1999 Minnesota Statutes

     469.175 Establishing, modifying tax increment financing 
  plan, annual accounts. 

    Subdivision 1.    Tax increment financing plan.  (a) A 
 tax increment financing plan shall contain:  

    (1) a statement of objectives of an authority for the 
 improvement of a project; 

    (2) a statement as to the development program for the 
 project, including the property within the project, if any, that 
 the authority intends to acquire; 

    (3) a list of any development activities that the plan 
 proposes to take place within the project, for which contracts 
 have been entered into at the time of the preparation of the 
 plan, including the names of the parties to the contract, the 
 activity governed by the contract, the cost stated in the 
 contract, and the expected date of completion of that activity; 

    (4) identification or description of the type of any other 
 specific development reasonably expected to take place within 
 the project, and the date when the development is likely to 
 occur; 

    (5) estimates of the following:  

    (i) cost of the project, including administration expenses; 

    (ii) amount of bonded indebtedness to be incurred; 

    (iii) sources of revenue to finance or otherwise pay public 
 costs; 

    (iv) the most recent net tax capacity of taxable real 
 property within the tax increment financing district and within 
 any subdistrict; 

    (v) the estimated captured net tax capacity of the tax 
 increment financing district at completion; and 

    (vi) the duration of the tax increment financing district's 
 and any subdistrict's existence; 

    (6) statements of the authority's alternate estimates of 
 the impact of tax increment financing on the net tax capacities 
 of all taxing jurisdictions in which the tax increment financing 
 district is located in whole or in part.  For purposes of one 
 statement, the authority shall assume that the estimated 
 captured net tax capacity would be available to the taxing 
 jurisdictions without creation of the district, and for purposes 
 of the second statement, the authority shall assume that none of 
 the estimated captured net tax capacity would be available to 
 the taxing jurisdictions without creation of the district or 
 subdistrict; 

    (7) identification and description of studies and analyses 
 used to make the determination set forth in subdivision 3, 
 clause (2); and 

    (8) identification of all parcels to be included in the 
 district or any subdistrict. 

    (b) For a housing district, redevelopment district, or a 
 hazardous substance subdistrict, the authority may elect in the 
 tax increment financing plan to provide for the identification 
 of a minimum market value in the plan, development agreement, or 
 assessment agreement, and provide that increment is first 
 received by the authority when (1) the market value of the 
 improvements as determined by the assessor reaches or exceeds 
 the minimum market value, or (2) four years has elapsed from the 
 date of certification of the original net tax capacity of the 
 taxable real property in the district or subdistrict by the 
 county auditor, whichever is earlier. 

    Subd. 1a.    Inclusion of county road costs.  (a) The 
 county board may require the authority to pay all or a portion 
 of the cost of county road improvements out of increment 
 revenues, if the following conditions occur: 

    (1) the proposed tax increment financing plan or an 
 amendment to the plan contemplates construction of a development 
 that will, in the judgment of the county, substantially increase 
 the use of county roads requiring construction of road 
 improvements or other road costs; and 

    (2) the road improvements or other road costs are not 
 scheduled for construction within five years under the county 
 capital improvement plan or other formally adopted county plan, 
 and in the opinion of the county, would not reasonably be 
 expected to be needed within the reasonably foreseeable future 
 if the tax increment financing plan were not implemented. 

    (b) If the county elects to use increments to finance the 
 road improvements, the county must notify the authority and 
 municipality within 30 days after receipt of the information on 
 the proposed tax increment district under subdivision 2.  The 
 notice must include the estimated cost of the road improvements 
 and schedule for construction and payment of the cost.  The 
 authority must include the improvements in the tax increment 
 financing plan.  The improvements may be financed with the 
 proceeds of tax increment bonds or the authority and the county 
 may agree that the county will finance the improvements with 
 county funds to be repaid in installments, with or without 
 interest, out of increment revenues.  If the cost of the road 
 improvements and other project costs exceed the projected amount 
 of the increment revenues, the county and authority shall 
 negotiate an agreement, modifying the development plan or 
 proposed road improvements that will permit financing of the 
 costs before the tax increment financing plan may be approved. 

