Minnesota 2025-2026 Regular Session

Minnesota House Bill HF457 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; income; proposing a refundable credit for conversion of
3	3	1.3 underutilized buildings; allowing grants in lieu of the credit; proposing a sunset
4	4	1.4 for the credit; requiring reports; proposing coding for new law in Minnesota
5	5	1.5 Statutes, chapter 290.
6	6	1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
7	7	1.7 Section 1. [290.0687] CREDIT FOR CONVERSION OF UNDERUTILIZED
8	8	1.8BUILDINGS.
9	9	1.9 Subdivision 1.Definitions.(a) For purposes of this section, the following terms have
10	10	1.10the meanings given.
11	11	1.11 (b) "Account" means the conversion credit administration account in the special revenue
12	12	1.12fund.
13	13	1.13 (c) "Applicant" means the developer, owner, or taxpayer applying for the credit or grant
14	14	1.14and receiving the allocation certificate.
15	15	1.15 (d) "Placed in service" means the completion of substantial conversion work that would
16	16	1.16allow for occupancy of the entire building or an identifiable portion of the building.
17	17	1.17 (e) "Qualifying conversion expenses" means expenses for a qualifying project.
18	18	1.18 (f) "Qualifying project" means a building project:
19	19	1.19 (1) to convert a structure that was first placed in service at least fifteen years before
20	20	1.20conversion begins;
21	21	1.21 (2) that demonstrates significant conversion of use in one of two ways:
22	22	1Section 1.
23	23	REVISOR EAP/LN 25-0109412/16/24
24	24	State of Minnesota
25	25	This Document can be made available
26	26	in alternative formats upon request
27	27	HOUSE OF REPRESENTATIVES
28	28	H. F. No. 457
29	29	NINETY-FOURTH SESSION
30	30	Authored by Harder02/13/2025
31	31	The bill was read for the first time and referred to the Committee on Taxes 2.1 (i) the structure was converted from one commercial, income-producing, habitable use
32	32	2.2to another for which the structure had not been previously used or for which purpose the
33	33	2.3structure was not intentionally built; or
34	34	2.4 (ii) the structure has had at least 50 percent of its occupiable floor area vacant for a
35	35	2.5period of no fewer than five years and the proposed conversion will return that vacant area
36	36	2.6to an income-producing, habitable condition; and
37	37	2.7 (3) that is otherwise eligible for the credit under this section.
38	38	2.8 Subd. 2.Credit or grant allowed.(a) A credit against the tax imposed under this chapter
39	39	2.9or a grant is allowed equal to not more than 30 percent of the total cost of qualifying
40	40	2.10conversion expenses for a qualifying project. The credit is claimable and the grant is payable
41	41	2.11in the year the qualifying project is placed in service.
42	42	2.12 (b) To qualify for the credit under this section, the qualifying project must fulfill the
43	43	2.13following requirements:
44	44	2.14 (1) at least 75 percent of the existing external walls of the structure must be retained as
45	45	2.15exterior or interior walls, with at least 50 percent of the existing external walls kept in place
46	46	2.16as external walls;
47	47	2.17 (2) at least 75 percent of the existing internal structural framework of the building must
48	48	2.18be retained in place; and
49	49	2.19 (3) the conversion work must commence and be completed within three years of the
50	50	2.20date of the allocation certificate issued under subdivision 3.
51	51	2.21 (c) An applicant can apply for a credit or a grant or a combination of a credit and grant
52	52	2.22under this section.
53	53	2.23 (d) A claimant is not allowed a credit or grant under this section for any qualifying
54	54	2.24conversion expenses that are used to claim the credit under section 290.0681.
55	55	2.25 Subd. 3.Application; allocations.(a) To qualify for a credit or grant under this section,
56	56	2.26the applicant for a qualifying project must apply to the commissioner of employment and
57	57	2.27economic development for either a credit or grant, or both, before the conversion begins.
58	58	2.28The application must contain the information and be in the form prescribed by the
59	59	2.29commissioner of employment and economic development and include the following:
60	60	2.30 (1) relevant financial information on the qualifying project, including but not limited to
61	61	2.31estimated and final conversion costs, materials costs, labor costs, the number of jobs created
62	62	2Section 1.
