1.1                          A bill for an act 
  1.2             relating to the financing and operation of state and 
  1.3             local government; providing property tax class rate 
  1.4             reform; dedicating future state revenues to property 
  1.5             tax reform; providing a property tax rebate; providing 
  1.6             for calculation of rent constituting property taxes; 
  1.7             changing truth-in-taxation requirements; imposing levy 
  1.8             limits on cities and counties for taxes levied in 1997 
  1.9             and 1998; authorizing deferral of property taxes by 
  1.10            senior citizens; changing fiscal note requirements for 
  1.11            state mandates; requiring periodic review of 
  1.12            administrative rules; making miscellaneous property, 
  1.13            income, and sales tax changes; changing and modifying 
  1.14            the application of tax increment financing provisions; 
  1.15            authorizing certain local governments to exercise 
  1.16            certain powers; authorizing local tax levies, 
  1.17            abatements, and assessments; modifying certain local 
  1.18            aids; conforming certain income tax laws with changes 
  1.19            in federal law; modifying certain income tax 
  1.20            definitions and formulas; providing income tax 
  1.21            credits; modifying the application of sales and excise 
  1.22            taxes; exempting certain purchases from the sales tax; 
  1.23            modifying waste management tax and minerals tax 
  1.24            provisions; increasing the budget reserve; revising 
  1.25            the law governing regional development commissions; 
  1.26            modifying certain provisions relating to insurance 
  1.27            companies; requiring studies; requiring reports; 
  1.28            appropriating money; repealing an appropriation; 
  1.29            amending Minnesota Statutes 1996, sections 6.76; 
  1.30            16A.152, subdivision 2; 60A.075, subdivisions 1, 8, 
  1.31            and 9; 60A.077, subdivisions 1, 2, 3, 5, 6, 7, 8, 9, 
  1.32            10, 11, and by adding a subdivision; 69.021, 
  1.33            subdivision 7; 93.41; 103D.905, subdivisions 4, 5, and 
  1.34            by adding a subdivision; 115A.554; 117.155; 121.15, by 
  1.35            adding a subdivision; 124.195, subdivisions 7 and 10; 
  1.36            124.239, subdivision 5, and by adding subdivisions; 
  1.37            161.45, by adding a subdivision; 216B.16, by adding a 
  1.38            subdivision; 270.60, by adding a subdivision; 270B.01, 
  1.39            subdivision 8; 270B.02, by adding a subdivision; 
  1.40            270B.12, by adding a subdivision; 271.01, subdivision 
  1.41            5; 271.19; 272.02, subdivision 1, and by adding a 
  1.42            subdivision; 272.115; 273.11, subdivisions 1, 1a, and 
  1.43            16; 273.111, subdivisions 3 and 6; 273.112, 
  1.44            subdivisions 2, 3, and 4; 273.12; 273.121; 273.124, 
  1.45            subdivision 1, and by adding a subdivision; 273.13, 
  1.46            subdivisions 22, 23, 24, 25, 31, 32, and by adding a 
  2.1             subdivision; 273.1393; 273.1398, subdivision 8; 
  2.2             273.18; 274.01; 274.13, by adding subdivisions; 
  2.3             275.065, subdivisions 1, 3, 5a, 6, 8, and by adding 
  2.4             subdivisions; 275.07, subdivision 4; 275.16; 275.62, 
  2.5             subdivision 1; 276.04, subdivision 2; 278.07; 281.13; 
  2.6             281.23, subdivision 6, and by adding a subdivision; 
  2.7             281.273; 281.276; 282.01, subdivision 8; 282.04, 
  2.8             subdivision 1; 287.22; 289A.02, subdivision 7; 
  2.9             289A.56, subdivision 4; 290.01, subdivisions 19, 19a, 
  2.10            19b, 19c, 19d, 19f, 19g, 31, and by adding a 
  2.11            subdivision; 290.014, subdivisions 2 and 3; 290.015, 
  2.12            subdivisions 3 and 5; 290.06, subdivision 22, and by 
  2.13            adding a subdivision; 290.067, subdivision 1; 290.068, 
  2.14            subdivision 1; 290.0922, subdivision 1; 290.17, 
  2.15            subdivisions 1 and 4; 290.191, subdivision 4; 290.371, 
  2.16            subdivision 2; 290.92, by adding a subdivision; 
  2.17            290.9725; 290.9727, subdivision 1; 290.9728, 
  2.18            subdivision 1; 290A.03, subdivisions 7, 11, and 13; 
  2.19            290A.04, by adding a subdivision; 290A.19; 291.005, 
  2.20            subdivision 1; 296.141, subdivision 4; 296.18, 
  2.21            subdivision 1; 297A.01, subdivisions 3, 4, 7, 11, and 
  2.22            16; 297A.09; 297A.15, subdivision 7; 297A.211, 
  2.23            subdivision 1; 297A.25, subdivisions 2, 3, 5, 7, 11, 
  2.24            16, 56, 59, and by adding subdivisions; 297A.44, 
  2.25            subdivision 1; 297B.01, subdivisions 7 and 8; 298.24, 
  2.26            subdivision 1; 298.28, subdivision 9a, and by adding a 
  2.27            subdivision; 298.296, subdivision 4; 298.2961, 
  2.28            subdivision 1; 298.75, subdivisions 1, 4, and by 
  2.29            adding a subdivision; 308A.705, subdivision 1; 
  2.30            325D.33, subdivision 3; 349.154, subdivision 2; 
  2.31            349.19, subdivision 2a; 349.191, subdivision 1b; 
  2.32            373.40, subdivision 7; 375.192, subdivision 2; 
  2.33            383A.75, subdivision 3; 398A.04, subdivision 1; 
  2.34            462.381; 462.383; 462.384, subdivision 5; 462.385, 
  2.35            subdivisions 1 and 3; 462.386, subdivision 1; 462.387; 
  2.36            462.388; 462.389, subdivisions 1, 3, and 4; 462.39, 
  2.37            subdivisions 2 and 3; 462.391, subdivision 5, and by 
  2.38            adding subdivisions; 462.393; 462.394; 462.396, 
  2.39            subdivisions 1, 3, and 4; 462.398; 465.71; 465.81, 
  2.40            subdivisions 1 and 3; 465.82, subdivisions 1, 2, and 
  2.41            by adding a subdivision; 465.87, subdivisions 1a and 
  2.42            2; 465.88; 469.012, subdivision 1; 469.033, 
  2.43            subdivision 6; 469.040, subdivision 3; 469.169, by 
  2.44            adding a subdivision; 469.174, subdivision 10, and by 
  2.45            adding subdivisions; 469.175, subdivision 3; 469.176, 
  2.46            subdivisions 1b, 4c, 4j, and 5; 469.177, subdivisions 
  2.47            1 and 3; 473.39, by adding a subdivision; 477A.011, 
  2.48            subdivision 36; 477A.05; Laws 1992, chapter 511, 
  2.49            article 2, section 52; Laws 1993, chapter 375, 
  2.50            articles 7, section 29, and 9, sections 45, 
  2.51            subdivisions 2, 3, 4, and by adding a subdivision, and 
  2.52            46, subdivision 2; Laws 1995, chapters 255, article 3, 
  2.53            section 2, subdivision 1, as amended, and 264, article 
  2.54            5, sections 44, subdivision 4, as amended, and 45, 
  2.55            subdivision 1, as amended; and Laws 1997, chapters 34, 
  2.56            section 2, and 75, section 2; proposing coding for new 
  2.57            law in Minnesota Statutes, chapters 3; 14; 16A; 273; 
  2.58            275; 287; 290; 297A; 383A; 383B; 458D; 462A; 465; and 
  2.59            469; proposing coding for new law as Minnesota 
  2.60            Statutes, chapters 290B; and 297F; repealing Minnesota 
  2.61            Statutes 1996, sections 3.982; 116.07, subdivision 10; 
  2.62            121.904, subdivision 4d; 124.2134; 270B.12, 
  2.63            subdivision 11; 273.1317; 273.1318; 276.012; 276.20; 
  2.64            276.21; 290A.03, subdivisions 12a and 14; 290A.055; 
  2.65            290A.26; 297A.01, subdivisions 20 and 21; 297A.02, 
  2.66            subdivision 5; 297A.45, as amended; 462.384, 
  2.67            subdivision 7; 462.385, subdivision 2; 462.389, 
  2.68            subdivision 5; 462.391, subdivisions 1, 2, 3, 4, 6, 7, 
  2.69            8, and 9; 462.392; 469.181; Laws 1995, chapter 264, 
  2.70            article 4, as amended; and H.F. 2158, article 1, 
  2.71            section 25, if enacted. 
  3.1   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.2                              ARTICLE 1 
  3.3                         PROPERTY TAX REFORM 
  3.4      Section 1.  Minnesota Statutes 1996, section 124.239, is 
  3.5   amended by adding a subdivision to read: 
  3.6      Subd. 3a.  [DEBT SERVICE COSTS QUALIFYING FOR AID.] Annual 
  3.7   debt service costs up to an amount equal to the 1997 debt 
  3.8   service costs for bonds outstanding on the effective date of 
  3.9   this act qualify for alternative facilities aid under 
  3.10  subdivision 5. 
  3.11     Sec. 2.  Minnesota Statutes 1996, section 124.239, 
  3.12  subdivision 5, is amended to read: 
  3.13     Subd. 5.  [LEVY AUTHORIZED.] A district, after local board 
  3.14  approval, may levy for costs related to an approved facility 
  3.15  plan as follows:  
  3.16     (a) if the district has indicated to the commissioner that 
  3.17  bonds will be issued, the district may levy for the principal 
  3.18  and interest payments on outstanding bonds issued according to 
  3.19  subdivision 3 after reduction for any alternative facilities aid 
  3.20  received under subdivision 5; or 
  3.21     (b) if the district has indicated to the commissioner that 
  3.22  the plan will be funded through levy, the district may levy 
  3.23  according to the schedule approved in the plan. 
  3.24     Sec. 3.  Minnesota Statutes 1996, section 124.239, is 
  3.25  amended by adding a subdivision to read: 
  3.26     Subd. 5a.  [ALTERNATIVE FACILITIES AID.] A district's 
  3.27  alternative facilities aid is the amount equal to the district's 
  3.28  annual debt service costs qualifying for aid under subdivision 
  3.29  3a. 
  3.30     Sec. 4.  [273.126] [QUALIFYING LOW-INCOME RENTAL HOUSING.] 
  3.31     Subdivision 1.  [QUALIFYING RULES.] The market value of a 
  3.32  rental housing unit qualifies for assessment under class 4d if: 
  3.33     (1) it is occupied by individuals meeting the income limits 
  3.34  under subdivision 2; 
  3.35     (2) a rent restriction agreement under subdivision 3 
  3.36  applies; 
  4.1      (3) the unit meets the minimum housing quality standards 
  4.2   under subdivision 4; and 
  4.3      (4) the Minnesota housing finance agency certifies to the 
  4.4   local assessor that the unit qualifies. 
  4.5      Subd. 2.  [INCOME LIMITS.] (a) In order to qualify under 
  4.6   class 4d, a unit must be occupied by an individual or 
  4.7   individuals whose income is at or below 60 percent of the median 
  4.8   area gross income.  If the resident's income met the requirement 
  4.9   when the resident first occupied the unit, the income of the 
  4.10  resident continues to qualify.  If an individual first occupied 
  4.11  a unit before January 1, 1998, the individual's income for 
  4.12  purposes of the preceding sentence is the income for calendar 
  4.13  year 1996. 
  4.14     (b) For purposes of this section, "median area gross income"
  4.15  means the greater of (1) the median gross income for the area 
  4.16  determined under section 42 of the Internal Revenue Code of 
  4.17  1986, as amended through December 31, 1996, or (2) the median 
  4.18  gross income for the state. 
  4.19     (c) The median gross income must be adjusted for family 
  4.20  size. 
  4.21     (d) Vacant units qualify as meeting the requirements of 
  4.22  this subdivision in the same proportion that total units in the 
  4.23  building are subject to rent restriction agreements under 
  4.24  subdivision 3 and meet minimum housing standards under 
  4.25  subdivision 4.  This paragraph applies only to the extent that 
  4.26  units subject to a rent restriction agreement and meeting the 
  4.27  minimum housing quality standards are vacant. 
  4.28     (e) The owner or manager of the property may comply with 
  4.29  this subdivision by obtaining written statements from the 
  4.30  residents that their incomes are at or below the limit.  
  4.31     Subd. 3.  [RENT RESTRICTIONS.] (a) In order to qualify 
  4.32  under class 4d, a unit must be subject to a rent restriction 
  4.33  agreement with the housing finance agency for a period of at 
  4.34  least five years.  The agreement must be in effect and apply to 
  4.35  the rents to be charged for the year in which the property taxes 
  4.36  are payable.  The agreement must provide that the restrictions 
  5.1   apply to each year of the period, regardless of whether the unit 
  5.2   is occupied by an individual with qualifying income or whether 
  5.3   class 4d applies.  The rent restriction agreement must provide 
  5.4   for rents for the unit to be no higher than 30 percent of 60 
  5.5   percent of the median gross income.  The definition of median 
  5.6   gross income specified in this section applies.  "Rent" means 
  5.7   "gross rent" as defined in section 42(g)(2)(B) of the Internal 
  5.8   Revenue Code of 1986, as amended through December 31, 1996.  
  5.9      (b) Notwithstanding the maximum rent levels permitted, 20 
  5.10  percent of the units in the metropolitan area and ten percent of 
  5.11  the units in greater Minnesota qualifying under class 4d must be 
  5.12  made available to a family with a section 8 certificate. 
  5.13     (c) The rent restriction agreement runs with the land and 
  5.14  binds any successor to title to the property, without regard to 
  5.15  whether the successor had actual notice or knowledge of the 
  5.16  agreement.  The owner must promptly record the agreement in the 
  5.17  office of the county recorder or must file it in the office of 
  5.18  the registrar of titles, in the county where the property is 
  5.19  located.  If the agreement is not recorded, class 4d does not 
  5.20  apply to the property. 
  5.21     Subd. 4.  [MINIMUM HOUSING STANDARDS.] In order to qualify 
  5.22  under class 4d, a unit must be certified by the housing finance 
  5.23  agency to meet the minimum housing standards established under 
  5.24  section 462A.071. 
  5.25     Subd. 5.  [MONITORING RENT LEVELS.] The housing finance 
  5.26  agency is directed to monitor changes in rent levels and the use 
  5.27  of section 8 certificates in units qualifying under class 4d. 
  5.28     Subd. 6.  [PENALTIES.] Notwithstanding the provisions of 
  5.29  section 273.01, 274.01, or any other law, if the Minnesota 
  5.30  housing finance agency notifies the assessor that the provisions 
  5.31  of this section have not been met for any period during which a 
  5.32  unit was classified under class 4d, a penalty is imposed as 
  5.33  provided in section 462A.071, subdivision 8. 
  5.34     Sec. 5.  [273.127] [TRANSITION CLASS RATES; LOW-INCOME 
  5.35  HOUSING.] 
  5.36     Subdivision 1.  [TAXES PAYABLE IN 1998.] For taxes payable 
  6.1   in 1998, low-income housing property classified as class 4c 
  6.2   shall have a class rate of two percent, and property classified 
  6.3   as class 4d shall have a class rate of 1.9 percent. 
  6.4      Subd. 2.  [APPLICATION.] (a) The class rates under 
  6.5   subdivisions 3 and 4 apply to the market value of properties: 
  6.6      (1)(i) which were classified as class 4c or class 4d for 
  6.7   taxes payable in 1998; or 
  6.8      (ii) which are constructed or substantially rehabilitated 
  6.9   during calendar year 1997 and would have qualified as class 4c 
  6.10  or class 4d for taxes payable in 1999 absent the amendments to 
  6.11  those classes in section 8; and 
  6.12     (2) which do not qualify as class 4d property as a result 
  6.13  of the eligibility criteria specified in section 273.126.  
  6.14     (b) To qualify for the class rates under this section, the 
  6.15  building's owner must annually certify to the assessor in 
  6.16  writing that the property, building, or unit continues to 
  6.17  qualify under the laws in effect and applicable to its 
  6.18  classification for taxes payable in 1998. 
  6.19     (c) A property no longer qualifies under this section: 
  6.20     (1) if it is transferred or sold; or 
  6.21     (2) if loans, that have a principal amount equal to more 
  6.22  than 25 percent of the property's market value and that are 
  6.23  secured by the property, are refinanced. 
  6.24     Subd. 3.  [CLASS 4C PROPERTIES.] For the market value of 
  6.25  properties that meet the criteria of subdivision 2, paragraph 
  6.26  (a), and which no longer qualify as a result of the eligibility 
  6.27  criteria specified in section 273.126, a class rate of 2.4 
  6.28  percent applies for taxes payable in 1999 and a class rate of 
  6.29  2.6 percent applies for taxes payable in 2000. 
  6.30     Subd. 4.  [CLASS 4D PROPERTIES.] For the market value of 
  6.31  properties that meet the criteria of subdivision 2, paragraph 
  6.32  (a), and which no longer qualify as a result of the eligibility 
  6.33  criteria specified in section 273.126, a class rate of 2.2 
  6.34  percent applies for taxes payable in 1999 and a class rate of 
  6.35  2.5 applies for taxes payable in 2000. 
  6.36     Sec. 6.  Minnesota Statutes 1996, section 273.13, 
  7.1   subdivision 22, is amended to read:  
  7.2      Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
  7.3   23, real estate which is residential and used for homestead 
  7.4   purposes is class 1.  The market value of class 1a property must 
  7.5   be determined based upon the value of the house, garage, and 
  7.6   land.  
  7.7      For taxes payable in 1998 and thereafter, the first 
  7.8   $72,000 $75,000 of market value of class 1a property has a net 
  7.9   class rate of one percent of its market value and a gross class 
  7.10  rate of 2.17 percent of its market value.  For taxes payable in 
  7.11  1992,; and the market value of class 1a property that 
  7.12  exceeds $72,000 but does not exceed $115,000 $75,000 has a class 
  7.13  rate of two 1.85 percent of its market value; and the market 
  7.14  value of class 1a property that exceeds $115,000 has a class 
  7.15  rate of 2.5 percent of its market value.  For taxes payable in 
  7.16  1993 and thereafter, the market value of class 1a property that 
  7.17  exceeds $72,000 has a class rate of two percent. 
  7.18     (b) Class 1b property includes homestead real estate or 
  7.19  homestead manufactured homes used for the purposes of a 
  7.20  homestead by 
  7.21     (1) any blind person, or the blind person and the blind 
  7.22  person's spouse; or 
  7.23     (2) any person, hereinafter referred to as "veteran," who: 
  7.24     (i) served in the active military or naval service of the 
  7.25  United States; and 
  7.26     (ii) is entitled to compensation under the laws and 
  7.27  regulations of the United States for permanent and total 
  7.28  service-connected disability due to the loss, or loss of use, by 
  7.29  reason of amputation, ankylosis, progressive muscular 
  7.30  dystrophies, or paralysis, of both lower extremities, such as to 
  7.31  preclude motion without the aid of braces, crutches, canes, or a 
  7.32  wheelchair; and 
  7.33     (iii) has acquired a special housing unit with special 
  7.34  fixtures or movable facilities made necessary by the nature of 
  7.35  the veteran's disability, or the surviving spouse of the 
  7.36  deceased veteran for as long as the surviving spouse retains the 
  8.1   special housing unit as a homestead; or 
  8.2      (3) any person who: 
  8.3      (i) is permanently and totally disabled and 
  8.4      (ii) receives 90 percent or more of total income from 
  8.5      (A) aid from any state as a result of that disability; or 
  8.6      (B) supplemental security income for the disabled; or 
  8.7      (C) workers' compensation based on a finding of total and 
  8.8   permanent disability; or 
  8.9      (D) social security disability, including the amount of a 
  8.10  disability insurance benefit which is converted to an old age 
  8.11  insurance benefit and any subsequent cost of living increases; 
  8.12  or 
  8.13     (E) aid under the federal Railroad Retirement Act of 1937, 
  8.14  United States Code Annotated, title 45, section 228b(a)5; or 
  8.15     (F) a pension from any local government retirement fund 
  8.16  located in the state of Minnesota as a result of that 
  8.17  disability; or 
  8.18     (G) pension, annuity, or other income paid as a result of 
  8.19  that disability from a private pension or disability plan, 
  8.20  including employer, employee, union, and insurance plans and 
  8.21     (iii) has household income as defined in section 290A.03, 
  8.22  subdivision 5, of $50,000 or less; or 
  8.23     (4) any person who is permanently and totally disabled and 
  8.24  whose household income as defined in section 290A.03, 
  8.25  subdivision 5, is 150 275 percent or less of the federal poverty 
  8.26  level. 
  8.27     Property is classified and assessed under clause (4) only 
  8.28  if the government agency or income-providing source certifies, 
  8.29  upon the request of the homestead occupant, that the homestead 
  8.30  occupant satisfies the disability requirements of this paragraph.
  8.31     Property is classified and assessed pursuant to clause (1) 
  8.32  only if the commissioner of economic security certifies to the 
  8.33  assessor that the homestead occupant satisfies the requirements 
  8.34  of this paragraph.  
  8.35     Permanently and totally disabled for the purpose of this 
  8.36  subdivision means a condition which is permanent in nature and 
  9.1   totally incapacitates the person from working at an occupation 
  9.2   which brings the person an income.  The first $32,000 market 
  9.3   value of class 1b property has a net class rate of .45 percent 
  9.4   of its market value and a gross class rate of .87 percent of its 
  9.5   market value.  The remaining market value of class 1b property 
  9.6   has a gross or net class rate using the rates for class 1 or 
  9.7   class 2a property, whichever is appropriate, of similar market 
  9.8   value.  
  9.9      (c) Class 1c property is commercial use real property that 
  9.10  abuts a lakeshore line and is devoted to temporary and seasonal 
  9.11  residential occupancy for recreational purposes but not devoted 
  9.12  to commercial purposes for more than 250 days in the year 
  9.13  preceding the year of assessment, and that includes a portion 
  9.14  used as a homestead by the owner, which includes a dwelling 
  9.15  occupied as a homestead by a shareholder of a corporation that 
  9.16  owns the resort or a partner in a partnership that owns the 
  9.17  resort, even if the title to the homestead is held by the 
  9.18  corporation or partnership.  For purposes of this clause, 
  9.19  property is devoted to a commercial purpose on a specific day if 
  9.20  any portion of the property, excluding the portion used 
  9.21  exclusively as a homestead, is used for residential occupancy 
  9.22  and a fee is charged for residential occupancy.  In order for a 
  9.23  property to be classified as class 1c, at least 40 percent of 
  9.24  the annual gross lodging receipts related to the property must 
  9.25  be from business conducted between Memorial Day weekend and 
  9.26  Labor Day weekend, and at least 60 percent of all bookings by 
  9.27  lodging guests during the year must be for periods of at least 
  9.28  two consecutive nights.  Class 1c property has a class rate of 
  9.29  one percent of total market value for taxes payable in 1993 and 
  9.30  thereafter with the following limitation:  the area of the 
  9.31  property must not exceed 100 feet of lakeshore footage for each 
  9.32  cabin or campsite located on the property up to a total of 800 
  9.33  feet and 500 feet in depth, measured away from the lakeshore.  
  9.34     (d) Class 1d property includes structures that meet all of 
  9.35  the following criteria: 
  9.36     (1) the structure is located on property that is classified 
 10.1   as agricultural property under section 273.13, subdivision 23; 
 10.2      (2) the structure is occupied exclusively by seasonal farm 
 10.3   workers during the time when they work on that farm, and the 
 10.4   occupants are not charged rent for the privilege of occupying 
 10.5   the property, provided that use of the structure for storage of 
 10.6   farm equipment and produce does not disqualify the property from 
 10.7   classification under this paragraph; 
 10.8      (3) the structure meets all applicable health and safety 
 10.9   requirements for the appropriate season; and 
 10.10     (4) the structure is not saleable as residential property 
 10.11  because it does not comply with local ordinances relating to 
 10.12  location in relation to streets or roads. 
 10.13     The market value of class 1d property has the same class 
 10.14  rates as class 1a property under paragraph (a). 
 10.15     Sec. 7.  Minnesota Statutes 1996, section 273.13, 
 10.16  subdivision 24, is amended to read: 
 10.17     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 10.18  property and utility real and personal property, except class 5 
 10.19  property as identified in subdivision 31, clause (1), is class 
 10.20  3a.  It Each parcel has a class rate of three 2.7 percent of the 
 10.21  first $100,000 tier of market value for taxes payable in 1993 
 10.22  and thereafter, and 5.06 4.0 percent of the remaining market 
 10.23  value over $100,000, except that in the case of contiguous 
 10.24  parcels of commercial and industrial property owned by the same 
 10.25  person or entity, only the value equal to the first-tier value 
 10.26  of the contiguous parcels qualifies for the reduced class rate.  
 10.27  For the purposes of this subdivision, the first tier means the 
 10.28  first $150,000 of market value.  In the case of state-assessed 
 10.29  commercial, industrial, and utility property owned by one person 
 10.30  or entity, only one parcel has a reduced class rate on the first 
 10.31  $100,000 of market value.  In the case of other commercial, 
 10.32  industrial, and utility property owned by one person or entity, 
 10.33  only one parcel in each county has a reduced class rate on the 
 10.34  first $100,000 tier of market value, except that:. 
 10.35     (1) if the market value of the parcel is less than 
 10.36  $100,000, and additional parcels are owned by the same person or 
 11.1   entity in the same city or town within that county, the reduced 
 11.2   class rate shall be applied up to a combined total market value 
 11.3   of $100,000 for all parcels owned by the same person or entity 
 11.4   in the same city or town within the county; 
 11.5      (2) in the case of grain, fertilizer, and feed elevator 
 11.6   facilities, as defined in section 18C.305, subdivision 1, or 
 11.7   232.21, subdivision 8, the limitation to one parcel per owner 
 11.8   per county for the reduced class rate shall not apply, but there 
 11.9   shall be a limit of $100,000 of preferential value per site of 
 11.10  contiguous parcels owned by the same person or entity.  Only the 
 11.11  value of the elevator portion of each parcel shall qualify for 
 11.12  treatment under this clause.  For purposes of this subdivision, 
 11.13  contiguous parcels include parcels separated only by a railroad 
 11.14  or public road right-of-way; and 
 11.15     (3) in the case of property owned by a nonprofit charitable 
 11.16  organization that qualifies for tax exemption under section 
 11.17  501(c)(3) of the Internal Revenue Code of 1986, as amended 
 11.18  through December 31, 1993, if the property is used as a business 
 11.19  incubator, the limitation to one parcel per owner per county for 
 11.20  the reduced class rate shall not apply, provided that the 
 11.21  reduced rate applies only to the first $100,000 of value per 
 11.22  parcel owned by the organization.  As used in this clause, a 
 11.23  "business incubator" is a facility used for the development of 
 11.24  nonretail businesses, offering access to equipment, space, 
 11.25  services, and advice to the tenant businesses, for the purpose 
 11.26  of encouraging economic development, diversification, and job 
 11.27  creation in the area served by the organization. 
 11.28     To receive the reduced class rate on additional parcels 
 11.29  under clause (1), (2), or (3), the taxpayer must notify the 
 11.30  county assessor that the taxpayer owns more than one parcel that 
 11.31  qualifies under clause (1), (2), or (3). 
 11.32     For purposes of this paragraph, parcels are considered to 
 11.33  be contiguous even if they are separated from each other by a 
 11.34  road, street, vacant lot, waterway, or other similar intervening 
 11.35  type of property. 
 11.36     (b) Employment property defined in section 469.166, during 
 12.1   the period provided in section 469.170, shall constitute class 
 12.2   3b and has a class rate of 2.3 percent of the first $50,000 of 
 12.3   market value and 3.6 percent of the remainder, except that for 
 12.4   employment property located in a border city enterprise zone 
 12.5   designated pursuant to section 469.168, subdivision 4, paragraph 
 12.6   (c), the class rate of the first $100,000 tier of market value 
 12.7   and the class rate of the remainder is determined under 
 12.8   paragraph (a), unless the governing body of the city designated 
 12.9   as an enterprise zone determines that a specific parcel shall be 
 12.10  assessed pursuant to the first clause of this sentence.  The 
 12.11  governing body may provide for assessment under the first clause 
 12.12  of the preceding sentence only for property which is located in 
 12.13  an area which has been designated by the governing body for the 
 12.14  receipt of tax reductions authorized by section 469.171, 
 12.15  subdivision 1. 
 12.16     (c) Structures which are (i) located on property classified 
 12.17  as class 3a, (ii) constructed under an initial building permit 
 12.18  issued after January 2, 1996, (iii) located in a transit zone as 
 12.19  defined under section 473.3915, subdivision 3, (iv) located 
 12.20  within the boundaries of a school district, and (v) not 
 12.21  primarily used for retail or transient lodging purposes, shall 
 12.22  have a class rate of four equal to 85 percent of the class rate 
 12.23  of the second tier of the commercial property rate under 
 12.24  paragraph (a) on that any portion of the market value in excess 
 12.25  of $100,000 and any market value under $100,000 that does not 
 12.26  qualify for the three percent first tier class rate under 
 12.27  paragraph (a).  As used in item (v), a structure is primarily 
 12.28  used for retail or transient lodging purposes if over 50 percent 
 12.29  of its square footage is used for those purposes.  The four 
 12.30  percent rate shall also apply to improvements to existing 
 12.31  structures that meet the requirements of items (i) to (v) if the 
 12.32  improvements are constructed under an initial building permit 
 12.33  issued after January 2, 1996, even if the remainder of the 
 12.34  structure was constructed prior to January 2, 1996.  For the 
 12.35  purposes of this paragraph, a structure shall be considered to 
 12.36  be located in a transit zone if any portion of the structure 
 13.1   lies within the zone.  If any property once eligible for 
 13.2   treatment under this paragraph ceases to remain eligible due to 
 13.3   revisions in transit zone boundaries, the property shall 
 13.4   continue to receive treatment under this paragraph for a period 
 13.5   of three years. 
 13.6      Sec. 8.  Minnesota Statutes 1996, section 273.13, 
 13.7   subdivision 25, is amended to read: 
 13.8      Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 13.9   estate containing four or more units and used or held for use by 
 13.10  the owner or by the tenants or lessees of the owner as a 
 13.11  residence for rental periods of 30 days or more.  Class 4a also 
 13.12  includes hospitals licensed under sections 144.50 to 144.56, 
 13.13  other than hospitals exempt under section 272.02, and contiguous 
 13.14  property used for hospital purposes, without regard to whether 
 13.15  the property has been platted or subdivided.  Class 4a property 
 13.16  in a city with a population of 5,000 or less, that is (1) 
 13.17  located outside of the metropolitan area, as defined in section 
 13.18  473.121, subdivision 2, or outside any county contiguous to the 
 13.19  metropolitan area, and (2) whose city boundary is at least 15 
 13.20  miles from the boundary of any city with a population greater 
 13.21  than 5,000 has a class rate of 2.3 percent of market value for 
 13.22  taxes payable in 1996 and thereafter.  All other class 4a 
 13.23  property has a class rate of 3.4 2.9 percent of market value for 
 13.24  taxes payable in 1996 and thereafter.  For purposes of this 
 13.25  paragraph, population has the same meaning given in section 
 13.26  477A.011, subdivision 3. 
 13.27     (b) Class 4b includes: 
 13.28     (1) residential real estate containing less than four units 
 13.29  that does not qualify as class 4bb, other than seasonal 
 13.30  residential, and recreational; 
 13.31     (2) manufactured homes not classified under any other 
 13.32  provision; 
 13.33     (3) a dwelling, garage, and surrounding one acre of 
 13.34  property on a nonhomestead farm classified under subdivision 23, 
 13.35  paragraph (b) containing two or three units; 
 13.36     (4) unimproved property that is classified residential as 
 14.1   determined under section 273.13, subdivision 33.  
 14.2      Class 4b property has a class rate of 2.8 percent of market 
 14.3   value for taxes payable in 1992, 2.5 percent of market value for 
 14.4   taxes payable in 1993, and 2.3 2.1 percent of market value for 
 14.5   taxes payable in 1994 and thereafter. 
 14.6      (c) Class 4bb includes: 
 14.7      (1) nonhomestead residential real estate containing one 
 14.8   unit, other than seasonal residential, and recreational; and 
 14.9      (2) a single family dwelling, garage, and surrounding one 
 14.10  acre of property on a nonhomestead farm classified under 
 14.11  subdivision 23, paragraph (b). 
 14.12     Class 4bb has a class rate of 1.9 percent on the first 
 14.13  $75,000 of market value and a class rate of 2.1 percent of its 
 14.14  market value that exceeds $75,000. 
 14.15     Property that has been classified as seasonal recreational 
 14.16  residential property at any time during which it has been owned 
 14.17  by the current owner or spouse of the current owner does not 
 14.18  qualify for class 4bb. 
 14.19     (c) (d) Class 4c property includes: 
 14.20     (1) a structure that is:  
 14.21     (i) situated on real property that is used for housing for 
 14.22  the elderly or for low- and moderate-income families as defined 
 14.23  in Title II, as amended through December 31, 1990, of the 
 14.24  National Housing Act or the Minnesota housing finance agency law 
 14.25  of 1971, as amended, or rules promulgated by the agency and 
 14.26  financed by a direct federal loan or federally insured loan made 
 14.27  pursuant to Title II of the Act; or 
 14.28     (ii) situated on real property that is used for housing the 
 14.29  elderly or for low- and moderate-income families as defined by 
 14.30  the Minnesota housing finance agency law of 1971, as amended, or 
 14.31  rules adopted by the agency pursuant thereto and financed by a 
 14.32  loan made by the Minnesota housing finance agency pursuant to 
 14.33  the provisions of the act.  
 14.34     This clause applies only to property of a nonprofit or 
 14.35  limited dividend entity.  Property is classified as class 4c 
 14.36  under this clause for 15 years from the date of the completion 
 15.1   of the original construction or substantial rehabilitation, or 
 15.2   for the original term of the loan.  
 15.3      (2) a structure that is: 
 15.4      (i) situated upon real property that is used for housing 
 15.5   lower income families or elderly or handicapped persons, as 
 15.6   defined in section 8 of the United States Housing Act of 1937, 
 15.7   as amended; and 
 15.8      (ii) owned by an entity which has entered into a housing 
 15.9   assistance payments contract under section 8 which provides 
 15.10  assistance for 100 percent of the dwelling units in the 
 15.11  structure, other than dwelling units intended for management or 
 15.12  maintenance personnel.  Property is classified as class 4c under 
 15.13  this clause for the term of the housing assistance payments 
 15.14  contract, including all renewals, or for the term of its 
 15.15  permanent financing, whichever is shorter; and 
 15.16     (3) a qualified low-income building as defined in section 
 15.17  42(c)(2) of the Internal Revenue Code of 1986, as amended 
 15.18  through December 31, 1990, that (i) receives a low-income 
 15.19  housing credit under section 42 of the Internal Revenue Code of 
 15.20  1986, as amended through December 31, 1990; or (ii) meets the 
 15.21  requirements of that section and receives public financing, 
 15.22  except financing provided under sections 469.174 to 469.179, 
 15.23  which contains terms restricting the rents; or (iii) meets the 
 15.24  requirements of section 273.1317.  Classification pursuant to 
 15.25  this clause is limited to a term of 15 years.  The public 
 15.26  financing received must be from at least one of the following 
 15.27  sources:  government issued bonds exempt from taxes under 
 15.28  section 103 of the Internal Revenue Code of 1986, as amended 
 15.29  through December 31, 1993, the proceeds of which are used for 
 15.30  the acquisition or rehabilitation of the building; programs 
 15.31  under section 221(d)(3), 202, or 236, of Title II of the 
 15.32  National Housing Act; rental housing program funds under Section 
 15.33  8 of the United States Housing Act of 1937 or the market rate 
 15.34  family graduated payment mortgage program funds administered by 
 15.35  the Minnesota housing finance agency that are used for the 
 15.36  acquisition or rehabilitation of the building; public financing 
 16.1   provided by a local government used for the acquisition or 
 16.2   rehabilitation of the building, including grants or loans from 
 16.3   federal community development block grants, HOME block grants, 
 16.4   or residential rental bonds issued under chapter 474A; or other 
 16.5   rental housing program funds provided by the Minnesota housing 
 16.6   finance agency for the acquisition or rehabilitation of the 
 16.7   building. 
 16.8      For all properties described in clauses (1), (2), and (3) 
 16.9   and in paragraph (d), the market value determined by the 
 16.10  assessor must be based on the normal approach to value using 
 16.11  normal unrestricted rents unless the owner of the property 
 16.12  elects to have the property assessed under Laws 1991, chapter 
 16.13  291, article 1, section 55.  If the owner of the property elects 
 16.14  to have the market value determined on the basis of the actual 
 16.15  restricted rents, as provided in Laws 1991, chapter 291, article 
 16.16  1, section 55, the property will be assessed at the rate 
 16.17  provided for class 4a or class 4b property, as appropriate.  
 16.18  Properties described in clauses (1)(ii), (3), and (4) may apply 
 16.19  to the assessor for valuation under Laws 1991, chapter 291, 
 16.20  article 1, section 55.  The land on which these structures are 
 16.21  situated has the class rate given in paragraph (b) if the 
 16.22  structure contains fewer than four units, and the class rate 
 16.23  given in paragraph (a) if the structure contains four or more 
 16.24  units.  This clause applies only to the property of a nonprofit 
 16.25  or limited dividend entity.  
 16.26     (4) a parcel of land, not to exceed one acre, and its 
 16.27  improvements or a parcel of unimproved land, not to exceed one 
 16.28  acre, if it is owned by a neighborhood real estate trust and at 
 16.29  least 60 percent of the dwelling units, if any, on all land 
 16.30  owned by the trust are leased to or occupied by lower income 
 16.31  families or individuals.  This clause does not apply to any 
 16.32  portion of the land or improvements used for nonresidential 
 16.33  purposes.  For purposes of this clause, a lower income family is 
 16.34  a family with an income that does not exceed 65 percent of the 
 16.35  median family income for the area, and a lower income individual 
 16.36  is an individual whose income does not exceed 65 percent of the 
 17.1   median individual income for the area, as determined by the 
 17.2   United States Secretary of Housing and Urban Development.  For 
 17.3   purposes of this clause, "neighborhood real estate trust" means 
 17.4   an entity which is certified by the governing body of the 
 17.5   municipality in which it is located to have the following 
 17.6   characteristics: 
 17.7      (a) it is a nonprofit corporation organized under chapter 
 17.8   317A; 
 17.9      (b) it has as its principal purpose providing housing for 
 17.10  lower income families in a specific geographic community 
 17.11  designated in its articles or bylaws; 
 17.12     (c) it limits membership with voting rights to residents of 
 17.13  the designated community; and 
 17.14     (d) it has a board of directors consisting of at least 
 17.15  seven directors, 60 percent of whom are members with voting 
 17.16  rights and, to the extent feasible, 25 percent of whom are 
 17.17  elected by resident members of buildings owned by the trust; and 
 17.18     (5) except as provided in subdivision 22, paragraph (c), 
 17.19  real property devoted to temporary and seasonal residential 
 17.20  occupancy for recreation purposes, including real property 
 17.21  devoted to temporary and seasonal residential occupancy for 
 17.22  recreation purposes and not devoted to commercial purposes for 
 17.23  more than 250 days in the year preceding the year of 
 17.24  assessment.  For purposes of this clause, property is devoted to 
 17.25  a commercial purpose on a specific day if any portion of the 
 17.26  property is used for residential occupancy, and a fee is charged 
 17.27  for residential occupancy.  In order for a property to be 
 17.28  classified as class 4c, seasonal recreational residential for 
 17.29  commercial purposes, at least 40 percent of the annual gross 
 17.30  lodging receipts related to the property must be from business 
 17.31  conducted between Memorial Day weekend and Labor Day weekend and 
 17.32  at least 60 percent of all bookings by lodging guests during the 
 17.33  year must be for periods of at least two consecutive nights.  
 17.34  Class 4c also includes commercial use real property used 
 17.35  exclusively for recreational purposes in conjunction with class 
 17.36  4c property devoted to temporary and seasonal residential 
 18.1   occupancy for recreational purposes, up to a total of two acres, 
 18.2   provided the property is not devoted to commercial recreational 
 18.3   use for more than 250 days in the year preceding the year of 
 18.4   assessment and is located within two miles of the class 4c 
 18.5   property with which it is used.  Class 4c property classified in 
 18.6   this clause also includes the remainder of class 1c resorts.  
 18.7   Owners of real property devoted to temporary and seasonal 
 18.8   residential occupancy for recreation purposes and all or a 
 18.9   portion of which was devoted to commercial purposes for not more 
 18.10  than 250 days in the year preceding the year of assessment 
 18.11  desiring classification as class 1c or 4c, must submit a 
 18.12  declaration to the assessor designating the cabins or units 
 18.13  occupied for 250 days or less in the year preceding the year of 
 18.14  assessment by January 15 of the assessment year.  Those cabins 
 18.15  or units and a proportionate share of the land on which they are 
 18.16  located will be designated class 1c or 4c as otherwise 
 18.17  provided.  The remainder of the cabins or units and a 
 18.18  proportionate share of the land on which they are located will 
 18.19  be designated as class 3a.  The first $100,000 of the market 
 18.20  value of the remainder of the cabins or units and a 
 18.21  proportionate share of the land on which they are located shall 
 18.22  have a class rate of three percent.  The owner of property 
 18.23  desiring designation as class 1c or 4c property must provide 
 18.24  guest registers or other records demonstrating that the units 
 18.25  for which class 1c or 4c designation is sought were not occupied 
 18.26  for more than 250 days in the year preceding the assessment if 
 18.27  so requested.  The portion of a property operated as a (1) 
 18.28  restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 18.29  facility operated on a commercial basis not directly related to 
 18.30  temporary and seasonal residential occupancy for recreation 
 18.31  purposes shall not qualify for class 1c or 4c; 
 18.32     (2) qualified property used as a golf course if: 
 18.33     (i) any portion of the property is located within a county 
 18.34  that has a population of less than 50,000, or within a county 
 18.35  containing a golf course owned by a municipality or the county; 
 18.36     (ii) it is open to the public on a daily fee basis.  It may 
 19.1   charge membership fees or dues, but a membership fee may not be 
 19.2   required in order to use the property for golfing, and its green 
 19.3   fees for golfing must be comparable to green fees typically 
 19.4   charged by municipal courses; and 
 19.5      (iii) it meets the requirements of section 273.112, 
 19.6   subdivision 3, paragraph (d). 
 19.7      A structure used as a clubhouse, restaurant, or place of 
 19.8   refreshment in conjunction with the golf course is classified as 
 19.9   class 3a property. 
 19.10     (6) (3) real property up to a maximum of one acre of land 
 19.11  owned by a nonprofit community service oriented organization; 
 19.12  provided that the property is not used for a revenue-producing 
 19.13  activity for more than six days in the calendar year preceding 
 19.14  the year of assessment and the property is not used for 
 19.15  residential purposes on either a temporary or permanent basis.  
 19.16  For purposes of this clause, a "nonprofit community service 
 19.17  oriented organization" means any corporation, society, 
 19.18  association, foundation, or institution organized and operated 
 19.19  exclusively for charitable, religious, fraternal, civic, or 
 19.20  educational purposes, and which is exempt from federal income 
 19.21  taxation pursuant to section 501(c)(3), (10), or (19) of the 
 19.22  Internal Revenue Code of 1986, as amended through December 31, 
 19.23  1990.  For purposes of this clause, "revenue-producing 
 19.24  activities" shall include but not be limited to property or that 
 19.25  portion of the property that is used as an on-sale intoxicating 
 19.26  liquor or 3.2 percent malt liquor establishment licensed under 
 19.27  chapter 340A, a restaurant open to the public, bowling alley, a 
 19.28  retail store, gambling conducted by organizations licensed under 
 19.29  chapter 349, an insurance business, or office or other space 
 19.30  leased or rented to a lessee who conducts a for-profit 
 19.31  enterprise on the premises.  Any portion of the property which 
 19.32  is used for revenue-producing activities for more than six days 
 19.33  in the calendar year preceding the year of assessment shall be 
 19.34  assessed as class 3a.  The use of the property for social events 
 19.35  open exclusively to members and their guests for periods of less 
 19.36  than 24 hours, when an admission is not charged nor any revenues 
 20.1   are received by the organization shall not be considered a 
 20.2   revenue-producing activity; 
 20.3      (7) (4) post-secondary student housing of not more than one 
 20.4   acre of land that is owned by a nonprofit corporation organized 
 20.5   under chapter 317A and is used exclusively by a student 
 20.6   cooperative, sorority, or fraternity for on-campus housing or 
 20.7   housing located within two miles of the border of a college 
 20.8   campus; and 
 20.9      (8) (5) manufactured home parks as defined in section 
 20.10  327.14, subdivision 3. 
 20.11     Class 4c property has a class rate of 2.3 2.1 percent of 
 20.12  market value, except that (i) for each parcel of seasonal 
 20.13  residential recreational property not used for commercial 
 20.14  purposes under clause (5) the first $72,000 $75,000 of market 
 20.15  value on each parcel has a class rate of 1.75 percent for taxes 
 20.16  payable in 1997 and 1.5 1.4 percent for taxes payable in 1998 
 20.17  and thereafter, and the market value of each parcel that exceeds 
 20.18  $72,000 $75,000 has a class rate of 2.5 percent, and (ii) 
 20.19  manufactured home parks assessed under clause (8) (5) have a 
 20.20  class rate of two percent for taxes payable in 1996, and 
 20.21  thereafter.  
 20.22     (d) (e) Class 4d property includes: 
 20.23     (1) a structure that is: 
 20.24     (i) situated on real property that is used for housing for 
 20.25  the elderly or for low and moderate income families as defined 
 20.26  by the Farmers Home Administration; 
 20.27     (ii) located in a municipality of less than 10,000 
 20.28  population; and 
 20.29     (iii) financed by a direct loan or insured loan from the 
 20.30  Farmers Home Administration.  Property is classified under this 
 20.31  clause for 15 years from the date of the completion of the 
 20.32  original construction or for the original term of the loan.  
 20.33     The class rates in paragraph (c), clauses (1), (2), and (3) 
 20.34  and this clause apply to the properties described in them, only 
 20.35  in proportion to occupancy of the structure by elderly or 
 20.36  handicapped persons or low and moderate income families as 
 21.1   defined in the applicable laws unless construction of the 
 21.2   structure had been commenced prior to January 1, 1984; or the 
 21.3   project had been approved by the governing body of the 
 21.4   municipality in which it is located prior to June 30, 1983; or 
 21.5   financing of the project had been approved by a federal or state 
 21.6   agency prior to June 30, 1983.  For those properties, 4c or 4d 
 21.7   classification is available only for those units meeting the 
 21.8   requirements of section 273.1318. 
 21.9      Classification under this clause is only available to 
 21.10  property of a nonprofit or limited dividend entity. 
 21.11     In the case of a structure financed or refinanced under any 
 21.12  federal or state mortgage insurance or direct loan program 
 21.13  exclusively for housing for the elderly or for housing for the 
 21.14  handicapped, a unit shall be considered occupied so long as it 
 21.15  is actually occupied by an elderly or handicapped person or, if 
 21.16  vacant, is held for rental to an elderly or handicapped person. 
 21.17     (2) For taxes payable in 1992, 1993, and 1994, only, 
 21.18  buildings and appurtenances, together with the land upon which 
 21.19  they are located, leased by the occupant under the community 
 21.20  lending model lease-purchase mortgage loan program administered 
 21.21  by the Federal National Mortgage Association, provided the 
 21.22  occupant's income is no greater than 60 percent of the county or 
 21.23  area median income, adjusted for family size and the building 
 21.24  consists of existing single family or duplex housing.  The lease 
 21.25  agreement must provide for a portion of the lease payment to be 
 21.26  escrowed as a nonrefundable down payment on the housing.  To 
 21.27  qualify under this clause, the taxpayer must apply to the county 
 21.28  assessor by May 30 of each year.  The application must be 
 21.29  accompanied by an affidavit or other proof required by the 
 21.30  assessor to determine qualification under this clause. 
 21.31     (3) Qualifying buildings and appurtenances, together with 
 21.32  the land upon which they are located, leased for a period of up 
 21.33  to five years by the occupant under a lease-purchase program 
 21.34  administered by the Minnesota housing finance agency or a 
 21.35  housing and redevelopment authority authorized under sections 
 21.36  469.001 to 469.047, provided the occupant's income is no greater 
 22.1   than 80 percent of the county or area median income, adjusted 
 22.2   for family size, and the building consists of two or less 
 22.3   dwelling units.  The lease agreement must provide for a portion 
 22.4   of the lease payment to be escrowed as a nonrefundable down 
 22.5   payment on the housing.  The administering agency shall verify 
 22.6   the occupants income eligibility and certify to the county 
 22.7   assessor that the occupant meets the income criteria under this 
 22.8   paragraph.  To qualify under this clause, the taxpayer must 
 22.9   apply to the county assessor by May 30 of each year.  For 
 22.10  purposes of this section, "qualifying buildings and 
 22.11  appurtenances" shall be defined as one or two unit residential 
 22.12  buildings which are unoccupied and have been abandoned and 
 22.13  boarded for at least six months is qualifying low-income rental 
 22.14  housing certified to the assessor by the housing finance agency 
 22.15  under sections 273.126 and 462A.071.  Class 4d includes land in 
 22.16  proportion to the total market value of the building that is 
 22.17  qualifying low-income rental housing.  For all properties 
 22.18  qualifying as class 4d, the market value determined by the 
 22.19  assessor must be based on the normal approach to value using 
 22.20  normal unrestricted rents. 
 22.21     Class 4d property has a class rate of two one percent of 
 22.22  market value except that property classified under clause (3), 
 22.23  shall have the same class rate as class 1a property. 
 22.24     (e) Residential rental property that would otherwise be 
 22.25  assessed as class 4 property under paragraph (a); paragraph (b), 
 22.26  clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 
 22.27  (4), is assessed at the class rate applicable to it under 
 22.28  Minnesota Statutes 1988, section 273.13, if it is found to be a 
 22.29  substandard building under section 273.1316.  Residential rental 
 22.30  property that would otherwise be assessed as class 4 property 
 22.31  under paragraph (d) is assessed at 2.3 percent of market value 
 22.32  if it is found to be a substandard building under section 
 22.33  273.1316. 
 22.34     (f) Class 4e property consists of the residential portion 
 22.35  of any structure located within a city that was converted from 
 22.36  nonresidential use to residential use, provided that: 
 23.1      (1) the structure had formerly been used as a warehouse; 
 23.2      (2) the structure was originally constructed prior to 1940; 
 23.3      (3) the conversion was done after December 31, 1995, but 
 23.4   before January 1, 2003; and 
 23.5      (4) the conversion involved an investment of at least 
 23.6   $25,000 per residential unit. 
 23.7      Class 4e property has a class rate of 2.3 percent, provided 
 23.8   that a structure is eligible for class 4e classification only in 
 23.9   the 12 assessment years immediately following the conversion. 
 23.10     Sec. 9.  Minnesota Statutes 1996, section 273.13, 
 23.11  subdivision 31, is amended to read: 
 23.12     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 23.13     (1) tools, implements, and machinery of an electric 
 23.14  generating, transmission, or distribution system or a pipeline 
 23.15  system transporting or distributing water, gas, crude oil, or 
 23.16  petroleum products or mains and pipes used in the distribution 
 23.17  of steam or hot or chilled water for heating or cooling 
 23.18  buildings, which are fixtures; 
 23.19     (2) unmined iron ore and low-grade iron-bearing formations 
 23.20  as defined in section 273.14; and 
 23.21     (3) all other property not otherwise classified. 
 23.22     Class 5 property has a class rate of 5.06 4.0 percent of 
 23.23  market value for taxes payable in 1998 and thereafter. 
 23.24     Sec. 10.  Minnesota Statutes 1996, section 273.13, 
 23.25  subdivision 32, is amended to read: 
 23.26     Subd. 32.  [TARGET CLASS RATE RATES.] (a) All classes of 
 23.27  property with a class rate of 5.06 4 percent have a target class 
 23.28  rate of four 3.5 percent.  Class 4a shall have a target class 
 23.29  rate of 2.5 percent.  Class 4bb has a target class rate of 1.25 
 23.30  percent of the first $75,000 of market value and a target class 
 23.31  rate of 1.85 percent of the market value in excess of $75,000. 
 23.32     (b) By the fourth Tuesday in January of 1998 and at the 
 23.33  time of submission of the biennial budget under section 
 23.34  16A.11 in each biennium thereafter, the governor shall must 
 23.35  recommend the effective class rate schedule for all properties 
 23.36  for taxes payable in 1999 for the schedule submitted in 1998 and 
 24.1   for the following two calendar years by designating a "phase-in 
 24.2   percentage," equal to the proportion of the effective class rate 
 24.3   that will be based on the target class rate of four percent, 
 24.4   with the remaining proportion based on the class rate of 5.06 
 24.5   percent in each biennium thereafter.  The class rate schedule 
 24.6   must include reductions in the class rates of the classes 
 24.7   designated in paragraph (a) until such time as the target class 
 24.8   rates are reached unless the governor recommends no change in 
 24.9   the class rate schedule for all properties.  As part of the 
 24.10  recommendation, the governor shall identify recommend 
 24.11  appropriation of monies from the property tax reform account 
 24.12  under section 16A.1521 and include within the budget additional 
 24.13  funding for the increased expenditures for the education 
 24.14  homestead and agricultural credit aid over the amount of 
 24.15  expenditures for homestead and agricultural credit aid provided 
 24.16  in Laws 1989, First Special Session chapter 1, that are 
 24.17  estimated to result from the recommendation.  At that time, the 
 24.18  property tax refund under chapter 290A and education aids under 
 24.19  chapters 124 and 124A to the extent those aids will be used to 
 24.20  reduce property tax levies.  The governor may propose 
 24.21  alternative programs other than homestead and agricultural 
 24.22  credit aid to prevent other taxpayers' the taxes of classes 
 24.23  other than those designated in paragraph (a) from increasing as 
 24.24  a result of the governor's recommended increase in the phase-in 
 24.25  percentage.  The effective net class rate is the sum of the 
 24.26  products of: 
 24.27     (1) the phase-in percentage adopted by the legislature 
 24.28  multiplied by four percent; and 
 24.29     (2) 100 percent minus the phase-in percentage multiplied by 
 24.30  5.06 percent. 
 24.31     The phase-in percentage in any year cannot be less than it 
 24.32  was in the prior year.  The phase-in percentage is ten percent 
 24.33  for taxes payable in 1991, 29.2 percent for taxes payable in 
 24.34  1992, 34.0 percent for taxes payable in 1993, and 43.4 percent 
 24.35  for taxes payable in 1994 and thereafter. 
 24.36     Beginning in 1991, the commissioner of revenue shall 
 25.1   annually set the effective class rate to use for taxes payable 
 25.2   in the following year as provided in this subdivision and 
 25.3   announce it by June 1.  For purposes of any aid, levy 
 25.4   limitation, debt limit, or salary limitation, and property tax 
 25.5   administration, net tax capacity must be computed with reference 
 25.6   to the effective class rate for the properties affected by this 
 25.7   subdivision class rate schedule. 
 25.8      Sec. 11.  [273.1319] [SINGLE FAMILY HOUSING; NONCOMPLIANCE; 
 25.9   MINNEAPOLIS AND ST. PAUL.] 
 25.10     (a) If the city determines that a residential rental 
 25.11  property classified as class 4bb under section 273.13, 
 25.12  subdivision 25, is not in compliance with the city's applicable 
 25.13  rental licensing requirements and housing codes, the city shall 
 25.14  notify the property owner of the specific items that are not in 
 25.15  compliance.  The owner has 60 days to correct the noncompliance 
 25.16  items identified by the city.  If they have not been corrected 
 25.17  within the 60-day time period to the satisfaction of the city, 
 25.18  the city shall notify the assessor that the property is out of 
 25.19  compliance and is no longer eligible for the class 4bb property 
 25.20  classification.  Notwithstanding any other provision of law, the 
 25.21  assessor shall reclassify the property for the current 
 25.22  assessment year, for taxes payable in the following year as 
 25.23  class 4b property.  The assessor shall notify the property owner 
 25.24  of the action. 
 25.25     (b) This section applies only to property located in the 
 25.26  cities of Minneapolis and St. Paul. 
 25.27     (c) This section is effective for each of the cities of 
 25.28  Minneapolis and St. Paul upon compliance with Minnesota 
 25.29  Statutes, section 645.021, subdivision 3, by the governing body 
 25.30  of the city. 
 25.31     Sec. 12.  [273.1382] [EDUCATION HOMESTEAD CREDIT.] 
 25.32     Subdivision 1.  [EDUCATION HOMESTEAD CREDIT.] Each year, 
 25.33  beginning with property taxes payable in 1998, the respective 
 25.34  county auditors shall determine the local tax rate for each 
 25.35  school district for the general education levy certified under 
 25.36  section 124A.23, subdivision 2 or 3.  That rate shall be the 
 26.1   general education homestead credit local tax rate for the 
 26.2   district.  The auditor shall then determine a general education 
 26.3   homestead credit for each homestead within the county equal to 
 26.4   32 percent of the general education homestead credit local tax 
 26.5   rate times the net tax capacity of the homestead for the taxes 
 26.6   payable year.  The amount of general education homestead credit 
 26.7   for a homestead may not exceed $225.  In the case of an 
 26.8   agricultural homestead, only the net tax capacity of the house, 
 26.9   garage, and surrounding one acre of land shall be used in 
 26.10  determining the property's education homestead credit. 
 26.11     Subd. 2.  [CREDIT REIMBURSEMENTS.] (a) The commissioner of 
 26.12  revenue shall determine the tax reductions allowed under this 
 26.13  section for each taxes payable year, and for each school 
 26.14  district based upon a review of the abstracts of tax lists 
 26.15  submitted by the county auditors under section 275.29, and from 
 26.16  any other information which the commissioner deems relevant.  
 26.17  The commissioner of revenue shall generally compute the tax 
 26.18  reductions at the unique taxing jurisdiction level, however the 
 26.19  commissioner may compute the tax reductions at a higher 
 26.20  geographic level if that would have a negligible impact, or if 
 26.21  changes in the composition of unique taxing jurisdictions do not 
 26.22  permit computation at the unique taxing jurisdiction level.  The 
 26.23  commissioner's determinations under this paragraph are not rules.
 26.24     (b) The commissioner of revenue shall certify the total of 
 26.25  the tax reductions granted under this section for each taxes 
 26.26  payable year within each school district to the commissioner of 
 26.27  children, families, and learning after July 1 and on or before 
 26.28  August 1 of the taxes payable year.  The commissioner of 
 26.29  children, families, and learning shall reimburse each affected 
 26.30  school district for the amount of the property tax reductions 
 26.31  allowed under this section as provided in section 273.1392.  The 
 26.32  commissioner of children, families, and learning shall treat the 
 26.33  reimbursement payments as entitlements for the same state fiscal 
 26.34  year as certified, including with each district's initial 
 26.35  payment all amounts that would have been paid up to that date, 
 26.36  computed as if 90 percent of the annual reimbursement amount for 
 27.1   the district were being paid one-twelfth in each month of the 
 27.2   fiscal year.  
 27.3      Subd. 3.  [APPROPRIATION.] An amount sufficient to make the 
 27.4   payments required by this section is annually appropriated from 
 27.5   the general fund to the commissioner of children, families, and 
 27.6   learning.  
 27.7      Sec. 13.  Minnesota Statutes 1996, section 273.1393, is 
 27.8   amended to read: 
 27.9      273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 
 27.10     Notwithstanding any other provisions to the contrary, "net" 
 27.11  property taxes are determined by subtracting the credits in the 
 27.12  order listed from the gross tax:  
 27.13     (1) disaster credit as provided in section 273.123; 
 27.14     (2) powerline credit as provided in section 273.42; 
 27.15     (3) agricultural preserves credit as provided in section 
 27.16  473H.10; 
 27.17     (4) enterprise zone credit as provided in section 469.171; 
 27.18     (5) disparity reduction credit; 
 27.19     (6) conservation tax credit as provided in section 273.119; 
 27.20     (7) education homestead credit as provided in section 
 27.21  273.1382; 
 27.22     (8) taconite homestead credit as provided in section 
 27.23  273.135; and 
 27.24     (8) (9) supplemental homestead credit as provided in 
 27.25  section 273.1391.  
 27.26     The combination of all property tax credits must not exceed 
 27.27  the gross tax amount.  
 27.28     Sec. 14.  Minnesota Statutes 1996, section 290A.03, 
 27.29  subdivision 13, is amended to read: 
 27.30     Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
 27.31  payable" means the property tax exclusive of special 
 27.32  assessments, penalties, and interest payable on a claimant's 
 27.33  homestead before reductions made under section 273.13 but after 
 27.34  deductions made under sections 273.135, 273.1391, 273.1382, 
 27.35  273.42, subdivision 2, and any other state paid property tax 
 27.36  credits in any calendar year.  In the case of a claimant who 
 28.1   makes ground lease payments, "property taxes payable" includes 
 28.2   the amount of the payments directly attributable to the property 
 28.3   taxes assessed against the parcel on which the house is 
 28.4   located.  No apportionment or reduction of the "property taxes 
 28.5   payable" shall be required for the use of a portion of the 
 28.6   claimant's homestead for a business purpose if the claimant does 
 28.7   not deduct any business depreciation expenses for the use of a 
 28.8   portion of the homestead in the determination of federal 
 28.9   adjusted gross income.  For homesteads which are manufactured 
 28.10  homes as defined in section 273.125, subdivision 8, and for 
 28.11  homesteads which are park trailers taxed as manufactured homes 
 28.12  under section 168.012, subdivision 9, "property taxes payable" 
 28.13  shall also include the amount of the gross rent paid in the 
 28.14  preceding year for the site on which the homestead is located, 
 28.15  which is attributable to the net tax paid on the site.  The 
 28.16  amount attributable to property taxes shall be determined by 
 28.17  multiplying the net tax on the parcel by a fraction, the 
 28.18  numerator of which is the gross rent paid for the calendar year 
 28.19  for the site and the denominator of which is the gross rent paid 
 28.20  for the calendar year for the parcel.  When a homestead is owned 
 28.21  by two or more persons as joint tenants or tenants in common, 
 28.22  such tenants shall determine between them which tenant may claim 
 28.23  the property taxes payable on the homestead.  If they are unable 
 28.24  to agree, the matter shall be referred to the commissioner of 
 28.25  revenue whose decision shall be final.  Property taxes are 
 28.26  considered payable in the year prescribed by law for payment of 
 28.27  the taxes. 
 28.28     In the case of a claim relating to "property taxes 
 28.29  payable," the claimant must have owned and occupied the 
 28.30  homestead on January 2 of the year in which the tax is payable 
 28.31  and (i) the property must have been classified as homestead 
 28.32  property pursuant to section 273.13, subdivision 22 or 23, on or 
 28.33  before December 15 of the assessment year to which the "property 
 28.34  taxes payable" relate; or (ii) the claimant must provide 
 28.35  documentation from the local assessor that application for 
 28.36  homestead classification has been made on or before December 15 
 29.1   of the year in which the "property taxes payable" were payable 
 29.2   and that the assessor has approved the application. 
 29.3      Sec. 15.  [462A.071] [CERTIFICATION OF HOUSING QUALIFYING 
 29.4   FOR REDUCED PROPERTY TAX RATE.] 
 29.5      Subdivision 1.  [CERTIFICATION.] By June 30 of each year, 
 29.6   the agency must certify to local assessors the units of 
 29.7   low-income rental properties that qualify for class 4d under 
 29.8   sections 273.126 and 273.13.  In making these certifications, 
 29.9   the agency may rely on the application and supporting 
 29.10  information supplied by the property owner as to compliance with 
 29.11  the income limits under section 273.126, subdivision 2, and 
 29.12  satisfaction of the minimum housing quality standards under 
 29.13  subdivision 4. 
 29.14     Subd. 2.  [APPLICATION.] (a) In order to qualify for 
 29.15  certification under subdivision 1, the owner or manager of the 
 29.16  property must annually apply to the agency.  The application 
 29.17  must be in the form prescribed by the agency, contain the 
 29.18  information required by the agency, and be submitted by the date 
 29.19  and time specified by the agency. 
 29.20     (b) Each application must include: 
 29.21     (1) the property tax identification number; 
 29.22     (2) the number, type, and size of units the applicant seeks 
 29.23  to qualify as low-income housing under class 4d; 
 29.24     (3) the number, type, and size of units in the property for 
 29.25  which the applicant is not seeking qualification, if any; 
 29.26     (4) a certification that the property has been inspected by 
 29.27  a qualified inspector within the past three years and meets the 
 29.28  minimum housing quality standards or is exempt from the 
 29.29  inspection requirement under subdivision 4; 
 29.30     (5) a statement indicating the building is in compliance 
 29.31  with the income limits; 
 29.32     (6) an executed agreement to restrict rents meeting the 
 29.33  requirements specified by the agency or executed leases for the 
 29.34  units for which qualification as low-income housing as class 4d 
 29.35  under section 273.13 is sought and the rent schedule; and 
 29.36     (7) any additional information the agency deems appropriate 
 30.1   to require. 
 30.2      (c) The applicant must pay a per-unit application fee to be 
 30.3   set by the agency.  The application fee charged by the agency 
 30.4   must approximately equal the costs of processing and reviewing 
 30.5   the applications.  The fee must be deposited in the general fund.
 30.6      Subd. 3.  [AGREEMENT TO RESTRICT RENTS.] The agency may 
 30.7   prescribe one or more standard form agreements to restrict rents 
 30.8   that meet the requirements of section 273.126, subdivision 3.  
 30.9   The agreements must be in recordable form.  The agency may 
 30.10  require applicants to execute a rent restriction agreement in 
 30.11  this form as a condition of entering an agreement to restrict 
 30.12  rents. 
 30.13     Subd. 4.  [MINIMUM HOUSING QUALITY STANDARDS.] (a) To 
 30.14  qualify for taxation under class 4d under section 273.13, a unit 
 30.15  must meet both the housing maintenance code of the local unit of 
 30.16  government in which the unit is located, if such a code has been 
 30.17  adopted, and the housing quality standards adopted by the United 
 30.18  States Department of Housing and Urban Development. 
 30.19     (b) In order to meet the minimum housing quality standards, 
 30.20  a building must be inspected by an independent designated 
 30.21  inspector at least once every three years.  The inspector must 
 30.22  certify that the building complies with the minimum standards.  
 30.23  The property owner must pay the cost of the inspection. 
 30.24     (c) The agency may exempt from the inspection requirement 
 30.25  housing units that are financed by a governmental entity and 
 30.26  subject to regular inspection or other compliance checks with 
 30.27  regard to minimum housing quality.  Written certification must 
 30.28  be supplied to show that these exempt units have been inspected 
 30.29  within the last three years and comply with the requirements 
 30.30  under the public financing or local requirements. 
 30.31     Subd. 5.  [HOUSING INSPECTORS.] (a) Housing inspections 
 30.32  required by this section may be conducted only by persons 
 30.33  designated by the agency.  The agency may designate one or more 
 30.34  persons to conduct inspections for all or part of the state.  A 
 30.35  designated inspector may charge a fee for an inspection up to a 
 30.36  maximum amount approved by the agency.  The inspector must be 
 31.1   independent of the owner or manager of the inspected property. 
 31.2      (b) The agency must maintain a list of persons eligible to 
 31.3   conduct housing inspections under this section. 
 31.4      Subd. 6.  [SECTION 8 AND TAX CREDIT UNITS.] (a) The agency 
 31.5   may deem units as meeting the requirements of section 273.126 
 31.6   and this section, if the units either: 
 31.7      (1) are subject to a housing assistance payments contract 
 31.8   under section 8 of the United States Housing Act of 1937, as 
 31.9   amended; or 
 31.10     (2) are rent and income restricted units of a qualified 
 31.11  low-income housing project receiving tax credits under section 
 31.12  42(g) of the Internal Revenue Code of 1986, as amended. 
 31.13     (b) The agency may certify these deemed units under 
 31.14  subdivision 1 based on a simplified application procedure that 
 31.15  verifies the unit's qualifications under paragraph (a). 
 31.16     Subd. 7.  [MONITORING COMPLIANCE.] (a) The agency must 
 31.17  monitor compliance by building owners with the requirements of 
 31.18  section 273.126 and this section.  The agency must annually 
 31.19  conduct on-site examinations of a sample of the buildings 
 31.20  receiving class 4d taxation to monitor compliance.  The agency 
 31.21  may contract with third parties to monitor compliance. 
 31.22     (b) An inspector, designated by the agency under 
 31.23  subdivision 5, shall notify the agency if, in conducting an 
 31.24  inspection under subdivision 4, the inspector finds that: 
 31.25     (1) a unit is receiving class 4d taxation; 
 31.26     (2) the unit is not in compliance with the requirements of 
 31.27  subdivision 4; and 
 31.28     (3) the owner or manager fails or refuses to cure the 
 31.29  violations within a reasonable time after receiving notification 
 31.30  of the violation. 
 31.31     Subd. 8.  [PENALTIES.] (a) The penalties provided by this 
 31.32  subdivision apply to each unit that received class 4d taxation 
 31.33  for a year and failed to meet the requirements of section 
 31.34  273.126 and this section. 
 31.35     (b) If the owner or manager does not comply with the rent 
 31.36  restriction agreement, or does not comply with the income 
 32.1   restrictions or minimum housing quality standards, a penalty 
 32.2   applies equal to the increased taxes that would have been 
 32.3   imposed if the property had not been classified under class 4d 
 32.4   for the year in which restrictions were violated. 
 32.5      (c) If the agency finds that the violations were 
 32.6   inadvertent and insubstantial, a penalty of $50 per unit per 
 32.7   year applies in lieu of the penalty specified under paragraph 
 32.8   (b).  In order to qualify under this paragraph, violations of 
 32.9   the minimum housing quality standards must be corrected within a 
 32.10  reasonable period of time and rent charged in excess of the 
 32.11  agreement must be rebated to the tenants. 
 32.12     (d) The agency may abate the penalties under this 
 32.13  subdivision for reasonable cause. 
 32.14     (e) Penalties assessed under paragraph (c) are payable to 
 32.15  the agency and must be deposited in the general fund.  If an 
 32.16  owner or manager fails to timely pay a penalty imposed under 
 32.17  paragraph (c), the agency may choose to: 
 32.18     (1) impose the penalty under paragraph (b); or 
 32.19     (2) certify the penalty under paragraph (c) to the auditor 
 32.20  for collection as additional taxes. 
 32.21  The agency shall certify to the county auditor penalties 
 32.22  assessed under paragraph (b) and clause (2).  The auditor shall 
 32.23  impose and collect the certified penalties as additional taxes 
 32.24  which will be distributed to taxing districts in the same manner 
 32.25  as property taxes on the property. 
 32.26     Subd. 9.  [TAX COURT REVIEW.] (a) An owner may appeal to 
 32.27  tax court as provided in section 271.06: 
 32.28     (1) a denial of a request for certification of a property 
 32.29  as qualifying for class 4d taxation; 
 32.30     (2) imposition of a penalty under this section; or 
 32.31     (3) denial of a request to abate a penalty. 
 32.32     (b) The county attorney shall represent the public in 
 32.33  opposing the appeal. 
 32.34     Subd. 10.  [INTERAGENCY CONTRACTING AUTHORITY.] The agency 
 32.35  may contract with the department of revenue or any other state 
 32.36  agency or a private entity to carry out administrative functions 
 33.1   under this section. 
 33.2      Subd. 11.  [RULEMAKING.] (a) The agency may adopt 
 33.3   administrative rules under chapter 14 to carry out the 
 33.4   provisions of this section, including establishing standards for 
 33.5   abating penalties, violations that are inadvertent and 
 33.6   insubstantial, selection of inspectors, selection of persons to 
 33.7   monitor compliance, and establishing rent restriction agreement 
 33.8   terms. 
 33.9      (b) Pending final rulemaking, and in order to implement 
 33.10  this section by January 1, 1998, the agency shall be allowed to 
 33.11  make determinations regarding selection of inspectors, rent 
 33.12  restriction agreement terms, fees, application information, 
 33.13  application deadlines, required documentation, exemptions from 
 33.14  inspection requirements, and deeming of eligibility.  Any 
 33.15  determinations adopted under this authority expire on January 1, 
 33.16  1999. 
 33.17     Sec. 16.  [PROPERTY TAX REBATE.] 
 33.18     (a) A credit is allowed against the tax imposed on an 
 33.19  individual under Minnesota Statutes, chapter 290 equal to 20 
 33.20  percent of the qualified property tax paid in calendar year 1997 
 33.21  for taxes assessed in 1996. 
 33.22     (b) For property owned and occupied by the taxpayer, 
 33.23  qualified tax means property taxes payable as defined in 
 33.24  Minnesota Statutes, section 290A.03, subdivision 13, assessed in 
 33.25  1996 and payable in 1997.  
 33.26     (c) For a renter, the qualified property tax means the 
 33.27  amount of rent constituting property taxes under Minnesota 
 33.28  Statutes, section 290A.03, subdivision 11, based on rent paid in 
 33.29  1997.  If two or more renters could be claimants under Minnesota 
 33.30  Statutes, chapter 290A with regard to the rent constituting 
 33.31  property taxes, the rules under Minnesota Statutes, section 
 33.32  290A.03, subdivision 8, paragraph (f), applies to determine the 
 33.33  amount of the credit for the individual. 
 33.34     (d) For an individual who both owned and rented principal 
 33.35  residences in calendar year 1997, qualified taxes are the sum of 
 33.36  the amounts under paragraphs (a) and (b). 
 34.1      (e) If the amount of the credit under this subdivision 
 34.2   exceeds the taxpayer's tax liability under this chapter, the 
 34.3   commissioner shall refund the excess. 
 34.4      (f) To claim a credit under this subdivision, the taxpayer 
 34.5   must attach a copy of the property tax statement and certificate 
 34.6   of rent paid, as applicable, and provide any additional 
 34.7   information the commissioner requires. 
 34.8      (g) An amount sufficient to pay refunds under this 
 34.9   subdivision is appropriated to the commissioner from the general 
 34.10  fund. 
 34.11     (h) This credit applies to taxable years beginning after 
 34.12  December 31, 1996, and before January 1, 1998. 
 34.13     Sec. 17.  [GENERAL EDUCATION LEVY REDUCTION.] 
 34.14     Notwithstanding the provisions of Minnesota Statutes, 
 34.15  section 124A.23, subdivision 1, the general education levy shall 
 34.16  be reduced by $93,000,000 for taxes payable in 1998 and 
 34.17  subsequent years.  The amount necessary to offset the costs of 
 34.18  the levy reductions contained in this section is annually 
 34.19  appropriated from the general fund to the commissioner of 
 34.20  children, families, and learning. 
 34.21     Sec. 18.  [TEMPORARY EXEMPTIONS FROM INSPECTION 
 34.22  REQUIREMENTS.] 
 34.23     (a) The Minnesota housing finance agency may provide a 
 34.24  temporary exemption to the inspection requirement under 
 34.25  Minnesota Statutes, sections 273.126, subdivision 4, and 
 34.26  462A.071, if the agency finds that: 
 34.27     (1) the property owner made a good faith effort to obtain 
 34.28  an inspection; and 
 34.29     (2) the owner was unable to obtain an inspection in time to 
 34.30  apply because the designated inspectors were unable to conduct 
 34.31  all the requested inspections. 
 34.32     (b) If a unit that is exempted under this section does not 
 34.33  ultimately obtain a certification from a designated inspector 
 34.34  that it is in compliance with the minimum housing quality 
 34.35  standards, the additional taxes under Minnesota Statutes, 
 34.36  section 273.126, subdivision 5, apply. 
 35.1      (c) Procedures or rules for granting exemptions under this 
 35.2   section are not subject to the administrative rulemaking under 
 35.3   Minnesota Statutes, chapter 14. 
 35.4      (d) The authority under this section expires December 31, 
 35.5   2000. 
 35.6      Sec. 19.  [TIF GRANTS; APPROPRIATIONS.] 
 35.7      Subdivision 1.  [TIF GRANTS.] (a) The commissioner of 
 35.8   revenue shall pay grants to municipalities for deficits in tax 
 35.9   increment financing districts caused by the changes in class 
 35.10  rates under this act.  Municipalities must submit applications 
 35.11  for the grants in a form prescribed by the commissioner by no 
 35.12  later than March 1 for grants payable during the calendar year.  
 35.13  The maximum grant equals the lesser of: 
 35.14     (1) for taxes payable in the year before the grant is paid, 
 35.15  the reduction in the tax increment financing district's revenues 
 35.16  derived from increment resulting from the class rate changes in 
 35.17  this article; or 
 35.18     (2) the municipality's total tax increments, including 
 35.19  unspent increments from previous years, less the amount due 
 35.20  during the calendar year to pay (i) bonds issued and sold before 
 35.21  the day following final enactment of this act and (ii) binding 
 35.22  contracts entered into before the day following final enactment 
 35.23  of this act.  
 35.24     (b) The commissioner of revenue may require applicants for 
 35.25  grants or pooling authority under this section to provide any 
 35.26  information the commissioner deems appropriate.  The 
 35.27  commissioner shall calculate the amount under paragraph (a), 
 35.28  clause (2), based on the reports for the tax increment financing 
 35.29  district or districts filed with the state auditor on or before 
 35.30  July 1 of the year before the year in which the grant is to be 
 35.31  paid. 
 35.32     (c) This subdivision applies only to deficits in tax 
 35.33  increment financing districts for which: 
 35.34     (1) the request for certification was made before the 
 35.35  enactment date of this act; and 
 35.36     (2) all timely reports have been filed with the state 
 36.1   auditor, as required by Minnesota Statutes, section 469.175. 
 36.2      (d) The commissioner shall pay the grants under this 
 36.3   subdivision by December 26 of the year. 
 36.4      (e) $2,000,000 is appropriated to the commissioner of 
 36.5   revenue to make grants under this section.  This appropriation 
 36.6   is available until expended or this section expires under 
 36.7   subdivision 3, whichever is earlier.  If the amount of grant 
 36.8   entitlements for a year exceed the appropriation, the 
 36.9   commissioner shall reduce each grant proportionately so the 
 36.10  total equals the amount available. 
 36.11     Subd. 2.  [ADDITIONAL POOLING AUTHORITY.] Notwithstanding 
 36.12  the provisions of Minnesota Statutes, section 469.1763, 
 36.13  subdivision 2, and the provisions of the tax increment financing 
 36.14  act in effect for districts for which the request for 
 36.15  certification was made before June 30, 1982, revenues derived 
 36.16  from increments may be spent on activities located outside of 
 36.17  the district to pay binding obligations entered into before the 
 36.18  day following final enactment.  The amount qualifying under this 
 36.19  subdivision to be spent outside the district is limited to an 
 36.20  amount necessary to meet a binding obligation of the other 
 36.21  district that cannot be paid by the other district because of 
 36.22  the reduction in class rates under this section.  Use of 
 36.23  increments under this authority must be approved, in writing, by 
 36.24  the commissioner of revenue. 
 36.25     Subd. 3.  [EXPIRATION.] This section expires on January 1, 
 36.26  2001. 
 36.27     Sec. 20.  [APPROPRIATION.] 
 36.28     (a) $450,000 is appropriated for fiscal year 1998 from the 
 36.29  general fund to the housing finance agency for purposes of 
 36.30  administering the certification of qualifying low-income 
 36.31  residential properties for property taxation under class 4d. 
 36.32     The cost ceiling for the Minnesota housing finance agency, 
 36.33  as otherwise provided by legislation enacted in 1997 without 
 36.34  regard to whether the legislation is enacted before or after 
 36.35  this act, is increased by $142,000 for fiscal year 1998 and by 
 36.36  $118,000 for fiscal year 1999. 
 37.1      (b) $15,300,000 is appropriated from the general fund to 
 37.2   the commissioner of children, families, and learning for fiscal 
 37.3   year 1999 for alternative facilities aid under section 3. 
 37.4      Sec. 21.  [REPEALER.] 
 37.5      (a) Minnesota Statutes, section 124.2134, is repealed. 
 37.6      (b) Minnesota Statutes, sections 273.1317; and 273.1318, 
 37.7   are repealed. 
 37.8      Sec. 22.  [EFFECTIVE DATES.] 
 37.9      Sections 1, 2, 5, 6, 7, 8, 9, 11, 12, 13, 14, 17, and 21, 
 37.10  paragraph (a), are effective for taxes levied in 1997, payable 
 37.11  in 1998 and subsequent years, except that the low-income housing 
 37.12  provisions in class 4c and 4d are effective for taxes payable in 
 37.13  1999 and thereafter and the provisions in sections 6 and 8 
 37.14  relating to class 1c and 4c seasonal residential property that 
 37.15  specify percentages of lodging receipts and bookings of at least 
 37.16  two consecutive nights are effective for taxes payable in 1999 
 37.17  and thereafter.  
 37.18     Sections 4, 15, and 21, paragraph (b), are effective for 
 37.19  taxes payable in 1999 and subsequent years. 
 37.20     Sections 3 and 20 are effective July 1, 1997. 
 37.21     Section 19 is effective for taxes payable in 1998, 1999, 
 37.22  and 2000. 
 37.23                             ARTICLE 2 
 37.24                            PROPERTY TAX 
 37.25     Section 1.  Minnesota Statutes 1996, section 69.021, 
 37.26  subdivision 7, is amended to read: 
 37.27     Subd. 7.  [APPORTIONMENT OF FIRE STATE AID TO 
 37.28  MUNICIPALITIES AND RELIEF ASSOCIATIONS.] (a) The commissioner 
 37.29  shall apportion the fire state aid relative to the premiums 
 37.30  reported on the Minnesota Firetown Premium Reports filed under 
 37.31  this chapter to each municipality and/or firefighters' relief 
 37.32  association.  
 37.33     (b) The commissioner shall calculate an initial fire state 
 37.34  aid allocation amount for each municipality or fire department 
 37.35  under paragraph (c) and a minimum fire state aid allocation 
 37.36  amount for each municipality or fire department under paragraph 
 38.1   (d).  The municipality or fire department must receive the 
 38.2   larger fire state aid amount. 
 38.3      (c) The initial fire state aid allocation amount is the 
 38.4   amount available for apportionment as fire state aid under 
 38.5   subdivision 5, without inclusion of any additional funding 
 38.6   amount to support a minimum fire state aid amount under section 
 38.7   423A.02, subdivision 3, allocated one-half in proportion to the 
 38.8   population as shown in the last official statewide federal 
 38.9   census for each fire town and one-half in proportion to the 
 38.10  market value of each fire town, including (1) the market value 
 38.11  of tax exempt property and (2) the market value of natural 
 38.12  resources lands receiving in lieu payments under sections 
 38.13  477A.11 to 477A.14, but excluding the market value of minerals.  
 38.14  In the case of incorporated or municipal fire departments 
 38.15  furnishing fire protection to other cities, towns, or townships 
 38.16  as evidenced by valid fire service contracts filed with the 
 38.17  commissioner, the distribution must be adjusted proportionately 
 38.18  to take into consideration the crossover fire protection 
 38.19  service.  Necessary adjustments shall be made to subsequent 
 38.20  apportionments.  In the case of municipalities or independent 
 38.21  fire departments qualifying for the aid, the commissioner shall 
 38.22  calculate the state aid for the municipality or relief 
 38.23  association on the basis of the population and the market value 
 38.24  of the area furnished fire protection service by the fire 
 38.25  department as evidenced by duly executed and valid fire service 
 38.26  agreements filed with the commissioner.  If one or more fire 
 38.27  departments are furnishing contracted fire service to a city, 
 38.28  town, or township, only the population and market value of the 
 38.29  area served by each fire department may be considered in 
 38.30  calculating the state aid and the fire departments furnishing 
 38.31  service shall enter into an agreement apportioning among 
 38.32  themselves the percent of the population and the market value of 
 38.33  each service area.  The agreement must be in writing and must be 
 38.34  filed with the commissioner. 
 38.35     (d) The minimum fire state aid allocation amount is the 
 38.36  amount in addition to the initial fire state allocation amount 
 39.1   that is derived from any additional funding amount to support a 
 39.2   minimum fire state aid amount under section 423A.02, subdivision 
 39.3   3, and allocated to municipalities with volunteer firefighter 
 39.4   relief associations based on the number of active volunteer 
 39.5   firefighters who are members of the relief association as 
 39.6   reported in the annual financial reporting for the calendar year 
 39.7   1993 to the office of the state auditor, but not to exceed 30 
 39.8   active volunteer firefighters, so that all municipalities or 
 39.9   fire departments with volunteer firefighter relief associations 
 39.10  receive in total at least a minimum fire state aid amount per 
 39.11  1993 active volunteer firefighter to a maximum of 30 
 39.12  firefighters. 
 39.13     (e) The fire state aid must be paid to the treasurer of the 
 39.14  municipality where the fire department is located and the 
 39.15  treasurer of the municipality shall, within 30 days of receipt 
 39.16  of the fire state aid, transmit the aid to the relief 
 39.17  association if the relief association has filed a financial 
 39.18  report with the treasurer of the municipality and has met all 
 39.19  other statutory provisions pertaining to the aid apportionment. 
 39.20     (f) The commissioner may make rules to permit the 
 39.21  administration of the provisions of this section.  Any 
 39.22  adjustments needed to correct prior misallocations must be made 
 39.23  to subsequent apportionments. 
 39.24     Sec. 2.  Minnesota Statutes 1996, section 103D.905, 
 39.25  subdivision 4, is amended to read: 
 39.26     Subd. 4.  [BOND FUND.] A bond fund consists of the proceeds 
 39.27  of special assessments, storm water charges, loan repayments, 
 39.28  and ad valorem tax levies pledged by the watershed district for 
 39.29  the payment of bonds or notes issued by the watershed district 
 39.30  secured by the property of the watershed district that is 
 39.31  producing or is likely to produce a regular income.  The bond 
 39.32  fund is to be used for the payment of the purchase price of the 
 39.33  property or the value of the property as determined by the court 
 39.34  in proper proceedings and for the improvement and development of 
 39.35  the property principal of, premium or administrative surcharge, 
 39.36  if any, and interest on the bonds and notes issued by the 
 40.1   watershed district and for payments required to be made to the 
 40.2   federal government under section 148(f) of the Internal Revenue 
 40.3   Code of 1986, as amended through December 31, 1996.  
 40.4      Sec. 3.  Minnesota Statutes 1996, section 103D.905, 
 40.5   subdivision 5, is amended to read: 
 40.6      Subd. 5.  [CONSTRUCTION OR IMPLEMENTATION FUND.] (a) A 
 40.7   construction or implementation fund consists of:  
 40.8      (1) the proceeds of watershed district bonds or notes or of 
 40.9   the sale of county bonds; 
 40.10     (2) construction or implementation loans from the pollution 
 40.11  control agency under sections 103F.701 to 103F.761, or from any 
 40.12  agency of the federal government; and 
 40.13     (3) special assessments, storm water charges, loan 
 40.14  repayments, and ad valorem tax levies levied or to be levied to 
 40.15  supply funds for the construction or implementation of the 
 40.16  projects of the watershed district, including reservoirs, 
 40.17  ditches, dikes, canals, channels, storm water facilities, sewage 
 40.18  treatment facilities, wells, and other works, and the expenses 
 40.19  incident to and connected with the construction or 
 40.20  implementation. 
 40.21     (b) Construction or implementation loans from the pollution 
 40.22  control agency under sections 103F.701 to 103F.761, or from an 
 40.23  agency of the federal government may be repaid from money 
 40.24  collected by the proceeds of watershed district bonds or notes 
 40.25  or from the collections of storm water charges, loan repayments, 
 40.26  ad valorem tax levies, or special assessments on properties 
 40.27  benefited by the project.  
 40.28     Sec. 4.  Minnesota Statutes 1996, section 103D.905, is 
 40.29  amended by adding a subdivision to read: 
 40.30     Subd. 9.  [PROJECT TAX LEVY.] In addition to other tax 
 40.31  levies provided in this section or in any other law, a watershed 
 40.32  district may levy a tax: 
 40.33     (1) to pay the costs of projects undertaken by the 
 40.34  watershed district which are to be funded, in whole or in part, 
 40.35  with the proceeds of grants or construction or implementation 
 40.36  loans under sections 103F.701 to 103F.761; 
 41.1      (2) to pay the principal of, or premium or administrative 
 41.2   surcharge, if any, and interest on, the bonds and notes issued 
 41.3   by the watershed district pursuant to section 103F.725; or 
 41.4      (3) to repay the construction or implementation loans under 
 41.5   sections 103F.701 to 103F.761. 
 41.6      Taxes levied with respect to payment of bonds and notes 
 41.7   shall comply with section 475.61. 
 41.8      Sec. 5.  Minnesota Statutes 1996, section 216B.16, is 
 41.9   amended by adding a subdivision to read: 
 41.10     Subd. 6d.  [WIND ENERGY; PROPERTY TAX.] An owner of a wind 
 41.11  energy conversion facility which is required to pay property 
 41.12  taxes under section 272.02, subdivision 1, paragraph (21), or a 
 41.13  public utility regulated by the public utilities commission 
 41.14  which purchases the wind generated electricity may petition the 
 41.15  commission to include in any power purchase agreement between 
 41.16  the owner of the facility and the public utility the amount of 
 41.17  property taxes paid by the owner of the facility.  The public 
 41.18  utilities commission shall require the public utility to amend 
 41.19  the power purchase agreement to include the property taxes paid 
 41.20  by the owner of the facility in the price paid by the utility 
 41.21  for wind generated electricity if the commission finds: 
 41.22     (a) the owner of the facility has paid the property taxes 
 41.23  required by this subdivision; 
 41.24     (b) the power purchase agreement between the public utility 
 41.25  and the owner does not already require the utility to pay the 
 41.26  amount of property taxes the owner has paid under this 
 41.27  subdivision; and 
 41.28     (c) the commission has approved a rate schedule containing 
 41.29  provisions for the automatic adjustment of charges for utility 
 41.30  service in direct relation to the charges ordered by the 
 41.31  commission under section 272.02, subdivision 1, paragraph (21). 
 41.32     Sec. 6.  Minnesota Statutes 1996, section 271.01, 
 41.33  subdivision 5, is amended to read: 
 41.34     Subd. 5.  [JURISDICTION.] The tax court shall have 
 41.35  statewide jurisdiction.  Except for an appeal to the supreme 
 41.36  court or any other appeal allowed under this subdivision, the 
 42.1   tax court shall be the sole, exclusive, and final authority for 
 42.2   the hearing and determination of all questions of law and fact 
 42.3   arising under the tax laws of the state, as defined in this 
 42.4   subdivision, in those cases that have been appealed to the tax 
 42.5   court and in any case that has been transferred by the district 
 42.6   court to the tax court.  The tax court shall have no 
 42.7   jurisdiction in any case that does not arise under the tax laws 
 42.8   of the state or in any criminal case or in any case determining 
 42.9   or granting title to real property or in any case that is under 
 42.10  the probate jurisdiction of the district court.  The small 
 42.11  claims division of the tax court shall have no jurisdiction in 
 42.12  any case dealing with property valuation or assessment for 
 42.13  property tax purposes until the taxpayer has appealed the 
 42.14  valuation or assessment to the county board of equalization, and 
 42.15  in those towns and cities which have not transferred their 
 42.16  duties to the county, the town or city board of equalization and 
 42.17  to the county board of equalization, except for those taxpayers 
 42.18  whose original assessments are determined by the commissioner of 
 42.19  revenue.  The tax court shall have no jurisdiction in any case 
 42.20  involving an order of the state board of equalization unless a 
 42.21  taxpayer contests the valuation of property.  Laws governing 
 42.22  taxes, aids, and related matters administered by the 
 42.23  commissioner of revenue, laws dealing with property valuation, 
 42.24  assessment or taxation of property for property tax purposes, 
 42.25  and any other laws that contain provisions authorizing review of 
 42.26  taxes, aids, and related matters by the tax court shall be 
 42.27  considered tax laws of this state subject to the jurisdiction of 
 42.28  the tax court.  This subdivision shall not be construed to 
 42.29  prevent an appeal, as provided by law, to an administrative 
 42.30  agency, board of equalization, review under section 274.13, 
 42.31  subdivision 1c, or to the commissioner of revenue.  Wherever 
 42.32  used in this chapter, the term commissioner shall mean the 
 42.33  commissioner of revenue, unless otherwise specified. 
 42.34     Sec. 7.  Minnesota Statutes 1996, section 272.02, 
 42.35  subdivision 1, is amended to read: 
 42.36     Subdivision 1.  All property described in this section to 
 43.1   the extent herein limited shall be exempt from taxation: 
 43.2      (1) All public burying grounds. 
 43.3      (2) All public schoolhouses. 
 43.4      (3) All public hospitals. 
 43.5      (4) All academies, colleges, and universities, and all 
 43.6   seminaries of learning. 
 43.7      (5) All churches, church property, and houses of worship. 
 43.8      (6) Institutions of purely public charity except parcels of 
 43.9   property containing structures and the structures described in 
 43.10  section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 
 43.11  and (3), or paragraph (d), other than those that qualify for 
 43.12  exemption under clause (25). 
 43.13     (7) All public property exclusively used for any public 
 43.14  purpose. 
 43.15     (8) Except for the taxable personal property enumerated 
 43.16  below, all personal property and the property described in 
 43.17  section 272.03, subdivision 1, paragraphs (c) and (d), shall be 
 43.18  exempt.  
 43.19     The following personal property shall be taxable:  
 43.20     (a) personal property which is part of an electric 
 43.21  generating, transmission, or distribution system or a pipeline 
 43.22  system transporting or distributing water, gas, crude oil, or 
 43.23  petroleum products or mains and pipes used in the distribution 
 43.24  of steam or hot or chilled water for heating or cooling 
 43.25  buildings and structures; 
 43.26     (b) railroad docks and wharves which are part of the 
 43.27  operating property of a railroad company as defined in section 
 43.28  270.80; 
 43.29     (c) personal property defined in section 272.03, 
 43.30  subdivision 2, clause (3); 
 43.31     (d) leasehold or other personal property interests which 
 43.32  are taxed pursuant to section 272.01, subdivision 2; 273.124, 
 43.33  subdivision 7; or 273.19, subdivision 1; or any other law 
 43.34  providing the property is taxable as if the lessee or user were 
 43.35  the fee owner; 
 43.36     (e) manufactured homes and sectional structures, including 
 44.1   storage sheds, decks, and similar removable improvements 
 44.2   constructed on the site of a manufactured home, sectional 
 44.3   structure, park trailer or travel trailer as provided in section 
 44.4   273.125, subdivision 8, paragraph (f); and 
 44.5      (f) flight property as defined in section 270.071.  
 44.6      (9) Personal property used primarily for the abatement and 
 44.7   control of air, water, or land pollution to the extent that it 
 44.8   is so used, and real property which is used primarily for 
 44.9   abatement and control of air, water, or land pollution as part 
 44.10  of an agricultural operation, as a part of a centralized 
 44.11  treatment and recovery facility operating under a permit issued 
 44.12  by the Minnesota pollution control agency pursuant to chapters 
 44.13  115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
 44.14  and 7045.0020 to 7045.1260, as a wastewater treatment facility 
 44.15  and for the treatment, recovery, and stabilization of metals, 
 44.16  oils, chemicals, water, sludges, or inorganic materials from 
 44.17  hazardous industrial wastes, or as part of an electric 
 44.18  generation system.  For purposes of this clause, personal 
 44.19  property includes ponderous machinery and equipment used in a 
 44.20  business or production activity that at common law is considered 
 44.21  real property. 
 44.22     Any taxpayer requesting exemption of all or a portion of 
 44.23  any real property or any equipment or device, or part thereof, 
 44.24  operated primarily for the control or abatement of air or water 
 44.25  pollution shall file an application with the commissioner of 
 44.26  revenue.  The equipment or device shall meet standards, rules, 
 44.27  or criteria prescribed by the Minnesota pollution control 
 44.28  agency, and must be installed or operated in accordance with a 
 44.29  permit or order issued by that agency.  The Minnesota pollution 
 44.30  control agency shall upon request of the commissioner furnish 
 44.31  information or advice to the commissioner.  On determining that 
 44.32  property qualifies for exemption, the commissioner shall issue 
 44.33  an order exempting the property from taxation.  The equipment or 
 44.34  device shall continue to be exempt from taxation as long as the 
 44.35  permit issued by the Minnesota pollution control agency remains 
 44.36  in effect. 
 45.1      (10) Wetlands.  For purposes of this subdivision, 
 45.2   "wetlands" means:  (i) land described in section 103G.005, 
 45.3   subdivision 15a; (ii) land which is mostly under water, produces 
 45.4   little if any income, and has no use except for wildlife or 
 45.5   water conservation purposes, provided it is preserved in its 
 45.6   natural condition and drainage of it would be legal, feasible, 
 45.7   and economically practical for the production of livestock, 
 45.8   dairy animals, poultry, fruit, vegetables, forage and grains, 
 45.9   except wild rice; or (iii) land in a wetland preservation area 
 45.10  under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
 45.11  and (ii) include adjacent land which is not suitable for 
 45.12  agricultural purposes due to the presence of the wetlands, but 
 45.13  do not include woody swamps containing shrubs or trees, wet 
 45.14  meadows, meandered water, streams, rivers, and floodplains or 
 45.15  river bottoms.  Exemption of wetlands from taxation pursuant to 
 45.16  this section shall not grant the public any additional or 
 45.17  greater right of access to the wetlands or diminish any right of 
 45.18  ownership to the wetlands. 
 45.19     (11) Native prairie.  The commissioner of the department of
 45.20  natural resources shall determine lands in the state which are 
 45.21  native prairie and shall notify the county assessor of each 
 45.22  county in which the lands are located.  Pasture land used for 
 45.23  livestock grazing purposes shall not be considered native 
 45.24  prairie for the purposes of this clause.  Upon receipt of an 
 45.25  application for the exemption provided in this clause for lands 
 45.26  for which the assessor has no determination from the 
 45.27  commissioner of natural resources, the assessor shall refer the 
 45.28  application to the commissioner of natural resources who shall 
 45.29  determine within 30 days whether the land is native prairie and 
 45.30  notify the county assessor of the decision.  Exemption of native 
 45.31  prairie pursuant to this clause shall not grant the public any 
 45.32  additional or greater right of access to the native prairie or 
 45.33  diminish any right of ownership to it. 
 45.34     (12) Property used in a continuous program to provide 
 45.35  emergency shelter for victims of domestic abuse, provided the 
 45.36  organization that owns and sponsors the shelter is exempt from 
 46.1   federal income taxation pursuant to section 501(c)(3) of the 
 46.2   Internal Revenue Code of 1986, as amended through December 31, 
 46.3   1992, notwithstanding the fact that the sponsoring organization 
 46.4   receives funding under section 8 of the United States Housing 
 46.5   Act of 1937, as amended. 
 46.6      (13) If approved by the governing body of the municipality 
 46.7   in which the property is located, property not exceeding one 
 46.8   acre which is owned and operated by any senior citizen group or 
 46.9   association of groups that in general limits membership to 
 46.10  persons age 55 or older and is organized and operated 
 46.11  exclusively for pleasure, recreation, and other nonprofit 
 46.12  purposes, no part of the net earnings of which inures to the 
 46.13  benefit of any private shareholders; provided the property is 
 46.14  used primarily as a clubhouse, meeting facility, or recreational 
 46.15  facility by the group or association and the property is not 
 46.16  used for residential purposes on either a temporary or permanent 
 46.17  basis. 
 46.18     (14) To the extent provided by section 295.44, real and 
 46.19  personal property used or to be used primarily for the 
 46.20  production of hydroelectric or hydromechanical power on a site 
 46.21  owned by the state or a local governmental unit which is 
 46.22  developed and operated pursuant to the provisions of section 
 46.23  103G.535. 
 46.24     (15) If approved by the governing body of the municipality 
 46.25  in which the property is located, and if construction is 
 46.26  commenced after June 30, 1983:  
 46.27     (a) a "direct satellite broadcasting facility" operated by 
 46.28  a corporation licensed by the federal communications commission 
 46.29  to provide direct satellite broadcasting services using direct 
 46.30  broadcast satellites operating in the 12-ghz. band; and 
 46.31     (b) a "fixed satellite regional or national program service 
 46.32  facility" operated by a corporation licensed by the federal 
 46.33  communications commission to provide fixed satellite-transmitted 
 46.34  regularly scheduled broadcasting services using satellites 
 46.35  operating in the 6-ghz. band. 
