1.1                          A bill for an act 
  1.2             relating to financing and operation of state and local 
  1.3             government; making policy, technical, administrative, 
  1.4             enforcement, collection, refund, and other changes to 
  1.5             income, franchise, property, sales and use, estate, 
  1.6             health care provider, cigarette and tobacco products, 
  1.7             insurance premiums, aggregate removal, mortgage 
  1.8             registry, occupation, net proceeds, and production 
  1.9             taxes, and other taxes and tax-related provisions; 
  1.10            establishing a regional investment credit; 
  1.11            establishing a credit for carsharing; providing a 
  1.12            refund for transit passes; changing the rent credit 
  1.13            calculation; authorizing sales tax exemptions; 
  1.14            authorizing local government sales taxes; repealing 
  1.15            the sunset of sales tax on alcoholic beverages and 
  1.16            rental cars; authorizing distributions of tax 
  1.17            proceeds; changing provisions relating to fiscal 
  1.18            disparities, education financing, state debt 
  1.19            collection procedures, sustainable forest incentives 
  1.20            programs, business subsidy, and tax data provisions; 
  1.21            conforming provisions to certain changes in federal 
  1.22            law; changing powers and duties of certain local 
  1.23            governments and authorities and state departments or 
  1.24            agencies; providing for payments of certain aids and 
  1.25            reimbursements to local units of government; providing 
  1.26            for issuance of obligations by local governments, and 
  1.27            use of the proceeds of the debt; authorizing certain 
  1.28            joint ventures to provide utility services; 
  1.29            authorizing use of nonprofit organizations to manage 
  1.30            certain enterprises; requiring transfer of a parking 
  1.31            facility; changing tax increment financing provisions, 
  1.32            and providing authorities to certain districts; 
  1.33            requiring a state aviation plan; authorizing 
  1.34            establishment of an International Economic Development 
  1.35            Zone and providing for tax incentives; regulating tax 
  1.36            preparers; imposing requirement on vendors that 
  1.37            contract with the state to collect sales taxes; 
  1.38            changing electronic filing provisions; prohibiting 
  1.39            misrepresentation of employment; providing for filling 
  1.40            of vacancies on the Tax Court; establishing 
  1.41            biotechnology and health science industry grants; 
  1.42            imposing requirements related to JOBZ; providing for 
  1.43            studies and reports; providing penalties; creating an 
  1.44            education reserve account; providing for allocation 
  1.45            and transfers of funds; appropriating money; amending 
  1.46            Minnesota Statutes 2002, sections 15.06, subdivision 
  2.1             6; 16D.10; 116J.993, subdivision 3, by adding a 
  2.2             subdivision; 116J.994, subdivision 5, by adding a 
  2.3             subdivision; 126C.17, subdivision 6, by adding 
  2.4             subdivisions; 161.1231, by adding a subdivision; 
  2.5             174.03, by adding a subdivision; 270.02, subdivision 
  2.6             3; 270.65; 270.69, subdivision 4; 270B.01, subdivision 
  2.7             8; 270B.12, subdivision 9; 272.01, subdivision 2; 
  2.8             272.02, subdivisions 1a, 7, 22, by adding 
  2.9             subdivisions; 272.029, subdivisions 4, 6; 273.11, by 
  2.10            adding subdivisions; 273.112, subdivision 3; 273.124, 
  2.11            subdivision 8; 273.1384, subdivision 3; 273.19, 
  2.12            subdivision 1a; 274.14; 275.065, subdivision 1a; 
  2.13            275.07, subdivisions 1, 4; 276.04, subdivision 2; 
  2.14            278.03, subdivision 1; 279.01, subdivision 1, by 
  2.15            adding a subdivision; 282.016; 282.21; 282.224; 
  2.16            282.301; 287.04; 289A.08, subdivision 1; 289A.12, 
  2.17            subdivision 3; 289A.20, subdivision 2; 289A.31, 
  2.18            subdivision 2; 289A.37, subdivision 5; 289A.38, 
  2.19            subdivision 6; 289A.39, subdivision 1; 289A.56, by 
  2.20            adding a subdivision; 289A.60, subdivision 6; 290.05, 
  2.21            subdivision 1; 290.06, subdivisions 22, 28, by adding 
  2.22            subdivisions; 290.0674, subdivision 2; 290.091, 
  2.23            subdivision 3; 290.10; 290.17, subdivision 4; 290.191, 
  2.24            subdivisions 1, 2, 3, 5, by adding a subdivision; 
  2.25            290.92, subdivisions 1, 4b; 290.9705, subdivision 1; 
  2.26            290A.03, subdivision 11, by adding a subdivision; 
  2.27            290A.19; 290C.05; 295.50, subdivision 4; 296A.22, by 
  2.28            adding a subdivision; 297A.61, by adding a 
  2.29            subdivision; 297A.67, by adding subdivisions; 297A.68, 
  2.30            subdivisions 4, 19, by adding subdivisions; 297A.70, 
  2.31            by adding a subdivision; 297A.71, by adding 
  2.32            subdivisions; 297A.75, subdivisions 1, 2; 297A.87, 
  2.33            subdivisions 2, 3; 297F.01, by adding a subdivision; 
  2.34            297F.09, by adding a subdivision; 297I.01, by adding 
  2.35            subdivisions; 297I.05, subdivisions 4, 5, by adding a 
  2.36            subdivision; 298.001, by adding subdivisions; 298.01, 
  2.37            subdivisions 3, 3a, 4; 298.015, subdivisions 1, 2; 
  2.38            298.016, subdivision 4; 298.018, as amended; 298.24, 
  2.39            subdivision 1; 298.28, subdivisions 9a, 9b, 10; 
  2.40            298.2961, by adding a subdivision; 298.75, subdivision 
  2.41            2; 325D.33, subdivision 6; 428A.101; 428A.21; 452.25, 
  2.42            subdivision 3; 462A.071, subdivision 6; 469.034, 
  2.43            subdivision 2; 469.1734, subdivision 6; 469.174, by 
  2.44            adding a subdivision; 469.176, by adding subdivisions; 
  2.45            469.1761, by adding a subdivision; 469.1792, as 
  2.46            amended; 471.342, subdivisions 3, 5, by adding a 
  2.47            subdivision; 473.39, by adding a subdivision; 473.843, 
  2.48            subdivisions 3, 5; 473F.02, subdivision 7; 473F.08, by 
  2.49            adding subdivisions; 474A.131, subdivision 1; 475.52, 
  2.50            subdivisions 1, 3, 4; 477A.011, subdivision 3; 
  2.51            477A.11, subdivision 4, by adding a subdivision; 
  2.52            477A.12, subdivisions 1, 2; 477A.14, subdivision 1; 
  2.53            480B.01, subdivisions 1, 10; 504B.215, by adding a 
  2.54            subdivision; Minnesota Statutes 2003 Supplement, 
  2.55            sections 116J.994, subdivisions 4, 9; 126C.17, 
  2.56            subdivisions 7, 9; 168A.05, subdivision 1a; 270.30, 
  2.57            subdivision 8; 270B.12, subdivision 13; 272.02, 
  2.58            subdivisions 47, 56; 273.11, subdivision 1a; 273.124, 
  2.59            subdivision 1; 273.13, subdivisions 23, 25; 274.014, 
  2.60            subdivision 3; 275.025, subdivision 1; 275.065, 
  2.61            subdivision 3; 276.112; 289A.02, subdivision 7; 
  2.62            289A.08, subdivision 16; 289A.19, subdivision 4; 
  2.63            289A.20, subdivision 4; 289A.40, subdivision 2; 
  2.64            290.01, subdivisions 7, 19, 19a, 19b, 19c, 19d, 31; 
  2.65            290.06, subdivision 2c; 290.0674, subdivision 1; 
  2.66            290.091, subdivision 2; 290A.03, subdivision 15; 
  2.67            290C.10; 291.005, subdivision 1; 297A.668, 
  2.68            subdivisions 1, 3, 5; 297A.669, subdivision 16; 
  2.69            297A.68, subdivisions 2, 5, 39; 297A.70, subdivision 
  2.70            8; 297B.03; 297F.08, subdivision 12; 297F.09, 
  2.71            subdivisions 1, 2; 298.223, subdivision 1; 298.27; 
  3.1             298.75, subdivision 1; 373.01, subdivision 3; 373.40, 
  3.2             subdivision 1; 403.21, subdivision 8; 403.27, 
  3.3             subdivisions 1, 3; 403.31, subdivision 6; 410.32; 
  3.4             412.301; 469.174, subdivision 10; 469.175, 
  3.5             subdivisions 1, 4, 6; 469.176, subdivision 1c; 
  3.6             469.310, subdivision 11; 469.330, subdivision 11; 
  3.7             469.335; 469.337; 475.521, subdivision 4; 475.58, 
  3.8             subdivision 3b; 477A.011, subdivisions 34, 36; 
  3.9             477A.013, subdivisions 8, 9; 477A.03, subdivisions 2a, 
  3.10            2b; Laws 1986, chapter 379, section 1; Laws 1986, 
  3.11            chapter 379, section 2, subdivision 1; Laws 1991, 
  3.12            chapter 291, article 8, section 27, subdivision 4; 
  3.13            Laws 1991, chapter 291, article 8, section 27, 
  3.14            subdivision 5; Laws 1996, chapter 471, article 2, 
  3.15            section 29; Laws 1998, chapter 389, article 3, section 
  3.16            41; Laws 1998, chapter 389, article 3, section 42, 
  3.17            subdivision 2, as amended; Laws 1998, chapter 389, 
  3.18            article 8, section 43, subdivision 3; Laws 1998, 
  3.19            chapter 389, article 8, section 43, subdivision 4; 
  3.20            Laws 1998, chapter 389, article 11, section 19, 
  3.21            subdivision 3; Laws 1998, chapter 389, article 11, 
  3.22            section 24, subdivision 1; Laws 1998, chapter 389, 
  3.23            article 11, section 24, subdivision 2; Laws 1999, 
  3.24            chapter 243, article 4, section 18, subdivision 1; 
  3.25            Laws 1999, chapter 243, article 4, section 18, 
  3.26            subdivision 3; Laws 1999, chapter 243, article 4, 
  3.27            section 18, subdivision 4; Laws 2001, First Special 
  3.28            Session chapter 5, article 12, section 67; Laws 2001, 
  3.29            First Special Session chapter 5, article 12, section 
  3.30            95; Laws 2002, chapter 377, article 12, section 16, 
  3.31            subdivision 1; Laws 2003, chapter 127, article 12, 
  3.32            section 38; Laws 2003, First Special Session chapter 
  3.33            21, article 4, section 12, subdivision 11; Laws 2003, 
  3.34            First Special Session chapter 21, article 5, section 
  3.35            13; Laws 2003, First Special Session chapter 21, 
  3.36            article 6, section 9; proposing coding for new law in 
  3.37            Minnesota Statutes, chapters 174; 270; 273; 278; 290; 
  3.38            290C; 297F; 298; 325D; 325F; 469; 473; repealing 
  3.39            Minnesota Statutes 2002, sections 273.19, subdivision 
  3.40            5; 274.05; 275.15; 283.07; 289A.26, subdivision 2a; 
  3.41            289A.60, subdivision 21; 290.191, subdivision 4; 
  3.42            295.55, subdivision 4; 295.60, subdivision 4; 297E.12, 
  3.43            subdivision 10; 297F.09, subdivision 7; 297G.09, 
  3.44            subdivision 6; 297I.35, subdivision 2; 297I.85, 
  3.45            subdivision 7; 298.01, subdivisions 3c, 3d, 4d, 4e; 
  3.46            298.017; Minnesota Statutes 2003 Supplement, sections 
  3.47            270.30, subdivision 1; 298.227; Laws 1975, chapter 
  3.48            287, section 5; Laws 2003, chapter 127, article 9, 
  3.49            section 9, subdivision 4; Minnesota Rules, parts 
  3.50            8093.2000; 8093.3000; 8130.0110, subpart 4; 8130.0200, 
  3.51            subparts 5, 6; 8130.0400, subpart 9; 8130.1200, 
  3.52            subparts 5, 6; 8130.2900; 8130.3100, subpart 1; 
  3.53            8130.4000, subparts 1, 2; 8130.4200, subpart 1; 
  3.54            8130.4400, subpart 3; 8130.5200; 8130.5600, subpart 3; 
  3.55            8130.5800, subpart 5; 8130.7300, subpart 5; 8130.8800, 
  3.56            subpart 4. 
  3.57  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.58                             ARTICLE 1
  3.59                             INCOME TAX
  3.60     Section 1.  Minnesota Statutes 2003 Supplement, section 
  3.61  289A.02, subdivision 7, is amended to read: 
  3.62     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
  3.63  defined otherwise, "Internal Revenue Code" means the Internal 
  4.1   Revenue Code of 1986, as amended through June 15, 2003 November 
  4.2   11, 2003. 
  4.3      <b>[EFFECTIVE DATE.]</b> This section is effective for actions 
  4.4   required on or after November 11, 2003. 
  4.5      Sec. 2.  Minnesota Statutes 2002, section 289A.08, 
  4.6   subdivision 1, is amended to read: 
  4.7      Subdivision 1.  [GENERALLY; INDIVIDUALS.] (a) A taxpayer 
  4.8   must file a return for each taxable year the taxpayer is 
  4.9   required to file a return under section 6012 of the Internal 
  4.10  Revenue Code, except that: 
  4.11     (1) an individual who is not a Minnesota resident for any 
  4.12  part of the year is not required to file a Minnesota income tax 
  4.13  return if the individual's gross income derived from Minnesota 
  4.14  sources as determined under sections 290.081, paragraph (a), and 
  4.15  290.17, is less than the filing requirements for a single 
  4.16  individual who is a full year resident of Minnesota; and 
  4.17     (2) an individual who is a Minnesota resident is not 
  4.18  required to file a Minnesota income tax return if the 
  4.19  individual's gross income derived from Minnesota sources as 
  4.20  determined under section 290.17, less the amount of the 
  4.21  individual's gross income that consists of compensation paid to 
  4.22  members of the armed forces of the United States or United 
  4.23  Nations for active duty performed outside Minnesota, is less 
  4.24  than the filing requirements for a single individual who is a 
  4.25  full-year resident of Minnesota. 
  4.26     (b) The decedent's final income tax return, and other 
  4.27  income tax returns for prior years where the decedent had gross 
  4.28  income in excess of the minimum amount at which an individual is 
  4.29  required to file and did not file, must be filed by the 
  4.30  decedent's personal representative, if any.  If there is no 
  4.31  personal representative, the return or returns must be filed by 
  4.32  the transferees, as defined in section 289A.38, subdivision 13, 
  4.33  who receive property of the decedent. 
  4.34     (c) The term "gross income," as it is used in this section, 
  4.35  has the same meaning given it in section 290.01, subdivision 20. 
  4.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  5.1   years beginning after December 31, 2003. 
  5.2      Sec. 3.  Minnesota Statutes 2002, section 289A.39, 
  5.3   subdivision 1, is amended to read: 
  5.4      Subdivision 1.  [EXTENSIONS FOR SERVICE MEMBERS.] (a) The 
  5.5   limitations of time provided by this chapter, chapter 290 
  5.6   relating to income taxes, chapter 271 relating to the Tax Court 
  5.7   for filing returns, paying taxes, claiming refunds, commencing 
  5.8   action thereon, appealing to the Tax Court from orders relating 
  5.9   to income taxes, and the filing of petitions under chapter 278 
  5.10  that would otherwise be due May 15, 1996 May 1, 2004, and 
  5.11  appealing to the Supreme Court from decisions of the Tax Court 
  5.12  relating to income taxes are extended, as provided in section 
  5.13  7508 of the Internal Revenue Code. 
  5.14     (b) If a member of the National Guard or reserves is called 
  5.15  to active duty in the armed forces, the limitations of time 
  5.16  provided by this chapter and chapters 290 and 290A relating to 
  5.17  income taxes and claims for property tax refunds are extended by 
  5.18  the following period of time: 
  5.19     (1) in the case of an individual whose active service is in 
  5.20  the United States, six months; or 
  5.21     (2) in the case of an individual whose active service 
  5.22  includes service abroad, the period of initial service plus six 
  5.23  months. 
  5.24     Nothing in this paragraph reduces the time within which an 
  5.25  act is required or permitted under paragraph (a). 
  5.26     (c) If an individual entitled to the benefit of paragraph 
  5.27  (a) files a return during the period disregarded under paragraph 
  5.28  (a), interest must be paid on an overpayment or refundable 
  5.29  credit from the due date of the return, notwithstanding section 
  5.30  289A.56, subdivision 2.  
  5.31     (d) The provisions of this subdivision apply to the spouse 
  5.32  of an individual entitled to the benefits of this subdivision 
  5.33  with respect to a joint return filed by the spouses.  
  5.34     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  5.35  years beginning after December 31, 2002, and for property taxes 
  5.36  payable after 2003. 
  6.1      Sec. 4.  Minnesota Statutes 2003 Supplement, section 
  6.2   290.01, subdivision 7, is amended to read: 
  6.3      Subd. 7.  [RESIDENT.] (a) The term "resident" means any 
  6.4   individual domiciled in Minnesota, except that an individual is 
  6.5   not a "resident" for the period of time that the individual is 
  6.6   either: 
  6.7      (1) on active duty stationed outside of Minnesota while in 
  6.8   the armed forces of the United States or the United Nations; or 
  6.9      (2) a "qualified individual" as defined in section 
  6.10  911(d)(1) of the Internal Revenue Code, if the qualified 
  6.11  individual notifies the county within three months of moving out 
  6.12  of the country that homestead status be revoked for the 
  6.13  Minnesota residence of the qualified individual, and the 
  6.14  property is not classified as a homestead while the individual 
  6.15  remains a qualified individual. 
  6.16     (b) "Resident" also means any individual domiciled outside 
  6.17  the state who maintains a place of abode in the state and spends 
  6.18  in the aggregate more than one-half of the tax year in 
  6.19  Minnesota, unless: 
  6.20     (1) the individual or the spouse of the individual is in 
  6.21  the armed forces of the United States; or 
  6.22     (2) the individual is covered under the reciprocity 
  6.23  provisions in section 290.081. 
  6.24     For purposes of this subdivision, presence within the state 
  6.25  for any part of a calendar day constitutes a day spent in the 
  6.26  state.  Individuals shall keep adequate records to substantiate 
  6.27  the days spent outside the state. 
  6.28     The term "abode" means a dwelling maintained by an 
  6.29  individual, whether or not owned by the individual and whether 
  6.30  or not occupied by the individual, and includes a dwelling place 
  6.31  owned or leased by the individual's spouse. 
  6.32     (c) Neither the commissioner nor any court shall consider 
  6.33  charitable contributions made by an individual within or without 
  6.34  the state in determining if the individual is domiciled in 
  6.35  Minnesota. 
  6.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  7.1   years beginning after December 31, 2003. 
  7.2      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
  7.3   290.01, subdivision 19, is amended to read: 
  7.4      Subd. 19.  [NET INCOME.] The term "net income" means the 
  7.5   federal taxable income, as defined in section 63 of the Internal 
  7.6   Revenue Code of 1986, as amended through the date named in this 
  7.7   subdivision, incorporating any elections made by the taxpayer in 
  7.8   accordance with the Internal Revenue Code in determining federal 
  7.9   taxable income for federal income tax purposes, and with the 
  7.10  modifications provided in subdivisions 19a to 19f. 
  7.11     In the case of a regulated investment company or a fund 
  7.12  thereof, as defined in section 851(a) or 851(g) of the Internal 
  7.13  Revenue Code, federal taxable income means investment company 
  7.14  taxable income as defined in section 852(b)(2) of the Internal 
  7.15  Revenue Code, except that:  
  7.16     (1) the exclusion of net capital gain provided in section 
  7.17  852(b)(2)(A) of the Internal Revenue Code does not apply; 
  7.18     (2) the deduction for dividends paid under section 
  7.19  852(b)(2)(D) of the Internal Revenue Code must be applied by 
  7.20  allowing a deduction for capital gain dividends and 
  7.21  exempt-interest dividends as defined in sections 852(b)(3)(C) 
  7.22  and 852(b)(5) of the Internal Revenue Code; and 
  7.23     (3) the deduction for dividends paid must also be applied 
  7.24  in the amount of any undistributed capital gains which the 
  7.25  regulated investment company elects to have treated as provided 
  7.26  in section 852(b)(3)(D) of the Internal Revenue Code.  
  7.27     The net income of a real estate investment trust as defined 
  7.28  and limited by section 856(a), (b), and (c) of the Internal 
  7.29  Revenue Code means the real estate investment trust taxable 
  7.30  income as defined in section 857(b)(2) of the Internal Revenue 
  7.31  Code.  
  7.32     The net income of a designated settlement fund as defined 
  7.33  in section 468B(d) of the Internal Revenue Code means the gross 
  7.34  income as defined in section 468B(b) of the Internal Revenue 
  7.35  Code. 
  7.36     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
  8.1   1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
  8.2   1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
  8.3   Protection Act, Public Law 104-188, the provisions of Public Law 
  8.4   104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
  8.5   913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
  8.6   1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
  8.7   and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
  8.8   1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
  8.9   105-34, the provisions of section 6010 of the Internal Revenue 
  8.10  Service Restructuring and Reform Act of 1998, Public Law 
  8.11  105-206, the provisions of section 4003 of the Omnibus 
  8.12  Consolidated and Emergency Supplemental Appropriations Act, 
  8.13  1999, Public Law 105-277, and the provisions of section 318 of 
  8.14  the Consolidated Appropriation Act of 2001, Public Law 106-554, 
  8.15  shall become effective at the time they become effective for 
  8.16  federal purposes. 
  8.17     The Internal Revenue Code of 1986, as amended through 
  8.18  December 31, 1996, shall be in effect for taxable years 
  8.19  beginning after December 31, 1996. 
  8.20     The provisions of sections 202(a) and (b), 221(a), 225, 
  8.21  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
  8.22  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
  8.23  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
  8.24  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
  8.25  of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
  8.26  provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
  8.27  and 7003 of the Internal Revenue Service Restructuring and 
  8.28  Reform Act of 1998, Public Law 105-206, the provisions of 
  8.29  section 3001 of the Omnibus Consolidated and Emergency 
  8.30  Supplemental Appropriations Act, 1999, Public Law 105-277, the 
  8.31  provisions of section 3001 of the Miscellaneous Trade and 
  8.32  Technical Corrections Act of 1999, Public Law 106-36, and the 
  8.33  provisions of section 316 of the Consolidated Appropriation Act 
  8.34  of 2001, Public Law 106-554, and the provision of section 101 of 
  8.35  the Military Family Tax Relief Act of 2003, Public Law 108-121, 
  8.36  shall become effective at the time they become effective for 
  9.1   federal purposes. 
  9.2      The Internal Revenue Code of 1986, as amended through 
  9.3   December 31, 1997, shall be in effect for taxable years 
  9.4   beginning after December 31, 1997. 
  9.5      The provisions of sections 5002, 6009, 6011, and 7001 of 
  9.6   the Internal Revenue Service Restructuring and Reform Act of 
  9.7   1998, Public Law 105-206, the provisions of section 9010 of the 
  9.8   Transportation Equity Act for the 21st Century, Public Law 
  9.9   105-178, the provisions of sections 1004, 4002, and 5301 of the 
  9.10  Omnibus Consolidation and Emergency Supplemental Appropriations 
  9.11  Act, 1999, Public Law 105-277, the provision of section 303 of 
  9.12  the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
  9.13  105-369, the provisions of sections 532, 534, 536, 537, and 538 
  9.14  of the Ticket to Work and Work Incentives Improvement Act of 
  9.15  1999, Public Law 106-170, the provisions of the Installment Tax 
  9.16  Correction Act of 2000, Public Law 106-573, and the provisions 
  9.17  of section 309 of the Consolidated Appropriation Act of 2001, 
  9.18  Public Law 106-554, shall become effective at the time they 
  9.19  become effective for federal purposes. 
  9.20     The Internal Revenue Code of 1986, as amended through 
  9.21  December 31, 1998, shall be in effect for taxable years 
  9.22  beginning after December 31, 1998.  
  9.23     The provisions of the FSC Repeal and Extraterritorial 
  9.24  Income Exclusion Act of 2000, Public Law 106-519, and the 
  9.25  provision of section 412 of the Job Creation and Worker 
  9.26  Assistance Act of 2002, Public Law 107-147, shall become 
  9.27  effective at the time it became effective for federal purposes. 
  9.28     The Internal Revenue Code of 1986, as amended through 
  9.29  December 31, 1999, shall be in effect for taxable years 
  9.30  beginning after December 31, 1999.  The provisions of sections 
  9.31  306 and 401 of the Consolidated Appropriation Act of 2001, 
  9.32  Public Law 106-554, and the provision of section 632(b)(2)(A) of 
  9.33  the Economic Growth and Tax Relief Reconciliation Act of 2001, 
  9.34  Public Law 107-16, and provisions of sections 101 and 402 of the 
  9.35  Job Creation and Worker Assistance Act of 2002, Public Law 
  9.36  107-147, shall become effective at the same time it became 
 10.1   effective for federal purposes. 
 10.2      The Internal Revenue Code of 1986, as amended through 
 10.3   December 31, 2000, shall be in effect for taxable years 
 10.4   beginning after December 31, 2000.  The provisions of sections 
 10.5   659a and 671 of the Economic Growth and Tax Relief 
 10.6   Reconciliation Act of 2001, Public Law 107-16, the provisions of 
 10.7   sections 104, 105, and 111 of the Victims of Terrorism Tax 
 10.8   Relief Act of 2001, Public Law 107-134, and the provisions of 
 10.9   sections 201, 403, 413, and 606 of the Job Creation and Worker 
 10.10  Assistance Act of 2002, Public Law 107-147, and the provision of 
 10.11  section 102 of the Military Family Tax Relief Act of 2003, 
 10.12  Public Law 108-121, shall become effective at the same time it 
 10.13  became effective for federal purposes. 
 10.14     The Internal Revenue Code of 1986, as amended through March 
 10.15  15, 2002, shall be in effect for taxable years beginning after 
 10.16  December 31, 2001. 
 10.17     The provisions of sections 101 and 102 of the Victims of 
 10.18  Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
 10.19  become effective at the same time it becomes effective for 
 10.20  federal purposes. 
 10.21     The Internal Revenue Code of 1986, as amended through June 
 10.22  15, 2003, shall be in effect for taxable years beginning after 
 10.23  December 31, 2002.  The provisions of section 201 of the Jobs 
 10.24  and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if 
 10.25  it is enacted into law Public Law 108-27, and the provisions of 
 10.26  sections 103, 106, 108, 109, and 110 of the Military Family Tax 
 10.27  Relief Act of 2003, Public Law 108-121, are effective at the 
 10.28  same time it became effective for federal purposes. 
 10.29     The Internal Revenue Code of 1986, as amended through 
 10.30  November 11, 2003, shall be in effect for taxable years 
 10.31  beginning after December 31, 2003. 
 10.32     Except as otherwise provided, references to the Internal 
 10.33  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 10.34  for purposes of determining net income for the applicable year. 
 10.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 10.36  following final enactment. 
 11.1      Sec. 6.  Minnesota Statutes 2003 Supplement, section 
 11.2   290.01, subdivision 19a, is amended to read: 
 11.3      Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 11.4   individuals, estates, and trusts, there shall be added to 
 11.5   federal taxable income: 
 11.6      (1)(i) interest income on obligations of any state other 
 11.7   than Minnesota or a political or governmental subdivision, 
 11.8   municipality, or governmental agency or instrumentality of any 
 11.9   state other than Minnesota exempt from federal income taxes 
 11.10  under the Internal Revenue Code or any other federal statute; 
 11.11  and 
 11.12     (ii) exempt-interest dividends as defined in section 
 11.13  852(b)(5) of the Internal Revenue Code, except the portion of 
 11.14  the exempt-interest dividends derived from interest income on 
 11.15  obligations of the state of Minnesota or its political or 
 11.16  governmental subdivisions, municipalities, governmental agencies 
 11.17  or instrumentalities, but only if the portion of the 
 11.18  exempt-interest dividends from such Minnesota sources paid to 
 11.19  all shareholders represents 95 percent or more of the 
 11.20  exempt-interest dividends that are paid by the regulated 
 11.21  investment company as defined in section 851(a) of the Internal 
 11.22  Revenue Code, or the fund of the regulated investment company as 
 11.23  defined in section 851(g) of the Internal Revenue Code, making 
 11.24  the payment; and 
 11.25     (iii) for the purposes of items (i) and (ii), interest on 
 11.26  obligations of an Indian tribal government described in section 
 11.27  7871(c) of the Internal Revenue Code shall be treated as 
 11.28  interest income on obligations of the state in which the tribe 
 11.29  is located; 
 11.30     (2) the amount of income taxes paid or accrued within the 
 11.31  taxable year under this chapter and income taxes paid to any 
 11.32  other state or to any province or territory of Canada, to the 
 11.33  extent allowed as a deduction under section 63(d) of the 
 11.34  Internal Revenue Code, but the addition may not be more than the 
 11.35  amount by which the itemized deductions as allowed under section 
 11.36  63(d) of the Internal Revenue Code exceeds the amount of the 
 12.1   standard deduction as defined in section 63(c) of the Internal 
 12.2   Revenue Code.  For the purpose of this paragraph, the 
 12.3   disallowance of itemized deductions under section 68 of the 
 12.4   Internal Revenue Code of 1986, income tax is the last itemized 
 12.5   deduction disallowed; 
 12.6      (3) the capital gain amount of a lump sum distribution to 
 12.7   which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 12.8   Reform Act of 1986, Public Law 99-514, applies; 
 12.9      (4) the amount of income taxes paid or accrued within the 
 12.10  taxable year under this chapter and income taxes paid to any 
 12.11  other state or any province or territory of Canada, to the 
 12.12  extent allowed as a deduction in determining federal adjusted 
 12.13  gross income.  For the purpose of this paragraph, income taxes 
 12.14  do not include the taxes imposed by sections 290.0922, 
 12.15  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 12.16     (5) the amount of expense, interest, or taxes disallowed 
 12.17  pursuant to section 290.10; 
 12.18     (6) the amount of a partner's pro rata share of net income 
 12.19  which does not flow through to the partner because the 
 12.20  partnership elected to pay the tax on the income under section 
 12.21  6242(a)(2) of the Internal Revenue Code; and 
 12.22     (7) 80 percent of the depreciation deduction allowed under 
 12.23  section 168(k) of the Internal Revenue Code.  For purposes of 
 12.24  this clause, if the taxpayer has an activity that in the taxable 
 12.25  year generates a deduction for depreciation under section 168(k) 
 12.26  and the activity generates a loss for the taxable year that the 
 12.27  taxpayer is not allowed to claim for the taxable year, "the 
 12.28  depreciation allowed under section 168(k)" for the taxable year 
 12.29  is limited to excess of the depreciation claimed by the activity 
 12.30  under section 168(k) over the amount of the loss from the 
 12.31  activity that is not allowed in the taxable year.  In succeeding 
 12.32  taxable years when the losses not allowed in the taxable year 
 12.33  are allowed, the depreciation under section 168(k) is allowed; 
 12.34     (8) the amount of mortgage interest paid on a residential 
 12.35  home with a market value greater than $500,000 as determined 
 12.36  under section 273.11, that exceeds $25,000 to the extent 
 13.1   deducted from federal taxable income; and 
 13.2      (9) the amount of expenses disallowed under section 290.10, 
 13.3   subdivision 2. 
 13.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 13.5   years beginning after December 31, 2003. 
 13.6      Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 13.7   290.01, subdivision 19b, is amended to read: 
 13.8      Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 13.9   individuals, estates, and trusts, there shall be subtracted from 
 13.10  federal taxable income: 
 13.11     (1) interest income on obligations of any authority, 
 13.12  commission, or instrumentality of the United States to the 
 13.13  extent includable in taxable income for federal income tax 
 13.14  purposes but exempt from state income tax under the laws of the 
 13.15  United States; 
 13.16     (2) if included in federal taxable income, the amount of 
 13.17  any overpayment of income tax to Minnesota or to any other 
 13.18  state, for any previous taxable year, whether the amount is 
 13.19  received as a refund or as a credit to another taxable year's 
 13.20  income tax liability; 
 13.21     (3) the amount paid to others, less the amount used to 
 13.22  claim the credit allowed under section 290.0674, not to exceed 
 13.23  $1,625 for each qualifying child in grades kindergarten to 6 and 
 13.24  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 13.25  textbooks, and transportation of each qualifying child in 
 13.26  attending an elementary or secondary school situated in 
 13.27  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 13.28  wherein a resident of this state may legally fulfill the state's 
 13.29  compulsory attendance laws, which is not operated for profit, 
 13.30  and which adheres to the provisions of the Civil Rights Act of 
 13.31  1964 and chapter 363A.  For the purposes of this clause, 
 13.32  "tuition" includes fees or tuition as defined in section 
 13.33  290.0674, subdivision 1, clause (1).  As used in this clause, 
 13.34  "textbooks" includes books and other instructional materials and 
 13.35  equipment purchased or leased for use in elementary and 
 13.36  secondary schools in teaching only those subjects legally and 
 14.1   commonly taught in public elementary and secondary schools in 
 14.2   this state.  Equipment expenses qualifying for deduction 
 14.3   includes expenses as defined and limited in section 290.0674, 
 14.4   subdivision 1, clause (3).  "Textbooks" does not include 
 14.5   instructional books and materials used in the teaching of 
 14.6   religious tenets, doctrines, or worship, the purpose of which is 
 14.7   to instill such tenets, doctrines, or worship, nor does it 
 14.8   include books or materials for, or transportation to, 
 14.9   extracurricular activities including sporting events, musical or 
 14.10  dramatic events, speech activities, driver's education, or 
 14.11  similar programs.  For purposes of the subtraction provided by 
 14.12  this clause, "qualifying child" has the meaning given in section 
 14.13  32(c)(3) of the Internal Revenue Code; 
 14.14     (4) income as provided under section 290.0802; 
 14.15     (5) to the extent included in federal adjusted gross 
 14.16  income, income realized on disposition of property exempt from 
 14.17  tax under section 290.491; 
 14.18     (6) to the extent included in federal taxable income, 
 14.19  postservice benefits for youth community service under section 
 14.20  124D.42 for volunteer service under United States Code, title 
 14.21  42, sections 12601 to 12604; 
 14.22     (7) to the extent not deducted in determining federal 
 14.23  taxable income by an individual who does not itemize deductions 
 14.24  for federal income tax purposes for the taxable year, an amount 
 14.25  equal to 50 percent of the excess of charitable contributions 
 14.26  allowable as a deduction for the taxable year under section 
 14.27  170(a) of the Internal Revenue Code over $500; 
 14.28     (8) for taxable years beginning before January 1, 2008, the 
 14.29  amount of the federal small ethanol producer credit allowed 
 14.30  under section 40(a)(3) of the Internal Revenue Code which is 
 14.31  included in gross income under section 87 of the Internal 
 14.32  Revenue Code; 
 14.33     (9) for individuals who are allowed a federal foreign tax 
 14.34  credit for taxes that do not qualify for a credit under section 
 14.35  290.06, subdivision 22, an amount equal to the carryover of 
 14.36  subnational foreign taxes for the taxable year, but not to 
 15.1   exceed the total subnational foreign taxes reported in claiming 
 15.2   the foreign tax credit.  For purposes of this clause, "federal 
 15.3   foreign tax credit" means the credit allowed under section 27 of 
 15.4   the Internal Revenue Code, and "carryover of subnational foreign 
 15.5   taxes" equals the carryover allowed under section 904(c) of the 
 15.6   Internal Revenue Code minus national level foreign taxes to the 
 15.7   extent they exceed the federal foreign tax credit; 
 15.8      (10) in each of the five tax years immediately following 
 15.9   the tax year in which an addition is required under subdivision 
 15.10  19a, clause (7), an amount equal to one-fifth of the delayed 
 15.11  depreciation.  For purposes of this clause, "delayed 
 15.12  depreciation" means the amount of the addition made by the 
 15.13  taxpayer under subdivision 19a, clause (7), minus the positive 
 15.14  value of any net operating loss under section 172 of the 
 15.15  Internal Revenue Code generated for the tax year of the 
 15.16  addition.  The resulting delayed depreciation cannot be less 
 15.17  than zero; and 
 15.18     (11) job opportunity building zone income as provided under 
 15.19  section 469.316; 
 15.20     (12) to the extent included in federal taxable income, an 
 15.21  amount, not to exceed $10,000, equal to an individual's 
 15.22  unreimbursed expenses for travel, lodging, and lost wages net of 
 15.23  sick pay related to the individual's donation of one or more of 
 15.24  the individual's organs to another person for human organ 
 15.25  transplantation.  For purposes of determining the extent to 
 15.26  which expenses are included in federal taxable income, expenses 
 15.27  qualifying under this paragraph are the first expenses 
 15.28  considered in determining the medical expense deduction allowed 
 15.29  under section 213 of the Internal Revenue Code.  For purposes of 
 15.30  this clause, "organ" means all or part of an individual's liver, 
 15.31  pancreas, kidney, intestine, lung, or bone marrow, and "human 
 15.32  organ transplantation" means the medical procedure by which 
 15.33  transfer of a human organ is made from the body of one person to 
 15.34  the body of another person.  An individual may claim the 
 15.35  subtraction in this clause for each instance of organ donation 
 15.36  for transplantation, during the taxable year in which the 
 16.1   expenses or lost wages occur; 
 16.2      (13) the amount of compensation paid to members of the 
 16.3   Minnesota National Guard or other reserve components of the 
 16.4   United States military for active service performed in 
 16.5   Minnesota, excluding compensation for services performed under 
 16.6   the Active Guard Reserve (AGR) program.  For purposes of this 
 16.7   clause, "active service" means (i) state active service as 
 16.8   defined in section 190.05, subdivision 5a, clause (1); (ii) 
 16.9   federally funded state active service as defined in section 
 16.10  190.05, subdivision 5b; or (iii) federal active service as 
 16.11  defined in section 190.05, subdivision 5c, but "active service" 
 16.12  excludes services performed exclusively for purposes of basic 
 16.13  combat training, advanced individual training, annual training, 
 16.14  and periodic inactive duty training; special training 
 16.15  periodically made available to reserve members; and service 
 16.16  performed in accordance with section 190.08, subdivision 3; and 
 16.17     (14) the amount of compensation paid to members of the 
 16.18  armed forces of the United States or United Nations for active 
 16.19  duty performed outside Minnesota. 
 16.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 16.21  years beginning after December 31, 2003. 
 16.22     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 16.23  290.01, subdivision 19c, is amended to read: 
 16.24     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 16.25  INCOME.] For corporations, there shall be added to federal 
 16.26  taxable income: 
 16.27     (1) the amount of any deduction taken for federal income 
 16.28  tax purposes for income, excise, or franchise taxes based on net 
 16.29  income or related minimum taxes, including but not limited to 
 16.30  the tax imposed under section 290.0922, paid by the corporation 
 16.31  to Minnesota, another state, a political subdivision of another 
 16.32  state, the District of Columbia, or any foreign country or 
 16.33  possession of the United States; 
 16.34     (2) interest not subject to federal tax upon obligations 
 16.35  of:  the United States, its possessions, its agencies, or its 
 16.36  instrumentalities; the state of Minnesota or any other state, 
 17.1   any of its political or governmental subdivisions, any of its 
 17.2   municipalities, or any of its governmental agencies or 
 17.3   instrumentalities; the District of Columbia; or Indian tribal 
 17.4   governments; 
 17.5      (3) exempt-interest dividends received as defined in 
 17.6   section 852(b)(5) of the Internal Revenue Code; 
 17.7      (4) the amount of any net operating loss deduction taken 
 17.8   for federal income tax purposes under section 172 or 832(c)(10) 
 17.9   of the Internal Revenue Code or operations loss deduction under 
 17.10  section 810 of the Internal Revenue Code; 
 17.11     (5) the amount of any special deductions taken for federal 
 17.12  income tax purposes under sections 241 to 247 of the Internal 
 17.13  Revenue Code; 
 17.14     (6) losses from the business of mining, as defined in 
 17.15  section 290.05, subdivision 1, clause (a), that are not subject 
 17.16  to Minnesota income tax; 
 17.17     (7) the amount of any capital losses deducted for federal 
 17.18  income tax purposes under sections 1211 and 1212 of the Internal 
 17.19  Revenue Code; 
 17.20     (8) the exempt foreign trade income of a foreign sales 
 17.21  corporation under sections 921(a) and 291 of the Internal 
 17.22  Revenue Code; 
 17.23     (9) the amount of percentage depletion deducted under 
 17.24  sections 611 through 614 and 291 of the Internal Revenue Code; 
 17.25     (10) for certified pollution control facilities placed in 
 17.26  service in a taxable year beginning before December 31, 1986, 
 17.27  and for which amortization deductions were elected under section 
 17.28  169 of the Internal Revenue Code of 1954, as amended through 
 17.29  December 31, 1985, the amount of the amortization deduction 
 17.30  allowed in computing federal taxable income for those 
 17.31  facilities; 
 17.32     (11) the amount of any deemed dividend from a foreign 
 17.33  operating corporation determined pursuant to section 290.17, 
 17.34  subdivision 4, paragraph (g); 
 17.35     (12) the amount of any environmental tax paid under section 
 17.36  59(a) of the Internal Revenue Code; 
 18.1      (13) the amount of a partner's pro rata share of net income 
 18.2   which does not flow through to the partner because the 
 18.3   partnership elected to pay the tax on the income under section 
 18.4   6242(a)(2) of the Internal Revenue Code; 
 18.5      (14) the amount of net income excluded under section 114 of 
 18.6   the Internal Revenue Code; 
 18.7      (15) any increase in subpart F income, as defined in 
 18.8   section 952(a) of the Internal Revenue Code, for the taxable 
 18.9   year when subpart F income is calculated without regard to the 
 18.10  provisions of section 614 of Public Law 107-147; and 
 18.11     (16) 80 percent of the depreciation deduction allowed under 
 18.12  section 168(k) of the Internal Revenue Code.  For purposes of 
 18.13  this clause, if the taxpayer has an activity that in the taxable 
 18.14  year generates a deduction for depreciation under section 168(k) 
 18.15  and the activity generates a loss for the taxable year that the 
 18.16  taxpayer is not allowed to claim for the taxable year, "the 
 18.17  depreciation allowed under section 168(k)" for the taxable year 
 18.18  is limited to excess of the depreciation claimed by the activity 
 18.19  under section 168(k) over the amount of the loss from the 
 18.20  activity that is not allowed in the taxable year.  In succeeding 
 18.21  taxable years when the losses not allowed in the taxable year 
 18.22  are allowed, the depreciation under section 168(k) is allowed; 
 18.23  and 
 18.24     (17) the amount of expenses disallowed under section 
 18.25  290.10, subdivision 2. 
 18.26     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 18.27  years beginning after December 31, 2003. 
 18.28     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 18.29  290.01, subdivision 31, is amended to read: 
 18.30     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 18.31  defined otherwise, "Internal Revenue Code" means the Internal 
 18.32  Revenue Code of 1986, as amended through June 15, 2003 December 
 18.33  31, 2003. 
 18.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 18.35  following final enactment except the changes incorporated by 
 18.36  federal changes are effective at the same times as the changes 
 19.1   were effective for federal purposes. 
 19.2      Sec. 10.  Minnesota Statutes 2002, section 290.05, 
 19.3   subdivision 1, is amended to read: 
 19.4      Subdivision 1.  [EXEMPT ENTITIES.] The following 
 19.5   corporations, individuals, estates, trusts, and organizations 
 19.6   shall be exempted from taxation under this chapter, provided 
 19.7   that every such person or corporation claiming exemption under 
 19.8   this chapter, in whole or in part, must establish to the 
 19.9   satisfaction of the commissioner the taxable status of any 
 19.10  income or activity: 
 19.11     (a) corporations, individuals, estates, and trusts engaged 
 19.12  in the business of mining or producing iron ore and other ores 
 19.13  the mining or production of which is subject to the occupation 
 19.14  tax imposed by section 298.01; but if any such corporation, 
 19.15  individual, estate, or trust engages in any other business or 
 19.16  activity or has income from any property not used in such 
 19.17  business it shall be subject to this tax computed on the net 
 19.18  income from such property or such other business or activity.  
 19.19  Royalty shall not be considered as income from the business of 
 19.20  mining or producing iron ore within the meaning of this section; 
 19.21     (b) the United States of America, the state of Minnesota or 
 19.22  any political subdivision of either agencies or 
 19.23  instrumentalities, whether engaged in the discharge of 
 19.24  governmental or proprietary functions; and 
 19.25     (c) any insurance company; and 
 19.26     (d) a corporation engaged in the business of operating a 
 19.27  personal rapid transit system, as defined in section 297A.61, 
 19.28  subdivision 37, in this state, independent of any government 
 19.29  subsidies, but if the corporation engages in any other business 
 19.30  or activity or has income from any property not used in the 
 19.31  business of operating a personal rapid transit system, it is 
 19.32  subject to this tax computed on the net income from the property 
 19.33  or business or activity. 
 19.34     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 19.35  years beginning after December 31, 2008. 
 19.36     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
 20.1   290.06, subdivision 2c, is amended to read: 
 20.2      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 20.3   AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 20.4   married individuals filing joint returns and surviving spouses 
 20.5   as defined in section 2(a) of the Internal Revenue Code must be 
 20.6   computed by applying to their taxable net income the following 
 20.7   schedule of rates: 
 20.8      (1) On the first $25,680, 5.35 percent; 
 20.9      (2) On all over $25,680, but not over $102,030, 7.05 
 20.10  percent; 
 20.11     (3) On all over $102,030, 7.85 8.0 percent. 
 20.12     Married individuals filing separate returns, estates, and 
 20.13  trusts must compute their income tax by applying the above rates 
 20.14  to their taxable income, except that the income brackets will be 
 20.15  one-half of the above amounts.  
 20.16     (b) The income taxes imposed by this chapter upon unmarried 
 20.17  individuals must be computed by applying to taxable net income 
 20.18  the following schedule of rates: 
 20.19     (1) On the first $17,570, 5.35 percent; 
 20.20     (2) On all over $17,570, but not over $57,710, 7.05 
 20.21  percent; 
 20.22     (3) On all over $57,710, 7.85 8.0 percent. 
 20.23     (c) The income taxes imposed by this chapter upon unmarried 
 20.24  individuals qualifying as a head of household as defined in 
 20.25  section 2(b) of the Internal Revenue Code must be computed by 
 20.26  applying to taxable net income the following schedule of rates: 
 20.27     (1) On the first $21,630, 5.35 percent; 
 20.28     (2) On all over $21,630, but not over $86,910, 7.05 
 20.29  percent; 
 20.30     (3) On all over $86,910, 7.85 8.0 percent. 
 20.31     (d) In lieu of a tax computed according to the rates set 
 20.32  forth in this subdivision, the tax of any individual taxpayer 
 20.33  whose taxable net income for the taxable year is less than an 
 20.34  amount determined by the commissioner must be computed in 
 20.35  accordance with tables prepared and issued by the commissioner 
 20.36  of revenue based on income brackets of not more than $100.  The 
 21.1   amount of tax for each bracket shall be computed at the rates 
 21.2   set forth in this subdivision, provided that the commissioner 
 21.3   may disregard a fractional part of a dollar unless it amounts to 
 21.4   50 cents or more, in which case it may be increased to $1. 
 21.5      (e) An individual who is not a Minnesota resident for the 
 21.6   entire year must compute the individual's Minnesota income tax 
 21.7   as provided in this subdivision.  After the application of the 
 21.8   nonrefundable credits provided in this chapter, the tax 
 21.9   liability must then be multiplied by a fraction in which:  
 21.10     (1) the numerator is the individual's Minnesota source 
 21.11  federal adjusted gross income as defined in section 62 of the 
 21.12  Internal Revenue Code and increased by the additions required 
 21.13  under section 290.01, subdivision 19a, clauses (1), (5), and 
 21.14  (6), and reduced by the subtraction under section 290.01, 
 21.15  subdivision 19b, clause (11), and the Minnesota assignable 
 21.16  portion of the subtraction for United States government interest 
 21.17  under section 290.01, subdivision 19b, clause (1), after 
 21.18  applying the allocation and assignability provisions of section 
 21.19  290.081, clause (a), or 290.17; and 
 21.20     (2) the denominator is the individual's federal adjusted 
 21.21  gross income as defined in section 62 of the Internal Revenue 
 21.22  Code of 1986, increased by the amounts specified in section 
 21.23  290.01, subdivision 19a, clauses (1), (5), and (6), and reduced 
 21.24  by the amounts specified in section 290.01, subdivision 19b, 
 21.25  clauses (1) and (11). 
 21.26     <b>[EFFECTIVE DATE.]</b> This section is effective only if 
 21.27  sections 16 and 17 of this article are enacted for taxable years 
 21.28  beginning after December 31, 2004. 
 21.29     Sec. 12.  Minnesota Statutes 2002, section 290.06, 
 21.30  subdivision 28, is amended to read: 
 21.31     Subd. 28.  [CREDIT REFUNDS FOR TRANSIT PASSES.] A taxpayer 
 21.32  (a) An employer may take a credit against the tax due under this 
 21.33  chapter claim a refund equal to 30 percent of the expense 
 21.34  incurred by the taxpayer employer to provide transit passes, for 
 21.35  use in Minnesota, to employees of the taxpayer.  
 21.36     (b) As used in this subdivision, the following terms have 
 22.1   the meanings given: 
 22.2      (1) "employer" means an individual or entity subject to tax 
 22.3   under this chapter or an entity that is exempt from taxation 
 22.4   under section 290.05, but excluding entities enumerated in 
 22.5   section 290.05, subdivision 1, paragraph (b); and 
 22.6      (2) "transit pass" has the meaning given in section 
 22.7   132(f)(5)(A) of the Internal Revenue Code.  
 22.8      (c) If the taxpayer employer purchases the transit passes 
 22.9   from the transit system operator, and resells them to the 
 22.10  employees, the credit refund is based on the amount of the 
 22.11  difference between the price paid for the passes by the employer 
 22.12  and the amount charged to employees. 
 22.13     (d) The commissioner shall prescribe the forms for and the 
 22.14  manner in which the refund may be claimed.  The commissioner 
 22.15  must provide for paying refunds at least quarterly.  The 
 22.16  commissioner may set a minimum amount of qualifying expenses 
 22.17  that must be incurred before a refund may be claimed. 
 22.18     (e) An amount sufficient to pay the refunds required by 
 22.19  this subdivision is appropriated to the commissioner of revenue. 
 22.20     <b>[EFFECTIVE DATE.]</b> This section is effective for transit 
 22.21  passes purchased after December 31, 2004. 
 22.22     Sec. 13.  Minnesota Statutes 2002, section 290.06, is 
 22.23  amended by adding a subdivision to read: 
 22.24     Subd. 32.  [REGIONAL INVESTMENT CREDIT.] (a) A credit is 
 22.25  allowed against the tax imposed by this chapter for investment 
 22.26  in a qualifying regional angel investment network fund.  The 
 22.27  credit equals 25 percent of the taxpayer's investment made in 
 22.28  the fund for the taxable year, but not to exceed the lesser of: 
 22.29     (1) the liability for tax under this chapter; or 
 22.30     (2) the amount of the certificate under paragraph (c) 
 22.31  provided to the taxpayer by the fund. 
 22.32     (b) For purposes of this subdivision, a regional angel 
 22.33  investment network fund means a pool investment fund that: 
 22.34     (1) is organized as a limited liability company and 
 22.35  consists of members who are accredited investors within the 
 22.36  meaning of Regulation D of the Securities and Exchange 
 23.1   Commission, Code of Federal Regulations, title 17, section 
 23.2   230.501(a); and 
 23.3      (2) primarily makes equity investments in emerging and 
 23.4   expanding small businesses as defined by the Small Business 
 23.5   Administration, or cooperative associations as defined in 
 23.6   chapter 308B, that are located in local communities in Minnesota 
 23.7   outside of the metropolitan area as defined in section 473.121, 
 23.8   subdivision 2, and does not make investments in residential real 
 23.9   estate. 
 23.10     (c) Regional angel investment network funds may apply to 
 23.11  the commissioner of employment and economic development for 
 23.12  certification as a qualifying regional angel investment network 
 23.13  fund.  The application must be in the form and made under 
 23.14  procedures specified by the commissioner of employment and 
 23.15  economic development.  The commissioner of employment and 
 23.16  economic development may certify up to ten qualifying funds and 
 23.17  provide certificates entitling investors in the funds to credits 
 23.18  under this subdivision of up to $250,000 for each fund.  The 
 23.19  commissioner of employment and economic development must not 
 23.20  issue a total amount of certificates for all funds of more than 
 23.21  $2,500,000.  In awarding certificates under this paragraph, the 
 23.22  commissioner of employment and economic development shall 
 23.23  generally award them to qualified applicants in the order in 
 23.24  which the applications are received, but shall also seek to 
 23.25  certify funds that are broadly dispersed across the entire state 
 23.26  outside of the metropolitan area, as defined in section 473.121, 
 23.27  subdivision 2. 
 23.28     (d) The commissioner of revenue may require a taxpayer to 
 23.29  provide a copy of the credit certificate under paragraph (c) to 
 23.30  verify the taxpayer's entitlement to a credit under this 
 23.31  subdivision. 
 23.32     (e) If the amount of the credit under this subdivision for 
 23.33  any taxable year exceeds the limitation under paragraph (a), 
 23.34  clause (1), the excess is a credit carryover to each of the 15 
 23.35  succeeding taxable years.  The entire amount of the excess 
 23.36  unused credit for the taxable year must be carried first to the 
 24.1   earliest of the taxable years to which the credit may be carried 
 24.2   and then to each successive year to which the credit may be 
 24.3   carried.  The amount of the unused credit which may be added 
 24.4   under this paragraph may not exceed the taxpayer's liability for 
 24.5   tax for the taxable year. 
 24.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 24.7   following final enactment, for taxable years beginning after 
 24.8   December 31, 2004.  It applies to investments made after the 
 24.9   fund has been certified by the commissioner of employment and 
 24.10  economic development. 
 24.11     Sec. 14.  Minnesota Statutes 2002, section 290.06, is 
 24.12  amended by adding a subdivision to read: 
 24.13     Subd. 33.  [CARSHARING CREDIT.] (a) For purposes of this 
 24.14  subdivision, a "carsharing organization"  means an organization 
 24.15  that:  
 24.16     (1) is described in section 501(c) of the Internal Revenue 
 24.17  Code; 
 24.18     (2) is comprised of members who purchase the use of a motor 
 24.19  vehicle from the organization; 
 24.20     (3) owns or leases a fleet of motor vehicles that are 
 24.21  available to members of the organization to pay for the use of a 
 24.22  vehicle on an hourly or per trip basis; and 
 24.23     (4) does not assign exclusive rights of use of specific 
 24.24  vehicles to individual members or allow individual members to 
 24.25  keep a vehicle in the member's sole possession.  
 24.26     (b) A taxpayer may take a credit against the tax due under 
 24.27  this chapter for the expenses incurred by the taxpayer to 
 24.28  purchase a membership and pay monthly dues to a carsharing 
 24.29  organization or to provide memberships and pay monthly dues to a 
 24.30  carsharing organization to employees of the taxpayer.  The 
 24.31  amount of the credit is equal to the lesser of the actual cost 
 24.32  of the membership fee and the monthly dues, or $390.  If an 
 24.33  employer purchases the membership or pays the monthly dues to 
 24.34  the nonprofit carsharing organization and resells the membership 
 24.35  to its employees or charges the monthly dues to its employees, 
 24.36  the credit allowed to the employer is the amount of the 
 25.1   difference between the amount paid by the employer and the 
 25.2   amount charged to the employee. 
 25.3      (c) A taxpayer who owns a parking facility that charges 
 25.4   customers an amount to park vehicles at the facility and 
 25.5   provides dedicated parking space at no charge to a nonprofit 
 25.6   carsharing organization to park the motor vehicles that are used 
 25.7   by the members of the organization on an hourly or per-trip 
 25.8   basis, may take a credit against the tax due under this chapter 
 25.9   for the value of the dedicated parking space provided to the 
 25.10  nonprofit carsharing organization.  The value of the dedicated 
 25.11  parking space is equal to the lowest amount charged to customers 
 25.12  who pay to park at the facility calculated on an hourly, daily, 
 25.13  or other long-term rate that results in the lowest total cost. 
 25.14     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 25.15  years beginning after December 31, 2004. 
 25.16     Sec. 15.  Minnesota Statutes 2002, section 290.0674, 
 25.17  subdivision 2, is amended to read: 
 25.18     Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
 25.19  greater than $33,500, the maximum credit allowed is $1,000 per 
 25.20  multiplied by the number of claimant's qualifying child and 
 25.21  $2,000 per family children in grades kindergarten through grade 
 25.22  12.  No credit is allowed for education-related expenses for 
 25.23  claimants with income greater than $37,500.  The maximum credit 
 25.24  per child claimant is reduced by $1 for each $4 of household 
 25.25  income over $33,500, and the maximum credit per family is 
 25.26  reduced by $2 for each $4 of household income over $33,500, but 
 25.27  in no case is the credit less than zero. 
 25.28     For purposes of this section "income" has the meaning given 
 25.29  in section 290.067, subdivision 2a.  In the case of a married 
 25.30  claimant, a credit is not allowed unless a joint income tax 
 25.31  return is filed. 
 25.32     (b) For a nonresident or part-year resident, the credit 
 25.33  determined under subdivision 1 and the maximum credit amount in 
 25.34  paragraph (a) must be allocated using the percentage calculated 
 25.35  in section 290.06, subdivision 2c, paragraph (e). 
 25.36     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 26.1   beginning after December 31, 2004. 
 26.2      Sec. 16.  Minnesota Statutes 2003 Supplement, section 
 26.3   290.091, subdivision 2, is amended to read: 
 26.4      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 26.5   this section, the following terms have the meanings given: 
 26.6      (a) "Alternative minimum taxable income" means the sum of 
 26.7   the following for the taxable year: 
 26.8      (1) the taxpayer's federal alternative minimum taxable 
 26.9   income as defined in section 55(b)(2) of the Internal Revenue 
 26.10  Code; 
 26.11     (2) the taxpayer's itemized deductions allowed in computing 
 26.12  federal alternative minimum taxable income, but excluding: 
 26.13     (i) the charitable contribution deduction under section 170 
 26.14  of the Internal Revenue Code to the extent that the deduction 
 26.15  exceeds 1.0 percent of adjusted gross income, as defined in 
 26.16  section 62 of the Internal Revenue Code; 
 26.17     (ii) the medical expense deduction; 
 26.18     (iii) the casualty, theft, and disaster loss deduction; and 
 26.19     (iv) the impairment-related work expenses of a disabled 
 26.20  person; and 
 26.21     (v) the amount of the exemption allowed the taxpayer under 
 26.22  section 151(c) of the Internal Revenue Code; 
 26.23     (3) for depletion allowances computed under section 613A(c) 
 26.24  of the Internal Revenue Code, with respect to each property (as 
 26.25  defined in section 614 of the Internal Revenue Code), to the 
 26.26  extent not included in federal alternative minimum taxable 
 26.27  income, the excess of the deduction for depletion allowable 
 26.28  under section 611 of the Internal Revenue Code for the taxable 
 26.29  year over the adjusted basis of the property at the end of the 
 26.30  taxable year (determined without regard to the depletion 
 26.31  deduction for the taxable year); 
 26.32     (4) to the extent not included in federal alternative 
 26.33  minimum taxable income, the amount of the tax preference for 
 26.34  intangible drilling cost under section 57(a)(2) of the Internal 
 26.35  Revenue Code determined without regard to subparagraph (E); 
 26.36     (5) to the extent not included in federal alternative 
 27.1   minimum taxable income, the amount of interest income as 
 27.2   provided by section 290.01, subdivision 19a, clause (1); and 
 27.3      (6) the amount of addition required by section 290.01, 
 27.4   subdivision 19a, clause (7); 
 27.5      less the sum of the amounts determined under the following: 
 27.6      (1) interest income as defined in section 290.01, 
 27.7   subdivision 19b, clause (1); 
 27.8      (2) an overpayment of state income tax as provided by 
 27.9   section 290.01, subdivision 19b, clause (2), to the extent 
 27.10  included in federal alternative minimum taxable income; 
 27.11     (3) the amount of investment interest paid or accrued 
 27.12  within the taxable year on indebtedness to the extent that the 
 27.13  amount does not exceed net investment income, as defined in 
 27.14  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 27.15  not include amounts deducted in computing federal adjusted gross 
 27.16  income; and 
 27.17     (4) amounts subtracted from federal taxable income as 
 27.18  provided by section 290.01, subdivision 19b, clauses (10) and 
 27.19  (11) to (12). 
 27.20     In the case of an estate or trust, alternative minimum 
 27.21  taxable income must be computed as provided in section 59(c) of 
 27.22  the Internal Revenue Code. 
 27.23     (b) "Investment interest" means investment interest as 
 27.24  defined in section 163(d)(3) of the Internal Revenue Code. 
 27.25     (c) "Tentative minimum tax" equals 6.4 percent of 
 27.26  alternative minimum taxable income after subtracting the 
 27.27  exemption amount determined under subdivision 3. 
 27.28     (d) "Regular tax" means the tax that would be imposed under 
 27.29  this chapter (without regard to this section and section 
 27.30  290.032), reduced by the sum of the nonrefundable credits 
 27.31  allowed under this chapter.  
 27.32     (e) "Net minimum tax" means the minimum tax imposed by this 
 27.33  section. 
 27.34     <b>[EFFECTIVE DATE.]</b> This section is effective only if 
 27.35  sections 11 and 17 of this article are enacted for taxable years 
 27.36  beginning after December 31, 2004. 
 28.1      Sec. 17.  Minnesota Statutes 2002, section 290.091, 
 28.2   subdivision 3, is amended to read: 
 28.3      Subd. 3.  [EXEMPTION AMOUNT.] (a) For purposes of computing 
 28.4   the alternative minimum tax, the exemption amount is the 
 28.5   exemption determined under section 55(d) of the Internal Revenue 
 28.6   Code, as amended through December 31, 1992, except that 
 28.7   alternative minimum taxable income as determined under this 
 28.8   section must be substituted in the computation of the phase out 
 28.9   under section 55(d)(3) $66,300 for married individuals filing 
 28.10  joint returns; and $33,150 for married individuals filing 
 28.11  separate returns, single individuals, and head of household 
 28.12  filers. 
 28.13     (b) The exemption amount determined under this subdivision 
 28.14  is reduced by an amount equal to 25 percent of the amount by 
 28.15  which the alternative minimum income exceeds $248,600 for 
 28.16  married individuals filing joint returns; and $124,300 for 
 28.17  married individuals filing separate returns, single individuals, 
 28.18  and head of household filers. 
 28.19     (c) For taxable years beginning after December 31, 2005, 
 28.20  the exemption amounts under paragraph (a), and the income 
 28.21  amounts in paragraph (b), must be adjusted for inflation.  The 
 28.22  commissioner shall make the inflation adjustments in accordance 
 28.23  with section 1(f) of the Internal Revenue Code except that for 
 28.24  the purposes of this subdivision the percentage increase must be 
 28.25  determined from the year starting September 1, 2004, and ending 
 28.26  August 31, 2005, as the base year for adjusting for inflation 
 28.27  for the tax year beginning after December 31, 2005.  The 
 28.28  determination of the commissioner under this subdivision is not 
 28.29  a rule under the Administrative Procedure Act. 
 28.30     <b>[EFFECTIVE DATE.]</b> This section is effective only if 
 28.31  sections 11 and 16 of this article are enacted for taxable years 
 28.32  beginning after December 31, 2004. 
 28.33     Sec. 18.  Minnesota Statutes 2002, section 290.10, is 
 28.34  amended to read: 
 28.35     290.10 [NONDEDUCTIBLE ITEMS.] 
 28.36     Subdivision 1.  [EXPENSES, INTEREST, AND TAXES.] Except as 
 29.1   provided in section 290.17, subdivision 4, paragraph (i), in 
 29.2   computing the net income of a taxpayer no deduction shall in any 
 29.3   case be allowed for expenses, interest and taxes connected with 
 29.4   or allocable against the production or receipt of all income not 
 29.5   included in the measure of the tax imposed by this chapter, 
 29.6   except that for corporations engaged in the business of mining 
 29.7   or producing iron ore, the mining of which is subject to the 
 29.8   occupation tax imposed by section 298.01, subdivision 4, this 
 29.9   shall not prevent the deduction of expenses and other items to 
 29.10  the extent that the expenses and other items are allowable under 
 29.11  this chapter and are not deductible, capitalizable, retainable 
 29.12  in basis, or taken into account by allowance or otherwise in 
 29.13  computing the occupation tax and do not exceed the amounts taken 
 29.14  for federal income tax purposes for that year.  Occupation taxes 
 29.15  imposed under chapter 298, royalty taxes imposed under chapter 
 29.16  299, or depletion expenses may not be deducted under this clause.
 29.17     Subd. 2.  [FINES, PENALTIES, DAMAGES, AND EXPENSES.] (a) No 
 29.18  deduction from taxable income for a trade or business expense 
 29.19  under section 162(a) of the Internal Revenue Code shall be 
 29.20  allowed for any fine, penalty, damages, or expenses paid to: 
 29.21     (1) the government of the United States, a state, a 
 29.22  territory or possession of the United States, the District of 
 29.23  Columbia, or the Commonwealth of Puerto Rico; 
 29.24     (2) the government of a foreign country; or 
 29.25     (3) a political subdivision of, or corporation or other 
 29.26  entity serving as an agency or instrumentality of, any 
 29.27  government described in clause (1) or (2). 
 29.28     (b) For purposes of this subdivision, "fine, penalty, 
 29.29  damages, or expenses" include, but are not limited to, any 
 29.30  amount: 
 29.31     (1) paid pursuant to a conviction or a plea of guilty or 
 29.32  nolo contendere for any crime in a criminal proceeding; 
 29.33     (2) paid as a civil penalty imposed by federal, state, or 
 29.34  local law, including tax penalties and interest; 
 29.35     (3) paid in settlement of the taxpayer's actual or 
 29.36  potential liability for a civil or criminal fine or penalty; 
 30.1      (4) forfeited as collateral posted in connection with a 
 30.2   proceeding that could result in imposition of a fine or penalty; 
 30.3   or 
 30.4      (5) legal fees and related expenses paid or incurred in the 
 30.5   prosecution or civil action arising from a violation of the law 
 30.6   imposing the fine or civil penalty, court costs assessed against 
 30.7   the taxpayer, or stenographic and printing charges, compensatory 
 30.8   damages, punitive damages, or restitution. 
 30.9      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 30.10  years beginning after December 31, 2003. 
 30.11     Sec. 19.  Minnesota Statutes 2002, section 290.191, 
 30.12  subdivision 2, is amended to read: 
 30.13     Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 30.14  Except for those trades or businesses required to use a 
 30.15  different formula under subdivision 3 or section 290.36, and for 
 30.16  those trades or businesses that receive permission to use some 
 30.17  other method under section 290.20 or under subdivision 4, a 
 30.18  trade or business required to apportion its net income must 
 30.19  apportion its income to this state on the basis of the 
 30.20  percentage obtained by taking the sum of:  
 30.21     (1) 75 percent of the percentage which the sales made 
 30.22  within this state in connection with the trade or business 
 30.23  during the tax period are of the total sales wherever made in 
 30.24  connection with the trade or business during the tax period;. 
 30.25     (2) 12.5 percent of the percentage which the total tangible 
 30.26  property used by the taxpayer in this state in connection with 
 30.27  the trade or business during the tax period is of the total 
 30.28  tangible property, wherever located, used by the taxpayer in 
 30.29  connection with the trade or business during the tax period; and 
 30.30     (3) 12.5 percent of the percentage which the taxpayer's 
 30.31  total payrolls paid or incurred in this state or paid in respect 
 30.32  to labor performed in this state in connection with the trade or 
 30.33  business during the tax period are of the taxpayer's total 
 30.34  payrolls paid or incurred in connection with the trade or 
 30.35  business during the tax period.  
 30.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 31.1   years beginning after December 31, 2004, only if section 21 of 
 31.2   this article is enacted. 
 31.3      Sec. 20.  Minnesota Statutes 2002, section 290.191, 
 31.4   subdivision 3, is amended to read: 
 31.5      Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 31.6   INSTITUTIONS.] Except for an investment company required to 
 31.7   apportion its income under section 290.36, a financial 
 31.8   institution that is required to apportion its net income must 
 31.9   apportion its net income to this state on the basis of the 
 31.10  percentage obtained by taking the sum of:  
 31.11     (1) 75 percent of the percentage which the receipts from 
 31.12  within this state in connection with the trade or business 
 31.13  during the tax period are of the total receipts in connection 
 31.14  with the trade or business during the tax period, from wherever 
 31.15  derived;. 
 31.16     (2) 12.5 percent of the percentage which the sum of the 
 31.17  total tangible property used by the taxpayer in this state and 
 31.18  the intangible property owned by the taxpayer and attributed to 
 31.19  this state in connection with the trade or business during the 
 31.20  tax period is of the sum of the total tangible property, 
 31.21  wherever located, used by the taxpayer and the intangible 
 31.22  property owned by the taxpayer and attributed to all states in 
 31.23  connection with the trade or business during the tax period; and 
 31.24     (3) 12.5 percent of the percentage which the taxpayer's 
 31.25  total payrolls paid or incurred in this state or paid in respect 
 31.26  to labor performed in this state in connection with the trade or 
 31.27  business during the tax period are of the taxpayer's total 
 31.28  payrolls paid or incurred in connection with the trade or 
 31.29  business during the tax period. 
 31.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 31.31  years beginning after December 31, 2004, only if section 21 of 
 31.32  this article is enacted. 
 31.33     Sec. 21.  Minnesota Statutes 2002, section 290.191, 
 31.34  subdivision 5, is amended to read: 
 31.35     Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
 31.36  this section, the following rules apply in determining the sales 
 32.1   factor.  
 32.2      (a) The sales factor includes all sales, gross earnings, or 
 32.3   receipts received in the ordinary course of the business, except 
 32.4   that the following types of income are not included in the sales 
 32.5   factor: 
 32.6      (1) interest; 
 32.7      (2) dividends; 
 32.8      (3) sales of capital assets as defined in section 1221 of 
 32.9   the Internal Revenue Code; 
 32.10     (4) sales of property used in the trade or business, except 
 32.11  sales of leased property of a type which is regularly sold as 
 32.12  well as leased; 
 32.13     (5) sales of debt instruments as defined in section 
 32.14  1275(a)(1) of the Internal Revenue Code or sales of stock; and 
 32.15     (6) royalties, fees, or other like income of a type which 
 32.16  qualify for a subtraction from federal taxable income under 
 32.17  section 290.01, subdivision 19(d)(11).  
 32.18     (b) Sales of tangible personal property are made within 
 32.19  this state if the property is received by a purchaser at a point 
 32.20  within this state, and the taxpayer is taxable in this state, 
 32.21  regardless of the f.o.b. point, other conditions of the sale, or 
 32.22  the ultimate destination of the property. 
 32.23     (c) Tangible personal property delivered to a common or 
 32.24  contract carrier or foreign vessel for delivery to a purchaser 
 32.25  in another state or nation is a sale in that state or nation, 
 32.26  regardless of f.o.b. point or other conditions of the sale.  If 
 32.27  the taxpayer is not taxable in the state of the delivery and the 
 32.28  property is shipped from an office, factory, warehouse, or other 
 32.29  place of storage in this state, sales of tangible personal 
 32.30  property outside this state are attributed to this state 
 32.31  regardless of the terms of shipping, delivery, or other 
 32.32  conditions of sale. 
 32.33     (d) Notwithstanding paragraphs (b) and (c), when 
 32.34  intoxicating liquor, wine, fermented malt beverages, cigarettes, 
 32.35  or tobacco products are sold to a purchaser who is licensed by a 
 32.36  state or political subdivision to resell this property only 
 33.1   within the state of ultimate destination, the sale is made in 
 33.2   that state.  
 33.3      (e) Sales made by or through a corporation that is 
 33.4   qualified as a domestic international sales corporation under 
 33.5   section 992 of the Internal Revenue Code are not considered to 
 33.6   have been made within this state.  
 33.7      (f) Sales, rents, royalties, and other income in connection 
 33.8   with real property is attributed to the state in which the 
 33.9   property is located.  
 33.10     (g) Receipts from the lease or rental of tangible personal 
 33.11  property, including finance leases and true leases, must be 
 33.12  attributed to this state if the property is located in this 
 33.13  state and to other states if the property is not located in this 
 33.14  state.  Receipts from the lease or rental of moving property 
 33.15  including, but not limited to, motor vehicles, rolling stock, 
 33.16  aircraft, vessels, or mobile equipment are included in the 
 33.17  numerator of the receipts factor to the extent that the property 
 33.18  is used in this state.  The extent of the use of moving property 
 33.19  is determined as follows: 
 33.20     (1) A motor vehicle is used wholly in the state in which it 
 33.21  is registered.  
 33.22     (2) The extent that rolling stock is used in this state is 
 33.23  determined by multiplying the receipts from the lease or rental 
 33.24  of the rolling stock by a fraction, the numerator of which is 
 33.25  the miles traveled within this state by the leased or rented 
 33.26  rolling stock and the denominator of which is the total miles 
 33.27  traveled by the leased or rented rolling stock. 
 33.28     (3) The extent that an aircraft is used in this state is 
 33.29  determined by multiplying the receipts from the lease or rental 
 33.30  of the aircraft by a fraction, the numerator of which is the 
 33.31  number of landings of the aircraft in this state and the 
 33.32  denominator of which is the total number of landings of the 
 33.33  aircraft. 
 33.34     (4) The extent that a vessel, mobile equipment, or other 
 33.35  mobile property is used in the state is determined by 
 33.36  multiplying the receipts from the lease or rental of the 
 34.1   property by a fraction, the numerator of which is the number of 
 34.2   days during the taxable year the property was in this state and 
 34.3   the denominator of which is the total days in the taxable year.  
 34.4      (h) Royalties and other income not described in paragraph 
 34.5   (a), clause (6), received for the use of or for the privilege of 
 34.6   using intangible property, including patents, know-how, 
 34.7   formulas, designs, processes, patterns, copyrights, trade names, 
 34.8   service names, franchises, licenses, contracts, customer lists, 
 34.9   or similar items, must be attributed to the state in which the 
 34.10  property is used by the purchaser.  If the property is used in 
 34.11  more than one state, the royalties or other income must be 
 34.12  apportioned to this state pro rata according to the portion of 
 34.13  use in this state.  If the portion of use in this state cannot 
 34.14  be determined, the royalties or other income must be excluded 
 34.15  from both the numerator and the denominator.  Intangible 
 34.16  property is used in this state if the purchaser uses the 
 34.17  intangible property or the rights therein in the regular course 
 34.18  of its business operations in this state, regardless of the 
 34.19  location of the purchaser's customers. 
 34.20     (i) Sales of intangible property are made within the state 
 34.21  in which the property is used by the purchaser.  If the property 
 34.22  is used in more than one state, the sales must be apportioned to 
 34.23  this state pro rata according to the portion of use in this 
 34.24  state.  If the portion of use in this state cannot be 
 34.25  determined, the sale must be excluded from both the numerator 
 34.26  and the denominator of the sales factor.  Intangible property is 
 34.27  used in this state if the purchaser used the intangible property 
 34.28  in the regular course of its business operations in this state. 
 34.29     (j) Receipts from the performance of services must be 
 34.30  attributed to the state where the services are received.  For 
 34.31  the purposes of this section, receipts from the performance of 
 34.32  services provided to a corporation, partnership, or trust may 
 34.33  only be attributed to a state where it has a fixed place of 
 34.34  doing business.  If the state where the services are received is 
 34.35  not readily determinable or is a state where the corporation, 
 34.36  partnership, or trust receiving the service does not have a 
 35.1   fixed place of doing business, the services shall be deemed to 
 35.2   be received at the location of the office of the customer from 
 35.3   which the services were ordered in the regular course of the 
 35.4   customer's trade or business.  If the ordering office cannot be 
 35.5   determined, the services shall be deemed to be received at the 
 35.6   office of the customer to which the services are billed.  If the 
 35.7   taxpayer is not taxable in the state of the purchaser, the sale 
 35.8   is attributed to this state if the greater proportion of the 
 35.9   service is performed in this state. 
 35.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 35.11  years beginning after December 31, 2003, only if sections 19 and 
 35.12  20 of this article are enacted. 
 35.13     Sec. 22.  Minnesota Statutes 2002, section 290.92, 
 35.14  subdivision 4b, is amended to read: 
 35.15     Subd. 4b.  [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership 
 35.16  shall deduct and withhold a tax as provided in paragraph (b) for 
 35.17  nonresident individual partners based on their distributive 
 35.18  shares of partnership income for a taxable year of the 
 35.19  partnership. 
 35.20     (b) The amount of tax withheld is determined by multiplying 
 35.21  the partner's distributive share allocable to Minnesota under 
 35.22  section 290.17, paid or credited during the taxable year by the 
 35.23  highest rate used to determine the income tax liability for an 
 35.24  individual under section 290.06, subdivision 2c, except that the 
 35.25  amount of tax withheld may be determined by the commissioner if 
 35.26  the partner submits a withholding exemption certificate under 
 35.27  subdivision 5. 
 35.28     (c) The commissioner may reduce or abate the tax withheld 
 35.29  under this subdivision if the partnership had reasonable cause 
 35.30  to believe that no tax was due under this section. 
 35.31     (d) Notwithstanding paragraph (a), a partnership is not 
 35.32  required to deduct and withhold tax for a nonresident partner if:
 35.33     (1) the partner elects to have the tax due paid as part of 
 35.34  the partnership's composite return under section 289A.08, 
 35.35  subdivision 7; 
 35.36     (2) the partner has Minnesota assignable federal adjusted 
 36.1   gross income from the partnership of less than $1,000; or 
 36.2      (3) the partnership is liquidated or terminated, the income 
 36.3   was generated by a transaction related to the termination or 
 36.4   liquidation, and no cash or other property was distributed in 
 36.5   the current or prior taxable year; or 
 36.6      (4) the distributive shares of partnership income are 
 36.7   attributable to: 
 36.8      (i) income required to be recognized because of discharge 
 36.9   of indebtedness; 
 36.10     (ii) income recognized because of a sale, exchange, or 
 36.11  other disposition of real estate, depreciable property, or 
 36.12  property described in section 179 of the Internal Revenue Code; 
 36.13  or 
 36.14     (iii) income recognized on the sale, exchange, or other 
 36.15  disposition of any property that has been the subject of a basis 
 36.16  reduction pursuant to section 108, 734, 743, 754, or 1017 of the 
 36.17  Internal Revenue Code 
 36.18  to the extent that the income does not include cash received or 
 36.19  receivable or, if there is cash received or receivable, to the 
 36.20  extent that the cash is required to be used to pay indebtedness 
 36.21  by the partnership or a secured debt on partnership property; or 
 36.22     (5) the partnership is a publicly traded partnership, as 
 36.23  defined in section 7704(b) of the Internal Revenue Code. 
 36.24     (e) For purposes of subdivision 6a, and sections 289A.09, 
 36.25  subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50, 
 36.26  289A.56, 289A.60, and 289A.63, a partnership is considered an 
 36.27  employer.  
 36.28     (f) To the extent that income is exempt from withholding 
 36.29  under paragraph (d), clause (4), the commissioner has a lien in 
 36.30  an amount up to the amount that would be required to be withheld 
 36.31  with respect to the income of the partner attributable to the 
 36.32  partnership interest, but for the application of paragraph (d), 
 36.33  clause (4).  The lien arises under section 270.69 from the date 
 36.34  of assessment of the tax against the partner, and attaches to 
 36.35  that partner's share of the profits and any other money due or 
 36.36  to become due to that partner in respect of the partnership.  
 37.1   Notice of the lien may be sent by mail to the partnership, 
 37.2   without the necessity for recording the lien.  The notice has 
 37.3   the force and effect of a levy under section 270.70, and is 
 37.4   enforceable against the partnership in the manner provided by 
 37.5   that section.  Upon payment in full of the liability subsequent 
 37.6   to the notice of lien, the partnership must be notified that the 
 37.7   lien has been satisfied.  
 37.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 37.9   years beginning after December 31, 2003. 
 37.10     Sec. 23.  Minnesota Statutes 2002, section 290A.03, 
 37.11  subdivision 11, is amended to read: 
 37.12     Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
 37.13  constituting property taxes" means 19 17 percent of the gross 
 37.14  rent actually paid in cash, or its equivalent, or the portion of 
 37.15  rent paid in lieu of property taxes, in any calendar year by a 
 37.16  claimant for the right of occupancy of the claimant's Minnesota 
 37.17  homestead in the calendar year, and which rent constitutes the 
 37.18  basis, in the succeeding calendar year of a claim for relief 
 37.19  under this chapter by the claimant.  
 37.20     If the amount of rent paid by the claimant for actual 
 37.21  property taxes paid on the unit exceeds 17 percent of rent paid, 
 37.22  the amount of rent constituting property taxes shall be 
 37.23  determined by multiplying the gross rent paid by the claimant 
 37.24  for the calendar year for the unit by a fraction, the numerator 
 37.25  of which is the net tax on the property where the unit is 
 37.26  located and the denominator of which is the total scheduled 
 37.27  rent.  In no case may the rent constituting property taxes 
 37.28  exceed 50 percent of the gross rent paid by the claimant during 
 37.29  that calendar year. 
 37.30     <b>[EFFECTIVE DATE.]</b> This section is effective for property 
 37.31  taxes payable in 2004 and thereafter, and for refund claims 
 37.32  based on property taxes payable in 2004 and thereafter. 
 37.33     Sec. 24.  Minnesota Statutes 2002, section 290A.03, is 
 37.34  amended by adding a subdivision to read: 
 37.35     Subd. 11a.  [TOTAL SCHEDULED RENT.] "Total scheduled rent" 
 37.36  means the sum of the monthly rents assigned to the residential 
 38.1   rental units in the property multiplied by 12.  The assigned 
 38.2   rents are the rents effective on April 15 for taxes payable in 
 38.3   2004 and thereafter.  In determining total scheduled rent, no 
 38.4   deduction is allowed for vacant units, uncollected rent, or 
 38.5   reduced cash rents in units occupied by employees or agents of 
 38.6   the property owner. 
 38.7      <b>[EFFECTIVE DATE.]</b> This section is effective for rent paid 
 38.8   on and after January 1, 2004. 
 38.9      Sec. 25.  Minnesota Statutes 2003 Supplement, section 
 38.10  290A.03, subdivision 15, is amended to read: 
 38.11     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 38.12  means the Internal Revenue Code of 1986, as amended through June 
 38.13  15, 2003 November 11, 2003. 
 38.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 38.15  following final enactment except the changes to household income 
 38.16  generated by federal changes to federal adjusted gross income 
 38.17  are effective at the same time federal changes are effective. 
 38.18     Sec. 26.  Minnesota Statutes 2002, section 290A.19, is 
 38.19  amended to read: 
 38.20     290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT 
 38.21  CERTIFICATE.] 
 38.22     The owner or managing agent of any property for which rent 
 38.23  is paid for occupancy as a homestead must furnish a certificate 
 38.24  of rent paid to a person who is a renter on December 31, in the 
 38.25  form prescribed by the commissioner.  The certificate of rent 
 38.26  paid must show the calculation of rent constituting property 
 38.27  taxes as provided in section 290A.03, subdivisions 11 and 11a.  
