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HF949 (Legislative Session 94 (2025-2026))

Tax increment financing; uses of unobligated increment clarified.

Related bill: SF23

AI Generated Summary

This bill is related to the clarification and expansion of how unobligated tax increment financing (TIF) can be used in Minnesota. The main provisions are as follows:

  1. Usage of Unobligated Increment: Allows the authority (a city or development agency) to transfer unobligated TIF funds for specific purposes:

    • To support private developments that involve construction or substantial rehabilitation of buildings and facilities which will create or retain jobs, provided construction begins before December 31, 2025, and would not start without such assistance.
    • To make equity investments in businesses (corporations, partnerships, or LLCs) when necessary to ensure financial feasibility for developments that qualify under the first point.

  2. Financial Limits: The maximum transfer of funds each year is limited to the amount of unobligated increment remaining after covering six months' worth of obligations on outstanding bonds, contracts, and other financial commitments.

  3. Approval and Planning Requirements:

    • The authority must prepare a written spending plan detailing how the transferred funds will be used.
    • This plan must be approved by the municipality after holding a public hearing, with notices published at least 10 days (but not more than 30 days) before the hearing.

  4. Oversight and Expiration:

    • Any transfers must be reported to the Office of the State Auditor, including a copy of the approved spending plan.
    • The ability to transfer increments will expire on December 31, 2022.
    • All funds transferred under this provision must be spent, loaned, or invested by December 31, 2025.
    • Any unspent, unloaned, or uninvested funds by that date must be returned to the respective district.

These changes aim to provide more flexibility in the use of tax increment funds to stimulate private development and economic growth while setting strict guidelines and deadlines to ensure accountability.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 16, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification on the temporary use and transfer of unobligated increment for private development and investments."
      ],
      "removed": [],
      "summary": "This bill amends the usage of property tax increments as specified in section 469.176 subdivision 4n.",
      "modified": [
        "Extends the deadline for construction commencement eligibility to December 31, 2025.",
        "Specifies procedures for spending plans and public hearings required by municipalities."
      ]
    },
    "citation": "469.176"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References the definition of tax increment as outlined in section 469.174 subdivision 25.",
      "modified": [
        "Clarifies the treatment of returned increments if the district is decertified."
      ]
    },
    "citation": "469.174"
  }
]

Sponsors