Minnesota Session Laws - 1985, Regular Session

  

                         Laws of Minnesota 1985 

                        CHAPTER 230-H.F.No. 1645
           An act relating to economic development; creating a 
          special enterprise zone for a large manufacturing 
          facility; providing for the taxation of the facility; 
          authorizing the issuance of bonds; providing 
          assistance to locate a large manufacturing facility in 
          the state; appropriating money; amending Minnesota 
          Statutes 1984, sections 273.1312, subdivisions 3 and 
          4; and 273.1314, subdivisions 3, 4, 6, 7, 8, 9, and by 
          adding a subdivision.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                               ARTICLE 1 

           SPECIAL ENTERPRISE ZONE, DESIGNATION AND TAXATION 
    Section 1.  Minnesota Statutes 1984, section 273.1312, 
subdivision 3, is amended to read:  
    Subd. 3.  [DURATION.] The designation of an area as an 
enterprise zone shall be effective for seven years after the 
date of designation except designation of areas pursuant to 
subdivision 4, paragraph (c), clause (4), shall be effective for 
30 years after the date of designation.  
    Sec. 2.  Minnesota Statutes 1984, section 273.1312, 
subdivision 4, is amended to read:  
    Subd. 4.  [ELIGIBILITY REQUIREMENTS.] An area is eligible 
for designation if the following requirements are met:  
    (a) The boundary of the zone or each subdivision of the 
zone is continuous and includes vacant or underutilized lands or 
buildings.  
    (b) The area of the zone is less than 400 acres.  The total 
market value of the taxable property contained in the zone at 
the time of application is less than $100,000 per acre or 
$300,000 per acre for an area located wholly within a first 
class city.  A zone which is located in a city of the third or 
fourth class may be divided into two to four separate 
subdivisions which need not be contiguous with each other.  Each 
subdivision must contain not less than 100 acres.  The 
restrictions provided by this paragraph shall not apply to areas 
designated pursuant to paragraph (c), clause (2) or, (3), or (4).
    (c) (1) The proposed zone is located within an economic 
hardship area, as established by meeting two or more of the 
following criteria:  
    (A) the number of residential housing units within the area 
which are substandard is 15 percent or greater under criteria 
prescribed by the commissioner using data collected by the 
bureau of the census or data submitted by the municipality and 
approved by the commissioner;  
    (B) the percentage of households within the area that fall 
below the poverty level, as determined by the United States 
census bureau, is 20 percent or greater;  
     (C) (i) the total market value of commercial and industrial 
property in the area has declined over three of the preceding 
five years, or (ii) the total market value of all property in 
the area has declined or it has increased less than 10.5 percent 
over the preceding three-year period;  
     (D) for the last full year for which data is available, the 
per capita income in the area was 90 percent or less of the per 
capita income for the state, excluding standard metropolitan 
statistical areas, or for the standard metropolitan statistical 
area if the area is located in a standard metropolitan 
statistical area;  
     (E) (i) the current rate of unemployment in the area is 120 
percent of the statewide average unemployment for the last 
12-month period for which verifiable figures are available, or 
(ii) the total number of employment positions has declined by 
ten percent during the last 18 months; or 
     (2) The area is so designated under federal legislation 
providing for federal tax benefits to investors, employers or 
employees in enterprise zones; or 
    (3) The area consists of a statutory or home rule charter 
city with a contiguous border with a city in another state or 
with a contiguous border with a city in Minnesota which has a 
contiguous border with a city in another state and the area is 
determined by the commissioner to be economically or fiscally 
distressed; or 
     (4) The area is to be utilized by a single corporation for 
a new manufacturing facility that has a projected employment of 
no less than 5,000 people, a projected capital investment of at 
least $3,000,000,000, and the commissioner determines the direct 
and indirect economic benefits of the new facility justify the 
designation of the area as a special enterprise zone. 
    For purposes of this subdivision, an economic hardship area 
must have a population under the most recent federal decennial 
census of at least (i) 4,000 if any of the area is located 
wholly or partly within a standard metropolitan statistical 
area, or (ii) 2,500 for an area located outside of a standard 
metropolitan statistical area, or (iii) no minimum in the case 
of an area located in an Indian reservation; except that, in the 
case of two or more cities seeking designation of an enterprise 
zone under a joint exercise of power pursuant to section 471.59, 
the minimum population required by this provision shall not 
exceed the sum of the populations of those cities.  
