SF 601

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; authorizing creation of heritage 
  1.3             and historic subdistricts within tax increment 
  1.4             financing districts; amending Minnesota Statutes 1996, 
  1.5             sections 273.1399, subdivision 6; 469.174, 
  1.6             subdivisions 4, 7, 16, 23, 24, and by adding 
  1.7             subdivisions; 469.175, subdivisions 1, 7, and by 
  1.8             adding a subdivision; 469.176, subdivisions 4e, 5, and 
  1.9             by adding a subdivision; and 469.1765, subdivisions 2, 
  1.10            3, 4, and 7. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1996, section 273.1399, 
  1.13  subdivision 6, is amended to read: 
  1.14     Subd. 6.  [EXEMPT DISTRICTS.] (a) The provisions of this 
  1.15  section do not apply to exempt tax increment financing districts 
  1.16  as specified by this subdivision. 
  1.17     (b) A tax increment financing district for an ethanol 
  1.18  production facility that satisfies all of the following 
  1.19  requirements is exempt: 
  1.20     (1) The district is an economic development district, that 
  1.21  qualifies under section 469.176, subdivision 4c, paragraph (a), 
  1.22  clause (1). 
  1.23     (2) The facility is certified by the commissioner of 
  1.24  agriculture to qualify for state payments for ethanol 
  1.25  development under section 41A.09 to the extent funds are 
  1.26  available. 
  1.27     (3) Increments from the district are used only to finance 
  1.28  the qualifying ethanol development project located in the 
  2.1   district or to pay for administrative costs of the district. 
  2.2      (4) The district is located outside of the seven-county 
  2.3   metropolitan area, as defined in section 473.121. 
  2.4      (5) The tax increment financing plan was approved by a 
  2.5   resolution of the county board. 
  2.6      (6) The exemption provided by this paragraph applies until 
  2.7   the first year after the total amount of increment for the 
  2.8   district exceeds $1,500,000.  The county auditor shall notify 
  2.9   the commissioner of revenue of the expiration of the exemption 
  2.10  by June 1 of the year in which the auditor projects the revenues 
  2.11  from increments will exceed $1,500,000.  On or before the 
  2.12  expiration of the exemption, the municipality may elect to make 
  2.13  a qualifying local contribution under paragraph (d) in lieu of 
  2.14  the state aid reduction. 
  2.15     (c) A qualified housing district is exempt. 
  2.16     (d)(1) A district is exempt if the municipality elects at 
  2.17  the time of approving the tax increment financing plan for the 
  2.18  district to make a qualifying local contribution.  To qualify 
  2.19  for the exemption in each year, the authority or the 
  2.20  municipality must make a qualifying local contribution equal to 
  2.21  the listed percentages of increment from the district or 
  2.22  subdistrict: 
  2.23     (A) for an economic development district, a housing 
  2.24  district, or a renewal and renovation district, ten percent; 
  2.25     (B) for a redevelopment district, a mined underground space 
  2.26  district, a hazardous substance subdistrict, or a soils 
  2.27  condition district, five percent. 
  2.28     (2) If the municipality elects to make a qualifying 
  2.29  contribution and fails to make the required contribution for a 
  2.30  year, the state aid reduction applies for the year.  The state 
  2.31  aid reduction equals the greater of (A) the required local 
  2.32  contribution or (B) the amount of the aid reduction that applies 
  2.33  under subdivision 3.  For a district exempt under paragraph (b), 
  2.34  no qualifying local contribution is required for years in which 
  2.35  the district is exempt. 
  2.36     (3)(A) If the sum of required local contributions for all 
  3.1   districts in the municipality exceeds two percent of city net 
  3.2   tax capacity as defined in section 477A.011, subdivision 20, for 
  3.3   a year, the municipality's total required local contribution for 
  3.4   that year is limited to two percent of net tax capacity to 
  3.5   qualify for the exemption under this subdivision.  The 
  3.6   municipality may allocate the contribution among the districts 
  3.7   on which it has made elections as it determines appropriate. 
