Subdivision 1. Generally.
, the terms defined in this section
have the meanings given them herein, unless the context indicates a different meaning.
Subd. 2. Authority.
"Authority" means a rural development financing authority created
pursuant to sections
; a housing and redevelopment authority created
pursuant to sections
; a port authority created pursuant to sections
; an economic development authority created pursuant to sections
a redevelopment agency as defined in sections
; a municipality that is
administering a development district created pursuant to sections
special law; a municipality that undertakes a project pursuant to sections
except a town located outside the metropolitan area or with a population of 5,000 persons or
less; or a municipality that exercises the powers of a port authority pursuant to any general
or special law.
Subd. 3. Bonds.
(a) "Bonds" means any bonds or other obligations issued:
(1) by an authority under section
(2) in aid of a project under any other law, except revenue bonds issued pursuant to sections
, prior to August 1, 1979.
(b) Bonds or other obligations include:
(1) refunding bonds;
(3) interim certificates;
(4) debentures; and
(5) interfund loans or advances qualifying under section
469.178, subdivision 7
Subd. 4. Captured net tax capacity.
"Captured net tax capacity" means the amount by
which the current net tax capacity of a tax increment financing district or an extended subdistrict
exceeds the original net tax capacity, including the value of property normally taxable as personal
property by reason of its location on or over property owned by a tax-exempt entity. In the case
of a hazardous substance subdistrict, except an extended subdistrict, "captured net tax capacity"
means the amount, if any, by which the lesser of (1) the original net tax capacity or (2) the current
net tax capacity of the portion of the tax increment financing district overlying the subdistrict
exceeds the original net tax capacity of the subdistrict.
Subd. 5. Governing body.
"Governing body" means the elected council or board of
Subd. 6. Municipality.
"Municipality" means the city, however organized, in which the
district is located, with the following exceptions:
(1) for a project undertaken pursuant to sections
, "municipality" has the
meaning given in sections
(2) for a project undertaken pursuant to sections
, or a county or
multicounty project undertaken pursuant to sections
or special law,
"municipality" means the county in which the district is located.
Subd. 7. Original net tax capacity.
(a) Except as provided in paragraph (b), "original net
tax capacity" means the tax capacity of all taxable real property within a tax increment financing
district as certified by the commissioner of revenue for the previous assessment year, provided
that the request by an authority for certification of a new tax increment financing district or for the
expansion of an existing district has been made to the county auditor by June 30. The original tax
capacity of districts for which requests are filed after June 30 has an original tax capacity based on
the current assessment year. In any case, the original tax capacity must be determined together
with subsequent adjustments as set forth in section
469.177, subdivisions 1 and 4
. In determining
the original net tax capacity the net tax capacity of real property exempt from taxation at the time
of the request shall be zero, except for real property which is tax exempt by reason of public
ownership by the requesting authority and which has been publicly owned for less than one year
prior to the date of the request for certification, in which event the net tax capacity of the property
shall be the net tax capacity as most recently determined by the commissioner of revenue.
(b) The original net tax capacity of any designated hazardous substance site or hazardous
substance subdistrict shall be determined as of the date the authority certifies to the county auditor
that the authority has entered a redevelopment or other agreement for the removal actions or
remedial actions specified in a development response action plan, or otherwise provided funds to
finance the development response action plan. The original net tax capacity equals (1) the net
tax capacity of the parcel or parcels in the site or subdistrict, as most recently determined by
the commissioner of revenue, less (2) the estimated costs of the removal actions and remedial
actions as specified in a development response action plan to be undertaken with respect to the
parcel or parcels, (3) but not less than zero.
(c) The original net tax capacity of a hazardous substance site or subdistrict shall be
increased by the amount by which it was reduced pursuant to paragraph (b), clause (2), upon
certification by the municipality that the cost of the removal and remedial actions specified in
the development response action plan, except for long-term monitoring and similar activities,
have been paid or reimbursed.
(d) For purposes of this subdivision, "real property" shall include any property normally
taxable as personal property by reason of its location on or over publicly owned property.
Subd. 8. Project.
"Project" means a project as described in section
; an industrial
development district as described in section
469.058, subdivision 1
; an economic development
district as described in section
469.101, subdivision 1
; a project as defined in section
; a development district as defined in section
469.125, subdivision 9
, or any special
law; or a project as defined in section
469.153, subdivision 2
, paragraph (a), (b), or (c).
Subd. 9. Tax increment financing district.
"Tax increment financing district" or "district"
means a contiguous or noncontiguous geographic area within a project delineated in the tax
increment financing plan, as provided by section
469.175, subdivision 1
, for the purpose of
financing redevelopment, housing or economic development in municipalities through the use of
tax increment generated from the captured net tax capacity in the tax increment financing district.