63	63	REVISOR EAP/LN 25-0109412/16/24 3.1during construction, a calculation of the preconversion adjusted basis, and the assessed
64	64	3.2property value in tax year before conversion;
65	65	3.3 (2) a statement affirming that the qualifying project meets the requirements under this
66	66	3.4section;
67	67	3.5 (3) demographic information on the applicant, contractor, and persons employed;
68	68	3.6 (4) a statement of whether the application is for a credit or grant in lieu of credit or a
69	69	3.7combination of the two; and
70	70	3.8 (5) information designating the taxpayer qualifying for the credit or the recipient of the
71	71	3.9grant.
72	72	3.10 (b) A conversion credit administration account is established in the special revenue fund.
73	73	3.11The commissioner of employment and economic development may collect a fee for
74	74	3.12application of up to one percent of estimated qualifying conversion expenses to offset costs
75	75	3.13associated with personnel and administrative expenses related to administering the credit
76	76	3.14and preparing the economic impact report in subdivision 9. Application fees are deposited
77	77	3.15in the account.
78	78	3.16 (c) Upon approving an application, the commissioner of employment and economic
79	79	3.17development shall issue an allocation certificate that:
80	80	3.18 (1) verifies an applicant's eligibility for the credit or grant;
81	81	3.19 (2) states the amount of credit or grant anticipated to be awarded for the qualifying
82	82	3.20project;
83	83	3.21 (3) states the fiscal year in which the credit or grant is allocated, and that the taxpayer
84	84	3.22or grant recipient is entitled to either the credit or the grant, or both, at the time the qualifying
85	85	3.23project is placed in service; and
86	86	3.24 (4) states the date after which the allocation is no longer available.
87	87	3.25 (d) The commissioner of employment and economic development must determine if the
88	88	3.26project is eligible for a credit or a grant, or both, under this section and must notify the
89	89	3.27applicant in writing of the determination. Eligibility for the credit is subject to review and
90	90	3.28audit by the commissioner of employment and economic development.
91	91	3.29 (e) Any decision of the commissioner of employment and economic development under
92	92	3.30paragraph (c) may be challenged as a contested case under chapter 14. The contested case
93	93	3.31proceeding must be initiated within 45 days of the date of written notification by the
94	94	3.32commissioner of employment and economic development.
95	95	3Section 1.
96	96	REVISOR EAP/LN 25-0109412/16/24 4.1 Subd. 4.Credit certificates; grants.(a) The applicant of a qualifying project for which
97	97	4.2the commissioner of employment and economic development has issued an allocation
98	98	4.3certificate must notify the commissioner of employment and economic development when
99	99	4.4the qualifying project is placed in service. Upon verifying that the qualifying project has
100	100	4.5been placed in service, the commissioner of employment and economic development must
101	101	4.6issue a credit certificate to the taxpayer designated in the application or must pay a grant to
102	102	4.7the recipient designated in the application. The credit certificate must state the amount of
103	103	4.8the credit. The credit and the grant amount must not exceed 30 percent of qualifying
104	104	4.9conversion costs.
105	105	4.10 (b) The recipient of a credit certificate may sell, assign, or otherwise transfer, in whole
106	106	4.11or in part, the certificate to one or more persons before the credit is claimed. No portion of
107	107	4.12the credit certificate may be transferred more than two times before the credit is claimed.
108	108	4.13An assignment is not valid unless the assignee notifies the commissioner of employment
109	109	4.14and economic development within 30 days of the date the assignment is made. The
110	110	4.15commissioner of employment and economic development must prescribe the forms necessary
111	111	4.16for notifying the commissioner of employment and economic development of the assignment
112	112	4.17of a credit certificate and for claiming a credit by assignment.
113	113	4.18 (c) Credits passed through to partners, members, shareholders, or owners pursuant to
114	114	4.19subdivision 5 are not an assignment of a credit certificate under this subdivision.
115	115	4.20 (d) An agreement between the commissioner of employment and economic development
116	116	4.21and the recipient of a credit certificate may allow the credit certificate to be issued to another
117	117	4.22individual or entity.
118	118	4.23 Subd. 5.Partnerships; multiple owners.Credits granted to a partnership, limited
119	119	4.24liability company taxed as a partnership, S corporation, or multiple owners of property are
120	120	4.25passed through to the partners, members, shareholders, or owners, respectively, pro rata to
121	121	4.26each partner, member, shareholder, or owner based on their share of the entity's assets or
122	122	4.27as specially allocated in their organizational documents or any other executed agreement,
123	123	4.28as of the last day of the taxable year.
