Minnesota 2025-2026 Regular Session

Minnesota Senate Bill SF7 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; tax increment financing; modifying eligibility for
3	3	1.3 redevelopment districts; repealing renewal and renovation districts; shortening
4	4	1.4 duration limits; amending Minnesota Statutes 2024, sections 469.174, subdivision
5	5	1.5 10; 469.175, subdivisions 3, 4; 469.176, subdivision 1b; 469.1763, subdivisions
6	6	1.6 2, 6; 469.177, subdivision 1; repealing Minnesota Statutes 2024, sections 469.174,
7	7	1.7 subdivision 10a; 469.176, subdivision 4j.
8	8	1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
9	9	1.9 Section 1. Minnesota Statutes 2024, section 469.174, subdivision 10, is amended to read:
10	10	1.10 Subd. 10.Redevelopment district.(a) "Redevelopment district" means a type of tax
11	11	1.11increment financing district consisting of a project, or portions of a project, within which
12	12	1.12the authority finds by resolution that one or more of the following conditions, reasonably
13	13	1.13distributed throughout the district, exists:
14	14	1.14 (1) parcels consisting of at least 70 percent of the area of the district are occupied by
15	15	1.15buildings, streets, utilities, paved or gravel parking lots, or other similar structures and more
16	16	1.16than 50 percent of the buildings, not including outbuildings, are structurally substandard to
17	17	1.17a degree requiring substantial renovation or clearance;
18	18	1.18 (2) parcels consisting of at least 70 percent of the area of the district are occupied by
19	19	1.19buildings, streets, utilities, paved or gravel parking lots, or other similar structures and at
20	20	1.20least 20 percent of the buildings are structurally substandard and at least 30 percent of the
21	21	1.21other buildings require substantial renovation or clearance to remove existing conditions
22	22	1.22such as inadequate street layouts, incompatible uses or land use relationships, overcrowding
23	23	1.23of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable
24	24	1Section 1.
25	25	25-00609 as introduced11/26/24 REVISOR MS/DG
26	26	SENATE
27	27	STATE OF MINNESOTA
28	28	S.F. No. 7NINETY-FOURTH SESSION
29	29	(SENATE AUTHORS: REST and Dibble)
30	30	OFFICIAL STATUSD-PGDATE
31	31	Introduction and first reading01/16/2025
32	32	Referred to Taxes 2.1for improvement or conversion, or other identified hazards to the health, safety, and general
33	33	2.2well-being of the community;
34	34	2.3 (2) (3) the property consists of vacant, unused, underused, inappropriately used, or
35	35	2.4infrequently used rail yards, rail storage facilities, or excessive or vacated railroad
36	36	2.5rights-of-way;
37	37	2.6 (3) (4) tank facilities, or property whose immediately previous use was for tank facilities,
38	38	2.7as defined in section 115C.02, subdivision 15, if the tank facilities:
39	39	2.8 (i) have or had a capacity of more than 1,000,000 gallons;
40	40	2.9 (ii) are located adjacent to rail facilities; and
41	41	2.10 (iii) have been removed or are unused, underused, inappropriately used, or infrequently
42	42	2.11used; or
43	43	2.12 (4) (5) a qualifying disaster area, as defined in subdivision 10b.
44	44	2.13 (b) For purposes of this subdivision, "structurally substandard" shall mean containing
45	45	2.14defects in structural elements or a combination of deficiencies in essential utilities and
46	46	2.15facilities, light and ventilation, fire protection including adequate egress, layout and condition
47	47	2.16of interior partitions, or similar factors, which defects or deficiencies are of sufficient total
48	48	2.17significance to justify substantial renovation or clearance.
49	49	2.18 (c) A building is not structurally substandard if it is in compliance with the building
50	50	2.19code applicable to new buildings or could be modified to satisfy the building code at a cost
51	51	2.20of less than 15 percent of the cost of constructing a new structure of the same square footage
52	52	2.21and type on the site. The municipality may find that a building is not disqualified as
53	53	2.22structurally substandard under the preceding sentence on the basis of reasonably available
54	54	2.23evidence, such as the size, type, and age of the building, the average cost of plumbing,
55	55	2.24electrical, or structural repairs, or other similar reliable evidence. The municipality may not
56	56	2.25make such a determination without an interior inspection of the property, but need not have
57	57	2.26an independent, expert appraisal prepared of the cost of repair and rehabilitation of the
58	58	2.27building. An interior inspection of the property is not required, if the municipality finds that
59	59	2.28(1) the municipality or authority is unable to gain access to the property after using its best
60	60	2.29efforts to obtain permission from the party that owns or controls the property; and (2) the
61	61	2.30evidence otherwise supports a reasonable conclusion that the building is structurally
62	62	2.31substandard. Items of evidence that support such a conclusion include recent fire or police
63	63	2.32inspections, on-site property tax appraisals or housing inspections, exterior evidence of
64	64	2.33deterioration, or other similar reliable evidence. Written documentation of the findings and
65	65	2Section 1.