 38.28  If the renter moves before December 31, the owner or managing 
 38.29  agent may give the certificate to the renter at the time of 
 38.30  moving, or mail the certificate to the forwarding address if an 
 38.31  address has been provided by the renter.  The certificate must 
 38.32  be made available to the renter before February 1 of the year 
 38.33  following the year in which the rent was paid.  The owner or 
 38.34  managing agent must retain a duplicate of each certificate or an 
 38.35  equivalent record showing the same information for a period of 
 38.36  three years.  The duplicate or other record must be made 
 39.1   available to the commissioner upon request.  For the purposes of 
 39.2   this section, "owner" includes a park owner as defined under 
 39.3   section 327C.01, subdivision 6, and "property" includes a lot as 
 39.4   defined under section 327C.01, subdivision 3. 
 39.5      <b>[EFFECTIVE DATE.]</b> This section is effective for 
 39.6   certificates of rent paid furnished for rent paid on and after 
 39.7   January 1, 2004. 
 39.8      Sec. 27.  Minnesota Statutes 2003 Supplement, section 
 39.9   291.005, subdivision 1, is amended to read: 
 39.10     Subdivision 1.  Unless the context otherwise clearly 
 39.11  requires, the following terms used in this chapter shall have 
 39.12  the following meanings: 
 39.13     (1) "Federal gross estate" means the gross estate of a 
 39.14  decedent as valued and otherwise determined for federal estate 
 39.15  tax purposes by federal taxing authorities pursuant to the 
 39.16  provisions of the Internal Revenue Code. 
 39.17     (2) "Minnesota gross estate" means the federal gross estate 
 39.18  of a decedent after (a) excluding therefrom any property 
 39.19  included therein which has its situs outside Minnesota, and (b) 
 39.20  including therein any property omitted from the federal gross 
 39.21  estate which is includable therein, has its situs in Minnesota, 
 39.22  and was not disclosed to federal taxing authorities.  
 39.23     (3) "Personal representative" means the executor, 
 39.24  administrator or other person appointed by the court to 
 39.25  administer and dispose of the property of the decedent.  If 
 39.26  there is no executor, administrator or other person appointed, 
 39.27  qualified, and acting within this state, then any person in 
 39.28  actual or constructive possession of any property having a situs 
 39.29  in this state which is included in the federal gross estate of 
 39.30  the decedent shall be deemed to be a personal representative to 
 39.31  the extent of the property and the Minnesota estate tax due with 
 39.32  respect to the property. 
 39.33     (4) "Resident decedent" means an individual whose domicile 
 39.34  at the time of death was in Minnesota. 
 39.35     (5) "Nonresident decedent" means an individual whose 
 39.36  domicile at the time of death was not in Minnesota. 
 40.1      (6) "Situs of property" means, with respect to real 
 40.2   property, the state or country in which it is located; with 
 40.3   respect to tangible personal property, the state or country in 
 40.4   which it was normally kept or located at the time of the 
 40.5   decedent's death; and with respect to intangible personal 
 40.6   property, the state or country in which the decedent was 
 40.7   domiciled at death. 
 40.8      (7) "Commissioner" means the commissioner of revenue or any 
 40.9   person to whom the commissioner has delegated functions under 
 40.10  this chapter. 
 40.11     (8) "Internal Revenue Code" means the United States 
 40.12  Internal Revenue Code of 1986, as amended through December 31, 
 40.13  2002 November 11, 2003. 
 40.14     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
 40.15  decedents dying after January 31, 2003. 
 40.16     Sec. 28.  [DISTRIBUTION.] 
 40.17     For the fiscal year beginning July 1, 2005, the revenue 
 40.18  collected under Minnesota Statutes, section 290.01, subdivision 
 40.19  19a, clause (8), for taxable years beginning after December 31, 
 40.20  2003, and before January 1, 2005, is appropriated to each of the 
 40.21  listed agencies in the designated percentages and must be used 
 40.22  only for the following programs:  (a) Department of Human 
 40.23  Services, (1) emergencies service programs under Laws 1997, 
 40.24  chapter 162, article 3, five percent; (2) transitional housing 
 40.25  operations under Minnesota Statutes, section 119A.43, 25 
 40.26  percent; (3) transitional housing operations targeted to 
 40.27  unaccompanied youth under Minnesota Statutes, section 119A.43, 
 40.28  five percent; (b) Minnesota Housing Finance Agency, (1) 
 40.29  Minnesota housing trust fund, under Minnesota Statutes, section 
 40.30  462A.201, 30 percent; (2) rental housing under Minnesota 
 40.31  Statutes, section 462A.2097, ten percent; (3) family homeless 
 40.32  prevention and assistance program, under Minnesota Statutes, 
 40.33  section 462A.204, 25 percent. 
 40.34     Sec. 29.  [STUDY; CORPORATE FRANCHISE TAX.] 
 40.35     The commissioners of the Departments of Finance and Revenue 
 40.36  shall conduct a comprehensive study to identify the reasons for 
 41.1   the decline in corporate tax receipts.  The study shall include 
 41.2   an analysis of the current and future effect of existing 
 41.3   corporate tax provisions, both independently and interactively 
 41.4   with other provisions; how tax provisions are changing business 
 41.5   practices; and the impact of outsourcing or relocation of 
 41.6   business operations and jobs.  On or before February 1, 2005, 
 41.7   the commissioners shall report to the chairpersons of the house 
 41.8   and senate tax committees the results of the study and shall 
 41.9   include recommendations for changes to the tax laws that would 
 41.10  reduce tax incentives for businesses to outsource or relocate 
 41.11  business operations or jobs. 
 41.12     Sec. 30.  [REPEALER.] 
 41.13     Minnesota Statutes 2002, section 290.191, subdivision 4, is 
 41.14  repealed. 
 41.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 41.16  years beginning after December 31, 2003. 
 41.17                             ARTICLE 2
 41.18                             SALES TAX
 41.19     Section 1.  Minnesota Statutes 2002, section 297A.61, is 
 41.20  amended by adding a subdivision to read: 
 41.21     Subd. 37.  [PERSONAL RAPID TRANSIT SYSTEM.] "Personal rapid 
 41.22  transit system" means a transportation system of small, 
 41.23  computer-controlled vehicles, transporting one to three 
 41.24  passengers on elevated guideways in a transportation network 
 41.25  operating on demand and nonstop directly to any stations in the 
 41.26  network.  The system shall provide service on a regular and 
 41.27  continuing basis and operate independent of any government 
 41.28  subsidies. 
 41.29     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 41.30  purchases made after June 30, 2008. 
 41.31     Sec. 2.  Minnesota Statutes 2002, section 297A.67, is 
 41.32  amended by adding a subdivision to read: 
 41.33     Subd. 32.  [GEOTHERMAL EQUIPMENT.] The loop field 
 41.34  collection system and the heat pump of a geothermal heating and 
 41.35  cooling system is exempt.  
 41.36     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 42.1   purchases occurring on and after July 1, 2004. 
 42.2      Sec. 3.  Minnesota Statutes 2002, section 297A.67, is 
 42.3   amended by adding a subdivision to read: 
 42.4      Subd. 33.  [BIOMASS FUEL STOVES.] Stoves designed to burn 
 42.5   fuel pellets made from biomass materials are exempt. 
 42.6      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 42.7   purchases made after June 30, 2004. 
 42.8      Sec. 4.  Minnesota Statutes 2003 Supplement, section 
 42.9   297A.68, subdivision 5, is amended to read: 
 42.10     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
 42.11  exempt.  The tax must be imposed and collected as if the rate 
 42.12  under section 297A.62, subdivision 1, applied, and then refunded 
 42.13  in the manner provided in section 297A.75. 
 42.14     "Capital equipment" means machinery and equipment purchased 
 42.15  or leased, and used in this state by the purchaser or lessee 
 42.16  primarily for manufacturing, fabricating, mining, or refining 
 42.17  tangible personal property to be sold ultimately at retail if 
 42.18  the machinery and equipment are essential to the integrated 
 42.19  production process of manufacturing, fabricating, mining, or 
 42.20  refining.  Capital equipment also includes machinery and 
 42.21  equipment used to electronically transmit results retrieved by a 
 42.22  customer of an on-line computerized data retrieval system. 
 42.23     (b) Capital equipment includes, but is not limited to: 
 42.24     (1) machinery and equipment used to operate, control, or 
 42.25  regulate the production equipment; 
 42.26     (2) machinery and equipment used for research and 
 42.27  development, design, quality control, and testing activities; 
 42.28     (3) environmental control devices that are used to maintain 
 42.29  conditions such as temperature, humidity, light, or air pressure 
 42.30  when those conditions are essential to and are part of the 
 42.31  production process; 
 42.32     (4) materials and supplies used to construct and install 
 42.33  machinery or equipment; 
 42.34     (5) repair and replacement parts, including accessories, 
 42.35  whether purchased as spare parts, repair parts, or as upgrades 
 42.36  or modifications to machinery or equipment; 
 43.1      (6) materials used for foundations that support machinery 
 43.2   or equipment; 
 43.3      (7) materials used to construct and install special purpose 
 43.4   buildings used in the production process; 
 43.5      (8) ready-mixed concrete equipment in which the ready-mixed 
 43.6   concrete is mixed as part of the delivery process regardless if 
 43.7   mounted on a chassis and leases of ready-mixed concrete trucks; 
 43.8   and 
 43.9      (9) machinery or equipment used for research, development, 
 43.10  design, or production of computer software.  
 43.11     (c) Capital equipment does not include the following: 
 43.12     (1) motor vehicles taxed under chapter 297B; 
 43.13     (2) machinery or equipment used to receive or store raw 
 43.14  materials; 
 43.15     (3) building materials, except for materials included in 
 43.16  paragraph (b), clauses (6) and (7); 
 43.17     (4) machinery or equipment used for nonproduction purposes, 
 43.18  including, but not limited to, the following:  plant security, 
 43.19  fire prevention, first aid, and hospital stations; support 
 43.20  operations or administration; pollution control; and plant 
 43.21  cleaning, disposal of scrap and waste, plant communications, 
 43.22  space heating, cooling, lighting, or safety; 
 43.23     (5) farm machinery and aquaculture production equipment as 
 43.24  defined by section 297A.61, subdivisions 12 and 13; 
 43.25     (6) machinery or equipment purchased and installed by a 
 43.26  contractor as part of an improvement to real property; or 
 43.27     (7) any other item that is not essential to the integrated 
 43.28  process of manufacturing, fabricating, mining, or refining. 
 43.29     (d) For purposes of this subdivision: 
 43.30     (1) "Equipment" means independent devices or tools separate 
 43.31  from machinery but essential to an integrated production 
 43.32  process, including computers and computer software, used in 
 43.33  operating, controlling, or regulating machinery and equipment; 
 43.34  and any subunit or assembly comprising a component of any 
 43.35  machinery or accessory or attachment parts of machinery, such as 
 43.36  tools, dies, jigs, patterns, and molds.  
 44.1      (2) "Fabricating" means to make, build, create, produce, or 
 44.2   assemble components or property to work in a new or different 
 44.3   manner. 
 44.4      (3) "Integrated production process" means a process or 
 44.5   series of operations through which tangible personal property is 
 44.6   manufactured, fabricated, mined, or refined.  For purposes of 
 44.7   this clause, (i) manufacturing begins with the removal of raw 
 44.8   materials from inventory and ends when the last process prior to 
 44.9   loading for shipment has been completed; (ii) fabricating begins 
 44.10  with the removal from storage or inventory of the property to be 
 44.11  assembled, processed, altered, or modified and ends with the 
 44.12  creation or production of the new or changed product; (iii) 
 44.13  mining begins with the removal of overburden from the site of 
 44.14  the ores, minerals, stone, peat deposit, or surface materials 
 44.15  and ends when the last process before stockpiling is completed; 
 44.16  and (iv) refining begins with the removal from inventory or 
 44.17  storage of a natural resource and ends with the conversion of 
 44.18  the item to its completed form. 
 44.19     (4) "Machinery" means mechanical, electronic, or electrical 
 44.20  devices, including computers and computer software, that are 
 44.21  purchased or constructed to be used for the activities set forth 
 44.22  in paragraph (a), beginning with the removal of raw materials 
 44.23  from inventory through completion of the product, including 
 44.24  packaging of the product. 
 44.25     (5) "Machinery and equipment used for pollution control" 
 44.26  means machinery and equipment used solely to eliminate, prevent, 
 44.27  or reduce pollution resulting from an activity described in 
 44.28  paragraph (a).  
 44.29     (6) "Manufacturing" means an operation or series of 
 44.30  operations where raw materials are changed in form, composition, 
 44.31  or condition by machinery and equipment and which results in the 
 44.32  production of a new article of tangible personal property.  For 
 44.33  purposes of this subdivision, "manufacturing" includes the 
 44.34  generation of electricity or steam to be sold at retail. 
 44.35     (7) "Mining" means the extraction of minerals, ores, stone, 
 44.36  or peat. 
 45.1      (8) "On-line data retrieval system" means a system whose 
 45.2   cumulation of information is equally available and accessible to 
 45.3   all its customers. 
 45.4      (9) "Primarily" means machinery and equipment used 50 
 45.5   percent or more of the time in an activity described in 
 45.6   paragraph (a). 
 45.7      (10) "Refining" means the process of converting a natural 
 45.8   resource to an intermediate or finished product, including the 
 45.9   treatment of water to be sold at retail. 
 45.10     (11) This subdivision does not apply to telecommunications 
 45.11  equipment as provided in subdivision 35, and does not apply to 
 45.12  wire, cable, fiber, poles, or conduit for telecommunications 
 45.13  services. 
 45.14     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
 45.15  made after July 31, 2001. 
 45.16     Sec. 5.  Minnesota Statutes 2002, section 297A.68, 
 45.17  subdivision 19, is amended to read: 
 45.18     Subd. 19.  [PETROLEUM PRODUCTS.] The following petroleum 
 45.19  products are exempt: 
 45.20     (1) products upon which a tax has been imposed and paid 
 45.21  under chapter 296A, and for which no refund has been or will be 
 45.22  allowed because the buyer used the fuel for nonhighway use; 
 45.23     (2) products that are used in the improvement of 
 45.24  agricultural land by constructing, maintaining, and repairing 
 45.25  drainage ditches, tile drainage systems, grass waterways, water 
 45.26  impoundment, and other erosion control structures; 
 45.27     (3) products purchased by a transit system receiving 
 45.28  financial assistance under section 174.24, 256B.0625, 
 45.29  subdivision 17, or 473.384; 
 45.30     (4) products purchased by an ambulance service licensed 
 45.31  under chapter 144E; 
 45.32     (5) products used in a passenger snowmobile, as defined in 
 45.33  section 296A.01, subdivision 39, for off-highway business use as 
 45.34  part of the operations of a resort as provided under section 
 45.35  296A.16, subdivision 2, clause (2); or 
 45.36     (6) products purchased by a state or a political 
 46.1   subdivision of a state for use in motor vehicles exempt from 
 46.2   registration under section 168.012, subdivision 1, paragraph 
 46.3   (b); or 
 46.4      (7) products purchased for use as fuel for a commuter rail 
 46.5   system operating under sections 174.80 to 174.90.  The tax must 
 46.6   be imposed and collected as if the rate under section 297A.62, 
 46.7   subdivision 1, applied, and then refunded in the manner provided 
 46.8   in section 297A.75. 
 46.9      <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
 46.10  made after June 30, 2004. 
 46.11     Sec. 6.  Minnesota Statutes 2002, section 297A.68, is 
 46.12  amended by adding a subdivision to read: 
 46.13     Subd. 40.  [MOVIES AND TELEVISION; INPUTS TO PRODUCTION.] 
 46.14  The sale of tangible personal property primarily used or 
 46.15  consumed directly in the preproduction, production, and 
 46.16  postproduction of movies and television shows that are produced 
 46.17  for domestic and international commercial distribution are 
 46.18  exempt. "Preproduction" and "production" include all the 
 46.19  activities related to the preparation of shooting and the 
 46.20  shooting of movies and television shows, including film 
 46.21  processing.  Equipment rented for preproduction and production 
 46.22  activities are exempt.  "Postproduction" includes all activities 
 46.23  related to editing and finishing of the movie or television 
 46.24  show.  This exemption does not apply to tangible personal 
 46.25  property or services used primarily in administration, general 
 46.26  management, or marketing.  Machinery and equipment purchased for 
 46.27  use in producing movies and television shows, fuel, electricity, 
 46.28  gas, or steam used for space heating and lighting, food, 
 46.29  lodging, and any property or service for the personal use of any 
 46.30  individual are not exempt under this subdivision. 
 46.31     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 46.32  purchases made after June 30, 2004. 
 46.33     Sec. 7.  Minnesota Statutes 2002, section 297A.68, is 
 46.34  amended by adding a subdivision to read: 
 46.35     Subd. 41.  [PERSONAL RAPID TRANSIT SYSTEM.] (a) Machinery, 
 46.36  equipment, and supplies purchased or leased, and used by the 
 47.1   purchaser or lessee in this state directly in the provision of a 
 47.2   personal rapid transit system as defined in section 297A.61, 
 47.3   subdivision 37, are exempt.  Machinery, equipment, and supplies 
 47.4   that qualify for this exemption include, but are not limited to, 
 47.5   the following: 
 47.6      (1) vehicles, guideways, and related parts used directly in 
 47.7   the transit system; 
 47.8      (2) computers and equipment used primarily for operating, 
 47.9   controlling, and regulating the system; 
 47.10     (3) machinery, equipment, furniture, and fixtures necessary 
 47.11  for the functioning of system stations; 
 47.12     (4) machinery, equipment, implements, tools, and supplies 
 47.13  used to maintain vehicles, guideways, and stations; and 
 47.14     (5) electricity and other fuels used in the provision of 
 47.15  the transit service, including heating, cooling, and lighting of 
 47.16  system stations. 
 47.17     (b) This exemption does not include machinery, equipment, 
 47.18  and supplies used for support and administration operations. 
 47.19     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 47.20  purchases made after June 30, 2008. 
 47.21     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 47.22  297A.70, subdivision 8, is amended to read: 
 47.23     Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
 47.24  SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
 47.25  but not limited to, end user equipment used for construction, 
 47.26  ownership, operation, maintenance, and enhancement of the 
 47.27  backbone system of the a regionwide or statewide public safety 
 47.28  radio communication system established under sections 403.21 to 
 47.29  403.34, are exempt.  For purposes of this subdivision, backbone 
 47.30  system is defined in section 403.21, subdivision 9.  This 
 47.31  subdivision is effective for purchases, sales, storage, use, or 
 47.32  consumption occurring before August 1, 2005, in the counties of 
 47.33  Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
 47.34     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 47.35  purchases made on and after July 1, 2004. 
 47.36     Sec. 9.  Minnesota Statutes 2002, section 297A.70, is 
 48.1   amended by adding a subdivision to read: 
 48.2      Subd. 17.  [DONATED MEALS.] Meals that are normally sold at 
 48.3   retail in the ordinary business activities of the taxpayer are 
 48.4   exempt if the meals are donated to a nonprofit group as defined 
 48.5   in subdivision 4 for fund-raising purposes. 
 48.6      <b>[EFFECTIVE DATE.]</b> This section is effective for donations 
 48.7   made after June 30, 2004. 
 48.8      Sec. 10.  Minnesota Statutes 2002, section 297A.71, is 
 48.9   amended by adding a subdivision to read: 
 48.10     Subd. 33.  [COMMUTER RAIL MATERIAL, SUPPLIES, AND 
 48.11  EQUIPMENT.] Materials and supplies consumed in, and equipment 
 48.12  incorporated in the construction, equipment, or improvement of a 
 48.13  commuter rail transportation system operated under sections 
 48.14  174.80 and 174.90 are exempt.  This exemption includes railroad 
 48.15  cars and engines and related equipment. 
 48.16     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
 48.17  made after June 30, 2004. 
 48.18     Sec. 11.  Minnesota Statutes 2002, section 297A.71, is 
 48.19  amended by adding a subdivision to read: 
 48.20     Subd. 34.  [WASTE RECOVERY FACILITY.] Materials and 
 48.21  supplies used or consumed in, and equipment incorporated into, 
 48.22  the construction, improvement, or expansion of a waste-to-energy 
 48.23  resource recovery facility are exempt if the facility uses 
 48.24  biomass or mixed municipal solid waste as a primary fuel to 
 48.25  generate steam or electricity. 
 48.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 48.27  purchases made after June 30, 2004. 
 48.28     Sec. 12.  Minnesota Statutes 2002, section 297A.71, is 
 48.29  amended by adding a subdivision to read: 
 48.30     Subd. 35.  [PERSONAL RAPID TRANSIT SYSTEM.] Materials and 
 48.31  supplies used or consumed in, and equipment incorporated into 
 48.32  the construction, expansion, or improvement of a personal rapid 
 48.33  transit system as defined in section 297A.61, subdivision 37, 
 48.34  are exempt. 
 48.35     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 48.36  purchases made after June 30, 2008. 
 49.1      Sec. 13.  Minnesota Statutes 2002, section 297A.71, is 
 49.2   amended by adding a subdivision to read: 
 49.3      Subd. 36.  [ST. MARY'S DULUTH CLINIC HEALTH 
 49.4   SYSTEM.] Materials and supplies used or consumed in and 
 49.5   equipment incorporated into the construction of the hospital 
 49.6   portion of the St. Mary's Duluth Clinic Health System are exempt.
 49.7      <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
 49.8   made on or after July 1, 2004, and on or before December 31, 
 49.9   2006. 
 49.10     Sec. 14.  Minnesota Statutes 2002, section 297A.75, 
 49.11  subdivision 1, is amended to read: 
 49.12     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
 49.13  receipts from the sale of the following exempt items must be 
 49.14  imposed and collected as if the sale were taxable and the rate 
 49.15  under section 297A.62, subdivision 1, applied.  The exempt items 
 49.16  include: 
 49.17     (1) capital equipment exempt under section 297A.68, 
 49.18  subdivision 5; 
 49.19     (2) building materials for an agricultural processing 
 49.20  facility exempt under section 297A.71, subdivision 13; 
 49.21     (3) building materials for mineral production facilities 
 49.22  exempt under section 297A.71, subdivision 14; 
 49.23     (4) building materials for correctional facilities under 
 49.24  section 297A.71, subdivision 3; 
 49.25     (5) building materials used in a residence for disabled 
 49.26  veterans exempt under section 297A.71, subdivision 11; 
 49.27     (6) chair lifts, ramps, elevators, and associated building 
 49.28  materials exempt under section 297A.71, subdivision 12; 
 49.29     (7) building materials for the Long Lake Conservation 
 49.30  Center exempt under section 297A.71, subdivision 17; 
 49.31     (8) materials, supplies, fixtures, furnishings, and 
 49.32  equipment for a county law enforcement and family service center 
 49.33  under section 297A.71, subdivision 26; and 
 49.34     (9) materials and supplies for qualified low-income housing 
 49.35  under section 297A.71, subdivision 23; and 
 49.36     (10) fuel purchased for commuter rail systems under section 
 50.1   297A.68, subdivision 19, clause (7). 
 50.2      <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
 50.3   made after June 30, 2004. 
 50.4      Sec. 15.  Minnesota Statutes 2002, section 297A.75, 
 50.5   subdivision 2, is amended to read: 
 50.6      Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
 50.7   forms prescribed by the commissioner, a refund equal to the tax 
 50.8   paid on the gross receipts of the exempt items must be paid to 
 50.9   the applicant.  Only the following persons may apply for the 
 50.10  refund: 
 50.11     (1) for subdivision 1, clauses (1) to (3), the applicant 
 50.12  must be the purchaser; 
 50.13     (2) for subdivision 1, clauses (4), (7), and (8), the 
 50.14  applicant must be the governmental subdivision; 
 50.15     (3) for subdivision 1, clause (5), the applicant must be 
 50.16  the recipient of the benefits provided in United States Code, 
 50.17  title 38, chapter 21; 
 50.18     (4) for subdivision 1, clause (6), the applicant must be 
 50.19  the owner of the homestead property; and 
 50.20     (5) for subdivision 1, clause (9), the owner of the 
 50.21  qualified low-income housing project; and 
 50.22     (6) for subdivision 1, clause (10), the operator of the 
 50.23  commuter rail system. 
 50.24     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
 50.25  made after June 30, 2004. 
 50.26     Sec. 16.  Minnesota Statutes 2002, section 297A.87, 
 50.27  subdivision 2, is amended to read: 
 50.28     Subd. 2.  [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The 
 50.29  operator of an event under subdivision 1 shall obtain one of the 
 50.30  following from a person who wishes to do business as a seller at 
 50.31  the event: 
 50.32     (1) evidence that the person holds a valid seller's permit 
 50.33  under section 297A.84; or 
 50.34     (2) a written statement that the person is not offering for 
 50.35  sale any item that is taxable under this chapter; or 
 50.36     (3) a written statement that this is the only selling event 
 51.1   that the person will be participating in for that calendar year, 
 51.2   that the person will be participating for three or fewer days, 
 51.3   and that the person will make $500 or less in total sales in the 
 51.4   calendar year.  The written statement shall include the person's 
 51.5   name, address, and telephone number. 
 51.6      (b) The operator shall require the evidence or statement as 
 51.7   a prerequisite to participating in the event as a seller. 
 51.8      <b>[EFFECTIVE DATE.]</b> This section is effective for selling 
 51.9   events occurring after June 15, 2004. 
 51.10     Sec. 17.  Minnesota Statutes 2002, section 297A.87, 
 51.11  subdivision 3, is amended to read: 
 51.12     Subd. 3.  [OCCASIONAL SALE PROVISIONS NOT APPLICABLE UNDER 
 51.13  LIMITED CIRCUMSTANCES.] The isolated and occasional 
 51.14  sale provisions provision under section 297A.67, subdivision 23, 
 51.15  or applies, provided that the seller only participates for three 
 51.16  or fewer days in one event per calendar year, makes $500 or less 
 51.17  in sales in the calendar year, and provides the written 
 51.18  statement required in subdivision 2, paragraph (a), clause (3).  
 51.19  The isolated and occasional sales provision under section 
 51.20  297A.68, subdivision 25, do does not apply to a seller at an 
 51.21  event under this section. 
 51.22     <b>[EFFECTIVE DATE.]</b> This section is effective for selling 
 51.23  events occurring after June 15, 2004. 
 51.24     Sec. 18.  Minnesota Statutes 2003 Supplement, section 
 51.25  297B.03, is amended to read: 
 51.26     297B.03 [EXEMPTIONS.] 
 51.27     There is specifically exempted from the provisions of this 
 51.28  chapter and from computation of the amount of tax imposed by it 
 51.29  the following:  
 51.30     (1) purchase or use, including use under a lease purchase 
 51.31  agreement or installment sales contract made pursuant to section 
 51.32  465.71, of any motor vehicle by the United States and its 
 51.33  agencies and instrumentalities and by any person described in 
 51.34  and subject to the conditions provided in section 297A.67, 
 51.35  subdivision 11; 
 51.36     (2) purchase or use of any motor vehicle by any person who 
 52.1   was a resident of another state or country at the time of the 
 52.2   purchase and who subsequently becomes a resident of Minnesota, 
 52.3   provided the purchase occurred more than 60 days prior to the 
 52.4   date such person began residing in the state of Minnesota and 
 52.5   the motor vehicle was registered in the person's name in the 
 52.6   other state or country; 
 52.7      (3) purchase or use of any motor vehicle by any person 
 52.8   making a valid election to be taxed under the provisions of 
 52.9   section 297A.90; 
 52.10     (4) purchase or use of any motor vehicle previously 
 52.11  registered in the state of Minnesota when such transfer 
 52.12  constitutes a transfer within the meaning of section 118, 331, 
 52.13  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
 52.14  1563(a) of the Internal Revenue Code of 1986, as amended through 
 52.15  December 31, 1999; 
 52.16     (5) purchase or use of any vehicle owned by a resident of 
 52.17  another state and leased to a Minnesota based private or for 
 52.18  hire carrier for regular use in the transportation of persons or 
 52.19  property in interstate commerce provided the vehicle is titled 
 52.20  in the state of the owner or secured party, and that state does 
 52.21  not impose a sales tax or sales tax on motor vehicles used in 
 52.22  interstate commerce; 
 52.23     (6) purchase or use of a motor vehicle by a private 
 52.24  nonprofit or public educational institution for use as an 
 52.25  instructional aid in automotive training programs operated by 
 52.26  the institution.  "Automotive training programs" includes motor 
 52.27  vehicle body and mechanical repair courses but does not include 
 52.28  driver education programs; 
 52.29     (7) purchase of a motor vehicle for use as an ambulance by 
 52.30  an ambulance service licensed under section 144E.10; 
 52.31     (8) purchase of a motor vehicle by or for a public library, 
 52.32  as defined in section 134.001, subdivision 2, as a bookmobile or 
 52.33  library delivery vehicle; 
 52.34     (9) purchase of a ready-mixed concrete truck; 
 52.35     (10) purchase or use of a motor vehicle by a town for use 
 52.36  exclusively for road maintenance, including snowplows and dump 
 53.1   trucks, but not including automobiles, vans, or pickup trucks; 
 53.2      (11) purchase or use of a motor vehicle by a corporation, 
 53.3   society, association, foundation, or institution organized and 
 53.4   operated exclusively for charitable, religious, or educational 
 53.5   purposes, except a public school, university, or library, but 
 53.6   only if the vehicle is: 
 53.7      (i) a truck, as defined in section 168.011, a bus, as 
 53.8   defined in section 168.011, or a passenger automobile, as 
 53.9   defined in section 168.011, if the automobile is designed and 
 53.10  used for carrying more than nine persons including the driver; 
 53.11  and 
 53.12     (ii) intended to be used primarily to transport tangible 
 53.13  personal property or individuals, other than employees, to whom 
 53.14  the organization provides service in performing its charitable, 
 53.15  religious, or educational purpose; 
 53.16     (12) purchase of a motor vehicle for use by a transit 
 53.17  provider exclusively to provide transit service is exempt if the 
 53.18  transit provider is either (i) receiving financial assistance or 
 53.19  reimbursement under section 174.24 or 473.384, or (ii) operating 
 53.20  under section 174.29, 473.388, or 473.405; 
 53.21     (13) purchase or use of a motor vehicle by a qualified 
 53.22  business, as defined in section 469.310, located in a job 
 53.23  opportunity building zone, if the motor vehicle is principally 
 53.24  garaged in the job opportunity building zone and is primarily 
 53.25  used as part of or in direct support of the person's operations 
 53.26  carried on in the job opportunity building zone.  The exemption 
 53.27  under this clause applies to sales, if the purchase was made and 
 53.28  delivery received during the duration of the job opportunity 
 53.29  building zone.  The exemption under this clause also applies to 
 53.30  any local sales and use tax; 
 53.31     (14) purchase or use after June 30, 2004, and before July 
 53.32  1, 2007, of a motor vehicle by a state agency or political 
 53.33  subdivision, provided that the motor vehicle has a fuel 
 53.34  efficiency greater than 45 miles per gallon in highway use, and 
 53.35  greater than 35 miles per gallon in city use, as certified by 
 53.36  the United States Environmental Protection Agency. 
 54.1      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 54.2   transfers made after June 30, 2004, and before July 1, 2007. 
 54.3      Sec. 19.  Laws 1986, chapter 379, section 1, is amended to 
 54.4   read: 
 54.5      Section 1.  [CITY OF ST. CLOUD; LIQUOR AND FOOD TAX.] 
 54.6      Subdivision 1.  [LIQUOR AND FOOD TAX AUTHORIZED.] 
 54.7   Notwithstanding Minnesota Statutes, section 477A.016, or any 
 54.8   ordinance, city charter, or other provision of law, the city of 
 54.9   St. Cloud may, by ordinance, impose a sales tax supplemental to 
 54.10  the general sales tax imposed in Minnesota Statutes, chapter 
 54.11  297A, the proceeds of which shall be used in accordance with 
 54.12  subdivision 2.  The tax imposed by the city may be not more than 
 54.13  one exceed two percent on the gross receipts from all retail 
 54.14  on-sales of intoxicating liquor and fermented malt beverages 
 54.15  sold at licensed on-sale liquor establishments located within 
 54.16  its geographic boundaries, or not more than one two percent on 
 54.17  the gross receipts from the retail sale of food and beverages 
 54.18  not subject to the liquor tax by a restaurant or place of 
 54.19  refreshment located within its geographic boundaries, or both.  
 54.20  For purposes of this act, the city shall define the terms 
 54.21  "restaurant" and "place of refreshment" by resolution.  The 
 54.22  governing body of the city may adopt an ordinance establishing a 
 54.23  convention center taxing district.  The ordinance shall describe 
 54.24  with particularity the area within the city to be included in 
 54.25  the district.  If the city establishes a convention center 
 54.26  taxing district, the sales taxes authorized under this 
 54.27  subdivision may be imposed only upon the sales occurring at 
 54.28  on-sale liquor establishments, restaurants, or other places of 
 54.29  refreshment located within the district.  The city may impose a 
 54.30  tax at a rate that is greater than one percent, not to exceed 
 54.31  two percent, only after the approval of the voters of the city 
 54.32  at the next general election. 
 54.33     Subd. 2.  [USE OF PROCEEDS OF LIQUOR AND FOOD TAX.] The 
 54.34  proceeds of any tax imposed under subdivision 1 shall be used by 
 54.35  the city to pay all or a portion of the expenses of constructing 
 54.36  a convention center facility or and related facilities, and the 
 55.1   municipal athletic complex.  Authorized expenses include, but 
 55.2   are not limited to, securing or paying debt service on bonds or 
 55.3   other obligations issued to finance the construction of a 
 55.4   convention center facility or and related facilities, and the 
 55.5   municipal athletic complex.  For the purposes of this act, 
 55.6   "related facilities" means all publicly owned real or personal 
 55.7   property that the governing body of the city determines will be 
 55.8   necessary to facilitate the use of the convention center 
 55.9   facilities including, but not limited to, parking, skyways, 
 55.10  lighting, and landscaping. 
 55.11     Subd. 3.  [EXPIRATION OF TAXING AUTHORITY.] The authority 
 55.12  granted by subdivision 1 to the city to impose a liquor and food 
 55.13  tax shall expire when the principal and interest on any bonds or 
 55.14  other obligations issued to finance construction of a convention 
 55.15  center facility or and related facilities, and municipal 
 55.16  athletic complex have been paid or at an earlier time as the 
 55.17  city shall, by ordinance, determine.  
 55.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 55.19  compliance by the city of St. Cloud with Minnesota Statutes, 
 55.20  section 645.021, subdivision 3. 
 55.21     Sec. 20.  Laws 1986, chapter 379, section 2, subdivision 1, 
 55.22  is amended to read: 
 55.23     Subdivision 1.  [ADDITIONAL TAX AUTHORIZED.] 
 55.24  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 55.25  ordinance, city charter, or other provision of law, the city of 
 55.26  St. Cloud may, by ordinance, impose a tax at a rate not to 
 55.27  exceed two three percent in addition to the tax authorized under 
 55.28  Laws 1979, chapter 197, on the gross receipts from the 
 55.29  furnishing for consideration of lodging at a hotel, motel, 
 55.30  rooming house, tourist court, or resort other than the renting 
 55.31  or leasing of it for a continuous period of 30 days or 
 55.32  more.  The city may impose a tax at a rate that is greater than 
 55.33  two percent, not to exceed three percent, only after the 
 55.34  approval of the voters of the city at the next general election. 
 55.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 55.36  compliance by the city of St. Cloud with Minnesota Statutes, 
 56.1   section 645.021, subdivision 3. 
 56.2      Sec. 21.  Laws 1991, chapter 291, article 8, section 27, 
 56.3   subdivision 4, is amended to read: 
 56.4      Subd. 4.  [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE 
 56.5   LIMITATION.] The authority granted by subdivisions 1 and 2 to 
 56.6   the city to impose a sales tax and an excise tax shall expire 
 56.7   when the principal and interest on any bonds or obligations 
 56.8   issued to finance construction of Riverfront 2000 and related 
 56.9   facilities have been paid or at an earlier time as the city 
 56.10  shall, by ordinance, determine.  The total capital, 
 56.11  administrative, and operating expenditures payable from bond 
 56.12  proceeds and revenues received from the taxes authorized by 
 56.13  subdivisions 1 and 2, excluding investment earnings on bond 
 56.14  proceeds and revenues, shall not exceed $25,000,000 for 
 56.15  Riverfront 2000 and related facilities. 
 56.16     <b>[EFFECTIVE DATE.]</b> This section is effective upon compliance 
 56.17  by the city of Mankato with Minnesota Statutes, section 645.021, 
 56.18  subdivision 3. 
 56.19     Sec. 22.  Laws 1991, chapter 291, article 8, section 27, 
 56.20  subdivision 5, is amended to read: 
 56.21     Subd. 5.  [BONDS.] The city of Mankato may issue general 
 56.22  obligation bonds of the city in an aggregate amount not to 
 56.23  exceed $25,000,000 for Riverfront 2000 and related facilities, 
 56.24  without election under Minnesota Statutes, chapter 475, on the 
 56.25  question of issuance of the bonds or a tax to pay them.  The 
 56.26  debt represented by bonds issued for Riverfront 2000 and related 
 56.27  facilities shall not be included in computing any debt 
 56.28  limitations applicable to the city of Mankato, and the levy of 
 56.29  taxes required by section 475.61 to pay principal of and 
 56.30  interest on the bonds shall not be subject to any levy 
 56.31  limitation or be included in computing or applying any levy 
 56.32  limitation applicable to the city. 
 56.33     <b>[EFFECTIVE DATE.]</b> This section is effective upon compliance 
 56.34  by the city of Mankato with Minnesota Statutes, section 645.021, 
 56.35  subdivision 3. 
 56.36     Sec. 23.  Laws 1996, chapter 471, article 2, section 29, is 
 57.1   amended to read: 
 57.2      Sec. 29.  [CITY OF HERMANTOWN; SALES AND USE TAX.] 
 57.3      Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] (a) 
 57.4   Notwithstanding Minnesota Statutes, section 477A.016, or any 
 57.5   other contrary provision of law, ordinance, or city charter, the 
 57.6   city of Hermantown may, by ordinance, impose an additional sales 
 57.7   and use tax of up to one percent on sales transactions, storage, 
 57.8   and use taxable pursuant to Minnesota Statutes, chapter 297A, 
 57.9   that occur within the city. 
 57.10     (b) The proceeds of the first one-half of one percent of 
 57.11  tax imposed under this section must be used to meet the costs of 
 57.12  by the city for the following projects: 
 57.13     (1) extending a sewer interceptor line; 
 57.14     (2) construction of a booster pump station, reservoirs, and 
 57.15  related improvements to the water system; and 
 57.16     (3) construction of a police and fire station. 
 57.17     (c) Revenues received from the remaining one-half of one 
 57.18  percent of the tax authorized under this section must be used by 
 57.19  the city to pay all or part of the capital and administrative 
 57.20  costs of developing, acquiring, constructing, and initially 
 57.21  furnishing and equipping for the following projects: 
 57.22     (1) construction of a community recreation center; 
 57.23     (2) completion of a civic center services complex; 
 57.24     (3) construction and relocation of a new public works 
 57.25  facility; 
 57.26     (4) construction of roads, street improvements, and other 
 57.27  traffic control measures within the city; and 
 57.28     (5) acquisition, construction, and improvement of parks and 
 57.29  trails within the city. 
 57.30     (d) Authorized expenses include, but are not limited to, 
 57.31  acquiring property, paying construction, administrative, and 
 57.32  operating expenses related to the development of the projects 
 57.33  listed in paragraph (c), paying debt service on bonds or other 
 57.34  obligations, including lease obligations, issued to finance 
 57.35  construction, expansion, or improvement of the projects listed 
 57.36  in paragraph (c), and other compatible uses, including but not 
 58.1   limited to, parking, lighting, and landscaping. 
 58.2      Subd. 2.  [REFERENDUM.] (a) If the Hermantown city council 
 58.3   proposes to impose the sales tax authorized by this section, it 
 58.4   shall conduct a referendum on the issue. 
 58.5      (b) If the Hermantown city council initially imposes the 
 58.6   tax at a rate that is less than one percent and proposes 
 58.7   increasing the tax rate at a later date up to the full one 
 58.8   percent, it shall conduct a referendum on the increase. 
 58.9      (c) The question of imposing or increasing the tax must be 
 58.10  submitted to the voters at a special or general election.  The 
 58.11  tax may not be imposed unless a majority of votes cast on the 
 58.12  question of imposing the tax are in the affirmative.  The 
 58.13  commissioner of revenue shall prepare a suggested form of 
 58.14  question to be presented at the election.  This subdivision 
 58.15  applies notwithstanding any city charter provision to the 
 58.16  contrary. 
 58.17     Subd. 3.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION OF 
 58.18  TAXES.] A sales tax imposed under this section must be reported 
 58.19  and paid to the commissioner of revenue with the state sales 
 58.20  taxes, and be subject to the same penalties, interest, and 
 58.21  enforcement provisions.  The proceeds of the tax, less refunds 
 58.22  and a proportionate share of the cost of collection, shall be 
 58.23  remitted at least quarterly to the city.  The commissioner shall 
 58.24  deduct from the proceeds remitted an amount that equals the 
 58.25  indirect statewide cost as well as the direct and indirect 
 58.26  department costs necessary to administer, audit, and collect the 
 58.27  tax.  The amount deducted shall be deposited in the state 
 58.28  general fund. 
 58.29     Subd. 3a.  [BONDING AUTHORITY.] (a) The city may issue 
 58.30  general obligation bonds under Minnesota Statutes, chapter 475, 
 58.31  to finance the costs in subdivision 1, paragraph (c).  The total 
 58.32  amount of bonds issued for the projects under subdivision 1, 
 58.33  paragraph (c), may not exceed $12,900,000 in the aggregate.  An 
 58.34  election to approve the bonds is not required. 
 58.35     (b) The bonds are not included in computing any debt 
 58.36  limitation applicable to the city and the levy of taxes under 
 59.1   Minnesota Statutes, section 475.61, to pay principal of and 
 59.2   interest on the bonds is not subject to any levy limitation. 
 59.3      (c) The taxes authorized under this section may be pledged 
 59.4   to and used for the payment of the bonds and any bonds issued to 
 59.5   refund them. 
 59.6      Subd. 4.  [TERMINATION.] The portion of the tax authorized 
 59.7   under this section to finance the improvements described in 
 59.8   subdivision 1, paragraph (b), terminates at the later of (1) ten 
 59.9   years after the date of initial imposition of the tax, or (2) on 
 59.10  the first day of the second month next succeeding a 
 59.11  determination by the city council that sufficient funds have 
 59.12  been received from that portion of the tax dedicated to finance 
 59.13  the those improvements described in subdivision 1, clauses (1) 
 59.14  to (3), and to prepay or retire at maturity the principal, 
 59.15  interest, and premium due on any bonds issued for the 
 59.16  improvements.  The portion of the tax authorized to finance the 
 59.17  improvements described in subdivision 1, paragraph (c), 
 59.18  terminates when the revenues raised are sufficient to finance 
 59.19  those improvements, up to an amount equal to $12,900,000 plus 
 59.20  any interest, premium, and other costs associated with the bonds 
 59.21  issued under subdivision 3a.  The city council may terminate 
 59.22  this portion of the tax earlier.  Any funds remaining after 
 59.23  completion of the improvements and retirement or redemption of 
 59.24  the bonds may be placed in the general fund of the city. 
 59.25     Subd. 5.  [LOCAL APPROVAL; EFFECTIVE DATE.] This section is 
 59.26  effective the day after final enactment, upon compliance with 
 59.27  Minnesota Statutes, section 645.021, subdivision 3, by the city 
 59.28  of Hermantown. 
 59.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 59.30  the governing body of the city of Hermantown and its chief 
 59.31  clerical officer comply with Minnesota Statutes, section 
 59.32  645.021, subdivisions 2 and 3. 
 59.33     Sec. 24.  Laws 1998, chapter 389, article 8, section 43, 
 59.34  subdivision 3, is amended to read: 
 59.35     Subd. 3.  [USE OF REVENUES.] Revenues received from the 
 59.36  taxes authorized by subdivisions 1 and 2 must be used by the 
 60.1   city to pay for the cost of collecting and administering the 
 60.2   taxes and to pay for the following projects: 
 60.3      (1) transportation infrastructure improvements including 
 60.4   both regional highway and airport improvements; 
 60.5      (2) improvements to the civic center complex; 
 60.6      (3) a municipal water, sewer, and storm sewer project 
 60.7   necessary to improve regional ground water quality; and 
 60.8      (4) construction of a regional recreation and sports center 
 60.9   and associated other higher education facilities available for 
 60.10  both community and student use, located at or adjacent to the 
 60.11  Rochester center. 
 60.12  The total amount of capital expenditures or bonds for these 
 60.13  projects that may be paid from the revenues raised from the 
 60.14  taxes authorized in this section may not exceed 
 60.15  $71,500,000 $111,500,000.  The total amount of capital 
 60.16  expenditures or bonds for the project in clause (4) that may be 
 60.17  paid from the revenues raised from the taxes authorized in this 
 60.18  section may not exceed $20,000,000 $28,000,000. 
 60.19     Sec. 25.  Laws 1998, chapter 389, article 8, section 43, 
 60.20  subdivision 4, is amended to read: 
 60.21     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 60.22  under Minnesota Statutes, chapter 475, to finance the capital 
 60.23  expenditure and improvement projects.  An election to approve 
 60.24  the bonds under Minnesota Statutes, section 475.58, may be held 
 60.25  in combination with the election to authorize imposition of the 
 60.26  tax under subdivision 1.  Whether to permit imposition of the 
 60.27  tax and issuance of bonds may be posed to the voters as a single 
 60.28  question.  The question must state that the sales tax revenues 
 60.29  are pledged to pay the bonds, but that the bonds are general 
 60.30  obligations and will be guaranteed by the city's property taxes. 
 60.31     (b) The issuance of bonds under this subdivision is not 
 60.32  subject to Minnesota Statutes, section 275.60. 
 60.33     (c) The bonds are not included in computing any debt 
 60.34  limitation applicable to the city, and the levy of taxes under 
 60.35  Minnesota Statutes, section 475.61, to pay principal of and 
 60.36  interest on the bonds is not subject to any levy limitation. 
 61.1   The aggregate principal amount of bonds, plus the aggregate of 
 61.2   the taxes used directly to pay eligible capital expenditures and 
 61.3   improvements may not exceed $71,500,000 $111,500,000, plus an 
 61.4   amount equal to the costs related to issuance of the bonds. 
 61.5      (d) The taxes may be pledged to and used for the payment of 
 61.6   the bonds and any bonds issued to refund them, only if the bonds 
 61.7   and any refunding bonds are general obligations of the city. 
 61.8      Sec. 26.  Laws 1999, chapter 243, article 4, section 18, 
 61.9   subdivision 1, is amended to read:  
 61.10     Subdivision 1.  [SALES AND USE TAX.] (a) Notwithstanding 
 61.11  Minnesota Statutes, section 297A.48, subdivision 1a, 477A.016, 
 61.12  or any other provision of law, ordinance, or city charter, if 
 61.13  approved by the city voters at the first municipal general 
 61.14  election held after the date of final enactment of this act or 
 61.15  at a special election held November 2, 1999, the city of Proctor 
 61.16  may impose by ordinance a sales and use tax of up to one-half of 
 61.17  one percent for the purposes specified in subdivision 3, 
 61.18  paragraph (a).  The provisions of Minnesota Statutes, 
 61.19  section 297A.48 297A.99, govern the imposition, administration, 
 61.20  collection, and enforcement of the tax authorized under this 
 61.21  subdivision. 
 61.22     (b) The city of Proctor may impose by ordinance an 
 61.23  additional sales and use tax of up to one-half of one percent if 
 61.24  approved by the city voters at a general election or at a 
 61.25  special election held for this purpose.  The revenues received 
 61.26  from this additional tax must be used for the purposes specified 
 61.27  in subdivision 3, paragraph (b).  
 61.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 61.29  following final enactment, upon compliance by the city of 
 61.30  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
 61.31     Sec. 27.  Laws 1999, chapter 243, article 4, section 18, 
 61.32  subdivision 3, is amended to read:  
 61.33     Subd. 3.  [USE OF REVENUES.] (a) Revenues received from 
 61.34  taxes authorized by subdivisions 1, paragraph (a), and 2 must be 
 61.35  used by the city to pay the cost of collecting the taxes and to 
 61.36  pay for construction and improvement of the following city 
 62.1   facilities: 
 62.2      (1) streets; and 
 62.3      (2) constructing and equipping the Proctor community 
 62.4   activity center. 
 62.5      Authorized expenses include, but are not limited to, 
 62.6   acquiring property, paying construction and operating expenses 
 62.7   related to the development of an authorized facility, and paying 
 62.8   debt service on bonds or other obligations, including lease 
 62.9   obligations, issued to finance the construction, expansion, or 
 62.10  improvement of an authorized facility.  The capital expenses for 
 62.11  all projects authorized under this paragraph that may be paid 
 62.12  with these taxes is limited to $3,600,000, plus an amount equal 
 62.13  to the costs related to issuance of the bonds. 
 62.14     (b) Revenues received from taxes authorized by subdivision 
 62.15  1, paragraph (b), must be used by the city to pay the cost of 
 62.16  collecting the taxes and for construction and improvements of 
 62.17  city streets, public utilities, sidewalks, bikeways, and trails. 
 62.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 62.19  following final enactment, upon compliance by the city of 
 62.20  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
 62.21     Sec. 28.  Laws 1999, chapter 243, article 4, section 18, 
 62.22  subdivision 4, is amended to read:  
 62.23     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 62.24  under Minnesota Statutes, chapter 475, to finance the capital 
 62.25  expenditure and improvement projects described in subdivision 
 62.26  3.  An election to approve the bonds under Minnesota Statutes, 
 62.27  section 475.58, is not required. 
 62.28     (b) The issuance of bonds under this subdivision is not 
 62.29  subject to Minnesota Statutes, sections 275.60 and 279.61 275.61.
 62.30     (c) The bonds are not included in computing any debt 
 62.31  limitation applicable to the city, and the levy of taxes under 
 62.32  Minnesota Statutes, section 475.61, to pay principal of and 
 62.33  interest on the bonds is not subject to any levy limitation.  
 62.34     (d) For projects described in subdivision 3, paragraph (a), 
 62.35  the aggregate principal amount of bonds, plus the aggregate of 
 62.36  the taxes used directly to pay eligible capital expenditures and 
 63.1   improvements, may not exceed $3,600,000, plus an amount equal to 
 63.2   the costs related to issuance of the bonds, including interest 
 63.3   on the bonds.  For projects described in subdivision 3, 
 63.4   paragraph (b), the aggregate principal amount of bonds may not 
 63.5   exceed $7,200,000, plus an amount equal to the costs related to 
 63.6   issuance of the bonds, including interest on the bonds.  
 63.7      (e) The sales and use and excise taxes authorized in this 
 63.8   section may be pledged to and used for the payment of the bonds 
 63.9   and any bonds issued to refund them only if the bonds and any 
 63.10  refunding bonds are general obligations of the city. 
 63.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 63.12  following final enactment, upon compliance by the city of 
 63.13  Proctor with Minnesota Statutes, section 645.021, subdivision 3. 
 63.14     Sec. 29.  Laws 2001, First Special Session chapter 5, 
 63.15  article 12, section 67, the effective date, is amended to read: 
 63.16     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
 63.17  and sales made after June 30, 2001, and before January 1, 2003 
 63.18  July 1, 2006. 
 63.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 63.20  following final enactment. 
 63.21     Sec. 30.  Laws 2001, First Special Session chapter 5, 
 63.22  article 12, section 95, is amended to read: 
 63.23     Sec. 95.  [REPEALER.] 
 63.24     (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
 63.25  16; 297A.68, subdivision 21; and 297A.71, subdivisions 2 and 16, 
 63.26  are repealed effective for sales and purchases occurring after 
 63.27  June 30, 2001, except that the repeal of section 297A.61, 
 63.28  subdivision 16, paragraph (d), is effective for sales and 
 63.29  purchases occurring after July 31, 2001. 
 63.30     (b) Minnesota Statutes 2000, sections 297A.62, subdivision 
 63.31  2, and 297A.64, subdivision 1, are repealed effective for sales 
 63.32  and purchases made after December 31, 2005. 
 63.33     (c) (b) Minnesota Statutes 2000, section 297A.71, 
 63.34  subdivision 15, is repealed effective for sales and purchases 
 63.35  made after June 30, 2002. 
 63.36     (d) (c) Minnesota Statutes 2000, section 289A.60, 
 64.1   subdivision 15, is repealed effective for liabilities after 
 64.2   January 1, 2003. 
 64.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 64.4   following final enactment. 
 64.5      Sec. 31.  Laws 2002, chapter 377, article 12, section 16, 
 64.6   subdivision 1, is amended to read: 
 64.7      Subdivision 1.  [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 
 64.8   The city of Thief River Falls may incorporate or authorize the 
 64.9   incorporation of a nonprofit corporation to operate a community 
 64.10  or regional center in the city.  A nonprofit corporation 
 64.11  incorporated under this section is exempt from payment of sales 
 64.12  and use tax on materials, equipment, and supplies consumed or 
 64.13  incorporated into the construction of the community or regional 
 64.14  center.  The exemption under this section applies to purchases 
 64.15  by the nonprofit corporation, a contractor, subcontractor, or 
 64.16  builder. 
 64.17     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 64.18  for purchases made on and after July 1, 2002. 
 64.19     Sec. 32.  [CITY OF ALBERT LEA; SALES AND USE TAX.] 
 64.20     Subdivision 1.  [SALES AND USE TAX 
 64.21  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
 64.22  477A.016, or any other provision of law, ordinance, or city 
 64.23  charter, the city of Albert Lea may, by ordinance, impose a 
 64.24  sales and use tax of one-half of one percent for the purposes 
 64.25  specified in subdivision 2.  The provisions of Minnesota 
 64.26  Statutes, section 297A.99, govern the imposition, 
 64.27  administration, collection, and enforcement of the tax 
 64.28  authorized under this subdivision. 
 64.29     Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
 64.30  imposed under this section shall be used to pay for lake 
 64.31  improvement projects as detailed in the Shell Rock River 
 64.32  watershed plan. 
 64.33     Subd. 3.  [REFERENDUM.] If the Albert Lea City Council 
 64.34  proposes to impose the tax authorized by this section, the 
 64.35  question of imposing the tax must be submitted to the voters at 
 64.36  the next general election. 
 65.1      Subd. 4.  [TERMINATION OF TAXES.] The taxes imposed under 
 65.2   this section expire at the earlier of (1) ten years after the 
 65.3   taxes are first imposed, or (2) when the city council first 
 65.4   determines that the amount of revenues raised to pay for the 
 65.5   projects under subdivision 2, shall meet or exceed the sum of 
 65.6   $15,000,000.  Any funds remaining after completion of the 
 65.7   projects may be placed in the general fund of the city. 
 65.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 65.9   compliance by the governing body of the city of Albert Lea with 
 65.10  Minnesota Statutes, section 645.021, subdivision 3. 
 65.11     Sec. 33.  [CITY OF BEAVER BAY; TAXES AUTHORIZED.] 
 65.12     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
 65.13  Minnesota Statutes, section 477A.016, or any other provision of 
 65.14  law or ordinance, if approved by the voters of the city at the 
 65.15  next general election held after the date of final enactment of 
 65.16  this act, the city of Beaver Bay may impose by ordinance a sales 
 65.17  and use tax at a rate of up to one percent for the purposes 
 65.18  specified in subdivision 2.  The provisions of Minnesota 
 65.19  Statutes, section 297A.99, govern the imposition, 
 65.20  administration, collection, and enforcement of the tax 
 65.21  authorized under this subdivision. 
 65.22     Subd. 2.  [USE OF REVENUES.] The revenues received from 
 65.23  taxes authorized by subdivision 1 must be used to pay the bonded 
 65.24  indebtedness on the city community building and to provide 
 65.25  funding for recreational facilities, the upgrading of the water 
 65.26  and sewer system, upgrading and replacement of fire equipment, 
 65.27  and improvement of streets. 
 65.28     Subd. 3.  [TERMINATION OF TAXES.] The authority granted 
 65.29  under subdivision 1 to the city of Beaver Bay to impose sales 
 65.30  and use taxes expires when the city council determines that the 
 65.31  amount of revenue received to pay the costs of the projects 
 65.32  described in subdivision 2 shall meet or exceed $1,500,000.  Any 
 65.33  funds remaining after completion of the projects may be placed 
 65.34  in the general fund of the city.  The tax imposed under 
 65.35  subdivision 1 may expire at an earlier time if the city so 
 65.36  determines by ordinance. 
 66.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 66.2   the governing body of the city of Beaver Bay and its chief 
 66.3   clerical officer timely comply with Minnesota Statutes, section 
 66.4   645.021, subdivisions 2 and 3. 
 66.5      Sec. 34.  [CITY OF BEMIDJI.] 
 66.6      Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 66.7   Notwithstanding Minnesota Statutes, section 477A.016, or any 
 66.8   other provision of law, ordinance, or city charter, pursuant to 
 66.9   the approval of the city voters at the general election held on 
 66.10  November 5, 2002, the city of Bemidji may impose by ordinance a 
 66.11  sales and use tax of one-half of one percent for the purposes 
 66.12  specified in subdivision 2.  The provisions of Minnesota 
 66.13  Statutes, section 297A.99, govern the imposition, 
 66.14  administration, collection, and enforcement of the tax 
 66.15  authorized under this subdivision. 
 66.16     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
 66.17  authorized by subdivision 1 must be used for the cost of 
 66.18  collecting and administering the tax and to pay all or part of 
 66.19  the capital or administrative costs of the acquisition, 
 66.20  construction, and improvement of parks and trails within the 
 66.21  city, as provided for in the city of Bemidji's parks, open 
 66.22  space, and trail system plan, adopted by the Bemidji City 
 66.23  Council on November 21, 2001.  Authorized expenses include, but 
 66.24  are not limited to, acquiring property, paying construction 
 66.25  expenses related to the development of these facilities and 
 66.26  improvements, and securing and paying debt service on bonds or 
 66.27  other obligations issued to finance acquisition, construction, 
 66.28  improvement, or development of parks and trails within the city 
 66.29  of Bemidji. 
 66.30     Subd. 3.  [BONDS.] Pursuant to the approval of the city 
 66.31  voters at the general election held on November 5, 2002, the 
 66.32  city of Bemidji may issue, without an additional election, 
 66.33  general obligation bonds of the city in an amount not to exceed 
 66.34  $9,826,000 to pay capital and administrative expenses for the 
 66.35  acquisition, construction, improvement, and development of parks 
 66.36  and trails as specified in subdivision 2.  The debt represented 
 67.1   by the bonds must not be included in computing any debt 
 67.2   limitations applicable to the city, and the levy of taxes 
 67.3   required by Minnesota Statutes, section 475.61, to pay the 
 67.4   principal of any interest on the bonds must not be subject to 
 67.5   any levy limitations or be included in computing or applying any 
 67.6   levy limitation applicable to the city. 
 67.7      Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
 67.8   subdivision 1 expires when the Bemidji City Council determines 
 67.9   that the amount described in subdivision 3 has been received 
 67.10  from the tax to finance the capital and administrative costs for 
 67.11  acquisition, construction, improvement, and development of parks 
 67.12  and trails and to repay or retire at maturity the principal, 
 67.13  interest, and premium due on any bonds issued for the park and 
 67.14  trail improvements under subdivision 3.  Any funds remaining 
 67.15  after completion of the park and trail improvements and 
 67.16  retirement or redemption of the bonds may be placed in the 
 67.17  general fund of the city.  The tax imposed under subdivision 1 
 67.18  may expire at an earlier time if the city so determines by 
 67.19  ordinance. 
 67.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 67.21  compliance by the governing body of the city of Bemidji with 
 67.22  Minnesota Statutes, section 645.021, subdivision 3. 
 67.23     Sec. 35.  [CITY OF CLOQUET; TAXES AUTHORIZED.] 
 67.24     Subdivision 1.  [SALES AND USE TAX.] Notwithstanding 
 67.25  Minnesota Statutes, section 477A.016, or any other provision of 
 67.26  law, ordinance, or city charter, if approved by the voters 
 67.27  pursuant to Minnesota Statutes, section 297A.99, the city of 
 67.28  Cloquet may impose by ordinance a sales and use tax of up to 
 67.29  one-half of one percent for the purpose specified in subdivision 
 67.30  3.  The provisions of Minnesota Statutes, section 297A.99, 
 67.31  govern the imposition, administration, collection, and 
 67.32  enforcement of the tax authorized under this subdivision. 
 67.33     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
 67.34  Minnesota Statutes, section 477A.016, or any other provision of 
 67.35  law, ordinance, or city charter, the city of Cloquet may impose 
 67.36  by ordinance, for the purposes specified in subdivision 3, an 
 68.1   excise tax of up to $20 per motor vehicle, as defined by 
 68.2   ordinance, purchased or acquired from any person engaged within 
 68.3   the city in the business of selling motor vehicles at retail. 
 68.4      Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
 68.5   authorized by subdivisions 1 and 2 must be used by the city to 
 68.6   pay the cost of collecting the taxes and to pay for the 
 68.7   following projects: 
 68.8      (1) construction and implementation of riverfront task 
 68.9   force park improvements including Veteran's Park; 
 68.10     (2) extension of water and sewer lines and other 
 68.11  improvements to city infrastructure necessary for construction 
 68.12  of a city industrial park; and 
 68.13     (3) costs associated with the closure of the Cloquet 
 68.14  Municipal Landfill. 
 68.15     Authorized expenses include, but are not limited to, 
 68.16  acquiring property and paying construction expenses related to 
 68.17  these improvements, and paying debt service on bonds or other 
 68.18  obligations issued to finance acquisition and construction of 
 68.19  these improvements. 
 68.20     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 68.21  under Minnesota Statutes, chapter 475, to pay capital and 
 68.22  administrative expenses for the improvements described in 
 68.23  subdivision 3 in an amount that does not exceed $7,000,000.  An 
 68.24  election to approve the bonds under Minnesota Statutes, section 
 68.25  475.58, is not required. 
 68.26     (b) The issuance of bonds under this subdivision is not 
 68.27  subject to Minnesota Statutes, sections 275.60 and 275.61. 
 68.28     (c) The debt represented by the bonds is not included in 
 68.29  computing any debt limitation applicable to the city, and any 
 68.30  levy of taxes under Minnesota Statutes, section 475.61, to pay 
 68.31  principal of and interest on the bonds is not subject to any 
 68.32  levy limitation.  
 68.33     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
 68.34  subdivisions 1 and 2 expire at the earlier of (1) 14 years, or 
 68.35  (2) when the city council determines that sufficient funds have 
 68.36  been received from the taxes to finance the capital and 
 69.1   administrative costs of the improvements described in 
 69.2   subdivision 3, plus the additional amount needed to pay the 
 69.3   costs related to issuance of bonds under subdivision 4, 
 69.4   including interest on the bonds.  Any funds remaining after 
 69.5   completion of the project and retirement or redemption of the 
 69.6   bonds may be placed in the general fund of the city.  The taxes 
 69.7   imposed under subdivisions 1 and 2 may expire at an earlier time 
 69.8   if the city so determines by ordinance. 
 69.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 69.10  the governing body of the city of Cloquet and its chief clerical 
 69.11  officer timely comply with Minnesota Statutes, section 645.021, 
 69.12  subdivisions 2 and 3. 
 69.13     Sec. 36.  [CITY OF CLEARWATER.] 
 69.14     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 69.15  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 69.16  other provision of law, ordinance, or city charter, pursuant to 
 69.17  the approval of the city voters at the next general election or 
 69.18  at a special election held for this purpose, the city of 
 69.19  Clearwater may impose by ordinance a sales and use tax of 
 69.20  one-half of one percent for the purposes specified in 
 69.21  subdivision 2.  The provisions of Minnesota Statutes, section 
 69.22  297A.99, govern the imposition, administration, collection, and 
 69.23  enforcement of the tax authorized under this subdivision. 
 69.24     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
 69.25  authorized by subdivision 1 must be used for the cost of 
 69.26  collecting and administering the tax and to pay all or part of 
 69.27  the capital or administrative costs of the development, 
 69.28  acquisition, construction, and improvement of parks, trails, 
 69.29  parkland, open space, and land and buildings for a regional 
 69.30  community and recreation center.  Authorized expenses include, 
 69.31  but are not limited to, acquiring property, paying construction 
 69.32  expenses related to the development of these facilities and 
 69.33  improvements, and securing and paying debt service on bonds or 
 69.34  other obligations issued to finance acquisition, construction, 
 69.35  improvement, or development. 
 69.36     Subd. 3.  [BONDS.] Pursuant to the approval of the city 
 70.1   voters to impose the tax authorized in subdivision 1, the city 
 70.2   of Clearwater may issue without an additional election general 
 70.3   obligation bonds of the city in an amount not to exceed 
 70.4   $3,000,000 to pay capital and administrative expenses for the 
 70.5   acquisition, construction, improvement, and development of the 
 70.6   projects specified in subdivision 2.  The debt represented by 
 70.7   the bonds must not be included in computing any debt limitations 
 70.8   applicable to the city, and the levy of taxes required by 
 70.9   Minnesota Statutes, section 475.61, to pay the principal or any 
 70.10  interest on the bonds must not be subject to any levy 
 70.11  limitations or be included in computing or applying any levy 
 70.12  limitation applicable to the city. 
 70.13     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
 70.14  subdivision 1 expires when the Clearwater City Council 
 70.15  determines that the amount described in subdivision 3 has been 
 70.16  received from the tax to finance the capital and administrative 
 70.17  costs for acquisition, construction, improvement, and 
 70.18  development of the projects specified in subdivision 2 and to 
 70.19  repay or retire at maturity the principal, interest, and premium 
 70.20  due on any bonds issued for the projects under subdivision 3.  
 70.21  Any funds remaining after completion of the projects specified 
 70.22  in subdivision 2 and retirement or redemption of the bonds may 
 70.23  be placed in the general fund of the city.  The tax imposed 
 70.24  under subdivision 1 may expire at an earlier time if the city so 
 70.25  determines by ordinance. 
 70.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 70.27  compliance by the governing body of the city of Clearwater with 
 70.28  Minnesota Statutes, section 645.021, subdivision 3. 
 70.29     Sec. 37.  [CITY OF MEDFORD; SALES AND USE TAX.] 
 70.30     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 70.31  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 70.32  other provision of law, ordinance, or city charter, the city of 
 70.33  Medford may, by ordinance, impose a sales and use tax of 
 70.34  one-half of one percent for the purposes specified in 
 70.35  subdivision 2.  Except as otherwise specifically provided, the 
 70.36  provisions of Minnesota Statutes, section 297A.99, govern the 
 71.1   imposition, administration, collection, and enforcement of the 
 71.2   tax authorized under this subdivision. 
 71.3      Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
 71.4   imposed under this section must be used to pay up to $5,000,000 
 71.5   in costs related to improving the city's wastewater system and 
 71.6   wastewater treatment plant. 
 71.7      Subd. 3.  [REFERENDUM.] If the Medford City Council 
 71.8   proposes to impose the tax authorized by this section, the 
 71.9   question of imposing the tax must be submitted to the voters at 
 71.10  the next general election.  The tax may not be imposed unless 
 71.11  the majority of votes cast on the question of imposing the tax 
 71.12  are in the affirmative.  The commissioner of revenue shall 
 71.13  prepare a suggested form of the question to be presented at the 
 71.14  election.  The question must state that the sales tax revenues 
 71.15  would be pledged to pay any bonds issued under subdivision 4 and 
 71.16  that these bonds are guaranteed by the city's property taxes. 
 71.17     Subd. 4.  [BONDING AUTHORITY.] (a) The city may issue bonds 
 71.18  under Minnesota Statutes, chapter 475, to finance the capital 
 71.19  expenditure and improvement projects authorized under 
 71.20  subdivision 2.  The total amount of bonds issued for the 
 71.21  projects listed in subdivision 2 may not exceed $5,000,000 in 
 71.22  aggregate.  An election to approve the bonds, as required under 
 71.23  Minnesota Statutes, section 475.58, is not required. 
 71.24     (b) The issuance of the bonds under this subdivision is not 
 71.25  subject to Minnesota Statutes, sections 275.60 and 275.61. 
 71.26     (c) The bonds are not included in computing any debt 
 71.27  limitation applicable to the city, and the levy of taxes under 
 71.28  Minnesota Statutes, section 475.61, to pay the principal of and 
 71.29  interest on the bonds is not subject to any levy limitation. 
 71.30     (d) The taxes authorized under this section may be pledged 
 71.31  to and used for the payment of the bonds and any bonds issued to 
 71.32  refund them only if the bonds and any refunding bonds are 
 71.33  general obligations of the city. 
 71.34     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
 71.35  this section expire at the earlier of (1) 20 years after the 
 71.36  taxes are first imposed, or (2) when the city council first 
 72.1   determines that the amount of revenues raised to pay for the 
 72.2   projects under subdivision 2 shall meet or exceed the sum of 
 72.3   $5,000,000, plus an amount equal to the costs related to the 
 72.4   issuance of bonds under subdivision 4.  Any funds remaining 
 72.5   after completion of the projects and retirement or redemption of 
 72.6   the bonds may be placed in the general funds of the city. 
 72.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 72.8   compliance with the governing body of the city of Medford with 
 72.9   Minnesota Statutes, section 645.021, subdivision 3. 
 72.10     Sec. 38.  [CITY OF PARK RAPIDS.] 
 72.11     Subdivision 1.  [SALES AND USE TAX AUTHORIZED.] 
 72.12  Notwithstanding Minnesota Statutes, section 477A.016, or any 
 72.13  other provision of law, ordinance, or city charter, pursuant to 
 72.14  the approval of the city voters at the next general election or 
 72.15  at a special election held for this purpose, the city of Park 
 72.16  Rapids may impose by ordinance a sales and use tax of one 
 72.17  percent for the purposes specified in subdivision 2.  The 
 72.18  provisions of Minnesota Statutes, section 297A.99, govern the 
 72.19  imposition, administration, collection, and enforcement of the 
 72.20  tax authorized under this subdivision. 
 72.21     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
 72.22  authorized by subdivision 1 must be used for the cost of 
 72.23  collecting and administering the tax and to pay all or part of 
 72.24  the capital or administrative costs of the development, 
 72.25  acquisition, construction, and improvement of the following 
 72.26  projects:  
 72.27     (1) two-thirds of the cost of construction and operation of 
 72.28  a community center that may include a senior citizen center, 
 72.29  fitness center, swimming pool, meeting rooms, indoor track, and 
 72.30  racquetball, basketball, and tennis courts, provided that an 
 72.31  amount equal to one-third of the cost of construction is 
 72.32  received from private sources; 
 72.33     (2) capital improvement projects including, but not limited 
 72.34  to, installation of water, sewer, storm sewer, street 
 72.35  improvements, new city water tower and well, costs related to 
 72.36  improvements to marked trunk highway 34; and 
 73.1      (3) park improvements. 
 73.2      Authorized expenses include, but are not limited to, 
 73.3   acquiring property, paying construction expenses related to the 
 73.4   development of these facilities and improvements, and securing 
 73.5   and paying debt service on bonds or other obligations issued to 
 73.6   finance acquisition, construction, improvement, or development. 
 73.7      Subd. 3.  [BONDS.] Pursuant to the approval of the city 
 73.8   voters to impose the tax authorized in subdivision 1, the city 
 73.9   of Park Rapids may issue without an additional election general 
 73.10  obligation bonds of the city to pay capital and administrative 
 73.11  expenses for the acquisition, construction, improvement, and 
 73.12  development of the projects specified in subdivision 2.  The 
 73.13  debt represented by the bonds must not be included in computing 
 73.14  any debt limitations applicable to the city, and the levy of 
 73.15  taxes required by Minnesota Statutes, section 475.61, to pay the 
 73.16  principal or any interest on the bonds must not be subject to 
 73.17  any levy limitations or be included in computing or applying any 
 73.18  levy limitation applicable to the city. 
 73.19     Subd. 4.  [TERMINATION OF TAX.] The tax imposed under 
 73.20  subdivision 1 expires the earlier of July 1, 2023, or when the 
 73.21  city council determines that sufficient revenues have been 
 73.22  received to retire the bonds in subdivision 3.  Any funds 
 73.23  remaining after completion of the projects specified in 
 73.24  subdivision 2 and retirement or redemption of the bonds may be 
 73.25  placed in the general fund of the city.  The tax imposed under 
 73.26  subdivision 1 may expire at an earlier time if the city so 
 73.27  determines by ordinance. 
 73.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 73.29  compliance by the governing body of the city of Park Rapids with 
 73.30  Minnesota Statutes, section 645.021, subdivision 3. 
 73.31     Sec. 39.  [CITY OF PROCTOR; LODGING TAX.] 
 73.32     The city of Proctor may use up to ten percent of the 
 73.33  revenues received from the lodging tax imposed by the city under 
 73.34  Minnesota Statutes, section 469.190, for preservation of the 
 73.35  Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 225, 
 73.36  donated to the city by the Duluth, Missabe and Iron Range 
 74.1   Railway Company, and the F-101F aircraft, serial number 59-0407, 
 74.2   donated to the city by the Department of the Air Force. 
 74.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 74.4   following final enactment. 
 74.5      Sec. 40.  [ST. CLOUD AREA CITIES; SALES AND USE TAX 
 74.6   AUTHORIZED.] 
 74.7      Subdivision 1.  [SALES AND USE TAX 
 74.8   AUTHORIZED.] Notwithstanding Minnesota Statutes, sections 
 74.9   297A.99, subdivision 3, paragraph (d), and 477A.016, or any 
 74.10  other provision of law, ordinance, or city charter, each of the 
 74.11  cities of St. Cloud, Sartell, Sauk Rapids, St. Augusta, St. 
 74.12  Joseph, and Waite Park may impose by ordinance a sales and use 
 74.13  tax at the rate of one-half of one percent for the purposes 
 74.14  specified in subdivision 2, pursuant to the approval of the 
 74.15  voters of that city at the next general election.  The 
 74.16  provisions of Minnesota Statutes, section 297A.99, except 
 74.17  subdivision 3, paragraph (d), govern the imposition, 
 74.18  administration, collection, and enforcement of the tax 
 74.19  authorized under this subdivision. 
 74.20     Subd. 2.  [USE OF REVENUES.] (a) Revenues received from the 
 74.21  tax authorized by subdivision 1 must be used for the cost of 
 74.22  collecting and administering the tax and to pay all or part of 
 74.23  the capital or administrative costs of the development, 
 74.24  acquisition, construction, improvement, and securing and paying 
 74.25  debt service on bonds or other obligations issued to finance the 
 74.26  following regional projects: 
 74.27     (1) St. Cloud Regional Airport; 
 74.28     (2) major transportation improvements; 
 74.29     (3) arts, libraries, and community centers; 
 74.30     (4) acquisition and improvement of park land and open 
 74.31  space; and 
 74.32     (5) St. Cloud Civic Center remodeling and expansion, not to 
 74.33  exceed $20,000,000 from the amount allocated to St. Cloud under 
 74.34  subdivision 3, clause (2).  
 74.35     (b) The revenues returned to each city under subdivision 3 
 74.36  may only be used to fund projects that have been approved by 
 75.1   voters at the referendum authorizing this tax. 
 75.2      Subd. 3.  [ALLOCATION OF SALES AND USE TAX REVENUES TO 
 75.3   CITIES.] Revenues collected from the taxes authorized by 
 75.4   subdivision 1, after paying the cost of collecting and 
 75.5   administering the tax, shall be allocated to cities imposing the 
 75.6   tax as follows: 
 75.7      (1) the first $900,000 of revenues collected annually, 
 75.8   indexed annually to the Consumer Price Index, to the city of St. 
 75.9   Cloud for expansion of the St. Cloud Civic Center or the 
 75.10  construction and relocation of the Great River Regional Library; 
 75.11  and 
 75.12     (2) the revenues collected from the taxes imposed under 
 75.13  subdivision 1 that exceed the amount needed to meet the 
 75.14  obligations under clause (1) in any year shall be returned to 
 75.15  the cities pursuant to a joint powers agreement allocating sales 
 75.16  tax revenues among the cities. 
 75.17     Subd. 4.  [ST. CLOUD BONDING AUTHORIZED.] Pursuant to the 
 75.18  approval of the city voters to impose the tax authorized in 
 75.19  subdivision 1, the city of St. Cloud may issue without an 
 75.20  additional election, general obligation bonds of the city not to 
 75.21  exceed $80,000,000 to pay the costs of the projects specified in 
 75.22  subdivision 2.  The debt represented by the bonds must not be 
 75.23  included in computing any debt limitations applicable to the 
 75.24  city, and the levy of taxes required by Minnesota Statutes, 
 75.25  section 475.61, to pay the principal or any interest on the 
 75.26  bonds must not be subject to any levy limitations or be included 
 75.27  in computing or applying any levy limitation applicable to the 
 75.28  city. 
 75.29     Subd. 5.  [TERMINATION OF TAX.] The tax imposed in the city 
 75.30  of St. Cloud under subdivision 1 expires when the city council 
 75.31  determines that sufficient funds have been collected from the 
 75.32  tax to retire or redeem the bonds authorized under subdivision 
 75.33  3.  The taxes imposed in the cities of Sartell, Sauk Rapids, St. 
 75.34  Augusta, St. Joseph, and Waite Park expire when the projects 
 75.35  authorized under subdivision 2 have been completed, but no later 
 75.36  than 20 years after the date the tax is first imposed.  Any 
 76.1   funds remaining after completion of the projects specified in 
 76.2   subdivision 2 and retirement or redemption of the bonds may be 
 76.3   placed in the general fund of the city.  The tax imposed under 
 76.4   subdivision 1 may expire at an earlier time if the city so 
 76.5   determines by ordinance. 
 76.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 76.7   compliance by the governing body of the city with Minnesota 
 76.8   Statutes, section 645.021, subdivision 3, for sales and 
 76.9   purchases on and after January 1, 2006. 
 76.10     Sec. 41.  [SALES AND USE TAX COMPLIANCE GAP.] 
 76.11     The commissioner must reduce the amount of the compliance 
 76.12  gap in the payment of sales and use tax by 25 percent before 
 76.13  December 31, 2006; and must reduce the compliance gap in the 
 76.14  payment of sales and use tax by an additional 25 percent before 
 76.15  December 31, 2008.  The commissioner must establish an effective 
 76.16  method to allow individuals who purchase taxable products or 
 76.17  services and have not paid the tax at the time of the purchase 
 76.18  to pay the tax.  The commissioner must advise residents of this 
 76.19  state how to pay sales and use tax. 
 76.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 76.21  following final enactment. 
 76.22     Sec. 42.  [WAITE PARK; LOCAL SALES TAX AUTHORIZED.] 
 76.23     Notwithstanding Minnesota Statutes, section 477A.016, or 
 76.24  any other provision of law, ordinance, or charter, the city of 
 76.25  Waite Park may impose a sales and use tax of one-half of one 
 76.26  percent pursuant to approval of the city voters at an election 
 76.27  held in November 2003. 
 76.28     Revenues from the tax imposed under this section must be 
 76.29  used for the purposes listed in Laws 2002, chapter 377, article 
 76.30  11, section 2, subdivision 2, and approved by the voters in the 
 76.31  November 2003 referendum.  The amount of revenues collected from 
 76.32  this tax which may be spent for airport costs under Laws 2002, 
 76.33  chapter 377, article 11, section 2, subdivision 2, paragraph 
 76.34  (a), is limited to $25,000 for each quarter in which the tax is 
 76.35  imposed with the remainder returned to the city to be spent on 
 76.36  the other allowed uses. 
 77.1      The tax under this section shall be imposed beginning July 
 77.2   1, 2004, and shall expire at the same time as the taxes imposed 
 77.3   under Laws 2002, chapter 377, article 11, section 2. 
 77.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 77.5   following final enactment, upon compliance of the governing body 
 77.6   of the city of Waite Park with Minnesota Statutes, section 
 77.7   645.021, subdivision 3. 
 77.8      Sec. 43.  [CITY OF WASECA; SALES AND USE TAX.] 
 77.9      Subdivision 1.  [SALES AND USE TAX 
 77.10  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
 77.11  477A.016, or any other provision of law, ordinance, or city 
 77.12  charter, the city of Waseca may, by ordinance, impose a sales 
 77.13  and use tax of one-half of one percent for the purposes 
 77.14  specified in subdivision 2.  The provisions of Minnesota 
 77.15  Statutes, section 297A.99, govern the imposition, 
 77.16  administration, collection, and enforcement of the tax 
 77.17  authorized under this subdivision. 
 77.18     Subd. 2.  [USE OF REVENUES.] The proceeds of the tax 
 77.19  imposed under this section must be used to pay for up to 
 77.20  $1,820,000 in costs related to one or more of the following 
 77.21  capital projects as described in the referendum in subdivision 3:
 77.22     (1) water quality and lake improvements; 
 77.23     (2) community center improvements; 
 77.24     (3) an industrial incubator; and 
 77.25     (4) downtown improvements, including a theatre and blighted 
 77.26  property acquisition. 
 77.27     Subd. 3.  [REFERENDUM.] If the Waseca city council proposes 
 77.28  to impose the tax authorized by this section, the question of 
 77.29  imposing the tax must be submitted to the voters at the next 
 77.30  general election.  The tax may not be imposed unless the 
 77.31  majority of votes cast on the question of imposing the tax are 
 77.32  in the affirmative.  The specific projects to be funded by the 
 77.33  tax must be identified at least 90 days before the referendum is 
 77.34  held and included in the question presented at the election.  
 77.35  The question must state that the sales tax revenues would be 
 77.36  pledged to pay any bonds issued under subdivision 4 and that 
 78.1   these bonds are guaranteed by the city's property taxes. 
 78.2      Subd. 4.  [BONDING AUTHORITY.] The city may issue bonds 
 78.3   under Minnesota Statutes, chapter 475, to finance the capital 
 78.4   expenditure and improvement projects authorized under 
 78.5   subdivision 2 and approved under subdivision 3.  The total 
 78.6   amount of bonds issued for the projects approved in subdivision 
 78.7   3 may not exceed $1,820,000 in aggregate.  An election to 
 78.8   approve the bonds, as required under Minnesota Statutes, section 
 78.9   475.58, is not required. 
 78.10     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
 78.11  this section expire at the earlier of (1) ten years after the 
 78.12  taxes are first imposed, or (2) when the city council first 
 78.13  determines that the amount of revenues raised is sufficient to 
 78.14  finance the capital projects approved under subdivision 3 and to 
 78.15  prepay or retire at maturity the principal, interest, and 
 78.16  premium due on any bonds issued under subdivision 4.  Any funds 
 78.17  remaining after completion of the projects may be placed in the 
 78.18  general funds of the city. 
 78.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 78.20  compliance with the governing body of the city of Waseca with 
 78.21  Minnesota Statutes, section 645.021, subdivision 3. 
 78.22     Sec. 44.  [CITY OF WINONA.] 
 78.23     Subdivision 1.  [SALES AND USE TAX 
 78.24  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
 78.25  477A.016, or any other provision of law, ordinance, or city 
 78.26  charter, if approved by the voters pursuant to Minnesota 
 78.27  Statutes, section 297A.99, the city of Winona may impose by 
 78.28  ordinance a sales and use tax of one-half of one percent for the 
 78.29  purposes specified in subdivision 3.  The provisions of 
 78.30  Minnesota Statutes, section 297A.99, govern the imposition, 
 78.31  administration, collection, and enforcement of the tax 
 78.32  authorized under this subdivision. 
