USA Minnesota

USA Statutes : minnesota
Title : LOCAL ECONOMIC DEVELOPMENT
Chapter : Economic development
469.001 Purposes.
The purposes of sections 469.001 to 469.047 are:
(1) to provide a sufficient supply of adequate, safe, and sanitary dwellings in order to protect the health, safety, morals, and welfare of the citizens of this state;
(2) to clear and redevelop blighted areas;
(3) to perform those duties according to comprehensive plans;
(4) to remedy the shortage of housing for low and moderate income residents, and to redevelop blighted areas, in situations in which private enterprise would not act without government participation or subsidies; and
(5) in cities of the first class, to provide housing for persons of all incomes.
Public participation in activities intended to meet the purposes of sections 469.001 to 469.047 and the exercise of powers confined by sections 469.001 to 469.047 are public uses and purposes for which private property may be acquired and public money spent.
469.002 Definitions.
Subdivision 1. Generally. In sections 469.001 to 469.047, the terms defined in this section have the meanings given to them herein, unless the context indicates a different meaning.
Subd. 2. Authority. "Authority" means a housing and redevelopment authority created or authorized to be created by sections 469.001 to 469.047.
Subd. 3. City. "City" means a home rule charter or statutory city.
Subd. 4. State public body. "State public body" means any city, county, commission, district, authority, or other political subdivision or instrumentality of this state.
Subd. 5. Governing body. "Governing body" means the council, board of trustees, or other body charged with governing any state public body.
Subd. 6. Mayor. "Mayor" means the mayor of a city.
Subd. 7. Clerk. "Clerk" means the clerk of a city or the officer of any other state public body charged with the duties customarily imposed on the clerk of a city.
Subd. 8. Area of operation. "Area of operation" means, in the case of an authority created in and for a city, county, or group of counties, the area within the territorial boundaries of that city, county, or group of counties.
Subd. 9. Federal government. "Federal government" includes the United States of America, the Department of Housing and Urban Development, or any other department, agency, or instrumentality of the United States of America.
Subd. 10. Federal legislation. "Federal legislation" includes the United States Housing Act of 1937, United States Code, title 42, sections 1401 to 1440, as amended through December 31, 1998; the National Housing Act, United States Code, title 12, sections 1701 to 1750g, as amended through December 31, 1989; and any other legislation of the Congress of the United States relating to federal assistance for clearance or rehabilitation of substandard or blighted areas, land assembly, redevelopment projects, or housing.
Subd. 11. Blighted area. "Blighted area" means any area with buildings or improvements which, by reason of dilapidation, obsolescence, overcrowding, faulty arrangement or design, lack of ventilation, light, and sanitary facilities, excessive land coverage, deleterious land use, or obsolete layout, or any combination of these or other factors, are detrimental to the safety, health, morals, or welfare of the community.
Subd. 12. Project. "Project" means a housing project, a housing development project or a redevelopment project, or any combination of those projects. The term "project" also may be applied to all real and personal property, assets, cash, or other funds, held or used in connection with the development or operation of the project. The term "project" also includes an interest reduction program authorized by section 469.012, subdivision 7.
Subd. 13. Housing project. "Housing project" means any work or undertaking to provide decent, safe, and sanitary dwellings for persons of low income and their families.
Such work or undertaking may include acquisition or provision of buildings, land, equipment, facilities, and other real or personal property for necessary, convenient, or desirable appurtenances, streets, sewers, water service, utilities, site preparation, landscaping, administrative, community, health, recreational, welfare, or other purposes.
"Housing project" also includes the planning of the buildings and improvements, the acquisition of property, the demolition or removal of existing structures, the construction, reconstruction, alteration, and repair of the improvements and all other work in connection therewith.
Subd. 14. Redevelopment project. "Redevelopment project" means any work or undertaking:
(1) to acquire blighted areas and other real property for the purpose of removing, preventing, or reducing blight, blighting factors, or the causes of blight;
(2) to clear any areas acquired and install, construct or reconstruct streets, utilities, and site improvements essential to the preparation of sites for uses in accordance with the redevelopment plan;
(3) to sell or lease land so acquired for uses in accordance with the redevelopment plan;
(4) to prepare a redevelopment plan, and to incur initiation, planning, survey and other administrative costs of a redevelopment project, and to prepare technical and financial plans and arrangements for buildings, structures, and improvements and all other work in connection therewith; or
(5) to conduct an urban renewal project. The term "urban renewal project" may include undertakings and activities for the elimination or for the prevention of the development or spread of slums or blighted or deteriorating areas and may involve any work or undertaking for that purpose constituting a redevelopment project or any rehabilitation or conservation work. For this purpose, "rehabilitation or conservation work" may include (i) carrying out plans for a program of voluntary or compulsory repair and rehabilitation of buildings or other improvements; (ii) acquisition of real property and demolition, removal, or rehabilitation of buildings and improvements thereon where necessary to eliminate unhealthful, unsanitary or unsafe conditions, lessen density, reduce traffic hazards, eliminate obsolete or other uses detrimental to the public welfare, or to otherwise remove or prevent the spread of blight or deterioration, to promote historic and architectural preservation, or to provide land for needed public facilities; (iii) installation, construction, or reconstruction of streets, utilities, parks, playgrounds, and other improvements necessary for carrying out the objectives of the urban renewal project; (iv) the disposition, for uses in accordance with the objectives of the urban renewal project, of any property or part thereof acquired in the area of the project; provided that the disposition shall be in the manner prescribed in sections 469.001 to 469.047 for the disposition of property in a redevelopment project area; (v) relocation within or outside the project area of structures that will be restored and maintained for architectural or historic purposes; (vi) restoration of acquired properties of historic or architectural value; and (vii)construction of foundations and platforms necessary for the provision of air rights sites.
The term "redevelopment project" also means a redevelopment project initiated as then provided by law and approved by the governing body of the city prior to July 1, 1951, as prescribed by Minnesota Statutes 1949, section 462.521.
Subd. 15. Housing development project. "Housing development project" means any work or undertaking to provide housing for persons of moderate income and their families. This work or undertaking may include the planning of building and improvements, the acquisition of real property which may be needed immediately or in the future for housing purposes, the construction, reconstruction, alteration and repair of new or existing buildings and the provisions of all equipment, facilities and other real or personal property for necessary, convenient or desirable appurtenances, streets, sewers, water service, utilities, site preparation, landscaping, administrative, community health, recreation or welfare or other purposes.
Subd. 16. Redevelopment plan. "Redevelopment plan" means a plan approved by the governing body, or by an agency designated by the governing body for the purpose of approving such plans or authorized by law to do so, of each city in which any of a redevelopment project is to be carried out, which plan provides an outline for the development or redevelopment of the area and is sufficiently complete (1) to indicate its relationship to definite local objectives as to appropriate land uses; and (2) to indicate general land uses and general standards of development or redevelopment.
Subd. 17. Persons of low income and their families. "Persons of low income and their families" means persons or families who lack a sufficient income to enable them, without financial assistance, to live in decent, safe, and sanitary dwellings, without overcrowding.
Subd. 18. Persons of moderate income and their families. "Persons of moderate income and their families" means persons and families whose income is not adequate to cause private enterprise to provide without governmental assistance a substantial supply of decent, safe, and sanitary housing at rents or prices within their financial means.
Subd. 19. Bonds. "Bonds" means any bonds, including refunding bonds, notes, interim certificates, debentures, or other obligations issued by an authority pursuant to sections 469.001 to 469.047.
Subd. 20. Real property. "Real property" includes all lands, together with improvements and fixtures thereon, and property of any nature appurtenant thereto, or used in connection therewith, and every estate, interest, and right, legal or equitable, therein, including terms for years.
Subd. 21. Obligee of the authority; obligee. "Obligee of the authority" or "obligee" includes any bondholder, and the federal government when it is a party to any contract with the authority.
Subd. 22. General plan for the development of the locality as a whole. "General plan for the development of the locality as a whole" means a plan adopted by a local planning agency or approved by the governing body of the city establishing general objectives for the future use of land in a locality, or if no such plan has been adopted or approved, the general land use proposals for the development of the locality established from time to time by the local planning agency or by the governing body of the city.
Subd. 23. Veterans. "Veterans" has the meaning given in section 197.447, except as otherwise defined in a contract with the federal government providing for veterans' preferences, or as may be required by any federal law or regulation as a condition of federal financial assistance for a project.
Subd. 24. Section 8 program. "Section 8 program" means an existing housing assistance payments program under section 8 of the United States Housing Act of 1937, United States Code, title 42, section 1437f, as amended.
469.003 City housing and redevelopment authority.
Subdivision 1. Preliminary city findings and declaration. There is created in each city in this state a public body, corporate and politic, to be known as the housing and redevelopment authority in and for that city. No such authority shall transact any business or exercise any powers until the governing body of the city shall, by resolution, find that in that city (1) substandard, slum, or blighted areas exist which cannot be redeveloped without government assistance, or (2) there is a shortage of decent, safe, and sanitary dwelling accommodations available to persons of low income and their families at rentals they can afford, and shall declare that there is need for a housing and redevelopment authority to function in that city. In determining whether dwelling accommodations are unsafe or unsanitary, or whether substandard, slum, or blighted areas exist, the governing body may consider the degree of deterioration, obsolescence, or overcrowding, the percentage of land coverage, the light, air, space, and access available to inhabitants of the dwelling accommodations, the size and arrangement of rooms, the sanitary facilities, the extent to which conditions exist in the buildings that endanger life or property by fire or other causes, and the original land planning, lot layout, and conditions of title in the area.
Subd. 2. Public hearing. The governing body of a city shall consider such a resolution only after a public hearing is held on it after publication of notice in a newspaper of general circulation in the city at least once not less than ten days nor more than 30 days prior to the date of the hearing. Opportunity to be heard shall be granted to all residents of the city and to all other interested persons. The resolution shall be published in the same manner in which ordinances are published in the municipality.
Subd. 3. Conclusiveness of resolution. When the resolution becomes finally effective, it shall be sufficient and conclusive for all purposes if it declares that there is need for an authority and finds in substantially the terms provided in subdivision 1 that the conditions therein described exist.
Subd. 4. Copy filed with commissioner of employment and economic development. When the resolution becomes finally effective, the clerk of the city shall file a certified copy of it with the commissioner of employment and economic development. In any suit, action, or proceeding involving the validity or enforcement of or relating to any contract of an authority, the authority shall be conclusively deemed to have become established and authorized to transact business and exercise its powers upon that filing. Proof of the resolution and of that filing may be made in any such suit, action, or proceeding by a certificate of the commissioner of employment and economic development.
Subd. 5. Commissioners. An authority shall consist of up to seven commissioners, who shall be residents of the area of operation of the authority, who shall be appointed after the resolution becomes finally effective. If any additional commissioners are appointed, one of the commissioners must be appointed in accordance with the requirements of Code of Federal Regulations, title 24, part 964.
Subd. 6. Appointment; approval; term; vacancy. The commissioners shall be appointed by the mayor, with the approval of the governing body. Those initially appointed shall be appointed for terms of one, two, three, four, and five years, respectively. Thereafter all commissioners shall be appointed for five-year terms. Each vacancy in an unexpired term shall be filled for the remainder of the term for which the original appointment was made. Any member of the governing body of a city may be appointed and may serve as a commissioner of the authority for the city. The council of any city which appoints members of the city council as commissioners may set the terms of office of a commissioner to coincide with the commissioner's term of office as a council member.
Subd. 7. Certificate of appointment; filing. Commissioners shall hold office until their successors have been appointed and qualified. A certificate of appointment of each commissioner shall be filed with the clerk and a certified copy shall be transmitted to the commissioner of employment and economic development. A certificate so filed shall be conclusive evidence of appointment.
469.004 County and multicounty authorities.
Subdivision 1. Preliminary county findings and declaration. There is created in each county in this state other than those counties in which a county housing authority has been created by special act, a public body, corporate and politic, to be known as the housing and redevelopment authority of that county, hereinafter referred to as "county authority." No county authority shall transact any business or exercise any powers until the governing body of the county, by resolution, finds that there is need for a county authority to function in the county. The governing body shall consider the need for a county authority to function (1) on the governing body's own motion or (2) upon the filing of a petition signed by 25 qualified voters of the county asserting that there is need for a county authority to function in the county and requesting that the governing body so declare. The governing body shall adopt a resolution declaring that there is need for a county authority to function in the county if it makes the findings required in section 469.003, subdivision 1.
Subd. 1a. Ramsey County authority. Ramsey County may exercise the powers of a housing and redevelopment authority. Before the commencement of a project by Ramsey County acting as a housing and redevelopment authority, the governing body of the municipality in which the project is to be located shall, by majority vote, approve the project as recommended by the authority. A resolution of the county board may provide that the board will constitute the county housing and redevelopment authority.
Subd. 2. Multicounty authorities. If the governing body of each of two or more cities or counties, or combinations of cities and counties, hereinafter referred to as "political subdivisions," by resolution declares that there is a need for one housing and redevelopment authority to exercise in those political subdivisions the powers and other functions prescribed for a multicounty housing and redevelopment authority, a public body corporate and politic to be known as a multicounty housing and redevelopment authority shall exist for all of those political subdivisions. That authority shall exercise its powers and other functions in those political subdivisions in lieu of the authority for each such political subdivision.
Subd. 3. Findings. The governing body shall make that declaration if it finds (a) that substandard, slum, or deteriorated areas exist in the political subdivision which cannot be redeveloped without government assistance, or there is a shortage of decent, safe and sanitary dwelling accommodations available to persons of low income at rentals or prices they can afford, and (b) that a multicounty authority would be a more effective, efficient or economical administrative unit than the housing and redevelopment authority of the political subdivision to carry out the purposes of sections 469.001 to 469.047, in the political subdivision.
In determining whether dwelling accommodations are unsafe or unsanitary a governing body may take into consideration the factors provided in section 469.003.
Subd. 4. Sufficiency and conclusiveness of resolution. When the resolution becomes finally effective, it shall be deemed sufficient and conclusive for all purposes if it declares that there is need for a county or multicounty authority and finds in substantially the terms provided in subdivision 3 that the conditions therein described exist.
Subd. 5. Function of authority. A county or multicounty housing authority will serve, program, develop, and manage all housing programs under its jurisdiction. Where a county or multicounty authority has been established, additional city housing and redevelopment authorities shall not be created within the area of operation of the county or multicounty authority without the explicit concurrence of the county or multicounty housing and redevelopment authority and the commissioner of employment and economic development. City housing and redevelopment authorities must petition the county or multicounty authority for authorization to establish a local housing authority and this petition must be approved by the commissioner of employment and economic development. This subdivision does not apply if a county or multicounty authority has not initiated or does not have in progress an active program or has not applied for a public housing, section 8, or redevelopment program from the federal government for a period of 12 months after its establishment.
Subd. 6. Copy filed with commissioner of employment and economic development. When the resolution becomes finally effective, the clerk of the political subdivision shall file a certified copy with the commissioner of employment and economic development. The provisions of section 469.003, subdivision 4, regarding establishment of authorities apply to filings under this subdivision.
469.008 Effect upon city housing and redevelopment authorities.
Nothing in sections 469.004 to 469.008 shall alter or impair the powers and obligations of city housing and redevelopment authorities created under Minnesota Statutes 1969, chapter 462, prior to June 8, 1971, nor shall the area of operation of such city authority be included within the area of operation of a county or multicounty authority created pursuant to sections 469.004 to 469.008. With the consent of the board of commissioners of a city authority and the governing body of the city, a city authority may become a part of a county or multicounty authority upon assumption by the authority of the obligations of the city authority.
469.012 Public body; powers, duties, programs; taxes limited.
Subdivision 1. MS 2002 Renumbered subdivisions 1 to 2j)
Subdivision 1. All-purpose, other powers here. (a) An authority shall be a public body corporate and politic and shall have all the powers necessary or convenient to carry out the purposes of sections 469.001 to 469.047, except that the power to levy and collect taxes or special assessments is limited to the power provided in sections 469.027 to 469.033.
(b) Its powers include the powers in subdivisions 1a through 2j, in addition to others granted in sections 469.001 to 469.047.
Subd. 1a. Lawsuits, seal, perpetual succession, rules. An authority may:
(1) sue and be sued;
(2) have a seal, which shall be judicially noticed, and may alter it;
(3) have perpetual succession; and
(4) make, amend, and repeal rules consistent with sections 469.001 to 469.047.
Subd. 1b. Director, other staff; legal services; available public services. An authority may employ an executive director, technical experts, and officers, agents, and employees, permanent and temporary, that it requires, and determine their qualifications, duties, and compensation; for legal services it requires, call upon the chief law officer of the city or employ its own counsel and legal staff; and, so far as practicable, use the services of local public bodies in its area of operation, provided that those local public bodies, if requested, shall make the services available.
Subd. 1c. Delegation. An authority may delegate to one or more of its agents or employees the powers or duties it deems proper.
Subd. 1d. Projects. An authority may, within its area of operation, undertake, prepare, carry out, and operate projects and provide for the construction, reconstruction, improvement, extension, alteration, or repair of any project or part thereof.
Subd. 1e. Property, contracts, other instruments. An authority may, subject to the provisions of section 469.026, give, sell, transfer, convey, or otherwise dispose of real or personal property or any interest therein and execute leases, deeds, conveyances, negotiable instruments, purchase agreements, and other contracts or instruments.
Subd. 1f. Necessary or convenient action. An authority may take action that is necessary or convenient to carry out the purposes of these sections.
Subd. 1g. Get property; eminent domain. (a) An authority may, within its area of operation, acquire real or personal property or any interest therein by gifts, grant, purchase, exchange, lease, transfer, bequest, devise, or otherwise, and by the exercise of the power of eminent domain, in the manner provided by chapter 117, acquire real property which it may deem necessary for its purposes, after the adoption by it of a resolution declaring that the acquisition of the real property is necessary:
(1) to eliminate one or more of the conditions found to exist in the resolution adopted pursuant to section 469.003 or to provide decent, safe, and sanitary housing for persons of low and moderate income; or
(2) to carry out a redevelopment project.
(b) Real property needed or convenient for a project may be acquired by the authority for the project by condemnation pursuant to this section.
(c) Prior to adoption of a resolution authorizing acquisition of property by condemnation, the governing body of the authority must hold a public hearing on the proposed acquisition after published notice in a newspaper of general circulation in the municipality, which must be made at least one time not less than ten days nor more than 30 days prior to the date of the hearing. The notice must reasonably describe the property to be acquired and state that the purpose of the hearing is to consider acquisition by exercise of the authority's powers of eminent domain. Not less than ten days before the hearing, notice of the hearing must also be mailed to the owner of each parcel proposed to be acquired, but failure to give mailed notice or any defects in the notice does not invalidate the acquisition. For the purpose of giving mailed notice, owners are determined in accordance with section 429.031, subdivision 1, paragraph (a).
(d) Property acquired by condemnation under this section may include any property devoted to a public use, whether or not held in trust, notwithstanding that the property may have been previously acquired by condemnation or is owned by a public utility corporation, because the public use in conformity with the provisions of sections 469.001 to 469.047 shall be deemed a superior public use. Property devoted to a public use may be so acquired only if the governing body of the municipality has approved its acquisition by the authority.
(e) An award of compensation shall not be increased by reason of any increase in the value of the real property caused by the assembly, clearance or reconstruction, or proposed assembly, clearance or reconstruction for the purposes of sections 469.001 to 469.047 of the real property in an area.
Subd. 1h. Redevelopment. (a) An authority may, within its area of operation, and without the adoption of an urban renewal plan, acquire, by all means as set forth in subdivision 1g but without the adoption of a resolution provided for in subdivision 1g, real property, and demolish, remove, rehabilitate, or reconstruct the buildings and improvements or construct new buildings and improvements thereon, or so provide through other means as set forth in Laws 1974, chapter 228, or grade, fill, and construct foundations or otherwise prepare the site for improvements.
(b) The authority may dispose of the property pursuant to section 469.029, provided that the provisions of section 469.029 requiring conformance to an urban renewal plan shall not apply.
(c) The authority may finance these activities by means of the redevelopment project fund or by means of tax increments or tax increment bonds or by the methods of financing provided for in section 469.033 or by means of contributions from the municipality provided for in section 469.041, clause (9), or by any combination of those means.
(d) Real property with buildings or improvements thereon shall only be acquired under this subdivision when the buildings or improvements are substandard.
(e) The exercise of the power of eminent domain under this subdivision shall be limited to real property which contains, or has contained within the three years immediately preceding the exercise of the power of eminent domain and is currently vacant, buildings and improvements which are vacated and substandard. Notwithstanding the prior sentence, in cities of the first class the exercise of the power of eminent domain under this subdivision shall be limited to real property which contains, or has contained within the three years immediately preceding the exercise of the power of eminent domain, buildings and improvements which are substandard.
(f) For the purpose of this subdivision, substandard buildings or improvements mean hazardous buildings as defined in section 463.15, subdivision 3, or buildings or improvements that are dilapidated or obsolescent, faultily designed, lack adequate ventilation, light, or sanitary facilities, or any combination of these or other factors that are detrimental to the safety or health of the community.
(g) The exercise of the power of eminent domain under this subdivision is subject to the notice and hearing requirements described in subdivision 1g.
Subd. 1i. Set, use income levels. An authority may, within its area of operation, determine the level of income constituting low or moderate family income. The authority may establish various income levels for various family sizes. In making its determination, the authority may consider income levels that may be established by the Department of Housing and Urban Development or a similar or successor federal agency for the purpose of federal loan guarantees or subsidies for persons of low or moderate income. The authority may use that determination as a basis for the maximum amount of income for admissions to housing development projects or housing projects owned or operated by it.
Subd. 1j. Relocation aid. An authority may provide in federally assisted projects any relocation payments and assistance necessary to comply with the requirements of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and any amendments or supplements thereto.
Subd. 1k. Property tax exemption; equitable local cooperation. (a) An authority may make an agreement with the governing body or bodies creating the authority which provides exemption from all ad valorem real and personal property taxes levied or imposed by the body or bodies creating the authority. In the case of low-rent public housing that received financial assistance under the United States Housing Act of 1937, or successor federal legislation, an authority may make an agreement with the governing body or bodies creating the authority to provide exemption from all real and personal property taxes levied or imposed by the state, city, county, or other political subdivision, for which the authority shall make payments in lieu of taxes to the state, city, county, or other political subdivisions as provided in section 469.040.
(b) The governing body shall agree on behalf of all the applicable governing bodies affected that local cooperation as required by the federal government shall be provided by the local governing body or bodies in whose jurisdiction the project is to be located, at no cost or at no greater cost than the same public services and facilities furnished to other residents.
Subd. 1l. Cooperate, be agent; take over federal project. An authority may cooperate with or act as agent for the federal government, the state or any state public body, or any agency or instrumentality of the foregoing, in carrying out any of the provisions of sections 469.001 to 469.047 or of any other related federal, state, or local legislation, and upon the consent of the governing body of the city purchase, lease, manage, or otherwise take over any housing project already owned and operated by the federal government.
Subd. 1m. Plans for rehabilitation, law enforcement. An authority may make plans for carrying out a program of voluntary repair and rehabilitation of buildings and improvements and plans for the enforcement of laws, codes, and regulations relating to:
(1) the use of land and the use and occupancy of buildings and improvements, and
(2) the compulsory repair, rehabilitation, demolition, or removal of buildings and improvements.
Subd. 1n. Activities to get rid of slums, blight. The authority may develop, test, and report methods and techniques, and carry out demonstrations and other activities for the prevention and elimination of slums and blight.
Subd. 1o. Loans; assistance. An authority may borrow money or other property and accept contributions, grants, gifts, services, or other assistance from the federal government, the state government, state public bodies, or from any other public or private sources.
Subd. 1p. Conditions by, default to, U.S.; reconveyance. An authority may:
(1) include in any contract for financial assistance with the federal government any conditions that the federal government may attach to its financial aid of a project, not inconsistent with purposes of sections 469.001 to 469.047, including obligating itself (which obligation shall be specifically enforceable and not constitute a mortgage, notwithstanding any other laws) to convey to the federal government the project to which the contract relates upon the occurrence of a substantial default with respect to the covenants or conditions to which the authority is subject; and
(2) provide in the contract that, in case of such conveyance, the federal government may complete, operate, manage, lease, convey, or otherwise deal with the project until the defaults are cured if the federal government agrees in the contract to reconvey to the authority the project as then constituted when the defaults have been cured.
Subd. 1q. Issue bonds; give security. An authority may issue bonds for any of its corporate purposes and to secure the bonds by mortgages upon property held or to be held by it or by pledge of its revenues, including grants or contributions.
Subd. 1r. Invest idle money. An authority may invest any funds held in reserves or sinking funds, or any funds not required for immediate disbursement, in property or securities in which savings banks may legally invest funds subject to their control or in the manner and subject to the conditions provided in section 118A.04 for the deposit and investment of public funds.
Subd. 1s. Identify blight, bad housing. An authority may, within its area of operation, determine where blight exists or where there is unsafe, unsanitary, or overcrowded housing.
Subd. 1t. Needs assessment. (a) An authority may:
(1) carry out studies of the housing and redevelopment needs within its area of operation and of the meeting of those needs; and
(2) make the results of those studies and analyses available to the public and to building, housing, and supply industries.
(b) Studies under paragraph (a) include the study of data on population and family groups and their distribution according to income groups, the amount and quality of available housing and its distribution according to rentals and sales prices, employment, wages, desirable patterns for land use and community growth, and other factors affecting the local housing and redevelopment needs and the meeting of those needs.
Subd. 1u. Plan if no local plan. An authority may, if a local public body does not have a planning agency or the planning agency has not produced a comprehensive or general community development plan, make or cause to be made a plan to be used as a guide in the more detailed planning of housing and redevelopment areas.
Subd. 1v. Lease; set rent. An authority may lease or rent any dwellings, accommodations, lands, buildings, structures, or facilities included in any project and, subject to the limitations contained in sections 469.001 to 469.047 with respect to the rental of dwellings in housing projects, to establish and revise the rents or charges therefor.
Subd. 1w. Have, fix, get rid of property. An authority may:
(1) own, hold, and improve real or personal property, and
(2) sell, lease, exchange, transfer, assign, pledge, or dispose of any real or personal property or any interest therein.
Subd. 1x. Insurance. An authority may insure or provide for the insurance of any real or personal property or operations of the authority against any risks or hazards.
Subd. 1y. Reserved
Subd. 1z. Reserved
Subd. 2. Government insurance, guarantees for bonds. An authority may procure or agree to the procurement of government insurance or guarantees of the payment of any bonds or parts thereof issued by an authority and to pay premiums on the insurance.
Subd. 2a. Necessary spending. An authority may make expenditures necessary to carry out the purposes of sections 469.001 to 469.047.
Subd. 2b. Relocation help to displaced. An authority may enter into an agreement or agreements with any state public body to provide informational service and relocation assistance to families, individuals, business concerns, and nonprofit organizations displaced or to be displaced by the activities of any state public body.
Subd. 2c. Catalogs; disposable property. An authority may:
(1) compile and maintain a catalog of all vacant, open and undeveloped land, or land which contains substandard buildings and improvements as that term is defined in subdivision 1g, that is owned or controlled by the authority or by the governing body within its area of operation; and
(2) compile and maintain a catalog of all authority owned real property that is in excess of the foreseeable needs of the authority,
in order to determine and recommend if the real property compiled in either catalog is appropriate for disposal pursuant to the provisions of section 469.029, subdivisions 9 and 10.
Subd. 2d. Comment on code enforcement. An authority may recommend to the city concerning the enforcement of the applicable health, housing, building, fire prevention, and housing maintenance code requirements as they relate to residential dwelling structures that are being rehabilitated by low- or moderate-income persons pursuant to section 469.029, subdivision 9, for the period of time necessary to complete the rehabilitation, as determined by the authority.
Subd. 2e. Suggest use of city powers on bad buildings. An authority may recommend to the city the initiation of municipal powers, against certain real properties, relating to repair, closing, condemnation, or demolition of unsafe, unsanitary, hazardous, and unfit buildings, as provided in section 469.041, clause (5).
Subd. 2f. Sale of loan security. An authority may sell, at private or public sale, at the price or prices determined by the authority, any note, mortgage, lease, sublease, lease purchase, or other instrument or obligation evidencing or securing a loan made for the purpose of economic development, job creation, redevelopment, or community revitalization by a public agency to a business, for-profit or nonprofit organization, or an individual.
Subd. 2g. Get, sell subsidized affordable housing. An authority may, within its area of operation, acquire and sell real property that is benefited by federal housing assistance payments, other rental subsidies, interest reduction payments, or interest reduction contracts for the purpose of preserving the affordability of low- and moderate-income multifamily housing.
Subd. 2h. Section 8 programs. (a) An authority may apply for, enter into contracts with the federal government, administer, and carry out a section 8 program.
(b) Authorization by the governing body creating the authority to administer the program at the authority's initial application is sufficient to authorize operation of the program in its area of operation for which it was created without additional local governing body approval.
(c) Approval by the governing body or bodies creating the authority constitutes approval of a housing program for purposes of any special or general law requiring local approval of Section 8 programs undertaken by city, county, or multicounty authorities.
Subd. 2i. Receivers, assignment of rent as security. An authority may secure a mortgage or loan for a rental housing project by obtaining the appointment of receivers or assignments of rents and profits under sections 559.17 and 576.01, except that the limitation relating to the minimum amounts of the original principal balances of mortgages specified in sections 559.17, subdivision 2, clause (2); and 576.01, subdivision 2, does not apply.
Subd. 2j. May be in LLP, LLC, or corporation; bound as if HRA. An authority may become a member or shareholder in and enter into or form limited partnerships, limited liability companies, or corporations for the purpose of developing, constructing, rehabilitating, managing, supporting, or preserving housing projects and housing development projects, including low-income housing tax credit projects. These limited partnerships, limited liability companies, or corporations are subject to all of the provisions of sections 469.001 to 469.047 and other laws that apply to housing and redevelopment authorities, as if the limited partnership, limited liability company, or corporation were a housing and redevelopment authority.
Subd. 3. Exercise of HRA powers. (a) An authority may exercise all or any part or combination of the powers granted by sections 469.001 to 469.047 within its area of operation.
(b) Any two or more authorities may join with one another in the exercise, either jointly or otherwise, of any or all of their powers for the purpose of financing, including the issuance of bonds and giving security therefor, planning, undertaking, owning, constructing, operating, or contracting with respect to a housing project located within the area of operation of any one or more of the authorities. For this purpose an authority may by resolution prescribe and authorize any other housing authority, so joining with it, to act on its behalf with respect to any or all powers, as its agent or otherwise, in the name of the authority so joining or in its own name.
(c) A city, county, or multicounty authority may by resolution authorize another housing authority to exercise its powers within the authorizing authority's area of operation at the same time that the authorizing authority is exercising the same powers.
(d) A county or city may join with any authority to permit the authority, on behalf of the county, town within the county, or city, to plan, undertake, administer, and carry out a leased existing housing assistance payments program, pursuant to section 8 of the United States Housing Act of 1937 as amended, 42 United States Code, section 1437f.
(e) A city may so join with an authority unless there is an authority in the city which has been authorized by resolution under section 469.003 to transact business or exercise powers.
(f) A county may so join with an authority unless:
(1) there is a county authority which has been authorized by resolution under section 469.004 to exercise powers, or the county is a member of a multicounty authority, and
(2) the authority has initiated or has in progress an active program or has applied for federal assistance in a public housing, section 8, or redevelopment program within 12 months after its establishment.
(g) Notwithstanding the other provisions of this subdivision, an authority administering and carrying out a leased existing housing assistance payments program, under section 8 of the United States Housing Act of 1937, United States Code, title 42, section 1437f, as amended, may administer the leased existing housing assistance payments program under the statutory and regulatory portability provisions of the federal section 8 existing housing assistance payments program, United States Code, title 42, section 1437f(r), as amended.
Subd. 4. Subject to laws of locality. All projects shall be subject to the planning, zoning, sanitary, and building laws, ordinances, and regulations applicable to the locality in which the project is situated.
Subd. 4a. Veterans' preferences. An authority may include in any contract with the federal government provision for veterans' and service persons' preferences that may be required by any federal law or regulation as a condition of federal financial assistance for a project.
Subd. 5. Repealed, 1989 c 335 art 1 s 270
Subd. 6. Housing rehabilitation loan, grant program. An authority may develop and administer a housing rehabilitation loan and grant program with respect to property located anywhere within its boundaries which is owned by persons of low and moderate income, on the terms and conditions it determines.
Subd. 7. Interest reduction program. (a) An authority may develop and administer an interest reduction program to assist the financing of the construction, rehabilitation, and purchase of housing units which are intended primarily for occupancy by individuals of low or moderate income and related and subordinate facilities.
(b) An authority may:
(1) pay in periodic payments or in a lump sum payment any or all of the interest on loans made pursuant to chapter 462C or subdivision 6;
(2) pay any or all of the interest on bonds issued pursuant to chapter 462C, or pursuant to sections 469.001 to 469.047 for the purpose of making loans authorized by subdivision 6;
(3) pay in periodic payments or in a lump sum payment any or all of the interest on loans made by private lenders to purchasers of housing units;
(4) pay any or all of the interest due on loans made by private lenders to a developer for the construction or rehabilitation of housing units;
(5) pay in periodic payments or in a lump sum payment any or all of the interest on loans made by any person to a developer for the construction, rehabilitation, and purchase of commercial facilities which are related and subordinate to the construction, rehabilitation, or purchase of housing units that receive interest reduction assistance provided that the entire development is composed primarily of housing units;
(6) pay any or all of the interest on bonds issued pursuant to sections 469.152 to 469.165, when the bonds are issued for a project that is related and subordinate to the construction, rehabilitation, or purchase of housing units that receive interest reduction assistance provided that the entire development is composed primarily of housing units;
(7) pay in periodic payments or in a lump sum payment any or all of the interest on loans made pursuant to section 469.184 for the rehabilitation or preservation of small and medium sized commercial buildings; and
(8) pay any or all of the interest on bonds issued pursuant to section 469.184.
Subd. 8. Interest reduction program; considerations, limits. (a) In developing the interest reduction program authorized by subdivision 7 the authority shall consider:
(1) the availability and affordability of other governmental programs;
(2) the availability and affordability of private market financing; and
(3) the need for additional affordable mortgage credit to encourage the construction and enable the purchase of housing units within the jurisdiction of the authority.
(b) The authority shall adopt rules for the interest reduction program. Interest reduction assistance shall not be provided if the authority determines that financing for the purchase of a housing unit or for the construction or rehabilitation of housing units is otherwise available from private lenders upon terms and conditions that are affordable by the applicant, as provided by the authority in its rules.
(c) For the purposes of this subdivision an "assisted housing unit" is a housing unit which is rented or to be rented and which is a part of a rental housing development where the financing for the rental housing development is assisted with interest reduction assistance provided by the authority during the calendar year.
(d) If interest reduction assistance is provided for construction period interest for a rental housing development, the housing units in the housing development shall be considered assisted housing units for a period after occupancy of the housing units which is equal to the period during which interest reduction assistance is provided to assist the construction financing of the rental housing development.
(e) In any calendar year when an authority provides interest reduction assistance for assisted housing units:
(1) at least 20 percent of the total assisted housing units within the jurisdiction of the authority shall be held available for rental to families or individuals with an adjusted gross income which is equal to or less than 80 percent of the median family income, and
(2) at least an additional 55 percent of the total assisted housing units within the jurisdiction of the authority shall be held available for rental to individuals or families with an annual adjusted gross income which is equal to or less than 66 times 120 percent of the monthly fair market rent for the unit established by the United States Department of Housing and Urban Development.
(f) At least 80 percent of the aggregate dollar amount of funds appropriated by an authority within any calendar year to provide interest reduction assistance for financing of construction, rehabilitation, or purchase of single family housing, as that term is defined in section 462C.02, subdivision 4, shall be appropriated for housing units that are to be sold to or occupied by families or individuals with an adjusted gross income which is equal to or less than 110 percent of median family income.
(g) For the purposes of this subdivision, "median family income" means the median family income established by the United States Department of Housing and Urban Development for the nonmetropolitan county or the standard metropolitan statistical area, as the case may be.
(h) The adjusted gross income must be adjusted by the authority for family size.
(i) The limitations imposed upon assisted housing units by this subdivision do not apply to interest reduction assistance for a rental housing development located in a targeted area as defined in section 462C.02.
(j) An authority that establishes a program pursuant to this subdivision shall by January 2 each year report to the commissioner of employment and economic development a description of the program established and a description of the recipients of interest reduction assistance.
