Engrossments
Introduction		Posted on 03/13/2006
1st Engrossment		Posted on 04/12/2006
2nd Engrossment		Posted on 04/20/2006
3rd Engrossment		Posted on 04/21/2006

A bill for an act
relating to financing and operation of state and local government; making
policy, technical, administrative, enforcement, collection, refund, and other
changes to income, franchise, property, sales and use, mortgage and deed, health
care provider, cigarette and tobacco products, liquor, insurance premiums,
aggregate removal, occupation, net proceeds, and production taxes, the property
tax refund, and other taxes and tax-related provisions; providing income tax
credits and subtraction; providing for taxation of foreign operating corporations;
providing a refund for transit passes; modifying and authorizing sales tax
exemptions; modifying and authorizing local government sales taxes; modifying
the homestead market value credit; modifying certain levies; changing and
providing property tax exemptions and value exclusions; providing for aids and
payments to local governments; modifying international economic development
zone authority; authorizing distributions of tax proceeds; changing provisions
relating to fiscal disparities and education financing; changing and imposing
powers, duties, and requirements on certain local governments and authorities
and state departments or agencies; providing for issuance of obligations by local
governments and other public authorities, and use of the proceeds of the debt;
changing tax increment financing and abatement provisions, and providing
authorities to certain districts; providing for studies and reports; providing
penalties; establishing accounts and providing funding; providing for allocation
and transfers of funds; appropriating money; amending Minnesota Statutes 2004,
sections 103E.635, subdivision 7; 116A.20, subdivision 3; 116J.993, subdivision
3; 123B.53, subdivision 5; 144F.01, subdivision 4; 162.18, subdivision 1;
162.181, subdivision 1; 216B.2424, subdivision 5; 270A.03, subdivision 2;
272.02, subdivisions 12, 45, 54, 55, by adding a subdivision; 273.032; 273.11,
by adding a subdivision; 273.124, subdivision 12, by adding a subdivision;
273.13, subdivision 23; 273.1384, subdivision 2; 273.1398, subdivision 3;
281.23, subdivision 9; 289A.09, subdivision 2; 290.06, subdivision 28, by adding
subdivisions; 290.10; 290.17, subdivision 1; 290.34, subdivision 1; 295.50,
subdivision 4; 295.53, subdivisions 3, 4a; 297A.61, subdivisions 12, 17, by
adding subdivisions; 297A.63; 297A.668, subdivision 6; 297A.669, subdivision
11; 297A.67, subdivisions 4, 5, 14, 18, 27, by adding a subdivision; 297A.68,
subdivision 19, by adding a subdivision; 297A.70, subdivisions 2, 3, 4, 7, 13,
14, 15; 297A.71, subdivision 23, by adding a subdivision; 297A.99, subdivision
7; 297F.01, by adding a subdivision; 297G.01, subdivision 7, by adding a
subdivision; 298.001, by adding a subdivision; 298.01, subdivisions 3a, 3b, 4a,
4b, by adding a subdivision; 298.17; 298.28, by adding a subdivision; 298.2961,
by adding a subdivision; 298.75, by adding a subdivision; 365A.08; 365A.095;
373.45, subdivision 1; 383A.80, subdivision 4; 383B.80, subdivision 4; 469.035;
469.103, subdivision 2; 469.176, subdivision 3; 469.1763, subdivisions 3, 4;
469.1813, subdivisions 1, 6b, 8, 9, by adding a subdivision; 469.312, subdivision
5; 473.39, by adding a subdivision; 473F.08, by adding a subdivision; 474A.062;
477A.013, subdivision 9; 477A.014, subdivision 1; Minnesota Statutes 2005
Supplement, sections 115B.49, subdivision 4; 123B.54; 126C.10, subdivision
13a; 270C.01, subdivision 4; 270C.304; 270C.33, subdivision 4; 270C.57,
subdivision 3; 270C.67, subdivision 1, by adding a subdivision; 270C.722,
subdivision 2; 271.12; 272.02, subdivision 83; 273.128, subdivision 1; 273.13,
subdivisions 22, 25; 273.1384, subdivision 1; 276.04, subdivision 2; 284.07;
289A.121, subdivision 5; 290.01, subdivisions 6b, 19b, 19c, 19d; 290.0922,
subdivisions 2, 3; 297A.61, subdivision 3; 297A.64, subdivision 4; 297A.67,
subdivision 6; 297A.68, subdivisions 37, 38, 41; 297A.70, subdivision 8;
297A.72, subdivision 2; 297A.75, subdivisions 1, 2, 3; 297A.815, subdivision
1; 298.01, subdivisions 3, 4; 298.223, subdivision 1; 298.2961, subdivision
4; 469.1763, subdivision 2; 469.178, subdivision 7; 469.1813, subdivision 6;
469.322; 469.323, subdivision 2; 469.327; 475.521, subdivision 4; 477A.011,
subdivision 36; 477A.013, subdivision 8; 477A.03, subdivision 2a; Laws 1980,
chapter 511, section 1, subdivision 2, as amended; Laws 1994, chapter 587,
article 9, section 20, subdivisions 1, 2; Laws 1996, chapter 471, article 2,
section 29; Laws 1999, chapter 243, article 4, section 18, subdivisions 1, 3,
4; Laws 2005, chapter 152, article 1, section 39, subdivision 1; Laws 2001,
First Special Session chapter 5, article 3, section 8, as amended; Laws 2005,
First Special Session chapter 3, article 2, section 5; article 5, sections 3; 43,
subdivision 3; 44, subdivision 1; article 10, section 23; proposing coding for
new law in Minnesota Statutes, chapters 41B; 270C; 273; 287; 290; 383C;
383D; 469; repealing Minnesota Statutes 2004, sections 297A.68, subdivisions
15, 18; 298.01, subdivisions 3c, 3d, 4d, 4e; Laws 1994, chapter 587, article
9, section 20, subdivision 4; Laws 1996, chapter 464, article 1, section 8,
subdivision 5; Laws 1998, chapter 389, article 11, section 18; Minnesota Rules,
parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 7, 8; 8130.5100;
8130.5400; 8130.5800, subpart 6.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

INCOME TAX

Section 1.

new text begin [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Farm" means any tract of land over ten acres in area used for or devoted to the
commercial production of farm products.
new text end

new text begin (c) "Farm product" means those plants and animals useful to humans and includes,
but is not limited to, forage and sod crops, grain and feed crops, dairy and dairy products,
poultry and poultry products, livestock, fruits, and vegetables.
new text end

new text begin (d) "Farming or livestock production" means the active use, management, and
operation of real and personal property for the production of a farm product.
new text end

new text begin (e) "Beginning farmer or livestock producer" means a resident of Minnesota who:
new text end

new text begin (1) is seeking entry or has entered within the last two years into farming or livestock
production;
new text end

new text begin (2) intends to farm or raise crops or livestock on land located within the state borders
of Minnesota; and
new text end

new text begin (3) meets the following eligibility requirements as determined by the authority:
new text end

new text begin (i) has a net worth of not more than $200,000, including any holdings by a spouse
or dependent, based on fair market value;
new text end

new text begin (ii) provides the majority of the day-to-day physical labor and management of the
farm;
new text end

new text begin (iii) has, by the judgment of the Rural Finance Authority ("authority"), adequate
farming or livestock production experience or demonstrates knowledge in the type of
farming or livestock production for which the beginning farmer seeks assistance from
the authority;
new text end

new text begin (iv) demonstrates to the authority a profit potential by submitting projected earnings
statements;
new text end

new text begin (v) asserts to the satisfaction of the authority that farming or livestock production
will be a significant source of income for the beginning farmer or livestock producer;
new text end

new text begin (vi) participates in a financial management program approved by the authority
or the commissioner of agriculture; and
new text end

new text begin (vii) has other such qualifications as specified by the authority.
new text end

new text begin Subd. 2. new text end

new text begin Beginning farmer management tax credit. new text end

new text begin (a) A beginning farmer or
livestock producer may take a credit against the tax due under chapter 290 for participating
in a financial management program approved by the authority. The credit is equal to 100
percent of the cost of participating in the program or $500, whichever is less. The credit
is available for up to three years while the farmer is in the program. The authority shall
maintain a list of approved financial management programs and establish a procedure for
approving equivalent programs that are not on the list.
new text end

new text begin (b) The credit is limited to the liability for tax, as computed under chapter 290 for
the taxable year. If the amount of the credit determined under this section for any taxable
year exceeds this limitation, the excess is a beginning farmer management credit carryover
according to section 290.06, subdivision 35.
new text end

new text begin Subd. 3. new text end

new text begin Authority's duties. new text end

new text begin The authority shall:
new text end

new text begin (1) approve and certify beginning farmers and livestock producers as eligible for
the program under this section;
new text end

new text begin (2) provide necessary and reasonable assistance and support to beginning farmers
and livestock producers for qualification and participation in financial management
programs approved by the authority; and
new text end

new text begin (3) refer beginning farmers and livestock producers to agencies and organizations
that may provide additional pertinent information and assistance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2006.
new text end

Sec. 2.

Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19b, is
amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;

(7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(8) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(9) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(10) job opportunity building zone income as provided under section 469.316;

(11) the amount of compensation paid to members of the Minnesota National Guard
or other reserve components of the United States military for active service performed
in Minnesota, excluding compensation for services performed under the Active Guard
Reserve (AGR) program. For purposes of this clause, "active service" means (i) state
active service as defined in section 190.05, subdivision 5a, clause (1); (ii) federally
funded state active service as defined in section 190.05, subdivision 5b; or (iii) federal
active service as defined in section 190.05, subdivision 5c, but "active service" excludes
services performed exclusively for purposes of basic combat training, advanced individual
training, annual training, and periodic inactive duty training; special training periodically
made available to reserve members; and service performed in accordance with section
190.08, subdivision 3;

(12) the amount of compensation paid to Minnesota residents who are members
of the armed forces of the United States or United Nations for active duty performed
outside Minnesota;

(13) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(14) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(15) to the extent included in federal taxable income, compensation paid to a
nonresident who is a service member as defined in United States Code, title 10, section
101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
Law 108-189, section 101(2); deleted text begin and
deleted text end

(16) international economic development zone income as provided under section
469.325new text begin ; and
new text end

new text begin (17) to the extent included in federal taxable income, a percentage of compensation
received from a pension or other retirement pay from the government for service in the
armed forces of the United States, up to a maximum amountnew text end .

new text begin For taxable years beginning after December 31, 2005, and before January 1, 2007, the
percentage is 25 percent and the maximum amount is $7,500; for taxable years beginning
after December 31, 2006, and before January 1, 2008, the percentage is 50 percent and
the maximum amount is $15,000; for taxable years beginning after December 31, 2007,
and before January 1, 2009, the percentage is 75 percent and the maximum amount is
$22,500; and for taxable years beginning after December 31, 2008, the percentage is 100
percent and there is no maximum amount.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2005.
new text end

Sec. 3.

Minnesota Statutes 2004, section 290.06, subdivision 28, is amended to read:

Subd. 28.

deleted text begin Creditdeleted text end new text begin Credits and refundsnew text end for transit passes.

new text begin (a) new text end A taxpayer may
take a credit against the tax due under this chapter equal to 30 percent of the expense
incurred by the taxpayer to provide transit passes, for use in Minnesota, to employees of
the taxpayer. As used in this subdivision, "transit pass" has the meaning given in section
132(f)(5)(A) of the Internal Revenue Code. If the taxpayer purchases the transit passes
from the transit system operator, and resells them to the employees, the credit is based on
the amount of the difference between the price paid for the passes by the employer and
the amount charged to employees.

new text begin (b) An employer that is exempt from taxation under section 290.05, but excluding
entities enumerated in section 290.05, subdivision 1, clause (b), may claim a refund equal
to 30 percent of an expense incurred by the employer to provide transit passes to the
employer's employees for use in Minnesota.
new text end

new text begin (c) The commissioner shall prescribe the forms for and the manner in which the
refund may be claimed. The commissioner must provide for paying refunds at least
quarterly. The commissioner may set a minimum amount of qualifying expenses that must
be incurred before a refund may be claimed.
new text end

new text begin (d) An amount sufficient to pay the refunds required by this subdivision is
appropriated to the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for transit passes purchased after
June 30, 2006.
new text end

Sec. 4.

Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 33. new text end

new text begin Film production credit. new text end

new text begin (a) A taxpayer is allowed a credit against the
taxes due under this chapter equal to 15 percent of film production expenditures made in
Minnesota that are directly attributable to film production in Minnesota. For purposes of
this subdivision, "film" means a movie, documentary, or music video, whether on film
or video; and "film production" means all the activities related to (i) the preparation for
shooting, (ii) the shooting, including processing, and (iii) the editing and finishing of a
film. For purposes of this subdivision, the following is not a "film:"
new text end

new text begin (1) news, current events, or public programming or a program that includes weather
or market reports;
new text end

new text begin (2) a talk show;
new text end

new text begin (3) a production with respect to a questionnaire or contest;
new text end

new text begin (4) a sports event or sports activity;
new text end

new text begin (5) a gala representation or awards show;
new text end

new text begin (6) a finished production that solicits funds; or
new text end

new text begin (7) a production for which the production company is required under United States
Code, title 18, section 2257, to maintain records with respect to a performer portrayed
in a single media or multimedia program.
new text end

new text begin (b) Expenditures that qualify for the credit under this subdivision must be subject to
taxation in Minnesota and include:
new text end

new text begin (1) payment of wages, fringe benefits, or fees for talent, management, or labor to a
person who is a Minnesota resident for purposes of this chapter;
new text end

new text begin (2) payment to personal services corporations for the services of a performing artist,
if the performing artist receiving payments from the personal services corporation pays
Minnesota income tax; and
new text end

new text begin (3) any of the following provided by a vendor:
new text end

new text begin (i) the story and scenario to be used for a film;
new text end

new text begin (ii) set construction and operations, wardrobe, accessories, and related services;
new text end

new text begin (iii) photography, sound synchronization, lighting, and related services;
new text end

new text begin (iv) editing and related services;
new text end

new text begin (v) rental of facilities and equipment;
new text end

new text begin (vi) leasing of vehicles; and
new text end

new text begin (vii) food and lodging.
new text end

new text begin (c) If the amount of the credit under this subdivision exceeds the taxpayer's tax
liability under this chapter for the taxable year, the amount of the excess must be refunded
to the taxpayer. The amount necessary to pay the refunds is appropriated annually from
the general fund to the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.new text end

Sec. 5.

Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 34. new text end

new text begin Credit for military service. new text end

new text begin (a) An individual may take a credit against
the tax due under this chapter equal to $59 for each month or portion thereof the individual
was in active military service in a designated area after September 11, 2001.An individual
may take this credit in the taxable year the individual returns to Minnesota residency
following active military service in a designated area. If a Minnesota resident served in
a designated area between September 11, 2001, and December 31, 2005, the individual
may take this credit in the taxable year beginning after December 31, 2005, and before
January 1, 2007.
new text end

new text begin (b) If a Minnesota resident is killed while serving in active military service in a
designated area, the individual's surviving spouse or dependent child may take this credit
in the taxable year of the death. If a Minnesota resident was killed while serving in a
designated area between September 11, 2002, and December 31, 2005, the individual's
surviving spouse or dependent child may take this credit in the taxable year beginning
after December 31, 2005, and before January 1, 2007.
new text end

new text begin (c) For purposes of this section, a "designated area" means a:
new text end

new text begin (1) combat zone designated by Executive Order from the President of the United
States;
new text end

new text begin (2) qualified hazardous duty area, designated in Public Law; or
new text end

new text begin (3) location certified by the U.S. Department of Defense as eligible for combat zone
tax benefits due to the location's direct support of military operations.
new text end

new text begin (d) For purposes of this section, active military service includes active duty service
in any of the United States Armed Forces, the National Guard, or reserves.
new text end

new text begin (e) If the amount of the credit which the taxpayer is eligible to receive under this
section exceeds the taxpayer's tax liability under this chapter, the commissioner of revenue
shall refund the excess to the taxpayer.
new text end

new text begin (f) The amount necessary to pay claims for the refund provided in this section is
appropriated from the general fund to the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 6.

Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 35. new text end

new text begin Beginning farmer management credit. new text end

new text begin (a) A taxpayer who is a
beginning farmer or livestock producer may take a credit against the tax due under
this chapter for participation in a financial management program according to section
41B.0391, subdivision 3.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the Rural
Finance Authority according to section 41B.0391.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter, for
the taxable year. If the amount of the credit determined under this subdivision for any
taxable year exceeds this limitation, the excess is a beginning farmer management credit
carryover to each of the three succeeding taxable years. The entire amount of the excess
unused credit for the taxable year is carried first to the earliest of the taxable years to
which the credit may be carried and then to each successive year to which the credit may
be carried. The amount of the unused credit which may be added under this paragraph
must not exceed the taxpayer's liability for tax less the beginning farmer management
credit for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2006.
new text end

Sec. 7.

Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Bovine testing credit. new text end

new text begin (a) An owner of cattle in Minnesota may take a
credit against the tax due under this chapter for an amount equal to one-half the expenses
incurred during the taxable year to conduct tuberculosis testing on those cattle.
new text end

new text begin (b) If the amount of credit which the taxpayer is eligible to receive under this
subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
revenue shall refund the excess to the taxpayer.
new text end

new text begin (c) The amount necessary to pay claims for the refund provided in this subdivision is
appropriated from the general fund to the commissioner of revenue.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 8.

Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Dairy investment credit. new text end

new text begin (a) A dairy investment credit is allowed against
the tax due under this chapter equal to ten percent of the amount paid or incurred by the
taxpayer, on the first $500,000 of qualifying expenditures made in the qualifying period.
new text end

new text begin (b) "Qualifying expenditures" means for purposes of this subdivision the amount
spent by a person who raises dairy animals for the acquisition, construction, or
improvement of buildings or facilities; or the development of pasture; or the acquisition of
equipment; for dairy animal housing, confinement, animal feeding, production of milk
and other dairy products, and waste management, including the following, if related to
dairy animals in this state:
new text end

new text begin (1) freestall barns;
new text end

new text begin (2) fences;
new text end

new text begin (3) watering facilities;
new text end

new text begin (4) feed storage and handling equipment;
new text end

new text begin (5) milking parlors;
new text end

new text begin (6) robotic equipment;
new text end

new text begin (7) scales;
new text end

new text begin (8) milk storage and cooling facilities;
new text end

new text begin (9) bulk tanks;
new text end

new text begin (10) manure pumping and storage facilities;
new text end

new text begin (11) digesters;
new text end

new text begin (12) equipment used to produce energy.
new text end

new text begin (13) on-farm processing of milk and other dairy products; and
new text end

new text begin (14) development of pasture owned or rented by the taxpayer for the use of dairy
animals.
new text end

new text begin Qualified expenditures only include amounts that are capitalized and deducted under either
section 167 or 179 of the Internal Revenue Code in computing federal taxable income.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter,
for qualifying expenditures, other than expenditures for development of pasture, only
include amounts that are capitalized and deducted under either section 167 or 179 of the
Internal Revenue Code in computing federal taxable income. Qualifying expenditures
for development of pasture must not include land acquisition and are limited to soil
preparation expenses, seed costs, planting costs, and weed control, which are allowed once
for each acre owned or rented by the taxpayer for the use of dairy animals and developed
into pasture during the qualifying period. The amount of the unused credit which may
be added under this paragraph must not exceed the taxpayer's liability for tax less the
dairy investment credit for the taxable year.
new text end

new text begin (d) The qualifying period is that time after December 31, 2005, and before January
1, 2012.
new text end

new text begin (e) The $50,000 maximum credit applies at the entity level for partnerships, S
corporations, trusts, and estates as well as at the individual level. In the case of married
individuals, the credit is limited to $50,000 for a married couple.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning after
December 31, 2005.
new text end

Sec. 9.

new text begin [290.0677] CREDIT FOR HISTORIC STRUCTURE REHABILITATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section, the terms defined in this
subdivision have the meanings given.
new text end

new text begin (b) "Certified historic structure" means a property located in Minnesota and listed
individually on the National Register of Historic Places or a historic property designated
by either a certified local government or a heritage preservation commission created
under the National Historic Preservation Act of 1966 and whose designation is approved
by the state historic preservation officer.
new text end

new text begin (c) "Eligible property" means a certified historic structure or a structure in a certified
historic district that is offered or used for residential or business purposes.
new text end

new text begin (d) "Structure in a certified historic district" means a structure located in Minnesota
that is certified by the State Historic Preservation Office as contributing to the historic
significance of a certified historic district listed on the National Register of Historic Places
or a local district that has been certified by the United States Department of the Interior.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer who incurs costs for the rehabilitation of
eligible property may take a credit against the tax imposed under this chapter in an amount
equal to 25 percent of the total costs of rehabilitation. Costs of rehabilitation include,
but are not limited to, qualified rehabilitation expenditures as defined under section
47(c)(2)(A) of the Internal Revenue Code, provided that the costs of rehabilitation must
exceed 50 percent of the total basis in the property at the time the rehabilitation activity
begins and the rehabilitation must meet standards consistent with the standards of the
Secretary of the Interior for rehabilitation as determined by the State Historic Preservation
Office of the Minnesota Historical Society.
new text end

new text begin Subd. 3. new text end

new text begin Carryback and carryforward. new text end

new text begin If the amount of the credit under
subdivision 2 exceeds the tax liability under this chapter for the year in which the cost is
incurred, the amount that exceeds the tax liability may be carried back to any of the three
preceding taxable years or carried forward to each of the ten taxable years succeeding the
taxable year in which the expense was incurred. The entire amount of the credit must
be carried to the earliest taxable year to which the amount may be carried. The unused
portion of the credit must be carried to the following taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners; transfers. new text end

new text begin (a) Credits granted to a
partnership, a limited liability company taxed as a partnership, or multiple owners of
property shall be passed through to the partners, members, or owners, respectively, pro
rata or pursuant to an executed agreement among the partners, members, or owners
documenting an alternate distribution method.
new text end

new text begin (b) Taxpayers eligible for credits may transfer, sell, or assign the credits in whole
or part. Any assignee may use acquired credits to offset up to 100 percent of the taxes
otherwise imposed by this chapter. The assignee shall perfect such transfer by notifying
the Department of Revenue in writing within 30 calendar days following the effective
date of the transfer in such form and manner as shall be prescribed by the Department
of Revenue. The proceeds of any sale or assignment of a credit shall be exempt from
taxation under this chapter.
new text end

new text begin Subd. 5. new text end

new text begin Process. new text end

new text begin To claim the credit, the taxpayer must apply to the State Historic
Preservation Office of the Minnesota Historical Society before a historic rehabilitation
project begins. The State Historic Preservation Office shall determine the amount of
eligible rehabilitation costs and whether the rehabilitation meets the standards of the
United States Department of the Interior. The State Historic Preservation Office shall issue
certificates verifying eligibility for and the amount of credit. The taxpayer shall attach
the certificate to any income tax return on which the credit is claimed. The State Historic
Preservation Office of the Minnesota Historical Society may collect fees for applications
for the historic preservation tax credit. Fees shall be set at an amount that does not exceed
the costs of administering the tax credit program.
new text end

new text begin Subd. 6. new text end

new text begin Mortgage certificates; credit for lending institutions. new text end

new text begin (a) The taxpayer
may elect, in lieu of the credit otherwise allowed under this section, to receive a historic
rehabilitation mortgage credit certificate.
new text end

new text begin (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a
certificate that is issued to the taxpayer according to procedures prescribed by the State
Historic Preservation Office with respect to the certified rehabilitation and which meets
the requirements of this paragraph. The face amount of the certificate must be equal to
the credit that would be allowable under subdivision 2 to the taxpayer with respect to
the rehabilitation. The certificate may only be transferred by the taxpayer to a lending
institution, including a nondepository home mortgage lending institution, in connection
with a loan:
new text end

new text begin (1) that is secured by the building with respect to which the credit is issued; and
new text end

new text begin (2) the proceeds of which may not be used for any purpose other than the acquisition
or rehabilitation of the building.
new text end

new text begin (c) In exchange for the certificate, the lending institution must provide to the
taxpayer an amount equal to the face amount of the certificate discounted by the amount
by which the federal income tax liability of the lending institution is increased due to its
use of the certificate in the manner provided in this section. That amount must be applied,
as directed by the taxpayer, in whole or in part, to reduce:
new text end

new text begin (1) the principal amount of the loan;
new text end

new text begin (2) the rate of interest on the loan; or
new text end

new text begin (3) the taxpayer's cost of purchasing the building, but only in the case of a qualified
historic home that is located in a poverty-impacted area as designated by the State Historic
Preservation Office. The lending institution may take as a credit against the tax due under
this chapter an amount equal to the amount specified in the certificate. If the amount of
the discount retained by the lender exceeds the amount by which the lending institution's
federal income tax liability is increased due to the use of a mortgage credit certificate, the
excess shall be refunded to the borrower with interest at the rate prescribed by the State
Historic Preservation Office. The lending institution may carry forward all unused credits
under this subdivision until exhausted. Nothing in this subdivision requires a lending
institution to accept a historic rehabilitation certificate from any person.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 10.