66	66	25-00609 as introduced11/26/24 REVISOR MS/DG 3.1reasons why an interior inspection was not conducted must be made and retained under
67	67	3.2section 469.175, subdivision 3, clause (1). Failure of a building to be disqualified under the
68	68	3.3provisions of this paragraph is a necessary, but not a sufficient, condition to determining
69	69	3.4that the building is substandard.
70	70	3.5 (d) A parcel is deemed to be occupied by a structurally substandard building for purposes
71	71	3.6of the finding under paragraph (a) or by the improvements described in paragraph (e) if all
72	72	3.7of the following conditions are met:
73	73	3.8 (1) the parcel was occupied by a substandard building or met the requirements of
74	74	3.9paragraph (e), as the case may be, within three years of the filing of the request for
75	75	3.10certification of the parcel as part of the district with the county auditor;
76	76	3.11 (2) the substandard building or the improvements described in paragraph (e) were
77	77	3.12demolished or removed by the authority or the demolition or removal was financed by the
78	78	3.13authority or was done by a developer under a development agreement with the authority;
79	79	3.14 (3) the authority found by resolution before the demolition or removal that the parcel
80	80	3.15was occupied by a structurally substandard building or met the requirements of paragraph
81	81	3.16(e) and that after demolition and clearance the authority intended to include the parcel within
82	82	3.17a district; and
83	83	3.18 (4) upon filing the request for certification of the tax capacity of the parcel as part of a
84	84	3.19district, the authority notifies the county auditor that the original tax capacity of the parcel
85	85	3.20must be adjusted as provided by section 469.177, subdivision 1, paragraph (f).
86	86	3.21 (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities,
87	87	3.22paved or gravel parking lots, or other similar structures unless 15 percent of the area of the
88	88	3.23parcel contains buildings, streets, utilities, paved or gravel parking lots, or other similar
89	89	3.24structures.
90	90	3.25 (f) For districts consisting of two or more noncontiguous areas, each area must qualify
91	91	3.26as a redevelopment district under paragraph (a) to be included in the district, and the entire
92	92	3.27area of the district must satisfy paragraph (a).
93	93	3.28 EFFECTIVE DATE.This section is effective for districts for which the request for
94	94	3.29certification was made after June 30, 2025.
95	95	3.30 Sec. 2. Minnesota Statutes 2024, section 469.175, subdivision 3, is amended to read:
96	96	3.31 Subd. 3.Municipality approval.(a) A county auditor shall not certify the original net
97	97	3.32tax capacity of a tax increment financing district until the tax increment financing plan
98	98	3Sec. 2.
99	99	25-00609 as introduced11/26/24 REVISOR MS/DG 4.1proposed for that district has been approved by the municipality in which the district is
100	100	4.2located. If an authority that proposes to establish a tax increment financing district and the
101	101	4.3municipality are not the same, the authority shall apply to the municipality in which the
102	102	4.4district is proposed to be located and shall obtain the approval of its tax increment financing
103	103	4.5plan by the municipality before the authority may use tax increment financing. The
104	104	4.6municipality shall approve the tax increment financing plan only after a public hearing
105	105	4.7thereon after published notice in a newspaper of general circulation in the municipality at
106	106	4.8least once not less than ten days nor more than 30 days prior to the date of the hearing. The
107	107	4.9published notice must include a map of the area of the district from which increments may
108	108	4.10be collected and, if the project area includes additional area, a map of the project area in
109	109	4.11which the increments may be expended. The hearing may be held before or after the approval
110	110	4.12or creation of the project or it may be held in conjunction with a hearing to approve the
111	111	4.13project.
112	112	4.14 (b) Before or at the time of approval of the tax increment financing plan, the municipality
113	113	4.15shall make the following findings, and shall set forth in writing the reasons and supporting
114	114	4.16facts for each determination:
115	115	4.17 (1) that the proposed tax increment financing district is a redevelopment district, a
116	116	4.18renewal or renovation district, a housing district, a soils condition district, or an economic
117	117	4.19development district; if the proposed district is a redevelopment district or a renewal or
118	118	4.20renovation district, the reasons and supporting facts for the determination that the district
119	119	4.21meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or
120	120	4.22subdivision 10a, must be documented in writing and retained and made available to the
121	121	4.23public by the authority until the district has been terminated;
122	122	4.24 (2) that, in the opinion of the municipality:
123	123	4.25 (i) the proposed development or redevelopment would not reasonably be expected to
124	124	4.26occur solely through private investment within the reasonably foreseeable future; and
125	125	4.27 (ii) the increased market value of the site that could reasonably be expected to occur
126	126	4.28without the use of tax increment financing would be less than the increase in the market
127	127	4.29value estimated to result from the proposed development after subtracting the present value
128	128	4.30of the projected tax increments for the maximum duration of the district permitted by the
129	129	4.31plan. The requirements of this item do not apply if the district is a housing district;
130	130	4.32 (3) that the tax increment financing plan conforms to the general plan for the development
131	131	4.33or redevelopment of the municipality as a whole;
132	132	4Sec. 2.
