program for the city may be modified at any time by
7.2the city council after a public hearing, notice of which is published in a newspaper of
7.3general circulation in the city and in the targeted neighborhood at least ten days nor
7.4more than 30 days before the date of the hearing. If the city council determines that the
7.5proposed modification is a significant modification to the program originally certified
7.6under paragraph (c), the city council shall implement the targeted revitalization program
7.7approval and certification process of this subdivision for the proposed modification.

7.8    Sec. 12. Minnesota Statutes 2008, section 469.204, subdivision 1, is amended to read:
7.9    Subdivision 1. Payment of state money. Upon receipt from a city of a certification
7.10that a revitalization program has been adopted or modified, the commissioner shall, within
7.1130 days, pay to the city the amount of state money identified as necessary to implement
7.12the revitalization program or program modification. State money may be paid to the
7.13city only to the extent that the appropriation limit for the city specified in subdivision 2
7.14is not exceeded. Once the state money has been paid to the city, it becomes targeted
7.15neighborhood community money for use by the city in accordance with an adopted
7.16revitalization program and subject only to the restrictions on its use in sections 469.201 to
7.17469.207 .

7.18    Sec. 13. Minnesota Statutes 2008, section 469.204, is amended by adding a subdivision
7.19to read:
7.20    Subd. 4. Revolving fund. A targeted community revitalization revolving fund
7.21is established in the state treasury. The fund consists of all money appropriated to the
7.22commissioner for the purposes of sections 469.201 to 469.207 and all proceeds received
7.23by the commissioner as the result of housing activities related to a targeted community
7.24revitalization program.

7.25    Sec. 14. Minnesota Statutes 2008, section 469.205, is amended to read:
7.26469.205 CITY POWERS; USES OF TARGETED NEIGHBORHOOD
7.27COMMUNITY MONEY.
7.28    Subdivision 1. Consolidation of existing powers in targeted neighborhoods
7.29communities. A city may exercise any of its corporate powers within a targeted
7.30neighborhood community. Those powers shall include, but not be limited to, all of
7.31the powers enumerated and granted to any city by chapters 462C, 469, and 474A. For
7.32the purposes of sections 469.048 to 469.068, a targeted neighborhood community is
7.33considered an industrial development district. A city may exercise the powers of sections
8.1469.048 to 469.068 in conjunction with, and in addition to, exercising the powers granted
8.2by sections 469.001 to 469.047 and chapter 462C, in order to promote and assist housing
8.3construction and rehabilitation within a targeted neighborhood community. For the
8.4purposes of section 462C.02, subdivision 9, a targeted neighborhood community is
8.5considered a "targeted area."
8.6    Subd. 2. Grants and loans. In addition to the authority granted by other law, a city
8.7may make grants, loans, and other forms of public assistance to individuals, for-profit and
8.8nonprofit corporations, and other organizations to implement a targeted revitalization
8.9program. The public assistance must contain the terms the city considers proper to
8.10implement a targeted revitalization program.
8.11    Subd. 3. Eligible uses of targeted neighborhood community money. The city may
8.12spend targeted neighborhood community money for any purpose authorized by subdivision
8.131 or 2, except that an amount equal to at least 50 percent of the state payment under section
8.14469.204 made to the city must be used for housing activities. Use of target neighborhood
8.15targeted community money must be authorized in a targeted revitalization program.