Minnesota Statutes 2004, section 290.10, is amended to read:

290.10 NONDEDUCTIBLE ITEMS.

new text begin Subdivision 1. new text end

new text begin Expenses, interest, and taxes.
new text end

new text begin new text end

Except as provided in section 290.17, subdivision 4, paragraph (i), in computing the
net income of a taxpayer no deduction shall in any case be allowed for expenses, interest
and taxes connected with or allocable against the production or receipt of all income not
included in the measure of the tax imposed by this chapter, except that for corporations
engaged in the business of mining or producing iron ore, the mining of which is subject to
the occupation tax imposed by section 298.01, subdivision 4, this shall not prevent the
deduction of expenses and other items to the extent that the expenses and other items are
allowable under this chapter and are not deductible, capitalizable, retainable in basis, or
taken into account by allowance or otherwise in computing the occupation tax and do not
exceed the amounts taken for federal income tax purposes for that year. Occupation
taxes imposed under chapter 298, royalty taxes imposed under chapter 299, or depletion
expenses may not be deducted under this clause.

new text begin Subd. 2. new text end

new text begin Fines, penalties, damages, and expenses. new text end

new text begin (a) No deduction from taxable
income for a trade or business expense under section 162(a) of the Internal Revenue Code
shall be allowed for any fine, penalty, damages, or expenses paid to:
new text end

new text begin (1) the government of the United States, a state, a territory or possession of the
United States, the District of Columbia, or the Commonwealth of Puerto Rico;
new text end

new text begin (2) the government of a foreign country; or
new text end

new text begin (3) a political subdivision of, or corporation or other entity serving as an agency or
instrumentality of, any government described in clause (1) or (2).
new text end

new text begin (b) For purposes of this subdivision, "fine, penalty, damages, or expenses" include,
but are not limited to, any amount:
new text end

new text begin (1) paid pursuant to a conviction or a plea of guilty or nolo contendere for any
crime in a criminal proceeding;
new text end

new text begin (2) paid as a civil penalty imposed by federal, state, or local law, including tax
penalties and interest;
new text end

new text begin (3) paid in settlement of the taxpayer's actual or potential liability for a civil or
criminal fine or penalty;
new text end

new text begin (4) forfeited as collateral posted in connection with a proceeding that could result in
imposition of a fine or penalty; or
new text end

new text begin (5) legal fees and related expenses paid or incurred in the prosecution or civil action
arising from a violation of the law imposing the fine or civil penalty, court costs assessed
against the taxpayer, or stenographic and printing charges, compensatory damages,
punitive damages, or restitution.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

ARTICLE 2

SALES AND USE TAX

Section 1.

Minnesota Statutes 2005 Supplement, section 270C.722, subdivision 2,
is amended to read:

Subd. 2.

New permits after revocation.

(a) The commissioner shall not issue a
new permit after revocation or reinstate a revoked permit unless the taxpayer applies for a
permit and provides reasonable evidence of intention to comply with the sales and use
tax laws and rules. The commissioner may require the applicant to provide security, in
addition to that authorized by section 297A.92, in an amount reasonably necessary to
ensure compliance with the sales and use tax laws and rules. If the commissioner issues
or reinstates a permit not in conformance with the requirements of this subdivision or
applicable rules, the commissioner may cancel the permit upon notice to the permit holder.
The notice must be served by first class and certified mail at the permit holder's last known
address. The cancellation shall be effective immediately, subject to the right of the permit
holder to show that the permit was issued in conformance with the requirements of this
subdivision and applicable rules. Upon such showing, the permit must be reissued.

(b) If a taxpayer has had a permit or permits revoked three times in a five-year
period, the commissioner deleted text begin shall notdeleted text end new text begin may refuse tonew text end issue a new permit or reinstate the
revoked permit until 24 months have elapsed after revocation and the taxpayer has
satisfied the conditions for reinstatement of a revoked permit or issuance of a new permit
imposed by this section and rules adopted under this section.

(1) an individual, if a revoked permit was issued to or in the name of an individual,
or a corporation or partnership, if a revoked permit was issued to or in the name of a
corporation or partnership; and

(2) an officer of a corporation, a member of a partnership, or an individual who is
liable for delinquent sales taxes, either for the entity for which the new or reinstated
permit is at issue, or for another entity for which a permit was previously revoked, or
personally as a permit holder.

Sec. 2.

Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3, is
amended to read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited
to, each of the transactions listed in this subdivision.

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or consume, for a consideration
in money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.

(c) Sale and purchase include the production, fabrication, printing, or processing of
tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication, printing, or processing.

(d) Sale and purchase include the preparing for a consideration of food.
Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy;

(4) dietary supplements; and

(5) all food sold through vending machinesnew text begin , except milknew text end .

(e) A sale and a purchase includes the furnishing for a consideration of electricity,
gas, water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten
computer software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing
salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;

(2) lodging and related services by a hotel, rooming house, resort, campground,
motel, or trailer camp and the granting of any similar license to use real property in a
specific facility, other than the renting or leasing of it for a continuous period of 30 days
or more under an enforceable written agreement that may not be terminated without
prior notice;

(3) nonresidential parking services, whether on a contractual, hourly, or other
periodic basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization if:

(i) the club, association, or other organization makes available for the use of its
members sports and athletic facilities, without regard to whether a separate charge is
assessed for use of the facilities; and

(ii) use of the sports and athletic facility is not made available to the general public
on the same basis as it is made available to members.

Granting of membership means both onetime initiation fees and periodic membership
dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
swimming pools; and other similar athletic or sports facilities;

(5) delivery of aggregate materials and concrete block by a third party if the delivery
would be subject to the sales tax if provided by the seller of the aggregate material or
concrete block; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services
provided by coin operated facilities operated by the customer, and rustproofing,
undercoating, and towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting and
exterminating services;

(iv) detective, security, burglar, fire alarm, and armored car services; but not
including services performed within the jurisdiction they serve by off-duty licensed peace
officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
organization for monitoring and electronic surveillance of persons placed on in-home
detention pursuant to court order or under the direction of the Minnesota Department
of Corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
public utility lines. Services performed under a construction contract for the installation of
shrubbery, plants, sod, trees, bushes, and similar items are not taxable;

(vii) massages, except when provided by a licensed health care facility or
professional or upon written referral from a licensed health care facility or professional for
treatment of illness, injury, or disease; and

(viii) the furnishing of lodging, board, and care services for animals in kennels and
other similar arrangements, but excluding veterinary and horse boarding services.

In applying the provisions of this chapter, the terms "tangible personal property"
and "sales at retail" include taxable services listed in clause (6), items (i) to (vi) and
(viii), and the provision of these taxable services, unless specifically provided otherwise.
Services performed by an employee for an employer are not taxable. Services performed
by a partnership or association for another partnership or association are not taxable if
one of the entities owns or controls more than 80 percent of the voting power of the
equity interest in the other entity. Services performed between members of an affiliated
group of corporations are not taxable. For purposes of the preceding sentence, "affiliated
group of corporations" includes those entities that would be classified as members of an
affiliated group under United States Code, title 26, section 1504, and that are eligible to
file a consolidated tax return for federal income tax purposes.

(h) A sale and a purchase includes the furnishing for a consideration of tangible
personal property or taxable services by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
subdivisions.

(i) A sale and a purchase includes the furnishing for a consideration of
telecommunications services, including cable television services and direct satellite
services. Telecommunications services are taxed to the extent allowed under federal law.

(j) A sale and a purchase includes the furnishing for a consideration of installation if
the installation charges would be subject to the sales tax if the installation were provided
by the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
65B.29, subdivision 1, clause (1).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases and sales made after
June 30, 2006.
new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 297A.64, subdivision 4, is
amended to read:

Subd. 4.

Exemptions.

(a) The tax and the fee imposed by this section do not apply
to a lease or rental of (1) a vehicle to be used by the lessee to provide a licensed taxi
service; (2) a hearse or limousine used in connection with a burial or funeral service; deleted text begin ordeleted text end
(3) a van designed or adapted primarily for transporting property rather than passengersnew text begin ;
or (4) a vehicle under a car sharing agreement where the lessee is a dues-paying member
of a nonprofit car sharing organization that leases vehicles only on an hourly or mileage
basisnew text end . The tax and the fee imposed under this section do not apply when the lease or rental
of a vehicle is exempt from the tax imposed under section 297A.62, subdivision 1.

(b) The lessor may elect not to charge the fee imposed in subdivision 2 if in the
previous calendar year the lessor had no more than 20 vehicles available for lease that
would have been subject to tax under this section, or no more than $50,000 in gross
receipts that would have been subject to tax under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for leases made after June 30, 2006.
new text end

Sec. 4.

Minnesota Statutes 2004, section 297A.67, subdivision 18, is amended to read:

Subd. 18.

Used new text begin and re-refined new text end motor oils.

Used motor oils are exempt.new text begin Re-refined
motor oils that meet American Petroleum Institute specifications for gasoline or diesel
engines are exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2006.
new text end

Sec. 5.

Minnesota Statutes 2004, section 297A.67, is amended by adding a subdivision
to read:

new text begin Subd. 33. new text end

new text begin Recycled copier and printing papers. new text end

new text begin Copier paper with a minimum
postconsumer recycled content of 30 percent by weight is exempt. Uncoated printing
paper with a minimum of 30 percent postconsumer recycled content by weight is exempt.
Coated printing paper with a minimum of ten percent of postconsumer recycled content by
weight is exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2006.
new text end

Sec. 6.

Minnesota Statutes 2004, section 297A.68, subdivision 19, is amended to read:

Subd. 19.

Petroleum products.

The following petroleum products are exempt:

(1) products upon which a tax has been imposed and paid under chapter 296A,
and for which no refund has been or will be allowed because the buyer used the fuel
for nonhighway use;

(2) products that are used in the improvement of agricultural land by constructing,
maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water
impoundment, and other erosion control structures;

(3) products purchased by a transit system receiving financial assistance under
section 174.24, 256B.0625, subdivision 17, or 473.384;

(4) products purchased by an ambulance service licensed under chapter 144E;

(5) products used in a passenger snowmobile, as defined in section 296A.01,
subdivision 39, for off-highway business use as part of the operations of a resort as
provided under section 296A.16, subdivision 2, clause (2); deleted text begin ordeleted text end

(6) products purchased by a state or a political subdivision of a state for use in motor
vehicles exempt from registration under section 168.012, subdivision 1, paragraph (b)new text begin ; or
new text end

new text begin (7) products purchased for use as fuel for a commuter rail system operating under
sections 174.80 to 174.90. The tax must be imposed and collected as if the rate under
section 297A.62, subdivision 1, applied, and then refunded in the manner provided
in section 297A.75new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases made after June 30,
2006.
new text end

Sec. 7.

Minnesota Statutes 2004, section 297A.68, is amended by adding a subdivision
to read:

new text begin Subd. 42. new text end

new text begin Commuter rail materials, supplies, and equipment. new text end

new text begin Materials,
supplies, and equipment used or consumed in the construction, equipment, or improvement
of a commuter rail transportation system operated under sections 174.80 to 174.90 are
exempt. This exemption includes railroad cars, engines, and related equipment.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases made after June 30,
2006.
new text end

Sec. 8.

Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:

Subd. 3.

Sales of certain goods and services to government.

(a) The following
sales to or use by the specified governments and political subdivisions of the state are
exempt:

(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and
fire apparatus to a political subdivision;

(2) machinery and equipment, except for motor vehicles, used directly for mixed
municipal solid waste management services at a solid waste disposal facility as defined in
section 115A.03, subdivision 10;

(3) chore and homemaking services to a political subdivision of the state to be
provided to elderly or disabled individuals;

(4) telephone services to the Department of Administration that are used to provide
telecommunications services through the intertechnologies revolving fund;

(5) firefighter personal protective equipment as defined in paragraph (b), if purchased
or authorized by and for the use of an organized fire department, fire protection district, or
fire company regularly charged with the responsibility of providing fire protection to the
state or a political subdivision;

(6) bullet-resistant body armor that provides the wearer with ballistic and trauma
protection, if purchased by a law enforcement agency of the state or a political subdivision
of the state, or a licensed peace officer, as defined in section 626.84, subdivision 1;

(7) motor vehicles purchased or leased by political subdivisions of the state if the
vehicles are exempt from registration under section 168.012, subdivision 1, paragraph (b),
exempt from taxation under section 473.448, or exempt from the motor vehicle sales tax
under section 297B.03, clause (12);

(8) equipment designed to process, dewater, and recycle biosolids for wastewater
treatment facilities of political subdivisions, and materials incidental to installation of
that equipment; deleted text begin and
deleted text end

(9) sales to a town of gravel and of machinery, equipment, and accessories, except
motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of
motor vehicles exempt from tax under section 297B.03, clause (10)new text begin ; and
new text end

new text begin (10) voting equipment purchased between January 1, 2006, and January 1, 2008,
by a county to comply with United States Code, title 42, section 15481, ("Help America
Vote Act of 2002")new text end .

(b) For purposes of this subdivision, "firefighters personal protective equipment"
means helmets, including face shields, chin straps, and neck liners; bunker coats and
pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets;
protective coveralls; goggles; self-contained breathing apparatus; canister filter masks;
personal alert safety systems; spanner belts; optical or thermal imaging search devices;
and all safety equipment required by the Occupational Safety and Health Administration.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from January 1, 2006.
new text end

Sec. 9.

Minnesota Statutes 2005 Supplement, section 297A.70, subdivision 8, is
amended to read:

Subd. 8.

Regionwide public safety radio communication system; products and
services.

Products and services including, but not limited to, end user equipment used
for construction, ownership, operation, maintenance, and enhancement of the backbone
system of the regionwide public safety radio communication system established under
sections 403.21 to , are exempt. For purposes of this subdivision, backbone
system is defined in section 403.21, subdivision 9. This subdivision is effective for
purchases, sales, storage, use, or consumption for use in the first and second phases of the
system, as defined in section 403.21, subdivisions 3, 10, and 11, deleted text begin anddeleted text end that portion of the
third phase of the system that is located in the southeast district of the State Patrol and
the counties of Benton, Sherburne, Stearns, and Wrightnew text begin , and that portion of the system
that is located in Itasca Countynew text end .

Sec. 10.

Minnesota Statutes 2004, section 297A.71, subdivision 23, is amended to read:

Subd. 23.

Construction materials for qualified low-income housing projects.

(a)
Purchases of materials and supplies used or consumed in and equipment incorporated into
the construction, improvement, or expansion of qualified low-income housing projects are
exempt from the tax imposed under this chapter if the owner of the qualified low-income
housing project is:

(1) the public housing agency or housing and redevelopment authority of a political
subdivision;

(2) an entity exercising the powers of a housing and redevelopment authority within
a political subdivision;

(3) a limited partnership in which the sole general partner is an authority under
clause (1) or an entity under clause (2);

(4) a nonprofit corporation subject to the provisions of chapter 317A, and qualifying
under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended; deleted text begin or
deleted text end

(5) an owner entity, as defined in Code of Federal Regulations, title 24, part 941.604,
for a qualified low-income housing project described in paragraph (b), clause (5)deleted text begin .deleted text end new text begin ; or
new text end

new text begin (6) a limited partnership in which either:
new text end

new text begin (i) the sole general partner is an entity under clause (4); or
new text end

new text begin (ii) the managing partner is an entity under clause (4) and makes the following
disclosures in writing to an entity under clause (1) or (2):
new text end

new text begin (A) the names of all members of the partnership;
new text end

new text begin (B) the address for service of process of each member of the partnership; and
new text end

new text begin (C) the financing plan for the low-income housing project.
new text end

This exemption applies regardless of whether the purchases are made by the owner
of the facility or a contractor.

(b) For purposes of this exemption, "qualified low-income housing project" means:

(1) a housing or mixed use project in which at least 20 percent of the residential units
are qualifying low-income rental housing units as defined in section 273.126;

(2) a federally assisted low-income housing project financed by a mortgage insured
or held by the United States Department of Housing and Urban Development under
United States Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 1715z-1; United
States Code, title 42, section 1437f; the Native American Housing Assistance and
Self-Determination Act, United States Code, title 25, section 4101 et seq.; or any similar
successor federal low-income housing program;

(3) a qualified low-income housing project as defined in United States Code, title
26, section 42(g), meeting all of the requirements for a low-income housing credit under
section 42 of the Internal Revenue Code regardless of whether the project actually applies
for or receives a low-income housing credit;

(4) a project that will be operated in compliance with Internal Revenue Service
revenue procedure 96-32; or

(5) a housing or mixed use project in which all or a portion of the residential units
are subject to the requirements of section 5 of the United States Housing Act of 1937.

(c) For a project, a portion of which is not used for low-income housing units,
the amount of purchases that are exempt under this subdivision must be determined by
multiplying the total purchases, as specified in paragraph (a), by the ratio of:

(1) the total gross square footage of units subject to the income limits under section
273.126, the financing for the project, the federal low-income housing tax credit, revenue
procedure 96-32, or section 5 of the United States Housing Act of 1937, as applicable
to the project; and

(2) the total gross square footage of all units in the project.

(d) The tax must be imposed and collected as if the rate under section 297A.62,
subdivision 1, applied, and then refunded in the manner provided in section 297A.75.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
June 30, 2006.
new text end

Sec. 11.

Minnesota Statutes 2004, section 297A.71, is amended by adding a
subdivision to read:

new text begin Subd. 37. new text end

new text begin Hydroelectric generating facility. new text end

new text begin Materials and supplies used or
consumed in the construction of a 10.3 megawatt run-of-the-river hydroelectric generating
facility that meets the requirements of this subdivision are exempt. To qualify for the
exemption under this subdivision, a hydroelectric generating facility must:
new text end

new text begin (1) utilize between 12 and 16 turbine generators at a dam site existing on March
31, 1994;
new text end

new text begin (2) be located on land within 3,000 feet of a 13.8 kilovolt distribution circuit; and
new text end

new text begin (3) be eligible to receive a renewable energy production incentive payment under
section 216C.41.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
April 30, 2006, and on or before December 31, 2009.
new text end

Sec. 12.

Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is
amended to read:

Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the
following exempt items must be imposed and collected as if the sale were taxable and the
rate under section 297A.62, subdivision 1, applied. The exempt items include:

(1) capital equipment exempt under section 297A.68, subdivision 5;

(2) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(3) building materials for mineral production facilities exempt under section
297A.71, subdivision 14;

(4) building materials for correctional facilities under section 297A.71, subdivision
3;

(5) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(6) elevators and building materials exempt under section 297A.71, subdivision 12;

(7) building materials for the Long Lake Conservation Center exempt under section
297A.71, subdivision 17;

(8) materials, supplies, fixtures, furnishings, and equipment for a county law
enforcement and family service center under section 297A.71, subdivision 26;

(9) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23; deleted text begin and
deleted text end

(10) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35new text begin ; and
new text end

new text begin (11) products purchased for use as fuel for a commuter rail system exempt under
section 297A.68, subdivision 19, clause (7)new text end .

Sec. 13.

Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is
amended to read:

Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
must be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;

(2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental
subdivision;

(3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (6), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (9), the owner of the qualified low-income housing
project; deleted text begin and
deleted text end

(6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or
a joint venture of municipal electric utilitiesnew text begin ; and
new text end

new text begin (7) for subdivision 1, clause (11), the applicant must be the purchaser of the fuelnew text end .

Sec. 14.

Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991,
chapter 291, article 8, section 22; Laws 1998, chapter 389, article 8, section 25; and Laws
2003, First Special Session chapter 21, article 8, section 11, is amended to read:

Subd. 2. Notwithstanding Minnesota Statutes, Section 477A.016, or any other law,
ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance,
impose an additional sales tax of up to deleted text begin one and one-half deleted text end new text begin two and one-quarter new text end percent on
sales transactions which are described in Minnesota Statutes 2000, Section 297A.01,
Subdivision 3, Clause (c). When the city council determines that the taxes imposed
under this subdivision and under new text begin Laws 1998, chapter 389, article 8, new text end section 26new text begin ,new text end at a rate
of one-half of one percent have produced revenue sufficient to pay (1) the debt service
on bonds in a principal amount of $8,000,000 issued for capital improvements to the
Duluth Entertainment and Convention Center, and (2) debt service on outstanding bonds
originally issued in the principal amount of $4,970,000 to finance capital improvements to
the Great Lakes Aquarium since the imposition of the taxes at the rate of one and one-half
percent, the rate of the tax under this subdivision is reduced deleted text begin to deleted text end new text begin by one-half of new text end one percent.
new text begin When the city council determines that the taxes imposed under this subdivision at a rate
of three-quarters of one percent have produced revenue sufficient to pay debt service on
bonds in the principal amount of $33,700,000, plus issuance and discount costs, issued
for capital improvements for a new arena at the Duluth Entertainment and Convention
Center, the rate of tax under this subdivision shall be reduced by three-quarters of one
percent. new text end The imposition of this tax shall not be subject to voter referendum under either
state law or city charter provisions.

EFFECTIVE DATE. new text begin This section is effective the day after the governing body of
the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3. new text end

Sec. 15.

Laws 1996, chapter 471, article 2, section 29, is amended to read:

Sec. 29. CITY OF HERMANTOWN; SALES new text begin AND USE new text end TAX.

Subdivision 1.

Sales new text begin and use new text end tax authorized.

new text begin (a) new text end Notwithstanding Minnesota
Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city
charter, the city of Hermantown may, by ordinance, impose an additional salesnew text begin and use new text end tax
of up to one percent on sales deleted text begin transactions deleted text end new text begin , storage, and use new text end taxable pursuant to Minnesota
Statutes, chapter 297A, that occur within the city.

new text begin (b) new text end The proceeds of the new text begin first one-half of the one percent new text end tax imposed under this
section must be used deleted text begin to meet the costs of deleted text end new text begin by the city for the following projectsnew text end :

(1) extending a sewer interceptor line;

(2) construction of a booster pump station, reservoirs, and related improvements
to the water system; and

(3) construction of a new text begin building containing a new text end police and fire stationnew text begin and an
administrative services facilitynew text end .

new text begin (c) Revenues received from the remaining one-half of the one percent tax
authorized under this section must be used by the city to pay all or part of the capital and
administrative costs of developing, acquiring, constructing, and initially furnishing and
equipping the following projects:
new text end

new text begin (1) construction of a new facility or purchase of an existing facility to be used as
a public works facility;
new text end

new text begin (2) construction, signalization, and rehabilitation of primary collector roads and
commercial frontage roads, within the city; and
new text end

new text begin (3) extension of a regional trunk sewer.
new text end

new text begin (d) Authorized expenses include, but are not limited to, acquiring property; paying
construction, administrative, and operating expenses related to the development of the
projects listed in paragraph (c); paying debt service on bonds or other obligations,
including lease obligations, issued to finance construction, expansion, or improvement of
the projects listed in paragraph (c); and other compatible uses, including but not limited to,
parking, lighting, and landscaping.
new text end

Subd. 2.

Referendum.

new text begin (a) new text end If the Hermantown city council proposes to impose the
sales tax authorized by this section, it shall conduct a referendum on the issue.

new text begin (b) If the Hermantown city council initially imposes the tax at a rate that is less than
one percent and proposes increasing the tax rate at a later date up to the full one percent, it
shall conduct a referendum on the increase of the tax rate.
new text end

new text begin (c) new text end The question of imposing new text begin or increasing new text end the tax must be submitted to the voters at
a special or general election. The tax may not be imposed unless a majority of votes cast
on the question of imposing the tax are in the affirmative. The commissioner of revenue
shall prepare a suggested form of question to be presented at the election. This subdivision
applies notwithstanding any city charter provision to the contrary.

Subd. 3.

Enforcement; collection; and administration of taxes.

A sales tax
imposed under this section must be reported and paid to the commissioner of revenue
with the state sales taxes, and be subject to the same penalties, interest, and enforcement
provisions. The proceeds of the tax, less refunds and a proportionate share of the cost of
collection, shall be remitted at least quarterly to the city. The commissioner shall deduct
from the proceeds remitted an amount that equals the indirect statewide cost as well as the
direct and indirect department costs necessary to administer, audit, and collect the tax.
The amount deducted shall be deposited in the state general fund.

new text begin Subd. 3a.new text end

new text begin Bonding authority.new text end

new text begin (a) The city may issue general obligation bonds
under Minnesota Statutes, chapter 475, to finance the costs in subdivision 1, paragraph (c).
The total amount of bonds issued for the projects under subdivision 1, paragraph (c), may
not exceed $13,000,000 in the aggregate. An election to approve the bonds is not required.
new text end

new text begin (b) The bonds are not included in computing any debt limitation applicable to the
city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
and interest on the bonds is not subject to any levy limitation.
new text end

new text begin (c) The taxes authorized under this section may be pledged to and used for the
payment of the bonds and any bonds issued to refund them.
new text end

Subd. 4.

Termination.

The new text begin portion of the new text end tax authorizeddeleted text begin under this section deleted text end new text begin to
finance the improvements described in subdivision 1, paragraph (b),new text end terminates deleted text begin at the later
of (1) ten years after the date of initial imposition of the tax, or (2) on the first day of the
second month next succeeding a determination by the city council that sufficient funds
have been received fromdeleted text end deleted text begin the taxdeleted text end deleted text begin to financedeleted text end deleted text begin the deleted text end deleted text begin improvements deleted text end deleted text begin described in subdivision 1,
clauses (1) to (3),deleted text end deleted text begin and to prepay or retire at maturity the principal, interest, and premium
due on any bonds issued for the improvementsdeleted text end new text begin on March 31, 2026.new text end new text begin The portion of the
tax authorized to finance the improvements described in subdivision 1, paragraph (c),
terminates when the revenues raised are sufficient to finance those improvements, up to an
amount equal to $13,000,000 plus any interest, premium, and other costs associated with
the bonds issued under subdivision 3a. The city council may terminate this portion of the
tax earliernew text end . Any funds remaining after completion of the improvements and retirement or
redemption of the bonds may be placed in the general fund of the city.

deleted text begin Subd. 5.deleted text end

deleted text begin Local approval; effective date.deleted text end

deleted text begin This section is effective the day after final
enactment, upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by
the city of Hermantown.
deleted text end

new text begin EFFECTIVE DATE.new text end

new text begin This section is effective the day after the governing body of
the city of Hermantown and its chief clerical officer comply with Minnesota Statutes,
section 645.021, subdivisions 2 and 3.new text end

Sec. 16.

Laws 1999, chapter 243, article 4, section 18, subdivision 1, is amended to
read:

Subdivision 1.

Sales and use tax.

new text begin (a) new text end Notwithstanding Minnesota Statutes, section
deleted text begin 297A.48, subdivision 1a,deleted text end 477A.016, or any other provision of law, ordinance, or city
charter, if approved by the city voters at the first municipal general election held after the
date of final enactment of this act or at a special election held November 2, 1999, the city
of Proctor may impose by ordinance a sales and use tax of up to one-half of one percent
for the purposes specified in subdivision 3new text begin , paragraph (a)new text end . The provisions of Minnesota
Statutes, section deleted text begin 297A.48 deleted text end new text begin 297A.99new text end , govern the imposition, administration, collection, and
enforcement of the tax authorized under this subdivision.

new text begin (b) The city of Proctor may impose by ordinance an additional sales and use tax of
up to one-half of one percent if approved by the city voters at a general election or at a
special election held for this purpose. The revenues received from this additional tax must
be used for the purposes specified in subdivision 3, paragraph (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
upon compliance by the city of Proctor with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 17.

Laws 1999, chapter 243, article 4, section 18, subdivision 3, is amended to
read:

Subd. 3.

Use of revenues.

new text begin (a) new text end Revenues received from taxes authorized by
subdivisions 1new text begin , paragraph (a),new text end and 2 must be used by the city to pay the cost of collecting
the taxes and to pay for construction and improvement of the following city facilities:

(1) streets; and

(2) constructing and equipping the Proctor community activity center.

Authorized expenses include, but are not limited to, acquiring property, paying
construction and operating expenses related to the development of an authorized facility,
and paying debt service on bonds or other obligations, including lease obligations, issued
to finance the construction, expansion, or improvement of an authorized facility. The
capital expenses for all projects authorized under this paragraph that may be paid with
these taxes is limited to $3,600,000, plus an amount equal to the costs related to issuance
of the bonds.

new text begin (b) Revenues received from taxes authorized by subdivision 1, paragraph (b),
must be used by the city to pay the cost of collecting the taxes and for construction and
improvements of city streets, public utilities, sidewalks, bikeways, and trails.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
upon compliance by the city of Proctor with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 18.

Laws 1999, chapter 243, article 4, section 18, subdivision 4, is amended to
read:

Subd. 4.

Bonding authority.

(a) The city may issue bonds under Minnesota
Statutes, chapter 475, to finance the capital expenditure and improvement projects
described in subdivision 3. An election to approve the bonds under Minnesota Statutes,
section 475.58, is not required.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes,
sections 275.60 and deleted text begin 279.61 deleted text end new text begin 275.61new text end .

(c) The bonds are not included in computing any debt limitation applicable to the
city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of
and interest on the bonds is not subject to any levy limitation.

(d) new text begin For projects described in subdivision 3, paragraph (a),new text end the aggregate principal
amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital
expenditures and improvements, may not exceed $3,600,000, plus an amount equal to
the costs related to issuance of the bonds, including interest on the bonds. new text begin For projects
described in subdivision 3, paragraph (b), the aggregate principal amount of bonds may
not exceed $7,200,000, plus an amount equal to the costs related to issuance of the bonds,
including interest on the bonds.
new text end

(e) The sales and use and excise taxes authorized in this section may be pledged to
and used for the payment of the bonds and any bonds issued to refund them only if the
bonds and any refunding bonds are general obligations of the city.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment,
upon compliance by the city of Proctor with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 19.

Laws 2005, First Special Session chapter 3, article 5, section 43, subdivision
3, is amended to read:

Subd. 3. Use of revenues. Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation
contained in the Minnesota Department of Transportation's Winona Intermodal study
dated June 2002 and in the resolution approved by the city council on January 3, 2005, new text begin and
all or a part of the capital costs of flood control projects approved by resolution of the city
council on February 6, 2006, new text end including securing or paying debt service on bonds issued
under subdivision 4, for the transportation new text begin and flood control new text end projects and to pay the cost
of collecting and administering the tax. Authorized costs include, but are not limited to,
acquiring property and paying construction and engineering costs related to the projects.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by
the governing body of the city of Winona with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 20.

Laws 2005, First Special Session chapter 3, article 5, section 44, subdivision
1, is amended to read:

Subdivision 1. [SALES AND USE TAX.] Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, if approved by
the voters pursuant to Minnesota Statutes, section 297A.99, at deleted text begin the nextdeleted text end new text begin a new text end general electionnew text begin
held before January 1, 2008new text end , the city of Worthington may impose by ordinance a sales
and use tax of up to one-half of one percent for the purpose specified in subdivision 3.
Except as otherwise provided in this section, the provisions of Minnesota Statutes, section
297A.99, govern the imposition, administration, collection, and enforcement of the tax
authorized under this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 21. new text begin CITY OF AUSTIN; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, if approved by the
voters pursuant to Minnesota Statutes, section 297A.99, at the next general election or
special election held for that purpose before January 1, 2007, the city of Austin may
impose by ordinance a sales and use tax of up to one-half of one percent for the purpose
specified in subdivision 2. Except as otherwise provided in this section, the provisions of
Minnesota Statutes, section 297A.99, govern the imposition, administration, collection,
and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from taxes authorized by subdivision
1 must be used by the city of Austin to pay all or part of the capital or administrative costs
of flood mitigation projects in the city of Austin. Authorized expenses include, but are not
limited to, acquiring property and paying construction and engineering expenses related
to the flood mitigation projects.
new text end

new text begin Subd. 3. new text end

new text begin Bonding authority. new text end

new text begin Pursuant to the approval of the city voters to impose
the tax authorized in subdivision 1, the city of Austin may issue without an additional
election general obligation bonds of the city in an amount not to exceed $14,000,000 to
finance the costs for the projects specified in subdivision 2. The debt represented by the
bonds must not be included in computing any debt limitations applicable to the city, and
the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or
any interest on the bonds must not be subject to any levy limitation.
new text end

new text begin Subd. 4. new text end

new text begin Termination of tax. new text end

new text begin The tax authorized under subdivision 1 terminates at
the earlier of:
new text end

new text begin (1) 20 years after the date of initial imposition of the tax; or
new text end

new text begin (2) when the Austin City Council determines that the amount described in
subdivision 2 has been received from the tax to finance the capital and administrative costs
for the projects specified in subdivision 2, and to repay or retire at maturity, the principal,
interest, and premium due on any bonds issued for the projects under subdivision 3.
new text end

new text begin Any funds remaining after completion of the projects specified in subdivision 2, and
retirement or redemption of the bonds in subdivision 3, may be placed in the general fund
of the city. The tax imposed under subdivision 1 may expire at an earlier time if the
city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by
the governing body of the city of Austin with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.
new text end

Sec. 22. new text begin CITY OF BAXTER; TAXES AUTHORIZED.
new text end

new text begin new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to
the approval of the voters on November 2, 2004, and pursuant to Minnesota Statutes,
section 297A.99, the city of Baxter may impose by ordinance a sales and use tax of
one-half of one percent for the purposes specified in subdivision 3. The provisions of
Minnesota Statutes, section 297A.99, govern the imposition, administration, collection,
and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other contrary provision of law, ordinance, or city charter, the city of
Baxter may impose by ordinance, for the purposes specified in subdivision 3, an excise tax
of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any
person engaged within the city of Baxter in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax
and to finance all or part of the costs of constructing an upgraded regional wastewater
treatment facility to serve the cities of Brainerd and Baxter, building and equipping a
fire substation, and constructing the Paul Bunyan bridge over Excelsior Road and other
improvements. Authorized costs include, but are not limited to, acquiring property and
paying construction and engineering costs related to the projects.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin The city of Baxter, pursuant to the approval of the voters at the
November 2, 2004, referendum authorizing the imposition of the taxes in this section, may
issue general obligation bonds of the city, in one or more series, in the aggregate principal
amount not to exceed $15,000,000 to finance the projects listed in subdivision 3. The debt
represented by the bonds is not included in computing any debt limitations applicable to
the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the
principal of and interest on the bonds is not subject to any levy limitation or included in
computing or applying any levy limitation applicable to the city of Baxter.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivisions 1 and 2
expire at the earlier of a date 12 years after the imposition of the tax or when the Baxter
City Council first determines that the amount of revenues raised from the taxes to pay for
the projects equals or exceeds $15,000,000 plus any interest on bonds issued for the
projects under subdivision 3. Any funds remaining after the expiration of the taxes and
retirement of the bonds shall be placed in a capital project fund of the city of Baxter. The
taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city of
Baxter so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by
the governing body of the city of Baxter with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 23. new text begin CITY OF BRAINERD; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, contingent
on the approval of the voters on the November 7, 2006, referendum, and pursuant to
Minnesota Statutes, section 297A.99, the city of Brainerd may impose by ordinance a sales
and use tax of one-half of one percent for the purposes specified in subdivision 3. The
provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration,
collection, and enforcement of the tax authorized under this section.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the city of Brainerd
may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
to $20 per motor vehicle, as defined by ordinance, purchased, or acquired from any person
engaged within the city of Brainerd in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax
and to finance all or part of the costs of constructing an upgraded regional wastewater
treatment facility to serve the cities of Brainerd and Baxter, water infrastructure
improvements, and trail development, contingent on approval by Brainerd voters at the
November 7, 2006, referendum. Authorized costs include, but are not limited to, acquiring
property and paying construction and engineering costs related to the projects.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin The city of Brainerd, contingent on approval of the voters at the
November 7, 2006, referendum authorizing the imposition of taxes in this section, may
issue general obligation bonds of the city, in one or more series, in the aggregate principal
amount not to exceed $22,030,000 to finance the projects listed in subdivision 3. The debt
represented by the bonds is not included in computing any debt limitations applicable to
Brainerd, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the
principal and interest on the bonds is not subject to any levy limitation or included in
computing any levy limitation applicable to the city of Brainerd.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivisions 1 and 2
expire at the earlier of a date 12 years after the imposition of the tax or when the city
council first determines that the amount of revenues raised from the taxes to pay for
projects equals or exceeds $22,030,000 plus any interest on bonds issued for the projects
under subdivision 3. Any funds remaining after the expiration of the taxes and retirement
of the bonds shall be placed in a capital project fund of the city of Brainerd. The taxes
imposed under subdivision 1 and 2 may expire at an earlier time if the city of Brainerd so
determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Brainerd with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 24. new text begin CITY OF BREEZY POINT; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to
the approval of the voters at the general election on November 7, 2006, and pursuant to
Minnesota Statutes, section 297A.99, the city of Breezy Point may impose by ordinance
a sales and use tax of one-half of one percent for the purposes specified in subdivision
3. The provisions of Minnesota Statutes, section 297A.99, govern the imposition,
administration, collection, and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other contrary provision of law, ordinance, or city charter, the city of
Breezy Point may impose by ordinance, for the purposes specified in subdivision 3, an
excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired
from any person engaged within the city of Breezy Point in the business of selling motor
vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax
and to finance sanitary sewer and storm sewer improvements as approved by the voters
at the referendum authorizing the tax. Authorized costs include, but are not limited to,
acquiring property and paying construction and engineering costs related to the projects.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin The city of Breezy Point, pursuant to the approval of the voters at
the referendum authorizing the imposition of the taxes in this section, may issue general
obligation bonds of the city, in one or more series, in the aggregate principal amount not to
exceed $11,000,000 to finance the projects listed in subdivision 3. The debt represented
by the bonds is not included in computing any debt limitations applicable to the city, and
the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal of
and interest on the bonds is not subject to any levy limitation or included in computing or
applying any levy limitation applicable to the city.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivisions 1 and 2
expire 15 years after the imposition of the tax or when the Breezy Point City Council
first determines that the amount of revenues raised from the taxes to pay for the projects
equals or exceeds $11,000,000 plus any interest on bonds issued for the projects under
subdivision 3, whichever is earlier. Any funds remaining after the expiration of the taxes
and retirement of the bonds may be placed in the general fund or in a capital project fund
of the city of Breezy Point. The taxes imposed under subdivisions 1 and 2 may expire
at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Breezy Point with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 25. new text begin CITY OF CLOQUET; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, if approved by the
voters pursuant to Minnesota Statutes, section 297A.99, or at a special election held for
this purpose, the city of Cloquet may impose by ordinance a sales and use tax of up to
one-half of one percent for the purpose specified in subdivision 3. Except as provided in
this section, the provisions of Minnesota Statutes, section 297A.99, govern the imposition,
administration, collection, and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the city of Cloquet
may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
engaged within the city in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from taxes authorized by subdivisions
1 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for the
following projects:
new text end

new text begin (1) construction and completion of park improvement projects, including
reconstruction of the Pinehurst Park swimming pool complex, St. Louis River Riverfront
improvements, Veteran's Park construction, and enhancements to the Hilltop Park soccer
complex and Braun Park baseball complex; and
new text end

new text begin (2) extension of utilities and the construction of all improvements associated with
the new Cloquet Industrial Park.
new text end

new text begin Authorized expenses include, but are not limited to, acquiring property and paying
construction expenses related to these improvements, and paying debt service on bonds or
other obligations issued to finance acquisition and construction of these improvements.
new text end

new text begin Subd. 4. new text end

new text begin Bonding authority. new text end

new text begin (a) The city may issue bonds under Minnesota
Statutes, chapter 475, to pay capital and administrative expenses for the improvements
described in subdivision 3 in an amount that does not exceed $9,000,000. An election to
approve the bonds under Minnesota Statutes, section 475.58, is not required.
new text end

new text begin (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes,
sections 275.60 and 275.61.
new text end

new text begin (c) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
475.61, to pay principal of and interest on the bonds is not subject to any levy limitation.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivisions 1 and 2
expire at the earlier of (1) 18 years, or (2) when the city council determines that sufficient
funds have been received from the taxes to finance the capital and administrative costs of
the improvements described in subdivision 3, plus the additional amount needed to pay
the costs related to issuance of bonds under subdivision 4, including interest on the bonds.
Any funds remaining after completion of the project and retirement or redemption of the
bonds may be placed in the general fund of the city. The taxes imposed under subdivisions
1 and 2 may expire at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Cloquet and its chief clerical officer timely comply with Minnesota Statutes,
section 645.021, subdivisions 2 and 3.new text end

Sec. 26. new text begin CITY OF ELY; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, if approved by the
voters pursuant to Minnesota Statutes, section 297A.99, the city of Ely may impose by
ordinance a sales and use tax of up to one percent for the purposes specified in subdivision
2. Except as otherwise provided in this section, the provisions of Minnesota Statutes,
section 297A.99, govern the imposition, administration, collection, and enforcement of
the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin The proceeds of the tax imposed under this section
shall be used for the following:
new text end

new text begin (1) land acquisition and site development;
new text end

new text begin (2) installations of improvements authorized by Minnesota Statutes, chapter 429;
new text end

new text begin (3) development or redevelopment activities in the central business district of Ely;
new text end

new text begin (4) business park development;
new text end

new text begin (5) development of a small business incubator;
new text end

new text begin (6) development of a technology center; and
new text end

new text begin (7) improvements to the Ely Community Center and City Hall needed to bring them
into compliance with the Americans with Disabilities Act.
new text end

new text begin Subd. 3. new text end

new text begin Bonding authority. new text end

new text begin The city of Ely may issue bonds in an amount not
to exceed $6,000,000 under Minnesota Statutes, chapter 475, to finance the capital
expenditures and improvements authorized by the referendum under subdivision 4. An
election to approve the bonds under Minnesota Statutes, section 475.58, is not required.
The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section
275.60 or 275.61. The debt represented by the bonds must not be included in computing
any debt limitations applicable to the city, and the levy of taxes required by Minnesota
Statutes, section 475.61, to pay the principal or any interest on the bonds and must not
be subject to any levy limitation.
new text end

new text begin Subd. 4. new text end

new text begin Termination of tax. new text end

new text begin The tax authorized under subdivision 1 terminates at
the earlier of (1) 20 years after the date of initial imposition of the tax, or (2) when the Ely
City Council determines that the amount of revenues raised to pay for the projects under
subdivision 2 shall meet or exceed the sum of $6,000,000, plus the amount needed to
finance the capital and administrative costs of the projects specified in subdivision 2, and
to repay or retire at maturity the principal, interest, and premium due on any bonds issued
for the projects under subdivision 3. Any funds remaining after completion of the projects
specified in subdivision 2, and retirement or redemption of the bonds in subdivision 3,
may be placed in the general fund of the city. The tax imposed under subdivision 1 may
expire at an earlier time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Ely with Minnesota Statutes, section 645.021, subdivisions
2 and 3.
new text end

