469.1813 ABATEMENT AUTHORITY.
Subdivision 1. Authority.
The governing body of a political subdivision may grant a
current or prospective abatement, by contract or otherwise, of the taxes imposed by the political
subdivision on a parcel of property, which may include personal property and machinery, or defer
the payments of the taxes and abate the interest and penalty that otherwise would apply, if:
(1) it expects the benefits to the political subdivision of the proposed abatement agreement
to at least equal the costs to the political subdivision of the proposed agreement or intends the
abatement to phase in a property tax increase, as provided in clause (2)(vii); and
(2) it finds that doing so is in the public interest because it will:
(i) increase or preserve tax base;
(ii) provide employment opportunities in the political subdivision;
(iii) provide or help acquire or construct public facilities;
(iv) help redevelop or renew blighted areas;
(v) help provide access to services for residents of the political subdivision;
(vi) finance or provide public infrastructure;
(vii) phase in a property tax increase on the parcel resulting from an increase of 50 percent or
more in one year on the estimated market value of the parcel, other than increase attributable to
improvement of the parcel; or
(viii) stabilize the tax base through equalization of property tax revenues for a specified
period of time with respect to a taxpayer whose real and personal property is subject to valuation
under Minnesota Rules, chapter 8100.
Subd. 1a. Use of term.
As used in this section and sections
"abatement" includes a deferral of taxes with abatement of interest and penalties unless the
context indicates otherwise.
Subd. 2. Abatement resolution.
(a) The governing body of a political subdivision may grant
an abatement only by adopting an abatement resolution, specifying the terms of the abatement. In
the case of a town, the board of supervisors may approve the abatement resolution. The resolution
must also include a specific statement as to the nature and extent of the public benefits which
the governing body expects to result from the agreement. The resolution may provide that the
political subdivision will retain or transfer to another political subdivision the abatement to pay
for all or part of the cost of acquisition or improvement of public infrastructure, whether or
not located on or adjacent to the parcel for which the tax is abated. The abatement may reduce
all or part of the property tax amount for the political subdivision on the parcel. A political
subdivision's maximum annual amount for a parcel equals its total local tax rate multiplied by the
total net tax capacity of the parcel.
(b) The political subdivision may limit the abatement:
(1) to a specific dollar amount per year or in total;
(2) to the increase in property taxes resulting from improvement of the property;
(3) to the increases in property taxes resulting from increases in the market value or tax
capacity of the property;
(4) in any other manner the governing body of the subdivision determines is appropriate; or
(5) to the interest and penalty that would otherwise be due on taxes that are deferred.
(c) The political subdivision may not abate tax attributable to the areawide tax under chapter
276A or 473F, except as provided in this subdivision.
Subd. 3. School district abatements.
An abatement granted under this section is not an
abatement for purposes of state aid or local levy under sections
Subd. 4. Property located in tax increment financing districts.
The governing body of
a political subdivision may not enter into a property tax abatement agreement under sections
that provides for abatement of taxes on a parcel, if the abatement will occur
while the parcel is located in a tax increment financing district.
Subd. 5. Notice and public hearing.
(a) The governing body of the political subdivision
may approve an abatement under sections
only after holding a public
hearing on the abatement.
(b) Notice of the hearing must be published in a newspaper of general circulation in the
political subdivision at least once more than ten days but less than 30 days before the hearing.
The newspaper must be one of general interest and readership in the community, and not one
of limited subject matter. The newspaper must be published at least once per week. The notice
must indicate that the governing body will consider granting a property tax abatement, identify
the property or properties for which an abatement is under consideration, and the total estimated
amount of the abatement.
Subd. 6. Duration limit.
(a) A political subdivision may grant an abatement for a period no
longer than 15 years, except as provided under paragraph (b). The abatement period commences
in the first year in which the abatement granted is either paid or retained in accordance with
, subdivision 2. The subdivision may specify in the abatement resolution a
shorter duration. If the resolution does not specify a period of time, the abatement is for eight
years. If an abatement has been granted to a parcel of property and the period of the abatement
has expired, the political subdivision that granted the abatement may not grant another abatement
for eight years after the expiration of the first abatement. This prohibition does not apply to
improvements added after and not subject to the first abatement. Economic abatement agreements
for real and personal property subject to valuation under Minnesota Rules, chapter 8100, are not
subject to this prohibition and may be granted successively.
(b) A political subdivision proposing to abate taxes for a parcel may request, in writing, that
the other political subdivisions in which the parcel is located grant an abatement for the property.
If one of the other political subdivisions declines, in writing, to grant an abatement or if 90 days
pass after receipt of the request to grant an abatement without a written response from one of
the political subdivisions, the duration limit for an abatement for the parcel by the requesting
political subdivision and any other participating political subdivision is increased to 20 years.
If the political subdivision which declined to grant an abatement later grants an abatement for
the parcel, the 20-year duration limit is reduced by one year for each year that the declining
political subdivision grants an abatement for the parcel during the period of the abatement granted
by the requesting political subdivision. The duration limit may not be reduced below the limit
under paragraph (a).
