SF 1465

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; eliminating the authority of the 
  1.3             state auditor to enforce the tax increment financing 
  1.4             laws; amending Minnesota Statutes 2002, sections 
  1.5             469.175, subdivisions 5, 6; 469.1771, subdivisions 1, 
  1.6             2a; repealing Minnesota Statutes 2002, sections 
  1.7             469.177, subdivision 11; 469.1771, subdivision 2b. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2002, section 469.175, 
  1.10  subdivision 5, is amended to read: 
  1.11     Subd. 5.  [ANNUAL DISCLOSURE.] An annual statement showing 
  1.12  for each district the information required to be reported under 
  1.13  subdivision 6, paragraph (c), clauses (1), (2), (3), (11), (12), 
  1.14  (20), and (21); the amounts of tax increment received and 
  1.15  expended in the reporting period; and any additional information 
  1.16  the authority deems necessary must be published in a newspaper 
  1.17  of general circulation in the municipality that approved the tax 
  1.18  increment financing plan.  The annual statement must inform 
  1.19  readers that additional information regarding each district may 
  1.20  be obtained from the authority, and must explain how the 
  1.21  additional information may be requested.  The authority must 
  1.22  publish the annual statement for a year no later than August 15 
  1.23  of the next year.  The authority must identify the newspaper of 
  1.24  general circulation in the municipality to which the annual 
  1.25  statement has been or will be submitted for publication and 
  1.26  provide a copy of the annual statement to the county board, the 
  2.1   county auditor, the school board, the state auditor commissioner 
  2.2   of revenue, and, if the authority is other than the 
  2.3   municipality, the governing body of the municipality on or 
  2.4   before August 1 of the year in which the statement must be 
  2.5   published.  
  2.6      The disclosure requirements imposed by this subdivision 
  2.7   apply to districts certified before, on, or after August 1, 1979.
  2.8      Sec. 2.  Minnesota Statutes 2002, section 469.175, 
  2.9   subdivision 6, is amended to read: 
  2.10     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
  2.11  auditor shall develop a uniform system of accounting and 
  2.12  financial reporting for tax increment financing districts.  The 
  2.13  system of accounting and financial reporting shall, as nearly as 
  2.14  possible: 
  2.15     (1) provide for full disclosure of the sources and uses of 
  2.16  public funds in the district; 
  2.17     (2) permit comparison and reconciliation with the affected 
  2.18  local government's accounts and financial reports; 
  2.19     (3) permit auditing of the funds expended on behalf of a 
  2.20  district, including a single district that is part of a 
  2.21  multidistrict project or that is funded in part or whole through 
  2.22  the use of a development account funded with tax increments from 
  2.23  other districts or with other public money; 
  2.24     (4) be consistent with generally accepted accounting 
  2.25  principles. 
  2.26     (b) The authority must annually submit to the state auditor 
  2.27  commissioner of revenue a financial report in compliance with 
  2.28  paragraph (a) that has been audited by an independent auditor.  
  2.29  Copies of the report must also be provided to the county auditor 
  2.30  and to the governing body of the municipality, if the authority 
  2.31  is not the municipality.  To the extent necessary to permit 
  2.32  compliance with the requirement of financial reporting, the 
  2.33  county and any other appropriate local government unit or 
  2.34  private entity must provide the necessary records or information 
  2.35  to the authority or the state auditor commissioner of revenue as 
  2.36  provided by the system of accounting and financial reporting 
  3.1   developed pursuant to paragraph (a).  The authority must submit 
  3.2   the annual report for a year on or before August 1 of the next 
  3.3   year. 
