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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

CHAPTER 288--H.F.No. 1721

An act

relating to economic development; authorizing redevelopment demolition loans; eliminating a semiannual report; establishing a small business advocate office in the Business Assistance Center; granting Albert Lea the authority to establish an industrial sewer charge rebate program;

amending Minnesota Statutes 2010, sections 116J.555, subdivision 2; 116J.571; 116J.572; 116J.575, by adding a subdivision; 116J.66; proposing coding for new law in Minnesota Statutes, chapter 116J.

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

Section 1.

Minnesota Statutes 2010, section 116J.555, subdivision 2, is amended to read:

Subd. 2.

Application cycles; reporting to legislature.

(a) In making grants, the commissioner shall establish semiannual application deadlines in which grants will be authorized from all or part of the available appropriations of money in the account.

(b) After each semiannual cycle in which grants are awarded, the commissioner shall report to the environment and natural resources committees of the senate and house of representatives, the Finance Division of the senate Committee on Environment and Natural Resources, and the house of representatives Committee on Environment and Natural Resources finance the grants awarded and appropriate supporting information describing each grant made. This report must be made within 30 days after the grants are awarded.

(c) (b) The commissioner shall annually report to the legislative committees in paragraph (b) committees of the senate and house of representatives with jurisdiction over environment and natural resources finance on the status of the cleanup projects undertaken under grants made under the programs. The commissioner shall include in the annual report information on the cleanup and development activities undertaken for the grants made in that and previous fiscal years. The commissioner shall make this report no later than 120 days after the end of the fiscal year.

Sec. 2.

Minnesota Statutes 2010, section 116J.571, is amended to read:

116J.571 CREATION OF ACCOUNTS.

Two redevelopment accounts are created, one in the general fund and one in the bond proceeds fund. Money in the accounts for the program may be used to make grants as provided in section 116J.575 and loans as provided in section 116J.5761 and to pay for the commissioner's costs in reviewing applications and making grants and loans and is available until spent. The repayment of principal and interest on loans and investment income earned on money in the account is deposited in the special revenue fund and may be used for making grants and loans and for administrative costs and are appropriated for such purposes.

Sec. 3.

Minnesota Statutes 2010, section 116J.572, is amended to read:

116J.572 DEFINITIONS.

Subdivision 1.

Scope of application.

For purposes of sections 116J.571 to 116J.575 116J.5765, the terms in this section have the meanings given.

Subd. 1a.

Demolition costs.

"Demolition costs" means the costs of demolition, destruction, removal and clearance of all structures and other improvements on the project site, including interior remedial activities, and proper disposal thereof. As used in this subdivision, "structure" has the meaning given it in section 116G.03, subdivision 11.

Subd. 2.

Development authority.

"Development authority" includes a statutory or home rule charter city, county, housing and redevelopment authority, economic development authority, or port authority.

Subd. 2a.

Metropolitan area.

"Metropolitan area" means the seven-county metropolitan area, as defined in section 473.121, subdivision 2.

Subd. 2b.

Municipality.

"Municipality" means the statutory or home rule charter city, town, or, in the case of unorganized territory, the county in which the redevelopment or project is located.

Subd. 3.

Redevelopment costs or costs.

"Redevelopment costs" or "costs" means the costs of land acquisition, stabilizing unstable soils when infill is required, demolition, infrastructure improvements, and ponding or other environmental infrastructure, demolition costs and costs necessary for adaptive reuse of buildings, including remedial activities.

Sec. 4.

Minnesota Statutes 2010, section 116J.575, is amended by adding a subdivision to read:

Subd. 4.

Grant repayment.

If a project fails to substantially provide the public benefits listed in the grant application within five years from the date of the grant award, the commissioner may require that 100 percent of the grant amount be repaid by the development authority over a term not to exceed ten years. The commissioner may exercise discretion to require repayment of only a portion of the grant amount taking into account the public benefits generated by the completed development.

Sec. 5.

[116J.5761] LOANS.

Subdivision 1.

Authority.

The commissioner may make loans to development authorities for projects that meet the criteria under sections 116J.5761 to 116J.5764. The commissioner may make a loan for up to 100 percent of the estimated land acquisition and demolition costs of the project. The determination whether to make a loan for a project is within the discretion of the commissioner, subject to this section, sections 116J.5761 to 116J.5764, and available unencumbered money in the redevelopment accounts. The commissioner's decisions and application of the priorities under this section are not subject to judicial review, except for abuse of discretion.

Subd. 2.

Qualifying projects.

A project qualifies for a loan under this section, if the following criteria are met:

(1) the property and structures are owned by the development authority;

(2) the structures on the property have been vacant for at least one year;

(3) the structures constitute a threat to public safety because of inadequate maintenance, dilapidation, obsolescence, or abandonment;

(4) the structures are not listed on the National Register of Historic Places; and

(5) upon completion of the demolition, the development authority reasonably expects that the property will be improved and these improvements will result in economic development benefits to the municipality.

Sec. 6.

[116J.5762] LOAN APPLICATIONS.

Subdivision 1.

Application required.

To obtain a demolition loan, a development authority shall apply to the commissioner. The governing body of the municipality must approve the application by resolution.

Subd. 2.

Required content.

