HF 4160

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to property taxation; modifying the definition of property classified
as agricultural; defining the classification of rural vacant land; modifying the
criteria for property to be enrolled in the Minnesota agricultural property tax law;
amending Minnesota Statutes 2006, sections 273.11, by adding a subdivision;
273.111, subdivisions 3, as amended, 4, 8, 9, 11, 11a, by adding a subdivision;
273.13, subdivision 23, as amended; repealing Minnesota Statutes 2006, section
273.111, subdivision 6.

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

Section 1.

Minnesota Statutes 2006, section 273.11, is amended by adding a
subdivision to read:

new text begin Subd. 24. new text end

new text begin Rural vacant land abutting public waters. new text end

new text begin (a) Any property that:
new text end

new text begin (1) is located in a township;
new text end

new text begin (2) is classified as rural vacant land under section 273.13, subdivision 23, paragraph
(c); and
new text end

new text begin (3) abuts public waters in whole or in part, shall be valued by the assessor on the
same basis as rural vacant land of the same quality that does not abut public waters until
some action is taken to develop the land as specified in paragraph (c).
new text end

new text begin (b) In each assessment year, the assessor shall determine the estimated market value
of the property as provided under subdivision 1, taking into consideration its highest
and best use. For each year that the property is classified under this subdivision, the
property tax statement shall include a notice that the property is being taxed under a
reduced valuation that will terminate under certain conditions.
new text end

new text begin (c) An owner of property meeting the criteria of this subdivision must notify the
county assessor within 30 days of applying for a development permit from the county or
local zoning board. If development permits are not required, an owner of property meeting
the criteria of this subdivision must notify the assessor prior to the property being platted.
new text end

new text begin (d) When one of the conditions specified in paragraph (c) occurs, additional taxes
shall be imposed in an amount equal to (1) the difference between the amount of taxes
actually levied on the property in the current year, and the amount of taxes that would
have been levied in the current year based on the estimated market value determined under
paragraph (b), (2) multiplied by seven. The additional taxes shall be extended against the
property on the tax list for the current year, provided that no interest or penalties shall be
levied on the additional taxes if timely paid. For purposes of this subdivision, "public
waters" means a meandered lake as defined under section 103G.005, subdivision 15,
paragraph (a), clause (3).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the 2008 assessment and
thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 273.111, subdivision 3, as amended by Laws
2008, chapter 154, article 13, section 26, is amended to read:

Subd. 3.

Requirements.

(a) Real estate consisting of ten acres or more or a nursery
or greenhouse, and qualifying for classification as class deleted text begin 1b, deleted text end 2a deleted text begin , or 2b deleted text end under section 273.13,
shall be entitled to valuation and tax deferment under this section deleted text begin only deleted text end if it deleted text begin is primarily
devoted to agricultural use, and meets the qualifications in subdivision 6, and either deleted text end :

(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the
owner or is real estate which is farmed with the real estate which contains the homestead
property; or

(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling,
or any combination thereof, for a period of at least seven years prior to application for
benefits under the provisions of this section, or is real estate which is farmed with the
real estate which qualifies under this clause and is within four townships or cities or
combination thereof from the qualifying real estate; or

(3) is the homestead of deleted text begin a shareholder in a family farm corporation as defined in deleted text end new text begin an
individual who is part of an entity in compliance with new text end section 500.24 deleted text begin , notwithstanding
the fact that legal title to the real estate may be held in the name of the family farm
corporation deleted text end ; or

(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor,
partnership, or corporation which also owns the nursery or greenhouse operations on
the parcel or parcels new text begin , provided that only the acreage that is used to grow nursery stock
qualify for treatment under this section new text end .

(b) deleted text begin Valuation of real estate under this section is limited to parcels the ownership of
which is in noncorporate entities except for: deleted text end

deleted text begin (1) family farm corporations organized pursuant to section 500.24; and
deleted text end

deleted text begin (2) corporations that derive 80 percent or more of their gross receipts from the
wholesale or retail sale of horticultural or nursery stock.
deleted text end

deleted text begin (c) deleted text end Land that previously qualified for tax deferment under this section and no longer
qualifies because it is not primarily used for agricultural purposes but would otherwise
qualify under deleted text begin subdivisions deleted text end new text begin Minnesota Statutes 2006, section 273.111, subdivision new text end 3 deleted text begin and 6 deleted text end
for a period of at least three years will not be required to make payment of the previously
deferred taxes, notwithstanding the provisions of subdivision 9. Sale of the land prior to
the expiration of the three-year period requires payment of deferred taxes as follows: sale
in the year the land no longer qualifies requires payment of the current year's deferred
taxes plus payment of deferred taxes for the two prior years; sale during the second year
the land no longer qualifies requires payment of the current year's deferred taxes plus
payment of the deferred taxes for the prior year; and sale during the third year the land
no longer qualifies requires payment of the current year's deferred taxes. Deferred taxes
shall be paid even if the land qualifies pursuant to subdivision 11a. When such property is
sold or no longer qualifies under this paragraph, or at the end of the three-year period,
whichever comes first, 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. If the bonds have
matured, the deferred special assessments plus interest are payable within 90 days. The
provisions of section 429.061, subdivision 2, apply to the collection of these installments.
Penalties are not imposed on any such special assessments if timely paid.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2008 and
thereafter.
new text end

Sec. 3.

