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S.F. No. 2396 - Tax Increment Financing; Providing Use for Certain Workforce Housing
 
Author: Senator LeRoy A. Stumpf
 
Prepared By: Eric S. Silvia, Senate Counsel (651/296-1771)
 
Date: March 12, 2014



 

S.F. 2396 makes several changes to the tax increment financing general law by allowing increment to be used for certain workforce housing.

Section 1 allows contributions under the Minnesota Housing Finance Agency Challenge Program to be made with tax increment.

Section 2 modifies the definition of an economic development tax increment financing district by allowing a workforce housing project (outlined in section 3) to be among the eligible criteria.

Section 3 requires that before or at the time of approval of a tax increment financing plan for a district to be used to fund workforce housing, the municipality must make the following findings:

  1. the unemployment rate for the county is equal to or less than 90% of the statewide unemployment rate for the most recent year;
  2. the percentage of unemployed adults in the county aged 16 to 64 exceeds 80% or the city is located outside the metro and has a residential postsecondary student population equal to or greater than 10% of its total population;
  3. the average vacancy rate for rental housing in a municipality and in any statutory or home rule charter city located within 15 miles or less of the boundaries of the municipality has been 5% or less for at least a two year period;
  4. one or more business in the municipality or within 15 miles of the municipality that employ a minimum of 20 full-time employees have provided a written statement stating that the lack of available rental housing has impeded their ability to hire/recruit employees; and
  5. the municipality and the development authority intent to use increment from the district for the development of rental housing.

Before or at the time of approval of a tax increment financing plan for a district to be used to fund a project to address a chronic shortage of workforce housing, the municipality must make the following findings:

  1. each of the findings noted above (a-e);
  2. the city’s population exceeds 1,500;
  3. the city is located outside the metro; and
  4. fewer than five market rate residential units per 1,000 residents were constructed in the city in each of the last ten years.

Section 4 sets the duration limit of an economic development district used for a project to address a chronic shortage of workforce housing at 25 years.

Section 5 provides that a project qualifies as a workforce housing project if tax increment is used exclusively to assist in the acquisition of property, construction of improvements, loans or subsidies, grants, public infrastructure, and related financing costs for rental housing developments in the municipality.

Section 6 provides that for a project receiving a loan or grant from the Minnesota Housing Finance Agency challenge program, the income limits are substituted for the applicable income limits found within the definition of housing projects under tax increment financing law.

Effective for districts for which the request for certification of the district is made after June 30, 2014.

 

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