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renewable generation sources like wind <br />and solar, while planning to decrease the <br />share of electric generation that is derived <br />from baseload power plants that produce <br />energy from coal or nuclear sources. Due <br />to the deep and longstanding relationship <br />IOUs have with some Minnesota cities, <br />the possible retirement of these power <br />plants stands to have a significant <br />disruptive effect on these cities. <br />Cities that host baseload power plants <br />make significant investments to support <br />those plants, including infrastructure, <br />public safety, and disaster preparedness. <br />To compensate for this, IOUs pay <br />personal property tax on electric <br />generation machinery. For some cities, <br />these revenues can account for over 50% <br />of the city's annual budget. Moreover, <br />IOUs have other significant direct and <br />indirect impacts on host communities. <br />IOUs tend to employ significant numbers <br />of employees at baseload power plants. <br />Those employees are likely to live, work, <br />attend school, and shop in and around the <br />local community. Therefore, the of the <br />retirement of these plants would have <br />significant negative impacts on these <br />communities. <br />While the power that is generated at these <br />facilities goes to support the entire state of <br />Minnesota, the impacts of hosting these <br />plants is felt most acutely in these local <br />communities. Therefore, state lawmakers <br />should partner with these communities <br />and support their transition in the event <br />that these baseload power plants are <br />retired by the IOUs. <br />Response: The League of Minnesota <br />Cities recognizes that the energy <br />landscape is rapidly changing, and <br />supports state policies to replace tax base <br />in communities facing the closure of a <br />baseload power plant, as well as other <br />138 <br />policies or programs to help those <br />communities replace their local tax base <br />through economic development. The <br />League of Minnesota Cities also support <br />efforts by the state legislature to study, <br />analyze, and design policy solutions to <br />address the unique challenges these <br />communities face. <br />FF-14. Taxation of Municipal Bond <br />Interest <br />Issue: The federal and state laws that grant a <br />tax exemption to bondholders for municipal <br />bond interest lowers borrowing costs for <br />cities and reduces property tax levies. <br />Recent proposed Internal Revenue Service <br />rules would potentially restrict some local <br />government entities such as housing and <br />redevelopment authorities, economic <br />development authorities and port authorities <br />from issuing tax exempt bonds. <br />Response: Congress and the state should <br />maintain the tax exemption for municipal <br />bond interest income. Congress should <br />also clarify the law to supersede proposed <br />IRS rules and thereby continue to allow <br />housing and redevelopment authorities, <br />economic development authorities and <br />port authorities to issue tax exempt debt. <br />FF-15. Pollution Control <br />Exemption <br />Issue: Minnesota grants electric utilities and <br />several other industries a property tax <br />exemption for personal and real property <br />that is primarily used for pollution control. <br />Minnesota adopted the property tax <br />exemption that now extends to electrical <br />generation systems, agricultural operations, <br />and wastewater treatment facilities in 1967, <br />before water and air pollution were heavily <br />regulated by the Environmental Protection <br />Agency and the Minnesota Pollution Control <br />