 46.36  An exemption provided by clause (15) shall apply for a period 
 47.1   not to exceed five years.  When the facility no longer qualifies 
 47.2   for exemption, it shall be placed on the assessment rolls as 
 47.3   provided in subdivision 4.  Before approving a tax exemption 
 47.4   pursuant to this paragraph, the governing body of the 
 47.5   municipality shall provide an opportunity to the members of the 
 47.6   county board of commissioners of the county in which the 
 47.7   facility is proposed to be located and the members of the school 
 47.8   board of the school district in which the facility is proposed 
 47.9   to be located to meet with the governing body.  The governing 
 47.10  body shall present to the members of those boards its estimate 
 47.11  of the fiscal impact of the proposed property tax exemption.  
 47.12  The tax exemption shall not be approved by the governing body 
 47.13  until the county board of commissioners has presented its 
 47.14  written comment on the proposal to the governing body or 30 days 
 47.15  have passed from the date of the transmittal by the governing 
 47.16  body to the board of the information on the fiscal impact, 
 47.17  whichever occurs first. 
 47.18     (16) Real and personal property owned and operated by a 
 47.19  private, nonprofit corporation exempt from federal income 
 47.20  taxation pursuant to United States Code, title 26, section 
 47.21  501(c)(3), primarily used in the generation and distribution of 
 47.22  hot water for heating buildings and structures.  
 47.23     (17) Notwithstanding section 273.19, state lands that are 
 47.24  leased from the department of natural resources under section 
 47.25  92.46. 
 47.26     (18) Electric power distribution lines and their 
 47.27  attachments and appurtenances, that are used primarily for 
 47.28  supplying electricity to farmers at retail.  
 47.29     (19) Transitional housing facilities.  "Transitional 
 47.30  housing facility" means a facility that meets the following 
 47.31  requirements.  (i) It provides temporary housing to individuals, 
 47.32  couples, or families.  (ii) It has the purpose of reuniting 
 47.33  families and enabling parents or individuals to obtain 
 47.34  self-sufficiency, advance their education, get job training, or 
 47.35  become employed in jobs that provide a living wage.  (iii) It 
 47.36  provides support services such as child care, work readiness 
 48.1   training, and career development counseling; and a 
 48.2   self-sufficiency program with periodic monitoring of each 
 48.3   resident's progress in completing the program's goals.  (iv) It 
 48.4   provides services to a resident of the facility for at least 
 48.5   three months but no longer than three years, except residents 
 48.6   enrolled in an educational or vocational institution or job 
 48.7   training program.  These residents may receive services during 
 48.8   the time they are enrolled but in no event longer than four 
 48.9   years.  (v) It is owned and operated or under lease from a unit 
 48.10  of government or governmental agency under a property 
 48.11  disposition program and operated by one or more organizations 
 48.12  exempt from federal income tax under section 501(c)(3) of the 
 48.13  Internal Revenue Code of 1986, as amended through December 31, 
 48.14  1992.  This exemption applies notwithstanding the fact that the 
 48.15  sponsoring organization receives financing by a direct federal 
 48.16  loan or federally insured loan or a loan made by the Minnesota 
 48.17  housing finance agency under the provisions of either Title II 
 48.18  of the National Housing Act or the Minnesota housing finance 
 48.19  agency law of 1971 or rules promulgated by the agency pursuant 
 48.20  to it, and notwithstanding the fact that the sponsoring 
 48.21  organization receives funding under Section 8 of the United 
 48.22  States Housing Act of 1937, as amended. 
 48.23     (20) Real and personal property, including leasehold or 
 48.24  other personal property interests, owned and operated by a 
 48.25  corporation if more than 50 percent of the total voting power of 
 48.26  the stock of the corporation is owned collectively by:  (i) the 
 48.27  board of regents of the University of Minnesota, (ii) the 
 48.28  University of Minnesota Foundation, an organization exempt from 
 48.29  federal income taxation under section 501(c)(3) of the Internal 
 48.30  Revenue Code of 1986, as amended through December 31, 1992, and 
 48.31  (iii) a corporation organized under chapter 317A, which by its 
 48.32  articles of incorporation is prohibited from providing pecuniary 
 48.33  gain to any person or entity other than the regents of the 
 48.34  University of Minnesota; which property is used primarily to 
 48.35  manage or provide goods, services, or facilities utilizing or 
 48.36  relating to large-scale advanced scientific computing resources 
 49.1   to the regents of the University of Minnesota and others. 
 49.2      (21)(a) Small scale wind energy conversion systems, as 
 49.3   defined in section 216C.06, subdivision 12, installed after 
 49.4   January 1, 1991, and before January 2, 1995, and used as an 
 49.5   electric power source, are exempt. 
 49.6      (b) "Small scale wind energy conversion systems" are wind 
 49.7   energy conversion systems, as defined in section 216C.06, 
 49.8   subdivision 12, installed after January 1, 1995, including the 
 49.9   foundation or support pad, which are (i) used as an electric 
 49.10  power source; (ii) located within one county and owned by the 
 49.11  same owner; and (iii) produce two megawatts or less of 
 49.12  electricity as measured by nameplate ratings, are exempt. 
 49.13     (c) (b) Medium scale wind energy conversion systems, as 
 49.14  defined in section 216C.06, subdivision 12, installed after 
 49.15  January 1, 1995 1991, and used as an electric power source but 
 49.16  not exempt under item (b), are treated as follows:  (i) the 
 49.17  foundation and support pad are taxable; (ii) the associated 
 49.18  supporting and protective structures are exempt for the first 
 49.19  five assessment years after they have been constructed, and 
 49.20  thereafter, 30 percent of the market value of the associated 
 49.21  supporting and protective structures are taxable; and (iii) the 
 49.22  turbines, blades, transformers, and its related equipment, are 
 49.23  exempt.  "Medium scale wind energy conversion systems" are wind 
 49.24  energy conversion systems as defined in section 216C.06, 
 49.25  subdivision 12, including the foundation or support pad, which 
 49.26  are:  (i) used as an electric power source; (ii) located within 
 49.27  one county and owned by the same owner; and (iii) produce more 
 49.28  than two but equal to or less than 12 megawatts of energy as 
 49.29  measured by nameplate ratings. 
 49.30     (c) Large scale wind energy conversion systems installed 
 49.31  after January 1, 1991, are treated as follows:  25 percent of 
 49.32  the market value of all property is taxable, including (i) the 
 49.33  foundation and support pad; (ii) the associated supporting and 
 49.34  protective structures; and (iii) the turbines, blades, 
 49.35  transformers, and its related equipment.  "Large scale wind 
 49.36  energy conversion systems" are wind energy conversion systems as 
 50.1   defined in section 216C.06, subdivision 12, including the 
 50.2   foundation or support pad, which are:  (i) used as an electric 
 50.3   power source; and (ii) produce more than 12 megawatts of energy 
 50.4   as measured by nameplate ratings. 
 50.5      (22) Containment tanks, cache basins, and that portion of 
 50.6   the structure needed for the containment facility used to 
 50.7   confine agricultural chemicals as defined in section 18D.01, 
 50.8   subdivision 3, as required by the commissioner of agriculture 
 50.9   under chapter 18B or 18C. 
 50.10     (23) Photovoltaic devices, as defined in section 216C.06, 
 50.11  subdivision 13, installed after January 1, 1992, and used to 
 50.12  produce or store electric power. 
 50.13     (24) Real and personal property owned and operated by a 
 50.14  private, nonprofit corporation exempt from federal income 
 50.15  taxation pursuant to United States Code, title 26, section 
 50.16  501(c)(3), primarily used for an ice arena or ice rink, and used 
 50.17  primarily for youth and high school programs. 
 50.18     (25) A structure that is situated on real property that is 
 50.19  used for: 
 50.20     (i) housing for the elderly or for low- and moderate-income 
 50.21  families as defined in Title II of the National Housing Act, as 
 50.22  amended through December 31, 1990, and funded by a direct 
 50.23  federal loan or federally insured loan made pursuant to Title II 
 50.24  of the act; or 
 50.25     (ii) housing lower income families or elderly or 
 50.26  handicapped persons, as defined in Section 8 of the United 
 50.27  States Housing Act of 1937, as amended. 
 50.28     In order for a structure to be exempt under (i) or (ii), it 
 50.29  must also meet each of the following criteria: 
 50.30     (A) is owned by an entity which is operated as a nonprofit 
 50.31  corporation organized under chapter 317A; 
 50.32     (B) is owned by an entity which has not entered into a 
 50.33  housing assistance payments contract under Section 8 of the 
 50.34  United States Housing Act of 1937, or, if the entity which owns 
 50.35  the structure has entered into a housing assistance payments 
 50.36  contract under Section 8 of the United States Housing Act of 
 51.1   1937, the contract provides assistance for less than 90 percent 
 51.2   of the dwelling units in the structure, excluding dwelling units 
 51.3   intended for management or maintenance personnel; 
 51.4      (C) operates an on-site congregate dining program in which 
 51.5   participation by residents is mandatory, and provides assisted 
 51.6   living or similar social and physical support services for 
 51.7   residents; and 
 51.8      (D) was not assessed and did not pay tax under chapter 273 
 51.9   prior to the 1991 levy, while meeting the other conditions of 
 51.10  this clause. 
 51.11     An exemption under this clause remains in effect for taxes 
 51.12  levied in each year or partial year of the term of its permanent 
 51.13  financing. 
 51.14     (26) Real and personal property that is located in the 
 51.15  Superior National Forest, and owned or leased and operated by a 
 51.16  nonprofit organization that is exempt from federal income 
 51.17  taxation under section 501(c)(3) of the Internal Revenue Code of 
 51.18  1986, as amended through December 31, 1992, and primarily used 
 51.19  to provide recreational opportunities for disabled veterans and 
 51.20  their families. 
 51.21     (27) Manure pits and appurtenances, which may include 
 51.22  slatted floors and pipes, installed or operated in accordance 
 51.23  with a permit, order, or certificate of compliance issued by the 
 51.24  Minnesota pollution control agency.  The exemption shall 
 51.25  continue for as long as the permit, order, or certificate issued 
 51.26  by the Minnesota pollution control agency remains in effect. 
 51.27     (28) Notwithstanding clause (8), item (a), attached 
 51.28  machinery and other personal property which is part of a 
 51.29  facility containing a cogeneration system as described in 
 51.30  section 216B.166, subdivision 2, paragraph (a), if the 
 51.31  cogeneration system has met the following criteria:  (i) the 
 51.32  system utilizes natural gas as a primary fuel and the 
 51.33  cogenerated steam initially replaces steam generated from 
 51.34  existing thermal boilers utilizing coal; (ii) the facility 
 51.35  developer is selected as a result of a procurement process 
 51.36  ordered by the public utilities commission; and (iii) 
 52.1   construction of the facility is commenced after July 1, 1994, 
 52.2   and before July 1, 1997. 
 52.3      (29) Real property acquired by a home rule charter city, 
 52.4   statutory city, county, town, or school district under a lease 
 52.5   purchase agreement or an installment purchase contract during 
 52.6   the term of the lease purchase agreement as long as and to the 
 52.7   extent that the property is used by the city, county, town, or 
 52.8   school district and devoted to a public use and to the extent it 
 52.9   is not subleased to any private individual, entity, association, 
 52.10  or corporation in connection with a business or enterprise 
 52.11  operated for profit. 
 52.12     Sec. 8.  Minnesota Statutes 1996, section 272.02, is 
 52.13  amended by adding a subdivision to read: 
 52.14     Subd. 9.  [PERSONAL PROPERTY; BIOMASS FACILITY.] (a) 
 52.15  Notwithstanding clause (8), item (a), of subdivision 1, attached 
 52.16  machinery and other personal property, excluding transmission 
 52.17  and distribution lines, that is part of a system that generates 
 52.18  biomass electric energy that satisfies the mandate, in whole or 
 52.19  in part, established in section 216B.2424, or a system that 
 52.20  generates electric energy using waste wood, is exempt if it 
 52.21  meets the requirements of this subdivision. 
 52.22     (b) The governing bodies of the county, city or town, and 
 52.23  school district must each approve, by resolution, the exemption 
 52.24  of the personal property under this subdivision.  Each of the 
 52.25  governing bodies shall file a copy of the resolution with the 
 52.26  county auditor.  The county auditor shall publish the 
 52.27  resolutions in newspapers of general circulation within the 
 52.28  county.  The voters of the county may request a referendum on 
 52.29  the proposed exemption by filing a petition within 30 days after 
 52.30  the resolutions are published.  The petition must be signed by 
 52.31  voters who reside in the county.  The number of signatures must 
 52.32  equal at least ten percent of the number of persons voting in 
 52.33  the county in the last general election.  If such a petition is 
 52.34  timely filed, the resolutions are not effective until they have 
 52.35  been submitted to the voters residing in the county at a general 
 52.36  or special election and a majority of votes cast on the question 
 53.1   of approving the resolution are in the affirmative.  The 
 53.2   commissioner of revenue shall prepare a suggested form of 
 53.3   question to be presented at the referendum. 
 53.4      (c) The exemption under this subdivision is limited to a 
 53.5   maximum of five years, beginning with the assessment year 
 53.6   immediately following the year during which the personal 
 53.7   property is put in operation.  
 53.8      Sec. 9.  Minnesota Statutes 1996, section 272.115, is 
 53.9   amended to read: 
 53.10     272.115 [CERTIFICATE OF VALUE; FILING.] 
 53.11     Subdivision 1.  [REQUIREMENT.] Except as otherwise provided 
 53.12  in subdivision 5, whenever any real estate is sold for a 
 53.13  consideration in excess of $1,000, whether by warranty deed, 
 53.14  quitclaim deed, contract for deed or any other method of sale, 
 53.15  the grantor, grantee or the legal agent of either shall file a 
 53.16  certificate of value with the county auditor in the county in 
 53.17  which the property is located when the deed or other document is 
 53.18  presented for recording.  Contract for deeds are subject to 
 53.19  recording under section 507.235, subdivision 1.  Value shall, in 
 53.20  the case of any deed not a gift, be the amount of the full 
 53.21  actual consideration thereof, paid or to be paid, including the 
 53.22  amount of any lien or liens assumed.  The items and value of 
 53.23  personal property transferred with the real property must be 
 53.24  listed and deducted from the sale price.  The certificate of 
 53.25  value shall include the classification to which the property 
 53.26  belongs for the purpose of determining the fair market value of 
 53.27  the property.  The certificate shall include financing terms and 
 53.28  conditions of the sale which are necessary to determine the 
 53.29  actual, present value of the sale price for purposes of the 
 53.30  sales ratio study.  The commissioner of revenue shall promulgate 
 53.31  administrative rules specifying the financing terms and 
 53.32  conditions which must be included on the certificate.  Pursuant 
 53.33  to the authority of the commissioner of revenue in section 
 53.34  270.066, the certificate of value must include the social 
 53.35  security number or the federal employer identification number of 
 53.36  the grantors and grantees.  The identification numbers of the 
 54.1   grantors and grantees are private data on individuals or 
 54.2   nonpublic data as defined in section 13.02, subdivisions 9 and 
 54.3   12, but, notwithstanding that section, the private or nonpublic 
 54.4   data may be disclosed to the commissioner of revenue for 
 54.5   purposes of tax administration. 
 54.6      Subd. 2.  [FORM; INFORMATION REQUIRED.] The certificate of 
 54.7   value shall require such facts and information as may be 
 54.8   determined by the commissioner to be reasonably necessary in the 
 54.9   administration of the state education aid formulas.  The form of 
 54.10  the certificate of value shall be prescribed by the department 
 54.11  of revenue which shall provide an adequate supply of forms to 
 54.12  each county auditor. 
 54.13     Subd. 3.  [COPIES TRANSMITTED; HOMESTEAD STATUS.] The 
 54.14  county auditor shall transmit two true copies of the certificate 
 54.15  of value to the assessor who shall insert the most recent market 
 54.16  value and when available, the year of original construction of 
 54.17  each parcel of property on both copies and shall transmit one 
 54.18  copy to the department of revenue.  Upon the request of a city 
 54.19  council located within the county, a copy of each certificate of 
 54.20  value for property located in that city shall be made available 
 54.21  to the governing body of the city.  The assessor shall remove 
 54.22  the homestead classification for the following assessment year 
 54.23  from a property which is sold or transferred, unless the grantee 
 54.24  or the person to whom the property is transferred completes a 
 54.25  homestead application under section 273.124, subdivision 13, and 
 54.26  qualifies for homestead status. 
 54.27     Subd. 4.  [ELIGIBILITY FOR HOMESTEAD STATUS.] No real 
 54.28  estate sold or transferred on or after January 1, 1993, under 
 54.29  subdivision 1 shall be classified as a homestead, unless (1) a 
 54.30  certificate of value has been filed with the county auditor in 
 54.31  accordance with this section, or (2) the real estate was 
 54.32  conveyed by the federal government, the state, a political 
 54.33  subdivision of the state, or combination of them to a person 
 54.34  otherwise eligible to receive homestead classification of the 
 54.35  property. 
 54.36     This subdivision shall apply to any real estate taxes that 
 55.1   are payable the year or years following the sale or transfer of 
 55.2   the property. 
 55.3      Subd. 5.  [EXEMPTION FOR GOVERNMENT BODIES.] A certificate 
 55.4   of real estate value is not required when the real estate is 
 55.5   being conveyed to or by a public authority or agency of the 
 55.6   federal government, the state of Minnesota, a political 
 55.7   subdivision of the state, or any combination of them, provided 
 55.8   that the authority, agency, or governmental unit has agreed to 
 55.9   file a list of the real estate conveyed by or to the authority, 
 55.10  agency, or governmental unit with the commissioner of revenue by 
 55.11  June 1 of the year following the year of the conveyance. 
 55.12     Sec. 10.  Minnesota Statutes 1996, section 273.11, 
 55.13  subdivision 1a, is amended to read: 
 55.14     Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
 55.15  property classified as agricultural homestead or nonhomestead, 
 55.16  residential homestead or nonhomestead, or noncommercial seasonal 
 55.17  recreational residential, the assessor shall compare the value 
 55.18  with that determined in the preceding assessment.  The amount of 
 55.19  the increase entered in the current assessment shall not exceed 
 55.20  the greater of (1) ten percent of the value in the preceding 
 55.21  assessment, or (2) one-third one-fourth of the difference 
 55.22  between the current assessment and the preceding assessment.  
 55.23  This limitation shall not apply to increases in value due to 
 55.24  improvements.  For purposes of this subdivision, the term 
 55.25  "assessment" means the value prior to any exclusion under 
 55.26  subdivision 16. 
 55.27     The provisions of this subdivision shall be in effect only 
 55.28  for assessment years 1993 through 1997 2001. 
 55.29     For purposes of the assessment/sales ratio study conducted 
 55.30  under section 124.2131, and the computation of state aids paid 
 55.31  under chapters 124, 124A, and 477A, market values and net tax 
 55.32  capacities determined under this subdivision and subdivision 16, 
 55.33  shall be used. 
 55.34     Sec. 11.  Minnesota Statutes 1996, section 273.11, 
 55.35  subdivision 16, is amended to read: 
 55.36     Subd. 16.  [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.] 
 56.1   Improvements to homestead property made before January 2, 2003, 
 56.2   shall be fully or partially excluded from the value of the 
 56.3   property for assessment purposes provided that (1) the house is 
 56.4   at least 35 years old at the time of the improvement and (2) 
 56.5   either 
 56.6      (a) the assessor's estimated market value of the house on 
 56.7   January 2 of the current year is equal to or less than $150,000, 
 56.8   or 
 56.9      (b) if the estimated market value of the house is over 
 56.10  $150,000 market value but is less than $300,000 on January 2 of 
 56.11  the current year, the property qualifies if 
 56.12     (i) it is located in a city or town in which 50 percent or 
 56.13  more of the owner-occupied housing units were constructed before 
 56.14  1960 based upon the 1990 federal census, and 
 56.15     (ii) the city or town's median family income based upon the 
 56.16  1990 federal census is less than the statewide median family 
 56.17  income based upon the 1990 federal census, or 
 56.18     (c) if the estimated market value of the house is $300,000 
 56.19  or more on January 2 of the current year, the property qualifies 
 56.20  if 
 56.21     (i) it is located in a city or town in which 45 percent or 
 56.22  more of the homes were constructed before 1940 based upon the 
 56.23  1990 federal census, and 
 56.24     (ii) it is located in a city or town in which 45 percent or 
 56.25  more of the housing units were rental based upon the 1990 
 56.26  federal census, and 
 56.27     (iii) the city or town's median value of owner-occupied 
 56.28  housing units based upon the 1990 federal census is less than 
 56.29  the statewide median value of owner-occupied housing units based 
 56.30  upon the 1990 federal census. 
 56.31     For purposes of determining this eligibility, "house" means 
 56.32  land and buildings.  
 56.33     The age of a residence is the number of years that the 
 56.34  residence has existed at its present site since the original 
 56.35  year of its construction.  In the case of a residence that is 
 56.36  relocated, the relocation must be from a location within the 
 57.1   state and the only improvements eligible for exclusion under 
 57.2   this subdivision are (1) those for which building permits were 
 57.3   issued to the homeowner after the residence was relocated to its 
 57.4   present site, and (2) those undertaken during or after the year 
 57.5   the residence is initially occupied by the homeowner, excluding 
 57.6   any market value increase relating to basic improvements that 
 57.7   are necessary to install the residence on its foundation and 
 57.8   connect it to utilities at its present site.  In the case of an 
 57.9   owner-occupied duplex or triplex, the improvement is eligible 
 57.10  regardless of which portion of the property was improved. 
 57.11     If the property lies in a jurisdiction which is subject to 
 57.12  a building permit process, a building permit must have been 
 57.13  issued prior to commencement of the improvement.  Any 
 57.14  improvement must add at least $1,000 to the value of the 
 57.15  property to be eligible for exclusion under this subdivision.  
 57.16  Only improvements to the structure which is the residence of the 
 57.17  qualifying homesteader or construction of or improvements to no 
 57.18  more than one two-car garage per residence qualify for the 
 57.19  provisions of this subdivision.  If an improvement was begun 
 57.20  between January 2, 1992, and January 2, 1993, any value added 
 57.21  from that improvement for the January 1994 and subsequent 
 57.22  assessments shall qualify for exclusion under this subdivision 
 57.23  provided that a building permit was obtained for the improvement 
 57.24  between January 2, 1992, and January 2, 1993.  Whenever a 
 57.25  building permit is issued for property currently classified as 
 57.26  homestead, the issuing jurisdiction shall notify the property 
 57.27  owner of the possibility of valuation exclusion under this 
 57.28  subdivision.  The assessor shall require an application, 
 57.29  including documentation of the age of the house from the owner, 
 57.30  if unknown by the assessor.  The application may be filed 
 57.31  subsequent to the date of the building permit provided that the 
 57.32  application must be filed within three years of the date the 
 57.33  building permit was issued for the improvement.  If the property 
 57.34  lies in a jurisdiction which is not subject to a building permit 
 57.35  process, the application must be filed within three years of the 
 57.36  date the improvement was made.  The assessor may require proof 
 58.1   from the taxpayer of the date the improvement was made.  
 58.2   Applications must be received prior to July 1 of any year in 
 58.3   order to be effective for taxes payable in the following year. 
 58.4      No exclusion may be granted for an improvement by a local 
 58.5   board of review or county board of equalization and no abatement 
 58.6   of the taxes for qualifying improvements may be granted by the 
 58.7   county board unless (1) a building permit was issued prior to 
 58.8   the commencement of the improvement if the jurisdiction requires 
 58.9   a building permit, and (2) an application was completed. 
 58.10     The assessor shall note the qualifying value of each 
 58.11  improvement on the property's record, and the sum of those 
 58.12  amounts shall be subtracted from the value of the property in 
 58.13  each year for ten years after the improvement has been made, at 
 58.14  which time an amount equal to 20 percent of the qualifying value 
 58.15  shall be added back in each of the five subsequent assessment 
 58.16  years.  If an application is filed after the first assessment 
 58.17  date at which an improvement could have been subject to the 
 58.18  valuation exclusion under this subdivision, the ten-year period 
 58.19  during which the value is subject to exclusion is reduced by the 
 58.20  number of years that have elapsed since the property would have 
 58.21  qualified initially.  The valuation exclusion shall terminate 
 58.22  whenever (1) the property is sold, or (2) the property is 
 58.23  reclassified to a class which does not qualify for treatment 
 58.24  under this subdivision.  Improvements made by an occupant who is 
 58.25  the purchaser of the property under a conditional purchase 
 58.26  contract do not qualify under this subdivision unless the seller 
 58.27  of the property is a governmental entity.  The qualifying value 
 58.28  of the property shall be computed based upon the increase from 
 58.29  that structure's market value as of January 2 preceding the 
 58.30  acquisition of the property by the governmental entity. 
 58.31     The total qualifying value for a homestead may not exceed 
 58.32  $50,000.  The total qualifying value for a homestead with a 
 58.33  house that is less than 70 years old may not exceed $25,000.  
 58.34  The term "qualifying value" means the increase in estimated 
 58.35  market value resulting from the improvement if the improvement 
 58.36  occurs when the house is at least 70 years old, or one-half of 
 59.1   the increase in estimated market value resulting from the 
 59.2   improvement otherwise.  The $25,000 and $50,000 maximum 
 59.3   qualifying value under this subdivision may result from up to 
 59.4   three separate improvements to the homestead.  The application 
 59.5   shall state, in clear language, that if more than three 
 59.6   improvements are made to the qualifying property, a taxpayer may 
 59.7   choose which three improvements are eligible, provided that 
 59.8   after the taxpayer has made the choice and any valuation 
 59.9   attributable to those improvements has been excluded from 
 59.10  taxation, no further changes can be made by the taxpayer. 
 59.11     If 50 percent or more of the square footage of a structure 
 59.12  is voluntarily razed or removed, the valuation increase 
 59.13  attributable to any subsequent improvements to the remaining 
 59.14  structure does not qualify for the exclusion under this 
 59.15  subdivision.  If a structure is unintentionally or accidentally 
 59.16  destroyed by a natural disaster, the property is eligible for an 
 59.17  exclusion under this subdivision provided that the structure was 
 59.18  not completely destroyed.  The qualifying value on property 
 59.19  destroyed by a natural disaster shall be computed based upon the 
 59.20  increase from that structure's market value as determined on 
 59.21  January 2 of the year in which the disaster occurred.  A 
 59.22  property receiving benefits under the homestead disaster 
 59.23  provisions under section 273.123 is not disqualified from 
 59.24  receiving an exclusion under this subdivision.  If any 
 59.25  combination of improvements made to a structure after January 1, 
 59.26  1993, increases the size of the structure by 100 percent or 
 59.27  more, the valuation increase attributable to the portion of the 
 59.28  improvement that causes the structure's size to exceed 100 
 59.29  percent does not qualify for exclusion under this subdivision. 
 59.30     Sec. 12.  Minnesota Statutes 1996, section 273.111, 
 59.31  subdivision 3, is amended to read: 
 59.32     Subd. 3.  (a) Real estate consisting of ten acres or more 
 59.33  or a nursery or greenhouse, and qualifying for classification as 
 59.34  class 1b, 2a, or 2b under section 273.13, subdivision 23, 
 59.35  paragraph (d), shall be entitled to valuation and tax deferment 
 59.36  under this section only if it is actively and exclusively 
 60.1   primarily devoted to agricultural use as defined, and meets the 
 60.2   qualifications in subdivision 6, and either:  
 60.3      (1) is the homestead of the owner, or of a surviving 
 60.4   spouse, child, or sibling of the owner or is real estate which 
 60.5   is farmed with the real estate which contains the homestead 
 60.6   property; or 
 60.7      (2) has been in possession of the applicant, the 
 60.8   applicant's spouse, parent, or sibling, or any combination 
 60.9   thereof, for a period of at least seven years prior to 
 60.10  application for benefits under the provisions of this section, 
 60.11  or is real estate which is farmed with the real estate which 
 60.12  qualifies under this clause and is within two townships or 
 60.13  cities or combination thereof from the qualifying real estate; 
 60.14  or 
 60.15     (3) is the homestead of a shareholder in a family farm 
 60.16  corporation as defined in section 500.24, notwithstanding the 
 60.17  fact that legal title to the real estate may be held in the name 
 60.18  of the family farm corporation; or 
 60.19     (4) is in the possession of a nursery or greenhouse or an 
 60.20  entity owned by a proprietor, partnership, or corporation which 
 60.21  also owns the nursery or greenhouse operations on the parcel or 
 60.22  parcels. 
 60.23     (b) Valuation of real estate under this section is limited 
 60.24  to parcels the ownership of which is in noncorporate entities 
 60.25  except for:  
 60.26     (1) family farm corporations organized pursuant to section 
 60.27  500.24; and 
 60.28     (2) corporations that derive 80 percent or more of their 
 60.29  gross receipts from the wholesale or retail sale of 
 60.30  horticultural or nursery stock.  
 60.31     Corporate entities who previously qualified for tax 
 60.32  deferment pursuant to this section and who continue to otherwise 
 60.33  qualify under subdivisions 3 and 6 for a period of at least 
 60.34  three years following the effective date of Laws 1983, chapter 
 60.35  222, section 8, will not be required to make payment of the 
 60.36  previously deferred taxes, notwithstanding the provisions of 
 61.1   subdivision 9.  Special assessments are payable at the end of 
 61.2   the three-year period or at time of sale, whichever comes first. 
 61.3      (c) Land that previously qualified for tax deferment 
 61.4   pursuant to under this section and no longer qualifies because 
 61.5   it is not classified as primarily used for agricultural land 
 61.6   purposes but would otherwise qualify under subdivisions 3 and 6 
 61.7   for a period of at least three years will not be required to 
 61.8   make payment of the previously deferred taxes, notwithstanding 
 61.9   the provisions of subdivision 9.  Sale of the land prior to the 
 61.10  expiration of the three-year period requires payment of deferred 
 61.11  taxes as follows:  sale in the year the land no longer qualifies 
 61.12  requires payment of the current year's deferred taxes plus 
 61.13  payment of deferred taxes for the two prior years; sale during 
 61.14  the second year the land no longer qualifies requires payment of 
 61.15  the current year's deferred taxes plus payment of the deferred 
 61.16  taxes for the prior year; and sale during the third year the 
 61.17  land no longer qualifies requires payment of the current year's 
 61.18  deferred taxes.  Deferred taxes shall be paid even if the land 
 61.19  qualifies pursuant to subdivision 11a.  When such property is 
 61.20  sold or no longer qualifies under this paragraph, or at the end 
 61.21  of the three-year period, whichever comes first, all deferred 
 61.22  special assessments plus interest are payable in equal 
 61.23  installments spread over the time remaining until the last 
 61.24  maturity date of the bonds issued to finance the improvement for 
 61.25  which the assessments were levied.  If the bonds have matured, 
 61.26  the deferred special assessments plus interest are payable 
 61.27  within 90 days.  The provisions of section 429.061, subdivision 
 61.28  2, apply to the collection of these installments.  Penalties are 
 61.29  not imposed on any such special assessments if timely paid. 
 61.30     Sec. 13.  Minnesota Statutes 1996, section 273.111, 
 61.31  subdivision 6, is amended to read: 
 61.32     Subd. 6.  Real property qualifying under subdivision 3 
 61.33  shall be considered to be in agricultural use provided that 
 61.34  annually: 
 61.35     (1) at least 33-1/3 percent of the total family income of 
 61.36  the owner is derived therefrom, or the total production income 
 62.1   including rental from the property is $300 plus $10 per tillable 
 62.2   acre; and 
 62.3      (2) it is devoted to the production for sale of 
 62.4   agricultural products as defined in section 273.13, subdivision 
 62.5   23, paragraph (e). 
 62.6      Slough, wasteland, and woodland contiguous to or surrounded 
 62.7   by land that is entitled to valuation and tax deferment under 
 62.8   this section is considered to be in agricultural use if under 
 62.9   the same ownership and management. 
 62.10     Sec. 14.  Minnesota Statutes 1996, section 273.112, 
 62.11  subdivision 2, is amended to read: 
 62.12     Subd. 2.  The present general system of ad valorem property 
 62.13  taxation in the state of Minnesota does not provide an equitable 
 62.14  basis for the taxation of certain private outdoor recreational, 
 62.15  social, open space and park land property and has resulted in 
 62.16  excessive taxes on some of these lands.  Therefore, it is hereby 
 62.17  declared that the public policy of this state would be best 
 62.18  served by equalizing tax burdens upon private outdoor, 
 62.19  recreational, social, open space and park land within this state 
 62.20  through appropriate taxing measures to encourage private 
 62.21  development of these lands which would otherwise not occur or 
 62.22  have to be provided by governmental authority.  
 62.23     Sec. 15.  Minnesota Statutes 1996, section 273.112, 
 62.24  subdivision 3, is amended to read: 
 62.25     Subd. 3.  Real estate shall be entitled to valuation and 
 62.26  tax deferment under this section only if it is: 
 62.27     (a) actively and exclusively devoted to golf, skiing, lawn 
 62.28  bowling, croquet, or archery or firearms range recreational use 
 62.29  or uses and other recreational or social uses carried on at the 
 62.30  establishment; 
 62.31     (b) five acres in size or more, except in the case of a 
 62.32  lawn bowling or croquet green or an archery or firearms range or 
 62.33  an establishment actively and exclusively devoted to indoor 
 62.34  fitness, health, social, recreational, and related uses in which 
 62.35  the establishment is owned and operated by a not-for-profit 
 62.36  corporation; 
 63.1      (c)(1) operated by private individuals or, in the case of a 
 63.2   lawn bowling or croquet green, by private individuals or 
 63.3   corporations, and open to the public; or 
 63.4      (2) operated by firms or corporations for the benefit of 
 63.5   employees or guests; or 
 63.6      (3) operated by private clubs having a membership of 50 or 
 63.7   more or open to the public, provided that the club does not 
 63.8   discriminate in membership requirements or selection on the 
 63.9   basis of sex or marital status; and 
 63.10     (d) made available, in the case of real estate devoted to 
 63.11  golf, for use without discrimination on the basis of sex during 
 63.12  the time when the facility is open to use by the public or by 
 63.13  members, except that use for golf may be restricted on the basis 
 63.14  of sex no more frequently than one, or part of one, weekend each 
 63.15  calendar month for each sex and no more than two, or part of 
 63.16  two, weekdays each week for each sex.  
 63.17     If a golf club membership allows use of golf course 
 63.18  facilities by more than one adult per membership, the use must 
 63.19  be equally available to all adults entitled to use of the golf 
 63.20  course under the membership, except that use may be restricted 
 63.21  on the basis of sex as permitted in this section.  Memberships 
 63.22  that permit play during restricted times may be allowed only if 
 63.23  the restricted times apply to all adults using the membership.  
 63.24  A golf club may not offer a membership or golfing privileges to 
 63.25  a spouse of a member that provides greater or less access to the 
 63.26  golf course than is provided to that person's spouse under the 
 63.27  same or a separate membership in that club, except that the 
 63.28  terms of a membership may provide that one spouse may have no 
 63.29  right to use the golf course at any time while the other spouse 
 63.30  may have either limited or unlimited access to the golf course.  
 63.31     A golf club may have or create an individual membership 
 63.32  category which entitles a member for a reduced rate to play 
 63.33  during restricted hours as established by the club.  The club 
 63.34  must have on record a written request by the member for such 
 63.35  membership.  
 63.36     A golf club that has food or beverage facilities or 
 64.1   services must allow equal access to those facilities and 
 64.2   services for both men and women members in all membership 
 64.3   categories at all times.  Nothing in this paragraph shall be 
 64.4   construed to require service or access to facilities to persons 
 64.5   under the age of 21 years or require any act that would violate 
 64.6   law or ordinance regarding sale, consumption, or regulation of 
 64.7   alcoholic beverages. 
 64.8      For purposes of this subdivision and subdivision 7a, 
 64.9   discrimination means a pattern or course of conduct and not 
 64.10  linked to an isolated incident. 
 64.11     Sec. 16.  Minnesota Statutes 1996, section 273.112, 
 64.12  subdivision 4, is amended to read: 
 64.13     Subd. 4.  The value of any real estate described in 
 64.14  subdivision 3 shall upon timely application by the owner, in the 
 64.15  manner provided in subdivision 6, be determined solely with 
 64.16  reference to its appropriate private outdoor, 
 64.17  recreational, social, open space and park land classification 
 64.18  and value notwithstanding sections 272.03, subdivision 8, and 
 64.19  273.11.  In determining such value for ad valorem tax purposes 
 64.20  the assessor shall not consider the value such real estate would 
 64.21  have if it were converted to commercial, industrial, residential 
 64.22  or seasonal residential use. 
 64.23     Sec. 17.  Minnesota Statutes 1996, section 273.121, is 
 64.24  amended to read: 
 64.25     273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
 64.26     Any county assessor or city assessor having the powers of a 
 64.27  county assessor, valuing or classifying taxable real property 
 64.28  shall in each year notify those persons whose property is to be 
 64.29  assessed or reclassified that year if the person's address is 
 64.30  known to the assessor, otherwise the occupant of the property.  
 64.31  The notice shall be in writing and shall be sent by ordinary 
 64.32  mail at least ten days before the meeting of the local board of 
 64.33  review or equalization under section 274.01 or the review 
 64.34  process established under section 274.13, subdivision 1c.  It 
 64.35  shall contain:  (1) the market value, (2) the limited market 
 64.36  value under section 273.11, subdivision 1a, (3) the qualifying 
 65.1   amount of any improvements under section 273.11, subdivision 16, 
 65.2   (4) the market value subject to taxation after subtracting the 
 65.3   amount of any qualifying improvements, (5) the new 
 65.4   classification, (6) a note that if the property is homestead and 
 65.5   at least 35 years old, improvements made to the property may be 
 65.6   eligible for a valuation exclusion under section 273.11, 
 65.7   subdivision 16, (7) the assessor's office address, and (8) the 
 65.8   dates, places, and times set for the meetings of the local board 
 65.9   of review or equalization, the review process established under 
 65.10  section 274.13, subdivision 1c, and the county board of 
 65.11  equalization.  If the assessment roll is not complete, the 
 65.12  notice shall be sent by ordinary mail at least ten days prior to 
 65.13  the date on which the board of review has adjourned.  The 
 65.14  assessor shall attach to the assessment roll a statement that 
 65.15  the notices required by this section have been mailed.  Any 
 65.16  assessor who is not provided sufficient funds from the 
 65.17  assessor's governing body to provide such notices, may make 
 65.18  application to the commissioner of revenue to finance such 
 65.19  notices.  The commissioner of revenue shall conduct an 
 65.20  investigation and, if satisfied that the assessor does not have 
 65.21  the necessary funds, issue a certification to the commissioner 
 65.22  of finance of the amount necessary to provide such notices.  The 
 65.23  commissioner of finance shall issue a warrant for such amount 
 65.24  and shall deduct such amount from any state payment to such 
 65.25  county or municipality.  The necessary funds to make such 
 65.26  payments are hereby appropriated.  Failure to receive the notice 
 65.27  shall in no way affect the validity of the assessment, the 
 65.28  resulting tax, the procedures of any board of review or 
 65.29  equalization, or the enforcement of delinquent taxes by 
 65.30  statutory means. 
 65.31     Sec. 18.  Minnesota Statutes 1996, section 273.124, 
 65.32  subdivision 1, is amended to read: 
 65.33     Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
 65.34  that is occupied and used for the purposes of a homestead by its 
 65.35  owner, who must be a Minnesota resident, is a residential 
 65.36  homestead.  
 66.1      Agricultural land, as defined in section 273.13, 
 66.2   subdivision 23, that is occupied and used as a homestead by its 
 66.3   owner, who must be a Minnesota resident, is an agricultural 
 66.4   homestead. 
 66.5      Dates for establishment of a homestead and homestead 
 66.6   treatment provided to particular types of property are as 
 66.7   provided in this section.  
 66.8      Property of a trustee, beneficiary, or grantor of a trust 
 66.9   is not disqualified from receiving homestead benefits if the 
 66.10  homestead requirements under this chapter are satisfied. 
 66.11     The assessor shall require proof, as provided in 
 66.12  subdivision 13, of the facts upon which classification as a 
 66.13  homestead may be determined.  Notwithstanding any other law, the 
 66.14  assessor may at any time require a homestead application to be 
 66.15  filed in order to verify that any property classified as a 
 66.16  homestead continues to be eligible for homestead status.  
 66.17  Notwithstanding any other law to the contrary, the department of 
 66.18  revenue may, upon request from an assessor, verify whether an 
 66.19  individual who is requesting or receiving homestead 
 66.20  classification has filed a Minnesota income tax return as a 
 66.21  resident for the most recent taxable year for which the 
 66.22  information is available. 
 66.23     When there is a name change or a transfer of homestead 
 66.24  property, the assessor may reclassify the property in the next 
 66.25  assessment unless a homestead application is filed to verify 
 66.26  that the property continues to qualify for homestead 
 66.27  classification. 
 66.28     (b) For purposes of this section, homestead property shall 
 66.29  include property which is used for purposes of the homestead but 
 66.30  is separated from the homestead by a road, street, lot, 
 66.31  waterway, or other similar intervening property.  The term "used 
 66.32  for purposes of the homestead" shall include but not be limited 
 66.33  to uses for gardens, garages, or other outbuildings commonly 
 66.34  associated with a homestead, but shall not include vacant land 
 66.35  held primarily for future development.  In order to receive 
 66.36  homestead treatment for the noncontiguous property, the owner 
 67.1   shall apply for it to the assessor by July 1 of the year when 
 67.2   the treatment is initially sought.  After initial qualification 
 67.3   for the homestead treatment, additional applications for 
 67.4   subsequent years are not required. 
 67.5      (c) Residential real estate that is occupied and used for 
 67.6   purposes of a homestead by a relative of the owner is a 
 67.7   homestead but only to the extent of the homestead treatment that 
 67.8   would be provided if the related owner occupied the property.  
 67.9   For purposes of this paragraph and paragraph (f) (g), "relative" 
 67.10  means a parent, stepparent, child, stepchild, grandparent, 
 67.11  grandchild, brother, sister, uncle, or aunt.  This relationship 
 67.12  may be by blood or marriage.  Property that has been classified 
 67.13  as seasonal recreational residential property at any time during 
 67.14  which it has been owned by the current owner or spouse of the 
 67.15  current owner will not be reclassified as a homestead unless it 
 67.16  is occupied as a homestead by the owner; this prohibition also 
 67.17  applies to property that, in the absence of this paragraph, 
 67.18  would have been classified as seasonal recreational residential 
 67.19  property at the time when the residence was constructed.  
 67.20  Neither the related occupant nor the owner of the property may 
 67.21  claim a property tax refund under chapter 290A for a homestead 
 67.22  occupied by a relative.  In the case of a residence located on 
 67.23  agricultural land, only the house, garage, and immediately 
 67.24  surrounding one acre of land shall be classified as a homestead 
 67.25  under this paragraph, except as provided in paragraph (d). 
 67.26     (d) Agricultural property that is occupied and used for 
 67.27  purposes of a homestead by a relative of the owner, is a 
 67.28  homestead, only to the extent of the homestead treatment that 
 67.29  would be provided if the related owner occupied the property, 
 67.30  and only if all of the following criteria are met: 
 67.31     (1) the relative who is occupying the agricultural property 
 67.32  is a son, daughter, father, or mother of the owner of the 
 67.33  agricultural property or a son or daughter of the spouse of the 
 67.34  owner of the agricultural property, 
 67.35     (2) the owner of the agricultural property must be a 
 67.36  Minnesota resident, 
 68.1      (3) the owner of the agricultural property must not receive 
 68.2   homestead treatment on any other agricultural property in 
 68.3   Minnesota, and 
 68.4      (4) the owner of the agricultural property is limited to 
 68.5   only one agricultural homestead per family under this paragraph. 
 68.6      Neither the related occupant nor the owner of the property 
 68.7   may claim a property tax refund under chapter 290A for a 
 68.8   homestead occupied by a relative qualifying under this 
 68.9   paragraph.  For purposes of this paragraph, "agricultural 
 68.10  property" means the house, garage, other farm buildings and 
 68.11  structures, and agricultural land. 
 68.12     Application must be made to the assessor by the owner of 
 68.13  the agricultural property to receive homestead benefits under 
 68.14  this paragraph.  The assessor may require the necessary proof 
 68.15  that the requirements under this paragraph have been met. 
 68.16     (e) In the case of property owned by a property owner who 
 68.17  is married, the assessor must not deny homestead treatment in 
 68.18  whole or in part if only one of the spouses occupies the 
 68.19  property and the other spouse is absent due to:  (1) marriage 
 68.20  dissolution proceedings, (2) legal separation, (3) employment or 
 68.21  self-employment in another location, or (4) residence in a 
 68.22  nursing home or boarding care facility, or (5) other personal 
 68.23  circumstances causing the spouses to live separately, not 
 68.24  including an intent to obtain two homestead classifications for 
 68.25  property tax purposes.  To qualify under clause (3), the 
 68.26  spouse's place of employment or self-employment must be at least 
 68.27  50 miles distant from the other spouse's place of employment, 
 68.28  and the homesteads must be at least 50 miles distant from each 
 68.29  other.  Homestead treatment, in whole or in part, shall not be 
 68.30  denied to the owner's spouse who previously occupied the 
 68.31  residence with the owner if the absence of the owner is due to 
 68.32  one of the exceptions provided in this paragraph. 
 68.33     (f) The assessor must not deny homestead treatment in whole 
 68.34  or in part if: 
 68.35     (1) in the case of a property owner who is not married, the 
 68.36  owner is absent due to residence in a nursing home or boarding 
 69.1   care facility and the property is not otherwise occupied; or 
 69.2      (2) in the case of a property owner who is married, the 
 69.3   owner or the owner's spouse or both are absent due to residence 
 69.4   in a nursing home or boarding care facility and the property is 
 69.5   not occupied or is occupied only by the owner's spouse. 
 69.6      (g) If an individual is purchasing property with the intent 
 69.7   of claiming it as a homestead and is required by the terms of 
 69.8   the financing agreement to have a relative shown on the deed as 
 69.9   a coowner, the assessor shall allow a full homestead 
 69.10  classification.  This provision only applies to first-time 
 69.11  purchasers, whether married or single, or to a person who had 
 69.12  previously been married and is purchasing as a single individual 
 69.13  for the first time.  The application for homestead benefits must 
 69.14  be on a form prescribed by the commissioner and must contain the 
 69.15  data necessary for the assessor to determine if full homestead 
 69.16  benefits are warranted. 
 69.17     Sec. 19.  Minnesota Statutes 1996, section 273.124, is 
 69.18  amended by adding a subdivision to read: 
 69.19     Subd. 19.  [LEASE-PURCHASE PROGRAM.] Qualifying buildings 
 69.20  and appurtenances, together with the land on which they are 
 69.21  located, are classified as homesteads, if the following 
 69.22  qualifications are met: 
 69.23     (1) the property is leased for up to a five-year period by 
 69.24  the occupant under a lease-purchase program administered by the 
 69.25  Minnesota housing finance agency or a housing and redevelopment 
 69.26  authority under sections 469.001 to 469.047; 
 69.27     (2) the occupant's income is no greater than 80 percent of 
 69.28  the county or area median income, adjusted for family size; 
 69.29     (3) the building consists of one or two dwelling units; 
 69.30     (4) the lease agreement provides that part of the lease 
 69.31  payment is escrowed as a nonrefundable down payment on the 
 69.32  housing; 
 69.33     (5) the administering agency verifies the occupant's income 
 69.34  eligibility and certifies to the county assessor that the 
 69.35  occupant meets the income standards; and 
 69.36     (6) the property owner applies to the county assessor by 
 70.1   May 30 of each year. 
 70.2      For purposes of this subdivision, "qualifying buildings and 
 70.3   appurtenances" means a one- or two-unit residential building 
 70.4   which was unoccupied, abandoned, and boarded for at least six 
 70.5   months.  
 70.6      Sec. 20.  Minnesota Statutes 1996, section 273.13, 
 70.7   subdivision 23, is amended to read: 
 70.8      Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 70.9   land including any improvements that is homesteaded.  The market 
 70.10  value of the house and garage and immediately surrounding one 
 70.11  acre of land has the same class rates as class 1a property under 
 70.12  subdivision 22.  The value of the remaining land including 
 70.13  improvements up to $115,000 has a net class rate of .45 0.4 
 70.14  percent of market value and a gross class rate of 1.75 percent 
 70.15  of market value.  The remaining value of class 2a property over 
 70.16  $115,000 of market value that does not exceed 320 acres has a 
 70.17  net class rate of one 0.9 percent of market value, and a gross 
 70.18  class rate of 2.25 percent of market value.  The remaining 
 70.19  property over the $115,000 market value in excess of 320 acres 
 70.20  has a class rate of 1.5 1.4 percent of market value, and a gross 
 70.21  class rate of 2.25 percent of market value.  
 70.22     (b) Class 2b property is (1) real estate, rural in 
 70.23  character and used exclusively for growing trees for timber, 
 70.24  lumber, and wood and wood products; (2) real estate that is not 
 70.25  improved with a structure and is used exclusively for growing 
 70.26  trees for timber, lumber, and wood and wood products, if the 
 70.27  owner has participated or is participating in a cost-sharing 
 70.28  program for afforestation, reforestation, or timber stand 
 70.29  improvement on that particular property, administered or 
 70.30  coordinated by the commissioner of natural resources; (3) real 
 70.31  estate that is nonhomestead agricultural land; or (4) a landing 
 70.32  area or public access area of a privately owned public use 
 70.33  airport.  Class 2b property has a net class rate of 1.5 1.4 
 70.34  percent of market value, and a gross class rate of 2.25 percent 
 70.35  of market value.  
 70.36     (c) Agricultural land as used in this section means 
 71.1   contiguous acreage of ten acres or more, primarily used during 
 71.2   the preceding year for agricultural purposes.  Agricultural use 
 71.3   may include "Agricultural purposes" as used in this section 
 71.4   means the raising or cultivation of agricultural products or 
 71.5   enrollment in the Reinvest in Minnesota program under sections 
 71.6   103F.501 to 103F.535 or the federal Conservation Reserve Program 
 71.7   as contained in Public Law Number 99-198.  Contiguous acreage on 
 71.8   the same parcel, or contiguous acreage on an immediately 
 71.9   adjacent parcel under the same ownership, may also qualify as 
 71.10  agricultural land, but only if it is pasture, timber, waste, 
 71.11  unusable wild land, and or land included in state or federal 
 71.12  farm or conservation programs.  "Agricultural purposes" as used 
 71.13  in this section means the raising or cultivation of agricultural 
 71.14  products.  Land enrolled in the Reinvest in Minnesota program 
 71.15  under sections 103F.505 to 103F.531 or the federal Conservation 
 71.16  Reserve Program as contained in Public Law Number 99-198, and 
 71.17  consisting of a minimum of ten contiguous acres, shall be 
 71.18  classified as agricultural.  Agricultural classification for 
 71.19  property shall be determined with respect to the use of the 
 71.20  whole parcel, excluding the house, garage, and immediately 
 71.21  surrounding one acre of land, and shall not be based upon the 
 71.22  market value of any residential structures on the parcel or 
 71.23  contiguous parcels under the same ownership. 
 71.24     (d) Real estate, excluding the house, garage, and 
 71.25  immediately surrounding one acre of land, of less than ten acres 
 71.26  which is exclusively and intensively used principally for 
 71.27  raising or cultivating agricultural products, shall be 
 71.28  considered as agricultural land, if it is not used primarily for 
 71.29  residential purposes. 
 71.30     Land shall be classified as agricultural even if all or a 
 71.31  portion of the agricultural use of that property is the leasing 
 71.32  to, or use by another person for agricultural purposes. 
 71.33     Classification under this subdivision is not determinative 
 71.34  for qualifying under section 273.111. 
 71.35     The property classification under this section supersedes, 
 71.36  for property tax purposes only, any locally administered 
 72.1   agricultural policies or land use restrictions that define 
 72.2   minimum or maximum farm acreage. 
 72.3      (e) The term "agricultural products" as used in this 
 72.4   subdivision includes production for sale of:  
 72.5      (1) livestock, dairy animals, dairy products, poultry and 
 72.6   poultry products, fur-bearing animals, horticultural and nursery 
 72.7   stock described in sections 18.44 to 18.61, fruit of all kinds, 
 72.8   vegetables, forage, grains, bees, and apiary products by the 
 72.9   owner; 
 72.10     (2) fish bred for sale and consumption if the fish breeding 
 72.11  occurs on land zoned for agricultural use; 
 72.12     (3) the commercial boarding of horses if the boarding is 
 72.13  done in conjunction with raising or cultivating agricultural 
 72.14  products as defined in clause (1); 
 72.15     (4) property which is owned and operated by nonprofit 
 72.16  organizations used for equestrian activities, excluding racing; 
 72.17  and 
 72.18     (5) game birds and waterfowl bred and raised for use on a 
 72.19  shooting preserve licensed under section 97A.115.  
 72.20     (f) If a parcel used for agricultural purposes is also used 
 72.21  for commercial or industrial purposes, including but not limited 
 72.22  to:  
 72.23     (1) wholesale and retail sales; 
 72.24     (2) processing of raw agricultural products or other goods; 
 72.25     (3) warehousing or storage of processed goods; and 
 72.26     (4) office facilities for the support of the activities 
 72.27  enumerated in clauses (1), (2), and (3), 
 72.28  the assessor shall classify the part of the parcel used for 
 72.29  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 72.30  appropriate, and the remainder in the class appropriate to its 
 72.31  use.  The grading, sorting, and packaging of raw agricultural 
 72.32  products for first sale is considered an agricultural purpose.  
 72.33  A greenhouse or other building where horticultural or nursery 
 72.34  products are grown that is also used for the conduct of retail 
 72.35  sales must be classified as agricultural if it is primarily used 
 72.36  for the growing of horticultural or nursery products from seed, 
 73.1   cuttings, or roots and occasionally as a showroom for the retail 
 73.2   sale of those products.  Use of a greenhouse or building only 
 73.3   for the display of already grown horticultural or nursery 
 73.4   products does not qualify as an agricultural purpose.  
 73.5      The assessor shall determine and list separately on the 
 73.6   records the market value of the homestead dwelling and the one 
 73.7   acre of land on which that dwelling is located.  If any farm 
 73.8   buildings or structures are located on this homesteaded acre of 
 73.9   land, their market value shall not be included in this separate 
 73.10  determination.  
 73.11     (g) To qualify for classification under paragraph (b), 
 73.12  clause (4), a privately owned public use airport must be 
 73.13  licensed as a public airport under section 360.018.  For 
 73.14  purposes of paragraph (b), clause (4), "landing area" means that 
 73.15  part of a privately owned public use airport properly cleared, 
 73.16  regularly maintained, and made available to the public for use 
 73.17  by aircraft and includes runways, taxiways, aprons, and sites 
 73.18  upon which are situated landing or navigational aids.  A landing 
 73.19  area also includes land underlying both the primary surface and 
 73.20  the approach surfaces that comply with all of the following:  
 73.21     (i) the land is properly cleared and regularly maintained 
 73.22  for the primary purposes of the landing, taking off, and taxiing 
 73.23  of aircraft; but that portion of the land that contains 
 73.24  facilities for servicing, repair, or maintenance of aircraft is 
 73.25  not included as a landing area; 
 73.26     (ii) the land is part of the airport property; and 
 73.27     (iii) the land is not used for commercial or residential 
 73.28  purposes. 
 73.29  The land contained in a landing area under paragraph (b), clause 
 73.30  (4), must be described and certified by the commissioner of 
 73.31  transportation.  The certification is effective until it is 
 73.32  modified, or until the airport or landing area no longer meets 
 73.33  the requirements of paragraph (b), clause (4).  For purposes of 
 73.34  paragraph (b), clause (4), "public access area" means property 
 73.35  used as an aircraft parking ramp, apron, or storage hangar, or 
 73.36  an arrival and departure building in connection with the airport.
 74.1      Sec. 21.  Minnesota Statutes 1996, section 273.13, is 
 74.2   amended by adding a subdivision to read: 
 74.3      Subd. 25a.  [ELDERLY ASSISTED LIVING FACILITY 
 74.4   PROPERTY.] "Elderly assisted living facility property" means 
 74.5   residential real estate containing more than one unit held for 
 74.6   use by the tenants or lessees as a residence for periods of 30 
 74.7   days or more, along with community rooms, lounges, activity 
 74.8   rooms, and related facilities, designed to meet the housing, 
 74.9   health, and financial security needs of the elderly.  The real 
 74.10  estate may be owned by an individual, partnership, limited 
 74.11  partnership, for-profit corporation or nonprofit corporation 
 74.12  exempt from federal income taxation under United States Code, 
 74.13  title 26, section 501(c)(3) or related sections.  
 74.14     An admission or initiation fee may be required of tenants.  
 74.15  Monthly charges may include charges for the residential unit, 
 74.16  meals, housekeeping, utilities, social programs, a health care 
 74.17  alert system, or any combination of them.  On-site health care 
 74.18  may be provided by in-house staff or an outside health care 
 74.19  provider. 
 74.20     The assessor shall classify elderly assisted living 
 74.21  facility property, depending upon the property's ownership, 
 74.22  occupancy, and use.  The applicable class rates shall apply 
 74.23  based on its classification, if taxable. 
 74.24     Sec. 22.  Minnesota Statutes 1996, section 273.18, is 
 74.25  amended to read: 
 74.26     273.18 [LISTING, VALUATION, AND ASSESSMENT OF EXEMPT 
 74.27  PROPERTY BY COUNTY AUDITORS.] 
 74.28     (a) In every sixth year after the year 1926, the county 
 74.29  auditor shall enter, in a separate place in the real estate 
 74.30  assessment books, the description of each tract of real property 
 74.31  exempt by law from taxation, with the name of the owner, if 
 74.32  known, and the assessor shall value and assess the same in the 
 74.33  same manner that other real property is valued and assessed, and 
 74.34  shall designate in each case the purpose for which the property 
 74.35  is used.  
 74.36     (b) For purposes of the apportionment of fire state aid 
 75.1   under section 69.021, subdivision 7, the county auditor shall 
 75.2   include on the abstract of assessment of exempt real property 
 75.3   filed under this section, the total number of acres of all 
 75.4   natural resources lands for which in lieu payments are made 
 75.5   under sections 477A.11 to 477A.14.  The assessor shall estimate 
 75.6   its market value, provided that if the assessor is not able to 
 75.7   estimate the market value of the land on a per parcel basis, the 
 75.8   assessor shall furnish the commissioner of revenue with an 
 75.9   estimate of the average value per acre of this land within the 
 75.10  county. 
 75.11     Sec. 23.  Minnesota Statutes 1996, section 274.01, is 
 75.12  amended to read: 
 75.13     274.01 [BOARD OF REVIEW.] 
 75.14     Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
 75.15  GRIEVANCES.] (a) The town board of a town, or the council or 
 75.16  other governing body of a city, is the board of review 
 75.17  except (1) in cities whose charters provide for a board of 
 75.18  equalization or (2) in any city or town that has transferred its 
 75.19  local board of review power and duties to the county board as 
 75.20  provided in subdivision 3.  The county assessor shall fix a day 
 75.21  and time when the board or the board of equalization shall meet 
 75.22  in the assessment districts of the county.  On or before 
 75.23  February 15 of each year the assessor shall give written notice 
 75.24  of the time to the city or town clerk.  Notwithstanding the 
 75.25  provisions of any charter to the contrary, the meetings must be 
 75.26  held between April 1 and May 31 each year.  The clerk shall give 
 75.27  published and posted notice of the meeting at least ten days 
 75.28  before the date of the meeting.  
 75.29     If in any county, at least 25 percent of the total net tax 
 75.30  capacity of a city or town is noncommercial seasonal residential 
 75.31  recreational property classified under section 273.13, 
 75.32  subdivision 25, the county must hold two countywide 
 75.33  informational meetings on Saturdays.  The meetings will allow 
 75.34  noncommercial seasonal residential recreational taxpayers to 
 75.35  discuss their property valuation with the appropriate assessment 
 75.36  staff.  These Saturday informational meetings must be scheduled 
 76.1   to allow the owner of the noncommercial seasonal residential 
 76.2   recreational property the opportunity to attend one of the 
 76.3   meetings prior to the scheduled board of review for their city 
 76.4   or town.  The Saturday meeting dates must be contained on the 
 76.5   notice of valuation of real property under section 273.121.  
 76.6      The board shall meet at the office of the clerk to review 
 76.7   the assessment and classification of property in the town or 
 76.8   city.  No changes in valuation or classification which are 
 76.9   intended to correct errors in judgment by the county assessor 
 76.10  may be made by the county assessor after the board of review or 
 76.11  the county board of equalization has adjourned in those cities 
 76.12  or towns that hold a local board of review; however, corrections 
 76.13  of errors that are merely clerical in nature or changes that 
 76.14  extend homestead treatment to property are permitted after 
 76.15  adjournment until the tax extension date for that assessment 
 76.16  year.  The changes must be fully documented and maintained in 
 76.17  the assessor's office and must be available for review by any 
 76.18  person.  A copy of the changes made during this period in those 
 76.19  cities or towns that hold a local board of review must be sent 
 76.20  to the county board no later than December 31 of the assessment 
 76.21  year.  
 76.22     (b) The board shall determine whether the taxable property 
 76.23  in the town or city has been properly placed on the list and 
 76.24  properly valued by the assessor.  If real or personal property 
 76.25  has been omitted, the board shall place it on the list with its 
 76.26  market value, and correct the assessment so that each tract or 
 76.27  lot of real property, and each article, parcel, or class of 
 76.28  personal property, is entered on the assessment list at its 
 76.29  market value.  No assessment of the property of any person may 
 76.30  be raised unless the person has been duly notified of the intent 
 76.31  of the board to do so.  On application of any person feeling 
 76.32  aggrieved, the board shall review the assessment or 
 76.33  classification, or both, and correct it as appears just.  
 76.34     (c) A local board of review may reduce assessments upon 
 76.35  petition of the taxpayer but the total reductions must not 
 76.36  reduce the aggregate assessment made by the county assessor by 
 77.1   more than one percent.  If the total reductions would lower the 
 77.2   aggregate assessments made by the county assessor by more than 
 77.3   one percent, none of the adjustments may be made.  The assessor 
 77.4   shall correct any clerical errors or double assessments 
 77.5   discovered by the board of review without regard to the one 
 77.6   percent limitation.  
 77.7      (d) A majority of the members may act at the meeting, and 
 77.8   adjourn from day to day until they finish hearing the cases 
 77.9   presented.  The assessor shall attend, with the assessment books 
 77.10  and papers, and take part in the proceedings, but must not 
 77.11  vote.  The county assessor, or an assistant delegated by the 
 77.12  county assessor shall attend the meetings.  The board shall list 
 77.13  separately, on a form appended to the assessment book, all 
 77.14  omitted property added to the list by the board and all items of 
 77.15  property increased or decreased, with the market value of each 
 77.16  item of property, added or changed by the board, placed opposite 
 77.17  the item.  The county assessor shall enter all changes made by 
 77.18  the board in the assessment book.  
 77.19     (e) Except as provided in subdivision 3, if a person fails 
 77.20  to appear in person, by counsel, or by written communication 
 77.21  before the board after being duly notified of the board's intent 
 77.22  to raise the assessment of the property, or if a person feeling 
 77.23  aggrieved by an assessment or classification fails to apply for 
 77.24  a review of the assessment or classification, the person may not 
 77.25  appear before the county board of equalization for a review of 
 77.26  the assessment or classification.  This paragraph does not apply 
 77.27  if an assessment was made after the board meeting, as provided 
 77.28  in section 273.01, or if the person can establish not having 
 77.29  received notice of market value at least five days before the 
 77.30  local board of review meeting.  
 77.31     (f) The board of review or the board of equalization must 
 77.32  complete its work and adjourn within 20 days from the time of 
 77.33  convening stated in the notice of the clerk, unless a longer 
 77.34  period is approved by the commissioner of revenue.  No action 
 77.35  taken after that date is valid.  All complaints about an 
 77.36  assessment or classification made after the meeting of the board 
 78.1   must be heard and determined by the county board of 
 78.2   equalization.  A nonresident may, at any time, before the 
 78.3   meeting of the board of review file written objections to an 
 78.4   assessment or classification with the county assessor.  The 
 78.5   objections must be presented to the board of review at its 
 78.6   meeting by the county assessor for its consideration. 
 78.7      Subd. 2.  [SPECIAL BOARD; DUTIES DELEGATED.] The governing 
 78.8   body of a city, including a city whose charter provides for a 
 78.9   board of equalization, may appoint a special board of review.  
 78.10  The city may delegate to the special board of review all of the 
 78.11  powers and duties in subdivision 1.  The special board of review 
 78.12  shall serve at the direction and discretion of the appointing 
 78.13  body, subject to the restrictions imposed by law.  The 
 78.14  appointing body shall determine the number of members of the 
 78.15  board, the compensation and expenses to be paid, and the term of 
 78.16  office of each member.  At least one member of the special board 
 78.17  of review must be an appraiser, realtor, or other person 
 78.18  familiar with property valuations in the assessment district. 
 78.19     Subd. 3.  [LOCAL BOARD DUTIES TRANSFERRED TO COUNTY.] The 
 78.20  town board of any town or the governing body of any home rule 
 78.21  charter or statutory city may transfer its powers and duties 
 78.22  under subdivision 1 to the county board, and no longer perform 
 78.23  the function of a local board.  Before the town board or the 
 78.24  governing body of a city transfers the powers and duties to the 
 78.25  county board, the town board or city's governing body shall give 
 78.26  public notice of the meeting at which the proposal for transfer 
 78.27  is to be considered.  The public notice shall follow the 
 78.28  procedure contained in section 471.705, subdivision 1c, 
 78.29  paragraph (b).  A transfer of duties as permitted under this 
 78.30  subdivision must be communicated to the county assessor, in 
 78.31  writing, before December 1 of any year to be effective for the 
 78.32  following year's assessment.  This transfer of duties to the 
 78.33  county may either be permanent or for a specified number of 
 78.34  years, provided that the transfer cannot be for less than three 
 78.35  years.  Its length must be stated in writing.  A town or city 
 78.36  may renew its option to transfer.  The option to transfer duties 
 79.1   under this subdivision is only available to a town or city whose 
 79.2   assessment is done by the county. 
 79.3      Sec. 24.  Minnesota Statutes 1996, section 274.13, is 
 79.4   amended by adding a subdivision to read: 
 79.5      Subd. 1b.  [ASSESSMENT CHANGES.] No changes in valuation or 
 79.6   classification that are intended to correct errors in judgment 
 79.7   by the county assessor may be made by the county assessor after 
 79.8   the county board of equalization has adjourned; however, 
 79.9   corrections of errors that are merely clerical in nature or 
 79.10  changes that extend homestead treatment to property are 
 79.11  permitted after adjournment until the tax extension date for 
 79.12  that assessment year.  The changes must be fully documented and 
 79.13  maintained in the assessor's office and must be available for 
 79.14  review by any person. 
 79.15     Sec. 25.  Minnesota Statutes 1996, section 274.13, is 
 79.16  amended by adding a subdivision to read: 
 79.17     Subd. 1c.  [ALTERNATIVE REVIEW OPTION.] The county shall 
 79.18  notify taxpayers whose town or city elected to transfer its 
 79.19  powers and duties under section 274.01 to the county.  Prior to 
 79.20  the time of the county board of equalization, the county shall 
 79.21  make available to those taxpayers a procedure for a review of 
 79.22  its assessments, including, but not limited to, open book 
 79.23  meetings.  This alternative review process shall take place in 
 79.24  April and May.  
 79.25     Sec. 26.  Minnesota Statutes 1996, section 281.13, is 
 79.26  amended to read: 
 79.27     281.13 [NOTICE OF EXPIRATION OF REDEMPTION.] 
 79.28     Every person holding a tax certificate after expiration of 
 79.29  three years, or the redemption period specified in section 
 79.30  281.17 if shorter, after the date of the tax sale under which 
 79.31  the same was issued, may present such certificate to the county 
 79.32  auditor; and thereupon the auditor shall prepare, under the 
 79.33  auditor's hand and official seal, a notice, directed to the 
 79.34  person or persons in whose name such lands are assessed, 
 79.35  specifying the description thereof, the amount for which the 
 79.36  same was sold, the amount required to redeem the same, exclusive 
 80.1   of the costs to accrue upon such notice, and the time when the 
 80.2   redemption period will expire.  If, at the time when any tax 
 80.3   certificate is so presented, such lands are assessed in the name 
 80.4   of the holder of the certificate, such notice shall be directed 
 80.5   also to the person or persons in whose name title in fee of such 
 80.6   land appears of record in the office of the county recorder.  
 80.7   The auditor shall deliver such notice to the party applying 
 80.8   therefor, who shall deliver it to the sheriff of the proper 
 80.9   county or any other person not less than 18 years of age for 
 80.10  service.  Within 20 days after receiving it, the sheriff or 
 80.11  other person serving the notice shall serve such notice upon the 
 80.12  persons to whom it is directed, if to be found in the sheriff's 
 80.13  county, in the manner prescribed for serving a summons in a 
 80.14  civil action; if not so found, then upon the person in 
 80.15  possession of the land, and make return thereof to the auditor.  
 80.16  In the case of land held in joint tenancy the notice shall be 
 80.17  served upon each joint tenant.  If one or more of the persons to 
 80.18  whom the notice is directed cannot be found in the county, and 
 80.19  there is no one in possession of the land, of each of which 
 80.20  facts the return of the sheriff or other person serving the 
 80.21  notice so specifying shall be prima facie evidence, service 
 80.22  shall be made upon those persons that can be found and service 
 80.23  shall also be made by two weeks' published notice, proof of 
 80.24  which publication shall be filed with the auditor. 
 80.25     When the records in the office of the county recorder show 
 80.26  that any lot or tract of land is encumbered by an unsatisfied 
 80.27  mortgage or other lien, and show the post office address of the 
 80.28  mortgagee or lienee, or if the same has been assigned, the post 
 80.29  office address of the assignee, the person holding such tax 
 80.30  certificate shall serve a copy of such notice upon such 
 80.31  mortgagee, lienee, or assignee by certified mail addressed to 
 80.32  such mortgagee, lienee, or assignee at the post office address 
 80.33  of the mortgagee, lienee, or assignee as disclosed by the 
 80.34  records in the office of the county recorder, at least 60 days 
 80.35  prior to the time when the redemption period will expire. 
 80.36     The notice herein provided for shall be sufficient if 
 81.1   substantially in the following form: 
 81.2                 "NOTICE OF EXPIRATION OF REDEMPTION 
 81.3      Office of the County Auditor 
 81.4      County of ......................., State of Minnesota. 
 81.5      To .............................. 
 81.6      You are hereby notified that the following described piece 
 81.7   or parcel of land, situated in the county of 
 81.8   ......................., and State of Minnesota, and known and 
 81.9   described as follows:  ......... 
 81.10  ............................................................ 
 81.11  .........., is now assessed in your name; that on the 
 81.12  ........................ day of May, ....................., at 
 81.13  the sale of land pursuant to the real estate tax judgment, duly 
 81.14  given and made in and by the district court in and for said 
 81.15  county of ......................................, on the 
 81.16  ................................. day of March, .............., 
 81.17  in proceedings to enforce the payment of taxes delinquent upon 
 81.18  real estate for the year .............. for said county of 
 81.19  ........... ......................., the above described piece 
 81.20  or parcel of land was sold for the sum of $............., and 
 81.21  the amount required to redeem such piece or parcel of land from 
 81.22  such sale, exclusive of the cost to accrue upon this notice, is 
 81.23  the sum of $............, and interest at the rate of 
 81.24  ............... percent per annum from said 
 81.25  ............................. day of ......................, 
 81.26  ..................., to the day such redemption is made, and 
 81.27  that the tax certificate has been presented to me by the holder 
 81.28  thereof, and the time for redemption of such piece or parcel of 
 81.29  land from such sale will expire 60 days after the service of 
 81.30  this notice and proof thereof has been filed in my office. 
 81.31     Witness my hand and official seal this 
 81.32  ............................  day of ................, 
 81.33  ................. 
 81.34     ................. 
 81.35     (OFFICIAL SEAL) 
 81.36     County Auditor of 
 82.1      ...................... County, Minnesota." 
 82.2      Sec. 27.  Minnesota Statutes 1996, section 281.23, is 
 82.3   amended by adding a subdivision to read: 
 82.4      Subd. 5a.  [DEFINITION.] In this section, "occupied parcel" 
 82.5   means a parcel containing a structure subject to property 
 82.6   taxation. 
 82.7      Sec. 28.  Minnesota Statutes 1996, section 281.23, 
 82.8   subdivision 6, is amended to read: 
 82.9      Subd. 6.  [SERVICE BY SHERIFF OF NOTICE.] (a) Forthwith 
 82.10  after the commencement of such publication or mailing the county 
 82.11  auditor shall deliver to the sheriff of the county or any other 
 82.12  person not less than 18 years of age a sufficient number of 
 82.13  copies of such notice of expiration of redemption for service 
 82.14  upon the persons in possession of all parcels of such land as 
 82.15  are actually occupied and documentation if the certified mail 
 82.16  notice was returned as undeliverable or the notice was not 
 82.17  mailed to the address associated with the property.  Within 30 
 82.18  days after receipt thereof, the sheriff or other person serving 
 82.19  the notice shall make such investigation as may be necessary to 
 82.20  ascertain whether or not the parcels covered by such notice are 
 82.21  actually occupied or not parcels, and shall serve a copy of such 
 82.22  notice of expiration of redemption upon the person in possession 
 82.23  of each parcel found to be so an occupied parcel, in the manner 
 82.24  prescribed for serving summons in a civil action.  The 
 82.25  sheriff or other person serving the notice shall make prompt 
 82.26  return to the auditor as to all notices so served and as to all 
 82.27  parcels found vacant and unoccupied.  Such return shall be made 
 82.28  upon a copy of such notice and shall be prima facie evidence of 
 82.29  the facts therein stated. 
 82.30     Unless compensation for such services is otherwise provided 
 82.31  by law, If the notice is served by the sheriff, the sheriff 
 82.32  shall receive from the county, in addition to other compensation 
 82.33  prescribed by law, such fees and mileage for service on persons 
 82.34  in possession as are prescribed by law for such service in other 
 82.35  cases, and shall also receive such compensation for making 
 82.36  investigation and return as to vacant and unoccupied lands as 
 83.1   the county board may fix, subject to appeal to the district 
 83.2   court as in case of other claims against the county.  As to 
 83.3   either service upon persons in possession or return as to vacant 
 83.4   lands, the sheriff shall charge mileage only for one trip if the 
 83.5   occupants of more than two tracts are served simultaneously, and 
 83.6   in such case mileage shall be prorated and charged equitably 
 83.7   against all such owners. 
 83.8      (b) The secretary of state shall receive sheriff's service 
 83.9   for all out-of-state interests. 
 83.10     Sec. 29.  Minnesota Statutes 1996, section 281.273, is 
 83.11  amended to read: 
 83.12     281.273 [EXPIRATION OF TIME OF REDEMPTION ON LANDS OWNED BY 
 83.13  PERSONS IN MILITARY SERVICE.] 
 83.14     When a county sheriff or other person serves notice of 
 83.15  expiration of the time for redemption of any parcel of real 
 83.16  property from delinquent taxes upon any occupant of the real 
 83.17  property, the sheriff or other person shall inquire of the 
 83.18  occupant and otherwise as the sheriff or other person may deem 
 83.19  proper whether the real property was owned and occupied for 
 83.20  dwelling, professional, business or agricultural purposes by a 
 83.21  person in the military service of the United States as defined 
 83.22  in the Soldiers' and Sailors' Civil Relief Act of 1940, as 
 83.23  amended, or the person's dependents at the commencement of the 
 83.24  period of military service.  On finding that the real property 
 83.25  is so owned, the sheriff or other person shall make a 
 83.26  certificate to the county auditor, setting forth the description 
 83.27  of the property, the name of the owner, the particulars of the 
 83.28  owner's military service so far as ascertained or claimed, and 
 83.29  the names and addresses of the persons of whom the sheriff or 
 83.30  other person made inquiry.  The certificate shall be filed with 
 83.31  the county auditor and shall be prima facie evidence of the 
 83.32  facts stated.  If the real property described in the certificate 
 83.33  becomes forfeited to the state, it shall be withheld from sale 
 83.34  or conveyance as tax-forfeited property in accordance with and 
 83.35  subject to the provisions of the Soldiers' and Sailors' Civil 
 83.36  Relief Act of 1940, as amended, except that the requirement in 
 84.1   United States Code, title 50, section 560, that the property be 
 84.2   occupied by the dependent or employee of the person in military 
 84.3   service does not apply.  The period of withholding from sale or 
 84.4   conveyance shall be no longer than is required by that act.  If 
 84.5   upon further investigation the sheriff or other person finds at 
 84.6   any time that the certificate is erroneous in any particular, 
 84.7   the sheriff or other person shall file a supplemental 
 84.8   certificate referring to the matter in error and stating the 
 84.9   facts as found.  The supplemental certificate shall be prima 
 84.10  facie evidence of the facts stated, and shall supersede any 
 84.11  prior certificate so far as in conflict therewith.  If it 
 84.12  appears from the supplemental certificate that the owner of the 
 84.13  real property affected is not entitled to have the same withheld 
 84.14  from sale under the Soldiers' and Sailors' Civil Relief Act of 
 84.15  1940, as amended, the property shall not be withheld from sale 
 84.16  further under this section.  
 84.17     Sec. 30.  Minnesota Statutes 1996, section 281.276, is 
 84.18  amended to read: 
 84.19     281.276 [RETURN OF SHERIFF MUST SHOW MILITARY SERVICE.] 
 84.20     Unless a sheriff's certificate showing military service is 
 84.21  filed as required by section 281.273, it shall be presumed that 
 84.22  the owner of the property described in the notice of expiration 
 84.23  of the time for redemption from delinquent taxes is not in such 
 84.24  service.  The filing of the sheriff's certificate provided for 
 84.25  in section 281.273 shall not affect the forfeiture of the real 
 84.26  property described in such notice of the expiration of the time 
 84.27  for redemption from delinquent taxes or their proceedings 
 84.28  relating thereto except as expressly herein provided. 
 84.29     Sec. 31.  Minnesota Statutes 1996, section 373.40, 
 84.30  subdivision 7, is amended to read: 
 84.31     Subd. 7.  [REPEALER.] This section is repealed effective 
 84.32  for bonds issued after July 1, 1998 2003, but continues to apply 
 84.33  to bonds issued before that date. 
 84.34     Sec. 32.  Minnesota Statutes 1996, section 375.192, 
 84.35  subdivision 2, is amended to read: 
 84.36     Subd. 2.  [PROCEDURE, CONDITIONS.] Upon written application 
 85.1   by the owner of any property, the county board may grant the 
 85.2   reduction or abatement of estimated market valuation or taxes 
 85.3   and of any costs, penalties, or interest on them as the board 
 85.4   deems just and equitable and order the refund in whole or part 
 85.5   of any taxes, costs, penalties, or interest which have been 
 85.6   erroneously or unjustly paid.  Except as provided in sections 
 85.7   469.1812 to 469.1815, no reduction or abatement may be granted 
 85.8   on the basis of providing an incentive for economic development 
 85.9   or redevelopment.  Except as provided in section 375.194, the 
 85.10  county board is authorized to consider and grant reductions or 
 85.11  abatements on applications only as they relate to taxes payable 
 85.12  in the current year and the two prior years; provided that 
 85.13  reductions or abatements for the two prior years shall be 
 85.14  considered or granted only for (i) clerical errors, or (ii) when 
 85.15  the taxpayer fails to file for a reduction or an adjustment due 
 85.16  to hardship, as determined by the county board.  The application 
 85.17  must include the social security number of the applicant.  The 
 85.18  social security number is private data on individuals as defined 
 85.19  by section 13.02, subdivision 12.  All applications must be 
 85.20  approved by the county assessor, or, if the property is located 
 85.21  in a city of the first or second class having a city assessor, 
 85.22  by the city assessor, and by the county auditor before 
 85.23  consideration by the county board, except that the part of the 
 85.24  application which is for the abatement of penalty or interest 
 85.25  must be approved by the county treasurer and county auditor.  
 85.26  Approval by the county or city assessor is not required for 
 85.27  abatements of penalty or interest.  No reduction, abatement, or 
 85.28  refund of any special assessments made or levied by any 
 85.29  municipality for local improvements shall be made unless it is 
 85.30  also approved by the board of review or similar taxing authority 
 85.31  of the municipality.  Before taking action on any reduction or 
 85.32  abatement where the reduction of taxes, costs, penalties, and 
 85.33  interest exceed $10,000, the county board shall give 20 days' 
 85.34  notice to the school board and the municipality in which the 
 85.35  property is located.  The notice must describe the property 
 85.36  involved, the actual amount of the reduction being sought, and 
 86.1   the reason for the reduction.  If the school board or the 
 86.2   municipality object to the granting of the reduction or 
 86.3   abatement, the county board must refer the abatement or 
 86.4   reduction to the commissioner of revenue with its 
 86.5   recommendation.  The commissioner shall consider the abatement 
 86.6   or reduction under section 270.07, subdivision 1.  
 86.7      An appeal may not be taken to the tax court from any order 
 86.8   of the county board made in the exercise of the discretionary 
 86.9   authority granted in this section.  
 86.10     The county auditor shall notify the commissioner of revenue 
 86.11  of all abatements resulting from the erroneous classification of 
 86.12  real property, for tax purposes, as nonhomestead property.  For 
 86.13  the abatements relating to the current year's tax processed 
 86.14  through June 30, the auditor shall notify the commissioner on or 
 86.15  before July 31 of that same year of all abatement applications 
 86.16  granted.  For the abatements relating to the current year's tax 
 86.17  processed after June 30 through the balance of the year, the 
 86.18  auditor shall notify the commissioner on or before the following 
 86.19  January 31 of all applications granted.  The county auditor 
 86.20  shall submit a form containing the social security number of the 
 86.21  applicant and such other information the commissioner prescribes.
 86.22     Sec. 33.  Minnesota Statutes 1996, section 465.71, is 
 86.23  amended to read: 
 86.24     465.71 [INSTALLMENT AND LEASE PURCHASES; CITIES; COUNTIES; 
 86.25  SCHOOL DISTRICTS.] 
 86.26     A home rule charter city, statutory city, county, town, or 
 86.27  school district may purchase personal property under an 
 86.28  installment contract, or lease real or personal property with an 
 86.29  option to purchase under a lease-purchase agreement, by which 
 86.30  contract or agreement title is retained by the seller or vendor 
 86.31  or assigned to a third party as security for the purchase price, 
 86.32  including interest, if any, but such purchases are subject to 
 86.33  statutory and charter provisions applicable to the purchase of 
 86.34  real or personal property.  For purposes of the bid requirements 
 86.35  contained in section 471.345, "the amount of the contract" shall 
 86.36  include the total of all lease payments for the entire term of 
 87.1   the lease under a lease-purchase agreement.  The obligation 
 87.2   created by a lease-purchase agreement for personal property or a 
 87.3   lease-purchase agreement for real property if the amount of the 
 87.4   contract for purchase of the real property is less than 
 87.5   $1,000,000 shall not be included in the calculation of net debt 
 87.6   for purposes of section 475.53, and shall not constitute debt 
 87.7   under any other statutory provision.  No election shall be 
 87.8   required in connection with the execution of a lease-purchase 
 87.9   agreement authorized by this section.  The city, county, town, 
 87.10  or school district must have the right to terminate a lease- 
 87.11  purchase agreement at the end of any fiscal year during its term.
 87.12     Sec. 34.  Minnesota Statutes 1996, section 465.81, 
 87.13  subdivision 1, is amended to read: 
 87.14     Subdivision 1.  [SCOPE.] Sections 465.81 to 465.87 
 87.15  establish procedures to be used by counties, cities, or towns 
 87.16  that adopt by resolution an agreement providing a plan to 
 87.17  provide combined services during an initial cooperation period 
 87.18  that may not exceed two years and then: 
 87.19     (1) to merge into a single unit of government over the 
 87.20  succeeding two-year period; or 
 87.21     (2) to agree to apportion the entire area of at least one 
 87.22  local government unit between or among two or more local 
 87.23  government units contiguous to the unit to be apportioned, 
 87.24  resulting in the elimination of at least one local government 
 87.25  unit over the succeeding two years.  
 87.26     Sec. 35.  Minnesota Statutes 1996, section 465.81, 
 87.27  subdivision 3, is amended to read: 
 87.28     Subd. 3.  [COMBINATION REQUIREMENTS.] Counties may combine 
 87.29  with one or more other counties.  Cities may combine with one or 
 87.30  more other cities or with one or more towns.  Towns may combine 
 87.31  with one or more other towns or with one or more cities.  Units 
 87.32  that combine must be contiguous.  A county, through the adoption 
 87.33  of a resolution by all county boards that are affected by the 
 87.34  combination, may apportion its territory between or among two or 
 87.35  more counties contiguous to the county that is to be 
 87.36  apportioned.  A city, through the adoption of a resolution by 
 88.1   all city councils that are affected by the combination, may 
 88.2   apportion its territory between or among two or more cities 
 88.3   contiguous to the city that is to be apportioned.  A township, 
 88.4   through the adoption of a resolution by all town boards or city 
 88.5   councils that are affected by the combination, may apportion its 
 88.6   territory between or among two or more townships or cities 
 88.7   contiguous to the township that is to be apportioned. 
 88.8      Sec. 36.  Minnesota Statutes 1996, section 465.82, 
 88.9   subdivision 1, is amended to read: 
 88.10     Subdivision 1.  [ADOPTION AND STATE AGENCY REVIEW.] Each 
 88.11  governing body that proposes to combine take part in a 
 88.12  combination under sections 465.81 to 465.87 must adopt by 
 88.13  resolution adopt a plan for cooperation and combination.  The 
 88.14  plan must address each item in this section.  The plan must be 
 88.15  specific for any item that will occur within three years and may 
 88.16  be general or set forth alternative proposals for an item that 
 88.17  will occur more than three years in the future.  The plan must 
 88.18  be submitted to the board of government innovation and 
 88.19  cooperation for review and comment.  For a metropolitan area 
 88.20  local government unit, the plan must also be submitted to the 
 88.21  metropolitan council for review and comment.  The council may 
 88.22  point out any resources or technical assistance it may be able 
 88.23  to provide a governing body submitting a plan under this 
 88.24  subdivision.  Significant modifications and specific resolutions 
 88.25  of items must be submitted to the board and council, if 
 88.26  appropriate, for review and comment.  In the official newspaper 
 88.27  of each local government unit proposed for proposing to take 
 88.28  part in the combination, the governing body must shall publish 
 88.29  at least a summary of the adopted plans, each significant 
 88.30  modification and resolution of items, and, if appropriate, the 
 88.31  results of each board and council, if appropriate, review and 
 88.32  comment.  If a territory of a unit is to be apportioned between 
 88.33  or among two or more units contiguous to the unit that is to be 
 88.34  apportioned, the plan must specify the area that will become a 
 88.35  part of each remaining unit. 
 88.36     Sec. 37.  Minnesota Statutes 1996, section 465.82, 
 89.1   subdivision 2, is amended to read: 
 89.2      Subd. 2.  [CONTENTS OF PLAN.] The plan must state:  
 89.3      (1) the specific cooperative activities the units will 
 89.4   engage in during the first two years of the venture; 
 89.5      (2) the steps to be taken to effect the merger of the 
 89.6   governmental units, with completion no later than four years 
 89.7   after the process begins; 
 89.8      (3) the steps by which a single governing body will be 
 89.9   created or, when the entire territory of a unit will be 
 89.10  apportioned between or among two or more units contiguous to the 
 89.11  unit that is to be apportioned, the steps to be taken by the 
 89.12  governing bodies of the remaining units to provide for 
 89.13  representation of the residents of the apportioned unit; 
 89.14     (4) changes in services provided, facilities used, and 
 89.15  administrative operations and staffing required to effect the 
 89.16  preliminary cooperative activities and the final merger, and a 
 89.17  two-, five-, and ten-year projection of expenditures for each 
 89.18  unit if it combined and if it remained separate; 
 89.19     (5) treatment of employees of the merging governmental 
 89.20  units, specifically including provisions for reassigning 
 89.21  employees, dealing with unions exclusive representatives, and 
 89.22  providing financial incentives to encourage early retirements; 
 89.23     (6) financial arrangements for the merger, specifically 
 89.24  including responsibility for debt service on outstanding 
 89.25  obligations of the merging entities units; 
 89.26     (7) one- and two-year impact analysis analyses, prepared by 
 89.27  the granting state agency at the request of the local government 
 89.28  unit, of major state aid revenues received for each unit if it 
 89.29  combined and if it remained separate.  This would also include, 
 89.30  including an impact analysis, prepared by the department of 
 89.31  revenue, of any property tax revenue implications, if any, 
 89.32  associated with tax increment financing districts and fiscal 
 89.33  disparities under chapter 276A or 473F resulting from the 
 89.34  merger; 
 89.35     (8) procedures for a referendum to be held before the 
 89.36  proposed combination to approve combining the local government 
 90.1   units, specifically stating whether a majority of those voting 
 90.2   in each district proposed for combination or a majority of those 
 90.3   voting on the question in the entire area proposed for 
 90.4   combination would be is needed to pass the referendum; and 
 90.5      (9) a time schedule for implementation. 
 90.6      Notwithstanding clause (3) or any other law to the 
 90.7   contrary, all current members of the governing bodies of the 
 90.8   local governmental government units that propose to combine 
 90.9   under sections 465.81 to 465.88 may serve on the initial 
 90.10  governing body of the combined unit until a gradual reduction in 
 90.11  membership is achieved by foregoing election of new members when 
 90.12  terms expire until the number permitted by other law is reached. 
 90.13     Sec. 38.  Minnesota Statutes 1996, section 465.82, is 
 90.14  amended by adding a subdivision to read: 
 90.15     Subd. 3.  [INTERIM GOVERNING BODY.] The plan for 
 90.16  cooperation and combination adopted in accordance with 
 90.17  subdivision 1 may establish an interim governing body to act on 
 90.18  behalf of the new local government unit before the effective 
 90.19  date of the combination.  If established, the interim governing 
 90.20  body must consist of at least a majority of the elected 
 90.21  officials from each local government unit taking part in the 
 90.22  combination.  If the plan establishes an interim governing body, 
 90.23  the governing body of each unit taking part in the combination 
 90.24  shall appoint its representatives to serve on the interim 
 90.25  governing body.  An interim governing body may not take any 
 90.26  official action on behalf of the new local government unit 
 90.27  before approval of the combination through the referendum 
 90.28  required by section 465.84.  After approval of the combination 
 90.29  through the referendum, and before the effective date of the 
 90.30  combination, an interim governing body may exercise all 
 90.31  statutory authority of the governing body of the new local 
 90.32  government unit, including the authority to enter into contracts 
 90.33  and adopt policies and local ordinances. 
 90.34     Sec. 39.  Minnesota Statutes 1996, section 465.87, 
 90.35  subdivision 1a, is amended to read: 
 90.36     Subd. 1a.  [ADDITIONAL ELIGIBILITY.] A local government 
 91.1   unit is eligible to apply for aid under this section if it has 
 91.2   combined with another unit of government in accordance with any 
 91.3   process within chapter 414 that results in the elimination of at 
 91.4   least one local government unit and a copy of the municipal 
 91.5   board's order or orders combining the two units of government is 
 91.6   forwarded to the board.  If the municipal board issues two or 
 91.7   more orders within 30 days for the annexation of the area of an 
 91.8   entire township by two or more cities contiguous to the 
 91.9   township, the cities subject to the board's order are eligible 
 91.10  to receive pro rata shares, on the basis of their populations, 
 91.11  of the total amount of cooperation and combination aid all 
 91.12  participating units of government would be eligible to receive 
 91.13  under subdivision 2.  If two units of government cooperate in 
 91.14  the orderly annexation of the entire area of a third unit of 
 91.15  government which has a population of at least 8,000 people, the 
 91.16  two units of government are each eligible for the amount of aid 
 91.17  specified in subdivision 2.  
 91.18     Sec. 40.  Minnesota Statutes 1996, section 465.87, 
 91.19  subdivision 2, is amended to read: 
 91.20     Subd. 2.  [AMOUNT OF AID.] The annual amount of aid to be 
 91.21  paid to each eligible local government unit may not exceed the 
 91.22  following per capita amounts, based on the combined population 
 91.23  of the units, as estimated by the state demographer, or 
 91.24  $100,000, whichever is less. 
 91.25        Combined Population                   Aid
 91.26         after Combination                 Per Capita
 91.27               0 -  2,500                     $25 
 91.28           2,500 -  5,000                      20 
 91.29           5,000 - 20,000                      15
 91.30              over 20,000                      10
 91.31  If two or more units are eligible for a single award under this 
 91.32  subdivision, the award must be divided among the units in pro 
 91.33  rata shares based on each unit's population.  Payments must be 
 91.34  made on the dates provided for payments of local government aid 
 91.35  under section 477A.013, beginning in the year during which 
 91.36  substantial cooperative activities under the plan initially 
 92.1   occur, unless those activities begin after July 1, in which case 
 92.2   the initial aid payment must be made in the following calendar 
 92.3   year.  Payments to a local government unit that qualifies for 
 92.4   aid under subdivision 1a must be made on the dates provided for 
 92.5   payments of local government aids under section 477A.013, 
 92.6   beginning in the calendar year during which a combination in any 
 92.7   form is expected to be ordered by the Minnesota municipal board 
 92.8   as evidenced in a resolution adopted by July 1 by the affected 
 92.9   local government units declaring their intent to combine.  The 
 92.10  resolutions must certify that the combination agreement 
 92.11  addressing all issues relative to the combination is 
 92.12  substantially complete.  The total amount of aid paid may not 
 92.13  exceed the amount appropriated to the board for purposes of this 
 92.14  section. 
 92.15     Sec. 41.  Minnesota Statutes 1996, section 465.88, is 
 92.16  amended to read: 
 92.17     465.88 [PLANNING AID FOR CONSOLIDATION STUDIES.] 
 92.18     Two or more local units of government with a combined 
 92.19  population of 2,500 30,000 or less based on the most recent 
 92.20  decennial census may apply to the board for aid to assist in the 
 92.21  study of a possible consolidation or combination.  To be 
 92.22  eligible for receipt of aid under this section, the two local 
 92.23  units of government must be subject to a municipal board motion 
 92.24  proceeding to form a consolidation commission under section 
 92.25  414.041, subdivision 2, or the governing bodies of the local 
 92.26  units of government must have approved a resolution expressing 
 92.27  their intent to develop and submit a combination plan for 
 92.28  consideration by the board.  The application must be on a form 
 92.29  prescribed by the board and must provide a proposed budget 
 92.30  detailing how the requested aid shall is to be used.  The 
 92.31  governing bodies of the local units of government must shall 
 92.32  also approve resolutions certifying that the requested aid is 
 92.33  essential for paying a portion of the costs associated with the 
 92.34  consolidation or combination study.  The board may grant up to 
 92.35  $10,000 in aid for each application received.  Two or more local 
 92.36  government units with a combined population of at least 2,500 
 93.1   but not greater than 30,000, based on the most recent decennial 
 93.2   census, must agree to provide at least $1 for the study of a 
 93.3   possible consolidation or combination for each dollar of aid 
 93.4   granted by the board under this section. 
