SF 2167

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 11:35pm

A bill for an act
relating to economic development; providing for stimulation of the construction
industry; streamlining and modifying conditions that apply to certain construction
projects; providing an investment tax credit and a historic structure rehabilitation
credit; authorizing green energy revenue bonds; permitting local assessments for
energy improvements; appropriating money; amending Minnesota Statutes 2008,
sections 16C.16, by adding a subdivision; 429.011, by adding subdivisions;
429.021, subdivision 1; 429.031, subdivision 3; 469.176, subdivision 2, by
adding a subdivision; Minnesota Statutes 2009 Supplement, section 469.153,
subdivision 2; proposing coding for new law in Minnesota Statutes, chapters
116J; 290; 469.

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

Section 1.

Minnesota Statutes 2008, section 16C.16, is amended by adding a
subdivision to read:

new text begin Subd. 13. new text end

new text begin Actions related to stimulus project. new text end

new text begin This section applies to the
construction of a stimulus project, as authorized in section 469.176, subdivision 8.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [116J.8737] SMALL BUSINESS INVESTMENT TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Qualified small business" means a business that satisfies all of the following
conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;
new text end

new text begin (3) the business is engaged in, or is committed to engage in, innovation in Minnesota
in one of the following:
new text end

new text begin (i) using proprietary technology to add value to a product, process, or service in a
qualified high-technology field;
new text end

new text begin (ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field;
new text end

new text begin (iii) researching, developing, or producing a new proprietary technology for use in
the fields of tourism, forestry, mining, or transportation; or
new text end

new text begin (iv) qualified green manufacturing;
new text end

new text begin (4) other than the activities specifically listed in clause (3), the business is not
engaged in real estate development, insurance, banking, lending, lobbying, political
consulting, information technology consulting, wholesale or retail trade, leisure,
hospitality, transportation, construction, ethanol production from corn, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;
new text end

new text begin (5) the business has fewer than 25 employees;
new text end

new text begin (6) if the business has five or more employees as measured on a full-time equivalent
basis, the business must pay its employees, other than its first five employees, annual wages
of at least 175 percent of the federal poverty guideline for the year for a family of four;
new text end

new text begin (7) the business has not been in operation for more than ten consecutive years;
new text end

new text begin (8) the business has not received more than $4,000,000 in qualifying investments
that have qualified for and received tax credits under this section;
new text end

new text begin (9) the business is not a member of a unitary group that employs more than 100
employees; and
new text end

new text begin (10) the business has not previously received private equity investments of more
than $2,000,000.
new text end

new text begin (c) "Qualified high-technology field" includes, but is not limited to, aerospace,
agricultural processing, alternative energy, environmental engineering, food technology,
cellulosic ethanol, information technology, materials science technology, nanotechnology,
telecommunications, biotechnology, medical device products, pharmaceuticals,
diagnostics, biologicals, and veterinary science.
new text end

new text begin (d) "Proprietary technology" means the technical innovations that are unique and
legally owned or licensed by a business and includes, without limitation, those innovations
that are patented, patent pending, a subject of trade secrets, or copyrighted.
new text end

new text begin (e) "Qualified green manufacturing" means a business whose primary business
activity is production of products, processes, methods, technologies, or services, excluding
consulting, intended to do one or more of the following:
new text end

new text begin (1) increase the use of energy from renewable sources, as defined in section
216B.1691;
new text end

new text begin (2) increase the energy efficiency of the electric utility-producing infrastructure
system or to increase energy conservation related to electricity or other utility use, as
provided in sections 216B.2401 and 216B.241;
new text end

new text begin (3) reduce greenhouse gas emissions, as defined in section 216H.01, subdivision 2,
or to mitigate greenhouse gas emissions or other waste products through, but not limited
to, carbon capture, storage, or sequestration;
new text end

new text begin (4) monitor, protect, restore, and preserve the quality of surface waters; and
new text end

new text begin (5) expand use of biofuels, including expanding the feasibility or reducing the cost
of producing biofuels or the types of equipment, machinery, and vehicles that can use
biofuels.
new text end

new text begin (f) "Qualified taxpayer" means an accredited investor, within the meaning of
Regulation D of the Securities and Exchange Commission, Code of Federal Regulations,
title 17, section 230.501(a), who:
new text end

new text begin (1) does not own, control, or hold power to vote 20 percent or more of the outstanding
securities of the qualified small business in which the eligible investment is proposed; or
new text end

new text begin (2) does not receive more than 50 percent of the taxpayer's gross annual income from
the qualified small business in which the eligible investment is proposed.
new text end

new text begin A member of the family of a taxpayer disqualified by this subdivision is not eligible
for a credit under this section.
new text end

new text begin (g)(1) "Qualified angel investment network fund" means a pooled investment fund
that:
new text end

new text begin (i) invests in qualified small businesses;
new text end

new text begin (ii) is organized as a pass-through entity; and
new text end

new text begin (iii) has at least three separate investors, all of whom are qualified taxpayers
as defined in paragraph (f), and that own no more than 50 percent of the outstanding
ownership interests in the fund.
new text end