    Subd. 2.    Consultations; comment and filing.  Before 
 formation of a tax increment financing district, the authority 
 shall provide an opportunity to the members of the county boards 
 of commissioners of any county in which any portion of the 
 proposed district is located and the members of the school board 
 of any school district in which any portion of the proposed 
 district is located to meet with the authority.  The authority 
 shall present to the members of the county boards of 
 commissioners and the school boards its estimate of the fiscal 
 and economic implications of the proposed tax increment 
 financing district.  The information on the fiscal and economic 
 implications of the plan must be provided to the county and 
 school district boards at least 30 days before the public 
 hearing required by subdivision 3.  The 30-day requirement is 
 waived if the county and school district submit written comments 
 on the proposal and any modification of the proposal to the 
 authority after receipt of the information.  The members of the 
 county boards of commissioners and the school boards may present 
 their comments at the public hearing on the tax increment 
 financing plan required by subdivision 3.  Upon adoption of the 
 tax increment financing plan, the authority shall file a copy of 
 the plan with the commissioner of revenue.  The authority must 
 also file with the commissioner a copy of the development plan 
 for the project area. 

    Subd. 2a.    Housing districts; redevelopment districts. 
  In the case of a proposed housing district or redevelopment 
 district, in addition to the requirements of subdivision 2, at 
 least 30 days before the publication of the notice for public 
 hearing under subdivision 3, the authority shall deliver written 
 notice of the proposed district to each county commissioner who 
 represents part of the area proposed to be included in the 
 district.  The notice must contain a general description of the 
 boundaries of the proposed district and the proposed activities 
 to be financed by the district, an offer by the authority to 
 meet and discuss the proposed district with the county 
 commissioner, and a solicitation of the commissioner's comments 
 with respect to the district. 

    Subd. 3.    Municipality approval.  A county auditor 
 shall not certify the original net tax capacity of a tax 
 increment financing district until the tax increment financing 
 plan proposed for that district has been approved by the 
 municipality in which the district is located.  If an authority 
 that proposes to establish a tax increment financing district 
 and the municipality are not the same, the authority shall apply 
 to the municipality in which the district is proposed to be 
 located and shall obtain the approval of its tax increment 
 financing plan by the municipality before the authority may use 
 tax increment financing.  The municipality shall approve the tax 
 increment financing plan only after a public hearing thereon 
 after published notice in a newspaper of general circulation in 
 the municipality at least once not less than ten days nor more 
 than 30 days prior to the date of the hearing.  The published 
 notice must include a map of the area of the district from which 
 increments may be collected and, if the project area includes 
 additional area, a map of the project area in which the 
 increments may be expended.  The hearing may be held before or 
 after the approval or creation of the project or it may be held 
 in conjunction with a hearing to approve the project.  Before or 
 at the time of approval of the tax increment financing plan, the 
 municipality shall make the following findings, and shall set 
 forth in writing the reasons and supporting facts for each 
 determination: 

    (1) that the proposed tax increment financing district is a 
 redevelopment district, a renewal or renovation district, a 
 mined underground space development district, a housing 
 district, a soils condition district, or an economic development 
 district; if the proposed district is a redevelopment district 
 or a renewal or renovation district, the reasons and supporting 
 facts for the determination that the district meets the criteria 
 of section 469.174, subdivision 10, paragraph (a), clauses (1) 
 and (2), or subdivision 10a, must be documented in writing and 
 retained and made available to the public by the authority until 
 the district has been terminated. 

    (2) that the proposed development or redevelopment, in the 
 opinion of the municipality, would not reasonably be expected to 
 occur solely through private investment within the reasonably 
 foreseeable future and that the increased market value of the 
 site that could reasonably be expected to occur without the use 
 of tax increment financing would be less than the increase in 
 the market value estimated to result from the proposed 
 development after subtracting the present value of the projected 
 tax increments for the maximum duration of the district 
 permitted by the plan.  The requirements of this clause do not 
 apply if the district is a qualified housing district, as 
 defined in section 273.1399, subdivision 1. 

