1.1                          A bill for an act 
  1.2             relating to tax increment financing; allowing use of 
  1.3             economic development districts for certain retail 
  1.4             facilities; amending Minnesota Statutes 1996, section 
  1.5             469.176, subdivision 4c. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1996, section 469.176, 
  1.8   subdivision 4c, is amended to read: 
  1.9      Subd. 4c.  [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue 
  1.10  derived from tax increment from an economic development district 
  1.11  may not be used to provide improvements, loans, subsidies, 
  1.12  grants, interest rate subsidies, or assistance in any form to 
  1.13  developments consisting of buildings and ancillary facilities, 
  1.14  if more than 15 percent of the buildings and facilities 
  1.15  (determined on the basis of square footage) are used for a 
  1.16  purpose other than:  
  1.17     (1) the manufacturing or production of tangible personal 
  1.18  property, including processing resulting in the change in 
  1.19  condition of the property; 
  1.20     (2) warehousing, storage, and distribution of tangible 
  1.21  personal property, excluding retail sales; 
  1.22     (3) research and development related to the activities 
  1.23  listed in clause (1) or (2); 
  1.24     (4) telemarketing if that activity is the exclusive use of 
  1.25  the property; 
  2.1      (5) tourism facilities; 
  2.2      (6) qualified border retail facilities; or 
  2.3      (6) (7) space necessary for and related to the activities 
  2.4   listed in clauses (1) to (5) (6).  
  2.5      (b) Notwithstanding the provisions of this subdivision, 
  2.6   revenue derived from tax increment from an economic development 
  2.7   district may be used to pay for site preparation and public 
  2.8   improvements, if the following conditions are met: 
  2.9      (1) bedrock soils conditions are present in 80 percent or 
  2.10  more of the acreage of the district; 
  2.11     (2) the estimated cost of physical preparation of the site 
  2.12  exceeds the fair market value of the land before completion of 
  2.13  the preparation; and 
  2.14     (3) revenues from tax increments are expended only for the 
  2.15  additional costs of preparing the site because of unstable soils 
  2.16  and the bedrock soils condition, the additional cost of 
  2.17  installing public improvements because of unstable soils or the 
  2.18  bedrock soils condition, and reasonable administrative costs. 
  2.19     (c) For purposes of this subdivision, a qualified border 
  2.20  retail facility is a development consisting of a shopping center 
  2.21  or one or more retail stores, if the authority finds that all of 
  2.22  the following conditions are satisfied: 
  2.23     (1) the district is in a city located within one mile or 
  2.24  less of the border of the state; 
  2.25     (2) the development is not located in the seven county 
  2.26  metropolitan area, as defined in section 473.121, subdivision 2, 
  2.27  or in a first class city; 
  2.28     (3) the development will contain new buildings or will 
  2.29  substantially rehabilitate existing buildings that together 
  2.30  contain at least 10,000 square feet of retail space; and 
  2.31     (4) without the use of tax increment financing for the 
  2.32  development, the development or a similar competing development 
  2.33  will instead occur in the bordering state or province. 
  2.34     Sec. 2.  [EFFECTIVE DATE.] 
  2.35     Section 1 is effective the day following final enactment 
  2.36  and applies to all tax increment financing districts, regardless 
  3.1   of when the request for certification was made.