Subd. 9. Interest reduction program; payoff to HRA on sale. (a) Under any interest reduction program authorized by subdivision 7 which provides interest reduction assistance pursuant to paragraph (b), clauses (1) to (6), the authority shall obtain an agreement from the developer or other benefited owner of the property. The agreement shall provide that, upon the benefited owner's sale or transfer of the property, the authority shall be paid in an amount determined under paragraph (c) and that this obligation is secured by an interest in the property. The interest in the property shall consist of either a right of co-ownership or a lien or mortgage against the property and may be subordinate to other interests in the property.
(b) For purposes of this subdivision, "property" means property the construction, acquisition, or improvement of which is financed in whole or part with the proceeds of a loan upon which the interest payments are reduced under an interest reduction program.
(c) The amount required to be paid to the authority under paragraph (a) shall equal at least:
(1) the sale price of the property,
(2) less the downpayment, any payments of principal, other payments made to construct, acquire, or improve the property and any outstanding liens or mortgages securing loans, advances, or goods and services provided for the construction, acquisition, or improvement of the property,
(3) less the amount, if any, which the authority determines should be allowed for the developer or other benefited property owner as a return on the developer's or other benefited property owner's investment in the property,
(4) multiplied by a fraction, the numerator of which is the interest reduction payments made by the authority and the denominator of which is the total of the downpayment, all principal and interest payments including any portion paid by the authority, and other payments made to construct, acquire, or improve the property. In the case of a transfer, other than an arm's-length sale, an appraisal shall be substituted for the sale price.
(d) If the interest reduction payments are made for a bond issue, or other obligation, the proceeds of which are lent to five or more purchasers of separate housing units, the fraction under paragraph (c), clause (4), may be determined on the basis of an estimate of the aggregate factors for all the borrowers of the proceeds, of the bonds or other obligations participating in the interest reduction program.
(e) The provisions of this subdivision shall not apply to interest reduction assistance provided for construction period interest for housing units which are to be sold upon completion to purchasers who intend at the time of purchase to occupy the housing units as their principal place of residence.
Subd. 10. Repealed, 1988 c 551 s 1
Subd. 11. HRAs created by special law. Except as expressly limited by the special law establishing the authority, an authority created pursuant to special law shall have the powers granted by any statute to any authority created pursuant to this chapter.
Subd. 12. Parking facilities. An authority may operate and maintain public parking facilities in connection with any of its projects.
Subd. 13. Down payment assistance loans, grants; findings. (a) An authority may develop and administer a down payment assistance loan and grant program with respect to property located within its boundaries on terms and conditions it determines.
(b) Before carrying out a down payment assistance loan and grant program, an authority must find that the program is necessary in the areas in which it is made available in furtherance of a policy of the authority to promote economic integration or to encourage owner occupancy of single family residences.
469.015 Letting of contracts; performance bonds.
Subdivision 1. Bids; notice. All construction work, and work of demolition or clearing, and every purchase of equipment, supplies, or materials, necessary in carrying out the purposes of sections 469.001 to 469.047, that involve expenditure of $50,000 or more shall be awarded by contract. Before receiving bids the authority shall publish, once a week for two consecutive weeks in an official newspaper of general circulation in the community a notice that bids will be received for that construction work, or that purchase of equipment, supplies, or materials. The notice shall state the nature of the work and the terms and conditions upon which the contract is to be let, naming a time and place where bids will be received, opened and read publicly, which time shall be not less than seven days after the date of the last publication. After the bids have been received, opened and read publicly and recorded, the authority shall award the contract to the lowest responsible bidder, provided that the authority reserves the right to reject any or all bids. Each contract shall be executed in writing, and the person to whom the contract is awarded shall give sufficient bond to the authority for its faithful performance. If no satisfactory bid is received, the authority may readvertise. The authority may establish reasonable qualifications to determine the fitness and responsibility of bidders and to require bidders to meet the qualifications before bids are accepted.
Subd. 2. Exception; emergency. If the authority by a vote of four-fifths of its members shall declare that an emergency exists requiring the immediate purchase of any equipment or material or supplies at a cost in excess of $50,000 but not exceeding $75,000, or making of emergency repairs, it shall not be necessary to advertise for bids, but the material, equipment, or supplies may be purchased in the open market at the lowest price obtainable, or the emergency repairs may be contracted for or performed without securing formal competitive bids. An emergency, for purposes of this subdivision, shall be understood to be unforeseen circumstances or conditions which result in the placing in jeopardy of human life or property.
Subd. 3. Performance and payment bonds. Performance and payment bonds shall be required from contractors for any works of construction as provided in and subject to all the provisions of sections 574.26 to 574.31 except for contracts entered into by an authority for an expenditure of less than $50,000.
Subd. 4. Exceptions. (a) An authority need not require competitive bidding in the following circumstances:
(1) in the case of a contract for the acquisition of a low-rent housing project:
(i) for which financial assistance is provided by the federal government;
(ii) which does not require any direct loan or grant of money from the municipality as a condition of the federal financial assistance; and
(iii) for which the contract provides for the construction of the project upon land that is either owned by the authority for redevelopment purposes or not owned by the authority at the time of the contract but the contract provides for the conveyance or lease to the authority of the project or improvements upon completion of construction;
(2) with respect to a structured parking facility:
(i) constructed in conjunction with, and directly above or below, a development; and
(ii) financed with the proceeds of tax increment or parking ramp general obligation or revenue bonds;
(3) until August 1, 2009, with respect to a facility built for the purpose of facilitating the operation of public transit or encouraging its use:
(i) constructed in conjunction with, and directly above or below, a development; and
(ii) financed with the proceeds of parking ramp general obligation or revenue bonds or with at least 60 percent of the construction cost being financed with funding provided by the federal government; and
(4) in the case of any building in which at least 75 percent of the usable square footage constitutes a housing development project if:
(i) the project is financed with the proceeds of bonds issued under section 469.034 or from nongovernmental sources;
(ii) the project is either located on land that is owned or is being acquired by the authority only for development purposes, or is not owned by the authority at the time the contract is entered into but the contract provides for conveyance or lease to the authority of the project or improvements upon completion of construction; and
(iii) the authority finds and determines that elimination of the public bidding requirements is necessary in order for the housing development project to be economical and feasible.
(b) An authority need not require a performance bond for the following projects:
(1) a contract described in paragraph (a), clause (1);
(2) a construction change order for a housing project in which 30 percent of the construction has been completed;
(3) a construction contract for a single-family housing project in which the authority acts as the general construction contractor; or
(4) a services or materials contract for a housing project.
For purposes of this paragraph, "services or materials contract" does not include construction contracts.
Subd. 5. Security in lieu of bond. The authority may accept a certified check or cashier's check in the same amount as required for a bond in lieu of a performance bond for contracts entered into by an authority for an expenditure of less than $50,000. The check must be held by the authority for 90 days after the contract has been completed. If no suit is brought within the 90 days, the authority must return the amount of the check to the person making it. If a suit is brought within the 90-day period, the authority must disburse the amount of the check pursuant to the order of the court.
469.028 Municipal governing body.
Subdivision 1. Findings, notice, determination. When an authority determines that a redevelopment project should be undertaken, it shall apply to the governing body of the city in which the project is located for approval. The application shall be accompanied by a redevelopment plan, a statement of the method proposed for financing the project, and the written opinion of the planning agency, if there is one. Before approving any redevelopment plan, the governing body shall hold 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.
Subd. 2. Findings, notice, determination; governing body. The authority shall not proceed with the project unless the governing body finds by resolution that:
(1) the land in the project area would not be made available for redevelopment without the financial aid to be sought;
(2) the redevelopment plans for the redevelopment areas in the locality will afford maximum opportunity, consistent with the needs of the locality as a whole, for the redevelopment of the areas by private enterprise; and
(3) the redevelopment plan conforms to a general plan for the development of the locality as a whole.
The governing body shall within 30 days after submission of the application, or resubmission as hereinafter provided, give written notice to the authority of its decision with respect to the project. When an authority has determined the location of a proposed redevelopment project, it may, without awaiting the approval of the governing body, proceed, by option or otherwise, to obtain control of the real property within the area, but it shall not, without the prior approval by the governing body of the redevelopment plan, unconditionally obligate itself to purchase any such property. A plan which has not been approved by the governing body when submitted to it may be again submitted to it with the modifications necessary to meet its objections. Once approved, the determination of the authority to undertake the project and the resolution of the governing body shall be conclusive, in any condemnation proceeding, of the public need for the project.
Subd. 3. Acquisition of open land. A redevelopment project may include any work or undertaking to acquire open or undeveloped land determined to be blighted by virtue of the following conditions:
(1) unusual and difficult physical characteristics of the ground;
(2) the existence of faulty planning characterized by the subdivision or sale of lots laid out in disregard of the contours or of irregular form and shape or of inadequate size; or
(3) a combination of these or other conditions which have prevented normal development of the land by private enterprise and have resulted in a stagnant and unproductive condition of land potentially useful and valuable for contributing to the public health, safety, and welfare. Acquisition of such land shall be a redevelopment project only if a redevelopment plan has been adopted which provides for the elimination of these conditions, thereby making the land useful and valuable for contributing to the public health, safety, and welfare and the acquisition of the land is necessary to carry out the redevelopment plan.
Subd. 4. Acquisition of unused or inappropriately used land. A redevelopment project may include any work or undertaking to acquire land or space that is vacant, unused, underused or inappropriately used, including infrequently used rail yards and rail storage facilities, and excessive or vacated railroad rights-of-way; air rights over streets, expressways, railroads, waterways, and similar locations; land which is occupied by functionally obsolete nonresidential buildings, or is used for low utility purposes, or is covered by shallow water, or is subject to periodic flooding, or consists of unused or underused slips or dock areas or other waterfront property. This subdivision applies only to land or space that the authority determines may be developed at a cost reasonably related to the public purpose to be served without major residential clearance activities, and with full consideration of the preservation of beneficial aspects of the urban and natural environment, for uses that are consistent with emphasis on housing for low and moderate income families. These uses include the provision of schools, hospitals, parks and other essential public facilities and, where appropriate, all uses associated with new community development programs as defined in the United States Urban Growth and New Community Development Act of 1970, as amended, or similar large scale undertakings related to inner city needs, including concentrated sources of employment.
Subd. 5. Early acquisition. When an authority has determined the location of a proposed redevelopment project, but prior to the approval of the redevelopment plan and project as provided in subdivision 2, the authority may acquire individual tracts of real property with the approval of the governing body as to each separate tract. Before approving early acquisition, the governing body shall hold a public hearing on the proposed acquisition activities 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 authority shall not proceed with the acquisition unless the governing body finds by resolution that (1) the proposed acquisition is necessary to carry out public improvements in the area, or that the acquisition will contribute to the elimination of blight or deterioration within the area or that the acquisition is necessary to relieve hardship; and (2) there is a feasible method for the relocation of families and individuals to be displaced by the proposed acquisition.
The governing body may, in approving early acquisition, agree to assume the responsibility for any loss that may arise as a result of the acquisition of land and related activities, including any costs of demolition, removal, and relocation, in the event that the property so acquired is not used for urban renewal purposes because the urban renewal plan is not approved, or is amended to omit the acquired property or is abandoned for any reason. Nothing in this subdivision shall be construed to waive the requirement for public hearing upon the redevelopment plan for the redevelopment project.
469.029 Disposal of property.
Subdivision 1. Sale, lease, or development. In accordance with a redevelopment plan, an authority may make any of its land in a redevelopment project available for use by private individuals, firms, corporations, partnerships, insurance companies, or other private interests, or by public agencies, by sale, lease, or otherwise, or the authority itself may retain property for redevelopment by it. The land shall be made available at a price that shall, except as provided for in subdivisions 9 and 10, take into consideration the estimated fair market or rental value of the cleared land as determined pursuant to section 469.032, for proposed uses in accordance with the redevelopment plan.
Subd. 2. Notice; public hearing; determination; terms and conditions. Any such lease or sale may be made without public bidding but only after a public hearing, after published notice, by the authority at least once not less than ten days nor more than 30 days prior to the date of the hearing upon the proposed lease or sale and the provisions thereof. The terms of any such lease shall be fixed by the authority, and the instrument of lease may provide for renewals upon reappraisals and with rentals and other provisions adjusted to the reappraisals. Every such lease or sale shall provide that the lessee or purchaser shall carry out or cause to be carried out the approved project area redevelopment plan or approved modifications thereof and that no use shall be made of any land or real property included in the lease or sale nor any building or structure erected thereon which does not conform to the approved plan or approved modifications thereof. In the instrument of lease or sale the authority may include other terms, conditions, and provisions in the judgment of the authority will provide reasonable assurance of the priority of the obligations of the lease or sale and of conformance to the plan over any other obligations of the lessee or purchaser, and also assurance of the financial and legal ability of the lessee or purchaser to carry out and conform to the plan and the terms and conditions of the lease or sale, to begin the building of any improvements within a period of time which the authority fixes as reasonable. The instrument shall also include the terms, conditions, and specifications concerning buildings, improvements, subleases, or tenancies, maintenance and management, and any other related matters the authority may reasonably impose or approve, including provisions whereby the obligations to carry out and conform to the project area plan shall run with the land. If maximum rentals to be charged to tenants of housing are specified, provision may be made for periodic reconsideration of the rental bases, with a view to proposing modification of the project area plan with respect to the rentals.
Subd. 3. Property devoted to public uses; transfer. After the property in a project area has been assembled by an authority, the authority may transfer by deed to local public bodies those pieces of property which, in accordance with the redevelopment plan, are to be devoted to public uses, other than public housing or redevelopment purposes. Except for property transferred by dedication, gift, or exchange, the transferee body shall pay to the authority the sum agreed upon, and, in the absence of agreement, the sum determined by arbitration. The authority shall reimburse the redevelopment project fund the fair use value of any property in a redevelopment project transferred to a public low-rent housing project.
Subd. 4. Disposition in parts. The authority may lease or sell parts of a project area separately to any persons. Any such sale or lease of a part or parts of a project area shall be subject to the provisions of this section, excluding property required for public low-rent housing projects.
Subd. 5. Limitation upon disposal by purchaser. Until the authority certifies that all building constructions and other physical improvements specified to be done and made by the purchaser of the area have been completed, the purchaser shall not convey the area, or any part thereof, without the consent of the authority. Consent shall not be given unless the grantee or mortgagee of the purchaser is obligated by written instrument to the authority to carry out that portion of the redevelopment plan which falls within the boundaries of the conveyed property, and also that the grantee, the grantee's heirs, representatives, successors, and assigns, shall not convey, lease, or let the conveyed property or any part thereof, or erect or use any building or structure erected thereon, except in conformance with the approved project area redevelopment plan or approved modifications thereof.
Subd. 6. Modification of plan. A redevelopment plan may be modified at any time. The modification must be adopted by the authority and the governing body of the political subdivision in which the project is located, upon the notice and after the public hearing required for the original adoption of the redevelopment plan. If the authority determines the necessity of changes in an approved redevelopment plan or approved modification thereof, which changes do not alter or affect the exterior boundaries, and do not substantially alter or affect the general land uses established in the plan, the changes shall not constitute a modification of the redevelopment plan nor require approval by the governing body of the political subdivision in which the project is located.
Subd. 7. Purchaser or lessee to furnish performance bond. As security for its fulfillment of the agreement with the authority, a purchaser or lessee shall furnish a performance bond, with the surety and in the form and amount the authority may approve, or make any other guaranty the authority deems necessary in the public interest. If the authority finds that the redevelopment is not being carried out or maintained in accordance with the contract terms and conditions, or there is a failure to prosecute the work with diligence, or to assume its completion on time, it shall notify the purchaser or lessee and the surety in writing of the noncompliance. Unless the purchaser or lessee complies with the terms of agreement within 20 days from the date of the notice, the authority may take over the work and may cause the work to be done, and the cost of the work shall be paid by the surety. The authority may take possession of and utilize in completion of the work the materials, appliances, and plant as may be on the site of the work and necessary for it.
Subd. 8. Discrimination forbidden. There shall be no discrimination in the use of any land in a redevelopment project because of race or religious, political, or other affiliations.
Subd. 9. Sale, grant or development. With or without accordance to a redevelopment plan, an authority may make any of its lands in a project that are vacant, open and undeveloped or lands that contain vacated residential dwelling structures that are substandard as that term is defined in section 469.012, subdivision 1h, available for use by sale, lease, grant, transfer, conveyance, or otherwise to persons or families of low and moderate income. The property shall be made available at a price which may take into consideration the estimated fair market value of the real estate, as determined pursuant to section 469.032, if the low or moderate income persons or families have the financial ability or building trade skills, as determined by the authority, to build on the vacant, open and undeveloped land or to repair, improve, or rehabilitate the residential dwelling structures, so as to conform with the applicable state, county, or city, health, housing, building, fire prevention, and housing maintenance codes within a reasonable period of time as determined by the authority. The authority may require an agreement from those persons or families of low or moderate income to build on the lands or to repair, improve, or rehabilitate the residential dwelling structures within a reasonable period of time so as to conform to the codes as a condition to final legal title to the lands and the residential dwelling units. Nothing in Laws 1974, chapter 228, shall prohibit an authority from making rehabilitation loans and grants, pursuant to section 469.012, subdivision 6, or procuring other authorized financial assistance for persons or families of low and moderate income who acquire real property pursuant to this section, in furtherance of the objectives of this section.
Subd. 10. Excess land. On or before December 31 each year, each authority shall make a survey of all lands held, owned, or controlled by it to determine what land, including air rights, is in excess of its foreseeable needs. A description of each parcel found to be in excess of foreseeable needs shall be made a matter of public record. Any low or moderate income resident or nonprofit housing corporation shall upon request be provided with a list of the parcels without charge. With or without accordance to a redevelopment plan, an authority may make the excess lands available for use as a housing or housing development project by a nonprofit housing corporation by sale, lease, grant, transfer, conveyance, or otherwise. The price may take into consideration the estimated fair market or rental value of the real property, as determined pursuant to section 469.032 and upon terms and conditions, notwithstanding any other provisions of law to the contrary, that the authority deems to be best suited to the development of the parcel for housing available to persons and families of low and moderate income.
469.0305 Report on loss of housing.
Subdivision 1. Effects of welfare reform. A public agency administering a public housing program or a rent subsidy program shall report to the commissioner of the housing finance agency by February 1, each year, beginning in 1998, the reduction in the number of units or section 8 certificates or vouchers during the year and an assessment of the reasons for the reduction, including whether it is due to the state's welfare reform initiatives.
Subd. 2. Reduction in low-income housing units. A public agency that acquires and demolishes housing occupied by persons whose incomes are less than 50 percent of the area median income shall report the number of units demolished to the commissioner of the Housing Finance Agency. The report must be submitted to the commissioner of the Housing Finance Agency no later than March 15 of the following year.
469.033 Public redevelopment cost; proceeds; financing.
Subdivision 1. Financing plans authorized. The entire cost of a project as defined in section 469.002, subdivision 12, including administrative expense of the authority allocable to the project and debt charges and all other costs authorized to be incurred by the authority in sections 469.001 to 469.047, shall be known as the public redevelopment cost. The proceeds from the sale or lease of property in a project shall be known as the capital proceeds. The capital proceeds from land sold may pay back only a portion of the public redevelopment cost. An authority may finance the projects in any one or by any combination of the following methods.
Subd. 2. Federal grants. The authority may accept grants or other financial assistance from the federal government as provided in sections 469.001 to 469.047. Before it uses other financial methods authorized by this section, the authority shall use all federal funds for which the project qualifies.
Subd. 3. Bond issue. An authority may issue its bonds or other obligations as provided in sections 469.001 to 469.047.
Subd. 4. Revenue pool; use. The authority may provide that all revenues received from its redevelopment areas be placed in a pool for the payment of interest and principal on all bonds issued for any redevelopment project, and the revenue from all such areas shall be paid into the pool until all outstanding bonds have been fully paid.
Subd. 5. Special benefit tax fund. If the authority issues bonds to finance a redevelopment project, it may, with the consent of the governing body obtained at the time of the approval of the redevelopment plan as required in section 469.028, notify the county treasurer to set aside in a special fund, for the retirement of the bonds and interest on them, all or part of the real estate tax revenues derived from the real property in the redevelopment area which is in excess of the tax revenue derived therefrom in the tax year immediately preceding the acquisition of the property by the authority. The county treasurer shall do so. This setting aside of funds shall continue until the bonds have been retired. This subdivision applies only to property that the governing body has by resolution designated for inclusion in a project prior to August 1, 1979.
Subd. 6. Operation area as taxing district, special tax. All of the territory included within the area of operation of any authority shall constitute a taxing district for the purpose of levying and collecting special benefit taxes as provided in this subdivision. All of the taxable property, both real and personal, within that taxing district shall be deemed to be benefited by projects to the extent of the special taxes levied under this subdivision. Subject to the consent by resolution of the governing body of the city in and for which it was created, an authority may levy a tax upon all taxable property within that taxing district. The tax shall be extended, spread, and included with and as a part of the general taxes for state, county, and municipal purposes by the county auditor, to be collected and enforced therewith, together with the penalty, interest, and costs. As the tax, including any penalties, interest, and costs, is collected by the county treasurer it shall be accumulated and kept in a separate fund to be known as the "housing and redevelopment project fund." The money in the fund shall be turned over to the authority at the same time and in the same manner that the tax collections for the city are turned over to the city, and shall be expended only for the purposes of sections 469.001 to 469.047. It shall be paid out upon vouchers signed by the chair of the authority or an authorized representative. The amount of the levy shall be an amount approved by the governing body of the city, but shall not exceed 0.0144 percent of taxable market value for the current levy year, notwithstanding section 273.032. The authority shall each year formulate and file a budget in accordance with the budget procedure of the city in the same manner as required of executive departments of the city or, if no budgets are required to be filed, by August 1. The amount of the tax levy for the following year shall be based on that budget.
Subd. 7. Inactive authorities; transfer of funds; dissolution. The authority may transfer to the city in and for which it was created all property, assets, cash or other funds held or used by the authority which were derived from the special benefit tax for redevelopment levied pursuant to subdivision 6 prior to March 6, 1953, whenever collected. Upon any such transfer, an authority shall not thereafter levy the tax or exercise the redevelopment powers of sections 469.001 to 469.047. All cash or other funds transferred to the city shall be used exclusively for permanent improvements in the city or the retirement of debts or bonds incurred for permanent improvements in the city. An authority which transfers its property, assets, cash or other funds derived from the special benefit tax for redevelopment and which has not entered into a contract with the federal government with respect to any low rent public housing project prior to March 6, 1953, shall be dissolved as herein provided. After a public hearing after ten days published notice thereof in a newspaper of general circulation in the city, the governing body of a city in and for which an authority has been created may dissolve the authority if the authority has not entered into any contract with the federal government or any agency or instrumentality thereof for a loan or a grant with respect to any urban redevelopment or low rent public housing project. The resolution or ordinance dissolving the authority shall be published in the same manner in which ordinances are published in the city and the authority shall be dissolved when the resolution or ordinance becomes finally effective. The clerk of the governing body of the municipality shall furnish to the commissioner of employment and economic development a certified copy of the resolution or ordinance of the governing body dissolving the authority. All property, records, assets, cash or other funds held or used by an authority shall be transferred to and become the property of the municipality and cash or other funds shall be used as herein provided. Upon dissolution of an authority, all rights of an authority against any person, firm, or corporation shall accrue to and be enforced by the municipality.
469.040 Tax status.
Subdivision 1. Declaration, essential public and governmental purposes. The property of an authority is public property used for essential public and governmental purposes. The property and the authority shall be exempt from all real and personal property taxes of the city, the county, the state, or any political subdivision thereof. "Taxes" does not include charges for special assessments or for utilities and special services, such as heat, water, electricity, gas, sewage disposal, or garbage removal. For purposes of this subdivision, "special services" means those physical services provided to a project for which the actual cost of the governing body providing the service can be calculated. When the obligations issued by an authority to assist in financing the development of a project have been retired and federal contributions have been discontinued, or the authority is no longer obligated by contracts with the federal government to maintain a project as a low-income housing project, whichever is later, then the exemptions from taxes for that project shall terminate.
Subd. 2. Leased property, exception. Notwithstanding the provisions of subdivision 1, any property other than property to be operated as a parking facility that the authority leases to private individuals or corporations for development in connection with a redevelopment project shall have the same tax status as if the leased property were owned by the private individuals or corporations.
Subd. 3. Statement filed with assessor; percentage tax on rentals. Notwithstanding the provisions of subdivision 1, after a housing project or a housing development project carried on under sections 469.016 to 469.026 has become occupied, in whole or in part, an authority shall file with the assessor, on or before April 15 of each year, a statement of the aggregate shelter rentals of that project collected during the preceding calendar year. Unless a greater amount has been agreed upon between the authority and the governing body or bodies for which the authority was created, in whose jurisdiction the project is located, five percent of the aggregate shelter rentals shall be charged to the authority as a service charge for the services and facilities to be furnished with respect to that project. The service charge shall be collected from the authority in the manner provided by law for the assessment and collection of taxes. The amount so collected shall be distributed to the several taxing bodies in the same proportion as the tax rate of each bears to the total tax rate of those taxing bodies. The governing body or bodies for which the authority has been created, in whose jurisdiction the project is located, may agree with the authority for the payment of a service charge for a housing project or a housing development project in an amount greater than five percent of the aggregate annual shelter rentals of any project, upon the basis of shelter rentals or upon another basis agreed upon. The service charge may not exceed the amount which would be payable in taxes were the property not exempt. If such an agreement is made, the service charge so agreed upon shall be collected and distributed in the manner above provided. If the project has become occupied, or if the land upon which the project is to be constructed has been acquired, the agreement shall specify the location of the project for which the agreement is made. "Shelter rental" means the total rentals of a housing project exclusive of any charge for utilities and special services such as heat, water, electricity, gas, sewage disposal, or garbage removal. "Service charge" means payment in lieu of taxes. The records of each project shall be open to inspection by the proper assessing officer.
Subd. 4. Facilities funded from multiple sources. In the metropolitan area, as defined in section 473.121, subdivision 2, the tax treatment provided in subdivision 3 applies to that portion of any multifamily rental housing facility represented by the ratio of (1) the number of units in the facility that are subject to the requirements of Section 5 of the United States Housing Act of 1937, as the result of the implementation of a federal court order or consent decree to (2) the total number of units within the facility.
The housing and redevelopment authority for the city in which the facility is located, any public entity exercising the powers of such housing and redevelopment authority, or the county housing and redevelopment authority for the county in which the facility is located, shall annually certify to the assessor responsible for assessing the facility, at the time and in the manner required by the assessor, the number of units in the facility that are subject to the requirements of Section 5 of the United States Housing Act of 1937.
Nothing in this subdivision shall prevent that portion of the facility not subject to this subdivision from meeting the requirements of section 273.126, and for that purpose the total number of units in the facility must be taken into account.
Subd. 5. Designated housing corporation. (a) To the extent not exempt from taxation under section 272.01, subdivision 1, property located within the exterior boundaries of an Indian reservation in the state that is owned by the tribe's designated housing entity as defined in United States Code, title 25, section 4103(21), and that is a housing project or a housing development project, as defined in section 469.002, subdivisions 13 and 15, is exempt from all real and personal property taxes of the city, the county, the state, or any political subdivision thereof.
(b) Property exempt from taxation under paragraph (a) is subject to subdivision 3. A copy of those portions of the annual reports submitted on behalf of the housing entity to the Secretary of the United States Department of Housing and Urban Development for the project that contain information sufficient to determine the amount due under subdivision 3 satisfies the reporting requirements of subdivision 3 for the project.
469.042 Agreement on tax increments, equivalents; bond pledge.
Subdivision 1. General. Any city or other state public body within the limits of which a project of an authority is wholly or partially located may agree with the authority with respect to payment by the authority of sums in lieu of taxes for any year or period of years in accordance with the provisions of section 469.040, but for no longer than the period of tax exemption provided for under that section. If property owned by the authority in a redevelopment project area is leased or otherwise made available by the authority to a private individual, firm, or corporation which previously owned the same or other property within the area, not for development in connection with the project but for temporary use pending relocation of the former owner's residence or business, the authority may agree to payment of sums in lieu of taxes for any year or period of temporary use. The payments shall not exceed the amount of the annual rentals or other payments it receives for the use. During the use the property and the authority shall be exempt from all taxes and special assessments as provided in section 469.040, and the provisions of section 272.01, subdivision 2 and of section 273.19 shall not apply to the property or to that use. In connection with any redevelopment project, an authority may make further agreements respecting taxes as provided below.
Subd. 2. Original net tax capacity. Upon or after approval of a redevelopment project of any housing and redevelopment authority under section 469.028, the auditor of the county in which it is situated shall upon request of the authority certify the net tax capacity of all taxable real property within the project area as then most recently determined, which is referred to in this section as the "original net tax capacity." The auditor shall certify to the authority each year thereafter the amount by which the original net tax capacity has increased or decreased, and the proportion which any such increase bears to the total net tax capacity of the real property for that year or the proportion which any such decrease bears to the original net tax capacity. This subdivision and subdivision 3 shall not apply to any redevelopment project, certification of which is requested subsequent to August 1, 1979.
Subd. 3. Tax increments. In each subsequent year the county auditor shall include no more than the original net tax capacity of the real property in the net tax capacity upon which the auditor computes the local tax rates of all taxes levied by the state, the county, the city or town, the school district and every other taxing district in which the project area is situated. The auditor shall extend all local tax rates so determined against the entire net tax capacity of the real property for that year. In each year for which the net tax capacity exceeds the original net tax capacity, the county treasurer shall remit to the authority, instead of the taxing districts, that proportion of all taxes paid that year on the real property in the project area which the excess net tax capacity bears to the total net tax capacity. The amount so remitted each year is referred to in this section as the "tax increment" for that year. Tax increments received with respect to any redevelopment project shall be segregated by the authority receiving them in a special account on its official books and records until the public redevelopment cost of the project, including interest on all money borrowed therefor, has been fully paid, and the city or other public body in which the project is situated has been fully reimbursed from the tax increments or revenues of the project for any principal and interest on general obligation bonds which it has issued for the project and has paid from taxes levied on other property within its corporate limits. The payment shall be reported to the county auditor, who shall thereafter include the entire net tax capacity of the project area in the net tax capacities upon which local tax rates are computed and extended and taxes are remitted to all taxing districts.
Subd. 4. Tax increment financing. The authority may pledge and appropriate any part or all of the tax increments received for any redevelopment project, and any part or all of the revenues received from lands in the project area while owned by the authority, for the payment of the principal of and interest on bonds issued in aid of the project pursuant to sections 469.034, 469.041, or 469.152 to 469.165, by the authority or by the governing body of the municipality or other state public body within whose corporate limits the project area is situated. Any such pledge for the payment of bonds issued by the governing body shall be made by written agreement executed on behalf of the authority and the governing body and filed with the county auditor. The estimated collections of the tax increments and any other revenues so pledged may be deducted from the taxes otherwise required to be levied before the issuance of the bonds under section 475.61, subdivision 1, or the collections thereof may be certified annually to reduce or cancel the initial tax levies in accordance with section 475.61, subdivision 3. When such an agreement is made and filed, the bonds may be issued by the governing body in the same manner and subject only to the same conditions as those provided in chapter 475 for bonds financing improvement costs reimbursable from special assessments. Bonds shall not be issued nor tax increments or other revenues pledged pursuant to this subdivision subsequent to August 1, 1979.
469.043 Property tax exemption.
Subdivision 1. Application. A developer proposing to construct a building on land located within a redevelopment project as defined in section 469.002, subdivision 14, may apply to the governing body of the city in which the land is located to obtain a partial tax exemption as provided in subdivision 2 for the approved property. The land and the building to be constructed thereon are referred to in this section as the "development." The development shall be designed and used primarily for housing purposes but portions of it may be planned and used for related business, commercial, cultural, or recreational purposes, consistent with the project plan. In applying for the tax exemption, the developer must submit a plan of the development that shall contain a general description of the area to be redeveloped and a statement of the plan for redevelopment that includes:
(1) height and bulk of structures, density of population, and percentage of land covered by structures as to their conformity with the purposes of sections 469.001 to 469.047 and with the project plan, if any; and the relationship of the density of population contemplated by the development plan, or project plan, to the distribution of the population of the city in other areas or parts thereof;
(2) provision, if any, for business or commercial facilities related to the development, relationship to existing and planned public facilities, adequacy and planned rearrangement of street facilities and provisions for light, air, cultural, and recreational facilities as to their conformity with the purposes of sections 469.001 to 469.047 and their adequacy for accommodation of the density of population contemplated by the development plan or project plan; and
(3) a development contract with the authority covering the acquisition, construction, financing, operation, and maintenance of the development. The contract shall provide that:
(a) after deducting all operating expenses, debt service payments, taxes or payments in lieu of taxes, and assessments, the developer may be paid annually out of the earnings of the project an amount equal to a specified percentage of the equity invested in the project; the percentage shall be fixed for the term of the tax exemption and shall be determined at the time of the approval of the development contract, provided that no percentage greater than eight percent shall be approved; the contract shall set out the terms of the developer's return on equity and shall define "developer's invested equity," "project earnings," "debt service," and "operating expenses"; and that any cash surplus derived from earnings from that project remaining in the treasury of the developer in excess of the amount necessary to provide such cumulative annual sums shall, upon a conveyance of the project or upon a dissolution of the company, be paid into the general fund of the city or town in which that project is located; and
(b) a provision that, so long as this section remains applicable to a project, the real property of the project shall not be sold, transferred, or assigned except as permitted by the terms of the contract or as subsequently approved by the governing body.
Subd. 2. Partial tax exemption. The governing body of a city in which the proposed development is to be located, after the approval required by subdivision 3, may exempt from all local taxes up to 50 percent of the net tax capacity of the development which represents an increase over the net tax capacity of the property, including both land and improvements, acquired for the development at the time of its original acquisition for redevelopment purposes. If the governing body grants an exemption, the development shall be exempt from any or all county and school district ad valorem property taxes to the extent of and for the duration of the municipal exemption. The tax exemption shall not operate for a period of more than ten years, commencing from the date on which the exemption first becomes effective. No exemption may be granted from payment of special assessments or from the payment of inspection, supervision, and auditing fees of the authority.
The governing body may not approve a tax exemption or a development contract for a development unless it finds by resolution that (1) the land which is part of the proposed development would not, in the foreseeable future, be made available for redevelopment in the manner proposed without the partial exemption; (2) the development plan submitted by the developer will meet a specific housing shortage identified by the city or the authority and will afford maximum opportunity, consistent with the project plan, for redevelopment of the land by private enterprise; and (3) the development plan conforms to the project plan as a whole.
Subd. 3. Comment by county board. Before approving a tax exemption pursuant to this section, the governing body of the city must provide an opportunity to members of the board of commissioners of the county in which the proposed development is to be located and the members of the school board of the school district which the proposed development is to be located to meet with the governing body. The governing body must present to the members of those boards its estimate of the fiscal impact of the proposed property tax exemption. The tax exemption may not be approved by the governing body until the county board of commissioners has presented its written comment on the proposal to the governing body, or 30 days have passed since the date of the transmittal by the governing body to the board of the information on fiscal impact, whichever occurs first.
Subd. 4. Change in project prohibited. During the period of any tax exemption granted pursuant to this section, no developer or any approved successor in interest to its title to a project or any part thereof may transfer any ownership interest in the developer entity or in the project or change any feature of a project for which approval of the city is required, without the approval of the authority and the approval by the local governing body by a majority of the number of the votes authorized to be cast by all of the members of the local governing body.
Subd. 5. Continuation of redevelopment company provisions. The provisions of Minnesota Statutes 1986, sections 462.591 to 462.705, shall continue in effect with respect to any project to which a tax exemption had been granted under Minnesota Statutes 1986, section 462.651, prior to August 1, 1987, whether or not the project continues to be owned by a redevelopment company, provided that if the project is not owned by a redevelopment company or governmental unit, the exemption shall not be available during any period when the earnings of the owner from the project annually paid to the owner or its shareholders for interest, amortization, and dividends exceeds eight percent of invested capital or equity in the project.
469.047 Suit for civil damages.
Nothing in sections 469.044 to 469.047 shall affect the rights of any person to bring a suit for civil damages. No bond shall be required in such a suit except as otherwise provided by law.
469.048 Definitions.
Subdivision 1. Generally. In sections 469.048 to 469.068, the terms defined in this section have the meanings given them herein, unless the context indicates a different meaning.
Subd. 2. Port authority. "Port authority" or "authority" means a port authority created under section 469.049 or a special law. "Port authority" includes a seaway port authority.
Subd. 3. Seaway port authority. A "seaway port authority" or a "seaport" is a port authority with jurisdiction over a harbor on the Great Lakes-St. Lawrence seaway.
Subd. 4. Port district. A "port district" is the total area of operations of a port authority.
