1.1 	A bill for an act
1.2 	relating to economic development; modifying provisions
1.3 	relating to job opportunity building zones and
1.4 	biotechnology and health sciences industry zone;
1.5 	providing an income or franchise tax credit for
1.6 	investment in a qualified regional angel investment
1.7 	network fund; amending Minnesota Statutes 2004,
1.8 	sections 272.02, subdivision 64; 289A.56, by adding a
1.9 	subdivision; 290.06, by adding a subdivision; 297A.68,
1.10 	subdivisions 37, 38; 469.310, subdivision 11, by
1.11 	adding a subdivision; 469.316; 469.317; 469.319,
1.12 	subdivision 1, by adding a subdivision; 469.320,
1.13 	subdivision 3; 469.330, subdivision 11; 469.337;
1.14 	469.340, subdivision 1; repealing Minnesota Statutes
1.15 	2004, sections 272.02, subdivision 65; 477A.08.
1.16 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.17 	Section 1. Minnesota Statutes 2004, section 272.02,
1.18 	subdivision 64, is amended to read:
1.19 		Subd. 64.Job opportunity building zone property.  (a)
1.20 	Improvements to real property, and personal property, classified
1.21 	under section 273.13, subdivision 24, and located within a job
1.22 	opportunity building zone, designated under section 469.314, are
1.23 	exempt from ad valorem taxes levied under chapter 275.
1.24 	(b) Improvements to real property, and tangible personal
1.25 	property, of an agricultural production facility located within
1.26 	an agricultural processing facility zone, designated under
1.27 	section 469.314, is exempt from ad valorem taxes levied under
1.28 	chapter 275.
1.29 	(c) For property to qualify for exemption under paragraph
1.30 	(a), the occupant must be a qualified business, as defined in
2.1 	section 469.310.
2.2 	(d) The exemption applies beginning for the first
2.3 	assessment year after designation of the job opportunity
2.4 	building zone by the commissioner of employment and economic
2.5 	development.  The exemption applies to each assessment year that
2.6 	begins during the duration of the job opportunity building zone
2.7 	and to property .  To be exempt, the property must be occupied by
2.8 	July 1 of the assessment year by a qualified business that has
2.9 	signed the business subsidy agreement and relocation agreement,
2.10 	if required, by July 1 of the assessment year.  This exemption
2.11 	does not apply to:
2.12 	(1) the levy under section 475.61 or similar levy
2.13 	provisions under any other law to pay general obligation bonds;
2.14 	or
2.15 	(2) a levy under section 126C.17, if the levy was approved
2.16 	by the voters before the designation of the job opportunity
2.17 	building zone.
2.18 	
EFFECTIVE DATE. This section is effective for taxes
2.19 	payable in 2006 and thereafter.

2.20 	Sec. 2. Minnesota Statutes 2004, section 289A.56, is
2.21 	amended by adding a subdivision to read:
2.22 		Subd. 7.Biotechnology and health sciences industry zone
2.23 	refunds. Notwithstanding subdivision 3, for refunds payable
2.24 	under section 297A.68, subdivision 38, interest is computed from
2.25 	90 days after the refund claim is filed with the commissioner.
2.26 	
EFFECTIVE DATE. This section is effective for refund
2.27 	claims filed on or after July 1, 2005.

