HF 4668

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/28/2022 02:39pm

A bill for an act
relating to taxation; modifying the local sales tax authority for the city of
Minneapolis; modifying stadium revenues and appropriations; amending Minnesota
Statutes 2020, sections 16A.726; 16A.727; 297E.021, subdivisions 3, 4; 473J.13,
subdivisions 2, 4; Laws 1986, chapter 396, sections 4, subdivision 1, as amended;
5, as amended; repealing Minnesota Statutes 2020, section 297A.994, subdivisions
1, 2, 3, 4.

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

Section 1.

Minnesota Statutes 2020, section 16A.726, is amended to read:

16A.726 SPORTS FACILITIES TRANSFERS; APPROPRIATIONS.

(a) If state appropriation bonds have not been issued under section 16A.965, amounts
not to exceed the increased revenues estimated by the commissioner of management and
budget under section 297E.021, subdivision 2, are appropriated from the general fund to
the commissioner of management and budget to make transfers to the Minnesota Sports
Facilities Authority for stadium costs as defined under section 473J.03, subdivision 9.

(b) The commissioner shall make transfers to the Minnesota Sports Facilities Authority
required to make the state payments under section 473J.13, subdivisions 2 and 4 deleted text begin , and for
the amount of Minneapolis taxes withheld under section 297A.994, subdivision 4, paragraph
(a), clause (5) deleted text end . Amounts sufficient to make the transfers are appropriated to the commissioner
from the general fund.

(c) $2,700,000 is annually appropriated from the general fund from fiscal year 2014
through fiscal year 2033 to the commissioner of management and budget for a grant to the
city of St. Paul for the operating or capital costs of new or existing sports facilities.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2020, section 16A.727, is amended to read:

16A.727 BACKUP REVENUES; FOOTBALL STADIUM FUNDING.

(a) If the commissioner of management and budget determines that the amount of
revenues under section 297E.021, subdivision 2, for the next fiscal year, plus $20,000,000,
will be less than the amounts specified in section 297E.021, subdivision 3, clause (1), items
(i) to (iii), for that fiscal year, the commissioner may implement the revenue options
authorized in Laws 2012, chapter 299, article 6; provided that this section does not constitute
a pledge of tax revenues as security for the payment of principal and interest on appropriation
bonds issued under section 16A.965. If the commissioner determines to exercise the authority
under this section for a fiscal year, the commissioner must implement the revenue options,
as necessary, in the following order:

(1) a sports-themed lottery game under section 349A.20; and

(2) a tax on suites as provided under section 473J.14.

(b) Revenue raised under the authority granted by this section must be deposited in the
general fund.

(c) If the commissioner determines to implement one or more of the revenue options
authorized by this section, each subsequent year the commissioner must determine if the
revenue is needed and will be imposed and collected for the next fiscal year. If the
commissioner determines that one or more revenue options implemented for a fiscal year
are not needed for a subsequent fiscal year, the commissioner must terminate them in the
reverse order they were required to be implemented by paragraph (a) with the last option
implemented terminated first and so forth.

(d) Before implementing a revenue source authorized under this section, the commissioner
must report the intent to do so to the Legislative Commission on Planning and Fiscal Policy.
The commissioner must inform the commission of determinations to continue or discontinue
each revenue source for a subsequent fiscal year.

(e) The provisions of this section no longer apply after the Minnesota Sports Facilities
Authority certifies to the commissioner that it has determined that deleted text begin the revenues of the general
fund under section 297A.994, deleted text end the increased revenues under chapter 297E deleted text begin , deleted text end and other available
resources of the authority provide adequate financial security for the state and the authority.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2020, section 297E.021, subdivision 3, is amended to read:

Subd. 3.

Available revenues.

