February 2, 2023

Meet Roz Peterson, NAIOP's new Public Policy Director

I am excited to join the NAIOP Public Policy team in a part-time role. I am a former two-term state representative who carried the legislation eliminating the statewide business property tax inflator and started the Commercial Real Estate Caucus while serving at the Capitol. I have been doing brokerage across all property types for 15 years with Cerron Commercial Properties. I am thrilled to combine my two passions of public policy and commercial real estate.

My properties have been a Penny Per Square Foot contributor for decades and if you don’t already contribute to NAIOP’S PPSF Advocacy Fund, you should. It is more important than ever to be engaged and make a difference. There is one-party rule and a $17.6 billion projected budget surplus (about $3,083 per person in MN or $5,854 per tax return). This surplus is about the same size as the entire discretionary budget from 2010.

I look forward to connecting and hearing what is important to you. You can reach me at roz@naiopmn.org or my cell is 612-708-5281.

The Minnesota legislature convened on January 3rd with the DFL in control of the House, Senate, and Governor's office. The House has a slim majority while the Senate is 34-33. Rep. Melissa Hortman (DFL-Brooklyn Park) was re-elected Speaker and Sen. Kari Dziedzic (DFL-Minneapolis) was elected Majority Leader of the Senate. The DFL-controlled legislature has been working at a rapid pace to move and pass legislation that they campaigned on. Thirty-five percent of the legislature is new, but the normal committee overview process has been skipped and have gone straight to passing monumental legislative changes. Many of these bills have an impact on businesses and we wanted to highlight them for you here.

Tax Conformity

Within two weeks, the House and Senate moved swiftly to bring Minnesota’s tax code into conformity with the federal tax law. HF31 provides roughly $100 million in tax relief with many of the provisions being retroactive to federal acts that have passed since 2019. The urgency to pass this bill was to incorporate these changes prior to the 2022 filing season which opens near the end of the month. Due to many of the provisions being retroactive, taxpayers will need to work with their accountants to review if they need to file amendments to previous years. The bill passed the House and Senate unanimously.

Employer Mandates

Two bills to place mandates on employers for earned sick and safe time along with paid family and medical leave (PFML) are moving rapidly through the committee process in both chambers. HF19, authored by Rep. Liz Olson (DFL-Duluth), would allow Minnesotans to accrue paid sick time at a rate of one hour per 30 hours worked, accrue up to 48/year with a rollover to a new year capped at 80, eligibility beginning after working 80 hours on the job, and is paid out at the same rate as normal hours worked. SF2, authored by Sen. Alice Mann (DFL-Edina) establishes a PFML and allows up to 12 weeks of benefits for a serious health condition or pregnancy and up to 12 weeks of benefits for bonding, safety leave, or family care—up to 24 weeks total for all full or part-time employees. The program would mirror the unemployment insurance design in that it would be self-funded through a $1 billion payroll tax on employers and employees. For both pieces of legislation, employers could opt-out of the state-run program by offering a more generous benefit to their workers.

Legalization of Cannabis

Another issue garnering a lot of attention is the legalization of cannabis. HF100, authored by Rep. Zack Stephenson (DFL-Coon Rapids), would legalize recreational cannabis for adults 21 and older. Other provisions of the bill include: possession of two ounces or less in a public place; use, possession, and transportation cannabis paraphernalia; and cultivation of up to eight cannabis plants. In addition, the bill includes key provisions such as creating an Office of Cannabis Management to regulate and take enforcement actions, expunging criminal records of low-level cannabis offenses, imposing an 8% retail sales tax, and prohibiting the use while operating a motor vehicle under the influence.

Governor’s Budget

Governor Walz released his full budget publicly on January 24th. The good news is that he is not raising taxes directly on commercial/industrial property. We expect legislators to want to increase taxes on businesses either directly or indirectly by shifting tax burden on to commercial/industrial properties. We will keep you up to speed on those issues. We have more than a $17 billion surplus and the 25% growth of government spending proposed in the Governor’s $65 billion budget is surely going to leave us with a structural deficit in two years. His budget includes a massive increase in K-12 education, rebate checks for some Minnesotans, increasing the capital gains tax to the highest in the country (1.5% over $500,000 and 4% over $1 million), investments in infrastructure, legalizing cannabis, and instituting the employer mandates highlighted above. Along with the payroll tax shared 50-50 between employees and employers, a metro sales tax and increased motor vehicle tax are also included. The Governor will have to announce his supplemental budget after the February forecast in a few weeks.

Other Hot Topics

1. The legislature passed the PRO Act codifying abortion protections until birth.
2. Carbon free by 2040 comes with additional mandates for new construction—energy efficiencies, zero net carbon and mandatory electric car charging stations for example.
3. A new proposal to raise transportation funding by applying a 50-cent user tax to every Amazon or third-party delivery was introduced.
4. We expect the street utility fee bill to be introduced in the coming weeks.
5. Driver's licenses for undocumented residents.

Contact Your Legislator

MNCRE Day at the Capitol was a huge success -- thanks to all who participated. Things are moving quickly, and sometimes public testimony is not allowed in committee hearings. It is more important than ever to reach out to your legislators to voice your opinion, particularly if you do not like something. If they hear nothing, they assume you support it. So far they have not heard much from the public.
Find who represents you & contact your legislator »