2.28 	Sec. 3. Minnesota Statutes 2004, section 290.06, is
2.29 	amended by adding a subdivision to read:
2.30 		Subd. 33.Regional investment credit. (a) A credit is
2.31 	allowed against the tax imposed by this chapter for investment
2.32 	in a qualified regional angel investment network fund.  The
2.33 	credit equals 25 percent of the taxpayer's investment made in
2.34 	the fund, but not to exceed the lesser of:
2.35 	(1) the liability for tax under this chapter, including the
2.36 	applicable alternative minimum tax; or 
3.1 	(2) the taxpayer's share of the amount of the certificate
3.2 	issued to the fund by the commissioner of employment and
3.3 	economic development under paragraph (c).
3.4 	The taxpayer must claim the credit in the same tax year in which
3.5 	the investment to the fund is made.  The credit is allowed only
3.6 	for investments made to a fund that are made after the fund has
3.7 	been certified by the commissioner of employment and economic
3.8 	development under paragraph (c).
3.9 	(b) For purposes of this subdivision, a regional angel
3.10 	investment network fund means a pool investment fund that:
3.11 	(1) is organized as a limited liability company and
3.12 	consists of members who are accredited investors within the
3.13 	meaning of Regulation D of the Securities and Exchange
3.14 	Commission, Code of Federal Regulations, title 17, section
3.15 	230.501(a); or consists of members that are not accredited
3.16 	investors that make equity investments or investments in notes
3.17 	that pay interest or other fixed amounts or any combination of
3.18 	both;
3.19 	(2) primarily makes investments in emerging and expanding
3.20 	small business as defined by the Small Business Administration,
3.21 	or cooperative association as defined in chapter 308B, that are
3.22 	located in local communities in Minnesota, outside of the
3.23 	metropolitan area, as defined in section 473.121, subdivision 2,
3.24 	and does not make investments in residential real estate;
3.25 	(3) has no fewer than five separate investors and no
3.26 	investor owns more than 25 percent of the outstanding ownership
3.27 	interests in the fund.  For purposes of determining the number
3.28 	of investors and the ownership interest of an investor under
3.29 	this clause, the ownership interests of an investor include
3.30 	those of:
3.31 	(i) the investor's spouse, a child, and sibling; and 
3.32 	(ii) a corporation, partnership, or trust in which the
3.33 	investor has a controlling equity interest or in which the
3.34 	investor exercises management control.
3.35 	(c) Regional angel investment network funds may apply to
3.36 	the commissioner of employment and economic development for
4.1 	certification as a qualifying regional angel investment network
4.2 	fund.  The application must be in the form and made under
4.3 	procedures specified by the commissioner of employment and
4.4 	economic development.  The commissioner of employment and
4.5 	economic development may certify up to 20 qualifying funds and
4.6 	provide certificates entitling investors in the funds to credits
4.7 	under this subdivision of up to $500,000 for each fund.  The
4.8 	commissioner of employment and economic development must not
4.9 	issue a total amount of certificates for all funds of more than
4.10 	$10,000,000.  In awarding certificates under this paragraph, the
4.11 	commissioner of employment and economic development shall
4.12 	generally award them to qualified applicants in the order in
4.13 	which the applications are received, but shall also seek to
4.14 	certify funds that are broadly dispersed across the entire state
4.15 	outside of the metropolitan area, as defined in section 473.121,
4.16 	subdivision 2.
4.17 	(d) Each fund must provide each investor a statement
4.18 	indicating the investor's share of the credit amount certified
4.19 	to the fund under paragraph (c) based on the order in which
4.20 	their investment is made to the fund.
4.21 	(e) If the amount of the credit under this subdivision for
4.22 	any taxable year exceeds the limitation under paragraph (a),
4.23 	clause (1), the excess is a credit carryover to each of the ten
4.24 	succeeding taxable years.  The entire amount of the excess
4.25 	unused credit for the taxable year must be carried first to the
4.26 	earliest of the taxable years to which the credit may be
4.27 	carried, and then to each successive year to which the credit
4.28 	may be carried.  The amount of the unused credit which may be
4.29 	added under this paragraph may not exceed the taxpayer's
4.30 	liability for tax less the credit for the taxable year.
4.31 	(f) In awarding certificates under this paragraph, the
4.32 	commissioner of employment and economic development shall award
4.33 	three certificates to a pooled investment fund that invests in
4.34 	qualifying small businesses located in the region of the state
4.35 	that is the focus of the fund and allocates at least 20 percent
4.36 	of its investments to qualified small businesses that meet local
5.1 	community needs.  To be a qualifying small business, a business
5.2 	must satisfy the following requirements:
5.3 	(1) 51 percent of the ownership interests in the business,
5.4 	excluding any equity interest of the fund, must be held by
5.5 	residents of the region; and 
5.6 	(2) the business must pay wages and benefits, measured on a
5.7 	full-time equivalent basis, to 75 percent or more of its
5.8 	employees equal to 175 percent of the federal poverty level for
5.9 	a family of four.  The required award of certificates under this
5.10 	paragraph cannot exceed the number of applicants qualifying
5.11 	under this paragraph.
5.12 	
EFFECTIVE DATE. This section is effective the day
5.13 	following final enactment.