 78.33     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
 78.34  Minnesota Statutes, section 477A.016, or any other provision of 
 78.35  law, ordinance, or city charter, the city of Winona may impose 
 78.36  by ordinance, for the purposes specified in subdivision 3, an 
 79.1   excise tax of up to $20 per motor vehicle, as defined by 
 79.2   ordinance, purchased or acquired from any person engaged within 
 79.3   the city in the business of selling motor vehicles at retail. 
 79.4      Subd. 3.  [USE OF REVENUES.] Revenues received from the 
 79.5   taxes authorized by subdivisions 1 and 2 must be dedicated to 
 79.6   pay all or part of the capital or administrative costs of 
 79.7   transportation projects or transportation improvements located 
 79.8   within the city, and to pay the cost of collecting and 
 79.9   administering the tax.  Authorized expenses include, but are not 
 79.10  limited to, acquiring property and paying construction and 
 79.11  engineering expenses related to the improvements. 
 79.12     Subd. 4.  [TERMINATION OF TAX.] The taxes imposed under 
 79.13  subdivisions 1 and 2 expire when the Winona City Council 
 79.14  determines that sufficient funds have been received from the tax 
 79.15  to pay the costs of the transportation projects or improvements 
 79.16  to which the tax was dedicated or ten years after imposition of 
 79.17  the tax, whichever is earlier.  Any funds remaining after 
 79.18  completion of the transportation project or transportation 
 79.19  improvements may be placed in a capital project fund of the city.
 79.20  The tax imposed under subdivisions 1 and 2 may expire at an 
 79.21  earlier time if the city so determines by ordinance. 
 79.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 79.23  compliance by the governing body of the city of Winona with 
 79.24  Minnesota Statutes, section 645.021, subdivision 3. 
 79.25     Sec. 45.  [DISTRIBUTION.] 
 79.26     For revenues from sales after December 31, 2005, and before 
 79.27  January 1, 2007, 95 percent of all revenues, including penalties 
 79.28  and interest, derived from the tax imposed under Minnesota 
 79.29  Statutes, section 297A.62, subdivision 2, are appropriated to 
 79.30  the commissioner of revenue for distribution to counties as 
 79.31  provided in this section.  For sales after December 31, 2006, 
 79.32  the total amount distributed under this section for each year is 
 79.33  the same amount that was distributed for sales in 2006.  Fifty 
 79.34  percent of the revenue must be allocated among all counties on a 
 79.35  per capita basis and 50 percent of the revenue must be allocated 
 79.36  to the county where the retail sale was made.  The commissioner 
 80.1   shall determine the county in which a retail sale was made by 
 80.2   using zip codes.  The commissioner shall distribute the revenue 
 80.3   to counties on or before the last day of each calendar quarter. 
 80.4   The revenue distributed to counties must be used to reduce 
 80.5   property taxes.  To qualify for this distribution, a county must 
 80.6   certify to the commissioner of revenue that it has increased its 
 80.7   funding for chemical dependency treatment programs that tend to 
 80.8   reduce the burden of property taxation caused by individuals who 
 80.9   are chemically dependent.  The amount of the increase must be at 
 80.10  least ten percent of the amount to be distributed. 
 80.11     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
 80.12  after December 31, 2005. 
 80.13                             ARTICLE 3
 80.14                           PROPERTY TAXES
 80.15     Section 1.  Minnesota Statutes 2002, section 126C.17, 
 80.16  subdivision 6, is amended to read: 
 80.17     Subd. 6.  [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal 
 80.18  year 2003 and later through 2006, a district's referendum 
 80.19  equalization levy equals the sum of the first tier referendum 
 80.20  equalization levy and the second tier referendum equalization 
 80.21  levy. 
 80.22     (b) A district's first tier referendum equalization levy 
 80.23  equals the district's first tier referendum equalization revenue 
 80.24  times the lesser of one or the ratio of the district's 
 80.25  referendum market value per resident marginal cost pupil unit to 
 80.26  $476,000. 
 80.27     (c) A district's second tier referendum equalization levy 
 80.28  equals the district's second tier referendum equalization 
 80.29  revenue times the lesser of one or the ratio of the district's 
 80.30  referendum market value per resident marginal cost pupil unit to 
 80.31  $270,000. 
 80.32     Sec. 2.  Minnesota Statutes 2002, section 126C.17, is 
 80.33  amended by adding a subdivision to read: 
 80.34     Subd. 6a.  [LOCAL EFFORT LEVEL.] (a) For fiscal year 2007 
 80.35  and later, a district's local effort level equals the sum of the 
 80.36  first tier referendum equalization level and the second tier 
 81.1   referendum local effort level. 
 81.2      (b) A district's first tier referendum local effort level 
 81.3   equals the district's first tier referendum equalization revenue 
 81.4   times the lesser of one or the ratio of the district's 
 81.5   referendum market value per resident marginal cost pupil unit to 
 81.6   $476,000. 
 81.7      (c) A district's second tier referendum local effort level 
 81.8   equals the district's second tier referendum equalization 
 81.9   revenue times the lesser of one or the ratio of the district's 
 81.10  referendum market value per resident marginal cost pupil unit to 
 81.11  $270,000. 
 81.12     Sec. 3.  Minnesota Statutes 2002, section 126C.17, is 
 81.13  amended by adding a subdivision to read: 
 81.14     Subd. 6b.  [LOCAL EFFORT REVENUE.] (a) For fiscal years 
 81.15  2007 and later, a school district's local effort revenue is 
 81.16  equal to its local effort level for that year. 
 81.17     (b) For referenda authorized under subdivision 9 prior to 
 81.18  June 30, 2005, a school district's local effort revenue must be 
 81.19  levied against the district's referendum market value according 
 81.20  to subdivision 10. 
 81.21     (c) For referenda authorized or renewed under subdivision 9 
 81.22  after June 30, 2005, that have been approved to be levied 
 81.23  against referendum market value, the local effort revenue must 
 81.24  be levied against the district's referendum market value 
 81.25  according to subdivision 10. 
 81.26     (d) For referenda authorized or renewed under subdivision 9 
 81.27  after June 30, 2005, that have been approved to be imposed as a 
 81.28  school referendum tax according to section 290.0621, the local 
 81.29  effort revenue must be raised as a tax against income liability 
 81.30  according to section 290.0621. 
 81.31     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
 81.32  126C.17, subdivision 7, is amended to read: 
 81.33     Subd. 7.  [REFERENDUM EQUALIZATION AID.] (a) For fiscal 
 81.34  years 2004 through 2006, a district's referendum equalization 
 81.35  aid equals the difference between its referendum equalization 
 81.36  revenue and levy.  For fiscal years 2007 and later, a district's 
 82.1   referendum equalization aid equals the difference between its 
 82.2   referendum equalization revenue and its local effort revenue. 
 82.3      (b) If a district's actual levy for first or second tier 
 82.4   referendum equalization revenue in fiscal years 2004 through 
 82.5   2006 is less than its maximum levy limit for that tier, aid 
 82.6   shall be proportionately reduced.  If a district's actual local 
 82.7   effort revenue for first or second tier referendum equalization 
 82.8   revenue in fiscal years 2007 and later is less than its maximum 
 82.9   local effort revenue limit for that tier, aid shall be 
 82.10  proportionately reduced. 
 82.11     (c) Notwithstanding paragraph (a), the referendum 
 82.12  equalization aid for a district, where the referendum 
 82.13  equalization aid under paragraph (a) exceeds 90 percent of the 
 82.14  referendum revenue, must not exceed 18.6 percent of the formula 
 82.15  allowance times the district's resident marginal cost pupil 
 82.16  units.  For fiscal years 2004 through 2006, a district's 
 82.17  referendum levy is increased by the amount of any reduction in 
 82.18  referendum aid under this paragraph.  For fiscal years 2007 and 
 82.19  later, a district's local effort level is increased by the 
 82.20  amount of any reduction in referendum aid under this paragraph. 
 82.21     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
 82.22  126C.17, subdivision 9, is amended to read: 
 82.23     Subd. 9.  [REFERENDUM REVENUE.] (a) The revenue authorized 
 82.24  by section 126C.10, subdivision 1, may be increased in the 
 82.25  amount approved by the voters of the district at a referendum 
 82.26  called for the purpose.  The referendum may be called by the 
 82.27  board or shall be called by the board upon written petition of 
 82.28  qualified voters of the district.  The referendum must be 
 82.29  conducted one or two calendar years before the increased levy 
 82.30  authority, if approved, first becomes payable.  Only one 
 82.31  election to approve an increase may be held in a calendar year.  
 82.32  Unless the referendum is conducted by mail under paragraph (g), 
 82.33  the referendum must be held on the first Tuesday after the first 
 82.34  Monday in November.  The ballot must state the maximum amount of 
 82.35  the increased revenue per resident marginal cost pupil unit, the 
 82.36  estimated referendum tax rate as a percentage of referendum 
 83.1   market value in the first year it is to be levied, and that the 
 83.2   revenue must be used to finance school operations.  The ballot 
 83.3   may state a schedule, determined by the board, of increased 
 83.4   revenue per resident marginal cost pupil unit that differs from 
 83.5   year to year over the number of years for which the increased 
 83.6   revenue is authorized.  If the ballot contains a schedule 
 83.7   showing different amounts, it must also indicate the estimated 
 83.8   referendum tax rate as a percent of referendum market value for 
 83.9   the amount specified for the first year and for the maximum 
 83.10  amount specified in the schedule.  The ballot, including a 
 83.11  ballot on the question to revoke or reduce the increased revenue 
 83.12  amount under paragraph (c), must abbreviate the term "per 
 83.13  resident marginal cost pupil unit" as "per pupil unit."  The 
 83.14  ballot may state that existing referendum levy taxing authority 
 83.15  is expiring.  In this case, if the referendum authority is based 
 83.16  on a property tax levy, the ballot may also compare the proposed 
 83.17  levy authority to the existing expiring levy authority, and 
 83.18  express the proposed increase as the amount, if any, over the 
 83.19  expiring referendum levy authority.  The ballot must designate 
 83.20  the specific number of years, not to exceed ten, for which the 
 83.21  referendum authorization applies.  The notice required under 
 83.22  section 275.60 may be modified to read, in cases of renewing 
 83.23  existing levies: 
 83.24     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
 83.25     FOR A PROPERTY TAX INCREASE." 
 83.26     If the referendum is on a proposed income tax under section 
 83.27  290.0621, the notice must read: 
 83.28     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
 83.29  FOR AN INCOME TAX INCREASE." 
 83.30     The ballot may contain a textual portion with the 
 83.31  information required in this subdivision and a question stating 
 83.32  substantially the following:  
 83.33     "Shall the increase in the revenue proposed by (petition 
 83.34  to) the board of ........., School District No. .., be approved?"
 83.35     If approved, an amount equal to the approved revenue per 
 83.36  resident marginal cost pupil unit times the resident marginal 
 84.1   cost pupil units for the school year beginning in the year after 
 84.2   the levy is certified or the income tax is imposed shall be 
 84.3   authorized for certification for the number of years approved, 
 84.4   if applicable, or until revoked or reduced by the voters of the 
 84.5   district at a subsequent referendum.  A referendum may be 
 84.6   conducted on the question of converting an existing referendum 
 84.7   property tax levy to a school referendum income tax to be 
 84.8   imposed under section 290.0621. 
 84.9      (b) The board must prepare and deliver by first class mail 
 84.10  at least 15 days but no more than 30 days before the day of the 
 84.11  referendum to each taxpayer a notice of the referendum and the 
 84.12  proposed revenue increase.  The board need not mail more than 
 84.13  one notice to any taxpayer.  For the purpose of giving mailed 
 84.14  notice under this subdivision for a referendum based on a 
 84.15  property tax levy, owners must be those shown to be owners on 
 84.16  the records of the county auditor or, in any county where tax 
 84.17  statements are mailed by the county treasurer, on the records of 
 84.18  the county treasurer.  Every property owner whose name does not 
 84.19  appear on the records of the county auditor or the county 
 84.20  treasurer is deemed to have waived this mailed notice unless the 
 84.21  owner has requested in writing that the county auditor or county 
 84.22  treasurer, as the case may be, include the name on the records 
 84.23  for this purpose.  The notice for a referendum based on a 
 84.24  property tax levy must project the anticipated amount of tax 
 84.25  increase in annual dollars and annual percentage for typical 
 84.26  residential homesteads, agricultural homesteads, apartments, and 
 84.27  commercial-industrial property within the school district.  For 
 84.28  the purpose of giving mailed notice under this subdivision, for 
 84.29  a referendum based on an income tax under section 290.0621, 
 84.30  taxpayers must be those shown to be domiciled in the school 
 84.31  district as indicated on the space which must be provided for 
 84.32  this information on the Minnesota individual income tax form for 
 84.33  the taxable year ending before the calendar year when the 
 84.34  referendum is conducted.  Every individual whose domicile is in 
 84.35  the school district whose name does not appear on the income tax 
 84.36  return as having a domicile in the district is deemed to have 
 85.1   waived this mailed notice unless the individual has requested in 
 85.2   writing that the county auditor or county treasurer, as the case 
 85.3   may be, include the individual's name on the records for this 
 85.4   purpose.  The notice must project the anticipated amount of tax 
 85.5   increase in annual dollars and annual percentage for typical 
 85.6   family incomes within the school district. 
 85.7      The notice for a referendum based on a property tax levy 
 85.8   may state that an existing referendum levy is expiring and 
 85.9   project the anticipated amount of increase over the existing 
 85.10  referendum levy in the first year, if any, in annual dollars and 
 85.11  annual percentage for typical residential homesteads, 
 85.12  agricultural homesteads, apartments, and commercial-industrial 
 85.13  property within the district. 
 85.14     The notice must include the following statement:  "Passage 
 85.15  of this referendum will result in an increase in your property 
 85.16  taxes."  However, in cases of renewing existing levies, the 
 85.17  notice may include the following statement:  "Passage of this 
 85.18  referendum may result in an increase in your property taxes." 
 85.19     The notice for a referendum based on income tax may state 
 85.20  that an existing income tax referendum authority is expiring and 
 85.21  project the anticipated amount of increase over the existing 
 85.22  referendum levy in the first year, if any, in annual dollars and 
 85.23  annual percentage for typical family incomes within the district.
 85.24     The notice must include the following statement:  "Passage 
 85.25  of this referendum will result in an increase in your personal 
 85.26  income taxes."  However, in cases of renewing existing income 
 85.27  tax referendum authorities, the notice may include the following 
 85.28  statement:  "Passage of this referendum may result in an 
 85.29  increase in your personal income taxes." 
 85.30     (c) A referendum on the question of revoking or reducing 
 85.31  the increased revenue amount authorized pursuant to paragraph 
 85.32  (a) may be called by the board and shall be called by the board 
 85.33  upon the written petition of qualified voters of the district.  
 85.34  A referendum to revoke or reduce the revenue amount must state 
 85.35  the amount per resident marginal cost pupil unit by which the 
 85.36  authority is to be reduced.  Revenue authority approved by the 
 86.1   voters of the district pursuant to paragraph (a) must be 
 86.2   available to the school district at least once before it is 
 86.3   subject to a referendum on its revocation or reduction for 
 86.4   subsequent years.  Only one revocation or reduction referendum 
 86.5   may be held to revoke or reduce referendum revenue for any 
 86.6   specific year and for years thereafter. 
 86.7      (d) A petition authorized by paragraph (a) or (c) is 
 86.8   effective if signed by a number of qualified voters in excess of 
 86.9   15 percent of the registered voters of the district on the day 
 86.10  the petition is filed with the board.  A referendum invoked by 
 86.11  petition must be held on the date specified in paragraph (a). 
 86.12     (e) The approval of 50 percent plus one of those voting on 
 86.13  the question is required to pass a referendum authorized by this 
 86.14  subdivision. 
 86.15     (f) At least 15 days before the day of the referendum, the 
 86.16  district must submit a copy of the notice required under 
 86.17  paragraph (b) to the commissioner and to the county auditor of 
 86.18  each county in which the district is located.  Within 15 days 
 86.19  after the results of the referendum have been certified by the 
 86.20  board, or in the case of a recount, the certification of the 
 86.21  results of the recount by the canvassing board, the district 
 86.22  must notify the commissioner of the results of the referendum. 
 86.23     <b>[EFFECTIVE DATE.]</b> This section is effective for referenda 
 86.24  conducted on or after July 1, 2004. 
 86.25     Sec. 6.  Minnesota Statutes 2002, section 272.02, 
 86.26  subdivision 22, is amended to read: 
 86.27     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] All real and 
 86.28  personal property of a wind energy conversion system as defined 
 86.29  in section 272.029, subdivision 2, is exempt from property tax 
 86.30  except that the land on which the property is located remains 
 86.31  taxable.  If approved by the county where the property is 
 86.32  located, the value of the land on which the wind energy 
 86.33  conversion system is located shall not be increased or 
 86.34  decreased, but shall be valued in the same manner as similar 
 86.35  land that has not been improved with a wind energy conversion 
 86.36  system.  The land shall be classified based on the most probable 
 87.1   use of the property if it were not improved with a wind energy 
 87.2   conversion system. 
 87.3      <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 87.4   year 2004 and thereafter, for taxes payable in 2005 and 
 87.5   thereafter. 
 87.6      Sec. 7.  Minnesota Statutes 2003 Supplement, section 
 87.7   272.02, subdivision 47, is amended to read: 
 87.8      Subd. 47.  [POULTRY LITTER BIOMASS GENERATION FACILITY; 
 87.9   PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
 87.10  attached machinery and other personal property which is part of 
 87.11  an electrical generating facility that meets the requirements of 
 87.12  this subdivision is exempt.  At the time of construction, the 
 87.13  facility must: 
 87.14     (1) be designed to utilize poultry litter as a primary fuel 
 87.15  source; and 
 87.16     (2) be constructed for the purpose of generating power at 
 87.17  the facility that will be sold pursuant to a contract approved 
 87.18  by the Public Utilities Commission in accordance with the 
 87.19  biomass mandate imposed under section 216B.2424. 
 87.20     Construction of the facility must be commenced after 
 87.21  January 1, 2003, and before December 31, 2003 2004.  Property 
 87.22  eligible for this exemption does not include electric 
 87.23  transmission lines and interconnections or gas pipelines and 
 87.24  interconnections appurtenant to the property or the facility. 
 87.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 87.26  levied in 2004, payable in 2005, and thereafter. 
 87.27     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
 87.28  272.02, subdivision 56, is amended to read: 
 87.29     Subd. 56.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 87.30  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 87.31  attached machinery and other personal property which is part of 
 87.32  a combined-cycle combustion-turbine electric generation facility 
 87.33  that exceeds 550 300 megawatts of installed capacity and that 
 87.34  meets the requirements of this subdivision is exempt.  At the 
 87.35  time of construction, the facility must: 
 87.36     (1) be designed to utilize natural gas as a primary fuel; 
 88.1      (2) not be owned by a public utility as defined in section 
 88.2   216B.02, subdivision 4; 
 88.3      (3) be located within five miles of an existing natural gas 
 88.4   pipeline and within four miles of an existing electrical 
 88.5   transmission substation; 
 88.6      (4) be located outside the metropolitan area as defined 
 88.7   under section 473.121, subdivision 2; and 
 88.8      (5) be designed to provide energy and ancillary services 
 88.9   and have received a certificate of need under section 216B.243. 
 88.10     (b) Construction of the facility must be commenced after 
 88.11  January 1, 2004, and before January 1, 2007, except that 
 88.12  property eligible for this exemption includes any expansion of 
 88.13  the facility that also meets the requirements of paragraph (a), 
 88.14  clauses (1) to (5), without regard to the date that construction 
 88.15  of the expansion commences.  Property eligible for this 
 88.16  exemption does not include electric transmission lines and 
 88.17  interconnections or gas pipelines and interconnections 
 88.18  appurtenant to the property or the facility. 
 88.19     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 88.20  levied in 2005, payable in 2006, and thereafter. 
 88.21     Sec. 9.  Minnesota Statutes 2002, section 272.02, is 
 88.22  amended by adding a subdivision to read: 
 88.23     Subd. 68.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 88.24  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 88.25  attached machinery and other personal property which is part of 
 88.26  a simple-cycle combustion-turbine electric generation facility 
 88.27  that exceeds 290 megawatts of installed capacity and that meets 
 88.28  the requirements of this subdivision is exempt.  At the time of 
 88.29  construction, the facility must: 
 88.30     (1) be designed to utilize natural gas as a primary fuel; 
 88.31     (2) not be owned by a public utility as defined in section 
 88.32  216B.02, subdivision 4; 
 88.33     (3) be located within five miles of an existing natural gas 
 88.34  pipeline and within five miles of an existing electrical 
 88.35  transmission substation; 
 88.36     (4) be located outside the metropolitan area as defined 
 89.1   under section 473.121, subdivision 2; 
 89.2      (5) be designed to provide peaking capacity energy and 
 89.3   ancillary services and have satisfied all of the requirements 
 89.4   under section 216B.243; and 
 89.5      (6) have received, by resolution, the approval from the 
 89.6   governing body of the county, city, and school district in which 
 89.7   the proposed facility is to be located for the exemption of 
 89.8   personal property under this subdivision. 
 89.9      (b) Construction of the facility must be commenced after 
 89.10  January 1, 2005, and before January 1, 2009.  Property eligible 
 89.11  for this exemption does not include electric transmission lines 
 89.12  and interconnections or gas pipelines and interconnections 
 89.13  appurtenant to the property or the facility. 
 89.14     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 89.15  year 2006, taxes payable in 2007, and thereafter. 
 89.16     Sec. 10.  Minnesota Statutes 2002, section 272.02, is 
 89.17  amended by adding a subdivision to read: 
 89.18     Subd. 69.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 89.19  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 89.20  machinery and other personal property which is part of a 
 89.21  simple-cycle, combustion-turbine electric generation facility 
 89.22  that exceeds 300 megawatts of installed capacity and that meets 
 89.23  the requirements of this subdivision is exempt.  At the time of 
 89.24  the construction, the facility must: 
 89.25     (1) be designed to utilize natural gas as a primary fuel; 
 89.26     (2) be owned by a public utility as defined in section 
 89.27  216B.02, subdivision 4, and be located at or interconnected with 
 89.28  an existing generating plant of the utility; 
 89.29     (3) be designed to provide peaking, emergency backup, or 
 89.30  contingency services; 
 89.31     (4) satisfy a resource need identified in an approved 
 89.32  integrated resource plan filed under section 216B.2422; and 
 89.33     (5) have received, by resolution, the approval from the 
 89.34  governing body of the county and the city for the exemption of 
 89.35  personal property under this subdivision. 
 89.36     Construction of the facility must be commenced after 
 90.1   January 1, 2004, and before January 1, 2006.  Property eligible 
 90.2   for this exemption does not include electric transmission lines 
 90.3   and interconnections or gas pipelines and interconnections 
 90.4   appurtenant to the property or the facility. 
 90.5      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 90.6   assessment year 2005, for taxes payable in 2006, and thereafter. 
 90.7      Sec. 11.  Minnesota Statutes 2002, section 272.02, is 
 90.8   amended by adding a subdivision to read: 
 90.9      Subd. 70.  [ELECTRIC GENERATION FACILITY PERSONAL 
 90.10  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and 
 90.11  section 453.54, subdivision 20, attached machinery and other 
 90.12  personal property which is part of an electric generation 
 90.13  facility that exceeds 150 megawatts of installed capacity and 
 90.14  meets the requirements of this subdivision is exempt.  At the 
 90.15  time of construction, the facility must: 
 90.16     (1) be designed to utilize natural gas as a primary fuel; 
 90.17     (2) be owned and operated by a municipal power agency as 
 90.18  defined in section 453.52, subdivision 8; 
 90.19     (3) have received the certificate of need under section 
 90.20  216B.243; 
 90.21     (4) be located outside the metropolitan area as defined 
 90.22  under section 473.121, subdivision 2; and 
 90.23     (5) be designed to be a combined-cycle facility, although 
 90.24  initially the facility will be operated as a simple-cycle 
 90.25  combustion turbine. 
 90.26     (b) To qualify under this subdivision, an agreement must be 
 90.27  negotiated between the municipal power agency and the host city, 
 90.28  for a payment in lieu of property taxes to the host city. 
 90.29     (c) Construction of the facility must be commenced after 
 90.30  January 1, 2004, and before January 1, 2006.  Property eligible 
 90.31  for this exemption does not include electric transmission lines 
 90.32  and interconnections or gas pipelines and interconnections 
 90.33  appurtenant to the property or the facility. 
 90.34     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 90.35  year 2005, taxes payable in 2006, and thereafter. 
 90.36     Sec. 12.  Minnesota Statutes 2002, section 272.02, is 
 91.1   amended by adding a subdivision to read: 
 91.2      Subd. 71.  [BIOMASS ELECTRIC GENERATION FACILITY; PERSONAL 
 91.3   PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 91.4   attached machinery and other personal property which is a part 
 91.5   of an electric generation facility, including remote boilers 
 91.6   that comprise part of the district heating system, generating up 
 91.7   to 30 megawatts of installed capacity and that meets the 
 91.8   requirements of this subdivision is exempt.  At the time of 
 91.9   construction, the facility must: 
 91.10     (1) be designed to utilize a minimum 90 percent waste 
 91.11  biomass as a fuel; 
 91.12     (2) not be owned by a public utility as defined in section 
 91.13  216B.02, subdivision 4; 
 91.14     (3) be located within a city of the first class and have 
 91.15  its primary location at a former garbage transfer station; and 
 91.16     (4) be designed to have capability to provide baseload 
 91.17  energy and district heating. 
 91.18     (b) Construction of the facility must be commenced after 
 91.19  January 1, 2004, and before January 1, 2008.  Property eligible 
 91.20  for this exemption does not include electric transmission lines 
 91.21  and interconnections or gas pipelines and interconnections 
 91.22  appurtenant to the property or the facility. 
 91.23     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 91.24  year 2005, taxes payable in 2006, and thereafter. 
 91.25     Sec. 13.  Minnesota Statutes 2002, section 272.02, is 
 91.26  amended by adding a subdivision to read: 
 91.27     Subd. 72.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 91.28  PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), 
 91.29  attached machinery and other personal property that is part of 
 91.30  either a simple-cycle, combustion-turbine electric generation 
 91.31  facility that equals or exceeds 150 megawatts of installed 
 91.32  capacity, or a combined-cycle, combustion-turbine electric 
 91.33  generation facility that equals or exceeds 225 megawatts of 
 91.34  installed capacity, and that in either case meets the 
 91.35  requirements of this subdivision, is exempt.  At the time of 
 91.36  construction, the facility must: 
 92.1      (1) be designed to utilize natural gas as a primary fuel; 
 92.2      (2) not be owned by a public utility as defined in section 
 92.3   216B.02, subdivision 4; 
 92.4      (3) be located in a metropolitan county defined in section 
 92.5   473.121, subdivision 4, that has a population greater than 
 92.6   190,000 and less than 225,000 in the most recent federal 
 92.7   decennial census, within one mile of an existing natural gas 
 92.8   pipeline, and within one mile of an existing electrical 
 92.9   transmission substation; and 
 92.10     (4) be designed to provide energy and ancillary services 
 92.11  and have received a certificate of need under section 216B.243. 
 92.12     (b) Construction of the facility must be commenced after 
 92.13  January 1, 2005, and before January 1, 2008.  Property eligible 
 92.14  for this exemption does not include electric transmission lines 
 92.15  and interconnections or gas pipelines and interconnections 
 92.16  appurtenant to the property or the facility. 
 92.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 92.18  levied in 2005, payable in 2006, and thereafter. 
 92.19     Sec. 14.  Minnesota Statutes 2002, section 272.02, is 
 92.20  amended by adding a subdivision to read: 
 92.21     Subd. 73.  [PERSONAL RAPID TRANSIT SYSTEM.] All property 
 92.22  used in the operation and support of a personal rapid transit 
 92.23  system as defined in section 297A.61, subdivision 37, that 
 92.24  provides service to the public on a regular and continuing 
 92.25  basis, is exempt, provided that it is operated independent of 
 92.26  any government subsidies. 
 92.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 92.28  payable in 2005 and subsequent years. 
 92.29     Sec. 15.  Minnesota Statutes 2002, section 272.029, 
 92.30  subdivision 4, is amended to read: 
 92.31     Subd. 4.  [REPORTS.] (a) An owner of a wind energy 
 92.32  conversion system subject to tax under subdivision 3 shall file 
 92.33  a report with the commissioner of revenue annually on or before 
 92.34  March 1 February 1 detailing the amount of electricity in 
 92.35  kilowatt-hours that was produced by the wind energy conversion 
 92.36  system for the previous calendar year.  The commissioner shall 
 93.1   prescribe the form of the report.  The report must contain the 
 93.2   information required by the commissioner to determine the tax 
 93.3   due to each county under this section for the current year.  If 
 93.4   an owner of a wind energy conversion system subject to taxation 
 93.5   under this section fails to file the report by the due date, the 
 93.6   commissioner of revenue shall determine the tax based upon the 
 93.7   nameplate capacity of the system multiplied by a capacity factor 
 93.8   of 40 percent. 
 93.9      (b) On or before March 31 February 28, the commissioner of 
 93.10  revenue shall notify the owner of the wind energy conversion 
 93.11  systems of the tax due to each county for the current year and 
 93.12  shall certify to the county auditor of each county in which the 
 93.13  systems are located the tax due from each owner for the current 
 93.14  year. 
 93.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 93.16  payable in 2005 and thereafter. 
 93.17     Sec. 16.  Minnesota Statutes 2002, section 272.029, 
 93.18  subdivision 6, is amended to read: 
 93.19     Subd. 6.  [DISTRIBUTION OF REVENUES.] Revenues from the 
 93.20  taxes imposed under subdivision 5 must be part of the settlement 
 93.21  between the county treasurer and the county auditor under 
 93.22  section 276.09.  The revenue must be distributed by the county 
 93.23  auditor or the county treasurer to all local taxing 
 93.24  jurisdictions in which the wind energy conversion system is 
 93.25  located, in the same proportion that each of the taxing 
 93.26  jurisdiction's current previous year's net tax capacity based 
 93.27  tax rate is to the current previous year's total local net tax 
 93.28  capacity based rate. 
 93.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 93.30  payable in 2004 and thereafter. 
 93.31     Sec. 17.  Minnesota Statutes 2003 Supplement, section 
 93.32  273.11, subdivision 1a, is amended to read: 
 93.33     Subd. 1a.  [LIMITED MARKET VALUE.] In the case of: 
 93.34     (1) all property classified as agricultural homestead or 
 93.35  nonhomestead, residential homestead or nonhomestead, timber, or 
 93.36  noncommercial seasonal residential recreational, or class 1c 
 94.1   resort property; and 
 94.2      (2) property classified as commercial-industrial that has a 
 94.3   total market value less than $500,000, the assessor shall 
 94.4   compare the value with the taxable portion of the value 
 94.5   determined in the preceding assessment except that for class 1c 
 94.6   resort property for assessment year 2004, the assessor shall 
 94.7   determine the limited market value as provided in subdivision 1b.
 94.8      For assessment year 2002, the amount of the increase shall 
 94.9   not exceed the greater of (1) ten percent of the value in the 
 94.10  preceding assessment, or (2) 15 percent of the difference 
 94.11  between the current assessment and the preceding assessment. 
 94.12     For assessment year 2003 and thereafter, the amount of the 
 94.13  increase shall not exceed the greater of (1) 12 percent of the 
 94.14  value in the preceding assessment, or (2) 20 percent of the 
 94.15  difference between the current assessment and the preceding 
 94.16  assessment. 
 94.17     For assessment year 2004, the amount of the increase shall 
 94.18  not exceed the greater of (1) 15 percent of the value in the 
 94.19  preceding assessment, or (2) 25 percent of the difference 
 94.20  between the current assessment and the preceding assessment. 
 94.21     For assessment year 2005, the amount of the increase shall 
 94.22  not exceed the greater of (1) 15 percent of the value in the 
 94.23  preceding assessment, or (2) 33 percent of the difference 
 94.24  between the current assessment and the preceding assessment.  
 94.25     For assessment year 2006, the amount of the increase shall 
 94.26  not exceed the greater of (1) 15 percent of the value in the 
 94.27  preceding assessment, or (2) 50 percent of the difference 
 94.28  between the current assessment and the preceding assessment. 
 94.29     This limitation shall not apply to increases in value due 
 94.30  to improvements.  For purposes of this subdivision, the term 
 94.31  "assessment" means the value prior to any exclusion under 
 94.32  subdivision 16. 
 94.33     The provisions of this subdivision shall be in effect 
 94.34  through assessment year 2006 as provided in this subdivision. 
 94.35     For purposes of this subdivision and subdivision 1b, "class 
 94.36  1c resort property" includes the portion of the property 
 95.1   classified class 1a or 1b homestead, the portion of the property 
 95.2   classified 1c, plus any remaining portion of the resort that is 
 95.3   classified 4c under section 273.13, subdivision 25, paragraph 
 95.4   (d), clause (1). 
 95.5      For purposes of the assessment/sales ratio study conducted 
 95.6   under section 127A.48, and the computation of state aids paid 
 95.7   under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
 95.8   477A, market values and net tax capacities determined under this 
 95.9   subdivision and subdivision 16, shall be used. 
 95.10     In the case of commercial-industrial property that 
 95.11  qualifies under clause (2) of the first paragraph of this 
 95.12  subdivision, for the first assessment year when the total market 
 95.13  value of the property exceeds $500,000, 33 percent of the 
 95.14  difference between the current assessment and the preceding 
 95.15  assessment must be added to the limited market value.  For the 
 95.16  next assessment year, 50 percent of the difference between the 
 95.17  current assessment and the preceding assessment must be added to 
 95.18  the limited market value.  In the third assessment year after 
 95.19  the total market value of the property initially exceeds 
 95.20  $500,000, this subdivision will no longer apply to the property. 
 95.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 95.22  following final enactment for assessment year 2004, and 
 95.23  thereafter. 
 95.24     Sec. 18.  Minnesota Statutes 2002, section 273.11, is 
 95.25  amended by adding a subdivision to read: 
 95.26     Subd. 1b.  [CLASS 1C RESORTS; 2004 ASSESSMENT ONLY.] For 
 95.27  assessment year 2004, the valuation increase on class 1c resort 
 95.28  property shall not exceed the greater of (1) 15 percent of the 
 95.29  value of its 2002 assessment, or (2) 25 percent of the 
 95.30  difference in value between its 2004 assessment and its 2002 
 95.31  assessment.  The valuation increase on class 1c resort property 
 95.32  for the 2005 and 2006 assessment years shall be determined based 
 95.33  upon the schedule contained in subdivision 1a.  
 95.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 95.35  following final enactment. 
 95.36     Sec. 19.  Minnesota Statutes 2002, section 273.11, is 
 96.1   amended by adding a subdivision to read: 
 96.2      Subd. 21.  [VALUATION EXCLUSION FOR SEWAGE TREATMENT SYSTEM 
 96.3   IMPROVEMENTS.] Owners of property classified as class 1a, 1b, 
 96.4   1c, 2a, 4b, 4bb, or noncommercial 4c under section 273.13 may 
 96.5   apply for a valuation exclusion under this subdivision, provided 
 96.6   that the property is located in a county which has authorized 
 96.7   valuation exclusions under this subdivision, and provided that 
 96.8   the following conditions are met: 
 96.9      (1) a notice of noncompliance has been issued by a licensed 
 96.10  compliance inspector with regard to the individual sewage 
 96.11  treatment system serving the property under section 115.55, 
 96.12  subdivision 5b; 
 96.13     (2) the owner of the property furnishes documentation to 
 96.14  the satisfaction of the assessor that the property's individual 
 96.15  sewage treatment system has been replaced or refurbished, 
 96.16  including replacement of the individual system with a community 
 96.17  or cluster system, between May 1, 2004, and December 31, 2006; 
 96.18  and 
 96.19     (3) a certificate of compliance has been issued for the new 
 96.20  or refurbished system under section 115.55, subdivision 5. 
 96.21     Application must be made to the assessor on a form 
 96.22  prescribed by the commissioner of revenue.  Property meeting the 
 96.23  requirements of this subdivision is eligible for a valuation 
 96.24  exclusion equal to 50 percent of the actual costs incurred, to a 
 96.25  maximum exclusion of $7,500, for a period of five years, after 
 96.26  which the amount of the exclusion will be added to the estimated 
 96.27  market value of the property.  The valuation exclusion 
 96.28  terminates upon the sale of the property.  If a property owner 
 96.29  applies for exclusion under this subdivision between January 1 
 96.30  and June 30 of any year, the exclusion first applies for taxes 
 96.31  payable in the following year.  If a property owner applies for 
 96.32  exclusion under this subdivision between July 1 and December 31 
 96.33  of any year, the exclusion first applies for taxes payable in 
 96.34  the second following year. 
 96.35     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 96.36  payable in 2005 and subsequent years. 
 97.1      Sec. 20.  Minnesota Statutes 2002, section 273.11, is 
 97.2   amended by adding a subdivision to read: 
 97.3      Subd. 22.  [VALUATION EXCLUSION FOR LEAD HAZARD REDUCTION.] 
 97.4   Owners of property classified as class 1a, 1b, 1c, 2a, 4b, or 
 97.5   4bb under section 273.13 may apply for a valuation exclusion for 
 97.6   lead hazard reduction, provided that the property is located in 
 97.7   a city which has authorized valuation exclusions under this 
 97.8   subdivision.  A city which authorizes valuation exclusions under 
 97.9   this subdivision must establish guidelines for qualifying lead 
 97.10  hazard reduction projects and must designate an agency within 
 97.11  the city to issue certificates of completion of qualifying 
 97.12  projects.  For purposes of this subdivision, "lead hazard 
 97.13  reduction" has the same meaning as in section 144.9501, 
 97.14  subdivision 17. 
 97.15     The property owner must obtain a certificate from the city 
 97.16  stating that the project has been completed and stating the cost 
 97.17  incurred by the owner in completing the project.  Only projects 
 97.18  originating after April 30, 2004, may qualify for exclusion 
 97.19  under this subdivision.  The property owner shall apply for a 
 97.20  valuation exclusion to the assessor on a form prescribed by the 
 97.21  commissioner of revenue. 
 97.22     A qualifying property is eligible for a valuation exclusion 
 97.23  equal to 50 percent of the actual costs incurred, to a maximum 
 97.24  exclusion of $15,000, for a period of five years, after which 
 97.25  the amount of the exclusion will be added to the estimated 
 97.26  market value of the property.  The valuation exclusion shall 
 97.27  terminate upon the sale of the property.  If a property owner 
 97.28  applies for exclusion under this subdivision between January 1 
 97.29  and June 30 of any year, the exclusion shall first apply for 
 97.30  taxes payable in the following year.  If a property owner 
 97.31  applies for exclusion under this subdivision between July 1 and 
 97.32  December 31 of any year, the exclusion shall first apply for 
 97.33  taxes payable in the second following year. 
 97.34     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 97.35  payable in 2005 and subsequent years. 
 97.36     Sec. 21.  [273.1115] [AGGREGATE RESOURCE PRESERVATION 
 98.1   PROPERTY TAX LAW.] 
 98.2      Subdivision 1.  [REQUIREMENTS.] Real estate is entitled to 
 98.3   valuation under this section only if all of the following 
 98.4   requirements are met: 
 98.5      (1) the property is classified 1a, 1b, 2a, or 2b property 
 98.6   under section 273.13, subdivisions 22 and 23; 
 98.7      (2) the property is at least ten contiguous acres, when the 
 98.8   application is filed under subdivision 2; 
 98.9      (3) the owner has filed a completed application for 
 98.10  deferment as specified in subdivision 2 with the county assessor 
 98.11  in the county in which the property is located; 
 98.12     (4) there are no delinquent taxes on the property; and 
 98.13     (5) a covenant on the land restricts its use as provided in 
 98.14  subdivision 2, clause (4). 
 98.15     Subd. 2.  [APPLICATION.] Application for valuation 
 98.16  deferment under this section must be filed by May 1 of the 
 98.17  assessment year.  Any application filed and granted continues in 
 98.18  effect for subsequent years until the property no longer 
 98.19  qualifies, provided that supplemental affidavits under 
 98.20  subdivision 6 are timely filed.  The application must be filed 
 98.21  with the assessor of the county in which the real property is 
 98.22  located on such form as may be prescribed by the commissioner of 
 98.23  revenue.  The application must be executed and acknowledged in 
 98.24  the manner required by law to execute and acknowledge a deed and 
 98.25  must contain at least the following information and any other 
 98.26  information the commissioner deems necessary: 
 98.27     (1) the legal description of the area; 
 98.28     (2) the name and address of owner; 
 98.29     (3) a copy of the affidavit filed under section 273.13, 
 98.30  subdivision 23, paragraph (h), in the case of property 
 98.31  classified class 2b, clause (5); or in the case of property 
 98.32  classified 1a, 1b, 2a, and 2b, clauses (1) to (3), the 
 98.33  application must include a similar document with the same 
 98.34  information as contained in the affidavit under section 273.13, 
 98.35  subdivision 23, paragraph (h); and 
 98.36     (4) a statement of proof from the owner that the land 
 99.1   contains a restrictive covenant limiting its use for the 
 99.2   property's surface to that which exists on the date of the 
 99.3   application and limiting its future use to the preparation and 
 99.4   removal of the aggregate commercial deposit under its surface. 
 99.5      To qualify under this clause, the covenant must be binding 
 99.6   on the owner or the owner's successor or assignee, and run with 
 99.7   the land, except as provided in subdivision 4 allowing for the 
 99.8   cancellation of the covenant under certain conditions. 
 99.9      Subd. 3.  [DETERMINATION OF VALUE.] Upon timely application 
 99.10  by the owner as provided in subdivision 2, notwithstanding 
 99.11  sections 272.03, subdivision 8, and 273.11, the value of any 
 99.12  qualifying land described in subdivision 2 must be valued as if 
 99.13  it were agricultural property, using a per acre valuation equal 
 99.14  to the current year's per acre valuation of agricultural land in 
 99.15  the county.  The assessor shall not consider any additional 
 99.16  value resulting from potential alternative and future uses of 
 99.17  the property.  The buildings located on the land shall be valued 
 99.18  by the assessor in the normal manner. 
 99.19     Subd. 4.  [CANCELLATION OF COVENANT.] The covenant required 
 99.20  under subdivision 2 may be canceled in two ways:  
 99.21     (1) by the owner beginning with the next subsequent 
 99.22  assessment year provided that the additional taxes as determined 
 99.23  under subdivision 5 are paid by the owner at the time of 
 99.24  cancellation; and 
 99.25     (2) by the city or town in which the property is located 
 99.26  beginning with the next subsequent assessment year, if the city 
 99.27  council or town board: 
 99.28     (i) changes the conditional use of the property; 
 99.29     (ii) revokes the mining permit; or 
 99.30     (iii) changes the zoning to disallow mining.  
 99.31     No additional taxes are imposed on the property under this 
 99.32  clause. 
 99.33     Subd. 4a.  [COUNTY TERMINATION.] Within two years of the 
 99.34  effective date of this section, a county may, following notice 
 99.35  and public hearing, terminate application of this section in the 
 99.36  county.  The termination is effective upon adoption of a 
100.1   resolution of the county board.  A termination applies 
100.2   prospectively and does not affect property enrolled under this 
100.3   section prior to the termination date.  A county may reauthorize 
100.4   application of this section by a resolution of the county board 
100.5   revoking the termination. 
100.6      Subd. 5.  [ADDITIONAL TAXES.] When real property which has 
100.7   been valued and assessed under this section no longer qualifies, 
100.8   the portion of the land classified under subdivision 1, clause 
100.9   (1), is subject to additional taxes.  The additional tax amount 
100.10  is determined by: 
100.11     (1) computing the difference between (i) the current year's 
100.12  taxes determined in accordance with subdivision 5, and (ii) an 
100.13  amount as determined by the assessor based upon the property's 
100.14  current year's estimated market value of like real estate at its 
100.15  highest and best use and the appropriate local tax rate; and 
100.16     (2) multiplying the amount determined in clause (1) by the 
100.17  number of years the land was in the program under this section, 
100.18  whichever is less.  
100.19     The current year's estimated market value as determined by 
100.20  the assessor must not exceed the market value that would result 
100.21  if the property was sold in an arms-length transaction and must 
100.22  not be greater than it would have been had the actual bona fide 
100.23  sale price of the property been used in lieu of that market 
100.24  value.  The additional taxes must be extended against the 
100.25  property on the tax list for the current year, except that 
100.26  interest or penalties must not be levied on such additional 
100.27  taxes if timely paid. 
100.28     The additional tax under this subdivision must not be 
100.29  imposed on that portion of the property which has actively been 
100.30  mined and has been removed from the program based upon the 
100.31  supplemental affidavits filed under subdivision 6. 
100.32     Subd. 6.  [SUPPLEMENTAL AFFIDAVITS; MINING ACTIVITY ON 
100.33  LAND.] When any portion of the property begins to be actively 
100.34  mined, the owner must file a supplemental affidavit within 60 
100.35  days from the day any aggregate is removed stating the number of 
100.36  acres of the property that is actively being mined.  The acres 
101.1   actively being mined shall be (1) valued and classified under 
101.2   section 273.13, subdivision 24, in the next subsequent 
101.3   assessment year, and (2) removed from the aggregate resource 
101.4   preservation property tax program under this section.  The 
101.5   additional taxes under subdivision 5 must not be imposed on the 
101.6   acres that are actively being mined and have been removed from 
101.7   the program under this section. 
101.8      Copies of the original affidavit and all supplemental 
101.9   affidavits must be filed with the county assessor, the local 
101.10  zoning administrator, and the Department of Natural Resources, 
101.11  Division of Land and Minerals.  A supplemental affidavit must be 
101.12  filed each time a subsequent portion of the property is actively 
101.13  mined, provided that the minimum acreage change is five acres, 
101.14  even if the actual mining activity constitutes less than five 
101.15  acres.  Failure to file the affidavits timely shall result in 
101.16  the property losing its valuation deferment under this section, 
101.17  and additional taxes must be imposed as calculated under 
101.18  subdivision 5. 
101.19     Subd. 7.  [LIEN.] The additional tax imposed by this 
101.20  section is a lien upon the property assessed to the same extent 
101.21  and for the same duration as other taxes imposed upon property 
101.22  within this state and, when collected, must be distributed in 
101.23  the manner provided by law for the collection and distribution 
101.24  of other property taxes. 
101.25     Subd. 8.  [CONTINUATION OF TAX TREATMENT UPON SALE.] When 
101.26  real property qualifying under subdivision 1 is sold, additional 
101.27  taxes must not be extended against the property if the property 
101.28  continues to qualify under subdivision 1, and the new owner 
101.29  files an application with the assessor for continued deferment 
101.30  within 30 days after the sale. 
101.31     Subd. 9.  [DEFINITIONS.] For purposes of this section, 
101.32  "commercial aggregate deposit" and "actively mined" have the 
101.33  meanings given them in section 273.13, subdivision 23, paragraph 
101.34  (h). 
101.35     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
101.36  levied in 2004, payable in 2005, and thereafter, except that for 
102.1   the 2004 assessment year, the application date under subdivision 
102.2   4 shall be September 1, 2004, and subdivision 4a is effective 
102.3   the day following final enactment. 
102.4      Sec. 22.  [273.1116] [HOMESTEAD RESORTS; VALUATION AND 
102.5   DEFERMENT.] 
102.6      Subdivision 1.  [REQUIREMENTS.] Real property qualifying 
102.7   for classification as class 1c under section 273.13, subdivision 
102.8   22, paragraph (c), is entitled to valuation and tax deferment 
102.9   under this section, provided that if part of a resort is not 
102.10  classified as class 1c, only that portion of the value of the 
102.11  property that is classified as class 1c property qualifies under 
102.12  this section. 
102.13     Subd. 2.  [DETERMINATION OF VALUE.] Upon timely application 
102.14  by the owner, as provided in subdivision 4, the value of real 
102.15  property described in subdivision 1 must be determined by the 
102.16  assessor solely with reference to its classification value as 
102.17  class 1c property, notwithstanding sections 272.03, subdivision 
102.18  8, and 273.11.  The owner must furnish information on the income 
102.19  generated by the property and other information required by the 
102.20  assessor to determine the value of the property.  The assessor 
102.21  shall not consider any added values resulting from other factors.
102.22     Subd. 3.  [SEPARATE DETERMINATION OF MARKET VALUE AND TAX.] 
102.23  The assessor shall, however, make a separate determination of 
102.24  the market value of the real estate.  The assessor shall record 
102.25  on the property assessment records the tax based upon the 
102.26  appropriate local tax rate applicable to the property in the 
102.27  taxing district. 
102.28     Subd. 4.  [APPLICATION.] Application for deferment of taxes 
102.29  and assessment under this section must be filed by May 1 of the 
102.30  year prior to the year in which the taxes are payable.  The 
102.31  application must be filed with the assessor of the taxing 
102.32  district in which the real property is located on a form 
102.33  prescribed by the commissioner of revenue.  The assessor may 
102.34  require proof by affidavit or otherwise that the property 
102.35  qualifies under subdivision 1.  An application approved by the 
102.36  assessor continues in effect for subsequent years until the 
103.1   property no longer qualifies under subdivision 1. 
103.2      Subd. 5.  [ADDITIONAL TAXES.] When real property valued and 
103.3   assessed under this section no longer qualifies under 
103.4   subdivision 1, the portion no longer qualifying is subject to 
103.5   additional taxes, in the amount equal to the difference between 
103.6   the taxes determined in accordance with subdivision 2, and the 
103.7   amount determined under subdivision 3, provided, however, that 
103.8   the amount determined under subdivision 3 must not be greater 
103.9   than it would have been had the actual bona fide sale price of 
103.10  the real property at an arms-length transaction been used in 
103.11  lieu of the market value determined under subdivision 3.  The 
103.12  additional taxes must be extended against the property on the 
103.13  tax list for the current year, except that no interest or 
103.14  penalties may be levied on the additional taxes if timely paid, 
103.15  and except that the additional taxes must only be levied with 
103.16  respect to the last seven years that the property has been 
103.17  valued and assessed under this section. 
103.18     Subd. 6.  [LIEN.] The tax imposed by this section is a lien 
103.19  on the property assessed to the same extent and for the same 
103.20  duration as other taxes imposed on property within this state.  
103.21  The tax must be annually extended by the county auditor and when 
103.22  payable must be collected and distributed in the manner provided 
103.23  by law for the collection and distribution of other property 
103.24  taxes. 
103.25     Subd. 7.  [SPECIAL LOCAL ASSESSMENTS.] The payment of 
103.26  special local assessments levied after June 30, 2004, for 
103.27  improvements made to any real property described in subdivision 
103.28  2, together with the interest thereon must, on timely 
103.29  application under subdivision 4, be deferred as long as the 
103.30  property qualifies under subdivision 1.  If special assessments 
103.31  against the property have been deferred under this subdivision, 
103.32  the governmental unit shall file with the county recorder in the 
103.33  county in which the property is located a certificate containing 
103.34  the legal description of the affected property and of the amount 
103.35  deferred.  When the property no longer qualifies under 
103.36  subdivision 1, all deferred special assessments plus interest 
104.1   are payable in equal installments spread over the time remaining 
104.2   until the last maturity date of the bonds issued to finance the 
104.3   improvement for which the assessments were levied.  If the bonds 
104.4   have matured, the deferred special assessments plus interest are 
104.5   payable within 90 days.  The provisions of section 429.061, 
104.6   subdivision 2, apply to the collection of these installments.  
104.7   Penalty must not be levied on the special assessments if timely 
104.8   paid. 
104.9      Subd. 8.  [CONTINUATION OF TAX TREATMENT UPON SALE.] When 
104.10  real property qualifying under subdivision 1 is sold, no 
104.11  additional taxes or deferred special assessments plus interest 
104.12  may be extended against the property if: 
104.13     (1) the property continues to qualify pursuant to 
104.14  subdivision 1; and 
104.15     (2) the new owner files an application for continued 
104.16  deferment within 30 days after the sale. 
104.17     Subd. 9.  [APPLICABILITY OF SPECIAL ASSESSMENT PROVISIONS.] 
104.18  This section applies to special local assessments levied after 
104.19  June 30, 2004, and payable in the years thereafter, but shall 
104.20  not apply to any special assessments levied at any time by a 
104.21  county or district court under the provisions of chapter 116A. 
104.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
104.23  levied in 2004, payable in 2005, and thereafter.  For 
104.24  applications for taxes payable in 2005 only, the application 
104.25  deadline in subdivision 4 is extended to August 1, 2004. 
104.26     Sec. 23.  Minnesota Statutes 2002, section 273.112, 
104.27  subdivision 3, is amended to read: 
104.28     Subd. 3.  [REQUIREMENTS.] Real estate shall be entitled to 
104.29  valuation and tax deferment under this section only if it is: 
104.30     (a) actively and exclusively devoted to golf, skiing, lawn 
104.31  bowling, croquet, polo, or archery or firearms range 
104.32  recreational use or other recreational uses carried on at the 
104.33  establishment; 
104.34     (b) five acres in size or more, except in the case of a 
104.35  lawn bowling or croquet green or an archery or firearms range; 
104.36     (c)(1) operated by private individuals or, in the case of a 
105.1   lawn bowling or croquet green, by private individuals or 
105.2   corporations, and open to the public; or 
105.3      (2) operated by firms or corporations for the benefit of 
105.4   employees or guests; or 
105.5      (3) operated by private clubs having a membership of 50 or 
105.6   more or open to the public, provided that the club does not 
105.7   discriminate in membership requirements or selection on the 
105.8   basis of sex or marital status; and 
105.9      (d) made available for use in the case of real estate 
105.10  devoted to golf without discrimination on the basis of sex 
105.11  during the time when the facility is open to use by the public 
105.12  or by members, except that use for golf may be restricted on the 
105.13  basis of sex no more frequently than one, or part of one, 
105.14  weekend each calendar month for each sex and no more than two, 
105.15  or part of two, weekdays each week for each sex.  
105.16     If a golf club membership allows use of golf course 
105.17  facilities by more than one adult per membership, the use must 
105.18  be equally available to all adults entitled to use of the golf 
105.19  course under the membership, except that use may be restricted 
105.20  on the basis of sex as permitted in this section.  Memberships 
105.21  that permit play during restricted times may be allowed only if 
105.22  the restricted times apply to all adults using the membership.  
105.23  A golf club may not offer a membership or golfing privileges to 
105.24  a spouse of a member that provides greater or less access to the 
105.25  golf course than is provided to that person's spouse under the 
105.26  same or a separate membership in that club, except that the 
105.27  terms of a membership may provide that one spouse may have no 
105.28  right to use the golf course at any time while the other spouse 
105.29  may have either limited or unlimited access to the golf course.  
105.30     A golf club may have or create an individual membership 
105.31  category which entitles a member for a reduced rate to play 
105.32  during restricted hours as established by the club.  The club 
105.33  must have on record a written request by the member for such 
105.34  membership.  
105.35     A golf club that has food or beverage facilities or 
105.36  services must allow equal access to those facilities and 
106.1   services for both men and women members in all membership 
106.2   categories at all times.  Nothing in this paragraph shall be 
106.3   construed to require service or access to facilities to persons 
106.4   under the age of 21 years or require any act that would violate 
106.5   law or ordinance regarding sale, consumption, or regulation of 
106.6   alcoholic beverages. 
106.7      For purposes of this subdivision and subdivision 7a, 
106.8   discrimination means a pattern or course of conduct and not 
106.9   linked to an isolated incident. 
106.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
106.11  levied in 2004, payable in 2005, and thereafter. 
106.12     Sec. 24.  Minnesota Statutes 2003 Supplement, section 
106.13  273.124, subdivision 1, is amended to read: 
106.14     Subdivision 1.  [GENERAL RULE.] (a) Residential real estate 
106.15  that is occupied and used for the purposes of a homestead by its 
106.16  owner, who must be a Minnesota resident, is a residential 
106.17  homestead.  
106.18     Agricultural land, as defined in section 273.13, 
106.19  subdivision 23, that is occupied and used as a homestead by its 
106.20  owner, who must be a Minnesota resident, is an agricultural 
106.21  homestead. 
106.22     Dates for establishment of a homestead and homestead 
106.23  treatment provided to particular types of property are as 
106.24  provided in this section.  
106.25     Property held by a trustee under a trust is eligible for 
106.26  homestead classification if the requirements under this chapter 
106.27  are satisfied. 
106.28     The assessor shall require proof, as provided in 
106.29  subdivision 13, of the facts upon which classification as a 
106.30  homestead may be determined.  Notwithstanding any other law, the 
106.31  assessor may at any time require a homestead application to be 
106.32  filed in order to verify that any property classified as a 
106.33  homestead continues to be eligible for homestead status.  
106.34  Notwithstanding any other law to the contrary, the Department of 
106.35  Revenue may, upon request from an assessor, verify whether an 
106.36  individual who is requesting or receiving homestead 
107.1   classification has filed a Minnesota income tax return as a 
107.2   resident for the most recent taxable year for which the 
107.3   information is available. 
107.4      When there is a name change or a transfer of homestead 
107.5   property, the assessor may reclassify the property in the next 
107.6   assessment unless a homestead application is filed to verify 
107.7   that the property continues to qualify for homestead 
107.8   classification. 
107.9      (b) For purposes of this section, homestead property shall 
107.10  include property which is used for purposes of the homestead but 
107.11  is separated from the homestead by a road, street, lot, 
107.12  waterway, or other similar intervening property.  The term "used 
107.13  for purposes of the homestead" shall include but not be limited 
107.14  to uses for gardens, garages, or other outbuildings commonly 
107.15  associated with a homestead, but shall not include vacant land 
107.16  held primarily for future development.  In order to receive 
107.17  homestead treatment for the noncontiguous property, the owner 
107.18  must use the property for the purposes of the homestead, and 
107.19  must apply to the assessor, both by the deadlines given in 
107.20  subdivision 9.  After initial qualification for the homestead 
107.21  treatment, additional applications for subsequent years are not 
107.22  required. 
107.23     (c) Residential real estate that is occupied and used for 
107.24  purposes of a homestead by a relative of the owner is a 
107.25  homestead but only to the extent of the homestead treatment that 
107.26  would be provided if the related owner occupied the property.  
107.27  For purposes of this paragraph and paragraph (g), "relative" 
107.28  means a parent, stepparent, child, stepchild, grandparent, 
107.29  grandchild, brother, sister, uncle, aunt, nephew, or niece.  
107.30  This relationship may be by blood or marriage.  Property that 
107.31  has been classified as seasonal residential recreational 
107.32  property at any time during which it has been owned by the 
107.33  current owner or spouse of the current owner will not be 
107.34  reclassified as a homestead unless it is occupied as a homestead 
107.35  by the owner; this prohibition also applies to property that, in 
107.36  the absence of this paragraph, would have been classified as 
108.1   seasonal residential recreational property at the time when the 
108.2   residence was constructed.  Neither the related occupant nor the 
108.3   owner of the property may claim a property tax refund under 
108.4   chapter 290A for a homestead occupied by a relative.  In the 
108.5   case of a residence located on agricultural land, only the 
108.6   house, garage, and immediately surrounding one acre of land 
108.7   shall be classified as a homestead under this paragraph, except 
108.8   as provided in paragraph (d). 
108.9      (d) Agricultural property that is occupied and used for 
108.10  purposes of a homestead by a relative of the owner, is a 
108.11  homestead, only to the extent of the homestead treatment that 
108.12  would be provided if the related owner occupied the property, 
108.13  and only if all of the following criteria are met: 
108.14     (1) the relative who is occupying the agricultural property 
108.15  is a son, daughter, grandson, granddaughter, father, or mother 
108.16  of the owner of the agricultural property or a son, daughter, 
108.17  grandson, or granddaughter of the spouse of the owner of the 
108.18  agricultural property; 
108.19     (2) the owner of the agricultural property must be a 
108.20  Minnesota resident; 
108.21     (3) the owner of the agricultural property must not receive 
108.22  homestead treatment on any other agricultural property in 
108.23  Minnesota; and 
108.24     (4) the owner of the agricultural property is limited to 
108.25  only one agricultural homestead per family under this paragraph. 
108.26     Neither the related occupant nor the owner of the property 
108.27  may claim a property tax refund under chapter 290A for a 
108.28  homestead occupied by a relative qualifying under this 
108.29  paragraph.  For purposes of this paragraph, "agricultural 
108.30  property" means the house, garage, other farm buildings and 
108.31  structures, and agricultural land. 
108.32     Application must be made to the assessor by the owner of 
108.33  the agricultural property to receive homestead benefits under 
108.34  this paragraph.  The assessor may require the necessary proof 
108.35  that the requirements under this paragraph have been met. 
108.36     (e) In the case of property owned by a property owner who 
109.1   is married, the assessor must not deny homestead treatment in 
109.2   whole or in part if only one of the spouses occupies the 
109.3   property and the other spouse is absent due to:  (1) marriage 
109.4   dissolution proceedings, (2) legal separation, (3) employment or 
109.5   self-employment in another location, or (4) other personal 
109.6   circumstances causing the spouses to live separately, not 
109.7   including an intent to obtain two homestead classifications for 
109.8   property tax purposes.  To qualify under clause (3), the 
109.9   spouse's place of employment or self-employment must be at least 
109.10  50 miles distant from the other spouse's place of employment, 
109.11  and the homesteads must be at least 50 miles distant from each 
109.12  other.  Homestead treatment, in whole or in part, shall not be 
109.13  denied to the owner's spouse who previously occupied the 
109.14  residence with the owner if the absence of the owner is due to 
109.15  one of the exceptions provided in this paragraph. 
109.16     (f) The assessor must not deny homestead treatment in whole 
109.17  or in part if: 
109.18     (1) in the case of a property owner who is not married, the 
109.19  owner is absent due to residence in a nursing home, boarding 
109.20  care facility, or an elderly assisted living facility property 
109.21  as defined in section 273.13, subdivision 25a, and the property 
109.22  is not otherwise occupied; or 
109.23     (2) in the case of a property owner who is married, the 
109.24  owner or the owner's spouse or both are absent due to residence 
109.25  in a nursing home, boarding care facility, or an elderly 
109.26  assisted living facility property as defined in section 273.13, 
109.27  subdivision 25a, and the property is not occupied or is occupied 
109.28  only by the owner's spouse. 
109.29     (g) If an individual is purchasing property with the intent 
109.30  of claiming it as a homestead and is required by the terms of 
109.31  the financing agreement to have a relative shown on the deed as 
109.32  a co-owner, the assessor shall allow a full homestead 
109.33  classification.  This provision only applies to first-time 
109.34  purchasers, whether married or single, or to a person who had 
109.35  previously been married and is purchasing as a single individual 
109.36  for the first time.  The application for homestead benefits must 
110.1   be on a form prescribed by the commissioner and must contain the 
110.2   data necessary for the assessor to determine if full homestead 
110.3   benefits are warranted. 
110.4      (h) If residential or agricultural real estate is occupied 
110.5   and used for purposes of a homestead by a child of a deceased 
110.6   owner and the property is subject to jurisdiction of probate 
110.7   court, the child shall receive relative homestead classification 
110.8   under paragraph (c) or (d) to the same extent they would be 
110.9   entitled to it if the owner was still living, until the probate 
110.10  is completed.  For purposes of this paragraph, "child" includes 
110.11  a relationship by blood or by marriage. 
110.12     (i) If a single family home, duplex, or triplex classified 
110.13  as either residential homestead or agricultural homestead is 
110.14  also used to provide licensed child care, the portion of the 
110.15  property used for licensed child care must be classified as 
110.16  homestead property. 
110.17     <b>[EFFECTIVE DATE.]</b> This section is effective in assessment 
110.18  year 2004 and thereafter, for taxes payable in 2005, and 
110.19  thereafter. 
110.20     Sec. 25.  Minnesota Statutes 2003 Supplement, section 
110.21  273.13, subdivision 23, is amended to read: 
110.22     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
110.23  land including any improvements that is homesteaded.  The market 
110.24  value of the house and garage and immediately surrounding one 
110.25  acre of land has the same class rates as class 1a property under 
110.26  subdivision 22.  The value of the remaining land including 
110.27  improvements up to and including $600,000 market value has a net 
110.28  class rate of 0.55 percent of market value.  The remaining 
110.29  property over $600,000 market value has a class rate of one 
110.30  percent of market value. 
110.31     (b) Class 2b property is (1) real estate, rural in 
110.32  character and used exclusively for growing trees for timber, 
110.33  lumber, and wood and wood products; (2) real estate that is not 
110.34  improved with a structure and is used exclusively for growing 
110.35  trees for timber, lumber, and wood and wood products, if the 
110.36  owner has participated or is participating in a cost-sharing 
111.1   program for afforestation, reforestation, or timber stand 
111.2   improvement on that particular property, administered or 
111.3   coordinated by the commissioner of natural resources; (3) real 
111.4   estate that is nonhomestead agricultural land; or (4) a landing 
111.5   area or public access area of a privately owned public use 
111.6   airport; or (5) land with a commercial aggregate deposit that is 
111.7   not actively being mined and is not otherwise classified as 
111.8   class 2a or 2b, clauses (1) to (3).  Class 2b property has a net 
111.9   class rate of one percent of market value. 
111.10     (c) Agricultural land as used in this section means 
111.11  contiguous acreage of ten acres or more, used during the 
111.12  preceding year for agricultural purposes.  "Agricultural 
111.13  purposes" as used in this section means the raising or 
111.14  cultivation of agricultural products.  "Agricultural purposes" 
111.15  also includes enrollment in the Reinvest in Minnesota program 
111.16  under sections 103F.501 to 103F.535 or the federal Conservation 
111.17  Reserve Program as contained in Public Law 99-198 if the 
111.18  property was classified as agricultural (i) under this 
111.19  subdivision for the assessment year 2002 or (ii) in the year 
111.20  prior to its enrollment.  Contiguous acreage on the same parcel, 
111.21  or contiguous acreage on an immediately adjacent parcel under 
111.22  the same ownership, may also qualify as agricultural land, but 
111.23  only if it is pasture, timber, waste, unusable wild land, or 
111.24  land included in state or federal farm programs.  Agricultural 
111.25  classification for property shall be determined excluding the 
111.26  house, garage, and immediately surrounding one acre of land, and 
111.27  shall not be based upon the market value of any residential 
111.28  structures on the parcel or contiguous parcels under the same 
111.29  ownership. 
111.30     (d) Real estate, excluding the house, garage, and 
111.31  immediately surrounding one acre of land, of less than ten acres 
111.32  which is exclusively and intensively used for raising or 
111.33  cultivating agricultural products, shall be considered as 
111.34  agricultural land.  
111.35     Land shall be classified as agricultural even if all or a 
111.36  portion of the agricultural use of that property is the leasing 
112.1   to, or use by another person for agricultural purposes. 
112.2      Classification under this subdivision is not determinative 
112.3   for qualifying under section 273.111. 
112.4      The property classification under this section supersedes, 
112.5   for property tax purposes only, any locally administered 
112.6   agricultural policies or land use restrictions that define 
112.7   minimum or maximum farm acreage. 
112.8      (e) The term "agricultural products" as used in this 
112.9   subdivision includes production for sale of:  
112.10     (1) livestock, dairy animals, dairy products, poultry and 
112.11  poultry products, fur-bearing animals, horticultural and nursery 
112.12  stock, fruit of all kinds, vegetables, forage, grains, bees, and 
112.13  apiary products by the owner; 
112.14     (2) fish bred for sale and consumption if the fish breeding 
112.15  occurs on land zoned for agricultural use; 
112.16     (3) the commercial boarding of horses if the boarding is 
112.17  done in conjunction with raising or cultivating agricultural 
112.18  products as defined in clause (1); 
112.19     (4) property which is owned and operated by nonprofit 
112.20  organizations used for equestrian activities, excluding racing; 
112.21     (5) game birds and waterfowl bred and raised for use on a 
112.22  shooting preserve licensed under section 97A.115; 
112.23     (6) insects primarily bred to be used as food for animals; 
112.24     (7) trees, grown for sale as a crop, and not sold for 
112.25  timber, lumber, wood, or wood products; and 
112.26     (8) maple syrup taken from trees grown by a person licensed 
112.27  by the Minnesota Department of Agriculture under chapter 28A as 
112.28  a food processor. 
112.29     (f) If a parcel used for agricultural purposes is also used 
112.30  for commercial or industrial purposes, including but not limited 
112.31  to:  
112.32     (1) wholesale and retail sales; 
112.33     (2) processing of raw agricultural products or other goods; 
112.34     (3) warehousing or storage of processed goods; and 
112.35     (4) office facilities for the support of the activities 
112.36  enumerated in clauses (1), (2), and (3), 
113.1   the assessor shall classify the part of the parcel used for 
113.2   agricultural purposes as class 1b, 2a, or 2b, whichever is 
113.3   appropriate, and the remainder in the class appropriate to its 
113.4   use.  The grading, sorting, and packaging of raw agricultural 
113.5   products for first sale is considered an agricultural purpose.  
113.6   A greenhouse or other building where horticultural or nursery 
113.7   products are grown that is also used for the conduct of retail 
113.8   sales must be classified as agricultural if it is primarily used 
113.9   for the growing of horticultural or nursery products from seed, 
113.10  cuttings, or roots and occasionally as a showroom for the retail 
113.11  sale of those products.  Use of a greenhouse or building only 
113.12  for the display of already grown horticultural or nursery 
113.13  products does not qualify as an agricultural purpose.  
113.14     The assessor shall determine and list separately on the 
113.15  records the market value of the homestead dwelling and the one 
113.16  acre of land on which that dwelling is located.  If any farm 
113.17  buildings or structures are located on this homesteaded acre of 
113.18  land, their market value shall not be included in this separate 
113.19  determination.  
113.20     (g) To qualify for classification under paragraph (b), 
113.21  clause (4), a privately owned public use airport must be 
113.22  licensed as a public airport under section 360.018.  For 
113.23  purposes of paragraph (b), clause (4), "landing area" means that 
113.24  part of a privately owned public use airport properly cleared, 
113.25  regularly maintained, and made available to the public for use 
113.26  by aircraft and includes runways, taxiways, aprons, and sites 
113.27  upon which are situated landing or navigational aids.  A landing 
113.28  area also includes land underlying both the primary surface and 
113.29  the approach surfaces that comply with all of the following:  
113.30     (i) the land is properly cleared and regularly maintained 
113.31  for the primary purposes of the landing, taking off, and taxiing 
113.32  of aircraft; but that portion of the land that contains 
113.33  facilities for servicing, repair, or maintenance of aircraft is 
113.34  not included as a landing area; 
113.35     (ii) the land is part of the airport property; and 
113.36     (iii) the land is not used for commercial or residential 
114.1   purposes. 
114.2   The land contained in a landing area under paragraph (b), clause 
114.3   (4), must be described and certified by the commissioner of 
114.4   transportation.  The certification is effective until it is 
114.5   modified, or until the airport or landing area no longer meets 
114.6   the requirements of paragraph (b), clause (4).  For purposes of 
114.7   paragraph (b), clause (4), "public access area" means property 
114.8   used as an aircraft parking ramp, apron, or storage hangar, or 
114.9   an arrival and departure building in connection with the airport.
114.10     (h) To qualify for classification under paragraph (b), 
114.11  clause (5), the property must be at least ten contiguous acres 
114.12  in size and the owner of the property must record with the 
114.13  county recorder of the county in which the property is located 
114.14  an affidavit containing: 
114.15     (1) a legal description of the property; 
114.16     (2) a disclosure that the property contains a commercial 
114.17  aggregate deposit that is not actively being mined; 
114.18     (3) documentation that the conditional use under the county 
114.19  or local zoning ordinance of this property is for mining; and 
114.20     (4) documentation that a permit has been issued by the 
114.21  local unit of government or the mining activity is allowed under 
114.22  local ordinance.  The disclosure must include a statement from a 
114.23  registered professional geologist, engineer, or soil scientist 
114.24  delineating the deposit and certifying that it is a commercial 
114.25  aggregate deposit.  
114.26     For purposes of this section and section 273.1115, 
114.27  "commercial aggregate deposit" means a deposit that will yield 
114.28  crushed stone or sand and gravel that is suitable for use as a 
114.29  construction aggregate; and "actively mined" means the removal 
114.30  of top soil and overburden in preparation for excavation or 
114.31  excavation of a commercial deposit. 
114.32     (i) When any portion of the property under this subdivision 
114.33  or section 273.13, subdivision 22, begins to be actively mined, 
114.34  the owner must file a supplemental affidavit within 60 days from 
114.35  the day any aggregate is removed stating the number of acres of 
114.36  the property that is actively being mined.  The acres actively 
115.1   being mined must be (1) valued and classified under section 
115.2   273.13, subdivision 24, in the next subsequent assessment year, 
115.3   and (2) removed from the aggregate resource preservation 
115.4   property tax program under section 273.1115, if the land was 
115.5   enrolled in that program.  Copies of the original affidavit and 
115.6   all supplemental affidavits must be filed with the county 
115.7   assessor, the local zoning administrator, and the Department of 
115.8   Natural Resources, Division of Land and Minerals.  A 
115.9   supplemental affidavit must be filed each time a subsequent 
115.10  portion of the property is actively mined, provided that the 
115.11  minimum acreage change is five acres, even if the actual mining 
115.12  activity constitutes less than five acres.  
115.13     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
115.14  levied in 2004, payable in 2005, and thereafter. 
115.15     Sec. 26.  Minnesota Statutes 2003 Supplement, section 
115.16  273.13, subdivision 25, is amended to read: 
115.17     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
115.18  estate containing four or more units and used or held for use by 
115.19  the owner or by the tenants or lessees of the owner as a 
115.20  residence for rental periods of 30 days or more.  Class 4a also 
115.21  includes hospitals licensed under sections 144.50 to 144.56, 
115.22  other than hospitals exempt under section 272.02, and contiguous 
115.23  property used for hospital purposes, without regard to whether 
115.24  the property has been platted or subdivided.  The market value 
115.25  of class 4a property has a class rate of 1.8 percent for taxes 
115.26  payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 
115.27  percent for taxes payable in 2004 and thereafter, except that 
115.28  class 4a property consisting of a structure for which 
115.29  construction commenced after June 30, 2001, has a class rate of 
115.30  1.25 percent of market value for taxes payable in 2003 and 
115.31  subsequent years. 
115.32     (b) Class 4b includes: 
115.33     (1) residential real estate containing less than four units 
115.34  that does not qualify as class 4bb, other than seasonal 
115.35  residential recreational property; 
115.36     (2) manufactured homes not classified under any other 
116.1   provision; 
116.2      (3) a dwelling, garage, and surrounding one acre of 
116.3   property on a nonhomestead farm classified under subdivision 23, 
116.4   paragraph (b) containing two or three units; and 
116.5      (4) unimproved property that is classified residential as 
116.6   determined under subdivision 33.  
116.7      The market value of class 4b property has a class rate of 
116.8   1.5 percent for taxes payable in 2002, and 1.25 percent for 
116.9   taxes payable in 2003 and thereafter. 
116.10     (c) Class 4bb includes: 
116.11     (1) nonhomestead residential real estate containing one 
116.12  unit, other than seasonal residential recreational property; and 
116.13     (2) a single family dwelling, garage, and surrounding one 
116.14  acre of property on a nonhomestead farm classified under 
116.15  subdivision 23, paragraph (b). 
116.16     Class 4bb property has the same class rates as class 1a 
116.17  property under subdivision 22. 
116.18     Property that has been classified as seasonal residential 
116.19  recreational property at any time during which it has been owned 
116.20  by the current owner or spouse of the current owner does not 
116.21  qualify for class 4bb. 
116.22     (d) Class 4c property includes: 
116.23     (1) except as provided in subdivision 22, paragraph (c), 
116.24  real property devoted to temporary and seasonal residential 
116.25  occupancy for recreation purposes, including real property 
116.26  devoted to temporary and seasonal residential occupancy for 
116.27  recreation purposes and not devoted to commercial purposes for 
116.28  more than 250 days in the year preceding the year of 
116.29  assessment.  For purposes of this clause, property is devoted to 
116.30  a commercial purpose on a specific day if any portion of the 
116.31  property is used for residential occupancy, and a fee is charged 
116.32  for residential occupancy.  In order for a property to be 
116.33  classified as class 4c, seasonal residential recreational for 
116.34  commercial purposes, at least 40 percent of the annual gross 
116.35  lodging receipts related to the property must be from business 
116.36  conducted during 90 consecutive days and either (i) at least 60 
117.1   percent of all paid bookings by lodging guests during the year 
117.2   must be for periods of at least two consecutive nights; or (ii) 
117.3   at least 20 percent of the annual gross receipts must be from 
117.4   charges for rental of fish houses, boats and motors, 
117.5   snowmobiles, downhill or cross-country ski equipment, or charges 
117.6   for marina services, launch services, and guide services, or the 
117.7   sale of bait and fishing tackle.  For purposes of this 
117.8   determination, a paid booking of five or more nights shall be 
117.9   counted as two bookings.  Class 4c also includes commercial use 
117.10  real property used exclusively for recreational purposes in 
117.11  conjunction with class 4c property devoted to temporary and 
117.12  seasonal residential occupancy for recreational purposes, up to 
117.13  a total of two acres, provided the property is not devoted to 
117.14  commercial recreational use for more than 250 days in the year 
117.15  preceding the year of assessment and is located within two miles 
117.16  of the class 4c property with which it is used.  Class 4c 
117.17  property classified in this clause also includes the remainder 
117.18  of class 1c resorts provided that the entire property including 
117.19  that portion of the property classified as class 1c also meets 
117.20  the requirements for class 4c under this clause; otherwise the 
117.21  entire property is classified as class 3.  Owners of real 
117.22  property devoted to temporary and seasonal residential occupancy 
117.23  for recreation purposes and all or a portion of which was 
117.24  devoted to commercial purposes for not more than 250 days in the 
117.25  year preceding the year of assessment desiring classification as 
117.26  class 1c or 4c, must submit a declaration to the assessor 
117.27  designating the cabins or units occupied for 250 days or less in 
117.28  the year preceding the year of assessment by January 15 of the 
117.29  assessment year.  Those cabins or units and a proportionate 
117.30  share of the land on which they are located will be designated 
117.31  class 1c or 4c as otherwise provided.  The remainder of the 
117.32  cabins or units and a proportionate share of the land on which 
117.33  they are located will be designated as class 3a.  The owner of 
117.34  property desiring designation as class 1c or 4c property must 
117.35  provide guest registers or other records demonstrating that the 
117.36  units for which class 1c or 4c designation is sought were not 
118.1   occupied for more than 250 days in the year preceding the 
118.2   assessment if so requested.  The portion of a property operated 
118.3   as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
118.4   nonresidential facility operated on a commercial basis not 
118.5   directly related to temporary and seasonal residential occupancy 
118.6   for recreation purposes shall not qualify for class 1c or 4c; 
118.7      (2) qualified property used as a golf course if: 
118.8      (i) it is open to the public on a daily fee basis.  It may 
118.9   charge membership fees or dues, but a membership fee may not be 
118.10  required in order to use the property for golfing, and its green 
118.11  fees for golfing must be comparable to green fees typically 
118.12  charged by municipal courses; and 
118.13     (ii) it meets the requirements of section 273.112, 
118.14  subdivision 3, paragraph (d). 
118.15     A structure used as a clubhouse, restaurant, or place of 
118.16  refreshment in conjunction with the golf course is classified as 
118.17  class 3a property; 
118.18     (3) real property up to a maximum of one acre of land owned 
118.19  by a nonprofit community service oriented organization; provided 
118.20  that the property is not used for a revenue-producing activity 
118.21  for more than six days in the calendar year preceding the year 
118.22  of assessment and the property is not used for residential 
118.23  purposes on either a temporary or permanent basis.  For purposes 
118.24  of this clause, a "nonprofit community service oriented 
118.25  organization" means any corporation, society, association, 
118.26  foundation, or institution organized and operated exclusively 
118.27  for charitable, religious, fraternal, civic, or educational 
118.28  purposes, and which is exempt from federal income taxation 
118.29  pursuant to section 501(c)(3), (10), or (19) of the Internal 
118.30  Revenue Code of 1986, as amended through December 31, 1990.  For 
118.31  purposes of this clause, "revenue-producing activities" shall 
118.32  include but not be limited to property or that portion of the 
118.33  property that is used as an on-sale intoxicating liquor or 3.2 
118.34  percent malt liquor establishment licensed under chapter 340A, a 
118.35  restaurant open to the public, bowling alley, a retail store, 
118.36  gambling conducted by organizations licensed under chapter 349, 
119.1   an insurance business, or office or other space leased or rented 
119.2   to a lessee who conducts a for-profit enterprise on the 
119.3   premises.  Any portion of the property which is used for 
119.4   revenue-producing activities for more than six days in the 
119.5   calendar year preceding the year of assessment shall be assessed 
119.6   as class 3a.  The use of the property for social events open 
119.7   exclusively to members and their guests for periods of less than 
119.8   24 hours, when an admission is not charged nor any revenues are 
119.9   received by the organization shall not be considered a 
119.10  revenue-producing activity; 
119.11     (4) postsecondary student housing of not more than one acre 
119.12  of land that is owned by a nonprofit corporation organized under 
119.13  chapter 317A and is used exclusively by a student cooperative, 
119.14  sorority, or fraternity for on-campus housing or housing located 
119.15  within two miles of the border of a college campus; 
119.16     (5) manufactured home parks as defined in section 327.14, 
119.17  subdivision 3; 
119.18     (6) real property that is actively and exclusively devoted 
119.19  to indoor fitness, health, social, recreational, and related 
119.20  uses, is owned and operated by a not-for-profit corporation, and 
119.21  is located within the metropolitan area as defined in section 
119.22  473.121, subdivision 2; 
119.23     (7) a leased or privately owned noncommercial aircraft 
119.24  storage hangar not exempt under section 272.01, subdivision 2, 
119.25  and the land on which it is located, provided that: 
119.26     (i) the land is on an airport owned or operated by a city, 
119.27  town, county, Metropolitan Airports Commission, or group 
119.28  thereof; and 
119.29     (ii) the land lease, or any ordinance or signed agreement 
119.30  restricting the use of the leased premise, prohibits commercial 
119.31  activity performed at the hangar. 
119.32     If a hangar classified under this clause is sold after June 
119.33  30, 2000, a bill of sale must be filed by the new owner with the 
119.34  assessor of the county where the property is located within 60 
119.35  days of the sale; and 
119.36     (8) residential real estate, a portion of which is used by 
120.1   the owner for homestead purposes, and that is also a place of 
120.2   lodging, if all of the following criteria are met: 
120.3      (i) rooms are provided for rent to transient guests that 
120.4   generally stay for periods of 14 or fewer days; 
120.5      (ii) meals are provided to persons who rent rooms, the cost 
120.6   of which is incorporated in the basic room rate; 
120.7      (iii) meals are not provided to the general public except 
120.8   for special events on fewer than seven days in the calendar year 
120.9   preceding the year of the assessment; and 
120.10     (iv) the owner is the operator of the property. 
120.11  The market value subject to the 4c classification under this 
120.12  clause is limited to five rental units.  Any rental units on the 
120.13  property in excess of five, must be valued and assessed as class 
120.14  3a.  The portion of the property used for purposes of a 
120.15  homestead by the owner must be classified as class 1a property 
120.16  under subdivision 22. 
