Required approvals of rezoning requests related to residential development, contents of and consistency of local ordinances with local comprehensive plans, certain tax incremental district project costs related to residential development, and tax incremental district lifespan extension. (FE)

1. The proposed change is for an area identified in the political subdivision’s comprehensive plan as projected for residential land use.

2. The area is contiguous with existing development.

3. The proposed minimum and maximum net density of residences in the residential housing development are within the minimum and maximum net density for the area specified by the political subdivision in its comprehensive plan or the political subdivision has failed to comply with the requirement created in the bill to specify the minimum and maximum net density in the area.

4. Current housing supply in the political subdivision does not meet existing housing demand or forecasted housing demand within the next five years, as provided in the comprehensive plan.

The bill provides that a political subdivision may refuse to grant a request meeting these requirements if the political subdivision demonstrates that the denial is necessary either 1) to prevent a shortage in, or the overburdening of, public facilities located in the political subdivision or 2) to address a significant threat to public health or safety.

The bill provides an exception to this mandatory rezoning procedure upon the failure of certain attempts to develop properties within a political subdivision. Specifically, if a political subdivision requests proposals for certain residential development and no proposals are received, the mandatory rezoning procedure created in the bill does not apply in that political subdivision for one year after the last date on which responses to the request were to be accepted.

The bill also specifies that a person who enforces the requirements of the bill by a mandamus action may recover any court costs and reasonable attorney fees attributable to the failure to approve the request within 60 days.

Comprehensive planning Under current law, unless certain conditions apply, certain ordinances enacted or amended by a political subdivision that affect land use must be consistent with that political subdivision’s comprehensive plan. The ordinances to which this requirement applies are official mapping, local subdivision regulation, and zoning ordinances. Also under current law, if a political subdivision enacts or amends any of these ordinances, the comprehensive plan must contain at least all of the required planning elements. The required planning elements include the following: housing; transportation; utilities and community facilities; agricultural, natural, and cultural resources; economic development; land use; and intergovernmental cooperation.

The bill requires political subdivisions to identify in their comprehensive plans the areas in which residential land use is projected and, for each of these areas, to specify the minimum and maximum net density of residences that will be authorized. These projections and authorized densities must be provided for five-year increments over 20 years. Political subdivisions must ensure that their comprehensive plans satisfy this requirement if, after the effective date of the bill, the political subdivision enacts or amends an official mapping ordinance, local subdivision ordinance, or zoning ordinance or adds lands by annexation or consolidation intended for residential development. In addition, if a person requests rezoning or the approval of a permit related to residential housing development, the political subdivision must amend its comprehensive plan within 180 days to satisfy the residential use and density specification requirement.

If a person requests rezoning for a residential housing development and the political subdivision has not complied with the residential use and density specification requirement, the bill provides that the land is either rezoned to the person’s requested zoning classification or that certain dimensional, physical, and location requirements requested by the person or the least restrictive dimensional, physical, and location requirements in the political subdivision’s zoning ordinance for any residential classification apply.

TIF generally Under current law, cities and villages may use tax incremental financing (TIF) to encourage development in the city or village. In general, under TIF, a city or village pays for improvements in a TID and then collects tax moneys attributable to all taxing jurisdictions on the increased property value in the TID for a certain period of time to pay for the improvements. Ideally, after that period of time, the city or village will have been repaid for its initial investment and the property tax base in the TID will have permanently increased in value.

In general and in brief, a city or village makes use of TIF using the following procedure:

1. The city or village designates an area as a TID and creates a project plan laying out the expenditures that the city or village will make within the TID, and the designation and project plan are approved by representatives of the other taxing jurisdictions (joint review board).

2. The Department of Revenue establishes the “base value” of the TID. This value is the equalized value of all taxable property within the TID at the time of its creation.

3. Each year thereafter, the “value increment” of the property within the TID is determined by subtracting the base value from the current value of property within the TID. The portion of taxes collected on any positive value increment (the tax increment) is collected by the city or village for use solely for the project costs of the TID. Tax increments collected by the city or village include taxes that would have been collected by other taxing jurisdictions, such as counties or school districts, if the TID had not been created.

4. Tax increments are collected until the city or village has recovered all of its project costs or until the TID reaches its statutory termination date.

Extending the life of a TID for housing stock purposes Currently, a city or village may extend the life of a TID for up to one year for housing stock improvement if all of the following occur:

1. The city or village pays off all of the TID’s project costs.

2. The city or village adopts a resolution stating that it intends to extend the life of the TID, the number of months it intends to do so, and how it intends to improve housing stock.

3. The city or village notifies DOR.

Current law requires the city or village to use 75 percent of the tax increments received during the period specified in the resolution to benefit affordable housing in the city or village and 25 percent to otherwise improve the city’s or village’s housing stock.

Under the bill, a TID’s life may be extended for up to two years for housing stock improvement. Also, under the bill, all tax increments for housing stock improvement must be expended to purchase goods or services from for-profit entities.

Expenditures for residential development Under current law, the project costs of a TID must be enumerated in the TID’s project plan. These project costs are the expenditures that the city or village expects to make in carrying out the project plan. Current law limits the types of expenditures that may be included as project costs. For example, public works such as sewers, streets, and lighting systems; financing costs; and site preparation costs may be included. The costs of constructing administrative buildings, for example, may not.

Generally, under current law, project costs may, under certain circumstances, include expenditures for newly platted residential development. Currently, such expenditures may qualify as project costs only in TIDs for which a project plan was approved before September 30, 1995, or for mixed-use TIDs. With regard to a mixed-use TID, such expenditures qualify only if certain density or development quality standards are also satisfied.

The bill defines “newly platted residential development” as residential development on a parcel that has not previously been the site of permanent structures other than structures used solely for agricultural purposes.

Because this bill may increase or decrease, directly or indirectly, the cost of the development, construction, financing, purchasing, sale, ownership, or availability of housing in this state, the Department of Administration, as required by law, will prepare a report to be printed as an appendix to this bill.