1.1 	A bill for an act
1.2 	relating to public finance; authorizing purchases of
1.3 	certain guaranteed investment contracts; authorizing a
1.4 	special levy; modifying a taconite fund provision;
1.5 	modifying the authority of cities and counties to
1.6 	finance purchases of computers and related items;
1.7 	extending the term of certain notes; clarifying the
1.8 	financing of conservation easements; extending sunsets
1.9 	on establishment of special service districts and
1.10 	housing improvement areas; authorizing municipalities
1.11 	to improve streets and roads outside municipal
1.12 	boundaries; providing for financing of certain
1.13 	improvements; extending the maximum maturity of
1.14 	certain bonds; revising time for certain notices of
1.15 	issues; exempting obligations issued to pay judgments
1.16 	from net debt limits; modifying limits on city capital
1.17 	improvement bonds and enabling certain towns to issue
1.18 	bonds under a capital improvement plan; authorizing
1.19 	the issuance of certain revenue bonds; modifying
1.20 	certain tax increment financing provisions; providing
1.21 	a bidding exception; increasing reserve from public
1.22 	facilities pool for certain purposes; providing for
1.23 	payment of certain refunding bonds; abolishing the
1.24 	housing bond credit enhancement program and providing
1.25 	for debt service on the bonds; authorizing a tax
1.26 	abatement extension; providing for an international
1.27 	economic development zone; providing tax incentives;
1.28 	requiring a report; appropriating money for certain
1.29 	refunds; amending Minnesota Statutes 2004, sections
1.30 	13.55, by adding a subdivision; 116J.556; 118A.05,
1.31 	subdivision 5; 272.02, subdivision 64, by adding a
1.32 	subdivision; 275.70, subdivision 5; 290.01,
1.33 	subdivisions 19b, 29; 290.06, subdivision 2c, by
1.34 	adding a subdivision; 290.067, subdivision 1;
1.35 	290.0671, subdivision 1; 290.091, subdivision 2;
1.36 	290.0921, subdivision 3; 290.0922, subdivisions 2, 3;
1.37 	297A.68, by adding a subdivision; 298.223, subdivision
1.38 	1; 343.11; 373.01, subdivision 3; 373.40, subdivision
1.39 	1; 410.32; 412.301; 428A.101; 428A.21; 469.015,
1.40 	subdivision 4; 469.034, subdivision 2; 469.158;
1.41 	469.174, subdivisions 11, 25; 469.175, subdivisions 1,
1.42 	4a, 5, 6; 469.176, subdivisions 2, 4d; 469.1761,
1.43 	subdivisions 1, 3; 469.1763, subdivision 6; 469.177,
1.44 	subdivision 1; 469.1771, subdivision 5; 469.178,
1.45 	subdivision 1; 469.1813, subdivisions 1, 6; 473.197,
1.46 	subdivision 4; 473.39, subdivision 1f, by adding
2.1 	subdivisions; 474A.061, subdivision 2c; 474A.131,
2.2 	subdivision 1; 475.51, subdivision 4; 475.52,
2.3 	subdivisions 1, 3, 4; 475.521, subdivisions 1, 2, 3,
2.4 	4; Laws 1996, chapter 412, article 5, section 24; Laws
2.5 	2003, chapter 127, article 12, section 38; proposing
2.6 	coding for new law in Minnesota Statutes, chapters
2.7 	428A; 429; 452; 469; repealing Minnesota Statutes
2.8 	2004, sections 469.176, subdivision 1a; 469.1766;
2.9 	473.197, subdivisions 1, 2, 3, 5; Laws 1998, chapter
2.10 	389, article 11, section 19, subdivision 3.
2.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.12 	ARTICLE 1
2.13 	PUBLIC FINANCE

2.14 	Section 1. Minnesota Statutes 2004, section 13.55, is
2.15 	amended by adding a subdivision to read:
2.16 		Subd. 4.City of st. paul data. (a) For purposes of this
2.17 	subdivision, "nonprofit organization" means the nonprofit
2.18 	organization with which the city of St. Paul contracts to market
2.19 	and promote the city as a tourist or convention center.
2.20 	(b) Data collected, received, created, or maintained by the
2.21 	nonprofit organization in the course of preparing or submitting
2.22 	any responses to requests for proposals or requests for bids
2.23 	relating to events hosted, conducted, or sponsored by the
2.24 	nonprofit organization is classified as nonpublic data under
2.25 	section 13.02, subdivision 9; or private data under section
2.26 	13.02, subdivision 12, until the time provided in subdivision 2,
2.27 	paragraph (a) or (b), of this section.  The nonprofit
2.28 	organization is a "civic center authority" for purposes of this
2.29 	section.

2.30 	Sec. 2. Minnesota Statutes 2004, section 118A.05,
2.31 	subdivision 5, is amended to read:
2.32 		Subd. 5.Guaranteed investment contracts.  Agreements or
2.33 	contracts for guaranteed investment contracts may be entered
2.34 	into if they are issued or guaranteed by United States
2.35 	commercial banks, domestic branches of foreign banks, United
2.36 	States insurance companies, or their Canadian subsidiaries, or
2.37 	the domestic affiliates of any of the foregoing.  The credit
2.38 	quality of the issuer's or guarantor's short- and long-term
2.39 	unsecured debt must be rated in one of the two highest
2.40 	categories by a nationally recognized rating agency.  Should the
3.1 	issuer's or guarantor's credit quality be downgraded below "A",
3.2 	the government entity must have withdrawal rights.

3.3 	Sec. 3. Minnesota Statutes 2004, section 275.70,
3.4 	subdivision 5, is amended to read:
3.5 		Subd. 5.Special levies.  "Special levies" means those
3.6 	portions of ad valorem taxes levied by a local governmental unit
3.7 	for the following purposes or in the following manner:
3.8 	(1) to pay the costs of the principal and interest on
3.9 	bonded indebtedness or to reimburse for the amount of liquor
3.10 	store revenues used to pay the principal and interest due on
3.11 	municipal liquor store bonds in the year preceding the year for
3.12 	which the levy limit is calculated;
3.13 	(2) to pay the costs of principal and interest on
3.14 	certificates of indebtedness issued for any corporate purpose
3.15 	except for the following:
3.16 	(i) tax anticipation or aid anticipation certificates of
3.17 	indebtedness;
3.18 	(ii) certificates of indebtedness issued under sections
3.19 	298.28 and 298.282;
3.20 	(iii) certificates of indebtedness used to fund current
3.21 	expenses or to pay the costs of extraordinary expenditures that
3.22 	result from a public emergency; or
3.23 	(iv) certificates of indebtedness used to fund an
3.24 	insufficiency in tax receipts or an insufficiency in other
3.25 	revenue sources;
3.26 	(3) to provide for the bonded indebtedness portion of
3.27 	payments made to another political subdivision of the state of
3.28 	Minnesota;
3.29 	(4) to fund payments made to the Minnesota State Armory
3.30 	Building Commission under section 193.145, subdivision 2, to
3.31 	retire the principal and interest on armory construction bonds;
3.32 	(5) property taxes approved by voters which are levied
3.33 	against the referendum market value as provided under section
3.34 	275.61;
3.35 	(6) to fund matching requirements needed to qualify for
3.36 	federal or state grants or programs to the extent that either
4.1 	(i) the matching requirement exceeds the matching requirement in
4.2 	calendar year 2001, or (ii) it is a new matching requirement
4.3 	that did not exist prior to 2002;
4.4 	(7) to pay the expenses reasonably and necessarily incurred
4.5 	in preparing for or repairing the effects of natural disaster
4.6 	including the occurrence or threat of widespread or severe
4.7 	damage, injury, or loss of life or property resulting from
4.8 	natural causes, in accordance with standards formulated by the
4.9 	Emergency Services Division of the state Department of Public
4.10 	Safety, as allowed by the commissioner of revenue under section
4.11 	275.74, subdivision 2;
4.12 	(8) pay amounts required to correct an error in the levy
4.13 	certified to the county auditor by a city or county in a levy
4.14 	year, but only to the extent that when added to the preceding
4.15 	year's levy it is not in excess of an applicable statutory,
4.16 	special law or charter limitation, or the limitation imposed on
4.17 	the governmental subdivision by sections 275.70 to 275.74 in the
4.18 	preceding levy year;
4.19 	(9) to pay an abatement under section 469.1815;
4.20 	(10) to pay any costs attributable to increases in the
4.21 	employer contribution rates under chapter 353 that are effective
4.22 	after June 30, 2001;
4.23 	(11) to pay the operating or maintenance costs of a county
4.24 	jail as authorized in section 641.01 or 641.262, or of a
4.25 	correctional facility as defined in section 241.021, subdivision
4.26 	1, paragraph (f), to the extent that the county can demonstrate
4.27 	to the commissioner of revenue that the amount has been included
4.28 	in the county budget as a direct result of a rule, minimum
4.29 	requirement, minimum standard, or directive of the Department of
4.30 	Corrections, or to pay the operating or maintenance costs of a
4.31 	regional jail as authorized in section 641.262.  For purposes of
4.32 	this clause, a district court order is not a rule, minimum
4.33 	requirement, minimum standard, or directive of the Department of
4.34 	Corrections.  If the county utilizes this special levy, except
4.35 	to pay operating or maintenance costs of a new regional jail
4.36 	facility under sections 641.262 to 641.264 which will not
5.1 	replace an existing jail facility, any amount levied by the
5.2 	county in the previous levy year for the purposes specified
5.3 	under this clause and included in the county's previous year's
5.4 	levy limitation computed under section 275.71, shall be deducted
5.5 	from the levy limit base under section 275.71, subdivision 2,
5.6 	when determining the county's current year levy limitation.  The
5.7 	county shall provide the necessary information to the
5.8 	commissioner of revenue for making this determination;
5.9 	(12) to pay for operation of a lake improvement district,
5.10 	as authorized under section 103B.555.  If the county utilizes
5.11 	this special levy, any amount levied by the county in the
5.12 	previous levy year for the purposes specified under this clause
5.13 	and included in the county's previous year's levy limitation
5.14 	computed under section 275.71 shall be deducted from the levy
5.15 	limit base under section 275.71, subdivision 2, when determining
5.16 	the county's current year levy limitation.  The county shall
5.17 	provide the necessary information to the commissioner of revenue
5.18 	for making this determination;
5.19 	(13) to repay a state or federal loan used to fund the
5.20 	direct or indirect required spending by the local government due
5.21 	to a state or federal transportation project or other state or
5.22 	federal capital project.  This authority may only be used if the
5.23 	project is not a local government initiative;
5.24 	(14) to pay for court administration costs as required
5.25 	under section 273.1398, subdivision 4b, less the (i) county's
5.26 	share of transferred fines and fees collected by the district
5.27 	courts in the county for calendar year 2001 and (ii) the aid
5.28 	amount certified to be paid to the county in 2004 under section
5.29 	273.1398, subdivision 4c; however, for taxes levied to pay for
5.30 	these costs in the year in which the court financing is
5.31 	transferred to the state, the amount under this clause is
5.32 	limited to the amount of aid the county is certified to receive
5.33 	under section 273.1398, subdivision 4a; and 
5.34 	(15) to fund a police or firefighters relief association as
5.35 	required under section 69.77 to the extent that the required
5.36 	amount exceeds the amount levied for this purpose in 2001; and 
6.1 	(16) for purposes of a storm sewer improvement district,
6.2 	pursuant to section 444.20.

6.3 	Sec. 4. Minnesota Statutes 2004, section 298.223,
6.4 	subdivision 1, is amended to read:
6.5 		Subdivision 1.Creation; purposes.  A fund called the
6.6 	taconite environmental protection fund is created for the
6.7 	purpose of reclaiming, restoring and enhancing those areas of
6.8 	northeast Minnesota located within the taconite assistance area
6.9 	defined in section 273.1341, that are adversely affected by the
6.10 	environmentally damaging operations involved in mining taconite
6.11 	and iron ore and producing iron ore concentrate and for the
6.12 	purpose of promoting the economic development of northeast
6.13 	Minnesota.  The taconite environmental protection fund shall be
6.14 	used for the following purposes:
6.15 	(a) to initiate investigations into matters the Iron Range
6.16 	Resources and Rehabilitation Board determines are in need of
6.17 	study and which will determine the environmental problems
6.18 	requiring remedial action;
6.19 	(b) reclamation, restoration, or reforestation of minelands
6.20 	not otherwise provided for by state law;
6.21 	(c) local economic development projects including
6.22 	construction of sewer and water systems, and other but only if
6.23 	those projects are approved by the board, and public works,
6.24 	including construction of sewer and water systems located within
6.25 	the taconite assistance area defined in section 273.1341;
6.26 	(d) monitoring of mineral industry related health problems
6.27 	among mining employees.
6.28 	
EFFECTIVE DATE. This section is effective the day
6.29 	following final enactment.

6.30 	Sec. 5. Minnesota Statutes 2004, section 343.11, is
6.31 	amended to read:
6.32 	343.11 ACQUISITION OF PROPERTY, APPROPRIATIONS.
6.33 	Every county and district society for the prevention of
6.34 	cruelty to animals may acquire, by purchase, gift, grant, or
6.35 	devise, and hold, use, or convey, real estate and personal
6.36 	property, and lease, mortgage, sell, or use the same in any
7.1 	manner conducive to its interest, to the same extent as natural
7.2 	persons.  The county board of any county, or the council of any
7.3 	city, in which such societies exist, may, in its discretion,
7.4 	appropriate for the maintenance and support of such societies in
7.5 	the transaction of the work for which they are organized, any
7.6 	sums of money not otherwise appropriated, not to exceed in any
7.7 	one year the sum of $4,800 or the sum of 50 cents $1 per capita
7.8 	based upon the county's or city's population as of the most
7.9 	recent federal census, whichever is greater; provided, that no
7.10 	part of the appropriation shall be expended for the payment of
7.11 	the salary of any officer of the society.

7.12 	EFFECTIVE DATE. This section is effective January 1, 2006.

7.13 	Sec. 6. Minnesota Statutes 2004, section 373.01,
7.14 	subdivision 3, is amended to read:
7.15 		Subd. 3.Capital notes. (a) A county board may, by
7.16 	resolution and without referendum, issue capital notes subject
7.17 	to the county debt limit to purchase capital equipment useful
7.18 	for county purposes that has an expected useful life at least
7.19 	equal to the term of the notes.  The notes shall be payable in
7.20 	not more than five ten years and shall be issued on terms and in
7.21 	a manner the board determines.  A tax levy shall be made for
7.22 	payment of the principal and interest on the notes, in
7.23 	accordance with section 475.61, as in the case of bonds.
7.24 	(b) For purposes of this subdivision, "capital equipment"
7.25 	means:
7.26 	(1) public safety, ambulance, road construction or
7.27 	maintenance, and medical equipment,;and
7.28 	(2) computer hardware and original operating system 
7.29 	software, whether bundled with machinery or equipment or
7.30 	unbundled.  The authority to issue capital notes for original
7.31 	operating systems software expires on July 1, 2005 2007.

7.32 	Sec. 7. Minnesota Statutes 2004, section 373.40,
7.33 	subdivision 1, is amended to read:
7.34 		Subdivision 1.Definitions.  For purposes of this
7.35 	section, the following terms have the meanings given.
7.36 	(a) "Bonds" means an obligation as defined under section
8.1 	475.51.
8.2 	(b) "Capital improvement" means acquisition or betterment
8.3 	of public lands, development rights in the form of conservation
8.4 	easements under chapter 84C,buildings, or other improvements
8.5 	within the county for the purpose of a county courthouse,
8.6 	administrative building, health or social service facility,
8.7 	correctional facility, jail, law enforcement center, hospital,
8.8 	morgue, library, park, qualified indoor ice arena, and roads and
8.9 	bridges, and the acquisition of development rights in the form
8.10 	of conservation easements under chapter 84C.  An improvement
8.11 	must have an expected useful life of five years or more to
8.12 	qualify.  "Capital improvement" does not include light rail
8.13 	transit or any activity related to it or a recreation or sports
8.14 	facility building (such as, but not limited to, a gymnasium, ice
8.15 	arena, racquet sports facility, swimming pool, exercise room or
8.16 	health spa), unless the building is part of an outdoor park
8.17 	facility and is incidental to the primary purpose of outdoor
8.18 	recreation.
8.19 	(c) "Commissioner" means the commissioner of employment and
8.20 	economic development.
8.21 	(d) "Metropolitan county" means a county located in the
8.22 	seven-county metropolitan area as defined in section 473.121 or
8.23 	a county with a population of 90,000 or more.
8.24 	(e) "Population" means the population established by the
8.25 	most recent of the following (determined as of the date the
8.26 	resolution authorizing the bonds was adopted):
8.27 	(1) the federal decennial census,
8.28 	(2) a special census conducted under contract by the United
8.29 	States Bureau of the Census, or
8.30 	(3) a population estimate made either by the Metropolitan
8.31 	Council or by the state demographer under section 4A.02.
8.32 	(f) "Qualified indoor ice arena" means a facility that
8.33 	meets the requirements of section 373.43.
8.34 	(g) "Tax capacity" means total taxable market value, but
8.35 	does not include captured market value.

8.36 	Sec. 8. Minnesota Statutes 2004, section 410.32, is
9.1 	amended to read:
9.2 	410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL
9.3 	EQUIPMENT.
9.4 	(a) Notwithstanding any contrary provision of other law or
9.5 	charter, a home rule charter city may, by resolution and without
9.6 	public referendum, issue capital notes subject to the city debt
9.7 	limit to purchase capital equipment.
9.8 	(b) For purposes of this section, "capital equipment" means:
9.9 	(1) public safety equipment, ambulance and other medical
9.10 	equipment, road construction and maintenance equipment, and
9.11 	other capital equipment;and
9.12 	(2) computer hardware and original operating system 
9.13 	software, provided whether bundled with machinery or equipment
9.14 	or unbundled.
9.15 	(c) The equipment or software has must have an expected
9.16 	useful life at least as long as the term of the notes.  The
9.17 	authority to issue capital notes for original operating system 
9.18 	software expires on July 1, 2005 2007.
9.19 	(d) The notes shall be payable in not more than five ten 
9.20 	years and be issued on terms and in the manner the city
9.21 	determines.  The total principal amount of the capital notes
9.22 	issued in a fiscal year shall not exceed 0.03 percent of the
9.23 	market value of taxable property in the city for that year.
9.24 	(e) A tax levy shall be made for the payment of the
9.25 	principal and interest on the notes, in accordance with section
9.26 	475.61, as in the case of bonds.
9.27 	(f) Notes issued under this section shall require an
9.28 	affirmative vote of two-thirds of the governing body of the city.
9.29 	(g) Notwithstanding a contrary provision of other law or
9.30 	charter, a home rule charter city may also issue capital notes
9.31 	subject to its debt limit in the manner and subject to the
9.32 	limitations applicable to statutory cities pursuant to section
9.33 	412.301.

9.34 	Sec. 9. Minnesota Statutes 2004, section 412.301, is
9.35 	amended to read:
9.36 	412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.
10.1 	(a) The council may issue certificates of indebtedness or
10.2 	capital notes subject to the city debt limits to
10.3 	purchase capital equipment.
10.4 	(b) For purposes of this section, "capital equipment" means:
10.5 	(1) public safety equipment, ambulance and other medical 
10.6 	equipment, road construction or and maintenance equipment, and
10.7 	other capital equipment;and
10.8 	(2) computer hardware and original operating system 
10.9 	software, provided whether bundled with machinery or equipment
10.10 	or unbundled.
10.11 	(c) The equipment or software has must have an expected
10.12 	useful life at least as long as the terms of the certificates or
10.13 	notes.  The authority to issue capital notes for original
10.14 	operating system software expires on July 1, 2005 2007.
10.15 	(d) Such certificates or notes shall be payable in not more
10.16 	than five ten years and shall be issued on such terms and in
10.17 	such manner as the council may determine.
10.18 	(e) If the amount of the certificates or notes to be issued
10.19 	to finance any such purchase exceeds 0.25 percent of the market
10.20 	value of taxable property in the city, they shall not be issued
10.21 	for at least ten days after publication in the official
10.22 	newspaper of a council resolution determining to issue them; and
10.23 	if before the end of that time, a petition asking for an
10.24 	election on the proposition signed by voters equal to ten
10.25 	percent of the number of voters at the last regular municipal
10.26 	election is filed with the clerk, such certificates or notes
10.27 	shall not be issued until the proposition of their issuance has
10.28 	been approved by a majority of the votes cast on the question at
10.29 	a regular or special election.
10.30 	(f) A tax levy shall be made for the payment of the
10.31 	principal and interest on such certificates or notes, in
10.32 	accordance with section 475.61, as in the case of bonds.

10.33 	Sec. 10. Minnesota Statutes 2004, section 428A.101, is
10.34 	amended to read:
10.35 	428A.101 DEADLINE FOR SPECIAL SERVICE DISTRICT UNDER
10.36 	GENERAL LAW.
11.1 	The establishment of a new special service district after
11.2 	June 30, 2005 2009, requires enactment of a special law
11.3 	authorizing the establishment.

11.4 	Sec. 11. [428A.102] NOTIFICATION.
11.5 	By the last day of the calendar year in which a special
11.6 	service district is established or modified, the city shall file
11.7 	a copy of the ordinance establishing or modifying the district
11.8 	with the Office of State Auditor.  Cities establishing districts
11.9 	before the effective date of this section must file a copy of
11.10 	the ordinance by December 31, 2005.

11.11 	Sec. 12. Minnesota Statutes 2004, section 428A.21, is
11.12 	amended to read:
11.13 	428A.21 SUNSET.
11.14 	No new housing improvement areas may be established under
11.15 	sections 428A.11 to 428A.20 after June 30, 2005 2009.  After
11.16 	June 30, 2005 2009, a city may establish a housing improvement
11.17 	area, provided that it receives enabling legislation authorizing
11.18 	the establishment of the area.

11.19 	Sec. 13. [428A.22] NOTIFICATION.
11.20 	By the last day of the calendar year in which a housing
11.21 	improvement district is established or modified, the city shall
11.22 	file a copy of the ordinance establishing or modifying the
11.23 	district with the Office of State Auditor.  Cities establishing
11.24 	districts before the effective date of this section must file a
11.25 	copy of the ordinance by December 31, 2005.

11.26 	Sec. 14. [429.052] STREET OR ROAD IMPROVEMENTS OUTSIDE
11.27 	MUNICIPAL BOUNDARIES.
11.28 	A municipality may construct street or road improvements
11.29 	outside its jurisdiction with the consent of the affected
11.30 	township, or if the property is located in unorganized
11.31 	territory, the county.  When property is brought within the
11.32 	corporate limits of the municipality, the municipality may
11.33 	subsequently reimburse itself for all or any portion of the cost
11.34 	of the improvement for which municipal funds have been expended,
11.35 	by levying an assessment upon any property abutting on, but not
11.36 	previously assessed for, the improvement.  No assessment may be
12.1 	so levied unless the property to be assessed was given notice
12.2 	and hearing of the improvements under section 429.031 at the
12.3 	time the improvement was ordered, and subsequently in accordance
12.4 	with the notice, hearing, and appeal rights, provided for under
12.5 	sections 429.061 and 429.081.

