273.1399 Reduction in state tax increment financing aid.
Subdivision 1. Definitions. For purposes of this section, the following terms have the meanings given.
(a) "Qualifying captured net tax capacity" means the following amounts:
(1) The captured net tax capacity of a new or the expanded part of an existing economic development tax increment financing district, for which certification was requested after April 30, 1990.
(2) The captured net tax capacity of a new or the expanded part of an existing tax increment financing district, other than an economic development district, for which certification was requested after April 30, 1990, multiplied by the following percentage based on the number of years that have elapsed since the assessment year of the original net tax capacity. In no case may the final amounts be less than zero or greater than the total captured net tax capacity of the district.
Number of Renewal and All other years Renovation Districts Districts 0 to 5 0 0 6 12.5 6.25 7 25 12.5 8 37.5 18.75 9 50 25 10 62.5 31.25 11 75 37.5 12 87.5 43.75 13 100 50 14 100 56.25 15 100 62.5 16 100 68.75 17 100 75 18 100 81.25 19 100 87.5 20 100 93.75 21 or more 100 100
(3) The following rules apply to a hazardous substance subdistrict. The applicable percentage under clause (2) must be determined under the "all other districts" category. The number of years must be measured from the date of certification of the subdistrict for purposes of the additional captured net tax capacity resulting from the reduction in the subdistrict's or site's original net tax capacity. After termination of the overlying district, captured net tax capacity includes the full amount that is captured by the subdistrict.
(4) Qualified captured tax capacity does not include the captured tax capacity of exempt districts under subdivisions 6 and 7.
(b) The terms defined in section 469.174 have the meanings given in that section.
(c) "Qualified housing district" means a housing district for a residential rental project or projects in which the only properties receiving assistance from revenues derived from tax increments from the district meet all of the requirements for a low-income housing credit under section 42 of the Internal Revenue Code of 1986, as amended through December 31, 1992, regardless of whether the project actually receives a low-income housing credit.
Subd. 2. Reporting. (a) The commissioner of revenue shall use the retained captured value, tax increment, and other information reported in the abstract of tax lists supplement in administering the provisions of this section.
(b) Each tax increment authority or municipality must by March 15 of each year submit to the commissioner of revenue a report on local contributions made to each tax increment district in the preceding year. The commissioner shall prescribe the form and content of the report, including the sources and amounts of contributions and any other information the commissioner requires. Submission of a local contribution report is required for a tax increment district to be exempt from the aid reduction provisions of this section.
Subd. 3. Calculation of education aids. For each school district containing qualifying captured net tax capacity, the commissioner of children, families, and learning shall compute a hypothetical state aid amount that would be paid to the school district if the qualifying captured net tax capacity were divided by the sales ratio and included in the school district's adjusted tax capacity for purposes of calculating equalized levies as defined in section 273.1398, subdivision 1, and associated state aids. The commissioner of children, families, and learning shall notify the commissioner of revenue of the difference between the actual aid paid and the hypothetical aid amounts calculated for each school district, broken down by the municipality that approved the tax increment financing district containing the qualifying captured net tax capacity. The resulting amount is the reduction in state tax increment financing aid.
Subd. 4. Equalization factor. The amount of the reduction in state tax increment financing aid equals the amount determined under subdivision 3 less
(1) 75 percent of the excess, if any, of the amount determined under subdivision 3, over
(2) .05 times the municipality's net tax capacity, divided by the sales ratio.
Subd. 5. Local government aids; homestead and agricultural aid calculations. (a) The reduction in state tax increment financing aid for a municipality must be deducted first from the local government aids to be paid to the municipality. If the deduction exceeds the amount of the local government aid, the rest must be deducted from the homestead and agricultural credit aid to be paid to the municipality.
(b) The amount of qualifying captured net tax capacity must be included in adjusted net tax capacity for purposes of computing the local government aid of the municipality that approved the tax increment financing district.
Subd. 6. Exempt districts. (a) The provisions of this section do not apply to exempt tax increment financing districts as specified by this subdivision.
(b) A tax increment financing district for an ethanol production facility that satisfies all of the following requirements is exempt:
(1) The district is an economic development district, that qualifies under section 469.176, subdivision 4c, paragraph (a), clause (1).
(2) The facility is certified by the commissioner of agriculture to qualify for state payments for ethanol development under section 41A.09 to the extent funds are available.
(3) Increments from the district are used only to finance the qualifying ethanol development project located in the district or to pay for administrative costs of the district.
(4) The district is located outside of the seven-county metropolitan area, as defined in section 473.121.
(5) The tax increment financing plan was approved by a resolution of the county board.
(6) The exemption provided by this paragraph applies until the first year after the total amount of increment for the district exceeds $1,500,000. The county auditor shall notify the commissioner of revenue of the expiration of the exemption by June 1 of the year in which the auditor projects the revenues from increments will exceed $1,500,000. On or before the expiration of the exemption, the municipality may elect to make a qualifying local contribution under paragraph (d) in lieu of the state aid reduction.
(c) A qualified housing district is exempt.
