Purpose of the Bill

The purpose of this bill is to amend the current Minnesota tax code related to property tax exemptions specific to institutions classified as public charities. It aims to clarify and possibly expand the criteria under which these charitable organizations can be deemed tax-exempt.

Main Provisions

1. Qualification for Exemption: This bill specifies the factors that institutions of public charity must meet to qualify for property tax exemptions. The institutions need to be nonprofits and meet six criteria related to their operations and funding sources.

2. Factors for Consideration:

   • The purpose of the institution should be altruistic, without expectation of material gain.
   • Support should come from donations, gifts, or public grants.
   • A significant portion of their beneficiaries must receive benefits at reduced or no cost, or their work must relieve the government of certain responsibilities.
   • Any income generated should not result in profits distributed to private interests.
   • Benefits should be available to the public or to a defined class related to the institution's goals.
   • Assets should not be available to private parties upon liquidation.

3. Exception with Justification:

   • If an institution does not meet criteria related to external funding, beneficiary cost, or beneficiary restrictions, it can still qualify if it provides a reasonable justification to the tax assessor.

4. Longevity of Exemption: Once granted, the exemption remains unless there is a significant change in the institution's status or operations.

5. Rental Housing: The bill clarifies that rental housing does not automatically qualify as exempt property unless it furthers the charity's mission beyond just providing low-income housing. Rent and tax credit assistance received by the housing owner are not considered as donations for exemption purposes.

Significant Changes to Existing Law

• The bill proposes changes to refine how charitable organizations qualify for property tax exemptions, particularly affecting properties used as rental housing. It adds specific criteria and exceptions to more clearly define what constitutes a charitable purpose under this context.

Relevant Terms

• Public charity, tax exemption, nonprofit, rental housing, government grants, property taxes, Internal Revenue Code, donations, tax credits, property tax assessor.