1.1 CONFERENCE COMMITTEE REPORT ON H. F. No. 785
1.2 A bill for an act
1.3 relating to financing and operation of government in this state; modifying truth in
1.4 taxation provisions and adding a taxpayer satisfaction survey; changing income,
1.5 corporate franchise, withholding, estate, property, sales and use, mortgage
1.6 registry, health care gross revenues, motor fuels, gambling, cigarette and tobacco
1.7 products, occupation, net proceeds, production, liquor, insurance, and other taxes
1.8 and tax-related provisions; making technical, clarifying, collection, enforcement,
1.9 refund, and administrative changes to certain taxes and tax-related provisions,
1.10 tax-forfeited lands, revenue recapture, unfair cigarette sales, state debt collection,
1.11 sustainable forest incentive programs, and payments in lieu of taxes; changing
1.12 local government aids and credits; providing for determination of population for
1.13 certain purposes; updating references to the Internal Revenue Code, changing
1.14 property tax exemptions, homesteads, assessment, valuation, classification, class
1.15 rates, levies, deferral, review and equalization, appeals, notices and statements,
1.16 and distribution provisions; changing rent constituting property taxes and
1.17 property tax refunds; requiring state contracts be with vendors registered to
1.18 collect use taxes; abolishing the political contribution refund; authorizing local
1.19 sales taxes; extending a sales tax expiration; providing for compliance with
1.20 streamlined sales tax agreement; changing the taxation of liquor and cigarettes;
1.21 authorizing income tax checkoffs; requiring registration of tax shelters and
1.22 providing for a voluntary compliance initiative; changing job opportunity
1.23 building zones, border city development zones, biotechnology and health
1.24 sciences industry zone provisions; setting minimum employee compensation
1.25 for qualifying business in a JOBZ; limiting sales tax construction exemption
1.26 in job zones to businesses paying prevailing wage; requiring a referendum
1.27 for certain subsidies to gambling enterprises; authorizing charges for certain
1.28 emergency services; imposing a franchise fee on card clubs; defining the term
1.29 "tax"; regulating tax preparers; suspending appropriations or aids to public
1.30 employers who prohibit certain employees from wearing a flag on a uniform;
1.31 providing for training and conduct of assessors; prohibiting purchases of
1.32 tax-forfeited lands by certain local officials; providing for data classification and
1.33 exchange of data; establishing a tax reform commission; providing and imposing
1.34 powers and duties on the commissioner of revenue and other state agencies and
1.35 departments and on certain political subdivisions and certain officials; changing
1.36 and imposing penalties; requiring reports; transferring funds; appropriating
1.37 money; amending Minnesota Statutes 2004, sections 4A.02; 16C.03, by adding a
1.38 subdivision; 16D.10; 168A.05, subdivision 1a; 190.09, subdivision 2; 240.30,
1.39 by adding a subdivision; 270.02, subdivision 3; 270.11, subdivision 2; 270.16,
1.40 subdivision 2; 270.30, subdivisions 1, 5, 6, 8, by adding subdivisions; 270.65;
1.41 270.67, subdivision 4; 270.69, subdivision 4; 270A.03, subdivisions 5, 7; 272.01,
1.42 subdivision 2; 272.02, subdivisions 1a, 7, 47, 53, 64, by adding subdivisions;
2.1 272.0211, subdivisions 1, 2; 272.0212, subdivisions 1, 2; 272.029, subdivisions
2.2 4, 6; 273.055; 273.0755; 273.11, subdivisions 1a, 8, by adding subdivisions;
2.3 273.111, by adding a subdivision; 273.123, subdivision 7; 273.124, subdivisions
2.4 3, 6, 8, 14, 21; 273.125, subdivision 8; 273.13, subdivisions 22, 23, 25, by
2.5 adding a subdivision; 273.1315; 273.1384, subdivision 1; 273.19, subdivision
2.6 1a; 273.372; 274.01, subdivision 1; 274.014, subdivisions 2, 3; 274.14; 275.025,
2.7 subdivision 4; 275.065, subdivisions 1c, 3, 4, 7, by adding subdivisions;
2.8 275.07, subdivisions 1, 4; 276.04, subdivision 2; 276.112; 276A.01, subdivision
2.9 7; 282.016; 282.08; 282.15; 282.21; 282.224; 282.301; 287.04; 289A.02,
2.10 subdivision 7; 289A.08, subdivisions 1, 3, 7, 13, 16; 289A.18, subdivision
2.11 1; 289A.19, subdivision 4; 289A.20, subdivision 2; 289A.31, subdivision 2;
2.12 289A.37, subdivision 5; 289A.38, subdivisions 6, 7, by adding subdivisions;
2.13 289A.40, subdivision 2, by adding subdivisions; 289A.50, subdivisions 1, 1a;
2.14 289A.56, by adding a subdivision; 289A.60, subdivisions 2a, 4, 6, 7, 11, 13, 20,
2.15 by adding subdivisions; 290.01, subdivisions 6, 7, 7b, 19, as amended, 19a,
2.16 19b, 19c, 19d, 31; 290.032, subdivisions 1, 2; 290.06, subdivisions 2c, 22, by
2.17 adding a subdivision; 290.067, subdivisions 1, 2a; 290.0671, subdivisions 1, 1a;
2.18 290.0672, subdivisions 1, 2; 290.0674, subdivisions 1, 2; 290.0675, subdivision
2.19 1; 290.091, subdivisions 2, 3; 290.0922, subdivision 2; 290.191, subdivisions
2.20 2, 3; 290.92, subdivisions 1, 4b; 290A.03, subdivisions 3, 11, 13, 15, by adding
2.21 subdivisions; 290A.07, by adding a subdivision; 290A.19; 290B.05, subdivision
2.22 3; 290C.05; 290C.10; 291.005, subdivision 1; 291.03, subdivision 1; 295.52,
2.23 subdivision 4; 295.53, subdivision 1; 295.582; 295.60, subdivision 3; 296A.22,
2.24 by adding a subdivision; 297A.61, subdivisions 3, 4, by adding a subdivision;
2.25 297A.64, subdivision 4; 297A.668, subdivisions 1, 5; 297A.67, subdivisions 2,
2.26 7, 9, 29, by adding a subdivision; 297A.68, subdivisions 2, 5, 28, 35, 37, 38, 39,
2.27 by adding subdivisions; 297A.70, subdivision 10; 297A.71, subdivision 12, by
2.28 adding a subdivision; 297A.72, by adding a subdivision; 297A.75, subdivision
2.29 1; 297A.87, subdivisions 2, 3; 297A.99, subdivisions 1, 3, 4, 9, by adding
2.30 subdivisions; 297E.01, subdivisions 5, 7, by adding subdivisions; 297E.06,
2.31 subdivision 2; 297E.07; 297F.08, subdivision 12, by adding a subdivision;
2.32 297F.09, subdivisions 1, 2; 297F.14, subdivision 4; 297G.09, by adding a
2.33 subdivision; 297I.01, by adding subdivisions; 297I.05, subdivisions 4, 5, by
2.34 adding a subdivision; 298.01, subdivisions 3, 4; 298.24, subdivision 1; 298.75,
2.35 by adding a subdivision; 325D.33, subdivision 6; 365.43, subdivision 1; 365.431;
2.36 366.011; 366.012; 373.45, subdivision 7; 469.169, by adding a subdivision;
2.37 469.1735, subdivision 3; 469.176, subdivisions 4l, 7; 469.310, subdivision 11,
2.38 by adding a subdivision; 469.315; 469.316; 469.317; 469.319, subdivision 1, by
2.39 adding a subdivision; 469.320, subdivision 3; 469.330, subdivision 11; 469.335;
2.40 469.337; 469.340, subdivision 1; 473.843, subdivision 5; 473F.02, subdivisions
2.41 2, 7; 477A.011, subdivisions 3, 34, 35, 36, 38; 477A.0124, subdivisions 2, 4;
2.42 477A.013, subdivisions 8, 9, by adding a subdivision; 477A.016; 477A.03,
2.43 subdivisions 2a, 2b; 477A.11, subdivision 4, by adding a subdivision; 477A.12,
2.44 subdivisions 1, 2; 477A.14, subdivision 1; 645.44, by adding a subdivision; Laws
2.45 1998, chapter 389, article 3, section 42, subdivision 2, as amended; Laws 1998,
2.46 chapter 389, article 8, section 43, subdivision 3; Laws 2001, First Special Session
2.47 chapter 5, article 3, section 8; Laws 2001, First Special Session chapter 5, article
2.48 12, section 95, as amended; Laws 2002, chapter 377, article 3, section 4; Laws
2.49 2003, chapter 127, article 5, section 27; Laws 2003, chapter 127, article 5, section
2.50 28; Laws 2003, First Special Session chapter 21, article 5, section 13; Laws
2.51 2003, First Special Session chapter 21, article 6, section 9; Laws 2005, chapter
2.52 43, section 1; proposing coding for new law in Minnesota Statutes, chapters 15;
2.53 270; 272; 273; 275; 280; 289A; 290; 290C; 295; 297A; 297F; 373; 459; 473;
2.54 repealing Minnesota Statutes 2004, sections 10A.322, subdivision 4; 16A.1522,
2.55 subdivision 4; 270.85; 270.88; 272.02, subdivision 65; 273.19, subdivision
2.56 5; 273.37, subdivision 3; 274.05; 275.065, subdivisions 5a, 6, 6b, 8; 275.15;
2.57 275.61, subdivision 2; 283.07; 290.06, subdivision 23; 297E.12, subdivision 10;
2.58 469.1794, subdivision 6; 477A.08; Laws 1975, chapter 287, section 5; Laws
3.1 1998, chapter 389, article 3, section 41; Laws 2003, chapter 127, article 9, section
3.2 9, subdivision 4; Minnesota Rules, parts 8093.2000; 8093.3000; 8130.0110,
3.3 subpart 4; 8130.0200, subparts 5, 6; 8130.0400, subpart 9; 8130.1200, subparts
3.4 5, 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1, 2; 8130.4200,
3.5 subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600, subpart 3; 8130.5800,
3.6 subpart 5; 8130.7300, subpart 5; 8130.8800, subpart 4.
3.7 May 20, 2006
3.8 The Honorable Steve Sviggum
3.9 Speaker of the House of Representatives
3.10 The Honorable James P. Metzen
3.11 President of the Senate
3.12 We, the undersigned conferees for H. F. No. 785 report that we have agreed upon the
3.13 items in dispute and recommend as follows:
3.14 That the Senate recede from its amendments and that H. F. No. 785 be further
3.15 amended as follows:
3.16 Delete everything after the enacting clause and insert:
3.17 "ARTICLE 1
3.18 INCOME AND FRANCHISE TAXES
3.19 Section 1. Minnesota Statutes 2004, section 290.06, is amended by adding a
3.20 subdivision to read:
3.21 Subd. 36. Bovine testing credit. (a) An owner of cattle in Minnesota may take a
3.22 credit against the tax due under this chapter for an amount equal to one-half the expenses
3.23 incurred during the taxable year to conduct tuberculosis testing on those cattle.
3.24 (b) If the amount of credit which the taxpayer is eligible to receive under this
3.25 subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of
3.26 revenue shall refund the excess to the taxpayer.
3.27 (c) The amount necessary to pay claims for the refund provided in this subdivision is
3.28 appropriated from the general fund to the commissioner of revenue.
3.29 EFFECTIVE DATE.This section is effective for taxable years beginning after
3.30 December 31, 2005.
3.31 Sec. 2. [290.0677] MILITARY SERVICE CREDIT.
3.32 Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
3.33 due under this chapter equal to $59 for each month or portion thereof that the individual
3.34 was in active military service in a designated area after September 11, 2001, while a
3.35 Minnesota domiciliary.
3.36 (b) For active service performed after September 11, 2001, and before December 31,
3.37 2006, the individual may claim the credit in the taxable year beginning after December 31,
3.38 2005, and before January 1, 2007.
4.1 (c) For active service performed after December 31, 2006, the individual may claim
4.2 the credit for the taxable year in which the active service was performed.
4.3 (d) If a Minnesota domiciliary is killed while performing active military service in a
4.4 designated area, the individual’s surviving spouse or dependent child may take the credit
4.5 in the taxable year of the death. If a Minnesota domiciliary was killed while performing
4.6 active military service in a designated area between September 11, 2001, and December
4.7 31, 2006, the individual’s surviving spouse or dependent child may claim this credit in the
4.8 taxable year beginning after December 31, 2005, and before January 1, 2007.
4.9 Subd. 2. Definitions. (a) For purposes of this section the following terms have
4.10 the meanings given.
4.11 (b) "Designated area" means a:
4.12 (1) combat zone designated by Executive Order from the President of the United
4.13 States;
4.14 (2) qualified hazardous duty area, designated in Public Law; or
4.15 (3) location certified by the U. S. Department of Defense as eligible for combat zone
4.16 tax benefits due to the location's direct support of military operations.
4.17 (c) "Active military service" means active duty service in any of the United States
4.18 Armed Forces, the National Guard, or reserves.
4.19 Subd. 3. Credit refundable. If the amount of credit which the individual is eligible
4.20 to receive under this section exceeds the individual’s tax liability under this chapter, the
4.21 commissioner shall refund the excess to the individual.
4.22 Subd. 4. Appropriation. An amount sufficient to pay the refunds required by this
4.23 section is appropriated to the commissioner from the general fund.
4.24 EFFECTIVE DATE.This section is effective for taxable years beginning after
4.25 December 31, 2005.
4.26 Sec. 3. Minnesota Statutes 2004, section 290.091, subdivision 3, is amended to read:
4.27 Subd. 3. Exemption amount. (a) For purposes of computing the alternative
4.28 minimum tax, the exemption amount is:
4.29 (1) for taxable years beginning before January 1, 2006, the exemption determined
4.30 under section 55(d) of the Internal Revenue Code, as amended through December 31,
4.31 1992; and
4.32 (2) for taxable years beginning after December 31, 2005, $60,000 for married
4.33 couples filing joint returns, $30,000 for married individuals filing separate returns, estates,
4.34 and trusts, and $45,000 for unmarried individuals.
5.1 (b) The exemption amount determined under this subdivision is subject to the phase
5.2 out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum
5.3 taxable income as determined under this section must be substituted in the computation
5.4 of the phase out under section 55(d)(3).
5.5 (c) For taxable years beginning after December 31, 2006, the exemption amount
5.6 under paragraph (a), clause (2), must be adjusted for inflation. The commissioner shall
5.7 make the inflation adjustments in accordance with section 1(f) of the Internal Revenue
5.8 Code except that for the purposes of this subdivision the percentage increase must be
5.9 determined from the year starting September 1, 2005, and ending August 31, 2006, as the
5.10 base year for adjusting for inflation for the tax year beginning after December 31, 2006.
5.11 The determination of the commissioner under this subdivision is not a rule under the
5.12 Administrative Procedure Act.
5.13 EFFECTIVE DATE.This section is effective for taxable years beginning after
5.14 December 31, 2005.
5.15 Sec. 4. Minnesota Statutes 2004, section 290.17, subdivision 1, is amended to read:
5.16 Subdivision 1. Scope of allocation rules. (a) The income of resident individuals
5.17 is not subject to allocation outside this state. The allocation rules apply to nonresident
5.18 individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders
5.19 of corporations treated as "S" corporations under section 290.9725, and all corporations
5.20 not having such an election in effect. If a partnership or corporation would not otherwise
5.21 be subject to the allocation rules, but conducts a trade or business that is part of a
5.22 unitary business involving another legal entity that is subject to the allocation rules, the
5.23 partnership or corporation is subject to the allocation rules.
5.24 (b) Expenses, losses, and other deductions (referred to collectively in this paragraph
5.25 as "deductions") must be allocated along with the item or class of gross income to which
5.26 they are definitely related for purposes of assignment under this section or apportionment
5.27 under section 290.191, 290.20, or 290.36. Deductions not definitely related to any item
5.28 or class of gross income are assigned under subdivision 2, paragraph (e), are assigned to
5.29 the taxpayer's domicile.
5.30 (c) In the case of an individual who is a resident for only part of a taxable year,
5.31 the individual's income, gains, losses, and deductions from the distributive share of a
5.32 partnership, S corporation, trust, or estate are not subject to allocation outside this state
5.33 to the extent of the distributive share multiplied by a ratio, the numerator of which is
5.34 the number of days the individual was a resident of this state during the tax year of the
6.1 partnership, S corporation, trust, or estate, and the denominator of which is the number of
6.2 days in the taxable year of the partnership, S corporation, trust, or estate.
6.3 EFFECTIVE DATE.This section is effective the day following final enactment.
6.4 ARTICLE 2
6.5 FEDERAL UPDATE
6.6 Section 1. Minnesota Statutes 2005 Supplement, section 289A.02, subdivision 7,
6.7 is amended to read:
6.8 Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
6.9 Revenue Code" means the Internal Revenue Code of 1986, as amended through April
6.10 15, 2005 May 18, 2006.
6.11 EFFECTIVE DATE.This section is effective the day following final enactment.
6.12 Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19, is
6.13 amended to read:
6.14 Subd. 19. Net income. The term "net income" means the federal taxable income,
6.15 as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
6.16 date named in this subdivision, incorporating the federal effective dates of changes to the
6.17 Internal Revenue Code and any elections made by the taxpayer in accordance with the
6.18 Internal Revenue Code in determining federal taxable income for federal income tax
6.19 purposes, and with the modifications provided in subdivisions 19a to 19f.
6.20 In the case of a regulated investment company or a fund thereof, as defined in section
6.21 851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
6.22 company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
6.23 except that:
6.24 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
6.25 Revenue Code does not apply;
6.26 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
6.27 Revenue Code must be applied by allowing a deduction for capital gain dividends and
6.28 exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
6.29 Revenue Code; and
6.30 (3) the deduction for dividends paid must also be applied in the amount of any
6.31 undistributed capital gains which the regulated investment company elects to have treated
6.32 as provided in section 852(b)(3)(D) of the Internal Revenue Code.
6.33 The net income of a real estate investment trust as defined and limited by section
6.34 856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
6.35 taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
7.1 The net income of a designated settlement fund as defined in section 468B(d) of
7.2 the Internal Revenue Code means the gross income as defined in section 468B(b) of the
7.3 Internal Revenue Code.
7.4 The Internal Revenue Code of 1986, as amended through April 15, 2005 May 18,
7.5 2006, shall be in effect for taxable years beginning after December 31, 1996.
7.6 Except as otherwise provided, references to the Internal Revenue Code in
7.7 subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
7.8 the applicable year.
7.9 EFFECTIVE DATE.This section is effective the day following final enactment.
7.10 Sec. 3. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19a, is
7.11 amended to read:
7.12 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
7.13 trusts, there shall be added to federal taxable income:
7.14 (1)(i) interest income on obligations of any state other than Minnesota or a political
7.15 or governmental subdivision, municipality, or governmental agency or instrumentality
7.16 of any state other than Minnesota exempt from federal income taxes under the Internal
7.17 Revenue Code or any other federal statute; and
7.18 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
7.19 Code, except the portion of the exempt-interest dividends derived from interest income
7.20 on obligations of the state of Minnesota or its political or governmental subdivisions,
7.21 municipalities, governmental agencies or instrumentalities, but only if the portion of the
7.22 exempt-interest dividends from such Minnesota sources paid to all shareholders represents
7.23 95 percent or more of the exempt-interest dividends that are paid by the regulated
7.24 investment company as defined in section 851(a) of the Internal Revenue Code, or the
7.25 fund of the regulated investment company as defined in section 851(g) of the Internal
7.26 Revenue Code, making the payment; and
7.27 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
7.28 government described in section 7871(c) of the Internal Revenue Code shall be treated as
7.29 interest income on obligations of the state in which the tribe is located;
7.30 (2) the amount of income or sales and use taxes paid or accrued within the taxable
7.31 year under this chapter and the amount of taxes based on net income paid or sales and
7.32 use taxes paid to any other state or to any province or territory of Canada, to the extent
7.33 allowed as a deduction under section 63(d) of the Internal Revenue Code, but the addition
7.34 may not be more than the amount by which the itemized deductions as allowed under
7.35 section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
7.36 as defined in section 63(c) of the Internal Revenue Code minus the addition which would
8.1 have been required under clause (10) if the taxpayer had claimed the standard deduction.
8.2 For the purpose of this paragraph, the disallowance of itemized deductions under section
8.3 68 of the Internal Revenue Code of 1986, income or sales and use tax is the last itemized
8.4 deduction disallowed;
8.5 (3) the capital gain amount of a lump sum distribution to which the special tax under
8.6 section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
8.7 (4) the amount of income taxes paid or accrued within the taxable year under this
8.8 chapter and taxes based on net income paid to any other state or any province or territory
8.9 of Canada, to the extent allowed as a deduction in determining federal adjusted gross
8.10 income. For the purpose of this paragraph, income taxes do not include the taxes imposed
8.11 by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
8.12 (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
8.13 other than expenses or interest used in computing net interest income for the subtraction
8.14 allowed under subdivision 19b, clause (1);
8.15 (6) the amount of a partner's pro rata share of net income which does not flow
8.16 through to the partner because the partnership elected to pay the tax on the income under
8.17 section 6242(a)(2) of the Internal Revenue Code;
8.18 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
8.19 Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
8.20 in the taxable year generates a deduction for depreciation under section 168(k) and the
8.21 activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
8.22 the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
8.23 limited to excess of the depreciation claimed by the activity under section 168(k) over the
8.24 amount of the loss from the activity that is not allowed in the taxable year. In succeeding
8.25 taxable years when the losses not allowed in the taxable year are allowed, the depreciation
8.26 under section 168(k) is allowed;
8.27 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
8.28 Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
8.29 Revenue Code of 1986, as amended through December 31, 2003;
8.30 (9) to the extent deducted in computing federal taxable income, the amount of the
8.31 deduction allowable under section 199 of the Internal Revenue Code; and
8.32 (10) for tax years beginning after December 31, 2004, to the extent deducted in
8.33 computing federal taxable income, the amount by which the standard deduction allowed
8.34 under section 63(c) of the Internal Revenue Code exceeds the standard deduction
8.35 allowable under section 63(c) of the Internal Revenue Code of 1986, as amended through
8.36 December 31, 2003; and
9.1 (11) (10) the exclusion allowed under section 139A of the Internal Revenue Code
9.2 for federal subsidies for prescription drug plans.
9.3 EFFECTIVE DATE.This section is effective for taxable years beginning after
9.4 December 31, 2005.
9.5 Sec. 4. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is
9.6 amended to read:
9.7 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
9.8 there shall be added to federal taxable income:
9.9 (1) the amount of any deduction taken for federal income tax purposes for income,
9.10 excise, or franchise taxes based on net income or related minimum taxes, including but not
9.11 limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
9.12 another state, a political subdivision of another state, the District of Columbia, or any
9.13 foreign country or possession of the United States;
9.14 (2) interest not subject to federal tax upon obligations of: the United States, its
9.15 possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
9.16 state, any of its political or governmental subdivisions, any of its municipalities, or any
9.17 of its governmental agencies or instrumentalities; the District of Columbia; or Indian
9.18 tribal governments;
9.19 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
9.20 Revenue Code;
9.21 (4) the amount of any net operating loss deduction taken for federal income tax
9.22 purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
9.23 deduction under section 810 of the Internal Revenue Code;
9.24 (5) the amount of any special deductions taken for federal income tax purposes
9.25 under sections 241 to 247 and 965 of the Internal Revenue Code;
9.26 (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
9.27 clause (a), that are not subject to Minnesota income tax;
9.28 (7) the amount of any capital losses deducted for federal income tax purposes under
9.29 sections 1211 and 1212 of the Internal Revenue Code;
9.30 (8) the exempt foreign trade income of a foreign sales corporation under sections
9.31 921(a) and 291 of the Internal Revenue Code;
9.32 (9) the amount of percentage depletion deducted under sections 611 through 614 and
9.33 291 of the Internal Revenue Code;
9.34 (10) for certified pollution control facilities placed in service in a taxable year
9.35 beginning before December 31, 1986, and for which amortization deductions were elected
9.36 under section 169 of the Internal Revenue Code of 1954, as amended through December
10.1 31, 1985, the amount of the amortization deduction allowed in computing federal taxable
10.2 income for those facilities;
10.3 (11) the amount of any deemed dividend from a foreign operating corporation
10.4 determined pursuant to section 290.17, subdivision 4, paragraph (g);
10.5 (12) the amount of a partner's pro rata share of net income which does not flow
10.6 through to the partner because the partnership elected to pay the tax on the income under
10.7 section 6242(a)(2) of the Internal Revenue Code;
10.8 (13) the amount of net income excluded under section 114 of the Internal Revenue
10.9 Code;
10.10 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
10.11 Revenue Code, for the taxable year when subpart F income is calculated without regard to
10.12 the provisions of section 614 of Public Law 107-147 103 of Public Law 109-222;
10.13 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
10.14 and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
10.15 has an activity that in the taxable year generates a deduction for depreciation under
10.16 section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
10.17 that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
10.18 under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
10.19 depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
10.20 amount of the loss from the activity that is not allowed in the taxable year. In succeeding
10.21 taxable years when the losses not allowed in the taxable year are allowed, the depreciation
10.22 under section 168(k)(1)(A) and (k)(4)(A) is allowed;
10.23 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
10.24 Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
10.25 Revenue Code of 1986, as amended through December 31, 2003;
10.26 (17) to the extent deducted in computing federal taxable income, the amount of the
10.27 deduction allowable under section 199 of the Internal Revenue Code; and
10.28 (18) the exclusion allowed under section 139A of the Internal Revenue Code for
10.29 federal subsidies for prescription drug plans.
10.30 EFFECTIVE DATE.The amendment to clause (5) is effective at the same time as
10.31 the provisions of section 965 of the Internal Revenue Code. Clause (14) of this section is
10.32 effective for taxable years beginning after December 31, 2006.
10.33 Sec. 5. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 31, is
10.34 amended to read:
11.1 Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, "Internal
11.2 Revenue Code" means the Internal Revenue Code of 1986, as amended through April
11.3 15, 2005 May 18, 2006.
11.4 EFFECTIVE DATE.This section is effective the day following final enactment
11.5 except the changes incorporated by federal changes are effective at the same times as the
11.6 changes were effective for federal purposes.
11.7 Sec. 6. Minnesota Statutes 2005 Supplement, section 290.0675, subdivision 1, is
11.8 amended to read:
11.9 Subdivision 1. Definitions. (a) For purposes of this section the following terms
11.10 have the meanings given.
11.11 (b) "Earned income" means the sum of the following, to the extent included in
11.12 Minnesota taxable income:
11.13 (1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
11.14 (2) income received from a retirement pension, profit-sharing, stock bonus, or
11.15 annuity plan; and
11.16 (3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
11.17 Code.
11.18 (c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
11.19 (d) "Earned income of lesser-earning spouse" means the earned income of the
11.20 spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable
11.21 year minus the sum of (i) the amount for one exemption under section 151(d) of the
11.22 Internal Revenue Code and (ii) one-half the amount of the standard deduction under
11.23 section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition
11.24 required under section 290.01, subdivision 19a, clause (10), and one-half of the addition
11.25 which would have been required under section 290.01, subdivision 19a, clause (10), if the
11.26 taxpayer had claimed the standard deduction.
11.27 EFFECTIVE DATE.This section is effective for taxable years beginning after
11.28 December 31, 2005.
11.29 Sec. 7. Minnesota Statutes 2005 Supplement, section 290A.03, subdivision 15, is
11.30 amended to read:
11.31 Subd. 15. Internal Revenue Code. "Internal Revenue Code" means the Internal
11.32 Revenue Code of 1986, as amended through April 15, 2005 May 18, 2006.
11.33 EFFECTIVE DATE.This section is effective for property tax refunds based on
11.34 property taxes payable on or after December 31, 2005, and rent paid on or after December
11.35 31, 2004.
12.1 Sec. 8. Minnesota Statutes 2005 Supplement, section 291.005, subdivision 1, is
12.2 amended to read:
12.3 Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
12.4 terms used in this chapter shall have the following meanings:
12.5 (1) "Federal gross estate" means the gross estate of a decedent as valued and
12.6 otherwise determined for federal estate tax purposes by federal taxing authorities pursuant
12.7 to the provisions of the Internal Revenue Code.
12.8 (2) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
12.9 excluding therefrom any property included therein which has its situs outside Minnesota,
12.10 and (b) including therein any property omitted from the federal gross estate which is
12.11 includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
12.12 authorities.
12.13 (3) "Personal representative" means the executor, administrator or other person
12.14 appointed by the court to administer and dispose of the property of the decedent. If there
12.15 is no executor, administrator or other person appointed, qualified, and acting within this
12.16 state, then any person in actual or constructive possession of any property having a situs in
12.17 this state which is included in the federal gross estate of the decedent shall be deemed
12.18 to be a personal representative to the extent of the property and the Minnesota estate tax
12.19 due with respect to the property.
12.20 (4) "Resident decedent" means an individual whose domicile at the time of death
12.21 was in Minnesota.
12.22 (5) "Nonresident decedent" means an individual whose domicile at the time of
12.23 death was not in Minnesota.
12.24 (6) "Situs of property" means, with respect to real property, the state or country in
12.25 which it is located; with respect to tangible personal property, the state or country in which
12.26 it was normally kept or located at the time of the decedent's death; and with respect to
12.27 intangible personal property, the state or country in which the decedent was domiciled
12.28 at death.
12.29 (7) "Commissioner" means the commissioner of revenue or any person to whom the
12.30 commissioner has delegated functions under this chapter.
12.31 (8) "Internal Revenue Code" means the United States Internal Revenue Code of
12.32 1986, as amended through April 15, 2005 May 18, 2006.
12.33 (9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
12.34 defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of
12.35 deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
13.1 EFFECTIVE DATE.This section is effective for estates of decedents dying after
13.2 December 31, 2005.
13.3 ARTICLE 3
13.4 SALES AND USE TAX
13.5 Section 1. Minnesota Statutes 2005 Supplement, section 270C.722, subdivision 2,
13.6 is amended to read:
13.7 Subd. 2. New permits after revocation. (a) The commissioner shall not issue a
13.8 new permit after revocation or reinstate a revoked permit unless the taxpayer applies for a
13.9 permit and provides reasonable evidence of intention to comply with the sales and use
13.10 tax laws and rules. The commissioner may require the applicant to provide security, in
13.11 addition to that authorized by section 297A.92, in an amount reasonably necessary to
13.12 ensure compliance with the sales and use tax laws and rules. If the commissioner issues
13.13 or reinstates a permit not in conformance with the requirements of this subdivision or
13.14 applicable rules, the commissioner may cancel the permit upon notice to the permit holder.
13.15 The notice must be served by first class and certified mail at the permit holder's last known
13.16 address. The cancellation shall be effective immediately, subject to the right of the permit
13.17 holder to show that the permit was issued in conformance with the requirements of this
13.18 subdivision and applicable rules. Upon such showing, the permit must be reissued.
13.19 (b) If a taxpayer has had a permit or permits revoked three times in a five-year
13.20 period, the commissioner shall not may refuse to issue a new permit or reinstate the
13.21 revoked permit until 24 months have elapsed after revocation and the taxpayer has
13.22 satisfied the conditions for reinstatement of a revoked permit or issuance of a new permit
13.23 imposed by this section and rules adopted under this section.
13.24 (c) For purposes of this subdivision, "taxpayer" means:
13.25 (1) an individual, if a revoked permit was issued to or in the name of an individual,
13.26 or a corporation or partnership, if a revoked permit was issued to or in the name of a
13.27 corporation or partnership; and
13.28 (2) an officer of a corporation, a member of a partnership, or an individual who is
13.29 liable for delinquent sales taxes, either for the entity for which the new or reinstated
13.30 permit is at issue, or for another entity for which a permit was previously revoked, or
13.31 personally as a permit holder.
13.32 Sec. 2. Minnesota Statutes 2004, section 297A.71, is amended by adding a subdivision
13.33 to read:
13.34 Subd. 37. Hydroelectric generating facility. Materials and supplies used or
13.35 consumed in the construction of a 10.3 megawatt run-of-the-river hydroelectric generating
14.1 facility that meets the requirements of this subdivision are exempt. To qualify for the
14.2 exemption under this subdivision, a hydroelectric generating facility must:
14.3 (1) utilize between 12 and 16 turbine generators at a dam site existing on March
14.4 31, 1994;
14.5 (2) be located on land within 3,000 feet of a 13.8 kilovolt distribution circuit; and
14.6 (3) be eligible to receive a renewable energy production incentive payment under
14.7 section 216C.41.
14.8 EFFECTIVE DATE.This section is effective for sales and purchases made after
14.9 April 30, 2006, and on or before December 31, 2009.
14.10 Sec. 3. Laws 1996, chapter 471, article 2, section 29, subdivision 1, is amended to read:
14.11 Subdivision 1. Sales tax authorized. Notwithstanding Minnesota Statutes, section
14.12 477A.016, or any other contrary provision of law, ordinance, or city charter, the city of
14.13 Hermantown may, by ordinance, impose an additional sales tax of up to one percent
14.14 on sales transactions taxable pursuant to Minnesota Statutes, chapter 297A, that occur
14.15 within the city. The proceeds of the tax imposed under this section must be used to meet
14.16 the costs of:
14.17 (1) extending a sewer interceptor line;
14.18
14.19 (2) construction of a booster pump station, reservoirs, and related improvements
14.20 to the water system; and
14.21
14.22 (3) construction of a building containing a police and fire station and an
14.23 administrative services facility.
14.24
14.25 EFFECTIVE DATE.This section is effective the day following final enactment,
14.26 upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by the city of
14.27 Hermantown.
14.28 Sec. 4. Laws 1996, chapter 471, article 2, section 29, subdivision 4, is amended to read:
14.29 Subd. 4. Termination. The tax authorized under this section terminates at the later
14.30 of (1) ten years after the date of initial imposition of the tax, or (2) on the first day of the
14.31 second month next succeeding a determination by the city council that sufficient funds
14.32 have been received from the tax to finance the improvements described in subdivision 1,
14.33 clauses (1) to (3), and to prepay or retire at maturity the principal, interest, and premium
14.34 due on any bonds issued for the improvements on March 31, 2026. Any funds remaining
15.1 after completion of the improvements and retirement or redemption of the bonds may
15.2 be placed in the general fund of the city.
15.3 EFFECTIVE DATE.This section is effective the day following final enactment,
15.4 upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by the city of
15.5 Hermantown.
15.6 Sec. 5. Laws 2005, First Special Session chapter 3, article 5, section 14, the effective
15.7 date, is amended to read:
15.8 EFFECTIVE DATE.This section is effective for sales made after December 31,
15.9 2004, and on or before December 31, 2007 2009.
15.10 Sec. 6. Laws 2005, First Special Session chapter 3, article 5, section 38, subdivision 2,
15.11 is amended to read:
15.12 Subd. 2. Use of revenues. The proceeds of the tax imposed under this section shall
15.13 be used to pay for lake improvement projects as detailed in the Shell Rock River watershed
15.14 plan and as directed by the Shell Rock River Watershed Board. Notwithstanding any
15.15 provision of statute, other law, or city charter to the contrary, the city shall transfer all
15.16 revenues from the tax imposed under subdivision 1, as soon as they are received, to the
15.17 Shell Rock River Watershed District. The city is not required to review the intended uses
15.18 of the revenues by the watershed district, nor is the watershed district required to submit
15.19 to the city proposed budgets, statements, or invoices explaining the intended uses of the
15.20 revenues as a prerequisite for the transfer of the revenues.
15.21 EFFECTIVE DATE.This section is effective the day after compliance by the
15.22 governing body of the city of Albert Lea with Minnesota Statutes, section 645.021,
15.23 subdivision 3.
15.24 Sec. 7. Laws 2005, First Special Session chapter 3, article 5, section 43, subdivision 3,
15.25 is amended to read:
15.26 Subd. 3. Use of revenues. Revenues received from the taxes authorized by
15.27 subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation
15.28 contained in the Minnesota Department of Transportation's Winona Intermodal study
15.29 dated June 2002 and in the resolution approved by the city council on January 3, 2005,
15.30 and all or a part of the capital costs of flood control projects, up to $1,200,000, approved
15.31 by resolution of the city council on February 6, 2006, including securing or paying debt
15.32 service on bonds issued under subdivision 4, for the transportation and flood control
15.33 projects and to pay the cost of collecting and administering the tax. Authorized costs
15.34 include, but are not limited to, acquiring property and paying construction and engineering
15.35 costs related to the projects.