For purposes of this section, "available revenues" equals
the amount determined under subdivision 2, plus up to $20,000,000 each fiscal year from
the taxes imposed under section 290.06, subdivision 1 deleted text begin : deleted text end new text begin ,
new text end

deleted text begin (1) deleted text end reduced by the following amounts paid for the fiscal year under:

deleted text begin (i) deleted text end new text begin (1) new text end the appropriation to principal and interest on appropriation bonds under section
16A.965, subdivision 8;

deleted text begin (ii) deleted text end new text begin (2) new text end the appropriation from the general fund to make operating expense payments
under section 473J.13, subdivision 2, paragraph (b);

deleted text begin (iii) deleted text end new text begin (3) new text end the appropriation for contributions to the capital reserve fund under section
473J.13, subdivision 4, paragraph (c);

deleted text begin (iv) deleted text end new text begin (4) new text end the appropriations under Laws 2012, chapter 299, article 4, for administration
and any successor appropriation;

deleted text begin (v) deleted text end new text begin (5) new text end the reduction in revenues resulting from the sales tax exemptions under section
297A.71, subdivision 43;

deleted text begin (vi) deleted text end new text begin (6) new text end reimbursements authorized by section 473J.15, subdivision 2, paragraph (d);

deleted text begin (vii) deleted text end new text begin (7) new text end the compulsive gambling appropriations under section 297E.02, subdivision 3,
paragraph (c), and any successor appropriation; and

deleted text begin (viii) deleted text end new text begin (8) new text end the appropriation for the city of St. Paul under section 16A.726, paragraph (c) deleted text begin ;
and deleted text end new text begin .
new text end

deleted text begin (2) increased by the revenue deposited in the general fund under section 297A.994,
subdivision 4, clauses (1) to (3), for the fiscal year.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2020, section 297E.021, subdivision 4, is amended to read:

Subd. 4.

Appropriation; general reserve account.

To the extent the commissioner
determines that revenues are available under subdivision 3 for the fiscal year, those amounts
are appropriated from the general fund for deposit in a general reserve account established
by order of the commissioner of management and budget. deleted text begin Amounts in this reserve are
appropriated as necessary for application against any shortfall in the amounts deposited to
the general fund under section 297A.994 or, deleted text end After consultation with the Legislative
Commission on Planning and Fiscal Policy, amounts in this reserve are appropriated to the
commissioner of management and budget for other uses related to the stadium authorized
under section 473J.03, subdivision 8, that the commissioner deems financially prudent
including but not limited to reimbursements for capital and operating costs relating to the
stadium, refundings, and prepayment of debt. In no event, shall available revenues be
pledged, nor shall the appropriations of available revenues made by this section constitute
a pledge of available revenues as security for the prepayment of principal and interest on
the appropriation bonds under section 16A.965.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2020, section 473J.13, subdivision 2, is amended to read:

Subd. 2.

Operating expenses.

(a) The authority must pay or cause to be paid all operating
expenses of the stadium. The authority must require in the lease or use agreement with the
NFL team that the NFL team pay the authority, beginning January 1, 2016, or other date as
mutually agreed upon by the parties, toward operating costs of the stadium, $8,500,000
each year, increased by a three percent annual inflation rate.

(b) Beginning January 1, 2016, or other date as mutually agreed upon by the parties,
deleted text begin and continuing through 2020, deleted text end the state shall pay the authority operating expenses, $6,000,000
each year, increased by an annual adjustment factor. deleted text begin The payment of $6,000,000 per year
beginning in 2016 is a payment by the state, which shall be repaid to the state, using funds
as provided under section 297A.994, subdivision 4, clause (4). After 2020, the state shall
assume this payment, using funds generated in accordance with the city of Minneapolis as
specified under section 297A.994, subdivision 4, clause (3).
deleted text end

(c) The authority may establish an operating reserve to cover operating expense shortfalls
and may accept funds from any source for deposit in the operating reserve. The establishment
or funding of an authority operating reserve must not decrease the amounts required to be
paid to the authority toward operating costs under this subdivision unless agreed to by the
authority.

(d) The authority will be responsible for operating cost overruns.