Subd. 5. Marginal property. "Marginal property" means property that suffers from at least one of the conditions in this subdivision:
(1) faulty planning causing deterioration, disuse, or economic dislocation;
(2) the subdividing and sale of lots too small and irregular for good use and development;
(3) lots laid out without regard to their physical characteristics and surrounding conditions;
(4) inadequate streets, open spaces, and utilities;
(5) areas that may flood;
(6) lower values, damaged investments, and social and economic maladjustment reducing taxpaying capacity to the extent that tax receipts are too low to pay for the public services rendered;
(7) lack of use or improper use of areas, resulting in stagnant or unproductive land that could contribute to the public health, safety and welfare;
(8) lower population and reduction of proper use of areas causing more decline, and requiring more public money for new public facilities and public services elsewhere;
(9) property valuation too low to establish a local improvement district to construct and install streets, walks, sewers, water and other utilities;
(10) lands within an industrial area not used for industry but needed for industrial development of the area; and
(11) state-acquired tax-forfeited land.
Subd. 6. City. "City" means a home rule charter or statutory city.
469.058 Industrial development districts.
Subdivision 1. Creation; notice; findings. A port authority may create and define the boundaries of industrial development districts in their port districts after holding a public hearing on the matter. At least ten days before the hearing, the authority shall publish notice of the hearing in a daily newspaper of general circulation in the port district. The development district may be created if the authority finds that a development district is proper and desirable to establish and develop a system of harbor and river improvements and industrial developments in its port district. In this section, "development" includes redevelopment, and "developing" includes redeveloping.
Subd. 2. Policy. It is state policy in the public interest to have a port authority exercise the power of eminent domain, and advance and spend public money for the purposes in sections 469.048 to 469.068, and to provide the means to develop marginal property according to the findings in subdivision 3.
Subd. 3. Findings. The legislature makes the findings in this subdivision about the purposes of this section.
(a) Sound development of the economic security of the people in port authority cities depends on proper development of marginal property. The general welfare of the residents of port districts requires remedies for the injurious conditions of marginal property by appropriate means.
(b) Marginal property cannot be developed without public participation and assistance in: (1) acquiring land, (2) planning, (3) financing of land assembly in the work of clearance and development, and (4) making necessary improvements for developing.
When the development of marginal property cannot be done by private enterprise alone, it is in the public interest to exercise the power of eminent domain, to advance and spend public money, and to provide the means to develop marginal property.
(c) The decline of marginal lands often cannot be reversed except by developing all or most of those lands. Private development may be uneconomic and practically impossible because of costs and lack of legal power. The public may have to acquire sizable areas of marginal property at fair prices to remedy the conditions on the marginal property, and to develop the areas under proper supervision, with appropriate planning and continuing land use. The development of land acquired under sections 469.048 to 469.068 is a public necessity and use and a governmental function. The sale or lease of the land after development is incidental to the real purpose: to remove the condition making the property marginal.
(d) The development of marginal property and its continuing use are public uses, public purposes, and government functions that justify spending or advancing public money and acquiring private property. The development is a state concern in the interest of health, safety, and welfare of the people of the state and of all residents and property owners in communities having marginal property. Marginal property causes problems beyond control of police power alone.
469.059 Development district powers.
Subdivision 1. In general. A port authority, or a city authorized by law to exercise the powers of a port authority, may use the powers in this section for the purposes in section 469.058, subdivision 1.
Subd. 2. Acquire property. The port authority may acquire by lease, purchase, gift, devise, or condemnation proceedings the needed right, title, and interest in property to create industrial development districts. A port authority may lease property in or out of its port district if it believes the property is suitable and proper to use to carry out its duties and responsibilities. It shall pay for the property out of money it receives under sections 469.059 to 469.068. It may hold and dispose of the property subject to the limits and conditions in sections 469.049, 469.050, and 469.058 to 469.068. The title to property acquired by condemnation or purchase must be in fee simple, absolute. The port authority may accept an interest in property acquired in another way subject to any condition of the grantor or donor. The condition must be consistent with the proper use of the property under sections 469.049, 469.050, and 469.058 to 469.068. Property acquired, owned, leased, controlled, used, or occupied by the port authority for any of the purposes of this section is for public governmental and municipal purposes and is exempt from taxation by the state or by its political subdivisions. The exemption applies only while the port authority holds property for its own purpose. When property is sold it begins to be taxed again.
Subd. 3. Options. The port authority may sign options to purchase, sell, or lease property.
Subd. 4. Eminent domain. The port authority may exercise the right of eminent domain under chapter 117, or under its city's charter to acquire property it is authorized to acquire by condemnation. The port authority may acquire in this way property acquired by its owner by eminent domain or property already devoted to a public use only if its city's council approves. The port authority may take possession of property to be condemned after it files a petition in condemnation proceedings describing the property. The authority may abandon the condemnation before taking possession.
Subd. 5. Contracts. The port authority may make contracts for an industrial development purpose within the powers given it in sections 469.049, 469.050, and 469.058 to 469.068.
Subd. 6. Partner. The port authority may be a limited partner.
Subd. 7. Rights; easements. The port authority may acquire rights or an easement for a term of years or perpetually for development of an industrial district.
Subd. 8. Supplies; materials. The port authority may buy the supplies and materials it needs to carry out this section.
Subd. 9. Receive public property. The port authority may accept land, money, or other assistance, whether by gift, loan or otherwise, in any form from the federal or state government, or an agency of either, or a local subdivision of state government to carry out sections 469.048 to 469.068 and to acquire and develop an industrial development district and its facilities under this section.
Subd. 10. Tax-forfeited land. The port authority may use the power of a governmental subdivision under section 282.01 to acquire land for and develop an industrial development district. The authority may exercise the power of a city of the first class under that section to acquire land forfeited to the state for nonpayment of taxes.
Subd. 11. Procedure. Tax-forfeited lands in an industrial development district that are vested in the state shall be conveyed to the port authority that is developing the district for one dollar per tract. The port authority may use and later resell the land for purposes of sections 469.048 to 469.068.
In conveying tax-forfeited land to a port authority, the state may not retain a possibility of reverter or right of reentry as it does under section 282.01, subdivision 1e.
The commissioner of revenue shall convey tax-forfeited parcels in an industrial development district to the port authority, if the authority petitions for conveyance under sections 469.048 to 469.068 and pays one dollar per tract.
The attorney general shall approve the form of the deed of conveyance. The port authority shall receive absolute title to the tract, subject only to a reservation of minerals and mineral rights, under section 282.12. The deed of conveyance must not contain a restriction on the use of the premises. The conveyance divests the state of all further right, title, claim or interest in the tracts, except for the reservation of minerals and mineral rights.
Subd. 12. Development district power. The port authority may sell or lease land held by it for river, harbor or industrial development in industrial development districts. The authority may, if in the public interest, build suitable buildings or structures on land owned by it. The authority may furnish capital equipment to be located permanently or used exclusively on the lands or in the buildings if necessary to the purposes of the buildings or structures. The port authority must intend that the buildings, structures, and equipment be leased or sold to private persons to further develop the industrial district.
The authority may acquire, develop, sell, or lease single or multiple tracts of land regardless of size, to be developed as a part of the industrial development of the district under sections 469.048 to 469.068.
Subd. 13. Tax increment. The port authority may request that the county auditor of the county of its industrial development district certify the latest net tax capacity of the legally described taxable real property in the request or of all the taxable real property in the district. The auditor shall make the certification. Valuation that is contributed to an areawide tax base under chapter 473F must be excluded from the certification. Each year the auditor shall certify to the authority the amounts and percentages of increase or decrease in the certified net tax capacity. The part of the change that is contributed to an areawide tax base under chapter 473F must be excluded.
The auditor shall compute the local tax rates of taxes against the original certified net tax capacity. The auditor shall also extend the rates against any increased net tax capacity. The auditor shall then send the resulting tax increment to the port authority. The procedure to be used for computing and sending the increments is provided in section 469.042, subdivisions 2 and 3.
The port authority shall keep tax increments received for a district in a special account on its official books and records.
The auditor shall send the tax increments to the port authority until the cost, including interest, of redevelopment of the marginal property within the district has been fully reimbursed. The port authority shall report to the auditor when the cost is fully reimbursed. After that the auditor shall compute and extend the local tax rates against the entire net tax capacity of the property and send the taxes to all taxing districts. The city council may direct that part or all of the tax collected from the property be pledged and appropriated to pay general obligation bonds of the authority. After the auditor has certified the base net tax capacity used to compute tax increments and while the tax increment is kept in a separate account, the auditor must not include increases in the net tax capacity of the property in the net tax capacity of a taxing district to compute its debt or levy limit or to compute the amount of its state or federal aid. This subdivision applies to projects for which the port authority requested a certification on the project before August 2, 1979.
Subd. 14. Foreign trade zone. The port authority may apply to the board defined in United States Code, title 19, section 81a, for the right to use the powers provided in United States Code, title 19, sections 81a to 81u. If the right is granted, the authority may use the powers in or out of its port district. One authority may apply with another port authority.
Subd. 15. Extension of other authorities' powers. The port authority may exercise powers and duties of a redevelopment agency under sections 469.152 to 469.165, for a purpose in sections 469.001 to 469.047 or 469.048 to 469.068. The port authority may also exercise the powers and duties in sections 469.001 to 469.047 and 469.048 to 469.068, for a purpose in sections 469.152 to 469.165.
Subd. 16. Parking and other facilities. The port authority may operate and maintain a public parking or other public facility to promote development in a development district.
Subd. 17. Secondary market. The port authority may sell, at private or public sale, at the price or prices determined by the authority, any note, mortgage, lease, sublease, lease purchase, or other instrument or obligation evidencing or securing a loan made for the purpose of economic development, job creation, redevelopment, or community revitalization by a public agency to a business, for-profit or nonprofit organization, or an individual.
469.065 Sale of property.
Subdivision 1. Power. A port authority may sell and convey property owned by it within a port or industrial district if it determines that the sale and conveyance are in the best interests of the district and its people, and that the transaction furthers its general plan of port improvement, or industrial development, or both. This section is not limited by other law on powers of port authorities.
Subd. 2. Notice; hearing. A port authority shall hold a hearing on the sale. At the hearing a taxpayer may testify for or against the sale. At least ten, but not more than 20, days before the hearing the authority shall publish notice of the hearing on the proposed sale in a newspaper. The newspaper must be published and of general circulation in the port authority's county and port district. The notice must describe the property to be sold and state the time and place of the hearing. The notice must also state that the public may see the terms and conditions of the sale at the authority's office and that at the hearing the authority will meet to decide if the sale is advisable.
Subd. 3. Decision; appeal. The port authority shall make its findings and decision on whether the sale is advisable and enter its decision on its records within 30 days of the hearing. A taxpayer may appeal the decision by filing a notice of appeal with the district court in the port or industrial district's county and serving the notice on the secretary of the port authority, within 20 days after the decision is entered. The only ground for appeal is that the action of the authority was arbitrary, capricious, or contrary to law.
Subd. 4. Terms. The terms and conditions of sale of the property must include the use that the bidder will be allowed to make of it. The authority may require the purchaser to file security to assure that the property will be given that use. In deciding the sale terms and conditions the port authority may consider the nature of the proposed use and the relation of the use to the improvement of the harbor, the riverfront, and the port authority's city and the business and the facilities of the port authority in general. The sale must be made on the port authority's terms and conditions. The port authority may publish an advertisement for bids on the property at the same time and in the same manner as the notice of hearing required in this section. The authority may award the sale to the bid considered by it to be most favorable considering the price and the specified intended use. The port authority also may sell the property at private sale at a negotiated price if after its hearing the authority considers that sale to be in the public interest and to further the aims and purposes of sections 469.048 to 469.068.
Subd. 5. One-year deadline. Within one year from the date of purchase, the purchaser shall devote the property to its intended use or begin work on the improvements to the property to devote it to that use. If the purchaser fails to do so, the port authority may cancel the sale and title to the property shall return to it. The port authority may extend the time to comply with a condition if the purchaser has good cause. The terms of sale may contain other provisions that the port authority considers necessary and proper to protect the public interest. A purchaser must not transfer title to the property within one year of purchase without the consent of the port authority.
Subd. 6. Covenant running with the land. A sale made under this section must incorporate in the deed as a covenant running with the land the conditions of sections 469.048 to 469.068 relating to the use of the land. If the covenant is violated the authority may declare a breach of the covenant and seek a judicial decree from the district court declaring a forfeiture and a cancellation of the deed.
Subd. 7. Plans; specifications. A conveyance must not be made until the purchaser gives the port authority plans and specifications to develop the property sold. The port authority must approve the plans and specifications in writing. The port authority may require preparation of final plans and specifications before the hearing on the sale.
469.0671 No state bailout of port authorities.
State appropriations or credit of the state must not be used to pay or guarantee the payment of the debt of a port authority.
469.068 Bid law for construction contracts.
Subdivision 1. Contracts; bids; bonds. All construction work and every purchase of equipment, supplies, or materials necessary in carrying out the purposes of sections 469.048 to 469.068, that involve the expenditure of $1,000 or more, shall be awarded by contract as provided in this subdivision. Before receiving bids under sections 469.048 to 469.068, the authority shall publish, once a week for two consecutive weeks in the official newspaper of the port's city, a notice that bids will be received for the construction work, or purchase of equipment, supplies, or materials. The notice shall state the nature of the work, and the terms and conditions upon which the contract is to be let and name a time and place where the bids will be received, opened, and read publicly, which time shall be not less than seven days after the date of the last publication. After the bids have been received, opened, read publicly, and recorded, the commissioners shall award the contract to the lowest responsible bidder, reserving the right to reject any or all bids. The contract shall be executed in writing and the person to whom the contract is awarded shall give sufficient bond to the board for its faithful performance. If no satisfactory bid is received, the port authority may readvertise, or, by an affirmative vote of two of its commissioners in the case of a three-member commission, or five of its members in the case of a seven-member commission, may authorize the authority to perform any part or parts of any construction work by day labor under conditions it prescribes. The commissioners may establish reasonable qualifications to determine the fitness and responsibility of bidders, and require bidders to meet the qualifications before bids are accepted. If the commissioners by a two-thirds or five-sevenths vote declare that an emergency exists requiring the immediate purchase of any equipment or material or supplies at a cost in excess of $1,000, but not exceeding $5,000, in amount, or making of emergency repairs, it shall not be necessary to advertise for bids, but the material, equipment, or supplies may be purchased in the open market at the lowest price obtainable, or the emergency repairs may be contracted for or performed without securing formal competitive bids. An emergency, for purposes of this section, is unforeseen circumstances or conditions which result in the jeopardizing of human life or property.
In all contracts involving the employment of labor, the commissioners shall stipulate conditions they deem reasonable, as to the hours of labor and wages and may stipulate as to the residence of employees to be employed by the contractors.
Bonds shall be required from contractors for any works of construction as provided in and subject to all the provisions of sections 574.26 to 574.31.
Subd. 2. City purchasing. A port authority may use the facilities of its city's purchasing department in connection with construction work and to purchase equipment, supplies, or materials.
Subd. 3. Uniform municipal contracting law. A port authority may use the dollar limits on contracts for the basis for competitive bids, quotations, or purchase or sale in the open market contained in section 471.345 as an alternative to the limits contained in subdivision 1.
469.089 Winona.
Subdivision 1. Establishment. The Winona City Council may by resolution establish the port authority of Winona.
Subd. 2. Port authority law applies. Sections 469.048 to 469.068 apply to the Winona port authority and to the city of Winona. The sections apply just as they apply to a port authority established by section 469.049, except a seaway port authority, and to the port authority's city, except as otherwise provided in this section. For the Winona port authority, when "industrial" is used in the context of industrial development district under sections 469.048 to 469.068, "industrial" or "industrial development" includes "economic" or "economic development." Sections 469.056, subdivision 1, 469.067, and 469.053, subdivision 6, and the per meeting payment provision of section 469.050, subdivision 5, do not apply to the Winona Port Authority.
Subd. 3. City approval. Action taken by the Winona port authority under section 469.058, 469.059, subdivision 4, or 469.061, must be approved by city council resolution to take effect.
Subd. 4. Staff; budget. The city of Winona, by resolution of its city council, may provide the port authority with personnel and staff, temporarily, provisionally, or permanently on terms and conditions it considers appropriate. In the same way, the city may appropriate and budget the funds to administer the port authority as the city considers necessary and appropriate. The money must be budgeted, used, and accounted for according to the charter and ordinances of the city.
Subd. 5. Marginal property. A port authority's decision that property it seeks is marginal under section 469.058 is prima facie evidence in eminent domain proceedings that the property is marginal. The decision must be made in a resolution. The resolution must state the characteristics that the authority thinks makes the property marginal. The port authority resolution must then be approved by city council resolution.
Subd. 6. Industrial development powers. The port authority has the powers granted to port authorities by sections 469.152 to 469.165. The powers may be exercised within and outside its corporate limits. The exercise of the powers is subject to approval by resolution of the city council.
Subd. 7. Bond interest. Revenue bonds issued by the port authority may be negotiated and sold at a price resulting in an average annual net interest rate on the bonds of not more than seven percent per year computed to the stated maturities.
Subd. 8. No assessments; improvement districts. The port authority must not levy special assessments or establish local improvement districts. The city of Winona, or its port authority with the approval by resolution of the city council, may exercise the powers in section 471.191 to acquire and to improve recreational land, buildings, and facilities within or outside their corporate limits.
Subd. 9. Surplus funds. On or before October 15 in each year the port authority shall report to the city council the amount of surplus funds that are in its judgment available for transfer to the sinking fund for any general obligation bonds of the authority, to reduce tax levies to pay the bonds. The council shall then decide by resolution what amount to transfer.
Subd. 10. Wisconsin real property. The port authority may purchase or lease real property in Wisconsin for barge fleeting or for recreation activities or for both.
Subd. 11. Transfer of city property to port. The city of Winona may transfer, with or without consideration and on other terms the city council considers desirable, its interest in any real property, including fee title, to the port authority of Winona. The transfer must be authorized by ordinance. The ordinance must contain the following:
(1) the general location and the specific legal description of the property;
(2) a finding by the city council that the real property is marginal under section 469.058, supported by reference to one or more of the conditions listed in section 469.048, subdivision 5;
(3) a statement as to the consideration, or absence of it, to be received by the city at the time of transfer; and
(4) other information considered appropriate by the city council.
A conveyance of fee title under this subdivision must be by quitclaim deed.
469.090 Definitions.
Subdivision 1. Generally. In sections 469.090 to 469.108, the terms defined in this section have the meanings given them herein, unless the context indicates a different meaning.
Subd. 2. Authority. "Authority" means an economic development authority.
Subd. 3. City. "City" means a home rule charter or statutory city.
Subd. 4. Development. "Development" includes redevelopment, and "developing" includes redeveloping.
Subd. 5. Cost of redevelopment. "Cost of redevelopment" means, with respect to an economic development district project, the cost of:
(1) acquiring property, whether by purchase, lease, condemnation, or otherwise;
(2) demolishing or removing structures or other improvements on acquired properties;
(3) correcting soil deficiencies necessary to develop or use the property for an appropriate use as determined by the authority;
(4) constructing or installing public improvements, including streets, roads, and utilities;
(5) providing relocation benefits to the occupants of acquired properties;
(6) planning, engineering, legal, and other services necessary to carry out the functions listed in clauses (1) to (5); and
(7) the allocated administrative expenses of the authority for the project.
469.091 Economic development authority.
Subdivision 1. Establishment. A city may, by adopting an enabling resolution in compliance with the procedural requirements of section 469.093, establish an economic development authority that, subject to section 469.092, has the powers contained in sections 469.090 to 469.108 and the powers of a housing and redevelopment authority under sections 469.001 to 469.047 or other law, and of a city under sections 469.124 to 469.134 or other law. If the economic development authority exercises the powers of a housing and redevelopment authority contained in sections 469.001 to 469.047 or other law, the city shall exercise the powers relating to a housing and redevelopment authority granted to a city by sections 469.001 to 469.047 or other law.
Subd. 2. Characteristics. An economic development authority is a public body corporate and politic and a political subdivision of the state with the right to sue and be sued in its own name. An authority carries out an essential governmental function when it exercises its power, but the authority is not immune from liability because of this.
Subd. 3. Unpaid officers, directors, and agents; liability. Section 317A.257 applies to an economic development authority or to a nonprofit corporation exercising the powers of an economic development authority.
469.092 Limit of powers.
Subdivision 1. Resolution. The enabling resolution may impose the following limits upon the actions of the authority:
(1) that the authority must not exercise any specified powers contained in sections 469.001 to 469.047, 469.090 to 469.108, and 469.124 to 469.134 or that the authority must not exercise any powers without the prior approval of the city council;
(2) that, except when previously pledged by the authority, the city council may by resolution require the authority to transfer any portion of the reserves generated by activities of the authority that the city council determines is not necessary for the successful operation of the authority to the debt service fund of the city, to be used solely to reduce tax levies for bonded indebtedness of the city;
(3) that the sale of all bonds or obligations issued by the authority be approved by the city council before issuance;
(4) that the authority follow the budget process for city departments as provided by the city and as implemented by the city council and mayor;
(5) that all official actions of the authority must be consistent with the adopted comprehensive plan of the city, and any official controls implementing the comprehensive plan;
(6) that the authority submit all planned activities for influencing the action of any other governmental agency, subdivision, or body to the city council for approval;
(7) that the authority submit its administrative structure and management practices to the city council for approval; and
(8) any other limitation or control established by the city council by the enabling resolution.
Subd. 2. Modification of resolution. The enabling resolution may be modified at any time, subject to subdivision 5, and provided that any modification is made in accordance with this section.
Subd. 3. Report on resolution. Without limiting the right of the authority to petition the city council at any time, each year, within 60 days of the anniversary date of the first adoption of the enabling resolution, the authority shall submit to the city council a report stating whether and how the enabling resolution should be modified. Within 30 days of receipt of the recommendation, the city council shall review the enabling resolution, consider the recommendations of the authority, and make any modification it considers appropriate. Modifications must be made in accordance with the procedural requirements of section 469.093.
Subd. 4. Compliance. The city council's determination that the authority has complied with the limitations imposed under this section is conclusive.
Subd. 5. Limits; security. Limits imposed under this section must not be applied in a manner that impairs the security of any bonds issued or contracts executed before the limit is imposed. The city council must not modify any limit in effect at the time any bonds or obligations are issued or contracts executed to the detriment of the holder of the bonds or obligations or any contracting party.
469.101 Powers.
Subdivision 1. Establishment. An economic development authority may create and define the boundaries of economic development districts at any place or places within the city if the district satisfies the requirements of section 469.174, subdivision 10, except that the district boundaries must be contiguous, and may use the powers granted in sections 469.090 to 469.108 to carry out its purposes. First the authority must hold a public hearing on the matter. At least ten days before the hearing, the authority shall publish notice of the hearing in a daily newspaper of general circulation in the city. Also, the authority shall find that an economic development district is proper and desirable to establish and develop within the city.
Subd. 2. Acquire property. The economic development authority may acquire by lease, purchase, gift, devise, or condemnation proceedings the needed right, title, and interest in property to create economic development districts. It shall pay for the property out of money it receives under sections 469.090 to 469.108. It may hold and dispose of the property subject to the limits and conditions in sections 469.090 to 469.108. The title to property acquired by condemnation or purchase must be in fee simple, absolute. The authority may accept an interest in property acquired in another way subject to any condition of the grantor or donor. The condition must be consistent with the proper use of the property under sections 469.090 to 469.108. Property acquired, owned, leased, controlled, used, or occupied by the authority for any of the purposes of this section is for public governmental and municipal purposes and is exempt from taxation by the state or by its political subdivisions, except to the extent that the property is subject to the sales and use tax under chapter 297A. The exemption applies only while the authority holds property for its own purpose. The exemption is subject to the provisions of section 272.02, subdivision 39. When the property is sold it becomes subject to taxation.
Subd. 3. Options. The economic development authority may sign options to purchase, sell, or lease property.
Subd. 4. Eminent domain. The economic development authority may exercise the right of eminent domain under chapter 117, or under its city's charter to acquire property it is authorized to acquire by condemnation. The authority may acquire in this way property acquired by its owner by eminent domain or property already devoted to a public use only if its city's council approves. The authority may take possession of property to be condemned after it files a petition in condemnation proceedings describing the property. The authority may abandon the condemnation before taking possession.
Subd. 5. Contracts. The economic development authority may make contracts for the purpose of economic development within the powers given it in sections 469.090 to 469.108. The authority may contract or arrange with the federal government, or any of its departments, with persons, public corporations, the state, or any of its political subdivisions, commissions, or agencies, for separate or joint action, on any matter related to using the authority's powers or performing its duties. The authority may contract to purchase and sell real and personal property. An obligation or expense must not be incurred unless existing appropriations together with the reasonably expected revenue of the authority from other sources are sufficient to discharge the obligation or pay the expense when due. The state and its municipal subdivisions are not liable on the obligations.
Subd. 6. Limited partner. The economic development authority may be a limited partner in a partnership whose purpose is consistent with the authority's purpose.
Subd. 7. Rights; easements. The economic development authority may acquire rights or an easement for a term of years or perpetually for development of an economic development district.
Subd. 8. Supplies; materials. The economic development authority may buy the supplies and materials it needs to carry out this section.
Subd. 9. Receive public property. The economic development authority may accept land, money, or other assistance, whether by gift, loan or otherwise, in any form from the federal or state government, or an agency of either, or a local subdivision of state government to carry out sections 469.090 to 469.108 and to acquire and develop an economic development district and its facilities under this section.
Subd. 10. Development district authority. The economic development authority may sell or lease land held by it for economic development in economic development districts. The authority may acquire, sell, or lease single or multiple tracts of land regardless of size, to be developed as a part of the economic development of the district under sections 469.090 to 469.108.
Subd. 11. Foreign trade zone. The economic development authority may apply to the board defined in United States Code, title 19, section 81a, for the right to use the powers provided in United States Code, title 19, sections 81a to 81u. If the right is granted, the authority may use the powers. One authority may apply with another authority.
Subd. 12. Relation to other redevelopment powers. The economic development authority may exercise powers and duties of a redevelopment agency under sections 469.152 to 469.165, for a purpose in sections 469.001 to 469.047 or 469.090 to 469.108. The authority may also use the powers and duties in sections 469.001 to 469.047 and 469.090 to 469.108 for a purpose in sections 469.152 to 469.165.
Subd. 13. Public facilities. The authority may operate and maintain a public parking facility or other public facility to promote development in an economic development district.
Subd. 14. Government agent. An economic development authority may cooperate with or act as agent for the federal or the state government, or a state public body, or an agency or instrumentality of a government or a public body to carry out sections 469.090 to 469.108 or any other related federal, state, or local law in the area of economic development district improvement.
Subd. 15. Studies, analysis, research. An authority may study and analyze economic development needs in the city, and ways to meet the needs. An authority may study the desirable patterns for land use for economic development and community growth and other factors affecting local economic development in the city and make the result of the studies available to the public and to industry in general. An authority may engage in research and disseminate information on economic development within the city.
Subd. 16. Public relations. To further an authorized purpose, an authority may (1) join an official, industrial, commercial, or trade association, or another organization concerned with the purpose, (2) have a reception of officials who may contribute to advancing the city and its economic development, and (3) carry out other public relations activities to promote the city and its economic development. Activities under this subdivision have a public purpose.
Subd. 17. Accept public land. An authority may accept conveyances of land from all other public agencies, commissions, or other units of government, if the land can be properly used by the authority in an economic development district, to carry out the purposes of sections 469.090 to 469.108.
Subd. 18. Economic development. An authority may carry out the law on economic development districts to develop and improve the lands in an economic development district to make it suitable and available for economic development uses and purposes. An authority may fill, grade, and protect the property and do anything necessary and expedient, after acquiring the property, to make it suitable and attractive as a tract for economic development. An authority may lease some or all of its lands or property and may set up local improvement districts in all or part of an economic development district.
Subd. 19. Loans in anticipation of bonds. After authorizing bonds under sections 469.102 and 469.103, an authority may borrow to provide money immediately required for the bond purpose. The loans must not exceed the amount of the bonds. The authority shall by resolution decide the terms of the loans. The loans must be evidenced by negotiable notes due in not more than 12 months from the date of the loan payable to the order of the lender or to bearer, to be repaid with interest from the proceeds of the bonds when the bonds are issued and delivered to the bond purchasers. The loan must not be obtained from any commissioner of the authority or from any corporation, association, or other institution of which an authority commissioner is a stockholder or officer.
Subd. 20. Use of proceeds. The proceeds of obligations issued by an authority under section 469.103 and temporary loans obtained under subdivision 19 may be used to make or purchase loans for economic development facilities that the authority believes will require financing. To make or purchase the loans, the authority may enter into loan and related agreements, both before and after issuing the obligations, with persons, firms, public or private corporations, federal or state agencies, and governmental units under terms and conditions the authority considers appropriate. A governmental unit in the state may apply, contract for, and receive the loans. Chapter 475 does not apply to the loans.
Subd. 21. Repealed, 2000 c 490 art 11 s 44
Subd. 22. Secondary market. An authority may sell, at private or public sale, at the price or prices determined by the authority, any note, mortgage, lease, sublease, lease purchase, or other instrument or obligation evidencing or securing a loan made for the purpose of economic development, job creation, redevelopment, or community revitalization by a public agency to a business, for-profit or nonprofit organization, or an individual.
Subd. 23. Supplying small business capital. Notwithstanding any contrary law, the authority may participate with public or private corporations or other entities, whose purpose is to provide seed or venture capital to small businesses that have facilities located or to be located in the district. For that purpose the authority may use not more than ten percent of available annual net income or $1,000,000 annually, whichever is less, to invest in equities or acquire equity-type investments. These investments can be made directly in eligible corporations or entities or acquired through participation in a public or private seed or venture capital fund. The participation by the authority may not exceed in any year 25 percent of the total amount of funds provided for venture or seed capital purposes by all of the participants. The corporation, entity, or fund shall report in writing each six months to the commissioners of the authority all investments and other action taken by it since the last report. Funds contributed to the corporation or entity must be invested pro rata with each contributor of capital taking proportional risks on each investment. As used in this subdivision, the term "small business" has the meaning given it in section 645.445, subdivision 2.
469.107 City may levy taxes for economic development authority.
Subdivision 1. City tax levy. A city may, at the request of the authority, levy a tax in any year for the benefit of the authority. The tax must be not more than 0.01813 percent of taxable market value. The amount levied must be paid by the city treasurer to the treasurer of the authority, to be spent by the authority.
Subd. 2. Reverse referendum. A city may increase its levy for economic development authority purposes under subdivision 1 in the following way. Its city council must first pass a resolution stating the proposed amount of levy increase. The city must then publish the resolution together with a notice of public hearing on the resolution for two successive weeks in its official newspaper or if none exists in a newspaper of general circulation in the city. The hearing must be held two to four weeks after the first publication. After the hearing, the city council may decide to take no action or may adopt a resolution authorizing the proposed increase or a lesser increase. A resolution authorizing an increase must be published in the city's official newspaper or if none exists in a newspaper of general circulation in the city. The resolution is not effective if a petition requesting a referendum on the resolution is filed with the city clerk within 30 days of publication of the resolution. The petition must be signed by voters equaling five percent of the votes cast in the city in the last general election. The election must be held at a general or special election. Notice of the election must be given in the manner required by law. The notice must state the purpose and amount of the levy.
469.108 Special law; optional use.
A city that has established a port authority by special law or that has been granted the power to establish a port authority by special law, or a city whose city council has been authorized to exercise the powers of a port authority by special law may elect to use the powers granted in sections 469.090 to 469.108. If the election is made, the powers and duties set forth in sections 469.090 to 469.108 supersede the special law and the special law must not be used after the election. The use of powers under sections 469.090 to 469.108 by a city described in this section does not impair the security of any obligations issued or contracts or agreements executed under the special law. Control, authority, and operation of any project may be transferred to the authority in the manner provided in section 469.094.
469.1081 Liable in contract or tort.
Subject to the provisions of chapter 466, an authority shall be liable in contract or in tort in the same manner as a private corporation. The commissioners of an authority shall not be personally liable as such on its contracts, or for torts, not committed or directly authorized by them. The property or funds of an authority shall not be subject to attachment, or to levy and sale on execution, but, if an authority refuses to pay a judgment entered against it in any court of competent jurisdiction, the district court for the county in which the authority is situated may, by writ of mandamus, direct the treasurer of the authority to pay the judgment from any unencumbered funds available for that purpose.
469.109 Purpose.
The legislature finds that there exists in the state certain areas of substantial and persistent unemployment causing hardship to many individuals and their families and that there also exist certain rural areas where development and redevelopment should be encouraged. The legislature finds that the powers and facilities of the state government and local communities, in cooperation with the federal government, should assist rural areas and areas of substantial and chronic unemployment in planning and financing economic redevelopment by private enterprise, enabling those areas to enhance their prosperity by the establishment of stable and diversified local economies, and to provide new employment opportunities through the development and expansion of new or existing facilities and resources.
The legislature finds that the establishment of local or regional area redevelopment agencies in Minnesota having the power to acquire, build, lease, sell, or otherwise provide plants and facilities for industrial, recreational, or commercial development will create new employment and promote economic redevelopment of rural areas and of depressed or underdeveloped areas in the state, and that the accomplishment of these objectives is a public purpose for which public money may be spent.
469.123 Examination and audit of local agency.
The accounts, books, and records of any local or area agency, including its receipts, disbursements, contracts, mortgages, investments, and other matters relating to its finances, operation, and affairs shall be examined and audited from time to time by the state auditor as provided by law.
469.124 Purpose.
The legislature finds that there is a need for new development in areas of a city that are already built up in order to provide employment opportunities, to improve the tax base, and to improve the general economy of the state. Therefore, cities are authorized to develop a program for improving a district of the city to provide impetus for commercial development; to increase employment; to protect pedestrians from vehicle traffic and inclement weather; to provide the necessary linkage between peripheral parking facilities and places of employment and shopping; to provide off-street parking to serve the shoppers and employees of the district; to provide open space relief within the district; and to provide other facilities as are outlined in the development program adopted by the governing body. The legislature declares that the actions required to assist the implementation of these development programs are a public purpose and that the execution and financing of these programs are a public purpose.
469.125 Definitions.
Subdivision 1. Generally. In sections 469.124 to 469.134, the terms defined in this section have the meanings given them herein unless the context indicates a different meaning.
Subd. 2. City. "City" means any home rule charter or statutory city.
Subd. 3. Development program. A "development program" is a statement of objectives of the city for improvement of a development district which contains a statement as to the public facilities to be constructed within the district, the open space to be created, the environmental controls to be applied, the proposed reuse of private property, and the proposed operations of the district after the capital improvements within the district have been completed.
Subd. 4. Pedestrian skyway system. "Pedestrian skyway system" means any system of providing for pedestrian traffic circulation, mechanical or otherwise, elevated aboveground, within and without the public right-of-way, and through or above private property and buildings, and includes overpasses, bridges, passageways, walkways, concourses, hallways, corridors, arcades, courts, plazas, malls, elevators, escalators, heated canopies and accesses and all fixtures, furniture, signs, equipment, facilities, services, and appurtenances which in the judgment of the governing body of the city will enhance the movement, safety, security, convenience, and enjoyment of pedestrians and benefit the city and adjoining properties. The use of a public street or public right-of-way for pedestrian skyway travel only constitutes a public use and shall not require a vacation of the street or right-of-way.
Subd. 5. Special lighting systems. "Special lighting systems" means lights or light displays of any type located within or without the public right-of-way.
Subd. 6. Parking structure. "Parking structure" means any building the principal use of which is designed for and intended for parking of motor vehicles or any parking lot.
Subd. 7. Maintenance and operation. "Maintenance and operation" means all activities necessary to maintain facilities after they have been developed and all activities necessary to operate the facilities including informational and educational programs, and safety and surveillance activities.
Subd. 8. Governing body. "Governing body" means the city council.
Subd. 9. Development district. A "development district" is an area within the corporate limits of a city which has been so designated and separately numbered by the governing body.
469.126 Authority granted.
Subdivision 1. Designation of districts. A city may designate development districts within the boundaries of the city. Before designating a district, the city must consult with its planning agency or department and must hold a public hearing on the designation. Notice of the hearing must be published in the official newspaper of the city or, if there is no official newspaper, in a newspaper of general distribution in the city. The city shall also provide for relocation pursuant to section 469.133 and consult with the advisory board created by section 469.132 before making this designation.
