SF 2075

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

  1.1                          A bill for an act 
  1.2             relating to tax increment financing; authorizing the 
  1.3             establishment of urban density districts; amending 
  1.4             Minnesota Statutes 1998, sections 273.1399, 
  1.5             subdivision 6; 469.174, by adding a subdivision; 
  1.6             469.175, subdivision 3; 469.176, subdivision 1b, and 
  1.7             by adding a subdivision; and 469.1763, by adding a 
  1.8             subdivision. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 273.1399, 
  1.11  subdivision 6, is amended to read: 
  1.12     Subd. 6.  [EXEMPT DISTRICTS.] (a) The provisions of this 
  1.13  section do not apply to exempt tax increment financing districts 
  1.14  as specified by this subdivision. 
  1.15     (b) A tax increment financing district for an ethanol 
  1.16  production facility that satisfies all of the following 
  1.17  requirements is exempt: 
  1.18     (1) The district is an economic development district, that 
  1.19  qualifies under section 469.176, subdivision 4c, paragraph (a), 
  1.20  clause (1). 
  1.21     (2) The facility is certified by the commissioner of 
  1.22  agriculture to qualify for state payments for ethanol 
  1.23  development under section 41A.09 to the extent funds are 
  1.24  available. 
  1.25     (3) Increments from the district are used only to finance 
  1.26  the qualifying ethanol development project located in the 
  1.27  district or to pay for administrative costs of the district. 
  2.1      (4) The district is located outside of the seven-county 
  2.2   metropolitan area, as defined in section 473.121. 
  2.3      (5) The tax increment financing plan was approved by a 
  2.4   resolution of the county board. 
  2.5      (6) The exemption provided by this paragraph applies until 
  2.6   the first year after the total amount of increment for the 
  2.7   district exceeds $1,500,000.  The county auditor shall notify 
  2.8   the commissioner of revenue of the expiration of the exemption 
  2.9   by June 1 of the year in which the auditor projects the revenues 
  2.10  from increments will exceed $1,500,000.  On or before the 
  2.11  expiration of the exemption, the municipality may elect to make 
  2.12  a qualifying local contribution under paragraph (d) in lieu of 
  2.13  the state aid reduction. 
  2.14     (c) A qualified housing district is exempt. 
  2.15     (d)(1) A district is exempt if the municipality elects at 
  2.16  the time of approving the tax increment financing plan for the 
  2.17  district to make a qualifying local contribution.  To qualify 
  2.18  for the exemption in each year, the authority or the 
  2.19  municipality must make a qualifying local contribution equal to 
  2.20  the listed percentages of increment from the district or 
  2.21  subdistrict: 
  2.22     (A) for an economic development district, a housing 
  2.23  district, or a renewal and renovation district, ten percent; 
  2.24     (B) for a redevelopment district, a mined underground space 
  2.25  district, a hazardous substance subdistrict, or a soils 
  2.26  condition district, or an urban density district, five percent. 
  2.27     (2) If the municipality elects to make a qualifying 
  2.28  contribution and fails to make the required contribution for a 
  2.29  year, the state aid reduction applies for the year.  The state 
  2.30  aid reduction equals the greater of (A) the required local 
  2.31  contribution or (B) the amount of the aid reduction that applies 
  2.32  under subdivision 3.  For a district exempt under paragraph (b), 
  2.33  no qualifying local contribution is required for years in which 
  2.34  the district is exempt. 
  2.35     (3)(A) If the sum of required local contributions for all 
  2.36  districts in the municipality exceeds two percent of city net 
  3.1   tax capacity as defined in section 477A.011, subdivision 20, for 
  3.2   a year, the municipality's total required local contribution for 
  3.3   that year is limited to two percent of net tax capacity to 
  3.4   qualify for the exemption under this subdivision.  The 
  3.5   municipality may allocate the contribution among the districts 
  3.6   on which it has made elections as it determines appropriate. 
  3.7      (B) If a municipality makes an election under this 
  3.8   subdivision for a district in a year in which item (A) applies, 
  3.9   a minimum annual qualifying contribution must be made for the 
  3.10  district equal to the lesser of 0.25 percent of city net tax 
  3.11  capacity or three percent of increment revenues.  This minimum 
  3.12  contribution applies for the life of the district for each year 
  3.13  that the restriction in item (A) applies and is in addition to 
  3.14  the contribution required by item (A). 
