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HF2257 (Legislative Session 94 (2025-2026))

Property tax; provisions related to public charity institution exemptions modified.

Related bill: SF2915

AI Generated Summary

Purpose of the Bill

The bill seeks to modify the criteria for property tax exemptions for institutions classified as public charities in Minnesota. It specifically aims to update the provisions regarding what qualifies an institution as a "purely public charity" under state law.

Main Provisions

  • Public Charity Qualifications: Institutions must meet several key factors to qualify for property tax exemptions. These include:

    1. The charity should provide help without expecting material rewards.
    2. Support should ideally come from donations, gifts, or government grants.
    3. Services should reduce government burdens or be offered at reduced/no cost.
    4. The charity should not generate profit distributed to private interests.
    5. The charity's beneficiaries can be restricted if closely related to the charity's goals.
    6. Profits or assets should not benefit private interests on dissolution.

  • Exceptions to Qualifications: There is flexibility allowing exemptions even if some factors aren't fully met, particularly clauses 2, 3, or 5, provided there's a justified reason not to comply, submitted to the assessor.

  • Rental Housing Property:

    • This type of property is only eligible for exemption if:
    • It furthers the charitable organization's tax-exempt purpose beyond just offering low-income housing.
    • It cannot be solely based on providing housing based on the tenant's income.

  • Definition of a Grant: A grant is defined as a legal instrument facilitating the transfer of funds to support public purposes rather than as payment for specific services.

Significant Changes

  • Rental Housing Clarification: New conditions clarify that rental housing must be integral to the charity's purpose, beyond merely accommodating low-income individuals, to qualify for an exemption.
  • Exemption Retention: Once granted, an exemption remains unless there is a significant change in circumstances.

Relevant Terms

  • Public charity
  • Property tax exemption
  • Federal tax code 501(c)(3)
  • Rental housing
  • Government grants
  • Tax-exempt purpose

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 11, 2025HouseFloorActionIntroduction and first reading, referred toTaxes
March 26, 2025HouseFloorActionAuthor added

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification on exemptions for institutions of purely public charity and conditions for exemption."
      ],
      "removed": [
        "Specific clauses that previously allowed for exemption without justification."
      ],
      "summary": "This bill modifies taxation provisions related to exemptions for institutions of public charity under section 272.02.",
      "modified": [
        "Revised factors for exemption eligibility and introduced additional conditions for rental housing properties."
      ]
    },
    "citation": "272.02"
  },
  {
    "analysis": {
      "added": [
        "Clarification that only 501(c)(3) institutions are considered for certain exemptions."
      ],
      "removed": [
        "N/A"
      ],
      "summary": "This section references federal tax exemption criteria for institutions of public charity.",
      "modified": [
        "N/A"
      ]
    },
    "citation": "501c3"
  }
]

Sponsors