133	133	25-00609 as introduced11/26/24 REVISOR MS/DG 5.1 (4) that the tax increment financing plan will afford maximum opportunity, consistent
134	134	5.2with the sound needs of the municipality as a whole, for the development or redevelopment
135	135	5.3of the project by private enterprise;
136	136	5.4 (5) that the municipality elects the method of tax increment computation set forth in
137	137	5.5section 469.177, subdivision 3, paragraph (b), if applicable.
138	138	5.6 (c) When the municipality and the authority are not the same, the municipality shall
139	139	5.7approve or disapprove the tax increment financing plan within 60 days of submission by
140	140	5.8the authority. When the municipality and the authority are not the same, the municipality
141	141	5.9may not amend or modify a tax increment financing plan except as proposed by the authority
142	142	5.10pursuant to subdivision 4. Once approved, the determination of the authority to undertake
143	143	5.11the project through the use of tax increment financing and the resolution of the governing
144	144	5.12body shall be conclusive of the findings therein and of the public need for the financing.
145	145	5.13 (d) For a district that is subject to the requirements of paragraph (b), clause (2), item
146	146	5.14(ii), the municipality's statement of reasons and supporting facts must include all of the
147	147	5.15following:
148	148	5.16 (1) an estimate of the amount by which the market value of the site will increase without
149	149	5.17the use of tax increment financing;
150	150	5.18 (2) an estimate of the increase in the market value that will result from the development
151	151	5.19or redevelopment to be assisted with tax increment financing; and
152	152	5.20 (3) the present value of the projected tax increments for the maximum duration of the
153	153	5.21district permitted by the tax increment financing plan.
154	154	5.22 (e) For purposes of this subdivision, "site" means the parcels on which the development
155	155	5.23or redevelopment to be assisted with tax increment financing will be located.
156	156	5.24 (f) Before or at the time of approval of the tax increment financing plan for a district to
157	157	5.25be used to fund a workforce housing project under section 469.176, subdivision 4c, paragraph
158	158	5.26(d), the municipality shall make the following findings and set forth in writing the reasons
159	159	5.27and supporting facts for each determination:
160	160	5.28 (1) the city is located outside of the metropolitan area, as defined in section 473.121,
161	161	5.29subdivision 2;
162	162	5.30 (2) the average vacancy rate for rental housing located in the municipality and in any
163	163	5.31statutory or home rule charter city located within 15 miles or less of the boundaries of the
164	164	5.32municipality has been three percent or less for at least the immediately preceding two-year
165	165	5.33period;
166	166	5Sec. 2.
167	167	25-00609 as introduced11/26/24 REVISOR MS/DG 6.1 (3) at least one business located in the municipality or within 15 miles of the municipality
168	168	6.2that employs a minimum of 20 full-time equivalent employees in aggregate has provided a
169	169	6.3written statement to the municipality indicating that the lack of available rental housing has
170	170	6.4impeded the ability of the business to recruit and hire employees; and
171	171	6.5 (4) the municipality and the development authority intend to use increments from the
172	172	6.6district for the development of rental housing to serve employees of businesses located in
173	173	6.7the municipality or surrounding area.
174	174	6.8 (g) The county auditor may not certify the original tax capacity of an economic
175	175	6.9development tax increment financing district for a workforce housing project if the request
176	176	6.10for certification is made after June 30, 2027.
177	177	6.11 EFFECTIVE DATE.This section is effective for districts for which the request for
178	178	6.12certification was made after June 30, 2025.
179	179	6.13 Sec. 3. Minnesota Statutes 2024, section 469.175, subdivision 4, is amended to read:
180	180	6.14 Subd. 4.Modification of plan.(a) A tax increment financing plan may be modified by
181	181	6.15an authority.
182	182	6.16 (b) The authority may make the following modifications only upon the notice and after
183	183	6.17the discussion, public hearing, and findings required for approval of the original plan:
184	184	6.18 (1) any reduction or enlargement of geographic area of the project or tax increment
185	185	6.19financing district that does not meet the requirements of paragraph (e);
186	186	6.20 (2) increase in amount of bonded indebtedness to be incurred;
187	187	6.21 (3) a determination to capitalize interest on the debt if that determination was not a part
188	188	6.22of the original plan;
189	189	6.23 (4) increase in the portion of the captured net tax capacity to be retained by the authority;
190	190	6.24 (5) increase in the estimate of the cost of the project, including administrative expenses,
191	191	6.25that will be paid or financed with tax increment from the district; or
192	192	6.26 (6) designation of additional property to be acquired by the authority.
193	193	6.27 (c) If an authority changes the type of district to another type of district, this change is
194	194	6.28not a modification but requires the authority to follow the procedure set forth in sections
195	195	6.29469.174 to 469.179 for adoption of a new plan, including certification of the net tax capacity
196	196	6.30of the district by the county auditor.