Sec. 27. new text begin CITY OF LUVERNE; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, if approved
by the voters pursuant to Minnesota Statutes, section 297A.99, the city of Luverne may
impose by ordinance a sales and use tax of one-half of one percent for the purposes
specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern
the imposition, administration, collection, and enforcement of the tax authorized under
this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other contrary provision of law, ordinance, or city charter, the city of
Luverne may impose by ordinance, for the purposes specified in subdivision 3, an excise
tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from
any person engaged within the city in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used to pay the cost of collecting and administering the
taxes and to pay all or part of the expenses for capital improvements and renovation of
the Historic Palace Theatre in an amount not to exceed $3,000,000. Authorized expenses
include, but are not limited to, acquiring property and paying construction expenses
related to the project, and paying debt service on bonds or other obligations issued to
finance the acquisition and improvements.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin If the taxes under subdivisions 1 and 2 are approved by voters
pursuant to Minnesota Statutes, section 297A.99, the city of Luverne may issue, without
an additional election, bonds, in one or more series, in the aggregate principal amount
not to exceed $3,000,000 to pay capital and administrative costs of the projects listed in
subdivision 3. The debt represented by the bonds is not included in computing any debt
limitations applicable to the city, and the levy of taxes required by Minnesota Statutes,
section 475.61, to pay the principal of and interest on the bonds is not subject to any levy
limitation or included in computing or applying any levy limitation applicable to the city.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivisions 1 and 2
expire at the later of 30 years after the imposition of the tax or when the Luverne city
council determines that sufficient funds have been received from the taxes to prepay
or retire at maturity the principal, interest, and premium due on any bonds issued for
the project under subdivision 4. Any funds remaining after expiration of the taxes and
retirement of the bonds may be placed in a capital project fund of the city. The taxes
imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines
by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Luverne with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 28. new text begin CITY OF MEDFORD; SALES AND USE TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, if approved by
the voters pursuant to Minnesota Statutes, section 297A.99, at the next general election,
the city of Medford may impose by ordinance a sales and use tax of one-half of one
percent for the purposes specified in subdivision 2. Except as otherwise provided in this
section, the provisions of Minnesota Statutes, section 297A.99, govern the imposition,
administration, collection, and enforcement of the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin The proceeds of the tax imposed under this section must
be used by the city of Medford to pay the costs of collecting and administering the tax and
to pay up to $5,000,000 in costs to improve the city's wastewater system and wastewater
treatment plant. Authorized expenses include, but are not limited to, acquiring property
and paying construction expenses and debt service on bonds or other obligations issued to
finance acquisition and construction of the improvements.
new text end

new text begin Subd. 3. new text end

new text begin Bonding authority. new text end

new text begin (a) If the tax authorized under subdivision 1 is
approved by the voters, the city may issue bonds under Minnesota Statutes, chapter 475,
to pay the capital and administrative expenses for the improvement projects authorized
under subdivision 2. The total amount of bonds issued for the projects listed in subdivision
2 may not exceed $5,000,000 in aggregate. An election to approve the bonds under
Minnesota Statutes, section 475.58, is not required.
new text end

new text begin (b) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city of Medford, and the levy of taxes under Minnesota
Statutes, section 475.61, to pay the principal of and interest on the bonds is not subject to
any levy limitation.
new text end

new text begin Subd. 4. new text end

new text begin Termination of taxes. new text end

new text begin The tax imposed under this section expires at the
earlier of (1) 20 years after the date the taxes are first imposed, or (2) when the Medford
City Council determines that the amount of revenues received from the tax equals or
exceeds the sum of $5,000,000, plus an amount equal to the costs related to the issuance of
bonds under subdivision 3, including interest on the bonds. Any funds remaining after
completion of the projects and retirement or redemption of the bonds may be placed in the
general fund of the city. The tax imposed under subdivision 1 may expire at an earlier
time if the city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Medford with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 29. new text begin CITY OF NORTH MANKATO; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, if approved by
the voters pursuant to Minnesota Statutes, section 297A.99, the city of North Mankato
may impose by ordinance a sales and use tax of one-half of one percent for the purposes
specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern
the imposition, administration, collection, and enforcement of the taxes authorized under
this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the tax authorized by
subdivision 1 must be used to pay all or part of the capital costs of the following projects:
new text end

new text begin (1) the local share of the marked Trunk Highway 14/County State-Aid Highway
41 interchange project, including a connection to the North Port Industrial Park and trail
connections to the scenic byway along the Minnesota River, the Nicollet County Park,
existing trails in the cities of North Mankato, and Mankato and the Sakatah State Trail;
new text end

new text begin (2) development of regional parks and hiking and biking trails in Caswell Park,
Benson Park, and Spring Lake Park;
new text end

new text begin (3) riverfront redevelopment projects; and
new text end

new text begin (4) lake improvement projects.
new text end

new text begin The total amount of revenues from the tax in subdivision 1 that may be used to fund
these projects is $5,250,000 plus any associated bond costs.
new text end

new text begin Subd. 3. new text end

new text begin Bonds. new text end

new text begin (a) The city of North Mankato, if approved by voters pursuant to
Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter
475, to pay capital and administrative expenses for the projects described in subdivision 2,
in an amount that does not exceed $5,250,000. A separate election to approve the bonds
under Minnesota Statutes, section 475.58, is not required.
new text end

new text begin (b) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
475.61, to pay principal and interest on the bonds is not subject to any levy limitation.
new text end

new text begin Subd. 4. new text end

new text begin Termination of taxes. new text end

new text begin The tax imposed under subdivision 1 expires at the
later of (1) 15 years, or (2) when the city council determines that the amount of revenues
received from the taxes to pay for the projects under subdivision 2 first equals or exceeds
the amount authorized to be spent for each project plus the additional amount needed to
pay the costs related to issuance of the bonds under subdivision 3, including interest
on the bonds. Any funds remaining after completion of the projects and retirement or
redemption of the bonds shall be placed in a capital facilities and equipment replacement
fund of the city. The tax imposed under section 1 may expire at an earlier time if the
city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of North Mankato with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 30. new text begin CITY OF OWATONNA; TAXES AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, if approved
by the voters pursuant to Minnesota Statutes, section 297A.99, the city of Owatonna
may impose by ordinance a sales and use tax of one-half of one percent for the purposes
specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern
the imposition, administration, collection, and enforcement of the taxes authorized under
this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Excise tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes, section
477A.016, or any other provision of law, ordinance, or city charter, the city of Owatonna
may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of
$20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
engaged within the city in the business of selling motor vehicles at retail.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation
projects included in the 2004 U.S. Highway 14-Owatonna Beltline Study by the Minnesota
Department of Transportation, Steele County, and the city of Owatonna; regional parks
and trail developments, West Hills complex, firehall, and library improvement projects;
and a public safety radio system; as described in the city resolution No. 4-06, Exhibit
A, as adopted by the city on January 17, 2006. The amount paid from these revenues
for transportation projects may not exceed $4,450,000 plus associated bond costs. The
amount paid from these revenues for park and trail projects may not exceed $5,400,000
plus associated bond costs. The amount paid from these revenues for West Hills complex,
fire hall, and library improvement projects may not exceed $2,823,000 plus associated
bond costs. The amount paid from these revenues for a public safety radio system may not
exceed $500,000 plus associated bond costs.
new text end

new text begin Subd. 4. new text end

new text begin Bonds. new text end

new text begin (a) The city of Owatonna, if approved by voters pursuant to
Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter
475, to pay capital and administrative expenses for the projects described in subdivision 3,
in an amount that does not exceed $13,200,000. A separate election to approve the bonds
under Minnesota Statutes, section 475.58, is not required.
new text end

new text begin (b) The debt represented by the bonds is not included in computing any debt
limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
475.61, to pay principal and interest on the bonds, is not subject to any levy limitation.
new text end

new text begin Subd. 5. new text end

new text begin Termination of taxes. new text end

new text begin The taxes imposed under subdivisions 1 and 2
expire at the earlier of (1) ten years, or (2) when the city council determines that the
amount of revenues received from the taxes to pay for the projects under subdivision 3 first
equals or exceeds the amount authorized to be spent for each project plus the additional
amount needed to pay the costs related to issuance of the bonds under subdivision 4,
including interest on the bonds. Any funds remaining after completion of the projects
and retirement or redemption of the bonds shall be placed in a capital project fund of
the city. The taxes imposed under sections 1 and 2 may expire at an earlier time if the
city so determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Owatonna with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 31. new text begin CITY OF PARK RAPIDS.
new text end

new text begin Subdivision 1. new text end

new text begin Sales and use tax authorized. new text end

new text begin Notwithstanding Minnesota Statutes,
section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to
the approval of the city voters at the next general election or at a special election held for
this purpose, the city of Park Rapids may impose by ordinance a sales and use tax of one
percent for the purposes specified in subdivision 2. The provisions of Minnesota Statutes,
section 297A.99, govern the imposition, administration, collection, and enforcement of
the tax authorized under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Use of revenues. new text end

new text begin Revenues received from the tax authorized by
subdivision 1 must be used for the cost of collecting and administering the tax and to
pay all or part of the capital or administrative costs of the development, acquisition,
construction, and improvement of the following projects:
new text end

new text begin (1) two-thirds of the cost of construction and operation of a community center that
may include a senior citizen center, fitness center, swimming pool, meeting rooms, indoor
track, and racquetball, basketball, and tennis courts, provided that an amount equal to
one-third of the cost of construction is received from private sources;
new text end

new text begin (2) capital improvement projects including, but not limited to, installation of water,
sewer, storm sewer, street improvements, new city water tower and well, costs related to
improvements to marked trunk highway 34; and
new text end

new text begin (3) park improvements.
new text end

new text begin Authorized expenses include, but are not limited to, acquiring property, paying
construction expenses related to the development of these facilities and improvements,
and securing and paying debt service on bonds or other obligations issued to finance
acquisition, construction, improvement, or development.
new text end

new text begin Subd. 3. new text end

new text begin Bonds. new text end

new text begin Pursuant to the approval of the city voters to impose the tax
authorized in subdivision 1, the city of Park Rapids may issue without an additional
election general obligation bonds of the city to pay capital and administrative expenses
for the acquisition, construction, improvement, and development of the projects specified
in subdivision 2. The debt represented by the bonds must not be included in computing
any debt limitations applicable to the city, and the levy of taxes required by Minnesota
Statutes, section 475.61, to pay the principal or any interest on the bonds must not be
subject to any levy limitations or be included in computing or applying any levy limitation
applicable to the city.
new text end

new text begin Subd. 4. new text end

new text begin Termination of tax. new text end

new text begin The tax imposed under subdivision 1 expires July
1, 2025. Any funds remaining after completion of the projects specified in subdivision
2 and retirement or redemption of the bonds may be placed in the general fund of the
city. The tax imposed under subdivision 1 may expire at an earlier time if the city so
determines by ordinance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after compliance by the
governing body of the city of Park Rapids with Minnesota Statutes, section 645.021,
subdivision 3.
new text end

Sec. 32. new text begin THIEF RIVER FALLS COMMUNITY CENTER.
new text end

new text begin The city of Thief River Falls may incorporate or authorize the incorporation of a
nonprofit corporation to operate a community or regional center in the city. A nonprofit
corporation incorporated under this section is exempt from payment of sales and use tax
on materials, equipment, and supplies consumed or incorporated into the construction of
the community or regional center. The exemption under this section applies to purchases
by the nonprofit corporation, a contractor, subcontractor, or builder. A contractor,
subcontractor, or builder that does not pay sales tax on purchases for construction of the
community or regional center shall not charge sales or use tax to the nonprofit corporation.
The nonprofit corporation may file a claim for refund for any sales taxes paid on the
construction costs of the community or regional center, and the commissioner of revenue
shall pay the refunded amount directly to the nonprofit corporation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for purchases made
on and after July 1, 2002.
new text end

ARTICLE 3

FOREIGN OPERATING CORPORATIONS

Section 1.

Minnesota Statutes 2005 Supplement, section 290.01, subdivision 6b,
is amended to read:

Subd. 6b.

Foreign operating corporation.

The term "foreign operating
corporation," when applied to a corporation, means a domestic corporation with the
following characteristics:

(1) it is part of a unitary business at least one member of which is taxable in this state;

(2) it is not a foreign sales corporation under section 922 of the Internal Revenue
Code, as amended through December 31, 1999, for the taxable year;

(3)new text begin either new text end (i)deleted text begin the average of the percentages of its property and payrolls, including
the pro rata share of its unitary partnerships' property and payrolls, assigned to locations
outside the United States, where the United States includes the District of Columbia and
excludes the commonwealth of Puerto Rico and possessions of the United States, as
determined under section 290.191 or 290.20, is 80 percent or more; or (ii)deleted text end it has in effect a
valid election under section 936 of the Internal Revenue Code; new text begin or (ii) at least 80 percent
of the gross income from all sources of the corporation in the tax year is active foreign
business income; new text end and

(4) deleted text begin it has $1,000,000 of payroll and $2,000,000 of property, as determined under
section 290.191 or 290.20, that are located outside the United States. If the domestic
corporation does not have payroll as determined under section 290.191 or 290.20, but it
or its partnerships have paid $1,000,000 for work, performed directly for the domestic
corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not
require payrolls to be included in the average calculationdeleted text end new text begin for purposes of this subdivision,
active foreign business income means gross income that is (i) derived from sources
without the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the
Internal Revenue Code; and (ii) attributable to the active conduct of a trade or business in
a foreign countrynew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 2.

Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is
amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g)new text begin . The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (19), (20),
(21), and (22)new text end ;

(12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 614 of Public Law 107-147;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code; deleted text begin and
deleted text end

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plansdeleted text begin .deleted text end new text begin ;
new text end

new text begin (19) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:
new text end

new text begin (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;
new text end

new text begin (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar expenses and costs.
new text end

new text begin For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.
new text end

new text begin This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;
new text end

new text begin (20) except as already included in the taxpayer's taxable income pursuant to clause
(19), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:
new text end

new text begin (i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;
new text end

new text begin (ii) income from factoring transactions or discounting transactions;
new text end

new text begin (iii) royalty, patent, technical, and copyright fees;
new text end

new text begin (iv) licensing fees; and
new text end

new text begin (v) other similar income.
new text end

new text begin This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to such item of income to the extent that
the income is income from sources without the United States as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code;
new text end

new text begin (21) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation; and
new text end

new text begin (22) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19d, is
amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the federal jobs credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

(8) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income,
excise, or franchise taxes based on net income or related minimum taxes paid by the
corporation to Minnesota, another state, a political subdivision of another state, the
District of Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
clause (1), in a prior taxable year;

(10) 80 percent of royalties, fees, or other like income accrued or received from a
foreign operating corporation or a foreign corporation which is part of the same unitary
business as the receiving corporationnew text begin , unless the income resulting from such payments or
accruals is income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Codenew text end ;

(11) income or gains from the business of mining as defined in section 290.05,
subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

(12) the amount of handicap access expenditures in the taxable year which are not
allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

(13) the amount of qualified research expenses not allowed for federal income tax
purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
the amount exceeds the amount of the credit allowed under section 290.068;

(14) the amount of salary expenses not allowed for federal income tax purposes due
to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
Code;

(15) the amount of any refund of environmental taxes paid under section 59A of the
Internal Revenue Code;

(16) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(17) for a corporation whose foreign sales corporation, as defined in section 922
of the Internal Revenue Code, constituted a foreign operating corporation during any
taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received from
the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
income excluded under section 114 of the Internal Revenue Code, provided the income is
not income of a foreign operating company;

(18) any decrease in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of section 614 of Public Law 107-147;

(19) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
resulting delayed depreciation cannot be less than zero; and

(20) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the
amount of the addition.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2005.
new text end

Sec. 4.

Minnesota Statutes 2004, section 290.34, subdivision 1, is amended to read:

Subdivision 1.

Business conducted in such a way as to create losses or improper
taxable net income.

new text begin (a) new text end When any corporation liable to taxation under this chapter
conducts its business in such a manner as, directly or indirectly, to benefit its members
or stockholders or any person or corporation interested in such business or to reduce the
income attributable to this state by selling the commodities or services in which it deals
at less than the fair price which might be obtained therefor, or buying such commodities
or services at more than the fair price for which they might have been obtained, or when
any corporation, a substantial portion of whose shares is owned directly or indirectly by
another corporation, deals in the commodities or services of the latter corporation in such
a manner as to create a loss or improper net income or to reduce the taxable net income
attributable to this state, the commissioner of revenue may determine the amount of its
income so as to reflect what would have been its reasonable taxable net income but for the
arrangements causing the understatement of its taxable net income or the overstatement of
its losses, having regard to the fair profits which, but for any agreement, arrangement, or
understanding, might have been or could have been obtained from such business.

new text begin (b) When any corporation engages in a transaction or series of transactions whose
primary business purpose is the avoidance of tax, or engages in a transaction or series of
transactions without economic substance, that transaction or series of transactions shall be
disregarded and the commissioner shall determine taxable net income without regard for
any such transaction or series of transactions.
new text end

Sec. 5. new text begin INTENT OF LEGISLATURE.
new text end

new text begin Section 4 does not change Minnesota law, but merely clarifies the legislature's
intention with respect to transactions without economic substance or business purpose.
new text end

ARTICLE 4

PROPERTY TAXES

Section 1.

Minnesota Statutes 2004, section 116J.993, subdivision 3, is amended to
read:

Subd. 3.

Business subsidy.

"Business subsidy" or "subsidy" means a state or local
government agency grant, contribution of personal property, real property, infrastructure,
the principal amount of a loan at rates below those commercially available to the recipient,
any reduction or deferral of any tax or any fee, any guarantee of any payment under any
loan, lease, or other obligation, or any preferential use of government facilities given
to a business.

The following forms of financial assistance are not a business subsidy:

(1) a business subsidy of less than $25,000;

(2) assistance that is generally available to all businesses or to a general class of
similar businesses, such as a line of business, size, location, or similar general criteria;

(3) public improvements to buildings or lands owned by the state or local
government that serve a public purpose and do not principally benefit a single business or
defined group of businesses at the time the improvements are made;

(4) redevelopment property polluted by contaminants as defined in section 116J.552,
subdivision 3;

(5) assistance provided for the sole purpose of renovating old or decaying building
stock or bringing it up to code and assistance provided for designated historic preservation
districts, provided that the assistance is equal to or less than 50 percent of the total cost;

(6) assistance to provide job readiness and training services if the sole purpose of
the assistance is to provide those services;

(7) assistance for housing;

(8) assistance for pollution control or abatement, including assistance for a tax
increment financing hazardous substance subdistrict as defined under section 469.174,
subdivision 23;

(9) assistance for energy conservation;

(10) tax reductions resulting from conformity with federal tax law;

(11) workers' compensation and unemployment insurance;

(12) benefits derived from regulation;

(13) indirect benefits derived from assistance to educational institutions;

(14) funds from bonds allocated under chapter 474A, bonds issued to refund
outstanding bonds, and bonds issued for the benefit of an organization described in section
501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999;

(15) assistance for a collaboration between a Minnesota higher education institution
and a business;

(16) assistance for a tax increment financing soils condition district as defined under
section 469.174, subdivision 19;

(17) redevelopment when the recipient's investment in the purchase of the site
and in site preparation is 70 percent or more of the assessor's current year's estimated
market value;

(18) general changes in tax increment financing law and other general tax law
changes of a principally technical nature;

(19) federal assistance until the assistance has been repaid to, and reinvested by, the
state or local government agency;

(20) funds from dock and wharf bonds issued by a seaway port authority;

(21) business loans and loan guarantees of $75,000 or less; deleted text begin and
deleted text end

(22) federal loan funds provided through the United States Department of
Commerce, Economic Development Administrationnew text begin ; and
new text end

new text begin (23) property tax abatements granted under section 469.1813 to property that is
subject to valuation under Minnesota Rules, chapter 8100new text end .

Sec. 2.

Minnesota Statutes 2004, section 123B.53, subdivision 5, is amended to read:

Subd. 5.

Equalized debt service levy.

(a) The equalized debt service levy of a
district equals the sum of the first tier equalized debt service levy and the second tier
equalized debt service levy.

(b) A district's first tier equalized debt service levy equals the district's first tier debt
service equalization revenue times the lesser of one or the ratio of:

(1) the quotient derived by dividing the adjusted net tax capacity of the district for
the year before the year the levy is certified by the adjusted pupil units in the district for
the school year ending in the year prior to the year the levy is certified; to

(2) deleted text begin $3,200deleted text end new text begin $5,000new text end .

(c) A district's second tier equalized debt service levy equals the district's second
tier debt service equalization revenue times the lesser of one or the ratio of:

(2) $8,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2008
and later.
new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 123B.54, is amended to read:

123B.54 DEBT SERVICE APPROPRIATION.

(a) deleted text begin $21,624,000deleted text end new text begin $22,701,000new text end in fiscal year 2008 and deleted text begin $20,403,000deleted text end new text begin $22,269,000new text end in
fiscal year 2009 and later are appropriated from the general fund to the commissioner of
education for payment of debt service equalization aid under section 123B.53.

(b) The appropriations in paragraph (a) must be reduced by the amount of any
money specifically appropriated for the same purpose in any year from any state fund.

Sec. 4.