120.17     Class 4c property has a class rate of 1.5 percent of market 
120.18  value, except that (i) each parcel of seasonal residential 
120.19  recreational property not used for commercial purposes has the 
120.20  same class rates as class 4bb property, (ii) manufactured home 
120.21  parks assessed under clause (5) have the same class rate as 
120.22  class 4b property, (iii) commercial-use seasonal residential 
120.23  recreational property has a class rate of one percent for the 
120.24  first $500,000 of market value, which includes any market value 
120.25  receiving the one percent rate under subdivision 22, and 1.25 
120.26  percent for the remaining market value, (iv) the market value of 
120.27  property described in clause (4) has a class rate of one 
120.28  percent, (v) the market value of property described in clauses 
120.29  (2) and (6) has a class rate of 1.25 percent, and (vi) that 
120.30  portion of the market value of property in clause (8) qualifying 
120.31  for class 4c property has a class rate of 1.25 percent.  
120.32     (e) Class 4d property is qualifying low-income rental 
120.33  housing certified to the assessor by the Housing Finance Agency 
120.34  under sections 273.126 and 462A.071.  Class 4d includes land in 
120.35  proportion to the total market value of the building that is 
120.36  qualifying low-income rental housing. 
121.1      Class 4d property has a class rate of 0.55 percent for 
121.2   taxes payable in 2005 and thereafter. 
121.3      Sec. 27.  [273.1321] [VALUATION OF LOW-INCOME RENTAL 
121.4   PROPERTY; CAPITALIZED VALUE OF NET OPERATING INCOME.] 
121.5      Subdivision 1.  [REQUIREMENT.] Low-income rental property 
121.6   classified as class 4d under section 273.13, subdivision 25, is 
121.7   entitled to valuation under this section if at least 75 percent 
121.8   of the units in the rental housing property meet any of the 
121.9   following qualifications: 
121.10     (1) the units are subject to a housing assistance payments 
121.11  contract under section 8 of the United States Housing Act of 
121.12  1937, as amended; 
121.13     (2) the units are rent-restricted and income-restricted 
121.14  units of a qualified low-income housing project receiving tax 
121.15  credits under section 42(g) of the Internal Revenue Code of 
121.16  1986, as amended; 
121.17     (3) the units are financed by the Rural Housing Service of 
121.18  the United States Department of Agriculture and receive payments 
121.19  under the rental assistance program pursuant to section 521(a) 
121.20  of the Housing Act of 1949, as amended; or 
121.21     (4) the units are subject to rent and income restrictions 
121.22  under the terms of financial assistance provided to the rental 
121.23  housing property by a federal, state, or local unit of 
121.24  government as evidenced by a document recorded against the 
121.25  property. 
121.26     The restrictions must require assisted units to be occupied 
121.27  by residents whose household income at the time of initial 
121.28  occupancy does not exceed 60 percent of the greater of area or 
121.29  state median income, adjusted for family size, as determined by 
121.30  the United States Department of Housing and Urban Development.  
121.31  The restriction must also require the rents for assisted units 
121.32  to not exceed 30 percent of 60 percent of the greater of area or 
121.33  state median income, adjusted for family size, as determined by 
121.34  the United States Department of Housing and Urban Development. 
121.35     Subd. 2.  [DETERMINATION OF VALUE.] (a) The value of any 
121.36  rental housing property meeting the qualifications of 
122.1   subdivision 1 shall be determined, upon timely application by 
122.2   the owner in the manner provided in subdivision 3, on the basis 
122.3   of the restricted use of the property, notwithstanding sections 
122.4   272.03, subdivision 8, and 273.11, by capitalizing the net 
122.5   operating income prior to the payment of debt service. 
122.6      (b) Net operating income prior to payment of debt service 
122.7   must be the amounts shown in a financial statement prepared by 
122.8   an independent certified public accountant or firm.  The 
122.9   financial statement must show the revenues, expenses, cash 
122.10  flows, assets, liabilities, and net assets for the property for 
122.11  which an application is made under this section. 
122.12     (c) The capitalization rate applied to net operating income 
122.13  shall be established jointly by the commissioner and the Housing 
122.14  Finance Agency based on market data and industry standards.  The 
122.15  commissioner and the Housing Finance Agency shall jointly 
122.16  establish separate rates based on types of rental housing 
122.17  properties and their locations. 
122.18     Subd. 3.  [APPLICATION.] (a) Application for assessment 
122.19  under this section must be filed by February 28 of the levy 
122.20  year, or at a later date the Housing Finance Agency deems 
122.21  practicable.  The application must be filed with the Housing 
122.22  Finance Agency, on a form prescribed by the agency, and must 
122.23  contain the information required by the Housing Finance Agency. 
122.24     (b) Each application must include: 
122.25     (1) the property tax identification number; 
122.26     (2) evidence that the property meets the requirements of 
122.27  subdivision 1; and 
122.28     (3) a true and correct copy of the financial statement 
122.29  related to the property. 
122.30     (c) The applicant must pay an application fee to be set by 
122.31  the Housing Finance Agency.  The application fee charged by the 
122.32  agency must approximately equal the costs of processing and 
122.33  reviewing the applications.  The fee must be deposited in the 
122.34  housing development fund. 
122.35     Subd. 4.  [CERTIFICATION.] By June 1 of each levy year, the 
122.36  Housing Finance Agency must certify to local assessors the 
123.1   valuation, as determined under this section, of rental 
123.2   properties that apply and are qualified for valuation under this 
123.3   section.  In making the certification, the Housing Finance 
123.4   Agency may rely on the application and supporting information 
123.5   supplied by the property owner. 
123.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
123.7   levied in 2005, payable in 2006, and thereafter. 
123.8      Sec. 28.  Minnesota Statutes 2002, section 273.1384, 
123.9   subdivision 3, is amended to read: 
123.10     Subd. 3.  [CREDIT REIMBURSEMENTS.] (a) The county auditor 
123.11  shall determine the tax reductions allowed under this section 
123.12  within the county for each taxes payable year and shall certify 
123.13  that amount to the commissioner of revenue as a part of the 
123.14  abstracts of tax lists submitted by the county auditors under 
123.15  section 275.29.  
123.16     (b) In the case of class 1a, class lc, or class 2a 
123.17  homestead property which is located within a city, the county 
123.18  auditor shall determine whether the net tax on each parcel is 
123.19  less than the applicable percentage of its taxable market value 
123.20  provided in this paragraph for the year.  For taxes payable in 
123.21  2006 and 2007, if the net tax on the property is less than 0.7 
123.22  percent of its taxable market value, the county auditor shall 
123.23  reduce the reimbursement to the county and the city for the 
123.24  credit allowed under subdivision 1 by the amount of the 
123.25  difference.  For taxes payable in 2008 and 2009, if the net tax 
123.26  on the property is less than 0.8 percent of its taxable market 
123.27  value, the county auditor shall reduce the reimbursement to the 
123.28  county and the city for the credit allowed under subdivision 1 
123.29  by the amount of the difference.  For taxes payable in 2010 and 
123.30  2011, if the net tax on the property is less than 0.9 percent of 
123.31  its taxable market value, the county auditor shall reduce the 
123.32  reimbursement to the county and the city for the credit allowed 
123.33  under subdivision 1 by the amount of the difference.  For taxes 
123.34  payable in 2012 and thereafter, if the net tax on the property 
123.35  is less than one percent of its taxable market value, the county 
123.36  auditor shall reduce the reimbursement to the county and the 
124.1   city for the credit allowed under subdivision 1 by the amount of 
124.2   the difference.  The market value credit reimbursement cannot be 
124.3   less than zero.  
124.4      (c) Any prior year adjustments shall also be certified on 
124.5   the abstracts of tax lists.  The commissioner shall review the 
124.6   certifications for accuracy, and may make such changes as are 
124.7   deemed necessary, or return the certification to the county 
124.8   auditor for correction.  If there is no reduction of the 
124.9   reimbursements under paragraph (b), the credits under this 
124.10  section must be used to proportionately reduce the net tax 
124.11  capacity-based property tax payable to each local taxing 
124.12  jurisdiction as provided in section 273.1393.  If there is a 
124.13  reduction under paragraph (b), the reimbursements paid to the 
124.14  city and county must be reduced in proportion to the amount of 
124.15  their levies. 
124.16     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
124.17  levied in 2005, payable in 2006, and thereafter. 
124.18     Sec. 29.  [273.323] [EFFECTIVE DATE FOR RULES FOR VALUATION 
124.19  OF ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.] 
124.20     Rules adopted by the commissioner that prescribe the method 
124.21  of valuing property of electric and transmission pipeline 
124.22  utilities may not take effect before the end of the regular 
124.23  legislative session in the calendar year following adoption of 
124.24  the rules. 
124.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
124.26  following final enactment. 
124.27     Sec. 30.  Minnesota Statutes 2003 Supplement, section 
124.28  275.025, subdivision 1, is amended to read: 
124.29     Subdivision 1.  [LEVY AMOUNT.] (a) The state general levy 
124.30  is levied against commercial-industrial property and seasonal 
124.31  residential recreational property, as defined in this section.  
124.32  The state general levy base amount is $592,000,000 for taxes 
124.33  payable in 2002.  For taxes payable in subsequent years on 
124.34  seasonal residential recreational property, the levy base amount 
124.35  is increased each year by multiplying the levy base amount 
124.36  for that class of property for the prior year by the sum of one 
125.1   plus the rate of increase, if any, in the implicit price 
125.2   deflator for government consumption expenditures and gross 
125.3   investment for state and local governments prepared by the 
125.4   Bureau of Economic Analysts of the United States Department of 
125.5   Commerce for the 12-month period ending March 31 of the year 
125.6   prior to the year the taxes are payable.  For taxes payable in 
125.7   2005 and subsequent years on commercial-industrial property, the 
125.8   tax is imposed under this subdivision at the rate of the tax 
125.9   imposed under this subdivision for taxes payable in 2002.  The 
125.10  tax under this section is not treated as a local tax rate under 
125.11  section 469.177 and is not the levy of a governmental unit under 
125.12  chapters 276A and 473F.  
125.13     (b) Beginning with taxes payable in 2007, and in each year 
125.14  thereafter, the commissioner of finance shall deposit in the 
125.15  education reserve account established in section 45, the 
125.16  increased amount of the state general levy for that year over 
125.17  the state general levy base amount for taxes payable in 2002.  
125.18     (c) The commissioner shall increase or decrease the 
125.19  preliminary or final rate for a year as necessary to account for 
125.20  errors and tax base changes that affected a preliminary or final 
125.21  rate for either of the two preceding years.  Adjustments are 
125.22  allowed to the extent that the necessary information is 
125.23  available to the commissioner at the time the rates for a year 
125.24  must be certified, and for the following reasons: 
125.25     (1) an erroneous report of taxable value by a local 
125.26  official; 
125.27     (2) an erroneous calculation by the commissioner; and 
125.28     (3) an increase or decrease in taxable value for 
125.29  commercial-industrial or seasonal residential recreational 
125.30  property reported on the abstracts of tax lists submitted under 
125.31  section 275.29 that was not reported on the abstracts of 
125.32  assessment submitted under section 270.11, subdivision 2, for 
125.33  the same year. 
125.34  The commissioner may, but need not, make adjustments if the 
125.35  total difference in the tax levied for the year would be less 
125.36  than $100,000. 
126.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
126.2   payable in 2004 and subsequent years. 
126.3      Sec. 31.  Minnesota Statutes 2003 Supplement, section 
126.4   275.065, subdivision 3, is amended to read: 
126.5      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
126.6   county auditor shall prepare and the county treasurer shall 
126.7   deliver after November 10 and on or before November 24 each 
126.8   year, by first class mail to each taxpayer at the address listed 
126.9   on the county's current year's assessment roll, a notice of 
126.10  proposed property taxes.  
126.11     (b) The commissioner of revenue shall prescribe the form of 
126.12  the notice. 
126.13     (c) The notice must inform taxpayers that it contains the 
126.14  amount of property taxes each taxing authority proposes to 
126.15  collect for taxes payable the following year.  In the case of a 
126.16  town, or in the case of the state general tax, the final tax 
126.17  amount will be its proposed tax.  In the case of taxing 
126.18  authorities required to hold a public meeting under subdivision 
126.19  6, the notice must clearly state that each taxing authority, 
126.20  including regional library districts established under section 
126.21  134.201, and including the metropolitan taxing districts as 
126.22  defined in paragraph (i), but excluding all other special taxing 
126.23  districts and towns, will hold a public meeting to receive 
126.24  public testimony on the proposed budget and proposed or final 
126.25  property tax levy, or, in case of a school district, on the 
126.26  current budget and proposed property tax levy.  It must clearly 
126.27  state the time and place of each taxing authority's meeting, a 
126.28  telephone number for the taxing authority that taxpayers may 
126.29  call if they have questions related to the notice, and an 
126.30  address where comments will be received by mail.  
126.31     (d) The notice must state for each parcel: 
126.32     (1) the market value of the property as determined under 
126.33  section 273.11, and used for computing property taxes payable in 
126.34  the following year and for taxes payable in the current year as 
126.35  each appears in the records of the county assessor on November 1 
126.36  of the current year; and, in the case of residential property, 
127.1   whether the property is classified as homestead or 
127.2   nonhomestead.  The notice must clearly inform taxpayers of the 
127.3   years to which the market values apply and that the values are 
127.4   final values; 
127.5      (2) the items listed below, shown separately by county, 
127.6   city or town, and state general tax, net of the residential and 
127.7   agricultural homestead credit under section 273.1384, voter 
127.8   approved school levy, other local school levy, and the sum of 
127.9   the special taxing districts, and as a total of all taxing 
127.10  authorities:  
127.11     (i) the actual tax for taxes payable in the current year; 
127.12  and 
127.13     (ii) the proposed tax amount. 
127.14     If the county levy under clause (2) includes an amount for 
127.15  a lake improvement district as defined under sections 103B.501 
127.16  to 103B.581, the amount attributable for that purpose must be 
127.17  separately stated from the remaining county levy amount.  
127.18     In the case of a town or the state general tax, the final 
127.19  tax shall also be its proposed tax unless the town changes its 
127.20  levy at a special town meeting under section 365.52.  If a 
127.21  school district has certified under section 126C.17, subdivision 
127.22  9, that a referendum will be held in the school district at the 
127.23  November general election, the county auditor must note next to 
127.24  the school district's proposed amount that a referendum is 
127.25  pending and that, if approved by the voters, the tax amount may 
127.26  be higher than shown on the notice.  In the case of the city of 
127.27  Minneapolis, the levy for the Minneapolis Library Board and the 
127.28  levy for Minneapolis Park and Recreation shall be listed 
127.29  separately from the remaining amount of the city's levy.  In the 
127.30  case of the city of St. Paul, the levy for the St. Paul Library 
127.31  Agency must be listed separately from the remaining amount of 
127.32  the city's levy.  In the case of Ramsey County, any amount 
127.33  levied under section 134.07 may be listed separately from the 
127.34  remaining amount of the county's levy.  In the case of a parcel 
127.35  where tax increment or the fiscal disparities areawide tax under 
127.36  chapter 276A or 473F applies, the proposed tax levy on the 
128.1   captured value or the proposed tax levy on the tax capacity 
128.2   subject to the areawide tax must each be stated separately and 
128.3   not included in the sum of the special taxing districts; and 
128.4      (3) the increase or decrease between the total taxes 
128.5   payable in the current year and the total proposed taxes, 
128.6   expressed as a percentage. 
128.7      For purposes of this section, the amount of the tax on 
128.8   homesteads qualifying under the senior citizens' property tax 
128.9   deferral program under chapter 290B is the total amount of 
128.10  property tax before subtraction of the deferred property tax 
128.11  amount. 
128.12     (e) The notice must clearly state that the proposed or 
128.13  final taxes do not include the following: 
128.14     (1) special assessments; 
128.15     (2) levies approved by the voters after the date the 
128.16  proposed taxes are certified, including bond referenda and 
128.17  school district levy referenda; 
128.18     (3) a levy limit increase approved by the voters by the 
128.19  first Tuesday after the first Monday in November of the levy 
128.20  year as provided under section 275.73; 
128.21     (4) amounts necessary to pay cleanup or other costs due to 
128.22  a natural disaster occurring after the date the proposed taxes 
128.23  are certified; 
128.24     (5) amounts necessary to pay tort judgments against the 
128.25  taxing authority that become final after the date the proposed 
128.26  taxes are certified; and 
128.27     (6) the contamination tax imposed on properties which 
128.28  received market value reductions for contamination. 
128.29     (f) Except as provided in subdivision 7, failure of the 
128.30  county auditor to prepare or the county treasurer to deliver the 
128.31  notice as required in this section does not invalidate the 
128.32  proposed or final tax levy or the taxes payable pursuant to the 
128.33  tax levy. 
128.34     (g) If the notice the taxpayer receives under this section 
128.35  lists the property as nonhomestead, and satisfactory 
128.36  documentation is provided to the county assessor by the 
129.1   applicable deadline, and the property qualifies for the 
129.2   homestead classification in that assessment year, the assessor 
129.3   shall reclassify the property to homestead for taxes payable in 
129.4   the following year. 
129.5      (h) In the case of class 4 residential property used as a 
129.6   residence for lease or rental periods of 30 days or more, the 
129.7   taxpayer must either: 
129.8      (1) mail or deliver a copy of the notice of proposed 
129.9   property taxes to each tenant, renter, or lessee; or 
129.10     (2) post a copy of the notice in a conspicuous place on the 
129.11  premises of the property.  
129.12     The notice must be mailed or posted by the taxpayer by 
129.13  November 27 or within three days of receipt of the notice, 
129.14  whichever is later.  A taxpayer may notify the county treasurer 
129.15  of the address of the taxpayer, agent, caretaker, or manager of 
129.16  the premises to which the notice must be mailed in order to 
129.17  fulfill the requirements of this paragraph. 
129.18     (i) For purposes of this subdivision, subdivisions 5a and 
129.19  6, "metropolitan special taxing districts" means the following 
129.20  taxing districts in the seven-county metropolitan area that levy 
129.21  a property tax for any of the specified purposes listed below: 
129.22     (1) Metropolitan Council under section 473.132, 473.167, 
129.23  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
129.24     (2) Metropolitan Airports Commission under section 473.667, 
129.25  473.671, or 473.672; and 
129.26     (3) Metropolitan Mosquito Control Commission under section 
129.27  473.711. 
129.28     For purposes of this section, any levies made by the 
129.29  regional rail authorities in the county of Anoka, Carver, 
129.30  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
129.31  398A shall be included with the appropriate county's levy and 
129.32  shall be discussed at that county's public hearing. 
129.33     <b>[EFFECTIVE DATE.]</b> This section is effective for notices for 
129.34  property taxes levied in 2004, payable in 2005, and thereafter. 
129.35     Sec. 32.  Minnesota Statutes 2002, section 276.04, 
129.36  subdivision 2, is amended to read: 
130.1      Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
130.2   shall provide for the printing of the tax statements.  The 
130.3   commissioner of revenue shall prescribe the form of the property 
130.4   tax statement and its contents.  The statement must contain a 
130.5   tabulated statement of the dollar amount due to each taxing 
130.6   authority and the amount of the state tax from the parcel of 
130.7   real property for which a particular tax statement is prepared.  
130.8   The dollar amounts attributable to the county, the state tax, 
130.9   the voter approved school tax, the other local school tax, the 
130.10  township or municipality, and the total of the metropolitan 
130.11  special taxing districts as defined in section 275.065, 
130.12  subdivision 3, paragraph (i), must be separately stated.  The 
130.13  amounts due all other special taxing districts, if any, may be 
130.14  aggregated.  If the county levy under this paragraph includes an 
130.15  amount for a lake improvement district as defined under sections 
130.16  103B.501 to 103B.581, the amount attributable for that purpose 
130.17  must be separately stated from the remaining county levy 
130.18  amount.  In the case of Ramsey County, if the county levy under 
130.19  this paragraph includes an amount for public library service 
130.20  under section 134.07, the amount attributable for that purpose 
130.21  may be separately stated from the remaining county levy amount.  
130.22  The amount of the tax on homesteads qualifying under the senior 
130.23  citizens' property tax deferral program under chapter 290B is 
130.24  the total amount of property tax before subtraction of the 
130.25  deferred property tax amount.  The amount of the tax on 
130.26  contamination value imposed under sections 270.91 to 270.98, if 
130.27  any, must also be separately stated.  The dollar amounts, 
130.28  including the dollar amount of any special assessments, may be 
130.29  rounded to the nearest even whole dollar.  For purposes of this 
130.30  section whole odd-numbered dollars may be adjusted to the next 
130.31  higher even-numbered dollar.  The amount of market value 
130.32  excluded under section 273.11, subdivision 16, if any, must also 
130.33  be listed on the tax statement. 
130.34     (b) The property tax statements for manufactured homes and 
130.35  sectional structures taxed as personal property shall contain 
130.36  the same information that is required on the tax statements for 
131.1   real property.  
131.2      (c) Real and personal property tax statements must contain 
131.3   the following information in the order given in this paragraph.  
131.4   The information must contain the current year tax information in 
131.5   the right column with the corresponding information for the 
131.6   previous year in a column on the left: 
131.7      (1) the property's estimated market value under section 
131.8   273.11, subdivision 1; 
131.9      (2) the property's taxable market value after reductions 
131.10  under section 273.11, subdivisions 1a and 16; 
131.11     (3) the property's gross tax, calculated by adding the 
131.12  property's total property tax to the sum of the aids enumerated 
131.13  in clause (4); 
131.14     (4) a total of the following aids: 
131.15     (i) education aids payable under chapters 122A, 123A, 123B, 
131.16  124D, 125A, 126C, and 127A; 
131.17     (ii) local government aids for cities, towns, and counties 
131.18  under chapter 477A; 
131.19     (iii) disparity reduction aid under section 273.1398; and 
131.20     (iv) homestead and agricultural credit aid under section 
131.21  273.1398; 
131.22     (5) for homestead residential and agricultural properties, 
131.23  the credits under section 273.1384; 
131.24     (6) any credits received under sections 273.119; 273.123; 
131.25  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
131.26  473H.10, except that the amount of credit received under section 
131.27  273.135 must be separately stated and identified as "taconite 
131.28  tax relief"; and 
131.29     (7) the net tax payable in the manner required in paragraph 
131.30  (a). 
131.31     (d) If the county uses envelopes for mailing property tax 
131.32  statements and if the county agrees, a taxing district may 
131.33  include a notice with the property tax statement notifying 
131.34  taxpayers when the taxing district will begin its budget 
131.35  deliberations for the current year, and encouraging taxpayers to 
131.36  attend the hearings.  If the county allows notices to be 
132.1   included in the envelope containing the property tax statement, 
132.2   and if more than one taxing district relative to a given 
132.3   property decides to include a notice with the tax statement, the 
132.4   county treasurer or auditor must coordinate the process and may 
132.5   combine the information on a single announcement.  
132.6      The commissioner of revenue shall certify to the county 
132.7   auditor the actual or estimated aids enumerated in clause (4) 
132.8   that local governments will receive in the following year.  The 
132.9   commissioner must certify this amount by January 1 of each year. 
132.10     <b>[EFFECTIVE DATE.]</b> This section is effective for property 
132.11  tax statements for taxes payable in 2005 and thereafter. 
132.12     Sec. 33.  [278.021] [PETITIONS INVOLVING LOW-INCOME RENTAL 
132.13  HOUSING PROPERTY.] 
132.14     Notwithstanding section 278.02, in the case of real 
132.15  property that meets the definition of qualifying low-income 
132.16  housing rental property established in section 273.126, the 
132.17  petition may include any and all such parcels of real property 
132.18  in which the petitioner has an estate, right, title, interest, 
132.19  or lien, except that all such parcels included in the petition 
132.20  must be located in the same county.  Contiguous qualifying 
132.21  low-income rental housing property overlapping county boundaries 
132.22  may be included in the same petition. 
132.23     Sec. 34.  Minnesota Statutes 2002, section 278.03, 
132.24  subdivision 1, is amended to read: 
132.25     Subdivision 1.  [REAL PROPERTY.] In the case of real 
132.26  property, If the proceedings instituted by the filing of the 
132.27  petition have not been completed before the 16th day of May next 
132.28  following the filing or, in the case of class 1c property or 
132.29  class 4c resort property before the 16th day of June for taxes 
132.30  payable in 2005 and 2006 only, the petitioner shall pay to the 
132.31  county treasurer 50 percent of the tax levied for such year 
132.32  against the property involved, unless permission to continue 
132.33  prosecution of the petition without such payment is obtained as 
132.34  herein provided. If the proceedings instituted by the filing of 
132.35  the petition have not been completed by the next October 16, or, 
132.36  in the case of class 1b agricultural homestead, class 2a 
133.1   agricultural homestead, and class 2b(2) agricultural 
133.2   nonhomestead property, November 16, the petitioner shall pay to 
133.3   the county treasurer 50 percent of the unpaid balance of the 
133.4   taxes levied for the year against the property involved if the 
133.5   unpaid balance is $2,000 or less and 80 percent of the unpaid 
133.6   balance if the unpaid balance is over $2,000, unless permission 
133.7   to continue prosecution of the petition without payment is 
133.8   obtained as herein provided.  The petitioner, upon ten days' 
133.9   notice to the county attorney and to the county auditor, given 
133.10  at least ten days prior to the 16th day of May or, in the case 
133.11  of class 1c or class 4c resort property, the 16th day of June 
133.12  for taxes payable in 2005 and 2006 only, or the 16th day of 
133.13  October, or, in the case of class 1b agricultural homestead, 
133.14  class 2a agricultural homestead, and class 2b(2) agricultural 
133.15  nonhomestead property, the 16th day of November, may apply to 
133.16  the court for permission to continue prosecution of the petition 
133.17  without payment; and, if it is made to appear 
133.18     (1) that the proposed review is to be taken in good faith; 
133.19     (2) that there is probable cause to believe that the 
133.20  property may be held exempt from the tax levied or that the tax 
133.21  may be determined to be less than 50 percent of the amount 
133.22  levied; and 
133.23     (3) that it would work a hardship upon petitioner to pay 
133.24  the taxes due, 
133.25     the court may permit the petitioner to continue prosecution 
133.26  of the petition without payment, or may fix a lesser amount to 
133.27  be paid as a condition of continuing the prosecution of the 
133.28  petition. 
133.29     Failure to make payment of the amount required when due 
133.30  shall operate automatically to dismiss the petition and all 
133.31  proceedings thereunder unless the payment is waived by an order 
133.32  of the court permitting the petitioner to continue prosecution 
133.33  of the petition without payment.  The petition shall be 
133.34  automatically reinstated upon payment of the entire tax plus 
133.35  interest and penalty if the payment is made within one year of 
133.36  the dismissal.  The county treasurer shall, upon request of the 
134.1   petitioner, issue duplicate receipts for the tax payment, one of 
134.2   which shall be filed by the petitioner in the proceeding. 
134.3      Sec. 35.  Minnesota Statutes 2002, section 279.01, 
134.4   subdivision 1, is amended to read: 
134.5      Subdivision 1.  [DUE DATES; PENALTIES.] Except as provided 
134.6   in subdivision 3 or 4 this section, on May 16 or 21 days after 
134.7   the postmark date on the envelope containing the property tax 
134.8   statement, whichever is later, a penalty shall accrue and 
134.9   thereafter be charged upon all unpaid taxes on real estate on 
134.10  the current lists in the hands of the county treasurer.  The 
134.11  penalty shall be at a rate of two percent on homestead property 
134.12  until May 31 and four percent on June 1.  The penalty on 
134.13  nonhomestead property shall be at a rate of four percent until 
134.14  May 31 and eight percent on June 1.  This penalty shall not 
134.15  accrue until June 1 of each year, or 21 days after the postmark 
134.16  date on the envelope containing the property tax statements, 
134.17  whichever is later, on commercial use real property used for 
134.18  seasonal residential recreational purposes and classified as 
134.19  class 1c or 4c, and on other commercial use real property 
134.20  classified as class 3a, provided that over 60 percent of the 
134.21  gross income earned by the enterprise on the class 3a property 
134.22  is earned during the months of May, June, July, and August.  Any 
134.23  property owner of such class 3a property who pays the first half 
134.24  of the tax due on the property after May 15 and before June 1, 
134.25  or 21 days after the postmark date on the envelope containing 
134.26  the property tax statement, whichever is later, shall attach an 
134.27  affidavit to the payment attesting to compliance with the income 
134.28  provision of this subdivision.  Thereafter, for both homestead 
134.29  and nonhomestead property, on the first day of each month 
134.30  beginning July 1, up to and including October 1 following, an 
134.31  additional penalty of one percent for each month shall accrue 
134.32  and be charged on all such unpaid taxes provided that if the due 
134.33  date was extended beyond May 15 as the result of any delay in 
134.34  mailing property tax statements no additional penalty shall 
134.35  accrue if the tax is paid by the extended due date.  If the tax 
134.36  is not paid by the extended due date, then all penalties that 
135.1   would have accrued if the due date had been May 15 shall be 
135.2   charged.  When the taxes against any tract or lot exceed $50, 
135.3   one-half thereof may be paid prior to May 16 or 21 days after 
135.4   the postmark date on the envelope containing the property tax 
135.5   statement, whichever is later; and, if so paid, no penalty shall 
135.6   attach; the remaining one-half shall be paid at any time prior 
135.7   to October 16 following, without penalty; but, if not so paid, 
135.8   then a penalty of two percent shall accrue thereon for homestead 
135.9   property and a penalty of four percent on nonhomestead 
135.10  property.  Thereafter, for homestead property, on the first day 
135.11  of November an additional penalty of four percent shall accrue 
135.12  and on the first day of December following, an additional 
135.13  penalty of two percent shall accrue and be charged on all such 
135.14  unpaid taxes.  Thereafter, for nonhomestead property, on the 
135.15  first day of November and December following, an additional 
135.16  penalty of four percent for each month shall accrue and be 
135.17  charged on all such unpaid taxes.  If one-half of such taxes 
135.18  shall not be paid prior to May 16 or 21 days after the postmark 
135.19  date on the envelope containing the property tax statement, 
135.20  whichever is later, the same may be paid at any time prior to 
135.21  October 16, with accrued penalties to the date of payment added, 
135.22  and thereupon no penalty shall attach to the remaining one-half 
135.23  until October 16 following.  
135.24     This section applies to payment of personal property taxes 
135.25  assessed against improvements to leased property, except as 
135.26  provided by section 277.01, subdivision 3. 
135.27     A county may provide by resolution that in the case of a 
135.28  property owner that has multiple tracts or parcels with 
135.29  aggregate taxes exceeding $50, payments may be made in 
135.30  installments as provided in this subdivision. 
135.31     The county treasurer may accept payments of more or less 
135.32  than the exact amount of a tax installment due.  If the accepted 
135.33  payment is less than the amount due, payments must be applied 
135.34  first to the penalty accrued for the year the payment is made.  
135.35  Acceptance of partial payment of tax does not constitute a 
135.36  waiver of the minimum payment required as a condition for filing 
136.1   an appeal under section 278.03 or any other law, nor does it 
136.2   affect the order of payment of delinquent taxes under section 
136.3   280.39. 
136.4      Sec. 36.  Minnesota Statutes 2002, section 279.01, is 
136.5   amended by adding a subdivision to read: 
136.6      Subd. 5.  [SEASONAL RESIDENTIAL RECREATIONAL PROPERTY USED 
136.7   FOR COMMERCIAL PURPOSES.] For taxes payable in 2005 and 2006 
136.8   only, in the case of class 1c property and class 4c seasonal 
136.9   residential recreational property used for commercial purposes, 
136.10  no penalties shall accrue to the first one-half property tax 
136.11  payment as provided in this section if paid by June 15.  On June 
136.12  16, a penalty shall accrue and thereafter be charged upon all 
136.13  unpaid taxes.  On class 1c property the penalty is at a rate of 
136.14  two percent until June 31, and four percent on July 1.  On class 
136.15  4c seasonal residential recreational property used for 
136.16  commercial purposes, the penalty is four percent until June 31 
136.17  and eight percent on July 1.  Thereafter, for both class 1c and 
136.18  class 4c seasonal residential recreational property used for 
136.19  commercial purposes, on the first day of September and on the 
136.20  first day of October, an additional penalty of one percent shall 
136.21  accrue and be charged on unpaid taxes.  The remaining one-half 
136.22  property taxes must be paid and penalties accrue as provided in 
136.23  subdivision 1. 
136.24     Sec. 37.  [290.0621] [SCHOOL REFERENDUM TAX.] 
136.25     Subdivision 1.  [IMPOSITION.] In addition to all other 
136.26  taxes imposed by this chapter, a tax is imposed on individuals 
136.27  who are domiciled on the last day of the taxable year within the 
136.28  territory of a school district in which the voters approved an 
136.29  income tax increase at a referendum conducted under section 
136.30  126C.17, subdivision 9, for that purpose in 2005 or a subsequent 
136.31  year.  This tax does not apply to referendums on bond issues.  
136.32  Individuals domiciled in the district on the last day of the 
136.33  taxable year are subject to the tax. 
136.34     Subd. 2.  [RATE.] The commissioner of revenue shall 
136.35  annually determine the rate of the tax imposed under this 
136.36  section as a percentage of the state income tax liability of 
137.1   individuals subject to the tax by each district.  The school 
137.2   referendum tax rate is equal to the ratio of (i) the district's 
137.3   local effort revenue under section 126C.17, subdivision 6b, to 
137.4   (ii) the state income tax liability of all individuals domiciled 
137.5   in the district on the last day of the previous taxable year. 
137.6      Subd. 3.  [REVENUE DISTRIBUTION.] Revenue raised in 
137.7   subdivision 1 must be placed in a special account in the general 
137.8   fund.  The amount necessary to make payments to school districts 
137.9   under this section is annually appropriated from the general 
137.10  fund to the commissioner of education and must be paid to school 
137.11  districts according to section 127A.45. 
137.12     Sec. 38.  Minnesota Statutes 2002, section 462A.071, 
137.13  subdivision 6, is amended to read: 
137.14     Subd. 6.  [SECTION 8, TAX CREDIT, AND RURAL HOUSING SERVICE 
137.15  UNITS.] (a) The agency may deem units as meeting the 
137.16  requirements of section 273.126 and this section, if the units: 
137.17     (1) are subject to a housing assistance payments contract 
137.18  under section 8 of the United States Housing Act of 1937, as 
137.19  amended; 
137.20     (2) are rent and income restricted units of a qualified 
137.21  low-income housing project receiving tax credits under section 
137.22  42(g) of the Internal Revenue Code of 1986, as amended; or 
137.23     (3) are financed by the Rural Housing Service of the United 
137.24  States Department of Agriculture and receive payments under the 
137.25  rental assistance program pursuant to section 521(a) of the 
137.26  Housing Act of 1949, as amended meet the requirements provided 
137.27  in section 273.1321, subdivision 1. 
137.28     (b) The agency may certify these deemed units under 
137.29  subdivision 1 based on a simplified application procedure that 
137.30  verifies the unit's qualifications under paragraph (a). 
137.31     Sec. 39.  Minnesota Statutes 2002, section 473F.08, is 
137.32  amended by adding a subdivision to read: 
137.33     Subd. 3c.  [UNCOMPENSATED CARE REIMBURSEMENT.] (a) As used 
137.34  in this subdivision, the following terms have the meanings given 
137.35  in this paragraph. 
137.36     (1) "Uncompensated care" means the sum of (i) the amount 
138.1   that would have been charged by a facility for rendering free or 
138.2   discounted care to persons who cannot afford to pay and for 
138.3   which the facility did not expect payment and (ii) the amount 
138.4   that had been charged by a facility for rendering care to 
138.5   persons and billed to that person or a third-party payer for 
138.6   which the facility expected but did not receive payment.  
138.7   Uncompensated care does not include contractual write-offs. 
138.8      (2) A "qualifying hospital" means a hospital in the area 
138.9   that is: 
138.10     (i) owned or operated by a local unit of government, or 
138.11  formerly owned by a university or is a private nonprofit 
138.12  hospital that leases its building from the county in which it is 
138.13  located; and 
138.14     (ii) has a licensed bed capacity greater than 400.  
138.15     (b) A county that contains a qualifying hospital is 
138.16  eligible for reimbursement of that portion of gross charges for 
138.17  uncompensated care determined by multiplying the hospital's 
138.18  gross charges during the base year by the percentage of 
138.19  uncompensated care provided by the hospital during the base year 
138.20  minus one-half of one percent of those gross charges, dividing 
138.21  the result by two, and adjusting to cost by multiplying that 
138.22  result by the hospital's cost-to-charge ratio during the base 
138.23  year.  By July 15, 2005, and each subsequent year, the county 
138.24  shall notify its county auditor, as well as the administrative 
138.25  auditor, of the amount of qualifying uncompensated care 
138.26  provided, adjusted to cost using the hospital's cost-to-charge 
138.27  ratio, during the 12-month period ending on June 30 of the 
138.28  current year. 
138.29     (c) The amount certified under paragraph (b) shall be 
138.30  certified annually by the county auditor to the administrative 
138.31  auditor as an addition to the county's areawide levy under 
138.32  subdivision 5. 
138.33     (d) The administrative auditor shall pay one-half of the 
138.34  reimbursement to the county auditor of the county that contains 
138.35  the qualifying hospital on or before June 15 and the remaining 
138.36  one-half of the reimbursement on or before November 15.  The 
139.1   county auditor receiving the payment shall disburse the 
139.2   reimbursement to the qualifying hospital within 15 days of 
139.3   receipt of the reimbursement. 
139.4      (e) Prior to the reporting specified in paragraph (b) 
139.5   above, all qualifying hospitals that participate in this program 
139.6   shall agree upon and implement a common standard for reporting 
139.7   uncompensated care, and a common standard for determining 
139.8   eligibility for uncompensated care for all participating 
139.9   hospitals. 
139.10     <b>[EFFECTIVE DATE.]</b> This section is effective for fiscal 
139.11  disparities contribution and distribution tax capacities for 
139.12  taxes payable in 2006 and 2007 only. 
139.13     Sec. 40.  Minnesota Statutes 2002, section 473F.08, is 
139.14  amended by adding a subdivision to read: 
139.15     Subd. 3d.  [HENNEPIN COUNTY PUBLIC DEFENDER COST 
139.16  REIMBURSEMENT.] (a) Hennepin County is eligible for 
139.17  reimbursement of costs incurred by the county under section 
139.18  611.26, subdivision 3a, paragraph (c).  By July 15, 2005, and 
139.19  each subsequent year, the county shall notify the county auditor 
139.20  and the administrative auditor, of the amount of that cost 
139.21  incurred by the county during the 12-month period ending on June 
139.22  30 of the current year. 
139.23     (b) The reimbursement under this subdivision for costs 
139.24  incurred during the 12-month period ending June 30, 2005, is 
139.25  equal to 25 percent of those costs.  The reimbursement under 
139.26  this subdivision for costs incurred during the 12-month period 
139.27  ending June 30, 2006, is equal to 50 percent of those costs.  
139.28  The reimbursement under this subdivision for costs incurred 
139.29  during the 12-month period ending June 30, 2007, is equal to 75 
139.30  percent of those costs.  The reimbursement under this 
139.31  subdivision for costs incurred during the 12-month period ending 
139.32  June 30, 2008, and subsequent years, is equal to 100 percent of 
139.33  those costs. 
139.34     (c) The amount certified under paragraph (b) shall be 
139.35  certified annually by the Hennepin County auditor to the 
139.36  administrative auditor as an addition to the county's areawide 
140.1   levy under subdivision 5. 
140.2      (d) The administrative auditor shall pay one-half of the 
140.3   reimbursement to the Hennepin County auditor on or before June 
140.4   15 and the remaining one-half of the reimbursement on or before 
140.5   November 15. 
140.6      <b>[EFFECTIVE DATE.]</b> This section is effective for fiscal 
140.7   disparities contribution and distribution tax capacities for 
140.8   taxes payable in 2006 and 2007 only. 
140.9      Sec. 41.  Laws 1998, chapter 389, article 3, section 41, is 
140.10  amended to read: 
140.11     Sec. 41.  [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.] 
140.12     Notwithstanding Minnesota Statutes, chapter 429, a city may 
140.13  defer the payment of any special assessment levied against a 
140.14  property qualifying under section 38 as determined by the city.  
140.15  Any special assessment, the payment of which has been deferred 
140.16  by the city, must be paid in full or a payment agreement may be 
140.17  approved by the city if the ownership of property is transferred 
140.18  to anyone or any entity.  Payment or a payment agreement must be 
140.19  made within 60 days of the transfer of ownership. 
140.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
140.21  following final enactment.  
140.22     Sec. 42.  Laws 1998, chapter 389, article 3, section 42, 
140.23  subdivision 2, as amended by Laws 2002, chapter 377, article 4, 
140.24  section 24, is amended to read: 
140.25     Subd. 2.  [RECAPTURE.] (a) Property or any portion thereof 
140.26  qualifying under section 38 is subject to additional taxes if: 
140.27     (1) ownership of the property is transferred to anyone 
140.28  other than the spouse or child of the current owner; 
140.29     (2) the current owner or the spouse or child of the current 
140.30  owner has not conveyed or entered into a contract before July 1, 
140.31  2007, to convey for ownership or public easement rights, (i) a 
140.32  portion of the property to a one or more nonprofit foundation 
140.33  foundations or corporation operating corporations; and (ii) a 
140.34  portion of the property to one or more local governments; and 
140.35  those entities shall separately or jointly operate the property 
140.36  as an art park providing the services included in section 38, 
141.1   clauses (2) to (5), and may also use some of the property for 
141.2   other public purposes as determined by the local governments; or 
141.3      (3) the nonprofit foundation or corporation to which a 
141.4   portion of the property was transferred ceases to provide the 
141.5   services included in section 38, clauses (2) to (5), earlier 
141.6   than ten years following the effective date of the conveyance 
141.7   conveyances or of the execution of the contract contracts to 
141.8   convey. 
141.9      (b) The additional taxes are imposed at the earlier of (1) 
141.10  the year following transfer of ownership to anyone other than 
141.11  the spouse or child of the current owner or a nonprofit 
141.12  foundation or corporation or local government operating the 
141.13  property as an art park and used for other public purposes, or 
141.14  (2) for taxes payable in 2008, or (3) in the event the nonprofit 
141.15  foundation or corporation to which a portion of the property was 
141.16  conveyed ceases to provide the required services within ten 
141.17  years after the conveyance, for taxes payable in the year 
141.18  following the year when it ceased to do so.  
141.19     The county board, with the approval of the city council, 
141.20  shall determine the amount of the additional taxes due on the 
141.21  portion of property which is no longer utilized as an art park; 
141.22  provided, however, that the additional taxes are equal to must 
141.23  not be greater than the difference between the taxes determined 
141.24  on that portion of the property utilized as an art park under 
141.25  sections 39 and 40 and the amount determined under subdivision 1 
141.26  for all years that the property qualified under section 38.  The 
141.27  additional taxes must be extended against the property on the 
141.28  tax list for the current year; provided, however, that No 
141.29  interest or penalties may be levied on the additional taxes if 
141.30  timely paid amount provided that it is paid within 30 days of 
141.31  the county's notice. 
141.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
141.33  following final enactment. 
141.34     Sec. 43.  Laws 2003, chapter 127, article 12, section 38, 
141.35  is amended to read: 
141.36     Sec. 38.  [MEMBERS MUST AUTHORITY TO LEVY TAXES FOR 
142.1   AUTHORITY.] 
142.2      (a) A member shall, at the request of the authority, levy a 
142.3   tax in any year for the benefit of the authority.  The authority 
142.4   is a special taxing district as defined in Minnesota Statutes, 
142.5   section 275.066, clause (13), with the power to adopt and 
142.6   certify a property tax levy to the county auditor.  The 
142.7   authority may levy a tax in any year for the benefit of the 
142.8   authority.  The tax is, for each member, is a pro rata portion 
142.9   of the total amount of tax requested by the authority based on 
142.10  the taxable market value within a the member's jurisdiction, but 
142.11  in no event may the tax in any year exceed 0.01813 percent of 
142.12  taxable market value.  For purposes of this section, "taxable 
142.13  market value" has the meaning as given in Minnesota Statutes, 
142.14  section 273.032. 
142.15     (b) The treasurer of each member city or town shall, within 
142.16  15 days after receiving the property tax settlements from the 
142.17  county treasurer, pay to the treasurer of the authority the 
142.18  amount collected for this purpose.  The money must be used by 
142.19  the authority for the purposes provided by sections 35 to 41. 
142.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
142.21  levied in 2004, payable in 2005, and thereafter. 
142.22     Sec. 44.  Laws 2003, First Special Session chapter 21, 
142.23  article 4, section 12, subdivision 11, is amended to read: 
142.24     Subd. 11.  [EFFECTIVE DATE; LOCAL APPROVAL.] This section 
142.25  is effective the day after the governing body of St. Louis 
142.26  county and its chief clerical officer timely complete their 
142.27  compliance with Minnesota Statutes, section 645.021, 
142.28  subdivisions 2 and 3, provided that the certificate of approval 
142.29  is filed with the secretary of state before January 1, 2006. 
142.30     If effective before September 1, 2003, the first levy is 
142.31  the payable 2004 levy; If effective between September 1, 2003, 
142.32  and before September 1, 2004, the first levy is the payable 2005 
142.33  levy; if effective after August 31, 2004, and before September 
142.34  1, 2005, the first levy is the payable 2006 levy; and if 
142.35  effective after August 31, 2005, the first levy is the payable 
142.36  2007 levy. 
143.1      Sec. 45.  [EDUCATION RESERVE ACCOUNT; APPROPRIATION.] 
143.2      (a) There is created in the state treasury an education 
143.3   reserve account as a special revenue fund for deposit of 
143.4   appropriations and other receipts as provided by law. 
143.5      (b) $24,655,000 is appropriated from the general fund to 
143.6   the education reserve account in fiscal year 2005.  This is a 
143.7   onetime appropriation.  Of this amount, the following amounts 
143.8   are appropriated to the commissioner of education in the fiscal 
143.9   years indicated to supplement the general education aid program 
143.10  under Minnesota Statutes, section 126C.13, subdivision 4: 
143.11     (1) $5,366,000 in fiscal year 2005; 
143.12     (2) $48,000 in fiscal year 2006; and 
143.13     (3) $45,000 in fiscal year 2007. 
143.14     (c) As provided in Minnesota Statutes, section 275.025, 
143.15  subdivision 1, beginning with taxes payable in 2007, the 
143.16  commissioner of finance shall deposit in the education reserve 
143.17  account the increased amount of the state general levy for that 
143.18  year over the state general levy base amount for taxes payable 
143.19  in 2002. 
143.20     (d) Each year, one-half of the annual amount will be 
143.21  deposited in the education reserve account in the state fiscal 
143.22  year corresponding to the first six months of the calendar year, 
143.23  and the other half will be deposited in the state fiscal year 
143.24  corresponding to the last six months of the calendar year.  The 
143.25  amounts in the education reserve account do not lapse or cancel 
143.26  each year, but remain until appropriated by law for education 
143.27  aid or higher education funding. 
143.28     Sec. 46.  [STUDY OF POLLUTION CONTROL EXEMPTION.] 
143.29     The commissioner of revenue must study the application of 
143.30  the property tax exemption provided under Minnesota Statutes, 
143.31  section 272.02, subdivision 10, to personal property used for 
143.32  pollution control as part of an electric generation system.  The 
143.33  commissioner must present a recommendation to the legislature by 
143.34  January 15, 2005, that would limit the exemption to property 
143.35  that is directly and exclusively used for pollution control 
143.36  purposes. 
144.1      Sec. 47.  [SUPPLEMENTARY AID.] 
144.2      (a) If a bill styled as H.F. No. 2028 is enacted at the 
144.3   2004 legislative session and includes provisions authorizing 
144.4   supplementary levy authority for school districts for deferred 
144.5   maintenance and capital projects, that section is repealed. 
144.6      (b) For fiscal years 2006, 2007, and 2008 only, each school 
144.7   district is eligible to receive $12 times the adjusted marginal 
144.8   cost pupil units annually for one or more of the following uses: 
144.9      (1) outstanding disability access projects; 
144.10     (2) onetime health- and safety-related projects that are 
144.11  not eligible for health and safety revenue under Minnesota 
144.12  Statutes, section 123B.57; 
144.13     (3) outstanding construction deficit costs of school 
144.14  facilities shared with the community; 
144.15     (4) utility and other costs of operating a district-owned 
144.16  community center where the district colocates services with 
144.17  other local units of government, in proportion to the amount of 
144.18  time the district uses the facility; 
144.19     (5) the district's share of the costs of building 
144.20  noninstructional facilities that will be operated in cooperation 
144.21  with other local units of government; 
144.22     (6) the cost of leasing school-related storage facilities; 
144.23     (7) the costs associated with leases of administrative and 
144.24  classroom space shared with other school districts or higher 
144.25  education institutions; 
144.26     (8) outstanding building lease levy amounts under Minnesota 
144.27  Statutes, section 126C.40, subdivision 1; outstanding 
144.28  unemployment insurance amount under Minnesota Statutes, section 
144.29  126C.43, subdivision 2; outstanding amount necessary for 
144.30  judgments against the district under Minnesota Statutes, section 
144.31  126C.43, subdivision 3; and additional costs under the safe 
144.32  schools levy under Minnesota Statutes, section 126C.44; 
144.33     (9) a school district whose total concentration of free and 
144.34  reduced price lunch students increased between fiscal year 2003 
144.35  and 2004 may utilize the revenue under this section, according 
144.36  to Minnesota Statutes, section 126C.13, subdivision 5; 
145.1      (10) retired employee health benefits; or 
145.2      (11) other district deferred maintenance projects or 
145.3   capital projects eligible under Minnesota Statutes, section 
145.4   126C.10, subdivision 14. 
145.5      (c) In a form and manner determined by the Department of 
145.6   Education, each district shall submit to the department the aid 
145.7   received under this section for each category in paragraph (a). 
145.8      (d) For each year in which payments to school districts are 
145.9   made under this section, the Department of Education shall make 
145.10  payments to districts using the estimated adjusted marginal cost 
145.11  pupil unit count contained in the preceding year's February 
145.12  forecast for the corresponding fiscal year. 
145.13     (e) In fiscal years 2006, 2007, and 2008, if insufficient 
145.14  aid is appropriated to fund the provisions of this section, each 
145.15  school district may levy an amount equal to the amount by which 
145.16  the appropriation is deficient: 
145.17     (i) for taxes payable in 2006 only, if insufficient aid is 
145.18  provided during the 2005 legislative session for fiscal year 
145.19  2006, each school district may levy an amount equal to the 
145.20  amount by which the appropriation is deficient and may recognize 
145.21  that revenue for fiscal year 2006; 
145.22     (ii) for taxes payable in 2007 only, if insufficient aid is 
145.23  provided during the 2005 or 2006 legislative session for fiscal 
145.24  year 2007, each school district may levy an amount equal to the 
145.25  amount by which the appropriation is deficient and may recognize 
145.26  that revenue for fiscal year 2007; and 
145.27     (iii) for taxes payable in 2008 only, if insufficient aid 
145.28  is provided during the 2007 legislative session for fiscal year 
145.29  2008, each school district may levy an amount equal to the 
145.30  amount by which the appropriation is deficient and may recognize 
145.31  that revenue for fiscal year 2008. 
145.32     <b>[EFFECTIVE DATE.]</b> This section is effective for revenue for 
145.33  fiscal years 2006, 2007, and 2008. 
145.34     Sec. 48.  [PRINSBURG; SPECIAL LEVY AUTHORITY.] 
145.35     Subdivision 1.  [BOARD APPROVAL.] Notwithstanding any law 
145.36  to the contrary, the board of Common School District No. 815, 
146.1   Prinsburg, may continue to operate as a common school district 
146.2   provided that: 
146.3      (1) the district adopts an annual resolution by May 1 of 
146.4   each year declaring that it will be operating for the following 
146.5   school year; 
146.6      (2) for fiscal years 2006 and later, the district's 
146.7   proposed budget for the following year shows that the district 
146.8   will not return to statutory operating debt under Minnesota 
146.9   Statutes, section 123B.81; and 
146.10     (3) the district has passed a referendum under subdivision 
146.11  4 authorizing levy authority for the coming school year. 
146.12     Subd. 2.  [DETERMINATION OF OUTSTANDING OBLIGATIONS.] Prior 
146.13  to exercising the authority to levy under this section, the 
146.14  boards of Common School District No. 815 and Independent School 
146.15  District No. 2180, MACCRAY, must mutually agree to the amount of 
146.16  the outstanding tuition owed by the Prinsburg School District to 
146.17  the MACCRAY School District.  If the districts cannot agree to 
146.18  the amount of the tuition owed, the districts may submit all 
146.19  relevant information to the commissioner of education who shall 
146.20  determine the amount of the obligation owed to the MACCRAY 
146.21  School District. 
146.22     Subd. 3.  [STATUTORY OPERATING DEBT.] For taxes payable in 
146.23  2005, 2006, and 2007, Common School District No. 815, Prinsburg, 
146.24  may levy the amount necessary to eliminate a deficit in the net 
146.25  unappropriated balance in the operating funds of the district, 
146.26  determined as of June 30, 2004, and certified and adjusted by 
146.27  the commissioner.  This levy may also include the amount 
146.28  necessary to eliminate the estimated deficit for fiscal year 
146.29  2005. 
146.30     Subd. 4.  [ANNUAL LEVY AUTHORITY.] (a) Common School 
146.31  District No. 815, Prinsburg, may levy the amount necessary to 
146.32  eliminate any projected deficit in the district's operating 
146.33  budget for the preceding school year, excluding the amounts 
146.34  raised by this subdivision, if the district's voters approve a 
146.35  referendum according to the provisions of this subdivision. 
146.36     (b) The referendum shall be called by the school board.  
147.1   The ballot must state that the annual levy will be the estimated 
147.2   amount necessary to eliminate the previous year's estimated 
147.3   operating deficit.  The ballot must designate the specific 
147.4   number of years, not to exceed five, for which the referendum 
147.5   authorization applies.  The ballot shall state substantially the 
147.6   following: 
147.7      "Shall the increase in the levy proposed by the Board of 
147.8   Prinsburg, Common School District No. 815, be approved?" 
147.9      If approved, the amount necessary to eliminate the previous 
147.10  year's estimated operating deficit may be authorized for 
147.11  certification for the number of years approved. 
147.12     (c) The board must follow the notice provisions of 
147.13  Minnesota Statutes, section 126C.17. 
147.14     (d) This levy is not subject to the property tax 
147.15  recognition shift under Minnesota Statutes, sections 123B.75, 
147.16  subdivision 5, and 127A.441. 
147.17     Subd. 5.  [FISCAL YEAR 2005 ONLY.] Notwithstanding the 
147.18  provisions of this section, for fiscal year 2005 only, Common 
147.19  School District No. 815, Prinsburg, may continue to operate as a 
147.20  common school district upon approval of a referendum under 
147.21  subdivision 4. 
147.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
147.23  following final enactment. 
147.24     Sec. 49.  [SAUK RIVER WATERSHED DISTRICT.] 
147.25     Notwithstanding Minnesota Statutes, section 103D.905, 
147.26  subdivision 3, the Sauk River Watershed District may annually 
147.27  levy up to 0.01 percent of taxable market value for its 
147.28  administrative fund. 
147.29     <b>[EFFECTIVE DATE.]</b> This section is effective, without local 
147.30  approval, beginning with the taxes levied in 2004, payable in 
147.31  2005. 
147.32     Sec. 50.  [COMMERCIAL-INDUSTRIAL LAND VALUE TAXATION; LOCAL 
147.33  OPTION.] 
147.34     The governing body of any municipality that has a 
147.35  population in excess of 70,000, or any municipality located in 
147.36  the taconite tax relief area defined in Minnesota Statutes, 
148.1   section 273.134, may by resolution adopt a system of valuing 
148.2   commercial-industrial property in its jurisdiction that is based 
148.3   on the value of the land, not including improvements.  The 
148.4   governing body may make the election under this section if it 
148.5   finds that implementation of the land value system will enhance 
148.6   economic development in the city.  An election under this 
148.7   section must be made by December 31, 2004.  If any municipality 
148.8   makes the election, it must notify the commissioner of revenue 
148.9   of the election and the legislature must enact during the 2005 
148.10  legislative session the legislation necessary to implement the 
148.11  system for taxes levied in 2005, payable in 2006, and thereafter.
148.12     Sec. 51.  [STUDY REQUIRED.] 
148.13     By February 1, 2005, the fiscal staff of the house of 
148.14  representatives and senate shall conduct a study of the 
148.15  metropolitan revenue distribution program contained in Minnesota 
148.16  Statutes, chapter 473F, commonly known as the fiscal disparities 
148.17  program, and shall make a report by March 1, 2005, to the chairs 
148.18  of the house and senate tax committees consisting of the 
148.19  findings of the study and any recommendations resulting from the 
148.20  study.  
148.21     The study shall primarily address the question of whether 
148.22  the program is achieving the purposes for which it was created.  
148.23  Additionally, the study shall address the following questions: 
148.24     (1) How has the program affected property tax disparities 
148.25  across the Twin Cities metropolitan area? 
148.26     (2) Is the formula for contributing tax base to the 
148.27  areawide pool reasonable?  Should certain commercial-industrial 
148.28  tax base continue to be exempt from contribution to the areawide 
148.29  pool, such as tax base in existence prior to 1979, tax base in 
148.30  tax increment financing districts established before 1979, and 
148.31  tax base located at the Minneapolis-St. Paul International 
148.32  Airport?  Should contribution amounts be adjusted for 
148.33  differences in sales ratios between communities? 
148.34     (3) Is the formula for distributing tax base from the 
148.35  areawide pool reasonable?  Should the formula reflect measures 
148.36  of need in addition to population?  Should the distribution 
149.1   formula be based on tax capacity rather than market value? 
149.2      (4) Does the program help promote orderly growth and 
149.3   encourage environmentally sound land use? 
149.4      (5) Does the program reduce competition for 
149.5   commercial-industrial tax base between communities?  Is reduced 
149.6   competition for commercial-industrial tax base desirable? 
149.7      (6) Do local governments derive sufficient tax revenues 
149.8   from commercial-industrial property to cover the costs of 
149.9   providing services to the property, considering the tax base 
149.10  that must be contributed to the areawide pool? 
149.11     (7) Could improvements be made in the administration of the 
149.12  program? 
149.13     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2004. 
149.14     Sec. 52.  [TOWNSHIP LEVY ADJUSTMENT FOR WIND ENERGY 
149.15  PRODUCTION TAX; PAYABLE 2004 ONLY.] 
149.16     Notwithstanding the deadlines in Minnesota Statutes, 
149.17  section 275.07, towns located in Lincoln or Pipestone County are 
149.18  authorized to adjust their payable 2004 levy for all or a 
149.19  portion of their estimated wind energy production tax amounts 
149.20  for 2004, as computed by the commissioner of revenue from 
149.21  reports filed under Minnesota Statutes, section 272.029, 
149.22  subdivision 4.  The Lincoln and Pipestone county auditors may 
149.23  adjust the payable 2004 levy certifications under Minnesota 
149.24  Statutes, section 275.07, subdivision 1, based upon the towns 
149.25  that have recertified their levies under this section by March 
149.26  15, 2004. 
149.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
149.28  levied in 2003, payable in 2004 only. 
149.29     Sec. 53.  [FEE STUDIES.] 
149.30     Subdivision 1.  [STATE AGENCY FEES.] The commissioner of 
149.31  each state agency that imposes any fee on individuals or 
149.32  businesses in this state must report to the commissioner of 
149.33  revenue by January 15, 2005, on the type and amount of fees 
149.34  imposed, amount and type of fee increases since January 1, 2003, 
149.35  the revenues derived from each fee for each of the most recent 
149.36  four fiscal years, and the use of the revenues from the fees.  
150.1   The commissioner of revenue shall compile this information and 
150.2   provide a comprehensive report on all state agency fees to the 
150.3   finance and tax committees of the senate and the appropriations 
150.4   and tax committees of the house of representatives by February 
150.5   15, 2005. 
150.6      Subd. 2.  [SCHOOL FEES.] By January 15, 2005, the 
150.7   Department of Education shall provide the house and senate 
150.8   education finance divisions and tax committees with a report 
150.9   that examines the total annual fees collected under Minnesota 
150.10  Public School Fee Law, Minnesota Statutes, sections 123B.34 to 
150.11  123B.39, in fiscal years 2002 to 2004.  The report must detail 
150.12  all different types of fees charged to Minnesota students under 
150.13  the law.  The report must report total fees statewide as well as 
150.14  by school district and charter school. 
150.15                             ARTICLE 4
150.16                     AIDS TO LOCAL GOVERNMENTS
150.17     Section 1.  Minnesota Statutes 2003 Supplement, section 
150.18  477A.011, subdivision 34, is amended to read: 
150.19     Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
150.20  population equal to or greater than 2,500, "city revenue need" 
150.21  is the sum of (1) 5.0734098 times the pre-1940 housing 
150.22  percentage; plus (2) 19.141678 times the population decline 
150.23  percentage; plus (3) 2504.06334 times the road accidents factor; 
150.24  plus (4) 355.0547; minus (5) the metropolitan area factor; minus 
150.25  (6) 49.10638 times the household size. 
150.26     (b) For a city with a population less than 2,500, "city 
150.27  revenue need" is the sum of (1) 2.387 times the pre-1940 housing 
150.28  percentage; plus (2) 2.67591 times the commercial industrial 
150.29  percentage; plus (3) 3.16042 times the population decline 
150.30  percentage; plus (4) 1.206 times the transformed population; 
150.31  minus (5) 62.772. 
150.32     (c) The city revenue need cannot be less than zero. 
150.33     (d) For calendar year 2005 and subsequent years, the city 
150.34  revenue need for a city, as determined in paragraphs (a) to (c), 
150.35  is multiplied by the ratio of the annual most recently available 
150.36  first quarter implicit price deflator for government consumption 
151.1   expenditures and gross investment for state and local 
151.2   governments as prepared by the United States Department of 
151.3   Commerce, for the most recently available year to the 2003 first 
151.4   quarter 2000 implicit price deflator for state and local 
151.5   government purchases. 
151.6      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
151.7   477A.011, subdivision 36, is amended to read: 
151.8      Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
151.9   provided in this subdivision, "city aid base" is zero. 
151.10     (b) The city aid base for any city with a population less 
151.11  than 500 is increased by $40,000 for aids payable in calendar 
151.12  year 1995 and thereafter, and the maximum amount of total aid it 
151.13  may receive under section 477A.013, subdivision 9, paragraph 
151.14  (c), is also increased by $40,000 for aids payable in calendar 
151.15  year 1995 only, provided that: 
151.16     (i) the average total tax capacity rate for taxes payable 
151.17  in 1995 exceeds 200 percent; 
151.18     (ii) the city portion of the tax capacity rate exceeds 100 
151.19  percent; and 
151.20     (iii) its city aid base is less than $60 per capita. 
151.21     (c) The city aid base for a city is increased by $20,000 in 
151.22  1998 and thereafter and the maximum amount of total aid it may 
151.23  receive under section 477A.013, subdivision 9, paragraph (c), is 
151.24  also increased by $20,000 in calendar year 1998 only, provided 
151.25  that: 
151.26     (i) the city has a population in 1994 of 2,500 or more; 
151.27     (ii) the city is located in a county, outside of the 
151.28  metropolitan area, which contains a city of the first class; 
151.29     (iii) the city's net tax capacity used in calculating its 
151.30  1996 aid under section 477A.013 is less than $400 per capita; 
151.31  and 
151.32     (iv) at least four percent of the total net tax capacity, 
151.33  for taxes payable in 1996, of property located in the city is 
151.34  classified as railroad property. 
151.35     (d) The city aid base for a city is increased by $200,000 
151.36  in 1999 and thereafter and the maximum amount of total aid it 
152.1   may receive under section 477A.013, subdivision 9, paragraph 
152.2   (c), is also increased by $200,000 in calendar year 1999 only, 
152.3   provided that: 
152.4      (i) the city was incorporated as a statutory city after 
152.5   December 1, 1993; 
152.6      (ii) its city aid base does not exceed $5,600; and 
152.7      (iii) the city had a population in 1996 of 5,000 or more. 
152.8      (e) The city aid base for a city is increased by $450,000 
152.9   in 1999 to 2008 and the maximum amount of total aid it may 
152.10  receive under section 477A.013, subdivision 9, paragraph (c), is 
152.11  also increased by $450,000 in calendar year 1999 only, provided 
152.12  that: 
152.13     (i) the city had a population in 1996 of at least 50,000; 
152.14     (ii) its population had increased by at least 40 percent in 
152.15  the ten-year period ending in 1996; and 
152.16     (iii) its city's net tax capacity for aids payable in 1998 
152.17  is less than $700 per capita. 
152.18     (f) Beginning in 2004, the city aid base for a city is 
152.19  equal to the sum of its city aid base in 2003 and the amount of 
152.20  additional aid it was certified to receive under section 477A.06 
152.21  in 2003.  For 2004 only, the maximum amount of total aid a city 
152.22  may receive under section 477A.013, subdivision 9, paragraph 
152.23  (c), is also increased by the amount it was certified to receive 
152.24  under section 477A.06 in 2003. 
152.25     (g) The city aid base for a city is increased by $150,000 
152.26  for aids payable in 2000 and thereafter, and the maximum amount 
152.27  of total aid it may receive under section 477A.013, subdivision 
152.28  9, paragraph (c), is also increased by $150,000 in calendar year 
152.29  2000 only, provided that: 
152.30     (1) the city has a population that is greater than 1,000 
152.31  and less than 2,500; 
152.32     (2) its commercial and industrial percentage for aids 
152.33  payable in 1999 is greater than 45 percent; and 
152.34     (3) the total market value of all commercial and industrial 
152.35  property in the city for assessment year 1999 is at least 15 
152.36  percent less than the total market value of all commercial and 
153.1   industrial property in the city for assessment year 1998. 
153.2      (h) (g) The city aid base for a city is increased by 
153.3   $200,000 in 2000 and thereafter, and the maximum amount of total 
153.4   aid it may receive under section 477A.013, subdivision 9, 
153.5   paragraph (c), is also increased by $200,000 in calendar year 
153.6   2000 only, provided that: 
153.7      (1) the city had a population in 1997 of 2,500 or more; 
153.8      (2) the net tax capacity of the city used in calculating 
153.9   its 1999 aid under section 477A.013 is less than $650 per 
153.10  capita; 
153.11     (3) the pre-1940 housing percentage of the city used in 
153.12  calculating 1999 aid under section 477A.013 is greater than 12 
153.13  percent; 
153.14     (4) the 1999 local government aid of the city under section 
153.15  477A.013 is less than 20 percent of the amount that the formula 
153.16  aid of the city would have been if the need increase percentage 
153.17  was 100 percent; and 
153.18     (5) the city aid base of the city used in calculating aid 
153.19  under section 477A.013 is less than $7 per capita. 
153.20     (i) (h) The city aid base for a city is increased by 
153.21  $102,000 in 2000 and thereafter, and the maximum amount of total 
153.22  aid it may receive under section 477A.013, subdivision 9, 
153.23  paragraph (c), is also increased by $102,000 in calendar year 
153.24  2000 only, provided that: 
153.25     (1) the city has a population in 1997 of 2,000 or more; 
153.26     (2) the net tax capacity of the city used in calculating 
153.27  its 1999 aid under section 477A.013 is less than $455 per 
153.28  capita; 
153.29     (3) the net levy of the city used in calculating 1999 aid 
153.30  under section 477A.013 is greater than $195 per capita; and 
153.31     (4) the 1999 local government aid of the city under section 
153.32  477A.013 is less than 38 percent of the amount that the formula 
153.33  aid of the city would have been if the need increase percentage 
153.34  was 100 percent. 
153.35     (j) (i) The city aid base for a city is increased by 
153.36  $32,000 in 2001 and thereafter, and the maximum amount of total 
154.1   aid it may receive under section 477A.013, subdivision 9, 
154.2   paragraph (c), is also increased by $32,000 in calendar year 
154.3   2001 only, provided that: 
154.4      (1) the city has a population in 1998 that is greater than 
154.5   200 but less than 500; 
154.6      (2) the city's revenue need used in calculating aids 
154.7   payable in 2000 was greater than $200 per capita; 
154.8      (3) the city net tax capacity for the city used in 
154.9   calculating aids available in 2000 was equal to or less than 
154.10  $200 per capita; 
154.11     (4) the city aid base of the city used in calculating aid 
154.12  under section 477A.013 is less than $65 per capita; and 
154.13     (5) the city's formula aid for aids payable in 2000 was 
154.14  greater than zero. 
154.15     (k) (j) The city aid base for a city is increased by $7,200 
154.16  in 2001 and thereafter, and the maximum amount of total aid it 
154.17  may receive under section 477A.013, subdivision 9, paragraph 
154.18  (c), is also increased by $7,200 in calendar year 2001 only, 
154.19  provided that: 
154.20     (1) the city had a population in 1998 that is greater than 
154.21  200 but less than 500; 
154.22     (2) the city's commercial industrial percentage used in 
154.23  calculating aids payable in 2000 was less than ten percent; 
154.24     (3) more than 25 percent of the city's population was 60 
154.25  years old or older according to the 1990 census; 
154.26     (4) the city aid base of the city used in calculating aid 
154.27  under section 477A.013 is less than $15 per capita; and 
154.28     (5) the city's formula aid for aids payable in 2000 was 
154.29  greater than zero. 
154.30     (l) (k) The city aid base for a city is increased by 
154.31  $45,000 in 2001 and thereafter and by an additional $50,000 in 
154.32  calendar years 2002 to 2011, and the maximum amount of total aid 
154.33  it may receive under section 477A.013, subdivision 9, paragraph 
154.34  (c), is also increased by $45,000 in calendar year 2001 only, 
154.35  and by $50,000 in calendar year 2002 only, provided that: 
154.36     (1) the net tax capacity of the city used in calculating 
155.1   its 2000 aid under section 477A.013 is less than $810 per 
155.2   capita; 
155.3      (2) the population of the city declined more than two 
155.4   percent between 1988 and 1998; 
155.5      (3) the net levy of the city used in calculating 2000 aid 
155.6   under section 477A.013 is greater than $240 per capita; and 
155.7      (4) the city received less than $36 per capita in aid under 
155.8   section 477A.013, subdivision 9, for aids payable in 2000. 
155.9   The city aid base for a city described in this paragraph is also 
155.10  increased by $250,000 in calendar years 2005 to 2014, and the 
155.11  maximum amount of total aid it may receive under section 
155.12  477A.013, subdivision 9, paragraph (c), is also increased by 
155.13  $250,000 in calendar year 2005 only. 
155.14     (m) (l) The city aid base for a city with a population of 
155.15  10,000 or more which is located outside of the seven-county 
155.16  metropolitan area is increased in 2002 and thereafter, and the 
155.17  maximum amount of total aid it may receive under section 
155.18  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
155.19  in calendar year 2002 only, by an amount equal to the lesser of: 
155.20     (1)(i) the total population of the city, as determined by 
155.21  the United States Bureau of the Census, in the 2000 census, (ii) 
155.22  minus 5,000, (iii) times 60; or 
155.23     (2) $2,500,000. 
155.24     (n) (m) The city aid base is increased by $50,000 in 2002 
155.25  and thereafter, and the maximum amount of total aid it may 
155.26  receive under section 477A.013, subdivision 9, paragraph (c), is 
155.27  also increased by $50,000 in calendar year 2002 only, provided 
155.28  that: 
155.29     (1) the city is located in the seven-county metropolitan 
155.30  area; 
155.31     (2) its population in 2000 is between 10,000 and 20,000; 
155.32  and 
155.33     (3) its commercial industrial percentage, as calculated for 
155.34  city aid payable in 2001, was greater than 25 percent. 
155.35     (o) (n) The city aid base for a city is increased by 
155.36  $150,000 in calendar years 2002 to 2011 and the maximum amount 
156.1   of total aid it may receive under section 477A.013, subdivision 
156.2   9, paragraph (c), is also increased by $150,000 in calendar year 
156.3   2002 only, provided that: 
156.4      (1) the city had a population of at least 3,000 but no more 
156.5   than 4,000 in 1999; 
156.6      (2) its home county is located within the seven-county 
156.7   metropolitan area; 
156.8      (3) its pre-1940 housing percentage is less than 15 
156.9   percent; and 
156.10     (4) its city net tax capacity per capita for taxes payable 
156.11  in 2000 is less than $900 per capita. 
156.12     (p) (o) The city aid base for a city is increased by 
156.13  $200,000 beginning in calendar year 2003 and the maximum amount 
156.14  of total aid it may receive under section 477A.013, subdivision 
156.15  9, paragraph (c), is also increased by $200,000 in calendar year 
156.16  2003 only, provided that the city qualified for an increase in 
156.17  homestead and agricultural credit aid under Laws 1995, chapter 
156.18  264, article 8, section 18. 
156.19     (q) (p) The city aid base for a city is increased by 
156.20  $200,000 in 2004 only and the maximum amount of total aid it may 
156.21  receive under section 477A.013, subdivision 9, is also increased 
156.22  by $200,000 in calendar year 2004 only, if the city is the site 
156.23  of a nuclear dry cask storage facility. 
156.24     (r) (q) The city aid base for a city is increased by 
156.25  $10,000 in 2004 and thereafter and the maximum total aid it may 
156.26  receive under section 477A.013, subdivision 9, is also increased 
156.27  by $10,000 in calendar year 2004 only, if the city was included 
156.28  in a federal major disaster designation issued on April 1, 1998, 
156.29  and its pre-1940 housing stock was decreased by more than 40 
156.30  percent between 1990 and 2000. 
156.31     (r) The city aid base for a city is increased by $25,000 in 
156.32  2005 only and the maximum total aid it may receive under section 
156.33  477A.013, subdivision 9, is also increased by $25,000 in 2005 
156.34  only, if the city (1) received no aid under section 477A.013 in 
156.35  2004; (2) had a population in 2002 greater than 20,000 and less 
156.36  than 50,000; and (3) had an adjusted net tax capacity of less 
157.1   than $750 per capita for aids payable in 2004. 
157.2      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
157.3   aids payable in 2004. 
157.4      Sec. 3.  Minnesota Statutes 2003 Supplement, section 
157.5   477A.013, subdivision 8, is amended to read: 
157.6      Subd. 8.  [CITY FORMULA AID.] In calendar year 2004 and 
157.7   subsequent years, the formula aid for a city is equal to the 
157.8   need increase percentage multiplied by the difference between 
157.9   (1) the city's revenue need multiplied by its population, and 
157.10  (2) the sum of the city's net tax capacity multiplied by the tax 
157.11  effort rate, and the taconite aids under sections 298.28 and 
157.12  298.282, multiplied by the following percentages:  
157.13     (i) zero percent for aids payable in 2004; 
157.14     (ii) 25 percent for aids payable in 2005; 
157.15     (iii) 50 percent for aids payable in 2006; 
157.16     (iv) 75 percent for aids payable in 2007; and 
157.17     (v) 100 percent for aids payable in 2008 and thereafter.  
157.18  No city may have a formula aid amount less than zero.  The need 
157.19  increase percentage must be the same for all cities.  
157.20     The applicable need increase percentage must be calculated 
157.21  by the Department of Revenue so that the total of the aid under 
157.22  subdivision 9 equals the total amount available for aid under 
157.23  section 477A.03 after the subtraction under section 477A.014, 
157.24  subdivisions 4 and 5.  
157.25     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
157.26  477A.013, subdivision 9, is amended to read: 
157.27     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
157.28  2002 and thereafter, each city shall receive an aid distribution 
157.29  equal to the sum of (1) the city formula aid under subdivision 
157.30  8, and (2) its city aid base. 
157.31     (b) The aid for a city in calendar year 2004 shall not 
157.32  exceed the amount of its aid in calendar year 2003 after the 
157.33  reductions under Laws 2003, First Special Session chapter 21, 
157.34  article 5.  
157.35     (c) For aids payable in 2005 and thereafter, the total aid 
157.36  for any city shall not exceed the sum of (1) ten percent of the 
158.1   city's net levy for the year prior to the aid distribution plus 
158.2   (2) its total aid in the previous year.  For aids payable in 
158.3   2005 and thereafter, the total aid for any city with a 
158.4   population of 2,500 or more may not decrease from its total aid 
158.5   under this section in the previous year by an amount greater 
158.6   than ten percent of its net levy in the year prior to the aid 
158.7   distribution. 
158.8      (d) For aids payable in 2004 only, the total aid for a city 
158.9   with a population less than 2,500 may not be less than the 
158.10  amount it was certified to receive in 2003 minus the greater of 
158.11  (1) the reduction to this aid payment in 2003 under Laws 2003, 
158.12  First Special Session chapter 21, article 5, or (2) five percent 
158.13  of its 2003 aid amount.  (c) For aids payable in 2005 and 
158.14  thereafter, the total aid for a city with a population less than 
158.15  2,500 must not be less than the amount it was certified to 
158.16  receive in the previous year minus five percent of its 2003 
158.17  certified aid amount. 
158.18     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
158.19  payable in 2005 and thereafter. 
158.20     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
158.21  477A.03, subdivision 2a, is amended to read: 
158.22     Subd. 2a.  [CITIES.] For aids payable in 2004, the total 
158.23  aids paid under section 477A.013, subdivision 9, are limited to 
158.24  $429,000,000.  For aids payable in 2005 and thereafter, the 
158.25  total aids paid under section 477A.013, subdivision 9, are 
158.26  increased to $437,052,000 $497,052,000.  For aids payable in 
158.27  2006, the total aids paid under section 477A.013, subdivision 9, 
158.28  are increased to $503,052,000.  For aids payable in 2007 and 
158.29  thereafter, the amount necessary to make the payments provided 
158.30  under section 477A.013, subdivision 9, is appropriated. 
158.31     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
158.32  payable in 2005 and thereafter. 
158.33     Sec. 6.  Minnesota Statutes 2002, section 477A.11, 
158.34  subdivision 4, is amended to read: 
158.35     Subd. 4.  [OTHER NATURAL RESOURCES LAND.] "Other natural 
158.36  resources land" means:  
159.1      (1) any other land presently owned in fee title by the 
159.2   state and administered by the commissioner, or any tax-forfeited 
159.3   land, other than platted lots within a city or those lands 
159.4   described under subdivision 3, clause (2), which is owned by the 
159.5   state and administered by the commissioner or by the county in 
159.6   which it is located; and 
159.7      (2) land leased by the state from the United States of 
159.8   America through the United States Secretary of Agriculture 
159.9   pursuant to Title III of the Bankhead Jones Farm Tenant Act, 
159.10  which land is commonly referred to as land utilization project 
159.11  land that is administered by the commissioner. 
159.12     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
159.13  payable in 2005 and thereafter. 
159.14     Sec. 7.  Minnesota Statutes 2002, section 477A.11, is 
159.15  amended by adding a subdivision to read: 
159.16     Subd. 5.  [LAND UTILIZATION PROJECT LAND.] "Land 
159.17  utilization project land" means land that is leased by the state 
159.18  from the United States through the United States Secretary of 
159.19  Agriculture according to Title III of the Bankhead Jones Farm 
159.20  Tenant Act and that is administered by the commissioner. 
159.21     Sec. 8.  Minnesota Statutes 2002, section 477A.12, 
159.22  subdivision 1, is amended to read: 
159.23     Subdivision 1.  [TYPES OF LAND; PAYMENTS.] (a) As an offset 
159.24  for expenses incurred by counties and towns in support of 
159.25  natural resources lands, the following amounts are annually 
159.26  appropriated to the commissioner of natural resources from the 
159.27  general fund for transfer to the commissioner of revenue.  The 
159.28  commissioner of revenue shall pay the transferred funds to 
159.29  counties as required by sections 477A.11 to 477A.145.  The 
159.30  amounts are: 
159.31     (1) for acquired natural resources land, $3, as adjusted 
159.32  for inflation under section 477A.145, multiplied by the total 
159.33  number of acres of acquired natural resources land or, at the 
159.34  county's option three-fourths of one percent of the appraised 
159.35  value of all acquired natural resources land in the county, 
159.36  whichever is greater; 
160.1      (2) $3, as adjusted for inflation under section 477A.145, 
160.2   multiplied by the total number of acres of land utilization 
160.3   project land; 
160.4      (3) 75 cents, as adjusted for inflation under section 
160.5   477A.145, multiplied by the number of acres of 
160.6   county-administered other natural resources land; and 
160.7      (3) (4) 37.5 cents, as adjusted for inflation under section 
160.8   477A.145, multiplied by the number of acres of 
160.9   commissioner-administered other natural resources land located 
160.10  in each county as of July 1 of each year prior to the payment 
160.11  year. 
160.12     (b) The amount determined under paragraph (a), clause (1), 
160.13  is payable for land that is acquired from a private owner and 
160.14  owned by the Department of Transportation for the purpose of 
160.15  replacing wetland losses caused by transportation projects, but 
160.16  only if the county contains more than 500 acres of such land at 
160.17  the time the certification is made under subdivision 2. 
160.18     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
160.19  payable in 2005 and thereafter. 
160.20     Sec. 9.  Minnesota Statutes 2002, section 477A.12, 
160.21  subdivision 2, is amended to read: 
160.22     Subd. 2.  [PROCEDURE.] Lands for which payments in lieu are 
160.23  made pursuant to section 97A.061, subdivision 3, and Laws 1973, 
160.24  chapter 567, shall not be eligible for payments under this 
160.25  section.  Each county auditor shall certify to the Department of 
160.26  Natural Resources during July of each year prior to the payment 
160.27  year the number of acres of county-administered other natural 
160.28  resources land within the county.  The Department of Natural 
160.29  resources may, in addition to the certification of acreage, 
160.30  require descriptive lists of land so certified.  The 
160.31  commissioner of natural resources shall determine and certify to 
160.32  the commissioner of revenue by March 1 of the payment year:  
160.33     (1) the number of acres and most recent appraised value of 
160.34  acquired natural resources land within each county; 
160.35     (2) the number of acres of commissioner-administered 
160.36  natural resources land within each county; and 
161.1      (3) the number of acres of county-administered other 
161.2   natural resources land within each county, based on the reports 
161.3   filed by each county auditor with the commissioner of natural 
161.4   resources; and 
161.5      (4) the number of acres of land utilization project land 
161.6   within each county and the net proceeds from timber sales on 
161.7   land utilization project lands in each county. 
161.8      The commissioner of transportation shall determine and 
161.9   certify to the commissioner of revenue by March 1 of the payment 
161.10  year the number of acres of land and the appraised value of the 
161.11  land described in subdivision 1, paragraph (b), but only if it 
161.12  exceeds 500 acres. 
161.13     The commissioner of revenue shall determine the 
161.14  distributions provided for in this section using the number of 
161.15  acres and appraised values certified by the commissioner of 
161.16  natural resources and the commissioner of transportation by 
161.17  March 1 of the payment year. 
161.18     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
161.19  payable in 2005 and thereafter. 