197	197	6Sec. 3.
198	198	25-00609 as introduced11/26/24 REVISOR MS/DG 7.1 (d) If a redevelopment district or a renewal and renovation district is enlarged, the reasons
199	199	7.2and supporting facts for the determination that the addition to the district meets the criteria
200	200	7.3of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or subdivision 10a,
201	201	7.4must be documented.
202	202	7.5 (e) The requirements of paragraph (b) do not apply if (1) the only modification is
203	203	7.6elimination of parcels from the project or district and (2)(A) the current net tax capacity of
204	204	7.7the parcels eliminated from the district equals or exceeds the net tax capacity of those parcels
205	205	7.8in the district's original net tax capacity or (B) the authority agrees that, notwithstanding
206	206	7.9section 469.177, subdivision 1, the original net tax capacity will be reduced by no more
207	207	7.10than the current net tax capacity of the parcels eliminated from the district. The authority
208	208	7.11must notify the county auditor of any modification that reduces or enlarges the geographic
209	209	7.12area of a district or a project area.
210	210	7.13 (f) The geographic area of a tax increment financing district may be reduced, but shall
211	211	7.14not be enlarged after five years following the date of certification of the original net tax
212	212	7.15capacity by the county auditor or after August 1, 1984, for tax increment financing districts
213	213	7.16authorized prior to August 1, 1979.
214	214	7.17 EFFECTIVE DATE.This section is effective for districts for which the request for
215	215	7.18certification was made after June 30, 2025.
216	216	7.19 Sec. 4. Minnesota Statutes 2024, section 469.176, subdivision 1b, is amended to read:
217	217	7.20 Subd. 1b.Duration limits; terms.(a) No tax increment shall in any event be paid to
218	218	7.21the authority:
219	219	7.22 (1) after 15 20 years after receipt by the authority of the first increment for a renewal
220	220	7.23and renovation redevelopment district;
221	221	7.24 (2) after 20 years after receipt by the authority of the first increment for a soils condition
222	222	7.25district;
223	223	7.26 (3) after eight years after receipt by the authority of the first increment for an economic
224	224	7.27development district;
225	225	7.28 (4) after 25 years after receipt by the authority of the first increment for a housing district
226	226	7.29or a redevelopment district, after 25 years from the date of receipt by the authority of the
227	227	7.30first increment.
228	228	7.31 (b) For purposes of determining a duration limit under this subdivision or subdivision
229	229	7.321e that is based on the receipt of an increment, any increments from taxes payable in the
230	230	7Sec. 4.
231	231	25-00609 as introduced11/26/24 REVISOR MS/DG 8.1year in which the district terminates shall be paid to the authority. This paragraph does not
232	232	8.2affect a duration limit calculated from the date of approval of the tax increment financing
233	233	8.3plan or based on the recovery of costs or to a duration limit under subdivision 1c. This
234	234	8.4paragraph does not supersede the restrictions on payment of delinquent taxes in subdivision
235	235	8.51f.
236	236	8.6 (c) An action by the authority to waive or decline to accept an increment has no effect
237	237	8.7for purposes of computing a duration limit based on the receipt of increment under this
238	238	8.8subdivision or any other provision of law. The authority is deemed to have received an
239	239	8.9increment for any year in which it waived or declined to accept an increment, regardless of
240	240	8.10whether the increment was paid to the authority.
241	241	8.11 (d) Receipt by a hazardous substance subdistrict of an increment as a result of a reduction
242	242	8.12in original net tax capacity under section 469.174, subdivision 7, paragraph (b), does not
243	243	8.13constitute receipt of increment by the overlying district for the purpose of calculating the
244	244	8.14duration limit under this section.
245	245	8.15 EFFECTIVE DATE.This section is effective for districts for which the request for
246	246	8.16certification was made after June 30, 2025.
247	247	8.17 Sec. 5. Minnesota Statutes 2024, section 469.1763, subdivision 2, is amended to read:
248	248	8.18 Subd. 2.Expenditures outside district.(a) For each tax increment financing district,
249	249	8.19an amount equal to at least 75 percent of the total revenue derived from tax increments paid
250	250	8.20by properties in the district must be expended on activities in the district or to pay bonds,
251	251	8.21to the extent that the proceeds of the bonds were used to finance activities in the district or
252	252	8.22to pay, or secure payment of, debt service on credit enhanced bonds. For districts, other
253	253	8.23than redevelopment districts for which the request for certification was made after June 30,
254	254	8.241995, the in-district percentage for purposes of the preceding sentence is 80 percent. Not
255	255	8.25more than 25 percent of the total revenue derived from tax increments paid by properties
256	256	8.26in the district may be expended, through a development fund or otherwise, on activities
257	257	8.27outside of the district but within the defined geographic area of the project except to pay,
258	258	8.28or secure payment of, debt service on credit enhanced bonds. For districts, other than
259	259	8.29redevelopment districts for which the request for certification was made after June 30, 1995,
260	260	8.30the pooling percentage for purposes of the preceding sentence is 20 percent. The revenues
261	261	8.31derived from tax increments paid by properties in the district that are expended on costs
262	262	8.32under section 469.176, subdivision 4h, may be deducted first before calculating the
263	263	8.33percentages that must be expended within and without the district.