  3.8      (B) If a municipality makes an election under this 
  3.9   subdivision for a district in a year in which item (A) applies, 
  3.10  a minimum annual qualifying contribution must be made for the 
  3.11  district equal to the lesser of 0.25 percent of city net tax 
  3.12  capacity or three percent of increment revenues.  This minimum 
  3.13  contribution applies for the life of the district for each year 
  3.14  that the restriction in item (A) applies and is in addition to 
  3.15  the contribution required by item (A). 
  3.16     (4) The amount of the local contribution must be made out 
  3.17  of unrestricted money of the authority or municipality, such as 
  3.18  the general fund, a property tax levy, or a federal or a state 
  3.19  grant-in-aid which may be spent for general government 
  3.20  purposes.  The local contribution may not be made, directly or 
  3.21  indirectly, with tax increments or developer payments as defined 
  3.22  under section 469.1766.  The local contribution must be used to 
  3.23  pay project costs and cannot be used for general government 
  3.24  purposes or for improvements or costs that the authority or 
  3.25  municipality planned to incur absent the project.  The authority 
  3.26  or municipality may request contributions from other local 
  3.27  government entities that will benefit from the district's 
  3.28  activities.  These contributions reduce the local contribution 
  3.29  required of the municipality or authority by this paragraph.  
  3.30  Cities, counties, towns, and schools may contribute to paying 
  3.31  these costs, notwithstanding any other law to the contrary. 
  3.32     (5) The municipality may make a local contribution in 
  3.33  excess of the required contribution for a year.  If it does so, 
  3.34  the municipality may credit the excess to a local contribution 
  3.35  account for the district.  The balance in the account may be 
  3.36  used to meet the requirements for qualifying local contributions 
  4.1   for later years.  No interest or investment earnings may be 
  4.2   credited or imputed to the account, except those (A) actually 
  4.3   paid by the municipality out of its unrestricted funds or by 
  4.4   another person or entity, other than a developer as used in 
  4.5   section 469.1766, and (B) used as required for a qualifying 
  4.6   local contribution. 
  4.7      (6) If the state contributes to the project costs through a 
  4.8   direct grant or similar incentive, the required local 
  4.9   contribution is reduced by one-half of the dollar amount of the 
  4.10  state grant or other similar incentive. 
  4.11     (e) A heritage and historic subdistrict is exempt. 
  4.12     Sec. 2.  Minnesota Statutes 1996, section 469.174, 
  4.13  subdivision 4, is amended to read: 
  4.14     Subd. 4.  [CAPTURED NET TAX CAPACITY.] "Captured net tax 
  4.15  capacity" means the amount by which the current net tax capacity 
  4.16  of a tax increment financing district or an extended subdistrict 
  4.17  exceeds the original net tax capacity, including the value of 
  4.18  property normally taxable as personal property by reason of its 
  4.19  location on or over property owned by a tax-exempt entity.  In 
  4.20  the case of a hazardous substance subdistrict, except an 
  4.21  extended subdistrict, "captured net tax capacity" means the 
  4.22  amount, if any, by which the lesser of (1) the original net tax 
  4.23  capacity or (2) the current net tax capacity of the portion of 
  4.24  the tax increment financing district overlying the subdistrict 
  4.25  exceeds the original net tax capacity of the subdistrict. 
  4.26     Sec. 3.  Minnesota Statutes 1996, section 469.174, 
  4.27  subdivision 7, is amended to read: 
  4.28     Subd. 7.  [ORIGINAL NET TAX CAPACITY.] (a) Except as 
  4.29  provided in paragraph (b), "original net tax capacity" means the 
  4.30  tax capacity of all taxable real property within a tax increment 
  4.31  financing district as certified by the commissioner of revenue 
  4.32  for the previous assessment year, provided that the request by 
  4.33  an authority for certification of a new tax increment financing 
  4.34  district or for the expansion of an existing district has been 
  4.35  made to the county auditor by June 30.  The original tax 
  4.36  capacity of districts for which requests are filed after June 30 
  5.1   has an original tax capacity based on the current assessment 
  5.2   year.  In any case, the original tax capacity must be determined 
  5.3   together with subsequent adjustments as set forth in section 
  5.4   469.177, subdivisions 1 and 4.  In determining the original net 
  5.5   tax capacity the net tax capacity of real property exempt from 
  5.6   taxation at the time of the request shall be zero, except for 
  5.7   real property which is tax exempt by reason of public ownership 
  5.8   by the requesting authority and which has been publicly owned 
  5.9   for less than one year prior to the date of the request for 
  5.10  certification, in which event the net tax capacity of the 
  5.11  property shall be the net tax capacity as most recently 
  5.12  determined by the commissioner of revenue.  
