HF 2453

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to rural economic development; providing 
  1.3             incentives for economic development in greater 
  1.4             Minnesota; containing urban sprawl; expanding the 
  1.5             research and credit for research in certain areas of 
  1.6             the state; expanding the permitted uses of economic 
  1.7             development tax increment financing districts; 
  1.8             providing a sales tax exemption for building materials 
  1.9             for certain facilities; specifying the duration limits 
  1.10            of economic development tax increment financing 
  1.11            districts based on geographic areas; amending 
  1.12            Minnesota Statutes 1998, sections 290.068, 
  1.13            subdivisions 1 and 2; 297A.25, by adding a 
  1.14            subdivision; 469.174, by adding a subdivision; and 
  1.15            469.176, subdivisions 1b and 4c; proposing coding for 
  1.16            new law in Minnesota Statutes, chapter 116J. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18     Section 1.  [116J.423] [DESIGNATION OF ECONOMIC DEVELOPMENT 
  1.19  ZONES.] 
  1.20     Subdivision 1.  [DUTY TO DESIGNATE.] The commissioner shall 
  1.21  establish four economic development zones within the state as 
  1.22  follows: 
  1.23     (1) Zone 1 consists of the counties in the Minneapolis and 
  1.24  St. Paul metropolitan statistical area. 
  1.25     (2) Zone 2 consists of the counties of the state that are 
  1.26  within metropolitan statistical areas, other than the 
  1.27  Minneapolis and St. Paul metropolitan statistical area. 
  1.28     (3) Zone 3 consists of each county not included in zones 1 
  1.29  or 2, if more than one-half of its area meets any combination of 
  1.30  the following: 
  1.31     (i) it is within 25 miles of the boundaries of the largest 
  2.1   city located in a metropolitan statistical area, other than the 
  2.2   Minneapolis and St. Paul metropolitan statistical area; or 
  2.3      (ii) it is in the one-half of the area of the state, 
  2.4   excluding zones 1 and 2, that is nearest to the geographic 
  2.5   center of the areas of the cities of Minneapolis and St. Paul. 
  2.6      (4) Zone 4 consists of the remaining counties of the state. 
  2.7      Subd. 2.  [RULEMAKING EXEMPTION.] Designation of zones by 
  2.8   the commissioner is not an administrative rule for purposes of 
  2.9   chapter 14. 
  2.10     Subd. 3.  [DEFINITION.] "Metropolitan statistical area" 
  2.11  means metropolitan statistical area as designated by the United 
  2.12  States Bureau of the Census. 
  2.13     Sec. 2.  Minnesota Statutes 1998, section 290.068, 
  2.14  subdivision 1, is amended to read: 
  2.15     Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
  2.16  a corporation treated as an "S" corporation under section 
  2.17  290.9725, is allowed a credit against the portion of the 
  2.18  franchise tax computed under section 290.06, subdivision 1, for 
  2.19  the taxable year equal to the sum of: 
  2.20     (a) 5 percent of the first $2,000,000 of the excess (if 
  2.21  any) of 
  2.22     (1) the qualified research expenses for the taxable year, 
  2.23  over 
  2.24     (2) the base amount; and 
  2.25     (b) 2.5 percent on all of such excess expenses over 
  2.26  $2,000,000; and 
  2.27     (c) 5 percent of qualified research expenses in economic 
  2.28  development zones 3 and 4. 
  2.29     Sec. 3.  Minnesota Statutes 1998, section 290.068, 
  2.30  subdivision 2, is amended to read: 
  2.31     Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
  2.32  following terms have the meanings given.  
  2.33     (a) "Qualified research expenses" means (i) qualified 
  2.34  research expenses and basic research payments as defined in 
  2.35  section 41(b) and (e) of the Internal Revenue Code, except it 
  2.36  does not include expenses incurred for qualified research or 
  3.1   basic research conducted outside the state of Minnesota pursuant 
  3.2   to section 41(d) and (e) of the Internal Revenue Code; and (ii) 
  3.3   contributions to a nonprofit corporation established and 
  3.4   operated pursuant to the provisions of chapter 317A for the 
  3.5   purpose of promoting the establishment and expansion of business 
  3.6   in this state, provided the contributions are invested by the 
  3.7   nonprofit corporation for the purpose of providing funds for 
  3.8   small, technologically innovative enterprises in Minnesota 
  3.9   during the early stages of their development.  
  3.10     (b) "Qualified research" means qualified research as 
  3.11  defined in section 41(d) of the Internal Revenue Code, except 
  3.12  that the term does not include qualified research conducted 
  3.13  outside the state of Minnesota.  