 93.5      Sec. 42.  Minnesota Statutes 1996, section 469.012, 
 93.6   subdivision 1, is amended to read: 
 93.7      Subdivision 1.  [SCHEDULE OF POWERS.] An authority shall be 
 93.8   a public body corporate and politic and shall have all the 
 93.9   powers necessary or convenient to carry out the purposes of 
 93.10  sections 469.001 to 469.047, except that the power to levy and 
 93.11  collect taxes or special assessments is limited to the power 
 93.12  provided in sections 469.027 to 469.033.  Its powers include the 
 93.13  following powers in addition to others granted in sections 
 93.14  469.001 to 469.047:  
 93.15     (1) to sue and be sued; to have a seal, which shall be 
 93.16  judicially noticed, and to alter it; to have perpetual 
 93.17  succession; and to make, amend, and repeal rules consistent with 
 93.18  sections 469.001 to 469.047; 
 93.19     (2) to employ an executive director, technical experts, and 
 93.20  officers, agents, and employees, permanent and temporary, that 
 93.21  it requires, and determine their qualifications, duties, and 
 93.22  compensation; for legal services it requires, to call upon the 
 93.23  chief law officer of the city or to employ its own counsel and 
 93.24  legal staff; so far as practicable, to use the services of local 
 93.25  public bodies in its area of operation, provided that those 
 93.26  local public bodies, if requested, shall make the services 
 93.27  available; 
 93.28     (3) to delegate to one or more of its agents or employees 
 93.29  the powers or duties it deems proper; 
 93.30     (4) within its area of operation, to undertake, prepare, 
 93.31  carry out, and operate projects and to provide for the 
 93.32  construction, reconstruction, improvement, extension, 
 93.33  alteration, or repair of any project or part thereof; 
 93.34     (5) subject to the provisions of section 469.026, to give, 
 93.35  sell, transfer, convey, or otherwise dispose of real or personal 
 93.36  property or any interest therein and to execute leases, deeds, 
 94.1   conveyances, negotiable instruments, purchase agreements, and 
 94.2   other contracts or instruments, and take action that is 
 94.3   necessary or convenient to carry out the purposes of these 
 94.4   sections; 
 94.5      (6) within its area of operation, to acquire real or 
 94.6   personal property or any interest therein by gifts, grant, 
 94.7   purchase, exchange, lease, transfer, bequest, devise, or 
 94.8   otherwise, and by the exercise of the power of eminent domain, 
 94.9   in the manner provided by chapter 117, to acquire real property 
 94.10  which it may deem necessary for its purposes, after the adoption 
 94.11  by it of a resolution declaring that the acquisition of the real 
 94.12  property is necessary to eliminate one or more of the conditions 
 94.13  found to exist in the resolution adopted pursuant to section 
 94.14  469.003 or to provide decent, safe, and sanitary housing for 
 94.15  persons of low and moderate income, or is necessary to carry out 
 94.16  a redevelopment project.  Real property needed or convenient for 
 94.17  a project may be acquired by the authority for the project by 
 94.18  condemnation pursuant to this section.  This includes any 
 94.19  property devoted to a public use, whether or not held in trust, 
 94.20  notwithstanding that the property may have been previously 
 94.21  acquired by condemnation or is owned by a public utility 
 94.22  corporation, because the public use in conformity with the 
 94.23  provisions of sections 469.001 to 469.047 shall be deemed a 
 94.24  superior public use.  Property devoted to a public use may be so 
 94.25  acquired only if the governing body of the municipality has 
 94.26  approved its acquisition by the authority.  An award of 
 94.27  compensation shall not be increased by reason of any increase in 
 94.28  the value of the real property caused by the assembly, clearance 
 94.29  or reconstruction, or proposed assembly, clearance or 
 94.30  reconstruction for the purposes of sections 469.001 to 469.047 
 94.31  of the real property in an area; 
 94.32     (7) within its area of operation, and without the adoption 
 94.33  of an urban renewal plan, to acquire, by all means as set forth 
 94.34  in clause (6) but without the adoption of a resolution provided 
 94.35  for in clause (6), real property, and to demolish, remove, 
 94.36  rehabilitate, or reconstruct the buildings and improvements or 
 95.1   construct new buildings and improvements thereon, or to so 
 95.2   provide through other means as set forth in Laws 1974, chapter 
 95.3   228, or to grade, fill, and construct foundations or otherwise 
 95.4   prepare the site for improvements.  The authority may dispose of 
 95.5   the property pursuant to section 469.029, provided that the 
 95.6   provisions of section 469.029 requiring conformance to an urban 
 95.7   renewal plan shall not apply.  The authority may finance these 
 95.8   activities by means of the redevelopment project fund or by 
 95.9   means of tax increments or tax increment bonds or by the methods 
 95.10  of financing provided for in section 469.033 or by means of 
 95.11  contributions from the municipality provided for in section 
 95.12  469.041, clause (9), or by any combination of those means.  Real 
 95.13  property with buildings or improvements thereon shall only be 
 95.14  acquired under this clause when the buildings or improvements 
 95.15  are substandard.  The exercise of the power of eminent domain 
 95.16  under this clause shall be limited to real property which 
 95.17  contains, or has contained within the three years immediately 
 95.18  preceding the exercise of the power of eminent domain and is 
 95.19  currently vacant, buildings and improvements which are vacated 
 95.20  and substandard.  Notwithstanding the prior sentence, in cities 
 95.21  of the first class the exercise of the power of eminent domain 
 95.22  under this clause shall be limited to real property which 
 95.23  contains, or has contained within the three years immediately 
 95.24  preceding the exercise of the power of eminent domain, buildings 
 95.25  and improvements which are substandard.  For the purpose of this 
 95.26  clause, substandard buildings or improvements mean hazardous 
 95.27  buildings as defined in section 463.15, subdivision 3, or 
 95.28  buildings or improvements that are dilapidated or obsolescent, 
 95.29  faultily designed, lack adequate ventilation, light, or sanitary 
 95.30  facilities, or any combination of these or other factors that 
 95.31  are detrimental to the safety or health of the community; 
 95.32     (8) within its area of operation, to determine the level of 
 95.33  income constituting low or moderate family income.  The 
 95.34  authority may establish various income levels for various family 
 95.35  sizes.  In making its determination, the authority may consider 
 95.36  income levels that may be established by the Department of 
 96.1   Housing and Urban Development or a similar or successor federal 
 96.2   agency for the purpose of federal loan guarantees or subsidies 
 96.3   for persons of low or moderate income.  The authority may use 
 96.4   that determination as a basis for the maximum amount of income 
 96.5   for admissions to housing development projects or housing 
 96.6   projects owned or operated by it; 
 96.7      (9) to provide in federally assisted projects any 
 96.8   relocation payments and assistance necessary to comply with the 
 96.9   requirements of the Federal Uniform Relocation Assistance and 
 96.10  Real Property Acquisition Policies Act of 1970, and any 
 96.11  amendments or supplements thereto; 
 96.12     (10) to make an agreement with the governing body or bodies 
 96.13  creating the authority which provides exemption from all ad 
 96.14  valorem real and personal property taxes levied or imposed by 
 96.15  the state, city, county, or other political subdivisions, for 
 96.16  which the authority shall make payments in lieu of taxes to the 
 96.17  state, city, county, or other political subdivisions as provided 
 96.18  in section 469.040 body or bodies creating the authority.  The 
 96.19  governing body shall agree on behalf of all the applicable 
 96.20  governing bodies affected that local cooperation as required by 
 96.21  the federal government shall be provided by the local governing 
 96.22  body or bodies in whose jurisdiction the project is to be 
 96.23  located, at no cost or at no greater cost than the same public 
 96.24  services and facilities furnished to other residents; 
 96.25     (11) to cooperate with or act as agent for the federal 
 96.26  government, the state or any state public body, or any agency or 
 96.27  instrumentality of the foregoing, in carrying out any of the 
 96.28  provisions of sections 469.001 to 469.047 or of any other 
 96.29  related federal, state, or local legislation; and upon the 
 96.30  consent of the governing body of the city to purchase, lease, 
 96.31  manage, or otherwise take over any housing project already owned 
 96.32  and operated by the federal government; 
 96.33     (12) to make plans for carrying out a program of voluntary 
 96.34  repair and rehabilitation of buildings and improvements, and 
 96.35  plans for the enforcement of laws, codes, and regulations 
 96.36  relating to the use of land and the use and occupancy of 
 97.1   buildings and improvements, and to the compulsory repair, 
 97.2   rehabilitation, demolition, or removal of buildings and 
 97.3   improvements.  The authority may develop, test, and report 
 97.4   methods and techniques, and carry out demonstrations and other 
 97.5   activities for the prevention and elimination of slums and 
 97.6   blight; 
 97.7      (13) to borrow money or other property and accept 
 97.8   contributions, grants, gifts, services, or other assistance from 
 97.9   the federal government, the state government, state public 
 97.10  bodies, or from any other public or private sources; 
 97.11     (14) to include in any contract for financial assistance 
 97.12  with the federal government any conditions that the federal 
 97.13  government may attach to its financial aid of a project, not 
 97.14  inconsistent with purposes of sections 469.001 to 469.047, 
 97.15  including obligating itself (which obligation shall be 
 97.16  specifically enforceable and not constitute a mortgage, 
 97.17  notwithstanding any other laws) to convey to the federal 
 97.18  government the project to which the contract relates upon the 
 97.19  occurrence of a substantial default with respect to the 
 97.20  covenants or conditions to which the authority is subject; to 
 97.21  provide in the contract that, in case of such conveyance, the 
 97.22  federal government may complete, operate, manage, lease, convey, 
 97.23  or otherwise deal with the project until the defaults are cured 
 97.24  if the federal government agrees in the contract to reconvey to 
 97.25  the authority the project as then constituted when the defaults 
 97.26  have been cured; 
 97.27     (15) to issue bonds for any of its corporate purposes and 
 97.28  to secure the bonds by mortgages upon property held or to be 
 97.29  held by it or by pledge of its revenues, including grants or 
 97.30  contributions; 
 97.31     (16) to invest any funds held in reserves or sinking funds, 
 97.32  or any funds not required for immediate disbursement, in 
 97.33  property or securities in which savings banks may legally invest 
 97.34  funds subject to their control or in the manner and subject to 
 97.35  the conditions provided in section 118A.04 for the deposit and 
 97.36  investment of public funds; 
 98.1      (17) within its area of operation, to determine where 
 98.2   blight exists or where there is unsafe, unsanitary, or 
 98.3   overcrowded housing; 
 98.4      (18) to carry out studies of the housing and redevelopment 
 98.5   needs within its area of operation and of the meeting of those 
 98.6   needs.  This includes study of data on population and family 
 98.7   groups and their distribution according to income groups, the 
 98.8   amount and quality of available housing and its distribution 
 98.9   according to rentals and sales prices, employment, wages, 
 98.10  desirable patterns for land use and community growth, and other 
 98.11  factors affecting the local housing and redevelopment needs and 
 98.12  the meeting of those needs; to make the results of those studies 
 98.13  and analyses available to the public and to building, housing, 
 98.14  and supply industries; 
 98.15     (19) if a local public body does not have a planning agency 
 98.16  or the planning agency has not produced a comprehensive or 
 98.17  general community development plan, to make or cause to be made 
 98.18  a plan to be used as a guide in the more detailed planning of 
 98.19  housing and redevelopment areas; 
 98.20     (20) to lease or rent any dwellings, accommodations, lands, 
 98.21  buildings, structures, or facilities included in any project 
 98.22  and, subject to the limitations contained in sections 469.001 to 
 98.23  469.047 with respect to the rental of dwellings in housing 
 98.24  projects, to establish and revise the rents or charges therefor; 
 98.25     (21) to own, hold, and improve real or personal property 
 98.26  and to sell, lease, exchange, transfer, assign, pledge, or 
 98.27  dispose of any real or personal property or any interest 
 98.28  therein; 
 98.29     (22) to insure or provide for the insurance of any real or 
 98.30  personal property or operations of the authority against any 
 98.31  risks or hazards; 
 98.32     (23) to procure or agree to the procurement of government 
 98.33  insurance or guarantees of the payment of any bonds or parts 
 98.34  thereof issued by an authority and to pay premiums on the 
 98.35  insurance; 
 98.36     (24) to make expenditures necessary to carry out the 
 99.1   purposes of sections 469.001 to 469.047; 
 99.2      (25) to enter into an agreement or agreements with any 
 99.3   state public body to provide informational service and 
 99.4   relocation assistance to families, individuals, business 
 99.5   concerns, and nonprofit organizations displaced or to be 
 99.6   displaced by the activities of any state public body; 
 99.7      (26) to compile and maintain a catalog of all vacant, open 
 99.8   and undeveloped land, or land which contains substandard 
 99.9   buildings and improvements as that term is defined in clause 
 99.10  (7), that is owned or controlled by the authority or by the 
 99.11  governing body within its area of operation and to compile and 
 99.12  maintain a catalog of all authority owned real property that is 
 99.13  in excess of the foreseeable needs of the authority, in order to 
 99.14  determine and recommend if the real property compiled in either 
 99.15  catalog is appropriate for disposal pursuant to the provisions 
 99.16  of section 469.029, subdivisions 9 and 10; 
 99.17     (27) to recommend to the city concerning the enforcement of 
 99.18  the applicable health, housing, building, fire prevention, and 
 99.19  housing maintenance code requirements as they relate to 
 99.20  residential dwelling structures that are being rehabilitated by 
 99.21  low- or moderate-income persons pursuant to section 469.029, 
 99.22  subdivision 9, for the period of time necessary to complete the 
 99.23  rehabilitation, as determined by the authority; 
 99.24     (28) to recommend to the city the initiation of municipal 
 99.25  powers, against certain real properties, relating to repair, 
 99.26  closing, condemnation, or demolition of unsafe, unsanitary, 
 99.27  hazardous, and unfit buildings, as provided in section 469.041, 
 99.28  clause (5); 
 99.29     (29) to sell, at private or public sale, at the price or 
 99.30  prices determined by the authority, any note, mortgage, lease, 
 99.31  sublease, lease purchase, or other instrument or obligation 
 99.32  evidencing or securing a loan made for the purpose of economic 
 99.33  development, job creation, redevelopment, or community 
 99.34  revitalization by a public agency to a business, for-profit or 
 99.35  nonprofit organization, or an individual; 
 99.36     (30) within its area of operation, to acquire and sell real 
100.1   property that is benefited by federal housing assistance 
100.2   payments, other rental subsidies, interest reduction payments, 
100.3   or interest reduction contracts for the purpose of preserving 
100.4   the affordability of low- and moderate-income multifamily 
100.5   housing; 
100.6      (31) to apply for, enter into contracts with the federal 
100.7   government, administer, and carry out a section 8 program.  
100.8   Authorization by the governing body creating the authority to 
100.9   administer the program at the authority's initial application is 
100.10  sufficient to authorize operation of the program in its area of 
100.11  operation for which it was created without additional local 
100.12  governing body approval.  Approval by the governing body or 
100.13  bodies creating the authority constitutes approval of a housing 
100.14  program for purposes of any special or general law requiring 
100.15  local approval of section 8 programs undertaken by city, county, 
100.16  or multicounty authorities; and 
100.17     (32) to secure a mortgage or loan for a rental housing 
100.18  project by obtaining the appointment of receivers or assignments 
100.19  of rents and profits under sections 559.17 and 576.01, except 
100.20  that the limitation relating to the minimum amounts of the 
100.21  original principal balances of mortgages specified in sections 
100.22  559.17, subdivision 2, clause (2); and 576.01, subdivision 2, 
100.23  does not apply. 
100.24     Sec. 43.  Minnesota Statutes 1996, section 469.033, 
100.25  subdivision 6, is amended to read: 
100.26     Subd. 6.  [OPERATION AREA AS TAXING DISTRICT, SPECIAL TAX.] 
100.27  All of the territory included within the area of operation of 
100.28  any authority shall constitute a taxing district for the purpose 
100.29  of levying and collecting special benefit taxes as provided in 
100.30  this subdivision.  All of the taxable property, both real and 
100.31  personal, within that taxing district shall be deemed to be 
100.32  benefited by projects to the extent of the special taxes levied 
100.33  under this subdivision.  Subject to the consent by resolution of 
100.34  the governing body of the city in and for which it was created, 
100.35  an authority may levy a tax upon all taxable property within 
100.36  that taxing district.  The tax shall be extended, spread, and 
101.1   included with and as a part of the general taxes for state, 
101.2   county, and municipal purposes by the county auditor, to be 
101.3   collected and enforced therewith, together with the penalty, 
101.4   interest, and costs.  As the tax, including any penalties, 
101.5   interest, and costs, is collected by the county treasurer it 
101.6   shall be accumulated and kept in a separate fund to be known as 
101.7   the "housing and redevelopment project fund."  The money in the 
101.8   fund shall be turned over to the authority at the same time and 
101.9   in the same manner that the tax collections for the city are 
101.10  turned over to the city, and shall be expended only for the 
101.11  purposes of sections 469.001 to 469.047.  It shall be paid out 
101.12  upon vouchers signed by the chair of the authority or an 
101.13  authorized representative.  The amount of the levy shall be an 
101.14  amount approved by the governing body of the city, but shall not 
101.15  exceed 0.0131 0.0144 percent of taxable market value.  The 
101.16  authority may levy an additional levy, not to exceed 0.0013 
101.17  percent of taxable market value, to be used to defray costs of 
101.18  providing informational service and relocation assistance as set 
101.19  forth in section 469.012, subdivision 1.  The authority shall 
101.20  each year formulate and file a budget in accordance with the 
101.21  budget procedure of the city in the same manner as required of 
101.22  executive departments of the city or, if no budgets are required 
101.23  to be filed, by August 1.  The amount of the tax levy for the 
101.24  following year shall be based on that budget. 
101.25     Sec. 44.  Minnesota Statutes 1996, section 469.040, 
101.26  subdivision 3, is amended to read: 
101.27     Subd. 3.  [STATEMENT FILED WITH ASSESSOR; PERCENTAGE TAX ON 
101.28  RENTALS.] Notwithstanding the provisions of subdivision 1, after 
101.29  a housing project or a housing development project carried on 
101.30  under sections 469.016 to 469.026 has become occupied, in whole 
101.31  or in part, an authority shall file with the assessor, on or 
101.32  before April 15 of each year, a statement of the aggregate 
101.33  shelter rentals of that project collected during the preceding 
101.34  calendar year.  Unless a greater amount has been agreed upon 
101.35  between the authority and the governing body or bodies for which 
101.36  the authority was created, in whose jurisdiction the project is 
102.1   located, five percent of the aggregate shelter rentals shall be 
102.2   charged to the authority as a service charge for the services 
102.3   and facilities to be furnished with respect to that project.  
102.4   The service charge shall be collected from the authority in the 
102.5   manner provided by law for the assessment and collection of 
102.6   taxes.  The amount so collected shall be distributed to the 
102.7   several taxing bodies in the same proportion as the tax rate of 
102.8   each bears to the total tax rate of those taxing bodies.  The 
102.9   governing body or bodies for which the authority has been 
102.10  created, in whose jurisdiction the project is located, may agree 
102.11  with the authority for the payment of a service charge for a 
102.12  housing project or a housing development project in an amount 
102.13  greater than five percent of the aggregate annual shelter 
102.14  rentals of any project, upon the basis of shelter rentals or 
102.15  upon another basis agreed upon.  The service charge may not 
102.16  exceed the amount which would be payable in taxes were the 
102.17  property not exempt.  If such an agreement is made, the service 
102.18  charge so agreed upon shall be collected and distributed in the 
102.19  manner above provided.  If the project has become occupied, or 
102.20  if the land upon which the project is to be constructed has been 
102.21  acquired, the agreement shall specify the location of the 
102.22  project for which the agreement is made.  "Shelter rental" means 
102.23  the total rentals of a housing project exclusive of any charge 
102.24  for utilities and special services such as heat, water, 
102.25  electricity, gas, sewage disposal, or garbage removal.  "Service 
102.26  charge" means payment in lieu of taxes.  The records of each 
102.27  housing project shall be open to inspection by the proper 
102.28  assessing officer. 
102.29     Sec. 45.  [469.1812] [DEFINITIONS.] 
102.30     Subdivision 1.  [SCOPE.] For purposes of sections 469.1812 
102.31  to 469.1815, the following terms have the meanings given. 
102.32     Subd. 2.  [GOVERNING BODY.] "Governing body" means, for a 
102.33  city, the city council; for a school district, the school board; 
102.34  for a county, the county board; and for a town, the annual 
102.35  meeting of the town. 
102.36     Subd. 3.  [MUNICIPALITY.] "Municipality" means a statutory 
103.1   or home rule charter city or a town. 
103.2      Subd. 4.  [POLITICAL SUBDIVISION OR SUBDIVISION.] 
103.3   "Political subdivision" or "subdivision" means a statutory or 
103.4   home rule charter city, town, school district, or county. 
103.5      Sec. 46.  [469.1813] [ABATEMENT AUTHORITY.] 
103.6      Subdivision 1.  [AUTHORITY.] The governing body of a 
103.7   political subdivision may grant an abatement of the taxes 
103.8   imposed by the political subdivision on a parcel of property, if:
103.9      (a) it expects the benefits to the political subdivision of 
103.10  the proposed abatement agreement to at least equal the costs to 
103.11  the political subdivision of the proposed agreement; and 
103.12     (b) it finds that doing so is in the public interest 
103.13  because it will: 
103.14     (1) increase or preserve tax base; 
103.15     (2) provide employment opportunities in the political 
103.16  subdivision; 
103.17     (3) provide or help acquire or construct public facilities; 
103.18     (4) help redevelop or renew blighted areas; or 
103.19     (5) help provide access to services for residents of the 
103.20  political subdivision. 
103.21     Subd. 2.  [ABATEMENT RESOLUTION.] The governing body of a 
103.22  political subdivision may grant an abatement only by adopting an 
103.23  abatement resolution, specifying the terms of the abatement.  
103.24  The resolution must also include a specific statement as to the 
103.25  nature and extent of the public benefits which the governing 
103.26  body expects to result from the agreement. The abatement may 
103.27  reduce all or part of the property tax levied by the political 
103.28  subdivision on the parcel.  The political subdivision may limit 
103.29  the abatement: 
103.30     (1) to a specific dollar amount per year or in total; 
103.31     (2) to the increase in property taxes resulting from 
103.32  improvement of the property; 
103.33     (3) to the increases in property taxes resulting from 
103.34  increases in the market value or tax capacity of the property; 
103.35  or 
103.36     (4) in any other manner the governing body of the 
104.1   subdivision determines is appropriate. 
104.2   The political subdivision may not abate tax attributable to the 
104.3   value of the land or the areawide tax under chapter 276A or 473F.
104.4      Subd. 3.  [SCHOOL DISTRICT ABATEMENT PROCEDURE.] 
104.5   Notwithstanding the amounts in subdivision 2, a school district 
104.6   that grants an abatement under this section must limit the 
104.7   abatement for any property to not more than an amount equal to 
104.8   the product of:  (1) the property's net tax capacity, and (2) 
104.9   the difference between the district's total tax rate for that 
104.10  year and one-half of the general education tax rate for that 
104.11  year.  An abatement granted under this section is not an 
104.12  abatement for purposes of state aid or local levy under chapter 
104.13  124.  
104.14     Subd. 4.  [PROPERTY LOCATED IN TAX INCREMENT FINANCING 
104.15  DISTRICTS.] The governing body of a governmental subdivision may 
104.16  not enter into a property tax abatement agreement under sections 
104.17  469.1812 to 469.1815 if the property is located in a tax 
104.18  increment financing district. 
104.19     Subd. 5.  [NOTICE AND PUBLIC HEARING.] (a) The governing 
104.20  body of the political subdivision may approve an abatement under 
104.21  sections 469.1812 to 469.1815 only after holding a public 
104.22  hearing on the abatement. 
104.23     (b) Notice of the hearing must be published in a newspaper 
104.24  of general circulation in the political subdivision at least 
104.25  once more than ten days but less than 30 days before the 
104.26  hearing.  The newspaper must be one of general interest and 
104.27  readership in the community, and not one of limited subject 
104.28  matter.  The newspaper must be published at least once per 
104.29  week.  The notice must indicate that the governing body will 
104.30  consider granting a property tax abatement, identify the 
104.31  property or properties for which an abatement is under 
104.32  consideration, and the total estimated amount of the abatement. 
104.33     Subd. 6.  [DURATION LIMIT.] (a) A political subdivision 
104.34  other than a school district may grant an abatement for a period 
104.35  no longer than ten years.  The subdivision may specify in the 
104.36  abatement resolution a shorter duration.  If the resolution does 
105.1   not specify a period of time, the abatement is for eight years.  
105.2   If an abatement has been granted to a parcel of property and the 
105.3   period of the abatement has expired, the political subdivision 
105.4   that granted the abatement may not grant another abatement for 
105.5   eight years after the expiration of the first abatement.  This 
105.6   prohibition does not apply to improvements added after and not 
105.7   subject to the first abatement. 
105.8      (b) A school district may grant an abatement for only one 
105.9   year at a time.  Once a school district has authorized an 
105.10  abatement for a property, it may reauthorize the abatement in 
105.11  any subsequent year for the next seven years, or nine years if 
105.12  provided in the original abatement agreement.  This prohibition 
105.13  does not apply to improvements added after and not subject to 
105.14  the original abatement agreement. 
105.15     Subd. 7.  [REVIEW AND MODIFICATION OF ABATEMENTS.] The 
105.16  political subdivision may provide in the abatement resolution 
105.17  that the abatement may not be modified or changed during its 
105.18  term.  If the abatement resolution does not provide that the 
105.19  abatement may not be modified or changed, the governing body of 
105.20  the political subdivision may review and modify the abatement 
105.21  every second year after it was approved. 
105.22     Subd. 8.  [LIMITATION ON ABATEMENTS.] In any year, the 
105.23  total amount of property taxes abated by a political subdivision 
105.24  under this section may not exceed (1) five percent of the 
105.25  current levy, or (2) $100,000, whichever is greater. 
105.26     Sec. 47.  [469.1814] [BONDING AUTHORITY.] 
105.27     Subdivision 1.  [AUTHORITY.] A political subdivision may 
105.28  issue bonds or other obligations to provide an amount equal to 
105.29  the sum of the abatements granted for a property under section 
105.30  469.1813.  The maximum principal amount of these bonds may not 
105.31  exceed the estimated sum of the abatements for the property for 
105.32  the years authorized.  The bonds may be general obligations of 
105.33  the political subdivision if the governing body of the political 
105.34  subdivision elects to pledge the full faith and credit of the 
105.35  subdivision in the resolution issuing the bonds. 
105.36     Subd. 2.  [BOND CODE APPLIES.] Chapter 475 applies to the 
106.1   obligations authorized by this section, except bonds are 
106.2   excluded from the calculation of the net debt limit. 
106.3      Subd. 3.  [MUNICIPAL ISSUE FOR COMBINED ABATEMENTS.] If two 
106.4   or more political subdivisions decide to grant abatements for 
106.5   the same property, the municipality in which the property is 
106.6   located may issue bonds to provide an amount equal to the sum of 
106.7   the abatements for each of the jurisdictions that agrees.  The 
106.8   governing body of each of the other jurisdictions must guarantee 
106.9   and pledge to pay annually to the municipality the amount of the 
106.10  abatement.  This pledge and guarantee is a binding obligation of 
106.11  the political subdivision and must be included in the abatement 
106.12  resolution. 
106.13     Subd. 4.  [BONDED ABATEMENTS NOT SUBJECT TO REVIEW.] If 
106.14  bonds are issued to provide advance payment of abatements under 
106.15  this section, the amount of abatement is not subject to periodic 
106.16  review by the political subdivision under section 469.1813, 
106.17  subdivision 7. 
106.18     Subd. 5.  [USE OF PROCEEDS.] The proceeds of bonds issued 
106.19  under this section may be used to (1) pay for public 
106.20  improvements that benefit the property, (2) to acquire and 
106.21  convey land or other property, as provided under this section, 
106.22  (3) to reimburse the property owner for the cost of improvements 
106.23  made to the property, or (4) to pay the costs of issuance of the 
106.24  bonds. 
106.25     Sec. 48.  [469.1815] [ADMINISTRATIVE.] 
106.26     Subdivision 1.  [INCLUSION IN PROPOSED AND FINAL 
106.27  LEVIES.] The political subdivision must add to its levy amount 
106.28  for the current year under sections 275.065 and 275.07 the total 
106.29  estimated amount of all current year abatements granted.  The 
106.30  tax amounts shown on the proposed notice under section 275.065, 
106.31  subdivision 3, and on the property tax statement under section 
106.32  276.04, subdivision 2, are the total amounts before the 
106.33  reduction of any abatements that will be granted on the property.
106.34     Subd. 2.  [PROPERTY TAXES; ABATEMENT PAYMENT.] The total 
106.35  property taxes shall be levied on the property and shall be due 
106.36  and payable to the county at the times provided under section 
107.1   279.01.  The political subdivision will pay the abatement to the 
107.2   property owner, lessee, or a representative of the bondholders, 
107.3   as provided by the abatement resolution. 
107.4      Sec. 49.  Minnesota Statutes 1996, section 477A.011, 
107.5   subdivision 36, is amended to read: 
107.6      Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
107.7   paragraphs (b) and, (c), and (d), "city aid base" means, for 
107.8   each city, the sum of the local government aid and equalization 
107.9   aid it was originally certified to receive in calendar year 1993 
107.10  under Minnesota Statutes 1992, section 477A.013, subdivisions 3 
107.11  and 5, and the amount of disparity reduction aid it received in 
107.12  calendar year 1993 under Minnesota Statutes 1992, section 
107.13  273.1398, subdivision 3. 
107.14     (b) For aids payable in 1996 and thereafter, a city that in 
107.15  1992 or 1993 transferred an amount from governmental funds to 
107.16  its sewer and water fund, which amount exceeded its net levy for 
107.17  taxes payable in the year in which the transfer occurred, has a 
107.18  "city aid base" equal to the sum of (i) its city aid base, as 
107.19  calculated under paragraph (a), and (ii) one-half of the 
107.20  difference between its city aid distribution under section 
107.21  477A.013, subdivision 9, for aids payable in 1995 and its city 
107.22  aid base for aids payable in 1995. 
107.23     (c) The city aid base for any city with a population less 
107.24  than 500 is increased by $40,000 for aids payable in calendar 
107.25  year 1995 and thereafter, and the maximum amount of total aid it 
107.26  may receive under section 477A.013, subdivision 9, paragraph 
107.27  (c), is also increased by $40,000 for aids payable in calendar 
107.28  year 1995 only, provided that: 
107.29     (i) the average total tax capacity rate for taxes payable 
107.30  in 1995 exceeds 200 percent; 
107.31     (ii) the city portion of the tax capacity rate exceeds 100 
107.32  percent; and 
107.33     (iii) its city aid base is less than $60 per capita. 
107.34     (d) The city aid base for a city is increased by $20,000 in 
107.35  1998 and thereafter and the maximum amount of total aid it may 
107.36  receive under section 477A.013, subdivision 9, paragraph (c), is 
108.1   also increased by $20,000 in calendar year 1998 only, provided 
108.2   that: 
108.3      (i) the city has a population in 1994 of 2,500 or more; 
108.4      (ii) the city is located in a county, outside of the 
108.5   metropolitan area, which contains a city of the first class; 
108.6      (iii) the city's net tax capacity used in calculating its 
108.7   1996 aid under section 477A.013 is less than $400 per capita; 
108.8   and 
108.9      (iv) at least four percent of the total net tax capacity, 
108.10  for taxes payable in 1996, of property located in the city is 
108.11  classified as railroad property. 
108.12     Sec. 50.  Laws 1992, chapter 511, article 2, section 52, is 
108.13  amended to read: 
108.14     Sec. 52.  [WATERSHED DISTRICT LEVIES.] 
108.15     (a) The Nine Mile Creek watershed district, the 
108.16  Riley-Purgatory Bluff Creek watershed district, the Minnehaha 
108.17  Creek watershed district, the Coon Creek watershed district, and 
108.18  the Lower Minnesota River watershed district may levy in 1992 
108.19  and thereafter a tax not to exceed $200,000 on property within 
108.20  the district for the administrative fund.  The levy authorized 
108.21  under this section is in lieu of section 103D.905, subdivision 
108.22  3.  The administrative fund shall be used for the purposes 
108.23  contained in Minnesota Statutes, section 103D.905, subdivision 
108.24  3.  The board of managers shall make the levy for the 
108.25  administrative fund in accordance with Minnesota Statutes, 
108.26  section 103D.915. 
108.27     (b) The Wild Rice watershed district may levy, for taxes 
108.28  payable in 1993, 1994, 1995, 1996, and 1997, 1998, 1999, 2000, 
108.29  2001, and 2002, an ad valorem tax not to exceed $200,000 on 
108.30  property within the district for the administrative fund.  The 
108.31  additional $75,000 above the amount authorized in Minnesota 
108.32  Statutes, section 103D.905, subdivision 3, must be used for 
108.33  costs incurred in connection with the development and 
108.34  maintenance of cost-sharing projects with the United States Army 
108.35  Corps of Engineers.  The board of managers shall make the levy 
108.36  for the administrative fund in accordance with Minnesota 
109.1   Statutes, section 103D.915. 
109.2      Sec. 51.  Laws 1997, chapter 75, section 2, is amended to 
109.3   read: 
109.4      Sec. 2. [EFFECTIVE DATE; EXPIRATION.] 
109.5      Section 1 is effective May 2, 1997, and expires January 1, 
109.6   1998. 
109.7      Sec. 52.  [VALUATION EXCLUSION FOR IMPROVEMENTS TO CERTAIN 
109.8   BUSINESS PROPERTY.] 
109.9      Property classified under Minnesota Statutes, section 
109.10  273.13, subdivision 24, which is eligible for the preferred 
109.11  class rate on the market value up to $150,000, shall qualify for 
109.12  a valuation exclusion for assessment purposes, provided all of 
109.13  the following conditions are met: 
109.14     (1) the building must be at least 50 years old at the time 
109.15  of the improvement or damaged by the 1997 floods; 
109.16     (2) the building must be located in a city or town with a 
109.17  population of 10,000 or less that is located outside the 
109.18  seven-county metropolitan area, as defined in section 473.121, 
109.19  subdivision 2; 
109.20     (3) the total estimated market value of the land and 
109.21  buildings must be $100,000 or less prior to the improvement and 
109.22  prior to the damage caused by the 1997 floods; 
109.23     (4) the current year's estimated market value of the 
109.24  property must be equal to or less than the property's estimated 
109.25  market value in each of the two previous years' assessments; 
109.26     (5) a building permit must have been issued prior to the 
109.27  commencement of the improvement, or if the building is located 
109.28  in a city or town which does not have a building permit process, 
109.29  the property owner must notify the assessor prior to the 
109.30  commencement of the improvement; 
109.31     (6) the property, including its improvements, has received 
109.32  no public assistance, grants or financing; 
109.33     (7) the property is not receiving a property tax abatement 
109.34  under section 469.1813; and 
109.35     (8) the improvements are made after the effective date of 
109.36  this act and prior to January 1, 1999. 
110.1      The assessor shall estimate the market value of the 
110.2   building in the assessment year immediately following the year 
110.3   that (1) the building permit was taken out, or (2) the taxpayer 
110.4   notified the assessor that an improvement was to be made.  If 
110.5   the estimated market value of the building has increased over 
110.6   the prior year's assessment, the assessor shall note the amount 
110.7   of the increase on the property's record, and that amount shall 
110.8   be subtracted from the value of the property in each year for 
110.9   five years after the improvement has been made, at which time an 
110.10  amount equal to 20 percent of the excluded value shall be added 
110.11  back in each of the five subsequent assessment years. 
110.12     For any property, there can be no more than two 
110.13  improvements qualifying for exclusion under this subdivision.  
110.14  The maximum amount of value that can be excluded from any 
110.15  property under this subdivision is $50,000. 
110.16     The assessor shall require an application, including 
110.17  documentation of the age of the building from the owner, if 
110.18  unknown by the assessor.  Applications must be received prior to 
110.19  July 1 of any year in order to be effective for taxes payable in 
110.20  the following year. 
110.21     For purposes of this subdivision, "population" has the same 
110.22  meaning given in Minnesota Statutes, section 477A.011, 
110.23  subdivision 3. 
110.24     Sec. 53.  [CITY OF DULUTH; REASSESSMENTS OF CANCELED 
110.25  SPECIAL ASSESSMENTS.] 
110.26     Subdivision 1.  [AUTHORIZATION.] Notwithstanding any law, 
110.27  city charter provision, or ordinance to the contrary, if a 
110.28  parcel of tax-forfeited land located in the city of Duluth is 
110.29  returned to private ownership and the parcel is benefited by an 
110.30  improvement for which special assessments were canceled because 
110.31  of the forfeiture, the city council may, upon notice and hearing 
110.32  as provided for in the original assessment, make a reassessment 
110.33  or a new assessment as to the parcel in an amount equal to the 
110.34  amount remaining unpaid on the original assessment. 
110.35     Subd. 2.  [LOCAL APPROVAL REQUIRED.] This section is 
110.36  effective upon approval by the governing body of the city of 
111.1   Duluth and compliance with Minnesota Statutes, section 645.021, 
111.2   subdivision 3. 
111.3      Sec. 54.  [FLOODWOOD JOINT RECREATION BOARD TAX.] 
111.4      Subdivision 1.  [LEVY AUTHORIZATION.] Each year, the 
111.5   Floodwood joint recreation board may levy a tax not to exceed 
111.6   $25,000 on the value of property situated in the territory of 
111.7   independent school district No. 698 in accordance with this 
111.8   section.  Property in territory in the school district may be 
111.9   made subject to the tax permitted by this section by the 
111.10  agreement of the governing body or town board of the city or 
111.11  town where it is located.  The agreement may be by resolution of 
111.12  a governing body or town board or by a joint powers agreement 
111.13  pursuant to Minnesota Statutes, section 471.59.  If levied, the 
111.14  tax is in addition to all other taxes on the property subject to 
111.15  it permitted to be levied for park and recreation purposes by 
111.16  the cities and towns other than for the support of the joint 
111.17  recreation board.  It shall be disregarded in the calculation of 
111.18  all other mill rate or per capita tax levy limitations imposed 
111.19  by law or charter upon them.  A city or town may withdraw its 
111.20  agreement to future taxes by notice to the recreation board and 
111.21  the county auditor unless provided otherwise by a joint powers 
111.22  agreement.  The tax shall be collected by the applicable county 
111.23  auditor and treasurer and paid directly to the Floodwood joint 
111.24  recreation board.  
111.25     Subd. 2.  [LOCAL APPROVAL.] This section is effective in 
111.26  the city of Floodwood, the towns of Arrowhead, Fine Lakes, 
111.27  Floodwood, Halden, Van Buren, Cedar Valley, Prairie Lake, and 
111.28  Unorganized Township 52-21 in St. Louis county, and Unorganized 
111.29  Township 52-22 in Aitkin county the day after compliance with 
111.30  Minnesota Statutes, section 645.021, subdivision 3, by the 
111.31  governing body of each.  This section is effective for each 
111.32  city, town, and unorganized township regardless of the action of 
111.33  the others.  
111.34     Approval of this section is not agreement to be subject to 
111.35  the tax permitted by it.  Agreement to the tax must be by 
111.36  separate action in accordance with subdivision 1. 
112.1      Sec. 55.  [SAUK RIVER WATERSHED DISTRICT.] 
112.2      Subdivision 1.  [LEVY AUTHORIZATION.] Notwithstanding 
112.3   Minnesota Statutes, section 103D.905, subdivision 3, the Sauk 
112.4   River watershed district may levy up to $150,000 for its 
112.5   administrative fund for taxes levied in 1997, payable in 1998. 
112.6      Subd. 2.  [EFFECTIVE DATE.] This section is effective the 
112.7   day following final enactment. 
112.8      Sec. 56.  [VIRGINIA AREA AMBULANCE DISTRICT.] 
112.9      Subdivision 1.  [AGREEMENT; POWERS; GENERAL DESCRIPTION.] 
112.10  (a) The cities of Virginia, Mountain Iron, and Gilbert, and the 
112.11  towns of Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, 
112.12  Ellsburg, Wouri, Lavell, Cotton, and Embarrass, may by 
112.13  resolution of their city councils and town boards establish the 
112.14  Virginia area ambulance district. 
112.15     (b) The St. Louis county board may by resolution provide 
112.16  that property located in unorganized townships described in 
112.17  clauses (1) to (6) may be included within the district: 
112.18     (1) Township 61 North, Range 17 West; 
112.19     (2) Township 59 North, Ranges 16 and 18 West; 
112.20     (3) Township 56 North, Range 16 West; 
112.21     (4) Township 60 North, Range 18 West; 
112.22     (5) Township 55 North, Range 15; and 
112.23     (6) Township 57, Range 16.  
112.24     (c) The district shall make payments of the proceeds of the 
112.25  tax authorized in this section to the city of Virginia, which 
112.26  shall provide ambulance services throughout the district and may 
112.27  exercise all the powers of the cities and towns that relate to 
112.28  ambulance service anywhere within its territory.  
112.29     (d) Any other contiguous town or home rule charter or 
112.30  statutory city may join the district with the agreement of the 
112.31  cities and towns that comprise the district at the time of its 
112.32  application to join.  Action to join the district may be taken 
112.33  by the city council or town board of the city or town.  
112.34     Subd. 2.  [BOARD.] The district shall be governed by a 
112.35  board composed of one member appointed by the city council or 
112.36  town board of each city and town in the district.  A district 
113.1   board member may, but is not required to, be a member of a city 
113.2   council or town board.  Except as provided in this section, 
113.3   members shall serve two-year terms ending the first Monday in 
113.4   January and until their successors are appointed and qualified.  
113.5   Of the members first appointed, as far as possible, the terms of 
113.6   one-half shall expire on the first Monday in January in the 
113.7   first year following appointment and one-half the first Monday 
113.8   in January in the second year.  The terms of those initially 
113.9   appointed must be determined by lot.  If an additional member is 
113.10  added because an additional city or town joins the district, the 
113.11  member's term must be fixed so that, as far as possible, the 
113.12  terms of one-half of all the members expire on the same date. 
113.13     Subd. 3.  [TAX.] The district may impose a property tax on 
113.14  real and personal property in the district in an amount 
113.15  sufficient to discharge its operating expenses and debt payable 
113.16  in each year, but not to exceed .0528 percent of the district's 
113.17  taxable market value.  The St. Louis county auditor shall 
113.18  collect the tax and distribute it to the Virginia area ambulance 
113.19  district. 
113.20     Subd. 4.  [EXPENDITURES.] The taxes collected under 
113.21  subdivision 3 shall be used for licensed ambulance services and 
113.22  first responders.  Licensed ambulance services shall receive 80 
113.23  percent of the available funds and first responders shall 
113.24  receive 20 percent of the available funds.  The amounts 
113.25  allocated to first responders shall be used for education, 
113.26  training, and reimbursement for their allowable expenses.  Only 
113.27  education and training that meets the recognized education and 
113.28  training guidelines set by the emergency medical services 
113.29  regulatory board under Minnesota Statutes, chapter 144E, shall 
113.30  be reimbursable under this subdivision. 
113.31     Subd. 5.  [PUBLIC INDEBTEDNESS.] The district may incur 
113.32  debt in the manner provided for a municipality by Minnesota 
113.33  Statutes, chapter 475, when necessary to accomplish a duty 
113.34  charged to it. 
113.35     Subd. 6.  [WITHDRAWAL.] Upon two years' notice, a city or 
113.36  town may withdraw from the district.  Its territory shall remain 
114.1   subject to taxation for debt incurred prior to its withdrawal 
114.2   under Minnesota Statutes, chapter 475. 
114.3      Subd. 7.  [EFFECTIVE DATE.] This section is effective (1) 
114.4   in the cities of Virginia, Mountain Iron, and Gilbert, and the 
114.5   towns of Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, 
114.6   Ellsburg, Wouri, Lavell, Cotton, and Embarrass, the day after 
114.7   compliance with Minnesota Statutes, section 645.021, subdivision 
114.8   2, by the governing body of each, and (2) for unorganized 
114.9   townships described in subdivision 1, paragraph (b), clauses (1) 
114.10  to (6), the day after compliance with Minnesota Statutes, 
114.11  section 645.021, subdivision 2, by the St. Louis county board, 
114.12  provided that the district must be established by September 1, 
114.13  2000.  Any of the cities, towns, and unorganized townships 
114.14  listed in subdivision 1 that do not join the district initially 
114.15  may join the district after its establishment. 
114.16     Sec. 57.  [ST. LOUIS COUNTY; UTILITY PERSONAL PROPERTY 
114.17  EXEMPTION.] 
114.18     (a) An electric generating facility with a capacity of 
114.19  110,000 kilowatts located in St. Louis County whose operation is 
114.20  integral to the development and operation of a new, adjacent 
114.21  industrial park is exempt from property taxes on attached 
114.22  machinery and other personal property for replacement equipment 
114.23  and improvements installed after July 1, 1997.  If the 
114.24  industrial park is not built by July 1, 2001, this exemption 
114.25  expires.  
114.26     (b) The governing bodies of the county, city or town, and 
114.27  school district must each approve by resolution the exemption of 
114.28  the personal property under this section.  The resolution shall 
114.29  contain the number of years for which the exemption is granted.  
114.30  Each of the governing bodies shall file a copy of the resolution 
114.31  with the county auditor.  The county auditor shall publish the 
114.32  resolutions in newspapers of general circulation within the 
114.33  county.  The voters of the county may request a referendum on 
114.34  the proposed exemption by filing a petition within 30 days after 
114.35  the resolutions are published.  The petition must be signed by 
114.36  voters who reside in the county.  The number of signatures must 
115.1   equal at least ten percent of the number of persons voting in 
115.2   the county in the last general election.  If such a petition is 
115.3   timely filed, the resolutions are not effective until they have 
115.4   been submitted to the voters residing in the county at a general 
115.5   or special election and a majority of votes cast on the question 
115.6   of approving the resolution are in the affirmative.  The 
115.7   commissioner of revenue shall prepare a suggested form of 
115.8   question to be presented at the referendum. 
115.9      (c) The exemption under this section is limited to a 
115.10  maximum of five years, beginning with the assessment year 
115.11  immediately following when the personal property is put in 
115.12  operation and expires thereafter. 
115.13     Sec. 58.  [WASHINGTON COUNTY; LEVY TO FUND THE COUNTY 
115.14  HOUSING AND REDEVELOPMENT AUTHORITY.] 
115.15     Subdivision 1.  [AUTHORIZATION.] In addition to all other 
115.16  levies authorized by law, Washington county may levy an amount 
115.17  not to exceed $2,000,000 over a ten-year period beginning in 
115.18  1997 for taxes payable in 1998, and transfer the proceeds of the 
115.19  levy to the Washington county housing and redevelopment 
115.20  authority to be used to support the activities of the authority, 
115.21  which may include refinancing of indebtedness of the authority, 
115.22  in the city of Landfall. 
115.23     Subd. 2.  [LOCAL APPROVAL.] This section is effective upon 
115.24  approval by the governing body of Washington county and 
115.25  compliance with Minnesota Statutes, section 645.021, subdivision 
115.26  3. 
115.27     Sec. 59.  [BROOKLYN PARK; CERTIFICATION OF CHARGES; 
115.28  DEFINITIONS.] 
115.29     Subdivision 1.  [SCOPE.] For the purpose of sections 60 and 
115.30  61, the terms defined in this section have the meanings given 
115.31  them. 
115.32     Subd. 2.  [ASSOCIATION.] "Association" has the meaning 
115.33  given it in Minnesota Statutes, section 515B.1-103, paragraph 
115.34  (4). 
115.35     Subd. 3.  [AUTHORITY.] "Authority" means the Brooklyn Park 
115.36  economic development authority. 
116.1      Subd. 4.  [COMMON ELEMENTS.] "Common elements" has the 
116.2   meaning given it in Minnesota Statutes, section 515B.1-103, 
116.3   paragraph (7). 
116.4      Subd. 5.  [COMMON ELEMENT IMPROVEMENTS.] "Common element 
116.5   improvements" means any physical repair, replacement, or 
116.6   modification of, or addition to, the common elements of a common 
116.7   interest community. 
116.8      Subd. 6.  [COMMON INTEREST COMMUNITY.] "Common interest 
116.9   community" has the meaning given it in Minnesota Statutes, 
116.10  section 515B.1-103, paragraph (10). 
116.11     Subd. 7.  [UNIT.] "Unit" has the meaning given it in 
116.12  Minnesota Statutes, section 515B.1-103, paragraph (33). 
116.13     Subd. 8.  [UNIT OWNER.] "Unit owner" has the meaning given 
116.14  it in Minnesota Statutes, section 515B.1-103, paragraph (35). 
116.15     Sec. 60.  [BROOKLYN PARK; AUTHORITY GRANTED.] 
116.16     If: 
116.17     (1) the authority lends or agrees to lend funds to an 
116.18  association for the provision or construction of common element 
116.19  improvements; 
116.20     (2) the association has duly levied common expense 
116.21  assessments against the units in order to provide the 
116.22  association with funds to: 
116.23     (i) pay principal and interest on the loan; 
116.24     (ii) provide coverage in excess of principal and interest 
116.25  payments on the loan; 
116.26     (iii) create or replenish reserve funds pledged as security 
116.27  for the loan; or 
116.28     (iv) pay expenses related to the loan or the assessments 
116.29  that are identified in the loan agreement between the authority 
116.30  and the association; 
116.31     (3) a unit owner has become delinquent in the payment of 
116.32  any assessment installment; and 
116.33     (4) the association has declared the entire amount of the 
116.34  assessment due and owing pursuant to Minnesota Statutes, section 
116.35  515B.3-115, paragraph (k), then 
116.36  the authority may certify the delinquent assessment, together 
117.1   with interest and penalties, to the county auditor for 
117.2   collection to the same extent and in the same manner provided by 
117.3   law for the assessment and collection of real estate taxes. 
117.4      Sec. 61.  [BROOKLYN PARK; DISCLOSURE REQUIRED.] 
117.5      For any common interest community located in the city of 
117.6   Brooklyn Park, the disclosure statement required under Minnesota 
117.7   Statutes, section 515B.4-102, must include a description of the 
117.8   potential applicability and consequences of section 60. 
117.9      Sec. 62.  [MINNEAPOLIS UTILITY CHARGE ASSESSMENTS.] 
117.10     Subdivision 1.  [BECOMES LIEN WHEN DELINQUENT.] An 
117.11  assessment levied by the city of Minneapolis for delinquent 
117.12  utility charges, and interest and penalties on the charges under 
117.13  Minnesota Statutes, section 272.32; Laws 1969, chapter 499; Laws 
117.14  1973, chapter 320; or Laws 1994, chapter 587, article 9, section 
117.15  4, with accruing interest, is a lien upon all property included 
117.16  in the assessment, concurrent with general taxes, from the date 
117.17  the utility charges become delinquent, regardless of the date 
117.18  the assessment is levied.  The time of effect of a lien attached 
117.19  for delinquent utility charge assessments supersedes any 
117.20  contrary law in Minnesota Statutes, section 272.32 or 429.061. 
117.21     Subd. 2.  [WHEN DELINQUENT; STATEMENT REQUIRED.] Utility 
117.22  charges become delinquent for the purposes of this section when 
117.23  they are set forth in a statement sent by the city of 
117.24  Minneapolis to the current billpayer of the property subject to 
117.25  the utility charges and are not paid in full on or before the 
117.26  due date stated in the statement.  The utility billing office of 
117.27  the city of Minneapolis shall provide a written summary of 
117.28  unpaid utility statements within ten business days of receipt of 
117.29  a written request for a specified real property title 
117.30  transaction.  If a summary is not provided by the utility 
117.31  billing office within the requested time or a previous statement 
117.32  charge is omitted, those charges and the lien under subdivision 
117.33  1 are not enforceable against third parties who rely upon the 
117.34  summary for real property transaction purposes. 
117.35     Subd. 3.  [UTILITY CHARGES DEFINED.] "Utility charges," in 
117.36  this section, includes all fees, taxes, special charges, or 
118.1   other charges imposed by the city of Minneapolis in connection 
118.2   with the provision of services for sewer, water, solid waste 
118.3   collection and management, nuisance abatement, or other services 
118.4   or improvements specified in Minnesota Statutes, section 
118.5   429.101; Laws 1969, chapter 499; and Laws 1973, chapter 320.  
118.6      Subd. 4.  [NOT CONVEYANCES.] The statement issued by the 
118.7   city of Minneapolis for utility charges or any instrument in 
118.8   writing created in connection with any assessment for delinquent 
118.9   utility charges subject to this section are not conveyances as 
118.10  defined in Minnesota Statutes, section 507.01, and are not 
118.11  subject to the requirements of Minnesota Statutes, chapter 507, 
118.12  regarding conveyances of real estate. 
118.13     Sec. 63.  [BROOKLYN CENTER, RICHFIELD, AND ST. LOUIS PARK; 
118.14  APARTMENT EXCLUSIONS.] 
118.15     Subdivision 1.  [IMPROVEMENTS MADE TO CERTAIN 
118.16  APARTMENTS.] (a) Notwithstanding any other provisions to the 
118.17  contrary, the market value increase resulting from improvements 
118.18  made after the effective date of this act and prior to January 
118.19  1, 1999, to qualifying property located in the city of Brooklyn 
118.20  Center, Richfield, or St. Louis Park shall be excluded for 
118.21  assessment purposes under the conditions provided in this 
118.22  subdivision.  
118.23     (b) "Qualifying property" means property that meets all of 
118.24  the following criteria: 
118.25     (1) the building is at least 30 years old at the time of 
118.26  the improvements; 
118.27     (2) the building is residential real estate of four or more 
118.28  units and is classified under Minnesota Statutes, section 
118.29  273.13, subdivision 25, as class 4a, 4c, or 4d property; and 
118.30     (3) the total cost of the qualifying improvements exceeds 
118.31  $5,000 per unit. 
118.32     (c) A building permit must have been issued prior to the 
118.33  commencement of the improvements.  Only improvements to the 
118.34  residential structure and garages qualify under this 
118.35  subdivision.  The assessor shall require an application, 
118.36  including, if unknown by the assessor, documentation of the age 
119.1   of the building from the owner.  The application may be filed 
119.2   subsequent to the date of the building permit provided that the 
119.3   application is filed prior to the next assessment date. 
119.4      (d) If the property qualifies under this subdivision, the 
119.5   assessor shall note the qualifying value of the improvements on 
119.6   the property's record and that amount shall be subtracted from 
119.7   the qualifying property's market value for the five assessment 
119.8   years immediately following the year in which the improvements 
119.9   were completed, at which time the assessor shall determine the 
119.10  property's estimated market value, and 20 percent of the 
119.11  qualifying value shall be added back in each of the next five 
119.12  subsequent assessment years.  The assessor may require from the 
119.13  owner any documentation necessary to verify that the cost of 
119.14  improvements exceed the $5,000 per unit minimum.  
119.15     Subd. 2.  [EFFECTIVE DATE.] This section is effective for 
119.16  each of the cities of Brooklyn Center, Richfield, and St. Louis 
119.17  Park upon compliance with Minnesota Statutes, section 645.021, 
119.18  subdivision 3, by the governing body of that city. 
119.19     Sec. 64.  [PROPERTY TAX ABATEMENTS; FLOOD PROPERTY.] 
119.20     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
119.21  requirements of Minnesota Statutes, section 375.192, the county 
119.22  board of a qualified county may grant abatements of the full 
119.23  amount of taxes on eligible property for taxes payable in 1997 
119.24  as provided in this section.  The owner of the property is not 
119.25  required to apply for the abatement. 
119.26     Subd. 2.  [DEFINITIONS.] (a) As used in this section, the 
119.27  terms defined in this subdivision have the meanings given them. 
119.28     (b) "Qualified county" means any county that has been 
119.29  designated between April 1, 1997, and May 1, 1997, by the 
119.30  director of the Federal Emergency Management Agency as eligible 
119.31  for federal aid due to flooding. 
119.32     (c) "Eligible property" means a parcel of taxable property 
119.33  located in a qualified county that contains a structure that has 
119.34  been determined by the assessor to have lost over 50 percent of 
119.35  its estimated market value due to flooding and flood damage.  In 
119.36  the case of agricultural property, the abatement is limited to 
120.1   the taxes on the parcel attributable to the value of the house, 
120.2   garage, and surrounding one acre, if the house has lost over 50 
120.3   percent of its estimated market value, and the tax attributable 
120.4   to the value of any farm buildings and structures that have lost 
120.5   over 50 percent of their estimated market value. 
120.6      Subd. 3.  [ASSESSORS' DUTIES.] As soon as practicable, 
120.7   local and county assessors in qualified counties shall notify 
120.8   the county board and property owners of parcels of eligible 
120.9   property. 
120.10     Sec. 65.  [DISASTER AREA; DUE DATE EXTENDED FOR BUSINESS 
120.11  PROPERTY TAXES.] 
120.12     (a) Notwithstanding Minnesota Statutes, section 279.01, 
120.13  subdivision 1, a penalty shall not accrue if (1) because of a 
120.14  natural disaster, a taxpayer is unable to pay the first half of 
120.15  the payable 1997 property taxes on class 3a or 3b property, 
120.16  classified under Minnesota Statutes, section 273.13, subdivision 
120.17  24, located in an area designated by the Federal Emergency 
120.18  Management Agency pursuant to a major disaster declaration 
120.19  issued for Minnesota by President Clinton between April 1, 1997, 
120.20  and April 14, 1997, and (2) the taxpayer pays the first half of 
120.21  the payable 1997 taxes by October 15, 1997. 
120.22     (b) If the first one half payment is paid after October 15, 
120.23  1997, then all penalties that would have occurred on the due 
120.24  date under Minnesota Statutes, section 279.01, subdivision 1, 
120.25  shall be charged on the amount of the unpaid tax. 
120.26     (c) The property taxpayer shall attach to the payment a 
120.27  statement that the property is located in a disaster area and 
120.28  qualified for an extension under this section.  
120.29     Sec. 66.  [DELAY OF FINANCIAL REPORT FILING; DISASTER 
120.30  AREAS.] 
120.31     For any city or town located in whole or in part within a 
120.32  county that has been designated between April 1, 1997, and May 
120.33  1, 1997, by the director of the Federal Emergency Management 
120.34  Agency as eligible for federal aid due to flooding, the deadline 
120.35  by which financial reports are required to be filed under 
120.36  Minnesota Statutes, section 471.697 or 471.698, is extended by 
121.1   90 days. 
121.2      Sec. 67.  [LOW-INCOME HOUSING CREDITS; PRIORITY IN DISASTER 
121.3   AREAS.] 
121.4      For its 1998 allocation of low-income housing tax credits 
121.5   through the greater Minnesota pool under Minnesota Statutes, 
121.6   section 462A.222, the Minnesota housing finance agency must give 
121.7   priority to projects located in areas that have lost low-income 
121.8   housing due to the floods that occurred in this state during 
121.9   1997. 
121.10     Sec. 68.  [ELDERLY ASSISTED LIVING FACILITIES.] 
121.11     Subdivision 1.  [APPLICATION.] To facilitate a review by 
121.12  the 1998 legislature of the property taxation of elderly 
121.13  assisted living facilities and the development of standards and 
121.14  criteria for the taxation of these facilities, this section: 
121.15     (1) requires the commissioner of revenue to conduct a 
121.16  survey of the tax status of these facilities under subdivision 
121.17  2; and 
121.18     (2) prohibits changes in assessment practices and policies 
121.19  regarding these facilities under subdivision 3. 
121.20     Subd. 2.  [REPORT BY COMMISSIONER OF REVENUE.] The 
121.21  commissioner of revenue shall survey all county assessors on the 
121.22  tax status of all elderly assisted living facilities as defined 
121.23  in Minnesota Statutes, section 273.13, subdivision 25a, located 
121.24  in the state, and report the findings to the chairs of the house 
121.25  and senate tax committees by February 1, 1998.  The survey must 
121.26  include, but is not limited to, estimates of the amount of 
121.27  charitable contributions, if any, for each elderly assisted 
121.28  living facility and the relative portion of those charitable 
121.29  contributions to the total operating costs of the elderly 
121.30  assisted living facility. 
121.31     Subd. 3.  [MORATORIUM ON CHANGES IN ASSESSMENT 
121.32  PRACTICES.] (a) An assessor may not change the current practices 
121.33  or policies used generally in assessing elderly assisted living 
121.34  facilities. 
121.35     (b) An assessor may not change the assessment of an 
121.36  existing elderly assisted living facility, unless the change is 
122.1   made as a result of a change in ownership, occupancy, or use of 
122.2   the facility.  This paragraph does not apply to: 
122.3      (1) a facility that was constructed during calendar year 
122.4   1997; 
122.5      (2) a facility that was converted to an elderly assisted 
122.6   living facility during calendar year 1997; or 
122.7      (3) a change in market value. 
122.8      (c) This subdivision expires and no longer applies on the 
122.9   earlier of: 
122.10     (1) the enactment of legislation establishing criteria for 
122.11  the property taxation of elderly assisted living facilities; or 
122.12     (2) final adjournment of the 1998 legislature. 
122.13     Subd. 4.  [DEFINITION.] For purposes of this section, 
122.14  "elderly assisted living facility" has the meaning given in 
122.15  Minnesota Statutes, section 273.13, subdivision 25a. 
122.16     Sec. 69.  [INSTRUCTION TO THE REVISOR.] 
122.17     The revisor of statutes shall change the phrase "implicit 
122.18  price deflator for state and local government purchases of goods 
122.19  and services" wherever it appears in the next edition of 
122.20  Minnesota Statutes and Minnesota Rules to "implicit price 
122.21  deflator for government consumption expenditures and gross 
122.22  investment for state and local governments" unless the reference 
122.23  is to the implicit price deflator as of a specified date before 
122.24  January 1, 1996. 
122.25     Sec. 70.  [REPEALER.] 
122.26     (a) Minnesota Statutes 1996, sections 270B.12, subdivision 
122.27  11; 276.012; 290A.055; and 290A.26; and Laws 1995, chapter 264, 
122.28  article 4, as amended by Laws 1996, chapter 471, article 3, are 
122.29  repealed.  Notwithstanding Minnesota Statutes, section 645.34, 
122.30  the sections of statutes amended by the repealed Laws 1995, 
122.31  chapter 264, article 4, as amended, remain in effect as if not 
122.32  so amended. 
122.33     (b) Minnesota Statutes 1996, section 469.181, is repealed. 
122.34     (c) Minnesota Statutes 1996, sections 276.20; and 276.21, 
122.35  are repealed. 
122.36     Sec. 71.  [EFFECTIVE DATE.] 
123.1      Section 1 is effective for aids distributed in 1999 and 
123.2   thereafter.  
123.3      Sections 2 to 4, 6, 17, 23 to 25, 32, 51, 57, 64 to 67, and 
123.4   70, paragraph (a), are effective the day following final 
123.5   enactment. 
123.6      Sections 7, 8, 12 to 16, 18, 20, 21, 45 to 48, and 70, 
123.7   paragraph (c), are effective for the 1997 assessment and 
123.8   thereafter, for taxes payable in 1998 and thereafter. 
123.9      Section 10 is effective beginning with the 1997 assessment. 
123.10     Section 11 is effective beginning with the 1997 assessment 
123.11  and ending with the 2002 assessment, for qualifying improvements 
123.12  made after January 2, 1993, to a residence that has been 
123.13  relocated; provided, that any residence that originally 
123.14  qualifies in that time period is allowed to receive the benefits 
123.15  provided under section 11 for the full ten-year time period.  In 
123.16  order to qualify for a market value exclusion under Minnesota 
123.17  Statutes, section 273.11, subdivision 10, for the 1997 
123.18  assessment for improvements made to a relocated residence, a 
123.19  homeowner must notify the assessor by July 1, 1997. 
123.20     Section 19 is effective payable 1999 and thereafter. 
123.21     Section 22 is effective for the abstracts of exempt real 
123.22  property filed in 1998, and thereafter. 
123.23     Sections 33 and 42 are effective for agreements executed on 
123.24  or after the day following final enactment. 
123.25     Section 44 is effective the day following final enactment 
123.26  for all housing development projects. 
123.27     Section 49 is effective for aids payable in 1998 and 
123.28  thereafter.  
123.29     Sections 59 to 61 are effective the day after the governing 
123.30  body of Brooklyn Park complies with Minnesota Statutes, section 
123.31  645.021, subdivision 3. 
123.32     Section 70, paragraph (b), is effective for property tax 
123.33  deferrals granted after June 30, 1997. 
123.34                             ARTICLE 3 
123.35                            LEVY LIMITS 
123.36     Section 1.  Minnesota Statutes 1996, section 275.16, is 
124.1   amended to read: 
124.2      275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 
124.3      If any such municipality shall return to the county auditor 
124.4   a levy greater than permitted by chapters 124, 124A, 124B, 136C, 
124.5   and 136D, and sections 275.124 to 275.16, and sections 275.70 to 
124.6   275.74, such county auditor shall extend only such amount of 
124.7   taxes as the limitations herein prescribed will permit; 
124.8   provided, if such levy shall include any levy for the payment of 
124.9   bonded indebtedness or judgments, such levies for bonded 
124.10  indebtedness or judgments shall be extended in full, and the 
124.11  remainder of the levies shall be reduced so that the total 
124.12  thereof, including levies for bonds and judgments, shall not 
124.13  exceed such amount as the limitations herein prescribed will 
124.14  permit.  
124.15     Sec. 2.  Minnesota Statutes 1996, section 275.62, 
124.16  subdivision 1, is amended to read: 
124.17     Subdivision 1.  [REPORT ON TAXES LEVIED.] The commissioner 
124.18  of revenue shall establish procedures for the annual reporting 
124.19  of local government levies.  Each local governmental unit shall 
124.20  submit a report to the commissioner by December 30 of the year 
124.21  in which the tax is levied.  The report shall include, but is 
124.22  not limited to, information on the amount of the tax levied by 
124.23  the governmental unit for the following purposes: 
124.24     (1) debt, which includes taxes levied for the purposes 
124.25  defined in Minnesota Statutes 1991 Supplement, section 275.50, 
124.26  subdivision 5, clauses (b), (c), (d), and (e); 
124.27     (2) social services and related programs, which include 
124.28  taxes levied for the purposes defined in Minnesota Statutes 1991 
124.29  Supplement, section 275.50, subdivision 5, clauses (a), (j), and 
124.30  (v); 
124.31     (3) libraries, which include taxes levied for the purposes 
124.32  defined in Minnesota Statutes 1991 Supplement, section 275.50, 
124.33  subdivision 5, clause (n); and 
124.34     (4) for counties only, the amount of levy needed to fund 
124.35  increased county costs associated with the welfare reform under 
124.36  Minnesota Laws 1997, chapter 85, including increased 
125.1   administration and program costs of the income maintenance 
125.2   programs and also related support services as they relate 
125.3   directly to the welfare reform; and 
125.4      (5) other levies, which include the taxes levied for all 
125.5   purposes not included in clause (1), (2), or (3), or (4). 
125.6      Sec. 3.  [275.70] [LEVY LIMITATIONS; DEFINITIONS.] 
125.7      Subdivision 1.  [APPLICATION.] For the purposes of sections 
125.8   275.70 to 275.74, the following terms shall have the meanings 
125.9   given them, unless provided otherwise. 
125.10     Subd. 2.  [IMPLICIT PRICE DEFLATOR.] "Implicit price 
125.11  deflator" means the implicit price deflator for government 
125.12  consumption expenditures and gross investment for state and 
125.13  local governments prepared by the bureau of economic analysis of 
125.14  the United States Department of Commerce for the 12-month period 
125.15  ending March 31 of the levy year. 
125.16     Subd. 3.  [LOCAL GOVERNMENTAL UNIT.] "Local governmental 
125.17  unit" means a county, or a statutory or home rule charter city 
125.18  with a population greater than 2,500. 
125.19     Subd. 4.  [POPULATION AND HOUSEHOLD ESTIMATES.] "Population"
125.20  or "number of households" means the population or number of 
125.21  households for the local governmental unit as established by the 
125.22  last federal census, by a census taken under section 275.14, or 
125.23  by an estimate made by the metropolitan council or by the state 
125.24  demographer under section 4A.02, whichever is most recent as to 
125.25  the stated date of the count or estimate up to and including 
125.26  July 1 of the current levy year. 
125.27     Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
125.28  portions of ad valorem taxes levied by a local governmental unit 
125.29  for the following purposes or in the following manner: 
125.30     (1) to pay the costs of the principal and interest on 
125.31  bonded indebtedness or to reimburse for the amount of liquor 
125.32  store revenues used to pay the principal and interest due on 
125.33  municipal liquor store bonds in the year preceding the year for 
125.34  which the levy limit is calculated; 
125.35     (2) to pay the costs of principal and interest on 
125.36  certificates of indebtedness issued for any corporate purpose 
126.1   except for the following: 
126.2      (i) tax anticipation or aid anticipation certificates of 
126.3   indebtedness; 
126.4      (ii) certificates of indebtedness issued under sections 
126.5   298.28 and 298.282; 
126.6      (iii) certificates of indebtedness used to fund current 
126.7   expenses or to pay the costs of extraordinary expenditures that 
126.8   result from a public emergency; or 
126.9      (iv) certificates of indebtedness used to fund an 
126.10  insufficiency in tax receipts or an insufficiency in other 
126.11  revenue sources; 
126.12     (3) to provide for the bonded indebtedness portion of 
126.13  payments made to another political subdivision of the state of 
126.14  Minnesota; 
126.15     (4) to fund payments made to the Minnesota state armory 
126.16  building commission under section 193.145, subdivision 2, to 
126.17  retire the principal and interest on armory construction bonds; 
126.18     (5) for unreimbursed expenses related to flooding that 
126.19  occurred during the first half of calendar year 1997, as allowed 
126.20  by the commissioner of revenue under section 275.74, paragraph 
126.21  (b); 
126.22     (6) for local units of government located in an area 
126.23  designated by the Federal Emergency Management Agency pursuant 
126.24  to a major disaster declaration issued for Minnesota by 
126.25  President Clinton after April 1, 1997, and before April 21, 
126.26  1997, for the amount of tax dollars lost due to abatements 
126.27  authorized under section 273.123, subdivision 7, to the extent 
126.28  that they are related to the major disaster; 
126.29     (7) property taxes approved by voters which are levied 
126.30  against the referendum market value as provided under section 
126.31  275.61; 
126.32     (8) to fund matching requirements needed to qualify for 
126.33  federal or state grants or programs to the extent that either 
126.34  (i) the matching requirement exceeds the matching requirement in 
126.35  calendar year 1997, or (ii) it is a new matching requirement 
126.36  that didn't exist prior to 1998; and 
127.1      (9) to pay the expenses reasonably and necessarily incurred 
127.2   in preparing for or repairing the effects of natural disaster 
127.3   including the occurrence or threat of widespread or severe 
127.4   damage, injury, or loss of life or property resulting from 
127.5   natural causes, in accordance with standards formulated by the 
127.6   emergency services division of the state department of public 
127.7   safety, as allowed by the commissioner of revenue under section 
127.8   275.74, paragraph (b). 
127.9      Sec. 4.  [275.71] [LEVY LIMITS.] 
127.10     Subdivision 1.  [LIMIT ON LEVIES.] Notwithstanding any 
127.11  other provision of law or municipal charter to the contrary 
127.12  which authorize ad valorem taxes in excess of the limits 
127.13  established by sections 275.70 to 275.74, the provision of this 
127.14  section shall apply to local governmental units for all purposes 
127.15  other than those for which special levies and special 
127.16  assessments are made. 
127.17     Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
127.18  local governmental unit for taxes levied in 1997 shall be equal 
127.19  to the sum of: 
127.20     (1) the amount the local governmental unit levied in 1996, 
127.21  less any amount levied for debt, as reported to the department 
127.22  of revenue under section 275.62, subdivision 1, clause (1), and 
127.23  less any tax levied in 1996 against market value as provided for 
127.24  in section 275.61; 
127.25     (2) the amount of aids the local governmental unit was 
127.26  certified to receive in calendar year 1997 under sections 
127.27  477A.011 to 477A.03 before any reductions for state tax 
127.28  increment financing aid under section 273.1399, subdivision 5; 
127.29     (3) the amount of homestead and agricultural credit aid the 
127.30  local governmental unit was certified to receive under section 
127.31  273.1398 in calendar year 1997 before any reductions for tax 
127.32  increment financing aid under section 273.1399, subdivision 5; 
127.33     (4) the amount of local performance aid the local 
127.34  governmental unit was certified to receive in calendar year 1997 
127.35  under section 477A.05; 
127.36     (5) the amount of any payments certified to the local 
128.1   government unit in 1997 under sections 298.28 and 298.282; and 
128.2      (6) the amount of any adjustments authorized under section 
128.3   275.72. 
128.4      If a governmental unit was not required to report under 
128.5   section 275.62 for taxes levied in 1997, the commissioner shall 
128.6   request information on levies used for debt from the local 
128.7   governmental unit and adjust its levy limit base accordingly. 
128.8      (b) The levy limit base for a local governmental unit for 
128.9   taxes levied in 1998 is limited to its adjusted levy limit base 
128.10  in the previous year, subject to any adjustments under section 
128.11  275.72. 
128.12     Subd. 3.  [ADJUSTED LEVY LIMIT BASE.] For taxes levied in 
128.13  1997 and 1998, the adjusted levy limit is equal to the levy 
128.14  limit base computed under subdivision 2, multiplied by: 
128.15     (1) one plus a percentage equal to the percentage growth in 
128.16  the implicit price deflator; and 
128.17     (2) for all cities and for counties outside of the 
128.18  seven-county metropolitan area, one plus a percentage equal to 
128.19  the percentage increase in number of households, if any, for the 
128.20  most recent 12-month period for which data is available; and 
128.21     (3) for counties located in the seven-county metropolitan 
128.22  area, one plus a percentage equal to the greater of the 
128.23  percentage increase in the number of households in the county or 
128.24  the percentage increase in the number of households in the 
128.25  entire seven-county metropolitan area for the most recent 
128.26  12-month period for which data is available. 
128.27     Subd. 4.  [PROPERTY TAX LEVY LIMIT.] For taxes levied in 
128.28  1997 and 1998, the property tax levy limit for a local 
128.29  governmental unit is equal to its adjusted levy limit base 
128.30  determined under subdivision 3 plus any additional levy 
128.31  authorized under section 275.73, which is levied against net tax 
128.32  capacity, reduced by the sum of (1) the total amount of aids 
128.33  that the local governmental unit is certified to receive under 
128.34  sections 477A.011 to 477A.014, (2) homestead and agricultural 
128.35  aids it is certified to receive under section 273.1398, (3) 
128.36  local performance aid it is certified to receive under section 
129.1   477A.05, and (4) taconite aids under sections 298.28 and 298.282 
129.2   including any aid which was required to be placed in a special 
129.3   fund for expenditure in the next succeeding year. 
129.4      Subd. 5.  [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 
129.5   made by a city or county exceeds the levy limit provided in 
129.6   sections 275.70 to 275.74, except when the excess levy is due to 
129.7   the rounding of the rate in accordance with section 275.28, the 
129.8   county auditor shall only extend the amount of taxes permitted 
129.9   under sections 275.70 to 275.74, as provided for in section 
129.10  275.16. 
129.11     Sec. 5.  [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION 
129.12  AND ANNEXATION.] 
129.13     Subdivision 1.  [ADJUSTMENTS FOR CONSOLIDATION.] If all of 
129.14  the area included in two or more local governmental units is 
129.15  consolidated, merged, or otherwise combined to constitute a 
129.16  single governmental unit, the levy limit base for the resulting 
129.17  governmental unit in the first levy year in which the 
129.18  consolidation is effective shall be equal to (1) the highest tax 
129.19  rate in any of the merging governmental units in the previous 
129.20  year multiplied by the net tax capacity of all the merging 
129.21  governmental units in the previous year, minus (2) the sum of 
129.22  all levies in the merging governmental units in the previous 
129.23  year that qualify as special levies under section 275.70, 
129.24  subdivision 3. 
129.25     Subd. 2.  [ADJUSTMENTS FOR ANNEXATION.] If a local 
129.26  governmental unit increases its tax base through annexation of 
129.27  an area which is not the area of an entire local governmental 
129.28  unit, the levy limit base of the local governmental unit in the 
129.29  first year in which the annexation is effective shall be equal 
129.30  to its adjusted levy limit base from the previous year 
129.31  multiplied by the ratio of the net tax capacity in the local 
129.32  governmental unit after the annexation compared to its net tax 
129.33  capacity before the annexation. 
129.34     Subd. 3.  [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 
129.35  function or service of one local governmental unit is 
129.36  transferred to another local governmental unit, the levy limits 
130.1   established under section 275.71 shall be adjusted by the 
130.2   commissioner of revenue in such manner so as to fairly and 
130.3   equitably reflect the reduced or increased property tax burden 
130.4   resulting from the transfer.  The aggregate of the adjusted 
130.5   limitations shall not exceed the aggregate of the limitations 
130.6   prior to adjustment. 
130.7      Subd. 4.  [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 
130.8   Annexations, mergers, and shifts in services and functional 
130.9   responsibilities that are effective by June 30 of the levy year 
130.10  are included in the calculation of the levy limit for that levy 
130.11  year.  Annexations, mergers, and shifts in services and 
130.12  functional responsibilities that are effective after June 30 of 
130.13  a levy year are not included in the calculation of the levy 
130.14  limit until the subsequent levy year. 
130.15     Sec. 6.  [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.] 
130.16     Subdivision 1.  [ADDITIONAL LEVY AUTHORIZATION.] 
130.17  Notwithstanding the provisions of sections 275.70 to 275.72, but 
130.18  subject to other law or charter provisions establishing other 
130.19  limitations on the amount of property taxes a local governmental 
130.20  unit may levy, a local governmental unit may levy an additional 
130.21  levy in any amount which is approved by the majority of voters 
130.22  of the governmental unit voting on the question at a general or 
130.23  special election.  Notwithstanding section 275.61, any levy 
130.24  authorized under this section shall be levied against net tax 
130.25  capacity unless the levy required voter approval under another 
130.26  general or special law or any charter provisions.  When the 
130.27  governing body of the local governmental unit resolves to 
130.28  increase the levy pursuant to this section, it shall provide for 
130.29  submission of the proposition of an additional levy at a general 
130.30  or special election.  Notice of the election shall be given in 
130.31  the manner required by law.  The notice shall state the purpose 
130.32  and the maximum yearly amount of the additional levy. 
130.33     Subd. 2.  [LEVY EFFECTIVE DATE.] An additional levy 
130.34  approved under subdivision 1 at a general or special election 
130.35  held prior to September 1 in any levy year may be levied in that 
130.36  same levy year and subsequent levy years.  An additional levy 
131.1   approved under subdivision 1 at a general or special election 
131.2   held after August 31 in any levy year shall not be levied in 
131.3   that same levy but may be levied in subsequent levy years. 
131.4      Sec. 7.  [275.74] [STATE REGULATION OF LEVIES.] 
131.5      (a) The commissioner of revenue shall make all necessary 
131.6   calculations for determining levy limits for local governmental 
131.7   units and notify the affected governmental units of their levy 
131.8   limits directly by August 1 of each levy year.  The local 
131.9   governmental unit shall report by September 15, in a manner 
131.10  prescribed by the commissioner, the maximum amount of taxes it 
131.11  plans to levy for each of the purposes listed under special 
131.12  levies and any additional levy authorized under section 275.73, 
131.13  along with any necessary documentation.  The commissioner shall 
131.14  review the proposed special levies and make any adjustments 
131.15  needed.  The commissioner's decision is final.  The final 
131.16  allowed special levy amounts and any levy limit adjustments 
131.17  shall be certified back to the local governments by December 
131.18  10.  In addition, the commissioner of revenue shall notify all 
131.19  county auditors on or before five working days after December 20 
131.20  of the sum of the levy limit plus the total of allowed special 
131.21  levies for each local governmental unit located within their 
131.22  boundaries so that they may fix the levies as required in 
131.23  section 275.16.  The local governmental units shall provide the 
131.24  commissioner of revenue with all information that the 
131.25  commissioner deems necessary to make the calculations provided 
131.26  for in sections 275.70 to 275.73. 
131.27     (b) A local governmental unit may request authorization to 
131.28  levy under section 275.70, subdivision 5, clause (5), if (i) the 
131.29  governmental unit is located in an area designated by the 
131.30  Federal Emergency Management Agency pursuant to a major disaster 
131.31  declaration issued for Minnesota by President Clinton after 
131.32  April 1, 1997, and before April 21, 1997, and (ii) the amount of 
131.33  direct unreimbursed costs incurred by the governmental unit 
131.34  related to the flooding and its clean up, including emergency 
131.35  disaster assistance to residents, exceeds five percent of its 
131.36  levy in 1997.  A local governmental unit may request 
132.1   authorization to levy for unreimbursed costs for other natural 
132.2   disasters, except the 1997 floods, under section 275.70, 
132.3   subdivision 5, clause (9).  The local governmental unit must 
132.4   submit a request to levy under section 275.70, subdivision 5, 
132.5   clause (5) or (9), to the commissioner of revenue by September 
132.6   15 of the levy year and the request must include information 
132.7   documenting the estimated unreimbursed costs.  The commissioner 
132.8   of revenue may grant levy authority, up to the amount requested 
132.9   based on the documentation submitted.  All decisions of the 
132.10  commissioner are final.  The commissioner shall send a report to 
132.11  the chairs of the house and senate tax committees on the levies 
132.12  authorized and levied under this provision by February 28 of the 
132.13  year following the levy year. 
132.14     Sec. 8.  [FARIBAULT COUNTY; CITY OF BLUE EARTH; SPECIAL 
132.15  LEVY.] 
132.16     The amount of taxes levied by Faribault county and by the 
132.17  city of Blue Earth is a special levy for the purposes of levy 
132.18  limits under Minnesota Statutes, sections 275.70 to 275.73, if 
132.19  the levy's purpose is to raise the matching funds required to 
132.20  receive restitution funds awarded by plea agreement in the case 
132.21  of United States v. Darling International, Inc., for developing 
132.22  environmental projects that will improve water quality in the 
132.23  Blue Earth and Minnesota rivers. 
132.24     Sec. 9.  [EFFECTIVE DATE.] 
132.25     Sections 1 to 7 are effective for taxes levied in 1997 and 
132.26  1998, payable in 1998 and 1999. 
132.27     Upon compliance with Minnesota Statutes, section 645.021, 
132.28  subdivision 3, by the governing body of Faribault county or the 
132.29  city of Blue Earth, section 8 is effective for taxes levied in 
132.30  1997 and 1998 in the county or city that approves it. 
132.31                             ARTICLE 4
132.32                         TRUTH IN TAXATION
132.33     Section 1.  Minnesota Statutes 1996, section 275.065, 
132.34  subdivision 1, is amended to read: 
132.35     Subdivision 1.  [PROPOSED LEVY.] (a) Notwithstanding any 
132.36  law or charter to the contrary, on or before September 15, each 
133.1   taxing authority, other than a school district, shall adopt a 
133.2   proposed budget and shall certify to the county auditor the 
133.3   proposed or, in the case of a town, the final property tax levy 
133.4   for taxes payable in the following year. 
133.5      (b) On or before September 30, each school district shall 
133.6   certify to the county auditor the proposed property tax levy for 
133.7   taxes payable in the following year.  The school district may 
133.8   shall certify the proposed levy as: 
133.9      (1) a specific dollar amount; or the state determined 
133.10  school levy amount as prescribed under section 124A.23, 
133.11  subdivision 2; 
133.12     (2) voter approved referendum and debt levies; and 
133.13     (2) an amount equal to (3) the sum of the remaining school 
133.14  levies, or the maximum levy limitation certified by the 
133.15  commissioner of children, families, and learning to the county 
133.16  auditor according to section 124.918, subdivision 1, less the 
133.17  amounts levied under clauses (1) and (2). 
133.18     (c) If the board of estimate and taxation or any similar 
133.19  board that establishes maximum tax levies for taxing 
133.20  jurisdictions within a first class city certifies the maximum 
133.21  property tax levies for funds under its jurisdiction by charter 
133.22  to the county auditor by September 15, the city shall be deemed 
133.23  to have certified its levies for those taxing jurisdictions. 
133.24     (d) For purposes of this section, "taxing authority" 
133.25  includes all home rule and statutory cities, towns, counties, 
133.26  school districts, and special taxing districts as defined in 
133.27  section 275.066.  Intermediate school districts that levy a tax 
133.28  under chapter 124 or 136D, joint powers boards established under 
133.29  sections 124.491 to 124.495, and common school districts No. 
133.30  323, Franconia, and No. 815, Prinsburg, are also special taxing 
133.31  districts for purposes of this section.  
133.32     Sec. 2.  Minnesota Statutes 1996, section 275.065, is 
133.33  amended by adding a subdivision to read: 
133.34     Subd. 1a.  [LEVY; SHARED, MERGED, CONSOLIDATED 
133.35  SERVICES.] If two or more taxing authorities are in the process 
133.36  of negotiating an agreement for sharing, merging, or 
134.1   consolidating services between those taxing authorities at the 
134.2   time the proposed levy is to be certified under subdivision 1, 
134.3   each taxing authority involved in the negotiation shall certify 
134.4   its total proposed levy as provided in that subdivision, 
134.5   including a notification to the county auditor of the specific 
134.6   service involved in the agreement which is not yet finalized.  
134.7   The affected taxing authorities may amend their proposed levies 
134.8   under subdivision 1 until October 10 for levy amounts relating 
134.9   only to the specific service involved. 
134.10     Sec. 3.  Minnesota Statutes 1996, section 275.065, 
134.11  subdivision 3, is amended to read: 
134.12     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
134.13  county auditor shall prepare and the county treasurer shall 
134.14  deliver after November 10 and on or before November 24 each 
134.15  year, by first class mail to each taxpayer at the address listed 
134.16  on the county's current year's assessment roll, a notice of 
134.17  proposed property taxes and, in the case of a town, final 
134.18  property taxes.  
134.19     (b) The commissioner of revenue shall prescribe the form of 
134.20  the notice. 
134.21     (c) The notice must inform taxpayers that it contains the 
134.22  amount of property taxes each taxing authority other than a town 
134.23  proposes to collect for taxes payable the following year and, 
134.24  for a town, the amount of its final levy.  It In the case of a 
134.25  town, or in the case of the state determined portion of the 
134.26  school district levy, the final tax amount will be its proposed 
134.27  tax.  The notice must clearly state that each taxing authority, 
134.28  including regional library districts established under section 
134.29  134.201, and including the metropolitan taxing districts as 
134.30  defined in paragraph (i), but excluding all other special taxing 
134.31  districts and towns, will hold a public meeting to receive 
134.32  public testimony on the proposed budget and proposed or final 
134.33  property tax levy, or, in case of a school district, on the 
134.34  current budget and proposed property tax levy.  It must clearly 
134.35  state the time and place of each taxing authority's meeting and 
134.36  an address where comments will be received by mail.  
135.1      (d) The notice must state for each parcel: 
135.2      (1) the market value of the property as determined under 
135.3   section 273.11, and used for computing property taxes payable in 
135.4   the following year and for taxes payable in the current year; 
135.5   and, in the case of residential property, whether the property 
135.6   is classified as homestead or nonhomestead.  The notice must 
135.7   clearly inform taxpayers of the years to which the market values 
135.8   apply and that the values are final values; 
135.9      (2) the items listed below, shown separately by county, 
135.10  city or town, school district excess referenda levy state 
135.11  determined school tax net of the education homestead credit 
135.12  under section 273.1382, remaining voter approved school levy, 
135.13  other local school district levy, regional library district, if 
135.14  in existence, the total of the metropolitan special taxing 
135.15  districts as defined in paragraph (i) and the sum of 
135.16  the remaining special taxing districts, and as a total of the 
135.17  all taxing authorities, including all special taxing districts, 
135.18  the proposed or, for a town, final net tax on the property for 
135.19  taxes payable the following year and the actual tax for taxes 
135.20  payable the current year: 
135.21     (i) the actual tax for taxes payable in the current year; 
135.22     (ii) the tax change due to spending factors, defined as the 
135.23  proposed tax minus the constant spending tax amount; 
135.24     (iii) the tax change due to other factors, defined as the 
135.25  constant spending tax amount minus the actual current year tax; 
135.26  and 
135.27     (iv) the proposed tax amount. 
135.28     In the case of a town or the state determined school tax, 
135.29  the final tax shall also be its proposed tax unless the town 
135.30  changes its levy at a special town meeting under section 
135.31  365.52.  If a school district has certified under section 
135.32  124A.03, subdivision 2, that a referendum will be held in the 
135.33  school district at the November general election, the county 
135.34  auditor must note next to the school district's proposed amount 
135.35  that a referendum is pending and that, if approved by the 
135.36  voters, the tax amount may be higher than shown on the 
136.1   notice.  For the purposes of this subdivision, "school district 
136.2   excess referenda levy" means school district taxes for operating 
136.3   purposes approved at referendums, including those taxes based on 
136.4   net tax capacity as well as those based on market value.  
136.5   "School district excess referenda levy" does not include school 
136.6   district taxes for capital expenditures approved at referendums 
136.7   or school district taxes to pay for the debt service on bonds 
136.8   approved at referenda.  In the case of the city of Minneapolis, 
136.9   the levy for the Minneapolis library board and the levy for 
136.10  Minneapolis park and recreation shall be listed separately from 
136.11  the remaining amount of the city's levy.  In the case of a 
136.12  parcel where tax increment or the fiscal disparities areawide 
136.13  tax under chapter 276A or 473F applies, the proposed tax levy on 
136.14  the captured value or the proposed tax levy on the tax capacity 
136.15  subject to the areawide tax must each be stated separately and 
136.16  not included in the sum of the special taxing districts; and 
136.17     (3) the increase or decrease in the amounts in clause (2) 
136.18  from between the total taxes payable in the current year to and 
136.19  the total proposed or, for a town, final taxes payable the 
136.20  following year taxes, expressed as a dollar amount and as a 
136.21  percentage. 
136.22     (e) The notice must clearly state that the proposed or 
136.23  final taxes do not include the following: 
136.24     (1) special assessments; 
136.25     (2) levies approved by the voters after the date the 
136.26  proposed taxes are certified, including bond referenda, school 
136.27  district levy referenda, and levy limit increase referenda; 
136.28     (3) amounts necessary to pay cleanup or other costs due to 
136.29  a natural disaster occurring after the date the proposed taxes 
136.30  are certified; 
136.31     (4) amounts necessary to pay tort judgments against the 
136.32  taxing authority that become final after the date the proposed 
136.33  taxes are certified; and 
136.34     (5) the contamination tax imposed on properties which 
136.35  received market value reductions for contamination. 
136.36     (f) Except as provided in subdivision 7, failure of the 
137.1   county auditor to prepare or the county treasurer to deliver the 
137.2   notice as required in this section does not invalidate the 
137.3   proposed or final tax levy or the taxes payable pursuant to the 
137.4   tax levy. 
137.5      (g) If the notice the taxpayer receives under this section 
137.6   lists the property as nonhomestead and the homeowner provides 
137.7   satisfactory documentation to the county assessor that the 
137.8   property is owned and used as the owner's homestead, the 
137.9   assessor shall reclassify the property to homestead for taxes 
137.10  payable in the following year. 
137.11     (h) In the case of class 4 residential property used as a 
137.12  residence for lease or rental periods of 30 days or more, the 
137.13  taxpayer must either: 
137.14     (1) mail or deliver a copy of the notice of proposed 
137.15  property taxes to each tenant, renter, or lessee; or 
137.16     (2) post a copy of the notice in a conspicuous place on the 
137.17  premises of the property.  
137.18     The notice must be mailed or posted by the taxpayer by 
137.19  November 27 or within three days of receipt of the notice, 
137.20  whichever is later.  A taxpayer may notify the county treasurer 
137.21  of the address of the taxpayer, agent, caretaker, or manager of 
137.22  the premises to which the notice must be mailed in order to 
137.23  fulfill the requirements of this paragraph. 
137.24     (i) For purposes of this subdivision, subdivisions 5a and 
137.25  6, "metropolitan special taxing districts" means the following 
137.26  taxing districts in the seven-county metropolitan area that levy 
137.27  a property tax for any of the specified purposes listed below: 
137.28     (1) metropolitan council under section 473.132, 473.167, 
137.29  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
137.30     (2) metropolitan airports commission under section 473.667, 
137.31  473.671, or 473.672; and 
137.32     (3) metropolitan mosquito control commission under section 
137.33  473.711. 
137.34     For purposes of this section, any levies made by the 
137.35  regional rail authorities in the county of Anoka, Carver, 
137.36  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
138.1   398A shall be included with the appropriate county's levy and 
138.2   shall be discussed at that county's public hearing. 
138.3      (j) For taxes levied in 1996, payable in 1997 only, in the 
138.4   case of a statutory or home rule charter city or town that 
138.5   exercises the local levy option provided in section 473.388, 
138.6   subdivision 7, the notice of its proposed taxes may include a 
138.7   statement of the amount by which its proposed tax increase for 
138.8   taxes payable in 1997 is attributable to its exercise of that 
138.9   option, together with a statement that the levy of the 
138.10  metropolitan council was decreased by a similar amount because 
138.11  of the exercise of that option. 
138.12     Sec. 4.  Minnesota Statutes 1996, section 275.065, is 
138.13  amended by adding a subdivision to read: 
138.14     Subd. 3a.  [CONSTANT SPENDING LEVY AMOUNT.] (a) For 
138.15  purposes of this section, "constant spending levy amount" for a 
138.16  county, city, town, or special taxing district means the 
138.17  property tax levy that the taxing authority would need to levy 
138.18  so that the sum of (i) its levy, including its fiscal 
138.19  disparities distribution levy under section 276A.06, subdivision 
138.20  3, clause (a), or 473F.08, subdivision 3, clause (a), plus (ii) 
138.21  its property tax aid amounts, would remain constant from the 
138.22  current year to the proposed year, taking into account the 
138.23  fiscal disparities distribution levy amounts and the property 
138.24  tax aid amounts that have been certified for the proposed year.  
138.25  For the purposes of this paragraph, property tax aids include 
138.26  homestead and agricultural credit aid under section 273.1398, 
138.27  subdivision 2, local government aid under section 477A.013, 
138.28  local performance aid under section 477A.05, county criminal 
138.29  justice aid under section 477A.0121, and family preservation aid 
138.30  under section 477A.0122. 
138.31     (b) For the state determined school tax, "constant spending 
138.32  levy amount" is the same as the proposed tax. 
138.33     (c) For the voter approved school levy, "constant spending 
138.34  levy amount" is the result of the following computation:  (i) 
138.35  compute the current year's revenue per pupil in average daily 
138.36  membership as the ratio of the voter approved referendum and 
139.1   debt service levy plus aid revenue to the number of pupils in 
139.2   average daily membership, as estimated at the time of levy 
139.3   certification the previous December; (ii) compute the proposed 
139.4   year's levy ratio as ratio of the proposed year's levy 
139.5   limitation for voter approved referendum and debt service 
139.6   revenue to the maximum referendum and debt service levy plus aid 
139.7   revenue for the proposed year, at the time of proposed levy 
139.8   certification in September; and (iii) compute the "constant 
139.9   spending levy amount" as the product of the current year's 
139.10  revenue per pupil from clause (i) times the proposed year's levy 
139.11  ratio from clause (ii) times the proposed year's pupils in 
139.12  average daily membership. 
139.13     (d) For the sum of all other school levies not included in 
139.14  paragraph (b) or (c), "constant spending levy amount" is the 
139.15  result of the following computation:  (i) compute the current 
139.16  year's revenue per pupil in average daily membership as the 
139.17  ratio of the levy plus associated aid revenue to the number of 
139.18  pupils in average daily membership, as estimated at the time of 
139.19  levy certification the previous December; (ii) compute the 
139.20  proposed year's levy ratio as ratio of the proposed year's levy 
139.21  limitation to the maximum levy plus associated aid revenue for 
139.22  the proposed year, estimated at the time of proposed levy 
139.23  certification in September; and (iii) compute the "constant 
139.24  spending levy amount" as the product of the current year's 
139.25  revenue per pupil from clause (i) times the proposed year's levy 
139.26  ratio from clause (ii) times the proposed year's pupils in 
139.27  average daily membership. 
139.28     (e) Each year, the commissioner of children, families, and 
139.29  learning must compute and report to the county auditor each 
139.30  school district's constant spending levy amounts by September 
139.31  30.  In no case shall a constant spending levy amount be less 
139.32  than $0.  For the purposes of this subdivision, school homestead 
139.33  and agricultural credit aid under section 273.1398, subdivision 
139.34  2, shall be included in the other school levy category.  For 
139.35  purposes of this subdivision, the school fiscal disparities 
139.36  distribution levy shall be apportioned proportionately among 
140.1   levy categories. 
140.2      (f) For the tax increment financing tax, and the fiscal 
140.3   disparities tax, the "constant spending levy amount" is the same 
140.4   as the proposed tax.  
140.5      Sec. 5.  Minnesota Statutes 1996, section 275.065, 
140.6   subdivision 5a, is amended to read: 
140.7      Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
140.8   population of more than 2,500, county, a metropolitan special 
140.9   taxing district as defined in subdivision 3, paragraph (i), a 
140.10  regional library district established under section 134.201, or 
140.11  school district shall advertise in a newspaper a notice of its 
140.12  intent to adopt a budget and property tax levy or, in the case 
140.13  of a school district, to review its current budget and proposed 
140.14  property taxes payable in the following year, at a public 
140.15  hearing.  The notice must be published not less than two 
140.16  business days nor more than six business days before the hearing.
140.17     The advertisement must be at least one-eighth page in size 
140.18  of a standard-size or a tabloid-size newspaper.  The 
140.19  advertisement must not be placed in the part of the newspaper 
140.20  where legal notices and classified advertisements appear.  The 
140.21  advertisement must be published in an official newspaper of 
140.22  general circulation in the taxing authority.  The newspaper 
140.23  selected must be one of general interest and readership in the 
140.24  community, and not one of limited subject matter.  The 
140.25  advertisement must appear in a newspaper that is published at 
140.26  least once per week.  
140.27     For purposes of this section, the metropolitan special 
140.28  taxing district's advertisement must only be published in the 
140.29  Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
140.30     (b) The advertisement for school districts, metropolitan 
140.31  special taxing districts, and regional library districts must be 
140.32  in the following form, except that the notice for a school 
140.33  district may include references to the current budget in regard 
140.34  to proposed property taxes. 
140.35                             "NOTICE OF
140.36                      PROPOSED PROPERTY TAXES
141.1             (City/County/School District/Metropolitan
141.2                   Special Taxing District/Regional
141.3                    Library District) of .........
141.4   The governing body of ........ will soon hold budget hearings 
141.5   and vote on the property taxes for (city/county/metropolitan 
141.6   special taxing district/regional library district services that 
141.7   will be provided in 199_ (year)/school district services that 
141.8   will be provided in 199_ (year) and 199_ (year)). 
141.9                      NOTICE OF PUBLIC HEARING:
141.10  All concerned citizens are invited to attend a public hearing 
141.11  and express their opinions on the proposed (city/county/school 
141.12  district/metropolitan special taxing district/regional library 
141.13  district) budget and property taxes, or in the case of a school 
141.14  district, its current budget and proposed property taxes, 
141.15  payable in the following year.  The hearing will be held on 
141.16  (Month/Day/Year) at (Time) at (Location, Address)." 
141.17     (c) The advertisement for cities and counties must be in 
141.18  the following form. 
141.19                       "NOTICE OF PROPOSED
141.20                 TOTAL BUDGET AND PROPERTY TAXES
141.21  The (city/county) governing body or board of commissioners will 
141.22  hold a public hearing to discuss the budget and to vote on the 
141.23  amount of property taxes to collect for services the 
141.24  (city/county) will provide in (year). 
141.25     
141.26  SPENDING:  The total budget amounts below compare 
141.27  (city's/county's) (year) total actual budget with the amount the 
141.28  (city/county) proposes to spend in (year). 
141.29     
141.30  (Year) Total          Proposed (Year)          Change from
141.31  Actual Budget             Budget               (Year)-(Year)
141.32     
141.33    $.......              $.......                ...%
141.34     
141.35  TAXES:  The property tax amounts below compare that portion of 
141.36  the current budget levied in property taxes in (city/county) for 
142.1   (year) with the property taxes the (city/county) proposes to 
142.2   collect in (year). 
142.3      
142.4   (Year) Property       Proposed (Year)          Change from
142.5       Taxes              Property Taxes         (Year)-(Year)
142.6      
142.7     $.......              $.......                ...% 
142.8      
142.9                     ATTEND THE PUBLIC HEARING
142.10  All (city/county) residents are invited to attend the public 
142.11  hearing of the (city/county) to express your opinions on the 
142.12  budget and the proposed amount of (year) property taxes.  The 
142.13  hearing will be held on: 
142.14                      (Month/Day/Year/Time)
142.15                        (Location/Address)
142.16  If the discussion of the budget cannot be completed, a time and 
142.17  place for continuing the discussion will be announced at the 
142.18  hearing.  You are also invited to send your written comments to: 
142.19                          (City/County)
142.20                       (Location/Address)"
142.21     (d) For purposes of this subdivision, the budget amounts 
142.22  listed on the advertisement mean: 
142.23     (1) for cities, the total government fund expenditures, as 
142.24  defined by the state auditor under section 471.6965, less any 
142.25  expenditures for improvements or services that are specially 
142.26  assessed or charged under chapter 429, 430, 435, or the 
142.27  provisions of any other law or charter; and 
142.28     (2) for counties, the total government fund expenditures, 
142.29  as defined by the state auditor under section 375.169, less any 
142.30  expenditures for direct payments to recipients or providers for 
142.31  the human service aids listed below: 
142.32     (1) aid to families with dependent children under sections 
142.33  256.82, subdivision 1, and 256.935, subdivision 1; 
142.34     (2) medical assistance under sections 256B.041, subdivision 
142.35  5, and 256B.19, subdivision 1; 
142.36     (3) general assistance medical care under section 256D.03, 
143.1   subdivision 6; 
143.2      (4) general assistance under section 256D.03, subdivision 
143.3   2; 
143.4      (5) emergency assistance under section 256.871, subdivision 
143.5   6; 
143.6      (6) Minnesota supplemental aid under section 256D.36, 
143.7   subdivision 1; 
143.8      (7) preadmission screening under section 256B.0911, and 
143.9   alternative care grants under section 256B.0913; 
143.10     (8) general assistance medical care claims processing, 
143.11  medical transportation and related costs under section 256D.03, 
143.12  subdivision 4; 
143.13     (9) medical transportation and related costs under section 
143.14  256B.0625, subdivisions 17 to 18a; 
143.15     (10) group residential housing under 256I.05, subdivision 
143.16  8, transferred from programs in clauses (4) and (6); or 
143.17     (11) any successor programs to those listed in clauses (1) 
143.18  to (10). 
143.19     (c) (e) A city with a population of over 500 but not more 
143.20  than 2,500 must advertise by posted notice as defined in section 
143.21  645.12, subdivision 1.  The advertisement must be posted at the 
143.22  time provided in paragraph (a).  It must be in the form required 
143.23  in paragraph (b). 
143.24     (d) (f) For purposes of this subdivision, the population of 
143.25  a city is the most recent population as determined by the state 
143.26  demographer under section 4A.02. 
143.27     (e) (g) The commissioner of revenue, subject to the 
143.28  approval of the chairs of the house and senate tax committees, 
143.29  shall prescribe the form and format of the advertisement. 
143.30     (f) For calendar year 1993, each taxing authority required 
143.31  to publish an advertisement must include on the advertisement a 
143.32  statement that information on the increases or decreases of the 
143.33  total budget, including employee and independent contractor 
143.34  compensation in the prior year, current year, and proposed 
143.35  budget year will be discussed at the hearing. 
143.36     (g) Notwithstanding paragraph (f), for 1993, the 
144.1   commissioner of revenue shall prescribe the form, format, and 
144.2   content of an advertisement comparing current and proposed 
144.3   expense budgets for the metropolitan council, the metropolitan 
144.4   airports commission, and the metropolitan mosquito control 
144.5   commission.  The expense budget must include occupancy, 
144.6   personnel, contractual and capital improvement expenses.  The 
144.7   form, format, and content of the advertisement must be approved 
144.8   by the chairs of the house and senate tax committees prior to 
144.9   publication. 
144.10     Sec. 6.  Minnesota Statutes 1996, section 275.065, 
144.11  subdivision 6, is amended to read: 
144.12     Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
144.13     (a) For purposes of this section, the following terms shall 
144.14  have the meanings given: 
144.15     (1) "Initial hearing" means the first and primary hearing 
144.16  held to discuss the taxing authority's proposed budget and 
144.17  proposed property tax levy for taxes payable in the following 
144.18  year, or, for school districts, the current budget and the 
144.19  proposed property tax levy for taxes payable in the following 
144.20  year. 
144.21     (2) "Continuation hearing" means a hearing held to complete 
144.22  the initial hearing, if the initial hearing is not completed on 
144.23  its scheduled date. 
144.24     (3) "Subsequent hearing" means the hearing held to adopt 
144.25  the taxing authority's final property tax levy, and, in the case 
144.26  of taxing authorities other than school districts, the final 
144.27  budget, for taxes payable in the following year. 
144.28     (b) Between November 29 and December 20, the governing 
144.29  bodies of a city that has a population over 500, county, 
144.30  metropolitan special taxing districts as defined in subdivision 
144.31  3, paragraph (i), and regional library districts shall each hold 
144.32  a an initial public hearing to discuss and seek public comment 
144.33  on its final budget and property tax levy for taxes payable in 
144.34  the following year, and the governing body of the school 
144.35  district shall hold a an initial public hearing to review its 
144.36  current budget and proposed property tax levy for taxes payable 
145.1   in the following year.  The metropolitan special taxing 
145.2   districts shall be required to hold only a single joint initial 
145.3   public hearing, the location of which will be determined by the 
145.4   affected metropolitan agencies. 
145.5      (c) The initial hearing must be held after 5:00 p.m. if 
145.6   scheduled on a day other than Saturday.  No initial hearing may 
145.7   be held on a Sunday.  
145.8      (d) At the initial hearing under this subdivision, the 
145.9   percentage increase in property taxes proposed by the taxing 
145.10  authority, if any, and the specific purposes for which property 
145.11  tax revenues are being increased must be discussed.  During the 
145.12  discussion, the governing body shall hear comments regarding a 
145.13  proposed increase and explain the reasons for the proposed 
145.14  increase.  The public shall be allowed to speak and to ask 
145.15  questions.  At the public hearing, the school district must also 
145.16  provide and discuss information on the distribution of its 
145.17  revenues by revenue source, and the distribution of its spending 
145.18  by program area.  
