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State lawmakers pass local tax exemptions, leave several Bloomington priorities unmet
Summary
State Representative Katie briefed the Bloomington City Council on the 2025 Minnesota legislative session, reporting passage of two local tax provisions important to the city but noting failures or delays on workforce development funding, sanitary sewer bonding for North Central and several housing bills.
Representative Katie briefed the Bloomington City Council on outcomes from the 2025 Minnesota legislative session, saying the regular session ended March 19 and leaders used a special session to finish negotiations.
The city’s top tax priorities largely advanced: “We had two tax provisions that we were wanting to get passed in the tax bill. One was the property tax exemption for the Ramada property, and the other was the South Loop development fifth flexibility,” Katie said, adding both provisions ultimately passed. She also said the city benefited from a change that removed a federal match requirement for a forward fund used by Bloomington entities.
Why it matters: passage of those local tax measures preserves specific revenue or exemption structures city staff had requested, but several other Bloomington goals did not clear the Capitol.
Among the disappointments, Katie said the city’s request for workforce development funding tied to Bloomington’s Bloom workforce initiative did not survive conference negotiations. “The House didn’t have any workforce development funding in their bill and the Senate was more focused on things they had funded in the past. So that one did not cross the finish line,” she said.
Bonding for the North Central sanitary sewer project also did not advance. Katie said negotiators produced a bonding bill that limited projects to state agencies and higher education and included no local earmarks: “They did pass a bonding bill in the end, but they included no local projects,” she said.
Other statewide changes affecting the city: the legislature repealed the local government cannabis aid for cities and counties as part of leadership agreements; lawmakers provided an allocation to the Philando Castile Memorial Training Fund for police training (Katie said it landed at $4.9 million per year, down from $6 million in an earlier period); and the legislature created an HOA ombudsman position in the Department of Commerce rather than adopting broader HOA reforms.
Housing bills that would have driven larger regulatory change statewide—such as the Minnesota Starter Home Act, transforming main-street or ‘More Homes Right Places’ measures—did not pass. Instead, the Minnesota Housing Finance Agency (MHFA) received new discretion to award up to five preference points in grant scoring for projects meeting specified priorities, including certain housing types and proximity criteria; Katie said the MHFA preference amounts to “a 5% points incentive” rather than a mandate.
On next steps, Katie told council members the fall could bring additional state legislative activity if federal changes (for example to Medicaid) require state-level fixes; the next regular session is scheduled to begin Feb. 17, 2026.
Ending: Council members asked staff to track how MHFA scoring preferences and the repeal of cannabis aid might affect Bloomington budgeting and project eligibility and to follow up on the status of the Ramada property exemption and other local provisions.
