HomeMy WebLinkAbout9.a. Special Legislation - Contamination / RemediationCITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
CITY COUNCIL MEETING DATE: November 5, 1991
AGENDA ITEM:
Special Legislation -
AGENDA SECTION:
Contamination/Remediation
Administrator's Report
PREPARED BY:
AGENDA hEFM#
Stephan Jilk,
City Administrator
./ A
ATTACBMENTB:
APP BY
Legislation &
Summary
Qa,
In the 1991 State legislative session the City of Rosemount supported
legislation for the use of tax increment financing for contamination
remediation and development purposes. This legislation did not reach a
successful end but we were able to get the Port Authority legislation
passed as part of that effort.
This year we are again working with Briggs & Morgan and others to get a
similar bill passed. Others have joined in this effort including the
Cities of Minneapolis and St. Paul. We have provided Mr. Dennis Ozment
with a draft of the legislation for his consideration. A "Highlight
Summary" along with a "General Summary" is also available to explain the
legislation in layman's terms.
We wish to present this to you for your consideration and direction to
continue.
RECOMMENDED ACTION
A motion to direct City staff to continue to work on getting special
legislation passed for use of tax increment financing on Contamination
Remediation.
COUNCIL ACTION:
LAW OFFICES
BRIGGS AND MORGAN
PROFESSIONAL ASSOCIATION
2200 FIRST NATIONAL BANK BUILDING
SAINT PAUL, MINNESOTA 55101
To: Distribution List
Re: Polluted Site Tax Increment Legislation
Ladies and Gentlemen:
Enclosed please find a revised draft of the legislation, including both a copy
marked to show changes from the prior draft, and a "clean" version. We have continued
to receive comments on this legislation, and the changes made here reflect those
comments. Many of the changes are purely editorial. The substantive changes occur
in the provisions relating to the guaranty and indemnification fund, where it is made clear
that tax increments may be either deposited in the fund, or pledged to secure an
obligation to make the payments from the fund. We think that change adds a useful
element of flexibility to the use of a guaranty or indemnification fund.
Also included is a summary of the legislation which we have prepared for use in
connection with discussions with legislators. The summary is in two parts: the first a
one-page "Highlight Summary"; the second a somewhat longer summary of the bill.
We have received a letter from Stephan Jilk, the City Administrator of the City of
Rosemount, concerning this legislation. As you know, we drafted special legislation for
the City of Rosemount last year, which was intended to accomplish much the same
purpose as this legislation. Mr. Jilk indicated in his letter to us that the City of Rosemount
is very interested in joining with others to support this legislation, and in fact suggested
that Representative Ozment might be persuaded to sponsor the legislation.
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TELEPHONE (612) 223 - 6600
FACSIMILE (612) 223-6450
October 28, 1991
MINNEAPOLIS OFFICE
2400 I D S CENTER
WRITER'S DIRECT DIAL NUMBER
MINNEAPOLIS, MINNESOTA 60402
TELEPHONE 1612) 334-8400
�t
(612) 223-6618
FACSIMILE (612) 334-8600
To: Distribution List
Re: Polluted Site Tax Increment Legislation
Ladies and Gentlemen:
Enclosed please find a revised draft of the legislation, including both a copy
marked to show changes from the prior draft, and a "clean" version. We have continued
to receive comments on this legislation, and the changes made here reflect those
comments. Many of the changes are purely editorial. The substantive changes occur
in the provisions relating to the guaranty and indemnification fund, where it is made clear
that tax increments may be either deposited in the fund, or pledged to secure an
obligation to make the payments from the fund. We think that change adds a useful
element of flexibility to the use of a guaranty or indemnification fund.
Also included is a summary of the legislation which we have prepared for use in
connection with discussions with legislators. The summary is in two parts: the first a
one-page "Highlight Summary"; the second a somewhat longer summary of the bill.
We have received a letter from Stephan Jilk, the City Administrator of the City of
Rosemount, concerning this legislation. As you know, we drafted special legislation for
the City of Rosemount last year, which was intended to accomplish much the same
purpose as this legislation. Mr. Jilk indicated in his letter to us that the City of Rosemount
is very interested in joining with others to support this legislation, and in fact suggested
that Representative Ozment might be persuaded to sponsor the legislation.
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BRIGGS AND MORGAN
Distribution List
October 28, 1991
Page 2
Representative Ozment was very supportive of Rosemount's earlier legislative proposal.
Rosemount will be in contact with you to provide input and to offer their assistance.
Yours very truly,
r f,
Richard H. Martin
Enclosure
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POLLUT$D BITE TAX INCRMCINT L$GISLATION
HIGHLIGHT SUNKARY
• Need. Many cities in Minnesota contain environmentally
contaminated sites. Those sites cannot be developed because
developers and lenders are afraid of environmental liability.
Under the present system, cities are blocked from inducing
development, and funds are not available to clean up- the
contamination.
0 Purpose. This legislation provides a mechanism for using
tax increment financing and a special tax levy to clean up
contaminated sites.