     Sec. 3.  Minnesota Statutes 1984, section 273.1314, 
subdivision 3, is amended to read:  
     Subd. 3.  [APPLICATIONS; CONTENTS.] The applications for 
designation as an enterprise zone shall contain, at a minimum:  
     (a) verification that the area is eligible for designation 
pursuant to section 273.1312;  
     (b) a development plan, outlining the types of investment 
and development within the zone that the municipality expects to 
take place if the incentives and tax reductions specified under 
paragraphs (d) and (e) are provided, the specific investment or 
development reasonably expected to take place, any commitments 
obtained from businesses, the projected number of jobs that will 
be created, the anticipated wage level of those jobs, and any 
proposed targeting of the jobs created, including affirmative 
action plans if any;  
      (c) the municipality's proposed means of assessing the 
effectiveness of the development plan or other programs to be 
implemented within the zone once they have been implemented;  
     (d) the specific form of tax reductions, authorized by 
subdivision 9, proposed to be granted to businesses, the 
duration of the tax reductions, an estimate of the total state 
taxes likely to be foregone as a result, and a statement of the 
relationship between the proposed tax reductions and the type of 
investment or development sought or expected to be attracted to 
or maintained in the area if it is designated as a zone;  
     (e) the municipality's contribution to the zone as required 
by subdivision 6;  
    (f) any additional information required by the 
commissioner; and 
    (g) any additional information which the municipality 
considers relevant to the designation of the area as an 
enterprise zone.  
    Paragraph (b) does not apply to an application for 
designation under section 273.1312, subdivision 4, paragraph 
(c), clause (3).  
     Paragraphs (b), (c), and (e) do not apply to an application 
for designation under section 273.1312, subdivision 4, paragraph 
(c), clause (4). 
     Sec. 4.  Minnesota Statutes 1984, section 273.1314, 
subdivision 4, is amended to read:  
    Subd. 4.  [EVALUATION OF APPLICATIONS.] The commissioner 
shall review and evaluate the applications submitted pursuant to 
subdivision 3 and shall determine whether each area is eligible 
for designation as an enterprise zone.  If the department of 
energy and economic development no longer exists as presently 
constituted, the commissioner shall consult with the successor 
to the responsibilities of the planning division of that 
department in making this determination.  In determining whether 
an area is eligible under section 273.1312, subdivision 4, 
paragraph (c), if unemployment, employment, income or other 
necessary data are not available for the area from the federal 
departments of labor or commerce or the state demographer, the 
commissioner may rely upon other data submitted by the 
municipality if he determines it is statistically reliable or 
accurate.  The commissioner, in conjunction with the 
commissioner of revenue, shall prepare an estimate of the amount 
of state tax revenue which will be foregone for each application 
if the area is designated as a zone.  
    Except for designations under section 273.1312, subdivision 
4, paragraph (c), clause (4), on or before October 1 of each 
year, the commissioner shall submit to the legislative advisory 
commission a list of the areas eligible for designation as 
enterprise zones, along with his recommendations for designation 
and supporting documentation.  In making recommendations for 
designation, the commissioner shall consider and evaluate the 
applications pursuant to the following criteria: 
      (a) the pervasiveness of poverty, unemployment, and general 
distress in the area; 
      (b) the extent of chronic abandonment, deterioration or 
reduction in value of commercial, industrial or residential 
structures in the area and the extent of property tax arrearages 
in the area; 
      (c) the prospects for new investment and economic 
development in the area with the tax reductions proposed in the 
application relative to the state and local tax revenue which 
would be foregone;  
     (d) the competing needs of other areas of the state;  
      (e) the municipality's proposed use of other state and 
federal development funds or programs to increase the 
probability of new investment and development occurring;  
      (f) the extent to which the projected development in the 
zone will provide employment to residents of the economic 
hardship area, and particularly individuals who are unemployed 
or who are economically disadvantaged as defined in the federal 
Job Training Partnership Act of 1982, 96 Statutes at Large 1322; 
     (g) the funds available pursuant to subdivision 8; and 
     (h) other relevant factors which he specifies in his 
recommendations.  
