Tax reduction authority modifications

A bill for an act

relating to taxation; economic development; modifying tax reduction authority;

removing restrictions; amending Minnesota Statutes 2024, sections 469.171,

subdivisions 1, 4, 6a; 469.1731, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 469.171, subdivision 1, is amended to read:

Subdivision 1.

Authorized types.

(a) The following types of tax reductions may be

approved by the commissioner for businesses located in a border city enterprise zone, after

the governing body of the border city has designated an area or areas,
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each consisting of at

least 100 acres, of the city not in excess of a total of 400 acres
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in which the tax reductions

may be provided:

(1) an exemption from the general sales tax imposed by chapter 297A for purchases of

construction materials or equipment for use in the zone if the purchase was made after the

date of application for the zone;

(2) a credit against the income tax of an employer for additional workers employed in

the zone, other than workers employed in construction, up to a maximum of
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$3,000
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$5,000
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per employee per year;

(3) an income tax credit for a percentage of the cost of debt financing to construct new

or expanded facilities in the zone;
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and
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(4) a state paid property tax credit for a portion of the property taxes paid by a new

commercial or industrial facility or the additional property taxes paid by an expansion of

an existing commercial or industrial facility in the zone
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.
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; and
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(5) reimbursement of land acquisition costs for business expansion within the zone if

the municipality determines that expansion was necessary to prevent the business from

relocating outside the state.

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(b) An application for a tax reduction under this subdivision may not be approved unless

the governing body finds
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both: (1)
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that the construction or improvement of the facility is

not likely to have the effect of transferring existing employment from a location outside of

the municipality but within the state
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; and (2) that the facility is in compliance with all

applicable municipal licensing and municipal regulatory requirements
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.

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EFFECTIVE DATE.

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This section is effective for taxable years beginning after December

31, 2025.

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Sec. 2.

Minnesota Statutes 2024, section 469.171, subdivision 4, is amended to read:

Subd. 4.

Restriction.

The tax reductions provided by this section shall not apply to
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:
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(1)
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a facility the primary purpose of which is one of the following: the provision of recreation

or entertainment, or a private or commercial golf course, country club, massage parlor,

tennis club, skating facility including roller skating, skateboard, and ice skating, racquet

sports facility, including any handball or racquetball court, hot tub facility, suntan facility,

or racetrack; (2)
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property of a public utility;
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(3)
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(2)
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property used in the operation of a

financial institution;
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(4)
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or (3)
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property owned by a fraternal or veterans' organization
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; or

(5) a retail food or beverage facility operating under a franchise agreement that requires the

business to be located in this state
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.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 3.

Minnesota Statutes 2024, section 469.171, subdivision 6a, is amended to read:

Subd. 6a.

Additional border city allocations.

The commissioner may allocate $2,000,000

for tax reductions pursuant to subdivision 9 to border city enterprise zones. This money

shall be allocated among the zones on a per capita basis. Tax reductions authorized by this

subdivision may not be allocated to any property which is:

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(1) a facility the primary purpose of which is one of the following: the provision of

recreation or entertainment, or a private or commercial golf course, country club, massage

parlor, tennis club, skating facility including roller skating, skateboard, and ice skating,

racquet sports facility, including any handball or racquetball court, hot tub facility, suntan

facility, or racetrack;

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(2)
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(1)
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property of a public utility;

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(3)
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(2)
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property used in the operation of a financial institution;
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or
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(4)
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(3)
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property owned by a fraternal or veterans' organization
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;
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.
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(5) property of a retail food or beverage service business operating under a franchise

agreement that requires the business to be located in the state.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 4.

Minnesota Statutes 2024, section 469.1731, subdivision 1, is amended to read:

Subdivision 1.

Designation.

To encourage economic development, to revitalize the

designated areas, to expand tax base and economic activity, and to provide job creation,

growth, and retention, the following border cities may designate, by resolution, areas of the

city as development zones after a public hearing upon 30-day notice.

(a) The city of Breckenridge may designate all or any part of the city as a zone.

(b) The city of Dilworth may designate
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between one and six areas of the city as zones

containing not more than 100 acres in the aggregate
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all or any part of the city as a zone
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.

(c) The city of East Grand Forks may designate all or any part of the city as a zone.

(d) The city of Moorhead may designate
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between one and six areas of the city as zones

containing not more than 100 acres in the aggregate
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all or any part of the city as a zone
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.

(e) The city of Ortonville may designate
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between one and six areas of the city as zones

containing not more than 100 acres in the aggregate
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all or any part of the city as a zone
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.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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