  5.13     (b) The original net tax capacity of any designated 
  5.14  hazardous substance site or hazardous substance subdistrict 
  5.15  shall be determined as of the date the authority certifies to 
  5.16  the county auditor that the authority has entered a 
  5.17  redevelopment or other agreement for the removal actions or 
  5.18  remedial actions specified in a development response action 
  5.19  plan, or otherwise provided funds to finance the development 
  5.20  response action plan.  The original net tax capacity equals (i) 
  5.21  the net tax capacity of the parcel or parcels in the site or 
  5.22  hazardous substance subdistrict, as most recently determined by 
  5.23  the commissioner of revenue, less (ii) the estimated costs of 
  5.24  the removal actions and remedial actions as specified in a 
  5.25  development response action plan to be undertaken with respect 
  5.26  to the parcel or parcels, (iii) but not less than zero. 
  5.27     (c) The original net tax capacity of a hazardous substance 
  5.28  site or hazardous substance subdistrict shall be increased by 
  5.29  the amount by which it was reduced pursuant to paragraph (b), 
  5.30  clause (ii), upon certification by the municipality that the 
  5.31  cost of the removal and remedial actions specified in the 
  5.32  development response action plan, except for long-term 
  5.33  monitoring and similar activities, have been paid or reimbursed. 
  5.34     (d) For purposes of this subdivision, "real property" shall 
  5.35  include any property normally taxable as personal property by 
  5.36  reason of its location on or over publicly owned property.  
  6.1      (e) The original net tax capacity of a heritage and 
  6.2   historic subdistrict shall be determined as of the date the 
  6.3   authority requests certification of the subdistrict.  The 
  6.4   original net tax capacity equals (1) the net tax capacity of the 
  6.5   parcel or parcels in the heritage and historic subdistrict, as 
  6.6   most recently determined by the commissioner of revenue, less 
  6.7   (2) the estimated costs as specified in the tax increment 
  6.8   financing plan to be undertaken with respect to the parcel or 
  6.9   parcels, (3) but not less than zero.  
  6.10     (f) The original net tax capacity of a heritage and 
  6.11  historic subdistrict shall be increased by the amount by which 
  6.12  it was reduced pursuant to paragraph (e), clause (2), upon 
  6.13  certification by the municipality that the costs specified in 
  6.14  the tax increment financing plan have been paid or reimbursed. 
  6.15     Sec. 4.  Minnesota Statutes 1996, section 469.174, 
  6.16  subdivision 16, is amended to read: 
  6.17     Subd. 16.  [DESIGNATED HAZARDOUS SUBSTANCE SITE.] 
  6.18  "Designated hazardous substance site" means any parcel or 
  6.19  parcels with respect to which the authority has certified to the 
  6.20  county auditor that the authority has entered into a 
  6.21  redevelopment or other agreement providing for the removal 
  6.22  actions or remedial actions specified in a development response 
  6.23  action plan or the authority will use other available money, 
  6.24  including without limitation tax increments, to finance the 
  6.25  removal or remedial actions.  A parcel described in the plan or 
  6.26  plan amendment may be designated for inclusion in the hazardous 
  6.27  substance subdistrict prior to approval of the development 
  6.28  action response plan on the basis of the reasonable expectation 
  6.29  of the municipality.  Such parcel may not be certified as part 
  6.30  of the hazardous substance subdistrict until the development 
  6.31  action response plan has been approved. 