12.6 	EFFECTIVE DATE. This section is effective for street and
12.7 	road improvements first ordered after August 1, 2005.

12.8 	Sec. 15. [452.26] UTILITY JOINT VENTURE.
12.9 	To provide reduced cost financing or to otherwise help in
12.10 	carrying out its functions, a municipal gas agency created under
12.11 	chapter 453A and any municipal utility authorized to provide gas
12.12 	facilities or services may enter into a joint venture that was
12.13 	incorporated before June 30, 2004, under section 452.25.  The
12.14 	joint venture, and any municipal gas agency which is a member of
12.15 	the joint venture, may provide gas utility service.

12.16 	EFFECTIVE DATE. This section is effective the day
12.17 	following final enactment.

12.18 	Sec. 16. Minnesota Statutes 2004, section 469.015,
12.19 	subdivision 4, is amended to read:
12.20 		Subd. 4.Exceptions.  (a) An authority need not require
12.21 	competitive bidding in the following circumstances:
12.22 	(1) in the case of a contract for the acquisition of a
12.23 	low-rent housing project:
12.24 	(i) for which financial assistance is provided by the
12.25 	federal government;
12.26 	(ii) which does not require any direct loan or grant of
12.27 	money from the municipality as a condition of the federal
12.28 	financial assistance; and
12.29 	(iii) for which the contract provides for the construction
12.30 	of the project upon land that is either owned by the authority
12.31 	for redevelopment purposes or not owned by the authority at the
12.32 	time of the contract but the contract provides for the
12.33 	conveyance or lease to the authority of the project or
12.34 	improvements upon completion of construction;
12.35 	(2) with respect to a structured parking facility:
12.36 	(i) constructed in conjunction with, and directly above or
13.1 	below, a development; and
13.2 	(ii) financed with the proceeds of tax increment or parking
13.3 	ramp general obligation or revenue bonds; and 
13.4 	(3) until August 1, 2009, with respect to a facility built
13.5 	for the purpose of facilitating the operation of public transit
13.6 	or encouraging its use:
13.7 	(i) constructed in conjunction with, and directly above or
13.8 	below, a development; and 
13.9 	(ii) financed with the proceeds of parking ramp general
13.10 	obligation or revenue bonds or with at least 60 percent of the
13.11 	construction cost being financed with funding provided by the
13.12 	federal government; and 
13.13 	(4) in the case of any building in which at least 75
13.14 	percent of the usable square footage constitutes a housing
13.15 	development project if:
13.16 	(i) the project is financed with the proceeds of bonds
13.17 	issued under section 469.034 or from nongovernmental sources;
13.18 	(ii) the project is either located on land that is owned or
13.19 	is being acquired by the authority only for development
13.20 	purposes, or is not owned by the authority at the time the
13.21 	contract is entered into but the contract provides for
13.22 	conveyance or lease to the authority of the project or
13.23 	improvements upon completion of construction; and
13.24 	(iii) the authority finds and determines that elimination
13.25 	of the public bidding requirements is necessary in order for the
13.26 	housing development project to be economical and feasible.
13.27 	(b) An authority need not require a performance bond for
13.28 	the following projects:
13.29 	(1) a contract described in paragraph (a), clause (1);
13.30 	(2) a construction change order for a housing project in
13.31 	which 30 percent of the construction has been completed;
13.32 	(3) a construction contract for a single-family housing
13.33 	project in which the authority acts as the general construction
13.34 	contractor; or
13.35 	(4) a services or materials contract for a housing project.
13.36 	For purposes of this paragraph, "services or materials
14.1 	contract" does not include construction contracts.

14.2 	Sec. 17. Minnesota Statutes 2004, section 469.034,
14.3 	subdivision 2, is amended to read:
14.4 		Subd. 2.General obligation revenue bonds.  (a) An
14.5 	authority may pledge the general obligation of the general
14.6 	jurisdiction governmental unit as additional security for bonds
14.7 	payable from income or revenues of the project or the
14.8 	authority.  The authority must find that the pledged revenues
14.9 	will equal or exceed 110 percent of the principal and interest
14.10 	due on the bonds for each year.  The proceeds of the bonds must
14.11 	be used for a qualified housing development project or
14.12 	projects.  The obligations must be issued and sold in the manner
14.13 	and following the procedures provided by chapter 475, except the
14.14 	obligations are not subject to approval by the electors,and the
14.15 	maturities may extend to not more than 30 35 years from the
14.16 	estimated date of completion of the project for obligations sold
14.17 	to finance housing for the elderly and 40 years for other
14.18 	obligations issued under this subdivision.  The authority is the
14.19 	municipality for purposes of chapter 475.
14.20 	(b) The principal amount of the issue must be approved by
14.21 	the governing body of the general jurisdiction governmental unit
14.22 	whose general obligation is pledged.  Public hearings must be
14.23 	held on issuance of the obligations by both the authority and
14.24 	the general jurisdiction governmental unit.  The hearings must
14.25 	be held at least 15 days, but not more than 120 days, before the
14.26 	sale of the obligations.
14.27 	(c) The maximum amount of general obligation bonds that may
14.28 	be issued and outstanding under this section equals the greater
14.29 	of (1) one-half of one percent of the taxable market value of
14.30 	the general jurisdiction governmental unit whose general
14.31 	obligation which includes a tax on property is pledged, or (2)
14.32 	$3,000,000.  In the case of county or multicounty general
14.33 	obligation bonds, the outstanding general obligation bonds of
14.34 	all cities in the county or counties issued under this
14.35 	subdivision must be added in calculating the limit under clause
14.36 	(1).
15.1 	(d) "General jurisdiction governmental unit" means the city
15.2 	in which the housing development project is located.  In the
15.3 	case of a county or multicounty authority, the county or
15.4 	counties may act as the general jurisdiction governmental unit.
15.5 	In the case of a multicounty authority, the pledge of the
15.6 	general obligation is a pledge of a tax on the taxable property
15.7 	in each of the counties.
15.8 	(e) "Qualified housing development project" means a housing
15.9 	development project providing housing either for the elderly or
15.10 	for individuals and families with incomes not greater than 80
15.11 	percent of the median family income as estimated by the United
15.12 	States Department of Housing and Urban Development for the
15.13 	standard metropolitan statistical area or the nonmetropolitan
15.14 	county in which the project is located, and will .  The project
15.15 	must be owned for the term of the bonds either by the
15.16 	authority for the term of the bonds.or by a limited partnership
15.17 	or other entity in which the authority or another entity under
15.18 	the sole control of the authority is the sole general partner
15.19 	and the partnership or other entity must receive (1) an
15.20 	allocation from the Department of Finance or an entitlement
15.21 	issuer of tax-exempt bonding authority for the project and a
15.22 	preliminary determination by the Minnesota Housing Finance
15.23 	Agency or the applicable suballocator of tax credits that the
15.24 	project will qualify for four percent low-income housing tax
15.25 	credits or (2) a reservation of nine percent low-income housing
15.26 	tax credits from the Minnesota Housing Finance Agency or a
15.27 	suballocator of tax credits for the project.A qualified
15.28 	housing development project may admit nonelderly individuals and
15.29 	families with higher incomes if:
15.30 	(1) three years have passed since initial occupancy;
15.31 	(2) the authority finds the project is experiencing
15.32 	unanticipated vacancies resulting in insufficient revenues,
15.33 	because of changes in population or other unforeseen
15.34 	circumstances that occurred after the initial finding of
15.35 	adequate revenues; and
15.36 	(3) the authority finds a tax levy or payment from general
16.1 	assets of the general jurisdiction governmental unit will be
16.2 	necessary to pay debt service on the bonds if higher income
16.3 	individuals or families are not admitted.

16.4 	Sec. 18. Minnesota Statutes 2004, section 469.158, is
16.5 	amended to read:
16.6 	469.158 MANNER OF ISSUANCE OF BONDS; INTEREST RATE.
16.7 	Bonds authorized under sections 469.152 to 469.165 must be
16.8 	issued in accordance with the provisions of chapter 475 relating
16.9 	to bonds payable from income of revenue producing conveniences,
16.10 	except that public sale is not required, the provisions of
16.11 	sections 475.62 and 475.63 do not apply, and the bonds may
16.12 	mature at the time or times, in the amount or amounts, within 30 
16.13 	40 years from date of issue, and may be sold at a price equal to
16.14 	the percentage of the par value thereof, plus accrued interest,
16.15 	and bearing interest at the rate or rates agreed by the
16.16 	contracting party, the purchaser, and the municipality or
16.17 	redevelopment agency, notwithstanding any limitation of interest
16.18 	rate or cost or of the amounts of annual maturities contained in
16.19 	any other law.  Bonds issued to refund bonds previously issued
16.20 	pursuant to sections 469.152 to 469.165 may be issued in amounts
16.21 	determined by the municipality or redevelopment agency
16.22 	notwithstanding the provisions of section 475.67, subdivision 3.

16.23 	Sec. 19. Minnesota Statutes 2004, section 469.1813,
16.24 	subdivision 1, is amended to read:
16.25 		Subdivision 1.Authority.  The governing body of a
16.26 	political subdivision may grant an abatement of the taxes
16.27 	imposed by the political subdivision on a parcel of property, or
16.28 	defer the payments of the taxes and abate the interest and
16.29 	penalty that otherwise would apply, if:
16.30 	(a) it expects the benefits to the political subdivision of
16.31 	the proposed abatement agreement to at least equal the costs to
16.32 	the political subdivision of the proposed agreement or intends
16.33 	the abatement to phase in a property tax increase, as provided
16.34 	in clause (b)(7); and
16.35 	(b) it finds that doing so is in the public interest
16.36 	because it will:
17.1 	(1) increase or preserve tax base;
17.2 	(2) provide employment opportunities in the political
17.3 	subdivision;
17.4 	(3) provide or help acquire or construct public facilities;
17.5 	(4) help redevelop or renew blighted areas;
17.6 	(5) help provide access to services for residents of the
17.7 	political subdivision;
17.8 	(6) finance or provide public infrastructure; or 
17.9 	(7) phase in a property tax increase on the parcel
17.10 	resulting from an increase of 50 percent or more in one year on
17.11 	the estimated market value of the parcel, other than increase
17.12 	attributable to improvement of the parcel; or 
17.13 	(8) finance historic or heritage preservation.

17.14 	Sec. 20. Minnesota Statutes 2004, section 469.1813,
17.15 	subdivision 6, is amended to read:
17.16 		Subd. 6.Duration limit.  (a) A political subdivision may
17.17 	grant an abatement for a period no longer than ten 15 years,
17.18 	except as provided under paragraph (b).  The subdivision may
17.19 	specify in the abatement resolution a shorter duration.  If the
17.20 	resolution does not specify a period of time, the abatement is
17.21 	for eight years.  If an abatement has been granted to a parcel
17.22 	of property and the period of the abatement has expired, the
17.23 	political subdivision that granted the abatement may not grant
17.24 	another abatement for eight years after the expiration of the
17.25 	first abatement.  This prohibition does not apply to
17.26 	improvements added after and not subject to the first abatement.
17.27 	(b) A political subdivision proposing to abate taxes for a
17.28 	parcel may request, in writing, that the other political
17.29 	subdivisions in which the parcel is located grant an abatement
17.30 	for the property.  If one of the other political subdivisions
17.31 	declines, in writing, to grant an abatement or if 90 days pass
17.32 	after receipt of the request to grant an abatement without a
17.33 	written response from one of the political subdivisions, the
17.34 	duration limit for an abatement for the parcel by the requesting
17.35 	political subdivision and any other participating political
17.36 	subdivision is increased to 15 20 years.  If the political
18.1 	subdivision which declined to grant an abatement later grants an
18.2 	abatement for the parcel, the 15-year 20-year duration limit is
18.3 	reduced by one year for each year that the declining political
18.4 	subdivision grants an abatement for the parcel during the period
18.5 	of the abatement granted by the requesting political
18.6 	subdivision.  The duration limit may not be reduced below the
18.7 	limit under paragraph (a).

18.8 	Sec. 21. Minnesota Statutes 2004, section 473.197,
18.9 	subdivision 4, is amended to read:
18.10 		Subd. 4.Debt reserve; levy.  To provide money to pay
18.11 	debt service on bonds issued under the credit enhancement
18.12 	program if pledged revenues are insufficient to pay debt service 
18.13 	in repealed subdivision 1 of Minnesota Statutes 2004, section
18.14 	473.197, the council must maintain a debt reserve fund in the
18.15 	manner and with the effect provided by section 118A.04 for
18.16 	public funds until such a reserve is no longer pledged or
18.17 	otherwise needed to pay debt service on such bonds. To provide
18.18 	funds for the debt reserve fund, the council may use up to
18.19 	$3,000,000 of the proceeds of solid waste bonds issued by the
18.20 	council under section 473.831 before its repeal.  To provide
18.21 	additional funds for the debt reserve fund, the council may levy
18.22 	a tax on all taxable property in the metropolitan area and must
18.23 	levy the tax If sums in the debt reserve fund are insufficient
18.24 	to cure any deficiency in the debt service fund established for
18.25 	the bonds, the council must levy a tax on all taxable property
18.26 	in the metropolitan area in the amount needed to cure the
18.27 	deficiency.  The tax authorized by this section does not affect
18.28 	the amount or rate of taxes that may be levied by the council
18.29 	for other purposes and is not subject to limit as to rate or
18.30 	amount.

18.31 	Sec. 22. Minnesota Statutes 2004, section 473.39,
18.32 	subdivision 1f, is amended to read:
18.33 		Subd. 1f.Prohibition of certain obligations.  The
18.34 	council may not issue obligations for construction of light rail
18.35 	transit in outside of the Hiawatha corridor.

18.36 	Sec. 23. Minnesota Statutes 2004, section 473.39, is
19.1 	amended by adding a subdivision to read:
19.2 		Subd. 1k.Obligations. After July 1, 2005, in addition
19.3 	to the authority in subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i,
19.4 	and 1j, the council may issue certificates of indebtedness,
19.5 	bonds, or other obligations under this section in an amount not
19.6 	exceeding $64,000,000 for capital expenditures as prescribed in
19.7 	the council's regional transit master plan and transit capital
19.8 	improvement program and for related costs, including the costs
19.9 	of issuance and sale of the obligations.

19.10 	Sec. 24. Minnesota Statutes 2004, section 473.39, is
19.11 	amended by adding a subdivision to read:
19.12 		Subd. 2a.Uses of investment income. Interest or other
19.13 	investment earnings on the proceeds of bonds issued under this
19.14 	section and on a debt service account for bonds issued under
19.15 	this section must be used only to:
19.16 	(1) pay capital expenditures and related expenses for which
19.17 	the obligations were authorized by this section; or 
19.18 	(2) to pay debt service on the obligations or to reduce the
19.19 	council's property tax levy imposed to pay debt service on
19.20 	obligations issued under this section.
19.21 	
EFFECTIVE DATE. This section is effective for investment
19.22 	earnings received after June 30, 2005.

19.23 	Sec. 25. Minnesota Statutes 2004, section 474A.061,
19.24 	subdivision 2c, is amended to read:
19.25 		Subd. 2c.Public facilities pool allocation.  From the
19.26 	beginning of the calendar year and continuing for a period of
19.27 	120 days, the commissioner shall reserve $3,000,000 $5,000,000 
19.28 	of the available bonding authority from the public facilities
19.29 	pool for applications for public facilities projects to be
19.30 	financed by the Western Lake Superior Sanitary District.
19.31 	Commencing on the second Tuesday in January and continuing on
19.32 	each Monday through the last Monday in July, the commissioner
19.33 	shall allocate available bonding authority from the public
19.34 	facilities pool to applications for eligible public facilities
19.35 	projects received on or before the Monday of the preceding
19.36 	week.  If there are two or more applications for public
20.1 	facilities projects from the pool and there is insufficient
20.2 	available bonding authority to provide allocations for all
20.3 	projects in any one week, the available bonding authority shall
20.4 	be awarded by lot unless otherwise agreed to by the respective
20.5 	issuers.

20.6 	Sec. 26. Minnesota Statutes 2004, section 474A.131,
20.7 	subdivision 1, is amended to read:
20.8 		Subdivision 1.Notice of issue.  Each issuer that issues
20.9 	bonds with an allocation received under this chapter shall
20.10 	provide a notice of issue to the department on forms provided by
20.11 	the department stating:
20.12 	(1) the date of issuance of the bonds;
20.13 	(2) the title of the issue;
20.14 	(3) the principal amount of the bonds;
20.15 	(4) the type of qualified bonds under federal tax law;
20.16 	(5) the dollar amount of the bonds issued that were subject
20.17 	to the annual volume cap; and
20.18 	(6) for entitlement issuers, whether the allocation is from
20.19 	current year entitlement authority or is from carryforward
20.20 	authority.
20.21 	For obligations that are issued as a part of a series of
20.22 	obligations, a notice must be provided for each series.  A
20.23 	penalty of one-half of the amount of the application deposit not
20.24 	to exceed $5,000 shall apply to any issue of obligations for
20.25 	which a notice of issue is not provided to the department within
20.26 	five business days after issuance or before the last Monday 4:30
20.27 	p.m. on the last business day in December, whichever occurs
20.28 	first.  Within 30 days after receipt of a notice of issue the
20.29 	department shall refund a portion of the application deposit
20.30 	equal to one percent of the amount of the bonding authority
20.31 	actually issued if a one percent application deposit was made,
20.32 	or equal to two percent of the amount of the bonding authority
20.33 	actually issued if a two percent application deposit was made,
20.34 	less any penalty amount.

20.35 	Sec. 27. Minnesota Statutes 2004, section 475.51,
20.36 	subdivision 4, is amended to read:
21.1 		Subd. 4.Net debt.  "Net debt" means the amount remaining
21.2 	after deducting from its gross debt the amount of current
21.3 	revenues which are applicable within the current fiscal year to
21.4 	the payment of any debt and the aggregate of the principal of
21.5 	the following:
21.6 	(1) Obligations issued for improvements which are payable
21.7 	wholly or partly from the proceeds of special assessments levied
21.8 	upon property specially benefited thereby, including those which
21.9 	are general obligations of the municipality issuing them, if the
21.10 	municipality is entitled to reimbursement in whole or in part
21.11 	from the proceeds of the special assessments.
21.12 	(2) Warrants or orders having no definite or fixed maturity.
21.13 	(3) Obligations payable wholly from the income from revenue
21.14 	producing conveniences.
21.15 	(4) Obligations issued to create or maintain a permanent
21.16 	improvement revolving fund.
21.17 	(5) Obligations issued for the acquisition, and betterment
21.18 	of public waterworks systems, and public lighting, heating or
21.19 	power systems, and of any combination thereof or for any other
21.20 	public convenience from which a revenue is or may be derived.
21.21 	(6) Debt service loans and capital loans made to a school
21.22 	district under the provisions of sections 126C.68 and 126C.69.
21.23 	(7) Amount of all money and the face value of all
21.24 	securities held as a debt service fund for the extinguishment of
21.25 	obligations other than those deductible under this subdivision.
21.26 	(8) Obligations to repay loans made under section 216C.37.
21.27 	(9) Obligations to repay loans made from money received
21.28 	from litigation or settlement of alleged violations of federal
21.29 	petroleum pricing regulations.
21.30 	(10) Obligations issued to pay pension fund liabilities
21.31 	under section 475.52, subdivision 6, or any charter authority.
21.32 	(11) Obligations issued to pay judgments against the
21.33 	municipality under section 475.52, subdivision 6, or any charter
21.34 	authority.
21.35 	(12) All other obligations which under the provisions of
21.36 	law authorizing their issuance are not to be included in
22.1 	computing the net debt of the municipality.

22.2 	Sec. 28. Minnesota Statutes 2004, section 475.52,
22.3 	subdivision 1, is amended to read:
22.4 		Subdivision 1.Statutory cities.  Any statutory city may
22.5 	issue bonds or other obligations for the acquisition or
22.6 	betterment of public buildings, means of garbage disposal,
22.7 	hospitals, nursing homes, homes for the aged, schools,
22.8 	libraries, museums, art galleries, parks, playgrounds, stadia,
22.9 	sewers, sewage disposal plants, subways, streets, sidewalks,
22.10 	warning systems; for any utility or other public convenience
22.11 	from which a revenue is or may be derived; for a permanent
22.12 	improvement revolving fund; for changing, controlling or
22.13 	bridging streams and other waterways; for the acquisition and
22.14 	betterment of bridges and roads within two miles of the
22.15 	corporate limits;for the acquisition of development rights in
22.16 	the form of conservation easements under chapter 84C; and for
22.17 	acquisition of equipment for snow removal, street construction
22.18 	and maintenance, or fire fighting.  Without limitation by the
22.19 	foregoing the city may issue bonds to provide money for any
22.20 	authorized corporate purpose except current expenses.

22.21 	Sec. 29. Minnesota Statutes 2004, section 475.52,
22.22 	subdivision 3, is amended to read:
22.23 		Subd. 3.Counties.  Any county may issue bonds for the
22.24 	acquisition or betterment of courthouses, county administrative
22.25 	buildings, health or social service facilities, correctional
22.26 	facilities, law enforcement centers, jails, morgues, libraries,
22.27 	parks, and hospitals, for roads and bridges within the county or
22.28 	bordering thereon and for road equipment and machinery and for
22.29 	ambulances and related equipment;for the acquisition of
22.30 	development rights in the form of conservation easements under
22.31 	chapter 84C, and for capital equipment for the administration
22.32 	and conduct of elections providing the equipment is uniform
22.33 	countywide, except that the power of counties to issue bonds in
22.34 	connection with a library shall not exist in Hennepin County.

22.35 	Sec. 30. Minnesota Statutes 2004, section 475.52,
22.36 	subdivision 4, is amended to read:
23.1 		Subd. 4.Towns.  Any town may issue bonds for the
23.2 	acquisition and betterment of town halls, town roads and
23.3 	bridges, nursing homes and homes for the aged, and for
23.4 	acquisition of equipment for snow removal, road construction or
23.5 	maintenance, and fire fighting;for the acquisition of
23.6 	development rights in the form of conservation easements under
23.7 	chapter 84C;and for the acquisition and betterment of any
23.8 	buildings to house and maintain town equipment.

23.9 	Sec. 31. Minnesota Statutes 2004, section 475.521,
23.10 	subdivision 1, is amended to read:
23.11 		Subdivision 1.Definitions.  For purposes of this
23.12 	section, the following terms have the meanings given.
23.13 	(a) "Bonds" mean an obligation defined under section 475.51.
23.14 	(b) "Capital improvement" means acquisition or betterment
23.15 	of public lands, buildings or other improvements for the purpose
23.16 	of a city hall, town hall, library,public safety facility, and
23.17 	public works facility.  An improvement must have an expected
23.18 	useful life of five years or more to qualify.  Capital
23.19 	improvement does not include light rail transit or any activity
23.20 	related to it, or a park, library,road, bridge, administrative
23.21 	building other than a city or town hall, or land for any of
23.22 	those facilities.
23.23 	(c) "City" "Municipality" means a home rule charter or
23.24 	statutory city or a town described in section 368.01,
23.25 	subdivision 1 or 1a.

