SF3869

Purpose

Establishes a Redevelopment Area Homestead Credit to reduce city property taxes for eligible properties in certain second-class cities that have redevelopment areas designated by the U.S. Department of Commerce under the Public Works and Economic Development Act of 1965. The program is funded through state reimbursements to local jurisdictions and is designed to support redevelopment efforts.

Main Provisions

• Eligibility: Property must be classified as 1a or 1b under Minnesota Statutes section 273.13, subdivision 2, and located in a city of the second class that was designated as a redevelopment area by the U.S. Department of Commerce under PWEDA (Public Law 89-136, title IV, section 401a4).
• Credit amount: The credit equals 70 percent of the property’s net tax capacity multiplied by the city capital debt tax rate (as determined under Minnesota Statutes section 275.08, subdivision 1b, paragraph d).
• Credit reimbursements: The county auditor determines the tax reductions allowed under this section for each taxes payable year and certifies the amounts to the commissioner of revenue (under section 270C.85, subdivision 2, clause 1). The commissioner may review, adjust if needed, or return certifications for correction. The credit must be used to reduce the city net tax capacity-based property tax as described in section 273.1393.
• Payment: The commissioner of revenue reimburses each local taxing jurisdiction for the tax reductions in two equal installments on October 31 and December 26 of the taxes payable year, including prior year adjustments certified under section 270C.85, subdivision 2.
• Funding: An amount sufficient to make these payments is annually appropriated from the general fund to the commissioner of revenue.

Significant Changes to Existing Law

• Creates a new standalone credit program called the Redevelopment Area Homestead Credit (section 273.1388) targeting properties in redevelopment areas within second-class cities.
• Establishes a formula based on net tax capacity and the city capital debt tax rate to compute the credit, tying local property tax relief to the city’s debt-related tax rate.
• Introduces a state-to-local reimbursement mechanism with a defined certification, review, and payment process, including two annual payments and adjustments for prior years.
• Requires ongoing annual appropriation from the general fund to fund these reimbursements.

Relevant Terms

Redevelopment Area Homestead Credit; net tax capacity; city capital debt tax rate; city net tax capacity-based property tax; local taxing jurisdiction; county auditor; commissioner of revenue; two equal installments; October 31; December 26; prior year adjustments; 270C.85; 273.1393; 275.08; 1a; 1b; Public Works and Economic Development Act of 1965; United States Department of Commerce; redevelopment area; second-class city.