Subd. 2. Powers. Within these districts the city may:
(1) adopt a development program consistent with which the city may acquire, construct, reconstruct, improve, alter, extend, operate, maintain, or promote developments aimed at improving the physical facilities, quality of life, and quality of transportation;
(2) acquire land or easements through negotiation or through powers of eminent domain;
(3) adopt ordinances regulating traffic in pedestrian skyway systems, public parking structures, and other facilities constructed within the development district. Traffic regulations may include direction and speed of traffic, policing of pedestrianways, hours that pedestrianways are open to the public, kinds of service activities that will be allowed in arcades, parks, and plazas, and rates to be charged in the parking structures;
(4) adopt ordinances regulating access to pedestrian skyway systems and the conditions under which such access is allowed;
(5) require private developers to construct buildings so as to accommodate and support pedestrian systems which are part of the program for the development district. When the city requires the developer to construct columns, beams, or girders with greater strength than required for normal building purposes, the city shall reimburse the developer for the added expense from development district funds;
(6) install special lighting systems, special street signs and street furniture, special landscaping of streets and public property, and special snow removal systems;
(7) acquire property for the district;
(8) lease or sell air rights over public buildings and spend public funds for constructing the foundations and columns in the public buildings strong enough to support the buildings to be constructed on air rights;
(9) lease all or portions of basement, ground, and second floors of the public buildings constructed in the district; and
(10) negotiate the sale or lease of property for private development if the development is consistent with the development program for the district.
469.127 Tax status.
The pedestrian skyway system, underground pedestrian concourse, the people mover system, and publicly owned parking structures are declared to be public property to be used for essential public and governmental purposes. They are exempt from all taxes and special assessments of the city, county, state, or any political subdivision thereof, except to the extent that the property is subject to the sales and use tax under chapter 297A. Taxes do not include charges for utilities and special services such as heat, water, electricity, gas, sewage disposal, or garbage removal.
469.134 Existing projects.
Sections 469.124 to 469.134 do not affect any project or program using tax increment financing which was approved by a city council under Laws 1971, chapter 548 or 677, or Laws 1973, chapter 196, 761, or 764, prior to July 1, 1974, and such projects or programs may be completed and financed in accordance with the provisions of the laws under which they were initiated notwithstanding any provision of this law. Provided, however, that Laws 1971, chapters 548 and 677, and Laws 1973, chapters 196, 761, and 764, are hereby specifically superseded, except as to those projects or programs which have been approved prior to July 1, 1974.
469.141 Regulation to protect mined underground space.
Subdivision 1. Department of Natural Resources review. The Department of Natural Resources shall review all project plans that involve dewatering of underground formations for construction and operation of mined underground space to determine the effects of the proposal on the quality and quantity of underground waters in and adjacent to the areas where the mined underground space is to be developed.
Subd. 2. Power to regulate. Cities may regulate all drilling, except water well and exploratory drilling that is subject to the provisions of chapter 103I, above, in, through, and adjacent to subsurface areas designated for mined underground space development and existing mined underground space. The regulations may prohibit, restrict, control, and require permits for such drilling.
Subd. 3. Water well regulation. Cities may prohibit, restrict, control, and require permits for drilling of wells as defined in section 103I.005, but the construction and abandonment of water wells is governed by chapter 103I.
Subd. 4. Permits for water removal. No mined underground space project involving or affecting the quality and quantity of underground waters may be developed until a water use permit for the appropriation of waters has been granted by the commissioner of natural resources under chapter 103G.
469.142 Purposes.
The purposes of a rural development financing authority are:
(1) to acquire, construct, improve, and equip projects comprising real and personal property within or outside the state, used or useful for producing or processing products of agriculture, including assembling, fabricating, manufacturing, mixing, storing, warehousing, distributing, or selling;
(2) to investigate, improve, and develop methods of constructing, operating, and financing such projects;
(3) to provide for the operation and maintenance of each project under an operating or lease agreement with a person, firm, or corporation considered qualified by experience and financial resources to assure that to the limit of its design and capacity it will make facilities for efficient and economical processing of agricultural products available throughout the term of the agreement to all producers contracting therefor;
(4) to promote agricultural, industrial, and scientific research in cooperation with state institutions of higher learning and profit or nonprofit private corporations, associations, or foundations;
(5) to assist in promoting new job opportunities through the development of natural resources and the agricultural industry by cooperating with private companies and with agencies of the federal and state governments and with agencies and political subdivisions of other states and of foreign nations to engage in the processing of agricultural products;
(6) to enter into contracts with or to employ financial, management, and production consultants, and scientific and economic specialists to develop and assist in promoting the purposes of the authority and to assist in operating, maintaining, constructing, and financing authority projects;
(7) to employ a financial management company to assist in organizing, initiating, developing, and operating projects for the authority under terms and conditions agreed upon between the authority and the company and to include any fee charged or to be charged by the company in the total capital costs of each project to be financed; and
(8) to provide financial or other assistance to rail users as defined in section 222.48, subdivision 6, for the purpose of making capital investment loans for rail line rehabilitation.
469.146 Issuance of bonds and notes.
Subdivision 1. Bonds. For the purposes authorized in section 469.142, the authority may issue bonds and execute mortgages and contracts, pledge revenues, and enter into covenants and agreements for the security thereof in the same manner and subject to the same conditions as a municipality under the provisions of sections 469.152 to 469.165 except as otherwise and additionally provided in sections 469.142 to 469.151. Net rentals and other charges payable to the authority by the operator or lessee of any project and pledged by the authority for payment of its bonds and interest thereon, and for the creation and maintenance of reserves therefor, may be reduced by amounts not exceeding the payments actually received by the authority from the other sources described in sections 469.142 to 469.151.
Subd. 2. Notes. The authority may issue notes, including renewal notes, for any purpose for which bonds may be issued, whenever the authority determines that payment thereof can be made in full from any revenues the authority expects to receive from any source. The notes may be issued to provide funds to pay preliminary costs of surveys, plans, development, or other matters relating to any proposed or existing project. The authority may pledge the revenues, subject to any other pledge thereof, for the payment of the notes, and may secure the notes in the same manner and with the same effect as herein provided for bonds and may also secure the notes by the personal guarantee of property owners within a benefited area. The authority may make contracts for the future sale of the notes, by which the purchaser shall be committed to purchase the notes on terms and conditions stated in such contracts. The authority may pay the consideration it deems proper for the commitments.
Subd. 3. Secondary market. An authority may sell, at private or public sale, at the price or prices determined by the authority, any note, mortgage, lease, sublease, lease purchase, or other instrument or obligation evidencing or securing a loan made for the purpose of economic development, job creation, redevelopment, or community revitalization by a public agency to a business, for-profit or nonprofit organization, or an individual.
469.149 Agreements for reservation of tax increments.
The authority may enter into an agreement with any county in which a project is to be situated, or a county exercising the powers of an authority may adopt a resolution, under which an agricultural resource project for which a conditional commitment for a loan guaranty has been made by the state as provided in section 41A.04, subdivision 3, is a tax increment financing project under sections 469.174 to 469.179 for so long as may be provided in the loan guaranty. The tax increment from the agricultural resource project shall be remitted to the authority or to the county for deposit and use in the loan guaranty fund of the state as provided in sections 41A.01 to 41A.06. Notwithstanding section 469.154, the tax increment for an agricultural resource project shall be discharged when either of the following occurs: (a) the loan obligation has been satisfied; or (b) the amount in the project account equals the amount of the guaranteed portion of the outstanding principal and interest on the guaranteed loan. Every county may, by resolution of the county board, do all things necessary for the computation, segregation, and application of tax increments under the loan guaranty in accordance with this section and sections 469.174 to 469.179.
469.151 State and county not liable on bonds.
The bonds and other obligations of an authority shall not be the debt of the state of Minnesota or of any county or political subdivision.
469.152 Purposes.
The welfare of the state requires the active promotion, attraction, encouragement, and development of economically sound industry and commerce through governmental action for the purpose of preventing the emergence of blighted and marginal lands and areas of chronic unemployment. It is the policy of the state to facilitate and encourage action by local government units to prevent the economic deterioration of such areas to the point where the process can be reversed only by total redevelopment through the use of local, state, and federal funds derived from taxation, necessitating relocating displaced persons and duplicating public services in other areas. By the use of the powers and procedures described in sections 469.152 to 469.165, local government units and their agencies and authorities responsible for redevelopment and economic development may prevent occurrence of conditions requiring redevelopment, or aid in the redevelopment of existing areas of blight, marginal land, and avoidance of substantial and persistent unemployment.
The welfare of the state further requires the provision of necessary health care facilities, so that adequate health care services are available to residents of the state at reasonable cost. The welfare of the state further requires the provision of county jail facilities for the purpose of providing adequately for the care, control, and safeguarding of civil rights of prisoners. The welfare of the state requires that, whenever feasible, employment opportunities made available in part by sections 469.152 to 469.165 or other state law providing for similar financing mechanisms should be offered to individuals who are unemployed or who are economically disadvantaged.
The welfare of the state further requires that, whenever feasible, action should be taken to reduce the cost of borrowing by local governments for public purposes.
469.153 Definitions.
Subdivision 1. Generally. In sections 469.152 to 469.165, the terms defined in this section have the meanings given them herein, unless the context indicates a different meaning.
Subd. 2. Project. (a) "Project" means (1) any properties, real or personal, used or useful in connection with a revenue producing enterprise, or any combination of two or more such enterprises engaged or to be engaged in generating, transmitting, or distributing electricity, assembling, fabricating, manufacturing, mixing, processing, storing, warehousing, or distributing any products of agriculture, forestry, mining, or manufacture, or in research and development activity in this field; (2) any properties, real or personal, used or useful in the abatement or control of noise, air, or water pollution, or in the disposal of solid wastes, in connection with a revenue producing enterprise, or any combination of two or more such enterprises engaged or to be engaged in any business or industry; (3) any properties, real or personal, used or useful in connection with the business of telephonic communications, conducted or to be conducted by a telephone company, including toll lines, poles, cables, switching, and other electronic equipment and administrative, data processing, garage, and research and development facilities; (4) any properties, real or personal, used or useful in connection with a district heating system, consisting of the use of one or more energy conversion facilities to produce hot water or steam for distribution to homes and businesses, including cogeneration facilities, distribution lines, service facilities, and retrofit facilities for modifying the user's heating or water system to use the heat energy converted from the steam or hot water.
(b) "Project" also includes any properties, real or personal, used or useful in connection with a revenue producing enterprise, or any combination of two or more such enterprises engaged in any business.
(c) "Project" also includes any properties, real or personal, used or useful for the promotion of tourism in the state. Properties may include hotels, motels, lodges, resorts, recreational facilities of the type that may be acquired under section 471.191, and related facilities.
(d) "Project" also includes any properties, real or personal, used or useful in connection with a revenue producing enterprise, whether or not operated for profit, engaged in providing health care services, including hospitals, nursing homes, and related medical facilities.
(e) "Project" does not include any property to be sold or to be affixed to or consumed in the production of property for sale, and does not include any housing facility to be rented or used as a permanent residence.
(f) "Project" also means the activities of any revenue producing enterprise involving the construction, fabrication, sale, or leasing of equipment or products to be used in gathering, processing, generating, transmitting, or distributing solar, wind, geothermal, biomass, agricultural or forestry energy crops, or other alternative energy sources for use by any person or any residential, commercial, industrial, or governmental entity in heating, cooling, or otherwise providing energy for a facility owned or operated by that person or entity.
(g) "Project" also includes any properties, real or personal, used or useful in connection with a county jail, county regional jail, community corrections facilities authorized by chapter 401, or other law enforcement facilities, the plans for which are approved by the commissioner of corrections; provided that the provisions of section 469.155, subdivisions 7 and 13, do not apply to those projects.
(h) "Project" also includes any real properties used or useful in furtherance of the purposes and policies of sections 469.135 to 469.141.
(i) "Project" also includes related facilities as defined by section 471A.02, subdivision 11.
(j) "Project" also includes an undertaking to purchase the obligations of local governments located in whole or in part within the boundaries of the municipality that are issued or to be issued for public purposes.
Subd. 3. Municipality. "Municipality" means any home rule charter or statutory city, any town described in section 368.01, and any county if (1) the project is located outside the boundaries of a city or a town described in section 368.01 or (2) the project involves telephonic communications conducted by or to be conducted by a telephone company, or financial or other assistance to rail users as defined in section 222.48, subdivision 6, for the purpose of making capital investment loans for rail line rehabilitation. In any case in which a city or town described in section 368.01 has consented to the issuance of bonds by a county on behalf of an organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1986, to finance a project within its boundaries or to refund bonds previously issued by such city or town, "municipality" means any county.
Subd. 4. Redevelopment agency. "Redevelopment agency"means any port authority referred to in sections 469.048 to 469.068, or any city authorized by general or special law to exercise the powers of a port authority; any economic development authority referred to in sections 469.090 to 469.108; any housing and redevelopment authority referred to in sections 469.001 to 469.047 or any body authorized to exercise the powers of a housing and redevelopment authority; and any area or municipal redevelopment agency referred to in sections 469.109 to 469.123.
Subd. 5. Commissioner. "Commissioner" means the commissioner of employment and economic development.
Subd. 6. Department. "Department" means the Department of Employment and Economic Development.
Subd. 7. Telephone company. "Telephone company" means any person, firm, association, including a cooperative association formed pursuant to chapter 308A, or corporation, excluding municipal telephone companies, operating for hire any telephone line, exchange, or system, wholly or partly within this state.
Subd. 8. Contracting party. "Contracting party" means a party to a revenue agreement other than the municipality or redevelopment agency.
Subd. 9. Revenues. "Revenues" of a project include payments under a revenue agreement, or under notes, debentures, bonds, and other secured or unsecured debt obligations of a contracting party.
Subd. 10. Revenue agreement. "Revenue agreement" means any written agreement between a municipality or redevelopment agency and a contracting party with respect to a project, whereby the contracting party agrees to pay to the municipality or redevelopment agency or its order amounts sufficient at all times to pay when due the principal of, premium, if any, and interest on all bonds issued by the municipality or redevelopment agency with respect to that project. A revenue agreement may be in the form of a lease, mortgage, direct or installment sale contract, loan agreement, take or pay or similar agreement, and be secured in manner the parties agree or be unsecured. A revenue agreement must satisfy the requirements of section 469.155, subdivision 5.
Subd. 11. Trustee. "Trustee" means any corporation, bank, or other entity authorized under any law of the United States or of any state to exercise trust powers, or any natural person, acting as trustee, cotrustee or successor trustee under an indenture pursuant to designation of the municipality or redevelopment agency.
Subd. 12. Alternative energy. "Alternative energy" means any energy source which does not depend upon nuclear fuel or nonrenewable fossil fuel, or which makes available another energy source which currently is wasted and which includes, but is not limited to, cogeneration or district heating.
Subd. 13. Related public improvements. "Related public improvements" means any public improvements described in section 429.021, that are acquired and constructed in connection with the project and are financed by the contracting party under the revenue agreement.
469.155 Powers.
Subdivision 1. General. Any municipality or redevelopment agency has the powers set forth in this section.
Subd. 2. Project acquisition. It may acquire, construct, and hold any lands, buildings, easements, water and air rights, improvements to lands and buildings, and capital equipment to be located permanently or used exclusively on a designated site and solid waste disposal and pollution control equipment, and alternative energy equipment and inventory, regardless of where located, that are deemed necessary in connection with a project to be situated within the state, and construct, reconstruct, improve, better, and extend the project. It may also pay part or all of the cost of an acquisition and construction by a contracting party under a revenue agreement.
In the case of a project described in section 469.153, subdivision 2, paragraph (j), it may purchase obligations issued by a local unit of government that is located in whole or in part within the boundaries of the municipality at public sale, or at private sale if the obligations may be sold in that manner under the law authorizing their issuance. The obligations must be issued under a capital improvement plan or program of at least five years.
Subd. 3. Revenue bonds. (a) It may issue revenue bonds, in anticipation of the collection of revenues of a project to be situated within the state, to finance, in whole or in part, the cost of the acquisition, construction, reconstruction, improvement, betterment, or extension thereof and of any related public improvements.
(b) It may issue revenue bonds to purchase the obligations of local government units located in whole or in part within the boundaries of the municipality. The proceeds of bonds issued to purchase obligations as provided under this paragraph may be disbursed or otherwise used to pay underwriter's or placement fees, expenses, or other costs of issuance and sale for the bonds only on a pro rata basis determined with respect to the portion of the proceeds that are used to purchase the obligations. The municipality may not pay the underwriter's or placement fees, expenses, or other costs of issuance and sale out of other money.
Subd. 4. Refinancing nonprofit facilities. It may issue revenue bonds to pay, purchase, or discharge all or any part of the outstanding indebtedness of a contracting party that is a qualifying organization previously incurred in the acquisition or betterment of its existing facilities to the extent deemed necessary by the governing body of the municipality or redevelopment agency; this may include any unpaid interest on the indebtedness accrued or to accrue to the date on which the indebtedness is finally paid, and any premium the governing body of the municipality or redevelopment agency determines to be necessary to be paid to pay, purchase, or defease the outstanding indebtedness. If revenue bonds are issued for this purpose, the refinancing and the existing properties of the contracting party shall be deemed to constitute a project under section 469.153, subdivision 2, clause (b), (c), or (d).
For purposes of this subdivision, "qualifying organization" means an organization that is primarily engaged in one or more of the following:
(1) health care related activities;
(2) activities for mentally or physically disabled persons;
(3) the operation of one or more nonprofit hospitals or nursing homes;
(4) educational activities as an elementary, secondary, or postsecondary school;
(5) presentation of artistic performances or arts education, such as theaters and museums; or
(6) providing social services, such as providing assistance to the poor, distressed, or underprivileged.
Subd. 5. Revenue agreements. It may enter into a revenue agreement with any person, firm, or public or private corporation or federal or state governmental subdivision or agency so that payments required thereby to be made by the contracting party are fixed and revised as necessary to produce income and revenue sufficient to provide for the prompt payment of principal of and interest on all bonds issued hereunder when due. The revenue agreement must also provide that the contracting party is required to pay all expenses of the operation and maintenance of the project including adequate insurance thereon and insurance against all liability for injury to persons or property arising from its operation, and all taxes and special assessments levied upon or with respect to the project and payable during the term of the revenue agreement. During the term of the revenue agreement, except as provided in subdivision 17, a tax shall be imposed and collected upon the project or, pursuant to the provisions of section 272.01, subdivision 2, for the privilege of using and possessing the project, in the same amount and to the same extent as though the contracting party were the owner of all real and personal property comprising the project. No revenue agreement is required in connection with a project described in section 469.153, subdivision 2, paragraph (j).
Subd. 6. Pledge of revenues. It may pledge and assign to the holders of the bonds or a trustee therefor all or any part of the revenues of one or more projects and define and segregate the revenues or provide for the payment thereof to a trustee, whether or not the trustee is in possession of the project under a mortgage or otherwise.
Subd. 7. Security interests. It may mortgage or otherwise encumber or grant a security interest in any project and its revenues, or may permit a mortgage, encumbrance, or security interest to be granted by a contracting party to the revenue agreement, in favor of the municipality or redevelopment agency, the holders of the bonds, or a trustee therefor. In creating a mortgage, encumbrance, or security interest, a municipality or redevelopment agency shall not obligate itself except with respect to the project and its revenues, unless otherwise specifically provided by law.
Subd. 8. Implementation of powers and covenants; construction and acquisition by contracting party. It may make all contracts, execute all instruments, and do all things necessary or convenient in the exercise of the powers granted in sections 469.152 to 469.165, or in the performance of its covenants or duties, or in order to secure the payment of its bonds. It may enter into a revenue agreement authorizing the contracting party, subject to any terms and conditions the municipality or redevelopment agency finds necessary or desirable and proper, to provide for the construction, acquisition, and installation of the buildings, improvements, and equipment to be included in the project and any related public improvements by any means legally available to the contracting party and in the manner determined by the contracting party and without advertisement for bids unless advertisement by the contracting party is otherwise required by law.
Subd. 9. Intergovernmental agreements. It may enter into and perform contracts and agreements with other municipalities, political subdivisions, and state agencies, authorities, and institutions as the governing body of the municipality or redevelopment agency may deem proper and feasible for or concerning the planning, construction, lease, purchase, mortgaging, or other acquisition, and the financing of a project, and the maintenance thereof, including an agreement whereby one municipality issues its revenue bonds in behalf of one or more other municipalities pursuant to revenue agreements with the same or different contracting parties, which contracts and agreements may establish a board, commission, or other body deemed proper for the supervision and general management of the facilities of the project. However, no municipality or redevelopment agency may enter into or perform any contract or agreement with any school district under which the municipality or redevelopment agency issues its revenue bonds or otherwise provides for the construction of school facilities and the school leases or otherwise acquires these facilities.
Subd. 10. Federal loans and grants. It may accept from any authorized agency of the federal government loans or grants for the planning, construction, acquisition, leasing, purchase, or other provision of any project, and enter into agreements with the agency respecting the loans or grants.
Subd. 11. Conveyance of projects. It may sell and convey all properties acquired in connection with projects, including the sale and conveyance thereof subject to a mortgage, or the sale and conveyance thereof under an option granted to the lessee of the project, for the price, and at the time the governing body of the municipality or redevelopment agency determines. No sale or conveyance of the properties may be made in a manner that impairs the rights or interests of the holders of any bonds issued under the authority of sections 469.152 to 469.165.
Subd. 12. Refunding. It may issue revenue bonds to refund, in whole or in part, bonds previously issued by the municipality or redevelopment agency under authority of sections 469.152 to 469.165, and interest on them. The municipality or redevelopment agency may issue revenue bonds to refund, in whole or in part, bonds previously issued by any other municipality or redevelopment agency on behalf of an organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1990, under authority of sections 469.152 to 469.155, and interest on them, but only with the consent of the original issuer of such bonds. The municipality or redevelopment agency may issue and sell warrants which give to their holders the right to purchase refunding bonds issuable under this subdivision prior to a stipulated date. The warrants are not required to be sold at public sale and all or any agreed portion of the proceeds of the warrants may be paid to the contracting party under the revenue agreement required by subdivision 5 or to its designee under the conditions the municipality or redevelopment agency shall agree upon. Warrants shall not be issued which obligate a municipality or redevelopment agency to issue refunding bonds that are or will be subject to federal tax law as defined in section 474A.02, subdivision 8. The warrants may provide a stipulated exercise price or a price that depends on the tax exempt status of interest on the refunding bonds at the time of issuance. The average interest rate on refunding bonds issued upon the exercise of the warrants to refund fixed rate bonds shall not exceed the average interest rate on fixed rate bonds to be refunded. The municipality or redevelopment agency may appoint a bank or trust company to serve as agent for the warrant holders and enter into agreements deemed necessary or incidental to the issuance of the warrants.
Subd. 13. Termination of revenue agreement. If so provided in the revenue agreement, it may terminate the agreement and reenter or repossess the project upon the default of the contracting party, and operate, lease, or sell the project in the manner authorized or required by the provisions of the revenue agreement or of the resolution or indenture securing the bonds issued for the project. If it undertakes to operate the project, it may hold in its own name all necessary operating licenses including licenses for the sale of food and intoxicating liquors. Any revenue agreement which includes provision for a conveyance of real estate to the contracting party may be terminated in accordance with the revenue agreement, notwithstanding that the revenue agreement may constitute an equitable mortgage.
Subd. 14. Limitations on powers. It may not operate any project referred to in sections 469.152 to 469.165 as a business or in any manner, except as authorized in subdivision 13. Nothing in this section authorizes any municipality or redevelopment agency to expend any funds on any project, other than the revenues of the project, or the proceeds of revenue bonds and notes issued hereunder, or other funds granted to the municipality or redevelopment agency for the purposes of sections 469.152 to 469.165, except:
(1) as is otherwise permitted by law;
(2) to enforce any right or remedy under any revenue agreement or related agreement for the benefit of the bondholders or for the protection of any security given in connection with a revenue agreement; or
(3) to pay without reimbursement part or all of the public cost of redevelopment of land including the acquisition of the site of the project, which cost shall not be deemed part of the cost of the project.
Subd. 15. Investment and deposit of funds. It may invest or deposit, or authorize a trustee to invest or deposit, any proceeds of revenue bonds or notes issued pursuant to sections 469.152 to 469.165, and income from the investment of the proceeds, in any manner and upon any terms and conditions agreed to by the contracting party under the related revenue agreement, resolution, or indenture, notwithstanding chapter 118A, but subject to any statutory provisions which govern the deposit and investment of funds of a contracting party which is itself a governmental subdivision or agency.
Subd. 16. Contractor's bond and mechanics' liens. It may waive or require the furnishing of a contractor's payment and performance bond of the kind described in section 574.26, whether or not the municipality or redevelopment agency is a party to the construction contract. If the bond is required, the provisions of chapter 514 relating to liens for labor and materials are not applicable with respect to work done or labor or materials supplied for the project. If the bond is waived, the provisions of chapter 514 apply with respect to work done or labor or materials supplied for the project.
Subd. 17. Tax exemption for unfinished sale or rental projects. If a building is to be constructed for sale or rent to a contracting party, the building is exempt from taxation as public property exclusively used for a public purpose until the building is first conveyed or first occupied by the lessee, in whole or in part, whichever occurs first, for up to a maximum of four years from the date of issue of bonds or notes for the project. The exemption must be applied for before October 10 of the year of the levy of the first taxes to which the exemption applies.
Subd. 18. Foreclosure. Upon foreclosure of any mortgage securing a revenue agreement entered into with respect to revenue bonds issued under this section, the city, trustee, or other mortgagee may determine that the mortgage debt for purposes of chapters 580, 581, 582, and 583 is the revenue agreement debt and does not include the bond debt, or the mortgagee may determine that the mortgage debt includes both the revenue agreement debt and the bond debt. The notice of sale or complaint shall state whether the foreclosure is to enforce only the revenue agreement debt or both the revenue agreement debt and the bond debt. If the mortgagee determines that the foreclosure is to enforce only the revenue agreement debt and not the bond debt:
(1) the revenue agreement debt is the mortgage debt for all purposes under chapters 580, 581, 582, and 583;
(2) the bond debt will remain outstanding as a valid and continuing separate debt and will not be extinguished, satisfied, relinquished, or otherwise terminated by the foreclosure sale; and
(3) the city or mortgagee may enter into a revenue agreement with the purchaser of the mortgaged property or a subsequent transferee, which provides for satisfaction by payment in full or otherwise of all principal of and interest on the bonds then in arrears and to become due.
469.162 Source of payment for bonds.
Subdivision 1. Restrictions on payment. Revenue bonds issued under sections 469.152 to 469.165 shall not be payable from nor charged upon any funds other than the revenue pledged to their payment, except as provided in this section, nor shall the municipality or redevelopment agency issuing the same be subject to any liability on them. No holder of the bonds shall ever have the right to compel any exercise of the taxing power of the municipality or redevelopment agency to pay the bonds or the interest thereon, except as provided in subdivision 2, nor to enforce payment of them against any property of the municipality or redevelopment agency except those projects, or portions thereof, mortgaged or otherwise encumbered under the provisions and for the purpose of sections 469.152 to 469.165.
Subd. 2. Tax increments; pre-1979 projects. (a) Any municipality or redevelopment agency may request the county auditor of the county in which a project is situated to certify the original net tax capacity of the real property included therein and the tax increments realized each year after the commencement of the project, as defined in section 469.042, and shall be entitled to receive, use, and pledge the tax increments for the further security of the revenue bonds issued to finance the project, in either of the following ways:
(1) to pay premiums for insurance guaranteeing the payment of net rentals when due under the project lease; or
(2) to accumulate and maintain a reserve securing the payment when due of the principal of and interest on the bonds.
(b) Tax increments with respect to any industrial development project shall be segregated and specially accounted for by the county treasurer until all bonds issued to finance the project have been fully paid; but the county treasurer shall remit the same to the municipality or redevelopment agency only in the amount certified to the treasurer to be required for any of the purposes stated in paragraph (a). The amount so needed shall be certified annually to the county auditor and treasurer by the municipality or redevelopment agency on or before October 1. Any tax increment remaining in any year after the remittance shall, when collected, be distributed among all of the taxing districts levying taxes on the project area, in proportion to the amounts levied by them. This subdivision shall not apply to a project, certification of which is requested subsequent to August 1, 1979.
Subd. 3. Restrictions on security. Bonds issued under sections 469.152 to 469.165 shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the municipality or redevelopment agency, except those projects, or portions thereof, mortgaged or otherwise encumbered under the provisions and for the purposes of sections 469.152 to 469.165. Each bond issued under sections 469.152 to 469.165 shall recite in substance that the bond, including interest thereon, is payable solely from the revenue pledged to its payment, but may contain a reference to the lease insurance or bond reserve for which the tax increment is pledged and appropriated. No such bond shall constitute a debt of the municipality or redevelopment agency within the meaning of any constitutional or statutory limitation. However, nothing herein shall impair the rights of holders of bonds issued hereunder to enforce covenants made for the security thereof as provided in section 469.163.
469.165 Applicability of HRA provisions.
If property that has been acquired by a housing and redevelopment authority pursuant to the provisions of sections 469.001 to 469.047, is sold, leased, or acquired with the consent of the housing and redevelopment authority in connection with a project conducted wholly or partly pursuant to the provisions of sections 469.152 to 469.164, it shall be deemed to be devoted to public purposes and public uses and to conform to the project area redevelopment plan within the meaning of sections 469.001 to 469.047. In giving its consent, the housing and redevelopment authority may waive any or all of the terms, conditions, restrictions, and limitations imposed upon the property by section 469.029, and the purchaser of the property or any subsequent purchasers may convey the property without the consent of any housing and redevelopment authority and, to the extent of the waiver, free and clear of the terms, conditions, restrictions, and limitations, whether or not the purchaser is obligated as provided in section 469.029, subdivision 5.
469.166 Definitions.
Subdivision 1. Generally. In sections 469.166 to 469.173, the terms defined in this section have the meanings given them herein, unless the context indicates a different meaning.
Subd. 2. Commissioner. "Commissioner" means the commissioner of employment and economic development.
Subd. 3. Enterprise zone. "Enterprise zone" means an area in the state designated as such by the commissioner.
Subd. 4. City. "City" means a home rule charter or statutory city.
Subd. 5. Municipality. "Municipality" means a city, or a county for an area located outside the boundaries of a city. If an area lies in two or more cities or in both incorporated and unincorporated areas, "municipality" shall include an entity formed pursuant to section 471.59 by the governing bodies of the cities with jurisdiction over the incorporated area and the counties with jurisdiction over the unincorporated area.
Subd. 6. Governing body. "Governing body" means the county board in the case of a county, the city council or other body designated by its charter in the case of a city, or the tribal or federal agency recognized as the governing body of an Indian reservation by the United States Secretary of the Interior.
Subd. 7. HUD. "HUD" means the United States Secretary of Housing and Urban Development or the secretary's delegate or successor.
Subd. 8. Indian reservation. "Indian reservation" means an area determined to be such by the United States Secretary of the Interior.
Subd. 9. SMSA. "SMSA" means the area in and around a city of 50,000 inhabitants or more, or an equivalent area, as defined by the United States Secretary of Commerce.
Subd. 10. Employment property. (a) "Employment property" means taxable property, excluding land but including buildings, structures, fixtures, and improvements that satisfy each of the following conditions:
(1) the property is located within an enterprise zone designated according to section 469.167;
(2) the property is commercial or industrial property except (i) a facility the primary purpose of which is one of the following: retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment, or a private or commercial golf course, country club, massage parlor, tennis club, skating facility including roller skating, skateboard, and ice skating, racquet sports facility, including any handball or racquetball court, hot tub facility, suntan facility, or racetrack; (ii) property of a public utility; (iii) property used in the operation of a financial institution; (iv) property owned by a fraternal or veterans' organization; or (v) property of a business operating under a franchise agreement that requires the business to be located in the state; except that, in an enterprise zone designated under section 469.168, subdivision 4, paragraph (a), clause (4), that is not in a city of the first class, employment property includes property used as a retail food or beverage facility or an automobile sales or service facility, and property described in (v) except for property of a retail food or beverage facility.
(b) In the case of property located in a border city zone, "employment property" includes land except in the case of employment property that is assessed pursuant to the first clause of the first sentence of section 273.13, subdivision 24, paragraph (b).
Subd. 11. Market value. "Market value" of a parcel of employment property means the value of the taxable property as annually determined pursuant to section 273.12, less (i) the market value of all property existing at the time of application for classification, as last assessed prior to the time of application, and (ii) any increase in the market value of the property referred to in clause (i) as assessed in each year after the employment property is first placed in service. In each year, any change in the values of the employment property and the other property on the land shall be deemed to be proportionate unless caused by a capital improvement or loss.
Subd. 12. Legislative Advisory Commission. "Legislative Advisory Commission" means the Legislative Advisory Commission established under section 3.30.
469.167 Designation of enterprise zones.
Subdivision 1. Process. The commissioner shall designate an area as an enterprise zone if (a) an application is made in the form and manner and containing the information as prescribed by the commissioner; (b) the application is made by the governing body of the area; (c) the area is determined by the commissioner to be eligible for designation under section 469.168; and (d) the zone is selected pursuant to the process provided by section 469.169.
Subd. 2. Duration. The designation of an area as an enterprise zone shall be effective for seven years after the date of designation, except that enterprise zones in border cities eligible to receive allocations for tax reductions under section 469.169, subdivisions 7 and 8, and under section 469.171, subdivision 6a or 6b, shall be effective until terminated by resolution adopted by the city in which the border city enterprise zone is located.
Subd. 3. Limitation. No area may be designated as an enterprise zone after December 31, 1986. No area may be designated as a border city zone after December 31, 1983.
469.168 Eligibility requirements.
Subdivision 1. Generally. An area is eligible for designation if each of the requirements set forth in subdivisions 2 to 4 are met.
Subd. 2. Boundaries; vacant land. The boundary of the zone or each subdivision of the zone must be continuous and the area must include vacant or underutilized lands or buildings.
Subd. 3. Acreage; market value. The area of the zone must be less than 400 acres. The total market value of the taxable property contained in the zone at the time of application must be less than $100,000 per acre or $300,000 per acre for an area located wholly within a first class city. A zone which is located in a city of the third or fourth class may be divided into two to four separate subdivisions which need not be contiguous with each other. Each subdivision must contain not less than 100 acres. The restrictions provided by this paragraph shall not apply to areas designated pursuant to subdivision 4, paragraph (b) or (c).
Subd. 4. Area characteristics. The area must meet the requirements of paragraph (a), (b), or (c).
(a) The proposed zone is located within an economic hardship area, as established by meeting two or more of the following criteria:
(1) the percentage of residential housing units within the area which are substandard is 15 percent or greater under criteria prescribed by the commissioner using data collected by the Bureau of the Census or data submitted by the municipality and approved by the commissioner;
(2) the percentage of households within the area that fall below the poverty level, as determined by the United States Census Bureau, is 20 percent or greater;
(3) (i) the total market value of commercial and industrial property in the area has declined over three of the preceding five years, or (ii) the total market value of all property in the area has declined or has increased less than 10.5 percent over the preceding three-year period;
(4) for the last full year for which data is available, the per capita income in the area was 90 percent or less of the per capita income for the state, excluding standard metropolitan statistical areas, or for the standard metropolitan statistical area if the area is located in a standard metropolitan statistical area;
(5)(i) the current rate of unemployment in the area is at least 120 percent of the statewide average unemployment for the last 12-month period for which verifiable figures are available, or (ii) the total number of employment positions has declined by at least ten percent during the last 18 months.
For purposes of this paragraph, an economic hardship area must have a population under the most recent federal decennial census of at least (1) 4,000 if any of the area is located wholly or partly within a standard metropolitan statistical area, or (2) 2,500 for an area located outside of a standard metropolitan statistical area; except that (1) no minimum population is required in the case of an area located in an Indian reservation, and (2) in the case of two or more cities seeking designation of an enterprise zone under a joint exercise of power pursuant to section 471.59, the minimum population required by this provision shall not exceed the sum of the populations of those cities. A zone qualifying under this paragraph is referred to in sections 469.166 to 469.173 as a "hardship area zone."
(b) The area is so designated under federal legislation providing for federal tax benefits to investors, employers, or employees in enterprise zones. A zone qualifying under this paragraph is referred to in sections 469.166 to 469.173 as a "federally designated zone."
(c) The area consists of a statutory or home rule charter city with a contiguous border with a city in another state or with a contiguous border with a city in Minnesota which has a contiguous border with a city in another state and the area is determined by the commissioner to be economically or fiscally distressed. An area designated under this paragraph is referred to in sections 469.166 to 469.173 as a "border city zone."
469.169 Selection of enterprise zones.
Subdivision 1. Submission of applications. By August 31 of each year, a municipality seeking designation of an area as an enterprise zone shall submit an application to the commissioner. The commissioner shall establish procedures and forms for the submission of applications for enterprise zone designation.
