Bill Text: MN SF1441 | 2011-2012 | 87th Legislature | Engrossed
Bill Title: Redevelopment demolition loans authorization; contamination cleanup report modification
Spectrum: Partisan Bill (Republican 4-0)
Status: (Introduced - Dead) 2012-04-24 - HF substituted on General Orders HF1721 [SF1441 Detail]
Download: Minnesota-2011-SF1441-Engrossed.html
1.2relating to economic development; authorizing redevelopment demolition loans;
1.3eliminating a semiannual report;amending Minnesota Statutes 2010, sections
1.4116J.555, subdivision 2; 116J.571; 116J.572; 116J.575, by adding a subdivision;
1.5proposing coding for new law in Minnesota Statutes, chapter 116J.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2010, section 116J.555, subdivision 2, is amended to
1.8read:
1.9 Subd. 2. Application cycles; reporting to legislature. (a) In making grants, the
1.10commissioner shall establish semiannual application deadlines in which grants will be
1.11authorized from all or part of the available appropriations of money in the account.
1.12(b) After each semiannual cycle in which grants are awarded, the commissioner shall
1.13report to the environment and natural resources committees of the senate and house of
1.14representatives, the Finance Division of the senate Committee on Environment and Natural
1.15Resources, and the house of representatives Committee on Environment and Natural
1.16Resources finance the grants awarded and appropriate supporting information describing
1.17each grant made. This report must be made within 30 days after the grants are awarded.
1.18(c) (b) The commissioner shall annually report to the legislative committees in
1.19paragraph (b) committees of the senate and house of representatives with jurisdiction over
1.20environment and natural resources finance on the status of the cleanup projects undertaken
1.21under grants made under the programs. The commissioner shall include in the annual
1.22report information on the cleanup and development activities undertaken for the grants
1.23made in that and previous fiscal years. The commissioner shall make this report no later
1.24than 120 days after the end of the fiscal year.
2.1 Sec. 2. Minnesota Statutes 2010, section 116J.571, is amended to read:
2.2116J.571 CREATION OF ACCOUNTS.
2.3Two redevelopment accounts are created, one in the general fund and one in
2.4the bond proceeds fund. Moneyin the accounts for the program may be used to make
2.5grants as provided in section116J.575 and loans as provided in section 116J.5761 and
2.6to pay for the commissioner's costs in reviewing applications and making grants and
2.7loans and is available until spent. The repayment of principal and interest on loans and
2.8investment income earned on money in the account is deposited in the special revenue
2.9fund and may be used for making grants and loans and for administrative costs and are
2.10appropriated for such purposes.
2.11 Sec. 3. Minnesota Statutes 2010, section 116J.572, is amended to read:
2.12116J.572 DEFINITIONS.
2.13 Subdivision 1. Scope of application. For purposes of sections116J.571 to
116J.575
2.14116J.5765, the terms in this section have the meanings given.
2.15 Subd. 1a. Demolition costs. "Demolition costs" means the costs of demolition,
2.16destruction, removal and clearance of all structures and other improvements on the project
2.17site, including interior remedial activities, and proper disposal thereof. As used in this
2.18subdivision, "structure" has the meaning given it in section 116G.03, subdivision 11.
2.19 Subd. 2. Development authority. "Development authority" includes a statutory
2.20or home rule charter city, county, housing and redevelopment authority, economic
2.21development authority, or port authority.
2.22 Subd. 2a. Metropolitan area. "Metropolitan area" means the seven-county
2.23metropolitan area, as defined in section473.121, subdivision 2 .
2.24 Subd. 2b. Municipality. "Municipality" means the statutory or home rule charter
2.25city, town, or, in the case of unorganized territory, the county in which the redevelopment
2.26or project is located.
2.27 Subd. 3. Redevelopment costs or costs. "Redevelopment costs" or "costs" means
2.28the costs of land acquisition, stabilizing unstable soils when infill is required,demolition,
2.29infrastructure improvements, and ponding or other environmental infrastructure,
2.30demolition costs and costs necessary for adaptive reuse of buildings, including remedial
2.31activities.
