HF 4774

03/12/26   REVISOR  MS/HL  26-07998
This Document can be made available
in alternative formats upon request  State of Minnesota
  HOUSE OF REPRESENTATIVES
  NINETY-FOURTH SESSION
  H. F. No.   4774
03/26/2026     Authored by Gander; Burkel; Joy; Anderson, P. H., and Backer
  The bill was read for the first time and referred to the Committee on Taxes
1.1A bill for an act
1.2relating to taxation; economic development; modifying tax reduction authority;
1.3removing restrictions; amending Minnesota Statutes 2024, sections 469.171,
1.4subdivisions 1, 4, 6a; 469.1731, subdivision 1.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6Section 1. Minnesota Statutes 2024, section 469.171, subdivision 1, is amended to read:
1.7Subdivision 1. Authorized types. (a) The following types of tax reductions may be
1.8approved by the commissioner for businesses located in a border city enterprise zone, after
1.9the governing body of the border city has designated an area or areas, each consisting of at
1.10least 100 acres, of the city not in excess of a total of 400 acres in which the tax reductions
1.11may be provided:
1.12(1) an exemption from the general sales tax imposed by chapter 297A for purchases of
1.13construction materials or equipment for use in the zone if the purchase was made after the
1.14date of application for the zone;
1.15(2) a credit against the income tax of an employer for additional workers employed in
1.16the zone, other than workers employed in construction, up to a maximum of $3,000 $5,000
1.17per employee per year;
1.18(3) an income tax credit for a percentage of the cost of debt financing to construct new
1.19or expanded facilities in the zone; and
1.20(4) a state paid property tax credit for a portion of the property taxes paid by a new
1.21commercial or industrial facility or the additional property taxes paid by an expansion of
1.22an existing commercial or industrial facility in the zone.; and
Section 1.  1
03/12/26   REVISOR  MS/HL  26-07998
2.1      (5) reimbursement of land acquisition costs for business expansion within the zone if
2.2  the municipality determines that expansion was necessary to prevent the business from
2.3  relocating outside the state.
2.4      (b) An application for a tax reduction under this subdivision may not be approved unless
2.5  the governing body finds both: (1) that the construction or improvement of the facility is
2.6  not likely to have the effect of transferring existing employment from a location outside of
2.7  the municipality but within the state; and (2) that the facility is in compliance with all
2.8  applicable municipal licensing and municipal regulatory requirements.
2.9      EFFECTIVE DATE. This section is effective for taxable years beginning after December
2.10 31, 2025.
2.11   Sec. 2. Minnesota Statutes 2024, section 469.171, subdivision 4, is amended to read:
2.12     Subd. 4. Restriction. The tax reductions provided by this section shall not apply to: (1)
2.13 a facility the primary purpose of which is one of the following: the provision of recreation
2.14 or entertainment, or a private or commercial golf course, country club, massage parlor,
2.15 tennis club, skating facility including roller skating, skateboard, and ice skating, racquet
2.16 sports facility, including any handball or racquetball court, hot tub facility, suntan facility,
2.17 or racetrack; (2) property of a public utility; (3) (2) property used in the operation of a
2.18 financial institution; (4) or (3) property owned by a fraternal or veterans' organization; or
2.19 (5) a retail food or beverage facility operating under a franchise agreement that requires the
2.20 business to be located in this state.
2.21     EFFECTIVE DATE. This section is effective the day following final enactment.
2.22   Sec. 3. Minnesota Statutes 2024, section 469.171, subdivision 6a, is amended to read:
2.23     Subd. 6a. Additional border city allocations. The commissioner may allocate $2,000,000
2.24 for tax reductions pursuant to subdivision 9 to border city enterprise zones. This money
2.25 shall be allocated among the zones on a per capita basis. Tax reductions authorized by this
2.26 subdivision may not be allocated to any property which is:
2.27     (1) a facility the primary purpose of which is one of the following: the provision of
2.28 recreation or entertainment, or a private or commercial golf course, country club, massage
2.29 parlor, tennis club, skating facility including roller skating, skateboard, and ice skating,
2.30 racquet sports facility, including any handball or racquetball court, hot tub facility, suntan
2.31 facility, or racetrack;
2.32     (2) (1) property of a public utility;
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3.1      (3) (2) property used in the operation of a financial institution; or
3.2      (4) (3) property owned by a fraternal or veterans' organization;.
3.3      (5) property of a retail food or beverage service business operating under a franchise
3.4  agreement that requires the business to be located in the state.
3.5      EFFECTIVE DATE. This section is effective the day following final enactment.
3.6    Sec. 4. Minnesota Statutes 2024, section 469.1731, subdivision 1, is amended to read:
3.7      Subdivision 1. Designation. To encourage economic development, to revitalize the
3.8  designated areas, to expand tax base and economic activity, and to provide job creation,
3.9  growth, and retention, the following border cities may designate, by resolution, areas of the
3.10 city as development zones after a public hearing upon 30-day notice.
3.11     (a) The city of Breckenridge may designate all or any part of the city as a zone.
3.12     (b) The city of Dilworth may designate between one and six areas of the city as zones
3.13 containing not more than 100 acres in the aggregate all or any part of the city as a zone.
3.14     (c) The city of East Grand Forks may designate all or any part of the city as a zone.
3.15     (d) The city of Moorhead may designate between one and six areas of the city as zones
3.16 containing not more than 100 acres in the aggregate all or any part of the city as a zone.
3.17     (e) The city of Ortonville may designate between one and six areas of the city as zones
3.18 containing not more than 100 acres in the aggregate all or any part of the city as a zone.
3.19     EFFECTIVE DATE. This section is effective the day following final enactment.
Sec. 4.  3