HF 1499

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; expanding limited market value
to include certain small resorts; extending limited
market value one additional year; providing a
valuation deferment for certain resorts; providing a
resort income tax investment credit; providing sales
tax refund for certain resort expenditures; amending
Minnesota Statutes 2004, sections 273.11, subdivision
1a, by adding a subdivision; 273.13, subdivision 22;
290.06, by adding a subdivision; 297A.71, by adding a
subdivision; 297A.75; proposing coding for new law in
Minnesota Statutes, chapter 273.

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

Section 1.

Minnesota Statutes 2004, section 273.11,
subdivision 1a, is amended to read:

Subd. 1a.

Limited market value.

In the case of all
property classified as agricultural homestead or nonhomestead,
residential homestead or nonhomestead, timber, deleted text begin or deleted text end noncommercial
seasonal residential recreational, new text begin or class 1c resort property,
new text end the assessor shall compare the value with the taxable portion of
the value determined in the preceding assessment new text begin , except that
for class 1c resort property for assessment year 2005, the
assessor shall determine the limited market value as provided in
subdivision 1b. If any portion of the class 1c resort is not
classified class 1c, only the portion of the value of the
property that is classified as class 1c property qualifies under
this section new text end .

For assessment year 2002, the amount of the increase shall
not exceed the greater of (1) ten percent of the value in the
preceding assessment, or (2) 15 percent of the difference
between the current assessment and the preceding assessment.

For assessment year 2003, the amount of the increase shall
not exceed the greater of (1) 12 percent of the value in the
preceding assessment, or (2) 20 percent of the difference
between the current assessment and the preceding assessment.

For assessment deleted text begin year deleted text end new text begin years new text end 2004 new text begin and 2005 new text end , the amount of the
increase shall not exceed the greater of (1) 15 percent of the
value in the preceding assessment, or (2) 25 percent of the
difference between the current assessment and the preceding
assessment.

For assessment year deleted text begin 2005 deleted text end new text begin 2006 new text end , the amount of the increase
shall not exceed the greater of (1) 15 percent of the value in
the preceding assessment, or (2) 33 percent of the difference
between the current assessment and the preceding assessment.

For assessment year deleted text begin 2006 deleted text end new text begin 2007 new text end , the amount of the increase
shall not exceed the greater of (1) 15 percent of the value in
the preceding assessment, or (2) 50 percent of the difference
between the current assessment and the preceding assessment.

This limitation shall not apply to increases in value due
to improvements. For purposes of this subdivision, the term
"assessment" means the value prior to any exclusion under
subdivision 16.

The provisions of this subdivision shall be in effect
through assessment year deleted text begin 2006 deleted text end new text begin 2007 new text end as provided in this
subdivision.

For purposes of the assessment/sales ratio study conducted
under section 127A.48, and the computation of state aids paid
under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and
477A, market values and net tax capacities determined under this
subdivision and subdivision 16, shall be used.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment
years 2005 through 2007, for taxes payable in 2006 through 2008.
new text end

Sec. 2.

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

new text begin Subd. 1b. new text end

new text begin Class 1c resorts; 2005 assessment only. new text end

new text begin For
assessment year 2005, the valuation on class 1c resort property
shall not exceed the greater of (1) 130 percent of the value of
its 2002 assessment, or (2) its value for the 2002 assessment
year plus 40 percent of the difference in value between its 2005
assessment and its 2002 assessment. The valuation increase on
class 1c resort property for assessment year 2006 and thereafter
shall be determined under subdivision 1a.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

new text begin [273.1115] HOMESTEAD RESORTS; VALUATION AND
DEFERMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Requirements. new text end

new text begin Real property qualifying
for classification as class 1c under section 273.13, subdivision
22, paragraph (c), is entitled to valuation and tax deferment
under this section, provided that if part of a resort is not
classified as class 1c, only that portion of the value of the
property that is classified as class 1c property qualifies under
this section.
new text end

new text begin Subd. 2. new text end

new text begin Determination of value. new text end

new text begin Upon timely application
by the owner, as provided in subdivision 4, the value of real
property described in subdivision 1 must be determined by the
assessor solely with reference to its value as class 1c
property, notwithstanding sections 272.03, subdivision 8, and
273.11. The assessor shall not consider any added values
resulting from other factors.
new text end

