1.1 A bill for an act
1.2 relating to taxation; tax increment financing; modifying eligibility for
1.3 redevelopment districts; repealing renewal and renovation districts; shortening
1.4 duration limits; amending Minnesota Statutes 2024, sections 469.174, subdivision
1.5 10; 469.175, subdivisions 3, 4; 469.176, subdivision 1b; 469.1763, subdivisions
1.6 2, 6; 469.177, subdivision 1; repealing Minnesota Statutes 2024, sections 469.174,
1.7 subdivision 10a; 469.176, subdivision 4j.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.9 Section 1. Minnesota Statutes 2024, section 469.174, subdivision 10, is amended to read:
1.10 Subd. 10.Redevelopment district.(a) "Redevelopment district" means a type of tax
1.11increment financing district consisting of a project, or portions of a project, within which
1.12the authority finds by resolution that one or more of the following conditions, reasonably
1.13distributed throughout the district, exists:
1.14 (1) parcels consisting of at least 70 percent of the area of the district are occupied by
1.15buildings, streets, utilities, paved or gravel parking lots, or other similar structures and more
1.16than 50 percent of the buildings, not including outbuildings, are structurally substandard to
1.17a degree requiring substantial renovation or clearance;
1.18 (2) parcels consisting of at least 70 percent of the area of the district are occupied by
1.19buildings, streets, utilities, paved or gravel parking lots, or other similar structures and at
1.20least 20 percent of the buildings are structurally substandard and at least 30 percent of the
1.21other buildings require substantial renovation or clearance to remove existing conditions
1.22such as inadequate street layouts, incompatible uses or land use relationships, overcrowding
1.23of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable
1Section 1.
REVISOR MS/DG 25-0060911/26/24
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 948
NINETY-FOURTH SESSION
Authored by Davids02/17/2025
The bill was read for the first time and referred to the Committee on Taxes 2.1for improvement or conversion, or other identified hazards to the health, safety, and general
2.2well-being of the community;
2.3 (2) (3) the property consists of vacant, unused, underused, inappropriately used, or
2.4infrequently used rail yards, rail storage facilities, or excessive or vacated railroad
2.5rights-of-way;
2.6 (3) (4) tank facilities, or property whose immediately previous use was for tank facilities,
2.7as defined in section 115C.02, subdivision 15, if the tank facilities:
2.8 (i) have or had a capacity of more than 1,000,000 gallons;
2.9 (ii) are located adjacent to rail facilities; and
2.10 (iii) have been removed or are unused, underused, inappropriately used, or infrequently
2.11used; or
2.12 (4) (5) a qualifying disaster area, as defined in subdivision 10b.
2.13 (b) For purposes of this subdivision, "structurally substandard" shall mean containing
2.14defects in structural elements or a combination of deficiencies in essential utilities and
2.15facilities, light and ventilation, fire protection including adequate egress, layout and condition
2.16of interior partitions, or similar factors, which defects or deficiencies are of sufficient total
2.17significance to justify substantial renovation or clearance.
2.18 (c) A building is not structurally substandard if it is in compliance with the building
2.19code applicable to new buildings or could be modified to satisfy the building code at a cost
2.20of less than 15 percent of the cost of constructing a new structure of the same square footage
2.21and type on the site. The municipality may find that a building is not disqualified as
2.22structurally substandard under the preceding sentence on the basis of reasonably available
2.23evidence, such as the size, type, and age of the building, the average cost of plumbing,
2.24electrical, or structural repairs, or other similar reliable evidence. The municipality may not
2.25make such a determination without an interior inspection of the property, but need not have
2.26an independent, expert appraisal prepared of the cost of repair and rehabilitation of the
2.27building. An interior inspection of the property is not required, if the municipality finds that
2.28(1) the municipality or authority is unable to gain access to the property after using its best
2.29efforts to obtain permission from the party that owns or controls the property; and (2) the
2.30evidence otherwise supports a reasonable conclusion that the building is structurally
2.31substandard. Items of evidence that support such a conclusion include recent fire or police
2.32inspections, on-site property tax appraisals or housing inspections, exterior evidence of
2.33deterioration, or other similar reliable evidence. Written documentation of the findings and
2Section 1.