The commissioner shall prescribe and provide the application form. The application must include at least the following information:

(1) identification of the property;

(2) proof of ownership by the development authority;

(3) a description of how the structures on the property constitute a threat to public safety, are functionally obsolete, or are economically unfeasible to repair;

(4) length of vacancy;

(5) a detailed estimate, along with supporting evidence, of the total demolition costs for the project;

(6) evidence that the structures on the property are not listed on the National Register of Historic Places;

(7) an assessment of the development potential or likely use of the property after completion of the demolition plan;

(8) the current appraised or assessed value of the property;

(9) financial documentation necessary for loan underwriting;

(10) other sources of funding if the total estimated demolition costs exceed the loan amount;

(11) the proposed source of funds to be used for repayment of the loan;

(12) information showing the applicant's financial condition and ability to repay the loan;

(13) the proposed term and principal repayment schedule for the loan;

(14) the statutory authorization for the applicant to issue bonds, together with a statement that the statutory provision authorizes the use of proceeds of such bonds to pay demolition costs and secure the loan; and

(15) any additional information the commissioner prescribes.

Sec. 7.

[116J.5763] PRIORITIES.

Subdivision 1.

Priorities.

(a) If applications for loans exceed the available appropriations, loans shall be made for projects that, in the commissioner's judgment, provide the highest return in public benefits for the public costs incurred. "Public benefits" include health, safety and other environmental benefits, blight reduction including the property's potential for improved economic vitality, functionality and aesthetics, community stabilization, crime reduction, reduced maintenance costs, and the potential for future development. In making this judgment, the commissioner shall consider the following:

(1) the extent to which the existing property conditions threaten public safety;

(2) the length of vacancy of the property;

(3) the development potential of the property;

(4) the proximity of the property to existing sufficient public infrastructure;

(5) the applicant's financial condition and ability to repay the loan.

(b) The factors in paragraph (a) are not listed in a rank order or priority; rather, the commissioner may weigh each factor, depending upon the facts and circumstances, as the commissioner considers appropriate. The commissioner may consider other factors that affect the net return of public benefits.

Subd. 2.

Application cycle.

The commissioner shall establish semiannual application deadlines in which loans will be authorized from available money in the accounts.

Sec. 8.

[116J.5764] LOAN TERMS AND CONDITIONS.

Subdivision 1.

Terms.

Loans to development authorities for demolition costs may be made by the commissioner subject to the following terms and conditions:

(1) the agreement to repay the loan must be a general obligation of the development authority, payable primarily from a dedicated source of revenue, and the development authority must deliver its bond or note to the commissioner to secure the loan;

(2) the term of the loan may not exceed 15 years;

(3) the loan shall bear interest at a rate equal to two percent, but interest will not accrue during the first two years of the loan term;

(4) the development authority shall make semiannual interest payments and annual principal payments beginning in the third year of the loan until the end of the term;

(5) the principal amount of a loan may not exceed $1,000,000;

(6) loan proceeds shall be disbursed for eligible demolition costs as incurred or paid by borrower and upon submission of invoices and other supporting documentation satisfactory to the commissioner;

(7) an eligible borrower shall establish a dedicated source of revenue for repayment of the loan.

Subd. 2.

Modification of loan terms.

The commissioner has the discretion to consent to the modification of the rate of interest, time of payment, installment of principal or interest, or other term of a loan made under sections 116J.5761 to 116J.5764.

Subd. 3.

Forgiveness.

The commissioner may forgive principal of the loan and interest accrued but unpaid thereon, if any, up to 50 percent of the original loan amount, not to exceed the costs of demolition, upon completion of the redevelopment plan, if the project would otherwise have received grant funding in the most recent semiannual grant round, based on the priorities in section 116J.575.

Sec. 9.

[116J.5765] NONLIABILITY.

The state shall have no responsibility or liability relating to or arising out of activities at the site of a project solely by reason of the making of a grant or loan by the commissioner under sections 116J.5761 to 116J.5764.

Sec. 10.

Minnesota Statutes 2010, section 116J.66, is amended to read:

116J.66 BUSINESS ASSISTANCE.

The commissioner shall establish within the department a business assistance center. The center shall consist of (1) a Bureau of Small Business which shall have as its sole function the provision of assistance to small businesses in the state and (2) a bureau of licenses to assist all businesses in obtaining state licenses and permits. This center shall be accorded at least equal status with the other major operating units within the department. A small business advocate office is established in the Business Assistance Center to provide one-stop access for small businesses in need of information or assistance in obtaining or renewing licenses, meeting state regulatory requirements, or resolving disputes with state agencies.

Sec. 11.

ALBERT LEA; INDUSTRIAL SEWER CHARGE REBATE AUTHORITY.

Notwithstanding Minnesota Statutes, section 444.075, the city of Albert Lea may by ordinance establish an industrial sewer charge rebate program in order to provide an incentive for new or expanded businesses that would be industrial users of the city's wastewater collection and treatment system to locate in the city. The ordinance must specify the criteria for awarding a rebate. The rebate program must not result in increased charges to current users.

EFFECTIVE DATE.

This section is effective the day after the governing body of the city of Albert Lea and its chief clerical officer timely complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sec. 12.

REVISOR'S INSTRUCTION.

The revisor of statutes shall change the term "neighborhood land trust" to "community land trust" and the term "neighborhood land trusts" to "community land trusts" wherever they appear in Minnesota Statutes, section 273.11, subdivision 12; and chapter 462A.

Presented to the governor May 7, 2012

Signed by the governor May 10, 2012, 12:43 p.m.