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Legislative Update: June 8, 2017

Posted By Administration, Thursday, June 8, 2017

Post-Session 2017

Legislators worked right up until the deadline for adjournment of the 2017 session, and then they just kept working.

Unable to reach an agreement which allowed them to finish work by Midnight on Monday, May 22 (which is the constitutionally-mandated deadline for adjournment), legislative leaders negotiated with the governor and got an extra 36 hours or so to complete their work. They needed even more than that, finally adjourning for good in the early morning hours of Friday, May 26.

Jobs & Economic Development

On the jobs and economic development front, the news was generally favorable. Included in the bill which Governor Mark Dayton eventually signed into law were the following provisions:

  • The Minnesota Investment Fund receives $25 million for the biennium.
  • The Job Creation Fund receives $17 million for the biennium.
  • The Border to Border Broadband Grant Program receives $20 million for the biennium.
  • The Broadband Development Office receives $500,000 for the biennium and an additional $200,000 for the biennium.

Unfortunately, there was no funding included for the Redevelopment Grant Program. The funding for MIF, JCF and Broadband are part of an overall appropriation of $194.3 million for DEED. Of that amount, $81.7 million went to business and community development programs, $8.7 million went for general support services, $4.5 million went to the Minnesota Trade Office, $53.7 million went for vocational rehabilitation, $12.85 million went to services for the blind, and the aforementioned total of $20.5 million went for broadband. Also included in the Jobs bill was $1.35 million per year for JTIP, a Minnesota Job Skills Partnership program.

The full spreadsheet is available here:

DEED Administrative Changes

The DEED bill contains a number of equity provisions initially funded in the 2016 supplemental budget. It also includes base funding for the Job Skills Partnership as well as other workforce development funds for incumbent and new workers/Minnesotans new to the workforce.

There are a few administrative changes to MIF and JCF worth noting. MIF language includes the one-time flexible use of local revolving loan funds with a 20% penalty. JCF language includes some lower requirements to qualify as a JCF business in Greater Minnesota, and for businesses that are owned by minorities, veterans, women, or persons with a disability.

Another policy provision allows the DEED commissioner to transfer up to $2 million a year between MIF and JCF to meet business demand. And now a local government entity may receive more than one award in a fiscal year.

The Transportation Economic Development (TED) program was funded with $3.5 million in the bonding bill as well (details below).

Bonding Bill

The Special Session produced a $990 million capital investment bill that is heavy on infrastructure and of which nearly one-fourth is focused on transportation.

Among the projects of note funded in the bill are:

  • $115.93 million in local road improvement fund grants
  • $71.12 million for rail grade separation crossings on crude oil rail transport corridors in Coon Rapids, Moorhead and Red Wing
  • $56.25 million for the local road improvement program
  • $55 million in water infrastructure ($40 million for wastewater and $15 million for drinking water)
  • $12.1 million for the Orange Line bus rapid transit line between Burnsville and downtown Minneapolis
  • $11.55 million for four flood hazard mitigation projects
  • $10 million for Reinvest in Minnesota (RIM)
  • $12 million for the Business Development Public Infrastructure grant program
  • $1.2 million for the Innovative Business Development Public Infrastructure grant program

TIF Items of Note

Included in the Special Session Tax Bill is language providing cities with a local tool to help address housing needs in areas of Greater Minnesota where wages, housing and market forces make it economically prohibitive to build much-needed workforce housing. The bill modifies the definition of economic TIF districts to authorize workforce housing projects and approve an economic development TIF district for workforce housing if a city has the following findings:

  • the city is located outside the seven-county, Twin Cities metropolitan area (defined by reference to the Metropolitan Council’s jurisdictional area);
  • the average vacancy rate for rental housing in the city or any other city within 15 miles is 3 percent or less for at least the last two years;
  • a business in the city or within 15 miles of the city that employs 20 or more full-time equivalent employees has provided a written statement that the lack of available rental housing has made it difficult to hire employees; and
  • the city intends to use increments to develop workforce housing.

Higher income limits will also be allowed under the Minnesota Housing Finance Agency challenge program used for housing TIF districts if the project receives an MHFA grant from the program.

Also included is language which modifies the definition of increment under the five-year rule (imposing time limits on spending increments) and the pooling rule (imposing percentage limits on increments that may be spent outside of the TIF district) to exclude increments that are repaid by developers. The effective date affects new certifications.

Also included is language creating a workforce housing tax credit intended to encourage development of workforce housing by modifying interfund loan provisions. The changes make it easier for cities and development authorities to make and document interfund loans. The changes include:

  • Modifies interfund loan provisions to make it easier for cities and development authorities to make and document interfund loans. The changes include:
  • Allowing loans to be made up to 60 days after the money has already been transferred or spent.
  • Authorizing the passage of the interfund loan resolution before the TIF plan is approved.
  • Authorizes rewriting loan terms after the loan has been made if it is done before the TIF district is decertified.
  • Requires an annual report of the amount of interfund loans made and any amendments of loan terms made in prior years.

Transportation Bill

The Special Session produced a $5.9 billion, two-year transportation funding bill that relies heavily on the state general fund and bonding, focusing primarily on funding construction for roads and bridges. Existing tax revenue from the sale of auto parts and rental vehicles that now goes into the general fund will be directed to fund roads and bridges. The bill provides a general fund increase of $300 million in new transportation funding for 2018-2019 and a $448 million increase in 2020-2021.

Providing $640 million for general road construction and $300 million for the Corridors of Commerce program, the bill authorizes $940 million in trunk highway bonds over the next four years. The bill provides $115.93 million in local road improvement fund grants.

The bill also authorizes $10 million to be transferred to the Minnesota Housing Finance Agency to the housing development fund for public housing rehabilitation, $17 million for state matching funds for USEPA capitalization grants and $55 million for the Water Infrastructure Fund.

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