    (3) that the tax increment financing plan conforms to the 
 general plan for the development or redevelopment of the 
 municipality as a whole. 

    (4) that the tax increment financing plan will afford 
 maximum opportunity, consistent with the sound needs of the 
 municipality as a whole, for the development or redevelopment of 
 the project by private enterprise. 

    (5) that the municipality elects the method of tax 
 increment computation set forth in section 469.177, subdivision 
 3, clause (b), if applicable. 

    When the municipality and the authority are not the same, 
 the municipality shall approve or disapprove the tax increment 
 financing plan within 60 days of submission by the authority, or 
 the plan shall be deemed approved.  When the municipality and 
 the authority are not the same, the municipality may not amend 
 or modify a tax increment financing plan except as proposed by 
 the authority pursuant to subdivision 4.  Once approved, the 
 determination of the authority to undertake the project through 
 the use of tax increment financing and the resolution of the 
 governing body shall be conclusive of the findings therein and 
 of the public need for the financing. 

    Subd. 4.    Modification of plan.  (a) A tax increment 
 financing plan may be modified by an authority, provided that 
 any reduction or enlargement of geographic area of the project 
 or tax increment financing district, increase in amount of 
 bonded indebtedness to be incurred, including a determination to 
 capitalize interest on the debt if that determination was not a 
 part of the original plan, or to increase or decrease the amount 
 of interest on the debt to be capitalized, increase in the 
 portion of the captured net tax capacity to be retained by the 
 authority, increase in total estimated tax increment 
 expenditures or designation of additional property to be 
 acquired by the authority shall be approved upon the notice and 
 after the discussion, public hearing, and findings required for 
 approval of the original plan; provided that if an authority 
 changes the type of district from housing, redevelopment, or 
 economic development to another type of district, this change 
 shall not be considered a modification but shall require the 
 authority to follow the procedure set forth in sections 469.174 
 to 469.179 for adoption of a new plan, including certification 
 of the net tax capacity of the district by the county auditor.  
 If a redevelopment district or a renewal and renovation district 
 is enlarged, the reasons and supporting facts for the 
 determination that the addition to the district meets the 
 criteria of section 469.174, subdivision 10, paragraph (a), 
 clauses (1) and (2), or subdivision 10a, must be documented.  
 The requirements of this paragraph do not apply if (1) the only 
 modification is elimination of parcels from the project or 
 district and (2)(A) the current net tax capacity of the parcels 
 eliminated from the district equals or exceeds the net tax 
 capacity of those parcels in the district's original net tax 
 capacity or (B) the authority agrees that, notwithstanding 
 section 469.177, subdivision 1, the original net tax capacity 
 will be reduced by no more than the current net tax capacity of 
 the parcels eliminated from the district.  The authority must 
 notify the county auditor of any modification that reduces or 
 enlarges the geographic area of a district or a project area.  

    (b) The geographic area of a tax increment financing 
 district may be reduced, but shall not be enlarged after five 
 years following the date of certification of the original net 
 tax capacity by the county auditor or after August 1, 1984, for 
 tax increment financing districts authorized prior to August 1, 
 1979. 

    Subd. 5.    Annual disclosure.  (a) The authority shall 
 annually submit to the county board, the county auditor, the 
 school board, state auditor and, if the authority is other than 
 the municipality, the governing body of the municipality, a 
 report of the status of the district.  The report shall include 
 the following information:  the amount and the source of revenue 
 in the account, the amount and purpose of expenditures from the 
 account, the amount of any pledge of revenues, including 
 principal and interest on any outstanding bonded indebtedness, 
 the original net tax capacity of the district and any 
 subdistrict, the captured net tax capacity retained by the 
 authority, the captured net tax capacity shared with other 
 taxing districts, the tax increment received, and any additional 
 information necessary to demonstrate compliance with any 
 applicable tax increment financing plan.  The authority must 
 submit the annual report for a year on or before August 1 of the 
 next year. 

