The bill introduces a new tax credit called the "Redevelopment Area Homestead Credit" for certain properties in Minnesota. To be eligible for this credit, a property must be defined as residential (1a or 1b classification) and located in a city classified as a second-class city, which has been designated as a redevelopment area by the U.S. Department of Commerce under specific criteria from a 1965 law.

The tax credit calculation gives qualifying properties a reduction equal to 70% of the property's net tax capacity multiplied by the city's capital debt tax rate. The mechanism for managing this tax reduction involves local county auditors, who will calculate the amount of tax reduction each year and certify this to the state's revenue commissioner. Any adjustments necessary are handled between the auditors and the commissioner.

Local taxing jurisdictions will be reimbursed for the tax reductions granted to homeowners, with payments made twice a year. The funds for these reimbursements will come from the state’s general fund, specifically set aside annually for this purpose.