145.19     (e) If the initial hearing is not completed on its 
145.20  scheduled date, the taxing authority must announce, prior to 
145.21  adjournment of the hearing, the date, time, and place for the 
145.22  continuation of the hearing.  The continuation hearing must be 
145.23  held at least five business days but no more than 14 business 
145.24  days after the initial hearing.  A continuation hearing may not 
145.25  be held later than December 20 except as provided in paragraphs 
145.26  (f) and (g).  A continuation hearing must be held after 5:00 
145.27  p.m. if scheduled on a day other than Saturday.  No continuation 
145.28  hearing may be held on a Sunday. 
145.29     (f) The governing body of a county shall hold its initial 
145.30  hearing on the second Tuesday in December each year, and may 
145.31  hold additional initial hearings on other dates before December 
145.32  20 if necessary for the convenience of county residents.  If the 
145.33  county needs a continuation of its hearing, the continuation 
145.34  hearing shall be held on the third Tuesday in December.  If the 
145.35  third Tuesday in December falls on December 21, the county's 
145.36  continuation hearing shall be held on Monday, December 20.  
146.1      (g) The metropolitan special taxing districts shall hold a 
146.2   joint initial public hearing on the first Monday of December.  A 
146.3   continuation hearing, if necessary, shall be held on the second 
146.4   Monday of December even if that second Monday is after December 
146.5   10. 
146.6      (h) The county auditor shall provide for the coordination 
146.7   of initial and continuation hearing dates for all school 
146.8   districts and cities within the county to prevent conflicts 
146.9   under clauses (i) and (j). 
146.10     (i) By August 10, each school board and the board of the 
146.11  regional library district shall certify to the county auditors 
146.12  of the counties in which the school district or regional library 
146.13  district is located the dates on which it elects to hold its 
146.14  initial hearing and any continuation hearing.  If a school board 
146.15  or regional library district does not certify these dates by 
146.16  August 10, the auditor will assign the initial and continuation 
146.17  hearing dates.  The dates elected or assigned must not conflict 
146.18  with the initial and continuation hearing dates of the county or 
146.19  the metropolitan special taxing districts.  
146.20     (j) By August 20, the county auditor shall notify the 
146.21  clerks of the cities within the county of the dates on which 
146.22  school districts and regional library districts have elected to 
146.23  hold their initial and continuation hearings.  At the time a 
146.24  city certifies its proposed levy under subdivision 1 it shall 
146.25  certify the dates on which it elects to hold its initial hearing 
146.26  and any continuation hearing.  If a city does not certify these 
146.27  dates by September 15, the auditor shall assign the initial and 
146.28  continuation hearing dates.  The dates elected or assigned for 
146.29  the initial hearing must not conflict with the initial hearing 
146.30  dates of the county, metropolitan special taxing districts, 
146.31  regional library districts, or school districts within which the 
146.32  city is located.  To the extent possible, the dates of the 
146.33  city's continuation hearing should not conflict with the 
146.34  continuation hearing dates of the county, metropolitan special 
146.35  taxing districts, regional library districts, or school 
146.36  districts within which the city is located.  This paragraph does 
147.1   not apply to cities of 500 population or less. 
147.2      (k) The county initial hearing date and the city, 
147.3   metropolitan special taxing district, regional library district, 
147.4   and school district initial hearing dates must be designated on 
147.5   the notices required under subdivision 3.  The continuation 
147.6   hearing dates need not be stated on the notices.  
147.7      (l) At a subsequent hearing, each county, school district, 
147.8   city over 500 population, and metropolitan special taxing 
147.9   district may amend its proposed property tax levy and must adopt 
147.10  a final property tax levy.  Each county, city over 500 
147.11  population, and metropolitan special taxing district may also 
147.12  amend its proposed budget and must adopt a final budget at the 
147.13  subsequent hearing.  The final property tax levy must be adopted 
147.14  prior to adopting the final budget.  A school district is not 
147.15  required to adopt its final budget at the subsequent hearing.  
147.16  The subsequent hearing of a taxing authority must be held on a 
147.17  date subsequent to the date of the taxing authority's initial 
147.18  public hearing, or subsequent to the date of its continuation 
147.19  hearing.  If a continuation hearing is held, the subsequent 
147.20  hearing must be held either immediately following the 
147.21  continuation hearing or on a date subsequent to the continuation 
147.22  hearing.  The subsequent hearing may be held at a regularly 
147.23  scheduled board or council meeting or at a special meeting 
147.24  scheduled for the purposes of the subsequent hearing.  The 
147.25  subsequent hearing of a taxing authority does not have to be 
147.26  coordinated by the county auditor to prevent a conflict with an 
147.27  initial hearing, a continuation hearing, or a subsequent hearing 
147.28  of any other taxing authority.  All subsequent hearings must be 
147.29  held prior to five working days after December 20 of the levy 
147.30  year.  The date, time, and place of the subsequent hearing must 
147.31  be announced at the initial public hearing or at the 
147.32  continuation hearing. 
147.33     (m) The property tax levy certified under section 275.07 by 
147.34  a city of any population, county, metropolitan special taxing 
147.35  district, regional library district, or school district must not 
147.36  exceed the proposed levy determined under subdivision 1, except 
148.1   by an amount up to the sum of the following amounts: 
148.2      (1) the amount of a school district levy whose voters 
148.3   approved a referendum to increase taxes under section 124.82, 
148.4   subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 
148.5   2, after the proposed levy was certified; 
148.6      (2) the amount of a city or county levy approved by the 
148.7   voters after the proposed levy was certified; 
148.8      (3) the amount of a levy to pay principal and interest on 
148.9   bonds approved by the voters under section 475.58 after the 
148.10  proposed levy was certified; 
148.11     (4) the amount of a levy to pay costs due to a natural 
148.12  disaster occurring after the proposed levy was certified, if 
148.13  that amount is approved by the commissioner of revenue under 
148.14  subdivision 6a; 
148.15     (5) the amount of a levy to pay tort judgments against a 
148.16  taxing authority that become final after the proposed levy was 
148.17  certified, if the amount is approved by the commissioner of 
148.18  revenue under subdivision 6a; 
148.19     (6) the amount of an increase in levy limits certified to 
148.20  the taxing authority by the commissioner of children, families, 
148.21  and learning or the commissioner of revenue after the proposed 
148.22  levy was certified; and 
148.23     (7) the amount required under section 124.755. 
148.24     At the hearing under this subdivision, the percentage 
148.25  increase in property taxes proposed by the taxing authority, if 
148.26  any, and the specific purposes for which property tax revenues 
148.27  are being increased must be discussed.  
148.28     During the discussion, the governing body shall hear 
148.29  comments regarding a proposed increase and explain the reasons 
148.30  for the proposed increase.  The public shall be allowed to speak 
148.31  and to ask questions.  At the subsequent hearing held as 
148.32  provided in this subdivision, the governing body, other than the 
148.33  governing body of a school district, shall adopt its final 
148.34  property tax levy prior to adopting its final budget. 
148.35     If the hearing is not completed on its scheduled date, the 
148.36  taxing authority must announce, prior to adjournment of the 
149.1   hearing, the date, time, and place for the continuation of the 
149.2   hearing.  The continued hearing must be held at least five 
149.3   business days but no more than 14 business days after the 
149.4   original hearing. 
149.5      The hearing must be held after 5:00 p.m. if scheduled on a 
149.6   day other than Saturday.  No hearing may be held on a Sunday.  
149.7   The governing body of a county shall hold a hearing on the 
149.8   second Tuesday in December each year, and may hold additional 
149.9   hearings on other dates before December 20 if necessary for the 
149.10  convenience of county residents.  If the county needs a 
149.11  continuation of its hearing, the continued hearing shall be held 
149.12  on the third Tuesday in December.  If the third Tuesday in 
149.13  December falls on December 21, the county's continuation hearing 
149.14  shall be held on Monday, December 20.  The county auditor shall 
149.15  provide for the coordination of hearing dates for all cities and 
149.16  school districts within the county. 
149.17     The metropolitan special taxing districts shall hold a 
149.18  joint public hearing on the first Monday of December.  A 
149.19  continuation hearing, if necessary, shall be held on the second 
149.20  Monday of December. 
149.21     By August 10, each school board and the board of the 
149.22  regional library district shall certify to the county auditors 
149.23  of the counties in which the school district or regional library 
149.24  district is located the dates on which it elects to hold its 
149.25  hearings and any continuations.  If a school board or regional 
149.26  library district does not certify the dates by August 10, the 
149.27  auditor will assign the hearing date.  The dates elected or 
149.28  assigned must not conflict with the hearing dates of the county 
149.29  or the metropolitan special taxing districts.  By August 20, the 
149.30  county auditor shall notify the clerks of the cities within the 
149.31  county of the dates on which school districts and regional 
149.32  library districts have elected to hold their hearings.  At the 
149.33  time a city certifies its proposed levy under subdivision 1 it 
149.34  shall certify the dates on which it elects to hold its hearings 
149.35  and any continuations.  For its initial hearing and for the 
149.36  subsequent hearing at which the final property tax levy will be 
150.1   adopted, the city must not select dates that conflict with the 
150.2   county hearing dates, metropolitan special taxing district 
150.3   dates, or with those elected by or assigned to the school 
150.4   districts or regional library district in which the city is 
150.5   located.  For continuation hearings, the city may select dates 
150.6   that conflict with other taxing authorities' dates if the city 
150.7   deems it necessary. 
150.8      The county hearing dates and the city, metropolitan special 
150.9   taxing district, regional library district, and school district 
150.10  hearing dates must be designated on the notices required under 
150.11  subdivision 3.  The continuation dates need not be stated on the 
150.12  notices.  
150.13     (n) This subdivision does not apply to towns and special 
150.14  taxing districts other than regional library districts and 
150.15  metropolitan special taxing districts. 
150.16     (o) Notwithstanding the requirements of this section, the 
150.17  employer is required to meet and negotiate over employee 
150.18  compensation as provided for in chapter 179A.  
150.19     Sec. 7.  Minnesota Statutes 1996, section 275.065, is 
150.20  amended by adding a subdivision to read: 
150.21     Subd. 6b.  [JOINT PUBLIC HEARINGS.] Notwithstanding any 
150.22  other provision of law, any city with a population of 10,000 and 
150.23  over, may conduct a more comprehensive public hearing than is 
150.24  contained in subdivision 6 by including a board member from the 
150.25  county, a board member from the school district located within 
150.26  the city's boundary, and a representative of the metropolitan 
150.27  council, if the city is in the metropolitan area, as defined in 
150.28  section 473.121, subdivision 2, at the city's public hearing.  
150.29  All provisions regarding the public hearings under subdivision 6 
150.30  are applicable to the joint public hearings under this 
150.31  subdivision. 
150.32     Upon the adoption of a resolution by the governing body of 
150.33  the city to hold a joint hearing, the city shall notify the 
150.34  county, the school district, and the metropolitan council if the 
150.35  city is in the metropolitan area, of the decision to hold a 
150.36  joint public hearing and request a board member from each of 
151.1   those taxing authorities, and the member or the designee of the 
151.2   metropolitan council if applicable, to be at the joint hearing.  
151.3   If the city is located in more than one county, the city may 
151.4   choose to request a county board member from each county or only 
151.5   from the county containing the majority of the city's market 
151.6   value.  If more than one school district is partially or totally 
151.7   located within the city, the city may choose to request a school 
151.8   district board member from each school district, or a board 
151.9   member only from the school district containing the majority of 
151.10  the city's market value.  If, as a result of requests under this 
151.11  subdivision, there are not sufficient board members in the 
151.12  county or the school district to attend the joint hearing, the 
151.13  county or school district may send a nonelected person working 
151.14  for its taxing authority to speak on the authority's behalf.  
151.15  The city may also invite each state senator and representative 
151.16  who represents the city, or a portion of the city, to come to 
151.17  the joint hearing. 
151.18     The primary purpose of the joint hearing is to discuss the 
151.19  city's budget and property tax levy.  The county and school 
151.20  district officials, and metropolitan council representative, if 
151.21  the city is in the metropolitan area, should be prepared to 
151.22  answer questions relevant to its budget and levy and the effect 
151.23  that its levy has on the property owners in the city. 
151.24     If a city conducts a hearing under this subdivision, this 
151.25  hearing is in lieu of the initial hearing required under 
151.26  subdivision 6.  However, the city is still required to adopt its 
151.27  proposed property tax levy at a subsequent hearing as provided 
151.28  under subdivision 6.  The hearings under this subdivision do not 
151.29  relieve a county, school district, or the metropolitan council 
151.30  of the requirement to hold its individual hearing under 
151.31  subdivision 6. 
151.32     Sec. 8.  Minnesota Statutes 1996, section 275.065, 
151.33  subdivision 8, is amended to read: 
151.34     Subd. 8.  [HEARING.] Notwithstanding any other provision of 
151.35  law, Ramsey county, the city of St. Paul, and independent school 
151.36  district No. 625 are authorized to and shall hold their initial 
152.1   public hearing jointly.  The hearing must be held on the second 
152.2   Tuesday of December each year.  The advertisement required in 
152.3   subdivision 5a may be a joint advertisement.  The hearing is 
152.4   otherwise subject to the requirements of this section. 
152.5      Ramsey county is authorized to hold an additional initial 
152.6   hearing or hearings as provided under this section, provided 
152.7   that any additional hearings must not conflict with the initial 
152.8   or continuation hearing dates of the other taxing districts.  
152.9   However, if Ramsey county elects not to hold such 
152.10  additional initial hearing or hearings, the joint initial 
152.11  hearing required by this subdivision must be held in a St. Paul 
152.12  location convenient to residents of Ramsey county. 
152.13     Sec. 9.  Minnesota Statutes 1996, section 275.07, 
152.14  subdivision 4, is amended to read: 
152.15     Subd. 4.  [REPORT TO COMMISSIONER.] (a) On or before 
152.16  October 8 of each year, the county auditor shall report to the 
152.17  commissioner of revenue the proposed levy certified by local 
152.18  units of government under section 275.065, subdivision 1.  If 
152.19  any taxing authorities have notified the county auditor that 
152.20  they are in the process of negotiating an agreement for sharing, 
152.21  merging, or consolidating services but that when the proposed 
152.22  levy was certified under section 275.065, subdivision 1a, the 
152.23  agreement was not yet finalized, the county auditor shall supply 
152.24  that information to the commissioner when filing the report 
152.25  under this section and shall recertify the affected levies as 
152.26  soon as practical after October 10. 
152.27     (b) On or before January 15 of each year, the county 
152.28  auditor shall report to the commissioner of revenue the final 
152.29  levy certified by local units of government under subdivision 1. 
152.30     (c) The levies must be reported in the manner prescribed by 
152.31  the commissioner.  The reports must show a total levy and the 
152.32  amount of each special levy. 
152.33     Sec. 10.  Minnesota Statutes 1996, section 276.04, 
152.34  subdivision 2, is amended to read: 
152.35     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
152.36  shall provide for the printing of the tax statements.  The 
153.1   commissioner of revenue shall prescribe the form of the property 
153.2   tax statement and its contents.  The statement must contain a 
153.3   tabulated statement of the dollar amount due to each taxing 
153.4   authority and the amount of the state determined school tax from 
153.5   the parcel of real property for which a particular tax statement 
153.6   is prepared.  The dollar amounts due attributable to the county, 
153.7   the state determined school tax, the voter approved school tax, 
153.8   the other local school tax, the township or municipality, and 
153.9   the total of the metropolitan special taxing districts as 
153.10  defined in section 275.065, subdivision 3, paragraph (i), school 
153.11  district excess referenda levy, remaining school district levy, 
153.12  and the total of other voter approved referenda levies based on 
153.13  market value under section 275.61 must be separately stated.  
153.14  The amounts due all other special taxing districts, if any, may 
153.15  be aggregated.  For the purposes of this subdivision, "school 
153.16  district excess referenda levy" means school district taxes for 
153.17  operating purposes approved at referenda, including those taxes 
153.18  based on net tax capacity as well as those based on market 
153.19  value. "School district excess referenda levy" does not include 
153.20  school district taxes for capital expenditures approved at 
153.21  referendums or school district taxes to pay for the debt service 
153.22  on bonds approved at referenda.  The amount of the tax on 
153.23  contamination value imposed under sections 270.91 to 270.98, if 
153.24  any, must also be separately stated.  The dollar amounts, 
153.25  including the dollar amount of any special assessments, may be 
153.26  rounded to the nearest even whole dollar.  For purposes of this 
153.27  section whole odd-numbered dollars may be adjusted to the next 
153.28  higher even-numbered dollar.  The amount of market value 
153.29  excluded under section 273.11, subdivision 16, if any, must also 
153.30  be listed on the tax statement.  The statement shall include the 
153.31  following sentence sentences, printed in upper case letters in 
153.32  boldface print:  "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT 
153.33  RECEIVE ANY PROPERTY TAX REVENUES, IT SETS THE AMOUNT OF THE 
153.34  STATE-DETERMINED SCHOOL TAX LEVY.  THE STATE OF MINNESOTA 
153.35  REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS 
153.36  TO LOCAL UNITS OF GOVERNMENT."  
154.1      (b) The property tax statements for manufactured homes and 
154.2   sectional structures taxed as personal property shall contain 
154.3   the same information that is required on the tax statements for 
154.4   real property.  
154.5      (c) Real and personal property tax statements must contain 
154.6   the following information in the order given in this paragraph.  
154.7   The information must contain the current year tax information in 
154.8   the right column with the corresponding information for the 
154.9   previous year in a column on the left: 
154.10     (1) the property's estimated market value under section 
154.11  273.11, subdivision 1; 
154.12     (2) the property's taxable market value after reductions 
154.13  under section 273.11, subdivisions 1a and 16; 
154.14     (3) the property's gross tax, calculated by multiplying the 
154.15  property's gross tax capacity times the total local tax rate and 
154.16  adding the property's total property tax to the result the sum 
154.17  of the aids enumerated in clause (4); 
154.18     (4) a total of the following aids: 
154.19     (i) education aids payable under chapters 124 and 124A; 
154.20     (ii) local government aids for cities, towns, and counties 
154.21  under chapter 477A; and 
154.22     (iii) disparity reduction aid under section 273.1398; and 
154.23     (iv) homestead and agricultural credit aid under section 
154.24  273.1398; 
154.25     (5) for homestead residential and agricultural properties, 
154.26  the education homestead and agricultural credit aid apportioned 
154.27  to the property.  This amount is obtained by multiplying the 
154.28  total local tax rate by the difference between the property's 
154.29  gross and net tax capacities under section 273.13.  This amount 
154.30  must be separately stated and identified as "homestead and 
154.31  agricultural credit."  For purposes of comparison with the 
154.32  previous year's amount for the statement for taxes payable in 
154.33  1990, the statement must show the homestead credit for taxes 
154.34  payable in 1989 under section 273.13, and the agricultural 
154.35  credit under section 273.132 for taxes payable in 1989 under 
154.36  section 273.1382; 
155.1      (6) any credits received under sections 273.119; 273.123; 
155.2   273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
155.3   473H.10, except that the amount of credit received under section 
155.4   273.135 must be separately stated and identified as "taconite 
155.5   tax relief"; and 
155.6      (7) the net tax payable in the manner required in paragraph 
155.7   (a). 
155.8      (d) If the county uses envelopes for mailing property tax 
155.9   statements and if the county agrees, a taxing district may 
155.10  include a notice with the property tax statement notifying 
155.11  taxpayers when the taxing district will begin its budget 
155.12  deliberations for the current year, and encouraging taxpayers to 
155.13  attend the hearings.  If the county allows notices to be 
155.14  included in the envelope containing the property tax statement, 
155.15  and if more than one taxing district relative to a given 
155.16  property decides to include a notice with the tax statement, the 
155.17  county treasurer or auditor must coordinate the process and may 
155.18  combine the information on a single announcement.  
155.19     The commissioner of revenue shall certify to the county 
155.20  auditor the actual or estimated aids enumerated in clauses (3) 
155.21  and clause (4) that local governments will receive in the 
155.22  following year.  In the case of a county containing a city of 
155.23  the first class, for taxes levied in 1991, and for all counties 
155.24  for taxes levied in 1992 and thereafter, The commissioner must 
155.25  certify this amount by September January 1 of each year.  
155.26     Sec. 11.  Minnesota Statutes 1996, section 383A.75, 
155.27  subdivision 3, is amended to read: 
155.28     Subd. 3.  [DUTIES.] The committee is authorized to and 
155.29  shall meet from time to time to make appropriate recommendations 
155.30  for the efficient and effective use of property tax dollars 
155.31  raised by the jurisdictions for programs, buildings, and 
155.32  operations.  In addition, the committee shall: 
155.33     (1) identify trends and factors likely to be driving budget 
155.34  outcomes over the next five years with recommendations for how 
155.35  the jurisdictions should manage those trends and factors to 
155.36  increase efficiency and effectiveness; 
156.1      (2) agree, by September October 1 of each year, on the 
156.2   appropriate level of overall property tax levy for the three 
156.3   jurisdictions and publicly report such to the governing bodies 
156.4   of each jurisdiction for ratification or modification by 
156.5   resolution; 
156.6      (3) plan for the joint truth-in-taxation hearings under 
156.7   section 275.065, subdivision 8; and 
156.8      (4) identify, by December 31 of each year, areas of the 
156.9   budget to be targeted in the coming year for joint review to 
156.10  improve services or achieve efficiencies. 
156.11     In carrying out its duties, the committee shall consult 
156.12  with public employees of each jurisdiction and with other 
156.13  stakeholders of the city, county, and school district, as 
156.14  appropriate. 
156.15     Sec. 12.  Laws 1993, chapter 375, article 7, section 29, is 
156.16  amended to read: 
156.17     Sec. 29.  [EFFECTIVE DATE.] 
156.18     Sections 1, 6 to 8, 13, 15 to 25, 27, and 28 are effective 
156.19  for taxes levied in 1993, payable in 1994 and thereafter.  
156.20     Section 3, subdivision 5, and the provisions of sections 9 
156.21  to 11 relating to regional library districts are effective for 
156.22  property taxes levied in 1994, payable in 1995, and thereafter.  
156.23  The other provisions of sections 9 to 11 are effective for 
156.24  property taxes levied in 1993, payable in 1994 and thereafter.  
156.25     Sections 12 and 14 are effective the day following final 
156.26  enactment and without local approval, as provided in Minnesota 
156.27  Statutes, section 645.023, subdivision 1, clause (a), and shall 
156.28  expire after December 31, 1997.  
156.29     Section 26 is effective beginning with aids payable in 
156.30  calendar year 1993. 
156.31     Sec. 13.  [EXCEPTION FOR TAXES PAYABLE IN 1998.] 
156.32     (a) Notwithstanding Minnesota Statutes, section 275.065, 
156.33  subdivision 3, for taxes payable in 1998 only, the commissioner 
156.34  of revenue may allow a county auditor, upon request, to prepare 
156.35  notices of proposed property taxes that do not itemize school 
156.36  district levies as required by that section, if the county 
157.1   determines that it is not able to compute the separate levies 
157.2   for the actual tax payable in 1997. 
157.3      (b) Notwithstanding Minnesota Statutes, section 276.04, 
157.4   subdivision 2, for taxes payable in 1998 only, the commissioner 
157.5   of revenue may allow a county treasurer, upon request, to 
157.6   prepare property tax statements that (i) do not itemize school 
157.7   levies as required by that section, and (ii) do not include 
157.8   homestead and agricultural credit aid as required by paragraph 
157.9   (c), clause (4), if the county determines that it is not able to 
157.10  compute the separate items for the tax payable in 1997.  
157.11     Sec. 14.  [APPROPRIATION.] 
157.12     $1,000,000 is appropriated for fiscal year 1998 to the 
157.13  commissioner of revenue for distribution to the 87 counties for 
157.14  implementing the various provisions of this act, including the 
157.15  added expenses of the truth in taxation provisions.  The 
157.16  commissioner shall distribute the dollars using the following 
157.17  formula:  25 percent shall be distributed equally, 25 percent 
157.18  shall be distributed based on population within each county, and 
157.19  the remaining 50 percent shall be distributed based on the 
157.20  number of property tax statements within each county. 
157.21     Sec. 15.  [EFFECTIVE DATE.] 
157.22     Sections 1 to 4 and 9 are effective for levies and notices 
157.23  for taxes payable in 1998, and thereafter. 
157.24     Section 5 is effective for newspaper advertisements 
157.25  prepared in 1997 for taxes payable in 1998, and thereafter. 
157.26     Sections 6 to 8 are effective for public hearings held in 
157.27  1997, and thereafter. 
157.28     Section 10 is effective for property tax statements 
157.29  prepared in 1998, and thereafter. 
157.30                             ARTICLE 5 
157.31               INCOME TAXES AND PROPERTY TAX REFUNDS 
157.32     Section 1.  Minnesota Statutes 1996, section 270B.02, is 
157.33  amended by adding a subdivision to read: 
157.34     Subd. 6.  [CLIENT LISTS; THIRD-PARTY BULK FILERS.] Client 
157.35  lists required under section 290.92, subdivision 30, are 
157.36  classified as private data on individuals or nonpublic data, as 
158.1   defined in section 13.02, subdivisions 9 and 12. 
158.2      Sec. 2.  Minnesota Statutes 1996, section 290.01, 
158.3   subdivision 19b, is amended to read: 
158.4      Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
158.5   individuals, estates, and trusts, there shall be subtracted from 
158.6   federal taxable income: 
158.7      (1) interest income on obligations of any authority, 
158.8   commission, or instrumentality of the United States to the 
158.9   extent includable in taxable income for federal income tax 
158.10  purposes but exempt from state income tax under the laws of the 
158.11  United States; 
158.12     (2) if included in federal taxable income, the amount of 
158.13  any overpayment of income tax to Minnesota or to any other 
158.14  state, for any previous taxable year, whether the amount is 
158.15  received as a refund or as a credit to another taxable year's 
158.16  income tax liability; 
158.17     (3) the amount paid to others not to exceed $650 for each 
158.18  dependent in grades kindergarten to 6 and $1,000 for each 
158.19  dependent in grades 7 to 12, for tuition, textbooks, and 
158.20  transportation of each dependent in attending an elementary or 
158.21  secondary school situated in Minnesota, North Dakota, South 
158.22  Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
158.23  legally fulfill the state's compulsory attendance laws, which is 
158.24  not operated for profit, and which adheres to the provisions of 
158.25  the Civil Rights Act of 1964 and chapter 363.  As used in this 
158.26  clause, "textbooks" includes books and other instructional 
158.27  materials and equipment used in elementary and secondary schools 
158.28  in teaching only those subjects legally and commonly taught in 
158.29  public elementary and secondary schools in this state.  
158.30  "Textbooks" does not include instructional books and materials 
158.31  used in the teaching of religious tenets, doctrines, or worship, 
158.32  the purpose of which is to instill such tenets, doctrines, or 
158.33  worship, nor does it include books or materials for, or 
158.34  transportation to, extracurricular activities including sporting 
158.35  events, musical or dramatic events, speech activities, driver's 
158.36  education, or similar programs.  In order to qualify for the 
159.1   subtraction under this clause the taxpayer must elect to itemize 
159.2   deductions under section 63(e) of the Internal Revenue Code; 
159.3      (4) to the extent included in federal taxable income, 
159.4   distributions from a qualified governmental pension plan, an 
159.5   individual retirement account, simplified employee pension, or 
159.6   qualified plan covering a self-employed person that represent a 
159.7   return of contributions that were included in Minnesota gross 
159.8   income in the taxable year for which the contributions were made 
159.9   but were deducted or were not included in the computation of 
159.10  federal adjusted gross income.  The distribution shall be 
159.11  allocated first to return of contributions until the 
159.12  contributions included in Minnesota gross income have been 
159.13  exhausted.  This subtraction applies only to contributions made 
159.14  in a taxable year prior to 1985; 
159.15     (5) income as provided under section 290.0802; 
159.16     (6) the amount of unrecovered accelerated cost recovery 
159.17  system deductions allowed under subdivision 19g; 
159.18     (7) to the extent included in federal adjusted gross 
159.19  income, income realized on disposition of property exempt from 
159.20  tax under section 290.491; 
159.21     (8) to the extent not deducted in determining federal 
159.22  taxable income, the amount paid for health insurance of 
159.23  self-employed individuals as determined under section 162(l) of 
159.24  the Internal Revenue Code, except that the 25 percent limit does 
159.25  not apply.  If the taxpayer deducted insurance payments under 
159.26  section 213 of the Internal Revenue Code of 1986, the 
159.27  subtraction under this clause must be reduced by the lesser of: 
159.28     (i) the total itemized deductions allowed under section 
159.29  63(d) of the Internal Revenue Code, less state, local, and 
159.30  foreign income taxes deductible under section 164 of the 
159.31  Internal Revenue Code and the standard deduction under section 
159.32  63(c) of the Internal Revenue Code; or 
159.33     (ii) the lesser of (A) the amount of insurance qualifying 
159.34  as "medical care" under section 213(d) of the Internal Revenue 
159.35  Code to the extent not deducted under section 162(1) of the 
159.36  Internal Revenue Code or excluded from income or (B) the total 
160.1   amount deductible for medical care under section 213(a); and 
160.2      (9) the exemption amount allowed under Laws 1995, chapter 
160.3   255, article 3, section 2, subdivision 3; and 
160.4      (10) to the extent included in federal taxable income, 
160.5   postservice benefits for youth community service under section 
160.6   121.707 for volunteer service under United States Code, title 
160.7   42, section 5011(d), as amended. 
160.8      Sec. 3.  Minnesota Statutes 1996, section 290.01, 
160.9   subdivision 19c, is amended to read: 
160.10     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
160.11  INCOME.] For corporations, there shall be added to federal 
160.12  taxable income: 
160.13     (1) the amount of any deduction taken for federal income 
160.14  tax purposes for income, excise, or franchise taxes based on net 
160.15  income or related minimum taxes paid by the corporation to 
160.16  Minnesota, another state, a political subdivision of another 
160.17  state, the District of Columbia, or any foreign country or 
160.18  possession of the United States; 
160.19     (2) interest not subject to federal tax upon obligations 
160.20  of:  the United States, its possessions, its agencies, or its 
160.21  instrumentalities; the state of Minnesota or any other state, 
160.22  any of its political or governmental subdivisions, any of its 
160.23  municipalities, or any of its governmental agencies or 
160.24  instrumentalities; the District of Columbia; or Indian tribal 
160.25  governments; 
160.26     (3) exempt-interest dividends received as defined in 
160.27  section 852(b)(5) of the Internal Revenue Code; 
160.28     (4) the amount of any windfall profits tax deducted under 
160.29  section 164 or 471 of the Internal Revenue Code; 
160.30     (5) the amount of any net operating loss deduction taken 
160.31  for federal income tax purposes under section 172 or 832(c)(10) 
160.32  of the Internal Revenue Code or operations loss deduction under 
160.33  section 810 of the Internal Revenue Code; 
160.34     (6) (5) the amount of any special deductions taken for 
160.35  federal income tax purposes under sections 241 to 247 of the 
160.36  Internal Revenue Code; 
161.1      (7) (6) losses from the business of mining, as defined in 
161.2   section 290.05, subdivision 1, clause (a), that are not subject 
161.3   to Minnesota income tax; 
161.4      (8) (7) the amount of any capital losses deducted for 
161.5   federal income tax purposes under sections 1211 and 1212 of the 
161.6   Internal Revenue Code; 
161.7      (9) (8) the amount of any charitable contributions deducted 
161.8   for federal income tax purposes under section 170 of the 
161.9   Internal Revenue Code; 
161.10     (10) (9) the exempt foreign trade income of a foreign sales 
161.11  corporation under sections 921(a) and 291 of the Internal 
161.12  Revenue Code; 
161.13     (11) (10) the amount of percentage depletion deducted under 
161.14  sections 611 through 614 and 291 of the Internal Revenue Code; 
161.15     (12) (11) for certified pollution control facilities placed 
161.16  in service in a taxable year beginning before December 31, 1986, 
161.17  and for which amortization deductions were elected under section 
161.18  169 of the Internal Revenue Code of 1954, as amended through 
161.19  December 31, 1985, the amount of the amortization deduction 
161.20  allowed in computing federal taxable income for those 
161.21  facilities; and 
161.22     (13) (12) the amount of any deemed dividend from a foreign 
161.23  operating corporation determined pursuant to section 290.17, 
161.24  subdivision 4, paragraph (g); and 
161.25     (13) the amount of any environmental tax paid under section 
161.26  59(a) of the Internal Revenue Code. 
161.27     Sec. 4.  Minnesota Statutes 1996, section 290.01, 
161.28  subdivision 19d, is amended to read: 
161.29     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
161.30  TAXABLE INCOME.] For corporations, there shall be subtracted 
161.31  from federal taxable income after the increases provided in 
161.32  subdivision 19c:  
161.33     (1) the amount of foreign dividend gross-up added to gross 
161.34  income for federal income tax purposes under section 78 of the 
161.35  Internal Revenue Code; 
161.36     (2) the amount of salary expense not allowed for federal 
162.1   income tax purposes due to claiming the federal jobs credit 
162.2   under section 51 of the Internal Revenue Code; 
162.3      (3) any dividend (not including any distribution in 
162.4   liquidation) paid within the taxable year by a national or state 
162.5   bank to the United States, or to any instrumentality of the 
162.6   United States exempt from federal income taxes, on the preferred 
162.7   stock of the bank owned by the United States or the 
162.8   instrumentality; 
162.9      (4) amounts disallowed for intangible drilling costs due to 
162.10  differences between this chapter and the Internal Revenue Code 
162.11  in taxable years beginning before January 1, 1987, as follows: 
162.12     (i) to the extent the disallowed costs are represented by 
162.13  physical property, an amount equal to the allowance for 
162.14  depreciation under Minnesota Statutes 1986, section 290.09, 
162.15  subdivision 7, subject to the modifications contained in 
162.16  subdivision 19e; and 
162.17     (ii) to the extent the disallowed costs are not represented 
162.18  by physical property, an amount equal to the allowance for cost 
162.19  depletion under Minnesota Statutes 1986, section 290.09, 
162.20  subdivision 8; 
162.21     (5) the deduction for capital losses pursuant to sections 
162.22  1211 and 1212 of the Internal Revenue Code, except that: 
162.23     (i) for capital losses incurred in taxable years beginning 
162.24  after December 31, 1986, capital loss carrybacks shall not be 
162.25  allowed; 
162.26     (ii) for capital losses incurred in taxable years beginning 
162.27  after December 31, 1986, a capital loss carryover to each of the 
162.28  15 taxable years succeeding the loss year shall be allowed; 
162.29     (iii) for capital losses incurred in taxable years 
162.30  beginning before January 1, 1987, a capital loss carryback to 
162.31  each of the three taxable years preceding the loss year, subject 
162.32  to the provisions of Minnesota Statutes 1986, section 290.16, 
162.33  shall be allowed; and 
162.34     (iv) for capital losses incurred in taxable years beginning 
162.35  before January 1, 1987, a capital loss carryover to each of the 
162.36  five taxable years succeeding the loss year to the extent such 
163.1   loss was not used in a prior taxable year and subject to the 
163.2   provisions of Minnesota Statutes 1986, section 290.16, shall be 
163.3   allowed; 
163.4      (6) an amount for interest and expenses relating to income 
163.5   not taxable for federal income tax purposes, if (i) the income 
163.6   is taxable under this chapter and (ii) the interest and expenses 
163.7   were disallowed as deductions under the provisions of section 
163.8   171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
163.9   federal taxable income; 
163.10     (7) in the case of mines, oil and gas wells, other natural 
163.11  deposits, and timber for which percentage depletion was 
163.12  disallowed pursuant to subdivision 19c, clause (11), a 
163.13  reasonable allowance for depletion based on actual cost.  In the 
163.14  case of leases the deduction must be apportioned between the 
163.15  lessor and lessee in accordance with rules prescribed by the 
163.16  commissioner.  In the case of property held in trust, the 
163.17  allowable deduction must be apportioned between the income 
163.18  beneficiaries and the trustee in accordance with the pertinent 
163.19  provisions of the trust, or if there is no provision in the 
163.20  instrument, on the basis of the trust's income allocable to 
163.21  each; 
163.22     (8) for certified pollution control facilities placed in 
163.23  service in a taxable year beginning before December 31, 1986, 
163.24  and for which amortization deductions were elected under section 
163.25  169 of the Internal Revenue Code of 1954, as amended through 
163.26  December 31, 1985, an amount equal to the allowance for 
163.27  depreciation under Minnesota Statutes 1986, section 290.09, 
163.28  subdivision 7; 
163.29     (9) the amount included in federal taxable income 
163.30  attributable to the credits provided in Minnesota Statutes 1986, 
163.31  section 273.1314, subdivision 9, or Minnesota Statutes, section 
163.32  469.171, subdivision 6; 
163.33     (10) amounts included in federal taxable income that are 
163.34  due to refunds of income, excise, or franchise taxes based on 
163.35  net income or related minimum taxes paid by the corporation to 
163.36  Minnesota, another state, a political subdivision of another 
164.1   state, the District of Columbia, or a foreign country or 
164.2   possession of the United States to the extent that the taxes 
164.3   were added to federal taxable income under section 290.01, 
164.4   subdivision 19c, clause (1), in a prior taxable year; 
164.5      (11) the following percentage 80 percent of royalties, 
164.6   fees, or other like income accrued or received from a foreign 
164.7   operating corporation or a foreign corporation which is part of 
164.8   the same unitary business as the receiving corporation: 
164.9         Taxable Year 
164.10        Beginning After .......... Percentage 
164.11        December 31, 1988 ........ 50 percent 
164.12        December 31, 1990 ........ 80 percent;    
164.13     (12) income or gains from the business of mining as defined 
164.14  in section 290.05, subdivision 1, clause (a), that are not 
164.15  subject to Minnesota franchise tax; 
164.16     (13) the amount of handicap access expenditures in the 
164.17  taxable year which are not allowed to be deducted or capitalized 
164.18  under section 44(d)(7) of the Internal Revenue Code; 
164.19     (14) the amount of qualified research expenses not allowed 
164.20  for federal income tax purposes under section 280C(c) of the 
164.21  Internal Revenue Code, but only to the extent that the amount 
164.22  exceeds the amount of the credit allowed under section 290.068; 
164.23  and 
164.24     (15) the amount of salary expenses not allowed for federal 
164.25  income tax purposes due to claiming the Indian employment credit 
164.26  under section 45A(a) of the Internal Revenue Code; and 
164.27     (16) the amount of any refund of environmental taxes paid 
164.28  under section 59A of the Internal Revenue Code. 
164.29     Sec. 5.  Minnesota Statutes 1996, section 290.06, is 
164.30  amended by adding a subdivision to read: 
164.31     Subd. 26.  [CREDIT FOR PROPERTY TAXES PAID ON SEASONAL 
164.32  RESIDENTIAL RECREATIONAL PROPERTY.] A taxpayer may take as a 
164.33  credit against the tax due from the taxpayer and a spouse, if 
164.34  any, under this chapter the credit allowed under section 
164.35  290A.04, subdivision 2j.  The credit allowed may not exceed the 
164.36  tax due under this chapter.  In the case of a nonresident, or a 
165.1   part-year resident, the credit must be allocated based on the 
165.2   ratio in subdivision 2c. 
165.3      Sec. 6.  Minnesota Statutes 1996, section 290.067, 
165.4   subdivision 1, is amended to read: 
165.5      Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
165.6   as a credit against the tax due from the taxpayer and a spouse, 
165.7   if any, under this chapter an amount equal to the dependent care 
165.8   credit for which the taxpayer is eligible pursuant to the 
165.9   provisions of section 21 of the Internal Revenue Code subject to 
165.10  the limitations provided in subdivision 2 except that in 
165.11  determining whether the child qualified as a dependent, income 
165.12  received as an aid to families with dependent children grant or 
165.13  allowance to or on behalf of the child, or as a grant or 
165.14  allowance to or on behalf of the child under the successor 
165.15  program pursuant to Public Law 104-193, must not be taken into 
165.16  account in determining whether the child received more than half 
165.17  of the child's support from the taxpayer, and the provisions of 
165.18  section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
165.19     (b) If a child who has not attained the age of six years at 
165.20  the close of the taxable year is cared for at a licensed family 
165.21  day care home operated by the child's parent, the taxpayer is 
165.22  deemed to have paid employment-related expenses.  If the child 
165.23  is 16 months old or younger at the close of the taxable year, 
165.24  the amount of expenses deemed to have been paid equals the 
165.25  maximum limit for one qualified individual under section 21(c) 
165.26  and (d) of the Internal Revenue Code.  If the child is older 
165.27  than 16 months of age but has not attained the age of six years 
165.28  at the close of the taxable year, the amount of expenses deemed 
165.29  to have been paid equals the amount the licensee would charge 
165.30  for the care of a child of the same age for the same number of 
165.31  hours of care.  
165.32     (c) If a married couple: 
165.33     (1) has a child who has not attained the age of one year at 
165.34  the close of the taxable year; 
165.35     (2) files a joint tax return for the taxable year; and 
165.36     (3) does not participate in a dependent care assistance 
166.1   program as defined in section 129 of the Internal Revenue Code, 
166.2   in lieu of the actual employment related expenses paid for that 
166.3   child under paragraph (a) or the deemed amount under paragraph 
166.4   (b), the lesser of (i) the combined earned income of the couple 
166.5   or (ii) $2,400 will be deemed to be the employment related 
166.6   expense paid for that child.  The earned income limitation of 
166.7   section 21(d) of the Internal Revenue Code shall not apply to 
166.8   this deemed amount.  These deemed amounts apply regardless of 
166.9   whether any employment-related expenses have been paid.  
166.10     (d) If the taxpayer is not required and does not file a 
166.11  federal individual income tax return for the tax year, no credit 
166.12  is allowed for any amount paid to any person unless: 
166.13     (1) the name, address, and taxpayer identification number 
166.14  of the person are included on the return claiming the credit; or 
166.15     (2) if the person is an organization described in section 
166.16  501(c)(3) of the Internal Revenue Code and exempt from tax under 
166.17  section 501(a) of the Internal Revenue Code, the name and 
166.18  address of the person are included on the return claiming the 
166.19  credit.  
166.20  In the case of a failure to provide the information required 
166.21  under the preceding sentence, the preceding sentence does not 
166.22  apply if it is shown that the taxpayer exercised due diligence 
166.23  in attempting to provide the information required. 
166.24     In the case of a nonresident, part-year resident, or a 
166.25  person who has earned income not subject to tax under this 
166.26  chapter, the credit determined under section 21 of the Internal 
166.27  Revenue Code must be allocated based on the ratio by which the 
166.28  earned income of the claimant and the claimant's spouse from 
166.29  Minnesota sources bears to the total earned income of the 
166.30  claimant and the claimant's spouse. 
166.31     Sec. 7.  [290.0672] [LONG-TERM CARE INSURANCE CREDIT.] 
166.32     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
166.33  section, the following terms have the meanings given. 
166.34     (b) "Long-term care insurance" means a policy that: 
166.35     (1) qualifies for a deduction under section 213 of the 
166.36  Internal Revenue Code, disregarding the 7.5 percent income test; 
167.1   or meets the requirements given in section 62A.46; or provides 
167.2   similar coverage issued under the laws of another jurisdiction; 
167.3   and 
167.4      (2) does not have a lifetime long-term care benefit limit 
167.5   of less than $100,000; and 
167.6      (3) includes inflation protection that meets or exceeds the 
167.7   inflation protection requirements of the long-term care 
167.8   insurance model regulation cited under section 
167.9   7702B(g)(2)(A)(i)(x) of the Internal Revenue Code. 
167.10     (c) "Qualified beneficiary" means the taxpayer or the 
167.11  taxpayer's spouse.  
167.12     (d) "Premiums deducted in determining federal taxable 
167.13  income" means the lesser of (1) long-term care insurance 
167.14  premiums that qualify as deductions under section 213 of the 
167.15  Internal Revenue Code; and (2) the total amount deductible for 
167.16  medical care under section 213 of the Internal Revenue Code. 
167.17     Subd. 2.  [CREDIT.] A taxpayer is allowed a credit against 
167.18  the tax imposed by this chapter for long-term care insurance 
167.19  policy premiums paid during the tax year.  The credit for each 
167.20  policy equals the lesser of (1) 25 percent of premiums paid to 
167.21  the extent not deducted in determining federal taxable income; 
167.22  or (2) $100.  A taxpayer may claim a credit for only one policy 
167.23  for each qualified beneficiary.  Only one credit may be claimed 
167.24  by any taxpayer for each policy.  The maximum total credit 
167.25  allowed per year is $200 for married couples filing joint 
167.26  returns and $100 for all other filers.  For a nonresident or 
167.27  part-year resident, the credit determined under this section 
167.28  must be allocated based on the percentage calculated under 
167.29  section 290.06, subdivision 2c, paragraph (e). 
167.30     Sec. 8.  [290.0673] [JOB TRAINING PROGRAM CREDIT.] 
167.31     Subdivision 1.  [CREDIT ALLOWED.] (a) A credit is allowed 
167.32  against the tax imposed by section 290.06, subdivision 1, equal 
167.33  to the sum of: 
167.34     (1) placement fees paid to a job training program upon 
167.35  hiring a qualified graduate of the program; and 
167.36     (2) retention fees paid to a job training program for 
168.1   retention of a qualified graduate of the program. 
168.2      (b) The maximum placement fee qualifying for a credit under 
168.3   this section is $8,000 per qualified graduate in the year 
168.4   hired.  The maximum retention fee qualifying for a credit under 
168.5   this section is $6,000 per qualified graduate retained as an 
168.6   employee per year.  Only retention fees paid in the second and 
168.7   third years after the qualified graduate is hired qualify for 
168.8   the credit. 
168.9      (c) A credit is allowed only up to the dollar amount of 
168.10  certificates, issued under subdivision 4, and provided by the 
168.11  job training program to the taxpayer. 
168.12     Subd. 2.  [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify 
168.13  for credits under this section, a job training program must 
168.14  satisfy the following requirements: 
168.15     (1) It must be operated by a nonprofit corporation that 
168.16  qualifies under section 501(c)(3) of the Internal Revenue Code. 
168.17     (2) The organization must spend at least $5,000 per 
168.18  graduate of the program. 
168.19     (3) The program must provide education and training in: 
168.20     (i) basic skills, such as reading, writing, mathematics, 
168.21  and communications; 
168.22     (ii) thinking skills, such as reasoning, creative thinking, 
168.23  decision making, and problem solving; and 
168.24     (iii) personal qualities, such as responsibility, 
168.25  self-esteem, self-management, honesty, and integrity. 
168.26     (4) The program must provide income supplements, when 
168.27  needed, to participants for housing, counseling, tuition, and 
168.28  other basic needs. 
168.29     (5) The education and training course must last for at 
168.30  least six months. 
168.31     (6) Individuals served by the program must: 
168.32     (i) be 18 years old or older; 
168.33     (ii) have had federal adjusted gross income of no more than 
168.34  $10,000 per year in the last two years; 
168.35     (iii) have assets of no more than $5,000, excluding the 
168.36  value of a homestead; and 
169.1      (iv) not have been claimed as a dependent on the federal 
169.2   tax return of another person in the previous taxable year. 
169.3      (7) The program must charge placement and retention fees 
169.4   that exceed the amount of credit certificates provided to the 
169.5   employer by at least 20 percent. 
169.6      (b) The program must be certified by the commissioner of 
169.7   children, families, and learning as meeting the requirements of 
169.8   this subdivision. 
169.9      Subd. 3.  [QUALIFIED GRADUATE.] A qualified graduate is a 
169.10  graduate of a job training program qualifying under subdivision 
169.11  1, who is placed in a job in Minnesota that pays at least $9 per 
169.12  hour or its equivalent.  To qualify for a credit under this 
169.13  section for a retention fee, a job in which the graduate is 
169.14  retained must pay at least $10 per hour at the end for the first 
169.15  and second years of employment.  A business, other than the 
169.16  business that originally hired the graduate, may pay a retention 
169.17  fee for the graduate and qualify for the credit. 
169.18     Subd. 4.  [DUTIES OF PROGRAM.] (a) Each program certified 
169.19  by the commissioner under subdivision 2 must comply with the 
169.20  requirements of this subdivision. 
169.21     (b) Each program must maintain records for each graduate 
169.22  for which the program provides a credit certificate to an 
169.23  employer.  These records must include information sufficient to 
169.24  verify the graduate's eligibility under this section, identify 
169.25  the employer, describe the job including its compensation rate 
169.26  and benefits, and determine the amount of placement and 
169.27  retention fees received. 
169.28     (c) Each program must report to the commissioner of revenue 
169.29  by January 1, 1999, and by January 1, 2001, on its use of the 
169.30  credit.  Each report must include, at least, information on: 
169.31     (1) the number of graduates placed; 
169.32     (2) demographic information on the graduates; 
169.33     (3) the types of position in which each graduate is placed, 
169.34  including compensation information; 
169.35     (4) the tenure of each graduate at the placed position or 
169.36  in other jobs; 
170.1      (5) the amount of employer fees paid to the program; 
170.2      (6) the amount of money raised by the program from other 
170.3   sources; and 
170.4      (7) the types and sizes of employers with which graduates 
170.5   have been placed and retained. 
170.6      (d) The commissioner shall compile and summarize this 
170.7   information and report to the legislature by February 15, 1999, 
170.8   and February 15, 2001.  
170.9      Subd. 5.  [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total 
170.10  amount of credits under this section is limited to $1,200,000 
170.11  for taxable years beginning after December 31, 1996, and before 
170.12  January 1, 2002.  The commissioner may issue under paragraph (b) 
170.13  no more than the specified amount of certificates for taxable 
170.14  years beginning during each calendar year: 
170.15         1997            $100,000
170.16         1998            $200,000
170.17         1999            $300,000
170.18         2000            $300,000
170.19         2001            $300,000
170.20     Unused certificates for a taxable year carry over and may 
170.21  be used for a later taxable year, regardless of when issued by 
170.22  the commissioner. 
170.23     (b) Upon application, the commissioner of children, 
170.24  families, and learning shall issue certificates to job training 
170.25  programs, certified under subdivision 2, up to the dollar amount 
170.26  available for the taxable year.  The certificates must be in a 
170.27  dollar amount that is no greater than the dollar amount applied 
170.28  for, and reflects the commissioner's estimate of the job 
170.29  training program's projected fees for placements and retentions 
170.30  of qualifying graduates.  The commissioner shall issue the 
170.31  certificates in the order in which applications are received 
170.32  until the available authority has been issued. 
170.33     (c) To the extent available, the job training program must 
170.34  provide to employers of its qualified graduates certificates 
170.35  issued by the commissioner of children, families, and learning 
170.36  under this subdivision. 
171.1      Subd. 6.  [NONREFUNDABLE.] The taxpayer must use the tax 
171.2   credit for the taxable year in which the certificate is issued 
171.3   to the employer.  The credit for the taxable year may not exceed 
171.4   the liability for tax under section 290.06, subdivision 1, for 
171.5   the taxable year, before reduction by the nonrefundable credits 
171.6   allowed under this chapter. 
171.7      Subd. 7.  [MANNER OF CLAIMING.] The commissioner shall 
171.8   prescribe the manner in which the credit may be claimed.  This 
171.9   may include allowing the credit only as a separately processed 
171.10  claim for a refund. 
171.11     Subd. 8.  [EXPIRATION.] This section expires effective for 
171.12  taxable years beginning after December 31, 2001. 
171.13     Sec. 9.  Minnesota Statutes 1996, section 290.191, 
171.14  subdivision 4, is amended to read: 
171.15     Subd. 4.  [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER 
171.16  BUSINESSES.] If the business of a corporation, partnership, or 
171.17  proprietorship consists exclusively of the selling of tangible 
171.18  personal property and services in response to orders received by 
171.19  United States mail or, telephone, facsimile, or other electronic 
171.20  media, and 99 percent of the taxpayer's property and payroll is 
171.21  within Minnesota, then the taxpayer may apportion net income to 
171.22  Minnesota based solely upon the percentage that the sales made 
171.23  within this state in connection with its trade or business 
171.24  during the tax period are of the total sales wherever made in 
171.25  connection with the trade or business during the tax period.  
171.26  Property and payroll factors are disregarded.  In determining 
171.27  eligibility for this subdivision:  
171.28     (1) the sale not in the ordinary course of business of 
171.29  tangible or intangible assets used in conducting business 
171.30  activities must be disregarded; and 
171.31     (2) property and payroll at a distribution center outside 
171.32  of Minnesota are disregarded if the sole activity at the 
171.33  distribution center is the filling of orders, and no 
171.34  solicitation of orders occurs at the distribution center. 
171.35     Sec. 10.  Minnesota Statutes 1996, section 290.92, is 
171.36  amended by adding a subdivision to read: 
172.1      Subd. 30.  [REGISTRATION; THIRD-PARTY BULK FILER.] (a) For 
172.2   purposes of this subdivision, the following terms have the 
172.3   meanings given: 
172.4      (1) Notwithstanding section 290.01, "person" means an 
172.5   individual, fiduciary, partnership, corporation, limited 
172.6   liability company, association, or other entity organized under 
172.7   the laws of this state or any other jurisdiction. 
172.8      (2) "Third-party bulk filer" means a person that collects 
172.9   withholding taxes from more than one employer for the purpose of 
172.10  filing returns and depositing the withheld taxes with the 
172.11  commissioner.  
172.12     (b) A person shall not act as a third-party bulk filer 
172.13  unless the person is registered with the commissioner under this 
172.14  subdivision. 
172.15     (c) A person may apply to the commissioner, on a form 
172.16  prescribed by the commissioner, for registration as a 
172.17  third-party bulk filer under this subdivision, and the 
172.18  commissioner shall grant the application if the application 
172.19  indicates that the person will comply with this subdivision. 
172.20     (d) A third-party bulk filer must: 
172.21     (1) keep client funds held for payment of federal or state 
172.22  withholding taxes or other client obligations in an account 
172.23  separate from the third-party bulk filer's own funds; 
172.24     (2) permit the commissioner to conduct scheduled or 
172.25  unscheduled audits of the third-party bulk filer's books and 
172.26  records relating to compliance with this subdivision and fully 
172.27  cooperate with the audits or, at the discretion of the 
172.28  commissioner, submit an audit conducted by a certified public 
172.29  accountant; 
172.30     (3) file returns electronically and make deposits 
172.31  electronically with the commissioner in compliance with the 
172.32  commissioner's requirements for electronic filing and 
172.33  depositing; 
172.34     (4) provide to the commissioner at least monthly, in the 
172.35  form requested by the commissioner, an updated client list that 
172.36  includes at least the name, address, tax identification number, 
173.1   and federal deposit frequency of each client.  The address 
173.2   listed for the client must be the client's actual street or post 
173.3   office box address and not the third-party bulk filer's address; 
173.4      (5) disclose in writing to prospective clients that: 
173.5      (i) the third-party bulk filer may invest client funds 
173.6   prior to depositing them with the commissioner and with the 
173.7   Internal Revenue Service and that earnings from those 
173.8   investments will be the property of the third-party bulk filer; 
173.9      (ii) if the third-party bulk filer incurs losses on those 
173.10  investments or uses the client's funds for other purposes, the 
173.11  third-party bulk filer will still be liable to the client for 
173.12  the amounts withheld but will be able to make required tax 
173.13  deposits on behalf of the client only by using the third-party 
173.14  bulk filer's own funds or other assets to replace the funds lost 
173.15  through the investments or used for other purposes; and 
173.16     (iii) no state or federal agency monitors or assumes any 
173.17  responsibility for the financial solvency of third-party bulk 
173.18  filers; 
173.19     (6) timely file all returns and timely make all tax 
173.20  deposits required under its contracts with its clients; 
173.21     (7) upon request, provide to the commissioner, within the 
173.22  time specified in the request, a copy of any contract with a 
173.23  client; and 
173.24     (8) comply with all other requirements of this section or 
173.25  of rules adopted under this section. 
173.26     (e) When the commissioner sends an order of assessment 
173.27  issued under section 289A.37, in either paper or electronic 
173.28  form, to a third-party bulk filer regarding a client, the 
173.29  commissioner shall also send a paper copy of the order of 
173.30  assessment to the client. 
173.31     (f) If the commissioner determines that a required deposit 
173.32  appears not to have been made, the commissioner shall send a 
173.33  written notice of the delinquency, in electronic or paper form, 
173.34  to the third-party bulk filer, and a copy to the client as 
173.35  required under paragraph (e). 
173.36     (g) If the commissioner determines that a required deposit 
174.1   has not been made, and that continued operation of the 
174.2   third-party bulk filer would present a risk of loss to its 
174.3   clients, the commissioner may, upon ten business days' written 
174.4   notice by certified mail to the third-party bulk filer, suspend 
174.5   the registration of the third-party bulk filer for an indefinite 
174.6   period, and notify the third-party bulk filer's clients that the 
174.7   registration has been suspended.  A registration may not be 
174.8   suspended if the failure to make a deposit was caused by the 
174.9   client's failure to deposit funds or provide the information 
174.10  necessary to calculate appropriate tax withholding payments.  
174.11  The commissioner shall, upon request, provide the third-party 
174.12  bulk filer with the opportunity for an administrative appeal 
174.13  under section 289A.65, subdivisions 1, 4, and 10, prior to 
174.14  suspension; the hearing, if any, on the administrative appeal 
174.15  must occur within the ten-day period unless the commissioner, in 
174.16  the commissioner's sole discretion, agrees to delay the 
174.17  suspension to permit a later hearing.  The 60-day period 
174.18  specified in section 289A.65, subdivision 4, does not apply to a 
174.19  proceeding under this paragraph.  Within 30 days after the 
174.20  beginning of a suspension under this paragraph, the commissioner 
174.21  may commence a proceeding to suspend or revoke under paragraph 
174.22  (h); if the commissioner fails to do so, the suspension under 
174.23  this paragraph terminates. 
174.24     (h) If the commissioner determines, in compliance with 
174.25  paragraph (i), that a third-party bulk filer has violated this 
174.26  section without reasonable cause or is no longer eligible for 
174.27  registration under this subdivision, the commissioner may 
174.28  suspend or revoke the third-party bulk filer's registration or 
174.29  may assess a civil penalty upon the third-party bulk filer, not 
174.30  to exceed $5,000 per violation.  A suspension of registration 
174.31  may be for any period of less than six months and may include 
174.32  conditions for reinstatement.  If the commissioner revokes the 
174.33  registration, the third-party bulk filer may not apply for 
174.34  reregistration for six months after the revocation.  If the 
174.35  commissioner suspends or revokes a registration, the 
174.36  commissioner shall notify the former registrant's clients that 
175.1   the registration has been suspended or revoked.  If the 
175.2   commissioner assesses a civil penalty, the commissioner shall 
175.3   not notify the third-party bulk filer's clients of the 
175.4   assessment. 
175.5      (i) Prior to a suspension, revocation, or assessment of a 
175.6   civil penalty under paragraph (h), the commissioner shall first 
175.7   provide 30 days' written notice to the third-party bulk filer, 
175.8   specifying the violations and informing the third-party bulk 
175.9   filer that the commissioner intends, based upon those 
175.10  violations, to take action against the third-party bulk filer as 
175.11  permitted under this paragraph and paragraph (h).  The notice 
175.12  shall advise the third-party bulk filer of the right to contest 
175.13  the suspension, revocation, or assessment of a civil penalty and 
175.14  of the general procedures for a contested case hearing under 
175.15  chapter 14.  The notice may be served personally or by mail in 
175.16  the manner prescribed for service of an order of assessment 
175.17  issued under section 289A.37.  A suspension or revocation of 
175.18  registration under this paragraph is effective when the 
175.19  commissioner serves a notice of suspension or revocation upon 
175.20  the third-party bulk filer after 30 days have passed following 
175.21  the date of the notice of intent to suspend or revoke without 
175.22  the third-party bulk filer requesting a hearing.  If a hearing 
175.23  is timely requested and held, the suspension or revocation is 
175.24  effective upon service by the commissioner of an order of 
175.25  suspension or revocation under section 14.62, subdivision 1. 
175.26     (j) A third-party bulk filer may terminate its registration 
175.27  by written notice to the commissioner, but the termination does 
175.28  not affect the commissioner's authority to begin or continue a 
175.29  proceeding to take action permitted under paragraph (h).  The 
175.30  commissioner shall notify the third-party bulk filer's clients 
175.31  of a termination of registration under this paragraph. 
175.32     (k) The commissioner shall remind employers at least 
175.33  annually, through the department's regular informational 
175.34  publications that it sends to employers, that employers may 
175.35  telephone the department to determine whether a required filing 
175.36  or deposit has been made by a third-party bulk filer. 
176.1      Sec. 11.  Minnesota Statutes 1996, section 290A.03, 
176.2   subdivision 7, is amended to read: 
176.3      Subd. 7.  [DEPENDENT.] "Dependent" means any person who is 
176.4   considered a dependent under sections 151 and 152 of the 
176.5   Internal Revenue Code.  In the case of a son, stepson, daughter, 
176.6   or stepdaughter of the claimant, amounts received as an aid to 
176.7   families with dependent children grant, allowance to or on 
176.8   behalf of the child, or as a grant or allowance to or on behalf 
176.9   of the child under the successor program pursuant to Public Law 
176.10  Number 104-193, surplus food, or other relief in kind supplied 
176.11  by a governmental agency must not be taken into account in 
176.12  determining whether the child received more than half of the 
176.13  child's support from the claimant.  
176.14     Sec. 12.  Minnesota Statutes 1996, section 290A.03, 
176.15  subdivision 11, is amended to read: 
176.16     Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
176.17  constituting property taxes" means the amount of gross rent 
176.18  actually paid in cash, or its equivalent, which is attributable 
176.19  (a) to the property tax paid on the unit or (b) to the amount 18 
176.20  percent of the gross rent actually paid in cash, or its 
176.21  equivalent, or the portion of rent paid in lieu of property 
176.22  taxes, in any calendar year by a claimant for the right of 
176.23  occupancy of the claimant's Minnesota homestead in the calendar 
176.24  year, and which rent constitutes the basis, in the succeeding 
176.25  calendar year of a claim for relief under this chapter by the 
176.26  claimant.  The amount of rent attributable to property taxes 
176.27  paid or payments in lieu made on the unit shall be determined by 
176.28  multiplying the gross rent paid by the claimant for the calendar 
176.29  year for the unit by a fraction, the numerator of which is the 
176.30  net tax on the property where the unit is located and the 
176.31  denominator of which is the total scheduled rent.  In no case 
176.32  may the rent constituting property taxes exceed 50 percent of 
176.33  the gross rent paid by the claimant during that calendar year.  
176.34  In the case of a claimant who resides in a unit for which (1) a 
176.35  rent subsidy is paid to, or for, the claimant based on the 
176.36  income of the claimant or the claimant's family, or (2) a 
177.1   subsidy is paid to a public housing authority that owns or 
177.2   operates the claimant's rental unit, pursuant to United States 
177.3   Code, title 42, section 1437c, 20 percent of gross rent actually 
177.4   paid in cash or its equivalent shall be the claimant's "rent 
177.5   constituting property taxes paid."  For purposes of this 
177.6   subdivision, "rent subsidy" does not include any housing 
177.7   assistance received under aid to families with dependent 
177.8   children, general assistance, Minnesota supplemental assistance, 
177.9   supplemental security income, or similar income maintenance 
177.10  programs. 
177.11     Sec. 13.  Minnesota Statutes 1996, section 290A.03, 
177.12  subdivision 13, is amended to read: 
177.13     Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
177.14  payable" means the property tax exclusive of special 
177.15  assessments, penalties, and interest payable on a claimant's 
177.16  homestead before reductions made under section 273.13 but after 
177.17  deductions made under sections 273.135, 273.1391, 273.42, 
177.18  subdivision 2, and any other state paid property tax credits in 
177.19  any calendar year.  In the case of a claimant who makes ground 
177.20  lease payments, "property taxes payable" includes the amount of 
177.21  the payments directly attributable to the property taxes 
177.22  assessed against the parcel on which the house is located.  No 
177.23  apportionment or reduction of the "property taxes payable" shall 
177.24  be required for the use of a portion of the claimant's homestead 
177.25  for a business purpose if the claimant does not deduct any 
177.26  business depreciation expenses for the use of a portion of the 
177.27  homestead in the determination of federal adjusted gross 
177.28  income.  For homesteads which are manufactured homes as defined 
177.29  in section 273.125, subdivision 8, and for homesteads which are 
177.30  park trailers taxed as manufactured homes under section 168.012, 
177.31  subdivision 9, "property taxes payable" shall also include the 
177.32  amount 18 percent of the gross rent paid in the preceding year 
177.33  for the site on which the homestead is located, which is 
177.34  attributable to the net tax paid on the site.  The amount 
177.35  attributable to property taxes shall be determined by 
177.36  multiplying the net tax on the parcel by a fraction, the 
178.1   numerator of which is the gross rent paid for the calendar year 
178.2   for the site and the denominator of which is the gross rent paid 
178.3   for the calendar year for the parcel.  When a homestead is owned 
178.4   by two or more persons as joint tenants or tenants in common, 
178.5   such tenants shall determine between them which tenant may claim 
178.6   the property taxes payable on the homestead.  If they are unable 
178.7   to agree, the matter shall be referred to the commissioner of 
178.8   revenue whose decision shall be final.  Property taxes are 
178.9   considered payable in the year prescribed by law for payment of 
178.10  the taxes. 
178.11     In the case of a claim relating to "property taxes 
178.12  payable," the claimant must have owned and occupied the 
178.13  homestead on January 2 of the year in which the tax is payable 
178.14  and (i) the property must have been classified as homestead 
178.15  property pursuant to section 273.13, subdivision 22 or 23 
178.16  273.124, on or before December 15 of the assessment year to 
178.17  which the "property taxes payable" relate; or (ii) the claimant 
178.18  must provide documentation from the local assessor that 
178.19  application for homestead classification has been made on or 
178.20  before December 15 of the year in which the "property taxes 
178.21  payable" were payable and that the assessor has approved the 
178.22  application. 
178.23     Sec. 14.  Minnesota Statutes 1996, section 290A.04, is 
178.24  amended by adding a subdivision to read: 
178.25     Subd. 2j.  [SEASONAL RESIDENTIAL RECREATIONAL CREDIT.] If 
178.26  the net property taxes payable on a seasonal residential 
178.27  recreational property not used for commercial purposes, 
178.28  classified under section 273.13, subdivision 25, increase more 
178.29  than ten percent over its net property taxes payable in the 
178.30  previous year, and if the amount of the increase is $100 or 
178.31  more, a claimant who is an owner of the property in both years 
178.32  is allowed a credit under section 290.06, subdivision 26, equal 
178.33  to 75 percent of the first $300 of the excess of the increase 
178.34  over ten percent.  This subdivision does not apply to the 
178.35  portion of an increase in taxes payable that are attributable to 
178.36  improvements to the property.  
179.1      In addition to the other proofs required by this chapter, 
179.2   each claimant under this subdivision shall file with the 
179.3   application a copy of the property tax statement for property 
179.4   taxes payable in the current year and the previous year and any 
179.5   other documents required by the commissioner. 
179.6      For purposes of this subdivision, "net property taxes 
179.7   payable" means property taxes payable minus credit amounts for 
179.8   which a claimant qualify's under this subdivision for the 
179.9   previous year. 
179.10     The credit under this subdivision is effective for property 
179.11  taxes payable in 1998, for credits under section 290.06, 
179.12  subdivision 26, for tax year 1998, income tax returns filed in 
179.13  1999; and for property taxes payable in 1999, for credits under 
179.14  section 290.06, subdivision 26, for tax year 1999, income tax 
179.15  returns filed in 2000. 
179.16     Sec. 15.  Minnesota Statutes 1996, section 290A.19, is 
179.17  amended to read: 
179.18     290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 
179.19  CERTIFICATE.] 
179.20     (a) The owner or managing agent of any property for which 
179.21  rent is paid for occupancy as a homestead must furnish a 
179.22  certificate of rent constituting property tax paid to a person 
179.23  who is a renter on December 31, in the form prescribed by the 
179.24  commissioner.  If the renter moves before December 31, the owner 
179.25  or managing agent may give the certificate to the renter at the 
179.26  time of moving, or mail the certificate to the forwarding 
179.27  address if an address has been provided by the renter.  The 
179.28  certificate must be made available to the renter before February 
179.29  1 of the year following the year in which the rent was paid.  
179.30  The owner or managing agent must retain a duplicate of each 
179.31  certificate or an equivalent record showing the same information 
179.32  for a period of three years.  The duplicate or other record must 
179.33  be made available to the commissioner upon request.  For the 
179.34  purposes of this section, "owner" includes a park owner as 
179.35  defined under section 327C.01, subdivision 6, and "property" 
179.36  includes a lot as defined under section 327C.01, subdivision 3. 
180.1      (b) The certificate of rent constituting property taxes 
180.2   must include the address of the property, including the county, 
180.3   and the property tax parcel identification number and any 
180.4   additional information that the commissioner determines is 
180.5   appropriate. 
180.6      (c) If the owner or managing agent fails to provide the 
180.7   renter with a certificate of rent constituting property taxes, 
180.8   the commissioner shall allocate the net tax on the building to 
180.9   the unit on a square footage basis or other appropriate basis as 
180.10  the commissioner determines.  The renter shall supply the 
180.11  commissioner with a statement from the county treasurer that 
180.12  gives the amount of property tax on the parcel, the address and 
180.13  property tax parcel identification number of the property, and 
180.14  the number of units in the building. 
180.15     (d) By January 31 of the year following the year in which 
180.16  the rent was collected, each owner or managing agent shall 
180.17  report to the commissioner on a form prescribed by the 
180.18  commissioner the net tax pertaining to the rental residential 
180.19  part of the property, the total scheduled rent, and the fraction 
180.20  computed under section 290A.03, subdivision 11.  A copy of the 
180.21  property tax statement for taxes payable in that year must be 
180.22  attached. 
180.23     Sec. 16.  Laws 1995, chapter 255, article 3, section 2, 
180.24  subdivision 1, as amended by Laws 1996, chapter 464, article 4, 
180.25  section 1, is amended to read: 
180.26     Subdivision 1.  [URBAN REVITALIZATION AND STABILIZATION 
180.27  ZONES.] (a) By September 1, 1995, the metropolitan council shall 
180.28  designate one or more urban revitalization and stabilization 
180.29  zones in the metropolitan area, as defined in section 473.121, 
180.30  subdivision 2.  The designated zones must contain no more than 
180.31  1,000 single family homes in total.  In designating urban 
180.32  revitalization and stabilization zones, the council shall choose 
180.33  areas that are in transition toward blight and poverty.  The 
180.34  council shall use indicators that evidence increasing 
180.35  neighborhood distress such as declining residential property 
180.36  values, declining resident incomes, declining rates of 
181.1   owner-occupancy, and other indicators of blight and poverty in 
181.2   determining which areas are to be urban revitalization and 
181.3   stabilization zones. 
181.4      (b) An urban revitalization and stabilization zone is 
181.5   created in the geographic area composed entirely of parcels that 
181.6   are in whole or in part located within the 1996 65Ldn contour 
181.7   surrounding the Minneapolis-St. Paul International Airport, or 
181.8   within one mile of the boundaries of the 1996 65Ldn contour.  
181.9   For residents of the zone created under this paragraph, 
181.10  eligibility for the program as provided in subdivision 2 is 
181.11  limited to persons buying and occupying a residence in the zone 
181.12  after June 1, 1996, who have entered into purchase agreements 
181.13  related to those homes before July 1, 1997. 
181.14     Sec. 17.  Laws 1997, chapter 34, section 2, is amended to 
181.15  read: 
181.16     Sec. 2.  [EFFECTIVE DATE.] 
181.17     Section 1 is effective the day following final enactment 
181.18  for time limitations which expire or due dates specified in 
181.19  Minnesota Statutes, section 289A.20, which fall in the period 
181.20  between March 31, 1997, and May 30, 1997. 
181.21     Sec. 18.  [LEGISLATIVE TAX STUDIES.] 
181.22     Subdivision 1.  [COMMISSION RESPONSIBILITIES.] (a) The 
181.23  legislative coordinating commission shall prepare studies of 
181.24  business taxation and the taxation of telecommunications 
181.25  services during the 1997-98 legislative session, as provided by 
181.26  this section.  The commission is responsible for managing any 
181.27  contracts under this section and for preparing the studies.  It 
181.28  may delegate any or all of its responsibilities under this 
181.29  section to the legislative commission on planning and fiscal 
181.30  policy. 
181.31     (b) For the business tax study under subdivision 2, the 
181.32  commission may appoint a formal or informal bipartisan working 
181.33  group of house and senate members to oversee and coordinate the 
181.34  study. 
181.35     (c) For the study of the taxation of telecommunications 
181.36  services under subdivision 4, the commission shall appoint a 
182.1   bipartisan working group that includes house and senate members 
182.2   and members of the public, at least two of whom are 
182.3   representatives of Internet service businesses who are 
182.4   knowledgeable about the technologies and practices of the 
182.5   Internet and at least two of whom are the representatives of 
182.6   businesses that conduct commerce on the Internet. 
182.7      Subd. 2.  [BUSINESS TAX STUDY.] The study of business taxes 
182.8   must analyze the following taxes paid by businesses: 
182.9      (1) the corporate franchise tax; 
182.10     (2) the sales tax on capital or other business inputs; 
182.11     (3) the personal property tax on utility property; 
182.12     (4) the real property tax on commercial and industrial 
182.13  property. 
182.14     The study must consider the impact of alternative methods 
182.15  of taxing business and the impact of doing so on the fairness, 
182.16  efficiency, simplicity, elasticity, and stability of revenues, 
182.17  and competitiveness of Minnesota's taxation of business. 
182.18     Subd. 3.  [APPROPRIATION.] $50,000 is appropriated from the 
182.19  general fund for fiscal years 1998 and 1999 to the legislative 
182.20  coordinating commission to study alternative methods of taxing 
182.21  businesses.  This appropriation may be used to hire a consultant 
182.22  or consultants to prepare all or part of the study and is fully 
182.23  available in either fiscal year. 
182.24     Subd. 4.  [TELECOMMUNICATIONS STUDY.] The commission and 
182.25  the working group shall: 
182.26     (1) study existing and emerging tax policies, both 
182.27  federally and nationally, that apply to telecommunications and 
182.28  computer industries and identify any inequities which may exist 
182.29  in the current system of taxation as it applies to those 
182.30  industries; 
182.31     (2) identify potential for erosion of the sales tax base as 
182.32  a result of evolving technologies in the telecommunications and 
182.33  computer industries; 
182.34     (3) consider methods of addressing potential impediments to 
182.35  extension of state taxes to emerging technologies; 
182.36     (4) suggest options for changing the tax system to maintain 
183.1   or broaden the sales tax base and to provide equitable tax 
183.2   treatment for users of existing and emerging technologies. 
183.3      Subd. 5.  [STAFFING.] The department of revenue shall 
183.4   provide administrative and staff assistance when requested by 
183.5   the commissions or working groups. 
183.6      Sec. 19.  [REPEALER.] 
183.7      Minnesota Statutes 1996, section 290A.03, subdivisions 12a 
183.8   and 14, are repealed. 
183.9      Sec. 20.  [EFFECTIVE DATE.] 
183.10     Sections 1, 5, 6, 11, 16, and 18 are effective the day 
183.11  following final enactment.  
183.12     Sections 2 to 4, and 9 are effective for taxable years 
183.13  beginning after December 31, 1996. 
183.14     Section 7 is effective for taxable years beginning after 
183.15  December 31, 1998. 
183.16     Section 8 is effective for tax credit certificates issued 
183.17  after December 31, 1996, and used in taxable years beginning 
183.18  after December 31, 1996. 
183.19     Section 10 is effective January 1, 1998. 
183.20     Sections 12, 13, 15, and 19 are effective beginning for 
183.21  property tax refunds based on rent paid after December 31, 1996. 
183.22     Section 17 is effective April 16, 1997. 
183.23                             ARTICLE 6 
183.24                           FEDERAL UPDATE 
183.25     Section 1.  Minnesota Statutes 1996, section 289A.02, 
183.26  subdivision 7, is amended to read: 
183.27     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
183.28  defined otherwise, "Internal Revenue Code" means the Internal 
183.29  Revenue Code of 1986, as amended through March 22 December 31, 
183.30  1996, and includes the provisions of section 1(a) and (b) of 
183.31  Public Law Number 104-117. 
183.32     Sec. 2.  Minnesota Statutes 1996, section 290.01, 
183.33  subdivision 19, is amended to read: 
183.34     Subd. 19.  [NET INCOME.] The term "net income" means the 
183.35  federal taxable income, as defined in section 63 of the Internal 
183.36  Revenue Code of 1986, as amended through the date named in this 
184.1   subdivision, incorporating any elections made by the taxpayer in 
184.2   accordance with the Internal Revenue Code in determining federal 
184.3   taxable income for federal income tax purposes, and with the 
184.4   modifications provided in subdivisions 19a to 19f. 
184.5      In the case of a regulated investment company or a fund 
184.6   thereof, as defined in section 851(a) or 851(h) of the Internal 
184.7   Revenue Code, federal taxable income means investment company 
184.8   taxable income as defined in section 852(b)(2) of the Internal 
184.9   Revenue Code, except that:  
184.10     (1) the exclusion of net capital gain provided in section 
184.11  852(b)(2)(A) of the Internal Revenue Code does not apply; and 
184.12     (2) the deduction for dividends paid under section 
184.13  852(b)(2)(D) of the Internal Revenue Code must be applied by 
184.14  allowing a deduction for capital gain dividends and 
184.15  exempt-interest dividends as defined in sections 852(b)(3)(C) 
184.16  and 852(b)(5) of the Internal Revenue Code; and 
184.17     (3) the deduction for dividends paid must also be applied 
184.18  in the amount of any undistributed capital gains which the 
184.19  regulated investment company elects to have treated as provided 
184.20  in section 852(b)(3)(D) of the Internal Revenue Code.  
184.21     The net income of a real estate investment trust as defined 
184.22  and limited by section 856(a), (b), and (c) of the Internal 
184.23  Revenue Code means the real estate investment trust taxable 
184.24  income as defined in section 857(b)(2) of the Internal Revenue 
184.25  Code.  
184.26     The net income of a designated settlement fund as defined 
184.27  in section 468B(d) of the Internal Revenue Code means the gross 
184.28  income as defined in section 468B(b) of the Internal Revenue 
184.29  Code. 
184.30     The Internal Revenue Code of 1986, as amended through 
184.31  December 31, 1986, shall be in effect for taxable years 
184.32  beginning after December 31, 1986.  The provisions of sections 
184.33  10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 
184.34  10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 
184.35  Omnibus Budget Reconciliation Act of 1987, Public Law Number 
184.36  100-203, the provisions of sections 1001, 1002, 1003, 1004, 
185.1   1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 
185.2   1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 
185.3   6277, and 6282 of the Technical and Miscellaneous Revenue Act of 
185.4   1988, Public Law Number 100-647, and the provisions of sections 
185.5   7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
185.6   1989, Public Law Number 101-239, and the provisions of sections 
185.7   1305, 1704(r), and 1704(e)(1) of the Small Business Job 
185.8   Protection Act, Public Law Number 104-188, shall be effective at 
185.9   the time they become effective for federal income tax purposes.  
185.10     The Internal Revenue Code of 1986, as amended through 
185.11  December 31, 1987, shall be in effect for taxable years 
185.12  beginning after December 31, 1987.  The provisions of sections 
185.13  4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 
185.14  6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 
185.15  6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 
185.16  Act of 1988, Public Law Number 100-647, the provisions of 
185.17  sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 
185.18  of 1989, Public Law Number 101-239, and the provisions of 
185.19  section 11702 of the Revenue Reconciliation Act of 1990, Public 
185.20  Law Number 101-508, shall become effective at the time they 
185.21  become effective for federal tax purposes.  
185.22     The Internal Revenue Code of 1986, as amended through 
185.23  December 31, 1988, shall be in effect for taxable years 
185.24  beginning after December 31, 1988.  The provisions of sections 
185.25  7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 
185.26  7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 
185.27  7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 
185.28  Reconciliation Act of 1989, Public Law Number 101-239, the 
185.29  provision of section 1401 of the Financial Institutions Reform, 
185.30  Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 
185.31  and the provisions of sections 11701 and 11703 of the Revenue 
185.32  Reconciliation Act of 1990, Public Law Number 101-508, and the 
185.33  provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 
185.34  Small Business Job Protection Act, Public Law Number 104-188, 
185.35  shall become effective at the time they become effective for 
185.36  federal tax purposes.  
186.1      The Internal Revenue Code of 1986, as amended through 
186.2   December 31, 1989, shall be in effect for taxable years 
186.3   beginning after December 31, 1989.  The provisions of sections 
186.4   11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 
186.5   the Revenue Reconciliation Act of 1990, Public Law Number 
186.6   101-508, and the provisions of sections 13224 and 13261 of the 
186.7   Omnibus Budget Reconciliation Act of 1993, Public Law Number 
186.8   103-66, shall become effective at the time they become effective 
186.9   for federal purposes.  
186.10     The Internal Revenue Code of 1986, as amended through 
186.11  December 31, 1990, shall be in effect for taxable years 
186.12  beginning after December 31, 1990. 
186.13     The provisions of section 13431 of the Omnibus Budget 
186.14  Reconciliation Act of 1993, Public Law Number 103-66, shall 
186.15  become effective at the time they became effective for federal 
186.16  purposes.  
186.17     The Internal Revenue Code of 1986, as amended through 
186.18  December 31, 1991, shall be in effect for taxable years 
186.19  beginning after December 31, 1991.  
186.20     The provisions of sections 1936 and 1937 of the 
186.21  Comprehensive National Energy Policy Act of 1992, Public Law 
186.22  Number 102-486, and the provisions of sections 13101, 13114, 
186.23  13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 
186.24  the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
186.25  103-66, shall become effective at the time they become effective 
186.26  for federal purposes.  
186.27     The Internal Revenue Code of 1986, as amended through 
186.28  December 31, 1992, shall be in effect for taxable years 
186.29  beginning after December 31, 1992.  
186.30     The provisions of sections 13116, 13121, 13206, 13210, 
186.31  13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 
186.32  the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
186.33  103-66, and the provisions of sections 1703(a), 1703(d), 
186.34  1703(i), 1703(l), and 1703(m) of the Small Business Job 
186.35  Protection Act, Public Law Number 104-188, shall become 
186.36  effective at the time they become effective for federal purposes.
187.1      The Internal Revenue Code of 1986, as amended through 
187.2   December 31, 1993, shall be in effect for taxable years 
187.3   beginning after December 31, 1993. 
187.4      The provision of section 741 of Legislation to Implement 
187.5   Uruguay Round of General Agreement on Tariffs and Trade, Public 
187.6   Law Number 103-465, and the provisions of sections 1, 2, and 3, 
187.7   of the Self-Employed Health Insurance Act of 1995, Public Law 
187.8   Number 104-7, the provision of section 501(b)(2) of the Health 
187.9   Insurance Portability and Accountability Act, Public Law Number 
187.10  104-191, and the provisions of sections 1604 and 1704(p)(1) and 
187.11  (2) of the Small Business Job Protection Act, Public Law Number 
187.12  104-188, shall become effective at the time they become 
187.13  effective for federal purposes. 
187.14     The Internal Revenue Code of 1986, as amended through 
187.15  December 31, 1994, shall be in effect for taxable years 
187.16  beginning after December 31, 1994. 
187.17     The provisions of sections 1119(a), 1120, 1121, 1202(a), 
187.18  1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 
187.19  Business Job Protection Act, Public Law Number 104-188, and the 
187.20  provision of section 511 of the Health Insurance Portability and 
187.21  Accountability Act, Public Law Number 104-191, shall become 
187.22  effective at the time they become effective for federal purposes.
187.23     The Internal Revenue Code of 1986, as amended through March 
187.24  22, 1996, is in effect for taxable years beginning after 
187.25  December 31, 1995. 
187.26     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
187.27  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
187.28  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
187.29  Protection Act, Public Law Number 104-188, and the provisions of 
187.30  Public Law Number 104-117 become effective at the time they 
187.31  become effective for federal purposes. 
187.32     The Internal Revenue Code of 1986, as amended through 
187.33  December 31, 1996, shall be in effect for taxable years 
187.34  beginning after December 31, 1996. 
187.35     Except as otherwise provided, references to the Internal 
187.36  Revenue Code in subdivisions 19a to 19g mean the code in effect 
188.1   for purposes of determining net income for the applicable year. 
188.2      Sec. 3.  Minnesota Statutes 1996, section 290.01, 
188.3   subdivision 19a, is amended to read: 
188.4      Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
188.5   individuals, estates, and trusts, there shall be added to 
188.6   federal taxable income: 
188.7      (1)(i) interest income on obligations of any state other 
188.8   than Minnesota or a political or governmental subdivision, 
188.9   municipality, or governmental agency or instrumentality of any 
188.10  state other than Minnesota exempt from federal income taxes 
188.11  under the Internal Revenue Code or any other federal statute, 
188.12  and 
188.13     (ii) exempt-interest dividends as defined in section 
188.14  852(b)(5) of the Internal Revenue Code, except the portion of 
188.15  the exempt-interest dividends derived from interest income on 
188.16  obligations of the state of Minnesota or its political or 
188.17  governmental subdivisions, municipalities, governmental agencies 
188.18  or instrumentalities, but only if the portion of the 
188.19  exempt-interest dividends from such Minnesota sources paid to 
188.20  all shareholders represents 95 percent or more of the 
188.21  exempt-interest dividends that are paid by the regulated 
188.22  investment company as defined in section 851(a) of the Internal 
188.23  Revenue Code, or the fund of the regulated investment company as 
188.24  defined in section 851(h) of the Internal Revenue Code, making 
188.25  the payment; and 
188.26     (iii) for the purposes of items (i) and (ii), interest on 
188.27  obligations of an Indian tribal government described in section 
188.28  7871(c) of the Internal Revenue Code shall be treated as 
188.29  interest income on obligations of the state in which the tribe 
188.30  is located; 
188.31     (2) the amount of income taxes paid or accrued within the 
188.32  taxable year under this chapter and income taxes paid to any 
188.33  other state or to any province or territory of Canada, to the 
188.34  extent allowed as a deduction under section 63(d) of the 
188.35  Internal Revenue Code, but the addition may not be more than the 
188.36  amount by which the itemized deductions as allowed under section 
189.1   63(d) of the Internal Revenue Code exceeds the amount of the 
189.2   standard deduction as defined in section 63(c) of the Internal 
189.3   Revenue Code.  For the purpose of this paragraph, the 
189.4   disallowance of itemized deductions under section 68 of the 
189.5   Internal Revenue Code of 1986, income tax is the last itemized 
189.6   deduction disallowed; 
189.7      (3) the capital gain amount of a lump sum distribution to 
189.8   which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
189.9   Reform Act of 1986, Public Law Number 99-514, applies; and 
189.10     (4) the amount of income taxes paid or accrued within the 
189.11  taxable year under this chapter and income taxes paid to any 
189.12  other state or any province or territory of Canada, to the 
189.13  extent allowed as a deduction in determining federal adjusted 
189.14  gross income.  For the purpose of this paragraph, income taxes 
189.15  do not include the taxes imposed by sections 290.0922, 
189.16  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729.; 
189.17     (5) the amount of loss or expense included in federal 
189.18  taxable income under section 1366 of the Internal Revenue Code 
189.19  flowing from a corporation that has a valid election in effect 
189.20  for the taxable year under section 1362 of the Internal Revenue 
189.21  Code, but which is not allowed to be an "S" corporation under 
189.22  section 290.9725; and 
189.23     (6) the amount of any distributions in cash or property 
189.24  made to a shareholder during the taxable year by a corporation 
189.25  that has a valid election in effect for the taxable year under 
189.26  section 1362 of the Internal Revenue code, but which is not 
189.27  allowed to be an "S" corporation under section 290.9725 to the 
189.28  extent not already included in federal taxable income under 
189.29  section 1368 of the Internal Revenue Code. 
189.30     Sec. 4.  Minnesota Statutes 1996, section 290.01, 
189.31  subdivision 19b, is amended to read: 
189.32     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
189.33  individuals, estates, and trusts, there shall be subtracted from 
189.34  federal taxable income: 
189.35     (1) interest income on obligations of any authority, 
189.36  commission, or instrumentality of the United States to the 
190.1   extent includable in taxable income for federal income tax 
190.2   purposes but exempt from state income tax under the laws of the 
190.3   United States; 
190.4      (2) if included in federal taxable income, the amount of 
190.5   any overpayment of income tax to Minnesota or to any other 
190.6   state, for any previous taxable year, whether the amount is 
190.7   received as a refund or as a credit to another taxable year's 
190.8   income tax liability; 
190.9      (3) the amount paid to others not to exceed $650 for each 
190.10  dependent in grades kindergarten to 6 and $1,000 for each 
190.11  dependent in grades 7 to 12, for tuition, textbooks, and 
190.12  transportation of each dependent in attending an elementary or 
190.13  secondary school situated in Minnesota, North Dakota, South 
190.14  Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
190.15  legally fulfill the state's compulsory attendance laws, which is 
190.16  not operated for profit, and which adheres to the provisions of 
190.17  the Civil Rights Act of 1964 and chapter 363.  As used in this 
190.18  clause, "textbooks" includes books and other instructional 
190.19  materials and equipment used in elementary and secondary schools 
190.20  in teaching only those subjects legally and commonly taught in 
190.21  public elementary and secondary schools in this state.  
190.22  "Textbooks" does not include instructional books and materials 
190.23  used in the teaching of religious tenets, doctrines, or worship, 
190.24  the purpose of which is to instill such tenets, doctrines, or 
190.25  worship, nor does it include books or materials for, or 
190.26  transportation to, extracurricular activities including sporting 
190.27  events, musical or dramatic events, speech activities, driver's 
190.28  education, or similar programs.  In order to qualify for the 
190.29  subtraction under this clause the taxpayer must elect to itemize 
190.30  deductions under section 63(e) of the Internal Revenue Code; 
190.31     (4) to the extent included in federal taxable income, 
190.32  distributions from a qualified governmental pension plan, an 
190.33  individual retirement account, simplified employee pension, or 
190.34  qualified plan covering a self-employed person that represent a 
190.35  return of contributions that were included in Minnesota gross 
190.36  income in the taxable year for which the contributions were made 
191.1   but were deducted or were not included in the computation of 
191.2   federal adjusted gross income.  The distribution shall be 
191.3   allocated first to return of contributions until the 
191.4   contributions included in Minnesota gross income have been 
191.5   exhausted.  This subtraction applies only to contributions made 
191.6   in a taxable year prior to 1985; 
191.7      (5) income as provided under section 290.0802; 
191.8      (6) the amount of unrecovered accelerated cost recovery 
191.9   system deductions allowed under subdivision 19g; 
191.10     (7) to the extent included in federal adjusted gross 
191.11  income, income realized on disposition of property exempt from 
191.12  tax under section 290.491; 
191.13     (8) to the extent not deducted in determining federal 
191.14  taxable income, the amount paid for health insurance of 
191.15  self-employed individuals as determined under section 162(l) of 
191.16  the Internal Revenue Code, except that the 25 percent limit does 
191.17  not apply.  If the taxpayer deducted insurance payments under 
191.18  section 213 of the Internal Revenue Code of 1986, the 
191.19  subtraction under this clause must be reduced by the lesser of: 
191.20     (i) the total itemized deductions allowed under section 
191.21  63(d) of the Internal Revenue Code, less state, local, and 
191.22  foreign income taxes deductible under section 164 of the 
191.23  Internal Revenue Code and the standard deduction under section 
191.24  63(c) of the Internal Revenue Code; or 
191.25     (ii) the lesser of (A) the amount of insurance qualifying 
191.26  as "medical care" under section 213(d) of the Internal Revenue 
191.27  Code to the extent not deducted under section 162(1) of the 
191.28  Internal Revenue Code or excluded from income or (B) the total 
191.29  amount deductible for medical care under section 213(a); and 
191.30     (9) the exemption amount allowed under Laws 1995, chapter 
191.31  255, article 3, section 2, subdivision 3.; and 
191.32     (10) the amount of income or gain included in federal 
191.33  taxable income under section 1366 of the Internal Revenue Code 
191.34  flowing from a corporation that has a valid election in effect 
191.35  for the taxable year under section 1362 of the Internal Revenue 
191.36  Code which is not allowed to be an "S" corporation under section 
192.1   290.9725. 
192.2      Sec. 5.  Minnesota Statutes 1996, section 290.01, 
192.3   subdivision 19f, is amended to read: 
192.4      Subd. 19f.  [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON 
192.5   DISPOSITION OF PROPERTY.] (a) For individuals, estates, and 
192.6   trusts, the basis of property is its adjusted basis for federal 
192.7   income tax purposes except as set forth in paragraphs (f) and, 
192.8   (g) and (m).  For corporations, the basis of property is its 
192.9   adjusted basis for federal income tax purposes, without regard 
192.10  to the time when the property became subject to tax under this 
192.11  chapter or to whether out-of-state losses or items of tax 
192.12  preference with respect to the property were not deductible 
192.13  under this chapter, except that the modifications to the basis 
192.14  for federal income tax purposes set forth in paragraphs (b) to 
192.15  (j) are allowed to corporations, and the resulting modifications 
192.16  to federal taxable income must be made in the year in which gain 
192.17  or loss on the sale or other disposition of property is 
192.18  recognized. 
192.19     (b) The basis of property shall not be reduced to reflect 
192.20  federal investment tax credit.  
192.21     (c) The basis of property subject to the accelerated cost 
192.22  recovery system under section 168 of the Internal Revenue Code 
192.23  shall be modified to reflect the modifications in depreciation 
192.24  with respect to the property provided for in subdivision 19e.  
192.25  For certified pollution control facilities for which 
192.26  amortization deductions were elected under section 169 of the 
192.27  Internal Revenue Code of 1954, the basis of the property must be 
192.28  increased by the amount of the amortization deduction not 
192.29  previously allowed under this chapter. 
192.30     (d) For property acquired before January 1, 1933, the basis 
192.31  for computing a gain is the fair market value of the property as 
192.32  of that date.  The basis for determining a loss is the cost of 
192.33  the property to the taxpayer less any depreciation, 
192.34  amortization, or depletion, actually sustained before that 
192.35  date.  If the adjusted cost exceeds the fair market value of the 
192.36  property, then the basis is the adjusted cost regardless of 
193.1   whether there is a gain or loss.  
193.2      (e) The basis is reduced by the allowance for amortization 
193.3   of bond premium if an election to amortize was made pursuant to 
193.4   Minnesota Statutes 1986, section 290.09, subdivision 13, and the 
193.5   allowance could have been deducted by the taxpayer under this 
193.6   chapter during the period of the taxpayer's ownership of the 
193.7   property.  
193.8      (f) For assets placed in service before January 1, 1987, 
193.9   corporations, partnerships, or individuals engaged in the 
193.10  business of mining ores other than iron ore or taconite 
193.11  concentrates subject to the occupation tax under chapter 298 
193.12  must use the occupation tax basis of property used in that 
193.13  business. 
193.14     (g) For assets placed in service before January 1, 1990, 
193.15  corporations, partnerships, or individuals engaged in the 
193.16  business of mining iron ore or taconite concentrates subject to 
193.17  the occupation tax under chapter 298 must use the occupation tax 
193.18  basis of property used in that business.  
193.19     (h) In applying the provisions of sections 301(c)(3)(B), 
193.20  312(f) and (g), and 316(a)(1) of the Internal Revenue Code, the 
193.21  dates December 31, 1932, and January 1, 1933, shall be 
193.22  substituted for February 28, 1913, and March 1, 1913, 
193.23  respectively.  
193.24     (i) In applying the provisions of section 362(a) and (c) of 
193.25  the Internal Revenue Code, the date December 31, 1956, shall be 
193.26  substituted for June 22, 1954.  
193.27     (j) The basis of property shall be increased by the amount 
193.28  of intangible drilling costs not previously allowed due to 
193.29  differences between this chapter and the Internal Revenue Code.  
193.30     (k) The adjusted basis of any corporate partner's interest 
193.31  in a partnership is the same as the adjusted basis for federal 
193.32  income tax purposes modified as required to reflect the basis 
193.33  modifications set forth in paragraphs (b) to (j).  The adjusted 
193.34  basis of a partnership in which the partner is an individual, 
193.35  estate, or trust is the same as the adjusted basis for federal 
193.36  income tax purposes modified as required to reflect the basis 
194.1   modifications set forth in paragraphs (f) and (g).  
194.2      (l) The modifications contained in paragraphs (b) to (j) 
194.3   also apply to the basis of property that is determined by 
194.4   reference to the basis of the same property in the hands of a 
194.5   different taxpayer or by reference to the basis of different 
194.6   property.  
194.7      (m) If a corporation has a valid election in effect for the 
194.8   taxable year under section 1362 of the Internal Revenue Code, 
194.9   but is not allowed to be an "S" corporation under section 
194.10  290.9725, and the corporation is liquidated or the individual 
194.11  shareholder disposes of the stock and there is no capital loss 
194.12  reflected in federal adjusted gross income because of the fact 
194.13  that corporate losses have exhausted the shareholders' basis for 
194.14  federal purposes, the shareholders shall be entitled to a 
194.15  capital loss commensurate to their Minnesota basis for the stock.
194.16     Sec. 6.  Minnesota Statutes 1996, section 290.01, 
194.17  subdivision 19g, is amended to read: 
194.18     Subd. 19g.  [ACRS MODIFICATION FOR INDIVIDUALS.] (a) An 
194.19  individual is allowed a subtraction from federal taxable income 
194.20  for the amount of accelerated cost recovery system deductions 
194.21  that were added to federal adjusted gross income in computing 
194.22  Minnesota gross income for taxable year 1981, 1982, 1983, or 
194.23  1984 and that were not deducted in a later taxable year.  The 
194.24  deduction is allowed beginning in the first taxable year after 
194.25  the entire allowable deduction for the property has been allowed 
194.26  under federal law or the first taxable year beginning after 
194.27  December 31, 1987, whichever is later.  The amount of the 
194.28  deduction is computed by deducting the amount added to federal 
194.29  adjusted gross income in computing Minnesota gross income (less 
194.30  any deduction allowed under Minnesota Statutes 1986, section 
194.31  290.01, subdivision 20f) in equal annual amounts over five years.
194.32     (b) In the event of a sale or exchange of the property, a 
194.33  deduction is allowed equal to the lesser of (1) the remaining 
194.34  amount that would be allowed as a deduction under paragraph (a) 
194.35  or (2) the amount of capital gain recognized and the amount of 
194.36  cost recovery deductions that were subject to recapture under 
195.1   sections 1245 and 1250 of the Internal Revenue Code of 1986 for 
195.2   the taxable year. 
195.3      (c) In the case of a corporation electing S corporation 
195.4   status under section 1362 of the Internal Revenue Code treated 
195.5   as an "S" corporation under section 290.9725, the amount of the 
195.6   corporation's cost recovery allowances that have been deducted 
195.7   in computing federal tax, but have been added to federal taxable 
195.8   income or not deducted in computing tax under this chapter as a 
195.9   result of the application of subdivision 19e, paragraphs (a) and 
195.10  (c) or Minnesota Statutes 1986, section 290.09, subdivision 7, 
195.11  is allowed as a deduction to the shareholders under the 
195.12  provisions of paragraph (a). 