  3.15     (4) The amount of the local contribution must be made out 
  3.16  of unrestricted money of the authority or municipality, such as 
  3.17  the general fund, a property tax levy, or a federal or a state 
  3.18  grant-in-aid which may be spent for general government 
  3.19  purposes.  The local contribution may not be made, directly or 
  3.20  indirectly, with tax increments or developer payments as defined 
  3.21  under section 469.1766.  The local contribution must be used to 
  3.22  pay project costs and cannot be used for general government 
  3.23  purposes or for improvements or costs that the authority or 
  3.24  municipality planned to incur absent the project.  The authority 
  3.25  or municipality may request contributions from other local 
  3.26  government entities that will benefit from the district's 
  3.27  activities.  These contributions reduce the local contribution 
  3.28  required of the municipality or authority by this paragraph.  
  3.29  Cities, counties, towns, and schools may contribute to paying 
  3.30  these costs, notwithstanding any other law to the contrary. 
  3.31     (5) The municipality may make a local contribution in 
  3.32  excess of the required contribution for a year.  If it does so, 
  3.33  the municipality may credit the excess to a local contribution 
  3.34  account for the district.  The balance in the account may be 
  3.35  used to meet the requirements for qualifying local contributions 
  3.36  for later years.  No interest or investment earnings may be 
  4.1   credited or imputed to the account, except those (A) actually 
  4.2   paid by the municipality out of its unrestricted funds or by 
  4.3   another person or entity, other than a developer as used in 
  4.4   section 469.1766, and (B) used as required for a qualifying 
  4.5   local contribution. 
  4.6      (6) If the state contributes to the project costs through a 
  4.7   direct grant or similar incentive, the required local 
  4.8   contribution is reduced by one-half of the dollar amount of the 
  4.9   state grant or other similar incentive. 
  4.10     (e) An urban density district is exempt if at least 15 
  4.11  percent of the revenue generated from tax increment in any year 
  4.12  is deposited in the housing development account of the authority 
  4.13  and expended according to the tax increment financing plan.  The 
  4.14  authority must identify in the plan the housing activities that 
  4.15  will be assisted by the housing development account.  Housing 
  4.16  activities may include rehabilitation, acquisition, demolition, 
  4.17  and financing of new or existing single-family or multifamily 
  4.18  housing.  Housing activities listed in the plan need not be 
  4.19  located within the district or project area but must be 
  4.20  activities that meet the requirements of a qualified housing 
  4.21  district under section 273.1399 or the requirements of section 
  4.22  469.1761, subdivision 2. 
  4.23     Sec. 2.  Minnesota Statutes 1998, section 469.174, is 
  4.24  amended by adding a subdivision to read: 
  4.25     Subd. 10b.  [URBAN DENSITY DISTRICT.] (a) "Urban density 
  4.26  district" means a type of tax increment financing district 
  4.27  consisting of a project, or portions of a project, within which 
  4.28  the authority finds by resolution that: 
  4.29     (1) one or more of the following conditions exist: 
  4.30     (i) parcels consisting of 70 percent of the area of the 
  4.31  district are occupied by improvements, and the improvements as a 
  4.32  whole impede development of the district for higher density use 
  4.33  because of inadequate street layout, incompatible land use 
  4.34  relationships, low density of buildings or dwelling units, 
  4.35  obsolete buildings requiring substantial renovation or clearance 
  4.36  in order to permit higher density use, or other identified 
  5.1   conditions that prevent higher density development; or 
  5.2      (ii) the parcels are eligible for inclusion in a soils 
  5.3   condition district; 
  5.4      (2) public water, sewer, and roads are currently available 
  5.5   to the exterior boundary of the district; 
  5.6      (3) all the parcels in the district are within a transit 
  5.7   zone as defined in section 473.3915 at the time of approval of 
  5.8   the tax increment financing plan; 
  5.9      (4) the municipality has elected to participate in the 
  5.10  local housing incentive account under section 473.254; and 
  5.11     (5) the proposed development will create density in the 
  5.12  district, measured by housing units per acre or floor area per 
  5.13  acre, that is at least 200 percent of existing density in the 
  5.14  district. 
