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SF 1168

as introduced - 90th Legislature (2017 - 2018) Posted on 06/21/2017 11:31am

KEY: stricken = removed, old language. underscored = added, new language.

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Current Version - as introduced

A bill for an act
relating to tax increment financing; authorizing certain workforce housing projects;
amending Minnesota Statutes 2016, sections 469.174, subdivision 12; 469.175,
subdivision 3; 469.176, subdivision 4c; 469.1761, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2016, section 469.174, subdivision 12, is amended to read:


Subd. 12.

Economic development district.

"Economic development district" means a
type of tax increment financing district which consists of any project, or portions of a project,
which the authority finds to be in the public interest because:

(1) it will discourage commerce, industry, or manufacturing from moving their operations
to another state or municipality; or

(2) it will result in increased employment in the state; or

(3) it will result in preservation and enhancement of the tax base of the state; or

(4) it satisfies the requirements of a workforce housing project under section 469.176,
subdivision 4c, paragraph (d)
.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification was made after June 30, 2017.

Sec. 2.

Minnesota Statutes 2016, section 469.175, subdivision 3, is amended to read:


Subd. 3.

Municipality approval.

(a) A county auditor shall not certify the original net
tax capacity of a tax increment financing district until the tax increment financing plan
proposed for that district has been approved by the municipality in which the district is
located. If an authority that proposes to establish a tax increment financing district and the
municipality are not the same, the authority shall apply to the municipality in which the
district is proposed to be located and shall obtain the approval of its tax increment financing
plan by the municipality before the authority may use tax increment financing. The
municipality shall approve the tax increment financing plan only after a public hearing
thereon after published notice in a newspaper of general circulation in the municipality at
least once not less than ten days nor more than 30 days prior to the date of the hearing. The
published notice must include a map of the area of the district from which increments may
be collected and, if the project area includes additional area, a map of the project area in
which the increments may be expended. The hearing may be held before or after the approval
or creation of the project or it may be held in conjunction with a hearing to approve the
project.

(b) Before or at the time of approval of the tax increment financing plan, the municipality
shall make the following findings, and shall set forth in writing the reasons and supporting
facts for each determination:

(1) that the proposed tax increment financing district is a redevelopment district, a
renewal or renovation district, a housing district, a soils condition district, or an economic
development district; if the proposed district is a redevelopment district or a renewal or
renovation district, the reasons and supporting facts for the determination that the district
meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or
subdivision 10a, must be documented in writing and retained and made available to the
public by the authority until the district has been terminated;

(2) that, in the opinion of the municipality:

(i) the proposed development or redevelopment would not reasonably be expected to
occur solely through private investment within the reasonably foreseeable future; and

(ii) the increased market value of the site that could reasonably be expected to occur
without the use of tax increment financing would be less than the increase in the market
value estimated to result from the proposed development after subtracting the present value
of the projected tax increments for the maximum duration of the district permitted by the
plan. The requirements of this item do not apply if the district is a housing district;

(3) that the tax increment financing plan conforms to the general plan for the development
or redevelopment of the municipality as a whole;

(4) that the tax increment financing plan will afford maximum opportunity, consistent
with the sound needs of the municipality as a whole, for the development or redevelopment
of the project by private enterprise;

(5) that the municipality elects the method of tax increment computation set forth in
section 469.177, subdivision 3, paragraph (b), if applicable.

(c) When the municipality and the authority are not the same, the municipality shall
approve or disapprove the tax increment financing plan within 60 days of submission by
the authority. When the municipality and the authority are not the same, the municipality
may not amend or modify a tax increment financing plan except as proposed by the authority
pursuant to subdivision 4. Once approved, the determination of the authority to undertake
the project through the use of tax increment financing and the resolution of the governing
body shall be conclusive of the findings therein and of the public need for the financing.

(d) For a district that is subject to the requirements of paragraph (b), clause (2), item
(ii), the municipality's statement of reasons and supporting facts must include all of the
following:

(1) an estimate of the amount by which the market value of the site will increase without
the use of tax increment financing;

(2) an estimate of the increase in the market value that will result from the development
or redevelopment to be assisted with tax increment financing; and

(3) the present value of the projected tax increments for the maximum duration of the
district permitted by the tax increment financing plan.

(e) For purposes of this subdivision, "site" means the parcels on which the development
or redevelopment to be assisted with tax increment financing will be located.

(f) Before or at the time of approval of the tax increment financing plan for a district to
be used to fund a workforce housing project under section 469.176, subdivision 4c, paragraph
(d), the municipality shall make the following findings and shall set forth in writing the
reasons and supporting facts for each determination:

(1) the city is located outside of the metropolitan area, as defined in section 473.121,
subdivision 2;

(2) the average vacancy rate for rental housing located in the municipality and in any
statutory or home rule charter city located within 15 miles or less of the boundaries of the
municipality has been three percent or less for at least the immediately preceding two-year
period;

(3) at least one business located in the municipality or within 15 miles of the municipality
that employs a minimum of 20 full-time equivalent employees in aggregate has provided a
written statement to the municipality indicating that the lack of available rental housing has
impeded the ability of the business to recruit and hire employees; and

(4) the municipality and the development authority intend to use increments from the
district for the development of rental housing to serve employees of businesses located in
the municipality or surrounding area.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification was made after June 30, 2017.

Sec. 3.

Minnesota Statutes 2016, section 469.176, subdivision 4c, is amended to read:


Subd. 4c.

Economic development districts.

(a) Revenue derived from tax increment
from an economic development district may not be used to provide improvements, loans,
subsidies, grants, interest rate subsidies, or assistance in any form to developments consisting
of buildings and ancillary facilities, if more than 15 percent of the buildings and facilities
(determined on the basis of square footage) are used for a purpose other than:

(1) the manufacturing or production of tangible personal property, including processing
resulting in the change in condition of the property;

(2) warehousing, storage, and distribution of tangible personal property, excluding retail
sales;

(3) research and development related to the activities listed in clause (1) or (2);

(4) telemarketing if that activity is the exclusive use of the property;

(5) tourism facilities; or

(6) space necessary for and related to the activities listed in clauses (1) to (5); or

(7) a workforce housing project that satisfies the requirements of paragraph (d).

(b) Notwithstanding the provisions of this subdivision, revenues derived from tax
increment from an economic development district may be used to provide improvements,
loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
square feet of any separately owned commercial facility located within the municipal
jurisdiction of a small city, if the revenues derived from increments are spent only to assist
the facility directly or for administrative expenses, the assistance is necessary to develop
the facility, and all of the increments, except those for administrative expenses, are spent
only for activities within the district.

(c) A city is a small city for purposes of this subdivision if the city was a small city in
the year in which the request for certification was made and applies for the rest of the
duration of the district, regardless of whether the city qualifies or ceases to qualify as a
small city.

(d) A project qualifies as a workforce housing project under this subdivision if increments
from the district are used exclusively to assist in the acquisition of property; construction
of improvements; and provision of loans or subsidies, grants, interest rate subsidies, public
infrastructure, and related financing costs for rental housing developments in the municipality,
and if the governing body of the municipality made the findings for the project required by
section 469.175, subdivision 3, paragraph (f).

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification was made after June 30, 2017.

Sec. 4.

Minnesota Statutes 2016, section 469.1761, is amended by adding a subdivision
to read:


Subd. 5.

Income limits; Minnesota Housing Finance Agency challenge program.

For a project receiving a loan or grant from the Minnesota Housing Finance Agency challenge
program under section 462A.33, the income limits under section 462A.33 are substituted
for the applicable income limits for the project under subdivision 2 or 3.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification was made after June 30, 2017.

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