  3.4      (c) The annual financial report must also include the 
  3.5   following items: 
  3.6      (1) the original net tax capacity of the district and any 
  3.7   subdistrict under section 469.177, subdivision 1; 
  3.8      (2) the net tax capacity for the reporting period of the 
  3.9   district and any subdistrict; 
  3.10     (3) the captured net tax capacity of the district; 
  3.11     (4) any fiscal disparity deduction from the captured net 
  3.12  tax capacity under section 469.177, subdivision 3; 
  3.13     (5) the captured net tax capacity retained for tax 
  3.14  increment financing under section 469.177, subdivision 2, 
  3.15  paragraph (a), clause (1); 
  3.16     (6) any captured net tax capacity distributed among 
  3.17  affected taxing districts under section 469.177, subdivision 2, 
  3.18  paragraph (a), clause (2); 
  3.19     (7) the type of district; 
  3.20     (8) the date the municipality approved the tax increment 
  3.21  financing plan and the date of approval of any modification of 
  3.22  the tax increment financing plan, the approval of which requires 
  3.23  notice, discussion, a public hearing, and findings under 
  3.24  subdivision 4, paragraph (a); 
  3.25     (9) the date the authority first requested certification of 
  3.26  the original net tax capacity of the district and the date of 
  3.27  the request for certification regarding any parcel added to the 
  3.28  district; 
  3.29     (10) the date the county auditor first certified the 
  3.30  original net tax capacity of the district and the date of 
  3.31  certification of the original net tax capacity of any parcel 
  3.32  added to the district; 
  3.33     (11) the month and year in which the authority has received 
  3.34  or anticipates it will receive the first increment from the 
  3.35  district; 
  3.36     (12) the date the district must be decertified; 
  4.1      (13) for the reporting period and prior years of the 
  4.2   district, the actual amount received from, at least, the 
  4.3   following categories: 
  4.4      (i) tax increments paid by the captured net tax capacity 
  4.5   retained for tax increment financing under section 469.177, 
  4.6   subdivision 2, paragraph (a), clause (1), but excluding any 
  4.7   excess taxes; 
  4.8      (ii) tax increments that are interest or other investment 
  4.9   earnings on or from tax increments; 
  4.10     (iii) tax increments that are proceeds from the sale or 
  4.11  lease of property, tangible or intangible, purchased by the 
  4.12  authority with tax increments; 
  4.13     (iv) tax increments that are repayments of loans or other 
  4.14  advances made by the authority with tax increments; 
  4.15     (v) bond or loan proceeds; 
  4.16     (vi) special assessments; 
  4.17     (vii) grants; and 
  4.18     (viii) transfers from funds not exclusively associated with 
  4.19  the district; 
  4.20     (14) for the reporting period and for the prior years of 
  4.21  the district, the amount budgeted under the tax increment 
  4.22  financing plan, and the actual amount expended for, at least, 
  4.23  the following categories: 
  4.24     (i) acquisition of land and buildings through condemnation 
  4.25  or purchase; 
  4.26     (ii)  site improvements or preparation costs; 
  4.27     (iii) installation of public utilities, parking facilities, 
  4.28  streets, roads, sidewalks, or other similar public improvements; 
  4.29     (iv) administrative costs, including the allocated cost of 
  4.30  the authority; 
  4.31     (v) public park facilities, facilities for social, 
  4.32  recreational, or conference purposes, or other similar public 
  4.33  improvements; and 
  4.34     (vi) transfers to funds not exclusively associated with the 
  4.35  district; 
  4.36     (15) for properties sold to developers, the total cost of 
  5.1   the property to the authority and the price paid by the 
  5.2   developer; 
  5.3      (16) the amount of any payments and the value of any 
  5.4   in-kind benefits, such as physical improvements and the use of 
  5.5   building space, that are paid or financed with tax increments 
  5.6   and are provided to another governmental unit other than the 
  5.7   municipality during the reporting period; 
  5.8      (17) the amount of any payments for activities and 
  5.9   improvements located outside of the district that are paid for 
  5.10  or financed with tax increments; 
  5.11     (18) the amount of payments of principal and interest that 
  5.12  are made during the reporting period on any nondefeased: 
  5.13     (i) general obligation tax increment financing bonds; 
  5.14     (ii) other tax increment financing bonds; and 
  5.15     (iii) notes and pay-as-you-go contracts; 
  5.16     (19) the principal amount, at the end of the reporting 
  5.17  period, of any nondefeased: 
  5.18     (i) general obligation tax increment financing bonds; 
  5.19     (ii) other tax increment financing bonds; and 
  5.20     (iii) notes and pay-as-you-go contracts; 
  5.21     (20) the amount of principal and interest payments that are 
  5.22  due for the current calendar year on any nondefeased: 
  5.23     (i) general obligation tax increment financing bonds; 
  5.24     (ii) other tax increment financing bonds; and 
  5.25     (iii) notes and pay-as-you-go contracts; 
  5.26     (21) if the fiscal disparities contribution under chapter 
  5.27  276A or 473F for the district is computed under section 469.177, 
  5.28  subdivision 3, paragraph (a), the amount of increased property 
  5.29  taxes imposed on other properties in the municipality that 
  5.30  approved the tax increment financing plan as a result of the 
  5.31  fiscal disparities contribution; and 
  5.32     (22) whether the tax increment financing plan or other 
  5.33  governing document permits increment revenues to be expended: 
  5.34     (i) to pay bonds, the proceeds of which were or may be 
  5.35  expended on activities outside of the district; 
  5.36     (ii) for deposit into a common bond fund from which money 
  6.1   may be expended on activities located outside of the district; 
  6.2   or 
  6.3      (iii) to otherwise finance activities located outside of 
  6.4   the tax increment financing district; and 
  6.5      (23) any additional information the state auditor may 
  6.6   require. 