Subd. 2. Applications; contents. The applications for designation as an enterprise zone shall contain, at a minimum:
(1) verification that the area is eligible for designation pursuant to section 469.168;
(2) a development plan, outlining the types of investment and development within the zone that the municipality expects to take place if the incentives and tax reductions specified under clauses (4) and (5) are provided, the specific investment or development reasonably expected to take place, any commitments obtained from businesses, the projected number of jobs that will be created, the anticipated wage level of those jobs, and any proposed targeting of the jobs created, including affirmative action plans if any. This clause does not apply to an application for designation as a border city zone;
(3) the municipality's proposed means of assessing the effectiveness of the development plan or other programs to be implemented within the zone once they have been implemented;
(4) the specific form of tax reductions, authorized by section 469.171, subdivision 1, proposed to be granted to businesses, the duration of the tax reductions, an estimate of the total state taxes likely to be foregone as a result, and a statement of the relationship between the proposed tax reductions and the type of investment or development sought or expected to be attracted to or maintained in the area if it is designated as a zone;
(5) the municipality's contribution to the zone as required by subdivision 5;
(6) any additional information required by the commissioner; and
(7) any additional information that the municipality considers relevant to the designation of the area as an enterprise zone.
Subd. 3. Evaluation of applications. The commissioner shall review and evaluate the applications submitted pursuant to subdivision 2 and shall determine whether each area is eligible for designation as an enterprise zone. In determining whether an area is eligible under section 469.168, subdivision 4, paragraph (a), if unemployment, employment, income, or other necessary data are not available for the area from the federal departments of labor or commerce or the state demographer, the commissioner may rely upon other data submitted by the municipality if the commissioner determines it is statistically reliable or accurate. The commissioner, together with the commissioner of revenue, shall prepare an estimate of the amount of state tax revenue which will be foregone for each application if the area is designated as a zone.
By October 1 of each year, the commissioner shall submit to the Legislative Advisory Commission a list of the areas eligible for designation as enterprise zones, along with recommendations for designation and supporting documentation. In making recommendations for designation, the commissioner shall consider and evaluate the applications pursuant to the following criteria:
(1) the pervasiveness of poverty, unemployment, and general distress in the area;
(2) the extent of chronic abandonment, deterioration, or reduction in value of commercial, industrial, or residential structures in the area and the extent of property tax arrearages in the area;
(3) the prospects for new investment and economic development in the area with the tax reductions proposed in the application relative to the state and local tax revenue which would be foregone;
(4) the competing needs of other areas of the state;
(5) the municipality's proposed use of other state and federal development funds or programs to increase the probability of new investment and development occurring;
(6) the extent to which the projected development in the zone will provide employment to residents of the economic hardship area, and particularly individuals who are unemployed or who are economically disadvantaged as defined in the federal Job Training Partnership Act of 1982, Volume 96, Statutes at Large, page 1322;
(7) the funds available pursuant to subdivision 7; and
(8) other relevant factors that the commissioner specifies in the commissioner's recommendations.
The commissioner shall submit a separate list of the areas entitled to designation as federally designated zones and border city zones along with recommendations for the amount of funds to be allocated to each area.
Subd. 4. LAC recommendations. By October 15, the Legislative Advisory Commission shall submit to the commissioner its advisory recommendations regarding the designation of enterprise zones. By October 30 of each year the commissioner shall make the final designation of the areas as enterprise zones, pursuant to section 469.167, subdivision 1. In making the designation, the commissioner may make modifications in the design of or limitations on the tax reductions contained in the application necessary because of the funding limitations under subdivision 7.
Subd. 5. Local contribution. No area may be designated as an enterprise zone unless the municipality agrees to make a qualifying local contribution in the form of a property tax reduction for employment property as provided by section 469.170 for any business qualifying for a state tax reduction pursuant to this section. A qualifying local contribution may in the alternative be a local contribution or investment out of other municipal funds, but excluding any special federal grants or loans, equivalent to the property tax reduction. In concluding the agreement with the municipality the commissioner may require that the local contribution will be made in a specified ratio to the amount of the state credits authorized. If the local contribution is to be used to fund additional reductions in state taxes, the commissioner and the governing body of the municipality shall enter an agreement for timely payment to the state to reimburse the state for the amount of tax revenue foregone as a result. The qualifying local contribution for development within the portion of an enterprise zone that is located in a town that has been added by boundary amendment to an enterprise zone that is located within five municipalities and was designated in 1984 shall be provided by the town.
Subd. 6. Limitations; number of designations. (a) In each of the years 1983 and 1984, the commissioner shall designate at least two but not more than five areas as enterprise zones. No designations shall be made after December 31, 1984.
(b) No more than one area may be designated as an enterprise zone in any county, except that two areas may be designated in a county containing a city of the first class.
(c) No more than two areas in a congressional district may be designated as an enterprise zone in 1984.
This subdivision shall not apply to federally designated zones or border city zones.
Subd. 7. Funding limitations. The maximum amount of the tax reductions which may be authorized pursuant to designations of enterprise zones is $36,400,000. The maximum amount of this total that may be authorized by the commissioner for tax reductions pursuant to section 469.171, subdivision 1, that will reduce tax revenues which otherwise would have been received during fiscal years 1984 and 1985 is $9,000,000. Of the total limitation and the 1984-1985 biennial limitation the commissioner shall allocate to border city zones an amount equal to $16,610,940 and $5,000,000 respectively. These funds shall be allocated among such zones on a per capita basis except that the maximum allocation to any one city is $6,610,940 and no city's allocation shall exceed $210 on a per capita basis. An amount sufficient to fund the state funded property tax credits, the refundable income tax credits, and the sales tax exemption, as authorized pursuant to this section is appropriated to the commissioner of revenue. Upon designation of an enterprise zone the commissioner shall certify the total amount available for tax reductions in the zone for its duration. The amount certified shall reduce the amount available for tax reductions in other enterprise zones. If subsequent estimates indicate or actual experience shows that the approved tax reductions will result in amounts of tax reductions in excess of the amount certified for the zone, the commissioner shall implement a plan to reduce the available tax reductions in the zone to an amount within the sum certified for the zone. If subsequent estimates indicate or actual experience shows that the approved tax reductions will result in amounts of tax reductions below the amount certified, the difference shall be available for certification in other zones or used in connection with an amended plan of tax reductions for the zone as the commissioner determines appropriate. If the tax reductions authorized result in reduced revenues for a dedicated fund, the commissioner of finance shall transfer equivalent amounts to the dedicated fund from the general fund as necessary. Of the $36,400,000 in tax reductions authorized under this subdivision, an additional $800,000 in tax reductions may be authorized within an enterprise zone located within five municipalities that was designated by the commissioner in 1984.
Subd. 8. Additional enterprise zone allocations. (a) In addition to tax reductions authorized in subdivision 7, the commissioner may allocate $600,000 for tax reductions pursuant to section 469.171, subdivisions 1 to 8, to hardship area zones or border city zones. Of this amount, a minimum of $200,000 must be allocated to an area added to an enterprise zone pursuant to Laws 1986, chapter 465, article 2, section 3. Allocations made pursuant to this subdivision may not be used to reduce a tax liability, or increase a tax refund, prior to July 1, 1987. Limits on the maximum allocation to a zone imposed by subdivision 7 do not apply to allocations made under this subdivision.
(b) A city encompassing an enterprise zone, or portion of an enterprise zone, qualifies for an additional allocation under this subdivision if the following requirements are met:
(1) the city encompassing an enterprise zone, or portion of an enterprise zone, has signed contracts with qualifying businesses that commit the city's total initial allocation received pursuant to subdivision 7; and
(2) the city encompassing an enterprise zone, or portion of an enterprise zone, submits an application to the commissioner requesting an additional allocation for tax reductions authorized by section 469.171, subdivisions 1 to 8. The application must identify a specific business expansion project which would not take place but for the availability of enterprise zone tax incentives.
(c) The commissioner shall use the following criteria when determining which qualifying cities shall receive an additional allocation under this subdivision and the amount of the additional allocation the city is to receive:
(1) additional allocations to qualifying cities under this subdivision shall be made within 60 days of receipt of an application;
(2) applications from cities with the highest level of economic distress, as determined using criteria listed in section 469.168, subdivision 4, paragraph (a), clauses (1) to (5), shall receive priority for an additional allocation under this subdivision;
(3) if the commissioner determines that two cities submitting applications within one week of each other have equal levels of economic distress, the application from the city with the business prospect which will have the greatest positive economic impact shall receive priority for an additional allocation. Criteria used by the commissioner to determine the potential economic impact a business would have shall include the number of jobs created and retained, the amount of private investment which will be made by the business, and the extent to which the business would help alleviate the economic distress in the immediate community; and
(4) the commissioner shall determine the amount of any additional allocation a city may receive. The commissioner shall base the amount of additional allocations on the commissioner's determination of the amount of tax incentives which are necessary to ensure the business prospect will expand in the city. No single allocation under this subdivision may exceed $100,000. No city may receive more than $250,000 under this subdivision.
Subd. 9. Additional border city allocations. In addition to tax reductions authorized in subdivisions 7 and 8, the commissioner may allocate $1,100,000 for tax reductions to border city enterprise zones in cities located on the western border of the state, and $300,000 to the border city enterprise zone in the city of Duluth. The commissioner shall make allocations to zones in cities on the western border by evaluating which cities' applications for allocations relate to business prospects that have the greatest positive economic impact. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Limitations on allocations under section 469.169, subdivision 7, do not apply to this allocation.
Subd. 10. Additional border city allocations. In addition to tax reductions authorized in subdivisions 7, 8, and 9, the commissioner may allocate $1,500,000 for tax reductions to border city enterprise zones in cities located on the western border of the state. The commissioner shall make allocations to zones in cities on the western border on a per capita basis. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Limitations on allocations under section 469.169, subdivision 7, do not apply to this allocation.
Subd. 11. Additional border city allocations. In addition to tax reductions authorized in subdivisions 7, 8, 9, and 10, the commissioner may allocate $1,500,000 for tax reductions to border city enterprise zones in cities located on the western border of the state. The commissioner shall make allocations to zones in cities on the western border on a per capita basis. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Limitations on allocations under section 469.169, subdivision 7, do not apply to this allocation.
Subd. 12. Additional zone allocations. (a) In addition to tax reductions authorized in subdivisions 7, 8, 9, 10, and 11, the commissioner shall allocate tax reductions to border city enterprise zones located on the western border of the state. The cumulative total amount of tax reductions for all years of the program under sections 469.1731 to 469.1735, is limited to:
(1) for the city of Breckenridge, $394,000;
(2) for the city of Dilworth, $118,200;
(3) for the city of East Grand Forks, $788,000;
(4) for the city of Moorhead, $591,000; and
(5) for the city of Ortonville, $78,800.
Allocations made under this subdivision may be used for tax reductions provided in section 469.1732 or 469.1734 or for reimbursements under section 469.1735, subdivision 3, but only if the municipality determines that the granting of the tax reduction or offset is necessary to enable a business to expand within a city or to attract a business to a city. Limitations on allocations under subdivision 7 do not apply to this allocation.
(b) The limit in the allocation in paragraph (a) for a municipality may be waived by the commissioner if the commissioner of revenue finds that the municipality must provide an incentive under section 469.1732 or 469.1734 that, by itself or when aggregated with all other tax reductions granted by the municipality under those provisions, exceeds the municipality's maximum allocation under paragraph (a), in order to obtain or retain a business in the city that would not occur in the municipality without the incentive. The limit may be waived only if the commissioner finds that the business for which the tax incentives are to be provided:
(1) requires a private capital investment of at least $1,000,000 within the city;
(2) employs at least 25 new or additional full-time equivalent employees within the city; and
(3) pays its employees at the location in the city wages that, on the average, will exceed the average wage paid in the county in which the municipality is located.
Subd. 13. Additional enterprise zone allocations. In addition to tax reductions authorized in subdivisions 7, 8, 9, 10, and 11, the commissioner may allocate $500,000 for tax reductions pursuant to enterprise zone designations, as designated in Laws 1997, chapter 231, article 16, section 26. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the enterprise zone. Limitations on allocations under subdivision 7 do not apply to this allocation.
Subd. 14. Additional border city allocations. In addition to tax reductions authorized in subdivisions 7 to 12, the commissioner may allocate $1,500,000 for tax reductions to border city enterprise zones in cities located on the western border of the state. The commissioner shall make allocations to zones in cities on the western border on a per capita basis. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Limitations on allocations under subdivision 7, do not apply to this allocation.
Subd. 15. Additional border city allocations. In addition to tax reductions authorized in subdivisions 7 to 14, the commissioner shall allocate $1,500,000 for tax reductions to border city enterprise zones in cities located on the western border of the state. The commissioner shall make allocations to zones in cities on the western border on a per capita basis. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or for other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Any portion of the allocation provided in this section may alternatively be used for tax reductions under section 469.1732 or 469.1734. If, at the end of the biennium, the total amount allowable under this section has not been expended, a city that has expended its allocation may submit a request for an additional allocation for qualifying reductions from the amount remaining. If more than one city exceeds their allocation and the additional qualifying amounts exceed the balance remaining, the commissioner shall allocate the amount remaining to each qualifying city in proportion to its request for additional allocation. Limitations on allocations under subdivision 7 do not apply to this allocation.
Subd. 16. Additional border city allocations. (a) In addition to tax reductions authorized in subdivisions 7 to 15, the commissioner shall allocate $750,000 for tax reductions to border city enterprise zones in cities located on the western border of the state. The commissioner shall make allocations to zones in cities on the western border on a per capita basis. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or for other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Any portion of the allocation provided in this paragraph may alternatively be used for tax reductions under section 469.1732 or 469.1734.
(b) The commissioner shall allocate $750,000 for tax reductions under section 469.1732 or 469.1734 to cities with border city enterprise zones located on the western border of the state. The commissioner shall allocate this amount among the cities on a per capita basis. Any portion of the allocation provided in this paragraph may alternatively be used for tax reductions as provided in section 469.171.
Subd. 17. Additional border city allocations. (a) In addition to tax reductions authorized in subdivisions 7 to 16, the commissioner shall allocate $750,000 for tax reductions to border city enterprise zones in cities located on the western border of the state. The commissioner shall make allocations to zones in cities on the western border on a per capita basis. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or for other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Any portion of the allocation provided in this paragraph may alternatively be used for tax reductions under section 469.1732 or 469.1734.
(b) The commissioner shall allocate $750,000 for tax reductions under section 469.1732 or 469.1734 to cities with border city enterprise zones located on the western border of the state. The commissioner shall allocate this amount among the cities on a per capita basis. Any portion of the allocation provided in this paragraph may alternatively be used for tax reductions as provided in section 469.171.
469.170 Tax classification of employment property.
Subdivision 1. Municipal applications. The governing body of any municipality that contains an enterprise zone designated under section 469.167 shall by resolution establish a program for classification of new property or improvements to existing property as employment property pursuant to the provisions of this section. Applications for classification under the program shall be filed with the municipal clerk or auditor in a form prescribed by the commissioner of revenue, with additions as prescribed by the governing body. The application shall contain, where appropriate, a legal description of the parcel of land on which the facility is to be situated or improved; a general description of the facility or improvement and its proposed use; the probable time schedule for undertaking any construction or improvement; and information regarding the findings required in subdivision 4; the market value and the net tax capacity of the land and of all other taxable property then situated on it, according to the most recent assessment; and, if the property is to be improved or expanded, an estimate of the probable cost of the new construction or improvement and the market value of the new or improved facility (excluding land) when completed.
Subd. 2. Hearing. Upon receipt of an application the municipal clerk or auditor, subject to any prior approval required by the resolution establishing the program, shall furnish a copy to the assessor for the property and to the governing body of each school district and other public body authorized to levy taxes on the property. The municipal clerk or auditor shall publish a notice in the official newspaper of the time and place of a hearing to be held by the governing body on the application, not less than 30 days after the notice is published. The notice shall state that the applicant, the assessor, representatives of the affected taxing authorities, and any taxpayer of the municipality may be heard or may present their views in writing at or before the hearing. The hearing may be adjourned from time to time, but the governing body shall take action on the application by resolution within 30 days after the hearing ends. If disapproved, the reasons shall be set forth in the resolution. The applicant may appeal to the commissioner of revenue within 30 days thereafter, but only on the ground that the determination is arbitrary, in relation to prior determinations as to classification under the program, or based upon a mistake of law. If approved, the resolution shall include determinations as to the findings required in subdivision 4, and the clerk or auditor shall transmit it to the commissioner.
Subd. 3. Commissioner's action. Within 60 days after receipt of an approved application or an appeal from the disapproval of an application, the commissioner of revenue shall take action on it. The commissioner of revenue shall approve each application approved by the governing body on finding that it complies with the provisions of this section. On disapproving the application, or finding that grounds exist for appeal of a disapproved application, the commissioner shall transmit the finding to the governing body and the applicant. When grounds for appeal have been determined to exist, the governing body shall reconsider and take further action on the application within 30 days after receipt of the commissioner's notice and serve written notice of the action upon the applicant. The applicant, within 30 days after receipt of notice of final disapproval by the commissioner of revenue or the governing body, may appeal from the disapproval to a court of competent jurisdiction.
Subd. 4. Hardship area zone criteria. In the case of hardship area zones, an application shall not be approved unless the governing body finds that the construction or improvement of the facility:
(1) is reasonably likely to create new employment or prevent a loss of employment in the municipality;
(2) is not likely to have the effect of transferring existing employment from one or more other municipalities within the state;
(3) is not likely to cause the total market value of employment property within the municipality to exceed five percent of the total market value of all taxable property within the municipality; or, if it will, considering the amount of additional municipal services likely to be required for the employment property, is not likely to substantially impede the operation or the financial integrity of the municipality or any other public body levying taxes on property in the municipality; and
(4) will not result in the reduction of the net tax capacity of existing property within the municipality owned by the applicant, through abandonment, demolition, or otherwise, without provision for the restoration of the existing property within a reasonable time in a manner sufficient to restore the net tax capacity.
Subd. 5. Border city zone criteria. In the case of border city zones, an application for assessment as employment property under section 273.13, subdivision 24, paragraph (b), or for a tax reduction pursuant to section 469.171, subdivision 1, may not be approved unless the governing body finds that the construction or improvement of the facility is not likely to have the effect of transferring existing employment from one or more other municipalities within the state.
Subd. 5a. Plans: businesses with no previous credits. All participating enterprise zone municipalities must submit, with each application from businesses that previously have not received enterprise zone credits, a written multiyear enterprise zone tax credit distribution plan. The plan must set forth: (1) the maximum amount of credits to be drawn over the five year allowable period; and (2) the maximum amount of state tax credits to be drawn each of those five years, and whether the form will be in tax credits or refunds.
Subd. 5b. Plans: previously approved businesses. Within 90 days of final enactment of this act, all participating enterprise zone municipalities, except those containing an enterprise zone designated under section 469.168, subdivision 4, clause (c), other than a zone in the city of the first class, must submit a written multiyear enterprise zone tax credit distribution plan. The plan must specify the maximum amounts of state tax credits previously approved business applicants are eligible to receive in each of the remaining years for which credits have been authorized. The commissioner may only approve requests for state tax credits from a business that meets the requirements established in sections 469.166 to 469.173. The commissioner shall not approve any request for state tax credits from a business that exceeds the amount set forth in an enterprise zone municipality's multiyear enterprise zone tax credit distribution plan for that business entity for that year.
Subd. 5c. Border city credit plans. Border city enterprise zones designated under section 469.168, subdivision 4, clause (c), that are not located in cities of the first class shall, within 90 days of final enactment of this act, submit a written multiyear enterprise zone tax distribution plan. The plan must specify the maximum aggregate amount of tax credits all previously approved business applicants are eligible to receive in each of the remaining years for which credits have been authorized. The commissioner may only approve requests for state tax credits for a business that meets the requirements established in sections 469.166 to 469.173.
Subd. 5d. Amendment of plans. A written multiyear enterprise zone tax credit distribution plan submitted under subdivision 5a, 5b, or 5c, may be amended, provided that an initial amendment may be made no sooner than two years from the date of submission of the original plan, and subsequent amendments may be made no sooner than two years after the most recent prior amendment.
Subd. 5e. Limits on multiyear plans. The requirements for a multiyear enterprise zone tax credit distribution plan under subdivisions 5a to 5d apply only for:
(1) each business that will receive more than $25,000 in credits in a year; or
(2) tax reductions under section 469.171, subdivision 1, for businesses in areas designated under section 469.171, subdivision 5.
Subd. 6. Classification. Property shall be classified as employment property and assessed as provided for class 3b property in section 273.13, subdivision 24, paragraph (b), for taxes levied in the year in which the classification is approved and for the four succeeding years after the approval. If the classification is revoked, the revocation is effective for taxes levied in the next year after revocation.
Subd. 7. Revocation. The governing body may request the commissioner of revenue to approve the revocation of a classification pursuant to this section if it finds by resolution that:
(1) the construction or improvement of the facility has not been completed within two years after the approval of the classification, or any longer period that may have been allowed in the approving resolution or may be necessary due to circumstances not reasonably within the control of the applicant; or
(2) the applicant has not proceeded in good faith with the construction or improvement of the facility, or with its operation, in a manner which is consistent with the purpose of this section and is possible under circumstances reasonably within the control of the applicant.
The findings may be made only after a hearing held upon notice mailed to the applicant by certified mail at least 60 days before the hearing.
Subd. 8. Hearing. Upon receipt of the request for revocation, the commissioner of revenue shall notify the applicant and the governing body of a time and place at which the applicant may be heard. The hearing must be held within 30 days after receipt of the request. Within 30 days after the hearing, the commissioner of revenue shall determine whether the facts and circumstances are grounds for revocation as recommended by the governing body. If the commissioner of revenue revokes the classification, the applicant may appeal from the order to a court of competent jurisdiction at any time within 30 days after revocation.
Subd. 9. Repealed, 1995 c 186 s 81
469.171 State tax reductions.
Subdivision 1. Authorized types. The following types of tax reductions may be approved by the commissioner for businesses located in an enterprise zone:
(1) an exemption from the general sales tax imposed by chapter 297A for purchases of construction materials or equipment for use in the zone if the purchase was made after the date of application for the zone;
(2) a credit against the income tax of an employer for additional workers employed in the zone, other than workers employed in construction, up to a maximum of $3,000 per employee per year;
(3) an income tax credit for a percentage of the cost of debt financing to construct new or expanded facilities in the zone; and
(4) a state paid property tax credit for a portion of the property taxes paid by a new commercial or industrial facility or the additional property taxes paid by an expansion of an existing commercial or industrial facility in the zone.
Subd. 2. Municipality to specify. The municipality shall specify in its application for designation the types of tax reductions it seeks to be made available in the zone and the percentage rates and other appropriate limitations on the reductions.
Subd. 3. Commissioner of revenue action. Upon designation of an enterprise zone and approval by the commissioner of the tax reductions to be made available therein, the commissioner of revenue shall implement the tax reductions.
Subd. 4. Restriction. The tax reductions provided by this section shall not apply to (1) a facility the primary purpose of which is one of the following: retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment, or a private or commercial golf course, country club, massage parlor, tennis club, skating facility including roller skating, skateboard, and ice skating, racquet sports facility, including any handball or racquetball court, hot tub facility, suntan facility, or racetrack; (2) property of a public utility; (3) property used in the operation of a financial institution; (4) property owned by a fraternal or veterans' organization; or (5) property of a business operating under a franchise agreement that requires the business to be located in the state; except that, in an enterprise zone designated under section 469.168, subdivision 4, clause (c), that is not in a city of the first class, tax reductions may be provided to a retail food or beverage facility or an automobile sales or service facility, or a business operating under a franchise agreement that requires the business to be located in this state except for such a franchised retail food or beverage facility.
Subd. 5. Border city areas. The commissioner shall approve tax reductions authorized by subdivision 1 within a border city zone only after the governing body of a city designated as an enterprise zone has designated an area or areas, each consisting of at least 100 acres, of the city not in excess of 400 acres in which the tax reductions may be provided.
Subd. 6. Additional border city tax reductions. In addition to the tax reductions authorized by subdivision 1, for a border city zone, the following types of tax reductions may be approved:
(1) a credit against income tax for workers employed in the zone and not qualifying for a credit under subdivision 1, clause (2), subject to a maximum of $1,500 per employee per year;
(2) a state paid property tax credit for a portion of the property taxes paid by a commercial or industrial facility located in the zone.
Subd. 6a. Additional border city allocations. In addition to tax reductions authorized in section 469.169, subdivisions 7 and 8, the commissioner may allocate $2,000,000 for tax reductions pursuant to subdivision 9 to enterprise zones designated under section 469.168, subdivision 4, clause (c), except for zones located in cities of the first class. This money shall be allocated among the zones on a per capita basis. Limits on the maximum allocation to a zone imposed by section 469.169, subdivision 7 do not apply to allocations made under this subdivision. Tax reductions authorized by this subdivision may not be allocated to any property which is:
(1) a facility the primary purpose of which is one of the following: the provision of recreation or entertainment, or a private or commercial golf course, country club, massage parlor, tennis club, skating facility including roller skating, skateboard, and ice skating, racquet sports facility, including any handball or racquetball court, hot tub facility, suntan facility, or racetrack;
(2) property of a public utility;
(3) property used in the operation of a financial institution;
(4) property owned by a fraternal or veterans' organization;
(5) property of a retail food or beverage service business operating under a franchise agreement that requires the business to be located in the state.
Subd. 6b. Additional border city allocations. In addition to tax reduction authorized under section 469.169, subdivisions 7 and 8, and under subdivision 6a, the commissioner may allocate $1,000,000 for tax reductions as provided in this section to enterprise zones designated under section 469.168, subdivision 4, paragraph (c), except for zones located in cities of the first class. The money shall be allocated among the zones on a per capita basis. Limits on the maximum allocation to a zone imposed by section 469.169, subdivision 7, do not apply to allocations made under this subdivision.
Subd. 7. Duration. Each tax reduction provided to a business pursuant to this subdivision shall terminate not longer than five years after the effective date of the tax reduction for the business unless the business is located in a border city enterprise zone designated under section 469.168, subdivision 4, clause (c), that is not a city of the first class. Each tax reduction provided to a business that is located in a border city enterprise zone designated under section 469.168, subdivision 4, clause (c), that is not located in a city of the first class, may be provided until the allocations provided under subdivision 6a, and under section 469.169, subdivisions 7 and 8, have been expended. Subject to the limitation in this subdivision, the tax reductions may be provided after expiration of the zone's designation.
Subd. 7a. Property tax credit; appropriation. There is annually appropriated from the general fund to the commissioner of revenue the amounts required to reimburse taxing jurisdictions for the revenue lost due to the property tax credit provided in subdivision 1, clause (4). Payment shall be made to taxing jurisdictions in the same proportion that the ad valorem tax is distributed. Payment shall be made to taxing jurisdictions, other than school districts, at the time provided in section 473H.10, subdivision 3.
Subd. 8. Refundable credits. The income tax credits provided pursuant to subdivisions 1 and 6 may be refundable.
Subd. 9. Recapture. Any business that (1) receives tax reductions authorized by subdivisions 1 to 8, classification as employment property pursuant to section 469.170, or an alternative local contribution under section 469.169, subdivision 5; and (2) ceases to operate its facility located within the enterprise zone shall repay the amount of the tax reduction or local contribution received during the two years immediately before it ceased to operate in the zone.
The repayment must be paid to the state to the extent it represents a tax reduction under subdivisions 1 to 8 and to the municipality to the extent it represents a property tax reduction or other local contribution. Any amount repaid to the state must be credited to the amount certified as available for tax reductions in the zone pursuant to section 469.169, subdivision 7. Any amount repaid to the municipality must be used by the municipality for economic development purposes. The commissioner of revenue may seek repayment of tax credits from a business ceasing to operate within an enterprise zone by utilizing any remedies available for the collection of tax.
Subd. 10. Interest. When tax credits allowed under subdivisions 1 to 8 result in an overpayment within the meaning of section 289A.50, the excess to be refunded to the taxpayer shall bear interest at the amount specified in section 270C.405, computed from 90 days after (1) the due date of the return or (2) the date on which the return is filed, whichever is later, to the date the refund is paid.
Subd. 11. Limitations; last eight months of duration. This subdivision applies only to state tax reductions first authorized by the municipality to be provided to a business within eight months of the expiration of the enterprise zone's designation.
Before agreeing with a business to provide tax reductions, the municipality must submit the proposed tax reductions to the commissioner for approval. The commissioner shall review and analyze the proposal in light of, at least, (1) the proposed investment that the business will make in the zone, (2) the number and quality of new jobs that will be created in the zone, (3) the overall positive impact on economic activity in the zone, and (4) the extent to which the impacts in clauses (1) to (3) are dependent upon providing the state tax reductions to the business. The commissioner shall disapprove the proposal if the commissioner determines the public benefits of increased investment and employment resulting from the tax reductions is disproportionately small relative to the cost of the state tax reductions. If the commissioner disapproves of the proposal, the tax reductions are not allowed to the business.
If the municipality submits the proposal to the commissioner before expiration of the zone designation, the authority to grant the tax reductions continues until the commissioner acts on the proposal.
469.1731 Border city development zones.
Subdivision 1. Designation. To encourage economic development, to revitalize the designated areas, to expand tax base and economic activity, and to provide job creation, growth, and retention, the following border cities may designate, by resolution, areas of the city as development zones after a public hearing upon 30-day notice.
(a) The city of Breckenridge may designate all or any part of the city as a zone.
(b) The city of Dilworth may designate between one and six areas of the city as zones containing not more than 100 acres in the aggregate.
(c) The city of East Grand Forks may designate all or any part of the city as a zone.
(d) The city of Moorhead may designate between one and six areas of the city as zones containing not more than 100 acres in the aggregate.
(e) The city of Ortonville may designate between one and six areas of the city as zones containing not more than 100 acres in the aggregate.
Subd. 2. Development plan. (a) Before designating a development zone, the city must adopt a written development plan that addresses:
(1) evidence of adverse economic conditions within the area resulting from competition with the bordering state or the 1997 floods or both;
(2) the viability of the development plan;
(3) public and private commitment to and other resources available for the area;
(4) how designation would relate to a development and revitalization plan for the city as a whole; and
(5) how the local regulatory burden will be eased for businesses operating in the area.
(b) The development plan must include:
(1) a map of the proposed zone that indicates the geographic boundaries, the total area, and the present use and conditions generally of land and structures within the area;
(2) evidence of community support and commitment from business interests;
(3) a description of the methods proposed to increase economic opportunity and expansion, facilitate infrastructure improvement, and identify job opportunities; and
(4) the duration of the zone designation, not to exceed 15 years.
Subd. 3. Filing. The city must file a copy of the resolution and development plan with the commissioner of employment and economic development. The designation takes effect 30 days after the filing.
469.1732 Tax incentives within development zones.
Subdivision 1. Authority. A business that conducts business activity within a border city development zone designated under section 469.1731 may qualify for the property tax exemption under section 272.0212 and the sales tax exemption under section 469.1734, subdivision 6.
Subd. 2. Repealed, 1Sp2001 c 5 art 9 s 30
Subd. 3. Phaseout at end of zone duration. During the last three years of the duration of a border city development zone, the available exemptions, subtractions, or credits are reduced by the following percentages for the taxes payable year or the taxable years that begin during:
(1) the calendar year that is two years before the final year of designation as a development zone, 25 percent;
(2) the calendar year that is immediately before the final year of designation as a development zone, 50 percent; and
(3) for the final calendar year of designation as a development zone, 75 percent.
469.1733 Disqualified taxpayers.
Subdivision 1. Delinquent taxpayers. An individual or a business is not eligible for the exemptions or credits available under section 272.0212, 469.1732, or 469.1734, if the individual or business owes delinquent amounts under chapter 290, 296A, 297A, 297B, 297F, or 297G or if the individual or business owns property located in the city or county in which the zone is located on which the property taxes are delinquent. Delinquency is determined as of the date of the application for a certificate under section 469.1735, subdivision 1. As a condition of receiving a certificate, the individual or business must authorize the Department of Revenue to disclose information necessary to make the determination under this subdivision notwithstanding any provision of chapter 270B or other law to the contrary.
Subd. 2. Relocation within county. If a business located in the county in which the border city development zone is located relocates from outside a zone into a zone, the business is not eligible for the exemptions or credits available in the border city development zone, unless the governing body of the city, for a business located in an incorporated area, or the county, for a business located outside of an incorporated area, approves the relocation of the business.
Subd. 3. Relocation from outside county. (a) If a business relocates more than 25 full-time equivalent jobs from a location in Minnesota outside of the county in which the zone is located, the business must notify the commissioner of employment and economic development and the city and county governments from which the jobs are being relocated. A business may satisfy the notification requirement by notifying the commissioner of employment and economic development, the city, and county of its intent to transfer jobs to a zone before actually doing so. The business is not eligible for the exemptions and credits available in the border city development zone, if the governing body of the city or county from which the jobs are being relocated adopts a resolution objecting to the relocation within 60 days after its receipt of the notice.
(b) The business becomes eligible for the exemptions and credits available in the zone when each city and county that objected to the relocation rescinds its objection by resolution.
(c) A city or county that objects to the relocation of jobs must file a copy of the resolution with the commissioner of employment and economic development and the city that created the border city development zone into which the jobs were or intend to be transferred.
469.1734 Tax incentives outside zones.
Subdivision 1. Authority. A city with authority to establish a border city development zone under section 469.1731 may grant the tax incentives provided by this section. This authority applies only to projects located outside of a zone, except as provided in subdivision 6.
Subd. 2. Definitions. For purposes of this section, "qualifying business" means the business conducted by a corporation, partnership, or individual doing business from a fixed location within the border city but located outside of the border city development zone.
Subd. 3. Property tax. (a) A city may grant a partial or complete exemption from property taxation of all buildings, structures, fixtures, and improvements used in or necessary to a qualifying business for a period not exceeding five taxes payable years. A partial exemption must be stated as a percentage of the total ad valorem taxes assessed against the property.
(b) In addition to, or in lieu of, a property tax exemption under paragraph (a), a city may establish an amount due as payments in lieu of ad valorem taxes on buildings, structures, fixtures, and improvements used by the qualifying business. The city council shall designate the amount of the payments for each year and the beginning year and the concluding year for payments in lieu of taxes. The option to make payments in lieu of taxes under this section is limited to 20 consecutive taxes payable years for any qualifying business. To establish the amount of payments in lieu of taxes, the city council may use actual or estimated levels of assessment and taxation or may designate different amounts of payments in lieu of other taxes in different years to recognize future expansion plans of a qualifying business or other considerations. The payments in lieu shall be collected and distributed in the same manner as ad valorem taxes.
(c) The city council must determine whether granting the exemption or payments in lieu of taxes, or both, is necessary to enable a business to expand in the city or to attract a business to the city and is in the best interest of the city. If it so determines, the city must give its approval.
Subd. 4. Repealed, 1Sp2001 c 5 art 9 s 30
Subd. 5. Border city new industry credit. (a) To provide a tax incentive for new industry in border cities, a corporation may be allowed a credit against the tax imposed by section 290.02. The commissioner shall prescribe the method in which the credit may be claimed. This may include allowing the credit only as a separately processed claim for refund.
(b) The credit equals one percent of the wages and salaries paid by the taxpayer during the taxable year for employees whose principal place of work is located in a border city but outside of a zone designated under section 469.1731. The credit applies for the first three taxable years of the operation of the corporation in the border city. In the fourth and fifth taxable years of the operation of the corporation in the border city, the credit equals 0.5 percent of the wages and salaries. After the fifth year, no credit is allowed. The city shall determine the amount of wages that qualify for the credit and issue tax credit certificates in the correct amount.
(c) The credit under this subdivision applies only to a corporate enterprise engaged in assembling, fabricating, manufacturing, mixing, or processing of any agricultural, mineral, or manufactured product or combinations of them.
(d) The credit allowed under this subdivision may not exceed the lesser of:
(1) the tax liability of the taxpayer for the taxable year; or
(2) the amount of the tax credit certificates received by the taxpayer from the city, less any tax credit certificates used under subdivisions 4 and 6, and section 469.1732, subdivision 2.
Subd. 6. Sales tax exemption; equipment; construction materials. (a) The gross receipts from the sale of machinery and equipment and repair parts are exempt from taxation under chapter 297A, if the machinery and equipment:
(1) are used in connection with a trade or business;
(2) are placed in service in a city that is authorized to designate a zone under section 469.1731, regardless of whether the machinery and equipment are used in a zone; and
(3) have a useful life of 12 months or more.
(b) The gross receipts from the sale of construction materials are exempt, if they are used to construct:
(1) a facility for use in a trade or business located in a city that is authorized to designate a zone under section 469.1731, regardless of whether the facility is located in a zone; or
(2) housing that is located in a zone.
The exemptions under this paragraph apply regardless of whether the purchase is made by the owner, the user, or a contractor.
(c) A purchaser may claim an exemption under this subdivision for tax on the purchases up to, but not exceeding:
(1) the amount of the tax credit certificates received from the city, less
(2) any tax credit certificates used under the provisions of subdivisions 4 and 5, and section 469.1732, subdivision 2.