  6.32     Sec. 5.  Minnesota Statutes 1996, section 469.174, 
  6.33  subdivision 23, is amended to read: 
  6.34     Subd. 23.  [HAZARDOUS SUBSTANCE SUBDISTRICT.] "Hazardous 
  6.35  substance subdistrict" or "subdistrict" means a hazardous 
  6.36  substance subdistrict created under section 469.175, subdivision 
  7.1   7. 
  7.2      Sec. 6.  Minnesota Statutes 1996, section 469.174, 
  7.3   subdivision 24, is amended to read: 
  7.4      Subd. 24.  [EXTENDED SUBDISTRICT.] "Extended subdistrict" 
  7.5   means a hazardous substance subdistrict or a heritage and 
  7.6   historic subdistrict, but only for any period during which the 
  7.7   subdistrict remains in effect after the overlying tax increment 
  7.8   district has terminated. 
  7.9      Sec. 7.  Minnesota Statutes 1996, section 469.174, is 
  7.10  amended by adding a subdivision to read: 
  7.11     Subd. 25.  [HERITAGE AND HISTORIC SUBDISTRICT.] "Heritage 
  7.12  and historic subdistrict" means a heritage and historic 
  7.13  subdistrict created under section 469.175, subdivision 9. 
  7.14     Sec. 8.  Minnesota Statutes 1996, section 469.174, is 
  7.15  amended by adding a subdivision to read: 
  7.16     Subd. 26.  [SUBDISTRICT.] "Subdistrict" means either a 
  7.17  hazardous substance subdistrict or a heritage and historic 
  7.18  subdistrict. 
  7.19     Sec. 9.  Minnesota Statutes 1996, section 469.175, 
  7.20  subdivision 1, is amended to read: 
  7.21     Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] (a) A tax 
  7.22  increment financing plan shall contain:  
  7.23     (1) a statement of objectives of an authority for the 
  7.24  improvement of a project; 
  7.25     (2) a statement as to the development program for the 
  7.26  project, including the property within the project, if any, that 
  7.27  the authority intends to acquire; 
  7.28     (3) a list of any development activities that the plan 
  7.29  proposes to take place within the project, for which contracts 
  7.30  have been entered into at the time of the preparation of the 
  7.31  plan, including the names of the parties to the contract, the 
  7.32  activity governed by the contract, the cost stated in the 
  7.33  contract, and the expected date of completion of that activity; 
  7.34     (4) identification or description of the type of any other 
  7.35  specific development reasonably expected to take place within 
  7.36  the project, and the date when the development is likely to 
  8.1   occur; 
  8.2      (5) estimates of the following:  
  8.3      (i) cost of the project, including administration expenses; 
  8.4      (ii) amount of bonded indebtedness to be incurred; 
  8.5      (iii) sources of revenue to finance or otherwise pay public 
  8.6   costs; 
  8.7      (iv) the most recent net tax capacity of taxable real 
  8.8   property within the tax increment financing district and within 
  8.9   any subdistrict; 
  8.10     (v) the estimated captured net tax capacity of the tax 
  8.11  increment financing district at completion; and 
  8.12     (vi) the duration of the tax increment financing district's 
  8.13  and any subdistrict's existence; 
  8.14     (6) statements of the authority's alternate estimates of 
  8.15  the impact of tax increment financing on the net tax capacities 
  8.16  of all taxing jurisdictions in which the tax increment financing 
  8.17  district is located in whole or in part.  For purposes of one 
  8.18  statement, the authority shall assume that the estimated 
  8.19  captured net tax capacity would be available to the taxing 
  8.20  jurisdictions without creation of the district, and for purposes 
  8.21  of the second statement, the authority shall assume that none of 
  8.22  the estimated captured net tax capacity would be available to 
  8.23  the taxing jurisdictions without creation of the district or 
  8.24  subdistrict; 
  8.25     (7) identification and description of studies and analyses 
  8.26  used to make the determination set forth in subdivision 3, 
  8.27  clause (2); and 
  8.28     (8) identification of all parcels to be included in the 
  8.29  district or any subdistrict. 