  6.7      (d) The commissioner of revenue shall prescribe the method 
  6.8   of calculating the increased property taxes under paragraph (c), 
  6.9   clause (21), and the form of the statement disclosing this 
  6.10  information on the annual statement under subdivision 5. 
  6.11     (e) The reporting requirements imposed by this subdivision 
  6.12  apply to districts certified before, on, and after August 1, 
  6.13  1979. 
  6.14     Sec. 3.  Minnesota Statutes 2002, section 469.1771, 
  6.15  subdivision 1, is amended to read: 
  6.16     Subdivision 1.  [ENFORCEMENT.] (a) The owner of taxable 
  6.17  property located in the city, town, school district, or county 
  6.18  in which the tax increment financing district is located may 
  6.19  bring suit for equitable relief or for damages, as provided in 
  6.20  subdivisions 2, 3, and 4, arising out of a failure of a 
  6.21  municipality or authority to comply with the provisions of 
  6.22  sections 469.174 to 469.1798, or related provisions of this 
  6.23  chapter.  The prevailing party in a suit filed under the 
  6.24  preceding sentence is entitled to costs, including reasonable 
  6.25  attorney fees. 
  6.26     (b) The state auditor may examine and audit political 
  6.27  subdivisions' use of tax increment financing.  Without previous 
  6.28  notice, the state auditor may examine or audit accounts and 
  6.29  records on a random basis as the auditor deems to be in the 
  6.30  public interest.  If the state auditor finds evidence that an 
  6.31  authority or municipality has violated a provision of the law 
  6.32  for which a remedy is provided under this section, the state 
  6.33  auditor shall forward the relevant information to the county 
  6.34  attorney.  The county attorney may bring an action to enforce 
  6.35  the provisions of sections 469.174 to 469.1798 or related 
  6.36  provisions of this chapter, for matters referred by the state 
  7.1   auditor or on behalf of the county.  If the county attorney 
  7.2   determines not to bring an action or if the county attorney has 
  7.3   not brought an action within 12 months after receipt of the 
  7.4   initial notification by the state auditor of the violation, the 
  7.5   county attorney shall notify the state auditor in writing. 
  7.6      (c) If the state auditor finds an authority is not in 
  7.7   compliance with sections 469.174 to 469.1798 or related 
  7.8   provisions of law, the auditor shall notify the governing body 
  7.9   of the municipality that approved the tax increment financing 
  7.10  district of its findings.  The governing body of the 
  7.11  municipality must respond in writing to the state auditor within 
  7.12  60 days after receiving the notification.  Its written response 
  7.13  must state whether the municipality accepts, in whole or part, 
  7.14  the auditor's findings.  If the municipality does not accept the 
  7.15  findings, the statement must indicate the basis for its 
  7.16  disagreement.  The state auditor shall annually summarize the 
  7.17  responses it receives under this section and send the summary 
  7.18  and copies of the responses to the chairs of the committees of 
  7.19  the legislature with jurisdiction over tax increment financing. 
  7.20     (d) The state auditor shall notify the attorney general in 
  7.21  writing and provide supporting materials for a violation found 
  7.22  by the auditor, if the: 
  7.23     (1) auditor receives notification from the county attorney 
  7.24  under paragraph (b) or receives no notification for a 12-month 
  7.25  period after initially notifying the county attorney and the 
  7.26  state auditor confirms with the county attorney or the 
  7.27  municipality that no action has been brought regarding the 
  7.28  matter; and 
  7.29     (2) municipality or development authority have not 
  7.30  eliminated or resolved the violation to the satisfaction of the 
  7.31  state auditor. 
