1.1                          A bill for an act 
  1.2             relating to taxation; authorizing certain 
  1.3             municipalities to establish tax abatement districts; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 272. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [272.72] [TAX ABATEMENT DISTRICTS.] 
  1.8      Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
  1.9   the terms defined in this subdivision have the meanings given 
  1.10  them. 
  1.11     (b) "Municipality" means (1) a home rule charter or 
  1.12  statutory city that has a population of less than 5,000, or (2) 
  1.13  a county, when acting as a municipality under this section in 
  1.14  territory not included within the borders of a city. 
  1.15     (c) "Qualified real estate" is real property, other than 
  1.16  land, which is located in a tax abatement district and to which 
  1.17  improvements have been made or added after designation of the 
  1.18  district that have increased the market value of the property by 
  1.19  at least ten percent.  "Qualified real estate" also means land 
  1.20  upon which no structure existed at the start of the new 
  1.21  construction, which is located in a tax abatement district and 
  1.22  upon which new construction has been added during the time the 
  1.23  area was so designated.  
  1.24     (d) "Improvements" as used in this section includes 
  1.25  rehabilitation and additions to existing structures as well as 
  2.1   new construction on vacant land or on land with existing 
  2.2   structures. 
  2.3      Subd. 2.  [AUTHORIZATION.] The governing body of a 
  2.4   municipality may, by ordinance, designate an area of the 
  2.5   municipality as a tax abatement district if it finds that the 
  2.6   designation is needed in order to: 
  2.7      (1) increase the local tax base; 
  2.8      (2) meet the need for affordable housing; 
  2.9      (3) stimulate economic development; or 
  2.10     (4) remedy blighted conditions. 
  2.11     Subd. 3.  [FINDINGS; PLAN.] To establish a tax abatement 
  2.12  district, the governing body of the municipality must adopt a 
  2.13  resolution finding that the rehabilitation, conservation, 
  2.14  redevelopment, or economic development of the area is necessary 
  2.15  in the interest of the public health, safety, or welfare of the 
  2.16  residents of the municipality. 
  2.17     The municipality must prepare a plan for the tax abatement 
  2.18  district.  The plan shall include the following: 
  2.19     (1) a legal description of the parcels forming the 
  2.20  boundaries of the proposed district along with a map depicting 
  2.21  the district; 
  2.22     (2) the current assessed valuation of the parcels in the 
  2.23  proposed area, listing the land and building values separately; 
  2.24  and 
  2.25     (3) a statement specifying whether the abatement is 
  2.26  applicable to none, some, or all of the property assessed as 
  2.27  residential, commercial, or industrial property within the 
  2.28  designated area or a combination thereof and whether the 
  2.29  abatement is for rehabilitation and additions to existing 
  2.30  buildings or new construction or both.  If abatement is made 
  2.31  applicable only to some property within a class, the definition 
  2.32  of that subset of eligible property must be by uniform criteria 
  2.33  which further some planning objective identified in the plan.  
  2.34  The city shall state how long it is estimated that the area 
  2.35  shall remain a designated revitalization area, which shall be 
  2.36  longer than one year from the date of designation and shall 
  3.1   state any plan by the city to issue revenue bonds for projects 
  3.2   within the area.  For a county, a tax abatement district shall 
  3.3   include only property which will be used as industrial 
  3.4   property.  For purposes of this section, commercial or 
  3.5   industrial property does not include utility property. 
  3.6      Subd. 4.  [PUBLIC HEARING; NOTICE.] The municipality shall 
  3.7   approve the tax abatement plan only after a public hearing on 
  3.8   the issue is conducted after published notice in a newspaper of 
  3.9   general circulation in the municipality at least once not less 
  3.10  than ten days nor more than 30 days prior to the date of the 
  3.11  hearing.  The published notice must include a map of the area of 
  3.12  the tax abatement district. 
  3.13     Subd. 5.  [EXEMPTION PROVIDED.] (a) The owner of qualified 
  3.14  real estate eligible for the exemption provided in this section 
  3.15  shall elect to take any applicable exemption provided in 
  3.16  paragraph (b), clauses (1) to (3), and notify the assessor of 
  3.17  the exemption chosen before the assessment date of the first 
  3.18  year when the improvement would have been assessed.  After the 
  3.19  election has been made and the exemption granted, the owner is 
  3.20  not permitted to change the method of exemption. 
  3.21     (b) The exemption options are as follows: 
  3.22     (1) for any class of qualified real estate, 100 percent of 
  3.23  the value of the improvements is exempt for three years; 
  3.24     (2) for any class of qualified real estate, the following 
  3.25  percentages of the value of improvements is exempt: 
  3.26     (i) for the first year, 80 percent; 
  3.27     (ii) for the second year, 70 percent; 
  3.28     (iii) for the third year, 60 percent; 
  3.29     (iv) for the fourth year, 50 percent; 
  3.30     (v) for the fifth year, 40 percent; 
  3.31     (vi) for the sixth year, 40 percent; 
  3.32     (vii) for the seventh year, 30 percent; 
  3.33     (viii) for the eighth year, 30 percent; 
  3.34     (ix) for the ninth year, 20 percent; and 
  3.35     (x) for the tenth year, 20 percent; or 
  3.36     (3) for all qualified real estate that is classified under 
  4.1   section 273.13, subdivision 25, paragraph (a) or (b), clause (1) 
  4.2   or (2), 100 percent of the value of the improvements is exempt 
  4.3   for a period of ten years. 
  4.4      Sec. 2.  [EFFECTIVE DATE.] 
  4.5      Section 1 is effective the day following final enactment, 
  4.6   and applies to taxes levied in 1996, payable in 1997, and 
  4.7   thereafter.