Subd. 10. Redevelopment district.
(a) "Redevelopment district" means a type of tax
increment financing district consisting of a project, or portions of a project, within which the
authority finds by resolution that one or more of the following conditions, reasonably distributed
throughout the district, exists:
(1) parcels consisting of 70 percent of the area of the district are occupied by buildings,
streets, utilities, paved or gravel parking lots, or other similar structures and more than 50 percent
of the buildings, not including outbuildings, are structurally substandard to a degree requiring
substantial renovation or clearance;
(2) the property consists of vacant, unused, underused, inappropriately used, or infrequently
used railyards, rail storage facilities, or excessive or vacated railroad rights-of-way;
(3) tank facilities, or property whose immediately previous use was for tank facilities, as
defined in section
115C.02, subdivision 15
, if the tank facilities:
(i) have or had a capacity of more than 1,000,000 gallons;
(ii) are located adjacent to rail facilities; and
(iii) have been removed or are unused, underused, inappropriately used, or infrequently
(4) a qualifying disaster area, as defined in subdivision 10b.
(b) For purposes of this subdivision, "structurally substandard" shall mean containing defects
in structural elements or a combination of deficiencies in essential utilities and facilities, light and
ventilation, fire protection including adequate egress, layout and condition of interior partitions,
or similar factors, which defects or deficiencies are of sufficient total significance to justify
substantial renovation or clearance.
(c) A building is not structurally substandard if it is in compliance with the building code
applicable to new buildings or could be modified to satisfy the building code at a cost of less than
15 percent of the cost of constructing a new structure of the same square footage and type on
the site. The municipality may find that a building is not disqualified as structurally substandard
under the preceding sentence on the basis of reasonably available evidence, such as the size,
type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or
other similar reliable evidence. The municipality may not make such a determination without an
interior inspection of the property, but need not have an independent, expert appraisal prepared of
the cost of repair and rehabilitation of the building. An interior inspection of the property is not
required, if the municipality finds that (1) the municipality or authority is unable to gain access to
the property after using its best efforts to obtain permission from the party that owns or controls
the property; and (2) the evidence otherwise supports a reasonable conclusion that the building
is structurally substandard. Items of evidence that support such a conclusion include recent fire
or police inspections, on-site property tax appraisals or housing inspections, exterior evidence
of deterioration, or other similar reliable evidence. Written documentation of the findings and
reasons why an interior inspection was not conducted must be made and retained under section
469.175, subdivision 3
, clause (1). Failure of a building to be disqualified under the provisions
of this paragraph is a necessary, but not a sufficient, condition to determining that the building
(d) A parcel is deemed to be occupied by a structurally substandard building for purposes of
the finding under paragraph (a) if all of the following conditions are met:
(1) the parcel was occupied by a substandard building within three years of the filing of the
request for certification of the parcel as part of the district with the county auditor;
(2) the substandard building was demolished or removed by the authority or the demolition
or removal was financed by the authority or was done by a developer under a development
agreement with the authority;
(3) the authority found by resolution before the demolition or removal that the parcel was
occupied by a structurally substandard building and that after demolition and clearance the
authority intended to include the parcel within a district; and
(4) upon filing the request for certification of the tax capacity of the parcel as part of a
district, the authority notifies the county auditor that the original tax capacity of the parcel must be
adjusted as provided by section
469.177, subdivision 1
, paragraph (f).
(e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities,
paved or gravel parking lots, or other similar structures unless 15 percent of the area of the parcel
contains buildings, streets, utilities, paved or gravel parking lots, or other similar structures.
(f) For districts consisting of two or more noncontiguous areas, each area must qualify as a
redevelopment district under paragraph (a) to be included in the district, and the entire area of the
district must satisfy paragraph (a).
Subd. 10a. Renewal and renovation district.
(a) "Renewal and renovation district" means a
type of tax increment financing district consisting of a project, or portions of a project, within
which the authority finds by resolution that:
(1)(i) parcels consisting of 70 percent of the area of the district are occupied by buildings,
streets, utilities, paved or gravel parking lots, or other similar structures; (ii) 20 percent of
the buildings are structurally substandard; and (iii) 30 percent of the other buildings require
substantial renovation or clearance to remove existing conditions such as: inadequate street
layout, incompatible uses or land use relationships, overcrowding of buildings on the land,
excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or
other identified hazards to the health, safety, and general well-being of the community; and
(2) the conditions described in clause (1) are reasonably distributed throughout the
geographic area of the district.
(b) For purposes of determining whether a building is structurally substandard, whether
parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar
structures, or whether noncontiguous areas qualify, the provisions of subdivision 10, paragraphs
(c), (e), and (f) apply.