new text begin (2) For purposes of determining the number of investors and the ownership interest
of an investor under this paragraph, the ownership interests of an investor include those of
the investor's family, and any corporation, limited liability company, partnership, or trust
in which the investor or the investor's family has a controlling equity interest or exercises
management control. Investments in the fund may consist of equity investments or notes
that pay interest or other fixed amounts, or any combination of both.
new text end

new text begin (h) "Qualified investment" means either a cash investment of a minimum of:
new text end

new text begin (1) $10,000 in a calendar year by a qualified taxpayer; or
new text end

new text begin (2) $50,000 in a calendar year by a qualified angel investment network fund.
new text end

new text begin The qualified investment in a qualified small business must be in exchange
for common stock, a partnership or membership interest, preferred stock, debt with
mandatory conversion to equity, or an equivalent ownership interest as determined by
the commissioner.
new text end

new text begin (i) "Family" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).
new text end

new text begin Subd. 2. new text end

new text begin Certification of small businesses. new text end

new text begin (a) Businesses may apply to the
commissioner for certification as a qualified small business. The application must be in the
form and be made under the procedures specified by the commissioner, accompanied by
an application fee of $150. The application for certification must be made available on the
department's Web site by August 1, 2010. Applications for subsequent years' certification
must be made available on the department's Web site by November 1 of the preceding
year. Application fees collected are appropriated to the commissioner to be used for
personnel and administrative expenses related to administering the program.
new text end

new text begin (b) A business seeking certification must submit an application for each taxable
year for which the business desires certification. If a qualified small business receives
a qualified investment for which tax credits are allocated, the business must annually
submit a certified small business report in the form required by the commissioner with
the required fee no later than February 1 for the two years subsequent to the last qualified
investment. Failure to file an annual report as required under this subdivision results in a
fine of $500 and revocation of certification.
new text end

new text begin (c) The commissioner must maintain a list of businesses certified under this
subdivision and make the list accessible to the public on the department's Web site.
new text end

new text begin Subd. 3. new text end

new text begin Certification of qualified taxpayers. new text end

new text begin (a) Taxpayers may apply to the
commissioner for certification as a qualified taxpayer. The application must be in the
form and be made under the procedures specified by the commissioner, accompanied by
an application fee of $350. The application for certification of qualified taxpayers must
be made available on the department's Web site by August 1, 2010. Applications for
subsequent years' certification must be made available on the department's Web site by
November 1 of the preceding year. Application fees are appropriated to the commissioner
for personnel and administrative expenses related to administering the program.
new text end

new text begin (b) A qualified taxpayer seeking certification must submit an application for each
taxable year in which the qualified taxpayer seeks certification. If a qualified taxpayer
receives tax credits under this section, a qualified taxpayer must submit an angel investor
annual report in the form required by the commissioner with the required fee no later than
February 1 of each year for two years subsequent to the last allocation of tax credits.
Failure to file an angel investor annual report as required under this subdivision results
in the revocation of tax credits. Once a qualified taxpayer has filed the required annual
reports and accompanying fees for two subsequent years following allocation of tax
credits and complied with all other requirements for that allocation, the tax credits are
no longer subject to revocation.
new text end

new text begin Subd. 4. new text end

new text begin Certification of qualified angel investment network funds. new text end

new text begin (a)
Angel investment network funds may apply to the commissioner of employment and
economic development for certification as a qualified angel investment network fund.
The application must be in the form and be made under the procedures specified by
the commissioner, accompanied by an application fee of $1,000. The application for
certification of qualified angel investor network funds must be made available on the
department's Web site by August 1, 2010. Applications for subsequent years' certification
must be made available by November 1 of the preceding year. Application fees collected
are appropriated to the commissioner to be used for personnel and administrative expenses
related to administering the program.
new text end

new text begin (b) A qualified angel investment network fund seeking certification must submit an
application for each taxable year for which the angel investment network fund seeks
certification. If any member of a qualified angel investment network fund receives tax
credits under this section for qualified investments made by the fund, the qualified angel
investment network fund must annually submit an angel investor annual report in the
form required by the commissioner with the required fee no later than February 1 of
each year for two years subsequent to the last allocation of credits. Failure to file an
angel investor annual report as required under this subdivision results in revocation of
tax credits. Once a qualified angel investment network fund has filed the required annual
reports and accompanying fees for two subsequent years following allocation of tax
credits and complied with all other requirements for that allocation, the tax credits are
no longer subject to revocation.
new text end

new text begin new text end

new text begin Subd. 5. new text end

new text begin Credit allowed. new text end

new text begin (a) A qualified taxpayer or angel investor network
fund is allowed a credit in the amount determined by the certification allocated by the
commissioner against the tax imposed by chapter 290. The commissioner must not allocate
more than $10,000,000 in credits to qualified taxpayers or angel investment network funds
for taxable years beginning after December 31, 2009, and before January 1, 2012, and
must not allocate more than $12,000,000 in credits per year for taxable years beginning
after December 31, 2011. Any portion of a taxable year's credits that is not allocated by
the commissioner does not cancel and may be carried forward to the subsequent taxable
year until all credits have been allocated. Applications for tax investment credits must be
made available on the department's Web site by September 1, 2010, and the department
must begin accepting applications by September 1, 2010. Applications for subsequent
years must be made available by November 1 of the preceding year.
new text end