Minnesota Statutes 2006, section 273.111, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Property no longer eligible for deferment. new text end

new text begin Real estate that qualifies for
tax deferment under this section for assessment year 2007, but which does not qualify
for the current assessment year due to changes in qualification requirements under this
act, shall continue to qualify until the land is sold or transferred, provided that the
property continues to meet the requirements of Minnesota Statutes 2006, section 273.111,
subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2006, section 273.111, subdivision 4, is amended to read:

Subd. 4.

Determination of value.

new text begin (a) new text end The value of any real estate described
in subdivision 3 shall upon timely application by the owner, in the manner provided
in subdivision 8, be determined solely with reference to its appropriate agricultural
classification and value notwithstanding sections 272.03, subdivision 8, and 273.11. deleted text begin In
determining the value for ad valorem tax purposes, the assessor shall use sales data for
agricultural lands located outside the seven metropolitan counties having similar soil
types, number of degree days, and other similar agricultural characteristics. deleted text end Furthermore,
the assessor shall not consider any added values resulting from nonagricultural factors.
new text begin In order to account for the presence of nonagricultural influences that may affect the value
of agricultural land, the commissioner of revenue shall develop a fair and uniform method
of determining agricultural values for each county in the state that are consistent with this
subdivision. The commissioner shall annually assign the resulting values to each county,
and these values shall be used as the basis for determining the agricultural value for all
properties in the county qualifying for tax deferment under this section.
new text end

new text begin (b) In the case of property qualifying for tax deferment only under subdivision 3a
of this section, the value shall be based on the value in effect for assessment year 2007,
multiplied by the ratio of the total taxable market value of all property in the county for
the current assessment year divided by the total taxable market value of all property
in the county for assessment year 2007.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2006, section 273.111, subdivision 8, is amended to read:

Subd. 8.

Application.

Application for deferment of taxes and assessment under this
section shall be filed by May 1 of the year prior to the year in which the taxes are payable.
Any application filed hereunder and granted shall continue in effect for subsequent years
until the property no longer qualifies. Such application shall be filed with the assessor of
the taxing district in which the real property is located on such form as may be prescribed
by the commissioner of revenue. The assessor may require proof by affidavit or otherwise
that the property qualifies under deleted text begin subdivisions deleted text end new text begin subdivision new text end 3 deleted text begin and 6 deleted text end .

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2006, section 273.111, subdivision 9, is amended to read:

Subd. 9.

Additional taxes.

When real property which is being, or has been valued
and assessed under this section no longer qualifies under deleted text begin subdivisions deleted text end new text begin subdivision new text end 3 deleted text begin and 6 deleted text end new text begin
or 3a new text end , the portion no longer qualifying shall be subject to additional taxes, in the amount
equal to the difference between the taxes determined in accordance with subdivision 4,
and the amount determined under subdivision 5, provided, however, that the amount
determined under subdivision 5 shall 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 5. Such additional taxes shall be extended
against the property on the tax list for the current year, provided, however, that no interest
or penalties shall be levied on such additional taxes if timely paid, and provided further,
that such additional taxes shall only be levied with respect to the last deleted text begin three deleted text end new text begin seven new text end years that
the said property has been valued and assessed under this section.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2006, section 273.111, subdivision 11, is amended to read:

Subd. 11.

Special local assessments.

The payment of special local assessments
levied after June 1, 1967, for improvements made to any real property described in
subdivision 3 together with the interest thereon shall, on timely application as provided
in subdivision 8, be deferred as long as such property meets the conditions contained in
deleted text begin subdivisions deleted text end new text begin subdivision new text end 3 deleted text begin and 6 deleted text end new text begin or 3a new text end or is transferred to an agricultural preserve under
sections 473H.02 to 473H.17. If special assessments against the property have been
deferred pursuant to 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 such property
no longer qualifies under deleted text begin subdivisions deleted text end new text begin subdivision new text end 3 deleted text begin and 6 deleted text end new text begin or 3a new text end , all deferred special
assessments plus interest shall be 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. If the bonds have matured, the deferred special
assessments plus interest shall be payable within 90 days. The provisions of section
429.061, subdivision 2, apply to the collection of these installments. Penalty shall not be
levied on any such special assessments if timely paid.