REVISOR MS/DG 25-0060911/26/24 3.1reasons why an interior inspection was not conducted must be made and retained under
3.2section 469.175, subdivision 3, clause (1). Failure of a building to be disqualified under the
3.3provisions of this paragraph is a necessary, but not a sufficient, condition to determining
3.4that the building is substandard.
3.5 (d) A parcel is deemed to be occupied by a structurally substandard building for purposes
3.6of the finding under paragraph (a) or by the improvements described in paragraph (e) if all
3.7of the following conditions are met:
3.8 (1) the parcel was occupied by a substandard building or met the requirements of
3.9paragraph (e), as the case may be, within three years of the filing of the request for
3.10certification of the parcel as part of the district with the county auditor;
3.11 (2) the substandard building or the improvements described in paragraph (e) were
3.12demolished or removed by the authority or the demolition or removal was financed by the
3.13authority or was done by a developer under a development agreement with the authority;
3.14 (3) the authority found by resolution before the demolition or removal that the parcel
3.15was occupied by a structurally substandard building or met the requirements of paragraph
3.16(e) and that after demolition and clearance the authority intended to include the parcel within
3.17a district; and
3.18 (4) upon filing the request for certification of the tax capacity of the parcel as part of a
3.19district, the authority notifies the county auditor that the original tax capacity of the parcel
3.20must be adjusted as provided by section 469.177, subdivision 1, paragraph (f).
3.21 (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities,
3.22paved or gravel parking lots, or other similar structures unless 15 percent of the area of the
3.23parcel contains buildings, streets, utilities, paved or gravel parking lots, or other similar
3.24structures.
3.25 (f) For districts consisting of two or more noncontiguous areas, each area must qualify
3.26as a redevelopment district under paragraph (a) to be included in the district, and the entire
3.27area of the district must satisfy paragraph (a).
3.28 EFFECTIVE DATE.This section is effective for districts for which the request for
3.29certification was made after June 30, 2025.
3.30 Sec. 2. Minnesota Statutes 2024, section 469.175, subdivision 3, is amended to read:
3.31 Subd. 3.Municipality approval.(a) A county auditor shall not certify the original net
3.32tax capacity of a tax increment financing district until the tax increment financing plan
3Sec. 2.
REVISOR MS/DG 25-0060911/26/24 4.1proposed for that district has been approved by the municipality in which the district is
4.2located. If an authority that proposes to establish a tax increment financing district and the
4.3municipality are not the same, the authority shall apply to the municipality in which the
4.4district is proposed to be located and shall obtain the approval of its tax increment financing
4.5plan by the municipality before the authority may use tax increment financing. The
4.6municipality shall approve the tax increment financing plan only after a public hearing
4.7thereon after published notice in a newspaper of general circulation in the municipality at
4.8least once not less than ten days nor more than 30 days prior to the date of the hearing. The
4.9published notice must include a map of the area of the district from which increments may
4.10be collected and, if the project area includes additional area, a map of the project area in
4.11which the increments may be expended. The hearing may be held before or after the approval
4.12or creation of the project or it may be held in conjunction with a hearing to approve the
4.13project.
4.14 (b) Before or at the time of approval of the tax increment financing plan, the municipality
4.15shall make the following findings, and shall set forth in writing the reasons and supporting
4.16facts for each determination:
4.17 (1) that the proposed tax increment financing district is a redevelopment district, a
4.18renewal or renovation district, a housing district, a soils condition district, or an economic
4.19development district; if the proposed district is a redevelopment district or a renewal or
4.20renovation district, the reasons and supporting facts for the determination that the district
4.21meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or
4.22subdivision 10a, must be documented in writing and retained and made available to the
4.23public by the authority until the district has been terminated;
4.24 (2) that, in the opinion of the municipality:
4.25 (i) the proposed development or redevelopment would not reasonably be expected to
4.26occur solely through private investment within the reasonably foreseeable future; and
4.27 (ii) the increased market value of the site that could reasonably be expected to occur
4.28without the use of tax increment financing would be less than the increase in the market
4.29value estimated to result from the proposed development after subtracting the present value
4.30of the projected tax increments for the maximum duration of the district permitted by the
4.31plan. The requirements of this item do not apply if the district is a housing district;
4.32 (3) that the tax increment financing plan conforms to the general plan for the development
4.33or redevelopment of the municipality as a whole;
4Sec. 2.