16.1 EFFECTIVE DATE.This section is effective the day after the governing body of
16.2 the city of Winona and its chief clerical officer comply with Minnesota Statutes, section
16.3 645.021, subdivisions 2 and 3.
16.4 Sec. 8. Laws 2005, First Special Session chapter 3, article 5, section 44, subdivision 1,
16.5 is amended to read:
16.6 Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section
16.7 477A.016, or any other provision of law, ordinance, or city charter, if approved by the
16.8 voters pursuant to Minnesota Statutes, section 297A.99, at the next a general election
16.9 held before January 1, 2008, the city of Worthington may impose by ordinance a sales
16.10 and use tax of up to one-half of one percent for the purpose specified in subdivision 3.
16.11 Except as otherwise provided in this section, the provisions of Minnesota Statutes, section
16.12 297A.99, govern the imposition, administration, collection, and enforcement of the tax
16.13 authorized under this subdivision.
16.14 EFFECTIVE DATE.This section is effective the day following final enactment.
16.15 Sec. 9. CITY OF AUSTIN; TAXES AUTHORIZED.
16.16 Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section
16.17 477A.016, or any other provision of law, ordinance, or city charter, if approved by the
16.18 voters pursuant to Minnesota Statutes, section 297A.99, at the next general election or
16.19 special election held for that purpose before January 1, 2007, the city of Austin may
16.20 impose by ordinance a sales and use tax of up to one-half of one percent for the purpose
16.21 specified in subdivision 2. Except as otherwise provided in this section, the provisions of
16.22 Minnesota Statutes, section 297A.99, govern the imposition, administration, collection,
16.23 and enforcement of the tax authorized under this subdivision.
16.24 Subd. 2. Use of revenues. Revenues received from taxes authorized by subdivision
16.25 1 must be used by the city of Austin to pay all or part of the capital or administrative costs
16.26 of flood mitigation projects in the city of Austin. Authorized expenses include, but are not
16.27 limited to, acquiring property and paying construction and engineering expenses related
16.28 to the flood mitigation projects.
16.29 Subd. 3. Bonding authority. Pursuant to the approval of the city voters to impose
16.30 the tax authorized in subdivision 1, the city of Austin may issue, without an additional
16.31 election, general obligation bonds of the city in an amount not to exceed $14,000,000 to
16.32 finance the costs for the projects specified in subdivision 2. The debt represented by the
16.33 bonds must not be included in computing any debt limitations applicable to the city, and
16.34 the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or
16.35 any interest on the bonds must not be subject to any levy limitation.
17.1 Subd. 4. Termination of tax. The tax authorized under subdivision 1 terminates at
17.2 the earlier of:
17.3 (1) 20 years after the date of initial imposition of the tax; or
17.4 (2) when the Austin City Council determines that the amount described in
17.5 subdivision 2 has been received from the tax to finance the capital and administrative costs
17.6 for the projects specified in subdivision 2, and to repay or retire at maturity, the principal,
17.7 interest, and premium due on any bonds issued for the projects under subdivision 3.
17.8 Any funds remaining after completion of the projects specified in subdivision 2, and
17.9 retirement or redemption of the bonds in subdivision 3, may be placed in the general fund
17.10 of the city. The tax imposed under subdivision 1 may expire at an earlier time if the
17.11 city so determines by ordinance.
17.12 EFFECTIVE DATE.This section is effective the day after the governing body of
17.13 the city of Austin and its chief clerical officer comply with Minnesota Statutes, section
17.14 645.021, subdivisions 2 and 3.
17.15 Sec. 10. CITY OF BAXTER; TAXES AUTHORIZED.
17.16 Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
17.17 section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to
17.18 the approval of the voters on November 2, 2004, and pursuant to Minnesota Statutes,
17.19 section 297A.99, the city of Baxter may impose by ordinance a sales and use tax of
17.20 one-half of one percent for the purposes specified in subdivision 3. The provisions of
17.21 Minnesota Statutes, section 297A.99, govern the imposition, administration, collection,
17.22 and enforcement of the tax authorized under this subdivision.
17.23 Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section
17.24 477A.016, or any other contrary provision of law, ordinance, or city charter, the city of
17.25 Baxter may impose by ordinance, for the purposes specified in subdivision 3, an excise tax
17.26 of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any
17.27 person engaged within the city of Baxter in the business of selling motor vehicles at retail.
17.28 Subd. 3. Use of revenues. Revenues received from the taxes authorized by
17.29 subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax
17.30 and to finance the acquisition and betterment of water and wastewater facilities to serve the
17.31 cities of Brainerd and Baxter, building and equipping a fire substation, as approved by the
17.32 voters at the referendum authorizing the tax. Authorized costs include, but are not limited
17.33 to, acquiring property and paying construction and engineering costs related to the projects.
17.34 Subd. 4. Bonds. The city of Baxter, pursuant to the approval of the voters at the
17.35 November 2, 2004, referendum authorizing the imposition of the taxes in this section, may
18.1 issue general obligation bonds of the city, in one or more series, in the aggregate principal
18.2 amount not to exceed $15,000,000 to finance the projects listed in subdivision 3. The debt
18.3 represented by the bonds is not included in computing any debt limitations applicable to
18.4 the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the
18.5 principal of and interest on the bonds is not subject to any levy limitation or included in
18.6 computing or applying any levy limitation applicable to the city of Baxter.
18.7 Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2
18.8 expire at the earlier of a date 12 years after the imposition of the tax or when the Baxter
18.9 City Council first determines that the amount of revenues raised from the taxes to pay for
18.10 the projects under subdivision 3 equals or exceeds $15,000,000 plus any interest on bonds
18.11 issued for the projects under subdivision 4. Any funds remaining after the expiration of
18.12 the taxes and retirement of the bonds shall be placed in a capital project fund of the city of
18.13 Baxter. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the
18.14 city of Baxter so determines by ordinance.
18.15 EFFECTIVE DATE.This section is effective the day after the governing body of
18.16 the city of Baxter and its chief clerical officer comply with Minnesota Statutes, section
18.17 645.021, subdivisions 2 and 3.
18.18 Sec. 11. CITY OF BRAINERD; TAXES AUTHORIZED.
18.19 Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
18.20 section 477A.016, or any other provision of law, ordinance, or city charter, contingent
18.21 on the approval of the voters on the November 7, 2006, referendum, and pursuant to
18.22 Minnesota Statutes, section 297A.99, the city of Brainerd may impose by ordinance a sales
18.23 and use tax of one-half of one percent for the purposes specified in subdivision 3. The
18.24 provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration,
18.25 collection, and enforcement of the tax authorized under this section.
18.26 Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section
18.27 477A.016, or any other provision of law, ordinance, or city charter, the city of Brainerd
18.28 may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up
18.29 to $20 per motor vehicle, as defined by ordinance, purchased, or acquired from any person
18.30 engaged within the city of Brainerd in the business of selling motor vehicles at retail.
18.31 Subd. 3. Use of revenues. Revenues received from the taxes authorized by
18.32 subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax
18.33 and to finance all or part of the costs of constructing upgraded water and wastewater
18.34 treatment facilities to serve the cities of Brainerd and Baxter, water infrastructure
18.35 improvements, and trail development, contingent on approval by Brainerd voters at the
19.1 November 7, 2006, referendum. Authorized costs include, but are not limited to, acquiring
19.2 property and paying construction and engineering costs related to the projects.
19.3 Subd. 4. Bonds. The city of Brainerd, contingent on approval of the voters at the
19.4 November 7, 2006, referendum authorizing the imposition of taxes in this section, may
19.5 issue general obligation bonds of the city, in one or more series, in the aggregate principal
19.6 amount not to exceed $22,030,000 to finance the projects listed in subdivision 3. The debt
19.7 represented by the bonds is not included in computing any debt limitations applicable to
19.8 Brainerd, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the
19.9 principal and interest on the bonds is not subject to any levy limitation or included in
19.10 computing any levy limitation applicable to the city of Brainerd.
19.11 Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2
19.12 expire at the earlier of a date 12 years after the imposition of the tax or when the city
19.13 council first determines that the amount of revenues raised from the taxes to pay for
19.14 projects under subdivision 3 equals or exceeds $22,030,000 plus any interest on bonds
19.15 issued for the projects under subdivision 4. Any funds remaining after the expiration of
19.16 the taxes and retirement of the bonds shall be placed in a capital project fund of the city of
19.17 Brainerd. The taxes imposed under subdivision 1 and 2 may expire at an earlier time if the
19.18 city of Brainerd so determines by ordinance.
19.19 EFFECTIVE DATE.This section is effective the day after the governing body of
19.20 the city of Brainerd and its chief clerical officer comply with Minnesota Statutes, section
19.21 645.021, subdivisions 2 and 3.
19.22 Sec. 12. CITY OF OWATONNA; TAXES AUTHORIZED.
19.23 Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes,
19.24 section 477A.016, or any other provision of law, ordinance, or city charter, if approved by
19.25 the voters at the next general election pursuant to Minnesota Statutes, section 297A.99,
19.26 the city of Owatonna may impose by ordinance a sales and use tax of one-half of one
19.27 percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes,
19.28 section 297A.99, govern the imposition, administration, collection, and enforcement of
19.29 the taxes authorized under this subdivision.
19.30 Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section
19.31 477A.016, or any other provision of law, ordinance, or city charter, the city of Owatonna
19.32 may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of
19.33 $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person
19.34 engaged within the city in the business of selling motor vehicles at retail.
20.1 Subd. 3. Use of revenues. Revenues received from the taxes authorized by
20.2 subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation
20.3 projects included in the 2004 U.S. Highway 14-Owatonna Beltline Study by the Minnesota
20.4 Department of Transportation, Steele County, and the city of Owatonna; regional parks
20.5 and trail developments; and the West Hills complex, including the firehall, and library
20.6 improvement projects; as described in the city resolution No. 4-06, Exhibit A, as adopted
20.7 by the city on January 17, 2006. The amount paid from these revenues for transportation
20.8 projects may not exceed $4,450,000 plus associated bond costs. The amount paid from
20.9 these revenues for park and trail projects may not exceed $5,400,000 plus associated bond
20.10 costs. The amount paid from these revenues for West Hills complex, fire hall, and library
20.11 improvement projects may not exceed $2,823,000 plus associated bond costs.
20.12 Subd. 4. Bonds. (a) The city of Owatonna, if approved by voters pursuant to
20.13 Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter
20.14 475, to pay capital and administrative expenses for the projects described in subdivision 3,
20.15 in an amount that does not exceed $12,700,000. A separate election to approve the bonds
20.16 under Minnesota Statutes, section 475.58, is not required.
20.17 (b) The debt represented by the bonds is not included in computing any debt
20.18 limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section
20.19 475.61, to pay principal and interest on the bonds, is not subject to any levy limitation.
20.20 Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2
20.21 expire at the earlier of (1) ten years after the tax is first imposed, or (2) when the city
20.22 council determines that the amount of revenues received from the taxes to pay for the
20.23 projects under subdivision 3 first equals or exceeds the amount authorized to be spent for
20.24 each project plus the additional amount needed to pay the costs related to issuance of the
20.25 bonds under subdivision 4, including interest on the bonds. Any funds remaining after
20.26 completion of the projects and retirement or redemption of the bonds shall be placed in
20.27 a capital project fund of the city. The taxes imposed under sections 1 and 2 may expire
20.28 at an earlier time if the city so determines by ordinance.
20.29 EFFECTIVE DATE.This section is effective the day after compliance by the
20.30 governing body of the city of Owatonna with Minnesota Statutes, section 645.021,
20.31 subdivision 3.
20.32 ARTICLE 4
20.33 PROPERTY TAXES
20.34 Section 1. Minnesota Statutes 2004, section 116J.993, subdivision 3, is amended to
20.35 read:
21.1 Subd. 3. Business subsidy. "Business subsidy" or "subsidy" means a state or local
21.2 government agency grant, contribution of personal property, real property, infrastructure,
21.3 the principal amount of a loan at rates below those commercially available to the recipient,
21.4 any reduction or deferral of any tax or any fee, any guarantee of any payment under any
21.5 loan, lease, or other obligation, or any preferential use of government facilities given
21.6 to a business.
21.7 The following forms of financial assistance are not a business subsidy:
21.8 (1) a business subsidy of less than $25,000;
21.9 (2) assistance that is generally available to all businesses or to a general class of
21.10 similar businesses, such as a line of business, size, location, or similar general criteria;
21.11 (3) public improvements to buildings or lands owned by the state or local
21.12 government that serve a public purpose and do not principally benefit a single business or
21.13 defined group of businesses at the time the improvements are made;
21.14 (4) redevelopment property polluted by contaminants as defined in section 116J.552,
21.15 subdivision 3;
21.16 (5) assistance provided for the sole purpose of renovating old or decaying building
21.17 stock or bringing it up to code and assistance provided for designated historic preservation
21.18 districts, provided that the assistance is equal to or less than 50 percent of the total cost;
21.19 (6) assistance to provide job readiness and training services if the sole purpose of
21.20 the assistance is to provide those services;
21.21 (7) assistance for housing;
21.22 (8) assistance for pollution control or abatement, including assistance for a tax
21.23 increment financing hazardous substance subdistrict as defined under section 469.174,
21.24 subdivision 23;
21.25 (9) assistance for energy conservation;
21.26 (10) tax reductions resulting from conformity with federal tax law;
21.27 (11) workers' compensation and unemployment insurance;
21.28 (12) benefits derived from regulation;
21.29 (13) indirect benefits derived from assistance to educational institutions;
21.30 (14) funds from bonds allocated under chapter 474A, bonds issued to refund
21.31 outstanding bonds, and bonds issued for the benefit of an organization described in section
21.32 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999;
21.33 (15) assistance for a collaboration between a Minnesota higher education institution
21.34 and a business;
21.35 (16) assistance for a tax increment financing soils condition district as defined under
21.36 section 469.174, subdivision 19;
22.1 (17) redevelopment when the recipient's investment in the purchase of the site
22.2 and in site preparation is 70 percent or more of the assessor's current year's estimated
22.3 market value;
22.4 (18) general changes in tax increment financing law and other general tax law
22.5 changes of a principally technical nature;
22.6 (19) federal assistance until the assistance has been repaid to, and reinvested by, the
22.7 state or local government agency;
22.8 (20) funds from dock and wharf bonds issued by a seaway port authority;
22.9 (21) business loans and loan guarantees of $75,000 or less; and
22.10 (22) federal loan funds provided through the United States Department of
22.11 Commerce, Economic Development Administration; and
22.12 (23) property tax abatements granted under section 469.1813 to property that is
22.13 subject to valuation under Minnesota Rules, chapter 8100.
22.14 Sec. 2. Minnesota Statutes 2005 Supplement, section 126C.17, subdivision 9, is
22.15 amended to read:
22.16 Subd. 9. Referendum revenue. (a) The revenue authorized by section 126C.10,
22.17 subdivision 1, may be increased in the amount approved by the voters of the district at a
22.18 referendum called for the purpose. The referendum may be called by the board or shall be
22.19 called by the board upon written petition of qualified voters of the district. The referendum
22.20 must be conducted one or two calendar years before the increased levy authority, if
22.21 approved, first becomes payable. Only one election to approve an increase may be held
22.22 in a calendar year. Unless the referendum is conducted by mail under paragraph (g), the
22.23 referendum must be held on the first Tuesday after the first Monday in November. The
22.24 ballot must state the maximum amount of the increased revenue per resident marginal cost
22.25 pupil unit. The ballot may state a schedule, determined by the board, of increased revenue
22.26 per resident marginal cost pupil unit that differs from year to year over the number of
22.27 years for which the increased revenue is authorized or may state that the amount shall
22.28 increase annually by the rate of inflation. For this purpose, the rate of inflation shall be the
22.29 annual inflationary increase calculated under subdivision 2, paragraph (b). The ballot may
22.30 state that existing referendum levy authority is expiring. In this case, the ballot may also
22.31 compare the proposed levy authority to the existing expiring levy authority, and express
22.32 the proposed increase as the amount, if any, over the expiring referendum levy authority.
22.33 The ballot must designate the specific number of years, not to exceed ten, for which the
22.34 referendum authorization applies. The ballot, including a ballot on the question to revoke
22.35 or reduce the increased revenue amount under paragraph (c), must abbreviate the term
23.1 "per resident marginal cost pupil unit" as "per pupil." The notice required under section
23.2 275.60 may be modified to read, in cases of renewing existing levies:
23.3 "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING
23.4 FOR A PROPERTY TAX INCREASE."
23.5 The ballot may contain a textual portion with the information required in this
23.6 subdivision and a question stating substantially the following:
23.7 "Shall the increase in the revenue proposed by (petition to) the board of .........,
23.8 School District No. .., be approved?"
23.9 If approved, an amount equal to the approved revenue per resident marginal cost
23.10 pupil unit times the resident marginal cost pupil units for the school year beginning in
23.11 the year after the levy is certified shall be authorized for certification for the number of
23.12 years approved, if applicable, or until revoked or reduced by the voters of the district at a
23.13 subsequent referendum.
23.14 (b) The board must prepare and deliver by first class mail at least 15 days but no more
23.15 than 30 days before the day of the referendum to each taxpayer a notice of the referendum
23.16 and the proposed revenue increase. The board need not mail more than one notice to any
23.17 taxpayer. For the purpose of giving mailed notice under this subdivision, owners must be
23.18 those shown to be owners on the records of the county auditor or, in any county where
23.19 tax statements are mailed by the county treasurer, on the records of the county treasurer.
23.20 Every property owner whose name does not appear on the records of the county auditor
23.21 or the county treasurer is deemed to have waived this mailed notice unless the owner
23.22 has requested in writing that the county auditor or county treasurer, as the case may be,
23.23 include the name on the records for this purpose. The notice must project the anticipated
23.24 amount of tax increase in annual dollars for typical residential homesteads, agricultural
23.25 homesteads, apartments, and commercial-industrial property within the school district.
23.26 The notice for a referendum may state that an existing referendum levy is expiring
23.27 and project the anticipated amount of increase over the existing referendum levy in
23.28 the first year, if any, in annual dollars for typical residential homesteads, agricultural
23.29 homesteads, apartments, and commercial-industrial property within the district.
23.30 The notice must include the following statement: "Passage of this referendum will
23.31 result in an increase in your property taxes." However, in cases of renewing existing
23.32 levies, the notice may include the following statement: "Passage of this referendum may
23.33 result in an increase in your property taxes."
23.34 (c) A referendum on the question of revoking or reducing the increased revenue
23.35 amount authorized pursuant to paragraph (a) may be called by the board and shall be called
23.36 by the board upon the written petition of qualified voters of the district. A referendum to
24.1 revoke or reduce the revenue amount must state the amount per resident marginal cost
24.2 pupil unit by which the authority is to be reduced. Revenue authority approved by the
24.3 voters of the district pursuant to paragraph (a) must be available to the school district at
24.4 least once before it is subject to a referendum on its revocation or reduction for subsequent
24.5 years. Only one revocation or reduction referendum may be held to revoke or reduce
24.6 referendum revenue for any specific year and for years thereafter.
24.7 (d) A petition authorized by paragraph (a) or (c) is effective if signed by a number of
24.8 qualified voters in excess of 15 percent of the registered voters of the district on the day
24.9 the petition is filed with the board. A referendum invoked by petition must be held on the
24.10 date specified in paragraph (a).
24.11 (e) The approval of 50 percent plus one of those voting on the question is required to
24.12 pass a referendum authorized by this subdivision.
24.13 (f) At least 15 days before the day of the referendum, the district must submit a
24.14 copy of the notice required under paragraph (b) to the commissioner and to the county
24.15 auditor of each county in which the district is located. Within 15 days after the results
24.16 of the referendum have been certified by the board, or in the case of a recount, the
24.17 certification of the results of the recount by the canvassing board, the district must notify
24.18 the commissioner of the results of the referendum.
24.19 EFFECTIVE DATE.This section is effective for referenda conducted on or after
24.20 July 1, 2006.
24.21 Sec. 3. Minnesota Statutes 2004, section 144F.01, subdivision 4, is amended to read:
24.22 Subd. 4. Property tax levy authority. The district's board may levy a tax on
24.23 the taxable real and personal property in the district. The ad valorem tax levy may not
24.24 exceed 0.048 percent of the taxable market value of the district or $250,000 $400,000,
24.25 whichever is less. The proceeds of the levy must be used as provided in subdivision 5.
24.26 The board shall certify the levy at the times as provided under section 275.07. The board
24.27 shall provide the county with whatever information is necessary to identify the property
24.28 that is located within the district. If the boundaries include a part of a parcel, the entire
24.29 parcel shall be included in the district. The county auditors must spread, collect, and
24.30 distribute the proceeds of the tax at the same time and in the same manner as provided by
24.31 law for all other property taxes.
24.32 Sec. 4. Minnesota Statutes 2004, section 216B.2424, subdivision 5, is amended to read:
24.33 Subd. 5. Mandate. (a) A public utility, as defined in section 216B.02, subdivision 4,
24.34 that operates a nuclear-powered electric generating plant within this state must construct
24.35 and operate, purchase, or contract to construct and operate (1) by December 31, 1998,
25.1 50 megawatts of electric energy installed capacity generated by farm-grown closed-loop
25.2 biomass scheduled to be operational by December 31, 2001; and (2) by December 31,
25.3 1998, an additional 75 megawatts of installed capacity so generated scheduled to be
25.4 operational by December 31, 2002.
25.5 (b) Of the 125 megawatts of biomass electricity installed capacity required under
25.6 this subdivision, no more than 55 megawatts of this capacity may be provided by a facility
25.7 that uses poultry litter as its primary fuel source and any such facility:
25.8 (1) need not use biomass that complies with the definition in subdivision 1;
25.9 (2) must enter into a contract with the public utility for such capacity, that has an
25.10 average purchase price per megawatt hour over the life of the contract that is equal to or
25.11 less than the average purchase price per megawatt hour over the life of the contract in
25.12 contracts approved by the Public Utilities Commission before April 1, 2000, to satisfy
25.13 the mandate of this section, and file that contract with the Public Utilities Commission
25.14 prior to September 1, 2000; and
25.15 (3) must schedule such capacity to be operational by December 31, 2002.
25.16 (c) Of the total 125 megawatts of biomass electric energy installed capacity required
25.17 under this section, no more than 75 megawatts may be provided by a single project.
25.18 (d) Of the 75 megawatts of biomass electric energy installed capacity required under
25.19 paragraph (a), clause (2), no more than 33 megawatts of this capacity may be provided by
25.20 a St. Paul district heating and cooling system cogeneration facility utilizing waste wood
25.21 as a primary fuel source. The St. Paul district heating and cooling system cogeneration
25.22 facility need not use biomass that complies with the definition in subdivision 1.
25.23 (e) The public utility must accept and consider on an equal basis with other biomass
25.24 proposals:
25.25 (1) a proposal to satisfy the requirements of this section that includes a project that
25.26 exceeds the megawatt capacity requirements of either paragraph (a), clause (1) or (2), and
25.27 that proposes to sell the excess capacity to the public utility or to other purchasers; and
25.28 (2) a proposal for a new facility to satisfy more than ten but not more than 20
25.29 megawatts of the electrical generation requirements by a small business-sponsored
25.30 independent power producer facility to be located within the northern quarter of the state,
25.31 which means the area located north of Constitutional Route No. 8 as described in section
25.32 161.114, subdivision 2, and that utilizes biomass residue wood, sawdust, bark, chipped
25.33 wood, or brush to generate electricity. A facility described in this clause is not required
25.34 to utilize biomass complying with the definition in subdivision 1, but must be under
25.35 construction by December 31, 2005.
26.1 (f) If a public utility files a contract with the commission for electric energy installed
26.2 capacity that uses poultry litter as its primary fuel source, the commission must do a
26.3 preliminary review of the contract to determine if it meets the purchase price criteria
26.4 provided in paragraph (b), clause (2), of this subdivision. The commission shall perform
26.5 its review and advise the parties of its determination within 30 days of filing of such a
26.6 contract by a public utility. A public utility may submit by September 1, 2000, a revised
26.7 contract to address the commission's preliminary determination.
26.8 (g) The commission shall finally approve, modify, or disapprove no later than July
26.9 1, 2001, all contracts submitted by a public utility as of September 1, 2000, to meet the
26.10 mandate set forth in this subdivision.
26.11 (h) If a public utility subject to this section exercises an option to increase the
26.12 generating capacity of a project in a contract approved by the commission prior to April
26.13 25, 2000, to satisfy the mandate in this subdivision, the public utility must notify the
26.14 commission by September 1, 2000, that it has exercised the option and include in the
26.15 notice the amount of additional megawatts to be generated under the option exercised.
26.16 Any review by the commission of the project after exercise of such an option shall be
26.17 based on the same criteria used to review the existing contract.
26.18 (i) A facility specified in this subdivision qualifies for exemption from property
26.19 taxation under section 272.02, subdivision 43 45.
26.20 EFFECTIVE DATE.This section is effective for property taxes levied in 2006,
26.21 payable in 2007, and thereafter.
26.22 Sec. 5. Minnesota Statutes 2004, section 272.02, subdivision 45, is amended to read:
26.23 Subd. 45. Biomass electrical generation facility; personal property.
26.24 Notwithstanding subdivision 9, clause (a), attached machinery and other personal property
26.25 which is part of an electrical generating facility that meets the requirements of this
26.26 subdivision is exempt. At the time of construction, the facility must:
26.27 (1) be designed to utilize biomass as established in section 216B.2424 as a primary
26.28 fuel source; and
26.29 (2) be constructed for the purpose of generating power at the facility that will be sold
26.30 pursuant to a contract approved by the Public Utilities Commission in accordance with
26.31 the biomass mandate imposed under section 216B.2424.
26.32 Construction of the facility must be commenced after January 1, 2000, and before
26.33 December 31, 2002 2005. Property eligible for this exemption does not include electric
26.34 transmission lines and interconnections or gas pipelines and interconnections appurtenant
26.35 to the property or facility.
27.1 EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable
27.2 in 2007, and thereafter.
27.3 Sec. 6. Minnesota Statutes 2005 Supplement, section 272.02, subdivision 53, is
27.4 amended to read:
27.5 Subd. 53. Electric generation facility; personal property. Notwithstanding
27.6 subdivision 9, clause (a), attached machinery and other personal property which is part
27.7 of a 3.2 megawatt run-of-the-river hydroelectric generation facility and that meets the
27.8 requirements of this subdivision is exempt. At the time of construction, the facility must:
27.9 (1) utilize two turbine generators at a dam site existing on March 31, 1994;
27.10 (2) be located on land within 1,500 feet of a 13.8 kilovolt distribution substation; and
27.11 (3) be eligible to receive a renewable energy production incentive payment under
27.12 section 216C.41.
27.13 Construction of the facility must be commenced after December 31, 2004, and
27.14 before January 1, 2007 2009. Property eligible for this exemption does not include electric
27.15 transmission lines and interconnections or gas pipelines and interconnections appurtenant
27.16 to the property or the facility.
27.17 EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable
27.18 in 2007, and thereafter.
27.19 Sec. 7. Minnesota Statutes 2004, section 272.02, subdivision 54, is amended to read:
27.20 Subd. 54. Small biomass electric generation facility; personal property. (a)
27.21 Subject to paragraph (b), notwithstanding subdivision 9, clause (a), attached machinery
27.22 and other personal property which is part of an electrical generating facility that meets the
27.23 requirements of this subdivision is exempt. At the time of construction the facility must:
27.24 (1) have a generation capacity of less than 25 megawatts;
27.25 (2) provide process heating needs in addition to electrical generation; and
27.26 (3) utilize agricultural by-products from the malting process and other biomass
27.27 fuels as its primary fuel source.
27.28 Construction of the facility must be commenced after January 1, 2002, and before
27.29 January 1, 2006 January 1, 2008. Property eligible for this exemption does not include
27.30 electric transmission lines and interconnections or gas pipelines and interconnections
27.31 appurtenant to the property or facility.
27.32 (b) The exemption under this subdivision is contingent on approval by the governing
27.33 bodies of the municipality and county in which the electric generation facility is located.
27.34 EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable
27.35 in 2009, and thereafter.
28.1 Sec. 8. Minnesota Statutes 2004, section 272.02, subdivision 55, is amended to read:
28.2 Subd. 55. Electric generation facility; personal property. Notwithstanding
28.3 subdivision 9, clause (a), attached machinery and other personal property which is part of
28.4 an electric generating facility that meets the requirements of this subdivision is exempt. At
28.5 the time of construction, the facility must be sited on an energy park that (i) is located on
28.6 an active mining site, or on a former mining or industrial site where mining or industrial
28.7 operations have terminated be designated as an innovative energy project as defined in
28.8 section 216B.1694, (ii) is be within a tax relief area as defined in section 273.134, (iii)
28.9 has on-site have access to existing railroad infrastructure within less than three miles, (iv)
28.10 has direct rail access to a Great Lakes port, (v) has sufficient private water resources
28.11 on site, and (vi) is have received by resolution approval from the governing body of
28.12 the county and township or city in which the proposed facility is to be located for the
28.13 exemption of personal property under this subdivision, and (v) be designed to host at
28.14 least 500 megawatts of electrical generation.
28.15 Construction of the first 250 500 megawatts of the facility must be commenced
28.16 after January 1, 2002 2006, and before January 1, 2005 2010. Construction of up to an
28.17 additional 750 megawatts of generation must be commenced before January 1, 2010
28.18 2015. Property eligible for this exemption does not include electric transmission lines and
28.19 interconnections or gas pipelines and interconnections appurtenant to the property or the
28.20 facility. To qualify for an exemption under this subdivision, the owner of the electric
28.21 generation facility must have an agreement with the host county, township or city, and
28.22 school district, for payment in lieu of personal property taxes to the host county, township
28.23 or city, and school district.
28.24 EFFECTIVE DATE.This section is effective the day following final enactment.
28.25 Sec. 9. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision
28.26 to read:
28.27 Subd. 84. Electric generation facility; personal property. Notwithstanding
28.28 subdivision 9, clause (a), attached machinery and other personal property which is part
28.29 of a 10.3 megawatt run-of-the-river hydroelectric generation facility and that meets the
28.30 requirements of this subdivision is exempt. At the time of construction, the facility must:
28.31 (1) utilize between 12 and 16 turbine generators at a dam site existing on March
28.32 31, 1994;
28.33 (2) be located on land within 3,000 feet of a 13.8 kilovolt distribution substation; and
28.34 (3) be eligible to receive a renewable energy production incentive payment under
28.35 section 216C.41.
29.1 Construction of the facility must be commenced after April 30, 2006, and
29.2 before January 1, 2009. Property eligible for this exemption does not include electric
29.3 transmission lines and interconnections or gas pipelines and interconnections appurtenant
29.4 to the property or the facility.
29.5 EFFECTIVE DATE.This section is effective for property taxes levied in 2006,
29.6 payable in 2007, and thereafter.
29.7 Sec. 10. Minnesota Statutes 2004, section 272.029, subdivision 2, is amended to read:
29.8 Subd. 2. Definitions. (a) For the purposes of this section, the term:
29.9 (1) "wind energy conversion system" has the meaning given it in section 216C.06,
29.10 subdivision 19, and also includes a substation that is used and owned by one or more
29.11 wind energy conversion facilities;
29.12 (2) "large scale wind energy conversion system" means a wind energy conversion
29.13 system of more than 12 megawatts, as measured by the nameplate capacity of the system
29.14 or as combined with other systems as provided in paragraph (b);
29.15 (3) "medium scale wind energy conversion system" means a wind energy conversion
29.16 system of over two and not more than 12 megawatts, as measured by the nameplate
29.17 capacity of the system or as combined with other systems as provided in paragraph (b); and
29.18 (4) "small scale wind energy conversion system" means a wind energy conversion
29.19 system of two megawatts and under, as measured by the nameplate capacity of the system
29.20 or as combined with other systems as provided in paragraph (b).
29.21 (b) For systems installed and contracted for after January 1, 2002, the total size of a
29.22 wind energy conversion system under this subdivision shall be determined according to
29.23 this paragraph. Unless the systems are interconnected with different distribution systems,
29.24 the nameplate capacity of one wind energy conversion system shall be combined with the
29.25 nameplate capacity of any other wind energy conversion system that is:
29.26 (1) located within five miles of the wind energy conversion system;
29.27 (2) constructed within the same calendar year as the wind energy conversion system;
29.28 and
29.29 (3) under common ownership.
29.30 In the case of a dispute, the commissioner of commerce shall determine the total size
29.31 of the system, and shall draw all reasonable inferences in favor of combining the systems.
29.32 (c) In making a determination under paragraph (b), the commissioner of commerce
29.33 may determine that two wind energy conversion systems are under common ownership
29.34 when the underlying ownership structure contains similar persons or entities, even if the
29.35 ownership shares differ between the two systems. Wind energy conversion systems are
30.1 not under common ownership solely because the same person or entity provided equity
30.2 financing for the systems.
30.3 EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable
30.4 in 2007, and thereafter.
30.5 Sec. 11. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision
30.6 to read:
30.7 Subd. 23. First tier valuation limit; agricultural homestead property. (a)
30.8 Beginning with assessment year 2006, the commissioner of revenue shall annually certify
30.9 the first tier limit for agricultural homestead property as the product of (i) $600,000, and
30.10 (ii) the ratio of the statewide average taxable market value of agricultural property per acre
30.11 of deeded farm land in the preceding assessment year to the statewide average taxable
30.12 market value of agricultural property per acre of deeded farm land for assessment year
30.13 2004. The limit shall be rounded to the nearest $10,000.
30.14 (b) For the purposes of this subdivision, "agricultural property" means all class 2
30.15 property under section 273.13, subdivision 23, except for (1) timberland, (2) a landing
30.16 area or public access area of a privately owned public use airport, and (3) property
30.17 consisting of the house, garage and immediately surrounding one acre of land of an
30.18 agricultural homestead.
30.19 (c) The commissioner shall certify the limit by January 2 of each assessment year,
30.20 except that for assessment year 2006 the commissioner shall certify the limit by June
30.21 1, 2006.
30.22 EFFECTIVE DATE.This section is effective for assessment year 2006 and
30.23 thereafter.
30.24 Sec. 12. Minnesota Statutes 2004, section 273.124, subdivision 12, is amended to read:
30.25 Subd. 12. Homestead of member of United States armed forces; Peace Corps;
30.26 VISTA. (a) Real estate actually occupied and used for the purpose of a homestead by
30.27 a person, or by a member of that person's immediate family shall be classified as a
30.28 homestead even though the person or family is absent if (1) the person or the person's
30.29 family is absent solely because the person is on active duty with the armed forces of the
30.30 United States, or is serving as a volunteer under the VISTA or Peace Corps program; (2)
30.31 the owner intends to return as soon as discharged or relieved from service; and (3) the
30.32 owner claims it as a homestead. A person who knowingly makes or submits to an assessor
30.33 an affidavit or other statement that is false in any material matter to obtain or aid another
30.34 in obtaining a benefit under this subdivision is guilty of a felony.
31.1 (b) In the case of a person who is absent solely because the person is on active duty
31.2 with the United States armed forces, homestead classification must be granted as provided
31.3 in this paragraph if the requirements of paragraph (a), clauses (1) to (3), are met, even
31.4 if the property has not been occupied as a homestead by the person or a member of the
31.5 person's family. To qualify for this classification, the person who acquires the property
31.6 must notify the assessor of the acquisition and of the person's absence due to military
31.7 service. When the person returns from military service and occupies the property as
31.8 a homestead, the person shall notify the assessor, who will provide for abatement of
31.9 the difference between the nonhomestead and homestead taxes for the current and two
31.10 preceding years, not to exceed the time during which the person owned the property.
31.11 EFFECTIVE DATE.This section is effective for assessments in 2006, taxes
31.12 payable in 2007, and thereafter.
31.13 Sec. 13. Minnesota Statutes 2004, section 273.13, subdivision 23, is amended to read:
31.14 Subd. 23. Class 2. (a) Class 2a property is agricultural land including any
31.15 improvements that is homesteaded. The market value of the house and garage and
31.16 immediately surrounding one acre of land has the same class rates as class 1a property
31.17 under subdivision 22. The value of the remaining land including improvements up to and
31.18 including $600,000 market value the first tier valuation limit of agricultural homestead
31.19 property has a net class rate of 0.55 percent of market value. The remaining property
31.20 over $600,000 market value the first tier has a class rate of one percent of market value.
31.21 For purposes of this subdivision, the "first tier valuation limit of agricultural homestead
31.22 property" and "first tier" means the limit certified under section 273.11, subdivision 23.