2.32 Sec. 4. Minnesota Statutes 2010, section 116J.575, is amended by adding a subdivision
2.33to read:
3.1 Subd. 4. Grant repayment. If a project fails to substantially provide the public
3.2benefits listed in the grant application within five years from the date of the grant award,
3.3the commissioner may require that 100 percent of the grant amount be repaid by the
3.4development authority over a term not to exceed ten years. The commissioner may
3.5exercise discretion to require repayment of only a portion of the grant amount taking into
3.6account the public benefits generated by the completed development.
3.7 Sec. 5. [116J.5761] LOANS.
3.8 Subdivision 1. Authority. The commissioner may make loans to development
3.9authorities for projects that meet the criteria under sections 116J.5761 to 116J.5764. The
3.10commissioner may make a loan for up to 100 percent of the estimated land acquisition and
3.11demolition costs of the project. The determination whether to make a loan for a project
3.12is within the discretion of the commissioner, subject to this section, sections 116J.5761
3.13to 116J.5764, and available unencumbered money in the redevelopment accounts. The
3.14commissioner's decisions and application of the priorities under this section are not subject
3.15to judicial review, except for abuse of discretion.
3.16 Subd. 2. Qualifying projects. A project qualifies for a loan under this section,
3.17if the following criteria are met:
3.18(1) the property and structures are owned by the development authority;
3.19(2) the structures on the property have been vacant for at least one year;
3.20(3) the structures constitute a threat to public safety because of inadequate
3.21maintenance, dilapidation, obsolescence, or abandonment;
3.22(4) the structures are not listed on the National Register of Historic Places; and
3.23(5) upon completion of the demolition, the development authority reasonably
3.24expects that the property will be improved and these improvements will result in economic
3.25development benefits to the municipality.
3.26 Sec. 6. [116J.5762] LOAN APPLICATIONS.
3.27 Subdivision 1. Application required. To obtain a demolition loan, a development
3.28authority shall apply to the commissioner. The governing body of the municipality must
3.29approve the application by resolution.
3.30 Subd. 2. Required content. The commissioner shall prescribe and provide the
3.31application form. The application must include at least the following information:
3.32(1) identification of the property;
3.33(2) proof of ownership by the development authority;
4.1(3) a description of how the structures on the property constitute a threat to public
4.2safety, are functionally obsolete, or are economically unfeasible to repair;
4.3(4) length of vacancy;
4.4(5) a detailed estimate, along with supporting evidence, of the total demolition
4.5costs for the project;
4.6(6) evidence that the structures on the property are not listed on the National Register
4.7of Historic Places;
4.8(7) as assessment of the development potential or likely use of the property after
4.9completion of the demolition plan;
4.10(8) the current appraised or assessed value of the property;
4.11(9) financial documentation necessary for loan underwriting;
4.12(10) other sources of funding if the total estimated demolition costs exceed the
4.13loan amount;
4.14(11) the proposed source of funds to be used for repayment of the loan;
4.15(12) information showing the applicant's financial condition and ability to repay
4.16the loan;
4.17(13) the proposed term and principal repayment schedule for the loan;
4.18(14) the statutory authorization for the applicant to issue bonds, together with a
4.19statement that the statutory provision authorizes the use of proceeds of such bonds to pay
4.20demolition costs and secure the loan; and
4.21(15) any additional information the commissioner prescribes.
4.22 Sec. 7. [116J.5763] PRIORITIES.
4.23 Subdivision 1. Priorities. (a) If applications for loans exceed the available
4.24appropriations, loans shall be made for projects that, in the commissioner's judgment,
4.25provide the highest return in public benefits for the public costs incurred. "Public benefits"
4.26include health, safety and other environmental benefits, blight reduction including
4.27the property's potential for improved economic vitality, functionality and aesthetics,
4.28community stabilization, crime reduction, reduced maintenance costs, and the potential
4.29for future development. In making this judgment, the commissioner shall consider the
4.30following:
4.31(1) the extent to which the existing property conditions threaten public safety;
4.32(2) the length of vacancy of the property;
4.33(3) the development potential of the property;
4.34(4) the proximity of the property to existing sufficient public infrastructure;
4.35(5) the applicant's financial condition and ability to repay the loan.