REVISOR MS/DG 25-0060911/26/24 5.1 (4) that the tax increment financing plan will afford maximum opportunity, consistent
5.2with the sound needs of the municipality as a whole, for the development or redevelopment
5.3of the project by private enterprise;
5.4 (5) that the municipality elects the method of tax increment computation set forth in
5.5section 469.177, subdivision 3, paragraph (b), if applicable.
5.6 (c) When the municipality and the authority are not the same, the municipality shall
5.7approve or disapprove the tax increment financing plan within 60 days of submission by
5.8the authority. When the municipality and the authority are not the same, the municipality
5.9may not amend or modify a tax increment financing plan except as proposed by the authority
5.10pursuant to subdivision 4. Once approved, the determination of the authority to undertake
5.11the project through the use of tax increment financing and the resolution of the governing
5.12body shall be conclusive of the findings therein and of the public need for the financing.
5.13 (d) For a district that is subject to the requirements of paragraph (b), clause (2), item
5.14(ii), the municipality's statement of reasons and supporting facts must include all of the
5.15following:
5.16 (1) an estimate of the amount by which the market value of the site will increase without
5.17the use of tax increment financing;
5.18 (2) an estimate of the increase in the market value that will result from the development
5.19or redevelopment to be assisted with tax increment financing; and
5.20 (3) the present value of the projected tax increments for the maximum duration of the
5.21district permitted by the tax increment financing plan.
5.22 (e) For purposes of this subdivision, "site" means the parcels on which the development
5.23or redevelopment to be assisted with tax increment financing will be located.
5.24 (f) Before or at the time of approval of the tax increment financing plan for a district to
5.25be used to fund a workforce housing project under section 469.176, subdivision 4c, paragraph
5.26(d), the municipality shall make the following findings and set forth in writing the reasons
5.27and supporting facts for each determination:
5.28 (1) the city is located outside of the metropolitan area, as defined in section 473.121,
5.29subdivision 2;
5.30 (2) the average vacancy rate for rental housing located in the municipality and in any
5.31statutory or home rule charter city located within 15 miles or less of the boundaries of the
5.32municipality has been three percent or less for at least the immediately preceding two-year
5.33period;
5Sec. 2.
REVISOR MS/DG 25-0060911/26/24 6.1 (3) at least one business located in the municipality or within 15 miles of the municipality
6.2that employs a minimum of 20 full-time equivalent employees in aggregate has provided a
6.3written statement to the municipality indicating that the lack of available rental housing has
6.4impeded the ability of the business to recruit and hire employees; and
6.5 (4) the municipality and the development authority intend to use increments from the
6.6district for the development of rental housing to serve employees of businesses located in
6.7the municipality or surrounding area.
6.8 (g) The county auditor may not certify the original tax capacity of an economic
6.9development tax increment financing district for a workforce housing project if the request
6.10for certification is made after June 30, 2027.
6.11 EFFECTIVE DATE.This section is effective for districts for which the request for
6.12certification was made after June 30, 2025.
6.13 Sec. 3. Minnesota Statutes 2024, section 469.175, subdivision 4, is amended to read:
6.14 Subd. 4.Modification of plan.(a) A tax increment financing plan may be modified by
6.15an authority.
6.16 (b) The authority may make the following modifications only upon the notice and after
6.17the discussion, public hearing, and findings required for approval of the original plan:
6.18 (1) any reduction or enlargement of geographic area of the project or tax increment
6.19financing district that does not meet the requirements of paragraph (e);
6.20 (2) increase in amount of bonded indebtedness to be incurred;
6.21 (3) a determination to capitalize interest on the debt if that determination was not a part
6.22of the original plan;
6.23 (4) increase in the portion of the captured net tax capacity to be retained by the authority;
6.24 (5) increase in the estimate of the cost of the project, including administrative expenses,
6.25that will be paid or financed with tax increment from the district; or
6.26 (6) designation of additional property to be acquired by the authority.