• Area Plan. A city inventories its contaminated sites, and
formulates a plan to deal with the contamination. The "area plan"
includes both remediation and prevention of future contamination
and action required to prepare the property for development. A
"development action response plan" approved by the MPCA is required
for each contaminated site. A public hearing must be held on the
plan, and the county and school district(s) are given an
opportunity to comment before the plan is finally approved.
• Taz Increments. A tax increment district is formed which
includes the contaminated sites. Tax increments are used to pay
clean-up costs, to pay bonds issued to pay those costs, and to pay
limited other costs such as some kinds of public infrastructure
Tax increments may not be used to finance economic development
itself. The city may form overlapping tax increment districts
under existing law to finance development. Tax increments may be
received and used for up to 25 years from the date of receipt of
the first tax increment. In certain very limited cases,•original
tax capacity may be reduced to provide additional tax increment,
but only for remediation of contamination.
• Guaranty or Indemnification Fund. The city may set up a
guaranty or indemnification fund to protect developers and lenders
from future liability, but the fund may not be used to protect
anyone currently responsible for clean-up costs or anyone who
contributes new contamination to the property.
• Funding. Tax increments are the primary source of funds.
Tax increments are not subject to LGA or RAGA deductions. Tax
increments may be received for 25 years (or longer to the extent
needed to remediate especially serious contamination). A city may
also impose a special tax levy to raise needed funds.
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POLLUTED SITE TAX INCREKENT LEGISLATION
Purpose and Need. The legislation provides a mechanism by
which local government units can use tax increment financing to
cure environmental contamination. There are many sites within the
State of Minnesota which are contaminated because of past uses, or
have become contaminated because of toxic substances in nearby
property. Those sites cannot be put to any productive use because
neither developers nor their lenders will take any risk of
environmental liability. While Minnesota conducts an active
program of remediation of major contaminated sites, both the
present level of funding and any reasonably expected future funding
will be insufficient to accomplish remediation of all contaminated
sites within the state. This legislation provides a means by which
local government units can act more quickly to use local resources
to remove or prevent contamination in an environmentally
responsible manner so that development of those sites can occur.
Process and Procedure. To use the tax increment financing
authorized by this legislation, the local government unit must
inventory all sites within its boundaries which contain
contamination or which must be included to prevent or remediate
contamination. Testing of sites is allowed for this purpose under
strict conditions. The local government unit then forms an "area"
which includes the contaminated sites, the sites necessary to
prevent or remediate contamination, plus a limited amount (up to
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ten acres) of property surrounding each contaminated site. The
local government unit prepares a plan which geographically
describes the area, and which describes the activities required to
remediate contamination, prevent future contamination, and cause
development to occur. The plan, which is similar to a tax
increment financing plan under existing law, must set forth
specific findings and the basis for those findings. The local
government unit must determine that the remediation cost equals or
exceeds $10,000 per acre for contaminated parcels, or $5,000 per
acre for other parcels, or the local government unit must determine
that the fair market value of the contaminated parcels has suffered
a decline in fair market value of not less than 35 percent in the
preceding three years. The local government unit must also find
that the use of this tax increment financing is necessary to allow
development to occur or necessary to cause the fair market value of
the parcels included in the area to be equal to the fair market
value of other similar development property in the same and
adjacent counties.
The local government unit must prepare a development action
response plan for the contaminated parcels which is submitted for
approval to the Minnesota Pollution Control Agency. The local
government unit must also publish a notice of public hearing and
conduct a public hearing on its proposal and must submit its
proposed plan to the county and school district(s) which will be
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affected. The county and school district(s) have the opportunity
to comment on the proposal before final approval of the plan.
The area proposed may include parcels outside the geographic
boundaries of the local government unit, with the consent of the
adjoining local government unit.
IIs• of Taz increment. Tax increments may not be used for
general economic development purposes. Tax increments may be used
to pay or reimburse for environmental remediation costs, to fund or
secure a guaranty or indemnification fund (see discussion below),
to pay bonds issued to finance costs authorized by this
legislation, to pay the cost of certain kinds of public
infrastructure and to pay the cost of acquisition of real property.
Pooling of tax increment within an area is permitted.
Where the costs of remediation will exceed the amount
available, cities may use all or a portion of original tax capacity
to generate additional funds. This may be done only to the extent
needed for remediation of contamination.
Guaranty or Indemnification bund. The legislation permits the
creation of a guaranty or indemnification fund to protect owners,
users and lenders from environmental liability costs. Experience
within the State of Minnesota has demonstrated that developers and
their lenders are so afraid of environmental liability costs, that
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they are unwilling to develop or finance development on previously
contaminated property, even after remediation has occurred, unless
they are protected from future liability. Environmental liability
insurance is available, but extremely expensive. The guaranty or
indemnification fund provides a mechanism by which protection
against environmental liability costs may be provided, thus
permitting future development. Tax increments derived from a
district formed pursuant to an area plan may be deposited in the
guaranty or indemnification fund, or used to secure obligations
payable from that fund. Cities may also amend existing tax
increment plans, under certain conditions, to use tax increments
from existing districts to provide additional funds for
remediation.