23.26 	Sec. 32. Minnesota Statutes 2004, section 475.521,
23.27 	subdivision 2, is amended to read:
23.28 		Subd. 2.Election requirement.  (a) Bonds issued by a
23.29 	city municipality to finance capital improvements under an
23.30 	approved capital improvements plan are not subject to the
23.31 	election requirements of section 475.58. The bonds are subject
23.32 	to the net debt limits under section 475.53.The bonds must be
23.33 	approved by an affirmative vote of three-fifths of the members
23.34 	of a five-member city council governing body.  In the case of
23.35 	a city council governing body having more or less than five
23.36 	members, the bonds must be approved by a vote of at least
24.1 	two-thirds of the city council members of the governing body.
24.2 	(b) Before the issuance of bonds qualifying under this
24.3 	section, the city municipality must publish a notice of its
24.4 	intention to issue the bonds and the date and time of the
24.5 	hearing to obtain public comment on the matter.  The notice must
24.6 	be published in the official newspaper of the city municipality 
24.7 	or in a newspaper of general circulation in the city 
24.8 	municipality.  Additionally, the notice may be posted on the
24.9 	official Web site, if any, of the city municipality.  The notice
24.10 	must be published at least 14 but not more than 28 days before
24.11 	the date of the hearing.
24.12 	(c) A city municipality may issue the bonds only after
24.13 	obtaining the approval of a majority of the voters voting on the
24.14 	question of issuing the obligations, if a petition requesting a
24.15 	vote on the issuance is signed by voters equal to five percent
24.16 	of the votes cast in the city municipality in the last general
24.17 	election and is filed with the city clerk within 30 days after
24.18 	the public hearing.  The commissioner of revenue shall prepare a
24.19 	suggested form of the question to be presented at the election.

24.20 	Sec. 33. Minnesota Statutes 2004, section 475.521,
24.21 	subdivision 3, is amended to read:
24.22 		Subd. 3.Capital improvement plan.  (a) A city 
24.23 	municipality may adopt a capital improvement plan.  The plan
24.24 	must cover at least a five-year period beginning with the date
24.25 	of its adoption.  The plan must set forth the estimated
24.26 	schedule, timing, and details of specific capital improvements
24.27 	by year, together with the estimated cost, the need for the
24.28 	improvement, and sources of revenue to pay for the improvement.
24.29 	In preparing the capital improvement plan, the city council 
24.30 	governing body must consider for each project and for the
24.31 	overall plan:
24.32 	(1) the condition of the city's municipality's existing
24.33 	infrastructure, including the projected need for repair or
24.34 	replacement;
24.35 	(2) the likely demand for the improvement;
24.36 	(3) the estimated cost of the improvement;
25.1 	(4) the available public resources;
25.2 	(5) the level of overlapping debt in the city municipality;
25.3 	(6) the relative benefits and costs of alternative uses of
25.4 	the funds;
25.5 	(7) operating costs of the proposed improvements; and
25.6 	(8) alternatives for providing services most efficiently
25.7 	through shared facilities with other cities municipalities or
25.8 	local government units.
25.9 	(b) The capital improvement plan and annual amendments to
25.10 	it must be approved by the city council governing body after
25.11 	public hearing.

25.12 	Sec. 34. Minnesota Statutes 2004, section 475.521,
25.13 	subdivision 4, is amended to read:
25.14 		Subd. 4.Limitations on amount.  A city municipality may
25.15 	not issue bonds under this section if the maximum amount of
25.16 	principal and interest to become due in any year on all the
25.17 	outstanding bonds issued under this section, including the bonds
25.18 	to be issued, will equal or exceed 0.05367 0.16 percent of the 
25.19 	taxable market value of property in the county municipality.
25.20 	Calculation of the limit must be made using the taxable market
25.21 	value for the taxes payable year in which the obligations are
25.22 	issued and sold. In the case of a municipality with a
25.23 	population of 2,500 or more, the bonds are subject to the net
25.24 	debt limits under section 475.53.  In the case of a shared
25.25 	facility in which more than one municipality participates, upon
25.26 	compliance by each participating municipality with the
25.27 	requirements of subdivision 2, the limitations in this
25.28 	subdivision and the net debt represented by the bonds shall be
25.29 	allocated to each participating municipality in proportion to
25.30 	its required financial contribution to the financing of the
25.31 	shared facility, as set forth in the joint powers agreement
25.32 	relating to the shared facility.This section does not limit
25.33 	the authority to issue bonds under any other special or general
25.34 	law.

25.35 	Sec. 35. Laws 1996, chapter 412, article 5, section 24, is
25.36 	amended to read:

26.1 	Sec. 24. BONDS PAID FROM TACONITE PRODUCTION TAX
26.2 	REVENUES.
 26.3 		Subdivision 1.Refunding bonds. The appropriation of
26.4 	funds from the distribution of taconite production tax revenues
26.5 	to the taconite environmental protection tax fund and the
26.6 	northeast Minnesota economic protection fund made by Laws 1988,
26.7 	chapter 718, article 7, sections 62 and 63, Laws 1989, chapter
26.8 	329, article 5, section 20, Laws 1990, chapter 604, article 8,
26.9 	section 13, Laws 1992, chapter 499, article 5, section 29, and
26.10 	by sections 18 to 20 Laws 1996, chapter 412, article 5, sections
26.11 	20 to 22, and Laws 2000, chapter 489, article 5, sections 24 to
26.12 	26, shall continue to apply to bonds issued under Minnesota
26.13 	Statutes, chapter 475, to refund bonds originally issued
26.14 	pursuant to those chapters.
26.15 		Subd. 2.Local payments. School districts that are
26.16 	required in Laws 1988, chapter 718, article 7, sections 62 and
26.17 	63, Laws 1989, chapter 329, article 5, section 20, Laws 1990,
26.18 	chapter 604, article 8, section 13, Laws 1992, chapter 499,
26.19 	article 5, section 29, and by sections 18 to 20 Laws 1996,
26.20 	chapter 412, article 5, sections 20 to 22, and Laws 2000,
26.21 	chapter 489, article 5, sections 24 to 26, to impose levies to
26.22 	pay debt service on the bonds issued under those provisions to
26.23 	the extent the principal and interest on the bonds is not paid
26.24 	by distributions from the taconite environmental protection fund
26.25 	and the northeast Minnesota economic protection trust, may pay
26.26 	their portion of the principal and interest from any funds
26.27 	available to them.  To the extent a school district uses funds
26.28 	other than the proceeds of a property tax levy to pay its share
26.29 	of the principal and interest on the bonds, the requirement to
26.30 	impose a property tax to pay the local share does not apply to
26.31 	the school district.

26.32 	Sec. 36. Laws 2003, chapter 127, article 12, section 38,
26.33 	is amended to read:
26.34 	Sec. 38MEMBERS MUST AUTHORITY TO LEVY TAXES FOR
26.35 	AUTHORITY.
 26.36 	(a) A member shall, at the request of the authority, levy a
27.1 	tax in any year for the benefit of the authority.The authority
27.2 	is a special taxing district as defined in Minnesota Statutes,
27.3 	section 275.066, clause (13), with the power to adopt and
27.4 	certify a property tax levy to the county auditor.  The
27.5 	authority may levy a tax in any year for the benefit of the
27.6 	authority.The tax is,for each member,is a pro rata portion
27.7 	of the total amount of tax requested by the authority based on
27.8 	the taxable market value within a the member's jurisdiction, but
27.9 	in no event may the tax in any year exceed 0.01813 percent of
27.10 	taxable market value.  For purposes of this section, "taxable
27.11 	market value" has the meaning as given in Minnesota Statutes,
27.12 	section 273.032.
27.13 	(b) The treasurer of each member city or town shall, within
27.14 	15 days after receiving the property tax settlements from the
27.15 	county treasurer, pay to the treasurer of the authority the
27.16 	amount collected for this purpose.  The money must be used by
27.17 	the authority for the purposes provided by sections 35 to 41.

27.18 	EFFECTIVE DATE. This section is effective for taxes
27.19 	levied in 2005, payable in 2006, and thereafter.

27.20 	Sec. 37. CITY OF BEMIDJI; DURATION EXTENSION FOR TAX
27.21 	ABATEMENT.
 27.22 	Notwithstanding the limitation in Minnesota Statutes,
27.23 	section 469.1813, subdivision 6, the city of Bemidji may extend
27.24 	the duration of the tax abatement given to support development
27.25 	within the fairgrounds district of the city for an additional
27.26 	four years beyond the duration permitted under that section.

27.27 	Sec. 38. TOWN OF WHITE; OBLIGATIONS AUTHORIZED.
 27.28 		Subdivision 1.Obligations. Notwithstanding any
27.29 	provision of law or charter to the contrary, the town of White
27.30 	may pledge its general obligation, as defined in Minnesota
27.31 	Statutes, section 475.51, subdivision 10, to secure the
27.32 	financing of local improvements as provided in this section.
27.33 		Subd. 2.Special rules. (a) The obligations are subject
27.34 	to the provisions of Minnesota Statutes, chapter 429, except as
27.35 	provided in this subdivision.
27.36 	(b) The obligations must be issued to finance:
28.1 	(1) the cost of local improvements described in Minnesota
28.2 	Statutes, section 429.021, located within the area referred to
28.3 	in Laws 2003, chapter 119, section 2;
28.4 	(2) any reserves required to market the obligation; and 
28.5 	(3) the costs of issuing the obligations.
28.6 	(c) The obligations must be additionally secured by special
28.7 	assessments levied or to be levied by the city of Biwabik within
28.8 	the area referred to in paragraph (b).
28.9 	(d) The pledge of special assessments by the city of
28.10 	Biwabik for the payment of the obligations must be made by
28.11 	written agreement by and between the town of White and the city
28.12 	of Biwabik and must be filed with the county auditor.
28.13 	(e) Notwithstanding Minnesota Statutes, section 475.58, no
28.14 	election is required to approve the obligations.
28.15 	(f) The obligations are not included in computing any debt
28.16 	limitation applicable to the town of White or the city of
28.17 	Biwabik, and the levy of taxes under Minnesota Statutes, section
28.18 	475.61, to pay principal of and interest on the obligations is
28.19 	not subject to any levy limitation.
28.20 	
EFFECTIVE DATE. This section is effective upon local
28.21 	approval by the town of White and the city of Biwabik in
28.22 	compliance with the requirements of Minnesota Statutes, section
28.23 	645.021.

28.24 	Sec. 39. SAUK RIVER WATERSHED DISTRICT.
 28.25 	Notwithstanding Minnesota Statutes, section 103D.905,
28.26 	subdivision 3, the Sauk River Watershed District may annually
28.27 	levy an additional amount up to $100,000 for its general fund.

28.28 	EFFECTIVE DATE. This section is effective, without local
28.29 	approval, beginning with the taxes levied in 2005, payable in
28.30 	2006.

28.31 	Sec. 40. CITY OF ST. PAUL; RIVERCENTRE COMPLEX
28.32 	OPERATION.
 28.33 		Subdivision 1.Definitions. (a) For the purposes of this
28.34 	section, the terms defined in this subdivision have the meanings
28.35 	given them.
28.36 	(b) "City" means the city of St. Paul, its mayor, city
29.1 	council, and any other board, authority, commission, or officer
29.2 	authorized by law, charter, or ordinance to exercise city powers
29.3 	of the nature referred to in this section.
29.4 	(c) "RiverCentre complex" means collectively the
29.5 	auditorium; convention, conference and education center; arena;
29.6 	and parking ramp facilities presently and commonly known as the
29.7 	Roy Wilkins Auditorium, St. Paul RiverCentre, Xcel Energy
29.8 	Center, and RiverCentre Parking Ramp, including all property,
29.9 	real or personal, tangible or intangible, located in the city,
29.10 	intended to be used as part of the RiverCentre complex or
29.11 	additions to or extensions of it.
29.12 		Subd. 2.Creation of nonprofit organization. As required
29.13 	under Minnesota Statutes, section 465.717, and notwithstanding
29.14 	any other law, city charter provision, or ordinance to the
29.15 	contrary, the city of St. Paul may participate in the creation
29.16 	of a nonprofit organization for the purposes provided in this
29.17 	section.
29.18 		Subd. 3.Governing board. (a) The mayor of the city,
29.19 	subject to approval by the city council, shall appoint a
29.20 	majority of the members of the governing board of the nonprofit
29.21 	organization performing all or a part of the activities
29.22 	necessary to carry out the purposes specified in this section.
29.23 	The mayor may designate any officer or employee of the city to
29.24 	serve as a member of the governing board of any nonprofit
29.25 	organization.
29.26 	(b) In addition to the appointments made by the mayor under
29.27 	paragraph (a), the mayor shall designate three members of the
29.28 	city council to serve on the governing board of the nonprofit
29.29 	organization.
29.30 	(c) Notwithstanding any provision contained in the articles
29.31 	of incorporation and bylaws of the nonprofit organization, any
29.32 	member of the governing board appointed by the mayor may be
29.33 	removed only by the mayor for cause.
29.34 	(d) The governing board of the nonprofit organization shall
29.35 	select, subject to the approval of the mayor, a president to
29.36 	serve as chief executive officer and general manager of the
30.1 	nonprofit organization.
30.2 	(e) The procedures in Minnesota Statutes, section 317A.255,
30.3 	subdivision 1, paragraph (b), relating to director conflicts of
30.4 	interest, are not required if the contract or other transaction
30.5 	is between the city and the nonprofit organization.
30.6 		Subd. 4.Rivercentre management; authority to contract
30.7 	with nonprofit organization. The city may enter into an
30.8 	agreement with the nonprofit organization created in subdivision
30.9 	2 to equip, maintain, manage, and operate all or a portion of
30.10 	the RiverCentre complex and to manage and operate a convention
30.11 	bureau to market and promote the city as a tourist or convention
30.12 	center.  Except as otherwise provided in this section, the
30.13 	nonprofit organization may only contract and utilize and expend
30.14 	funds for these purposes under the direction of its governing
30.15 	board, subject to the accounting, financial reporting, and other
30.16 	conditions that the city may prescribe in a contract made under
30.17 	this section between the city and the nonprofit organization.
30.18 	The nonprofit organization may use the services of the office of
30.19 	the city attorney and the city's purchasing department.  All
30.20 	activities performed to carry out these purposes are deemed to
30.21 	be for a public purpose.
30.22 	Subd. 5.[BONDHOLDERS' RIGHTS AND RIVERCENTRE COMPLEX TAX
30.23 	EXEMPTIONS PRESERVED.] (a) The city must protect the rights of
30.24 	holders of bonds issued for the RiverCentre complex, including
30.25 	preserving the tax-exempt status of the bonds.
30.26 	(b) The use and operation of the RiverCentre complex by the
30.27 	nonprofit organization with which the city contracts under this
30.28 	act is a use, lease, or occupancy for public, governmental, and
30.29 	municipal purposes, and the complex is exempt from taxation by
30.30 	the state or any political subdivision of the state during such
30.31 	use, to the extent it would be exempt if the complex was
30.32 	equipped, maintained, managed, and operated by the city.
30.33 	(c) Gross receipts of tickets and admissions to events at
30.34 	the RiverCentre complex sponsored by the nonprofit organization
30.35 	created in this section do not qualify for the sales tax
30.36 	exemption under Minnesota Statutes, section 297A.70, subdivision
31.1 	10.
31.2 		Subd. 6.Applicable general laws. The following statutes
31.3 	apply to the nonprofit organization with which the city
31.4 	contracts under this section the same as they apply to the city:
31.5 	(1) Minnesota Statutes, chapter 13D, the Minnesota Open
31.6 	Meeting Law; and 
31.7 	(2) Minnesota Statutes, chapter 13, the Government Data
31.8 	Practices Act.
31.9 		Subd. 7.Succession. The nonprofit organization with
31.10 	which the city contracts under this section is the successor to
31.11 	all powers, rights, assets, privileges, and interests held and
31.12 	enjoyed by the RiverCentre authority on the effective date of
31.13 	this section, and established by the provisions of Laws 1967,
31.14 	chapter 459, sections 1, 2, 4, and 8, subdivisions 2 and 3,
31.15 	clause (3), as amended; Laws 1982, chapter 523, article 25,
31.16 	sections 4 and 5; Laws 1998, chapter 404, sections 81 and 82;
31.17 	and Minnesota Statutes, section 297A.98.  On the effective date
31.18 	of the contract between the city and the nonprofit organization
31.19 	authorized by this section, the RiverCentre authority ceases to
31.20 	exist for only so long as the contract is in effect, and all
31.21 	other laws or provisions specifically relating to the
31.22 	RiverCentre authority and the RiverCentre complex that are not
31.23 	otherwise referenced in this section, do not apply to the
31.24 	nonprofit organization.
31.25 		Subd. 8.Liability. The nonprofit organization with
31.26 	which the city contracts under this section is a "municipality,"
31.27 	and the officers, directors, employees, and agents of the
31.28 	nonprofit organization are "employees, officers, or agents,"
31.29 	under Minnesota Statutes, chapter 466, relating to tort
31.30 	liability.  The city must defend, save harmless, and indemnify
31.31 	the nonprofit organization, including the nonprofit's officers,
31.32 	directors, employees, and agents, against any claim or demand
31.33 	arising out of the nonprofit organization's performance under
31.34 	the contract.
31.35 	
EFFECTIVE DATE. This section is effective the day after
31.36 	the city council and the chief clerical officer of the city of
32.1 	St. Paul have timely completed their compliance with Minnesota
32.2 	Statutes, section 645.023, subdivisions 2 and 3.

32.3 	Sec. 41. CITY OF WINONA; BOND AUTHORIZATION.
 32.4 	(a) The city of Winona may issue its general obligation
32.5 	bonds under Minnesota Statutes, chapter 475, and its charter for
32.6 	up to $3,500,000, plus any cost of issuance, to finance costs
32.7 	related to the Pelzer Street reconstruction project.  Bonds
32.8 	issued under this authority are not subject to an election under
32.9 	Minnesota Statutes, section 475.58, and are exempt from the net
32.10 	debt limits under Minnesota Statutes, section 475.53.
32.11 	(b) In addition to any other available revenues, the city
32.12 	may also pledge to the payment of the bonds a tax abatement by
32.13 	Winona County, entered into under Minnesota Statutes, sections
32.14 	469.1812 to 469.1815, in an amount that equals the increment of
32.15 	the Riverfront Tax Increment Financing District Number 2 that is
32.16 	attributable to the county's levy in the last year of the
32.17 	district.  Notwithstanding any law to the contrary, the county
32.18 	is authorized to enter into an abatement of its tax on the
32.19 	parcels of the former Tax Increment Financing District Number 2
32.20 	to make these payments.
32.21 	(c) The authority under this section does not restrict or
32.22 	limit any other powers of the city or the county to provide for
32.23 	the financing for the Pelzer Street reconstruction under any
32.24 	other law.

32.25 	Sec. 42. IRON RANGE RESOURCES AND REHABILITATION
32.26 	COMMISSIONER; BONDS AUTHORIZED.
 32.27 		Subdivision 1.Issuance; purpose. Notwithstanding any
32.28 	provision of Minnesota Statutes, chapter 298, to the contrary,
32.29 	the commissioner of Iron Range resources and rehabilitation may
32.30 	issue revenue bonds in a principal amount of $15,000,000 in one
32.31 	or more series, and bonds to refund those bonds.  The proceeds
32.32 	of the bonds must be used to make grants to school districts
32.33 	located in the taconite tax relief area defined in Minnesota
32.34 	Statutes, section 273.134, or the taconite assistance area
32.35 	defined in Minnesota Statutes, section 273.1341, to be used by
32.36 	the school districts to pay for health, safety, and maintenance
33.1 	improvements but only if the school district has levied the
33.2 	maximum amount allowable under law for those purposes.
33.3 		Subd. 2.Appropriation. There is annually appropriated
33.4 	from the distribution of taconite production tax revenues to the
33.5 	taconite environmental protection fund pursuant to Minnesota
33.6 	Statutes, section 298.28, subdivision 11, and to the Douglas J.
33.7 	Johnson economic protection trust pursuant to Minnesota
33.8 	Statutes, section 298.28, subdivisions 9 and 11, in equal
33.9 	shares, an amount sufficient to pay when due the principal and
33.10 	interest on the bonds issued pursuant to subdivision 1.  If the
33.11 	annual distribution to the Douglas J. Johnson economic
33.12 	protection trust is insufficient to pay its share after
33.13 	fulfilling any obligations of the trust under Minnesota
33.14 	Statutes, section 298.225 or 298.293, the deficiency is
33.15 	appropriated from the taconite environmental protection fund.
33.16 	The appropriation under this subdivision terminates upon payment
33.17 	or maturity of the last of the bonds issued under this section.
33.18 		Subd. 3.Credit enhancement. The bonds issued under this
33.19 	section are "debt obligations" and the commissioner of Iron
33.20 	Range resources and rehabilitation is a "district" for purposes
33.21 	of Minnesota Statutes, section 126C.55, provided that advances
33.22 	made under Minnesota Statutes, section 126C.55, subdivision 2,
33.23 	are not subject to Minnesota Statutes, section 126C.55,
33.24 	subdivisions 4 to 7.
33.25 	
EFFECTIVE DATE. This section is effective the day
33.26 	following final enactment.

33.27 	Sec. 43. CROW WING COUNTY SEWER DISTRICT; PILOT PROJECT.
 33.28 		Subdivision 1.Powers. In addition to the powers granted
33.29 	in Minnesota Statutes, chapter 116A, the county board for Crow
33.30 	Wing County, by resolution, may grant the following powers to a
33.31 	sewer district created by the county board under Minnesota
33.32 	Statutes, chapter 116A:
33.33 	(1) provide that an authorized representative of the
33.34 	district, after presentation of credentials, may enter at
33.35 	reasonable times any premise to inspect or maintain an
33.36 	individual sewage treatment system, as defined in Minnesota
34.1 	Statutes, section 115.55, subdivision 1, paragraph (g);
34.2 	(2) include areas of the county within the sewer district
34.3 	that are not contiguous and establish different systems for
34.4 	wastewater treatment in specific areas of the county;
34.5 	(3) provide that each special service area that is managed
34.6 	by the sewer system or combination thereof constitutes a system
34.7 	under Minnesota Statutes, chapter 116A;
34.8 	(4) delegate to the sewer district, by resolution, all or a
34.9 	portion of its administrative and enforcement obligations with
34.10 	respect to individual sewage treatment systems under Minnesota
34.11 	Statutes, chapter 115, and rules adopted by the Pollution
34.12 	Control Agency;
34.13 	(5) modify any individual sewage treatment system to
34.14 	provide reasonable access to it for inspection and maintenance;
34.15 	and 
34.16 	(6) neither the approval nor the waiver of the county
34.17 	board, nor confirmation by order of the district court, is
34.18 	required for the sewer commission to exercise the powers set
34.19 	forth in Minnesota Statutes, section 116A.24.
34.20 		Subd. 2.Report. If the Crow Wing County Board exercises
34.21 	the powers granted under subdivision 1, the county shall report
34.22 	by January 15, 2009, to the senate and house committees with
34.23 	jurisdiction over environmental policy and taxes on the
34.24 	establishment and operation of the sewer district.  The report
34.25 	must include:
34.26 	(1) a description of the implementation of the additional
34.27 	powers granted under subdivision 1;
34.28 	(2) available information on the effectiveness of the
34.29 	additional powers to control pollution in the county; and 
34.30 	(3) any recommendations for changes to Minnesota Statutes,
34.31 	chapter 116A, to broaden the authority for sewer districts to
34.32 	include any of the additional powers granted under subdivision 1.
34.33 	
EFFECTIVE DATE. This section is effective the day
34.34 	following compliance with Minnesota Statutes, section 645.021,
34.35 	subdivision 2.