264	264	8Sec. 5.
265	265	25-00609 as introduced11/26/24 REVISOR MS/DG 9.1 (b) In the case of a housing district, a housing project, as defined in section 469.174,
266	266	9.2subdivision 11, is an activity in the district.
267	267	9.3 (c) All administrative expenses are considered to be expenditures for activities outside
268	268	9.4of the district, except that if the only expenses for activities outside of the district under this
269	269	9.5subdivision are for the purposes described in paragraph (d), administrative expenses will
270	270	9.6be considered as expenditures for activities in the district.
271	271	9.7 (d) The authority may elect, in the tax increment financing plan for the district, to increase
272	272	9.8by up to ten percentage points the permitted amount of expenditures for activities located
273	273	9.9outside the geographic area of the district under paragraph (a). As permitted by section
274	274	9.10469.176, subdivision 4k, the expenditures, including the permitted expenditures under
275	275	9.11paragraph (a), need not be made within the geographic area of the project. Expenditures
276	276	9.12that meet the requirements of this paragraph are legally permitted expenditures of the district,
277	277	9.13notwithstanding section 469.176, subdivisions 4b, and 4c, and 4j. To qualify for the increase
278	278	9.14under this paragraph, the expenditures must:
279	279	9.15 (1) be used exclusively to assist housing that meets the requirement for a qualified
280	280	9.16low-income building, as that term is used in section 42 of the Internal Revenue Code; and
281	281	9.17 (2) not exceed the qualified basis of the housing, as defined under section 42(c) of the
282	282	9.18Internal Revenue Code, less the amount of any credit allowed under section 42 of the Internal
283	283	9.19Revenue Code; and
284	284	9.20 (3) be used to:
285	285	9.21 (i) acquire and prepare the site of the housing;
286	286	9.22 (ii) acquire, construct, or rehabilitate the housing; or
287	287	9.23 (iii) make public improvements directly related to the housing; or
288	288	9.24 (4) be used to develop housing:
289	289	9.25 (i) if the market value of the housing does not exceed the lesser of:
290	290	9.26 (A) 150 percent of the average market value of single-family homes in that municipality;
291	291	9.27or
292	292	9.28 (B) $200,000 for municipalities located in the metropolitan area, as defined in section
293	293	9.29473.121, or $125,000 for all other municipalities; and
294	294	9.30 (ii) if the expenditures are used to pay the cost of site acquisition, relocation, demolition
295	295	9.31of existing structures, site preparation, and pollution abatement on one or more parcels, if
296	296	9.32the parcel contains a residence containing one to four family dwelling units that has been
297	297	9Sec. 5.
298	298	25-00609 as introduced11/26/24 REVISOR MS/DG 10.1vacant for six or more months and is in foreclosure as defined in section 325N.10, subdivision
299	299	10.27, but without regard to whether the residence is the owner's principal residence, and only
300	300	10.3after the redemption period has expired; or
301	301	10.4 (5) to assist owner-occupied housing that meets the requirements of section 469.1761,
302	302	10.5subdivision 2.
303	303	10.6 (e) The authority under paragraph (d), clause (4), expires on December 31, 2016.
304	304	10.7Increments may continue to be expended under this authority after that date, if they are used
305	305	10.8to pay bonds or binding contracts that would qualify under subdivision 3, paragraph (a), if
306	306	10.9December 31, 2016, is considered to be the last date of the five-year period after certification
307	307	10.10under that provision.
308	308	10.11 (f) For purposes of determining whether the minimum percentage of expenditures for
309	309	10.12activities in the district and maximum percentages of expenditures allowed on activities
310	310	10.13outside the district have been met under this subdivision, any amounts returned to the county
311	311	10.14auditor as excess increment, as returned increment under subdivision 4, paragraph (g), or
312	312	10.15as remedies under section 469.1771, subdivision 2, shall first be subtracted from the total
313	313	10.16revenues derived from tax increments paid by properties in the district. Any other amounts
314	314	10.17returned to the county auditor for purposes other than a remedy under section 469.1771,
315	315	10.18subdivision 3, are considered to be expenditures for activities in the district.
316	316	10.19 EFFECTIVE DATE.This section is effective for districts for which the request for
317	317	10.20certification was made after June 30, 2025.
318	318	10.21Sec. 6. Minnesota Statutes 2024, section 469.1763, subdivision 6, is amended to read:
319	319	10.22 Subd. 6.Pooling permitted for deficits.(a) This subdivision applies only to districts
320	320	10.23for which the request for certification was made before August 1, 2001, and without regard
321	321	10.24to whether the request for certification was made prior to August 1, 1979.
