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HF2574 (Legislative Session 94 (2025-2026))

Tax increment financing; use of increment to convert vacant or underused commercial or industrial buildings to residential purposes authorized, and calculation of increment and findings required for a district converting vacant or underused property modified.

Related bill: SF2824

AI Generated Summary

Purpose of the Bill

The bill aims to modify existing laws concerning tax increment financing (TIF). Specifically, it allows local authorities to use financial increments generated from TIF districts to transform vacant or underutilized commercial or industrial buildings into residential spaces. The legislation seeks to revitalize areas within Minneapolis and St. Paul by encouraging urban redevelopment, particularly of areas not currently in active use.

Main Provisions

  • Definition of Redevelopment Districts: The bill updates the criteria defining a redevelopment district under Minnesota law. A redevelopment district includes areas with a high presence of vacant or underused properties that were previously intended for commercial or industrial use. This change specifically targets districts in Minneapolis or St. Paul.

  • Criteria for Structural Substandard Buildings: The bill stipulates the conditions under which a building is considered structurally substandard. This includes defects in essential utilities or facilities that justify significant renovation or demolition.

  • Use of Increments: It authorizes the use of tax increments to fund the conversion of certain vacant or underused commercial or industrial properties into residential purposes.

  • Demolition and Tax Capacity Adjustment: For parcels with substandard buildings, certain conditions must be met to fund removal projects. This includes having an authority resolution before demolition, which explicitly states the intent to incorporate the parcel into a TIF district post-clearance.

  • Specific Conditions for Inclusion: Amends the conditions under which parcels within a district are deemed occupied by structurally substandard buildings. These conditions contribute to the potential financial return from TIF to support redevelopment goals.

Significant Changes to Existing Law

  • The amendments extend the application of TIF to facilitate residential conversions, thereby broadening the scope beyond traditional commercial or industrial redevelopment purposes.
  • Modifies the percentage of areas within a parcel that must contain buildings or similar structures to qualify for TIF support.
  • Allows for broader local authority discretion in determining and utilizing spaces for residential development, focusing on improving adaptability and revitalizing economic spaces in urban centers.

Relevant Terms

tax increment financing, vacant properties, underused property, redevelopment district, structural substandard buildings, commercial to residential conversion, Minneapolis, St. Paul, increment calculation, urban redevelopment.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 19, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Includes new conditions related to property use in cities such as Minneapolis or St. Paul."
      ],
      "removed": [
        "Old requirements for tank facility properties."
      ],
      "summary": "Amends definition and requirements for redevelopment district classification under Minnesota tax law.",
      "modified": [
        "Clarifies conditions for structural substandardness and allows adjustments in municipality findings."
      ]
    },
    "citation": "469.174"
  },
  {
    "analysis": {
      "added": [
        "New documentation requirements when an interior inspection isn't possible."
      ],
      "removed": [
        "Need for independent expert appraisals under certain conditions."
      ],
      "summary": "Modifies documentation requirements and procedures related to certification of parcels and structural inspections.",
      "modified": [
        "Adjusted process for obtaining permission for property inspections."
      ]
    },
    "citation": "469.175"
  },
  {
    "analysis": {
      "added": [
        "Introduced new criteria for adjusting original tax capacity in redevelopment districts."
      ],
      "removed": [
        "Certain provisions related to noncontiguous areas within districts."
      ],
      "summary": "Amends rules related to the adjustment of original tax capacity of parcels after demolition or redevelopment.",
      "modified": [
        "Clarified adjustments procedures for the certification of tax capacity."
      ]
    },
    "citation": "469.177"
  }
]

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