(e) After the joint selection of the third-party manager or program manager, the authority
may agree with a program manager or other third-party manager of the stadium on a fixed
cost operating, management, or employment agreement with operating cost protections
under which the program manager or third-party manager assumes responsibility for stadium
operating costs and shortfalls. The agreement with the manager must require the manager
to prepare an initial and ongoing operating plan and operating budgets for approval by the
authority in consultation with the NFL team. The manager must agree to operate the stadium
in accordance with the approved operating plan and operating budget.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to repayments due on or after that date.
new text end

Sec. 6.

Minnesota Statutes 2020, section 473J.13, subdivision 4, is amended to read:

Subd. 4.

Capital improvements.

(a) The authority shall establish a capital reserve fund.
The authority shall be responsible for making, or for causing others to make, all capital
repairs, replacements, and improvements for the stadium and stadium infrastructure. The
authority shall maintain, or cause others to maintain, the stadium and stadium infrastructure
in a safe, clean, attractive, and first-class manner so as to cause them to remain in a condition
comparable to that of other comparable NFL facilities of similar design and age. The authority
shall make, or cause others to make, all necessary or appropriate repairs, renewals, and
replacements, whether structural or nonstructural, interior or exterior, ordinary or
extraordinary, foreseen or unforeseen, in a prompt and timely manner. In addition, the
authority, with approval of the NFL team, may enter into an agreement with a program
manager to perform some or all of the responsibilities of the authority in this subdivision
and to assume and accept financial liability for the cost of performing the responsibilities.

(b) The NFL team must contribute $1,500,000 each year, beginning in 2016 or as
otherwise determined for the term of the lease or use agreement to the capital reserve fund,
increased by a three percent annual inflation rate.

(c) The state shall contribute $1,500,000 each year, beginning in 2016 or as otherwise
determined for the term of the lease to the capital reserve fund. The contributions of the
state are subject to increase by an annual adjustment factor. deleted text begin The contribution under this
paragraph by the state from 2016 through 2020 shall be repaid to the state using funds in
accordance with section 297A.994, subdivision 4, clause (4).
deleted text end

(d) The authority with input from the NFL team shall develop short-term and long-term
capital funding plans and shall use those plans to guide the future capital needs of the stadium
and stadium infrastructure. The authority shall make the final determination with respect
to funding capital needs. Any capital improvement proposed by the NFL team intended
primarily to provide revenue enhancements to the NFL team shall be paid for by the NFL
team, unless otherwise agreed to with the authority.

(e) The NFL team has authority to determine the design of a retractable roof feature for
the stadium. The NFL team must cooperate with the authority in designing the feature to
minimize any additional operating cost. The design must not result in a material marginal
increase in the operating or capital costs of the stadium, considering current collections and
reserves.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to repayments due on or after that date.
new text end

Sec. 7.

Laws 1986, chapter 396, section 4, subdivision 1, as amended by Laws 2012,
chapter 299, article 3, section 2, is amended to read:

Subdivision 1.

Imposition.

Notwithstanding Minnesota Statutes, section 477A.016, or
any other contrary provision of law, ordinance, or city charter, upon approval by the city's
board of estimate and taxation by a vote of at least five members, the city of Minneapolis
may by ordinance impose an additional sales tax of up to one-half of one percent on sales
taxable pursuant to Minnesota Statutes, chapter 297A that occur within the city, and may
also by ordinance impose an additional compensating use tax of up to one-half of one percent
on uses of property within the city, the sale of which would be subject to the additional sales
tax but for the fact such property was sold outside the city. The tax is imposed on the tax
base defined in Minnesota Statutes, section 297A.99, subdivision 4, and is subject to the
exemptions and credits in Minnesota Statutes, section 297A.99, subdivisions 7 and 8.

The tax authorized by this section must deleted text begin not deleted text end be terminated deleted text begin before deleted text end new text begin at the earlier of (1) new text end
January 1, 2047 new text begin , or (2) when the city council determines that the amount received from the
tax and the tax imposed in section 5 is sufficient to pay for the project costs authorized
under subdivision 3, plus an amount sufficient to pay the costs related to issuance of any
bonds authorized under subdivision 3, including interest on the bonds new text end . new text begin The tax imposed
may also terminate at an earlier time if the city so determines by ordinance. new text end The tax must
be imposed and may be adjusted periodically by the city council in conformity with
Minnesota Statutes, section 297A.99, subdivision 12, such that the rate imposed, rounded
to the next highest one-tenth of one percent, produces revenue sufficient to finance the
purposes described in subdivisions 3 and 4, deleted text begin and in Minnesota Statutes, section 297A.994, deleted text end
but in no case may the rate exceed one-half of one percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Minneapolis and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 8.