31.23 (b) Class 2b property is (1) real estate, rural in character and used exclusively for
31.24 growing trees for timber, lumber, and wood and wood products; (2) real estate that
31.25 is not improved with a structure and is used exclusively for growing trees for timber,
31.26 lumber, and wood and wood products, if the owner has participated or is participating in
31.27 a cost-sharing program for afforestation, reforestation, or timber stand improvement on
31.28 that particular property, administered or coordinated by the commissioner of natural
31.29 resources; (3) real estate that is nonhomestead agricultural land; or (4) a landing area or
31.30 public access area of a privately owned public use airport. Class 2b property has a net
31.31 class rate of one percent of market value.
31.32 (c) Agricultural land as used in this section means contiguous acreage of ten acres or
31.33 more, used during the preceding year for agricultural purposes. "Agricultural purposes" as
31.34 used in this section means the raising or cultivation of agricultural products. "Agricultural
31.35 purposes" also includes enrollment in the Reinvest in Minnesota program under sections
32.1 103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public
32.2 Law 99-198 if the property was classified as agricultural (i) under this subdivision for
32.3 the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage
32.4 on the same parcel, or contiguous acreage on an immediately adjacent parcel under the
32.5 same ownership, may also qualify as agricultural land, but only if it is pasture, timber,
32.6 waste, unusable wild land, or land included in state or federal farm programs. Agricultural
32.7 classification for property shall be determined excluding the house, garage, and
32.8 immediately surrounding one acre of land, and shall not be based upon the market value of
32.9 any residential structures on the parcel or contiguous parcels under the same ownership.
32.10 (d) Real estate, excluding the house, garage, and immediately surrounding one acre
32.11 of land, of less than ten acres which is exclusively and intensively used for raising or
32.12 cultivating agricultural products, shall be considered as agricultural land.
32.13 Land shall be classified as agricultural even if all or a portion of the agricultural use
32.14 of that property is the leasing to, or use by another person for agricultural purposes.
32.15 Classification under this subdivision is not determinative for qualifying under
32.16 section 273.111.
32.17 The property classification under this section supersedes, for property tax purposes
32.18 only, any locally administered agricultural policies or land use restrictions that define
32.19 minimum or maximum farm acreage.
32.20 (e) The term "agricultural products" as used in this subdivision includes production
32.21 for sale of:
32.22 (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
32.23 animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains,
32.24 bees, and apiary products by the owner;
32.25 (2) fish bred for sale and consumption if the fish breeding occurs on land zoned
32.26 for agricultural use;
32.27 (3) the commercial boarding of horses if the boarding is done in conjunction with
32.28 raising or cultivating agricultural products as defined in clause (1);
32.29 (4) property which is owned and operated by nonprofit organizations used for
32.30 equestrian activities, excluding racing;
32.31 (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed
32.32 under section 97A.115;
32.33 (6) insects primarily bred to be used as food for animals;
32.34 (7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood
32.35 products; and
33.1 (8) maple syrup taken from trees grown by a person licensed by the Minnesota
33.2 Department of Agriculture under chapter 28A as a food processor.
33.3 (f) If a parcel used for agricultural purposes is also used for commercial or industrial
33.4 purposes, including but not limited to:
33.5 (1) wholesale and retail sales;
33.6 (2) processing of raw agricultural products or other goods;
33.7 (3) warehousing or storage of processed goods; and
33.8 (4) office facilities for the support of the activities enumerated in clauses (1), (2),
33.9 and (3),
33.10 the assessor shall classify the part of the parcel used for agricultural purposes as class
33.11 1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its
33.12 use. The grading, sorting, and packaging of raw agricultural products for first sale is
33.13 considered an agricultural purpose. A greenhouse or other building where horticultural
33.14 or nursery products are grown that is also used for the conduct of retail sales must be
33.15 classified as agricultural if it is primarily used for the growing of horticultural or nursery
33.16 products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of
33.17 those products. Use of a greenhouse or building only for the display of already grown
33.18 horticultural or nursery products does not qualify as an agricultural purpose.
33.19 The assessor shall determine and list separately on the records the market value of
33.20 the homestead dwelling and the one acre of land on which that dwelling is located. If any
33.21 farm buildings or structures are located on this homesteaded acre of land, their market
33.22 value shall not be included in this separate determination.
33.23 (g) To qualify for classification under paragraph (b), clause (4), a privately owned
33.24 public use airport must be licensed as a public airport under section 360.018. For purposes
33.25 of paragraph (b), clause (4), "landing area" means that part of a privately owned public use
33.26 airport properly cleared, regularly maintained, and made available to the public for use by
33.27 aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing
33.28 or navigational aids. A landing area also includes land underlying both the primary surface
33.29 and the approach surfaces that comply with all of the following:
33.30 (i) the land is properly cleared and regularly maintained for the primary purposes of
33.31 the landing, taking off, and taxiing of aircraft; but that portion of the land that contains
33.32 facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
33.33 (ii) the land is part of the airport property; and
33.34 (iii) the land is not used for commercial or residential purposes.
33.35 The land contained in a landing area under paragraph (b), clause (4), must be described
33.36 and certified by the commissioner of transportation. The certification is effective until
34.1 it is modified, or until the airport or landing area no longer meets the requirements of
34.2 paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area"
34.3 means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival
34.4 and departure building in connection with the airport.
34.5 EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable
34.6 in 2007, and thereafter.
34.7 Sec. 14. Minnesota Statutes 2004, section 469.1813, subdivision 1, is amended to read:
34.8 Subdivision 1. Authority. The governing body of a political subdivision may grant
34.9 an a current or prospective abatement, by contract or otherwise, of the taxes imposed by
34.10 the political subdivision on a parcel of property, which may include personal property
34.11 and machinery, or defer the payments of the taxes and abate the interest and penalty
34.12 that otherwise would apply, if:
34.13 (a) (1) it expects the benefits to the political subdivision of the proposed abatement
34.14 agreement to at least equal the costs to the political subdivision of the proposed agreement
34.15 or intends the abatement to phase in a property tax increase, as provided in clause (b)(7);
34.16 and
34.17 (b) (2) it finds that doing so is in the public interest because it will:
34.18 (1) (i) increase or preserve tax base;
34.19 (2) (ii) provide employment opportunities in the political subdivision;
34.20 (3) (iii) provide or help acquire or construct public facilities;
34.21 (4) (iv) help redevelop or renew blighted areas;
34.22 (5) (v) help provide access to services for residents of the political subdivision;
34.23 (6) (vi) finance or provide public infrastructure; or
34.24 (7) (vii) phase in a property tax increase on the parcel resulting from an increase of
34.25 50 percent or more in one year on the estimated market value of the parcel, other than
34.26 increase attributable to improvement of the parcel; or
34.27 (viii) stabilize the tax base through equalization of property tax revenues for a
34.28 specified period of time with respect to a taxpayer whose real and personal property is
34.29 subject to valuation under Minnesota Rules, chapter 8100.
34.30 Sec. 15. Minnesota Statutes 2005 Supplement, section 469.1813, subdivision 6,
34.31 is amended to read:
34.32 Subd. 6. Duration limit. (a) A political subdivision may grant an abatement for a
34.33 period no longer than 15 years, except as provided under paragraph (b). The abatement
34.34 period commences in the first year in which the abatement granted is either paid or
34.35 retained in accordance with section 469.1815, subdivision 2. The subdivision may specify
35.1 in the abatement resolution a shorter duration. If the resolution does not specify a period
35.2 of time, the abatement is for eight years. If an abatement has been granted to a parcel of
35.3 property and the period of the abatement has expired, the political subdivision that granted
35.4 the abatement may not grant another abatement for eight years after the expiration of the
35.5 first abatement. This prohibition does not apply to improvements added after and not
35.6 subject to the first abatement. Economic abatement agreements for real and personal
35.7 property subject to valuation under Minnesota Rules, chapter 8100, are not subject to this
35.8 prohibition and may be granted successively.
35.9 (b) A political subdivision proposing to abate taxes for a parcel may request, in
35.10 writing, that the other political subdivisions in which the parcel is located grant an
35.11 abatement for the property. If one of the other political subdivisions declines, in writing,
35.12 to grant an abatement or if 90 days pass after receipt of the request to grant an abatement
35.13 without a written response from one of the political subdivisions, the duration limit
35.14 for an abatement for the parcel by the requesting political subdivision and any other
35.15 participating political subdivision is increased to 20 years. If the political subdivision
35.16 which declined to grant an abatement later grants an abatement for the parcel, the 20-year
35.17 duration limit is reduced by one year for each year that the declining political subdivision
35.18 grants an abatement for the parcel during the period of the abatement granted by the
35.19 requesting political subdivision. The duration limit may not be reduced below the limit
35.20 under paragraph (a).
35.21 Sec. 16. Minnesota Statutes 2004, section 469.1813, subdivision 6b, is amended to
35.22 read:
35.23 Subd. 6b. Extended duration limit. (a) Notwithstanding the provisions of
35.24 subdivision 6, a political subdivision may grant an abatement for a period of up to 20
35.25 years, if the abatement is for a qualified business.
35.26 (b) To be a qualified business for purposes of this subdivision, at least 50 percent of
35.27 the payroll of the operations of the business that qualify for the abatement must be for
35.28 employees engaged in one of the following lines of business or any combination of them:
35.29 (1) manufacturing;
35.30 (2) agricultural processing;
35.31 (3) mining;
35.32 (4) research and development;
35.33 (5) warehousing; or
35.34 (6) qualified high technology.
35.35 Alternatively, a qualified business also includes a taxpayer whose real and personal
35.36 property is subject to valuation under Minnesota Rules, chapter 8100.
36.1 (c)(1) "Manufacturing" means the material staging and production of tangible
36.2 personal property by procedures commonly regarded as manufacturing, processing,
36.3 fabrication, or assembling which changes some existing material into new shapes, new
36.4 qualities, or new combinations.
36.5 (2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code
36.6 of 1986.
36.7 (3) "Agricultural processing" means transforming, packaging, sorting, or grading
36.8 livestock or livestock products, agricultural commodities, or plants or plant products into
36.9 goods that are used for intermediate or final consumption including goods for nonfood use.
36.10 (4) "Research and development" means qualified research as defined in section
36.11 41(d) of the Internal Revenue Code of 1986.
36.12 (5) "Qualified high technology" means one or more of the following activities:
36.13 (i) advanced computing, which is any technology used in the design and
36.14 development of any of the following:
36.15 (A) computer hardware and software;
36.16 (B) data communications; and
36.17 (C) information technologies;
36.18 (ii) advanced materials, which are materials with engineered properties created
36.19 through the development of specialized process and synthesis technology;
36.20 (iii) biotechnology, which is any technology that uses living organisms, cells,
36.21 macromolecules, microorganisms, or substances from living organisms to make or modify
36.22 a product, improve plants or animals, or develop microorganisms for useful purposes;
36.23 (iv) electronic device technology, which is any technology that involves
36.24 microelectronics, semiconductors, electronic equipment, and instrumentation, radio
36.25 frequency, microwave, and millimeter electronics, and optical and optic-electrical devices,
36.26 or data and digital communications and imaging devices;
36.27 (v) engineering or laboratory testing related to the development of a product;
36.28 (vi) technology that assists in the assessment or prevention of threats or damage to
36.29 human health or the environment, including, but not limited to, environmental cleanup
36.30 technology, pollution prevention technology, or development of alternative energy sources;
36.31 (vii) medical device technology, which is any technology that involves medical
36.32 equipment or products other than a pharmaceutical product that has therapeutic or
36.33 diagnostic value and is regulated; or
36.34 (viii) advanced vehicles technology which is any technology that involves electric
36.35 vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the
36.36 construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric
37.1 vehicle is a road vehicle that draws propulsion energy only from an on-board source of
37.2 electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from
37.3 both a consumable fuel and a rechargeable energy storage system.
37.4 (d) The authority to grant new abatements under this subdivision expires on July 1,
37.5 2004, except that the authority to grant new abatements for real and personal property
37.6 subject to valuation under Minnesota Rules, chapter 8100, does not expire.
37.7 Sec. 17. Minnesota Statutes 2004, section 469.1813, subdivision 8, is amended to read:
37.8 Subd. 8. Limitation on abatements. In any year, the total amount of property taxes
37.9 abated by a political subdivision under this section may not exceed (1) ten percent of
37.10 the current levy, or (2) $200,000, whichever is greater. The limit under this subdivision
37.11 does not apply to:
37.12 (1) an uncollected abatement from a prior year that is added to the abatement levy; or
37.13 (2) a taxpayer whose real and personal property is subject to valuation under
37.14 Minnesota Rules, chapter 8100.
37.15 Sec. 18. Minnesota Statutes 2004, section 469.1813, subdivision 9, is amended to read:
37.16 Subd. 9. Consent of property owner not required. A political subdivision may
37.17 abate the taxes on a parcel under sections 469.1812 to 469.1815 without obtaining the
37.18 consent of the property owner. This subdivision does not apply to abatements granted to a
37.19 taxpayer whose real and personal property is valued under Minnesota Rules, chapter 8100.
37.20 Sec. 19. Minnesota Statutes 2004, section 469.1813, is amended by adding a
37.21 subdivision to read:
37.22 Subd. 10. Applicability to utility properties. When this statute is applied or
37.23 utilized with respect to a taxpayer whose real and personal property is subject to valuation
37.24 under Minnesota Rules, chapter 8100, the provisions of this section and sections 469.1814
37.25 and 469.1815 shall apply only to property specified or described in the abatement contract
37.26 or agreement.
37.27 Sec. 20. Laws 2001, First Special Session chapter 5, article 3, section 8, the effective
37.28 date, as amended by Laws 2005, chapter 151, article 3, section 19, is amended to read:
37.29 [EFFECTIVE DATE.] This section is effective for taxes levied in 2002, payable in
37.30 2003, through taxes levied in 2009 2011, payable in 2010 2012.
37.31 Sec. 21. PROPERTY TAX REFUND COLLECTION ACTION PROHIBITED;
37.32 REFUNDS REQUIRED.
37.33 Notwithstanding Minnesota Statutes, section 289A.60, subdivision 12, or any other
37.34 law to the contrary, the commissioner of revenue shall not disallow any part of a claim
37.35 for a property tax refund filed in 2005 or an earlier year to the extent that the claim
38.1 was excessive because it did not include in the claimant's income as determined under
38.2 Minnesota Statutes, section 290A.03, subdivision 3, the cash value of a tuition discount
38.3 provided by a postsecondary education institution. If a claimant was required to repay
38.4 any part of a property tax refund based on inclusion of this discount in the claimant's
38.5 income on a claim filed in 2005 or an earlier year, the commissioner must refund that
38.6 amount to the claimant.
38.7 EFFECTIVE DATE.This section is effective the day following final enactment.
38.8 Sec. 22. BUFFALO-RED RIVER WATERSHED DISTRICT.
38.9 (a) Notwithstanding the limitations of Minnesota Statutes, section 103D.905,
38.10 subdivision 3, and Laws 1976, chapter 162, as amended, the Buffalo-Red River watershed
38.11 district may levy only (1) the annual general levy as provided in Minnesota Statutes,
38.12 section 103D.905, subdivision 3, and (2) a tax not to exceed 0.02394 percent of taxable
38.13 market value to pay the cost attributable to the basic water management features of
38.14 projects initiated by petition of a political subdivision within the watershed district or by
38.15 petition of at least 50 resident owners of property within the watershed district. In addition
38.16 to any other purposes authorized by law, the levy under this section may be used to
38.17 develop and implement total maximum daily loads for water quality. Any project initiated
38.18 by petition cannot be for a period exceeding 15 consecutive years.
38.19 (b) The tax levy under paragraph (a), clause (2), is effective beginning with taxes
38.20 levied in 2006, payable in 2007, through taxes levied in 2008, payable in 2009, except that
38.21 any project initiated by petition under this section within the two-year time period that
38.22 extends beyond taxes payable in 2009, the 0.00798 percent of taxable market value levy
38.23 authorization under Minnesota Statutes, section 103D.905, subdivision 3, shall continue to
38.24 fund those projects for their duration. The tax levy under paragraph (a), clause (i), has
38.25 no expiration date.
38.26 EFFECTIVE DATE.This section is effective the day following final enactment.
38.27 Sec. 23. COOK-ORR HOSPITAL DISTRICT; ADDITION OF TERRITORY.
38.28 The board of the hospital district created under Laws 1988, chapter 645, may
38.29 enter into an agreement with the Tribal Council of the Bois Forte Band of Minnesota
38.30 Chippewa that would permit the reservation lands of the Bois Forte Band at Nett Lake
38.31 and Lake Vermilion to be included in the territory of the hospital district. The agreement
38.32 must establish the terms and conditions under which the territory would be so expanded,
38.33 including the amount of or means for determining the amount of the contribution by the
38.34 Bois Forte Band to the district.
39.1 Sec. 24. PROPERTY TAX CERTIFICATION; ROCHESTER SCHOOL
39.2 DISTRICT.
39.3 Notwithstanding Minnesota Statutes, sections 126C.48 and 275.065, with the
39.4 agreement of the school district's home county, Independent School District No. 535,
39.5 Rochester, on or before October 8, shall certify to the county auditor the district's proposed
39.6 property tax levy for taxes payable in the following year.
39.7 EFFECTIVE DATE.This section is effective for taxes payable in 2007 only.
39.8 Sec. 25. LEASE LEVY; ADMINISTRATIVE SPACE, ROCORI AND
39.9 FARIBAULT.
39.10 Independent School Districts Nos. 656, Faribault, and 750, Rocori, may lease
39.11 administrative space under Minnesota Statutes, section 126C.40, subdivision 1, if the
39.12 district can demonstrate to the satisfaction of the commissioner of education that the
39.13 administrative space is less expensive than instructional space that the district would
39.14 otherwise lease. A school district may not levy under this section for more than five years.
39.15 The commissioner must deny this levy authority unless the district passes a resolution
39.16 stating its intent to lease instructional space under Minnesota Statutes, section 126C.40,
39.17 subdivision 1, if the commissioner does not grant authority under this section. The
39.18 resolution must also certify that a lease of administrative space under this section is
39.19 less expensive than the district's proposed instructional lease. Levy authority under
39.20 this section shall not exceed the total levy authority under Minnesota Statutes, section
39.21 126C.40, subdivision 1, paragraph (e).
39.22 EFFECTIVE DATE.This section is effective beginning with revenue for taxes
39.23 payable in 2007.
39.24 ARTICLE 5
39.25 DEPARTMENT OF REVENUE PROPERTY TAXES AND AIDS
39.26 Section 1. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 22,
39.27 is amended to read:
39.28 Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b)
39.29 and (c), real estate which is residential and used for homestead purposes is class 1a. In the
39.30 case of a duplex or triplex in which one of the units is used for homestead purposes, the
39.31 entire property is deemed to be used for homestead purposes. The market value of class 1a
39.32 property must be determined based upon the value of the house, garage, and land.
39.33 The first $500,000 of market value of class 1a property has a net class rate of
39.34 one percent of its market value; and the market value of class 1a property that exceeds
39.35 $500,000 has a class rate of 1.25 percent of its market value.
40.1 (b) Class 1b property includes homestead real estate or homestead manufactured
40.2 homes used for the purposes of a homestead by
40.3 (1) any person who is blind as defined in section 256D.35, or the blind person and
40.4 the blind person's spouse; or
40.5 (2) any person, hereinafter referred to as "veteran," who:
40.6 (i) served in the active military or naval service of the United States; and
40.7 (ii) is entitled to compensation under the laws and regulations of the United States
40.8 for permanent and total service-connected disability due to the loss, or loss of use, by
40.9 reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
40.10 lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
40.11 a wheelchair; and
40.12 (iii) has acquired a special housing unit with special fixtures or movable facilities
40.13 made necessary by the nature of the veteran's disability, or the surviving spouse of the
40.14 deceased veteran for as long as the surviving spouse retains the special housing unit
40.15 as a homestead; or
40.16 (3) any person who is permanently and totally disabled.
40.17 Property is classified and assessed under clause (3) only if the government agency or
40.18 income-providing source certifies, upon the request of the homestead occupant, that the
40.19 homestead occupant satisfies the disability requirements of this paragraph.
40.20 Property is classified and assessed pursuant to clause (1) only if the commissioner of
40.21 revenue certifies to the assessor that the homestead occupant satisfies the requirements of
40.22 this paragraph.
40.23 Permanently and totally disabled for the purpose of this subdivision means a
40.24 condition which is permanent in nature and totally incapacitates the person from working
40.25 at an occupation which brings the person an income. The first $32,000 market value of
40.26 class 1b property has a net class rate of .45 percent of its market value. The remaining
40.27 market value of class 1b property has a class rate using the rates for class 1a or class 2a
40.28 property, whichever is appropriate, of similar market value.
40.29 (c) Class 1c property is commercial use real property that abuts a lakeshore line and
40.30 is devoted to temporary and seasonal residential occupancy for recreational purposes but
40.31 not devoted to commercial purposes for more than 250 days in the year preceding the
40.32 year of assessment, and that includes a portion used as a homestead by the owner, which
40.33 includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
40.34 the resort, a partner in a partnership that owns the resort, or a member of a limited liability
40.35 company that owns the resort even if the title to the homestead is held by the corporation,
40.36 partnership, or limited liability company. For purposes of this clause, property is devoted
41.1 to a commercial purpose on a specific day if any portion of the property, excluding the
41.2 portion used exclusively as a homestead, is used for residential occupancy and a fee
41.3 is charged for residential occupancy. The portion of the property used as a homestead
41.4 by the owner has the same class rates as is class 1a property under paragraph (a). The
41.5 remainder of the property is classified as follows: the first $500,000 of market value is tier
41.6 I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III.
41.7 The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25
41.8 percent. If a class 1c resort property has any market value in tier III, the entire property
41.9 must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for
41.10 class 1c treatment under this paragraph.
41.11 (d) Class 1d property includes structures that meet all of the following criteria:
41.12 (1) the structure is located on property that is classified as agricultural property under
41.13 section 273.13, subdivision 23;
41.14 (2) the structure is occupied exclusively by seasonal farm workers during the time
41.15 when they work on that farm, and the occupants are not charged rent for the privilege of
41.16 occupying the property, provided that use of the structure for storage of farm equipment
41.17 and produce does not disqualify the property from classification under this paragraph;
41.18 (3) the structure meets all applicable health and safety requirements for the
41.19 appropriate season; and
41.20 (4) the structure is not salable as residential property because it does not comply
41.21 with local ordinances relating to location in relation to streets or roads.
41.22 The market value of class 1d property has the same class rates as class 1a property
41.23 under paragraph (a).
41.24 EFFECTIVE DATE.This section is effective for taxes payable in 2006 and
41.25 thereafter.
41.26 Sec. 2. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 25, is
41.27 amended to read:
41.28 Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more
41.29 units and used or held for use by the owner or by the tenants or lessees of the owner
41.30 as a residence for rental periods of 30 days or more, excluding property qualifying for
41.31 class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other
41.32 than hospitals exempt under section 272.02, and contiguous property used for hospital
41.33 purposes, without regard to whether the property has been platted or subdivided. The
41.34 market value of class 4a property has a class rate of 1.25 percent.
41.35 (b) Class 4b includes:
42.1 (1) residential real estate containing less than four units that does not qualify as class
42.2 4bb, other than seasonal residential recreational property;
42.3 (2) manufactured homes not classified under any other provision;
42.4 (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead
42.5 farm classified under subdivision 23, paragraph (b) containing two or three units; and
42.6 (4) unimproved property that is classified residential as determined under subdivision
42.7 33.
42.8 The market value of class 4b property has a class rate of 1.25 percent.
42.9 (c) Class 4bb includes:
42.10 (1) nonhomestead residential real estate containing one unit, other than seasonal
42.11 residential recreational property; and
42.12 (2) a single family dwelling, garage, and surrounding one acre of property on a
42.13 nonhomestead farm classified under subdivision 23, paragraph (b).
42.14 Class 4bb property has the same class rates as class 1a property under subdivision 22.
42.15 Property that has been classified as seasonal residential recreational property at
42.16 any time during which it has been owned by the current owner or spouse of the current
42.17 owner does not qualify for class 4bb.
42.18 (d) Class 4c property includes:
42.19 (1) except as provided in subdivision 22, paragraph (c), real property devoted to
42.20 temporary and seasonal residential occupancy for recreation purposes, including real
42.21 property devoted to temporary and seasonal residential occupancy for recreation purposes
42.22 and not devoted to commercial purposes for more than 250 days in the year preceding
42.23 the year of assessment. For purposes of this clause, property is devoted to a commercial
42.24 purpose on a specific day if any portion of the property is used for residential occupancy,
42.25 and a fee is charged for residential occupancy. In order for a property to be classified as
42.26 class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of
42.27 the annual gross lodging receipts related to the property must be from business conducted
42.28 during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging
42.29 guests during the year must be for periods of at least two consecutive nights; or (ii) at least
42.30 20 percent of the annual gross receipts must be from charges for rental of fish houses,
42.31 boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for
42.32 marina services, launch services, and guide services, or the sale of bait and fishing tackle.
42.33 For purposes of this determination, a paid booking of five or more nights shall be counted
42.34 as two bookings. Class 4c also includes commercial use real property used exclusively
42.35 for recreational purposes in conjunction with class 4c property devoted to temporary
42.36 and seasonal residential occupancy for recreational purposes, up to a total of two acres,
43.1 provided the property is not devoted to commercial recreational use for more than 250
43.2 days in the year preceding the year of assessment and is located within two miles of the
43.3 class 4c property with which it is used. Owners of real property devoted to temporary and
43.4 seasonal residential occupancy for recreation purposes and all or a portion of which was
43.5 devoted to commercial purposes for not more than 250 days in the year preceding the year
43.6 of assessment desiring classification as class 1c or 4c, must submit a declaration to the
43.7 assessor designating the cabins or units occupied for 250 days or less in the year preceding
43.8 the year of assessment by January 15 of the assessment year. Those cabins or units and a
43.9 proportionate share of the land on which they are located will be designated class 1c or 4c
43.10 as otherwise provided. The remainder of the cabins or units and a proportionate share of
43.11 the land on which they are located will be designated as class 3a. The owner of property
43.12 desiring designation as class 1c or 4c property must provide guest registers or other
43.13 records demonstrating that the units for which class 1c or 4c designation is sought were
43.14 not occupied for more than 250 days in the year preceding the assessment if so requested.
43.15 The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other
43.16 nonresidential facility operated on a commercial basis not directly related to temporary and
43.17 seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;
43.18 (2) qualified property used as a golf course if:
43.19 (i) it is open to the public on a daily fee basis. It may charge membership fees or
43.20 dues, but a membership fee may not be required in order to use the property for golfing,
43.21 and its green fees for golfing must be comparable to green fees typically charged by
43.22 municipal courses; and
43.23 (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
43.24 A structure used as a clubhouse, restaurant, or place of refreshment in conjunction
43.25 with the golf course is classified as class 3a property;
43.26 (3) real property up to a maximum of one acre of land owned by a nonprofit
43.27 community service oriented organization; provided that the property is not used for a
43.28 revenue-producing activity for more than six days in the calendar year preceding the year
43.29 of assessment and the property is not used for residential purposes on either a temporary
43.30 or permanent basis. For purposes of this clause, a "nonprofit community service oriented
43.31 organization" means any corporation, society, association, foundation, or institution
43.32 organized and operated exclusively for charitable, religious, fraternal, civic, or educational
43.33 purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3),
43.34 (10), or (19) of the Internal Revenue Code of 1986, as amended through December 31,
43.35 1990. For purposes of this clause, "revenue-producing activities" shall include but not be
43.36 limited to property or that portion of the property that is used as an on-sale intoxicating
44.1 liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant
44.2 open to the public, bowling alley, a retail store, gambling conducted by organizations
44.3 licensed under chapter 349, an insurance business, or office or other space leased or
44.4 rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of
44.5 the property which is used for revenue-producing activities for more than six days in the
44.6 calendar year preceding the year of assessment shall be assessed as class 3a. The use of
44.7 the property for social events open exclusively to members and their guests for periods of
44.8 less than 24 hours, when an admission is not charged nor any revenues are received by the
44.9 organization shall not be considered a revenue-producing activity;
44.10 (4) postsecondary student housing of not more than one acre of land that is owned by
44.11 a nonprofit corporation organized under chapter 317A and is used exclusively by a student
44.12 cooperative, sorority, or fraternity for on-campus housing or housing located within two
44.13 miles of the border of a college campus;
44.14 (5) manufactured home parks as defined in section 327.14, subdivision 3;
44.15 (6) real property that is actively and exclusively devoted to indoor fitness, health,
44.16 social, recreational, and related uses, is owned and operated by a not-for-profit corporation,
44.17 and is located within the metropolitan area as defined in section 473.121, subdivision 2;
44.18 (7) a leased or privately owned noncommercial aircraft storage hangar not exempt
44.19 under section 272.01, subdivision 2, and the land on which it is located, provided that:
44.20 (i) the land is on an airport owned or operated by a city, town, county, Metropolitan
44.21 Airports Commission, or group thereof; and
44.22 (ii) the land lease, or any ordinance or signed agreement restricting the use of the
44.23 leased premise, prohibits commercial activity performed at the hangar.
44.24 If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must
44.25 be filed by the new owner with the assessor of the county where the property is located
44.26 within 60 days of the sale;
44.27 (8) a privately owned noncommercial aircraft storage hangar not exempt under
44.28 section 272.01, subdivision 2, and the land on which it is located, provided that:
44.29 (i) the land abuts a public airport; and
44.30 (ii) the owner of the aircraft storage hangar provides the assessor with a signed
44.31 agreement restricting the use of the premises, prohibiting commercial use or activity
44.32 performed at the hangar; and
44.33 (9) residential real estate, a portion of which is used by the owner for homestead
44.34 purposes, and that is also a place of lodging, if all of the following criteria are met:
44.35 (i) rooms are provided for rent to transient guests that generally stay for periods
44.36 of 14 or fewer days;
45.1 (ii) meals are provided to persons who rent rooms, the cost of which is incorporated
45.2 in the basic room rate;
45.3 (iii) meals are not provided to the general public except for special events on fewer
45.4 than seven days in the calendar year preceding the year of the assessment; and
45.5 (iv) the owner is the operator of the property.
45.6 The market value subject to the 4c classification under this clause is limited to five rental
45.7 units. Any rental units on the property in excess of five, must be valued and assessed as
45.8 class 3a. The portion of the property used for purposes of a homestead by the owner must
45.9 be classified as class 1a property under subdivision 22.
45.10 Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
45.11 parcel of seasonal residential recreational property not used for commercial purposes has
45.12 the same class rates as class 4bb property, (ii) manufactured home parks assessed under
45.13 clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal
45.14 residential recreational property has a class rate of one percent for the first $500,000
45.15 of market value, which includes any market value receiving the one percent rate under
45.16 subdivision 22, and 1.25 percent for the remaining market value, (iv) the market value
45.17 of property described in clause (4) has a class rate of one percent, (v) the market value
45.18 of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that
45.19 portion of the market value of property in clause (9) qualifying for class 4c property
45.20 has a class rate of 1.25 percent.
45.21 (e) Class 4d property is qualifying low-income rental housing certified to the assessor
45.22 by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion
45.23 of the units in the building qualify as low-income rental housing units as certified under
45.24 section 273.128, subdivision 3, only the proportion of qualifying units to the total number
45.25 of units in the building qualify for class 4d. The remaining portion of the building shall be
45.26 classified by the assessor based upon its use. Class 4d also includes the same proportion of
45.27 land as the qualifying low-income rental housing units are to the total units in the building.
45.28 For all properties qualifying as class 4d, the market value determined by the assessor must
45.29 be based on the normal approach to value using normal unrestricted rents.
45.30 Class 4d property has a class rate of 0.75 percent.
45.31 EFFECTIVE DATE.This section is effective for taxes payable in 2006 and
45.32 subsequent years.
45.33 Sec. 3. Minnesota Statutes 2005 Supplement, section 273.1384, subdivision 1, is
45.34 amended to read:
45.35 Subdivision 1. Residential homestead market value credit. Each county auditor
45.36 shall determine a homestead credit for each class 1a, 1b, 1c, and 2a homestead property
46.1 within the county equal to 0.4 percent of the first $76,000 of market value of the property
46.2 minus .09 percent of the market value in excess of $76,000. The credit amount may not
46.3 be less than zero. In the case of an agricultural or resort homestead, only the market
46.4 value of the house, garage, and immediately surrounding one acre of land is eligible
46.5 in determining the property's homestead credit. In the case of a property which that is
46.6 classified as part homestead and part nonhomestead, (i) the credit shall apply only to
46.7 the homestead portion of the property, but (ii) if a portion of a property is classified as
46.8 nonhomestead solely because not all the owners occupy the property, not all the owners
46.9 have qualifying relatives occupying the property, or solely because both not all the spouses
46.10 do not of owners occupy the property, the credit amount shall be initially computed as
46.11 if that nonhomestead portion were also in the homestead class and then prorated to the
46.12 owner-occupant's percentage of ownership or prorated to one-half if both spouses do not
46.13 occupy the property. For the purpose of this section, when an owner-occupant's spouse
46.14 does not occupy the property, the percentage of ownership for the owner-occupant spouse
46.15 is one-half of the couple's ownership percentage.
46.16 EFFECTIVE DATE.This section is effective for taxes payable in 2007 and
46.17 thereafter.
46.18 Sec. 4. Minnesota Statutes 2004, section 273.1384, subdivision 2, is amended to read:
46.19 Subd. 2. Agricultural homestead market value credit. Property classified
46.20 as class 2a agricultural homestead is eligible for an agricultural credit. The credit is
46.21 computed using the property's agricultural credit market value, defined for this purpose
46.22 as the property's class 2a market value excluding the market value of the house, garage,
46.23 and immediately surrounding one acre of land. The credit is equal to 0.3 percent of the
46.24 first $115,000 of the property's agricultural credit market value. The credit under this
46.25 subdivision is limited to $345 for each homestead. The credit is reduced by minus .05
46.26 percent of the property's agricultural credit market value in excess of $115,000, subject to
46.27 a maximum reduction of $115. In the case of property that is classified in part as class 2a
46.28 agricultural homestead and in part as class 2b nonhomestead farm land solely because not
46.29 all the owners occupy or farm the property, not all the owners have qualifying relatives
46.30 occupying or farming the property, or solely because not all the spouses of owners occupy
46.31 the property, the credit must be initially computed as if that nonhomestead agricultural
46.32 land was also classified as class 2a agricultural homestead and then prorated to the
46.33 owner-occupant's percentage of ownership.
46.34 EFFECTIVE DATE.This section is effective for taxes payable in 2007 and
46.35 thereafter.
47.1 Sec. 5. Minnesota Statutes 2004, section 273.1398, subdivision 3, is amended to read:
47.2 Subd. 3. Disparity reduction aid. For taxes payable in 2003 and subsequent years,
47.3 The amount of disparity aid certified for each taxing district within each unique taxing
47.4 jurisdiction for taxes payable in the prior year shall be multiplied by the ratio of (1) the
47.5 jurisdiction's tax capacity using the class rates for taxes payable in the year for which aid
47.6 is being computed, to (2) its tax capacity using the class rates for taxes payable in the year
47.7 prior to that for which aid is being computed, both based upon market values for taxes
47.8 payable in the year prior to that for which aid is being computed. For the purposes of this
47.9 aid determination, disparity reduction aid certified for taxes payable in the prior year for
47.10 a taxing entity other than a town or school district is deemed to be county government
47.11 disparity reduction aid. The amount of disparity aid certified to each taxing jurisdiction
47.12 shall be reduced by any reductions required in the current year or permanent reductions
47.13 required in previous years under section 477A.0132. If the commissioner determines that
47.14 insufficient information is available to reasonably and timely calculate the numerator
47.15 in this ratio for the first taxes payable year that a class rate change or new class rate is
47.16 effective, the commissioner shall omit the effects of that class rate change or new class
47.17 rate when calculating this ratio for aid payable in that taxes payable year. For aid payable
47.18 in the year following a year for which such omission was made, the commissioner shall
47.19 use in the denominator for the class that was changed or created, the tax capacity for taxes
47.20 payable two years prior to that in which the aid is payable, based on market values for
47.21 taxes payable in the year prior to that for which aid is being computed.
47.22 EFFECTIVE DATE.This section is effective for taxes payable in 2006 and
47.23 thereafter.