new text begin (b) Tax investment credits must be allocated to qualified taxpayers or angel investor
network funds in the order that the tax credit request applications are filed with the
department. The investment specified in the application must be made within 60 days of
the allocation of the credits. If the investment is not made within 60 days, the credits are
deemed revoked. A qualified taxpayer or angel investor network fund that fails to invest
as specified in the application, within 60 days from allocation of the credits, must notify
the department of the failure to invest within five business days of the expiration of the
60-day investment period.
new text end

new text begin (c) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. In the event that two or more qualified
taxpayers or angel investment network funds file tax credit request applications on the
same day, and the aggregate amount of credit allocation claims exceeds the aggregate limit
of credit under this section or the lesser amount of credits that remain unallocated on that
day, then the credits must be allocated among the qualified taxpayers or angel investment
network funds who filed on that day on a pro rata basis with respect to the amounts claimed.
The pro rata allocation for any one qualified taxpayer or angel investment network fund is
the product obtained by multiplying a fraction, the numerator of which is the amount of
the credit allocation claim filed on behalf of a qualified taxpayer and the denominator of
which is the total of all credit allocation claims filed on behalf of all applicants on that day,
by the amount of credits that remain unallocated on that day for the fiscal year.
new text end

new text begin (d) The commissioner must notify the commissioner of revenue of every credit
allocated and every credit revoked under this section.
new text end

new text begin Subd. 6. new text end

new text begin Annual reports. new text end

new text begin (a) By February 1 of each year for two years subsequent
to the last allocation of credits, certified small businesses, qualified taxpayers, and
qualified angel investment network funds must submit an annual report and a filing fee of
$100. All report fees collected are appropriated to the commissioner for personnel and
administrative expense related to administering the program.
new text end

new text begin (b) Certified businesses must certify to the department in the form required by the
commissioner that it satisfies the following requirements:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;
new text end

new text begin (3) that the business is engaged in, or is committed to engage in, innovation in
Minnesota as defined under subdivision 1; and
new text end

new text begin (4) that the business meets the payroll requirements in subdivision 1, paragraph
(b), clause (6).
new text end

new text begin (c) Certified taxpayers must certify to the department in the form required by the
commissioner that the investor satisfies the following requirements:
new text end

new text begin (1) the taxpayer continues to meet the requirements of subdivision 1, paragraph
(f); and
new text end

new text begin (2) that the taxpayer continues to remain invested in the qualified small business as
required by section 290.0682, subdivision 3.
new text end

new text begin (d) Certified angel investment network funds must certify to the department in the
form required by the commissioner that the investor satisfies the following requirements:
new text end

new text begin (1) the taxpayer continues to meet the requirements of subdivision 1, paragraph
(g); and
new text end

new text begin (2) that the angel investment network fund continues to remain invested in the
qualified small business as required by section 290.0682, subdivision 3.
new text end

new text begin Subd. 7. new text end

new text begin Rulemaking. new text end

new text begin The commissioner's actions in establishing procedures and
requirements and in making determinations and certifications to administer this section are
not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act
contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin Subd. 8. new text end

new text begin Report. new text end

new text begin Beginning in 2011, the commissioner must annually report by
March 15 to the chairs of the committees having jurisdiction over taxes and economic
development in the senate and the house of representatives on the tax credits issued under
this section. The report must include:
new text end

new text begin (1) the number and amount of the credits issued;
new text end

new text begin (2) the recipients of the credits;
new text end

new text begin (3) the number and type of each business certified as a qualified small business;
new text end

new text begin (4) to the extent determinable, the total amount of investment generated by these
credits; and
new text end

new text begin (5) any other information relevant to evaluating the effect of these credits.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for investments made after July
1, 2010, for taxable years beginning after December 31, 2009, and only applies to
investments made after the qualified business and the qualified taxpayer or qualified angel
investment network fund have been certified by the commissioner of employment and
economic development.
new text end

Sec. 3.

new text begin [290.0681] CREDIT FOR HISTORIC STRUCTURE REHABILITATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the terms in this
subdivision have the meanings given them.
new text end

new text begin (b) "Certified historic structure" means a property located in Minnesota and listed
individually on the National Register of Historic Places or a historic property designated
by either a certified local government or a heritage preservation commission created
under the National Historic Preservation Act of 1966 and whose designation is approved
by the state historic preservation officer.
new text end

new text begin (c) "Eligible property" means a certified historic structure or a structure in a certified
historic district that is offered or used for residential or business purposes.
new text end