34.36 	Sec. 44. APPLICATION.
 35.1 	Sections 21, 22, 23, and 45 apply in the counties of Anoka,
35.2 	Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

35.3 	Sec. 45. REPEALER.
 35.4 	Minnesota Statutes 2004, section 473.197, subdivisions 1,
35.5 	2, 3, and 5, are repealed.

35.6 	Sec. 46. EFFECTIVE DATE.
 35.7 	(a) Section 1 is effective the day after the city council
35.8 	and the chief clerical officer of the city of St. Paul have
35.9 	timely completed their compliance with Minnesota Statutes,
35.10 	section 645.023, subdivisions 2 and 3.
35.11 	(b) Except as otherwise provided, this article is effective
35.12 	the day following final enactment.

35.13 	ARTICLE 2
35.14 	TAX INCREMENT FINANCING

35.15 	Section 1. Minnesota Statutes 2004, section 116J.556, is
35.16 	amended to read:
35.17 	116J.556 LOCAL MATCH REQUIREMENT.
35.18 	(a) In order to qualify for a grant under sections 116J.551
35.19 	to 116J.557, the municipality must pay for at least one-quarter
35.20 	of the project costs as a local match.  The municipality shall
35.21 	pay an amount of the project costs equal to at least 12 percent
35.22 	of the cleanup costs from the municipality's general fund, a
35.23 	property tax levy for that purpose, or other unrestricted money
35.24 	available to the municipality (excluding tax increments).  These
35.25 	unrestricted moneys may be spent for project costs, other than
35.26 	cleanup costs, and qualify for the local match payment equal to
35.27 	12 percent of cleanup costs.  The rest of the local match may be
35.28 	paid with tax increments, regional, state, or federal money
35.29 	available for the redevelopment of brownfields or any other
35.30 	money available to the municipality.
35.31 	(b) If the development authority establishes a tax
35.32 	increment financing district or hazardous substance subdistrict
35.33 	on the site to pay for part of the local match requirement, the
35.34 	district or subdistrict must be decertified when an amount of
35.35 	tax increments equal to no more than three times the costs of
35.36 	implementing the response action plan for the site and the
36.1 	administrative costs for the district or subdistrict have been
36.2 	received, after deducting the amount of the state grant.

36.3 	EFFECTIVE DATE. This section is effective the day
36.4 	following final enactment.

36.5 	Sec. 2. Minnesota Statutes 2004, section 272.02,
36.6 	subdivision 64, is amended to read:
36.7 		Subd. 64.Job opportunity building zone property.  (a)
36.8 	Improvements to real property, and personal property, classified
36.9 	under section 273.13, subdivision 24, and located within a job
36.10 	opportunity building zone, designated under section 469.314, are
36.11 	exempt from ad valorem taxes levied under chapter 275.
36.12 	(b) Improvements to real property, and tangible personal
36.13 	property, of an agricultural production facility located within
36.14 	an agricultural processing facility zone, designated under
36.15 	section 469.314, is exempt from ad valorem taxes levied under
36.16 	chapter 275.
36.17 	(c) For property to qualify for exemption under paragraph
36.18 	(a), the occupant must be a qualified business, as defined in
36.19 	section 469.310.
36.20 	(d) The exemption applies beginning for the first
36.21 	assessment year after designation of the job opportunity
36.22 	building zone by the commissioner of employment and economic
36.23 	development.  The exemption applies to each assessment year that
36.24 	begins during the duration of the job opportunity building zone
36.25 	and to property occupied by July 1 of the assessment year by a
36.26 	qualified business.  This exemption does not apply to:
36.27 	(1) the levy under section 475.61 or similar levy
36.28 	provisions under any other law to pay general obligation bonds;
36.29 	or
36.30 	(2) a levy under section 126C.17, if the levy was approved
36.31 	by the voters before the designation of the job opportunity
36.32 	building zone.
36.33 	(e) This subdivision does not apply to a parcel of property
36.34 	for any taxes payable year in which the parcel is contained in
36.35 	both:
36.36 	(1) an agricultural processing zone, designated under
36.37 	section 469.314, subdivision 1, paragraph (b); and 
37.1 	(2) a tax increment financing district, if the request for
37.2 	certification of the district was made before January 1, 2004.
37.3 	
EFFECTIVE DATE. This section is effective beginning for
37.4 	taxes payable in 2006.

37.5 	Sec. 3. Minnesota Statutes 2004, section 469.174,
37.6 	subdivision 11, is amended to read:
37.7 		Subd. 11.Housing district.  "Housing district" means a
37.8 	type of tax increment financing district which consists of a
37.9 	project, or a portion of a project, intended for occupancy, in
37.10 	part, by persons or families of low and moderate income, as
37.11 	defined in chapter 462A, Title II of the National Housing Act of
37.12 	1934, the National Housing Act of 1959, the United States
37.13 	Housing Act of 1937, as amended, Title V of the Housing Act of
37.14 	1949, as amended, any other similar present or future federal,
37.15 	state, or municipal legislation, or the regulations promulgated
37.16 	under any of those acts.  A district does not qualify as a
37.17 	housing district under this subdivision if the fair market value
37.18 	of the improvements which are constructed in the district for
37.19 	commercial uses or for uses other than low and moderate income
37.20 	housing consists of more than 20 percent of the total fair
37.21 	market value of the planned improvements in the development plan
37.22 	or agreement.  The fair market value of the improvements may be
37.23 	determined using the cost of construction, capitalized income,
37.24 	or other appropriate method of estimating market value , and that
37.25 	satisfies the requirements of section 469.1761.  Housing project
37.26 	means a project, or a portion of a project, that meets all of
37.27 	the qualifications of a housing district under this subdivision,
37.28 	whether or not actually established as a housing district.
37.29 	
EFFECTIVE DATE. This section is effective for districts
37.30 	for which the request for certification was filed with the
37.31 	county auditor after October 5, 1989, except (1) the new
37.32 	language is effective for requests for certification made after
37.33 	June 30, 2005, and (2) the fair market value of the improvements
37.34 	which are constructed for commercial uses in a district for
37.35 	which the request for certification was filed with the county
37.36 	auditor after October 5, 1989, and before July 1, 2005, may not
38.1 	exceed more than 20 percent of total fair market value of the
38.2 	planned improvements in the development plan or agreement.

38.3 	Sec. 4. Minnesota Statutes 2004, section 469.174,
38.4 	subdivision 25, is amended to read:
38.5 		Subd. 25.Increment.  "Increment," "tax increment," "tax
38.6 	increment revenues," "revenues derived from tax increment," and
38.7 	other similar terms for a district include:
38.8 	(1) taxes paid by the captured net tax capacity, but
38.9 	excluding any excess taxes, as computed under section 469.177;
38.10 	(2) the proceeds from the sale or lease of property,
38.11 	tangible or intangible, to the extent the property was purchased
38.12 	by the authority with tax increments;
38.13 	(3) principal and interest received on loans or other
38.14 	advances made by the authority with tax increments; and 
38.15 	(4) interest or other investment earnings on or from tax
38.16 	increments;
38.17 	(5) repayments or return of tax increments made to the
38.18 	authority under agreements for districts for which the request
38.19 	for certification was made after August 1, 1993; and 
38.20 	(6) the market value homestead credit paid to the authority
38.21 	under section 273.1384.
38.22 	
EFFECTIVE DATE. This section is effective for tax
38.23 	increment financing districts, regardless of when the request
38.24 	for certification was made, including districts for which the
38.25 	request for certification was made before August 1, 1979,
38.26 	provided that the amendment to clause (2) applies only to the
38.27 	extent that the underlying provisions of clause (2) apply to the
38.28 	district and to the sale or lease under prior law.  This
38.29 	effective date does not affect the application of clause (1),
38.30 	(3), or (4).

38.31 	Sec. 5. Minnesota Statutes 2004, section 469.175,
38.32 	subdivision 1, is amended to read:
38.33 		Subdivision 1.Tax increment financing plan.  A tax
38.34 	increment financing plan shall contain:
38.35 	(1) a statement of objectives of an authority for the
38.36 	improvement of a project;
39.1 	(2) a statement as to the development program for the
39.2 	project, including the property within the project, if any, that
39.3 	the authority intends to acquire, identified by parcel number,
39.4 	identifiable property name, block, or other appropriate means
39.5 	indicating the area in which the authority intends to acquire
39.6 	properties;
39.7 	(3) a list of any development activities that the plan
39.8 	proposes to take place within the project, for which contracts
39.9 	have been entered into at the time of the preparation of the
39.10 	plan, including the names of the parties to the contract, the
39.11 	activity governed by the contract, the cost stated in the
39.12 	contract, and the expected date of completion of that activity;
39.13 	(4) identification or description of the type of any other
39.14 	specific development reasonably expected to take place within
39.15 	the project, and the date when the development is likely to
39.16 	occur;
39.17 	(5) estimates of the following:
39.18 	(i) cost of the project, including administrative expenses,
39.19 	except that if part of the cost of the project is paid or
39.20 	financed with increment from the tax increment financing
39.21 	district, the tax increment financing plan for the district must
39.22 	contain an estimate of the amount of the cost of the project,
39.23 	including administrative expenses, that will be paid or financed
39.24 	with tax increments from the district;
39.25 	(ii) amount of bonded indebtedness to be incurred;
39.26 	(iii) sources of revenue to finance or otherwise pay public
39.27 	costs;
39.28 	(iv) the most recent net tax capacity of taxable real
39.29 	property within the tax increment financing district and within
39.30 	any subdistrict;
39.31 	(v) the estimated captured net tax capacity of the tax
39.32 	increment financing district at completion; and
39.33 	(vi) the duration of the tax increment financing district's
39.34 	and any subdistrict's existence;
39.35 	(6) statements of the authority's alternate estimates of
39.36 	the impact of tax increment financing on the net tax capacities
40.1 	of all taxing jurisdictions in which the tax increment financing
40.2 	district is located in whole or in part.  For purposes of one
40.3 	statement, the authority shall assume that the estimated
40.4 	captured net tax capacity would be available to the taxing
40.5 	jurisdictions without creation of the district, and for purposes
40.6 	of the second statement, the authority shall assume that none of
40.7 	the estimated captured net tax capacity would be available to
40.8 	the taxing jurisdictions without creation of the district or
40.9 	subdistrict;
40.10 	(7) identification and description of studies and analyses
40.11 	used to make the determination set forth in subdivision 3,
40.12 	clause (2); and
40.13 	(8) identification of all parcels to be included in the
40.14 	district or any subdistrict.
40.15 	
EFFECTIVE DATE. This section is effective for tax
40.16 	increment financing plans and amendments to tax increment
40.17 	financing plans approved after June 30, 2005.

40.18 	Sec. 6. Minnesota Statutes 2004, section 469.175,
40.19 	subdivision 4a, is amended to read:
40.20 		Subd. 4a.Filing plan with state.  (a) The authority must
40.21 	file a copy of the tax increment financing plan and amendments
40.22 	to the plan with the commissioner of revenue and the state
40.23 	auditor.  The authority must also file a copy of the development
40.24 	plan or the project plan for the project area with the
40.25 	commissioner of revenue.  The commissioner of revenue shall
40.26 	provide a copy of a plan to the state auditor upon request and
40.27 	the state auditor.
40.28 	(b) Filing under this subdivision must be made within 60
40.29 	days after the latest of:
40.30 	(1) the filing of the request for certification of the
40.31 	district;
40.32 	(2) approval of the plan by the municipality; or
40.33 	(3) adoption of the plan by the authority.
40.34 	
EFFECTIVE DATE. This section is effective for plans and
40.35 	amendments approved after June 30, 2005.

40.36 	Sec. 7. Minnesota Statutes 2004, section 469.175,
41.1 	subdivision 5, is amended to read:
41.2 		Subd. 5.Annual disclosure.  An annual statement showing
41.3 	for each district the information required to be reported under
41.4 	subdivision 6, paragraph (c), clauses (1), (2), (3), (11),
41.5 	(12), (20), and (21) (18), and (19); the amounts of tax
41.6 	increment received and expended in the reporting period; and any
41.7 	additional information the authority deems necessary must be
41.8 	published in a newspaper of general circulation in the
41.9 	municipality that approved the tax increment financing plan.
41.10 	The annual statement must inform readers that additional
41.11 	information regarding each district may be obtained from the
41.12 	authority, and must explain how the additional information may
41.13 	be requested.  The authority must publish the annual statement
41.14 	for a year no later than August 15 of the next year.  The
41.15 	authority must identify the newspaper of general circulation in
41.16 	the municipality to which the annual statement has been or will
41.17 	be submitted for publication and provide a copy of the annual
41.18 	statement to the county board, the county auditor, the school
41.19 	board, the state auditor, and, if the authority is other than
41.20 	the municipality, the governing body of the municipality on or
41.21 	before August 1 of the year in which the statement must be
41.22 	published.
41.23 	The disclosure requirements imposed by this subdivision
41.24 	apply to districts certified before, on, or after August 1, 1979.
41.25 	
EFFECTIVE DATE. This section is effective for reports
41.26 	required to be filed after December 31, 2005.

41.27 	Sec. 8. Minnesota Statutes 2004, section 469.175,
41.28 	subdivision 6, is amended to read:
41.29 		Subd. 6.Annual financial reporting.  (a) The state
41.30 	auditor shall develop a uniform system of accounting and
41.31 	financial reporting for tax increment financing districts.  The
41.32 	system of accounting and financial reporting shall, as nearly as
41.33 	possible:
41.34 	(1) provide for full disclosure of the sources and uses of
41.35 	public funds in the district;
41.36 	(2) permit comparison and reconciliation with the affected
42.1 	local government's accounts and financial reports;
42.2 	(3) permit auditing of the funds expended on behalf of a
42.3 	district, including a single district that is part of a
42.4 	multidistrict project or that is funded in part or whole through
42.5 	the use of a development account funded with tax increments from
42.6 	other districts or with other public money;
42.7 	(4) be consistent with generally accepted accounting
42.8 	principles.
42.9 	(b) The authority must annually submit to the state auditor
42.10 	a financial report in compliance with paragraph (a).  Copies of
42.11 	the report must also be provided to the county auditor and to
42.12 	the governing body of the municipality, if the authority is not
42.13 	the municipality.  To the extent necessary to permit compliance
42.14 	with the requirement of financial reporting, the county and any
42.15 	other appropriate local government unit or private entity must
42.16 	provide the necessary records or information to the authority or
42.17 	the state auditor as provided by the system of accounting and
42.18 	financial reporting developed pursuant to paragraph (a).  The
42.19 	authority must submit the annual report for a year on or before
42.20 	August 1 of the next year.
42.21 	(c) The annual financial report must also include the
42.22 	following items:
42.23 	(1) the original net tax capacity of the district and any
42.24 	subdistrict under section 469.177, subdivision 1;
42.25 	(2) the net tax capacity for the reporting period of the
42.26 	district and any subdistrict;
42.27 	(3) the captured net tax capacity of the district;
42.28 	(4) any fiscal disparity deduction from the captured net
42.29 	tax capacity under section 469.177, subdivision 3;
42.30 	(5) the captured net tax capacity retained for tax
42.31 	increment financing under section 469.177, subdivision 2,
42.32 	paragraph (a), clause (1);
42.33 	(6) any captured net tax capacity distributed among
42.34 	affected taxing districts under section 469.177, subdivision 2,
42.35 	paragraph (a), clause (2);
42.36 	(7) the type of district;
43.1 	(8) the date the municipality approved the tax increment
43.2 	financing plan and the date of approval of any modification of
43.3 	the tax increment financing plan, the approval of which requires
43.4 	notice, discussion, a public hearing, and findings under
43.5 	subdivision 4, paragraph (a);
43.6 	(9) the date the authority first requested certification of
43.7 	the original net tax capacity of the district and the date of
43.8 	the request for certification regarding any parcel added to the
43.9 	district;
43.10 	(10) the date the county auditor first certified the
43.11 	original net tax capacity of the district and the date of
43.12 	certification of the original net tax capacity of any parcel
43.13 	added to the district;
43.14 	(11) the month and year in which the authority has received
43.15 	or anticipates it will receive the first increment from the
43.16 	district;
43.17 	(12) the date the district must be decertified;
43.18 	(13) for the reporting period and prior years of the
43.19 	district, the actual amount received from, at least, the
43.20 	following categories:
43.21 	(i) tax increments paid by the captured net tax capacity
43.22 	retained for tax increment financing under section 469.177,
43.23 	subdivision 2, paragraph (a), clause (1), but excluding any
43.24 	excess taxes;
43.25 	(ii) tax increments that are interest or other investment
43.26 	earnings on or from tax increments;
43.27 	(iii) tax increments that are proceeds from the sale or
43.28 	lease of property, tangible or intangible, purchased by the
43.29 	authority with tax increments;
43.30 	(iv) tax increments that are repayments of loans or other
43.31 	advances made by the authority with tax increments;
43.32 	(v) bond or loan proceeds;
43.33 	(vi) special assessments;
43.34 	(vii) grants; and 
43.35 	(viii) transfers from funds not exclusively associated with
43.36 	the district; and 
44.1 	(ix) the market value homestead credit paid to the
44.2 	authority under section 273.1384;
44.3 	(14) for the reporting period and for the prior years of
44.4 	the district, the actual amount expended for, at least, the
44.5 	following categories:
44.6 	(i) acquisition of land and buildings through condemnation
44.7 	or purchase;
44.8 	(ii) site improvements or preparation costs;
44.9 	(iii) installation of public utilities, parking facilities,
44.10 	streets, roads, sidewalks, or other similar public improvements;
44.11 	(iv) administrative costs, including the allocated cost of
44.12 	the authority;
44.13 	(v) public park facilities, facilities for social,
44.14 	recreational, or conference purposes, or other similar public
44.15 	improvements; and
44.16 	(vi) transfers to funds not exclusively associated with the
44.17 	district;
44.18 	(15) for properties sold to developers, the total cost of
44.19 	the property to the authority and the price paid by the
44.20 	developer;
44.21 	(16) the amount of any payments and the value of any
44.22 	in-kind benefits, such as physical improvements and the use of
44.23 	building space, that are paid or financed with tax increments
44.24 	and are provided to another governmental unit other than the
44.25 	municipality during the reporting period;
44.26 	(17) the amount of any payments for activities and
44.27 	improvements located outside of the district that are paid for
44.28 	or financed with tax increments;
44.29 	(18) (16) the amount of payments of principal and interest
44.30 	that are made during the reporting period on any nondefeased:
44.31 	(i) general obligation tax increment financing bonds;
44.32 	(ii) other tax increment financing bonds; and
44.33 	(iii) notes and pay-as-you-go contracts;
44.34 	(19) (17) the principal amount, at the end of the reporting
44.35 	period, of any nondefeased:
44.36 	(i) general obligation tax increment financing bonds;
45.1 	(ii) other tax increment financing bonds; and
45.2 	(iii) notes and pay-as-you-go contracts;
45.3 	(20) (18) the amount of principal and interest payments
45.4 	that are due for the current calendar year on any nondefeased:
45.5 	(i) general obligation tax increment financing bonds;
45.6 	(ii) other tax increment financing bonds; and
45.7 	(iii) notes and pay-as-you-go contracts;
45.8 	(21) (19) if the fiscal disparities contribution under
45.9 	chapter 276A or 473F for the district is computed under section
45.10 	469.177, subdivision 3, paragraph (a), the amount of increased
45.11 	property taxes imposed on other properties in the municipality
45.12 	that approved the tax increment financing plan as a result of
45.13 	the fiscal disparities contribution;
45.14 	(22) whether the tax increment financing plan or other
45.15 	governing document permits increment revenues to be expended:
45.16 	(i) to pay bonds, the proceeds of which were or may be
45.17 	expended on activities outside of the district;
45.18 	(ii) for deposit into a common bond fund from which money
45.19 	may be expended on activities located outside of the district;
45.20 	or 
45.21 	(iii) to otherwise finance activities located outside of
45.22 	the tax increment financing district;
45.23 	(23) (20) the estimate, if any, contained in the tax
45.24 	increment financing plan of the amount of the cost of the
45.25 	project, including administrative expenses, that will be paid or
45.26 	financed with tax increment; and
45.27 	(24) (21) any additional information the state auditor may
45.28 	require.
45.29 	(d) The commissioner of revenue shall prescribe the method
45.30 	of calculating the increased property taxes under paragraph (c),
45.31 	clause (21) (19), and the form of the statement disclosing this
45.32 	information on the annual statement under subdivision 5.
45.33 	(e) The reporting requirements imposed by this subdivision
45.34 	apply to districts certified before, on, and after August 1,
45.35 	1979.
45.36 	
EFFECTIVE DATE. This section is effective for reports
46.1 	required to be filed after December 31, 2005.

46.2 	Sec. 9. Minnesota Statutes 2004, section 469.176,
46.3 	subdivision 2, is amended to read:
46.4 		Subd. 2.Excess increments.  (a) The authority shall
46.5 	annually determine the amount of excess increments for a
46.6 	district, if any.  This determination must be based on the tax
46.7 	increment financing plan in effect on December 31 of the year
46.8 	and the increments and other revenues received as of December 31
46.9 	of the year. The authority must spend or return the excess
46.10 	increments under paragraph (c) within nine months after the end
46.11 	of the year.
46.12 	(b) For purposes of this subdivision, "excess increments"
46.13 	equals the excess of:
46.14 	(1) total increments collected from the district since its
46.15 	certification, reduced by any excess increments paid under
46.16 	paragraph (c), clause (4), for a prior year, over
46.17 	(2) the total costs authorized by the tax increment
46.18 	financing plan to be paid with increments from the district,
46.19 	reduced, but not below zero, by the sum of:
46.20 	(i) the amounts of those authorized costs that have been
46.21 	paid from sources other than tax increments from the district;
46.22 	(ii) revenues, other than tax increments from the district,
46.23 	that are dedicated for or otherwise required to be used to pay
46.24 	those authorized costs and that the authority has received and
46.25 	that are not included in item (i); and 
46.26 	(iii) the amount of principal and interest obligations due
46.27 	on outstanding bonds after December 31 of the year and not
46.28 	prepaid under paragraph (c) in a prior year; and 
46.29 	(iv) increased by the sum of the transfers of increments
46.30 	made under section 469.1763, subdivision 6, to reduce deficits
46.31 	in other districts made by December 31 of the year.
46.32 	(c) The authority shall use excess increment only to do one
46.33 	or more of the following:
46.34 	(1) prepay any outstanding bonds;
46.35 	(2) discharge the pledge of tax increment for any
46.36 	outstanding bonds;
47.1 	(3) pay into an escrow account dedicated to the payment of
47.2 	any outstanding bonds; or
47.3 	(4) return the excess amount to the county auditor who
47.4 	shall distribute the excess amount to the city or town, county,
47.5 	and school district in which the tax increment financing
47.6 	district is located in direct proportion to their respective
47.7 	local tax rates.
47.8 	(d) For purposes of a district for which the request for
47.9 	certification was made prior to August 1, 1979, excess
47.10 	increments equal the amount of increments on hand on December
47.11 	31, less the principal and interest obligations due on
47.12 	outstanding bonds or advances, qualifying under subdivision 1c,
47.13 	clauses (1), (2), and (5), after December 31 of the year and not
47.14 	prepaid under paragraph (c).
47.15 	(e) The county auditor must report to the commissioner of
47.16 	education the amount of any excess tax increment distributed to
47.17 	a school district within 30 days of the distribution.
47.18 	(f) For purposes of this subdivision, "outstanding bonds"
47.19 	means bonds which are secured by increments from the district.
47.20 	
EFFECTIVE DATE. This section is effective for districts,
47.21 	regardless of when the request for certification was made, and
47.22 	applies to calculations of excess increments beginning in
47.23 	calendar year 2005.