47.24 Sec. 6. Minnesota Statutes 2004, section 281.23, subdivision 9, is amended to read:
47.25 Subd. 9. Certificate. After the time for redemption of any lands shall have expired
47.26 after notice given, as provided in subdivisions 2, 3, 5, and 6, the county auditor shall
47.27 execute a certificate describing the lands, specifying the tax judgment sale at which the
47.28 same were bid in for the state, and stating that the time for redemption thereof has expired
47.29 after notice given as provided by law and that absolute title thereto has vested in the
47.30 state of Minnesota. Such certificate shall be recorded in the office of the county recorder
47.31 and thereafter filed in the office of the county auditor, except that in case of registered
47.32 land such certificate shall be filed recorded in the office of the registrar of titles and a
47.33 duplicate filed in the office of the county auditor. Such certificate and the record thereof
47.34 shall be prima facie evidence of the facts therein stated, but failure to execute or record or
48.1 file such certificate shall not affect the validity of any proceedings hereunder respecting
48.2 such lands or the title of the state thereto.
48.3 EFFECTIVE DATE.This section is effective the day following final enactment.
48.4 Sec. 7. Minnesota Statutes 2005 Supplement, section 284.07, is amended to read:
48.5 284.07 COUNTY AUDITOR'S CERTIFICATE TO BE PRIMA FACIE
48.6 EVIDENCE.
48.7 The county auditor's certificate of forfeiture filed recorded by the county auditor
48.8 as provided by section 281.23, subdivision 9, and acts supplemental thereto, or by any
48.9 other law hereafter enacted providing for the recording of such a certificate or a certified
48.10 copy of such certificate or of the record thereof, shall, for all purposes, be prima facie
48.11 evidence that all requirements of the law respecting the taxation and forfeiture of the
48.12 lands therein described were complied with, and that at the date of the certificate absolute
48.13 title to such lands had vested in the state by reason of forfeiture for delinquent taxes, as
48.14 set forth in the certificate.
48.15 EFFECTIVE DATE.This section is effective the day following final enactment.
48.16 Sec. 8. Minnesota Statutes 2004, section 477A.014, subdivision 1, is amended to read:
48.17 Subdivision 1. Calculations and payments. (a) The commissioner of revenue
48.18 shall make all necessary calculations and make payments pursuant to sections 477A.013,
48.19 477A.0132, and 477A.03 directly to the affected taxing authorities annually. In addition,
48.20 the commissioner shall notify the authorities of their aid amounts, as well as the
48.21 computational factors used in making the calculations for their authority, and those
48.22 statewide total figures that are pertinent, before August 1 of the year preceding the aid
48.23 distribution year.
48.24 (b) For the purposes of this subdivision, aid is determined for a city or town based
48.25 on its city or town status as of June 30 of the year preceding the aid distribution year. If
48.26 the effective date for a municipal incorporation, consolidation, annexation, detachment,
48.27 dissolution, or township organization is on or before June 30 of the year preceding
48.28 the aid distribution year, such change in boundaries or form of government shall be
48.29 recognized for aid determinations for the aid distribution year. If the effective date for a
48.30 municipal incorporation, consolidation, annexation, detachment, dissolution, or township
48.31 organization is after June 30 of the year preceding the aid distribution year, such change in
48.32 boundaries or form of government shall not be recognized for aid determinations until
48.33 the following year.
48.34 (c) Changes in boundaries or form of government will only be recognized for the
48.35 purposes of this subdivision, to the extent that: (1) changes in market values are included
49.1 in market values reported by assessors to the commissioner, and changes in population,
49.2 household size, and the road accidents factor are included in their respective certifications
49.3 to the commissioner as referenced in section 477A.011, or (2) an annexation information
49.4 report as provided in paragraph (d) is received by the commissioner on or before July 15
49.5 of the aid calculation year. Revisions to estimates or data for use in recognizing changes
49.6 in boundaries or form of government are not effective for purposes of this subdivision
49.7 unless received by the commissioner on or before July 15 of the aid calculation year.
49.8 Clerical errors in the certification or use of estimates and data established as of July 15 in
49.9 the aid calculation year are subject to correction within the time periods allowed under
49.10 subdivision 3.
49.11 (d) In the case of an annexation, an annexation information report may be completed
49.12 by the annexing jurisdiction and submitted to the commissioner for purposes of this
49.13 subdivision if the net tax capacity of annexed area for the assessment year preceding the
49.14 effective date of the annexation exceeds five percent of the city's net tax capacity for the
49.15 same year. The form and contents of the annexation information report shall be prescribed
49.16 by the commissioner. The commissioner shall change the net tax capacity, the population,
49.17 the population decline, the commercial industrial percentage, and the transformed
49.18 population for the annexing jurisdiction only if the annexation information report provides
49.19 data the commissioner determines to be reliable for all of these factors used to compute city
49.20 revenue need for the annexing jurisdiction. The commissioner shall adjust the pre-1940
49.21 housing percentage, the road accidents factor, and household size only if the entire area of
49.22 an existing city or town is annexed or consolidated and only if reliable data is available for
49.23 all of these factors used to compute city revenue need for the annexing jurisdiction.
49.24 EFFECTIVE DATE.This section is effective for aid payable in 2007 and thereafter.
49.25 ARTICLE 6
49.26 DEPARTMENT OF REVENUE SALES AND USE TAXES
49.27 Section 1. Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3,
49.28 is amended to read:
49.29 Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited
49.30 to, each of the transactions listed in this subdivision.
49.31 (b) Sale and purchase include:
49.32 (1) any transfer of title or possession, or both, of tangible personal property, whether
49.33 absolutely or conditionally, for a consideration in money or by exchange or barter; and
50.1 (2) the leasing of or the granting of a license to use or consume, for a consideration
50.2 in money or by exchange or barter, tangible personal property, other than a manufactured
50.3 home used for residential purposes for a continuous period of 30 days or more.
50.4 (c) Sale and purchase include the production, fabrication, printing, or processing of
50.5 tangible personal property for a consideration for consumers who furnish either directly or
50.6 indirectly the materials used in the production, fabrication, printing, or processing.
50.7 (d) Sale and purchase include the preparing for a consideration of food.
50.8 Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
50.9 to, the following:
50.10 (1) prepared food sold by the retailer;
50.11 (2) soft drinks;
50.12 (3) candy;
50.13 (4) dietary supplements; and
50.14 (5) all food sold through vending machines.
50.15 (e) A sale and a purchase includes the furnishing for a consideration of electricity,
50.16 gas, water, or steam for use or consumption within this state.
50.17 (f) A sale and a purchase includes the transfer for a consideration of prewritten
50.18 computer software whether delivered electronically, by load and leave, or otherwise.
50.19 (g) A sale and a purchase includes the furnishing for a consideration of the following
50.20 services:
50.21 (1) the privilege of admission to places of amusement, recreational areas, or athletic
50.22 events, and the making available of amusement devices, tanning facilities, reducing
50.23 salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
50.24 (2) lodging and related services by a hotel, rooming house, resort, campground,
50.25 motel, or trailer camp and the granting of any similar license to use real property in a
50.26 specific facility, other than the renting or leasing of it for a continuous period of 30 days
50.27 or more under an enforceable written agreement that may not be terminated without
50.28 prior notice;
50.29 (3) nonresidential parking services, whether on a contractual, hourly, or other
50.30 periodic basis, except for parking at a meter;
50.31 (4) the granting of membership in a club, association, or other organization if:
50.32 (i) the club, association, or other organization makes available for the use of its
50.33 members sports and athletic facilities, without regard to whether a separate charge is
50.34 assessed for use of the facilities; and
50.35 (ii) use of the sports and athletic facility is not made available to the general public
50.36 on the same basis as it is made available to members.
51.1 Granting of membership means both onetime initiation fees and periodic membership
51.2 dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
51.3 squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
51.4 swimming pools; and other similar athletic or sports facilities;
51.5 (5) delivery of aggregate materials and concrete block by a third party if the delivery
51.6 would be subject to the sales tax if provided by the seller of the aggregate material or
51.7 concrete block; and
51.8 (6) services as provided in this clause:
51.9 (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
51.10 and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
51.11 drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
51.12 include services provided by coin operated facilities operated by the customer;
51.13 (ii) motor vehicle washing, waxing, and cleaning services, including services
51.14 provided by coin operated facilities operated by the customer, and rustproofing,
51.15 undercoating, and towing of motor vehicles;
51.16 (iii) building and residential cleaning, maintenance, and disinfecting and
51.17 exterminating services;
51.18 (iv) detective, security, burglar, fire alarm, and armored car services; but not
51.19 including services performed within the jurisdiction they serve by off-duty licensed peace
51.20 officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
51.21 organization for monitoring and electronic surveillance of persons placed on in-home
51.22 detention pursuant to court order or under the direction of the Minnesota Department
51.23 of Corrections;
51.24 (v) pet grooming services;
51.25 (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
51.26 and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
51.27 plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
51.28 clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
51.29 public utility lines. Services performed under a construction contract for the installation of
51.30 shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
51.31 (vii) massages, except when provided by a licensed health care facility or
51.32 professional or upon written referral from a licensed health care facility or professional for
51.33 treatment of illness, injury, or disease; and
51.34 (viii) the furnishing of lodging, board, and care services for animals in kennels and
51.35 other similar arrangements, but excluding veterinary and horse boarding services.
52.1 In applying the provisions of this chapter, the terms "tangible personal property"
52.2 and "sales at retail sale" include taxable services listed in clause (6), items (i) to (vi) and
52.3 (viii), and the provision of these taxable services, unless specifically provided otherwise.
52.4 Services performed by an employee for an employer are not taxable. Services performed
52.5 by a partnership or association for another partnership or association are not taxable if one
52.6 of the entities owns or controls more than 80 percent of the voting power of the equity
52.7 interest in the other entity. Services performed between members of an affiliated group of
52.8 corporations are not taxable. For purposes of the preceding sentence, "affiliated group
52.9 of corporations" includes means those entities that would be classified as members of an
52.10 affiliated group as defined under United States Code, title 26, section 1504, and that are
52.11 eligible to file a consolidated tax return for federal income tax purposes disregarding
52.12 the exclusions in section 1504(b).
52.13 (h) A sale and a purchase includes the furnishing for a consideration of tangible
52.14 personal property or taxable services by the United States or any of its agencies or
52.15 instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
52.16 subdivisions.
52.17 (i) A sale and a purchase includes the furnishing for a consideration of
52.18 telecommunications services, including cable television services and direct satellite
52.19 services. Telecommunications services are taxed to the extent allowed under federal law.
52.20 (j) A sale and a purchase includes the furnishing for a consideration of installation if
52.21 the installation charges would be subject to the sales tax if the installation were provided
52.22 by the seller of the item being installed.
52.23 (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
52.24 to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
52.25 the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
52.26 65B.29, subdivision 1, clause (1).
52.27 EFFECTIVE DATE.This section is effective the day following final enactment.
52.28 Sec. 2. Minnesota Statutes 2004, section 297A.61, subdivision 12, is amended to read:
52.29 Subd. 12. Farm machinery. (a) "Farm machinery" means new or used machinery,
52.30 equipment, implements, accessories, and contrivances used directly and principally in
52.31 agricultural production of tangible personal property intended to be sold ultimately at
52.32 retail including, but not limited to:
52.33 (1) machinery for the preparation, seeding, or cultivation of soil for growing
52.34 agricultural crops;
53.1 (2) barn cleaners, milking systems, grain dryers, feeding systems including
53.2 stationary feed bunks, and similar installations, whether or not the equipment is installed
53.3 by the seller and becomes part of the real property; and
53.4 (3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe
53.5 fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation
53.6 system when sold as part of an irrigation system, whether or not the equipment is installed
53.7 by the seller and becomes part of the real property.
53.8 (b) Farm machinery does not include:
53.9 (1) repair or replacement parts;
53.10 (2) tools, shop equipment, grain bins, fencing material, communication equipment,
53.11 and other farm supplies;
53.12 (3) motor vehicles taxed under chapter 297B;
53.13 (4) snowmobiles or snow blowers;
53.14 (5) lawn mowers except those used in the production of sod for sale, or garden-type
53.15 tractors or garden tillers; or
53.16 (6) machinery, equipment, implements, accessories, and contrivances used directly in
53.17 the production of horses not raised for slaughter, fur-bearing animals, or research animals.
53.18 EFFECTIVE DATE.This section is effective the day following final enactment.
53.19 Sec. 3. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
53.20 to read:
53.21 Subd. 16a. Computer. "Computer" means an electronic device that accepts
53.22 information in digital or similar form and manipulates it for a result based on a sequence
53.23 of instructions.
53.24 EFFECTIVE DATE.This section is effective the day following final enactment.
53.25 Sec. 4. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
53.26 to read:
53.27 Subd. 16b. Electronic. "Electronic" means relating to technology having electrical,
53.28 digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
53.29 EFFECTIVE DATE.This section is effective the day following final enactment.
53.30 Sec. 5. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
53.31 to read:
53.32 Subd. 16c. Computer software. "Computer software" means a set of coded
53.33 instructions designed to cause a computer or automatic data processing equipment to
53.34 perform a task.
54.1 EFFECTIVE DATE.This section is effective the day following final enactment.
54.2 Sec. 6. Minnesota Statutes 2004, section 297A.61, subdivision 17, is amended to read:
54.3 Subd. 17. Prewritten computer software. "Prewritten computer software" means
54.4 computer software, including prewritten upgrades, that is not designed and developed by
54.5 the author or other creator to the specifications of a specific purchaser. The combining
54.6 of two or more "prewritten computer software" programs or prewritten portions of the
54.7 programs does not cause the combination to be other than "prewritten computer software."
54.8 "Prewritten computer software" includes software designed and developed by the author
54.9 or other creator to the specifications of a specific purchaser when it is sold to a person
54.10 other than the specific purchaser. If a person modifies or enhances computer software
54.11 of which the person is not the author or creator, the person is deemed to be the author
54.12 or creator only of such person's modifications or enhancements. "Prewritten computer
54.13 software" or a prewritten portion of it that is modified or enhanced to any degree, if the
54.14 modification or enhancement is designed and developed to the specifications of a specific
54.15 purchaser, remains "prewritten computer software"; provided, however, that if there is a
54.16 reasonable, separately stated charge or an invoice or other statement of the price given to
54.17 the purchaser for such modification or enhancement, the modification or enhancement
54.18 does not constitute "prewritten computer software." For purposes of this subdivision:
54.19 (1) "computer" means an electronic device that accepts information in digital or
54.20 similar form and manipulates it for a result based on a sequence of instructions;
54.21 (2) "electronic" means relating to technology having electrical, digital, magnetic,
54.22 wireless, optical, electromagnetic, or similar capabilities; and
54.23 (3) "computer software" means a set of coded instructions designed to cause a
54.24 "computer" or automatic data processing equipment to perform a task.
54.25 EFFECTIVE DATE.This section is effective the day following final enactment.
54.26 Sec. 7. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision
54.27 to read:
54.28 Subd. 37. Logging equipment. (a) "Logging equipment" means new or used
54.29 machinery, equipment, implements, accessories, and contrivances used directly and
54.30 principally in the commercial cutting or removal or both of timber or other solid wood
54.31 forest products intended to be sold ultimately at retail, including, but not limited to:
54.32 (1) machinery used for bucking, bunching, debarking, delimbing, felling, forwarding,
54.33 loading, piling, skidding, topping, and yarding operations performed on timber; and
54.34 (2) chain saws.
54.35 (b) Logging equipment does not include:
55.1 (1) repair or replacement parts;
55.2 (2) tools, shop equipment, communication equipment, and other logging supplies;
55.3 (3) motor vehicles taxed under chapter 297B;
55.4 (4) snowmobiles, snow blowers, or recreational all-terrain vehicles; or
55.5 (5) machinery, equipment, implements, accessories, and contrivances used in the
55.6 creation of other commercial wood products for sale to others, including, but not limited
55.7 to, milling, planing, carving, wood chipping, or paper manufacturing.
55.8 EFFECTIVE DATE.This section is effective the day following final enactment.
55.9 Sec. 8. Minnesota Statutes 2004, section 297A.63, is amended to read:
55.10 297A.63 USE TAXES IMPOSED; RATES.
55.11 Subdivision 1. Use of tangible personal property or taxable services. (a) For the
55.12 privilege of using, storing, distributing, or consuming in Minnesota tangible personal
55.13 property or taxable services purchased for use, storage, distribution, or consumption in
55.14 this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the sales
55.15 purchase price of retail sales of the tangible personal property or taxable services at the
55.16 rate of tax imposed under section 297A.62. A person that purchases property from a
55.17 Minnesota retailer and returns the tangible personal property to a point within Minnesota,
55.18 except in the course of interstate commerce, after it was delivered outside of Minnesota,
55.19 is subject to the use tax.
55.20 (b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
55.21 was paid on the sales price of the tangible personal property or taxable services.
55.22 (c) No tax is imposed under paragraph (a) if the purchase meets the requirements for
55.23 exemption under section 297A.67, subdivision 21.
55.24 Subd. 2. Use of tangible personal property made from materials. (a) A use tax
55.25 is imposed on a person who manufactures, fabricates, or assembles tangible personal
55.26 property from materials, either within or outside this state and who uses, stores, distributes,
55.27 or consumes the tangible personal property in Minnesota. The tax is imposed on the sales
55.28 purchase price of retail sales of the materials contained in the tangible personal property at
55.29 the rate of tax imposed under section 297A.62.
55.30 (b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
55.31 was paid on the sales price of materials contained in the tangible personal property.
55.32 EFFECTIVE DATE.This section is effective the day following final enactment.
55.33 Sec. 9. Minnesota Statutes 2004, section 297A.668, subdivision 6, is amended to read:
55.34 Subd. 6. Multiple points of use. (a) Notwithstanding the provisions of subdivisions
55.35 2 to 5, a business purchaser that is not a holder of a direct pay permit that knows at the
56.1 time of its purchase of a digital good, computer software delivered electronically, or a
56.2 service that the digital good, computer software delivered electronically, or service will
56.3 be concurrently available for use in more than one taxing jurisdiction shall deliver to
56.4 the seller in conjunction with its purchase a multiple points of use exemption certificate
56.5 disclosing this fact.
56.6 (b) Upon receipt of the multiple points of use exemption certificate, the seller is
56.7 relieved of the obligation to collect, pay, or remit the applicable tax and the purchaser is
56.8 obligated to collect, pay, or remit the applicable tax on a direct pay basis.
56.9 (c) A purchaser delivering the multiple points of use exemption certificate may use
56.10 any reasonable, but consistent and uniform, method of apportionment that is supported by
56.11 the purchaser's business records as they exist at the time of the consummation of the sale.
56.12 (d) The multiple points of use exemption certificate remains in effect for all future
56.13 sales by the seller to the purchaser until it is revoked in writing, except as to the subsequent
56.14 sale's specific apportionment that is governed by the principle of paragraph (c) and the
56.15 facts existing at the time of the sale.
56.16 (e) A holder of a direct pay permit is not required to deliver a multiple points or use
56.17 exemption certificate to the seller. A direct pay permit holder shall follow the provisions
56.18 of paragraph (c) in apportioning the tax due on a digital good, computer software delivered
56.19 electronically, or a service that will be concurrently available for use in more than one
56.20 taxing jurisdiction.
56.21 EFFECTIVE DATE.This section is effective the day following final enactment.
56.22 Sec. 10. Minnesota Statutes 2004, section 297A.669, subdivision 11, is amended to
56.23 read:
56.24 Subd. 11. Mobile telecommunications service. "Mobile telecommunications
56.25 service," for purposes of this section, means the same as that term is defined in Section
56.26 124(1) 124(7) of Public Law 106-252 (Mobile Telecommunications Sourcing Act).
56.27 EFFECTIVE DATE.This section is effective the day following final enactment.
56.28 Sec. 11. Minnesota Statutes 2004, section 297A.67, subdivision 4, is amended to read:
56.29 Subd. 4. Exempt meals at residential facilities. Meals or Prepared food, candy,
56.30 and soft drinks served to patients, inmates, or persons residing at hospitals, sanitariums,
56.31 nursing homes, senior citizen homes, and correctional, detention, and detoxification
56.32 facilities are exempt. Food sold through vending machines is not exempt.
56.33 EFFECTIVE DATE.This section is effective the day following final enactment.
56.34 Sec. 12. Minnesota Statutes 2004, section 297A.67, subdivision 5, is amended to read:
57.1 Subd. 5. Exempt meals at schools. Meals and lunches Prepared food, candy,
57.2 and soft drinks served at public and private elementary, middle, or secondary schools as
57.3 defined in section 120A.05 are exempt. Meals and lunches Prepared food, candy, and soft
57.4 drinks served to students at a college, university, or private career school under a board
57.5 contract are exempt. For purposes of this subdivision, "meals and lunches" does not
57.6 include sales from vending machines. Food sold through vending machines is not exempt.
57.7 EFFECTIVE DATE.This section is effective the day following final enactment.
57.8 Sec. 13. Minnesota Statutes 2005 Supplement, section 297A.67, subdivision 6, is
57.9 amended to read:
57.10 Subd. 6. Other exempt meals. (a) Meals or Prepared food, candy, and soft drinks
57.11 purchased for and served exclusively to individuals who are 60 years of age or over and
57.12 their spouses or to handicapped persons and their spouses by governmental agencies,
57.13 nonprofit organizations, or churches, or pursuant to any program funded in whole or in
57.14 part through United States Code, title 42, sections 3001 through 3045, wherever delivered,
57.15 prepared, or served, are exempt. Food sold through vending machines is not exempt.
57.16 (b) Meals or Prepared food, candy, and soft drinks purchased for and served
57.17 exclusively to children who are less than 14 years of age or disabled children who are less
57.18 than 16 years of age and who are attending a child care or early childhood education
57.19 program, are exempt if they are:
57.20 (1) purchased by a nonprofit child care facility that is exempt under section 297A.70,
57.21 subdivision 4, and that primarily serves families with income of 250 percent or less of
57.22 federal poverty guidelines; and
57.23 (2) prepared at the site of the child care facility.
57.24 EFFECTIVE DATE.This section is effective the day following final enactment.
57.25 Sec. 14. Minnesota Statutes 2004, section 297A.67, subdivision 14, is amended to read:
57.26 Subd. 14. Personal Computers prescribed for use by school. Personal Computers
57.27 and related computer software sold by a school, college, university, or private career
57.28 school to students who are enrolled at the institutions are exempt if:
57.29 (1) the use of the personal computer, or of a substantially similar model of computer,
57.30 and the related computer software is prescribed by the institution in conjunction with a
57.31 course of study; and
57.32 (2) each student of the institution, or of a unit of the institution in which the student
57.33 is enrolled, is required by the institution to have such a personal computer and related
57.34 software as a condition of enrollment.
58.1 For the purposes of this subdivision, "school" and "private career school" have the
58.2 meanings given in subdivision 13.
58.3 EFFECTIVE DATE.This section is effective the day following final enactment.
58.4 Sec. 15. Minnesota Statutes 2004, section 297A.67, subdivision 27, is amended to read:
58.5 Subd. 27. Sewing materials. Sewing materials are exempt. For purposes of this
58.6 subdivision "sewing materials" mean fabric, thread, zippers, interfacing, buttons, trim,
58.7 and other items that are usually directly incorporated into the construction of clothing, as
58.8 defined in subdivision 8, regardless of whether it is actually used for making clothing.
58.9 It does not include batting, foam, or fabric specifically manufactured for arts and craft
58.10 projects, or other materials for craft projects.
58.11 EFFECTIVE DATE.This section is effective the day following final enactment.
58.12 Sec. 16. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 37,
58.13 is amended to read:
58.14 Subd. 37. Job opportunity building zones. (a) Purchases of tangible personal
58.15 property or taxable services by a qualified business, as defined in section 469.310, are
58.16 exempt if the property or services are primarily used or consumed in a job opportunity
58.17 building zone designated under section 469.314. For purposes of this subdivision, an aerial
58.18 camera package, including any camera, computer, and navigation device contained in the
58.19 package, that is used in an aircraft that is operated under a Federal Aviation Administration
58.20 Restricted Airworthiness Certificate according to Code of Federal Regulations, title 14,
58.21 part 21, section 21.25(b)(3), relating to aerial surveying, and that is based, maintained, and
58.22 dispatched from a job opportunity building zone, qualifies as primarily used or consumed
58.23 in a job opportunity building zone if the imagery acquired from the aerial camera package
58.24 is returned to the job opportunity building zone for processing. The exemption for an
58.25 aerial camera package is limited to $50,000 in taxes as provided in this subdivision and
58.26 the tax must be imposed and collected as if the rate under section 297A.62, subdivision 1,
58.27 applied and then refunded in the manner provided in section 297A.75. The total amount
58.28 of the aerial camera package exemption refunded for all taxpayers for all fiscal years is
58.29 limited to $50,000 in taxes.
58.30 (b) Purchase and use of construction materials, and supplies, or equipment used or
58.31 consumed in, and equipment incorporated into, the construction of improvements to
58.32 real property in a job opportunity building zone are exempt if the improvements after
58.33 completion of construction are to be used in the conduct of a qualified business, as defined
58.34 in section 469.310. This exemption applies regardless of whether the purchases are made
58.35 by the business or a contractor.
59.1 (c) The exemptions under this subdivision apply to a local sales and use tax
59.2 regardless of whether the local sales tax is imposed on the sales taxable as defined under
59.3 this chapter.
59.4 (d) This subdivision applies to sales, if the purchase was made and delivery received
59.5 during the duration of the zone.
59.6 (e) Notwithstanding the restriction in paragraph (a), which requires items purchased
59.7 to be primarily used or consumed in the zone, purchases by a qualified business that is
59.8 an electrical cooperative located in Meeker County of equipment and materials used for
59.9 the generation, transmission, and distribution of electrical energy are exempt under this
59.10 subdivision, except that:
59.11 (1) the exemption for materials and equipment used or consumed outside the zone
59.12 must not exceed $200,000 in taxes for all taxpayers for all fiscal years; and
59.13 (2) no sales and use tax exemption is allowed for equipment purchased for resale.
59.14 For purposes of this paragraph, the tax must be imposed and collected as if the rate
59.15 under section 297A.62, subdivision 1, applied and then refunded in the manner provided
59.16 in section 297A.75.
59.17 EFFECTIVE DATE.Paragraphs (a) and (e) are effective for sales and purchases
59.18 made on or after August 1, 2005. Paragraph (b) is effective for sales and purchases made
59.19 on or after January 1, 2004.
59.20 Sec. 17. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 38,
59.21 is amended to read:
59.22 Subd. 38. Biotechnology and health sciences industry zone. (a) Purchases of
59.23 tangible personal property or taxable services by a qualified business, as defined in section
59.24 469.330, are exempt if the property or services are primarily used or consumed in a
59.25 biotechnology and health sciences industry zone designated under section 469.334.
59.26 (b) Purchase and use of construction materials, and supplies, or equipment used
59.27 or consumed in, and equipment incorporated into, the construction of improvements
59.28 to real property in a biotechnology and health sciences industry zone are exempt if the
59.29 improvements after completion of construction are to be used in the conduct of a qualified
59.30 business, as defined in section 469.330. This exemption applies regardless of whether the
59.31 purchases are made by the business or a contractor.
59.32 (c) The exemptions under this subdivision apply to a local sales and use tax
59.33 regardless of whether the local sales tax is imposed on the sales taxable as defined under
59.34 this chapter.
59.35 (d)(1) The tax on sales of goods or services exempted under this subdivision are
59.36 imposed and collected as if the applicable rate under section 297A.62 applied. Upon
60.1 application by the purchaser, on forms prescribed by the commissioner, a refund equal
60.2 to the tax paid must be paid to the purchaser. The application must include sufficient
60.3 information to permit the commissioner to verify the sales tax paid and the eligibility of
60.4 the claimant to receive the credit. No more than two applications for refunds may be filed
60.5 under this subdivision in a calendar year. The provisions of section 289A.40 apply to
60.6 the refunds payable under this subdivision.
60.7 (2) The amount required to make the refunds is annually appropriated to the
60.8 commissioner of revenue.
60.9 (3) The aggregate amount refunded to a qualified business must not exceed the
60.10 amount allocated to the qualified business under section 469.335.
60.11 (e) This subdivision applies only to sales made during the duration of the designation
60.12 of the zone.
60.13 EFFECTIVE DATE.This section is effective for sales and purchases made on
60.14 or after January 1, 2004.
60.15 Sec. 18. Minnesota Statutes 2004, section 297A.70, subdivision 2, is amended to read:
60.16 Subd. 2. Sales to government. (a) All sales, except those listed in paragraph (b),
60.17 to the following governments and political subdivisions, or to the listed agencies or
60.18 instrumentalities of governments and political subdivisions, are exempt:
60.19 (1) the United States and its agencies and instrumentalities;
60.20 (2) school districts, the University of Minnesota, state universities, community
60.21 colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts
60.22 Education, and an instrumentality of a political subdivision that is accredited as an
60.23 optional/special function school by the North Central Association of Colleges and Schools;
60.24 (3) hospitals and nursing homes owned and operated by political subdivisions of
60.25 the state of tangible personal property and taxable services used at or by hospitals and
60.26 nursing homes;
60.27 (4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip
60.28 operations provided for in section 473.4051;
60.29 (5) other states or political subdivisions of other states, if the sale would be exempt
60.30 from taxation if it occurred in that state; and
60.31 (6) sales to public libraries, public library systems, multicounty, multitype library
60.32 systems as defined in section 134.001, county law libraries under chapter 134A, state
60.33 agency libraries, the state library under section 480.09, and the Legislative Reference
60.34 Library.
60.35 (b) This exemption does not apply to the sales of the following products and services:
61.1 (1) building, construction, or reconstruction materials purchased by a contractor
61.2 or a subcontractor as a part of a lump-sum contract or similar type of contract with a
61.3 guaranteed maximum price covering both labor and materials for use in the construction,
61.4 alteration, or repair of a building or facility;
61.5 (2) construction materials purchased by tax exempt entities or their contractors to
61.6 be used in constructing buildings or facilities which will not be used principally by the
61.7 tax exempt entities;
61.8 (3) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5,
61.9 except for leases entered into by the United States or its agencies or instrumentalities; or
61.10 (4) meals and lodging as defined under section 297A.61, subdivision 3, paragraphs
61.11 (d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks, except for
61.12 meals and lodging, prepared food, candy, and soft drinks purchased directly by the United
61.13 States or its agencies or instrumentalities.
61.14 (c) As used in this subdivision, "school districts" means public school entities and
61.15 districts of every kind and nature organized under the laws of the state of Minnesota, and
61.16 any instrumentality of a school district, as defined in section 471.59.
61.17 EFFECTIVE DATE.This section is effective the day following final enactment.
61.18 Sec. 19. Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:
61.19 Subd. 3. Sales of certain goods and services to government. (a) The following
61.20 sales to or use by the specified governments and political subdivisions of the state are
61.21 exempt:
61.22 (1) repair and replacement parts for emergency rescue vehicles, fire trucks, and
61.23 fire apparatus to a political subdivision;
61.24 (2) machinery and equipment, except for motor vehicles, used directly for mixed
61.25 municipal solid waste management services at a solid waste disposal facility as defined in
61.26 section 115A.03, subdivision 10;
61.27 (3) chore and homemaking services to a political subdivision of the state to be
61.28 provided to elderly or disabled individuals;
61.29 (4) telephone services to the Department of Administration that are used to provide
61.30 telecommunications services through the intertechnologies revolving fund;
61.31 (5) firefighter personal protective equipment as defined in paragraph (b), if purchased
61.32 or authorized by and for the use of an organized fire department, fire protection district, or
61.33 fire company regularly charged with the responsibility of providing fire protection to the
61.34 state or a political subdivision;
62.1 (6) bullet-resistant body armor that provides the wearer with ballistic and trauma
62.2 protection, if purchased by a law enforcement agency of the state or a political subdivision
62.3 of the state, or a licensed peace officer, as defined in section 626.84, subdivision 1;
62.4 (7) motor vehicles purchased or leased by political subdivisions of the state if the
62.5 vehicles are exempt from registration under section 168.012, subdivision 1, paragraph (b),
62.6 exempt from taxation under section 473.448, or exempt from the motor vehicle sales tax
62.7 under section 297B.03, clause (12);
62.8 (8) equipment designed to process, dewater, and recycle biosolids for wastewater
62.9 treatment facilities of political subdivisions, and materials incidental to installation of
62.10 that equipment; and
62.11 (9) sales to a town of gravel and of machinery, equipment, and accessories, except
62.12 motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of
62.13 motor vehicles exempt from tax under section 297B.03, clause (10).; and
62.14 (10) the removal of trees, bushes, or shrubs for the construction and maintenance
62.15 of roads, trails, or firebreaks when purchased by an agency of the state or a political
62.16 subdivision of the state.
62.17 (b) For purposes of this subdivision, "firefighters personal protective equipment"
62.18 means helmets, including face shields, chin straps, and neck liners; bunker coats and
62.19 pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets;
62.20 protective coveralls; goggles; self-contained breathing apparatus; canister filter masks;
62.21 personal alert safety systems; spanner belts; optical or thermal imaging search devices;
62.22 and all safety equipment required by the Occupational Safety and Health Administration.
62.23 EFFECTIVE DATE.This section is effective for sales and purchases made after
62.24 October 28, 2002, but for sales and purchases made after October 28, 2002, and before
62.25 July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 289A.50, for
62.26 sales taxes collected and remitted to the state.
62.27 Sec. 20. Minnesota Statutes 2004, section 297A.70, subdivision 4, is amended to read:
62.28 Subd. 4. Sales to nonprofit groups. (a) All sales, except those listed in paragraph
62.29 (b), to the following "nonprofit organizations" are exempt:
62.30 (1) a corporation, society, association, foundation, or institution organized and
62.31 operated exclusively for charitable, religious, or educational purposes if the item
62.32 purchased is used in the performance of charitable, religious, or educational functions; and
62.33 (2) any senior citizen group or association of groups that:
62.34 (i) in general limits membership to persons who are either age 55 or older, or
62.35 physically disabled; and
63.1 (ii) is organized and operated exclusively for pleasure, recreation, and other
63.2 nonprofit purposes, no part of the net earnings of which inures to the benefit of any private
63.3 shareholders.
63.4 For purposes of this subdivision, charitable purpose includes the maintenance of a
63.5 cemetery owned by a religious organization.
63.6 (b) This exemption does not apply to the following sales:
63.7 (1) building, construction, or reconstruction materials purchased by a contractor
63.8 or a subcontractor as a part of a lump-sum contract or similar type of contract with a
63.9 guaranteed maximum price covering both labor and materials for use in the construction,
63.10 alteration, or repair of a building or facility;
63.11 (2) construction materials purchased by tax-exempt entities or their contractors to
63.12 be used in constructing buildings or facilities that will not be used principally by the
63.13 tax-exempt entities; and
63.14 (3) meals and lodging as defined under section 297A.61, subdivision 3, paragraphs
63.15 (d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks; and
63.16 (4) leasing of a motor vehicle as defined in section 297B.01, subdivision 5, except as
63.17 provided in paragraph (c).
63.18 (c) This exemption applies to the leasing of a motor vehicle as defined in section
63.19 297B.01, subdivision 5, only if the vehicle is:
63.20 (1) a truck, as defined in section 168.011, a bus, as defined in section 168.011, or a
63.21 passenger automobile, as defined in section 168.011, if the automobile is designed and
63.22 used for carrying more than nine persons including the driver; and
63.23 (2) intended to be used primarily to transport tangible personal property or
63.24 individuals, other than employees, to whom the organization provides service in
63.25 performing its charitable, religious, or educational purpose.
63.26 (d) A limited liability company also qualifies for exemption under this subdivision if
63.27 (1) it consists of a sole member that would qualify for the exemption, and (2) the items
63.28 purchased qualify for the exemption.
63.29 EFFECTIVE DATE.This section is effective the day following final enactment.
63.30 Sec. 21. Minnesota Statutes 2004, section 297A.70, subdivision 7, is amended to read:
63.31 Subd. 7. Hospitals and outpatient surgical centers. (a) Sales, except for those
63.32 listed in paragraph (c), to a hospital are exempt, if the items purchased are used in
63.33 providing hospital services. For purposes of this subdivision, "hospital" means a hospital
63.34 organized and operated for charitable purposes within the meaning of section 501(c)(3) of
63.35 the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction,
64.1 and "hospital services" are services authorized or required to be performed by a "hospital"
64.2 under chapter 144.