new text begin Subd. 3. new text end

new text begin Separate determination of market value and tax.
new text end

new text begin The assessor shall, however, make a separate determination of
the estimated market value of the real estate based on its
highest and best most likely use, such as lakeshore development
of residential single-family or multifamily homes or condominium
units. The assessor shall record on the property assessment
records the tax based upon the value so determined, the
appropriate class rate, and the appropriate local tax rate
applicable to the property in the taxing district.
new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin Application for deferment of taxes
and assessment under this section must be filed by May 1 of the
year prior to the year in which the taxes are payable. The
application must be filed with the assessor of the taxing
district in which the real property is located on a form
prescribed by the commissioner of revenue. The assessor may
require proof by affidavit or otherwise that the property
qualifies under subdivision 1. An application approved by the
assessor continues in effect for subsequent years until the
property no longer qualifies under subdivision 1.
new text end

new text begin Subd. 5. new text end

new text begin Additional taxes. new text end

new text begin When real property valued and
assessed under this section no longer qualifies under
subdivision 1, the portion no longer qualifying is subject to
additional taxes, in the amount equal to the difference between
the taxes determined in accordance with subdivision 2, and the
amount determined under subdivision 3, provided, however, that
the amount determined under subdivision 3 must not be greater
than it would have been had the actual bona fide sale price of
the real property at an arm's-length transaction been used in
lieu of the market value determined under subdivision 3. The
additional taxes must be extended against the property on the
tax list for the current year, except that no interest or
penalties may be levied on the additional taxes if timely paid,
and except that the additional taxes must only be levied with
respect to the last seven years that the property has been
valued and assessed under this section.
new text end

new text begin Subd. 6. new text end

new text begin Timely paid. new text end

new text begin For purposes of this section,
"timely paid" means paid (1) within 60 days after notification
from the county that the property no longer qualifies, or (2)
prior to the recording of the conveyance of the property,
whichever is earlier.
new text end

new text begin Subd. 7. new text end

new text begin Lien. new text end

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

new text begin Subd. 8. new text end

new text begin Special local assessments. new text end

new text begin The payment of
special local assessments levied after June 30, 2005, for
improvements made to any real property described in subdivision
2, together with the interest thereon must, on timely
application under subdivision 4, be deferred as long as the
property qualifies under subdivision 1. If special assessments
against the property have been deferred under this subdivision,
the governmental unit shall file with the county recorder in the
county in which the property is located a certificate containing
the legal description of the affected property and of the amount
deferred. When the property no longer qualifies under
subdivision 1, all deferred special assessments plus interest
are payable in equal installments spread over the time remaining
until the last maturity date of the bonds issued to finance the
improvement for which the assessments were levied. The
provisions of section 469.061, subdivision 2, apply to the
collection of these installments. If the bonds have matured,
the deferred special assessments plus interest are payable
within 60 days. Penalty must not be levied on the special
assessments if timely paid.
new text end

new text begin Subd. 9. new text end

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

new text begin When
real property qualifying under subdivision 1 is sold, no
additional taxes or deferred special assessments plus interest
may be extended against the property if:
new text end

new text begin (1) the property continues to qualify pursuant to
subdivision 1; and
new text end

new text begin (2) the new owner files an application for continued
deferment within 30 days after the sale.
new text end

new text begin Subd. 10. new text end

new text begin Applicability of special assessment
provisions. new text end

new text begin This section applies to special local assessments
levied after June 30, 2005, and payable in the years thereafter,
but shall not apply to any special assessments levied at any
time by a county or district court under the provisions of
chapter 116A.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes
levied in 2005, payable in 2006, and thereafter. For
applications for the 2005 assessment for taxes payable in 2006
only, the application deadline in subdivision 4 is extended to
August 1, 2005.
new text end

Sec. 4.

Minnesota Statutes 2004, section 273.13,
subdivision 22, is amended to read:

Subd. 22.

Class 1.

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

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

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

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

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

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

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

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

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

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

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

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

(c) Class 1c property is commercial use real property that
abuts a lakeshore line and is devoted to temporary and seasonal
residential occupancy for recreational purposes but not devoted
to commercial purposes for more than 250 days in the year
preceding the year of assessment, and that includes a portion
used as a homestead by the owner, which includes a dwelling
occupied as a homestead by a shareholder of a corporation that
owns the resort, a partner in a partnership that owns the
resort, or a member of a limited liability company that owns the
resort even if the title to the homestead is held by the
corporation, partnership, or limited liability company. For
purposes of this clause, property is devoted to a commercial
purpose on a specific day if any portion of the property,
excluding the portion used exclusively as a homestead, is used
for residential occupancy and a fee is charged for residential
occupancy. The first $500,000 of market value of class 1c
property has a class rate of deleted text begin one deleted text end new text begin 0.55 new text end percent, and the remaining
market value of class 1c property has a class rate of one
percent, with the following limitation: the area of the
property must not exceed 100 feet of lakeshore footage for each
cabin or campsite located on the property up to a total of 800
feet and 500 feet in depth, measured away from the lakeshore.
If any portion of the class 1c resort property is classified as
class 4c under subdivision 25, the entire property must meet the
requirements of subdivision 25, paragraph (d), clause (1), to
qualify for class 1c treatment under this paragraph.