new text begin (d) "Structure in a certified historic district" means a structure located in Minnesota
that is certified by the State Historic Preservation Office as contributing to the historic
significance of a certified historic district listed on the National Register of Historic Places
or a local district that has been certified by the United States Department of the Interior.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer who incurs costs for the rehabilitation of
eligible property may take a credit against the tax imposed under this chapter in an amount
equal to 25 percent of the total costs of rehabilitation. Costs of rehabilitation include,
but are not limited to, qualified rehabilitation expenditures as defined under section
47(c)(2)(A) of the Internal Revenue Code, provided that the costs of rehabilitation must
exceed 50 percent of the total basis in the property at the time the rehabilitation activity
begins and the rehabilitation must meet standards consistent with the standards of the
Secretary of the Interior for rehabilitation as determined by the State Historic Preservation
Office of the Minnesota Historical Society.
new text end

new text begin Subd. 3. new text end

new text begin Carryback and carryforward. new text end

new text begin If the amount of the credit under
subdivision 2 exceeds the tax liability under this chapter for the year in which the cost is
incurred, the amount that exceeds the tax liability may be carried back to any of the three
preceding taxable years or carried forward to each of the ten taxable years succeeding the
taxable year in which the expense was incurred. The entire amount of the credit must
be carried to the earliest taxable year to which the amount may be carried. The unused
portion of the credit must be carried to the following taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners; transfers. new text end

new text begin (a) Credits granted to a
partnership, a limited liability company taxed as a partnership, or multiple owners of
property shall be passed through to the partners, members, or owners, respectively, pro
rata or pursuant to an executed agreement among the partners, members, or owners
documenting an alternate distribution method.
new text end

new text begin (b) Taxpayers eligible for credits may transfer, sell, or assign the credits in whole or
in part. Any assignee may use acquired credits to offset up to 100 percent of the taxes
otherwise imposed by this chapter. The assignee shall perfect a transfer by notifying the
Department of Revenue in writing within 30 calendar days following the effective date
of the transfer in a form and manner as prescribed by the Department of Revenue. The
proceeds of any sale or assignment of a credit is exempt from taxation under this chapter.
new text end

new text begin Subd. 5. new text end

new text begin Process. new text end

new text begin To claim the credit, the taxpayer must apply to the State Historic
Preservation Office of the Minnesota Historical Society before a historic rehabilitation
project begins. The State Historic Preservation Office shall determine the amount of
eligible rehabilitation costs and whether the rehabilitation meets the standards of the
United States Department of the Interior. The State Historic Preservation Office shall issue
certificates verifying eligibility for and the amount of credit. The taxpayer shall attach
the certificate to any income tax return on which the credit is claimed. The State Historic
Preservation Office of the Minnesota Historical Society may collect fees for applications
for the historic preservation tax credit. Fees shall be set at an amount that does not exceed
the costs of administering the tax credit program.
new text end

new text begin Subd. 6. new text end

new text begin Mortgage certificates; credit for lending institutions. new text end

new text begin (a) The taxpayer
may elect, in lieu of the credit otherwise allowed under this section, to receive a historic
rehabilitation mortgage credit certificate.
new text end

new text begin (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a
certificate that is issued to the taxpayer according to procedures prescribed by the State
Historic Preservation Office with respect to the certified rehabilitation and meets the
requirements of this paragraph. The face amount of the certificate must be equal to
the credit that would be allowable under subdivision 2 to the taxpayer with respect to
the rehabilitation. The certificate may only be transferred by the taxpayer to a lending
institution, including a nondepository home mortgage lending institution, in connection
with a loan:
new text end

new text begin (1) that is secured by the building with respect to which the credit is issued; and
new text end

new text begin (2) the proceeds of which may not be used for any purpose other than the acquisition
or rehabilitation of the building.
new text end

new text begin (c) In exchange for the certificate, the lending institution must provide to the
taxpayer an amount equal to the face amount of the certificate discounted by the amount
by which the federal income tax liability of the lending institution is increased due to its
use of the certificate in the manner provided in this section. That amount must be applied,
as directed by the taxpayer, in whole or in part, to reduce:
new text end

new text begin (1) the principal amount of the loan;
new text end

new text begin (2) the rate of interest on the loan; or
new text end

new text begin (3) the taxpayer's cost of purchasing the building, but only in the case of a qualified
historic home that is located in a poverty-impacted area as designated by the State Historic
Preservation Office.
new text end

new text begin (d) The lending institution may take as a credit against the tax due under this chapter
an amount equal to the amount specified in the certificate. If the amount of the discount
retained by the lender exceeds the amount by which the lending institution's federal
income tax liability is increased due to the use of a mortgage credit certificate, the excess
shall be refunded to the borrower with interest at the rate prescribed by the State Historic
Preservation Office. The lending institution may carry forward all unused credits under
this subdivision until exhausted. Nothing in this subdivision requires a lending institution
to accept a historic rehabilitation certificate from any person.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

Sec. 4.