161.20     Sec. 10.  Minnesota Statutes 2002, section 477A.14, 
161.21  subdivision 1, is amended to read: 
161.22     Subdivision 1.  [GENERAL DISTRIBUTION.] Except as provided 
161.23  in subdivision 2 or in section 97A.061, subdivision 5, 40 
161.24  percent of the total payment to the county shall be deposited in 
161.25  the county general revenue fund to be used to provide property 
161.26  tax levy reduction.  The remainder shall be distributed by the 
161.27  county in the following priority:  
161.28     (a) 37.5 cents, as adjusted for inflation under section 
161.29  477A.145, for each acre of county-administered other natural 
161.30  resources land shall be deposited in a resource development fund 
161.31  to be created within the county treasury for use in resource 
161.32  development, forest management, game and fish habitat 
161.33  improvement, and recreational development and maintenance of 
161.34  county-administered other natural resources land.  Any county 
161.35  receiving less than $5,000 annually for the resource development 
161.36  fund may elect to deposit that amount in the county general 
162.1   revenue fund; 
162.2      (b) From the funds remaining, within 30 days of receipt of 
162.3   the payment to the county, the county treasurer shall pay each 
162.4   organized township 30 cents, as adjusted for inflation under 
162.5   section 477A.145, for each acre of acquired natural resources 
162.6   land, each acre of land utilization project land, and each acre 
162.7   of land described in section 477A.12, subdivision 1, paragraph 
162.8   (b), and 7.5 cents, as adjusted for inflation under section 
162.9   477A.145, for each acre of other natural resources land located 
162.10  within its boundaries.  Payments for natural resources lands not 
162.11  located in an organized township shall be deposited in the 
162.12  county general revenue fund.  Payments to counties and townships 
162.13  pursuant to this paragraph shall be used to provide property tax 
162.14  levy reduction, except that of the payments for natural 
162.15  resources lands not located in an organized township, the county 
162.16  may allocate the amount determined to be necessary for 
162.17  maintenance of roads in unorganized townships.  Provided that, 
162.18  if the total payment to the county pursuant to section 477A.12 
162.19  is not sufficient to fully fund the distribution provided for in 
162.20  this clause, the amount available shall be distributed to each 
162.21  township and the county general revenue fund on a pro rata 
162.22  basis; and 
162.23     (c) Any remaining funds shall be deposited in the county 
162.24  general revenue fund.  Provided that, if the distribution to the 
162.25  county general revenue fund exceeds $35,000, the excess shall be 
162.26  used to provide property tax levy reduction. 
162.27     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
162.28  payable in 2005 and thereafter. 
162.29     Sec. 11.  Laws 2003, First Special Session chapter 21, 
162.30  article 5, section 13, is amended to read: 
162.31     Sec. 13.  [2004 CITY AID REDUCTIONS.] 
162.32     The commissioner of revenue shall compute an aid reduction 
162.33  amount for 2004 for each city as provided in this section. 
162.34     The initial aid reduction amount for each city is the 
162.35  amount by which the city's aid distribution under Minnesota 
162.36  Statutes, section 477A.013, and related provisions payable in 
163.1   2003 exceeds the city's 2004 distribution under those provisions.
163.2      The minimum aid reduction amount for a city is the amount 
163.3   of its reduction in 2003 under section 12.  If a city receives 
163.4   an increase to its city aid base under Minnesota Statutes, 
163.5   section 477A.011, subdivision 36, its minimum aid reduction is 
163.6   reduced by an equal amount. 
163.7      The maximum aid reduction amount for a city is an amount 
163.8   equal to 14 percent of the city's total 2004 levy plus aid 
163.9   revenue base, except that if the city has a city net tax 
163.10  capacity for aids payable in 2004, as defined in Minnesota 
163.11  Statutes, section 477A.011, subdivision 20, of $700 per capita 
163.12  or less, the maximum aid reduction shall not exceed an amount 
163.13  equal to 13 percent of the city's total 2004 levy plus aid 
163.14  revenue base. 
163.15     If the initial aid reduction amount for a city is less than 
163.16  the minimum aid reduction amount for that city, the final aid 
163.17  reduction amount for the city is the sum of the initial aid 
163.18  reduction amount and the lesser of the amount of the city's 
163.19  payable 2004 reimbursement under Minnesota Statutes, section 
163.20  273.1384, or the difference between the minimum and initial aid 
163.21  reduction amounts for the city, and the amount of the final aid 
163.22  reduction in excess of the initial aid reduction is deducted 
163.23  from the city's reimbursements pursuant to Minnesota Statutes, 
163.24  section 273.1384. 
163.25     If the initial aid reduction amount for a city is greater 
163.26  than the maximum aid reduction amount for the city, the city 
163.27  receives an additional distribution under this section equal to 
163.28  the result of subtracting the maximum aid reduction amount from 
163.29  the initial aid reduction amount.  This distribution shall be 
163.30  paid in equal installments in 2004 on the dates specified in 
163.31  Minnesota Statutes, section 477A.015.  The amount necessary for 
163.32  these additional distributions is appropriated to the 
163.33  commissioner of revenue from the general fund in fiscal year 
163.34  2005. 
163.35     The initial aid reduction is applied to the city's 
163.36  distribution pursuant to Minnesota Statutes, section 477A.013, 
164.1   and any aid reduction in excess of the initial aid reduction is 
164.2   applied to the city's reimbursements pursuant to Minnesota 
164.3   Statutes, section 273.1384. 
164.4      To the extent that sufficient information is available on 
164.5   each payment date in 2004, the commissioner of revenue shall pay 
164.6   the reimbursements reduced under this section in equal 
164.7   installments on the payment dates provided in law. 
164.8      <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
164.9   payable in 2004. 
164.10                             ARTICLE 5
164.11                         LOCAL DEVELOPMENT
164.12     Section 1.  Minnesota Statutes 2002, section 116J.993, 
164.13  subdivision 3, is amended to read: 
164.14     Subd. 3.  [BUSINESS SUBSIDY.] "Business subsidy" or 
164.15  "subsidy" means a state or local government agency grant, 
164.16  contribution of personal property, real property, 
164.17  infrastructure, the principal amount of a loan at rates below 
164.18  those commercially available to the recipient, any reduction or 
164.19  deferral of any tax or any fee, any guarantee of any payment 
164.20  under any loan, lease, or other obligation, or any preferential 
164.21  use of government facilities given to a business. 
164.22     The following forms of financial assistance are not a 
164.23  business subsidy: 
164.24     (1) a business subsidy of less than $25,000; 
164.25     (2) assistance that is generally available to all 
164.26  businesses or to a general class of similar businesses, such as 
164.27  a line of business, size, location, or similar general criteria; 
164.28     (3) public improvements to buildings or lands owned by the 
164.29  state or local government that serve a public purpose and do not 
164.30  principally benefit a single business or defined group of 
164.31  businesses at the time the improvements are made; 
164.32     (4) redevelopment property polluted by contaminants as 
164.33  defined in section 116J.552, subdivision 3; 
164.34     (5) assistance provided for the sole purpose of renovating 
164.35  old or decaying building stock or bringing it up to code and 
164.36  assistance provided for designated historic preservation 
165.1   districts, provided that the assistance is equal to or less than 
165.2   50 percent of the total cost; 
165.3      (6) assistance to provide job readiness and training 
165.4   services if the sole purpose of the assistance is to provide 
165.5   those services, except when such assistance is paid for by 
165.6   expenditures of tax increments under section 469.176, 
165.7   subdivision 4m; 
165.8      (7) assistance for housing; 
165.9      (8) assistance for pollution control or abatement, 
165.10  including assistance for a tax increment financing hazardous 
165.11  substance subdistrict as defined under section 469.174, 
165.12  subdivision 23; 
165.13     (9) assistance for energy conservation; 
165.14     (10) tax reductions resulting from conformity with federal 
165.15  tax law; 
165.16     (11) workers' compensation and unemployment compensation; 
165.17     (12) benefits derived from regulation; 
165.18     (13) indirect benefits derived from assistance to 
165.19  educational institutions; 
165.20     (14) funds from bonds allocated under chapter 474A, bonds 
165.21  issued to refund outstanding bonds, and bonds issued for the 
165.22  benefit of an organization described in section 501(c)(3) of the 
165.23  Internal Revenue Code of 1986, as amended through December 31, 
165.24  1999; 
165.25     (15) assistance for a collaboration between a Minnesota 
165.26  higher education institution and a business; 
165.27     (16) assistance for a tax increment financing soils 
165.28  condition district as defined under section 469.174, subdivision 
165.29  19; 
165.30     (17) redevelopment when the recipient's investment in the 
165.31  purchase of the site and in site preparation is 70 percent or 
165.32  more of the assessor's current year's estimated market value; 
165.33     (18) general changes in tax increment financing law and 
165.34  other general tax law changes of a principally technical nature; 
165.35     (19) federal assistance until the assistance has been 
165.36  repaid to, and reinvested by, the state or local government 
166.1   agency; 
166.2      (20) funds from dock and wharf bonds issued by a seaway 
166.3   port authority; 
166.4      (21) business loans and loan guarantees of $75,000 or less; 
166.5   and 
166.6      (22) federal loan funds provided through the United States 
166.7   Department of Commerce, Economic Development Administration. 
166.8      Sec. 2.  Minnesota Statutes 2002, section 116J.993, is 
166.9   amended by adding a subdivision to read: 
166.10     Subd. 8.  [RESIDENCE.] "Residence" means the place where an 
166.11  individual has established a permanent home from which the 
166.12  individual has no present intention of moving. 
166.13     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
166.14  116J.994, subdivision 4, is amended to read: 
166.15     Subd. 4.  [WAGE AND JOB GOALS.] The subsidy agreement, in 
166.16  addition to any other goals, must include:  (1) goals for the 
166.17  number of jobs created, which may include separate goals for the 
166.18  number of part-time or full-time jobs, or, in cases where job 
166.19  loss is specific and demonstrable, goals for the number of jobs 
166.20  retained; (2) wage goals for any jobs created or retained; and 
166.21  (3) wage goals for any jobs to be enhanced through increased 
166.22  wages.  After a public hearing, if the creation or retention of 
166.23  jobs is determined not to be a goal, the wage and job goals may 
166.24  be set at zero.  The goals for the number of jobs to be created 
166.25  or retained must result in job creation or retention by the 
166.26  recipient within the granting jurisdiction overall. 
166.27     In addition to other specific goal time frames, the wage 
166.28  and job goals must contain specific goals to be attained within 
166.29  two years of the benefit date. 
166.30     <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2004, 
166.31  and applies to subsidy agreements entered into on or after that 
166.32  date. 
166.33     Sec. 4.  Minnesota Statutes 2002, section 116J.994, 
166.34  subdivision 5, is amended to read: 
166.35     Subd. 5.  [PUBLIC NOTICE AND HEARING.] (a) Before granting 
166.36  a business subsidy that exceeds $500,000 for a state government 
167.1   grantor and $100,000 for a local government grantor, the grantor 
167.2   must provide public notice and a hearing on the subsidy.  A 
167.3   public hearing and notice under this subdivision is not required 
167.4   if a hearing and notice on the subsidy is otherwise required by 
167.5   law. 
167.6      (b) Public notice of a proposed business subsidy under this 
167.7   subdivision by a state government grantor, other than the Iron 
167.8   Range Resources and Rehabilitation Board, must be published in 
167.9   the State Register.  Public notice of a proposed business 
167.10  subsidy under this subdivision by a local government grantor or 
167.11  the Iron Range Resources and Rehabilitation Board must be 
167.12  published in a local newspaper of general circulation.  The 
167.13  public notice must identify the location at which information 
167.14  about the business subsidy, including a summary of the terms of 
167.15  the subsidy, is available.  Published notice should be 
167.16  sufficiently conspicuous in size and placement to distinguish 
167.17  the notice from the surrounding text.  The grantor must make the 
167.18  information available in printed paper copies and, if possible, 
167.19  on the Internet.  The government agency must provide at least a 
167.20  ten-day notice for the public hearing. 
167.21     (c) The public notice must include the date, time, and 
167.22  place of the hearing. 
167.23     (d) The public hearing by a state government grantor other 
167.24  than the Iron Range Resources and Rehabilitation Board must be 
167.25  held in St. Paul. 
167.26     (e) If more than one nonstate grantor provides a business 
167.27  subsidy to the same recipient, the nonstate grantors may 
167.28  designate one nonstate grantor to hold a single public hearing 
167.29  regarding the business subsidies provided by all nonstate 
167.30  grantors.  For the purposes of this paragraph, "nonstate 
167.31  grantor" includes the iron range resources and rehabilitation 
167.32  board. 
167.33     (f) The public notice of any public meeting about a 
167.34  business subsidy agreement, including those required by this 
167.35  subdivision and by subdivision 4, must include notice that a 
167.36  person with residence in or the owner of taxable property in the 
168.1   granting jurisdiction may file a written complaint with the 
168.2   grantor if the grantor fails to comply with sections 116J.993 to 
168.3   116J.995, and that no action may be filed against the grantor 
168.4   for such failure to comply unless a written complaint is filed. 
168.5      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
168.6   116J.994, subdivision 9, is amended to read: 
168.7      Subd. 9.  [COMPILATION AND SUMMARY REPORT.] The Department 
168.8   of Employment and Economic Development must publish a 
168.9   compilation and summary of the results of the reports for the 
168.10  previous calendar year by August 1 of 2004 and every other year 
168.11  thereafter.  The reports of the government agencies to the 
168.12  department and the compilation and summary report of the 
168.13  department must be made available to the public.  The 
168.14  commissioner must make copies of all business subsidy reports 
168.15  submitted by local and state granting agencies available on the 
168.16  department's Web site by October 1 of the year in which they 
168.17  were submitted.  
168.18     The commissioner must coordinate the production of reports 
168.19  so that useful comparisons across time periods and across 
168.20  grantors can be made.  The commissioner may add other 
168.21  information to the report as the commissioner deems necessary to 
168.22  evaluate business subsidies.  Among the information in the 
168.23  summary and compilation report, the commissioner must include: 
168.24     (1) total amount of subsidies awarded in each development 
168.25  region of the state; 
168.26     (2) distribution of business subsidy amounts by size of the 
168.27  business subsidy; 
168.28     (3) distribution of business subsidy amounts by time 
168.29  category; 
168.30     (4) distribution of subsidies by type and by public 
168.31  purpose; 
168.32     (5) percent of all business subsidies that reached their 
168.33  goals; 
168.34     (6) percent of business subsidies that did not reach their 
168.35  goals by two years from the benefit date; 
168.36     (7) total dollar amount of business subsidies that did not 
169.1   meet their goals after two years from the benefit date; 
169.2      (8) percent of subsidies that did not meet their goals and 
169.3   that did not receive repayment; 
169.4      (9) list of recipients that have failed to meet the terms 
169.5   of a subsidy agreement in the past five years and have not 
169.6   satisfied their repayment obligations; 
169.7      (10) number of part-time and full-time jobs within separate 
169.8   bands of wages; and 
169.9      (11) benefits paid within separate bands of wages.  
169.10     Sec. 6.  Minnesota Statutes 2002, section 116J.994, is 
169.11  amended by adding a subdivision to read: 
169.12     Subd. 11.  [ENFORCEMENT.] (a) A person with residence in or 
169.13  an owner of taxable property located in the jurisdiction of the 
169.14  grantor may bring an action for equitable relief arising out of 
169.15  the failure of the grantor to comply with sections 116J.993 to 
169.16  116J.995.  The court may award a prevailing party in an action 
169.17  under this subdivision costs and reasonable attorney fees. 
169.18     (b) Prior to bringing an action, the party must file a 
169.19  written complaint with the grantor stating the alleged violation 
169.20  and proposing a remedy.  The grantor has up to 30 days to reply 
169.21  to the complaint in writing and may take action to comply with 
169.22  sections 116J.993 to 116J.995. 
169.23     (c) The written complaint under this subdivision for 
169.24  failure to comply with subdivisions 1 to 5, must be filed with 
169.25  the grantor within 180 days after approval of the subsidy 
169.26  agreement under subdivision 3, paragraph (d).  An action under 
169.27  this subdivision must be commenced within 30 days following 
169.28  receipt of the grantor's reply, or within 180 days after 
169.29  approval of the subsidy agreement under subdivision 3, paragraph 
169.30  (d), whichever is later. 
169.31     <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2004, 
169.32  and applies to subsidy agreements entered into on or after that 
169.33  date. 
169.34     Sec. 7.  Minnesota Statutes 2002, section 161.1231, is 
169.35  amended by adding a subdivision to read: 
169.36     Subd. 11.  [TRANSFER OF OWNERSHIP.] The commissioner shall, 
170.1   at the earliest feasible date after receiving payment, transfer 
170.2   ownership of the parking facilities to the city of Minneapolis.  
170.3   The payment must be equal to the amount of state funds spent by 
170.4   the commissioner for construction of the facilities.  Upon 
170.5   assuming ownership of the facilities, the city shall operate the 
170.6   facilities in accordance with the rules adopted by the 
170.7   commissioner under subdivision 2.  Upon assumption of ownership, 
170.8   the city shall assume the authority to collect fees for use of 
170.9   the facilities under subdivision 5.  The commissioner shall take 
170.10  no action under this section that would result in federal 
170.11  sanctions against Minnesota or require the repayment of any 
170.12  state funds to the federal government.  The commissioner shall 
170.13  deposit all money received under this subdivision in the trunk 
170.14  highway fund. 
170.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
170.16  the governing body of the city of Minneapolis and its chief 
170.17  clerical officer comply with Minnesota Statutes, section 
170.18  645.021, subdivisions 2 and 3. 
170.19     Sec. 8.  Minnesota Statutes 2002, section 469.034, 
170.20  subdivision 2, is amended to read: 
170.21     Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
170.22  authority may pledge the general obligation of the general 
170.23  jurisdiction governmental unit as additional security for bonds 
170.24  payable from income or revenues of the project or the 
170.25  authority.  The authority must find that the pledged revenues 
170.26  will equal or exceed 110 percent of the principal and interest 
170.27  due on the bonds for each year.  The proceeds of the bonds must 
170.28  be used for a qualified housing development project or 
170.29  projects.  The obligations must be issued and sold in the manner 
170.30  and following the procedures provided by chapter 475, except the 
170.31  obligations are not subject to approval by the electors and the 
170.32  maturities may extend to not more than 30 years from the 
170.33  estimated date of completion of the project.  The authority is 
170.34  the municipality for purposes of chapter 475.  
170.35     (b) The principal amount of the issue must be approved by 
170.36  the governing body of the general jurisdiction governmental unit 
171.1   whose general obligation is pledged.  Public hearings must be 
171.2   held on issuance of the obligations by both the authority and 
171.3   the general jurisdiction governmental unit.  The hearings must 
171.4   be held at least 15 days, but not more than 120 days, before the 
171.5   sale of the obligations. 
171.6      (c) The maximum amount of general obligation bonds that may 
171.7   be issued and outstanding under this section equals the greater 
171.8   of (1) one-half of one percent of the taxable market value of 
171.9   the general jurisdiction governmental unit whose general 
171.10  obligation which includes a tax on property is pledged, or (2) 
171.11  $3,000,000.  In the case of county or multicounty general 
171.12  obligation bonds, the outstanding general obligation bonds of 
171.13  all cities in the county or counties issued under this 
171.14  subdivision must be added in calculating the limit under clause 
171.15  (1). 
171.16     (d) "General jurisdiction governmental unit" means the city 
171.17  in which the housing development project is located.  In the 
171.18  case of a county or multicounty authority, the county or 
171.19  counties may act as the general jurisdiction governmental unit.  
171.20  In the case of a multicounty authority, the pledge of the 
171.21  general obligation is a pledge of a tax on the taxable property 
171.22  in each of the counties. 
171.23     (e) "Qualified housing development project" means a housing 
171.24  development project providing housing either for the elderly or 
171.25  for individuals and families with incomes not greater than 80 
171.26  percent of the median family income as estimated by the United 
171.27  States Department of Housing and Urban Development for the 
171.28  standard metropolitan statistical area or the nonmetropolitan 
171.29  county in which the project is located, and will.  The project 
171.30  must be owned for the term of the bonds either by the authority 
171.31  for the term of the bonds or by a limited partnership or other 
171.32  entity in which the authority or another entity under the sole 
171.33  control of the authority is the sole general partner.  The 
171.34  partnership or other entity must receive either:  (1) an 
171.35  allocation from the Department of Finance or an entitlement 
171.36  issuer of tax-exempt bonding authority for the project and a 
172.1   preliminary determination by the Minnesota Housing Finance 
172.2   Agency or the applicable suballocator of tax credits that the 
172.3   project will qualify for four percent low-income housing tax 
172.4   credits; or (2) a reservation of nine percent low-income housing 
172.5   tax credits from the Minnesota Housing Finance Agency or a 
172.6   suballocator of tax credits for the project.  A qualified 
172.7   housing development project may admit nonelderly individuals and 
172.8   families with higher incomes if: 
172.9      (1) three years have passed since initial occupancy; 
172.10     (2) the authority finds the project is experiencing 
172.11  unanticipated vacancies resulting in insufficient revenues, 
172.12  because of changes in population or other unforeseen 
172.13  circumstances that occurred after the initial finding of 
172.14  adequate revenues; and 
172.15     (3) the authority finds a tax levy or payment from general 
172.16  assets of the general jurisdiction governmental unit will be 
172.17  necessary to pay debt service on the bonds if higher income 
172.18  individuals or families are not admitted. 
172.19     <b>[EFFECTIVE DATE.]</b> This section is effective for bonds 
172.20  issued after the day following final enactment. 
172.21     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
172.22  469.174, subdivision 10, is amended to read: 
172.23     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
172.24  district" means a type of tax increment financing district 
172.25  consisting of a project, or portions of a project, within which 
172.26  the authority finds by resolution that one or more of the 
172.27  following conditions, reasonably distributed throughout the 
172.28  district, exists: 
172.29     (1) parcels consisting of 70 percent of the area of the 
172.30  district are occupied by buildings, streets, utilities, paved or 
172.31  gravel parking lots, or other similar structures and more than 
172.32  50 percent of the buildings, not including outbuildings, are 
172.33  structurally substandard to a degree requiring substantial 
172.34  renovation or clearance; 
172.35     (2) the property consists of vacant, unused, underused, 
172.36  inappropriately used, or infrequently used railyards, rail 
173.1   storage facilities, or excessive or vacated railroad 
173.2   rights-of-way; 
173.3      (3) tank facilities, or property whose immediately previous 
173.4   use was for tank facilities, as defined in section 115C.02, 
173.5   subdivision 15, if the tank facilities: 
173.6      (i) have or had a capacity of more than 1,000,000 gallons; 
173.7      (ii) are located adjacent to rail facilities; and 
173.8      (iii) have been removed or are unused, underused, 
173.9   inappropriately used, or infrequently used; or 
173.10     (4) a qualifying disaster area, as defined in subdivision 
173.11  10b. 
173.12     (b) For purposes of this subdivision, "structurally 
173.13  substandard" shall mean containing defects in structural 
173.14  elements or a combination of deficiencies in essential utilities 
173.15  and facilities, light and ventilation, fire protection including 
173.16  adequate egress, layout and condition of interior partitions, or 
173.17  similar factors, which defects or deficiencies are of sufficient 
173.18  total significance to justify substantial renovation or 
173.19  clearance.  A building originally constructed for use as a 
173.20  public or private school, 50 percent or more of the square 
173.21  footage of which was constructed 30 or more years before 
173.22  approval of the plan, is deemed to be structurally substandard 
173.23  for purposes of this subdivision, notwithstanding paragraph (c), 
173.24  if the tax increment financing plan provides for demolition or 
173.25  substantial renovation of the building. 
173.26     (c) A building is not structurally substandard if it is in 
173.27  compliance with the building code applicable to new buildings or 
173.28  could be modified to (1) satisfy the building code, plus (2) if 
173.29  the tax increment financing plan provides for demolition or 
173.30  substantial renovation of the building, abate or remove asbestos 
173.31  and lead, at a cost of less than 15 percent of the cost of 
173.32  constructing a new structure of the same square footage and type 
173.33  on the site.  The municipality may find that a building is not 
173.34  disqualified as structurally substandard under the preceding 
173.35  sentence on the basis of reasonably available evidence, such as 
173.36  the size, type, and age of the building, the average cost of 
174.1   plumbing, electrical, or structural repairs, or other similar 
174.2   reliable evidence.  The municipality may not make such a 
174.3   determination without an interior inspection of the property, 
174.4   but need not have an independent, expert appraisal prepared of 
174.5   the cost of repair and rehabilitation of the building.  An 
174.6   interior inspection of the property is not required, if the 
174.7   municipality finds that (1) the municipality or authority is 
174.8   unable to gain access to the property after using its best 
174.9   efforts to obtain permission from the party that owns or 
174.10  controls the property; and (2) the evidence otherwise supports a 
174.11  reasonable conclusion that the building is structurally 
174.12  substandard.  Items of evidence that support such a conclusion 
174.13  include recent fire or police inspections, on-site property tax 
174.14  appraisals or housing inspections, exterior evidence of 
174.15  deterioration, or other similar reliable evidence.  Written 
174.16  documentation of the findings and reasons why an interior 
174.17  inspection was not conducted must be made and retained under 
174.18  section 469.175, subdivision 3, clause (1).  Failure of a 
174.19  building to be disqualified under the provisions of this 
174.20  paragraph is a necessary, but not a sufficient, condition to 
174.21  determining that the building is substandard.  
174.22     (d) A parcel is deemed to be occupied by a structurally 
174.23  substandard building for purposes of the finding under paragraph 
174.24  (a) if all of the following conditions are met: 
174.25     (1) the parcel was occupied by a substandard building 
174.26  within three years of the filing of the request for 
174.27  certification of the parcel as part of the district with the 
174.28  county auditor; 
174.29     (2) the substandard building was demolished or removed by 
174.30  the authority or the demolition or removal was financed by the 
174.31  authority or was done by a developer under a development 
174.32  agreement with the authority; 
174.33     (3) the authority found by resolution before the demolition 
174.34  or removal that the parcel was occupied by a structurally 
174.35  substandard building and that after demolition and clearance the 
174.36  authority intended to include the parcel within a district; and 
175.1      (4) upon filing the request for certification of the tax 
175.2   capacity of the parcel as part of a district, the authority 
175.3   notifies the county auditor that the original tax capacity of 
175.4   the parcel must be adjusted as provided by section 469.177, 
175.5   subdivision 1, paragraph (f). 
175.6      (e) For purposes of this subdivision, a parcel is not 
175.7   occupied by buildings, streets, utilities, paved or gravel 
175.8   parking lots, or other similar structures unless 15 percent of 
175.9   the area of the parcel contains buildings, streets, utilities, 
175.10  paved or gravel parking lots, or other similar structures. 
175.11     (f) For districts consisting of two or more noncontiguous 
175.12  areas, each area must qualify as a redevelopment district under 
175.13  paragraph (a) to be included in the district, and the entire 
175.14  area of the district must satisfy paragraph (a). 
175.15     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
175.16  for which the request for certification was made after June 30, 
175.17  2004. 
175.18     Sec. 10.  Minnesota Statutes 2002, section 469.174, is 
175.19  amended by adding a subdivision to read: 
175.20     Subd. 30.  [URBAN RENEWAL AREA.] "Urban renewal area" means 
175.21  a contiguous geographic area designated within a project and 
175.22  within which all parcels must be eligible for inclusion in a 
175.23  redevelopment, renewal and renovation, or soils condition 
175.24  district or are currently located within a redevelopment, 
175.25  renewal and renovation, or soils condition district certified 
175.26  within ten years before or after the date of approval of the 
175.27  urban renewal area by the city or county, whichever is later.  
175.28  In determining eligibility for inclusion in a district, each 
175.29  parcel may only be considered as a part of one district. 
175.30     <b>[EFFECTIVE DATE.]</b> This section is effective for urban 
175.31  renewal areas established on or after the date of final 
175.32  enactment. 
175.33     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
175.34  469.175, subdivision 1, is amended to read: 
175.35     Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] A tax 
175.36  increment financing plan shall contain:  
176.1      (1) a statement of objectives of an authority for the 
176.2   improvement of a project; 
176.3      (2) a statement as to the development program for the 
176.4   project, including the property within the project, if any, that 
176.5   the authority intends to acquire; 
176.6      (3) a list of any development activities that the plan 
176.7   proposes to take place within the project, for which contracts 
176.8   have been entered into at the time of the preparation of the 
176.9   plan, including the names of the parties to the contract, the 
176.10  activity governed by the contract, the cost stated in the 
176.11  contract, and the expected date of completion of that activity; 
176.12     (4) identification or description of the type of any other 
176.13  specific development reasonably expected to take place within 
176.14  the project, and the date when the development is likely to 
176.15  occur; 
176.16     (5) estimates of the following:  
176.17     (i) cost of the project, including administrative expenses, 
176.18  except that if part of the cost of the project is paid or 
176.19  financed with increment from the tax increment financing 
176.20  district, the tax increment financing plan for the district must 
176.21  contain an estimate of the amount of the cost of the project, 
176.22  including administrative expenses, that will be paid or financed 
176.23  with tax increments from the district; 
176.24     (ii) amount of bonded indebtedness to be incurred; 
176.25     (iii) sources of revenue to finance or otherwise pay public 
176.26  costs; 
176.27     (iv) the most recent net tax capacity of taxable real 
176.28  property within the tax increment financing district and within 
176.29  any subdistrict; 
176.30     (v) the estimated captured net tax capacity of the tax 
176.31  increment financing district at completion; and 
176.32     (vi) the duration of the tax increment financing district's 
176.33  and any subdistrict's existence; 
176.34     (6) statements of the authority's alternate estimates of 
176.35  the impact of tax increment financing on the net tax capacities 
176.36  of all taxing jurisdictions in which the tax increment financing 
177.1   district is located in whole or in part.  For purposes of one 
177.2   statement, the authority shall assume that the estimated 
177.3   captured net tax capacity would be available to the taxing 
177.4   jurisdictions without creation of the district, and for purposes 
177.5   of the second statement, the authority shall assume that none of 
177.6   the estimated captured net tax capacity would be available to 
177.7   the taxing jurisdictions without creation of the district or 
177.8   subdistrict; 
177.9      (7) identification and description of studies and analyses 
177.10  used to make the determination set forth in subdivision 3, 
177.11  clause (2); and 
177.12     (8) identification of all parcels to be included in the 
177.13  district or any subdistrict; and 
177.14     (9) identification of any job training costs intended to be 
177.15  paid by use of tax increments, including the name of the 
177.16  employer whose employees will be trained and the nature and cost 
177.17  of the training.  The plan is not required to identify the 
177.18  provider of the job training. 
177.19     <b>[EFFECTIVE DATE.]</b> This section applies to districts for 
177.20  which the request for certification was made after July 31, 
177.21  1979, and is effective for tax increment financing plans 
177.22  approved after June 30, 2004.  
177.23     Sec. 12.  Minnesota Statutes 2003 Supplement, section 
177.24  469.175, subdivision 4, is amended to read: 
177.25     Subd. 4.  [MODIFICATION OF PLAN.] (a) A tax increment 
177.26  financing plan may be modified by an authority. 
177.27     (b) The authority may make the following modifications only 
177.28  upon the notice and after the discussion, public hearing, and 
177.29  findings required for approval of the original plan: 
177.30     (1) any reduction or enlargement of geographic area of the 
177.31  project or tax increment financing district that does not meet 
177.32  the requirements of paragraph (e); 
177.33     (2) increase in amount of bonded indebtedness to be 
177.34  incurred; 
177.35     (3) a determination to capitalize interest on the debt if 
177.36  that determination was not a part of the original plan, or to 
178.1   increase or decrease the amount of interest on the debt to be 
178.2   capitalized; 
178.3      (4) increase in the portion of the captured net tax 
178.4   capacity to be retained by the authority; 
178.5      (5) increase in the estimate of the cost of the project, 
178.6   including administrative expenses, that will be paid or financed 
178.7   with tax increment from the district; or 
178.8      (6) designation of additional property to be acquired by 
178.9   the authority; or 
178.10     (7) a decision to pay for job training for employees of a 
178.11  business located in the district that was not a part of the 
178.12  original plan. 
178.13     (c) If an authority changes the type of district to another 
178.14  type of district, this change is not a modification but requires 
178.15  the authority to follow the procedure set forth in sections 
178.16  469.174 to 469.179 for adoption of a new plan, including 
178.17  certification of the net tax capacity of the district by the 
178.18  county auditor.  
178.19     (d) If a redevelopment district or a renewal and renovation 
178.20  district is enlarged, the reasons and supporting facts for the 
178.21  determination that the addition to the district meets the 
178.22  criteria of section 469.174, subdivision 10, paragraph (a), 
178.23  clauses (1) and (2), or subdivision 10a, must be documented.  
178.24     (e) The requirements of paragraph (b) do not apply if (1) 
178.25  the only modification is elimination of parcels from the project 
178.26  or district and (2)(A) the current net tax capacity of the 
178.27  parcels eliminated from the district equals or exceeds the net 
178.28  tax capacity of those parcels in the district's original net tax 
178.29  capacity or (B) the authority agrees that, notwithstanding 
178.30  section 469.177, subdivision 1, the original net tax capacity 
178.31  will be reduced by no more than the current net tax capacity of 
178.32  the parcels eliminated from the district.  The authority must 
178.33  notify the county auditor of any modification that reduces or 
178.34  enlarges the geographic area of a district or a project area.  
178.35     (f) The geographic area of a tax increment financing 
178.36  district may be reduced, but shall not be enlarged after five 
179.1   years following the date of certification of the original net 
179.2   tax capacity by the county auditor or after August 1, 1984, for 
179.3   tax increment financing districts authorized prior to August 1, 
179.4   1979. 
179.5      <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
179.6   for which the request for certification was made after July 31, 
179.7   1979, and is effective for modifications made after June 30, 
179.8   2004. 
179.9      Sec. 13.  Minnesota Statutes 2003 Supplement, section 
179.10  469.175, subdivision 6, is amended to read: 
179.11     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
179.12  auditor shall develop a uniform system of accounting and 
179.13  financial reporting for tax increment financing districts.  The 
179.14  system of accounting and financial reporting shall, as nearly as 
179.15  possible: 
179.16     (1) provide for full disclosure of the sources and uses of 
179.17  public funds in the district; 
179.18     (2) permit comparison and reconciliation with the affected 
179.19  local government's accounts and financial reports; 
179.20     (3) permit auditing of the funds expended on behalf of a 
179.21  district, including a single district that is part of a 
179.22  multidistrict project or that is funded in part or whole through 
179.23  the use of a development account funded with tax increments from 
179.24  other districts or with other public money; 
179.25     (4) be consistent with generally accepted accounting 
179.26  principles. 
179.27     (b) The authority must annually submit to the state auditor 
179.28  a financial report in compliance with paragraph (a).  Copies of 
179.29  the report must also be provided to the county auditor and to 
179.30  the governing body of the municipality, if the authority is not 
179.31  the municipality.  To the extent necessary to permit compliance 
179.32  with the requirement of financial reporting, the county and any 
179.33  other appropriate local government unit or private entity must 
179.34  provide the necessary records or information to the authority or 
179.35  the state auditor as provided by the system of accounting and 
179.36  financial reporting developed pursuant to paragraph (a).  The 
180.1   authority must submit the annual report for a year on or before 
180.2   August 1 of the next year. 
180.3      (c) The annual financial report must also include the 
180.4   following items: 
180.5      (1) the original net tax capacity of the district and any 
180.6   subdistrict under section 469.177, subdivision 1; 
180.7      (2) the net tax capacity for the reporting period of the 
180.8   district and any subdistrict; 
180.9      (3) the captured net tax capacity of the district; 
180.10     (4) any fiscal disparity deduction from the captured net 
180.11  tax capacity under section 469.177, subdivision 3; 
180.12     (5) the captured net tax capacity retained for tax 
180.13  increment financing under section 469.177, subdivision 2, 
180.14  paragraph (a), clause (1); 
180.15     (6) any captured net tax capacity distributed among 
180.16  affected taxing districts under section 469.177, subdivision 2, 
180.17  paragraph (a), clause (2); 
180.18     (7) the type of district; 
180.19     (8) the date the municipality approved the tax increment 
180.20  financing plan and the date of approval of any modification of 
180.21  the tax increment financing plan, the approval of which requires 
180.22  notice, discussion, a public hearing, and findings under 
180.23  subdivision 4, paragraph (a); 
180.24     (9) the date the authority first requested certification of 
180.25  the original net tax capacity of the district and the date of 
180.26  the request for certification regarding any parcel added to the 
180.27  district; 
180.28     (10) the date the county auditor first certified the 
180.29  original net tax capacity of the district and the date of 
180.30  certification of the original net tax capacity of any parcel 
180.31  added to the district; 
180.32     (11) the month and year in which the authority has received 
180.33  or anticipates it will receive the first increment from the 
180.34  district; 
180.35     (12) the date the district must be decertified; 
180.36     (13) for the reporting period and prior years of the 
181.1   district, the actual amount received from, at least, the 
181.2   following categories: 
181.3      (i) tax increments paid by the captured net tax capacity 
181.4   retained for tax increment financing under section 469.177, 
181.5   subdivision 2, paragraph (a), clause (1), but excluding any 
181.6   excess taxes; 
181.7      (ii) tax increments that are interest or other investment 
181.8   earnings on or from tax increments; 
181.9      (iii) tax increments that are proceeds from the sale or 
181.10  lease of property, tangible or intangible, purchased by the 
181.11  authority with tax increments; 
181.12     (iv) tax increments that are repayments of loans or other 
181.13  advances made by the authority with tax increments; 
181.14     (v) bond or loan proceeds; 
181.15     (vi) special assessments; 
181.16     (vii) grants; and 
181.17     (viii) transfers from funds not exclusively associated with 
181.18  the district; 
181.19     (14) for the reporting period and for the prior years of 
181.20  the district, the actual amount expended for, at least, the 
181.21  following categories: 
181.22     (i) acquisition of land and buildings through condemnation 
181.23  or purchase; 
181.24     (ii)  site improvements or preparation costs; 
181.25     (iii) installation of public utilities, parking facilities, 
181.26  streets, roads, sidewalks, or other similar public improvements; 
181.27     (iv) administrative costs, including the allocated cost of 
181.28  the authority; 
181.29     (v) public park facilities, facilities for social, 
181.30  recreational, or conference purposes, or other similar public 
181.31  improvements; and 
181.32     (vi) transfers to funds not exclusively associated with the 
181.33  district; and 
181.34     (vii) job training as permitted under section 469.176, 
181.35  subdivision 4m; 
181.36     (15) for properties sold to developers, the total cost of 
182.1   the property to the authority and the price paid by the 
182.2   developer; 
182.3      (16) the amount of any payments and the value of any 
182.4   in-kind benefits, such as physical improvements and the use of 
182.5   building space, that are paid or financed with tax increments 
182.6   and are provided to another governmental unit other than the 
182.7   municipality during the reporting period; 
182.8      (17) the amount of any payments for activities and 
182.9   improvements located outside of the district that are paid for 
182.10  or financed with tax increments; 
182.11     (18) the amount of payments of principal and interest that 
182.12  are made during the reporting period on any nondefeased: 
182.13     (i) general obligation tax increment financing bonds; 
182.14     (ii) other tax increment financing bonds; and 
182.15     (iii) notes and pay-as-you-go contracts; 
182.16     (19) the principal amount, at the end of the reporting 
182.17  period, of any nondefeased: 
182.18     (i) general obligation tax increment financing bonds; 
182.19     (ii) other tax increment financing bonds; and 
182.20     (iii) notes and pay-as-you-go contracts; 
182.21     (20) the amount of principal and interest payments that are 
182.22  due for the current calendar year on any nondefeased: 
182.23     (i) general obligation tax increment financing bonds; 
182.24     (ii) other tax increment financing bonds; and 
182.25     (iii) notes and pay-as-you-go contracts; 
182.26     (21) if the fiscal disparities contribution under chapter 
182.27  276A or 473F for the district is computed under section 469.177, 
182.28  subdivision 3, paragraph (a), the amount of increased property 
182.29  taxes imposed on other properties in the municipality that 
182.30  approved the tax increment financing plan as a result of the 
182.31  fiscal disparities contribution; 
182.32     (22) whether the tax increment financing plan or other 
182.33  governing document permits increment revenues to be expended: 
182.34     (i) to pay bonds, the proceeds of which were or may be 
182.35  expended on activities outside of the district; 
182.36     (ii) for deposit into a common bond fund from which money 
183.1   may be expended on activities located outside of the district; 
183.2   or 
183.3      (iii) to otherwise finance activities located outside of 
183.4   the tax increment financing district; 
183.5      (23) the estimate, if any, contained in the tax increment 
183.6   financing plan of the amount of the cost of the project, 
183.7   including administrative expenses, that will be paid or financed 
183.8   with tax increment; and 
183.9      (24) any additional information the state auditor may 
183.10  require. 
183.11     (d) The commissioner of revenue shall prescribe the method 
183.12  of calculating the increased property taxes under paragraph (c), 
183.13  clause (21), and the form of the statement disclosing this 
183.14  information on the annual statement under subdivision 5. 
183.15     (e) The reporting requirements imposed by this subdivision 
183.16  apply to districts certified before, on, and after August 1, 
183.17  1979. 
183.18     <b>[EFFECTIVE DATE.]</b> This section is effective for reports 
183.19  filed in 2005 and thereafter. 
183.20     Sec. 14.  Minnesota Statutes 2003 Supplement, section 
183.21  469.176, subdivision 1c, is amended to read: 
183.22     Subd. 1c.  [DURATION LIMITS; PRE-1979 DISTRICTS.] (a) For 
183.23  tax increment financing districts created prior to August 1, 
183.24  1979, no tax increment shall be paid to the authority after 
183.25  April 1, 2001, or the term of a nondefeased bond or obligation 
183.26  outstanding on April 1, 1990, secured by increments from the 
183.27  district or project area, whichever time is greater, provided 
183.28  that in no case will a tax increment be paid to an authority 
183.29  after August 1, 2009, from such a district.  If a district's 
183.30  termination date is extended beyond April 1, 2001, because bonds 
183.31  were outstanding on April 1, 1990, with maturities extending 
183.32  beyond April 1, 2001, the following restrictions apply.  No 
183.33  increment collected from the district may be expended after 
183.34  April 1, 2001, except to pay or repay: 
183.35     (1) bonds issued before April 1, 1990; 
183.36     (2) bonds issued to refund the principal of the outstanding 
184.1   bonds and pay associated issuance costs; 
184.2      (3) administrative expenses of the district required to be 
184.3   paid under section 469.176, subdivision 4h, paragraph (a); 
184.4      (4) transfers of increment permitted under section 
184.5   469.1763, subdivision 6; and 
184.6      (5) any advance or payment made by the municipality or the 
184.7   authority after June 1, 2002, to pay any bonds listed in clause 
184.8   (1) or (2); and 
184.9      (6) amounts authorized under paragraph (d). 
184.10     (b) Each year, any increments from a district subject to 
184.11  this subdivision must be first applied to pay obligations listed 
184.12  under paragraph (a), clauses (1) and (2), and administrative 
184.13  expenses under paragraph (a), clause (3).  Any remaining 
184.14  increments may be used for transfers of increments permitted 
184.15  under section 469.1763, subdivision 6, and to make payments 
184.16  under paragraph paragraphs (a), clause (5), and (d). 
184.17     (c) When sufficient money has been received to pay in full 
184.18  or defease obligations under paragraph (a), clauses (1), (2), 
184.19  and (5), and no spending is permitted by paragraph (d) for the 
184.20  year, the tax increment project or district must be decertified. 
184.21     (d) In addition to the expenditures authorized under 
184.22  paragraph (a), clauses (1) to (5), a city may expend increments 
184.23  from a tax increment financing district subject to this 
184.24  subdivision after April 1, 2001, if all of the following 
184.25  conditions are met: 
184.26     (1) the captured tax capacity for all tax increment 
184.27  financing districts constituted less than six percent of the 
184.28  city's total tax capacity for taxes payable in 2003; and 
184.29     (2) the population of the city exceeds 50,000. 
184.30     <b>[EFFECTIVE DATE.]</b> This section is effective for tax 
184.31  increment financing districts for which the request for 
184.32  certification was made before August 1, 1979. 
184.33     Sec. 15.  Minnesota Statutes 2002, section 469.176, is 
184.34  amended by adding a subdivision to read: 
184.35     Subd. 4m.  [USE OF INCREMENTS FOR JOB 
184.36  TRAINING.] Notwithstanding the limits on use of increments in 
185.1   subdivision 4, 4b, 4c, or 4j, increments may be expended for job 
185.2   training that is intended to result in new job growth within a 
185.3   tax increment financing district.  The authority may expend 
185.4   increments directly for the cost of the job training or may 
185.5   reimburse an employer located within the district or a 
185.6   municipality in which the district is located for job training 
185.7   expenditures.  Increments may be expended only for job training 
185.8   programs that are approved for this purpose by the local 
185.9   workforce council established under section 268.666 that has 
185.10  jurisdiction over the workforce service area that includes the 
185.11  tax increment financing district.  For purposes of section 
185.12  469.1763, increments expended under this subdivision are 
185.13  considered to be expended on activities in the district.  
185.14     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
185.15  for which the request for certification was made after July 31, 
185.16  1979, provided that districts for which the request for 
185.17  certification was made before the effective date of this act 
185.18  must modify their plans to provide for this expenditure. 
185.19     Sec. 16.  Minnesota Statutes 2002, section 469.176, is 
185.20  amended by adding a subdivision to read: 
185.21     Subd. 8.  [URBAN RENEWAL AREA.] (a) An authority may create 
185.22  an urban renewal area only upon the notice and after the 
185.23  discussion, public hearing, and findings required for approval 
185.24  of the original project.  In addition, the authority must obtain 
185.25  written approval from the county in which the urban renewal area 
185.26  is to be located.  After approval by the city and county, the 
185.27  authority shall notify the commissioner of revenue of the 
185.28  approved urban renewal area. 
185.29     (b) All provisions of sections 469.174 through 469.1799 
185.30  apply except: 
185.31     (1) the five-year rule under section 469.1763, subdivision 
185.32  3, is extended to ten years; 
185.33     (2) the limitation on spending increment outside of the 
185.34  district under section 469.1763, subdivision 2, does not apply, 
185.35  provided that increments may only be expended on improvements or 
185.36  activities within the urban renewal area, and increments from a 
186.1   soils condition district must be expended as provided under 
186.2   subdivision 4b; and 
186.3      (3) the local tax rate certification required under section 
186.4   469.177, subdivision 1a, does not apply. 
186.5      <b>[EFFECTIVE DATE.]</b> This section is effective for urban 
186.6   renewal areas established on or after the date of final 
186.7   enactment. 
186.8      Sec. 17.  Minnesota Statutes 2002, section 469.1761, is 
186.9   amended by adding a subdivision to read: 
186.10     Subd. 3a.  [MIXED-INCOME OCCUPANCY PROJECTS.] (a) 
186.11  Notwithstanding the income requirements in subdivisions 2 and 3, 
186.12  or section 469.174, subdivision 11, an authority may create 
186.13  housing districts for developments that contain both 
186.14  owner-occupied and residential rental units for mixed-income 
186.15  occupancy.  Such a district consists of a project, or a portion 
186.16  of a project, intended for occupancy, in part, by persons of low 
186.17  and moderate income as defined in chapter 462A, title II, of the 
186.18  National Housing Act of 1934; the National Housing Act of 1959; 
186.19  the United States Housing Act of 1937, as amended; title V of 
186.20  the Housing Act of 1949, as amended; any other similar present 
186.21  or future federal, state, or municipal legislation, or the 
186.22  regulations promulgated under any of those acts, as further 
186.23  specified in this section.  Twenty percent of the units in the 
186.24  development in the housing district must be occupied by 
186.25  individuals whose family income is equal to or less than 50 
186.26  percent of area median gross income, and an additional 60 
186.27  percent of the units in the development in the housing district 
186.28  must be occupied by individuals whose family income is equal to 
186.29  or less than 115 percent of area median gross income.  Twenty 
186.30  percent of the units in the development in the housing district 
186.31  are not required to be subject to any income limitations. 
186.32     (b) For purposes of this subdivision, "family income" means 
186.33  the median gross income for the area as determined under section 
186.34  42 of the Internal Revenue Code of 1986, as amended.  The income 
186.35  requirements of this subdivision are satisfied if the sum of 
186.36  qualified owner-occupied units and qualified residential rental 
187.1   units equals the required total number of qualified units.  
187.2   Owner-occupied units must be initially purchased and occupied by 
187.3   individuals whose family income satisfies the income 
187.4   requirements of this subdivision.  For residential rental 
187.5   property, the income requirements of this subdivision apply for 
187.6   the duration of the tax increment district.  
187.7      (c) The development in the housing district, but not the 
187.8   project, does not qualify under this subdivision if the fair 
187.9   market value of the improvements that are constructed for 
187.10  commercial uses or for uses other than owner-occupied and rental 
187.11  mixed-income housing consists of more than 20 percent of the 
187.12  total fair market value of the planned improvements in the 
187.13  development plan or agreement.  The fair market value of the 
187.14  improvements may be determined using the cost of construction, 
187.15  capitalized income, or other appropriate method of estimating 
187.16  market value. 
187.17     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
187.18  for which certification is requested after July 31, 2004. 
187.19     Sec. 18.  Minnesota Statutes 2002, section 469.1792, as 
187.20  amended by Laws 2003, chapter 127, is amended to read: 
187.21     469.1792 [SPECIAL DEFICIT AUTHORITY.] 
187.22     Subdivision 1.  [SCOPE.] This section applies only to an 
187.23  authority with a preexisting district for which: 
187.24     (1) the increments from the district were insufficient to 
187.25  pay preexisting obligations as a result of the class rate 
187.26  changes or the elimination of the state-determined general 
187.27  education property tax levy under this act, or both; or 
187.28     (2)(i) the development authority has a binding contract, 
187.29  entered into before August 1, 2001, with a person requiring the 
187.30  authority to pay to the person an amount that may not exceed the 
187.31  increment from the district or a specific development within the 
187.32  district; and 
187.33     (ii) the authority is unable to pay the full amount under 
187.34  the contract from the pledged increments or other increments 
187.35  from the district that would have been due if the class rate 
187.36  changes or elimination of the state-determined general education 
188.1   property tax levy or both had not been made under Laws 2001, 
188.2   First Special Session chapter 5; 
188.3      (3) the authority amends its tax increment financing plan 
188.4   to establish an affordable housing account to which increments 
188.5   are pledged; or 
188.6      (4) the authority amends its tax increment financing plan 
188.7   to establish a hazardous substance, pollutant, or contaminant 
188.8   remediation account to which increments are pledged. 
188.9      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
188.10  the following terms have the meanings given. 
188.11     (b) "Affordable housing account" means an account in which 
188.12  increment is deposited solely for affordable housing activities 
188.13  as defined in section 469.174, subdivision 11.  
188.14     (c) "Hazardous substance, pollutant, or contaminant 
188.15  remediation account" means an account in which increment is 
188.16  deposited solely for removal or remediation activities described 
188.17  in section 469.174, subdivisions 16 to 19.  
188.18     (b) (d) "Preexisting district" means a tax increment 
188.19  financing district for which the request for certification was 
188.20  made before August 1, 2001. 
188.21     (c) (e) "Preexisting obligation" means a bond or binding 
188.22  contract that: 
188.23     (1)(i) was issued or approved before August 1, 2001, or was 
188.24  issued pursuant to a binding contract entered into before July 
188.25  1, 2001; or 
188.26     (ii) was issued to refinance an obligation under item (i), 
188.27  if the refinancing does not increase the present value of the 
188.28  debt service; and 
188.29     (2) is secured by increments from a preexisting district. 
188.30     Subd. 3.  [ACTIONS AUTHORIZED.] (a) An authority with a 
188.31  district qualifying under this section may take either or both 
188.32  any or all of the following actions for any or all of its 
188.33  preexisting districts: 
188.34     (1) the authority may elect that the original local tax 
188.35  rate under section 469.177, subdivision 1a, does not apply to 
188.36  the district; and 
189.1      (2) the authority may elect the fiscal disparities 
189.2   contribution will be computed under section 469.177, subdivision 
189.3   3, paragraph (a), regardless of the election that was made for 
189.4   the district or if the district is an economic development 
189.5   district for which the request for certification was made after 
189.6   June 30, 1997; or 
189.7      (3) the authority may elect to extend the duration of the 
189.8   district by up to eight additional years beyond the duration 
189.9   limit on the collection of increment under section 469.176, 
189.10  subdivision 1b or 1e, or a special law applicable to the 
189.11  district. 
189.12     (b) The authority may take action under this subdivision 
189.13  only after the municipality approves the action, by resolution, 
189.14  after notice and public hearing in the manner provided under 
189.15  section 469.175, subdivision 3.  To be effective for taxes 
189.16  payable in the following year, the resolution must be adopted 
189.17  and the county auditor must be notified of the adoption on or 
189.18  before July 1. 
189.19     (c) The additional increment that may be collected as a 
189.20  result of actions taken under this section and any increments 
189.21  transferred to the district under section 469.1763, subdivision 
189.22  6, is limited to the lesser of: 
189.23     (1) the amount the authority is obligated to pay under 
189.24  preexisting obligations out of the increments from the district 
189.25  that result in application of this section under subdivision 1; 
189.26  or 
189.27     (2) an amount estimated to represent the difference between 
189.28  the increment that would have been collected if the class rate 
189.29  changes and elimination of the state-determined general 
189.30  education property tax levy had not been made under Laws 2001, 
189.31  First Special Session chapter 5, for the term of the district 
189.32  under general law, and the actual increments collected for the 
189.33  term of the district. 
189.34     Subd. 4.  [EXPENDITURES FROM AFFORDABLE HOUSING 
189.35  ACCOUNTS.] Increment from an affordable housing account may be 
189.36  spent by an authority anywhere within its area of operation.  
190.1   Notwithstanding the definition of a project under section 
190.2   469.174, increments may be spent to assist housing that meets 
190.3   the requirements under section 469.1761.  The limitation imposed 
190.4   by section 469.1763, subdivision 2, does not apply to any 
190.5   transfers of increment to the affordable housing account to the 
190.6   extent that the amount transferred to the account under this 
190.7   subdivision does not exceed ten percent of the revenue derived 
190.8   from tax increments paid by properties in the district in the 
190.9   year. 
190.10     Subd. 5.  [EXPENDITURES FROM HAZARDOUS SUBSTANCE, 
190.11  POLLUTANT, OR CONTAMINANT REMEDIATION ACCOUNT.] Increment from a 
190.12  hazardous substance, pollutant, or contaminant remediation 
190.13  account may be spent by an authority anywhere within its area of 
190.14  operation.  Notwithstanding the definition of a project under 
190.15  section 469.174, increments may be expended to remediation and 
190.16  removal activities that meet the requirements of section 
190.17  469.176, subdivision 4b or 4e.  The limitation imposed by 
190.18  section 469.1763, subdivision 2, does not apply to any transfers 
190.19  of increment to the hazardous substance, pollutant, or 
190.20  contaminant remediation account to the extent that the amount 
190.21  transferred to the account under this subdivision does not 
190.22  exceed ten percent of the revenue derived from tax increments 
190.23  paid by properties in the district in the year. 
190.24     <b>[EFFECTIVE DATE.]</b> This section is effective for actions 
190.25  taken and resolutions approved after June 30, 2004. 
190.26     Sec. 19.  Minnesota Statutes 2003 Supplement, section 
190.27  469.310, subdivision 11, is amended to read: 
190.28     Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
190.29  means a person carrying on a trade or business at a place of 
190.30  business located within a job opportunity building zone. 
190.31     (b) A person that relocates a trade or business from 
190.32  outside a job opportunity building zone into a zone is not a 
190.33  qualified business, unless the business: 
190.34     (1)(i) increases full-time employment in the first full 
190.35  year of operation within the job opportunity building zone by at 
190.36  least 20 percent measured relative to the operations that were 
191.1   relocated and maintains the required level of employment for 
191.2   each year the zone designation applies; or 
191.3      (ii) makes a capital investment in the property located 
191.4   within a zone equivalent to ten percent of the gross revenues of 
191.5   operation that were relocated in the immediately preceding 
191.6   taxable year; and 
191.7      (2) enters a binding written agreement with the 
191.8   commissioner that: 
191.9      (i) pledges the business will meet the requirements of 
191.10  clause (1); 
191.11     (ii) provides for repayment of all tax benefits enumerated 
191.12  under section 469.315 to the business under the procedures in 
191.13  section 469.319, if the requirements of clause (1) are not met 
191.14  for the taxable year or for taxes payable during the year in 
191.15  which the requirements were not met; and 
191.16     (iii) contains any other terms the commissioner determines 
191.17  appropriate. 
191.18     (c) A business is not a qualified business if at its 
191.19  location or locations in the zone, the business is primarily 
191.20  engaged in making retail sales to purchasers who are physically 
191.21  present at the business's zone location.  
191.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
191.23  following final enactment and applies to any business entering a 
191.24  business subsidy agreement for a job opportunity development 
191.25  zone after that date. 
191.26     Sec. 20.  Laws 1998, chapter 389, article 11, section 19, 
191.27  subdivision 3, is amended to read: 
191.28     Subd. 3.  [DURATION OF DISTRICT.] Notwithstanding the 
191.29  provisions of Minnesota Statutes, section 469.176, subdivision 
191.30  1b, no tax increment may be paid to the authority or the city 
191.31  after 18 years from the date of receipt by the authority of the 
191.32  first increment generated from the final phase of 
191.33  redevelopment.  In no case may increments be paid to the 
191.34  authority after 30 years from approval of the tax increment 
191.35  plan.  "Final phase of redevelopment" means that phase of 
191.36  redevelopment activity which completes the rehabilitation of the 
192.1   Lake Street site. 
192.2      <b>[EFFECTIVE DATE.]</b> This section is effective upon compliance 
192.3   with Minnesota Statutes, sections 469.1782, subdivision 2, and 
192.4   645.021, subdivision 2. 
192.5      Sec. 21.  Laws 1998, chapter 389, article 11, section 24, 
192.6   subdivision 1, is amended to read: 
192.7      Subdivision 1.  [SPECIAL RULES.] (a) If the city elects 
192.8   upon the adoption of the tax increment financing plan for the 
192.9   district, the rules under this section apply to one or more 
192.10  redevelopment or soils condition tax increment financing 
192.11  districts established by the city of New Brighton or a 
192.12  development authority of the city in the area bounded on the 
192.13  north by the south boundary line of tax increment district 
192.14  number 8 extended to Long Lake regional park, on the east by 
192.15  interstate highway 35W, on the south by interstate highway 694, 
192.16  and on the west by Long Lake regional park. 
192.17     (b) The five-year rule under Minnesota Statutes, section 
192.18  469.1763, subdivision 3, is extended to nine years for the 
192.19  district. 
192.20     (c) The limitations on spending increment outside of the 
192.21  district under Minnesota Statutes, section 469.1763, subdivision 
192.22  2, do not apply, but the following limitations apply: 
192.23     (1) increments may only be expended on improvements or 
192.24  activities within the area defined in paragraph (a); and 
192.25     (2) increment from the area described in paragraph (d) must 
192.26  be expended within the area or for administrative expenses, 
192.27  sanitary sewer relocation, and the cost of road improvements 
192.28  that are a direct result of development occurring within that 
192.29  area. 
192.30     (c) The certified original local tax rate for the district 
192.31  under Minnesota Statutes, section 469.177, subdivision 1a, does 
192.32  not apply. 
192.33     (d) The requirements for qualifying a redevelopment 
192.34  district under Minnesota Statutes, section 469.174, subdivision 
192.35  10, do not apply to the parcels identified as 20-30-23-14-0004, 
192.36  20-30-23-14-0003, 20-30-23-41-0001, 21-30-23-32-0009, 
193.1   21-30-23-32-0010, 20-30-23-41-0015, 20-30-23-41-0003, 
193.2   21-30-23-32-0013, 20-30-23-41-0004, 20-30-23-41-0016, 
193.3   20-30-23-41-0005, 20-30-23-41-0006, 20-30-23-41-0007, 
193.4   20-30-23-41-0014, 20-30-23-41-0010, and 20-30-23-44-0002, or to 
193.5   railroad property in the district.  The area of each parcel and 
193.6   the railroad property shall be deemed eligible for the purpose 
193.7   of qualifying for inclusion in a redevelopment district. 
193.8      Sec. 22.  Laws 1998, chapter 389, article 11, section 24, 
193.9   subdivision 2, is amended to read: 
193.10     Subd. 2.  [EXPIRATION.] (a) The exception from the 
193.11  limitations of Minnesota Statutes, section 469.1763, subdivision 
193.12  2, expires 18 years after the receipt of the first increment 
193.13  from a district to which the city has elected that this section 
193.14  applies. 
193.15     (b) The authority to approve tax increment financing plans 
193.16  to establish a tax increment financing district or districts 
193.17  under this section expires on December 31, 2008 2013. 
193.18     <b>[EFFECTIVE DATE.]</b> This section is effective upon approval 
193.19  by the governing bodies of the city of New Brighton and Ramsey 
193.20  County and upon compliance by the city with Minnesota Statutes, 
193.21  section 645.021, subdivision 3. 
193.22     Sec. 23.  [ANOKA COUNTY REGIONAL RAILROAD AUTHORITY 
193.23  POWERS.] 
193.24     Subdivision 1.  [ECONOMIC DEVELOPMENT POWERS AND 
193.25  DUTIES.] The Anoka County Regional Railroad Authority may 
193.26  exercise any of the powers and duties of an economic development 
193.27  authority under Minnesota Statutes, sections 469.090, 469.098, 
193.28  and 469.101 to 469.106.  The Anoka County Regional Railroad 
193.29  Authority may exercise the powers under Minnesota Statutes, 
193.30  sections 469.001 to 469.047, for the purpose of transit-oriented 
193.31  development, except that the Anoka County Regional Railroad 
193.32  Authority must not exercise the power to tax under Minnesota 
193.33  Statutes, section 469.033, subdivision 6.  In applying Minnesota 
193.34  Statutes, sections 469.001 to 469.047, 469.090, 469.098, and 
193.35  469.101 to 469.106, to the Anoka County Regional Railroad 
193.36  Authority, the county is considered to be the city and the 
194.1   county board is considered to be the city council. 
194.2      Subd. 2.  [RELATION TO LOCAL AUTHORITIES.] Nothing in 
194.3   subdivision 1 shall change or impair the powers or duties of a 
194.4   city, town, municipal housing and redevelopment authority, or 
194.5   municipal economic development authority. 
194.6      Subd. 3.  [LOCAL APPROVAL.] If any economic development 
194.7   project is constructed in the county pursuant to the 
194.8   authorization in this section, the project must be approved by 
194.9   the governing body of each city or town within which the project 
194.10  will be constructed. 
194.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
194.12  the governing body of the Anoka County Regional Railroad 
194.13  Authority and its chief clerical officer timely complete their 
194.14  compliance with Minnesota Statutes, section 645.021, 
194.15  subdivisions 2 and 3. 
194.16     Sec. 24.  [CITY OF DETROIT LAKES; REDEVELOPMENT TAX 
194.17  INCREMENT FINANCING DISTRICT.] 
194.18     Subdivision 1.  [AUTHORIZATION.] At the election of the 
194.19  governing body of the city of Detroit Lakes, upon adoption of 
194.20  the tax increment financing plan for the district described in 
194.21  this section, the rules provided under this section apply to 
194.22  each such district. 
194.23     Subd. 2.  [DEFINITION.] In this section, "district" means a 
194.24  redevelopment district established by the city of Detroit Lakes 
194.25  or the Detroit Lakes Development Authority within the following 
194.26  area:  
194.27  Beginning at the intersection of Washington Avenue and the 
194.28  Burlington Northern Santa Fe Railroad then east to the 
194.29  intersection of Roosevelt Avenue then south to the intersection 
194.30  of Highway 10/Frazee Street then west to the intersection of 
194.31  Frazee Street and the alley that parallels Washington Avenue 
194.32  then north to the point of beginning. 
194.33     More than one district may be created under this act. 
194.34     Subd. 3.  [QUALIFICATION AS REDEVELOPMENT DISTRICT; SPECIAL 
194.35  RULES.] The district shall be a redevelopment district under 
194.36  Minnesota Statutes, section 469.174, subdivision 10.  All 
195.1   buildings that are removed to facilitate the Highway 10 
195.2   Realignment Project are deemed to be "structurally 
195.3   substandard."  The three-year limit after demolition of the 
195.4   buildings to request tax increment financing certification 
195.5   provided in Minnesota Statutes, section 469.174, subdivision 10, 
195.6   paragraph (d), clause (1), does not apply. 
195.7      Subd. 4.  [EXPIRATION.] The authority to approve tax 
195.8   increment financing plans to establish a tax increment financing 
195.9   redevelopment district subject to this section expires on 
195.10  December 31, 2014. 
195.11     Subd. 5.  [EFFECTIVE DATE.] This section is effective upon 
195.12  approval of the governing body of the city of Detroit Lakes and 
195.13  compliance with Minnesota Statutes, section 645.021, subdivision 
195.14  3. 
195.15     Sec. 25.  [CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 
195.16  INCREMENT FINANCING DISTRICTS.] 
195.17     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
195.18  mileage limitation in Minnesota Statutes, section 469.174, 
195.19  subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 
195.20  are deemed to be small cities for purposes of Minnesota 
195.21  Statutes, sections 469.174 to 469.1799, as long as they do not 
195.22  exceed the population limit in that section. 
195.23     Subd. 2.  [LOCAL APPROVAL.] This section is effective for 
195.24  each of the cities of Elgin, Eyota, Byron, and Oronoco upon 
195.25  approval of that city's governing body and compliance with 
195.26  Minnesota Statutes, section 645.021, subdivisions 2 and 3. 
195.27     Sec. 26.  [CITY OF BROOKLYN CENTER; EXTENSION OF TIME TO 
195.28  EXPEND TAX INCREMENT.] 
195.29     For tax increment financing district number 3, established 
195.30  on December 19, 1994, by Brooklyn Center Resolution No. 94-273, 
195.31  Minnesota Statutes, section 469.1763, subdivision 3, applies to 
195.32  the district by permitting a period of 13 years for commencement 
195.33  of activities within the district. 
195.34     <b>[EFFECTIVE DATE.]</b> This section is effective upon approval 
195.35  by the governing body of the city of Brooklyn Center and 
195.36  compliance with Minnesota Statutes, section 645.021, subdivision 
196.1   3. 
196.2      Sec. 27.  [CITY OF FAIRMONT; TAX INCREMENT FINANCING 
196.3   DISTRICT.] 
196.4      Subdivision 1.  [AUTHORITY TO REDUCE ORIGINAL VALUE.] The 
196.5   city of Fairmont may elect to reduce the original tax capacity 
196.6   of a previously tax-exempt parcel, consisting of property 
196.7   formerly owned by the United States Post Office, in tax 
196.8   increment financing district No. 20, to the value of the land. 
196.9      Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
196.10  compliance by the city of Fairmont with the requirements of 
196.11  Minnesota Statutes, section 645.021. 
196.12     Sec. 28.  [CITY OF FERGUS FALLS; ECONOMIC DEVELOPMENT 
196.13  PROPERTY.] 
196.14     The provisions of Minnesota Statutes, section 272.02, 
196.15  subdivision 39, apply to property located in the city of Fergus 
196.16  Falls as if the city had a population of 5,000 or less. 
196.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
196.18  levied in 2004, payable in 2005, and thereafter. 
196.19     Sec. 29.  [CITY OF MINNEAPOLIS; SPECIAL SERVICE DISTRICTS; 
196.20  MANAGEMENT BY NONPROFIT CORPORATIONS.] 
196.21     The city of Minneapolis may elect, in the establishment of 
196.22  a special service district, to provide that the activities of 
196.23  the special service district may be managed by a nonprofit 
196.24  corporation created to assist and act on behalf of the city in 
196.25  implementing and providing services as authorized by Minnesota 
196.26  Statutes, section 428A.02.  The ordinance establishing the 
196.27  district may not be adopted until the city certifies that no 
196.28  current city employee is able and available to perform the 
196.29  services called for by the contract and until that certification 
196.30  is verified at the public hearing on the ordinance. 
196.31     If the city intends to contract with a nonprofit 
196.32  corporation to manage a special service district, the notice of 
196.33  the hearing on the ordinance relating to creation of the 
196.34  district must include a statement of that intent, and 
196.35  certification that no city employee is able and available to 
196.36  perform the service that would be provided within the special 
197.1   service district. 
197.2      <b>[EFFECTIVE DATE.]</b> This section is effective for public 
197.3   hearings on ordinances conducted after June 30, 2004, but only 
197.4   after approval by the governing body of the city of Minneapolis 
197.5   and compliance with Minnesota Statutes, section 645.021, 
197.6   subdivision 3. 
197.7      Sec. 30.  [CITY OF RICHFIELD; TAX INCREMENT FINANCING 
197.8   DISTRICT.] 
197.9      Subdivision 1.  [AUTHORIZATION.] The city of Richfield may 
197.10  create a tax increment financing district consisting of an area 
197.11  bordered by Crosstown Highway 62 on the north, 66th Street on 
197.12  the south, Trunk Highway 77 on the east, and the east side of 
197.13  16th Avenue to the west.  The city or its housing and 
197.14  redevelopment authority may be the authority for the purposes of 
197.15  Minnesota Statutes, sections 469.174 to 469.179. 
197.16     Subd. 2.  [DISTRICT IS REDEVELOPMENT DISTRICT.] The 
197.17  redevelopment tax increment district created pursuant to 
197.18  subdivision 1 is deemed to be a redevelopment district and is 
197.19  subject to Minnesota Statutes, sections 469.174 to 469.179, 
197.20  except that expenditures for activities as defined in Minnesota 
197.21  Statutes, section 469.1763, subdivision 1, paragraph (b), 
197.22  anywhere in the district are deemed to be the costs of 
197.23  correcting conditions that allow the designation of 
197.24  redevelopment districts pursuant to Minnesota Statutes, section 
197.25  469.174, subdivision 10. 
197.26     <b>[EFFECTIVE DATE.]</b> This section is effective upon local 
197.27  approval by the city of Richfield in compliance with Minnesota 
197.28  Statutes, section 645.021. 
197.29     Sec. 31.  [CITY OF ST. MICHAEL; TAX INCREMENT FINANCING 
197.30  DISTRICT.] 
197.31     Subdivision 1.  [ESTABLISHMENT OF DISTRICT.] The city of St.
197.32  Michael may establish a redevelopment tax increment financing 
197.33  district subject to Minnesota Statutes, sections 469.174 to 
197.34  469.179, except as provided in this section.  The district must 
197.35  be established within an area that includes the downtown and 
197.36  town center areas as designated by the city as well as all 
198.1   parcels adjacent to marked Trunk Highway 241 within the city. 
198.2      Subd. 2.  [SPECIAL RULES.] (a) Notwithstanding the 
198.3   requirements of Minnesota Statutes, section 469.174, subdivision 
198.4   10, the district may be established and operated as a 
198.5   redevelopment district. 
198.6      (b) Notwithstanding the restrictions of Minnesota Statutes, 
198.7   sections 469.176, subdivisions 4 and 4j, and 469.1763, 
198.8   subdivision 2, revenues derived from tax increments from the 
198.9   district created under this section may be used to meet the cost 
198.10  of land acquisition, removal of buildings in the right-of-way 
198.11  acquisition area, and other costs incurred by the city of St. 
198.12  Michael in the expansion and improvement of marked Trunk Highway 
198.13  241 within the city. 
198.14     (c) Minnesota Statutes, section 469.176, subdivision 5, 
198.15  does not apply to the district. 
198.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
198.17  the governing body of the city of St. Michael complies with 
198.18  Minnesota Statutes, section 645.021, subdivision 3. 
198.19     Sec. 32.  [WABASHA TAX INCREMENT FINANCING DISTRICT.] 
198.20     Subdivision 1.  [DISTRICT EXTENSION.] The governing body of 
198.21  the city of Wabasha may elect to extend the duration of its 
198.22  redevelopment tax increment financing district number 3 by up to 
198.23  five additional years. 
198.24     Subd. 2.  [FIVE-YEAR RULE.] The requirements of Minnesota 
198.25  Statutes, section 469.1763, subdivision 3, that activities must 
198.26  be undertaken within a five-year period from the date of 
198.27  certification of a tax increment financing district must be 
198.28  considered to be met for the city of Wabasha redevelopment tax 
198.29  increment district number 3, if the activities are undertaken 
198.30  within ten years from the date of certification of the district. 
198.31     Subd. 3.  [NATIONAL EAGLE CENTER.] Notwithstanding the 
198.32  provisions of Minnesota Statutes, section 469.176, subdivision 
198.33  4l, or any other law, the city of Wabasha may spend the proceeds 
198.34  of tax increment bonds issued prior to January 1, 2000, to pay 
198.35  the costs of acquiring and constructing a National Eagle Center 
198.36  in the city.  The city of Wabasha may also use tax increment 
199.1   from its tax increment districts to pay the debt service on such 
199.2   bonds, or any bonds issued to refund such bonds, subject to 
199.3   legal restrictions on the pooling of tax increment. 
199.4      <b>[EFFECTIVE DATE.]</b> Subdivision 1 is effective upon 
199.5   compliance with the provisions of Minnesota Statutes, sections 
199.6   469.1782, subdivision 2, and 645.021.  Subdivisions 2 and 3 are 
199.7   effective upon compliance by the governing body of the city of 
199.8   Wabasha with the provisions of Minnesota Statutes, section 
199.9   645.021. 
199.10     Sec. 33.  [JOBZ EXPENDITURE LIMITATIONS; AUDITS.] 
199.11     Subdivision 1.  [DETERMINATION OF TAX EXPENDITURES.] By 
199.12  September 1, 2004, the commissioner of revenue, with the 
199.13  assistance of the commissioner of employment and economic 
199.14  development, must estimate the total amount of tax expenditures 
199.15  projected to have been obligated for all job opportunity 
199.16  building zone projects that have been approved before June 1, 
199.17  2004.  If the commissioner of revenue determines that the 
199.18  estimated amount of tax expenditures for fiscal years 2005-2007 
199.19  exceeds $13,780,000, the commissioner of revenue must inform the 
199.20  commissioner of employment and economic development of that 
199.21  fact, and the commissioner of trade and economic development 
199.22  must notify all the job opportunity building zone and subzone 
199.23  administrators that no additional business subsidy agreements 
199.24  may be completed after September 1, 2004. 
199.25     Subd. 2.  [AUDITS.] The Tax Increment Financing, Investment 
199.26  and Finance Division of the Office of the State Auditor must 
199.27  annually audit the creation and operation of all job opportunity 
199.28  building zones and business subsidy agreements entered into 
199.29  under Minnesota Statutes, sections 469.310 to 469.320. 
199.30                             ARTICLE 6
199.31                           PUBLIC FINANCE
199.32     Section 1.  Minnesota Statutes 2003 Supplement, section 
199.33  373.01, subdivision 3, is amended to read: 
199.34     Subd. 3.  [CAPITAL NOTES.] (a) A county board may, by 
199.35  resolution and without referendum, issue capital notes subject 
199.36  to the county debt limit to purchase capital equipment useful 
200.1   for county purposes that has an expected useful life at least 
200.2   equal to the term of the notes.  The notes shall be payable in 
200.3   not more than five years and shall be issued on terms and in a 
200.4   manner the board determines.  A tax levy shall be made for 
200.5   payment of the principal and interest on the notes, in 
200.6   accordance with section 475.61, as in the case of bonds. 
200.7      (b) For purposes of this subdivision, "capital equipment" 
200.8   means: 
200.9      (1) public safety, ambulance, road construction or 
200.10  maintenance, and medical equipment,; and 
200.11     (2) computer hardware and original operating system 
200.12  software, whether bundled with machinery or equipment or 
200.13  unbundled, together with application development services and 
200.14  training related to the use of the computer. 
200.15     (c) The authority to issue capital notes for original 
200.16  operating systems computer software and related services expires 
200.17  on July 1, 2005. 
200.18     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
200.19  373.40, subdivision 1, is amended to read: 
200.20     Subdivision 1.  [DEFINITIONS.] For purposes of this 
200.21  section, the following terms have the meanings given. 
200.22     (a) "Bonds" means an obligation as defined under section 
200.23  475.51. 
200.24     (b) "Capital improvement" means acquisition or betterment 
200.25  of public lands, development rights in the form of conservation 
200.26  easements under chapter 84C, buildings, or other improvements 
200.27  within the county for the purpose of a county courthouse, 
200.28  administrative building, health or social service facility, 
200.29  correctional facility, jail, law enforcement center, hospital, 
200.30  morgue, library, park, qualified indoor ice arena, and roads and 
200.31  bridges, and the acquisition of development rights in the form 
200.32  of conservation easements under chapter 84C.  An improvement 
200.33  must have an expected useful life of five years or more to 
200.34  qualify.  "Capital improvement" does not include light rail 
200.35  transit or any activity related to it or a recreation or sports 
200.36  facility building (such as, but not limited to, a gymnasium, ice 
201.1   arena, racquet sports facility, swimming pool, exercise room or 
201.2   health spa), unless the building is part of an outdoor park 
201.3   facility and is incidental to the primary purpose of outdoor 
201.4   recreation. 
201.5      (c) "Commissioner" means the commissioner of employment and 
201.6   economic development. 
201.7      (d) "Metropolitan county" means a county located in the 
201.8   seven-county metropolitan area as defined in section 473.121 or 
201.9   a county with a population of 90,000 or more. 
201.10     (e) "Population" means the population established by the 
201.11  most recent of the following (determined as of the date the 
201.12  resolution authorizing the bonds was adopted): 
201.13     (1) the federal decennial census, 
201.14     (2) a special census conducted under contract by the United 
201.15  States Bureau of the Census, or 
201.16     (3) a population estimate made either by the metropolitan 
201.17  council or by the state demographer under section 4A.02. 
201.18     (f) "Qualified indoor ice arena" means a facility that 
201.19  meets the requirements of section 373.43. 
201.20     (g) "Tax capacity" means total taxable market value, but 
201.21  does not include captured market value. 
201.22     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
201.23  403.21, subdivision 8, is amended to read: 
201.24     Subd. 8.  [SUBSYSTEMS.] "Subsystems" or "public safety 
201.25  radio subsystems" means systems identified in the plan or a plan 
201.26  developed under section 403.36 as subsystems interconnected by 
201.27  the first and third phase backbone in subsequent phases and 
201.28  operated by local government units for their own internal 
201.29  operations. 
201.30     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
201.31  403.27, subdivision 1, is amended to read: 
201.32     Subdivision 1.  [AUTHORIZATION.] After consulting with the 
201.33  commissioner of finance, the council, if requested by a vote of 
201.34  at least two-thirds of all of the members of the Public Safety 
201.35  Radio Communication System Planning Committee established under 
201.36  section 403.36, may, by resolution, authorize the issuance of 
202.1   its revenue bonds for any of the following purposes to: 
202.2      (1) provide funds for regionwide mutual aid and emergency 
202.3   medical services communications; 
202.4      (2) provide funds for the elements of the first phase of 
202.5   the regionwide public safety radio communications system that 
202.6   the board determines are of regionwide benefit and support 
202.7   mutual aid and emergency medical services communication 
202.8   including, but not limited to, costs of master controllers of 
202.9   the backbone; 
202.10     (3) provide money for the second phase of the public safety 
202.11  radio communication system; 
202.12     (4) provide money for the third phase of the public safety 
202.13  radio communication system; 
202.14     (5) to the extent money is available after meeting the 
202.15  needs described in clauses (1) to (3), provide money to 
202.16  reimburse local units of government for amounts expended for 
202.17  capital improvements to the first phase system previously paid 
202.18  for by the local government units; or 
202.19     (6) to the extent money is available after meeting the 
202.20  needs described in clauses (1) to (5), provide money for 
202.21  assistance to a local government unit for up to 50 percent of 
202.22  the cost of building a subsystem in the southeast or central 
202.23  districts of the State Patrol; or 
202.24     (7) refund bonds issued under this section. 
202.25     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
202.26  403.27, subdivision 3, is amended to read: 
202.27     Subd. 3.  [LIMITATIONS.] (a) The principal amount of the 
202.28  bonds issued pursuant to subdivision 1, exclusive of any 
202.29  original issue discount, shall not exceed the amount of 
202.30  $10,000,000 plus the amount the council determines necessary to 
202.31  pay the costs of issuance, fund reserves, debt service, and pay 
202.32  for any bond insurance or other credit enhancement. 
202.33     (b) In addition to the amount authorized under paragraph 
202.34  (a), the council may issue bonds under subdivision 1 in a 
202.35  principal amount of $3,306,300, plus the amount the council 
202.36  determines necessary to pay the cost of issuance, fund reserves, 
203.1   debt service, and any bond insurance or other credit 
203.2   enhancement.  The proceeds of bonds issued under this paragraph 
203.3   may not be used to finance portable or subscriber radio sets. 
203.4      (c) In addition to the amount authorized under paragraphs 
203.5   (a) and (b), the council may issue bonds under subdivision 1 in 
203.6   a principal amount of $18,000,000, plus the amount the council 
203.7   determines necessary to pay the costs of issuance, fund 
203.8   reserves, debt service, and any bond insurance or other credit 
203.9   enhancement.  The proceeds of bonds issued under this paragraph 
203.10  must be used to pay up to 50 percent of the cost to a local 
203.11  government unit of building a subsystem identified in the plan 
203.12  adopted under section 403.23, subdivision 2, and may not be used 
203.13  to finance portable or subscriber radio sets.  The bond proceeds 
203.14  may be used to make improvements to an existing 800 MHz radio 
203.15  system that will interoperate with the regionwide public safety 
203.16  radio communication system, provided that the improvements 
203.17  conform to the board's plan and technical standards.  The 
203.18  council must time the sale and issuance of the bonds so that the 
203.19  debt service on the bonds can be covered by the additional 
203.20  revenue that will become available in the fiscal year ending 
203.21  June 30, 2005, generated under section 403.11 and appropriated 
203.22  under section 403.30.  
203.23     (d) In addition to the amount authorized under paragraphs 
203.24  (a) to (c), the council may issue bonds under subdivision 1 in a 
203.25  principal amount of up to $27,000,000, plus the amount the 
203.26  council determines necessary to pay the costs of issuance, fund 
203.27  reserves, debt service, and any bond insurance or other credit 
203.28  enhancement.  The proceeds of bonds issued under this paragraph 
203.29  are appropriated to the commissioner of public safety for phase 
203.30  three of the public safety radio communication system.  In 
203.31  anticipation of the receipt by the commissioner of public safety 
203.32  of the bond proceeds, the Metropolitan Radio Board may advance 
203.33  money from its operating appropriation to the commissioner of 
203.34  public safety to pay for design and preliminary engineering for 
203.35  phase three.  The commissioner of public safety must return 
203.36  these amounts to the Metropolitan Radio Board when the bond 
204.1   proceeds are received. 
204.2      (e) In addition to the amount authorized under paragraphs 
204.3   (a) to (d), the council may issue bonds under subdivision 1 in a 
204.4   principal amount of up to $9,500,000, plus the amount the 
204.5   council determines necessary to pay the costs of issuance, fund 
204.6   reserves, debt service, and any bond insurance or other credit 
204.7   enhancement.  The proceeds of bonds issued under this paragraph 
204.8   are appropriated to the commissioner of public safety for the 
204.9   purpose of subdivision 1, clause (6), provided that the proceeds 
204.10  may not be used to finance portable or subscriber radio sets. 
204.11     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
204.12  403.31, subdivision 6, is amended to read: 
204.13     Subd. 6.  [OPERATING COSTS OF PHASES THREE TO SIX.] (a) The 
204.14  ongoing costs of the commissioner in operating phases three to 
204.15  six of the statewide public safety radio communication system 
204.16  shall be allocated among and paid by the following users, all in 
204.17  accordance with the statewide public safety radio communication 
204.18  system plan developed by the planning committee under section 
204.19  403.36: 
204.20     (1) the state of Minnesota for its operations using the 
204.21  system; 
204.22     (2) all local government units using the system; and 
204.23     (3) other eligible users of the system. 
204.24     (b) Each local government and other eligible users of 
204.25  phases three to six of the system shall pay to the commissioner 
204.26  all sums charged under this section, at the times and in the 
204.27  manner determined by the commissioner.  The governing body of 
204.28  each local government shall take all action that may be 
204.29  necessary to provide the funds required for these payments and 
204.30  to make the payments when due.  
