HF 2288

Introduction - 84th Legislature (2005 - 2006)

Posted on 12/15/2009 12:00 a.m.

A bill for an act
relating to taxation; property; disallowing certain
property to continue to receive property tax deferment
benefits in the agricultural property tax program
located in nonmetropolitan counties; authorizing
cities to establish programs for reclassification of
vacant commercial and industrial properties created in
nonmetropolitan counties; amending Minnesota Statutes
2004, sections 273.111, subdivisions 3, 9, 11, by
adding a subdivision; 273.13, subdivision 31;
proposing coding for new law in Minnesota Statutes,
chapter 273.

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

Section 1.

Minnesota Statutes 2004, section 273.111,
subdivision 3, is amended to read:

Subd. 3.

Requirements.

(a) Real estate consisting of ten
acres or more or a nursery or greenhouse, and qualifying for
classification as class 1b, 2a, or 2b under section 273.13,
subdivision 23, paragraph (d), shall be entitled to valuation
and tax deferment under this section only if it is primarily
devoted to agricultural use, and meets the qualifications in
subdivision 6, new text begin and is not disqualified under subdivision 6a, new text end and
either:

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

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

(3) is the homestead of a shareholder in a family farm
corporation as defined in section 500.24, notwithstanding the
fact that legal title to the real estate may be held in the name
of the family farm corporation; or

(4) is in the possession of a nursery or greenhouse or an
entity owned by a proprietor, partnership, or corporation which
also owns the nursery or greenhouse operations on the parcel or
parcels.

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

(1) family farm corporations organized pursuant to section
500.24; and

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

Corporate entities who previously qualified for tax
deferment pursuant to this section and who continue to otherwise
qualify under subdivisions 3 deleted text begin and deleted text end new text begin , new text end 6 new text begin , and 6a new text end for a period of at
least three years following the effective date of Laws 1983,
chapter 222, section 8, will not be required to make payment of
the previously deferred taxes, notwithstanding the provisions of
subdivision 9. Special assessments are payable at the end of
the three-year period or at time of sale, whichever comes first.

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2004, section 273.111, is
amended by adding a subdivision to read:

new text begin Subd. 6a. new text end

new text begin Certain urban property; nonmetropolitan
counties. new text end

new text begin Notwithstanding subdivisions 3 and 6, property
located outside the metropolitan area, as defined under section
473.121, subdivision 2, does not qualify for tax deferment under
this section if:
new text end

new text begin (1) the property has on each side (i) platted property some
of which is improved with structures, or (ii) a street or
highway segment that abuts other platted property, some of which
is improved with structures; and
new text end

new text begin (2) the property is generally served by infrastructure,
including streets, curb, gutter, public sewer, and water.
new text end

new text begin This exclusion does not apply to property that contains an
intensive agricultural use including, but not limited to,
orchards, horticulture and nursery stock, fruit, vegetables, and
apiary.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2004, section 273.111,
subdivision 9, is amended to read:

Subd. 9.

Additional taxes.

new text begin (a) new text end When real property which
is being, or has been valued and assessed under this section no
longer qualifies under subdivisions 3 deleted text begin and deleted text end new text begin , new text end 6 new text begin , and 6a new text end , the
portion no longer qualifying shall be subject to additional
taxes, in the amount equal to the difference between the taxes
determined in accordance with subdivision 4, and the amount
determined under subdivision 5, provided, however, that the
amount determined under subdivision 5 shall not be greater than
it would have been had the actual bona fide sale price of the
real property at an arm's-length transaction been used in lieu
of the market value determined under subdivision 5.

new text begin (b) new text end deleted text begin Such deleted text end new text begin For property no longer qualifying under
subdivisions 3 and 6, the new text end additional taxes new text begin as determined under
paragraph (a) new text end shall be extended against the property on the tax
list for the current year, provided, however, that no interest
or penalties shall be levied on deleted text begin such deleted text end new text begin the new text end additional taxes if
timely paid, and provided further, that deleted text begin such deleted text end new text begin the new text end additional
taxes shall only be levied with respect to the last three years
that the said property has been valued and assessed under this
section.

new text begin (c) For property no longer qualifying under subdivision 6a,
the additional taxes as determined under paragraph (a) shall be
extended against the property on the tax lists only for the
current year, provided, however, that no interest or penalties
shall be levied on the additional taxes if timely paid.
new text end

new text begin (d) For purposes of this section, "timely paid" means paid
within 30 days after notification from the county that the
property no longer qualifies, or paid prior to the recording of
the conveyance of the property, whichever is earlier.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2004, section 273.111,
subdivision 11, is amended to read:

Subd. 11.