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment
year 2005, taxes payable in 2006, and thereafter.
new text end

Sec. 5.

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

new text begin Subd. 32. new text end

new text begin Resort investment credit. new text end

new text begin (a) A seasonal
recreational investment credit is allowed against the tax due
under this chapter equal to ten percent of the amount paid or
incurred by the taxpayer, on the first $300,000 of qualifying
expenditures made in the qualifying period.
new text end

new text begin (b) "Qualifying expenditures" means for purposes of this
subdivision the amount spent for the acquisition, construction,
or improvement of buildings or facilities, including land
improvements such as sewer and water systems, docks, and
sidewalks, or the acquisition of equipment, located at or
acquired for use at a resort, including the following, if
acquired for use at a resort:
new text end

new text begin (1) appliances, carpet, and furniture;
new text end

new text begin (2) information systems and related peripheral equipment;
and
new text end

new text begin (3) generators and renewable energy equipment and systems.
new text end

new text begin Qualifying expenditures do not include boats and other
watercraft. Qualifying expenditures only include amounts that
are capitalized and deducted under either section 167 or 179 of
the Internal Revenue Code in computing federal taxable income.
new text end

new text begin (c) "Resort" means for purposes of this subdivision a
resort classified as class 1c or 4c under section 273.13,
subdivision 22 or 25, including any portion of a 1c or 4c resort
classified as class 3 under section 273.13, subdivision 24.
new text end

new text begin (d) The credit is limited to the liability for tax, as
computed under this chapter for the taxable year. If the amount
of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a seasonal recreational
investment credit carryover to each of the 15 succeeding taxable
years. The entire amount of the excess unused credit for the
taxable year is carried first to the earliest of the taxable
years to which the credit may be carried and then to each
successive year to which the credit may be carried. The amount
of the unused credit which may be added under this paragraph
shall not exceed the taxpayer's liability for tax less the
seasonal recreational investment credit for the taxable year.
new text end

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

new text begin (f) The $30,000 maximum credit applies at the entity level
for partnerships, S corporations, trusts, and estates as well as
at the individual level. In the case of married individuals,
the credit is limited to $30,000 for a married couple.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

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

new text begin Subd. 33. new text end

new text begin Construction materials and supplies; certain
resorts. new text end

new text begin Construction materials and supplies used or consumed
in physically expanding or making capital improvements to a
resort classified as class 1c or 4c, under section 273.13,
subdivision 22 or 25, including any portion of a 1c or 4c resort
classified as class 3 under section 273.13, subdivision 24, are
exempt, up to a maximum refund of $10,000 in each calendar year
for each resort. The tax must be imposed and collected as if
the rate under section 297A.62, subdivision 1, applied, and then
refunded in the manner provided in section 297A.75.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and
purchases made after June 30, 2005.
new text end

Sec. 7.

Minnesota Statutes 2004, section 297A.75, is
amended to read:

297A.75 REFUND; APPROPRIATION.

Subdivision 1.

Tax collected.

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

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

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

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

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

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

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

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

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

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

new text begin (10) materials and supplies for qualified resorts under
section 297A.71, subdivision 33 new text end .

Subd. 2.

Refund; eligible persons.

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

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

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

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

(4) for subdivision 1, clause (6), the applicant must be
the owner of the homestead property; deleted text begin and
deleted text end

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

new text begin (6) for subdivision 1, clause (10), the owner of the resort new text end .

Subd. 3.

Application.

(a) The application must include
sufficient information to permit the commissioner to verify the
tax paid. If the tax was paid by a contractor, subcontractor,
or builder, under subdivision 1, clause (4), (5), (6), (7), (8),
deleted text begin or deleted text end (9) new text begin , or (10) new text end , the contractor, subcontractor, or builder must
furnish to the refund applicant a statement including the cost
of the exempt items and the taxes paid on the items unless
otherwise specifically provided by this subdivision. The
provisions of sections 289A.40 and 289A.50 apply to refunds
under this section.

(b) An applicant may not file more than two applications
per calendar year for refunds for taxes paid on capital
equipment exempt under section 297A.68, subdivision 5.

Subd. 4.

Interest.

Interest must be paid on the refund
at the rate in section 270.76 from 90 days after the refund
claim is filed with the commissioner for taxes paid under
subdivision 1.

Subd. 5.

Appropriation.

The amount required to make the
refunds is annually appropriated to the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and
purchases made after June 30, 2005.
new text end