195.13     Sec. 7.  Minnesota Statutes 1996, section 290.01, 
195.14  subdivision 31, is amended to read: 
195.15     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
195.16  defined otherwise, "Internal Revenue Code" means the Internal 
195.17  Revenue Code of 1986, as amended through March 22 December 31, 
195.18  1996, and includes the provisions of section 1(a) and (b) of 
195.19  Public Law Number 104-117. 
195.20     Sec. 8.  Minnesota Statutes 1996, section 290.014, 
195.21  subdivision 2, is amended to read: 
195.22     Subd. 2.  [NONRESIDENT INDIVIDUALS.] Except as provided in 
195.23  section 290.015, a nonresident individual is subject to the 
195.24  return filing requirements and to tax as provided in this 
195.25  chapter to the extent that the income of the nonresident 
195.26  individual is: 
195.27     (1) allocable to this state under section 290.17, 290.191, 
195.28  or 290.20; 
195.29     (2) taxed to the individual under the Internal Revenue Code 
195.30  (or not taxed under the Internal Revenue Code by reason of its 
195.31  character but of a character which is taxable under this 
195.32  chapter) in the individual's capacity as a beneficiary of an 
195.33  estate with income allocable to this state under section 290.17, 
195.34  290.191, or 290.20 and the income, taking into account the 
195.35  income character provisions of section 662(b) of the Internal 
195.36  Revenue Code, would be allocable to this state under section 
196.1   290.17, 290.191, or 290.20 if realized by the individual 
196.2   directly from the source from which realized by the estate; 
196.3      (3) taxed to the individual under the Internal Revenue Code 
196.4   (or not taxed under the Internal Revenue Code by reason of its 
196.5   character but of a character that is taxable under this chapter) 
196.6   in the individual's capacity as a beneficiary or grantor or 
196.7   other person treated as a substantial owner of a trust with 
196.8   income allocable to this state under section 290.17, 290.191, or 
196.9   290.20 and the income, taking into account the income character 
196.10  provisions of section 652(b), 662(b), or 664(b) of the Internal 
196.11  Revenue Code, would be allocable to this state under section 
196.12  290.17, 290.191, or 290.20 if realized by the individual 
196.13  directly from the source from which realized by the trust; 
196.14     (4) taxed to the individual under the Internal Revenue Code 
196.15  (or not taxed under the Internal Revenue Code by reason of its 
196.16  character but of a character which is taxable under this 
196.17  chapter) in the individual's capacity as a limited or general 
196.18  partner in a partnership with income allocable to this state 
196.19  under section 290.17, 290.191, or 290.20 and the income, taking 
196.20  into account the income character provisions of section 702(b) 
196.21  of the Internal Revenue Code, would be allocable to this state 
196.22  under section 290.17, 290.191, or 290.20 if realized by the 
196.23  individual directly from the source from which realized by the 
196.24  partnership; or 
196.25     (5) taxed to the individual under the Internal Revenue Code 
196.26  (or not taxed under the Internal Revenue Code by reason of its 
196.27  character but of a character which is taxable under this 
196.28  chapter) in the individual's capacity as a shareholder of a 
196.29  corporation having a valid election in effect under section 1362 
196.30  of the Internal Revenue Code treated as an "S" corporation under 
196.31  section 290.9725, and income allocable to this state under 
196.32  section 290.17, 290.191, or 290.20 and the income, taking into 
196.33  account the income character provisions of section 1366(b) of 
196.34  the Internal Revenue Code, would be allocable to this state 
196.35  under section 290.17, 290.191, or 290.20 if realized by the 
196.36  individual directly from the source from which realized by the 
197.1   corporation. 
197.2      Sec. 9.  Minnesota Statutes 1996, section 290.014, 
197.3   subdivision 3, is amended to read: 
197.4      Subd. 3.  [TRUSTS AND ESTATES.] Except as provided in 
197.5   section 290.015, a trust or estate, whether resident or 
197.6   nonresident, is subject to the return filing requirements and to 
197.7   tax as provided in this chapter to the extent that the income of 
197.8   the trust or estate is: 
197.9      (1) allocable to this state under section 290.17, 290.191, 
197.10  or 290.20; 
197.11     (2) taxed to the trust or estate under the Internal Revenue 
197.12  Code (or not taxed under the Internal Revenue Code by reason of 
197.13  its character but of a character which is taxable under this 
197.14  chapter) in its capacity as a beneficiary of a trust or estate 
197.15  with income allocable to this state under section 290.17, 
197.16  290.191, or 290.20 and the income, taking into account the 
197.17  income character provisions of section 662(b) of the Internal 
197.18  Revenue Code, would be allocable to this state under section 
197.19  290.17, 290.191, or 290.20 if realized by the trust or 
197.20  beneficiary estate directly from the source from which realized 
197.21  by the distributing estate; 
197.22     (3) taxed to the trust or estate under the Internal Revenue 
197.23  Code (or not taxed under the Internal Revenue Code by reason of 
197.24  its character but of a character which is taxable under this 
197.25  chapter) in its capacity as a beneficiary or grantor or other 
197.26  person treated as a substantial owner of a trust with income 
197.27  allocable to this state under section 290.17, 290.191, or 290.20 
197.28  and the income, taking into account the income character 
197.29  provisions of section 652(b), 662(b), or 664(b) of the Internal 
197.30  Revenue Code, would be allocable to this state under section 
197.31  290.17, 290.191, or 290.20 if realized by the beneficiary trust 
197.32  or estate directly from the source from which realized by the 
197.33  distributing trust; 
197.34     (4) taxed to the trust or estate under the Internal Revenue 
197.35  Code (or not taxed under the Internal Revenue Code by reason of 
197.36  its character but of a character which is taxable under this 
198.1   chapter) in its capacity as a limited or general partner in a 
198.2   partnership with income allocable to this state under section 
198.3   290.17, 290.191, or 290.20 and the income, taking into account 
198.4   the income character provisions of section 702(b) of the 
198.5   Internal Revenue Code, would be allocable to this state under 
198.6   section 290.17, 290.191, or 290.20 if realized by the trust or 
198.7   estate directly from the source from which realized by the 
198.8   partnership; or 
198.9      (5) taxed to the trust or estate under the Internal Revenue 
198.10  Code (or not taxed under the Internal Revenue Code by reason of 
198.11  its character but of a character which is taxable under this 
198.12  chapter) in its capacity as a shareholder of a 
198.13  corporation having a valid election in effect under section 1362 
198.14  of the Internal Revenue Code treated as an "S" corporation under 
198.15  section 290.9725, and income allocable to this state under 
198.16  section 290.17, 290.191, or 290.20 and the income, taking into 
198.17  account the income character provisions of section 1366(b) of 
198.18  the Internal Revenue Code, would be allocable to this state 
198.19  under section 290.17, 290.191, or 290.20 if realized by the 
198.20  trust or estate directly from the source from which realized by 
198.21  the corporation. 
198.22     Sec. 10.  Minnesota Statutes 1996, section 290.015, 
198.23  subdivision 3, is amended to read: 
198.24     Subd. 3.  [EXCEPTIONS.] (a) A person is not subject to tax 
198.25  under this chapter if the person is engaged in the business of 
198.26  selling tangible personal property and taxation of that person 
198.27  under this chapter is precluded by Public Law Number 86-272, 
198.28  United States Code, title 15, sections 381 to 384, or would be 
198.29  so precluded except for the fact that the person stored tangible 
198.30  personal property in a state licensed facility under chapter 231.
198.31     (b) Ownership of an interest in the following types of 
198.32  property (including those contacts with this state reasonably 
198.33  required to evaluate and complete the acquisition or disposition 
198.34  of the property, the servicing of the property or the income 
198.35  from it, the collection of income from the property, or the 
198.36  acquisition or liquidation of collateral relating to the 
199.1   property) shall not be a factor in determining whether the owner 
199.2   is subject to tax under this chapter: 
199.3      (1) an interest in a real estate mortgage investment 
199.4   conduit, a real estate investment trust, a financial asset 
199.5   securitization investment trust, or a regulated investment 
199.6   company or a fund of a regulated investment company, as those 
199.7   terms are defined in the Internal Revenue Code; 
199.8      (2) an interest in money market instruments or securities 
199.9   as defined in section 290.191, subdivision 6, paragraphs (c) and 
199.10  (d); 
199.11     (3) an interest in a loan-backed, mortgage-backed, or 
199.12  receivable-backed security representing either:  (i) ownership 
199.13  in a pool of promissory notes, mortgages, or receivables or 
199.14  certificates of interest or participation in such notes, 
199.15  mortgages, or receivables, or (ii) debt obligations or equity 
199.16  interests which provide for payments in relation to payments or 
199.17  reasonable projections of payments on the notes, mortgages, or 
199.18  receivables; 
199.19     (4) an interest acquired from a person in assets described 
199.20  in section 290.191, subdivision 11, paragraphs (e) to (l), 
199.21  subject to the provisions of paragraph (c), clause (2)(A); 
199.22     (5) an interest acquired from a person in the right to 
199.23  service, or collect income from any assets described in section 
199.24  290.191, subdivision 11, paragraphs (e) to (l), subject to the 
199.25  provisions of paragraph (c), clause (2)(A); 
199.26     (6) an interest acquired from a person in a funded or 
199.27  unfunded agreement to extend or guarantee credit whether 
199.28  conditional, mandatory, temporary, standby, secured, or 
199.29  otherwise, subject to the provisions of paragraph (c), clause 
199.30  (2)(A); 
199.31     (7) an interest of a person other than an individual, 
199.32  estate, or trust, in any intangible, tangible, real, or personal 
199.33  property acquired in satisfaction, whether in whole or in part, 
199.34  of any asset embodying a payment obligation which is in default, 
199.35  whether secured or unsecured, the ownership of an interest in 
199.36  which would be exempt under the preceding provisions of this 
200.1   subdivision, provided the property is disposed of within a 
200.2   reasonable period of time; or 
200.3      (8) amounts held in escrow or trust accounts, pursuant to 
200.4   and in accordance with the terms of property described in this 
200.5   subdivision. 
200.6      (c)(1) For purposes of paragraph (b), clauses (4) to (6), 
200.7   an interest in the type of assets or credit agreements described 
200.8   is deemed to exist at the time the owner becomes legally 
200.9   obligated, conditionally or unconditionally, to fund, acquire, 
200.10  renew, extend, amend, or otherwise enter into the credit 
200.11  arrangement. 
200.12     (2)(A) An owner has acquired an interest from a person in 
200.13  paragraph (b), clauses (4) to (6), assets if:  
200.14     (i) the owner at the time of the acquisition of the asset 
200.15  does not own, directly or indirectly, 15 percent or more of the 
200.16  outstanding stock or in the case of a partnership 15 percent or 
200.17  more of the capital or profit interests of the person from whom 
200.18  it acquired the asset; 
200.19     (ii) the person from whom the owner acquired the asset 
200.20  regularly sells, assigns, or transfers interests in paragraph 
200.21  (b), clauses (4) to (6), assets during the 12 calendar months 
200.22  immediately preceding the month of acquisition to three or more 
200.23  persons; and 
200.24     (iii) the person from whom the owner acquired the asset 
200.25  does not sell, assign, or transfer 75 percent or more of its 
200.26  paragraph (b), clauses (4) to (6), assets during the 12 calendar 
200.27  months immediately preceding the month of acquisition to the 
200.28  owner. 
200.29  For purposes of determining indirect ownership under item (i), 
200.30  the owner is deemed to own all stock, capital, or profit 
200.31  interests owned by another person if the owner directly owns 15 
200.32  percent or more of the stock, capital, or profit interests in 
200.33  the other person.  The owner is also deemed to own through any 
200.34  intermediary parties all stock, capital, and profit interests 
200.35  directly owned by a person to the extent there exists a 15 
200.36  percent or more chain of ownership of stock, capital, or profit 
201.1   interests between the owner, intermediary parties and the person.
201.2      (B) If the owner of the asset is a member of the unitary 
201.3   group, paragraph (b), clauses (4) to (8), do not apply to an 
201.4   interest acquired from another member of the unitary group.  If 
201.5   the interest in the asset was originally acquired from a 
201.6   nonunitary member and at that time qualified as a section 
201.7   290.015, subdivision 3, paragraph (b), asset, the foregoing 
201.8   limitation does not apply. 
201.9      Sec. 11.  Minnesota Statutes 1996, section 290.015, 
201.10  subdivision 5, is amended to read: 
201.11     Subd. 5.  [DETERMINATION AT ENTITY LEVEL.] Determinations 
201.12  under this section with respect to trades or businesses 
201.13  conducted by a partnership, trust, estate, or corporation with 
201.14  an election in effect under section 1362 of the Internal Revenue 
201.15  Code treated as an "S" corporation under section 290.9725, or 
201.16  any other entity, the income of which is or may be taxed to its 
201.17  owners or beneficiaries must be made with respect to the entity 
201.18  carrying on the trade or business and not with respect to owners 
201.19  or beneficiaries of the trade or business, the taxability of 
201.20  which under this chapter must be determined under section 
201.21  290.014.  
201.22     Sec. 12.  Minnesota Statutes 1996, section 290.06, 
201.23  subdivision 22, is amended to read: 
201.24     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
201.25  taxpayer who is liable for taxes on or measured by net income to 
201.26  another state or province or territory of Canada, as provided in 
201.27  paragraphs (b) through (f), upon income allocated or apportioned 
201.28  to Minnesota, is entitled to a credit for the tax paid to 
201.29  another state or province or territory of Canada if the tax is 
201.30  actually paid in the taxable year or a subsequent taxable year.  
201.31  A taxpayer who is a resident of this state pursuant to section 
201.32  290.01, subdivision 7, clause (2), and who is subject to income 
201.33  tax as a resident in the state of the individual's domicile is 
201.34  not allowed this credit unless the state of domicile does not 
201.35  allow a similar credit. 
201.36     (b) For an individual, estate, or trust, the credit is 
202.1   determined by multiplying the tax payable under this chapter by 
202.2   the ratio derived by dividing the income subject to tax in the 
202.3   other state or province or territory of Canada that is also 
202.4   subject to tax in Minnesota while a resident of Minnesota by the 
202.5   taxpayer's federal adjusted gross income, as defined in section 
202.6   62 of the Internal Revenue Code, modified by the addition 
202.7   required by section 290.01, subdivision 19a, clause (1), and the 
202.8   subtraction allowed by section 290.01, subdivision 19b, clause 
202.9   (1), to the extent the income is allocated or assigned to 
202.10  Minnesota under sections 290.081 and 290.17.  
202.11     (c) If the taxpayer is an athletic team that apportions all 
202.12  of its income under section 290.17, subdivision 5, paragraph 
202.13  (c), the credit is determined by multiplying the tax payable 
202.14  under this chapter by the ratio derived from dividing the total 
202.15  net income subject to tax in the other state or province or 
202.16  territory of Canada by the taxpayer's Minnesota taxable income. 
202.17     (d) The credit determined under paragraph (b) or (c) shall 
202.18  not exceed the amount of tax so paid to the other state or 
202.19  province or territory of Canada on the gross income earned 
202.20  within the other state or province or territory of Canada 
202.21  subject to tax under this chapter, nor shall the allowance of 
202.22  the credit reduce the taxes paid under this chapter to an amount 
202.23  less than what would be assessed if such income amount was 
202.24  excluded from taxable net income. 
202.25     (e) In the case of the tax assessed on a lump sum 
202.26  distribution under section 290.032, the credit allowed under 
202.27  paragraph (a) is the tax assessed by the other state or province 
202.28  or territory of Canada on the lump sum distribution that is also 
202.29  subject to tax under section 290.032, and shall not exceed the 
202.30  tax assessed under section 290.032.  To the extent the total 
202.31  lump sum distribution defined in section 290.032, subdivision 1, 
202.32  includes lump sum distributions received in prior years or is 
202.33  all or in part an annuity contract, the reduction to the tax on 
202.34  the lump sum distribution allowed under section 290.032, 
202.35  subdivision 2, includes tax paid to another state that is 
202.36  properly apportioned to that distribution. 
203.1      (f) If a Minnesota resident reported an item of income to 
203.2   Minnesota and is assessed tax in such other state or province or 
203.3   territory of Canada on that same income after the Minnesota 
203.4   statute of limitations has expired, the taxpayer shall receive a 
203.5   credit for that year under paragraph (a), notwithstanding any 
203.6   statute of limitations to the contrary.  The claim for the 
203.7   credit must be submitted within one year from the date the taxes 
203.8   were paid to the other state or province or territory of 
203.9   Canada.  The taxpayer must submit sufficient proof to show 
203.10  entitlement to a credit. 
203.11     (g) For the purposes of this subdivision, a resident 
203.12  shareholder of a corporation having a valid election in effect 
203.13  under section 1362 of the Internal Revenue Code treated as an "S"
203.14  corporation under section 290.9725, must be considered to have 
203.15  paid a tax imposed on the shareholder in an amount equal to the 
203.16  shareholder's pro rata share of any net income tax paid by the S 
203.17  corporation to another state.  For the purposes of the preceding 
203.18  sentence, the term "net income tax" means any tax imposed on or 
203.19  measured by a corporation's net income. 
203.20     (h) For the purposes of this subdivision, a resident member 
203.21  of a limited liability company taxed as a partnership under the 
203.22  Internal Revenue Code must be considered to have paid a tax 
203.23  imposed on the member in an amount equal to the member's pro 
203.24  rata share of any net income tax paid by the limited liability 
203.25  company to a state that does not measure the income of the 
203.26  member of the limited liability company by reference to the 
203.27  income of the limited liability company.  For purposes of the 
203.28  preceding sentence, the term "net income" tax means any tax 
203.29  imposed on or measured by a limited liability company's net 
203.30  income. 
203.31     Sec. 13.  Minnesota Statutes 1996, section 290.068, 
203.32  subdivision 1, is amended to read: 
203.33     Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
203.34  a corporation with a valid election in effect under section 1362 
203.35  of the Internal Revenue Code treated as an "S" corporation under 
203.36  section 290.9725, is allowed a credit against the portion of the 
204.1   franchise tax computed under section 290.06, subdivision 1, for 
204.2   the taxable year equal to: 
204.3      (a) 5 percent of the first $2 million of the excess (if 
204.4   any) of 
204.5      (1) the qualified research expenses for the taxable year, 
204.6   over 
204.7      (2) the base amount; and 
204.8      (b) 2.5 percent on all of such excess expenses over $2 
204.9   million. 
204.10     Sec. 14.  Minnesota Statutes 1996, section 290.0922, 
204.11  subdivision 1, is amended to read: 
204.12     Subdivision 1.  [IMPOSITION.] (a) In addition to the tax 
204.13  imposed by this chapter without regard to this section, the 
204.14  franchise tax imposed on a corporation required to file under 
204.15  section 289A.08, subdivision 3, other than a corporation having 
204.16  a valid election in effect under section 1362 of the Internal 
204.17  Revenue Code treated as an "S" corporation under section 
204.18  290.9725 for the taxable year includes a tax equal to the 
204.19  following amounts: 
204.20       If the sum of the corporation's
204.21  Minnesota property, payrolls, and sales
204.22  or receipts is:                            the tax equals:
204.23             less than $500,000                    $0
204.24     $   500,000 to $   999,999                  $100
204.25     $ 1,000,000 to $ 4,999,999                  $300
204.26     $ 5,000,000 to $ 9,999,999                $1,000 
204.27     $10,000,000 to $19,999,999                $2,000 
204.28     $20,000,000 or more                       $5,000 
204.29     (b) A tax is imposed for each taxable year on a corporation 
204.30  required to file a return under section 289A.12, subdivision 3, 
204.31  that has a valid election in effect for the taxable year under 
204.32  section 1362 of the Internal Revenue Code is treated as an "S" 
204.33  corporation under section 290.9725 and on a partnership required 
204.34  to file a return under section 289A.12, subdivision 3, other 
204.35  than a partnership that derives over 80 percent of its income 
204.36  from farming.  The tax imposed under this paragraph is due on or 
205.1   before the due date of the return for the taxpayer due under 
205.2   section 289A.18, subdivision 1.  The commissioner shall 
205.3   prescribe the return to be used for payment of this tax.  The 
205.4   tax under this paragraph is equal to the following amounts:  
205.5        If the sum of the S corporation's or partnership's 
205.6   Minnesota property, payrolls, and sales
205.7   or receipts is:                        the tax equals:
205.8                less than $500,000                $0 
205.9        $   500,000 to $   999,999              $100 
205.10       $ 1,000,000 to $ 4,999,999              $300 
205.11       $ 5,000,000 to $ 9,999,999            $1,000 
205.12       $10,000,000 to $19,999,999            $2,000 
205.13       $20,000,000 or more                   $5,000 
205.14     Sec. 15.  Minnesota Statutes 1996, section 290.17, 
205.15  subdivision 1, is amended to read: 
205.16     Subdivision 1.  [SCOPE OF ALLOCATION RULES.] (a) The income 
205.17  of resident individuals is not subject to allocation outside 
205.18  this state.  The allocation rules apply to nonresident 
205.19  individuals, estates, trusts, nonresident partners of 
205.20  partnerships, nonresident shareholders of corporations having a 
205.21  valid election in effect under section 1362 of the Internal 
205.22  Revenue Code treated as "S" corporations under section 290.9725, 
205.23  and all corporations not having such an election in effect.  If 
205.24  a partnership or corporation would not otherwise be subject to 
205.25  the allocation rules, but conducts a trade or business that is 
205.26  part of a unitary business involving another legal entity that 
205.27  is subject to the allocation rules, the partnership or 
205.28  corporation is subject to the allocation rules. 
205.29     (b) Expenses, losses, and other deductions (referred to 
205.30  collectively in this paragraph as "deductions") must be 
205.31  allocated along with the item or class of gross income to which 
205.32  they are definitely related for purposes of assignment under 
205.33  this section or apportionment under section 290.191, 290.20, 
205.34  290.35, or 290.36.  Deductions not definitely related to any 
205.35  item or class of gross income are assigned to the taxpayer's 
205.36  domicile. 
206.1      (c) In the case of an individual who is a resident for only 
206.2   part of a taxable year, the individual's income, gains, losses, 
206.3   and deductions from the distributive share of a partnership, S 
206.4   corporation, trust, or estate are not subject to allocation 
206.5   outside this state to the extent of the distributive share 
206.6   multiplied by a ratio, the numerator of which is the number of 
206.7   days the individual was a resident of this state during the tax 
206.8   year of the partnership, S corporation, trust, or estate, and 
206.9   the denominator of which is the number of days in the taxable 
206.10  year of the partnership, S corporation, trust, or estate. 
206.11     Sec. 16.  Minnesota Statutes 1996, section 290.371, 
206.12  subdivision 2, is amended to read: 
206.13     Subd. 2.  [EXEMPTIONS.] A corporation is not required to 
206.14  file a notice of business activities report if:  
206.15     (1) by the end of an accounting period for which it was 
206.16  otherwise required to file a notice of business activities 
206.17  report under this section, it had received a certificate of 
206.18  authority to do business in this state; 
206.19     (2) a timely return has been filed under section 289A.08; 
206.20     (3) the corporation is exempt from taxation under this 
206.21  chapter pursuant to section 290.05; 
206.22     (4) the corporation's activities in Minnesota, or the 
206.23  interests in property which it owns, consist solely of 
206.24  activities or property exempted from jurisdiction to tax under 
206.25  section 290.015, subdivision 3, paragraph (b); or 
206.26     (5) the corporation has a valid election in effect under 
206.27  section 1362 of the Internal Revenue Code is an "S" corporation 
206.28  under section 290.9725. 
206.29     Sec. 17.  Minnesota Statutes 1996, section 290.9725, is 
206.30  amended to read: 
206.31     290.9725 [S CORPORATION.] 
206.32     For purposes of this chapter, the term "S corporation" 
206.33  means any corporation having a valid election in effect for the 
206.34  taxable year under section 1362 of the Internal Revenue Code, 
206.35  except that a corporation which either: 
206.36     (1) is a financial institution to which either section 585 
207.1   or section 593 of the Internal Revenue Code applies; or 
207.2      (2) has a wholly owned subsidiary which is a financial 
207.3   institution as described above 
207.4   is not an "S" corporation for the purposes of this chapter.  An 
207.5   S corporation shall not be subject to the taxes imposed by this 
207.6   chapter, except the taxes imposed under sections 290.0922, 
207.7   290.92, 290.9727, 290.9728, and 290.9729. 
207.8      Sec. 18.  Minnesota Statutes 1996, section 290.9727, 
207.9   subdivision 1, is amended to read: 
207.10     Subdivision 1.  [TAX IMPOSED.] For a an "S" corporation 
207.11  electing S corporation status pursuant to section 1362 of the 
207.12  Internal Revenue Code after December 31, 1986, and having a 
207.13  recognized built-in gain as defined in section 1374 of the 
207.14  Internal Revenue Code, there is imposed a tax on the taxable 
207.15  income of such S corporation, as defined in this section, at the 
207.16  rate prescribed by section 290.06, subdivision 1.  This 
207.17  subdivision does not apply to any corporation having an S 
207.18  election in effect for each of its taxable years.  An S 
207.19  corporation and any predecessor corporation must be treated as 
207.20  one corporation for purposes of the preceding sentence.  
207.21     Sec. 19.  Minnesota Statutes 1996, section 290.9728, 
207.22  subdivision 1, is amended to read: 
207.23     Subdivision 1.  [TAX IMPOSED.] There is imposed a tax on 
207.24  the taxable income of a an "S" corporation that has:  
207.25     (1) elected S corporation status pursuant to section 1362 
207.26  of the Internal Revenue Code of 1986, as amended through 
207.27  December 31, 1986, before January 1, 1987; 
207.28     (2) a net capital gain for the taxable year (i) in excess 
207.29  of $25,000 and (ii) exceeding 50 percent of the corporation's 
207.30  federal taxable income for the taxable year; and 
207.31     (3) federal taxable income for the taxable year exceeding 
207.32  $25,000.  
207.33     The tax is imposed at the rate prescribed by section 
207.34  290.06, subdivision 1.  For purposes of this section, "federal 
207.35  taxable income" means federal taxable income determined under 
207.36  section 1374(4)(d) of the Internal Revenue Code.  This section 
208.1   does not apply to an S corporation which has had an election 
208.2   under section 1362 of the Internal Revenue Code of 1954, in 
208.3   effect for the three immediately preceding taxable years.  This 
208.4   section does not apply to an S corporation that has been in 
208.5   existence for less than four taxable years and has had an 
208.6   election in effect under section 1362 of the Internal Revenue 
208.7   Code of 1954 for each of the corporation's taxable years.  For 
208.8   purposes of this section, an S corporation and any predecessor 
208.9   corporation are treated as one corporation.  
208.10     Sec. 20.  [290.9743] [ELECTION BY FASIT.] 
208.11     An entity having a valid election as a financial asset 
208.12  securitization investment trust in effect for a taxable year 
208.13  under section 860L(a) of the Internal Revenue Code shall not be 
208.14  subject to the taxes imposed by this chapter, except the tax 
208.15  imposed under section 290.92. 
208.16     Sec. 21.  [290.9744] [FASIT INCOME TAXABLE TO HOLDERS OF 
208.17  INTERESTS.] 
208.18     The income of a financial asset securitization investment 
208.19  trust is taxable to the holders of interests in the financial 
208.20  asset securitization investment trust as provided in sections 
208.21  860H to 860L of the Internal Revenue Code.  The income of the 
208.22  holders must be computed under the provisions of this chapter. 
208.23     Sec. 22.  Minnesota Statutes 1996, section 291.005, 
208.24  subdivision 1, is amended to read: 
208.25     Subdivision 1.  Unless the context otherwise clearly 
208.26  requires, the following terms used in this chapter shall have 
208.27  the following meanings: 
208.28     (1) "Federal gross estate" means the gross estate of a 
208.29  decedent as valued and otherwise determined for federal estate 
208.30  tax purposes by federal taxing authorities pursuant to the 
208.31  provisions of the Internal Revenue Code. 
208.32     (2) "Minnesota gross estate" means the federal gross estate 
208.33  of a decedent after (a) excluding therefrom any property 
208.34  included therein which has its situs outside Minnesota and (b) 
208.35  including therein any property omitted from the federal gross 
208.36  estate which is includable therein, has its situs in Minnesota, 
209.1   and was not disclosed to federal taxing authorities.  
209.2      (3) "Personal representative" means the executor, 
209.3   administrator or other person appointed by the court to 
209.4   administer and dispose of the property of the decedent.  If 
209.5   there is no executor, administrator or other person appointed, 
209.6   qualified, and acting within this state, then any person in 
209.7   actual or constructive possession of any property having a situs 
209.8   in this state which is included in the federal gross estate of 
209.9   the decedent shall be deemed to be a personal representative to 
209.10  the extent of the property and the Minnesota estate tax due with 
209.11  respect to the property. 
209.12     (4) "Resident decedent" means an individual whose domicile 
209.13  at the time of death was in Minnesota. 
209.14     (5) "Nonresident decedent" means an individual whose 
209.15  domicile at the time of death was not in Minnesota. 
209.16     (6) "Situs of property" means, with respect to real 
209.17  property, the state or country in which it is located; with 
209.18  respect to tangible personal property, the state or country in 
209.19  which it was normally kept or located at the time of the 
209.20  decedent's death; and with respect to intangible personal 
209.21  property, the state or country in which the decedent was 
209.22  domiciled at death. 
209.23     (7) "Commissioner" means the commissioner of revenue or any 
209.24  person to whom the commissioner has delegated functions under 
209.25  this chapter. 
209.26     (8) "Internal Revenue Code" means the United States 
209.27  Internal Revenue Code of 1986, as amended through March 22 
209.28  December 31, 1996, and includes the provisions of section 
209.29  1(a)(4) of Public Law Number 104-117. 
209.30     Sec. 23.  [FEDERAL CHANGES.] 
209.31     The changes made by sections 1118(a), 1305, 1603, 1702(e), 
209.32  and 1702(f) of the Small Business Job Protection Act, Public Law 
209.33  Number 104-188, sections 451(a), 451(b), 909, and 910 of the 
209.34  Personal Responsibility and Work Opportunity Reconciliation Act, 
209.35  Public Law Number 104-193, and the federal changes to taxable 
209.36  income of section 2 of this article which affect the Minnesota 
210.1   definition of wages under Minnesota Statutes, section 290.92, 
210.2   subdivision 1, S corporation status under Minnesota Statutes, 
210.3   section 290.9725, unrelated business income tax under Minnesota 
210.4   Statutes, section 290.05, subdivision 3, corporate alternative 
210.5   minimum tax under Minnesota Statutes, section 290.0921, 
210.6   subdivision 3, estate tax under Minnesota Statutes, sections 
210.7   291.005 and 291.03, the Minnesota working family credit under 
210.8   Minnesota Statutes, section 290.0671, subdivision 1, and the 
210.9   definition of income under Minnesota Statutes, section 290A.03, 
210.10  subdivision 3, shall become effective at the same time the 
210.11  changes become effective for federal purposes. 
210.12     Sec. 24.  [INSTRUCTION TO REVISOR.] 
210.13     In the next edition of Minnesota Statutes, the revisor of 
210.14  statutes shall substitute the phrase "Internal Revenue Code of 
210.15  1986, as amended through December 31, 1996," for the words 
210.16  "Internal Revenue Code of 1986, as amended through April 15, 
210.17  1995," wherever the phrase occurs in chapters 290A, 297, 298, 
210.18  and 469. 
210.19     Sec. 25.  [EFFECTIVE DATE.] 
210.20     Sections 3 to 5, 7 to 20 and the provision of section 2 
210.21  dealing with regulated investment companies are effective for 
210.22  tax years beginning after December 31, 1996.  The remainder of 
210.23  this article is effective at the same time and for the same 
210.24  years as the federal changes made in 1996 were effective for 
210.25  federal purposes. 
210.26                             ARTICLE 7
210.27                      SALES AND SPECIAL TAXES
210.28     Section 1.  Minnesota Statutes 1996, section 289A.56, 
210.29  subdivision 4, is amended to read: 
210.30     Subd. 4.  [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO 
210.31  PURCHASERS.] Notwithstanding subdivision 3, for refunds payable 
210.32  under sections section 297A.15, subdivision 5, and 289A.50, 
210.33  subdivision 2a, interest is computed from the date the refund 
210.34  claim is filed with the commissioner.  For refunds payable under 
210.35  section 289A.50, subdivision 2a, interest is computed from the 
210.36  20th day of the month following the month of the invoice date 
211.1   for the purchase which is the subject of the refund. 
211.2      Sec. 2.  Minnesota Statutes 1996, section 296.141, 
211.3   subdivision 4, is amended to read: 
211.4      Subd. 4.  [CREDIT OR REFUND OF TAX PAID.] The commissioner 
211.5   shall allow the distributor credit or refund of the tax paid on 
211.6   gasoline and special fuel: 
211.7      (1) exported or sold for export from the state, other than 
211.8   in the supply tank of a motor vehicle or of an aircraft; 
211.9      (2) sold to the United States government to be used 
211.10  exclusively in performing its governmental functions and 
211.11  activities or to any "cost plus a fixed fee" contractor employed 
211.12  by the United States government on any national defense project; 
211.13     (3) if the fuel is placed in a tank used exclusively for 
211.14  residential heating; 
211.15     (4) destroyed by accident while in the possession of the 
211.16  distributor; 
211.17     (5) in error; 
211.18     (6) in the case of gasoline only, sold for storage in an 
211.19  on-farm bulk storage tank, if the tax was not collected on the 
211.20  sale; and 
211.21     (6) (7) in such other cases as the commissioner may permit, 
211.22  not inconsistent with the provisions of this chapter and other 
211.23  laws relating to the gasoline and special fuel excise taxes. 
211.24     Sec. 3.  Minnesota Statutes 1996, section 296.18, 
211.25  subdivision 1, is amended to read: 
211.26     Subdivision 1.  [CLAIM; FUEL USED IN OTHER VEHICLES.] Any 
211.27  person who shall buy and use gasoline for a qualifying purpose 
211.28  other than use in motor vehicles, snowmobiles except as provided 
211.29  in clause (2), or motorboats, or special fuel for a qualifying 
211.30  purpose other than use in licensed motor vehicles, and who shall 
211.31  have paid the Minnesota excise tax directly or indirectly 
211.32  through the amount of the tax being included in the price of the 
211.33  gasoline or special fuel, or otherwise, shall be reimbursed and 
211.34  repaid the amount of the tax paid upon filing with the 
211.35  commissioner a claim in the form and manner prescribed by the 
211.36  commissioner, and containing the information the commissioner 
212.1   shall require.  By signing any such claim which is false or 
212.2   fraudulent, the applicant shall be subject to the penalties 
212.3   provided in this section for knowingly making a false claim.  
212.4   The claim shall set forth the total amount of the gasoline so 
212.5   purchased and used by the applicant other than in motor 
212.6   vehicles, or special fuel so purchased and used by the applicant 
212.7   other than in licensed motor vehicles, and shall state when and 
212.8   for what purpose it was used.  When a claim contains an error in 
212.9   computation or preparation, the commissioner is authorized to 
212.10  adjust the claim in accordance with the evidence shown on the 
212.11  claim or other information available to the commissioner.  The 
212.12  commissioner, on being satisfied that the claimant is entitled 
212.13  to the payments, shall approve the claim and transmit it to the 
212.14  commissioner of finance.  No repayment shall be made unless the 
212.15  claim and invoice shall be filed with the commissioner within 
212.16  one year from the date of the purchase.  The postmark on the 
212.17  envelope in which a written claim is mailed shall determine its 
212.18  date of filing.  The words "gasoline" or "special fuel" as used 
212.19  in this subdivision do not include aviation gasoline or special 
212.20  fuel for aircraft.  Gasoline or special fuel bought and used for 
212.21  a "qualifying purpose" means: 
212.22     (1) Gasoline or special fuel used in carrying on a trade or 
212.23  business, used on a farm situated in Minnesota, and used for a 
212.24  farming purpose.  "Farm" and "farming purpose" have the meanings 
212.25  given them in section 6420(c)(2), (3), and (4) of the Internal 
212.26  Revenue Code of 1986, as amended through December 31, 1988.  
212.27     (2) Gasoline or special fuel used for off-highway business 
212.28  use.  "Off-highway business use" means any use off the public 
212.29  highway by a person in that person's trade, business, or 
212.30  activity for the production of income.  "Off-highway business 
212.31  use" includes: 
212.32     (a) use of a passenger snowmobile off the public highways 
212.33  as part of the operations of a resort as defined in section 
212.34  157.15.; and 
212.35     (b) use of gasoline or special fuel to operate a power 
212.36  takeoff unit on a vehicle, but not including fuel consumed 
213.1   during idling time. 
213.2      "Off-highway business use" does not include use as a fuel 
213.3   in a motor vehicle which, at the time of use, is registered or 
213.4   is required to be registered for highway use under the laws of 
213.5   any state or foreign country.  
213.6      (3) Gasoline or special fuel placed in the fuel tanks of 
213.7   new motor vehicles, manufactured in Minnesota, and shipped by 
213.8   interstate carrier to destinations in other states or foreign 
213.9   countries. 
213.10     By July 1, 1998, the commissioner shall adopt rules that 
213.11  determine the rates and percentages necessary to develop 
213.12  formulas for calculating and administering the refund under 
213.13  clause (2)(b). 
213.14     Sec. 4.  Minnesota Statutes 1996, section 297A.01, 
213.15  subdivision 3, is amended to read: 
213.16     Subd. 3.  A "sale" and a "purchase" includes, but is not 
213.17  limited to, each of the following transactions: 
213.18     (a) Any transfer of title or possession, or both, of 
213.19  tangible personal property, whether absolutely or conditionally, 
213.20  and the leasing of or the granting of a license to use or 
213.21  consume tangible personal property other than manufactured homes 
213.22  used for residential purposes for a continuous period of 30 days 
213.23  or more, for a consideration in money or by exchange or barter; 
213.24     (b) The production, fabrication, printing, or processing of 
213.25  tangible personal property for a consideration for consumers who 
213.26  furnish either directly or indirectly the materials used in the 
213.27  production, fabrication, printing, or processing; 
213.28     (c) The furnishing, preparing, or serving for a 
213.29  consideration of food, meals, or drinks.  "Sale" or "purchase" 
213.30  does not include: 
213.31     (1) meals or drinks served to patients, inmates, or persons 
213.32  residing at hospitals, sanitariums, nursing homes, senior 
213.33  citizens homes, and correctional, detention, and detoxification 
213.34  facilities; 
213.35     (2) meals or drinks purchased for and served exclusively to 
213.36  individuals who are 60 years of age or over and their spouses or 
214.1   to the handicapped and their spouses by governmental agencies, 
214.2   nonprofit organizations, agencies, or churches or pursuant to 
214.3   any program funded in whole or part through 42 USCA sections 
214.4   3001 through 3045, wherever delivered, prepared or served; or 
214.5      (3) meals and lunches served at public and private schools, 
214.6   universities, or colleges. 
214.7   Notwithstanding section 297A.25, subdivision 2, taxable food or 
214.8   meals include, but are not limited to, the following:  
214.9      (i) heated food or drinks; prepared by the retailer for 
214.10  immediate consumption either on or off the retailer's premises.  
214.11  For purposes of this subdivision, "food or drinks prepared for 
214.12  immediate consumption" includes any food product upon which an 
214.13  act of preparation including, but not limited to, cooking, 
214.14  mixing, sandwich making, blending, heating, or pouring has been 
214.15  performed by the retailer so the food product may be immediately 
214.16  consumed by the purchaser.  For purposes of this subdivision, 
214.17  "premises" means the total space and facilities, including 
214.18  buildings, grounds, and parking lots that are made available or 
214.19  that are available for use by the retailer or customer for the 
214.20  purpose of sale or consumption of prepared food and drinks.  
214.21  Food and drinks sold within a building or grounds which require 
214.22  an admission charge for entrance are presumed to be sold for 
214.23  consumption on the premises.  The premises of a caterer is the 
214.24  place where the catered food or drinks are served; 
214.25     (ii) sandwiches prepared by the retailer; 
214.26     (iii) single sales of prepackaged ice cream or ice milk 
214.27  novelties prepared by the retailer; 
214.28     (iv) hand-prepared or dispensed ice cream or ice milk ice 
214.29  cream, ice milk, or frozen yogurt products including novelties, 
214.30  cones, sundaes, and snow cones, sold in single or individual 
214.31  servings.  For purposes of this subdivision, "single or 
214.32  individual servings" does not include products prepackaged and 
214.33  sold in bulk containers or packaging; 
214.34     (v) (iii) soft drinks and other beverages prepared or 
214.35  served by the retailer; including all carbonated and 
214.36  noncarbonated beverages or drinks sold in liquid form except 
215.1   beverages or drinks which contain milk or milk products, 
215.2   beverages or drinks containing 15 or more percent fruit juice, 
215.3   or noncarbonated and noneffervescent bottled water sold in 
215.4   individual containers of one-half gallon or more in size; 
215.5      (vi) (iv) gum;, candy, and candy products, except when sold 
215.6   for fundraising purposes by a nonprofit organization that 
215.7   provides educational and social activities primarily for young 
215.8   people 18 years of age and under; 
215.9      (vii) (v) ice; 
215.10     (viii) (vi) all food sold in from vending machines, 
215.11  pushcarts, lunch carts, motor vehicles, or any other form of 
215.12  vehicle except home delivery vehicles; 
215.13     (ix) (vii) party trays prepared by the retailers; and 
215.14     (x) (viii) all meals and single servings of packaged snack 
215.15  food, single cans or bottles of pop, sold in restaurants and 
215.16  bars; and 
215.17     (ix) bakery products prepared by the retailer for 
215.18  consumption on the retailer's premises; 
215.19     (d) The granting of the privilege of admission to places of 
215.20  amusement, recreational areas, or athletic events, except a 
215.21  world championship football game sponsored by the national 
215.22  football league, and the privilege of having access to and the 
215.23  use of amusement devices, tanning facilities, reducing salons, 
215.24  steam baths, turkish baths, health clubs, and spas or athletic 
215.25  facilities; 
215.26     (e) The furnishing for a consideration of lodging and 
215.27  related services by a hotel, rooming house, tourist court, motel 
215.28  or trailer camp and of the granting of any similar license to 
215.29  use real property other than the renting or leasing thereof for 
215.30  a continuous period of 30 days or more; 
215.31     (f) The furnishing for a consideration of electricity, gas, 
215.32  water, or steam for use or consumption within this state, or 
215.33  local exchange telephone service, intrastate toll service, and 
215.34  interstate toll service, if that service originates from and is 
215.35  charged to a telephone located in this state.  Telephone service 
215.36  does not include services purchased with prepaid telephone 
216.1   calling cards.  Telephone service includes paging services and 
216.2   private communication service, as defined in United States Code, 
216.3   title 26, section 4252(d), as amended through December 31, 1991, 
216.4   except for private communication service purchased by an agent 
216.5   acting on behalf of the state lottery.  The furnishing for a 
216.6   consideration of access to telephone services by a hotel to its 
216.7   guests is a sale under this clause.  Sales by municipal 
216.8   corporations in a proprietary capacity are included in the 
216.9   provisions of this clause.  The furnishing of water and sewer 
216.10  services for residential use shall not be considered a sale.  
216.11  The sale of natural gas to be used as a fuel in vehicles 
216.12  propelled by natural gas shall not be considered a sale for the 
216.13  purposes of this section; 
216.14     (g) The furnishing for a consideration of cable television 
216.15  services, including charges for basic service, charges for 
216.16  premium service, and any other charges for any other 
216.17  pay-per-view, monthly, or similar television services; 
216.18     (h) The furnishing for a consideration of parking services, 
216.19  whether on a contractual, hourly, or other periodic basis, 
216.20  except for parking at a meter; 
216.21     (i) The furnishing for a consideration of services listed 
216.22  in this paragraph: 
216.23     (i) laundry and dry cleaning services including cleaning, 
216.24  pressing, repairing, altering, and storing clothes, linen 
216.25  services and supply, cleaning and blocking hats, and carpet, 
216.26  drapery, upholstery, and industrial cleaning.  Laundry and dry 
216.27  cleaning services do not include services provided by coin 
216.28  operated facilities operated by the customer; 
216.29     (ii) motor vehicle washing, waxing, and cleaning services, 
216.30  including services provided by coin-operated facilities operated 
216.31  by the customer, and rustproofing, undercoating, and towing of 
216.32  motor vehicles; 
216.33     (iii) building and residential cleaning, maintenance, and 
216.34  disinfecting and exterminating services; 
216.35     (iv) detective services, security services, burglar, fire 
216.36  alarm, and armored car services; but not including services 
217.1   performed within the jurisdiction they serve by off-duty 
217.2   licensed peace officers as defined in section 626.84, 
217.3   subdivision 1, or services provided by a nonprofit organization 
217.4   for monitoring and electronic surveillance of persons placed on 
217.5   in-home detention pursuant to court order or under the direction 
217.6   of the Minnesota department of corrections; 
217.7      (v) pet grooming services; 
217.8      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
217.9   services; garden planting and maintenance; tree, bush, and shrub 
217.10  pruning, bracing, spraying, and surgery; indoor plant care; 
217.11  tree, bush, shrub and stump removal; and tree trimming for 
217.12  public utility lines.  Services performed under a construction 
217.13  contract for the installation of shrubbery, plants, sod, trees, 
217.14  bushes, and similar items are not taxable; 
217.15     (vii) mixed municipal solid waste management services as 
217.16  described in section 297A.45; 
217.17     (viii) massages, except when provided by a licensed health 
217.18  care facility or professional or upon written referral from a 
217.19  licensed health care facility or professional for treatment of 
217.20  illness, injury, or disease; and 
217.21     (ix) the furnishing for consideration of lodging, board and 
217.22  care services for animals in kennels and other similar 
217.23  arrangements, but excluding veterinary and horse boarding 
217.24  services. 
217.25  The services listed in this paragraph are taxable under section 
217.26  297A.02 if the service is performed wholly within Minnesota or 
217.27  if the service is performed partly within and partly without 
217.28  Minnesota and the greater proportion of the service is performed 
217.29  in Minnesota, based on the cost of performance.  In applying the 
217.30  provisions of this chapter, the terms "tangible personal 
217.31  property" and "sales at retail" include taxable services and the 
217.32  provision of taxable services, unless specifically provided 
217.33  otherwise.  Services performed by an employee for an employer 
217.34  are not taxable under this paragraph.  Services performed by a 
217.35  partnership or association for another partnership or 
217.36  association are not taxable under this paragraph if one of the 
218.1   entities owns or controls more than 80 percent of the voting 
218.2   power of the equity interest in the other entity.  Services 
218.3   performed between members of an affiliated group of corporations 
218.4   are not taxable.  For purposes of this section, "affiliated 
218.5   group of corporations" includes those entities that would be 
218.6   classified as a member of an affiliated group under United 
218.7   States Code, title 26, section 1504, as amended through December 
218.8   31, 1987, and who are eligible to file a consolidated tax return 
218.9   for federal income tax purposes; 
218.10     (j) A "sale" and a "purchase" includes the transfer of 
218.11  computer software, meaning information and directions that 
218.12  dictate the function performed by data processing equipment.  A 
218.13  "sale" and a "purchase" does not include the design, 
218.14  development, writing, translation, fabrication, lease, or 
218.15  transfer for a consideration of title or possession of a custom 
218.16  computer program; and 
218.17     (k) The granting of membership in a club, association, or 
218.18  other organization if: 
218.19     (1) the club, association, or other organization makes 
218.20  available for the use of its members sports and athletic 
218.21  facilities (without regard to whether a separate charge is 
218.22  assessed for use of the facilities); and 
218.23     (2) use of the sports and athletic facilities is not made 
218.24  available to the general public on the same basis as it is made 
218.25  available to members.  
218.26  Granting of membership includes both one-time initiation fees 
218.27  and periodic membership dues.  Sports and athletic facilities 
218.28  include golf courses, tennis, racquetball, handball and squash 
218.29  courts, basketball and volleyball facilities, running tracks, 
218.30  exercise equipment, swimming pools, and other similar athletic 
218.31  or sports facilities.  The provisions of this paragraph do not 
218.32  apply to camps or other recreation facilities owned and operated 
218.33  by an exempt organization under section 501(c)(3) of the 
218.34  Internal Revenue Code of 1986, as amended through December 31, 
218.35  1992, for educational and social activities for young people 
218.36  primarily age 18 and under.  
219.1      Sec. 5.  Minnesota Statutes 1996, section 297A.01, 
219.2   subdivision 4, is amended to read: 
219.3      Subd. 4.  (a) A "retail sale" or "sale at retail" means a 
219.4   sale for any purpose other than resale in the regular course of 
219.5   business.  
219.6      (b) Property utilized by the owner only by leasing such 
219.7   property to others or by holding it in an effort to so lease it, 
219.8   and which is put to no use by the owner other than resale after 
219.9   such lease or effort to lease, shall be considered property 
219.10  purchased for resale.  
219.11     (c) Master computer software programs that are purchased 
219.12  and used to make copies for sale or lease are considered 
219.13  property purchased for resale.  
219.14     (d) Sales of building materials, supplies and equipment to 
219.15  owners, contractors, subcontractors or builders for the erection 
219.16  of buildings or the alteration, repair or improvement of real 
219.17  property are "retail sales" or "sales at retail" in whatever 
219.18  quantity sold and whether or not for purpose of resale in the 
219.19  form of real property or otherwise.  
219.20     (e) A sale of carpeting, linoleum, or other similar floor 
219.21  covering which includes installation of the carpeting, linoleum, 
219.22  or other similar floor covering is a contract for the 
219.23  improvement of real property.  
219.24     (f) A sale of shrubbery, plants, sod, trees, and similar 
219.25  items that includes installation of the shrubbery, plants, sod, 
219.26  trees, and similar items is a contract for the improvement of 
219.27  real property.  
219.28     (g) Aircraft and parts for the repair thereof purchased by 
219.29  a nonprofit, incorporated flying club or association utilized 
219.30  solely by the corporation by leasing such aircraft to 
219.31  shareholders of the corporation shall be considered property 
219.32  purchased for resale.  The leasing of the aircraft to the 
219.33  shareholders by the flying club or association shall be 
219.34  considered a sale.  Leasing of aircraft utilized by a lessee for 
219.35  the purpose of leasing to others, whether or not the lessee also 
219.36  utilizes the aircraft for flight instruction where no separate 
220.1   charge is made for aircraft rental or for charter service, shall 
220.2   be considered a purchase for resale; provided, however, that a 
220.3   proportionate share of the lease payment reflecting use for 
220.4   flight instruction or charter service is subject to tax pursuant 
220.5   to section 297A.14. 
220.6      (h) Tangible personal property that is awarded as prizes 
220.7   shall not be considered property purchased for resale. 
220.8      (i) Tangible personal property that is utilized or employed 
220.9   in the furnishing or providing of services under section 
220.10  297A.01, subdivision 3, paragraph (d), or in conducting lawful 
220.11  gambling under chapter 349 or the state lottery under chapter 
220.12  349A, including property given as promotional items, shall not 
220.13  be considered property purchased for resale.  Machines, 
220.14  equipment, or devices that are used to furnish, provide, or 
220.15  dispense goods or services, including coin-operated devices, 
220.16  shall not be considered property purchased for resale. 
220.17     Sec. 6.  Minnesota Statutes 1996, section 297A.01, 
220.18  subdivision 7, is amended to read: 
220.19     Subd. 7.  "Storage" and "use" do not include the keeping, 
220.20  or retaining or exercising of any right or power over in a 
220.21  public warehouse of tangible personal property or tickets or 
220.22  admissions to places of amusement or athletic events when 
220.23  shipped or brought into Minnesota by common carrier, for the 
220.24  purpose of subsequently being transported outside Minnesota and 
220.25  thereafter used solely outside Minnesota, except in the course 
220.26  of interstate commerce, or for the purpose of being processed, 
220.27  fabricated or manufactured into, attached to or incorporated 
220.28  into other tangible personal property to be transported outside 
220.29  Minnesota and not thereafter returned to a point within 
220.30  Minnesota, except in the course of interstate commerce. 
220.31     Sec. 7.  Minnesota Statutes 1996, section 297A.01, 
220.32  subdivision 11, is amended to read: 
220.33     Subd. 11.  "Tangible personal property" means corporeal 
220.34  personal property of any kind whatsoever, including property 
220.35  which is to become real property as a result of incorporation, 
220.36  attachment, or installation following its acquisition. 
221.1      Personal property does not include: 
221.2      (a) large ponderous machinery and equipment used in a 
221.3   business or production activity which at common law would be 
221.4   considered to be real property; 
221.5      (b) property which is subject to an ad valorem property 
221.6   tax; 
221.7      (c) property described in section 272.02, subdivision 1, 
221.8   clause (8), paragraphs (a) to (d); 
221.9      (d) property described in section 272.03, subdivision 2, 
221.10  clauses (3) and (5). 
221.11     Tangible personal property includes computer software, 
221.12  whether contained on tape, discs, cards, or other 
221.13  devices.  Tangible personal property also includes prepaid 
221.14  telephone calling cards. 
221.15     Sec. 8.  Minnesota Statutes 1996, section 297A.01, 
221.16  subdivision 16, is amended to read: 
221.17     Subd. 16.  [CAPITAL EQUIPMENT.] (a) Capital equipment means 
221.18  machinery and equipment purchased or leased for use in this 
221.19  state and used by the purchaser or lessee primarily for 
221.20  manufacturing, fabricating, mining, or refining tangible 
221.21  personal property to be sold ultimately at retail and for 
221.22  electronically transmitting results retrieved by a customer of 
221.23  an on-line computerized data retrieval system.  
221.24     (b) Capital equipment includes all machinery and equipment 
221.25  that is essential to the integrated production process.  Capital 
221.26  equipment includes, but is not limited to: 
221.27     (1) machinery and equipment used or required to operate, 
221.28  control, or regulate the production equipment; 
221.29     (2) machinery and equipment used for research and 
221.30  development, design, quality control, and testing activities; 
221.31     (3) environmental control devices that are used to maintain 
221.32  conditions such as temperature, humidity, light, or air pressure 
221.33  when those conditions are essential to and are part of the 
221.34  production process; or 
221.35     (4) materials and supplies necessary to construct and 
221.36  install machinery or equipment.; 
222.1      (5) repair and replacement parts, including accessories, 
222.2   whether purchased as spare parts, repair parts, or as upgrades 
222.3   or modifications to machinery or equipment; 
222.4      (6) materials used for foundations that support machinery 
222.5   or equipment; or 
222.6      (7) materials used to construct and install special purpose 
222.7   buildings used in the production process. 
222.8      (c) Capital equipment does not include the following: 
222.9      (1) repair or replacement parts, including accessories, 
222.10  whether purchased as spare parts, repair parts, or as upgrades 
222.11  or modifications, and whether purchased before or after the 
222.12  machinery or equipment is placed into service.  Parts or 
222.13  accessories are treated as capital equipment only to the extent 
222.14  that they are a part of and are essential to the operation of 
222.15  the machinery or equipment as initially purchased; 
222.16     (2) motor vehicles taxed under chapter 297B; 
222.17     (3) (2) machinery or equipment used to receive or store raw 
222.18  materials; 
222.19     (4) (3) building materials; 
222.20     (5) (4) machinery or equipment used for nonproduction 
222.21  purposes, including, but not limited to, the following:  
222.22  machinery and equipment used for plant security, fire 
222.23  prevention, first aid, and hospital stations; machinery and 
222.24  equipment used in support operations or for administrative 
222.25  purposes; machinery and equipment used solely for pollution 
222.26  control, prevention, or abatement; and machinery and equipment 
222.27  used in plant cleaning, disposal of scrap and waste, plant 
222.28  communications, space heating, lighting, or safety; 
222.29     (6) (5) "farm machinery" as defined by subdivision 15, and 
222.30  "aquaculture production equipment" as defined by subdivision 19, 
222.31  and "replacement capital equipment" as defined by subdivision 
222.32  20; or 
222.33     (7) (6) any other item that is not essential to the 
222.34  integrated process of manufacturing, fabricating, mining, or 
222.35  refining. 
222.36     (d) For purposes of this subdivision: 
223.1      (1) "Equipment" means independent devices or tools separate 
223.2   from machinery but essential to an integrated production 
223.3   process, including computers and software, used in operating, 
223.4   controlling, or regulating machinery and equipment; and any 
223.5   subunit or assembly comprising a component of any machinery or 
223.6   accessory or attachment parts of machinery, such as tools, dies, 
223.7   jigs, patterns, and molds. 
223.8      (2) "Fabricating" means to make, build, create, produce, or 
223.9   assemble components or property to work in a new or different 
223.10  manner. 
223.11     (3) "Machinery" means mechanical, electronic, or electrical 
223.12  devices, including computers and software, that are purchased or 
223.13  constructed to be used for the activities set forth in paragraph 
223.14  (a), beginning with the removal of raw materials from inventory 
223.15  through the completion of the product, including packaging of 
223.16  the product. 
223.17     (4) "Manufacturing" means an operation or series of 
223.18  operations where raw materials are changed in form, composition, 
223.19  or condition by machinery and equipment and which results in the 
223.20  production of a new article of tangible personal property.  For 
223.21  purposes of this subdivision, "manufacturing" includes the 
223.22  generation of electricity or steam to be sold at retail. 
223.23     (5) "Mining" means the extraction of minerals, ores, stone, 
223.24  and peat. 
223.25     (6) "On-line data retrieval system" means a system whose 
223.26  cumulation of information is equally available and accessible to 
223.27  all its customers. 
223.28     (7) "Pollution control equipment" means machinery and 
223.29  equipment used to eliminate, prevent, or reduce pollution 
223.30  resulting from an activity described in paragraph (a). 
223.31     (8) "Primarily" means machinery and equipment used 50 
223.32  percent or more of the time in an activity described in 
223.33  paragraph (a). 
223.34     (9) "Refining" means the process of converting a natural 
223.35  resource to a product, including the treatment of water to be 
223.36  sold at retail. 
224.1      (e) For purposes of this subdivision the requirement that 
224.2   the machinery or equipment "must be used by the purchaser or 
224.3   lessee" means that the person who purchases or leases the 
224.4   machinery or equipment must be the one who uses it for the 
224.5   qualifying purpose.  When a contractor buys and installs 
224.6   machinery or equipment as part of an improvement to real 
224.7   property, only the contractor is considered the purchaser. 
224.8      (f) Notwithstanding prior provisions of this subdivision, 
224.9   machinery and equipment purchased or leased to replace machinery 
224.10  and equipment used in the mining or production of taconite shall 
224.11  qualify as capital equipment. 
224.12     Sec. 9.  Minnesota Statutes 1996, section 297A.09, is 
224.13  amended to read: 
224.14     297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 
224.15     For the purpose of the proper administration of sections 
224.16  297A.01 to 297A.44 and to prevent evasion of the tax, it shall 
224.17  be presumed that all gross receipts are subject to the tax until 
224.18  the contrary is established.  The burden of proving that a sale 
224.19  is not a sale at retail is upon the person who makes the sale, 
224.20  but that person may take from the purchaser, at the time the 
224.21  exempt purchase occurs, an exemption certificate to the effect 
224.22  that the property purchased is for resale or that the sale is 
224.23  otherwise exempt from the application of the tax imposed by 
224.24  sections 297A.01 to 297A.44.  A person asserting a claim that 
224.25  certain sales are exempt, who does not have the required 
224.26  exemption certificates in their possession, shall acquire the 
224.27  certificates within 60 days after receiving written notice from 
224.28  the commissioner that the certificates are required.  If the 
224.29  certificates are not obtained within the 60-day period, the 
224.30  sales are deemed taxable sales under this chapter. 
224.31     Sec. 10.  Minnesota Statutes 1996, section 297A.15, 
224.32  subdivision 7, is amended to read: 
224.33     Subd. 7.  [REFUND; APPROPRIATION; ADULT AND JUVENILE 
224.34  CORRECTIONAL FACILITIES.] (a) If construction materials and 
224.35  supplies described in paragraph (b) section 297A.25, subdivision 
224.36  63, are purchased by a contractor, subcontractor, or builder as 
225.1   part of a lump-sum contract or similar type of contract with a 
225.2   price covering both labor and materials for use in the project, 
225.3   a refund equal to 20 percent of the taxes paid by the 
225.4   contractor, subcontractor, or builder must be paid to the 
225.5   governmental subdivision.  The tax must be imposed and collected 
225.6   as if the sales were taxable and the rate under section 297A.02, 
225.7   subdivision 1, applied.  An application for refund must be 
225.8   submitted by the governmental subdivision and must include 
225.9   sufficient information to permit the commissioner to verify the 
225.10  sales taxes paid for the project.  The contractor, 
225.11  subcontractor, or builder must furnish to the governmental 
225.12  subdivision a statement of the cost of the construction 
225.13  materials and supplies and the sales taxes paid on them.  The 
225.14  amount required to make the refunds is annually appropriated to 
225.15  the commissioner.  Interest must be paid on the refund at the 
225.16  rate in section 270.76 from 60 days after the date the refund 
225.17  claim is filed with the commissioner. 
225.18     (b) Construction materials and supplies qualify for the 
225.19  refund under this section if:  (1) the materials and supplies 
225.20  are for use in a project to construct or improve an adult or 
225.21  juvenile correctional facility in a county, home rule charter 
225.22  city, or statutory city, and (2) the project is mandated by 
225.23  state or federal law, rule, or regulation.  The refund applies 
225.24  regardless of whether the materials and supplies are purchased 
225.25  by the city or county, or by a contractor, subcontractor, or 
225.26  builder under a contract with the city or county. 
225.27     Sec. 11.  Minnesota Statutes 1996, section 297A.211, 
225.28  subdivision 1, is amended to read: 
225.29     Subdivision 1.  Every person, as defined in this chapter, 
225.30  who is engaged in interstate for-hire transportation of tangible 
225.31  personal property or passengers by motor vehicle may at their 
225.32  option, under rules prescribed by the commissioner, register as 
225.33  retailers and pay the taxes imposed by this chapter in 
225.34  accordance with this section.  Any taxes paid under this section 
225.35  are deemed use taxes, except local sales taxes when no 
225.36  corresponding local use tax is imposed.  Persons referred to 
226.1   herein are:  (1) persons possessing a certificate or permit or 
226.2   having completed a registration process that authorizes for-hire 
226.3   transportation of property or passengers from the United States 
226.4   Department of Transportation, the transportation regulation 
226.5   board, or the department of transportation; or (2) persons 
226.6   transporting commodities defined as "exempt" in for-hire 
226.7   transportation in interstate commerce; or (3) persons who, 
226.8   pursuant to contracts with persons described in clause (1) or 
226.9   (2) above, transport tangible personal property in interstate 
226.10  commerce.  Persons qualifying under clauses (2) and (3) must 
226.11  maintain on a current basis the same type of mileage records 
226.12  that are required by persons specified in clause (1) by the 
226.13  United States Department of Transportation.  Persons who in the 
226.14  course of their business are transporting solely their own goods 
226.15  in interstate commerce may also register as retailers pursuant 
226.16  to rules prescribed by the commissioner and pay the taxes 
226.17  imposed by this chapter in accordance with this section.  
226.18     Sec. 12.  [297A.213] [DIRECT PAYMENT BY PURCHASERS 
226.19  PERMITTED.] 
226.20     The commissioner may permit purchasers to pay taxes imposed 
226.21  by this chapter directly to the commissioner.  Any taxes paid by 
226.22  purchasers under this section are deemed use taxes, except local 
226.23  sales taxes when no corresponding local use tax is imposed. 
226.24     Sec. 13.  Minnesota Statutes 1996, section 297A.25, 
226.25  subdivision 2, is amended to read: 
226.26     Subd. 2.  [FOOD PRODUCTS.] The gross receipts from the sale 
226.27  of food products including but not limited to cereal and cereal 
226.28  products, butter, cheese, milk and milk products, oleomargarine, 
226.29  meat and meat products, fish and fish products, eggs and egg 
226.30  products, vegetables and vegetable products, fruit and fruit 
226.31  products, spices and salt, sugar and sugar products, coffee and 
226.32  coffee substitutes, tea, cocoa and cocoa products, and food 
226.33  products which are not taxable pursuant to section 297A.01, 
226.34  subdivision 3, clause (c) are exempt.  This exemption does not 
226.35  include the following:  
226.36     (1) candy and candy products, except when sold for 
227.1   fundraising purposes by a nonprofit organization that provides 
227.2   educational and social activities for young people primarily 
227.3   aged 18 and under; 
227.4      (2) carbonated beverages, beverages commonly referred to as 
227.5   soft drinks containing less than 15 percent fruit juice, or 
227.6   bottled water other than noncarbonated and noneffervescent 
227.7   bottled water sold in individual containers of one-half gallon 
227.8   or more in size. 
227.9      Sec. 14.  Minnesota Statutes 1996, section 297A.25, 
227.10  subdivision 3, is amended to read: 
227.11     Subd. 3.  [MEDICINES; MEDICAL DEVICES.] The gross receipts 
227.12  from the sale of prescribed drugs, prescribed medicine and 
227.13  insulin, intended for use, internal or external, in the cure, 
227.14  mitigation, treatment or prevention of illness or disease in 
227.15  human beings are exempt, together with prescription glasses, 
227.16  fever thermometers, therapeutic, and prosthetic devices.  
227.17  "Prescribed drugs" or "prescribed medicine" includes 
227.18  over-the-counter drugs or medicine prescribed by a licensed 
227.19  physician.  "Therapeutic devices" includes reusable finger 
227.20  pricking devices for the extraction of blood, blood glucose 
227.21  monitoring machines, and other diagnostic agents used in 
227.22  diagnosing, monitoring, or treating diabetes.  Nonprescription 
227.23  analgesics consisting principally (determined by the weight of 
227.24  all ingredients) of acetaminophen, acetylsalicylic acid, 
227.25  ibuprofen, ketoprofen, naproxen, and other nonprescription 
227.26  analgesics that are approved by the United States Food and Drug 
227.27  Administration for internal use by human beings, or a 
227.28  combination thereof, are exempt. 
227.29     Sec. 15.  Minnesota Statutes 1996, section 297A.25, 
227.30  subdivision 5, is amended to read: 
227.31     Subd. 5.  [OUTSTATE TRANSPORT OR DELIVERY.] The gross 
227.32  receipts from the following sales of, and storage, use, or 
227.33  consumption of, tangible personal property are exempt:  
227.34     (1) property which, without intermediate use, is shipped or 
227.35  transported outside Minnesota by the purchaser and thereafter 
227.36  used in a trade or business or is stored, processed, fabricated 
228.1   or manufactured into, attached to or incorporated into other 
228.2   tangible personal property transported or shipped outside 
228.3   Minnesota and thereafter used in a trade or business outside 
228.4   Minnesota, and which is not thereafter returned to a point 
228.5   within Minnesota, except in the course of interstate commerce 
228.6   (storage shall not constitute intermediate use); provided that 
228.7   the property is not subject to tax in that state or country to 
228.8   which it is transported for storage or use and provided further 
228.9   that sales of tangible personal property to be used in other 
228.10  states or countries as part of a maintenance contract shall be 
228.11  specifically exempt; or 
228.12     (2) property which the seller delivers to a common carrier 
228.13  for delivery outside Minnesota, places in the United States mail 
228.14  or parcel post directed to the purchaser outside Minnesota, or 
228.15  delivers to the purchaser outside Minnesota by means of the 
228.16  seller's own delivery vehicles, and which is not thereafter 
228.17  returned to a point within Minnesota, except in the course of 
228.18  interstate commerce. 
228.19     Sec. 16.  Minnesota Statutes 1996, section 297A.25, 
228.20  subdivision 7, is amended to read: 
228.21     Subd. 7.  [PETROLEUM PRODUCTS.] The gross receipts from the 
228.22  sale of and storage, use or consumption of the following 
228.23  petroleum products are exempt:  
228.24     (1) products upon which a tax has been imposed and paid 
228.25  under the provisions of chapter 296, and no refund has been or 
228.26  will be allowed because the buyer used the fuel for nonhighway 
228.27  use; 
228.28     (2) products which are used in the improvement of 
228.29  agricultural land by constructing, maintaining, and repairing 
228.30  drainage ditches, tile drainage systems, grass waterways, water 
228.31  impoundment, and other erosion control structures; 
228.32     (3) products purchased by a transit system receiving 
228.33  financial assistance under section 174.24 or 473.384; or 
228.34     (4) products used in a passenger snowmobile, as defined in 
228.35  section 296.01, subdivision 27a, for off-highway business use as 
228.36  part of the operations of a resort as provided under section 
229.1   296.18, subdivision 1, clause (2); or 
229.2      (5) products purchased by a state or a political 
229.3   subdivision of a state for use in motor vehicles exempt from 
229.4   registration under section 168.012, subdivision 1, paragraph (b).
229.5      Sec. 17.  Minnesota Statutes 1996, section 297A.25, 
229.6   subdivision 56, is amended to read: 
229.7      Subd. 56.  [FIREFIGHTERS PERSONAL PROTECTIVE EQUIPMENT.] 
229.8   The gross receipts from the sale of and storage, use, or 
229.9   consumption of firefighters personal protective equipment are 
229.10  exempt if purchased by, or when authorized by and for the use 
229.11  of, an organized fire department, fire protection district, or 
229.12  fire company, regularly charged with the responsibility of 
229.13  providing fire protection to the state or a political 
229.14  subdivision.  For purposes of this subdivision, "personal 
229.15  protective equipment" includes:  helmets (including face 
229.16  shields, chin straps, and neck liners), bunker coats and pants 
229.17  (including pant suspenders), boots, gloves, head covers or 
229.18  hoods, wildfire jackets, protective coveralls, goggles, 
229.19  self-contained breathing apparatuses, canister filter masks, 
229.20  personal alert safety systems, spanner belts, optical or thermal 
229.21  imaging search devices, and all safety equipment required by the 
229.22  Occupational Safety and Health Administration. 
229.23     Sec. 18.  Minnesota Statutes 1996, section 297A.25, 
229.24  subdivision 59, is amended to read: 
229.25     Subd. 59.  [FARM MACHINERY.] From July 1, 1994, until June 
229.26  30, 1997, The gross receipts from the sale of used farm 
229.27  machinery are exempt. 
229.28     Sec. 19.  Minnesota Statutes 1996, section 297A.25, is 
229.29  amended by adding a subdivision to read: 
229.30     Subd. 62.  [MATERIALS USED IN PROVIDING TAXABLE 
229.31  SERVICES.] (a) The gross receipts from the sale of and the 
229.32  storage, use, or consumption of all materials used or consumed 
229.33  in providing a taxable service intended to be sold ultimately at 
229.34  retail are exempt. 
229.35     (b) This exemption includes, but is not limited to: 
229.36     (1) chemicals, lubricants, packaging materials, seeds, 
230.1   trees, fertilizers, and herbicides, used or consumed in 
230.2   providing the taxable service; 
230.3      (2) chemicals used to treat waste generated as a result of 
230.4   providing the taxable service; and 
230.5      (3) accessory tools, equipment, and other items that are 
230.6   separate detachable units used in providing the service and that 
230.7   have an ordinary useful life of less than 12 months. 
230.8      (c) This exemption does not include: 
230.9      (1) machinery, equipment, implements, tools, accessories, 
230.10  appliances, contrivances, furniture, and fixtures used in 
230.11  providing the taxable service; and 
230.12     (2) fuel, electricity, gas, and steam used for space 
230.13  heating or lighting. 
230.14     (d) For purposes of this subdivision, "taxable services" 
230.15  means the services listed in section 297A.01, subdivision 3, 
230.16  paragraph (i). 
230.17     Sec. 20.  Minnesota Statutes 1996, section 297A.25, is 
230.18  amended by adding a subdivision to read: 
230.19     Subd. 63.  [HOSPITALS.] The gross receipts from the sale of 
230.20  tangible personal property to, and the storage, use, or 
230.21  consumption of such property by, a hospital are exempt, if the 
230.22  property purchased is to be used in providing hospital services 
230.23  to human beings.  For purposes of this subdivision, "hospital" 
230.24  means a hospital organized and operated for charitable purposes 
230.25  within the meaning of section 501(c)(3) of the Internal Revenue 
230.26  Code of 1986, as amended, and licensed under chapter 144 or by 
230.27  any other jurisdiction.  For purposes of this subdivision, 
230.28  "hospital services" are services authorized or required to be 
230.29  performed by a "hospital" under chapter 144 and regulations 
230.30  thereunder or under the applicable licensure law of any other 
230.31  jurisdiction.  This exemption does not apply to purchases made 
230.32  by a clinic, physician's office, or any other medical facility 
230.33  not operating as a hospital, even though the clinic, office, or 
230.34  facility may be owned and operated by a hospital.  Sales 
230.35  exempted by this subdivision do not include sales under section 
230.36  297A.01, subdivision 3, paragraphs (c) and (e).  This exemption 
231.1   does not apply to building, construction, or reconstruction 
231.2   materials purchased by a contractor or a subcontractor as a part 
231.3   of a lump-sum contract or similar type of contract with a 
231.4   guaranteed maximum price covering both labor and materials for 
231.5   use in the construction, alteration, or repair of a hospital.  
231.6   This exemption does not apply to construction materials to be 
231.7   used in constructing buildings or facilities which will not be 
231.8   used principally by a hospital.  This exemption does not apply 
231.9   to the leasing of a motor vehicle as defined in section 297B.01, 
231.10  subdivision 5. 
231.11     Sec. 21.  Minnesota Statutes 1996, section 297A.25, is 
231.12  amended by adding a subdivision to read: 
231.13     Subd. 64.  [COPIES OF COURT REPORTER DOCUMENTS.] The gross 
231.14  receipts from sales of, and use, storage, or consumption of, 
231.15  transcripts or copies of transcripts of verbatim testimony 
231.16  produced and sold by court reporters or other transcribers of 
231.17  legal proceedings to individuals or entities that are parties to 
231.18  or representatives of parties to the proceeding to which the 
231.19  transcript relates, are exempt. 
231.20     Sec. 22.  Minnesota Statutes 1996, section 297A.25, is 
231.21  amended by adding a subdivision to read: 
231.22     Subd. 65.  [CONSTRUCTION MATERIALS FOR CORRECTIONAL 
231.23  FACILITIES.] The gross receipts from the sale of and storage, 
231.24  use, or consumption of construction materials and supplies are 
231.25  exempt from the tax imposed under this chapter if purchased for 
231.26  use in a project to construct or improve an adult or juvenile 
231.27  correctional facility in a county, home rule charter city, or 
231.28  statutory city, and if the project is mandated by state or 
231.29  federal law, rule, or regulation.  The exemption applies 
231.30  regardless of whether the materials and supplies are purchased 
231.31  by the city or county, or by a contractor, subcontractor, or 
231.32  builder under a contract with the city or county. 
231.33     Sec. 23.  Minnesota Statutes 1996, section 297A.25, is 
231.34  amended by adding a subdivision to read: 
231.35     Subd. 66.  [CONSTRUCTION MATERIALS; LAKE SUPERIOR 
231.36  CENTER.] Construction materials and supplies are exempt from the 
232.1   tax imposed under this chapter, regardless of whether purchased 
232.2   by the owner, a contractor, subcontractor, or builder, provided 
232.3   the materials and supplies are used or consumed in constructing 
232.4   the Lake Superior Center. 
232.5      Sec. 24.  Minnesota Statutes 1996, section 297A.25, is 
232.6   amended by adding a subdivision to read: 
232.7      Subd. 67.  [CONSTRUCTION MATERIALS; SCIENCE 
232.8   MUSEUM.] Construction materials and supplies are exempt from the 
232.9   tax imposed under this chapter, regardless of whether purchased 
232.10  by the owner, a contractor, subcontractor, or builder, provided 
232.11  the materials and supplies are used or consumed in constructing 
232.12  the Science Museum of Minnesota. 
232.13     Sec. 25.  Minnesota Statutes 1996, section 297A.25, is 
232.14  amended by adding a subdivision to read: 
232.15     Subd. 68.  [CONSTRUCTION MATERIALS; BUSINESS INCUBATOR AND 
232.16  INDUSTRIAL PARK FACILITY.] Materials and supplies used or 
232.17  consumed in constructing, or incorporated into the construction 
232.18  of, an exempted facility as defined in this subdivision are 
232.19  exempt from the taxes imposed under this chapter and from any 
232.20  sales and use tax imposed by a local unit of government, 
232.21  notwithstanding any ordinance or city charter provision. 
232.22     As used in this subdivision, an "exempted facility" is a 
232.23  facility that includes a business incubator and industrial park 
232.24  that: 
232.25     (1) is owned and operated by a nonprofit charitable 
232.26  organization that qualifies for tax exemption under section 
232.27  501(c)(3) of the Internal Revenue Code; 
232.28     (2) is used for the development of nonretail businesses, 
232.29  offering access to equipment, space, services, and advice to the 
232.30  tenant businesses, for the purpose of encouraging economic 
232.31  development and job creation in the area served by the 
232.32  organization, and emphasizes development of businesses that 
232.33  manufacture products from materials found in the waste stream, 
232.34  or manufacture alternative energy and conservation systems, or 
232.35  make use of emerging environmental technologies; 
232.36     (3) includes in its structure systems of material and 
233.1   energy exchanges that use waste products from one industrial 
233.2   process as sources of energy and material for other processes; 
233.3   and 
233.4      (4) makes use of solar and wind energy technology and 
233.5   incorporates salvaged materials in its construction. 
233.6      Sec. 26.  Minnesota Statutes 1996, section 297A.25, is 
233.7   amended by adding a subdivision to read: 
233.8      Subd. 69.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
233.9   SYSTEM; PRODUCTS AND SERVICES.] The gross receipts from the sale 
233.10  of, and the storage, use, or consumption of, products and 
233.11  services including end user equipment used for construction, 
233.12  ownership, operation, maintenance, and enhancement of the 
233.13  backbone system of the regionwide public safety radio 
233.14  communication system established under sections 473.891 to 
233.15  473.905, are exempt.  For purposes of this subdivision, backbone 
233.16  system is defined in section 473.891, subdivision 9. 
233.17     Sec. 27.  Minnesota Statutes 1996, section 297A.25, is 
233.18  amended by adding a subdivision to read: 
233.19     Subd. 70.  [ALFALFA PROCESSING FACILITIES CONSTRUCTION 
233.20  MATERIALS.] Purchases of construction materials and supplies are 
233.21  exempt from the sales and use taxes imposed under this chapter, 
233.22  regardless of whether purchased by the owner or a contractor, 
233.23  subcontractor, or builder, if: 
233.24     (1) the materials and supplies are used or consumed in 
233.25  constructing a facility which either (i) develops market-value 
233.26  agricultural products made from alfalfa leaf material, or (ii) 
233.27  produces biomass energy fuel or electricity from alfalfa stems 
233.28  in accordance with the biomass mandate imposed under section 
233.29  216B.2424; and 
233.30     (2) the total capital investment made in the value-added 
233.31  agricultural products and biomass electric generation facilities 
233.32  is at least $50,000,000; or 
233.33     (3) the materials and supplies are used or consumed in 
233.34  constructing, equipping or modifying a district heating and 
233.35  cooling system cogeneration facility that: 
233.36     (i) utilizes wood waste as a primary fuel source; and 
234.1      (ii) satisfies the requirements of the biomass mandate in 
234.2   section 216B.2424, subdivision 5. 
234.3      Sec. 28.  Minnesota Statutes 1996, section 297A.25, is 
234.4   amended by adding a subdivision to read: 
234.5      Subd. 71.  [FIREWOOD.] The gross receipts from the sale of 
234.6   and the storage, use, or consumption of wood used for fires for 
234.7   heating, cooking, or any other purpose, except for the 
234.8   generation of electricity, steam, or heat to be sold at retail, 
234.9   are exempt. 
234.10     Sec. 29.  Minnesota Statutes 1996, section 297A.25, is 
234.11  amended by adding a subdivision to read: 
234.12     Subd. 72.  [WIND ENERGY CONVERSION SYSTEMS.] The gross 
234.13  receipts from the sale of and the storage, use, or consumption 
234.14  of wind energy conversion systems, as defined in section 
234.15  216C.06, subdivision 12, and the materials used to manufacture, 
234.16  install, construct, repair, or replace them are exempt if the 
234.17  systems are used as an electric power source. 
234.18     Sec. 30.  [297A.48] [LOCAL SALES TAX RULES.] 
234.19     Subdivision 1.  [AUTHORIZATION; SCOPE.] (a) A political 
234.20  subdivision of this state may impose a general sales tax if 
234.21  permitted by special law or if the subdivision enacted and 
234.22  imposed the tax before the effective date of section 477A.016 
234.23  and its predecessor provision. 
234.24     (b) This section governs the imposition of a general sales 
234.25  tax by the political subdivision.  The provisions of this 
234.26  section preempt the provisions of any special law: 
234.27     (1) enacted before its effective date, or 
234.28     (2) enacted after its effective date that does not 
234.29  explicitly exempt the special law provision from this section's 
234.30  rules by reference. 
234.31     (c) This section does not apply to or preempt a sales tax 
234.32  on motor vehicles or a special excise tax on motor vehicles. 
234.33     Subd. 2.  [TAX BASE.] (a) The tax applies to sales taxable 
234.34  under this chapter that occur within the political subdivision. 
234.35     (b) Taxable services are subject to a political 
234.36  subdivision's sales tax, if they are performed either: 
235.1      (1) within the political subdivision, or 
235.2      (2) partly within and partly without the political 
235.3   subdivision and more of the service is performed within the 
235.4   political subdivision, based on the cost of performance. 
235.5      Subd. 3.  [TAX RATE.] (a) The tax rate is as specified in 
235.6   the special law authorization and as imposed by the political 
235.7   subdivision. 
235.8      (b) The full political subdivision rate applies to any 
235.9   sales that are taxed at a state rate less than or more than the 
235.10  state general sales and use tax rate. 
235.11     Subd. 4.  [USE TAX.] A compensating use tax applies, at the 
235.12  same rate as the sales tax, on the use, storage, distribution, 
235.13  or consumption of tangible personal property or taxable services.
235.14     Subd. 5.  [EXEMPTIONS.] (a) All goods or services that are 
235.15  otherwise exempt from taxation under this chapter are exempt 
235.16  from a political subdivision's tax. 
235.17     (b) The gross receipts from the sale of tangible personal 
235.18  property that meets the requirement of section 297A.25, 
235.19  subdivision 5, are exempt, except the qualification test applies 
235.20  based on the boundaries of the political subdivision instead of 
235.21  the state of Minnesota. 
235.22     (c) All mobile transportation equipment, and parts and 
235.23  accessories attached to or to be attached to the equipment are 
235.24  exempt, if purchased by a holder of a motor carrier direct pay 
235.25  permit under section 297A.211.  
235.26     Subd. 6.  [CREDIT FOR OTHER LOCAL TAXES.] If a person paid 
235.27  sales or use tax to another political subdivision on tangible 
235.28  personal property or another item subject to tax under this 
235.29  section, a credit applies against the tax imposed under this 
235.30  section.  The credit equals the tax the person paid to the other 
235.31  political subdivision for the item.  
235.32     Subd. 7.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] (a)
235.33  The commissioner of revenue shall collect the taxes subject to 
235.34  this section.  The commissioner may collect the tax with the 
235.35  state sales and use tax.  All taxes under this section are 
235.36  subject to the same penalties, interest, and enforcement 
236.1   provisions as apply to the state sales and use tax. 
236.2      (b) A request for a refund of state sales tax paid in 
236.3   excess of the amount of tax legally due includes a request for a 
236.4   refund of the political subdivision taxes paid on the goods or 
236.5   services.  The commissioner must refund to the taxpayer the full 
236.6   amount of the political subdivision taxes paid on exempt sales 
236.7   or use. 
236.8      (c) A political subdivision that is collecting and 
236.9   administering its own sales and use tax before January 1, 1998, 
236.10  may elect to be exempt from this subdivision and subdivision 8. 
236.11     Subd. 8.  [REVENUES; COST OF COLLECTION.] The commissioner 
236.12  shall remit the proceeds of the tax, less refunds and a 
236.13  proportionate share of the cost of collection, at least 
236.14  quarterly, to the political subdivision.  The commissioner shall 
236.15  deduct from the proceeds remitted an amount that equals 
236.16     (1) the direct and indirect costs of the department to 
236.17  administer, audit, and collect the political subdivision's tax, 
236.18  plus 
236.19     (2) the political subdivision's proportionate share of the 
236.20  indirect cost of administering all taxes under this section. 
236.21     Subd. 9.  [EFFECTIVE DATES; NOTIFICATION.] (a) A political 
236.22  subdivision may impose a tax under this section starting only on 
236.23  the first day of a calendar quarter.  A political subdivision 
236.24  may repeal a tax under this section stopping only on the last 
236.25  day of a calendar quarter. 
236.26     (b) The political subdivision must notify the commissioner 
236.27  of revenue at least 90 days before imposing or repealing a tax 
236.28  under this section. 
236.29     Subd. 10.  [APPLICATION.] This section applies to all local 
236.30  sales taxes authorized on or after the day of enactment of this 
236.31  act.  Starting January 1, 2000, this section applies to all 
236.32  local sales tax that were authorized before the day of enactment 
236.33  of this act. 
236.34     Sec. 31.  Minnesota Statutes 1996, section 297B.01, 
236.35  subdivision 7, is amended to read: 
236.36     Subd. 7.  [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 
237.1   ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," 
237.2   or "acquired" means any transfer of title of any motor vehicle, 
237.3   whether absolutely or conditionally, for a consideration in 
237.4   money or by exchange or barter for any purpose other than resale 
237.5   in the regular course of business.  Any motor vehicle utilized 
237.6   by the owner only by leasing such vehicle to others or by 
237.7   holding it in an effort to so lease it, and which is put to no 
237.8   other use by the owner other than resale after such lease or 
237.9   effort to lease, shall be considered property purchased for 
237.10  resale.  The terms also shall include any transfer of title or 
237.11  ownership of a motor vehicle by way of gift or by any other 
237.12  manner or by any other means whatsoever, for or without 
237.13  consideration, except that these terms shall not include: 
237.14     (a) the acquisition of a motor vehicle by inheritance from 
237.15  or by bequest of, a decedent who owned it; 
237.16     (b) the transfer of a motor vehicle which was previously 
237.17  licensed in the names of two or more joint tenants and 
237.18  subsequently transferred without monetary consideration to one 
237.19  or more of the joint tenants; 
237.20     (c) the transfer of a motor vehicle by way of gift between 
237.21  a husband and wife or parent and child; or 
237.22     (d) the voluntary or involuntary transfer of a motor 
237.23  vehicle between a husband and wife in a divorce proceeding.; or 
237.24     (e) the transfer of a motor vehicle by way of a gift to an 
237.25  organization that is exempt from federal income taxation under 
237.26  section 501(c)(3) of the Internal Revenue Code, as amended 
237.27  through December 31, 1996, when the motor vehicle will be used 
237.28  exclusively for religious, charitable, or educational purposes. 
237.29     Sec. 32.  Minnesota Statutes 1996, section 297B.01, 
237.30  subdivision 8, is amended to read: 
237.31     Subd. 8.  [PURCHASE PRICE.] "Purchase price" means the 
237.32  total consideration valued in money for a sale, whether paid in 
237.33  money or otherwise.  The purchase price excludes the amount of a 
237.34  manufacturer's rebate paid or payable to the purchaser.  If a 
237.35  motor vehicle is taken in trade as a credit or as part payment 
237.36  on a motor vehicle taxable under this chapter, the credit or 
238.1   trade-in value allowed by the person selling the motor vehicle 
238.2   shall be deducted from the total selling price to establish the 
238.3   purchase price of the vehicle being sold and the trade-in 
238.4   allowance allowed by the seller shall constitute the purchase 
238.5   price of the motor vehicle accepted as a trade-in.  The purchase 
238.6   price in those instances where the motor vehicle is acquired by 
238.7   gift or by any other transfer for a nominal or no monetary 
238.8   consideration shall also include the average value of similar 
238.9   motor vehicles, established by standards and guides as 
238.10  determined by the motor vehicle registrar.  The purchase price 
238.11  in those instances where a motor vehicle is manufactured by a 
238.12  person who registers it under the laws of this state shall mean 
238.13  the manufactured cost of such motor vehicle and manufactured 
238.14  cost shall mean the amount expended for materials, labor and 
238.15  other properly allocable costs of manufacture, except that in 
238.16  the absence of actual expenditures for the manufacture of a part 
238.17  or all of the motor vehicle, manufactured costs shall mean the 
238.18  reasonable value of the completed motor vehicle.  
238.19     The term "purchase price" shall not include the portion of 
238.20  the value of a motor vehicle due solely to modifications 
238.21  necessary to make the motor vehicle handicapped accessible.  The 
238.22  term "purchase price" shall not include the transfer of a motor 
238.23  vehicle by way of gift between a husband and wife or parent and 
238.24  child, or to a nonprofit organization as provided under section 
238.25  297B.01, paragraph (e), nor shall it include the transfer of a 
238.26  motor vehicle by a guardian to a ward when there is no monetary 
238.27  consideration and the title to such vehicle was registered in 
238.28  the name of the guardian, as guardian, only because the ward was 
238.29  a minor.  There shall not be included in "purchase price" the 
238.30  amount of any tax imposed by the United States upon or with 
238.31  respect to retail sales whether imposed upon the retailer or the 
238.32  consumer.  
238.33     The term "purchase price" shall not include the transfer of 
238.34  a motor vehicle as a gift between a foster parent and foster 
238.35  child.  For purposes of this subdivision, a foster relationship 
238.36  exists, regardless of the age of the child, if (1) a foster 
239.1   parent's home is or was licensed as a foster family home under 
239.2   Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 
239.3   county verifies that the child was a state ward or in permanent 
239.4   foster care. 
239.5      Sec. 33.  Minnesota Statutes 1996, section 349.154, 
239.6   subdivision 2, is amended to read: 
239.7      Subd. 2.  [NET PROFIT REPORTS.] (a) Each licensed 
239.8   organization must report monthly to the board on a form 
239.9   prescribed by the board each expenditure and contribution of net 
239.10  profits from lawful gambling.  The reports must provide for each 
239.11  expenditure or contribution: 
239.12     (1) the name, address, and telephone number of the 
239.13  recipient of the expenditure or contribution; 
239.14     (2) the date the contribution was approved by the 
239.15  organization; 
239.16     (3) the date, amount, and check number of the expenditure 
239.17  or contribution; 
239.18     (4) a brief description of how the expenditure or 
239.19  contribution meets one or more of the purposes in section 
239.20  349.12, subdivision 25; and 
239.21     (5) in the case of expenditures authorized under section 
239.22  349.12, subdivision 25, paragraph (a), clause (7), whether the 
239.23  expenditure is for a facility or activity that primarily 
239.24  benefits male or female participants. 
239.25     (b) The board shall make available to the commissioners of 
239.26  revenue and public safety copies of reports received under this 
239.27  subdivision and requested by them. 
239.28     (c) The report required under this subdivision must provide 
239.29  for a separate accounting for all expenditures made from the 
239.30  reporting organization's tax refund and or credit account 
239.31  authorized under section 297E.02, subdivision 4, paragraph (d). 
239.32     Sec. 34.  Minnesota Statutes 1996, section 349.19, 
239.33  subdivision 2a, is amended to read: 
239.34     Subd. 2a.  [TAX REFUND AND OR CREDIT ACCOUNT.] (a) Each 
239.35  organization that receives a refund or credit under section 
239.36  297E.02, subdivision 4, paragraph (d), must establish a separate 
240.1   account designated as the tax and credit refund account.  The 
240.2   organization must (1) within four business days of receiving a 
240.3   refund under that paragraph deposit the refund in 
240.4   the organization's gambling account, and (2) within four 
240.5   business days of filing a tax return that claims a credit under 
240.6   that paragraph, transfer from the separate account established 
240.7   under subdivision 2 to the tax refund and credit account an 
240.8   amount equal to the tax credit. 
240.9      (b) The name and address of the bank, the account number 
240.10  for the tax refund and credit account, and the names of 
240.11  organization members authorized as signatories on the account 
240.12  must be provided to the board within 30 days of the date when 
240.13  the organization establishes the account.  Changes in the 
240.14  information must be submitted to the board at least ten days 
240.15  before the change is made. 
240.16     (c) (b) The organization may expend money in the account 
240.17  the tax refund or credit issued under section 297E.02, 
240.18  subdivision 4, paragraph (d), only for lawful purposes, other 
240.19  than lawful purposes described in section 349.012, subdivision 
240.20  25, paragraph (a), clauses (8), (9), and (12).  Amounts in the 
240.21  account received as refunds or allowed as credits must be spent 
240.22  for qualifying lawful purposes no later than one year after the 
240.23  refund or credit is deposited received. 
240.24     Sec. 35.  Minnesota Statutes 1996, section 349.191, 
240.25  subdivision 1b, is amended to read: 
240.26     Subd. 1b.  [CREDIT AND SALES TO DELINQUENT DISTRIBUTORS.] 
240.27  (a) If a manufacturer does not receive payment in full from a 
240.28  distributor within 30 35 days of the delivery of gambling 
240.29  equipment, the manufacturer must notify the board in writing of 
240.30  the delinquency. 
240.31     (b) If a manufacturer who has notified the board under 
240.32  paragraph (a) has not received payment in full from the 
240.33  distributor within 60 days of the notification under paragraph 
240.34  (a), the manufacturer must notify the board of the continuing 
240.35  delinquency. 
240.36     (c) On receipt of a notice under paragraph (a), the board 
241.1   shall order all manufacturers that until further notice from the 
241.2   board, they may sell gambling equipment to the delinquent 
241.3   distributor only on a cash basis with no credit extended.  On 
241.4   receipt of a notice under paragraph (b), the board shall order 
241.5   all manufacturers not to sell any gambling equipment to the 
241.6   delinquent distributor. 
241.7      (d) No manufacturer may extend credit or sell gambling 
241.8   equipment to a distributor in violation of an order under 
241.9   paragraph (c) until the board has authorized such credit or sale.
241.10     Sec. 36.  Laws 1993, chapter 375, article 9, section 45, 
241.11  subdivision 2, is amended to read: 
241.12     Subd. 2.  [USE OF REVENUES.] (a) Revenues received from 
241.13  taxes authorized by subdivision 1 shall be used by Cook county 
241.14  to pay the cost of collecting the tax and to pay all or a 
241.15  portion of the costs of expanding and improving the health care 
241.16  facility located in the county and known as North Shore hospital.
241.17  Authorized costs include, but are not limited to, securing or 
241.18  paying debt service on bonds or other obligations issued to 
241.19  finance the expansion and improvement of North Shore hospital.  
241.20  The total capital expenditures payable from bond proceeds, 
241.21  excluding investment earnings on bond proceeds and tax revenues, 
241.22  shall not exceed $4,000,000. 
241.23     (b) Additional revenues received from taxes authorized by 
241.24  subdivision 1 may be used by Cook county to pay all or a portion 
241.25  of the costs of betterment of North Shore care center and 
241.26  providing additional improvements to North Shore hospital.  
241.27  Authorized costs include, but are not limited to, securing or 
241.28  paying debt service on bonds or other obligations issued to 
241.29  finance the remodeling of North Shore care center and additional 
241.30  improvements to North Shore hospital.  The total capital 
241.31  expenditures payable from bond proceeds, excluding investment 
241.32  earnings on bond proceeds and tax revenues, shall not exceed 
241.33  $2,200,000. 
241.34     Sec. 37.  Laws 1993, chapter 375, article 9, section 45, 
241.35  subdivision 3, is amended to read: 
241.36     Subd. 3.  [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 
242.1   LIMITATION.] The authority granted by subdivision 1 to Cook 
242.2   county to impose a sales tax shall expire when the principal and 
242.3   interest on any bonds or obligations issued under subdivision 4, 
242.4   paragraph (a), to finance the expansion and improvement of North 
242.5   Shore hospital described in subdivision 2, paragraph (a), have 
242.6   been paid, or at an earlier time as the county shall, by 
242.7   resolution, determine.  Any funds remaining after completion of 
242.8   the improvements and retirement or redemption of the bonds may 
242.9   be placed in the general fund of the county. 
242.10     Sec. 38.  Laws 1993, chapter 375, article 9, section 45, 
242.11  subdivision 4, is amended to read: 
242.12     Subd. 4.  [BONDS.] (a) Cook county may issue general 
242.13  obligation bonds in an amount not to exceed $4,000,000 for the 
242.14  expansion and improvement of North Shore hospital,. 
242.15     (b) Additionally, Cook county may issue general obligation 
242.16  bonds in an amount not to exceed $2,200,000 for the betterment 
242.17  of North Shore care center and additional improvements to North 
242.18  Shore hospital.  
242.19     (c) The bonds may be issued without election under 
242.20  Minnesota Statutes, chapter 475, on the question of issuance of 
242.21  the bonds or a property tax to pay them.  The debt represented 
242.22  by the bonds issued for the expansion and improvement of North 
242.23  Shore hospital shall not be included in computing any debt 
242.24  limitations applicable to Cook county, and the levy of taxes 
242.25  required by Minnesota Statutes, section 475.61, to pay principal 
242.26  of and interest on the bonds shall not be subject to any levy 
242.27  limitation or be included in computing or applying any levy 
242.28  limitation applicable to the county. 
242.29     Sec. 39.  Laws 1993, chapter 375, article 9, section 45, is 
242.30  amended by adding a subdivision to read: 
242.31     Subd. 5a.  [REFERENDUM.] If the governing body of Cook 
242.32  county intends to use the sales tax proceeds as authorized by 
242.33  subdivision 2, paragraph (b), it shall conduct a referendum on 
242.34  the issue.  The question of so using the tax proceeds must be 
242.35  submitted to the voters at a special or general election.  The 
242.36  tax proceeds may not be used as provided in subdivision 2, 
243.1   paragraph (b), unless a majority of votes cast on the question 
243.2   are in the affirmative.  The commissioner of revenue shall 
243.3   prepare a suggested form of question to be presented at the 
243.4   election.  The referendum must be held at a special or general 
243.5   election before December 1, 1997. 
243.6      Sec. 40.  Laws 1993, chapter 375, article 9, section 46, 
243.7   subdivision 2, is amended to read: 
243.8      Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
243.9   authorized by subdivision 1 may only be used by the city to pay 
243.10  the cost of collecting the tax, and to pay for the following 
243.11  projects or to secure or pay any principal, premium, or interest 
243.12  on bonds issued in accordance with subdivision 3 for the 
243.13  following projects.  
243.14     (a) To pay all or a portion of the capital expenses of 
243.15  construction, equipment and acquisition costs for the expansion 
243.16  and remodeling of the St. Paul Civic Center complex. 
243.17     (b) The remainder of the funds must be spent for: 
243.18     (1) capital projects to further residential, cultural, 
243.19  commercial, and economic development in both downtown St. Paul 
243.20  and St. Paul neighborhoods; and 
243.21     (2) the operating expenses of cultural organizations in the 
243.22  city, provided that the amount spent under this clause may not 
243.23  exceed ten percent of the total amount spent under this 
243.24  paragraph. 
243.25     By January 15 of each odd-numbered year, the mayor and the 
243.26  city council must report to the legislature on the use of sales 
243.27  tax revenues during the preceding two-year period. 
243.28     Sec. 41.  [CITY OF WILLMAR; TAXES.] 
243.29     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] Pursuant to 
243.30  the approval of the city voters at the general election held on 
243.31  November 5, 1996, the city of Willmar may, by ordinance, impose, 
243.32  for the purposes specified in subdivision 3, a sales and use tax 
243.33  of up to one-half of one percent.  The provisions of Minnesota 
243.34  Statutes, section 297A.48, govern the imposition, 
243.35  administration, collection, and enforcement of the tax 
243.36  authorized under this subdivision. 
244.1      Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
244.2   Minnesota Statutes, section 477A.016, or any other contrary 
244.3   provision of law, ordinance, or city charter, the city of 
244.4   Willmar may, by ordinance, impose, for the purposes specified in 
244.5   subdivision 3, an excise tax of up to $20 per motor vehicle, as 
244.6   defined by ordinance, purchased or acquired from any person 
244.7   engaged within the city in the business of selling motor 
244.8   vehicles at retail. 
244.9      Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
244.10  authorized by subdivisions 1 and 2 must be used to pay the costs 
244.11  of collecting the taxes, and to pay all or a part of the capital 
244.12  and administrative costs of the acquisition, construction, and 
244.13  improvement of public library facilities, including securing or 
244.14  paying debt service on bonds issued for the project under 
244.15  subdivision 4.  The total capital and administrative 
244.16  expenditures payable from bond proceeds and revenues received 
244.17  from the taxes authorized by subdivisions 1 and 2, excluding 
244.18  investment earnings thereon, must not exceed $4,500,000. 
244.19     Subd. 4.  [BONDS.] The city of Willmar, pursuant to the 
244.20  approval of the city voters at the general election held on 
244.21  November 5, 1996, may issue without additional election general 
244.22  obligation bonds of the city in an amount not to exceed 
244.23  $4,500,000 to pay capital and administrative expenses for the 
244.24  acquisition, construction, and improvement of public library 
244.25  facilities.  The debt represented by the bonds must not be 
244.26  included in computing any debt limitations applicable to the 
244.27  city, and the levy of taxes required by Minnesota Statutes, 
244.28  section 475.61, to pay the principal of and interest on the 
244.29  bonds must not be subject to any levy limitation or be included 
244.30  in computing or applying any levy limitation applicable to the 
244.31  city.  
244.32     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
244.33  subdivisions 1 and 2 expire when the city council determines 
244.34  that sufficient funds have been received from the taxes to 
244.35  finance the capital and administrative costs for the 
244.36  acquisition, construction, and improvement of public library 
245.1   facilities and to prepay or retire at maturity the principal, 
245.2   interest, and premium due on any bonds issued for the project 
245.3   under subdivision 4.  Any funds remaining after completion of 
245.4   the project and retirement or redemption of the bonds may be 
245.5   placed in the general fund of the city.  The taxes imposed under 
245.6   subdivisions 1 and 2 may expire at an earlier time if the city 
245.7   so determines by ordinance.  
245.8      Subd. 6.  [EFFECTIVE DATE.] This section is effective 
245.9   August 1, 1997, upon compliance by the governing body of the 
245.10  city of Willmar with Minnesota Statutes, section 645.021, 
245.11  subdivision 3. 
