02-14-2024 Workshop Packet - Laserfiche WebLink

Home Browse Search

RELEVANT LINKS: League of Minnesota Cities Handbook for Minnesota Cities 8/1/2023 Community Development and Redevelopment Chapter 14 | Page 19 It can apply those captured proceeds to specific, designated uses, so long as the benefits at least equal the costs to the city, and it is in the public interest as defined by the statute. Christopher Virta, Growing Trend: Use of Tax Abatement for Economic Development and Public Facilities. The term “abatement” is somewhat misleading, as the phrase is often used to refer to a method of adjusting an individual property owner’s tax burden by adjusting the market value of the property. Instead, in this instance, property tax abatement is an incentive for economic development. When used as a development driver, property tax abatement does not reduce the amount of taxes paid on the property. Instead, the full amount is paid by the taxpayer, and the county auditor refunds the abated portion back to the local government entity that granted the abatement to achieve a specific goal. Minnesota House Research Department, Property Tax Abatements for Economic Development. Goals include paying infrastructure costs associated with a development project, or paying debt service on bonds if tax abatement bonds were issued. If the money is to be refunded to the taxpayer, there must be a contract in place that outlines the conditions that must be satisfied to receive the money – often job creation or wage goals. Minn. Stat. § 469.1813 subd. 2, 5. A city may grant an abatement only by adopting an abatement resolution, specifying the terms of the abatement. The terms should include a specific statement as to the nature and extent of the public benefits the governing body expects to result from the agreement. The resolution may only be adopted after the council holds a public hearing. Minn. Stat. § 469.1814. Minn. Stat. § 469.1813 subd. 6, 8. A city may issue bonds or other obligations to provide an amount equal to the sum of the abatements granted for a specific property. The maximum principal amount of these bonds may not exceed the estimated sum of the abatements for the property for the years authorized. The bonds may be general obligations of the city if the city council chooses to pledge the full faith and credit of the city in the resolution issuing the bonds. The law limits property tax abatements to 15 years. School districts and counties have similar abatement powers. A city, county, and school district can agree to abate their taxes on the same property. G. Housing trust funds Minn. Stat. § 462C.16 subd 2. Cities have authority to establish a local housing trust fund by ordinance or to participate in a joint powers agreement to establish a regional housing trust fund. These trust funds may also be administered through a nonprofit organization. If the fund is administered through a nonprofit organization, that organization shall encourage private charitable donations to the fund.