5.14 	Sec. 4. Minnesota Statutes 2004, section 297A.68,
5.15 	subdivision 37, is amended to read:
5.16 		Subd. 37.Job opportunity building zones.  (a) Purchases
5.17 	of tangible personal property or taxable services by a qualified
5.18 	business, as defined in section 469.310, are exempt if the
5.19 	property or services are primarily used or consumed in a job
5.20 	opportunity building zone designated under section 469.314.
5.21 	(b) For purposes of this subdivision, aircraft that are
5.22 	operated under a Federal Aviation Administration Restricted
5.23 	Airworthiness Certificate according to Code of Federal
5.24 	Regulations, title 14, part 21, section 21.25(b)(3), relating to
5.25 	aerial surveying, and that are based, maintained, and dispatched
5.26 	from a job opportunity building zone, and any aerial camera
5.27 	package, including any camera, computer, and navigation device
5.28 	contained in the package, that is used in the aircraft, qualify
5.29 	as primarily used or consumed in a job opportunity building zone
5.30 	if the imagery acquired from the aerial camera package is
5.31 	returned to the job opportunity building zone for processing.
5.32 	(c) Purchase and use of construction materials and ,
5.33 	supplies for , or equipment used or consumed in the construction
5.34 	of improvements to real property in a job opportunity building
5.35 	zone are exempt if the improvements after completion of
5.36 	construction are to be used in the conduct of a qualified
6.1 	business, as defined in section 469.310.  This exemption applies
6.2 	regardless of whether the purchases are made by the business or
6.3 	a contractor.
6.4 	(c) (d) The exemptions under this subdivision apply to a
6.5 	local sales and use tax regardless of whether the local sales
6.6 	tax is imposed on the sales taxable as defined under this
6.7 	chapter.
6.8 	(d) (e) This subdivision applies to sales, if the purchase
6.9 	was made and delivery received during the duration of the zone.
6.10 	(f) The lease of a motor vehicle by a qualified business,
6.11 	as defined in section 469.310, is exempt if the motor vehicle is
6.12 	principally garaged in the job opportunity building zone and is
6.13 	primarily used as part of or in direct support of the business's
6.14 	operations carried on in the job opportunity building zone.
6.15 	
EFFECTIVE DATE. This section is effective for leases
6.16 	entered into or sales made after December 31, 2003.

6.17 	Sec. 5. Minnesota Statutes 2004, section 297A.68,
6.18 	subdivision 38, is amended to read:
6.19 		Subd. 38.Biotechnology and health sciences industry
6.20 	zone.  (a) Purchases of tangible personal property or taxable
6.21 	services by a qualified business, as defined in section 469.330,
6.22 	are exempt if the property or services are primarily used or
6.23 	consumed in a biotechnology and health sciences industry zone
6.24 	designated under section 469.334.
6.25 	(b) Purchase and use of construction materials and ,
6.26 	supplies for , or equipment used or consumed in the construction
6.27 	of improvements to real property in a biotechnology and health
6.28 	sciences industry zone are exempt if the improvements after
6.29 	completion of construction are to be used in the conduct of a
6.30 	qualified business, as defined in section 469.330.  This
6.31 	exemption applies regardless of whether the purchases are made
6.32 	by the business or a contractor.
6.33 	(c) The exemptions under this subdivision apply to a local
6.34 	sales and use tax regardless of whether the local sales tax is
6.35 	imposed on the sales taxable as defined under this chapter.
6.36 	(d)(1) The tax on sales of goods or services exempted under
7.1 	this subdivision are imposed and collected as if the applicable
7.2 	rate under section 297A.62 applied.  Upon application by the
7.3 	purchaser, on forms prescribed by the commissioner, a refund
7.4 	equal to the tax paid must be paid to the purchaser.  The
7.5 	application must include sufficient information to permit the
7.6 	commissioner to verify the sales tax paid and the eligibility of
7.7 	the claimant to receive the credit.  No more than two
7.8 	applications for refunds may be filed under this subdivision in
7.9 	a calendar year.  The provisions of section 289A.40 apply to the
7.10 	refunds payable under this subdivision.
7.11 	(2) The amount required to make the refunds is annually
7.12 	appropriated to the commissioner of revenue.
7.13 	(3) The aggregate amount refunded to a qualified business
7.14 	must not exceed the amount allocated to the qualified business
7.15 	under section 469.335.
7.16 	(e) This subdivision applies only to sales made during the
7.17 	duration of the designation of the zone.
7.18 	
EFFECTIVE DATE. This section is effective for sales made
7.19 	after December 31, 2003.