A guaranty or indemnification fund may not be used to protect
a person who is already a "responsible person" under Chapter 115B
(that is, an owner, user, occupier or lender who is already
responsible for environmental costs). For the purposes of a
guaranty or indemnification fund, however, a new owner, user,
occupier or lender is not a "responsible person" unless that person
contributes new contamination to the property. Thus, tax -
increments may not be used to protect or indemnify any person who
is liable for environmental costs prior to the date of adoption of
the area plan. only those who come in to develop the property
after environmental remediation will be entitled to the benefit of
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4
the guaranty or indemnification fund and then only if they use the
property in an environmentally responsible manner.
Relationship to Misting Lai►. This legislation supplements
existing tax increment financing law, but does not replace it. If
a local government unit wishes to use tax increment financing for
the actual development of the property in the area, it may do so
only under existing law, and subject to all of the conditions and
limitations of existing law. A local government unit may, however,
form overlapping tax increment districts under this legislation,
and under existing law, to accomplish both environmental
remediation purposes, and development purposes.
Other Provisions. The legislation contains the following
additional provisions:
a. The term of a tax increment district formed under
this legislation is 25 years from the date of receipt of the
first tax increment. The date of the receipt of the first tax
increment may be delayed by up to five years.
b. As under existing law, excess tax increments must be
returned to the county auditor for redistribution.
C. There are no deductions for LGA or HACA.
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d. Modifications -of an area are subject to the same
conditions and limitations as applied to original formation of
the area.
e. No housing and redevelopment authority, port
authority or economic development authority may exercise the
powers of this legislation except upon prior approval of the
host city.
f. Bonds payable from tax increments may be issued to
finance eligible costs.
Romodiation Levy. A local government unit may impose a
special levy to provide additional funds for uses authorized by
this legislation.
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A bill for an act
relating to tax increment financing; authorizing the
establishment of a special environmental treatment area,
the establishment therein of tax increment financing
.districts, and the exercise therein of certain
contaminant remediation and Development powers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. FINDINGS; PURPOSE.
The legislature hereby finds and determines that historical
uses of properties within or adjacent to certain geographic areas
within Minnesota communities have contributed to the known or
15 suspected contamination thereof, that the known or suspected
16 contamination of those geographic areas is significant and
17 widespread, that the welfare of the state requires environmentally
18 sound remediation of contaminated sites, that certain of the
19 contaminated geographic areas can be made suitable for development
20 if contaminants are removed but that such areas cannot be developed
21 for any purpose unless remediation is undertaken, and that the
22 remediation and development of the contaminated geographic areas
23 are public purposes in the interests of environmental quality,
24 contamination management and disposal, and economic development for
25 which the expenditure of public funds and the exercise of the
26 powers provided herein are authorized and in the public interest.
27 It is not the intent of this chapter to relieve any
28 responsible person, as defined in this chapter, from liability
29 under any Minnesota or federal environmental law from liability for
30 any remediation costs associated with such responsible person's
31 ownership, occupancy, use or financing of a contaminated parcel
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1 included in an area formed pursuant to this chapter. The agency,
2 the attorney general, and other Minnesota agencies and officers
3 shall continue to exercise.. their best efforts to identify
4 responsible persons, to cause such responsible persons to carry out
5 remediation with respect to such contaminated parcels, and to
6 recover form such responsible persons the costs of remediation of
7 contaminated parcels.
8 Section 2. DEFINITIONS.
9 As used herein the following terms have the following
10 meanings, respectively:
11 (a) "additional tax increment" means the tax increment
12 received by the city which is derived from any reduction of the
13 original net tax capacity of property within the area pursuant to
14 section 6(d);
15 (b) "agency" means the Minnesota pollution control agency, or
16 any successor to its functions; and
17 (c) "area" means a special environmental treatment area
18 established as provided in section 3;
19 (d) "City" means an "authority" as defined in section
20 469.174, subdivision 2, and a "municipality" as defined in section
21 469.174, subdivision 6, and any housing and redevelopment
22 authority, port authority or economic development authority created
23 pursuant to a special law;
24 (e) "commissioner" means the commissioner or acting
25 commissioner of the agency.
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1 (f) "contamination" means the presence or possible presence
2 on, within, or otherwise affecting the area (or adjacent properties
3 if suspected of being a contributing source of contamination of the
4 area) of any hazardous substance or waste, petroleum or petroleum
5 products and by-products, crude oil or any fraction thereof,
6 polychlorinated biphenyls, asbestos or related materials, volatile
7 organic hydrocarbons, nitrates, and groundwater contaminants; of
S any substances defined as "hazardous substances" or "toxic
9 substances" in the Comprehensive Environmental Response
10 Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sec.
