This bill authorizes the Taylors Falls City Council to designate all or part of the city as a
border city development zone. Minnesota Statutes, section 469.1731 to 469.1735, the current border
city development zone law, would apply to the zones within Taylors Falls. Under that 1998 law, the
benefits of the border city development zone designation are available only to the cities of
Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville. The underlying law requires
that the city must adopt a development plan that addresses the evidence of adverse economic
conditions within the area resulting from competition with the bordering state, or the 1997 floods,
or both, as well as the description of the area of the zone, and the methods that are proposed to
increase economic opportunity and expansion, facilitate infrastructure improvement and identify job
opportunities. Zones may be in effect for up to 15 years. A business that conducts business activity
within a border city development zone may be granted a property tax exemption for the duration of
the zone if the municipality determines that the granting of the exemption is necessary to enable a
business to expand within its zone or to attract a business to its zone. Businesses located within the
zone would also be eligible for a sales tax exemption on sales of machinery and equipment used in
connection with the trade or business that have a useful life of 12 months or more, and for
construction materials that are used to construct a facility for use in a trade or business located in a
city that is authorized to designate a zone, even if the facility is located outside of the zone. The
sales tax exemption for construction materials also applies to housing located in a zone. A city that
qualifies for the border city economic development zone provisions can also grant a partial or
complete property tax exemption for businesses located outside of the zone, but within the city, for
a period of up to five years.
The bill provides that the cumulative total amount of the state portion of the tax reductions
for all years when the program is in effect, is limited to $100,000. The bill provides that the
Commissioner of Revenue may waive the dollar limitation if the commissioner finds that the
municipality must provide tax incentives under this program that in the aggregate, exceed the
municipality's maximum allocation for the purpose of obtaining or retaining a business in the city
that would not occur in the municipality without the incentives. A waiver may take place without
the incentives. The waiver may take place only if the commissioner finds that the business which
would receive the incentives would require a private capital investment of least $1,000,000 within
the city, employs at least 25 new or additional full-time equivalent employees within the city, and
pays its employees at the target location in the city, wages that average greater than the average wage
paid in the county.
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