Purpose

• Create two new tax credits to encourage redevelopment of underutilized property in the city of Brooklyn Center, Minnesota, by converting vacant or underused buildings into usable property and by adding energy-efficient features. The program targets certain properties in qualified census tracts and uses city decisions to determine eligibility. It also requires reporting to the Legislature and has an expiration date.

Key terms and definitions (from the bill)

• eligible property: property located in a qualifying census tract, exempt from certain property taxes, and meeting conditions about tenancy or structural status as determined by the city.
• qualified census tract: specific census tracts identified in the bill (from the 2020 federal census).
• qualified property: eligible property that has been reclassified to certain assessment classifications or is no longer vacant/undeveloped and is not structurally substandard.
• qualified construction expenditures: costs to convert eligible property to qualified property (excluding related sustainable investments) plus costs for related facilities.
• qualified sustainable investment expenditures: costs for LEED certification, solar panels, geothermal systems, energy-efficient HVAC, and green retrofits (excluding construction expenditures).
• related facilities: access roads, lighting, sidewalks, and utility components needed for safe access/use of the property.
• LEED certification, solar panels, geothermal systems, energyefficient HVAC, green retrofits: specific sustainability features included in the eligible expenditures.
• credit certificates: formal credits issued by state agencies confirming the amount of credit available for a taxpayer.

Main provisions: two types of credits

• Credit for qualified construction expenditures
  • Amount: 20% of qualified construction expenditures.
  • How to claim: apply to the commissioner for a credit certificate, with details about location, classification/assessment year, and expenditures; the certificate states the credit amount and expenditures.
  • Limits: not more than one credit certificate per taxpayer per taxable year.
  • Timing: the credit may not be claimed until two taxable years after the year the certificate is issued.
• Credit for qualified sustainable investment expenditures
  • Amount: 30% of qualified sustainable investment expenditures.
  • How to claim: apply to the commissioner of commerce for a credit certificate, in consultation with the commissioner, including location, expenditures, and required documentation; certificate issued within 30 days if eligible; the certificate is shared with the commissioner of revenue.
  • Limits: not more than one credit certificate per taxpayer per taxable year.
  • Timing: the credit may not be claimed until two taxable years after the year the certificate is issued.

How applications and certificates work

• Applicants must apply for credit certificates with the required documentation.
• The agencies issue certificates within a short period after receipt if criteria are met.
• Certificates specify the credit amount and the associated expenditures.
• Credits are not issued more than once per taxpayer per year for each credit type.

City role and resolution requirements

• The city must adopt a resolution finding that the eligible property qualifies under the specified criteria.
• The resolution must be in place a minimum lead time before the first qualified expenditure is made (the exact number of days is specified in the bill but not filled in the text you provided).

Pass-through and allocation

• For partnerships, LLCs treated as partnerships, S corporations, or multiple owners, credits pass through pro rata to owners based on ownership interests, or as otherwise allocated in official documents.

Nonresidents and part-year residents

• Credits are allocated to nonresidents/part-year residents according to a specific percentage method tied to Minnesota tax rules.

Refundability and funding

• If the credit amount exceeds tax liability, the excess is refundable.
• An amount sufficient to pay refunds is appropriated from the general fund.

Reporting to the Legislature

• By January 31, 2031, and every two years thereafter, the commissioners of Revenue and Commerce must report to the legislators’ relevant committees.
• Reports include: total qualified construction expenditures and qualified sustainable investment expenditures by census tract, property classifications of converted and qualified properties, and the total credits awarded for both types.

Sunset and continuation of reporting

• The program expires for taxable years beginning after December 31, 2035 (January 1, 2036).
• Related reporting requirements extend through January 1, 2039.

Significant changes from current law (highlights)

• Establishes two new targeted tax credits specifically tied to converting underutilized property in Brooklyn Center into qualified property, with incentives focused on construction investments (20%) and sustainable investments (30%).
• Introduces a defined framework for eligible properties, qualified census tracts, and related facilities, linking eligibility to specific property classifications and vacancy/underdevelopment status.
• Shifts some administrative responsibilities to the commissioner of revenue and the commissioner of commerce, including the issuance of credit certificates and the sharing of certificate information.
• Adds a mandatory city resolution requirement to trigger eligibility, creating a local approval step before expenditures begin.
• Allows refundable credits and requires annual/biannual reporting to the Legislature, with a sunset in 2036 and extended reporting through 2039.

Relevant terms - eligible property - qualified property - qualified census tract - qualified construction expenditures - qualified sustainable investment expenditures - related facilities - LEED certification - solar panels - geothermal systems - energyefficient HVAC - green retrofits - credit certificate - commissioner of revenue - commissioner of commerce - Brooklyn Center - vacancy - structurally substandard - exemption from taxation (section 272.02) - class 3a (and other classes 1a, 4a, 4d) - pass-through credits - nonresident allocation - refundable credit - appropriation - sunset (2036)