HF3443

Purpose

This bill creates and funds a new state-level tax credit called the Redevelopment Area Homestead Credit. The goal is to provide property tax relief for eligible properties located in redevelopment areas within certain Minnesota cities, and to reimburse local governments for the tax reductions.

Key eligibility and area definitions

• Eligible property must be classified as 1a or 1b under section 273.13 subdivision 2.
• The property must be located in a city of the second class that has been designated as a redevelopment area by the United States Department of Commerce under the Public Works and Economic Development Act of 1965.

How the credit is calculated

• The credit equals 70 percent of the property’s net tax capacity multiplied by the city capital debt tax rate. The city capital debt tax rate is determined under section 275.08 subdivision 1b, paragraph d.

How the credit is administered and paid

• County auditors determine the tax reductions for each taxes payable year and certify the amounts to the commissioner of revenue.
• The commissioner of revenue reviews the certifications for accuracy and can make changes as needed.
• The credit is used to reduce the city net tax capacity-based property tax as described in section 273.1393.

How payments to local governments work

• The commissioner of revenue reimburses each local taxing jurisdiction for the tax reductions in two equal installments in the taxes payable year (on October 31 and December 26). The payments include any prior year adjustments certified under section 270C.85 subdivision 2.

Funding

• An annual amount sufficient to make these payments is appropriated from the general fund to the commissioner of revenue.

Relationship to existing law

• This bill would amend Minnesota Statutes 2024 sections 273.1392 and 273.1393, and sections 275.065 subdivision 3, 275.07 by adding 275.08 subdivision 1b, and 276.04 subdivision 2, and would codify the new Redevelopment Area Homestead Credit in Minnesota Statutes chapter 273.1.7.

Practical impact

• Eligible properties in redevelopment areas in second-class cities could receive a substantial reduction in city net tax capacity-based property taxes (70% of net tax capacity times the city capital debt tax rate).
• Local governments would be reimbursed by the state for these reductions, helping support redevelopment efforts in designated areas.

Relevant terms redevelopment area homestead credit; net tax capacity; city capital debt tax rate; city of the second class; redevelopment area designation; United States Department of Commerce; Public Works and Economic Development Act of 1965; county auditor; commissioner of revenue; tax reductions; two equal installments; October 31; December 26; general fund appropriation; Minnesota Statutes 273.1392; Minnesota Statutes 273.1393; Minnesota Statutes 275.065; Minnesota Statutes 275.07; Minnesota Statutes 275.08; Minnesota Statutes 276.04; 273.13 subdivision 2; 270C.85 subdivision 2.