SF2915

Purpose of the Bill

The purpose of this bill is to modify existing tax exemption provisions for institutions recognized as purely public charities in Minnesota. It clarifies the criteria under which these organizations can qualify for tax-exempt status on their real property.

Main Provisions

• Criteria for Exemption: The bill outlines six specific factors that need to be considered for an institution to be recognized as purely public charity, eligible for a property tax exemption:
  1. Helping others without expecting immediate material reward.
  2. Support from donations, gifts, or government grants.
  3. Providing services at reduced or no cost, or services that reduce government burden.
  4. Not distributing profits to private interests.
  5. Open or reasonably related access to charitable objectives.
  6. No distribution of dividends or assets to private interests upon dissolution.
• Justification for Falling Short: An institution may still qualify as a purely public charity even if it does not meet certain criteria (2, 3, or 5), provided it can reasonably justify non-compliance to the assessor.
• Grant Definition: Defines a grant as a transfer of value to support public purposes rather than for direct government benefit acquisition.
• Rental Housing Exclusion: Rental housing cannot qualify for the tax exemption unless its use aligns with the organization’s charitable purpose and is not based solely on serving low-income individuals.

Significant Changes to Existing Law

• The bill revises existing tax exemption laws by specifying more detailed criteria for what constitutes a public charity.
• It introduces the notion of reasonable justification for not meeting certain criteria.
• It addresses and narrows the eligibility for exemptions concerning rental housing, ensuring it strictly aligns with charitable intentions rather than merely based on income levels.

Relevant Terms

public charity, tax exemption, real property, donations, government grants, charitable purpose, rental housing, income characteristics, tax credits, nonprofit organizations