Bill Text: MN HF2971 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Tax increment financing; increment expenditure permitted time increased.
Spectrum: Slight Partisan Bill (Democrat 3-1)
Status: (Introduced - Dead) 2014-03-12 - Introduction and first reading, referred to Taxes [HF2971 Detail]
Download: Minnesota-2013-HF2971-Introduced.html
1.2relating to taxation; tax increment financing; increasing the time permitted
1.3to expend increments; amending Minnesota Statutes 2012, section 469.1763,
1.4subdivisions 3, 4; Minnesota Statutes 2013 Supplement, section 469.1763,
1.5subdivision 2.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2013 Supplement, section 469.1763, subdivision 2,
1.8is amended to read:
1.9 Subd. 2. Expenditures outside district. (a) For each tax increment financing
1.10district, an amount equal to at least 75 percent of the total revenue derived from tax
1.11increments paid by properties in the district must be expended on activities in the district
1.12or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
1.13in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
1.14For districts, other than redevelopment districts for which the request for certification
1.15was made after June 30, 1995, the in-district percentage for purposes of the preceding
1.16sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
1.17increments paid by properties in the district may be expended, through a development fund
1.18or otherwise, on activities outside of the district but within the defined geographic area of
1.19the project except to pay, or secure payment of, debt service on credit enhanced bonds.
1.20For districts, other than redevelopment districts for which the request for certification was
1.21made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
1.2220 percent. The revenue derived from tax increments for the district that are expended on
1.23costs under section469.176, subdivision 4h , paragraph (b), may be deducted first before
1.24calculating the percentages that must be expended within and without the district.
2.1 (b) In the case of a housing district, a housing project, as defined in section469.174,
2.2subdivision 11 , is an activity in the district.
2.3 (c) All administrative expenses are for activities outside of the district, except that
2.4if the only expenses for activities outside of the district under this subdivision are for
2.5the purposes described in paragraph (d), administrative expenses will be considered as
2.6expenditures for activities in the district.
2.7 (d) The authority may elect, in the tax increment financing plan for the district,
2.8to increase by up to ten percentage points the permitted amount of expenditures for
2.9activities located outside the geographic area of the district under paragraph (a). As
2.10permitted by section469.176, subdivision 4k , the expenditures, including the permitted
2.11expenditures under paragraph (a), need not be made within the geographic area of the
2.12project. Expenditures that meet the requirements of this paragraph are legally permitted
2.13expenditures of the district, notwithstanding section469.176, subdivisions 4b, 4c, and 4j .
2.14To qualify for the increase under this paragraph, the expenditures must:
2.15 (1) be used exclusively to assist housing that meets the requirement for a qualified
2.16low-income building, as that term is used in section 42 of the Internal Revenue Code; and
2.17 (2) not exceed the qualified basis of the housing, as defined under section 42(c) of
2.18the Internal Revenue Code, less the amount of any credit allowed under section 42 of
2.19the Internal Revenue Code; and
2.20 (3) be used to:
2.21 (i) acquire and prepare the site of the housing;
2.22 (ii) acquire, construct, or rehabilitate the housing; or
2.23 (iii) make public improvements directly related to the housing; or
2.24(4) be used to develop housing:
2.25(i) if the market value of the housing does not exceed the lesser of:
2.26(A) 150 percent of the average market value of single-family homes in that
2.27municipality; or
2.28(B) $200,000 for municipalities located in the metropolitan area, as defined in
2.29section473.121 , or $125,000 for all other municipalities; and
2.30(ii) if the expenditures are used to pay the cost of site acquisition, relocation,
2.31demolition of existing structures, site preparation, and pollution abatement on one or
2.32more parcels, if the parcel contains a residence containing one to four family dwelling
2.33units that has been vacant for six or more months and is in foreclosure as defined in
2.34section325N.10, subdivision 7 , but without regard to whether the residence is the owner's
2.35principal residence, and only after the redemption period has expired.
3.1 (e) For a district created within a biotechnology and health sciences industry zone
3.2as defined in section469.330, subdivision 6 , or for an existing district located within
3.3such a zone, tax increment derived from such a district may be expended outside of the
3.4district but within the zone only for expenditures required for the construction of public
3.5infrastructure necessary to support the activities of the zone, land acquisition, and other
3.6redevelopment costs as defined in section469.176, subdivision 4j . These expenditures are
3.7considered as expenditures for activities within the district.