  8.30     (b) For a housing district, redevelopment district, or a 
  8.31  hazardous substance subdistrict, the authority may elect in the 
  8.32  tax increment financing plan to provide for the identification 
  8.33  of a minimum market value in the plan, development agreement, or 
  8.34  assessment agreement, and provide that increment is first 
  8.35  received by the authority when (1) the market value of the 
  8.36  improvements as determined by the assessor reaches or exceeds 
  9.1   the minimum market value, or (2) four years has elapsed from the 
  9.2   date of certification of the original net tax capacity of the 
  9.3   taxable real property in the district or subdistrict by the 
  9.4   county auditor, whichever is earlier. 
  9.5      Sec. 10.  Minnesota Statutes 1996, section 469.175, 
  9.6   subdivision 7, is amended to read: 
  9.7      Subd. 7.  [CREATION OF HAZARDOUS SUBSTANCE SUBDISTRICT; 
  9.8   RESPONSE ACTIONS.] (a) An authority which is creating or has 
  9.9   created a tax increment financing district may establish within 
  9.10  the district a hazardous substance subdistrict upon the notice 
  9.11  and after the discussion, public hearing, and findings required 
  9.12  for approval of or modification to the original plan.  The 
  9.13  geographic area of the hazardous substance subdistrict is made 
  9.14  up of any parcels in the district designated for inclusion by 
  9.15  the municipality or authority that are designated hazardous 
  9.16  substance sites, and any additional parcels in the district 
  9.17  designated for inclusion that are contiguous to the hazardous 
  9.18  substance sites, including parcels that are contiguous to the 
  9.19  site except for the interposition of a right-of-way.  Before or 
  9.20  at the time of approval of the tax increment financing plan or 
  9.21  plan modification providing for the creation of the hazardous 
  9.22  substance subdistrict, the authority must make the findings 
  9.23  under paragraphs (b) to (d), and set forth in writing the 
  9.24  reasons and supporting facts for each. 
  9.25     (b) Development or redevelopment of the site, in the 
  9.26  opinion of the authority, would not reasonably be expected to 
  9.27  occur solely through private investment and tax increment 
  9.28  otherwise available, and therefore the hazardous substance 
  9.29  district is deemed necessary. 
  9.30     (c) Other parcels that are not designated hazardous 
  9.31  substance sites are expected to be developed together with a 
  9.32  designated hazardous substance site.  
  9.33     (d) The hazardous substance subdistrict is not larger than, 
  9.34  and the period of time during which increments are elected to be 
  9.35  received is not longer than, that which is necessary in the 
  9.36  opinion of the authority to provide for the additional costs due 
 10.1   to the designated hazardous substance site. 
 10.2      (e) Upon request by an authority that has incurred expenses 
 10.3   for removal or remedial actions to implement a development 
 10.4   response action plan, the attorney general may: 
 10.5      (1) bring a civil action on behalf of the authority to 
 10.6   recover the expenses, including administrative costs and 
 10.7   litigation expenses, under section 115B.04 or other law; or 
 10.8      (2) assist the authority in bringing an action as described 
 10.9   in clause (1), by providing legal and technical advice, 
 10.10  intervening in the action, or other appropriate assistance. 
 10.11  The decision to participate in any action to recover expenses is 
 10.12  at the discretion of the attorney general. 
 10.13     (f) If the attorney general brings an action as provided in 
 10.14  paragraph (e), clause (1), the authority shall certify its 
 10.15  reasonable and necessary expenses incurred to implement the 
 10.16  development response action plan and shall cooperate with the 
 10.17  attorney general as required to effectively pursue the action.  
 10.18  The certification by the authority is prima facie evidence that 
 10.19  the expenses are reasonable and necessary.  The attorney general 
 10.20  may deduct litigation expenses incurred by the attorney general 
 10.21  from any amounts recovered in an action brought under paragraph 
 10.22  (e), clause (1).  The authority shall reimburse the attorney 
 10.23  general for litigation expenses not recovered in an action under 
 10.24  paragraph (e), clause (1), but only from the additional tax 
 10.25  increment required to be used as described in section 469.176, 
 10.26  subdivision 4e.  The authority must reimburse the attorney 
 10.27  general for litigation expenses incurred to assist in bringing 
 10.28  an action under paragraph (e), clause (2), but only from amounts 
 10.29  recovered by the authority in an action or, if the amounts are 
 10.30  insufficient, from the additional tax increment required to be 
 10.31  used as described in section 469.176, subdivision 4e.  All money 
 10.32  recovered or paid to the attorney general for litigation 
 10.33  expenses under this paragraph shall be paid to the general fund 
 10.34  of the state for deposit to the account of the attorney 
 10.35  general.  For the purposes of this section, "litigation 
 10.36  expenses" means attorney fees and costs of discovery and other 
 11.1   preparation for litigation. 