      The commissioner shall submit a separate list of the areas 
entitled to designation as enterprise zones under section 
273.1312, subdivision 4, paragraph (c), clauses (2) and (3), 
along with his recommendations for the amount of funds to be 
allocated to each area.  
     Sec. 5.  Minnesota Statutes 1984, section 273.1314, is 
amended by adding a subdivision to read:  
     Subd. 4a.  [SPECIAL ENTERPRISE ZONES.] Applications for a 
special enterprise zone designation under section 273.1312, 
subdivision 4, paragraph (c), clause (4), may be submitted at 
any time.  A special enterprise zone under that clause may be 
designated by the commissioner no later than September 30, 
1985.  In making the decision whether to designate an area a 
special enterprise zone the commissioner shall consider the:  
    (1) number of jobs that will be created in the zone; 
    (2) size of the private investment in the zone; and 
    (3) number of jobs that will be created inside and outside 
of the zone because of the manufacturing facility located in the 
zone.  
    The procedure for granting property tax relief contained in 
section 273.1313 is not applicable to a special enterprise zone 
designated under section 273.1312, subdivision 4, paragraph (c), 
clause (4), and the property in the special enterprise zone 
shall not be reclassified as employment property. 
    For the period of 30 years after the designation of the 
special enterprise zone or until the zone is abolished, 
whichever is earlier, the value of the property in a special 
enterprise zone shall not be included for the purpose of 
computing any tax, charge, or levy imposed by the state or a 
local unit of government or in the determination of the payment 
of any aid or credit by the state or a local unit of government, 
including, without limitations:  
    (a) the determination of any mill levy under the laws of 
this state, local charter or ordinance, or other law;  
    (b) the determination of market value of any municipality 
or the areawide tax base for the purpose of distributions under 
chapter 473F relating to municipal revenue distribution;  
    (c) the determination of state aid for schools under 
chapter 124; or 
    (d) the determination of local government aid under chapter 
477A.  
    Sec. 6.  Minnesota Statutes 1984, section 273.1314, 
subdivision 6, is amended to read:  
    Subd. 6.  [LOCAL CONTRIBUTION.] No area may be designated 
as an enterprise zone unless the municipality agrees to make a 
qualifying local contribution in the form of a property tax 
reduction for employment property as provided by section 
273.1313 for any business qualifying for a state tax reduction 
pursuant to this section.  A qualifying local contribution may 
in the alternative be a local contribution or investment out of 
other municipal funds, but excluding any special federal grants 
or loans, equivalent to the property tax reduction.  In 
concluding the agreement with the municipality the commissioner 
may require that the local contribution will be made in a 
specified ratio to the amount of the state credits authorized.  
If the local contribution is to be used to fund additional 
reductions in state taxes, the commissioner and the governing 
body of the municipality shall enter an agreement for timely 
payment to the state to reimburse the state for the amount of 
tax revenue foregone as a result.  The qualifying local 
contribution for a special enterprise zone under section 
273.1312, subdivision 4, paragraph (c), clause (4), shall be the 
complete abatement of property taxes on property in the zone.  
     Sec. 7.  Minnesota Statutes 1984, section 273.1314, 
subdivision 7, is amended to read:  
    Subd. 7.  [LIMITATIONS; NUMBER OF DESIGNATIONS.] (a) In 
each of the years 1983 and 1984, the commissioner shall 
designate at least two but not more than five areas as 
enterprise zones.  No designations shall be made after December 
31, 1984.  
    (b) No more than one area may be designated as an 
enterprise zone in any county, except that two areas may be 
designated in a county containing a city of the first class.  
    (c) No more than two areas in a congressional district may 
be designated as an enterprise zone in 1984.  
    This subdivision shall not apply to enterprise zones 
designated pursuant to section 273.1312, subdivision 4, 
paragraph (c), clause (2) or, (3), or (4).  