5.1(b) The factors in paragraph (a) are not listed in a rank order or priority; rather, the
5.2commissioner may weigh each factor, depending upon the facts and circumstances, as
5.3the commissioner considers appropriate. The commissioner may consider other factors
5.4that affect the net return of public benefits.
5.5 Subd. 2. Application cycle. The commissioner shall establish semiannual
5.6application deadlines in which loans will be authorized from available money in the
5.7accounts.
5.8 Sec. 8. [116J.5764] LOAN TERMS AND CONDITIONS.
5.9 Subdivision 1. Terms. Loans to development authorities for demolition costs may
5.10be made by the commissioner subject to the following terms and conditions:
5.11(1) the agreement to repay the loan must be a general obligation of the development
5.12authority, payable primarily from a dedicated source of revenue, and the development
5.13authority must deliver its bond or note to the commissioner to secure the loan;
5.14(2) the term of the loan may not exceed 15 years;
5.15(3) the loan shall bear interest at a rate equal to two percent, but interest will not
5.16accrue during the first two years of the loan term;
5.17(4) the development authority shall make semiannual interest payments and annual
5.18principal payments beginning in the third year of the loan until the end of the term;
5.19(5) the principal amount of a loan may not exceed $1,000,000;
5.20(6) loan proceeds shall be disbursed for eligible demolition costs as incurred or
5.21paid by borrower and upon submission of invoices and other supporting documentation
5.22satisfactory to the commissioner;
5.23(7) an eligible borrower shall establish a dedicated source of revenue for repayment
5.24of the loan.
5.25 Subd. 2. Modification of loan terms. The commissioner has the discretion to
5.26consent to the modification of the rate of interest, time of payment, installment of principal
5.27or interest, or other term of a loan made under sections 116J.5761 to 116J.5764.
5.28 Subd. 3. Forgiveness. The commissioner may forgive principal of the loan and
5.29interest accrued but unpaid thereon, if any, up to 50 percent of the original loan amount,
5.30not to exceed the costs of demolition, upon completion of the redevelopment plan, if the
5.31project would otherwise have received grant funding in the most recent semiannual grant
5.32round, based on the priorities in section 116J.575.
5.33 Sec. 9. [116J.5765] NONLIABILITY.
6.1The state shall have no responsibility or liability relating to or arising out of
6.2activities at the site of a project solely by reason of the making of a grant or loan by the
6.3commissioner under sections 116J.5761 to 116J.5764.
1.3eliminating a semiannual report;amending Minnesota Statutes 2010, sections
1.4116J.555, subdivision 2; 116J.571; 116J.572; 116J.575, by adding a subdivision;
1.5proposing coding for new law in Minnesota Statutes, chapter 116J.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2010, section 116J.555, subdivision 2, is amended to
1.8read:
1.9 Subd. 2. Application cycles; reporting to legislature. (a) In making grants, the
1.10commissioner shall establish semiannual application deadlines in which grants will be
1.11authorized from all or part of the available appropriations of money in the account.
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20environment and natural resources finance on the status of the cleanup projects undertaken
1.21under grants made under the programs. The commissioner shall include in the annual
1.22report information on the cleanup and development activities undertaken for the grants
1.23made in that and previous fiscal years. The commissioner shall make this report no later
1.24than 120 days after the end of the fiscal year.
2.1 Sec. 2. Minnesota Statutes 2010, section 116J.571, is amended to read:
2.2116J.571 CREATION OF ACCOUNTS.
2.3Two redevelopment accounts are created, one in the general fund and one in
2.4the bond proceeds fund. Money
2.5grants as provided in section
2.6to pay for the commissioner's costs in reviewing applications and making grants and
2.7loans and is available until spent. The repayment of principal and interest on loans and
2.8investment income earned on money in the account is deposited in the special revenue
2.9fund and may be used for making grants and loans and for administrative costs and are
2.10appropriated for such purposes.