204.31     (c) If the governing body of any local government using 
204.32  phase three, four, five, or six of the system fails to meet any 
204.33  payment to the commissioner under this subdivision when due, the 
204.34  commissioner may certify to the auditor of the county in which 
204.35  the government unit is located the amount required for payment 
204.36  of the amount due with interest at six percent per year.  The 
205.1   auditor shall levy and extend the amount due, with interest, as 
205.2   a tax upon all taxable property in the government unit for the 
205.3   next calendar year, free from any existing limitations imposed 
205.4   by law or charter.  This tax shall be collected in the same 
205.5   manner as the general taxes of the government unit, and the 
205.6   proceeds of the tax, when collected, shall be paid by the county 
205.7   treasurer to the commissioner and credited to the government 
205.8   unit for which the tax was levied. 
205.9      Sec. 7.  Minnesota Statutes 2003 Supplement, section 
205.10  410.32, is amended to read: 
205.11     410.32 [CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL 
205.12  EQUIPMENT.] 
205.13     (a) Notwithstanding any contrary provision of other law or 
205.14  charter, a home rule charter city may, by resolution and without 
205.15  public referendum, issue capital notes subject to the city debt 
205.16  limit to purchase capital equipment. 
205.17     (b) For purposes of this section, "capital equipment" means:
205.18     (1) public safety equipment, ambulance and other medical 
205.19  equipment, road construction and maintenance equipment, and 
205.20  other capital equipment; and 
205.21     (2) computer hardware and original operating system 
205.22  software, provided whether bundled with machinery or equipment 
205.23  or unbundled, together with application development services and 
205.24  training related to the use of the computer. 
205.25     (c) The equipment or software has must have an expected 
205.26  useful life at least as long as the term of the notes. 
205.27     (d) The authority to issue capital notes for original 
205.28  operating system computer software and related services expires 
205.29  on July 1, 2005. 
205.30     (e) The notes shall be payable in not more than five years 
205.31  and be issued on terms and in the manner the city determines.  
205.32  The total principal amount of the capital notes issued in a 
205.33  fiscal year shall not exceed 0.03 percent of the market value of 
205.34  taxable property in the city for that year. 
205.35     (f) A tax levy shall be made for the payment of the 
205.36  principal and interest on the notes, in accordance with section 
206.1   475.61, as in the case of bonds. 
206.2      (g) Notes issued under this section shall require an 
206.3   affirmative vote of two-thirds of the governing body of the city.
206.4      (h) Notwithstanding a contrary provision of other law or 
206.5   charter, a home rule charter city may also issue capital notes 
206.6   subject to its debt limit in the manner and subject to the 
206.7   limitations applicable to statutory cities pursuant to section 
206.8   412.301. 
206.9      Sec. 8.  Minnesota Statutes 2003 Supplement, section 
206.10  412.301, is amended to read: 
206.11     412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
206.12     (a) The council may issue certificates of indebtedness or 
206.13  capital notes subject to the city debt limits to 
206.14  purchase capital equipment. 
206.15     (b) For purposes of this section, "capital equipment" means:
206.16     (1) public safety equipment, ambulance and other medical 
206.17  equipment, road construction or and maintenance equipment, and 
206.18  other capital equipment; and 
206.19     (2) computer hardware and original operating system 
206.20  software, provided whether bundled with machinery or equipment 
206.21  or unbundled, together with application development services and 
206.22  training related to the use of the computer.  
206.23     (c) The equipment or software has must have an expected 
206.24  useful life at least as long as the terms of the certificates or 
206.25  notes. 
206.26     (d) The authority to issue capital notes for original 
206.27  operating system computer software and related services expires 
206.28  on July 1, 2005. 
206.29     (e) Such certificates or notes shall be payable in not more 
206.30  than five ten years and shall be issued on such terms and in 
206.31  such manner as the council may determine. 
206.32     (f) If the amount of the certificates or notes to be issued 
206.33  to finance any such purchase exceeds 0.25 percent of the market 
206.34  value of taxable property in the city, they shall not be issued 
206.35  for at least ten days after publication in the official 
206.36  newspaper of a council resolution determining to issue them; and 
207.1   if before the end of that time, a petition asking for an 
207.2   election on the proposition signed by voters equal to ten 
207.3   percent of the number of voters at the last regular municipal 
207.4   election is filed with the clerk, such certificates or notes 
207.5   shall not be issued until the proposition of their issuance has 
207.6   been approved by a majority of the votes cast on the question at 
207.7   a regular or special election. 
207.8      (g) A tax levy shall be made for the payment of the 
207.9   principal and interest on such certificates or notes, in 
207.10  accordance with section 475.61, as in the case of bonds. 
207.11     Sec. 9.  Minnesota Statutes 2002, section 428A.101, is 
207.12  amended to read: 
207.13     428A.101 [SPECIAL SERVICE DISTRICT; SUNSET OF 
207.14  SELF-EXECUTING PROVISIONS.] 
207.15     The establishment of a new special service district after 
207.16  June 30, 2005 2009, requires enactment of a special law 
207.17  authorizing the establishment. 
207.18     Sec. 10.  Minnesota Statutes 2002, section 428A.21, is 
207.19  amended to read: 
207.20     428A.21 [SUNSET.] 
207.21     No new housing improvement areas may be established under 
207.22  sections 428A.11 to 428A.20 after June 30, 2005 2009.  After 
207.23  June 30, 2005 2009, a city may establish a housing improvement 
207.24  area, provided that it receives enabling legislation authorizing 
207.25  the establishment of the area. 
207.26     Sec. 11.  Minnesota Statutes 2002, section 452.25, 
207.27  subdivision 3, is amended to read: 
207.28     Subd. 3.  [AUTHORITY.] (a) Upon the approval of its elected 
207.29  utilities commission or, if there be none, its city council, a 
207.30  municipal utility may enter into a joint venture with other 
207.31  municipal utilities, municipal power agencies, cooperative 
207.32  associations, or investor-owned utilities, or other private 
207.33  investors to provide utility services.  Retail electric utility 
207.34  services provided by a joint venture must be within the 
207.35  boundaries of each utility's exclusive electric service 
207.36  territory as shown on the map of service territories maintained 
208.1   by the department of commerce.  The terms and conditions of the 
208.2   joint venture are subject to ratification by the governing 
208.3   bodies of the respective utilities and may include the formation 
208.4   of a corporate or other separate legal entity with an 
208.5   administrative and governance structure independent of the 
208.6   respective utilities. 
208.7      (b) A corporate or other separate legal entity, if formed: 
208.8      (1) has the authority and legal capacity and, in the 
208.9   exercise of the joint venture, the powers, privileges, 
208.10  responsibilities, and duties authorized by this section; 
208.11     (2) is subject to the laws and rules applicable to the 
208.12  organization, internal governance, and activities of the entity; 
208.13     (3) in connection with its property and affairs and in 
208.14  connection with property within its control, may exercise any 
208.15  and all powers that may be exercised by a natural person or a 
208.16  private corporation or other private legal entity in connection 
208.17  with similar property and affairs; 
208.18     (4) a joint venture that does not include an investor-owned 
208.19  utility may elect to be deemed a municipal utility or a 
208.20  cooperative association for purposes of chapter 216B or other 
208.21  federal or state law regulating utility operations; and 
208.22     (5) for a joint venture that includes an investor-owned 
208.23  utility, the commission has authority over the activities, 
208.24  services, and rates of the joint venture, and may exercise that 
208.25  authority, to the same extent the commission has authority over 
208.26  the activities, services, and rates of the investor-owned 
208.27  utility itself. 
208.28     (c) Any corporation, if formed, must comply with section 
208.29  465.719, subdivisions 9, 10, 11, 12, 13, and 14.  The term 
208.30  "political subdivision," as it is used in section 465.719, shall 
208.31  refer to the city council of a city.  In this paragraph, 
208.32  "corporation" means a corporation organized under chapters 302A 
208.33  and 317A. 
208.34     Sec. 12.  Minnesota Statutes 2002, section 469.034, 
208.35  subdivision 2, is amended to read: 
208.36     Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
209.1   authority may pledge the general obligation of the general 
209.2   jurisdiction governmental unit as additional security for bonds 
209.3   payable from income or revenues of the project or the 
209.4   authority.  The authority must find that the pledged revenues 
209.5   will equal or exceed 110 percent of the principal and interest 
209.6   due on the bonds for each year.  The proceeds of the bonds must 
209.7   be used for a qualified housing development project or 
209.8   projects.  The obligations must be issued and sold in the manner 
209.9   and following the procedures provided by chapter 475, except the 
209.10  obligations are not subject to approval by the electors, and the 
209.11  maturities may extend to not more than 30 years from the 
209.12  estimated date of completion of the project for obligations sold 
209.13  to finance housing for the elderly and 40 years from the 
209.14  estimated date of completion of the project for other 
209.15  obligations issued under this subdivision.  The authority is the 
209.16  municipality for purposes of chapter 475.  
209.17     (b) The principal amount of the issue must be approved by 
209.18  the governing body of the general jurisdiction governmental unit 
209.19  whose general obligation is pledged.  Public hearings must be 
209.20  held on issuance of the obligations by both the authority and 
209.21  the general jurisdiction governmental unit.  The hearings must 
209.22  be held at least 15 days, but not more than 120 days, before the 
209.23  sale of the obligations. 
209.24     (c) The maximum amount of general obligation bonds that may 
209.25  be issued and outstanding under this section equals the greater 
209.26  of (1) one-half of one percent of the taxable market value of 
209.27  the general jurisdiction governmental unit whose general 
209.28  obligation which includes a tax on property is pledged, or (2) 
209.29  $3,000,000.  In the case of county or multicounty general 
209.30  obligation bonds, the outstanding general obligation bonds of 
209.31  all cities in the county or counties issued under this 
209.32  subdivision must be added in calculating the limit under clause 
209.33  (1). 
209.34     (d) "General jurisdiction governmental unit" means the city 
209.35  in which the housing development project is located.  In the 
209.36  case of a county or multicounty authority, the county or 
210.1   counties may act as the general jurisdiction governmental unit.  
210.2   In the case of a multicounty authority, the pledge of the 
210.3   general obligation is a pledge of a tax on the taxable property 
210.4   in each of the counties. 
210.5      (e) "Qualified housing development project" means a housing 
210.6   development project providing housing either for the elderly or 
210.7   for individuals and families with incomes not greater than 80 
210.8   percent of the median family income as estimated by the United 
210.9   States Department of Housing and Urban Development for the 
210.10  standard metropolitan statistical area or the nonmetropolitan 
210.11  county in which the project is located, and will be owned by the 
210.12  authority for the term of the bonds.  A qualified housing 
210.13  development project may admit nonelderly individuals and 
210.14  families with higher incomes if: 
210.15     (1) three years have passed since initial occupancy; 
210.16     (2) the authority finds the project is experiencing 
210.17  unanticipated vacancies resulting in insufficient revenues, 
210.18  because of changes in population or other unforeseen 
210.19  circumstances that occurred after the initial finding of 
210.20  adequate revenues; and 
210.21     (3) the authority finds a tax levy or payment from general 
210.22  assets of the general jurisdiction governmental unit will be 
210.23  necessary to pay debt service on the bonds if higher income 
210.24  individuals or families are not admitted. 
210.25     Sec. 13.  Minnesota Statutes 2002, section 471.342, is 
210.26  amended by adding a subdivision to read: 
210.27     Subd. 2a.  [WATER SUBMETERING.] In this section, "water 
210.28  submetering" means metering devices in multifamily dwellings and 
210.29  related services, which detect water leaks and monitor water 
210.30  usage of specific units or areas. 
210.31     Sec. 14.  Minnesota Statutes 2002, section 471.342, 
210.32  subdivision 3, is amended to read: 
210.33     Subd. 3.  [PROGRAM AUTHORITY.] A city may establish an 
210.34  inflow and infiltration prevention program and a water 
210.35  submetering program and provide loans and grants to property 
210.36  owners to assist the owners in financing the cost of abating 
211.1   inflow and infiltration and water conservation and leak 
211.2   detection on their property.  
211.3      Sec. 15.  Minnesota Statutes 2002, section 471.342, 
211.4   subdivision 5, is amended to read: 
211.5      Subd. 5.  [PROGRAM FINANCING.] The city may finance the 
211.6   program programs with federal, state, private, or city funds.  
211.7   City funds include, but are not limited to, general fund 
211.8   appropriations, sanitary or storm sewer utility funds, and fees 
211.9   or charges.  A city may also issue revenue obligations payable 
211.10  solely from fees and charges imposed for program costs and loan 
211.11  repayments to finance the programs. 
211.12     Sec. 16.  Minnesota Statutes 2002, section 473.39, is 
211.13  amended by adding a subdivision to read: 
211.14     Subd. 1k.  [OBLIGATIONS.] After July 1, 2004, in addition 
211.15  to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 
211.16  and 1j, the council may issue certificates of indebtedness, 
211.17  bonds, or other obligations under this section in an amount not 
211.18  exceeding $32,000,000 for capital expenditures as prescribed in 
211.19  the council's regional transit master plan and transit capital 
211.20  improvement program and for related costs, including the costs 
211.21  of issuance and sale of the obligations. 
211.22     Sec. 17.  Minnesota Statutes 2002, section 474A.131, 
211.23  subdivision 1, is amended to read: 
211.24     Subdivision 1.  [NOTICE OF ISSUE.] Each issuer that issues 
211.25  bonds with an allocation received under this chapter shall 
211.26  provide a notice of issue to the department on forms provided by 
211.27  the department stating: 
211.28     (1) the date of issuance of the bonds; 
211.29     (2) the title of the issue; 
211.30     (3) the principal amount of the bonds; 
211.31     (4) the type of qualified bonds under federal tax law; 
211.32     (5) the dollar amount of the bonds issued that were subject 
211.33  to the annual volume cap; and 
211.34     (6) for entitlement issuers, whether the allocation is from 
211.35  current year entitlement authority or is from carryforward 
211.36  authority. 
212.1      For obligations that are issued as a part of a series of 
212.2   obligations, a notice must be provided for each series.  A 
212.3   penalty of one-half of the amount of the application deposit not 
212.4   to exceed $5,000 shall apply to any issue of obligations for 
212.5   which a notice of issue is not provided to the department within 
212.6   five business days after issuance or before the last Monday 4:30 
212.7   p.m. on the last business day in December, whichever occurs 
212.8   first.  Within 30 days after receipt of a notice of issue the 
212.9   department shall refund a portion of the application deposit 
212.10  equal to one percent of the amount of the bonding authority 
212.11  actually issued if a one percent application deposit was made, 
212.12  or equal to two percent of the amount of the bonding authority 
212.13  actually issued if a two percent application deposit was made, 
212.14  less any penalty amount. 
212.15     Sec. 18.  Minnesota Statutes 2002, section 475.52, 
212.16  subdivision 1, is amended to read: 
212.17     Subdivision 1.  [STATUTORY CITIES.] Any statutory city may 
212.18  issue bonds or other obligations for the acquisition or 
212.19  betterment of public buildings, means of garbage disposal, 
212.20  hospitals, nursing homes, homes for the aged, schools, 
212.21  libraries, museums, art galleries, parks, playgrounds, stadia, 
212.22  sewers, sewage disposal plants, subways, streets, sidewalks, 
212.23  warning systems; for any utility or other public convenience 
212.24  from which a revenue is or may be derived; for a permanent 
212.25  improvement revolving fund; for changing, controlling or 
212.26  bridging streams and other waterways; for the acquisition and 
212.27  betterment of bridges and roads within two miles of the 
212.28  corporate limits; for the acquisition of development rights in 
212.29  the form of conservation easements under chapter 84C; and for 
212.30  acquisition of equipment for snow removal, street construction 
212.31  and maintenance, or fire fighting.  Without limitation by the 
212.32  foregoing the city may issue bonds to provide money for any 
212.33  authorized corporate purpose except current expenses. 
212.34     Sec. 19.  Minnesota Statutes 2002, section 475.52, 
212.35  subdivision 3, is amended to read: 
212.36     Subd. 3.  [COUNTIES.] Any county may issue bonds for the 
213.1   acquisition or betterment of courthouses, county administrative 
213.2   buildings, health or social service facilities, correctional 
213.3   facilities, law enforcement centers, jails, morgues, libraries, 
213.4   parks, and hospitals, for roads and bridges within the county or 
213.5   bordering thereon and for road equipment and machinery and for 
213.6   ambulances and related equipment, for the acquisition of 
213.7   development rights in the form of conservation easements under 
213.8   chapter 84C, and for capital equipment for the administration 
213.9   and conduct of elections providing the equipment is uniform 
213.10  countywide, except that the power of counties to issue bonds in 
213.11  connection with a library shall not exist in Hennepin County. 
213.12     Sec. 20.  Minnesota Statutes 2002, section 475.52, 
213.13  subdivision 4, is amended to read: 
213.14     Subd. 4.  [TOWNS.] Any town may issue bonds for the 
213.15  acquisition and betterment of town halls, town roads and 
213.16  bridges, nursing homes and homes for the aged, and for 
213.17  acquisition of equipment for snow removal, road construction or 
213.18  maintenance, and fire fighting, for the acquisition of 
213.19  development rights in the form of conservation easements under 
213.20  chapter 84C, and for the acquisition and betterment of any 
213.21  buildings to house and maintain town equipment. 
213.22     Sec. 21.  Minnesota Statutes 2003 Supplement, section 
213.23  475.521, subdivision 4, is amended to read: 
213.24     Subd. 4.  [LIMITATIONS ON AMOUNT.] A city may not issue 
213.25  bonds under this section if the maximum amount of principal and 
213.26  interest to become due in any year on all the outstanding bonds 
213.27  issued under this section, including the bonds to be issued, 
213.28  will equal or exceed 0.05367 0.16 percent of the taxable market 
213.29  value of property in the county city for a city that has a 
213.30  population less than 2,500 and 0.05367 percent of the taxable 
213.31  market value of property in the city for a city that has a 
213.32  population of 2,500 or more.  Calculation of the limit must be 
213.33  made using the taxable market value for the taxes payable year 
213.34  in which the obligations are issued and sold.  This section does 
213.35  not limit the authority to issue bonds under any other special 
213.36  or general law. 
214.1      Sec. 22.  Minnesota Statutes 2003 Supplement, section 
214.2   475.58, subdivision 3b, is amended to read: 
214.3      Subd. 3b.  [STREET RECONSTRUCTION.] (a) A municipality may, 
214.4   without regard to the election requirement under subdivision 1, 
214.5   issue and sell obligations for street reconstruction, if the 
214.6   following conditions are met: 
214.7      (1) the streets are reconstructed under a street 
214.8   reconstruction plan that describes the streets to be 
214.9   reconstructed, the estimated costs, and any planned 
214.10  reconstruction of other streets in the municipality over the 
214.11  next five years, and the plan and issuance of the obligations 
214.12  has been approved by a vote of all of the members of the 
214.13  governing body following a public hearing for which notice has 
214.14  been published in the official newspaper at least ten days but 
214.15  not more than 28 days prior to the hearing; and 
214.16     (2) if a petition requesting a vote on the issuance is 
214.17  signed by voters equal to five percent of the votes cast in the 
214.18  last municipal general election and is filed with the municipal 
214.19  clerk within 30 days of the public hearing, the municipality may 
214.20  issue the bonds only after obtaining the approval of a majority 
214.21  of the voters voting on the question of the issuance of the 
214.22  obligations. 
214.23     (b) Obligations issued under this subdivision are subject 
214.24  to the debt limit of the municipality and are not excluded from 
214.25  net debt under section 475.51, subdivision 4. 
214.26     (c) For purposes of this subdivision, street reconstruction 
214.27  includes utility replacement and relocation and other activities 
214.28  incidental to the street reconstruction, but turn lanes, and 
214.29  other improvements having a substantial public safety function 
214.30  and realignments, other modifications to intersect with state 
214.31  and county roads, and the local share of state and county road 
214.32  projects. 
214.33     (d) Except in the case of turn lanes, safety improvements, 
214.34  intersection modifications, and the local share of state and 
214.35  county road projects, street reconstruction does not include the 
214.36  portion of project cost allocable to widening a street or adding 
215.1   curbs and gutters where none previously existed. 
215.2      Sec. 23.  Minnesota Statutes 2002, section 504B.215, is 
215.3   amended by adding a subdivision to read: 
215.4      Subd. 5.  [UTILITY CHARGES.] (a) Where submetering, as 
215.5   defined in section 471.342, subdivision 2a, is installed, 
215.6   metering equipment must comply with safety and technical 
215.7   standards established by the American Water Works Association, 
215.8   and must be installed in accordance with manufacturer's 
215.9   instructions and applicable code. 
215.10     (b) Where tenants are billed separately from rent for 
215.11  utilities, the person or entity billing the tenants may not 
215.12  collect in the aggregate more than the amount billed by the 
215.13  utility for the utility service provided.  The person or entity 
215.14  may not collect from tenants as part of utility charges, 
215.15  administrative, capital, or other expenses related to the 
215.16  provision of utility service.  Such expenses include, but are 
215.17  not limited to, purchase and installation of submeters, 
215.18  connection, disconnection, reconnection, billing, or other 
215.19  servicing charges and late payment charges.  
215.20     (c) The rate for utility service charged to tenants must be 
215.21  the same rate that the bill payer of record is charged by the 
215.22  utility.  Recovery by the bill payer of record from the tenants 
215.23  of any fixed monthly or periodic charges shall be made on a pro 
215.24  rata basis. 
215.25     (d) Upon a resident's request, an owner must provide a copy 
215.26  of any bills received from the utility showing the billed rate 
215.27  and total consumption and any bills, statements, or other 
215.28  documentation of rates and consumption provided by any third 
215.29  party to an owner during the prior 12 months. 
215.30     (e) Any violation of this subdivision shall be considered a 
215.31  violation of sections 325F.69 and 325D.44. 
215.32     Sec. 24.  [CITY OF ST. PAUL; RIVERCENTRE COMPLEX 
215.33  OPERATION.] 
215.34     Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
215.35  section, the terms defined in this subdivision have the meanings 
215.36  given them. 
216.1      (b) "City" means the city of St. Paul, its mayor, city 
216.2   council, and any other board, authority, commission, or officer 
216.3   authorized by law, charter, or ordinance to exercise city powers 
216.4   of the nature referred to in this section. 
216.5      (c) "RiverCentre complex" means collectively the 
216.6   auditorium, convention, conference and education center, arena, 
216.7   and parking ramp facilities presently and commonly known as the 
216.8   Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy 
216.9   Center, and RiverCentre Parking Ramp, including all property, 
216.10  real or personal, tangible or intangible, located in the city, 
216.11  intended to be used as part of the RiverCentre complex or 
216.12  additions to or extensions of it. 
216.13     Subd. 2.  [CREATION OF NONPROFIT ORGANIZATION.] As required 
216.14  under Minnesota Statutes, section 465.717, and notwithstanding 
216.15  any other law, city charter provision, or ordinance to the 
216.16  contrary, the city of St. Paul may participate in the creation 
216.17  of a nonprofit organization for the purposes provided in this 
216.18  section. 
216.19     Subd. 3.  [GOVERNING BOARD.] (a) The mayor of the city, 
216.20  subject to approval by the city council, shall appoint a 
216.21  majority of the members of the governing board of the nonprofit 
216.22  organization performing all or a part of the activities 
216.23  necessary to carry out the purposes specified in this section.  
216.24  The mayor may designate any officer or employee of the city to 
216.25  serve as a member of the governing board of any nonprofit 
216.26  organization. 
216.27     (b) In addition to the appointments made by the mayor under 
216.28  paragraph (a), the mayor shall designate two members of the city 
216.29  council to serve on the governing board of the nonprofit 
216.30  organization. 
216.31     (c) Notwithstanding any provision contained in the articles 
216.32  of incorporation and bylaws of the nonprofit organization, any 
216.33  member of the governing board appointed by the mayor may be 
216.34  removed only by the mayor. 
216.35     (d) The governing board of the nonprofit organization shall 
216.36  select, subject to the approval of the mayor, a president to 
217.1   serve as chief executive officer and general manager of the 
217.2   nonprofit organization. 
217.3      (e) The procedures in Minnesota Statutes, section 317A.255, 
217.4   subdivision 1, paragraph (b), relating to director conflicts of 
217.5   interest, are not required if the contract or other transaction 
217.6   is between the city and the nonprofit organization. 
217.7      Subd. 4.  [RIVERCENTRE MANAGEMENT; AUTHORITY TO CONTRACT 
217.8   WITH NONPROFIT ORGANIZATION.] The city may enter into an 
217.9   agreement with the nonprofit organization created in subdivision 
217.10  2 to equip, maintain, manage, and operate all or a portion of 
217.11  the RiverCentre complex and to manage and operate a convention 
217.12  bureau to market and promote the city as a tourist or convention 
217.13  center.  Except as otherwise provided in this section, the 
217.14  nonprofit organization may only contract and utilize and expend 
217.15  funds for these purposes under the direction of its governing 
217.16  board, subject to the accounting, financial reporting, and other 
217.17  conditions that the city may prescribe in a contract made under 
217.18  this section between the city and the nonprofit organization.  
217.19  The nonprofit organization may use the services of the office of 
217.20  the city attorney and the city's purchasing department.  All 
217.21  activities performed to carry out these purposes are deemed to 
217.22  be for a public purpose. 
217.23     Subd. 5.  [BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX 
217.24  EXEMPTIONS PRESERVED.] (a) The city must protect the rights of 
217.25  holders of bonds issued for the RiverCentre complex, including 
217.26  preserving the tax-exempt status of the bonds. 
217.27     (b) The use and operation of the RiverCentre complex by the 
217.28  nonprofit organization with which the city contracts under this 
217.29  act is a use, lease, or occupancy for public, governmental, and 
217.30  municipal purposes, and the complex is exempt from taxation by 
217.31  the state or any political subdivision of the state during such 
217.32  use, to the extent it would be exempt if the complex was 
217.33  equipped, maintained, managed, and operated by the city. 
217.34     (c) Gross receipts of tickets and admissions to events at 
217.35  the RiverCentre complex sponsored by the nonprofit organization 
217.36  created in section 2 do not qualify for the sales tax exemption 
218.1   under Minnesota Statutes, section 297A.70, subdivision 10. 
218.2      Subd. 6.  [APPLICABLE GENERAL LAWS.] The following statutes 
218.3   apply to the nonprofit organization with which the city 
218.4   contracts under this section the same as they apply to the city, 
218.5   to the extent practicable: 
218.6      (1) Minnesota Statutes, chapter 13D, the Minnesota Open 
218.7   Meeting Law; and 
218.8      (2) Minnesota Statutes, chapter 13, the Government Data 
218.9   Practices Act. 
218.10     Subd. 7.  [SUCCESSION.] The nonprofit organization with 
218.11  which the city contracts under this section is the successor to 
218.12  all powers, rights, assets, privileges, and interests held and 
218.13  enjoyed by the RiverCentre authority on the effective date of 
218.14  this section, and established by the provisions of Laws 1967, 
218.15  chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3, 
218.16  clause (3), as amended; Laws 1982, chapter 523, article 25, 
218.17  sections 4 and 5, as amended; Laws 1998, chapter 404, sections 
218.18  81 and 82; and Minnesota Statutes, section 297A.98.  On the 
218.19  effective date of the contract between the city and the 
218.20  nonprofit organization authorized by this section, the 
218.21  RiverCentre authority ceases to exist for only so long as the 
218.22  contract is in effect, and all other laws or provisions 
218.23  specifically relating to the RiverCentre authority and the 
218.24  RiverCentre complex that are not otherwise referenced in this 
218.25  section, do not apply to the nonprofit organization. 
218.26     Subd. 8.  [LIABILITY.] The nonprofit organization with 
218.27  which the city contracts under this section is a "municipality," 
218.28  and the officers, directors, employees, and agents of the 
218.29  nonprofit organization are "employees, officers, or agents," 
218.30  under Minnesota Statutes, chapter 466, relating to tort 
218.31  liability.  The city must defend, save harmless, and indemnify 
218.32  the nonprofit organization, including the nonprofit's officers, 
218.33  directors, employees, and agents, against any claim or demand 
218.34  arising out of the nonprofit organization's performance under 
218.35  the contract. 
218.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
219.1   the city council and the chief clerical officer of the city of 
219.2   St. Paul have timely completed their compliance with Minnesota 
219.3   Statutes, section 645.023, subdivisions 2 and 3. 
219.4      Sec. 25.  [TRANSFER OF MHFA BONDING AUTHORITY TO HESO.] 
219.5      Notwithstanding Minnesota Statutes, section 474A.03, 
219.6   subdivision 2a, clause (b), the Minnesota Housing Finance Agency 
219.7   may enter into an agreement with the Higher Education Services 
219.8   Office under which the Higher Education Services Office issues 
219.9   qualified student loan bonds, up to $50,000,000 of which are 
219.10  issued pursuant to bonding authority allocated to the Minnesota 
219.11  Housing Finance Agency in 2004 under Minnesota Statutes, section 
219.12  474A.03, subdivision 2a, clause (a).  This amount is in addition 
219.13  to the bonding authority otherwise allocated to the Higher 
219.14  Education Services Office under Minnesota Statutes, chapter 
219.15  474A.  Notwithstanding Minnesota Statutes, section 474A.04, 
219.16  subdivision 1a, 474A.061, or 474A.091, subdivision 2, bonding 
219.17  authority carried forward by the Minnesota Housing Financing 
219.18  Agency from its allocation for 2004 under Minnesota Statutes, 
219.19  section 474A.03, subdivision 2a, clause (b), are exempt from the 
219.20  requirement that the bonding authority be permanently issued by 
219.21  December 31 of the next succeeding calendar year. 
219.22     Sec. 26.  [APPLICATION.] 
219.23     Section 16 applies in the counties of Anoka, Carver, 
219.24  Dakota, Hennepin, Ramsey, Scott, and Washington. 
219.25     Sec. 27.  [EFFECTIVE DATE.] 
219.26     Except as provided in section 24, this article is effective 
219.27  the day following final enactment. 
219.28                             ARTICLE 7
219.29              INTERNATIONAL ECONOMIC DEVELOPMENT ZONE
219.30     Section 1.  Minnesota Statutes 2002, section 174.03, is 
219.31  amended by adding a subdivision to read: 
219.32     Subd. 2a.  [STATE AVIATION PLAN.] (a) Each revision of the 
219.33  state transportation plan must include a chapter setting out a 
219.34  state aviation plan.  The plan must include the following: 
219.35     (1) an analysis of the projected commercial aviation needs 
219.36  of the state over the next 20 years; 
220.1      (2) a description of the present capacity, function, and 
220.2   levels of activity at each commercial service airport as 
220.3   designated by the Federal Aviation Administration, each airport 
220.4   that the commissioner determines is likely to become a 
220.5   commercial service airport in the next 20 years, and any other 
220.6   airport that the commissioner determines should be included by 
220.7   reason of commercial passenger or cargo service levels; and 
220.8      (3) a description of the capacity, function, and levels of 
220.9   activity that each airport identified in clause (2) must have in 
220.10  order to carry out the plan's goal and objectives and meet the 
220.11  needs described under clause (1). 
220.12     (b) In assessing aviation needs and the capacity, function, 
220.13  and level of activity at any airport, the plan must consider 
220.14  both commercial passenger service and cargo service. 
220.15     Sec. 2.  [174.032] [ADVISORY COUNCIL ON AVIATION PLANNING.] 
220.16     Subdivision 1.  [ADVISORY COUNCIL CREATED.] (a) The 
220.17  commissioner shall create an Advisory Council on Aviation 
220.18  Planning to advise the commissioner on the aviation chapter of 
220.19  the state transportation plan.  The council consists of the 
220.20  following members appointed by the commissioner: 
220.21     (1) one member of the Metropolitan Airports Commission; 
220.22     (2) one representative of major commercial airlines; 
220.23     (3) one representative of independent pilots who fly for 
220.24  small business; 
220.25     (4) one representative of the air cargo industry; 
220.26     (5) two representatives of the business community unrelated 
220.27  to aviation, one of whom must reside within the seven-county 
220.28  metropolitan area and one of whom must reside outside that area; 
220.29     (6) one representative of environmental interests; 
220.30     (7) one employee of the Department of Transportation's 
220.31  Office of Aeronautics; 
220.32     (8) two representatives of neighborhoods that are 
220.33  significantly affected by airplane noise; and 
220.34     (9) one representative of tier-two airports (St. Cloud, 
220.35  Duluth, Willmar, and Rochester). 
220.36     (b) Members of the advisory council serve at the pleasure 
221.1   of the appointing authority.  Members shall serve without 
221.2   compensation. 
221.3      Subd. 2.  [ADVISORY COUNCIL DUTIES.] (a) The Advisory 
221.4   Council on Aviation Planning shall advise the commissioner on 
221.5   the aviation planning chapter of the state transportation plan 
221.6   required under section 174.03, subdivision 2a.  In carrying out 
221.7   these duties the advisory council shall prepare an initial draft 
221.8   of the chapter and submit it to the commissioner, revise the 
221.9   draft if so requested by the commissioner, and comment to the 
221.10  commissioner on any revisions to the draft the commissioner 
221.11  makes.  In drafting the chapter the council shall consider: 
221.12     (1) present and anticipated capacity needs of commercial 
221.13  service airports, including limitations on expanding the 
221.14  capacity of individual commercial service airports imposed by 
221.15  state or local regulations, safety or environmental concerns, 
221.16  and land uses near the airport that are incompatible with 
221.17  airport operations; 
221.18     (2) the needs of Minnesota residents and businesses for 
221.19  passenger and cargo service, from both a statewide and regional 
221.20  perspective; 
221.21     (3) anticipated changes in commercial aircraft types and 
221.22  characteristics; 
221.23     (4) noise and other environmental impacts of aviation at 
221.24  commercial service airports; 
221.25     (5) trends in the aviation and airline industries; and 
221.26     (6) relationship between aviation and other forms of 
221.27  transportation covered by the state transportation plan. 
221.28     (b) The advisory council may also make recommendations to 
221.29  the commissioner, the Metropolitan Airports Commission, and the 
221.30  legislature concerning the policy steps needed to implement the 
221.31  chapter. 
221.32     Subd. 3.  [TERM OF COUNCIL; EXPIRATION; RECONVENING.] (a) 
221.33  The commissioner shall appoint the first advisory council by 
221.34  July 1, 2004.  The council shall submit any recommendations it 
221.35  makes to the legislature by January 15, 2005.  The terms of all 
221.36  members of the advisory council serving on July 1, 2004, expire 
222.1   on January 1, 2006. 
222.2      (b) The commissioner shall appoint and convene a new 
222.3   advisory council not less than two years before the date on 
222.4   which each revision of the state transportation plan is required 
222.5   under section 174.03, subdivision 1a.  Each such advisory 
222.6   council must consist of members as prescribed in subdivision 1, 
222.7   who shall serve on the same terms as set forth under subdivision 
222.8   1.  Each such advisory council expires on the date on which the 
222.9   revision of the state transportation plan becomes final. 
222.10     Sec. 3.  Minnesota Statutes 2002, section 290.06, is 
222.11  amended by adding a subdivision to read: 
222.12     Subd. 32.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE JOB 
222.13  CREDIT.] A taxpayer that is a qualified business, as defined in 
222.14  section 469.321, subdivision 6, is allowed a credit as 
222.15  determined under section 469.327 against the tax imposed by this 
222.16  chapter. 
222.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
222.18  years beginning after December 31, 2004. 
222.19     Sec. 4.  [290.0681] [INTERNATIONAL ECONOMIC DEVELOPMENT 
222.20  ZONE INVESTMENT CREDIT.] 
222.21     A person is allowed a credit against the taxes imposed 
222.22  under this chapter in an amount equal to 50 percent of the 
222.23  amount of qualifying investment.  A qualifying investment is an 
222.24  amount invested in a regional distribution center, as developed 
222.25  pursuant to section 469.322.  Unused portions of the credit may 
222.26  be carried over for five years. 
222.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
222.28  years beginning after December 31, 2004. 
222.29     Sec. 5.  Minnesota Statutes 2002, section 290.191, is 
222.30  amended by adding a subdivision to read: 
222.31     Subd. 4a.  [APPORTIONMENT FORMULA FOR CERTAIN QUALIFIED 
222.32  BUSINESSES.] (a) If the business of a corporation, partnership, 
222.33  or proprietorship is a qualified business under section 469.321, 
222.34  and has operations only within the international economic 
222.35  development zone, then the taxpayer may apportion net income to 
222.36  Minnesota based solely upon the percentage that the sales made 
223.1   within this state in connection with its trade or business 
223.2   during the tax period are of the total sales wherever made in 
223.3   connection with the trade or business during the tax period.  
223.4   Property and payroll factors are disregarded. 
223.5      (b) If the taxpayer has operations both within the 
223.6   international economic development zone and outside of the 
223.7   international economic development zone, income will be 
223.8   apportioned to Minnesota under the formula in subdivision 2, 
223.9   except that only the Minnesota sales of the facility or 
223.10  facilities located in the international economic development 
223.11  zone will be included in the taxpayer's factors.  Property and 
223.12  payroll factors of the facility or facilities located in the 
223.13  international economic development zone are disregarded. 
223.14     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
223.15  years beginning after December 31, 2004. 
223.16     Sec. 6.  Minnesota Statutes 2002, section 297A.68, is 
223.17  amended by adding a subdivision to read: 
223.18     Subd. 40.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a) 
223.19  Purchases of tangible personal property or taxable services by a 
223.20  qualified business, as defined in section 469.321, are exempt if 
223.21  the property or services are primarily used or consumed in an 
223.22  international economic development zone designated under section 
223.23  469.322. 
223.24     (b) Purchase and use of construction materials and supplies 
223.25  for construction of improvements to real property in an 
223.26  international economic development zone are exempt if the 
223.27  improvements after completion of construction are to be used in 
223.28  the conduct of a qualified business, as defined in section 
223.29  469.321.  This exemption applies regardless of whether the 
223.30  purchases are made by the business or a contractor. 
223.31     (c) The exemptions under this subdivision apply to a local 
223.32  sales and use tax, regardless of whether the local tax is 
223.33  imposed on sales taxable under this chapter or in another law, 
223.34  ordinance, or charter provision. 
223.35     (d) This subdivision applies to sales, if the purchase was 
223.36  made and delivery received during the period provided under 
224.1   section 469.324, subdivision 2. 
224.2      <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
224.3   on or after the day following final enactment. 
224.4      Sec. 7.  [469.321] [DEFINITIONS.] 
224.5      Subdivision 1.  [SCOPE.] For purposes of sections 469.321 
224.6   to 469.328, the following terms have the meanings given. 
224.7      Subd. 2.  [FOREIGN TRADE ZONE.] "Foreign trade zone" means 
224.8   a foreign trade zone designated pursuant to United States Code, 
224.9   title 19, section 81b, for the right to use the powers provided 
224.10  in United States Code, title 19, sections 81a to 81u, or a 
224.11  subzone authorized by the foreign trade zone. 
224.12     Subd. 3.  [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade 
224.13  zone authority" means the Greater Metropolitan Foreign Trade 
224.14  Zone Commission number 119, a joint powers authority created by 
224.15  the county of Hennepin, the cities of Minneapolis and 
224.16  Bloomington, and the Metropolitan Airports Commission, under the 
224.17  authority of section 469.059, 469.101, or 471.59, which includes 
224.18  any other political subdivisions that enter into the authority 
224.19  after its creation. 
224.20     Subd. 4.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] An 
224.21  "international economic development zone" or "zone" is a zone so 
224.22  designated under section 469.322. 
224.23     Subd. 5.  [PERSON.] "Person" includes an individual, 
224.24  corporation, partnership, limited liability company, 
224.25  association, or any other entity. 
224.26     Subd. 6.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
224.27  means a person carrying on a trade or business at a place of 
224.28  business located within an international economic development 
224.29  zone that is: 
224.30     (1) engaged in the furtherance of international export or 
224.31  import of goods; and 
224.32     (2) certified by the foreign trade zone authority as a 
224.33  trade or business that furthers the purpose of developing 
224.34  international distribution capacity and capability. 
224.35     (b) A person that relocates a trade or business from within 
224.36  Minnesota but outside an international economic development zone 
225.1   into an international economic development zone is not a 
225.2   qualified business, unless the business: 
225.3      (1)(i) increases full-time employment in the first full 
225.4   year of operation within the international economic development 
225.5   zone by at least 20 percent measured relative to the operations 
225.6   that were relocated and maintains the required level of 
225.7   employment for each year that tax incentives under section 
225.8   469.324 are claimed; or 
225.9      (ii) makes a capital investment in the property located 
225.10  within a zone equal to at least ten percent of the gross 
225.11  revenues of the operations that were relocated in the 
225.12  immediately proceeding taxable year; and 
225.13     (2) enters a binding written agreement with the foreign 
225.14  trade zone authority that: 
225.15     (i) pledges that the business will meet the requirements of 
225.16  clause (1); 
225.17     (ii) provides for repayment of all tax benefits enumerated 
225.18  under section 469.324 to the business under the procedures in 
225.19  section 469.328, if the requirements of clause (1) are not met 
225.20  for the taxable year or for taxes payable during a year in which 
225.21  the requirements were not met; and 
225.22     (iii) contains any other terms the foreign trade zone 
225.23  authority determines appropriate. 
225.24     Clause (1) of this paragraph does not apply to a freight 
225.25  forwarder. 
225.26     (c) A qualified business must pay each employee total 
225.27  compensation, including benefits not mandated by law, that on an 
225.28  annualized basis is equal to at least 110 percent of the federal 
225.29  poverty guidelines for a family of four. 
225.30     Subd. 7.  [REGIONAL DISTRIBUTION CENTER.] A "regional 
225.31  distribution center" is a distribution center developed within a 
225.32  foreign trade zone.  The regional distribution center must have 
225.33  as its primary purpose to facilitate gathering of freight for 
225.34  the purpose of centralizing the functions necessary for the 
225.35  shipment of freight in international commerce, including, but 
225.36  not limited to, security and customs functions. 
226.1      Subd. 8.  [RELOCATE.] (a) "Relocate" means that a trade or 
226.2   business: 
226.3      (1) ceases one or more operations or functions at another 
226.4   location in Minnesota and begins performing substantially the 
226.5   same operations or functions at a location in an international 
226.6   economic development zone; or 
226.7      (2) reduces employment at another location in Minnesota 
226.8   during a period starting one year before and ending one year 
226.9   after it begins operations in an international economic 
226.10  development zone and its employees in the international economic 
226.11  development zone are engaged in the same line of business as the 
226.12  employees at the location where it reduced employment. 
226.13     (b) "Relocate" does not include an expansion by a business 
226.14  that establishes a new facility that does not replace or 
226.15  supplant an existing operation or employment, in whole or in 
226.16  part. 
226.17     (c) "Trade or business" includes any business entity that 
226.18  is substantially similar in operation or ownership to the 
226.19  business entity seeking to be a qualified business under this 
226.20  section. 
226.21     Subd. 9.  [FREIGHT FORWARDER.] "Freight forwarder" is a 
226.22  business that, for compensation, ensures that goods produced or 
226.23  sold by another business move from point of origin to point of 
226.24  destination. 
226.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
226.26  following final enactment. 
226.27     Sec. 8.  [469.322] [DESIGNATION OF INTERNATIONAL ECONOMIC 
226.28  DEVELOPMENT ZONE.] 
226.29     (a) An area designated as a foreign trade zone may be 
226.30  designated by the foreign trade zone authority as an 
226.31  international economic development zone if within the zone a 
226.32  regional distribution center is being developed pursuant to 
226.33  section 469.323.  The zone must be not less than 500 acres and 
226.34  not more than 1,000 acres in size. 
226.35     (b) In making the designation, the foreign trade zone 
226.36  authority, in consultation with the Minnesota Department of 
227.1   Transportation and the Metropolitan Council, shall consider 
227.2   access to major transportation routes, consistency with current 
227.3   state transportation and air cargo planning, adequacy of the 
227.4   size of the site, access to airport facilities, present and 
227.5   future capacity at the designated airport, the capability to 
227.6   meet integrated present and future air cargo, security, and 
227.7   inspection services, and access to other infrastructure and 
227.8   financial incentives.  The border of the international economic 
227.9   development zone must be no more than 60 miles distant or 90 
227.10  minutes drive time from the border of the Minneapolis-St. Paul 
227.11  International Airport.  The county in which the zone is located 
227.12  must be a member of the foreign trade zone authority. 
227.13     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
227.14  following final enactment. 
227.15     Sec. 9.  [469.323] [FOREIGN TRADE ZONE AUTHORITY POWERS.] 
227.16     Subdivision 1.  [DEVELOPMENT OF REGIONAL DISTRIBUTION 
227.17  CENTER.] The foreign trade zone authority is responsible for 
227.18  creating a development plan for the regional distribution 
227.19  center.  The regional distribution center must be developed with 
227.20  the purpose of expanding, on a regional basis, international 
227.21  distribution capacity and capability.  The foreign trade zone 
227.22  authority shall consult with municipalities that have indicated 
227.23  to the authority an interest in locating the international 
227.24  economic development zone within their boundaries and a 
227.25  willingness to establish a tax increment financing district 
227.26  coterminous with the boundaries of the zone, as well as 
227.27  interested businesses, potential financiers, and appropriate 
227.28  state and federal agencies. 
227.29     Subd. 2.  [BUSINESS PLAN.] Before designation of an 
227.30  international economic development zone under section 469.322, 
227.31  the governing body of the foreign trade zone authority shall 
227.32  prepare a business plan.  The plan must include an analysis of 
227.33  the economic feasibility of the regional distribution center 
227.34  once it becomes operational and of the operations of freight 
227.35  forwarders and other businesses that choose to locate within the 
227.36  boundaries of the zone.  The analysis must provide profitability 
228.1   models that: 
228.2      (1) include the benefits of the incentives; 
228.3      (2) estimate the amount of time needed to achieve 
228.4   profitability; and 
228.5      (3) analyze the length of time incentives will be necessary 
228.6   to the economic viability of the regional distribution center. 
228.7      If the governing body of the foreign trade authority 
228.8   determines that the models do not establish the economic 
228.9   feasibility of the project, the regional distribution center 
228.10  does not meet the development requirements of this section and 
228.11  section 469.322. 
228.12     Subd. 3.  [PORT AUTHORITY POWERS.] The governing body of 
228.13  the foreign trade zone authority may establish a port authority 
228.14  that has the same powers as a port authority established under 
228.15  section 469.049.  If the foreign trade zone authority 
228.16  establishes a port authority, the governing body of the foreign 
228.17  trade zone authority may exercise all powers granted to a city 
228.18  by sections 469.048 to 469.068 within the area of the 
228.19  international economic development zone, except it may not 
228.20  impose or request imposition of a property tax levy under 
228.21  section 469.053 by any city. 
228.22     Subd. 4.  [BUSINESS SUBSIDY LAW.] Tax exemptions, job 
228.23  credits, and tax increment financing provided under this section 
228.24  are business subsidies for the purpose of sections 116J.993 to 
228.25  116J.995. 
228.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
228.27  following final enactment. 
228.28     Sec. 10.  [469.324] [TAX INCENTIVES IN INTERNATIONAL 
228.29  ECONOMIC DEVELOPMENT ZONE.] 
228.30     Subdivision 1.  [AVAILABILITY.] Qualified businesses that 
228.31  operate in an international economic development zone, 
228.32  individuals who invest in a regional distribution center, or 
228.33  qualified businesses that operate in an international economic 
228.34  development zone qualify for: 
228.35     (1) investment tax credits as provided under section 
228.36  290.0681; 
229.1      (2) special apportionment formula for corporate franchise 
229.2   taxes as provided under section 290.191, subdivision 4a; 
229.3      (3) exemption from the state sales and use tax and any 
229.4   local sales and use taxes on qualifying purchases as provided in 
229.5   section 297A.68, subdivision 40; 
229.6      (4) the jobs credit allowed under section 469.327; and 
229.7      (5) tax increment financing as provided in this chapter. 
229.8      Subd. 2.  [DURATION.] (a) Except as provided in paragraph 
229.9   (b), the tax incentives described in subdivision 1, clauses (1), 
229.10  (2), and (4), are available for no more than 12 consecutive 
229.11  taxable years for any taxpayer that claims them.  The tax 
229.12  incentives described in subdivision 1, clause (3), are available 
229.13  for each taxpayer that claims them for taxes otherwise payable 
229.14  on transactions during a period of 12 years from the date when 
229.15  the first exemption is claimed by that taxpayer under each 
229.16  exemption.  No exemptions described in subdivision 1, clauses 
229.17  (1) to (4), are available after December 31, 2020. 
229.18     (b) For taxpayers that are freight forwarders, the 
229.19  durations provided under paragraph (a) are reduced to six years. 
229.20     Subd. 3.  [QUALIFICATION.] To receive the tax incentives 
229.21  under this section, a qualified business must, by December 31 of 
229.22  each year, certify to the commissioner of revenue the percentage 
229.23  of its business activity within the zone that constitutes 
229.24  international business activity for the year, measured by value 
229.25  or volume of activity.  If the percentage is less than 100 
229.26  percent, the amount of the tax benefits provided under sections 
229.27  290.06, subdivision 32, 290.0681, and 469.327 are reduced in 
229.28  proportion to the percentage of business activity that is not 
229.29  international business activity.  The commissioner of revenue 
229.30  may audit the business activities of a qualifying business to 
229.31  determine its eligibility for tax benefits under this section. 
229.32     Sec. 11.  [469.327] [JOBS CREDIT.] 
229.33     Subdivision 1.  [CREDIT ALLOWED.] A qualified business is 
229.34  allowed a credit against the taxes imposed under chapter 290.  
229.35  The credit equals seven percent of the: 
229.36     (1) lesser of: 
230.1      (i) zone payroll for the taxable year, less the zone 
230.2   payroll for the base year; or 
230.3      (ii) total Minnesota payroll for the taxable year, less 
230.4   total Minnesota payroll for the base year; minus 
230.5      (2) $30,000 multiplied by the number of full-time 
230.6   equivalent employees that the qualified business employs in the 
230.7   international economic development zone for the taxable year, 
230.8   minus the number of full-time equivalent employees the business 
230.9   employed in the zone in the base year, but not less than zero. 
230.10     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
230.11  the following terms have the meanings given. 
230.12     (b) "Base year" means the taxable year beginning during the 
230.13  calendar year prior to the calendar year in which the zone 
230.14  designation took effect. 
230.15     (c) "Full-time equivalent employees" means the equivalent 
230.16  of annualized expected hours of work equal to 2,080 hours. 
230.17     (d) "Minnesota payroll" means the wages or salaries 
230.18  attributed to Minnesota under section 290.191, subdivision 12, 
230.19  for the qualified business or the unitary business of which the 
230.20  qualified business is a part, whichever is greater. 
230.21     (e) "Zone payroll" means wages or salaries used to 
230.22  determine the zone payroll factor for the qualified business, 
230.23  less the amount of compensation attributable to any employee 
230.24  that exceeds $70,000. 
230.25     Subd. 3.  [INFLATION ADJUSTMENT.] For taxable years 
230.26  beginning after December 31, 2005, the dollar amounts in 
230.27  subdivision 1, clause (2), and subdivision 2, paragraph (e), are 
230.28  annually adjusted for inflation.  The commissioner of revenue 
230.29  shall adjust the amounts by the percentage determined under 
230.30  section 290.06, subdivision 2d, for the taxable year. 
230.31     Subd. 4.  [REFUNDABLE.] If the amount of the credit exceeds 
230.32  the liability for tax under chapter 290, the commissioner of 
230.33  revenue shall refund the excess to the qualified business. 
230.34     Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
230.35  refunds authorized by this section is appropriated to the 
230.36  commissioner of revenue from the general fund. 
231.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
231.2   years beginning after December 31, 2004. 
231.3      Sec. 12.  [469.328] [REPAYMENT OF TAX BENEFITS.] 
231.4      Subdivision 1.  [REPAYMENT OBLIGATION.] A person must repay 
231.5   the amount of the tax reduction received under section 469.324, 
231.6   subdivision 1, clauses (1) to (4), and refund received under 
231.7   section 469.327, during the two years immediately before it 
231.8   ceased to operate in the zone, if the person ceased to operate 
231.9   its facility located within the zone or otherwise ceases to be 
231.10  or is not a qualified business. 
231.11     Subd. 2.  [DISPOSITION OF REPAYMENT.] The repayment must be 
231.12  paid to the state to the extent it represents a state tax 
231.13  reduction.  Any amount repaid to the state must be deposited in 
231.14  the general fund.  Any repayment of local sales or use taxes 
231.15  must be repaid to the jurisdiction imposing the local sales or 
231.16  use tax. 
231.17     Subd. 3.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
231.18  taxes imposed under chapter 290 or 297A or local taxes collected 
231.19  pursuant to section 297A.99, a person must file an amended 
231.20  return with the commissioner of revenue and pay any taxes 
231.21  required to be repaid within 30 days after ceasing to be a 
231.22  qualified business.  The amount required to be repaid is 
231.23  determined by calculating the tax for the period for which 
231.24  repayment is required without regard to the tax reductions 
231.25  allowed under section 469.324. 
231.26     (b) The provisions of chapters 270 and 289A relating to the 
231.27  commissioner of revenue's authority to audit, assess, and 
231.28  collect the tax and to hear appeals are applicable to the 
231.29  repayment required under paragraph (a).  The commissioner may 
231.30  impose civil penalties as provided in chapter 289A, and the 
231.31  additional tax and penalties are subject to interest at the rate 
231.32  provided in section 270.75, from 30 days after ceasing to do 
231.33  business in the zone until the date the tax is paid. 
231.34     (c) For determining the tax required to be repaid, a tax 
231.35  reduction is deemed to have been received on the date that the 
231.36  tax would have been due if the person had not been entitled to 
232.1   the tax reduction. 
232.2      (d) The commissioner of revenue may assess the repayment of 
232.3   taxes under paragraph (b) at any time within two years after the 
232.4   person ceases to be a qualified business, or within any period 
232.5   of limitations for the assessment of tax under section 289A.38, 
232.6   whichever is later. 
232.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
232.8   following final enactment. 
232.9      Sec. 13.  [DEPARTMENT OF EMPLOYMENT AND ECONOMIC 
232.10  DEVELOPMENT STUDY; INTERNATIONAL AIR FREIGHT.] 
232.11     The commissioner of employment and economic development 
232.12  must study and analyze the issue of whether the state would 
232.13  benefit from more than one international economic development 
232.14  zone as defined in Minnesota Statutes, section 469.321.  The 
232.15  commissioner shall solicit input on the issue from businesses, 
232.16  communities, and economic development organizations.  The 
232.17  commissioner must report the results of the study and analysis 
232.18  to the committees of the legislature having jurisdiction over 
232.19  economic development issues by December 1, 2004, along with any 
232.20  legislative recommendations. 
232.21                             ARTICLE 8
232.22                           MISCELLANEOUS
232.23     Section 1.  Minnesota Statutes 2002, section 15.06, 
232.24  subdivision 6, is amended to read: 
232.25     Subd. 6.  [GENERAL POWERS OF COMMISSIONERS.] Except as 
232.26  otherwise expressly provided by law, a commissioner shall have 
232.27  the following powers: 
232.28     (1) to delegate to any subordinate employee the exercise of 
232.29  specified statutory powers or duties as the commissioner may 
232.30  deem advisable, subject to the commissioner's control; provided, 
232.31  that every delegation shall be made by written order, filed with 
232.32  the secretary of state; and further provided that only a deputy 
232.33  commissioner may have all the powers or duties of the 
232.34  commissioner.  A commissioner who delegates the exercise of 
232.35  identical powers or duties to ten or more subordinate employees, 
232.36  may combine the delegation to these employees in one written 
233.1   order.  A delegation of authority granted by a commissioner 
233.2   remains in effect until revoked by the commissioner, revoked by 
233.3   a successor commissioner, or termination of the employees' 
233.4   employment.  A successor commissioner may continue to grant the 
233.5   same delegations of authority that were granted by a previous 
233.6   commissioner, by issuing a written order that is filed with the 
233.7   secretary of state and lists the names of the subordinate 
233.8   employees that have orders of delegations of authority, the date 
233.9   the order was signed, and the date the order was filed with the 
233.10  secretary of state; 
233.11     (2) to appoint all subordinate employees and to prescribe 
233.12  their duties; provided, that all departments and agencies shall 
233.13  be subject to the provisions of chapter 43A; 
233.14     (3) with the approval of the commissioner of 
233.15  administration, to organize the department or agency as deemed 
233.16  advisable in the interest of economy and efficiency; and 
233.17     (4) to prescribe procedures for the internal management of 
233.18  the department or agency to the extent that the procedures do 
233.19  not directly affect the rights of or procedure available to the 
233.20  public. 
233.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
233.22  following final enactment. 
233.23     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
233.24  270.30, subdivision 8, is amended to read: 
233.25     Subd. 8.  [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The 
233.26  provisions of subdivisions 6 and 7 this section, except for 
233.27  subdivision 4, do not apply to: 
233.28     (1) an attorney admitted to practice under section 481.01; 
233.29     (2) a certified public accountant holding a certificate 
233.30  under section 326A.04 or a person issued a permit to practice 
233.31  under section 326A.05; 
233.32     (3) a person designated as a registered accounting 
233.33  practitioner under Minnesota Rules, part 1105.6600, or a 
233.34  registered accounting practitioner firm issued a permit under 
233.35  Minnesota Rules, part 1105.7100; 
233.36     (4) an enrolled agent who has passed the special enrollment 
234.1   examination administered by the Internal Revenue Service; and 
234.2      (5) any fiduciary, or the regular employees of a fiduciary, 
234.3   while acting on behalf of the fiduciary estate, the testator, 
234.4   trustor, grantor, or beneficiaries of them; 
234.5      (6) a tax preparer who provides tax preparation services 
234.6   for fewer than six clients in a calendar year; 
234.7      (7) a person who provides tax preparation services to a 
234.8   spouse, parent, grandparent, child, or sibling; and 
234.9      (8) an employee who provides tax preparation services for 
234.10  an employer. 
234.11     Sec. 3.  [270.772] [MINIMUM DOLLAR REQUIREMENT FOR 
234.12  ELECTRONIC PAYMENT OF TAXES AND FEES.] 
234.13     Unless a requirement to make payments electronically 
234.14  regardless of dollar amount is provided for by law for a 
234.15  specific type of tax, fee, or surcharge, or for a group of 
234.16  taxpayers or payors, payments of every tax, fee, or surcharge 
234.17  administered by and payable to the commissioner in a calendar 
234.18  year, including deposits and estimated payments, must be 
234.19  remitted electronically if the liability of the taxpayer or 
234.20  payor for the tax, fee, or surcharge in the preceding fiscal 
234.21  year ending June 30 is $20,000 or more.  This section does not 
234.22  apply to individual income, estate, and airflight property taxes.
234.23     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
234.24  due in calendar year 2005, and in calendar years thereafter, 
234.25  based on liabilities incurred in fiscal year ending June 30, 
234.26  2004, and in fiscal years thereafter. 
234.27     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
234.28  289A.08, subdivision 16, is amended to read: 
234.29     Subd. 16.  [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 
234.30  FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 
234.31  preparer," as defined in section 289A.60, subdivision 13, 
234.32  paragraph (g), who prepared more than 500 Minnesota individual 
234.33  income tax returns for the prior calendar year must file all 
234.34  Minnesota individual income tax returns prepared for the current 
234.35  calendar year by electronic means.  "Tax refund or return 
234.36  preparer" does not include (i) an organization that meets the 
235.1   requirements of section 501(c)(3) of the Internal Revenue Code 
235.2   or (ii) an individual hired by such an organization for the 
235.3   purpose of preparing tax returns. 
235.4      (b) For tax returns prepared for the tax year beginning in 
235.5   2001, the "500" in paragraph (a) is reduced to 250. 
235.6      (c) For tax returns prepared for tax years beginning after 
235.7   December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
235.8      (d) Paragraph (a) does not apply to a return if the 
235.9   taxpayer has indicated on the return that the taxpayer did not 
235.10  want the return filed by electronic means. 
235.11     (e) For each return that is not filed electronically by a 
235.12  tax refund or return preparer under this subdivision, including 
235.13  returns filed under paragraph (d), a paper filing fee of $5 is 
235.14  imposed upon the preparer.  The fee is collected from the 
235.15  preparer in the same manner as income tax.  The fee does not 
235.16  apply to returns that the commissioner requires to be filed in 
235.17  paper form. 
235.18     <b>[EFFECTIVE DATE.]</b> This section is effective for returns 
235.19  filed for tax years beginning after December 31, 2003. 
235.20     Sec. 5.  Minnesota Statutes 2002, section 289A.12, 
235.21  subdivision 3, is amended to read: 
235.22     Subd. 3.  [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 
235.23  AND S CORPORATIONS.] (a) Partnerships must file a return with 
235.24  the commissioner for each taxable year.  The return must conform 
235.25  to the requirements of section 290.311, and must include the 
235.26  names and addresses of the partners entitled to a distributive 
235.27  share in their taxable net income, gain, loss, or credit, and 
235.28  the amount of the distributive share to which each is entitled.  
235.29  A partnership required to file a return for a partnership 
235.30  taxable year must furnish a copy of the information required to 
235.31  be shown on the return to a person who is a partner at any time 
235.32  during the taxable year, on or before the day on which the 
235.33  return for the taxable year was filed.  A partnership with more 
235.34  than 100 partners that is required to file a federal partnership 
235.35  return electronically under Code of Federal Regulations, title 
235.36  26, section 301.6011-3 (2003), must also file the return due 
236.1   under this section electronically.  If a return required to be 
236.2   filed electronically is filed on paper, the return is still 
236.3   valid but a penalty of $50 for each partner over 100 partners is 
236.4   imposed for failing to file electronically.  The commissioner 
236.5   may waive the penalty if the partnership can demonstrate that 
236.6   filing the return electronically creates a hardship. 
236.7      (b) The fiduciary of an estate or trust making the return 
236.8   required to be filed under section 289A.08, subdivision 2, for a 
236.9   taxable year must give a beneficiary who receives a distribution 
236.10  from the estate or trust with respect to the taxable year or to 
236.11  whom any item with respect to the taxable year is allocated, a 
236.12  statement containing the information required to be shown on the 
236.13  return, on or before the date on which the return was filed. 
236.14     (c) An S corporation must file a return with the 
236.15  commissioner for a taxable year during which an election under 
236.16  section 290.9725 is in effect, stating specifically the names 
236.17  and addresses of the persons owning stock in the corporation at 
236.18  any time during the taxable year, the number of shares of stock 
236.19  owned by a shareholder at all times during the taxable year, the 
236.20  shareholder's pro rata share of each item of the corporation for 
236.21  the taxable year, and other information the commissioner 
236.22  requires.  An S corporation required to file a return under this 
236.23  paragraph for any taxable year must furnish a copy of the 
236.24  information shown on the return to the person who is a 
236.25  shareholder at any time during the taxable year, on or before 
236.26  the day on which the return for the taxable year was filed. 
236.27     (d) The partnership or S corporation return must be signed 
236.28  by someone designated by the partnership or S corporation. 
236.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
236.30  years beginning after December 31, 2003. 
236.31     Sec. 6.  Minnesota Statutes 2002, section 289A.20, 
236.32  subdivision 2, is amended to read: 
236.33     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
236.34  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
236.35  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
236.36  (a) A tax required to be deducted and withheld during the 
237.1   quarterly period must be paid on or before the last day of the 
237.2   month following the close of the quarterly period, unless an 
237.3   earlier time for payment is provided.  A tax required to be 
237.4   deducted and withheld from compensation of an entertainer and 
237.5   from a payment to an out-of-state contractor must be paid on or 
237.6   before the date the return for such tax must be filed under 
237.7   section 289A.18, subdivision 2.  Taxes required to be deducted 
237.8   and withheld by partnerships and S corporations must be paid on 
237.9   or before the date the return must be filed under section 
237.10  289A.18, subdivision 2. 
237.11     (b) An employer who, during the previous quarter, withheld 
237.12  more than $1,500 of tax under section 290.92, subdivision 2a or 
237.13  3, or 290.923, subdivision 2, must deposit tax withheld under 
237.14  those sections with the commissioner within the time allowed to 
237.15  deposit the employer's federal withheld employment taxes under 
237.16  Code of Federal Regulations, title 26, section 31.6302-1, as 
237.17  amended through December 31, 2001, without regard to the safe 
237.18  harbor or de minimis rules in subparagraph (f) or the one-day 
237.19  rule in subsection (c), clause (3).  Taxpayers must submit a 
237.20  copy of their federal notice of deposit status to the 
237.21  commissioner upon request by the commissioner. 
237.22     (c) The commissioner may prescribe by rule other return 
237.23  periods or deposit requirements.  In prescribing the reporting 
237.24  period, the commissioner may classify payors according to the 
237.25  amount of their tax liability and may adopt an appropriate 
237.26  reporting period for the class that the commissioner judges to 
237.27  be consistent with efficient tax collection.  In no event will 
237.28  the duration of the reporting period be more than one year. 
237.29     (d) If less than the correct amount of tax is paid to the 
237.30  commissioner, proper adjustments with respect to both the tax 
237.31  and the amount to be deducted must be made, without interest, in 
237.32  the manner and at the times the commissioner prescribes.  If the 
237.33  underpayment cannot be adjusted, the amount of the underpayment 
237.34  will be assessed and collected in the manner and at the times 
237.35  the commissioner prescribes. 
237.36     (e) If the aggregate amount of the tax withheld during a 
238.1   fiscal year ending June 30 under section 290.92, subdivision 2a 
238.2   or 3, is equal to or exceeds the amounts established for 
238.3   remitting federal withheld taxes pursuant to the regulations 
238.4   promulgated under section 6302(h) of the Internal Revenue Code, 
238.5   the employer must remit each required deposit for wages paid in 
238.6   the subsequent calendar year by electronic means. 
238.7      (f) A third-party bulk filer as defined in section 290.92, 
238.8   subdivision 30, paragraph (a), clause (2), who remits 
238.9   withholding deposits must remit all deposits by electronic means 
238.10  as provided in paragraph (e), regardless of the aggregate amount 
238.11  of tax withheld during a fiscal year for all of the employers.  
238.12     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
238.13  due in calendar year 2005, and in calendar years thereafter, 
238.14  based upon liabilities incurred in fiscal year ending June 30, 
238.15  2004, and in fiscal years thereafter. 
238.16     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
238.17  289A.20, subdivision 4, is amended to read: 
238.18     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
238.19  chapter 297A are due and payable to the commissioner monthly on 
238.20  or before the 20th day of the month following the month in which 
238.21  the taxable event occurred, or following another reporting 
238.22  period as the commissioner prescribes or as allowed under 
238.23  section 289A.18, subdivision 4, paragraph (f) or (g), except 
238.24  that use taxes due on an annual use tax return as provided under 
238.25  section 289A.11, subdivision 1, are payable by April 15 
238.26  following the close of the calendar year. 
238.27     (b) A vendor having a liability of $120,000 or more during 
238.28  a fiscal year ending June 30 must remit the June liability for 
238.29  the next year in the following manner: 
238.30     (1) Two business days before June 30 of the year, the 
238.31  vendor must remit 85 percent of the estimated June liability to 
238.32  the commissioner.  
238.33     (2) On or before August 20 of the year, the vendor must pay 
238.34  any additional amount of tax not remitted in June. 
238.35     (c) A vendor having a liability of $120,000 or more during 
238.36  a fiscal year ending June 30 must remit all liabilities on 
239.1   returns due for periods beginning in the subsequent calendar 
239.2   year by electronic means on or before the 20th day of the month 
239.3   following the month in which the taxable event occurred, or on 
239.4   or before the 20th day of the month following the month in which 
239.5   the sale is reported under section 289A.18, subdivision 4, 
239.6   except for 85 percent of the estimated June liability, which is 
239.7   due two business days before June 30.  The remaining amount of 
239.8   the June liability is due on August 20.  
239.9      <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
239.10  due in calendar year 2005, and in calendar years thereafter, 
239.11  based upon liabilities incurred in fiscal year ending June 30, 
239.12  2004, and in fiscal years thereafter. 
239.13     Sec. 8.  Minnesota Statutes 2002, section 297F.01, is 
239.14  amended by adding a subdivision to read: 
239.15     Subd. 10a.  [OUT-OF-STATE RETAILER.] "Out-of-state retailer"
239.16  means a person engaged outside of this state in the business of 
239.17  selling, or offering to sell, cigarettes or tobacco products to 
239.18  consumers located in this state. 
239.19     Sec. 9.  [297F.031] [REGISTRATION REQUIREMENT.] 
239.20     Prior to making delivery sales or shipping cigarettes or 
239.21  tobacco products in connection with any sales, an out-of-state 
239.22  retailer shall file with the Department of Revenue a statement 
239.23  setting forth the out-of-state retailer's name, trade name, and 
239.24  the address of the out-of-state retailer's principal place of 
239.25  business and any other place of business. 
239.26     Sec. 10.  Minnesota Statutes 2002, section 297F.09, is 
239.27  amended by adding a subdivision to read: 
239.28     Subd. 4a.  [REPORTING REQUIREMENTS.] No later than the 18th 
239.29  day of each calendar month, an out-of-state retailer that has 
239.30  made a delivery of cigarettes or tobacco products or shipped or 
239.31  delivered cigarettes or tobacco products into the state in a 
239.32  delivery sale in the previous calendar month shall file with the 
239.33  Department of Revenue reports in the form and in the manner 
239.34  prescribed by the commissioner of revenue that provides for each 
239.35  delivery sale, the name and address of the purchaser and the 
239.36  brand or brands and quantity of cigarettes or tobacco products 
240.1   sold.  A tobacco retailer that meets the requirements of United 
240.2   States Code, title 15, section 375 et seq. satisfies the 
240.3   requirements of this subdivision. 
240.4      Sec. 11.  Minnesota Statutes 2002, section 297I.01, is 
240.5   amended by adding a subdivision to read: 
240.6      Subd. 6a.  [DIRECT BUSINESS.] (a) "Direct business" means 
240.7   all insurance provided by an insurance company or its agents, 
240.8   and specifically includes stop-loss insurance purchased in 
240.9   connection with a self-insurance plan for employee health 
240.10  benefits or for other purposes, but excludes: 
240.11     (1) reinsurance in which an insurance company assumes the 
240.12  liability of another insurance company; and 
240.13     (2) self-insurance. 
240.14     (b) For purposes of this subdivision, an insurance company 
240.15  includes a nonprofit health service corporation, health 
240.16  maintenance organization, and community integrated service 
240.17  network. 
240.18     <b>[EFFECTIVE DATE.]</b> This section is effective for insurance 
240.19  premiums received after December 31, 2004. 
240.20     Sec. 12.  Minnesota Statutes 2002, section 297I.05, 
240.21  subdivision 4, is amended to read: 
240.22     Subd. 4.  [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH 
240.23  TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A 
240.24  tax is imposed on mutual insurance companies that sell both 
240.25  property and casualty companies insurance that had total assets 
240.26  greater than $5,000,000 at the end of the calendar year but that 
240.27  had total assets less than $1,600,000,000 on December 31, 1989.  
240.28  The rate of tax is equal to: 
240.29     (1) two percent of gross premiums less return premiums on 
240.30  all direct business received by the insurer or agents of the 
240.31  insurer in Minnesota for life insurance, in cash or otherwise, 
240.32  during the year; and 
240.33     (2) 1.26 percent of gross premiums less return premiums on 
240.34  all other direct business received by the insurer or agents of 
240.35  the insurer in Minnesota, in cash or otherwise, during the year, 
240.36  except for life insurance as provided in subdivision 14. 
241.1      <b>[EFFECTIVE DATE.]</b> This section is effective for premiums 
241.2   received after December 31, 2004. 
241.3      Sec. 13.  Minnesota Statutes 2002, section 297I.05, is 
241.4   amended by adding a subdivision to read: 
241.5      Subd. 14.  [LIFE INSURANCE.] A tax is imposed on life 
241.6   insurance.  The rate of tax equals 1.50 percent of gross 
241.7   premiums less return premiums on all direct business received by 
241.8   the insurer or agents of the insurer in Minnesota for life 
241.9   insurance, in cash or otherwise, during the year. 
241.10     <b>[EFFECTIVE DATE.]</b> This section is effective for premiums 
241.11  received after December 31, 2004. 
241.12     Sec. 14.  Minnesota Statutes 2002, section 298.01, 
241.13  subdivision 3, is amended to read: 
241.14     Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
241.15  engaged in the business of mining or producing ores in this 
241.16  state, except iron ore or taconite concentrates, shall pay an 
241.17  occupation tax to the state of Minnesota as provided in this 
241.18  subdivision.  The tax is determined in the same manner as the 
241.19  tax imposed by section 290.02, except that sections 290.05, 
241.20  subdivision 1, clause (a), and 290.17, subdivision 4, and 
241.21  290.191, subdivision 2, do not apply.  A person subject to 
241.22  occupation tax under this section shall apportion its net income 
241.23  on the basis of the percentage obtained by taking the sum of: 
241.24     (1) 75 percent of the percentage which the sales made 
241.25  within this state in connection with the trade or business 
241.26  during the tax period are of the total sales wherever made in 
241.27  connection with the trade or business during the tax period; 
241.28     (2) 12.5 percent of the percentage which the total tangible 
241.29  property used by the taxpayer in this state in connection with 
241.30  the trade or business during the tax period is of the total 
241.31  tangible property, wherever located, used by the taxpayer in 
241.32  connection with the trade or business during the tax period; and 
241.33     (3) 12.5 percent of the percentage which the taxpayer's 
241.34  total payrolls paid or incurred in this state or paid in respect 
241.35  to labor performed in this state in connection with the trade or 
241.36  business during the tax period are of the taxpayer's total 
242.1   payrolls paid or incurred in connection with the trade or 
242.2   business during the tax period.  
242.3      The tax is in addition to all other taxes. 
242.4      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
242.5   beginning after December 31, 2004. 
242.6      Sec. 15.  Minnesota Statutes 2002, section 298.01, 
242.7   subdivision 4, is amended to read: 
242.8      Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
242.9   CONCENTRATES.] A person engaged in the business of mining or 
242.10  producing of iron ore, taconite concentrates or direct reduced 
242.11  ore in this state shall pay an occupation tax to the state of 
242.12  Minnesota.  The tax is determined in the same manner as the tax 
242.13  imposed by section 290.02, except that sections 290.05, 
242.14  subdivision 1, clause (a), and 290.17, subdivision 4, and 
242.15  290.191, subdivision 2, do not apply.  A person subject to 
242.16  occupation tax under this section shall apportion its net income 
242.17  on the basis of the percentage obtained by taking the sum of: 
242.18     (1) 75 percent of the percentage which the sales made 
242.19  within this state in connection with the trade or business 
242.20  during the tax period are of the total sales wherever made in 
242.21  connection with the trade or business during the tax period; 
242.22     (2) 12.5 percent of the percentage which the total tangible 
242.23  property used by the taxpayer in this state in connection with 
242.24  the trade or business during the tax period is of the total 
242.25  tangible property, wherever located, used by the taxpayer in 
242.26  connection with the trade or business during the tax period; and 
242.27     (3) 12.5 percent of the percentage which the taxpayer's 
242.28  total payrolls paid or incurred in this state or paid in respect 
242.29  to labor performed in this state in connection with the trade or 
242.30  business during the tax period are of the taxpayer's total 
242.31  payrolls paid or incurred in connection with the trade or 
242.32  business during the tax period.  
242.33     The tax is in addition to all other taxes. 
242.34     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
242.35  beginning after December 31, 2004. 
242.36     Sec. 16.  [325D.125] [EMPLOYERS NOT TO MISREPRESENT STATUS 
243.1   OF EMPLOYEES.] 
243.2      Subdivision 1.  [MISREPRESENTATION PROHIBITED.] No employer 
243.3   shall misrepresent the nature of its employment relationship 
243.4   with its employees to any federal, state, or local government 
243.5   unit, to other employers or to its employees.  An employer 
243.6   misrepresents the nature of its employment relationship with its 
243.7   employees if it makes any statement regarding the nature of the 
243.8   relationship that the employer does not in good faith believe to 
243.9   be true or if it fails to report individuals as employees when 
243.10  legally required to do so. 
243.11     Subd. 2.  [EMPLOYEE COERCION PROHIBITED.] No employer shall 
243.12  require or request any employee to enter into any agreement, or 
243.13  sign any document, that results in misclassification of the 
243.14  employee as an independent contractor or otherwise does not 
243.15  accurately reflect the employment relationship with the employer.
243.16     Subd. 3.  [VIOLATIONS.] Any court finding any person guilty 
243.17  of violating this section shall transmit a copy of the 
243.18  documentation of the finding of guilt to the commissioner of 
243.19  labor and industry.  The commissioner of labor and industry 
243.20  shall report the finding of guilt to relevant state and federal 
243.21  agencies, including at least the commissioner of commerce, the 
243.22  commissioner of economic security, the commissioner of revenue, 
243.23  the federal Internal Revenue Service, and the United States 
243.24  Department of Labor. 
243.25     Sec. 17.  [325F.781] [REQUIREMENTS; TOBACCO PRODUCT 
243.26  DELIVERY SALES.] 
243.27     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
243.28  section, the following terms have the meanings given, unless the 
243.29  language or context clearly provides otherwise. 
243.30     (b) "Consumer" means an individual who purchases, receives, 
243.31  or possesses tobacco products for personal consumption and not 
243.32  for resale. 
243.33     (c) "Delivery sale" means: 
243.34     (1) a sale of tobacco products to a consumer in this state 
243.35  when: 
243.36     (i) the purchaser submits the order for the sale by means 
244.1   of a telephonic or other method of voice transmission, the mail 
244.2   or any other delivery service, or the Internet or other on-line 
244.3   service; or 
244.4      (ii) the tobacco products are delivered by use of the mail 
244.5   or other delivery service; or 
244.6      (2) a sale of tobacco products that satisfies the criteria 
244.7   in clause (1), item (i), regardless of whether the seller is 
244.8   located inside or outside of the state. 
244.9      A sale of tobacco products to an individual in this state 
244.10  must be treated as a sale to a consumer, unless the individual 
244.11  is licensed as a distributor or retailer of tobacco products. 
244.12     (d) "Delivery service" means a person, including the United 
244.13  States Postal Service, that is engaged in the commercial 
244.14  delivery of letters, packages, or other containers. 
244.15     (e) "Distributor" means a person, whether located inside or 
244.16  outside of this state, other than a retailer, who sells or 
244.17  distributes tobacco products in the state.  Distributor does not 
244.18  include a tobacco products manufacturer, export warehouse 
244.19  proprietor, or importer with a valid permit under United States 
244.20  Code, title 26, section 5712 (1997), if the person sells or 
244.21  distributes tobacco products in this state only to distributors 
244.22  who hold valid and current licenses under the laws of a state, 
244.23  or to an export warehouse proprietor or another manufacturer.  
244.24  Distributor does not include a common or contract carrier that 
244.25  is transporting tobacco products under a proper bill of lading 
244.26  or freight bill that states the quantity, source, and 
244.27  destination of tobacco products, or a person who ships tobacco 
244.28  products through this state by common or contract carrier under 
244.29  a bill of lading or freight bill. 
244.30     (f) "Retailer" means a person, whether located inside or 
244.31  outside this state, who sells or distributes tobacco products to 
244.32  a consumer in this state. 
244.33     (g) "Tobacco products" means: 
244.34     (1) cigarettes, as defined in section 297F.01, subdivision 
244.35  3; and 
244.36     (2) smokeless tobacco as defined in section 325F.76. 
245.1      Subd. 2.  [REQUIREMENTS FOR ACCEPTING ORDER FOR DELIVERY 
245.2   SALE.] (a) This subdivision applies to acceptance of an order 
245.3   for a delivery sale of tobacco products. 
245.4      (b) When accepting the first order for a delivery sale from 
245.5   a consumer, the tobacco retailer shall obtain the following 
245.6   information from the person placing the order: 
245.7      (1) a copy of a valid government-issued document that 
245.8   provides the person's name, current address, photograph, and 
245.9   date of birth; and 
245.10     (2) an original written statement signed by the person 
245.11  documenting that the person: 
245.12     (i) is of legal age to purchase tobacco products in the 
245.13  state; 
245.14     (ii) has made a choice whether to receive mailings from a 
245.15  tobacco retailer; 
245.16     (iii) understands that providing false information may be a 
245.17  violation of law; and 
245.18     (iv) understands that it is a violation of law to purchase 
245.19  tobacco products for subsequent resale or for delivery to 
245.20  persons who are under the legal age to purchase tobacco products.
245.21     (c) If an order is made as a result of advertisement over 
245.22  the Internet, the tobacco retailer shall request the e-mail 
245.23  address of the purchaser and shall receive payment by credit 
245.24  card or check prior to shipping. 
245.25     (d) Prior to shipping the tobacco products, the tobacco 
245.26  retailer shall verify the information provided under paragraph 
245.27  (b) against a commercially available database.  Any such 
245.28  database or databases may also include age and identity 
245.29  information from other government or validated commercial 
245.30  sources, if that additional information is regularly used by 
245.31  government and businesses for the purpose of identity 
245.32  verification and authentication, and if the additional 
245.33  information is used only to supplement and not to replace the 
245.34  government-issued identification data in the age and identity 
245.35  verification process. 
245.36     Subd. 3.  [REQUIREMENTS FOR SHIPPING A DELIVERY SALE.] (a) 
246.1   This subdivision applies to a tobacco retailer shipping tobacco 
246.2   products pursuant to a delivery sale. 
246.3      (b) The tobacco retailer shall clearly mark the outside of 
246.4   the package of tobacco products to be shipped "tobacco products -
246.5   adult signature required" and to show the name of the tobacco 
246.6   retailer. 
246.7      (c) The tobacco retailer shall utilize a delivery service 
246.8   that imposes the following requirements: 
246.9      (1) an adult must sign for the delivery; and 
246.10     (2) the person signing for the delivery must show valid 
246.11  government-issued identification that contains a photograph of 
246.12  the person signing for the delivery and indicates that the 
246.13  person signing for the delivery is of legal age to purchase 
246.14  tobacco products and resides at the delivery address. 
246.15     (d) The retailer must provide delivery instructions that 
246.16  clearly indicate the requirements of this subdivision and must 
246.17  declare that state law requires compliance with the requirements.
246.18     (e) No criminal penalty may be imposed on a person for a 
246.19  violation of this section other than a violation described in 
246.20  paragraph (f) or (g).  Whenever it appears to the commissioner 
246.21  that any person has engaged in any act or practice constituting 
246.22  a violation of this section, and the violation is not within two 
246.23  years of any previous violation of this section, the 
246.24  commissioner shall issue and cause to be served upon the person 
246.25  an order requiring the person to cease and desist from violating 
246.26  this section.  The order must give reasonable notice of the 
246.27  rights of the person to request a hearing and must state the 
246.28  reason for the entry of the order.  Unless otherwise agreed 
246.29  between the parties, a hearing shall be held not later than 
246.30  seven days after the request for the hearing is received by the 
246.31  commissioner after which and within 20 days after the receipt of 
246.32  the administrative law judge's report and subsequent exceptions 
246.33  and argument, the commissioner shall issue an order vacating the 
246.34  cease and desist order, modifying it, or making it permanent as 
246.35  the facts require.  If no hearing is requested within 30 days of 
246.36  the service of the order, the order becomes final and remains in 
247.1   effect until modified or vacated by the commissioner.  All 
247.2   hearings shall be conducted in accordance with the provisions of 
247.3   chapter 14.  If the person to whom a cease and desist order is 
247.4   issued fails to appear at the hearing after being duly notified, 
247.5   the person shall be deemed in default, and the proceeding may be 
247.6   determined against the person upon consideration of the cease 
247.7   and desist order, the allegations of which may be deemed to be 
247.8   true. 