47.24 	Sec. 10. Minnesota Statutes 2004, section 469.176,
47.25 	subdivision 4d, is amended to read:
47.26 		Subd. 4d.Housing districts.  Revenue derived from tax
47.27 	increment from a housing district must be used solely to finance
47.28 	the cost of housing projects as defined in section sections 
47.29 	469.174, subdivision 11, and 469.1761.  The cost of public
47.30 	improvements directly related to the housing projects and the
47.31 	allocated administrative expenses of the authority may be
47.32 	included in the cost of a housing project.
47.33 	
EFFECTIVE DATE. This section is effective for all
47.34 	districts to which the provisions of Minnesota Statutes, section
47.35 	469.1761, apply.

47.36 	Sec. 11. Minnesota Statutes 2004, section 469.1761,
48.1 	subdivision 1, is amended to read:
48.2 		Subdivision 1.Requirement imposed. (a) In order for a
48.3 	tax increment financing district to qualify as a housing
48.4 	district,:
48.5 	(1) the income limitations provided in this section must be
48.6 	satisfied; and 
48.7 	(2) no more than 20 percent of the square footage of
48.8 	buildings that receive assistance from tax increments may
48.9 	consist of commercial, retail, or other nonresidential uses.
48.10 	(b) The requirements imposed by this section apply to
48.11 	residential property receiving assistance financed with tax
48.12 	increments, including interest reduction, land transfers at less
48.13 	than the authority's cost of acquisition, utility service or
48.14 	connections, roads, parking facilities,or other subsidies.  The
48.15 	provisions of this section do not apply to districts located in
48.16 	a targeted area as defined in section 462C.02, subdivision 9,
48.17 	clause (e).
48.18 	
EFFECTIVE DATE. This section is effective for districts
48.19 	for which the request for certification was made after June 30,
48.20 	2005.

48.21 	Sec. 12. Minnesota Statutes 2004, section 469.1761,
48.22 	subdivision 3, is amended to read:
48.23 		Subd. 3.Rental property.  For residential rental
48.24 	property, the property must satisfy the income requirements for
48.25 	a qualified residential rental project as defined in section
48.26 	142(d) of the Internal Revenue Code. A property also satisfies
48.27 	the requirements of section 142(d) if 50 percent of the
48.28 	residential units in the project are occupied by individuals
48.29 	whose income is 80 percent or less of area median gross income.
48.30 	The requirements of this subdivision apply for the duration of
48.31 	the tax increment financing district.
48.32 	
EFFECTIVE DATE. This section is effective for districts
48.33 	for which the request for certification was made after June 30,
48.34 	2004.

48.35 	Sec. 13. Minnesota Statutes 2004, section 469.1763,
48.36 	subdivision 6, is amended to read:
49.1 		Subd. 6.Pooling permitted for deficits.  (a) This
49.2 	subdivision applies only to districts for which the request for
49.3 	certification was made before August 1, 2001, and without regard
49.4 	to whether the request for certification was made prior to
49.5 	August 1, 1979.
49.6 	(b) The municipality for the district may transfer
49.7 	available increments from another tax increment financing
49.8 	district located in the municipality, if the transfer is
49.9 	necessary to eliminate a deficit in the district to which the
49.10 	increments are transferred.  A deficit in the district for
49.11 	purposes of this subdivision means the lesser of the following
49.12 	two amounts:
49.13 	(1)(i) the amount due during the calendar year to pay
49.14 	preexisting obligations of the district; minus
49.15 	(ii) the total increments collected or to be collected from
49.16 	properties located within the district that are available for
49.17 	the calendar year including amounts collected in prior years
49.18 	that are currently available; plus
49.19 	(iii) total increments from properties located in other
49.20 	districts in the municipality including amounts collected in
49.21 	prior years that are available to be used to meet the district's
49.22 	obligations under this section, excluding this subdivision, or
49.23 	other provisions of law (but excluding a special tax under
49.24 	section 469.1791 and the grant program under Laws 1997, chapter
49.25 	231, article 1, section 19, or Laws 2001, First Special Session
49.26 	chapter 5); or
49.27 	(2) the reduction in increments collected from properties
49.28 	located in the district for the calendar year as a result of the
49.29 	changes in class rates in Laws 1997, chapter 231, article 1;
49.30 	Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243,
49.31 	and Laws 2001, First Special Session chapter 5, or the
49.32 	elimination of the general education tax levy under Laws 2001,
49.33 	First Special Session chapter 5.
49.34 	The authority may compute the deficit amount under clause
49.35 	(1) only (without regard to the limit under clause (2)) if the
49.36 	authority makes an irrevocable commitment, by resolution, to use
50.1 	increments from the district to which increments are to be
50.2 	transferred and any transferred increments are only used to pay
50.3 	preexisting obligations and administrative expenses for the
50.4 	district that are required to be paid under section 469.176,
50.5 	subdivision 4h, paragraph (a).
50.6 	(c) A preexisting obligation means:
50.7 	(1) bonds issued and sold before August 1, 2001, or bonds
50.8 	issued pursuant to a binding contract requiring the issuance of
50.9 	bonds entered into before July 1, 2001, and bonds issued to
50.10 	refund such bonds or to reimburse expenditures made in
50.11 	conjunction with a signed contractual agreement entered into
50.12 	before August 1, 2001, to the extent that the bonds are secured
50.13 	by a pledge of increments from the tax increment financing
50.14 	district; and
50.15 	(2) binding contracts entered into before August 1, 2001,
50.16 	to the extent that the contracts require payments secured by a
50.17 	pledge of increments from the tax increment financing district.
50.18 	(d) The municipality may require a development authority,
50.19 	other than a seaway port authority, to transfer available
50.20 	increments including amounts collected in prior years that are
50.21 	currently available for any of its tax increment financing
50.22 	districts in the municipality to make up an insufficiency in
50.23 	another district in the municipality, regardless of whether the
50.24 	district was established by the development authority or another
50.25 	development authority.  This authority applies notwithstanding
50.26 	any law to the contrary, but applies only to a development
50.27 	authority that:
50.28 	(1) was established by the municipality; or
50.29 	(2) the governing body of which is appointed, in whole or
50.30 	part, by the municipality or an officer of the municipality or
50.31 	which consists, in whole or part, of members of the governing
50.32 	body of the municipality.  The municipality may use this
50.33 	authority only after it has first used all available increments
50.34 	of the receiving development authority to eliminate the
50.35 	insufficiency and exercised any permitted action under section
50.36 	469.1792, subdivision 3, for preexisting districts of the
51.1 	receiving development authority to eliminate the insufficiency.
51.2 	(e) The authority under this subdivision to spend tax
51.3 	increments outside of the area of the district from which the
51.4 	tax increments were collected:
51.5 	(1) is an exception to the restrictions under section
51.6 	469.176, subdivision subdivisions 4b, 4c, 4d, 4e,4i, and 4j;
51.7 	the expenditure limits under section 469.176, subdivision 1c;
51.8 	and the other provisions of this section,;and the percentage
51.9 	restrictions under subdivision 2 must be calculated after
51.10 	deducting increments spent under this subdivision from the total
51.11 	increments for the district; and
51.12 	(2) applies notwithstanding the provisions of the Tax
51.13 	Increment Financing Act in effect for districts for which the
51.14 	request for certification was made before June 30, 1982, or any
51.15 	other law to the contrary.
51.16 	(f) If a preexisting obligation requires the development
51.17 	authority to pay an amount that is limited to the increment from
51.18 	the district or a specific development within the district and
51.19 	if the obligation requires paying a higher amount to the extent
51.20 	that increments are available, the municipality may determine
51.21 	that the amount due under the preexisting obligation equals the
51.22 	higher amount and may authorize the transfer of increments under
51.23 	this subdivision to pay up to the higher amount.  The existence
51.24 	of a guarantee of obligations by the individual or entity that
51.25 	would receive the payment under this paragraph is disregarded in
51.26 	the determination of eligibility to pool under this
51.27 	subdivision.  The authority to transfer increments under this
51.28 	paragraph may only be used to the extent that the payment of all
51.29 	other preexisting obligations in the municipality due during the
51.30 	calendar year have been satisfied.
51.31 	(g) For transfers of increments made in calendar year 2005
51.32 	and later, the reduction in increments as a result of the
51.33 	elimination of the general education tax levy for purposes of
51.34 	paragraph (b), clause (2), for a taxes payable year equals the
51.35 	general education tax rate for the school district under
51.36 	Minnesota Statutes 2000, section 273.1382, subdivision 1, for
52.1 	taxes payable in 2001, multiplied by the captured tax capacity
52.2 	of the district for the current taxes payable year.
52.3 	
EFFECTIVE DATE. This section applies to transfers of
52.4 	increments made after the effective date of the original
52.5 	enactment of Minnesota Statutes, section 469.1763, subdivision 6.

52.6 	Sec. 14. Minnesota Statutes 2004, section 469.177,
52.7 	subdivision 1, is amended to read:
52.8 		Subdivision 1.Original net tax capacity.  (a) Upon or
52.9 	after adoption of a tax increment financing plan, the auditor of
52.10 	any county in which the district is situated shall, upon request
52.11 	of the authority, certify the original net tax capacity of the
52.12 	tax increment financing district and that portion of the
52.13 	district overlying any subdistrict as described in the tax
52.14 	increment financing plan and shall certify in each year
52.15 	thereafter the amount by which the original net tax capacity has
52.16 	increased or decreased as a result of a change in tax exempt
52.17 	status of property within the district and any subdistrict,
52.18 	reduction or enlargement of the district or changes pursuant to
52.19 	subdivision 4.
52.20 	(b) If the classification under section 273.13 of property
52.21 	located in a district changes to a classification that has a
52.22 	different assessment ratio, the original net tax capacity of
52.23 	that property must be redetermined at the time when its use is
52.24 	changed as if the property had originally been classified in the
52.25 	same class in which it is classified after its use is changed.
52.26 	(c) The amount to be added to the original net tax capacity
52.27 	of the district as a result of previously tax exempt real
52.28 	property within the district becoming taxable equals the net tax
52.29 	capacity of the real property as most recently assessed pursuant
52.30 	to section 273.18 or, if that assessment was made more than one
52.31 	year prior to the date of title transfer rendering the property
52.32 	taxable, the net tax capacity assessed by the assessor at the
52.33 	time of the transfer.  If improvements are made to tax exempt
52.34 	property after certification of the district and before the
52.35 	parcel becomes taxable, the assessor shall, at the request of
52.36 	the authority, separately assess the estimated market value of
53.1 	the improvements.  If the property becomes taxable, the county
53.2 	auditor shall add to original net tax capacity, the net tax
53.3 	capacity of the parcel, excluding the separately assessed
53.4 	improvements.  If substantial taxable improvements were made to
53.5 	a parcel after certification of the district and if the property
53.6 	later becomes tax exempt, in whole or part, as a result of the
53.7 	authority acquiring the property through foreclosure or exercise
53.8 	of remedies under a lease or other revenue agreement or as a
53.9 	result of tax forfeiture, the amount to be added to the original
53.10 	net tax capacity of the district as a result of the property
53.11 	again becoming taxable is the amount of the parcel's value that
53.12 	was included in original net tax capacity when the parcel was
53.13 	first certified.  The amount to be added to the original net tax
53.14 	capacity of the district as a result of enlargements equals the
53.15 	net tax capacity of the added real property as most recently
53.16 	certified by the commissioner of revenue as of the date of
53.17 	modification of the tax increment financing plan pursuant to
53.18 	section 469.175, subdivision 4.
53.19 	(d) If the net tax capacity of a property increases because
53.20 	the property no longer qualifies under the Minnesota
53.21 	Agricultural Property Tax Law, section 273.111; the Minnesota
53.22 	Open Space Property Tax Law, section 273.112; or the
53.23 	Metropolitan Agricultural Preserves Act, chapter 473H, or
53.24 	because platted, unimproved property is improved or three years
53.25 	pass market value is increased after approval of the plat under
53.26 	section 273.11, subdivision 1 14, 14a, or 14b, the increase in
53.27 	net tax capacity must be added to the original net tax capacity.
53.28 	(e) The amount to be subtracted from the original net tax
53.29 	capacity of the district as a result of previously taxable real
53.30 	property within the district becoming tax exempt, or a reduction
53.31 	in the geographic area of the district, shall be the amount of
53.32 	original net tax capacity initially attributed to the property
53.33 	becoming tax exempt or being removed from the district.  If the
53.34 	net tax capacity of property located within the tax increment
53.35 	financing district is reduced by reason of a court-ordered
53.36 	abatement, stipulation agreement, voluntary abatement made by
54.1 	the assessor or auditor or by order of the commissioner of
54.2 	revenue, the reduction shall be applied to the original net tax
54.3 	capacity of the district when the property upon which the
54.4 	abatement is made has not been improved since the date of
54.5 	certification of the district and to the captured net tax
54.6 	capacity of the district in each year thereafter when the
54.7 	abatement relates to improvements made after the date of
54.8 	certification.  The county auditor may specify reasonable form
54.9 	and content of the request for certification of the authority
54.10 	and any modification thereof pursuant to section 469.175,
54.11 	subdivision 4.
54.12 	(f) If a parcel of property contained a substandard
54.13 	building that was demolished or removed and if the authority
54.14 	elects to treat the parcel as occupied by a substandard building
54.15 	under section 469.174, subdivision 10, paragraph (b), the
54.16 	auditor shall certify the original net tax capacity of the
54.17 	parcel using the greater of (1) the current net tax capacity of
54.18 	the parcel, or (2) the estimated market value of the parcel for
54.19 	the year in which the building was demolished or removed, but
54.20 	applying the class rates for the current year.
54.21 	(g) For a redevelopment district qualifying under section
54.22 	469.174, subdivision 10, paragraph (a), clause (4), as a
54.23 	qualified disaster area, the auditor shall certify the value of
54.24 	the land as the original tax capacity for any parcel in the
54.25 	district that contains a building that suffered substantial
54.26 	damage as a result of the disaster or emergency.
54.27 	
EFFECTIVE DATE. This section is effective for land
54.28 	platted on or after August 1, 1991.

54.29 	Sec. 15. Minnesota Statutes 2004, section 469.1771,
54.30 	subdivision 5, is amended to read:
54.31 		Subd. 5.Disposition of payments.  If the authority does
54.32 	not have sufficient increments or other available money to make
54.33 	a payment required by this section, the municipality that
54.34 	approved the district must use any available money to make the
54.35 	payment including the levying of property taxes.  Money received
54.36 	by the county auditor under this section must be distributed as
55.1 	excess increments under section 469.176, subdivision 2,
55.2 	paragraph (a) (c), clause (4), except that if the county auditor
55.3 	receives the payment after (1) 60 days from a municipality's
55.4 	receipt of the state auditor's notification under subdivision 1,
55.5 	paragraph (c), of noncompliance requiring the payment, or (2)
55.6 	the commencement of an action by the county attorney to compel
55.7 	the payment, then no distributions may be made to the
55.8 	municipality that approved the tax increment financing district.
55.9 	
EFFECTIVE DATE. This section is effective at the same
55.10 	time as the amendments to Minnesota Statutes, section 469.176,
55.11 	subdivision 2, by Laws 2003, chapter 127, article 10, section 11.

55.12 	Sec. 16. Minnesota Statutes 2004, section 469.178,
55.13 	subdivision 1, is amended to read:
55.14 		Subdivision 1.Generally.  Notwithstanding any other law,
55.15 	no bonds, payment for which tax increment is pledged, shall be
55.16 	issued in connection with any project for which tax increment
55.17 	financing has been undertaken except as authorized in this
55.18 	section.  The proceeds from the bonds shall be used only in
55.19 	accordance with section 469.176, subdivision subdivisions 4 to
55.20 	4l, as if the proceeds were tax increment, except that a tax
55.21 	increment financing plan need not be adopted for any project for
55.22 	which tax increment financing has been undertaken prior to
55.23 	August 1, 1979, pursuant to laws not requiring a tax increment
55.24 	financing plan.  The bonds are not included for purposes of
55.25 	computing the net debt of any municipality.
55.26 	
EFFECTIVE DATE. This section is effective for tax
55.27 	increment financing districts for which the request for
55.28 	certification was made after August 1, 1979.

55.29 	Sec. 17. EXTENSION OF TIME TO EXPEND TAX INCREMENT.
 55.30 	Notwithstanding any contrary provision of law or charter,
55.31 	for tax increment financing district number 3, established on
55.32 	December 19, 1994, by Brooklyn Center Resolution No. 94-273,
55.33 	Minnesota Statutes, section 469.1763, subdivision 3, applies to
55.34 	the district by permitting a period of 13 years for commencement
55.35 	of activities within the district.

55.36 	EFFECTIVE DATE. This section is effective upon approval
56.1 	by the governing body of the city of Brooklyn Center and
56.2 	compliance with Minnesota Statutes, section 645.021, subdivision
56.3 	3.

56.4 	Sec. 18. FAIRMONT; ABATEMENT AUTHORITY.
 56.5 	The city of Fairmont, Martin County, and Independent School
56.6 	District No. 2752, Fairmont Area Schools, may each grant an
56.7 	abatement under Minnesota Statutes, sections 469.1812 to
56.8 	469.1815, for property located in tax increment financing
56.9 	district No. 20 in the city of Fairmont, notwithstanding any law
56.10 	to the contrary.  The total amount of the abatement for each
56.11 	political subdivision may not exceed the taxes paid by the
56.12 	original tax capacity of the district for each year of its
56.13 	existence.  Notwithstanding Minnesota Statutes, section 471.87,
56.14 	or any other law governing conflicts of interest, a local
56.15 	elected official may have a financial interest in and benefit
56.16 	from the tax abatement authorized in this section if the
56.17 	official discloses the interest and potential benefit on the
56.18 	record, and abstains from voting on the matter.

56.19 	EFFECTIVE DATE. This section is effective the day
56.20 	following final enactment.

56.21 	Sec. 19. WABASHA TAX INCREMENT FINANCING DISTRICT.
 56.22 		Subdivision 1.District extension. The governing body of
56.23 	the city of Wabasha may elect to compute the duration of its
56.24 	redevelopment tax increment financing district number 3 without
56.25 	regard to any increment received for taxes payable in 2001.
56.26 		Subd. 2.Five-year rule. The requirements of Minnesota
56.27 	Statutes, section 469.1763, subdivision 3, that activities must
56.28 	be undertaken within a five-year period from the date of
56.29 	certification of a tax increment financing district must be
56.30 	considered to be met for the city of Wabasha redevelopment tax
56.31 	increment district number 3, if the activities are undertaken
56.32 	within ten years from the date of certification of the district.
56.33 		Subd. 3.National eagle center. Notwithstanding the
56.34 	provisions of Minnesota Statutes, section 469.176, subdivision
56.35 	4l, or any other law, the city of Wabasha may spend the proceeds
56.36 	of tax increment bonds issued prior to January 1, 2000, to pay
57.1 	the costs of acquiring and constructing a National Eagle Center
57.2 	in the city.  The city of Wabasha may also use tax increment
57.3 	from its tax increment districts to pay the debt service on such
57.4 	bonds, or any bonds issued to refund such bonds, subject to
57.5 	legal restrictions on the pooling of tax increment.  These bonds
57.6 	may not be treated as preexisting obligations under Minnesota
57.7 	Statutes, section 469.1794.
57.8 		Subd. 4.Pooling. Except as otherwise specifically
57.9 	provided in this section, all increments from district number 3
57.10 	must be spent on activities within the district and
57.11 	administrative expenses.
57.12 	
EFFECTIVE DATE. Subdivision 1 is effective upon
57.13 	compliance with Minnesota Statutes, sections 469.1782,
57.14 	subdivision 2, and 645.021.  Subdivisions 2 and 3 are effective
57.15 	upon compliance by the governing body of the city of Wabasha
57.16 	with Minnesota Statutes, section 645.021.

57.17 	Sec. 20. CITY OF RICHFIELD; TAX INCREMENT FINANCING
57.18 	DISTRICT.
 57.19 		Subdivision 1.Authorization. The city of Richfield may
57.20 	create a tax increment financing district consisting of an area
57.21 	lying west of Trunk Highway 77 extending:  to 16th Avenue
57.22 	between Crosstown Highway 62 and 66th Street; to 17th Avenue
57.23 	between 66th and 69th Streets; and to 18th Avenue between 69th
57.24 	and 72nd Streets.  The city or its housing and redevelopment
57.25 	authority may be the authority for the purposes of Minnesota
57.26 	Statutes, sections 469.174 to 469.179.
57.27 		Subd. 2.District is redevelopment district. The
57.28 	redevelopment tax increment district created pursuant to
57.29 	subdivision 1 is deemed to be a redevelopment district and is
57.30 	subject to Minnesota Statutes, sections 469.174 to 469.179,
57.31 	except that:
57.32 	(1) expenditures for activities as defined in Minnesota
57.33 	Statutes, section 469.1763, subdivision 1, paragraph (b),
57.34 	anywhere in the district are deemed to be the costs of
57.35 	correcting conditions that allow the designation of
57.36 	redevelopment districts pursuant to Minnesota Statutes, section
58.1 	469.174, subdivision 10; and 
58.2 	(2) the five-year rule under Minnesota Statutes, section
58.3 	469.1763, subdivision 3, does not apply.
58.4 	
EFFECTIVE DATE. This section is effective upon local
58.5 	approval by the city of Richfield in compliance with Minnesota
58.6 	Statutes, section 645.021.

