A bill for an act
relating to taxation; income; proposing a refundable credit for conversion of
underutilized buildings; allowing grants in lieu of the credit; proposing a sunset
for the credit; requiring reports; proposing coding for new law in Minnesota
Statutes, chapter 290.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
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(a) For purposes of this section, the following terms have
the meanings given.
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(b) "Account" means the conversion credit administration account in the special revenue
fund.
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(c) "Applicant" means the developer, owner, or taxpayer applying for the credit or grant
and receiving the allocation certificate.
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(d) "Placed in service" means the completion of substantial conversion work that would
allow for occupancy of the entire building or an identifiable portion of the building.
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(e) "Qualifying conversion expenses" means expenses for a qualifying project.
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(f) "Qualifying project" means a building project:
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(1) to convert a structure that was first placed in service at least fifteen years before
conversion begins;
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(2) that demonstrates significant conversion of use in one of two ways:
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(i) the structure was converted from one commercial, income-producing, habitable use
to another for which the structure had not been previously used or for which purpose the
structure was not intentionally built; or
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(ii) the structure has had at least 50 percent of its occupiable floor area vacant for a
period of no fewer than five years and the proposed conversion will return that vacant area
to an income-producing, habitable condition; and
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(3) that is otherwise eligible for the credit under this section.
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(a) A credit against the tax imposed under this chapter
or a grant is allowed equal to not more than 30 percent of the total cost of qualifying
conversion expenses for a qualifying project. The credit is claimable and the grant is payable
in the year the qualifying project is placed in service.
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(b) To qualify for the credit under this section, the qualifying project must fulfill the
following requirements:
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(1) at least 75 percent of the existing external walls of the structure must be retained as
exterior or interior walls, with at least 50 percent of the existing external walls kept in place
as external walls;
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(2) at least 75 percent of the existing internal structural framework of the building must
be retained in place; and
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(3) the conversion work must commence and be completed within three years of the
date of the allocation certificate issued under subdivision 3.
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(c) An applicant can apply for a credit or a grant or a combination of a credit and grant
under this section.
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(d) A claimant is not allowed a credit or grant under this section for any qualifying
conversion expenses that are used to claim the credit under section 290.0681.
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(a) To qualify for a credit or grant under this section,
the applicant for a qualifying project must apply to the commissioner of employment and
economic development for either a credit or grant, or both, before the conversion begins.
The application must contain the information and be in the form prescribed by the
commissioner of employment and economic development and include the following:
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(1) relevant financial information on the qualifying project, including but not limited to
estimated and final conversion costs, materials costs, labor costs, the number of jobs created
during construction, a calculation of the preconversion adjusted basis, and the assessed
property value in tax year before conversion;
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(2) a statement affirming that the qualifying project meets the requirements under this
section;
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(3) demographic information on the applicant, contractor, and persons employed;
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(4) a statement of whether the application is for a credit or grant in lieu of credit or a
combination of the two; and
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(5) information designating the taxpayer qualifying for the credit or the recipient of the
grant.
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(b) A conversion credit administration account is established in the special revenue fund.
The commissioner of employment and economic development may collect a fee for
application of up to one percent of estimated qualifying conversion expenses to offset costs
associated with personnel and administrative expenses related to administering the credit
and preparing the economic impact report in subdivision 9. Application fees are deposited
in the account.
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(c) Upon approving an application, the commissioner of employment and economic
development shall issue an allocation certificate that:
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(1) verifies an applicant's eligibility for the credit or grant;
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(2) states the amount of credit or grant anticipated to be awarded for the qualifying
project;
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(3) states the fiscal year in which the credit or grant is allocated, and that the taxpayer
or grant recipient is entitled to either the credit or the grant, or both, at the time the qualifying
project is placed in service; and
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(4) states the date after which the allocation is no longer available.
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(d) The commissioner of employment and economic development must determine if the
project is eligible for a credit or a grant, or both, under this section and must notify the
applicant in writing of the determination. Eligibility for the credit is subject to review and
audit by the commissioner of employment and economic development.
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(e) Any decision of the commissioner of employment and economic development under
paragraph (c) may be challenged as a contested case under chapter 14. The contested case
proceeding must be initiated within 45 days of the date of written notification by the
commissioner of employment and economic development.
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(a) The applicant of a qualifying project for which
the commissioner of employment and economic development has issued an allocation
certificate must notify the commissioner of employment and economic development when
the qualifying project is placed in service. Upon verifying that the qualifying project has
been placed in service, the commissioner of employment and economic development must
issue a credit certificate to the taxpayer designated in the application or must pay a grant to