Rent tax credit expansion proposed for nonprofit child care centers

In 2023, Minnesota launched the “renter’s credit,” which isn’t really a tax credit, but a property tax refund for those who pay rent, rather than own their home. It gives renters a slice of the property tax refunds that go to their landlords.

So, say you rent space to run a nonprofit child care center in a building. Are you eligible for part of that building’s property tax refund? Child care providers that own a building are.

Child care centers that rent would be, too, under HF805. Sponsored by Rep. Cheryl Youakim (DFL-Hopkins), it would make such centers and family-based day cares eligible for a refund of 10% for rent paid during the calendar year.

“This bill is about leveling the playing field among our nonprofit child care centers,” Youakim said. “Our child care facilities are facing major challenges. This is one way to provide them a little bit of relief in their overhead.”

Joined by her daughter Louise, Kylie Cooper, executive director of Rise Early Learning Center, testifies in support of a bill to establish a renter’s property tax refund program for nonprofit child care facilities. Rep. Cheryl Youakim, left, sponsors HF805. (Photo by Michele Jokinen)

On Wednesday, the House Taxes Committee laid the bill over for possible omnibus bill inclusion.

Under the bill, property owners who lease property to child care facilities would be annually required to provide the facility with a certificate of rent paid. The bill would also require the Department of Revenue to submit a report on the share of rent constituting property taxes for child care facilities.

The bill would be effective for refunds paid in 2025, based on rent paid in 2024.

The Revenue Department estimates that the change would reduce the General Fund by $250,000 in fiscal year 2026, rising by about $30,000 to $40,000 each ensuing year.

“Nearly half of all licensed child care centers in Minnesota are not for profit,” said Kylie Cooper, executive director of Rise Early Learning Center in St. Louis Park. “Our state has a growing shortage of child care slots, and the barriers to open new programs are plenty. This bill is a step in the right direction, alleviating a small portion of the cost to run a quality child care facility.”

Rep. Kristin Robbins (R-Maple Grove) asked Youakim why the bill is limited to nonprofit child care centers. Youakim said that she just wanted to make sure that like centers are treated alike.