58.7 	Sec. 21. CITY OF MOUNDS VIEW; TAX INCREMENT FINANCING
58.8 	DISTRICT.
 58.9 		Subdivision 1.Establishment. (a) The city of Mounds
58.10 	View may establish within the corporate boundaries of the city
58.11 	one or more economic development tax increment financing
58.12 	districts subject to the special rules under subdivision 2.  The
58.13 	districts must be located on property that is exempt from
58.14 	taxation for property taxes payable in 2005 and within the area
58.15 	defined in paragraph (b).
58.16 	(b) For purposes of this section, "area" is bounded by, and
58.17 	including, on the north County Road J west of Coral Sea Street
58.18 	and 82nd Lane NE east of Coral Sea Street, on the east Coral Sea
58.19 	Street north of 82nd Lane NE and Interstate Highway 35W south of
58.20 	82nd Lane NE, on the south and southwest U.S. Highway 10, and on
58.21 	the west the western boundary of Outlot A, Sysco, according to
58.22 	the recorded plat thereof, and situated in Ramsey County,
58.23 	Minnesota.
58.24 		Subd. 2.Special rules. (a) If the city elects upon the
58.25 	adoption of the tax increment financing plan for the district,
58.26 	the rules under this section apply to the district.
58.27 	(b) The duration limit under Minnesota Statutes, section
58.28 	469.176, subdivision 1b, clause (3), is extended to 25 years
58.29 	after receipt of the first increment.
58.30 	(c) The five-year rule under Minnesota Statutes, section
58.31 	469.1763, subdivision 3, is extended to a ten-year period.
58.32 	(d) The limitations on spending increment outside of the
58.33 	district under Minnesota Statutes, section 469.1763, subdivision
58.34 	2, and on spending increment for developments more than 15
58.35 	percent of the square footage of which is used for purposes
58.36 	other than those listed in Minnesota Statutes, section 469.176,
59.1 	subdivision 4c, do not apply.  Except as provided in paragraph
59.2 	(e), increments may only be expended within the area defined in
59.3 	subdivision 1, paragraph (b), and related to development
59.4 	occurring within the area defined in subdivision 1, paragraph
59.5 	(b), whether or not included in a tax increment financing
59.6 	district.  Increments may only be spent on one or more of the
59.7 	following costs, improvements, or activities:
59.8 	(1) acquisition and removal of existing billboards;
59.9 	(2) acquisition of land and easements, if the parcel is
59.10 	occupied by a building constructed before 1990;
59.11 	(3) sanitary sewer, sewer, and water improvements;
59.12 	(4) road improvements;
59.13 	(5) parking, including structured parking;
59.14 	(6) administrative expenses;
59.15 	(7) wetland mitigation;
59.16 	(8) soils correction; and 
59.17 	(9) environmental cleanup.
59.18 	(e) Increments may be expended on costs, improvements, or
59.19 	activities outside the area defined in subdivision 1, paragraph
59.20 	(b), wherever located, whether or not included in a tax
59.21 	increment financing district, for sanitary sewer, sewer, and
59.22 	water improvements and improvements to Coral Sea Street, Airport
59.23 	Road, 82nd Lane NE, County Road J, U.S. Highway 10, and
59.24 	Interstate Highway 35W so long as the improvements are related
59.25 	to development within the area defined in subdivision 1,
59.26 	paragraph (b).
59.27 	(f) The limitation on the ability to elect the method of
59.28 	computation under Minnesota Statutes, section 469.177,
59.29 	subdivision 3, for an economic development district does not
59.30 	apply and the city or authority may elect the method of
59.31 	computation under paragraph (a) or (b) of section 469.177,
59.32 	subdivision 3.
59.33 		Subd. 3.Expiration. The authority to approve tax
59.34 	increment financing plans to establish a tax increment financing
59.35 	district under this section expires on December 31, 2015.
59.36 	
EFFECTIVE DATE. This section is effective upon approval
60.1 	by the governing body of the city of Mounds View and upon
60.2 	compliance by the city with Minnesota Statutes, sections
60.3 	469.1782, subdivision 2, and 645.021, subdivision 3.

60.4 	Sec. 22. CONVEYANCE OF STATE INTEREST IN REAL PROPERTY TO
60.5 	CITY OF MOUNDS VIEW.
 60.6 	(a) Notwithstanding Minnesota Statutes, section 16B.281,
60.7 	16B.282, 92.45, or any other law to the contrary, the
60.8 	commissioner of transportation shall convey to the city of
60.9 	Mounds View all right, title, and interest of the state of
60.10 	Minnesota created by corrective deed dated March 16, 1989, in
60.11 	the land located in Ramsey County, described as:
60.12 	The South Half of the Northeast Quarter of Section 5,
60.13 	Township 30 North, Range 23 West, Ramsey County, Minnesota;
60.14 	which lies northerly and westerly of the following
60.15 	described line:  Commencing at the center of said Section
60.16 	5; thence north on an azimuth of 359 degrees 23 minutes 10
60.17 	seconds (azimuth oriented to Minnesota State Plane
60.18 	Coordinate System) along the north and south quarter line
60.19 	of said Section 5 for 781.42 feet to the point of beginning
60.20 	of the line to be described; thence on an azimuth of 108
60.21 	degrees 12 minutes 41 seconds, 231.14 feet; thence on an
60.22 	azimuth of 98 degrees 27 minutes 03 seconds, 1486.78 feet;
60.23 	thence run northeasterly for 447.16 feet on a nontangential
60.24 	curve, concave to the northwest, having a radius of 720
60.25 	feet, a delta angle of 35 degrees 35 minutes 02 seconds and
60.26 	a chord azimuth of 76 degrees 55 minutes 11 seconds; thence
60.27 	on an azimuth of 59 degrees 07 minutes 40 seconds, 192.89
60.28 	feet; thence run northerly 398.14 feet on a nontangential
60.29 	curve, concave to the northwest, having a radius of 850
60.30 	feet, a delta angle of 26 degrees 50 minutes 15 seconds and
60.31 	a chord azimuth of 29 degrees 26 minutes 05 seconds; thence
60.32 	on an azimuth of 16 degrees 00 minutes 57 seconds, 303.65
60.33 	feet to the north line of said Tract A and there
60.34 	terminating;
60.35 	Containing 40.41 acres, more or less.
60.36 	(b) The conveyance shall be for consideration according to
60.37 	paragraph (d) in a form approved by the attorney general.
60.38 	(c) This property was acquired by the Department of
60.39 	Transportation for construction of a new portion of Trunk
60.40 	Highway 10 west of Interstate Highway 35W.  The property was not
60.41 	needed for highway purposes.  In 1988, the commissioner of
60.42 	transportation deeded the property to the city of Mounds View
60.43 	subject to a right of reverter.
60.44 	(d) If the city of Mounds View enters into a fully executed
60.45 	development agreement to redevelop the land described in
60.46 	paragraph (a) by January 1, 2007, the city shall pay the
60.47 	commissioner of transportation $1,000,000 for deposit in the
61.1 	trunk highway fund.  If the city of Mounds View does not enter
61.2 	into a fully executed development agreement to redevelop the
61.3 	land described in paragraph (a) by January 1, 2007, all right,
61.4 	title, and interest in the land shall revert back to the
61.5 	Department of Transportation unless the land is still used for a
61.6 	public purpose.  If the land is not subject to a fully executed
61.7 	development agreement and is still used for a public purpose on
61.8 	or after January 1, 2007, the land may continue to be used for
61.9 	such public purpose by the city of Mounds View, subject to a
61.10 	right of reverter if the land ceases to be used for a public
61.11 	purpose.

61.12 	Sec. 23. ST. PAUL; HOUSING AND REDEVELOPMENT AUTHORITY.
 61.13 		Subdivision 1.Housing and redevelopment
61.14 	subdistricts. For its tax increment financing districts
61.15 	identified in subdivision 2, the Housing and Redevelopment
61.16 	Authority of the city of St. Paul may establish subdistricts up
61.17 	to the number set forth for each tax increment financing
61.18 	district in subdivision 2.  The subdistricts shall be treated as
61.19 	set forth in subdivision 3, notwithstanding the provisions of
61.20 	any other law to the contrary.
61.21 		Subd. 2.Division into subdistricts; authority. The tax
61.22 	increment financing districts with the following Ramsey County
61.23 	identification numbers may be divided into a number of
61.24 	subdistricts not to exceed the number set forth as follows:  No.
61.25 	224/233, six subdistricts; No. 225, six subdistricts; No. 228,
61.26 	three subdistricts; and No. 234, two subdistricts.
61.27 		Subd. 3.Designation of parcels. All parcels in a tax
61.28 	increment financing district listed in subdivision 2 must be
61.29 	assigned to a subdistrict.  Each subdistrict established
61.30 	pursuant to this section shall consist of those parcels in the
61.31 	tax increment financing district which are designated by the
61.32 	commissioners of the Housing and Redevelopment Authority of the
61.33 	city of St. Paul by resolution, which parcels need not be
61.34 	contiguous.  For purposes of determining tax increments and the
61.35 	parcels treated as paying tax increments, each subdistrict shall
61.36 	be treated as a separate tax increment district.
62.1 	
EFFECTIVE DATE. This section is effective the day after
62.2 	the governing body of the city of St. Paul and its chief
62.3 	clerical officer comply with Minnesota Statutes, section
62.4 	645.021, subdivisions 2 and 3.

62.5 	Sec. 24. REPEALER.
 62.6 	Minnesota Statutes 2004, sections 469.176, subdivision 1a;
62.7 	and 469.1766; and Laws 1998, chapter 389, article 11, section
62.8 	19, subdivision 3, are repealed.

62.9 	EFFECTIVE DATE. The repeal of Minnesota Statutes, section
62.10 	469.1766, is effective for districts for which the request for
62.11 	certification was made after August 1, 1993.  The repeal of
62.12 	Minnesota Statutes, section 469.176, subdivision 1a, is
62.13 	effective the day following final enactment, provided that
62.14 	Minnesota Statutes, section 469.176, subdivision 1a, is
62.15 	satisfied for any district to which it applies, if bonds have
62.16 	been issued, property acquired, or public improvements
62.17 	constructed before the end of the three-year period, regardless
62.18 	of whether the action was undertaken before or after
62.19 	certification of the district.  The repeal of Laws 1998, chapter
62.20 	389, article 11, section 19, subdivision 3, is effective upon
62.21 	compliance by the city of Minneapolis with Minnesota Statutes,
62.22 	section 645.021, subdivision 2.

62.23 	ARTICLE 3
62.24 	INTERNATIONAL ECONOMIC DEVELOPMENT ZONE

62.25 	Section 1. Minnesota Statutes 2004, section 272.02, is
62.26 	amended by adding a subdivision to read:
62.27 		Subd. 68.International economic development zone
62.28 	property. (a) Improvements to real property, and personal
62.29 	property, classified under section 273.13, subdivision 24, and
62.30 	located within the international economic development zone
62.31 	designated under section 469.322, are exempt from ad valorem
62.32 	taxes levied under chapter 275, if the improvements are:
62.33 	(1) part of a regional distribution center as defined in
62.34 	section 469.321; or 
62.35 	(2) occupied by a qualified business as defined in section
62.36 	469.321, that uses the improvements primarily in freight
63.1 	forwarding operations.
63.2 	(b) The exemption applies beginning for the first
63.3 	assessment year after designation of the international economic
63.4 	development zone.  The exemption applies to each assessment year
63.5 	that begins during the duration of the international economic
63.6 	development zone.  To be exempt under paragraph (a), clause (2),
63.7 	the property must be occupied by July 1 of the assessment year
63.8 	by a qualified business that has signed the business subsidy
63.9 	agreement by July 1 of the assessment year.
63.10 	
EFFECTIVE DATE. This section is effective beginning for
63.11 	property taxes payable in 2008.

63.12 	Sec. 2. Minnesota Statutes 2004, section 290.01,
63.13 	subdivision 19b, is amended to read:
63.14 		Subd. 19b.Subtractions from federal taxable income.  For
63.15 	individuals, estates, and trusts, there shall be subtracted from
63.16 	federal taxable income:
63.17 	(1) interest income on obligations of any authority,
63.18 	commission, or instrumentality of the United States to the
63.19 	extent includable in taxable income for federal income tax
63.20 	purposes but exempt from state income tax under the laws of the
63.21 	United States;
63.22 	(2) if included in federal taxable income, the amount of
63.23 	any overpayment of income tax to Minnesota or to any other
63.24 	state, for any previous taxable year, whether the amount is
63.25 	received as a refund or as a credit to another taxable year's
63.26 	income tax liability;
63.27 	(3) the amount paid to others, less the amount used to
63.28 	claim the credit allowed under section 290.0674, not to exceed
63.29 	$1,625 for each qualifying child in grades kindergarten to 6 and
63.30 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
63.31 	textbooks, and transportation of each qualifying child in
63.32 	attending an elementary or secondary school situated in
63.33 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
63.34 	wherein a resident of this state may legally fulfill the state's
63.35 	compulsory attendance laws, which is not operated for profit,
63.36 	and which adheres to the provisions of the Civil Rights Act of
64.1 	1964 and chapter 363A.  For the purposes of this clause,
64.2 	"tuition" includes fees or tuition as defined in section
64.3 	290.0674, subdivision 1, clause (1).  As used in this clause,
64.4 	"textbooks" includes books and other instructional materials and
64.5 	equipment purchased or leased for use in elementary and
64.6 	secondary schools in teaching only those subjects legally and
64.7 	commonly taught in public elementary and secondary schools in
64.8 	this state.  Equipment expenses qualifying for deduction
64.9 	includes expenses as defined and limited in section 290.0674,
64.10 	subdivision 1, clause (3).  "Textbooks" does not include
64.11 	instructional books and materials used in the teaching of
64.12 	religious tenets, doctrines, or worship, the purpose of which is
64.13 	to instill such tenets, doctrines, or worship, nor does it
64.14 	include books or materials for, or transportation to,
64.15 	extracurricular activities including sporting events, musical or
64.16 	dramatic events, speech activities, driver's education, or
64.17 	similar programs.  For purposes of the subtraction provided by
64.18 	this clause, "qualifying child" has the meaning given in section
64.19 	32(c)(3) of the Internal Revenue Code;
64.20 	(4) income as provided under section 290.0802;
64.21 	(5) to the extent included in federal adjusted gross
64.22 	income, income realized on disposition of property exempt from
64.23 	tax under section 290.491;
64.24 	(6) to the extent included in federal taxable income,
64.25 	postservice benefits for youth community service under section
64.26 	124D.42 for volunteer service under United States Code, title
64.27 	42, sections 12601 to 12604;
64.28 	(7) to the extent not deducted in determining federal
64.29 	taxable income by an individual who does not itemize deductions
64.30 	for federal income tax purposes for the taxable year, an amount
64.31 	equal to 50 percent of the excess of charitable contributions
64.32 	allowable as a deduction for the taxable year under section
64.33 	170(a) of the Internal Revenue Code over $500;
64.34 	(8) for taxable years beginning before January 1, 2008, the
64.35 	amount of the federal small ethanol producer credit allowed
64.36 	under section 40(a)(3) of the Internal Revenue Code which is
65.1 	included in gross income under section 87 of the Internal
65.2 	Revenue Code;
65.3 	(9) for individuals who are allowed a federal foreign tax
65.4 	credit for taxes that do not qualify for a credit under section
65.5 	290.06, subdivision 22, an amount equal to the carryover of
65.6 	subnational foreign taxes for the taxable year, but not to
65.7 	exceed the total subnational foreign taxes reported in claiming
65.8 	the foreign tax credit.  For purposes of this clause, "federal
65.9 	foreign tax credit" means the credit allowed under section 27 of
65.10 	the Internal Revenue Code, and "carryover of subnational foreign
65.11 	taxes" equals the carryover allowed under section 904(c) of the
65.12 	Internal Revenue Code minus national level foreign taxes to the
65.13 	extent they exceed the federal foreign tax credit;
65.14 	(10) in each of the five tax years immediately following
65.15 	the tax year in which an addition is required under subdivision
65.16 	19a, clause (7), an amount equal to one-fifth of the delayed
65.17 	depreciation.  For purposes of this clause, "delayed
65.18 	depreciation" means the amount of the addition made by the
65.19 	taxpayer under subdivision 19a, clause (7), minus the positive
65.20 	value of any net operating loss under section 172 of the
65.21 	Internal Revenue Code generated for the tax year of the
65.22 	addition.  The resulting delayed depreciation cannot be less
65.23 	than zero; and 
65.24 	(11) job opportunity building zone income as provided under
65.25 	section 469.316; and 
65.26 	(12) international economic development zone income as
65.27 	provided under section 469.325.
65.28 	
EFFECTIVE DATE. This section is effective for tax years
65.29 	beginning after December 31, 2006.

65.30 	Sec. 3. Minnesota Statutes 2004, section 290.01,
65.31 	subdivision 29, is amended to read:
65.32 		Subd. 29.Taxable income.  The term "taxable income"
65.33 	means:
65.34 	(1) for individuals, estates, and trusts, the same as
65.35 	taxable net income;
65.36 	(2) for corporations, the taxable net income less
66.1 	(i) the net operating loss deduction under section 290.095;
66.2 	(ii) the dividends received deduction under section 290.21,
66.3 	subdivision 4;
66.4 	(iii) the exemption for operating in a job opportunity
66.5 	building zone under section 469.317; and 
66.6 	(iv) the exemption for operating in a biotechnology and
66.7 	health sciences industry zone under section 469.337; and 
66.8 	(v) the exemption for operating in an international
66.9 	economic development zone under section 469.326.
66.10 	
EFFECTIVE DATE. This section is effective for tax years
66.11 	beginning after December 31, 2006.

66.12 	Sec. 4. Minnesota Statutes 2004, section 290.06,
66.13 	subdivision 2c, is amended to read:
66.14 		Subd. 2c.Schedules of rates for individuals, estates,
66.15 	and trusts.  (a) The income taxes imposed by this chapter upon
66.16 	married individuals filing joint returns and surviving spouses
66.17 	as defined in section 2(a) of the Internal Revenue Code must be
66.18 	computed by applying to their taxable net income the following
66.19 	schedule of rates:
66.20 	(1) On the first $25,680, 5.35 percent;
66.21 	(2) On all over $25,680, but not over $102,030, 7.05
66.22 	percent;
66.23 	(3) On all over $102,030, 7.85 percent.
66.24 	Married individuals filing separate returns, estates, and
66.25 	trusts must compute their income tax by applying the above rates
66.26 	to their taxable income, except that the income brackets will be
66.27 	one-half of the above amounts.
66.28 	(b) The income taxes imposed by this chapter upon unmarried
66.29 	individuals must be computed by applying to taxable net income
66.30 	the following schedule of rates:
66.31 	(1) On the first $17,570, 5.35 percent;
66.32 	(2) On all over $17,570, but not over $57,710, 7.05
66.33 	percent;
66.34 	(3) On all over $57,710, 7.85 percent.
66.35 	(c) The income taxes imposed by this chapter upon unmarried
66.36 	individuals qualifying as a head of household as defined in
67.1 	section 2(b) of the Internal Revenue Code must be computed by
67.2 	applying to taxable net income the following schedule of rates:
67.3 	(1) On the first $21,630, 5.35 percent;
67.4 	(2) On all over $21,630, but not over $86,910, 7.05
67.5 	percent;
67.6 	(3) On all over $86,910, 7.85 percent.
67.7 	(d) In lieu of a tax computed according to the rates set
67.8 	forth in this subdivision, the tax of any individual taxpayer
67.9 	whose taxable net income for the taxable year is less than an
67.10 	amount determined by the commissioner must be computed in
67.11 	accordance with tables prepared and issued by the commissioner
67.12 	of revenue based on income brackets of not more than $100.  The
67.13 	amount of tax for each bracket shall be computed at the rates
67.14 	set forth in this subdivision, provided that the commissioner
67.15 	may disregard a fractional part of a dollar unless it amounts to
67.16 	50 cents or more, in which case it may be increased to $1.
67.17 	(e) An individual who is not a Minnesota resident for the
67.18 	entire year must compute the individual's Minnesota income tax
67.19 	as provided in this subdivision.  After the application of the
67.20 	nonrefundable credits provided in this chapter, the tax
67.21 	liability must then be multiplied by a fraction in which:
67.22 	(1) the numerator is the individual's Minnesota source
67.23 	federal adjusted gross income as defined in section 62 of the
67.24 	Internal Revenue Code and increased by the additions required
67.25 	under section 290.01, subdivision 19a, clauses (1), (5), and
67.26 	(6), and reduced by the subtraction under section 290.01,
67.27 	subdivision 19b, clause clauses (11) and (12), and the Minnesota
67.28 	assignable portion of the subtraction for United States
67.29 	government interest under section 290.01, subdivision 19b,
67.30 	clause (1), after applying the allocation and assignability
67.31 	provisions of section 290.081, clause (a), or 290.17; and
67.32 	(2) the denominator is the individual's federal adjusted
67.33 	gross income as defined in section 62 of the Internal Revenue
67.34 	Code of 1986, increased by the amounts specified in section
67.35 	290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
67.36 	by the amounts specified in section 290.01, subdivision 19b,
68.1 	clauses (1) and ,(11), and (12).
68.2 	
EFFECTIVE DATE. This section is effective for tax years
68.3 	beginning after December 31, 2006.

68.4 	Sec. 5. Minnesota Statutes 2004, section 290.06, is
68.5 	amended by adding a subdivision to read:
68.6 		Subd. 32.International economic development zone job
68.7 	credit. A taxpayer that is a qualified business, as defined in
68.8 	section 469.321, subdivision 6, is allowed a credit as
68.9 	determined under section 469.327 against the tax imposed by this
68.10 	chapter.
68.11 	
EFFECTIVE DATE. This section is effective the day
68.12 	following final enactment.