new text begin [290.0682] SMALL BUSINESS INVESTMENT CREDIT; CREDIT
ALLOWED; LIMITATIONS; HOLDING PERIOD; AND CARRYOVER.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A qualified taxpayer is allowed a credit against the
tax imposed under this chapter for investments made in the year in a qualified small
business as defined under section 116J.8737. The credit equals 25 percent of the qualified
taxpayer's investment in the business, but not to exceed the lesser of:
new text end

new text begin (1) the liability for tax under this chapter, including the applicable alternative
minimum tax, but excluding the minimum fee under section 290.0922; and
new text end

new text begin (2) the amount of the certificate provided to the qualified taxpayer under section
116J.8737.
new text end

new text begin Subd. 2. new text end

new text begin Limitations. new text end

new text begin No taxpayer may receive more than $125,000 in credits
under this section in any one year.
new text end

new text begin Subd. 3. new text end

new text begin Holding period. new text end

new text begin The credit is allowed only for investments made after
the qualified taxpayer or qualified angel investment network fund has been certified by
the commissioner of employment and economic development under section 116J.8737.
Any credit taken by a taxpayer must be repaid, and any unused credits must be canceled,
if the investment in the qualified small business is not held for at least three years. The
three-year holding period does not apply if:
new text end

new text begin (1) the investment by the qualified taxpayer becomes worthless before the end
of the three-year period;
new text end

new text begin (2) 80 percent or more of the assets of the qualified small business is sold before
the end of the three-year period;
new text end

new text begin (3) the qualified small business is sold before the end of the three-year period; or
new text end

new text begin (4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period.
new text end

new text begin Subd. 4. new text end

new text begin Proportional credits. new text end

new text begin Each pass-through entity must provide each
investor a statement indicating the investor's share of the credit amount certified to the
pass-through entity based on its share of the pass-through entity's assets at the time of
the qualified investment.
new text end

new text begin Subd. 5. new text end

new text begin Carryover. new text end

new text begin If the amount of the credit under this subdivision for any
taxable year exceeds the liability for tax, the excess is a credit carryover to each of the ten
succeeding taxable years. The entire amount of the excess unused credit for the taxable
year must be carried first to the earliest of the taxable years to which the credit may be
carried. The amount of the unused credit that may be added under this subdivision may
not exceed the taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin Subd. 6. new text end

new text begin Transfer of credits. new text end

new text begin Any taxpayer who has not had liability under this
chapter for the immediate past three taxable years and does not have anticipated liability
for the current taxable year may transfer the entirety of the credit to any natural person of
net worth, as defined in the Code of Federal Regulations, title 17, section 230.501(a). No
person is entitled to a refund for the interest created under this subdivision. Only the full
credit for any one taxpayer may be transferred and the interest may be transferred only one
time. A credit acquired by transfer is subject to the limitations prescribed in this section.
Documentation of any credit acquired by transfer must be provided by the taxpayer in
the form required by the commissioner.
new text end

new text begin Subd. 7. new text end

new text begin Audit powers. new text end

new text begin Notwithstanding the certification eligibility issued by the
commissioner of employment and economic development under section 116J.8737, the
commissioner may utilize any audit and examination powers under chapter 270C or 289A
to the extent necessary to verify that the taxpayer is eligible for the credit and to assess for
the amount of any improperly claimed credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for investments made after July
1, 2010, for taxable years beginning after December 31, 2009, and only applies to
investments made after the qualified taxpayer has been certified by the commissioner of
employment and economic development.
new text end

Sec. 5.

Minnesota Statutes 2008, section 429.011, is amended by adding a subdivision
to read:

new text begin Subd. 2c. new text end

new text begin Municipality, energy conservation improvements. new text end

new text begin For purposes
of construction, improvement, alteration, and reconstruction of an on-site energy
conservation system, a municipality may provide the improvements through and impose
special assessments upon the request of a port authority, economic development authority,
industrial development authority, or housing and redevelopment authority.
new text end

Sec. 6.

Minnesota Statutes 2008, section 429.011, is amended by adding a subdivision
to read:

new text begin Subd. 17. new text end

new text begin On-site energy conservation improvements. new text end

new text begin "On-site energy
conservation improvements" mean any type of active or passive improvement, including
insulation; windows or doors; heating, cooling, or other building systems; lighting
systems; energy-related process or manufacturing changes; energy demand monitoring
and regulation equipment; and any other type of device, improvement, or equipment
installed in a building for the primary purpose of reduction in the use of energy in the
building, whether the devices, equipment, or improvements so installed are publicly
or privately owned.
new text end

Sec. 7.

Minnesota Statutes 2008, section 429.021, subdivision 1, is amended to read:

Subdivision 1.

Improvements authorized.

The council of a municipality shall have
power to make the following improvements:

(1) To acquire, open, and widen any street, and to improve the same by constructing,
reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle parking
strips of any material, or by grading, graveling, oiling, or otherwise improving the same,
including the beautification thereof and including storm sewers or other street drainage
and connections from sewer, water, or similar mains to curb lines.

(2) To acquire, develop, construct, reconstruct, extend, and maintain storm and
sanitary sewers and systems, including outlets, holding areas and ponds, treatment plants,
pumps, lift stations, service connections, and other appurtenances of a sewer system,
within and without the corporate limits.

(3) To construct, reconstruct, extend, and maintain steam heating mains.