(d) The tax on sales of items exempted under this subdivision shall be imposed and collected as if the applicable rate under section 297A.62 applied. Upon application by the purchaser, on forms prescribed by the commissioner, a refund equal to the tax paid shall be paid to the purchaser. The application must include sufficient information to permit the commissioner to verify the sales tax paid and the eligibility of the claimant to receive the credit. No more than two applications for refunds may be filed under this subdivision in a calendar year. The provisions of section 289A.40 apply to the refunds payable under this subdivision. There is annually appropriated to the commissioner of revenue the amount required to make the refunds, which must be deducted from the amount of the city's allocation under section 469.169, subdivision 12, that remains available and its limitation under section 469.1735.The amount to be refunded shall bear interest at the rate in section 270C.405 from the date the refund claim is filed with the commissioner.
Subd. 7. Notice to competitors. (a) Before an exemption or other concession is granted under subdivision 3 or 4, the procedure under this subdivision applies.
(b) Unless the city council determines that no existing business within the city would be a potential competitor of the project, the project operator shall publish two notices to competitors of the application of the tax exemption or payments in lieu in the official newspaper of the city. The city shall prescribe the form of the notice. The two notices must be published at least one week apart. The publications must be completed not less than 15 days nor more than 30 days before the city council approves the tax exemption or payments in lieu of taxes.
469.1735 Limit on tax reductions; applications required.
Subdivision 1. Businesses must apply. To claim a tax credit under section 469.1732, subdivision 2, or 469.1734, subdivision 4 or 5, or an exemption from sales tax under section 469.1734, subdivision 6, a business must apply to the city for a tax credit certificate. As a condition of its application, the business must agree to furnish information to the city that is sufficient to verify the eligibility for any credits or other tax reductions claimed. The total amount of the state tax reductions allowed for the specified period may not exceed the amount of the tax credit certificates provided by the city to the business. The city must verify the amount of tax reduction or credits for which each business is eligible.
Subd. 2. City limitations. (a) Each city may provide tax credit certificates to businesses that apply and meet the requirements for the tax credit and exemption. The certificates that each city may provide for the period covered by this section is limited to the amount specified in this subdivision.
(b) The maximum amount of tax credit certificates each city may issue over the duration of the program equals the amount of the allocation to the city under section 469.169, subdivision 12.
Subd. 3. Transfer authority for property tax. (a) A city may elect to use all or part of its allocation under subdivision 2 to reimburse the city or county or both for property tax reductions under section 272.0212. To elect this option, the city must notify the commissioner of revenue by October 1 of each calendar year of the amount of the property tax reductions for which it seeks reimbursements for taxes payable during the current year and the governmental units to which the amounts will be paid. The commissioner may require the city to provide information substantiating the amount of the reductions granted or any other information necessary to administer this provision. The commissioner shall pay the reimbursements by December 26 of the taxes payable year. Any amount transferred under this authority reduces the amount of tax credit certificates available under subdivisions 1 and 2.
(b) The amount elected by the city under paragraph (a) is appropriated to the commissioner of revenue from the general fund to reimburse the city or county for tax reductions under section 272.0212. The amount appropriated may not exceed the maximum amounts allocated to a city under subdivision 2, paragraph (b), less the amount of certificates issued by the city under subdivision 1, and is available until expended.
Subd. 4. Appropriation; waivers. An amount sufficient to fund any tax reductions under a waiver made by the commissioner under section 469.169, subdivision 12, paragraph (b), is appropriated to the commissioner of revenue from the general fund. This appropriation may not be deducted from the dollar limits under this section or section 469.169 or 469.1734.
469.174 Definitions.
Subdivision 1. Generally. In sections 469.174 to 469.179, 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 469.142 to 469.151; a housing and redevelopment authority created pursuant to sections 469.001 to 469.047; a port authority created pursuant to sections 469.048 to 469.068; an economic development authority created pursuant to sections 469.090 to 469.108; a redevelopment agency as defined in sections 469.152 to 469.165; a municipality that is administering a development district created pursuant to sections 469.124 to 469.134 or any special law; a municipality that undertakes a project pursuant to sections 469.152 to 469.165, 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 469.178; or
(2) in aid of a project under any other law, except revenue bonds issued pursuant to sections 469.152 to 469.165, prior to August 1, 1979.
(b) Bonds or other obligations include:
(1) refunding bonds;
(2) notes;
(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 a municipality.
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 469.152 to 469.165, "municipality" has the meaning given in sections 469.152 to 469.165; and
(2) for a project undertaken pursuant to sections 469.142 to 469.151, or a county or multicounty project undertaken pursuant to sections 469.004 to 469.008 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 (i) the net tax capacity of the parcel or parcels in the site or subdistrict, as most recently determined by the commissioner of revenue, less (ii) 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, (iii) 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 (ii), 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 469.142; 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 469.002, subdivision 12; 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 used; or
(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 is substandard.
(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 following requirements:
(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 469.1761. 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 469.178; or
(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 115B.02. The term "petroleum" has the meaning given in section 115C.02.
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 bonds feasible.
For purposes of this subdivision, "applicable in-district percentage" means the percentage under section 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 median income;
(2) is located in a county in development region 2, 3, 4, or 5, as defined in section 462.385;
(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 469.175, subdivision 7.
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 under section 469.177;
(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 tax increments;
(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 273.1384.
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 4A.02.
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.
469.175 Establishing, changing TIF plan, annual accounts.
Subdivision 1. Tax increment financing plan. 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, identified by parcel number, identifiable property name, block, or other appropriate means indicating the area in which the authority intends to acquire properties;
(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 administrative expenses, except that if part of the cost of the project is paid or financed with increment from the tax increment financing district, the tax increment financing plan for the district must contain an estimate of the amount of the cost of the project, including administrative expenses, that will be paid or financed with tax increments from the district;
(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.
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 within five years under another 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 45 days after receipt of the proposed tax increment financing plan 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. (a) Before formation of a tax increment financing district, the authority shall provide the county auditor and clerk of the school board with the proposed tax increment financing plan for the district and the authority's estimate of the fiscal and economic implications of the proposed tax increment financing district. The authority must provide the proposed tax increment financing plan and the information on the fiscal and economic implications of the plan to the county auditor and the clerk of the school district board at least 30 days before the public hearing required by subdivision 3. The information on the fiscal and economic implications may be included in or as part of the tax increment financing plan. The county auditor and clerk of the school board shall provide copies to the members of the boards, as directed by their respective boards. The 30-day requirement is waived if the boards of 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.
(b) For purposes of this subdivision, "fiscal and economic implications of the proposed tax increment financing district" includes:
(1) an estimate of the total amount of tax increment that will be generated over the life of the district;
(2) a description of the probable impact of the district on city-provided services such as police and fire protection, public infrastructure, and borrowing costs attributable to the district;
(3) the estimated amount of tax increments over the life of the district that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same;
(4) the estimated amount of tax increments over the life of the district that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same; and
(5) any additional information requested by the county or the school district that would enable it to determine additional costs that will accrue to it due to the development proposed for the district.
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. The commissioner may waive the 30-day requirement by submitting written comments on the proposal and any modification of the proposal to the authority after receipt of the information.
Subd. 3. Municipality approval. (a) 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.
(b) 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 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, in the opinion of the municipality:
(i) the proposed development or redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; and
(ii) 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 item do not apply if the district is a qualified housing district;
(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.
(c) 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. 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.
(d) For a district that is subject to the requirements of paragraph (b), clause (2), item (ii), the municipality's statement of reasons and supporting facts must include all of the following:
(1) an estimate of the amount by which the market value of the site will increase without the use of tax increment financing;
(2) an estimate of the increase in the market value that will result from the development or redevelopment to be assisted with tax increment financing; and
(3) the present value of the projected tax increments for the maximum duration of the district permitted by the tax increment financing plan.
(e) For purposes of this subdivision, "site" means the parcels on which the development or redevelopment to be assisted with tax increment financing will be located.
Subd. 4. Modification of plan. (a) A tax increment financing plan may be modified by an authority.
(b) The authority may make the following modifications only upon the notice and after the discussion, public hearing, and findings required for approval of the original plan:
(1) any reduction or enlargement of geographic area of the project or tax increment financing district that does not meet the requirements of paragraph (e);
(2) increase in amount of bonded indebtedness to be incurred;
(3) 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;
(4) increase in the portion of the captured net tax capacity to be retained by the authority;
(5) increase in the estimate of the cost of the project, including administrative expenses, that will be paid or financed with tax increment from the district; or
(6) designation of additional property to be acquired by the authority.
(c) If an authority changes the type of district to another type of district, this change is not a modification but requires 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.
(d) 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.
(e) The requirements of paragraph (b) 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.
(f) 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. 4a. Filing plan with state. (a) The authority must file a copy of the tax increment financing plan and amendments to the plan with the commissioner of revenue and the state auditor. The authority must also file a copy of the development plan or the project plan for the project area with the commissioner of revenue and the state auditor.
(b) Filing under this subdivision must be made within 60 days after the latest of:
(1) the filing of the request for certification of the district;
(2) approval of the plan by the municipality; or
(3) adoption of the plan by the authority.
Subd. 5. Annual disclosure. An annual statement showing for each district the information required to be reported under subdivision 6, paragraph (c), clauses (1), (2), (3), (11), (12), (18), and (19); the amounts of tax increment received and expended in the reporting period; and any additional information the authority deems necessary must be published in a newspaper of general circulation in the municipality that approved the tax increment financing plan. The annual statement must inform readers that additional information regarding each district may be obtained from the authority, and must explain how the additional information may be requested. 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 county board, the county auditor, the school board, the state auditor, and, if the authority is other than the municipality, the governing body of the municipality on or before August 1 of the year in which the statement must be published.
The disclosure requirements imposed by this subdivision apply to districts certified before, on, or after August 1, 1979.
Subd. 6. Annual 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 auditor 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 under section 469.177, subdivision 1;
(2) the net tax capacity for the reporting period of the district and any subdistrict;
(3) the captured net tax capacity of the district;
(4) any fiscal disparity deduction from the captured net tax capacity under section 469.177, subdivision 3;
(5) the captured net tax capacity retained for tax increment financing under section 469.177, subdivision 2, paragraph (a), clause (1);
(6) any captured net tax capacity distributed among affected taxing districts under section 469.177, subdivision 2, paragraph (a), clause (2);
(7) the type of district;
(8) the date the municipality approved the tax increment financing plan and the date of approval of any modification of the tax increment financing plan, the approval of which requires notice, discussion, a public hearing, and findings under subdivision 4, paragraph (a);
(9) the date the authority first requested certification of the original net tax capacity of the district and the date of the request for certification regarding any parcel added to the district;
(10) the date the county auditor first certified the original net tax capacity of the district and the date of certification of the original net tax capacity of any parcel added to the district;
(11) the month and year in which the authority has received or anticipates it will receive the first increment from the district;
(12) the date the district must be decertified;
(13) for the reporting period and prior years of the district, the actual amount received from, at least, the following categories:
(i) tax increments paid by the captured net tax capacity retained for tax increment financing under section 469.177, subdivision 2, paragraph (a), clause (1), but excluding any excess taxes;
(ii) tax increments that are interest or other investment earnings on or from tax increments;
(iii) tax increments that are proceeds from the sale or lease of property, tangible or intangible, purchased by the authority with tax increments;
(iv) tax increments that are repayments of loans or other advances made by the authority with tax increments;
(v) bond or loan proceeds;
(vi) special assessments;
(vii) grants;
(viii) transfers from funds not exclusively associated with the district; and
(ix) the market value homestead credit paid to the authority under section 273.1384;
(14) for the reporting period and for the prior years of the district, 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; and
(vi) transfers to funds not exclusively associated with the district;
(15) the amount of any payments for activities and improvements located outside of the district that are paid for or financed with tax increments;
(16) the amount of payments of principal and interest that are made during the reporting period on any nondefeased:
(i) general obligation tax increment financing bonds;
(ii) other tax increment financing bonds; and
(iii) notes and pay-as-you-go contracts;
(17) the principal amount, at the end of the reporting period, of any nondefeased:
(i) general obligation tax increment financing bonds;
(ii) other tax increment financing bonds; and
(iii) notes and pay-as-you-go contracts;
(18) the amount of principal and interest payments that are due for the current calendar year on any nondefeased:
(i) general obligation tax increment financing bonds;
(ii) other tax increment financing bonds; and
(iii) notes and pay-as-you-go contracts;
(19) if the fiscal disparities contribution under chapter 276A or 473F for the district is computed under section 469.177, subdivision 3, paragraph (a), the amount of increased property taxes imposed on other properties in the municipality that approved the tax increment financing plan as a result of the fiscal disparities contribution;
(20) the estimate, if any, contained in the tax increment financing plan of the amount of the cost of the project, including administrative expenses, that will be paid or financed with tax increment; and
(21) any additional information the state auditor may require.
(d) The commissioner of revenue shall prescribe the method of calculating the increased property taxes under paragraph (c), clause (19), and the form of the statement disclosing this information on the annual statement under subdivision 5.
(e) The reporting requirements imposed by this subdivision apply to districts certified before, on, and after August 1, 1979.
Subd. 6a. Repealed, 2000 c 490 art 11 s 44
Subd. 6b. Duration of disclosure and reporting requirements. The disclosure and reporting requirements imposed by subdivisions 5 and 6 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 remediation 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.
469.176 Limitations.
Subdivision 1. Duration of tax increment financing districts. (a) Subject to the limitations contained in subdivisions 1a to 1f, any tax increment financing district as to which bonds are outstanding, payment for which the tax increment and other revenues have been pledged, shall remain in existence at least as long as the bonds continue to be outstanding. The municipality may, at the time of approval of the initial tax increment financing plan, provide for a shorter maximum duration limit than specified in subdivisions 1a to 1f. The specified limit applies in place of the otherwise applicable limit.
(b) The tax increment pledged to the payment of the bonds and interest thereon may be discharged and the tax increment financing district may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or date of redemption and interest thereon to the maturity or redemption date.
(c) For bonds issued pursuant to section 469.178, subdivisions 2 and 3, the full faith and credit and any taxing powers of the municipality or authority are pledged to the payment of the bonds until the principal of and interest on the bonds has been paid in full.
Subd. 1a. Repealed, 2005 c 152 art 2 s 31
Subd. 1b. Duration limits; terms. (a) No tax increment shall in any event be paid to the authority
(1) after 15 years after receipt by the authority of the first increment for a renewal and renovation district,
(2) after 20 years after receipt by the authority of the first increment for a soils condition district,
(3) after eight years after receipt by the authority of the first increment for an economic development district,
(4) for a housing district or a redevelopment district, after 25 years from the date of receipt by the authority of the first increment.
(b) For purposes of determining a duration limit under this subdivision or subdivision 1e that is based on the receipt of an increment, any increments from taxes payable in the year in which the district terminates shall be paid to the authority. This paragraph does not affect a duration limit calculated from the date of approval of the tax increment financing plan or based on the recovery of costs or to a duration limit under subdivision 1c. This paragraph does not supersede the restrictions on payment of delinquent taxes in subdivision 1f.
(c) An action by the authority to waive or decline to accept an increment has no effect for purposes of computing a duration limit based on the receipt of increment under this subdivision or any other provision of law. The authority is deemed to have received an increment for any year in which it waived or declined to accept an increment, regardless of whether the increment was paid to the authority.
(d) Receipt by a hazardous substance subdistrict of an increment as a result of a reduction in original net tax capacity under section 469.174, subdivision 7, paragraph (b), does not constitute receipt of increment by the overlying district for the purpose of calculating the duration limit under this section.
Subd. 1c. Duration limits; pre-1979 districts. (a) For tax increment financing districts created prior to August 1, 1979, no tax increment shall be paid to the authority after April 1, 2001, or the term of a nondefeased bond or obligation outstanding on April 1, 1990, secured by increments from the district or project area, whichever time is greater, provided that in no case will a tax increment be paid to an authority after August 1, 2009, from such a district. If a district's termination date is extended beyond April 1, 2001, because bonds were outstanding on April 1, 1990, with maturities extending beyond April 1, 2001, the following restrictions apply. No increment collected from the district may be expended after April 1, 2001, except to pay or repay:
(1) bonds issued before April 1, 1990;
(2) bonds issued to refund the principal of the outstanding bonds and pay associated issuance costs;
(3) administrative expenses of the district required to be paid under section 469.176, subdivision 4h, paragraph (a);
(4) transfers of increment permitted under section 469.1763, subdivision 6; and
(5) any advance or payment made by the municipality or the authority after June 1, 2002, to pay any bonds listed in clause (1) or (2).
(b) Each year, any increments from a district subject to this subdivision must be first applied to pay obligations listed under paragraph (a), clauses (1) and (2), and administrative expenses under paragraph (a), clause (3). Any remaining increments may be used for transfers of increments permitted under section 469.1763, subdivision 6, and to make payments under paragraph (a), clause (5).
(c) When sufficient money has been received to pay in full or defease obligations under paragraph (a), clauses (1), (2), and (5), the tax increment project or district must be decertified.
Subd. 1d. Duration limits; effect of modifications. Modification of a tax increment financing plan pursuant to section 469.175, subdivision 4, shall not extend the durational limitations of subdivisions 1 to 1f.
Subd. 1e. Duration limits; hazardous substance subdistricts. If a parcel of a district is part of a designated hazardous substance site or a hazardous substance subdistrict, tax increment may be paid to the authority from the parcel for longer than the period otherwise provided by subdivisions 1 to 1f for the overlying district. The extended period for collection of tax increment begins on the date of receipt of the first tax increment from the parcel that is more than any tax increment received from the parcel before the date of the certification under section 469.174, subdivision 7, paragraph (b), and received after the date of certification to the county auditor described in section 469.174, subdivision 7, paragraph (b). The extended period for collection of tax increment is the lesser of: (1) 25 years from the date of commencement of the extended period; or (2) the period necessary to recover the costs of removal actions or remedial actions specified in a development response action plan.
Subd. 1f. Delinquent taxes after termination. If a parcel located in the district has delinquent property taxes when the district terminates under the duration limits, the payment of the parcel's delinquent taxes made after decertification of the district are tax increments to the extent the nonpayment of property taxes caused the outstanding bonds or contractual obligations pledged to be paid by the district to be paid by sources other than tax increments or to go unpaid. The county auditor shall pay the appropriate amount to the district. The authority shall provide the county auditor with information regarding the payment of outstanding bonds or contractual obligations and any other information necessary to administer the payment, as requested by the county auditor.
Subd. 1g. Extension to recover cleanup costs. (a) The authority, with the approval of the municipality, may extend the duration of a district beyond the limit that otherwise applies under this section, if the following circumstances apply:
(1) after the district is established, contamination, hazardous substances, pollution, or other materials requiring removal or remediation are found in the district;
(2) the authority elects not to create a hazardous substance subdistrict; and
(3) the municipality pays for the cost of removal, cleanup, or remediation out of its general fund or other money of the municipality, except revenues from tax increments.
(b) The maximum duration extension permitted by this subdivision is the lesser of (1) ten years after the district otherwise would have terminated or (2) the number of additional years necessary to collect increment equal to the cleanup costs paid by the municipality out of funds other than tax increments. Cleanup costs are limited to the actual costs of removal and remediation, and do not include financing or interest costs. Cleanup costs do include testing and engineering costs. Cleanup costs must be reduced by any reimbursements or amounts recovered from private parties or other responsible parties.
Subd. 1h. Repealed, 2002 c 377 art 7 s 13
Subd. 2. Excess increments. (a) The authority shall annually determine the amount of excess increments for a district, if any. This determination must be based on the tax increment financing plan in effect on December 31 of the year and the increments and other revenues received as of December 31 of the year. The authority must spend or return the excess increments under paragraph (c) within nine months after the end of the year.
(b) For purposes of this subdivision, "excess increments" equals the excess of:
(1) total increments collected from the district since its certification, reduced by any excess increments paid under paragraph (c), clause (4), for a prior year, over
(2) the total costs authorized by the tax increment financing plan to be paid with increments from the district, reduced, but not below zero, by the sum of:
(i) the amounts of those authorized costs that have been paid from sources other than tax increments from the district;
(ii) revenues, other than tax increments from the district, that are dedicated for or otherwise required to be used to pay those authorized costs and that the authority has received and that are not included in item (i);
(iii) the amount of principal and interest obligations due on outstanding bonds after December 31 of the year and not prepaid under paragraph (c) in a prior year; and
(iv) increased by the sum of the transfers of increments made under section 469.1763, subdivision 6, to reduce deficits in other districts made by December 31 of the year.
(c) The authority shall use excess increment only to do one or more of the following:
(1) prepay any outstanding bonds;
(2) discharge the pledge of tax increment for any outstanding bonds;
(3) pay into an escrow account dedicated to the payment of any outstanding bonds; or
(4) return the excess amount to the county auditor who shall distribute the excess amount to the city or town, county, and school district in which the tax increment financing district is located in direct proportion to their respective local tax rates.
(d) For purposes of a district for which the request for certification was made prior to August 1, 1979, excess increments equal the amount of increments on hand on December 31, less the principal and interest obligations due on outstanding bonds or advances, qualifying under subdivision 1c, clauses (1), (2), and (5), after December 31 of the year and not prepaid under paragraph (c).
(e) The county auditor must report to the commissioner of education the amount of any excess tax increment distributed to a school district within 30 days of the distribution.
(f) For purposes of this subdivision, "outstanding bonds" means bonds which are secured by increments from the district.
Subd. 3. Limitation on administrative expenses. (a) For districts for which certification was requested before August 1, 1979, or after June 30, 1982 and before August 1, 2001, no tax increment shall be used to pay any administrative expenses for a project which exceed ten percent of the total estimated tax increment expenditures authorized by the tax increment financing plan or the total tax increment expenditures for the project, whichever is less.
(b) For districts for which certification was requested after July 31, 1979, and before July 1, 1982, no tax increment shall be used to pay administrative expenses, as defined in Minnesota Statutes 1980, section 273.73, for a district which exceeds five percent of the total tax increment expenditures authorized by the tax increment financing plan or the total estimated tax increment expenditures for the district, whichever is less.
(c) For districts for which certification was requested after July 31, 2001, no tax increment may be used to pay any administrative expenses for a project which exceed ten percent of total estimated tax increment expenditures authorized by the tax increment financing plan or the total tax increments, as defined in section 469.174, subdivision 25, clause (1), from the district, whichever is less.
Subd. 4. Limitation on use of tax increment; general rule. All revenues derived from tax increment shall be used in accordance with the tax increment financing plan. The revenues shall be used solely for the following purposes: (1) to pay the principal of and interest on bonds issued to finance a project; (2) by a rural development financing authority for the purposes stated in section 469.142, by a port authority or municipality exercising the powers of a port authority to finance or otherwise pay the cost of redevelopment pursuant to sections 469.048 to 469.068, by an economic development authority to finance or otherwise pay the cost of redevelopment pursuant to sections 469.090 to 469.108, by a housing and redevelopment authority or economic development authority to finance or otherwise pay public redevelopment costs pursuant to sections 469.001 to 469.047, by a municipality or economic development authority to finance or otherwise pay the capital and administration costs of a development district pursuant to sections 469.124 to 469.134, by a municipality or authority to finance or otherwise pay the costs of developing and implementing a development action response plan, by a municipality or redevelopment agency to finance or otherwise pay premiums for insurance or other security guaranteeing the payment when due of principal of and interest on the bonds pursuant to chapter 462C, sections 469.152 to 469.165, or both, or to accumulate and maintain a reserve securing the payment when due of the principal of and interest on the bonds pursuant to chapter 462C, sections 469.152 to 469.165, or both, which revenues in the reserve shall not exceed, subsequent to the fifth anniversary of the date of issue of the first bond issue secured by the reserve, an amount equal to 20 percent of the aggregate principal amount of the outstanding and nondefeased bonds secured by the reserve.
Subd. 4a. Repealed, 2000 c 490 art 11 s 44
Subd. 4b. Soils condition districts. Revenue derived from tax increment from a soils condition district may be used only to (1) acquire parcels on which the improvements described in clause (2) will occur; (2) pay for the cost of removal or remedial action; and (3) pay for the administrative expenses of the authority allocable to the district, including the cost of preparation of the development action response plan.
Subd. 4c. Economic development districts. (a) Revenue derived from tax increment from an economic development district may not be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form to developments consisting of buildings and ancillary facilities, if more than 15 percent of the buildings and facilities (determined on the basis of square footage) are used for a purpose other than:
(1) the manufacturing or production of tangible personal property, including processing resulting in the change in condition of the property;
(2) warehousing, storage, and distribution of tangible personal property, excluding retail sales;
(3) research and development related to the activities listed in clause (1) or (2);
(4) telemarketing if that activity is the exclusive use of the property;
(5) tourism facilities;
(6) qualified border retail facilities; or
(7) space necessary for and related to the activities listed in clauses (1) to (6).
(b) Notwithstanding the provisions of this subdivision, revenue derived from tax increment from an economic development district may be used to pay for site preparation and public improvements, if the following conditions are met:
(1) bedrock soils conditions are present in 80 percent or more of the acreage of the district;
(2) the estimated cost of physical preparation of the site exceeds the fair market value of the land before completion of the preparation; and
(3) revenues from tax increments are expended only for the additional costs of preparing the site because of unstable soils and the bedrock soils condition, the additional cost of installing public improvements because of unstable soils or the bedrock soils condition, and reasonable administrative costs.
(c) Notwithstanding the provisions of this subdivision, revenues derived from tax increment from an economic development district may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000 square feet of any separately owned commercial facility located within the municipal jurisdiction of a small city, if the revenues derived from increments are spent only to assist the facility directly or for administrative expenses, the assistance is necessary to develop the facility, and all of the increments, except those for administrative expenses, are spent only for activities within the district.
(d) For purposes of this subdivision, a qualified border retail facility is a development consisting of a shopping center or one or more retail stores, if the authority finds that all of the following conditions are satisfied:
(1) the district is in a small city located within one mile or less of the border of the state;
(2) the development is not located in the seven-county metropolitan area, as defined in section 473.121, subdivision 2;
(3) the development will contain new buildings or will substantially rehabilitate existing buildings that together contain at least 25,000 square feet of retail space; and
(4) without the use of tax increment financing for the development, the development or a similar competing development will instead occur in the bordering state or province.
(e) A city is a small city for purposes of this subdivision if the city was a small city in the year in which the request for certification was made and applies for the rest of the duration of the district, regardless of whether the city qualifies or ceases to qualify as a small city.
Subd. 4d. Housing districts. Revenue derived from tax increment from a housing district must be used solely to finance the cost of housing projects as defined in sections 469.174, subdivision 11, and 469.1761. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the authority may be included in the cost of a housing project.
Subd. 4e. Hazardous substance subdistricts. The additional tax increment received by the municipality from a hazardous substance subdistrict as a result of a reduction in original net tax capacity pursuant to section 469.174, subdivision 7, paragraph (b), or as a result of the extension of the period for collection of tax increment from a hazardous substance site or subdistrict provided for in subdivision 1, paragraph (g), may be used only to pay or reimburse the costs of: (1) removal actions or remedial actions with respect to hazardous substances or pollutants or contaminants or petroleum releases affecting or which may affect the designated hazardous substance site; (2) pollution testing, demolition, and soil compaction correction necessitated by the development response action plan for the designated hazardous substance site; (3) purchase of environmental insurance or deposits to a guaranty fund, relating only to liability or response costs for land in the subdistrict; and (4) related administrative and legal costs, including costs of review and approval of development response action plans by the pollution control agency and litigation expenses of the attorney general.
Subd. 4f. Interest reduction. Revenues derived from tax increment may be used to finance the costs of an interest reduction program operated pursuant to section 469.012, subdivisions 7 to 10, or pursuant to other law granting interest reduction authority and power by reference to those subdivisions only under the following conditions: (1) tax increments may not be collected for a program for a period in excess of 15 years after the date of the first interest rate reduction payment for the program, (2) tax increments may not be used for an interest reduction program, if the proceeds of bonds issued pursuant to section 469.178 after December 31, 1985, have been or will be used to provide financial assistance to the specific project which would receive the benefit of the interest reduction program, and (3) tax increments may not be used to finance an interest reduction program for owner-occupied single-family dwellings.
Subd. 4g. General government use prohibited. (a) Tax increments may not be used to circumvent existing levy limit law.
(b) No tax increment from any district may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure.
(c)(1) Tax increments may not be used to pay for the cost of public improvements, equipment, or other items, if:
(i) the improvements, equipment, or other items are located outside of the area of the tax increment financing district from which the increments were collected; and
(ii) the improvements, equipment, or items that (A) primarily serve a decorative or aesthetic purpose, or (B) serve a functional purpose, but their cost is increased by more than 100 percent as a result of the selection of materials, design, or type as compared with more commonly used materials, designs, or types for similar improvements, equipment, or items.
(2) The provisions of this paragraph do not apply to expenditures related to the rehabilitation of historic structures that are:
(i) individually listed on the National Register of Historic Places; or
(ii) a contributing element to a historic district listed on the National Register of Historic Places.
Subd. 4h. County costs. (a) Tax increments may be used to pay for the county's actual administrative expenses under sections 469.174 to 469.179. The county may require payment of those expenses by February 15 of the year after the year in which the expenses are incurred. The amount of these payments is not required to be set forth in the tax increment financing plan for the project. To obtain payment for actual administrative costs, the county auditor must submit to the authority a record of costs incurred by the county auditor related to administration of the authority's tax increment financing districts.
(b) Tax increments may be used to pay county road costs as provided in section 469.175, subdivision 1a.
Subd. 4i. Multicounty use prohibited. If a tax increment district is located in a municipality, parts of which are situated in more than one county, the revenue derived from tax increments from parcels located in one county must be expended for the direct and primary benefit of a project located or conducted within that county, unless the county boards of each of the counties involved agree to waive this requirement.
Subd. 4j. Redevelopment districts. At least 90 percent of the revenues derived from tax increments from a redevelopment district or renewal and renovation district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under section 469.174. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary to development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the authority, including the cost of preparation of the development action response plan, may be included in the qualifying costs.
Subd. 4k. Assisting housing outside project area. Notwithstanding the definition of a project under section 469.174, increments may be spent to assist housing that meets the requirements under section 469.1763, subdivision 2, paragraph (d), regardless of whether the housing is located within the boundaries of the project area.
Subd. 4l. Prohibited facilities. (a) No tax increment from any district may be used for:
(1) a commons area used as a public park; or
(2) a facility used for social, recreational, or conference purposes.
(b) This subdivision does not apply to a privately owned facility for conference purposes or a parking structure.
Subd. 5. Requirement for agreements. No more than 25 percent, by acreage, of the property to be acquired within a project which contains a redevelopment district, or ten percent, by acreage, of the property to be acquired within a project which contains a housing or economic development district, as set forth in the tax increment financing plan, shall at any time be owned by an authority as a result of acquisition with the proceeds of bonds issued pursuant to section 469.178 to which tax increment from the property acquired is pledged unless prior to acquisition in excess of the percentages, the authority has concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the authority should the development or redevelopment not be completed. This subdivision does not apply to a parcel of a district that is a designated hazardous substance site established under section 469.174, subdivision 16, or part of a hazardous substance subdistrict established under section 469.175, subdivision 7.
Subd. 6. Action required. If, after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to section 469.177, no demolition, rehabilitation, or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel, and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation, or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority shall certify to the county auditor that the activity has commenced, and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street.
Subd. 7. Parcels not includable in districts. (a) The authority may request inclusion in a tax increment financing district and the county auditor may certify the original tax capacity of a parcel or a part of a parcel that qualified under the provisions of section 273.111 or 273.112 or chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification only for:
(1) a district in which 85 percent or more of the planned buildings and facilities (determined on the basis of square footage) are a qualified manufacturing facility or a qualified distribution facility or a combination of both; or
(2) a qualified housing district.
(b)(1) A distribution facility means buildings and other improvements to real property that are used to conduct activities in at least each of the following categories:
(i) to store or warehouse tangible personal property;
(ii) to take orders for shipment, mailing, or delivery;
(iii) to prepare personal property for shipment, mailing, or delivery; and
(iv) to ship, mail, or deliver property.
(2) A manufacturing facility includes space used for manufacturing or producing tangible personal property, including processing resulting in the change in condition of the property, and space necessary for and related to the manufacturing activities.
(3) To be a qualified facility, the owner or operator of a manufacturing or distribution facility must agree to pay and pay 90 percent or more of the employees of the facility at a rate equal to or greater than 160 percent of the federal minimum wage for individuals over the age of 20.
469.177 Computation of tax increment.
Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax increment financing plan, the auditor of any county in which the district is situated shall, upon request of the authority, certify the original net tax capacity of the tax increment financing district and that portion of the district overlying any subdistrict as described in the tax increment financing plan and shall certify in each year thereafter the amount by which the original net tax capacity has increased or decreased as a result of a change in tax exempt status of property within the district and any subdistrict, reduction or enlargement of the district or changes pursuant to subdivision 4.
(b) If the classification under section 273.13 of property located in a district changes to a classification that has a different assessment ratio, the original net tax capacity of that property must be redetermined at the time when its use is changed as if the property had originally been classified in the same class in which it is classified after its use is changed.
(c) The amount to be added to the original net tax capacity of the district as a result of previously tax exempt real property within the district becoming taxable equals the net tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if that assessment was made more than one year prior to the date of title transfer rendering the property taxable, the net tax capacity assessed by the assessor at the time of the transfer. If improvements are made to tax exempt property after certification of the district and before the parcel becomes taxable, the assessor shall, at the request of the authority, separately assess the estimated market value of the improvements. If the property becomes taxable, the county auditor shall add to original net tax capacity, the net tax capacity of the parcel, excluding the separately assessed improvements. If substantial taxable improvements were made to a parcel after certification of the district and if the property later becomes tax exempt, in whole or part, as a result of the authority acquiring the property through foreclosure or exercise of remedies under a lease or other revenue agreement or as a result of tax forfeiture, the amount to be added to the original net tax capacity of the district as a result of the property again becoming taxable is the amount of the parcel's value that was included in original net tax capacity when the parcel was first certified. The amount to be added to the original net tax capacity of the district as a result of enlargements equals the net tax capacity of the added real property as most recently certified by the commissioner of revenue as of the date of modification of the tax increment financing plan pursuant to section 469.175, subdivision 4.
(d) If the net tax capacity of a property increases because the property no longer qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is improved or market value is increased after approval of the plat under section 273.11, subdivision 14, 14a, or 14b, the increase in net tax capacity must be added to the original net tax capacity.
(e) The amount to be subtracted from the original net tax capacity of the district as a result of previously taxable real property within the district becoming tax exempt, or a reduction in the geographic area of the district, shall be the amount of original net tax capacity initially attributed to the property becoming tax exempt or being removed from the district. If the net tax capacity of property located within the tax increment financing district is reduced by reason of a court-ordered abatement, stipulation agreement, voluntary abatement made by the assessor or auditor or by order of the commissioner of revenue, the reduction shall be applied to the original net tax capacity of the district when the property upon which the abatement is made has not been improved since the date of certification of the district and to the captured net tax capacity of the district in each year thereafter when the abatement relates to improvements made after the date of certification. The county auditor may specify reasonable form and content of the request for certification of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
(f) If a parcel of property contained a substandard building that was demolished or removed and if the authority elects to treat the parcel as occupied by a substandard building under section 469.174, subdivision 10, paragraph (b), the auditor shall certify the original net tax capacity of the parcel using the greater of (1) the current net tax capacity of the parcel, or (2) the estimated market value of the parcel for the year in which the building was demolished or removed, but applying the class rates for the current year.
(g) For a redevelopment district qualifying under section 469.174, subdivision 10, paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of the land as the original tax capacity for any parcel in the district that contains a building that suffered substantial damage as a result of the disaster or emergency.
Subd. 1a. Original local tax rate. At the time of the initial certification of the original net tax capacity for a tax increment financing district or a subdistrict, the county auditor shall certify the original local tax rate that applies to the district or subdistrict. The original local tax rate is the sum of all the local tax rates that apply to a property in the district or subdistrict. The local tax rate to be certified is the rate in effect for the same taxes payable year applicable to the tax capacity values certified as the district's or subdistrict's original tax capacity. The resulting tax capacity rate is the original local tax rate for the life of the district or subdistrict.
Subd. 1b. State tax and increment computation. The original local tax rate and any other tax rate or amount used to calculate the amount of tax increment does not include any rate or amount attributable to a state levy, whether the state levy is imposed by section 275.02 or another provision of law.
Subd. 1c. Original net tax capacity adjustments; presidential disaster area. (a) The provisions of this subdivision apply to a district located in a disaster area, as described in section 273.123, subdivision 1, paragraph (b), clause (1), and are effective for taxes payable in the first calendar year beginning at least four months after the date of the determination.
