Market Value and HRAs/EDAs

 
Statutory levy limits for housing and redevelopment authorities, economic development authorities, and port authorities are computed under state law as a defined percentage of “taxable market value.” Beginning with taxes payable in 2013, the Minnesota Department of Revenue’s interpretation of what is “taxable market value” will reduce values by the amount of the homestead market value exclusion. This in turn reduces the revenue-generating capacity of these entities.

The Department’s interpretation also affects the statutory three percent debt limit in a similar manner, however, under the statutes, there is no one-year lag in the market valuation used for the debt limit calculation and therefore, the debt limit impact is already in effect.

The League believes that the existence of very explicit statutory exclusions, combined with the absence of any reference to the new “market value exclusion,” makes it clear that the Legislature did not intend the new homestead market value exclusion to have an impact on debt and levy limits. Legislation introduced by the League during the 2012 session to clarify these statutes was included in the final omnibus tax bill that was unfortunately vetoed by the governor.

The League is working to gather information from cities on how the current DOR interpretation is affecting levy decisions for EDAs, HRAs and port authorities as well as examples of how the debt limit implications create difficulties.

Please respond to the short survey below.
1. What is your city?
2. If you have a housing and redevelopment authority (HRA), will the levy of your city’s HRA run the risk of being lowered due to the statutory limit of 0.0185% of market value as reduced by the new homestead exclusion?
3. Will the levy of your city’s EDA run the risk of being in excess of the statutory limit of 0.01813% of market value as reduced by the new homestead exclusion?
4. Will the mandatory levy of your city’s port authority run the risk of being in excess of the statutory limit of 0.01813% of market value as reduced by the new homestead exclusion?
5. If YES to any of the above: Tell us more. What will be the effects of having to reduce the levy amount? In other words, what won’t your city EDA/HRA/port authority be able to do as a result of needing to keep the levy under the limit?
6. What is your city’s current debt as a percentage of market value after the new homestead exclusion:
7. Will your city reach the debt limit of 3% of market value after the new homestead exclusion?
8. If YES: Tell us more. What will be the effects of having to reduce your debt? In other words, what won’t your city be able to do in order to keep the debt lower?
9. Can we contact you with follow up questions? Please provide the information below:
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