Technical Tax Increment Financing Bill Approved by Senate Taxes Committee

January 23, 2023

The bill reflects the recommendations of a working group convened by the Office of the State Auditor to address confusing and ambiguous TIF statutes.

The Senate Taxes Committee on Jan.18 approved SF 261 (Taxes Committee Chair Sen. Ann Rest, DFL-New Hope), a bill that contains a collection of technical clarifications and corrections to the statutes governing the use of the tax increment financing (TIF) tool.

The League testified on behalf of the bill as did State Auditor Julie Blaha and Deputy State Auditor Jason Nord, who administers the Tax Increment Financing Division. Metro Cities also shared support for the bill.

The bill was sent to the Senate floor to await consideration by the full Senate.

Provisions of interest

Among other provisions, the bill includes:

  • Clarification of the definition of administrative expense and the limitation on those expenses.
  • A new definition of “pay-as-you-go” contracts and notes.
  • Clarifications to the existing pooling authorization and restrictions.

Previous efforts

In late 2021, the Office of the State Auditor convened a working group to discuss sections of Minnesota Statutes, section 469 that have created confusion for development authorities and for the Office of the State Auditor in their oversight role.

The working group consisted of city representatives and TIF experts as well as representatives from the League of Minnesota Cities, counties and school districts, Metro Cities, and non-partisan legislative staff.

The group’s recommendations were included in both the House and Senate tax bills in 2022, but that bill was never enacted into law.

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