 11.2      (g) The authority shall reimburse the pollution control 
 11.3   agency for its administrative expenses incurred to review and 
 11.4   approve a development action response plan.  The authority must 
 11.5   reimburse the pollution control agency for expenses incurred for 
 11.6   any services rendered to the attorney general to support the 
 11.7   attorney general in actions brought or assistance provided under 
 11.8   paragraph (e), but only from amounts recovered by the authority 
 11.9   in an action brought under paragraph (e) or from the additional 
 11.10  tax increment required to be used as described in section 
 11.11  469.176, subdivision 4e.  All money paid to the pollution 
 11.12  control agency under this paragraph shall be deposited in the 
 11.13  environmental response, compensation and compliance fund. 
 11.14     (h) Actions taken by an authority consistent with a 
 11.15  development response action plan are deemed to be authorized 
 11.16  response actions for the purpose of section 115B.17, subdivision 
 11.17  12.  An authority that takes actions consistent with a 
 11.18  development response action plan qualifies for the defenses 
 11.19  available under sections 115B.04, subdivision 11, and 115B.05, 
 11.20  subdivision 9. 
 11.21     (i) All money recovered by an authority in an action 
 11.22  brought under paragraph (e) in excess of the amounts paid to the 
 11.23  attorney general and the pollution control agency must be 
 11.24  treated as excess increments and be distributed as provided in 
 11.25  section 469.176, subdivision 2, clause (4), to the extent the 
 11.26  removal and remedial actions were initially financed with 
 11.27  increment revenues. 
 11.28     Sec. 11.  Minnesota Statutes 1996, section 469.175, is 
 11.29  amended by adding a subdivision to read: 
 11.30     Subd. 9.  [CREATION OF HERITAGE AND HISTORIC 
 11.31  SUBDISTRICT.] (a) An authority which is creating or has created 
 11.32  a tax increment financing district may establish within the 
 11.33  district a heritage and historic subdistrict upon the notice and 
 11.34  after discussion, public hearing, and findings required for 
 11.35  approval of or modification to the original plan.  The 
 11.36  geographic area of the subdistrict shall include only those 
 12.1   parcels in the district which, in whole or in part, either: 
 12.2      (1) are listed in the National Register of Historic places 
 12.3   maintained by the Department of Interior pursuant to the 
 12.4   National Historic Preservation Act of 1966; 
 12.5      (2) contain a certified historic structure as defined in 
 12.6   section 47(c)(3)(A) of the Internal Revenue Code which has been 
 12.7   certified by the Secretary of the Interior; or 
 12.8      (3) are located in a certified local district as designated 
 12.9   by either a certified local government or a historic 
 12.10  preservation commission pursuant to the National Historic 
 12.11  Preservation Act of 1966 and whose designation is also approved 
 12.12  by the state historic preservation officer. 
 12.13     Before or at the time of approval of the tax increment 
 12.14  financing plan or plan modification providing for the creation 
 12.15  of the heritage and historic subdistrict, the authority must 
 12.16  make the findings under paragraphs (b) and (c), and set forth in 
 12.17  writing the reasons and supporting facts for each. 
 12.18     (b) Development or redevelopment of the heritage and 
 12.19  historic subdistrict, in the opinion of the authority, would not 
 12.20  reasonably be expected to occur solely through private 
 12.21  investment and tax increment otherwise available, and therefore 
 12.22  the heritage and historic subdistrict is deemed necessary. 