245.12     Sec. 42.  [STATEMENT OF PURPOSE.] 
245.13     The purpose of section 5, paragraph (i), is to confirm and 
245.14  clarify the original intent of the legislature in enacting an 
245.15  exemption from the sales tax for property to be resold in the 
245.16  normal course of business.  Section 5, paragraph (i), ratifies 
245.17  the existing state interpretation that a resale requires the 
245.18  transfer of title to the property or the complete transfer of 
245.19  possession and control over the property.  This section does not 
245.20  apply to litigation currently pending before the Minnesota 
245.21  Supreme Court. 
245.22     Sec. 43.  [RECODIFICATION.] 
245.23     In coordination with legislative staff, the revisor of 
245.24  statutes shall prepare a bill for introduction in the 1998 
245.25  session of the legislature that clarifies and recodifies chapter 
245.26  297A.  The department of revenue shall assist in the preparation 
245.27  of the legislation as requested by the revisor.  The revisor may 
245.28  consult professional groups and other interested persons in 
245.29  preparing the legislation.  
245.30     Sec. 44.  [EXPIRATION.] 
245.31     Minnesota Statutes, section 297A.24, subdivision 3, as 
245.32  added by Laws 1997, chapter 84, article 3, section 5, expires 
245.33  January 1, 2000. 
245.34     Sec. 45.  [APPLICATION.] 
245.35     Section 26 applies in the counties of Anoka, Carver, 
245.36  Dakota, Hennepin, Ramsey, Scott, and Washington. 
246.1      Sec. 46.  [REPEALER.] 
246.2      Minnesota Statutes 1996, sections 297A.01, subdivision 20; 
246.3   and 297A.02, subdivision 5, are repealed. 
246.4      Sec. 47.  [EFFECTIVE DATES.] 
246.5      Section 1 is effective for refund claims filed after June 
246.6   30, 1997. 
246.7      Sections 2, 6, 7, 9, 13, 15, 16, 17, 18, 20, 21, 25, 31, 
246.8   and 32 are effective for purchases, sales, storage, use, or 
246.9   consumption occurring after June 30, 1997. 
246.10     Section 3 is effective on July 1, 1997, or upon adoption of 
246.11  the corresponding rules, whichever occurs earlier. 
246.12     Section 4, paragraph (i), clause (iv), is effective for 
246.13  purchases and sales occurring after September 30, 1987; the 
246.14  remainder of section 4 is effective for purchases and sales 
246.15  occurring after June 30, 1997. 
246.16     Section 5, paragraph (h), is effective for purchases and 
246.17  sales occurring after June 30, 1997, and paragraph (i) is 
246.18  effective for purchases and sales occurring after December 31, 
246.19  1992. 
246.20     Sections 8 and 46 are effective July 1, 1998. 
246.21     Sections 10 and 22 are effective for purchases, sales, 
246.22  storage, use, or consumption occurring after August 31, 1996. 
246.23     Sections 11, 12, 33, 34, and 35 are effective July 1, 1997. 
246.24     Sections 14 and 19 are effective for purchases and sales 
246.25  after June 30, 1999. 
246.26     Section 23 is effective January 1, 1997. 
246.27     Section 24 is effective for purchases, sales, storage, use, 
246.28  or consumption occurring after April 30, 1997. 
246.29     Sections 26 and 45 are effective for purchases, sales, 
246.30  storage, use, or consumption occurring after July 31, 1997, and 
246.31  before August 1, 2003. 
246.32     Section 27 is effective for purchases, sales, storage, use, 
246.33  or consumption occurring after May 31, 1997. 
246.34     Section 28 is effective for sales made after December 31, 
246.35  1989, and before January 1, 1997.  The provisions of Minnesota 
246.36  Statutes, section 289A.50, apply to refunds claimed under 
247.1   section 28.  Refunds claimed under section 28 must be filed by 
247.2   the later of December 31, 1997, or the time limit under 
247.3   Minnesota Statutes, section 289A.40, subdivision 1. 
247.4      Section 29 is effective for sales or first use after May 
247.5   31, 1997, and before June 1, 1998. 
247.6      Sections 30, 42, and 43 are effective the day following 
247.7   final enactment. 
247.8      Sections 36 to 39 are effective the day after compliance by 
247.9   the governing body of Cook county with Minnesota Statutes, 
247.10  section 645.021, subdivision 3. 
247.11     Section 40 is effective for STAR funds collected after June 
247.12  30, 1997. 
247.13                             ARTICLE 8 
247.14                           MINERALS TAXES 
247.15     Section 1.  Minnesota Statutes 1996, section 93.41, is 
247.16  amended to read: 
247.17     93.41 [STATE-OWNED IRON-BEARING MATERIALS.] 
247.18     Subdivision 1.  [USE FOR ROAD CONSTRUCTION AND OTHER 
247.19  PURPOSES.] In case the commissioner of natural resources shall 
247.20  determine that any paint rock, taconite, or other iron-bearing 
247.21  material belonging to the state and containing not more than 45 
247.22  percent dried iron by analysis is needed and suitable for use in 
247.23  the construction or maintenance of any road, tailings basin, 
247.24  settling basin, dike, dam, bank fill, or other works on public 
247.25  or private property, and that such use would be in the best 
247.26  interests of the public, the commissioner may authorize the 
247.27  disposal of such material therefor as hereinafter provided.  
247.28     Subd. 2.  [MATERIALS SUBJECT TO STATE IRON ORE MINING 
247.29  LEASE.] If such material is subject to an existing state iron 
247.30  ore mining lease or located on property subject to an existing 
247.31  state iron ore mining lease, the commissioner, by written 
247.32  agreement with the holder of the lease, may authorize the use of 
247.33  the material for any purpose specified in subdivision 1 that 
247.34  will facilitate the mining and disposal of the iron ore therein 
247.35  on such terms as the commissioner may prescribe consistent with 
247.36  the interests of the state, or may authorize the holder of the 
248.1   lease to dispose of the material otherwise for any purpose 
248.2   specified in subdivision 1 upon payment of an amount therefor 
248.3   equivalent to the royalty that would be payable under the terms 
248.4   of the lease if the material were shipped or otherwise disposed 
248.5   of as iron ore, but not less than the applicable minimum rate 
248.6   prescribed by section 93.20.  
248.7      Subd. 3.  [ISSUANCE OF LEASES, ROYALTIES.] If such 
248.8   material, whether in the ground or in stockpile, is not subject 
248.9   to an existing lease, the commissioner may issue leases for the 
248.10  taking and removal thereof for the purposes specified in 
248.11  subdivision 1 in like manner as provided by section 92.50 for 
248.12  leases for the taking and removal of sand, gravel, and other 
248.13  materials specified in said section, and subject to all the 
248.14  provisions thereof, so far as applicable; provided, that the 
248.15  amount payable for such material shall be at least equivalent to 
248.16  the minimum royalty that would be payable therefor under the 
248.17  provisions of section 93.20.  
248.18     Subd. 4.  [SALE OF STOCKPILED IRON-BEARING MATERIAL IN 
248.19  PLACE.] If such material is in stockpile and is not subject to 
248.20  an existing lease, the commissioner may sell stockpiled 
248.21  iron-bearing material in place.  The sale must be to a person 
248.22  holding an interest in the surface of the property upon which 
248.23  the stockpile is located or to a person holding an interest in 
248.24  publicly or privately owned stockpiled iron-bearing material 
248.25  located in the same stockpile.  
248.26     Sec. 2.  Minnesota Statutes 1996, section 273.11, 
248.27  subdivision 1, is amended to read: 
248.28     Subdivision 1.  [GENERALLY.] Except as provided in this 
248.29  section or section 273.17, subdivision 1, all property shall be 
248.30  valued at its market value.  The market value as determined 
248.31  pursuant to this section shall be stated such that any amount 
248.32  under $100 is rounded up to $100 and any amount exceeding $100 
248.33  shall be rounded to the nearest $100.  In estimating and 
248.34  determining such value, the assessor shall not adopt a lower or 
248.35  different standard of value because the same is to serve as a 
248.36  basis of taxation, nor shall the assessor adopt as a criterion 
249.1   of value the price for which such property would sell at a 
249.2   forced sale, or in the aggregate with all the property in the 
249.3   town or district; but the assessor shall value each article or 
249.4   description of property by itself, and at such sum or price as 
249.5   the assessor believes the same to be fairly worth in money.  The 
249.6   assessor shall take into account the effect on the market value 
249.7   of property of environmental factors in the vicinity of the 
249.8   property.  In assessing any tract or lot of real property, the 
249.9   value of the land, exclusive of structures and improvements, 
249.10  shall be determined, and also the value of all structures and 
249.11  improvements thereon, and the aggregate value of the property, 
249.12  including all structures and improvements, excluding the value 
249.13  of crops growing upon cultivated land.  In valuing real property 
249.14  upon which there is a mine or quarry, it shall be valued at such 
249.15  price as such property, including the mine or quarry, would sell 
249.16  for at a fair, voluntary sale, for cash, if the material being 
249.17  mined or quarried is not subject to taxation under section 
249.18  298.015 and the mine or quarry is not exempt from the general 
249.19  property tax under section 298.25.  In valuing real property 
249.20  which is vacant, platted property shall be assessed as provided 
249.21  in subdivision 14.  All property, or the use thereof, which is 
249.22  taxable under section 272.01, subdivision 2, or 273.19, shall be 
249.23  valued at the market value of such property and not at the value 
249.24  of a leasehold estate in such property, or at some lesser value 
249.25  than its market value. 
249.26     Sec. 3.  Minnesota Statutes 1996, section 273.12, is 
249.27  amended to read: 
249.28     273.12 [ASSESSMENT OF REAL PROPERTY.] 
249.29     It shall be the duty of every assessor and board, in 
249.30  estimating and determining the value of lands for the purpose of 
249.31  taxation, to consider and give due weight to every element and 
249.32  factor affecting the market value thereof, including its 
249.33  location with reference to roads and streets and the location of 
249.34  roads and streets thereon or over the same, and to take into 
249.35  consideration a reduction in the acreage of each tract or lot 
249.36  sufficient to cover the amount of land actually used for any 
250.1   improved public highway and the reduction in area of land caused 
250.2   thereby.  It shall be the duty of every assessor and board, in 
250.3   estimating and determining the value of lands for the purpose of 
250.4   taxation, to consider and give due weight to lands which are 
250.5   comparable in character, quality, and location, to the end that 
250.6   all lands similarly located and improved will be assessed upon a 
250.7   uniform basis and without discrimination and, for agricultural 
250.8   lands, to consider and give recognition to its earning potential 
250.9   as measured by its free market rental rate.  
250.10     When mineral, clay, or gravel deposits exist on a property, 
250.11  and their extent, quality, and costs of extraction are 
250.12  sufficiently well known so as to influence market value, such 
250.13  deposits shall be recognized in valuing the property; except for 
250.14  mineral and energy-resource deposits which are subject to 
250.15  taxation under section 298.015, and except for taconite and 
250.16  iron-sulphide deposits which are exempt from the general 
250.17  property tax under section 298.25. 
250.18     Sec. 4.  [273.1651] [TAXATION AND FORFEITURE OF STOCKPILED 
250.19  METALLIC MINERALS MATERIAL.] 
250.20     Subdivision 1.  [DEFINITION.] "Stockpiled metallic minerals 
250.21  material" for purposes of this section, means surface 
250.22  overburden, rock, lean ore, tailings, or other material that has 
250.23  been removed from the ground and deposited elsewhere on the 
250.24  surface in the process of iron ore, taconite, or other metallic 
250.25  minerals mining, or in the process of beneficiation.  Stockpiled 
250.26  metallic minerals material does not include processed metallic 
250.27  minerals concentrates in the form of pellets, chips, briquettes, 
250.28  fines, or other form which have been prepared for or are in the 
250.29  process of shipment. 
250.30     Subd. 2.  [PURPOSE.] The purpose of this section is to 
250.31  clarify the ownership of stockpiled metallic minerals material 
250.32  in this state.  Depending on the intent of the person who 
250.33  extracted the material from the ground, stockpiled metallic 
250.34  minerals material may or may not be owned separately and apart 
250.35  from the fee title to the surface of the real property.  The 
250.36  legislature finds that the uncertainty of ownership of 
251.1   stockpiled metallic minerals material located on real property 
251.2   that becomes tax forfeited has created a burden on the public 
251.3   owner of the surface of the real property and an impediment to 
251.4   productive management or use of a public resource. 
251.5      Subd. 3.  [TAXATION AND FORFEITURE.] From and after the 
251.6   effective date of this section, for purposes of taxation, the 
251.7   definition of "real property," as contained in section 272.03, 
251.8   subdivision 1, includes stockpiled metallic minerals material.  
251.9   Nothing in this subdivision shall be construed to subject 
251.10  stockpiled metallic minerals material to the general property 
251.11  tax when the stockpiled metallic minerals material is exempt 
251.12  from the general property tax pursuant to section 298.015 or 
251.13  298.25.  If the surface of the real property forfeits for 
251.14  delinquent taxes, stockpiled metallic minerals material located 
251.15  on the real property forfeits with the surface of the property. 
251.16     Subd. 4.  [PRIOR FORFEITURE.] Stockpiled metallic minerals 
251.17  material located on real property that forfeited prior to the 
251.18  effective date of this section or forfeits due to a judgment for 
251.19  delinquent taxes issued prior to the effective date of this 
251.20  section shall be assessed and taxed as real property.  The tax 
251.21  applies only to stockpiled metallic minerals material located on 
251.22  real property that remains in the ownership of the state or a 
251.23  political subdivision of the state.  The tax shall be based on 
251.24  the market value of the rental of the property for storage of 
251.25  stockpiled metallic minerals material. 
251.26     Subd. 5.  [EXCEPTIONS; TAX LAWS.] (a) The tax imposed 
251.27  pursuant to this section shall not be imposed on the following: 
251.28     (1) stockpiled metallic minerals material valued and taxed 
251.29  under other laws relating to the taxation of minerals, gas, 
251.30  coal, oil, or other similar interests; 
251.31     (2) stockpiled metallic minerals material that is exempt 
251.32  from taxation pursuant to constitutional or related statutory 
251.33  provisions; or 
251.34     (3) stockpiled metallic minerals material that is owned by 
251.35  the state.  
251.36     (b) All laws for the enforcement of taxes on real property 
252.1   shall apply to the tax imposed pursuant to this section on 
252.2   stockpiled metallic minerals material. 
252.3      Subd. 6.  [FEE OWNER.] For purposes of section 276.041, the 
252.4   owner of stockpiled metallic minerals material is a fee owner. 
252.5      Sec. 5.  Minnesota Statutes 1996, section 282.01, 
252.6   subdivision 8, is amended to read: 
252.7      Subd. 8.  [MINERALS IN TAX-FORFEITED LAND AND TAX-FORFEITED 
252.8   STOCKPILED METALLIC MINERALS MATERIAL SUBJECT TO MINING; 
252.9   PROCEDURES.] In case the commissioner of natural resources shall 
252.10  notify the county auditor of any county in writing that the 
252.11  minerals in any tax-forfeited land or tax-forfeited stockpiled 
252.12  metallic minerals material located on tax-forfeited land in such 
252.13  county have been designated as a mining unit as provided by law, 
252.14  or that such minerals or tax-forfeited stockpiled metallic 
252.15  minerals material are subject to a mining permit or lease issued 
252.16  therefor as provided by law, the surface of such tax-forfeited 
252.17  land shall be subject to disposal and use for mining purposes 
252.18  pursuant to such designation, permit, or lease, and shall be 
252.19  withheld from sale or lease by the county auditor until the 
252.20  commissioner shall notify the county auditor that such land has 
252.21  been removed from the list of mining units or that any mining 
252.22  permit or lease theretofore issued thereon is no longer in 
252.23  force; provided, that the surface of such tax-forfeited land may 
252.24  be leased by the county auditor as provided by law, with the 
252.25  written approval of the commissioner, subject to disposal and 
252.26  use for mining purposes as herein provided and to any special 
252.27  conditions relating thereto that the commissioner may prescribe, 
252.28  also subject to cancellation for mining purposes on three months 
252.29  written notice from the commissioner to the county auditor. 
252.30     Sec. 6.  Minnesota Statutes 1996, section 282.04, 
252.31  subdivision 1, is amended to read: 
252.32     Subdivision 1.  [TIMBER SALES; LAND LEASES AND USES.] (a) 
252.33  The county auditor may sell timber upon any tract that may be 
252.34  approved by the natural resources commissioner.  Such sale of 
252.35  timber shall be made for cash at not less than the appraised 
252.36  value determined by the county board to the highest bidder after 
253.1   not less than one week's published notice in an official paper 
253.2   within the county.  Any timber offered at such public sale and 
253.3   not sold may thereafter be sold at private sale by the county 
253.4   auditor at not less than the appraised value thereof, until such 
253.5   time as the county board may withdraw such timber from sale.  
253.6   The appraised value of the timber and the forestry practices to 
253.7   be followed in the cutting of said timber shall be approved by 
253.8   the commissioner of natural resources.  
253.9      (b) Payment of the full sale price of all timber sold on 
253.10  tax-forfeited lands shall be made in cash at the time of the 
253.11  timber sale, except in the case of oral or sealed bid auction 
253.12  sales, the down payment shall be no less than 15 percent of the 
253.13  appraised value, and the balance shall be paid prior to entry.  
253.14  In the case of auction sales that are partitioned and sold as a 
253.15  single sale with predetermined cutting blocks, the down payment 
253.16  shall be no less than 15 percent of the appraised price of the 
253.17  entire timber sale which may be held until the satisfactory 
253.18  completion of the sale or applied in whole or in part to the 
253.19  final cutting block.  The value of each separate block must be 
253.20  paid in full before any cutting may begin in that block.  With 
253.21  the permission of the county administrator the purchaser may 
253.22  enter unpaid blocks and cut necessary timber incidental to 
253.23  developing logging roads as may be needed to log other blocks 
253.24  provided that no timber may be removed from an unpaid block 
253.25  until separately scaled and paid for.  
253.26     (c) The county board may require final settlement on the 
253.27  basis of a scale of cut products.  Any parcels of land from 
253.28  which timber is to be sold by scale of cut products shall be so 
253.29  designated in the published notice of sale above mentioned, in 
253.30  which case the notice shall contain a description of such 
253.31  parcels, a statement of the estimated quantity of each species 
253.32  of timber thereon and the appraised price of each specie of 
253.33  timber for 1,000 feet, per cord or per piece, as the case may 
253.34  be.  In such cases any bids offered over and above the appraised 
253.35  prices shall be by percentage, the percent bid to be added to 
253.36  the appraised price of each of the different species of timber 
254.1   advertised on the land.  The purchaser of timber from such 
254.2   parcels shall pay in cash at the time of sale at the rate bid 
254.3   for all of the timber shown in the notice of sale as estimated 
254.4   to be standing on the land, and in addition shall pay at the 
254.5   same rate for any additional amounts which the final scale shows 
254.6   to have been cut or was available for cutting on the land at the 
254.7   time of sale under the terms of such sale.  Where the final 
254.8   scale of cut products shows that less timber was cut or was 
254.9   available for cutting under terms of such sale than was 
254.10  originally paid for, the excess payment shall be refunded from 
254.11  the forfeited tax sale fund upon the claim of the purchaser, to 
254.12  be audited and allowed by the county board as in case of other 
254.13  claims against the county.  No timber, except hardwood pulpwood, 
254.14  may be removed from such parcels of land or other designated 
254.15  landings until scaled by a person or persons designated by the 
254.16  county board and approved by the commissioner of natural 
254.17  resources.  Landings other than the parcel of land from which 
254.18  timber is cut may be designated for scaling by the county board 
254.19  by written agreement with the purchaser of the timber.  The 
254.20  county board may, by written agreement with the purchaser and 
254.21  with a consumer designated by the purchaser when the timber is 
254.22  sold by the county auditor, and with the approval of the 
254.23  commissioner of natural resources, accept the consumer's scale 
254.24  of cut products delivered at the consumer's landing.  No timber 
254.25  shall be removed until fully paid for in cash.  Small amounts of 
254.26  timber not exceeding $3,000 in appraised valuation may be sold 
254.27  for not less than the full appraised value at private sale to 
254.28  individual persons without first publishing notice of sale or 
254.29  calling for bids, provided that in case of such sale involving a 
254.30  total appraised value of more than $200 the sale shall be made 
254.31  subject to final settlement on the basis of a scale of cut 
254.32  products in the manner above provided and not more than two such 
254.33  sales, directly or indirectly to any individual shall be in 
254.34  effect at one time. 
254.35     (d) As directed by the county board, the county auditor may 
254.36  lease tax-forfeited land to individuals, corporations or 
255.1   organized subdivisions of the state at public or private vendue, 
255.2   and at such prices and under such terms as the county board may 
255.3   prescribe, for use as cottage and camp sites and for 
255.4   agricultural purposes and for the purpose of taking and removing 
255.5   of hay, stumpage, sand, gravel, clay, rock, marl, and black dirt 
255.6   therefrom, and for garden sites and other temporary uses 
255.7   provided that no leases shall be for a period to exceed ten 
255.8   years; provided, further that any leases involving a 
255.9   consideration of more than $1,500 per year, except to an 
255.10  organized subdivision of the state shall first be offered at 
255.11  public sale in the manner provided herein for sale of timber.  
255.12  Upon the sale of any such leased land, it shall remain subject 
255.13  to the lease for not to exceed one year from the beginning of 
255.14  the term of the lease.  Any rent paid by the lessee for the 
255.15  portion of the term cut off by such cancellation shall be 
255.16  refunded from the forfeited tax sale fund upon the claim of the 
255.17  lessee, to be audited and allowed by the county board as in case 
255.18  of other claims against the county. 
255.19     (e) As directed by the county board, the county auditor may 
255.20  lease tax-forfeited land to individuals, corporations, or 
255.21  organized subdivisions of the state at public or private vendue, 
255.22  at such prices and under such terms as the county board may 
255.23  prescribe, for the purpose of taking and removing for use for 
255.24  road construction and other purposes tax-forfeited stockpiled 
255.25  iron-bearing material.  The county auditor must determine that 
255.26  the material is needed and suitable for use in the construction 
255.27  or maintenance of a road, tailings basin, settling basin, dike, 
255.28  dam, bank fill, or other works on public or private property, 
255.29  and that the use would be in the best interests of the public.  
255.30  No lease shall exceed ten years.  The use of a stockpile for 
255.31  these purposes must first be approved by the commissioner of 
255.32  natural resources.  The request shall be deemed approved unless 
255.33  the requesting county is notified to the contrary by the 
255.34  commissioner of natural resources within six months after 
255.35  receipt of a request for approval for use of a stockpile.  Once 
255.36  use of a stockpile has been approved, the county may continue to 
256.1   lease it for these purposes until approval is withdrawn by the 
256.2   commissioner of natural resources. 
256.3      (f) The county auditor, with the approval of the county 
256.4   board is authorized to grant permits, licenses, and leases to 
256.5   tax-forfeited lands for the depositing of stripping, lean ores, 
256.6   tailings, or waste products from mines or ore milling plants, 
256.7   upon such conditions and for such consideration and for such 
256.8   period of time, not exceeding 15 years, as the county board may 
256.9   determine; said permits, licenses, or leases to be subject to 
256.10  approval by the commissioner of natural resources. 
256.11     (g) Any person who removes any timber from tax-forfeited 
256.12  land before said timber has been scaled and fully paid for as 
256.13  provided in this subdivision is guilty of a misdemeanor. 
256.14     (h) The county auditor may, with the approval of the county 
256.15  board, and without first offering at public sale, grant leases, 
256.16  for a term not exceeding 25 years, for the removal of peat from 
256.17  tax-forfeited lands upon such terms and conditions as the county 
256.18  board may prescribe.  Any lease for the removal of peat from 
256.19  tax-forfeited lands must first be reviewed and approved by the 
256.20  commissioner of natural resources if the lease covers 320 or 
256.21  more acres.  No lease for the removal of peat shall be made by 
256.22  the county auditor pursuant to this section without first 
256.23  holding a public hearing on the auditor's intention to lease.  
256.24  One printed notice in a legal newspaper in the county at least 
256.25  ten days before the hearing, and posted notice in the courthouse 
256.26  at least 20 days before the hearing shall be given of the 
256.27  hearing. 
256.28     Sec. 7.  Minnesota Statutes 1996, section 298.24, 
256.29  subdivision 1, is amended to read: 
256.30     Subdivision 1.  (a) For concentrate produced in 1992, 1993, 
256.31  1994, and 1995 there is imposed upon taconite and iron 
256.32  sulphides, and upon the mining and quarrying thereof, and upon 
256.33  the production of iron ore concentrate therefrom, and upon the 
256.34  concentrate so produced, a tax of $2.054 per gross ton of 
256.35  merchantable iron ore concentrate produced therefrom.  
256.36     (b) On concentrates produced in 1997 and thereafter, an 
257.1   additional tax is imposed equal to three cents per gross ton of 
257.2   merchantable iron ore concentrate for each one percent that the 
257.3   iron content of the product exceeds 72 percent, when dried at 
257.4   212 degrees Fahrenheit. 
257.5      (c) For concentrates produced in 1996 and subsequent years, 
257.6   the tax rate shall be equal to the preceding year's tax rate 
257.7   plus an amount equal to the preceding year's tax rate multiplied 
257.8   by the percentage increase in the implicit price deflator from 
257.9   the fourth quarter of the second preceding year to the fourth 
257.10  quarter of the preceding year, provided that, for concentrates 
257.11  produced in 1996 only, the increase in the rate of tax imposed 
257.12  under this section over the rate imposed for the previous year 
257.13  may not exceed four cents per ton.  "Implicit price deflator" 
257.14  for the gross national product means the implicit price deflator 
257.15  prepared by the bureau of economic analysis of the United States 
257.16  Department of Commerce.  
257.17     (c) (d) The tax shall be imposed on the average of the 
257.18  production for the current year and the previous two years.  The 
257.19  rate of the tax imposed will be the current year's tax rate.  
257.20  This clause shall not apply in the case of the closing of a 
257.21  taconite facility if the property taxes on the facility would be 
257.22  higher if this clause and section 298.25 were not applicable.  
257.23     (d) (e) If the tax or any part of the tax imposed by this 
257.24  subdivision is held to be unconstitutional, a tax of $2.054 per 
257.25  gross ton of merchantable iron ore concentrate produced shall be 
257.26  imposed.  
257.27     (e) (f) Consistent with the intent of this subdivision to 
257.28  impose a tax based upon the weight of merchantable iron ore 
257.29  concentrate, the commissioner of revenue may indirectly 
257.30  determine the weight of merchantable iron ore concentrate 
257.31  included in fluxed pellets by subtracting the weight of the 
257.32  limestone, dolomite, or olivine derivatives or other basic flux 
257.33  additives included in the pellets from the weight of the 
257.34  pellets.  For purposes of this paragraph, "fluxed pellets" are 
257.35  pellets produced in a process in which limestone, dolomite, 
257.36  olivine, or other basic flux additives are combined with 
258.1   merchantable iron ore concentrate.  No subtraction from the 
258.2   weight of the pellets shall be allowed for binders, mineral and 
258.3   chemical additives other than basic flux additives, or moisture. 
258.4      (f) (g) (1) Notwithstanding any other provision of this 
258.5   subdivision, for the first five years of a plant's production of 
258.6   direct reduced ore, the rate of the tax on direct reduced ore is 
258.7   determined under this paragraph two years of a plant's 
258.8   production of direct reduced ore, no tax is imposed under this 
258.9   section.  As used in this paragraph, "direct reduced ore" is ore 
258.10  that results in a product that has an iron content of at least 
258.11  75 percent.  For the third year of a plant's production of 
258.12  direct reduced ore, the rate to be applied to direct reduced ore 
258.13  is 25 percent of the rate otherwise determined under this 
258.14  subdivision for the first 500,000 of taxable tons for the 
258.15  production year, and 50 percent of the rate otherwise determined 
258.16  for any remainder.  If the taxpayer had no production in the two 
258.17  years prior to the current production year, the tonnage eligible 
258.18  to be taxed at 25 percent of the rate otherwise determined under 
258.19  this subdivision is the first 166,667 tons.  If the taxpayer had 
258.20  some production in the year prior to the current production year 
258.21  but no production in the second prior year, the tonnage eligible 
258.22  to be taxed at 25 percent of the rate otherwise determined under 
258.23  this subdivision is the first 333,333 tons.  For the fourth such 
258.24  production year, the rate is 50 percent of the rate otherwise 
258.25  determined under this subdivision; for the fifth such production 
258.26  year, the rate is 75 percent of the rate otherwise determined 
258.27  under this subdivision; and for all subsequent production years, 
258.28  the full rate is imposed. 
258.29     (2) Subject to clause (1), production of direct reduced ore 
258.30  in this state is subject to the tax imposed by this section, but 
258.31  if that production is not produced by a producer of taconite or 
258.32  iron sulfides, the production of taconite or iron sulfides 
258.33  consumed in the production of direct reduced iron in this state 
258.34  is not subject to the tax imposed by this section on taconite or 
258.35  iron sulfides. 
258.36     Sec. 8.  Minnesota Statutes 1996, section 298.28, 
259.1   subdivision 9a, is amended to read: 
259.2      Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 15.4 
259.3   cents per ton for distributions in 1996, 1998, and 1999 and 20.4 
259.4   cents per ton for distributions in 1997, 1998, and 1999 shall be 
259.5   paid to the taconite economic development fund.  No distribution 
259.6   shall be made under this paragraph in any year in which total 
259.7   industry production falls below 30 million tons. 
259.8      (b) An amount equal to 50 percent of the tax under section 
259.9   298.24 for concentrate sold in the form of pellet chips and 
259.10  fines not exceeding 5/16 inch in size and not including crushed 
259.11  pellets shall be paid to the taconite economic development 
259.12  fund.  The amount paid shall not exceed $700,000 annually for 
259.13  all companies.  If the initial amount to be paid to the fund 
259.14  exceeds this amount, each company's payment shall be prorated so 
259.15  the total does not exceed $700,000. 
259.16     Sec. 9.  Minnesota Statutes 1996, section 298.28, is 
259.17  amended by adding a subdivision to read: 
259.18     Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
259.19  ton for distributions in 1998 and 1999 shall be paid to the 
259.20  taconite environmental fund for use under section 298.2961.  No 
259.21  distribution may be made under this paragraph in any year in 
259.22  which total industry production falls below 30,000,000 tons. 
259.23     Sec. 10.  Minnesota Statutes 1996, section 298.296, 
259.24  subdivision 4, is amended to read: 
259.25     Subd. 4.  [TEMPORARY LOAN AUTHORITY.] (a) The board may 
259.26  recommend that up to $10,000,000 $7,500,000 from the corpus of 
259.27  the trust may be used for loans as provided in this 
259.28  subdivision.  The money would be available for loans for 
259.29  construction and equipping of facilities constituting (1) a 
259.30  value added iron products plant, which may be either a new plant 
259.31  or a facility incorporated into an existing plant that produces 
259.32  iron upgraded to a minimum of 75 percent iron content or any 
259.33  iron alloy with a total minimum metallic content of 90 percent; 
259.34  or (2) a new mine or minerals processing plant for any mineral 
259.35  subject to the net proceeds tax imposed under section 298.015.  
259.36  A loan under this paragraph may not exceed $5,000,000 for any 
260.1   facility.  
260.2      (b) Additionally, the board must reserve the first 
260.3   $2,000,000 of the net interest, dividends, and earnings arising 
260.4   from the investment of the trust after June 30, 1996, to be used 
260.5   for additional grants for the purposes set forth in paragraph 
260.6   (a).  This amount must be reserved until it is used for the 
260.7   grants or until June 30, 1998, whichever is earlier. 
260.8      (c) Additionally, the board may recommend that up to 
260.9   $3,000,000 $5,500,000 from the corpus of the trust may be used 
260.10  for additional grants for the purposes set forth in paragraph 
260.11  (a). 
260.12     (d) The board may require that it receive an equity 
260.13  percentage in any project to which it contributes under this 
260.14  section. 
260.15     (e) The authority to make loans and grants under this 
260.16  subdivision terminates June 30, 1998. 
260.17     Sec. 11.  Minnesota Statutes 1996, section 298.2961, 
260.18  subdivision 1, is amended to read: 
260.19     Subdivision 1.  [APPROPRIATION.] (a) $10,000,000 is 
260.20  appropriated from the northeast Minnesota economic protection 
260.21  trust fund to a special account in the taconite area 
260.22  environmental protection fund for grants or loans to producers 
260.23  on a project-by-project basis as provided in this section. 
260.24     (b) The proceeds of the tax designated under section 
260.25  298.28, subdivision 9b, are appropriated for grants and loans to 
260.26  producers on a project-by-project basis as provided in this 
260.27  section. 
260.28     Sec. 12.  Minnesota Statutes 1996, section 298.75, 
260.29  subdivision 1, is amended to read: 
260.30     Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
260.31  provided, the following words, when used in this section, shall 
260.32  have the meanings herein ascribed to them.  
260.33     (1) "Aggregate material" shall mean nonmetallic natural 
260.34  mineral aggregate including, but not limited to sand, silica 
260.35  sand, gravel, building stone, crushed rock, limestone, and 
260.36  granite.  Aggregate material shall not include dimension stone 
261.1   and dimension granite.  Aggregate material must be measured or 
261.2   weighed after it has been extracted from the pit, quarry, or 
261.3   deposit.  
261.4      (2) "Person" shall mean any individual, firm, partnership, 
261.5   corporation, organization, trustee, association, or other entity.
261.6      (3) "Operator" shall mean any person engaged in the 
261.7   business of removing aggregate material from the surface or 
261.8   subsurface of the soil, for the purpose of sale, either directly 
261.9   or indirectly, through the use of the aggregate material in a 
261.10  marketable product or service.  
261.11     (4) "Extraction site" shall mean a pit, quarry, or deposit 
261.12  containing aggregate material and any contiguous property to the 
261.13  pit, quarry, or deposit which is used by the operator for 
261.14  stockpiling the aggregate material.  
261.15     (5) "Importer" shall mean any person who buys aggregate 
261.16  material produced from a county not listed in paragraph (6) or 
261.17  another state and causes the aggregate material to be imported 
261.18  into a county in this state which imposes a tax on aggregate 
261.19  material.  
261.20     (6) "County" shall mean the counties of Pope, Stearns, 
261.21  Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
261.22  Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
261.23  Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
261.24  Sibley, Hennepin, Washington, Chisago, and Ramsey.  
261.25     Sec. 13.  Minnesota Statutes 1996, section 298.75, 
261.26  subdivision 4, is amended to read: 
261.27     Subd. 4.  If the county auditor has not received the report 
261.28  by the 15th day after the last day of each calendar quarter from 
261.29  the operator or importer as required by subdivision 3 or has 
261.30  received an erroneous report, the county auditor shall estimate 
261.31  the amount of tax due and notify the operator or importer by 
261.32  registered mail of the amount of tax so estimated within the 
261.33  next 14 days.  An operator or importer may, within 30 days from 
261.34  the date of mailing the notice, and upon payment of the amount 
261.35  of tax determined to be due, file in the office of the county 
261.36  auditor a written statement of objections to the amount of taxes 
262.1   determined to be due.  The statement of objections shall be 
262.2   deemed to be a petition within the meaning of chapter 278, and 
262.3   shall be governed by sections 278.02 to 278.13. 
262.4      Sec. 14.  Minnesota Statutes 1996, section 298.75, is 
262.5   amended by adding a subdivision to read: 
262.6      Subd. 8.  The county auditor or its duly authorized agent 
262.7   may examine records, including computer records, maintained by 
262.8   an importer or operator.  The term "record" includes, but is not 
262.9   limited to, all accounts of an importer or operator.  The county 
262.10  auditor must have access at all reasonable times to inspect and 
262.11  copy all business records related to an importer's or operator's 
262.12  collection, transportation, and disposal of aggregate to the 
262.13  extent necessary to ensure that all aggregate material 
262.14  production taxes required to be paid have been remitted to the 
262.15  county.  The records must be maintained by the importer or 
262.16  operator for no less than six years. 
262.17     Sec. 15.  [ST. LOUIS COUNTY TOWNS.] 
262.18     Subdivision 1.  [TAX MAY BE IMPOSED; CONDITIONS.] If the St.
262.19  Louis county board does not approve section 12, as provided in 
262.20  section 18, each of the following towns in St. Louis county may 
262.21  impose the aggregate materials tax under Minnesota Statutes, 
262.22  section 298.75:  the towns of Alden, Brevator, Canosia, Duluth, 
262.23  Fredenberg, Gnesen, Grand Lake, Industrial, Lakewood, Midway, 
262.24  Normanna, North Star, Rice Lake, and Solway. 
262.25     Subd. 2.  [PROVISIONS THAT APPLY.] For purposes of 
262.26  exercising the powers contained in Minnesota Statutes, section 
262.27  298.75, the "town" is deemed to be the "county." 
262.28     In those towns located in St. Louis County that impose the 
262.29  tax under Minnesota Statutes, section 298.75, all provisions in 
262.30  that section shall apply to those towns, except that in lieu of 
262.31  the distribution of the tax proceeds under subdivision 7, all 
262.32  proceeds from this tax shall be retained by each of the towns 
262.33  that impose the tax. 
262.34     Subd. 3.  [APPROVAL.] A tax imposed under this section is 
262.35  effective in the town that approves it the day after compliance 
262.36  by the town with the requirements of Minnesota Statutes, section 
263.1   645.021, subdivision 3. 
263.2      Sec. 16.  [USE OF PRODUCTION TAX PROCEEDS.] 
263.3      The amount distributed to the iron range resources and 
263.4   rehabilitation board under Minnesota Statutes, section 298.28, 
263.5   subdivision 7, that is attributable to the tax increase due to 
263.6   the implicit price deflator increase as provided in Minnesota 
263.7   Statutes, section 298.24, subdivision 1, paragraph (c), for 
263.8   concentrates produced in 1997 shall be used by the board to make 
263.9   a grant to the city of Hoyt Lakes to be used for the 
263.10  establishment of an industrial park in the city. 
263.11     Sec. 17.  [SALES OF LANDS BY SCOTT COUNTY; AGGREGATE 
263.12  MATERIALS.] 
263.13     Minerals subject to reservation by Scott county under 
263.14  Minnesota Statutes, section 373.01, subdivision 1, clause (1), 
263.15  do not include minerals defined as aggregate material by 
263.16  Minnesota Statutes, section 298.75, subdivision 1, that are 
263.17  present in and upon the following described property: 
263.18     All that part of the East Half of the Southwest Quarter in 
263.19  Section 33, Township 115, Range 23, Scott County MN; which lies 
263.20  westerly of the westerly right of way line of the Chicago, St. 
263.21  Paul, Minneapolis, and Omaha Railway Company (Chicago and 
263.22  NorthWestern Railway), 
263.23     Together with all that part of the East Half of the 
263.24  Southwest Quarter of Section 33, Township 115, Range 23, Scott 
263.25  County, MN; lying easterly of the easterly right of way line of 
263.26  the Chicago, St. Paul, Minneapolis and Omaha Railway Company 
263.27  (Chicago and NorthWestern Railway); and all that part of the 
263.28  West Half of the Southeast Quarter of said Section 33 lying 
263.29  westerly of the westerly right of way line of the Minneapolis 
263.30  and St. Louis Railroad; excepting therefrom the following 
263.31  described parcel: 
263.32     EXCEPTION: 
263.33     Commencing at the Southwest corner of the Southeast Quarter 
263.34     of said Section 33; thence on an assumed bearing of North 
263.35     87 degrees 25 minutes 08 seconds East along the South line 
263.36     of said Southeast Quarter a distance of 501.49 feet; thence 
264.1      North 02 degrees 24 minutes 52 seconds West a distance of 
264.2      750.00 feet; thence South 87 degrees 12 minutes 56 seconds 
264.3      East a distance of 750.00 feet; thence South 02 degrees 34 
264.4      minutes 52 seconds East a distance of 750.00 feet to the 
264.5      South line of said East Half of the Southwest Quarter; 
264.6      thence North 86 degrees 48 minutes 19 seconds East along 
264.7      said South line of the East Half of the Southwest Quarter a 
264.8      distance of 248.52 feet to the point of beginning. 
264.9      Together with Tract A, Registered Land Survey Number 86; 
264.10  and Tract C, Registered Land Survey Number 136; as filed in the 
264.11  office of the Registrar of Titles, Scott County, Minnesota. 
264.12     The county may sell, lease, or convey the property and 
264.13  except the aggregate material from the mineral reservation 
264.14  required by Minnesota Statutes, section 373.01, subdivision 1, 
264.15  and it may lease the aggregate material upon conditions 
264.16  different from those prescribed by that subdivision. 
264.17     Sec. 18.  [EFFECTIVE DATE.] 
264.18     Section 7 is effective for production years beginning after 
264.19  December 31, 1996. 
264.20     Section 12 is effective for Pope county the day after 
264.21  compliance by Pope county with the requirements of Minnesota 
264.22  Statutes, section 645.021, subdivision 3. 
264.23     Section 12 is effective for Carlton county the day after 
264.24  compliance by Carlton county with the requirements of Minnesota 
264.25  Statutes, section 645.021, subdivision 3. 
264.26     Section 12 is effective for St. Louis county the day after 
264.27  compliance by St. Louis county with the requirements of 
264.28  Minnesota Statutes, section 645.021, subdivision 3. 
264.29     Sections 16 and 17 are effective the day following final 
264.30  enactment. 
264.31                             ARTICLE 9 
264.32                           BUDGET RESERVE 
264.33     Section 1.  Minnesota Statutes 1996, section 16A.152, 
264.34  subdivision 2, is amended to read: 
264.35     Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] If on the basis 
264.36  of a forecast of general fund revenues and expenditures after 
265.1   November 1 in an odd-numbered year, the commissioner of finance 
265.2   determines that there will be a positive unrestricted budgetary 
265.3   general fund balance at the close of the biennium, the 
265.4   commissioner of finance must allocate money to the budget 
265.5   reserve until the total amount in the account is $270,000,000.  
265.6   An amount equal to any additional biennial unrestricted 
265.7   budgetary general fund balance made available as the result of a 
265.8   forecast in an odd-numbered calendar year after November 1 is 
265.9   appropriated in January of the following year to reduce the 
265.10  property tax levy recognition percent under section 121.904, 
265.11  subdivision 4a, to zero before additional money beyond 
265.12  $270,000,000 is allocated to the budget reserve account.  The 
265.13  amount appropriated is the full amount forecast to be available 
265.14  at the end of the biennium and is not limited to the amount 
265.15  forecast to be available at the end of the current fiscal year 
265.16  as follows: 
265.17     (a) first, to the budget reserve until the total amount in 
265.18  the account equals $522,000,000; then 
265.19     (b) 60 percent to the property tax reform account 
265.20  established in section 16A.1521; and 
265.21     (c) 40 percent is an unrestricted balance in the general 
265.22  fund. 
265.23     The amounts necessary to meet the requirements of this 
265.24  section are appropriated from the general fund within two weeks 
265.25  after the forecast is released. 
265.26     Sec. 2.  [16A.1521] [PROPERTY TAX REFORM ACCOUNT.] 
265.27     (a) A property tax reform account is established in the 
265.28  general fund. 
265.29     (b) Amounts in the account are available for and may only 
265.30  be spent to reform the property tax system by: 
265.31     (1) reducing the class rates to the target rates specified 
265.32  in section 273.13, subdivision 32, or to further reduce the 
265.33  ratio of the highest class rate to lowest class rate; 
265.34     (2) increasing state education aids to reduce property 
265.35  taxes; 
265.36     (3) increasing the state share of education funding to 70 
266.1   percent; 
266.2      (4) increasing the education homestead credit; or 
266.3      (5) increasing the property tax refund. 
266.4   As provided by section 273.13, subdivision 32, the governor 
266.5   shall recommend to the legislature uses of money in the account 
266.6   to compress class rate ratios, while mitigating the shifting of 
266.7   relative property tax burdens from one class to another through 
266.8   the mechanisms listed in clauses (2) through (5).  
266.9      (c) The balance in the account does not cancel and remains 
266.10  in the account until appropriated for property tax reform.  
266.11  Investment earnings on the account are credited to the account. 
266.12     Sec. 3.  Minnesota Statutes 1996, section 124.195, 
266.13  subdivision 7, is amended to read: 
266.14     Subd. 7.  [PAYMENTS TO SCHOOL NONOPERATING FUNDS.] Each 
266.15  fiscal year state general fund payments for a district 
266.16  nonoperating fund shall be made at 85 percent of the estimated 
266.17  entitlement during the fiscal year of the entitlement, unless a 
266.18  higher rate has been established according to section 121.904, 
266.19  subdivision 4d.  This amount shall be paid in 12 equal monthly 
266.20  installments.  The amount of the actual entitlement, after 
266.21  adjustment for actual data, minus the payments made during the 
266.22  fiscal year of the entitlement shall be paid prior to October 31 
266.23  of the following school year.  The commissioner may make advance 
266.24  payments of homestead and agricultural credit aid for a 
266.25  district's debt service fund earlier than would occur under the 
266.26  preceding schedule if the district submits evidence showing a 
266.27  serious cash flow problem in the fund.  The commissioner may 
266.28  make earlier payments during the year and, if necessary, 
266.29  increase the percent of the entitlement paid to reduce the cash 
266.30  flow problem. 
266.31     Sec. 4.  Minnesota Statutes 1996, section 124.195, 
266.32  subdivision 10, is amended to read: 
266.33     Subd. 10.  [AID PAYMENT PERCENTAGE.] Except as provided in 
266.34  subdivisions 8, 9, and 11, each fiscal year, all education aids 
266.35  and credits in this chapter and chapters 121, 123, 124A, 124B, 
266.36  125, 126, 134, and section 273.1392, shall be paid at 90 percent 
267.1   for districts operating a program under section 121.585 for 
267.2   grades 1 to 12 for all students in the district and 85 percent 
267.3   for other districts of the estimated entitlement during the 
267.4   fiscal year of the entitlement, unless a higher rate has been 
267.5   established according to section 121.904, subdivision 4d.  
267.6   Districts operating a program under section 121.585 for grades 1 
267.7   to 12 for all students in the district shall receive 85 percent 
267.8   of the estimated entitlement plus an additional amount of 
267.9   general education aid equal to five percent of the estimated 
267.10  entitlement.  For all districts, the final adjustment payment, 
267.11  according to subdivision 6, shall be the amount of the actual 
267.12  entitlement, after adjustment for actual data, minus the 
267.13  payments made during the fiscal year of the entitlement. 
267.14     Sec. 5.  [APPROPRIATIONS.] 
267.15     Subdivision 1.  [BUDGET RESERVE.] An amount sufficient to 
267.16  increase the budget reserve to $522,000,000 on July 1, 1997, is 
267.17  appropriated from the general fund. 
267.18     Subd. 2.  [PROPERTY REFORM ACCOUNT.] $46,000,000 is 
267.19  appropriated to the property tax reform account from the general 
267.20  fund for fiscal year 2000. 
267.21     Sec. 6.  [REPEALER.] 
267.22     Minnesota Statutes 1996, section 121.904, subdivision 4d, 
267.23  is repealed. 
267.24     Sec. 7.  [EFFECTIVE DATE.] 
267.25     Sections 1 to 6 are effective July 1, 1997. 
267.26                             ARTICLE 10 
267.27                      TAX INCREMENT FINANCING
267.28     Section 1.  Minnesota Statutes 1996, section 469.174, 
267.29  subdivision 10, is amended to read: 
267.30     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
267.31  district" means a type of tax increment financing district 
267.32  consisting of a project, or portions of a project, within which 
267.33  the authority finds by resolution that one of the following 
267.34  conditions, reasonably distributed throughout the district, 
267.35  exists: 
267.36     (1) parcels consisting of 70 percent of the area of the 
268.1   district are occupied by buildings, streets, utilities, or other 
268.2   improvements and more than 50 percent of the buildings, not 
268.3   including outbuildings, are structurally substandard to a degree 
268.4   requiring substantial renovation or clearance; or 
268.5      (2) the property consists of vacant, unused, underused, 
268.6   inappropriately used, or infrequently used railyards, rail 
268.7   storage facilities, or excessive or vacated railroad 
268.8   rights-of-way. 
268.9      (b) For purposes of this subdivision, "structurally 
268.10  substandard" shall mean containing defects in structural 
268.11  elements or a combination of deficiencies in essential utilities 
268.12  and facilities, light and ventilation, fire protection including 
268.13  adequate egress, layout and condition of interior partitions, or 
268.14  similar factors, which defects or deficiencies are of sufficient 
268.15  total significance to justify substantial renovation or 
268.16  clearance.  
268.17     (c) A building is not structurally substandard if it is in 
268.18  compliance with the building code applicable to new buildings or 
268.19  could be modified to satisfy the building code at a cost of less 
268.20  than 15 percent of the cost of constructing a new structure of 
268.21  the same square footage and type on the site.  The municipality 
268.22  may find that a building is not disqualified as structurally 
268.23  substandard under the preceding sentence on the basis of 
268.24  reasonably available evidence, such as the size, type, and age 
268.25  of the building, the average cost of plumbing, electrical, or 
268.26  structural repairs, or other similar reliable evidence.  If the 
268.27  evidence supports a reasonable conclusion that the building is 
268.28  not disqualified as structurally substandard, The municipality 
268.29  may not make such a determination without an interior inspection 
268.30  or of the property, but need not have an independent, expert 
268.31  appraisal prepared of the cost of repair and rehabilitation of 
268.32  the building.  An interior inspection of the property is not 
268.33  required, if the municipality finds that (1) the municipality or 
268.34  authority is unable to gain access to the property after using 
268.35  its best efforts to obtain permission from the party that owns 
268.36  or controls the property; and (2) the evidence otherwise 
269.1   supports a reasonable conclusion that the building is 
269.2   structurally substandard.  Items of evidence that support such a 
269.3   conclusion include recent fire or police inspections, on-site 
269.4   property tax appraisals or housing inspections, exterior 
269.5   evidence of deterioration, or other similar reliable evidence.  
269.6   Written documentation of the findings and reasons why an 
269.7   interior inspection was not conducted must be made and retained 
269.8   under section 469.175, subdivision 3, clause (1). 
269.9      (d) A parcel is deemed to be occupied by a structurally 
269.10  substandard building for purposes of the finding under paragraph 
269.11  (a) if all of the following conditions are met: 
269.12     (1) the parcel was occupied by a substandard building 
269.13  within three years of the filing of the request for 
269.14  certification of the parcel as part of the district with the 
269.15  county auditor; 
269.16     (2) the substandard building was demolished or removed by 
269.17  the authority or the demolition or removal was financed by the 
269.18  authority or was done by a developer under a development 
269.19  agreement with the authority; 
269.20     (3) the authority found by resolution before the demolition 
269.21  or removal that the parcel was occupied by a structurally 
269.22  substandard building and that after demolition and clearance the 
269.23  authority intended to include the parcel within a district; and 
269.24     (4) upon filing the request for certification of the tax 
269.25  capacity of the parcel as part of a district, the authority 
269.26  notifies the county auditor that the original tax capacity of 
269.27  the parcel must be adjusted as provided by section 469.177, 
269.28  subdivision 1, paragraph (h). 
269.29     (c) (e) For purposes of this subdivision, a parcel is not 
269.30  occupied by buildings, streets, utilities, or other improvements 
269.31  unless 15 percent of the area of the parcel contains 
269.32  improvements. 
269.33     (d) (f) For districts consisting of two or more 
269.34  noncontiguous areas, each area must qualify as a redevelopment 
269.35  district under paragraph (a) to be included in the district, and 
269.36  the entire area of the district must satisfy paragraph (a). 
270.1      Sec. 2.  Minnesota Statutes 1996, section 469.174, is 
270.2   amended by adding a subdivision to read: 
270.3      Subd. 25.  [INCREMENT.] "Increment," "tax increment," "tax 
270.4   increment revenues," "revenues derived from tax increment," and 
270.5   other similar terms for a district include: 
270.6      (1) taxes paid by the captured net tax capacity, but 
270.7   excluding any excess taxes, as computed under section 469.177; 
270.8      (2) the proceeds from the sale or lease of property, 
270.9   tangible or intangible, purchased by the authority with tax 
270.10  increments; 
270.11     (3) repayments of loans or other advances made by the 
270.12  authority with tax increments; and 
270.13     (4) interest or other investment earnings on or from tax 
270.14  increments. 
270.15     Sec. 3.  Minnesota Statutes 1996, section 469.174, is 
270.16  amended by adding a subdivision to read: 
270.17     Subd. 26.  [POPULATION.] "Population" means the population 
270.18  established as of December 31 by the most recent of the 
270.19  following: 
270.20     (1) the federal census; 
270.21     (2) a special census conducted under contract with the 
270.22  United States Bureau of the Census; 
270.23     (3) a population estimate made by the metropolitan council; 
270.24  and 
270.25     (4) a population estimate made by the state demographer 
270.26  under section 4A.02. 
270.27     The population so established applies to the following 
270.28  calendar year. 
270.29     Sec. 4.  Minnesota Statutes 1996, section 469.174, is 
270.30  amended by adding a subdivision to read: 
270.31     Subd. 27.  [SMALL CITY.] "Small city" means any home rule 
270.32  charter or statutory city that has a population of 5,000 or less 
270.33  and that is located ten miles or more from a home rule charter 
270.34  or statutory city, located in this state, with a population of 
270.35  10,000 or more.  For purposes of this definition, the distance 
270.36  between cities is measured by drawing a straight line from the 
271.1   nearest boundaries of the two cities. 
271.2      Sec. 5.  Minnesota Statutes 1996, section 469.175, 
271.3   subdivision 3, is amended to read: 
271.4      Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
271.5   not certify the original net tax capacity of a tax increment 
271.6   financing district until the tax increment financing plan 
271.7   proposed for that district has been approved by the municipality 
271.8   in which the district is located.  If an authority that proposes 
271.9   to establish a tax increment financing district and the 
271.10  municipality are not the same, the authority shall apply to the 
271.11  municipality in which the district is proposed to be located and 
271.12  shall obtain the approval of its tax increment financing plan by 
271.13  the municipality before the authority may use tax increment 
271.14  financing.  The municipality shall approve the tax increment 
271.15  financing plan only after a public hearing thereon after 
271.16  published notice in a newspaper of general circulation in the 
271.17  municipality at least once not less than ten days nor more than 
271.18  30 days prior to the date of the hearing.  The published notice 
271.19  must include a map of the area of the district from which 
271.20  increments may be collected and, if the project area includes 
271.21  additional area, a map of the project area in which the 
271.22  increments may be expended.  The hearing may be held before or 
271.23  after the approval or creation of the project or it may be held 
271.24  in conjunction with a hearing to approve the project.  Before or 
271.25  at the time of approval of the tax increment financing plan, the 
271.26  municipality shall make the following findings, and shall set 
271.27  forth in writing the reasons and supporting facts for each 
271.28  determination: 
271.29     (1) that the proposed tax increment financing district is a 
271.30  redevelopment district, a renewal or renovation district, a 
271.31  mined underground space development district, a housing 
271.32  district, a soils condition district, or an economic development 
271.33  district; if the proposed district is a redevelopment district 
271.34  or a renewal or renovation district, the reasons and supporting 
271.35  facts for the determination that the district meets the criteria 
271.36  of section 469.174, subdivision 10, paragraph (a), clauses (1) 
272.1   and (2), or subdivision 10a, must be documented in writing and 
272.2   retained and made available to the public by the authority until 
272.3   the district has been terminated. 
272.4      (2) that the proposed development or redevelopment, in the 
272.5   opinion of the municipality, would not reasonably be expected to 
272.6   occur solely through private investment within the reasonably 
272.7   foreseeable future and that the increased market value of the 
272.8   site that could reasonably be expected to occur without the use 
272.9   of tax increment financing would be less than the increase in 
272.10  the market value estimated to result from the proposed 
272.11  development after subtracting the present value of the projected 
272.12  tax increments for the maximum duration of the district 
272.13  permitted by the plan.  The requirements of this clause do not 
272.14  apply if the district is a qualified housing district, as 
272.15  defined in section 273.1399, subdivision 1. 
272.16     (3) that the tax increment financing plan conforms to the 
272.17  general plan for the development or redevelopment of the 
272.18  municipality as a whole. 
272.19     (4) that the tax increment financing plan will afford 
272.20  maximum opportunity, consistent with the sound needs of the 
272.21  municipality as a whole, for the development or redevelopment of 
272.22  the project by private enterprise. 
272.23     (5) that the municipality elects the method of tax 
272.24  increment computation set forth in section 469.177, subdivision 
272.25  3, clause (b), if applicable. 
272.26     When the municipality and the authority are not the same, 
272.27  the municipality shall approve or disapprove the tax increment 
272.28  financing plan within 60 days of submission by the authority, or 
272.29  the plan shall be deemed approved.  When the municipality and 
272.30  the authority are not the same, the municipality may not amend 
272.31  or modify a tax increment financing plan except as proposed by 
272.32  the authority pursuant to subdivision 4.  Once approved, the 
272.33  determination of the authority to undertake the project through 
272.34  the use of tax increment financing and the resolution of the 
272.35  governing body shall be conclusive of the findings therein and 
272.36  of the public need for the financing. 
273.1      Sec. 6.  Minnesota Statutes 1996, section 469.176, 
273.2   subdivision 1b, is amended to read: 
273.3      Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
273.4   shall in any event be paid to the authority 
273.5      (1) after 25 years from date of receipt by the authority of 
273.6   the first tax increment for a mined underground space 
273.7   development district, 
273.8      (2) after 15 years after receipt by the authority of the 
273.9   first increment for a renewal and renovation district, 
273.10     (3) after 12 20 years from approval of the tax increment 
273.11  financing plan after receipt by the authority of the first 
273.12  increment for a soils condition district, 
273.13     (4) after nine years from the date of the receipt, or 11 
273.14  years from approval of the tax increment financing plan, 
273.15  whichever is less, for an economic development district, 
273.16     (5) for a housing district or a redevelopment district, 
273.17  after 20 years from the date of receipt by the authority of the 
273.18  first tax increment by the authority pursuant to section 
273.19  469.175, subdivision 1, paragraph (b); or, if no provision is 
273.20  made under section 469.175, subdivision 1, paragraph (b), after 
273.21  25 years from the date of receipt by the authority of the first 
273.22  increment. 
273.23     (b) For purposes of determining a duration limit under this 
273.24  subdivision or subdivision 1e that is based on the receipt of an 
273.25  increment, any increments from taxes payable in the year in 
273.26  which the district terminates shall be paid to the authority.  
273.27  This paragraph does not affect a duration limit calculated from 
273.28  the date of approval of the tax increment financing plan or 
273.29  based on the recovery of costs or to a duration limit under 
273.30  subdivision 1c.  This paragraph does not supersede the 
273.31  restrictions on payment of delinquent taxes in subdivision 1f. 
273.32     Sec. 7.  Minnesota Statutes 1996, section 469.176, 
273.33  subdivision 4c, is amended to read: 
273.34     Subd. 4c.  [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue 
273.35  derived from tax increment from an economic development district 
273.36  may not be used to provide improvements, loans, subsidies, 
274.1   grants, interest rate subsidies, or assistance in any form to 
274.2   developments consisting of buildings and ancillary facilities, 
274.3   if more than 15 percent of the buildings and facilities 
274.4   (determined on the basis of square footage) are used for a 
274.5   purpose other than:  
274.6      (1) the manufacturing or production of tangible personal 
274.7   property, including processing resulting in the change in 
274.8   condition of the property; 
274.9      (2) warehousing, storage, and distribution of tangible 
274.10  personal property, excluding retail sales; 
274.11     (3) research and development related to the activities 
274.12  listed in clause (1) or (2); 
274.13     (4) telemarketing if that activity is the exclusive use of 
274.14  the property; 
274.15     (5) tourism facilities; or 
274.16     (6) qualified border retail facilities; 
274.17     (7) space necessary for and related to the activities 
274.18  listed in clauses (1) to (5) (6).  
274.19     (b) Notwithstanding the provisions of this subdivision, 
274.20  revenue derived from tax increment from an economic development 
274.21  district may be used to pay for site preparation and public 
274.22  improvements, if the following conditions are met: 
274.23     (1) bedrock soils conditions are present in 80 percent or 
274.24  more of the acreage of the district; 
274.25     (2) the estimated cost of physical preparation of the site 
274.26  exceeds the fair market value of the land before completion of 
274.27  the preparation; and 
274.28     (3) revenues from tax increments are expended only for the 
274.29  additional costs of preparing the site because of unstable soils 
274.30  and the bedrock soils condition, the additional cost of 
274.31  installing public improvements because of unstable soils or the 
274.32  bedrock soils condition, and reasonable administrative costs. 
274.33     (c) Notwithstanding the provisions of this subdivision, 
274.34  revenues derived from tax increment from an economic development 
274.35  district may be used to provide improvements, loans, subsidies, 
274.36  grants, interest rate subsidies, or assistance in any form for 
275.1   up to 15,000 square feet of any separately owned commercial 
275.2   facility located within the municipal jurisdiction of a small 
275.3   city, if the revenues derived from increments are spent only to 
275.4   assist the facility directly or for administrative expenses, the 
275.5   assistance is necessary to develop the facility, and all of the 
275.6   increments, except those for administrative expenses, are spent 
275.7   only for activities within the district. 
275.8      (d) For purposes of this subdivision, a qualified border 
275.9   retail facility is a development consisting of a shopping center 
275.10  or one or more retail stores, if the authority finds that all of 
275.11  the following conditions are satisfied: 
275.12     (1) the district is in a small city located within one mile 
275.13  or less of the border of the state; 
275.14     (2) the development is not located in the seven county 
275.15  metropolitan area, as defined in section 473.121, subdivision 2; 
275.16     (3) the development will contain new buildings or will 
275.17  substantially rehabilitate existing buildings that together 
275.18  contain at least 25,000 square feet of retail space; and 
275.19     (4) without the use of tax increment financing for the 
275.20  development, the development or a similar competing development 
275.21  will instead occur in the bordering state or province. 
275.22     (e) A city is a small city for purposes of this subdivision 
275.23  if the city was a small city in the year in which the request 
275.24  for certification was made and applies for the rest of the 
275.25  duration of the district, regardless of whether the city 
275.26  qualifies or ceases to qualify as a small city. 
275.27     Sec. 8.  Minnesota Statutes 1996, section 469.176, 
275.28  subdivision 4j, is amended to read: 
275.29     Subd. 4j.  [REDEVELOPMENT DISTRICTS.] At least 90 percent 
275.30  of the revenues derived from tax increments from a redevelopment 
275.31  district or renewal and renovation district must be used to 
275.32  finance the cost of correcting conditions that allow designation 
275.33  of redevelopment and renewal and renovation districts under 
275.34  section 469.174.  These costs include, but are not limited to, 
275.35  acquiring properties containing structurally substandard 
275.36  buildings or improvements or hazardous substances, pollution, or 
276.1   contaminants, acquiring adjacent parcels necessary to provide a 
276.2   site of sufficient size to permit development, demolition and 
276.3   rehabilitation of structures, clearing of the land, the removal 
276.4   of hazardous substances or remediation necessary to development 
276.5   of the land, and installation of utilities, roads, sidewalks, 
276.6   and parking facilities for the site.  The allocated 
276.7   administrative expenses of the authority, including the cost of 
276.8   preparation of the development action response plan, may be 
276.9   included in the qualifying costs. 
276.10     Sec. 9.  Minnesota Statutes 1996, section 469.176, 
276.11  subdivision 5, is amended to read: 
276.12     Subd. 5.  [REQUIREMENT FOR AGREEMENTS.] No more than 25 
276.13  percent, by acreage, of the property to be acquired within a 
276.14  project which contains a redevelopment district, or ten percent, 
276.15  by acreage, of the property to be acquired within a project 
276.16  which contains a housing or economic development district, as 
276.17  set forth in the tax increment financing plan, shall at any time 
276.18  be owned by an authority as a result of acquisition with the 
276.19  proceeds of bonds issued pursuant to section 469.178 to which 
276.20  tax increment from the property acquired is pledged unless prior 
276.21  to acquisition in excess of the percentages, the authority has 
276.22  concluded an agreement for the development or redevelopment of 
276.23  the property acquired and which provides recourse for the 
276.24  authority should the development or redevelopment not be 
276.25  completed.  This subdivision does not apply to a parcel of a 
276.26  district that is a designated hazardous substance site 
276.27  established under section 469.174, subdivision 16, or part of a 
276.28  hazardous substance subdistrict established under section 
276.29  469.175, subdivision 7.  
276.30     Sec. 10.  Minnesota Statutes 1996, section 469.177, 
276.31  subdivision 1, is amended to read: 
276.32     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
276.33  after adoption of a tax increment financing plan, the auditor of 
276.34  any county in which the district is situated shall, upon request 
276.35  of the authority, certify the original net tax capacity of the 
276.36  tax increment financing district and that portion of the 
277.1   district overlying any subdistrict as described in the tax 
277.2   increment financing plan and shall certify in each year 
277.3   thereafter the amount by which the original net tax capacity has 
277.4   increased or decreased as a result of a change in tax exempt 
277.5   status of property within the district and any subdistrict, 
277.6   reduction or enlargement of the district or changes pursuant to 
277.7   subdivision 4.  
277.8      (b) In the case of a mined underground space development 
277.9   district the county auditor shall certify the original net tax 
277.10  capacity as zero, plus the net tax capacity, if any, previously 
277.11  assigned to any subsurface area included in the mined 
277.12  underground space development district pursuant to section 
277.13  272.04. 
277.14     (c) For districts approved under section 469.175, 
277.15  subdivision 3, or parcels added to existing districts after May 
277.16  1, 1988, if the classification under section 273.13 of property 
277.17  located in a district changes to a classification that has a 
277.18  different assessment ratio, the original net tax capacity of 
277.19  that property must be redetermined at the time when its use is 
277.20  changed as if the property had originally been classified in the 
277.21  same class in which it is classified after its use is changed. 
277.22     (d) The amount to be added to the original net tax capacity 
277.23  of the district as a result of previously tax exempt real 
277.24  property within the district becoming taxable equals the net tax 
277.25  capacity of the real property as most recently assessed pursuant 
277.26  to section 273.18 or, if that assessment was made more than one 
277.27  year prior to the date of title transfer rendering the property 
277.28  taxable, the net tax capacity assessed by the assessor at the 
277.29  time of the transfer.  If substantial taxable improvements were 
277.30  made to a parcel after certification of the district and if the 
277.31  property later becomes tax exempt, in whole or part, as a result 
277.32  of the authority acquiring the property through foreclosure or 
277.33  exercise of remedies under a lease or other revenue agreement or 
277.34  as a result of tax forfeiture, the amount to be added to the 
277.35  original net tax capacity of the district as a result of the 
277.36  property again becoming taxable is the amount of the parcel's 
278.1   value that was included in original net tax capacity when the 
278.2   parcel was first certified.  The amount to be added to the 
278.3   original net tax capacity of the district as a result of 
278.4   enlargements equals the net tax capacity of the added real 
278.5   property as most recently certified by the commissioner of 
278.6   revenue as of the date of modification of the tax increment 
278.7   financing plan pursuant to section 469.175, subdivision 4. 
278.8      (e) For districts approved under section 469.175, 
278.9   subdivision 3, or parcels added to existing districts after May 
278.10  1, 1988, if the net tax capacity of a property increases because 
278.11  the property no longer qualifies under the Minnesota 
278.12  agricultural property tax law, section 273.111; the Minnesota 
278.13  open space property tax law, section 273.112; or the 
278.14  metropolitan agricultural preserves act, chapter 473H, or 
278.15  because platted, unimproved property is improved or three years 
278.16  pass after approval of the plat under section 273.11, 
278.17  subdivision 1, the increase in net tax capacity must be added to 
278.18  the original net tax capacity.  
278.19     (f) Each year the auditor shall also add to the original 
278.20  net tax capacity of each economic development district an amount 
278.21  equal to the original net tax capacity for the preceding year 
278.22  multiplied by the average percentage increase in the market 
278.23  value of all property included in the economic development 
278.24  district during the five years prior to certification of the 
278.25  district.  In computing the average percentage increase in 
278.26  market value, the auditor shall exclude the market value, as 
278.27  estimated by the assessor, that is attributable to new 
278.28  construction; extension of sewer, water, roads, or other public 
278.29  utilities; or platting of the land. 
278.30     (g) The amount to be subtracted from the original net tax 
278.31  capacity of the district as a result of previously taxable real 
278.32  property within the district becoming tax exempt, or a reduction 
278.33  in the geographic area of the district, shall be the amount of 
278.34  original net tax capacity initially attributed to the property 
278.35  becoming tax exempt or being removed from the district.  If the 
278.36  net tax capacity of property located within the tax increment 
279.1   financing district is reduced by reason of a court-ordered 
279.2   abatement, stipulation agreement, voluntary abatement made by 
279.3   the assessor or auditor or by order of the commissioner of 
279.4   revenue, the reduction shall be applied to the original net tax 
279.5   capacity of the district when the property upon which the 
279.6   abatement is made has not been improved since the date of 
279.7   certification of the district and to the captured net tax 
279.8   capacity of the district in each year thereafter when the 
279.9   abatement relates to improvements made after the date of 
279.10  certification.  The county auditor may specify reasonable form 
279.11  and content of the request for certification of the authority 
279.12  and any modification thereof pursuant to section 469.175, 
279.13  subdivision 4.  
279.14     (h) If a parcel of property contained a substandard 
279.15  building that was demolished or removed and if the authority 
279.16  elects to treat the parcel as occupied by a substandard building 
279.17  under section 469.174, subdivision 10, paragraph (b), the 
279.18  auditor shall certify the original net tax capacity of the 
279.19  parcel using the greater of (1) the current net tax capacity of 
279.20  the parcel, or (2) the estimated market value of the parcel for 
279.21  the year in which the building was demolished or removed, but 
279.22  applying the class rates for the current year. 
279.23     Sec. 11.  Minnesota Statutes 1996, section 469.177, 
279.24  subdivision 3, is amended to read: 
279.25     Subd. 3.  [TAX INCREMENT, RELATIONSHIP TO CHAPTERS 276A AND 
279.26  473F.] (a) Unless the governing body elects pursuant to clause 
279.27  (b) the following method of computation shall apply to a 
279.28  district other than an economic development district for which 
279.29  the request for certification was made after June 30, 1997: 
279.30     (1) The original net tax capacity and the current net tax 
279.31  capacity shall be determined before the application of the 
279.32  fiscal disparity provisions of chapter 276A or 473F.  Where the 
279.33  original net tax capacity is equal to or greater than the 
279.34  current net tax capacity, there is no captured net tax capacity 
279.35  and no tax increment determination.  Where the original net tax 
279.36  capacity is less than the current net tax capacity, the 
280.1   difference between the original net tax capacity and the current 
280.2   net tax capacity is the captured net tax capacity.  This amount 
280.3   less any portion thereof which the authority has designated, in 
280.4   its tax increment financing plan, to share with the local taxing 
280.5   districts is the retained captured net tax capacity of the 
280.6   authority.  
280.7      (2) The county auditor shall exclude the retained captured 
280.8   net tax capacity of the authority from the net tax capacity of 
280.9   the local taxing districts in determining local taxing district 
280.10  tax rates.  The local tax rates so determined are to be extended 
280.11  against the retained captured net tax capacity of the authority 
280.12  as well as the net tax capacity of the local taxing districts.  
280.13  The tax generated by the extension of the lesser of (A) the 
280.14  local taxing district tax rates or (B) the original local tax 
280.15  rate to the retained captured net tax capacity of the authority 
280.16  is the tax increment of the authority.  
280.17     (b) The following method of computation applies to any 
280.18  economic development district for which the request for 
280.19  certification was made after June 30, 1997, and to any other 
280.20  district for which the governing body may, by resolution 
280.21  approving the tax increment financing plan pursuant to section 
280.22  469.175, subdivision 3, elect the following method of 
280.23  computation elects: 
280.24     (1) The original net tax capacity shall be determined 
280.25  before the application of the fiscal disparity provisions of 
280.26  chapter 276A or 473F.  The current net tax capacity shall 
280.27  exclude any fiscal disparity commercial-industrial net tax 
280.28  capacity increase between the original year and the current year 
280.29  multiplied by the fiscal disparity ratio determined pursuant to 
280.30  section 276A.06, subdivision 7, or 473F.08, subdivision 6.  
280.31  Where the original net tax capacity is equal to or greater than 
280.32  the current net tax capacity, there is no captured net tax 
280.33  capacity and no tax increment determination.  Where the original 
280.34  net tax capacity is less than the current net tax capacity, the 
280.35  difference between the original net tax capacity and the current 
280.36  net tax capacity is the captured net tax capacity.  This amount 
281.1   less any portion thereof which the authority has designated, in 
281.2   its tax increment financing plan, to share with the local taxing 
281.3   districts is the retained captured net tax capacity of the 
281.4   authority.  
281.5      (2) The county auditor shall exclude the retained captured 
281.6   net tax capacity of the authority from the net tax capacity of 
281.7   the local taxing districts in determining local taxing district 
281.8   tax rates.  The local tax rates so determined are to be extended 
281.9   against the retained captured net tax capacity of the authority 
281.10  as well as the net tax capacity of the local taxing districts.  
281.11  The tax generated by the extension of the lesser of (A) the 
281.12  local taxing district tax rates or (B) the original local tax 
281.13  rate to the retained captured net tax capacity of the authority 
281.14  is the tax increment of the authority.  
281.15     (3) An election by the governing body pursuant to paragraph 
281.16  (b) shall be submitted to the county auditor by the authority at 
281.17  the time of the request for certification pursuant to 
281.18  subdivision 1. 
281.19     (c) The method of computation of tax increment applied to a 
281.20  district pursuant to paragraph (a) or (b) shall remain the same 
281.21  for the duration of the district, except that the governing body 
281.22  may elect to change its election from the method of computation 
281.23  in paragraph (a) to the method in paragraph (b). 
281.24     Sec. 12.  Laws 1995, chapter 264, article 5, section 44, 
281.25  subdivision 4, as amended by Laws 1996, chapter 471, article 7, 
281.26  section 21, is amended to read: 
281.27     Subd. 4.  [AUTHORITY.] For housing replacement projects in 
281.28  the city of Crystal, "authority" means the Crystal economic 
281.29  development authority.  For housing replacement projects in the 
281.30  city of Fridley, "authority" means the housing and redevelopment 
281.31  authority in and for the city of Fridley or a successor in 
281.32  interest.  For housing replacement projects in the city of 
281.33  Minneapolis, "authority" means the Minneapolis community 
281.34  development agency.  For housing replacement projects in the 
281.35  city of St. Paul, "authority" means the St. Paul housing and 
281.36  redevelopment authority.  For housing replacement projects in 
282.1   the city of Duluth, "authority" means the Duluth economic 
282.2   development authority.  For housing replacement projects in the 
282.3   city of Richfield, "authority" is the authority as defined in 
282.4   Minnesota Statutes, section 469.174, subdivision 2, that is 
282.5   designated by the governing body of the city of Richfield.  For 
282.6   housing replacement projects in the city of Columbia Heights, 
282.7   "authority" is the authority as defined in Minnesota Statutes, 
282.8   section 469.174, subdivision 2, that is designated by the 
282.9   governing body of the city of Columbia Heights. 
282.10     Sec. 13.  Laws 1995, chapter 264, article 5, section 45, 
282.11  subdivision 1, as amended by Laws 1996, chapter 471, article 7, 
282.12  section 22, is amended to read: 
282.13     Subdivision 1.  [CREATION OF PROJECTS.] (a) An authority 
282.14  may create a housing replacement project under sections 44 to 
282.15  47, as provided in this section. 
282.16     (b) For the cities of Crystal, Fridley, and Richfield, and 
282.17  Columbia Heights, the authority may designate up to 50 parcels 
282.18  in the city to be included in a housing replacement district.  
282.19  No more than ten parcels may be included in year one of the 
282.20  district, with up to ten additional parcels added to the 
282.21  district in each of the following nine years.  For the cities of 
282.22  Minneapolis, St. Paul, and Duluth, each authority may designate 
282.23  up to 100 parcels in the city to be included in a housing 
282.24  replacement district over the life of the district.  The only 
282.25  parcels that may be included in a district are (1) vacant sites, 
282.26  (2) parcels containing vacant houses, or (3) parcels containing 
282.27  houses that are structurally substandard, as defined in 
282.28  Minnesota Statutes, section 469.174, subdivision 10.  
282.29     (c) The city in which the authority is located must pay at 
282.30  least 25 percent of the housing replacement project costs from 
282.31  its general fund, a property tax levy, or other unrestricted 
282.32  money, not including tax increments. 
282.33     (d) The housing replacement district plan must have as its 
282.34  sole object the acquisition of parcels for the purpose of 
282.35  preparing the site to be sold for market rate housing.  As used 
282.36  in this section, "market rate housing" means housing that has a 
283.1   market value that does not exceed 150 percent of the average 
283.2   market value of single-family housing in that municipality. 
283.3      Sec. 14.  [CITY OF BROOKLYN CENTER; USE OF TAX INCREMENT 
283.4   FINANCING.] 
283.5      Subdivision 1.  [APPLICATION OF TIME LIMIT.] For tax 
283.6   increment financing district number 3, established on December 
283.7   19, 1994, by Brooklyn Center Resolution No. 94-273, Minnesota 
283.8   Statutes, section 469.1763, subdivision 3, applies to the 
283.9   district by permitting a period of ten years for commencement of 
283.10  activities within the district. 
283.11     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
283.12  approval by the governing body of the city of Brooklyn Center 
283.13  and compliance with Minnesota Statutes, section 645.021, 
283.14  subdivision 3. 
283.15     Sec. 15.  [CITY OF BUFFALO LAKE; TAX INCREMENT FINANCING 
283.16  DISTRICT.] 
283.17     Subdivision 1.  [EXTENSION OF TIME FOR 
283.18  CERTIFICATION.] Notwithstanding the provisions of Minnesota 
283.19  Statutes, section 273.1399, subdivision 6, paragraph (b), clause 
283.20  (2), tax increment financing district 1-1 in the city of Buffalo 
283.21  Lake is an exempt district under Minnesota Statutes, section 
283.22  273.1399, paragraph (b), if the facility is certified by the 
283.23  commissioner of agriculture by December 31, 1998. 
283.24     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
283.25  approval by the governing body of the city of Buffalo Lake and 
283.26  compliance with Minnesota Statutes, section 645.021, subdivision 
283.27  3. 
283.28     Sec. 16.  [GAYLORD.] 
283.29     Subdivision 1.  [TIF DISTRICT EXTENSION AND EXPANSION.] 
283.30  Notwithstanding the provisions of Minnesota Statutes, section 
283.31  469.176, subdivision 1c, the city of Gaylord may, by resolution, 
283.32  extend the duration of a tax increment financing district 
283.33  originally certified in 1978.  The city may not extend the 
283.34  duration beyond December 31, 2008. 
283.35     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
283.36  compliance with the requirements of Minnesota Statutes, sections 
284.1   469.1782 and 645.021. 
284.2      Sec. 17.  [DEFINITIONS.] 
284.3      Subdivision 1.  [APPLICABILITY.] As used in sections 17 to 
284.4   19, the terms defined in this section have the meanings given 
284.5   them. 
284.6      Subd. 2.  [AUTHORITY.] "Authority" or "authorities" means 
284.7   the Minneapolis public housing authority and the Minneapolis 
284.8   community development agency if and to the extent that the 
284.9   governing body has delegated to either the powers and duties 
284.10  hereunder pursuant to section 18, subdivision 4, paragraph (b). 
284.11     Subd. 3.  [CAPTURED NET TAX CAPACITY.] "Captured net tax 
284.12  capacity" means the amount by which the current net tax capacity 
284.13  of the housing transition district exceeds the original net tax 
284.14  capacity, including the value of property normally taxable as 
284.15  personal property by reason of its location on or over property 
284.16  owned by a tax exempt entity. 
284.17     Subd. 4.  [CITY.] "City" means the city of Minneapolis, 
284.18  Minnesota. 
284.19     Subd. 5.  [CONSENT DECREE.] "Consent decree" means the 
284.20  order of the United States District Court issued in connection 
284.21  with <i>Hollman et. al. vs. Cisneros et. al.,</i> United States 
284.22  District Court, Civil Case 4-92-712, as may be amended from time 
284.23  to time. 
284.24     Subd. 6.  [COUNTY AUDITOR.] "County auditor" means the 
284.25  county auditor of Hennepin county, Minnesota. 
284.26     Subd. 7.  [GOVERNING BODY.] "Governing body" means the city 
284.27  council of the city. 
284.28     Subd. 8.  [HOUSING TRANSITION DISTRICT; DISTRICT.] "Housing 
284.29  transition district" or "district" means a geographic area 
284.30  designated by the governing body within boundaries commencing at 
284.31  the intersection of Humboldt Avenue North and Plymouth Avenue 
284.32  North, thence East along Plymouth Avenue North to Seventh Street 
284.33  North, thence South along Seventh Street North to Lyndale 
284.34  Avenue, thence South along Lyndale Avenue to Glenwood Avenue 
284.35  North, thence West along Glenwood Avenue North to Girard Avenue 
284.36  North, thence North along Girard Avenue North to Girard Terrace, 
285.1   thence North along Girard Terrace to Olson Memorial Highway, 
285.2   thence West along Olson Memorial Highway to Humboldt Avenue 
285.3   North, thence North on Humboldt Avenue North to the point of 
285.4   beginning. 
285.5      Subd. 9.  [NONTAXABLE PARCEL.] "Nontaxable parcel" means a 
285.6   parcel to be included within the housing transition district 
285.7   which at the time of certification is not subject to property 
285.8   taxation by reason of public ownership. 
285.9      Subd. 10.  [ORIGINAL NET TAX CAPACITY.] (a) With respect to 
285.10  nontaxable parcels within the district, "original net tax 
285.11  capacity" means zero. 
285.12     (b) With respect to taxable parcels within the district, 
285.13  "original net tax capacity" means the net tax capacity of the 
285.14  parcels as certified by the commissioner of revenue for the 
285.15  appropriate assessment year.  For purposes of this subdivision, 
285.16  the appropriate assessment year is the previous assessment year, 
285.17  if a request by the authority for certification has been made to 
285.18  the county auditor by June 30.  If the request for certification 
285.19  is filed after June 30, the appropriate assessment year is the 
285.20  current assessment year. 
285.21     Subd. 11.  [PARCEL.] "Parcel" means a tract or plat of land 
285.22  established prior to the certification of the district as a 
285.23  single unit for purposes of assessment. 
285.24     Subd. 12.  [PREEXISTING DISTRICT.] "Preexisting district" 
285.25  means any tax increment district within which is located a 
285.26  parcel proposed to be included within the housing transition 
285.27  district. 
285.28     Subd. 13.  [TAXABLE PARCEL.] "Taxable parcel" means a 
285.29  parcel to be included within the housing transition district 
285.30  which is subject to property taxation at the time of 
285.31  certification. 
285.32     Sec. 18.  [ESTABLISHMENT OF HOUSING TRANSITION DISTRICT.] 
285.33     Subdivision 1.  [CREATION.] The governing body may 
285.34  establish a housing transition district within the city.  The 
285.35  parcels included within the district need not be contiguous but 
285.36  must all be designated and included at the time the district is 
286.1   initially established.  Parcels must not be added to the 
286.2   district after its initial certification. 
286.3      Subd. 2.  [TAX INCREMENT.] (a) Upon request of the 
286.4   authority, the county auditor shall certify the original net tax 
286.5   capacity of the district and shall certify in each year 
286.6   thereafter the amount by which the original net tax capacity 
286.7   increases as a result of the conditions described in Minnesota 
286.8   Statutes, section 469.177, subdivision 4, or decreases as a 
286.9   result of the conditions described in Minnesota Statutes, 
286.10  section 469.177, subdivision 1, paragraph (g).  No other changes 
286.11  shall be made in original net tax capacity once certified by the 
286.12  county auditor. 
286.13     (b) The provisions of Minnesota Statutes, section 469.177, 
286.14  subdivisions 1a and 3 to 10, apply to the computation of tax 
286.15  increment for the housing transition district created under 
286.16  sections 17 to 19. 
286.17     (c) If an authority request for certification includes 
286.18  nontaxable parcels then within a preexisting district, the 
286.19  county auditor shall remove the parcels from the preexisting 
286.20  district.  If an authority request for certification includes 
286.21  taxable parcels then within a preexisting district, the county 
286.22  auditor shall allocate all taxes derived from the captured net 
286.23  tax capacity attributable thereto to the preexisting district. 
286.24     Subd. 3.  [HOUSING TRANSITION DISTRICT PLAN.] To establish 
286.25  a housing transition district, the governing body shall adopt a 
286.26  housing transition district plan which constitutes a tax 
286.27  increment financing plan, as used in those provisions of 
286.28  Minnesota Statutes, sections 469.174 to 469.1781, made 
286.29  applicable by sections 17 to 20, and contains the following: 
286.30     (1) a general description of the plans for development of 
286.31  the district; 
286.32     (2) a description of the parcels to be included in the 
286.33  district, including such information regarding each as shall 
286.34  establish that the district meets the conditions described in 
286.35  section 17, subdivision 8; 
286.36     (3) the most recent net tax capacity of each parcel 
287.1   included in the district; 
287.2      (4) a budget containing estimated tax increment collections 
287.3   and expenditures as authorized or permitted by sections 17 to 
287.4   19; 
287.5      (5) estimates of the sources of revenue, public and 
287.6   private, other than tax increment to pay estimated or budgeted 
287.7   costs; 
287.8      (6) statements of the alternate estimated impacts of the 
287.9   housing transition district on the net tax capacities of all 
287.10  taxing jurisdictions in which the housing transition district is 
287.11  located in whole or in part.  For purposes of one statement, the 
287.12  statement shall assume that the estimated captured net tax 
287.13  capacity would be available to the taxing jurisdictions without 
287.14  creation of the housing transition district, and for purposes of 
287.15  the second statement, it shall be assumed that none of the 
287.16  estimated captured net tax capacity would be available to the 
287.17  taxing jurisdictions without creation of the housing transition 
287.18  district. 
287.19     Subd. 4.  [PROCEDURE.] (a) The provisions of Minnesota 
287.20  Statutes, section 469.175, subdivisions 3, 5, 6, and 6a, apply 
287.21  to the establishment and operation of the housing transition 
287.22  district created under sections 17 to 19, except the 
287.23  determinations required by Minnesota Statutes, section 469.175, 
287.24  subdivision 3, clauses (1) and (2), are not required. 
287.25     (b) Upon approval of the housing transition district plan, 
287.26  the governing body shall delegate to one or both of the 
287.27  authorities the powers and duties regarding the implementation 
287.28  and administration of the housing transition district it 
287.29  determines appropriate. 
287.30     Sec. 19.  [LIMITATIONS.] 
287.31     Subdivision 1.  [DURATION.] Tax increment generated by the 
287.32  district must cease to be paid to the authority after 20 years 
287.33  from the receipt by the authority of the first tax increment 
287.34  from the district. 
287.35     Subd. 2.  [USE.] (a) All tax increment received by the 
287.36  authority from the district must be used in accordance with the 
288.1   housing transition district plan. 
288.2      (b) Tax increment may be used to pay the costs of: 
288.3      (1) acquiring title to or an ownership interest in any 
288.4   property within the district; 
288.5      (2) relocating owners of or tenants in any property within 
288.6   the district; 
288.7      (3) demolishing all or a part of any structures or other 
288.8   improvements within the district; 
288.9      (4) site preparation, soil correction, and infrastructure 
288.10  improvements within the district; 
288.11     (5) rehabilitating or constructing any housing structures 
288.12  or other improvements within the district; 
288.13     (6) constructing public improvements associated with 
288.14  development within the district; 
288.15     (7) making loans or grants to public or private entities in 
288.16  order to facilitate development within the district; and 
288.17     (8) administering the creation and operation of the 
288.18  district or the implementation of the consent decree, including 
288.19  reimbursement for costs previously incurred or advanced and not 
288.20  reimbursed. 
288.21     (c) The authority may pay the costs authorized by this 
288.22  subdivision, directly, through the issuance and sale of 
288.23  obligations pursuant to Minnesota Statutes, section 469.178, by 
288.24  means of loans or grants to the current or future owners of 
288.25  property within the district, or through the exercise of any 
288.26  authority contained in Minnesota Statutes, sections 469.001 to 
288.27  469.047. 
288.28     (d) Minnesota Statutes, section 469.176, subdivision 4g, 
288.29  applies to the district.  Minnesota Statutes, section 469.176, 
288.30  subdivision 3, applies to the district, except "15" is 
288.31  substituted for "ten" in paragraph (a) of subdivision 3. 
288.32     Sec. 20.  [APPLICABILITY OF OTHER LAWS.] 
288.33     Minnesota Statutes, sections 469.174 to 469.179, apply to 
288.34  the housing transition district or tax increment generated 
288.35  pursuant to sections 17 to 19 only to the extent specified in 
288.36  sections 17 to 19.  The housing transition district is a 
289.1   redevelopment district for purposes of Minnesota Statutes, 
289.2   section 273.1399.  The housing transition district does not have 
289.3   a longer duration than permitted by general law for purposes of 
289.4   Minnesota Statutes, section 469.1782. 
289.5      Sec. 21.  [CITY OF MINNETONKA; HOUSING DEVELOPMENT 
289.6   ACCOUNT.] 
289.7      Subdivision 1.  [DEPOSITS IN ACCOUNT.] The Minnetonka 
289.8   economic development authority may deposit the balance of 
289.9   revenues derived from tax increment from housing tax increment 
289.10  financing district No. 1 in the housing development account of 
289.11  the authority.  These increments may be expended for housing 
289.12  activities in accordance with the tax increment financing plan, 
289.13  if before depositing the increments or making any expenditures 
289.14  for housing activities under this section, the authority and 
289.15  city: 
289.16     (1) elect, by resolution, to decertify housing tax 
289.17  increment financing district No. 1 as of December 31, 1997; and 
289.18     (2) identify in the plan the housing activities that will 
289.19  be assisted by the housing development account.  
289.20     The election to decertify and any necessary plan amendment 
289.21  may be approved before or after the effective date of this 
289.22  section. 
289.23     Subd. 2.  [PERMITTED HOUSING ACTIVITIES.] For the purposes 
289.24  of this section, housing activities:  
289.25     (1) may include rehabilitation, acquisition, demolition, 
289.26  and financing of new or existing single family or multifamily 
289.27  housing and public improvements directly related to such 
289.28  activities, together with other related activities specified in 
289.29  the housing action plan approved by the city or the authority in 
289.30  compliance with Minnesota Statutes, sections 473.25 to 473.254; 
289.31     (2) may be located anywhere within the city without regard 
289.32  to the boundaries of any tax increment financing district or 
289.33  project area; and 
289.34     (3) for rental and owner-occupied housing, must meet the 
289.35  income, rent, or sales price limitations established from time 
289.36  to time by the metropolitan council under Minnesota Statutes, 
290.1   sections 473.25 to 473.254. 
290.2      Subd. 3.  [SEPARATE ACCOUNT REQUIRED.] Tax increment to be 
290.3   expended for housing activities under this section must be 
290.4   segregated by the authority into a special housing development 
290.5   account on its official books and records.  The account may also 
290.6   receive funds from other public and private sources. 
290.7      Subd. 4.  [EFFECTIVE DATE.] This section is effective upon 
290.8   approval by the governing body of the city of Minnetonka and 
290.9   compliance with Minnesota Statutes, section 645.021, subdivision 
290.10  3. 
290.11     Sec. 22.  [EAST GRAND FORKS] 
290.12     Subdivision 1.  [TIF EXTENSION.] The governing body of the 
290.13  city of East Grand Forks may extend the duration of tax 
290.14  increment financing district No. 2 (Gateway East) by up to five 
290.15  additional years.  The district terminates no later than the end 
290.16  of calendar year 2005. 
290.17     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
290.18  compliance by the governing body of the city of East Grand Forks 
290.19  with the provisions of Minnesota Statutes, sections 469.1782, 
290.20  subdivision 2; and 645.021. 
290.21     Sec. 23.  [TOWN OF WHITE; ECONOMIC DEVELOPMENT.] 
290.22     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
290.23  provisions of Minnesota Statutes, section 469.176, subdivision 
290.24  1b, upon approval of the governing body of the town of White by 
290.25  resolution, the duration of tax increment financing districts 
290.26  numbers 1 and 2 of the joint east range economic development 
290.27  authority may be extended by three additional years beyond the 
290.28  limit that otherwise applies under Minnesota Statutes, section 
290.29  469.176, subdivision 1, to the districts.  
290.30     Subd. 2.  [SPECIAL RULES.] (a) Tax increment financing 
290.31  districts numbers 1 and 2 of the joint east range economic 
290.32  development authority are subject to Minnesota Statutes, 
290.33  sections 469.174 to 469.179, except as provided in this 
290.34  subdivision. 
290.35     (b) Minnesota Statutes, sections 273.1399, and 469.1782, 
290.36  subdivision 1, do not apply. 
291.1      (c) The application of Minnesota Statutes, section 
291.2   469.1763, is modified to permit the use of increments from 
291.3   either district to be used to pay any promissory notes issued in 
291.4   connection with either district. 
291.5      Subd. 3.  [EFFECTIVE DATE.] This section is effective upon 
291.6   compliance by the governing bodies of the town of White, the 
291.7   county of St. Louis, and independent school district No. 2711 
291.8   with Minnesota Statutes, sections 469.1782, subdivision 2, and 
291.9   645.021, subdivision 2. 
291.10     Sec. 24.  [TASK FORCE; TIF RECODIFICATION.] 
291.11     (a) A legislative task force is established on tax 
291.12  increment financing and local economic development powers.  The 
291.13  task force consists of 12 members as follows: 
291.14     (1) six members of the house of representatives, at least 
291.15  two of whom are members of the minority caucus, appointed by the 
291.16  speaker; and 
291.17     (2) six members of the senate, at least two of whom are 
291.18  members of the minority caucus, appointed by the committee on 
291.19  committees. 
291.20     (b) The task force shall prepare a bill for the 1998 
291.21  legislative session that recodifies the Tax Increment Financing 
291.22  Act and combines the statutes providing local economic 
291.23  development powers into one law providing a uniform set of 
291.24  powers relative to the use of tax increment financing. 
291.25     (c) In preparing the bill under this section, the task 
291.26  force shall consult with and seek comments from and 
291.27  participation by representatives of the affected local 
291.28  governments. 
291.29     (d) The revisor of statutes and house and senate 
291.30  legislative staff shall staff the task force. 
291.31     (e) This section expires on March 1, 1998. 
291.32     Sec. 25.  [EFFECTIVE DATE.] 
291.33     Sections 1, 3 to 6, 7, and 10, are effective for districts 
291.34  for which the requests for certification are made after June 30, 
291.35  1997. 
291.36     Section 2, clauses (1) and (4), are effective for districts 
292.1   for which the requests for certification were made after July 
292.2   31, 1979, and for payments and investment earnings received 
292.3   after July 1, 1997.  Section 2, clauses (2) and (3), are 
292.4   effective for districts for which the request for certification 
292.5   was made after June 30, 1982, and proceeds from sales and leases 
292.6   of properties purchased by the authority after June 30, 1997, 
292.7   and repayments of advances and loans that were made after June 
292.8   30, 1997.  
292.9      Sections 8 and 9 apply to all tax increment districts, 
292.10  whenever certified, insofar as the underlying law applies to 
292.11  them, and any uses of tax increment expended prior to the date 
292.12  of enactment of this act which are in compliance with the 
292.13  provisions of those sections are deemed valid. 
292.14     Sections 12 and 13 are effective on the day the chief 
292.15  clerical officer of the city of Columbia Heights complies with 
292.16  Minnesota Statutes, sections 645.021, subdivision 3. 
292.17     Sections 17 to 20 are effective the day following final 
292.18  enactment and upon compliance by the governing body with 
292.19  Minnesota Statutes, section 645.021, subdivision 3. 
292.20     Section 24 is effective the day following final enactment. 
292.21                             ARTICLE 11 
292.22                    INTERGOVERNMENTAL RELATIONS 
292.23     Section 1.  [3.986] [DEFINITIONS.] 
292.24     Subdivision 1.  [SCOPE.] The terms used in sections 3.986 
292.25  to 3.989 have the meanings given them in this section. 
292.26     Subd. 2.  [LOCAL FISCAL IMPACT.] (a) "Local fiscal impact" 
292.27  means increased or decreased costs or revenues that a political 
292.28  subdivision would incur as a result of a law enacted after June 
292.29  30, 1997, or rule proposed after June 30, 1998: 
292.30     (1) that mandates a new program, eliminates an existing 
292.31  mandated program, requires an increased level of service of an 
292.32  existing program, or permits a decreased level of service in an 
292.33  existing mandated program; 
292.34     (2) that implements or interprets federal law and, by its 
292.35  implementation or interpretation, increases or decreases program 
292.36  or service levels beyond the level required by the federal law; 
293.1      (3) that implements or interprets a statute or amendment 
293.2   adopted or enacted pursuant to the approval of a statewide 
293.3   ballot measure by the voters and, by its implementation or 
293.4   interpretation, increases or decreases program or service levels 
293.5   beyond the levels required by the ballot measure; 
293.6      (4) that removes an option previously available to 
293.7   political subdivisions, or adds an option previously unavailable 
293.8   to political subdivisions, thus requiring higher program or 
293.9   service levels or permitting lower program or service levels, or 
293.10  prohibits a specific activity and so forces political 
293.11  subdivisions to use a more costly alternative to provide a 
293.12  mandated program or service; 
293.13     (5) that requires that an existing program or service be 
293.14  provided in a shorter time period and thus increases the cost of 
293.15  the program or service, or permits an existing mandated program 
293.16  or service to be provided in a longer time period, thus 
293.17  permitting a decrease in the cost of the program or service; 
293.18     (6) that adds new requirements to an existing optional 
293.19  program or service and thus increases the cost of the program or 
293.20  service because the political subdivisions have no reasonable 
293.21  alternative other than to continue the optional program; 
293.22     (7) that affects local revenue collections by changes in 
293.23  property or sales and use tax exemptions; 
293.24     (8) that requires costs previously incurred at local option 
293.25  that have subsequently been mandated by the state; or 
293.26     (9) that requires payment of a new fee or increases the 
293.27  amount of an existing fee, or permits the elimination or 
293.28  decrease of an existing fee mandated by the state. 
293.29     (b) When state law is intended to achieve compliance with 
293.30  federal law or court orders, state mandates shall be determined 
293.31  as follows: 
293.32     (1) if the federal law or court order is discretionary, the 
293.33  state law is a state mandate; 
293.34     (2) if the state law exceeds what is required by the 
293.35  federal law or court order, only the provisions of the state law 
293.36  that exceed the federal requirements are a state mandate; and 
294.1      (3) if the state law does not exceed what is required by 
294.2   the federal statute or regulation or court order, the state law 
294.3   is not a state mandate. 
294.4      Subd. 3.  [MANDATE.] A "mandate" is a requirement imposed 
294.5   upon a political subdivision in a law by a state agency or by 
294.6   judicial authority that, if not complied with, results in: 
294.7      (1) civil liability; 
294.8      (2) criminal penalty; or 
294.9      (3) administrative sanctions such as reduction or loss of 
294.10  funding. 
294.11     Subd. 4.  [POLITICAL SUBDIVISION.] A "political 
294.12  subdivision" is a county, home rule charter or statutory city, 
294.13  town, or other taxing district or municipal corporation. 
294.14     Subd. 5.  [REQUIRING AN INCREASED LEVEL OF 
294.15  SERVICE.] "Requiring an increased level of service" includes 
294.16  requiring that an existing service be provided in a shorter time.
294.17     Sec. 2.  [3.987] [LOCAL IMPACT TO NOTES FOR STATE-MANDATED 
294.18  ACTIONS.] 
294.19     Subdivision 1.  [LOCAL IMPACT NOTES.] The commissioner of 
294.20  finance shall coordinate the development of a local impact note 
294.21  for any proposed legislation introduced after June 30, 1997, or 
294.22  any rule proposed after June 30, 1998, upon request of the chair 
294.23  or the ranking minority member of either legislative tax 
294.24  committee.  The local impact note must be prepared as provided 
294.25  in section 3.98, subdivision 2, and made available to the public 
294.26  upon request.  If the action is among the exceptions listed in 
294.27  section 3.988, a local impact note need not be requested nor 
294.28  prepared.  The commissioner shall make a reasonable and timely 
294.29  estimate of the local fiscal impact on each type of political 
294.30  subdivision that would result from the proposed legislation.  
294.31  The commissioner of finance may require any political 
294.32  subdivision or the commissioner of an administrative agency of 
294.33  the state to supply in a timely manner any information 
294.34  determined to be necessary to determine local fiscal impact.  