322	322	10.25 (b) The municipality for the district may transfer available increments from another tax
323	323	10.26increment financing district located in the municipality, if the transfer is necessary to
324	324	10.27eliminate a deficit in the district to which the increments are transferred. The municipality
325	325	10.28may transfer increments as provided by this subdivision without regard to whether the
326	326	10.29transfer or expenditure is authorized by the tax increment financing plan for the district
327	327	10.30from which the transfer is made. A deficit in the district for purposes of this subdivision
328	328	10.31means the lesser of the following two amounts:
329	329	10.32 (1) the amount due during the calendar year to pay preexisting obligations of the district;
330	330	10.33minus the sum of
331	331	10Sec. 6.
332	332	25-00609 as introduced11/26/24 REVISOR MS/DG 11.1 (i) the total increments collected or to be collected from properties located within the
333	333	11.2district that are available for the calendar year including amounts collected in prior years
334	334	11.3that are currently available; plus
335	335	11.4 (ii) total increments from properties located in other districts in the municipality including
336	336	11.5amounts collected in prior years that are available to be used to meet the district's obligations
337	337	11.6under this section, excluding this subdivision, or other provisions of law; or
338	338	11.7 (2) the reduction in increments collected from properties located in the district for the
339	339	11.8calendar year as a result of the changes in classification rates in Laws 1997, chapter 231,
340	340	11.9article 1; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and Laws 2001,
341	341	11.10First Special Session chapter 5, or the elimination of the general education tax levy under
342	342	11.11Laws 2001, First Special Session chapter 5.
343	343	11.12 The authority may compute the deficit amount under clause (1) only (without regard to
344	344	11.13the limit under clause (2)) if the authority makes an irrevocable commitment, by resolution,
345	345	11.14to use increments from the district to which increments are to be transferred and any
346	346	11.15transferred increments are only used to pay preexisting obligations and administrative
347	347	11.16expenses for the district that are required to be paid under section 469.176, subdivision 4h,
348	348	11.17paragraph (a).
349	349	11.18 (c) A preexisting obligation means:
350	350	11.19 (1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a binding
351	351	11.20contract requiring the issuance of bonds entered into before July 1, 2001, and bonds issued
352	352	11.21to refund such bonds or to reimburse expenditures made in conjunction with a signed
353	353	11.22contractual agreement entered into before August 1, 2001, to the extent that the bonds are
354	354	11.23secured by a pledge of increments from the tax increment financing district; and
355	355	11.24 (2) binding contracts entered into before August 1, 2001, to the extent that the contracts
356	356	11.25require payments secured by a pledge of increments from the tax increment financing district.
357	357	11.26 (d) The municipality may require a development authority, other than a seaway port
358	358	11.27authority, to transfer available increments including amounts collected in prior years that
359	359	11.28are currently available for any of its tax increment financing districts in the municipality to
360	360	11.29make up an insufficiency in another district in the municipality, regardless of whether the
361	361	11.30district was established by the development authority or another development authority.
362	362	11.31This authority applies notwithstanding any law to the contrary, but applies only to a
363	363	11.32development authority that:
364	364	11.33 (1) was established by the municipality; or
365	365	11Sec. 6.
366	366	25-00609 as introduced11/26/24 REVISOR MS/DG 12.1 (2) the governing body of which is appointed, in whole or part, by the municipality or
367	367	12.2an officer of the municipality or which consists, in whole or part, of members of the
368	368	12.3governing body of the municipality. The municipality may use this authority only after it
369	369	12.4has first used all available increments of the receiving development authority to eliminate
370	370	12.5the insufficiency and exercised any permitted action under section 469.1792, subdivision
371	371	12.63, for preexisting districts of the receiving development authority to eliminate the
372	372	12.7insufficiency.
373	373	12.8 (e) The authority under this subdivision to spend tax increments outside of the area of
374	374	12.9the district from which the tax increments were collected:
375	375	12.10 (1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c, 4d, 4e,
376	376	12.11and 4i, and 4j; the expenditure limits under section 469.176, subdivision 1c; and the other
377	377	12.12provisions of this section; and the percentage restrictions under subdivision 2 must be
378	378	12.13calculated after deducting increments spent under this subdivision from the total increments
379	379	12.14for the district; and
380	380	12.15 (2) applies notwithstanding the provisions of the Tax Increment Financing Act in effect
381	381	12.16for districts for which the request for certification was made before June 30, 1982, or any
382	382	12.17other law to the contrary.
383	383	12.18 (f) If a preexisting obligation requires the development authority to pay an amount that
384	384	12.19is limited to the increment from the district or a specific development within the district and
385	385	12.20if the obligation requires paying a higher amount to the extent that increments are available,
386	386	12.21the municipality may determine that the amount due under the preexisting obligation equals
387	387	12.22the higher amount and may authorize the transfer of increments under this subdivision to
388	388	12.23pay up to the higher amount. The existence of a guarantee of obligations by the individual
389	389	12.24or entity that would receive the payment under this paragraph is disregarded in the
390	390	12.25determination of eligibility to pool under this subdivision. The authority to transfer increments
391	391	12.26under this paragraph may only be used to the extent that the payment of all other preexisting
392	392	12.27obligations in the municipality due during the calendar year have been satisfied.