Subd. 6a. Deferment payment schedule.
When the tax is deferred and the interest and
penalty abated, the political subdivision must set a schedule for repayments. The deferred
payment must be included with the current taxes due and payable in the years the deferred
payments are due and payable and must be levied accordingly.
Subd. 6b. Extended duration limit.
(a) Notwithstanding the provisions of subdivision 6,
a political subdivision may grant an abatement for a period of up to 20 years, if the abatement
is for a qualified business.
(b) To be a qualified business for purposes of this subdivision, at least 50 percent of the
payroll of the operations of the business that qualify for the abatement must be for employees
engaged in one of the following lines of business or any combination of them:
(2) agricultural processing;
(4) research and development;
(5) warehousing; or
(6) qualified high technology.
Alternatively, a qualified business also includes a taxpayer whose real and personal property
is subject to valuation under Minnesota Rules, chapter 8100.
(c)(1) "Manufacturing" means the material staging and production of tangible personal
property by procedures commonly regarded as manufacturing, processing, fabrication, or
assembling which changes some existing material into new shapes, new qualities, or new
(2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code of 1986.
(3) "Agricultural processing" means transforming, packaging, sorting, or grading livestock
or livestock products, agricultural commodities, or plants or plant products into goods that are
used for intermediate or final consumption including goods for nonfood use.
(4) "Research and development" means qualified research as defined in section 41(d) of
the Internal Revenue Code of 1986.
(5) "Qualified high technology" means one or more of the following activities:
(i) advanced computing, which is any technology used in the design and development of
any of the following:
(A) computer hardware and software;
(B) data communications; and
(C) information technologies;
(ii) advanced materials, which are materials with engineered properties created through the
development of specialized process and synthesis technology;
(iii) biotechnology, which is any technology that uses living organisms, cells,
macromolecules, microorganisms, or substances from living organisms to make or modify a
product, improve plants or animals, or develop microorganisms for useful purposes;
(iv) electronic device technology, which is any technology that involves microelectronics,
semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and
millimeter electronics, and optical and optic-electrical devices, or data and digital communications
and imaging devices;
(v) engineering or laboratory testing related to the development of a product;
(vi) technology that assists in the assessment or prevention of threats or damage to human
health or the environment, including, but not limited to, environmental cleanup technology,
pollution prevention technology, or development of alternative energy sources;
(vii) medical device technology, which is any technology that involves medical equipment
or products other than a pharmaceutical product that has therapeutic or diagnostic value and
is regulated; or
(viii) advanced vehicles technology which is any technology that involves electric vehicles,
hybrid vehicles, or alternative fuel vehicles, or components used in the construction of electric
vehicles, hybrid vehicles, or alternative fuel vehicles. An electric vehicle is a road vehicle that
draws propulsion energy only from an on-board source of electrical energy. A hybrid vehicle is a
road vehicle that can draw propulsion energy from both a consumable fuel and a rechargeable
energy storage system.
(d) The authority to grant new abatements under this subdivision expires on July 1, 2004,
except that the authority to grant new abatements for real and personal property subject to
valuation under Minnesota Rules, chapter 8100, does not expire.
Subd. 7. Review and modification of abatements.
The political subdivision may provide in
the abatement resolution that the abatement may not be modified or changed during its term. If
the abatement resolution does not provide that the abatement may not be modified or changed,
the governing body of the political subdivision may review and modify the abatement every
second year after it was approved.
Subd. 8. Limitation on abatements.
In any year, the total amount of property taxes abated
by a political subdivision under this section may not exceed (1) ten percent of the current levy, or
(2) $200,000, whichever is greater. The limit under this subdivision does not apply to:
(i) an uncollected abatement from a prior year that is added to the abatement levy; or
(ii) a taxpayer whose real and personal property is subject to valuation under Minnesota
Rules, chapter 8100.
Subd. 9. Consent of property owner not required.
A political subdivision may abate the
taxes on a parcel under sections
without obtaining the consent of the
property owner. This subdivision does not apply to abatements granted to a taxpayer whose real
and personal property is valued under Minnesota Rules, chapter 8100.
Subd. 10. Applicability to utility properties.
When this statute is applied or utilized with
respect to a taxpayer whose real and personal property is subject to valuation under Minnesota
Rules, chapter 8100, the provisions of this section and sections
apply only to property specified or described in the abatement contract or agreement.
History: 1997 c 231 art 2 s 46; 1998 c 397 art 11 s 3; 1999 c 243 art 10 s 8-14; 1999 c 248 s
19; 2000 c 490 art 11 s 33-35; 1Sp2001 c 5 art 15 s 26; 2002 c 377 art 7 s 5; 2003 c 127 art 10 s
26; art 12 s 19; 1Sp2003 c 21 art 10 s 11; 2005 c 152 art 1 s 17; 2006 c 259 art 4 s 14-19