Minnesota Statutes 2005 Supplement, section 126C.10, subdivision 13a,
is amended to read:

Subd. 13a.

Operating capital levy.

To obtain operating capital revenue for fiscal
year 2007 and later, a district may levy an amount not more than the product of its
operating capital revenue for the fiscal year times the lesser of one or the ratio of its
adjusted net tax capacity per adjusted marginal cost pupil unit to the operating capital
equalizing factor. The operating capital equalizing factor equals $22,222 for fiscal year
2006, deleted text begin anddeleted text end $10,700 for fiscal year 2007new text begin , and $22,222 for fiscal year 2008 new text end and later.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for fiscal year 2008
and later.
new text end

Sec. 5.

Minnesota Statutes 2004, section 144F.01, subdivision 4, is amended to read:

Subd. 4.

Property tax levy authority.

The district's board may levy a tax on
the taxable real and personal property in the district. The ad valorem tax levy may not
exceed 0.048 percent of the taxable market value of the district or deleted text begin $250,000deleted text end new text begin $400,000new text end ,
whichever is less. The proceeds of the levy must be used as provided in subdivision 5.
The board shall certify the levy at the times as provided under section 275.07. The board
shall provide the county with whatever information is necessary to identify the property
that is located within the district. If the boundaries include a part of a parcel, the entire
parcel shall be included in the district. The county auditors must spread, collect, and
distribute the proceeds of the tax at the same time and in the same manner as provided by
law for all other property taxes.

Sec. 6.

Minnesota Statutes 2004, section 216B.2424, subdivision 5, is amended to read:

Subd. 5.

Mandate.

(a) A public utility, as defined in section 216B.02, subdivision 4,
that operates a nuclear-powered electric generating plant within this state must construct
and operate, purchase, or contract to construct and operate (1) by December 31, 1998,
50 megawatts of electric energy installed capacity generated by farm-grown closed-loop
biomass scheduled to be operational by December 31, 2001; and (2) by December 31,
1998, an additional 75 megawatts of installed capacity so generated scheduled to be
operational by December 31, 2002.

(b) Of the 125 megawatts of biomass electricity installed capacity required under
this subdivision, no more than 55 megawatts of this capacity may be provided by a facility
that uses poultry litter as its primary fuel source and any such facility:

(1) need not use biomass that complies with the definition in subdivision 1;

(2) must enter into a contract with the public utility for such capacity, that has an
average purchase price per megawatt hour over the life of the contract that is equal to or
less than the average purchase price per megawatt hour over the life of the contract in
contracts approved by the Public Utilities Commission before April 1, 2000, to satisfy
the mandate of this section, and file that contract with the Public Utilities Commission
prior to September 1, 2000; and

(3) must schedule such capacity to be operational by December 31, 2002.

(c) Of the total 125 megawatts of biomass electric energy installed capacity required
under this section, no more than 75 megawatts may be provided by a single project.

(d) Of the 75 megawatts of biomass electric energy installed capacity required under
paragraph (a), clause (2), no more than 33 megawatts of this capacity may be provided by
a St. Paul district heating and cooling system cogeneration facility utilizing waste wood
as a primary fuel source. The St. Paul district heating and cooling system cogeneration
facility need not use biomass that complies with the definition in subdivision 1.

(e) The public utility must accept and consider on an equal basis with other biomass
proposals:

(1) a proposal to satisfy the requirements of this section that includes a project that
exceeds the megawatt capacity requirements of either paragraph (a), clause (1) or (2), and
that proposes to sell the excess capacity to the public utility or to other purchasers; and

(2) a proposal for a new facility to satisfy more than ten but not more than 20
megawatts of the electrical generation requirements by a small business-sponsored
independent power producer facility to be located within the northern quarter of the state,
which means the area located north of Constitutional Route No. 8 as described in section
161.114, subdivision 2, and that utilizes biomass residue wood, sawdust, bark, chipped
wood, or brush to generate electricity. A facility described in this clause is not required
to utilize biomass complying with the definition in subdivision 1, but must be under
construction by December 31, 2005.

(f) If a public utility files a contract with the commission for electric energy installed
capacity that uses poultry litter as its primary fuel source, the commission must do a
preliminary review of the contract to determine if it meets the purchase price criteria
provided in paragraph (b), clause (2), of this subdivision. The commission shall perform
its review and advise the parties of its determination within 30 days of filing of such a
contract by a public utility. A public utility may submit by September 1, 2000, a revised
contract to address the commission's preliminary determination.

(g) The commission shall finally approve, modify, or disapprove no later than July
1, 2001, all contracts submitted by a public utility as of September 1, 2000, to meet the
mandate set forth in this subdivision.

(h) If a public utility subject to this section exercises an option to increase the
generating capacity of a project in a contract approved by the commission prior to April
25, 2000, to satisfy the mandate in this subdivision, the public utility must notify the
commission by September 1, 2000, that it has exercised the option and include in the
notice the amount of additional megawatts to be generated under the option exercised.
Any review by the commission of the project after exercise of such an option shall be
based on the same criteria used to review the existing contract.

(i) A facility specified in this subdivision qualifies for exemption from property
taxation under section 272.02, subdivision deleted text begin 43deleted text end new text begin 45new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes levied in 2006,
payable in 2007, and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2004, section 272.02, subdivision 12, is amended to read:

Subd. 12.

Native prairie.

Native prairie lands are exempt. The commissioner of deleted text begin the
Department ofdeleted text end natural resources shall determine lands in the state which are native prairie
and shall notify the county assessor of each county in which the lands are located. Pasture
land used for livestock grazing purposes shall not be considered native prairie for the
purposes of this subdivisionnew text begin unless the pasture is covered by a grazing plan approved by
the commissioner of natural resourcesnew text end . Upon receipt of an application for the exemption
provided in this subdivision for lands for which the assessor has no determination from
the commissioner of natural resources, the assessor shall refer the application to the
commissioner of natural resources who shall determine within deleted text begin 30deleted text end new text begin 180 new text end days whether the
land is native prairie and notify the county assessor of the decision. Exemption of native
prairie pursuant to this subdivision shall not grant the public any additional or greater right
of access to the native prairie or diminish any right of ownership to it.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2006, payable
in 2007, and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2004, section 272.02, subdivision 45, is amended to read:

Subd. 45.

Biomass electrical generation facility; personal property.

Notwithstanding subdivision 9, clause (a), attached machinery and other personal property
which is part of an electrical generating facility that meets the requirements of this
subdivision is exempt. At the time of construction, the facility must:

(1) be designed to utilize biomass as established in section 216B.2424 as a primary
fuel source; and

(2) be constructed for the purpose of generating power at the facility that will be sold
pursuant to a contract approved by the Public Utilities Commission in accordance with
the biomass mandate imposed under section 216B.2424.

Construction of the facility must be commenced after January 1, 2000, and before
December 31, deleted text begin 2002deleted text end new text begin 2005new text end . Property eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and interconnections appurtenant
to the property or facility.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2006, payable
in 2007, and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2004, section 272.02, subdivision 54, is amended to read:

Subd. 54.

Small biomass electric generation facility; personal property.

new text begin (a)
Subject to paragraph (b),new text end notwithstanding subdivision 9, clause (a), attached machinery
and other personal property which is part of an electrical generating facility that meets the
requirements of this subdivision is exempt. At the time of construction the facility must:

(1) have a generation capacity of less than 25 megawatts;

(2) provide process heating needs in addition to electrical generation; and

(3) utilize agricultural by-products from the malting process and other biomass
fuels as its primary fuel source.

Construction of the facility must be commenced after January 1, 2002, and before
deleted text begin January 1, 2006deleted text end new text begin June 30, 2007new text end . Property eligible for this exemption does not include
electric transmission lines and interconnections or gas pipelines and interconnections
appurtenant to the property or facility.

new text begin (b) The exemption under this subdivision is contingent on approval by the governing
bodies of the municipality and county in which the electric generation facility is located.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2008, payable
in 2009, and thereafter.
new text end

Sec. 10.

Minnesota Statutes 2004, section 272.02, subdivision 55, is amended to read:

Subd. 55.

Electric generation facility; personal property.

Notwithstanding
subdivision 9, clause (a), attached machinery and other personal property which is part of
an electric generating facility that meets the requirements of this subdivision is exempt. At
the time of construction, the facility must deleted text begin be sited on an energy park thatdeleted text end (i) deleted text begin is located on
an active mining site, or on a former mining or industrial site where mining or industrial
operations have terminateddeleted text end new text begin be designated as an innovative energy project as defined in
section 216B.1694new text end , (ii) deleted text begin isdeleted text end new text begin be new text end within a tax relief area as defined in section 273.134, (iii)
deleted text begin has deleted text end deleted text begin on-site deleted text end new text begin have new text end access to existing railroad infrastructurenew text begin within less than three milesnew text end , (iv)
deleted text begin has direct rail access to a Great Lakes port, (v) has sufficient private water resources
on deleted text end deleted text begin site, and (vi) isdeleted text end new text begin have received by resolution approval from the governing body of
the county and township or city in which the proposed facility is to be located for the
exemption of personal property under this subdivision, and (v) benew text end designed to host at
least 500 megawatts of electrical generation.

Construction of the first deleted text begin 250deleted text end new text begin 500new text end megawatts of the facility must be commenced
after January 1, deleted text begin 2002deleted text end new text begin 2006new text end , and before January 1, deleted text begin 2005deleted text end new text begin 2010new text end . Construction of up to an
additional 750 megawatts of generation must be commenced before January 1, deleted text begin 2010deleted text end new text begin
2015new text end . Property eligible for this exemption does not include electric transmission lines and
interconnections or gas pipelines and interconnections appurtenant to the property or the
facility. new text begin To qualify for an exemption under this subdivision, the owner of the electric
generation facility must have an agreement with the host county, township or city, and
school district, for payment in lieu of personal property taxes to the host county, township
or city, and school district.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 84. new text end

new text begin Electric generation facility; personal property. new text end

new text begin Notwithstanding
subdivision 9, clause (a), attached machinery and other personal property which is part
of a 10.3 megawatt run-of-the-river hydroelectric generation facility and that meets the
requirements of this subdivision is exempt. At the time of construction, the facility must:
new text end

new text begin (1) utilize between 12 and 16 turbine generators at a dam site existing on March
31, 1994;
new text end

new text begin (2) be located on land within 3,000 feet of a 13.8 kilovolt distribution substation; and
new text end

new text begin (3) be eligible to receive a renewable energy production incentive payment under
section 216C.41.
new text end

new text begin Construction of the facility must be commenced after April 30, 2006, and
before January 1, 2009. Property eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and interconnections appurtenant
to the property or the facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property taxes levied in 2006,
payable in 2007, and thereafter.
new text end

Sec. 12.

Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision
to read:

new text begin Subd. 23. new text end

new text begin First tier valuation limit; agricultural homestead property. new text end

new text begin (a)
Beginning with assessment year 2006, the commissioner of revenue shall annually certify
the first tier limit for agricultural homestead property as the product of (i) $600,000, and
(ii) the ratio of the statewide average taxable market value of agricultural property per acre
of deeded farm land in the preceding assessment year to the statewide average taxable
market value of agricultural property per acre of deeded farm land for assessment year
1999. The limit shall be rounded to the nearest $10,000.
new text end

new text begin (b) For the purposes of this subdivision, "agricultural property" means all class 2
property under section 273.13, subdivision 23, except for (1) timberland, (2) a landing
area or public access area of a privately owned public use airport, and (3) property
consisting of the house, garage and immediately surrounding one acre of land of an
agricultural homestead.
new text end

new text begin (c) The commissioner shall certify the limit by January 2 of each assessment year,
except that for assessment year 2006 the commissioner shall certify the limit by June
1, 2006.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2006 and
thereafter.
new text end

Sec. 13.

new text begin [273.1115] AGGREGATE RESOURCE PRESERVATION PROPERTY
TAX LAW.
new text end

new text begin Subdivision 1. new text end

new text begin Requirements. new text end

new text begin Real estate is entitled to valuation under this section
only if all of the following requirements are met:
new text end

new text begin (1) the property is classified 1a, 1b, 2a, or 2b property under section 273.13,
subdivisions 22 and 23;
new text end

new text begin (2) the property is at least ten contiguous acres, when the application is filed under
subdivision 2;
new text end

new text begin (3) the owner has filed a completed application for deferment as specified in
subdivision 2 with the county assessor in the county in which the property is located;
new text end

new text begin (4) there are no delinquent taxes on the property; and
new text end

new text begin (5) a covenant on the land restricts its use as provided in subdivision 2, clause (4).
new text end

new text begin Subd. 2. new text end

new text begin Application. new text end

new text begin Application for valuation deferment under this section
must be filed by May 1 of the assessment year. Any application filed and granted
continues in effect for subsequent years until the property no longer qualifies, provided
that supplemental affidavits under subdivision 6 are timely filed. The application must
be filed with the assessor of the county in which the real property is located on such
form as may be prescribed by the commissioner of revenue. The application must be
executed and acknowledged in the manner required by law to execute and acknowledge a
deed and must contain at least the following information and any other information the
commissioner deems necessary:
new text end

new text begin (1) the legal description of the area;
new text end

new text begin (2) the name and address of owner;
new text end

new text begin (3) a copy of the affidavit filed under section , subdivision 23, paragraph (h),
in the case of property classified class 2b, clause (5); or in the case of property classified
1a, 1b, 2a, and 2b, clauses (1) to (3), the application must include a similar document with
the same information as contained in the affidavit under section , subdivision 23,
paragraph (h); and
new text end

new text begin (4) a statement of proof from the owner that the land contains a restrictive covenant
limiting its use for the property's surface to that which exists on the date of the application
and limiting its future use to the preparation and removal of the aggregate commercial
deposit under its surface.
new text end

new text begin To qualify under this clause, the covenant must be binding on the owner or the
owner's successor or assignee, and run with the land, except as provided in subdivision 4
allowing for the cancellation of the covenant under certain conditions.
new text end

new text begin Subd. 3. new text end

new text begin Determination of value. new text end

new text begin Upon timely application by the owner as
provided in subdivision 2, notwithstanding sections new text begin 272.03, subdivision 8new text end , and ,
the value of any qualifying land described in subdivision 2 must be valued as if it were
agricultural property, using a per acre valuation equal to the current year's per acre
valuation of agricultural land in the county. The assessor shall not consider any additional
value resulting from potential alternative and future uses of the property. The buildings
located on the land shall be valued by the assessor in the normal manner.
new text end

new text begin Subd. 4. new text end

new text begin Cancellation of covenant. new text end

new text begin The covenant required under subdivision
2 may be canceled in two ways:
new text end

new text begin (1) by the owner beginning with the next subsequent assessment year provided
that the additional taxes as determined under subdivision 5 are paid by the owner at the
time of cancellation; and
new text end

new text begin (2) by the city or town in which the property is located beginning with the next
subsequent assessment year, if the city council or town board:
new text end

new text begin (i) changes the conditional use of the property;
new text end

new text begin (ii) revokes the mining permit; or
new text end

new text begin (iii) changes the zoning to disallow mining.
new text end

new text begin No additional taxes are imposed on the property under this clause.
new text end

new text begin Subd. 4a. new text end

new text begin County termination. new text end

new text begin Within two years of the effective date of this
section, a county may, following notice and public hearing, terminate application of this
section in the county. The termination is effective upon adoption of a resolution of the
county board. A county has 60 days from receipt of the first application for enrollment
under this section to notify the applicant and any subsequent applicants of the county's
intent to begin the process of terminating application of this section in the county. The
county must act on the termination within six months. Upon termination by a vote of the
county board, all applications received during notification of intent to terminate shall be
deemed void. If the county board does not act on the termination within six months of
notification, all applications for valuation for deferment received shall be deemed eligible
to be enrolled under this section. Following this initial 60-day grace period, a termination
applies prospectively and does not affect property enrolled under this section prior to the
termination date. A county may reauthorize application of this section by a resolution of
the county board revoking the termination.
new text end

new text begin Subd. 5. new text end

new text begin Additional taxes. new text end

new text begin When real property which has been valued and assessed
under this section no longer qualifies, the portion of the land classified under subdivision
1, clause (1), is subject to additional taxes. The additional tax amount is determined by:
new text end

new text begin (1) computing the difference between (i) the current year's taxes determined in
accordance with subdivision 5, and (ii) an amount as determined by the assessor based
upon the property's current year's estimated market value of like real estate at its highest
and best use and the appropriate local tax rate; and
new text end

new text begin (2) multiplying the amount determined in clause (1) by the number of years the
land was in the program under this section.
new text end

new text begin The current year's estimated market value as determined by the assessor must not
exceed the market value that would result if the property was sold in an arms-length
transaction and must not be greater than it would have been had the actual bona fide sale
price of the property been used in lieu of that market value. The additional taxes must be
extended against the property on the tax list for the current year, except that interest or
penalties must not be levied on such additional taxes if timely paid.
new text end

new text begin The additional tax under this subdivision must not be imposed on that portion of the
property which has actively been mined and has been removed from the program based
upon the supplemental affidavits filed under subdivision 6.
new text end

new text begin Subd. 6. new text end

new text begin Supplemental affidavits; mining activity on land. new text end

new text begin When any portion
of the property begins to be actively mined, the owner must file a supplemental affidavit
within 60 days from the day any aggregate is removed stating the number of acres of the
property that is actively being mined. The acres actively being mined shall be (1) valued
and classified under section new text begin 273.13, subdivision 24new text end , in the next subsequent assessment
year, and (2) removed from the aggregate resource preservation property tax program
under this section. The additional taxes under subdivision 5 must not be imposed on
the acres that are actively being mined and have been removed from the program under
this section.
new text end

new text begin Copies of the original affidavit and all supplemental affidavits must be filed with the
county assessor, the local zoning administrator, and the Department of Natural Resources,
Division of Land and Minerals. A supplemental affidavit must be filed each time a
subsequent portion of the property is actively mined, provided that the minimum acreage
change is five acres, even if the actual mining activity constitutes less than five acres.
Failure to file the affidavits timely shall result in the property losing its valuation deferment
under this section, and additional taxes must be imposed as calculated under subdivision 5.
new text end

new text begin Subd. 7. new text end

new text begin Lien. new text end

new text begin The additional tax imposed by this section is a lien upon the property
assessed to the same extent and for the same duration as other taxes imposed upon
property within this state and, when collected, must be distributed in the manner provided
by law for the collection and distribution of other property taxes.
new text end

new text begin Subd. 8. new text end

new text begin Continuation of tax treatment upon sale. new text end

new text begin When real property qualifying
under subdivision 1 is sold, additional taxes must not be extended against the property
if the property continues to qualify under subdivision 1, and the new owner files an
application with the assessor for continued deferment within 30 days after the sale.
new text end

new text begin Subd. 9. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, "commercial aggregate deposit"
and "actively mined" have the meanings given them in section new text begin 273.13, subdivision 23new text end ,
paragraph (h).
new text end

new text begin Subd. 10. new text end

new text begin County administrative fee. new text end

new text begin A county may charge the owner of property
that is valued under this section a fee to compensate for its costs of administering this
program.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter, except that for the 2007 assessment year, the application date
under subdivision 4 shall be September 1, 2007, and subdivision 4a is effective the day
following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2004, section 273.124, subdivision 12, is amended to read:

Subd. 12.

Homestead of member of United States armed forces; Peace Corps;
VISTA.

new text begin (a) new text end Real estate actually occupied and used for the purpose of a homestead by
a person, or by a member of that person's immediate family shall be classified as a
homestead even though the person or family is absent if (1) the person or the person's
family is absent solely because the person is on active duty with the armed forces of the
United States, or is serving as a volunteer under the VISTA or Peace Corps program; (2)
the owner intends to return as soon as discharged or relieved from service; and (3) the
owner claims it as a homestead. A person who knowingly makes or submits to an assessor
an affidavit or other statement that is false in any material matter to obtain or aid another
in obtaining a benefit under this subdivision is guilty of a felony.

new text begin (b) In the case of a person who is absent solely because the person is on active duty
with the United States armed forces, homestead classification must be granted as provided
in this paragraph if the requirements of paragraph (a), clauses (1) to (3), are met, even
if the property has not been occupied as a homestead by the person or a member of the
person's family. To qualify for this classification, the person who acquires the property
must notify the assessor of the acquisition and of the person's absence due to military
service. When the person returns from military service and occupies the property as
a homestead, the person shall notify the assessor, who will provide for abatement of
the difference between the nonhomestead and homestead taxes for the current and two
preceding years, not to exceed the time during which the person owned the property.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessments in 2006, taxes
payable in 2007, and thereafter.
new text end

Sec. 15.

Minnesota Statutes 2004, section 273.124, is amended by adding a subdivision
to read:

new text begin Subd. 22. new text end

new text begin Annual registration of certain relative homesteads. new text end

new text begin If the owner of
property or the owner's relative who occupies property that is classified as a homestead
under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any
part of that property for a period that exceeds 31 consecutive days during the calendar
year, the recipient of the compensation must register the property with the city in which
it is located no later than 60 days after the initial rental period began. This requirement
applies to property located in a city that has a population over 25,000. Each such city must
maintain a file of these property registrations that is open to the public, and retain the
registrations for one year after the date of filing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 16.

Minnesota Statutes 2005 Supplement, section 273.128, subdivision 1, is
amended to read:

Subdivision 1.

Requirement.

Low-income rental property classified as class 4d
under section 273.13, subdivision 25, is entitled to valuation under this section deleted text begin if at least
75 percent ofdeleted text end new text begin for new text end the units in the rental housing property new text begin that new text end meet any of the following
qualifications:

(1) the units are subject to a housing assistance payments contract under section 8
of the United States Housing Act of 1937, as amended;

(2) the units are rent-restricted and income-restricted units of a qualified low-income
housing project receiving tax credits under section 42(g) of the Internal Revenue Code of
1986, as amended;

(3) the units are financed by the Rural Housing Service of the United States
Department of Agriculture and receive payments under the rental assistance program
pursuant to section 521(a) of the Housing Act of 1949, as amended; or

(4) the units are subject to rent and income restrictions under the terms of financial
assistance provided to the rental housing property by the federal government deleted text begin ordeleted text end new text begin ,new text end the
state of Minnesotanew text begin , or a local unit of government new text end as evidenced by a document recorded
against the property.