11 9061, et seq.; of any substance defined as "hazardous substance,"
12 "hazardous waste," or "pollutant or contaminant" in the
13 Environmental Response and Liability Act, Minnesota Statutes,
14 section 115B.01, eft sec.; or of any other substance or contaminant
15 whose removal or remediation is necessary to the development of the
16 Area;
17 (g) "development" includes, with respect to the area, the
18 remediation or prevention of contamination, the provision of waste
19 management facilities, the procurement of environmental liability
20 insurance, the establishment of a guaranty or indemnification fund,
21 and other activities necessary to make the parcels included in the
22 area suitable for economic development or housing development, and
23 development further includes the exercise of any of the other
24
powers granted in
section
4, subdivision
2 or elsewhere in
this
25
chapter, including
without
limitation use
of tax increments
and
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1 remediation powers, provided that tax increments may be expended
2 only for eligible costs;
3 (h) "district" means any tax increment financing district
4 established within an area as authorized by sections l to 9;
5 (i) "eligible costs" means the costs -eligible for payment
6 from tax increments as provided in section 7.
7 (j) "plan" means the plan required by section 3, as from time
8 to time amended;
9 (k) "remediation" includes waste management facilities and,
10 with respect to contamination, any activity constituting "removal,"
11 "remedy," "remedial action," or "response" as defined in Minnesota
12 Statutes, section 115B.02; environmental audits; pollution tests;
13 demolition; soil removal, correction, disposal, or compaction;
14 preparation and implementation of environmental response plans;
15 administrative, legal (including litigation), and professional
16 fees; and other activities reasonably related to the prevention or
17 amelioration of contamination;
18 (1) "responsible person" means a responsible person as
19 defined by section 10, subdivision l of this chapter.
20 (m) "tax increment" means the same as "tax increment" as used
21 in the TIF Act and any additional tax increment derived from a
22 district pursuant to section 5(d), and the proceeds of tax
23 increment bonds or other obligations payable in whole or in part
24 from tax increments
25 (n) "tax increment bonds" means bonds or other obligations
26 issued pursuant to section S.
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1 (o) "TIF Act" means Minnesota Statutes, sections 469.174
2 through 469.179, as amended through December 31, 1991, without
3 regard to any subsequent termination, amendment, or other
4 modification thereof;
5 (p) "waste management facilities" means
the development
of
6 any facilities within the area to be engaged
in the recycling
of
7 waste the recovery of materials or energy from waste; or the
8 prevention, remediation, disposal, or treatment of contamination or
9 of other substances or conditions which threaten environmental
10 safety or quality or public health and welfare;
11 Section 3. ESTABLISHMENT OF SPECIAL ENVIRONMENTAL
12 TREATMENT AREA.
13 Subd. 1. Establishment of An Area. A city may establish an
14 area only upon compliance with the requirements of this section.
15 Subd. 2. Geographic Description. A city establishing an area
16 shall inventory all known sites within its jurisdictional
17 boundaries which contain contamination, or the inclusion of which
18 is reasonably required to remediate present contamination or
19 prevent future contamination. For the purposes of the inventory
20 required by the preceding sentence, the city may by resolution
21 authorize testing of any parcel within the city to assess the
22 presence of contamination or to discover facts relevant to whether
23 the parcel should be included in the geographic area described in
24 a plan in order to remediate present contamination or prevent
25 future contamination, subject to the following limitations: (a)
26 the testing shall not unreasonably interfere with the current
27 activity occurring on each parcel tested; (b) the city shall
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1 provide written notice of the testing,
not less than 10 days
prior
2 to the testing, to the owner of record
of the parcel and each
other
3 person with an interest in the parcel whose interest appears
in the
4 public land records of the county, and
each other person occupying
5 or using the parcel if the city has
actual knowledge of
their
6 occupancy or use;
and
(c)
the city
shall bear
the
cost of the
7 testing and of the
cost
of
repair or
restoration
of
any property
8 destroyed or damaged by the testing, provided that the city may
9 recover the cost of the testing and other costs from a person who
10 is a responsible person with respect to the parcel tested, if
11 otherwise permitted by any other law. The agency may, at the
12 request of the city, conduct such testing or cause the testing to
13 be performed, in which case the activities of the agency shall be
14 governed by, at the agency's discretion, this chapter or other
15 applicable law. The area shall consist of all or some of the
16 contaminated sites so identified, together with the parcels to be
17 included in the area for the purposes of remediating present
18 contamination or preventing future contamination, or for the
19 purpose of facilitating future development within the area. An
20 area need not consist of contiguous parcels, but parcels in
21 addition to those which contain contamination may be included only
22 if contiguous to a contaminated parcel, or which are necessary to
23 be included to remediate present contamination or prevent future
24 contamination of contaminated parcels, or which are desirable in
25 order to form a development site surrounding each contaminated
26 site. Each development site may not be larger than a parcel which
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1 include a contaminated site plus 10 acres. The city shall prepare
2 or cause to be prepared a map showing all of the parcels to be
3 included in the area.