2.11 Sec. 3. Minnesota Statutes 2010, section 116J.572, is amended to read:
2.12116J.572 DEFINITIONS.
2.13 Subdivision 1. Scope of application. For purposes of sections
2.14116J.5765, the terms in this section have the meanings given.
2.15 Subd. 1a. Demolition costs. "Demolition costs" means the costs of demolition,
2.16destruction, removal and clearance of all structures and other improvements on the project
2.17site, including interior remedial activities, and proper disposal thereof. As used in this
2.18subdivision, "structure" has the meaning given it in section 116G.03, subdivision 11.
2.19 Subd. 2. Development authority. "Development authority" includes a statutory
2.20or home rule charter city, county, housing and redevelopment authority, economic
2.21development authority, or port authority.
2.22 Subd. 2a. Metropolitan area. "Metropolitan area" means the seven-county
2.23metropolitan area, as defined in section
2.24 Subd. 2b. Municipality. "Municipality" means the statutory or home rule charter
2.25city, town, or, in the case of unorganized territory, the county in which the redevelopment
2.26or project is located.
2.27 Subd. 3. Redevelopment costs or costs. "Redevelopment costs" or "costs" means
2.28the costs of land acquisition, stabilizing unstable soils when infill is required,
2.29infrastructure improvements, and ponding or other environmental infrastructure,
2.30demolition costs and costs necessary for adaptive reuse of buildings, including remedial
2.31activities.
2.32 Sec. 4. Minnesota Statutes 2010, section 116J.575, is amended by adding a subdivision
2.33to read:
3.1 Subd. 4. Grant repayment. If a project fails to substantially provide the public
3.2benefits listed in the grant application within five years from the date of the grant award,
3.3the commissioner may require that 100 percent of the grant amount be repaid by the
3.4development authority over a term not to exceed ten years. The commissioner may
3.5exercise discretion to require repayment of only a portion of the grant amount taking into
3.6account the public benefits generated by the completed development.
3.7 Sec. 5. [116J.5761] LOANS.
3.8 Subdivision 1. Authority. The commissioner may make loans to development
3.9authorities for projects that meet the criteria under sections 116J.5761 to 116J.5764. The
3.10commissioner may make a loan for up to 100 percent of the estimated land acquisition and
3.11demolition costs of the project. The determination whether to make a loan for a project
3.12is within the discretion of the commissioner, subject to this section, sections 116J.5761
3.13to 116J.5764, and available unencumbered money in the redevelopment accounts. The
3.14commissioner's decisions and application of the priorities under this section are not subject
3.15to judicial review, except for abuse of discretion.
3.16 Subd. 2. Qualifying projects. A project qualifies for a loan under this section,
3.17if the following criteria are met:
3.18(1) the property and structures are owned by the development authority;
3.19(2) the structures on the property have been vacant for at least one year;
3.20(3) the structures constitute a threat to public safety because of inadequate
3.21maintenance, dilapidation, obsolescence, or abandonment;
3.22(4) the structures are not listed on the National Register of Historic Places; and
3.23(5) upon completion of the demolition, the development authority reasonably
3.24expects that the property will be improved and these improvements will result in economic
3.25development benefits to the municipality.
3.26 Sec. 6. [116J.5762] LOAN APPLICATIONS.
3.27 Subdivision 1. Application required. To obtain a demolition loan, a development
3.28authority shall apply to the commissioner. The governing body of the municipality must
3.29approve the application by resolution.