294.35  The political subdivision, its representative association, or 
294.36  commissioner shall convey the requested information to the 
295.1   commissioner of finance with a signed statement to the effect 
295.2   that the information is accurate and complete to the best of its 
295.3   ability.  The political subdivision, its representative 
295.4   association, or commissioner, when requested, shall update its 
295.5   determination of local fiscal impact based on actual cost or 
295.6   revenue figures, improved estimates, or both. 
295.7      Subd. 2.  [MANDATE EXPLANATIONS.] Any bill introduced in 
295.8   the legislature after June 30, 1997, that seeks to impose 
295.9   program or financial mandates on political subdivisions must 
295.10  include an attachment from the author that gives appropriate 
295.11  responses to the following guidelines.  It must state and list: 
295.12     (1) the policy goals that are sought to be attained, the 
295.13  performance standards that are to be imposed, and an explanation 
295.14  why the goals and standards will best be served by requiring 
295.15  compliance by political subdivisions; 
295.16     (2) performance standards that will allow political 
295.17  subdivisions flexibility and innovation of method in achieving 
295.18  those goals; 
295.19     (3) the reasons for each prescribed standard and the 
295.20  process by which each standard governs input such as staffing 
295.21  and other administrative aspects of the program; 
295.22     (4) the sources of additional revenue, in addition to 
295.23  existing funding for similar programs, that are directly linked 
295.24  to imposition of the mandates that will provide adequate and 
295.25  stable funding for their requirements; 
295.26     (5) what input has been obtained to ensure that the 
295.27  implementing agencies have the capacity to carry out the 
295.28  delegated responsibilities; and 
295.29     (6) the reasons why less intrusive measures such as 
295.30  financial incentives or voluntary compliance would not yield the 
295.31  equity, efficiency, or desired level of statewide uniformity in 
295.32  the proposed program. 
295.33     Subd. 3.  [LOCAL INVOLVEMENT; LAWS.] Any bill introduced in 
295.34  the legislature after June 30, 1997, that seeks to impose a 
295.35  program or financial mandate on political subdivisions must 
295.36  include an attachment prepared by the author that describes the 
296.1   efforts put forth, if any, to involve political subdivisions in 
296.2   the creation or development of the proposed mandate. 
296.3      Subd. 4.  [NO MANDATE RESTRICTION.] Except as specifically 
296.4   provided by this article, nothing in this article restricts or 
296.5   eliminates the authority of the state to create or impose 
296.6   programs by law upon political subdivisions. 
296.7      Sec. 3.  [3.988] [EXCEPTIONS TO LOCAL IMPACT NOTES.] 
296.8      Subdivision 1.  [COSTS RESULTING FROM INFLATION.] A local 
296.9   impact note need not be prepared for increases in the cost of 
296.10  providing an existing service if the increases result directly 
296.11  from inflation.  "Resulting directly from inflation" means 
296.12  attributable to maintaining an existing level of service rather 
296.13  than increasing the level of service.  A cost-of-living increase 
296.14  in welfare benefits is an example of a cost resulting directly 
296.15  from inflation.  
296.16     Subd. 2.  [COSTS NOT THE RESULT OF A NEW PROGRAM OR 
296.17  INCREASED SERVICE.] A local impact note need not be prepared for 
296.18  increased local costs that do not result from a new program or 
296.19  an increased level of service. 
296.20     Subd. 3.  [MISCELLANEOUS EXCEPTIONS.] A local impact note 
296.21  or an attachment as provided in section 3.987, subdivision 2, 
296.22  need not be prepared for the cost of a mandated action if the 
296.23  law, including a rulemaking, containing the mandate:  
296.24     (1) accommodates a specific local request; 
296.25     (2) results in no new local government duties; 
296.26     (3) leads to revenue losses from exemptions to taxes; 
296.27     (4) provided only clarifying or conforming, nonsubstantive 
296.28  charges on local government; 
296.29     (5) imposes additional net local costs that are minor (less 
296.30  than $200 for any single local government if the mandate does 
296.31  not apply statewide or less than $3,000,000 if the mandate is 
296.32  statewide) and do not cause a financial burden on local 
296.33  government; 
296.34     (6) is a law or executive order enacted before July 1, 
296.35  1997, or a rule initially implementing a law enacted before July 
296.36  1, 1997; 
297.1      (7) implements something other than a law or executive 
297.2   order, such as a federal, court, or voter-approved mandate; 
297.3      (8) defines a new crime or redefines an existing crime or 
297.4   infraction; 
297.5      (9) results in savings that equal or exceed costs; 
297.6      (10) requires the holding of elections; 
297.7      (11) ensures due process or equal protection; 
297.8      (12) provides for the notification and conduct of public 
297.9   meetings; 
297.10     (13) establishes the procedures for administrative and 
297.11  judicial review of actions taken by political subdivisions; 
297.12     (14) protects the public from malfeasance, misfeasance, or 
297.13  nonfeasance by officials of political subdivisions; 
297.14     (15) relates directly to financial administration, 
297.15  including the levy, assessment, and collection of taxes; 
297.16     (16) relates directly to the preparation and submission of 
297.17  financial audits necessary to the administration of state laws; 
297.18  or 
297.19     (17) requires uniform standards to apply to public and 
297.20  private institutions without differentiation. 
297.21     Sec. 4.  [3.989] [REIMBURSEMENT TO LOCAL POLITICAL 
297.22  SUBDIVISIONS FOR COSTS OF STATE MANDATES.] 
297.23     Subdivision 1.  [DEFINITIONS.] In this section: 
297.24     (1) "Class A state mandates" means those laws under which 
297.25  the state mandates to political subdivisions, their 
297.26  participation, the organizational structure of the program, and 
297.27  the procedural regulations under which the law must be 
297.28  administered; and 
297.29     (2) "Class B state mandates" means those mandates that 
297.30  allow the political subdivisions to opt for administration of a 
297.31  law with program elements mandated beforehand and with an 
297.32  assured revenue level from the state of at least 90 percent of 
297.33  full program and administrative costs.  
297.34     Subd. 2.  [REPORT.] The commissioner of finance shall 
297.35  prepare by September 1, 1998, and by September 1 of each 
297.36  even-numbered year thereafter, a report by political 
298.1   subdivisions of the costs of class A state mandates established 
298.2   after June 30, 1997.  
298.3      The commissioner shall annually include the statewide total 
298.4   of the statement of costs of class A mandates as a notation in 
298.5   the state budget for the next fiscal year.  
298.6      Subd. 3.  [CERTAIN POLITICAL SUBDIVISIONS; REPORT.] The 
298.7   political subdivisions that have opted to administer class B 
298.8   state mandates shall report to the commissioner of finance by 
298.9   September 1, 1998, and by September 1 of each year thereafter, 
298.10  identifying each instance when revenue for a class B state 
298.11  mandate has fallen below 85 percent of the total cost of the 
298.12  program and the political subdivision intends to cease 
298.13  administration of the program.  
298.14     The commissioner shall forward a copy of the report to the 
298.15  chairs of the appropriate funding committees of the senate and 
298.16  the house for proposed inclusion of the shortfall as a line item 
298.17  appropriation in the state budget for the next fiscal year.  
298.18     The political subdivision may exercise its option to cease 
298.19  administration only if the legislature has failed to include the 
298.20  shortfall as an appropriation in the state budget for the next 
298.21  fiscal year.  
298.22     Subd. 4.  [EXEMPTIONS.] Laws and executive orders 
298.23  enumerated in section 3.988 are exempted from this section. 
298.24     Sec. 5.  [14.431] [PERIODIC REVIEW OF ADMINISTRATIVE 
298.25  RULES.] 
298.26     Subdivision 1.  [DEFINITIONS.] The terms defined in section 
298.27  3.986, subdivision 1, apply to this section. 
298.28     Subd. 2.  [SIGNIFICANT FINANCIAL IMPACT.] The commissioner 
298.29  of finance shall review, every five years, rules adopted after 
298.30  June 30, 1998, that have significant financial impact upon 
298.31  political subdivisions.  In this section, "significant financial 
298.32  impact" means requiring local political subdivisions to expand 
298.33  existing services, employ additional personnel, or increase 
298.34  local expenditures.  The commissioner shall determine the costs 
298.35  and benefits of each rulemaking and submit a report to the 
298.36  legislative coordinating commission with its opinion, if any, 
299.1   for the continuation, modification, or elimination of the rules 
299.2   in the rulemaking.  
299.3      Sec. 6.  Minnesota Statutes 1996, section 273.1398, 
299.4   subdivision 8, is amended to read: 
299.5      Subd. 8.  [APPROPRIATION.] (a) An amount sufficient to pay 
299.6   the aids and credits provided under this section for school 
299.7   districts, intermediate school districts, or any group of school 
299.8   districts levying as a single taxing entity, is annually 
299.9   appropriated from the general fund to the commissioner of 
299.10  children, families, and learning.  An amount sufficient to pay 
299.11  the aids and credits provided under this section for counties, 
299.12  cities, towns, and special taxing districts is annually 
299.13  appropriated from the general fund to the commissioner of 
299.14  revenue.  A jurisdiction's aid amount may be increased or 
299.15  decreased based on any prior year adjustments for homestead 
299.16  credit or other property tax credit or aid programs. 
299.17     (b) The commissioner of finance shall bill the commissioner 
299.18  of revenue for the cost of preparation of local impact notes as 
299.19  required by section 3.987 only to the extent to which those 
299.20  costs exceed those costs incurred in fiscal year 1997 and for 
299.21  any other new costs attributable to the local impact note 
299.22  function required by section 3.987, not to exceed $100,000 in 
299.23  fiscal year 1998 and $200,000 in fiscal year 1999 and thereafter.
299.24     The commissioner of revenue shall deduct the amount billed 
299.25  under this paragraph from aid payments to be made to cities and 
299.26  counties under subdivision 2 on a pro rata basis.  The amount 
299.27  deducted under this paragraph is appropriated to the 
299.28  commissioner of finance for the preparation of local impact 
299.29  notes.  
299.30     Sec. 7.  Minnesota Statutes 1996, section 477A.05, is 
299.31  amended to read: 
299.32     477A.05 [LOCAL PERFORMANCE AID.] 
299.33     Subdivision 1.  [QUALIFICATION.] By May 15, 1996, and March 
299.34  31 25 of each year thereafter, the commissioner shall send a 
299.35  local performance aid qualification form to each county and city 
299.36  in the state.  Jurisdictions that are eligible to receive the 
300.1   aid must return the completed form by June 30 in order to 
300.2   receive aid in the following calendar year.  For each 
300.3   determinator specified in subdivision 2, the form shall have a 
300.4   space for the jurisdiction to indicate that it has satisfied the 
300.5   conditions of the determinator.  For counties, the form must be 
300.6   signed by the chair of the county board.  For cities, the form 
300.7   must be signed by the mayor, if the city has a mayor, and a 
300.8   member the chair of the city council.  Applications may be filed 
300.9   jointly by jurisdictions planning to spend the aid jointly. 
300.10     Subd. 2.  [ELIGIBILITY DETERMINATOR.] For calendar year 
300.11  1997 1998 and subsequent calendar years, a jurisdiction is 
300.12  eligible to receive local performance aid if the jurisdiction 
300.13  affirms that it (1) the aid will result in a reduction in 
300.14  property taxes at least equal to the amount of aid received, and 
300.15  (2) the jurisdiction will spend the aid on programs for which it 
300.16  has developed a system of performance measures for the services 
300.17  provided by the jurisdiction, and that these measures are will 
300.18  allow for the measurement of continuous improvement and will be 
300.19  regularly compiled and presented to the county board or the city 
300.20  council at least once a year.  The jurisdiction must identify 
300.21  the program or programs that are to be funded with the aid.  A 
300.22  jurisdiction is also eligible for aid under this determinator if 
300.23  it affirms that it is in the process of developing and 
300.24  implementing a system of performance measures for the program or 
300.25  programs for which the aid is being sought; however, eligibility 
300.26  based upon being in the process of development may not be used 
300.27  for more than two consecutive years aid amounts under this 
300.28  section may not be spent on the program or programs until the 
300.29  performance measurement system has been instituted, unless the 
300.30  aid is being used to establish the performance measurement 
300.31  system. 
300.32     Subd. 3.  [DETERMINATION OF AID AMOUNT.] The commissioner 
300.33  shall sum the populations of all jurisdictions that have met the 
300.34  condition conditions specified in subdivision 2.  The 
300.35  commissioner shall determine a per capita aid amount by dividing 
300.36  the aggregate aid available under subdivision 5 by the sum of 
301.1   the populations for all qualifying jurisdictions, separately for 
301.2   counties and cities.  Each jurisdiction shall then be eligible 
301.3   for aid equal to the jurisdictions's population times the per 
301.4   capita aid amount.  For purposes of this subdivision, population 
301.5   means the most recent population established under section 
301.6   477A.011, subdivision 3, in the year in which the aid is 
301.7   determined. 
301.8      Subd. 4.  [NOTIFICATION AND PAYMENT.] Jurisdictions shall 
301.9   be notified of their aid under this section at the same time as 
301.10  the notification for aid under section 477A.014, subdivision 1.  
301.11  Payments of aid under this section shall be made on the dates 
301.12  prescribed in section 477A.015. 
301.13     Subd. 5.  [APPROPRIATION.] (a) For payments to counties 
301.14  under this section, there is annually appropriated from the 
301.15  general fund to the commissioner of revenue an amount equal to 
301.16  the sum of $558,625 plus the amount by which county aids were 
301.17  reduced under Laws 1996, chapter 471, article 3, section 49, 
301.18  adjusted for inflation as provided under section 477A.03, 
301.19  subdivision 3.  For payments to cities under this section, there 
301.20  is annually appropriated from the general fund to the 
301.21  commissioner of revenue an amount equal to the sum of $441,735 
301.22  plus the amount by which city aids were reduced under Laws 1996, 
301.23  chapter 471, article 3, section 49, adjusted for inflation as 
301.24  provided under section 477A.03, subdivision 3. 
301.25     (b) For aids payable in 1998 under this section, an 
301.26  additional amount of $560,000 for counties and $440,000 for 
301.27  cities is appropriated from the general fund to the commissioner 
301.28  of revenue. 
301.29     Sec. 8.  [REPEALER.] 
301.30     Minnesota Statutes 1996, section 3.982, is repealed. 
301.31     Sec. 9.  [EFFECTIVE DATE.] 
301.32     Section 7 is effective beginning with aids payable in 1998. 
301.33                             ARTICLE 12
301.34                  REGIONAL DEVELOPMENT COMMISSIONS
301.35     Section 1.  Minnesota Statutes 1996, section 462.381, is 
301.36  amended to read: 
302.1      462.381 [TITLE.] 
302.2      Sections 462.381 to 462.398 may be cited as the "regional 
302.3   development act of 1969."  
302.4      Sec. 2.  Minnesota Statutes 1996, section 462.383, is 
302.5   amended to read: 
302.6      462.383 [PURPOSE:  GOVERNMENT COOPERATION AND 
302.7   COORDINATION.] 
302.8      Subdivision 1.  [LEGISLATIVE FINDINGS.] The legislature 
302.9   finds that problems of growth and development in urban and rural 
302.10  regions of the state so transcend the boundary lines of local 
302.11  government units that no single unit can plan for their solution 
302.12  without affecting other units in the region; that various 
302.13  multicounty planning activities conducted under various laws of 
302.14  the United States are presently being conducted in an 
302.15  uncoordinated manner that coordination of multijurisdictional 
302.16  activities is essential to the development and implementation of 
302.17  effective policies and programs; that intergovernmental 
302.18  cooperation on a regional basis is an effective means of pooling 
302.19  the resources of local government to approach common problems; 
302.20  and that the assistance of the state is needed to make the most 
302.21  effective use of local, state, federal, and private programs in 
302.22  serving the citizens of such urban and rural regions.  
302.23     Subd. 2.  [BY CREATING REGIONAL COMMISSION.] It is the 
302.24  purpose of sections 462.381 to 462.398 to facilitate 
302.25  intergovernmental cooperation and to insure the orderly and 
302.26  harmonious coordination of state, federal, and local 
302.27  comprehensive planning and development programs for the solution 
302.28  of economic, social, physical, and governmental problems of the 
302.29  state and its citizens by providing for the creation of regional 
302.30  development commissions authorize the establishment of regional 
302.31  development commissions to work with and on behalf of local 
302.32  units of government to develop plans or implement programs to 
302.33  address economic, social, physical, and governmental concerns of 
302.34  each region of the state.  The commissions may assist with, 
302.35  develop, or implement plans or programs for individual local 
302.36  units of government.  
303.1      Sec. 3.  Minnesota Statutes 1996, section 462.384, 
303.2   subdivision 5, is amended to read: 
303.3      Subd. 5.  [DEVELOPMENT REGION, REGION.] "Development 
303.4   region" or "region" means a geographic region composed of a 
303.5   grouping of counties embodied in an executive order of the 
303.6   governor or as otherwise established by sections 462.381 to 
303.7   462.398.  
303.8      Sec. 4.  Minnesota Statutes 1996, section 462.385, 
303.9   subdivision 1, is amended to read: 
303.10     Subdivision 1.  [BY GOVERNOR'S ORDER; HEARINGS.] 
303.11  Development regions for the state shall be those regions so 
303.12  designated by the governor by executive order.  The order shall 
303.13  provide for public hearings within each proposed region after 
303.14  which any county may request assignment to a region other than 
303.15  that proposed by the order.  If a request for reassignment is 
303.16  unacceptable to the commissioner, the county shall remain in the 
303.17  originally designated region until the next session of the 
303.18  legislature for its review and final assignment. consist of the 
303.19  following counties: 
303.20     Region 1:  Kittson, Roseau, Marshall, Pennington, Red Lake, 
303.21  Polk, and Norman. 
303.22     Region 2:  Lake of the Woods, Beltrami, Mahnomen, 
303.23  Clearwater, and Hubbard. 
303.24     Region 3:  Koochiching, Itasca, St. Louis, Lake, Cook, 
303.25  Aitkin, and Carlton. 
303.26     Region 4:  Clay, Becker, Wilkin, Otter Tail, Grant, 
303.27  Douglas, Traverse, Stevens, and Pope. 
303.28     Region 5:  Cass, Wadena, Crow Wing, Todd, and Morrison. 
303.29     Region 6E:  Kandiyohi, Meeker, Renville, and McLeod. 
303.30     Region 6W:  Big Stone, Swift, Chippewa, Lac Qui Parle, and 
303.31  Yellow Medicine. 
303.32     Region 7E:  Mille Lacs, Kanabec, Pine, Isanti, and Chisago. 
303.33     Region 7W:  Stearns, Benton, Sherburne, and Wright. 
303.34     Region 8:  Lincoln, Lyon, Redwood, Pipestone, Murray, 
303.35  Cottonwood, Rock, Nobles, and Jackson. 
303.36     Region 9:  Sibley, Nicollet, LeSueur, Brown, Blue Earth, 
304.1   Waseca, Watonwan, Martin, and Faribault. 
304.2      Region 10:  Rice, Goodhue, Wabasha, Steele, Dodge, Olmsted, 
304.3   Winona, Freeborn, Mower, Fillmore, and Houston. 
304.4      Region 11:  Anoka, Hennepin, Ramsey, Washington, Carver, 
304.5   Scott, and Dakota. 
304.6      Sec. 5.  Minnesota Statutes 1996, section 462.385, 
304.7   subdivision 3, is amended to read: 
304.8      Subd. 3.  [ONGOING BOUNDARY STUDIES; CHANGES.] The 
304.9   commissioner shall conduct continuous studies and analysis of 
304.10  the boundaries of regions and shall make recommendations for 
304.11  their modification where necessary.  Modification of regional 
304.12  boundaries may be initiated by a county, a commission, or by the 
304.13  commissioner and will be accomplished in accordance with this 
304.14  section as in the case of initial designation requesting 
304.15  assignment to a region other than that within which it is 
304.16  designated.  If a request for reassignment is unacceptable to 
304.17  the commission whose boundaries would be modified, the county 
304.18  requesting reassignment shall remain in the originally 
304.19  designated region until the legislature determines the final 
304.20  assignment. 
304.21     Sec. 6.  Minnesota Statutes 1996, section 462.386, 
304.22  subdivision 1, is amended to read: 
304.23     Subdivision 1.  [EXCEPTION, WORKING AGREEMENTS.] All 
304.24  coordination, planning, and development regions assisted or 
304.25  created by the state of Minnesota or pursuant to federal 
304.26  legislation shall conform to the regions designated by the 
304.27  executive order except where, after review and approval by the 
304.28  commissioner governor or designee, nonconformance is clearly 
304.29  justified.  The commissioner governor or designee shall develop 
304.30  working agreements with state and federal departments and 
304.31  agencies to insure conformance with this subdivision. 
304.32     Sec. 7.  Minnesota Statutes 1996, section 462.387, is 
304.33  amended to read: 
304.34     462.387 [REGIONAL DEVELOPMENT COMMISSIONS; ESTABLISHMENT.] 
304.35     Subdivision 1.  [PETITION.] Any combination of counties or 
304.36  municipalities representing a majority of the population of the 
305.1   region for which a commission is proposed may petition the 
305.2   commissioner governor or designee by formal resolution setting 
305.3   forth its desire to establish, and the need for, the 
305.4   establishment of a regional development commission.  For 
305.5   purposes of this section the population of a county does not 
305.6   include the population of a municipality within the county. 
305.7      Subd. 1a.  [OPERATING COMMISSION.] Regional development 
305.8   commissions shall be those organizations operating pursuant to 
305.9   sections 462.381 to 462.398 which were formed by formal 
305.10  resolution of local units of government and those which may 
305.11  petition by formal resolution to establish a regional 
305.12  development commission. 
305.13     Subd. 3.  [ESTABLISHMENT.] Upon receipt of a petition as 
305.14  provided in subdivision 1 a regional development commission 
305.15  shall be established by the commissioner governor or designee 
305.16  and the notification of all local government units within the 
305.17  region for which the commission is proposed shall be notified.  
305.18  The notification shall be made within 60 days of 
305.19  the commissioner's governor's receipt of a petition under 
305.20  subdivision 1. 
305.21     Subd. 4.  [SELECTION OF MEMBERSHIP.] The commissioner 
305.22  governor or designee shall call together each of the membership 
305.23  classifications except citizen groups, defined in section 
305.24  462.388, within 60 days of the establishment of a regional 
305.25  development commission for the purpose of selecting the 
305.26  commission membership. 
305.27     Subd. 5.  [NAME OF COMMISSION.] The name of the 
305.28  organization shall be determined by formal resolution of the 
305.29  commission. 
305.30     Sec. 8.  Minnesota Statutes 1996, section 462.388, is 
305.31  amended to read: 
305.32     462.388 [COMMISSION MEMBERSHIP.] 
305.33     Subdivision 1.  [REPRESENTATION OF VARIOUS MEMBERS.] A 
305.34  commission shall consist of the following members: 
305.35     (1) one member from each county board of every county in 
305.36  the development region; 
306.1      (2) one additional county board member from each county of 
306.2   over 100,000 population; 
306.3      (3) the town clerk, town treasurer, or one member of a town 
306.4   board of supervisors from each county containing organized 
306.5   towns; 
306.6      (4) one additional member selected by the county board of 
306.7   any county containing no townships; 
306.8      (5) one mayor or council member from a municipality of 
306.9   under 10,000 population from each county, selected by the mayors 
306.10  of all such municipalities in the county; 
306.11     (6) one mayor or council member from each municipality of 
306.12  over 10,000 in each county; 
306.13     (7) two school board members elected by a majority of the 
306.14  chairs of school boards in the development region; 
306.15     (8) one member from each council of governments; 
306.16     (9) one member appointed by each native American tribal 
306.17  council located in each region; and 
306.18     (10) citizens representing public interests within the 
306.19  region including members of minority groups to be selected after 
306.20  adoption of the bylaws of the commission; and 
306.21     (10) the chair, who shall be selected by the commission. 
306.22     Subd. 2.  [TERMS, SELECTION METHOD.] The terms of office 
306.23  and method of selection of members other than the chair shall be 
306.24  provided in the bylaws of the commission which shall not be 
306.25  inconsistent with the provisions of subdivision 1.  The 
306.26  commission shall adopt rules setting forth its procedures. 
306.27     Subd. 5.  [PER DIEM; BOARD MEMBERS.] Members of the 
306.28  regional commission may receive a per diem of not over $35 $50, 
306.29  the amount to be determined by the commission, and shall be 
306.30  reimbursed for their reasonable expenses as determined by the 
306.31  commission.  The commission shall may provide for the election 
306.32  of a board of directors, who need not be commission members, and 
306.33  provide, at its discretion, for a per diem of not over $35 $50 a 
306.34  day for meetings of the board and expenses.  A member of the 
306.35  board of directors who is a member of the commission shall 
306.36  receive only the per diem payable to board members when meetings 
307.1   of the board of directors and the commission are held on the 
307.2   same day. 
307.3      Sec. 9.  Minnesota Statutes 1996, section 462.389, 
307.4   subdivision 1, is amended to read: 
307.5      Subdivision 1.  [CHAIR.] The chair of the commission shall 
307.6   have been a resident of the region for at least one year and 
307.7   shall be a person experienced in the field of government 
307.8   affairs.  The chair shall preside at the meetings of the 
307.9   commission and board of directors, appoint all employees 
307.10  thereof, subject to the approval of the commission, and be 
307.11  responsible for carrying out all policy decisions of the 
307.12  commission.  The chair's expense allowances shall be fixed by 
307.13  the commission.  The term of the first chair shall be one year, 
307.14  and the chair shall serve until a successor is selected and 
307.15  qualifies.  At the expiration of the term of the first chair, 
307.16  the chair shall be elected from the membership of the commission 
307.17  according to procedures established in its bylaws.  
307.18     Sec. 10.  Minnesota Statutes 1996, section 462.389, 
307.19  subdivision 3, is amended to read: 
307.20     Subd. 3.  [EXECUTIVE DIRECTOR.] Upon the recommendation of 
307.21  the chair, The commission may appoint an executive director to 
307.22  serve as the chief administrative officer.  The director may be 
307.23  chosen from among the citizens of the nation at large, and shall 
307.24  be selected on the basis of training and experience in the field 
307.25  of government affairs. 
307.26     Sec. 11.  Minnesota Statutes 1996, section 462.389, 
307.27  subdivision 4, is amended to read: 
307.28     Subd. 4.  [EMPLOYEES.] The commission may prepare, in 
307.29  consultation with the state commissioner of employee relations, 
307.30  and may adopt a merit personnel system for its officers and 
307.31  employees including terms and conditions for the employment, the 
307.32  fixing of compensation, their classification, benefits, and the 
307.33  filing of performance and fidelity bonds, and such policies of 
307.34  insurance as it may deem advisable, the premiums for which, 
307.35  however, shall be paid for by the commission.  Officers and 
307.36  employees are public employees within the meaning of chapter 
308.1   353.  The commission shall make the employer's contributions to 
308.2   pension funds of its employees.  
308.3      Sec. 12.  Minnesota Statutes 1996, section 462.39, 
308.4   subdivision 2, is amended to read: 
308.5      Subd. 2.  [FEDERAL REGIONAL PROGRAMS.] The commission is 
308.6   the authorized agency to receive state and federal grants public 
308.7   and private funds for regional purposes from the following 
308.8   programs: 
308.9      (1) Section 403 of the Public Works and Economic 
308.10  Development Act of 1965 (economic development districts); 
308.11     (2) Section 701 of the Housing Act of 1954, as amended 
308.12  (multicounty comprehensive planning); 
308.13     (3) Omnibus Crime Control Act of 1968; 
308.14     and for the following to the extent feasible as determined 
308.15  by the governor: 
308.16     (a) Economic Opportunity Act of 1964; 
308.17     (b) Comprehensive Health Planning Act of 1965; 
308.18     (c) Federal regional manpower planning programs; 
308.19     (d) Resource, conservation, and development districts; or 
308.20     (e) Any state and federal programs providing funds 
308.21  for including, but not limited to program administration, 
308.22  multicounty planning, coordination, and development 
308.23  purposes. The director shall, where consistent with state and 
308.24  federal statutes and regulations, review applications for all 
308.25  state and federal regional planning and development grants to a 
308.26  commission. 
308.27     Sec. 13.  Minnesota Statutes 1996, section 462.39, 
308.28  subdivision 3, is amended to read: 
308.29     Subd. 3.  [PLANNING.] The commission shall may prepare and 
308.30  adopt submit for adoption, after appropriate study and such 
308.31  public hearings as may be necessary, a comprehensive development 
308.32  plan plans for local units of government, individually or 
308.33  collectively, within the region.  The plan shall Plans may 
308.34  consist of a compilation of policy statements, goals, standards, 
308.35  programs, and maps prescribing guides for an orderly and 
308.36  economic development, public and private, of the region.  The 
309.1   comprehensive development plan within the jurisdiction subject 
309.2   to the plan.  The plans shall recognize and incorporate planning 
309.3   principles which encompass physical, social, or economic needs 
309.4   of the region, and those future developments which will have an 
309.5   impact on the entire region including but not limited to such 
309.6   matters as land use, parks and open space land needs, access to 
309.7   direct sunlight for solar energy systems, the necessity for and 
309.8   location of airports, highways, transit facilities, public 
309.9   hospitals, libraries, schools, public and private, housing, and 
309.10  other public buildings.  In preparing the development plan plans 
309.11  the commission shall use to the maximum extent feasible the 
309.12  resources studies and data available from other planning 
309.13  agencies within the region, including counties, municipalities, 
309.14  special districts, and subregional planning agencies, and it 
309.15  shall utilize the resources of the director state agencies to 
309.16  the same purpose.  No development plan or portion thereof for 
309.17  the region shall be adopted by the commission until it has been 
309.18  submitted to the director for review and comment and a period of 
309.19  60 days has elapsed after such submission.  When a development 
309.20  plan has been adopted, the commission shall distribute it to all 
309.21  local government units within the region. 
309.22     Sec. 14.  Minnesota Statutes 1996, section 462.391, is 
309.23  amended by adding a subdivision to read: 
309.24     Subd. 1a.  [REVIEW OF LOCAL PLANS.] The commission may 
309.25  review and provide comments and recommendations on local plans 
309.26  or development proposals which in the judgment of the commission 
309.27  have a substantial effect on regional development.  Local units 
309.28  of government may request that a regional commission review, 
309.29  comment, and provide advisory recommendations on local plans or 
309.30  development proposals. 
309.31     Sec. 15.  Minnesota Statutes 1996, section 462.391, is 
309.32  amended by adding a subdivision to read: 
309.33     Subd. 2a.  [STAFF SERVICES.] To avoid duplication of staff 
309.34  for various regional bodies assisted by federal or state 
309.35  government, the commission may provide basic administrative, 
309.36  research, and planning services for all regional planning and 
310.1   development bodies.  The commissions may contract to obtain or 
310.2   perform services with state agencies, for-profit or nonprofit 
310.3   entities, subdistricts organized as the result of federal or 
310.4   state programs, councils of governments organized under section 
310.5   471.59, or any other law, and with local governments. 
310.6      Sec. 16.  Minnesota Statutes 1996, section 462.391, is 
310.7   amended by adding a subdivision to read: 
310.8      Subd. 3a.  [DATA AND INFORMATION.] The commission may be 
310.9   designated as a regional data center providing data collection, 
310.10  storage, analysis, and dissemination to be used by it and other 
310.11  governmental and private users, and may accept gifts or grants 
310.12  to provide this service. 
310.13     Sec. 17.  Minnesota Statutes 1996, section 462.391, 
310.14  subdivision 5, is amended to read: 
310.15     Subd. 5.  [URBAN AND RURAL RESEARCH.] Where studies have 
310.16  not been otherwise authorized by law the commission may study 
310.17  the feasibility of programs relating including, but not limited 
310.18  to, water, land use, economic development, minority problems 
310.19  housing, demographics, cultural issues, governmental problems 
310.20  issues, human and services, natural resources, 
310.21  communication, technology, transportation, and other subjects of 
310.22  concern to the citizens of the region, may institute 
310.23  demonstration projects in connection therewith, and may enter 
310.24  into contracts or accept gifts or grants for such purposes as 
310.25  otherwise authorized in sections 462.381 to 462.398.  
310.26     Sec. 18.  Minnesota Statutes 1996, section 462.391, is 
310.27  amended by adding a subdivision to read: 
310.28     Subd. 11.  [PROGRAM OPERATION.] Upon approval of the 
310.29  appropriate authority from local, state, and federal government 
310.30  units, commissions may be regarded as general purpose units of 
310.31  government to receive funds and operate programs on a regional 
310.32  or subregional basis to provide economies of scale or to enhance 
310.33  program efficiency. 
310.34     Sec. 19.  Minnesota Statutes 1996, section 462.391, is 
310.35  amended by adding a subdivision to read: 
310.36     Subd. 12.  [PROPERTY OWNERSHIP.] A commission may buy, 
311.1   lease, acquire, own, hold, improve, and use real or personal 
311.2   property or an interest in property, wherever located in the 
311.3   state for purposes of housing the administrative office of the 
311.4   regional commission. 
311.5      Sec. 20.  Minnesota Statutes 1996, section 462.391, is 
311.6   amended by adding a subdivision to read: 
311.7      Subd. 13.  [PROPERTY DISPOSITION.] A commission may sell, 
311.8   convey, mortgage, create a security interest in, lease, 
311.9   exchange, transfer, or dispose of all or part of its real or 
311.10  personal property or an interest in property, wherever located 
311.11  in the state. 
311.12     Sec. 21.  Minnesota Statutes 1996, section 462.393, is 
311.13  amended to read: 
311.14     462.393 [ANNUAL REPORT TO UNITS, PUBLIC, GOVERNOR, 
311.15  LEGISLATURE.] 
311.16     Subdivision 1.  [CONTENTS.] On or before August September 1 
311.17  of each year, the commission shall prepare a report for the 
311.18  governmental units, the public within the region, the 
311.19  legislature and the governor.  The report shall include: 
311.20     (1) A statement of the commission's receipts and 
311.21  expenditures by category since the preceding report; 
311.22     (2) A detailed budget for the year in which the report is 
311.23  filed and a tentative budget for the following year including an 
311.24  outline of its program for such period; 
311.25     (3) A description of any comprehensive plan adopted in 
311.26  whole or in part for the region; 
311.27     (4) Summaries of any studies and the recommendations 
311.28  resulting therefrom made for the region; 
311.29     (5) A listing of all applications for federal grants or 
311.30  loans made by governmental units within the region together with 
311.31  the action taken by the commission in relation thereto summary 
311.32  of significant accomplishments; 
311.33     (6) A listing of plans of local governmental units 
311.34  submitted to the region, and actions taken in relationship 
311.35  thereto; 
311.36     (7) Recommendations of the commission regarding federal and 
312.1   state programs, cooperation, funding, and legislative needs; and 
312.2      (8) A summary of any audit report made during the previous 
312.3   year by the state auditor relative to the commission.  
312.4      Subd. 2.  [ASSESSMENT EVERY 5 YEARS.] In 1981 2001 and 
312.5   every five years thereafter the commission shall review its 
312.6   activities and issue a report assessing its performance in 
312.7   fulfilling the purposes of the regional development act of 
312.8   1969.  The report shall state address whether the existence of 
312.9   the commission is in the public welfare and interest.  The 
312.10  report shall be included in the report required by subdivision 1.
312.11     Sec. 22.  Minnesota Statutes 1996, section 462.394, is 
312.12  amended to read: 
312.13     462.394 [CITIZEN PARTICIPATION AND ADVISORY COMMITTEES.] 
312.14     The commission may appoint advisory committees of 
312.15  interested and affected citizens to assist in the review of 
312.16  plans, programs, and other matters referred for review by the 
312.17  commission.  Whenever a special advisory committee is required 
312.18  by any federal or state regional program the commission chair 
312.19  shall, as far as practical, appoint such committees as advisory 
312.20  groups to the commission.  Members of the advisory committees 
312.21  shall serve without compensation but shall be reimbursed for 
312.22  their reasonable expenses as determined by the commission.  
312.23     Sec. 23.  Minnesota Statutes 1996, section 462.396, 
312.24  subdivision 1, is amended to read: 
312.25     Subdivision 1.  [GRANTMAKING, TAX LEVY.] The director 
312.26  governor and the legislature shall determine the amount of state 
312.27  assistance and designate an agency to make grants to any 
312.28  commission created under sections 462.381 to 462.398 from 
312.29  appropriations made available for those purposes, provided a 
312.30  work program is submitted acceptable to the director.  Any 
312.31  regional commission may levy a tax on all taxable property in 
312.32  the region to provide money for the purposes of sections 462.381 
312.33  to 462.398. 
312.34     Sec. 24.  Minnesota Statutes 1996, section 462.396, 
312.35  subdivision 3, is amended to read: 
312.36     Subd. 3.  [GIFTS, GRANTS, LOANS.] The commission is a 
313.1   special purpose unit of government which may accept gifts, apply 
313.2   for and use grants or loans of money or other property from the 
313.3   United States, the state, or any person, local or governmental 
313.4   body for any commission purpose and may enter into agreements 
313.5   required in connection therewith and may hold, use, and dispose 
313.6   of such moneys or property in accordance with the terms of the 
313.7   gift, grant, loan, agreement, or contract relating thereto.  
313.8      For purposes of receipt of state or federal funds for 
313.9   community and economic development, regional commissions shall 
313.10  be considered general purpose units of government. 
313.11     Sec. 25.  Minnesota Statutes 1996, section 462.396, 
313.12  subdivision 4, is amended to read: 
313.13     Subd. 4.  [ACCOUNTING; CHECKS; ANNUAL AUDIT.] The 
313.14  commission shall keep an accurate account of its receipts and 
313.15  disbursement.  Disbursements of funds of the commission shall be 
313.16  made by check signed by the chair or vice-chair or secretary of 
313.17  the commission and countersigned by the executive director or an 
313.18  authorized deputy thereof after such auditing and approval of 
313.19  the expenditure as may be provided by rules of the commission.  
313.20  The state auditor shall may audit the books and accounts of the 
313.21  commission once each year, or as often as funds and personnel of 
313.22  the state auditor permit.  The commission shall pay to the state 
313.23  the total cost and expenses of such examination, including the 
313.24  salaries paid to the auditors while actually engaged in making 
313.25  such examination.  The general fund shall be credited with all 
313.26  collections made for any such examination.  In lieu of an annual 
313.27  audit by the state auditor, the commission may shall contract 
313.28  with a certified public accountant for the annual audit of the 
313.29  books and accounts of the commission.  If a certified public 
313.30  accountant performs the audit, the commission shall send a copy 
313.31  of the audit to the state auditor. 
313.32     Sec. 26.  Minnesota Statutes 1996, section 462.398, is 
313.33  amended to read: 
313.34     462.398 [TERMINATION OF COMMISSION.] 
313.35     Subdivision 1.  [PETITION; POPULATION.] Any combination of 
313.36  counties or municipalities representing a majority of the 
314.1   population of the region for which a commission exists may 
314.2   petition the director governor by formal resolution stating that 
314.3   the existence of the commission is no longer in the public 
314.4   welfare and interest and is not needed to accomplish the 
314.5   purposes of the regional development act of 1969.  For purposes 
314.6   of this section the population of a county does not include the 
314.7   population of a municipality within the county.  Any formal 
314.8   resolution adopted by the governing body of a county or 
314.9   municipality for the termination of a commission shall be 
314.10  effective for a period of one year for the purpose of 
314.11  determining the requisite population of the region needed to 
314.12  petition the director governor. 
314.13     Subd. 2.  [HEARINGS; RECOMMENDATION, TERMINATION DATE.] 
314.14  Within 35 days of the receipt filing of the petition, the 
314.15  director governor or designee shall fix a time and place within 
314.16  the region for a hearing.  The director shall give notice of the 
314.17  hearing by publication once each week for two successive weeks 
314.18  before the date of the hearing in a legal newspaper in each of 
314.19  the counties which the commission represents.  The hearing shall 
314.20  be conducted by members of the commission.  If the commission 
314.21  determines that the existence of the commission is no longer in 
314.22  the public welfare and interest and that it is not needed to 
314.23  accomplish the purposes of the regional development act of 1969, 
314.24  the commission shall recommend to the director governor or 
314.25  designee that the director governor or designee terminate the 
314.26  commission.  Within 60 days after receipt of the recommendation, 
314.27  the director governor or designee shall terminate the commission 
314.28  by giving notice of the termination to all government units 
314.29  within the region for which the commission was established.  
314.30  Unless otherwise provided by this subdivision, the hearing shall 
314.31  be in accordance with sections 14.001 to 14.69. 
314.32     Subd. 3.  [30 MONTHS BETWEEN PETITIONS.] The 
314.33  director governor or designee shall not accept a petition for 
314.34  termination more than once in 30 months for each regional 
314.35  development commission. 
314.36     Sec. 27.  [REPEALER.] 
315.1      Minnesota Statutes 1996, sections 462.384, subdivision 7; 
315.2   462.385, subdivision 2; 462.389, subdivision 5; 462.391, 
315.3   subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; and 462.392, are 
315.4   repealed. 
315.5                              ARTICLE 13
315.6                        WASTE MANAGEMENT TAXES
315.7      Section 1.  Minnesota Statutes 1996, section 270B.01, 
315.8   subdivision 8, is amended to read: 
315.9      Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
315.10  chapter only, "Minnesota tax laws" means the taxes administered 
315.11  by or paid to the commissioner under chapters 289A (except taxes 
315.12  imposed under sections 298.01, 298.015, and 298.24), 290, 290A, 
315.13  291, and 297A, and 297F and sections 295.50 to 295.59, or any 
315.14  similar Indian tribal tax administered by the commissioner 
315.15  pursuant to any tax agreement between the state and the Indian 
315.16  tribal government, and includes any laws for the assessment, 
315.17  collection, and enforcement of those taxes.  
315.18     Sec. 2.  Minnesota Statutes 1996, section 297A.01, 
315.19  subdivision 3, is amended to read: 
315.20     Subd. 3.  A "sale" and a "purchase" includes, but is not 
315.21  limited to, each of the following transactions: 
315.22     (a) Any transfer of title or possession, or both, of 
315.23  tangible personal property, whether absolutely or conditionally, 
315.24  and the leasing of or the granting of a license to use or 
315.25  consume tangible personal property other than manufactured homes 
315.26  used for residential purposes for a continuous period of 30 days 
315.27  or more, for a consideration in money or by exchange or barter; 
315.28     (b) The production, fabrication, printing, or processing of 
315.29  tangible personal property for a consideration for consumers who 
315.30  furnish either directly or indirectly the materials used in the 
315.31  production, fabrication, printing, or processing; 
315.32     (c) The furnishing, preparing, or serving for a 
315.33  consideration of food, meals, or drinks.  "Sale" does not 
315.34  include: 
315.35     (1) meals or drinks served to patients, inmates, or persons 
315.36  residing at hospitals, sanitariums, nursing homes, senior 
316.1   citizens homes, and correctional, detention, and detoxification 
316.2   facilities; 
316.3      (2) meals or drinks purchased for and served exclusively to 
316.4   individuals who are 60 years of age or over and their spouses or 
316.5   to the handicapped and their spouses by governmental agencies, 
316.6   nonprofit organizations, agencies, or churches or pursuant to 
316.7   any program funded in whole or part through 42 USCA sections 
316.8   3001 through 3045, wherever delivered, prepared or served; or 
316.9      (3) meals and lunches served at public and private schools, 
316.10  universities, or colleges. 
316.11  Notwithstanding section 297A.25, subdivision 2, taxable food or 
316.12  meals include, but are not limited to, the following:  
316.13     (i) heated food or drinks; 
316.14     (ii) sandwiches prepared by the retailer; 
316.15     (iii) single sales of prepackaged ice cream or ice milk 
316.16  novelties prepared by the retailer; 
316.17     (iv) hand-prepared or dispensed ice cream or ice milk 
316.18  products including cones, sundaes, and snow cones; 
316.19     (v) soft drinks and other beverages prepared or served by 
316.20  the retailer; 
316.21     (vi) gum; 
316.22     (vii) ice; 
316.23     (viii) all food sold in vending machines; 
316.24     (ix) party trays prepared by the retailers; and 
316.25     (x) all meals and single servings of packaged snack food, 
316.26  single cans or bottles of pop, sold in restaurants and bars; 
316.27     (d) The granting of the privilege of admission to places of 
316.28  amusement, recreational areas, or athletic events, except a 
316.29  world championship football game sponsored by the national 
316.30  football league, and the privilege of having access to and the 
316.31  use of amusement devices, tanning facilities, reducing salons, 
316.32  steam baths, turkish baths, health clubs, and spas or athletic 
316.33  facilities; 
316.34     (e) The furnishing for a consideration of lodging and 
316.35  related services by a hotel, rooming house, tourist court, motel 
316.36  or trailer camp and of the granting of any similar license to 
317.1   use real property other than the renting or leasing thereof for 
317.2   a continuous period of 30 days or more; 
317.3      (f) The furnishing for a consideration of electricity, gas, 
317.4   water, or steam for use or consumption within this state, or 
317.5   local exchange telephone service, intrastate toll service, and 
317.6   interstate toll service, if that service originates from and is 
317.7   charged to a telephone located in this state.  Telephone service 
317.8   includes paging services and private communication service, as 
317.9   defined in United States Code, title 26, section 4252(d), except 
317.10  for private communication service purchased by an agent acting 
317.11  on behalf of the state lottery.  The furnishing for a 
317.12  consideration of access to telephone services by a hotel to its 
317.13  guests is a sale under this clause.  Sales by municipal 
317.14  corporations in a proprietary capacity are included in the 
317.15  provisions of this clause.  The furnishing of water and sewer 
317.16  services for residential use shall not be considered a sale.  
317.17  The sale of natural gas to be used as a fuel in vehicles 
317.18  propelled by natural gas shall not be considered a sale for the 
317.19  purposes of this section; 
317.20     (g) The furnishing for a consideration of cable television 
317.21  services, including charges for basic service, charges for 
317.22  premium service, and any other charges for any other 
317.23  pay-per-view, monthly, or similar television services; 
317.24     (h) The furnishing for a consideration of parking services, 
317.25  whether on a contractual, hourly, or other periodic basis, 
317.26  except for parking at a meter; 
317.27     (i) The furnishing for a consideration of services listed 
317.28  in this paragraph: 
317.29     (i) laundry and dry cleaning services including cleaning, 
317.30  pressing, repairing, altering, and storing clothes, linen 
317.31  services and supply, cleaning and blocking hats, and carpet, 
317.32  drapery, upholstery, and industrial cleaning.  Laundry and dry 
317.33  cleaning services do not include services provided by coin 
317.34  operated facilities operated by the customer; 
317.35     (ii) motor vehicle washing, waxing, and cleaning services, 
317.36  including services provided by coin-operated facilities operated 
318.1   by the customer, and rustproofing, undercoating, and towing of 
318.2   motor vehicles; 
318.3      (iii) building and residential cleaning, maintenance, and 
318.4   disinfecting and exterminating services; 
318.5      (iv) detective services, security services, burglar, fire 
318.6   alarm, and armored car services not including services performed 
318.7   within the jurisdiction they serve by off-duty licensed peace 
318.8   officers as defined in section 626.84, subdivision 1; 
318.9      (v) pet grooming services; 
318.10     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
318.11  services; garden planting and maintenance; tree, bush, and shrub 
318.12  pruning, bracing, spraying, and surgery; tree, bush, shrub and 
318.13  stump removal; and tree trimming for public utility lines.  
318.14  Services performed under a construction contract for the 
318.15  installation of shrubbery, plants, sod, trees, bushes, and 
318.16  similar items are not taxable; 
318.17     (vii) mixed municipal solid waste management services as 
318.18  described in section 297A.45; 
318.19     (viii) massages, except when provided by a licensed health 
318.20  care facility or professional or upon written referral from a 
318.21  licensed health care facility or professional for treatment of 
318.22  illness, injury, or disease; and 
318.23     (ix) (viii) the furnishing for consideration of lodging, 
318.24  board and care services for animals in kennels and other similar 
318.25  arrangements, but excluding veterinary and horse boarding 
318.26  services. 
318.27  The services listed in this paragraph are taxable under section 
318.28  297A.02 if the service is performed wholly within Minnesota or 
318.29  if the service is performed partly within and partly without 
318.30  Minnesota and the greater proportion of the service is performed 
318.31  in Minnesota, based on the cost of performance.  In applying the 
318.32  provisions of this chapter, the terms "tangible personal 
318.33  property" and "sales at retail" include taxable services and the 
318.34  provision of taxable services, unless specifically provided 
318.35  otherwise.  Services performed by an employee for an employer 
318.36  are not taxable under this paragraph.  Services performed by a 
319.1   partnership or association for another partnership or 
319.2   association are not taxable under this paragraph if one of the 
319.3   entities owns or controls more than 80 percent of the voting 
319.4   power of the equity interest in the other entity.  Services 
319.5   performed between members of an affiliated group of corporations 
319.6   are not taxable.  For purposes of this section, "affiliated 
319.7   group of corporations" includes those entities that would be 
319.8   classified as a member of an affiliated group under United 
319.9   States Code, title 26, section 1504, and who are eligible to 
319.10  file a consolidated tax return for federal income tax purposes; 
319.11     (j) A "sale" and a "purchase" includes the transfer of 
319.12  computer software, meaning information and directions that 
319.13  dictate the function performed by data processing equipment.  A 
319.14  "sale" and a "purchase" does not include the design, 
319.15  development, writing, translation, fabrication, lease, or 
319.16  transfer for a consideration of title or possession of a custom 
319.17  computer program; and 
319.18     (k) The granting of membership in a club, association, or 
319.19  other organization if: 
319.20     (1) the club, association, or other organization makes 
319.21  available for the use of its members sports and athletic 
319.22  facilities (without regard to whether a separate charge is 
319.23  assessed for use of the facilities); and 
319.24     (2) use of the sports and athletic facilities is not made 
319.25  available to the general public on the same basis as it is made 
319.26  available to members.  
319.27  Granting of membership includes both one-time initiation fees 
319.28  and periodic membership dues.  Sports and athletic facilities 
319.29  include golf courses, tennis, racquetball, handball and squash 
319.30  courts, basketball and volleyball facilities, running tracks, 
319.31  exercise equipment, swimming pools, and other similar athletic 
319.32  or sports facilities.  The provisions of this paragraph do not 
319.33  apply to camps or other recreation facilities owned and operated 
319.34  by an exempt organization under section 501(c)(3) of the 
319.35  Internal Revenue Code of 1986, as amended through December 31, 
319.36  1992, for educational and social activities for young people 
320.1   primarily age 18 and under.  
320.2      Sec. 3.  Minnesota Statutes 1996, section 297A.25, 
320.3   subdivision 11, is amended to read: 
320.4      Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
320.5   all sales, including sales in which title is retained by a 
320.6   seller or a vendor or is assigned to a third party under an 
320.7   installment sale or lease purchase agreement under section 
320.8   465.71, of tangible personal property to, and all storage, use 
320.9   or consumption of such property by, the United States and its 
320.10  agencies and instrumentalities, the University of Minnesota, 
320.11  state universities, community colleges, technical colleges, 
320.12  state academies, the Lola and Rudy Perpich Minnesota center for 
320.13  arts education, and school districts are exempt. 
320.14     As used in this subdivision, "school districts" means 
320.15  public school entities and districts of every kind and nature 
320.16  organized under the laws of the state of Minnesota, including, 
320.17  without limitation, school districts, intermediate school 
320.18  districts, education districts, service cooperatives, secondary 
320.19  vocational cooperative centers, special education cooperatives, 
320.20  joint purchasing cooperatives, telecommunication cooperatives, 
320.21  regional management information centers, and any instrumentality 
320.22  of a school district, as defined in section 471.59. 
320.23     Sales exempted by this subdivision include sales under 
320.24  section 297A.01, subdivision 3, paragraph (f), but do not 
320.25  include sales under section 297A.01, subdivision 3, paragraph 
320.26  (j), clause (vii).  
320.27     Sales to hospitals and nursing homes owned and operated by 
320.28  political subdivisions of the state are exempt under this 
320.29  subdivision.  
320.30     The sales to and exclusively for the use of libraries of 
320.31  books, periodicals, audio-visual materials and equipment, 
320.32  photocopiers for use by the public, and all cataloguing and 
320.33  circulation equipment, and cataloguing and circulation software 
320.34  for library use are exempt under this subdivision.  For purposes 
320.35  of this paragraph "libraries" means libraries as defined in 
320.36  section 134.001, county law libraries under chapter 134A, the 
321.1   state library under section 480.09, and the legislative 
321.2   reference library. 
321.3      Sales of supplies and equipment used in the operation of an 
321.4   ambulance service owned and operated by a political subdivision 
321.5   of the state are exempt under this subdivision provided that the 
321.6   supplies and equipment are used in the course of providing 
321.7   medical care.  Sales to a political subdivision of repair and 
321.8   replacement parts for emergency rescue vehicles and fire trucks 
321.9   and apparatus are exempt under this subdivision.  
321.10     Sales to a political subdivision of machinery and 
321.11  equipment, except for motor vehicles, used directly for mixed 
321.12  municipal solid waste management services at a solid waste 
321.13  disposal facility as defined in section 115A.03, subdivision 10, 
321.14  are exempt under this subdivision.  
321.15     Sales to political subdivisions of chore and homemaking 
321.16  services to be provided to elderly or disabled individuals are 
321.17  exempt. 
321.18     Sales of telephone services to the department of 
321.19  administration that are used to provide telecommunications 
321.20  services through the intertechnologies revolving fund are exempt 
321.21  under this subdivision. 
321.22     This exemption shall not apply to building, construction or 
321.23  reconstruction materials purchased by a contractor or a 
321.24  subcontractor as a part of a lump-sum contract or similar type 
321.25  of contract with a guaranteed maximum price covering both labor 
321.26  and materials for use in the construction, alteration, or repair 
321.27  of a building or facility.  This exemption does not apply to 
321.28  construction materials purchased by tax exempt entities or their 
321.29  contractors to be used in constructing buildings or facilities 
321.30  which will not be used principally by the tax exempt entities. 
321.31     This exemption does not apply to the leasing of a motor 
321.32  vehicle as defined in section 297B.01, subdivision 5, except for 
321.33  leases entered into by the United States or its agencies or 
321.34  instrumentalities.  
321.35     The tax imposed on sales to political subdivisions of the 
321.36  state under this section applies to all political subdivisions 
322.1   other than those explicitly exempted under this subdivision, 
322.2   notwithstanding section 115A.69, subdivision 6, 116A.25, 
322.3   360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
322.4   469.127, 473.448, 473.545, or 473.608 or any other law to the 
322.5   contrary enacted before 1992. 
322.6      Sales exempted by this subdivision include sales made to 
322.7   other states or political subdivisions of other states, if the 
322.8   sale would be exempt from taxation if it occurred in that state, 
322.9   but do not include sales under section 297A.01, subdivision 3, 
322.10  paragraphs (c) and (e). 
322.11     Sec. 4.  Minnesota Statutes 1996, section 297A.25, 
322.12  subdivision 16, is amended to read: 
322.13     Subd. 16.  [SALES TO NONPROFIT GROUPS.] The gross receipts 
322.14  from the sale of tangible personal property to, and the storage, 
322.15  use or other consumption of such property by, any corporation, 
322.16  society, association, foundation, or institution organized and 
322.17  operated exclusively for charitable, religious, or educational 
322.18  purposes if the property purchased is to be used in the 
322.19  performance of charitable, religious, or educational functions, 
322.20  or any senior citizen group or association of groups that in 
322.21  general limits membership to persons who are either (1) age 55 
322.22  or older, or (2) physically disabled, and is organized and 
322.23  operated exclusively for pleasure, recreation, and other 
322.24  nonprofit purposes, no part of the net earnings of which inures 
322.25  to the benefit of any private shareholders, are exempt.  For 
322.26  purposes of this subdivision, charitable purpose includes the 
322.27  maintenance of a cemetery owned by a religious organization.  
322.28  Sales exempted by this subdivision include sales pursuant to 
322.29  section 297A.01, subdivision 3, paragraphs (d) and (f), but do 
322.30  not include sales under section 297A.01, subdivision 3, 
322.31  paragraph (j), clause (vii).  This exemption shall not apply to 
322.32  building, construction, or reconstruction materials purchased by 
322.33  a contractor or a subcontractor as a part of a lump-sum contract 
322.34  or similar type of contract with a guaranteed maximum price 
322.35  covering both labor and materials for use in the construction, 
322.36  alteration, or repair of a building or facility.  This exemption 
323.1   does not apply to construction materials purchased by tax exempt 
323.2   entities or their contractors to be used in constructing 
323.3   buildings or facilities which will not be used principally by 
323.4   the tax exempt entities.  This exemption does not apply to the 
323.5   leasing of a motor vehicle as defined in section 297B.01, 
323.6   subdivision 5. 
323.7      Sec. 5.  Minnesota Statutes 1996, section 297A.44, 
323.8   subdivision 1, is amended to read: 
323.9      Subdivision 1.  (a) Except as provided in paragraphs 
323.10  (b), and (c), and (d), all revenues, including interest and 
323.11  penalties, derived from the excise and use taxes imposed by 
323.12  sections 297A.01 to 297A.44 shall be deposited by the 
323.13  commissioner in the state treasury and credited to the general 
323.14  fund.  
323.15     (b) All excise and use taxes derived from sales and use of 
323.16  property and services purchased for the construction and 
323.17  operation of an agricultural resource project, from and after 
323.18  the date on which a conditional commitment for a loan guaranty 
323.19  for the project is made pursuant to section 41A.04, subdivision 
323.20  3, shall be deposited in the Minnesota agricultural and economic 
323.21  account in the special revenue fund.  The commissioner of 
323.22  finance shall certify to the commissioner the date on which the 
323.23  project received the conditional commitment.  The amount 
323.24  deposited in the loan guaranty account shall be reduced by any 
323.25  refunds and by the costs incurred by the department of revenue 
323.26  to administer and enforce the assessment and collection of the 
323.27  taxes.  
323.28     (c) All revenues, including interest and penalties, derived 
323.29  from the excise and use taxes imposed on sales and purchases 
323.30  included in section 297A.01, subdivision 3, paragraphs (d) and 
323.31  (l), clauses (1) and (2), must be deposited by the commissioner 
323.32  in the state treasury, and credited as follows: 
323.33     (1) first to the general obligation special tax bond debt 
323.34  service account in each fiscal year the amount required by 
323.35  section 16A.661, subdivision 3, paragraph (b); and 
323.36     (2) after the requirements of clause (1) have been met, the 
324.1   balance must be credited to the general fund. 
324.2      (d) The revenues, including interest and penalties, derived 
324.3   from the taxes imposed on solid waste collection services as 
324.4   described in section 297A.45, shall be deposited by the 
324.5   commissioner in the state treasury and credited to the general 
324.6   fund to be used for funding solid waste reduction and recycling 
324.7   programs. 
324.8      Sec. 6.  [297F.01] [SOLID WASTE MANAGEMENT TAX 
324.9   DEFINITIONS.] 
324.10     Subdivision 1.  [SCOPE.] When used in this chapter, the 
324.11  following terms have the meanings given to them in this 
324.12  section.  For terms not defined in this section, the definitions 
324.13  contained in chapter 115A are incorporated into this chapter. 
324.14     Subd. 2.  [COMMERCIAL GENERATOR.] "Commercial generator" 
324.15  means any of the following: 
324.16     (1) an owner or operator of a business, including a 
324.17  home-operated business, industry, church, nursing home, 
324.18  nonprofit organization, school, or any other commercial or 
324.19  institutional enterprise that generates mixed municipal solid 
324.20  waste or non-mixed-municipal solid waste; or 
324.21     (2) any other generator of taxable waste that is not a 
324.22  residential generator defined in subdivision 8.  A commercial 
324.23  generator does not include a self-hauler. 
324.24     Subd. 3.  [CUBIC YARD.] "Cubic yard" means a cubic yard of 
324.25  non-mixed-municipal solid waste that is not compacted. 
324.26     Subd. 4.  [MARKET PRICE.] "Market price" means the lowest 
324.27  price available in the area, assuming transactions between 
324.28  separate parties that are willing buyers and willing sellers in 
324.29  a market. 
324.30     Subd. 5.  [MIXED MUNICIPAL SOLID WASTE.] "Mixed municipal 
324.31  solid waste" means mixed municipal solid waste as defined in 
324.32  section 115A.03, subdivision 21. 
324.33     Subd. 6.  [NON-MIXED-MUNICIPAL SOLID 
324.34  WASTE.] "Non-mixed-municipal solid waste" means: 
324.35     (1) infectious waste as defined in section 116.76, 
324.36  subdivision 12; 
325.1      (2) pathological waste as defined in section 116.76, 
325.2   subdivision 14; 
325.3      (3) industrial waste as defined in section 115A.03, 
325.4   subdivision 13a; and 
325.5      (4) construction debris as defined in section 115A.03, 
325.6   subdivision 7. 
325.7      Subd. 7.  [PERIODIC WASTE COLLECTION.] "Periodic waste 
325.8   collection" means each time a waste container is emptied by the 
325.9   person that collects the non-mixed-municipal solid waste at the 
325.10  point that the waste has been aggregated for collection by the 
325.11  generator. 
325.12     Subd. 8.  [RESIDENTIAL GENERATOR.] "Residential generator" 
325.13  means any of the following: 
325.14     (1) a detached single family residence that generates mixed 
325.15  municipal solid waste or non-mixed-municipal solid waste; 
325.16     (2) a person residing in a building or site containing 
325.17  multiple residences that generates mixed municipal solid waste, 
325.18  including apartment buildings, condominiums, manufactured home 
325.19  parks, or townhomes, where each residence is separately billed 
325.20  by the waste service provider; 
325.21     (3) an owner of a building or site containing multiple 
325.22  residences or an association representing residences that 
325.23  generate mixed municipal solid waste or non-mixed-municipal 
325.24  solid waste, including apartment buildings, condominiums, 
325.25  manufactured home parks, or townhomes where no residence is 
325.26  separately billed for such service by the waste management 
325.27  service provider and the owner or association is billed directly 
325.28  for the waste management services.  A residential generator does 
325.29  not include a self-hauler. 
325.30     Subd. 9.  [SALES PRICE.] "Sales price" means total 
325.31  consideration valued in money for waste management services, 
325.32  excluding separately stated charges for exemptions listed under 
325.33  section 297F.06. 
325.34     Subd. 10.  [SELF-HAULER.] "Self-hauler" means a person who 
325.35  transports mixed municipal solid waste or non-mixed-municipal 
325.36  solid waste generated by that person or another person without 
326.1   compensation. 
326.2      Subd. 11.  [WASTE MANAGEMENT SERVICE PROVIDER.] "Waste 
326.3   management service provider" means the person who directly bills 
326.4   the generator or self-hauler for waste management services, and 
326.5   includes, but is not limited to, waste-haulers, waste management 
326.6   facilities, utility services, and political subdivisions, to the 
326.7   extent they directly bill for waste management services.  
326.8      Subd. 12.  [WASTE MANAGEMENT SERVICES.] "Waste management 
326.9   services" means waste collection, transportation, processing, 
326.10  and disposal. 
326.11     Sec. 7.  [297F.02] [RESIDENTIAL GENERATORS.] 
326.12     Subdivision 1.  [IMPOSITION.] (a) A tax is imposed upon the 
326.13  sales price of mixed municipal solid waste management services 
326.14  received by a residential generator. 
326.15     (b) The tax is imposed upon the difference between the 
326.16  market price and the tip fee at a processing or disposal 
326.17  facility where the tip fee is less than the market price and the 
326.18  political subdivision subsidizes the cost of service at the 
326.19  facility.  The political subdivision is liable for the tax. 
326.20     (c) The tax is imposed upon the market price of waste 
326.21  management services where a political subdivision directly bills 
326.22  on a property tax statement for organized collection of mixed 
326.23  municipal solid waste.  The political subdivision is liable for 
326.24  the tax. 
326.25     (d) The political subdivision shall, by resolution, 
326.26  identify the market price.  The political subdivision shall 
326.27  submit the market price to the director of the office of 
326.28  environmental assistance for review by October 1 of the year 
326.29  prior to the calendar year in which the market price will be in 
326.30  effect.  The prices that the state pays for waste management 
326.31  services in that jurisdiction or the county where the 
326.32  jurisdiction is located must be a guideline in determining the 
326.33  market price.  The director shall consult with the commissioner 
326.34  of the pollution control agency in reviewing the market price 
326.35  and shall inform the political subdivisions of any necessary 
326.36  changes to market price by November 15 of that year.  The market 
327.1   price shall be effective as of January 1 of the next calendar 
327.2   year following review.  The director may consider adjustment to 
327.3   the market price if a political subdivision submits a resolution 
327.4   for adjustment by May 1 of any year.  The effective date of the 
327.5   adjustment shall be July 1. 
327.6      If the commissioner of revenue believes a market price 
327.7   declared by resolution is not accurate, the commissioner may 
327.8   request that the office of environmental assistance advise the 
327.9   political subdivision to identify by resolution an updated 
327.10  market price and submit the updated market price to the office 
327.11  of environmental assistance for review. 
327.12     Subd. 2.  [RATES.] The rate of tax under this section is 
327.13  9.75 percent. 
327.14     Subd. 3.  [SALES PRICE OF BAGS, STICKERS, OR OTHER 
327.15  INDICIA.] When the sales price of a bag, sticker, or other 
327.16  indicia includes mixed municipal solid waste management services 
327.17  for residential generators, the tax on the bag, sticker, and 
327.18  other indicia sold by vendors on behalf of a political 
327.19  subdivision or waste hauler shall be collected when the bag, 
327.20  sticker, or other indicia are sold to the vendor by the 
327.21  political subdivision or waste hauler, and shall be taxed at the 
327.22  rate imposed under subdivision 2.  The solid waste management 
327.23  service and the solid waste management tax shall be included in 
327.24  the sales price of the bag, sticker, or other indicia. 
327.25     Sec. 8.  [297F.03] [MIXED MUNICIPAL SOLID WASTE COMMERCIAL 
327.26  GENERATORS.] 
327.27     Subdivision 1.  [IMPOSITION.] (a) A tax is imposed upon the 
327.28  sales price of mixed municipal solid waste management services 
327.29  received by a commercial generator. 
327.30     (b) The tax is imposed upon the difference between the 
327.31  market price and the tip fee at a processing or disposal 
327.32  facility where the tip fee is less than the market price and the 
327.33  political subdivision subsidizes the cost of service at the 
327.34  facility.  The political subdivision is liable for the tax. 
327.35     (c) The tax is imposed upon the market price of waste 
327.36  management services where a political subdivision directly bills 
328.1   on a property tax statement for organized collection of mixed 
328.2   municipal solid waste.  The political subdivision is liable for 
328.3   the tax. 
328.4      (d) Section 297F.02, subdivision 1, paragraph (d), applies 
328.5   to paragraphs (b) and (c) of this subdivision. 
328.6      Subd. 2.  [RATE.] The rate of the tax under this section is 
328.7   17 percent. 
328.8      Subd. 3.  [SALES PRICE OF BAGS, STICKERS, OR OTHER 
328.9   INDICIA.] When the sales price of a bag, sticker, or other 
328.10  indicia includes mixed municipal solid waste management services 
328.11  for commercial generators, the tax on the bag, sticker, and 
328.12  other indicia sold by vendors on behalf of a political 
328.13  subdivision or waste hauler shall be collected when the bag, 
328.14  sticker, or other indicia are sold to the vendor by the 
328.15  political subdivision or waste hauler, and shall be taxed at the 
328.16  rate imposed under subdivision 2.  The solid waste management 
328.17  service and the solid waste management tax shall be included in 
328.18  the sales price of the bag, sticker, or other indicia. 
328.19     Sec. 9.  [297F.04] [NON-MIXED-MUNICIPAL SOLID WASTE.] 
328.20     Subdivision 1.  [IMPOSITION.] A tax is imposed upon the 
328.21  volume of non-mixed-municipal solid waste that is managed. 
328.22     Subd. 2.  [RATE.] (a) Commercial generators that generate 
328.23  non-mixed-municipal solid waste shall pay a solid waste 
328.24  management tax of 60 cents per noncompacted cubic yard of 
328.25  periodic waste collection capacity purchased by the generator, 
328.26  based on the size of the container for the non-mixed-municipal 
328.27  solid waste, the actual volume, or the weight-to-volume 
328.28  conversion schedule in paragraph (c).  However, the tax must be 
328.29  calculated by the waste management service provider using the 
328.30  same method for calculating the waste management service fee so 
328.31  that both are calculated according to container capacity, actual 
328.32  volume, or weight. 
328.33     (b) Notwithstanding section 297F.02, a residential 
328.34  generator that generates non-mixed-municipal solid waste shall 
328.35  pay a solid waste management tax in the same manner as provided 
328.36  in paragraph (a). 
329.1      (c) The weight-to-volume conversion schedule for: 
329.2      (1) construction debris as defined in section 115A.03, 
329.3   subdivision 7, is one ton equals 3.33 cubic yards, or $2 per 
329.4   ton; 
329.5      (2) industrial waste as defined in section 115A.03, 
329.6   subdivision 13a, is equal to 60 cents per cubic yard.  The 
329.7   commissioner of revenue after consultation with the commissioner 
329.8   of the pollution control agency, shall determine, and may 
329.9   publish by notice, a conversion schedule for various industrial 
329.10  wastes; and 
329.11     (3) infectious waste as defined in section 116.76, 
329.12  subdivision 12, and pathological waste as defined in section 
329.13  116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
329.14  60 cents per 150 pounds. 
329.15     Sec. 10.  [297F.05] [SELF-HAULERS.] 
329.16     (a) A self-hauler of mixed municipal solid waste shall pay 
329.17  the tax to the operator of the waste management facility to 
329.18  which the waste is delivered at the rate imposed under section 
329.19  297F.03, based on the sales price of the waste management 
329.20  services. 
329.21     (b) A self-hauler of non-mixed-municipal solid waste shall 
329.22  pay the tax to the operator of the waste management facility to 
329.23  which the waste is delivered at the rate imposed under section 
329.24  297F.04. 
329.25     (c) The tax imposed on the self-hauler of 
329.26  non-mixed-municipal solid waste may be based either on the 
329.27  capacity of the container, the actual volume, or the 
329.28  weight-to-volume conversion schedule in paragraph (d).  However, 
329.29  the tax must be calculated by the operator using the same method 
329.30  for calculating the tipping fee so that both are calculated 
329.31  according to container capacity, actual volume, or weight. 
329.32     (d) The weight-to-volume conversion schedule for: 
329.33     (1) construction debris as defined in section 115A.03, 
329.34  subdivision 7, is one ton equals 3.33 cubic yards, or $2 per 
329.35  ton; 
329.36     (2) industrial waste as defined in section 115A.03, 
330.1   subdivision 13a, is equal to 60 cents per cubic yard.  The 
330.2   commissioner of revenue, after consultation with the 
330.3   commissioner of the pollution control agency, shall determine, 
330.4   and may publish by notice, a conversion schedule for various 
330.5   industrial wastes; and 
330.6      (3) infectious waste as defined in section 116.76, 
330.7   subdivision 12, and pathological waste as defined in section 
330.8   116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
330.9   60 cents per 150 pounds. 
330.10     Sec. 11.  [297F.06] [EXEMPTIONS.] 
330.11     Subdivision 1.  [CERTAIN SURCHARGES OR FEES.] The amount of 
330.12  a surcharge, fee, or charge established pursuant to section 
330.13  115A.919, 115A.921, 115A.923, or 473.843 is exempt from the 
330.14  solid waste management tax.  The amount shown on a property tax 
330.15  statement as a county charge for solid waste management service 
330.16  or as a surcharge, fee, or charge established pursuant to 
330.17  section 400.08, subdivision 3, or section 473.811, subdivision 
330.18  3a, is exempt from the solid waste management tax.  The 
330.19  exemption does not apply to the tax imposed on market price 
330.20  under section 297F.02, subdivision 1, paragraphs (b) and (c), or 
330.21  section 297F.03, subdivision 1, paragraphs (b) and (c). 
330.22     Subd. 2.  [MATERIALS.] The tax is not imposed upon charges 
330.23  to generators of mixed municipal solid waste or upon the volume 
330.24  of non-mixed-municipal solid waste for waste management services 
330.25  to manage the following materials: 
330.26     (1) mixed municipal solid waste and non-mixed-municipal 
330.27  solid waste generated outside of Minnesota; 
330.28     (2) recyclable materials that are separated for recycling 
330.29  by the generator, collected separately from other waste, and 
330.30  recycled, to the extent the price of the service for handling 
330.31  recyclable material is separately itemized; 
330.32     (3) recyclable non-mixed-municipal solid waste that is 
330.33  separated for recycling by the generator, collected separately 
330.34  from other waste, delivered to a waste facility for the purpose 
330.35  of recycling, and recycled; 
330.36     (4) industrial waste, when it is transported to a facility 
331.1   owned and operated by the same person that generated it; 
331.2      (5) mixed municipal solid waste from a recycling facility 
331.3   that separates or processes recyclable materials and reduces the 
331.4   volume of the waste by at least 85 percent, provided that the 
331.5   exempted waste is managed separately from other waste; 
331.6      (6) recyclable materials that are separated from mixed 
331.7   municipal solid waste by the generator, collected and delivered 
331.8   to a waste facility that recycles at least 85 percent of its 
331.9   waste, and are collected with mixed municipal solid waste that 
331.10  is segregated in leakproof bags, provided that the mixed 
331.11  municipal solid waste does not exceed five percent of the total 
331.12  weight of the materials delivered to the facility and is 
331.13  ultimately delivered to a waste facility identified as a 
331.14  preferred waste management facility in county solid waste plans 
331.15  under section 115A.46; 
331.16     (7) through December 31, 2002, source-separated compostable 
331.17  waste, if the waste is delivered to a facility exempted as 
331.18  described in this clause.  To initially qualify for an 
331.19  exemption, a facility must apply for an exemption in its 
331.20  application for a new or amended solid waste permit to the 
331.21  pollution control agency.  The first time a facility applies to 
331.22  the agency it must certify in its application that it will 
331.23  comply with the criteria in items (i) to (v) and the 
331.24  commissioner of the agency shall so certify to the commissioner 
331.25  of revenue who must grant the exemption.  For each subsequent 
331.26  calendar year, by October 1 of the preceding year, the facility 
331.27  must apply to the agency for certification to renew its 
331.28  exemption for the following year.  The application must be filed 
331.29  according to the procedures of, and contain the information 
331.30  required by, the agency.  The commissioner of revenue shall 
331.31  grant the exemption if the commissioner of the pollution control 
331.32  agency finds and certifies to the commissioner of revenue that 
331.33  based on an evaluation of the composition of incoming waste and 
331.34  residuals and the quality and use of the product: 
331.35     (i) generators separate materials at the source; 
331.36     (ii) the separation is performed in a manner appropriate to 
332.1   the technology specific to the facility that: 
332.2      (A) maximizes the quality of the product; 
332.3      (B) minimizes the toxicity and quantity of residuals; and 
332.4      (C) provides an opportunity for significant improvement in 
332.5   the environmental efficiency of the operation; 
332.6      (iii) the operator of the facility educates generators, in 
332.7   coordination with each county using the facility, about 
332.8   separating the waste to maximize the quality of the waste stream 
332.9   for technology specific to the facility; 
332.10     (iv) process residuals do not exceed 15 percent of the 
332.11  weight of the total material delivered to the facility; and 
332.12     (v) the final product is accepted for use; and 
332.13     (8) waste and waste by-products for which the tax has been 
332.14  paid. 
332.15     Sec. 12.  [297F.07] [BILLING.] 
332.16     The amount of the tax imposed under this chapter shall be 
332.17  itemized separately on the generator's bill, and shall be 
332.18  designated as the "solid waste management tax." 
332.19     Sec. 13.  [297F.08] [PAYMENT; REPORTING.] 
332.20     (a) The waste management service provider, or a political 
332.21  subdivision specified in section 297F.02, subdivision 1, and 
332.22  section 297F.03, subdivision 1, shall report the tax on a return 
332.23  prescribed by the commissioner of revenue, and shall remit the 
332.24  tax with the return.  The return and the tax must be filed using 
332.25  the filing cycle and due dates provided for taxes imposed under 
332.26  chapter 297A. 
332.27     (b) The waste hauler or political subdivision that sells 
332.28  bags, stickers, or other indicia to vendors must report and 
332.29  remit the tax imposed by section 297F.02, subdivision 3, and 
332.30  section 297F.03, subdivision 3, on a return prescribed by the 
332.31  commissioner of revenue, and shall remit the tax with the 
332.32  return.  The return and the tax must be filed using the filing 
332.33  cycle provided for taxes imposed under chapter 297A. 
332.34     (c) Any partial payments received by waste management 
332.35  service providers for waste management services shall be 
332.36  prorated between the tax imposed under section 297F.02, 297F.03, 
333.1   or 297F.04 and the service.  
333.2      Sec. 14.  [297F.09] [BAD DEBTS.] 
333.3      The remitter of the solid waste management tax may offset 
333.4   against the tax payable, with respect to any reporting period, 
333.5   the amount of tax imposed by this chapter previously remitted to 
333.6   the commissioner of revenue which qualified as a bad debt under 
333.7   section 166(a) of the Internal Revenue Code, as amended through 
333.8   December 31, 1993, during such reporting period, but only in 
333.9   proportion to the portion of such debt which became 
333.10  uncollectable.  This section applies only to accrual basis 
333.11  remitters that remit tax before it is collected and to the 
333.12  extent they are unable to collect the tax. 
333.13     Sec. 15.  [297F.10] [ADMINISTRATION; ENFORCEMENT; PENALTY.] 
333.14     Subdivision 1.  [ADMINISTRATION AND ENFORCEMENT.] The 
333.15  audit, assessment, refund, penalty, interest, enforcement, 
333.16  collection remedies, appeal, and administrative provisions of 
333.17  chapters 270 and 289A that are applicable to taxes imposed under 
333.18  chapter 297A apply to this chapter. 
333.19     Subd. 2.  [PENALTY.] If the form prescribed by the 
333.20  commissioner of revenue for remitting the tax is the sales tax 
333.21  return, a penalty is imposed on a person or political 
333.22  subdivision who fails to separately report the amount of tax due 
333.23  under this chapter.  The specified penalties are ten percent for 
333.24  the first violation and 20 percent for the second and subsequent 
333.25  violations.  The penalty applies only to that portion of the tax 
333.26  that should have been reported on the separate lines for the tax 
333.27  due under this chapter and that was included on other lines of 
333.28  the sales tax return. 
333.29     Sec. 16.  [297F.11] [REQUIREMENTS AND POTENTIAL LIABILITY 
333.30  OF WASTE MANAGEMENT SERVICE PROVIDERS.] 
333.31     Subdivision 1.  [REQUIREMENTS.] Waste management service 
333.32  providers are required to: 
333.33     (1) separately and accurately state the amount of the tax 
333.34  in the appropriate statement of charges for waste management 
333.35  services, or other statement if there are no charges for waste 
333.36  management services, and in any action to enforce payment on 
334.1   delinquent accounts; 
334.2      (2) accurately account for and remit tax received; and 
334.3      (3) work with the commissioner of revenue to ensure that 
334.4   generators pay the tax. 
334.5      Subd. 2.  [LIABILITY.] A waste management service provider 
334.6   is liable for an amount equal to the solid waste management tax 
334.7   that was either: 
334.8      (1) received by the waste management service provider but 
334.9   not timely remitted to the commissioner of revenue; or 
334.10     (2) not received by the waste management service provider 
334.11  and the waste management service provider failed to separately 
334.12  and accurately state the amount of the tax in the appropriate 
334.13  statement of charges for waste management services and in any 
334.14  action to enforce payment on delinquent accounts. 
334.15     Subd. 3.  [RECOVERY.] A person who is liable under 
334.16  subdivision 2 is not prohibited from recovering from the 
334.17  generator or self-hauler the amount of the liability paid to the 
334.18  commissioner of revenue that is equal to the solid waste 
334.19  management tax owed by the generator or self-hauler. 
334.20     Sec. 17.  [297F.12] [INFORMATION REGARDING THE SOLID WASTE 
334.21  MANAGEMENT TAX.] 
334.22     The director of the office of environmental assistance, 
334.23  after consulting with the commissioner of revenue, the 
334.24  commissioner of the pollution control agency, and waste 
334.25  management service providers, shall develop information 
334.26  regarding the solid waste management tax for distribution to 
334.27  waste generators in the state.  The information shall include 
334.28  facts about the substitution of the solid waste management tax 
334.29  for the sales tax on solid waste services and the solid waste 
334.30  generator assessment and the purposes for which revenue from the 
334.31  tax will be spent. 
334.32     Sec. 18.  [297F.13] [DEPOSIT OF REVENUES; USE OF PROCEEDS; 
334.33  FUNDING SHORTFALLS; REPORT ON RECEIPTS.] 
334.34     Subdivision 1.  [DEPOSIT OF REVENUES.] The revenues derived 
334.35  from the taxes imposed on waste management services under this 
334.36  chapter, less the costs to the department of revenue for 
335.1   administering the tax under this chapter, shall be deposited by 
335.2   the commissioner of revenue in the state treasury. 
335.3      The amounts retained by the department of revenue shall be 
335.4   deposited in a separate revenue department fund which is hereby 
335.5   created.  Money in this fund is hereby appropriated, up to a 
335.6   maximum annual amount of $200,000, to the commissioner of 
335.7   revenue for the costs incurred in administration of the solid 
335.8   waste management tax under this chapter. 
335.9      Subd. 2.  [ALLOCATION OF REVENUES.] (a) $22,000,000, or 50 
335.10  percent, whichever is greater, of the amounts remitted under 
335.11  this chapter must be credited to the solid waste fund 
335.12  established in section 115B.42. 
335.13     (b) The remainder must be deposited into the general fund. 
335.14     Subd. 3.  [FUNDING SHORTFALLS.] If less than $22,000,000 is 
335.15  projected to be available for new encumbrances in any fiscal 
335.16  year after fiscal year 1999 from all existing dedicated revenue 
335.17  sources for landfill cleanup and reimbursement costs under 
335.18  sections 115B.39 to 115B.445, by October 1 before the next 
335.19  fiscal year in which the shortfall is projected, the 
335.20  commissioner of the pollution control agency shall certify to 
335.21  the commissioner of revenue the amount of the shortfall and 
335.22  notify persons required to collect and remit the tax.  To 
335.23  provide for the shortfall, the commissioner of revenue shall 
335.24  increase the tax under sections 297F.03, 297F.04, and 297F.05, 
335.25  proportionately for both mixed municipal solid waste and 
335.26  non-mixed-municipal solid waste, by an amount sufficient to 
335.27  generate revenue equal to the amount of the shortfall effective 
335.28  the following January 1 and shall provide notice of the 
335.29  increased assessment by November 1 following certification to 
335.30  persons who are required to collect and remit the tax under this 
335.31  chapter. 
335.32     Subd. 4.  [EXCESS REVENUE ADJUSTMENT.] If the total tax 
335.33  revenues collected from the taxes imposed under this chapter in 
335.34  fiscal year 1999 is projected to exceed $44,500,000, the 
335.35  commissioner of revenue shall decrease proportionately the 
335.36  amount of the tax under sections 297F.02, 297F.03, 297F.04, and 
336.1   297F.05, by an amount sufficient to eliminate the excess 
336.2   effective October 1, 1999, and shall provide notice of the 
336.3   decreased tax by August 1, 1999, to waste management service 
336.4   providers. 
336.5      Subd. 5.  [REPORT ON RECEIPTS.] The commissioner of revenue 
336.6   shall report to the chairs of the house and senate environment 
336.7   and natural resources committees; the house environment and 
336.8   natural resources finance division; the senate environment and 
336.9   agriculture budget division; the house tax committee and the 
336.10  senate taxes and tax laws committee; the commissioner of the 
336.11  pollution control agency; and the director of the office of 
336.12  environmental assistance on the total tax revenues received from 
336.13  the taxes imposed under this chapter.  The reports shall be made 
336.14  as follows: 
336.15     (1) a report by May 31, 1998, based on amounts received by 
336.16  the commissioner of revenue from January 1, 1998, through April 
336.17  30, 1998; 
336.18     (2) a report by September 30, 1998, based on amounts 
336.19  received by the commissioner of revenue from May 1, 1998, 
336.20  through August 31, 1998; and 
336.21     (3) a report by January 31, 1999, based on amounts received 
336.22  by the commissioner of revenue from September 1, 1998, through 
336.23  December 31, 1998. 
336.24     Subd. 6.  [ORGANIZED COLLECTION BILLING PRACTICES.] In 
336.25  preparing the report required under section 115A.981, including 
336.26  the duty to consider information filed by political subdivisions 
336.27  under section 115A.929, the commissioner of the pollution 
336.28  control agency shall report the extent, if any, to which the 
336.29  solid waste management tax is not being collected on the full 
336.30  cost of organized collection service because of billings that do 
336.31  not reflect the full cost of service. 
336.32     Sec. 19.  [MORATORIUM.] 
336.33     The commissioner of revenue shall not initiate or continue 
336.34  any action to collect any underpayment from political 
336.35  subdivisions, or to reimburse any overpayment to any political 
336.36  subdivisions, of use taxes on solid waste management services 
337.1   under Minnesota Statutes, section 297A.45, for the period from 
337.2   January 1, 1990, through December 31, 1996. 
337.3      Sec. 20.  [REPEALER.] 
337.4      Minnesota Statutes 1996, sections 116.07, subdivision 10; 
337.5   297A.01, subdivision 21; and 297A.45, as amended by Laws 1997, 
337.6   chapter 84, article 3, section 8, are repealed. 
337.7      Sec. 21.  [EFFECTIVE DATES.] 
337.8      Sections 1 to 18 and 20 are effective January 1, 1998. 
337.9      Section 19 is effective the day following final enactment. 
337.10                             ARTICLE 14
337.11               SENIOR CITIZENS PROPERTY TAX DEFERRAL
337.12     Section 1.  Minnesota Statutes 1996, section 270B.12, is 
337.13  amended by adding a subdivision to read: 
337.14     Subd. 12.  [PROPERTY TAX DEFERRAL.] The commissioner may 
337.15  disclose to a county auditor and treasurer, and to their 
337.16  designated agents or employees, the annual deferral amounts and 
337.17  the cumulative deferral and interest as determined by the 
337.18  commissioner under chapter 290B for each parcel of homestead 
337.19  property in the county that is enrolled in the senior citizen 
337.20  property tax deferral program under chapter 290B. 
337.21     Sec. 2.  Minnesota Statutes 1996, section 275.065, 
337.22  subdivision 3, is amended to read: 
337.23     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
337.24  county auditor shall prepare and the county treasurer shall 
337.25  deliver after November 10 and on or before November 24 each 
337.26  year, by first class mail to each taxpayer at the address listed 
337.27  on the county's current year's assessment roll, a notice of 
337.28  proposed property taxes and, in the case of a town, final 
337.29  property taxes.  
337.30     (b) The commissioner of revenue shall prescribe the form of 
337.31  the notice. 
337.32     (c) The notice must inform taxpayers that it contains the 
337.33  amount of property taxes each taxing authority other than a town 
337.34  proposes to collect for taxes payable the following year and, 
337.35  for a town, the amount of its final levy.  It must clearly state 
337.36  that each taxing authority, including regional library districts 
338.1   established under section 134.201, and including the 
338.2   metropolitan taxing districts as defined in paragraph (i), but 
338.3   excluding all other special taxing districts and towns, will 
338.4   hold a public meeting to receive public testimony on the 
338.5   proposed budget and proposed or final property tax levy, or, in 
338.6   case of a school district, on the current budget and proposed 
338.7   property tax levy.  It must clearly state the time and place of 
338.8   each taxing authority's meeting and an address where comments 
338.9   will be received by mail.  
338.10     (d) The notice must state for each parcel: 
338.11     (1) the market value of the property as determined under 
338.12  section 273.11, and used for computing property taxes payable in 
338.13  the following year and for taxes payable in the current year; 
338.14  and, in the case of residential property, whether the property 
338.15  is classified as homestead or nonhomestead.  The notice must 
338.16  clearly inform taxpayers of the years to which the market values 
338.17  apply and that the values are final values; 
338.18     (2) by county, city or town, school district excess 
338.19  referenda levy, remaining school district levy, regional library 
338.20  district, if in existence, the total of the metropolitan special 
338.21  taxing districts as defined in paragraph (i) and the sum of the 
338.22  remaining special taxing districts, and as a total of the taxing 
338.23  authorities, including all special taxing districts, the 
338.24  proposed or, for a town, final net tax on the property for taxes 
338.25  payable the following year and the actual tax for taxes payable 
338.26  the current year.  If a school district has certified under 
338.27  section 124A.03, subdivision 2, that a referendum will be held 
338.28  in the school district at the November general election, the 
338.29  county auditor must note next to the school district's proposed 
338.30  amount that a referendum is pending and that, if approved by the 
338.31  voters, the tax amount may be higher than shown on the notice.  
338.32  For the purposes of this subdivision, "school district excess 
338.33  referenda levy" means school district taxes for operating 
338.34  purposes approved at referendums, including those taxes based on 
338.35  net tax capacity as well as those based on market value.  
338.36  "School district excess referenda levy" does not include school 
339.1   district taxes for capital expenditures approved at referendums 
339.2   or school district taxes to pay for the debt service on bonds 
339.3   approved at referenda.  In the case of the city of Minneapolis, 
339.4   the levy for the Minneapolis library board and the levy for 
339.5   Minneapolis park and recreation shall be listed separately from 
339.6   the remaining amount of the city's levy.  In the case of a 
339.7   parcel where tax increment or the fiscal disparities areawide 
339.8   tax under chapter 276A or 473F applies, the proposed tax levy on 
339.9   the captured value or the proposed tax levy on the tax capacity 
339.10  subject to the areawide tax must each be stated separately and 
339.11  not included in the sum of the special taxing districts; and 
339.12     (3) the increase or decrease in the amounts in clause (2) 
339.13  from taxes payable in the current year to proposed or, for a 
339.14  town, final taxes payable the following year, expressed as a 
339.15  dollar amount and as a percentage. 
339.16     For purposes of this section, the amount of the tax on 
339.17  homesteads qualifying under the senior citizens' property tax 
339.18  deferral program under chapter 290B is the total amount of 
339.19  property tax before subtraction of the deferred property tax 
339.20  amount. 
339.21     (e) The notice must clearly state that the proposed or 
339.22  final taxes do not include the following: 
339.23     (1) special assessments; 
339.24     (2) levies approved by the voters after the date the 
339.25  proposed taxes are certified, including bond referenda, school 
339.26  district levy referenda, and levy limit increase referenda; 
339.27     (3) amounts necessary to pay cleanup or other costs due to 
339.28  a natural disaster occurring after the date the proposed taxes 
339.29  are certified; 
339.30     (4) amounts necessary to pay tort judgments against the 
339.31  taxing authority that become final after the date the proposed 
339.32  taxes are certified; and 
339.33     (5) the contamination tax imposed on properties which 
339.34  received market value reductions for contamination. 
339.35     (f) Except as provided in subdivision 7, failure of the 
339.36  county auditor to prepare or the county treasurer to deliver the 
340.1   notice as required in this section does not invalidate the 
340.2   proposed or final tax levy or the taxes payable pursuant to the 
340.3   tax levy. 
340.4      (g) If the notice the taxpayer receives under this section 
340.5   lists the property as nonhomestead and the homeowner provides 
340.6   satisfactory documentation to the county assessor that the 
340.7   property is owned and used as the owner's homestead, the 
340.8   assessor shall reclassify the property to homestead for taxes 
340.9   payable in the following year. 
340.10     (h) In the case of class 4 residential property used as a 
340.11  residence for lease or rental periods of 30 days or more, the 
340.12  taxpayer must either: 
340.13     (1) mail or deliver a copy of the notice of proposed 
340.14  property taxes to each tenant, renter, or lessee; or 
340.15     (2) post a copy of the notice in a conspicuous place on the 
340.16  premises of the property.  
340.17     The notice must be mailed or posted by the taxpayer by 
340.18  November 27 or within three days of receipt of the notice, 
340.19  whichever is later.  A taxpayer may notify the county treasurer 
340.20  of the address of the taxpayer, agent, caretaker, or manager of 
340.21  the premises to which the notice must be mailed in order to 
340.22  fulfill the requirements of this paragraph. 
340.23     (i) For purposes of this subdivision, subdivisions 5a and 
340.24  6, "metropolitan special taxing districts" means the following 
340.25  taxing districts in the seven-county metropolitan area that levy 
340.26  a property tax for any of the specified purposes listed below: 
340.27     (1) metropolitan council under section 473.132, 473.167, 
340.28  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
340.29     (2) metropolitan airports commission under section 473.667, 
340.30  473.671, or 473.672; and 
340.31     (3) metropolitan mosquito control commission under section 
340.32  473.711. 
340.33     For purposes of this section, any levies made by the 
340.34  regional rail authorities in the county of Anoka, Carver, 
340.35  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
340.36  398A shall be included with the appropriate county's levy and 
341.1   shall be discussed at that county's public hearing. 
341.2      (j) For taxes levied in 1996, payable in 1997 only, in the 
341.3   case of a statutory or home rule charter city or town that 
341.4   exercises the local levy option provided in section 473.388, 
341.5   subdivision 7, the notice of its proposed taxes may include a 
341.6   statement of the amount by which its proposed tax increase for 
341.7   taxes payable in 1997 is attributable to its exercise of that 
341.8   option, together with a statement that the levy of the 
341.9   metropolitan council was decreased by a similar amount because 
341.10  of the exercise of that option. 
341.11     Sec. 3.  Minnesota Statutes 1996, section 276.04, 
341.12  subdivision 2, is amended to read: 
341.13     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
341.14  shall provide for the printing of the tax statements.  The 
341.15  commissioner of revenue shall prescribe the form of the property 
341.16  tax statement and its contents.  The statement must contain a 
341.17  tabulated statement of the dollar amount due to each taxing 
341.18  authority from the parcel of real property for which a 
341.19  particular tax statement is prepared.  The dollar amounts due 
341.20  the county, township or municipality, the total of the 
341.21  metropolitan special taxing districts as defined in section 
341.22  275.065, subdivision 3, paragraph (i), school district excess 
341.23  referenda levy, remaining school district levy, and the total of 
341.24  other voter approved referenda levies based on market value 
341.25  under section 275.61 must be separately stated.  The amounts due 
341.26  all other special taxing districts, if any, may be aggregated.  
341.27  The amount of the tax on homesteads qualifying under the senior 
341.28  citizens' property tax deferral program under chapter 290B is 
341.29  the total amount of property tax before subtraction of the 
341.30  deferred property tax amount.  For the purposes of this 
341.31  subdivision, "school district excess referenda levy" means 
341.32  school district taxes for operating purposes approved at 
341.33  referenda, including those taxes based on net tax capacity as 
341.34  well as those based on market value.  "School district excess 
341.35  referenda levy" does not include school district taxes for 
341.36  capital expenditures approved at referendums or school district 
342.1   taxes to pay for the debt service on bonds approved at 
342.2   referenda.  The amount of the tax on contamination value imposed 
342.3   under sections 270.91 to 270.98, if any, must also be separately 
342.4   stated.  The dollar amounts, including the dollar amount of any 
342.5   special assessments, may be rounded to the nearest even whole 
342.6   dollar.  For purposes of this section whole odd-numbered dollars 
342.7   may be adjusted to the next higher even-numbered dollar.  The 
342.8   amount of market value excluded under section 273.11, 
342.9   subdivision 16, if any, must also be listed on the tax 
342.10  statement.  The statement shall include the following sentence, 
342.11  printed in upper case letters in boldface print:  "THE STATE OF 
342.12  MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES.  THE STATE 
342.13  OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND 
342.14  REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."  
342.15     (b) The property tax statements for manufactured homes and 
342.16  sectional structures taxed as personal property shall contain 
342.17  the same information that is required on the tax statements for 
342.18  real property.  
342.19     (c) Real and personal property tax statements must contain 
342.20  the following information in the order given in this paragraph.  
342.21  The information must contain the current year tax information in 
342.22  the right column with the corresponding information for the 
342.23  previous year in a column on the left: 
342.24     (1) the property's estimated market value under section 
342.25  273.11, subdivision 1; 
342.26     (2) the property's taxable market value after reductions 
342.27  under section 273.11, subdivisions 1a and 16; 
342.28     (3) the property's gross tax, calculated by multiplying the 
342.29  property's gross tax capacity times the total local tax rate and 
342.30  adding to the result the sum of the aids enumerated in clause 
342.31  (4); 
342.32     (4) a total of the following aids: 
342.33     (i) education aids payable under chapters 124 and 124A; 
342.34     (ii) local government aids for cities, towns, and counties 
342.35  under chapter 477A; and 
342.36     (iii) disparity reduction aid under section 273.1398; 
343.1      (5) for homestead residential and agricultural properties, 
343.2   the homestead and agricultural credit aid apportioned to the 
343.3   property.  This amount is obtained by multiplying the total 
343.4   local tax rate by the difference between the property's gross 
343.5   and net tax capacities under section 273.13.  This amount must 
343.6   be separately stated and identified as "homestead and 
343.7   agricultural credit."  For purposes of comparison with the 
343.8   previous year's amount for the statement for taxes payable in 
343.9   1990, the statement must show the homestead credit for taxes 
343.10  payable in 1989 under section 273.13, and the agricultural 
343.11  credit under section 273.132 for taxes payable in 1989; 
343.12     (6) any credits received under sections 273.119; 273.123; 
343.13  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
343.14  473H.10, except that the amount of credit received under section 
343.15  273.135 must be separately stated and identified as "taconite 
343.16  tax relief"; and 
343.17     (7) any deferred property tax amount under the senior 
343.18  citizens' property tax deferral program under chapter 290B, as 
343.19  well as the total deferred amount plus accrued interest; and 
343.20     (8) the net tax payable in the manner required in paragraph 
343.21  (a). 
343.22     (d) If the county uses envelopes for mailing property tax 
343.23  statements and if the county agrees, a taxing district may 
343.24  include a notice with the property tax statement notifying 
343.25  taxpayers when the taxing district will begin its budget 
343.26  deliberations for the current year, and encouraging taxpayers to 
343.27  attend the hearings.  If the county allows notices to be 
343.28  included in the envelope containing the property tax statement, 
343.29  and if more than one taxing district relative to a given 
343.30  property decides to include a notice with the tax statement, the 
343.31  county treasurer or auditor must coordinate the process and may 
343.32  combine the information on a single announcement.  
343.33     The commissioner of revenue shall certify to the county 
343.34  auditor the actual or estimated aids enumerated in clauses (3) 
343.35  and (4) that local governments will receive in the following 
343.36  year.  In the case of a county containing a city of the first 
344.1   class, for taxes levied in 1991, and for all counties for taxes 
344.2   levied in 1992 and thereafter, the commissioner must certify 
344.3   this amount by September 1.  
344.4      Sec. 4.  [290B.01] [PURPOSE.] 
344.5      Minnesota's system of ad valorem property taxation does not 
344.6   adequately recognize the unique financial circumstances of 
344.7   homestead property owned and occupied by low-income senior 
344.8   citizens.  It is therefore declared to be in the public interest 
344.9   of this state to stabilize tax burdens on homestead property 
344.10  owned by qualifying low-income senior citizens through a 
344.11  deferral of certain property taxes. 
344.12     Sec. 5.  [290B.02] [CITATION.] 
344.13     This program shall be named the "senior citizens' property 
344.14  tax deferral program." 
344.15     Sec. 6.  [290B.03] [DEFERRAL OF PROPERTY TAXES.] 
344.16     Subdivision 1.  [PROGRAM QUALIFICATIONS.] The 
344.17  qualifications for the senior citizens' property tax deferral 
344.18  program are as follows: 
344.19     (1) the property must be owned and occupied as a homestead 
344.20  by a person 65 years of age or older.  In the case of a married 
344.21  couple, both of the spouses must be at least 65 years old at the 
344.22  time the first property tax deferral is granted, regardless of 
344.23  whether the property is titled in the name of one spouse or both 
344.24  spouses, or titled in another way that permits the property to 
344.25  have homestead status; 
344.26     (2) the total household income of the qualifying 
344.27  homeowners, as defined in section 290A.03, subdivision 5, for 
344.28  the calendar year preceding the year of the initial application 
344.29  may not exceed $30,000; 
344.30     (3) the homestead must have been owned and occupied as the 
344.31  homestead of at least one of the qualifying homeowners for at 
344.32  least 15 years prior to the year the initial application is 
344.33  filed; 
344.34     (4) there are no delinquent property taxes, penalties, or 
344.35  interest on the homesteaded property; 
344.36     (5) there are no delinquent special assessments on the 
345.1   homesteaded property; 
345.2      (6) there are no state or federal tax liens or judgment 
345.3   liens on the homesteaded property; 
345.4      (7) there are no mortgages or other liens on the property 
345.5   that secure future advances, except for those subject to credit 
345.6   limits that result in compliance with clause (8); and 
345.7      (8) the total unpaid balances of debts secured by mortgages 
345.8   and other liens on the property, including unpaid special 
345.9   assessments, but not including property taxes payable during the 
345.10  year, does not exceed 30 percent of the assessor's estimated 
345.11  market value for the year. 