(4) To install, replace, extend, and maintain street lights and street lighting systems
and special lighting systems.

(5) To acquire, improve, construct, reconstruct, extend, and maintain water works
systems, including mains, valves, hydrants, service connections, wells, pumps, reservoirs,
tanks, treatment plants, and other appurtenances of a water works system, within and
without the corporate limits.

(6) To acquire, improve and equip parks, open space areas, playgrounds, and
recreational facilities within or without the corporate limits.

(7) To plant trees on streets and provide for their trimming, care, and removal.

(8) To abate nuisances and to drain swamps, marshes, and ponds on public or private
property and to fill the same.

(9) To construct, reconstruct, extend, and maintain dikes and other flood control
works.

(10) To construct, reconstruct, extend, and maintain retaining walls and area walls.

(11) To acquire, construct, reconstruct, improve, alter, extend, operate, maintain, and
promote a pedestrian skyway system. Such improvement may be made upon a petition
pursuant to section 429.031, subdivision 3.

(12) To acquire, construct, reconstruct, extend, operate, maintain, and promote
underground pedestrian concourses.

(13) To acquire, construct, improve, alter, extend, operate, maintain, and promote
public malls, plazas or courtyards.

(14) To construct, reconstruct, extend, and maintain district heating systems.

(15) To construct, reconstruct, alter, extend, operate, maintain, and promote fire
protection systems in existing buildings, but only upon a petition pursuant to section
429.031, subdivision 3.

(16) To acquire, construct, reconstruct, improve, alter, extend, and maintain highway
sound barriers.

(17) To improve, construct, reconstruct, extend, and maintain gas and electric
distribution facilities owned by a municipal gas or electric utility.

(18) To purchase, install, and maintain signs, posts, and other markers for addressing
related to the operation of enhanced 911 telephone service.

(19) To improve, construct, extend, and maintain facilities for Internet access and
other communications purposes, if the council finds that:

(i) the facilities are necessary to make available Internet access or other
communications services that are not and will not be available through other providers or
the private market in the reasonably foreseeable future; and

(ii) the service to be provided by the facilities will not compete with service provided
by private entities.

(20) To assess affected property owners for all or a portion of the costs agreed to
with an electric utility, telecommunications carrier, or cable system operator to bury or
alter a new or existing distribution system within the public right-of-way that exceeds the
utility's design and construction standards, or those set by law, tariff, or franchise, but only
upon petition under section 429.031, subdivision 3.

new text begin (21) To construct, reconstruct, improve, alter, and maintain on-site energy
conservation improvements in existing buildings, but only upon a petition under section
429.031, subdivision 3. The activities under this clause may also be undertaken by a port
authority, economic development authority, industrial development authority, or housing
and redevelopment authority, and the municipality may act on the request of those entities
in imposing special assessments.
new text end

Sec. 8.

Minnesota Statutes 2008, section 429.031, subdivision 3, is amended to read:

Subd. 3.

Petition by all owners.

Whenever all owners of real property abutting
upon any street named as the location of any improvement shall petition the council
to construct the improvement and to assess the entire cost against their property, the
council may, without a public hearing, adopt a resolution determining such fact and
ordering the improvement. The validity of the resolution shall not be questioned by
any taxpayer or property owner or the municipality unless an action for that purpose
is commenced within 30 days after adoption of the resolution as provided in section
429.036. Nothing herein prevents any property owner from questioning the amount
or validity of the special assessment against the owner's property pursuant to section
429.081. In the case of a petition for the municipality to own and install a fire protection
system, a pedestrian skyway system, new text begin on-site energy conservation improvements, new text end or
on-site water contaminant improvements, the petition must contain or be accompanied
by an undertaking satisfactory to the city by the petitioner that the petitioner will grant
the municipality the necessary property interest in the building to permit the city to enter
upon the property and the building to construct, maintain, and operate the fire protection
system, pedestrian skyway system, new text begin on-site energy conservation improvements, new text end or on-site
water contaminant improvements. In the case of a petition for the installation of a
privately owned fire protection system, a privately owned pedestrian skyway system,
new text begin privately owned on-site energy conservation improvements, new text end or privately owned on-site
water contaminant improvements, the petition shall contain the plans and specifications
for the improvement, the estimated cost of the improvement and a statement indicating
whether the city or the owner will contract for the construction of the improvement. If the
owner is contracting for the construction of the improvement, the city shall not approve
the petition until it has reviewed and approved the plans, specifications, and cost estimates
contained in the petition. The construction cost financed under section 429.091 shall not
exceed the amount of the cost estimate contained in the petition. In the case of a petition
for the installation of a fire protection system, a pedestrian skyway system, new text begin on-site energy
conservation improvements, new text end or on-site water contaminant improvements, the petitioner
may request abandonment of the improvement at any time after it has been ordered
pursuant to subdivision 1 and before contracts have been awarded for the construction of
the improvement under section 429.041, subdivision 2. If such a request is received, the
city council shall abandon the proceedings but in such case the petitioner shall reimburse
the city for any and all expenses incurred by the city in connection with the improvement.