     Sec. 8.  Minnesota Statutes 1984, section 273.1314, 
subdivision 8, is amended to read:  
    Subd. 8.  [FUNDING LIMITATIONS.] The maximum amount of the 
tax reductions which may be authorized pursuant to designations 
of enterprise zones under section 273.1312 and this section is 
limited to $35,600,000.  The maximum amount of this total which 
may be authorized by the commissioner for tax reductions 
pursuant to subdivision 9 that will reduce tax revenues which 
otherwise would have been received during fiscal years 1984 and 
1985 is limited to $9,000,000.  Of the total limitation and the 
1984-1985 biennial limitation the commissioner shall allocate to 
enterprise zones designated under section 273.1312, subdivision 
4, paragraph (c), clause (3), an amount equal to $16,610,940 and 
$5,000,000 respectively.  These funds shall be allocated among 
such zones on a per capita basis except that the maximum 
allocation to any one city is $6,610,940 and no city's 
allocation shall exceed $210 on a per capita basis.  An amount 
sufficient to fund the state funded property tax credits, the 
refundable income tax credits, and the sales tax exemption, as 
authorized pursuant to this section is appropriated to the 
commissioner of revenue.  Upon designation of an enterprise zone 
the commissioner shall certify the total amount available for 
tax reductions in the zone for its duration.  The amount 
certified shall reduce the amount available for tax reductions 
in other enterprise zones.  If subsequent estimates indicate or 
actual experience shows that the approved tax reductions will 
result in amounts of tax reductions in excess of the amount 
certified for the zone, the commissioner shall implement a plan 
to reduce the available tax reductions in the zone to an amount 
within the sum certified for the zone.  If subsequent estimates 
indicate or actual experience shows that the approved tax 
reductions will result in amounts of tax reductions below the 
amount certified, the difference shall be available for 
certification in other zones or used in connection with an 
amended plan of tax reductions for the zone as the commissioner 
determines appropriate.  If the tax reductions authorized result 
in reduced revenues for a dedicated fund, the commissioner of 
finance shall transfer equivalent amounts to the dedicated fund 
from the general fund as necessary. 
    This subdivision, including the funding limitations, does 
not apply to enterprise zones designated pursuant to section 
273.1312, subdivision 4, paragraph (c), clause (4).  
     Sec. 9.  Minnesota Statutes 1984, section 273.1314, 
subdivision 9, is amended to read:  
    Subd. 9.  [AUTHORIZED FORMS OF STATE TAX REDUCTIONS.] (a) 
The following types of tax reductions may be approved by the 
commissioner for businesses located in an enterprise zone: 
    (1) An exemption from the general sales tax imposed by 
chapter 297A for purchases of construction materials or 
equipment for use in the zone if the purchase was made after the 
date of application for the zone; 
    (2) A credit against the income tax of an employer for 
additional workers employed in the zone, other than workers 
employed in construction, up to a maximum of $3,000 per employee 
per year;  
    (3) An income tax credit for a percentage of the cost of 
debt financing to construct new or expanded facilities in the 
zone; 
    (4) A state paid property tax credit for a portion of the 
property taxes paid by a new commercial or industrial facility 
or the additional property taxes paid by an expansion of an 
existing commercial or industrial facility in the zone; and 
    (5) A complete abatement of all corporate income and excise 
taxes under chapter 290, property taxes, and sales and use taxes 
under chapter 297A on the purchase of construction materials or 
equipment for use in the zone if the zone is designated pursuant 
to section 273.1312, subdivision (4), paragraph (c), clause 
(4).  Local taxing authorities with an enterprise zone 
designated pursuant to section 273.1312, subdivision 4, 
paragraph (c), clause (4), will be reimbursed by the state for 
foregone property taxes only to the extent that the local taxing 
authority can demonstrate the development within that zone has 
imposed an additional net financial burden on its budget.  The 
additional net financial burden shall be determined by 
subtracting the increase in the total equalized assessed 
property value of the local taxing authority that is in excess 
of a statewide average increase in equalized assessed property 
values as determined by the commissioner of revenue, multiplied 
by the mill rate of the local taxing authority for taxes payable 
in the current year, from the additional direct costs the 
development has placed on the local taxing authority's budget 
for the current year.  The commissioner of energy and economic 
development, in consultation with the commissioner of revenue, 
shall review that local taxing authority's demonstration of 
additional financial burden and determine the amount which the 
state will reimburse the local taxing authority for foregone 
property tax revenue.  
    (b) The municipality shall specify in its application for 
designation the types of tax reductions it seeks to be made 
available in the zone and the percentage rates and other 
appropriate limitations on the reductions.  
    (c) Upon designation of an enterprise zone and approval by 
the commissioner of the tax reductions to be made available 
therein, the commissioner of revenue shall take the steps 
necessary to implement the tax reductions.  