6.27 (c) If an authority changes the type of district to another type of district, this change is
6.28not a modification but requires the authority to follow the procedure set forth in sections
6.29469.174 to 469.179 for adoption of a new plan, including certification of the net tax capacity
6.30of the district by the county auditor.
6Sec. 3.
REVISOR MS/DG 25-0060911/26/24 7.1 (d) If a redevelopment district or a renewal and renovation district is enlarged, the reasons
7.2and supporting facts for the determination that the addition to the district meets the criteria
7.3of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or subdivision 10a,
7.4must be documented.
7.5 (e) The requirements of paragraph (b) do not apply if (1) the only modification is
7.6elimination of parcels from the project or district and (2)(A) the current net tax capacity of
7.7the parcels eliminated from the district equals or exceeds the net tax capacity of those parcels
7.8in the district's original net tax capacity or (B) the authority agrees that, notwithstanding
7.9section 469.177, subdivision 1, the original net tax capacity will be reduced by no more
7.10than the current net tax capacity of the parcels eliminated from the district. The authority
7.11must notify the county auditor of any modification that reduces or enlarges the geographic
7.12area of a district or a project area.
7.13 (f) The geographic area of a tax increment financing district may be reduced, but shall
7.14not be enlarged after five years following the date of certification of the original net tax
7.15capacity by the county auditor or after August 1, 1984, for tax increment financing districts
7.16authorized prior to August 1, 1979.
7.17 EFFECTIVE DATE.This section is effective for districts for which the request for
7.18certification was made after June 30, 2025.
7.19 Sec. 4. Minnesota Statutes 2024, section 469.176, subdivision 1b, is amended to read:
7.20 Subd. 1b.Duration limits; terms.(a) No tax increment shall in any event be paid to
7.21the authority:
7.22 (1) after 15 20 years after receipt by the authority of the first increment for a renewal
7.23and renovation redevelopment district;
7.24 (2) after 20 years after receipt by the authority of the first increment for a soils condition
7.25district;
7.26 (3) after eight years after receipt by the authority of the first increment for an economic
7.27development district;
7.28 (4) after 25 years after receipt by the authority of the first increment for a housing district
7.29or a redevelopment district, after 25 years from the date of receipt by the authority of the
7.30first increment.
7.31 (b) For purposes of determining a duration limit under this subdivision or subdivision
7.321e that is based on the receipt of an increment, any increments from taxes payable in the
7Sec. 4.
REVISOR MS/DG 25-0060911/26/24 8.1year in which the district terminates shall be paid to the authority. This paragraph does not
8.2affect a duration limit calculated from the date of approval of the tax increment financing
8.3plan or based on the recovery of costs or to a duration limit under subdivision 1c. This
8.4paragraph does not supersede the restrictions on payment of delinquent taxes in subdivision
8.51f.
8.6 (c) An action by the authority to waive or decline to accept an increment has no effect
8.7for purposes of computing a duration limit based on the receipt of increment under this
8.8subdivision or any other provision of law. The authority is deemed to have received an
8.9increment for any year in which it waived or declined to accept an increment, regardless of
8.10whether the increment was paid to the authority.
8.11 (d) Receipt by a hazardous substance subdistrict of an increment as a result of a reduction
8.12in original net tax capacity under section 469.174, subdivision 7, paragraph (b), does not
8.13constitute receipt of increment by the overlying district for the purpose of calculating the
8.14duration limit under this section.
8.15 EFFECTIVE DATE.This section is effective for districts for which the request for
8.16certification was made after June 30, 2025.
