1.2relating to economic development; authorizing redevelopment demolition loans;
1.3amending Minnesota Statutes 2010, sections 116J.571; 116J.572; 116J.575,
1.4by adding a subdivision; proposing coding for new law in Minnesota Statutes,
1.5chapter 116J.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7    Section 1. Minnesota Statutes 2010, section 116J.571, is amended to read:
1.8116J.571 CREATION OF ACCOUNTS.
1.9Two redevelopment accounts are created, one in the general fund and one in the
1.10bond proceeds fund. Money in the accounts for the program may be used to make grants
1.11as provided in section 116J.575 and loans as provided in section 116J.5761 and to pay
1.12for the commissioner's costs in reviewing applications and making grants and loans and
1.13is available until spent. The repayment of principal and interest on loans and other
1.14income earned on money in the accounts may be used for making grants and loans and for
1.15administrative costs and are appropriated for such purposes.

1.16    Sec. 2. Minnesota Statutes 2010, section 116J.572, is amended to read:
1.17116J.572 DEFINITIONS.
1.18    Subdivision 1. Scope of application. For purposes of sections 116J.571 to 116J.575
1.19116J.5765, the terms in this section have the meanings given.
1.20    Subd. 1a. Demolition costs. "Demolition costs" means the costs of demolition,
1.21destruction, removal and clearance of all structures and other improvements on the project
1.22site, including interior remedial activities, and proper disposal thereof. As used in this
1.23subdivision, "structure" has the meaning given it in section 116G.03, subdivision 11.
2.1    Subd. 2. Development authority. "Development authority" includes a statutory
2.2or home rule charter city, county, housing and redevelopment authority, economic
2.3development authority, or port authority.
2.4    Subd. 2a. Metropolitan area. "Metropolitan area" means the seven-county
2.5metropolitan area, as defined in section 473.121, subdivision 2.
2.6    Subd. 2b. Municipality. "Municipality" means the statutory or home rule charter
2.7city, town, or, in the case of unorganized territory, the county in which the redevelopment
2.8or project is located.
2.9    Subd. 3. Redevelopment costs or costs. "Redevelopment costs" or "costs" means
2.10the costs of land acquisition, stabilizing unstable soils when infill is required, demolition,
2.11infrastructure improvements, and ponding or other environmental infrastructure,
2.12demolition costs and costs necessary for adaptive reuse of buildings, including remedial
2.13activities.

2.14    Sec. 3. Minnesota Statutes 2010, section 116J.575, is amended by adding a subdivision
2.15to read:
2.16    Subd. 4. Grant repayment. If a project fails to substantially provide the public
2.17benefits listed in the grant application within five years from the date of the grant award,
2.18the commissioner shall require that 100 percent of the grant amount be repaid by the
2.19development authority over a term not to exceed ten years. The commissioner may
2.20exercise discretion to require repayment of only a portion of the grant amount taking into
2.21account the public benefits generated by the completed development.

2.22    Sec. 4. [116J.5761] LOANS.
2.23    Subdivision 1. Authority. The commissioner may make loans to development
2.24authorities for projects that meet the criteria under sections 116J.5761 to 116J.5764. The
2.25commissioiner may make a loan for up to 100 percent of the estimated land acquisition and
2.26demolition costs of the project. The determination whether to make a loan for a project
2.27is within the discretion of the commissioner, subject to this section, sections 116J.5761
2.28to 116J.5764, and available unencumbered money in the redevelopment accounts. The
2.29commissioner's decisions and application of the priorities under this section are not subject
2.30to judicial review, except for abuse of discretion.
2.31    Subd. 2. Qualifying projects. A project qualifies for a loan under this section,
2.32if the following criteria are met:
2.33(1) the property and structures are owned by the development authority;
2.34(2) the structures on the property have bee vacant for at least one year;
3.1(3) the structures constitute a threat to public safety because of inadequate
3.2maintenance, dilapidation, obsolescence, or abandonment;
3.3(4) the structures are not listed on the National Register of Historic Places; and
3.4(5) upon completion of the demolition, the development authority reasonably
3.5expects that he property will be improved and these improvements will result in economic
3.6development benefits to the municipality.

