HF 2821

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

  1.1                          A bill for an act 
  1.2             relating to taxes; defining terms; clarifying 
  1.3             responsibility for decertifying tax increment 
  1.4             financing districts; clarifying duration of tax 
  1.5             increment financing reporting requirements; providing 
  1.6             remedies for failure to file tax increment financing 
  1.7             reports; clarifying when municipalities lose 
  1.8             distributions of payments to county auditors; amending 
  1.9             Minnesota Statutes 1996, sections 469.174, by adding a 
  1.10            subdivision; 469.175, subdivisions 5, 6, 6a, and by 
  1.11            adding a subdivision; 469.177, by adding a 
  1.12            subdivision; and 469.1771, subdivision 5, and by 
  1.13            adding a subdivision. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15     Section 1.  Minnesota Statutes 1996, section 469.174, is 
  1.16  amended by adding a subdivision to read: 
  1.17     Subd. 28.  [DECERTIFICATION.] "Decertify" or 
  1.18  "decertification" means the termination of a tax increment 
  1.19  financing district which occurs when the county auditor removes 
  1.20  all remaining parcels from the district. 
  1.21     Sec. 2.  Minnesota Statutes 1996, section 469.175, 
  1.22  subdivision 5, is amended to read: 
  1.23     Subd. 5.  [ANNUAL DISCLOSURE.] (a) For all tax increment 
  1.24  financing districts, whether created prior or subsequent to 
  1.25  August 1, 1979, on or before July 1 of each year, The authority 
  1.26  shall annually submit to the county board, the county auditor, 
  1.27  the school board, state auditor and, if the authority is other 
  1.28  than the municipality, the governing body of the municipality, a 
  1.29  report of the status of the district.  The report shall include 
  2.1   the following information:  the amount and the source of revenue 
  2.2   in the account, the amount and purpose of expenditures from the 
  2.3   account, the amount of any pledge of revenues, including 
  2.4   principal and interest on any outstanding bonded indebtedness, 
  2.5   the original net tax capacity of the district and any 
  2.6   subdistrict, the captured net tax capacity retained by the 
  2.7   authority, the captured net tax capacity shared with other 
  2.8   taxing districts, the tax increment received, and any additional 
  2.9   information necessary to demonstrate compliance with any 
  2.10  applicable tax increment financing plan.  The authority must 
  2.11  submit the annual report for a year on or before August 1 of the 
  2.12  next year. 
  2.13     (b) An annual statement showing the tax increment received 
  2.14  and expended in that year, the original net tax capacity, 
  2.15  captured net tax capacity, amount of outstanding bonded 
  2.16  indebtedness, the amount of the district's and any subdistrict's 
  2.17  increments paid to other governmental bodies, the amount paid 
  2.18  for administrative costs, the sum of increments paid, directly 
  2.19  or indirectly, for activities and improvements located outside 
  2.20  of the district, and any additional information the authority 
  2.21  deems necessary shall be published in a newspaper of general 
  2.22  circulation in the municipality.  If the fiscal disparities 
  2.23  contribution under chapter 276A or 473F for the district is 
  2.24  computed under section 469.177, subdivision 3, paragraph (a), 
  2.25  the annual statement must disclose that fact and indicate the 
  2.26  amount of increased property tax imposed on other properties in 
  2.27  the municipality as a result of the fiscal disparities 
  2.28  contribution.  The commissioner of revenue shall prescribe the 
  2.29  form of this statement and the method for calculating the 
  2.30  increased property taxes.  The authority must publish the annual 
  2.31  statement for a year no later than July 1 August 15 of the next 
  2.32  year.  The authority must provide identification of the 
  2.33  newspaper of general circulation in the municipality to which 
  2.34  the annual statement has been or will be submitted for 
  2.35  publication and a copy of the annual statement to the state 
  2.36  auditor by the time it submits it for publication on or before 
  3.1   August 1 of the year in which the statement must be published.  
  3.2      (c) The disclosure and reporting requirements imposed by 
  3.3   this subdivision apply to districts certified before, on, or 
  3.4   after August 1, 1979. 
  3.5      Sec. 3.  Minnesota Statutes 1996, section 469.175, 
  3.6   subdivision 6, is amended to read: 
  3.7      Subd. 6.  [FINANCIAL REPORTING.] (a) The state auditor 
  3.8   shall develop a uniform system of accounting and financial 
  3.9   reporting for tax increment financing districts.  The system of 
  3.10  accounting and financial reporting shall, as nearly as possible: 
  3.11     (1) provide for full disclosure of the sources and uses of 
  3.12  public funds in the district; 
  3.13     (2) permit comparison and reconciliation with the affected 
  3.14  local government's accounts and financial reports; 
  3.15     (3) permit auditing of the funds expended on behalf of a 
  3.16  district, including a single district that is part of a 
  3.17  multidistrict project or that is funded in part or whole through 
  3.18  the use of a development account funded with tax increments from 
  3.19  other districts or with other public money; 
  3.20     (4) be consistent with generally accepted accounting 
  3.21  principles. 