8.17 Sec. 5. Minnesota Statutes 2024, section 469.1763, subdivision 2, is amended to read:
8.18 Subd. 2.Expenditures outside district.(a) For each tax increment financing district,
8.19an amount equal to at least 75 percent of the total revenue derived from tax increments paid
8.20by properties in the district must be expended on activities in the district or to pay bonds,
8.21to the extent that the proceeds of the bonds were used to finance activities in the district or
8.22to pay, or secure payment of, debt service on credit enhanced bonds. For districts, other
8.23than redevelopment districts for which the request for certification was made after June 30,
8.241995, the in-district percentage for purposes of the preceding sentence is 80 percent. Not
8.25more than 25 percent of the total revenue derived from tax increments paid by properties
8.26in the district may be expended, through a development fund or otherwise, on activities
8.27outside of the district but within the defined geographic area of the project except to pay,
8.28or secure payment of, debt service on credit enhanced bonds. For districts, other than
8.29redevelopment districts for which the request for certification was made after June 30, 1995,
8.30the pooling percentage for purposes of the preceding sentence is 20 percent. The revenues
8.31derived from tax increments paid by properties in the district that are expended on costs
8.32under section 469.176, subdivision 4h, may be deducted first before calculating the
8.33percentages that must be expended within and without the district.
8Sec. 5.
REVISOR MS/DG 25-0060911/26/24 9.1 (b) In the case of a housing district, a housing project, as defined in section 469.174,
9.2subdivision 11, is an activity in the district.
9.3 (c) All administrative expenses are considered to be expenditures for activities outside
9.4of the district, except that if the only expenses for activities outside of the district under this
9.5subdivision are for the purposes described in paragraph (d), administrative expenses will
9.6be considered as expenditures for activities in the district.
9.7 (d) The authority may elect, in the tax increment financing plan for the district, to increase
9.8by up to ten percentage points the permitted amount of expenditures for activities located
9.9outside the geographic area of the district under paragraph (a). As permitted by section
9.10469.176, subdivision 4k, the expenditures, including the permitted expenditures under
9.11paragraph (a), need not be made within the geographic area of the project. Expenditures
9.12that meet the requirements of this paragraph are legally permitted expenditures of the district,
9.13notwithstanding section 469.176, subdivisions 4b, and 4c, and 4j. To qualify for the increase
9.14under this paragraph, the expenditures must:
9.15 (1) be used exclusively to assist housing that meets the requirement for a qualified
9.16low-income building, as that term is used in section 42 of the Internal Revenue Code; and
9.17 (2) not exceed the qualified basis of the housing, as defined under section 42(c) of the
9.18Internal Revenue Code, less the amount of any credit allowed under section 42 of the Internal
9.19Revenue Code; and
9.20 (3) be used to:
9.21 (i) acquire and prepare the site of the housing;
9.22 (ii) acquire, construct, or rehabilitate the housing; or
9.23 (iii) make public improvements directly related to the housing; or
9.24 (4) be used to develop housing:
9.25 (i) if the market value of the housing does not exceed the lesser of:
9.26 (A) 150 percent of the average market value of single-family homes in that municipality;
9.27or
9.28 (B) $200,000 for municipalities located in the metropolitan area, as defined in section
9.29473.121, or $125,000 for all other municipalities; and
9.30 (ii) if the expenditures are used to pay the cost of site acquisition, relocation, demolition
9.31of existing structures, site preparation, and pollution abatement on one or more parcels, if
9.32the parcel contains a residence containing one to four family dwelling units that has been
9Sec. 5.
REVISOR MS/DG 25-0060911/26/24 10.1vacant for six or more months and is in foreclosure as defined in section 325N.10, subdivision
10.27, but without regard to whether the residence is the owner's principal residence, and only
10.3after the redemption period has expired; or
10.4 (5) to assist owner-occupied housing that meets the requirements of section 469.1761,
10.5subdivision 2.
10.6 (e) The authority under paragraph (d), clause (4), expires on December 31, 2016.
10.7Increments may continue to be expended under this authority after that date, if they are used
10.8to pay bonds or binding contracts that would qualify under subdivision 3, paragraph (a), if
10.9December 31, 2016, is considered to be the last date of the five-year period after certification
10.10under that provision.