7.20 	Sec. 6. Minnesota Statutes 2004, section 469.310,
7.21 	subdivision 11, is amended to read:
7.22 		Subd. 11.Qualified business.  (a) "Qualified business"
7.23 	means A person carrying on a trade or business at a place of
7.24 	business located within a job opportunity building zone is a
7.25 	qualified business for the purposes of sections 469.310 to
7.26 	469.320 according to the criteria in paragraphs (b) to (f).
7.27 	(b) A person is a qualified business only on those parcels
7.28 	of land for which the person has entered into a business subsidy
7.29 	agreement, as required under section 469.313, with the
7.30 	appropriate local government unit in which the parcels are
7.31 	located.
7.32 	(c) Prior to execution of the business subsidy agreement,
7.33 	the local government unit must consider the following factors:
7.34 	(1) how wages plus benefits compare to 110 percent of the
7.35 	statewide poverty rate for a family of four;
7.36 	(2) how wages compare to the regional industry average;
8.1 	(3) the number of jobs that will be provided relative to
8.2 	overall employment in the community;
8.3 	(4) the economic outlook for the industry the business will
8.4 	engage in;
8.5 	(5) sales that will be generated from outside the state of
8.6 	Minnesota;
8.7 	(6) how the business will build on existing regional
8.8 	strengths or diversify the regional economy;
8.9 	(7) how the business will increase capital investment in
8.10 	the zone; and 
8.11 	(8) any other criteria the commissioner deems necessary.
8.12 	(b) (d) A person that relocates a trade or business from
8.13 	outside a job opportunity building zone into a zone is not a
8.14 	qualified business,unless the business meets all of the
8.15 	requirements of paragraphs (b) and (c) and:
8.16 	(1) (i) increases full-time employment in the first full
8.17 	year of operation within the job opportunity building zone by at
8.18 	least a minimum of five jobs or 20 percent, whichever is
8.19 	greater,measured relative to the operations that were relocated
8.20 	and maintains the required level of employment for each year the
8.21 	zone designation applies; or 
8.22 	(ii) makes a capital investment in the property located
8.23 	within a zone equivalent to ten percent of the gross revenues of
8.24 	operation that were relocated in the immediately preceding
8.25 	taxable year;and
8.26 	(2) enters a binding written agreement with the
8.27 	commissioner that:
8.28 	(i) pledges the business will meet the requirements of
8.29 	clause (1);
8.30 	(ii) provides for repayment of all tax benefits enumerated
8.31 	under section 469.315 to the business under the procedures in
8.32 	section 469.319, if the requirements of clause (1) are not met
8.33 	for the taxable year or for taxes payable during the year in
8.34 	which the requirements were not met; and
8.35 	(iii) contains any other terms the commissioner determines
8.36 	appropriate.
9.1 	(e) The commissioner may waive the requirements under
9.2 	paragraph (d), clause (1), if the commissioner determines that
9.3 	the qualified business will substantially achieve the factors
9.4 	under this subdivision.
9.5 	(f) A business is not a qualified business if, at its
9.6 	location or locations in the zone, the business is primarily
9.7 	engaged in making retail sales to purchasers who are physically
9.8 	present at the business's zone location.
9.9 	
EFFECTIVE DATE. This section is effective the day
9.10 	following final enactment and applies to any business entering a
9.11 	business subsidy agreement for a job opportunity development
9.12 	zone after that date, except that paragraph (b) is effective
9.13 	retroactively from June 9, 2003.