345.12     Subd. 2.  [QUALIFYING HOMESTEAD; DEFINED.] Qualifying 
345.13  homestead property is defined as the dwelling occupied as the 
345.14  homeowner's principal residence and so much of the land 
345.15  surrounding it, not exceeding one acre, as is reasonably 
345.16  necessary for use of the dwelling as a home and any other 
345.17  property used for purposes of a homestead as defined in section 
345.18  273.13, subdivisions 22 and 23.  The homestead may be part of a 
345.19  multidwelling building and the land on which it is built. 
345.20     Sec. 7.  [290B.04] [APPLICATION FOR DEFERRAL.] 
345.21     Subdivision 1.  [INITIAL APPLICATION.] A taxpayer meeting 
345.22  the program qualifications under section 290B.03 may apply to 
345.23  the commissioner of revenue for the deferral of taxes.  
345.24  Applications are due on or before July 1 for deferral of any of 
345.25  the following year's property taxes.  A taxpayer may apply in 
345.26  the year in which the taxpayer becomes 65 years old, provided 
345.27  that no deferral of property taxes will be made until the 
345.28  calendar year after the taxpayer becomes 65 years old.  The 
345.29  application, which shall be prescribed by the commissioner of 
345.30  revenue, shall include the following items and any other 
345.31  information which the commissioner deems necessary: 
345.32     (1) the name, address, and social security number of the 
345.33  owner or owners; 
345.34     (2) a copy of the property tax statement for the current 
345.35  payable year for the homesteaded property; 
345.36     (3) the initial year of ownership and occupancy as a 
346.1   homestead; 
346.2      (4) the owner's household income for the previous calendar 
346.3   year; and 
346.4      (5) information on any mortgage loans or other amounts 
346.5   secured by mortgages or other liens against the property, for 
346.6   which purpose the commissioner may require the applicant to 
346.7   provide a copy of the mortgage note, the mortgage, or a 
346.8   statement of the balance owing on the mortgage loan provided by 
346.9   the mortgage holder.  The commissioner may require the 
346.10  appropriate documents in connection with obtaining and 
346.11  confirming information on unpaid amounts secured by other liens. 
346.12     The application must state that program participation is 
346.13  voluntary.  The application must also state that the deferred 
346.14  amount depends directly on the applicant's household income, and 
346.15  that program participation includes authorization for the 
346.16  deferred amount for each year and the cumulative deferral and 
346.17  interest to appear on each year's property tax statement as 
346.18  public data. 
346.19     Subd. 2.  [APPROVAL; RECORDING.] The commissioner shall 
346.20  approve all initial applications that qualify under this chapter 
346.21  and shall notify qualifying homeowners on or before December 1.  
346.22  The commissioner may investigate the facts or require 
346.23  confirmation in regard to an application.  The commissioner 
346.24  shall record or file a notice of qualification for deferral, 
346.25  including the names of the qualifying homeowners and a legal 
346.26  description of the property, in the office of the county 
346.27  recorder, or registrar of titles, whichever is applicable, in 
346.28  the county where the qualifying property is located.  The notice 
346.29  must state that it serves as a notice of lien and that it 
346.30  includes deferrals under this section for future years.  The 
346.31  homeowner shall pay the recording or filing fees. 
346.32     Subd. 3.  [ANNUAL CERTIFICATION BY TAXPAYER.] Annually on 
346.33  or before July 1, a taxpayer whose initial application has been 
346.34  approved under subdivision 2, shall complete the certification 
346.35  form and return it to the commissioner of revenue.  The 
346.36  certification must state whether or not the taxpayer wishes to 
347.1   have property taxes deferred for the following year provided the 
347.2   taxes exceed the maximum property tax amount under section 
347.3   290B.05.  If the taxpayer does wish to have property taxes 
347.4   deferred, the certification must state the homeowner's total 
347.5   household income for the previous calendar year and any other 
347.6   information which the commissioner deems necessary.  
347.7      Sec. 8.  [290B.05] [MAXIMUM PROPERTY TAX AMOUNT AND 
347.8   DEFERRED PROPERTY TAX AMOUNT.] 
347.9      Subdivision 1.  [DETERMINATION BY COMMISSIONER.] The 
347.10  commissioner shall annually determine the qualifying homeowner's 
347.11  "maximum property tax amount" and "maximum allowable deferral."  
347.12  The maximum property tax amount calculated for taxes payable in 
347.13  the following year is equal to five percent of the homeowner's 
347.14  total household income for the previous calendar year.  No tax 
347.15  may be deferred for any homeowner whose total household income 
347.16  for the previous year exceeds $30,000.  No tax shall be deferred 
347.17  in any year in which the homeowner does not meet the program 
347.18  qualifications in section 290B.03.  The maximum allowable total 
347.19  deferral is equal to 75 percent of the assessor's estimated 
347.20  market value for the year, less (1) the balance of any mortgage 
347.21  loans and other amounts secured by liens against the property at 
347.22  the time of application, including any unpaid special 
347.23  assessments but not including property taxes payable during the 
347.24  year; and (2) any outstanding deferral and interest.  
347.25     Subd. 2.  [CERTIFICATION BY COMMISSIONER.] On or before 
347.26  December 1, the commissioner shall certify to the county auditor 
347.27  of the county in which the qualifying homestead is located (1) 
347.28  the maximum property tax amount; (2) the maximum allowable 
347.29  deferral for the year; and (3) the cumulative deferral and 
347.30  interest for all years preceding the next taxes payable year. 
347.31     Subd. 3.  [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 
347.32  When final property tax amounts for the following year have been 
347.33  determined, the county auditor shall calculate the "deferred 
347.34  property tax amount."  The deferred property tax amount is equal 
347.35  to the lesser of (1) the maximum allowable deferral for the 
347.36  year; or (2) the difference between the total amount of property 
348.1   taxes levied upon the qualifying homestead by all taxing 
348.2   jurisdictions and the maximum property tax amount.  Any special 
348.3   assessments levied by any local unit of government must not be 
348.4   included in the total tax used to calculate the deferred tax 
348.5   amount.  No deferral of the current year's property taxes is 
348.6   allowed if there are any delinquent property taxes or delinquent 
348.7   special assessments for any previous year.  Any tax attributable 
348.8   to new improvements made to the property after the initial 
348.9   application has been approved under section 290B.04, subdivision 
348.10  2, must be excluded when determining any subsequent deferred 
348.11  property tax amount.  The county auditor shall annually, on or 
348.12  before April 15, certify to the commissioner of revenue the 
348.13  property tax deferral amounts determined under this subdivision 
348.14  by property and by owner.  
348.15     Subd. 4.  [LIMITATION ON TOTAL AMOUNT OF DEFERRED TAXES.] 
348.16  On or before September 1 of each year, the commissioner shall 
348.17  request, and each county or city assessor shall provide, the 
348.18  current year's estimated market value of each property on the 
348.19  list supplied by the commissioner that may be eligible for 
348.20  deferral under this section for taxes payable in the following 
348.21  year.  The total amount of deferred taxes and interest on a 
348.22  property, when added to (1) the balance owing on any mortgages 
348.23  on the property at the time of initial application; and (2) 
348.24  other amounts secured by liens on the property at the time of 
348.25  the initial application, may not exceed 75 percent of the 
348.26  assessor's current estimated market value of the property. 
348.27     Sec. 9.  [290B.06] [PROPERTY TAX REFUNDS.] 
348.28     For purposes of qualifying for the regular property tax 
348.29  refund or the special refund for homeowners under chapter 290A, 
348.30  the qualifying tax is the full amount of taxes, including the 
348.31  deferred portion of the tax.  In any year in which a program 
348.32  participant chooses to have property taxes deferred under this 
348.33  section, any regular or special property tax refund awarded 
348.34  based upon those property taxes must be taken first as a 
348.35  deduction from the amount of the deferred tax for that year, and 
348.36  second as a deduction against any outstanding deferral from 
349.1   previous years, rather than as a cash payment to the homeowner.  
349.2   The commissioner shall cancel any current year's deferral or 
349.3   previous years' deferral and interest that is offset by the 
349.4   property tax refunds.  If the total of the regular and the 
349.5   special property tax refund amounts exceeds the sum of the 
349.6   deferred tax for the current year and cumulative deferred tax 
349.7   and interest for previous years, the commissioner shall then 
349.8   remit the excess amount to the homeowner.  On or before the date 
349.9   on which the commissioner issues property tax refunds, the 
349.10  commissioner shall notify program participants of any reduction 
349.11  in the deferred amount for the current and previous years 
349.12  resulting from property tax refunds. 
349.13     Sec. 10.  [290B.07] [LIEN; DEFERRED PORTION.] 
349.14     Payment by the state to the county treasurer of taxes 
349.15  deferred under this section is deemed a loan from the state to 
349.16  the program participant.  The commissioner must compute the 
349.17  interest as provided in section 270.75, subdivision 5, but not 
349.18  to exceed five percent, and maintain records of the total 
349.19  deferred amount and interest for each participant.  Interest 
349.20  shall accrue beginning September 1 of the payable year for which 
349.21  the taxes are deferred.  The lien created under section 272.31 
349.22  continues to secure payment by the taxpayer, or by the 
349.23  taxpayer's successors or assigns, of the amount deferred, 
349.24  including interest, with respect to all years for which amounts 
349.25  are deferred.  The lien for deferred taxes and interest has the 
349.26  same priority as any other lien under section 272.31, except 
349.27  that liens, including mortgages, recorded or filed prior to the 
349.28  recording or filing of the notice under section 290B.04, 
349.29  subdivision 2, have priority over the lien for deferred taxes 
349.30  and interest.  A seller's interest in a contract for deed, in 
349.31  which a qualifying homeowner is the purchaser or an assignee of 
349.32  the purchaser, has priority over deferred taxes and interest on 
349.33  deferred taxes, regardless of whether the contract for deed is 
349.34  recorded or filed.  The lien for deferred taxes and interest for 
349.35  future years has the same priority as the lien for deferred 
349.36  taxes and interest for the first year, which is always higher in 
350.1   priority than any mortgages or other liens filed, recorded, or 
350.2   created after the notice recorded or filed under section 
350.3   290B.04, subdivision 2.  The county treasurer or auditor shall 
350.4   maintain records of the deferred portion and shall list the 
350.5   amount of deferred taxes for the year and the cumulative 
350.6   deferral and interest for all previous years as a lien against 
350.7   the property on the property tax statement.  In any 
350.8   certification of unpaid taxes for a tax parcel, the county 
350.9   auditor shall clearly distinguish between taxes payable in the 
350.10  current year, deferred taxes and interest, and delinquent 
350.11  taxes.  Payment of the deferred portion becomes due and owing at 
350.12  the time specified in section 290B.08.  Upon receipt of the 
350.13  payment, the commissioner shall issue a receipt for it to the 
350.14  person making the payment upon request and shall notify the 
350.15  auditor of the county in which the parcel is located, within ten 
350.16  days, identifying the parcel to which the payment applies.  Upon 
350.17  receipt by the commissioner of revenue of collected funds in the 
350.18  amount of the deferral, the state's loan to the program 
350.19  participant is deemed paid in full. 
350.20     Sec. 11.  [290B.08] [TERMINATION OF DEFERRAL; PAYMENT OF 
350.21  DEFERRED TAXES.] 
350.22     Subdivision 1.  [TERMINATION.] (a) The deferral of taxes 
350.23  granted under this chapter terminates when one of the following 
350.24  occurs: 
350.25     (1) the property is sold or transferred; 
350.26     (2) the death of the qualifying homeowner(s); 
350.27     (3) the homeowner notifies the commissioner in writing that 
350.28  the homeowner desires to discontinue the deferral; or 
350.29     (4) the property no longer qualifies as a homestead. 
350.30     (b) A property is not terminated from the program because 
350.31  no deferred property tax amount is determined on the homestead 
350.32  for any given year after the homestead's initial enrollment into 
350.33  the program. 
350.34     Subd. 2.  [PAYMENT UPON TERMINATION.] Upon the termination 
350.35  of the deferral under subdivision 1, the amount of deferred 
350.36  taxes and interest plus the recording or filing fees under both 
351.1   section 290B.04, subdivision 2, and this subdivision becomes due 
351.2   and payable to the commissioner within 90 days of termination of 
351.3   the deferral.  No additional interest is due on the deferral if 
351.4   timely paid.  On receipt of payment, the commissioner shall 
351.5   within ten days notify the auditor of the county in which the 
351.6   parcel is located, identifying the parcel to which the payment 
351.7   applies and shall remit the recording or filing fees under 
351.8   section 290B.04, subdivision 2, and this subdivision to the 
351.9   auditor.  A notice of termination of deferral, containing the 
351.10  legal description and the recording or filing data for the 
351.11  notice of qualification for deferral under section 290B.04, 
351.12  subdivision 2, shall be prepared and recorded or filed by the 
351.13  county auditor in the same office in which the notice of 
351.14  qualification for deferral under section 290B.04, subdivision 2, 
351.15  was recorded or filed, and the county auditor shall mail a copy 
351.16  of the notice of termination to the property owner.  The 
351.17  property owner shall pay the recording or filing fees.  Upon 
351.18  recording or filing of the notice of termination of deferral, 
351.19  the notice of qualification for deferral under section 290B.04, 
351.20  subdivision 2, and the lien created by it are discharged.  If 
351.21  the deferral is not timely paid, the penalty, interest, lien, 
351.22  forfeiture, and other rules for the collection of ad valorem 
351.23  property taxes apply. 
351.24     Sec. 12.  [290B.09] [STATE REIMBURSEMENT.] 
351.25     Subdivision 1.  [DETERMINATION; PAYMENT.] The commissioner 
351.26  of revenue shall determine the deferred amount of property tax 
351.27  in each county, basing determinations on a review of abstracts 
351.28  of tax lists submitted by the county auditors under section 
351.29  275.29.  The commissioner may make changes in the abstracts of 
351.30  tax lists as deemed necessary.  The commissioner of revenue, 
351.31  after such review, shall pay the deferred amount of property tax 
351.32  to each county treasurer on or before August 31.  
351.33     At least once each year, the commissioner shall report to 
351.34  the county auditor the total cumulative amount of deferred taxes 
351.35  and interest that constitute a lien against the property.  
351.36     The county treasurer shall distribute as part of the 
352.1   October settlement the funds received as if they had been 
352.2   collected as a part of the property tax. 
352.3      Subd. 2.  [APPROPRIATION.] An amount sufficient to pay the 
352.4   total amount of property tax determined under subdivision 1 is 
352.5   annually appropriated from the general fund to the commissioner 
352.6   of revenue. 
352.7      Sec. 13.  [DEPARTMENT OF REVENUE APPROPRIATION.] 
352.8      There is appropriated to the commissioner of revenue 
352.9   $33,000 for fiscal year 1999 for the purposes of administering 
352.10  the provisions of this article. 
352.11     Sec. 14.  [EFFECTIVE DATE.] 
352.12     Sections 1 to 12 are effective for deferral of property 
352.13  taxes payable in 1999, and thereafter. 
352.14                             ARTICLE 15 
352.15                        INSURANCE PROVISIONS 
352.16     Section 1.  Minnesota Statutes 1996, section 60A.075, 
352.17  subdivision 1, is amended to read: 
352.18     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
352.19  section, the terms in this subdivision have the meanings given 
352.20  them. 
352.21     (a) "Eligible member" means a policyholder whose policy is 
352.22  in force as of the record date, which is the date that the 
352.23  mutual company's board of directors adopts a plan of conversion 
352.24  or some other date specified as the record date in the plan of 
352.25  conversion and approved by the commissioner.  Unless otherwise 
352.26  provided in the plan, a person insured under a group policy is 
352.27  not an eligible member, unless on the record date: 
352.28     (1) the person is insured or covered under a group life 
352.29  policy or group annuity contract under which funds are 
352.30  accumulated and allocated to the respective covered persons; 
352.31     (2) the person has the right to direct the application of 
352.32  the funds so allocated; 
352.33     (3) the group policyholder makes no contribution to the 
352.34  premiums or deposits for the policy or contract; and 
352.35     (4) the converting mutual company has the names and 
352.36  addresses of the persons covered under the group life policy or 
353.1   group annuity contract. 
353.2      (b) "Reorganized company" means a Minnesota domestic stock 
353.3   insurance company that has converted from a Minnesota domestic 
353.4   mutual insurance company according to this section. 
353.5      (c) "Plan of conversion" or "plan" means a plan adopted by 
353.6   a Minnesota domestic mutual insurance company's board of 
353.7   directors under this section to convert the mutual company into 
353.8   a Minnesota domestic stock insurance company. 
353.9      (d) "Policy" means a policy or contract of insurance issued 
353.10  by a converting mutual company, including an annuity contract. 
353.11     (e) "Commissioner" means the commissioner of commerce. 
353.12     (f) "Converting mutual company" means a Minnesota domestic 
353.13  mutual insurance company seeking to convert to a Minnesota 
353.14  domestic stock insurance company according to this section. 
353.15     (g) "Effective date of a conversion" means the date 
353.16  determined according to subdivision 6. 
353.17     (h) "Membership interests" means all policyholders' rights 
353.18  as members of the converting mutual company, including but not 
353.19  limited to, rights to vote and to participate in any 
353.20  distributions of surplus, whether or not incident to the 
353.21  company's liquidation. 
353.22     (i) "Equitable surplus" means the converting mutual 
353.23  company's surplus as regards policyholders as of the 
353.24  effective record date of the conversion or other date approved 
353.25  by the commissioner determined in a manner that is not unfair or 
353.26  inequitable to policyholders. 
353.27     (j) "Permitted issuer" means:  (1) a corporation organized 
353.28  and owned by the converting mutual company or by any other 
353.29  insurance company or insurance holding company for the purpose 
353.30  of purchasing and holding all of the stock securities 
353.31  representing a majority of voting control of the reorganized 
353.32  company; (2) a stock insurance company owned by the converting 
353.33  mutual company or by any other insurance company or insurance 
353.34  holding company into which the converting mutual company will be 
353.35  merged; or (3) any other corporation approved by the 
353.36  commissioner. 
354.1      Sec. 2.  Minnesota Statutes 1996, section 60A.075, 
354.2   subdivision 8, is amended to read: 
354.3      Subd. 8.  [SHARE CONVERSION.] A plan of conversion under 
354.4   this subdivision shall provide for exchange of policyholders' 
354.5   membership interests in return for shares in the reorganized 
354.6   company, according to paragraphs (a) to (c). 
354.7      (a) The policyholders' membership interests shall be 
354.8   exchanged, in a manner that takes into account the estimated 
354.9   proportionate contribution of equitable surplus of each class of 
354.10  participating policies and contracts, for all of the common 
354.11  shares of the reorganized company or common shares of its parent 
354.12  company or a permitted issuer, or for a combination of the 
354.13  common shares of the reorganized company or common shares of its 
354.14  parent company or a permitted issuer. 
354.15     (b) Unless the anticipated issuance within a shorter period 
354.16  is disclosed in the plan of conversion, the issuer of common 
354.17  shares shall not, within two years after the effective date of 
354.18  reorganization, issue either of the following: 
354.19     (1) any of its common shares or any securities convertible 
354.20  with or without consideration into the common shares or carrying 
354.21  any warrant to subscribe to or purchase common shares; and 
354.22     (2) any warrant, right, or option to subscribe to or 
354.23  purchase the common shares or other securities described in 
354.24  paragraph (a), except for the issue of common shares to or for 
354.25  the benefit of policyholders according to the plan of conversion 
354.26  and the issue of options nontransferable subscription rights for 
354.27  the purchase of common shares being granted to officers, 
354.28  directors, or employees a tax qualified employee benefit plan of 
354.29  the reorganized company or its parent company, if any, or a 
354.30  permitted issuer, according to this section subdivision 11. 
354.31     (c) Unless the common shares have a public market when 
354.32  issued, the issuer shall use its best efforts to encourage and 
354.33  assist in the establishment of a public market for the common 
354.34  shares within two years of the effective date of the conversion 
354.35  or a longer period as disclosed in the plan of conversion.  
354.36  Within one year after any offering of stock other than the 
355.1   initial distribution, but no later than six years after the 
355.2   effective date of the conversion, the reorganized company shall 
355.3   offer to make available to policyholders who received and 
355.4   retained shares of common stock or securities described in 
355.5   paragraph (b), clause (1), a procedure to dispose of those 
355.6   shares of stock at market value without brokerage commissions or 
355.7   similar fees. 
355.8      Sec. 3.  Minnesota Statutes 1996, section 60A.075, 
355.9   subdivision 9, is amended to read: 
355.10     Subd. 9.  [SURPLUS DISTRIBUTION.] A plan of conversion 
355.11  under this subdivision shall provide for the exchange of the 
355.12  policyholders' membership interests in return for the operation 
355.13  of the converting mutual company's participating policies as a 
355.14  closed block of business and for the distribution of the 
355.15  company's equitable surplus to policyholders, and shall provide 
355.16  for the issuance of new shares of the reorganized company or its 
355.17  parent corporation, each according to paragraphs (a) to (i). 
355.18     (a) The converting mutual company's participating business, 
355.19  comprised of its participating policies and contracts in force 
355.20  on the effective date of the conversion or other reasonable date 
355.21  as provided in the plan, shall be operated by the reorganized 
355.22  company as a closed block of participating business.  However, 
355.23  at the option of the converting mutual company, group policies 
355.24  and group contracts may be omitted from the closed block. 
355.25     (b) Assets of the converting mutual company must be 
355.26  allocated to the closed block of participating business in an 
355.27  amount equal to the reserves and liabilities for the converting 
355.28  mutual life insurer's participating policies and contracts in 
355.29  force on the effective date of the conversion.  The plan must be 
355.30  accompanied by an opinion of an independent qualified actuary 
355.31  who meets the standards set forth in the insurance laws or 
355.32  regulations for the submission of actuarial opinions as to the 
355.33  adequacy of reserves or assets.  The opinion must relate to the 
355.34  adequacy of the assets allocated to support the closed block of 
355.35  business.  The actuarial opinion must be based on methods of 
355.36  analysis considered appropriate for those purposes by the 
356.1   Actuarial Standards Board. 
356.2      (c) The reorganized company shall keep a separate 
356.3   accounting for the closed block and shall make and include in 
356.4   the annual statement to be filed with the commissioner each year 
356.5   a separate statement showing the gains, losses, and expenses 
356.6   properly attributable to the closed block. 
356.7      (d) Notwithstanding the establishment of a closed block, 
356.8   the entire assets of the reorganized company shall be available 
356.9   for the payment of benefits to policyholders.  Payment must 
356.10  first be made from the assets supporting the closed block until 
356.11  exhausted, and then from the general assets of the reorganized 
356.12  company. 
356.13     (e) The converting mutual company's equitable surplus shall 
356.14  be distributed to eligible participating policyholders in a form 
356.15  or forms selected by the converting mutual company.  The form of 
356.16  distribution may consist of cash, securities of the reorganized 
356.17  company, securities of another institution, a certificate of 
356.18  contribution, additional life insurance, annuity benefits, 
356.19  increased dividends, reduced premiums, or other equitable 
356.20  consideration or any combination of forms of consideration.  The 
356.21  consideration, if any, given to a class or category of 
356.22  policyholders may differ from the consideration given to another 
356.23  class or category of policyholders.  A certificate of 
356.24  contribution must be repayable in ten years, be equal to 100 
356.25  percent of the value of the policyholders' membership interest, 
356.26  and bear interest at the highest rate charged by the reorganized 
356.27  company for policy loans on the effective date of the conversion.
356.28     (f) The consideration must be allocated among the 
356.29  policyholders in a manner that is fair and equitable to the 
356.30  policyholders. 
356.31     (g) The reorganized company or its parent corporation shall 
356.32  issue and sell shares of one or more classes having a total 
356.33  price equal to the estimated value in the market of the shares 
356.34  on the initial offering date.  The estimated value must take 
356.35  into account all of the following: 
356.36     (1) the pro forma market value of the reorganized company; 
357.1      (2) the consideration to be given to policyholders 
357.2   according to paragraph (e); 
357.3      (3) the proceeds of the sale of the shares; and 
357.4      (4) any additional value attributable to the shares as a 
357.5   result of a purchaser or a group of purchasers who acted in 
357.6   concert to obtain shares in the initial offering, attaining, 
357.7   through such purchase, control of the reorganized company or its 
357.8   parent corporation. 
357.9      (h) If a purchaser or a group of purchasers acting in 
357.10  concert is to attain control in the initial offering, the mutual 
357.11  company shall not, directly or indirectly, pay for any of the 
357.12  costs or expenses of conversion of the mutual company, whether 
357.13  or not the conversion is effected, except with permission of the 
357.14  commissioner. 
357.15     (i) Periodically, with the commissioner's approval, the 
357.16  reorganized company may share in the profits of the closed block 
357.17  of participating business for the benefit of stockholders if the 
357.18  assets allocated to the closed block are in excess of those 
357.19  necessary to support the closed block. 
357.20     Sec. 4.  Minnesota Statutes 1996, section 60A.077, 
357.21  subdivision 1, is amended to read: 
357.22     Subdivision 1.  [FORMATION.] (a) A domestic mutual 
357.23  insurance company, upon approval of the commissioner, may 
357.24  reorganize by forming an insurance holding company based upon a 
357.25  mutual plan and continuing the corporate existence of the 
357.26  reorganizing insurance company as a stock insurance company.  
357.27  The commissioner, if satisfied that the interests of the 
357.28  policyholders are properly protected and that the plan of 
357.29  reorganization is fair and equitable to the policyholders, may 
357.30  approve the proposed plan of reorganization and may require as a 
357.31  condition of approval the modifications of the proposed plan of 
357.32  reorganization as the commissioner finds necessary for the 
357.33  protection of the policyholders' interests.  The commissioner 
357.34  shall retain jurisdiction over the mutual insurance holding 
357.35  company according to this section and chapter 60D to assure that 
357.36  policyholder and member interests are protected. 
358.1      (b) All of the initial voting shares of the capital stock 
358.2   of the reorganized insurance company must be issued to the 
358.3   mutual insurance holding company or to an intermediate stock 
358.4   holding company that is wholly owned by the mutual insurance 
358.5   holding company.  The membership interests of the policyholders 
358.6   of the reorganized insurance company become membership interests 
358.7   in the mutual insurance holding company.  "Membership interests" 
358.8   means those interests described in section 60A.075, subdivision 
358.9   1, paragraph (h).  Policyholders of the reorganized insurance 
358.10  company shall be members of the mutual insurance holding company 
358.11  and their voting rights must be determined in accordance with 
358.12  the articles of incorporation and bylaws of the mutual insurance 
358.13  holding company.  The mutual insurance holding company shall, at 
358.14  all times, directly or through an one or more intermediate stock 
358.15  holding company companies, control a majority of the voting 
358.16  shares of the capital stock of the reorganized insurance 
358.17  company, taking into account any potential dilution resulting 
358.18  from convertible securities. 
358.19     (c) A majority of the board of directors of a mutual 
358.20  insurance holding company must be disinterested directors.  For 
358.21  purposes of this section, a director is disinterested if (i) the 
358.22  director is not or has not within the past two years been an 
358.23  officer or employee of the mutual insurance holding company or 
358.24  any subsidiary or predecessor corporation, and (ii) the director 
358.25  does not hold, directly or indirectly, a material ownership 
358.26  interest in any subsidiary of the mutual insurance holding 
358.27  company.  An ownership interest is material if it represents 
358.28  more than one-half of one percent of the voting securities of 
358.29  the issuer, or a larger percentage as the commissioner may 
358.30  approve. 
358.31     Sec. 5.  Minnesota Statutes 1996, section 60A.077, 
358.32  subdivision 2, is amended to read: 
358.33     Subd. 2.  [MERGER.] (a) A domestic or foreign mutual 
358.34  insurance company, upon the approval of the commissioner, may 
358.35  reorganize by merging its policyholders' membership interests 
358.36  into a mutual insurance holding company formed according to 
359.1   subdivision 1 and continuing the corporate existence of the 
359.2   reorganizing insurance company as a stock insurance company 
359.3   subsidiary of the mutual insurance holding company or of an 
359.4   intermediate stock holding company.  "Membership interests" 
359.5   means those interests described in section 60A.075, subdivision 
359.6   1, paragraph (h).  The commissioner, if satisfied that the 
359.7   interests of the policyholder policyholders of the reorganizing 
359.8   company and the interests of the existing members of the mutual 
359.9   insurance holding company are properly protected and that the 
359.10  merger is fair and equitable to the policyholders those parties, 
359.11  may approve the proposed merger and may require as a condition 
359.12  of approval the modifications of the proposed merger as the 
359.13  commissioner finds necessary for the protection of the 
359.14  policyholders' or members' interests.  The commissioner shall 
359.15  retain jurisdiction, under chapter 60D, over the mutual 
359.16  insurance holding company organized according to this section to 
359.17  assure that policyholder and member interests are protected. 
359.18     (b) All of the initial voting shares of the capital stock 
359.19  of the reorganized insurance company must be issued to the 
359.20  mutual insurance holding company, or to an intermediate stock 
359.21  holding company that is wholly owned by the mutual insurance 
359.22  holding company.  The membership interests of the policyholders 
359.23  of the reorganized insurance company become membership interests 
359.24  in the mutual insurance holding company.  Policyholders of the 
359.25  reorganized insurance company shall be members of the mutual 
359.26  insurance holding company and their voting rights must be 
359.27  determined according to the articles of incorporation and bylaws 
359.28  of the mutual insurance holding company.  The mutual insurance 
359.29  holding company shall, at all times, directly or through one or 
359.30  more intermediate stock holding companies, control a majority of 
359.31  the voting shares of the capital stock of the reorganized 
359.32  insurance company, taking into account any potential dilution 
359.33  resulting from convertible securities. 
359.34     (c) A domestic mutual insurance holding company may merge 
359.35  with a domestic or foreign mutual insurance holding company in 
359.36  the manner prescribed for the merger of insurance companies set 
360.1   forth in section 60A.16, with any exceptions or modifications 
360.2   the commissioner may approve. 
360.3      Sec. 6.  Minnesota Statutes 1996, section 60A.077, 
360.4   subdivision 3, is amended to read: 
360.5      Subd. 3.  [PLAN OF REORGANIZATION; APPROVAL BY 
360.6   COMMISSIONER.] (a) The A reorganizing or merging insurer or a 
360.7   merging mutual insurance holding company shall file a plan of 
360.8   reorganization, approved, by the affirmative vote of a majority 
360.9   of its board of directors, for review and approval by the 
360.10  commissioner adopt a plan of reorganization or merger consistent 
360.11  with the requirements of this section and file the plan with the 
360.12  commissioner.  At any time before the approval of a plan by the 
360.13  commissioner, the company, by the affirmative vote of a majority 
360.14  of its directors, may amend or withdraw the plan.  The plan must 
360.15  provide for the following: 
360.16     (1) in the case of a reorganization under subdivision 1, 
360.17  establishing a mutual insurance holding company with at least 
360.18  one stock insurance company subsidiary, the majority of shares 
360.19  of which must be owned, either directly or through an 
360.20  intermediate stock holding company, by the mutual insurance 
360.21  holding company or in the case of a reorganization under 
360.22  subdivision 2, a description of the terms and conditions of the 
360.23  proposed merger; 
360.24     (2) analyzing the benefits and risks attendant to the 
360.25  proposed reorganization, including the rationale for the 
360.26  reorganization and analysis of the comparative benefits and 
360.27  risks of a demutualization under section 60A.075; 
360.28     (3) protecting the immediate and long-term interests of 
360.29  existing policyholders; 
360.30     (4) ensuring immediate membership in the mutual insurance 
360.31  holding company of all existing policyholders of the 
360.32  reorganizing domestic insurance company; 
360.33     (5) describing a plan providing for membership interests of 
360.34  future policyholders; 
360.35     (6) describing the number of members of the board of 
360.36  directors of the mutual insurance holding company required to be 
361.1   policyholders; 
361.2      (7) ensuring that, in the event of proceedings under 
361.3   chapter 60B involving a stock insurance company subsidiary of 
361.4   the mutual insurance holding company that resulted from the 
361.5   reorganization of a domestic mutual insurance company, the 
361.6   assets of the mutual insurance holding company will be available 
361.7   to satisfy the policyholder obligations of the stock insurance 
361.8   company; 
361.9      (8) for periodic distribution of accumulated holding 
361.10  company earnings to members describing the mutual insurance 
361.11  holding company's plan for distributions to members or other 
361.12  uses of accumulated mutual holding company earnings; 
361.13     (9) (8) describing the nature and content of the annual 
361.14  report and financial statement to be sent to each member; 
361.15     (10) (9) a copy of the proposed mutual insurance holding 
361.16  company's articles of incorporation and bylaws specifying all 
361.17  membership rights; 
361.18     (11) (10) the names, addresses, and occupational 
361.19  information of all corporate officers and members of the 
361.20  proposed mutual insurance holding company board of directors; 
361.21     (12) (11) information sufficient to demonstrate that the 
361.22  financial condition of the reorganizing or merging company will 
361.23  not be materially diminished upon reorganization, including 
361.24  information concerning any subsidiaries of the reorganizing or 
361.25  merging insurers that will become subsidiaries of the mutual 
361.26  insurance holding company or an intermediate holding company as 
361.27  part of the reorganization; 
361.28     (13) (12) a copy of the articles of incorporation and 
361.29  bylaws for any proposed insurance company subsidiary or 
361.30  intermediate holding company subsidiary; 
361.31     (14) (13) describing any plans for the an initial sale or 
361.32  subscription of stock for or other securities of the reorganized 
361.33  insurance company or any intermediate holding company; and 
361.34     (15) (14) any other information requested by the 
361.35  commissioner or required by rule. 
361.36     (b) The commissioner may approve the plan upon finding that 
362.1   the requirements of this section have been fully met and the 
362.2   plan will protect the immediate and long-term interests of 
362.3   policyholders. 
362.4      (c) The commissioner may retain, at the reorganizing or 
362.5   merging mutual company's expense, any qualified experts not 
362.6   otherwise a part of the commissioner's staff to assist in 
362.7   reviewing the plan. 
362.8      (d) The commissioner may, but need not, conduct a public 
362.9   hearing regarding the proposed plan.  The hearing must be held 
362.10  within 30 days after submission of a completed plan of 
362.11  reorganization to the commissioner.  The commissioner shall give 
362.12  the reorganizing mutual company at least 20 days' notice of the 
362.13  hearing.  At the hearing, the reorganizing mutual company, its 
362.14  policyholders, and any other person whose interest may be 
362.15  affected by the proposed reorganization, may present evidence, 
362.16  examine and cross-examine witnesses, and offer oral and written 
362.17  arguments or comments according to the procedure for contested 
362.18  cases under chapter 14.  The persons participating may conduct 
362.19  discovery proceedings in the same manner as prescribed for the 
362.20  district courts of this state.  All discovery proceedings must 
362.21  be concluded no later than three days before the scheduled 
362.22  commencement of the public hearing. 
362.23     Sec. 7.  Minnesota Statutes 1996, section 60A.077, 
362.24  subdivision 5, is amended to read: 
362.25     Subd. 5.  [APPROVAL BY MEMBERS.] The plan shall be approved 
362.26  by the members as provided in section 60A.075, subdivision 5. by 
362.27  the eligible members described in paragraphs (a) to (c).  
362.28     (a) In the case of a formation under subdivision 1, the 
362.29  plan must be approved by the eligible members of the 
362.30  reorganizing insurance company. 
362.31     (b) In the case of a merger under subdivision 2, paragraph 
362.32  (a), the plan must be approved by the eligible members of the 
362.33  merging insurance company and by the eligible members of the 
362.34  mutual insurance holding company into which the policyholders' 
362.35  membership interests are to be merged.  The vote of the eligible 
362.36  members of the mutual insurance holding company is not required 
363.1   if the commissioner determines that the merger would not be 
363.2   material to the financial condition of the mutual insurance 
363.3   holding company. 
363.4      (c) In the case of a merger of two mutual insurance holding 
363.5   companies under subdivision 2, paragraph (c), the plan must be 
363.6   approved by the eligible members of both companies.  The vote of 
363.7   the eligible members of the surviving mutual holding company is 
363.8   not required if the commissioner determines that the merger 
363.9   would not be material to the financial condition of the 
363.10  surviving company. 
363.11     Sec. 8.  Minnesota Statutes 1996, section 60A.077, 
363.12  subdivision 6, is amended to read: 
363.13     Subd. 6.  [INCORPORATION.] A mutual insurance holding 
363.14  company resulting from the reorganization of a domestic mutual 
363.15  insurance company organized under chapter 300 shall be 
363.16  incorporated pursuant to chapter 300.  The articles of 
363.17  incorporation and any amendments to the articles of the mutual 
363.18  insurance holding company are subject to approval of the 
363.19  commissioner in the same manner as those of an insurance 
363.20  company.  Members of a mutual insurance holding company shall be 
363.21  entitled to vote on all matters required to be submitted to 
363.22  members under chapter 300 and shall additionally be treated as 
363.23  shareholders for purposes of the voting approval requirements of 
363.24  section 300.09. 
363.25     Sec. 9.  Minnesota Statutes 1996, section 60A.077, 
363.26  subdivision 7, is amended to read: 
363.27     Subd. 7.  [APPLICABILITY OF CERTAIN PROVISIONS.] (a) A In 
363.28  the event of the insolvency of a mutual insurance holding 
363.29  company, the mutual insurance holding company is considered to 
363.30  be an insurer subject to chapter 60B.  and shall automatically 
363.31  be a party to any proceeding under chapter 60B involving an 
363.32  insurance company that, as a result of a reorganization 
363.33  according to subdivision 1 or 2, is a subsidiary of the mutual 
363.34  insurance holding company.  In any proceeding under chapter 60B 
363.35  involving the reorganized insurance company, the assets of the 
363.36  mutual insurance holding company are considered to be assets of 
364.1   the estate of the reorganized insurance company for purposes of 
364.2   satisfying the claims of the reorganized insurance company's 
364.3   policyholders.  A mutual insurance holding company shall not 
364.4   dissolve or liquidate without the approval of the commissioner 
364.5   or as ordered by the district a court according to chapter 
364.6   60B of competent jurisdiction. 
364.7      (b) A mutual insurance holding company is subject to 
364.8   chapter 60D to the extent consistent with this section. 
364.9      (c) As a condition to approval of the plan, the 
364.10  commissioner may require the mutual insurance holding company to 
364.11  comply with any provision of the insurance laws necessary to 
364.12  protect the interests of the policyholders as if the mutual 
364.13  insurance holding company were a domestic mutual insurance 
364.14  company.  
364.15     (d) No person or group of persons other than the chief 
364.16  executive officer of a mutual insurance holding company, or the 
364.17  chief executive officer's designee, shall seek to obtain proxies 
364.18  from the members of the mutual insurance holding company for the 
364.19  purposes of affecting a change of control of the mutual 
364.20  insurance holding company unless that person or persons have 
364.21  filed with the commissioner and have sent to the mutual 
364.22  insurance holding company a statement containing the information 
364.23  required by section 60D.17.  Section 60D.17, subdivisions 2 to 
364.24  7, apply in the event of a proxy solicitation regulated by this 
364.25  paragraph. 
364.26     (e) For purposes of this subdivision, the term "control," 
364.27  including the terms "controlling," "controlled by," and "under 
364.28  common control with," means the possession, direct or indirect, 
364.29  of the power to direct or cause the direction of the management 
364.30  and policies of a person, whether through membership voting 
364.31  interests, by contract other than a commercial contract for 
364.32  goods or nonmanagement services, or otherwise, unless the power 
364.33  is the result of an official position with, corporate office 
364.34  held by, or court appointment of, the person.  Control is 
364.35  presumed to exist if any person, directly or indirectly, owns, 
364.36  controls, holds with the power to vote, or holds proxies 
365.1   representing, ten percent or more of the membership voting 
365.2   interests of the mutual insurance holding company.  This 
365.3   presumption may be rebutted by a showing made in the manner 
365.4   provided by section 60D.19, subdivision 11, that control does 
365.5   not exist in fact.  The commissioner may determine after 
365.6   furnishing all persons in interest notice and opportunity to be 
365.7   heard and making specific findings of fact to support the 
365.8   determination, that control exists in fact, notwithstanding the 
365.9   absence of a presumption to that effect. 
365.10     Sec. 10.  Minnesota Statutes 1996, section 60A.077, 
365.11  subdivision 8, is amended to read: 
365.12     Subd. 8.  [APPLICABILITY OF DEMUTUALIZATION PROVISIONS.] 
365.13  (a) Except as otherwise provided, section 60A.075 is not 
365.14  applicable to a reorganization or merger according to this 
365.15  section, except for section 60A.075, subdivisions 14 to 16. 
365.16     (b) Section 60A.075 is applicable to demutualization of a 
365.17  mutual insurance holding company that resulted from the 
365.18  reorganization of a domestic mutual insurance company organized 
365.19  under chapter 300 as if it were a mutual insurance company. 
365.20     (c) Section 60A.075, subdivisions 14 to 16, are applicable 
365.21  to a reorganization or merger under this section. 
365.22     Sec. 11.  Minnesota Statutes 1996, section 60A.077, 
365.23  subdivision 9, is amended to read: 
365.24     Subd. 9.  [MEMBERSHIP INTERESTS.] A membership interest in 
365.25  a domestic mutual insurance holding company does not constitute 
365.26  a security as defined in section 80A.14, subdivision 18.  No 
365.27  member of a mutual insurance holding company may transfer or 
365.28  pledge membership in the mutual insurance holding company or any 
365.29  right arising from the membership except as attendant to the 
365.30  valid transfer or assignment of the member's policy in any 
365.31  reorganized company that gave rise to the member's membership 
365.32  interest.  A member of a mutual insurance holding company is 
365.33  not, as a member, personally liable for the acts, debts, 
365.34  liabilities, or obligations of the company.  No assessments of 
365.35  any kind may be imposed upon the members of a mutual insurance 
365.36  holding company by the directors or members, or because of any 
366.1   liability of any company owned or controlled by the mutual 
366.2   insurance holding company or because of any act, debt, or 
366.3   liability of the mutual insurance holding company.  A member's 
366.4   interest in the mutual insurance holding company shall 
366.5   automatically terminate upon cancellation, nonrenewal, 
366.6   expiration, or termination of the member's policy in any 
366.7   insurance company that gave rise to the member's membership 
366.8   interest. 
366.9      Sec. 12.  Minnesota Statutes 1996, section 60A.077, 
366.10  subdivision 10, is amended to read: 
366.11     Subd. 10.  [FINANCIAL STATEMENT REQUIREMENTS.] (a) In 
366.12  addition to any items required under chapter 60D, each mutual 
366.13  insurance holding company shall file with the commissioner, by 
366.14  April 1 of each year, an annual statement consisting of the 
366.15  following: 
366.16     (1) an income statement, balance sheet, and cashflow 
366.17  statement prepared in accordance with generally accepted 
366.18  accounting principles; 
366.19     (2) complete information on the status of any closed block 
366.20  formed as part of a plan of reorganization; 
366.21     (3) an investment plan covering all assets; and 
366.22     (4) a statement disclosing any intention to pledge, borrow 
366.23  against, alienate, hypothecate, or in any way encumber the 
366.24  assets of the mutual insurance holding company or an 
366.25  intermediate stock holding company.  Action taken according to 
366.26  the statement is subject to the commissioner's prior written 
366.27  approval. 
366.28     (b) The aggregate pledges and encumbrances of a mutual 
366.29  insurance holding company's assets shall not affect more than 49 
366.30  percent of the company's stock in ownership of any subsidiary 
366.31  insurance holding company or subsidiary insurance company that 
366.32  resulted from a reorganization or merger. 
366.33     (c) At least 50 percent of the generally accepted 
366.34  accounting principles (GAAP) net worth of a mutual insurance 
366.35  holding company must be invested in insurance company 
366.36  subsidiaries. 
367.1      Sec. 13.  Minnesota Statutes 1996, section 60A.077, 
367.2   subdivision 11, is amended to read: 
367.3      Subd. 11.  [SALE OF STOCK AND PAYMENT OF DIVIDENDS.] (a) A 
367.4   reorganized insurance company and an intermediate stock holding 
367.5   company may issue subscription rights and may issue or grant any 
367.6   other securities, rights, options, and similar items to the same 
367.7   extent as any business corporation organized under chapter 
367.8   302A.  However, except as provided in paragraphs (b) to (d), 
367.9   no solicitation for the sale of the stock securities of the 
367.10  reorganized insurance company, or of an intermediate stock 
367.11  holding company of the mutual insurance holding company, that 
367.12  directly or indirectly controls a majority of voting shares of 
367.13  the reorganized insurance company, may be made without the 
367.14  commissioner's prior written approval.  
367.15     (b) A registration statement covering securities that has 
367.16  been approved by the commissioner and filed with and declared 
367.17  effective by the Securities and Exchange Commission under the 
367.18  Securities Act of 1933 pursuant to any provision of that statute 
367.19  or rule that allows registration of securities to be sold on a 
367.20  delayed or continuous basis may be sold without further approval.
367.21     (c) Unless the commissioner has granted the mutual 
367.22  insurance holding company a written exemption from the 
367.23  requirements of this paragraph, any securities which are 
367.24  regularly traded on the New York Stock Exchange, the American 
367.25  Stock Exchange, or another exchange approved by the 
367.26  commissioner, or designated on the National Association of 
367.27  Securities Dealers automated quotations (NASDAQ) national market 
367.28  system, shall be sold according to the procedure in this 
367.29  paragraph.  If the mutual insurance holding company, an 
367.30  intermediate holding company, or a reorganized insurance company 
367.31  intends to offer securities that are governed by this paragraph, 
367.32  that entity shall deliver to the commissioner, not less than ten 
367.33  days before the offering, a notice of the planned offering and 
367.34  information regarding:  (1) the approximate number of shares 
367.35  intended to be offered; (2) the target date of sale; (3) 
367.36  evidence the security is regularly traded on one of the public 
368.1   exchanges noted above; and (4) the recent history of the trading 
368.2   price and trading volume of the security.  The commissioner is 
368.3   considered to have approved the sale unless within ten days 
368.4   following receipt of the notice, the commissioner issues an 
368.5   objection to the sale.  If the commissioner issues an objection 
368.6   to the sale, the security may not be sold until the commissioner 
368.7   issues an order approving the sale. 
368.8      (d) A reorganized insurance company or intermediate holding 
368.9   company that has issued securities that are regularly traded on 
368.10  one of the exchanges or markets described in paragraph (c), may 
368.11  establish stock option, incentive, and share ownership plans 
368.12  customary for publicly traded companies in the same or similar 
368.13  industries.  If the reorganized insurance company or 
368.14  intermediate holding company intends to establish a stock 
368.15  option, incentive or share ownership plan, that entity shall 
368.16  deliver to the commissioner, not less than 30 days before the 
368.17  establishment of the plan, a notice of the proposed plan along 
368.18  with any information about the proposed plan the commissioner 
368.19  requires.  The commissioner is considered to have approved the 
368.20  plan unless within 30 days following receipt of the notice, the 
368.21  commissioner issues an objection to the proposed plan.  If the 
368.22  commissioner issues an objection to the proposed plan, the plan 
368.23  may not be established until the commissioner issues an order 
368.24  approving the plan.  If the commissioner approves the 
368.25  establishment of the stock option, incentive, or share ownership 
368.26  plan, the reorganized insurance company or the intermediate 
368.27  holding company that obtained the approval may sell or issue 
368.28  securities according to the approved plan without further 
368.29  approval. 
368.30     (e) The total number of shares of capital stock issued by 
368.31  the reorganized insurance company or an intermediate holding 
368.32  company that may be held by directors and officers of the mutual 
368.33  insurance holding company, any intermediate holding company, and 
368.34  of any reorganized insurance company, and acquired according to 
368.35  subscription rights or stock option, incentive, and share 
368.36  ownership plans, may not exceed the percentage limits set forth 
369.1   in section 60A.075, subdivision 11, paragraph (b).  Subject to 
369.2   the requirements of subdivision 1, paragraph (c), nothing in 
369.3   this section prohibits the acquisition of any securities of a 
369.4   reorganized insurance company or intermediate stock holding 
369.5   company through a licensed securities broker-dealer by any 
369.6   officer or director of the reorganized company, an intermediate 
369.7   stock holding company, or the mutual insurance holding company. 
369.8      (f) Dividends and other distributions to the shareholders 
369.9   of the reorganized stock insurance company or of an intermediate 
369.10  stock holding company shall not be made except in 
369.11  compliance must comply with section 60D.20.  Any dividends and 
369.12  other distributions to the members of the mutual insurance 
369.13  holding company must comply with section 60D.20 and any other 
369.14  approval requirements contained in the mutual insurance holding 
369.15  company's articles of incorporation. 
369.16     (g) Unless previously approved as part of the plan of 
369.17  reorganization, the initial offering of any voting shares to the 
369.18  public by a reorganized company, a stock insurance company 
369.19  subsidiary, or an intermediate holding company which holds a 
369.20  majority of the voting shares of a reorganized insurance company 
369.21  or stock insurance company subsidiary, must be approved by a 
369.22  majority of votes cast at a regular or special meeting of the 
369.23  members of the mutual insurance holding company.  Any issuer 
369.24  repurchase program, plan of exchange, recapitalization, or 
369.25  offering of capital securities to the public, shall, in addition 
369.26  to any other approvals required by law or by the issuer's 
369.27  articles of incorporation, be approved by a majority of the 
369.28  board of directors of the mutual insurance holding company and 
369.29  by a majority of the disinterested members of the board of 
369.30  directors of the mutual insurance holding company. 
369.31     Sec. 14.  Minnesota Statutes 1996, section 60A.077, is 
369.32  amended by adding a subdivision to read: 
369.33     Subd. 12.  [PROVISIONS IN THE EVENT OF INSURER 
369.34  INSOLVENCY.] (a) In the event of any insolvency proceeding 
369.35  involving an insolvent stock subsidiary, the assets of the 
369.36  mutual insurance holding company, together with any assets of 
370.1   any intermediate holding company that directly or indirectly 
370.2   controls the insolvent stock subsidiary, must be available to 
370.3   satisfy the policyholder obligations of the insolvent stock 
370.4   subsidiary in an amount determined by the commissioner, but in 
370.5   no event more than the total amount of nonpolicyholder dividends 
370.6   paid by the insolvent stock subsidiary to the mutual insurance 
370.7   holding company, or any intermediate holding company that 
370.8   controls the insolvent stock subsidiary, during the ten-year 
370.9   period immediately preceding the date of insolvency. 
370.10     (b) In determining the required contribution by the mutual 
370.11  insurance holding company or any intermediate stock holding 
370.12  company which controls the insolvent stock subsidiary, the 
370.13  commissioner shall take into account among other factors: 
370.14     (1) the possible direct or indirect negative effects of any 
370.15  required contribution on any insurance company affiliate of the 
370.16  insolvent stock subsidiary; and 
370.17     (2) the possible direct or indirect, long-term, or 
370.18  short-term negative effects on the members of the mutual 
370.19  insurance holding company, other than those members who, are, or 
370.20  were policyholders of the insolvent stock subsidiary. 
370.21     Nothing in this subdivision limits the powers of the 
370.22  commissioner or the liquidator under chapter 60B. 
370.23     (c) For purposes of this subdivision, the following terms 
370.24  have the meanings given: 
370.25     (1) "date of insolvency" means, as to an insolvent stock 
370.26  subsidiary, the date established in accordance with chapter 60B 
370.27  or comparable statute of another state governing the 
370.28  rehabilitation or liquidation of a foreign insolvent stock 
370.29  subsidiary; 
370.30     (2) "insolvency proceeding" means any proceeding under 
370.31  chapter 60B or comparable statute of another state governing the 
370.32  rehabilitation and liquidation of a foreign insolvent stock 
370.33  subsidiary; 
370.34     (3) "insolvent stock subsidiary" means any stock insurance 
370.35  company subsidiary of a mutual insurance holding company that 
370.36  resulted from the reorganization of a domestic or foreign mutual 
371.1   insurance company according to subdivision 1 or 2, or any other 
371.2   stock insurance company subsidiary that is subject to an 
371.3   insolvency proceeding, which on the date of insolvency has in 
371.4   force policies that have given rise to membership interests in 
371.5   the mutual insurance holding company; 
371.6      (4) "control" has the meaning given in section 60D.15, 
371.7   subdivision 4; and 
371.8      (5) "dividends" include distributions of cash or any other 
371.9   assets. 
371.10     Sec. 15.  Minnesota Statutes 1996, section 290.01, is 
371.11  amended by adding a subdivision to read: 
371.12     Subd. 4c.  [MUTUAL INSURANCE HOLDING COMPANIES.] A "mutual 
371.13  insurance holding company" is not an insurance company for 
371.14  purposes of this chapter. 
371.15     Sec. 16.  Minnesota Statutes 1996, section 290.17, 
371.16  subdivision 4, is amended to read: 
371.17     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
371.18  business conducted wholly within this state or partly within and 
371.19  partly without this state is part of a unitary business, the 
371.20  entire income of the unitary business is subject to 
371.21  apportionment pursuant to section 290.191.  Notwithstanding 
371.22  subdivision 2, paragraph (c), none of the income of a unitary 
371.23  business is considered to be derived from any particular source 
371.24  and none may be allocated to a particular place except as 
371.25  provided by the applicable apportionment formula.  The 
371.26  provisions of this subdivision do not apply to farm income 
371.27  subject to subdivision 5, paragraph (a), business income subject 
371.28  to subdivision 5, paragraph (b) or (c), income of an insurance 
371.29  company determined under section 290.35, or income of an 
371.30  investment company determined under section 290.36. 
371.31     (b) The term "unitary business" means business activities 
371.32  or operations which are of mutual benefit, dependent upon, or 
371.33  contributory to one another, individually or as a group.  The 
371.34  term may be applied within a single legal entity or between 
371.35  multiple entities and without regard to whether each entity is a 
371.36  corporation, a partnership or a trust.  
372.1      (c) Unity is presumed whenever there is unity of ownership, 
372.2   operation, and use, evidenced by centralized management or 
372.3   executive force, centralized purchasing, advertising, 
372.4   accounting, or other controlled interaction, but the absence of 
372.5   these centralized activities will not necessarily evidence a 
372.6   nonunitary business. 
372.7      (d) Where a business operation conducted in Minnesota is 
372.8   owned by a business entity that carries on business activity 
372.9   outside the state different in kind from that conducted within 
372.10  this state, and the other business is conducted entirely outside 
372.11  the state, it is presumed that the two business operations are 
372.12  unitary in nature, interrelated, connected, and interdependent 
372.13  unless it can be shown to the contrary.  
372.14     (e) Unity of ownership is not deemed to exist when a 
372.15  corporation is involved unless that corporation is a member of a 
372.16  group of two or more business entities and more than 50 percent 
372.17  of the voting stock of each member of the group is directly or 
372.18  indirectly owned by a common owner or by common owners, either 
372.19  corporate or noncorporate, or by one or more of the member 
372.20  corporations of the group.  For this purpose, the term "voting 
372.21  stock" shall include membership interests of mutual insurance 
372.22  holding companies formed under section 60A.077.  
372.23     (f) The net income and apportionment factors under section 
372.24  290.191 or 290.20 of foreign corporations and other foreign 
372.25  entities which are part of a unitary business shall not be 
372.26  included in the net income or the apportionment factors of the 
372.27  unitary business.  A foreign corporation or other foreign entity 
372.28  which is required to file a return under this chapter shall file 
372.29  on a separate return basis.  The net income and apportionment 
372.30  factors under section 290.191 or 290.20 of foreign operating 
372.31  corporations shall not be included in the net income or the 
372.32  apportionment factors of the unitary business except as provided 
372.33  in paragraph (g). 
372.34     (g) The adjusted net income of a foreign operating 
372.35  corporation shall be deemed to be paid as a dividend on the last 
372.36  day of its taxable year to each shareholder thereof, in 
373.1   proportion to each shareholder's ownership, with which such 
373.2   corporation is engaged in a unitary business.  Such deemed 
373.3   dividend shall be treated as a dividend under section 290.21, 
373.4   subdivision 4. 
373.5      Dividends actually paid by a foreign operating corporation 
373.6   to a corporate shareholder which is a member of the same unitary 
373.7   business as the foreign operating corporation shall be 
373.8   eliminated from the net income of the unitary business in 
373.9   preparing a combined report for the unitary business.  The 
373.10  adjusted net income of a foreign operating corporation shall be 
373.11  its net income adjusted as follows: 
373.12     (1) any taxes paid or accrued to a foreign country, the 
373.13  commonwealth of Puerto Rico, or a United States possession or 
373.14  political subdivision of any of the foregoing shall be a 
373.15  deduction; and 
373.16     (2) the subtraction from federal taxable income for 
373.17  payments received from foreign corporations or foreign operating 
373.18  corporations under section 290.01, subdivision 19d, clause (11), 
373.19  shall not be allowed. 
373.20     If a foreign operating corporation incurs a net loss, 
373.21  neither income nor deduction from that corporation shall be 
373.22  included in determining the net income of the unitary business. 
373.23     (h) For purposes of determining the net income of a unitary 
373.24  business and the factors to be used in the apportionment of net 
373.25  income pursuant to section 290.191 or 290.20, there must be 
373.26  included only the income and apportionment factors of domestic 
373.27  corporations or other domestic entities other than foreign 
373.28  operating corporations that are determined to be part of the 
373.29  unitary business pursuant to this subdivision, notwithstanding 
373.30  that foreign corporations or other foreign entities might be 
373.31  included in the unitary business.  
373.32     (i) Deductions for expenses, interest, or taxes otherwise 
373.33  allowable under this chapter that are connected with or 
373.34  allocable against dividends, deemed dividends described in 
373.35  paragraph (g), or royalties, fees, or other like income 
373.36  described in section 290.01, subdivision 19d, clause (11), shall 
374.1   not be disallowed. 
374.2      (j) Each corporation or other entity that is part of a 
374.3   unitary business must file combined reports as the commissioner 
374.4   determines.  On the reports, all intercompany transactions 
374.5   between entities included pursuant to paragraph (h) must be 
374.6   eliminated and the entire net income of the unitary business 
374.7   determined in accordance with this subdivision is apportioned 
374.8   among the entities by using each entity's Minnesota factors for 
374.9   apportionment purposes in the numerators of the apportionment 
374.10  formula and the total factors for apportionment purposes of all 
374.11  entities included pursuant to paragraph (h) in the denominators 
374.12  of the apportionment formula. 
374.13     (k) If a corporation has been divested from a unitary 
374.14  business and is included in a combined report for a fractional 
374.15  part of the common accounting period of the combined report:  
374.16     (1) its income includable in the combined report is its 
374.17  income incurred for that part of the year determined by 
374.18  proration or separate accounting; and 
374.19     (2) its sales, property, and payroll included in the 
374.20  apportionment formula must be prorated or accounted for 
374.21  separately. 
374.22                             ARTICLE 16 
374.23                           MISCELLANEOUS 
374.24     Section 1.  Minnesota Statutes 1996, section 6.76, is 
374.25  amended to read: 
374.26     6.76 [LOCAL GOVERNMENTAL EXPENDITURES FOR LOBBYISTS.] 
374.27     (a) On or before January 31, 1990, and of each year 
374.28  thereafter, all counties, cities, school districts, metropolitan 
374.29  agencies, regional railroad authorities, and the metropolitan 
374.30  council shall report to the state auditor, on forms prescribed 
374.31  by the auditor, their estimated expenditures paid for the 
374.32  previous calendar year to a lobbyist as defined in section 
374.33  10A.01, subdivision 11, except payments to associations of local 
374.34  governments that are reported under paragraph (b), and to any 
374.35  staff person not registered as a lobbyist, over 25 percent of 
374.36  whose time is spent during the legislative session on 
375.1   legislative matters. 
375.2      (b) Associations of local governments subject to this 
375.3   section shall report annually, on or before January 31, to the 
375.4   state auditor and the association's members the proportionate 
375.5   amount of each member's dues spent for lobbying purposes. 
375.6      Sec. 2.  Minnesota Statutes 1996, section 115A.554, is 
375.7   amended to read: 
375.8      115A.554 [AUTHORITY OF SANITARY DISTRICTS.] 
375.9      A sanitary district has the authorities and duties of 
375.10  counties within the district's boundary for purposes of sections 
375.11  115A.0716; 115A.46, subdivisions 4 and 5; 115A.48; 115A.551; 
375.12  115A.552; 115A.553; 115A.919; 115A.929; 115A.93; 115A.96, 
375.13  subdivision 6; 115A.961; 116.072; 375.18, subdivision 14; 
375.14  400.08, except subdivision 4, paragraph (b); 400.16; and 400.161.
375.15     Sec. 3.  Minnesota Statutes 1996, section 117.155, is 
375.16  amended to read: 
375.17     117.155 [PAYMENTS; PARTIAL PAYMENT PENDING APPEAL.] 
375.18     Except as otherwise provided herein payment of damages 
375.19  awarded may be made or tendered at any time after the filing of 
375.20  the report; and the duty of the petitioner to pay the amount of 
375.21  any award or final judgment upon appeal shall, for all purposes, 
375.22  be held and construed to be full and just compensation to the 
375.23  respective owners or the persons interested in the lands.  If 
375.24  either the petitioner or any respondent appeals from an award, 
375.25  the respondent or respondents, if there is more than one, except 
375.26  encumbrancers having an interest in the award which has been 
375.27  appealed, may demand of the petitioner a partial payment of the 
375.28  award pending the final determination thereof, and it shall be 
375.29  the duty of the petitioner to comply with such demand and to 
375.30  promptly pay the amount demanded but not in excess of an amount 
375.31  equal to three-fourths of the award of damages for the parcel 
375.32  which has been appealed, less any payments made by petitioner 
375.33  pursuant to section 117.042; provided, however, that the 
375.34  petitioner may by motion after due notice to all interested 
375.35  parties request, and the court may order, reduction in the 
375.36  amount of the partial payment for cause shown.  If an appeal is 
376.1   taken from an award the petitioner may, but it cannot be 
376.2   compelled to, pay the entire amount of the award pending the 
376.3   final determination thereof.  If any respondent or respondents 
376.4   having an interest in the award refuses to accept such payment 
376.5   the petitioner may pay the amount thereof to the court 
376.6   administrator of district court to be paid out under direction 
376.7   of the court.  A partial or full payment as herein provided 
376.8   shall not draw interest from the condemner from the date of 
376.9   payment or deposit, and upon final determination of any appeal 
376.10  the total award of damages shall be reduced by the amount of the 
376.11  partial or full payment.  If any partial or full payment exceeds 
376.12  the amount of the award of compensation as finally determined, 
376.13  the petitioner shall have a claim against the respondents 
376.14  receiving such payment for the amount thereof, to be recoverable 
376.15  in the same manner as in any civil action upon petitioner's 
376.16  motion, final judgment must be entered in the condemnation 
376.17  action in favor of the petitioner in the amount of the balance 
376.18  owed to the petitioner and is recoverable within the original 
376.19  condemnation action. 
376.20     Sec. 4.  Minnesota Statutes 1996, section 121.15, is 
376.21  amended by adding a subdivision to read: 
376.22     Subd. 1a.  [PROJECT.] The construction, remodeling, or 
376.23  improvement of a building or site of an educational facility at 
376.24  an estimated cost exceeding $100,000 is a project under section 
376.25  177.42, subdivision 2. 
376.26     Sec. 5.  Minnesota Statutes 1996, section 161.45, is 
376.27  amended by adding a subdivision to read: 
376.28     Subd. 3.  [UTILITY INTERESTS WHEN REAL PROPERTY 
376.29  CONVEYED.] In proceedings to vacate, transfer, turn back, or 
376.30  otherwise convey an interest in real property owned or 
376.31  controlled by the department, when the property is owned in fee 
376.32  by the state, the commissioner may specify that the conveyance 
376.33  of the department's interest does not affect a prior, existing 
376.34  utility easement in the property or use of the property granted 
376.35  to a utility under permit issued by the department.  In 
376.36  addition, the commissioner may convey interests in real 
377.1   property, including an easement, subject to the right of a 
377.2   utility to enter upon the right-of-way to maintain, repair, 
377.3   replace, reconstruct, improve, remove, or otherwise attend to 
377.4   its equipment.  Where the utility had no preexisting easement 
377.5   over the real property, this subdivision does not prohibit a 
377.6   political subdivision, government agency, or private entity from 
377.7   negotiating or contracting with a utility with regard to the 
377.8   utility's easement or other interest in the property, but the 
377.9   utility shall continue to hold the interest in the property and 
377.10  the right of reasonable entry unless and until the utility 
377.11  agrees in writing to relinquish its interests. 
377.12     Sec. 6.  Minnesota Statutes 1996, section 270.60, is 
377.13  amended by adding a subdivision to read: 
377.14     Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
377.15  shall pay to a qualified county in which an Indian gaming casino 
377.16  is located ten percent of the state share of all taxes generated 
377.17  from activities on reservations and collected under a tax 
377.18  agreement under this section with the tribal government for the 
377.19  reservation located in the county.  If the tribe has casinos 
377.20  located in more than one county, the payment must be divided 
377.21  equally among the counties in which the casinos are located. 
377.22     (b) A county qualifies for payments under this subdivision 
377.23  only if one of the following conditions is met: 
377.24     (1) the county's per capita income is less than 80 percent 
377.25  of the state per capita personal income, based on the most 
377.26  recent estimates made by the United States Bureau of Economic 
377.27  Analysis; or 
377.28     (2) 30 percent or more of the total market value of real 
377.29  property in the county is exempt from ad valorem taxation. 
377.30     (c) The commissioner shall make the payments required under 
377.31  this subdivision by February 28 of the year following the year 
377.32  the taxes are collected. 
377.33     (d) To make the payments authorized by this subdivision, 
377.34  $1,100,000 is annually appropriated from the general fund to the 
377.35  commissioner.  If the authorized payments exceed the amount of 
377.36  the appropriation, the commissioner shall proportionately reduce 
378.1   the rate so that the total amount equals the appropriation. 
378.2      Sec. 7.  Minnesota Statutes 1996, section 271.19, is 
378.3   amended to read: 
378.4      271.19 [COSTS AND DISBURSEMENTS.] 
378.5      Upon the determination of any appeal under this chapter 
378.6   before the tax court, or of any review hereunder by the supreme 
378.7   court, the costs and disbursements shall be taxed and allowed in 
378.8   favor of the prevailing party and against the losing party as in 
378.9   civil actions or, if there has been an offer of judgment or 
378.10  settlement by a party prior to ten days before the court hears 
378.11  the appeal, pursuant to Minnesota Rules of Civil Procedure, rule 
378.12  68.  In any case where a person liable for a tax or other 
378.13  obligation has lost an appeal or review instituted by the 
378.14  person, and the tax court or court shall determine that the 
378.15  person instituted the same merely for the purposes of delay, or 
378.16  that the taxpayer's position in the proceedings is frivolous, 
378.17  additional costs, commensurate with the expense incurred and 
378.18  services performed by the agencies of the state in connection 
378.19  with the appeal, but not exceeding $5,000 in any case, may be 
378.20  allowed against the taxpayer, in the discretion of the tax court 
378.21  or court.  Costs and disbursements allowed against any such 
378.22  person shall be added to the tax or other obligation determined 
378.23  to be due, and shall be payable therewith.  To the extent 
378.24  described in section 15.471, where an award of costs and 
378.25  attorney fees is authorized under section 15.472, the costs and 
378.26  fees shall be allowed against the state, including expenses 
378.27  incurred by the taxpayer to administratively protest or appeal 
378.28  to the department of revenue the order, decision, or report of 
378.29  the commissioner that is the subject of the tax court 
378.30  proceedings.  Costs and disbursements allowed against the state 
378.31  or other public agencies shall be paid out of funds received 
378.32  from taxes or other obligations of the kind involved in the 
378.33  proceeding, or other funds of the agency concerned appropriated 
378.34  and available therefor.  Witnesses in proceedings under this 
378.35  chapter shall receive like fees as in the district court, to be 
378.36  paid in the first instance by the parties by whom the witnesses 
379.1   were called, and to be taxed and allowed as herein provided. 
379.2      Sec. 8.  Minnesota Statutes 1996, section 278.07, is 
379.3   amended to read: 
379.4      278.07 [JUDGMENT; AMOUNT; COSTS.] 
379.5      Judgment shall be for the amount of the taxes for the year 
379.6   as the court shall determine the same, less the amount paid 
379.7   thereon, if any.  If the tax is sustained in the full amount 
379.8   levied or increased, costs and disbursements may, in the 
379.9   discretion of the court, be taxed and allowed as in delinquent 
379.10  tax proceedings and shall be included in the judgment.  If the 
379.11  tax so determined shall be less than is decreased from the 
379.12  amount thereof as originally levied, the court may, in its 
379.13  discretion, award disbursements to the petitioner, which shall 
379.14  be taxed and allowed and be deducted from the amount of the 
379.15  taxes as determined unless there has been a previous offer of 
379.16  reduced taxes that was rejected by the petitioner, in which case 
379.17  the award of costs and disbursements is governed by Minnesota 
379.18  Rules of Civil Procedure, rule 68.  If there be no judgment for 
379.19  taxes, a judgment may be entered determining the right of the 
379.20  parties and for the costs and disbursements as taxed and allowed.
379.21     Sec. 9.  Minnesota Statutes 1996, section 287.22, is 
379.22  amended to read: 
379.23     287.22 [EXCEPTIONS.] 
379.24     The tax imposed by section 287.21 shall not apply to: 
379.25     A.  Any executory contract for the sale of land under which 
379.26  the vendee is entitled to or does take possession thereof, or 
379.27  any assignment or cancellation thereof.  
379.28     B.  Any mortgage or any assignment, extension, partial 
379.29  release, or satisfaction thereof.  
379.30     C.  Any will.  
379.31     D.  Any plat.  
379.32     E.  Any lease.  
379.33     F.  Any deed, instrument, or writing in which the United 
379.34  States or any agency or instrumentality thereof is the grantor, 
379.35  assignor, transferor, conveyor, grantee or assignee. 
379.36     G.  Deeds for cemetery lots.  
380.1      H.  Deeds of distribution by personal representatives.  
380.2      I.  Deeds to or from coowners partitioning undivided 
380.3   interests in the same piece of property. 
380.4      J.  Any deed or other instrument of conveyance issued 
380.5   pursuant to a land exchange under section 92.121 and related 
380.6   laws.  
380.7      K.  A referee's or sheriff's certificate of sale in a 
380.8   mortgage or lien foreclosure sale. 
380.9      L.  A referee's or sheriff's certificate of redemption from 
380.10  a mortgage or lien foreclosure sale issued to the redeeming 
380.11  mortgagor or lienee. 
380.12     M.  A decree of marriage dissolution, as defined in section 
380.13  287.01, subdivision 4, or any deed or other instrument between 
380.14  the parties to the dissolution made pursuant to the terms of the 
380.15  decree. 
380.16     Sec. 10.  [287.221] [NEW RESIDENTIAL CONSTRUCTION.] 
380.17     The commissioner of revenue may not enforce a deed tax 
380.18  assessment on the consideration paid for an improvement in the 
380.19  case of new residential construction if, at or before the time 
380.20  the first residential owners of the improvement take possession, 
380.21  the deed tax has been paid on the consideration paid for the 
380.22  improvement. 
380.23     Sec. 11.  Minnesota Statutes 1996, section 308A.705, 
380.24  subdivision 1, is amended to read: 
380.25     Subdivision 1.  [DISTRIBUTION OF NET INCOME.] Net income in 
380.26  excess of dividends on capital stock and additions to reserves 
380.27  shall be distributed on the basis of patronage.  A cooperative 
380.28  may establish allocation units, whether the units are 
380.29  functional, divisional, departmental, geographic, or otherwise, 
380.30  and pooling arrangements and may account for and distribute net 
380.31  income on the basis of allocation units and pooling 
380.32  arrangements.  A cooperative may offset the net loss of an 
380.33  allocation unit or pooling arrangement against the net income of 
380.34  other allocation units or pooling arrangements to the extent 
380.35  permitted by section 1388(j) of the Internal Revenue Code of 
380.36  1986, as amended through December 31, 1996. 
381.1      Sec. 12.  Minnesota Statutes 1996, section 325D.33, 
381.2   subdivision 3, is amended to read: 
381.3      Subd. 3.  [REBATES OR CONCESSIONS.] It is unlawful for a 
381.4   wholesaler to offer a rebate in price, to give a rebate in 
381.5   price, to offer a concession of any kind, or to give a 
381.6   concession of any kind in connection with the sale of 
381.7   cigarettes.  For purposes of this chapter, the term "discount" 
381.8   is included in the definition of a rebate.  For purposes of this 
381.9   subdivision, the term "wholesaler" does not include a 
381.10  manufacturer or manufacturer's representative. 
381.11     Sec. 13.  [383A.80] [RAMSEY COUNTY DEED AND MORTGAGE TAX.] 
381.12     Subdivision 1.  [AUTHORITY TO IMPOSE; RATE.] (a) The 
381.13  governing body of Ramsey county may impose a mortgage registry 
381.14  and deed tax. 
381.15     (b) The rate of the mortgage registry tax equals one cent 
381.16  for each $100 or fraction of the principal. 
381.17     (c) The rate of the deed tax equals five cents for each 
381.18  $500 or fraction of the amount. 
381.19     Subd. 2.  [GENERAL LAW PROVISIONS APPLY.] The taxes under 
381.20  this section apply to the same base and must be imposed, 
381.21  collected, administered, and enforced in the same manner as 
381.22  provided under chapter 287 for the state mortgage registry and 
381.23  deed taxes.  All the provisions of chapter 287 apply to these 
381.24  taxes, except the rate is as specified in subdivision 1, the 
381.25  term "Ramsey county" must be substituted for "the state," and 
381.26  the revenue must be deposited as provided in subdivision 3. 
381.27     Subd. 3.  [DEPOSIT OF REVENUES.] All revenues from the tax 
381.28  are for the use of the Ramsey county board of commissioners and 
381.29  must be deposited in the county's environmental response fund 
381.30  under section 383B.81. 
381.31     Subd. 4.  [EXPIRATION.] The authority to impose the tax 
381.32  under this section expires January 1, 2003. 
381.33     Sec. 14.  [383A.81] [ENVIRONMENTAL RESPONSE FUND.] 
381.34     Subdivision 1.  [CREATION.] An environmental response fund 
381.35  is created for the purposes specified in this section.  The 
381.36  taxes imposed by section 383B.80 must be deposited in the fund.  
382.1   The board of county commissioners shall administer the fund 
382.2   either as a county board, a housing and redevelopment authority, 
382.3   or a regional rail authority. 
382.4      Subd. 2.  [USES OF FUND.] The fund created in subdivision 1 
382.5   must be used for the following purposes: 
382.6      (1) acquisition through purchase or condemnation of lands 
382.7   or property which are polluted or contaminated with hazardous 
382.8   substances; 
382.9      (2) paying the costs associated with indemnifying or 
382.10  holding harmless the entity taking title to lands or property 
382.11  from any liability arising out of the ownership, remediation, or 
382.12  use of the land or property; 
382.13     (3) paying for the costs of remediating the acquired land 
382.14  or property; 
382.15     (4) paying the costs associated with remediating lands or 
382.16  property which are polluted or contaminated with hazardous 
382.17  substances; or 
382.18     (5) paying for the costs associated with improving the 
382.19  property for economic development, recreational, housing, 
382.20  transportation or rail traffic. 
382.21     Subd. 3.  [MATCHING FUNDS.] In expending funds under this 
382.22  section, the county shall seek matching funds from contamination 
382.23  clean up funds administered by the commissioner of the 
382.24  department of trade and economic development, the metropolitan 
382.25  council, the federal government, the private sector, and any 
382.26  other source. 
382.27     Subd. 4.  [BONDS.] The county may pledge the proceeds from 
382.28  the taxes imposed by section 383B.80 to bonds issued under this 
382.29  chapter and chapters 398A, 462, 469, and 475. 
382.30     Subd. 5.  [PRIORITIES.] The first priority for the use of 
382.31  the environmental response fund created in this section is to 
382.32  clean up the site located in the city of St. Paul known as the 
382.33  Dale Street Shops and Maxson Steel site or other sites at or 
382.34  near rail lines that are blighted and the clean up of which will 
382.35  lead to living wage jobs, and to improve the land for economic 
382.36  development. 
383.1      Subd. 6.  [LAND SALES.] Land or property acquired under 
383.2   this section may be resold at fair market value.  Proceeds from 
383.3   the sale of the land must be deposited in the environmental 
383.4   response fund. 
383.5      Subd. 7.  [DOT ASSISTANCE.] The commissioner of 
383.6   transportation shall collaborate with the county and any 
383.7   affected municipality by providing technical assistance and 
383.8   support in cleaning up a contaminated site related to a trunk 
383.9   highway or railroad improvement. 
383.10     Sec. 15.  [383B.80] [HENNEPIN COUNTY DEED AND MORTGAGE 
383.11  TAX.] 
383.12     Subdivision 1.  [AUTHORITY TO IMPOSE; RATE.] (a) The 
383.13  governing body of Hennepin county may impose a mortgage registry 
383.14  and deed tax. 
383.15     (b) The rate of the mortgage registry tax equals one cent 
383.16  for each $100 or fraction of the principal. 
383.17     (c) The rate of the deed tax equals five cents for each 
383.18  $500 or fraction of the amount. 
383.19     Subd. 2.  [GENERAL LAW PROVISIONS APPLY.] The taxes under 
383.20  this section apply to the same base and must be imposed, 
383.21  collected, administered, and enforced in the same manner as 
383.22  provided under Minnesota Statutes, chapter 287 for the state 
383.23  mortgage registry and deed taxes.  All the provisions of chapter 
383.24  287 apply to these taxes, except the rate is as specified in 
383.25  subdivision 1, the term "Hennepin county" must be substituted 
383.26  for the "state," and the revenue must be deposited as provided 
383.27  in subdivision 3. 
383.28     Subd. 3.  [DEPOSIT OF REVENUES.] All revenues from the tax 
383.29  are for the use of the Hennepin county board of commissioners 
383.30  and must be deposited in the county's environmental response 
383.31  fund under section 383B.81. 
383.32     Subd. 4.  [EXPIRATION.] The authority to impose the tax 
383.33  under this section expires January 1, 2003. 
383.34     Sec. 16.  [383B.81] [ENVIRONMENTAL RESPONSE FUND.] 
383.35     Subdivision 1.  [CREATION.] An environmental response fund 
383.36  is created for the purposes specified in this section.  The 
384.1   taxes imposed by section 383B.80 must be deposited in the fund.  
384.2   The board of county commissioners shall administer the fund 
384.3   either as a county board, a housing and redevelopment authority, 
384.4   or a regional rail authority. 
384.5      Subd. 2.  [USES OF FUND.] The fund created in subdivision 1 
384.6   must be used for the following purposes: 
384.7      (1) acquisition through purchase or condemnation of lands 
384.8   or property which are polluted or contaminated with hazardous 
384.9   substances; 
384.10     (2) paying the costs associated with indemnifying or 
384.11  holding harmless the entity taking title to lands or property 
384.12  from any liability arising out of the ownership, remediation, or 
384.13  use of the land or property; 
384.14     (3) paying for the costs of remediating the acquired land 
384.15  or property; 
384.16     (4) paying the costs associated with remediating lands or 
384.17  property which are polluted or contaminated with hazardous 
384.18  substances; or 
384.19     (5) paying for the costs associated with improving the 
384.20  property for economic development, recreational, housing, 
384.21  transportation or rail traffic. 
384.22     Subd. 3.  [MATCHING FUNDS.] In expending funds under this 
384.23  section the county shall seek matching funds from contamination 
384.24  cleanup funds administered by the commissioners of the 
384.25  department of trade and economic development, the metropolitan 
384.26  council, the federal government, the private sector and any 
384.27  other source. 
384.28     Subd. 4.  [CITY APPROVAL.] The county may not expend funds 
384.29  under this section unless the governing body of the city in 
384.30  which the site is located approves the project. 
384.31     Subd. 5.  [BONDS.] The county may pledge the proceeds from 
384.32  the taxes imposed by section 383B.80 to bonds issued under this 
384.33  chapter and chapters 398A, 462, 469, and 475. 
384.34     Subd. 6.  [PRIORITIES.] The first priority for the use of 
384.35  the the environmental response fund created in this section is 
384.36  to clean up the site located in the city of St. Louis Park known 
385.1   as NL Industries/Tara Corporation/Golden Auto, EPA I.D. No. 
385.2   MND097891634 and to provide adequate right-of-way for a portion 
385.3   of the rail line to replace the 29th street line in the city of 
385.4   Minneapolis, including making rail improvements, changing the 
385.5   curve of the railroad track and eliminating a switching 
385.6   facility, and improving the land for economic development.  No 
385.7   money from the environmental response fund may be expended for 
385.8   remediating the site until the site has been acquired through 
385.9   purchase or condemnation. 
385.10     Subd. 7.  [LAND SALES.] Land or property acquired under 
385.11  this section may be resold at fair market value.  Proceeds from 
385.12  the sale of the land must be deposited in the environmental 
385.13  response fund. 
385.14     Subd. 8.  [DOT ASSISTANCE.] With respect to the site 
385.15  described in subdivision 6, the commissioner of transportation 
385.16  shall collaborate with the county and any affected municipality 
385.17  by providing technical assistance and support in facilitating 
385.18  the railroad improvement and testing at that portion of the site 
385.19  to be used for the railroad improvement. 
385.20     Sec. 17.  Minnesota Statutes 1996, section 398A.04, 
385.21  subdivision 1, is amended to read: 
385.22     Subdivision 1.  [GENERAL.] An authority may exercise all 
385.23  the powers necessary or desirable to implement the powers 
385.24  specifically granted in this section, and in exercising the 
385.25  powers is deemed to be performing an essential governmental 
385.26  function and exercising a part of the sovereign power of the 
385.27  state, and is a local government unit and political subdivision 
385.28  of the state.  Without limiting the generality of the foregoing, 
385.29  the authority may: 
385.30     (a) Sue and be sued, have a seal, which may but need not be 
385.31  affixed to documents as directed by the board, make and perform 
385.32  contracts, and have perpetual succession; 
385.33     (b) Acquire real and personal property within or outside 
385.34  its taxing jurisdiction, by purchase, gift, devise, 
385.35  condemnation, conditional sale, lease, lease purchase, or 
385.36  otherwise; or for purposes, including the facilitation of an 
386.1   economic development project pursuant to section 383B.81 or 
386.2   469.091 or 469.175, subdivision 7, that also improve rail 
386.3   service; and 
386.4      (c) Hold, manage, control, sell, convey, lease, mortgage, 
386.5   or otherwise dispose of real or personal property. 
386.6      Sec. 18.  [458D.111] [COLLECTION OF SOLID WASTE MANAGEMENT 
386.7   SERVICE CHARGES.] 
386.8      Subdivision 1.  [AUTHORITY.] The board shall have the 
386.9   powers of a county as specified in section 400.08. 
386.10     Subd. 2.  [METHOD OF COLLECTING CERTAIN SERVICE 
386.11  CHARGES.] The board shall determine the method of collecting 
386.12  service charges in a service area by resolution. 
386.13     Subd. 3.  [SERVICE CHARGES ON REAL ESTATE INCLUDING EXEMPT 
386.14  PROPERTY.] In addition to any methods provided in section 
386.15  400.08, the board may assess and collect service charges as 
386.16  follows.  On or before October 15 of each year, the board shall 
386.17  certify to each county auditor an itemized list of solid waste 
386.18  management service charges and a description of parcels of lands 
386.19  against which the charges arise.  It shall be the duty of the 
386.20  county auditors to include the charges upon the tax rolls of the 
386.21  county for the taxes due and payable for the following year.  
386.22  The solid waste management service charge shall be enforced and 
386.23  collected in the manner provided for the enforcement and 
386.24  collection of real property taxes.  The service charges shall be 
386.25  subject to the same penalties, interest, and other conditions 
386.26  provided for the collection of property taxes.  The board shall 
386.27  reimburse each county auditor for the costs of collection of the 
386.28  service charge. 
386.29     Sec. 19.  [465.715] [POLITICAL SUBDIVISIONS; LEASE PURCHASE 
386.30  AGREEMENTS.] 
386.31     Subdivision 1.  [STATUTORY AUTHORIZATION REQUIRED.] A 
386.32  county, home rule charter city, statutory city, town, school 
386.33  district, or other political subdivision may not create a 
386.34  corporation, whether for profit or not for profit, unless 
386.35  explicitly authorized to do so by law. 
386.36     Subd. 2.  [PRE-DECEMBER 1, 1996, LEASE PURCHASE 
387.1   AGREEMENTS.] The validity of any lease purchase agreement 
387.2   entered into prior to December 1, 1996, and subsequent 
387.3   refinancings are not affected by either the amount of 
387.4   consideration paid by a lessor for an interest in real property 
387.5   or, in the case of lessors organized by or on behalf of the 
387.6   city, county, town, or school district, any defect in or lack of 
387.7   authority to organize such entity.  A nonprofit corporation 
387.8   organized by or on behalf of a city, county, town, or school 
387.9   district, for the purpose of a lease purchase agreement, may 
387.10  continue in existence until the end of any lease agreement in 
387.11  effect on December 1, 1996, but thereafter is dissolved.  During 
387.12  its existence, the nonprofit corporation shall conduct only 
387.13  business that is necessary and directly related to the lease 
387.14  agreement.  The nonprofit corporation is a public corporation 
387.15  for purposes of section 465.035 and is subject to all laws as if 
387.16  it were a part of the city, county, town, or school district. 
387.17     Sec. 20.  Minnesota Statutes 1996, section 469.169, is 
387.18  amended by adding a subdivision to read: 
387.19     Subd. 11.  [ADDITIONAL BORDER CITY ALLOCATIONS.] In 
387.20  addition to tax reductions authorized in subdivisions 7, 8, 9, 
387.21  and 10, the commissioner may allocate $1,500,000 for tax 
387.22  reductions to border city enterprise zones in cities located on 
387.23  the western border of the state.  The commissioner shall make 
387.24  allocations to zones in cities on the western border on a per 
387.25  capita basis.  Allocations made under this subdivision may be 
387.26  used for tax reductions as provided in section 469.171, or other 
387.27  offsets of taxes imposed on or remitted by businesses located in 
387.28  the enterprise zone, but only if the municipality determines 
387.29  that the granting of the tax reduction or offset is necessary in 
387.30  order to retain a business within or attract a business to the 
387.31  zone.  Limitations on allocations under section 469.169, 
387.32  subdivision 7, do not apply to this allocation.  Enterprise 
387.33  zones that receive allocations under this subdivision may 
387.34  continue in effect for purposes of those allocations through 
387.35  December 31, 1998. 
387.36     Sec. 21.  Minnesota Statutes 1996, section 473.39, is 
388.1   amended by adding a subdivision to read: 
388.2      Subd. 1d.  [OBLIGATIONS; 1998-2000.] In addition to the 
388.3   authority in subdivisions 1a, 1b, and 1c, the council may issue 
388.4   certificates of indebtedness, bonds, or other obligations under 
388.5   this section in an amount not exceeding $30,000,000, which may 
388.6   be used for capital expenditures as prescribed in the council's 
388.7   transit capital improvement program and for related costs, 
388.8   including the costs of issuance and sale of the obligations. 
388.9      Sec. 22.  [PUBLIC SAFETY TRAINING FACILITY.] 
388.10     Subdivision 1.  [JOINT POWERS AGREEMENT; BONDS.] Each of 
388.11  the cities of Bloomington, Chanhassen, Eden Prairie, Edina, 
388.12  Minnetonka, and Richfield may issue general obligation bonds of 
388.13  the city in an amount not to exceed $1,000,000 for its share of 
388.14  the cost of the acquisition, construction, and equipping of a 
388.15  public safety training facility to be jointly operated by a 
388.16  joint powers association consisting of two or more municipal or 
388.17  public corporations of which that city is a member.  The 
388.18  issuance of the bonds is subject to Minnesota Statutes, chapter 
388.19  475, except that no election shall be required except as 
388.20  provided in subdivision 2. 
388.21     Subd. 2.  [REVERSE REFERENDUM.] Before the adoption by the 
388.22  governing body of a city of any resolution authorizing the 
388.23  issuance of any bonds authorized by subdivision 1, the city 
388.24  shall publish a notice in the official newspaper of the city 
388.25  stating that the governing body of the city intends to consider 
388.26  the authorization of the issuance of the bonds, stating the 
388.27  amount, purpose, and, in general, the security and source of 
388.28  payment for the bonds.  The resolution authorizing the issuance 
388.29  of the bonds shall not be adopted by the governing body of the 
388.30  city for at least 15 days after publication of the notice of 
388.31  intention.  If within 15 days after publication of the notice of 
388.32  intention a petition asking for an election on the proposition 
388.33  that the city issue the bonds signed by the voters equal to at 
388.34  least ten percent of the registered voters in the city is filed 
388.35  with the clerk, no bonds may be issued by the city unless 
388.36  approved by a majority of the voters of the city voting on the 
389.1   question of the issuance at a regular or special election.  
389.2      Subd. 3.  [EFFECTIVE DATE; LOCAL APPROVAL.] This section is 
389.3   effective with respect to any of the cities of Bloomington, 
389.4   Chanhassen, Eden Prairie, Edina, Minnetonka, and Richfield the 
389.5   day after compliance by that city with Minnesota Statutes, 
389.6   section 645.021, subdivision 3. 
389.7      Sec. 23.  [CONTAMINATION CLEANUP AND RAIL IMPROVEMENT.] 
389.8      Subdivision 1.  [CONTAMINATION CLEANUP FUNDS.] The 
389.9   commissioner of the department of trade and economic 
389.10  development, pursuant to Minnesota Statutes, section 116J.555, 
389.11  subdivision 1, and the metropolitan council, pursuant to 
389.12  Minnesota Statutes, section 473.252, subdivision 3, paragraph 
389.13  (b), clause (1), shall designate the site located in the city of 
389.14  St. Louis Park and known as NL Industries/Tara Corp./Golden 
389.15  Auto, EPA ID. No. MND 097891634 to be an eligible site for 
389.16  receipt of contamination cleanup funds from the contaminated 
389.17  site cleanup and development account in the general fund and 
389.18  from the tax base revitalization account in the metropolitan 
389.19  livable communities fund.  Grants from these accounts shall be 
389.20  available only upon confirmation from the commissioner of 
389.21  transportation that Hennepin county and the city of St. Louis 
389.22  Park have entered into an agreement as described in subdivision 
389.23  2. 
389.24     Subd. 2.  [AGREEMENT BETWEEN HENNEPIN COUNTY AND CITY OF ST.
389.25  LOUIS PARK.] To qualify for receipt of funds under subdivision 
389.26  1, or from the environmental response fund established in 
389.27  Minnesota Statutes, section 383B.81, which funds are to be used 
389.28  for the site described in subdivision 1, Hennepin county and the 
389.29  city of St. Louis Park must, after consultation and negotiation 
389.30  with representatives of affected neighborhoods along the 
389.31  impacted and proposed rail lines, enter into an agreement with 
389.32  respect to the following: 
389.33     (1) acquisition through purchase or condemnation of the 
389.34  entire site described in subdivision 1.  A portion of the site 
389.35  must be used to provide adequate rights-of-way for transferring 
389.36  railroad traffic from the Canadian Pacific railroad line from 
390.1   Louisiana Avenue in St. Louis Park easterly to trunk highway 
390.2   55/Hiawatha Avenue, commonly referred to as the 29th street 
390.3   depression, to the Canadian Pacific railroad line from the 29th 
390.4   street rail line northerly to the Burlington Northern 
390.5   connection, entirely within the city of St. Louis Park; 
390.6      (2) responsibility for the costs of the railroad 
390.7   improvement, including changing the curve of the railroad track 
390.8   and eliminating a switching facility; 
390.9      (3) obtaining by Hennepin county and the city of St. Louis 
390.10  Park of all applicable assurances, including, but not limited 
390.11  to, letters of assurance, certificates of completion, and no 
390.12  association determinations available from the United States 
390.13  Environmental Protection Agency and the Minnesota pollution 
390.14  control agency; 
390.15     (4) respective responsibilities of the parties in 
390.16  remediating the acquired property and in assuming responsibility 
390.17  for any required matching funds; and 
390.18     (5) entitlement to proceeds from any ultimate disposition 
390.19  of the property consistent with any statutory restrictions 
390.20  applicable to the source of the acquisition funds. 
390.21     Subd. 3.  [COMMISSIONER OF TRANSPORTATION.] The 
390.22  commissioner of transportation shall confirm that St. Louis Park 
390.23  and Hennepin county have entered into an agreement.  The 
390.24  commissioner of transportation shall collaborate with the city 
390.25  and county by providing technical assistance and support in 
390.26  facilitating the railroad improvement and testing at that 
390.27  portion of the site to be used for the railroad improvement.  
390.28  The project shall proceed only if the city of St. Louis Park, 
390.29  Hennepin county, and the commissioner have entered into an 
390.30  agreement regarding responsibility for safety and noise 
390.31  mitigation measures to be implemented or constructed on or 
390.32  adjacent to the Canadian Pacific railroad line from the 29th 
390.33  street rail line northerly to the Burlington Northern 
390.34  connection, entirely within the city of St. Louis Park. 
390.35     Sec. 24.  [CITY OF ST. PAUL; RAINLEADER DISCONNECTION AND 
390.36  SEWER CONNECTION PROGRAM.] 
391.1      Subdivision 1.  [PUBLIC PURPOSE.] The legislature finds 
391.2   that the disconnection of rainleaders and the repair of 
391.3   defective sanitary sewer connections is a public purpose and 
391.4   that providing financing to owners of residences and businesses 
391.5   to disconnect rainleaders and repair defective sanitary sewer 
391.6   connections located on their private property is a public 
391.7   purpose. 
391.8      Subd. 2.  [PROGRAM AUTHORIZED.] The city of Saint Paul may 
391.9   undertake a program to disconnect rainleaders, connect buildings 
391.10  to storm sewers, or correct defective sanitary sewer connections 
391.11  located on private property at the written request of the owner 
391.12  of the property.  The city may contract for the disconnection of 
391.13  rainleaders, the connection of buildings to storm sewers, and 
391.14  the repair of defective sanitary sewer connections, or may pay 
391.15  or reimburse the cost for disconnection of rainleaders, the 
391.16  connection of buildings to storm sewers, and the repair of 
391.17  defective sanitary sewer connections for which the owner of the 
391.18  property has entered into contracts.  As part of the program, 
391.19  the city may identify criteria for private contractors and may 
391.20  limit the payment or reimbursement of costs to those situations 
391.21  in which the work has been performed by contractors whose 
391.22  participation in the program has been approved by the city in 
391.23  advance.  The city need not hold any hearing in connection with 
391.24  the request of individual property owners for participation in 
391.25  the program. 
391.26     Subd. 3.  [CHARGES AUTHORIZED.] The city may charge the 
391.27  cost of the program to the owners who have requested the 
391.28  disconnection of their rainleaders, the connection of buildings 
391.29  to storm sewers, or the repair of their sanitary sewer 
391.30  connections.  The amount charged may include the full amount 
391.31  paid or reimbursed, the cost of administration, and the cost of 
391.32  financing.  The amount charged may be made payable with interest 
391.33  at a rate determined by the city in installments over a period 
391.34  determined by the city not to exceed 20 years and the 
391.35  installments may be certified, added to, and collected in the 
391.36  same manner as municipal taxes by the county department of 
392.1   property taxation or similar department and paid over to the 
392.2   city in the same manner as are municipal taxes.  The city may 
392.3   certify due and unpaid installments to the county auditor along 
392.4   with taxes against the benefited property for collection as 
392.5   other real property taxes are collected, in which event the 
392.6   installments may be enforced in the manner required for 
392.7   enforcement of real property taxes in accordance with state law. 
392.8      Subd. 4.  [CHARGES TO PROPERTY OWNERS.] Instead of charging 
392.9   the cost of the program as provided above, the city may charge 
392.10  the cost of the program to the owners who have requested the 
392.11  disconnection of their rainleaders, the connection of buildings 
392.12  to storm sewers, or the repair of their defective sanitary sewer 
392.13  connections.  The amount charged may include the full amount 
392.14  paid or reimbursed, the cost of administration, and the cost of 
392.15  financing.  The amount charged must be payable with interest at 
392.16  a rate determined by the city in installments over a period 
392.17  determined by the city not to exceed 20 years.  All charges for 
392.18  the program are valid and enforceable without regard to 
392.19  valuation of the property or the benefit conferred.  After the 
392.20  amount to be charged has been determined, whether or not the 
392.21  work has been performed, the city must hold a public hearing on 
392.22  the charges after notice mailed to the owner of the property to 
392.23  be charged not less than 14 days before the published hearing.  
392.24  Notice of the hearing is not required.  The city shall select 
392.25  Minnesota Statutes, chapter 429, or the city charter to govern 
392.26  the procedure for the levy and collection of the charges, and 
392.27  except as a different procedure is provided in this section, 
392.28  proceedings for the imposition, appeal, repeal, supplementation, 
392.29  and collection of the charges must conform to the procedures 
392.30  selected. 
392.31     Subd. 5.  [NATURE OF CHARGES.] The charges, with accruing 
392.32  interest, are a lien upon all private and public property 
392.33  included in the charges, from the date of the resolution 
392.34  adopting the charges, concurrent with general taxes.  All 
392.35  charges and interest on them must be collected and paid over in 
392.36  the same manner as municipal taxes. 
393.1      Subd. 6.  [OBLIGATIONS AUTHORIZED.] To pay the costs of the 
393.2   program, the city may issue general or special obligations in 
393.3   one or more series without an election and without being subject 
393.4   to limits on net debt, but otherwise in accordance with 
393.5   Minnesota Statutes, chapter 475.  To the payment of the 
393.6   obligations, the city must pledge receipts of the charges, and 
393.7   may in addition pledge revenues or net revenues of the city's 
393.8   sewer service fund.  The city may pledge its full faith, credit, 
393.9   and taxing powers to pay the obligations, and may levy taxes to 
393.10  pay the obligations. 
393.11     Subd. 7.  [LOCAL APPROVAL.] This section is effective the 
393.12  day after the governing body of the city of Saint Paul complies 
393.13  with Minnesota Statutes, section 645.021, subdivision 3. 
393.14     Sec. 25.  [MINNESOTA INVESTMENT FUND; CITY OF WORTHINGTON.] 
393.15     Notwithstanding the grant limit contained in Minnesota 
393.16  Statutes, section 116J.8731, subdivision 5, a grant of up to 
393.17  $1,000,000 may be made to the city of Worthington to offset 
393.18  severe job losses due to plant closings. 
393.19     Sec. 26.  [DESIGNATION OF KOOCHICHING COUNTY AS AN 
393.20  ENTERPRISE ZONE.] 
393.21     Notwithstanding the limitation in Minnesota Statutes, 
393.22  section 469.167, subdivision 3, the commissioner of trade and 
393.23  economic development shall designate Koochiching county as an 
393.24  enterprise zone under Minnesota Statutes, sections 469.166 to 
393.25  469.173. 
393.26     Sec. 27.  [YEAR 2000 READY.] 
393.27     Any computer software or hardware that is purchased by the 
393.28  state or a political subdivision with money appropriated in this 
393.29  bill must be year 2000 ready. 
393.30     Sec. 28.  [APPROPRIATION; PAYMENT OF CLAIMS.] 
393.31     $16,600,000 is appropriated in fiscal year 1998 from the 
393.32  general fund to the commissioner of revenue to pay claims filed 
393.33  under the Cambridge Bank Judgment. 
393.34     Sec. 29.  [APPROPRIATION; ADMINISTRATION OF ACT.] 
393.35     $2,132,000 is appropriated from the general fund for fiscal 
393.36  year 1998 and $48,000 is appropriated for fiscal year 1999 to 
394.1   the commissioner of revenue to pay the costs of administering 
394.2   the provisions of this act. 
394.3      Sec. 30.  [REPEALER.] 
394.4      1997 H.F. 2158, article 1, section 25, if enacted, is 
394.5   repealed.  This section repeals 1997 H.F. 2158, article 1, 
394.6   section 25, without regard to order of final enactment. 
394.7      Sec. 31.  [EFFECTIVE DATE.] 
394.8      Section 9 is effective for decrees of marriage dissolution, 
394.9   deeds, or other instruments executed and delivered after July 1, 
394.10  1997. 
394.11     Section 10 is effective for assessments made on or after 
394.12  the effective date of laws 1996, chapter 471, article 2, section 
394.13  32. 
394.14     Section 19 is effective the day following final enactment.