68.13 	Sec. 6. Minnesota Statutes 2004, section 290.067,
68.14 	subdivision 1, is amended to read:
68.15 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
68.16 	as a credit against the tax due from the taxpayer and a spouse,
68.17 	if any, under this chapter an amount equal to the dependent care
68.18 	credit for which the taxpayer is eligible pursuant to the
68.19 	provisions of section 21 of the Internal Revenue Code subject to
68.20 	the limitations provided in subdivision 2 except that in
68.21 	determining whether the child qualified as a dependent, income
68.22 	received as a Minnesota family investment program grant or
68.23 	allowance to or on behalf of the child must not be taken into
68.24 	account in determining whether the child received more than half
68.25 	of the child's support from the taxpayer, and the provisions of
68.26 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
68.27 	(b) If a child who has not attained the age of six years at
68.28 	the close of the taxable year is cared for at a licensed family
68.29 	day care home operated by the child's parent, the taxpayer is
68.30 	deemed to have paid employment-related expenses.  If the child
68.31 	is 16 months old or younger at the close of the taxable year,
68.32 	the amount of expenses deemed to have been paid equals the
68.33 	maximum limit for one qualified individual under section 21(c)
68.34 	and (d) of the Internal Revenue Code.  If the child is older
68.35 	than 16 months of age but has not attained the age of six years
68.36 	at the close of the taxable year, the amount of expenses deemed
69.1 	to have been paid equals the amount the licensee would charge
69.2 	for the care of a child of the same age for the same number of
69.3 	hours of care.
69.4 	(c) If a married couple:
69.5 	(1) has a child who has not attained the age of one year at
69.6 	the close of the taxable year;
69.7 	(2) files a joint tax return for the taxable year; and
69.8 	(3) does not participate in a dependent care assistance
69.9 	program as defined in section 129 of the Internal Revenue Code,
69.10 	in lieu of the actual employment related expenses paid for that
69.11 	child under paragraph (a) or the deemed amount under paragraph
69.12 	(b), the lesser of (i) the combined earned income of the couple
69.13 	or (ii) the amount of the maximum limit for one qualified
69.14 	individual under section 21(c) and (d) of the Internal Revenue
69.15 	Code will be deemed to be the employment related expense paid
69.16 	for that child.  The earned income limitation of section 21(d)
69.17 	of the Internal Revenue Code shall not apply to this deemed
69.18 	amount.  These deemed amounts apply regardless of whether any
69.19 	employment-related expenses have been paid.
69.20 	(d) If the taxpayer is not required and does not file a
69.21 	federal individual income tax return for the tax year, no credit
69.22 	is allowed for any amount paid to any person unless:
69.23 	(1) the name, address, and taxpayer identification number
69.24 	of the person are included on the return claiming the credit; or
69.25 	(2) if the person is an organization described in section
69.26 	501(c)(3) of the Internal Revenue Code and exempt from tax under
69.27 	section 501(a) of the Internal Revenue Code, the name and
69.28 	address of the person are included on the return claiming the
69.29 	credit.
69.30 	In the case of a failure to provide the information required
69.31 	under the preceding sentence, the preceding sentence does not
69.32 	apply if it is shown that the taxpayer exercised due diligence
69.33 	in attempting to provide the information required.
69.34 	In the case of a nonresident, part-year resident, or a
69.35 	person who has earned income not subject to tax under this
69.36 	chapter including earned income excluded pursuant to section
70.1 	290.01, subdivision 19b, clause clauses (11) and (12), the
70.2 	credit determined under section 21 of the Internal Revenue Code
70.3 	must be allocated based on the ratio by which the earned income
70.4 	of the claimant and the claimant's spouse from Minnesota sources
70.5 	bears to the total earned income of the claimant and the
70.6 	claimant's spouse.
70.7 	
EFFECTIVE DATE. This section is effective for tax years
70.8 	beginning after December 31, 2006.

70.9 	Sec. 7. Minnesota Statutes 2004, section 290.0671,
70.10 	subdivision 1, is amended to read:
70.11 		Subdivision 1.Credit allowed.  (a) An individual is
70.12 	allowed a credit against the tax imposed by this chapter equal
70.13 	to a percentage of earned income.  To receive a credit, a
70.14 	taxpayer must be eligible for a credit under section 32 of the
70.15 	Internal Revenue Code.
70.16 	(b) For individuals with no qualifying children, the credit
70.17 	equals 1.9125 percent of the first $4,620 of earned income.  The
70.18 	credit is reduced by 1.9125 percent of earned income or modified
70.19 	adjusted gross income, whichever is greater, in excess of
70.20 	$5,770, but in no case is the credit less than zero.
70.21 	(c) For individuals with one qualifying child, the credit
70.22 	equals 8.5 percent of the first $6,920 of earned income and 8.5
70.23 	percent of earned income over $12,080 but less than $13,450.
70.24 	The credit is reduced by 5.73 percent of earned income or
70.25 	modified adjusted gross income, whichever is greater, in excess
70.26 	of $15,080, but in no case is the credit less than zero.
70.27 	(d) For individuals with two or more qualifying children,
70.28 	the credit equals ten percent of the first $9,720 of earned
70.29 	income and 20 percent of earned income over $14,860 but less
70.30 	than $16,800.  The credit is reduced by 10.3 percent of earned
70.31 	income or modified adjusted gross income, whichever is greater,
70.32 	in excess of $17,890, but in no case is the credit less than
70.33 	zero.
70.34 	(e) For a nonresident or part-year resident, the credit
70.35 	must be allocated based on the percentage calculated under
70.36 	section 290.06, subdivision 2c, paragraph (e).
71.1 	(f) For a person who was a resident for the entire tax year
71.2 	and has earned income not subject to tax under this chapter,
71.3 	including income excluded under section 290.01, subdivision 19b,
71.4 	clause (11) or (12), the credit must be allocated based on the
71.5 	ratio of federal adjusted gross income reduced by the earned
71.6 	income not subject to tax under this chapter over federal
71.7 	adjusted gross income.
71.8 	(g) For tax years beginning after December 31, 2001, and
71.9 	before December 31, 2004, the $5,770 in paragraph (b), the
71.10 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
71.11 	after being adjusted for inflation under subdivision 7, are each
71.12 	increased by $1,000 for married taxpayers filing joint returns.
71.13 	(h) For tax years beginning after December 31, 2004, and
71.14 	before December 31, 2007, the $5,770 in paragraph (b), the
71.15 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
71.16 	after being adjusted for inflation under subdivision 7, are each
71.17 	increased by $2,000 for married taxpayers filing joint returns.
71.18 	(i) For tax years beginning after December 31, 2007, and
71.19 	before December 31, 2010, the $5,770 in paragraph (b), the
71.20 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
71.21 	after being adjusted for inflation under subdivision 7, are each
71.22 	increased by $3,000 for married taxpayers filing joint returns.
71.23 	For tax years beginning after December 31, 2008, the $3,000 is
71.24 	adjusted annually for inflation under subdivision 7.
71.25 	(j) The commissioner shall construct tables showing the
71.26 	amount of the credit at various income levels and make them
71.27 	available to taxpayers.  The tables shall follow the schedule
71.28 	contained in this subdivision, except that the commissioner may
71.29 	graduate the transition between income brackets.
71.30 	
EFFECTIVE DATE. This section is effective for tax years
71.31 	beginning after December 31, 2006.

71.32 	Sec. 8. Minnesota Statutes 2004, section 290.091,
71.33 	subdivision 2, is amended to read:
71.34 		Subd. 2.Definitions.  For purposes of the tax imposed by
71.35 	this section, the following terms have the meanings given:
71.36 	(a) "Alternative minimum taxable income" means the sum of
72.1 	the following for the taxable year:
72.2 	(1) the taxpayer's federal alternative minimum taxable
72.3 	income as defined in section 55(b)(2) of the Internal Revenue
72.4 	Code;
72.5 	(2) the taxpayer's itemized deductions allowed in computing
72.6 	federal alternative minimum taxable income, but excluding:
72.7 	(i) the charitable contribution deduction under section 170
72.8 	of the Internal Revenue Code to the extent that the deduction
72.9 	exceeds 1.0 percent of adjusted gross income, as defined in
72.10 	section 62 of the Internal Revenue Code;
72.11 	(ii) the medical expense deduction;
72.12 	(iii) the casualty, theft, and disaster loss deduction; and
72.13 	(iv) the impairment-related work expenses of a disabled
72.14 	person;
72.15 	(3) for depletion allowances computed under section 613A(c)
72.16 	of the Internal Revenue Code, with respect to each property (as
72.17 	defined in section 614 of the Internal Revenue Code), to the
72.18 	extent not included in federal alternative minimum taxable
72.19 	income, the excess of the deduction for depletion allowable
72.20 	under section 611 of the Internal Revenue Code for the taxable
72.21 	year over the adjusted basis of the property at the end of the
72.22 	taxable year (determined without regard to the depletion
72.23 	deduction for the taxable year);
72.24 	(4) to the extent not included in federal alternative
72.25 	minimum taxable income, the amount of the tax preference for
72.26 	intangible drilling cost under section 57(a)(2) of the Internal
72.27 	Revenue Code determined without regard to subparagraph (E);
72.28 	(5) to the extent not included in federal alternative
72.29 	minimum taxable income, the amount of interest income as
72.30 	provided by section 290.01, subdivision 19a, clause (1); and
72.31 	(6) the amount of addition required by section 290.01,
72.32 	subdivision 19a, clause (7);
72.33 	less the sum of the amounts determined under the following:
72.34 	(1) interest income as defined in section 290.01,
72.35 	subdivision 19b, clause (1);
72.36 	(2) an overpayment of state income tax as provided by
73.1 	section 290.01, subdivision 19b, clause (2), to the extent
73.2 	included in federal alternative minimum taxable income;
73.3 	(3) the amount of investment interest paid or accrued
73.4 	within the taxable year on indebtedness to the extent that the
73.5 	amount does not exceed net investment income, as defined in
73.6 	section 163(d)(4) of the Internal Revenue Code.  Interest does
73.7 	not include amounts deducted in computing federal adjusted gross
73.8 	income; and
73.9 	(4) amounts subtracted from federal taxable income as
73.10 	provided by section 290.01, subdivision 19b, clauses (10) and ,
73.11 	(11), and (12).
73.12 	In the case of an estate or trust, alternative minimum
73.13 	taxable income must be computed as provided in section 59(c) of
73.14 	the Internal Revenue Code.
73.15 	(b) "Investment interest" means investment interest as
73.16 	defined in section 163(d)(3) of the Internal Revenue Code.
73.17 	(c) "Tentative minimum tax" equals 6.4 percent of
73.18 	alternative minimum taxable income after subtracting the
73.19 	exemption amount determined under subdivision 3.
73.20 	(d) "Regular tax" means the tax that would be imposed under
73.21 	this chapter (without regard to this section and section
73.22 	290.032), reduced by the sum of the nonrefundable credits
73.23 	allowed under this chapter.
73.24 	(e) "Net minimum tax" means the minimum tax imposed by this
73.25 	section.
73.26 	
EFFECTIVE DATE. This section is effective for tax years
73.27 	beginning after December 31, 2006.

73.28 	Sec. 9. Minnesota Statutes 2004, section 290.0921,
73.29 	subdivision 3, is amended to read:
73.30 		Subd. 3.Alternative minimum taxable income.
 73.31 	"Alternative minimum taxable income" is Minnesota net income as
73.32 	defined in section 290.01, subdivision 19, and includes the
73.33 	adjustments and tax preference items in sections 56, 57, 58, and
73.34 	59(d), (e), (f), and (h) of the Internal Revenue Code.  If a
73.35 	corporation files a separate company Minnesota tax return, the
73.36 	minimum tax must be computed on a separate company basis.  If a
74.1 	corporation is part of a tax group filing a unitary return, the
74.2 	minimum tax must be computed on a unitary basis.  The following
74.3 	adjustments must be made.
74.4 	(1) For purposes of the depreciation adjustments under
74.5 	section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code,
74.6 	the basis for depreciable property placed in service in a
74.7 	taxable year beginning before January 1, 1990, is the adjusted
74.8 	basis for federal income tax purposes, including any
74.9 	modification made in a taxable year under section 290.01,
74.10 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
74.11 	subdivision 7, paragraph (c).
74.12 	For taxable years beginning after December 31, 2000, the
74.13 	amount of any remaining modification made under section 290.01,
74.14 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
74.15 	subdivision 7, paragraph (c), not previously deducted is a
74.16 	depreciation allowance in the first taxable year after December
74.17 	31, 2000.
74.18 	(2) The portion of the depreciation deduction allowed for
74.19 	federal income tax purposes under section 168(k) of the Internal
74.20 	Revenue Code that is required as an addition under section
74.21 	290.01, subdivision 19c, clause (16), is disallowed in
74.22 	determining alternative minimum taxable income.
74.23 	(3) The subtraction for depreciation allowed under section
74.24 	290.01, subdivision 19d, clause (19), is allowed as a
74.25 	depreciation deduction in determining alternative minimum
74.26 	taxable income.
74.27 	(4) The alternative tax net operating loss deduction under
74.28 	sections 56(a)(4) and 56(d) of the Internal Revenue Code does
74.29 	not apply.
74.30 	(5) The special rule for certain dividends under section
74.31 	56(g)(4)(C)(ii) of the Internal Revenue Code does not apply.
74.32 	(6) The special rule for dividends from section 936
74.33 	companies under section 56(g)(4)(C)(iii) does not apply.
74.34 	(7) The tax preference for depletion under section 57(a)(1)
74.35 	of the Internal Revenue Code does not apply.
74.36 	(8) The tax preference for intangible drilling costs under
75.1 	section 57(a)(2) of the Internal Revenue Code must be calculated
75.2 	without regard to subparagraph (E) and the subtraction under
75.3 	section 290.01, subdivision 19d, clause (4).
75.4 	(9) The tax preference for tax exempt interest under
75.5 	section 57(a)(5) of the Internal Revenue Code does not apply.
75.6 	(10) The tax preference for charitable contributions of
75.7 	appreciated property under section 57(a)(6) of the Internal
75.8 	Revenue Code does not apply.
75.9 	(11) For purposes of calculating the tax preference for
75.10 	accelerated depreciation or amortization on certain property
75.11 	placed in service before January 1, 1987, under section 57(a)(7)
75.12 	of the Internal Revenue Code, the deduction allowable for the
75.13 	taxable year is the deduction allowed under section 290.01,
75.14 	subdivision 19e.
75.15 	For taxable years beginning after December 31, 2000, the
75.16 	amount of any remaining modification made under section 290.01,
75.17 	subdivision 19e, not previously deducted is a depreciation or
75.18 	amortization allowance in the first taxable year after December
75.19 	31, 2004.
75.20 	(12) For purposes of calculating the adjustment for
75.21 	adjusted current earnings in section 56(g) of the Internal
75.22 	Revenue Code, the term "alternative minimum taxable income" as
75.23 	it is used in section 56(g) of the Internal Revenue Code, means
75.24 	alternative minimum taxable income as defined in this
75.25 	subdivision, determined without regard to the adjustment for
75.26 	adjusted current earnings in section 56(g) of the Internal
75.27 	Revenue Code.
75.28 	(13) For purposes of determining the amount of adjusted
75.29 	current earnings under section 56(g)(3) of the Internal Revenue
75.30 	Code, no adjustment shall be made under section 56(g)(4) of the
75.31 	Internal Revenue Code with respect to (i) the amount of foreign
75.32 	dividend gross-up subtracted as provided in section 290.01,
75.33 	subdivision 19d, clause (1), (ii) the amount of refunds of
75.34 	income, excise, or franchise taxes subtracted as provided in
75.35 	section 290.01, subdivision 19d, clause (10), or (iii) the
75.36 	amount of royalties, fees or other like income subtracted as
76.1 	provided in section 290.01, subdivision 19d, clause (11).
76.2 	(14) Alternative minimum taxable income excludes the income
76.3 	from operating in a job opportunity building zone as provided
76.4 	under section 469.317.
76.5 	(15) Alternative minimum taxable income excludes the income
76.6 	from operating in a biotechnology and health sciences industry
76.7 	zone as provided under section 469.337.
76.8 	(16) Alternative minimum taxable income excludes the income
76.9 	from operating in an international economic development zone as
76.10 	provided under section 469.326.
76.11 	Items of tax preference must not be reduced below zero as a
76.12 	result of the modifications in this subdivision.
76.13 	
EFFECTIVE DATE. This section is effective for tax years
76.14 	beginning after December 31, 2006.

76.15 	Sec. 10. Minnesota Statutes 2004, section 290.0922,
76.16 	subdivision 2, is amended to read:
76.17 		Subd. 2.Exemptions.  The following entities are exempt
76.18 	from the tax imposed by this section:
76.19 	(1) corporations exempt from tax under section 290.05;
76.20 	(2) real estate investment trusts;
76.21 	(3) regulated investment companies or a fund thereof; and
76.22 	(4) entities having a valid election in effect under
76.23 	section 860D(b) of the Internal Revenue Code;
76.24 	(5) town and farmers' mutual insurance companies;
76.25 	(6) cooperatives organized under chapter 308A that provide
76.26 	housing exclusively to persons age 55 and over and are
76.27 	classified as homesteads under section 273.124, subdivision 3;
76.28 	and 
76.29 	(7) an entity, if for the taxable year all of its property
76.30 	is located in a job opportunity building zone designated under
76.31 	section 469.314 and all of its payroll is a job opportunity
76.32 	building zone payroll under section 469.310; and 
76.33 	(8) an entity, if for the taxable year all of its property
76.34 	is located in an international economic development zone
76.35 	designated under section 469.322, and all of its payroll is
76.36 	international economic development zone payroll under section
77.1 	469.321.
77.2 	Entities not specifically exempted by this subdivision are
77.3 	subject to tax under this section, notwithstanding section
77.4 	290.05.
77.5 	
EFFECTIVE DATE. This section is effective for tax years
77.6 	beginning after December 31, 2006.

77.7 	Sec. 11. Minnesota Statutes 2004, section 290.0922,
77.8 	subdivision 3, is amended to read:
77.9 		Subd. 3.Definitions.  (a) "Minnesota sales or receipts"
77.10 	means the total sales apportioned to Minnesota pursuant to
77.11 	section 290.191, subdivision 5, the total receipts attributed to
77.12 	Minnesota pursuant to section 290.191, subdivisions 6 to 8,
77.13 	and/or the total sales or receipts apportioned or attributed to
77.14 	Minnesota pursuant to any other apportionment formula applicable
77.15 	to the taxpayer.
77.16 	(b) "Minnesota property" means total Minnesota tangible
77.17 	property as provided in section 290.191, subdivisions 9 to 11,
77.18 	any other tangible property located in Minnesota, but does not
77.19 	include property located in a job opportunity building zone
77.20 	designated under section 469.314,or property of a qualified
77.21 	business located in a biotechnology and health sciences industry
77.22 	zone designated under section 469.334, or property of a
77.23 	qualified business located in the international economic
77.24 	development zone designated under section 469.322.  Intangible
77.25 	property shall not be included in Minnesota property for
77.26 	purposes of this section.  Taxpayers who do not utilize tangible
77.27 	property to apportion income shall nevertheless include
77.28 	Minnesota property for purposes of this section.  On a return
77.29 	for a short taxable year, the amount of Minnesota property
77.30 	owned, as determined under section 290.191, shall be included in
77.31 	Minnesota property based on a fraction in which the numerator is
77.32 	the number of days in the short taxable year and the denominator
77.33 	is 365.
77.34 	(c) "Minnesota payrolls" means total Minnesota payrolls as
77.35 	provided in section 290.191, subdivision 12, but does not
77.36 	include job opportunity building zone payrolls under section
78.1 	469.310, subdivision 8, or biotechnology and health sciences
78.2 	industry zone payroll payrolls under section 469.330,
78.3 	subdivision 8, or international economic development zone
78.4 	payrolls under section 469.321, subdivision 9.  Taxpayers who do
78.5 	not utilize payrolls to apportion income shall nevertheless
78.6 	include Minnesota payrolls for purposes of this section.
78.7 	
EFFECTIVE DATE. This section is effective for tax years
78.8 	beginning after December 31, 2006.

78.9 	Sec. 12. Minnesota Statutes 2004, section 297A.68, is
78.10 	amended by adding a subdivision to read:
78.11 		Subd. 40.International economic development zones. (a)
78.12 	Purchases of tangible personal property or taxable services by a
78.13 	qualified business, as defined in section 469.321, are exempt if
78.14 	the property or services are primarily used or consumed in the
78.15 	international economic development zone designated under section
78.16 	469.322.
78.17 	(b) Purchase and use of construction materials, supplies,
78.18 	and equipment incorporated into the construction of improvements
78.19 	to real property in the international economic development zone
78.20 	are exempt if the improvements after completion of construction
78.21 	are to be used as a regional distribution center as defined in
78.22 	section 469.321 or otherwise used in the conduct of freight
78.23 	forwarding activities of a qualified business as defined in
78.24 	section 469.321.  This exemption applies regardless of whether
78.25 	the purchases are made by the business or a contractor.
78.26 	(c) The exemptions under this subdivision apply to a local
78.27 	sales and use tax, regardless of whether the local tax is
78.28 	imposed on sales taxable under this chapter or in another law,
78.29 	ordinance, or charter provision.
78.30 	(d) The exemption in paragraph (a) applies to sales during
78.31 	the duration of the zone and after June 30, 2007, if the
78.32 	purchase was made and delivery received after the business signs
78.33 	the business subsidy agreement required under chapter 469.
78.34 	(e) The exemption in paragraph (b) applies to sales made
78.35 	after the business signs the business subsidy agreement required
78.36 	under chapter 469 and before the end of the duration of the
79.1 	zone, if the purchase and delivery were made after June 30,
79.2 	2006.  For purchases made before July 1, 2007, the tax must be
79.3 	imposed and collected as if the rate under section 297A.62,
79.4 	subdivision 1, applied, and then refunded in the manner provided
79.5 	in section 297A.75 in fiscal year 2008.
79.6 	
EFFECTIVE DATE. This section is effective the day
79.7 	following final enactment.

79.8 	Sec. 13. [469.321] DEFINITIONS.
79.9 		Subdivision 1.Scope. For purposes of sections 469.321
79.10 	to 469.328, the following terms have the meanings given.
79.11 		Subd. 2.Foreign trade zone. "Foreign trade zone" means
79.12 	a foreign trade zone designated pursuant to United States Code,
79.13 	title 19, section 81a, for the right to use the powers provided
79.14 	in United States Code, title 19, sections 81a to 81u, or a
79.15 	subzone authorized by the foreign trade zone.
79.16 		Subd. 3.Foreign trade zone authority. "Foreign trade
79.17 	zone authority" means the Greater Metropolitan Foreign Trade
79.18 	Zone Commission number 119, a joint powers authority created by
79.19 	the county of Hennepin, the cities of Minneapolis and
79.20 	Bloomington, and the Metropolitan Airports Commission, under the
79.21 	authority of section 469.059, 469.101, or 471.59, which includes
79.22 	any other political subdivisions that enter into the authority
79.23 	after its creation.
79.24 		Subd. 4.International economic development zone or
79.25 	zone. An "international economic development zone" or "zone" is
79.26 	a zone so designated under section 469.322.
79.27 		Subd. 5.Person. "Person" includes an individual,
79.28 	corporation, partnership, limited liability company,
79.29 	association, or any other entity.
79.30 		Subd. 6.Qualified business. "Qualified business" means
79.31 	a person who has signed a business subsidy agreement as required
79.32 	under sections 116J.993 to 116J.995 and 469.323, subdivision 4,
79.33 	carrying on a trade or business at a place of business located
79.34 	within the international economic development zone that is:
79.35 	(1)(i) engaged in the furtherance of international export
79.36 	or import of goods as a freight forwarder; and (ii) certified by
80.1 	the foreign trade zone authority as a trade or business that
80.2 	furthers the purpose of developing international distribution
80.3 	capacity and capability; or 
80.4 	(2) the owner or operator of a regional distribution center.
80.5 		Subd. 7.Regional distribution center. A "regional
80.6 	distribution center" is a distribution center developed within a
80.7 	foreign trade zone.  The regional distribution center must have
80.8 	as its primary purpose, the facilitation of the gathering of
80.9 	freight for the purpose of centralizing the functions necessary
80.10 	for the shipment of freight in international commerce,
80.11 	including, but not limited to, security and customs functions.
80.12 		Subd. 8.International economic development zone
80.13 	percentage or zone percentage. "International economic
80.14 	development zone percentage" or "zone percentage" means the
80.15 	following fraction reduced to a percentage:
80.16 	(1) the numerator of the fraction is:
80.17 	(i) the ratio of the taxpayer's property factor under
80.18 	section 290.191 located in the zone for the taxable year which
80.19 	is land, buildings, machinery and equipment, inventories, and
80.20 	other tangible personal property that is a regional distribution
80.21 	center or is used in the furtherance of the taxpayer's freight
80.22 	forwarding operations over the property factor numerator
80.23 	determined under section 290.191, plus 
80.24 	(ii) the ratio of the taxpayer's international economic
80.25 	development zone payroll factor under subdivision 9 over the
80.26 	payroll factor numerator determined under section 290.191; and 
80.27 	(2) the denominator of the fraction is two.
80.28 	When calculating the zone percentage for a business that is
80.29 	part of a unitary business as defined under section 290.17,
80.30 	subdivision 4, the denominator of the payroll and property
80.31 	factors is the Minnesota payroll and property of the unitary
80.32 	business as reported on the combined report under section
80.33 	290.17, subdivision 4, paragraph (j).
80.34 		Subd. 9.International economic development zone payroll
80.35 	factor or international economic development zone payroll.
 80.36 	"International economic development zone payroll factor" or
81.1 	"international economic development zone payroll" is that
81.2 	portion of the payroll factor under section 290.191 used to
81.3 	operate a regional distribution center, or used in the
81.4 	furtherance of the taxpayer's freight forwarding operations that
81.5 	represents:
81.6 	(1) wages or salaries paid to an individual for services
81.7 	performed in the international economic development zone; or 
81.8 	(2) wages or salaries paid to individuals working from
81.9 	offices within the international economic development zone, if
81.10 	their employment requires them to work outside the zone and the
81.11 	work is incidental to the work performed by the individual
81.12 	within the zone.  However, in no case does zone payroll include
81.13 	wages paid for work performed outside the zone of an employee
81.14 	who performs more than ten percent of total services for the
81.15 	employer outside the zone.
81.16 		Subd. 10.Freight forwarder. "Freight forwarder" is a
81.17 	business that, for compensation, ensures that goods produced or
81.18 	sold by another business move from point of origin to point of
81.19 	destination.
81.20 	
EFFECTIVE DATE. This section is effective the day
81.21 	following final enactment.