3.30 Subd. 2. Required content. The commissioner shall prescribe and provide the
3.31application form. The application must include at least the following information:
3.32(1) identification of the property;
3.33(2) proof of ownership by the development authority;
4.1(3) a description of how the structures on the property constitute a threat to public
4.2safety, are functionally obsolete, or are economically unfeasible to repair;
4.3(4) length of vacancy;
4.4(5) a detailed estimate, along with supporting evidence, of the total demolition
4.5costs for the project;
4.6(6) evidence that the structures on the property are not listed on the National Register
4.7of Historic Places;
4.8(7) as assessment of the development potential or likely use of the property after
4.9completion of the demolition plan;
4.10(8) the current appraised or assessed value of the property;
4.11(9) financial documentation necessary for loan underwriting;
4.12(10) other sources of funding if the total estimated demolition costs exceed the
4.13loan amount;
4.14(11) the proposed source of funds to be used for repayment of the loan;
4.15(12) information showing the applicant's financial condition and ability to repay
4.16the loan;
4.17(13) the proposed term and principal repayment schedule for the loan;
4.18(14) the statutory authorization for the applicant to issue bonds, together with a
4.19statement that the statutory provision authorizes the use of proceeds of such bonds to pay
4.20demolition costs and secure the loan; and
4.21(15) any additional information the commissioner prescribes.
4.22 Sec. 7. [116J.5763] PRIORITIES.
4.23 Subdivision 1. Priorities. (a) If applications for loans exceed the available
4.24appropriations, loans shall be made for projects that, in the commissioner's judgment,
4.25provide the highest return in public benefits for the public costs incurred. "Public benefits"
4.26include health, safety and other environmental benefits, blight reduction including
4.27the property's potential for improved economic vitality, functionality and aesthetics,
4.28community stabilization, crime reduction, reduced maintenance costs, and the potential
4.29for future development. In making this judgment, the commissioner shall consider the
4.30following:
4.31(1) the extent to which the existing property conditions threaten public safety;
4.32(2) the length of vacancy of the property;
4.33(3) the development potential of the property;
4.34(4) the proximity of the property to existing sufficient public infrastructure;
4.35(5) the applicant's financial condition and ability to repay the loan.
5.1(b) The factors in paragraph (a) are not listed in a rank order or priority; rather, the
5.2commissioner may weigh each factor, depending upon the facts and circumstances, as
5.3the commissioner considers appropriate. The commissioner may consider other factors
5.4that affect the net return of public benefits.
5.5 Subd. 2. Application cycle. The commissioner shall establish semiannual
5.6application deadlines in which loans will be authorized from available money in the
5.7accounts.
5.8 Sec. 8. [116J.5764] LOAN TERMS AND CONDITIONS.
5.9 Subdivision 1. Terms. Loans to development authorities for demolition costs may
5.10be made by the commissioner subject to the following terms and conditions:
5.11(1) the agreement to repay the loan must be a general obligation of the development
5.12authority, payable primarily from a dedicated source of revenue, and the development
5.13authority must deliver its bond or note to the commissioner to secure the loan;
5.14(2) the term of the loan may not exceed 15 years;
5.15(3) the loan shall bear interest at a rate equal to two percent, but interest will not
5.16accrue during the first two years of the loan term;
5.17(4) the development authority shall make semiannual interest payments and annual
5.18principal payments beginning in the third year of the loan until the end of the term;
5.19(5) the principal amount of a loan may not exceed $1,000,000;
5.20(6) loan proceeds shall be disbursed for eligible demolition costs as incurred or
5.21paid by borrower and upon submission of invoices and other supporting documentation
5.22satisfactory to the commissioner;
5.23(7) an eligible borrower shall establish a dedicated source of revenue for repayment
5.24of the loan.
5.25 Subd. 2. Modification of loan terms. The commissioner has the discretion to
5.26consent to the modification of the rate of interest, time of payment, installment of principal
5.27or interest, or other term of a loan made under sections 116J.5761 to 116J.5764.
5.28 Subd. 3. Forgiveness. The commissioner may forgive principal of the loan and
5.29interest accrued but unpaid thereon, if any, up to 50 percent of the original loan amount,
5.30not to exceed the costs of demolition, upon completion of the redevelopment plan, if the
5.31project would otherwise have received grant funding in the most recent semiannual grant
5.32round, based on the priorities in section 116J.575.
5.33 Sec. 9. [116J.5765] NONLIABILITY.
6.1The state shall have no responsibility or liability relating to or arising out of
6.2activities at the site of a project solely by reason of the making of a grant or loan by the
6.3commissioner under sections 116J.5761 to 116J.5764.