    (d) The tax reductions provided by this subdivision shall 
not apply to any facility described in section 103(b)(6)(O) of 
the Internal Revenue Code of 1954, as amended through January 
15, 1983, or to any regulated public utility.  
    (e) The commissioner shall approve tax reductions 
authorized by paragraph (a) within an enterprise zone designated 
pursuant to section 273.1312, subdivision 4, paragraph (c), 
clause (3), only after the governing body of a city designated 
as an enterprise zone has designated an area or areas, each 
consisting of at least 100 acres, of the city not in excess of 
400 acres in which the tax reductions may be provided.  
    (f) In addition to the tax reductions authorized by 
paragraph (a), for an enterprise zone designated under section 
273.1312, subdivision 4, paragraph (c), clause (3), the 
following types of tax reductions may be approved:  
    (1) A credit against income tax for workers employed in the 
zone and not qualifying for a credit under paragraph (a), clause 
(2), subject to a maximum of $1,500 per employee per year; 
    (2) A state paid property tax credit for a portion of the 
property taxes paid by a commercial or industrial facility 
located in the zone.  Notwithstanding paragraph (d), the credits 
provided by this paragraph may be provided to the businesses 
described in section 103(b)(6)(0)(i) of the Internal Revenue 
Code of 1954, as amended through December 31, 1983.  
    (g) Each tax reduction provided to a business pursuant to 
this subdivision shall terminate not longer than five years 
after the effective date of the tax reduction for the business. 
Subject to the five year limitation, the tax reductions may be 
provided after expiration of the zone's designation.  
    (h) The income tax credits provided pursuant to clauses (a) 
and (f) may be refundable.  

                                ARTICLE 2

                             APPROPRIATIONS
    Section 1.  [REIMBURSEMENT OF PROPERTY TAX REVENUES; 
DEPARTMENT OF REVENUE.] 
    (a) The sum of $5,000,000 for fiscal years 1986-1987 is 
appropriated to the commissioner of revenue to reimburse a 
municipality and other local taxing authorities for foregone 
property tax revenues under section 273.1314, subdivision 4a.  
The commissioner of revenue is authorized to distribute those 
funds subject to the conditions the commissioner imposes to 
assure proper and prompt reimbursement. 
    (b) The funds appropriated in this section shall not be 
encumbered until the commissioner of energy and economic 
development designates a special enterprise zone pursuant to 
section 273.1312, subdivision 4, paragraph (c), clause (4).  If 
no such designation is made prior to September 30, 1985, this 
section expires and the appropriated funds revert to the general 
fund. 
    Sec. 2.  [PURCHASE OF SITE AND INFRASTRUCTURE 
IMPROVEMENTS.] 
    The sum of $30,000,000 or so much thereof as determined 
necessary by the commissioner is appropriated from the general 
fund to the commissioner of energy and economic development to 
provide a grant to a city which is selected as the site for a 
new manufacturing facility of a single corporation that has a 
projected employment of no less than 5,000 employees, a 
projected capital investment of at least $3,000,000,000, and is 
determined by the commissioner to have a substantial positive 
economic benefit for the entire state.  A new manufacturing 
facility is a facility that was not in operation prior to July 
1, 1985, and the principal activity within the facility is the 
manufacture of a product or products defined in the United 
States Department of Commerce's standard industrial 
classification codes 20 to 39.  The city may use the grant money 
to purchase the site, convey the site to the corporation, and 
assist the corporation with the public improvements necessary 
for the proper operation of the facility.  The improvements may 
include, but are not limited to, the cost of providing sewer, 
water, and other utility services to the facility. 
    Designation of the city that will receive this grant is not 
subject to the provisions of Minnesota Statutes, chapter 14.  
The funds appropriated in this section shall not be encumbered 
until the commissioner of energy and economic development 
designates a special enterprise zone pursuant to section 
273.1312, subdivision 4, paragraph (c), clause (4).  If no such 
designation is made prior to September 30, 1985, this section 
expires and the appropriated funds revert to the general fund.  
    Sec. 3.  [CENTER FOR ADVANCED MANUFACTURING TECHNOLOGY; 
UNIVERSITY OF MINNESOTA.] 
