SF 2794

as introduced - 88th Legislature (2013 - 2014) Posted on 03/20/2014 09:34am

A bill for an act
relating to taxation; tax increment financing; providing use for certain workforce
housing; amending Minnesota Statutes 2012, sections 462A.33, subdivision
3; 469.174, subdivision 12; 469.175, subdivision 3; 469.1761, by adding a
subdivision; Minnesota Statutes 2013 Supplement, section 469.176, subdivision
4c.

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

Section 1.

Minnesota Statutes 2012, section 462A.33, subdivision 3, is amended to read:

Subd. 3.

Contribution requirement.

Fifty percent of the funds appropriated for
this section must be used for challenge grants or loans for housing proposals with financial
or in-kind contributions from nonstate resources that reduce the need for deferred loan or
grant funds from state resources. Challenge grants or loans must be used for economically
viable homeownership or rental housing proposals that address the housing needs of
the local work force.

Among comparable proposals, preference must be given to proposals that include
contributions from nonstate resources for the greatest portion of the total development
cost. Comparable proposals with contributions from local units of government or private
philanthropic, religious, or charitable organizations must be given preference in awarding
grants or loans.

For the purpose of this subdivision, a contribution may consist partially or wholly
of the premium paid for federal housing tax credits new text begin or of the provision of tax increment
financing to the project new text end .

Sec. 2.

Minnesota Statutes 2012, 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; deleted text begin or
deleted text end

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

new text begin (4) it satisfies the requirements of a workforce housing project under section
469.175, subdivision 3, paragraph (f) new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts for which the request for
certification is made after June 30, 2014.
new text end

Sec. 3.

Minnesota Statutes 2012, 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.

new text begin (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:
new text end

new text begin (1) the unemployment rate for the county is equal to or less than 90 percent of the
statewide unemployment rate for the most recent year for which data is available;
new text end

new text begin (2) the percentage of adults, aged 16 to 64, in the county who are employed exceeds
80 percent for the most recently available reporting period using data from the United
States Census Bureau or that the city is located outside of the metropolitan area, as defined
in section 473.121, subdivision 2, and has a residential postsecondary student population
equal to or greater than ten percent of its total population;
new text end

new text begin (3) the average vacancy rate for market rate residential units 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 two percent or less for at least a two-year
period;
new text end

new text begin (4) one or more businesses located in the municipality or within 15 miles of the
municipality that employ a minimum of 20 full-time equivalent employees in aggregate
have provided a written statement to the municipality indicating that the lack of available
market rate residential units has impeded their ability to recruit and hire employees; and
new text end

new text begin (5) the municipality and the development authority intend to use increments from
the district for the development of market rate residential units to serve employees of
businesses located in the municipality or surrounding area.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts for which the request for
certification is made after June 30, 2014.
new text end

Sec. 4.

Minnesota Statutes 2013 Supplement, 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; deleted text begin or
deleted text end

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

new text begin (7) a workforce housing project that satisfies the requirements of paragraph (d) new text end .

(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.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for districts for which the request for
certification is made after June 30, 2014.
new text end

Sec. 5.

Minnesota Statutes 2012, section 469.1761, is amended by adding a subdivision
to read:

new text begin Subd. 5. new text end

new text begin Income limits; MHFA challenge program. new text end

new text begin 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 under subdivision 2 or 3 for the project.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax increment financing districts
for which the request for certification is made after June 30, 2014.
new text end