    (b) An annual statement showing the tax increment received 
 and expended in that year, the original net tax capacity, 
 captured net tax capacity, amount of outstanding bonded 
 indebtedness, the amount of the district's and any subdistrict's 
 increments paid to other governmental bodies, the amount paid 
 for administrative costs, the sum of increments paid, directly 
 or indirectly, for activities and improvements located outside 
 of the district, and any additional information the authority 
 deems necessary shall be published in a newspaper of general 
 circulation in the municipality.  If the fiscal disparities 
 contribution under chapter 276A or 473F for the district is 
 computed under section 469.177, subdivision 3, paragraph (a), 
 the annual statement must disclose that fact and indicate the 
 amount of increased property tax imposed on other properties in 
 the municipality as a result of the fiscal disparities 
 contribution.  The commissioner of revenue shall prescribe the 
 form of this statement and the method for calculating the 
 increased property taxes.  The authority must publish the annual 
 statement for a year no later than August 15 of the next year.  
 The authority must identify the newspaper of general circulation 
 in the municipality to which the annual statement has been or 
 will be submitted for publication and provide a copy of the 
 annual statement to the state auditor on or before August 1 of 
 the year in which the statement must be published.  

    (c) The disclosure and reporting requirements imposed by 
 this subdivision apply to districts certified before, on, or 
 after August 1, 1979. 

    Subd. 6.    Financial reporting.  (a) The state auditor 
 shall develop a uniform system of accounting and financial 
 reporting for tax increment financing districts.  The system of 
 accounting and financial reporting shall, as nearly as possible: 

    (1) provide for full disclosure of the sources and uses of 
 public funds in the district; 

    (2) permit comparison and reconciliation with the affected 
 local government's accounts and financial reports; 

    (3) permit auditing of the funds expended on behalf of a 
 district, including a single district that is part of a 
 multidistrict project or that is funded in part or whole through 
 the use of a development account funded with tax increments from 
 other districts or with other public money; 

    (4) be consistent with generally accepted accounting 
 principles. 

    (b) The authority must annually submit to the state auditor 
 a financial report in compliance with paragraph (a).  Copies of 
 the report must also be provided to the county and school 
 district boards and to the governing body of the municipality, 
 if the authority is not the municipality.  To the extent 
 necessary to permit compliance with the requirement of financial 
 reporting, the county and any other appropriate local government 
 unit or private entity must provide the necessary records or 
 information to the authority or the state auditor as provided by 
 the system of accounting and financial reporting developed 
 pursuant to paragraph (a).  The authority must submit the annual 
 report for a year on or before August 1 of the next year. 

    (c) The annual financial report must also include the 
 following items: 

    (1) the original net tax capacity of the district and any 
 subdistrict; 

    (2) the captured net tax capacity of the district, 
 including the amount of any captured net tax capacity shared 
 with other taxing districts; 

    (3) for the reporting period and for the duration of the 
 district, the amount budgeted under the tax increment financing 
 plan, and the actual amount expended for, at least, the 
 following categories: 

    (i) acquisition of land and buildings through condemnation 
 or purchase; 

    (ii)  site improvements or preparation costs; 

    (iii) installation of public utilities, parking facilities, 
 streets, roads, sidewalks, or other similar public improvements; 

    (iv) administrative costs, including the allocated cost of 
 the authority; 

    (v) public park facilities, facilities for social, 
 recreational, or conference purposes, or other similar public 
 improvements; 

    (4) for properties sold to developers, the total cost of 
 the property to the authority and the price paid by the 
 developer; and 

    (5) the amount of increments rebated or paid to developers 
 or property owners for privately financed improvements or other 
 qualifying costs. 

    (d) The reporting requirements imposed by this subdivision 
 apply to districts certified before, on, and after August 1, 
 1979. 