3.8(f) The authority under paragraph (d), clause (4), expires on December 31, 2016.
3.9Increments may continue to be expended under this authority after that date, if they are
3.10used to pay bonds or binding contracts that would qualify under subdivision 3, paragraph
3.11(a), if December 31, 2016, is considered to be the last date of thefive-year eight-year
3.12 period after certification under that provision.
3.13EFFECTIVE DATE.This section is effective for districts for which the request for
3.14certification was made after June 30, 2007.
3.15 Sec. 2. Minnesota Statutes 2012, section 469.1763, subdivision 3, is amended to read:
3.16 Subd. 3.Five-year Eight-year rule. (a) Revenues derived from tax increments are
3.17considered to have been expended on an activity within the district under subdivision 2
3.18only if one of the following occurs:
3.19(1) before or withinfive eight years after certification of the district, the revenues are
3.20actually paid to a third party with respect to the activity;
3.21(2) bonds, the proceeds of which must be used to finance the activity, are issued and
3.22sold to a third party before or withinfive eight years after certification, the revenues are
3.23spent to repay the bonds, and the proceeds of the bonds either are, on the date of issuance,
3.24reasonably expected to be spent before the end of the later of (i) thefive-year eight-year
3.25 period, or (ii) a reasonable temporary period within the meaning of the use of that term
3.26under section 148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably
3.27required reserve or replacement fund;
3.28(3) binding contracts with a third party are entered into for performance of the
3.29activity before or withinfive eight years after certification of the district and the revenues
3.30are spent under the contractual obligation;
3.31(4) costs with respect to the activity are paid before or withinfive eight years after
3.32certification of the district and the revenues are spent to reimburse a party for payment
3.33of the costs, including interest on unreimbursed costs; or
4.1(5) expenditures are made for housing purposes as permitted by subdivision 2,
4.2paragraphs (b) and (d), or for public infrastructure purposes within a zone as permitted
4.3by subdivision 2, paragraph (e).
4.4(b) For purposes of this subdivision, bonds include subsequent refunding bonds if
4.5the original refunded bonds meet the requirements of paragraph (a), clause (2).
4.6(c) For a redevelopment district or a renewal and renovation district certified after
4.7June 30, 2003, and before April 20, 2009, the five-year periods described in paragraph
4.8(a) are extended to ten years after certification of the district. This extension is provided
4.9primarily to accommodate delays in development activities due to unanticipated economic
4.10circumstances.
4.11EFFECTIVE DATE.This section is effective for districts for which the request for
4.12certification was made after June 30, 2007.
4.13 Sec. 3. Minnesota Statutes 2012, section 469.1763, subdivision 4, is amended to read:
4.14 Subd. 4. Use of revenues for decertification. (a) In each year beginning with the
4.15sixth ninth year following certification of the district, if the applicable in-district percent
4.16of the revenues derived from tax increments paid by properties in the district exceeds the
4.17amount of expenditures that have been made for costs permitted under subdivision 3, an
4.18amount equal to the difference between the in-district percent of the revenues derived from
4.19tax increments paid by properties in the district and the amount of expenditures that have
4.20been made for costs permitted under subdivision 3 must be used and only used to pay or
4.21defease the following or be set aside to pay the following:
4.22(1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);
4.23(2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4);
4.24(3) credit enhanced bonds to which the revenues derived from tax increments are
4.25pledged, but only to the extent that revenues of the district for which the credit enhanced
4.26bonds were issued are insufficient to pay the bonds and to the extent that the increments
4.27from the applicable pooling percent share for the district are insufficient; or
4.28(4) the amount provided by the tax increment financing plan to be paid under
4.29subdivision 2, paragraphs (b), (d), and (e).
