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Please take the League’s short survey to let us know how reduced market value under the new HMVE program will affect your city.
(Published Jul 11, 2012)
Statutory levy limits for housing and redevelopment authorities (HRAs), economic development authorities (EDAs), 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 (DOR) interpretation of what is “taxable market value” will reduce values by the amount of the homestead market value exclusion (HMVE). This in turn reduces the revenue-generating capacity of these entities.
The DOR’s interpretation also affects the statutory 3 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 Gov. Dayton.
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. We would appreciate your input on this matter. Please use the link below to take our short survey.