9.14 	Sec. 7. Minnesota Statutes 2004, section 469.310, is
9.15 	amended by adding a subdivision to read:
9.16 		Subd. 13.Relocation payroll percentage. "Relocation
9.17 	payroll percentage" is a fraction, the numerator of which is the
9.18 	zone payroll of the business for the tax year minus the payroll
9.19 	from the relocated operations in the last full year of
9.20 	operations prior to the relocation, and the denominator of which
9.21 	is the zone payroll of the business for the tax year.  The
9.22 	relocation payroll percentage of a business that is not a
9.23 	relocating business is 100 percent.
9.24 	
EFFECTIVE DATE. This section is effective the day
9.25 	following final enactment but applies only to qualified
9.26 	businesses with business subsidy agreements that are fully
9.27 	executed after June 30, 2005.

9.28 	Sec. 8. Minnesota Statutes 2004, section 469.316, is
9.29 	amended to read:
9.30 	469.316 INDIVIDUAL INCOME TAX EXEMPTION.
9.31 		Subdivision 1.Application. An individual, estate, or
9.32 	trust operating a trade or business in a job opportunity
9.33 	building zone, and an individual, estate, or trust making a
9.34 	qualifying investment in a qualified business operating in a job
9.35 	opportunity building zone qualifies for the exemptions from
9.36 	taxes imposed under chapter 290, as provided in this section.
10.1 	The exemptions provided under this section apply only to the
10.2 	extent that the income otherwise would be taxable under chapter
10.3 	290.  Subtractions under this section from federal taxable
10.4 	income, alternative minimum taxable income, or any other base
10.5 	subject to tax are limited to the amount that otherwise would be
10.6 	included in the tax base absent the exemption under this
10.7 	section.  This section applies only to taxable years beginning
10.8 	during the duration of the job opportunity building zone.
10.9 		Subd. 2.Rents. An individual, estate, or trust is
10.10 	exempt from the taxes imposed under chapter 290 on net rents
10.11 	derived from real or tangible personal property used by a
10.12 	qualified business and located in a zone for a taxable year in
10.13 	which the zone was designated a job opportunity building zone.
10.14 	If tangible personal property was used both within and outside
10.15 	of the zone by the qualified business, the exemption amount for
10.16 	the net rental income must be multiplied by a fraction, the
10.17 	numerator of which is the number of days the property was used
10.18 	in the zone and the denominator of which is the total days the
10.19 	property is rented by the qualified business.
10.20 		Subd. 3.Business income. An individual, estate, or
10.21 	trust is exempt from the taxes imposed under chapter 290 on net
10.22 	income from the operation of a qualified business in a job
10.23 	opportunity building zone.  If the trade or business is carried
10.24 	on within and without the zone and the individual is not a
10.25 	resident of Minnesota, or the taxpayer is an estate or trust,
10.26 	the exemption must be apportioned based on the zone percentage
10.27 	and the relocation payroll percentage for the taxable year.  If
10.28 	the trade or business is carried on within and without the zone
10.29 	and the individual is a resident of Minnesota, the exemption
10.30 	must be apportioned based on the zone percentage and the
10.31 	relocation payroll percentage for the taxable year, except the
10.32 	ratios under section 469.310, subdivision 7, clause (1), items
10.33 	(i) and (ii), must use the denominators of the property and
10.34 	payroll factors determined under section 290.191.  No
10.35 	subtraction is allowed under this section in excess of 20
10.36 	percent of the sum of the job opportunity building zone payroll
11.1 	and the adjusted basis of the property at the time that the
11.2 	property is first used in the job opportunity building zone by
11.3 	the business.
11.4 		Subd. 4.Capital gains. (a) An individual, estate, or
11.5 	trust is exempt from the taxes imposed under chapter 290 on:
11.6 	(1) net gain derived on a sale or exchange of real property
11.7 	located in the zone and used by a qualified business.  If the
11.8 	property was held by the individual, estate, or trust during a
11.9 	period when the zone was not designated, the gain must be
11.10 	prorated based on the percentage of time, measured in calendar
11.11 	days, that the real property was held by the individual, estate,
11.12 	or trust during the period the zone designation was in effect to
11.13 	the total period of time the real property was held by the
11.14 	individual;
11.15 	(2) net gain derived on a sale or exchange of tangible
11.16 	personal property used by a qualified business in the zone.  If
11.17 	the property was held by the individual, estate, or trust during
11.18 	a period when the zone was not designated, the gain must be
11.19 	prorated based on the percentage of time, measured in calendar
11.20 	days, that the property was held by the individual, estate, or
11.21 	trust during the period the zone designation was in effect to
11.22 	the total period of time the property was held by the
11.23 	individual.  If the tangible personal property was used outside
11.24 	of the zone during the period of the zone's designation, the
11.25 	exemption must be multiplied by a fraction, the numerator of
11.26 	which is the number of days the property was used in the zone
11.27 	during the time of the designation and the denominator of which
11.28 	is the total days the property was held during the time of the
11.29 	designation; and
11.30 	(3) net gain derived on a sale of an ownership interest in
11.31 	a qualified business operating in the job opportunity building
11.32 	zone, meeting the requirements of paragraph (b).  The exemption
11.33 	on the gain must be multiplied by the zone percentage of the
11.34 	business for the taxable year prior to the sale.
11.35 	(b) A qualified business meets the requirements of
11.36 	paragraph (a), clause (3), if it is a corporation, an S
12.1 	corporation, or a partnership, and for the taxable year its job
12.2 	opportunity building zone percentage exceeds 25 percent.  For
12.3 	purposes of paragraph (a), clause (3), the zone percentage must
12.4 	be calculated by modifying the ratios under section 469.310,
12.5 	subdivision 7, clause (1), items (i) and (ii), to use the
12.6 	denominators of the property and payroll factors determined
12.7 	under section 290.191.  Upon the request of an individual,
12.8 	estate, or trust holding an ownership interest in the entity,
12.9 	the entity must certify to the owner, in writing, the job
12.10 	opportunity building zone percentage needed to determine the
12.11 	exemption.
12.12 	
EFFECTIVE DATE. This section is effective for tax years
12.13 	beginning after December 31, 2003, except that changes in
12.14 	subdivision 3 relating to the relocation payroll percentage are
12.15 	effective the day following final enactment and apply only to
12.16 	qualified businesses with business subsidy agreements that are
12.17 	fully executed after June 30, 2005.