Special local assessments.

The payment of
special local assessments levied after June 1, 1967, for
improvements made to any real property described in subdivision
3 together with the interest thereon shall, on timely
application as provided in subdivision 8, be deferred as long as
such property meets the conditions contained in subdivisions
3 deleted text begin and deleted text end new text begin , new text end 6 new text begin , and 6a new text end or is transferred to an agricultural preserve
under sections 473H.02 to 473H.17. If special assessments
against the property have been deferred pursuant to this
subdivision, the governmental unit shall file with the county
recorder in the county in which the property is located a
certificate containing the legal description of the affected
property and of the amount deferred. When such property no
longer qualifies under subdivisions 3 deleted text begin and deleted text end new text begin , new text end 6 new text begin , and 6a new text end , all
deferred special assessments plus interest shall be payable in
equal installments spread over the time remaining until the last
maturity date of the bonds issued to finance the improvement for
which the assessments were levied. If the bonds have matured,
the deferred special assessments plus interest shall be payable
within 90 days. The provisions of section 429.061, subdivision
2, apply to the collection of these installments. Penalty shall
not be levied on any such special assessments if timely paid.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2004, section 273.13,
subdivision 31, is amended to read:

Subd. 31.

Class 5.

Class 5 property includes:

(1) unmined iron ore and low-grade iron-bearing formations
as defined in section 273.14; deleted text begin and
deleted text end

(2) new text begin properties classified under a program established under
section 273.1321; and
new text end

new text begin (3) new text end all other property not otherwise classified.

Class 5 property has a class rate of 2.0 percent of market
value.

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

new text begin [273.1321] VACANT COMMERCIAL INDUSTRIAL
PROPERTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Authority. new text end

new text begin A city may establish, by
ordinance, a program for the reclassification of class 3
properties under section 273.13, subdivision 24, as class 5
properties under section 273.13, subdivision 31, to encourage
redevelopment, better utilization of property, and elimination
of blighting influences. The program may provide for
reclassification of a property only if:
new text end

new text begin (1) the property has been vacant, as defined in subdivision
3, clause (1), (2), or (3), for three or more consecutive years
prior to the current assessment year;
new text end

new text begin (2) the property has been vacant as defined under
subdivision 3, clause (4), for five or more consecutive years
prior to the current assessment year; or
new text end

new text begin (3) the property has exhibited more than 66 percent
depreciation for the current assessment year. Depreciation can
be caused by either physical deterioration or by obsolescence.
For purposes of this section, obsolescence is defined as the
impairment in the desirability and usefulness caused by new
inventions, changes in design, improved processes for
production, or external factors that make a property less
desirable and valuable for a continued use. Obsolescence may be
either functional or external.
new text end

new text begin Subd. 2. new text end

new text begin Minimum program requirements. new text end

new text begin The program must
provide:
new text end

new text begin (1) standards for determining whether a property is vacant;
new text end

new text begin (2) written assessment notice by the city or county to the
property owner informing the owner that the property will be
reclassified;
new text end

new text begin (3) opportunity for the property owner to appeal the
reclassification at the board of equalization;
new text end

new text begin (4) timely notice to the county assessor of the
reclassification of the property, if the city has a city
assessor and the city assessor has reclassified the property;
and
new text end

new text begin (5) any other provisions the city determines are necessary
or appropriate to the operation of the program to achieve its
purposes.
new text end

new text begin Subd. 3. new text end

new text begin Definition of vacant. new text end

new text begin A program established
under this section may provide that a property is vacant if the
property is:
new text end

new text begin (1) condemned, dangerous, or having multiple building code
violations;
new text end

new text begin (2) condemned and illegally occupied;
new text end

new text begin (3) either occupied or unoccupied, during which time the
enforcement officer for the municipality has issued multiple
orders to correct nuisance conditions; or
new text end

new text begin (4) unoccupied and not utilized for a commercial or
industrial purpose.
new text end

new text begin Subd. 4. new text end

new text begin Notice to property owner. new text end

new text begin The municipality
shall give notice to the property owner requiring: (1) the
property to be occupied, the conditions in subdivision 3,
clauses (1) to (3), be remedied, and the property must be used
for a commercial or industrial purpose for at least 180 days
during the next 12-month period; or (2) the property may be
reclassified as class 5 property.
new text end

new text begin Subd. 5. new text end

new text begin Application outside of metropolitan area. new text end

new text begin This
section applies only to cities located outside of the
metropolitan area, as defined in section 473.121, subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

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