4 Subd. 3. Area Plan. The city shall prepare a plan for the
5 area which includes the geographic description and map prepared
6 pursuant to subdivision 2 and which describes the proposed
7 activities within the area to (a) remediate existing contamination
8 in accordance with the development action response plan required by
9 subdivision 6, (b) prevent future contamination, and (c) cause
10 development to occur within the area. The plan shall further
11 estimate the amount and uses of all tax increments and other funds
12 to be derived by the city from the area. The plan shall contain
13 the findings required by subdivisions 4 and 5 and shall provide
14 sufficient detail to show the basis for such findings. To the
15 extent funds other than tax increments are to be applied for the
16 purposes of activities within the area;' the plan shall estimate the
17 sources and uses of such funds. The plan required by this
18 subdivision shall include a tax increment financing plan under
19 section 469.175, subdivision 1, for each district to be established
20 pursuant to the plan, except that a tax increment financing plan
21 may be for more than one such district.
22 Subd. 4. Fair Market value or cost criterion. No city shall
23 establish an area unless the city finds that either (a) the
24 estimated costs of remediating present contamination or preventing.
25 future contamination within the area are no less than $10,000 per
26 acre for each contaminated parcel, or, if a contaminated parcel is
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1 included in a development site established as provided in
2 subdivision 2, $5,000 per acre, or (b) the city finds that the fair
3 market value of the contaminated parcels to be included within the
4 area have suffered a decline in fair market value of not less than
5 35 percent in the preceding three years.
6 Subd. 5. Development Criteria. The city shall not establish
7 an area unless the city finds that establishment of the area and
8 the environmental remediation and prevention activities described
9 in the plan are (a) necessary to allow development to occur on the
10 contaminated sites and related parcels included in the area because
it of the reluctance of private parties to assume the risk of the cost
12 of remediation of the contaminated parcels in the area, or (b)
13 necessary to cause the fair market value of the parcels included in
14 the area to rise to the approximate fair market value of similar
15 property available for development in the county which includes the
16 city and adjacent counties. The plan shall describe the specific
17 kinds of development expected to occur, and the increases, if any,
18
in tax capacity
expected to
result
from the
development.
19
Subd. 6.
Development
Action
Response
Plan. The city shall
20 not establish an area or approve the plan for the area until a
21 development action response plan as defined in section 469.174,
22 subdivision 17, has been submitted to the agency and the
23 commissioner of the agency has approved or modified the development
24 action response plan, provided that, notwithstanding any other law,
25 the commissioner shall review the development action response plan
26 and approve, modify or reject the recommended actions within 90
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1 days after submission of the plan, or revised plan. All
2 contaminated parcels may be included in a development action
3 response plan, or separate development action response plans may be
4 submitted for one or more contaminated sites.
5 Subd. 7. Plan Review and Approval. The city shall not give
6 final approval to the plan until the review, hearing and approval
7 procedures of this subdivision have been satisfied. The city shall
8 publish notice of a public hearing on the plan at least once not
9 less than 14 days prior to a public hearing on the plan to be
10 conducted by the governing body of the city, or by city officials
it designated to conduct the hearing. A copy of the proposed plan
12 shall be made available for public inspection from and after the
13 date of publication of the notice of hearing during normal business
14 hours at the administrative offices of the city. At the hearing,
15 the city shall receive comments on the plan from all those who
16 desire to speak thereon, and shall accept comments submitted in
17 writing at or before the hearing. The city shall also afford others
18 a reasonable opportunity to comment on the plan at the hearing.
19 Following the hearing, and any revisions to the plan based on
20 the comments received by the city, the city shall submit the plan
21 to the county and each school district whose jurisdictional
22 boundaries include any part of the area. The county and school
23 district shall have 30 days in which to review the plan and provide
24 their comments to the city.
25 Following receipt of comments from the county and school"
26 district, or the expiration of the 30 day comment period, the city
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1 shall revise the proposed plan as the city shall determine to be
2 appropriate, or as required by federal or State environmental
3 protection laws. The city may then give final approval to the
4 plan, and proceed with implementation of the plan.
5 Subd. 8. Modification of the Area. Following final approval
6 of the plan, the city may eliminate properties from the area but
7 shall not enlarge the area except upon satisfaction of the
8 following conditions:
9 (a) the city satisfies the requirements of this section with
10 respect to the parcels to be added to the area; and
11 (b) the enlargement must contain contamination, or in its
12 inclusion within the area is necessary for remediation purposes.
13 Subd. 9. Extraterritorial Area. An area may include parcels
14 outside the geographic boundaries of the city only if the city and
15 the subject city or township shall have entered into a mutually
16 acceptable agreement,.hereby authorized, of the type described in
17 Minnesota Statutes, section 471.59, authorizing the city to
18 exercise therein the powers granted hereby, subject -to the
19 conditions or limitations provided in the agreement. Tax
20 increments derived from the parcels outside the boundaries of the
21 city shall be paid to the city unless otherwise provided in the
22 agreement for all or a portion of the tax increments.