Laws 1986, chapter 396, section 5, as amended by Laws 2001, First Special Session
chapter 5, article 12, section 87, Laws 2012, chapter 299, article 3, section 3, and Laws
2019, First Special Session chapter 6, article 6, section 5, is amended to read:

Sec. 5. LIQUOR, LODGING, AND RESTAURANT TAXES.

The city may, by resolution, levy in addition to taxes authorized by other law:

(1) a sales tax of not more than three percent on the gross receipts on retail on-sales of
intoxicating liquor and fermented malt beverages when sold at licensed on-sale liquor
establishments located within the downtown taxing area, provided that this tax may not be
imposed if sales of intoxicating liquor and fermented malt beverages are exempt from
taxation under new text begin Minnesota Statutes, new text end chapter 297A;

(2) a sales tax of not more than three percent on the gross receipts from the furnishing
for consideration of lodging for a period of less than 30 days at a hotel, motel, rooming
house, tourist court, or trailer camp located within the city by a hotel or motel which has
more than 50 rooms available for lodging; the tax imposed under this clause shall be at a
rate that, when added to the sum of the rate of all other city taxes on lodging in the city of
Minneapolis, equals 6.5 percent; and

(3) a sales tax of not more than three percent on the gross receipts on all sales of food
primarily for consumption on or off the premises by restaurants and places of refreshment
as defined by resolution of the city that occur within the downtown taxing area.

The taxes authorized by this section must deleted text begin not deleted text end be terminated deleted text begin before deleted text end new text begin at the earlier of (1) new text end
January 1, 2047 new text begin , or (2) when the city council determines that the amount received from the
tax and the tax imposed in section 4 is sufficient to pay for the project costs authorized
under section 4, subdivision 3, plus an amount sufficient to pay the costs related to issuance
of any bonds authorized under section 4, subdivision 3, including interest on the bonds new text end . new text begin The
tax imposed may also terminate at an earlier time if the city so determines by ordinance.
new text end The taxes shall be imposed and may be adjusted periodically by the city council such that
the rates imposed produce revenue sufficient, together with the tax imposed under section
4, to finance the purposes described in deleted text begin Minnesota Statutes, section 297A.994, and deleted text end section
4, subdivisions 3 and 4. These taxes shall be applied deleted text begin , first, as provided in Minnesota Statutes,
section 297A.994, subdivision 3, clauses (1) to (3), and then, deleted text end solely to pay, secure, maintain,
and fund the payment of any principal of, premium on, and interest on any bonds or any
other purposes in section 4, subdivision 3 or 4. The commissioner of revenue may enter
into appropriate agreements with the city to provide for the collection of these taxes by the
state on behalf of the city. These taxes shall be subject to the same interest, penalties, and
enforcement provisions as the taxes imposed under Minnesota Statutes, chapter 297A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of the
city of Minneapolis and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end

Sec. 9. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2020, section 297A.994, subdivisions 1, 2, 3, and 4, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 22-07244

297A.994 CITY OF MINNEAPOLIS SALES TAX; ALLOCATION OF REVENUES.

Subdivision 1.

Scope.

Notwithstanding the provisions of section 297A.99, subdivision 11, the provisions of this section govern the remittance of the proceeds of taxes imposed by the city of Minneapolis under the special law.

Subd. 2.

Definitions.

(a) For purposes of this section, the following definitions apply.

(b) "City" means the city of Minneapolis.

(c) "Special law" means Laws 1986, chapter 396, sections 4 and 5, as amended.

(d) "Tax" means the sales taxes imposed by the city under the special law.

(e) The terms defined under section 473J.03 apply for purposes of this section.

Subd. 3.

General allocation of revenues.

