Revitalize Vacant Downtown Commercial Buildings.

 

This bill aims to revitalize struggling downtown areas of cities across Minnesota by supporting the redevelopment of

substantially vacant buildings. It will provide grant funds administered through the Minnesota Department of Employment

and Economic Development (DEED) to support projects that will revitalize downtowns by creating jobs, affordable housing,

and community spaces in first, second, and third-class cities in Minnesota.

 

Many cities in Minnesota are currently experiencing significant disinvestment, which depresses property values, which

leads to a decline in property taxes, straining the city’s budget. This is shown in the steady downward trend of

commercial property percent of Estimated Market Value (EMV) since at least 2016 in the greater Minnesota regions, and

especially in the Metro Voss regions. This is impactful because while commercial properties account for just 6.9% of

taxable property, they pay 16% of net property taxes in Minnesota, as they have a much higher classification rate

compared to other properties. Preserving the value of commercial properties is incredibly important to all city budgets

in Minnesota and requires statewide effort to revitalize the sector.

 

Eligible buildings need to be primarily vacant, and the project needs to demonstrate sufficient financial need, with

priority given to high-impact projects that will significantly grow the tax base, create jobs, include affordable

housing, or include community centers.

Projects shall be defined as a major renovation of primarily vacant commercial buildings in a Downtown area.

A primarily vacant building shall be defined as a building that is over 50% vacant.

Downtown shall be defined as a city-designated central business district or major commercial corridor.

Grant awards shall be defined as 25% of Total Project Costs, not to exceed $1,500,000 per project. Up to 10% of the

awarded grant may be used to fund 25% of the design costs prior to a project securing commitments for full funding.

Total Project costs shall be defined as the total design, building construction, site work, and infrastructure costs of

each eligible building.

Eligible applicants shall be defined as first, second, and third-class Cities in Minnesota. At least half of the grant

funds will be awarded to cities in the second or third classes, provided a sufficient number of applications are

submitted.

Eligible projects shall be selected through a twice-a-year competitive request for proposal (RFP).

Projects shall show Demonstrated Financial Need but shall match a minimum of 100% of the proposed grant with non-state

funds.

 

The funding of 75 million dollars total for this bill will be allocated from the state’s budget surplus. The grant

program will award 15 million dollars each year for 5 years to fund multiple eligible buildings across the state. There

will be an option to renew this bill after 5 years.

 

There are no penalties or enforcements necessary for this bill.

 

This bill will have an effective date of January 1st, 2027.