  7.32  The auditor shall provide the municipality and development 
  7.33  authority a copy of the notification sent to the attorney 
  7.34  general. 
  7.35     Sec. 4.  Minnesota Statutes 2002, section 469.1771, 
  7.36  subdivision 2a, is amended to read: 
  8.1      Subd. 2a.  [SUSPENSION OF DISTRIBUTION OF TAX INCREMENT.] 
  8.2   (a) If an authority fails to make a disclosure or to submit a 
  8.3   report containing the information required by section 469.175, 
  8.4   subdivisions 5 and 6, regarding a tax increment financing 
  8.5   district within the time provided in section 469.175, 
  8.6   subdivisions 5 and 6, the state auditor commissioner of revenue 
  8.7   shall mail to the authority a written notice that it or the 
  8.8   municipality has failed to make the required disclosure or to 
  8.9   submit a required report with respect to a particular district.  
  8.10  The state auditor commissioner of revenue shall mail the notice 
  8.11  on or before the third Tuesday of August of the year in which 
  8.12  the disclosure or report was required to be made or submitted.  
  8.13  The notice must describe the consequences of failing to disclose 
  8.14  or submit a report as provided in paragraph (b).  If the state 
  8.15  auditor commissioner of revenue has not received a copy of a 
  8.16  disclosure or a report described in this paragraph on or before 
  8.17  the third Tuesday of November of the year in which the 
  8.18  disclosure or report was required to be made or submitted, the 
  8.19  state auditor commissioner of revenue shall mail a written 
  8.20  notice to the county auditor to hold the distribution of tax 
  8.21  increment from a particular district.  
  8.22     (b) Upon receiving written notice from the state auditor 
  8.23  commissioner of revenue to hold the distribution of tax 
  8.24  increment, the county auditor shall hold: 
  8.25     (1) 25 percent of the amount of tax increment that 
  8.26  otherwise would be distributed, if the distribution is made 
  8.27  after the third Friday in November but during the year in which 
  8.28  the disclosure or report was required to be made or submitted; 
  8.29  or 
  8.30     (2) 100 percent of the amount of tax increment that 
  8.31  otherwise would be distributed, if the distribution is made 
  8.32  after December 31 of the year in which the disclosure or report 
  8.33  was required to be made or submitted. 
  8.34     (c) Upon receiving the copy of the disclosure and all of 
  8.35  the reports described in paragraph (a) with respect to a 
  8.36  district regarding which the state auditor commissioner of 
  9.1   revenue has mailed to the county auditor a written notice to 
  9.2   hold distribution of tax increment, the state auditor 
  9.3   commissioner of revenue shall mail to the county auditor a 
  9.4   written notice lifting the hold and authorizing the county 
  9.5   auditor to distribute to the authority or municipality any tax 
  9.6   increment that the county auditor had held pursuant to paragraph 
  9.7   (b).  The state auditor commissioner of revenue shall mail the 
  9.8   written notice required by this paragraph within five working 
  9.9   days after receiving the last outstanding item.  The county 
  9.10  auditor shall distribute the tax increment to the authority or 
  9.11  municipality within 15 working days after receiving the written 
  9.12  notice required by this paragraph. 
  9.13     (d) Notwithstanding any law to the contrary, any interest 
  9.14  that accrues on tax increment while it is being held by the 
  9.15  county auditor pursuant to paragraph (b) is not tax increment 
  9.16  and may be retained by the county. 
  9.17     (e) For purposes of sections 469.176, subdivisions 1a to 
  9.18  1g, and 469.177, subdivision 11, tax increment being held by the 
  9.19  county auditor pursuant to paragraph (b) is considered 
  9.20  distributed to or received by the authority or municipality as 
  9.21  of the time that it would have been distributed or received but 
  9.22  for paragraph (b). 
  9.23     Sec. 5.  [REPEALER.] 
  9.24     Minnesota Statutes 2002, sections 469.177, subdivision 11; 
  9.25  and 469.1771, subdivision 2b, are repealed.