12.18 	Sec. 9. Minnesota Statutes 2004, section 469.317, is
12.19 	amended to read:
12.20 	469.317 CORPORATE FRANCHISE TAX EXEMPTION.
12.21 	(a) A qualified business is exempt from taxation under
12.22 	section 290.02, the alternative minimum tax under section
12.23 	290.0921, and the minimum fee under section 290.0922, on the
12.24 	portion of its income attributable to operations within the
12.25 	zone.  This exemption is determined as follows:
12.26 	(1) for purposes of the tax imposed under section 290.02,
12.27 	by multiplying its taxable net income by its zone percentage and
12.28 	by its relocation payroll percentage and subtracting the result
12.29 	in determining taxable income;
12.30 	(2) for purposes of the alternative minimum tax under
12.31 	section 290.0921, by multiplying its alternative minimum taxable
12.32 	income by its zone percentage and by its relocation payroll
12.33 	percentage and reducing alternative minimum taxable income by
12.34 	this amount; and
12.35 	(3) for purposes of the minimum fee under section 290.0922,
12.36 	by excluding property and payroll in the zone from the
13.1 	computations of the fee or by exempting the entity under section
13.2 	290.0922, subdivision 2, clause (7).
13.3 	(b) No subtraction is allowed under this section in excess
13.4 	of 20 percent of the sum of the corporation's job opportunity
13.5 	building zone payroll and the adjusted basis of the property at
13.6 	the time that the property is first used in the job opportunity
13.7 	building zone by the corporation.
13.8 	(c) This section applies only to taxable years beginning
13.9 	during the duration of the job opportunity building zone.

13.10 	EFFECTIVE DATE. This section is effective the day
13.11 	following final enactment but applies only to qualified
13.12 	businesses with business subsidy agreements that are fully
13.13 	executed after June 30, 2005.