23 Section 4. STATUS OF AREA POWERS OF CITY.
24
Subd. 1. Status
of Area. The area
shall constitute and be
25
deemed a "project" of
the City within
the meaning of section
26
469.174, subdivision 8,
of the TIF Act; an
"industrial development
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1 district" as described in section 469.058, subdivision 1; a
2 "project" as described in section 469.002, subdivision 12; and a
3 "development district" as described in section 469.125,
4 subdivision 9.
5 Subd. 2. Powers of the City. With respect to development of
6 the area, the city may exercise all powers granted hereby and all
7 powers of or relating to a port authority, a housing and
8 redevelopment authority, and an economic development authority
9 pursuant to chapter 469, or other law; and the city may establish
10 within the area and modify from time to time one or more tax
it increment financing district(s) pursuant to and subject to the
12 provisions of the area plan and the TIF Act as herein modified and
13 supplemented, and to expend tax increments derived therefrom on
14 eligible costs.
15 Subd. 3. Guaranty or Indemnification Fund. In addition to
16 the powers otherwise granted hereby, a city shall have the power to
17 establish and maintain a guaranty or indemnification fund with
18 respect to any contaminated parcel, or more than one such -parcel,
19 included within the area. Funds held in the guaranty or
20 indemnification fund shall be available upon terms and conditions
21 determined by the city through agreement or resolution to any
22 person (other than a responsible person as defined in section 10,
23 subdivision 1) to protect the person from liability for remediation
24 costs arising under any state or federal environmentallaw,
25 regulation, ruling order or decision with respect to such
26 contaminated parcel or parcels by reason of the person's use,
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1 occupancy, ownership or financing associated with such contaminated
2 parcel. Tax increments derived from a district established as
3 authorized by this chapter, together with any other funds available
4 to the city, may be deposited in or otherwise used to secured
5 payments from the guaranty or indemnification fund, together with
6 other funds available to the city. Tax increments derived from a
7 district established as authorized by the TIF Act may also be
8
deposited in
the a
guaranty or
indemnification fund,
9
notwithstanding
any contrary provision of
the TIF Act. The city
10
shall be liable
under the
guaranty or indemnification only to the
11
extent of funds
available
in or otherwise
pledged to the guaranty
12
or indemnification
fund.
The guaranty or indemnification fund
13 shall be held or maintained in or with any financial institution or
14 corporate fiduciary eligible for the deposit of public moneys or
15 eligible to act as a trustee or fiduciary for bonds or other
16 obligations issued under chapter •'475. The guaranty or
17 indemnification fund shall be held and maintained for the period
18 agreed to by the city, except that tax increments may deposited
19 therein or otherwise used to secure payments therefrom only during
20 the period permitted by section 5, clause (b), and provided that
21 upon expiration of the period of guaranty or indemnification all
22 unexpended moneys then held in the guaranty or indemnification fund
23 shall be deemed excess tax increments and returned to the county
24 auditor for redistribution. Investment earnings (net of investment
25 losses) on moneys held in the guaranty or indemnification fund
26 shall, at the option of the city, beretainedtherein or disbursed
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to the city and applied to other eligible costs. Tax increments
used or pledged to secure payments from the guaranty or
indemnification fund may be irrevocably pledged for that purpose,
and neither filing nor possession is required to perfect the
security interest created by the pledge.
Subd. 4. Remediation Levy. Any city which has established an
area may annually levy 0. percent of taxable market value.
The proceeds of this levy must be deposited in either a remediation
fund available solely to pay costs of remediation of contaminated
parcels within the area, or a guaranty or indemnification fund.
The levy may be imposed only during the period specified by section
5, clause (b).
Section 5. LIMITATIONS; OTHER PROVISIONS.
Every tax increment financing district established by the city
pursuant hereto shall be subject to the following provisions:
(a) Request for certification thereof shall be filed with the
county auditor before December 1 of the year following the third
year in which the city gives final approval to the plan, but the
city may by written notice to the county auditor elect to defer
receipt of the first increment from any district until any year
beginning not later than five years after the date of the request
for certification, which election may thereafter be -amended to
provide an earlier year of commencement of increment provided the
notice thereof is filed with the county auditor before December 1
of the previous year.
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1 (b) No tax increment from a district shall be paid to the
2 city after January 1 of the year which is 25 years after the year
3 of receipt of the first tax increment, provided that tax increment
4 may be paid to the city under clause (d) for the period necessary
5 to pay or provide for the payment of remediation costs or to make
6 required deposits in or otherwise secure payments from a guaranty
7 or indemnification fund relating to parcels for which the city
8 makes an election under clause (d).
9 (c) Section 469.1763 of the TIF Act shall not apply to the
10 district. Tax increment may be expended or reserved for
11 expenditure by the city for eligible costs, and only for such
12 eligible costs.