4.30(b) The district must be decertified and the pledge of tax increment discharged
4.31when the outstanding bonds have been defeased and when sufficient money has been set
4.32aside to pay, based on the increment to be collected through the end of the calendar year,
4.33the following amounts:
4.34(1) contractual obligations as defined in subdivision 3, paragraph (a), clauses (3)
4.35and (4);
5.1(2) the amount specified in the tax increment financing plan for activities qualifying
5.2under subdivision 2, paragraph (b), that have not been funded with the proceeds of bonds
5.3qualifying under paragraph (a), clause (1); and
5.4(3) the additional expenditures permitted by the tax increment financing plan for
5.5housing activities under an election under subdivision 2, paragraph (d), that have not been
5.6funded with the proceeds of bonds qualifying under paragraph (a), clause (1).
5.7EFFECTIVE DATE.This section is effective for districts for which the request for
5.8certification was made after June 30, 2007.
1.3to expend increments; amending Minnesota Statutes 2012, section 469.1763,
1.4subdivisions 3, 4; Minnesota Statutes 2013 Supplement, section 469.1763,
1.5subdivision 2.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2013 Supplement, section 469.1763, subdivision 2,
1.8is amended to read:
1.9 Subd. 2. Expenditures outside district. (a) For each tax increment financing
1.10district, an amount equal to at least 75 percent of the total revenue derived from tax
1.11increments paid by properties in the district must be expended on activities in the district
1.12or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
1.13in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
1.14For districts, other than redevelopment districts for which the request for certification
1.15was made after June 30, 1995, the in-district percentage for purposes of the preceding
1.16sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
1.17increments paid by properties in the district may be expended, through a development fund
1.18or otherwise, on activities outside of the district but within the defined geographic area of
1.19the project except to pay, or secure payment of, debt service on credit enhanced bonds.
1.20For districts, other than redevelopment districts for which the request for certification was
1.21made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
1.2220 percent. The revenue derived from tax increments for the district that are expended on
1.23costs under section
1.24calculating the percentages that must be expended within and without the district.
2.1 (b) In the case of a housing district, a housing project, as defined in section
2.2subdivision 11
2.3 (c) All administrative expenses are for activities outside of the district, except that
2.4if the only expenses for activities outside of the district under this subdivision are for
2.5the purposes described in paragraph (d), administrative expenses will be considered as
2.6expenditures for activities in the district.
2.7 (d) The authority may elect, in the tax increment financing plan for the district,
2.8to increase by up to ten percentage points the permitted amount of expenditures for
2.9activities located outside the geographic area of the district under paragraph (a). As
2.10permitted by section
2.11expenditures under paragraph (a), need not be made within the geographic area of the
2.12project. Expenditures that meet the requirements of this paragraph are legally permitted
2.13expenditures of the district, notwithstanding section
2.14To qualify for the increase under this paragraph, the expenditures must:
2.15 (1) be used exclusively to assist housing that meets the requirement for a qualified
2.16low-income building, as that term is used in section 42 of the Internal Revenue Code; and
2.17 (2) not exceed the qualified basis of the housing, as defined under section 42(c) of
2.18the Internal Revenue Code, less the amount of any credit allowed under section 42 of
2.19the Internal Revenue Code; and
2.20 (3) be used to:
2.21 (i) acquire and prepare the site of the housing;
2.22 (ii) acquire, construct, or rehabilitate the housing; or
2.23 (iii) make public improvements directly related to the housing; or
2.24(4) be used to develop housing:
2.25(i) if the market value of the housing does not exceed the lesser of:
2.26(A) 150 percent of the average market value of single-family homes in that
2.27municipality; or
2.28(B) $200,000 for municipalities located in the metropolitan area, as defined in
2.29section
2.30(ii) if the expenditures are used to pay the cost of site acquisition, relocation,
2.31demolition of existing structures, site preparation, and pollution abatement on one or
2.32more parcels, if the parcel contains a residence containing one to four family dwelling
2.33units that has been vacant for six or more months and is in foreclosure as defined in
2.34section
2.35principal residence, and only after the redemption period has expired.
3.1 (e) For a district created within a biotechnology and health sciences industry zone
3.2as defined in section
3.3such a zone, tax increment derived from such a district may be expended outside of the
3.4district but within the zone only for expenditures required for the construction of public
3.5infrastructure necessary to support the activities of the zone, land acquisition, and other
3.6redevelopment costs as defined in section
3.7considered as expenditures for activities within the district.
3.8(f) The authority under paragraph (d), clause (4), expires on December 31, 2016.
