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Focus on New Laws: Special Service Districts
A new law in effect as of July 1, 2023, allows special service districts the option to include qualified multifamily property in new and existing districts.
As a part of the 2023 state government finance omnibus bill, now Chapter 62 in 2023 Session Law, special service districts now have the ability to include qualified multifamily property in new and existing districts.
Special service districts allow cities to provide an increased level of service or services not ordinarily provided throughout the city from general fund revenues to certain areas. Service charges are collected from properties benefitting from the special services. Previously special service districts were only allowed to assess charges from commercial nonresidential property.
The law change now allows a district to include both nonresidential and multiunit residential property in a district subject to the existing petition requirements in Minnesota Statutes, section 428A.01 to 428A.10.
Multiunit residential property is defined in the law change as:
- Property classified as 4a under section 273.13, subdivision 25, paragraph (a).
- Condominiums as defined under section 515A.1-103, clause (7), that are classified as:
- Class 1a under section 273.13, subdivision 22, paragraph (a);
- Class 4b under section 273.13, subdivision 25, paragraph (b), clause (1);
- Class 4bb under section 273.13, subdivision 25, paragraph (c), clause (1); or
- Condominiums under chapters 515 and 515A established prior to the enactment of the Minnesota Common Interest Ownership act under chapter 515B.
- Condominium-type storage units classified as class 4bb under section 273.13, subdivision 25, paragraph (c), clause (3).
- Duplex or triplex property classified as:
- Class 1a under section 273.13, subdivision 22, paragraph (a); or
- Class 4b under section 273.13, subdivision 25, paragraph (b), clause (1).
The definition of multifamily residential property expressly excludes any unit that is an affordable housing unit classified as 4d low-income rental housing under section 273.13, subdivision 25, paragraph (e).
The change in law was spurred on by the dynamic changes that modern downtowns are experiencing with a greater influx of residential property in historically commercial property-heavy areas. The new law ensures that all types of properties enjoying services provided by a special service district are eligible to contribute to the district that is providing the services, if a city choses to include them as a part of the petition process.