64.3 (b) Sales, except for those listed in paragraph (c), to an outpatient surgical center
64.4 are exempt, if the items purchased are used in providing outpatient surgical services. For
64.5 purposes of this subdivision, "outpatient surgical center" means an outpatient surgical
64.6 center organized and operated for charitable purposes within the meaning of section
64.7 501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other
64.8 jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means:
64.9 (1) services authorized or required to be performed by an outpatient surgical center under
64.10 chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means
64.11 health services furnished to a person whose medical condition is sufficiently acute to
64.12 require treatment unavailable through, or inappropriate to be provided by, a clinic or
64.13 physician's office, but not so acute as to require treatment in a hospital emergency room.
64.14 (c) This exemption does not apply to the following products and services:
64.15 (1) purchases made by a clinic, physician's office, or any other medical facility not
64.16 operating as a hospital or outpatient surgical center, even though the clinic, office, or
64.17 facility may be owned and operated by a hospital or outpatient surgical center;
64.18 (2) sales under section 297A.61, subdivision 3, paragraphs (d) and (g) paragraph
64.19 (g), clause (2), and prepared food, candy, and soft drinks;
64.20 (3) building and construction materials used in constructing buildings or facilities
64.21 that will not be used principally by the hospital or outpatient surgical center;
64.22 (4) building, construction, or reconstruction materials purchased by a contractor
64.23 or a subcontractor as a part of a lump-sum contract or similar type of contract with a
64.24 guaranteed maximum price covering both labor and materials for use in the construction,
64.25 alteration, or repair of a hospital or outpatient surgical center; or
64.26 (5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5.
64.27 (d) A limited liability company also qualifies for exemption under this subdivision if
64.28 (1) it consists of a sole member that would qualify for the exemption, and (2) the items
64.29 purchased qualify for the exemption.
64.30 EFFECTIVE DATE.This section is effective the day following final enactment.
64.31 Sec. 22. Minnesota Statutes 2004, section 297A.70, subdivision 13, is amended to read:
64.32 Subd. 13. Fund-raising sales by or for nonprofit groups. (a) The following
64.33 sales by the specified organizations for fund-raising purposes are exempt, subject to the
64.34 limitations listed in paragraph (b):
65.1 (1) all sales made by an organization that exists solely for the purpose of providing
65.2 educational or social activities for young people primarily age 18 and under;
65.3 (2) all sales made by an organization that is a senior citizen group or association of
65.4 groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized
65.5 and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii)
65.6 no part of its net earnings inures to the benefit of any private shareholders;
65.7 (3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if
65.8 the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization
65.9 under section 501(c)(3) of the Internal Revenue Code; and
65.10 (4) sales of gum, candy, and candy products sold for fund-raising purposes by a
65.11 nonprofit organization that provides educational and social activities primarily for young
65.12 people age 18 and under.
65.13 (b) The exemptions listed in paragraph (a) are limited in the following manner:
65.14 (1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross
65.15 annual receipts of the organization from fund-raising do not exceed $10,000; and
65.16 (2) the exemption under paragraph (a), clause (1), does not apply if the sales are
65.17 derived from admission charges or from activities for which the money must be deposited
65.18 with the school district treasurer under section 123B.49, subdivision 2, or be recorded in
65.19 the same manner as other revenues or expenditures of the school district under section
65.20 123B.49, subdivision 4.
65.21 (c) Sales of tangible personal property are exempt if the entire proceeds, less the
65.22 necessary expenses for obtaining the property, will be contributed to a registered combined
65.23 charitable organization described in section 309.501, to be used exclusively for charitable,
65.24 religious, or educational purposes, and the registered combined charitable organization
65.25 has given its written permission for the sale. Sales that occur over a period of more than
65.26 24 days per year are not exempt under this paragraph.
65.27 (d) For purposes of this subdivision, a club, association, or other organization of
65.28 elementary or secondary school students organized for the purpose of carrying on sports,
65.29 educational, or other extracurricular activities is a separate organization from the school
65.30 district or school for purposes of applying the $10,000 limit.
65.31 EFFECTIVE DATE.This section is effective the day following final enactment.
65.32 Sec. 23. Minnesota Statutes 2004, section 297A.70, subdivision 14, is amended to read:
65.33 Subd. 14. Fund-raising events sponsored by nonprofit groups. (a) Sales of
65.34 tangible personal property at, and admission charges for fund-raising events sponsored
65.35 by, a nonprofit organization are exempt if:
66.1 (1) all gross receipts are recorded as such, in accordance with generally accepted
66.2 accounting practices, on the books of the nonprofit organization; and
66.3 (2) the entire proceeds, less the necessary expenses for the event, will be used
66.4 solely and exclusively for charitable, religious, or educational purposes. Exempt sales
66.5 include the sale of food, meals, and drinks prepared food, candy, and soft drinks at the
66.6 fund-raising event.
66.7 (b) This exemption is limited in the following manner:
66.8 (1) it does not apply to admission charges for events involving bingo or other
66.9 gambling activities or to charges for use of amusement devices involving bingo or other
66.10 gambling activities;
66.11 (2) all gross receipts are taxable if the profits are not used solely and exclusively for
66.12 charitable, religious, or educational purposes;
66.13 (3) it does not apply unless the organization keeps a separate accounting record,
66.14 including receipts and disbursements from each fund-raising event that documents all
66.15 deductions from gross receipts with receipts and other records;
66.16 (4) it does not apply to any sale made by or in the name of a nonprofit corporation as
66.17 the active or passive agent of a person that is not a nonprofit corporation;
66.18 (5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
66.19 (6) it does not apply to fund-raising events conducted on premises leased for more
66.20 than five days but less than 30 days; and
66.21 (7) it does not apply if the risk of the event is not borne by the nonprofit organization
66.22 and the benefit to the nonprofit organization is less than the total amount of the state and
66.23 local tax revenues foregone by this exemption.
66.24 (c) For purposes of this subdivision, a "nonprofit organization" means any unit of
66.25 government, corporation, society, association, foundation, or institution organized and
66.26 operated for charitable, religious, educational, civic, fraternal, and senior citizens' or
66.27 veterans' purposes, no part of the net earnings of which inures to the benefit of a private
66.28 individual.
66.29 EFFECTIVE DATE.This section is effective the day following final enactment.
66.30 Sec. 24. Minnesota Statutes 2004, section 297A.70, subdivision 15, is amended to read:
66.31 Subd. 15. Statewide amateur athletic games. Notwithstanding section 297A.61,
66.32 subdivision 3, or any other provision of this chapter, the gross receipts from the following
66.33 sales made to or by a nonprofit corporation designated by the Minnesota Amateur Sports
66.34 Commission to conduct a series of statewide amateur athletic games and related events,
66.35 workshops, and clinics are exempt:
67.1 (1) sales of tangible personal property to or the storage, use, or other consumption of
67.2 tangible personal property by the nonprofit corporation; and
67.3 (2) sales of tangible personal property, admission charges, and sales of food,
67.4 meals, and drinks prepared food, candy, and soft drinks by the nonprofit corporation at
67.5 fund-raising events, athletic events, or athletic facilities.
67.6 EFFECTIVE DATE.This section is effective the day following final enactment.
67.7 Sec. 25. Minnesota Statutes 2005 Supplement, section 297A.72, subdivision 2, is
67.8 amended to read:
67.9 Subd. 2. Content and form of exemption certificate. An exemption certificate
67.10 must be substantially in the form prescribed by the commissioner and:
67.11 (1) be signed by the purchaser or meet the requirements of section 270C.304;
67.12 (2) bear the name and address of the purchaser; and
67.13 (3) indicate the sales tax account number, if any, issued to the purchaser;.
67.14 (4) indicate the general character of the property sold by the purchaser in the regular
67.15 course of business or the activities carried on by the organization; and
67.16 (5) identify the property purchased.
67.17 EFFECTIVE DATE.This section is effective the day following final enactment.
67.18 Sec. 26. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is
67.19 amended to read:
67.20 Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the
67.21 following exempt items must be imposed and collected as if the sale were taxable and the
67.22 rate under section 297A.62, subdivision 1, applied. The exempt items include:
67.23 (1) capital equipment exempt under section 297A.68, subdivision 5;
67.24 (2) building materials for an agricultural processing facility exempt under section
67.25 297A.71, subdivision 13;
67.26 (3) building materials for mineral production facilities exempt under section
67.27 297A.71, subdivision 14;
67.28 (4) building materials for correctional facilities under section 297A.71, subdivision
67.29 3;
67.30 (5) building materials used in a residence for disabled veterans exempt under section
67.31 297A.71, subdivision 11;
67.32 (6) elevators and building materials exempt under section 297A.71, subdivision 12;
67.33 (7) building materials for the Long Lake Conservation Center exempt under section
67.34 297A.71, subdivision 17;
68.1 (8) materials, supplies, fixtures, furnishings, and equipment for a county law
68.2 enforcement and family service center under section 297A.71, subdivision 26;
68.3 (9) materials and supplies for qualified low-income housing under section 297A.71,
68.4 subdivision 23; and
68.5 (10) materials, supplies, and equipment for municipal electric utility facilities under
68.6 section 297A.71, subdivision 35.;
68.7 (11) equipment and materials used for the generation, transmission, and distribution
68.8 of electrical energy and an aerial camera package exempt under section 297A.68,
68.9 subdivision 37; and
68.10 (12) tangible personal property and taxable services and construction materials,
68.11 supplies, and equipment exempt under section 297A.68, subdivision 41.
68.12 EFFECTIVE DATE.This section is effective the day following final enactment.
68.13 Sec. 27. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is
68.14 amended to read:
68.15 Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the
68.16 commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
68.17 must be paid to the applicant. Only the following persons may apply for the refund:
68.18 (1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
68.19 (2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental
68.20 subdivision;
68.21 (3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits
68.22 provided in United States Code, title 38, chapter 21;
68.23 (4) for subdivision 1, clause (6), the applicant must be the owner of the homestead
68.24 property;
68.25 (5) for subdivision 1, clause (9), the owner of the qualified low-income housing
68.26 project; and
68.27 (6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or
68.28 a joint venture of municipal electric utilities.; and
68.29 (7) for subdivision 1, clauses (11) and (12), the owner of the qualifying business.
68.30 EFFECTIVE DATE.This section is effective the day following final enactment.
68.31 Sec. 28. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 3, is
68.32 amended to read:
68.33 Subd. 3. Application. (a) The application must include sufficient information
68.34 to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
68.35 subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), or (10),
69.1 (11), or (12), the contractor, subcontractor, or builder must furnish to the refund applicant
69.2 a statement including the cost of the exempt items and the taxes paid on the items unless
69.3 otherwise specifically provided by this subdivision. The provisions of sections 289A.40
69.4 and 289A.50 apply to refunds under this section.
69.5 (b) An applicant may not file more than two applications per calendar year for
69.6 refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
69.7 EFFECTIVE DATE.This section is effective the day following final enactment.
69.8 Sec. 29. Minnesota Statutes 2005 Supplement, section 297A.815, subdivision 1,
69.9 is amended to read:
69.10 Subdivision 1. Motor vehicle lease price; payment. (a) In the case of a lease of a
69.11 motor vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), the
69.12 tax is imposed on the total amount to be paid by the lessee under the lease agreement. The
69.13 lessor shall collect the tax in full at the time the lease is executed or, if the tax is included
69.14 in the lease and the lease is assigned, the tax is due from the original lessor at the time the
69.15 lease is assigned. The total amount to be paid by the lessee under the lease agreement
69.16 equals the agreed-upon value of the vehicle less manufacturer's rebates, the stated residual
69.17 value of the leased vehicle, and the total value allowed for a vehicle owned by the lessee
69.18 taken in trade by the lessor, plus the price of any taxable goods and services included in
69.19 the lease and the rent charge as provided by Code of Federal Regulations, title 12, section
69.20 213.4, excluding any rent charge related to the capitalization of the tax.
69.21 (b) If the total amount paid by the lessee for use of the leased vehicle includes
69.22 amounts that are not calculated at the time the lease is executed, the tax is imposed and
69.23 must be collected by the lessor at the time the amounts are paid by the lessee. In the case
69.24 of a lease which by its terms may be renewed, the sales tax is due and payable on the
69.25 total amount to be paid during the initial term of the lease, and then for each subsequent
69.26 renewal period on the total amount to be paid during the renewal period.
69.27 (c) If a lease is canceled or rescinded on or before 90 days of its execution or if a
69.28 vehicle is returned to the manufacturer under section 325F.665, the lessor may file a claim
69.29 for a refund of the total tax paid minus the amount of tax due for the period the vehicle is
69.30 used by the lessee.
69.31 (d) If a lessee's obligation to make payments on a lease is canceled more than 90
69.32 days after its execution, a credit is allowed against sales tax or motor vehicles sales tax
69.33 due on a subsequent lease or purchase of a motor vehicle if that lease or purchase is
69.34 consummated within 30 days of the date the prior lease was canceled. The amount of the
69.35 credit is equal to (1) the sales tax paid at the inception of the lease, multiplied by (2)
69.36 the ratio of the number of full months remaining in the lease at the time of termination
70.1 compared to the term of the lease used in calculating sales tax paid at the inception of the
70.2 lease. The credit or any part of it cannot be assigned or transferred to another person.
70.3 EFFECTIVE DATE.This section is effective for leases entered into after
70.4 September 30, 2005.
70.5 Sec. 30. Minnesota Statutes 2004, section 297A.99, subdivision 7, is amended to read:
70.6 Subd. 7. Exemptions. (a) All goods or services that are otherwise exempt from
70.7 taxation under this chapter are exempt from a political subdivision's tax.
70.8 (b) The gross receipts from the sale of tangible personal property that meets the
70.9 requirement of section 297A.68, subdivision 15, are exempt, except the qualification
70.10 test applies based on the boundaries of the political subdivision instead of the state
70.11 of Minnesota.
70.12 (c) All mobile transportation equipment, and parts and accessories attached to or
70.13 to be attached to the equipment are exempt, if purchased by a holder of a motor carrier
70.14 direct pay permit under section 297A.90.
70.15 EFFECTIVE DATE.This section is effective the day following final enactment.
70.16 Sec. 31. Laws 2005, First Special Session chapter 3, article 5, section 3, the effective
70.17 date, is amended to read:
70.18
70.19 EFFECTIVE DATE. This section is effective for sales and purchases made after
70.20 October 28, 2002, but for land clearing contracts entered into after October 28, 2002,
70.21 but before July 15, 2005, no refunds may be claimed under Minnesota Statutes, section
70.22 289A.50, for sales taxes collected and remitted to the state on the land clearing contracts.
70.23 EFFECTIVE DATE.This section is effective the day following final enactment.
70.24 Sec. 32. REPEALER.
70.25 (a) Minnesota Statutes 2004, section 297A.68, subdivisions 15 and 18, are repealed.
70.26 (b) Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 7,
70.27 and 8; 8130.5100; 8130.5400; and 8130.5800, subpart 6, are repealed.
70.28 EFFECTIVE DATE.This section is effective the day following final enactment.
70.29 ARTICLE 7
70.30 DEPARTMENT OF REVENUE SPECIAL TAXES AND FEES
70.31 Section 1. Minnesota Statutes 2005 Supplement, section 115B.49, subdivision 4, is
70.32 amended to read:
71.1 Subd. 4. Registration; fees. (a) The owner or operator of a dry cleaning facility
71.2 shall register on or before October 1 of each year with the commissioner of revenue in
71.3 a manner prescribed by the commissioner of revenue and pay a registration fee for the
71.4 facility. The amount of the fee is:
71.5 (1) $500, for facilities with a full-time equivalence of fewer than five;
71.6 (2) $1,000, for facilities with a full-time equivalence of five to ten; and
71.7 (3) $1,500, for facilities with a full-time equivalence of more than ten.
71.8 The registration fee must be paid on or before October 18 or the owner or operator
71.9 of a dry cleaning facility may elect to pay the fee in equal installments. Installment
71.10 payments must be paid on or before October 18, on or before January 18, on or before
71.11 April 18, and on or before June 18. All payments made after October 18 bear interest
71.12 at the rate specified in section 270C.40.
71.13 (b) A person who sells dry cleaning solvents for use by dry cleaning facilities in the
71.14 state shall collect and remit to the commissioner of revenue in a manner prescribed by the
71.15 commissioner of revenue, on or before the 20th day of the month following the month in
71.16 which the sales of dry cleaning solvents are made, a fee of:
71.17 (1) $3.50 for each gallon of perchloroethylene sold for use by dry cleaning facilities
71.18 in the state;
71.19 (2) 70 cents for each gallon of hydrocarbon-based dry cleaning solvent sold for use
71.20 by dry cleaning facilities in the state; and
71.21 (3) 35 cents for each gallon of other nonaqueous solvents sold for use by dry
71.22 cleaning facilities in the state.
71.23 (c) The audit, assessment, appeal, collection, enforcement, and administrative
71.24 provisions of chapters 270C and 289A apply to the fee imposed by this subdivision.
71.25 To enforce this subdivision, the commissioner of revenue may grant extensions to file
71.26 returns and pay fees, impose penalties and interest on the annual registration fee under
71.27 paragraph (a) and the monthly fee under paragraph (b), and abate penalties and interest in
71.28 the manner provided in chapters 270C and 289A. The penalties and interest imposed on
71.29 taxes under chapter 297A apply to the fees imposed under this subdivision. Disclosure
71.30 of data collected by the commissioner of revenue under this subdivision is governed by
71.31 chapter 270B.
71.32 EFFECTIVE DATE.This section is effective for returns and payments due on
71.33 or after October 1, 2006.
71.34 Sec. 2. [287.222] TRANSFER TO OBTAIN FINANCING.
72.1 The deed tax is $1.65 on a deed or other instrument that transfers real property if
72.2 the transfer is (1) to a person who is a builder or contractor, (2) intended to be temporary,
72.3 and (3) done solely to enable the builder or contractor to obtain financing to build an
72.4 improvement on the conveyed property under a contract for improvement with the grantor
72.5 that calls for the conveyed property to be reconveyed to the grantor upon completion of
72.6 and payment for the improvement. The deed tax is $1.65 on a deed or other instrument
72.7 that transfers the real property back from the builder or contractor to the grantor.
72.8 EFFECTIVE DATE.This section is effective for deeds both executed and recorded
72.9 on or after July 1, 2006.
72.10 Sec. 3. Minnesota Statutes 2004, section 295.50, subdivision 4, is amended to read:
72.11 Subd. 4. Health care provider. (a) "Health care provider" means:
72.12 (1) a person whose health care occupation is regulated or required to be regulated by
72.13 the state of Minnesota furnishing any or all of the following goods or services directly to a
72.14 patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services,
72.15 drugs, laboratory, diagnostic or therapeutic services;
72.16 (2) a person who provides goods and services not listed in clause (1) that qualify for
72.17 reimbursement under the medical assistance program provided under chapter 256B;
72.18 (3) a staff model health plan company;
72.19 (4) an ambulance service required to be licensed; or
72.20 (5) a person who sells or repairs hearing aids and related equipment or prescription
72.21 eyewear.
72.22 (b) Health care provider does not include:
72.23 (1) hospitals; medical supplies distributors, except as specified under paragraph
72.24 (a), clause (5); nursing homes licensed under chapter 144A or licensed in any other
72.25 jurisdiction; pharmacies; surgical centers; bus and taxicab transportation, or any other
72.26 providers of transportation services other than ambulance services required to be licensed;
72.27 supervised living facilities for persons with mental retardation or related conditions,
72.28 licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; residential care homes
72.29 licensed under chapter 144B; housing with services establishments required to be
72.30 registered under chapter 144D; board and lodging establishments providing only custodial
72.31 services that are licensed under chapter 157 and registered under section 157.17 to
72.32 provide supportive services or health supervision services; adult foster homes as defined
72.33 in Minnesota Rules, part 9555.5105; day training and habilitation services for adults
72.34 with mental retardation and related conditions as defined in section 252.41, subdivision
73.1 3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day
73.2 care centers as defined in Minnesota Rules, part 9555.9600;
73.3 (2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart
73.4 15; a person providing personal care services and supervision of personal care services
73.5 as defined in Minnesota Rules, part 9505.0335; a person providing private duty nursing
73.6 services as defined in Minnesota Rules, part 9505.0360; and home care providers required
73.7 to be licensed under chapter 144A;
73.8 (3) a person who employs health care providers solely for the purpose of providing
73.9 patient services to its employees; and
73.10 (4) an educational institution that employs health care providers solely for the
73.11 purpose of providing patient services to its students if the institution does not receive fee
73.12 for service payments or payments for extended coverage.
73.13 EFFECTIVE DATE.This section is effective the day following final enactment.
73.14 Sec. 4. Minnesota Statutes 2004, section 295.53, subdivision 3, is amended to read:
73.15 Subd. 3. Separate statement of tax. A hospital, surgical center, or health care
73.16 provider, or wholesale drug distributor must not state the tax obligation under section
73.17 295.52 in a deceptive or misleading manner. It must not separately state tax obligations
73.18 on bills provided to patients, consumers, or other payers when the amount received for
73.19 the services or goods is not subject to tax.
73.20 Pharmacies that separately state the tax obligations on bills provided to consumers
73.21 or to other payers who purchase legend drugs may state the tax obligation as the wholesale
73.22 price of the legend drugs multiplied by the tax percentage specified in section 295.52.
73.23 Pharmacies must not state the tax obligation based on the retail price.
73.24 Whenever the commissioner determines that a person has engaged in any act or
73.25 practice constituting a violation of this subdivision, the commissioner may bring an action
73.26 in the name of the state in the district court of the appropriate county to enjoin the act
73.27 or practice and to enforce compliance with this subdivision, or the commissioner may
73.28 refer the matter to the attorney general or the county attorney of the appropriate county.
73.29 Upon a proper showing, a permanent or temporary injunction, restraining order, or other
73.30 appropriate relief must be granted.
73.31 EFFECTIVE DATE.This section is effective the day following final enactment.
73.32 Sec. 5. Minnesota Statutes 2004, section 297F.01, is amended by adding a subdivision
73.33 to read:
73.34 Subd. 22a. Weighted average retail price. "Weighted average retail price" means
73.35 (1) the average retail price per pack of 20 cigarettes, with the average price weighted by the
74.1 number of packs sold at each price, (2) reduced by the sales tax included in the retail price,
74.2 and (3) adjusted for the expected inflation from the time of the survey to the average of the
74.3 12 months that the sales tax will be imposed. The commissioner shall make the inflation
74.4 adjustment in accordance with the Consumer Price Index for all urban consumers inflation
74.5 indicator as published in the most recent state budget forecast. The inflation factor for the
74.6 calendar year in which the new tax rate takes effect must be used. If the survey indicates
74.7 that the average retail price of cigarettes has not increased relative to the average retail
74.8 price in the previous year's survey, then no inflation adjustment must be made.
74.9 EFFECTIVE DATE.This section is effective April 30, 2006.
74.10 Sec. 6. Minnesota Statutes 2004, section 297G.01, subdivision 7, is amended to read:
74.11 Subd. 7. Distilled spirits. "Distilled spirits" is means:
74.12 (1) intoxicating liquors, including ethyl alcohol, hydrated oxide of ethyl, spirits of
74.13 wine, whiskey, rum, brandy, gin, and other distilled spirits, including all dilutions and
74.14 mixtures, for nonindustrial use.;
74.15 (2) any beverage that would be classified as a flavored malt beverage except that the
74.16 alcohol contribution from flavors and other nonbeverage materials exceeds 49 percent
74.17 of the alcohol content of the product; or
74.18 (3) any beverage that would be classified as a flavored malt beverage except that the
74.19 beverage contains more than six percent alcohol by volume, and more than 1.5 percent
74.20 of the volume of the finished product consists of alcohol derived from flavors and other
74.21 nonbeverage ingredients that contain alcohol.
74.22 EFFECTIVE DATE.This section is effective July 1, 2006.
74.23 Sec. 7. Minnesota Statutes 2004, section 297G.01, is amended by adding a subdivision
74.24 to read:
74.25 Subd. 8a. Flavored malt beverage. (a) "Flavored malt beverage" means a
74.26 fermented malt beverage that:
74.27 (1) contains six percent or less alcohol by volume and derives at least 51 percent
74.28 of its alcohol content by volume from the fermentation of grain-derived carbohydrates,
74.29 as long as not more than 49 percent of the beverage's overall alcohol content is obtained
74.30 from flavors and other added nonbeverage ingredients containing alcohol; or
74.31 (2) contains more than six percent alcohol by volume that derives not more than 1.5
74.32 percent of its overall alcohol content by volume from flavors and other added nonbeverage
74.33 ingredients containing alcohol.
74.34 (b) Flavored malt beverage does not include cider or an alcoholic beverage obtained
74.35 primarily by fermentation of rice, such as sake.
75.1 EFFECTIVE DATE.This section is effective July 1, 2006.
75.2 ARTICLE 8
75.3 DEPARTMENT OF REVENUE MISCELLANEOUS
75.4 Section 1. Minnesota Statutes 2005 Supplement, section 270C.01, subdivision 4, is
75.5 amended to read:
75.6 Subd. 4. Electronic means; electronically. "Electronic means" and "electronically"
75.7 mean a method that is electronic, as defined in section 325L.02, paragraph (e), and that
75.8 is prescribed by the commissioner. Electronic means includes the use of a touch-tone
75.9 telephone to transmit return information in a manner prescribed by the commissioner.
75.10 EFFECTIVE DATE.This section is effective the day following final enactment.
75.11 Sec. 2. Minnesota Statutes 2005 Supplement, section 270C.304, is amended to read:
75.12 270C.304 ELECTRONICALLY FILED RETURNS; SIGNATURES.
75.13 For purposes of a law administered by the commissioner, the name of the taxpayer,
75.14 the name of the taxpayer's authorized agent, or the taxpayer's identification number,
75.15 will constitute a signature when transmitted as part of the return information on returns
75.16 filed by electronic means by the taxpayer or at the taxpayer's direction. "Electronic
75.17 means" includes, but is not limited to, the use of a touch-tone telephone to transmit return
75.18 information in a manner prescribed by the commissioner.
75.19 EFFECTIVE DATE.This section is effective the day following final enactment.
75.20 Sec. 3. Minnesota Statutes 2005 Supplement, section 270C.33, subdivision 4, is
75.21 amended to read:
75.22 Subd. 4. Orders of assessment. (a) The commissioner may issue an order of
75.23 assessment in any of the following circumstances:
75.24 (1) the commissioner determines that the correct amount of tax is different than that
75.25 assessed on a return filed with the commissioner;
75.26 (2) no return has been filed and the commissioner determines the amount of tax
75.27 that should have been assessed;
75.28 (3) the commissioner determines that the correct amount of a refundable credit
75.29 is different than the amount claimed by a taxpayer. For purposes of this subdivision,
75.30 "refundable credit" means a refund benefit or credit due a person that is unrelated to the
75.31 person's liability for a tax. "Refundable credit" does not include estimated tax payments
75.32 or withholding taxes. An assessment for an overpayment of a refundable credit may be
75.33 collected in the same manner as a tax collected by the commissioner; and
75.34 (4) the commissioner determines the correct amount of a tax that the taxpayer is not
75.35 required to assess by a return filed with the commissioner.; and
76.1 (5) the commissioner determines that a penalty other than a penalty for late payment
76.2 of tax, late filing of a return, or failure to pay tax by electronic means should be imposed,
76.3 and the penalty is not included on an order of assessment made under clauses (1) to (4).
76.4 (b) An order of assessment must be in writing.
76.5 (c) An order of assessment must be signed by the commissioner or a delegate, or
76.6 have their facsimile signature, if the change in tax, excluding penalties and interest,
76.7 exceeds $1,000.
76.8 (d) An order of assessment is final when made but, as applicable, is reviewable
76.9 administratively under section 270C.35, or appealable to Tax Court under chapter 271.
76.10 EFFECTIVE DATE.This section is effective the day following final enactment.
76.11 Sec. 4. Minnesota Statutes 2005 Supplement, section 270C.57, subdivision 3, is
76.12 amended to read:
76.13 Subd. 3. Assessment; abatement; review. The commissioner may assess liability
76.14 against a successor business under this section within the time prescribed for collecting
76.15 the underlying sales and withholding taxes, interest, and penalties. The assessment is
76.16 presumed to be valid, and the burden is upon the successor to show it is incorrect or
76.17 invalid. An order assessing successor liability is reviewable administratively under section
76.18 270C.35 and is appealable to Tax Court under chapter 271. The commissioner may abate
76.19 an assessment if the successor's failure to give the notice required under this section is due
76.20 to reasonable cause. The procedural and appeal provisions under section 270C.34 apply
76.21 to abatement requests under this subdivision. Collection remedies available against the
76.22 transferring business are available against the successor from the date of assessment of
76.23 successor liability.
76.24 EFFECTIVE DATE.This section is effective the day following final enactment.
76.25 Sec. 5. Minnesota Statutes 2005 Supplement, section 270C.67, subdivision 1, is
76.26 amended to read:
76.27 Subdivision 1. Authority. If any tax payable to the commissioner or to the
76.28 department is not paid when due, such tax may be collected by the commissioner within
76.29 five years after the date of assessment of the tax, or if a lien has been filed, during the
76.30 period the lien is enforceable, or if the tax judgment has been filed, within the statutory
76.31 period of enforcement of a valid tax judgment, by a levy upon all property and rights
76.32 to property, including any property in the possession of law enforcement officials, of
76.33 the person liable for the payment or collection of such tax (except that which is exempt
76.34 from execution pursuant to section 550.37) or property on which there is a lien provided
77.1 in section 270C.63. For this purpose, "tax" includes any penalty, interest, and costs,
77.2 properly payable.
77.3 EFFECTIVE DATE.This section is effective the day following final enactment.
77.4 Sec. 6. Minnesota Statutes 2005 Supplement, section 270C.67, is amended by adding a
77.5 subdivision to read:
77.6 Subd. 1a. Exempt property. A levy under this section is not enforceable against:
77.7 (1) a purchaser with respect to tangible personal property purchased at retail in
77.8 the ordinary course of the seller's trade or business, unless at the time of purchase the
77.9 purchaser intends the purchase to or knows the purchase will hinder, evade, or defeat
77.10 the collection of a tax; or
77.11 (2) the personal property listed as exempt in sections 550.37, 550.38, and 550.39.
77.12 EFFECTIVE DATE.This section is effective the day following final enactment.
77.13 Sec. 7. Minnesota Statutes 2005 Supplement, section 271.12, is amended to read:
77.14 271.12 WHEN ORDER EFFECTIVE.
77.15 No order for refundment by the commissioner of revenue, the appropriate unit of
77.16 government, or the Tax Court shall take effect until the time for appeal therefrom or
77.17 review thereof by all parties entitled thereto has expired. Otherwise every order of the
77.18 commissioner, the appropriate unit of government, or the Tax Court shall take effect
77.19 immediately upon the filing thereof, and no appeal therefrom or review thereof shall
77.20 stay the execution thereof or extend the time for payment of any tax or other obligation
77.21 unless otherwise expressly provided by law; provided, that in case an order which has
77.22 been acted upon, in whole or in part, shall thereafter be set aside or modified upon appeal,
77.23 the determination upon appeal or review shall supersede the order appealed from and be
77.24 binding upon all parties affected thereby, and such adjustments as may be necessary
77.25 to give effect thereto shall be made accordingly; and provided further, the Tax Court
77.26 may enjoin enforcement of the order of the commissioner being appealed. If it be finally
77.27 determined upon such appeal or review that any person is entitled to refundment of any
77.28 amount which has been paid for a tax or other obligation, such amount, unless otherwise
77.29 provided by law, shall be paid to the person by the commissioner of finance, or other
77.30 proper officer, out of funds derived from taxes of the same kind, if available for the
77.31 purpose, or out of other available funds, if any, with interest at the rate specified in section
77.32 270C.405 from the date of payment of the tax, unless a different rate or date of accrual
77.33 of interest is otherwise provided by law, in which case such other rate or date of accrual
77.34 shall apply, upon certification by the commissioner of revenue, the appropriate unit of
77.35 government, the Tax Court or the Supreme Court.
78.1 If, within 120 days after a decision of the Tax Court becomes final, the commissioner
78.2 does not refund the overpayment determined by the court, together with interest, on
78.3 motion by the taxpayer, the Tax Court shall have jurisdiction to order the refund of
78.4 the overpayment and interest, and to award reasonable litigation costs for bringing the
78.5 motion. If any tax, assessment, or other obligation be increased upon such appeal or
78.6 review, the increase shall be added to the original amount, and may be enforced and
78.7 collected therewith.
78.8 EFFECTIVE DATE.This section is effective the day following final enactment.
78.9 Sec. 8. Minnesota Statutes 2005 Supplement, section 289A.121, subdivision 5, is
78.10 amended to read:
78.11 Subd. 5. Reportable transactions. (a) For each taxable year in which a taxpayer
78.12 must make a return or a statement under Code of Federal Regulations, title 26, section
78.13 1.6011-4, for a reportable transaction, including a listed transaction, in which the taxpayer
78.14 participated in a taxable year for which a return is required under chapter 290, the taxpayer
78.15 must file a copy of the disclosure with the commissioner.
78.16 (b) Any taxpayer that is a member of a unitary business group that includes any
78.17 person that must make a disclosure statement under Code of Federal Regulations, title 26,
78.18 section 1.6011-4, must file a disclosure under this subdivision.
78.19 (c) Disclosure under this subdivision is required for any transaction entered into after
78.20 December 31, 2001, that the Internal Revenue Service determines is a listed transaction
78.21 at any time, and must be made in the manner prescribed by the commissioner. For
78.22 transactions in which the taxpayer participated for taxable years ending before December
78.23 31, 2005, disclosure must be made by the extended due date of the first return required
78.24 under chapter 290 that occurs 60 days or more after July 14, 2005. With respect to
78.25 transactions in which the taxpayer participated for taxable years ending on and after
78.26 December 31, 2005, disclosure must be made in the time and manner prescribed in Code
78.27 of Federal Regulations, title 26, section 1.6011-4(e).
78.28 (d) Notwithstanding paragraphs (a) to (c), no disclosure is required for transactions
78.29 entered into after December 31, 2001, and before January 1, 2006, if (1) the taxpayer
78.30 has filed an amended income tax return which reverses the tax benefits of the tax
78.31 shelter transaction, or (2) as a result of a federal audit the Internal Revenue Service has
78.32 determined the tax treatment of the transaction and an amended return has been filed
78.33 to reflect the federal treatment.
79.1 EFFECTIVE DATE.This section is effective for disclosures of reportable
79.2 transactions in which the taxpayer participated for taxable years ending before December
79.3 31, 2005.
79.4 ARTICLE 9
79.5 PUBLIC FINANCE
79.6 Section 1. Minnesota Statutes 2004, section 103E.635, subdivision 7, is amended to
79.7 read:
79.8 Subd. 7. Sale of definitive drainage bonds. The board must sell and negotiate the
79.9 definitive drainage bonds for at least their par value. The definitive bonds must be sold
79.10 in accordance with section according to sections 475.56 and 475.60.
79.11 Sec. 2. Minnesota Statutes 2004, section 116A.20, subdivision 3, is amended to read:
79.12 Subd. 3. How payable. The bonds shall be payable at such time or times, not to
79.13 exceed (1) 30 years from their date or (2) 40 years or the useful life of the asset, whichever
79.14 is less, if financed or guaranteed by the United States Department of Agriculture, and bear
79.15 such rate or rates of interest not exceeding eight percent per annum, payable annually or
79.16 semiannually as the county board shall by resolution determine. The years and amounts
79.17 of principal maturities shall be such as in the opinion of the county board are warranted
79.18 by the anticipated collections of the water and sewer improvement assessments without
79.19 regard to any limitations on such maturities imposed by section 475.54.