3.9Increments may continue to be expended under this authority after that date, if they are
3.10used to pay bonds or binding contracts that would qualify under subdivision 3, paragraph
3.11(a), if December 31, 2016, is considered to be the last date of the
3.12 period after certification under that provision.
3.13EFFECTIVE DATE.This section is effective for districts for which the request for
3.14certification was made after June 30, 2007.
3.15 Sec. 2. Minnesota Statutes 2012, section 469.1763, subdivision 3, is amended to read:
3.16 Subd. 3.
3.17considered to have been expended on an activity within the district under subdivision 2
3.18only if one of the following occurs:
3.19(1) before or within
3.20actually paid to a third party with respect to the activity;
3.21(2) bonds, the proceeds of which must be used to finance the activity, are issued and
3.22sold to a third party before or within
3.23spent to repay the bonds, and the proceeds of the bonds either are, on the date of issuance,
3.24reasonably expected to be spent before the end of the later of (i) the
3.25 period, or (ii) a reasonable temporary period within the meaning of the use of that term
3.26under section 148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably
3.27required reserve or replacement fund;
3.28(3) binding contracts with a third party are entered into for performance of the
3.29activity before or within
3.30are spent under the contractual obligation;
3.31(4) costs with respect to the activity are paid before or within
3.32certification of the district and the revenues are spent to reimburse a party for payment
3.33of the costs, including interest on unreimbursed costs; or
4.1(5) expenditures are made for housing purposes as permitted by subdivision 2,
4.2paragraphs (b) and (d), or for public infrastructure purposes within a zone as permitted
4.3by subdivision 2, paragraph (e).
4.4(b) For purposes of this subdivision, bonds include subsequent refunding bonds if
4.5the original refunded bonds meet the requirements of paragraph (a), clause (2).
4.6(c) For a redevelopment district or a renewal and renovation district certified after
4.7June 30, 2003, and before April 20, 2009, the five-year periods described in paragraph
4.8(a) are extended to ten years after certification of the district. This extension is provided
4.9primarily to accommodate delays in development activities due to unanticipated economic
4.10circumstances.
4.11EFFECTIVE DATE.This section is effective for districts for which the request for
4.12certification was made after June 30, 2007.
4.13 Sec. 3. Minnesota Statutes 2012, section 469.1763, subdivision 4, is amended to read:
4.14 Subd. 4. Use of revenues for decertification. (a) In each year beginning with the
4.15
4.16of the revenues derived from tax increments paid by properties in the district exceeds the
4.17amount of expenditures that have been made for costs permitted under subdivision 3, an
4.18amount equal to the difference between the in-district percent of the revenues derived from
4.19tax increments paid by properties in the district and the amount of expenditures that have
4.20been made for costs permitted under subdivision 3 must be used and only used to pay or
4.21defease the following or be set aside to pay the following:
4.22(1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);
4.23(2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4);
4.24(3) credit enhanced bonds to which the revenues derived from tax increments are
4.25pledged, but only to the extent that revenues of the district for which the credit enhanced
4.26bonds were issued are insufficient to pay the bonds and to the extent that the increments
4.27from the applicable pooling percent share for the district are insufficient; or
4.28(4) the amount provided by the tax increment financing plan to be paid under
4.29subdivision 2, paragraphs (b), (d), and (e).
4.30(b) The district must be decertified and the pledge of tax increment discharged
4.31when the outstanding bonds have been defeased and when sufficient money has been set
4.32aside to pay, based on the increment to be collected through the end of the calendar year,
4.33the following amounts:
4.34(1) contractual obligations as defined in subdivision 3, paragraph (a), clauses (3)
4.35and (4);
5.1(2) the amount specified in the tax increment financing plan for activities qualifying
5.2under subdivision 2, paragraph (b), that have not been funded with the proceeds of bonds
5.3qualifying under paragraph (a), clause (1); and
5.4(3) the additional expenditures permitted by the tax increment financing plan for
5.5housing activities under an election under subdivision 2, paragraph (d), that have not been
5.6funded with the proceeds of bonds qualifying under paragraph (a), clause (1).
5.7EFFECTIVE DATE.This section is effective for districts for which the request for
5.8certification was made after June 30, 2007.