    The sum of $1,866,600 is appropriated from the general fund 
to the University of Minnesota for creation and operation of a 
center for advanced manufacturing technology.  The appropriation 
shall not be encumbered until the commissioner of energy and 
economic development designates a special enterprise zone as 
authorized by section 273.1312, subdivision 4, paragraph (c), 
clause (4).  If no such designation is made prior to September 
30, 1985, this section expires and the appropriated funds revert 
to the general fund. 
    The center shall be operated to assist in educating 
engineering and scientific talent, to conduct competitive 
research programs, and to conduct extensive outreach and 
technology transfer programs. 
    The center shall: 
    (1) promote education and research in advanced 
manufacturing technologies in the state of Minnesota, including 
CAD, CAM, and robotics; 
    (2) promote and develop Minnesota industries and services 
related to and supportive of automated design and manufacture; 
    (3) engage in joint activity with manufacturers of 
automated production systems, pursuant to contractual 
relationships, in the development of systems, equipment, 
applications software, services, and processes; 
    (4) promote and participate in education and training 
programs related to the needs of technology and 
information-intensive manufacturing industry and to the needs of 
users and potential users of automated manufacturing systems; 
    (5) establish mechanisms so the capabilities and services 
of the center can be made available to public and governmental 
organizations in Minnesota and elsewhere in the nation and in 
foreign countries; and 
    (6) establish appropriate mechanisms so the services and 
capabilities of the center can be made available to the private 
sector. 
    Sec. 4.  [JOB TRAINING CENTER; BOARD OF VOCATIONAL 
TECHNICAL EDUCATION.] 
    The sum of $2,200,000 is appropriated from the general fund 
to the state board of vocational technical education for the 
purpose of providing administrative support for the job training 
center established in article 3, section 1.  This appropriation 
is available until expended or until this section is repealed. 
    Sec. 5.  [EDUCATION AND TRAINING TRANSITION TEAMS; HIGHER 
EDUCATION COORDINATING BOARD.] 
    The sum of $2,000,000 is appropriated from the general fund 
to the higher education coordinating board for the purpose of 
developing an education and training transition team and center 
to ensure that state-of-the-art training facilities and 
equipment are available on the manufacturing facility site 
described in section 1 to train employees during the transition 
years in which the facility is beginning operations.  The 
education and training center will be headed by a director with 
management experience in education and industry. 
    Of this amount, $561,500 is appropriated in both fiscal 
year 1986 and fiscal year 1987 for salaries and benefits for 14 
positions in the classified service; $56,000 in fiscal year 1986 
and $18,000 in fiscal year 1987 for equipment; and the remainder 
is for team support services. 
    Sec. 6.  [CANCELLATION OF APPROPRIATIONS.] 
    The appropriations contained in sections 4 and 5 may not be 
expended unless the commissioner of energy and economic 
development has designated a site as a special enterprise zone 
as authorized by section 273.1312, subdivision 4, paragraph (c), 
clause (4).  If no site is designated as such prior to September 
30, 1985, the appropriations contained in sections 4 and 5 
revert to the general fund.  

                               ARTICLE 3 

                      CAPITAL IMPROVEMENTS; BONDS 
    Section 1.  [CAPITAL IMPROVEMENTS; APPROPRIATIONS.] 
    Subdivision 1.  $14,500,000 is appropriated from the state 
building fund to the University of Minnesota to acquire and to 
better land, buildings, and other capital improvements for a 
center for advanced manufacturing technologies.  $20,600,000 is 
appropriated from the state building fund to the state board of 
vocational technical education to acquire and to better land, 
buildings, and other capital improvements for a job training 
center.  
    Subd. 2.  To provide the money appropriated in this section 
from the state building fund, the commissioner of finance upon 
request of the governor shall sell and issue bonds of the state 
in an amount up to $35,100,000 in the manner, upon the terms, 
and with the effect prescribed by Minnesota Statutes, sections 
16A.631 to 16A.672, and by the Constitution, article XI, 
sections 4 to 7. 
     Sec. 2.  [EFFECTIVE DATE.] 
     Section 1 is only effective if the commissioner of energy 
and economic development designates an enterprise zone under 
section 273.1312, subdivision 4, paragraph (c), clause (4), 
prior to September 30, 1985. 
    Approved May 24, 1985