HF2324

Purpose of the Bill

The purpose of this bill is to expand the eligible uses of tax increment financing (TIF) in the cities of Minnetonka, Richfield, and St. Louis Park in Minnesota. The expansion specifically allows for the transfer of some of these funds to local housing trust funds to support housing-related initiatives.

Main Provisions

• Increase in Expenditure Allowance: The bill permits an increase from the standard expenditure limits for activities outside the TIF district. Specifically, the allowable increase is up to 15 percentage points for each city listed.
• Transfer to Housing Trust Funds: The increased funds must be allocated to local housing trust funds as established by Minnesota law. This aims at enhancing housing options within the communities.
• Use of Transferred Funds: The transferred funds are intended to benefit low to moderate-income households:
  • For rental housing support, funds should benefit households earning at or below 80% of the area median income.
  • For homeownership support, funds should benefit households earning at or below 120% of the area median income.

Significant Changes to Existing Law

• The bill introduces a new policy that allows TIF increments to be transferred to local housing trust funds with specified income distribution targets, diverging from their traditional use solely within the TIF districts.
• Transferred increments under this bill will no longer be classified as TIF increments, meaning they are exempt from the usual annual reporting requirements typically imposed on TIF activities.

Relevant Terms

tax increment financing, TIF districts, housing trust funds, area median income, economic development authority, housing and redevelopment authority, rental housing, homeownership