13.14 	Sec. 10. Minnesota Statutes 2004, section 469.319,
13.15 	subdivision 1, is amended to read:
13.16 		Subdivision 1.Repayment obligation.  A business must
13.17 	repay the amount of the total tax reduction listed in section
13.18 	469.315 and any refund under section 469.318 in excess of tax
13.19 	liability, received during the two years immediately before it
13.20 	ceased to operate in the zone, if the business:
13.21 	(1) received tax reductions authorized by section 469.315;
13.22 	and
13.23 	(2)(i) did not meet the goals specified in an agreement
13.24 	entered into with the applicant that states any obligation the
13.25 	qualified business must fulfill in order to be eligible for tax
13.26 	benefits.  The commissioner of employment and economic
13.27 	development may extend for up to one year the period for meeting
13.28 	any goals provided in an agreement.  The applicant may extend
13.29 	the period for meeting other goals by documenting in writing the
13.30 	reason for the extension and attaching a copy of the document to
13.31 	its next annual report to the commissioner of employment and
13.32 	economic development; or
13.33 	(ii) ceased to operate its facility located within the job
13.34 	opportunity building zone or otherwise ceases to be or is not a
13.35 	qualified business.
13.36 	
EFFECTIVE DATE. This section is effective the day
14.1 	following final enactment.

14.2 	Sec. 11. Minnesota Statutes 2004, section 469.319, is
14.3 	amended by adding a subdivision to read:
14.4 		Subd. 6.Reconciliation. Where this section is
14.5 	inconsistent with section 116J.994, subdivision 3, paragraph
14.6 	(e), or 6, or any other provisions of sections 116J.993 to
14.7 	116J.995, this section prevails.
14.8 	
EFFECTIVE DATE. This section is effective the day
14.9 	following final enactment.

14.10 	Sec. 12. Minnesota Statutes 2004, section 469.320,
14.11 	subdivision 3, is amended to read:
14.12 		Subd. 3.Remedies.  If the commissioner determines, based
14.13 	on a report filed under subdivision 1 or other available
14.14 	information, that a zone or subzone is failing to meet its
14.15 	performance goals, the commissioner may take any actions the
14.16 	commissioner determines appropriate, including modification of
14.17 	the boundaries of the zone or a subzone or termination of the
14.18 	zone or a subzone.  Before taking any action, the commissioner
14.19 	shall consult with the applicant and the affected local
14.20 	government units, including notifying them of the proposed
14.21 	actions to be taken. The commissioner shall publish any order
14.22 	modifying a zone in the State Register and on the Internet.The
14.23 	applicant may appeal the commissioner's order under the
14.24 	contested case procedures of chapter 14.
14.25 	
EFFECTIVE DATE. This section is effective the day
14.26 	following final enactment.

14.27 	Sec. 13. Minnesota Statutes 2004, section 469.330,
14.28 	subdivision 11, is amended to read:
14.29 		Subd. 11.Qualified business.  (a) "Qualified business"
14.30 	means a person carrying on a trade or business at a
14.31 	biotechnology and health sciences industry facility located
14.32 	within a biotechnology and health sciences industry zone. A
14.33 	person is a qualified business only on those parcels of land for
14.34 	which it has entered into a business subsidy agreement, as
14.35 	required under section 469.333, with the appropriate local
14.36 	government unit in which the parcels are located.
15.1 	(b) A person that relocates a biotechnology and health
15.2 	sciences industry facility from outside a biotechnology and
15.3 	health sciences industry zone into a zone is not a qualified
15.4 	business, unless the business:
15.5 	(1)(i) increases full-time employment in the first full
15.6 	year of operation within the biotechnology and health sciences
15.7 	industry zone by at least 20 percent measured relative to the
15.8 	operations that were relocated and maintains the required level
15.9 	of employment for each year the zone designation applies; or
15.10 	(ii) makes a capital investment in the property located
15.11 	within a zone equivalent to ten percent of the gross revenues of
15.12 	operation that were relocated in the immediately preceding
15.13 	taxable year; and
15.14 	(2) enters a binding written agreement with the
15.15 	commissioner that:
15.16 	(i) pledges the business will meet the requirements of
15.17 	clause (1);
15.18 	(ii) provides for repayment of all tax benefits enumerated
15.19 	under section 469.336 to the business under the procedures in
15.20 	section 469.340, if the requirements of clause (1) are not met;
15.21 	and
15.22 	(iii) contains any other terms the commissioner determines
15.23 	appropriate.
15.24 	
EFFECTIVE DATE. This section is effective retroactively
15.25 	from June 9, 2003.