79.20 Sec. 3. Minnesota Statutes 2004, section 162.18, subdivision 1, is amended to read:
79.21 Subdivision 1. Limitation on amount. Any city having a population of 5,000 or
79.22 more may in accordance with chapter 475, except as otherwise provided herein, issue and
79.23 sell its obligations for the purpose of establishing, locating, relocating, constructing,
79.24 reconstructing, and improving municipal state-aid streets therein. In the resolution
79.25 providing for the issuance of the obligations, the governing body of the municipality
79.26 shall irrevocably pledge and appropriate to the sinking fund from which the obligations
79.27 are payable, an amount of the moneys allotted or to be allotted to the municipality from
79.28 its account in the municipal state-aid street fund sufficient to pay the principal of and the
79.29 interest on the obligations as they respectively come due. The obligations shall be issued
79.30 in amounts and on terms such that the average annual amount of principal and interest due
79.31 in all subsequent calendar years on the obligations, including any similar obligations of
79.32 the municipality which are outstanding, shall not exceed 50 90 percent of the amount of
79.33 the last annual allotment preceding the bond issue received by the municipality from the
79.34 construction account in the municipal state-aid street fund; except that the municipality
79.35 may issue general obligation bonds for said purpose, to be purchased by it for the account
80.1 of any one or more of its own funds, including debt redemption funds, in which case such
80.2 bonds shall mature in not exceeding five years from their respective dates of issue, in
80.3 principal amounts not exceeding in any calendar year, with the principal amount of all
80.4 other municipal state-aid street obligations maturing in such year, the total amount of the
80.5 last annual allotment preceding the bond issue received by the municipality from the
80.6 construction account in the municipal state-aid street fund. All interest on the obligations
80.7 shall be paid out of the municipality's normal maintenance account in the municipal
80.8 state-aid street fund. Any such obligations may be made general obligations, but if
80.9 moneys of the municipality other than moneys received from the municipal state-aid street
80.10 fund, are used for payment of the obligations, the moneys so used shall be restored to the
80.11 appropriate fund from the moneys next received by the municipality from the construction
80.12 or maintenance account in the municipal state-aid street fund which are not required to be
80.13 paid into a sinking fund for obligations.
80.14 Sec. 4. Minnesota Statutes 2004, section 162.181, subdivision 1, is amended to read:
80.15 Subdivision 1. Limitation on amount. Except as otherwise provided herein, any
80.16 county may, in accordance with chapter 475, issue and sell its obligations, the total
80.17 amount thereof not to exceed the total of the preceding two years state-aid allotments,
80.18 for the purpose of establishing, locating, relocating, constructing, reconstructing, and
80.19 improving county state-aid highways and constructing buildings and other facilities for
80.20 maintaining county state-aid highways. In the resolution providing for the issuance of the
80.21 obligations, the county board of the county shall irrevocably pledge and appropriate to the
80.22 sinking fund from which the obligations are payable, an amount of the money allotted
80.23 or to be allotted to the county from its account in the county state-aid highway fund
80.24 sufficient to pay the principal of and the interest on the obligations as they respectively
80.25 come due. The obligations shall be issued in the amounts and on terms such that the
80.26 amount of principal and interest due in any calendar year on the obligations, including
80.27 any similar obligations of the county which are outstanding, shall not exceed 50 90
80.28 percent of the amount of the last annual allotment preceding the bond issue received
80.29 by the county from the construction account in the county state-aid highway fund. All
80.30 interest on the obligations shall be paid out of the county's normal maintenance account
80.31 in the county state-aid highway fund. The obligations may be made general obligations,
80.32 but if money of the county other than money received from the county state-aid highway
80.33 fund, is used for payment of the obligations, the money so used shall be restored to the
80.34 appropriate fund from the money next received by the county from the construction or
80.35 maintenance account in the county state-aid highway fund which is not required to be
80.36 paid into a sinking fund for obligations.
81.1 Sec. 5. Minnesota Statutes 2004, section 273.032, is amended to read:
81.2 273.032 MARKET VALUE DEFINITION.
81.3 For the purpose of determining any property tax levy limitation based on market
81.4 value, any net debt limit based on market value, any limit on the issuance of bonds,
81.5 certificates of indebtedness, or capital notes based on market value, any qualification
81.6 to receive state aid based on market value, or any state aid amount based on market
81.7 value, the terms "market value," "taxable market value," and "market valuation," whether
81.8 equalized or unequalized, mean the total taxable market value of property within the local
81.9 unit of government before any adjustments for tax increment, fiscal disparity, powerline
81.10 credit, or wind energy values, but after the limited market adjustments under section
81.11 273.11, subdivision 1a, and after the market value exclusions of certain improvements to
81.12 homestead property under section 273.11, subdivision 16. Unless otherwise provided,
81.13 "market value," "taxable market value," and "market valuation" for purposes of this
81.14 paragraph, refer to the taxable market value for the previous assessment year.
81.15 For the purpose of determining any net debt limit based on market value, or any limit
81.16 on the issuance of bonds, certificates of indebtedness, or capital notes based on market
81.17 value, the terms "market value," "taxable market value," and "market valuation," whether
81.18 equalized or unequalized, mean the total taxable market value of property within the local
81.19 unit of government before any adjustments for tax increment, fiscal disparity, powerline
81.20 credit, or wind energy values, but after the limited market adjustments under section
81.21 273.11, subdivision 1a, and after the market value exclusions of certain improvements to
81.22 homestead property under section 273.11, subdivision 16. Unless otherwise provided,
81.23 "market value," "taxable market value," and "market valuation" for purposes of this
81.24 paragraph, mean the taxable market value as last finally equalized.
81.25 Sec. 6. Minnesota Statutes 2004, section 373.45, subdivision 1, is amended to read:
81.26 Subdivision 1. Definitions. (a) As used in this section, the following terms have
81.27 the meanings given.
81.28 (b) "Authority" means the Minnesota Public Facilities Authority.
81.29 (c) "Commissioner" means the commissioner of finance.
81.30 (d) "Debt obligation" means a general obligation bond issued by a county, a bond to
81.31 which the general obligation of a county is pledged under section 469.034, subdivision 2,
81.32 or a bond payable from a county lease obligation under section 641.24, to provide funds
81.33 for the construction of:
81.34 (1) jails;
81.35 (2) correctional facilities;
81.36 (3) law enforcement facilities;
82.1 (4) social services and human services facilities; or
82.2 (5) solid waste facilities; or
82.3 (6) qualified housing development projects as defined in section 469.034, subdivision
82.4 2.
82.5 Sec. 7. Minnesota Statutes 2004, section 469.035, is amended to read:
82.6 469.035 MANNER OF BOND ISSUANCE; SALE.
82.7 Bonds of an authority shall be authorized by its resolution. They may be issued in
82.8 one or more series and shall bear the date or dates, mature at the time or times, bear interest
82.9 at the rate or rates, be in the denomination or denominations, be in the form either coupon
82.10 or registered, carry the conversion or registration privileges, have the rank or priority, be
82.11 executed in the manner, be payable in the medium of payment at the place or places, and
82.12 be subject to the terms of redemption with or without premium, as the resolution, its trust
82.13 indenture or mortgage provides. The bonds may be sold at public or private sale at not
82.14 less than par in the manner and for the price that the authority determines to be in the best
82.15 interest of the authority. Notwithstanding any other law, bonds issued pursuant to sections
82.16 469.001 to 469.047 shall be fully negotiable. In any suit, action, or proceedings involving
82.17 the validity or enforceability of any bonds of an authority or the security for the bonds,
82.18 any bond reciting in substance that it has been issued by the authority to aid in financing a
82.19 project shall be conclusively deemed to have been issued for that purpose, and the project
82.20 shall be conclusively deemed to have been planned, located, and carried out in accordance
82.21 with the purposes and provisions of sections 469.001 to 469.047.
82.22 In cities of the first class, the governing body of the city must approve all notes
82.23 executed with the Minnesota Housing Finance Agency pursuant to this section if the
82.24 interest rate on the note exceeds seven percent.
82.25 Sec. 8. Minnesota Statutes 2004, section 469.103, subdivision 2, is amended to read:
82.26 Subd. 2. Form. The bonds of each series issued by the authority under this section
82.27 shall bear interest at a rate or rates, shall mature at the time or times within 20 30 years
82.28 from the date of issuance, and shall be in the form, whether payable to bearer, registrable
82.29 as to principal, or fully registrable, as determined by the authority. Section 469.102,
82.30 subdivision 6, applies to all bonds issued under this section, and the bonds and their
82.31 coupons, if any, when payable to bearer, shall be negotiable instruments.
82.32 Sec. 9. Minnesota Statutes 2005 Supplement, section 469.178, subdivision 7, is
82.33 amended to read:
82.34 Subd. 7. Interfund loans. The authority or municipality may advance or loan
82.35 money to finance expenditures under section 469.176, subdivision 4, from its general
82.36 fund or any other fund under which it has legal authority to do so. The loan or advance
83.1 must be authorized, by resolution of the governing body or of the authority, whichever
83.2 has jurisdiction over the fund from which the advance or loan is made, before money
83.3 is transferred, advanced, or spent, whichever is earliest. The resolution may generally
83.4 grant to the authority the power to make interfund loans under one or more tax increment
83.5 financing plans or for one or more districts. The terms and conditions for repayment of
83.6 the loan must be provided in writing and include, at a minimum, the principal amount,
83.7 the interest rate, and maximum term. The maximum rate of interest permitted to be
83.8 charged is limited to the greater of the rates specified under section 270C.40 or 549.09
83.9 as of the date or advance is made, unless the written agreement states that the maximum
83.10 interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09
83.11 are from time to time adjusted.
83.12 Sec. 10. Minnesota Statutes 2004, section 474A.062, is amended to read:
83.13 474A.062 HESO 120-DAY ISSUANCE EXEMPTION.
83.14 The Minnesota Higher Education Services Office is exempt from the 120-day
83.15 issuance requirements in this chapter and may carry forward allocations for student loan
83.16 bonds into three one successive calendar years year, subject to carryforward notice
83.17 requirements of section 474A.131, subdivision 2. The maximum cumulative carryforward
83.18 is limited to $25,000,000.
83.19 EFFECTIVE DATE.This section is effective for bond allocations made in 2006
83.20 and thereafter.
83.21 Sec. 11. CARVER COUNTY AUTHORITY NAME CHANGE.
83.22 The Carver County Housing and Redevelopment Authority created under Laws
83.23 1980, chapter 482, is renamed the Carver County Community Development Agency.
83.24 Sec. 12. CITY OF RAMSEY; GENERAL OBLIGATION BONDS.
83.25 The governing body of the city of Ramsey or a development authority established
83.26 by the city may issue general obligation bonds to pay for costs related to a project in an
83.27 area within the city consisting of the property defined as outlot L, Ramsey Town Center
83.28 Addition and lot 2, block 1, Ramsey Town Center Addition. Bonds issued under this
83.29 section are not subject to the net debt limit of the city under Minnesota Statutes, section
83.30 475.53, or any other law or charter provision.
83.31 Sec. 13. UNIFIED POOL; OFFICE OF HIGHER EDUCATION; TEMPORARY
83.32 PRIORITY.
83.33 Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph
83.34 (b), prior to October 1, 2006, only the following applications shall be awarded allocations
83.35 from the unified pool. Allocations shall be awarded in the following order of priority:
84.1 (1) applications for student loan bonds issued by or on behalf of the Office of
84.2 Higher Education;
84.3 (2) applications for residential rental project bonds;
84.4 (3) applications for small issue bonds for manufacturing projects; and
84.5 (4) applications for small issue bonds for agricultural development bond loan
84.6 projects.
84.7 EFFECTIVE DATE.This section is effective July 1, 2006.
84.8 Sec. 14. UNIFIED POOL; TEMPORARY PRIORITY CHANGE.
84.9 Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph
84.10 (c), on the first Monday in October 2006, through the last Monday in November 2006,
84.11 allocations shall be awarded from the unified pool in the following order of priority:
84.12 (1) applications for mortgage bonds;
84.13 (2) applications for public facility projects funded by public facility bonds;
84.14 (3) applications for small issue bonds for manufacturing projects;
84.15 (4) applications for small issue bonds for agricultural development bond loan
84.16 projects;
84.17 (5) applications for residential rental project bonds;
84.18 (6) applications for enterprise zone facility bonds;
84.19 (7) applications for governmental bonds; and
84.20 (8) applications for redevelopment bonds.
84.21 EFFECTIVE DATE.This section is effective July 1, 2006.
84.22 Sec. 15. UNIFIED POOL; OFFICE OF HIGHER EDUCATION TOTAL
84.23 ALLOCATION.
84.24 Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph (i),
84.25 the total amount of allocations for student loan bonds from the unified pool in calendar
84.26 year 2006 may not exceed 50 percent of the total in the unified pool on the day after the
84.27 last Monday in July, 2006.
84.28 EFFECTIVE DATE.This section is effective July 1, 2006.
84.29 ARTICLE 10
84.30 TAX INCREMENT FINANCING
84.31 Section 1. Minnesota Statutes 2005 Supplement, section 469.175, subdivision 2,
84.32 is amended to read:
84.33 Subd. 2. Consultations; comment and filing. (a) Before formation of a tax
84.34 increment financing district, the authority shall provide the county auditor and clerk of
85.1 the school board with the proposed tax increment financing plan for the district and the
85.2 authority's estimate of the fiscal and economic implications of the proposed tax increment
85.3 financing district. The authority must provide the proposed tax increment financing plan
85.4 and the information on the fiscal and economic implications of the plan to the county
85.5 auditor and the clerk of the school district board at least 30 days before the public hearing
85.6 required by subdivision 3. The information on the fiscal and economic implications may
85.7 be included in or as part of the tax increment financing plan. The county auditor and
85.8 clerk of the school board shall provide copies to the members of the boards, as directed
85.9 by their respective boards. The 30-day requirement is waived if the boards of the county
85.10 and school district submit written comments on the proposal and any modification of the
85.11 proposal to the authority after receipt of the information.
85.12 (b) For purposes of this subdivision, "fiscal and economic implications of the
85.13 proposed tax increment financing district" includes:
85.14 (1) an estimate of the total amount of tax increment that will be generated over the
85.15 life of the district;
85.16 (2) a description of the probable impact of the district on city-provided services such
85.17 as police and fire protection, public infrastructure, and borrowing costs the impact of
85.18 any general obligation tax increment bonds attributable to the district upon the ability to
85.19 issue other debt for general fund purposes;
85.20 (3) the estimated amount of tax increments over the life of the district that would
85.21 be attributable to school district levies, assuming the school district's share of the total
85.22 local tax rate for all taxing jurisdictions remained the same;
85.23 (4) the estimated amount of tax increments over the life of the district that would be
85.24 attributable to county levies, assuming the county's share of the total local tax rate for all
85.25 taxing jurisdictions remained the same; and
85.26 (5) any additional information regarding the size, timing, or type of development in
85.27 the district requested by the county or the school district that would enable it to determine
85.28 additional costs that will accrue to it due to the development proposed for the district.
85.29 If a county or school district has not adopted standard questions in a written policy on
85.30 information requested for fiscal and economic implications, a county or school district
85.31 must request additional information no later than 15 days after receipt of the tax increment
85.32 financing plan and the request does not require an additional 30 days of notice before
85.33 the public hearing.
85.34 EFFECTIVE DATE.This section is effective for proposed tax increment financing
85.35 plans provided after June 30, 2006.
86.1 Sec. 2. Minnesota Statutes 2004, section 469.175, subdivision 4, is amended to read:
86.2 Subd. 4. Modification of plan. (a) A tax increment financing plan may be modified
86.3 by an authority.
86.4 (b) The authority may make the following modifications only upon the notice and
86.5 after the discussion, public hearing, and findings required for approval of the original plan:
86.6 (1) any reduction or enlargement of geographic area of the project or tax increment
86.7 financing district that does not meet the requirements of paragraph (e);
86.8 (2) increase in amount of bonded indebtedness to be incurred;
86.9 (3) a determination to capitalize interest on the debt if that determination was not a
86.10 part of the original plan, or to increase or decrease the amount of interest on the debt to
86.11 be capitalized;
86.12 (4) increase in the portion of the captured net tax capacity to be retained by the
86.13 authority;
86.14 (5) increase in the estimate of the cost of the project, including administrative
86.15 expenses, that will be paid or financed with tax increment from the district; or
86.16 (6) designation of additional property to be acquired by the authority.
86.17 (c) If an authority changes the type of district to another type of district, this change
86.18 is not a modification but requires the authority to follow the procedure set forth in sections
86.19 469.174 to 469.179 for adoption of a new plan, including certification of the net tax
86.20 capacity of the district by the county auditor.
86.21 (d) If a redevelopment district or a renewal and renovation district is enlarged,
86.22 the reasons and supporting facts for the determination that the addition to the district
86.23 meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2),
86.24 or subdivision 10a, must be documented.
86.25 (e) The requirements of paragraph (b) do not apply if (1) the only modification is
86.26 elimination of parcels from the project or district and (2)(A) the current net tax capacity
86.27 of the parcels eliminated from the district equals or exceeds the net tax capacity of
86.28 those parcels in the district's original net tax capacity or (B) the authority agrees that,
86.29 notwithstanding section 469.177, subdivision 1, the original net tax capacity will be
86.30 reduced by no more than the current net tax capacity of the parcels eliminated from the
86.31 district. The authority must notify the county auditor of any modification that reduces or
86.32 enlarges the geographic area of a district or a project area.
86.33 (f) The geographic area of a tax increment financing district may be reduced, but
86.34 shall not be enlarged after five years following the date of certification of the original net
86.35 tax capacity by the county auditor or after August 1, 1984, for tax increment financing
86.36 districts authorized prior to August 1, 1979.
87.1 EFFECTIVE DATE.This section is effective for all districts, regardless of when
87.2 the request for certification was made, and applies to plan amendments adopted after the
87.3 day following final enactment.
87.4 Sec. 3. Minnesota Statutes 2005 Supplement, section 469.175, subdivision 5, is
87.5 amended to read:
87.6 Subd. 5. Annual disclosure. An annual statement showing for each district the
87.7 information required to be reported under subdivision 6, paragraph (c), clauses (1), (2),
87.8 (3), (11), (12), (18), and (19); the amounts of tax increment received and expended in the
87.9 reporting period; and any additional information the authority deems necessary must be
87.10 published in a newspaper of general circulation in the municipality that approved the
87.11 tax increment financing plan. The annual statement must inform readers that additional
87.12 information regarding each district may be obtained from the authority, and must explain
87.13 how the additional information may be requested. The authority must publish the annual
87.14 statement for a year no later than August 15 of the next year. The authority must identify
87.15 the newspaper of general circulation in the municipality to which the annual statement has
87.16 been or will be submitted for publication and provide a copy of the annual statement to the
87.17 county board, the county auditor, the school board, the state auditor, and, if the authority is
87.18 other than the municipality, the governing body of the municipality on or before August
87.19 1 of the year in which the statement must be published.
87.20 The disclosure requirements imposed by this subdivision apply to districts certified
87.21 before, on, or after August 1, 1979.
87.22 EFFECTIVE DATE.This section is effective for disclosures required to be
87.23 provided after June 30, 2006.
87.24 Sec. 4. Minnesota Statutes 2004, section 469.176, subdivision 1, is amended to read:
87.25 Subdivision 1. Duration of tax increment financing districts. (a) Subject to the
87.26 limitations contained in subdivisions 1a to 1f, any tax increment financing district as to
87.27 which bonds are outstanding, payment for which the tax increment and other revenues
87.28 have been pledged, shall remain in existence at least as long as the bonds continue to be
87.29 outstanding. The municipality may, at the time of approval of the initial tax increment
87.30 financing plan, provide for a shorter maximum duration limit than specified in subdivisions
87.31 1a to 1f. The specified limit applies in place of the otherwise applicable limit, unless the
87.32 authority modifies the plan following the procedures under section 469.175, subdivision 4,
87.33 paragraph (b).
87.34 (b) The tax increment pledged to the payment of the bonds and interest thereon may
87.35 be discharged and the tax increment financing district may be terminated if sufficient funds
88.1 have been irrevocably deposited in the debt service fund or other escrow account held in
88.2 trust for all outstanding bonds to provide for the payment of the bonds at maturity or date
88.3 of redemption and interest thereon to the maturity or redemption date.
88.4 (c) For bonds issued pursuant to section 469.178, subdivisions 2 and 3, the full
88.5 faith and credit and any taxing powers of the municipality or authority are pledged to the
88.6 payment of the bonds until the principal of and interest on the bonds has been paid in full.
88.7 EFFECTIVE DATE.This section is effective for all districts, regardless of when
88.8 the request for certification was made, and applies to plan amendments adopted after the
88.9 day following final enactment.
88.10 Sec. 5. Minnesota Statutes 2005 Supplement, section 469.1763, subdivision 2, is
88.11 amended to read:
88.12 Subd. 2. Expenditures outside district. (a) For each tax increment financing
88.13 district, an amount equal to at least 75 percent of the total revenue derived from tax
88.14 increments paid by properties in the district must be expended on activities in the district
88.15 or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
88.16 in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
88.17 For districts, other than redevelopment districts for which the request for certification
88.18 was made after June 30, 1995, the in-district percentage for purposes of the preceding
88.19 sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
88.20 increments paid by properties in the district may be expended, through a development fund
88.21 or otherwise, on activities outside of the district but within the defined geographic area of
88.22 the project except to pay, or secure payment of, debt service on credit enhanced bonds.
88.23 For districts, other than redevelopment districts for which the request for certification was
88.24 made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
88.25 20 percent. The revenue derived from tax increments for the district that are expended on
88.26 costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before
88.27 calculating the percentages that must be expended within and without the district.
88.28 (b) In the case of a housing district, a housing project, as defined in section 469.174,
88.29 subdivision 11, is an activity in the district.
88.30 (c) All administrative expenses are for activities outside of the district, except that
88.31 if the only expenses for activities outside of the district under this subdivision are for
88.32 the purposes described in paragraph (d), administrative expenses will be considered as
88.33 expenditures for activities in the district.
88.34 (d) The authority may elect, in the tax increment financing plan for the district,
88.35 to increase by up to ten percentage points the permitted amount of expenditures for
88.36 activities located outside the geographic area of the district under paragraph (a). As
89.1 permitted by section 469.176, subdivision 4k, the expenditures, including the permitted
89.2 expenditures under paragraph (a), need not be made within the geographic area of the
89.3 project. Expenditures that meet the requirements of this paragraph are legally permitted
89.4 expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j.
89.5 To qualify for the increase under this paragraph, the expenditures must:
89.6 (1) be used exclusively to assist housing that meets the requirement for a qualified
89.7 low-income building, as that term is used in section 42 of the Internal Revenue Code;
89.8 (2) not exceed the qualified basis of the housing, as defined under section 42(c) of
89.9 the Internal Revenue Code, less the amount of any credit allowed under section 42 of
89.10 the Internal Revenue Code; and
89.11 (3) be used to:
89.12 (i) acquire and prepare the site of the housing;
89.13 (ii) acquire, construct, or rehabilitate the housing; or
89.14 (iii) make public improvements directly related to the housing.
89.15 (e) For a district created within a biotechnology and health sciences industry zone
89.16 as defined in section 469.330, subdivision 6, or for an existing district located within
89.17 such a zone, tax increment derived from such a district may be expended outside of
89.18 the district but within the zone only for expenditures required for the construction of
89.19 public infrastructure necessary to support the activities of the zone. Public infrastructure
89.20 expenditures are considered as expenditures for activities within the district.
89.21 EFFECTIVE DATE.This section applies to all districts, regardless of when the
89.22 request for certification was made.
89.23 Sec. 6. Minnesota Statutes 2004, section 469.1763, subdivision 3, is amended to read:
89.24 Subd. 3. Five-year rule. (a) Revenues derived from tax increments are considered
89.25 to have been expended on an activity within the district under subdivision 2 only if one
89.26 of the following occurs:
89.27 (1) before or within five years after certification of the district, the revenues are
89.28 actually paid to a third party with respect to the activity;
89.29 (2) bonds, the proceeds of which must be used to finance the activity, are issued and
89.30 sold to a third party before or within five years after certification, the revenues are spent
89.31 to repay the bonds, and the proceeds of the bonds either are, on the date of issuance,
89.32 reasonably expected to be spent before the end of the later of (i) the five-year period, or
89.33 (ii) a reasonable temporary period within the meaning of the use of that term under section
89.34 148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve
89.35 or replacement fund;
90.1 (3) binding contracts with a third party are entered into for performance of the
90.2 activity before or within five years after certification of the district and the revenues are
90.3 spent under the contractual obligation;
90.4 (4) costs with respect to the activity are paid before or within five years after
90.5 certification of the district and the revenues are spent to reimburse a party for payment
90.6 of the costs, including interest on unreimbursed costs; or
90.7 (5) expenditures are made for housing purposes as permitted by subdivision 2,
90.8 paragraph paragraphs (b) and (d), or for public infrastructure purposes within a zone as
90.9 permitted by subdivision 2, paragraph (e).
90.10 (b) For purposes of this subdivision, bonds include subsequent refunding bonds if
90.11 the original refunded bonds meet the requirements of paragraph (a), clause (2).
90.12 Sec. 7. Minnesota Statutes 2004, section 469.1763, subdivision 4, is amended to read:
90.13 Subd. 4. Use of revenues for decertification. (a) In each year beginning with the
90.14 sixth year following certification of the district, if the applicable in-district percent of the
90.15 revenues derived from tax increments paid by properties in the district exceeds the amount
90.16 of expenditures that have been made for costs permitted under subdivision 3, an amount
90.17 equal to the difference between the in-district percent of the revenues derived from tax
90.18 increments paid by properties in the district and the amount of expenditures that have
90.19 been made for costs permitted under subdivision 3 must be used and only used to pay or
90.20 defease the following or be set aside to pay the following:
90.21 (1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);
90.22 (2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4); or
90.23 (3) credit enhanced bonds to which the revenues derived from tax increments are
90.24 pledged, but only to the extent that revenues of the district for which the credit enhanced
90.25 bonds were issued are insufficient to pay the bonds and to the extent that the increments
90.26 from the applicable pooling percent share for the district are insufficient; or
90.27 (4) the amount provided by the tax increment financing plan to be paid under
90.28 subdivision 2, paragraphs (b), (d), and (e).
90.29 (b) The district must be decertified and the pledge of tax increment discharged
90.30 when the outstanding bonds have been defeased and when sufficient money has been set
90.31 aside to pay, based on the increment to be collected through the end of the calendar year,
90.32 the following amounts:
90.33 (1) contractual obligations as defined in subdivision 3, paragraph (a), clauses (3) and
90.34 (4), the district must be decertified and the pledge of tax increment discharged.;
91.1 (2) the amount specified in the tax increment financing plan for activities qualifying
91.2 under subdivision 2, paragraph (b), that have not been funded with the proceeds of bonds
91.3 qualifying under paragraph (a), clause (1); and
91.4 (3) the additional expenditures permitted by the tax increment financing plan for
91.5 housing activities under an election under subdivision 2, paragraph (d), that have not been
91.6 funded with the proceeds of bonds qualifying under paragraph (a), clause (1).
91.7 EFFECTIVE DATE.This section is effective for districts for which the request for
91.8 certification was made after April 30, 1990.
91.9 Sec. 8. Minnesota Statutes 2005 Supplement, section 469.1763, subdivision 6, is
91.10 amended to read:
91.11 Subd. 6. Pooling permitted for deficits. (a) This subdivision applies only to
91.12 districts for which the request for certification was made before August 1, 2001, and
91.13 without regard to whether the request for certification was made prior to August 1, 1979.
91.14 (b) The municipality for the district may transfer available increments from another
91.15 tax increment financing district located in the municipality, if the transfer is necessary to
91.16 eliminate a deficit in the district to which the increments are transferred. The municipality
91.17 may transfer increments as provided by this subdivision without regard to whether the
91.18 transfer or expenditure is authorized by the tax increment financing plan for the district
91.19 from which the transfer is made. A deficit in the district for purposes of this subdivision
91.20 means the lesser of the following two amounts:
91.21 (1)(i) the amount due during the calendar year to pay preexisting obligations of
91.22 the district; minus
91.23 (ii) the total increments collected or to be collected from properties located within
91.24 the district that are available for the calendar year including amounts collected in prior
91.25 years that are currently available; plus
91.26 (iii) total increments from properties located in other districts in the municipality
91.27 including amounts collected in prior years that are available to be used to meet the
91.28 district's obligations under this section, excluding this subdivision, or other provisions of
91.29 law (but excluding a special tax under section 469.1791 and the grant program under Laws
91.30 1997, chapter 231, article 1, section 19, or Laws 2001, First Special Session chapter 5); or
91.31 (2) the reduction in increments collected from properties located in the district for
91.32 the calendar year as a result of the changes in class rates in Laws 1997, chapter 231, article
91.33 1; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and Laws 2001, First
91.34 Special Session chapter 5, or the elimination of the general education tax levy under
91.35 Laws 2001, First Special Session chapter 5.
92.1 The authority may compute the deficit amount under clause (1) only (without regard
92.2 to the limit under clause (2)) if the authority makes an irrevocable commitment, by
92.3 resolution, to use increments from the district to which increments are to be transferred and
92.4 any transferred increments are only used to pay preexisting obligations and administrative
92.5 expenses for the district that are required to be paid under section 469.176, subdivision
92.6 4h, paragraph (a).
92.7 (c) A preexisting obligation means:
92.8 (1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a
92.9 binding contract requiring the issuance of bonds entered into before July 1, 2001, and
92.10 bonds issued to refund such bonds or to reimburse expenditures made in conjunction with
92.11 a signed contractual agreement entered into before August 1, 2001, to the extent that the
92.12 bonds are secured by a pledge of increments from the tax increment financing district; and
92.13 (2) binding contracts entered into before August 1, 2001, to the extent that the
92.14 contracts require payments secured by a pledge of increments from the tax increment
92.15 financing district.
92.16 (d) The municipality may require a development authority, other than a seaway port
92.17 authority, to transfer available increments including amounts collected in prior years that
92.18 are currently available for any of its tax increment financing districts in the municipality to
92.19 make up an insufficiency in another district in the municipality, regardless of whether the
92.20 district was established by the development authority or another development authority.
92.21 This authority applies notwithstanding any law to the contrary, but applies only to a
92.22 development authority that:
92.23 (1) was established by the municipality; or
92.24 (2) the governing body of which is appointed, in whole or part, by the municipality
92.25 or an officer of the municipality or which consists, in whole or part, of members of
92.26 the governing body of the municipality. The municipality may use this authority only
92.27 after it has first used all available increments of the receiving development authority to
92.28 eliminate the insufficiency and exercised any permitted action under section 469.1792,
92.29 subdivision 3, for preexisting districts of the receiving development authority to eliminate
92.30 the insufficiency.
92.31 (e) The authority under this subdivision to spend tax increments outside of the area
92.32 of the district from which the tax increments were collected:
92.33 (1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c,
92.34 4d, 4e, 4i, and 4j; the expenditure limits under section 469.176, subdivision 1c; and the
92.35 other provisions of this section; and the percentage restrictions under subdivision 2 must
93.1 be calculated after deducting increments spent under this subdivision from the total
93.2 increments for the district; and
93.3 (2) applies notwithstanding the provisions of the Tax Increment Financing Act in
93.4 effect for districts for which the request for certification was made before June 30, 1982,
93.5 or any other law to the contrary.
93.6 (f) If a preexisting obligation requires the development authority to pay an amount
93.7 that is limited to the increment from the district or a specific development within the
93.8 district and if the obligation requires paying a higher amount to the extent that increments
93.9 are available, the municipality may determine that the amount due under the preexisting
93.10 obligation equals the higher amount and may authorize the transfer of increments
93.11 under this subdivision to pay up to the higher amount. The existence of a guarantee of
93.12 obligations by the individual or entity that would receive the payment under this paragraph
93.13 is disregarded in the determination of eligibility to pool under this subdivision. The
93.14 authority to transfer increments under this paragraph may only be used to the extent
93.15 that the payment of all other preexisting obligations in the municipality due during the
93.16 calendar year have been satisfied.
93.17 (g) For transfers of increments made in calendar year 2005 and later, the reduction in
93.18 increments as a result of the elimination of the general education tax levy for purposes of
93.19 paragraph (b), clause (2), for a taxes payable year equals the general education tax rate
93.20 for the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1,
93.21 for taxes payable in 2001, multiplied by the captured tax capacity of the district for the
93.22 current taxes payable year.
93.23 EFFECTIVE DATE.This section is effective for all districts, regardless of when
93.24 the request for certification was made, and applies retroactively to any transfer made
93.25 under subdivision 6.
93.26 Sec. 9. Minnesota Statutes 2005 Supplement, section 469.177, subdivision 1, is
93.27 amended to read:
93.28 Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax
93.29 increment financing plan, the auditor of any county in which the district is situated shall,
93.30 upon request of the authority, certify the original net tax capacity of the tax increment
93.31 financing district and that portion of the district overlying any subdistrict as described in
93.32 the tax increment financing plan and shall certify in each year thereafter the amount by
93.33 which the original net tax capacity has increased or decreased as a result of a change in tax
93.34 exempt status of property within the district and any subdistrict, reduction or enlargement
93.35 of the district or changes pursuant to subdivision 4.
94.1 (b) If the classification under section 273.13 of property located in a district changes
94.2 to a classification that has a different assessment ratio, the original net tax capacity of that
94.3 property must be redetermined at the time when its use is changed as if the property had
94.4 originally been classified in the same class in which it is classified after its use is changed.
94.5 (c) The amount to be added to the original net tax capacity of the district as a result of
94.6 previously tax exempt real property within the district becoming taxable equals the net tax
94.7 capacity of the real property as most recently assessed pursuant to section 273.18 or, if that
94.8 assessment was made more than one year prior to the date of title transfer rendering the
94.9 property taxable, the net tax capacity assessed by the assessor at the time of the transfer.
94.10 If improvements are made to tax exempt property after certification of the municipality
94.11 approves the district and before the parcel becomes taxable, the assessor shall, at the
94.12 request of the authority, separately assess the estimated market value of the improvements.
94.13 If the property becomes taxable, the county auditor shall add to original net tax capacity,
94.14 the net tax capacity of the parcel, excluding the separately assessed improvements. If
94.15 substantial taxable improvements were made to a parcel after certification of the district
94.16 and if the property later becomes tax exempt, in whole or part, as a result of the authority
94.17 acquiring the property through foreclosure or exercise of remedies under a lease or other
94.18 revenue agreement or as a result of tax forfeiture, the amount to be added to the original
94.19 net tax capacity of the district as a result of the property again becoming taxable is the
94.20 amount of the parcel's value that was included in original net tax capacity when the parcel
94.21 was first certified. The amount to be added to the original net tax capacity of the district
94.22 as a result of enlargements equals the net tax capacity of the added real property as most
94.23 recently certified by the commissioner of revenue as of the date of modification of the tax
94.24 increment financing plan pursuant to section 469.175, subdivision 4.
94.25 (d) If the net tax capacity of a property increases because the property no longer
94.26 qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the
94.27 Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan
94.28 Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is
94.29 improved or market value is increased after approval of the plat under section 273.11,
94.30 subdivision 14, 14a, or 14b, the increase in net tax capacity must be added to the original
94.31 net tax capacity.
94.32 (e) The amount to be subtracted from the original net tax capacity of the district
94.33 as a result of previously taxable real property within the district becoming tax exempt,
94.34 or a reduction in the geographic area of the district, shall be the amount of original net
94.35 tax capacity initially attributed to the property becoming tax exempt or being removed
94.36 from the district. If the net tax capacity of property located within the tax increment
95.1 financing district is reduced by reason of a court-ordered abatement, stipulation agreement,
95.2 voluntary abatement made by the assessor or auditor or by order of the commissioner of
95.3 revenue, the reduction shall be applied to the original net tax capacity of the district when
95.4 the property upon which the abatement is made has not been improved since the date of
95.5 certification of the district and to the captured net tax capacity of the district in each year
95.6 thereafter when the abatement relates to improvements made after the date of certification.
95.7 The county auditor may specify reasonable form and content of the request for certification
95.8 of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
95.9 (f) If a parcel of property contained a substandard building that was demolished
95.10 or removed and if the authority elects to treat the parcel as occupied by a substandard
95.11 building under section 469.174, subdivision 10, paragraph (b), the auditor shall certify the
95.12 original net tax capacity of the parcel using the greater of (1) the current net tax capacity
95.13 of the parcel, or (2) the estimated market value of the parcel for the year in which the
95.14 building was demolished or removed, but applying the class rates for the current year.
95.15 (g) For a redevelopment district qualifying under section 469.174, subdivision 10,
95.16 paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of
95.17 the land as the original tax capacity for any parcel in the district that contains a building
95.18 that suffered substantial damage as a result of the disaster or emergency.
95.19 EFFECTIVE DATE.This section is effective for improvements made to tax
95.20 exempt property made after June 30, 2006.
95.21 Sec. 10. Minnesota Statutes 2004, section 469.1771, subdivision 2a, is amended to
95.22 read:
95.23 Subd. 2a. Suspension of distribution of tax increment. (a) If an authority fails to
95.24 make a disclosure or to submit a report containing the information required by section
95.25 469.175, subdivisions 5 and 6, regarding a tax increment financing district within the
95.26 time provided in section 469.175, subdivisions 5 and 6, the state auditor shall mail to
95.27 the authority a written notice that it or the municipality has failed to make the required
95.28 disclosure or to submit a required report with respect to a particular district. The state
95.29 auditor shall mail the notice on or before the third Tuesday of August of the year in which
95.30 the disclosure or report was required to be made or submitted. The notice must describe
95.31 the consequences of failing to disclose or submit a report as provided in paragraph (b).