The restrictions must require assisted units to be occupied by residents whose
household income at the time of initial occupancy does not exceed 60 percent of the
greater of area or state median income, adjusted for family size, as determined by the
United States Department of Housing and Urban Development. The restriction must also
require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of
area or state median income, adjusted for family size, as determined by the United States
Department of Housing and Urban Development.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2006, payable
in 2007, and thereafter.
new text end

Sec. 17.

Minnesota Statutes 2004, section 273.13, subdivision 23, is amended to read:

Subd. 23.

Class 2.

(a) Class 2a property is agricultural land including any
improvements that is homesteaded. The market value of the house and garage and
immediately surrounding one acre of land has the same class rates as class 1a property
under subdivision 22. The value of the remaining land including improvements up to deleted text begin and
including $600,000 market valuedeleted text end new text begin the first tier valuation limit of agricultural homestead
property new text end has a net class rate of 0.55 percent of market value. The remaining property
over deleted text begin $600,000 market valuedeleted text end new text begin the first tier new text end has a class rate of one percent of market value.new text begin
For purposes of this subdivision, the "first tier valuation limit of agricultural homestead
property" and "first tier" means the limit certified under section 273.11, subdivision 23.
new text end

(b) Class 2b property is (1) real estate, rural in character and used exclusively for
growing trees for timber, lumber, and wood and wood products; (2) real estate that is not
improved with a structure and is used exclusively for growing trees for timber, lumber, and
wood and wood products, if the owner has participated or is participating in a cost-sharing
program for afforestation, reforestation, or timber stand improvement on that particular
property, administered or coordinated by the commissioner of natural resources; (3) real
estate that is nonhomestead agricultural land; deleted text begin ordeleted text end (4) a landing area or public access area of
a privately owned public use airportnew text begin ; or (5) land with a commercial aggregate deposit that
is not actively being mined and is not otherwise classified as class 2a or 2b, clauses (1) to
(3)new text end . Class 2b property has a net class rate of one percent of market value.

(c) Agricultural land as used in this section means contiguous acreage of ten
acres or more, used during the preceding year for agricultural purposes. "Agricultural
purposes" as used in this section means the raising or cultivation of agricultural products.
"Agricultural purposes" also includes enrollment in the Reinvest in Minnesota program
under sections 103F.501 to 103F.535new text begin , the native prairie bank under section 84.96, new text end or the
federal Conservation Reserve Program as contained in Public Law 99-198 if the property
was classified as agricultural (i) under this subdivision for the assessment year 2002 or (ii)
in the year prior to its enrollment. Contiguous acreage on the same parcel, or contiguous
acreage on an immediately adjacent parcel under the same ownership, may also qualify
as agricultural land, but only if it is pasture, timber, waste, unusable wild land, or land
included in state or federal farm programs. Agricultural classification for property shall be
determined excluding the house, garage, and immediately surrounding one acre of land,
and shall not be based upon the market value of any residential structures on the parcel or
contiguous parcels under the same ownership.

(d) Real estate, excluding the house, garage, and immediately surrounding one acre
of land, of less than ten acres which is exclusively and intensively used for raising or
cultivating agricultural products, shall be considered as agricultural land.

Land shall be classified as agricultural even if all or a portion of the agricultural use
of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under
section 273.111.

The property classification under this section supersedes, for property tax purposes
only, any locally administered agricultural policies or land use restrictions that define
minimum or maximum farm acreage.

(e) The term "agricultural products" as used in this subdivision includes production
for sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
bees, and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned
for agricultural use;

(3) the commercial boarding of horses if the boarding is done in conjunction with
raising or cultivating agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for
equestrian activities, excluding racing;

(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood
productsnew text begin , except that short rotation woody crops that are cultivated using agricultural
practices to produce timber or forest products are agricultural productsnew text end ; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(f) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2),
and (3),

the assessor shall classify the part of the parcel used for agricultural purposes as class
1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
use. The grading, sorting, and packaging of raw agricultural products for first sale is
considered an agricultural purpose. A greenhouse or other building where horticultural
or nursery products are grown that is also used for the conduct of retail sales must be
classified as agricultural if it is primarily used for the growing of horticultural or nursery
products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
those products. Use of a greenhouse or building only for the display of already grown
horticultural or nursery products does not qualify as an agricultural purpose.

The assessor shall determine and list separately on the records the market value of
the homestead dwelling and the one acre of land on which that dwelling is located. If any
farm buildings or structures are located on this homesteaded acre of land, their market
value shall not be included in this separate determination.

(g) To qualify for classification under paragraph (b), clause (4), a privately owned
public use airport must be licensed as a public airport under section 360.018. For purposes
of paragraph (b), clause (4), "landing area" means that part of a privately owned public use
airport properly cleared, regularly maintained, and made available to the public for use by
aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing
or navigational aids. A landing area also includes land underlying both the primary surface
and the approach surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of
the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under paragraph (b), clause (4), must be described
and certified by the commissioner of transportation. The certification is effective until
it is modified, or until the airport or landing area no longer meets the requirements of
paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area"
means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival
and departure building in connection with the airport.

new text begin (h) To qualify for classification under paragraph (b), clause (5), the property must be
at least ten contiguous acres in size and the owner of the property must record with the
county recorder of the county in which the property is located an affidavit containing:
new text end

new text begin (1) a legal description of the property;
new text end

new text begin (2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;
new text end

new text begin (3) documentation that the conditional use under the county or local zoning
ordinance of this property is for mining; and
new text end

new text begin (4) documentation that a permit has been issued by the local unit of government
or the mining activity is allowed under local ordinance. The disclosure must include a
statement from a registered professional geologist, engineer, or soil scientist delineating
the deposit and certifying that it is a commercial aggregate deposit.
new text end

new text begin For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use
as a construction aggregate; and "actively mined" means the removal of top soil and
overburden in preparation for excavation or excavation of a commercial deposit.
new text end

new text begin (i) When any portion of the property under this subdivision or section 273.13,
subdivision 22, begins to be actively mined, the owner must file a supplemental affidavit
within 60 days from the day any aggregate is removed stating the number of acres of the
property that is actively being mined. The acres actively being mined must be (1) valued
and classified under section 273.13, subdivision 24, in the next subsequent assessment
year, and (2) removed from the aggregate resource preservation property tax program
under section 273.1115, if the land was enrolled in that program. Copies of the original
affidavit and all supplemental affidavits must be filed with the county assessor, the local
zoning administrator, and the Department of Natural Resources, Division of Land and
Minerals. A supplemental affidavit must be filed each time a subsequent portion of the
property is actively mined, provided that the minimum acreage change is five acres, even
if the actual mining activity constitutes less than five acres.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2006, payable in
2007, and thereafter, except that the provisions relating to land with aggregate deposits is
effective for taxes levied in 2007, payable in 2008, and thereafter.
new text end

Sec. 18.

new text begin [273.323] EFFECTIVE DATE FOR RULES FOR VALUATION OF
ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.
new text end

new text begin Rules adopted by the commissioner of revenue that prescribe the method of valuing
property of electric and transmission pipeline utilities may not take effect before the end
of the regular legislative session in the calendar year following adoption of the rules.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 19.

Minnesota Statutes 2005 Supplement, section 276.04, subdivision 2, is
amended to read:

Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the
printing of the tax statements. The commissioner of revenue shall prescribe the form
of the property tax statement and its contents. The statement must contain a tabulated
statement of the dollar amount due to each taxing authority and the amount of the state
tax from the parcel of real property for which a particular tax statement is prepared. The
dollar amounts attributable to the county, the state tax, the voter approved school tax, the
other local school tax, the township or municipality, and the total of the metropolitan
special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must
be separately stated. The amounts due all other special taxing districts, if any, may be
aggregated except that any levies made by the regional rail authorities in the county of
Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A
shall be listed on a separate line directly under the appropriate county's levy. If the county
levy under this paragraph includes an amount for a lake improvement district as defined
under sections 103B.501 to 103B.581, the amount attributable for that purpose must be
separately stated from the remaining county levy amount. In the case of Ramsey County,
if the county levy under this paragraph includes an amount for public library service
under section 134.07, the amount attributable for that purpose may be separated from the
remaining county levy amount. The amount of the tax on homesteads qualifying under the
senior citizens' property tax deferral program under chapter 290B is the total amount of
property tax before subtraction of the deferred property tax amount. The amount of the
tax on contamination value imposed under sections 270.91 to 270.98, if any, must also
be separately stated. The dollar amounts, including the dollar amount of any special
assessments, may be rounded to the nearest even whole dollar. For purposes of this section
whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar.
The amount of market value excluded under section 273.11, subdivision 16, if any, must
also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures
taxed as personal property shall contain the same information that is required on the
tax statements for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's taxable market value after reductions under section 273.11,
subdivisions 1a and 16;

(3) the property's gross tax, calculated by adding the property's total property tax to
the sum of the aids enumerated in clause (4);

(4) a total of the following aids:

(i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C,
and 127A;

(ii) local government aids for cities, towns, and counties under sections 477A.011 to
477A.04; and

(iii) disparity reduction aid under section 273.1398;

(5) for homestead residential and agricultural properties, the credits under section
273.1384;

(6) any credits received under sections 273.119; 273.123; 273.135; 273.1391;
273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received
under section 273.135 must be separately stated and identified as "taconite tax relief"; and

(7) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current
year, and encouraging taxpayers to attend the hearings. If the county allows notices to
be included in the envelope containing the property tax statement, and if more than
one taxing district relative to a given property decides to include a notice with the tax
statement, the county treasurer or auditor must coordinate the process and may combine
the information on a single announcement.

The commissioner of revenue shall certify to the county auditor the actual or
estimated aids enumerated in paragraph (c), clause (4), that local governments will receive
in the following year. The commissioner must certify this amount by January 1 of each
year.

new text begin (e) A notice must be printed on the front side of the property tax statement for
homestead property stating that if the total property tax has increased over the previous
year's tax by more than the threshold percentage in section 290A.04, subdivision 2h,
the taxpayer may be eligible, regardless of income, for a special property tax refund
from the state.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax statements prepared
in 2006, for property taxes payable in 2007 and thereafter.
new text end

Sec. 20.

Minnesota Statutes 2004, section 469.1813, subdivision 1, is amended to read:

Subdivision 1.

Authority.

The governing body of a political subdivision may grant
deleted text begin andeleted text end new text begin a current or prospectivenew text end abatementnew text begin , by contract or otherwise,new text end of the taxes imposed by
the political subdivision on a parcel of property, new text begin which may include personal property
and machinery, new text end or defer the payments of the taxes and abate the interest and penalty
that otherwise would apply, if:

deleted text begin (a)deleted text end new text begin (1) new text end it expects the benefits to the political subdivision of the proposed abatement
agreement to at least equal the costs to the political subdivision of the proposed agreement
or intends the abatement to phase in a property tax increase, as provided in clause (b)(7);
and

deleted text begin (b)deleted text end new text begin (2) new text end it finds that doing so is in the public interest because it will:

deleted text begin (1)deleted text end new text begin (i) new text end increase or preserve tax base;

deleted text begin (2)deleted text end new text begin (ii) new text end provide employment opportunities in the political subdivision;

deleted text begin (3)deleted text end new text begin (iii) new text end provide or help acquire or construct public facilities;

deleted text begin (4)deleted text end new text begin (iv) new text end help redevelop or renew blighted areas;

deleted text begin (5)deleted text end new text begin (v) new text end help provide access to services for residents of the political subdivision;

deleted text begin (6)deleted text end new text begin (vi) new text end finance or provide public infrastructure; deleted text begin or
deleted text end

deleted text begin (7)deleted text end new text begin (vii) new text end phase in a property tax increase on the parcel resulting from an increase of
50 percent or more in one year on the estimated market value of the parcel, other than
increase attributable to improvement of the parcelnew text begin ; or
new text end

new text begin (viii) stabilize the tax base through equalization of property tax revenues for a
specified period of time with respect to a taxpayer whose real and personal property is
subject to valuation under Minnesota Rules, chapter 8100new text end .

Sec. 21.

Minnesota Statutes 2005 Supplement, section 469.1813, subdivision 6,
is amended to read:

Subd. 6.

Duration limit.

(a) A political subdivision may grant an abatement for a
period no longer than 15 years, except as provided under paragraph (b). new text begin The abatement
period will commence in the first year in which the abatement granted is either paid or
retained in accordance with section 469.1815, subdivision 2. new text end The subdivision may specify
in the abatement resolution a shorter duration. If the resolution does not specify a period
of time, the abatement is for eight years. If an abatement has been granted to a parcel of
property and the period of the abatement has expired, the political subdivision that granted
the abatement may not grant another abatement for eight years after the expiration of the
first abatement. This prohibition does not apply to improvements added after and not
subject to the first abatement.new text begin Economic abatement agreements for real and personal
property subject to valuation under Minnesota Rules, chapter 8100, are not subject to this
prohibition and may be granted successively.
new text end

(b) A political subdivision proposing to abate taxes for a parcel may request, in
writing, that the other political subdivisions in which the parcel is located grant an
abatement for the property. If one of the other political subdivisions declines, in writing,
to grant an abatement or if 90 days pass after receipt of the request to grant an abatement
without a written response from one of the political subdivisions, the duration limit
for an abatement for the parcel by the requesting political subdivision and any other
participating political subdivision is increased to 20 years. If the political subdivision
which declined to grant an abatement later grants an abatement for the parcel, the 20-year
duration limit is reduced by one year for each year that the declining political subdivision
grants an abatement for the parcel during the period of the abatement granted by the
requesting political subdivision. The duration limit may not be reduced below the limit
under paragraph (a).

Sec. 22.

Minnesota Statutes 2004, section 469.1813, subdivision 6b, is amended to
read:

Subd. 6b.

Extended duration limit.

(a) Notwithstanding the provisions of
subdivision 6, a political subdivision may grant an abatement for a period of up to 20
years, if the abatement is for a qualified business.

(b) To be a qualified business for purposes of this subdivision, at least 50 percent of
the payroll of the operations of the business that qualify for the abatement must be for
employees engaged in one of the following lines of business or any combination of them:

(1) manufacturing;

(2) agricultural processing;

(3) mining;

(4) research and development;

(5) warehousing; or

(6) qualified high technology.

new text begin Alternatively, a qualified business also includes a taxpayer whose real and personal
property is subject to valuation under Minnesota Rules, chapter 8100.
new text end

(c)(1) "Manufacturing" means the material staging and production of tangible
personal property by procedures commonly regarded as manufacturing, processing,
fabrication, or assembling which changes some existing material into new shapes, new
qualities, or new combinations.

(2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code
of 1986.

(3) "Agricultural processing" means transforming, packaging, sorting, or grading
livestock or livestock products, agricultural commodities, or plants or plant products into
goods that are used for intermediate or final consumption including goods for nonfood use.

(4) "Research and development" means qualified research as defined in section
41(d) of the Internal Revenue Code of 1986.

(5) "Qualified high technology" means one or more of the following activities:

(i) advanced computing, which is any technology used in the design and
development of any of the following:

(A) computer hardware and software;

(B) data communications; and

(ii) advanced materials, which are materials with engineered properties created
through the development of specialized process and synthesis technology;

(iii) biotechnology, which is any technology that uses living organisms, cells,
macromolecules, microorganisms, or substances from living organisms to make or modify
a product, improve plants or animals, or develop microorganisms for useful purposes;

(iv) electronic device technology, which is any technology that involves
microelectronics, semiconductors, electronic equipment, and instrumentation, radio
frequency, microwave, and millimeter electronics, and optical and optic-electrical devices,
or data and digital communications and imaging devices;

(v) engineering or laboratory testing related to the development of a product;

(vi) technology that assists in the assessment or prevention of threats or damage to
human health or the environment, including, but not limited to, environmental cleanup
technology, pollution prevention technology, or development of alternative energy sources;

(vii) medical device technology, which is any technology that involves medical
equipment or products other than a pharmaceutical product that has therapeutic or
diagnostic value and is regulated; or

(viii) advanced vehicles technology which is any technology that involves electric
vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the
construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric
vehicle is a road vehicle that draws propulsion energy only from an on-board source of
electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from
both a consumable fuel and a rechargeable energy storage system.

(d) The authority to grant new abatements under this subdivision expires on July 1,
2004new text begin , except that the authority to grant new abatements for real and personal property
subject to valuation under Minnesota Rules, chapter 8100, does not expirenew text end .

Sec. 23.

Minnesota Statutes 2004, section 469.1813, subdivision 8, is amended to read:

Subd. 8.

Limitation on abatements.

In any year, the total amount of property taxes
abated by a political subdivision under this section may not exceed (1) ten percent of
the current levy, or (2) $200,000, whichever is greater. The limit under this subdivision
does not apply tonew text begin :
new text end

new text begin (1)new text end an uncollected abatement from a prior year that is added to the abatement levynew text begin ; or
new text end

new text begin (2) a taxpayer whose real and personal property is subject to valuation under
Minnesota Rules, chapter 8100new text end .

Sec. 24.

Minnesota Statutes 2004, section 469.1813, subdivision 9, is amended to read:

Subd. 9.

Consent of property owner not required.

A political subdivision may
abate the taxes on a parcel under sections 469.1812 to 469.1815 without obtaining the
consent of the property owner.new text begin This subdivision does not apply to abatements granted to a
taxpayer whose real and personal property is valued under Minnesota Rules, chapter 8100.new text end

Sec. 25.

Minnesota Statutes 2004, section 469.1813, is amended by adding a
subdivision to read:

new text begin Subd. 10. new text end

new text begin Applicability to utility properties. new text end

new text begin When this statute is applied or
utilized with respect to a taxpayer whose real and personal property is subject to valuation
under Minnesota Rules, chapter 8100, the provisions of this section and sections 469.1814
and 469.1815 shall apply only to property specified or described in the abatement contract
or agreement.
new text end

Sec. 26.

Minnesota Statutes 2004, section 473F.08, is amended by adding a subdivision
to read:

new text begin Subd. 3c. new text end

new text begin Uncompensated care reimbursement. new text end

new text begin (a) As used in this subdivision,
the following terms have the meanings given in this paragraph.
new text end

new text begin (1) "Uncompensated care" means the sum of (i) the amount that would have been
charged by a facility for rendering free or discounted care to persons who cannot afford to
pay and for which the facility did not expect payment and (ii) the amount that had been
charged by a facility for rendering care to persons and billed to that person or a third-party
payer for which the facility expected but did not receive payment. Uncompensated care
does not include contractual write-offs.
new text end

new text begin (2) A "qualifying hospital" means a hospital in the area that is:
new text end

new text begin (i) owned or operated by a local unit of government, or formerly owned by a
university or is a private nonprofit hospital that leases its building from the county in
which it is located; and
new text end

new text begin (ii) has a licensed bed capacity greater than 400.
new text end

new text begin (b) A county that contains a qualifying hospital is eligible for reimbursement of
that portion of gross charges for uncompensated care determined by multiplying the
hospital's gross charges during the base year by the percentage of uncompensated care
provided by the hospital during the base year minus one-half of one percent of those gross
charges, dividing the result by two, and adjusting the cost by multiplying that result by the
hospital's cost-to-charge ratio during the base year. By July 15, 2007, and each subsequent
year, the county shall notify its county auditor, as well as the administrative auditor, of the
amount of qualifying uncompensated care provided, adjusted to cost using the hospital's
cost-to-charge ratio, during the 12-month period ending on June 30 of the current year.
new text end

new text begin (c) The amount certified under paragraph (b) shall be certified annually by the
county auditor to the administrative auditor as an addition to the county's areawide levy
under subdivision 5.
new text end

new text begin (d) The administrative auditor shall pay one-half of the reimbursement to the county
auditor of the county that contains the qualifying hospital on or before June 15 and the
remaining one-half of the reimbursement on or before November 15. The county auditor
receiving the payment shall disburse the reimbursement to the qualifying hospital within
15 days of receipt of the reimbursement.
new text end

new text begin (e) Prior to the reporting specified in paragraph (b) above, all qualifying hospitals
that participate in this program shall agree upon and implement a common standard for
reporting uncompensated care, and a common standard for determining eligibility for
uncompensated care for all participating hospitals.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for fiscal disparities contribution and
distribution tax capacities for taxes payable in 2008 and 2009 only.
new text end

Sec. 27.

Laws 2001, First Special Session chapter 5, article 3, section 8, the effective
date, as amended by Laws 2005, chapter 151, article 3, section 19, is amended to read:

[EFFECTIVE DATE.] This section is effective for taxes levied in 2002, payable in
2003, deleted text begin through taxes levied in 2009, payable in 2010deleted text end new text begin and thereafternew text end .

Sec. 28. new text begin PROPERTY TAX CERTIFICATION; ROCHESTER SCHOOL
DISTRICT.
new text end

new text begin Notwithstanding Minnesota Statutes, sections 126C.48 and 275.065, with the
agreement of the school district's home county, Independent School District No. 535,
Rochester, on or before October 8, shall certify to the county auditor the district's proposed
property tax levy for taxes payable in the following year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2007 only.
new text end

Sec. 29. new text begin LEASE LEVY; ADMINISTRATIVE SPACE, ROCORI AND
FARIBAULT.
new text end

new text begin Independent School Districts Nos. 656, Faribault, and 750, Rocori, may lease
administrative space under Minnesota Statutes, section 126C.40, subdivision 1, if the
district can demonstrate to the satisfaction of the commissioner of education that the
administrative space is less expensive than instructional space that the district would
otherwise lease. The commissioner must deny this levy authority unless the district
passes a resolution stating its intent to lease instructional space under Minnesota Statutes,
section 126C.40, subdivision 1, if the commissioner does not grant authority under this
section. The resolution must also certify that a lease of administrative space under this
section is less expensive than the district's proposed instructional lease. Levy authority
under this section shall not exceed the total levy authority under Minnesota Statutes,
section 126C.40, subdivision 1, paragraph (e).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenue for taxes payable in 2007.
new text end

Sec. 30. new text begin MISCELLANEOUS EDUCATION PROPERTY TAX REDUCTION.
new text end

new text begin Notwithstanding Minnesota Statutes, section 126C.10, subdivision 13a, the
commissioner of education shall increase the operating capital equalizing factor under
Minnesota Statutes, section 126C.10, subdivision 13a, to reduce the operating capital levy
by $2,593,000 in fiscal year 2008 and $2,259,000 in fiscal year 2009.
new text end

ARTICLE 5

DEPARTMENT OF REVENUE PROPERTY TAXES AND AIDS

Section 1.