Sec. 9.

Minnesota Statutes 2009 Supplement, section 469.153, subdivision 2, is
amended to read:

Subd. 2.

Project.

(a) "Project" means (1) any properties, real or personal, used
or useful in connection with a revenue producing enterprise, or any combination of
two or more such enterprises engaged or to be engaged in generating, transmitting, or
distributing electricity, assembling, fabricating, manufacturing, mixing, processing,
storing, warehousing, or distributing any products of agriculture, forestry, mining, or
manufacture, or in research and development activity in this field, or in the manufacturing,
creation, or production of intangible property, including any patent, copyright, formula,
process, design, know-how, format, or other similar item; (2) any properties, real or
personal, used or useful in the abatement or control of noise, air, or water pollution, or in
the disposal of solid wastes, in connection with a revenue producing enterprise, or any
combination of two or more such enterprises engaged or to be engaged in any business
or industry; (3) any properties, real or personal, used or useful in connection with the
business of telephonic communications, conducted or to be conducted by a telephone
company, including toll lines, poles, cables, switching, and other electronic equipment
and administrative, data processing, garage, and research and development facilities;
(4) any properties, real or personal, used or useful in connection with a district heating
system, consisting of the use of one or more energy conversion facilities to produce hot
water or steam for distribution to homes and businesses, including cogeneration facilities,
distribution lines, service facilities, and retrofit facilities for modifying the user's heating
or water system to use the heat energy converted from the steam or hot water.

(b) "Project" also includes any properties, real or personal, used or useful in
connection with a revenue producing enterprise, or any combination of two or more
such enterprises engaged in any business.

(c) "Project" also includes any properties, real or personal, used or useful for the
promotion of tourism in the state. Properties may include hotels, motels, lodges, resorts,
recreational facilities of the type that may be acquired under section 471.191, and related
facilities.

(d) "Project" also includes any properties, real or personal, used or useful in
connection with a revenue producing enterprise, whether or not operated for profit,
engaged in providing health care services, including hospitals, nursing homes, and related
medical facilities.

(e) "Project" does not include any property to be sold or to be affixed to or consumed
in the production of property for sale, and does not include any housing facility to be
rented or used as a permanent residence.

(f) "Project" also means the activities of any revenue producing enterprise involving
the construction, fabrication, sale, or leasing of equipment or products to be used in
gathering, processing, generating, transmitting, or distributing solar, wind, geothermal,
biomass, agricultural or forestry energy crops, or other alternative energy sources for
use by any person or any residential, commercial, industrial, or governmental entity in
heating, cooling, or otherwise providing energy for a facility owned or operated by that
person or entity.

(g) "Project" also includes any properties, real or personal, used or useful in
connection with a county jail, county regional jail, community corrections facilities
authorized by chapter 401, or other law enforcement facilities, the plans for which are
approved by the commissioner of corrections; provided that the provisions of section
469.155, subdivisions 7 and 13, do not apply to those projects.

(h) "Project" also includes any real properties used or useful in furtherance of the
purpose and policy of section 469.141.

(i) "Project" also includes related facilities as defined by section 471A.02,
subdivision 11.

(j) "Project" also includes an undertaking to purchase the obligations of local
governments located in whole or in part within the boundaries of the municipality that are
issued or to be issued for public purposes.

new text begin (k) "Project" also includes any properties designated as a qualified green building
and sustainable design project under section 469.1655.
new text end

Sec. 10.

new text begin [469.1655] QUALIFIED GREEN BUILDING AND SUSTAINABLE
DESIGN PROJECTS.
new text end

new text begin Subdivision 1. new text end

new text begin Project designation and eligibility. new text end

new text begin (a) A municipality or
redevelopment agency issuing revenue bonds under sections 469.152 to 469.165 may
designate the project for which the bonds are issued as a qualified green building and
sustainable design project as provided in this section.
new text end

new text begin (b) The issuer must ensure that each designated project substantially:
new text end

new text begin (1) reduces consumption of electricity compared to conventional construction;
new text end

new text begin (2) reduces daily carbon dioxide emissions compared to energy generated from coal;
new text end

new text begin (3) increases the use of solar photovoltaic cells in this state; or
new text end

new text begin (4) increases the use of fuel cells to generate energy.
new text end

new text begin (c) Before designating a project under this section, the issuer must document in
writing that the project will satisfy the eligibility criteria in this section.
new text end

new text begin (d) At least 75 percent of the square footage of commercial buildings that are part of
the project must be registered with a recognized green building rating system, including
Minnesota's sustainable building guidelines or the United States Green Building Council's
Leadership in Energy and Environmental Design (LEED) certification, or in the case of
residential buildings, Minnesota GreenStar rating, and must be reasonably expected to
receive the certification.
new text end

new text begin Subd. 2. new text end

new text begin Applications. new text end

new text begin An application for designation under this section must
include a project proposal that describes the energy-efficiency, renewable energy, and
sustainable design features of the project and demonstrates that the project satisfies the
eligibility criteria in this section. The application must include a description of:
new text end

