HF2006

Purpose of the Bill

This bill aims to modify the rules around tax increment financing (TIF) in Minnesota. It clarifies how unobligated increments can be used, extends the expiration date for these uses, and ensures that the new provisions are used to support development projects that create or retain jobs in the state.

Main Provisions

• Transfer of Unobligated Increment: The bill allows local authorities to transfer unobligated increment for specific development purposes. These include providing financial support for private development projects, such as construction or rehabilitation of buildings, if they contribute to job creation or retention in Minnesota and begin before December 31, 2025.
• Equity Investments: Local authorities may also invest in corporations, partnerships, or LLCs when necessary to make such development projects financially feasible.
• Spending Plan Requirement: Local authorities must create and municipality must approve a written spending plan for the use of these transferred increments. This plan should outline how increments, including any interest earned, will be used, and must be made public through a hearing with proper notice.

Significant Changes to Existing Law

• Expiration Extension: The authority to utilize these increments has been extended from December 31, 2022, to December 31, 2027. All transferred increments must be used or committed by this new deadline, or they must be returned to the district.
• Public Hearing and Plan Amendment: Municipalities can alter the spending plan to extend deadlines and authorize the use of interest on these funds, provided a public hearing is held and the state auditor is notified with a signed and approved copy of any amendments.

Relevant Terms

• Tax Increment Financing (TIF)
• Unobligated Increment
• Local Authority
• Equity Investment
• Development Project
• Job Creation and Retention
• Public Hearing
• Spending Plan
• State Auditor