    Subd. 6a.    Reporting requirements.  (a) The 
 municipality must annually report to the state auditor the 
 following amounts for the entire municipality: 

    (1) the total principal amount of nondefeased tax increment 
 financing bonds that are outstanding at the end of the previous 
 calendar year; and 

    (2) the total annual amount of principal and interest 
 payments that are due for the current calendar year on (i) 
 general obligation tax increment financing bonds, and (ii) other 
 tax increment financing bonds. 

    (b) The municipality must annually report to the state 
 auditor the following amounts for each tax increment financing 
 district located in the municipality: 

    (1) the type of district, whether economic development, 
 redevelopment, housing, soils condition, mined underground 
 space, or hazardous substance site; 

    (2) the date on which the district is required to be 
 decertified; 

    (3) the amount of any payments and the value of in-kind 
 benefits, such as physical improvements and the use of building 
 space, that are financed with revenues derived from increments 
 and are provided to another governmental unit (other than the 
 municipality) during the preceding calendar year; 

    (4) the tax increment revenues for taxes payable in the 
 current calendar year; 

    (5) whether the tax increment financing plan or other 
 governing document permits increment revenues to be expended (i) 
 to pay bonds, the proceeds of which were or may be expended on 
 activities located outside of the district, (ii) for deposit 
 into a common fund from which money may be expended on 
 activities located outside of the district, or (iii) to 
 otherwise finance activities located outside of the tax 
 increment financing district; and 

    (6) any additional information that the state auditor may 
 require.  

    (c) The municipality must submit the annual report for a 
 year required by this subdivision on or before August 1 of the 
 next year. 

    (d) The state auditor may provide for combining the reports 
 required by this subdivision and subdivisions 5 and 6 so that 
 only one report is made for each year to the auditor. 

    (e) This section applies to districts certified before, on, 
 and after August 1, 1979. 

    Subd. 6b.    Duration of disclosure and reporting 
 requirements.  The disclosure and reporting requirements 
 imposed by subdivisions 5, 6, and 6a apply with respect to a tax 
 increment financing district beginning with the annual 
 disclosure and reports for the year in which the original net 
 tax capacity of the district was certified and ending with the 
 annual disclosure and reports for the year in which both of the 
 following events have occurred: 

    (1) decertification of the district; and 

    (2) expenditure or return to the county auditor of all 
 remaining revenues derived from tax increments paid by 
 properties in the district. 

    Subd. 7.    Creation of hazardous substance subdistrict; 
 response actions.  (a) An authority which is creating or has 
 created a tax increment financing district may establish within 
 the district a hazardous substance subdistrict upon the notice 
 and after the discussion, public hearing, and findings required 
 for approval of or modification to the original plan.  The 
 geographic area of the subdistrict is made up of any parcels in 
 the district designated for inclusion by the municipality or 
 authority that are designated hazardous substance sites, and any 
 additional parcels in the district designated for inclusion that 
 are contiguous to the hazardous substance sites, including 
 parcels that are contiguous to the site except for the 
 interposition of a right-of-way.  Before or at the time of 
 approval of the tax increment financing plan or plan 
 modification providing for the creation of the hazardous 
 substance subdistrict, the authority must make the findings 
 under paragraphs (b) to (d), and set forth in writing the 
 reasons and supporting facts for each. 

    (b) Development or redevelopment of the site, in the 
 opinion of the authority, would not reasonably be expected to 
 occur solely through private investment and tax increment 
 otherwise available, and therefore the hazardous substance 
 district is deemed necessary. 

    (c) Other parcels that are not designated hazardous 
 substance sites are expected to be developed together with a 
 designated hazardous substance site.  

    (d) The subdistrict is not larger than, and the period of 
 time during which increments are elected to be received is not 
 longer than, that which is necessary in the opinion of the 
 authority to provide for the additional costs due to the 
 designated hazardous substance site. 