  3.22     (b) The authority must annually submit to the state 
  3.23  auditor, on or before July 1, a financial report in compliance 
  3.24  with paragraph (a).  Copies of the report must also be provided 
  3.25  to the county and school district boards and to the governing 
  3.26  body of the municipality, if the authority is not the 
  3.27  municipality.  To the extent necessary to permit compliance with 
  3.28  the requirement of financial reporting, the county and any other 
  3.29  appropriate local government unit or private entity must provide 
  3.30  the necessary records or information to the authority or the 
  3.31  state auditor as provided by the system of accounting and 
  3.32  financial reporting developed pursuant to paragraph (a).  The 
  3.33  authority must submit the annual report for a year on or before 
  3.34  August 1 of the next year. 
  3.35     (c) The annual financial report must also include the 
  3.36  following items: 
  4.1      (1) the original net tax capacity of the district and any 
  4.2   subdistrict; 
  4.3      (2) the captured net tax capacity of the district, 
  4.4   including the amount of any captured net tax capacity shared 
  4.5   with other taxing districts; 
  4.6      (3) for the reporting period and for the duration of the 
  4.7   district, the amount budgeted under the tax increment financing 
  4.8   plan, and the actual amount expended for, at least, the 
  4.9   following categories: 
  4.10     (i) acquisition of land and buildings through condemnation 
  4.11  or purchase; 
  4.12     (ii)  site improvements or preparation costs; 
  4.13     (iii) installation of public utilities, parking facilities, 
  4.14  streets, roads, sidewalks, or other similar public improvements; 
  4.15     (iv) administrative costs, including the allocated cost of 
  4.16  the authority; 
  4.17     (v) public park facilities, facilities for social, 
  4.18  recreational, or conference purposes, or other similar public 
  4.19  improvements; 
  4.20     (4) for properties sold to developers, the total cost of 
  4.21  the property to the authority and the price paid by the 
  4.22  developer; and 
  4.23     (5) the amount of increments rebated or paid to developers 
  4.24  or property owners for privately financed improvements or other 
  4.25  qualifying costs. 
  4.26     (d) The reporting requirements imposed by this subdivision 
  4.27  apply to districts certified before, on, and after August 1, 
  4.28  1979. 
  4.29     Sec. 4.  Minnesota Statutes 1996, section 469.175, 
  4.30  subdivision 6a, is amended to read: 
  4.31     Subd. 6a.  [REPORTING REQUIREMENTS.] (a) The municipality 
  4.32  must annually report to the state auditor the following amounts 
  4.33  for the entire municipality: 
  4.34     (1) the total principal amount of nondefeased tax increment 
  4.35  financing bonds that are outstanding at the end of the previous 
  4.36  calendar year; and 
  5.1      (2) the total annual amount of principal and interest 
  5.2   payments that are due for the current calendar year on (i) 
  5.3   general obligation tax increment financing bonds, and (ii) other 
  5.4   tax increment financing bonds. 
  5.5      (b) The municipality must annually report to the state 
  5.6   auditor the following amounts for each tax increment financing 
  5.7   district located in the municipality: 
  5.8      (1) the type of district, whether economic development, 
  5.9   redevelopment, housing, soils condition, mined underground 
  5.10  space, or hazardous substance site; 
  5.11     (2) the date on which the district is required to be 
  5.12  decertified; 
  5.13     (3) the amount of any payments and the value of in-kind 
  5.14  benefits, such as physical improvements and the use of building 
  5.15  space, that are financed with revenues derived from increments 
  5.16  and are provided to another governmental unit (other than the 
  5.17  municipality) during the preceding calendar year; 
  5.18     (4) the tax increment revenues for taxes payable in the 
  5.19  current calendar year; 
  5.20     (5) whether the tax increment financing plan or other 
  5.21  governing document permits increment revenues to be expended (i) 
  5.22  to pay bonds, the proceeds of which were or may be expended on 
  5.23  activities located outside of the district, (ii) for deposit 
  5.24  into a common fund from which money may be expended on 
  5.25  activities located outside of the district, or (iii) to 
  5.26  otherwise finance activities located outside of the tax 
  5.27  increment financing district; and 
  5.28     (6) any additional information that the state auditor may 
  5.29  require.  
  5.30     (c) The report required by this subdivision must be filed 
  5.31  with the state auditor on or before July 1 of each year.  The 
  5.32  municipality must submit the annual report for a year required 
  5.33  by this subdivision on or before August 1 of the next year. 
  5.34     (d) The state auditor may provide for combining the reports 
  5.35  required by this subdivision and subdivisions 5 and 6 so that 
  5.36  only one report is made for each year to the auditor. 
  6.1      (e) This section applies to districts certified before, on, 
  6.2   and after August 1, 1979. 