new text begin (1) the amount of electric consumption reduced as compared to conventional
construction;
new text end

new text begin (2) the amount of carbon dioxide daily emissions reduced compared to energy
generated from coal;
new text end

new text begin (3) the amount of the gross installed capacity of the project's solar photovoltaic
capacity measured in megawatts; and
new text end

new text begin (4) the amount in megawatts of the project's energy generated by fuel cells.
new text end

new text begin Subd. 3. new text end

new text begin Use of bond financing. new text end

new text begin The project proposal must include a description of
the bond financing that will be allocated for financing of one or more of the following:
new text end

new text begin (1) the purchase, construction, integration, or other use of energy-efficiency,
renewable energy, and sustainable design features of the project; or
new text end

new text begin (2) compliance with certification standards cited under subdivision 1, paragraph (d).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for bonds issued after June 30, 2010.
new text end

Sec. 11.

Minnesota Statutes 2008, section 469.176, subdivision 2, is amended to read:

Subd. 2.

Excess increments.

(a) The authority shall annually determine the amount
of excess increments for a district, if any. This determination must be based on the tax
increment financing plan in effect on December 31 of the year and the increments and
other revenues received as of December 31 of the year. The authority must spend or return
the excess increments under paragraph (c) within nine months after the end of the year.

(b) For purposes of this subdivision, "excess increments" equals the excess of:

(1) total increments collected from the district since its certification, reduced by any
excess increments paid under paragraph (c), clause (4), for a prior year, over

(2) the total costs authorized by the tax increment financing plan to be paid with
increments from the district, reduced, but not below zero, by the sum of:

(i) the amounts of those authorized costs that have been paid from sources other than
tax increments from the district;

(ii) revenues, other than tax increments from the district, that are dedicated for or
otherwise required to be used to pay those authorized costs and that the authority has
received and that are not included in item (i);

(iii) the amount of principal and interest obligations due on outstanding bonds after
December 31 of the year and not prepaid under paragraph (c) in a prior year; and

(iv) increased by the sum of the transfers of increments made under section 469.1763,
subdivision 6, to reduce deficits in other districts made by December 31 of the year.

(c) The authority shall use excess increment only to do one or more of the following:

(1) prepay any outstanding bonds;

(2) discharge the pledge of tax increment for any outstanding bonds;

(3) pay into an escrow account dedicated to the payment of any outstanding bonds; deleted text begin or
deleted text end

(4) new text begin pay or reimburse eligible project costs for a stimulus project certified by the
authority as defined in section 469.176, subdivision 8, paragraph (b); or
new text end

new text begin (5) new text end return the excess amount to the county auditor who shall distribute the excess
amount to the city or town, county, and school district in which the tax increment financing
district is located in direct proportion to their respective local tax rates.

(d) For purposes of a district for which the request for certification was made prior to
August 1, 1979, excess increments equal the amount of increments on hand on December
31, less the principal and interest obligations due on outstanding bonds or advances,
qualifying under subdivision 1c, clauses (1), (2), (4), and (5), after December 31 of the
year and not prepaid under paragraph (c).

(e) The county auditor must report to the commissioner of education the amount of
any excess tax increment distributed to a school district within 30 days of the distribution.

(f) For purposes of this subdivision, "outstanding bonds" means bonds which are
secured by increments from the district.

(g) The state auditor may exempt an authority from reporting the amounts calculated
under this subdivision for a calendar year, if the authority certifies to the auditor in
its report that the total amount authorized by the tax increment plan to be paid with
increments from the district exceeds the sum of the total increments collected for the
district for all years by 20 percent.

Sec. 12.

Minnesota Statutes 2008, section 469.176, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Economic stimulus projects. new text end

new text begin (a) In connection with a stimulus project, the
authority may extend by ten years the duration limits in subdivision 1b, paragraph (a), for
any district for which the request for certification was made after June 30, 2010, and before
January 1, 2012, to pay expenditures relating to a stimulus project located within the
district. Permitted expenditures in economic development districts include office facilities
during the duration of the economic stimulus project. The authority may reallocate excess
funds from existing tax increment districts in connection with a stimulus project outside of
the boundaries of the district between June 30, 2010, and before January 1, 2012.
new text end

new text begin (b) A "stimulus project" means any capital project, the construction of which
commences after June 30, 2010, and before January 1, 2012, determined to create or retain
jobs in the state, including construction jobs, by the governing body of the municipality
in which the project is located.
new text end

Sec. 13. new text begin EXTENSION OF CERTAIN ECONOMIC DEVELOPMENT-RELATED
PERMITS.
new text end

new text begin Notwithstanding any law, rule, or local ordinance or regulation to the contrary, the
expiration date of a permit for an economic development project or subdivision approved
under Minnesota Statutes, section 326B.121, subdivision 2, or sections 462.351 to 462.364,
that has not expired before the effective date of this section is extended for one year
beyond its original expiration date. The permit grantee shall notify the grantor in writing
of the status of the economic development project or subdivision approved every 90 days
from the effective date and no less than 90 days in advance of initiation of construction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end