Development credit banks

A bill that would allow local governments to set up a “transfer of development credits bank” to purchase, hold and sell development credits cleared two committee hurdles.

HF305, sponsored by Rep. Jeremy Kalin (DFL-North Branch), would add to a current law that allows local governments to adopt official controls providing for the purchase of development rights, in the form of conservation easements, and transfer them to areas that are considered more desirable for development.

The bill would allow for the establishment of a third-party development credit bank with the power to purchase credits from willing sellers who Kalin said may be in a hurry to sell because of the economy.

Kent Sulem, an attorney with the Minnesota Association of Townships, said his organization has taken a neutral position on the bill. He said whether the bill would have a positive or negative effect would depend on how local governments use it, but he added that is also true of existing law.

“It’s one more tool. It’s neither good nor bad,” Sulem said.

Lobbyists representing the Association of Minnesota Counties and the League of Minnesota Cities gave similar testimony, taking a largely neutral position on the bill but also arguing that it would give local governments some helpful flexibility.

Rep. Steve Gottwalt (R-St. Cloud) said he found the proposal “intriguing,” but also worried that it could create conflicts of interests by allowing people to reap profits from inflated prices on land development credits.

The House Local Government Division approved the bill Feb. 16 and the House State and Local Government Operations Reform, Technology and Elections Committee approved it Feb. 18. It now goes to the House Commerce and Labor Committee.

A companion, SF234, sponsored by Sen. Rick Olseen (DFL-Harris), awaits action by the full Senate.