  3.14     (c) "Base amount" means base amount as defined in section 
  3.15  41(c) of the Internal Revenue Code, except that the average 
  3.16  annual gross receipts must be calculated using Minnesota sales 
  3.17  or receipts under section 290.191 and the definitions contained 
  3.18  in clauses (a) and (b) shall apply. 
  3.19     (d) "Economic development zones" means the economic 
  3.20  development zones designated by the commissioner of trade and 
  3.21  economic development under section 116J.423. 
  3.22     Sec. 4.  Minnesota Statutes 1998, section 297A.25, is 
  3.23  amended by adding a subdivision to read: 
  3.24     Subd. 79.  [RURAL ECONOMIC DEVELOPMENT.] (a) Machinery and 
  3.25  equipment are exempt from the tax imposed under this chapter, 
  3.26  regardless of whether purchased by the owner or a contractor, 
  3.27  subcontractor, or builder, if: 
  3.28     (1) the machinery and equipment are used in a facility 
  3.29  located in economic development zone 3 or 4, as designated by 
  3.30  the commissioner of trade and economic development under section 
  3.31  116J.423; and 
  3.32     (2) the principal purpose of the facility is one of the 
  3.33  following: 
  3.34     (i) the manufacturing or production of tangible personal 
  3.35  property, including processing resulting in the change in 
  3.36  condition of the property; 
  4.1      (ii) telecommunications; 
  4.2      (iii) telemarketing; 
  4.3      (iv) provision of information services, data processing, 
  4.4   data retrieval, and similar and related services; and 
  4.5      (v) research and development related to the activities 
  4.6   listed in items (i) to (iv). 
  4.7      (b) Construction materials and supplies are exempt from tax 
  4.8   under this chapter, regardless of whether purchased by the owner 
  4.9   or a contractor, subcontractor, or builder, if the construction 
  4.10  materials and supplies are used or consumed in constructing 
  4.11  improvements to a facility that: 
  4.12     (1) qualifies under paragraph (a); 
  4.13     (2) is located in economic development zone 4, as 
  4.14  designated by the commissioner of trade and economic development 
  4.15  under section 116J.423; and 
  4.16     (3) is located within the boundaries of a statutory or home 
  4.17  rule charter city whose population does not exceed 5,000.  
  4.18     (c) Machinery, equipment, construction materials, and 
  4.19  supplies exempt under this subdivision do not qualify for 
  4.20  exemption under subdivision 42. 
  4.21     Sec. 5.  Minnesota Statutes 1998, section 469.174, is 
  4.22  amended by adding a subdivision to read: 
  4.23     Subd. 29.  [ECONOMIC DEVELOPMENT ZONES.] "Economic 
  4.24  development zones" means the zones designated by the 
  4.25  commissioner of trade and economic development under section 
  4.26  116J.423. 
  4.27     Sec. 6.  Minnesota Statutes 1998, section 469.176, 
  4.28  subdivision 1b, is amended to read: 
  4.29     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
  4.30  shall in any event be paid to the authority 
  4.31     (1) after 25 years from date of receipt by the authority of 
  4.32  the first tax increment for a mined underground space 
  4.33  development district, 
  4.34     (2) after 15 years after receipt by the authority of the 
  4.35  first increment for a renewal and renovation district, 
  4.36     (3) after 20 years after receipt by the authority of the 
  5.1   first increment for a soils condition district, 
  5.2      (4) after nine years from the date of the receipt, or 11 
  5.3   years from approval of the tax increment financing plan, 
  5.4   whichever is less, for an economic development district located 
  5.5   in economic development 
  5.6      (i) zone 1, after four years after receipt by the authority 
  5.7   of the first increment, 
  5.8      (ii) zone 2, after eight years after receipt by the 
  5.9   authority of the first increment, 
  5.10     (iii) zone 3, after 12 years after receipt by the authority 
  5.11  of the first increment, and 
  5.12     (iv) zone 4, after 16 years after receipt by the authority 
  5.13  of the first increment, 
  5.14     (5) for a housing district or a redevelopment district, 
  5.15  after 20 years from the date of receipt by the authority of the 
  5.16  first tax increment by the authority pursuant to section 
  5.17  469.175, subdivision 1, paragraph (b); or, if no provision is 
  5.18  made under section 469.175, subdivision 1, paragraph (b), after 
  5.19  25 years from the date of receipt by the authority of the first 
  5.20  increment. 
  5.21     (b) For purposes of determining a duration limit under this 
  5.22  subdivision or subdivision 1e that is based on the receipt of an 
  5.23  increment, any increments from taxes payable in the year in 
  5.24  which the district terminates shall be paid to the authority.  