Minnesota Statutes 2005 Supplement, section 273.13, subdivision 22,
is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b)
and (c), real estate which is residential and used for homestead purposes is class 1a. In the
case of a duplex or triplex in which one of the units is used for homestead purposes, the
entire property is deemed to be used for homestead purposes. The market value of class 1a
property must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net class rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a class rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured
homes used for the purposes of a homestead by

(1) any person who is blind as defined in section 256D.35, or the blind person and
the blind person's spouse; or

(2) any person, hereinafter referred to as "veteran," who:

(i) served in the active military or naval service of the United States; and

(ii) is entitled to compensation under the laws and regulations of the United States
for permanent and total service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
a wheelchair; and

(iii) has acquired a special housing unit with special fixtures or movable facilities
made necessary by the nature of the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the special housing unit
as a homestead; or

(3) any person who is permanently and totally disabled.

Property is classified and assessed under clause (3) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph.

Property is classified and assessed pursuant to clause (1) only if the commissioner of
revenue certifies to the assessor that the homestead occupant satisfies the requirements of
this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a
condition which is permanent in nature and totally incapacitates the person from working
at an occupation which brings the person an income. The first $32,000 market value of
class 1b property has a net class rate of .45 percent of its market value. The remaining
market value of class 1b property has a class rate using the rates for class 1a or class 2a
property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real property that abuts a lakeshore line and
is devoted to temporary and seasonal residential occupancy for recreational purposes but
not devoted to commercial purposes for more than 250 days in the year preceding the
year of assessment, and that includes a portion used as a homestead by the owner, which
includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
the resort, a partner in a partnership that owns the resort, or a member of a limited liability
company that owns the resort even if the title to the homestead is held by the corporation,
partnership, or limited liability company. For purposes of this clause, property is devoted
to a commercial purpose on a specific day if any portion of the property, excluding the
portion used exclusively as a homestead, is used for residential occupancy and a fee
is charged for residential occupancy. The portion of the property used as a homestead
deleted text begin by the owner has the same class rates asdeleted text end new text begin is new text end class 1a property under paragraph (a). The
remainder of the property is classified as follows: the first $500,000 of market value is tier
I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III.
The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25
percent. If a class 1c resort property has any market value in tier III, the entire property
must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for
class 1c treatment under this paragraph.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time
when they work on that farm, and the occupants are not charged rent for the privilege of
occupying the property, provided that use of the structure for storage of farm equipment
and produce does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the
appropriate season; and

(4) the structure is not salable as residential property because it does not comply
with local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same class rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2006 and
thereafter.
new text end

Sec. 2.

Minnesota Statutes 2005 Supplement, section 273.13, subdivision 25, is
amended to read:

Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more
units and used or held for use by the owner or by the tenants or lessees of the owner
as a residence for rental periods of 30 days or more, excluding property qualifying for
class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
than hospitals exempt under section 272.02, and contiguous property used for hospital
purposes, without regard to whether the property has been platted or subdivided. The
market value of class 4a property has a class rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
farm classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a class rate of 1.25 percent.

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property; and

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).

Class 4bb property has the same class rates as class 1a property under subdivision 22.

Property that has been classified as seasonal residential recreational property at
any time during which it has been owned by the current owner or spouse of the current
owner does not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real property devoted to
temporary and seasonal residential occupancy for recreation purposes, including real
property devoted to temporary and seasonal residential occupancy for recreation purposes
and not devoted to commercial purposes for more than 250 days in the year preceding
the year of assessment. For purposes of this clause, property is devoted to a commercial
purpose on a specific day if any portion of the property is used for residential occupancy,
and a fee is charged for residential occupancy. In order for a property to be classified as
class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of
the annual gross lodging receipts related to the property must be from business conducted
during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging
guests during the year must be for periods of at least two consecutive nights; or (ii) at least
20 percent of the annual gross receipts must be from charges for rental of fish houses,
boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for
marina services, launch services, and guide services, or the sale of bait and fishing tackle.
For purposes of this determination, a paid booking of five or more nights shall be counted
as two bookings. Class 4c also includes commercial use real property used exclusively
for recreational purposes in conjunction with class 4c property devoted to temporary
and seasonal residential occupancy for recreational purposes, up to a total of two acres,
provided the property is not devoted to commercial recreational use for more than 250
days in the year preceding the year of assessment and is located within two miles of the
class 4c property with which it is used. Owners of real property devoted to temporary and
seasonal residential occupancy for recreation purposes and all or a portion of which was
devoted to commercial purposes for not more than 250 days in the year preceding the year
of assessment desiring classification as class 1c or 4c, must submit a declaration to the
assessor designating the cabins or units occupied for 250 days or less in the year preceding
the year of assessment by January 15 of the assessment year. Those cabins or units and a
proportionate share of the land on which they are located will be designated class 1c or 4c
as otherwise provided. The remainder of the cabins or units and a proportionate share of
the land on which they are located will be designated as class 3a. The owner of property
desiring designation as class 1c or 4c property must provide guest registers or other
records demonstrating that the units for which class 1c or 4c designation is sought were
not occupied for more than 250 days in the year preceding the assessment if so requested.
The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other
nonresidential facility operated on a commercial basis not directly related to temporary and
seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or
dues, but a membership fee may not be required in order to use the property for golfing,
and its green fees for golfing must be comparable to green fees typically charged by
municipal courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
with the golf course is classified as class 3a property;

(3) real property up to a maximum of one acre of land owned by a nonprofit
community service oriented organization; provided that the property is not used for a
revenue-producing activity for more than six days in the calendar year preceding the year
of assessment and the property is not used for residential purposes on either a temporary
or permanent basis. For purposes of this clause, a "nonprofit community service oriented
organization" means any corporation, society, association, foundation, or institution
organized and operated exclusively for charitable, religious, fraternal, civic, or educational
purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3),
(10), or (19) of the Internal Revenue Code of 1986, as amended through December 31,
1990. For purposes of this clause, "revenue-producing activities" shall include but not be
limited to property or that portion of the property that is used as an on-sale intoxicating
liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant
open to the public, bowling alley, a retail store, gambling conducted by organizations
licensed under chapter 349, an insurance business, or office or other space leased or
rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of
the property which is used for revenue-producing activities for more than six days in the
calendar year preceding the year of assessment shall be assessed as class 3a. The use of
the property for social events open exclusively to members and their guests for periods of
less than 24 hours, when an admission is not charged nor any revenues are received by the
organization shall not be considered a revenue-producing activity;

(4) postsecondary student housing of not more than one acre of land that is owned by
a nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5) manufactured home parks as defined in section 327.14, subdivision 3;

(6) real property that is actively and exclusively devoted to indoor fitness, health,
social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
and is located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt
under section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the
leased premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
be filed by the new owner with the assessor of the county where the property is located
within 60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed
agreement restricting the use of the premises, prohibiting commercial use or activity
performed at the hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead
purposes, and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods
of 14 or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated
in the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer
than seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22.

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
parcel of seasonal residential recreational property not used for commercial purposes has
the same class rates as class 4bb property, (ii) manufactured home parks assessed under
clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal
residential recreational property has a class rate of one percent for the first $500,000
of market value, deleted text begin which includes any market value receiving the one percent rate under
subdivision 22,deleted text end and 1.25 percent for the remaining market value, (iv) the market value
of property described in clause (4) has a class rate of one percent, (v) the market value
of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that
portion of the market value of property in clause (9) qualifying for class 4c property
has a class rate of 1.25 percent.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
of the units in the building qualify as low-income rental housing units as certified under
section 273.128, subdivision 3, only the proportion of qualifying units to the total number
of units in the building qualify for class 4d. The remaining portion of the building shall be
classified by the assessor based upon its use. Class 4d also includes the same proportion of
land as the qualifying low-income rental housing units are to the total units in the building.
For all properties qualifying as class 4d, the market value determined by the assessor must
be based on the normal approach to value using normal unrestricted rents.

Class 4d property has a class rate of 0.75 percent.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2006 and
subsequent years.
new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 273.1384, subdivision 1, is
amended to read:

Subdivision 1.

Residential homestead market value credit.

Each county auditor
shall determine a homestead credit for each class 1a, 1b, deleted text begin 1c,deleted text end and 2a homestead property
within the county equal to 0.4 percent of the first $76,000 of market value of the property
minus .09 percent of the market value in excess of $76,000. The credit amount may not
be less than zero. In the case of an agricultural or resort homestead, only the market
value of the house, garage, and immediately surrounding one acre of land is eligible
in determining the property's homestead credit. In the case of a property deleted text begin whichdeleted text end new text begin thatnew text end is
classified as part homestead and part nonhomestead, (i) the credit shall apply only to
the homestead portion of the property, but (ii) if a portion of a property is classified as
nonhomestead solely because not all the owners occupy the property,new text begin not all the owners
have qualifying relatives occupying the property,new text end or solely because deleted text begin bothdeleted text end new text begin not all thenew text end spouses
deleted text begin do notdeleted text end new text begin of ownersnew text end occupy the property, the credit amount shall be initially computed as
if that nonhomestead portion were also in the homestead class and then prorated to the
owner-occupant's percentage of ownership deleted text begin or prorated to one-half if both spouses do not
occupy the propertydeleted text end .new text begin For the purpose of this section, when an owner-occupant's spouse
does not occupy the property, the percentage of ownership for the owner-occupant spouse
is one-half of the couple's ownership percentage.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2007 and
thereafter.
new text end

Sec. 4.

Minnesota Statutes 2004, section 273.1384, subdivision 2, is amended to read:

Subd. 2.

Agricultural homestead market value credit.

Property classified
as class 2a agricultural homestead is eligible for an agricultural credit. new text begin The credit is
computed using the property's agricultural credit market value, defined for this purpose
as the property's class 2a market value excluding the market value of the house, garage,
and immediately surrounding one acre of land. new text end The credit is equal to 0.3 percent of the
first $115,000 of the property's new text begin agricultural credit new text end market valuedeleted text begin . The credit under this
subdivision is limited to $345 for each homestead. The credit is reduced bydeleted text end new text begin minus new text end .05
percent of the new text begin property's agricultural credit new text end market value in excess of $115,000, subject to
a maximum reduction of $115.new text begin In the case of property that is classified in part as class 2a
agricultural homestead and in part as class 2b nonhomestead farm land solely because not
all the owners occupy or farm the property, not all the owners have qualifying relatives
occupying or farming the property, or solely because not all the spouses of owners occupy
the property, the credit must be initially computed as if that nonhomestead agricultural
land was also classified as class 2a agricultural homestead and then prorated to the
owner-occupant's percentage of ownership.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2007 and
thereafter.
new text end

Sec. 5.

Minnesota Statutes 2004, section 273.1398, subdivision 3, is amended to read:

Subd. 3.

Disparity reduction aid.

deleted text begin For taxes payable in 2003 and subsequent years,deleted text end
The amount of disparity aid certified for each taxing district within each unique taxing
jurisdiction for taxes payable in the prior year shall be multiplied by the ratio of (1) the
jurisdiction's tax capacity using the class rates for taxes payable in the year for which aid
is being computed, to (2) its tax capacity using the class rates for taxes payable in the year
prior to that for which aid is being computed, both based upon market values for taxes
payable in the year prior to that for which aid is being computed. deleted text begin For the purposes of this
aid determination, disparity reduction aid certified for taxes payable in the prior year for
a taxing entity other than a town or school district is deemed to be county government
disparity reduction aid. The amount of disparity aid certified to each taxing jurisdiction
shall be reduced by any reductions required in the current year or permanent reductions
required in previous years under section 477A.0132. deleted text end new text begin If the commissioner determines that
insufficient information is available to reasonably and timely calculate the numerator
in this ratio for the first taxes payable year that a class rate change or new class rate is
effective, the commissioner shall omit the effects of that class rate change or new class
rate when calculating this ratio for aid payable in that taxes payable year. For aid payable
in the year following a year for which such omission was made, the commissioner shall
use in the denominator for the class that was changed or created, the tax capacity for taxes
payable two years prior to that in which the aid is payable, based on market values for
taxes payable in the year prior to that for which aid is being computed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2006 and
thereafter.
new text end

Sec. 6.

Minnesota Statutes 2004, section 281.23, subdivision 9, is amended to read:

Subd. 9.

Certificate.

After the time for redemption of any lands shall have expired
after notice given, as provided in subdivisions 2, 3, 5, and 6, the county auditor shall
execute a certificate describing the lands, specifying the tax judgment sale at which the
same were bid in for the state, and stating that the time for redemption thereof has expired
after notice given as provided by law and that absolute title thereto has vested in the
state of Minnesota. Such certificate shall be recorded in the office of the county recorder
deleted text begin and thereafter filed in the office of the county auditordeleted text end , except that in case of registered
land such certificate shall be deleted text begin fileddeleted text end new text begin recorded new text end in the office of the registrar of titles deleted text begin and a
duplicate filed in the office of the county auditordeleted text end . Such certificate and the record thereof
shall be prima facie evidence of the facts therein stated, but failure to execute or record or
file such certificate shall not affect the validity of any proceedings hereunder respecting
such lands or the title of the state thereto.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2005 Supplement, section 284.07, is amended to read:

284.07 COUNTY AUDITOR'S CERTIFICATE TO BE PRIMA FACIE
EVIDENCE.

The county auditor's certificate of forfeiture deleted text begin fileddeleted text end new text begin recorded by the county auditor
new text end as provided by section 281.23, subdivision 9, and acts supplemental thereto, or by any
other law hereafter enacted providing for the recording of such a certificate or a certified
copy of such certificate or of the record thereof, shall, for all purposes, be prima facie
evidence that all requirements of the law respecting the taxation and forfeiture of the
lands therein described were complied with, and that at the date of the certificate absolute
title to such lands had vested in the state by reason of forfeiture for delinquent taxes, as
set forth in the certificate.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2004, section 477A.014, subdivision 1, is amended to read:

Subdivision 1.

Calculations and payments.

new text begin (a) new text end The commissioner of revenue
shall make all necessary calculations and make payments pursuant to sections 477A.013,
477A.0132, and 477A.03 directly to the affected taxing authorities annually. In addition,
the commissioner shall notify the authorities of their aid amounts, as well as the
computational factors used in making the calculations for their authority, and those
statewide total figures that are pertinent, before August 1 of the year preceding the aid
distribution year.

new text begin (b)new text end For the purposes of this subdivision, aid is determined for a city or town based
on its city or town status as of June 30 of the year preceding the aid distribution year. If
the effective date for a municipal incorporation, consolidation, annexation, detachment,
dissolution, or township organization is on or before June 30 of the year preceding
the aid distribution year, such change in boundaries or form of government shall be
recognized for aid determinations for the aid distribution year. If the effective date for a
municipal incorporation, consolidation, annexation, detachment, dissolution, or township
organization is after June 30 of the year preceding the aid distribution year, such change in
boundaries or form of government shall not be recognized for aid determinations until
the following year.

new text begin (c) Changes in boundaries or form of government will only be recognized for the
purposes of this subdivision, to the extent that: (1) changes in market values are included
in market values reported by assessors to the commissioner, and changes in population,
household size, and the road accidents factor are included in their respective certifications
to the commissioner as referenced in section 477A.011, or (2) an annexation information
report as provided in paragraph (d) is received by the commissioner on or before July 15
of the aid calculation year. Revisions to estimates or data for use in recognizing changes
in boundaries or form of government are not effective for purposes of this subdivision
unless received by the commissioner on or before July 15 of the aid calculation year.
Clerical errors in the certification or use of estimates and data established as of July 15 in
the aid calculation year are subject to correction within the time periods allowed under
subdivision 3.
new text end

new text begin (d) In the case of an annexation, an annexation information report may be completed
by the annexing jurisdiction and submitted to the commissioner for purposes of this
subdivision if the net tax capacity of annexed area for the assessment year preceding the
effective date of the annexation exceeds five percent of the city's net tax capacity for the
same year. The form and contents of the annexation information report shall be prescribed
by the commissioner. The commissioner shall change the net tax capacity, the population,
the population decline, the commercial industrial percentage, and the transformed
population for the annexing jurisdiction only if the annexation information report provides
data the commissioner determines to be reliable for all of these factors used to compute city
revenue need for the annexing jurisdiction. The commissioner shall adjust the pre-1940
housing percentage, the road accidents factor, and household size only if the entire area of
an existing city or town is annexed or consolidated and only if reliable data is available for
all of these factors used to compute city revenue need for the annexing jurisdiction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid payable in 2007 and thereafter.
new text end

ARTICLE 6

DEPARTMENT OF REVENUE SALES AND USE TAXES

Section 1.

Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3,
is amended to read:

Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited
to, each of the transactions listed in this subdivision.

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and

(d) Sale and purchase include the preparing for a consideration of food.
Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy;

(4) dietary supplements; and

(5) all food sold through vending machines.

(e) A sale and a purchase includes the furnishing for a consideration of electricity,
gas, water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten
computer software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(3) nonresidential parking services, whether on a contractual, hourly, or other
periodic basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization if:

(ii) use of the sports and athletic facility is not made available to the general public
on the same basis as it is made available to members.

(5) delivery of aggregate materials and concrete block by a third party if the delivery
would be subject to the sales tax if provided by the seller of the aggregate material or
concrete block; and

(6) services as provided in this clause:

(iii) building and residential cleaning, maintenance, and disinfecting and
exterminating services;

(v) pet grooming services;

(viii) the furnishing of lodging, board, and care services for animals in kennels and
other similar arrangements, but excluding veterinary and horse boarding services.

In applying the provisions of this chapter, the terms "tangible personal property"
and "deleted text begin sales atdeleted text end retailnew text begin salenew text end " include taxable services listed in clause (6), items (i) to (vi) and
(viii), and the provision of these taxable services, unless specifically provided otherwise.
Services performed by an employee for an employer are not taxable. Services performed
by a partnership or association for another partnership or association are not taxable if one
of the entities owns or controls more than 80 percent of the voting power of the equity
interest in the other entity. Services performed between members of an affiliated group of
corporations are not taxable. For purposes of the preceding sentence, "affiliated group
of corporations" deleted text begin includesdeleted text end new text begin means new text end those entities that would be classified as members of an
affiliated group new text begin as defined new text end under United States Code, title 26, section 1504, deleted text begin and that are
eligible to file a consolidated tax return for federal income tax purposesdeleted text end new text begin disregarding
the exclusions in section 1504(b)new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2004, section 297A.61, subdivision 12, is amended to read:

Subd. 12.

Farm machinery.

(a) "Farm machinery" means new or used machinery,
equipment, implements, accessories, and contrivances used directly and principally in
agricultural production new text begin of tangible personal property intended to be sold ultimately at
retail new text end including, but not limited to:

(1) machinery for the preparation, seeding, or cultivation of soil for growing
agricultural crops;

(2) barn cleaners, milking systems, grain dryers, feeding systems including
stationary feed bunks, and similar installations, whether or not the equipment is installed
by the seller and becomes part of the real property; and

(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe
fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation
system when sold as part of an irrigation system, whether or not the equipment is installed
by the seller and becomes part of the real property.

(b) Farm machinery does not include:

(1) repair or replacement parts;

(2) tools, shop equipment, grain bins, fencing material, communication equipment,
and other farm supplies;

(3) motor vehicles taxed under chapter 297B;

(4) snowmobiles or snow blowers;

(5) lawn mowers except those used in the production of sod for sale, or garden-type
tractors or garden tillers; or

(6) machinery, equipment, implements, accessories, and contrivances used directly in
the production of horses not raised for slaughter, fur-bearing animals, or research animals.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
to read:

new text begin Subd. 16a. new text end

new text begin Computer. new text end

new text begin "Computer" means an electronic device that accepts
information in digital or similar form and manipulates it for a result based on a sequence
of instructions.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
to read:

new text begin Subd. 16b. new text end

new text begin Electronic. new text end

new text begin "Electronic" means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
to read:

new text begin Subd. 16c. new text end

new text begin Computer software. new text end

new text begin "Computer software" means a set of coded
instructions designed to cause a computer or automatic data processing equipment to
perform a task.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2004, section 297A.61, subdivision 17, is amended to read:

Subd. 17.

Prewritten computer software.

"Prewritten computer software" means
computer software, including prewritten upgrades, that is not designed and developed by
the author or other creator to the specifications of a specific purchaser. The combining
of two or more "prewritten computer software" programs or prewritten portions of the
programs does not cause the combination to be other than "prewritten computer software."
"Prewritten computer software" includes software designed and developed by the author
or other creator to the specifications of a specific purchaser when it is sold to a person
other than thenew text begin specific new text end purchaser. If a person modifies or enhances computer software
of which the person is not the author or creator, the person is deemed to be the author
or creator only of such person's modifications or enhancements. "Prewritten computer
software" or a prewritten portion of it that is modified or enhanced to any degree, if the
modification or enhancement is designed and developed to the specifications of a specific
purchaser, remains "prewritten computer software"; provided, however, that if there is a
reasonable, separately stated charge or an invoice or other statement of the price given to
the purchaser for such modification or enhancement, the modification or enhancement
does not constitute "prewritten computer software." deleted text begin For purposes of this subdivision:
deleted text end

deleted text begin (1) "computer" means an electronic device that accepts information in digital or
similar form and manipulates it for a result based on a sequence of instructions;
deleted text end

deleted text begin (2) "electronic" means relating to technology having electrical, digital, magnetic,
wireless, optical, electromagnetic, or similar capabilities; and
deleted text end

deleted text begin (3) "computer software" means a set of coded instructions designed to cause a
"computer" or automatic data processing equipment to perform a task.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Logging equipment. new text end

new text begin (a) "Logging equipment" means new or used
machinery, equipment, implements, accessories, and contrivances used directly and
principally in the commercial cutting or removal or both of timber or other solid wood
forest products, including, but not limited to:
new text end

new text begin (1) machinery used for bucking, bunching, debarking, delimbing, felling, forwarding,
loading, piling, skidding, topping, and yarding operations performed on timber; and
new text end

new text begin (2) chain saws.
new text end

new text begin (b) Logging equipment does not include:
new text end

new text begin (1) repair or replacement parts;
new text end

new text begin (2) tools, shop equipment, communication equipment, and other logging supplies;
new text end

new text begin (3) motor vehicles taxed under chapter 297B;
new text end

new text begin (4) snowmobiles, snow blowers, or recreational all-terrain vehicles; or
new text end

new text begin (5) machinery, equipment, implements, accessories, and contrivances used in the
creation of other commercial wood products for sale to others, including, but not limited
to, milling, planing, carving, wood chipping, or paper manufacturing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2004, section 297A.63, is amended to read:

297A.63 USE TAXES IMPOSED; RATES.