95.32 If the state auditor has not received a copy of a disclosure or a report described in this
95.33 paragraph on or before the third Tuesday of November first day of October of the year
95.34 in which the disclosure or report was required to be made or submitted, the state auditor
95.35 shall mail a written notice to the county auditor to hold the distribution of tax increment
95.36 from a particular district.
96.1 (b) Upon receiving written notice from the state auditor to hold the distribution of
96.2 tax increment, the county auditor shall hold:
96.3 (1) 25 100 percent of the amount of tax increment that otherwise would be
96.4 distributed, if the distribution is made after the third Friday in November first day of
96.5 October but during the year in which the disclosure or report was required to be made or
96.6 submitted; or
96.7 (2) 100 percent of the amount of tax increment that otherwise would be distributed,
96.8 if the distribution is made after December 31 of the year in which the disclosure or report
96.9 was required to be made or submitted.
96.10 (c) Upon receiving the copy of the disclosure and all of the reports described in
96.11 paragraph (a) with respect to a district regarding which the state auditor has mailed to the
96.12 county auditor a written notice to hold distribution of tax increment, the state auditor shall
96.13 mail to the county auditor a written notice lifting the hold and authorizing the county
96.14 auditor to distribute to the authority or municipality any tax increment that the county
96.15 auditor had held pursuant to paragraph (b). The state auditor shall mail the written notice
96.16 required by this paragraph within five working days after receiving the last outstanding
96.17 item. The county auditor shall distribute the tax increment to the authority or municipality
96.18 within 15 working days after receiving the written notice required by this paragraph.
96.19 (d) Notwithstanding any law to the contrary, any interest that accrues on tax
96.20 increment while it is being held by the county auditor pursuant to paragraph (b) is not tax
96.21 increment and may be retained by the county.
96.22 (e) For purposes of sections 469.176, subdivisions 1a to 1g, and 469.177, subdivision
96.23 11, tax increment being held by the county auditor pursuant to paragraph (b) is considered
96.24 distributed to or received by the authority or municipality as of the time that it would have
96.25 been distributed or received but for paragraph (b).
96.26 EFFECTIVE DATE.This section is effective for disclosures and reports required
96.27 to be filed after December 30, 2006.
96.28 Sec. 11. Minnesota Statutes 2004, section 475.58, subdivision 1, is amended to read:
96.29 Subdivision 1. Approval by electors; exceptions. Obligations authorized by law or
96.30 charter may be issued by any municipality upon obtaining the approval of a majority of
96.31 the electors voting on the question of issuing the obligations, but an election shall not be
96.32 required to authorize obligations issued:
96.33 (1) to pay any unpaid judgment against the municipality;
96.34 (2) for refunding obligations;
97.1 (3) for an improvement or improvement program, which obligation is payable
97.2 wholly or partly from the proceeds of special assessments levied upon property specially
97.3 benefited by the improvement or by an improvement within the improvement program, or
97.4 of taxes levied upon the increased value of property within a district for the development of
97.5 which the improvement is undertaken from tax increments, as defined in section 469.174,
97.6 subdivision 25, including obligations which are the general obligations of the municipality,
97.7 if the municipality is entitled to reimbursement in whole or in part from the proceeds of
97.8 such special assessments or taxes tax increments and not less than 20 percent of the cost of
97.9 the improvement or the improvement program is to be assessed against benefited property
97.10 or is to be paid from the proceeds of federal grant funds or a combination thereof, or is
97.11 estimated to be received from such taxes within the district tax increments;
97.12 (4) payable wholly from the income of revenue producing conveniences;
97.13 (5) under the provisions of a home rule charter which permits the issuance of
97.14 obligations of the municipality without election;
97.15 (6) under the provisions of a law which permits the issuance of obligations of a
97.16 municipality without an election;
97.17 (7) to fund pension or retirement fund liabilities pursuant to section 475.52,
97.18 subdivision 6;
97.19 (8) under a capital improvement plan under section 373.40; and
97.20 (9) under sections 469.1813 to 469.1815 (property tax abatement authority bonds), if
97.21 the proceeds of the bonds are not used for a purpose prohibited under section 469.176,
97.22 subdivision 4g, paragraph (b).
97.23 EFFECTIVE DATE.This section is effective the day following final enactment.
97.24 Sec. 12. BURNSVILLE; HEART OF THE CITY TAX INCREMENT
97.25 FINANCING DISTRICT.
97.26 Notwithstanding any contrary provision of law, the five-year rule under Minnesota
97.27 Statutes, section 469.1763, subdivisions 3 and 4, is extended to ten years for tax increment
97.28 derived from the parcel described as Lot 2, Block 1, Nicollet Commons Park within tax
97.29 increment financing District No. 6 established by the city and its economic development
97.30 authority on April 15, 2002.
97.31 EFFECTIVE DATE.This section is effective upon compliance with Minnesota
97.32 Statutes, section 645.021, subdivision 3.
97.33 Sec. 13. CITY OF DETROIT LAKES; REDEVELOPMENT TAX INCREMENT
97.34 FINANCING DISTRICT.
98.1 Subdivision 1. Authorization. At the election of the governing body of the city of
98.2 Detroit Lakes, upon adoption of the tax increment financing plan for the district described
98.3 in this section, the rules provided under this section apply to each such district.
98.4 Subd. 2. Definition. In this section, "district" means a redevelopment district
98.5 established by the city of Detroit Lakes or the Detroit Lakes Development Authority
98.6 within the following area:
98.7 Beginning at the intersection of Washington Avenue and the Burlington Northern
98.8 Santa Fe railroad then east to the intersection of Roosevelt Avenue then south to the
98.9 intersection of Highway 10/Frazee Street then west to the intersection of Frazee Street and
98.10 the alley that parallels Washington Avenue then north to the point of beginning.
98.11 More than one district may be created under this section.
98.12 Subd. 3. Qualification as redevelopment district; special rules. The city may
98.13 qualify the district as a redevelopment district under Minnesota Statutes, section 469.174,
98.14 subdivision 10, applying the rules under this subdivision:
98.15 (1) All buildings that are removed to facilitate the Highway 10 Realignment Project
98.16 are deemed to be "structurally substandard."
98.17 (2) The three-year limit after demolition of the buildings to request tax increment
98.18 financing certification provided in Minnesota Statutes, section 469.174, subdivision 10,
98.19 paragraph (d), clause (1), does not apply.
98.20 Subd. 4. Expiration. The authority to approve tax increment financing plans to
98.21 establish a tax increment financing redevelopment district subject to this section expires
98.22 on December 31, 2014.
98.23 Subd. 5. Effective date. This section is effective upon approval of the governing
98.24 body of the city of Detroit Lakes and compliance with Minnesota Statutes, section
98.25 645.021, subdivision 3.
98.26 Sec. 14. CITY OF MINNEAPOLIS; HOMELESS ASSISTANCE TAX
98.27 INCREMENT DISTRICT.
98.28 Subdivision 1. Definitions. (a) "City" means the city of Minneapolis.
98.29 (b) "Homeless assistance tax increment district" means a contiguous area of the
98.30 city that:
98.31 (1) is no larger than six acres;
98.32 (2) is located within the boundaries of a city municipal development district; and
98.33 (3) contains at least two shelters for homeless persons that have been owned or
98.34 operated by nonprofit corporations that (i) are qualified charitable organizations under
98.35 section 501(c)(3) of the United States Internal Revenue Code, (ii) have operated such
99.1 homeless facilities within the district for at least five years, and (iii) have been recipients
99.2 of emergency services grants under Minnesota Statutes, section 256E.36.
99.3 Subd. 2. Establishment of tax increment district. The city may create one
99.4 homeless assistance tax increment district. To establish the homeless assistance tax
99.5 increment district, the city shall adopt a homeless assistance tax increment plan and
99.6 otherwise comply with the requirements of Minnesota Statutes, section 469.175, except
99.7 that the determinations required in Minnesota Statutes, section 469.175, subdivision 3,
99.8 paragraph (b), clauses (1) and (2), items (i) and (ii), are not required.
99.9 Subd. 3. Application of tax increment law. Minnesota Statutes, sections 469.174
99.10 to 469.179, shall apply to the administration of the district, except:
99.11 (1) as this section provides otherwise; and
99.12 (2) with respect to the portion of the increment to be expended for homeless shelter
99.13 and services pursuant to subdivision 5, paragraph (b):
99.14 (i) the use for which tax increment that may be expended is as provided by
99.15 subdivision 5; and
99.16 (ii) Minnesota Statutes, sections 469.1761 and 469.1763, do not apply.
99.17 Subd. 4. Duration limitation. No tax increment generated by the district shall
99.18 be paid to the city after the expiration of 25 years from the receipt by the city of the
99.19 first increment from that district.
99.20 Subd. 5. Limitations on use of increment. (a) All increment received by the city
99.21 from the district shall be used in accordance with the homeless assistance tax increment
99.22 district plan.
99.23 (b) No less than 50 percent of the increment, after deduction of allowable
99.24 administrative expenses under Minnesota Statutes, section 469.176, subdivision 3, shall
99.25 be used to provide emergency shelter and services for homeless persons within and
99.26 outside the district.
99.27 (c) The remainder of the tax increment derived from the district shall be used for
99.28 purposes allowed under Minnesota Statutes, section 469.176, subdivision 4.
99.29 Subd. 6. Applicability of other laws. References in Minnesota Statutes to tax
99.30 increment financing districts created and tax increment generated under Minnesota
99.31 Statutes, sections 469.174 to 469.179, include the homeless assistance district and tax
99.32 increment subject to this section.
99.33 EFFECTIVE DATE.This section is effective upon compliance by the city of
99.34 Minneapolis with Minnesota Statutes, section 645.021.
99.35 Sec. 15. CITY OF FARIBAULT; TIF EXTENSION.
100.1 Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision
100.2 1b, or any other law to the contrary, the governing bodies of the city of Faribault and
100.3 its economic development authority may elect to extend the duration of tax increment
100.4 financing district No. 5-1 by two additional years through taxes payable in 2008.
100.5 Additional increments resulting from an extension authorized by this section must be
100.6 used to pay the city's bonds issued for redevelopment project No. 5 or to reimburse the
100.7 guarantor for payments made to pay the bonds. Any amounts in excess of those necessary
100.8 to pay those amounts must be returned as excess increments under Minnesota Statutes,
100.9 section 469.176, subdivision 2.
100.10 EFFECTIVE DATE.This section is effective upon compliance by the governing
100.11 body of the city of Faribault with the requirements of Minnesota Statutes, section 645.021,
100.12 and by the governing bodies of the county, city, and school district with the requirements
100.13 of Minnesota Statutes, section 469.1782, subdivision 2.
100.14 Sec. 16. BROOKLYN PARK; TIF.
100.15 Subdivision 1. Duration limit extension. Notwithstanding Minnesota Statutes,
100.16 section 469.176, subdivision 1b, or any other law to the contrary, the governing body of
100.17 the city of Brooklyn Park may extend the duration limit of the district established under
100.18 Laws 1994, chapter 587, article 9, section 20, by up to five additional years beyond the
100.19 limit permitted under Laws 2005, chapter 152, article 3, section 29. If the city extends the
100.20 duration of the district under this authority, all of the increment received after December
100.21 31, 2006, must be deposited in the housing development account of the authority.
100.22 Subd. 2 Housing districts; authority to establish. (a) The governing body of
100.23 the city of Brooklyn Park and an authority of the city, as defined in Minnesota Statutes,
100.24 section 469.174, subdivision 2, may establish up to six housing tax increment financing
100.25 districts under the provisions of this section. To qualify under this authority, a district must
100.26 be located within the boundaries of the city and at least 75 percent of the parcels in each
100.27 district must consist of either vacant land or contain a property or properties classified
100.28 under Minnesota Statutes, section 273.13, subdivision 25, as class 4a, 4b, or 4d, that
100.29 were originally constructed before 1975.
100.30 (b) The districts are subject to all of the applicable rules under Minnesota Statutes,
100.31 sections 469.174 through 469.1799, except that for property or properties classified under
100.32 Minnesota Statutes, section 273.13, subdivision 25, as class 4a, 4b, or 4d, that were
100.33 originally constructed before 1975, the county auditor shall certify the original net tax
100.34 capacity of the parcel under Minnesota Statutes, section 469.177, subdivision 1, based
100.35 only on the net tax capacity of the value of the land.
101.1 (c) The authority to establish districts under this subdivision expires on December
101.2 31, 2011.
101.3 EFFECTIVE DATE.This section is effective upon compliance by the governing
101.4 body of the city of Brooklyn Park with the provisions of Minnesota Statutes, section
101.5 469.021, except subdivision 1 is effective only upon compliance by the governing bodies
101.6 of the county and school district with the provisions of Minnesota Statutes, section
101.7 469.1782, subdivision 2.
101.8 Sec. 17. REPEALER; DISTRIBUTION OF CERTAIN BURNSVILLE TAX
101.9 INCREMENTS.
101.10 Laws 1998, chapter 389, article 11, section 18, is repealed. The balance of tax
101.11 increments derived from tax increment financing district no. 2-1 as of the effective date
101.12 of this act must be returned to the county for distribution in accordance with Minnesota
101.13 Statutes, section 469.176, subdivision 2.
101.14 EFFECTIVE DATE.This section is effective upon compliance with Minnesota
101.15 Statutes, section 645.021, subdivision 3.
101.16 ARTICLE 11
101.17 AIDS AND CREDITS
101.18 Section 1. Minnesota Statutes 2005 Supplement, section 477A.011, subdivision 36,
101.19 is amended to read:
101.20 Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision,
101.21 "city aid base" is zero.
101.22 (b) The city aid base for any city with a population less than 500 is increased by
101.23 $40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount
101.24 of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
101.25 increased by $40,000 for aids payable in calendar year 1995 only, provided that:
101.26 (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
101.27 (ii) the city portion of the tax capacity rate exceeds 100 percent; and
101.28 (iii) its city aid base is less than $60 per capita.
101.29 (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and
101.30 the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
101.31 paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
101.32 (i) the city has a population in 1994 of 2,500 or more;
101.33 (ii) the city is located in a county, outside of the metropolitan area, which contains a
101.34 city of the first class;
102.1 (iii) the city's net tax capacity used in calculating its 1996 aid under section
102.2 477A.013 is less than $400 per capita; and
102.3 (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of
102.4 property located in the city is classified as railroad property.
102.5 (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and
102.6 the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
102.7 paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
102.8 (i) the city was incorporated as a statutory city after December 1, 1993;
102.9 (ii) its city aid base does not exceed $5,600; and
102.10 (iii) the city had a population in 1996 of 5,000 or more.
102.11 (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the
102.12 maximum amount of total aid it may receive under section 477A.013, subdivision 9,
102.13 paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
102.14 (i) the city had a population in 1996 of at least 50,000;
102.15 (ii) its population had increased by at least 40 percent in the ten-year period ending
102.16 in 1996; and
102.17 (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
102.18 (f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and
102.19 thereafter, and the maximum amount of total aid it may receive under section 477A.013,
102.20 subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only,
102.21 provided that:
102.22 (1) the city has a population that is greater than 1,000 and less than 2,500;
102.23 (2) its commercial and industrial percentage for aids payable in 1999 is greater
102.24 than 45 percent; and
102.25 (3) the total market value of all commercial and industrial property in the city
102.26 for assessment year 1999 is at least 15 percent less than the total market value of all
102.27 commercial and industrial property in the city for assessment year 1998.
102.28 (g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and
102.29 the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
102.30 paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
102.31 (1) the city had a population in 1997 of 2,500 or more;
102.32 (2) the net tax capacity of the city used in calculating its 1999 aid under section
102.33 477A.013 is less than $650 per capita;
102.34 (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under
102.35 section 477A.013 is greater than 12 percent;
103.1 (4) the 1999 local government aid of the city under section 477A.013 is less than
103.2 20 percent of the amount that the formula aid of the city would have been if the need
103.3 increase percentage was 100 percent; and
103.4 (5) the city aid base of the city used in calculating aid under section 477A.013
103.5 is less than $7 per capita.
103.6 (h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and
103.7 the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
103.8 paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
103.9 (1) the city has a population in 1997 of 2,000 or more;
103.10 (2) the net tax capacity of the city used in calculating its 1999 aid under section
103.11 477A.013 is less than $455 per capita;
103.12 (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is
103.13 greater than $195 per capita; and
103.14 (4) the 1999 local government aid of the city under section 477A.013 is less than
103.15 38 percent of the amount that the formula aid of the city would have been if the need
103.16 increase percentage was 100 percent.
103.17 (i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and
103.18 the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
103.19 paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
103.20 (1) the city has a population in 1998 that is greater than 200 but less than 500;
103.21 (2) the city's revenue need used in calculating aids payable in 2000 was greater
103.22 than $200 per capita;
103.23 (3) the city net tax capacity for the city used in calculating aids available in 2000
103.24 was equal to or less than $200 per capita;
103.25 (4) the city aid base of the city used in calculating aid under section 477A.013
103.26 is less than $65 per capita; and
103.27 (5) the city's formula aid for aids payable in 2000 was greater than zero.
103.28 (j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and
103.29 the maximum amount of total aid it may receive under section 477A.013, subdivision 9,
103.30 paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
103.31 (1) the city had a population in 1998 that is greater than 200 but less than 500;
103.32 (2) the city's commercial industrial percentage used in calculating aids payable in
103.33 2000 was less than ten percent;
103.34 (3) more than 25 percent of the city's population was 60 years old or older according
103.35 to the 1990 census;
104.1 (4) the city aid base of the city used in calculating aid under section 477A.013
104.2 is less than $15 per capita; and
104.3 (5) the city's formula aid for aids payable in 2000 was greater than zero.
104.4 (k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and
104.5 by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of
104.6 total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also
104.7 increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002
104.8 only, provided that:
104.9 (1) the net tax capacity of the city used in calculating its 2000 aid under section
104.10 477A.013 is less than $810 per capita;
104.11 (2) the population of the city declined more than two percent between 1988 and 1998;
104.12 (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is
104.13 greater than $240 per capita; and
104.14 (4) the city received less than $36 per capita in aid under section 477A.013,
104.15 subdivision 9, for aids payable in 2000.
104.16 (l) The city aid base for a city with a population of 10,000 or more which is located
104.17 outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the
104.18 maximum amount of total aid it may receive under section 477A.013, subdivision 9,
104.19 paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to
104.20 the lesser of:
104.21 (1)(i) the total population of the city, as determined by the United States Bureau of
104.22 the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
104.23 (2) $2,500,000.
104.24 (m) The city aid base is increased by $50,000 in 2002 and thereafter, and the
104.25 maximum amount of total aid it may receive under section 477A.013, subdivision 9,
104.26 paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
104.27 (1) the city is located in the seven-county metropolitan area;
104.28 (2) its population in 2000 is between 10,000 and 20,000; and
104.29 (3) its commercial industrial percentage, as calculated for city aid payable in 2001,
104.30 was greater than 25 percent.
104.31 (n) The city aid base for a city is increased by $150,000 in calendar years 2002
104.32 to 2011 and the maximum amount of total aid it may receive under section 477A.013,
104.33 subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2002 only,
104.34 provided that:
104.35 (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
104.36 (2) its home county is located within the seven-county metropolitan area;
105.1 (3) its pre-1940 housing percentage is less than 15 percent; and
105.2 (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900
105.3 per capita.
105.4 (o) The city aid base for a city is increased by $200,000 beginning in calendar
105.5 year 2003 and the maximum amount of total aid it may receive under section 477A.013,
105.6 subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only,
105.7 provided that the city qualified for an increase in homestead and agricultural credit aid
105.8 under Laws 1995, chapter 264, article 8, section 18.
105.9 (p) The city aid base for a city is increased by $200,000 in 2004 only and the
105.10 maximum amount of total aid it may receive under section 477A.013, subdivision 9, is
105.11 also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear
105.12 dry cask storage facility.
105.13 (q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the
105.14 maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
105.15 by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster
105.16 designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by
105.17 more than 40 percent between 1990 and 2000.
105.18 (r) The city aid base for a city is increased by $25,000 in 2006 only and the
105.19 maximum total aid it may receive under section 477A.013, subdivision 9, is also increased
105.20 by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000
105.21 and has a state park for which the city provides rescue services and which comprised at
105.22 least 14 percent of the total geographic area included within the city boundaries in 2000.
105.23 (s) The city aid base for a city with a population less than 5,000 is increased in
105.24 2006 and thereafter and the minimum and maximum amount of total aid it may receive
105.25 under this section is also increased in calendar year 2006 only by an amount equal to
105.26 $6 multiplied by its population.
105.27 (t) The city aid base for a city is increased by $80,000 in 2007 only and the minimum
105.28 and maximum amount of total aid it may receive under section 477A.013, subdivision 9,
105.29 is also increased by $80,000 in calendar year 2007 only, if:
105.30 (1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed
105.31 to be placed in trust status as tax-exempt Indian land;
105.32 (2) the placement of the land is being challenged administratively or in court; and
105.33 (3) due to the challenge, the land proposed to be placed in trust is still on the tax
105.34 rolls as of May 1, 2006.
106.1 (u) the city aid base for a city is increased by $100,000 in 2007 and thereafter and
106.2 the minimum and maximum total amount of aid it may receive under this section is also
106.3 increased in calendar year 2007 only, provided that:
106.4 (1) the city has a 2004 estimated population greater than 200 but less than 2,000;
106.5 (2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;
106.6 (3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids
106.7 payable in 2006 was greater than 110 percent; and
106.8 (4) it is located in a county where at least 15,000 acres of land are classified as tax-
106.9 exempt Indian reservations according to the 2004 abstract of tax-exempt property.
106.10 EFFECTIVE DATE.This section is effective beginning with aids payable in 2007.
106.11 Sec. 2. Minnesota Statutes 2004, section 477A.013, subdivision 9, is amended to read:
106.12 Subd. 9. City aid distribution. (a) In calendar year 2002 and thereafter, each
106.13 city shall receive an aid distribution equal to the sum of (1) the city formula aid under
106.14 subdivision 8, and (2) its city aid base.
106.15 (b) The aid for a city in calendar year 2004 shall not exceed the amount of its aid in
106.16 calendar year 2003 after the reductions under Laws 2003, First Special Session chapter 21,
106.17 article 5.
106.18 (c) (b) For aids payable in 2005 and thereafter, the total aid for any city shall not
106.19 exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid
106.20 distribution plus (2) its total aid in the previous year. For aids payable in 2005 and
106.21 thereafter, the total aid for any city with a population of 2,500 or more may not decrease
106.22 from its total aid under this section in the previous year by an amount greater than ten
106.23 percent of its net levy in the year prior to the aid distribution.
106.24 (d) (c) For aids payable in 2004 only, the total aid for a city with a population less
106.25 than 2,500 may not be less than the amount it was certified to receive in 2003 minus the
106.26 greater of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special
106.27 Session chapter 21, article 5, or (2) five percent of its 2003 aid amount. For aids payable
106.28 in 2005 and thereafter, the total aid for a city with a population less than 2,500 must not be
106.29 less than the amount it was certified to receive in the previous year minus five percent
106.30 of its 2003 certified aid amount.
106.31 (d) If a city's net tax capacity used in calculating aid under this section has decreased
106.32 in any year by more than 25 percent from its net tax capacity in the previous year due to
106.33 property becoming tax-exempt Indian land, the city's maximum allowed aid increase
106.34 under paragraph (b) shall be increased by an amount equal to (1) the city's tax rate in the
107.1 year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
107.2 resulting from the property becoming tax exempt.
107.3 EFFECTIVE DATE.This section is effective beginning with aids payable in 2007.
107.4 Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT,
107.5 PROPERTY TAX REIMBURSEMENT; 2006 ONLY.
107.6 Subdivision 1. Aid appropriation. $600,000 is appropriated from the general fund
107.7 to the commissioner of revenue to be used to make payments to compensate for the loss of
107.8 property tax revenue due to the placement of land located in the city of Mahnomen that
107.9 was put in trust status by the United Stated Department of the Interior, Bureau of Indian
107.10 Affairs, during calendar year 2006. The commissioner shall pay the county of Mahnomen,
107.11 $450,000; the city of Mahnomen, $80,000; and Independent School District No. 432,
107.12 Mahnomen, $70,000. The payments shall be made on July 20, 2006.
107.13 Subd. 2. School district tax base adjustments. The Department of Revenue
107.14 must reduce the referendum market value and the adjusted net tax capacity certified
107.15 for assessment year 2005 used to calculate school levies for taxes payable in 2007
107.16 for Independent School District No. 432, Mahnomen, by the amounts of any values
107.17 attributable to property that is no longer subject to property taxation because the land has
107.18 been placed in trust in calendar year 2006 through action of the United States Department
107.19 of Interior, Bureau of Indian Affairs. The Mahnomen County auditor must certify the
107.20 reductions in value to the Department of Revenue in the form and manner specified by the
107.21 Department of Revenue.
107.22 EFFECTIVE DATE.This section is effective the day following final enactment.
107.23 ARTICLE 12
107.24 MINERALS
107.25 Section 1. Minnesota Statutes 2004, section 298.001, is amended by adding a
107.26 subdivision to read:
107.27 Subd. 3a. Producer. "Producer" means a person engaged in the business of mining
107.28 or producing iron ore, taconite concentrate, or direct reduced ore in this state.
107.29 EFFECTIVE DATE.This section is effective for tax years beginning after
107.30 December 31, 2005.
107.31 Sec. 2. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 3, is
107.32 amended to read:
107.33 Subd. 3. Occupation tax; other ores. Every person engaged in the business of
107.34 mining or producing ores in this state, except iron ore or taconite concentrates, shall pay
108.1 an occupation tax to the state of Minnesota as provided in this subdivision. The tax is
108.2 determined in the same manner as the tax imposed by section 290.02, except that sections
108.3 290.05, subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do
108.4 not apply, and the occupation tax must be computed by applying to taxable income the
108.5 rate of 2.45 percent. A person subject to occupation tax under this section shall apportion
108.6 its net income on the basis of the percentage obtained by taking the sum of:
108.7 (1) 75 percent of the percentage which the sales made within this state in connection
108.8 with the trade or business during the tax period are of the total sales wherever made in
108.9 connection with the trade or business during the tax period;
108.10 (2) 12.5 percent of the percentage which the total tangible property used by the
108.11 taxpayer in this state in connection with the trade or business during the tax period is of
108.12 the total tangible property, wherever located, used by the taxpayer in connection with the
108.13 trade or business during the tax period; and
108.14 (3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or
108.15 incurred in this state or paid in respect to labor performed in this state in connection with
108.16 the trade or business during the tax period are of the taxpayer's total payrolls paid or
108.17 incurred in connection with the trade or business during the tax period.
108.18 The tax is in addition to all other taxes.
108.19 EFFECTIVE DATE.This section is effective for tax years beginning after
108.20 December 31, 2005.
108.21 Sec. 3. Minnesota Statutes 2004, section 298.01, subdivision 3a, is amended to read:
108.22 Subd. 3a. Gross income. (a) For purposes of determining a person's taxable income
108.23 under subdivision 3, gross income is determined by the amount of gross proceeds from
108.24 mining in this state under section 298.016 and includes any gain or loss recognized from
108.25 the sale or disposition of assets used in the business in this state. If more than one mineral,
108.26 metal, or energy resource referred to in section 298.016 is mined and processed at the
108.27 same mine and plant, a gross income for each mineral, metal, or energy resource must be
108.28 determined separately. The gross incomes may be combined on one occupation tax return
108.29 to arrive at the gross income of all production.
108.30 (b) In applying section 290.191, subdivision 5, transfers of ores are deemed to be
108.31 sales outside in this state if the ores are transported out of this state after the ores have
108.32 been converted to a marketable quality.
108.33 EFFECTIVE DATE.This section is effective for tax years beginning after
108.34 December 31, 2005.
109.1 Sec. 4. Minnesota Statutes 2004, section 298.01, subdivision 3b, is amended to read:
109.2 Subd. 3b. Deductions. (a) For purposes of determining taxable income under
109.3 subdivision 3, the deductions from gross income include only those expenses necessary
109.4 to convert raw ores to marketable quality. Such expenses include costs associated with
109.5 refinement but do not include expenses such as transportation, stockpiling, marketing, or
109.6 marine insurance that are incurred after marketable ores are produced, unless the expenses
109.7 are included in gross income. The allowable deductions from a mine or plant that mines
109.8 and produces more than one mineral, metal, or energy resource must be determined
109.9 separately for the purposes of computing the deduction in section 290.01, subdivision 19c,
109.10 clause (9). These deductions may be combined on one occupation tax return to arrive at
109.11 the deduction from gross income for all production.
109.12 (b) The provisions of section 290.01, subdivisions 19c, clauses (6) and (9), and 19d,
109.13 clauses (7) and (11), are not used to determine taxable income.
109.14 EFFECTIVE DATE.This section is effective for tax years beginning after
109.15 December 31, 2005.
109.16 Sec. 5. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 4, is
109.17 amended to read:
109.18 Subd. 4. Occupation tax; iron ore; taconite concentrates. A person engaged in
109.19 the business of mining or producing of iron ore, taconite concentrates or direct reduced ore
109.20 in this state shall pay an occupation tax to the state of Minnesota. The tax is determined
109.21 in the same manner as the tax imposed by section 290.02, except that sections 290.05,
109.22 subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply,
109.23 and the occupation tax shall be computed by applying to taxable income the rate of 2.45
109.24 percent. A person subject to occupation tax under this section shall apportion its net
109.25 income on the basis of the percentage obtained by taking the sum of:
109.26 (1) 75 percent of the percentage which the sales made within this state in connection
109.27 with the trade or business during the tax period are of the total sales wherever made in
109.28 connection with the trade or business during the tax period;
109.29 (2) 12.5 percent of the percentage which the total tangible property used by the
109.30 taxpayer in this state in connection with the trade or business during the tax period is of
109.31 the total tangible property, wherever located, used by the taxpayer in connection with the
109.32 trade or business during the tax period; and
109.33 (3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or
109.34 incurred in this state or paid in respect to labor performed in this state in connection with
109.35 the trade or business during the tax period are of the taxpayer's total payrolls paid or
109.36 incurred in connection with the trade or business during the tax period.
110.1 The tax is in addition to all other taxes.
110.2 EFFECTIVE DATE.This section is effective for tax years beginning after
110.3 December 31, 2005.
110.4 Sec. 6. Minnesota Statutes 2004, section 298.01, subdivision 4a, is amended to read:
110.5 Subd. 4a. Gross income. (a) For purposes of determining a person's taxable income
110.6 under subdivision 4, gross income is determined by the mine value of the ore mined in
110.7 Minnesota and includes any gain or loss recognized from the sale or disposition of assets
110.8 used in the business in this state.
110.9 (b) Mine value is the value, or selling price, of iron ore or taconite concentrates, f.o.b.
110.10 mine. The mine value is calculated by multiplying the iron unit price for the period, as
110.11 determined by the commissioner, by the tons produced and the weighted average analysis.
110.12 (c) In applying section 290.191, subdivision 5, transfers of iron ore and taconite
110.13 concentrates are deemed to be sales outside in this state if the iron ore or taconite
110.14 concentrates are transported out of this state after the raw iron ore and taconite
110.15 concentrates have been converted to a marketable quality.
110.16 (d) If iron ore or taconite and a mineral, metal, or energy resource referred to in
110.17 section 298.016 is mined and processed at the same mine and plant, a gross income for
110.18 each mineral, metal, or energy resource must be determined separately from the mine
110.19 value for the iron ore or taconite. The gross income may be combined on one occupation
110.20 tax return to arrive at the gross income from all production.
110.21 EFFECTIVE DATE.This section is effective for tax years beginning after
110.22 December 31, 2005.
110.23 Sec. 7. Minnesota Statutes 2004, section 298.01, subdivision 4b, is amended to read:
110.24 Subd. 4b. Deductions. For purposes of determining taxable income under
110.25 subdivision 4, the deductions from gross income include only those expenses necessary
110.26 to convert raw iron ore or taconite concentrates to marketable quality. Such expenses
110.27 include costs associated with beneficiation and refinement but do not include expenses
110.28 such as transportation, stockpiling, marketing, or marine insurance that are incurred after
110.29 marketable iron ore or taconite pellets are produced. The allowable deductions from a
110.30 mine or plant that mines and produces iron ore or taconite and one or more mineral or
110.31 metal referred to in section 298.016 must be determined separately for the purposes of
110.32 computing the deduction in section 290.01, subdivision 19c, clause (9). These deductions
110.33 may be combined on one occupation tax return to arrive at the deduction from gross
110.34 income for all production.
111.1 EFFECTIVE DATE.This section is effective for tax years beginning after
111.2 December 31, 2005.
111.3 Sec. 8. Minnesota Statutes 2004, section 298.01, is amended by adding a subdivision
111.4 to read:
111.5 Subd. 6. Deductions applicable to mining both taconite and other ores; ratio
111.6 applied. If a person is engaged in the business of mining or producing both iron ores,
111.7 taconite concentrates, or direct reduced ore, and other ores from the same mine or
111.8 facility, that person must separately determine the mine value of (1) the iron ore, taconite
111.9 concentrates, and direct reduced ore, and (2) the amount of gross proceeds from mining
111.10 other ores in Minnesota. The ratio of mine value from iron ore, taconite concentrates,
111.11 and direct reduced ore to gross proceeds from mining other ores must be applied to
111.12 deductions common to both processes to determine taxable income for tax paid pursuant
111.13 to subdivisions 3 and 4.
111.14 EFFECTIVE DATE.This section is effective for tax years beginning after
111.15 December 31, 2005.
111.16 Sec. 9. Minnesota Statutes 2004, section 298.227, is amended to read:
111.17 298.227 TACONITE ECONOMIC DEVELOPMENT FUND.
111.18 An amount equal to that distributed pursuant to each taconite producer's taxable
111.19 production and qualifying sales under section 298.28, subdivision 9a, shall be held by
111.20 the Iron Range Resources and Rehabilitation Board in a separate taconite economic
111.21 development fund for each taconite and direct reduced ore producer. Money from the
111.22 fund for each producer shall be released by the commissioner after review by a joint
111.23 committee consisting of an equal number of representatives of the salaried employees and
111.24 the nonsalaried production and maintenance employees of that producer. The District 11
111.25 director of the United States Steelworkers of America, on advice of each local employee
111.26 president, shall select the employee members. In nonorganized operations, the employee
111.27 committee shall be elected by the nonsalaried production and maintenance employees.
111.28 The review must be completed no later than six months after the producer presents a
111.29 proposal for expenditure of the funds to the committee. The funds held pursuant to this
111.30 section may be released only for acquisition of equipment and facilities for the producer
111.31 or for research and development in Minnesota on new mining, or taconite, iron, or steel
111.32 production technology, but only if the producer provides a matching expenditure to be
111.33 used for the same purpose of at least 50 percent of the distribution based on 14.7 cents
111.34 per ton beginning with distributions in 2002. If a producer uses money from the fund to
111.35 procure haulage trucks, mobile equipment, or mining shovels, and the producer removes
112.1 the piece of equipment from the taconite tax relief area defined in section 273.134 within
112.2 ten years from the date of receipt of the money from the fund, a portion of the money
112.3 granted from the fund must be repaid to the taconite economic development fund. The
112.4 portion of the money to be repaid is 100 percent of the grant if the equipment is removed
112.5 from the taconite tax relief area within 12 months after receipt of the money from the fund,
112.6 declining by ten percent for each of the subsequent nine years during which the equipment
112.7 remains within the taconite tax relief area. If a taconite production facility is sold after
112.8 operations at the facility had ceased, any money remaining in the fund for the former
112.9 producer may be released to the purchaser of the facility on the terms otherwise applicable
112.10 to the former producer under this section. If a producer fails to provide matching funds
112.11 for a proposed expenditure within six months after the commissioner approves release
112.12 of the funds, the funds are available for release to another producer in proportion to the
112.13 distribution provided and under the conditions of this section. Any portion of the fund
112.14 which is not released by the commissioner within two years of its deposit in the fund shall
112.15 be divided between the taconite environmental protection fund created in section 298.223
112.16 and the Douglas J. Johnson economic protection trust fund created in section 298.292 for
112.17 placement in their respective special accounts. Two-thirds of the unreleased funds shall be
112.18 distributed to the taconite environmental protection fund and one-third to the Douglas J.