124	124	4.29 Subd. 6.Credit refundable.If the amount of credit that the taxpayer is eligible to receive
125	125	4.30under this section exceeds the liability for tax under this chapter, the commissioner of
126	126	4.31revenue shall refund the excess to the taxpayer.
127	127	4.32 Subd. 7.Appropriations.(a) The amounts necessary to pay the refunds and grants
128	128	4.33authorized under this section are appropriated to the commissioner of revenue and the
129	129	4.34commissioner of employment and economic development from the general fund.
130	130	4Section 1.
131	131	REVISOR EAP/LN 25-0109412/16/24 5.1 (b) Amounts in the account are appropriated to the commissioner of employment and
132	132	5.2economic development for costs associated with personnel and administrative expenses
133	133	5.3related to administering the conversion credit in this section and for costs associated with
134	134	5.4preparing the economic impact report required in subdivision 9.
135	135	5.5 Subd. 8.Manner of claiming credit or grant.(a) The commissioner of revenue shall
136	136	5.6prescribe the manner in which the credit may be claimed. This may include allowing the
137	137	5.7credit only as a separately processed claim for refund. If the credit under this section is
138	138	5.8separately processed as a claim for refund, the commissioner of revenue must determine
139	139	5.9how to reconcile the payment of the credit once the taxpayer files and determines liability.
140	140	5.10 (b) The commissioner of employment and economic development shall prescribe the
141	141	5.11manner in which the grant may be paid. This may include allowing the grant to be paid in
142	142	5.12installments.
143	143	5.13 Subd. 9.Reports required.(a) The commissioner of employment and economic
144	144	5.14development must dedicate a sufficient amount of the administrative fee to prepare, or
145	145	5.15contract to be prepared, the following reports to the chairs and ranking minority members
146	146	5.16of the legislative committees with jurisdiction over taxes:
147	147	5.17 (1) an annual report on the economic impact of all qualifying projects put in service in
148	148	5.18each fiscal year; and
149	149	5.19 (2) a comprehensive five-year report after December 31, 2031, which shall include the:
150	150	5.20 (i) location of all completed and in-progress qualifying projects under this program;
151	151	5.21 (ii) amount of building materials reclaimed or reused;
152	152	5.22 (iii) amount of building materials repurposed onsite, which may include existing structural
153	153	5.23and finishing components;
154	154	5.24 (iv) leasing and sales information for completed qualifying projects, including occupancy
155	155	5.25percentages and rental rates;
156	156	5.26 (v) energy savings and sustainability measures utilized;
157	157	5.27 (vi) applicant demographics and numbers of persons employed; and
158	158	5.28 (vii) changes in use of the structures.
159	159	5.29 (b) The reports must comply with sections 3.195 and 3.197.
160	160	5.30 Subd. 10.Sunset.This section expires after fiscal year 2031, except that the commissioner
161	161	5.31of employment and economic development's authority to issue credit certificates under
162	162	5Section 1.
163	163	REVISOR EAP/LN 25-0109412/16/24 6.1subdivision 4 based on allocation certificates that were issued before fiscal year 2032 remains
164	164	6.2in effect through 2035, and the reporting requirements in subdivision 9 remain in effect
165	165	6.3through the year following the year in which all allocation certificates have either been
166	166	6.4canceled or resulted in issuance of credit certificates, or 2036, whichever is earlier.
167	167	6.5 EFFECTIVE DATE.This section is effective for taxable years beginning after December
168	168	6.631, 2025.
169	169	6.7 Sec. 2. PUBLIC PROCESS; CREDIT FOR CONVERSION OF UNDERUTILIZED
170	170	6.8BUILDINGS.
171	171	6.9 Upon completion of the development of the conversion program application information
172	172	6.10and forms required to claim the credits in section 1, the commissioner of employment and
173	173	6.11economic development shall hold a public hearing for the purpose of receiving stakeholder
174	174	6.12feedback and shall make revisions as deemed appropriate. The commissioner shall make
175	175	6.13available to the public sufficient materials to allow stakeholders to engage in self-education
176	176	6.14and promotion of this program.
177	177	6.15 EFFECTIVE DATE.This section is effective the day following final enactment.
178	178	6Sec. 2.
179	179	REVISOR EAP/LN 25-0109412/16/24