  5.25  This paragraph does not affect a duration limit calculated from 
  5.26  the date of approval of the tax increment financing plan or 
  5.27  based on the recovery of costs or to a duration limit under 
  5.28  subdivision 1c.  This paragraph does not supersede the 
  5.29  restrictions on payment of delinquent taxes in subdivision 1f. 
  5.30     Sec. 7.  Minnesota Statutes 1998, section 469.176, 
  5.31  subdivision 4c, is amended to read: 
  5.32     Subd. 4c.  [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue 
  5.33  derived from tax increment from an economic development district 
  5.34  may not be used to provide improvements, loans, subsidies, 
  5.35  grants, interest rate subsidies, or assistance in any form to 
  5.36  developments consisting of buildings and ancillary facilities, 
  6.1   if more than 15 percent of the buildings and facilities 
  6.2   (determined on the basis of square footage) are used for a 
  6.3   purpose other than:  
  6.4      (1) the manufacturing or production of tangible personal 
  6.5   property, including processing resulting in the change in 
  6.6   condition of the property; 
  6.7      (2) warehousing, storage, and distribution of tangible 
  6.8   personal property, excluding retail sales; 
  6.9      (3) research and development related to the activities 
  6.10  listed in clause (1) or, (2), or (7); 
  6.11     (4) telemarketing if that activity is the exclusive use of 
  6.12  the property; 
  6.13     (5) tourism facilities; or 
  6.14     (6) qualified border retail facilities; or 
  6.15     (7) for districts located in economic development zone 3 or 
  6.16  4, telecommunications, provision of information services, data 
  6.17  processing, data retrieval, and similar and related services; 
  6.18     (8) space necessary for and related to the activities 
  6.19  listed in clauses (1) to (6) (7).  
  6.20     (b) Notwithstanding the provisions of this subdivision, 
  6.21  revenue derived from tax increment from an economic development 
  6.22  district may be used to pay for site preparation and public 
  6.23  improvements, if the following conditions are met: 
  6.24     (1) bedrock soils conditions are present in 80 percent or 
  6.25  more of the acreage of the district; 
  6.26     (2) the estimated cost of physical preparation of the site 
  6.27  exceeds the fair market value of the land before completion of 
  6.28  the preparation; and 
  6.29     (3) revenues from tax increments are expended only for the 
  6.30  additional costs of preparing the site because of unstable soils 
  6.31  and the bedrock soils condition, the additional cost of 
  6.32  installing public improvements because of unstable soils or the 
  6.33  bedrock soils condition, and reasonable administrative costs. 
  6.34     (c) Notwithstanding the provisions of this subdivision, 
  6.35  revenues derived from tax increment from an economic development 
  6.36  district may be used to provide improvements, loans, subsidies, 
  7.1   grants, interest rate subsidies, or assistance in any form for 
  7.2   up to 15,000 square feet of any separately owned commercial 
  7.3   facility located within the municipal jurisdiction of a small 
  7.4   city, if the revenues derived from increments are spent only to 
  7.5   assist the facility directly or for administrative expenses, the 
  7.6   assistance is necessary to develop the facility, and all of the 
  7.7   increments, except those for administrative expenses, are spent 
  7.8   only for activities within the district. 
  7.9      (d) For purposes of this subdivision, a qualified border 
  7.10  retail facility is a development consisting of a shopping center 
  7.11  or one or more retail stores, if the authority finds that all of 
  7.12  the following conditions are satisfied: 
  7.13     (1) the district is in a small city located within one mile 
  7.14  or less of the border of the state; 
  7.15     (2) the development is not located in the seven-county 
  7.16  metropolitan area, as defined in section 473.121, subdivision 2; 
  7.17     (3) the development will contain new buildings or will 
  7.18  substantially rehabilitate existing buildings that together 
  7.19  contain at least 25,000 square feet of retail space; and 
  7.20     (4) without the use of tax increment financing for the 
  7.21  development, the development or a similar competing development 
  7.22  will instead occur in the bordering state or province. 
  7.23     (e) A city is a small city for purposes of this subdivision 
  7.24  if the city was a small city in the year in which the request 
  7.25  for certification was made and applies for the rest of the 
  7.26  duration of the district, regardless of whether the city 
  7.27  qualifies or ceases to qualify as a small city. 
  7.28     Sec. 8.  [EFFECTIVE DATE.] 
  7.29     Section 1 is effective the day following final enactment.  
  7.30  Sections 2 and 3 are effective for taxable years beginning after 
  7.31  December 31, 1999.  Section 4 is effective for sales made after 
  7.32  June 30, 1999.  Sections 5 to 7 are effective for districts for 
  7.33  which the request for certification is made after August 1, 1999.