Purpose

Explain and support child care providers who rent the facilities they operate by creating a property tax refund program and updating how rents are treated in the property tax system. The bill aims to reduce the tax burden on rented child care sites and improve program oversight through a required report and state funding.

Main provisions

• Establish a property tax refund program specifically for child care providers that rent a child care facility.
• Require the state to appropriate money to fund this program.
• Amend Minnesota property tax law (section 290A.03, subdivision 12) to redefine “Gross rent” and to cover rents in rental situations tied to eligible child care properties.
• Define gross rent as rent paid for the right of occupancy at arm’s length of a site where a homestead or manufactured home is located or an eligible child care property.
• If landlord and tenant did not deal at arm’s length and the commissioner finds the gross rent excessive, the commissioner may adjust the gross rent to a reasonable amount for purposes of this tax chapter.
• Include, within the concept of property taxes payable, any amount paid by a claimant living in a property that is assessed under specified sections for occupancy, even if the property owner is not the claimant.
• Add new subdivisions (legal code sections) to implement the program, its definitions, and reporting requirements (e.g., provisions labeled 290A.04, 290A.19, 290A.23).

How it changes existing law

• Expands who can receive property tax relief to include child care providers who rent facilities, not just owners.
• Changes how gross rent is calculated and when rents can be adjusted if not at arm’s length, giving the state commissioner authority to modify rents deemed excessive.
• Clarifies that occupancy payments by renters count toward property taxes payable, even when ownership is in someone else’s name.
• Introduces new rules and reporting requirements tied to the program and allocates state funds to support it.

Implementation and oversight

• Requires a formal report (details to be specified) to accompany the program.
• Requires appropriation of funds to support the property tax refund program for rented child care properties.
• Gives the state tax commissioner or relevant authority power to adjust rents in non-arm’s-length situations and to apply these rules to eligible child care properties.

Potential impacts

• Lower operating costs for child care providers who rent spaces, potentially making child care more affordable for families.
• Increased administrative work to administer the refund program and ensure proper reporting.
• Changes in how rental properties used for child care are taxed and how refunds are calculated.

Relevant Terms - property tax refund - child care provider - rent / gross rent - arms length (arm’s-length transaction) - commissioner - property taxes payable - eligible child care property - occupancy - manufactured home - homestead - landlord-tenant - Minnesota Statutes - appropriation - report