Subd. 10b. Qualified disaster area.
A "qualified disaster area" is an area that meets the
(1) parcels consisting of 70 percent of the area of the district were occupied by buildings,
streets, utilities, paved or gravel parking lots, or other similar structures immediately before
the disaster or emergency;
(2) the area of the district was subject to a disaster or emergency, as defined in section
273.123, subdivision 1
, within the 18-month period ending on the day the request for certification
of the district is made; and
(3) 50 percent or more of the buildings in the area have suffered substantial damage as a
result of the disaster or emergency.
Subd. 11. Housing district.
"Housing district" means a type of tax increment financing
district which consists of a project, or a portion of a project, intended for occupancy, in part, by
persons or families of low and moderate income, as defined in chapter 462A, Title II of the
National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act
of 1937, as amended, Title V of the Housing Act of 1949, as amended, any other similar present
or future federal, state, or municipal legislation, or the regulations promulgated under any of those
acts, and that satisfies the requirements of section
. Housing project means a project, or a
portion of a project, that meets all of the qualifications of a housing district under this subdivision,
whether or not actually established as a housing district.
Subd. 12. Economic development district.
"Economic development district" means a type
of tax increment financing district which consists of any project, or portions of a project, which
the authority finds to be in the public interest because:
(1) it will discourage commerce, industry, or manufacturing from moving their operations
to another state or municipality; or
(2) it will result in increased employment in the state; or
(3) it will result in preservation and enhancement of the tax base of the state.
Subd. 13.[Repealed, 2000 c 490 art 11 s 44
Subd. 14. Administrative expenses.
"Administrative expenses" means all expenditures
of an authority other than:
(1) amounts paid for the purchase of land;
(2) amounts paid to contractors or others providing materials and services, including
architectural and engineering services, directly connected with the physical development of the
real property in the project;
(3) relocation benefits paid to or services provided for persons residing or businesses located
in the project;
(4) amounts used to pay principal or interest on, fund a reserve for, or sell at a discount
bonds issued pursuant to section
(5) amounts used to pay other financial obligations to the extent those obligations were used
to finance costs described in clauses (1) to (3).
For districts for which the requests for certifications were made before August 1, 1979, or
after June 30, 1982, "administrative expenses" includes amounts paid for services provided by
bond counsel, fiscal consultants, and planning or economic development consultants.
Subd. 15. Parcel.
"Parcel" means a tract or plat of land established prior to the certification
of the district as a single unit for purposes of assessment.
Subd. 16. Designated hazardous substance site.
"Designated hazardous substance site"
means any parcel or parcels with respect to which the authority has certified to the county auditor
that the authority has entered into a redevelopment or other agreement providing for the removal
actions or remedial actions specified in a development response action plan or the authority will
use other available money, including without limitation tax increments, to finance the removal
or remedial actions. A parcel described in the plan or plan amendment may be designated for
inclusion in the hazardous substance subdistrict prior to approval of the development action
response plan on the basis of the reasonable expectation of the municipality. Such parcel may not
be certified as part of the subdistrict until the development action response plan has been approved.
Subd. 17. Development action response plan.
"Development action response plan" means a
plan or proposal for removal actions or remedial actions if the plan or proposal is submitted to
the pollution control agency and the actions recommended in the plan or proposal are approved
in writing by the commissioner of the agency as reasonable and necessary to protect the public
health, welfare, and environment. The commissioner shall review the development action
response plan and approve, modify, or reject the recommended actions within 60 days after
submission of the plan (or revised plan) by the authority. The commissioner shall notify the
authority in writing of the decision on the recommended actions within 30 days after the decision
and, if the recommended actions are rejected, shall specify the reasons for rejection.
Subd. 18. Terms defined in other chapters.
The terms "removal," "remedy," "remedial
action," "response," "hazardous substance," and "pollutant or contaminant" have the meanings
given in section
. The term "petroleum" has the meaning given in section
Subd. 19. Soils condition district.
(a) "Soils condition district" means a type of tax
increment financing district consisting of a project, or portions of a project, within which the
authority finds by resolution that the following conditions exist:
(1) the presence of hazardous substances, pollution, or contaminants requires removal or
remedial action for use;
(2) the estimated cost of the proposed removal and remedial action exceeds the fair market
value of the land before completion of the preparation.
The requirements of clause (2) need not be satisfied, if each parcel of property in the district
either satisfies the requirements of clause (2) or the estimated costs of the proposed removal or
remedial action exceeds $2 per square foot for the area of the parcel.
(b) The proposed removal or remediation action must be specified in a development action
response plan to satisfy the requirements of paragraph (a).