Subdivision 1.

Use of tangible personal property or taxable services.

(a) For the
privilege of using, storing, distributing, or consuming in Minnesota tangible personal
property or taxable services purchased for use, storage, distribution, or consumption in
this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the deleted text begin salesdeleted text end
new text begin purchase new text end price of retail sales of the tangible personal property or taxable services at the
rate of tax imposed under section 297A.62.new text begin A person that purchases property from a
Minnesota retailer and returns the tangible personal property to a point within Minnesota,
except in the course of interstate commerce, after it was delivered outside of Minnesota,
is subject to the use tax.new text end

(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
was paid on the sales price of the tangible personal property or taxable services.

(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
exemption under section 297A.67, subdivision 21.

Subd. 2.

Use of tangible personal property made from materials.

(a) A use tax
is imposed on a person who manufactures, fabricates, or assembles tangible personal
property from materials, either within or outside this state and who uses, stores, distributes,
or consumes the tangible personal property in Minnesota. The tax is imposed on the deleted text begin salesdeleted text end
new text begin purchase new text end price of retail sales of the materials contained in the tangible personal property at
the rate of tax imposed under section 297A.62.

(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
was paid on the sales price of materials contained in the tangible personal property.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2004, section 297A.668, subdivision 6, is amended to read:

Subd. 6.

Multiple points of use.

(a) Notwithstanding the provisions of subdivisions
2 to 5, a business purchaser that is not a holder of a direct pay permit that knows at the
time of its purchase of a digital good, computer software delivered electronically, or a
service that the digital good, computer software delivered electronically, or service will
be concurrently available for use in more than one deleted text begin taxingdeleted text end jurisdiction shall deliver to
the seller in conjunction with its purchase a multiple points of use exemption certificate
disclosing this fact.

(b) Upon receipt of the multiple points of use exemption certificate, the seller is
relieved of the obligation to collect, pay, or remit the applicable tax and the purchaser is
obligated to collect, pay, or remit the applicable tax on a direct pay basis.

(c) A purchaser delivering the multiple points of use exemption certificate may use
any reasonable, but consistent and uniform, method of apportionment that is supported by
the purchaser's business records as they exist at the time of the consummation of the sale.

(d) The multiple points of use exemption certificate remains in effect for all future
sales by the seller to the purchaser until it is revoked in writing, except as to the subsequent
sale's specific apportionment that is governed by the principle of paragraph (c) and the
facts existing at the time of the sale.

(e) A holder of a direct pay permit is not required to deliver a multiple points or use
exemption certificate to the seller. A direct pay permit holder shall follow the provisions
of paragraph (c) in apportioning the tax due on a digital good, computer software delivered
electronically, or a service that will be concurrently available for use in more than one
deleted text begin taxingdeleted text end jurisdiction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2004, section 297A.669, subdivision 11, is amended to
read:

Subd. 11.

Mobile telecommunications service.

"Mobile telecommunications
service," for purposes of this section, means the same as that term is defined in Section
deleted text begin 124(1)deleted text end new text begin 124(7) new text end of Public Law 106-252 (Mobile Telecommunications Sourcing Act).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2004, section 297A.67, subdivision 4, is amended to read:

Subd. 4.

Exempt meals at residential facilities.

deleted text begin Meals ordeleted text end new text begin Prepared food, candy,
and soft new text end drinks served to patients, inmates, or persons residing at hospitals, sanitariums,
nursing homes, senior citizen homes, and correctional, detention, and detoxification
facilities are exempt.new text begin Food sold through vending machines is not exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 12.

Minnesota Statutes 2004, section 297A.67, subdivision 5, is amended to read:

Subd. 5.

Exempt meals at schools.

deleted text begin Meals and lunches deleted text end new text begin Prepared food, candy,
and soft drinks new text end served at public and private elementary, middle, or secondary schools as
defined in section 120A.05 are exempt. deleted text begin Meals and lunches deleted text end new text begin Prepared food, candy, and soft
drinks new text end served to students at a college, university, or private career school under a board
contract are exempt. deleted text begin For purposes of this subdivision, "meals and lunches" does not
include sales from vending machines. deleted text end new text begin Food sold through vending machines is not exempt.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 13.

Minnesota Statutes 2005 Supplement, section 297A.67, subdivision 6, is
amended to read:

Subd. 6.

Other exempt meals.

(a) deleted text begin Meals ordeleted text end new text begin Prepared food, candy, and soft new text end drinks
purchased for and served exclusively to individuals who are 60 years of age or over and
their spouses or to handicapped persons and their spouses by governmental agencies,
nonprofit organizations, or churches, or pursuant to any program funded in whole or in
part through United States Code, title 42, sections 3001 through 3045, wherever delivered,
prepared, or served, are exempt.new text begin Food sold through vending machines is not exempt.
new text end

(b) deleted text begin Meals or deleted text end new text begin Prepared food, candy, and soft new text end drinks purchased for and served
exclusively to children who are less than 14 years of age or disabled children who are less
than 16 years of age and who are attending a child care or early childhood education
program, are exempt if they are:

(1) purchased by a nonprofit child care facility that is exempt under section 297A.70,
subdivision 4, and that primarily serves families with income of 250 percent or less of
federal poverty guidelines; and

(2) prepared at the site of the child care facility.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 14.

Minnesota Statutes 2004, section 297A.67, subdivision 14, is amended to read:

Subd. 14.

deleted text begin Personaldeleted text end Computers prescribed for use by school.

deleted text begin Personaldeleted text end Computers
and related computer software sold by a school, college, university, or private career
school to students who are enrolled at the institutions are exempt if:

(1) the use of the deleted text begin personaldeleted text end computer, or of a substantially similar model of computer,
and the related computer software is prescribed by the institution in conjunction with a
course of study; and

(2) each student of the institution, or of a unit of the institution in which the student
is enrolled, is required by the institution to have such a deleted text begin personaldeleted text end computer and related
software as a condition of enrollment.

For the purposes of this subdivision, "school" and "private career school" have the
meanings given in subdivision 13.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 15.

Minnesota Statutes 2004, section 297A.67, subdivision 27, is amended to read:

Subd. 27.

Sewing materials.

Sewing materials are exempt. For purposes of this
subdivision "sewing materials" mean fabric, thread, zippers, interfacing, buttons, trim,
and other items that are usually directly incorporated into the construction of clothing,new text begin as
defined in subdivision 8,new text end regardless of whether it is actually used for making clothing.
It does not include batting, foam, or fabric specifically manufactured for arts and craft
projects, or other materials for craft projects.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 16.

Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 37,
is amended to read:

Subd. 37.

Job opportunity building zones.

(a) Purchases of tangible personal
property or taxable services by a qualified business, as defined in section 469.310, are
exempt if the property or services are primarily used or consumed in a job opportunity
building zone designated under section 469.314. For purposes of this subdivision, an aerial
camera package, including any camera, computer, and navigation device contained in the
package, that is used in an aircraft that is operated under a Federal Aviation Administration
Restricted Airworthiness Certificate according to Code of Federal Regulations, title 14,
part 21, section 21.25(b)(3), relating to aerial surveying, and that is based, maintained, and
dispatched from a job opportunity building zone, qualifies as primarily used or consumed
in a job opportunity building zone if the imagery acquired from the aerial camera package
is returned to the job opportunity building zone for processing. The exemption for an
aerial camera package is limited deleted text begin todeleted text end deleted text begin $50,000 in taxes deleted text end new text begin as provided in this subdivision new text end and
the tax must be imposed and collected as if the rate under section 297A.62, subdivision 1,
applied and then refunded in the manner provided in section 297A.75.new text begin The total amount
of the aerial camera package exemption refunded for all taxpayers for all fiscal years is
limited to $50,000 in taxes.
new text end

(b) Purchase and use of construction materialsdeleted text begin ,deleted text end new text begin and new text end suppliesdeleted text begin , or equipmentdeleted text end used or
consumed innew text begin , and equipment incorporated into, new text end the construction of improvements to
real property in a job opportunity building zone are exempt if the improvements after
completion of construction are to be used in the conduct of a qualified business, as defined
in section 469.310. This exemption applies regardless of whether the purchases are made
by the business or a contractor.

(c) The exemptions under this subdivision apply to a local sales and use tax
regardless of whether the local sales tax is imposed on the sales taxable as defined under
this chapter.

(d) This subdivision applies to sales, if the purchase was made and delivery received
during the duration of the zone.

(e) Notwithstanding the restriction in paragraph (a), which requires items purchased
to be primarily used or consumed in the zone, purchases by a qualified business that is
an electrical cooperative located in Meeker County of equipment and materials used for
the generation, transmission, and distribution of electrical energy are exempt under this
subdivision, except that:

(1) the exemption for materials and equipment used or consumed outside the zone
must not exceed $200,000 in taxesnew text begin for all taxpayers for all fiscal yearsnew text end ; and

(2) no sales and use tax exemption is allowed for equipment purchased for resale.

For purposes of this paragraph, the tax must be imposed and collected as if the rate
under section 297A.62, subdivision 1, applied and then refunded in the manner provided
in section 297A.75.

new text begin EFFECTIVE DATE. new text end

new text begin Paragraphs (a) and (e) are effective for sales and purchases
made on or after August 1, 2005. Paragraph (b) is effective for sales and purchases made
on or after January 1, 2004.
new text end

Sec. 17.

Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 38,
is amended to read:

Subd. 38.

Biotechnology and health sciences industry zone.

(a) Purchases of
tangible personal property or taxable services by a qualified business, as defined in section
469.330, are exempt if the property or services are primarily used or consumed in a
biotechnology and health sciences industry zone designated under section 469.334.

(b) Purchase and use of construction materialsdeleted text begin ,deleted text end new text begin and new text end suppliesdeleted text begin , or equipmentdeleted text end used
or consumed innew text begin , and equipment incorporated into, new text end the construction of improvements
to real property in a biotechnology and health sciences industry zone are exempt if the
improvements after completion of construction are to be used in the conduct of a qualified
business, as defined in section 469.330. This exemption applies regardless of whether the
purchases are made by the business or a contractor.

(c) The exemptions under this subdivision apply to a local sales and use tax
regardless of whether the local sales tax is imposed on the sales taxable as defined under
this chapter.

(d)(1) The tax on sales of goods or services exempted under this subdivision are
imposed and collected as if the applicable rate under section 297A.62 applied. Upon
application by the purchaser, on forms prescribed by the commissioner, a refund equal
to the tax paid must be paid to the purchaser. The application must include sufficient
information to permit the commissioner to verify the sales tax paid and the eligibility of
the claimant to receive the credit. No more than two applications for refunds may be filed
under this subdivision in a calendar year. The provisions of section 289A.40 apply to
the refunds payable under this subdivision.

(2) The amount required to make the refunds is annually appropriated to the
commissioner of revenue.

(3) The aggregate amount refunded to a qualified business must not exceed the
amount allocated to the qualified business under section 469.335.

(e) This subdivision applies only to sales made during the duration of the designation
of the zone.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made on
or after January 1, 2004.
new text end

Sec. 18.

Minnesota Statutes 2004, section 297A.70, subdivision 2, is amended to read:

Subd. 2.

Sales to government.

(a) All sales, except those listed in paragraph (b),
to the following governments and political subdivisions, or to the listed agencies or
instrumentalities of governments and political subdivisions, are exempt:

(1) the United States and its agencies and instrumentalities;

(2) school districts, the University of Minnesota, state universities, community
colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts
Education, and an instrumentality of a political subdivision that is accredited as an
optional/special function school by the North Central Association of Colleges and Schools;

(3) hospitals and nursing homes owned and operated by political subdivisions of
the state of tangible personal property and taxable services used at or by hospitals and
nursing homes;

(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip
operations provided for in section 473.4051;

(5) other states or political subdivisions of other states, if the sale would be exempt
from taxation if it occurred in that state; and

(6) sales to public libraries, public library systems, multicounty, multitype library
systems as defined in section 134.001, county law libraries under chapter 134A, state
agency libraries, the state library under section 480.09, and the Legislative Reference
Library.

(b) This exemption does not apply to the sales of the following products and services:

(1) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a building or facility;

(2) construction materials purchased by tax exempt entities or their contractors to
be used in constructing buildings or facilities which will not be used principally by the
tax exempt entities;

(3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5,
except for leases entered into by the United States or its agencies or instrumentalities; or

(4) deleted text begin meals anddeleted text end lodging as defined under section 297A.61, subdivision 3, deleted text begin paragraphs
(d) and (g)deleted text end new text begin paragraph (g)new text end , clause (2), new text begin and prepared food, candy, and soft drinks, new text end except for
deleted text begin meals anddeleted text end lodgingnew text begin , prepared food, candy, and soft drinks new text end purchased directly by the United
States or its agencies or instrumentalities.

(c) As used in this subdivision, "school districts" means public school entities and
districts of every kind and nature organized under the laws of the state of Minnesota, and
any instrumentality of a school district, as defined in section 471.59.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 19.

Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:

Subd. 3.

Sales of certain goods and services to government.

(a) The following
sales to or use by the specified governments and political subdivisions of the state are
exempt:

(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and
fire apparatus to a political subdivision;

(3) chore and homemaking services to a political subdivision of the state to be
provided to elderly or disabled individuals;

(4) telephone services to the Department of Administration that are used to provide
telecommunications services through the intertechnologies revolving fund;

new text begin (10) the removal of trees, bushes, or shrubs for the construction and maintenance
of roads, trails, or firebreaks when purchased by an agency of the state or a political
subdivision of the state.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
October 28, 2002, but for sales and purchases made after October 28, 2002, and before
July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 289A.50, for
sales taxes collected and remitted to the state.
new text end

Sec. 20.

Minnesota Statutes 2004, section 297A.70, subdivision 4, is amended to read:

Subd. 4.

Sales to nonprofit groups.

(a) All sales, except those listed in paragraph
(b), to the following "nonprofit organizations" are exempt:

(1) a corporation, society, association, foundation, or institution organized and
operated exclusively for charitable, religious, or educational purposes if the item
purchased is used in the performance of charitable, religious, or educational functions; and

(2) any senior citizen group or association of groups that:

(i) in general limits membership to persons who are either age 55 or older, or
physically disabled; and

(ii) is organized and operated exclusively for pleasure, recreation, and other
nonprofit purposes, no part of the net earnings of which inures to the benefit of any private
shareholders.

For purposes of this subdivision, charitable purpose includes the maintenance of a
cemetery owned by a religious organization.

(b) This exemption does not apply to the following sales:

(2) construction materials purchased by tax-exempt entities or their contractors to
be used in constructing buildings or facilities that will not be used principally by the
tax-exempt entities; and

(3) deleted text begin meals anddeleted text end lodging as defined under section 297A.61, subdivision 3, deleted text begin paragraphs
(d) and (g)deleted text end new text begin paragraph (g)new text end , clause (2)new text begin , and prepared food, candy, and soft drinksnew text end ; and

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 5, except as
provided in paragraph (c).

(c) This exemption applies to the leasing of a motor vehicle as defined in section
297B.01, subdivision 5, only if the vehicle is:

(1) a truck, as defined in section 168.011, a bus, as defined in section 168.011, or a
passenger automobile, as defined in section 168.011, if the automobile is designed and
used for carrying more than nine persons including the driver; and

(2) intended to be used primarily to transport tangible personal property or
individuals, other than employees, to whom the organization provides service in
performing its charitable, religious, or educational purpose.

(d) A limited liability company also qualifies for exemption under this subdivision if
(1) it consists of a sole member that would qualify for the exemption, and (2) the items
purchased qualify for the exemption.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 21.

Minnesota Statutes 2004, section 297A.70, subdivision 7, is amended to read:

Subd. 7.

Hospitals and outpatient surgical centers.

(a) Sales, except for those
listed in paragraph (c), to a hospital are exempt, if the items purchased are used in
providing hospital services. For purposes of this subdivision, "hospital" means a hospital
organized and operated for charitable purposes within the meaning of section 501(c)(3) of
the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction,
and "hospital services" are services authorized or required to be performed by a "hospital"
under chapter 144.

(b) Sales, except for those listed in paragraph (c), to an outpatient surgical center
are exempt, if the items purchased are used in providing outpatient surgical services. For
purposes of this subdivision, "outpatient surgical center" means an outpatient surgical
center organized and operated for charitable purposes within the meaning of section
501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other
jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means:
(1) services authorized or required to be performed by an outpatient surgical center under
chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means
health services furnished to a person whose medical condition is sufficiently acute to
require treatment unavailable through, or inappropriate to be provided by, a clinic or
physician's office, but not so acute as to require treatment in a hospital emergency room.

(1) purchases made by a clinic, physician's office, or any other medical facility not
operating as a hospital or outpatient surgical center, even though the clinic, office, or
facility may be owned and operated by a hospital or outpatient surgical center;

(2) sales under section 297A.61, subdivision 3, deleted text begin paragraphs (d) and (g)deleted text end new text begin paragraph
(g)new text end , clause (2)new text begin , and prepared food, candy, and soft drinksnew text end ;

(3) building and construction materials used in constructing buildings or facilities
that will not be used principally by the hospital or outpatient surgical center;

(4) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a hospital or outpatient surgical center; or

(5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 22.

Minnesota Statutes 2004, section 297A.70, subdivision 13, is amended to read:

Subd. 13.

Fund-raising sales by or for nonprofit groups.

(a) The following
sales by the specified organizations for fund-raising purposes are exempt, subject to the
limitations listed in paragraph (b):

(1) all sales made by an organization that exists solely for the purpose of providing
educational or social activities for young people primarily age 18 and under;

(2) all sales made by an organization that is a senior citizen group or association of
groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii)
no part of its net earnings inures to the benefit of any private shareholders;

(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if
the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization
under section 501(c)(3) of the Internal Revenue Code; and

(4) sales of deleted text begin gum,deleted text end candydeleted text begin , and candy productsdeleted text end sold for fund-raising purposes by a
nonprofit organization that provides educational and social activities primarily for young
people age 18 and under.

(b) The exemptions listed in paragraph (a) are limited in the following manner:

(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross
annual receipts of the organization from fund-raising do not exceed $10,000; and

(2) the exemption under paragraph (a), clause (1), does not apply if the sales are
derived from admission charges or from activities for which the money must be deposited
with the school district treasurer under section 123B.49, subdivision 2, or be recorded in
the same manner as other revenues or expenditures of the school district under section
123B.49, subdivision 4.

(c) Sales of tangible personal property are exempt if the entire proceeds, less the
necessary expenses for obtaining the property, will be contributed to a registered combined
charitable organization described in section 309.501, to be used exclusively for charitable,
religious, or educational purposes, and the registered combined charitable organization
has given its written permission for the sale. Sales that occur over a period of more than
24 days per year are not exempt under this paragraph.

(d) For purposes of this subdivision, a club, association, or other organization of
elementary or secondary school students organized for the purpose of carrying on sports,
educational, or other extracurricular activities is a separate organization from the school
district or school for purposes of applying the $10,000 limit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 23.

Minnesota Statutes 2004, section 297A.70, subdivision 14, is amended to read:

Subd. 14.

Fund-raising events sponsored by nonprofit groups.

(a) Sales of
tangible personal property at, and admission charges for fund-raising events sponsored
by, a nonprofit organization are exempt if:

(1) all gross receipts are recorded as such, in accordance with generally accepted
accounting practices, on the books of the nonprofit organization; and

(2) the entire proceeds, less the necessary expenses for the event, will be used
solely and exclusively for charitable, religious, or educational purposes. Exempt sales
include the sale of deleted text begin food, meals, and drinksdeleted text end new text begin prepared food, candy, and soft drinks new text end at the
fund-raising event.

(b) This exemption is limited in the following manner:

(1) it does not apply to admission charges for events involving bingo or other
gambling activities or to charges for use of amusement devices involving bingo or other
gambling activities;

(2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, religious, or educational purposes;

(3) it does not apply unless the organization keeps a separate accounting record,
including receipts and disbursements from each fund-raising event that documents all
deductions from gross receipts with receipts and other records;

(4) it does not apply to any sale made by or in the name of a nonprofit corporation as
the active or passive agent of a person that is not a nonprofit corporation;

(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;

(6) it does not apply to fund-raising events conducted on premises leased for more
than five days but less than 30 days; and

(7) it does not apply if the risk of the event is not borne by the nonprofit organization
and the benefit to the nonprofit organization is less than the total amount of the state and
local tax revenues foregone by this exemption.

(c) For purposes of this subdivision, a "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and
operated for charitable, religious, educational, civic, fraternal, and senior citizens' or
veterans' purposes, no part of the net earnings of which inures to the benefit of a private
individual.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 24.

Minnesota Statutes 2004, section 297A.70, subdivision 15, is amended to read:

Subd. 15.

Statewide amateur athletic games.

Notwithstanding section 297A.61,
subdivision 3, or any other provision of this chapter, the gross receipts from the following
sales made to or by a nonprofit corporation designated by the Minnesota Amateur Sports
Commission to conduct a series of statewide amateur athletic games and related events,
workshops, and clinics are exempt:

(1) sales of tangible personal property to or the storage, use, or other consumption of
tangible personal property by the nonprofit corporation; and

(2) sales of tangible personal property, admission charges, and sales of deleted text begin food,
meals, and drinksdeleted text end new text begin prepared food, candy, and soft drinks new text end by the nonprofit corporation at
fund-raising events, athletic events, or athletic facilities.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 25.

Minnesota Statutes 2005 Supplement, section 297A.72, subdivision 2, is
amended to read:

Subd. 2.

Content and form of exemption certificate.

An exemption certificate
must be substantially in the form prescribed by the commissioner and:

(1) be signed by the purchaser or meet the requirements of section 270C.304;

(2) bear the name and address of the purchaser;new text begin and
new text end

(3) indicate the sales tax account number, if any, issued to the purchaserdeleted text begin ;deleted text end new text begin .
new text end

deleted text begin (4) indicate the general character of the property sold by the purchaser in the regular
course of business or the activities carried on by the organization; and
deleted text end

deleted text begin (5) identify the property purchased.
deleted text end