13 (d) Concurrently with the original request for certification
14 or at any subsequent time during the life of a district within the
15 area and established as provided in the plan, the city may elect in
16 writing to the county auditor to reduce the original net -tax
17 capacity of the district, or portions thereof selected by the city,
18 by up to 100 percent, and all additional tax increment derived from
19 the reduction shall be expended only for the costs of remediation
20 of contaminated parcels within the area, or to make deposits in or
21 otherwise secure payments from a guaranty or indemnification fund.
22 When the city has received sufficient additional tax increment to
23 pay or to provide for payment of all the remediation costs, or to
24 make required deposits in or otherwise secure payments from a
25 guaranty or indemnification fund, whether or not the city's
26 undertaking to pay the remediation costs is contingent, the city
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1 shall within 60 days notify the county auditor of such occurrence
2 and shall treat all the additional tax increment which may exceed
3 such requirements as excess tax increment. The city shall return
4 the excess tax increments to the county auditor for redistribution,
5 and the county auditor shall, upon receipt of the notice, increase
6 the original net tax capacity of the district to that original net
7 tax -capacity thatwouldat the time prevail had no such reduction
8 been made. The reduction of the original net tax capacity
9 permitted by this clause (d) shall be made only upon findings by
10 the city, supported by written reasons or facts, that properties
11 within the district contain significant contamination or are
12 adjacent to such contaminated properties except for the
13 interposition of a right-of-way (collectively, the "site"), that
14 the development of the district would not reasonably be expected to
15 occur through private investment and tax increment otherwise
16 available, that properties not a part of the site are expected to
17 - be developed together with the site, and that the site is not
18 larger than, and the period of time during which the additional tax
19 increment is received is not longer than, that which is necessary
20 to provide the funds required for remediation of the site as set
21 forth in the plan and the development action response pian for the
22 site, or to make required deposits in or otherwise provide security
23 for a guaranty or indemnification fund.
24 (e) The city shall decertify each district upon receipt of
25 sufficient tax increment therefrom to pay, or to provide for the
26 payment of, all of the eligible costs respecting the area, and the
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1 city shall treat all
such tax increment
which may exceed such
2 requirements as excess
tax increment which
the city shall return to
3 the county auditor for redistribution.
4 (f) In establishing or modifying a district included in the
5 area and established pursuant to the plan, subdivisions 1(7), la,
6 and 7 of section 469.175 shall not apply and the findings otherwise
7 required by subdivision 3 thereof shall not be required, except
8 that the city shall make the finding, which shall be supported by
9 the city with written reasons or supporting facts, that the action
10 is reasonably required in the judgment of the city in furtherance
11 of the development of the area.
12 (g) The following provisions of the TIF Act shall not apply
13 to any district: subdivisions 7(b) and (c), 16, and 17 (except as
14 provided otherwise in Section 5(e) hereof) of section 469.174;
15 subdivisions 1(d), (e), and (g) and subdivisions 3, 4e, 4h, 5, 6,
16 and 7 of section 469.176; and section 469.1762.
17 (h) No housing and redevelopment authority, port authority or
18 economic development authority may exercise the powers granted by
19 this chapter except upon the prior approval, by resolution, of the
20 governing body of the statutory or home rule city or cities or
21 township or townships included in whole or in part within the area
22 established pursuant to section 3.
23 (i) Nothing in this chapter shall be construed to prevent or
24 preclude a city from establishing one or more tax increment
25 districts under the TIF Act for any purpose permitted thereby, and
26 any such district may include all or some of an area or any
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1 district established under this chapter. To the extent permitted
2 by this chapter or the applicable provisions of the TIF Act, the
3 city may allocate tax increments derived from districts established
4 under this chapter or the TIF Act between the purposes thereof,
5 except that tax increments derived from the authority of clause (d)
6 shall only be applied as provided therein.
7 Section 6. INTER -GOVERNMENTAL COOPERATION AND ASSISTANCE.
8 The city, the agency, the attorney general, any city as
9 defined in section 2(b), and any agency of the state or the
10 University of Minnesota are authorized to cooperate with one
11 another and to take such individual or collective actions as may be
12 deemed necessary or desirable to assist development and remediation
13 within the area, including without limitation the preparation and
14 execution of development action response plans, the rendering of
15 legal and technical advice and other assistance, and the, transfer
16 of any of its properties within the area to the city or to other
17 entities in furtherance of the development of the area, and all
18 properties so transferred by a state agency or the University of
19 Minnesota shall, whenever included within a district within the
20 area and established pursuant to the plan and notwithstanding any
21 other provision of the TIF Act, have an original net tax capacity -
22 of zero.