393	393	12.28 (g) For transfers of increments made in calendar year 2005 and later, the reduction in
394	394	12.29increments as a result of the elimination of the general education tax levy for purposes of
395	395	12.30paragraph (b), clause (2), for a taxes payable year equals the general education tax rate for
396	396	12.31the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1, for taxes
397	397	12.32payable in 2001, multiplied by the captured tax capacity of the district for the current taxes
398	398	12.33payable year.
399	399	12Sec. 6.
400	400	25-00609 as introduced11/26/24 REVISOR MS/DG 13.1 EFFECTIVE DATE.This section is effective for districts for which the request for
401	401	13.2certification was made after June 30, 2025.
402	402	13.3 Sec. 7. Minnesota Statutes 2024, section 469.177, subdivision 1, is amended to read:
403	403	13.4 Subdivision 1.Original net tax capacity.(a) Upon or after adoption of a tax increment
404	404	13.5financing plan, the auditor of any county in which the district is situated shall, upon request
405	405	13.6of the authority, certify the original net tax capacity of the tax increment financing district
406	406	13.7and that portion of the district overlying any subdistrict as described in the tax increment
407	407	13.8financing plan and shall certify in each year thereafter the amount by which the original net
408	408	13.9tax capacity has increased or decreased as a result of a change in tax exempt status of
409	409	13.10property within the district and any subdistrict, reduction or enlargement of the district or
410	410	13.11changes pursuant to subdivision 4. The auditor shall certify the amount within 30 days after
411	411	13.12receipt of the request and sufficient information to identify the parcels included in the district.
412	412	13.13The certification relates to the taxes payable year as provided in subdivision 6.
413	413	13.14 (b) If the classification under section 273.13 of property located in a district changes to
414	414	13.15a classification that has a different assessment ratio, the original net tax capacity of that
415	415	13.16property must be redetermined at the time when its use is changed as if the property had
416	416	13.17originally been classified in the same class in which it is classified after its use is changed.
417	417	13.18 (c) The amount to be added to the original net tax capacity of the district as a result of
418	418	13.19previously tax exempt real property within the district becoming taxable equals the net tax
419	419	13.20capacity of the real property as most recently assessed pursuant to information reported to
420	420	13.21the commissioner under section 270C.85, subdivision 2, clause (4), or, if that assessment
421	421	13.22was made more than one year prior to the date of title transfer rendering the property taxable,
422	422	13.23the net tax capacity assessed by the assessor at the time of the transfer. If improvements are
423	423	13.24made to tax exempt property after the municipality approves the district and before the
424	424	13.25parcel becomes taxable, the assessor shall, at the request of the authority, separately assess
425	425	13.26the estimated market value of the improvements. If the property becomes taxable, the county
426	426	13.27auditor shall add to original net tax capacity, the net tax capacity of the parcel, excluding
427	427	13.28the separately assessed improvements. If substantial taxable improvements were made to
428	428	13.29a parcel after certification of the district and if the property later becomes tax exempt, in
429	429	13.30whole or part, as a result of the authority acquiring the property through foreclosure or
430	430	13.31exercise of remedies under a lease or other revenue agreement or as a result of tax forfeiture,
431	431	13.32the amount to be added to the original net tax capacity of the district as a result of the
432	432	13.33property again becoming taxable is the amount of the parcel's value that was included in
433	433	13.34original net tax capacity when the parcel was first certified. The amount to be added to the
434	434	13Sec. 7.
435	435	25-00609 as introduced11/26/24 REVISOR MS/DG 14.1original net tax capacity of the district as a result of enlargements equals the net tax capacity
436	436	14.2of the added real property as most recently certified by the commissioner of revenue as of
437	437	14.3the date of modification of the tax increment financing plan pursuant to section 469.175,
438	438	14.4subdivision 4.
439	439	14.5 (d) If the net tax capacity of a property increases because the property no longer qualifies
440	440	14.6under the Minnesota Agricultural Property Tax Law, section 273.111; the Minnesota Open
441	441	14.7Space Property Tax Law, section 273.112; or the Metropolitan Agricultural Preserves Act,
442	442	14.8chapter 473H, the Rural Preserve Property Tax Program under section 273.114, or because
443	443	14.9platted, unimproved property is improved or market value is increased after approval of the
444	444	14.10plat under section 273.11, subdivision 14a or 14b, the increase in net tax capacity must be
445	445	14.11added to the original net tax capacity. If the net tax capacity of a property increases because
446	446	14.12the property no longer qualifies for the homestead market value exclusion under section
447	447	14.13273.13, subdivision 35, the increase in net tax capacity must be added to original net tax
448	448	14.14capacity if the original construction of the affected home was completed before the date the
449	449	14.15assessor certified the original net tax capacity of the district.