10.11 (f) For purposes of determining whether the minimum percentage of expenditures for
10.12activities in the district and maximum percentages of expenditures allowed on activities
10.13outside the district have been met under this subdivision, any amounts returned to the county
10.14auditor as excess increment, as returned increment under subdivision 4, paragraph (g), or
10.15as remedies under section 469.1771, subdivision 2, shall first be subtracted from the total
10.16revenues derived from tax increments paid by properties in the district. Any other amounts
10.17returned to the county auditor for purposes other than a remedy under section 469.1771,
10.18subdivision 3, are considered to be expenditures for activities in the district.
10.19 EFFECTIVE DATE.This section is effective for districts for which the request for
10.20certification was made after June 30, 2025.
10.21Sec. 6. Minnesota Statutes 2024, section 469.1763, subdivision 6, is amended to read:
10.22 Subd. 6.Pooling permitted for deficits.(a) This subdivision applies only to districts
10.23for which the request for certification was made before August 1, 2001, and without regard
10.24to whether the request for certification was made prior to August 1, 1979.
10.25 (b) The municipality for the district may transfer available increments from another tax
10.26increment financing district located in the municipality, if the transfer is necessary to
10.27eliminate a deficit in the district to which the increments are transferred. The municipality
10.28may transfer increments as provided by this subdivision without regard to whether the
10.29transfer or expenditure is authorized by the tax increment financing plan for the district
10.30from which the transfer is made. A deficit in the district for purposes of this subdivision
10.31means the lesser of the following two amounts:
10.32 (1) the amount due during the calendar year to pay preexisting obligations of the district;
10.33minus the sum of
10Sec. 6.
REVISOR MS/DG 25-0060911/26/24 11.1 (i) the total increments collected or to be collected from properties located within the
11.2district that are available for the calendar year including amounts collected in prior years
11.3that are currently available; plus
11.4 (ii) total increments from properties located in other districts in the municipality including
11.5amounts collected in prior years that are available to be used to meet the district's obligations
11.6under this section, excluding this subdivision, or other provisions of law; or
11.7 (2) the reduction in increments collected from properties located in the district for the
11.8calendar year as a result of the changes in classification rates in Laws 1997, chapter 231,
11.9article 1; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and Laws 2001,
11.10First Special Session chapter 5, or the elimination of the general education tax levy under
11.11Laws 2001, First Special Session chapter 5.
11.12 The authority may compute the deficit amount under clause (1) only (without regard to
11.13the limit under clause (2)) if the authority makes an irrevocable commitment, by resolution,
11.14to use increments from the district to which increments are to be transferred and any
11.15transferred increments are only used to pay preexisting obligations and administrative
11.16expenses for the district that are required to be paid under section 469.176, subdivision 4h,
11.17paragraph (a).
11.18 (c) A preexisting obligation means:
11.19 (1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a binding
11.20contract requiring the issuance of bonds entered into before July 1, 2001, and bonds issued
11.21to refund such bonds or to reimburse expenditures made in conjunction with a signed
11.22contractual agreement entered into before August 1, 2001, to the extent that the bonds are
11.23secured by a pledge of increments from the tax increment financing district; and
11.24 (2) binding contracts entered into before August 1, 2001, to the extent that the contracts
11.25require payments secured by a pledge of increments from the tax increment financing district.
11.26 (d) The municipality may require a development authority, other than a seaway port
11.27authority, to transfer available increments including amounts collected in prior years that
11.28are currently available for any of its tax increment financing districts in the municipality to
11.29make up an insufficiency in another district in the municipality, regardless of whether the
11.30district was established by the development authority or another development authority.
11.31This authority applies notwithstanding any law to the contrary, but applies only to a
11.32development authority that:
11.33 (1) was established by the municipality; or
11Sec. 6.
REVISOR MS/DG 25-0060911/26/24 12.1 (2) the governing body of which is appointed, in whole or part, by the municipality or
12.2an officer of the municipality or which consists, in whole or part, of members of the
12.3governing body of the municipality. The municipality may use this authority only after it
12.4has first used all available increments of the receiving development authority to eliminate
12.5the insufficiency and exercised any permitted action under section 469.1792, subdivision
12.63, for preexisting districts of the receiving development authority to eliminate the
12.7insufficiency.