 12.23     (c) The heritage and historic subdistrict is not larger 
 12.24  than, and the period of time during which increments are elected 
 12.25  to be received is not longer than, that which is necessary in 
 12.26  the opinion of the authority to provide for the additional costs 
 12.27  due to the designated heritage and historic subdistrict. 
 12.28     (d) Each parcel in a heritage and historic subdistrict must 
 12.29  comply with the requirements of paragraph (a) for the duration 
 12.30  of the heritage and historic subdistrict. 
 12.31     Sec. 12.  Minnesota Statutes 1996, section 469.176, 
 12.32  subdivision 4e, is amended to read: 
 12.33     Subd. 4e.  [HAZARDOUS SUBSTANCE SUBDISTRICTS.] The 
 12.34  additional tax increment received by the municipality from a 
 12.35  hazardous substance subdistrict as a result of a reduction in 
 12.36  original net tax capacity pursuant to section 469.174, 
 13.1   subdivision 7, paragraph (b), or as a result of the extension of 
 13.2   the period for collection of tax increment from a hazardous 
 13.3   substance site or hazardous substance subdistrict provided for 
 13.4   in subdivision 1, paragraph (g), may be used only to pay or 
 13.5   reimburse the costs of:  (1) removal actions or remedial actions 
 13.6   with respect to hazardous substances or pollutants or 
 13.7   contaminants or petroleum releases affecting or which may affect 
 13.8   the designated hazardous substance site; (2) pollution testing, 
 13.9   demolition, and soil compaction correction necessitated by the 
 13.10  development response action plan for the designated hazardous 
 13.11  substance site; (3) purchase of environmental insurance or 
 13.12  deposits to a guaranty fund, relating only to liability or 
 13.13  response costs for land in the hazardous substance subdistrict; 
 13.14  and (4) related administrative and legal costs, including costs 
 13.15  of review and approval of development response action plans by 
 13.16  the pollution control agency and litigation expenses of the 
 13.17  attorney general. 
 13.18     Sec. 13.  Minnesota Statutes 1996, section 469.176, is 
 13.19  amended by adding a subdivision to read: 
 13.20     Subd. 4k.  [HERITAGE AND HISTORIC SUBDISTRICTS.] The 
 13.21  additional tax increment received by the municipality from a 
 13.22  heritage and historic subdistrict as a result of a reduction in 
 13.23  original net tax capacity pursuant to section 469.174, 
 13.24  subdivision 7, paragraph (e), may be used only to pay or 
 13.25  reimburse the costs that are: 
 13.26     (1) described in subdivision 4e; 
 13.27     (2) described in subdivision 4j; or 
 13.28     (3) eligible for a rehabilitation credit as defined in 
 13.29  section 47 of the Internal Revenue Code. 
 13.30     Sec. 14.  Minnesota Statutes 1996, section 469.176, 
 13.31  subdivision 5, is amended to read: 
 13.32     Subd. 5.  [REQUIREMENT FOR AGREEMENTS.] No more than 25 
 13.33  percent, by acreage, of the property to be acquired within a 
 13.34  project which contains a redevelopment district, or ten percent, 
 13.35  by acreage, of the property to be acquired within a project 
 13.36  which contains a housing or economic development district, as 
 14.1   set forth in the tax increment financing plan, shall at any time 
 14.2   be owned by an authority as a result of acquisition with the 
 14.3   proceeds of bonds issued pursuant to section 469.178 unless 
 14.4   prior to acquisition in excess of the percentages, the authority 
 14.5   has concluded an agreement for the development or redevelopment 
 14.6   of the property acquired and which provides recourse for the 
 14.7   authority should the development or redevelopment not be 
 14.8   completed.  This subdivision does not apply to a parcel of a 
 14.9   district that is a designated hazardous substance site 
 14.10  established under section 469.174, subdivision 16, or part of a 
 14.11  hazardous substance subdistrict established under section 
 14.12  469.175, subdivision 7, or part of a heritage and historic 
 14.13  subdistrict established under section 469.175, subdivision 9.  
