375.194 ECONOMIC DEVELOPMENT TAX ABATEMENT.
Subdivision 1. Definitions.
For purposes of this section, the following terms have the
meanings given them.
(a) "Eligible county" means a county whose county government average tax rate is at least
45 points higher than an adjacent neighboring county's county government average tax rate in the
initial year that the tax abatement is granted on the eligible property. An eligible county cannot be
one of the seven metropolitan counties under section
473.121, subdivision 4
(b) "Neighboring county" means a county whose average county government tax rate is at
least 45 points lower than the average county government tax rate of an adjacent county that is an
eligible county, in the initial year that the tax abatement is granted.
(c) "Eligible property" means property located in an eligible county within 20 miles
of the neighboring county and is either (i) commercial property classified under section
273.13, subdivision 24
, whose estimated market value has increased by at least $400,000 from
improvements made on that property by the taxpayer after January 2, 1996, or (ii) industrial
property classified under section
273.13, subdivision 24
, whose estimated market value has
increased by at least $100,000 from improvements made on that property by the taxpayer after
January 2, 1996.
(d) "Improvements" means (i) new construction, and (ii) rehabilitation, reconstruction,
and additions to existing structures.
(e) "Maximum tax abatement" for any given year means the difference between (i) the
eligible county's current year county government tax rate times the net tax capacity of the eligible
property, and (ii) the neighboring county's current year county government tax rate times the net
tax capacity of the eligible property.
(f) "Taxpayer" means the person who is responsible for payment of the property tax,
including a lessee who pays the taxes on the eligible property.
Subd. 2. Abatement authority.
The county board of an eligible county may enter into a
written agreement with the taxpayer of eligible property to grant a property tax abatement to the
taxpayer. The agreement must specify the percentage of the maximum tax abatement to be granted
for each of the designated tax abatement years. The agreement must not provide a property tax
abatement for any given year that exceeds the maximum tax abatement under subdivision 1,
paragraph (e). The maximum length of the agreement is ten years. Even if the difference in the
two county average tax rates in any given year is less than the required 45-point minimum, the
agreement shall remain in effect for its duration. The agreement is binding unless both the eligible
county's county board and the taxpayer mutually agree upon any changes in the agreement.
Subd. 3. Abatement calculations.
The actual tax abatement shall be computed annually
by the county auditor of the county in which the eligible property is located using (i) the
difference between the eligible county's current year average county government tax rate and the
neighboring county's current year average county government tax rate, and (ii) the percentage of
the maximum tax abatement specified in the agreement.
If the improvements are made over two calendar years, the county board is allowed to grant
the initial tax abatement based on improvements of less than the $100,000 estimated market value
for industrial property and $400,000 estimated market value for commercial property, provided
that the county board has finalized the agreement and is reasonably assured that the minimum
dollar requirements provided in subdivision 1 will be met over the two-year time period. However,
the agreement's ten-year maximum time period begins with the year the first abatement is granted.
Subd. 4. Proposed and final property tax statements.
For purposes of determining the
eligible property's taxes on the proposed property tax statement under section
, the amount
shown will be the amount before the deduction of the tax abatement under subdivision 3. The
property taxes shown on the final property tax statement shall reflect both the taxes before and
after the tax abatement granted under this section.
Subd. 5. Determination of county tax rate.
The eligible county's proposed and final tax
rates shall be determined by dividing the certified levy by the total taxable net tax capacity, without
regard to any abatements granted under this section. The county board shall make available the
estimated amount of the abatement at the public hearing under section
275.065, subdivision 6
Subd. 6. Property eligible TIF.
Eligible property may be located in a tax increment
financing district, provided that (i) the governing body of the municipality containing the district
approves the written agreement under subdivision 2, and (ii) the county treasurer, when making
property tax settlements of the property tax collected on eligible property, shall deduct the full
amount of the tax abatement granted to the eligible property under this section from the property
tax distribution made to the tax increment financing district.
History: 1996 c 471 art 3 s 37