(b) For a district certified before the date of the disaster area determination as provided in section 273.123, subdivision 1, paragraph (b), clause (1), upon the request of the municipality, the county auditor shall reduce the original net tax capacity of the district by the reduction in the net tax capacity of properties in the district that is attributable to the physical effects of the disaster, but not below zero. The assessor shall determine the amount of the reduction in market value that is attributable to the physical effects of the disaster to be used by the county auditor in computing the reduction in net tax capacity.
(c) For a district that does not qualify under paragraph (b) and for which the request for certification is made in the same calendar year as the disaster area determination, upon the request of the municipality, the assessor shall determine the reduction in market value of properties in the district that is attributable to the physical effects of the disaster. The county auditor shall use the reduced market value in certifying the original net tax capacity of the district.
Subd. 2. Captured net tax capacity. The county auditor shall certify the amount of the captured net tax capacity to the authority each year, together with the proportion that the captured net tax capacity bears to the total net tax capacity of the real property within the tax increment financing district and any subdistrict for that year.
(a) An authority may choose to retain any part or all of the captured net tax capacity for purposes of tax increment financing according to one of the following options:
(1) If the plan provides that all the captured net tax capacity is necessary to finance or otherwise make permissible expenditures under section 469.176, subdivision 4, the authority may retain the full captured net tax capacity.
(2) If the plan provides that only a portion of the captured net tax capacity is necessary to finance or otherwise make permissible expenditures under section 469.176, subdivision 4, only that portion shall be set aside and the remainder shall be distributed among the affected taxing districts by the county auditor.
(b) The portion of captured net tax capacity that an authority intends to use for purposes of tax increment financing must be clearly stated in the tax increment financing plan.
Subd. 3. Tax increment, relationship to chapters 276A and 473F. (a) Unless the governing body elects pursuant to paragraph (b) the following method of computation shall apply to a district other than an economic development district for which the request for certification was made after June 30, 1997:
(1) The original net tax capacity and the current net tax capacity shall be determined before the application of the fiscal disparity provisions of chapter 276A or 473F. Where the original net tax capacity is equal to or greater than the current net tax capacity, there is no captured net tax capacity and no tax increment determination. Where the original net tax capacity is less than the current net tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority.
(2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the lesser of (A) the local taxing district tax rates or (B) the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority.
(b) The following method of computation applies to any economic development district for which the request for certification was made after June 30, 1997, and to any other district for which the governing body, by resolution approving the tax increment financing plan pursuant to section 469.175, subdivision 3, elects:
(1) The original net tax capacity shall be determined before the application of the fiscal disparity provisions of chapter 276A or 473F. The current net tax capacity shall exclude any fiscal disparity commercial-industrial net tax capacity increase between the original year and the current year multiplied by the fiscal disparity ratio determined pursuant to section 276A.06, subdivision 7, or 473F.08, subdivision 6. Where the original net tax capacity is equal to or greater than the current net tax capacity, there is no captured net tax capacity and no tax increment determination. Where the original net tax capacity is less than the current net tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority.
(2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the lesser of (A) the local taxing district tax rates or (B) the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority.
(3) An election by the governing body pursuant to paragraph (b) shall be submitted to the county auditor by the authority at the time of the request for certification pursuant to subdivision 1.
(c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election from the method of computation in paragraph (a) to the method in paragraph (b).
Subd. 4. Prior planned improvements. The authority shall, after diligent search, accompany its request for certification to the county auditor pursuant to subdivision 1, or its notice of district enlargement pursuant to section 469.175, subdivision 4, with a listing of all properties within the tax increment financing district or area of enlargement for which building permits have been issued during the 18 months immediately preceding approval of the tax increment financing plan by the municipality pursuant to section 469.175, subdivision 3. The county auditor shall increase the original net tax capacity of the district by the net tax capacity of each improvement for which a building permit was issued.
Subd. 5. Tax increment account. The tax increment received with respect to any district shall be segregated by the authority in a special account or accounts on its official books and records or as otherwise established by resolution of the authority to be held by a trustee or trustees for the benefit of holders of the bonds.
Subd. 6. Request for certification of new tax increment financing district. A request for certification of a new tax increment financing district pursuant to subdivision 1 or of a modification to an existing tax increment financing district pursuant to section 469.175, subdivision 4, received by the county auditor on or before June 30 of the calendar year shall be recognized by the county auditor in determining local tax rates for the current and subsequent levy years. Requests received by the county auditor after June 30 of the calendar year shall not be recognized by the county auditor in determining local tax rates for the current levy year but shall be recognized by the county auditor in determining local tax rates for subsequent levy years.
Subd. 7. Property classification changes. When any law governing the classification of real property and determining the percentage of market value to be assessed for ad valorem taxation purposes is amended, the increase or decrease in net tax capacity resulting therefrom shall be applied proportionately to original net tax capacity and captured net tax capacity of any tax increment financing district in each year thereafter. This subdivision applies to tax increment districts created pursuant to sections 469.174 to 469.178 or any prior tax increment law.
Subd. 8. Assessment agreements. An authority may enter into a written assessment agreement with any person establishing a minimum market value of land, existing improvements, or improvements to be constructed in a district, if the property is owned or will be owned by the person. The minimum market value established by an assessment agreement may be fixed, or increase or decrease in later years from the initial minimum market value. If an agreement is fully executed before July 1 of an assessment year, the market value as provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. The assessor shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, shall execute the following certification upon the agreement:
The undersigned assessor, being legally responsible for the assessment of the above described property, certifies that the market values assigned to the land and improvements are reasonable.
The assessment agreement shall be filed for record and recorded in the office of the county recorder or the registrar of titles of each county where the real estate or any part thereof is situated. After the agreement becomes effective for assessment purposes, the assessor shall value the property under section 273.11, except that the market value assigned shall not be less than the minimum market value established by the assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. The owner of the property may seek, through the exercise of administrative and legal remedies, a reduction in market value for property tax purposes, but no city assessor, county assessor, county auditor, board of review, board of equalization, commissioner of revenue, or court of this state shall grant a reduction of the market value below the minimum market value established by the assessment agreement during the term of the agreement filed of record regardless of actual market values which may result from incomplete construction of improvements, destruction, or diminution by any cause, insured or uninsured, except in the case of acquisition or reacquisition of the property by a public entity. Recording an assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them.
An assessment agreement may be modified or terminated by mutual consent of the current parties to the agreement. Modification or termination of an assessment agreement must be approved by the governing body of the municipality. If the estimated market value for the property for the most recently available assessment is less than the minimum market value established by the assessment agreement for that or any later year and if bond counsel does not conclude that termination of the agreement is necessary to preserve the tax exempt status of outstanding bonds or refunding bonds to be issued, the modification or termination of the assessment agreement also must be approved by the governing bodies of the county and the school district. A document modifying or terminating an agreement, including records of the municipality, county, and school district approval, must be filed for record. The assessor's review and certification is not required if the document terminates an agreement. A change to an agreement not fully executed before July 1 of an assessment year is not effective for assessment purposes for that assessment year. If an assessment agreement has been modified or prematurely terminated, a person may seek a reduction in market value or tax through the exercise of any administrative or legal remedy. The remedy may not provide for reduction of the market value below the minimum provided under a modified assessment agreement that remains in effect. In no event may a reduction be sought for a year other than the current taxes payable year.
Subd. 9. Distributions of excess taxes on captured net tax capacity. (a) If the amount of tax paid on captured net tax capacity exceeds the amount of tax increment, the county auditor shall distribute the excess to the municipality, county, and school district as follows: each governmental unit's share of the excess equals
(1) the total amount of the excess for the tax increment financing district, multiplied by
(2) a fraction, the numerator of which is the current local tax rate of the governmental unit less the governmental unit's local tax rate for the year the original local tax rate for the district was certified (in no case may this amount be less than zero) and the denominator of which is the sum of the numerators for the municipality, county, and school district.
If the entire increase in the local tax rate is attributable to a taxing district, other than the municipality, county, or school district, then the excess must be distributed to the municipality, county, and school district in proportion to their respective local tax rates.
(b) The amounts distributed shall be deducted in computing the levy limits of the taxing district for the succeeding taxable year.
(c) In the case of distributions to a school district, the county auditor shall report amounts distributed to the commissioner of education in the same manner as provided for excess increments under section 469.176, subdivision 2, and the distribution shall be deducted from the school district's state aid payments and levy limitation according to section 127A.49, subdivision 3.
Subd. 10. Payment to school for referendum levy. (a) The provisions of this subdivision apply to tax increment financing districts and projects for which certification was requested before May 1, 1988, that are located in a school district in which the voters have approved new local tax rates or an increase in local tax rates after the tax increment financing district was certified.
(b)(1) If there are no outstanding bonds on May 1, 1988, to which increment from the district is pledged, or if the referendum is approved after May 1, 1988, and there are no bonds outstanding at the time the referendum is approved, that were issued before May 1, 1988, the authority must annually pay to the school district an amount of increment equal to the increment that is attributable to the increase in the local tax rate under the referendum.
(2) If clause (1) does not apply, upon approval by a majority vote of the governing body of the municipality and the school board, the authority must pay to the school district an amount of increment equal to the increment that is attributable to the increase in the local tax rate under the referendum.
(c) The amounts of these increments may be expended and must be treated by the school district in the same manner as provided for the revenues derived from the referendum levy approved by the voters. The provisions of this subdivision apply to projects for which certification was requested before, on, and after August 1, 1979.
Subd. 11. Deduction for enforcement costs; appropriation. (a) The county treasurer shall deduct an amount equal to 0.25 percent of any increment distributed to an authority or municipality. The county treasurer shall pay the amount deducted to the commissioner of finance for deposit in the state general fund.
(b) The amounts deducted and paid under paragraph (a) are appropriated to the state auditor for the cost of (1) the financial reporting of tax increment financing information and (2) the cost of examining and auditing of authorities' use of tax increment financing as provided under section 469.1771, subdivision 1. Notwithstanding section 16A.28 or any other law to the contrary, this appropriation does not cancel and remains available until spent.
(c) For taxes payable in 2002 and thereafter, the commissioner of revenue shall increase the percent in paragraph (a) to a percent equal to the product of the percent in paragraph (a) and the amount that the statewide tax increment levy for taxes payable in 2002 would have been without the class rate changes in this act and the elimination of the general education levy in this act divided by the statewide tax increment levy for taxes payable in 2002.
Subd. 12. Decertification of tax increment financing district. The county auditor shall decertify a tax increment financing district when the earliest of the following times is reached:
(1) the applicable maximum duration limit under section 469.176, subdivisions 1a to 1g;
(2) the maximum duration limit, if any, provided by the municipality pursuant to section 469.176, subdivision 1;
(3) the time of decertification specified in section 469.1761, subdivision 4, if the commissioner of revenue issues an order of noncompliance and the maximum duration limit for economic development districts has been exceeded;
(4) upon completion of the required actions to allow decertification under section 469.1763, subdivision 4; or
(5) upon the later of receipt by the county auditor of a written request for decertification from the authority that requested certification of the original net tax capacity of the district or its successor or the decertification date specified in the request.
469.178 Tax increment bonding.
Subdivision 1. Generally. Notwithstanding any other law, no bonds, payment for which tax increment is pledged, shall be issued in connection with any project for which tax increment financing has been undertaken except as authorized in this section. The proceeds from the bonds shall be used only in accordance with section 469.176, subdivisions 4 to 4l, as if the proceeds were tax increment, except that a tax increment financing plan need not be adopted for any project for which tax increment financing has been undertaken prior to August 1, 1979, pursuant to laws not requiring a tax increment financing plan. The bonds are not included for purposes of computing the net debt of any municipality.
Subd. 2. Municipality's general obligation bonds. A municipality may issue general obligation bonds to finance any expenditure by the municipality or an authority the jurisdiction of which is wholly or partially within that municipality, pursuant to section 469.176, subdivision 4, in the same manner and subject only to the same conditions as those provided in chapter 475 for bonds financing improvement costs reimbursable from special assessments. Any pledge of tax increment, assessments, or other revenues for the payment of the principal of and interest on general obligation bonds issued under this subdivision, except when the authority and the municipality are the same, shall be made by written agreement by and between the authority and the municipality and filed with the county auditor. When the authority and the municipality are the same, the municipality may by covenant pledge tax increment, assessments, or other revenues for the payment of the principal of and interest on general obligation bonds issued under this subdivision and shall file the resolution containing the covenant with the county auditor. When tax increment, assessments, and other revenues are pledged, the estimated collections of the tax increment, assessments, and other revenues so pledged may be deducted from the taxes otherwise required to be levied before the issuance of the bonds under section 475.61, subdivision 1, or the collections thereof may be certified annually to reduce or cancel the initial tax levies in accordance with section 475.61, subdivision 1 or 3.
Subd. 3. Authority's general obligation bonds. When the authority and the municipality are not the same, an authority may, by resolution, authorize, issue, and sell its general obligation bonds to finance any expenditure which that authority is authorized to make by section 469.176, subdivision 4. The bonds of the authority shall be authorized by its resolution and shall mature as determined by resolution of the authority in accordance with sections 469.174 to 469.178. The bonds may be issued in one or more series and shall bear the date or dates, bear interest at the rate or rates, be in the denomination or denominations, be in the form, either coupon or registered, carry the conversion or registration privileges, have the rank or priority, be executed in the manner, be payable in medium of payment at the place or places, and be subject to the terms of redemption, with or without premium, as the resolution, its trust indenture, or mortgage may provide. The bonds may be sold at public or private sale at the price or prices the authority by resolution shall determine. Notwithstanding any provision of law to the contrary, the bonds shall be fully negotiable. In any suit or proceedings involving the validity of enforceability of any bonds of the authority or the security therefor, any bond reciting in substance that it has been issued by the authority to aid in financing a project shall be conclusively deemed to have been issued for that purpose, and the tax increment financing district within the project shall be conclusively deemed to have been planned, located, and carried out in accordance with the purposes and provisions of sections 469.174 to 469.178. Neither the authority, nor any director, commissioner, council member, board member, officer, employee, or agent of the authority nor any person executing the bonds shall be liable personally on the bonds by reason of the issuance thereof. The bonds of the authority shall not be a debt of any municipality, the state, or any political subdivision thereof, and neither the municipality nor the state or any political subdivision thereof shall be liable thereon, nor shall the bonds be payable out of any funds or properties other than those of the authority and any tax increment and revenues of a tax increment financing district pledged therefor; the bonds shall state this on their face.
Subd. 4. Authority's revenue bonds. Notwithstanding any other law, an authority may, by resolution, authorize, issue, and sell revenue bonds payable solely from all or a portion of revenues, including tax increment revenues and assessments, derived from a tax increment financing district located wholly or partially within the municipality to finance any expenditure that the authority is authorized to make by section 469.176, subdivision 4. The bonds shall mature as determined by resolution of the authority in accordance with sections 469.174 to 469.178 and may be issued in one or more series. The bonds shall bear the date or dates, bear interest at the rate or rates, be in the denomination or denominations, be in the form, either coupon or registered, carry the conversion or registration privileges, have the rank or priority, be executed in the manner, be payable in medium of payment at the place or places, and be subject to the terms of redemption, with or without premium, as the resolution, its trust indenture, or mortgage may provide. The bonds may be sold at public or private sale at the price or prices the authority by resolution determines, and any provision of any law to the contrary notwithstanding, shall be fully negotiable. In any suit or proceedings involving the validity or enforceability of any bonds of the authority or the security therefor, any bond reciting in substance that it has been issued by the authority to aid in financing a project shall be conclusively deemed to have been issued for that purpose, and the tax increment financing district within the project shall be conclusively deemed to have been planned, located, and carried out in accordance with the purposes and provisions of sections 469.174 to 469.178. Neither the authority, nor any director, commissioner, council member, board member, officer, employee, or agent of the authority nor any person executing the bonds shall be liable personally on the bonds by reason of their issuance. The bonds may be further secured by a pledge and mortgage of all or any portion of the district in aid of which the bonds are issued and by covenants the authority deems by resolution to be necessary and proper to secure payment of the bonds. The bonds shall not be payable from nor charged upon any funds other than the revenues and property pledged or mortgaged to the payment thereof, nor shall the issuing authority be subject to any liability thereon or have the powers to obligate itself to pay or pay the bonds from funds other than the revenues and properties pledged and mortgaged, and no holder or holders of the bonds shall ever have the right to compel any exercise of any taxing power of the issuing authority or any other public body, other than as is permitted or required under sections 469.174 to 469.178 and pledged hereunder, to pay the principal of or interest on the bonds, nor to enforce payment thereof against any property of the authority or other public body other than that expressly pledged or mortgaged for the payment thereof; the bonds shall state this on their face.
Subd. 5. Temporary bonds. (a) In anticipation of the issuance of bonds pursuant to subdivision 2, 3, or 4, the authority or municipality may by resolution issue and sell temporary bonds pursuant to subdivision 2, 3, or 4, maturing within three years from their date of issue, to pay any part or all of the cost of a project. To the extent that the principal of and interest on the temporary bonds cannot be paid when due from receipts of tax increment, assessments, or other funds appropriated for the purpose, they shall be paid from the proceeds of long-term bonds or additional temporary bonds that the authority or municipality offers for sale in advance of the maturity date of the temporary bonds, but the indebtedness funded by an issue of temporary bonds shall not be extended by the issue of additional temporary bonds for more than six years from the date of the first issue. Long-term bonds may be issued pursuant to subdivision 2, 3, or 4 without regard to whether the temporary bonds were issued pursuant to subdivision 2, 3, or 4. If general obligation temporary bonds are issued pursuant to subdivision 2, proceeds of long-term bonds or additional temporary bonds not yet sold may be treated as pledged revenues, in reduction of the tax otherwise required by section 475.61 to be levied prior to delivery of the obligations. Subject to the six-year maturity limitation contained above, but without regard to the requirement of section 475.58, if any temporary bonds are not paid in full at maturity, in addition to any other remedy authorized or permitted by law, the holders may demand that the authority or municipality issue pursuant to subdivision 2, 3, or 4 as the temporary bonds and in exchange for the temporary bonds, at par, replacement temporary bonds dated as of the date of the replaced temporary bonds, maturing within one year from the date of the replacement temporary bonds and earning interest at the rate set forth in the resolution authorizing the issuance of the replaced temporary bonds, provided that the rate shall not exceed the maximum rate permitted by law at the date of issue of the replaced temporary bonds. The authority or municipality shall do so upon demand.
(b) Funds of a municipality may be invested in its temporary bonds in accordance with the provisions of section 118A.04, and may be purchased upon their initial issue, but shall be purchased only from funds which the governing body of the municipality determines will not be required for other purposes before the maturity date, and shall be resold before maturity only in case of emergency. If purchased from a debt service fund securing other bonds, the holders of those bonds may enforce the municipality's obligations on the temporary bonds in the same manner as if they held the temporary bonds.
Subd. 6. When bond allocation act applies. Sections 474A.01 to 474A.21 apply to any issuance of obligations under this section that are subject to limitation under a federal tax law as defined in section 474A.02, subdivision 8.
Subd. 7. Interfund loans. The authority or municipality may advance or loan money to finance expenditures under section 469.176, subdivision 4, from its general fund or any other fund under which it has legal authority to do so. The loan or advance must be authorized, by resolution of the governing body, before money is transferred, advanced, or spent, whichever is earliest. The resolution may generally grant to the authority the power to make interfund loans under one or more tax increment financing plans or for one or more districts. The terms and conditions for repayment of the loan must be provided in writing and include, at a minimum, the principal amount, the interest rate, and maximum term. The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under section 270C.40 or 549.09 as of the date or advance is made, unless the written agreement states that the maximum interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09 are from time to time adjusted.
469.1782 Special law provisions.
Subdivision 1. Repealed, 1Sp2001 c 5 art 15 s 41
Subd. 2. Local approval of special laws. (a) If a special law allows an extension of the duration limit of an existing tax increment financing district under section 469.176 or allows establishment of a new district with a longer duration limit than that permitted by general law, the "affected local government units," for purposes of section 645.021 and article XII, section 2, of the Minnesota Constitution, include the city or town, the school district, and the county in which the tax increment district is located. The town board may act to approve the special law.
(b) The chief clerical officer of the municipality must, as soon after the affected local units have approved the special law allowing an extension, file with the secretary of state a certificate stating the essential facts necessary to valid approval, including a copy of each of the resolutions of approval by the city or town, the school district, and the county. The attorney general shall prescribe the form of the certificate and the secretary of state shall furnish copies. If the municipality fails to file a certificate of approval before the first day of the next regular session of the legislature, the extension of the duration is deemed to be disapproved, unless the special law allows a longer period for approval. If the law contains other provisions besides an extension of the duration and the municipality otherwise complies with section 645.021, the rest of the law takes effect.
469.179 Existing projects; effective dates of amendments.
Subdivision 1. Exemption. The provisions of sections 469.174 to 469.178 shall not affect any project for which tax increment certification was requested pursuant to law prior to August 1, 1979, or any project carried on by an authority pursuant to section 469.033, subdivision 5, with respect to which the governing body has by resolution designated properties for inclusion in the district prior to August 1, 1979, except:
(1) as otherwise expressly provided in sections 469.174 to 469.178; or
(2) as an authority elects to proceed with an existing district, under the provisions of sections 469.174 to 469.178; or
(3) as provided in subdivision 2; or
(4) section 469.177, subdivision 3, clause (b), shall apply to all development districts created pursuant to Minnesota Statutes 1978, chapter 472A, or any special law, prior to August 1, 1979.
Subd. 2. Application to existing districts. If the development or redevelopment activity within the project or district of a tax increment financing project certified prior to August 1, 1979, is extended beyond the scope of activity set forth in the district's redevelopment plan under chapter 462 or 472A, if applicable, after May 1, 1988, the authority must with regard to the new activity conform to the provisions of sections 469.174 to 469.178 with the following exceptions.
(a) Section 469.175, subdivision 3, paragraphs (1) and (5), shall not apply. Furthermore, the provisions of section 473F.02, subdivision 3, shall continue to apply to the entire district, if applicable.
(b) Section 469.177, subdivision 3, shall not apply.
Subd. 3. Act amendments; effective date presumptions. (a) This subdivision establishes presumptions as to the effective dates of acts amending sections 469.174 to 469.178. These rules supplement the rules under section 645.02. The rules in paragraphs (b) and (c) apply unless the act specifies a different intent as to the time of its application.
(b) If the act is effective on a date either specified by the act itself or under section 645.02, the act is effective for districts for which requests for certification are made after the specified date.
(c) If the act is effective for districts for which requests for certification are made after a specified date either under paragraph (b) or the terms of the act, the following rules apply:
(1) in the case of a district where the first request for certification is made after the specified date, the act applies in full and to the entire area of the district; and
(2) in the case of a district where the first request for certification was made on or before the specified date, the act applies only to the area of the district added by tax increment financing plan amendments for which certification is requested after the specified date.
469.1811 Property tax exempt; agricultural processing facility.
Subdivision 1. Definitions. For purposes of this section:
(1) "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, but not including livestock or livestock products, poultry or poultry products, or wood or wood products. As used in this subdivision, land is limited to land on which the buildings, structures, fixtures, and improvements are situated and the immediately surrounding land used for storage or other functions directly related to the processing or production, not including land used for the growing of agricultural crops.
(2) "Qualifying property" means taxable property: (i) that consists of an agricultural processing facility; and (ii) for which the agricultural processing facility project costs exceed $100,000,000.
Subd. 2. City may exempt. The governing body of a home rule or statutory city may by resolution exempt qualifying property from property taxation. The exemption may include the entire market value of the qualifying property as determined by the assessor, including the land and any improvements existing at the time the exemption is granted, any increases in the value of the land and improvements during the duration of the exemption, and the value of any improvements constructed or attached during the exemption period. The property tax exemption granted by the city may not exceed a ten-year period beginning with taxes payable the year following the year the exemption is granted. At the expiration of the exemption period, the facility shall be assessed and pay property taxes as otherwise provided by law.
Subd. 3. Application; hearing. A person proposing to construct an agricultural processing facility may apply for a property tax exemption to the city clerk of the city where the facility is proposed to be located. The application must contain a plan that includes a legal description of the real estate on which the exemption is sought, a description of the proposed facility, a detailed estimate of acquisition and construction costs, a construction time schedule, and any other information required by the city.
Before approving a tax exemption pursuant to this section, the governing body of the city must hold a public hearing. The municipal clerk or auditor shall publish a notice in the official newspaper of the time and place of a hearing to be held by the governing body on the application, not less than 30 days after the notice is published. The notice shall state that the applicant, local government officials, and any taxpayer of the municipality may be heard or may present their views in writing at or before the hearing. The hearing may be adjourned from time to time, but the governing body shall take action on the application by resolution within 30 days after the hearing ends. If disapproved, the reasons shall be set forth in the resolution. If the application for a tax exemption is approved, the city clerk shall forward a copy of the resolution approving the tax exemption to the county assessor who shall exempt the property from taxation under the terms of and for the period contained in the resolution.
Subd. 4. Conditions; revocation. (a) The governing body of the city may set conditions to its approval or continuation of a tax exemption under this section. The conditions may include construction specifications; time limits for construction; traffic, parking, safety, or environmental requirements; requirements as to the type and number of jobs to be created; valuation or assessment requirements after the exemption expires; or any other conditions reasonably required by the city to safeguard the public welfare.
(b) If the city proposes to revoke its approval of a tax exemption granted under this section, it must notify the owner of the property and give the person an opportunity to be heard. The city must give the person 30 days' notice before holding the hearing. A revocation by the city must be made by resolution and must state the findings on which the revocation is based.
469.1812 Definitions.
Subdivision 1. Scope. For purposes of sections 469.1812 to 469.1815, the following terms have the meanings given.
Subd. 2. Governing body. "Governing body" means, for a city, the city council; for a school district, the school board; for a county, the county board; and for a town, the board of supervisors.
Subd. 3. Municipality. "Municipality" means a statutory or home rule charter city or a town.
Subd. 4. Political subdivision or subdivision. "Political subdivision" or "subdivision" means a statutory or home rule charter city, town, school district, or county.
469.1813 Abatement authority.
Subdivision 1. Authority. The governing body of a political subdivision may grant an abatement of the taxes imposed by the political subdivision on a parcel of property, or defer the payments of the taxes and abate the interest and penalty that otherwise would apply, if:
(a) 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 (b)(7); and
(b) it finds that doing so is in the public interest because it will:
(1) increase or preserve tax base;
(2) provide employment opportunities in the political subdivision;
(3) provide or help acquire or construct public facilities;
(4) help redevelop or renew blighted areas;
(5) help provide access to services for residents of the political subdivision;
(6) finance or provide public infrastructure; or
(7) 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.
Subd. 1a. Use of term. As used in this section and sections 469.1814 and 469.1815, "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 127A.40 to 127A.51.
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 469.1812 to 469.1815 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 469.1812 to 469.1815 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 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.
(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:
(1) manufacturing;
(2) agricultural processing;
(3) mining;
(4) research and development;
(5) warehousing; or
(6) qualified high technology.
(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 combinations.
(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.
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 an uncollected abatement from a prior year that is added to the abatement levy.
Subd. 9. Consent of property owner not required. A political subdivision may abate the taxes on a parcel under sections 469.1812 to 469.1815 without obtaining the consent of the property owner.
469.1815 Administrative.
Subdivision 1. Inclusion in proposed and final levies. The political subdivision must add to its levy amount for the current year under sections 275.065 and 275.07 the total estimated amount of all current year abatements granted. If all or a portion of an abatement levy for a prior year was uncollected, the political subdivision may add the uncollected amount to its abatement levy for the current year. The tax amounts shown on the proposed notice under section 275.065, subdivision 3, and on the property tax statement under section 276.04, subdivision 2, are the total amounts before the reduction of any abatements that will be granted on the property.
Subd. 2. Property taxes; abatement payment. The total property taxes shall be levied on the property and shall be due and payable to the county at the times provided under section 279.01. The political subdivision will pay the abatement to the property owner, lessee, or a representative of the bondholders or will retain the abatement to pay public infrastructure costs, as provided by the abatement resolution.
469.186 Bureau of information and publicity; statutory cities.
The council of any statutory city may establish and maintain a bureau of information and publicity for the purpose of furnishing tourists information and for outdoor advertising and for preparing, publishing, and circulating information and facts concerning the recreational facilities and business and industrial conditions of the community.
469.189 Spend to advertise city; statutory, 2, 3, 4th class city.
The governing body of any statutory city or home rule charter city of the second, third, or fourth class may annually appropriate money to advertise the municipality and its resources and advantages. The money appropriated shall be used only to advertise the municipality or for cooperative programs of promotion for the area by more than one municipality and its resources and advantages.
469.190 Local lodging tax.
Subdivision 1. Authorization. Notwithstanding section 477A.016 or any other law, a statutory or home rule charter city may by ordinance, and a town may by the affirmative vote of the electors at the annual town meeting, or at a special town meeting, impose a tax of up to three percent on the gross receipts from the furnishing for consideration of lodging at a hotel, motel, rooming house, tourist court, or resort, other than the renting or leasing of it for a continuous period of 30 days or more. A statutory or home rule charter city may by ordinance impose the tax authorized under this subdivision on the camping site receipts of a municipal campground.
Subd. 2. Existing taxes. No statutory or home rule charter city or town may impose a tax under this section upon transient lodging that, when combined with any tax authorized by special law or enacted prior to 1972, exceeds a rate of three percent.
Subd. 3. Disposition of proceeds. Ninety-five percent of the gross proceeds from any tax imposed under subdivision 1 shall be used by the statutory or home rule charter city or town to fund a local convention or tourism bureau for the purpose of marketing and promoting the city or town as a tourist or convention center. This subdivision shall not apply to any statutory or home rule charter city or town that has a lodging tax authorized by special law or enacted prior to 1972 at the time of enactment of this section.
Subd. 4. Unorganized territories. A county board acting as a town board with respect to an unorganized territory may impose a lodging tax within the unorganized territory according to this section if it determines by resolution that imposition of the tax is in the public interest.
Subd. 5. Reverse referendum. If the county board passes a resolution under subdivision 4 to impose the tax, the resolution must be published for two successive weeks in a newspaper of general circulation within the unorganized territory, together with a notice fixing a date for a public hearing on the proposed tax.
The hearing must be held not less than two weeks nor more than four weeks after the first publication of the notice. After the public hearing, the county board may determine to take no further action, or may adopt a resolution authorizing the tax as originally proposed or approving a lesser rate of tax. The resolution must be published in a newspaper of general circulation within the unorganized territory. The voters of the unorganized territory may request a referendum on the proposed tax by filing a petition with the county auditor within 30 days after the resolution is published. The petition must be signed by voters who reside in the unorganized territory. The number of signatures must equal at least five percent of the number of persons voting in the unorganized territory in the last general election. If such a petition is timely filed, the resolution is not effective until it has been submitted to the voters residing in the unorganized territory at a general or special election and a majority of votes cast on the question of approving the resolution are in the affirmative. The commissioner of revenue shall prepare a suggested form of question to be presented at the referendum.
Subd. 6. Joint powers agreements. Any statutory or home rule charter city, town, or county when the county board is acting as a town board with respect to an unorganized territory, may enter into a joint exercise of powers agreement pursuant to section 471.59 for the purpose of imposing the tax and disposing of its proceeds pursuant to this section.
Subd. 7. Collection. The statutory or home rule charter city may agree with the commissioner of revenue that a tax imposed pursuant to this section shall be collected by the commissioner together with the tax imposed by chapter 297A, and subject to the same interest, penalties, and other rules and that its proceeds, less the cost of collection, shall be remitted to the city.
469.201 Definitions.
Subdivision 1. Applicability. The definitions in this section apply to sections 469.201 to 469.207.
Subd. 2. City. "City" means a city of the first class as defined in section 410.01 and a city of the second class that is designated as an economically depressed area by the United States Department of Commerce. For each city, a port authority, housing and redevelopment authority, or other agency or instrumentality, the jurisdiction of which is the territory of the city, is included within the meaning of city.
Subd. 3. City council. "City council" means the city council of a city as defined in subdivision 2.
Subd. 4. City matching money. (a) "City matching money" means the money of a city specified in a revitalization program. The sources of city matching money may include:
(1) money from the general fund or a special fund of a city used to implement a revitalization program;
(2) money paid or repaid to a city from the proceeds of a grant that a city has received from the federal government, a profit or nonprofit corporation, or another entity or individual, that is to be used to implement a revitalization program;
(3) tax increments received by a city under sections 469.174 to 469.179 or other law, if eligible, to be spent in the targeted neighborhood;
(4) the greater of the fair market value or the cost to the city of acquiring land, buildings, equipment, or other real or personal property that a city contributes, grants, leases, or loans to a profit or nonprofit corporation or other entity or individual, in connection with the implementation of a revitalization program;
(5) city money to be used to acquire, install, reinstall, repair, or improve the infrastructure facilities of a targeted neighborhood;
(6) money contributed by a city to pay issuance costs, fund bond reserves, or to otherwise provide financial support for revenue bonds or obligations issued by a city for a project or program related to the implementation of a revitalization program;
(7) money derived from fees received by a city in connection with its community development activities that are to be used in implementing a revitalization program;
(8) money derived from the apportionment to the city under section 162.14 or by special law, and expended in a targeted neighborhood for an activity related to the revitalization program;
(9) administrative expenses of the city that are incurred in connection with the planning, implementation, or reporting requirements of sections 469.201 to 469.207.
(b) City matching money does not include:
(1) city money used to provide a service or to exercise a function that is ordinarily provided throughout the city, unless an increased level of the service or function is to be provided in a targeted neighborhood in accordance with a revitalization program;
(2) the proceeds of bonds issued by the city under chapter 462C or 469 and payable solely from repayments made by one or more nongovernmental persons in consideration for the financing provided by the bonds; or
(3) money given by the state to fund any part of the revitalization program.
Subd. 5. Commissioner. "Commissioner" means the commissioner of employment and economic development.
Subd. 6. Housing activities. "Housing activities" include any work or undertaking to provide housing and related services and amenities primarily for persons and families of low or moderate income. This work or undertaking may include the planning of buildings and improvements; the acquisition of real property which may be needed immediately or in the future for housing purposes and the demolition of any existing improvements; and the construction, reconstruction, alteration, and repair of new and existing buildings. Housing activities also include the provision of a housing rehabilitation and energy improvement loan and grant program with respect to any residential property located within the targeted neighborhood, the cost of relocation relating to acquiring property for housing activities, and programs authorized by chapter 462C.
Subd. 7. Lost unit. "Lost unit" means a rental housing unit that is lost as a result of revitalization activities because it is demolished, converted to an owner-occupied unit that is not a cooperative, or converted to a nonresidential use, or because the gross rent to be charged exceeds 125 percent of the gross rent charged for the unit six months before the start of rehabilitation.
Subd. 8. Persons and families of low income. "Persons and families of low income" means persons and families of low income as defined in section 469.002, subdivision 17.
Subd. 9. Persons and families of moderate income. "Persons and families of moderate income" means persons and families of moderate income as defined in section 469.002, subdivision 18.
Subd. 10. Targeted neighborhood. "Targeted neighborhood" means an area including one or more census tracts, as determined and measured by the Bureau of Census of the United States Department of Commerce, that a city council determines in a resolution adopted under section 469.202, subdivision 1, meets the criteria of section 469.202, subdivision 2, and any additional area designated under section 469.202, subdivision 3.
Subd. 11. Targeted neighborhood money. "Targeted neighborhood money" means the money designated in the revitalization program to be used to implement the revitalization program.
Subd. 12. Targeted neighborhood revitalization and financing program. "Targeted neighborhood revitalization and financing program," "revitalization program," or "program" means the targeted neighborhood revitalization and financing program adopted in accordance with section 469.203.
469.202 Designation of targeted neighborhoods.
Subdivision 1. City authority. A city may by resolution designate targeted neighborhoods within its borders after adopting detailed findings that the designated neighborhoods meet the eligibility requirements in subdivision 2 or 3.
Subd. 2. Eligibility requirements for targeted neighborhoods. An area within a city is eligible for designation as a targeted neighborhood if the area meets two of the following three criteria:
(a) The area had an unemployment rate that was twice the unemployment rate for the Minneapolis and Saint Paul standard metropolitan statistical area as determined by the most recent federal decennial census.
(b) The median household income in the area was no more than half the median household income for the Minneapolis and Saint Paul standard metropolitan statistical area as determined by the most recent federal decennial census.
(c) The area is characterized by residential dwelling units in need of substantial rehabilitation. An area qualifies under this paragraph if 25 percent or more of the residential dwelling units are in substandard condition as determined by the city, or if 70 percent or more of the residential dwelling units in the area were built before 1940 as determined by the most recent federal decennial census.