247.9      (f) Any person who violates this section within two years 
247.10  of a violation for which a cease and desist order was issued 
247.11  under paragraph (e), is guilty of a misdemeanor. 
247.12     (g) Any person who commits a third or subsequent violation 
247.13  of this section, including a violation for which a cease and 
247.14  desist order was issued under paragraph (c), within any 
247.15  subsequent two-year period is guilty of a gross misdemeanor. 
247.16     Subd. 4.  [COMMON CARRIERS.] This section may not be 
247.17  construed as imposing liability upon any common carrier, or 
247.18  officers or employees of the common carrier, when acting within 
247.19  the scope of business of the common carrier. 
247.20     Subd. 5.  [REGISTRATION REQUIREMENT.] Prior to making 
247.21  delivery sales or shipping tobacco products in connection with 
247.22  any sales, an out-of-state retailer must meet the requirements 
247.23  of section 297F.031. 
247.24     Subd. 6.  [COLLECTION OF TAXES.] (a) Prior to shipping any 
247.25  tobacco products to a purchaser in this state, the out of state 
247.26  retailer shall comply with all requirements of chapter 297F and 
247.27  shall ensure that all state excise taxes and fees that apply to 
247.28  such tobacco products have been collected and paid to the state 
247.29  and that all related state excise tax stamps or other indicators 
247.30  of state excise tax payment have been properly affixed to those 
247.31  tobacco products. 
247.32     (b) In addition to any penalties under chapter 297F, a 
247.33  distributor who fails to pay any tax due according to paragraph 
247.34  (a) shall pay, in addition to any other penalty, a penalty of 50 
247.35  percent of the tax due but unpaid. 
247.36     Subd. 7.  [APPLICATION OF STATE LAWS.] All state laws that 
248.1   apply to in-state tobacco product retailers shall apply to 
248.2   Internet and mail-order sellers that sell into this state. 
248.3      Subd. 8.  [FORFEITURE.] Any tobacco product sold or 
248.4   attempted to be sold in a delivery sale that does not meet the 
248.5   requirements of this section is deemed to be contraband and is 
248.6   subject to forfeiture in the same manner as and in accordance 
248.7   with the provisions of section 297F.21. 
248.8      Subd. 9.  [CIVIL PENALTIES.] A tobacco retailer or 
248.9   distributor who violates this section or rules adopted under 
248.10  this section is subject to the following fines: 
248.11     (1) for the first violation, a fine of not more than 
248.12  $1,000; and 
248.13     (2) for the second and any subsequent violation, a fine of 
248.14  not more than $5,000. 
248.15     Subd. 10.  [ENFORCEMENT.] The attorney general may bring an 
248.16  action to enforce this section and may seek injunctive relief, 
248.17  including a preliminary or final injunction, and fines, 
248.18  penalties, and equitable relief and may seek to prevent or 
248.19  restrain actions in violation of this section by any person or 
248.20  any person controlling such person.  In addition, a violation of 
248.21  this section is a violation of the Unlawful Trade Practices Act, 
248.22  sections 325D.09 to 325D.16. 
248.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
248.24  following final enactment. 
248.25     Sec. 18.  Minnesota Statutes 2003 Supplement, section 
248.26  469.335, is amended to read: 
248.27     469.335 [APPLICATION FOR TAX BENEFITS.] 
248.28     (a) To claim a tax credit or exemption against a state tax 
248.29  under section 469.336, clauses (2) through (5), a business must 
248.30  apply to the commissioner for a tax credit certificate.  As a 
248.31  condition of its application, the business must agree to furnish 
248.32  information to the commissioner that is sufficient to verify the 
248.33  eligibility for any credits or exemptions claimed.  The total 
248.34  amount of the state tax credits and exemptions allowed for the 
248.35  specified period may not exceed the amount of the tax credit 
248.36  certificates provided by the commissioner to the business.  The 
249.1   commissioner must verify to the commissioner of revenue the 
249.2   amount of tax exemptions or credits for which each business is 
249.3   eligible. 
249.4      (b) A tax credit certificate issued under this section may 
249.5   specify the particular tax exemptions or credits against a state 
249.6   tax that the qualified business is eligible to claim under 
249.7   section 469.336, clauses (2) through (5), and the amount of each 
249.8   exemption or credit allowed. 
249.9      (c) The commissioner may issue $1,000,000 of tax credits or 
249.10  exemptions in fiscal year 2004.  Any tax credits or exemptions 
249.11  not awarded in fiscal year 2004 may be awarded in fiscal year 
249.12  2005.  The commissioner may not award any additional tax credits 
249.13  after June 30, 2004. 
249.14     (d) A qualified business must use the tax credits or tax 
249.15  exemptions granted under this section by the later of the end of 
249.16  the state fiscal year or the taxpayer's tax year in which the 
249.17  credits or exemptions are granted. 
249.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
249.19  following final enactment. 
249.20     Sec. 19.  [469.342] [BIOTECHNOLOGY AND HEALTH SCIENCES 
249.21  INDUSTRY GRANTS.] 
249.22     Subdivision 1.  [GRANT ELIGIBILITY.] The commissioner shall 
249.23  make grants to eligible businesses in the biotechnology and 
249.24  health sciences industry to support the startup and growth of 
249.25  biotechnology and health sciences businesses.  An eligible 
249.26  business is a business that: 
249.27     (1) is engaged primarily in: 
249.28     (i) researching, developing, and/or manufacturing a 
249.29  biotechnology product or service or a biotechnology-related 
249.30  health sciences product or service; 
249.31     (ii) researching, developing, and/or manufacturing a 
249.32  biotechnology medical device product or service or a 
249.33  biotechnology-related medical device product or service; or 
249.34     (iii) promoting, supplying, or servicing businesses 
249.35  involved in clause (1) or (2), if the business derives more than 
249.36  50 percent of its gross receipts from those activities; 
250.1      (2) pledges that the business will increase full-time 
250.2   employment in high-paying jobs by at least 20 percent in the 
250.3   first full year of operation after a grant is awarded; 
250.4      (3) shows a viable link between a higher education/research 
250.5   institution and the business activities of the biotechnology or 
250.6   health sciences business; and 
250.7      (4) agrees to treat a grant awarded under this section as a 
250.8   business subsidy under sections 116J.993 to 116J.995, and to 
250.9   comply with the requirements of that law. 
250.10     Subd. 2.  [AMOUNT AND LIMITATIONS OF GRANTS.] The 
250.11  commissioner may award grants in fiscal year 2007.  The total of 
250.12  the grants in aggregate may not exceed $5,000,000. 
250.13     Subd. 3.  [APPLICATION AND AWARD OF GRANTS.] A 
250.14  biotechnology and health sciences business must apply for grants 
250.15  under this section following the procedures established by the 
250.16  commissioner.  To be eligible for a grant, a business must 
250.17  demonstrate to the commissioner that it meets the requirements 
250.18  under subdivision 1, and provide any information required by the 
250.19  commissioner to determine eligibility.  All applications must be 
250.20  received on or before October 1 of each year that grants may be 
250.21  awarded, and the commissioner must advise each applicant on or 
250.22  before December 31 of that year that a grant is awarded or an 
250.23  explanation why a grant is not awarded. 
250.24     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2004. 
250.25     Sec. 20.  [473.24] [POPULATION ESTIMATES.] 
250.26     (a) The Metropolitan Council shall prepare an estimate of 
250.27  population and of the number of households for each city and 
250.28  town in the metropolitan area annually and convey the estimates 
250.29  to the governing body of each city or town by June 1 of each 
250.30  year.  In the case of a city or town that is located partly 
250.31  within and partly without the metropolitan area, the 
250.32  Metropolitan Council shall estimate the proportion of the total 
250.33  population and number of households that reside within the 
250.34  area.  The Metropolitan Council may prepare an estimate of the 
250.35  population and of the number of households for any other 
250.36  political subdivision located in the metropolitan area. 
251.1      (b) A governing body of a city or town may challenge an 
251.2   estimate made under this section by making its specific 
251.3   objections to the Metropolitan Council by June 24.  If the 
251.4   challenge does not result in an acceptable estimate, the 
251.5   governing body may have a special census conducted by the United 
251.6   States Bureau of the Census.  The Metropolitan Council shall 
251.7   certify the population estimates to the commissioner of revenue 
251.8   by July 15.  The political subdivision must notify the 
251.9   Metropolitan Council on or before July 1 of its intent to have 
251.10  the special census conducted.  The political subdivision must 
251.11  bear all costs of the special census.  Results of the special 
251.12  census must be received by the Metropolitan Council by the next 
251.13  May 15 to be used in that year's June 1 estimate under this 
251.14  section. 
251.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
251.16  following final enactment. 
251.17     Sec. 21.  Minnesota Statutes 2002, section 473.843, 
251.18  subdivision 3, is amended to read: 
251.19     Subd. 3.  [PAYMENT OF FEE.] On or before the 20th day of 
251.20  each month each operator shall pay the fee due under this 
251.21  section for the previous month, using a form provided by the 
251.22  commissioner of revenue.  
251.23     An operator having a fee of $120,000 or more during a 
251.24  fiscal year ending June 30 must pay all fees in the subsequent 
251.25  calendar year by electronic means. 
251.26     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
251.27  due in calendar year 2005, and in calendar years thereafter, 
251.28  based upon liabilities incurred in fiscal year ending June 30, 
251.29  2004, and in fiscal years thereafter. 
251.30     Sec. 22.  Minnesota Statutes 2002, section 473F.02, 
251.31  subdivision 7, is amended to read: 
251.32     Subd. 7.  [POPULATION.] "Population" means the most recent 
251.33  estimate of the population of a municipality made by the 
251.34  Metropolitan Council under section 473.24 and filed with the 
251.35  commissioner of revenue as of July 1 15 of the year in which a 
251.36  municipality's distribution net tax capacity is calculated.  The 
252.1   council shall annually estimate the population of each 
252.2   municipality as of a date which it determines and, in the case 
252.3   of a municipality which is located partly within and partly 
252.4   without the area, the proportion of the total which resides 
252.5   within the area, and shall promptly thereafter file its 
252.6   estimates with the commissioner of revenue. 
252.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
252.8   following final enactment. 
252.9      Sec. 23.  Minnesota Statutes 2002, section 477A.011, 
252.10  subdivision 3, is amended to read: 
252.11     Subd. 3.  [POPULATION.] "Population" means the 
252.12  population estimated or established as of July 1 15 in an aid 
252.13  calculation year by the most recent federal census, by a special 
252.14  census conducted under contract with the United States Bureau of 
252.15  the Census, by a population estimate made by the Metropolitan 
252.16  Council, or by a population estimate of the state demographer 
252.17  made pursuant to section 4A.02, whichever is the most recent as 
252.18  to the stated date of the count or estimate for the preceding 
252.19  calendar year, and which has been certified to the commissioner 
252.20  of revenue on or before July 15 of the aid calculation year.  
252.21  The term "per capita" refers to population as defined by this 
252.22  subdivision.  No changes in population will be recognized for 
252.23  the purposes of sections 477A.011 to 477A.014 after July 15 of 
252.24  the aid calculation year.  Clerical errors in the certification 
252.25  or use of the estimates and counts established as of July 15 in 
252.26  the aid calculation year are subject to correction within the 
252.27  time periods allowed under section 477A.014. 
252.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
252.29  following final enactment. 
252.30     Sec. 24.  Minnesota Statutes 2002, section 480B.01, 
252.31  subdivision 1, is amended to read: 
252.32     Subdivision 1.  [JUDICIAL VACANCIES.] If a judge of the 
252.33  district court or, Workers' Compensation Court of Appeals, or 
252.34  Tax Court dies, resigns, retires, or is removed during the 
252.35  judge's term of office, or if a new district or, Workers' 
252.36  Compensation Court of Appeals, or Tax Court judgeship is 
253.1   created, the resulting vacancy must be filled by the governor as 
253.2   provided in this section. 
253.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
253.4   following final enactment. 
253.5      Sec. 25.  Minnesota Statutes 2002, section 480B.01, 
253.6   subdivision 10, is amended to read: 
253.7      Subd. 10.  [NOTICE TO THE PUBLIC.] Upon receiving notice 
253.8   from the governor that a judicial vacancy has occurred or will 
253.9   occur on a specified date, the chair shall provide notice of the 
253.10  following information: 
253.11     (1) the office that is or will be vacant; 
253.12     (2) that applications from qualified persons or on behalf 
253.13  of qualified persons are being accepted by the commission; 
253.14     (3) that application forms may be obtained from the 
253.15  governor or the commission at a named address; and 
253.16     (4) that application forms must be returned to the 
253.17  commission by a named date.  
253.18     For a district court vacancy, the notice must be made 
253.19  available to attorney associations in the judicial district 
253.20  where the vacancy has occurred or will occur and to at least one 
253.21  newspaper of general circulation in each county in the 
253.22  district.  For a Workers' Compensation Court of Appeals or Tax 
253.23  Court vacancy, the notice must be given to state attorney 
253.24  associations and all forms of the public media. 
253.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
253.26  following final enactment. 
253.27     Sec. 26.  [COMPACTS; RETALIATORY TAXES.] 
253.28     The commissioner is authorized to enter into compact 
253.29  agreements with other states for the purpose of eliminating 
253.30  retaliatory insurance premiums tax provisions between this state 
253.31  and other states.  The commissioner shall report to the 
253.32  chairpersons of the house and senate tax committees, on or 
253.33  before February 1, 2005, on the actions the commissioner has 
253.34  taken to enter into compact agreements with other states. 
253.35     Sec. 27.  [APPROPRIATION.] 
253.36     (a) The amounts necessary to award grants as provided in 
254.1   Minnesota Statutes, section 469.342, shall be appropriated to 
254.2   the commissioner of employment and economic development from the 
254.3   general fund. 
254.4      (b) $3,000,000 is appropriated to the Department of Revenue 
254.5   from fiscal year 2005 and each year thereafter, in addition to 
254.6   any other appropriation provided under law.  This money must be 
254.7   used for operation of the department. 
254.8      Sec. 28.  [REPEALER.] 
254.9      (a) Minnesota Statutes 2002, sections 289A.26, subdivision 
254.10  2a; 289A.60, subdivision 21; 295.55, subdivision 4; 295.60, 
254.11  subdivision 4; 297F.09, subdivision 7; 297G.09, subdivision 6; 
254.12  297I.35, subdivision 2; and 297I.85, subdivision 7, are repealed.
254.13     (b) Minnesota Statutes 2003 Supplement, section 270.30, 
254.14  subdivision 1, is repealed. 
254.15     <b>[EFFECTIVE DATE.]</b> Paragraph (a) of this section is 
254.16  effective for payments due in calendar year 2005, and in 
254.17  calendar years thereafter, based upon liabilities incurred in 
254.18  fiscal year ending June 30, 2004, and in fiscal years 
254.19  thereafter.  Paragraph (b) is effective the day following final 
254.20  enactment. 
254.21                             ARTICLE 9
254.22              DEPARTMENT OF REVENUE POLICY PROVISIONS
254.23     Section 1.  Minnesota Statutes 2002, section 16D.10, is 
254.24  amended to read: 
254.25     16D.10 [CASE REVIEWER.] 
254.26     Subdivision 1.  [DUTIES.] The commissioner shall make a 
254.27  case reviewer available to debtors.  The reviewer must be 
254.28  available to answer a debtor's questions concerning the 
254.29  collection process and to review the collection activity taken.  
254.30  If the reviewer reasonably believes that the particular action 
254.31  being taken is unreasonable or unfair, the reviewer may make 
254.32  recommendations to the commissioner in regard to the collection 
254.33  action.  
254.34     Subd. 2.  [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 
254.35  application filed by a debtor with the case reviewer, in the 
254.36  form, manner, and in the time prescribed by the commissioner, 
255.1   and after thorough investigation, the case reviewer may issue a 
255.2   debtor assistance order if, in the determination of the case 
255.3   reviewer, the manner in which the state debt collection laws are 
255.4   being administered is creating or will create an unjust and 
255.5   inequitable result for the debtor.  Debtor assistance orders are 
255.6   governed by the provisions relating to taxpayer assistance 
255.7   orders under section 270.273. 
255.8      Subd. 3.  [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 
255.9   All duties and authority of the case reviewer under subdivisions 
255.10  1 and 2 are transferred to the taxpayer rights advocate. 
255.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
255.12  following final enactment. 
255.13     Sec. 2.  Minnesota Statutes 2002, section 270.02, 
255.14  subdivision 3, is amended to read: 
255.15     Subd. 3.  [POWERS, ORGANIZATION, ASSISTANTS.] Subject to 
255.16  the provisions of this chapter and other applicable laws the 
255.17  commissioner shall have power to organize the department with 
255.18  such divisions and other agencies as the commissioner deems 
255.19  necessary and to appoint one deputy commissioner, a department 
255.20  secretary, directors of divisions, and such other officers, 
255.21  employees, and agents as the commissioner may deem necessary to 
255.22  discharge the functions of the department, define the duties of 
255.23  such officers, employees, and agents, and delegate to them any 
255.24  of the commissioner's powers or duties, subject to the 
255.25  commissioner's control and under such conditions as the 
255.26  commissioner may prescribe.  Appointments to exercise delegated 
255.27  power to sign documents which require the signature of the 
255.28  commissioner or a delegate by law shall be by written order 
255.29  filed with the secretary of state as provided under section 
255.30  15.06, subdivision 6.  The delegations of authority granted by 
255.31  the commissioner remain in effect until revoked by the 
255.32  commissioner or a successor commissioner. 
255.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
255.34  following final enactment. 
255.35     Sec. 3.  [270.0611] [SUFFICIENCY OF NOTICE OF DETERMINATION 
255.36  OR ACTION OF COMMISSIONER OF REVENUE.] 
256.1      When a method of notification of a written determination or 
256.2   action of the commissioner is not specifically provided for by 
256.3   law, notice of the determination or action sent postage prepaid 
256.4   by United States mail to the taxpayer or other person affected 
256.5   by the determination or action at the taxpayer's or person's 
256.6   last known address is sufficient.  If the taxpayer or person 
256.7   being notified is deceased or is under a legal disability, or if 
256.8   a corporation being notified has terminated its existence, 
256.9   notice to the last known address of the taxpayer, person, or 
256.10  corporation is sufficient, unless the department has been 
256.11  provided with a new address by a party authorized to receive 
256.12  notices from the commissioner. 
256.13     <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
256.14  sent on or after the day following final enactment. 
256.15     Sec. 4.  Minnesota Statutes 2002, section 270.69, 
256.16  subdivision 4, is amended to read: 
256.17     Subd. 4.  [PERIOD OF LIMITATIONS.] The lien imposed by this 
256.18  section shall, notwithstanding any other provision of law to the 
256.19  contrary, be enforceable from the time the lien arises and for 
256.20  ten years from the date of filing the notice of lien, which must 
256.21  be filed by the commissioner within five years after the date of 
256.22  assessment of the tax or final administrative or judicial 
256.23  determination of the assessment.  A notice of lien filed in one 
256.24  county may be transcribed to the secretary of state or to any 
256.25  other county within ten years after the date of its filing, but 
256.26  the transcription shall not extend the period during which the 
256.27  lien is enforceable.  A notice of lien may be renewed by the 
256.28  commissioner before the expiration of the ten-year period for an 
256.29  additional ten years.  The taxpayer must receive written notice 
256.30  of the renewal. 
256.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
256.32  following final enactment. 
256.33     Sec. 5.  Minnesota Statutes 2002, section 270B.01, 
256.34  subdivision 8, is amended to read: 
256.35     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
256.36  chapter only, unless expressly stated otherwise, "Minnesota tax 
257.1   laws" means: 
257.2      (1) the taxes, refunds, and fees administered by or paid to 
257.3   the commissioner under chapters 115B (except taxes imposed under 
257.4   sections 115B.21 to 115B.24), 289A (except taxes imposed under 
257.5   sections 298.01, 298.015, and 298.24), 290, 290A, 291, 295, 
257.6   297A, and 297H, or any similar Indian tribal tax administered by 
257.7   the commissioner pursuant to any tax agreement between the state 
257.8   and the Indian tribal government, and includes any laws for the 
257.9   assessment, collection, and enforcement of those taxes, refunds, 
257.10  and fees; and 
257.11     (2) section 273.1315. 
257.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
257.13  following final enactment. 
257.14     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
257.15  270B.12, subdivision 13, is amended to read: 
257.16     Subd. 13.  [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 
257.17  commissioner may disclose to a county assessor, and to the 
257.18  assessor's designated agents or employees, a listing of parcels 
257.19  of property qualifying for the class 1b property tax 
257.20  classification under section 273.13, subdivision 22, and the 
257.21  names and addresses of qualified applicants. 
257.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
257.23  following final enactment. 
257.24     Sec. 7.  Minnesota Statutes 2002, section 289A.31, 
257.25  subdivision 2, is amended to read: 
257.26     Subd. 2.  [JOINT INCOME TAX RETURNS.] (a) If a joint income 
257.27  tax return is made by a husband and wife, the liability for the 
257.28  tax is joint and several.  A spouse who qualifies for relief 
257.29  from a liability attributable to an underpayment under section 
257.30  6015(b) of the Internal Revenue Code is relieved of the state 
257.31  income tax liability on the underpayment.  
257.32     (b) In the case of individuals who were a husband and wife 
257.33  prior to the dissolution of their marriage or their legal 
257.34  separation, or prior to the death of one of the individuals, for 
257.35  tax liabilities reported on a joint or combined return, the 
257.36  liability of each person is limited to the proportion of the tax 
258.1   due on the return that equals that person's proportion of the 
258.2   total tax due if the husband and wife filed separate returns for 
258.3   the taxable year.  This provision is effective only when the 
258.4   commissioner receives written notice of the marriage 
258.5   dissolution, legal separation, or death of a spouse from the 
258.6   husband or wife.  No refund may be claimed by an ex-spouse, 
258.7   legally separated or widowed spouse for any taxes paid more than 
258.8   60 days before receipt by the commissioner of the written notice.
258.9      (c) A request for calculation of separate liability 
258.10  pursuant to paragraph (b) for taxes reported on a return must be 
258.11  made within six years after the due date of the return.  For 
258.12  calculation of separate liability for taxes assessed by the 
258.13  commissioner under section 289A.35 or 289A.37, the request must 
258.14  be made within six years after the date of assessment.  The 
258.15  commissioner is not required to calculate separate liability if 
258.16  the remaining unpaid liability for which recalculation is 
258.17  requested is $100 or less. 
258.18     <b>[EFFECTIVE DATE.]</b> This section is effective for requests 
258.19  for relief made on or after the day following final enactment. 
258.20     Sec. 8.  Minnesota Statutes 2002, section 289A.56, is 
258.21  amended by adding a subdivision to read: 
258.22     Subd. 7.  [BIOTECHNOLOGY AND BORDER CITY ZONE 
258.23  REFUNDS.] Notwithstanding subdivision 3, for refunds payable 
258.24  under sections 297A.68, subdivision 38, and 469.1734, 
258.25  subdivision 6, interest is computed from 90 days after the 
258.26  refund claim is filed with the commissioner. 
258.27     <b>[EFFECTIVE DATE.]</b> This section is effective for refund 
258.28  claims filed on or after July 1, 2004. 
258.29     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
258.30  290.01, subdivision 19d, is amended to read: 
258.31     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
258.32  TAXABLE INCOME.] For corporations, there shall be subtracted 
258.33  from federal taxable income after the increases provided in 
258.34  subdivision 19c:  
258.35     (1) the amount of foreign dividend gross-up added to gross 
258.36  income for federal income tax purposes under section 78 of the 
259.1   Internal Revenue Code; 
259.2      (2) the amount of salary expense not allowed for federal 
259.3   income tax purposes due to claiming the federal jobs credit 
259.4   under section 51 of the Internal Revenue Code; 
259.5      (3) any dividend (not including any distribution in 
259.6   liquidation) paid within the taxable year by a national or state 
259.7   bank to the United States, or to any instrumentality of the 
259.8   United States exempt from federal income taxes, on the preferred 
259.9   stock of the bank owned by the United States or the 
259.10  instrumentality; 
259.11     (4) amounts disallowed for intangible drilling costs due to 
259.12  differences between this chapter and the Internal Revenue Code 
259.13  in taxable years beginning before January 1, 1987, as follows: 
259.14     (i) to the extent the disallowed costs are represented by 
259.15  physical property, an amount equal to the allowance for 
259.16  depreciation under Minnesota Statutes 1986, section 290.09, 
259.17  subdivision 7, subject to the modifications contained in 
259.18  subdivision 19e; and 
259.19     (ii) to the extent the disallowed costs are not 
259.20  represented by physical property, an amount equal to the 
259.21  allowance for cost depletion under Minnesota Statutes 1986, 
259.22  section 290.09, subdivision 8; 
259.23     (5) the deduction for capital losses pursuant to sections 
259.24  1211 and 1212 of the Internal Revenue Code, except that: 
259.25     (i) for capital losses incurred in taxable years beginning 
259.26  after December 31, 1986, capital loss carrybacks shall not be 
259.27  allowed; 
259.28     (ii) for capital losses incurred in taxable years beginning
259.29  after December 31, 1986, a capital loss carryover to each of the 
259.30  15 taxable years succeeding the loss year shall be allowed; 
259.31     (iii) for capital losses incurred in taxable years 
259.32  beginning before January 1, 1987, a capital loss carryback to 
259.33  each of the three taxable years preceding the loss year, subject 
259.34  to the provisions of Minnesota Statutes 1986, section 290.16, 
259.35  shall be allowed; and 
259.36     (iv) for capital losses incurred in taxable years beginning
260.1   before January 1, 1987, a capital loss carryover to each of the 
260.2   five taxable years succeeding the loss year to the extent such 
260.3   loss was not used in a prior taxable year and subject to the 
260.4   provisions of Minnesota Statutes 1986, section 290.16, shall be 
260.5   allowed; 
260.6      (6) an amount for interest and expenses relating to income 
260.7   not taxable for federal income tax purposes, if (i) the income 
260.8   is taxable under this chapter and (ii) the interest and expenses 
260.9   were disallowed as deductions under the provisions of section 
260.10  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
260.11  federal taxable income; 
260.12     (7) in the case of mines, oil and gas wells, other natural 
260.13  deposits, and timber for which percentage depletion was 
260.14  disallowed pursuant to subdivision 19c, clause (11) (2), a 
260.15  reasonable allowance for depletion based on actual cost.  In the 
260.16  case of leases the deduction must be apportioned between the 
260.17  lessor and lessee in accordance with rules prescribed by the 
260.18  commissioner.  In the case of property held in trust, the 
260.19  allowable deduction must be apportioned between the income 
260.20  beneficiaries and the trustee in accordance with the pertinent 
260.21  provisions of the trust, or if there is no provision in the 
260.22  instrument, on the basis of the trust's income allocable to 
260.23  each; 
260.24     (8) for certified pollution control facilities placed in 
260.25  service in a taxable year beginning before December 31, 1986, 
260.26  and for which amortization deductions were elected under section 
260.27  169 of the Internal Revenue Code of 1954, as amended through 
260.28  December 31, 1985, an amount equal to the allowance for 
260.29  depreciation under Minnesota Statutes 1986, section 290.09, 
260.30  subdivision 7; 
260.31     (9) amounts included in federal taxable income that are due 
260.32  to refunds of income, excise, or franchise taxes based on net 
260.33  income or related minimum taxes paid by the corporation to 
260.34  Minnesota, another state, a political subdivision of another 
260.35  state, the District of Columbia, or a foreign country or 
260.36  possession of the United States to the extent that the taxes 
261.1   were added to federal taxable income under section 290.01, 
261.2   subdivision 19c, clause (1), in a prior taxable year; 
261.3      (10) 80 percent of royalties, fees, or other like income 
261.4   accrued or received from a foreign operating corporation or a 
261.5   foreign corporation which is part of the same unitary business 
261.6   as the receiving corporation; 
261.7      (11) income or gains from the business of mining as defined 
261.8   in section 290.05, subdivision 1, clause (a), that are not 
261.9   subject to Minnesota franchise tax; 
261.10     (12) the amount of handicap access expenditures in the 
261.11  taxable year which are not allowed to be deducted or capitalized 
261.12  under section 44(d)(7) of the Internal Revenue Code; 
261.13     (13) the amount of qualified research expenses not allowed 
261.14  for federal income tax purposes under section 280C(c) of the 
261.15  Internal Revenue Code, but only to the extent that the amount 
261.16  exceeds the amount of the credit allowed under section 
261.17  290.068 or 469.339; 
261.18     (14) the amount of salary expenses not allowed for federal 
261.19  income tax purposes due to claiming the Indian employment credit 
261.20  under section 45A(a) of the Internal Revenue Code; 
261.21     (15) the amount of any refund of environmental taxes paid 
261.22  under section 59A of the Internal Revenue Code; 
261.23     (16) for taxable years beginning before January 1, 2008, 
261.24  the amount of the federal small ethanol producer credit allowed 
261.25  under section 40(a)(3) of the Internal Revenue Code which is 
261.26  included in gross income under section 87 of the Internal 
261.27  Revenue Code; 
261.28     (17) for a corporation whose foreign sales corporation, as 
261.29  defined in section 922 of the Internal Revenue Code, constituted 
261.30  a foreign operating corporation during any taxable year ending 
261.31  before January 1, 1995, and a return was filed by August 15, 
261.32  1996, claiming the deduction under section 290.21, subdivision 
261.33  4, for income received from the foreign operating corporation, 
261.34  an amount equal to 1.23 multiplied by the amount of income 
261.35  excluded under section 114 of the Internal Revenue Code, 
261.36  provided the income is not income of a foreign operating 
262.1   company; 
262.2      (18) any decrease in subpart F income, as defined in 
262.3   section 952(a) of the Internal Revenue Code, for the taxable 
262.4   year when subpart F income is calculated without regard to the 
262.5   provisions of section 614 of Public Law 107-147; and 
262.6      (19) in each of the five tax years immediately following 
262.7   the tax year in which an addition is required under subdivision 
262.8   19c, clause (16), an amount equal to one-fifth of the delayed 
262.9   depreciation.  For purposes of this clause, "delayed 
262.10  depreciation" means the amount of the addition made by the 
262.11  taxpayer under subdivision 19c, clause (16).  The resulting 
262.12  delayed depreciation cannot be less than zero. 
262.13     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
262.14  beginning after December 31, 2003. 
262.15     Sec. 10.  Minnesota Statutes 2002, section 290.9705, 
262.16  subdivision 1, is amended to read: 
262.17     Subdivision 1.  [WITHHOLDING OF PAYMENTS TO OUT-OF-STATE 
262.18  CONTRACTORS.] (a) In this section, "person" means a person, 
262.19  corporation, or cooperative, the state of Minnesota and its 
262.20  political subdivisions, and a city, county, and school district 
262.21  in Minnesota. 
262.22     (b) A person who in the regular course of business is 
262.23  hiring, contracting, or having a contract with a nonresident 
262.24  person or foreign corporation, as defined in Minnesota Statutes 
262.25  1986, section 290.01, subdivision 5, to perform construction 
262.26  work in Minnesota, shall deduct and withhold eight percent of 
262.27  every payment cumulative calendar year payments to the 
262.28  contractor if the contract exceeds or can reasonably be expected 
262.29  to exceed $100,000 which exceed $50,000. 
262.30     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
262.31  made after December 31, 2004. 
262.32     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
262.33  290C.10, is amended to read: 
262.34     290C.10 [WITHDRAWAL PROCEDURES.] 
262.35     An approved claimant under the sustainable forest incentive 
262.36  program for a minimum of four years may notify the commissioner 
263.1   of the intent to terminate enrollment.  Within 90 days of 
263.2   receipt of notice to terminate enrollment, the commissioner 
263.3   shall inform the claimant in writing, acknowledging receipt of 
263.4   this notice and indicating the effective date of termination 
263.5   from the sustainable forest incentive program.  Termination of 
263.6   enrollment in the sustainable forest incentive program occurs on 
263.7   January 1 of the fifth calendar year that begins after receipt 
263.8   by the commissioner of the termination notice.  After the 
263.9   commissioner issues an effective date of termination, a claimant 
263.10  wishing to continue the land's enrollment in the sustainable 
263.11  forest incentive program beyond the termination date must apply 
263.12  for enrollment as prescribed in section 290C.04.  A claimant who 
263.13  withdraws a parcel of land from this program may not reenroll 
263.14  the parcel for a period of three years.  Within 90 days after 
263.15  the termination date, the commissioner shall execute and 
263.16  acknowledge a document releasing the land from the covenant 
263.17  required under this chapter.  The document must be mailed to the 
263.18  claimant and is entitled to be recorded.  The commissioner may 
263.19  allow early withdrawal from the Sustainable Forest Incentive Act 
263.20  without penalty in cases of condemnation when the state of 
263.21  Minnesota, any local government unit, or any other entity which 
263.22  has the right of eminent domain acquires title or possession to 
263.23  the land for a public purpose notwithstanding the provisions of 
263.24  this section.  In the case of such acquisition, the commissioner 
263.25  shall execute and acknowledge a document releasing the land 
263.26  acquired by the state, local government unit, or other entity 
263.27  from the covenant.  All other enrolled land must remain in the 
263.28  program. 
263.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
263.30  following final enactment. 
263.31     Sec. 12.  Minnesota Statutes 2002, section 469.1734, 
263.32  subdivision 6, is amended to read: 
263.33     Subd. 6.  [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 
263.34  MATERIALS.] (a) The gross receipts from the sale of machinery 
263.35  and equipment and repair parts are exempt from taxation under 
263.36  chapter 297A, if the machinery and equipment: 
264.1      (1) are used in connection with a trade or business; 
264.2      (2) are placed in service in a city that is authorized to 
264.3   designate a zone under section 469.1731, regardless of whether 
264.4   the machinery and equipment are used in a zone; and 
264.5      (3) have a useful life of 12 months or more. 
264.6      (b) The gross receipts from the sale of construction 
264.7   materials are exempt, if they are used to construct: 
264.8      (1) a facility for use in a trade or business located in a 
264.9   city that is authorized to designate a zone under section 
264.10  469.1731, regardless of whether the facility is located in a 
264.11  zone; or 
264.12     (2) housing that is located in a zone.  
264.13  The exemptions under this paragraph apply regardless of whether 
264.14  the purchase is made by the owner, the user, or a contractor. 
264.15     (c) A purchaser may claim an exemption under this 
264.16  subdivision for tax on the purchases up to, but not exceeding: 
264.17     (1) the amount of the tax credit certificates received from 
264.18  the city, less 
264.19     (2) any tax credit certificates used under the provisions 
264.20  of subdivisions 4 and 5, and section 469.1732, subdivision 2. 
264.21     (d) The tax on sales of items exempted under this 
264.22  subdivision shall be imposed and collected as if the applicable 
264.23  rate under section 297A.62 applied.  Upon application by the 
264.24  purchaser, on forms prescribed by the commissioner, a refund 
264.25  equal to the tax paid shall be paid to the purchaser.  The 
264.26  application must include sufficient information to permit the 
264.27  commissioner to verify the sales tax paid and the eligibility of 
264.28  the claimant to receive the credit.  No more than two 
264.29  applications for refunds may be filed under this subdivision in 
264.30  a calendar year.  The provisions of section 289A.40 apply to the 
264.31  refunds payable under this subdivision.  There is annually 
264.32  appropriated to the commissioner of revenue the amount required 
264.33  to make the refunds, which must be deducted from the amount of 
264.34  the city's allocation under section 469.169, subdivision 12, 
264.35  that remains available and its limitation under section 469.1735.
264.36  The amount to be refunded shall bear interest at the rate in 
265.1   section 270.76 from 90 days after the date the refund claim is 
265.2   filed with the commissioner. 
265.3      <b>[EFFECTIVE DATE.]</b> This section is effective for refund 
265.4   claims filed on or after July 1, 2004. 
265.5      Sec. 13.  Minnesota Statutes 2003 Supplement, section 
265.6   469.310, subdivision 11, is amended to read: 
265.7      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
265.8   means a person carrying on a trade or business at a place of 
265.9   business located within a job opportunity building zone.  A 
265.10  person is a qualified business only on those parcels of land for 
265.11  which it has entered into a business subsidy agreement, as 
265.12  required under section 469.313, with the appropriate local 
265.13  government unit in which the parcels are located. 
265.14     (b) A person that relocates a trade or business from 
265.15  outside a job opportunity building zone into a zone is not a 
265.16  qualified business, unless the business: 
265.17     (1)(i) increases full-time employment in the first full 
265.18  year of operation within the job opportunity building zone by at 
265.19  least 20 percent measured relative to the operations that were 
265.20  relocated and maintains the required level of employment for 
265.21  each year the zone designation applies; or 
265.22     (ii) makes a capital investment in the property located 
265.23  within a zone equivalent to ten percent of the gross revenues of 
265.24  operation that were relocated in the immediately preceding 
265.25  taxable year; and 
265.26     (2) enters a binding written agreement with the 
265.27  commissioner that: 
265.28     (i) pledges the business will meet the requirements of 
265.29  clause (1); 
265.30     (ii) provides for repayment of all tax benefits enumerated 
265.31  under section 469.315 to the business under the procedures in 
265.32  section 469.319, if the requirements of clause (1) are not met 
265.33  for the taxable year or for taxes payable during the year in 
265.34  which the requirements were not met; and 
265.35     (iii) contains any other terms the commissioner determines 
265.36  appropriate. 
266.1      <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
266.2   from June 9, 2003. 
266.3      Sec. 14.  Minnesota Statutes 2003 Supplement, section 
266.4   469.330, subdivision 11, is amended to read: 
266.5      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
266.6   means a person carrying on a trade or business at a 
266.7   biotechnology and health sciences industry facility located 
266.8   within a biotechnology and health sciences industry zone.  A 
266.9   person is a qualified business only on those parcels of land for 
266.10  which it has entered into a business subsidy agreement, as 
266.11  required under section 469.333, with the appropriate local 
266.12  government unit in which the parcels are located. 
266.13     (b) A person that relocates a biotechnology and health 
266.14  sciences industry facility from outside a biotechnology and 
266.15  health sciences industry zone into a zone is not a qualified 
266.16  business, unless the business: 
266.17     (1)(i) increases full-time employment in the first full 
266.18  year of operation within the biotechnology and health sciences 
266.19  industry zone by at least 20 percent measured relative to the 
266.20  operations that were relocated and maintains the required level 
266.21  of employment for each year the zone designation applies; or 
266.22     (ii) makes a capital investment in the property located 
266.23  within a zone equivalent to ten percent of the gross revenues of 
266.24  operation that were relocated in the immediately preceding 
266.25  taxable year; and 
266.26     (2) enters a binding written agreement with the 
266.27  commissioner that: 
266.28     (i) pledges the business will meet the requirements of 
266.29  clause (1); 
266.30     (ii) provides for repayment of all tax benefits enumerated 
266.31  under section 469.336 to the business under the procedures in 
266.32  section 469.340, if the requirements of clause (1) are not met; 
266.33  and 
266.34     (iii) contains any other terms the commissioner determines 
266.35  appropriate. 
266.36     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
267.1   from June 9, 2003. 
267.2      Sec. 15.  Minnesota Statutes 2003 Supplement, section 
267.3   469.337, is amended to read: 
267.4      469.337 [CORPORATE FRANCHISE TAX EXEMPTION.] 
267.5      (a) A qualified business is exempt from taxation under 
267.6   section 290.02, the alternative minimum tax under section 
267.7   290.0921, and the minimum fee under section 290.0922, on the 
267.8   portion of its income attributable to operations of a qualified 
267.9   business within the biotechnology and health sciences industry 
267.10  zone.  This exemption is determined as follows: 
267.11     (1) for purposes of the tax imposed under section 290.02, 
267.12  by multiplying its taxable net income by its zone percentage and 
267.13  subtracting the result in determining taxable income; 
267.14     (2) for purposes of the alternative minimum tax under 
267.15  section 290.0921, by multiplying its alternative minimum taxable 
267.16  income by its zone percentage and reducing alternative minimum 
267.17  taxable income by this amount; and 
267.18     (3) for purposes of the minimum fee under section 290.0922, 
267.19  by excluding zone property and payroll in the zone from the 
267.20  computations of the fee.  The qualified business is exempt from 
267.21  the minimum fee if all of its property is located in the zone 
267.22  and all of its payroll is zone payroll. 
267.23     (b) No subtraction is allowed under this section in excess 
267.24  of 20 percent of the sum of the corporation's biotechnology and 
267.25  health sciences industry zone payroll and the adjusted basis of 
267.26  the property at the time that the property is first used in the 
267.27  biotechnology and health sciences industry zone by the 
267.28  corporation. 
267.29     (c) No reduction in tax is allowed in excess of the amount 
267.30  allocated under section 469.335. 
267.31     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
267.32  beginning after December 31, 2003. 
267.33     Sec. 16.  [REPEALER.] 
267.34     Laws 1975, chapter 287, section 5, and Laws 2003, chapter 
267.35  127, article 9, section 9, subdivision 4, are repealed. 
267.36     <b>[EFFECTIVE DATE.]</b> This section is effective without local 
268.1   approval for taxes payable in 2005 and thereafter. 
268.2                              ARTICLE 10
268.3                         MINERALS; AGGREGATE
268.4      Section 1.  Minnesota Statutes 2002, section 272.02, is 
268.5   amended by adding a subdivision to read: 
268.6      Subd. 68.  [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 
268.7   TO THE NET PROCEEDS TAX.] The following property used in the 
268.8   business of mining subject to the net proceeds tax under section 
268.9   298.015 is exempt: 
268.10     (1) deposits of ores, metals, and minerals and the lands in 
268.11  which they are contained; 
268.12     (2) all real and personal property used in mining, 
268.13  quarrying, producing, or refining ores, minerals, or metals, 
268.14  including lands occupied by or used in connection with the 
268.15  mining, quarrying, production, or refining facilities; and 
268.16     (3) concentrate or direct reduced ore. 
268.17  This exemption applies for each year that a person subject to 
268.18  tax under section 298.015 uses the property for mining, 
268.19  quarrying, producing, or refining ores, metals, or minerals. 
268.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
268.21  payable in 2005 and thereafter. 
268.22     Sec. 2.  Minnesota Statutes 2002, section 290.05, 
268.23  subdivision 1, is amended to read: 
268.24     Subdivision 1.  [EXEMPT ENTITIES.] The following 
268.25  corporations, individuals, estates, trusts, and organizations 
268.26  shall be exempted from taxation under this chapter, provided 
268.27  that every such person or corporation claiming exemption under 
268.28  this chapter, in whole or in part, must establish to the 
268.29  satisfaction of the commissioner the taxable status of any 
268.30  income or activity: 
268.31     (a) corporations, individuals, estates, and trusts engaged 
268.32  in the business of mining or producing iron ore and mining, 
268.33  producing, or refining other ores, metals, and minerals, the 
268.34  mining or, production, or refining of which is subject to the 
268.35  occupation tax imposed by section 298.01; but if any such 
268.36  corporation, individual, estate, or trust engages in any other 
269.1   business or activity or has income from any property not used in 
269.2   such business it shall be subject to this tax computed on the 
269.3   net income from such property or such other business or 
269.4   activity.  Royalty shall not be considered as income from the 
269.5   business of mining or producing iron ore within the meaning of 
269.6   this section; 
269.7      (b) the United States of America, the state of Minnesota or 
269.8   any political subdivision of either agencies or 
269.9   instrumentalities, whether engaged in the discharge of 
269.10  governmental or proprietary functions; and 
269.11     (c) any insurance company. 
269.12     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
269.13  years beginning after December 31, 2003. 
269.14     Sec. 3.  Minnesota Statutes 2002, section 290.17, 
269.15  subdivision 4, is amended to read: 
269.16     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
269.17  business conducted wholly within this state or partly within and 
269.18  partly without this state is part of a unitary business, the 
269.19  entire income of the unitary business is subject to 
269.20  apportionment pursuant to section 290.191.  Notwithstanding 
269.21  subdivision 2, paragraph (c), none of the income of a unitary 
269.22  business is considered to be derived from any particular source 
269.23  and none may be allocated to a particular place except as 
269.24  provided by the applicable apportionment formula.  The 
269.25  provisions of this subdivision do not apply to business income 
269.26  subject to subdivision 5, income of an insurance company, or 
269.27  income of an investment company determined under section 290.36, 
269.28  or income of a mine or mineral processing facility subject to 
269.29  tax under section 298.01. 
269.30     (b) The term "unitary business" means business activities 
269.31  or operations which result in a flow of value between them.  The 
269.32  term may be applied within a single legal entity or between 
269.33  multiple entities and without regard to whether each entity is a 
269.34  sole proprietorship, a corporation, a partnership or a trust.  
269.35     (c) Unity is presumed whenever there is unity of ownership, 
269.36  operation, and use, evidenced by centralized management or 
270.1   executive force, centralized purchasing, advertising, 
270.2   accounting, or other controlled interaction, but the absence of 
270.3   these centralized activities will not necessarily evidence a 
270.4   nonunitary business.  Unity is also presumed when business 
270.5   activities or operations are of mutual benefit, dependent upon 
270.6   or contributory to one another, either individually or as a 
270.7   group. 
270.8      (d) Where a business operation conducted in Minnesota is 
270.9   owned by a business entity that carries on business activity 
270.10  outside the state different in kind from that conducted within 
270.11  this state, and the other business is conducted entirely outside 
270.12  the state, it is presumed that the two business operations are 
270.13  unitary in nature, interrelated, connected, and interdependent 
270.14  unless it can be shown to the contrary.  
270.15     (e) Unity of ownership is not deemed to exist when a 
270.16  corporation is involved unless that corporation is a member of a 
270.17  group of two or more business entities and more than 50 percent 
270.18  of the voting stock of each member of the group is directly or 
270.19  indirectly owned by a common owner or by common owners, either 
270.20  corporate or noncorporate, or by one or more of the member 
270.21  corporations of the group.  For this purpose, the term "voting 
270.22  stock" shall include membership interests of mutual insurance 
270.23  holding companies formed under section 60A.077.  
270.24     (f) The net income and apportionment factors under section 
270.25  290.191 or 290.20 of foreign corporations and other foreign 
270.26  entities which are part of a unitary business shall not be 
270.27  included in the net income or the apportionment factors of the 
270.28  unitary business.  A foreign corporation or other foreign entity 
270.29  which is required to file a return under this chapter shall file 
270.30  on a separate return basis.  The net income and apportionment 
270.31  factors under section 290.191 or 290.20 of foreign operating 
270.32  corporations shall not be included in the net income or the 
270.33  apportionment factors of the unitary business except as provided 
270.34  in paragraph (g). 
270.35     (g) The adjusted net income of a foreign operating 
270.36  corporation shall be deemed to be paid as a dividend on the last 
271.1   day of its taxable year to each shareholder thereof, in 
271.2   proportion to each shareholder's ownership, with which such 
271.3   corporation is engaged in a unitary business.  Such deemed 
271.4   dividend shall be treated as a dividend under section 290.21, 
271.5   subdivision 4. 
271.6      Dividends actually paid by a foreign operating corporation 
271.7   to a corporate shareholder which is a member of the same unitary 
271.8   business as the foreign operating corporation shall be 
271.9   eliminated from the net income of the unitary business in 
271.10  preparing a combined report for the unitary business.  The 
271.11  adjusted net income of a foreign operating corporation shall be 
271.12  its net income adjusted as follows: 
271.13     (1) any taxes paid or accrued to a foreign country, the 
271.14  commonwealth of Puerto Rico, or a United States possession or 
271.15  political subdivision of any of the foregoing shall be a 
271.16  deduction; and 
271.17     (2) the subtraction from federal taxable income for 
271.18  payments received from foreign corporations or foreign operating 
271.19  corporations under section 290.01, subdivision 19d, clause (10), 
271.20  shall not be allowed. 
271.21     If a foreign operating corporation incurs a net loss, 
271.22  neither income nor deduction from that corporation shall be 
271.23  included in determining the net income of the unitary business. 
271.24     (h) For purposes of determining the net income of a unitary 
271.25  business and the factors to be used in the apportionment of net 
271.26  income pursuant to section 290.191 or 290.20, there must be 
271.27  included only the income and apportionment factors of domestic 
271.28  corporations or other domestic entities other than foreign 
271.29  operating corporations that are determined to be part of the 
271.30  unitary business pursuant to this subdivision, notwithstanding 
271.31  that foreign corporations or other foreign entities might be 
271.32  included in the unitary business.  
271.33     (i) Deductions for expenses, interest, or taxes otherwise 
271.34  allowable under this chapter that are connected with or 
271.35  allocable against dividends, deemed dividends described in 
271.36  paragraph (g), or royalties, fees, or other like income 
272.1   described in section 290.01, subdivision 19d, clause (10), shall 
272.2   not be disallowed. 
272.3      (j) Each corporation or other entity, except a sole 
272.4   proprietorship, that is part of a unitary business must file 
272.5   combined reports as the commissioner determines.  On the 
272.6   reports, all intercompany transactions between entities included 
272.7   pursuant to paragraph (h) must be eliminated and the entire net 
272.8   income of the unitary business determined in accordance with 
272.9   this subdivision is apportioned among the entities by using each 
272.10  entity's Minnesota factors for apportionment purposes in the 
272.11  numerators of the apportionment formula and the total factors 
272.12  for apportionment purposes of all entities included pursuant to 
272.13  paragraph (h) in the denominators of the apportionment formula. 
272.14     (k) If a corporation has been divested from a unitary 
272.15  business and is included in a combined report for a fractional 
272.16  part of the common accounting period of the combined report:  
272.17     (1) its income includable in the combined report is its 
272.18  income incurred for that part of the year determined by 
272.19  proration or separate accounting; and 
272.20     (2) its sales, property, and payroll included in the 
272.21  apportionment formula must be prorated or accounted for 
272.22  separately. 
272.23     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
272.24  years beginning after December 31, 2003. 
272.25     Sec. 4.  Minnesota Statutes 2002, section 290.191, 
272.26  subdivision 1, is amended to read: 
272.27     Subdivision 1.  [GENERAL RULE.] (a) Except as otherwise 
272.28  provided in section 290.17, subdivision 5, the net income from a 
272.29  trade or business carried on partly within and partly without 
272.30  this state must be apportioned to this state as provided in this 
272.31  section.  To the extent that an entity is exempt from taxation 
272.32  under this chapter as provided in section 290.05, the 
272.33  apportionment factors associated with the entity's exempt 
272.34  activities are excluded from the apportionment formula under 
272.35  this section. 
272.36     (b) For purposes of this section, "state" means a state of 
273.1   the United States, the District of Columbia, the commonwealth of 
273.2   Puerto Rico, or any territory or possession of the United States 
273.3   or any foreign country. 
273.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
273.5   years beginning after December 31, 2003. 
273.6      Sec. 5.  Minnesota Statutes 2002, section 297A.68, 
273.7   subdivision 4, is amended to read: 
273.8      Subd. 4.  [TACONITE, OTHER ORES, METALS, OR MINERALS; 
273.9   PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 
273.10  balls that are substantially consumed in the production of 
273.11  taconite or other ores, metals, or minerals are exempt when sold 
273.12  to or stored, used, or consumed by persons taxed under the 
273.13  in-lieu provisions of chapter 298.  
273.14     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
273.15  purchases made after June 30, 2005. 
273.16     Sec. 6.  Minnesota Statutes 2002, section 298.001, is 
273.17  amended by adding a subdivision to read: 
273.18     Subd. 9.  [REFINING.] "Refining" means and is limited to 
273.19  refining: 
273.20     (1) of ores, metals, or mineral products, the mining, 
273.21  extraction, or quarrying of which were subject to tax under 
273.22  section 298.015; and 
273.23     (2) carried on by the entity, or an affiliated entity, that 
273.24  mined, extracted, or quarried the metal or mineral products. 
273.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
273.26  years beginning after December 31, 2003. 
273.27     Sec. 7.  Minnesota Statutes 2002, section 298.001, is 
273.28  amended by adding a subdivision to read: 
273.29     Subd. 10.  [PRECIOUS MINERALS TAX RELIEF AREA.] The 
273.30  "precious minerals tax relief area" means the area of the 
273.31  following Independent School Districts: 
273.32     (1) No. 166, Cook County; 
273.33     (2) No. 316, Coleraine; 
273.34     (3) No. 318, Grand Rapids; 
273.35     (4) No. 319, Nashwauk-Keewatin; 
273.36     (5) No. 381, Lake Superior; 
274.1      (6) No. 695, Chisholm; 
274.2      (7) No. 696, Ely; 
274.3      (8) No. 701, Hibbing; 
274.4      (9) No. 706, Virginia; 
274.5      (10) No. 712, Mountain Iron-Buhl; 
274.6      (11) No. 2711, Mesabi East; 
274.7      (12) No. 2142, St. Louis County; and 
274.8      (13) No. 2154, Eveleth-Gilbert.  
274.9      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
274.10  years beginning after December 31, 2003.  
274.11     Sec. 8.  Minnesota Statutes 2002, section 298.01, 
274.12  subdivision 3, is amended to read: 
274.13     Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
274.14  engaged in the business of mining, refining, or producing ores, 
274.15  metals, or minerals in this state, except iron ore or taconite 
274.16  concentrates, shall pay an occupation tax to the state of 
274.17  Minnesota as provided in this subdivision.  For purposes of this 
274.18  subdivision, mining includes the application of 
274.19  hydrometallurgical processes.  The tax is determined in the same 
274.20  manner as the tax imposed by section 290.02, except that 
274.21  sections 290.05, subdivision 1, clause (a), 290.0921, and 
274.22  290.17, subdivision 4, do not apply.  Except as provided in 
274.23  section 290.05, subdivision 1, paragraph (a), the tax is in 
274.24  addition to all other taxes. 
274.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
274.26  years beginning after December 31, 2003. 
274.27     Sec. 9.  Minnesota Statutes 2002, section 298.01, 
274.28  subdivision 3a, is amended to read: 
274.29     Subd. 3a.  [GROSS INCOME.] (a) For purposes of determining 
274.30  a person's taxable income under subdivision 3, gross income is 
274.31  determined by the amount of gross proceeds from mining in this 
274.32  state under section 298.016 and includes any gain or loss 
274.33  recognized from the sale or disposition of assets used in the 
274.34  business in this state. 
274.35     (b) In applying section 290.191, subdivision 5, transfers 
274.36  of ores, metals, or minerals that are subject to tax under this 
275.1   chapter are deemed to be sales outside this state if the ores, 
275.2   metals, or minerals are transported out of this state for 
275.3   further processing or refining by the person engaged in mining 
275.4   after the ores, metals, or minerals have been converted to a 
275.5   marketable quality. 
275.6      (c) In applying section 290.191, subdivision 5, transfers 
275.7   of ores, metals, or minerals that are subject to tax under this 
275.8   chapter are deemed to be sales within this state if the ores, 
275.9   metals, or minerals are received by a purchaser at a point 
275.10  within this state, and the taxpayer is taxable in this state, 
275.11  regardless of the f.o.b. point, or other conditions of the sale, 
275.12  or the ultimate destination of the property. 
275.13     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
275.14  years beginning after December 31, 2003. 
275.15     Sec. 10.  Minnesota Statutes 2002, section 298.01, 
275.16  subdivision 4, is amended to read: 
275.17     Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
275.18  CONCENTRATES.] A person engaged in the business of mining or 
275.19  producing of iron ore, taconite concentrates or direct reduced 
275.20  ore in this state shall pay an occupation tax to the state of 
275.21  Minnesota.  The tax is determined in the same manner as the tax 
275.22  imposed by section 290.02, except that sections 290.05, 
275.23  subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 
275.24  do not apply.  The tax is in addition to all other taxes. 
275.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
275.26  years beginning after December 31, 2003. 
275.27     Sec. 11.  Minnesota Statutes 2002, section 298.015, 
275.28  subdivision 1, is amended to read: 
275.29     Subdivision 1.  [TAX IMPOSED.] A person engaged in the 
275.30  business of mining shall pay to the state of Minnesota for 
275.31  distribution as provided in section 298.018 a net proceeds tax 
275.32  equal to two four percent of the net proceeds from mining in 
275.33  Minnesota.  The tax applies to all mineral and energy resources 
275.34  ores, metals, and minerals mined or, extracted, produced, or 
275.35  refined within the state of Minnesota except for sand, silica 
275.36  sand, gravel, building stone, crushed rock, limestone, granite, 
276.1   dimension granite, dimension stone, horticultural peat, clay, 
276.2   soil, iron ore, and taconite concentrates.  Except as provided 
276.3   in section 272.02, subdivision 68, the tax is in addition to all 
276.4   other taxes provided for by law.  
276.5      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
276.6   payable in 2005 and thereafter. 
276.7      Sec. 12.  Minnesota Statutes 2002, section 298.015, 
276.8   subdivision 2, is amended to read: 
276.9      Subd. 2.  [NET PROCEEDS.] For purposes of this section, the 
276.10  term "net proceeds" means the gross proceeds from mining, as 
276.11  defined in section 298.016, less the same deductions allowed in 
276.12  section 298.017 for purposes of determining taxable income under 
276.13  section 298.01, subdivision 3b.  No other credits or deductions 
276.14  shall apply to this tax except for those provided in section 
276.15  298.017.  
276.16     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
276.17  payable in 2005 and thereafter. 
276.18     Sec. 13.  Minnesota Statutes 2002, section 298.016, 
276.19  subdivision 4, is amended to read: 
276.20     Subd. 4.  [DEFINITIONS.] For the purposes of sections 
276.21  298.015 and 298.017, the terms defined in this subdivision have 
276.22  the meaning given them unless the context clearly indicates 
276.23  otherwise.  
276.24     (a) "Metal or mineral products" means all those mineral and 
276.25  energy resources ores, metals, and minerals subject to the tax 
276.26  provided in section 298.015. 
276.27     (b) "Exploration" means activities designed and engaged in 
276.28  to ascertain the existence, location, extent, or quality of any 
276.29  deposit of metal or mineral products prior to the development of 
276.30  a mining site.  
276.31     (c) "Development" means activities designed and engaged in 
276.32  to prepare or develop a potential mining site for mining after 
276.33  the existence of metal or mineral products in commercially 
276.34  marketable quantities has been disclosed including, but not 
276.35  limited to, the clearing of forestation, the building of roads, 
276.36  removal of overburden, or the sinking of shafts.  
277.1      (d) "Research" means activities designed and engaged in to 
277.2   create new or improved methods of mining, producing, processing, 
277.3   beneficiating, smelting, or refining metal or mineral products.  
277.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
277.5   years beginning after December 31, 2004. 
277.6      Sec. 14.  Minnesota Statutes 2002, section 298.018, as 
277.7   amended by Laws 2003, First Special Session chapter 21, article 
277.8   11, sections 14, 15, is amended to read: 
277.9      298.018 [DISTRIBUTION OF PROCEEDS.] 
277.10     Subdivision 1.  [WITHIN THE TACONITE PRECIOUS MINERALS 
277.11  ASSISTANCE AREA.] The proceeds of the tax paid under sections 
277.12  298.015 to 298.017 on ores, metals, and minerals and energy 
277.13  resources mined or extracted within the taconite precious 
277.14  minerals assistance area defined in section 273.1341, shall be 
277.15  allocated as follows: 
277.16     (1) five percent to the city or town within which the ores, 
277.17  metals, or minerals or energy resources are mined or extracted; 
277.18     (2) ten percent to the taconite municipal aid account to be 
277.19  distributed as provided in section 298.282 to qualifying 
277.20  municipalities, as defined in section 298.282 and located in the 
277.21  precious minerals assistance area; 
277.22     (3) ten percent to the school district within which the 
277.23  ores, metals, or minerals or energy resources are mined or 
277.24  extracted; 
277.25     (4) 20 30 percent to a group of school districts comprised 
277.26  of those school districts wherein the mineral or energy resource 
277.27  was mined or extracted or in which there is a qualifying 
277.28  municipality as defined by section 273.134, paragraph (b), in 
277.29  direct proportion to school district indexes as follows:  for 
277.30  each school district, its pupil units determined under section 
277.31  126C.05 for the prior school year shall be multiplied by the 
277.32  ratio of the average adjusted net tax capacity per pupil unit 
277.33  for school districts receiving aid under this clause as 
277.34  calculated pursuant to chapters 122A, 126C, and 127A for the 
277.35  school year ending prior to distribution to the adjusted net tax 
277.36  capacity per pupil unit of the district.  Each district shall 
278.1   receive that portion of the distribution which its index bears 
278.2   to the sum of the indices for all school districts that receive 
278.3   the distributions the state general fund to represent the 
278.4   portion of the tax that is in lieu of the state general tax 
278.5   under section 275.025; 
278.6      (5) 20 percent to the county within which the ores, metals, 
278.7   or minerals or energy resources are mined or extracted; 
278.8      (6) 20 percent to St. Louis County acting as the counties' 
278.9   fiscal agent to be distributed as provided in sections 273.134 
278.10  to 273.136; 
278.11     (7) five percent to the Iron Range Resources and 
278.12  Rehabilitation Board for the purposes of section 298.22; 
278.13     (8) five (7) ten percent to the Douglas J. Johnson economic 
278.14  protection trust fund; and 
278.15     (9) five (8) ten percent to the taconite environmental 
278.16  protection fund. 
278.17     The proceeds of the tax shall be distributed on July 15 
278.18  each year. 
278.19     Subd. 2.  [OUTSIDE THE TACONITE PRECIOUS MINERALS 
278.20  ASSISTANCE AREA.] The proceeds of the tax paid under sections 
278.21  298.015 to 298.017 on ores, metals, or minerals and energy 
278.22  resources mined or extracted outside of the taconite precious 
278.23  minerals assistance area defined in section 273.1341, shall be 
278.24  deposited in the general fund. 
278.25     Subd. 3.  [SEGREGATION OF FUNDS.] The proceeds of the tax 
278.26  allocated under subdivision 1, clauses (2), (6), (7), and (8), 
278.27  including any investment earnings on them, must be segregated 
278.28  and separately accounted for in the respective funds or account 
278.29  to which they are allocated.  These amounts must only be 
278.30  distributed to municipalities within the precious minerals 
278.31  assistance area or used for projects located in the precious 
278.32  minerals assistance area.  
278.33     <b>[EFFECTIVE DATE.]</b> This section is effective for 
278.34  distribution of net proceeds tax revenues made after July 1, 
278.35  2004.  
278.36     Sec. 15.  [298.021] [ROYALTY TAX.] 
279.1      In addition to any other taxes imposed by law, a tax is 
279.2   imposed on a royalty, as defined in section 290.923, subdivision 
279.3   1, paid on ore, other than iron ore, taconite, iron sulphides, 
279.4   or semitaconite.  The tax equals 12 percent of the amount of the 
279.5   royalty paid.  The person paying the royalty shall withhold the 
279.6   tax from the payment and remit the payment to the commissioner 
279.7   at the times and under the procedures provided under section 
279.8   290.923.  The commissioner shall deposit proceeds in the general 
279.9   fund and allocate the proceeds as provided under section 
279.10  298.018, subdivision 1.  
279.11     <b>[EFFECTIVE DATE.]</b> This section is effective for royalties 
279.12  paid after June 30, 2004.  
279.13     Sec. 16.  Minnesota Statutes 2003 Supplement, section 
279.14  298.223, subdivision 1, is amended to read: 
279.15     Subdivision 1.  [CREATION; PURPOSES.] A fund called the 
279.16  taconite environmental protection fund is created for the 
279.17  purpose of reclaiming, restoring and enhancing those areas of 
279.18  northeast Minnesota located within the taconite assistance area 
279.19  defined in section 273.1341, that are adversely affected by the 
279.20  environmentally damaging operations involved in mining taconite 
279.21  and iron ore and producing iron ore concentrate and for the 
279.22  purpose of promoting the economic development of northeast 
279.23  Minnesota.  The taconite environmental protection fund shall be 
279.24  used for the following purposes: 
279.25     (a) to initiate investigations into matters the Iron Range 
279.26  Resources and Rehabilitation Board determines are in need of 
279.27  study and which will determine the environmental problems 
279.28  requiring remedial action; 
279.29     (b) reclamation, restoration, or reforestation of minelands 
279.30  not otherwise provided for by state law; 
279.31     (c) local economic development projects including 
279.32  construction of sewer and water systems, and other public works, 
279.33  including construction of sewer and water systems located within 
279.34  the taconite assistance area defined in section 273.1341; 
279.35     (d) monitoring of mineral industry related health problems 
279.36  among mining employees. 
280.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
280.2   following final enactment. 
280.3      Sec. 17.  Minnesota Statutes 2002, section 298.24, 
280.4   subdivision 1, is amended to read: 
280.5      Subdivision 1.  (a) For concentrate produced in 2001, 2002, 
280.6   and 2003, there is imposed upon taconite and iron sulphides, and 
280.7   upon the mining and quarrying thereof, and upon the production 
280.8   of iron ore concentrate therefrom, and upon the concentrate so 
280.9   produced, a tax of $2.103 per gross ton of merchantable iron ore 
280.10  concentrate produced therefrom.  
280.11     (b) For concentrates produced in 2004 and subsequent years, 
280.12  the tax rate shall be equal to the preceding year's tax rate 
280.13  plus an amount equal to the preceding year's tax rate multiplied 
280.14  by the percentage increase in the implicit price deflator from 
280.15  the fourth quarter of the second preceding year to the fourth 
280.16  quarter of the preceding year.  "Implicit price deflator" means 
280.17  the implicit price deflator for the gross domestic product 
280.18  prepared by the Bureau of Economic Analysis of the United States 
280.19  Department of Commerce.  
280.20     (c) On concentrates produced in 1997 and thereafter, an 
280.21  additional tax is imposed equal to three cents per gross ton of 
280.22  merchantable iron ore concentrate for each one percent that the 
280.23  iron content of the product exceeds 72 percent, when dried at 
280.24  212 degrees Fahrenheit. 
280.25     (d) Except for taxes payable in 2004 through 2006, the tax 
280.26  shall be imposed on the average of the production for the 
280.27  current year and the previous two years.  The rate of the tax 
280.28  imposed will be the current year's tax rate.  This clause shall 
280.29  not apply in the case of the closing of a taconite facility if 
280.30  the property taxes on the facility would be higher if this 
280.31  clause and section 298.25 were not applicable.  
280.32     (e) If the tax or any part of the tax imposed by this 
280.33  subdivision is held to be unconstitutional, a tax of $2.103 per 
280.34  gross ton of merchantable iron ore concentrate produced shall be 
280.35  imposed.  
280.36     (f) Consistent with the intent of this subdivision to 
281.1   impose a tax based upon the weight of merchantable iron ore 
281.2   concentrate, the commissioner of revenue may indirectly 
281.3   determine the weight of merchantable iron ore concentrate 
281.4   included in fluxed pellets by subtracting the weight of the 
281.5   limestone, dolomite, or olivine derivatives or other basic flux 
281.6   additives included in the pellets from the weight of the 
281.7   pellets.  For purposes of this paragraph, "fluxed pellets" are 
281.8   pellets produced in a process in which limestone, dolomite, 
281.9   olivine, or other basic flux additives are combined with 
281.10  merchantable iron ore concentrate.  No subtraction from the 
281.11  weight of the pellets shall be allowed for binders, mineral and 
281.12  chemical additives other than basic flux additives, or moisture. 
281.13     (g)(1) Notwithstanding any other provision of this 
281.14  subdivision, for any year before the plant reaches the level of 
281.15  commercial production and for the first two years of a plant's 
281.16  commercial production of direct reduced ore, no tax is imposed 
281.17  under this section.  As used in this paragraph, "commercial 
281.18  production" is production of more than 50,000 tons of direct 
281.19  reduced ore per year, and "direct reduced ore" is ore that 
281.20  results in a product that has an iron content of at least 75 
281.21  percent.  For the third year of a plant's commercial production 
281.22  of direct reduced ore, the rate to be applied to direct reduced 
281.23  ore is 25 percent of the rate otherwise determined under this 
281.24  subdivision.  For the fourth such production year, the rate is 
281.25  50 percent of the rate otherwise determined under this 
281.26  subdivision; for the fifth such production year, the rate is 75 
281.27  percent of the rate otherwise determined under this subdivision; 
281.28  and for all subsequent production years, the full rate is 
281.29  imposed. 
281.30     (2) Subject to clause (1), production of direct reduced ore 
281.31  in this state is subject to the tax imposed by this section, but 
281.32  if that production is not produced by a producer of taconite or 
281.33  iron sulfides, the production of taconite or iron sulfides 
281.34  consumed in the production of direct reduced iron in this state 
281.35  is not subject to the tax imposed by this section on taconite or 
281.36  iron sulfides. 
282.1      (3) Notwithstanding any other provision of this 
282.2   subdivision, no tax is imposed under this section for the first 
282.3   two years of noncommercial production of direct reduced ore. 
282.4      <b>[EFFECTIVE DATE.]</b> This section is effective for direct 
282.5   reduced ore produced after the date of final enactment. 
282.6      Sec. 18.  Minnesota Statutes 2003 Supplement, section 
282.7   298.27, is amended to read: 
282.8      298.27 [COLLECTION AND PAYMENT OF TAX.] 
282.9      The taxes provided by section 298.24 shall be paid directly 
282.10  to each eligible county and the Iron Range Resources and 
282.11  Rehabilitation Board.  The commissioner of revenue shall notify 
282.12  each producer of the amount to be paid each recipient prior to 
282.13  February 15.  Every person subject to taxes imposed by section 
282.14  298.24 shall file a correct report covering the preceding year.  
282.15  The report must contain the information required by the 
282.16  commissioner.  The report shall be filed by each producer on or 
282.17  before February 1.  A remittance equal to 50 percent of the 
282.18  total tax required to be paid hereunder shall be paid on or 
282.19  before February 24.  A remittance equal to 20 percent of the 
282.20  remaining total tax required to be paid hereunder shall be paid 
282.21  on or before the first days of April, May, June, July, and 
282.22  August 24.  On or before February 25 and August 25, the county 
282.23  auditor shall make distribution of the payments previously 
282.24  received by the county in the manner provided by section 
282.25  298.28.  Reports shall be made and hearings held upon the 
282.26  determination of the tax in accordance with procedures 
282.27  established by the commissioner of revenue.  The commissioner of 
282.28  revenue shall have authority to make reasonable rules as to the 
282.29  form and manner of filing reports necessary for the 
282.30  determination of the tax hereunder, and by such rules may 
282.31  require the production of such information as may be reasonably 
282.32  necessary or convenient for the determination and apportionment 
282.33  of the tax.  All the provisions of the occupation tax law with 
282.34  reference to the assessment and determination of the occupation 
282.35  tax, including all provisions for appeals from or review of the 
282.36  orders of the commissioner of revenue relative thereto, but not 
283.1   including provisions for refunds, are applicable to the taxes 
283.2   imposed by section 298.24 except in so far as inconsistent 
283.3   herewith.  If any person subject to section 298.24 shall fail to 
283.4   make the report provided for in this section at the time and in 
283.5   the manner herein provided, the commissioner of revenue shall in 
283.6   such case, upon information possessed or obtained, ascertain the 
283.7   kind and amount of ore mined or produced and thereon find and 
283.8   determine the amount of the tax due from such person.  There 
283.9   shall be added to the amount of tax due a penalty for failure to 
283.10  report on or before February 1, which penalty shall equal ten 
283.11  percent of the tax imposed and be treated as a part thereof. 
283.12     If any person responsible for making a tax payment at the 
283.13  time and in the manner herein provided fails to do so, there 
283.14  shall be imposed a penalty equal to ten percent of the amount so 
283.15  due, which penalty shall be treated as part of the tax due. 
283.16     In the case of any underpayment of the tax payment required 
283.17  herein, there may be added and be treated as part of the tax due 
283.18  a penalty equal to ten percent of the amount so underpaid. 
283.19     A person having a liability of $120,000 or more during a 
283.20  calendar year must remit all liabilities by means of a funds 
283.21  transfer as defined in section 336.4A-104, paragraph (a).  The 
283.22  funds transfer payment date, as defined in section 336.4A-401, 
283.23  must be on or before the date the tax is due.  If the date the 
283.24  tax is due is not a funds transfer business day, as defined in 
283.25  section 336.4A-105, paragraph (a), clause (4), the payment date 
283.26  must be on or before the funds transfer business day next 
283.27  following the date the tax is due. 
283.28     <b>[EFFECTIVE DATE.]</b> This section is effective for production 
283.29  payable beginning calendar year 2005.  
283.30     Sec. 19.  Minnesota Statutes 2002, section 298.28, 
283.31  subdivision 9a, is amended to read: 
283.32     Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT MINERAL 
283.33  PROCESSING AND ENERGY DEVELOPMENT ASSISTANCE FUND.] (a) 30.1 
283.34  cents per ton for distributions in 2002 2005 and thereafter must 
283.35  be paid to the taconite economic development fund mineral 
283.36  processing and energy development assistance fund under section 
284.1   298.2962.  No distribution shall be made under this paragraph in 
284.2   2004 or any subsequent year in which total industry production 
284.3   falls below 30 million tons.  Distribution shall only be made to 
284.4   a taconite producer's fund under section 298.227 if the producer 
284.5   timely pays its tax under section 298.24 by the dates provided 
284.6   under section 298.27, or pursuant to the due dates provided by 
284.7   an administrative agreement with the commissioner. 
284.8      (b) An amount equal to 50 percent of the tax under section 
284.9   298.24 for concentrate sold in the form of pellet chips and 
284.10  fines not exceeding 5/16 inch in size and not including crushed 
284.11  pellets shall be paid to the taconite economic mineral 
284.12  processing and energy development assistance fund under section 
284.13  298.2962.  The amount paid shall not exceed $700,000 annually 
284.14  for all companies.  If the initial amount to be paid to the fund 
284.15  exceeds this amount, each company's payment shall be prorated so 
284.16  the total does not exceed $700,000. 
284.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
284.18  following final enactment.  
284.19     Sec. 20.  Minnesota Statutes 2002, section 298.28, 
284.20  subdivision 9b, is amended to read: 
284.21     Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
284.22  ton for distributions in 1999, 2000, 2001, 2002, and 2003 must 
284.23  be paid to the taconite environmental fund for use under section 
284.24  298.2961, subdivision 4.  
284.25     <b>[EFFECTIVE DATE.]</b> This section is effective for 
284.26  distributions in 2004 and later years. 
284.27     Sec. 21.  Minnesota Statutes 2002, section 298.28, 
284.28  subdivision 10, is amended to read: 
284.29     Subd. 10.  [INCREASE.] Beginning with distributions in 2000 
284.30  2005, except for the amount of the revenue increases provided in 
284.31  subdivision 4, paragraph (d), the amount determined under 
284.32  subdivision 9 shall be increased in the same proportion as of 
284.33  increased tax proceeds attributable to the increase in the 
284.34  implicit price deflator as provided in section 298.24, 
284.35  subdivision 1, is distributed to the taconite environmental 
284.36  protection fund under section 298.223.  Beginning with 
285.1   distributions in 2003, the amount determined under subdivision 
285.2   6, paragraph (a), shall be increased in the same proportion as 
285.3   the increase in the implicit price deflator as provided in 
285.4   section 298.24, subdivision 1.  
285.5      Sec. 22.  Minnesota Statutes 2002, section 298.2961, is 
285.6   amended by adding a subdivision to read: 
285.7      Subd. 4.  [GRANT AND LOAN FUND.] (a) A fund is established 
285.8   to receive distributions under section 298.28, subdivision 9b, 
285.9   and to make grants or loans as provided in this subdivision.  
285.10  Any grant or loan made under this subdivision must be approved 
285.11  by a majority of the members of the Iron Range Resources and 
285.12  Rehabilitation Board, established under section 298.22. 
285.13     (b) Distributions received in calendar year 2004 are 
285.14  allocated to the city of Virginia for improvements and repairs 
285.15  to the city's steam heating system. 
285.16     (c) Distributions received in calendar year 2005 are 
285.17  allocated to a project of the public utilities commissions of 
285.18  the cities of Hibbing and Virginia to convert their electrical 
285.19  generating plants to the use of biomass products, such as wood. 
285.20     (d) For distributions received in 2006 and later, amounts 
285.21  are to be allocated to joint ventures with mining companies for 
285.22  reclamation of lands containing abandoned or worked out mines to 
285.23  convert these lands to marketable properties for residential, 
285.24  recreational, commercial, or other valuable uses. 
285.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
285.26  following final enactment. 
285.27     Sec. 23.  [298.2962] [MINERAL PROCESSING AND ENERGY 
285.28  DEVELOPMENT ASSISTANCE FUND.] 
285.29     Subdivision 1.  [CREATION OF FUND; DEPOSITS.] The amount 
285.30  distributed under section 298.28, subdivision 9a, must be 
285.31  deposited by the commissioner of iron range resources and 
285.32  rehabilitation in a mineral processing and energy development 
285.33  assistance fund, which is created in this section.  In this 
285.34  section, "commissioner" means the commissioner of iron range 
285.35  resources and rehabilitation. 
285.36     Subd. 2.  [USE OF FUND.] The commissioner shall use money 
286.1   in the fund to make grants, loans, or equity investments in 
286.2   mineral processing and energy generating facilities including, 
286.3   but not limited to, taconite processing, direct reduction 
286.4   processing, steel production, and energy generation facilities.  
286.5   Money in the fund may also be used to pay for the costs of 
286.6   carrying out the commissioner's due diligence duties under this 
286.7   section.  Any grant, loan, or equity investment made under this 
286.8   subdivision must be approved by a majority of the members of the 
286.9   Iron Range Resources and Rehabilitation Board. 
286.10     Subd. 3.  [REQUIREMENTS PRIOR TO COMMITTING FUNDS.] The 
286.11  commissioner, prior to making a commitment for a grant, loan, or 
286.12  equity investment must, at a minimum, conduct due diligence 
286.13  research regarding the proposed loan or equity investment, 
286.14  including contracting with professionals as needed to assist in 
286.15  the due diligence. 
286.16     Subd. 4.  [REQUIREMENTS FOR FUND DISBURSEMENTS.] The 
286.17  commissioner may make conditional commitments for grants, loans, 
286.18  or equity investments but disbursements of funds pursuant to a 
286.19  commitment may not be made until commitments for the remainder 
286.20  of a project's funding are made that are satisfactory to the 
286.21  commissioner and disbursements are made from the other 
286.22  commitments sufficient to protect the interests of the state in 
286.23  its loan or investment. 
286.24     Subd. 5.  [COMPANY CONTRIBUTION.] The commissioner may 
286.25  provide grants, loans, or equity investments that match, in a 
286.26  proportion determined by the commissioner, an investment made by 
286.27  the owner of a facility. 
286.28     Sec. 24.  Minnesota Statutes 2003 Supplement, section 
286.29  298.75, subdivision 1, is amended to read: 
286.30     Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
286.31  provided, the following words, when used in this section, shall 
286.32  have the meanings herein ascribed to them.  
286.33     (1) "Aggregate material" shall mean nonmetallic natural 
286.34  mineral aggregate including, but not limited to sand, silica 
286.35  sand, gravel, crushed rock, limestone, granite, and borrow, but 
286.36  only if the borrow is transported on a public road, street, or 
287.1   highway.  Aggregate material shall not include dimension stone 
287.2   and dimension granite.  Aggregate material must be measured or 
287.3   weighed after it has been extracted from the pit, quarry, or 
287.4   deposit.  
287.5      (2) "Person" shall mean any individual, firm, partnership, 
287.6   corporation, organization, trustee, association, or other entity.
287.7      (3) "Operator" shall mean any person engaged in the 
287.8   business of removing aggregate material from the surface or 
287.9   subsurface of the soil, for the purpose of sale, either directly 
287.10  or indirectly, through the use of the aggregate material in a 
287.11  marketable product or service; except that operator does not 
287.12  include persons engaged in a transaction in which:  (i) the 
287.13  person is allowed to remove or produce aggregate without a 
287.14  mining permit; or (ii) the aggregate is moved within a project's 
287.15  construction limits to other locations within that same 
287.16  project's construction limits.  
287.17     (4) "Extraction site" shall mean a pit, quarry, or deposit 
287.18  containing aggregate material and any contiguous property to the 
287.19  pit, quarry, or deposit which is used by the operator for 
287.20  stockpiling the aggregate material.  
287.21     (5) "Importer" shall mean any person who buys aggregate 
287.22  material produced from a county not listed in paragraph (6) or 
287.23  another state and causes the aggregate material to be imported 
287.24  into a county in this state which imposes a tax on aggregate 
287.25  material.  
287.26     (6) "County" shall mean the counties of Pope, Stearns, 
287.27  Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
287.28  Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
287.29  Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
287.30  Sibley, Hennepin, Washington, Chisago, and Ramsey.  County also 
287.31  means any other county whose board has voted after a public 
287.32  hearing to impose the tax under this section and has notified 
287.33  the commissioner of revenue of the imposition of the tax. 
287.34     (7) "Borrow" shall mean granular borrow, consisting of 
287.35  durable particles of gravel and sand, crushed quarry or mine 
287.36  rock, crushed gravel or stone, or any combination thereof, the 
288.1   ratio of the portion passing the (#200) sieve divided by the 
288.2   portion passing the (1 inch) sieve may not exceed 20 percent by 
288.3   mass. 
288.4      <b>[EFFECTIVE DATE.]</b> This section is effective for aggregate 
288.5   sold, imported, transported, or used from a stockpile after June 
288.6   30, 2004. 
288.7      Sec. 25.  Minnesota Statutes 2002, section 298.75, 
288.8   subdivision 2, is amended to read: 
288.9      Subd. 2.  [TAX IMPOSED.] A county shall impose upon every 
288.10  importer and operator a production tax up to ten cents per cubic 
288.11  yard or up to seven cents per ton of aggregate material removed 
288.12  except that the county board may decide not to impose this tax 
288.13  if it determines that in the previous year operators removed 
288.14  less than 20,000 tons or 14,000 cubic yards of aggregate 
288.15  material from that county.  A county or town may exempt an 
288.16  operator from the tax if the operator has removed less than 
288.17  2,500 tons or 1,750 yards from the county in the year that the 
288.18  tax is due and no other aggregate operator has removed material 
288.19  from the same site in the same year.  The tax shall be imposed 
288.20  on aggregate material produced in the county when the aggregate 
288.21  material is transported from the extraction site or sold.  When 
288.22  aggregate material is stored in a stockpile within the state of 
288.23  Minnesota and a public highway, road or street is not used for 
288.24  transporting the aggregate material, the tax shall be imposed 
288.25  either when the aggregate material is sold, or when it is 
288.26  transported from the stockpile site, or when it is used from the 
288.27  stockpile, whichever occurs first.  The tax shall be imposed on 
288.28  an importer when the aggregate material is imported into the 
288.29  county that imposes the tax.  
288.30     If the aggregate material is transported directly from the 
288.31  extraction site to a waterway, railway, or another mode of 
288.32  transportation other than a highway, road or street, the tax 
288.33  imposed by this section shall be apportioned equally between the 
288.34  county where the aggregate material is extracted and the county 
288.35  to which the aggregate material is originally transported.  If 
288.36  that destination is not located in Minnesota, then the county 
289.1   where the aggregate material was extracted shall receive all of 
289.2   the proceeds of the tax.  
289.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
289.4   following final enactment. 
289.5      Sec. 26.  [TRANSITION PROVISION.] 
289.6      Each person with an alternative minimum tax credit on 
289.7   December 31, 2003, pursuant to Minnesota Statutes 2002, section 
289.8   298.01, may take that credit against occupation tax under the 
289.9   provisions of Minnesota Statutes 2002, section 298.01, 
289.10  subdivision 3d or 4e. 
289.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
289.12  following final enactment. 