8.16    Sec. 15. Minnesota Statutes 2008, section 469.207, subdivision 2, is amended to read:
8.17    Subd. 2. Annual report. A city that begins to implement a revitalization program
8.18in a calendar year must, by March 1 of the succeeding calendar year, provide a detailed
8.19report on the revitalization program or programs being implemented in the city. The report
8.20must describe the status of the program implementation and analyze whether the intended
8.21outcomes identified in section 469.203, subdivision 1, clause (4), are being achieved. The
8.22report must include at least the following:
8.23(1) the number of housing units, including lost units, removed, created, lost,
8.24replaced, relocated, and assisted as a result of the program. The level of rent of the units
8.25and the income of the households affected must be included in the report;
8.26(2) the number and type of commercial establishments removed, created, and
8.27assisted as a result of a revitalization program. The report must include information
8.28regarding the number of new jobs created by category, whether the jobs are full time or
8.29part time, and the salary or wage levels of both new and expanded jobs in the affected
8.30commercial establishments;
8.31(3) a description of a statement of the cost of the public improvement projects that
8.32are part of the program and the number of jobs created for each $20,000 of money spent
8.33on commercial projects and applicable public improvement projects;
8.34(4) the increase in the tax capacity for the city as a result of the assistance to
8.35commercial and housing assistance; and
9.1(5) the amount of private investment that is a result of the use of public money
9.2in a targeted neighborhood community.
9.3The report must be submitted to the commissioner, the Minnesota housing finance
9.4agency, and the legislative audit commission, and must be available to the public.

9.5    Sec. 16. Laws 2008, chapter 366, article 5, section 37, is amended to read:
9.6    Sec. 37. CITY OF MINNEAPOLIS; TAX INCREMENT FINANCING
9.7DISTRICT.
9.8    Subdivision 1. Authorization. Notwithstanding the provisions of any other law,
9.9the city of Minneapolis may establish a redevelopment tax increment financing district
9.10comprised of the properties included in the existing tax increment districts in the city
9.11that are exempt under Minnesota Statutes, section 469.179, subdivision 1, and were not
9.12decertified before July 1, 2008. The district created under this section may be certified
9.13after January 1, 2010, and terminates no later than December 31, 2020. The city may
9.14create the district under this section only if it enters into an agreement with Hennepin
9.15County to pay the county annually out of the increment from this district an amount equal
9.16to the tax that would have been payable to the county on the captured tax capacity of the
9.17district had the district not been created.
9.18    Subd. 2. Special rules. The requirements for qualifying a redevelopment district
9.19under Minnesota Statutes, section 469.174, subdivision 10, do not apply to parcels located
9.20within the district. Minnesota Statutes, section 469.176, subdivisions 4j and 4l, do not
9.21apply to the district. The original tax capacity of the district is $2,731,854.
9.22    Subd. 3. Authorized expenditures. (a) Tax increment from the district may
9.23be expended only:
9.24(1) to pay principal and interest on bond obligations issued by the city of Minneapolis
9.25or the Minneapolis Community Development Agency for Target Center, including
9.26payment of principal and interest on any bonds issued to repay bonds or loans; and
9.27(2) for neighborhood revitalization purposes, as provided under the city's program
9.28established under Minnesota Statutes, section 469.1831. All such expenditures are
9.29deemed to be activities within the district under Minnesota Statutes, section 469.1763,
9.30subdivisions 2 , 3, and 4.
9.31(b) At least one-half of the expenditures must be for the purposes described in
9.32paragraph (a), clause (2). Any expenditures made as provided under paragraph (a) are
9.33deemed to satisfy the requirements of Minnesota Statutes, sections 469.174 to 469.1799.
9.34    Subd. 4. Adjusted net tax capacity. The captured tax capacity of the district must
9.35be included in the adjusted net tax capacity of the city, county, and school district for the
10.1purposes of determining local government aid, education aid, and county program aid.
10.2The county auditor shall report to the commissioner of revenue the amount of the captured
10.3tax capacity for the district at the time the assessment abstracts are filed.
10.4EFFECTIVE DATE.This section is effective upon compliance by the governing
10.5body of the city of Minneapolis with the provisions of Minnesota Statutes, section
10.6645.021, subdivision 3.

10.7    Sec. 17. APPROPRIATION.
10.8$30,000,000 is appropriated in fiscal year 2010 from the general fund to the
10.9Department of Employment and Economic Development to carry out activities under the
10.10targeted community revitalization and financing program. This appropriation is available
10.11until spent.

10.12    Sec. 18. REPEALER.
10.13Minnesota Statutes 2008, sections 469.203, subdivision 3; and 469.204, subdivisions
10.142 and 3, are repealed.