Minnesota Adopted New Law to Create Compact Development TIF District for Commercial and Industrial Building Redevelopment

The Minnesota Governor signed House Bill 2695 and Senate Bill 2568 into law on April 1, 2010 giving municipalities the authority to create Compact Development Districts (CDDs), a variation of a traditional TIF district. The purpose of creating CDD is to provide municipalities with more opportunities to use TIF for economic development and job creation.  A CDD, unlike a traditional TIF district, does not need to be established in a blighted area. Under the new law, between June 30, 2010 and June 30, 2012 a local legislative body has the authority to designate an area as a CDD if 70% of the area is occupied by commercial and industrial buildings and the planned redevelopment will increase the total square footage of commercial and industrial buildings at least 3 times, compared to the original square footage.  The term of a CDD is limited to 25 years.

The new law allows tax increment generated from a CDD to be used to pay for the following:

  • Land acquisition;
  • Building demolition, removal and site preparation;
  • Public infrastructure or public improvements specifically designed to serve transit vehicles; however, roads or other public improvements designated for single occupancy vehicles are expressly excluded; and
  • Administrative expenses

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