HF 2257

as introduced - 94th Legislature (2025 - 2026) Posted on 03/27/2025 04:10pm

A bill for an act
relating to taxation; property; modifying provisions related to exemptions for
institutions of public charity; amending Minnesota Statutes 2024, section 272.02,
subdivision 7.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 272.02, subdivision 7, is amended to read:

Subd. 7.

Institutions of public charity.

(a) Institutions of purely public charity that are
exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code
are exempt if they meet the requirements of this subdivision. In determining whether real
property is exempt under this subdivision, the following factors must be considered:

(1) whether the stated purpose of the undertaking is to be helpful to others without
immediate expectation of material reward;

(2) whether the institution of public charity is supported by material donations, gifts, or
government grants for services to the public in whole or in part;

(3) whether a material number of the recipients of the charity receive benefits or services
at reduced or no cost, or whether the organization provides services to the public that alleviate
burdens or responsibilities that would otherwise be borne by the government;

(4) whether the income received, including material gifts and donations, produces a
profit to the charitable institution that is not distributed to private interests;

(5) whether the beneficiaries of the charity are restricted or unrestricted, and, if restricted,
whether the class of persons to whom the charity is made available is one having a reasonable
relationship to the charitable objectives; and

(6) whether dividends, in form or substance, or assets upon dissolution, are not available
to private interests.

A charitable organization must satisfy the factors in clauses (1) to (6) for its property to
be exempt under this subdivision, unless there is a reasonable justification for failing to
meet the factors in clause (2), (3), or (5), and the organization provides to the assessor the
factual basis for that justification. If there is reasonable justification for failing to meet the
factors in clause (2), (3), or (5), an organization is a purely public charity under this
subdivision without meeting those factors. After an exemption is properly granted under
this subdivision, it will remain in effect unless there is a material change in facts.

(b) For purposes of this subdivision, a grant is a written instrument or electronic document
defining a legal relationship between a granting agency and a grantee when the principal
purpose of the relationship is to transfer cash or something of value to the grantee to support
a public purpose authorized by law in a general manner instead of acquiring by professional
or technical contract, purchase, lease, or barter property or services for the direct benefit or
use of the granting agency.

new text begin (c) Rental housing property does not qualify for an exemption under this subdivision
unless: (1) the use of the rental property is in furtherance of the tax-exempt charitable
purpose of the organization; and (2) the use of the rental property does not further the
tax-exempt charitable purpose of the organization solely by providing rental housing to
persons or families on the basis of the income characteristics of those persons or families.
new text end

deleted text begin (c) deleted text end new text begin (d) new text end In determining whether rental housing property qualifies for exemption under
this subdivision, the following are not gifts or donations to the owner of the rental housing:

(1) rent assistance provided by the government to or on behalf of tenants; and

(2) financing assistance or tax credits provided by the government to the owner on
condition that specific units or a specific quantity of units be set aside for persons or families
with certain income characteristics.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes payable in 2025 and
thereafter.
new text end