  5.15     (b) For purposes of determining whether parcels are 
  5.16  occupied by improvements, or whether noncontiguous areas 
  5.17  qualify, the provisions of subdivision 10, paragraphs (c) and 
  5.18  (d), apply. 
  5.19     (c) For purposes of this section, "improvements" means 
  5.20  buildings, streets, utilities, or other physical improvements on 
  5.21  or in the land. 
  5.22     (d) A parcel is located in a transit zone for the purposes 
  5.23  of paragraph (a), clause (3), if any portion of the parcel lies 
  5.24  within the zone.  
  5.25     Sec. 3.  Minnesota Statutes 1998, section 469.175, 
  5.26  subdivision 3, is amended to read: 
  5.27     Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
  5.28  not certify the original net tax capacity of a tax increment 
  5.29  financing district until the tax increment financing plan 
  5.30  proposed for that district has been approved by the municipality 
  5.31  in which the district is located.  If an authority that proposes 
  5.32  to establish a tax increment financing district and the 
  5.33  municipality are not the same, the authority shall apply to the 
  5.34  municipality in which the district is proposed to be located and 
  5.35  shall obtain the approval of its tax increment financing plan by 
  5.36  the municipality before the authority may use tax increment 
  6.1   financing.  The municipality shall approve the tax increment 
  6.2   financing plan only after a public hearing thereon after 
  6.3   published notice in a newspaper of general circulation in the 
  6.4   municipality at least once not less than ten days nor more than 
  6.5   30 days prior to the date of the hearing.  The published notice 
  6.6   must include a map of the area of the district from which 
  6.7   increments may be collected and, if the project area includes 
  6.8   additional area, a map of the project area in which the 
  6.9   increments may be expended.  The hearing may be held before or 
  6.10  after the approval or creation of the project or it may be held 
  6.11  in conjunction with a hearing to approve the project.  Before or 
  6.12  at the time of approval of the tax increment financing plan, the 
  6.13  municipality shall make the following findings, and shall set 
  6.14  forth in writing the reasons and supporting facts for each 
  6.15  determination: 
  6.16     (1) that the proposed tax increment financing district is a 
  6.17  redevelopment district, a renewal or renovation district, an 
  6.18  urban density district, a mined underground space development 
  6.19  district, a housing district, a soils condition district, or an 
  6.20  economic development district; if the proposed district is a 
  6.21  redevelopment district or, a renewal or renovation district, or 
  6.22  an urban density district, the reasons and supporting facts for 
  6.23  the determination that the district meets the criteria of 
  6.24  section 469.174, subdivision 10, paragraph (a), clauses (1) and 
  6.25  (2), or subdivision 10a, or subdivision 10b, must be documented 
  6.26  in writing and retained and made available to the public by the 
  6.27  authority until the district has been terminated. 
  6.28     (2) that the proposed development or redevelopment, in the 
  6.29  opinion of the municipality, would not reasonably be expected to 
  6.30  occur solely through private investment within the reasonably 
  6.31  foreseeable future and that the increased market value of the 
  6.32  site that could reasonably be expected to occur without the use 
  6.33  of tax increment financing would be less than the increase in 
  6.34  the market value estimated to result from the proposed 
  6.35  development after subtracting the present value of the projected 
  6.36  tax increments for the maximum duration of the district 
  7.1   permitted by the plan.  The requirements of this clause do not 
  7.2   apply if the district is a qualified housing district, as 
  7.3   defined in section 273.1399, subdivision 1. 
  7.4      (3) that the tax increment financing plan conforms to the 
  7.5   general plan for the development or redevelopment of the 
  7.6   municipality as a whole. 
  7.7      (4) that the tax increment financing plan will afford 
  7.8   maximum opportunity, consistent with the sound needs of the 
  7.9   municipality as a whole, for the development or redevelopment of 
  7.10  the project by private enterprise. 