  6.3      Sec. 5.  Minnesota Statutes 1996, section 469.175, is 
  6.4   amended by adding a subdivision to read: 
  6.5      Subd. 6b.  [DURATION OF DISCLOSURE AND REPORTING 
  6.6   REQUIREMENTS.] The disclosure and reporting requirements imposed 
  6.7   by subdivisions 5, 6, and 6a apply with respect to a tax 
  6.8   increment financing district beginning with the annual 
  6.9   disclosure and reports for the year in which the original net 
  6.10  tax capacity of the district was certified and ending with the 
  6.11  annual disclosure and reports for the year in which both of the 
  6.12  following events have occurred: 
  6.13     (1) decertification of the district; and 
  6.14     (2) expenditure or return to the county auditor of all 
  6.15  remaining revenues derived from tax increments paid by 
  6.16  properties in the district. 
  6.17     Sec. 6.  Minnesota Statutes 1996, section 469.177, is 
  6.18  amended by adding a subdivision to read: 
  6.19     Subd. 12.  [DECERTIFICATION OF TAX INCREMENT FINANCING 
  6.20  DISTRICT.] The county auditor shall decertify a tax increment 
  6.21  financing district when the earliest of the following times is 
  6.22  reached: 
  6.23     (1) the applicable maximum duration limit under section 
  6.24  469.176, subdivisions 1a to 1g; 
  6.25     (2) the maximum duration limit, if any, provided by the 
  6.26  municipality pursuant to section 469.176, subdivision 1; 
  6.27     (3) the time of decertification specified in section 
  6.28  469.1761, subdivision 4, if the commissioner of revenue issues 
  6.29  an order of noncompliance and the maximum duration limit for 
  6.30  economic development districts has been exceeded; 
  6.31     (4) upon completion of the required actions to allow 
  6.32  decertification under section 469.1763, subdivision 4; or 
  6.33     (5) upon receipt by the county auditor of a written request 
  6.34  for decertification from the authority that requested 
  6.35  certification of the original net tax capacity of the district 
  6.36  or its successor. 
  7.1      Sec. 7.  Minnesota Statutes 1996, section 469.1771, is 
  7.2   amended by adding a subdivision to read: 
  7.3      Subd. 2a.  [SUSPENSION OF DISTRIBUTION OF TAX 
  7.4   INCREMENT.] (a) If an authority fails to make a disclosure or to 
  7.5   submit a report containing the information required by section 
  7.6   469.175, subdivisions 5 and 6, regarding a tax increment 
  7.7   financing district within the time provided in section 469.175, 
  7.8   subdivisions 5 and 6, no tax increment shall be paid to the 
  7.9   authority or municipality for the district until the authority 
  7.10  complies with the disclosure and reporting requirements.  If a 
  7.11  municipality fails to submit a report containing the information 
  7.12  required by section 469.175, subdivision 6a, regarding a tax 
  7.13  increment financing district within the time provided in section 
  7.14  469.175, subdivision 6a, no tax increment shall be paid to the 
  7.15  authority or municipality for the district until the 
  7.16  municipality complies with the reporting requirements.  Upon 
  7.17  receiving written notice from the state auditor regarding a 
  7.18  failure to disclose or report, the county auditor shall hold any 
  7.19  tax increment that otherwise would be distributed to the 
  7.20  authority or municipality for the district until the county 
  7.21  auditor receives written notice from the state auditor to 
  7.22  distribute the tax increment. 
  7.23     (b) Notwithstanding any law to the contrary, any interest 
  7.24  that accrues on tax increment while it is being held by the 
  7.25  county auditor pursuant to paragraph (a) is not tax increment 
  7.26  and may be retained by the county. 
  7.27     (c) For purposes of sections 469.176, subdivisions 1a to 
  7.28  1g, and 469.177, subdivision 11, tax increment being held by the 
  7.29  county auditor pursuant to paragraph (a) shall be considered 
  7.30  distributed to or received by the authority or municipality as 
  7.31  of the time that it would have been distributed or received but 
  7.32  for paragraph (a). 
  7.33     Sec. 8.  Minnesota Statutes 1996, section 469.1771, 
  7.34  subdivision 5, is amended to read: 
  7.35     Subd. 5.  [DISPOSITION OF PAYMENTS.] If the authority does 
  7.36  not have sufficient increments or other available money to make 
  8.1   a payment required by this section, the municipality that 
  8.2   approved the district must use any available money to make the 
  8.3   payment including the levying of property taxes.  Money received 
  8.4   by the county auditor under this section must be distributed as 
  8.5   excess increments under section 469.176, subdivision 2, 
  8.6   paragraph (a), clause (4)., except that if the county auditor 
  8.7   receives the payment after (1) 60 days from a municipality's 
  8.8   receipt of the state auditor's notification of noncompliance 
  8.9   requiring the payment, or (2) the commencement of an action by 
  8.10  the county attorney to compel the payment, then no distributions 
  8.11  may be made to the municipality that approved the tax increment 
  8.12  financing district. 
  8.13     Sec. 9.  [EFFECTIVE DATE.] 
  8.14     Sections 1, 5, and 6 apply to tax increment financing 
  8.15  districts certified before, on, or after August 1, 1979. 
  8.16     Sections 2, 3, 4, and 7 are effective for disclosures 
  8.17  required to be made and reports required to be submitted on or 
  8.18  before a date beginning August 1, 1999.  
  8.19     Section 8 is effective the day following final enactment.