The commissioner shall remit the revenues from the taxes, less the deductions listed in this subdivision, to the city at least quarterly. The commissioner shall make the following deductions in the order listed before distribution to the city:

(1) refunds of any of these taxes due to taxpayers, if any;

(2) the direct and indirect costs of the department to administer, audit, and collect the tax, according to the applicable law and agreements between the commissioner and the city. For revenues from the general local sales and use tax, the commissioner must deduct a proportionate share of costs described in section 297A.99, subdivision 11; and

(3) notwithstanding the provisions of any agreement between the commissioner and the city providing for collection and remittance of these taxes, the commissioner must deposit to the general fund the amounts specified in subdivision 4.

Subd. 4.

General fund allocations.

The commissioner must retain and deposit to the general fund the following amounts, as required by subdivision 3, clause (3):

(1) for state bond debt service support beginning in calendar year 2021, and for each calendar year thereafter through calendar year 2046, periodic amounts so that not later than December 31, 2046, an aggregate amount equal to a present value of $150,000,000 has been deposited in the general fund. To determine aggregate present value, the commissioner must consult with the commissioner of management and budget regarding the present value dates, discount rate or rates, and schedules of annual amounts. The present value date or dates must be based on the date or dates bonds are sold under section 16A.965, or the date or dates other state funds, if any, are deposited into the construction fund. The discount rate or rates must be based on the true interest cost of the bonds issued under section 16A.965, or an equivalent 30-year bond index, as determined by the commissioner of management and budget. The schedule of annual amounts must be certified to the commissioner by the commissioner of management and budget and the finance officer of the city;

(2) for the capital improvement reserve appropriation to the Minnesota Sports Facilities Authority beginning in calendar year 2021, and for each calendar year thereafter through calendar year 2046, an aggregate annual amount equal to the amount paid by the state for this purpose in that calendar year under section 473J.13, subdivision 4;

(3) for the operating expense appropriation to the Minnesota Sports Facilities Authority beginning in calendar year 2021, and for each calendar year thereafter through calendar year 2046, an aggregate annual amount equal to the amount paid by the state for this purpose in that calendar year under section 473J.13, subdivision 2;

(4) for recapture of state advances for capital improvements and operating expenses for calendar years 2016 through 2020 beginning in calendar year 2021, and for each calendar year thereafter until all amounts under this clause have been paid, proportionate amounts periodically until an aggregate amount equal to the present value of all amounts paid by the state have been deposited in the general fund. To determine the present value of the amounts paid by the state to the authority and the present value of amounts deposited to the general fund under this clause, the commissioner shall consult with the commissioner of management and budget regarding the present value dates, discount rate or rates, and schedule of annual amounts. The present value dates must be based on the dates state funds are paid to the authority, or the dates the commissioner of revenue deposits taxes for purposes of this clause to the general fund. The discount rates must be based on the reasonably equivalent cost of state funds as determined by the commissioner of management and budget. The schedule of annual amounts must be revised to reflect amounts paid under section 473J.13, subdivision 2, paragraph (b), for 2016 to 2020, and subdivision 4, paragraph (c), for 2016 to 2020, and taxes deposited to the general fund from time to time under this clause, and the schedule and revised schedules must be certified to the commissioner by the commissioner of management and budget and the finance officer of the city, and are transferred as accrued from the general fund for repayment of advances made by the state to the authority; and

(5) to capture increases in taxes imposed under the special law, for the benefit of the Minnesota Sports Facilities Authority, beginning in calendar year 2013 and for each calendar year thereafter through 2046, there shall be deposited to the general fund in proportionate periodic payments in the following year, an amount equal to the following:

(i) 50 percent of the difference, if any, by which the amount of the net annual taxes for the previous year exceeds the sum of the net actual taxes in calendar year 2011 plus $1,000,000, inflated at two percent per year since 2011, minus

(ii) 25 percent of the difference, if any, by which the amount of the net annual taxes for the preceding year exceeds the sum of the net actual taxes in calendar year 2011 plus $3,000,000, inflated at two percent per year since 2011.