Subd. 20. Internal Revenue Code.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through December 31, 1993.
Subd. 21. Credit enhanced bonds.
"Credit enhanced bonds" means special obligation
bonds that are:
(1) payable primarily from tax increments (i) derived from a tax increment financing district
within which the activity, as defined in section
469.1763, subdivision 1
, financed by at least the
applicable in-district percentage of the bond proceeds is located and (ii) estimated on the date of
issuance to be sufficient to pay when due the debt service on the bonds, and
(2) further secured by tax increments (i) derived from one or more tax increment financing
districts and (ii) determined by the issuer to be necessary in order to make the marketing of the
For purposes of this subdivision, "applicable in-district percentage" means the percentage
469.1763, subdivision 2
, for the district.
Subd. 22. Tourism facility.
"Tourism facility" means property that:
(1) is located in a county where the median income is no more than 85 percent of the state
(2) is located in a county in development region 2, 3, 4, or 5, as defined in section
(3) is not located in a city with a population in excess of 20,000; and
(4) is acquired, constructed, or rehabilitated for use as a convention and meeting facility that
is privately owned, marina, hotel, motel, lodging facility, or nonhomestead dwelling unit that in
each case is intended to serve primarily individuals from outside the county.
Subd. 23. Hazardous substance subdistrict.
"Hazardous substance subdistrict" or
"subdistrict" means a hazardous substance subdistrict created under section
Subd. 24. Extended subdistrict.
"Extended subdistrict" means a hazardous substance
subdistrict, but only for any period during which the subdistrict remains in effect after the
overlying tax increment district has terminated.
Subd. 25. Increment.
"Increment," "tax increment," "tax increment revenues," "revenues
derived from tax increment," and other similar terms for a district include:
(1) taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed
(2) the proceeds from the sale or lease of property, tangible or intangible, to the extent the
property was purchased by the authority with tax increments;
(3) principal and interest received on loans or other advances made by the authority with
(4) interest or other investment earnings on or from tax increments;
(5) repayments or return of tax increments made to the authority under agreements for
districts for which the request for certification was made after August 1, 1993; and
(6) the market value homestead credit paid to the authority under section
Subd. 26. Population.
"Population" means the population established as of December 31
by the most recent of the following:
(1) the federal census;
(2) a special census conducted under contract with the United States Bureau of the Census;
(3) a population estimate made by the Metropolitan Council; and
(4) a population estimate made by the state demographer under section
The population so established applies to the following calendar year.
Subd. 27. Small city.
"Small city" means any home rule charter or statutory city that has
a population of 5,000 or less and that is located ten miles or more from a home rule charter or
statutory city, located in this state, with a population of 10,000 or more. For purposes of this
definition, the distance between cities is measured by drawing a straight line from the nearest
boundaries of the two cities.
Subd. 28. Decertify or decertification.
"Decertify" or "decertification" means the
termination of a tax increment financing district which occurs when the county auditor removes
all remaining parcels from the district.
Subd. 29. Qualified housing district.
"Qualified housing district" means:
(1) 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 the rent
restriction requirements and the low-income occupancy test for a qualified low-income housing
project under section 42(g) of the Internal Revenue Code of 1986, as amended through December
31, 2002, regardless of whether the project actually receives a low-income housing credit; or
(2) a housing district for a single-family homeownership project or projects, if 95 percent
or more of the homes receiving assistance from tax increments from the district are purchased
by qualified purchasers. A qualified purchaser means the first purchaser of a home after the tax
increment assistance is provided whose income is at or below 85 percent of the median gross
income for a family of the same size as the purchaser. Median gross income is the greater of
(i) area median gross income, or (ii) the statewide median gross income, as determined by the
secretary of Housing and Urban Development.
History: 1987 c 291 s 175; 1988 c 719 art 5 s 84; art 12 s 1-8; 1989 c 277 art 2 s 62; 1989 c
329 art 13 s 20; 1Sp1989 c 1 art 14 s 1-5; 1990 c 391 art 8 s 50; 1990 c 604 art 7 s 4-9; 1991 c
291 art 10 s 4,5; 1993 c 375 art 14 s 4-6; 1994 c 465 art 1 s 53; 1994 c 587 art 1 s 24; 1995 c
264 art 5 s 12-16; 1996 c 471 art 7 s 9,10; 1997 c 231 art 10 s 1-4; 1998 c 389 art 11 s 1;
1999 c 248 s 20; 2000 c 490 art 11 s 13-18; 1Sp2001 c 5 art 15 s 3-6; 2003 c 127 art 10 s 1-5;
1Sp2003 c 21 art 10 s 2-4; 2005 c 152 art 2 s 5,6