81.22 	Sec. 14. [469.3215] APPLICATION FOR DESIGNATION.
81.23 		Subdivision 1.Who may apply. One or more local
81.24 	government units, or a joint powers board under section 471.59,
81.25 	acting on behalf of two or more units, may apply for designation
81.26 	of an area as an international economic development zone.  All
81.27 	or part of the area proposed for designation as a zone must be
81.28 	located within the boundaries of each of the governmental
81.29 	units.  A local government unit may not submit or have submitted
81.30 	on its behalf more than one application for designation of an
81.31 	international economic development zone.
81.32 		Subd. 2.Application content. (a) The application must
81.33 	include:
81.34 	(1) a resolution or ordinance adopted by each of the cities
81.35 	or towns and the counties in which the zone is located, agreeing
81.36 	to provide all of the local tax exemptions provided under
82.1 	section 469.315;
82.2 	(2) an agreement by the applicant to treat incentives
82.3 	provided under the zone designation as business subsidies under
82.4 	sections 116J.993 to 116J.995 and to comply with the
82.5 	requirements of that law; and 
82.6 	(3) supporting evidence to allow the authority to evaluate
82.7 	the application.
82.8 	(b) Applications must be submitted to the authority no
82.9 	later than December 31, 2005.
82.10 	
EFFECTIVE DATE. This section is effective the day
82.11 	following final enactment.

82.12 	Sec. 15. [469.322] DESIGNATION OF INTERNATIONAL ECONOMIC
82.13 	DEVELOPMENT ZONE.
82.14 	(a) An area designated as a foreign trade zone may be
82.15 	designated by the foreign trade zone authority as an
82.16 	international economic development zone if within the zone a
82.17 	regional distribution center is being developed pursuant to
82.18 	section 469.323.  The zone must consist of contiguous area of
82.19 	not less than 500 acres and not more than 1,000 acres.  The
82.20 	designation authority under this section is limited to one zone.
82.21 	(b) In making the designation, the foreign trade zone
82.22 	authority, in consultation with the Minnesota Department of
82.23 	Transportation, the Minnesota Department of Employment and
82.24 	Economic Development, the Minnesota Department of Revenue, and
82.25 	the Metropolitan Council, shall consider access to major
82.26 	transportation routes, consistency with current state
82.27 	transportation and air cargo planning, adequacy of the size of
82.28 	the site, access to airport facilities, present and future
82.29 	capacity at the designated airport, the capability to meet
82.30 	integrated present and future air cargo, security, and
82.31 	inspection services, and access to other infrastructure and
82.32 	financial incentives to maximize the security, efficiency, and
82.33 	volume of Minnesota's export shipments.  The border of the
82.34 	international economic development zone must be no more than 60
82.35 	miles distant or 90 minutes drive time from the border of the
82.36 	Minneapolis-St. Paul International Airport.
83.1 	(c) Prior to a final site designation, the foreign trade
83.2 	zone authority, in consultation with the applicant, must conduct
83.3 	a transportation impact study based on the regional model and
83.4 	utilizing traffic forecasting and assignments.  The results must
83.5 	be used to evaluate the effects of the proposed use on the
83.6 	transportation system and identify any needed improvements.  If
83.7 	the site is in the metropolitan area the study must also
83.8 	evaluate the effect of the transportation impacts on the
83.9 	Metropolitan Transportation System plan as well as the
83.10 	comprehensive plans of the municipalities that would be
83.11 	affected.  The cost of the study must be paid by the applicant.
83.12 	(d) Final zone designation must be made by June 30, 2006.
83.13 	(e) Duration of the zone is a 12-year period beginning on
83.14 	January 1, 2007.

83.15 	EFFECTIVE DATE. This section is effective the day
83.16 	following final enactment.

83.17 	Sec. 16. [469.323] FOREIGN TRADE ZONE AUTHORITY POWERS.
83.18 		Subdivision 1.Development of regional distribution
83.19 	center. The foreign trade zone authority shall be responsible
83.20 	for creating a development plan for the regional distribution
83.21 	center.  The regional distribution center must be developed with
83.22 	the purpose of expanding, on a regional basis, international
83.23 	distribution capacity and capability.  The foreign trade zone
83.24 	authority shall consult only with municipalities that have
83.25 	indicated to the authority an interest in locating the
83.26 	international economic development zone within their boundaries,
83.27 	as well as interested businesses, potential financiers, and
83.28 	appropriate state and federal agencies.
83.29 		Subd. 2.Business plan. Before designation of an
83.30 	international economic development zone under section 469.322,
83.31 	the governing body of the foreign trade zone authority shall
83.32 	prepare a business plan.  The plan must establish performance
83.33 	goals for the zone.  These goals must set out, at a minimum, the
83.34 	amount of investment, the number of jobs, and the amount of
83.35 	freight handled expected to be attained at the end of three-,
83.36 	five-, and ten-year periods by the zone.  The plan also must
84.1 	include an analysis of the economic feasibility of the regional
84.2 	distribution center once it becomes operational and of the
84.3 	operations of freight forwarders and other businesses that
84.4 	choose to locate within the boundaries of the zone.  The
84.5 	analysis must provide profitability models that:
84.6 	(1) include the benefits of the incentives;
84.7 	(2) estimate the amount of time needed to achieve
84.8 	profitability; and 
84.9 	(3) analyze the length of time incentives will be necessary
84.10 	to the economic viability of the regional distribution center.
84.11 	If the governing body of the foreign trade authority
84.12 	determines that the models do not establish the economic
84.13 	feasibility of the project, the regional distribution center
84.14 	does not meet the development requirements of this section and
84.15 	section 469.322.
84.16 		Subd. 3.Port authority powers. The governing body of
84.17 	the foreign trade zone authority may establish a port authority
84.18 	that has the same powers as a port authority established under
84.19 	section 469.049.  If the foreign trade zone authority
84.20 	establishes a port authority, the governing body of the foreign
84.21 	trade zone authority may exercise all powers granted to a city
84.22 	by sections 469.048 to 469.068 or other law, except the power to
84.23 	levy property taxes under section 469.053.
84.24 		Subd. 4.Business subsidy law. Tax exemptions and job
84.25 	credits provided under this section are business subsidies paid
84.26 	by the affected local government for the purpose of sections
84.27 	116J.871 and 116J.993 to 116J.995.
84.28 	
EFFECTIVE DATE. This section is effective the day
84.29 	following final enactment.

84.30 	Sec. 17. [469.324] TAX INCENTIVES IN INTERNATIONAL
84.31 	ECONOMIC DEVELOPMENT ZONE.
84.32 		Subdivision 1.Availability. Qualified businesses that
84.33 	operate in an international economic development zone,
84.34 	individuals who invest in a regional distribution center or
84.35 	qualified businesses that operate in an international economic
84.36 	development zone, and property located in an international
85.1 	economic development zone qualify for:
85.2 	(1) exemption from individual income taxes as provided
85.3 	under section 469.325;
85.4 	(2) exemption from corporate franchise taxes as provided
85.5 	under section 469.326;
85.6 	(3) exemption from the state sales and use tax and any
85.7 	local sales and use taxes on qualifying purchases as provided in
85.8 	section 297A.68, subdivision 40;
85.9 	(4) exemption from the property tax as provided in section
85.10 	272.02, subdivision 68; and 
85.11 	(5) the jobs credit allowed under section 469.327.

85.12 	Sec. 18. [469.325] INDIVIDUAL INCOME TAX EXEMPTION.
85.13 		Subdivision 1.Application. An individual, estate, or
85.14 	trust operating a trade or business in the international
85.15 	economic development zone, and an individual making a qualifying
85.16 	investment in a qualified business operating in the
85.17 	international economic development zone, qualifies for the
85.18 	exemptions from taxes imposed under chapter 290, as provided in
85.19 	this section.  The exemptions provided under this section apply
85.20 	only to the extent that the income otherwise would be taxable
85.21 	under chapter 290.  Subtractions under this section from federal
85.22 	taxable income, alternative minimum taxable income, or any other
85.23 	base subject to tax are limited to the amount that otherwise
85.24 	would be included in the tax base absent the exemption under
85.25 	this section.  This section applies only to tax years beginning
85.26 	during the duration of the zone.
85.27 		Subd. 2.Rents. An individual, estate, or trust is
85.28 	exempt from the taxes imposed under chapter 290 on net rents
85.29 	derived from real or tangible personal property used by a
85.30 	qualified business and located in the zone for the taxable year
85.31 	in which the zone was designated an international economic
85.32 	development zone.  If tangible personal property was used both
85.33 	within and outside of the zone by the qualified business, the
85.34 	exemption amount for the net rental income must be multiplied by
85.35 	a fraction, the numerator of which is the number of days the
85.36 	property was used in the zone and the denominator of which is
86.1 	the total days the property is rented by a qualified business.
86.2 		Subd. 3.Business income. An individual, estate, or
86.3 	trust is exempt from the taxes imposed under chapter 290 on net
86.4 	income from the operation of a qualified business in the
86.5 	international economic development zone.  If the trade or
86.6 	business is carried on within and outside of the zone and the
86.7 	individual is not a resident of Minnesota, the exemption must be
86.8 	apportioned based on the zone percentage for the taxable year.
86.9 	If the trade or business is carried on within or outside of the
86.10 	zone and the individual is a resident of Minnesota, the
86.11 	exemption must be apportioned based on the zone percentage for
86.12 	the taxable year, except the ratios under section 469.321,
86.13 	subdivision 8, clause (1), items (i) and (ii), must use the
86.14 	denominators of the property and payroll factors determined
86.15 	under section 290.191.  No subtraction is allowed under this
86.16 	section in excess of 20 percent of the sum of the international
86.17 	economic development zone payroll and the adjusted basis of the
86.18 	property at the time that the property is first used in the
86.19 	international economic development zone by the business.
86.20 		Subd. 4.Capital gains. (a) An individual, estate, or
86.21 	trust is exempt from the taxes imposed under chapter 290 on:
86.22 	(1) net gain derived on a sale or exchange of real property
86.23 	located in the international economic development zone and used
86.24 	by a qualified business.  If the property was held by the
86.25 	individual, estate, or trust during a period when the zone was
86.26 	not designated, the gain must be prorated based on the
86.27 	percentage of time, measured in calendar days, that the real
86.28 	property was held by the individual during the period the zone
86.29 	designation was in effect to the total period of time the real
86.30 	property was held by the individual;
86.31 	(2) net gain derived on a sale or exchange of tangible
86.32 	personal property used by a qualified business in the
86.33 	international economic development zone.  If the property was
86.34 	held by the individual, estate, or trust during a period when
86.35 	the zone was not designated, the gain must be prorated based on
86.36 	the percentage of time, measured in calendar days, that the
87.1 	property was held by the individual during the period the zone
87.2 	designation was in effect to the total period of time the
87.3 	property was held by the individual, estate, or trust.  If the
87.4 	tangible personal property was used outside of the zone during
87.5 	the period of the zone's designation, the exemption must be
87.6 	multiplied by a fraction, the numerator of which is the number
87.7 	of days the property was used in the zone during the time of the
87.8 	designation and the denominator of which is the total days the
87.9 	property was held during the time of the designation; and 
87.10 	(3) net gain derived on a sale of an ownership interest in
87.11 	a qualified business operating in the international economic
87.12 	development zone, meeting the requirements of paragraph (b).
87.13 	The exemption on the gain must be multiplied by the zone
87.14 	percentage of the business for the taxable year prior to the
87.15 	sale.
87.16 	(b) A qualified business meets the requirements of
87.17 	paragraph (a), clause (3), if it is a corporation, an S
87.18 	corporation, or a partnership, and for the taxable year its
87.19 	international economic development zone percentage exceeds 25
87.20 	percent.  For purposes of paragraph (a), clause (3), the zone
87.21 	percentage must be calculated by modifying the ratios under
87.22 	section 469.321, subdivision 8, clause (1), items (i) and (ii),
87.23 	to use the denominators of the property and payroll factors
87.24 	determined under section 290.191.  Upon the request of an
87.25 	individual, estate, or trust holding an ownership interest in
87.26 	the entity, the entity must certify to the owner, in writing,
87.27 	the international economic development zone percentage needed to
87.28 	determine the exemption.
87.29 	
EFFECTIVE DATE. This section is effective for tax years
87.30 	beginning after December 31, 2006.

87.31 	Sec. 19. [469.326] CORPORATE FRANCHISE TAX EXEMPTION.
87.32 	(a) A qualified business is exempt from taxation under
87.33 	section 290.02, the alternative minimum tax under section
87.34 	290.0921, and the minimum fee under section 290.0922, on the
87.35 	portion of its income attributable to operations within the
87.36 	international economic development zone.  This exemption is
88.1 	determined as follows:
88.2 	(1) for purposes of the tax imposed under section 290.02,
88.3 	by multiplying its taxable net income by its zone percentage and
88.4 	subtracting the result in determining taxable income;
88.5 	(2) for purposes of the alternative minimum tax under
88.6 	section 290.0921, by multiplying its alternative minimum taxable
88.7 	income by its zone percentage and reducing alternative minimum
88.8 	taxable income by this amount; and 
88.9 	(3) for purposes of the minimum fee under section 290.0922,
88.10 	by excluding property and payroll in the zone from the
88.11 	computations of the fee or by exempting the entity under section
88.12 	290.0922, subdivision 2, clause (8).
88.13 	(b) No subtraction is allowed under this section in excess
88.14 	of 20 percent of the sum of the corporation's international
88.15 	economic development zone payroll and the adjusted basis of the
88.16 	zone property at the time that the property is first used in the
88.17 	international economic development zone by the corporation.
88.18 	(c) This section applies only to tax years beginning during
88.19 	the duration of the international economic development zone.

88.20 	EFFECTIVE DATE. This section is effective for tax years
88.21 	beginning after December 31, 2006.

88.22 	Sec. 20. [469.327] JOBS CREDIT.
88.23 		Subdivision 1.Credit allowed. A qualified business is
88.24 	allowed a credit against the taxes imposed under chapter 290.
88.25 	The credit equals seven percent of the:
88.26 	(1) lesser of:
88.27 	(i) zone payroll for the taxable year, less the zone
88.28 	payroll for the base year; or 
88.29 	(ii) total Minnesota payroll for the taxable year, less
88.30 	total Minnesota payroll for the base year; minus 
88.31 	(2) $30,000 multiplied by the number of full-time
88.32 	equivalent employees that the qualified business employs in the
88.33 	international economic development zone for the taxable year,
88.34 	minus the number of full-time equivalent employees the business
88.35 	employed in the zone in the base year, but not less than zero.
88.36 		Subd. 2.Definitions. (a) For purposes of this section,
89.1 	the following terms have the meanings given.
89.2 	(b) "Base year" means the taxable year beginning during the
89.3 	calendar year in which the zone designation was made under
89.4 	section 469.322, paragraph (d).
89.5 	(c) "Full-time equivalent employees" means the equivalent
89.6 	of annualized expected hours of work equal to 2,080 hours.
89.7 	(d) "Minnesota payroll" means the wages or salaries
89.8 	attributed to Minnesota under section 290.191, subdivision 12,
89.9 	for the qualified business or the unitary business of which the
89.10 	qualified business is a part, whichever is greater.
89.11 	(e) "Zone payroll" means wages or salaries used to
89.12 	determine the zone payroll factor for the qualified business,
89.13 	less the amount of compensation attributable to any employee
89.14 	that exceeds $100,000.
89.15 		Subd. 3.Inflation adjustment. For taxable years
89.16 	beginning after December 31, 2004, the dollar amounts in
89.17 	subdivisions 1, clause (2); and 2, paragraph (e), are annually
89.18 	adjusted for inflation.  The commissioner of revenue shall
89.19 	adjust the amounts by the percentage determined under section
89.20 	290.06, subdivision 2d, for the taxable year.
89.21 		Subd. 4.Refundable. If the amount of the credit exceeds
89.22 	the liability for tax under chapter 290, the commissioner of
89.23 	revenue shall refund the excess to the qualified business.
89.24 		Subd. 5.Appropriation. An amount sufficient to pay the
89.25 	refunds authorized by this section is appropriated to the
89.26 	commissioner of revenue from the general fund.
89.27 	
EFFECTIVE DATE. This section is effective for tax years
89.28 	beginning after December 31, 2006.

89.29 	Sec. 21. [469.328] REPAYMENT OF TAX BENEFITS.
89.30 		Subdivision 1.Repayment obligation. A person must repay
89.31 	the amount of the tax reduction received under section 469.324,
89.32 	subdivision 1, clauses (1) to (5), or credit received under
89.33 	section 469.327, during the two years immediately before it
89.34 	ceased to operate in the zone as a qualified business, if the
89.35 	person ceased to operate its facility located within the zone,
89.36 	ceased to be in compliance with the terms of the business
90.1 	subsidy agreement, or otherwise ceases to be or is not a
90.2 	qualified business.
90.3 		Subd. 2.Disposition of repayment. The repayment must be
90.4 	paid to the state to the extent it represents a state tax
90.5 	reduction and to the county to the extent it represents a
90.6 	property tax reduction.  Any amount repaid to the state must be
90.7 	deposited in the general fund.  Any amount repaid to the county
90.8 	for the property tax exemption must be distributed to the local
90.9 	governments with authority to levy taxes in the zone in the same
90.10 	manner provided for distribution of payment of delinquent
90.11 	property taxes.  Any repayment of local sales or use taxes must
90.12 	be repaid to the jurisdiction imposing the local sales or use
90.13 	tax.
90.14 		Subd. 3.Repayment procedures. (a) For the repayment of
90.15 	taxes imposed under chapter 290 or 297A or local taxes collected
90.16 	pursuant to section 297A.99, a person must file an amended
90.17 	return with the commissioner of revenue and pay any taxes
90.18 	required to be repaid within 30 days after ceasing to be a
90.19 	qualified business.  The amount required to be repaid is
90.20 	determined by calculating the tax for the period for which
90.21 	repayment is required without regard to the tax reductions and
90.22 	credits allowed under section 469.324.
90.23 	(b) For the repayment of property taxes, the county auditor
90.24 	shall prepare a tax statement for the person, applying the
90.25 	applicable tax extension rates for each payable year and provide
90.26 	a copy to the business.  The person must pay the taxes to the
90.27 	county treasurer within 30 days after receipt of the tax
90.28 	statement.  The taxpayer may appeal the valuation and
90.29 	determination of the property tax to the tax court within 30
90.30 	days after receipt of the tax statement.
90.31 	(c) The provisions of chapters 270 and 289A relating to the
90.32 	commissioner of revenue's authority to audit, assess, and
90.33 	collect the tax and to hear appeals are applicable to the
90.34 	repayment required under paragraphs (a) and (b).  The
90.35 	commissioner may impose civil penalties as provided in chapter
90.36 	289A, and the additional tax and penalties are subject to
91.1 	interest at the rate provided in section 270.75, from 30 days
91.2 	after ceasing to do business in the zone until the date the tax
91.3 	is paid.
91.4 	(d) If a property tax is not repaid under paragraph (c),
91.5 	the county treasurer shall add the amount required to be repaid
91.6 	to the property taxes assessed against the property for payment
91.7 	in the year following the year in which the treasurer discovers
91.8 	that the person ceased to operate in the international economic
91.9 	development zone.
91.10 	(e) For determining the tax required to be repaid, a tax
91.11 	reduction is deemed to have been received on the date that the
91.12 	tax would have been due if the person had not been entitled to
91.13 	the tax reduction.
91.14 	(f) The commissioner of revenue may assess the repayment of
91.15 	taxes under paragraph (d) at any time within two years after the
91.16 	person ceases to be a qualified business, or within any period
91.17 	of limitations for the assessment of tax under section 289A.38,
91.18 	whichever is later.
91.19 		Subd. 4.Waiver authority. The commissioner of revenue
91.20 	may waive all or part of a repayment, if, in consultation with
91.21 	the foreign trade zone authority and appropriate officials from
91.22 	the state and local government units, including the commissioner
91.23 	of employment and economic development, determines that
91.24 	requiring repayment of the tax is not in the best interest of
91.25 	the state or local government and the business ceased operating
91.26 	as a result of circumstances beyond its control, including, but
91.27 	not limited to:
91.28 	(1) a natural disaster;
91.29 	(2) unforeseen industry trends; or 
91.30 	(3) loss of a major supplier or customer.
91.31 	
EFFECTIVE DATE. This section is effective the day
91.32 	following final enactment.

91.33 	Sec. 22. [469.329] REPORTING REQUIREMENTS.
91.34 	An applicant receiving designation of an international
91.35 	economic development zone under section 469.322 must annually
91.36 	report to the commissioner of employment and economic
92.1 	development on its progress in meeting the zone performance
92.2 	goals under the business plan for the zone and the applicant's
92.3 	compliance with the business subsidy law under sections 116J.993
92.4 	to 116J.995.

92.5 	EFFECTIVE DATE. This section is effective the day
92.6 	following final enactment.