(d)(1) A district is exempt if the municipality elects at the time of approving the tax increment financing plan for the district to make a qualifying local contribution. To qualify for the exemption in each year, the authority or the municipality must make a qualifying local contribution equal to the listed percentages of increment from the district or subdistrict:
(A) for an economic development district, a housing district, or a renewal and renovation district, ten percent;
(B) for a redevelopment district, a mined underground space district, a hazardous substance subdistrict, or a soils condition district, five percent.
(2) If the municipality elects to make a qualifying contribution and fails to make the required contribution for a year, the state aid reduction applies for the year. The state aid reduction equals the greater of (A) the required local contribution or (B) the amount of the aid reduction that applies under subdivision 3. For a district exempt under paragraph (b), no qualifying local contribution is required for years in which the district is exempt.
(3)(A) If the sum of required local contributions for all districts in the municipality exceeds two percent of city net tax capacity as defined in section 477A.011, subdivision 20, for a year, the municipality's total required local contribution for that year is limited to two percent of net tax capacity to qualify for the exemption under this subdivision. The municipality may allocate the contribution among the districts on which it has made elections as it determines appropriate.
(B) If a municipality makes an election under this subdivision for a district in a year in which item (A) applies, a minimum annual qualifying contribution must be made for the district equal to the lesser of 0.25 percent of city net tax capacity or three percent of increment revenues. This minimum contribution applies for the life of the district for each year that the restriction in item (A) applies and is in addition to the contribution required by item (A).
(4) The amount of the local contribution must be made out of unrestricted money of the authority or municipality, such as the general fund, a property tax levy, or a federal or a state grant-in-aid which may be spent for general government purposes. The local contribution may not be made, directly or indirectly, with tax increments or developer payments as defined under section 469.1766. The local contribution must be used to pay project costs and cannot be used for general government purposes or for improvements or costs that the authority or municipality planned to incur absent the project. The authority or municipality may request contributions from other local government entities that will benefit from the district's activities. These contributions reduce the local contribution required of the municipality or authority by this paragraph. Cities, counties, towns, and schools may contribute to paying these costs, notwithstanding any other law to the contrary.
(5) The municipality may make a local contribution in excess of the required contribution for a year. If it does so, the municipality may credit the excess to a local contribution account for the district. The balance in the account may be used to meet the requirements for qualifying local contributions for later years. No interest or investment earnings may be credited or imputed to the account, except those (A) actually paid by the municipality out of its unrestricted funds or by another person or entity, other than a developer as used in section 469.1766, and (B) used as required for a qualifying local contribution.
(6) If the state contributes to the project costs through a direct grant or similar incentive, the required local contribution is reduced by one-half of the dollar amount of the state grant or other similar incentive.
Subd. 7. Exemption; agricultural processing facilities. The provisions of this section do not apply to a tax increment financing district that satisfies all of the following requirements:
(1) the district is established to construct or expand an agricultural processing facility;
(2) the construction or expansion of the facility creates, or upon completion will create, a minimum of five permanent full-time jobs;
(3) the district is located outside of the seven-county metropolitan area, as defined in section 473.121;
(4) the tax increment financing plan was approved by a resolution of the county board;
(5) the municipality approving the tax increment financing plan agrees to make a local contribution that meets the requirements of subdivision 6, paragraph (d), except that a required rate of five percent applies and the limitation under subdivision 6, paragraph (d), clause (3), also applies; and
(6) the commissioner of agriculture has certified to the county auditor that the requirements of this subdivision have been met.
The exemption provided by this subdivision applies until the first year after the total amount of increment for the district exceeds $1,500,000. The county auditor shall notify the commissioner of revenue of the expiration of the exemption by June 1 of the year in which the auditor projects the revenues from increment will exceed $1,500,000.
For purposes of this section, "agricultural processing facility" means land, buildings, structures, fixtures, and improvements used or operated primarily for the processing or production of marketable products from agricultural crops, including waste and residues from agricultural crops, and including livestock products, poultry products, and wood products, but not the raising of livestock or poultry.
Subd. 8. Application to extensions by special law. The provisions of this section apply to a tax increment financing district, notwithstanding the date on which the request for certification was made, if (1) the duration limit of the district under section 469.176 is extended by a special law and (2) the municipality elects under section 469.1782, subdivision 1, clause (2), that this section applies to the extension. The section applies beginning for the first taxes payable year after the district would have terminated under general law and the aid reduction is determined by using 100 percent of the captured tax capacity as the qualified captured tax capacity of the district. The exemption provided by subdivision 6, paragraph (d), does not apply.
HIST: 1990 c 604 art 7 s 1; 1991 c 291 art 10 s 1,2; 1992 c 511 art 4 s 9; 1993 c 250 s 2; 1993 c 375 art 14 s 1; 1994 c 416 art 1 s 23; 1995 c 264 art 5 s 4-8; 1Sp1995 c 3 art 16 s 13; 1996 c 471 art 7 s 3,4
* NOTE: For effective date, see Laws 1990, chapter 604, *article 7, section 31.
Official Publication of the State of Minnesota
Revisor of Statutes