3.7    Sec. 5. [116J.5762] LOAN APPLICATIONS.
3.8    Subdivision 1. Application required. To obtain a demolition loan, a development
3.9authority shall apply to the commissioner. The governing body of the municipality must
3.10approve the application by resolution.
3.11    Subd. 2. Required content. The commissioner shall prescribe and provide the
3.12application form. The application must include at least the following information:
3.13(1) identification of the property;
3.14(2) proof of ownership by the development authority;
3.15(3) a description of how the structures on the property constitute a threat to public
3.16safety, are functionally obsolete, or are economically unfeasible to repair;
3.17(4) length of vacancy;
3.18(5) a detailed estimate, along with supporting evidence, of the total demolition
3.19costs for the project;
3.20(6) evidence that the structures on the property are not listed on the National Register
3.21of Historic Places;
3.22(7) as assessment of the development potential or likely use of the property after
3.23completion of the demolition plan;
3.24(8) the current appraised or assessed value of the property;
3.25(9) financial documentation necessary for loan underwriting;
3.26(10) other sources of funding if the total estimated demolition costs exceed the
3.27loan amount;
3.28(11) the proposed source of funds to be used for repayment of the loan;
3.29(12) information showing the applicant's financial condition and ability to repay
3.30the loan;
3.31(13) the proposed term and principal repayment schedule for the loan;
3.32(14) the statutory authorization for the applicant to issue bonds, together with a
3.33statement that the statutory provision authorizes the use of proceeds of such bonds to pay
3.34demolition costs and secure the loan; and
3.35(15) any additional information the commissioner prescribes.

4.1    Sec. 6. [116J.5763] PRIORITIES.
4.2    Subdivision 1. Priorities. (a) If applications for loans exceed the available
4.3appropriations, loans shall be made for projects that, in the commissioner's judgment,
4.4provide the highest return in public benefits for the public costs incurred. "Public benefits"
4.5include health, safety and other environmental benefits, blight reduction including
4.6the property's potential for improved economic vitality, functionality and aesthetics,
4.7community stabilization, crime reduction, reduced maintenance costs, and the potential
4.8for future development. In making this judgment, the commissioner shall consider the
4.9following:
4.10(1) the extent to which the existing property conditions threaten public safety;
4.11(2) the length of vacancy of the property;
4.12(3) the development potential of the property;
4.13(4) the proximity of the property to existing sufficient public infrastructure;
4.14(5) the applicant's financial condition and ability to repay the loan.
4.15(b) The factors in paragraph (a) are not listed in a rank order or priority; rather, the
4.16commissioner may weigh each factor, depending upon the facts and circumstances, as
4.17the commissioner considers appropriate. The commissioner may consider other factors
4.18that affect the net return of public benefits.
4.19    Subd. 2. Application cycle. The commissioner shall establish semiannual
4.20application deadlines in which loans will be authorized from available money in the
4.21accounts.

4.22    Sec. 7. [116J.5764] LOAN TERMS AND CONDITIONS.
4.23    Subdivision 1. Terms. Loans to development authorities for demolition costs may
4.24be made by the commissioner subject to the following terms and conditions:
4.25(1) the agreement to repay the loan must be a general obligation of the development
4.26authority, payable primarily from a dedicated source of revenue, and the development
4.27authority must deliver its bond or note to the commissioner to secure the loan;
4.28(2) the term of the loan may not exceed 15 years;
4.29(3) the loan shall bear interest at a rate equal to two percent, but interest will not
4.30accrue during the first two years of the loan term;
4.31(4) the development authority shall make semiannual interest payments and annual
4.32principal payments beginning in the third year of the loan until the end of the term;
4.33(5) the principal amount of a loan may not exceed $1,000,000;
5.1(6) loan proceeds shall be disbursed for eligible demolition costs as incurred or
5.2paid by borrower and upon submission of invoices and other supporting documentation
5.3satisfactory to the commissioner;
5.4(7) an eligible borrower shall establish a dedicated source of revenue for repayment
5.5of the loan.
5.6    Subd. 2. Modification of loan terms. The commissioner has the discretion to
5.7consent to the modification of the rate of interest, time of payment, installment of principal
5.8or interest, or other term of a loan made under sections 116J.5761 to 116J.5764.
5.9    Subd. 3 Forgiveness. The commissioner may forgive principal of the loan and
5.10interest accrued but unpaid thereon, if any, up to 50 percent of the original loan amount,
5.11not to exceed the costs of demolition, upon completion of the redevelopment plan, if the
5.12project would otherwise have received grant funding in the most recent semiannual grant
5.13round, based on the priorities in section 116J.575.

5.14    Sec. 8. [116J.5765] NONLIABILITY.
5.15The state shall have no responsibility or liability relating to or arising out of
5.16activities at the site of a project solely by reason of the making of a grant or loan by the
5.17commissioner under sections 116J.5761 to 116J.5764.