12.8 (e) The authority under this subdivision to spend tax increments outside of the area of
12.9the district from which the tax increments were collected:
12.10 (1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c, 4d, 4e,
12.11and 4i, and 4j; the expenditure limits under section 469.176, subdivision 1c; and the other
12.12provisions of this section; and the percentage restrictions under subdivision 2 must be
12.13calculated after deducting increments spent under this subdivision from the total increments
12.14for the district; and
12.15 (2) applies notwithstanding the provisions of the Tax Increment Financing Act in effect
12.16for districts for which the request for certification was made before June 30, 1982, or any
12.17other law to the contrary.
12.18 (f) If a preexisting obligation requires the development authority to pay an amount that
12.19is limited to the increment from the district or a specific development within the district and
12.20if the obligation requires paying a higher amount to the extent that increments are available,
12.21the municipality may determine that the amount due under the preexisting obligation equals
12.22the higher amount and may authorize the transfer of increments under this subdivision to
12.23pay up to the higher amount. The existence of a guarantee of obligations by the individual
12.24or entity that would receive the payment under this paragraph is disregarded in the
12.25determination of eligibility to pool under this subdivision. The authority to transfer increments
12.26under this paragraph may only be used to the extent that the payment of all other preexisting
12.27obligations in the municipality due during the calendar year have been satisfied.
12.28 (g) For transfers of increments made in calendar year 2005 and later, the reduction in
12.29increments as a result of the elimination of the general education tax levy for purposes of
12.30paragraph (b), clause (2), for a taxes payable year equals the general education tax rate for
12.31the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1, for taxes
12.32payable in 2001, multiplied by the captured tax capacity of the district for the current taxes
12.33payable year.
12Sec. 6.
REVISOR MS/DG 25-0060911/26/24 13.1 EFFECTIVE DATE.This section is effective for districts for which the request for
13.2certification was made after June 30, 2025.
13.3 Sec. 7. Minnesota Statutes 2024, section 469.177, subdivision 1, is amended to read:
13.4 Subdivision 1.Original net tax capacity.(a) Upon or after adoption of a tax increment
13.5financing plan, the auditor of any county in which the district is situated shall, upon request
13.6of the authority, certify the original net tax capacity of the tax increment financing district
13.7and that portion of the district overlying any subdistrict as described in the tax increment
13.8financing plan and shall certify in each year thereafter the amount by which the original net
13.9tax capacity has increased or decreased as a result of a change in tax exempt status of
13.10property within the district and any subdistrict, reduction or enlargement of the district or
13.11changes pursuant to subdivision 4. The auditor shall certify the amount within 30 days after
13.12receipt of the request and sufficient information to identify the parcels included in the district.
13.13The certification relates to the taxes payable year as provided in subdivision 6.
13.14 (b) If the classification under section 273.13 of property located in a district changes to
13.15a classification that has a different assessment ratio, the original net tax capacity of that
13.16property must be redetermined at the time when its use is changed as if the property had
13.17originally been classified in the same class in which it is classified after its use is changed.
13.18 (c) The amount to be added to the original net tax capacity of the district as a result of
13.19previously tax exempt real property within the district becoming taxable equals the net tax
13.20capacity of the real property as most recently assessed pursuant to information reported to
13.21the commissioner under section 270C.85, subdivision 2, clause (4), or, if that assessment
13.22was made more than one year prior to the date of title transfer rendering the property taxable,
13.23the net tax capacity assessed by the assessor at the time of the transfer. If improvements are
13.24made to tax exempt property after the municipality approves the district and before the
13.25parcel becomes taxable, the assessor shall, at the request of the authority, separately assess
13.26the estimated market value of the improvements. If the property becomes taxable, the county
13.27auditor shall add to original net tax capacity, the net tax capacity of the parcel, excluding
13.28the separately assessed improvements. If substantial taxable improvements were made to
13.29a parcel after certification of the district and if the property later becomes tax exempt, in
13.30whole or part, as a result of the authority acquiring the property through foreclosure or
13.31exercise of remedies under a lease or other revenue agreement or as a result of tax forfeiture,
13.32the amount to be added to the original net tax capacity of the district as a result of the
13.33property again becoming taxable is the amount of the parcel's value that was included in
13.34original net tax capacity when the parcel was first certified. The amount to be added to the
13Sec. 7.