450	450	14.16 (e) The amount to be subtracted from the original net tax capacity of the district as a
451	451	14.17result of previously taxable real property within the district becoming tax exempt or
452	452	14.18qualifying in whole or part for an exclusion from taxable market value, or a reduction in
453	453	14.19the geographic area of the district, shall be the amount of original net tax capacity initially
454	454	14.20attributed to the property becoming tax exempt, being excluded from taxable market value,
455	455	14.21or being removed from the district. If the net tax capacity of property located within the tax
456	456	14.22increment financing district is reduced by reason of a court-ordered abatement, stipulation
457	457	14.23agreement, voluntary abatement made by the assessor or auditor or by order of the
458	458	14.24commissioner of revenue, the reduction shall be applied to the original net tax capacity of
459	459	14.25the district when the property upon which the abatement is made has not been improved
460	460	14.26since the date of certification of the district and to the captured net tax capacity of the district
461	461	14.27in each year thereafter when the abatement relates to improvements made after the date of
462	462	14.28certification. The county auditor may specify reasonable form and content of the request
463	463	14.29for certification of the authority and any modification thereof pursuant to section 469.175,
464	464	14.30subdivision 4.
465	465	14.31 (f) If a parcel of property contained a substandard building or improvements described
466	466	14.32in section 469.174, subdivision 10, paragraph (e), that were demolished or removed and if
467	467	14.33the authority elects to treat the parcel as occupied by a substandard building under section
468	468	14.34469.174, subdivision 10, paragraph (b), or by improvements under section 469.174,
469	469	14.35subdivision 10, paragraph (e), the auditor shall certify the original net tax capacity of the
470	470	14Sec. 7.
471	471	25-00609 as introduced11/26/24 REVISOR MS/DG 15.1parcel using the greater of (1) the current net tax capacity of the parcel, or (2) the estimated
472	472	15.2market value of the parcel for the year in which the building or other improvements were
473	473	15.3demolished or removed, but applying the classification rates for the current year.
474	474	15.4 (g) For a redevelopment district qualifying under section 469.174, subdivision 10,
475	475	15.5paragraph (a), clause (4) (5), as a qualified disaster area, the auditor shall certify the value
476	476	15.6of the land as the original tax capacity for any parcel in the district that contains a building
477	477	15.7that suffered substantial damage as a result of the disaster or emergency.
478	478	15.8 EFFECTIVE DATE.This section is effective for districts for which the request for
479	479	15.9certification was made after June 30, 2025.
480	480	15.10Sec. 8. REPEALER.
481	481	15.11 Minnesota Statutes 2024, sections 469.174, subdivision 10a; and 469.176, subdivision
482	482	15.124j, are repealed.
483	483	15.13 EFFECTIVE DATE.This section is effective for districts for which the request for
484	484	15.14certification was made after June 30, 2025.
485	485	15Sec. 8.
486	486	25-00609 as introduced11/26/24 REVISOR MS/DG 469.174 DEFINITIONS.
487	487	Subd. 10a.Renewal and renovation district.(a) "Renewal and renovation district" means a
488	488	type of tax increment financing district consisting of a project, or portions of a project, within which
489	489	the authority finds by resolution that:
490	490	(1)(i) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets,
491	491	utilities, paved or gravel parking lots, or other similar structures; (ii) 20 percent of the buildings
492	492	are structurally substandard; and (iii) 30 percent of the other buildings require substantial renovation
493	493	or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or
494	494	land use relationships, overcrowding of buildings on the land, excessive dwelling unit density,
495	495	obsolete buildings not suitable for improvement or conversion, or other identified hazards to the
496	496	health, safety, and general well-being of the community; and
497	497	(2) the conditions described in clause (1) are reasonably distributed throughout the geographic
498	498	area of the district.
499	499	(b) For purposes of determining whether a building is structurally substandard, whether parcels
500	500	are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures,
501	501	or whether noncontiguous areas qualify, the provisions of subdivision 10, paragraphs (b) through
502	502	(f), apply.
503	503	469.176 LIMITATIONS.
504	504	Subd. 4j.Redevelopment districts.At least 90 percent of the revenues derived from tax
505	505	increments from a redevelopment district or renewal and renovation district must be used to finance
506	506	the cost of correcting conditions that allow designation of redevelopment and renewal and renovation
507	507	districts under section 469.174. These costs include, but are not limited to, acquiring properties
508	508	containing structurally substandard buildings or improvements or hazardous substances, pollution,
509	509	or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit
510	510	development, demolition and rehabilitation of structures, clearing of the land, the removal of
511	511	hazardous substances or remediation necessary to development of the land, and installation of
512	512	utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses
513	513	of the authority, including the cost of preparation of the development action response plan, may be
514	514	included in the qualifying costs.
515	515	1R
516	516	APPENDIX
517	517	Repealed Minnesota Statutes: 25-00609