23 Section 7. ELIGIBLE COSTS.
24 For the purposes of this chapter, eligible costs shall mean
25 all of the following, all of which costs shall be payable from tax
26 increments:
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1 (a) to pay, or reimburse any person for thepaymentof,
2 remediation costs;
3 (b) the cost of funding or otherwise providing security for a
4 guaranty or indemnification fund as permitted by section 4,
5 subdivision 3, or to pay the premiums on environmental
6 liability insurance obtained by the city or by any other
7 person with respect to any real property within the area;
8 (c) the cost of paying the principal of and interest on bonds
9 or other obligations of the city and costs associated
10 therewith or the cost of paying the interest on other bonds or
11 other obligations or establishing and maintaining a reserve
12 fund for such other bonds or other obligations, all as
13 permitted by section 8;
14 (d) the cost of issuing bonds or other obligations payable
15 from tax increments derived from an area and customary
16 financing costs associated therewith, including discount,
17 capitalized interest and interest on such obligations;
18 (e) the cost of real property acquisition for land within the
19 - area and site preparation in connection with development
20 thereon;
21 (f) the cost of public infrastructure extensions and
22 installations including water, sanitary and storm sewer,
23 ponding and drainage improvements, including such improvements
24 located outside the boundaries of the area if necessary for
25 remediation of contamination or prevention of future
26 contamination or to facilitate development of the area;
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1 (g) reasonable administrative costs;
2 (h) the costs of other of all other activities and
3 improvements authorized hereby; and
4 (i) costs reasonably related to the-�feregoing.
5 All such eligible costs are hereby declared to be costs of a
6 project for which tax increments and other public funds may be
7 expended.
8 Section 8. FINANCING
9 To finance eligible costs, the city may issue bonds or other
10 obligations, payable in whole or in part from tax increments in
11 accordance with section 469.178 and the use of tax increments to
12 pay the principal of and interest on such bonds and other costs
13 associated therewith shall be an eligible cost. The city may apply
14 tax increments to pay all or a portion of the interest on bonds or
15 other obligations issued by public or private entities to finance
16 eligible costs of development incurred with respect to parcels
17 within the area or to establish or maintain reserve_ "funds in
18 connection therewith.
19 Section 9. RELATIONSHIP TO TAX INCREMENT FINANCING ACT.
20 Subd. 1. In General. To the extent that any provision of the
21 TIF Act conflicts or is otherwise consistent with any provision
22 hereof, the provisions hereof shall apply and govern. Nothing
23 herein shall limit or prevent the exercise by the city of any power
24 or authority it may have, and the city may, without limitation, in
25 connection with the exercise of any such power respecting
26 development or the establishment of a tax increment financing
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1 district therein, elect not to use the authority granted hereby and
2 instead proceed under and subject to all of the terms of such other
3 applicable law, including all provisions of sections 469.174
4 through 469.179 with respect to a tax increment financing district.
5 Subd. 2. Guaranty or Indemnification Fund. Notwithstanding
6 any provision of the TIF Act to the contrary, an authority as
7 defined in the TIF Act may amend the tax increment financing plan
8 - with respect to any district to permit the deposit or pledge of tax
9 increments derived from the district, or the proceeds of bonds or
10
other obligations payable from
the tax
increments, in
a guaranty or
11
indemnification fund created
under
this chapter
or to secure
12 payments from the fund if the amendment is approved on or before
13 the date which is 5 years before the latest termination date of the
14 district permitted by the TIF Act.
15 Section 10. RESPONSIBLE PERSONS.
16 Subd. 1. Responsible Person. The term "responsible person"
17_ shall mean a responsible person as defined by section 115B.03, but
18 excluding, for the purposes of this chapter, any person who did not
19 own, use, occupy or provide financing with respect to a
20 contaminated parcel prior to the date of final approval of a plan,
21 which includes such contaminated parcel, unless such person caused
22 additional contamination of such parcel after the date of such
23 final approval.
24 Subd. 2. No Indemnity. The city shall not agree to indemnify
25 or hold harmless any responsible person, as defined in subdivision
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1 1, from any losses, costs or damages arising from the application
2 of chapter 115B or other Minnesota or federal environmental law.
3 Subd. 3. Recovery From Responsible Persons. The city, the
4 agency, the attorney general and other appropriate Minnesota and
5 federal environmental regulatory agencies or persons authorized to
6 enforce Minnesota and federal environmental laws shall enforce the
7 provisionsofMinnesota and federal environmental laws against all
8 responsible persons, as defined in this chapter --All _ amounts
9 recovered from such responsible persons with respect to parcels
10 included in the area shall be deposited with the city to the extent
11 required or permitted by other law.
12 Subd. 4 Amounts Recovered. All amounts recovered, from
13 responsible persons, as defined in this chapter, pursuant to
14 subdivision 2 and deposited with the city, shall be deemed tax
15 increments derived from a district formed pursuant to this chapter
16 and applied to (a) the payment of the costs of recover, or (b) to
17 the payment of eligible costs or (c) returned to the county auditor
18 for redistribution.
19 Section 11. SPECIAL LEVY
20 - Minnesota Statutes 1991, Section 275.50, subdivision 5 is
21 hereby amended as follows:
22 .......
23 (cc) for a city, the amount of the levy authorized by Laws
24 1992, chapter , section 4, subdivision 4.
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1 Section 12. EFFECTIVE DATE.
2 Sections 1 through 9 are effective the day following final
3 enactment.
4
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