112.19 Johnson economic protection trust fund.
112.20 Sec. 10. Minnesota Statutes 2004, section 298.28, subdivision 6, is amended to read:
112.21 Subd. 6. Property tax relief. (a) In 2002 and thereafter, 33.9 cents per taxable
112.22 ton, less any amount required to be distributed under paragraphs (b) and (c), or section
112.23 298.2961, subdivision 5, must be allocated to St. Louis County acting as the counties'
112.24 fiscal agent, to be distributed as provided in sections 273.134 to 273.136.
112.25 (b) If an electric power plant owned by and providing the primary source of power
112.26 for a taxpayer mining and concentrating taconite is located in a county other than the
112.27 county in which the mining and the concentrating processes are conducted, .1875 cent per
112.28 taxable ton of the tax imposed and collected from such taxpayer shall be paid to the county.
112.29 (c) If an electric power plant owned by and providing the primary source of power
112.30 for a taxpayer mining and concentrating taconite is located in a school district other than
112.31 a school district in which the mining and concentrating processes are conducted, .4541
112.32 cent per taxable ton of the tax imposed and collected from the taxpayer shall be paid to
112.33 the school district.
112.34 Sec. 11. Minnesota Statutes 2004, section 298.28, subdivision 8, is amended to read:
113.1 Subd. 8. Range Association of Municipalities and Schools. .20 .30 cent per
113.2 taxable ton shall be paid to the Range Association of Municipalities and Schools, for
113.3 the purpose of providing an areawide approach to problems which demand coordinated
113.4 and cooperative actions and which are common to those areas of northeast Minnesota
113.5 affected by operations involved in mining iron ore and taconite and producing concentrate
113.6 therefrom, and for the purpose of promoting the general welfare and economic
113.7 development of the cities, towns and school districts within the iron range area of
113.8 northeast Minnesota.
113.9 EFFECTIVE DATE.This section is effective for taxes paid in 2007 and subsequent
113.10 years.
113.11 Sec. 12. Minnesota Statutes 2005 Supplement, section 298.2961, subdivision 4,
113.12 is amended to read:
113.13 Subd. 4. Grant and loan fund. (a) A fund is established to receive distributions
113.14 under section 298.28, subdivision 9b, and to make grants or loans as provided in this
113.15 subdivision. Any grant or loan made under this subdivision must be approved by
113.16 a majority of the members of the Iron Range Resources and Rehabilitation Board,
113.17 established under section 298.22.
113.18 (b) Distributions received in calendar year 2005 are allocated to the city of Virginia
113.19 for improvements and repairs to the city's steam heating system.
113.20 (c) Distributions received in calendar year 2006 are allocated to a project of the
113.21 public utilities commissions of the cities of Hibbing and Virginia to convert their electrical
113.22 generating plants to the use of biomass products, such as wood.
113.23 (d) Distributions received in calendar year 2007 must be paid to the city of Tower to
113.24 be used for the East Two Rivers project in or near the city of Tower.
113.25 (e) For distributions received in 2008 and later, amounts may be allocated to joint
113.26 ventures with mining companies for reclamation of lands containing abandoned or worked
113.27 out mines to convert these lands to marketable properties for residential, recreational,
113.28 commercial, or other valuable uses, the first $2,000,000 of the 2008 distribution must be
113.29 paid to St. Louis County for deposit in its county road and bridge fund to be used for
113.30 relocation of St. Louis County Road 715, commonly referred to as Pike River Road. The
113.31 remainder of the 2008 distribution and the full amount of the distributions in 2009 and
113.32 subsequent years is allocated for projects under section 298.223, subdivision 1.
113.33 Sec. 13. Minnesota Statutes 2004, section 298.2961, is amended by adding a
113.34 subdivision to read:
113.35 Subd. 5. Public works and local economic development fund. For distributions in
113.36 2007 only, a special fund is established to receive 38.4 cents per ton that otherwise would
114.1 be allocated under section 298.28, subdivision 6. The following amounts are allocated to
114.2 St. Louis County acting as the fiscal agent for the recipients for the specific purposes:
114.3 (1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for
114.4 construction of a combined wastewater facility;
114.5 (2) six cents per ton to the city of Eveleth to redesign and design and construct
114.6 improvements to renovate its water treatment facility;
114.7 (3) one cent per ton for the East Range Joint Powers Board to acquire land for and to
114.8 design a central wastewater collection and treatment system;
114.9 (4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;
114.10 (5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;
114.11 (6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;
114.12 (7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and
114.13 Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment
114.14 and Economic Development;
114.15 (8) 0.4 cents per ton to the city of Keewatin for a new city well;
114.16 (9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous
114.17 materials center;
114.18 (10) 0.9 cents per ton to Aitkin County Growth for an economic development
114.19 project for peat harvesting;
114.20 (11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;
114.21 (12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive
114.22 plan;
114.23 (13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;
114.24 (14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake
114.25 Environmental Learning Center;
114.26 (15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;
114.27 (16) 0.5 cents per ton to the Economic Development Authority of the city of Grand
114.28 Rapids for planning for the North Central Research and Technology Laboratory;
114.29 (17) 0.6 cents per ton to the city of Bovey for sewer and water extension;
114.30 (18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and
114.31 (19) ten cents per ton to an economic development authority in a city through which
114.32 State Highway 1 passes, or a city in Independent School District No. 2142 that has an
114.33 active mine, for an economic development project approved by the Iron Range Resources
114.34 and Rehabilitation Board.
114.35 EFFECTIVE DATE.This section is effective the day following final enactment.
115.1 Sec. 14. Minnesota Statutes 2004, section 298.75, is amended by adding a subdivision
115.2 to read:
115.3 Subd. 10. Tax may be imposed; Sylvan Township. (a) If Cass County does not
115.4 impose a tax under this section and approves imposition of the tax under this subdivision,
115.5 the town of Sylvan in Cass County may impose the aggregate materials tax under this
115.6 section.
115.7 (b) For purposes of exercising the powers contained in this section, the "town" is
115.8 deemed to be the "county."
115.9 (c) All provisions in this section apply to the town of Sylvan, except that, in lieu
115.10 of the distribution of the tax proceeds under subdivision 7, all proceeds of the tax must
115.11 be retained by the town.
115.12 (d) If Cass County imposes an aggregate materials tax under this section, the tax
115.13 imposed by the town of Sylvan under this subdivision is repealed on the effective date
115.14 of the Cass County tax.
115.15 EFFECTIVE DATE.This section is effective the day after the governing body of
115.16 the town of Sylvan and its chief clerical officer comply with section 645.021, subdivisions
115.17 2 and 3.
115.18 Sec. 15. Laws 2005, chapter 152, article 1, section 39, subdivision 1, is amended to
115.19 read:
115.20 Subdivision 1. Issuance; purpose. Notwithstanding any provision of Minnesota
115.21 Statutes, chapter 298, to the contrary, the commissioner of Iron Range resources and
115.22 rehabilitation may shall issue revenue bonds in a principal amount of $15,000,000 plus
115.23 an amount sufficient to pay costs of issuance, in one or more series, and thereafter may
115.24 issue bonds to refund those bonds. The proceeds of the bonds must be used to pay costs
115.25 of issuance and to make grants to school districts located in the taconite tax relief area
115.26 defined in Minnesota Statutes, section 273.134, or the taconite assistance area defined
115.27 in Minnesota Statutes, section 273.1341, to be used by the school districts to pay for
115.28 health, safety, and maintenance improvements but only if the school district has levied the
115.29 maximum amount allowable under law for those purposes.
115.30 EFFECTIVE DATE.This section is effective the day following final enactment.
115.31 Sec. 16. TRANSITION PROVISIONS.
115.32 Each person with an alternative minimum tax credit on December 31, 2005, pursuant
115.33 to Minnesota Statutes 2004, section 298.01, subdivision 3d or 4e, may take that credit
115.34 against occupation tax under Minnesota Statutes, section 298.01.
115.35 EFFECTIVE DATE.This section is effective the day following final enactment.
116.1 Sec. 17. REPEALER.
116.2 Minnesota Statutes 2004, section 298.01, subdivisions 3c, 3d, 4d, and 4e, are
116.3 repealed effective for tax years beginning after December 31, 2005.
116.4 ARTICLE 13
116.5 MISCELLANEOUS
116.6 Section 1. Minnesota Statutes 2005 Supplement, section 272.02, subdivision 83,
116.7 is amended to read:
116.8 Subd. 83. International economic development zone property. (a) Improvements
116.9 to real property, and personal property, classified under section 273.13, subdivision
116.10 24, and located within the international economic development zone designated under
116.11 section 469.322, are exempt from ad valorem taxes levied under chapter 275, if the
116.12 improvements are:
116.13 (1) part of a regional distribution center as defined in section 469.321; or
116.14 (2) occupied by a qualified business as defined in section 469.321, that uses the
116.15 improvements primarily in freight forwarding operations.
116.16 (b) The exemption applies beginning for the first assessment year after designation of
116.17 the international economic development zone. The exemption applies to each assessment
116.18 year that begins during the duration of the international economic development zone. To
116.19 be exempt under paragraph (a), clause (2), the property must be occupied by July 1 of the
116.20 assessment year by a qualified business that has signed the business subsidy agreement
116.21 by July 1 of the assessment year.
116.22 EFFECTIVE DATE.This section is effective the day following final enactment.
116.23 Sec. 2. Minnesota Statutes 2005 Supplement, section 289A.20, subdivision 4, is
116.24 amended to read:
116.25 Subd. 4. Sales and use tax. (a) The taxes imposed by chapter 297A are due and
116.26 payable to the commissioner monthly on or before the 20th day of the month following the
116.27 month in which the taxable event occurred, or following another reporting period as the
116.28 commissioner prescribes or as allowed under section 289A.18, subdivision 4, paragraph
116.29 (f) or (g), except that use taxes due on an annual use tax return as provided under section
116.30 289A.11, subdivision 1, are payable by April 15 following the close of the calendar year.
116.31 (b) A vendor having a liability of $120,000 or more during a fiscal year ending June
116.32 30 must remit the June liability for the next year in the following manner:
116.33 (1) Two business days before June 30 of the year, the vendor must remit 85 78
116.34 percent of the estimated June liability to the commissioner.
117.1 (2) On or before August 20 of the year, the vendor must pay any additional amount
117.2 of tax not remitted in June.
117.3 (c) A vendor having a liability of:
117.4 (1) $20,000 or more in the fiscal year ending June 30, 2005; or
117.5 (2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years
117.6 thereafter,
117.7 must remit all liabilities on returns due for periods beginning in the subsequent calendar
117.8 year by electronic means on or before the 20th day of the month following the month in
117.9 which the taxable event occurred, or on or before the 20th day of the month following the
117.10 month in which the sale is reported under section 289A.18, subdivision 4, except for 85 78
117.11 percent of the estimated June liability, which is due two business days before June 30. The
117.12 remaining amount of the June liability is due on August 20.
117.13 EFFECTIVE DATE.This section is effective for sales tax payments in June 2007
117.14 and thereafter.
117.15 Sec. 3. Minnesota Statutes 2004, section 289A.60, subdivision 15, is amended to read:
117.16 Subd. 15. Accelerated payment of June sales tax liability; penalty for
117.17 underpayment. (a) For payments made after December 31, 2002, and before January 1,
117.18 2004, if a vendor is required by law to submit an estimation of June sales tax liabilities
117.19 and 75 percent payment by a certain date, the vendor shall pay a penalty equal to ten
117.20 percent of the amount of actual June liability required to be paid in June less the amount
117.21 remitted in June. The penalty must not be imposed, however, if the amount remitted in
117.22 June equals the lesser of 75 percent of the preceding May's liability or 75 percent of the
117.23 average monthly liability for the previous calendar year.
117.24 (b) For payments made after December 31, 2003 2006, if a vendor is required by
117.25 law to submit an estimation of June sales tax liabilities and 85 78 percent payment by a
117.26 certain date, the vendor shall pay a penalty equal to ten percent of the amount of actual
117.27 June liability required to be paid in June less the amount remitted in June. The penalty
117.28 must not be imposed, however, if the amount remitted in June equals the lesser of 85 78
117.29 percent of the preceding May's liability or 85 78 percent of the average monthly liability
117.30 for the previous calendar year.
117.31 EFFECTIVE DATE.This section is effective for sales tax payments in June 2007
117.32 and thereafter.
117.33 Sec. 4. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 2, is
117.34 amended to read:
118.1 Subd. 2. Exemptions. The following entities are exempt from the tax imposed
118.2 by this section:
118.3 (1) corporations exempt from tax under section 290.05;
118.4 (2) real estate investment trusts;
118.5 (3) regulated investment companies or a fund thereof; and
118.6 (4) entities having a valid election in effect under section 860D(b) of the Internal
118.7 Revenue Code;
118.8 (5) town and farmers' mutual insurance companies;
118.9 (6) cooperatives organized under chapter 308A or 308B that provide housing
118.10 exclusively to persons age 55 and over and are classified as homesteads under section
118.11 273.124, subdivision 3;
118.12 (7) an entity, if for the taxable year all of its property is located in a job opportunity
118.13 building zone designated under section 469.314 and all of its payroll is a job opportunity
118.14 building zone payroll under section 469.310; and
118.15 (8) an entity, if for the taxable year all of its property is located in an international
118.16 economic development zone designated under section 469.322, and all of its payroll is
118.17 international economic development zone payroll under section 469.321. The exemption
118.18 under this clause applies to taxable years beginning during the duration of the international
118.19 economic development zone.
118.20 Entities not specifically exempted by this subdivision are subject to tax under this
118.21 section, notwithstanding section 290.05.
118.22 EFFECTIVE DATE.This section is effective the day following final enactment.
118.23 Sec. 5. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 3, is
118.24 amended to read:
118.25 Subd. 3. Definitions. (a) "Minnesota sales or receipts" means the total sales
118.26 apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts
118.27 attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the
118.28 total sales or receipts apportioned or attributed to Minnesota pursuant to any other
118.29 apportionment formula applicable to the taxpayer.
118.30 (b) "Minnesota property" means total Minnesota tangible property as provided in
118.31 section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota,
118.32 but does not include: (1) property located in a job opportunity building zone designated
118.33 under section 469.314, or (2) property of a qualified business located in a biotechnology
118.34 and health sciences industry zone designated under section 469.334, or (3) for taxable
118.35 years beginning during the duration of the zone, property of a qualified business located
118.36 in the international economic development zone designated under section 469.322.
119.1 Intangible property shall not be included in Minnesota property for purposes of this
119.2 section. Taxpayers who do not utilize tangible property to apportion income shall
119.3 nevertheless include Minnesota property for purposes of this section. On a return for
119.4 a short taxable year, the amount of Minnesota property owned, as determined under
119.5 section 290.191, shall be included in Minnesota property based on a fraction in which the
119.6 numerator is the number of days in the short taxable year and the denominator is 365.
119.7 (c) "Minnesota payrolls" means total Minnesota payrolls as provided in section
119.8 290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls
119.9 under section 469.310, subdivision 8, or (2) biotechnology and health sciences industry
119.10 zone payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning
119.11 during the duration of the zone, international economic development zone payrolls under
119.12 section 469.321, subdivision 9. Taxpayers who do not utilize payrolls to apportion income
119.13 shall nevertheless include Minnesota payrolls for purposes of this section.
119.14 EFFECTIVE DATE.This section is effective the day following final enactment.
119.15 Sec. 6. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 41, is
119.16 amended to read:
119.17 Subd. 41. International economic development zones. (a) Purchases of tangible
119.18 personal property or taxable services by a qualified business, as defined in section 469.321,
119.19 are exempt if the property or services are primarily used or consumed in the international
119.20 economic development zone designated under section 469.322. This exemption applies
119.21 only if the purchase is made and delivery received after the business signed the business
119.22 subsidy agreement required under chapter 469.
119.23 (b) Purchase and use of construction materials, supplies, and equipment incorporated
119.24 into the construction of improvements to real property in the international economic
119.25 development zone are exempt if the improvements after completion of construction are
119.26 to be used as a regional distribution center as defined in section 469.321 or otherwise
119.27 used in the conduct of freight forwarding activities of a qualified business as defined in
119.28 section 469.321. This exemption applies regardless of whether the purchases are made
119.29 by the business or a contractor.
119.30 (c) The exemptions under this subdivision apply to a local sales and use tax,
119.31 regardless of whether the local tax is imposed on sales taxable under this chapter or in
119.32 another law, ordinance, or charter provision.
119.33 (d) The exemption in paragraph (a) applies exemptions in this section apply to sales
119.34 during the duration of the zone and after June 30, 2007, if the purchase was made and
119.35 delivery received after the business signs the business subsidy agreement required under
119.36 chapter 469 and purchases made after the date of final zone designation under section
120.1 469.322, paragraph (c), and before the expiration of the zone under section 469.322,
120.2 paragraph (d).
120.3 (e) For purchases made for improvements to real property to be occupied by a
120.4 business that has not signed a business subsidy agreement at the time of the purchase, the
120.5 tax must be imposed and collected as if the rate under section 297A.62, subdivision 1,
120.6 applied, and then refunded in the manner provided in section 297A.75 beginning in fiscal
120.7 year 2008. The taxpayer must attach to the claim for refund information sufficient for
120.8 the commissioner to be able to determine that the improvements are being occupied by
120.9 a business that has signed a business subsidy agreement.
120.10 EFFECTIVE DATE.This section is effective the day following final enactment.
120.11 Sec. 7. Minnesota Statutes 2004, section 297F.09, subdivision 10, is amended to read:
120.12 Subd. 10. Accelerated tax payment; cigarette or tobacco products distributor.
120.13 A cigarette or tobacco products distributor having a liability of $120,000 or more during a
120.14 fiscal year ending June 30, shall remit the June liability for the next year in the following
120.15 manner:
120.16 (a) Two business days before June 30 of the year, the distributor shall remit the
120.17 actual May liability and 85 78 percent of the estimated June liability to the commissioner
120.18 and file the return in the form and manner prescribed by the commissioner.
120.19 (b) On or before August 18 of the year, the distributor shall submit a return showing
120.20 the actual June liability and pay any additional amount of tax not remitted in June. A
120.21 penalty is imposed equal to ten percent of the amount of June liability required to be paid
120.22 in June, less the amount remitted in June. However, the penalty is not imposed if the
120.23 amount remitted in June equals the lesser of:
120.24 (1) 85 78 percent of the actual June liability; or
120.25 (2) 85 78 percent of the preceding May's liability.
120.26 EFFECTIVE DATE.This section is effective for sales tax payments in June 2007
120.27 and thereafter.
120.28 Sec. 8. Minnesota Statutes 2004, section 297G.09, subdivision 9, is amended to read:
120.29 Subd. 9. Accelerated tax payment; penalty. A person liable for tax under this
120.30 chapter having a liability of $120,000 or more during a fiscal year ending June 30, shall
120.31 remit the June liability for the next year in the following manner:
120.32 (a) Two business days before June 30 of the year, the taxpayer shall remit the actual
120.33 May liability and 85 78 percent of the estimated June liability to the commissioner and file
120.34 the return in the form and manner prescribed by the commissioner.
121.1 (b) On or before August 18 of the year, the taxpayer shall submit a return showing
121.2 the actual June liability and pay any additional amount of tax not remitted in June. A
121.3 penalty is imposed equal to ten percent of the amount of June liability required to be paid
121.4 in June less the amount remitted in June. However, the penalty is not imposed if the
121.5 amount remitted in June equals the lesser of:
121.6 (1) 85 78 percent of the actual June liability; or
121.7 (2) 85 78 percent of the preceding May liability.
121.8 EFFECTIVE DATE.This section is effective for sales tax payments in June 2007
121.9 and thereafter.
121.10 Sec. 9. [469.193] FOREIGN TRADE ZONES.
121.11 A city, county, town, or other political subdivision may apply to the board defined in
121.12 United States Code, title 19, section 81a, for the right to use the powers provided in United
121.13 States Code, title 19, sections 81a to 81u. If the right is granted, the city, county, town, or
121.14 other political subdivision may use the powers within or outside of a port district. Any
121.15 city, county, town, or other political subdivision may apply jointly with any other city,
121.16 county, town, or other political subdivision.
121.17 EFFECTIVE DATE.This section is effective the day following final enactment.
121.18 Sec. 10. Minnesota Statutes 2004, section 469.312, subdivision 5, is amended to read:
121.19 Subd. 5. Duration limit. (a) The maximum duration of a zone is 12 years. The
121.20 applicant may request a shorter duration. The commissioner may specify a shorter
121.21 duration, regardless of the requested duration.
121.22 (b) The duration limit under this subdivision and the duration of the zone for
121.23 purposes of allowance of tax incentives described in section 469.315 is extended by three
121.24 calendar years for each parcel of property that meets the following requirements:
121.25 (1) the qualified business operates an ethanol plant, as defined in section 41A.09, on
121.26 the site that includes the parcel; and
121.27 (2) the business subsidy agreement was executed after April 30, 2006, and before
121.28 July 1, 2007.
121.29 EFFECTIVE DATE.This section is effective the day following final enactment.
121.30 Sec. 11. Minnesota Statutes 2005 Supplement, section 469.322, is amended to read:
121.31 469.322 DESIGNATION OF INTERNATIONAL ECONOMIC
121.32 DEVELOPMENT ZONE.
121.33 (a) An area designated as a foreign trade zone may be designated by the foreign
121.34 trade zone authority as an international economic development zone if within the zone
122.1 a regional distribution center is being developed pursuant to section 469.323. The zone
122.2 must consist of contiguous area of not less than 500 acres and not more than 1,000 acres.
122.3 The designation authority under this section is limited to one zone.
122.4 (b) In making the designation, the foreign trade zone authority, in consultation with
122.5 the Minnesota Department of Transportation and the Metropolitan Council, shall consider
122.6 access to major transportation routes, consistency with current state transportation and
122.7 air cargo planning, adequacy of the size of the site, access to airport facilities, present
122.8 and future capacity at the designated airport, the capability to meet integrated present
122.9 and future air cargo, security, and inspection services, and access to other infrastructure
122.10 and financial incentives. The border of the international economic development zone
122.11 must be no more than 60 miles distant or 90 minutes drive time from the border of the
122.12 Minneapolis-St. Paul International Airport.
122.13 (c) Before final designation of the zone, the foreign trade zone authority, in
122.14 consultation with the applicant, must conduct a transportation impact study based on the
122.15 regional model and utilizing traffic forecasting and assignments. The results must be used
122.16 to evaluate the effects of the proposed use on the transportation system and identify any
122.17 needed improvements. If the site is in the metropolitan area the study must also evaluate
122.18 the effect of the transportation impacts on the Metropolitan Transportation System plan
122.19 as well as the comprehensive plans of the municipalities that would be affected. The
122.20 authority shall provide copies of the study to the legislature under section 3.195 and to the
122.21 chairs of the committees with jurisdiction over transportation and economic development.
122.22 The applicant must pay the cost of the study.
122.23 (c) (d) Final zone designation must be made by June 30, 2006 2008.
122.24 (d) (e) Duration of the zone is a 12-year period beginning on January 1, 2007 2010.
122.25 EFFECTIVE DATE.This section is effective the day following final enactment.
122.26 Sec. 12. Minnesota Statutes 2005 Supplement, section 469.323, subdivision 2, is
122.27 amended to read:
122.28 Subd. 2. Business plan. Before designation of an international economic
122.29 development zone under section 469.322, the governing body of the foreign trade zone
122.30 authority shall prepare a business plan. The findings of the business plan shall be
122.31 presented to the legislature pursuant to section 3.195. Copies of the business plan shall be
122.32 provided to the chairs of committees with jurisdiction over transportation and economic
122.33 development. The plan must include an analysis of the economic feasibility of the regional
122.34 distribution center once it becomes operational and of the operations of freight forwarders
122.35 and other businesses that choose to locate within the boundaries of the zone. The analysis
122.36 must provide profitability models that:
123.1 (1) include the benefits of the incentives;
123.2 (2) estimate the amount of time needed to achieve profitability; and
123.3 (3) analyze the length of time incentives will be necessary to the economic viability
123.4 of the regional distribution center.
123.5 If the governing body of the foreign trade authority determines that the models do
123.6 not establish the economic feasibility of the project, the regional distribution center does
123.7 not meet the development requirements of this section and section 469.322.
123.8 Sec. 13. Minnesota Statutes 2005 Supplement, section 469.327, is amended to read:
123.9 469.327 JOBS CREDIT.
123.10 Subdivision 1. Credit allowed. (a) A qualified business is allowed a credit against
123.11 the taxes imposed under chapter 290. The credit equals seven percent of the:
123.12 (1) lesser of:
123.13 (i) zone payroll for the taxable year, less the zone payroll for the base year; or
123.14 (ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for
123.15 the base year; minus
123.16 (2) $30,000 multiplied by the number of full-time equivalent employees that the
123.17 qualified business employs in the international economic development zone for the taxable
123.18 year, minus the number of full-time equivalent employees the business employed in the
123.19 zone in the base year, but not less than zero.
123.20 (b) This section applies only to tax years beginning during the duration of the
123.21 international economic development zone.
123.22 Subd. 2. Definitions. (a) For purposes of this section, the following terms have
123.23 the meanings given.
123.24 (b) "Base year" means the taxable year beginning during the calendar year
123.25 immediately preceding the calendar year in which the zone designation was made duration
123.26 of the zone begins under section 469.322, paragraph (d).
123.27 (c) "Full-time equivalent employees" means the equivalent of annualized expected
123.28 hours of work equal to 2,080 hours.
123.29 (d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under
123.30 section 290.191, subdivision 12, for the qualified business or the unitary business of which
123.31 the qualified business is a part, whichever is greater.
123.32 (e) "Zone payroll" means wages or salaries used to determine the zone payroll
123.33 factor for the qualified business, less the amount of compensation attributable to any
123.34 employee that exceeds $70,000.
123.35 Subd. 3. Inflation adjustment. For taxable years beginning after December 31,
123.36 2006 2010, the dollar amounts in subdivisions 1, clause (2); and 2, paragraph (e), are
124.1 annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by
124.2 the percentage determined under section 290.06, subdivision 2d, for the taxable year.
124.3 Subd. 4. Refundable. If the amount of the credit exceeds the liability for tax under
124.4 chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
124.5 Subd. 5. Appropriation. An amount sufficient to pay the refunds authorized by this
124.6 section is appropriated to the commissioner of revenue from the general fund.
124.7 EFFECTIVE DATE.This section is effective the day following final enactment.
124.8 Sec. 14. Minnesota Statutes 2004, section 473.39, is amended by adding a subdivision
124.9 to read:
124.10 Subd. 11. Obligations. After July 1, 2006, in addition to the authority in
124.11 subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 1j, and 1k, the council may issue certificates of
124.12 indebtedness, bonds, or other obligations under this section in an amount not exceeding
124.13 $32,800,000 for capital expenditures as prescribed in the council's regional transit master
124.14 plan and transit capital improvement program, as adopted through May 1, 2006, and for
124.15 related costs, including the costs of issuance and sale of the obligations.
124.16 EFFECTIVE DATE.This section is effective the day following final enactment.
124.17 Sec. 15. Minnesota Statutes 2004, section 645.44, is amended by adding a subdivision
124.18 to read:
124.19 Subd. 19. Fee and tax. (a) "Tax" means any fee, charge, exaction, or assessment
124.20 imposed by a governmental entity on an individual, person, entity, transaction, good,
124.21 service, or other thing. It excludes a price that an individual or entity chooses voluntarily
124.22 to pay in return for receipt of goods or services provided by the governmental entity.
124.23 A government good or service does not include access to or the authority to engage in
124.24 private market transactions with a nongovernmental party, such as licenses to engage in a
124.25 trade, profession, or business or to improve private property.
124.26 (b) For purposes of applying the laws of this state, a "fee," "charge," or other similar
124.27 term that satisfies the functional requirements of paragraph (a) must be treated as a tax
124.28 for all purposes, regardless of whether the statute or law names or describes it as a tax.
124.29 The provisions of this subdivision do not preempt or supersede limitations under law
124.30 that apply to fees, charges, or assessments.
124.31 (c) This subdivision is not intended to extend or limit article 4, section 18 of the
124.32 Minnesota Constitution.
124.33 EFFECTIVE DATE.This section is effective the day following final enactment.
124.34 Sec. 16. Laws 2005, First Special Session chapter 3, article 10, section 23, is amended
124.35 to read:
125.1 Sec. 23. GRANTS TO QUALIFYING BUSINESSES.
125.2
125.3 $750,000 is appropriated in fiscal year 2006 from the general fund to the
125.4 commissioner of employment and economic development to be distributed to the foreign
125.5 trade zone authority to provide grants to qualified businesses as determined by the
125.6 authority, subject to Minnesota Statutes, sections 116J.993 to 116J.995, to provide
125.7 incentives for the businesses to locate their operations in an international economic
125.8 development zone. If the money is not distributed during fiscal year 2006, it remains
125.9 available for distribution under this section during fiscal year 2007 until December 31,
125.10 2010.
125.11 Sec. 17. TAX RELIEF ACCOUNT.
125.12 (a) On June 30, 2006, the commissioner of finance shall cancel to the general fund an
125.13 amount in the tax relief account under Minnesota Statutes, section 16A.1522, subdivision
125.14 4, sufficient to provide an ending general fund balance for fiscal year 2007 of zero after
125.15 taking into account the effect on the general fund of laws enacted during the 2006 regular
125.16 legislative session relative to the February 2006 forecast.
125.17 (b) On July 1, 2007, the remaining balance in the tax relief account under Minnesota
125.18 Statutes, section 16A.1522, subdivision 4, is cancelled to the general fund.
125.19 EFFECTIVE DATE.This section is effective the day following final enactment.
125.20 Sec. 18. APPLICATION.
125.21 Section 14 applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey,
125.22 Scott, and Washington."
125.23 Delete the title and insert:
125.24 "A bill for an act
125.25 relating to financing and operation of state and local government; making policy,
125.26 technical, administrative, enforcement, collection, refund, appeal, abatement,
125.27 and other changes to income, franchise, property, sales and use, deed, health
125.28 care provider, cigarette and tobacco products, liquor, estate, aggregate removal,
125.29 occupation, and production taxes, the property tax refund, and other taxes and
125.30 tax-related provisions; providing for administration of certain fees, aids, tax
125.31 titles, and tax sales; modifying accelerated sales tax requirements; conforming
125.32 provisions to changes in the Internal Revenue Code; providing income tax
125.33 credits; modifying and authorizing sales tax exemptions; modifying and
125.34 authorizing local government sales taxes; modifying certain levies; changing
125.35 ballots for referendum revenue; changing and providing property tax exemptions;
125.36 providing for aids and payments to local governments; modifying international
125.37 economic development zone authority; authorizing distributions of tax proceeds;
125.38 providing terms and conditions related to the issuance of obligations; defining
125.39 terms; providing for authorization of interfund loans; modifying the priorities for
125.40 allocating bond issuance authority; changing and imposing powers, duties, and
125.41 requirements on certain local governments and authorities and state departments
126.1 or agencies; providing for issuance of obligations by local governments and
126.2 other public authorities, and use of the proceeds of the debt; changing tax
126.3 increment financing and abatement provisions, and providing authorities to
126.4 certain districts; providing for allocation and transfers of funds; appropriating
126.5 money; amending Minnesota Statutes 2004, sections 103E.635, subdivision
126.6 7; 116A.20, subdivision 3; 116J.993, subdivision 3; 144F.01, subdivision 4;
126.7 162.18, subdivision 1; 162.181, subdivision 1; 216B.2424, subdivision 5;
126.8 272.02, subdivisions 45, 54, 55, by adding a subdivision; 272.029, subdivision
126.9 2; 273.032; 273.11, by adding a subdivision; 273.124, subdivision 12; 273.13,
126.10 subdivision 23; 273.1384, subdivision 2; 273.1398, subdivision 3; 281.23,
126.11 subdivision 9; 289A.60, subdivision 15; 290.06, by adding a subdivision;
126.12 290.091, subdivision 3; 290.17, subdivision 1; 295.50, subdivision 4; 295.53,
126.13 subdivision 3; 297A.61, subdivisions 12, 17, by adding subdivisions; 297A.63;
126.14 297A.668, subdivision 6; 297A.669, subdivision 11; 297A.67, subdivisions 4,
126.15 5, 14, 27; 297A.70, subdivisions 2, 3, 4, 7, 13, 14, 15; 297A.71, by adding a
126.16 subdivision; 297A.99, subdivision 7; 297F.01, by adding a subdivision; 297F.09,
126.17 subdivision 10; 297G.01, subdivision 7, by adding a subdivision; 297G.09,
126.18 subdivision 9; 298.001, by adding a subdivision; 298.01, subdivisions 3a, 3b, 4a,
126.19 4b, by adding a subdivision; 298.227; 298.28, subdivisions 6, 8; 298.2961, by
126.20 adding a subdivision; 298.75, by adding a subdivision; 373.45, subdivision 1;
126.21 469.035; 469.103, subdivision 2; 469.175, subdivision 4; 469.176, subdivision 1;
126.22 469.1763, subdivisions 3, 4; 469.1771, subdivision 2a; 469.1813, subdivisions
126.23 1, 6b, 8, 9, by adding a subdivision; 469.312, subdivision 5; 473.39, by adding
126.24 a subdivision; 474A.062; 475.58, subdivision 1; 477A.013, subdivision 9;
126.25 477A.014, subdivision 1; 645.44, by adding a subdivision; Minnesota Statutes
126.26 2005 Supplement, sections 115B.49, subdivision 4; 126C.17, subdivision 9;
126.27 270C.01, subdivision 4; 270C.304; 270C.33, subdivision 4; 270C.57, subdivision
126.28 3; 270C.67, subdivision 1, by adding a subdivision; 270C.722, subdivision 2;
126.29 271.12; 272.02, subdivisions 53, 83; 273.13, subdivisions 22, 25; 273.1384,
126.30 subdivision 1; 284.07; 289A.02, subdivision 7; 289A.121, subdivision 5;
126.31 289A.20, subdivision 4; 290.01, subdivisions 19, 19a, 19c, 31; 290.0675,
126.32 subdivision 1; 290.0922, subdivisions 2, 3; 290A.03, subdivision 15; 291.005,
126.33 subdivision 1; 297A.61, subdivision 3; 297A.67, subdivision 6; 297A.68,
126.34 subdivisions 37, 38, 41; 297A.72, subdivision 2; 297A.75, subdivisions 1, 2, 3;
126.35 297A.815, subdivision 1; 298.01, subdivisions 3, 4; 298.2961, subdivision 4;
126.36 469.175, subdivisions 2, 5; 469.1763, subdivisions 2, 6; 469.177, subdivision 1;
126.37 469.178, subdivision 7; 469.1813, subdivision 6; 469.322; 469.323, subdivision
126.38 2; 469.327; 477A.011, subdivision 36; Laws 1996, chapter 471, article 2,
126.39 section 29, subdivisions 1, 4; Laws 2005, chapter 152, article 1, section 39,
126.40 subdivision 1; Laws 2001, First Special Session chapter 5, article 3, section 8,
126.41 as amended; Laws 2005, First Special Session chapter 3, article 5, sections 3;
126.42 14; 38, subdivision 2; 43, subdivision 3; 44, subdivision 1; article 10, section
126.43 23; proposing coding for new law in Minnesota Statutes, chapters 287; 290;
126.44 469; repealing Minnesota Statutes 2004, sections 297A.68, subdivisions 15, 18;
126.45 298.01, subdivisions 3c, 3d, 4d, 4e; Laws 1998, chapter 389, article 11, section
126.46 18; Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5,
126.47 6, 7, 8; 8130.5100; 8130.5400; 8130.5800, subpart 6."
We request the adoption of this report and repassage of the bill.House Conferees: (Signed) Philip Krinkie, Ron Abrams, Dean Simpson, Ray Vandeveer, Ann LenczewskiSenate Conferees: (Signed) Lawrence J. Pogemiller, William V. Belanger, Rod Skoe, Mee Moua, John Marty127.1 We request the adoption of this report and repassage of the bill.
127.2 House Conferees:(Signed)
127.3
127.4 Philip Krinkie Ron Abrams
127.5
127.6 Dean Simpson Ray Vandeveer
127.7
127.8 Ann Lenczewski
127.9 Senate Conferees:(Signed)
127.10
127.11 Lawrence J. Pogemiller William V. Belanger
127.12
127.13 Rod Skoe Mee Moua
127.14
127.15 John Marty