289.13     Sec. 27.  [REPEALER.] 
289.14     (a) Minnesota Statutes 2002, section 298.01, subdivisions 
289.15  3c, 3d, 4d, and 4e, are repealed effective for taxable years 
289.16  beginning after December 31, 2003. 
289.17     (b) Minnesota Statutes 2002, section 298.017, is repealed 
289.18  effective for taxes payable in 2005 and thereafter. 
289.19     (c) Minnesota Statutes 2003 Supplement, section 298.227, is 
289.20  repealed July 1, 2004.  The commissioner of iron range resources 
289.21  and rehabilitation must transfer any unobligated money in the 
289.22  taconite economic development fund on that date to the mineral 
289.23  processing and energy development assistance fund established 
289.24  under Minnesota Statutes, section 298.2962. 
289.25                             ARTICLE 11
289.26                        SALES AND USE TAXES
289.27              DEPARTMENT OF REVENUE TECHNICAL CHANGES
289.28     Section 1.  Minnesota Statutes 2002, section 289A.38, 
289.29  subdivision 6, is amended to read: 
289.30     Subd. 6.  [OMISSION IN EXCESS OF 25 PERCENT.] Additional 
289.31  taxes may be assessed within 6-1/2 years after the due date of 
289.32  the return or the date the return was filed, whichever is later, 
289.33  if: 
289.34     (1) the taxpayer omits from gross income an amount properly 
289.35  includable in it that is in excess of 25 percent of the amount 
289.36  of gross income stated in the return; 
290.1      (2) the taxpayer omits from a sales, use, or withholding 
290.2   tax return an amount of taxes in excess of 25 percent of the 
290.3   taxes reported in the return; or 
290.4      (3) the taxpayer omits from the gross estate assets in 
290.5   excess of 25 percent of the gross estate reported in the return. 
290.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
290.7   following final enactment. 
290.8      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
290.9   289A.40, subdivision 2, is amended to read: 
290.10     Subd. 2.  [BAD DEBT LOSS.] If a claim relates to an 
290.11  overpayment because of a failure to deduct a loss due to a bad 
290.12  debt or to a security becoming worthless, the claim is 
290.13  considered timely if filed within seven years from the date 
290.14  prescribed for the filing of the return.  A claim relating to an 
290.15  overpayment of taxes under chapter 297A must be filed within 
290.16  3-1/2 years from the date prescribed for filing the return, plus 
290.17  any extensions granted for filing the return, but only if filed 
290.18  within the extended time.  The refund or credit is limited to 
290.19  the amount of overpayment attributable to the loss.  "Bad debt" 
290.20  for purposes of this subdivision, has the same meaning as that 
290.21  term is used in United States Code, title 26, section 166, 
290.22  except that for a claim relating to an overpayment of taxes 
290.23  under chapter 297A the following are excluded from the 
290.24  calculation of bad debt:  financing charges or interest; sales 
290.25  or use taxes charged on the purchase price; uncollectible 
290.26  amounts on property that remain in the possession of the seller 
290.27  until the full purchase price is paid; expenses incurred in 
290.28  attempting to collect any debt; and repossessed property. 
290.29     <b>[EFFECTIVE DATE.]</b> For claims relating to an overpayment of 
290.30  taxes under chapter 297A, this section is effective for sales 
290.31  and purchases made on or after January 1, 2004; for all other 
290.32  bad debts or claims, this section is effective on or after July 
290.33  1, 2003. 
290.34     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
290.35  297A.668, subdivision 1, is amended to read: 
290.36     Subdivision 1.  [APPLICABILITY.] The provisions of this 
291.1   section apply regardless of the characterization of a product as 
291.2   tangible personal property, a digital good, or a service; but do 
291.3   not apply to telecommunications services, or the sales of motor 
291.4   vehicles, watercraft, aircraft, modular homes, manufactured 
291.5   homes, or mobile homes.  These provisions only apply to 
291.6   determine a seller's obligation to pay or collect and remit a 
291.7   sales or use tax with respect to the seller's sale of a 
291.8   product.  These provisions do not affect the obligation of a 
291.9   seller as purchaser to remit tax on the use of the product. 
291.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
291.11  following final enactment. 
291.12     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
291.13  297A.668, subdivision 3, is amended to read: 
291.14     Subd. 3.  [LEASE OR RENTAL OF TANGIBLE PERSONAL PROPERTY.] 
291.15  The lease or rental of tangible personal property, other than 
291.16  property identified in subdivision 4 or 5, shall be sourced as 
291.17  required in paragraphs (a) to (c). 
291.18     (a) For a lease or rental that requires recurring periodic 
291.19  payments, the first periodic payment is sourced the same as a 
291.20  retail sale in accordance with the provisions of subdivision 6 2.
291.21  Periodic payments made subsequent to the first payment are 
291.22  sourced to the primary property location for each period covered 
291.23  by the payment.  The primary property location must be as 
291.24  indicated by an address for the property provided by the lessee 
291.25  that is available to the lessor from its records maintained in 
291.26  the ordinary course of business, when use of this address does 
291.27  not constitute bad faith.  The property location must not be 
291.28  altered by intermittent use at different locations, such as use 
291.29  of business property that accompanies employees on business 
291.30  trips and service calls. 
291.31     (b) For a lease or rental that does not require recurring 
291.32  periodic payments, the payment is sourced the same as a retail 
291.33  sale in accordance with the provisions of subdivision 2. 
291.34     (c) This subdivision does not affect the imposition or 
291.35  computation of sales or use tax on leases or rentals based on a 
291.36  lump sum or accelerated basis, or on the acquisition of property 
292.1   for lease. 
292.2      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
292.3   purchases made on or after January 1, 2004. 
292.4      Sec. 5.  Minnesota Statutes 2003 Supplement, section 
292.5   297A.668, subdivision 5, is amended to read: 
292.6      Subd. 5.  [TRANSPORTATION EQUIPMENT.] (a) The retail sale, 
292.7   including lease or rental, of transportation equipment shall be 
292.8   sourced the same as a retail sale in accordance with the 
292.9   provisions of subdivision 2, notwithstanding the exclusion of 
292.10  lease or rental in subdivision 2. 
292.11     (b) "Transportation equipment" means any of the following: 
292.12     (1) locomotives and railcars that are utilized for the 
292.13  carriage of persons or property in interstate commerce; and/or 
292.14     (2) trucks and truck-tractors with a gross vehicle weight 
292.15  rating (GVWR) of 10,001 pounds or greater, trailers, 
292.16  semitrailers, or passenger buses that are: 
292.17     (i) registered through the international registration plan; 
292.18  and 
292.19     (ii) operated under authority of a carrier authorized and 
292.20  certified by the United States Department of Transportation or 
292.21  another federal authority to engage in the carriage of persons 
292.22  or property in interstate commerce; 
292.23     (3) aircraft that are operated by air carriers authorized 
292.24  and certificated by the United States Department of 
292.25  Transportation or another federal or a foreign authority to 
292.26  engage in the carriage of persons or property in interstate 
292.27  commerce; or 
292.28     (4) containers designed for use on and component parts 
292.29  attached or secured on the transportation equipment described in 
292.30  items (1) through (3).  
292.31     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
292.32  purchases made on or after January 1, 2004. 
292.33     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
292.34  297A.669, subdivision 16, is amended to read: 
292.35     Subd. 16.  [SERVICE ADDRESS.] "Service address," for 
292.36  purposes of this section, means: 
293.1      (1) the location of the telecommunications equipment to 
293.2   which a customer's call is charged and from which the call 
293.3   originates or terminates, regardless of where the call is billed 
293.4   or paid; 
293.5      (2) if the location in paragraph (a) clause (1) is not 
293.6   known, service address means the origination point of the signal 
293.7   of the telecommunications services first identified by either 
293.8   the seller's telecommunications system or in information 
293.9   received by the seller from its service provider, where the 
293.10  system used to transport the signals is not that of the seller; 
293.11  or 
293.12     (3) if the location in paragraphs (a) clauses (1) and 
293.13  (b) (2) is not known, the service address means the location of 
293.14  the customer's place of primary use. 
293.15     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
293.16  purchases made on or after January 1, 2004. 
293.17     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
293.18  297A.68, subdivision 2, is amended to read: 
293.19     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
293.20  (a) Materials stored, used, or consumed in industrial production 
293.21  of personal property intended to be sold ultimately at retail 
293.22  are exempt, whether or not the item so used becomes an 
293.23  ingredient or constituent part of the property produced.  
293.24  Materials that qualify for this exemption include, but are not 
293.25  limited to, the following: 
293.26     (1) chemicals, including chemicals used for cleaning food 
293.27  processing machinery and equipment; 
293.28     (2) materials, including chemicals, fuels, and electricity 
293.29  purchased by persons engaged in industrial production to treat 
293.30  waste generated as a result of the production process; 
293.31     (3) fuels, electricity, gas, and steam used or consumed in 
293.32  the production process, except that electricity, gas, or steam 
293.33  used for space heating, cooling, or lighting is exempt if (i) it 
293.34  is in excess of the average climate control or lighting for the 
293.35  production area, and (ii) it is necessary to produce that 
293.36  particular product; 
294.1      (4) petroleum products and lubricants; 
294.2      (5) packaging materials, including returnable containers 
294.3   used in packaging food and beverage products; 
294.4      (6) accessory tools, equipment, and other items that are 
294.5   separate detachable units with an ordinary useful life of less 
294.6   than 12 months used in producing a direct effect upon the 
294.7   product; and 
294.8      (7) the following materials, tools, and equipment used in 
294.9   metalcasting:  crucibles, thermocouple protection sheaths and 
294.10  tubes, stalk tubes, refractory materials, molten metal filters 
294.11  and filter boxes, degassing lances, and base blocks. 
294.12     (b) This exemption does not include: 
294.13     (1) machinery, equipment, implements, tools, accessories, 
294.14  appliances, contrivances and furniture and fixtures, except 
294.15  those listed in paragraph (a), clause (6); and 
294.16     (2) petroleum and special fuels used in producing or 
294.17  generating power for propelling ready-mixed concrete trucks on 
294.18  the public highways of this state. 
294.19     (c) Industrial production includes, but is not limited to, 
294.20  research, development, design or production of any tangible 
294.21  personal property, manufacturing, processing (other than by 
294.22  restaurants and consumers) of agricultural products (whether 
294.23  vegetable or animal), commercial fishing, refining, smelting, 
294.24  reducing, brewing, distilling, printing, mining, quarrying, 
294.25  lumbering, generating electricity, the production of road 
294.26  building materials, and the research, development, design, or 
294.27  production of computer software.  Industrial production does not 
294.28  include painting, cleaning, repairing or similar processing of 
294.29  property except as part of the original manufacturing process.  
294.30  Industrial production does not include the furnishing of 
294.31  services listed in section 297A.61, subdivision 3, paragraph 
294.32  (g), clause (6), items (i) to (vi) and (viii). 
294.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
294.34  following final enactment. 
294.35     Sec. 8.  Minnesota Statutes 2003 Supplement, section 
294.36  297A.68, subdivision 5, is amended to read: 
295.1      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
295.2   exempt.  The tax must be imposed and collected as if the rate 
295.3   under section 297A.62, subdivision 1, applied, and then refunded 
295.4   in the manner provided in section 297A.75. 
295.5      "Capital equipment" means machinery and equipment purchased 
295.6   or leased, and used in this state by the purchaser or lessee 
295.7   primarily for manufacturing, fabricating, mining, or refining 
295.8   tangible personal property to be sold ultimately at retail if 
295.9   the machinery and equipment are essential to the integrated 
295.10  production process of manufacturing, fabricating, mining, or 
295.11  refining.  Capital equipment also includes machinery and 
295.12  equipment used primarily to electronically transmit results 
295.13  retrieved by a customer of an on-line computerized data 
295.14  retrieval system. 
295.15     (b) Capital equipment includes, but is not limited to: 
295.16     (1) machinery and equipment used to operate, control, or 
295.17  regulate the production equipment; 
295.18     (2) machinery and equipment used for research and 
295.19  development, design, quality control, and testing activities; 
295.20     (3) environmental control devices that are used to maintain 
295.21  conditions such as temperature, humidity, light, or air pressure 
295.22  when those conditions are essential to and are part of the 
295.23  production process; 
295.24     (4) materials and supplies used to construct and install 
295.25  machinery or equipment; 
295.26     (5) repair and replacement parts, including accessories, 
295.27  whether purchased as spare parts, repair parts, or as upgrades 
295.28  or modifications to machinery or equipment; 
295.29     (6) materials used for foundations that support machinery 
295.30  or equipment; 
295.31     (7) materials used to construct and install special purpose 
295.32  buildings used in the production process; 
295.33     (8) ready-mixed concrete equipment in which the ready-mixed 
295.34  concrete is mixed as part of the delivery process regardless if 
295.35  mounted on a chassis and leases of ready-mixed concrete trucks; 
295.36  and 
296.1      (9) machinery or equipment used for research, development, 
296.2   design, or production of computer software.  
296.3      (c) Capital equipment does not include the following: 
296.4      (1) motor vehicles taxed under chapter 297B; 
296.5      (2) machinery or equipment used to receive or store raw 
296.6   materials; 
296.7      (3) building materials, except for materials included in 
296.8   paragraph (b), clauses (6) and (7); 
296.9      (4) machinery or equipment used for nonproduction purposes, 
296.10  including, but not limited to, the following:  plant security, 
296.11  fire prevention, first aid, and hospital stations; support 
296.12  operations or administration; pollution control; and plant 
296.13  cleaning, disposal of scrap and waste, plant communications, 
296.14  space heating, cooling, lighting, or safety; 
296.15     (5) farm machinery and aquaculture production equipment as 
296.16  defined by section 297A.61, subdivisions 12 and 13; 
296.17     (6) machinery or equipment purchased and installed by a 
296.18  contractor as part of an improvement to real property; or 
296.19     (7) machinery and equipment used by restaurants in the 
296.20  furnishing, preparing, or serving of prepared foods as defined 
296.21  in section 297A.61, subdivision 31; 
296.22     (8) machinery and equipment used to furnish the services 
296.23  listed in section 297A.61, subdivision 3, paragraph (g), clause 
296.24  (6), items (i) to (vi) and (viii); or 
296.25     (9) any other item that is not essential to the integrated 
296.26  process of manufacturing, fabricating, mining, or refining. 
296.27     (d) For purposes of this subdivision: 
296.28     (1) "Equipment" means independent devices or tools separate 
296.29  from machinery but essential to an integrated production 
296.30  process, including computers and computer software, used in 
296.31  operating, controlling, or regulating machinery and equipment; 
296.32  and any subunit or assembly comprising a component of any 
296.33  machinery or accessory or attachment parts of machinery, such as 
296.34  tools, dies, jigs, patterns, and molds.  
296.35     (2) "Fabricating" means to make, build, create, produce, or 
296.36  assemble components or property to work in a new or different 
297.1   manner. 
297.2      (3) "Integrated production process" means a process or 
297.3   series of operations through which tangible personal property is 
297.4   manufactured, fabricated, mined, or refined.  For purposes of 
297.5   this clause, (i) manufacturing begins with the removal of raw 
297.6   materials from inventory and ends when the last process prior to 
297.7   loading for shipment has been completed; (ii) fabricating begins 
297.8   with the removal from storage or inventory of the property to be 
297.9   assembled, processed, altered, or modified and ends with the 
297.10  creation or production of the new or changed product; (iii) 
297.11  mining begins with the removal of overburden from the site of 
297.12  the ores, minerals, stone, peat deposit, or surface materials 
297.13  and ends when the last process before stockpiling is completed; 
297.14  and (iv) refining begins with the removal from inventory or 
297.15  storage of a natural resource and ends with the conversion of 
297.16  the item to its completed form. 
297.17     (4) "Machinery" means mechanical, electronic, or electrical 
297.18  devices, including computers and computer software, that are 
297.19  purchased or constructed to be used for the activities set forth 
297.20  in paragraph (a), beginning with the removal of raw materials 
297.21  from inventory through completion of the product, including 
297.22  packaging of the product. 
297.23     (5) "Machinery and equipment used for pollution control" 
297.24  means machinery and equipment used solely to eliminate, prevent, 
297.25  or reduce pollution resulting from an activity described in 
297.26  paragraph (a).  
297.27     (6) "Manufacturing" means an operation or series of 
297.28  operations where raw materials are changed in form, composition, 
297.29  or condition by machinery and equipment and which results in the 
297.30  production of a new article of tangible personal property.  For 
297.31  purposes of this subdivision, "manufacturing" includes the 
297.32  generation of electricity or steam to be sold at retail. 
297.33     (7) "Mining" means the extraction of minerals, ores, stone, 
297.34  or peat. 
297.35     (8) "On-line data retrieval system" means a system whose 
297.36  cumulation of information is equally available and accessible to 
298.1   all its customers. 
298.2      (9) "Primarily" means machinery and equipment used 50 
298.3   percent or more of the time in an activity described in 
298.4   paragraph (a). 
298.5      (10) "Refining" means the process of converting a natural 
298.6   resource to an intermediate or finished product, including the 
298.7   treatment of water to be sold at retail. 
298.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
298.9   following final enactment. 
298.10     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
298.11  297A.68, subdivision 39, is amended to read: 
298.12     Subd. 39.  [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of 
298.13  tangible personal property or services is exempt from tax or a 
298.14  tax rate increase for a period of six months from the effective 
298.15  date of the law change that results in the imposition of the tax 
298.16  or the tax rate increase under this chapter if: 
298.17     (1) the act imposing the tax or increasing the tax rate 
298.18  does not have transitional effective date language for existing 
298.19  construction contracts and construction bids; and 
298.20     (2) the requirements of paragraph (b) are met. 
298.21     (b) A sale is tax exempt under paragraph (a) if it meets 
298.22  the requirements of either clause (1) or (2): 
298.23     (1) For a construction contract: 
298.24     (i) the goods or services sold must be used for the 
298.25  performance of a bona fide written lump sum or fixed price 
298.26  construction contract; 
298.27     (ii) the contract must be entered into before the date the 
298.28  goods or services become subject to the sales tax or the tax 
298.29  rate was increased; 
298.30     (iii) the contract must not provide for allocation of 
298.31  future taxes; and 
298.32     (iv) for each qualifying contract the contractor must give 
298.33  the seller documentation of the contract on which an exemption 
298.34  is to be claimed. 
298.35     (2) For a construction bid: 
298.36     (i) the goods or services sold must be used pursuant to an 
299.1   obligation of a bid or bids; 
299.2      (ii) the bid or bids must be submitted and accepted before 
299.3   the date the goods or services became subject to the sales 
299.4   tax or the tax rate was increased; 
299.5      (iii) the bid or bids must not be able to be withdrawn, 
299.6   modified, or changed without forfeiting a bond; and 
299.7      (iv) for each qualifying bid, the contractor must give the 
299.8   seller documentation of the bid on which an exemption is to be 
299.9   claimed. 
299.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
299.11  following final enactment. 
299.12     Sec. 10.  [REPEALER.] 
299.13     Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200, 
299.14  subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5 
299.15  and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1 
299.16  and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200; 
299.17  8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 
299.18  5; and 8130.8800, subpart 4, are repealed. 
299.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
299.20  following final enactment. 
299.21                             ARTICLE 12
299.22                           SPECIAL TAXES
299.23              DEPARTMENT OF REVENUE TECHNICAL CHANGES
299.24     Section 1.  Minnesota Statutes 2002, section 287.04, is 
299.25  amended to read: 
299.26     287.04 [EXEMPTIONS.] 
299.27     The tax imposed by section 287.035 does not apply to:  
299.28     (a) A decree of marriage dissolution or an instrument made 
299.29  pursuant to it.  
299.30     (b) A mortgage given to correct a misdescription of the 
299.31  mortgaged property. 
299.32     (c) A mortgage or other instrument that adds additional 
299.33  security for the same debt for which mortgage registry tax has 
299.34  been paid.  
299.35     (d) A contract for the conveyance of any interest in real 
299.36  property, including a contract for deed. 
300.1      (e) A mortgage secured by real property subject to the 
300.2   minerals production tax of sections 298.24 to 298.28. 
300.3      (f) The principal amount of a mortgage loan made under a 
300.4   low and moderate income or other affordable housing program, if 
300.5   the mortgagee is a federal, state, or local government agency. 
300.6      (g) Mortgages granted by fraternal benefit societies 
300.7   subject to section 64B.24. 
300.8      (h) A mortgage amendment or extension, as defined in 
300.9   section 287.01. 
300.10     (i) An agricultural mortgage if the proceeds of the loan 
300.11  secured by the mortgage are used to acquire or improve real 
300.12  property classified under section 273.13, subdivision 23, 
300.13  paragraph (a), or (b), clause (1), (2), or (3). 
300.14     (j) A mortgage on an armory building as set forth in 
300.15  section 193.147. 
300.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
300.17  following final enactment. 
300.18     Sec. 2.  Minnesota Statutes 2002, section 295.50, 
300.19  subdivision 4, is amended to read: 
300.20     Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
300.21  provider" means: 
300.22     (1) a person whose health care occupation is regulated or 
300.23  required to be regulated by the state of Minnesota furnishing 
300.24  any or all of the following goods or services directly to a 
300.25  patient or consumer:  medical, surgical, optical, visual, 
300.26  dental, hearing, nursing services, drugs, laboratory, diagnostic 
300.27  or therapeutic services; 
300.28     (2) a person who provides goods and services not listed in 
300.29  clause (1) that qualify for reimbursement under the medical 
300.30  assistance program provided under chapter 256B; 
300.31     (3) a staff model health plan company; 
300.32     (4) an ambulance service required to be licensed; or 
300.33     (5) a person who sells or repairs hearing aids and related 
300.34  equipment or prescription eyewear. 
300.35     (b) Health care provider does not include: 
300.36     (1) hospitals; medical supplies distributors, except as 
301.1   specified under paragraph (a), clause (5); nursing homes 
301.2   licensed under chapter 144A or licensed in any other 
301.3   jurisdiction; pharmacies; surgical centers; bus and taxicab 
301.4   transportation, or any other providers of transportation 
301.5   services other than ambulance services required to be licensed; 
301.6   supervised living facilities for persons with mental retardation 
301.7   or related conditions, licensed under Minnesota Rules, parts 
301.8   4665.0100 to 4665.9900; residential care homes licensed under 
301.9   chapter 144B housing with services establishments required to be 
301.10  registered under chapter 144D; board and lodging establishments 
301.11  providing only custodial services that are licensed under 
301.12  chapter 157 and registered under section 157.17 to provide 
301.13  supportive services or health supervision services; adult foster 
301.14  homes as defined in Minnesota Rules, part 9555.5105; day 
301.15  training and habilitation services for adults with mental 
301.16  retardation and related conditions as defined in section 252.41, 
301.17  subdivision 3; boarding care homes, as defined in Minnesota 
301.18  Rules, part 4655.0100; and adult day care centers as defined in 
301.19  Minnesota Rules, part 9555.9600; 
301.20     (2) home health agencies as defined in Minnesota Rules, 
301.21  part 9505.0175, subpart 15; a person providing personal care 
301.22  services and supervision of personal care services as defined in 
301.23  Minnesota Rules, part 9505.0335; a person providing private duty 
301.24  nursing services as defined in Minnesota Rules, part 9505.0360; 
301.25  and home care providers required to be licensed under chapter 
301.26  144A; 
301.27     (3) a person who employs health care providers solely for 
301.28  the purpose of providing patient services to its employees; and 
301.29     (4) an educational institution that employs health care 
301.30  providers solely for the purpose of providing patient services 
301.31  to its students if the institution does not receive fee for 
301.32  service payments or payments for extended coverage. 
301.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
301.34  following final enactment. 
301.35     Sec. 3.  Minnesota Statutes 2002, section 296A.22, is 
301.36  amended by adding a subdivision to read: 
302.1      Subd. 9.  [ABATEMENT OF PENALTY.] (a) The commissioner may 
302.2   by written order abate any penalty imposed under this section, 
302.3   if in the commissioner's opinion there is reasonable cause to do 
302.4   so. 
302.5      (b) A request for abatement of penalty must be filed with 
302.6   the commissioner within 60 days of the date the notice stating 
302.7   that a penalty has been imposed was mailed to the taxpayer's 
302.8   last known address. 
302.9      (c) If the commissioner issues an order denying a request 
302.10  for abatement of penalty, the taxpayer may file an 
302.11  administrative appeal as provided in section 296A.25 or appeal 
302.12  to the Tax Court as provided in section 271.06.  If the 
302.13  commissioner does not issue an order on the abatement request 
302.14  within 60 days from the date the request is received, the 
302.15  taxpayer may appeal to the Tax Court as provided in section 
302.16  271.06. 
302.17     <b>[EFFECTIVE DATE.]</b> This section is effective for penalties 
302.18  imposed on or after the day following final enactment. 
302.19     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
302.20  297F.08, subdivision 12, is amended to read: 
302.21     Subd. 12.  [CIGARETTES IN INTERSTATE COMMERCE.] (a) A 
302.22  person may not transport or cause to be transported from this 
302.23  state cigarettes for sale in another state without first 
302.24  affixing to the cigarettes the stamp required by the state in 
302.25  which the cigarettes are to be sold or paying any other excise 
302.26  tax on the cigarettes imposed by the state in which the 
302.27  cigarettes are to be sold. 
302.28     (b) A person may not affix to cigarettes the stamp required 
302.29  by another state or pay any other excise tax on the cigarettes 
302.30  imposed by another state if the other state prohibits stamps 
302.31  from being affixed to the cigarettes, prohibits the payment of 
302.32  any other excise tax on the cigarettes, or prohibits the sale of 
302.33  the cigarettes. 
302.34     (c) Not later than 15 days after the end of each calendar 
302.35  quarter, a person who transports or causes to be transported 
302.36  from this state cigarettes for sale in another state shall 
303.1   submit to the commissioner a report identifying the quantity and 
303.2   style of each brand of the cigarettes transported or caused to 
303.3   be transported in the preceding calendar quarter, and the name 
303.4   and address of each recipient of the cigarettes.  This reporting 
303.5   requirement only relates to cigarettes manufactured by companies 
303.6   that are not original or subsequent participating manufacturers 
303.7   in the Master Settlement Agreement with other states. 
303.8      (d) For purposes of this section, "person" has the meaning 
303.9   given in section 297F.01, subdivision 12.  Person does not 
303.10  include any common or contract carrier, or public warehouse that 
303.11  is not owned, in whole or in part, directly or indirectly by 
303.12  such person, and does not include a manufacturer that has 
303.13  entered into is an original or subsequent participating 
303.14  manufacturer in the Master Settlement Agreement with other 
303.15  states. 
303.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
303.17  following final enactment. 
303.18     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
303.19  297F.09, subdivision 1, is amended to read: 
303.20     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
303.21  or before the 18th day of each calendar month, a distributor 
303.22  with a place of business in this state shall file a return with 
303.23  the commissioner showing the quantity of cigarettes manufactured 
303.24  or brought in from outside the state or purchased during the 
303.25  preceding calendar month and the quantity of cigarettes sold or 
303.26  otherwise disposed of in this state and outside this state 
303.27  during that month.  A licensed distributor outside this state 
303.28  shall in like manner file a return showing the quantity of 
303.29  cigarettes shipped or transported into this state during the 
303.30  preceding calendar month.  Returns must be made in the form and 
303.31  manner prescribed by the commissioner and must contain any other 
303.32  information required by the commissioner.  The return must be 
303.33  accompanied by a remittance for the full unpaid tax liability 
303.34  shown by it.  The return for the May liability and 85 percent of 
303.35  the estimated June liability is due on the date payment of the 
303.36  tax is due.  For distributors subject to the accelerated tax 
304.1   payment requirements in subdivision 10, the return for the May 
304.2   liability is due two business days before June 30th of the year 
304.3   and the return for the June liability is due on or before August 
304.4   18th of the year. 
304.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
304.6   following final enactment. 
304.7      Sec. 6.  Minnesota Statutes 2003 Supplement, section 
304.8   297F.09, subdivision 2, is amended to read: 
304.9      Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
304.10  On or before the 18th day of each calendar month, a distributor 
304.11  with a place of business in this state shall file a return with 
304.12  the commissioner showing the quantity and wholesale sales price 
304.13  of each tobacco product: 
304.14     (1) brought, or caused to be brought, into this state for 
304.15  sale; and 
304.16     (2) made, manufactured, or fabricated in this state for 
304.17  sale in this state, during the preceding calendar month.  
304.18  Every licensed distributor outside this state shall in like 
304.19  manner file a return showing the quantity and wholesale sales 
304.20  price of each tobacco product shipped or transported to 
304.21  retailers in this state to be sold by those retailers, during 
304.22  the preceding calendar month.  Returns must be made in the form 
304.23  and manner prescribed by the commissioner and must contain any 
304.24  other information required by the commissioner.  The return must 
304.25  be accompanied by a remittance for the full tax liability 
304.26  shown.  The return for the May liability and 85 percent of the 
304.27  estimated June liability is due on the date payment of the tax 
304.28  is due.  For distributors subject to the accelerated tax payment 
304.29  requirements in subdivision 10, the return for the May liability 
304.30  is due two business days before June 30th of the year and the 
304.31  return for the June liability is due on or before August 18th of 
304.32  the year. 
304.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
304.34  following final enactment. 
304.35     Sec. 7.  Minnesota Statutes 2002, section 297I.01, is 
304.36  amended by adding a subdivision to read: 
305.1      Subd. 13a.  [REINSURANCE.] "Reinsurance" is insurance 
305.2   whereby an insurance company, for a consideration, agrees to 
305.3   indemnify another insurance company against all or part of the 
305.4   loss which the latter may sustain under the policy or policies 
305.5   which it has issued. 
305.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
305.7   following final enactment. 
305.8      Sec. 8.  Minnesota Statutes 2002, section 297I.05, 
305.9   subdivision 5, is amended to read: 
305.10     Subd. 5.  [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 
305.11  HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 
305.12  SERVICE NETWORKS.] (a) Health maintenance organizations, 
305.13  community integrated service networks, and nonprofit health care 
305.14  service plan corporations are exempt from the tax imposed under 
305.15  this section for premiums received in calendar years 2001 to 
305.16  2003. 
305.17     (b) For calendar years after 2003, a tax is imposed on 
305.18  health maintenance organizations, community integrated service 
305.19  networks, and nonprofit health care service plan corporations.  
305.20  The rate of tax is equal to one percent of gross premiums less 
305.21  return premiums on all direct business received by the 
305.22  organization, network, or corporation or its agents in 
305.23  Minnesota, in cash or otherwise, in the calendar year. 
305.24     (c) In approving the premium rates as required in sections 
305.25  62L.08, subdivision 8, and 62A.65, subdivision 3, the 
305.26  commissioners of health and commerce shall ensure that any 
305.27  exemption from tax as described in paragraph (a) is reflected in 
305.28  the premium rate. 
305.29     (d) The commissioner shall deposit all revenues, including 
305.30  penalties and interest, collected under this chapter from health 
305.31  maintenance organizations, community integrated service 
305.32  networks, and nonprofit health service plan corporations in the 
305.33  health care access fund.  Refunds of overpayments of tax imposed 
305.34  by this subdivision must be paid from the health care access 
305.35  fund.  There is annually appropriated from the health care 
305.36  access fund to the commissioner the amount necessary to make any 
306.1   refunds of the tax imposed under this subdivision. 
306.2      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2004.
306.3      Sec. 9.  [REPEALER.] 
306.4      Minnesota Statutes 2002, section 297E.12, subdivision 10, 
306.5   is repealed effective the day following final enactment. 
306.6                              ARTICLE 13
306.7                       PROPERTY TAXES AND AIDS
306.8              DEPARTMENT OF REVENUE TECHNICAL PROVISIONS
306.9      Section 1.  Minnesota Statutes 2003 Supplement, section 
306.10  168A.05, subdivision 1a, is amended to read: 
306.11     Subd. 1a.  [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX 
306.12  PAYMENT.] In the case of a manufactured home as defined in 
306.13  section 327.31, subdivision 6, the department shall not issue a 
306.14  certificate of title unless the application under section 
306.15  168A.04 is accompanied with a statement from the county auditor 
306.16  or county treasurer where the manufactured home is presently 
306.17  located, stating that all manufactured home personal property 
306.18  taxes levied on the unit in the name of the current owner at the 
306.19  time of transfer have been paid.  For this purpose, manufactured 
306.20  home personal property taxes are treated as levied on January 1 
306.21  of the payable year. 
306.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
306.23  following final enactment. 
306.24     Sec. 2.  Minnesota Statutes 2002, section 270B.12, 
306.25  subdivision 9, is amended to read: 
306.26     Subd. 9.  [COUNTY ASSESSORS; HOMESTEAD APPLICATION, 
306.27  DETERMINATION, AND INCOME TAX STATUS.] (a) If, as a result of an 
306.28  audit, the commissioner determines that a person is a Minnesota 
306.29  nonresident or part-year resident for income tax purposes, the 
306.30  commissioner may disclose the person's name, address, and Social 
306.31  Security number to the assessor of any political subdivision in 
306.32  the state, when there is reason to believe that the person may 
306.33  have claimed or received homestead property tax benefits for a 
306.34  corresponding assessment year in regard to property apparently 
306.35  located in the assessor's jurisdiction. 
306.36     (b) To the extent permitted by section 273.124, subdivision 
307.1   1, paragraph (a), the Department of Revenue may verify to a 
307.2   county assessor whether an individual who is requesting or 
307.3   receiving a homestead classification has filed a Minnesota 
307.4   income tax return as a resident for the most recent taxable year 
307.5   for which the information is available. 
307.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
307.7   following final enactment. 
307.8      Sec. 3.  Minnesota Statutes 2002, section 272.01, 
307.9   subdivision 2, is amended to read: 
307.10     Subd. 2.  (a) When any real or personal property which is 
307.11  exempt from ad valorem taxes, and taxes in lieu thereof, is 
307.12  leased, loaned, or otherwise made available and used by a 
307.13  private individual, association, or corporation in connection 
307.14  with a business conducted for profit, there shall be imposed a 
307.15  tax, for the privilege of so using or possessing such real or 
307.16  personal property, in the same amount and to the same extent as 
307.17  though the lessee or user was the owner of such property. 
307.18     (b) The tax imposed by this subdivision shall not apply to: 
307.19     (1) property leased or used as a concession in or relative 
307.20  to the use in whole or part of a public park, market, 
307.21  fairgrounds, port authority, economic development authority 
307.22  established under chapter 469, municipal auditorium, municipal 
307.23  parking facility, municipal museum, or municipal stadium; 
307.24     (2) property of an airport owned by a city, town, county, 
307.25  or group thereof which is:  
307.26     (i) leased to or used by any person or entity including a 
307.27  fixed base operator; and 
307.28     (ii) used as a hangar for the storage or repair of aircraft 
307.29  or to provide aviation goods, services, or facilities to the 
307.30  airport or general public; 
307.31  the exception from taxation provided in this clause does not 
307.32  apply to: 
307.33     (i) property located at an airport owned or operated by the 
307.34  Metropolitan Airports Commission or by a city of over 50,000 
307.35  population according to the most recent federal census or such a 
307.36  city's airport authority; 
308.1      (ii) hangars leased by a private individual, association, 
308.2   or corporation in connection with a business conducted for 
308.3   profit other than an aviation-related business; or 
308.4      (iii) facilities leased by a private individual, 
308.5   association, or corporation in connection with a business for 
308.6   profit, that consists of a major jet engine repair facility 
308.7   financed, in whole or part, with the proceeds of state bonds and 
308.8   located in a tax increment financing district; 
308.9      (3) property constituting or used as a public pedestrian 
308.10  ramp or concourse in connection with a public airport; or 
308.11     (4) property constituting or used as a passenger check-in 
308.12  area or ticket sale counter, boarding area, or luggage claim 
308.13  area in connection with a public airport but not the airports 
308.14  owned or operated by the Metropolitan Airports Commission or 
308.15  cities of over 50,000 population or an airport authority 
308.16  therein.  Real estate owned by a municipality in connection with 
308.17  the operation of a public airport and leased or used for 
308.18  agricultural purposes is not exempt; 
308.19     (5) property leased, loaned, or otherwise made available to 
308.20  a private individual, corporation, or association under a 
308.21  cooperative farming agreement made pursuant to section 97A.135; 
308.22  or 
308.23     (6) property leased, loaned, or otherwise made available to 
308.24  a private individual, corporation, or association under section 
308.25  272.68, subdivision 4. 
308.26     (c) Taxes imposed by this subdivision are payable as in the 
308.27  case of personal property taxes and shall be assessed to the 
308.28  lessees or users of real or personal property in the same manner 
308.29  as taxes assessed to owners of real or personal property, except 
308.30  that such taxes shall not become a lien against the property.  
308.31  When due, the taxes shall constitute a debt due from the lessee 
308.32  or user to the state, township, city, county, and school 
308.33  district for which the taxes were assessed and shall be 
308.34  collected in the same manner as personal property taxes.  If 
308.35  property subject to the tax imposed by this subdivision is 
308.36  leased or used jointly by two or more persons, each lessee or 
309.1   user shall be jointly and severally liable for payment of the 
309.2   tax. 
309.3      (d) The tax on real property of the state or any of its 
309.4   political subdivisions that is leased by a private individual, 
309.5   association, or corporation and becomes taxable under this 
309.6   subdivision or other provision of law must be assessed and 
309.7   collected as a personal property assessment.  The taxes do not 
309.8   become a lien against the real property. 
309.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
309.10  following final enactment. 
309.11     Sec. 4.  Minnesota Statutes 2002, section 272.02, 
309.12  subdivision 1a, is amended to read: 
309.13     Subd. 1a.  [LIMITATIONS ON EXEMPTIONS.] The exemptions 
309.14  granted by subdivision 1 are subject to the limits contained in 
309.15  the other subdivisions of this section, section 272.025, or 
309.16  273.13, subdivision 25, paragraph (c), clause (1) or (2), or 
309.17  paragraph (d), clause (2) and all other provisions of applicable 
309.18  law.  
309.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
309.20  following final enactment. 
309.21     Sec. 5.  Minnesota Statutes 2002, section 272.02, 
309.22  subdivision 7, is amended to read: 
309.23     Subd. 7.  [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of 
309.24  purely public charity are exempt except parcels of property 
309.25  containing structures and the structures described in section 
309.26  273.13, subdivision 25, paragraph (e), other than those that 
309.27  qualify for exemption under subdivision 26.  In determining 
309.28  whether rental housing property qualifies for exemption under 
309.29  this subdivision, the following are not gifts or donations to 
309.30  the owner of the rental housing: 
309.31     (1) rent assistance provided by the government to or on 
309.32  behalf of tenants, and 
309.33     (2) financing assistance or tax credits provided by the 
309.34  government to the owner on condition that specific units or a 
309.35  specific quantity of units be set aside for persons or families 
309.36  with certain income characteristics. 
310.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
310.2   payable in 2004 and thereafter. 
310.3      Sec. 6.  Minnesota Statutes 2002, section 272.02, is 
310.4   amended by adding a subdivision to read: 
310.5      Subd. 68.  [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR 
310.6   NET PROCEEDS TAX.] (a) Except for mineral interests taxed under 
310.7   section 273.165, and except for lands taxed under section 
310.8   298.26, real and personal property described in section 298.25 
310.9   is exempt to the extent the tax on taconite and iron sulphides 
310.10  under section 298.24 is described in section 298.25 as being in 
310.11  lieu of other taxes on such property.  This exemption applies 
310.12  for taxes payable in each year that the tax under section 298.24 
310.13  is payable with respect to such property. 
310.14     (b) Except for mineral interests taxed under section 
310.15  273.165, deposits of mineral, metal, or energy resources the 
310.16  mining of which is subject to taxation under section 298.015 are 
310.17  exempt.  This exemption applies for taxes payable in each year 
310.18  that the tax under section 298.015 is payable with respect to 
310.19  such property. 
310.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
310.21  following final enactment. 
310.22     Sec. 7.  Minnesota Statutes 2002, section 272.02, is 
310.23  amended by adding a subdivision to read: 
310.24     Subd. 69.  [RELIGIOUS CORPORATIONS.] Personal and real 
310.25  property that a religious corporation, formed under section 
310.26  317A.909, necessarily uses for a religious purpose is exempt to 
310.27  the extent provided in section 317A.909, subdivision 3. 
310.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
310.29  following final enactment. 
310.30     Sec. 8.  Minnesota Statutes 2002, section 272.02, is 
310.31  amended by adding a subdivision to read: 
310.32     Subd. 70.  [CHILDREN'S HOMES.] Personal and real property 
310.33  owned by a corporation formed under section 317A.907 is exempt 
310.34  to the extent provided in section 317A.907, subdivision 7. 
310.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
310.36  following final enactment. 
311.1      Sec. 9.  Minnesota Statutes 2002, section 272.02, is 
311.2   amended by adding a subdivision to read: 
311.3      Subd. 71.  [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL 
311.4   HOUSING AUTHORITY PROPERTY.] Property owned by a housing and 
311.5   redevelopment authority described in chapter 469, or by a 
311.6   designated housing authority described in section 469.040, 
311.7   subdivision 5, is exempt to the extent provided in chapter 469. 
311.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
311.9   following final enactment. 
311.10     Sec. 10.  Minnesota Statutes 2002, section 273.124, 
311.11  subdivision 8, is amended to read: 
311.12     Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
311.13  CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR 
311.14  PARTNERSHIP.] (a) Each family farm corporation, each; each joint 
311.15  family farm venture,; and each limited liability company, and 
311.16  each or partnership operating which operates a family farm; is 
311.17  entitled to class 1b under section 273.13, subdivision 22, 
311.18  paragraph (b), or class 2a assessment for one homestead occupied 
311.19  by a shareholder, member, or partner thereof who is residing on 
311.20  the land, and actively engaged in farming of the land owned by 
311.21  the family farm corporation, joint family farm venture, limited 
311.22  liability company, or partnership operating a family farm.  
311.23  Homestead treatment applies even if legal title to the property 
311.24  is in the name of the family farm corporation, joint family farm 
311.25  venture, limited liability company, or partnership operating the 
311.26  family farm, and not in the name of the person residing on it. 
311.27     "Family farm corporation," "family farm," and "partnership 
311.28  operating a family farm" have the meanings given in section 
311.29  500.24, except that the number of allowable shareholders, 
311.30  members, or partners under this subdivision shall not exceed 
311.31  12.  "Limited liability company" has the meaning contained in 
311.32  sections 322B.03, subdivision 28, and 500.24, subdivision 2, 
311.33  paragraphs (l) and (m).  "Joint family farm venture" means a 
311.34  cooperative agreement among two or more farm enterprises 
311.35  authorized to operate a family farm under section 500.24. 
311.36     (b) In addition to property specified in paragraph (a), any 
312.1   other residences owned by family farm corporations, joint family 
312.2   farm ventures, limited liability companies, or partnerships 
312.3   operating a family farm described in paragraph (a) which are 
312.4   located on agricultural land and occupied as homesteads by its 
312.5   shareholders, members, or partners who are actively engaged in 
312.6   farming on behalf of that corporation, joint farm venture, 
312.7   limited liability company, or partnership must also be assessed 
312.8   as class 2a property or as class 1b property under section 
312.9   273.13. 
312.10     (c) Agricultural property that is owned by a member, 
312.11  partner, or shareholder of a family farm corporation or joint 
312.12  family farm venture, limited liability company operating a 
312.13  family farm, or by a partnership operating a family farm and 
312.14  leased to the family farm corporation, limited liability 
312.15  company, or partnership operating a family farm, or joint farm 
312.16  venture, as defined in paragraph (a), is eligible for 
312.17  classification as class 1b or class 2a under section 273.13, if 
312.18  the owner is actually residing on the property, and is actually 
312.19  engaged in farming the land on behalf of that corporation, joint 
312.20  farm venture, limited liability company, or partnership.  This 
312.21  paragraph applies without regard to any legal possession rights 
312.22  of the family farm corporation, joint family farm venture, 
312.23  limited liability company, or partnership operating a family 
312.24  farm under the lease. 
312.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
312.26  following final enactment. 
312.27     Sec. 11.  Minnesota Statutes 2002, section 273.19, 
312.28  subdivision 1a, is amended to read: 
312.29     Subd. 1a.  For purposes of this section, a lease includes 
312.30  any agreement, except a cooperative farming agreement pursuant 
312.31  to section 97A.135, subdivision 3, or a lease executed pursuant 
312.32  to section 272.68, subdivision 4, permitting a nonexempt person 
312.33  or entity to use the property, regardless of whether the 
312.34  agreement is characterized as a lease.  A lease has a "term of 
312.35  at least one year" if the term is for a period of less than one 
312.36  year and the lease permits the parties to renew the lease 
313.1   without requiring that similar terms for leasing the property 
313.2   will be offered to other applicants or bidders through a 
313.3   competitive bidding or other form of offer to potential lessees 
313.4   or users. 
313.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
313.6   following final enactment. 
313.7      Sec. 12.  Minnesota Statutes 2003 Supplement, section 
313.8   274.014, subdivision 3, is amended to read: 
313.9      Subd. 3.  [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] Any 
313.10  city or town that does not provide proof to the county assessor 
313.11  by December 1, 2006, and each year thereafter, that it is in 
313.12  compliance with the requirements of subdivision 2, and that it 
313.13  had a quorum at each meeting of the board of appeal and 
313.14  equalization in the prior current year, is deemed to have 
313.15  transferred its board of appeal and equalization powers to the 
313.16  county under section 274.01, subdivision 3, for the following 
313.17  year's assessment. 
313.18     The county shall notify the taxpayers when the board of 
313.19  appeal and equalization for a city or town has been transferred 
313.20  to the county under this subdivision and, prior to the meeting 
313.21  time of the county board of equalization, the county shall make 
313.22  available to those taxpayers a procedure for a review of the 
313.23  assessments, including, but not limited to, open book meetings.  
313.24  This alternate review process shall take place in April and May. 
313.25     A local board whose powers are transferred to the county 
313.26  under this subdivision may be reinstated by resolution of the 
313.27  governing body of the city or town and upon proof of compliance 
313.28  with the requirements of subdivision 2.  The resolution and 
313.29  proofs must be provided to the county assessor by December 1 in 
313.30  order to be effective for the following year's assessment. 
313.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
313.32  following final enactment. 
313.33     Sec. 13.  Minnesota Statutes 2002, section 274.14, is 
313.34  amended to read: 
313.35     274.14 [LENGTH OF SESSION; RECORD.] 
313.36     The county board of equalization or the special board of 
314.1   equalization appointed by it shall meet during the last ten 
314.2   meeting days in June.  For this purpose, "meeting days" are 
314.3   defined as any day of the week excluding Saturday and Sunday.  
314.4   The board may meet on any ten consecutive meeting days in June, 
314.5   after the second Friday in June, if.  The actual meeting dates 
314.6   are must be contained on the valuation notices mailed to each 
314.7   property owner in the county under as provided in section 
314.8   273.121.  For this purpose, "meeting days" is defined as any day 
314.9   of the week excluding Saturday and Sunday.  No action taken by 
314.10  the county board of review after June 30 is valid, except for 
314.11  corrections permitted in sections 273.01 and 274.01.  The county 
314.12  auditor shall keep an accurate record of the proceedings and 
314.13  orders of the board.  The record must be published like other 
314.14  proceedings of county commissioners.  A copy of the published 
314.15  record must be sent to the commissioner of revenue, with the 
314.16  abstract of assessment required by section 274.16.  
314.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
314.18  following final enactment. 
314.19     Sec. 14.  Minnesota Statutes 2002, section 275.065, 
314.20  subdivision 1a, is amended to read: 
314.21     Subd. 1a.  [OVERLAPPING JURISDICTIONS.] In the case of a 
314.22  taxing authority lying in two or more counties, the home county 
314.23  auditor shall certify the proposed levy and the proposed local 
314.24  tax rate to the other county auditor by September 20 October 5.  
314.25  The home county auditor must estimate the levy or rate in 
314.26  preparing the notices required in subdivision 3, if the other 
314.27  county has not certified the appropriate information.  If 
314.28  requested by the home county auditor, the other county auditor 
314.29  must furnish an estimate to the home county auditor. 
314.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
314.31  following final enactment. 
314.32     Sec. 15.  Minnesota Statutes 2002, section 275.07, 
314.33  subdivision 1, is amended to read: 
314.34     Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
314.35  provided under paragraph (b), the taxes voted by cities, 
314.36  counties, school districts, and special districts shall be 
315.1   certified by the proper authorities to the county auditor on or 
315.2   before five working days after December 20 in each year.  A town 
315.3   must certify the levy adopted by the town board to the county 
315.4   auditor by September 15 each year.  If the town board modifies 
315.5   the levy at a special town meeting after September 15, the town 
315.6   board must recertify its levy to the county auditor on or before 
315.7   five working days after December 20.  The taxes certified shall 
315.8   not be reduced by the county auditor by the aid received under 
315.9   section 273.1398, subdivision 2, but shall be reduced by the 
315.10  county auditor by the aid received under section 273.1398, 
315.11  subdivision 3.  If a city, town, county, school district, or 
315.12  special district fails to certify its levy by that date, its 
315.13  levy shall be the amount levied by it for the preceding year. 
315.14     (b)(i) The taxes voted by counties under sections 103B.241, 
315.15  103B.245, and 103B.251 shall be separately certified by the 
315.16  county to the county auditor on or before five working days 
315.17  after December 20 in each year.  The taxes certified shall not 
315.18  be reduced by the county auditor by the aid received under 
315.19  section 273.1398, subdivisions 2 and 3.  If a county fails to 
315.20  certify its levy by that date, its levy shall be the amount 
315.21  levied by it for the preceding year.  
315.22     (ii) For purposes of the proposed property tax notice under 
315.23  section 275.065 and the property tax statement under section 
315.24  276.04, for the first year in which the county implements the 
315.25  provisions of this paragraph, the county auditor shall reduce 
315.26  the county's levy for the preceding year to reflect any amount 
315.27  levied for water management purposes under clause (i) included 
315.28  in the county's levy. 
315.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
315.30  following final enactment. 
315.31     Sec. 16.  Minnesota Statutes 2002, section 275.07, 
315.32  subdivision 4, is amended to read: 
315.33     Subd. 4.  [REPORT TO COMMISSIONER.] (a) On or before 
315.34  October 8 of each year, the county auditor shall report to the 
315.35  commissioner of revenue the proposed levy certified by local 
315.36  units of government under section 275.065, subdivision 1.  If 
316.1   any taxing authorities have notified the county auditor that 
316.2   they are in the process of negotiating an agreement for sharing, 
316.3   merging, or consolidating services but that when the proposed 
316.4   levy was certified under section 275.065, subdivision 1c, the 
316.5   agreement was not yet finalized, the county auditor shall supply 
316.6   that information to the commissioner when filing the report 
316.7   under this section and shall recertify the affected levies as 
316.8   soon as practical after October 10. 
316.9      (b) On or before January 15 of each year, the county 
316.10  auditor shall report to the commissioner of revenue the final 
316.11  levy certified by local units of government under subdivision 1. 
316.12     (c) The levies must be reported in the manner prescribed by 
316.13  the commissioner.  The reports must show a total levy and the 
316.14  amount of each special levy. 
316.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
316.16  following final enactment. 
316.17     Sec. 17.  Minnesota Statutes 2003 Supplement, section 
316.18  276.112, is amended to read: 
316.19     276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.] 
316.20     On or before January 25 each year, for the period ending 
316.21  December 31 of the prior year, and on or before two business 
316.22  days before June 29 30 each year, for the period ending on the 
316.23  most recent settlement day determined in section 276.09, and on 
316.24  or before December 2 each year, for the period ending November 
316.25  20, the county treasurer must make full settlement with the 
316.26  county auditor according to sections 276.09, 276.10, and 276.111 
316.27  for all receipts of state property taxes levied under section 
316.28  275.025, and must transmit those receipts to the commissioner of 
316.29  revenue by electronic means. 
316.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
316.31  following final enactment. 
316.32     Sec. 18.  Minnesota Statutes 2002, section 282.016, is 
316.33  amended to read: 
316.34     282.016 [PROHIBITED PURCHASERS.] 
316.35     No (a) A county auditor, county treasurer, court 
316.36  administrator of the district court, or county assessor or, 
317.1   supervisor of assessments, or deputy or clerk or an employee of 
317.2   such officer, and no a commissioner for tax-forfeited lands or 
317.3   an assistant to such commissioner may, must not become a 
317.4   purchaser, either personally or as an agent or attorney for 
317.5   another person, of the properties offered for sale under the 
317.6   provisions of this chapter, either personally, or as agent or 
317.7   attorney for any other person, except that in the county for 
317.8   which the person performs duties. 
317.9      (b) Notwithstanding paragraph (a), such officer, deputy, 
317.10  court administrator clerk, or employee or commissioner for 
317.11  tax-forfeited lands or assistant to such commissioner may (1) 
317.12  purchase lands owned by that official at the time the state 
317.13  became the absolute owner thereof or (2) bid upon and purchase 
317.14  forfeited property offered for sale under the alternate sale 
317.15  procedure described in section 282.01, subdivision 7a. 
317.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
317.17  following final enactment. 
317.18     Sec. 19.  Minnesota Statutes 2002, section 282.21, is 
317.19  amended to read: 
317.20     282.21 [FORM OF CONVEYANCE.] 
317.21     When any sale has been made under sections 282.14 to 
317.22  282.22, upon payment in full of the purchase price, appropriate 
317.23  conveyance in fee in such form as may be prescribed by the 
317.24  attorney general shall be issued by the commissioner of finance 
317.25  to the purchaser or the purchaser's assigns and this conveyance 
317.26  shall have the force and effect of a patent from the state.  
317.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
317.28  following final enactment. 
317.29     Sec. 20.  Minnesota Statutes 2002, section 282.224, is 
317.30  amended to read: 
317.31     282.224 [FORM OF CONVEYANCE.] 
317.32     When any sale has been made under sections 282.221 to 
317.33  282.226, upon payment in full of the purchase price, appropriate 
317.34  conveyance in fee, in such form as may be prescribed by the 
317.35  attorney general, shall be issued by the commissioner of natural 
317.36  resources to the purchaser or the purchaser's assignee, and the 
318.1   conveyance shall have the force and effect of a patent from the 
318.2   state.  
318.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
318.4   following final enactment. 
318.5      Sec. 21.  Minnesota Statutes 2002, section 282.301, is 
318.6   amended to read: 
318.7      282.301 [RECEIPTS FOR PAYMENTS.] 
318.8      When any sale has been made under sections 282.012 and 
318.9   282.241 to 282.324, the purchaser shall receive from the county 
318.10  auditor at the time of repurchase a receipt, in such form as may 
318.11  be prescribed by the attorney general.  When the purchase price 
318.12  of a parcel of land shall be paid in full, the following facts 
318.13  shall be certified by the county auditor to the commissioner of 
318.14  revenue of the state of Minnesota:  the description of land, the 
318.15  date of sale, the name of the purchaser or the purchaser's 
318.16  assignee, and the date when the final installment of the 
318.17  purchase price was paid.  Upon payment in full of the purchase 
318.18  price, the purchaser or the assignee shall receive a quitclaim 
318.19  deed from the state, to be executed by the commissioner of 
318.20  revenue.  The deed must be sent to the county auditor who shall 
318.21  have it recorded before it is forwarded to the purchaser.  
318.22  Failure to make any payment herein required shall constitute 
318.23  default and upon such default and cancellation in accord with 
318.24  section 282.40, the right, title and interest of the purchaser 
318.25  or the purchaser's heirs, representatives, or assigns in such 
318.26  parcel shall terminate.  
318.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
318.28  following final enactment. 
318.29     Sec. 22.  Minnesota Statutes 2003 Supplement, section 
318.30  477A.03, subdivision 2b, is amended to read: 
318.31     Subd. 2b.  [COUNTIES.] (a) For aids payable in calendar 
318.32  year 2005 and thereafter, the total aids paid to counties under 
318.33  section 477A.0124, subdivision 3, are limited to $100,500,000.  
318.34  Each calendar year, $500,000 shall be retained by the 
318.35  commissioner of revenue to make reimbursements to the 
318.36  commissioner of finance for payments made under section 611.27.  
319.1   For calendar year 2004, the amount shall be $500,000 is 
319.2   appropriated from the general fund for this purpose in addition 
319.3   to the payments authorized under section 477A.0124, subdivision 
319.4   1.  For calendar year 2005 and subsequent years, the amount 
319.5   shall be deducted from the appropriation under this paragraph 
319.6   for section 477A.0124, subdivision 1.  The reimbursements shall 
319.7   be to defray the additional costs associated with court-ordered 
319.8   counsel under section 611.27.  Any retained amounts not used for 
319.9   reimbursement in a year shall be included in the next 
319.10  distribution of county need aid that is certified to the county 
319.11  auditors for the purpose of property tax reduction for the next 
319.12  taxes payable year. 
319.13     (b) For aids payable in 2005 and thereafter, the total aids 
319.14  under section 477A.0124, subdivision 4, are limited to 
319.15  $105,000,000.  The commissioner of finance shall bill the 
319.16  commissioner of revenue for the cost of preparation of local 
319.17  impact notes as required by section 3.987, not to exceed 
319.18  $207,000 in fiscal year 2004 and thereafter.  The commissioner 
319.19  of education shall bill the commissioner of revenue for the cost 
319.20  of preparation of local impact notes for school districts as 
319.21  required by section 3.987, not to exceed $7,000 in fiscal year 
319.22  2004 and thereafter.  For aids payable in 2004, $214,000 is 
319.23  appropriated from the general fund for this purpose.  For aids 
319.24  payable in 2005 and thereafter, the commissioner of revenue 
319.25  shall deduct the amounts billed under this paragraph from the 
319.26  appropriation under this paragraph section for section 
319.27  477A.0124, subdivision 4.  The amounts deducted are appropriated 
319.28  to the commissioner of finance and the commissioner of education 
319.29  for the preparation of local impact notes. 
319.30     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
319.31  payable in 2004 and thereafter. 
319.32     Sec. 23.  Laws 2003, First Special Session chapter 21, 
319.33  article 6, section 9, is amended to read: 
319.34     Sec. 9.  [DEFINITIONS.] 
319.35     (a) For purposes of sections 9 to 15, the following terms 
319.36  have the meanings given them in this section. 
320.1      (b) The 2003 and 2004 "levy plus aid revenue base" for a 
320.2   county is the sum of that county's certified property tax levy 
320.3   for taxes payable in 2003, plus the sum of the amounts the 
320.4   county was certified to receive in the designated calendar year 
320.5   as: 
320.6      (1) homestead and agricultural credit aid under Minnesota 
320.7   Statutes, section 273.1398, subdivision 2, plus any additional 
320.8   aid under section 16, minus the amount calculated under section 
320.9   273.1398, subdivision 4a, paragraph (b), for counties in 
320.10  judicial districts one, three, six, and ten, and 25 percent of 
320.11  the amount calculated under section 273.1398, subdivision 4a, 
320.12  paragraph (b), for counties in judicial districts two and four; 
320.13     (2) the amount of county manufactured home homestead and 
320.14  agricultural credit aid computed for the county for payment in 
320.15  2003 under section 273.166; 
320.16     (3) criminal justice aid under Minnesota Statutes, section 
320.17  477A.0121; 
320.18     (4) family preservation aid under Minnesota Statutes, 
320.19  section 477A.0122; 
320.20     (5) taconite aids under Minnesota Statutes, sections 298.28 
320.21  and 298.282, including any aid which was required to be placed 
320.22  in a special fund for expenditure in the next succeeding year; 
320.23  and 
320.24     (6) county program aid under section 477A.0124, exclusive 
320.25  of the attached machinery aid component. 
320.26     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
320.27  payable in 2004. 
320.28     Sec. 24.  [REPEALER.] 
320.29     Minnesota Statutes 2002, sections 273.19, subdivision 5; 
320.30  274.05; 275.15; and 283.07, are repealed effective the day 
320.31  following final enactment. 
320.32                             ARTICLE 14
320.33                           MISCELLANEOUS
320.34              DEPARTMENT OF REVENUE TECHNICAL CHANGES
320.35     Section 1.  Minnesota Statutes 2002, section 270.65, is 
320.36  amended to read: 
321.1      270.65 [DATE OF ASSESSMENT; DEFINITION.] 
321.2      For purposes of taxes administered by the commissioner, the 
321.3   term "date of assessment" means the date a liability reported on 
321.4   a return was entered into the records of the commissioner or the 
321.5   date a return should have been filed, whichever is later; or, in 
321.6   the case of taxes determined by the commissioner, "date of 
321.7   assessment" means the date of the order assessing taxes or date 
321.8   of the return made by the commissioner; or, in the case of an 
321.9   amended return filed by the taxpayer, the assessment date is the 
321.10  date additional liability reported on the return, if any, was 
321.11  entered into the records of the commissioner; or, in the case of 
321.12  a consent agreement signed by the taxpayer under section 270.67, 
321.13  subdivision 3, the assessment date is the notice date shown on 
321.14  the agreement; or, in the case of a check from a taxpayer that 
321.15  is dishonored and results in an erroneous refund being given to 
321.16  the taxpayer, remittance of the check is deemed to be an 
321.17  assessment and the "date of assessment" is the date the check 
321.18  was received by the commissioner. 
321.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
321.20  following final enactment. 
321.21     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
321.22  289A.19, subdivision 4, is amended to read: 
321.23     Subd. 4.  [ESTATE TAX RETURNS.] When in the commissioner's 
321.24  judgment good cause exists, the commissioner may extend the time 
321.25  for filing an estate tax return for not more than six months.  
321.26  When an extension to file the federal estate tax return has been 
321.27  granted under section 6081 of the Internal Revenue Code, the 
321.28  time for filing the estate tax return is extended for that 
321.29  period.  If the estate requests an extension to file an estate 
321.30  tax return within the time provided in section 289A.18, 
321.31  subdivision 3, the commissioner shall extend the time for filing 
321.32  the estate tax return for six months. 
321.33     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
321.34  decedents dying after December 31, 2003. 
321.35     Sec. 3.  Minnesota Statutes 2002, section 289A.37, 
321.36  subdivision 5, is amended to read: 
322.1      Subd. 5.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
322.2   sent postage prepaid by United States mail to the taxpayer at 
322.3   the taxpayer's last known address, or sent by electronic mail to 
322.4   the taxpayer's last known electronic mailing address as provided 
322.5   for in section 325L.08, is sufficient even if the taxpayer is 
322.6   deceased or is under a legal disability, or, in the case of a 
322.7   corporation, has terminated its existence, unless the department 
322.8   has been provided with a new address by a party authorized to 
322.9   receive notices of assessment. 
322.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
322.11  following final enactment. 
322.12     Sec. 4.  Minnesota Statutes 2002, section 289A.60, 
322.13  subdivision 6, is amended to read: 
322.14     Subd. 6.  [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT 
322.15  RETURN, EVASION.] If a person, with intent to evade or defeat a 
322.16  tax or payment of tax, fails to file a return, files a false or 
322.17  fraudulent return, or attempts in any other manner to evade or 
322.18  defeat a tax or payment of tax, there is imposed on the person a 
322.19  penalty equal to 50 percent of the tax, less amounts paid by the 
322.20  person on the basis of the false or fraudulent return, if any, 
322.21  due for the period to which the return related.  
322.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
322.23  following final enactment. 
322.24     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
322.25  290.01, subdivision 19a, is amended to read: 
322.26     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
322.27  individuals, estates, and trusts, there shall be added to 
322.28  federal taxable income: 
322.29     (1)(i) interest income on obligations of any state other 
322.30  than Minnesota or a political or governmental subdivision, 
322.31  municipality, or governmental agency or instrumentality of any 
322.32  state other than Minnesota exempt from federal income taxes 
322.33  under the Internal Revenue Code or any other federal statute; 
322.34  and 
322.35     (ii) exempt-interest dividends as defined in section 
322.36  852(b)(5) of the Internal Revenue Code, except the portion of 
323.1   the exempt-interest dividends derived from interest income on 
323.2   obligations of the state of Minnesota or its political or 
323.3   governmental subdivisions, municipalities, governmental agencies 
323.4   or instrumentalities, but only if the portion of the 
323.5   exempt-interest dividends from such Minnesota sources paid to 
323.6   all shareholders represents 95 percent or more of the 
323.7   exempt-interest dividends that are paid by the regulated 
323.8   investment company as defined in section 851(a) of the Internal 
323.9   Revenue Code, or the fund of the regulated investment company as 
323.10  defined in section 851(g) of the Internal Revenue Code, making 
323.11  the payment; and 
323.12     (iii) for the purposes of items (i) and (ii), interest on 
323.13  obligations of an Indian tribal government described in section 
323.14  7871(c) of the Internal Revenue Code shall be treated as 
323.15  interest income on obligations of the state in which the tribe 
323.16  is located; 
323.17     (2) the amount of income taxes paid or accrued within the 
323.18  taxable year under this chapter and income the amount of taxes 
323.19  based on net income paid to any other state or to any province 
323.20  or territory of Canada, to the extent allowed as a deduction 
323.21  under section 63(d) of the Internal Revenue Code, but the 
323.22  addition may not be more than the amount by which the itemized 
323.23  deductions as allowed under section 63(d) of the Internal 
323.24  Revenue Code exceeds the amount of the standard deduction as 
323.25  defined in section 63(c) of the Internal Revenue Code.  For the 
323.26  purpose of this paragraph, the disallowance of itemized 
323.27  deductions under section 68 of the Internal Revenue Code of 
323.28  1986, income tax is the last itemized deduction disallowed; 
323.29     (3) the capital gain amount of a lump sum distribution to 
323.30  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
323.31  Reform Act of 1986, Public Law 99-514, applies; 
323.32     (4) the amount of income taxes paid or accrued within the 
323.33  taxable year under this chapter and income taxes based on net 
323.34  income paid to any other state or any province or territory of 
323.35  Canada, to the extent allowed as a deduction in determining 
323.36  federal adjusted gross income.  For the purpose of this 
324.1   paragraph, income taxes do not include the taxes imposed by 
324.2   sections 290.0922, subdivision 1, paragraph (b), 290.9727, 
324.3   290.9728, and 290.9729; 
324.4      (5) the amount of expense, interest, or taxes disallowed 
324.5   pursuant to section 290.10; 
324.6      (6) the amount of a partner's pro rata share of net income 
324.7   which does not flow through to the partner because the 
324.8   partnership elected to pay the tax on the income under section 
324.9   6242(a)(2) of the Internal Revenue Code; and 
324.10     (7) 80 percent of the depreciation deduction allowed under 
324.11  section 168(k) of the Internal Revenue Code.  For purposes of 
324.12  this clause, if the taxpayer has an activity that in the taxable 
324.13  year generates a deduction for depreciation under section 168(k) 
324.14  and the activity generates a loss for the taxable year that the 
324.15  taxpayer is not allowed to claim for the taxable year, "the 
324.16  depreciation allowed under section 168(k)" for the taxable year 
324.17  is limited to excess of the depreciation claimed by the activity 
324.18  under section 168(k) over the amount of the loss from the 
324.19  activity that is not allowed in the taxable year.  In succeeding 
324.20  taxable years when the losses not allowed in the taxable year 
324.21  are allowed, the depreciation under section 168(k) is allowed. 
324.22     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
324.23  beginning after December 31, 2003. 
324.24     Sec. 6.  Minnesota Statutes 2002, section 290.06, 
324.25  subdivision 22, is amended to read: 
324.26     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
324.27  taxpayer who is liable for taxes based on or measured by net 
324.28  income to another state, as provided in paragraphs (b) through 
324.29  (f), upon income allocated or apportioned to Minnesota, is 
324.30  entitled to a credit for the tax paid to another state if the 
324.31  tax is actually paid in the taxable year or a subsequent taxable 
324.32  year.  A taxpayer who is a resident of this state pursuant to 
324.33  section 290.01, subdivision 7, clause (2) paragraph (b), and who 
324.34  is subject to income tax as a resident in the state of the 
324.35  individual's domicile is not allowed this credit unless the 
324.36  state of domicile does not allow a similar credit. 
325.1      (b) For an individual, estate, or trust, the credit is 
325.2   determined by multiplying the tax payable under this chapter by 
325.3   the ratio derived by dividing the income subject to tax in the 
325.4   other state that is also subject to tax in Minnesota while a 
325.5   resident of Minnesota by the taxpayer's federal adjusted gross 
325.6   income, as defined in section 62 of the Internal Revenue Code, 
325.7   modified by the addition required by section 290.01, subdivision 
325.8   19a, clause (1), and the subtraction allowed by section 290.01, 
325.9   subdivision 19b, clause (1), to the extent the income is 
325.10  allocated or assigned to Minnesota under sections 290.081 and 
325.11  290.17.  
325.12     (c) If the taxpayer is an athletic team that apportions all 
325.13  of its income under section 290.17, subdivision 5, the credit is 
325.14  determined by multiplying the tax payable under this chapter by 
325.15  the ratio derived from dividing the total net income subject to 
325.16  tax in the other state by the taxpayer's Minnesota taxable 
325.17  income. 
325.18     (d) The credit determined under paragraph (b) or (c) shall 
325.19  not exceed the amount of tax so paid to the other state on the 
325.20  gross income earned within the other state subject to tax under 
325.21  this chapter, nor shall the allowance of the credit reduce the 
325.22  taxes paid under this chapter to an amount less than what would 
325.23  be assessed if such income amount was excluded from taxable net 
325.24  income. 
325.25     (e) In the case of the tax assessed on a lump sum 
325.26  distribution under section 290.032, the credit allowed under 
325.27  paragraph (a) is the tax assessed by the other state on the lump 
325.28  sum distribution that is also subject to tax under section 
325.29  290.032, and shall not exceed the tax assessed under section 
325.30  290.032.  To the extent the total lump sum distribution defined 
325.31  in section 290.032, subdivision 1, includes lump sum 
325.32  distributions received in prior years or is all or in part an 
325.33  annuity contract, the reduction to the tax on the lump sum 
325.34  distribution allowed under section 290.032, subdivision 2, 
325.35  includes tax paid to another state that is properly apportioned 
325.36  to that distribution. 
326.1      (f) If a Minnesota resident reported an item of income to 
326.2   Minnesota and is assessed tax in such other state on that same 
326.3   income after the Minnesota statute of limitations has expired, 
326.4   the taxpayer shall receive a credit for that year under 
326.5   paragraph (a), notwithstanding any statute of limitations to the 
326.6   contrary.  The claim for the credit must be submitted within one 
326.7   year from the date the taxes were paid to the other state.  The 
326.8   taxpayer must submit sufficient proof to show entitlement to a 
326.9   credit. 
326.10     (g) For the purposes of this subdivision, a resident 
326.11  shareholder of a corporation treated as an "S" corporation under 
326.12  section 290.9725, must be considered to have paid a tax imposed 
326.13  on the shareholder in an amount equal to the shareholder's pro 
326.14  rata share of any net income tax paid by the S corporation to 
326.15  another state.  For the purposes of the preceding sentence, the 
326.16  term "net income tax" means any tax imposed on or measured by a 
326.17  corporation's net income. 
326.18     (h) For the purposes of this subdivision, a resident 
326.19  partner of an entity taxed as a partnership under the Internal 
326.20  Revenue Code must be considered to have paid a tax imposed on 
326.21  the partner in an amount equal to the partner's pro rata share 
326.22  of any net income tax paid by the partnership to another state.  
326.23  For purposes of the preceding sentence, the term "net income" 
326.24  tax means any tax imposed on or measured by a partnership's net 
326.25  income. 
326.26     (i) For the purposes of this subdivision, "another state": 
326.27     (1) includes: 
326.28     (i) the District of Columbia; and 
326.29     (ii) a province or territory of Canada; but 
326.30     (2) excludes Puerto Rico and the several territories 
326.31  organized by Congress. 
326.32     (j) The limitations on the credit in paragraphs (b), (c), 
326.33  and (d), are imposed on a state by state basis. 
326.34     (k) For a tax imposed by a province or territory of Canada, 
326.35  the tax for purposes of this subdivision is the excess of the 
326.36  tax over the amount of the foreign tax credit allowed under 
327.1   section 27 of the Internal Revenue Code.  In determining the 
327.2   amount of the foreign tax credit allowed, the net income taxes 
327.3   imposed by Canada on the income are deducted first.  Any 
327.4   remaining amount of the allowable foreign tax credit reduces the 
327.5   provincial or territorial tax that qualifies for the credit 
327.6   under this subdivision. 
327.7      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
327.8   beginning after December 31, 2003. 
327.9      Sec. 7.  Minnesota Statutes 2003 Supplement, section 
327.10  290.0674, subdivision 1, is amended to read: 
327.11     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
327.12  a credit against the tax imposed by this chapter in an amount 
327.13  equal to 75 percent of the amount paid for education-related 
327.14  expenses for a qualifying child in kindergarten through grade 
327.15  12.  For purposes of this section, "education-related expenses" 
327.16  means: 
327.17     (1) fees or tuition for instruction by an instructor under 
327.18  section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 
327.19  (5), or a member of the Minnesota Music Teachers Association, 
327.20  and who is not a lineal ancestor or sibling of the dependent for 
327.21  instruction outside the regular school day or school year, 
327.22  including tutoring, driver's education offered as part of school 
327.23  curriculum, regardless of whether it is taken from a public or 
327.24  private entity or summer camps, in grade or age appropriate 
327.25  curricula that supplement curricula and instruction available 
327.26  during the regular school year, that assists a dependent to 
327.27  improve knowledge of core curriculum areas or to expand 
327.28  knowledge and skills under the graduation rule under section 
327.29  120B.02, paragraph (e), clauses (1) to (7), (9), and (10) 
327.30  required academic standards under section 120B.021, subdivision 
327.31  1, and the elective standard under section 120B.022, subdivision 
327.32  1, clause (3), and that do not include the teaching of religious 
327.33  tenets, doctrines, or worship, the purpose of which is to 
327.34  instill such tenets, doctrines, or worship; 
327.35     (2) expenses for textbooks, including books and other 
327.36  instructional materials and equipment purchased or leased for 
328.1   use in elementary and secondary schools in teaching only those 
328.2   subjects legally and commonly taught in public elementary and 
328.3   secondary schools in this state.  "Textbooks" does not include 
328.4   instructional books and materials used in the teaching of 
328.5   religious tenets, doctrines, or worship, the purpose of which is 
328.6   to instill such tenets, doctrines, or worship, nor does it 
328.7   include books or materials for extracurricular activities 
328.8   including sporting events, musical or dramatic events, speech 
328.9   activities, driver's education, or similar programs; 
328.10     (3) a maximum expense of $200 per family for personal 
328.11  computer hardware, excluding single purpose processors, and 
328.12  educational software that assists a dependent to improve 
328.13  knowledge of core curriculum areas or to expand knowledge and 
328.14  skills under the graduation rule under section 120B.02 required 
328.15  academic standards under section 120B.021, subdivision 1, and 
328.16  the elective standard under section 120B.022, subdivision 1, 
328.17  clause (3), purchased for use in the taxpayer's home and not 
328.18  used in a trade or business regardless of whether the computer 
328.19  is required by the dependent's school; and 
328.20     (4) the amount paid to others for transportation of a 
328.21  qualifying child attending an elementary or secondary school 
328.22  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
328.23  Wisconsin, wherein a resident of this state may legally fulfill 
328.24  the state's compulsory attendance laws, which is not operated 
328.25  for profit, and which adheres to the provisions of the Civil 
328.26  Rights Act of 1964 and chapter 363A. 
328.27     For purposes of this section, "qualifying child" has the 
328.28  meaning given in section 32(c)(3) of the Internal Revenue Code. 
328.29     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
328.30  beginning after December 31, 2003. 
328.31     Sec. 8.  Minnesota Statutes 2002, section 290.92, 
328.32  subdivision 1, is amended to read: 
328.33     Subdivision 1.  [DEFINITIONS.] (1)  [WAGES.] For purposes 
328.34  of this section, the term "wages" means the same as that term is 
328.35  defined in section 3401(a) and (f) of the Internal Revenue Code. 
328.36     (2)  [PAYROLL PERIOD.] For purposes of this section the 
329.1   term "payroll period" means a period for which a payment of 
329.2   wages is ordinarily made to the employee by the employee's 
329.3   employer, and the term "miscellaneous payroll period" means a 
329.4   payroll period other than a daily, weekly, biweekly, 
329.5   semimonthly, monthly, quarterly, semiannual, or annual payroll 
329.6   period. 
329.7      (3)  [EMPLOYEE.] For purposes of this section the term 
329.8   "employee" means any resident individual performing services for 
329.9   an employer, either within or without, or both within and 
329.10  without the state of Minnesota, and every nonresident individual 
329.11  performing services within the state of Minnesota, the 
329.12  performance of which services constitute, establish, and 
329.13  determine the relationship between the parties as that of 
329.14  employer and employee.  As used in the preceding sentence, the 
329.15  term "employee" includes an officer of a corporation, and an 
329.16  officer, employee, or elected official of the United States, a 
329.17  state, or any political subdivision thereof, or the District of 
329.18  Columbia, or any agency or instrumentality of any one or more of 
329.19  the foregoing. 
329.20     (4)  [EMPLOYER.] For purposes of this section the term 
329.21  "employer" means any person, including individuals, fiduciaries, 
329.22  estates, trusts, partnerships, limited liability companies, and 
329.23  corporations transacting business in or deriving any income from 
329.24  sources within the state of Minnesota for whom an individual 
329.25  performs or performed any service, of whatever nature, as the 
329.26  employee of such person, except that if the person for whom the 
329.27  individual performs or performed the services does not have 
329.28  legal control of the payment of the wages for such services, the 
329.29  term "employer," except for purposes of paragraph (1), means the 
329.30  person having legal control of the payment of such wages.  As 
329.31  used in the preceding sentence, the term "employer" includes any 
329.32  corporation, individual, estate, trust, or organization which is 
329.33  exempt from taxation under section 290.05 and further includes, 
329.34  but is not limited to, officers of corporations who have legal 
329.35  control, either individually or jointly with another or others, 
329.36  of the payment of the wages. 
330.1      (5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For 
330.2   purposes of this section, the term "number of withholding 
330.3   exemptions claimed" means the number of withholding exemptions 
330.4   claimed in a withholding exemption certificate in effect under 
330.5   subdivision 5, except that if no such certificate is in effect, 
330.6   the number of withholding exemptions claimed shall be considered 
330.7   to be zero. 
330.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
330.9   following final enactment. 
330.10     Sec. 9.  Minnesota Statutes 2002, section 290C.05, is 
330.11  amended to read: 
330.12     290C.05 [ANNUAL CERTIFICATION.] 
330.13     On or before July 1 of each year, beginning with the year 
330.14  after the claimant has received an approved application, the 
330.15  commissioner shall send each claimant enrolled under the 
330.16  sustainable forest incentive program a certification form.  The 
330.17  claimant must sign the certification, attesting that the 
330.18  requirements and conditions for continued enrollment in the 
330.19  program are currently being met, and must return the signed 
330.20  certification form to the commissioner by August 15 of that same 
330.21  year.  Failure to If the claimant does not return an annual 
330.22  certification form by the due date shall result in removal of 
330.23  the lands from the provisions of the sustainable forest 
330.24  incentive program, and the imposition of any applicable removal 
330.25  penalty, the provisions in section 290C.11 apply.  The claimant 
330.26  may appeal the removal and any associated penalty according to 
330.27  the procedures and within the time allowed under this chapter. 
330.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
330.29  following final enactment. 
330.30     Sec. 10.  [290C.055] [LENGTH OF COVENANT.] 
330.31     The covenant remains in effect for a minimum of eight 
330.32  years.  If land is removed from the program after it has been 
330.33  enrolled for less than four years, the covenant remains in 
330.34  effect for eight years from the date recorded. 
330.35     In the case of land that has been enrolled for more than 
330.36  four years and is removed from the program for any reason, there 
331.1   is a four-year waiting period to end the covenant.  The covenant 
331.2   remains in effect until January 1 of the fifth calendar year 
331.3   that begins after the date that: 
331.4      (1) the commissioner receives notification from the 
331.5   claimant that the claimant wishes to be removed from the program 
331.6   under section 290C.10, or 
331.7      (2) the date that land is removed from the program under 
331.8   section 290C.11. 
331.9      Notwithstanding the other provisions of this section, the 
331.10  covenant is terminated at the same time that land is removed 
331.11  from the program due to acquisition of title or possession for a 
331.12  public purpose under section 290C.10. 
331.13     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
331.14  following final enactment. 
331.15     Sec. 11.  Minnesota Statutes 2002, section 325D.33, 
331.16  subdivision 6, is amended to read: 
331.17     Subd. 6.  [VIOLATIONS.] If the commissioner determines that 
331.18  a distributor is violating any provision of this chapter, the 
331.19  commissioner must give the distributor a written warning 
331.20  explaining the violation and an explanation of what must be done 
331.21  to comply with this chapter.  Within ten days of issuance of the 
331.22  warning, the distributor must notify the commissioner that the 
331.23  distributor has complied with the commissioner's recommendation 
331.24  or request that the commissioner set the issue for a hearing 
331.25  pursuant to chapter 14.  If a hearing is requested, the hearing 
331.26  shall be scheduled within 20 days of the request and the 
331.27  recommendation of the administrative law judge shall be issued 
331.28  within five working days of the close of the hearing.  The 
331.29  commissioner's final determination shall be issued within five 
331.30  working days of the receipt of the administrative law judge's 
331.31  recommendation.  If the commissioner's final determination is 
331.32  adverse to the distributor and the distributor does not comply 
331.33  within ten days of receipt of the commissioner's final 
331.34  determination, the commissioner may order the distributor to 
331.35  immediately cease the stamping of cigarettes.  As soon as 
331.36  practicable after the order, the commissioner must remove the 
332.1   meter and any unapplied cigarette stamps from the premises of 
332.2   the distributor. 
332.3      If within ten days of issuance of the written warning the 
332.4   distributor has not complied with the commissioner's 
332.5   recommendation or requested a hearing, the commissioner may 
332.6   order the distributor to immediately cease the stamping of 
332.7   cigarettes and remove the meter and unapplied stamps from the 
332.8   distributor's premises. 
332.9      If, within any 12-month period, the commissioner has issued 
332.10  three written warnings to any distributor, even if the 
332.11  distributor has complied within ten days, the commissioner shall 
332.12  notify the distributor of the commissioner's intent to revoke 
332.13  the distributor's license for a continuing course of conduct 
332.14  contrary to this chapter.  For purposes of this paragraph, a 
332.15  written warning that was ultimately resolved by removal of the 
332.16  warning by the commissioner is not deemed to be a warning.  The 
332.17  commissioner must notify the distributor of the date and time of 
332.18  a hearing pursuant to chapter 14 at least 20 days before the 
332.19  hearing is held.  The hearing must provide an opportunity for 
332.20  the distributor to show cause why the license should not be 
332.21  revoked.  If the commissioner revokes a distributor's license, 
332.22  the commissioner shall not issue a new license to that 
332.23  distributor for 180 days. 
332.24     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
332.25  following final enactment. 
332.26     Sec. 12.  Minnesota Statutes 2002, section 473.843, 
332.27  subdivision 5, is amended to read: 
332.28     Subd. 5.  [PENALTIES; ENFORCEMENT.] The audit, penalty, and 
332.29  enforcement provisions applicable to corporate franchise taxes 
332.30  imposed under chapter 290 apply to the fees imposed under this 
332.31  section.  The commissioner of revenue shall administer the 
332.32  provisions.  
332.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
332.34  following final enactment. 
332.35     Sec. 13.  [REPEALER.] 
332.36     Minnesota Rules, parts 8093.2000 and 8093.3000, are 
333.1   repealed. 
333.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
333.3   following final enactment.