Subd. 3. Additional area eligible for inclusion in targeted neighborhood. (a) A city may add to the area designated as a targeted neighborhood under subdivision 2 additional area extending up to four contiguous city blocks in all directions from the designated targeted neighborhood. For the purpose of this subdivision, "city block" has the meaning determined by the city; or
(b) The city may enlarge the targeted neighborhood to include portions of a census tract that is contiguous to a targeted neighborhood, provided that the city council first determines the additional area satisfies two of the three criteria in subdivision 2.
469.310 Definitions.
Subdivision 1. Scope. For purposes of sections 469.310 to 469.320, the following terms have the meanings given.
Subd. 2. Agricultural processing facility. "Agricultural processing facility" means one or more facilities or operations that transform, package, sort, or grade 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, and surrounding property.
Subd. 3. Applicant. "Applicant" means a local government unit or units applying for designation of an area as a job opportunity building zone or a joint powers board, established under section 471.59, acting on behalf of two or more local government units.
Subd. 4. Commissioner. "Commissioner" means the commissioner of employment and economic development.
Subd. 5. Development plan. "Development plan" means a plan meeting the requirements of section 469.311.
Subd. 6. Job opportunity building zone or zone. "Job opportunity building zone" or "zone" means a zone designated by the commissioner under section 469.314, and includes an agricultural processing facility zone.
Subd. 7. Job opportunity building zone percentage or zone percentage. "Job opportunity building zone percentage" or "zone percentage" means the following fraction reduced to a percentage:
(1) the numerator of the fraction is:
(i) the ratio of the taxpayer's property factor under section 290.191 located in the zone for the taxable year over the property factor numerator determined under section 290.191, plus
(ii) the ratio of the taxpayer's job opportunity building zone payroll factor under subdivision 8 over the payroll factor numerator determined under section 290.191; and
(2) the denominator of the fraction is two.
When calculating the zone percentage for a business that is part of a unitary business as defined under section 290.17, subdivision 4, the denominator of the payroll and property factors is the Minnesota payroll and property of the unitary business as reported on the combined report under section 290.17, subdivision 4, paragraph (j).
Subd. 8. Job opportunity building zone payroll factor. "Job opportunity building zone payroll factor" or "job opportunity building zone payroll" is that portion of the payroll factor under section 290.191 that represents:
(1) wages or salaries paid to an individual for services performed in a job opportunity building zone; or
(2) wages or salaries paid to individuals working from offices within a job opportunity building zone if their employment requires them to work outside the zone and the work is incidental to the work performed by the individual within the zone.
Subd. 9. Local government unit. "Local government unit" means a statutory or home rule charter city, county, town, Iron Range Resources and Rehabilitation Agency, Regional Development Commission, or a federally designated economic development district.
Subd. 10. Person. "Person" includes an individual, corporation, partnership, limited liability company, association, or any other entity.
Subd. 11. Qualified business. (a) A person carrying on a trade or business at a place of business located within a job opportunity building zone is a qualified business for the purposes of sections 469.310 to 469.320 according to the criteria in paragraphs (b) to (f).
(b) A person is a qualified business only on those parcels of land for which the person has entered into a business subsidy agreement, as required under section 469.313, with the appropriate local government unit in which the parcels are located.
(c) Prior to execution of the business subsidy agreement, the local government unit must consider the following factors:
(1) how wages compare to the regional industry average;
(2) the number of jobs that will be provided relative to overall employment in the community;
(3) the economic outlook for the industry the business will engage in;
(4) sales that will be generated from outside the state of Minnesota;
(5) how the business will build on existing regional strengths or diversify the regional economy;
(6) how the business will increase capital investment in the zone; and
(7) any other criteria the commissioner deems necessary.
(d) A person that relocates a trade or business from outside a job opportunity building zone into a zone is not a qualified business unless the business meets all of the requirements of paragraphs (b) and (c) and:
(1) increases full-time employment in the first full year of operation within the job opportunity building zone by a minimum of five jobs or 20 percent, whichever is greater, measured relative to the operations that were relocated and maintains the required level of employment for each year the zone designation applies; and
(2) enters a binding written agreement with the commissioner that:
(i) pledges the business will meet the requirements of clause (1);
(ii) provides for repayment of all tax benefits enumerated under section 469.315 to the business under the procedures in section 469.319, if the requirements of clause (1) are not met for the taxable year or for taxes payable during the year in which the requirements were not met; and
(iii) contains any other terms the commissioner determines appropriate.
(e) The commissioner may waive the requirements under paragraph (d), clause (1), if the commissioner determines that the qualified business will substantially achieve the factors under this subdivision.
(f) A business is not a qualified business if, at its location or locations in the zone, the business is primarily engaged in making retail sales to purchasers who are physically present at the business's zone location.
(g) A qualifying business must pay each employee compensation, including benefits not mandated by law, that on an annualized basis is equal to at least 110 percent of the federal poverty level for a family of four.
(h) A public utility, as defined in section 300.111, is not a qualified business.
Subd. 12. Relocates. (a) "Relocates" means that the trade or business:
(1) ceases one or more operations or functions at another location in Minnesota and begins performing substantially the same operations or functions at a location in a job opportunity building zone; or
(2) reduces employment at another location in Minnesota during a period starting one year before and ending one year after it begins operations in a job opportunity building zone and its employees in the job opportunity building zone are engaged in the same line of business as the employees at the location where it reduced employment.
(b) "Relocate" does not include an expansion by a business that establishes a new facility that does not replace or supplant an existing operation or employment, in whole or in part.
(c) "Trade or business" includes any business entity that is substantially similar in operation or ownership to the business entity seeking to be a qualified business under this section.
Subd. 13. Relocation payroll percentage. "Relocation payroll percentage" is a fraction, the numerator of which is the zone payroll of the business for the tax year minus the payroll from the relocated operations in the last full year of operations prior to the relocation, and the denominator of which is the zone payroll of the business for the tax year. The relocation payroll percentage of a business that is not a relocating business is 100 percent.
469.314 Designation of job opportunity building zones.
Subdivision 1. Commissioner to designate. (a) The commissioner, in consultation with the commissioner of revenue, shall designate not more than ten job opportunity building zones. In making the designations, the commissioner shall consider need and likelihood of success to yield the most economic development and revitalization of economically distressed rural areas of Minnesota.
(b) In addition to the designations under paragraph (a), the commissioner may, in consultation with the commissioners of agriculture and revenue, designate up to five agricultural processing facility zones.
(c) The commissioner may, upon designation of a zone, modify the development plan, including the boundaries of the zone or subzones, if in the commissioner's opinion a modified plan would better meet the objectives of the job opportunity building zone program. The commissioner shall notify the applicant of the modification and provide a statement of the reasons for the modifications.
Subd. 2. Need indicators. (a) In evaluating applications to determine the need for designation of a job opportunity building zone, the commissioner shall consider the following factors as indicators of need:
(1) the percentage of the population that is below 200 percent of the poverty rate, compared with the state as a whole;
(2) the extent to which the area's average weekly wage is significantly lower than the state average weekly wage;
(3) the amount of property in or near the proposed zone that is deteriorated or underutilized;
(4) the extent to which the median sale price of housing units in the area is below the state median;
(5) the extent to which the median household income of the area is lower than the state median household income;
(6) the extent to which the area experienced a population loss during the 20-year period ending the year before the application is made;
(7) the extent to which an area has experienced sudden or severe job loss as a result of closing of businesses or other employers;
(8) the extent to which property in the area would remain underdeveloped or nonperforming due to physical characteristics;
(9) the extent to which the area has substantial real property with adequate infrastructure and energy to support new or expanded development; and
(10) the extent to which the business startup or expansion rates are significantly lower than the respective rate for the state.
(b) In applying the need indicators, the best available data should be used. If reported data are not available for the proposed zone, data for the smallest area that is available and includes the area of the proposed zone may be used. The commissioner may require applicants to provide data to demonstrate how the area meets one or more of the indicators of need.
Subd. 3. Success indicators. In determining the likelihood of success of a proposed zone, the commissioner shall consider:
(1) the strength and viability of the proposed development goals, objectives, and strategies in the development plan;
(2) whether the development plan is creative and innovative in comparison to other applications;
(3) local public and private commitment to development of the proposed zone and the potential cooperation of surrounding communities;
(4) existing resources available to the proposed zone;
(5) how the designation of the zone would relate to other economic and community development projects and to regional initiatives or programs;
(6) how the regulatory burden will be eased for businesses operating in the proposed zone;
(7) proposals to establish and link job creation and job training; and
(8) the extent to which the development is directed at encouraging and that designation of the zone is likely to result in the creation of high-paying jobs.
Subd. 4. Designation schedule. (a) The schedule in paragraphs (b) to (f) applies to the designation of job opportunity building zones.
(b) The commissioner shall publish the form for applications and any procedural, form, or content requirements for applications by no later than August 1, 2003. The commissioner may publish these requirements on the Internet, in the State Register, or by any other means the commissioner determines appropriate to disseminate the information to potential applicants for designation.
(c) Applications must be submitted by October 15, 2003.
(d) The commissioner shall designate the zones by no later than December 31, 2003.
(e) The designation of the zones takes effect January 1, 2004.
(f) The commissioner may reserve one or more of the ten authorized zones for a second round of designations in calendar year 2004. If the commissioner chooses to reserve designations for this purpose, the commissioner shall establish the schedule for the second round of designations, notwithstanding the dates in paragraphs (c), (d), and (e). The commissioner shall allow a period of at least 90 days for submission of applications after notification of the second round. A zone designated in the second round takes effect on January 1, 2005.
Subd. 5. Geographic distribution. The commissioner shall have as a goal the geographic distribution of zones around the state.
Subd. 6. Rulemaking exemption. The commissioner's actions in establishing procedures, requirements, and making determinations to administer sections 469.310 to 469.320 are not a rule for purposes of chapter 14 and are not subject to the Administrative Procedure Act contained in chapter 14 and are not subject to section 14.386.
469.316 Individual income tax exemption.
Subdivision 1. Application. An individual, estate, or trust operating a trade or business in a job opportunity building zone, and an individual, estate, or trust making a qualifying investment in a qualified business operating in a job opportunity building zone qualifies for the exemptions from taxes imposed under chapter 290, as provided in this section. The exemptions provided under this section apply only to the extent that the income otherwise would be taxable under chapter 290. Subtractions under this section from federal taxable income, alternative minimum taxable income, or any other base subject to tax are limited to the amount that otherwise would be included in the tax base absent the exemption under this section. This section applies only to taxable years beginning during the duration of the job opportunity building zone.
Subd. 2. Rents. An individual, estate, or trust is exempt from the taxes imposed under chapter 290 on net rents derived from real or tangible personal property used by a qualified business and located in a zone for a taxable year in which the zone was designated a job opportunity building zone. If tangible personal property was used both within and outside of the zone by the qualified business, the exemption amount for the net rental income must be multiplied by a fraction, the numerator of which is the number of days the property was used in the zone and the denominator of which is the total days the property is rented by the qualified business.
Subd. 3. Business income. An individual, estate, or trust is exempt from the taxes imposed under chapter 290 on net income from the operation of a qualified business in a job opportunity building zone. If the trade or business is carried on within and without the zone and the individual is not a resident of Minnesota, or the taxpayer is an estate or trust, the exemption must be apportioned based on the zone percentage and the relocation payroll percentage for the taxable year. If the trade or business is carried on within and without the zone and the individual is a resident of Minnesota, the exemption must be apportioned based on the zone percentage and the relocation payroll percentage for the taxable year, except the ratios under section 469.310, subdivision 7, clause (1), items (i) and (ii), must use the denominators of the property and payroll factors determined under section 290.191. No subtraction is allowed under this section in excess of 20 percent of the sum of the job opportunity building zone payroll and the adjusted basis of the property at the time that the property is first used in the job opportunity building zone by the business.
Subd. 4. Capital gains. (a) An individual, estate, or trust is exempt from the taxes imposed under chapter 290 on:
(1) net gain derived on a sale or exchange of real property located in the zone and used by a qualified business. If the property was held by the individual, estate, or trust during a period when the zone was not designated, the gain must be prorated based on the percentage of time, measured in calendar days, that the real property was held by the individual, estate, or trust during the period the zone designation was in effect to the total period of time the real property was held by the individual;
(2) net gain derived on a sale or exchange of tangible personal property used by a qualified business in the zone. If the property was held by the individual, estate, or trust during a period when the zone was not designated, the gain must be prorated based on the percentage of time, measured in calendar days, that the property was held by the individual, estate, or trust during the period the zone designation was in effect to the total period of time the property was held by the individual. If the tangible personal property was used outside of the zone during the period of the zone's designation, the exemption must be multiplied by a fraction, the numerator of which is the number of days the property was used in the zone during the time of the designation and the denominator of which is the total days the property was held during the time of the designation; and
(3) net gain derived on a sale of an ownership interest in a qualified business operating in the job opportunity building zone, meeting the requirements of paragraph (b). The exemption on the gain must be multiplied by the zone percentage of the business for the taxable year prior to the sale.
(b) A qualified business meets the requirements of paragraph (a), clause (3), if it is a corporation, an S corporation, or a partnership, and for the taxable year its job opportunity building zone percentage exceeds 25 percent. For purposes of paragraph (a), clause (3), the zone percentage must be calculated by modifying the ratios under section 469.310, subdivision 7, clause (1), items (i) and (ii), to use the denominators of the property and payroll factors determined under section 290.191. Upon the request of an individual, estate, or trust holding an ownership interest in the entity, the entity must certify to the owner, in writing, the job opportunity building zone percentage needed to determine the exemption.
469.317 Corporate franchise tax exemption.
(a) A qualified business is exempt from taxation under section 290.02, the alternative minimum tax under section 290.0921, and the minimum fee under section 290.0922, on the portion of its income attributable to operations within the zone. This exemption is determined as follows:
(1) for purposes of the tax imposed under section 290.02, by multiplying its taxable net income by its zone percentage and by its relocation payroll percentage and subtracting the result in determining taxable income;
(2) for purposes of the alternative minimum tax under section 290.0921, by multiplying its alternative minimum taxable income by its zone percentage and by its relocation payroll percentage and reducing alternative minimum taxable income by this amount; and
(3) for purposes of the minimum fee under section 290.0922, by excluding property and payroll in the zone from the computations of the fee or by exempting the entity under section 290.0922, subdivision 2, clause (7).
(b) No subtraction is allowed under this section in excess of 20 percent of the sum of the corporation's job opportunity building zone payroll and the adjusted basis of the property at the time that the property is first used in the job opportunity building zone by the corporation.
(c) This section applies only to taxable years beginning during the duration of the job opportunity building zone.
469.318 Jobs credit.
Subdivision 1. Credit allowed. A qualified business is allowed a credit against the taxes imposed under chapter 290.The credit equals seven percent of the:
(1) lesser of:
(i) zone payroll for the taxable year, less the zone payroll for the base year; or
(ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for the base year; minus
(2) $30,000 multiplied by (the number of full-time equivalent employees that the qualified business employs in the job opportunity building zone for the taxable year, minus the number of full-time equivalent employees the business employed in the zone in the base year, but not less than zero).
Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meanings given.
(b) "Base year" means the taxable year beginning during the calendar year prior to the calendar year in which the zone designation took effect.
(c) "Full-time equivalent employees" means the equivalent of annualized expected hours of work equal to 2,080 hours.
(d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under section 290.191, subdivision 12, for the qualified business or the unitary business of which the qualified business is a part, whichever is greater.
(e) "Zone payroll" means wages or salaries used to determine the zone payroll factor for the qualified business, less the amount of compensation attributable to any employee that exceeds $100,000.
Subd. 3. Inflation adjustment. For taxable years beginning after December 31, 2004, the dollar amounts in subdivision 1, clause (2), and subdivision 2, paragraph (e), are annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by the percentage determined under section 290.06, subdivision 2d, for the taxable year.
Subd. 4. Refundable. If the amount of the credit exceeds the liability for tax under chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
Subd. 5. Appropriation. An amount sufficient to pay the refunds authorized by this section is appropriated to the commissioner of revenue from the general fund.
469.321 Definitions.
Subdivision 1. Scope. For purposes of sections 469.321 to 469.328, the following terms have the meanings given.
Subd. 2. Foreign trade zone. "Foreign trade zone" means a foreign trade zone designated pursuant to United States Code, title 19, section 81a, for the right to use the powers provided in United States Code, title 19, sections 81a to 81u, or a subzone authorized by the foreign trade zone.
Subd. 3. Foreign trade zone authority. "Foreign trade zone authority" means the Greater Metropolitan Foreign Trade Zone Commission number 119, a joint powers authority created by the county of Hennepin, the cities of Minneapolis and Bloomington, and the Metropolitan Airports Commission, under the authority of section 469.059, 469.101, or 471.59, and includes any other political subdivisions that enter into the authority after its creation, as well as the county in which the zone is located. Notwithstanding section 471.59, the members of the authority are not required to have separate authority to establish or operate a foreign trade zone.
Subd. 4. International economic development zone or zone. An "international economic development zone" or "zone" is a zone so designated under section 469.322.
Subd. 5. Person. "Person" includes an individual, corporation, partnership, limited liability company, association, or any other entity.
Subd. 6. Qualified business. "Qualified business" means a person who has signed a business subsidy agreement as required under sections 116J.993 to 116J.995 and 469.323, subdivision 4, carrying on a trade or business at a place of business located within the international economic development zone that is:
(1)(i) engaged in the furtherance of international export or import of goods as a freight forwarder; and (ii) certified by the foreign trade zone authority as a trade or business that furthers the purpose of developing international distribution capacity and capability; or
(2) the owner or operator of a regional distribution center.
Subd. 7. Regional distribution center. A "regional distribution center" is a distribution center developed within a foreign trade zone. The regional distribution center must have as its primary purpose, the facilitation of the gathering of freight for the purpose of centralizing the functions necessary for the shipment of freight in international commerce, including, but not limited to, security and customs functions.
Subd. 8. International economic development zone percentage or zone percentage. "International economic development zone percentage" or "zone percentage" means the following fraction reduced to a percentage:
(1) the numerator of the fraction is:
(i) the ratio of the taxpayer's property factor under section 290.191 located in the zone for the taxable year which is land, buildings, machinery and equipment, inventories, and other tangible personal property that is a regional distribution center or is used in the furtherance of the taxpayer's freight forwarding operations over the property factor numerator determined under section 290.191, plus
(ii) the ratio of the taxpayer's international economic development zone payroll factor under subdivision 9 over the payroll factor numerator determined under section 290.191; and
(2) the denominator of the fraction is two.
When calculating the zone percentage for a business that is part of a unitary business as defined under section 290.17, subdivision 4, the denominator of the payroll and property factors is the Minnesota payroll and property of the unitary business as reported on the combined report under section 290.17, subdivision 4, paragraph (j).
Subd. 9. International economic development zone payroll factor or international economic development zone payroll. "International economic development zone payroll factor" or "international economic development zone payroll" is that portion of the payroll factor under section 290.191 used to operate a regional distribution center, or used in the furtherance of the taxpayer's freight forwarding operations that represents:
(1) wages or salaries paid to an individual for services performed in the international economic development zone; or
(2) wages or salaries paid to individuals working from offices within the international economic development zone, if their employment requires them to work outside the zone and the work is incidental to the work performed by the individual within the zone. However, in no case does zone payroll include wages paid for work performed outside the zone of an employee who performs more than ten percent of total services for the employer outside the zone.
Subd. 10. Freight forwarder. "Freight forwarder" is a business that, for compensation, ensures that goods produced or sold by another business move from point of origin to point of destination.
469.322 Designation of international economic development zone.
(a) An area designated as a foreign trade zone may be designated by the foreign trade zone authority as an international economic development zone if within the zone a regional distribution center is being developed pursuant to section 469.323. The zone must consist of contiguous area of not less than 500 acres and not more than 1,000 acres. The designation authority under this section is limited to one zone.
(b) In making the designation, the foreign trade zone authority, in consultation with the Minnesota Department of Transportation and the Metropolitan Council, shall consider access to major transportation routes, consistency with current state transportation and air cargo planning, adequacy of the size of the site, access to airport facilities, present and future capacity at the designated airport, the capability to meet integrated present and future air cargo, security, and inspection services, and access to other infrastructure and financial incentives. The border of the international economic development zone must be no more than 60 miles distant or 90 minutes drive time from the border of the Minneapolis-St. Paul International Airport.
(c) Final zone designation must be made by June 30, 2006.
(d) Duration of the zone is a 12-year period beginning on January 1, 2007.
469.325 Individual income tax exemption.
Subdivision 1. Application. An individual, estate, or trust operating a trade or business in the international economic development zone, and an individual making a qualifying investment in a qualified business operating in the international economic development zone, qualifies for the exemptions from taxes imposed under chapter 290, as provided in this section. The exemptions provided under this section apply only to the extent that the income otherwise would be taxable under chapter 290. Subtractions under this section from federal taxable income, alternative minimum taxable income, or any other base subject to tax are limited to the amount that otherwise would be included in the tax base absent the exemption under this section. This section applies only to tax years beginning during the duration of the zone.
Subd. 2. Business income. An individual, estate, or trust is exempt from the taxes imposed under chapter 290 on net income from the operation of a qualified business in the international economic development zone. If the trade or business is carried on within and outside of the zone and the individual is not a resident of Minnesota, the exemption must be apportioned based on the zone percentage for the taxable year. If the trade or business is carried on within or outside of the zone and the individual is a resident of Minnesota, the exemption must be apportioned based on the zone percentage for the taxable year, except the ratios under section 469.321, subdivision 8, clause (1), items (i) and (ii), must use the denominators of the property and payroll factors determined under section 290.191. No subtraction is allowed under this section in excess of 20 percent of the sum of the international economic development zone payroll and the adjusted basis of the property at the time that the property is first used in the international economic development zone by the business.
469.326 Corporate franchise tax exemption.
(a) A qualified business is exempt from taxation under section 290.02, the alternative minimum tax under section 290.0921, and the minimum fee under section 290.0922, on the portion of its income attributable to operations within the international economic development zone. This exemption is determined as follows:
(1) for purposes of the tax imposed under section 290.02, by multiplying its taxable net income by its zone percentage and subtracting the result in determining taxable income;
(2) for purposes of the alternative minimum tax under section 290.0921, by multiplying its alternative minimum taxable income by its zone percentage and reducing alternative minimum taxable income by this amount; and
(3) for purposes of the minimum fee under section 290.0922, by excluding property and payroll in the zone from the computations of the fee or by exempting the entity under section 290.0922, subdivision 2, clause (8).
(b) No subtraction is allowed under this section in excess of 20 percent of the sum of the corporation's international economic development zone payroll and the adjusted basis of the zone property at the time that the property is first used in the international economic development zone by the corporation.
(c) This section applies only to tax years beginning during the duration of the international economic development zone.
469.327 Jobs credit.
Subdivision 1. Credit allowed. A qualified business is allowed a credit against the taxes imposed under chapter 290.The credit equals seven percent of the:
(1) lesser of:
(i) zone payroll for the taxable year, less the zone payroll for the base year; or
(ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for the base year; minus
(2) $30,000 multiplied by the number of full-time equivalent employees that the qualified business employs in the international economic development zone for the taxable year, minus the number of full-time equivalent employees the business employed in the zone in the base year, but not less than zero.
Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meanings given.
(b) "Base year" means the taxable year beginning during the calendar year in which the zone designation was made under section 469.322, paragraph (d).
(c) "Full-time equivalent employees" means the equivalent of annualized expected hours of work equal to 2,080 hours.
(d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under section 290.191, subdivision 12, for the qualified business or the unitary business of which the qualified business is a part, whichever is greater.
(e) "Zone payroll" means wages or salaries used to determine the zone payroll factor for the qualified business, less the amount of compensation attributable to any employee that exceeds $70,000.
Subd. 3. Inflation adjustment. For taxable years beginning after December 31, 2006, the dollar amounts in subdivisions 1, clause (2); and 2, paragraph (e), are annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by the percentage determined under section 290.06, subdivision 2d, for the taxable year.
Subd. 4. Refundable. If the amount of the credit exceeds the liability for tax under chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
Subd. 5. Appropriation. An amount sufficient to pay the refunds authorized by this section is appropriated to the commissioner of revenue from the general fund.
469.330 Definitions.
Subdivision 1. Scope. For purposes of sections 469.330 to 469.341, the following terms have the meanings given.
Subd. 2. Applicant. "Applicant" means a local government unit or units applying for designation of an area as a biotechnology and health sciences industry zone or a joint powers board, established under section 471.59, acting on behalf of two or more local government units.
Subd. 3. Biotechnology and health sciences industry facility. "Biotechnology and health sciences industry facility" means one or more facilities or operations involved in:
(1) researching, developing, and/or manufacturing a biotechnology product or service or a biotechnology-related health sciences product or service;
(2) researching, developing, and/or manufacturing a biotechnology medical device product or service or a biotechnology-related medical device product or service; or
(3) promoting, supplying, or servicing a facility or operation involved in clause (1) or (2), if the business derives more than 50 percent of its gross receipts from those activities.
Subd. 4. Commissioner. "Commissioner" means the commissioner of employment and economic development.
Subd. 5. Development plan. "Development plan" means a plan meeting the requirements of section 469.331.
Subd. 6. Biotechnology and health sciences industry zone or zone. "Biotechnology and health sciences industry zone" or "zone" means a zone designated by the commissioner under section 469.334.
Subd. 7. Biotechnology and health sciences industry zone percentage or zone percentage. "Biotechnology and health sciences industry zone percentage" or "zone percentage" means the following fraction reduced to a percentage:
(1) the numerator of the fraction is:
(i) the ratio of the taxpayer's property factor under section 290.191 located in the zone for the taxable year over the property factor numerator determined under section 290.191, plus
(ii) the ratio of the taxpayer's biotechnology and health sciences industry zone payroll factor under subdivision 8 over the payroll factor numerator determined under section 290.191; and
(2) the denominator of the fraction is two.
When calculating the zone percentage for a business that is part of a unitary business as defined under section 290.17, subdivision 4, the denominator of the payroll and property factors is the Minnesota payroll and property of the unitary business as reported on the combined report under section 290.17, subdivision 4, paragraph (j).
Subd. 8. Biotechnology and health sciences industry zone payroll factor. "Biotechnology and health sciences industry zone payroll factor" or "biotechnology and health sciences industry zone payroll" is that portion of the payroll factor under section 290.191 that represents:
(1) wages or salaries paid to an individual for services performed for a qualified business in a biotechnology and health sciences industry zone; or
(2) wages or salaries paid to individuals working from offices of a qualified business within a biotechnology and health sciences industry zone if their employment requires them to work outside the zone and the work is incidental to the work performed by the individual within the zone.
Subd. 9. Local government unit. "Local government unit" means a statutory or home rule charter city, county, town, or school district.
Subd. 10. Person. "Person" includes an individual, corporation, partnership, limited liability company, association, or any other entity.
Subd. 11. Qualified business. (a) "Qualified business" means a person carrying on a trade or business at a biotechnology and health sciences industry facility located within a biotechnology and health sciences industry zone. A person is a qualified business only on those parcels of land for which it has entered into a business subsidy agreement, as required under section 469.333, with the appropriate local government unit in which the parcels are located.
(b) A person that relocates a biotechnology and health sciences industry facility from outside a biotechnology and health sciences industry zone into a zone is not a qualified business, unless the business:
(1)(i) increases full-time employment in the first full year of operation within the biotechnology and health sciences industry zone by at least 20 percent measured relative to the operations that were relocated and maintains the required level of employment for each year the zone designation applies; or
(ii) makes a capital investment in the property located within a zone equivalent to ten percent of the gross revenues of operation that were relocated in the immediately preceding taxable year; and
(2) enters a binding written agreement with the commissioner that:
(i) pledges the business will meet the requirements of clause (1);
(ii) provides for repayment of all tax benefits enumerated under section 469.336 to the business under the procedures in section 469.340, if the requirements of clause (1) are not met; and
(iii) contains any other terms the commissioner determines appropriate.
Subd. 12. Relocates. (a) "Relocates" means that the trade or business:
(1) ceases one or more operations or functions at another location in Minnesota and begins performing substantially the same operations or functions at a location in a biotechnology and health sciences industry zone; or
(2) reduces employment at another location in Minnesota during a period starting one year before and ending one year after it begins operations in a biotechnology and health sciences industry zone and its employees in the biotechnology and health sciences industry zone are engaged in the same line of business as the employees at the location where it reduced employment.
(b) "Relocate" does not include an expansion by a business that establishes a new facility that does not replace or supplant an existing operation or employment, in whole or in part.
469.334 Designation of zone.
Subdivision 1. Commissioner to designate. (a) The commissioner, in consultation with the commissioner of revenue and the director of the Office of Strategic and Long-Range Planning, shall designate not more than one biotechnology and health sciences industry zone. Priority must be given to applicants with a development plan that links a higher education/research institution with a biotechnology and health sciences industry facility.
(b) The commissioner may consult with the applicant prior to the designation of the zone. The commissioner may modify the development plan, including the boundaries of the zone or subzones, if in the commissioner's opinion a modified plan would better meet the objectives of the biotechnology and health sciences industry zone program. The commissioner shall notify the applicant of the modifications and provide a statement of the reasons for the modifications.
Subd. 2. Need indicators. (a) In evaluating applications to determine the need for designation of a biotechnology and health sciences industry zone, the commissioner shall consider the following factors as indicators of need:
(1) the extent to which land in proximity to a significant scientific research institution could be developed as a higher and better use for biotechnology and health sciences industry facilities;
(2) the amount of property in or near the zone that is deteriorated or underutilized; and
(3) the extent to which property in the area would remain underdeveloped or nonperforming due to physical characteristics.
(b) The commissioner may require applicants to provide data to demonstrate how the area meets one or more of the indicators of need.
Subd. 3. Success indicators. In determining the likelihood of success of a proposed zone, the commissioner shall consider:
(1) applicants that show a viable link between a higher education/research institution, the biotechnology and/or medical devices business sectors, and one or more units of local government with a development plan;
(2) the extent to which the area has substantial real property with adequate infrastructure and energy to support new or expanded development;
(3) the strength and viability of the proposed development goals, objectives, and strategies in the development plan;
(4) whether the development plan is creative and innovative in comparison to other applications;
(5) local public and private commitment to development of a biotechnology and health sciences industry facility or facilities in the proposed zone and the potential cooperation of surrounding communities;
(6) existing resources available to the proposed zone;
(7) how the designation of the zone would relate to other economic and community development projects and to regional initiatives or programs;
(8) how the regulatory burden will be eased for biotechnology and health sciences industry facilities located in the proposed zone;
(9) proposals to establish and link job creation and job training in the biotechnology and health sciences industry with research/educational institutions; and
(10) the extent to which the development is directed at encouraging, and that designation of the zone is likely to result in, the creation of high-paying jobs.
Subd. 4. Designation schedule. (a) The schedule in paragraphs (b) to (e) applies to the designation of the biotechnology and health sciences industry zone.
(b) The commissioner shall publish the form for applications and any procedural, form, or content requirements for applications by no later than August 1, 2003. The commissioner may publish these requirements on the Internet, in the State Register, or by any other means the commissioner determines appropriate to disseminate the information to potential applicants for designation.
(c) Applications must be submitted by October 15, 2003.
(d) The commissioner shall designate the zones by no later than December 31, 2003.
(e) The designation of the zones takes effect January 1, 2004.
469.335 Application for tax benefits.
(a) To claim a tax credit or exemption against a state tax under section 469.336, clauses (2) through (5), a business must apply to the commissioner for a tax credit certificate. As a condition of its application, the business must agree to furnish information to the commissioner that is sufficient to verify the eligibility for any credits or exemptions claimed. The total amount of the state tax credits and exemptions allowed for the specified period may not exceed the amount of the tax credit certificates provided by the commissioner to the business. The commissioner must verify to the commissioner of revenue the amount of tax exemptions or credits for which each business is eligible.
(b) A tax credit certificate issued under this section may specify the particular tax exemptions or credits against a state tax that the qualified business is eligible to claim under section 469.336, clauses (2) through (5), and the amount of each exemption or credit allowed.
(c) The commissioner may issue $1,000,000 of tax credits or exemptions in fiscal year 2004. Any tax credits or exemptions not awarded in fiscal year 2004 may be awarded in fiscal year 2005.
(d) A qualified business must use the tax credits or tax exemptions granted under this section by the later of the end of the state fiscal year or the taxpayer's tax year in which the credits or exemptions are granted.
469.337 Corporate franchise tax exemption.
(a) A qualified business is exempt from taxation under section 290.02, the alternative minimum tax under section 290.0921, and the minimum fee under section 290.0922, on the portion of its income attributable to operations of a qualified business within the biotechnology and health sciences industry zone. This exemption is determined as follows:
(1) for purposes of the tax imposed under section 290.02, by multiplying its taxable net income by its zone percentage and subtracting the result in determining taxable income;
(2) for purposes of the alternative minimum tax under section 290.0921, by multiplying its alternative minimum taxable income by its zone percentage and reducing alternative minimum taxable income by this amount; and
(3) for purposes of the minimum fee under section 290.0922, by excluding zone property and payroll from the computations of the fee. The qualified business is exempt from the minimum fee if all of its property is located in the zone and all of its payroll is zone payroll.
(b) No subtraction is allowed under this section in excess of 20 percent of the sum of the corporation's biotechnology and health sciences industry zone payroll and the adjusted basis of the property at the time that the property is first used in the biotechnology and health sciences industry zone by the corporation.
(c) No reduction in tax is allowed in excess of the amount allocated under section 469.335.
469.338 Jobs credit.
Subdivision 1. Credit allowed. A qualified business is allowed a credit against the taxes imposed under chapter 290.
The credit equals seven percent of the:
(1) lesser of:
(i) zone payroll for the taxable year, less the zone payroll for the base year; or
(ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for the base year; minus
(2) $30,000 multiplied by the number of full-time equivalent employee positions that the qualified business employs in the biotechnology and health sciences industry zone for the taxable year, minus the number of full-time equivalent employees the business employed in the zone in the base year, but not less than zero.
Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meaning given.
(b) "Base year" means the taxable year beginning during the calendar year in which the commissioner designated the zone.
(c) "Full-time equivalent employee position" means the equivalent of annualized expected hours of work equal to 2,080 hours.
(d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under section 290.191, subdivision 12, for the qualified business or the unitary business of which the qualified business is a part, whichever is greater.
(e) "Zone payroll" means wages or salaries used to determine the zone payroll factor for the qualified business.
Subd. 3. Inflation adjustment. For taxable years beginning after December 31, 2004, the dollar amount in subdivision 1, clause (2), is annually adjusted for inflation. The commissioner of revenue shall adjust the amount by the percentage determined under section 290.06, subdivision 2d, for the taxable year.
Subd. 4. Refundable. If the amount of the credit calculated under this section and allocated to the qualified business under section 469.335 exceeds the liability for tax under chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
469.339 Credit for more research in zone.
Subdivision 1. Credit allowed. A corporation, other than a corporation treated as an "S" corporation under section 290.9725, is allowed a credit against the portion of the franchise tax computed under section 290.06, subdivision 1, for the taxable year equal to:
(1) five percent of the first $2,000,000 of the excess (if any) of (i) the qualified research expenses for the taxable year, over (ii) the base amount; and
(2) 2.5 percent of all such excess expenses over $2,000,000.
Subd. 2. Definitions. (a) For purposes of this section, the following terms have the meanings given.
(b) "Qualified research expenses" means qualified research expenses and basic research payments as defined in section 41(b) and (e) of the Internal Revenue Code.
(c) "Qualified research" means activities in the fields of biotechnology or health sciences that are "qualified research" as defined in section 41(d) of the Internal Revenue Code, except that the term does not include qualified research conducted outside the biotechnology and health sciences industry zone.
(d) "Base amount" means base amount as defined in section 41(c) of the Internal Revenue Code, except that the average annual gross receipts must be calculated using Minnesota sales or receipts under section 290.191 and the definitions contained in paragraphs (b) and (c) apply.
(e) "Liability for tax" for purposes of this section means the tax imposed under this chapter for the taxable year reduced by the sum of the nonrefundable credits allowed under this chapter.
Subd. 3. Refundable credit. If the credit determined under this section and allocated to the taxpayer under section 469.335 for the taxable year exceeds the taxpayer's liability for tax for the year, the commissioner shall refund the difference to the taxpayer.
Subd. 4. Partnerships. For partnerships, the credit is allocated in the same manner provided by section 41(f)(2) of the Internal Revenue Code.
Subd. 5. Adjustments; acquisitions and dispositions. If a taxpayer acquires or disposes of the major portion of a trade or business or the major portion of a separate unit of a trade or business in a transaction with another taxpayer, the taxpayer's qualified research expenses and base amount are adjusted in the same manner provided by section 41(f)(3) of the Internal Revenue Code.
Subd. 6. Interaction; regular research credit. Any amount used to calculate a credit under this section may not be used to generate a credit under section 290.068.

USA Statutes : minnesota