REVISOR MS/DG 25-0060911/26/24 14.1original net tax capacity of the district as a result of enlargements equals the net tax capacity
14.2of the added real property as most recently certified by the commissioner of revenue as of
14.3the date of modification of the tax increment financing plan pursuant to section 469.175,
14.4subdivision 4.
14.5 (d) If the net tax capacity of a property increases because the property no longer qualifies
14.6under the Minnesota Agricultural Property Tax Law, section 273.111; the Minnesota Open
14.7Space Property Tax Law, section 273.112; or the Metropolitan Agricultural Preserves Act,
14.8chapter 473H, the Rural Preserve Property Tax Program under section 273.114, or because
14.9platted, unimproved property is improved or market value is increased after approval of the
14.10plat under section 273.11, subdivision 14a or 14b, the increase in net tax capacity must be
14.11added to the original net tax capacity. If the net tax capacity of a property increases because
14.12the property no longer qualifies for the homestead market value exclusion under section
14.13273.13, subdivision 35, the increase in net tax capacity must be added to original net tax
14.14capacity if the original construction of the affected home was completed before the date the
14.15assessor certified the original net tax capacity of the district.
14.16 (e) The amount to be subtracted from the original net tax capacity of the district as a
14.17result of previously taxable real property within the district becoming tax exempt or
14.18qualifying in whole or part for an exclusion from taxable market value, or a reduction in
14.19the geographic area of the district, shall be the amount of original net tax capacity initially
14.20attributed to the property becoming tax exempt, being excluded from taxable market value,
14.21or being removed from the district. If the net tax capacity of property located within the tax
14.22increment financing district is reduced by reason of a court-ordered abatement, stipulation
14.23agreement, voluntary abatement made by the assessor or auditor or by order of the
14.24commissioner of revenue, the reduction shall be applied to the original net tax capacity of
14.25the district when the property upon which the abatement is made has not been improved
14.26since the date of certification of the district and to the captured net tax capacity of the district
14.27in each year thereafter when the abatement relates to improvements made after the date of
14.28certification. The county auditor may specify reasonable form and content of the request
14.29for certification of the authority and any modification thereof pursuant to section 469.175,
14.30subdivision 4.
14.31 (f) If a parcel of property contained a substandard building or improvements described
14.32in section 469.174, subdivision 10, paragraph (e), that were demolished or removed and if
14.33the authority elects to treat the parcel as occupied by a substandard building under section
14.34469.174, subdivision 10, paragraph (b), or by improvements under section 469.174,
14.35subdivision 10, paragraph (e), the auditor shall certify the original net tax capacity of the
14Sec. 7.
REVISOR MS/DG 25-0060911/26/24 15.1parcel using the greater of (1) the current net tax capacity of the parcel, or (2) the estimated
15.2market value of the parcel for the year in which the building or other improvements were
15.3demolished or removed, but applying the classification rates for the current year.
15.4 (g) For a redevelopment district qualifying under section 469.174, subdivision 10,
15.5paragraph (a), clause (4) (5), as a qualified disaster area, the auditor shall certify the value
15.6of the land as the original tax capacity for any parcel in the district that contains a building
15.7that suffered substantial damage as a result of the disaster or emergency.
15.8 EFFECTIVE DATE.This section is effective for districts for which the request for
15.9certification was made after June 30, 2025.
15.10Sec. 8. REPEALER.
15.11 Minnesota Statutes 2024, sections 469.174, subdivision 10a; and 469.176, subdivision
15.124j, are repealed.
15.13 EFFECTIVE DATE.This section is effective for districts for which the request for
15.14certification was made after June 30, 2025.
15Sec. 8.
REVISOR MS/DG 25-0060911/26/24 469.174 DEFINITIONS.
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 (b) through
(f), apply.
469.176 LIMITATIONS.
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.
1R
APPENDIX
Repealed Minnesota Statutes: 25-00609