15.26 	Sec. 14. Minnesota Statutes 2004, section 469.337, is
15.27 	amended to read:
15.28 	469.337 CORPORATE FRANCHISE TAX EXEMPTION.
15.29 	(a) A qualified business is exempt from taxation under
15.30 	section 290.02, the alternative minimum tax under section
15.31 	290.0921, and the minimum fee under section 290.0922, on the
15.32 	portion of its income attributable to operations of a qualified
15.33 	business within the biotechnology and health sciences industry
15.34 	zone.  This exemption is determined as follows:
15.35 	(1) for purposes of the tax imposed under section 290.02,
15.36 	by multiplying its taxable net income by its zone percentage and
16.1 	subtracting the result in determining taxable income;
16.2 	(2) for purposes of the alternative minimum tax under
16.3 	section 290.0921, by multiplying its alternative minimum taxable
16.4 	income by its zone percentage and reducing alternative minimum
16.5 	taxable income by this amount; and
16.6 	(3) for purposes of the minimum fee under section 290.0922,
16.7 	by excluding zone property and payroll in the zone from the
16.8 	computations of the fee. The qualified business is exempt from
16.9 	the minimum fee if all of its property is located in the zone
16.10 	and all of its payroll is zone payroll.
16.11 	(b) No subtraction is allowed under this section in excess
16.12 	of 20 percent of the sum of the corporation's biotechnology and
16.13 	health sciences industry zone payroll and the adjusted basis of
16.14 	the property at the time that the property is first used in the
16.15 	biotechnology and health sciences industry zone by the
16.16 	corporation.
16.17 	(c) No reduction in tax is allowed in excess of the amount
16.18 	allocated under section 469.335.

16.19 	EFFECTIVE DATE. This section is effective for tax years
16.20 	beginning after December 31, 2003.

16.21 	Sec. 15. Minnesota Statutes 2004, section 469.340,
16.22 	subdivision 1, is amended to read:
16.23 		Subdivision 1.Repayment obligation.  A business must
16.24 	repay the amount of the tax reduction listed in section 469.336
16.25 	and any refunds under sections 469.338 and 469.339 in excess of
16.26 	tax liability, received during the two years immediately before
16.27 	it ceased to operate in the zone, if the business:
16.28 	(1) received tax reductions authorized by section 469.336;
16.29 	and
16.30 	(2)(i) did not meet the goals specified in an agreement
16.31 	entered into with the applicant that states any obligation the
16.32 	qualified business must fulfill in order to be eligible for tax
16.33 	benefits.  The commissioner of employment and economic
16.34 	development may extend for up to one year the period for meeting
16.35 	any goals provided in an agreement.  The applicant may extend
16.36 	the period for meeting other goals by documenting in writing the
17.1 	reason for the extension and attaching a copy of the document to
17.2 	its next annual report to the commissioner of employment and
17.3 	economic development; or
17.4 	(ii) ceased to operate its facility located within the
17.5 	biotechnology and health sciences industry zone or otherwise
17.6 	ceases to be or is not a qualified business.
17.7 	
EFFECTIVE DATE. This section is effective the day
17.8 	following final enactment.

17.9 	Sec. 16. REVISOR'S INSTRUCTION.
 17.10 	The revisor shall renumber Minnesota Statutes, section
17.11 	469.310, subdivision 11, as section 469.3135, and insert the
17.12 	following definition of "qualified business" in Minnesota
17.13 	Statutes, section 469.310:  "'Qualified business' means the
17.14 	entity described in section 469.3135." 

17.15 	Sec. 17. REPEALER.
 17.16 	Minnesota Statutes 2004, sections 272.02, subdivision 65;
17.17 	and 477A.08, are repealed.

17.18 	EFFECTIVE DATE. The repeal of section 272.02, subdivision
17.19 	65, is effective for taxes payable in 2006 and thereafter.  The
17.20 	repeal of section 477A.08 is effective for aid payable in 2005
17.21 	and thereafter.