 14.14     Sec. 15.  Minnesota Statutes 1996, section 469.1765, 
 14.15  subdivision 2, is amended to read: 
 14.16     Subd. 2.  [ELIGIBLE PERSON.] The authority may agree to 
 14.17  pledge money in the guaranty fund to indemnify a person whose 
 14.18  liability arises out of use, ownership, occupancy, or financing 
 14.19  of a property in the hazardous substance subdistrict or district.
 14.20     Sec. 16.  Minnesota Statutes 1996, section 469.1765, 
 14.21  subdivision 3, is amended to read: 
 14.22     Subd. 3.  [TERMS OF INDEMNITY.] The authority shall 
 14.23  determine by resolution or by agreement with the person the 
 14.24  terms and conditions under which money in the guaranty fund will 
 14.25  be used to indemnify or hold harmless the person.  The authority 
 14.26  may not agree to indemnify a person from liability for 
 14.27  contamination caused by the person.  The maximum amount that may 
 14.28  be paid from the guaranty fund with respect to properties within 
 14.29  a hazardous substance subdistrict or district is one-half of the 
 14.30  remediation and removal costs.  The maximum duration of an 
 14.31  indemnification agreement is 25 years.  An indemnification 
 14.32  agreement is subject to any other restrictions provided by this 
 14.33  section or other law. 
 14.34     Sec. 17.  Minnesota Statutes 1996, section 469.1765, 
 14.35  subdivision 4, is amended to read: 
 14.36     Subd. 4.  [FUNDING.] (a) Revenues derived from tax 
 15.1   increments and any other money available to the authority may be 
 15.2   deposited in the guaranty fund.  The municipality may 
 15.3   appropriate money to the authority to be deposited in the 
 15.4   guaranty fund. 
 15.5      (b) If a guaranty fund is established that applies to 
 15.6   property located in more than one tax increment financing 
 15.7   district or hazardous substance subdistrict, the authority shall 
 15.8   establish separate accounts for each hazardous substance 
 15.9   subdistrict and district.  The authority shall deposit all 
 15.10  revenues derived from tax increments from a hazardous substance 
 15.11  subdistrict or district in the account for that hazardous 
 15.12  substance subdistrict or district, except the following amounts 
 15.13  may be deposited in a general or other account:  (1) the portion 
 15.14  of revenue derived increments from a district, subject to 
 15.15  section 469.1763, that may be spent on activities outside of the 
 15.16  district, or (2) up to 25 percent of the revenues derived from 
 15.17  increments from districts that are not subject to section 
 15.18  469.1763 and which may be deposited in the guaranty fund under 
 15.19  the applicable tax increment financing plans.  Investment 
 15.20  earnings of money in an account must be credited to that account.
 15.21     (c) The only money which may be pledged to indemnify or 
 15.22  hold harmless a person from liability are amounts either in the 
 15.23  account for the hazardous substance subdistrict or district in 
 15.24  which the property out of which the liability arose is located 
 15.25  or in an account not dedicated to a specific hazardous substance 
 15.26  subdistrict or district. 
 15.27     Sec. 18.  Minnesota Statutes 1996, section 469.1765, 
 15.28  subdivision 7, is amended to read: 
 15.29     Subd. 7.  [FINAL DISPOSITION OF FUNDS.] At the end of the 
 15.30  period of the indemnification, all unencumbered money in the 
 15.31  guaranty fund for the hazardous substance subdistrict or 
 15.32  district must be treated as an excess increment and distributed 
 15.33  under the provisions of section 469.176, subdivision 2, 
 15.34  paragraph (a), clause (4).  If the municipality contributed 
 15.35  money to the account, other than revenues derived from 
 15.36  increments, the authority may deduct and pay to the municipality 
 16.1   a proportionate share of the unencumbered money in the account 
 16.2   before the money is distributed as an excess increment.  The 
 16.3   proportionate share is determined based on the amount of 
 16.4   contributions of nonincrements to the account relative to total 
 16.5   contributions, including increments, to the account. 
 16.6      Sec. 19.  [EFFECTIVE DATE.] 
 16.7      Sections 1 to 18 are effective for heritage and historic 
 16.8   subdistricts created after May 31, 1997.