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2006, section 273.111, subdivision 11a, is amended to read:

Subd. 11a.

Continuation of tax treatment upon sale.

When real property
qualifying under deleted text begin subdivisions deleted text end new text begin subdivision new text end 3 deleted text begin and 6 deleted text end is sold, no additional taxes or deferred
special assessments plus interest shall be extended against the property provided the
property continues to qualify pursuant to deleted text begin subdivisions deleted text end new text begin subdivision new text end 3 deleted text begin and 6 deleted text end , and provided
the new owner files an application for continued deferment within 30 days after the sale.

deleted text begin For purposes of meeting the income requirements of subdivision 6, the property
purchased shall be considered in conjunction with other qualifying property owned by
the purchaser.
deleted text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 9.

Minnesota Statutes 2006, section 273.13, subdivision 23, as amended by Laws
2008, chapter 154, article 2, section 12, is amended to read:

Subd. 23.

Class 2.

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

(b) new text begin Class 2a consists of parcels of property, or portions thereof, that are agricultural
land and buildings. Class 2a property has a net class rate of one percent of market value,
unless it is part of an agricultural homestead under paragraph (a). Class 2a property
may contain an incidental amount of property that would otherwise be classified as 2b,
including but not limited to sloughs, wooded wind shelters, acreage abutting ditches, and
other similar land impractical for the assessor to value separately from the rest of the
property.
new text end

new text begin (c) new text end Class 2b property deleted text begin is (1) deleted text end new text begin consists of parcels of property, or portions thereof,
that are unplatted new text end real estate, rural in character and new text begin not used for agricultural purposes,
including land new text end used deleted text begin exclusively deleted text end for growing trees for timber, lumber, and wood and wood
products deleted text begin ; (2) real estate deleted text end that is not improved with a structure deleted text begin and is used exclusively
for growing trees for timber, lumber, and wood and wood products, if the owner has
participated or is participating in a cost-sharing program for afforestation, reforestation, or
timber stand improvement on that particular property, administered or coordinated by the
commissioner of natural resources; (3) real estate that is nonhomestead agricultural land;
or (4) a landing area or public access area of a privately owned public use airport deleted text end new text begin , provided
that the presence of a minor, ancillary nonresidential structure does not disqualify the
property from classification under this paragraph new text end . Class 2b property has a net class rate of
one percent of market value deleted text begin , except that unplatted property described in clause (1) or (2)
has a net class rate of .65 percent if it consists deleted text end new text begin unless it is part of an agricultural homestead
under paragraph (a), or qualifies as class 2c under paragraph (d).
new text end

new text begin (d) Class 2c is property consisting new text end of no less than ten and no more than 1,920 acres
deleted text begin and deleted text end new text begin that new text end is being managed under a forest management plan that meets the requirements of
chapter 290C, but is not enrolled in the sustainable forest resource management incentive
program new text begin . It has a class rate of .65 percent new text end , provided that the owner of the property must
apply to the assessor annually to receive the reduced class rate and provide the information
required by the assessor to verify that the property qualifies for the reduced rate.

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

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

new text begin (f) new text end Land shall be classified as agricultural even if all or a portion of the agricultural
use of that property is the leasing to, or use by another person for agricultural purposes.

deleted text begin Classification under this subdivision is not determinative for qualifying under
section 273.111.
deleted text end

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

deleted text begin (e) deleted text end new text begin (h) new text end The term "agricultural products" as used in this subdivision includes
production for sale of:

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

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

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

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

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

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

(7) trees, grown for sale as a crop, new text begin including short rotation woody crops, new text end and not
sold for timber, lumber, wood, or wood products; and

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

deleted text begin (f) deleted text end new text begin (i) new text end If a parcel used for agricultural purposes is also used for commercial or
industrial purposes, including but not limited to:

(1) wholesale and retail sales;

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

(3) warehousing or storage of processed goods; and

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

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

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

deleted text begin (g) deleted text end new text begin (j) A landing area or public access area of a privately owned public use airport
is class 2d. new text end To qualify for classification under new text begin this new text end paragraph deleted text begin (b), clause (4) deleted text end , a privately
owned public use airport must be licensed as a public airport under section 360.018. For
purposes of new text begin this new text end paragraph deleted text begin (b), clause (4) deleted text end , "landing area" means that part of a privately
owned public use airport properly cleared, regularly maintained, and made available to the
public for use by aircraft and includes runways, taxiways, aprons, and sites upon which
are situated landing or navigational aids. A landing area also includes land underlying
both the primary surface and the approach surfaces that comply with all of the following:

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 273.111, subdivision 6, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

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