Minnesota House Bill HF1159

Minnesota 2025-2026 Regular Session

• Introduced: 2/19/25
• Refer: 2/19/25

Caption

Eligible uses of increment from tax increment financing districts expanded to include transfers to local housing trust funds, and requirements on use of transferred increment imposed.

Impact

The impact of HF1159 on state laws revolves around its modification of Minnesota Statutes Section 469.1763. By permitting the allocation of funds to housing trust funds, the bill aims to promote affordable housing opportunities, which is a growing concern in many areas of the state. It stipulates that at least 75% of the tax increments must be spent within the respective districts, ensuring that local interests are prioritized while still allowing for a portion of these funds to assist neighboring communities in housing development efforts. This change reinforces the notion that financial resources should not only benefit areas generating the revenue but also contribute to regional housing stability.

Summary

House File 1159 introduces significant changes to Minnesota's tax increment financing (TIF) system by expanding the eligible uses of increments from TIF districts. Specifically, the bill allows for transfers to local housing trust funds, which can be utilized for rental and homeownership initiatives aimed at low to moderate-income households. This expansion is geared toward leveraging tax increment revenues to address housing affordability issues in various communities across Minnesota, ensuring that funds are directed towards housing projects that directly serve the needs of residents with limited financial capacity.

Contention

Notable points of contention may arise regarding the provisions stipulated for the usage of transferred increments. The bill imposes income restrictions on the beneficiaries of the funds; specifically, 60% of area median income must be the cutoff for rental assistance, while homeownership assistance is capped at 120%. These requirements may draw ire from various stakeholders who argue about their potential restrictiveness or appropriateness. Additionally, local governments may face challenges in adapting to the new allocation rules and ensuring compliance with the stipulations outlined in the bill, sparking discussions about local governance and economic autonomy.