  7.11     (5) that the municipality elects the method of tax 
  7.12  increment computation set forth in section 469.177, subdivision 
  7.13  3, clause (b), if applicable. 
  7.14     When the municipality and the authority are not the same, 
  7.15  the municipality shall approve or disapprove the tax increment 
  7.16  financing plan within 60 days of submission by the authority, or 
  7.17  the plan shall be deemed approved.  When the municipality and 
  7.18  the authority are not the same, the municipality may not amend 
  7.19  or modify a tax increment financing plan except as proposed by 
  7.20  the authority pursuant to subdivision 4.  Once approved, the 
  7.21  determination of the authority to undertake the project through 
  7.22  the use of tax increment financing and the resolution of the 
  7.23  governing body shall be conclusive of the findings therein and 
  7.24  of the public need for the financing. 
  7.25     Sec. 4.  Minnesota Statutes 1998, section 469.176, 
  7.26  subdivision 1b, is amended to read: 
  7.27     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
  7.28  shall in any event be paid to the authority 
  7.29     (1) after 25 years from date of receipt by the authority of 
  7.30  the first tax increment for a mined underground space 
  7.31  development district, 
  7.32     (2) after 15 years after receipt by the authority of the 
  7.33  first increment for a renewal and renovation district, 
  7.34     (3) after 20 years after receipt by the authority of the 
  7.35  first increment for a soils condition district, 
  7.36     (4) after nine years from the date of the receipt, or 11 
  8.1   years from approval of the tax increment financing plan, 
  8.2   whichever is less, for an economic development district, 
  8.3      (5) for a housing district or a redevelopment district, 
  8.4   after 20 years from the date of receipt by the authority of the 
  8.5   first tax increment by the authority pursuant to section 
  8.6   469.175, subdivision 1, paragraph (b); or, if no provision is 
  8.7   made under section 469.175, subdivision 1, paragraph (b), after 
  8.8   25 years from the date of receipt by the authority of the first 
  8.9   increment, 
  8.10     (6) after 25 years from the date of receipt by the 
  8.11  authority of the first tax increment for an urban density 
  8.12  district. 
  8.13     (b) For purposes of determining a duration limit under this 
  8.14  subdivision or subdivision 1e that is based on the receipt of an 
  8.15  increment, any increments from taxes payable in the year in 
  8.16  which the district terminates shall be paid to the authority.  
  8.17  This paragraph does not affect a duration limit calculated from 
  8.18  the date of approval of the tax increment financing plan or 
  8.19  based on the recovery of costs or to a duration limit under 
  8.20  subdivision 1c.  This paragraph does not supersede the 
  8.21  restrictions on payment of delinquent taxes in subdivision 1f. 
  8.22     Sec. 5.  Minnesota Statutes 1998, section 469.176, is 
  8.23  amended by adding a subdivision to read: 
  8.24     Subd. 4k.  [URBAN DENSITY DISTRICTS.] At least 90 percent 
  8.25  of the revenues derived from tax increments from an urban 
  8.26  density district must be used to provide assistance to 
  8.27  developments that meet the requirements in section 469.174, 
  8.28  subdivision 10b, paragraph (a), clause (5).  These costs 
  8.29  include, but are not limited to, acquiring properties, 
  8.30  demolition and rehabilitation of structures, clearing of the 
  8.31  land, removal of hazardous substances or remediation necessary 
  8.32  to development of the land, and installation of utilities, 
  8.33  roads, sidewalks, and parking facilities for the site.  The 
  8.34  allocated administrative expenses of the authority, including 
  8.35  the costs of preparation of a development action response plan, 
  8.36  may be included in the qualifying costs. 
  9.1      Sec. 6.  Minnesota Statutes 1998, section 469.1763, is 
  9.2   amended by adding a subdivision to read: 
  9.3      Subd. 6.  [URBAN DENSITY DISTRICTS.] In the case of urban 
  9.4   density districts, "ten years" is substituted for "five years" 
  9.5   in subdivision 3, and "11th year" is substituted for "sixth 
  9.6   year" in subdivision 4. 
  9.7      Sec. 7.  [EFFECTIVE DATE.] 
  9.8      Sections 1 to 6 are effective the day following final 
  9.9   enactment.