    (e) Upon request by an authority that has incurred expenses 
 for removal or remedial actions to implement a development 
 response action plan, the attorney general may: 

    (1) bring a civil action on behalf of the authority to 
 recover the expenses, including administrative costs and 
 litigation expenses, under section 115B.04 or other law; or 

    (2) assist the authority in bringing an action as described 
 in clause (1), by providing legal and technical advice, 
 intervening in the action, or other appropriate assistance. 

 The decision to participate in any action to recover expenses is 
 at the discretion of the attorney general. 

    (f) If the attorney general brings an action as provided in 
 paragraph (e), clause (1), the authority shall certify its 
 reasonable and necessary expenses incurred to implement the 
 development response action plan and shall cooperate with the 
 attorney general as required to effectively pursue the action.  
 The certification by the authority is prima facie evidence that 
 the expenses are reasonable and necessary.  The attorney general 
 may deduct litigation expenses incurred by the attorney general 
 from any amounts recovered in an action brought under paragraph 
 (e), clause (1).  The authority shall reimburse the attorney 
 general for litigation expenses not recovered in an action under 
 paragraph (e), clause (1), but only from the additional tax 
 increment required to be used as described in section 469.176, 
 subdivision 4e.  The authority must reimburse the attorney 
 general for litigation expenses incurred to assist in bringing 
 an action under paragraph (e), clause (2), but only from amounts 
 recovered by the authority in an action or, if the amounts are 
 insufficient, from the additional tax increment required to be 
 used as described in section 469.176, subdivision 4e.  All money 
 recovered or paid to the attorney general for litigation 
 expenses under this paragraph shall be paid to the general fund 
 of the state for deposit to the account of the attorney 
 general.  For the purposes of this section, "litigation 
 expenses" means attorney fees and costs of discovery and other 
 preparation for litigation. 

    (g) The authority shall reimburse the pollution control 
 agency for its administrative expenses incurred to review and 
 approve a development action response plan.  The authority must 
 reimburse the pollution control agency for expenses incurred for 
 any services rendered to the attorney general to support the 
 attorney general in actions brought or assistance provided under 
 paragraph (e), but only from amounts recovered by the authority 
 in an action brought under paragraph (e) or from the additional 
 tax increment required to be used as described in section 
 469.176, subdivision 4e.  All money paid to the pollution 
 control agency under this paragraph shall be deposited in the 
 environmental response, compensation and compliance fund. 

    (h) Actions taken by an authority consistent with a 
 development response action plan are deemed to be authorized 
 response actions for the purpose of section 115B.17, subdivision 
 12.  An authority that takes actions consistent with a 
 development response action plan qualifies for the defenses 
 available under sections 115B.04, subdivision 11, and 115B.05, 
 subdivision 9. 

    (i) All money recovered by an authority in an action 
 brought under paragraph (e) in excess of the amounts paid to the 
 attorney general and the pollution control agency must be 
 treated as excess increments and be distributed as provided in 
 section 469.176, subdivision 2, clause (4), to the extent the 
 removal and remedial actions were initially financed with 
 increment revenues. 

    Subd. 7a. Repealed, 1995 c 264 art 5 s 48 

    Subd. 8.    Payment of debt service on credit enhanced 
 bonds.  A tax increment financing plan may provide for the use 
 of the tax increment to pay, or secure payment of, debt service 
 on credit enhanced bonds issued to finance any project located 
 within the boundaries of the municipality, whether or not the 
 tax increment financing district from which the increment is 
 derived is located within the boundaries of the project. 

    HIST: 1987 c 291 s 176; 1987 c 312 art 1 s 26 subd 2; 1988 c 
 719 art 5 s 84; art 12 s 9-14; 1989 c 277 art 2 s 63; 1989 c 329 
 art 13 s 20; 1989 c 335 art 1 s 246,247; 1Sp1989 c 1 art 14 s 
 6-8; 1990 c 604 art 7 s 10-14; 1993 c 375 art 3 s 43; art 14 s 
 7-9; 1995 c 264 art 5 s 17-21; 1996 c 471 art 7 s 11-13; art 11 
 s 14; 1997 c 231 art 10 s 5; 1998 c 389 art 11 s 2-5